A dry spell that’s emptying Brazilian hydropower dams is poised to turn Cia. Energetica de Sao Paulo, the second-worst generator stock last year, into one of the industry’s biggest winners.
Cesp, as the utility is known, and other producers that can sell extra electricity in the spot market may be able to profit after prices surged to a record, said JPMorgan Chase & Co. and Banco BTG Pactual SA. Net buyers of energy in the spot market — from billionaire Eike Batista’s MPX Energia SA (MPXE3) to steelmaker Usinas Siderurgicas de Minas Gerais SA — stand to lose the most, analysts said.
Concern the government will ration electricity to avoid blackouts has wiped out $2.1 billion in the market value of Brazil’s 15 biggest electricity utilities since Jan. 1. Reservoir levels at dams accounting for most of the nation’s generating capacity fell to a 12-year low last month, prompting state-run Centrais Eletricas Brasileiras SA (ELET6), or Eletrobras, to fire up costly natural-gas plants to meet demand.
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