Distributed energy grows by 5.0% and Net Operating Revenue reaches R$1.05 billion in 3Q12

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1 Teleconference in Portuguese Date: November 22, 2012 Time: 11h00 (Brasília) 8h00 (NY DST) Information for connecting: Telephone: Acess Password: Celesc Common Share at 09/30/2012 CLSC4 R$ 34,40/share Increment in 3Q12 CLSC4: -13,6% Ibovespa: 8,9% Market Value 30/09/12 R$ million US$ 639 million Free Float: 76,1% Other Indicators at 09/30/12 Net Debt / EBITDA 12m: 2,2x PPA 9M12 (R$/share): -R$ 3.14 IPA (R$/share): R$ Quote/VPS: 0,7x For more information, please access the website or contact the Investor Relations Area: Tel: (55-48) ri@celesc.com.br Florianópolis Santa Catarina, November 13, 2012 Centrais Elétricas de Santa Catarina SA - Celesc (BM&FBOVESPA: CLSC3, CLSC4; OTC: CEDWY), an electric power utility holding company engaged in the generation, transmission, and distribution of electric energy and distribution of natural gas, announces the results for the third quarter (3Q12) and for the first nine months of 2012 (9M12). The company s financial information, except where otherwise stated, are presented in Reais (R$) at September 30, 2012 and were prepared according to the new Brazilian accounting principles resulting from effectively applying the International Financial Reporting Standards (IFRS). Distributed energy grows by 5.0% and Net Operating Revenue reaches R$1.05 billion in 3Q12 Main Highlights: Distributed energy in Celesc s area of concession during 3Q12 was 5.0% higher than for the same period in 2011, reaching 5,167 GWh; Consolidated Net Operating Revenue was R$1.05 billion in 3Q12, 0.3% above the third quarter of Netting out the effects of Construction Revenue, Consolidated NOR increased 2.8% in the quarter (amounting to R$976.8 million) and 4.0% in the first nine months of 2012 (R$2.99 billion); In 3Q12 the Company registered a loss of R$135.5 million (based on IFRS). Considering the adjustments regarding Regulatory Assets / Liabilities and nonrecurrent effects, the quarterly result reverts to a net profit of R$82.9 million, 179.8% above that for 3Q11; Investments made in 3Q12 were R$97.3 million, a 26.2% reduction in comparison to 3Q11. For the accumulated 9M12 position consolidated investments added up to R$276.9 million, 4.5% below the same period in 2011; The highlight for Celesc Distribuição s manageable costs was a reduction in the order of 32.1% in Cost of Material in 3Q12 compared to 3Q11. Personnel expenses, the most relevant manageable cost, decreased by 11.8% on a quarterly comparison basis taking into consideration non-recurring events (Voluntary Resignation Plan and Reference Price salary adjustments - URP); On August 7, 2012 the index for the third Periodic Tariff Revision for Celesc Distribuição came into effect, resulting in a repositioning of the Company s tariffs in the order of +3.99% and an average effect perceived by the energy distributor s captive clients of -0.32%. Main Highlights 3 rd Quarter Accumulated 12 Months % Chg % Chg. Operating Indexes Celesc Distribuição - Energy Sales (GWh) 4,922 5, ,975 15, Celesc Geração - Energy Generation(MWh) 150, ,458 (20.1) 446, ,491 (18.2) SCGÁS - Volume of Gas Sold (thousand/m³) 171, , , , Financial Indexes - Consolidated (R$ million) Gross Operating Revenue 1, , , , Net Revenues 1, , , , Operating Costs and Expenses , , , EBITDA (IFRS) (163.2) (215.3) (82.3) (116.7) EBITDA (IFRS + Regulatory Assets/Liabilities - Non-Recurring ) Net Income (IFRS) 48.6 (135.5) (378.8) (121.1) (149.2) Net Income(IFRS + Regulatory Assets/Liabilities - Non-Recurring ) Investiments (26.2) (4.5) 1

2 1- Overview Centrais Elétricas de Santa Catarina S.A. CELESC is one of the largest companies in the Brazilian electric sector, mainly in the areas of distribution and generation of electric energy. Structured as a Holding Company in 2006, the Company possesses two wholly-owned subsidiaries - Celesc Geração S.A. and Celesc Distribuição S.A. Additionally it holds a controlling interest in Companhia de Gás de Santa Catarina (SCGÁS Santa Catarina Gas Company) and is a partner in Dona Francisca Energética S.A. (DFESA), Empresa Catarinense de Transmissão de Energia S.A. (ECTE Santa Catarina Energy Transmission Co.), Companhia Catarinense de Água e Saneamento (CASAN Santa Catarina Water and Sanitation Co.) and of Usina Hidrelétrica Cubatão S.A. (Cubatão Hydroelectric Plant) Its major shareholder is the State of Santa Catarina which holds 50.2% of the Company s common shares, corresponding to 20.2% of the Total Capital. CELESC s Shareholder and Corporate Structure (base-date 09/30/2012) 2

3 Wholly-Owned Subsidiaries Celesc Distribuição S.A. The company provides energy to over 2.5 million consuming units located in 262 municipalities in Santa Catarina (91.79% of the state s territory) and in Rio Negro, state of Paraná. It is further responsible for the supply of electric energy to four concessionaires and 16 permit-holders that are active in the other 36 Santa Catarina municipalities. In the domestic context, Celesc Distribuição is the seventh largest distributor in Brazil in terms of gross operating revenue, the sixth in the volume of energy supplied, the eighth in sales and the ninth in the number of consumers serviced, according to data furnished by the Brazilian Association of Electric Energy Distributors (ABRADEE). Average residential consumption reaches 198kWh/month, the largest in the Southern region and the fifth largest in the country. The company distributed almost 20 thousand GWh in 2011, a volume corresponding to 26.8% of the consumption for the Southern region and 5.2% of the total energy consumed in the country. Its annual gross billings are in the order of R$ 6.4 billion. 3

4 Celesc Geração S.A. Celesc Geração S.A. is Celesc Group s subsidiary engaged in the operation, maintenance and expansion of the company s generation facilities, currently made up of 12 Small Hydroelectric Plants (SHPs) with a total installed generation capacity of 81.15MW. Own generating plants - Plants 100% from Celesc Geração S.A Plants Location Concession Expiration Installed Capacity (MW) Guaranteed Energy (MW) Estimated Future Capacity (MW) Estimated Guaranteed Energy (MW) Date of entry of New Capacity PCH Palmeiras Rio dos Cedros/SC 7/11/ PCH Bracinho Schroeder/SC 7/11/ PCH Garcia Angelina/SC 7/7/ PCH Cedros Rio dos Cedros/SC 7/11/ april/2015 Basic Project PCH Salto Blumenau/SC 7/11/ october/2015 Preliminary environmental license in July 2012 PCH Celso Ramos Faxinal dos Guedes/SC 23/11/ october/2014 Preliminary environmental license in July 2012 PCH Pery Curitibanos/SC 9/7/ december/ 2012 Construction PCH Caveiras Lages/SC 10/7/ april/2015 Basic Project PCH Ivo Silveira Campos Novos/SC 7/7/ april/2015 Basic Project PCH Piraí Joinville/SC 7/ w ithout expected date Basic Project CGH Rio do Peixe Videira/SC (*) april/2015 Basic Project CGH São Lourenço Mafra/SC (*) Total - MW (*) Power Plants with less than 1 MW are exempt from the act of concession STATUS In recent years, driven by a strategy to increase its own generation capacity, the Company has invested in increasing the power capacity of existing plants and in the formation of partnerships to make projects aimed at the construction of new undertakings feasible, including the diversification of the energy matrix. In October, Public Call Notice 001/2012 was divulged replacing Public Call Notice 001/2008. This new call notice publicly disclosed the Company s intention of analyzing partnership opportunities in energy generation undertakings that are aligned with its strategic reference regarding mission and business view, without limitation as to their sourcing and location. The company already participates in Specific Purpose Companies that make new undertakings in which Celesc Geração S.A. holds a minority interest, feasible. The table below presents the main features of these undertakings and their respective stage of development: New Developments - Celesc Geração celesc holds minority stake Plants Location Installed Capacity (MW) Guaranteed Energy (MW) % of Participatio n Celesc Geração Equivalent Installed Capacity Equivalent Guaranteed Energy (MW) Date of entry of New Capacity PCH Prata Bandeirante/SC Operation started in August/11 PCH Belmonte Belmonte/SC Operation started in May/12 PCH Bandeirante Bandeirante/SC Operation started in September/12 In Operation PCH Rondinha Passos Maia/SC august / 2013 Construction PCH Painel São Joaquim/SC Basic Project PCH Campo Belo Campo Belo do Sul/SC Basic Project PCH Xavantina Xenerê/SC obtaining funding TOTAL Status The aspects of Provisionary Measure 579/2012 that affect Celesc Geração s business will be discussed in a specific item on page 25. 4

5 Controlled Entity Companhia de Gás de Santa Catarina SCGÁS SCGÁS is the second largest Brazilian locally piped gas distributor regarding the quantity of municipalities serviced (59). Santa Catarina state possesses the third largest natural gas distribution network (1,002 kilometers) and is the third largest in terms of number of industrial businesses supplied with natural gas (218), in addition to possessing the third largest distribution network for vehicle natural gas (GNV) in the country (136 stations). Possessing 100% of the concession for exploiting natural gas distribution services throughout Santa Catarina state, the company sells and distributes daily over 1.8 million cubic meters of natural gas to about 4,185 clients. Participation in Other Companies Empresa Catarinense de Transmissão de Energia - ECTE Constituted with the specific purpose of exploiting electric energy transmission lines in the Southern, Southeastern regions and the Santa Catarina coastline, the company is the owner of the SE Transmission Line between Campos Novos and Blumenau, which is km. long. The line is responsible for transporting about 20% of the assured energy to supply the demand in Celesc Distribuição S.A. s area of concession. In December/11, the company acquired in auction the right to construct the Abdon Batista (525/230kV) and Gaspar (230/138kV) substations, through subsidiary Empresa de Transmissão Serrana S.A. ETSE. Construction work, forecasted to be concluded in 2014, has begun. Dona Francisca Energética S.A DFESA An independent electric energy production concessionaire, DFESA owns the Dona Francisca Hydroelectric Plant built on the Jacuí River in Rio Grande do Sul, with an installed capacity of 125MW and 78MW of assured energy. The undertaking was inaugurated in May, Celesc holds 23.03% of the company s common shares. Companhia Catarinense de Água e Saneamento CASAN A mixed government and privately owned, publicly traded company, controlled by the State Government of Santa Catarina, CASAN s function is to plan, execute, operate and exploit the supply of drinkable water and sanitation services to its area of concession. Currently the company s services cover practically the entire state of Santa Catarina and service a population of 2.3 million consumers with treated water and with the collection, treatment and final disposal of sanitary waste. Celesc holds 15.48% of the Company s subscribed capital. Usina Hidrelétrica Cubatão S.A. A specific purpose company constituted for the implementation of the Cubatão Hydroelectric Plant, an undertaking to be constructed in Joinville (SC) with a 50MW installed power capacity. After facing environmental obstacles, the project was entirely revised in New construction techniques were employed which allowed the licensing process to start anew and presently the project is being analyzed by the appropriate authorities. 5

6 2 Performance by Business Area 2.1 Celesc Distribuição S.A Operational Performance Santa Catarina electric energy market The amount of energy supplied verified in the third quarter of 2012 for the area serviced by Celesc Distribuição S.A. varied positively by 4.1% in relation to the figures for the same quarter in the prior year and totaled 5,580 GWh. The percentage variation of energy supplied was above that for Brazil, which grew by 2.9%, a similar index for the performance of the supply to the Southern region. A large part of these growth indices are a reflection of policies recently adopted by the federal government to reduce taxes and encourage the consumption of goods and services by families. Energy Load (GWh) Year 3Q Brazil (GWh)* , ,230 % Chg. 2.9% Brazilian South (GWh) , ,909 % Chg. 4.1% Carga Celesc Distribuição S.A. (GWh)** , ,359 % Chg. 4.1% Source: ONS / Celesc Distribuição Note (*): Refers to the National Interconnected System SIN (**): Energy injected into the concessionaire s distribution system (captive market + free market + losses in distribution). Electric Energy Balance The amount of energy required by the Company to meet the demand of the captive market and to overcome losses was GWh in 3Q12. The Electricity Trading Board CCEE registered 71.2% of the supply via Contracts for the Trading of Electricity in a Regulated Environment (CCEAR s), 25.4% via agreements with Itaipú and 3.4% from other sources. Energy Balance - 3Q12 (GWh) BILATERAL CONTRACTS - LONG TERM 49 FINAL CONSUMER 3,579 CCEAR 3,343 OWN CONSUMPTION 3 ITAIPU 1,192 RESELL 302 4,490 PROINFA 106 DISTRIBUTION LOSSES 192 SETTLED IN THE SHORT TERM TRANSMISSION LOSSES 414 DISTRIBUTED GENERATION 5 Notes: (¹) Value subject to eventual re-accounting by the Electricity Trading Board - CCEE. (²): Includes, in addition to losses in distribution, differences arising from the billing calendar. 6

7 Distributed Energy In 3Q12 the energy supplied by Celesc Distribuição to the captive market increased by 1.5% compared to the same period of the prior year, reaching 3,881 GWh (excluding own consumption that represented 2.80 GWh). Regarding the total market (captive + free), the growth rate was 5.0%, reaching 5,164 GWh. The following table presents figures for distributed energy during the third quarter of 2012: Consumption per Class In MWh - Total 3rd Quarter Accumulated 9M % Chg % Chg. Captive Market 3,824 3,881 (1.5) 11,937 12,163 (1.9) Residential 1,093 1, ,374 3, Industrial 1,193 1,161 (2.7) 3,643 3,496 (4.0) Commercial ,230 2, Rural Public Entities Public Lighting Public Service Co To Other Utilities (2.1) 1, (7.5) Free Market 1,095 1, ,029 3, Total (Captive Market + Free Market) 4,919 5, ,966 15, Own Consumption 3 3 (1.1) Total 4,922 5, ,975 15, The graph below helps to illustrate consumption data for the area serviced by Celesc Distribuição, excluding its own consumption. Energy Consumption in GWh - Celesc Distribuição 5.0% 1.5% 4,919 5,163 3,824 3, % -2.7% 1,093 1,112 1,193 1, % % % 598 1, , 1% 1,283 Residential Industrial Commercial Rural Other Classes¹ Free Market Captive Market Total Market 3Q11 3Q12 Source: DCL / DPCM / DVME Note: Remaining Classes¹ = Public Authorities + Public Illumination + Public Services + Resale. Does not consider own consumption. 7

8 Performance of the Captive Market per Class of Consumer Residential Residential class electric energy consumption totaled 1,112 GWh in 3Q12, 1.7% above the figure registered for the same period in the previous year. The slow growth verified in residential consumption is partly explained by higher temperatures in 3Q12 compared with 3Q11. In this manner the use of residential heaters decreased, which reduced energy consumption for this class. Industrial The captive industrial class registered a 2.7% reduction in electric energy consumption in 3Q12 compared with the same period of the previous year. The migration of captive consumers to the free market continues to be the main factor contributing to the decrease in consumption. Regardless of a decrease in consumption among captive industries, the drop is milder than those which occurred in prior quarters. It happens that large consumers have already switched over to the free market and future migrations that tend to occur will primarily be conducted by A4 clients, which demand lower electric energy volumes. Commercial In 3Q12, the commercial class consumed 736 GWh with a 7.6% growth in relation to 3Q11. The consumption of goods and services by families has been maintained at favorable levels and retail sales continue to grow as per the federal government s objectives. Rural Rural class consumption increased by 4.6% in 3Q12 compared with 3Q11. Activities associated with cereal cultivation, which represents 48.5% of rural class consumption, grew by 2.6% in the period. Another highly representative activity in terms of energy consumption that performed well was farming/cattle raising, which grew by 4.4% in 3Q12 in relation to the same period in the previous year. Other Classes (Public Authorities, Public illumination, Public Service and Resale) In 3Q12 consumption for other classes increased 1.1% compared to 3Q11. Public Authority and Public Service classes registered the greatest growth rates with respective increases of 5.9% and 5.4%. The graph below shows the share of participation per consumer class in Celesc Distribuição S.A. s captive market: Distribution by consumer class (MWh) - 3Q12 Rural 7% Other * 15% Industrial 30% Commercial 19% Residential 29% Performance of the Free Market The free electric energy market, in which consumers may chose their suppliers, represents about 25% of the total energy distributed by Celesc. In 3Q12 the amount of energy consumed in this market was 17.2% greater than that verified in the same period of the prior year. The possibility of choosing specific products per consumer profile combined with differentiated prices has been contributing to the increase in the quantity of free consumers. In 3Q12, the number of 8

9 clients in the Free Market Environment that were connected to Celesc s network grew by 56.6% in relation to 3Q11. The highlight was in commercial consumers, which went from 10 units in 3Q11 to 28 units in the same period of Share per Consumer Class in the Free Market Industrial 89.4% Resale 0.9% Rural 0.9% Commercial 8.8% Of the total market serviced by Celesc Distribuição S.A. in the third quarter of 2012, the captive market represented 75.2% and free clients represented 24.8%, as shown in the graph below: Energy Consumption - 3Q12 Captive Market 75.2% Free Market 24.8% 9

10 Losses in Distribution According to the last periodic tariff revision for Celesc Distribuição S.A., regulatory losses in distribution were set at 7.40%. Of this total, 6.35% refer to the volume of technical losses and 1.06% to non-technical losses. In the accumulated 12 months year-to-date position up to September, 2012 global losses represented 6.31% of the energy injected into the concessionaire s distribution system, 6.06% referred to technical losses as defined by PRODIST Module 7 (2009 and 2010) and 0.24% corresponded to non-technical losses. The graph below shows the evolution of losses in distribution within the Company s area of concession: 2ºCRTP 7.73% 1,38% Losses on Distribution % of Energy Sold - last 12 months ANEEL Limit 1,39% 1,27% 0,82% 0,38% 0,24% REGULATORY LOSSES established at 7,73% (3ºCRTP) 6,35% refers to Technical Losses and 6,63% 6,11% 6,11% 6,09% 6,08% 6,06% Q12 2Q12 3Q12 Technical Losses Non - Technical Losses System Efficiency Indicators The system efficiency indicators showed improvement in the 3Q12. The DEC index (average duration of interruptions per consuming unit) for Celesc Distribuição was 3.45 hours, 2.1% below that verified in the same quarter of In this same period, the index for interruptions per consuming unit (FEC) dropped 0.9%, representing 2.43 interruptions for the period between July and September, Efficiency Indicators (DEC and FEC) DEC (weighted hours) Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 FEC (interruptions per consumer) DEC FEC. 10

11 2.1.2 Economic and Financial Performance Main Highlights - Celesc Distribuição S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Gross Operating Revenue 1, , % 4, , % Deductions From Gross Revenue (580.2) (598.3) 3.1% (1,744.8) (1,877.0) 7.6% Net Revenues 1, % 2, , % Operating Costs and Expenses (781.5) (1,086.9) 39.1% (2,314.4) (2,963.6) 28.1% Electricity Costs (Non-Manageable) (565.7) (697.5) 23.3% (1,710.2) (2,142.9) 25.3% Operating Expenses (Manageable) (215.9) (389.4) 80.4% (604.2) (820.7) 35.8% EBITDA (159.7) % (103.6) % EBITDA Margin (%) 13.0% -16.0% -29,0 p.p. 15.4% -3.4% -18,7 p.p. Profit / Losses Net 40.6 (127.3) % (131.1) % Net Margin (%) 4.0% -12.8% -16,8 p.p. 7.3% -4.3% -11,6 p.p. IFRS + Regulatory Assets / Liabilities - Non-Recurring * R$ milhões 3 rd Quarter Accumulated 9 Months Chg. % Chg. % EBITDA (IFRS + Regulatory Assets / Liabilities - Non-Recurring ) % % Lucro Líquido(IFRS + Regulatory Assets / Liabilities - Non-Recurring ) % % * Further details of the adjustments on page 17 of this earnings release. Results Highlights In the third quarter of 2012 Celesc Distribuição s result continued being impacted by the increase in operating costs and expenses which were 39.1% (R$305.4 million) higher when compared with the same period of the prior year. The main reasons are related to: (i) a 23.3% increase in unmanageable costs (purchased energy for resale and respective fringe) which amounted to R$697.5 million in the period; (ii) a labor indemnification of R$38.8 million as per an agreement ratified between the workers union and Celesc regarding a suit called URP-Concórdia and the respective reversal of the provision; and (iii) the Voluntary Resignation Plan - PDV which impacted the Personnel account in R$245.1 million. Considering the effect of Regulatory Assets and Liabilities and non-recurring items, as mentioned above, the adjusted result was a Net Profit of R$91.1 million in 3Q12. The accumulated 9M12 adjusted net profit reached R$160.1 million, 26.1% higher than that for the same period in the previous year. GROSS OPERATING REVENUE Main Highlights - Celesc Distribuição S.A. R$ million 3 nd Quarter Accumulated 9 Months % Chg % Chg. GROSS OPERATING REVENUE 1, , % 4, , % Energy Supply 1, , % 4, , % Energy Sales to distributors % % Availibility Energy System(TUSD) % % Leasing and Rentals % % Income from Services % % Other Incomes % % Financial Income % % Construction Income % % 11

12 Celesc Distribuição Gross Operating Revenue (GOR) in 3Q12 was R$ 1,596.2 million, 0.6% greater than the third quarter of Disregarding Construction Revenue 1, which amounted to R$ 70.6 million in the quarter, GOR adds up to R$ 1,525.6 million or 2,2% higher than the revenue registered in 3Q11 (R$ 1,492.9 million). GOR for the first nine months of the year was R$4,952.1 million, 5.1% over that verified in the same period in Excluding the effects of Construction Revenue (R$215.1 million), Gross Operating Revenue grew by 4.9% in 9M12, to R$4,737.0 million. The main factors responsible for this performance were: (i) an increase in the order of 1.5% in electric energy consumption for Celesc Distribuição captive consumers in 3Q12 (+1.9% in the accumulated 2012 position); (ii) a 12.4% increase in TUSD revenue in 3Q12 (13.6% for 9M12) compared to the same period in the previous year, reaching R$ 91.3 million and reflecting a 17.2% increase in the consumption of free clients located within the Company s area of concession; and (iii) the tariff adjustments conceded to the concessionaire by ANEEL in the period, which had an average +1.19% impact between August, 2011 and August 2011 and -0.32% as of August DEDUCTIONS TO OPERATING REVENUE Deductions from Gross Operating Revenues - Celesc Distribuição S.A. R$ million 3 nd Quarter Accumulated 9 Months % Chg % Chg. Deductions from Gross Operating Revenues (580.2) (598.3) 3.1% (1,744.8) (1,877.0) 7.6% (Value-added Tax on Sales and Services) ICMS (312.2) (321.4) 3.0% (950.6) (1,003.5) 5.6% PIS/COFINS (135.7) (141.8) 4.5% (413.6) (442.6) 7.0% Global Reversion Reserve- RGR (9.3) (11.1) 19.3% (15.9) (35.7) 123.7% Energy Development Account - CDE (46.3) (52.0) 12.1% (139.0) (155.9) 12.1% Fuel Consumption Account - CCC (65.3) (59.8) -8.5% (190.6) (201.3) 5.6% Research and Development (R&D) - P&D (0,5% of NOI) (4.4) (4.7) 7.8% (13.4) (14.5) 8.3% Energy Efficiency Program - PEE (0,5% of NOI) (4.4) (4.7) 7.8% (13.4) (14.5) 8.3% Other (2.7) (2.9) 7.6% (8.4) (8.9) 6.2% Deductions to operating revenue increased by 3.1% in 3Q12, amounting to R$ million which represents 37.5% of Gross Operating Revenue in the period. In addition to increases in the ICMS and PIS/COFINS taxes, which accompany the growth of billings in the quarter (excluding Construction Revenue), the major impacts verified are a result of an increase of R$ 1.8 million in the Global Reserve for Reversals RGR and R$5.7 million in the Energy Development Account CDE. In the accumulated 9-months 2012 position, deductions to revenue grew by 7.6%. NET OPERATING REVENUE Net Operating Revenue - NOR for Celesc Distribuição in the third quarter of 2012 reached R$997.9 million, 0.8% lower than 3Q11. Disregarding Construction Revenue, Net Operating Revenue adds up to R$ million or 1.6% greater than revenue registered for 3Q11 (R$912.7 million). In the first nine months of 2012, NOR reached R$3,075.1 million, 3.6% over the figure verified for the same period in Excluding the effects of Construction Revenue (R$215.1 million), Net Operating Revenue grew 3.2% to R$2,860.0 million in 9M12. 1 Construction Revenue, according to IFRS accounting standards, is booked for the same amount in operating costs and therefore does not affect the Company s result. 12

13 OPERATING COSTS AND EXPENSES Operating Costs and Expenses - Celesc Distribuição S.A. R$ milhões 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Operating Costs and Expenses , % 2, , % Electric Energy Costs - Non-Manageable / Installment A % 1, , % Electric energy purchased for resale % 1, , % Electric Energy Trading Chamber % % Electric grid usage charge % % Incentive Program for Alternative Sources of Energy (PROINFA) % % Electric Energy Costs - Non-Manageable / Installment B % % Personnel and Management % % Material % % Third-party costs and services % % Other Expenses 29.5 (66.5) % % Depreciation / Amortization % % Construction costs % % Celesc Distribuição s Operating Costs and Expenses increased 30.2% in 3Q12 and 25.1% in the first nine months of the year. Not considering the Cost of Construction account (which bears no effect on the result), the distributor s Operating Costs and Expenses varied by 36.5% in the quarter and 26.5% in 9M12. This behavior is mainly a result of an increase in electric energy costs (unmanageable costs) and expenses with personnel, reflecting the constitution of the provision for the Voluntary Resignation Plan PDV proposed to the Company s employees. Electric Energy Costs Electric energy costs rose by R$131.8 million in 3Q12, which led this item to vary upwards by 23.3% in relation to the same period in This variation is caused by: (i) costs with short-term energy in the order of R$69.6 million, due to the increase in the Price for Liquidating Differences (PLD) and further influenced by the disposing of thermal-electric power plants due to the low availability of water in the country s water reservoirs; (ii) an increase in the value of the American dollar which directly impacted the cost of energy purchased from Itaipu and (iii) foreseen price readjustments in purchase contracts. For these reasons, the three headings in Energy Costs were affected: purchased energy itself, fringe expenses with usage and the Program for Encouraging Alternative Electric Energy Sources - PROINFA. In 3Q12, approximately R$47.1 million refer to short-term energy costs which have not yet been included in the closing of the verified cost variation - CVA. Such effects influenced the quarterly result and will be taken into account in the composition of the Required Revenue to be calculated for the next tariff readjustment cycle (2013/14). The table below presents the mix of tariffs paid in the Company s purchases of electric energy to service its consumer market: Purchased Energy Costs by Contracting Mode Average Rate of Energy Purchased by Type (R$/MWh) 3Q11 3Q12* Chg. of Price % Participation % in 3Q11 Mix Participation % in 3Q12 Mix Average Rate of Tariff Adjustment * 2012/13 (R$/MWh) LEILÃO - CCEAR / Hydro % 58.5% 50.9% LEILÃO - CCEAR / Termal % 17.7% 26.9% ITAIPU % 21.5% 20.3% 92.3 BILATERAL AGREEMENTS % 2.2% 2.0% Total - (R$/MWh) % * NT 207/2011, Table 9, page. 12 and NT 246/2012 Table 13, page.25 - SRE/ANEEL. 13

14 The average purchase tariff rose in all contract modalities, with special mention going to the variations in contracts with Itaipu which remain at levels above those approved by ANEEL in both tariff cycles. Duties for the Use of the Electric and Transmission Network The Duties for the Use of the Electric and Transmission Network amounted to R$114.6 million in the quarter, an increase of 12.3% when compared with 3Q11. The accumulated year-to-date figure of R$335.2 million rose by 11.9% in relation to the first nine months of PMSO (Personnel, Material, Services and Other) Celesc Distribuição s manageable costs totaled R$389.4 million in 3Q12, an 80.4% rise in comparison to the R$215.9 million registered in 3Q11. The year-to-date accumulated figure was R$820.7 million, an increase in the order of 35.8%. Below, the main factors that influenced these cost results are discussed. Personnel Personnel costs increased by 194.7% in 3Q12. In the accumulated nine-month result of R$ million, the increment was 66.6%. The R$267.6 million increase in expenses with Personnel and Management in 3Q12 is explained by the following extraordinary factors: (i) (ii) Personnel Expenses - Celesc Distribuição S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Personnel - Total % % Personnel and Management % % Personnel and Management % % Pension Plan % % Actuarial expense % % the setting-up of a provision of R$245.1 million for the Voluntary Resignation Plan - PDV. The PDV was approved by the Company s Board of Directors in May and, after 734 employees applied, it was disclosed as a Material Fact by the Company on September 21, 2012; a labor suit indemnification of R$38.8 million, as per agreement signed and ratified between the Electric Energy Industry Worker s Union of Concórdia STIEEC and Celesc regarding a process (denominated URP-Concórdia) that had been in course since The Company s management decided to enter into the agreement proposed by Concordia s Labor Court based on the understanding that it was the best solution for a litigation that had lasted for over 22 years and which implied in the maintenance of relevant judicial freezing of assets and accounts as well as possible losses in correlated labor suits (legal risk). The provision for contingencies of R$44, 6 million that had been constituted for this process was simultaneously reversed, which positively affected Other Expenses. Eliminating the effects of the costs with the PDV and the aforementioned labor indemnification, total Personnel costs would have dropped by 11.8% in 3Q12 (a R$16.3 million reduction) and by 4.9% in 9M12 (a R$19.6 million decrease). Personnel Expenses - Celesc Distribuição S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Personnel - Total % % (-) Workers' compensation "URP-Concórdia" - (38.8) 0.0% - (38.8) 0.0% (-) Voluntary Dismissal Plan - PDV - (245.1) 0.0% - (245.1) 0.0% Personnel - Adjusted Total % % 14

15 Materials The material employed heading amounted to R$4.9 million in the quarter, a 32.1% (R$2, 3 million) decrease when compared to 3Q11. The accumulated nine-month result of R$ 16.6 million dropped 21.5% (R$4, 6 million) comparatively. Third Party Services The Company registered an increase in expenses with Third Party Services for 9M12 in the order of R$0.6 million, 0.5% higher than the comparative period (9M11). In 3Q12 a R$4.1 million (+10.0%) increase was verified. Other Operating Expenses Other Operating Expenses - Celesc Distribuição S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Other Expenses - Total 29.5 (66.5) % % Provision for Doubtful Accounts (Net) % % Other Provisions (Net) (0.1) (69.9) 55386% 13.7 (54.6) % Leasing and Rentals % % Insurance Taxes % % ANEEL inspection fee % % Various 4.3 (9.3) % % Other Operating Expenses dropped by R$66.5 million (a -325,7% variation in relation to expenses registered in 3Q11). Provisions to Loss Reserves added-up to R$5.6 million in 3Q12, a 74.6% decrease compared to 3Q11. It is important to mention that at that time (3Q11) a non-recurrent expense of R$17.9 million was registered, referring to unpaid installments owed by large consumers who had petitioned for Judicial Recovery (receivership). In Other Net Provisions the reversal of the provision for the URP-Concórdia Labor Lawsuit was effected in the amount of R$44.6 million, due to the Judicial Agreement that was entered into in the period. The respective indemnification of R$38.8 million was accounted in Personnel Costs, as commented above. Personnel Expenses - Celesc Distribuição S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Other Expenses - Total 29.5 (66.5) % % (-) Reversal of Provision "URP-Concórdia" % % Other Expenses - Adjusted Total 29.5 (21.9) % % Additionally, the Company was successful in other lawsuits which resulted in the reversal of approximately R$16 million of Provisions for Regulatory Contingencies, among which the cancellation of a R$4 million fine and a substantial reduction in the amounts involved in other such processes. FINANCIAL RESULT Celesc Distribuição generated a net positive financial result of R$13.4 million in 3Q12, reversing the R$25.5 million negative result registered in 3Q11. 15

16 Financial Results Statement - Celesc Distribuição In thousand Reais Quarter Chg. Accumulated Chg. 3Q12 3Q11 % 9M12 9M11 % Financial Income Interest Income % % Income on Accounts Receivable % % Monetary Variation % % Financial incentives - Social Fund % % Currency Devaluation on Energy % % Other Income % % % % Financial Expenses Debt Services (5.6) (8.8) -36.3% (19.2) (23.6) -18.8% Monetary Correction (1.9) (9.5) -79.8% (11.3) (10.1) 12.3% Adjustment of R&D and Energy Efficiency (4.5) (6.0) -25.5% (14.7) (16.2) -9.0% Other expenses (0.6) (33.2) -98.1% (8.8) (37.6) -76.6% (12.7) (57.5) -78.0% (54.0) (87.4) -38.3% Net Financial 13.4 (25.5) % 32.5 (1.7) -1977% Regulatory Assets and Liabilities Inter-ministry Decree 25, dated January 24, 2001, issued by the Finance and the Mines and Energy State Ministries, established the Compensation Account for items in Portion A CVA as the account for registering variances in unmanageable costs that occur in periods between tariff readjustments. With the adoption of the IFRS, the Company s results no longer reflect the deferred CVA amount; however it continues to be accounted to comply with ANEEL s requirements. The table below demonstrates the balance of Regulatory Assets and Liabilities at the end of the period. Accumulated Regulatory Assets / Liabilities - Celesc Distribuição S.A. R$ million in 12/31/2011 in 03/31/2012 in 06/30/2012 in 09/30/2012 Regulatory Assets Regulatory Liabilities (111.5) (102.7) (65.4) (58.9) Net Balance (7.4) (9.2) The balances referred to above are an integral part of the Company s tariff readjustments and affect IFRS results at the rate the corresponding revenue is billed to consumers. The table below shows the effect of Regulatory Assets and Liabilities on Celesc Distribuição s results and refers to amounts already considered in the Tariff Cycle 2012/13: Regulatory Assets / Liabilities Effects - Celesc Distribuição S.A. R$ million 1Q12 2Q12 3Q12 9M12 Effect on income without taxes 1.9 (77.9) (93.5) (167.6) Effect on income with taxes 1.2 (51.4) (51.4) (110.6) EBITDA EBITDA (IFRS basis) for Celesc Distribuição in 3Q12 was a negative R$159.7 million while for the first nine months of 2012 it was likewise negative in the amount of R$103.6 million. However, as mentioned before, the increase in the cost of 16

17 electric energy purchased for resale, the provision constituted for the Voluntary Resignation Plan PDV and the labor indemnification regarding the URP-Concórdia process substantially impacted the Company s performance in the period. The table below shows the Adjusted EBITDA, restated considering the following: (i) the impact of approximately R$91.6 million in 3Q12 and R$167.6 million in 6M12, already declared in the determination of Regulatory Assets and Liabilities; (ii) the provisioning of R$19.2 million in 2012 and R$17.9 in 2011 for past-due amounts from large consumers that filed for Judicial Recovery (receivership); (iii) the setting up of a provision of R$245.1 million in expenses for the Voluntary Resignation Plan PDV, that occurred in 3Q12; and (iv) a labor indemnification of $38.8 million as per agreement signed and ratified between the Electric Energy Industry Worker s Union of Concórdia STIEEC and Celesc regarding a process (denominated URP-Concórdia) that had been in course since 1990, and the respective reversal of the R$44.6 million provision. Celesc Distribuição S.A. / EBITDA IFRS + Regulatory Assets / Liabilities - Non-Recurring R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % EBITDA - IFRS Reported (159.7) % (103.6) % (+) Regulatory Assets / Liabilities Effects recognized (46.6) 91.6 (153.8) (=) EBITDA Adjusted by Regulatory Assets / Liabilities 84.5 (68.1) % % (-) Non-Recurring Effects ANEEL 367 Resolution Judicial Recovery - Large Consumers Workers' compensation "URP-Concórdia" - Expenses (-) Reversal of Provision - (5.8) - (5.8) Voluntary Dismissal Plan - PDV (=) EBITDA Adjusted by Regulatory Assets / Liabilities - Non-Recurring Effects % % Adjusting the Company s result solely for the effect of Regulatory Assets and Liabilities, EBITDA in the quarter would have registered a negative amount of R$68.1 million (a 180.6% drop in relation to 3Q11). In the accumulated 2012 position, it would have reached a positive amount of R$64.0 million, which represents a decrease of 78.8%. Including the effects of non-recurring events (ANEEL Resolution 367, Judicial Recovery Large Consumers, the PDV and the URP-Concórdia suit), adjusted EBITDA is R$171.3 million in the quarter and R$337.5 million for the first nine months of the year (increases of 67.3% and 5.3% respectively in relation to the comparative periods). 17

18 NET PROFIT Celesc Distribuição registered a loss (IFRS) of R$127.3 million in 3Q12 compared to a net profit of R$40.6 million in 3Q11. In the accumulated position for the first nine months of the year, the loss amounted to R$131.1 million against a profit of R$216.6 million in 9Q11. The amounts net of Income Taxes and Social Contribution Taxes for the items that affected the Company s quarterly result are: previously registered Regulatory Assets and Liabilities (R$60.5 million), the URP-Concórdia Labor Indemnification (-R$3.8 million) and the PDV (R$161.8 million), as per a table below that shows the adjustments to Net Profit reported on an IFRS basis: R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Net Income - IFRS Reported 40.6 (127.3) % (131.1) % (+) Regulatory Assets / Liabilities Effects recognized (30.8) 60.5 (101.5) (=) Lucro Ajustado por Ativos/Passivos Regulatórios 9.8 (66.9) % (20.4) % (-) Non-Recurring Effects ANEEL 367 Resolution Judicial Recovery - Large Consumers Workers' compensation "URP-Concórdia" - Expenses (-) Reversal of Provision - (3.8) - (3.8) Voluntary Dismissal Plan - PDV (=) Net Income Adjusted by Regulatory Assets / Liabilities - Non-Recurring Effects % % Adjusting the Company s results only for the effects of Regulatory produces a net loss in the quarter of R$66.9 million. The year-to-date accumulated amount is a negative R$20.4 million, which represents a 117.7% drop. Adjusted Net Profit in 3Q12 reached R$91.1 million while for 9M12 it amounted to R$160.1 million (26.1% above that registered for the same period in 2011). 18

19 Debt Celesc Distribuição s Gross debt reached R$257.6 million at September 30, 2012, a 12.1% reduction in relation to 3Q11. This variation is mainly explained by the amortization of the Credit Assignments Investment Fund FIDC debt. Cash equivalents at the end of the third quarter of 2012 were R$ million, resulting in a net debt position of R$55.7 million, R$47.5 million above the amount verified at the end of the same period in 2011 (R$8.2 million). Debt - Celesc Distribuição S.A. Financial Debt - 3Q12 (R$ milllion) Short Term Debt 110,3 Long Term Debt 147,4 Total Debt 257,6 ( - ) Cash * (201,9) Net Debt 55,7 Net Debt / Equity 0.2x Financial Debt Profile 43% 57% Short Term Debt Long Term Debt * Cash and Cash Equivalents + Marketable Securities Celesc Distribuição sponsors the Celesc Foundation for Social Security CELOS, a closed, complementary pension entity. Taking into consideration the Obligations with Pensions, which added-up to R$615.1 million on September 30, 2012 and with other Employee Benefits (Health Plan, PDV, other) in the amount of R$649.7 million, the Company s adjusted net debt reached R$1.06 billion as demonstrated in the table below: Debt + Pension Plan Adjusted Debt 3Q12 (R$ million) Total Debt Post-Employment Benefits 1,005.1 Pension obligations Other benefits to employees ( - ) Net Pension Plan (260.0) ( - ) Cash * (201.9) Adjusted Net Debt 1,060.8 Equity 1,347.6 Adjusted Net Debt / Equity 0.8x Short Term Debt Total Debt Profile incluinding Post-Employment Benefits 91% 9% Long Term Debt * Cash and Cash Equivalents + Marketable Securities 19

20 Investments Celesc Distribuição s investments totaled R$77.9 million in the third quarter of 2012, 18.1% below the amount of investments made in the same period in Investments for 9M12 reached R$227.0 million (an 8.4% increase). The table below shows the distributing company s investments, indicating those which make up the Regulatory Assets Base (RAB): CAPEX - Celesc Distribuição S.A. R$ milhões 3 rd Quarter Accumulated 9 Months 3Q11 3Q12 Chg. % 9M11 9M12 Chg. % Investments Distribution % % RAB % % Non - RAB % % CAPEX Celesc Distribuição (R$MM) CAPEX Celesc Distribuição (R$MM) Q11 3Q12 RAB Non-RAB Capex x Depreciation M11 9M12 RAB Non-RAB Capex x Depreciation The graph below shows the composition of the investments made during the period: CAPEX BREAKDOWN - CELESC DISTRIBUIÇÃO (%) 1.3% HIGH VOLTAGE 1.5% 9.8% 13.5% 24.8% LOW AND MEDIUM VOLTAGE AUTOMATION MEASUREMENT 49.0% MAINTENANCE OTHER 20

21 2.1.3 Regulatory Aspects for Celesc Distribuição S.A. Third Tariff Cycle Periodic Revision ANEEL, within the scope of the Public Executive Board Meeting held on July 31, 2012, ratified Celesc Distribuição s process for the 3rd Tariff Cycle Periodic Revision ( 3rd CRTP ), establishing the rate for repositioning tariffs at +3.99% (economic effect), with an average perceived effect for the consumer of -0,32% as of August 7, Details of the Tariff Revision process are available at the Nota Técnica nº 246/2012-SRE/ANEEL link, or at and on the Investor Relations page at Provisional Measure 579 of September 11, 2012 ( MP 579/2012 ) On , the Federal Government published Provisionary Measure 579 ( MP 579 ) with the purpose of reducing electric energy costs to consumers. On , Presidential Decree (DP) 7,805 was enacted, defining some of the operating procedures for the implementation of what was determined in MP 579. This Provisional Measure allowed concessionaires who had energy generation, transmission and distribution agreements expiring between 2015 and 2017 in place the possibility of pulling forward their deferments against specific conditions established therein. For distribution concessionaires, MP 579 foresees that, as of January 1st, 2013, tariffs may be reduced with the elimination of certain sector fringe costs and, as of February, 2013 they will be subject to an extraordinary revision process with the purpose of reflecting the reduction in the tariffs for generation and transmission as well as eventual effects of reallocating energy quotas for generation entities whose agreements were extended. As required by MP 579, the company filed a request for extension on for Celesc Distribuição s concession agreement 56/1999, confirming the intention manifested in June to the regulating body (Aneel). 21

22 2.2 - Celesc Geração Operating Performance Availability of Facilities In 3Q12 the plants operated by Celesc Geração achieved a 99.2% rate of availability, disregarding programmed interruptions. Taking all programmed interruptions into consideration, global availability during the second quarter of 2012 reached 92.9%. This figure is 2.2 percentage points under the rate of overall availability obtained in the last quarter (2Q12). This was mainly due to a greater quantity of programmed maintenance stops executed during the period of low river affluence. Production The total volume of energy generated in 3Q12 by Celesc Geração s plants was 20.1% below that for 3Q11. This result is mainly explained by adverse hydrologic conditions (low effluence) throughout the state of Santa Catarina. Operating Performance (MWh) 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Own Generating Park 150, , % 446, , % PCH Palmeiras 46,880 38, % 137, , % PCH Bracinho 25,336 15, % 73,933 54, % PCH Garcia 18,131 13, % 53,034 42, % PCH Cedros 17,161 17, % 50,016 48, % PCH Salto 7,210 3, % 26,401 19, % PCH Celso Ramos 11,307 6, % 31,544 18, % PCH Pery 8,622 9, % 26,696 25, % PCH Caveiras 7,504 7, % 22,143 17, % PCH Ivo Silveira 5,421 5, % 16,433 15, % PCH Piraí 1,175 1, % 3,441 3, % CGH Rio do Peixe 1, % 3,076 2, % CGH São Lourenço % 2,380 2, % Financial Performance Main Highlights - Celesc Geração S.A. R$ million 3 rd Quarter Accumulated 9 Months % Chg % Chg. Gross Operating Revenue % % Deductions from Gross Operating Revenue (1.6) (5.5) 254.8% (4.8) (10.4) 117.0% Net Revenues % % Operating Costs and Expenses (15.3) (24.5) 59.9% (24.8) (34.9) 40.6% Energy Eletric Costs (0.7) (5.2) 626.5% (2.2) (6.7) 208.4% Operating Costs and Expenses (14.6) (19.3) 32.1% (22.7) (28.2) 24.5% EBITDA 5.4 (3.6) % % EBITDA Margin (%) 42.0% -24.4% -66,4 p.p. 51.2% 37.4% -13,8 p.p. Net Income / Loss 2.3 (4.7) % % Net Margin (%) 18.4% -31.8% -50,2 p.p. 25.9% 17.4% -8,5 p.p. 22

23 Gross Operating Revenue Gross Operating Revenue - Celesc Geração S.A. R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % GROSS OPERATING REVENUE % % Electric Energy Supply % % Electric Energy Sales to Distributors % % Electric Energy Trading Chamber (CCEE) 0.6 (2.4) % % Gross Operating revenue for Celesc Geração grew 42.2% in 3Q12 and 38.0% during the first nine months of the year. This variation can be explained by: (i) contractual price adjustments; (ii) influence of the increase to the PLD during the period, inducing customers to exercise the flexibility foreseen in the agreements; (iii) new supply agreements; (iv) an automatic contractual disposition for an industrial consumer, altering the price of billed energy from that for conventional sources to those that receive incentives; (v) liquidation by the Energy Trading Board (CCEE) of energy surpluses at the PLD price, during the comparison period; (vi) the amount registered as Short-term Energy (CCEE) in 3Q12 reflects the non-registration of the agreement in the chamber s accounting system, which is foreseen to be adjusted via a re-accounting process in the next quarters. Energy Sold - Celesc Geração S.A. MWh Acumulated 9 Months Chg. % Electric Energy Supply 401, , % Industrial 139, , % Commercial, Services and Other 8,635 8, % Electric Energy Sales to Distributors 202, , % Electric Energy Trading Chamber (CCEE 52,012 90, % Average Sales Price (R$/MWh) % *The average sale price, considering only the revenue from sales of electricity to industrial, commercial and energy supply, without application of ICMS and disregarding CCEE. The table above shows an increase of 21.3% in billed energy for the accumulated 9M12 position and basically reflects what has been previously discussed: the exercising of flexibility mechanisms foreseen in the agreements as well as new clients. 23

24 Operating Costs and Expenses Operating Expenses - Celesc Geração S.A R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % OPERATING EXPENSES % % Electric energy purchased for resale + Charges Electric grid usage charge % % Personnel, Management % % Material % % Third-party costs and services % % Depreciation / Amortization % % Net Provision for Allowance Accounts % % Other Net Provisions Other Expenses % % Equity Result % % Operating costs varied by 103.5% in 3Q12 compared to the same period in the prior year and the main impacts were electric energy purchased for resale and fringe expenses due to changes in the manner in which the Company s plants commercial profile as a result of the alteration in the concession regime as an Independent Energy Producer PIE (in June, 2012). Additionally, in 3Q12 an extraordinary payment of R$7.4 million was booked according to the change in the basis for calculating the PIS and COFINS taxes as of June, This was due to a revision in the interpretation of the tax norm that allowed the application of a lower tax rate on revenue earned in short-term market operations under CCEE guidelines and the consequent revision to the bookings that had already been done. In the nine-months year-to-date 2012 position, Celesc Geração Operating costs increased by 40.6%. EBITDA Celesc Geração s EBITDA in 3Q12 was a negative R$3.6 million, 167.6% under the figure registered in 3Q11. However EBITDA accumulated in the year totaled R$18.6 million, a -6.3% variation. Net Profit The extraordinary expense generated by the change in the PÌS/COFINS tax calculation, as mentioned previously, was reflected in the Company s result with a R$4.7 million loss in 3Q12. In the accumulated 9-months position, Celesc Geração registered a Net Profit of R$8.7 million, 13.6% below the figure for 9M11. Investments (CAPEX) Celesc Geração invested R$25.7 million during the first nine months of 2012, 31.3% less than in the same period in Investments in its own generating facilities amounted to R$21.0 million, a 39.3% reduction reflecting the impending end of the construction work to enlarge the Pery Small Hydroelectric Plant and the consequent reduction of investments needed in that plant. 24

25 On the other hand investments in SPC s in which the Company holds a minority interest grew 68.8% in 9M12, reaching R$4.7 million. CAPEX - Celesc Geração S.A. R$ million 3 rd Quarter Accumulated 9 Months 3Q11 3Q12 Chg. % 9M11 9M12 Chg. % Investments Generation % % Own Power Plants Generating Complex % % Investiments in SPEs % % CAPEX Celesc Geração (R$MM) CAPEX Celesc Geração (R$MM) Q Q M11 9M12 Investiments in SPEs Own Power Plants Generating Complex Investiments in SPEs Own Power Plants Generating Complex Regulatory Aspects for Celesc Geração S.A. The Federal Government published Provisionary Measure 579 on , which deals with concessions for generating, transmitting and distributing electric energy in the face of a reduction in sector fringe expenses, with the purpose of assisting the productive sector to become more competitive and to stimulate the country s economy. The aforementioned Provisionary Measure foresees that the renovation of electric energy concessions that were granted before the enactment of the Law of Concessions (Law 8.987/95) and were not subject to public tender may be renewed once only for a term of up to 30 years, provided that the concessionaires accept the new conditions: (i) remuneration as per tariffs calculated by the National Electric Energy Agency - ANEEL for each hydroelectric plant; (ii) allocation of quotas for energy guaranteed in terms of physical capacity and power belonging to the hydroelectric plant, to public service electric energy distribution concessionaires within the National Interconnected System - SIN, to be defined by ANEEL as per regulation issued by the conceding authority; and (iii) submission to the standards of quality for the service, set by ANEEL. Celesc Geração possesses a total of 08 (eight) Small Hydroelectric Plants that are subject to the effects of MP 579/2012, as presented below: 25

26 Plants affected by MP 579/2012 Plants Location Concession Expiration Installed Capacity (MW) Guaranteed Energy (MW) Estimated Future Capacity (MW) Estimated Guaranteed Energy (MW) PCH Palmeiras Rio dos Cedros/SC 11/7/ PCH Bracinho Schroeder/SC 11/7/ PCH Garcia Angelina/SC 7/7/ PCH Cedros Rio dos Cedros/SC 11/7/ PCH Salto Blumenau/SC 11/7/ PCH Pery Curitibanos/SC 7/9/ PCH Ivo Silveira Campos Novos/SC 7/7/ PCH Piraí Joinville/SC 11/7/ Total - MW Pursuant to what the Company disclosed in an Announcement to the Market in 10/29/2012, the company consigned its request for renovating the concessions through separate processes, mainly bearing in mind the specific condition of the Pery unit which was undergoing the final phase of the construction work for the amplification and repowering of its installations. ANEEL, through its Dispatch dated , resolved to: 1. Recommend the extension of the term of the concession for the Bracinho, Garcia, Cedros, Salto, Ivo Silveira and Palmeiras hydroelectric plants, which was requested by Celesc Geração under the terms of Provisionary Measure 579 of 2012; 2. Recommend the extension of the term of the concession for the Pery Hydroelectric Plant, establishing that (a) in the first twenty years, only the amount of energy corresponding to the prior power capacity of the plant, i.e. 4 MW, shall be subject to the quota regime foreseen in Provisionary Measure 579, while all incremental power, or 26MW, may be freely sold and (b) in the final ten years, the full power capacity of the plant shall be subject to the quota regime; 3. Recommend to not extend the Pirai Hydroelectric Plant s concession as it is subject to later Registration. The Piraí plant possesses an installed capacity of merely 0.78 MW which was reconsidered when the second amendment for renovating the concession was signed in Therefore, the renovation of the concession is not required and only the registration of the operation with the regulating agency is necessary. On Joint Ministerial Ordinance 578 MME/MF was published. It defines the initial tariffs that may be charged by hydroelectric plants classified within Provisionary Measure 579/2012, based on the Cost of Managing Generation Assets (GAG). On the same date Joint Ministerial Ordinance 580 MME/MF was published in which the amounts for indemnification of the investments in reversible assets that have not yet been amortized or depreciated are defined. Considering the current scenario for regulatory definitions, the Company s management is analyzing the conditions that were proposed for extending the term of the concessions for its hydroelectric plants and will submit to this analysis discussions held by its bodies of governance to conclude whether the extension proposed by the conceding authority should be ratified and the terms of the amendment to the Concession Agreement for the referred undertakings should be signed. 26

27 2.3 SCGÁS Operational Performance The volume of gas sold by SCGÁS during 3Q12 was 175,440 thousand cubic meters, 2.1% over sales achieved in 3Q11. In the first nine months of this year sales volumes reached 507,364 thousand cubic meters or 1.1% above the figure for the same period in The highlight goes to the Residential and Commercial segments that registered the greatest growth rate due to the expansion of services to these classes. Gas Sales by Segment - Volume (thounsand M3) 3 rd Quarter Accumulated 9 months Segment Chg. % Chg. % Industrial 135, , , , Automotive 30,995 28,311 (8.7) 90,123 87,062 (3.4) Commercial 1,600 1, ,112 4, Compressed Natural Gas 3,233 3,026 (6.4) 9,354 9,327 (0.3) Residential Total 171, , , , SCGÁS - Volume Sold by Segment accumulatedo 9M12 0.9% 1.8% 0.1% 17.2% Industrial Automotive Commercial Contribution Margin by Segment accumulated 9M12 4.6% 0.1% 26.8% 0.8% Industrial Automotive Commercial 80.0% Compressed Natural Gas 67.8% Compressed Natural Gas The accumulated Margin of Contribution for the first nine months of 2012 was R$65 million, 39.8% under that verified in 2011 (R$ million), mainly as a result of a drop in the margin of contribution for the industrial segment - on average R$ 0.10/m 3 - and unfavorable exchange fluctuations which caused accumulated losses up to 3Q12 in the order of R$5 million Economic and Financial Performance In the third quarter SCGÁS had a net result of R$8.2 million, 19.7% below the R$10.2 million profit achieved in the same period of

28 Main Financial Indicators - SCGÁS S.A R$ million 3 rd Quarter Accumulated 9 months Chg. % Chg. % Gross Operating Revenue Deductions from Operating Revenues (34.2) (43.1) 25.8 (99.5) (115.5) 16.2 Net Operating Revenue Operating Costs and Expenses (108.4) (148.1) 36.7 (297.0) (410.8) 38.3 Costs of Natural Gas (93.2) (130.7) 40.2 (251.4) (360.6) 43.4 Operationg Expenses (15.2) (17.5) 14.9 (45.6) (50.1) 10.0 EBITDA (10.1) (57.5) EBITDA Margin (%) 17.3% 12.0% -5,3 p.p. 22.7% 8.2% -14,5 p.p. Lucro/ Prejuízo Líquido (19.7) (78.2) Net Margin (%) 8.3% 5.1% -3,2 p.p. 12.5% 2.3% -10,2 p.p. The growth of 20.2 % in Net Operating Revenue in year-to-date 2012 (+30.0% in 3Q12) due to tariff adjustments implemented by the Company in the period was not sufficient to offset the increase in Natural Gas prices, which occurred due to unfavorable exchange fluctuations and which had a negative impact on the Company s performance. Debt The Company has debt outstanding with the National Bank for Social and Economic Development BNDES with interest set at the Long-Term Interest Rate (TLJP) + 4.5% per annum. The collateral is bills receivable for some clients specified in the agreement. The loan matures on November 15, At the end of 3Q12, SCGÁS possessed Net Cash in the amount of R$44.9 million. SCGás / Debt - 3Q12 (R$ Million) Short Term Debt 4.5 Long Term Debt 0.8 Total Debt 5.3 ( - ) Cash Equivalents (50.2) Net Debt / (Net Cash) (44.9) Total Debt / EBITDA 12M 0,1x Total Debt / Equity 0,03x Investments (CAPEX) Investments made during 9M12 totaled R$24.2 million and reflect the accomplishment of construction work (amplification of the constructed network) of 44.1 km, bringing up the total to 1,002 km. CAPEX SCGÁS (in R$Thousandl) M11 DISTRIBUTION SYSTEM M12 Other 28

29 2.4. Remaining Participations REMAINING PARTICIPATIONS Celesc Interest 30.88% Celesc Interest 23.03% Celesc Interest 15.48% Net Revenue Net Revenue Net Revenue R$54.9 MM R$68.8 MM R$450.1 MM EBITDA / EBTIDA Margin EBITDA / EBTIDA Margin EBITDA / EBTIDA Margin FINANCIAL HIGHTLIGHTS 6M12 R$51.4 MM / 93.7% Net Profit / Margin R$32.2 MM / 58.7% Net Debt R$48.3 MM Total Assets R$36.5 MM / 53.0% Net Profit / Margin R$24.2 MM / 35.2% Net Debt R$(76.1) MM Total Assets R$75.9 MM 16.9% Net Profit / Margin R$12.8 MM 2.8% Net Debt R$278.2 MM Total Assets R$240.9 MM R$371.1 MM R$2,298.3 MM Equity Equity Equity R$134.1 MM R$136.5 MM R$1,279.6 MM ACCOUNTING ON A PROPOR- TIONAL CONSOLIDATION BASIS ACCOUNTING ONLY ON AN EQUITY EQUIVALENCE BASIS INVESTIMENTO AVALIADO A FAIR VALUE BASIS (TVM) COMMENTARY OF THE RESULTS 26.3% on net revenue 9.2% on operating expenses 12.0% on operating expenses 46.6% on financial result 38.5% on net income 23.6% on net revenue 8.6% on operating expenses 9.9% on EBITDA 35.5% on financial result 4.5% on net income 13.4% on net revenue 12.1% on operating expenses 40.9% on EBITDA 2.2% on financial result 1,623.6% on net income ABOUT THE BUSINESS Constituted in 2000, it holds a 30- year concession term for exploiting power lines in Santa Catarina state. The agreement foresees a 50% reduction in RAP as of November, It set-up ETSE, a whollyowned subsidiary, to manage new transmission lines that were awarded in auction in Dec/2011. An independent energy producer constituted in 1996, it holds a 35- year concession. It is located on the Jacúi River (RS) with na installed capacity of 125 MW and an assured energy output of 78 MW. It is directing resources to new investments. Operates water and sewage services in 198 municipalities, 03 districts in the state of Santa Catarina and 01 municipality in Paraná. Almost wholly of these municipalities operates through a concession contract, with most of them has 30- year duration. 29

30 35,00% 30,00% 25,00% 20,00% 15,00% 10,00% 5,00% 0,00% Results 3Q12 3. Holding Company Equity Accounting Result The Equity Accounting Result shows performance per controlled or associated entities: Equity Result R$ million 3Q11 3Q12 % Chg. 9M11 9M12 % Chg. Celesc Distribuição 40.6 (127.3) (413.9) (131.1) (160.5) Celesc Geração 2.3 (4.7) (304.8) (13.6) SCGás (19.6) (78.2) ECTE (43.7) (1.4) DFESA Equity Result 48.8 (127.4) (361.1) (108.0) (143.8) Other Results (0.2) (8.1) (1.0) (13.0) Net Income 48.6 (135.5) (378.8) (121.1) (149.2) Dividends Celesc s by-laws (chapter V, articles 49 to 50) adopt the minimum percentage foreseen in legislation for distributing dividends, that being 25% of the adjusted net profit. However, in the last five tax years dividends paid-out have been the equivalent of 30%. Dividend Yield 25,00% 25,00% 30,00% 30,00% 30,00% 30,00% 30,00% 6,14% 4,74% 7,69% 4,75% 2,78% 5,24% 7,30% Dividend Yield PN PAY -OUT The Remuneration policy provided Company shareholders with a dividend-yield in the order of 7.30% for preferred CLSC4 shares (2011 closing basis). 30

31 4. Consolidated Result Gross Operating Revenue Gross Operating Revenue - Consolidated R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Gross Revenue Breadown per Segment 1, , % 4, , % Celesc Distribuição 1, , % 4, , % Celesc Geração % % SCGÁS % % ECTE % % Other (CRF) Net Operating Revenue 1, , % 3, , % Net Margin 4.6% -12.9% 8.0% -3.8% The Gross operating revenue for the Celesc Group in 3Q12 amounted to R$ 1.7 billion, 1.7% higher than that for the third quarter of Below the composition of Consolidated Operating Revenue per segment is shown: Gross Revenue Breakdown per Segment - 3Q12 SCGÁS 1.9% Celesc Geração 1.2% ECTE 0.4% Celesc Distribuição 96.6% Consolidated Net Operating Revenue Net Operating Revenue for Celesc in 3Q12 was R$ 1.05 billion, 0,3% greater than that for the same period in Net Operating Revenue R$ miillion Q11 3Q12 31

32 Consolidated Net Revenue in the third quarter of 2012, disregarding construction revenue (R$74.5 million), totaled R$976.8 million, 2.8% above the figure registered in 3Q11 (R$950.2 million). For the nine-month year-to-date period, Consolidated Net Revenue reached R$3.22 billion, a 4.2% growth in relation to 9M11. Excluding the effects of Construction Revenue (R$219.0 million in 9M12) consolidated net revenue was R$2.99 billion or about 4.0% over the prior period. Consolidated Operating Costs and Expenses In the third quarter of 2012, Celesc s operating costs (which include Energy Costs and Operation Costs) were R$ 1.2 billion, 31.9% higher than 3Q11. The major impact was the cost of purchased electric energy, the URP-Concórdia labor indemnification and the provision for the Voluntary Resignation Plan PDV, which affected Celesc Distribuição s result as previously mentioned. The cumulative amount in the first nine months of 2012 was R$ 3.4 billion or 25.7% above the figure registered for the comparison period. Disregarding the Cost of Construction (which has no effect on the Result), Operating Costs and Expenses grew by 38.2% in the quarter and by 27.2% for 9M12. Operating Result (Result of the Activities) and EBITDA The overall result of the Company s activities was a negative R$203.1 million in 3Q12, reflecting the growth verified in operating costs and expenses (+31.9%). In the 9-month accumulated position, the result was a negative R$205.2 million. Based on the Result of the Activities, EBITDA amounted to a negative R$163.2 million in the third quarter of Consequently the EBITDA margin during this period was -15.5%. In the nine-month accumulated position, EBITDA was a negative R$82.3 million. Adjusting EBITDA for Regulatory Assets and Liabilities and for non-recurrent amounts informed previously and which affected Celesc Distribuição s result, normal EBITDA in 3Q12 is R$167.7 million, 48.7% higher than 3Q11. In 9M12 adjusted EBITDA reached R$358.8 million or 0.6% above that for the period being compared, as demonstrated in the table below: Consolidated / EBITDA IFRS + Regulatory Assets / Liabilities - Non-Recurring R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % EBITDA - IFRS Reported (163.2) % (82.3) % (+) Regulatory Assets / Liabilities Effects recognized (46.6) 91.6 (153.8) (=) EBITDA Adjusted by Regulatory Assets / Liabilities 94.9 (71.6) % % (-) Non-Recurring Effects ANEEL 367 Resolution Judicial Recovery - Large Consumers Workers' compensation "URP-Concórdia" - Expenses (-) Reversal of Provision - (5.8) - (5.8) Voluntary Dismissal Plan - PDV (=) EBITDA Adjusted by Regulatory Assets / Liabilities - Non-Recurring Effects % % Financial Result Celesc s net financial result in 3Q12 was a negative R$22.7 million, 167% under the R$15.2 million surplus registered in 3Q11. The Net Financial Result for the first nine months of the year was R$8.1 million. 32

33 Financial Results Statement - Consolidated In thousand Reais Quarter Chg. Accumulated Chg. 3T12 3T11 % 9M12 9M11 % Financial Income Interest Income % % Income on Accounts Receivable % % Monetary Variation % % Financial incentives - Social Fund % % Currency Devaluation on Energy % % Other Income % % % % Financial Expenses Debt Services (4.8) (8.0) -40.1% (19.5) (24.1) -19.1% Monetary Variation 8.5 (9.8) % (0.9) (10.5) -91.4% Adjustment of R&D and Energy Efficiency (4.5) (6.0) -25.5% (14.7) (16.2) -9.0% Other expenses (12.6) (35.3) -64.4% (22.3) (40.9) -45.4% (13.3) (59.1) -77.4% (57.4) (91.6) -37.3% Net Financial 15.2 (22.7) % % NET CONSOLIDATED PROFIT Celesc registered a loss (IFRS) of R$135,5 million in 3Q12 compared with a net profit of R$48.6 million in 3Q11. In the nine-month accumulated position, the loss amounted to R$121.1 million in comparison to a R$245.9 million profit in 9M11. As previously presented, the Celesc Distribuição subsidiary was negatively impacted during the period by the effects of cost raises for purchased electric energy and other non-recurrent items. The following table presents restated amounts after the mentioned effects are excluded from the consolidated result: NET INCOME IFRS + Regulatory Assets / Liabilities - Non-Recurring Effects R$ million 3 rd Quarter Accumulated 9 Months Chg. % Chg. % Net income - IFRS Reported 48.6 (135.5) % (121.1) % (+) Ativos e Passivos Regulatórios Effects recognized (30.8) 60.5 (101.5) (=) net Income adjusted by Regulatory Assets / Liabilities 17.8 (75.0) % (10.4) % (-) Non-Recurring Effects ANEEL 367 Resolution Judicial Recovery - Large Consumers Workers' compensation "URP-Concórdia" - Expenses (-) Reversal of Provision - (3.8) - (3.8) Voluntary Dismissal Plan - PDV (=) Net Income IFRS + Regulatory Assets / Liabilities - Non-Recurring Effects % % Adjusting the Company s results only for the effect of Regulatory Assets and Liabilities, the loss in the quarter would be reduced to about R$75.0 million. The accumulated 2012 result would be a negative R$10.4 million, which represents a decrease of 107.2%. Adjusted Net Profit, including non-recurrent effects, totals R$82.9 million in 3Q12, while that for the first nine months of 2012 reaches R$170.1 million (8.9% higher than that registered for the same period in 2011). Consolidated Debt Gross consolidated debt at September 30, 2012 was R$ million, 25.7% under the amount registered in the same period of Cash and cash equivalents amounted to R$262.9 million at the end of the third quarter, resulting in a net debt position in the order of R$21.6 million. 33

34 Consolidated Debt Financial Debt - 3Q12 (R$ million Short Term Debt Long Term Debt Total Debt ( - ) Cash * (262.9) Net Debt / (Net Cash 21.6 EBITDA (últimos 12 meses) 9.7 Net Debt / EBITDA 12M 2,2x Net Debt / Equity 0,1x * Cash and Cash Equivalents + Marketable Securities The Company s adjusted debt, that is, if the obligations assumed with post-job benefits (CELOS Foundation) are considered, was R$ 1.0 billion on September 30, Debt + Pension Plan Adjusted Debt - 3Q12 (R$ million) Total Debt Post-Employment Benefits 1,005.1 Pension obligations Other benefits to employees ( - ) Net Pension Plan (260.0) ( - ) Cash * (262.9) Adjusted Net Debt 1,026.7 Adjusted Net Debt/ EBITDA 12 months 105.8x Adjusted Net Debt / Equity 0.5x * Cash and Cash Equivalents + Marketable Securities In the following table is a list of the loans and financing contracts taken down by the companies in the Group: 34

35 Loans and Financing (R$ '000) - September 2012 Total Total % Chg. Interest Sep/11 Sep/12 Local Currency BNDES (SCGás) TJLP % (77.6) Bank Loans 106% CDI (41.3) Eletrobrás 5.00% Finame 5.73% Debêntures CDI % (17.7) FIDC Celesc D CDI + 0,95% (73.2) Total (23.3) Short Term - Current Long Term - 1 to 5 years Long Term - above 5 years Cash and Marketable Securities (42.9) Net Debt / (Cash) (61.3) BNDES (National Bank for Social and Economic Development) This concerns a financing agreement entered into by controlled entity SCGÁS with the BNDES. The loan is guaranteed by collection titles issued against specific clients which are kept in custody. This loan becomes due on November 15, 2013 and the bears interest at the Long-term Interest Rate (TJLP) plus 4% p.a. Bank Loans On December 3, 2007 Celesc Distribuição took down a loan with Banco do Brasil for the Liquidation of Debits with Celos, at an interest rate of 106% of the interbank certificate of deposit rate - CDI. On April 14, 2011, Celesc Distribuição S.A. signed a Working Capital Financing Agreement with Banco do Brasil with interest set at % p.a. plus IRP (Savings Remuneration Index). This operation contemplates an amount of R$ 80 million which is due in 18 months with a 12- months grace period for payment of principal and interest, in six monthly installments. These agreements are guaranteed by receivables and have been accepted by ANEEL. Additionally, on September 25, 2012 Celesc Distribuição used R$19.8 million of its corporate card limit with Banco do Brasil. This loan bears monthly interest at 0.77% and becomes fully due in November, During a meeting held on October 17, 2012 the Board of Directors authorized R$110.0 million worth of funds to be raised in the market, paying 7.55% p.a., with a 6 months term and a 12 months grace period. This debt will be secured by duplicate invoices held in custody for an amount equivalent to 100% of the balance outstanding of the operation. This information will be disclosed in the next quarter s financial statements. Eletrobrás The amounts taken down are meant, among other purposes, to finance the rural electrification programs and the funds originate from the Global Reversal Fund - RGR and from the Eletrobrás Financing Fund. In general, the agreements for these loans contemplate a 24 months grace period, a 60 months amortization term, interest at a 5% p.a. rate, an administration Fee of 2% p.a., are guaranteed by receivables and have been acknowledged by ANEEL. Finame The loan taken down was meant to cover a partial cash shortfall at Celesc Distribuição, for the purchase of machinery and equipment. In this case, each equipment acquisition transaction constitutes a loan agreement. The entire funds were to be used in 2011 and 2012 and bear interest at between 4.5% and 8.7% p.a. The loan amount may reach R$50 million, to be amortized in 96 months as of August, The loan guarantee is bound to receivables owed to the debtor and the loan terms have been accepted by ANEEL. Debentures ECTE issued a single series of 75 debentures on March 16, 2011, in the amount of R$ 75 million, for a five-year term as of date of issuance. They are simple, non-convertible (to shares), booked and nominal. 35

36 The debentures yield 100% (one hundred percent) of the accumulated daily average for the one-day Inter-finance Deposit (DI) rate (an extra over to the group), to which is added a spread of 1.30% per annum based on 252 working days. The per-unit nominal value of the debentures is amortizable starting from the sixth month as of the date of issuance, in monthly and consecutive installments as per the timetable included in the booked deed of sale of the debentures, beginning on September 16, The current value for the quarter ended September 30, 2012 is R$57.2 million, of which R$ 17.7 million or 30.88% of the total balance outstanding have been proportionately consolidated in the Company. Credits Receivable Investment Fund (FIDC) The FIDC or "Receivables Fund" is a type of investment fund with assets composed of credit rights. In 2007, Celesc Distribuição S.A. offered as receivables the credit rights regarding future energy consumption for previously selected consuming units, all of which possessed a performing profile. According to accepted Brazilian accounting practices, the FIDC was consolidated and the portion owed, related to quotas purchased by third parties are accordingly booked in liabilities, as debt. The Group s Investments The volume of Celesc Group s investments in the third quarter of 2012 was R$97.3 million or 26.2% lower than investments in 3Q11. The distribution subsidiary was responsible for the greater portion of R$77.9 million. Celesc Geração S.A. invested R$12.9 million while the investments for SCGÁS in 3Q12 added up to R$6.5 million. The table below shows the amounts invested in the third quarters of 2011 and 2012 and the amount accumulated in the first nine months: Investments In Thousand Reais 3 rd Quarter % Accumulated 9 months Chg. % Chg. % Generation % % Distribution of Energy % % Distribution of Natural Gas % % Total % % 36

37 5 Main Challenges Main Challenges Status CORPORATE BY-LAWS MASTER BUSINESS PLAN Statutory revision approved in Jan/2012 Specialized consultancy Roland Berger hired in Aug/2012 GROUP OPERATING EFFICIENCY Tender process for hiring of specialized consultancy in progress. GLOBAL REPORT INITIATIVE - GRI Implementation process initiated in Aug/2012 with Key Associados consultancy. CELESC GERAÇÃO Public Call 001/2012 SHP AUTOMATION RENEWED POWER CONSTRUC- TION SITE FOR PERY SHP Analyzing partnership opportunities in energy generation projects 83% of all SHP s have been automated Inserção de 25,6MW de potência. Início da operação em dez/2012. PERSONAL Labor appropriation Centralization of Activities 5.0 percentage point increment over the end of 2011 Implementation process in progress. CELESC DISTRIBUIÇÃO PAST DUES AUTOMATION Substation Automation COM - Measurement Operations Center Regulatory - OK Plan for Reduction of Past-due Balance to be presented to the Board in Sept/ substations of which 124 are tele-controlled Inaugurated in Aug/2012. Already has capacity to tele-measure Group "A" consumers that are responsible for 46% of the Company s Billings. In 2013 it will be able to service all consumers in this Group. Pending In progress Concluded / Delivered 37