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Brazil Senate passes decree to help utilities ahead of auction

An electrical post is seen on a road in Montero Lobato, east of Sao Paulo August 7, 2015. REUTERS/Nacho Doce

BRASILIA (Reuters) - The Brazilian Senate on Tuesday approved a presidential decree that helps hydroelectric producers hit by record droughts, in a move that could raise investors' appetite for power plants up for auction on Wednesday. The approval of the decree is crucial to grant judicial guarantees for potential bidders in an auction in which the government expects to raise 17 billion reais ($4.60 billion), analysts said. President Dilma Rousseff is counting on that money to improve public finances severely compromised after years of heavy expenditures and hefty tax breaks to local businesses. The decree allows the owners of hydroelectric plants to raise electricity charges on customers if their production falls due to droughts. Power plants were allowed to increase tariffs this year after they piled up massive debts in 2013 and 2014, when the government mandated rate reductions to artificially control inflation. Brazil has recorded three straight years of record droughts in the densely populated south. A growing number of hydroelectric companies have secured injunctions exempting them from paying the additional costs for costly spot energy as their output dwindle. About two-thirds of Brazil's power grid is dependent on hydroelectricity. ($1 = 3.6978 Brazilian reais) (Reporting by Alonso Soto; Editing by Sandra Maler)