* Regulator says reviewing compensation under new contracts
* Eletrobras shares up despite top shareholder's sale
* Official sees "marginal" changes to terms of renewals
By Roberta Vilas Boas and Leonardo Goy
CAMPINAS/BRASILIA, Nov 27 Brazil showed some
flexibility in its aggressive efforts to slash electric bills on
Tuesday, agreeing to review how much it will pay certain
utilities to renegotiate their concessions.
The prospect of greater compensation for prior investments
under the new contracts lifted some shares in the sector, but
officials said any changes were likely to be small and the
government was holding the line on steep cuts to power rates
President Dilma Rousseff has offered to extend leases
expiring between 2015 and 2017 if power companies agree to a
sharply lower electric rates, which are among the highest in the
world. Companies are challenging the terms, complaining of
inadequate compensation for investments they have made.
The head of power regulator Aneel, Nelson Hubner, told
reporters on Tuesday that the agency would review compensation
for the Tres Irmaos hydro plant run by Companhia Energetica de
Sao Paulo, or CESP, due to a prior calculating error.
"Wherever there are differences, we will correct them. Tres
Irmaos has a big difference. Others don't," Hubner said.
The government had offered CESP compensation of nearly 1
billion reais ($480 million) for the Tres Irmaos investment,
assuming that it entered service in 1982 when it actually began
generation in 1992, Hubner said.
Still, any changes to such indemnifications under
renegotiated contracts will be "marginal," deputy energy
minister Marcio Zimmermann told reporters in Brasilia. He added
that the government still sees no room to reduce the scale of
Preferred shares of electric utilities Centrais Eletricas
Brasileiras SA, known as Eletrobras, rose 3.4 percent
and Companhia de Transmissao de Energia Eletrica Paulista
, or CTEEP, gained 1.8 percent on Tuesday.
Zimmermann's comments tempered earlier gains of 6 percent
for Eletrobras and CTEEP, while CESP, after gaining in earlier
trading, fell 6 percent.
SHAREHOLDER CUTS ELETROBRAS STAKE
Investors welcomed the signs of flexibility from the
government, according to Guilherme Sand, a partner with Zenith
Asset Management in Porto Alegre, but the sector's gains were
limited by doubts of any major changes to the new concessions.
Preferred shares of state-controlled Eletrobras, its most
widely traded stock, have fallen nearly 70 percent so far this
year but led gains in the sector on Tuesday despite news that
its largest private shareholder was paring back its stake.
Norwegian mutual fund manager Skagen sold 278,900 preferred
shares of Eletrobras, it said in a Tuesday securities filing,
reducing its stake to 14.82 percent from 15.22 percent. The
transaction had a trade date of Nov. 26 and a settlement date of
Nov. 29, Skagen said.
Eletrobras shares gained for the third straight day on
Tuesday, after a 47-percent drop over the prior five sessions.