The billion-dollar time bomb Brazil needs to diffuse

The Itaipu dam is a symbol of national pride in Brazil. When it was inaugurated, in 1984, it was the largest hydroelectric power plant in the world, and its magnitude earned it a spot on the list of the seven modern wonders of the world. It is, however, as much Paraguayan as it is Brazilian. Built in a border region along the Paraná River, it is half-owned by each country. But since Brazil’s appetite for electricity is infinitely bigger than its small neighbor, it buys around 85 percent of Paraguay’s share. With the Brazilian half combined, Itaipu accounts for 15 percent of the energy consumed in Brazil. And it is about to get much more expensive.

The contract between the two countries setting the prices for electricity is up in 2023. As parts of the deal will expire — and need renegotiation — there should be major changes in how energy is dealt between Brazil and Paraguay. Among the changes...