Brazil short-term energy prices down as drought risks retreat

Fri Jan 11, 2013 5:38pm EST

* Rain forecasts allay concerns of energy shortages

* Hydroelectric reservoirs at lowest levels on record

SAO PAULO Jan 11 (Reuters) - Short-term energy prices in Brazil retreated from a five-year high, energy clearinghouse CCEE said on Friday, as expectations of rain eased fears of energy shortages.

The price at which companies will buy and sell energy outside of long-term contracts next week, which the CCEE is responsible for calculating, fell 38 percent from a week earlier after rising for three straight weeks.

Concerns about an energy crisis have mounted as a hot, dry summer has drained hydroelectric reservoirs, raising the risk of widespread energy rationing for the first time since 2001.

Nearly all of the thermoelectric plants in Brazil have been activated, as reservoirs at hydroelectric plants have dipped to some of the lowest levels on record.

Rising forecasts for rain in Brazil's southeast, south and northeast regions were responsible for lower short-term prices on the national grid next week, CCEE said in a statement.

Brazilian officials have dismissed the possibility of energy rationing this year, insisting that the country has enough thermoelectric capacity to meet its needs.

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