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A-1, A-3 E A-5 (Auction) – It is pronounced as A minus one, A minus three, A minus five. It refers to Electric Energy Sale Auctions and indicates the number of years prior to the beginning of delivery of that energy purchased in those Auctions. It corresponds to the one year before, the third year before and the fifth year before the Base Year “A” (refer to Base Year “A”).

Access Holder – Distribution concessionaire, distribution concession holder, generation concessionaire, generation dealer, electric energy import and export dealer, as well as free consumers who apply for access to transmission and distribution systems.

Accounting (CCEE) – Verification process of electric energy trading businesses among agents of CCEE, which determines, at defined time intervals, the condition of each agent, as creditor or debtor of CCEE.

Accounting and Settlement System – please refer to SINERCOM and SCL.

Accounting Process and Financial Settlement – SCL – Set of operations involving measurement, registration of every electric energy purchase and sale agreement, including Energy Trading Agreement in the Regulated Market – CCEARs, the amounts object of Accounting, the Financial Settlement, including the management of financial transfers among Agents of the Electric Energy Trading Board – CCEE and the several programs and methods used.

ACL – Please refer to Free Contracting Market.

Active Electric Energy – Electric energy that may be converted into another form of energy, expressed in Kilowatts-hour (kWh).

ACR - Please refer to Regulated Contracting Market.

ANEEL – Brazilian Electricity Regulatory Agency It is an Agency that regulates the Brazilian electric industry. Governmental agency working on special conditions, linked to the Ministry of Mines and Energy – MME, created by Law 9,427 of December 26, 1996. Its responsibilities are: to regulate and inspect the electric energy generation, transmission, distribution and trade, evenly handling conflicts from agents and consumers and to the benefit of the company; mediating conflicts of interest among the electric industry agents and among them and the consumers; granting, allowing and authorizing power plants and services; ensuring fair tariff; ensuring service quality; demanding investment; encouraging competition among operators and ensuring service granting to everyone.

Agent – Concessionaire or authorized distributor, concessionaire or authorized generator, authorized importer and/or exporter of electric energy, and free consumers.

Agent Category – It is the category where the agent is included in CCEE, according to its activity. The CCEE´s categories are: Generation Category (formed by classes of Public Service Generators, Independent Generators and Self-generators), Distribution Category (formed by the Distributors´ class) and Trading Category (formed by the Class of Import and Export Agents, Traders and Free Consumers).

Agent – Electric Energy Trading Board´s Agent – CCEE – Concessionaire or authorized agent of electric energy services and plants and free consumers, members of CCEE and subject to duties and rights foreseen by the Trading Convention, Rules and Procedures.

ADR American Depositary Receipts – Certificates that represent shares of those companies whose headquarters are located outside the United States. They are issued by American banks.

Ancillary Services – Services demanded due to the use of equipment or facilities of the interconnected system to ensure the electric system operation according to quality, safety and reliability standards. It is regulated by ANEEL.

ANEEL – Electric Energy National Agency – Agency that regulates the Brazilian electric industry. Governmental agency working on special conditions, linked to the Ministry of Mines and Energy – MME, created by Law 9,427 of December 26, 1996. Its responsibilities are: to regulate and inspect the electric energy generation, transmission, distribution and trade, evenly handling conflicts from agents and consumers and to the benefit of the company; mediating conflicts of interest among the electric industry agents and among them and the consumers; granting, allowing and authorizing power plants and services; ensuring fair tariff; ensuring service quality; demanding investment; encouraging competition among operators and ensuring service granting to everyone.

ANIMEC – National Association of Capital Market Investors.

Annual Program for Service Expansion – A program which contemplates annual targets to expand services to each municipality within the concession or permission area. Aiming at reaching an ever increasing covered area.

Annual Allowed Income – RAP – Annual income which the agent, holder of the transmission concession, under control of ONS, will be entitled to render transmission services to users of the basic network.

APIMEC – Association of Capital Market Analysts and Investment Professionals.

Arbitration Chamber – External entity elected by CCEE Agents for the purpose of structuring, organizing and administering an alternative Conflict resolution process, which, under the strict exercise of applicable laws, shall manage Conflicts through Arbitration, under the terms of this Convention and the CCEE´s Bylaws.

ASM – Annual Shareholders Meeting – A mandatory meeting of the company´s shareholders convened within 4 (four) months following the close of each fiscal year, where the following matters are addressed: management issues; the review, deliberation and approval of financial statements; the destination of the fiscal year´s net profit and dividend distribution; and election of Directors and Audit Committee members, whenever necessary.

Assured Energy – Please refer to Physical garantee.

Auction – A bidding process for the electric energy purchase, governed by a Call and its related documents.

Audit Council – Its function is to inspect the company´s financial condition. The audit council has a minimum of three effective members and three alternate members with no connection to the company.

Authorization Object – 1 Implementation of Thermal Power Plants, with a capacity of 5,000 kW or higher, designed for the exclusive use of the self-generator; 2. The use of hydro capacities of more than 1,000 kW and equal to or lower than 10,000 kW, designed for the exclusive use of the self-generator. They are not asked to have a concession, permit or authorization, but the Granting Power has to be informed for registration and statistics purpose about the hydro power use equal to or lower than 1,000 kW and the implementation of a Thermal Power Plant of a capacity higher or lower than 5,000 kW.

Average Megawatt (MW average) – Usual measurement unit regarding the energy converted into Megawatt-hour (MWh) divided by the respective number of hours of that period.

Backup Energy – Electric energy intended to increase safety in supplying electric energy to the National Interconnected System – SIN.

Backup Energy Fee – EER – It is a fee composed of those costs resulting from the contracting of backup energy, including administrative, financial and tax costs to be prorated among final users of SIN electric energy.

Base Year “A” – Is the year foreseen for the beginning of the supply of that electric energy purchased by distribution agents on auctions dealt by Decree nº 5,163 of July 30, 2004.

Basic Network – Transmission facilities belonging to the Interconnected Electric System, identified in accordance with specific ANEEL resolutions.

Basic Network Losses – It corresponds to electric losses in the transmission systems, verified by the Electric Energy Trading Board – CCEE.

Benchmark – A term used to establish an index that can serve as a parameter of comparison between products, services and rates.

Benefits – These are the dividends, interest on own capital, bond issues and subscription rights that a company distributes to its shareholders.

Bilateral Contract – Legal instrument that formalizes the purchase and sale of electric energy among CCEE´s Agents, for the purpose of establishing prices, deadlines and supply amounts at specific times.

Binomial Tariff – Set of supply tariffs, consisting of prices applied to the consumption of active electric energy and to invoiceable demand.

Biomass Power Plant – Power plant that produces electric energy through the burning of biomass (vegetal and animal residues).

Black Start – The capacity of a generator unit or plant to go from total shut-down to online status independently of an external source fueling its ancillary services to initiate operation of its generator units.

Blue Tariff – Structured Model to use different tariffs of electric energy consumption according to the time of the day use and season of the year, as well as different tariff of capacity demand according to the time of the day use.

BM&FBovespa S.A. – Bolsa de Valores Mercadorias e Futuros – São Paulo Stock Exchange and Commodities Exchange.

BNDES – Brazilian Development Bank – A federal public bank whose objective is to finance endeavors that contribute to Brazil´s development.

Board of Directors – Among its main duties are the definition of strategy, election and removal of executives, approval of the selection or dismissal of other executives as proposed by the main executive (CEO), accompanying management and monitoring risks.

Bonds Issue (or bonds share) – Shares distributed to shareholders at no cost as a result of a capital increase arising from the incorporation of reserves or profits.

Book Value of Share – Net book value verified in the balance sheet divided by the number of existing shares.

CAG – Generation Automatic Control – A systemic process that enables the maintenance of the electric frequency and/or the exchange among areas of the electric system, by using controls that act on the power plants or generating units. This term is also used to refer to the set of equipment and/or device responsible for such an action.

Capacity Factor – It is the ratio between the active electric energy and the square root of the sum of the squares of the active and reactive electric energies, consumed during a specific period.

Capital Increase – Incorporation of new resources or reserves into a company´s capital.

Capital Market – The network consisting of stock exchanges and financial institutions that trade securities issued by companies. Their purpose is to redirect funds to finance commerce, industry and the government. They play a crucial role in the country´s growth.

Capitalization – Increase in a company´s assets through the issue of shares.

Captive Consumer – A consumer connected to the distribution network of a given energy supplier who must buy energy from that supplier.

Captive Market – Volume of energy billed to serve captive consumers and for the supply of other concessionaires or official distributors of electric energy, being not included, the volume relating to electric loss of distribution systems.

CAR – Risk Aversion Curve – A mechanism that establishes the minimum level of water storage in hydroelectric dams which is necessary to safely generate energy to the interconnected system. CAR was created in January 2002 by Resolution nº 109 which established criteria and guidelines for the energy operation and thermal generation policy from ONS, as well as to form the electric energy price in the market.

CCC – Fossil Fuel Consumption Account – It is an account which aims at portioning among every company and user, the costs and advantages arising from the consumption of fossil fuels, in order to meet the needs of the interconnected or isolated systems or imposed by the national interest.

CCD – Connection to the Distribution System Agreement – It is an agreement signed between the user of the distribution network or of Other Transmission Units (DIT´s), and the concessionaire owner of the distribution units, where the responsibilities for the implementation, operation and maintenance of connection units and their respective costs are established, as well as technical and commercial conditions for the connection of such users to the distribution network.

CCE – Energy Purchase Agreement – It is an agreement with regulated tariff, which establishes the terms and general conditions that will regulate the electric energy trading between the present generator and distributor of a market of less than 500 GWh/year to supply its market.

CCEAR – Energy Trading Agreement in the Regulated Market – An agreement signed between each generator and every distributor participating in trading auctions of electric energy generated by existing facilities or by new future facilities.

CCEE – Electric Energy Trading Board – A non-profit, private corporation that acts under the authorization of the Granting Power and regulations and surveillance of ANEEL, for the purpose of enabling the purchase and sale of electric energy among the CCEE´s Agents, in the National Interconnected System – SIN, whose creation was authorized by Article 4 of Law No. 10,848 dated March 15, 2004; and Decree No. 5,177 dated August 12, 2004.

CCT – Transmission System Connection Agreement – It is an agreement signed between the user of the transmission network and the concessionaire who owns the transmission facility. It establishes the responsibilities for the implementation, operation and maintenance of connection facilities and their respective costs, as well as the commercial conditions for the connection of such user to transmission networks.

CCVEE or Energy Purchase and Sale Agreement – Also named Bilateral Agreement. It is an instrument that formalizes the electric energy trading (volumes, prices, conditions etc.) arising from the free negotiation among generators, traders, free consumers, importers, all in the Free Contracting Market.

CDE – Energy Development Account – This is used to promote competitiveness of the electric energy produced by plants that use alternative sources: wind, small hydroelectric plants, biomass, Brazilian mineral coal, etc. Part of the resources arising from the account is also redirected to broaden up the access to the electric energy in Brazil. The CDE cost is apportioned for all consumers served by the Interconnected System. Isolated System consumers are exempt from this cost.

Closing Quote – Closing price of a share recorded at the end of a Stock Exchange´s trading day.

CNPE National Energy Policy Council – Is a committee created in August 1997 that advises the President of Brazil on the development of national energy policy. The CNPE was created to optimize the use of Brazil’s energy resources and to guarantee national energy supply.

CMO – Operating Margin Cost – Cost per unit of energy generated to reach an increase in the system load.

Commercializing Company – Company authorized by ANEEL to act as an electricity commercializing agent.

Company or CESP – Companhia Energética de São Paulo.

Concessions – Concessions granted or extended according to the terms of CESP.

Concession Agreement – Concession contract number 003/2004/ANEEL-CESP, agreement between the Company, the Federal Government, through ANEEL and the State Government, as an intermediary.

Concession Contract – Legal document signed between the Granting Power and the concessionaire formalizing the concession, which must have the essential clauses relating to the objective, area and period, as well as the main conditions for the provision of the public service.

Concessionaire – Holder of the federal concession to render energy generation, transmission or distribution services.

Connection Tariffs – Tariffs referring to connection contracts between Group A consumers and public service generation concessionaires.

Consumed Electric Energy – Total amount of electric energy used by electrical equipment, or home appliances, of the consuming unit, measured in Kilowatt-hour (kWh).

Consumer – An individual or legal person, firm or lawful entity, legally represented, which asks the concessionary the supply of electric energy and takes the responsibility for the payment of invoices and other obligations established by ANEEL´s rules and regulations. It is bound to supply agreements of use, connection or representation, according to the case and terms of Ruling Resolution nº 414, dated September 9, 2010.

Consuming unit – A set of equipment or electric device characterized by the receipt of electric energy at only one spot. It is measured as an individual consumer.

Contracted demand – Active power capacity to be continuously and compulsorily available by the concessionaire, at the delivery spot, according to value and effectiveness period set forth in contract and which shall be completely paid off, whether used or not during the billing period. It is expressed in kilowatts (kW).

Contracting of Electric Energy by Free Consumers – Terms for the option of supply and access, mediation and billing of energy supply contracts for free consumers.

CONUER – Backup Energy Use Agreement – It is an agreement which establishes the relation between the Electric Energy Trading Body – CCEE and the Backup Energy User (distributors, free consumers, special consumers and self-generators).

Conventional Tariff Structure – It is a structure characterized by the use of electric energy consumption tariffs and/or power demand independently of the time of use during the day and periods of the year.

Correlated Company – A company in the sector that has contractual sale and purchase relations with the declaring company, including on the Wholesale Electric Energy Market (MAE) and the National System Operator (ONS).

Cost of Restricted Operation – Cost related to the compensation given for operation restrictions placed on generating units whose operation differs from the unlimited dispatch defined in the optimized operation plan of the interconnected system´s resources.

CPSA – Ancillary Service Rendering Agreement – It is an agreement signed by ONS and the generation agent on which terms and conditions for the rendering of services requested are established by the use of equipment and facilities of the interconnected system, to ensure the electric system operation according to quality standards, safety and reliability necessary, and is regulated by ANEEL.

CPST – Transmission Services Rendering Agreement – It is an agreement signed by ONS and a transmission concessionaire, holder of transmission facilities that integrate the basic network, where the terms and conditions for the energy transmission services rendering are established for the basic network users.

CUSD – Distribution System Use Agreement – It is an agreement that establishes the terms and conditions for the use of the distribution system.

CUST – Transmission System Use Agreement – It is an agreement signed by the permission holder and the National Electric System Operator – ONS, establishing technical conditions and obligations relating to the use of transmission facilities that integrate the Basic Network, including the rendering of transmission services, under ONS supervision, as well as the coordination services and the operation control of the National Interconnected System – SIN, by ONS. An agreement signed by users and ONS establishing the terms and conditions for the connection of users to the transmission system (Basic Network). It also defines the rights and obligations of each part.

CVA – Variation Compensation Account of Tranche A, which is composed of costs considered as non-administrative.

CVM – Brazilian Securities and Exchange Commission.

Debentures – Certificates that represent a company´s funds from third-parties, documented by an indenture that sets forth the terms and conditions of the debt (remuneration, term, form of amortization, guarantees, whether convertible and/or subject to swaps, etc.).

Delivery spot – Connection interface of the electric system of the distributor with the electric facility of the consumer. It is the delivery spot under the responsibility of the distributor.

Demand – Average electric power, active or reactive, demanded of a system by the portion of installed capacity in operation in the consuming unit during a specific period of time.

Demanded Distribution Income – Income to be recovered by the use of TUSD (Tariff for the use of electric energy distribution systems) to the reference market of energy and demand.

Difference Settlement Price – Spot price on short term energy market.

Disclosure – Release of comprehensive information on the company´s activities meant to facilitate investors´ decisions and protect investors.

Dispatch Reserve – It is the availability of the generating units with the purpose of recomposing the primary and secondary capacity reserves of the system, in case of unavailability or generation declaration, if the limit of the active capacity reserve of the system is reached.

Distributed Generation – Modality of acquisition of electric energy possibly contracted by the Supplied Unit according to art. 14 of Decree nº 5,163 of 2004.

Distribution Agent – Distributor – Holder of the concession or permission to distribute electric energy to the final consumer or Supplied Unit, exclusively in a regulated way. It sells to captive consumers within its distribution area.

Distribution Line – An electric line that is part of a distribution system (lower than 230 kV).

Distribution Network – Set of electric energy distribution facilities with voltage lower than 230 KV, or facilities with equal or higher voltages, when specifically defined by ANEEL.

Distributors – Providers authorized by law to distribute electricity.

DIT – Other Transmission Facilities – They are all the facilities of a transmission concessionaire which is not a member of the basic network. They are dedicated to serve one or more users, with the purpose of interconnecting their facilities to the basic network, whether directly using their transmission facilities or not.

Dividend – Monetary distribution to shareholders in proportion to the number of shares they hold, with funds from the company´s profit for a specified period. Brazilian corporate law stipulates distribution of dividends of at least 25% of the net profit reported in each fiscal year.

Dry Season – Lasts for seven consecutive months, involves the supply covered by readings made from May to November.

Energy – It may be defined as the ability to do a work. It is measured as the capacity to do a work or convert such a capacity into movement.

EBIT – Earnings Before Interest and Tax – Indicator of the company’s profitability, calculated as revenue less expenses, excluding tax and interest. Also referred to as operating gains, operating profit and operating income; in other words, EBIT is all income before the payment of interest and tax on earnings. The indicator facilitates comparisons with other companies.

EBITDA – EBITDA is defined by CESP as the net income (or loss) plus the net financial results, pension fund results, depreciation and amortization, non-operating results, goodwill amortization, income tax and social contribution.

Electric capacity- It is the amount of energy each electric equipment or device demands from the electric system. It is measured in kilowatt (kW).

Electric Energy – It may be defined as the electric power generation or use by a device for a time span expressed in Watt-hour (Wh) and its multiples.

Electric Energy Balance – A collection of information about the quantity of electric energy, in MWh, detailed by the availability and electric energy market requirements of the concessionaire.

Electric Energy Independent Generator – PIE – A Legal Entity or a Consortium of Companies, holding a concession, permission or authorization to generate electric energy to be sold in whole or partially, at their own risk.

Electric Energy Prices – Prices referring to energy contracts signed among CCEE´s agents.

Electric Energy Sold – Set of information of physical and monetary values of electric energy sales, discriminated by purchasing company.

Electric Energy Balance – A collection of information about the quantity of electric energy, in MWh, detailed by the availability and electric energy market requirements of the concessionaire.

Electric Energy Self-Producer – It is an individual, a legal entity or companies assembled in a consortium which is granted the concession or authorization to generate electric energy for their own use. They may eventually trade the exceeding amount of energy, as far as authorized by ANEEL.

Electric Industry General Agreement – Agreement signed by generators and distributors with the purpose of defining rules to compensate financial losses caused by the energy rationing occurred between 2001/2002. The agreement, signed in December 2001, foresaw the financing of up to R$ 7.5 billion from the National Bank of Economic and Social Development (BNDES) to the companies and an extra tariff adjustment of 2.9% for rural and residential consumers, except for low income consumers, and 7.9% for other consumers as loss compensations.

Electric Line – A set of one or more conductors, their insulators and accessories, and, when relevant, their mechanical protection, used to transport electric energy or transmit electrical signals.

Electric Sector General Agreement – Agreement signed between generators and distributors defining the rules for compensation for the financial losses due to energy rationing in 2001/2002. The agreement, signed in December 2001, envisaged a loan provided by the Brazilian Development Bank (BNDES) to companies and the extraordinary tariff adjustment for consumers, except low‐income consumers, to recoup losses.

Electric System – Set of Electric Energy Generation, Transmission and Distribution facilities.

Energy – It can be defined as the ability to do a work, it can be measured as the potential to doa work or the conversion of such a potential into movement.

Energy Auction – A bidding process for the electric energy purchase, governed by the Call and its related documents, where the Distributors may purchase energy to supply their markets.

Energy Cogeneration – Combined useful heat and mechanical energy production process, usually totally or partially converted into electric energy from chemical energy generally made available by one or more fuels. (See also: Qualification of energy plant co-generators).

Energy from Existing Projects – Energy produced by projects that were already operating by December 31, 1999, also called Old Energy.

Energy from New Projects – Electric energy from new plants, new projects in the bidding process and projects granted or authorized until March 16, 2004, which began commercial operations as of January 1, 2000 and whose energy was not contracted until March 16, 2004. It is also called New Energy.

Energy Provision – Sale of energy to large consumers.

Energy Supply – Sale of energy to distributors and sellers who resell it to their clients.

Energy Relocation Mechanism – MRE – The mechanism for sharing the hydrological risks of the electro-energetic optimization of the National Interconnected System (SIN), related to the centralized dispatch of power plants.

Energy Research Company (EPE) – A federal, public company responding to the Ministry of Mines and Energy and established by Decree No. 5.184 dated August 16, 2004, based on the provisions of Law No. 10,847 dated March 15, 2004.

EPE – Energy Planning Company.

ESM – Extraordinary Shareholders´ Meeting A special meeting of the company´s shareholders where specific matters are discussed and which were not previously discussed in the Annual Shareholders´ Meeting.

ESS – System Services Fees.

Excess Demand – Portion of demand, measured in kilowatts (kW), which exceeds the contracted demand.

Existing Facilities Energy – Electric energy generated by facilities that were already in operation as of December 31, 1999. It is also called “Old Energy”.

Extraordinary Tariff Recomposition – RTE – Temporary tariff increase, authorized by art. 4 of Interim Measure nº 14, of December 21, 2001, converted into Law nº 10,438 of 2002, to distributors and generators in regions that were subject to water rationing in 2001/2002. The purpose of the readjustment was to return losses that those energy concessionaires had with the reduction in consumption imposed by the government.

Failure rate – TF – The incidence of interruptions in service hours affecting equipment or generating units of a Power Generation Company, during the period under study, relating to a standard year of 8,760 hours.

FEC – Equivalent Frequency of Electric Energy Outages per Consuming Unit – Number of outages occurred on average, within a certain period of time under observation in each consuming unit of the set under study.

FIC – Frequency of Individual Electric Energy Outages per Consuming Unit – Number of outages occurred within a certain period of time under observation in each consuming unit.

FIDC – Credit Rights Investment fund, as established by the rules of the Brazilian Securities and Exchange Commission (CVM). Receivables securitization.

FIESP – São Paulo State Association of Industries.

Financial Compensation (CF) for Hydro Sources Utilization – Energy generators pay as a Financial Compensation to those municipalities affected by the HEP´s dams. Calculation is based on the formula: CF = 6.75% x energy generated in the month x Updated Reference Tariff (TAR). The TAR is yearly updated by an ANEEL´s Homologation Resolution. Municipalities affected by the dams receive 45% of that amount, and the State receives 45%. Federal government receives 10%. Small Hydro Generators (PCHs) don´t have to pay for the Financial Compensation.

Financial Guarantees – Extrajudicial means used to ensure the fulfillment of a payment obligation.

Financial Market – The market, which includes the money markets and the capital markets, for the exchange of financial assets. In the financial market, short-term, mid-term and long-term instruments are traded.

Financial Settlement – Process of paying or receiving those values verified as debts or credits, respectively, resulting from the accounting prepared by the Electric Energy Trading Board – CCEE.

Financial Surplus – The positive difference between the total paid and the total received on the MAE, which is due to energy transactions between submarkets and price differences.

FIPE – Institute of Economic Research of University of São Paulo (USP).

Free Consumer – Consumer with specific conditions for the purchase and sale of electric energy, made directly with the energy provider of their choice, and who have the freedom to negotiate prices, considering the load, tension, and type of supplier.

Free Contracting Market – ACL Segment of the market where electric energy buying and selling takes place through freely negotiated, bilateral contracts, in compliance with specific commercialization rules and procedures. Distributing Agents (distributors) cannot buy at this Market.

Free Energy – Electric energy generated, according to the Electric Industry General Agreement of 2011, but not subject to initial contracts or equivalent contracts, including financial surplus allocated to the respective companies related to the transmission of this energy among different submarkets.

Free Float – The percentage of the company´s total shares free on the market.

Free Market – The market that allows sales to certain Consumers with contracted demand equal to or higher than 3.0 MW, connected at a supply voltage equal to or higher than 69kW, which may select the concessionaries from which they buy energy, negotiating the conditions, terms and tariffs and Energy Dealers.

Fuel Consumption Bill (CCC) – It aims at apportioning among every company and users, the burdens and advantages arising from the fossil fuel consumption in order to meet the needs of the interconnected and isolated systems, or due to federal government ruling.

GCOI – Interconnected Operation Coordination Group. A collegiate body of Power Systems, established by Law No. 5,899 dated July 5, 1973.

Generated Energy – Sum of the electric energy generation referring to each of the generating units from the electricity generating plant.

Generating Unit – A set composed of an electrical generator linked to driving machines and their respective equipment, designed to convert a kind of energy into electric energy. In CESP, this set is designed to convert hydro energy into electric energy.

Generation Agent – Generator – Agent holding a concession, permit, or authorization for the generation of electric energy according to the applicable law, whether due to the use of the public property or to the rendering of energy generation public services.

Generators – Providers authorized to generate electric energy, whether for the public welfare or for providing public energy generation services.

Gigawatt (GW) – Unit of energy equal to one billion watts.

Gigawatt-hour or GWh – Unit equivalent to one gigawatt of electric energy provided for an hour or one billion Watt-hours.

Global Reversion Reserve – RGR – It is a tax monthly paid (quota) by electric energy companies, with the purpose of providing funds for reversion and/or encompassing electric energy public services. It has also a legal destination to finance the expansion and improvement of services, as well as finance alternative sources of electric energy for inventory and feasibility surveys of potentially new hydro facilities, and to develop and implement programs and projects designed to fight against waste and the efficient use of electric energy. The annual value of the tax to be charged is equivalent to 2.5% the Permanent Assets value linked to the rendering of electricity services, limited to 3.0% of its annual revenue.

Granting Power – The Federal Union or the agency designated by it.

Granting of Concession Upon Payment – This is the act of granting the concession, in accordance with Law 9,074/95, for the exploitation of electric energy services, as well as the extension of the periods during which the Federal Union shall be paid the value stipulated for the right to exploit these hydraulic energy services and power.

Gravity Center – It is a virtual point in the electric system, defined by the Trading Rules of CCEE, where the symbolic delivery of the energy contracted will be made and where the total losses of the basic network are equally divided among generators and loads. The accounting of differences verified at CCEE are referenced to this point and settled for each one of the Submarkets.

Green Tariff – Structured mode for the application of differentiated tariffs for the consumption of electric power according to time of use during the day and the period of the year, as well as a sole tariff for power demand.

Group “A” – Grouping composed of consuming units with an energy supply equal to or higher than 2.3 kV voltage or yet, served by a voltage lower than 2.3 kV from an underground system of distribution and billed as belonging to such a Group according to terms defined in Regulatory Resolution nº 414 of September 9, 2010, characterized by the binomial tariff structure (consumption and demand) and that shows subdivisions.

Group “B” – Grouping composed of consuming units with an energy supply lower than 2.3 kV voltage or yet, served by a voltage higher than 2.3 kV and billed as belonging to such a Group according to terms defined in Regulatory Resolution nº 414 of September 9, 2010, characterized by the monomial tariff structure and that shows subdivisions.

GSF (Generation Scaling Factor, MRE Factor)  is na Adjustment Factor on Assured Generated Energy that consider a reduction of assured energy of the MRE units when the total energy generated is less than the total assured energy. GSF = Hydraulic Generation in SIN / Total Generation in SIN. Then a GSF <100% indicates that the MRE plants generated less than their physical security.

Guaranteed Power Output – It is the amount of energy an agent is authorized to trade in accordance with agreements, as an electric energy offer, measured in average MW (MW average). It is defined by ANEEL as the average amount of electric energy that a power plant is able to generate and sustainable trade at a rate of 365 days with a 5% risk factor (it substitutes the assured energy concept).

Hedge – Strategy used by investors to protect themselves from price changes that do not favor their objectives, involving financial market transactions such as futures and options (currency, interest, indices, commodities).

HPP – Hydroelectric Power Plant.

Hertz (Hz) – A unit of frequency equal to one cycle per second. The Brazilian AC current works at 60Hz.

High Voltage – Voltage of 2.3 kV or more.

Hour-Seasonal Tariff Structure – It is a structure characterized by the use of different tariffs of electric energy consumption and the power demand according to the time of use during the day and period of the year.

Hydroelectric Inventory of Hydrographic Basins – It is the stage where the engineering surveys define the possible electric capacity of a hydrographic basin, through surveys of the waterfall rate and previous definition of the best use of the hydro sources.

Hydroelectric Power Plant – HEP – A generating unit that transforms the potential energy of the water stored in a reservoir into electricity.

IBGC – Brazilian Institute of Corporate Governance. The institute´s main objective is to contribute to the optimization of corporate governance practices in Brazilian companies, in order to ensure their successful perpetuation. Good corporate governance practices ensure equity, transparency, accountability and responsibility for results.

IBOVESPA – Indicator of the average return of a theoretical portfolio comprised of the most representatively traded shares on the São Paulo Stock Exchange. The Ibovespa index is revised every four months, and serves as an indicator of the market behavior. Its composition simulates, as much of as possible, the real configuration of operations carried out in BOVESPA spot market.

IBRI – Brazilian Institute of Investor Relations. Founded in 1997, IBRI is an association of professionals directly or indirectly involved in Investor Relations activities, whose interests include finance, marketing, and communication between companies and shareholders, as well as market analysts, institutional investors, other market participants, and members of Brazilian and international financial communities.

IBX – Brazil Index – Price index that measures the return of a theoretical portfolio made up of 100 shares selected from BOVESPA´s most traded stocks.

IEX – Electric Energy Index – Sector index that measures the profitability of shares of electric energy generation and distribution companies, as well as electric energy holding companies.

IFRS – International Financial Reporting Standards.

Independent Electric Power Producer – A legal entity or companies in a consortium which were granted concessions or the authorization to produce electric energy, of which all or part of the energy produced at its own expense and risk is meant for sale.

Inspection (by ANEEL) – Follow-up, monitoring, control and evaluation activities, so as to ensure the effective or potential use of the public service.

Installed Capacity – Maximum amount of electricity that can be supplied by one generating unit, by a hydroelectric power plant or generating park, particularly on the basis of total continuous load, according to the specific terms and conditions established by the producer.

Installed Power of a Generating Plant – Installed Capacity of a Generating Unit.

Interconnected Systems Installed Capacity – The sum of the rated outputs of the central generators and energy importing facilities in each of the interconnected systems in the North/Northeast and South/Southeast/Midwest regions. For the latter, the Itaipu Binacional rated output will not be considered.

Interest on Equity – JCP – It is the payment on profit of the Company to shareholders, created by Law nº 9,249/95 which allows the Company to include, in value due as dividends to shareholders, the portion regarding interest paid or credited as own capital remuneration, for tax purposes. Such interests are deducted for the purpose of real profit calculation.

Intermittent Energy Source – Renewable energy source that, for conversion into electric energy by a generation system, cannot be stored in its original form.

Internal Losses (power plants) – It refers to the internal consumption plus the loss from transformers, before the energy is delivered to the interconnected system.

Installed Capacity – Maximum amount of electricity that can be supplied by one generating unit, by a hydroelectric power plant or generating park, particularly on the basis of total continuous load, according to the specific terms and conditions established by the producer.

Initial Public Offering (IPO) – In U.S. capital markets, the first public issue of shares by a company.

Invoiceable Demand – Amount of active power demand, expressed in kilowatts (kW), based on the criteria established and considered for billing, with the respective tariff applied.

JCP – Interest on Equity. A way of distributing results to shareholders, created by Law 9,249/95, which allows a company to include, as part of the value of dividends due to shareholders, the interest paid or credited, referred to as the return on own capital. The interest provides a fiscal benefit, as it is deducted when a company´s taxable profit is calculated.

Kilovolt or kV – Unit equivalent to one thousand Volts.

Kilowatt or kW – Unit equivalent to one thousand Watts.

Kilowatt-hour or kWh – Unit equivalent to one kilowatt of electric energy provided in an hour or one thousand Watt-hours.

Load – Total electric energy capacity demand from an agent, which can contemplate, depending on the kind of agent, the following portions: captive market; electric system losses; facilities internal consumption; demands from free consumers; consumption units of self-generators and independent generators connected to the network; and services to other agents.

Load Factor – Ratio between average demand and maximum demand of the consuming unit, occurred during the same specified time span.

Low Voltage – Voltage below 2.3 kV.

MAE – Wholesale Electricity Market. A non-profit, private entity responsible for accounting and settling short-term electric energy purchase and sale transactions under the authorization, regulation and control of ANEEL. Its creation was authorized by Provisional Measure No. 29, dated February 7, 2002 and converted into Law No. 10,433 on April 24, 2002.

Market Rules – Set of commercial rules and their algebraic formulations defined by ANEEL that must be followed by the agents participating in the market.

Market Share – The percentage of the total sales of a given type of product or service that are attributable to a given company.

Market Value of Share – The closing price of a share traded on the stock exchange, which may be higher than or lower than its book value.

MCSD – Excess and Deficit Compensation Mechanism – Reallocation process among Distribution Agents participating of the Electric Energy Trading Body – CCEE, of excess and deficits of those volumes of energy contracted in the Regulated Contracting Market. By using this process the distributors may transfer to other distributors up to 3% per year their volumes contracted from the generators.

Measurement – A process to register, collect and validate data from electric energy generation, consumption and active or reactive capacity.

Megavolt Ampere or MVA – Unit equivalent to one million volt-amperes.

Megawatt (MW) – Measurement unit of electric or mechanical power, thermal flow and the energetic flow of radiation. It is equivalent to one million (1,000,000) watts.

MWAverage MW average – Measurement unit related to energy in MegaWatt-hour (MWh) divided by number of hours of the period.

Megawatt-hour or MWh – Unit equivalent to one megawatt of electric energy provided in an hour or one million Watt-hours.

Meter – An instrument that measures electric energy and active and reactive capacity.

Metered Demand – Greater active power demand, expressed in kilowatts (kW), ascertained by measurement at intervals of 15 (fifteen) minutes during the billing period.

MME – Ministry of Mines and Energy – A department of the federal government. It was created in 1960 by Law nº 3,782, of July 22, 1960. In 1990, Law nº 8,028 extinguished the MME and transferred its attributions to the Ministry of Infrastructure. The Ministry of Mines and Energy was recreated in 1992, by Law nº 8,422. In 2003, the Law nº 10,683/2003 defined as MME´s competencies the areas of geology, mineral and energy resources; hydro energy utilization; mining and metallurgy; and oil, fuel and electric energy, including nuclear power. The structure of the Ministry was regulated by Decree nº 5,267, of December 9, 2004, which created the Secretariats of Energy Planning and Development; of Electric Energy; of Fossil Fuel, Natural Gas and Renewable Fuels; and Geology, Mining and Mineral Processing. MME also has companies linked to it as the Energy Research Company (EPE), Eletrobrás and Petrobrás, besides other utilities such as the Electric Energy National Agency – ANEEL.

MRE – Energy Relocation Mechanism – It is a mechanism to share hydro risks associated with the electro-energetic optimization of the Interconnected National System – SIN, concerning the dispatch which is centralized of the electric energy generation units. It means that probable generation outages of a power plant, subject to ONS, it can be generated by other power plant integrating the system, aiming at the optimization of the system. Such compensations are remunerated by TEO – Optimization Energy Tariff. This mechanism was created to ensure the full optimization of power plants, resulting in the transfer of energy between power generators.

National Installed Capacity – The sum of the rated outputs of the interconnected systems, plus the rated outputs of the isolated systems.

New Energy – Please refer to New Facilities Energy..

New Facilities Energy – Electric energy from new plants, which do not yet have concession or authorization, and also from projects authorized as of March 16, 2004, which began operation as from January 1, 2000 and whose energy was still not contracted as of March 16, 2004.

New Value – Average value of the energy price of supply contractors in force each year resulting from public electric energy auctions.

Nominal Electric Capacity – The capacity determined by the manufacturer informed in every equipment plate.

Nominal Active Electric Power – The nominal active electric power of a generating plant (in kW) is defined by the product of apparent nominal electric power (in kVA) by the nominal power factor of the electrical generator, taking into account the continuous operating system and the nominal operational conditions.

Normal Maximum Water Level Upstream – As defined by energy studies, it is the maximum water level in the reservoir necessary to normally operate the power plant, corresponding to the upper limit of the useful volume.

Normal Minimum Water Level Upstream – As defined by energy studies, it is the minimum water level in the reservoir necessary to normally operate the power plant, corresponding to the lower limit of the useful volume.

Normal Water Level Downstream – Water level downstream the power house for a flow corresponding to the sum of the full-gate discharges of all turbines, without considering the influence of the spilled flow.

Object of Authorization – 1. The installation of Thermal Power Plants with capacity greater than 5,000 kW for the exclusive use of non-utility producers. 2. Hydropower projects with capacity greater than 1,000 kW and equal to or less than 10,000 kW for the exclusive use of non-utility producers. Hydropower projects with capacity equal to or lower than 1,000 kW and the installation of Thermal Power Plants with capacity equal to or lower than 5,000 kW are discharged from obtaining concessions, licenses or authorizations, needing only to inform the Granting Power for recording and statistical purposes.

Off-Peak Hour – A period composed of a set of daily consecutive hours supplementary to those defined as peak hours.

ONS – National Electric System Operator – It is an agent, created by Law nº 9,648 of 1988 and wording of Law nº 10,848 of 2004 responsible for the coordination and control of the generation, operation and transmission of electric energy of the National Interconnected System – SIN.

Opening Quote – Initial price of a share recorded at the beginning of a Stock Exchange´s trading day.

Operation Marginal Cost – Cost per unit of energy produced to meet a voltage increase in the system.

Operation Procedures Guide of the National Electric System Operator – ONS – Revision I – This guide is an integral part of the Network Procedures and refers to operating procedures. It covers the System Operation macro-function, and covers the Pre-Operation, Real-Time Operation and Post-Operation functions. It also defines concepts, and establishes the necessary procedures and methods for fulfillment of ONS duties.

Optimization Energy Tariff – TEO – It is a Tariff defined by ANEEL, used for the payment of transfer of energy among those plants participating in the Energy Realocation Mechanism – MRE, within the scope of CCEE. TEO, which is annually set, aims at covering only incremental costs regarding the generations of electric energy traded in MRE, that is, costs incurred during the production of that electric energy above the physical guarantee of the hydroelectric power plants including the financial compensation for the use of hydro sources.

Option Exercise Value – Price of an option traded in a stock exchange specified in the contract.

PAC – Annual Accounting – Financial statements of public electric energy service concessionaires and permission holders.

Option Exercise Value – Price of an option traded in a stock exchange specified in the contract.

PAC – Annual Accounting. Financial statements of public electric energy service concessionaires and permission holders.

Participation of Generating Agent in National Installed Capacity – This is the percentage of the agent´s installed capacity in relation to national installed capacity.

Participation of Generating Agent in National Installed Capacity of the Interconnected System – This is the percentage of the agent´s installed capacity in relation to the installed capacity of the respective interconnected system.

PCH – Small Hydro Power Plants.

Peak Hour – A period defined by the distribution concessionaire that is composed of 3 (three) consecutive hours per day, where the peak consumption occur, considering the characteristics of its electric system.

Periodic Tariff Review – Usual review, foreseen in concession contracts of distributors and transmitters, to be held taking into consideration the alterations in the structure of costs and the concessionaire market, the tariff levels by observing similar companies, whether nationally or internationally, and incentives to efficiency and low tariff.

Permanent System – Interval of time for reading voltage, once no electrical disturbances capable of invalidating the reading occur, defined as a 10 (ten) minute interval.

Physical garantee – The amount of energy that an agent is authorized to trade under contracts, as energy supply, measured in average megawatts (average MW). It is established by ANEEL as the average amount of energy that a plant can generate and trade, on a sustainable basis, 365 days per year, with a 5% risk factor. (this replaces the concept of assured energy).

PIE – Please refer to Electric Energy Independent Generator.

PLD – Please refer to Differences Settlement Price.

PMAE – Short Term Market Price – This is set by MAE for each measurement period and for each energy sub-market, which sets the price for energy not covered by bilateral contracts and which is traded in the short term market.

Potentially Free Consumers – Consumers that possess characteristics set forth by law to become free consumers but are captive consumers.

Power Factor – The ratio of active electric energy to the square root of the sum of the squares of active and reactive electric energy consumed in a given period.

Power Plant – It represents a group of Generating Units. They can be hydro, thermal, biomass, wind and others.

Power Purchase Agreements – Electric energy buy and sale contracts inherited by generators and distributors during privatization. In accordance with the electric sector law, these contracts should be reduced at a rate of 25% per year starting in 2003.

Power Reference Market – This is the market relating to electric energy consumption for the period used as a basis for concessionaire or permit-holder periodic tariff reviews.

Preferred Shares – Shares that do not carry voting rights, but that have priority in dividend distribution.

Primary Control Power Reserve – The provision for the active power reserve made by generating plants for the primary control of frequency.

Production Category – Made up of the Generating Agents, the Importing Agents and the Self-production Agents.

Profitability – This is the rate that indicates the return on an investment. Profitability is calculated by dividing the profit obtained by the value of the initial investment.

Proinfa – Incentive Program to Encourage the Development of Alternative Sources of Electric Power. The objective of this program is the diversification of the sources of Brazilian energy and the search for regional solutions involving the use of renewable energy sources, involving the economic use of the available raw materials and applied technologies, through the increase in the share of electric energy produced using these sources in the National Interconnected Electric System (SIN).

Publicly-held Company – Company that has issued securities in its name that are registered with the CVM (Brazilian Securities and Exchange Commission) for trading on the stock exchange or over the counter market.

Public Hearing (ANEEL) – An instrument that supports the decision making process of the Electric Energy National Agency – ANEEL. It can be broadly consulted by the public; it precedes the disclosure of administrative acts. Its main purpose is to gather subsidies and information from the public for subjects under analysis, as well as to offer to those interested the opportunity to refer to their pleas, opinions and suggestions relating to the subject matter.

Public Offering – The public distribution of securities to investors; the placement of a certain number of shares in the market by a company. Characterized by its extension to include non-shareholders in the company.

Public Share Offering – Instruments that regulate the rights of shareholders upon the delisting of a company. There are three types: 1) via sale of controlling interest: obligation of the parties acquiring the control of the company to carry out a public offering for the acquisition of the total number of voting shares held by the other shareholders in the company; 2) via cancellation of the company’s registration at the Securities and Exchange Commission of Brazil (CVM); 3) via an increase in the interest of the controlling shareholder.

Qualified Credits – Liquid credits held against the company by a shareholder, which have been property qualified by the company through the issuance of a written statement verifying their existence, value, liquidity, and certainty of credit for the interested shareholder against the Company. The credit related to the AFAC Realization Agreement was considered automatically and immediately qualified regardless of the date of its constitution. The Company only qualified credits originally belonging to the shareholder that wished to use them for the payment of shares and in cases in which such credits debt resulting from (i) loans or financing to the company with expiration prior to the date of publication of the Commencement Announcement or (ii) advances for future capital growth of the company.

Quotas – See quota system.

Quota system – The mechanism used for proration of physically guaranteed energy and power from the Hydroelectric Plants, renewed in accordance with Law 12.783 (MP 579) and allocated to the National Interconnected System electric energy distribution concessionaires, as per specific ANEEL regulation, aiming to tariff moderateness.

Quotation – Price of each of the securities, shares, foreign currencies or merchandise negotiated on the Exchange or the BM&F.

Rationing – Shortage of energy where a compulsory reduction in supply to final consumers is demanded. It is ruled by the Granting Power.

RAP – Please refer to Annual Allowed Income.

Reactive Electric Energy – Electric energy continuously floating around several electric and magnetic fields of a AC current, showing no produce, expressed in kilovolt-Ampére-reactive-hour (kVArh).

Reference Market – This is the energy market and the power demand for the 12 months immediately prior to the tariff adjustment date in progress.

Regulated Contracting Market – ACR – It is the market segment in which electric energy sales and purchase happen among selling and distributing agents, prior to a bidding process, except for those events foreseen by law, according to specific rules and procedures of commercialization.

Regulated Market – Regulated market for the sale to energy distributors in auctions sponsored by the government.

Regulation – Every act, becoming a rule or not, that discipline or organize a certain public service, including its characteristics, quality standards, social and environmental impact, rights and obligations of the users and of those responsible for the offer, rendering, fixing and review of the tariff prices and other public prices.

Regulation S – Regulation S of the Securities Act.

Reinforcement (Transmission) – Implementation of new transmission facilities; by substituting or adapting the existing facilities, recommended by the expansion plans of the transmission system and authorized by ANEEL, to increase the transmission capacity or the reliability of the National Interconnected System – SIN, or yet, which result in a physical alteration of the electric network or facility design.

Reinforcement of Primary Distribution Network – The alteration of the physical characteristics of an existing network aiming to increase their capacity.

Required Distribution Revenue – Revenue to be obtained from the application of TUSDs (Tariffs for the Use of Electric Energy Distribution Systems) to the reference energy market and demand.

Research and Development (Investment) – It refers to the compulsory use of one percent of the net operating revenue of the company in technological research and development of the Brazilian electric industry.

Reservoir Area – Area of the plant upstream of the dam when filled to the maximum normal water level.

Revenue from Use in the Transportation of Electric Power – Information about physical and monetary quantities referring to revenue obtained from use of transmission and/or distribution systems, detailed by company.

RGR – Global Reversion Reserve..

RTE – Extraordinary Tariff Recomposition – Extraordinary Tariff Recomposition – Temporary tariff increase authorized for distributors of regions where energy was rationed in 2001 and 2002, in compliance with Law 10,438, of 2002. Part of the proceeds from this compensation was transferred to generators as a refund for the energy purchased..

Rule 144A – Rule 144A of the Securities Act.

SAMP – Economic Regulation Market Information Monitoring System – The process for collecting information related to the electric energy market for concessionaires and permission holders.

SCL – Accounting and Settlement System – Covers the accounting, reconciliation and financial settlement processes and aims to check the purchases and sales of electric energy under the auspices of the MAE, price those transactions not covered by bilateral contracts, as well as to manage financial transfers among MAE members.

Seasonal Variation – Monthly calculation of the annual volumes of energy contracted or Physical Guarantee.

SEC – Securities and Exchange Commission of the United States.

Secondary Energy – It is the surplus energy regarding the generation above the system physical guarantee (see MRE) determined in each verification period. Secondary energy is distributed to every plants participant of MRE proportionally to the physical guarantee contribution of that plant to the physical guarantee of the system.

Secondary Control Power Reserve – The provision for the active power reserve made by generating plants participating in the CAG for the secondary control of frequency and/or the net exchange of active power among control areas.

Secondary Frequency Control – The control performed by generating units participating in Automatic Generation Control – CAG, aimed at re-establishing the system frequency to its programmed value and maintaining and/or re-establishing the live power exchanges to programmed values.

Securities Act – United States Securities Act of 1933, as amended.

Seller – A company that operates in the intermediation of energy purchase and sale transactions.

Selling Agent – Holder of the concession, permit or authorization from the Granting Power to generate, import or trade energy.

Share – Certificates indicating a percentage of ownership of a given company, representing rights to a portion of the company´s profit and/or to voting on decisions deliberated in shareholders meetings.

Short-term Energy – It is the energy verified by CCEE arising from the differences between the one that was generated or consumed and that one that was contracted. Positive or negative differences are settled at the Short-Term Market and valued according to PLD (Differences Settlement Price), it is weekly determined for each load level and sub-market, basing on the marginal cost of the system operation, being limited to a minimum and maximum price.

Short-Term Market – Segment of the MAE in which electric energy that is not the subject of bilateral contracts, any surplus power from bilateral power purchase agreements entered into by Consumption Category agents, and the shortages related to bilateral power sale agreements that are the responsibility of Production Category agents, are traded.

SIN – National Interconnected System – Made up of facilities responsible for supplying electric energy to the South, Southeast, Central-West, Northeast, and part of the North of Brazil; interconnected electrically.

SINERCON – It is a computer system used by CCEE to do the accounting and settlement of the agents. Please refer to the Accounting and Settlement System.

Small Hydroelectric Power Plants – PCH – Hydroelectric projects with power capacity above 1,000 kW and equal to or less than 30,000 kW, with a total reservoir area equal to or under 3.0 km2, will be considered as projects with the characteristics of small hydroelectric plants.

Special Consumer – It is a consumer who is responsible for a consuming unit or set of consuming units of “Group A”, member of the same submarket of SIN – Interconnected National System and grouped according to its real and legal interest, which energy load is equal to or higher than 500kW.

Spot Market – Segment of the Electric Energy Trading Board (CCEE) where the differences among the electric energy amounts contracted and recorded by CCEE agents and the amounts actually generated or consumed and attributed to the respective agents are traded.

Spot Market Power – The energy accounted for by the CCEE resulting from differences between production or consumption and the contracted amount. Positive or negative differences are settled in the spot market and calculated at the PLD (spot price).

Stored Energy – Energy valuation of the volume stored in a reservoir considering the production of those hydro power plants downstream.

Sub-markets – Geographical Subdivisions of the National Interconnected System – SIN corresponding to market areas which receive set specific Differences Settlement Prices and which barriers are defined according to significant presence and duration of transmission restrictions.

Substation – It is a facility with electric energy transmission, control and protection equipment. It works as a transfer point in an electric energy transmission system, directing and controlling the energy flow, transforming the voltage levels. During the flow among the generating units and consumers, the electricity goes thru several substations, where transformers increase or decrease its voltage.

Supplied Unit – A public service concessionaire or holder of distribution permission holding own market of less than 500 GWh/year.

Supplier Unit – Public service distribution or generation concession holders, including independent energy producers, responsible for supplying the Supplied Unit.

Supply Agreement – It is a legal instrument on which every distribution concessionaire and the consumers responsible for the consuming units of Group “A” adjust technical characteristics and electric energy supply commercial conditions.

Supply Tariffs – Electric energy tariffs charged by public service generation or distribution concessionaires and permission holders for final consumers as set by ANEEL.

Surplus Demand – Portion of demand verified that exceeds the contracted demand value, it is expressed in kilowatts (kW) and is subject to penalties.

Surplus Tariff – Tariff applicable to the positive difference between measured and contracted demand, when the preset limits are exceeded.

Synchronous Compensator – It is a machine which main part spins and rotates. It works without mechanical stress, delivering or absorbing reactive power.

System Service Fees – ESS – Monetary values designed to cover costs of system services, including ancillary services, rendered to users of the National Interconnected System – SIN which comprises the costs arising from the dispatched energy independently of the merit, in MW, made available by the generators for regulating the system frequency and its autonomous start-up operation, the capacity reserve, in MVAr, made available by generators, higher than those reference values established for each generator in Network Procedures, necessary for the transmission system operation, for the generator operators as synchronous compensators, the regulation of the voltage and plans to cut generation and loads relief.

TAC Conduct Adjustment Agreement – A legal instrument entered into between those responsible for certain actions or measures (CESP, in this case) and the federal, state or municipal Prosecution Office to defend the public or collective interest. It generally refers to environment preservation, mitigation or recovery initiatives through the establishment of technical obligations and conditions.

Tag Along Rights – Extension to all shareholders of the same conditions obtained by the controlling shareholders upon the sale of control in a company.

Tariff – Energy sale price to the captive consumer, regulated by ANEEL, per unit of electric energy and/or active capacity demand.

Tariff Structure – Set of tariffs applicable to components of electric energy use and/or active power demand according to the modality of supply.

Tariff Adjustment Index – This is the index used to calculate annual tariff adjustments. They are calculated according to the following formula: VPA1 + VPB0 (IGPM +/- X) Where:
VPA = Non-manageable costs for the following tariff year; VPB = Manageable costs from the previous tariff year.

TC – Contracted Voltage – Effective voltage value stipulated in the contract, expressed in volts or kilovolts.

TD – Emergency Attendance Time – Interval of time, expressed in minutes, between authorizing the emergency service team and the time it arrives at the location of the occurrence.

Technical Report on Conclusive Access – A document prepared by the distribution concessionaire or permission-holder, or by the National Electric System Operator (ONS), with the participation of the respective transmission concessionaire, which defines the form of connection of each generator plant participating in the Incentive Program to Encourage the Development of Alternative Sources of Electric Energy (Proinfa), as well as any expansions and/or reinforcements needed for the transmission and distribution networks.

TEO – Please refer to Optimization Energy Tariff.

TF – Failure rateThe incidence of interruptions in service hours affecting equipment or generating units of a Power Generation Company, during the period considered, relating to a standard year of 8,760 hours.

TFSEE – Electric Energy Power Services Inspection – Charge It is annually set by ANEEL and is monthly paid by every agent that work in the industry of electric energy generation, transmission and distribution. It constitutes the income of ANEEL to cover its administrative and operational costs.

Thermoelectric Power Plant – A generating unit that uses thermal energy provided by the burning of fuels, such as coal, oil, natural gas, diesel, and other hydrocarbons as a source of energy to generate electricity.

TN – Rated Voltage – Effective voltage value designated for the system, expressed in volts or kilovolts.

TNO – Rated Operating Voltage – Effective voltage value designated for the system, expressed in volts or kilovolts.

TNP – Non-Standard Voltage – Rated voltage value expressed in volts or kilovolts, not mentioned in art. 47 of Decree 41,019, dated 1957, as amended by Decree 97,280, dated 1988.

Trading Agent – Trader – Holder of an authorization, concession or permission to sell and buy electric energy from the CCEE – Electric Energy Trading Board. It intermediates the sale and purchase of electric energy.

Trading Procedures – Set of rules approved by ANEEL which define the conditions, requirements, events and terms relating to the electric energy trading in the Electric Energy Trading Board – CCEE.

Transmission Agent – Transmitter – Agents holding the concession to transmit electric energy which are connected to the basic network.

Transmission Facilities – Public service facilities that transmit electric energy, as per Resolutions no. 166 and no. 167, both issued in the 2000, as well as the transmission facilities authorized by specific ANEEL resolutions that are part of the public transmission service concessions granted since May 31, 2000, and any transmission facilities granted, donated or transferred to transmission concessionaires.

Transmission Line – It is an electrical line that is part of a transmission system.

Transmitter – Also refer to Transmission Agent.

TUSD – Tariff for the Use of the Electric Energy Distribution System – It is a tariff set by ANEEL, designed for the payment, whenever the user is not a captive user of the distributor, for the use of the distribution system in a certain connection point to the system.

TUSDg – Tariff for the Use of the Electric Energy Distribution System – TUSD applied to generating units – tariff for the use of the distribution system, when they are used by generators that are connected to the distribution systems.

TUST – Tariff for the Use of the Electric Energy Transmission System – It is a tariff set by ANEEL, as TUST RB, relating to the use of the Basic Network facilities, and TUST FR, relating to the use of the facilities facing the Basic Network. It is designed to remunerate the services rendered by the Transmitters.

UHE – HEP – Hydroelectric Power Plant.

US GAAP – U.S. Generally Accepted Accounting Practices.

Utilization Concession – It is the administrative agreement through which the Granting Public Power grants the sole use of one of its facilities to a private entity. It may be explored according to its specific purpose.

Utilization Fee – It is a value due to the rendering of energy distribution and/or transmission services, calculated by the sum of utilization tariffs for the respective amount of demand and energy contracted or verified.

Verified Demand – Higher demand of active power verified by measurement and paid up within 15 (fifteen) minutes during the billing period and expressed in kilowatts (kW).

Volt (V) – Measurement unit for the electric potential difference in the International System defined as the difference in power between two points on a conductor through which an electrical current of 1 ampere is passed, when the power dissipated between the two points is equal to 1 watt.

VR – Annual Reference Value – Maximum limit value used to regulate the transfer to tariffs of final consumers of the electric energy purchase costs, according to art. 34 of Decree nº 5,163 of 2004.

Watt – The basic unit of electric energy power.

Wet Season – The five consecutive months encompassing the supply involving the meter readings from December of any given year through April of the following year.

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