UPDATE 2-Wildfires blamed for massive blackout in northeastern Brazil
By Anna Flávia Rochas and Reese Ewing
SAO PAULO Aug 28 (Reuters) - Millions in northeastern Brazil were without power on Wednesday after wildfires crippled transmission lines in the first widespread outage to affect Latin America's largest economy since 2012, the national electricity regulator said.
Brazil has suffered several major blackouts in the past decade as its aging infrastructure, hobbled by one of Latin America's lowest levels of public investment, has struggled to keep pace with its economic growth.
Homes, hospitals and businesses across the states of Pernambuco, Bahia, Rio Grande do Norte, Piauí, Alagoas, Ceará, Paraíba, Sergipe and Maranhão were affected by the blackout, which began around 3 p.m. (1800 GMT).
Power was slowly being restored to affected areas, according to energy distribution companies in the region.
Representatives from ONS, which operates the national electricity grid, and Brazil's energy ministry said wildfires in Piauí had caused the failure of at least two transmission lines, causing a drop of 10,900 megawatts of capacity in the regional transmission grid.
A representative of Chesf, the country's biggest transmission company and a subsidiary of federal utility holding company Eletrobras, said the entire northeastern region was affected, including its own headquarters in Recife.
Brazil, which has one of the world's cleanest electric grids, relies on hydroelectric energy for about 70 percent of its power.
Reservoirs in its semi-arid northeastern region were only 37.5 percent full as of Wednesday, their lowest August since the government began compiling data on their levels in the 1930s, according to ONS.
Although Brazil's transmission grid has been built out in the past decade sufficiently to transfer electric energy from other regions to the northeast, there were at least six regional blackouts in 2012, mostly in the northeast.
Brazil's worst blackout in recent history occurred in 1999, when more than a quarter of its 195 million people were plunged into darkness after transmission lines from the 14,000 megawatt Itaipu hydroelectric plant on the border with Paraguay failed.
Brazil has been steadily expanding generation, transmission and distribution capacity through regular public auctions, in which would-be investors with the lowest bids win concessions to build and operate energy projects.
But analysts have said that one of the flaws of that auction system is that investors only have an incentive to provide minimum-quality service, which can easily fail under stress.
"Choosing the lowest price doesn't always turn out to be the cheapest option," said Cristopher Vlavianos, head of Comerc Energia, an energy trading company.
The blackout comes after mass protests spontaneously erupted in major cities in June, prompted by anger over the government's lack of investment in national infrastructure, schools, healthcare and general public services.
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