Light and Power

Small companies established in the 19th century, largely by businessmen associated with coffee, later formed the São Paulo electric power industry

Book História da Light – Primeiros 50 Anos, by Edgard de Souza, 1989 Building occupied by Companhia Água e Luz, in 1901. The utility company had its offices in the old center of the capital of São Paulo StateBook História da Light – Primeiros 50 Anos, by Edgard de Souza, 1989

Now controlled by big companies, the electric power industry in São Paulo got its start in the 19th century thanks to dozens of small companies, founded most often by businessmen associated with coffee-growing. According to Gildo Magalhães dos Santos Filho, from the Department of History at the USP School of Philosophy, Literature and Human Sciences (FFLCH-USP), the same process occurred in the United States. “There were hundreds of small local companies that later joined into groups that served more cities. Those small companies optimized their power generation function in order to add customers. Then two or three cities became five, then 10, and the associations turned into regional companies. That was exactly what happened here in Brazil,” says the researcher, who is coordinating the thematic project Eletromemória II. “That similarity was a very significant finding of the project that is now in its second phase.” Since 2007 Magalhães’s group has been mapping collections of documents about the history of electricity in the state. The project will eventually feature a database on the subject that will be available for public consultation.

Architect Débora de Almeida Nogueira, collaborative researcher from the Enterprises Laboratory at the University of Campinas (Unicamp) and a participant in Eletromemória II, reports that the first city in the state to install a street lighting system fed by a thermoelectric plant was Rio Claro, in 1885. Three years later, on December 5, 1888, residents of the city of São Paulo celebrated the lighting of street lamps on Rua Boa Vista in the old city center thanks to a coal-fired thermoelectric plant installed on Rua Araújo by utility company Água e Luz. The service covered the triangle formed by São Bento, Direita, and Quinze de Novembro streets, the city’s principal commercial zone at the time.

As Nogueira explains, thermoelectric power plants cost less initially than hydroelectric plants, since the latter required the construction of dams. But in the long run thermoelectric plants lost that advantage because of the price of imported coal. The first hydroelectric plant to begin operation in the state of São Paulo was the Monjolinho plant in São Carlos, in 1893. It was followed that same year by the Luiz de Queiroz plant in Piracicaba. By 1900, nine more hydroelectric plants had bene built—all of them in the region between Piracicaba and Ribeirão Preto. Nogueira argues that this concentration indicates that it was coffee profits that financed the investments in electricity. “The families of coffee plantation owners gave birth to the businessmen who developed new industries, bought stock in the railroads, and won the concessions to operate public utilities,” she says.

Renato Oliveira Diniz Report published in A Gazeta (7/20/1965) entitled “Cherp opens doors to the development of an immense area of the state of São Paulo” depicts construction by Companhia Hidrelétrica do Rio Pardo (Cherp): the government of São Paulo began to increase electricity generation in the 1950sRenato Oliveira Diniz

That would explain why electric lighting appeared first in the cities of western São Paulo State, home to the most profitable coffee plantations. It was not until 1900 that electricity began to reach the older coffee-growing areas in the Paraíba Valley, spreading through the other regions of the state after 1910 (168 of the 204 São Paulo municipalities had electricity in 1920). The first hydroelectric plant to serve the state capital appeared in Santana do Paranaíba in 1903. It was considered big when compared to those in the interior of the state.

Although coffee growers headed up many of those enterprises, businessmen from other fields were also interested in electric power. “In the case study that we conducted in São José do Rio Pardo, we saw that among the 13 original subscribers there was quite a variety of individuals, from modest Italian immigrants such as a successful shoe repairman, to a coffee plantation owner who later bought out the holdings of the others. The company actually started out very democratically,” Magalhães observes. “We also found that in addition to the well-known use of electricity for illumination and electric traction (trolleys and trains), from the outset electrification was directly associated with industrialization in the inland regions of the state of São Paulo, notably in the textile, paper, and foods industries.”

Even though the industry attracted a lot of investors, there were limits on the ability of those companies to expand. According to Nogueira, the entrepreneurs from the coffee business had enough capital to finance electrification but not enough to enable them to take full advantage of its potential, since they allocated only part of their surplus capital to the effort. The bulk of the profits was reinvested in the coffee plantations. Furthermore, since the farmers had neither experience nor technological knowledge of the business, they had to work with the foreign companies that ultimately established themselves in the region and eventually came to dominate the market.

Gildo Magalhães dos Santos Filho/FFLCH-USP Construction workers building a dam on the left bank of the Paranapanema River in 1926Gildo Magalhães dos Santos Filho/FFLCH-USP

Historian Alexandre Ricardi, who was Magalhães’s advisor during his doctoral studies at the FFLCH and a member of Eletromemória, examined, as part of his own master’s degree studies, the principal model for internationalization of capital in the industry and described in detail the process by which Companhia Água e Luz was organized, beginning in 1886. Ricardi explains that despite having important businessmen and politicians on its board of directors, Água e Luz could not raise enough capital to build a hydroelectric plant, which prevented the company from expanding. “They already owned the Rasgão waterfall and held a deed representing a formal commitment to purchase the Pau d’Alho rapids on the Tietê River. They needed 13,000 contos de réis for the construction project, but the board was only able to raise 2,000 contos,” he says. This is why in 1909 the assets and liabilities of Água e Luz were permanently absorbed into the accounts of Light and Power, a Canadian company that had been a controlling shareholder in the São Paulo company since 1900.

Light, as it was known, had more resources and soon attracted the support of the São Paulo elite. “Light arrived in Brazil with the intention of using the country’s hydroelectric matrix. Since it had money to invest, it won the support of politicians and other public figures for its projects, which the elite considered indications of modernization,” Ricardi says. According to Alexandre Macchione Saes, a professor at the School of Economics, Business Administration and Accounting (FEA) of the University of São Paulo (USP), Light’s ascent did not occur without resistance, as Saes demonstrated in his doctoral dissertation entitled “Conflitos do capital: Light versus CBEE [Companhia Brasileira de Energia Elétrica] na formação do capitalismo brasileiro (1898-1927)” (Capital conflicts, Light versus the CBEE – Companhia Brasileira de Energia Elétrica – in the formation of Brazilian capitalism (1898-1927)), which he defended at the Institute of Economics (Unicamp) in 2008. The multinational, however, was able to forge “a broad system of alliances and relations with local political groups” at a time when federal government influence was weak and electric power concessions were in the hands of the city councils.

In 1927, when Light had already consolidated its domination in the capital city and in the Paraíba Valley, the U.S. firm American & Foreign Power (Amforp, part of the General Electric group) arrived in Brazil and within three years bought out 22 concessionaires in western São Paulo State and elsewhere. At the time, the prospects for the two foreign companies were quite promising: electric power concessions were valid for 90 years and tariffs could be readjusted whenever the Brazilian currency depreciated.

Débora Nogueira Mortati The first São Paulo hydroelectric plants to begin operations were the Monjolinho (above) in São Carlos and the Luiz de Queiroz, in Piracicaba, both in 1893Débora Nogueira Mortati

The 1930 Revolution in Brazil brought changes to the industry. In 1934, Getúlio Vargas instituted the Waters Code, which limited the term of concessions to 30 years and changed the way rates were calculated, restricting remuneration on company capital to 10% per year. Under that scenario, both Light and Amforp drastically reduced their investments, and blackouts became more and more frequent. As Marcelo Squinca da Silva points out in the book Energia elétrica – Estatização e desenvolvimento, 1956-1967 [ Electric energy – Nationalization and development 1956-1967] (Alameda, 2011), the state then assumed the burden of expanding electricity generation but left distribution—the most profitable part of the business—to the private sector.

In 1951, the São Paulo government began building hydroelectric plants on the Paranapanema River; in 1955 it established the Companhia Hidrelétrica do Rio Pardo (Cherp), and in 1961 inaugurated the Centrais Elétricas do Urubupungá. This change was examined by historian Renato de Oliveira Diniz in a thesis defended at the FFLCH in 2011. “What justifies a change in course from state-owned company to private enterprise or vice versa is financing,” says Diniz, who headed the Energy and Sanitation Foundation served on the board of Communications and Institutional Relations at CPFL Energia (successor to Amforp), whose headquarters are in Campinas. “When nationalization came about, there was an increasing demand for electricity but investments were not forthcoming because foreign private enterprise was not interested and the Brazilian private sector lacked funds. So the state went in to build the energy infrastructure.” The hefty government investments created conditions for São Paulo to expand its industrial infrastructure. “After CESP (Companhia Energética de São Paulo) built the Jupiá and Ilha Solteira plants, São Paulo came to generate half of Brazil’s electricity. The state’s industrialization was a reflection of this,” Magalhães adds.

Orders from the public sector enabled the major Brazilian-funded contractors to strengthen their position. As Diniz explains, until the Old Republic (1889-1930) civil construction had been dominated by foreign companies. “Engineering plans were usually prepared abroad. The Brazilian offices brokered the contracts and later supervised their execution. Beginning in the 1950s, Brazilian companies started planning and carrying out the construction work. They then ceased to be regional companies and gained national dimensions.”

Gildo Magalhães dos Santos Filho/FFLCH-USP Carrara marble control panel dating from 1912, at the Santa Alice power plant in São José do Rio Pardo: still in useGildo Magalhães dos Santos Filho/FFLCH-USP

The data from the Eletromemória project is not restricted to economics. The cultural aspects of electrification are also being analyzed. “The 1907 Santa Alice plant in São José do Rio Pardo is a living museum,” Magalhães points out. “It is operating with equipment from that era, its power has not been boosted, the control panel is made of Carrara marble, and the original clock, made by Siemens, is still functioning.” The property has a high potential for attracting tourists and museum visitors. “The problem is that not many people appreciate their industrial heritage,” he complains. According to Magalhães, even the Council for the Defense of the Historical, Archaeological, Artistic and Touristic Heritage (Condephaat) is reluctant to treat power plants as having historic importance. “The Corumbataí plant in Rio Claro is the only one registered by the state as a historic landmark. The municipal departments of culture usually won’t lift a finger in the cause.”

Magalhães also calls attention to the environmental issue. “The areas surrounding the localities where those plants are situated have largely been devastated, replaced by cropland and pastures, but the hydroelectric plants sites, including natural forest vegetation, have been preserved,” he says. “The smaller power plants are very pretty. The Esmeril plant, in Patrocínio Paulista, has a 90-meter waterfall. You can take a five-minute walk from the powerhouse to find a lake formed by that waterfall and be completely surrounded by nature,” he observes, adding that now almost no one sees that beautiful landscape.

History of electricity in the State of São Paulo (1890-1960): industrial heritage, landscape and environment (nº 12/51424-2); Grant Mechanism Thematic project; Principal investigator Gildo Magalhães dos Santos Filho (USP); Investment R$682,670.72.

Scientific Articles
MAGALHÃES, G. Is small really beautiful? Operating early Brazilian power plants. History of Energy (Electric Worlds). V. 8, pp. 559-74, 2016.
MAGALHÃES, G. Electricity in Brazil – Part 1. IEEE Industry Applications Magazine (Print). V. 17/2, pp. 8-12, 2011; Part 2, V. 17/3, pp. 8-11/69, 2011.
NOGUEIRA, Débora Marques de Almeida and ARGOLLO FERRAO, André Munhoz de. Hidrelétricas no desenvolvimento urbano e territorial de São Paulo. Labor & Engenho. V. 9, pp. 19-36, 2015.

MAGALHÃES, G. Força e luz: Eletricidade e modernização na República Velha. São Paulo, Unesp/FAPESP, 2000, 129 p.
MAGALHÃES, G. História e energia – Memória, informação e sociedade. São Paulo: Alameda/FAPESP, 2012, 375 p.
DINIZ, R. 100 anos de história e energia. São Paulo: Via das Artes, 2012, 142 p.