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SAO PAULO, April 4 (Reuters) - Brazil's electric grid operator ONS cut its forecast on Friday for water levels in the country's major southeastern and mid-west reservoir system, a setback in Brazil's struggle to avoid crippling power blackouts and electricity rationing.
Hydro reservoirs, which generate two-thirds of Brazil's power, are at near-record lows following a prolonged drought. To keep the lights on and factories open, all of the country's main thermal power plants are running full throttle.
ONS said it expects reservoirs in the region to remain unchanged at a current 36.5 percent of capacity at the end of April, down from a previous projection of 40.1 percent.
The current level is less than half the average 75.36 percent April reservoir level in the region over the last 15 years. It is close to the record low of 34.53 percent in April 2001, the year that Brazil was forced to cut electricity use by up to 20 percent.
A continued lack of rain could lead to an energy shortage and rationing, a key political risk for President Dilma Rousseff as she prepares to run for a second term in October's election and a potential cause for embarrassment during the World Cup soccer tournament that starts in June.
The grid operator also cut its forecast for rains in the region to 70 percent of the historical average, down from 83 percent previously.
In January 2001, a few months before the government last mandated energy rationing, reservoir levels were at 31.41 percent. (Reporting by Anna Flavia Rochas; Writing by Asher Levine; Editing by Peter Galloway)