Logic appears to have abandoned Brazil's electric power sector. Following a severe drought that hit hydroelectric generation - which accounts for more than two thirds of Brazil's energy matrix - and forced the country to fall back on thermal energy sources, the rains returned and hydroelectric generation recovered. However, the rebound in hydroelectric supply came in the middle of an economic crisis which has seen energy consumption fall. According to basic market logic, greater supply and lower consumption should mean lower electricity prices. Nevertheless, the fall in the price of electricity has not been as resounding as it should have been for Brazil's regulated clients.
Despite experiencing a marginal decline this year so far, an unfortunate combination of factors has kept electricity prices high. The industrial sector, for example, has seen energy prices rise some 59.3% between 2013 and 2016, measured in constant June 2016 reais, according to a study by Rio de Janeiro state industrial firms association Firjam. According to the entity, the average price between July 2015 and July 2016 was 535.28 reais/MWh (around US$165 at July 2016 exchange rates), based on tariffs for the A4 medium-voltage consumer category, which receives a voltage of 2.3-44kV.
Meanwhile electricity spot prices were around 80 reais/MWh in July 2016, after having reached 800 reais/MWh at the end of 2014.
The difference between the spot market and the figures cited by Firjam are not a consequence of economic factors, but are a reflection of accumulated tariff distortions in recent years in Brazil's electric power market.
This market is now beginning to reach a semblance of order as part of a process that will see it undergo profound change, but uncertainty remains.
"The energy sector is at the center of the corruption scandals in Brazil," says Rafael Herzberg, partner at São Paulo consultancy Interact Ltd. "The sector is in complete disarray and there are no clear signs as to what will happen in the future."
This report will look at how Brazil got to this stage, and what is next for the electric power sector in the country.