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10 July 2006 - During energy auctions organized in Brazil on June 29th, Suez affiliate company Tractebel Energia managed to sell 493 MW of power for an amount of €6bn ($7.7bn), covering a term of 30 years starting in 2009.
The company sold respectively 220 MW and 273 MW of its existing hydropower plants Itá and Cana Brava, at an average price of €46.67/MWh, which surpassed the average auction price.
As a result of the auction, Tractebel Energia will sign contracts representing a predictable cash flow of €6bn with electricity prices which are internationally competitive.
Dirk Beeuwsaert, CEO of Suez Energy International : "Through the different auctions the new Brazilian market model - introduced three years ago - has proven to bring predictability and gradually improved the attractiveness of the Brazilian power sector for Suez. The outcome of this auction resulted in contracts secured for 30 years and are essential for the optimization and risk management of Tractebel Energia's client's portfolio. More than ever this confirms Suez Energy International's strategy which consists in strengthening its presence in the growing Brazilian market as well as its position as first private electricity producer in the country."
On September 5th, another energy auction is scheduled; Suez Energy International will offer at this occasion electricity from new projects for a 30-years term starting as from 2011.
Under the new Brazilian electricity model, the generation and distribution activities are unbundled. Distribution is a fully regulated activity and distributors are required to contract 100 per cent of their expected demand and buy power via government sponsored auctions. National demand is determined by all distributors in the country submitting projections of their own demand over the next few years to the government. An auction is then held where generators indicate the price at which they are willing to supply power to satisfy this demand. After the auctions, each generator who participated in the auction signs a separate contract with every distributor who acquired power in the auction.
The new model allows all industrial customers that consume over 3 MW and with a connection voltage over 69 KV to purchase directly from a generator rather than from the distributor. Many of these eligible customers have been leaving their distributors as a means to reduce costs. Moreover power producers have been able to sell these contracts at very attractive prices.
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