Financial Difficulties Facing Power Companies in Brazil :: Energy, electric, Utilities

Due to the size of the losings and their impact on the income of reason distribution utilities, this issue has become a matter of a lot concern to these enterprises which must estimate them properly and ramble up solutions to curb them effectively. Another pressing problem on the causation market is defrayment in arrears . Over the past decade, the capacity to grow prompt payment for essential services has been dropping sharply in Brazil, whether they atomic number 18 provided by the Government or by public utilities clubby enterprises. With rising unemployment and shrinking income, many consumers are forced to postpone payment of their electrical energy bills, particularly in view of steady tariff increases, which locomote an averagea total of 231.24% between 1995 and 2004 . (ANEEL, 2004), well over the inflation rate, as a result, it is estimated that complimentary electricity bills in Brazil reached R$ 3.15bn (US$1.3bn) in 2002. The spell of these overdue payments, as per customer group, shows that R$760mi (US$304mi) was caused by gratuitous electricity bills from medium and large clients, supplied with high and medium voltages (Group A) R$1,6bn (US$640mi) corresponding to debt make up by residential consumers, small commercial and industrial companies, much from Government facilities, and street-lighting, all supplied by the low voltage network (Group B) and R$800mi (US$320mi) owed by Governments. AGAIN? WHERE THE GOVERNMENT IS? An important point issue is the vigorous relatiosnships between electricity liberationes and unpaid bills. These two phenomena are so closely linked that a reduction in one whitethorn prompt an increase in the other. A customer caught stealing power is connected up properly to the grid and is then charged for the stolen power, in addition to a fine, payable in installments. If the costumer fails to pay thiese unpaid electricity billss and/or fails to pay the installmentscharges, the power supply is interrupted aft(prenominal) some a short time. A customer without power may well re reach to stealing, again becoming again a loss problem. This same cycle may also be triggered by unpaid electricity bills when customers have their power supply take down off because they are unable to pay their bills, they may start to steal through surreptitious connections, with similar consequences. The cycle may start with unpaid electricity bills. A customer unable to pay his/her bill has his/her power supply cut off, which can lead him/her to steal. In other words, a more frightful reaction by public utilities in relation to unpaid electricity bills may have as an unintended and undesirable consequence to turn a defaulters into a thievesf.