After explosions, Brazil power transmission companies remove GE equipment

SAO PAULO (Reuters) – After an unusual number of explosions, several Brazilian power transmission companies have started removing a piece of equipment made by General Electric Co (GE.N), a blow for GE’s Brazil unit as it battles competing suppliers from China and India.

Brazil’s grid operator ONS recommended replacing GE’s CTH-550 transformer model after registering 53 explosions, as Reuters exclusively reported in January. ONS said then that the equipment showed “a failure rate that is superior to what is expected” for such a device.

There are close to 700 pieces of that equipment in Brazil’s grid, each costing up to 100,000 reais ($26,000). Power transmission companies have already launched tenders to buy replacement transformers while they discuss the costs and a schedule for the changes with GE and regulators.

In a statement to Reuters, GE said it is investigating what caused the equipment failure in Brazil.

“GE Grid Solutions performed a series of checks in the equipment with its clients and, as of this moment, there is no evidence that the problems were caused by the design, components or production processes,” it said.

Brazil’s electrical energy regulator Aneel said that, after conducting a detailed analysis, it has determined the problem is with the manufacturer.

“The transmission companies acquired a product which, according to the reports, has presented a high rate of failure,” Aneel director Sandoval Feitosa told Reuters.

Taesa (TAEE11.SA), one of Brazil’s largest power transmission companies, controlled by regional utility Cemig (CMIG4.SA) and Colombia’s ISA (ISA.CN), said it has started replacing all GE model CTH-550 transformers in its networks.

Taesa’s CEO Raul Lycurgo Leite said the changes will be completed next year, adding that it will take time due to the buying process and coordinated grid work.

China’s State Grid Corp [STGRD.UL], which has expanded strongly in Brazil this decade, has also confirmed plans to make the changes, but did not provide further details.

Other companies such as Furnas and Copel said they have opened tenders to buy new transformers.

These companies are also negotiating with Brazil’s electricity regulator Aneel to have some fines suspended. They were fined due to interruption in the flow of power after the explosions and say they are not responsible for the outages.