💸 Dam drama

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Brazil faces power bill hike over Itaipu Dam deficit

Brazil’s electricity regulator, Aneel, has warned that energy prices will rise unless the government resolves a financial shortfall at the Itaipu Dam, the massive hydroelectric complex shared by Brazil and Paraguay.

Driving the news. The deficit stems from a payment structure designed to offset a planned electricity tariff increase, but officials now say the mechanism has fallen short. Aneel has given the government two weeks to present a “concrete solution” to the conundrum.

The backdrop. Since its completion, Itaipu — one of the world’s largest hydroelectric dams — has supplied about 9% of Brazil’s electricity and more than 85% of Paraguay’s. Under a 1973 treaty, both countries split the energy output equally, but Paraguay, consuming far less, is required to sell its surplus to Brazil at cost.

• For decades, Itaipu’s tariffs were capped to cover operational expenses and a towering construction debt, which had ballooned from an initial USD 3.5 billion in 1975 to an estimated USD 79 billion before it was finally paid off in 2023. 

• Many expected energy prices to drop as a result. 

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