In 2001, energy production in São Paulo, Brazil was highly constrained as a result of both severe drought and government energy tariff policies that favored the development of hydroelectric systems over thermal plants. In order to prevent blackouts, the government imposed quotas aimed at reducing energy consumption by 10-35 percent, based on the added value of particular industries and the number of jobs affected. Private electric companies were hard hit by the reduction quotas, including the hydroelectric company AES Tiete, which had closed a US$300 million 15-year bond offering the year before. While the company scaled back costs.
