SAO PAULO, Nov 3 (Reuters) - Brazil’s power industry watchdog Aneel approved on Tuesday a new proposal to compensate hydropower operators for losses related to a prolonged drought that cut into supply.
Under the plan, the government will pay hydropower companies for the difference between expected and actual electricity output, regardless of limitations they are facing to preserve water reservoir levels.
The move is a first step to help resolve a crisis that has forced power companies to sue the government as their losses soared. It could also improve the chances that a large auction of operation rights for existing hydropower plants scheduled for November 25 succeeds.
According to Aneel, the new plan could increase net income at companies operating hydroelectric dams by up to 1.5 billion reais ($397 million), due to retroactive payments that would be made according to the new model.
Consumers will pay for the difference between the amount of energy the companies would like to produce and actual output, Aneel said. Aneel requires that, for companies to be eligible for the new plan, they need to drop their lawsuits.
It remains unclear whether companies will adhere to the plan, subsequently dropping their lawsuits.
Shares of large hydropower operators jumped on Tuesday in São Paulo. Tractebel Energia SA rose 6.58 percent, while state-controlled Centrais Elétricas Brasileiras SA, or Eletrobras, jumped 5.3 percent.
Cia Energética de Minas Gerais SA, known as Cemig, gained 5.59 percent.
$1 = 3.77 Brazilian reais Reporting by Luciano Costa; Writing by Marcelo Teixeira; Editing by Guillermo Parra-Bernal and Andrew Hay