Rio Bonito Energia

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The Brazilian company Rio Bonito Energia Ltda was granted the authorizations to build two small hydro power plants located in the state of Santa Catarina (total capacity of 4.2 MW). The 30-year contracts were signed with the regulatory agency ANEEL starting in July 2009. The power plants were named PCH Rio Bonito and PCH Baitaca. In August 2009, PCH Rio Bonito took part in a competitive bidding process to sell electricity to the regulated wholesale market. The power plant presented the winning offer to sell electricity to distribution companies for the price of US$ 72/MWh (BRL 144/MWh). A 30-year power purchase agreement was signed guaranteeing the sale of electricity to the national grid. The power plant committed to start supplying electricity in 2012. The investment committed to the power plants were not available. Both PCH Rio Bonito and PCH Baitaca commenced commercial operations in June 2012. The company was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures. In 2010, the company applied for carbon credits to finance both PCH Rio Bonito and PCH Baitaca.