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The Energy Crisis in Brazil and Uncertainty About 'Annex V' Sep 01
Standard & Poors, Sep 2001
Abstract
To anyone following the Brazilian energy crisis, the resolution of Annex V is of critical importance. The monetary impact at stake for the players--Brazilian distribution and generation companies where power rationing has been mandated--has been estimated at between BrR5 billion (US$2 billion) and BrR10 billion (US$4 billion). If implemented, Annex V would likely put extreme financial strain on the electrical system's generators and possibly create windfall profits for distributors. Per second-quarter financial reports examined thus far by Standard & Poor's, utilities have taken various stances on this issue. In part, reporting of gains (distributors) or losses (generators) reflects the conservatism of individual company management. However, the reports also reflect various managements' uncertainty over the outcome of Annex V. The Federative...
Companies mentioned in this report are: Duke Energy Corp.,Electricite de France S.A.,Brazil (Federative Republic of),The AES Corp.,Eletrobras-Centrais Eletricas Brasileiras S.A.,Espirito Santo Centrais Eletricas S.A.,Companhia de Saneamento Basico do Estado de Sao Paulo,Ampla Energia e Servicos S.A,Light Servicos de Eletricidade S.A.,EDP - Energias de Portugal S.A.,Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.,CESP-Companhia Energetica de Sao Paulo
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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