Release 3Q17. October 31 st, 2017 NET INCOME. Main Indicators

Transcription

1 \ Release 3Q17 October 31 st, 2017 EBITDA NET INCOME NET DEBT R$ mi R$ mi R$ 3.9 bi Main Indicators Indicators (R$ thousand) 3Q17 3Q16 Var. 9M17 9M16 Var. Gross Margin 864, , % 2,605,531 2,537, % PMTO (293,628) (293,094) 0.2% (929,349) (927,862) 0.2% EBITDA 551, , % 1,624,821 1,902, % Adjusted EBITDA¹ 535, , % 1,571,319 1,343, % Net Income 140, , % 416, , % Adjusted Net Income¹ 129, , % 381, , % Capex² 164, , % 488, , % Net debt 3,908,086 3,396, % 3,908,086 3,396, % 1 Excluding non-recurring effects: Non-indemnified Financial Asset (VNR), Provision for the Reimbursement of the Water Charge, Sale of Pantanal Energética, Insurance Recoveries at Pecém 2 Capex consider onsolidated assets Hydrological Risk Protection Construction of São Manoel Uptime of Pecém Reduction of Total Losses Efficiency Against PDD Provision for Doubtful Accounts and Default Investment in Distribution Distributed energy volume Transmission Environmental Licensing Commercialization Gross Margin of R$ 43.5 Million Pecém Gross Margin of R$ Million PMTO Evolution Under Inflation Total energy hedge of 18% (184 average MW) 97.2% of physical work completion and the attainment of the Operating License 91%, accumulated, superior to the auction parameter p.p. at EDP SP and p.p. at EDP ES in relation to Dec/16 Reduction of R$ 21 Million in relation to 2Q % in relation to 9M % increase volume, especially in EDP São Paulo, with a 4.4% growth Schedule anticipation and the expectation to obtain the Installation License by the end of the year Growth of 264.0% in relation to 3Q16 Growth of 74.2% in relation to 3Q % when compared to 9M16 Adjusted EBITDA of R$ Million Adjusted Net Income of R$ Million Increase of 14.3% in relation to 3Q16 Increase of 2.4% in relation to 3Q16 Market Value: R$ 9.2 bi Treasury Shares: 685,476 Total Shares: 606,850,394 Free float: 48.7% Earnings Conference Calls with webcast Investor Relations Portuguese 11h00 (BRA) +55 (11) (11) November 01, 2017 English 09h00 (NYC) USA: +1 (786) Others: +1 (888) The conference will be held in Portuguese with simultaneous translation into English ri@edpbr.com.br São Paulo, October 31 st, EDP ENERGIAS DO BRASIL S.A. ( EDP Energias do Brasil, Company or Group ) listed on the BM&FBOVESPA s Novo Mercado (ticker symbol: ENBR3) today announces its financial and operating results for the third quarter and for the year to September Information is shown on a consolidated basis in accordance with accounting practices in Brazil and International Financial Reporting Standards (IFRS) based on revised financial information. The operating information has not been revised by the independent auditors

2 Highlights of the quarter Gross Margin: in the 3Q17, EDP Brasil recorded a Gross Margin of R$ million, a reduction of 7.6% compared to 3Q16. In the 9M17, the growth reached 2.7%. Manageable Expenditures: The Company maintains strict control of expenditures through its Zero Based Budget (Orçamento Base Zero OBZ), which is reflected in an unchanged PMTO from 2016, reaffirming the Company s commitment to controlling expenditures at below inflation levels. EBITDA (adjusted): EBITDA (adjusted) rose by 14.3% (R$ million) in the quarter and 16.9% (R$ 1.6 billion) in accumulated terms for the year. Out of the quarter s totals, 35.4% of EBITDA come from Hydro Generation, 25.3% from Thermal Generation, 36.2% for Distribution, and 7.8% from the Trading Company and EDP Grid 1. Net Debt: Continuing with the debt-cost reduction strategy, with a strategic focus on financial and fiscal efficiency, the Company has been working on several initiatives. In the quarter the settlement of the 4 th Debentures Issue in the amount of R$ 384 million was performed. The Net Debt/EBITDA ratio remained at comfortable levels of 1.9x, which allows the Company to continue its projects at a suitable level of controlled risk. Interest on Capital: Payment made on September 25, for fiscal year 2016, in the total gross amount of R$ 330 million. Energy Management o o o Hydro Plants: The Company has reinforced its strategy of protecting the portfolio from the effects of the GSF (Generation Scaling Factor) and PLD (Preço de Liquidação das Diferenças Price for Settlement of Differences) by uncontracting Jari ( Jari ) HPP and Cachoeira Caldeirão ( Cachoeira Caldeirão ) HPP, through the MCSD (Excess and Deficits Compensation Mechanism), in addition to reductions that have been made to bilateral agreements. This uncontracting reinforces the Company s effective portfolio-protection strategy by capturing avoided costs, increasing the uncontracted position to 18%, + 9 p.p. from the beginning of the year. Commercialization: EDP's Trading Company acted as an instrument for the management of the Company's energy portfolio, acting jointly with the generators in the purchase and sale transactions. In this way, it presented a growth of 53.7% in the volume of energy sold. Also, Gross Margin increased R$ 31.6 million between quarters, reflecting the improvement in the unit margin between the quarters and the maintenance of the strategy of consistency of results. Pecém: The ADOMP hedge was carried out, generating savings of R$ 29.3 million. Distribution: Distribution increased by 2.3%, driven by a 4.4% growth in EDP São Paulo ("EDP SP") and a 0.9% drop in EDP Espírito Santo ("EDP ES"). At EDP SP, the increase in volume reflects the recovery of industrial production in the state (excluding the effects of the migrations). In EDP ES, the decrease in distributed energy reflects the milder temperatures. In the year, R$ 413 million were invested, a growth of 19.3%, focused on increasing operational efficiency and quality of services, reflecting the increase in the compensation base to be captured. Gross margin increased 11.6% in EDP SP and 12.3% in EDP ES, disregarding the amount of the indemnifying financial asset (VNR) accounted for in EDP ES's tariff revision in The main impacts of the quarter were: (i) over-contracting in EDP ES, resulting in a positive impact of R$ 22.9 million; (ii) reduction of the PDD, in both distributors, totaling R$ 21.0 million; and (iii) reduction of total losses in both distributors, of -0.16% p.p. in EDP SP and p.p. in EDP ES, in relation to December Pecém: In accumulated terms for the year, the thermal plant has reached 91% average uptime, exceeding the 90.14% uptime required at the auction. In operational terms, the first phase out of a total of three of the maintenance plan for the coal conveyor belt was implemented, the purpose of which is to reduce the additional cost of coal transportation by truck and improve the conveyor s efficiency by reducing the time spent unloading coal cargo ships. In financial terms, it is worth mentioning the ADOMP hedge, which generated savings of R$ 29.3 million this quarter. The Uptime Factor - FID (moving average for the past 60 months), was recalculated for 2018, to 90.7%. The GU02 went through a program stoppage during 12 days in September, reflecting an uptime reduction. São Manoel: The Plant s operating license was granted and the commissioning tests at GU01 have begun, as have pre-commissioning tests at GU02. The site reached 97.2% physical work completion. Transmission: The Company proceeded according to the construction schedule for Lot 24 s Transmission Line, from Auction n 13/2015, in the state of Espírito Santo, disbursing a total R$ 6.3 million on land purchases and environmental studies, continuing the environmental licensing process the Environmental Control Report (Relatório de Controle Ambiental - RCA) was submitted and the application for the Preliminary License was required. The Company expects to be given the Installation License in the coming months. Digitalization: The Company implementation of administrative processes automation and robotization continues, providing efficiency and quality gains through innovation and technology initiatives. Innovation initiatives were initially implemented in the Company s Shared Services Center (Centro de Serviços Partilhados CSP), to fill tax guides, bank 1 Considering that -4.7% related to intragroup eliminations. 2

3 reconciliation and receipt of invoices. By the end of the quarter, the Company had 15 robots in operation and an estimated 25 additional robots are to be incorporated by year-end, a total of 40 robots. 3

4 Contents 1.Significant Events for the Period 5 2.Operating Performance Generation Commercialization Volume Consolidated Energy Balance Losses Quality Indicators 14 3.Economic-Financial Performance Consolidated Non-Recurring Events Revenues and Gross Margin Manageable Expenditures Gain on Divestment/Acquisition of investment EBITDA Financial Result Net Income Unconsolidated Projects Santo Antônio Do Jari HPP Cachoeira Caldeirão HPP 24 4.Assets Under Construction 25 São Manoel HPP 25 5.Debt 25 6.Variation in Fixed Assets 27 7.Regulatory Assets and Liabilities 28 8.Sustainable Performance Commitments with Sustainable Development Sustainability Indicators Other Information on Sustainability 30 9.Capital Markets Share Performance Capital Stock ANNEXES 33 4

5 1. SIGNIFICANT EVENTS FOR THE PERIOD MME opens a public hearing for reforming the electric sector On July 3 rd, the Ministry of Mines and Energy (MME) announced a Public Hearing (number 32/2017) to discuss the report Principles for the Reorganization of the Brazilian Electric Sector. The document sets forth the principles for improving the legal, institutional and regulatory structure of the sector. On July 5 th, the MME published Technical Note 5/2017 under Public Hearing number 33/2017 (PH No. 33/17), putting forward several measures, the most important being: legal adjustment in self-production, adjustments in price formation, reduction of the limits for access to the free market, reduction in cost of transmission and generation, separation of commercial capacity backing, new guidelines for setting tariffs and measures for dejudicialization. For this PH, EDP, with assistance from consultants Bain & CO, Instituto Acende Brasil and universities FGV, Unicamp and USP, drafted 6 Technical Notes (TN) addressing the following topics: Free Market Expansion (TN1), Price Formation (TN2), Structural Market Factors (TN3), Supply Expansion (TN4), Discounts and Subsidies (TN5), and Unlocking Operations (TN6). In addition, the company also developed a Legal Booklet containing the amendments to the law required to implement the suggested improvements, as well as a document summarizing the NTs and EDP s vision for the electric sector s future (TN0). Overall, EDP submitted 42 contributions, including, but not limited to, the following main ones: (i) Guidelines for free-market expansion and for separating power line and energy segments; (ii) The need to develop a robust guarantees system and a clearing house; (iii) Developing mechanisms to ensure the electric sector s financiability and separate backing from energy; (iv) Developing a competitive ancillary services market, ensuring the feasibility of the basic thermal power plants; (v) Establishing clear rules for the extension of hydro plant concessions; and (vi) Assessing the Energy Reallocation Mechanism to ensure the mitigation of hydro risks only and the presence of mechanisms to ensure greater player participation in price formation In the continuity of the work, EDP carried out a study comparing the main contributions made by the agents and is studying the best way to be prepare for the movements resulting from this process. Issue of Promissory Note by EDP São Paulo On July 19, EDP São Paulo issued promissory notes in the amount of R$ 130 million with a term of 2 years with bullet payments of principal and interest at maturity. The interest rate is set at % of the Interbank Interest Rate - CDI, a reflection of the excellent quality of EDP São Paulo s credit. Uncontracting energy of the Santo Antonio do Jari and Cachoeira Caldeirão HPPs On July 24, 20.9 amw of Jari and 95 amw of Cachoeira Caldeirão was uncontracted through the MCSD (A-0) - Excess and Deficits Compensation Mechanism. At Jari, of the uncontracted 20.9 amw, amw have been held for hedging purposes and 3.40 amw have been recontracted. At Cachoeira Caldeirão, of the 95.0 amw uncontracted, amw have been held for hedging purposes and amw have been recontracted. Uncontracting is effective from July to December The recontracted amounts were sold to the shareholders trading companies in the same proportion as their stakes in the company. 3rd and 4th Tranches of the Long-Term Loan from BNDES for São Manoel HPP On July 28, the São Manoel HPP ( São Manoel ) received the 3rd tranche under the Financing Agreement with BNDES, in the amount of R$ 84.0 million, and, on August 28, the 4th tranche, in the amount of R$ 39.9 million. The balance to be disbursed is R$ 178 million, for a total financing of R$ 1.3 billion, at TJLP % p.a. Interest on the disbursed amount will be capitalized quarterly until December 15, 2018, and due on a monthly basis from January 15, Repayments will have the same grace period as the interest and be due monthly until December 15, ANEEL authorizes the 2017 annual tariff readjustment for EDP Espírito Santo The 2017, annual tariff readjustment for EDP Espírito Santo was approved on July 31, effective as of August 07 th, The average perceived effect for consumers was +9.34%, of which % for high- and medium-voltage consumers and +8.53% for low-voltage consumers. Parcel B-tranche was adjusted by -2.52%, equal to R$ million. Reduction of Social Capital in Enerpeixe On August 31 st, the reduction of Enerpeixe's capital stock was deliberated, through an Extraordinary General Meeting ("AGE"), in the amount of R$ million, from the current R$ million to R$ million million, as it is considered excessive in relation to its corporate purpose, without cancellation of shares, maintaining the same proportion of the share of each shareholder in the capital stock. This reduction was approved by Aneel through Order No /17. The effectiveness of the resolution is conditioned to the expiration of the period of 60 days after the publication of the Extraordinary General Meeting pursuant to article 174, of Law 6,404/77. Payment of the 4th Issue of Simple, non-convertible Debentures of EDP Brasil On September 15, the Company made a payment of interest and principal associated with the 4th Issue of Simple, non-convertible, Debentures of EDP Brasil, in the global amount of R$ million. Of this amount, R$ million related to payment of the first tranche of the principal of the 1st series and R$ 52.8 million, interest distributed as follows: (i) 1st series of R$ 41.8 million; (ii) 2nd series of R$ 8.7 million; and (iii) 3rd series of R$ 2.3 million. Payment of Interest on Capital On September 19, the Company announced to its Shareholders a payment, on September 25, of interest on capital in the total amount of R$ million for the fiscal year ending on December 31,

6 Subsequent Events Reimbursement of the Emergency Water Charge of Pecém I TPP On October 10, the Pecém I TPP (Pecém) received a (cash) reimbursement of R$ 32.0 million, reflected in the 2Q16 result, for the Emergency Water Charge levied by the State of Ceará for the September 2016-May 2017 period. The reimbursement was granted based on a May 8 federal court order that mandated full transfer via the CVU. In addition, the order requires suspended application on the part of ANEEL of any penalty for the potential reduction and/or interruption of energy generation from the plant resulting from water supply problems, and prevents any type of suspension of payment of the fixed revenue to which Pecém is entitled under the terms of the Power Purchasing Agreements in the Regulated Contracting Environment - CCEARs. ANEEL authorizes the 2017 annual tariff readjustment for EDP São Paulo The 2017 annual tariff readjustment for EDP Espírito Santo was approved on October, effective on October 23, The average perceived effect for consumers was %, of which % for high- and medium-voltage consumers and % for lowvoltage consumers. Parcel B-tranche was adjusted by -2.68%, equal to R$ million. Aneel presents a proposal for improving tariff flag methodology On October 24, the National Electric Energy Agency (ANEEL) announced a proposal for improving the tariff flag methodology to be submitted to a Public Hearing within the next 60 days. This proposal involves amounts charged to consumers and the inclusion of new criteria for calculations such as costs relating to the hydric deficit. Exceptionally, in the light of the unfavorable hydrological scenario, the regulator s board has voted to anticipate the change in the tariff flag with effect from November and not January/February 2018 as envisaged. Aneel has therefore proposed to increase the additional value charged when the second stage of the red flag tariff is triggered implying an increase from R$ 3.50 per 100 kilowatt hour (KWh) to R$ 5.0 for each 100 KWh. In the case of the yellow flag, the additional premium is to decline from R$ 2.0 to R$ 1.0 for each 100 kwh. Conversely, the additional charge for the first level of the red flag has been maintained at R$ 3.0 for the same 100 kwh consumed. Reduction of Capital Stock in Subsidiaries On October 26 th, the reduction of the capital stock of Lajeado Energia and EDP PCH was decided, through AGE's, in the amounts of R$ million and R$ million, respectively, as it was considered excessive in related to its corporate purpose, without cancellation of shares, while keeping the proportion of each shareholder's share in the capital stock unchanged. The resolutions are subject to the approval of Aneel pursuant to Normative Resolution No. 149/05. Once the respective approvals have been obtained, the said resolutions will be considered effective and their effects will retroactively be the date of the AGE. R$ Million Capital Stock Reduction Changed Capital Stock Lajeado Energia (300.0) 6.9 EDP PCH (150.0)

7 The information below concerns the third quarter (3Q17) compared with the same period in 2016 (3Q16) and for the year to September (9M17). 2. OPERATING PERFORMANCE 2.1 GENERATION The Group s 2 energy volume sales were 3,169 GWh, down 2.7%. In the year to September, total volume was 9,251 GWh, down 4.9%. Asset Note: 1 Total Hydroelectric Plant Tariff does not take into account intragroup eliminations/ 2 Amounts of Pecém sale tariff relates to the CVU for September 2017 and Hydroelectric Generation Energy volume sold from the hydro plants was 1,811 GWh, a reduction of 4.7%, due to lower energy volumes contracted from Enerpeixe and Energest, mitigated by the increased volume from Costa Rica HPP and SHPs of short-term sales. In the year to September, hydroelectric generation amounted to 5,221 GWh, a decrease of 8.2%. The average energy sale tariff was R$ 182.8/MWh, a growth of 12.3% due to: (i) a 97.1% increase in the Costa Rica plant s average sales tariff, a reflection of the higher short-term sales tariffs; and (ii) higher average sales tariffs from the other plants because of the annual readjustments of bilateral agreements and Power Purchasing Agreements in the Regulated Contracting Environment CCEARs. - Unconsolidated Assets 3Q17 3Q16 Var 3Q17 3Q16 Var Lajeado 875, , % % Investco 9,195 8, % % Enerpeixe 467, , % % Energest 280, , % % PCH 118,283 88, % % Costa Rica 25,795 22, % % Santa Fé 34,050 33, % % Total HPPs 1,810,650 1,898, % % Pecém² 1,357,920 1,357, % % Total Consolidated 3,168,570 3,256, % Asset Volume (MWh) Volume (MWh) Sales Price (R$/MWh)¹ Sales Price (R$/MWh) 3Q17 3Q16 Var 3Q17 3Q16 Var Cachoeira Caldeirão (50%) 126, , % % Jari (50%) 209, , % % Total Unconsolidated 335, , % % The volume of energy sold from Unconsolidated Assets was GWh, a decrease of 4.4% due to the lower volume of contracted energy from the Jari HPP this quarter compared with the same period in the previous year. In the year to September, total volume was 1,074 GWh, up 21.5% result of the entry into operation of the third machine at the Cachoeira Caldeirão HPP in late 3Q16. On July 24, uncontracting took place, via the MCSD (A-0), of 20.9 amw from Jari and 95 amw from Cachoeira Caldeirão. At Jari, of the uncontracted 20.9 amw, amw have been held for hedging purposes and 3.40 amw have been recontracted. At Cachoeira Caldeirão, of the 95.0 amw uncontracted, amw have been held for hedging purposes and amw have been recontracted. Uncontracting is effective from July to December The recontracted amounts were sold to the shareholders trading companies in the same proportion as their stakes in the company. The average energy sale tariff for these assets was R$ 154.0/MWh, an increase of 20.4% due to the 53.2% rise in the average energy sale tariff from Cachoeira Caldeirão because of the higher short-term sales tariffs. 2 Energy sold does not include the Company s 50% stake in Jari and Cachoeira Caldeirão 7

8 Consolidated Sales from Hydro Generation (GWh) Consolidated Sales from Hydro Generation (GWh) 5,685 5,221 26% 26% 25% 25% 25% 24% 25% 1,899 1,811 24% 3Q 9M 1Q 2Q 3Q 4Q GSF (Generation Scaling Factor) and Protection Mechanisms The third quarter of 2017 was marked by a deterioration in the Brazilian hydrological scenario, which led to a significant increase in the PLD and a reduction of the GSF, as the graphs below illustrate: R$ % R$ 34.6 R$ 62.2 R$ R$ R$ R$ % 89% 83% 88% 84% 62% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 PLD Southeast GSF In anticipation of the deteriorating PLD and GSF scenario, the Company decided to implement certain initiatives to reinforce its strategies for protection against the impacts of high energy prices in the Free Market for generation companies, increasing the share of uncontracted energy in its portfolio. In late 2015 and early 2016, the Company renegotiated 35% of its Physical Guarantee through product SP92, on average. Taking Unconsolidated Assets into consideration, 46% of the Physical Guarantee has been renegotiated. In 2017, in anticipation of the hydrological deficit, the Company decided to allocate part of the Physical Guarantee for 2H17, as the graph above illustrates. To increase the share of total uncontracted energy (natural hedge) from 9.0% 3 (96 amw), in May 2017 the company acquired 70 amw, mitigating future GSF-related risks. The additional volume extends from May to December Furthermore, in July, the company uncontracted, Jari and Cachoeira Caldeirão energy, as mentioned before, being effective from July to December The recontracted amounts were sold to the shareholders trading companies in the same proportion as their stakes in the company. The energy integrated into the portfolio of EDP's Trading has contributed to the mitigation of the hydrological risk of the group and to maximize the result. Considering the natural hedge (96 amw), the additional purchase of 70 amw, the effects of decontracting in the MCSD (8 amw) and reductions from bilateral agreements (10 amw), the total portion of decontracted energy reached 18.0% 4 (184 amw) in 3Q17. 3 Includes the Company s 50% stake in Jari and Cachoeira Caldeirão 4 Includes the Company s 50% stake in Jari and Cachoeira Caldeirão 8

9 The graph below illustrates the Consolidated Energy Balance of Hydroelectric Generation for the quarter in amw: Free Physical Guarantee GSF Generation Outside MRE Allocated Physical Guarantee Purchases/Short- Term Market CCEE Sale Contracts The average GSF in the quarter was 62.2%, representing an exposure of 766 GWh to the average PLD of R$ /MWh (SE/C- W submarket). In the year to September, the average GSF was 85.6%, representing an exposure of 900 GWh to the average PLD of R$ /MWh (SE/C-W submarket). It is worth noting that in 1Q17 there was secondary energy in the system, thus contributing positively to accumulated exposure of the GSF in the year. - Thermal Generation The volume of energy sold from the Pecém I TPP ( Pecém ) of 1,358 GWh was flat relative to 3Q16. In the year to September, the volume reached 4,030 GWh, a reduction of 0.4%, compared with 9M16, due to the greater number of hours in 2016 (a leap year). Despite the completion of two scheduled stops, in the year to September, average uptime at Pecém reached 91%, greater than the uptime stipulated in the auction of 90.14%, reflecting improved operating efficiency at the thermal plant over the course of Average availability at Pecém in 3Q17 increased by 9.8% from the same period in the previous year. Compared with 2Q17 average availability remained stable. GU02 showed reduced uptime because of a scheduled 12-day stoppage for annual maintenance in September. GU01 Scheduled Maintenance GU02 Scheduled Maintenance 85% 82% 78% 96% 94% 99% 91% 94% 94% 94% 98% 91% 91% 89% 90% 91% 81% 81% 3Q16 4Q16 1Q17 2Q17 3Q17 9M17 GU01 GU02 Average TPP Details on the plant s revenues, expenditures and gross margin are provided in Chapter

10 - Installed Generation Capacity The Company s installed generation capacity at quarter-end was 2.8 GW with a physical guarantee of 1.8 agw, unchanged from year-end Installed Capacity in MW pro forma % 110 2, , , Sale of Pantanal Energética 1Q16 C. Caldeirão HPP 3Q17 São Manoel HPP Considers the proportional share of the Santo Antônio do Jari (50%), Cachoeira Caldeirão (50%) and São Manoel (33.4%) HPPs. Installed capacity proportional to the stakes in Costa Rica, Lajeado and Enerpeixe HPPs is not considered since data for these plants is fully consolidated in EDP. 2.2 COMMERCIALIZATION Commercialized energy volume amounted to 5,093 GWh, an increase of 53.7%, due to: (i) price volatility in the quarter, varying between R$ 135/MWh and R$ 465/MWh (market prices at a negative premium compared to PLD), associated with high market liquidity benefiting both long and short-term operations; (ii) greater energy allocation by sector agents to the 2H17 period, generating an increase in short-term liquidity; and (iii) greater energy volume available in the market thanks to energy uncontracting at the distributors through the MCSD or bilateral agreements; and (iv) an increase in energy sales to the new free consumers. In the year to September, total commercialized energy amounted to 12,042 GWh, 34.3% greater than in 9M Distribution Volume (MWh) 3Q17 3Q16 Var Related Parts 656,168 3, % Out-of-Group Sales 4,436,580 3,309, % Total Commercialization 5,092,749 3,312, % Average Tariff (R$/MWh) % VOLUME Distribution shows an increase in the volume of energy distributed, of 2.3% and 0.5% respectively in the quarter and in the year to September. EDP São Paulo Volume (MWh) Volume (MWh) Consumers (unit) 3Q17 3Q16 Var 9M17 9M16 Var Var Residential 903, , % 2,744,540 2,683, % 1,668,007 1,639, % Industrial 357, , % 1,033,685 1,447, % 12,660 12, % Commercial 439, , % 1,399,924 1,641, % 126, , % Rural 20,002 18, % 61,171 60, % 7,905 7, % Others 223, , % 670, , % 13,656 13, % Energy Supplied to Final Consumers 1,944,491 2,065, % 5,909,467 6,523, % 1,829,111 1,796, % Supply 11,626 10, % 34,503 32, % % Energy in transit (USD) 1,750,127 1,473, % 5,073,334 4,240, % % Free consumers 1,678,983 1,414, % 4,877,657 4,066, % % Concessionaries 71,145 58, % 195, , % % Own consumption 1,495 1, % 4,631 4, % % Total Energy Distributed 3,707,739 3,551, % 11,021,935 10,801, % 1,829,712 1,796, % 10

11 EDP Espírito Santo Residential 479, , % 1,676,709 1,721, % 1,195,945 1,174, % Industrial 159, , % 490, , % 11,236 11, % Commercial 263, , % 937,967 1,062, % 123, , % Rural 176, , % 589, , % 185, , % Others 170, , % 589, , % 13,329 13, % Energy Supplied to Final Consumers 1,249,303 1,382, % 4,284,848 4,712, % 1,529,137 1,501, % Supply 114, , % 347, , % % Energy in transit (USD) 940, , % 2,745,130 2,357, % % Free consumers 925, , % 2,672,728 2,321, % % Concessionaries 15,404 5, % 72,402 35, % % Own consumption 1,588 1, % 5,588 5, % % Total Energy Distributed 2,305,639 2,326, % 7,383,020 7,505, % 1,529,621 1,502, % Residential 1,383,559 1,366, % 4,421,249 4,405, % 2,863,952 2,813, % Industrial 516, , % 1,524,630 2,159, % 23,896 23, % Commercial 702, , % 2,337,892 2,704, % 250, , % Rural 196, , % 650, , % 193, , % Others 394, , % 1,259,669 1,276, % 26,985 27, % Energy Supplied to Final Consumers 3,193,794 3,448, % 10,194,315 11,235, % 3,358,248 3,298, % Supply 125, , % 381, , % % Energy in transit (USD) 2,690,751 2,274, % 7,818,464 6,597, % % Free consumers 2,604,194 2,210, % 7,550,385 6,388, % % Concessionaries 86,548 63, % 268, , % % Own consumption 3,083 3, % 10,219 10, % % Total Energy Distributed 6,013,378 5,877, % 18,404,955 18,306, % 3,359,333 3,299, % N o tes: Others = P ublic entities + P ublic lighting + P ublic services USD = Usage o f the D istributio n System - Captive Market Results for the captive market were affected mainly by the large number of customers migrating from the captive to the free market, due to: (i) attractive prices in the free contracting environment (ACL) over the course of 2016 and early 2017; (ii) the slower pace of the country s economy and persistently high unemployment levels at 12.6% of the active population, and even higher rates in the states of São Paulo and Espírito Santo, at 14.2% and 14.4%, respectively; and (iii) milder temperatures in the State of Espírito Santo (-1.7 C compared with 3Q16). Total migrations in the past 12 months added up to 250 consumers (151 5 at EDP São Paulo and 99 6 at EDP Espírito Santo). - Average Tariff Captive market Distribution Average Tariff (R$/MWh) EDP São Paulo EDP Espírito Santo 3Q17 3Q16 Var 3Q17 3Q16 Var Residential % % Industrial % % Commercial % % Rural % % Others % % Total % % At EDP SP, the average sales tariff dropped by 15.6%, due to the Tariff Readjustment had in October 2016, the average effect of which on consumer billing was %. In addition, the extraordinary electric energy distributors tariff adjustment process, intended to reverse the effects of the inclusion of the portion of the Reserve Energy Charge (EER) associated with the contracting of the Angra III plant in 2016, contributed to the reduction in tariffs. At EDP ES, the average tariff increased by 7.9%, due to the annual tariff readjustment in August 2017, the average effect of which was 8.65%. The tariff increase for the rural class reflects the reduction in off-peak consumption in the period. 5 At EDP São Paulo, the total variation in number of clients was 151 as follows: (i) 67 migrations in the commercial class; (ii) 81 in the industrial class; (iii) 3 for government; (iv) 1 disconnection; and (v) 1 new entrant. 6 At EDP Espírito Santo, the total variation in the number of clients was 99, as follows: (i) 49 migrations in the commercial class; (ii) 50 in the industrial class; and (iii) 1 disconnection. 11

12 - Free Market Consolidated energy in transit in the distribution system (USD - Use of the Distribution System) for supply to free market clients was 18.3% and 18.5%, in 3Q17 and 9M17, respectively, due to migrations from the ACR to the ACL CONSOLIDATED ENERGY BALANCE Total energy delivered to the system was 22,641 GWh. Total losses in transmission, sales and adjustments were 2,027 GWh. Required Energy amounted to 20,614 GWh and excluding 2,209 GWh in losses, resulted in a total for Distributed Energy of 18,405 GWh. Energy Balance - Distribution 9M17 (MWh) Itaipu + Proinfa Transmission Losses 3,204, ,875 Required Auction Losses from Itaipu 11,388,936 (-) 171,327 = Energy Others Short Term Sales 229,275-1,627,865 20,614,254 Energy in Transit Short Term Adjustments 7,818,464 10,040 Total 22,641,282 2,027,028 20,614,254 Wholesale Supply 381,957 Retail Supply 10,204,534 Losses and Diferences 2,209,299 Energy in Transit 7,818,464 20,614,254 Of the total Required Energy, 60% was destined for EDP SP and 40% to EDP ES. Energy Balance - EDP São Paulo 9M17 (MWh) Itaipu + Proinfa Transmission Losses Wholesale Supply 2,023, ,800 Required 34,503 Auction Losses from Itaipu Retail Supply 6,581, ,139 Energy 5,914,098 Others Short Term Sales Losses and Diferences 9,070-1,271,134 12,131,529 1,109,594 Energy in Transit Short Term Adjustments Energy in Transit 5,073,334-27,946 5,073,334 Total 13,687,548 1,556,019 12,131,529 12,131,529 Energy Balance EDP ES 9M17 (MWh) Itaipu + Proinfa Transmission Losses 1,181,103 90,076 Required Auction Losses from Itaipu 4,807,296 ( - ) 62,188 = Energy Others Short Term Sales 220, ,731 8,482,725 Energy in Transit Short Term Adjustments 2,745,130 37,985 Total 8,953, ,009 8,482,725 Wholesale Supply 347,454 Retail Supply 4,290,436 Losses and Diferences 1,099,706 Energy in Transit 2,745,130 8,482,725 * Note: The above figures for Losses and Differences relate to the first 9 months of 2017, while the figures mentioned in the losses chapter relate to the 12-month period (October 2016-September 2017). 12

13 2.3.3 LOSSES Accumulated losses in the last 12 months (GWh or %) Input of Energy in Grid (A) Technical (B) Non-technical (C) Total (B + C) Technical (B / A) Non-technical (C / A) Total (B+C / A) EDP São Paulo EDP Espírito Santo Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 ANEEL Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 ANEEL 15,901 15,916 15,947 15,959 16,130 11,874 11,522 11,457 11,353 11, , ,395 1,415 1,396 1,393 1,407 1,688 1,599 1,571 1,532 1, % 5.51% 5.51% 5.42% 5.47% 4.59% 8.68% 8.60% 8.57% 8.50% 8.34% 7.14% 3.29% 3.37% 3.25% 3.31% 3.26% 3.29% 5.53% 5.28% 5.14% 4.99% 4.74% 4.63% 8.77% 8.89% 8.75% 8.73% 8.73% 7.88% 14.21% 13.88% 13.71% 13.50% 13.09% 11.77% Low Tension Accumulated losses in the last 12 months (GWh or %) Low Tension Demand (D) Low Tension Commercial Losses (C/D) Total (C /D ) EDP São Paulo EDP Espírito Santo Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 ANEEL Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 ANEEL 5,389 5,384 5,397 5,416 5,459 4,606 4,505 4,505 4,448 4, % 9.98% 9.60% 9.75% 9.63% 9.55% 14.27% 13.50% 13.08% 12.74% 12.14% 11.45% 9.71% 9.98% 9.60% 9.75% 9.63% 9.55% 14.27% 13.50% 13.08% 12.74% 12.14% 11.45% The Company s strategy of enhanced shielding of more than 60% of total consumption proved effective in prevention and combating energy fraud and theft, resulting in an increase in billed energy volume and a decrease in total losses. In relation to this quarter, in addition to the identification and regularization of unregistered public illumination installations (IP) in the Company s system, actions such as the substitution of obsolete meters and the regularization of clandestine connections, enabling energy sales to recover. - Consumption Shielding at Distribution Companies: EDP São Paulo EDP Espírito Santo # Shielded % # Shielded % Clients consumption Clients consumption Telemetering High Voltage Consumers % % Metering Shield Monitoring Interventions Medium Voltage Consumers 4, % 4, % 100% Telemetering with own team BTZero (Concentrated Metering System) Social Programs Inspections Low Voltage Consumers (Indirect connection) Low Voltage Consumers 23, % 15, % 8, % 58, % Total Consumption Shielded: 36, % 77, % Total losses remained stable at EDP SP, reflecting the increase in total energy delivered to the system as a result of additional investments in network expansion and improvements. At EDP ES, quarter-on-quarter reduction was.41 p.p. Unlike EDP SP, at EDP ES the load delivered to the system was reduced. In addition to the topics mentioned above in connection with non-technical losses, investments in network expansion and improvements completed in 2016 and intensified in 2017 contributed to the reduction in technical losses. In 9M17, distribution companies spent R$ 73.8 million in programs for combating losses. Out of the total, R$ 51.9 million went to operating investments (substitution of meters, installation of a special grid and telemetering) and R$ 22.9 million to manageable expenses (inspections and dismantling irregular connections). Distributors completed thousand inspections, substituted 71.9 thousand obsolete meters, and regularized 62.1 thousand clandestine/irregular connections. 13

14 2.3.4 QUALITY INDICATORS Service quality indicators remained within ANEEL s regulatory parameters. Improvement in indicators, at EDP Espírito Santo, reflects the careful application of investments, associated with strict controls and a reduction in repeat interruptions. The increase in the indicators for EDP SP is the result of heavy rainfall in late September throughout the concession area. DEC (hours) FEC (times) Q16 2Q17 3Q17 EDP São Paulo EDP Espírito Santo 3Q16 2Q17 3Q17 EDP São Paulo EDP Espírito Santo Note: Distributors DEC and FEC indicators disclosed in the quarter are preliminary since the final indicator is published 30 days after the end of the month. ANEEL Annual Regulatory Target for 2017 EDP São Paulo: DEC 8.41 / FEC: 6.59 EDP Espírito Santo: DEC: 9.81 / FEC: ECONOMIC-FINANCIAL PERFORMANCE 3.1 CONSOLIDATED Items in R$ thousand or % Hydro Generation 2 Thermal Generation Distribution Comerc. + EDP GRID Consolidated 2 3Q17 3Q17 3Q17 3Q17 3Q17 Net Revenue 1 370, ,894 1,780,940 1,085,481 3,328,217 Infrasctructure construction revenue , ,606 Non-manageable expenditures (149,761) (288,429) (1,369,704) (1,030,990) (2,463,762) Gross Margin 221, , ,236 54, ,455 Manageable Expenditures (65,184) (77,151) (405,264) (13,371) (606,744) PMTO (25,645) (37,051) (191,668) (11,475) (293,628) EBITDA 195, , ,794 43, ,540 Depreciation and amortization (39,558) (40,238) (47,780) (1,896) (144,223) Result of statutory participation (1,614) (2,573) Minority interests (28,203) (28,194) Net Income 75,823 33,335 44,877 26, ,072 Items in R$ thousand or % Hydro Generation 2 Thermal Generation Distribution Comerc. + EDP GRID Consolidated 2 3Q16 3Q16 3Q16 3Q16 3Q16 Net Revenue 1 308, ,329 1,506, ,412 2,382,864 Infrasctructure construction revenue , ,785 Non-manageable expenditures (54,704) (177,025) (944,384) (482,098) (1,447,472) Gross Margin 253, , ,368 16, ,392 Manageable Expenditures (63,827) (76,398) (414,533) (12,119) (602,645) PMTO (26,540) (36,844) (196,929) (11,183) (293,094) EBITDA 227,121 64, ,578 5, ,559 Depreciation and amortization (37,362) (39,600) (43,958) (937) (136,027) Result of statutory participation (10,344) (11,193) Minority interests (30,268) (30,268) Net Income 66,101 (28,648) 193,387 (2,065) 230,798 14

15 Items in R$ thousand or % Var Var Var Var Var Net Revenue % 67.0% 18.2% 117.8% 39.7% Infrasctructure construction revenue n.a. n.a. -7.4% n.a. -5.2% Non-manageable expenditures 173.8% 62.9% 45.0% 113.9% 70.2% Gross Margin -12.8% 74.2% -26.9% 234.0% -7.6% Manageable Expenditures 2.1% 1.0% -2.2% 10.3% 0.7% PMTO -3.4% 0.6% -2.7% 2.6% 0.2% EBITDA -14.0% 116.3% -42.8% n.a % Depreciation and amortization 5.9% 1.6% 8.7% 102.3% 6.0% Result of statutory participation n.a. n.a. n.a. n.a. n.a. Minority interests n.a. n.a. n.a. n.a. n.a. Net Income 14.7% % -76.8% n.a % 1 Does not consider Infrastructure construction Revenue. 2 Consolidated: considers intragroup elimination. Hydro Generation 2 Thermal Generation Distribution Comerc. + EDP GRID Consolidated NON-RECURRING EVENTS The following non-recurring events affected the analysis for 3Q17 in relation with 3Q16: (i) Insurance reimbursement, in 3Q17, under the Cost of consumed raw materials item in the amount of R$ 9.0 million covering the insurer s recognition of lost profits due to a conveyor belt failure in The following non-recurring events affected the analysis for 9M17 versus 9M16, in addition to the effect mentioned above: (ii) (iii) (iv) (v) Provision of R$ 33.4 million (gross of PIS/Cofins and R&D) with respect to the Emergency Water Charge at Pecém in 2Q17; Completion of the sale of Pantanal Energética, in 1Q16, with a R$ million impact on results; and Booking, in 1Q16, of R$ 81.8 million (+R$ 66.7 million to the Gains and losses in the disposal of assets and rights line and +R$ 15.1 million to the Reimbursement due to unavailability line) with respect to insurance recoveries at Pecém, the difference between reimbursement received from an insurance claim and the writing off of the asset. This relates to a stoppage of the GU01 in September 2014 for work on replacing the unit s stator; Accounting for the Update of EDP ES's Indemnable Financial Assets (VNR) in 3Q16, due to a Periodic Tariff Review, resulting in a non-recurring gain of R$ million REVENUES AND GROSS MARGIN Items in R$ thousand or % - Hydroelectric Generation Net Revenue reported a growth of 20.3%, reflecting: (i) increased volume of energy sold through short-term bilateral agreements from Costa Rica HPP and SHPs; and (ii) higher short-term sales tariffs due to the annual readjustment of ACR agreements. In the year to September, Net Revenues grew by 11.1%. Non-Manageable Expenditures increased by R$ 95.1 million, reflecting the R$ 92.2 million increase in energy purchased for reselling due to the GSF situation in the quarter, mainly for Lajeado, SHPs and Energest. In the year to September, Non- Manageable Expenditures reported an R$ million increase. Gross Margin dropped 12.8%, reaching R$ million. 3Q17 3Q16 Var 9M17 9M16 Var Net Operating Revenue 3,328,217 2,382, % 8,216,285 6,490, % Non-manageable expenditures (2,463,762) (1,447,472) 70.2% (5,610,754) (3,952,379) 42.0% Energy Purchased to Resell (2,076,847) (1,184,082) 75.4% (4,621,743) (3,280,214) 40.9% Charges for Usage of Basic Network (188,432) (120,499) 56.4% (436,023) (352,474) 23.7% Others (198,483) (142,891) 38.9% (552,988) (319,691) 73.0% Gross Margin 864, , % 2,605,531 2,537, % Itens in R$ thousand or % Consolidated Hydro Generation Consolidated 3Q17 3Q16 Var 9M17 9M16 Var Net Operating Revenue 370, , % 988, , % Non-manageable expenditures (149,761) (54,704) 173.8% (257,976) (140,009) 84.3% Energy Purchased to Resell (126,238) (34,069) 270.5% (193,062) (81,371) 137.3% Charges for Usage of Basic Network (21,537) (20,635) 4.4% (62,928) (58,638) 7.3% Other (1,986) - n.a. (1,986) - n.a. Gross Margin 221, , % 730, , % 15

16 The graph below presents the effects that make up the Gross Margin of Consolidated Hydroelectric Generation in R$ million: Supply Revenue MRE GSF/PLD Impacts Reimbursement Short-term Operations Margin Initial Hedge Revenue Others Gross Margin The Company s successful strategy for short-term operations and for measures to protect the portfolio from the negative impacts of the scenario projected for 2017 with a positive impact of R$ 164 million on the Margin. In the year to September, the Gross Margin dropped by 2.6%. For additional details on the impacts of the GSF/PLD and risk-mitigation strategies adopted, see Chapter Thermal Generation Itens in R$ thousand or % Net Revenue of R$ million was the result of: (i) + R$ million in fixed revenue from the CCEAR; (ii) + R$ million in variable revenue from energy dispatch; (iii) + R$ 11.0 million from the right to transfer the full cost of the water charge to the CVU for the period from July to September 2017; (iv) + R$ million from the restoration of generation backing capacity and settlement of the excess energy generated in the short-term market and other services; and (v) - R$ 50.0 million from the booking of taxes (ICMS, PIS and COFINS, R&D and Supervision Fee) and incurred charges. Growth of 67.0% in Net Revenue relates to: (i) an increase of 7.9% in fixed revenue; (ii) an increase of 38.1% in the average CVU; (iii) an increase of 71.4% of variable revenue related to energy dispatch; and (iv) an increase of R$ million in revenue from short-term energy sales. In the year to September, Net Revenue rose 37.8% (+ R$ million) from the same period in the previous year, due to the effects already mentioned. In 3Q17 compared with 3Q16, Non-Manageable Expenditures increased R$ million due to: Energy purchased for resale: (i) Increased expenditure with energy purchases (+ R$ 59.4 million) due to the FID (moving average of the past 60 months), a reflection of the average PLD increase for the quarter (R$ /MWh in 3Q17 versus R$ /MWh in 3Q16, NE Submarket); Cost of raw materials consumed: (ii) Increased cost of consumed raw materials (+ R$ 34.3 million) due to a 42.3% increase in the average acquisition price of coal (R$ /ton in 3Q17, versus R$ /ton in 3Q16) and the cost of trucked coal transportation; (iii) Increased expenditure from water usage (+ R$ 1.0 million) due to the emergency water charge; and (iv) Reduced coast of the consumed raw materials ( R$ 9.0 million) due to the recognition of lost profits by the insurer as a result of a conveyor belt failure in Reimbursement for unavailability: (v) Increase (+ R$ 17.6 million) in the account for Reimbursement due to Unavailability as a result of increased PLD, as mentioned before. In the year to September, Non-Manageable Costs increased 88.8%. Thermal Generation 3Q17 3Q16 Var 9M17 9M16 Var Net Operating Revenue 464, , % 1,186, , % Non-manageable expenditures (288,429) (177,025) 62.9% (750,043) (397,288) 88.8% Energy Purchased to Resell (76,554) (17,164) 346.0% (151,882) (34,307) 342.7% Charges for Usage of Basic Network (17,888) (16,517) 8.3% (52,796) (47,397) 11.4% Other (193,987) (143,344) 35.3% (545,365) (315,584) 72.8% Gross Margin 176, , % 436, , % Gross Margin increased 74.2% due to the 71.4% increase in variable revenues for dispatch and the 379.2% increase in revenues from the settlement of the surplus energy generated in the short-term market. In the year, Gross Margin was flat with a reduction of 5.8%. The ADOMP hedge generated a positive impact on the gross margin of R$ 29.3 million in 3Q17, reflecting the Company s strategy of using protection mechanisms to minimize the impacts of PLD volatility. 16

17 In the year, the gross margin decreased by 5.8%. - Emergency Water Charge at Pecém I TPP In September 2016, the state government of Ceará introduced an Emergency Water Charge (EHE), a contingency tariff which increased the cost of water supply 7.0 times. In January 2017, Pecém filed a lawsuit against the state of Ceará and Companhia de Gestão de Recursos Hídricos do Ceará ( COGERH ), the local water utility, for judicial review for relief from the EHE as well as to suspend the efficacy of existing legislation. Following negotiations between the parties in February 2017, the EHE was reduced to 3.1 times. Subsequently, in May a federal court granted a preliminary injunction allowing the full amount charged under the EHE to be incorporated in the CVU. Additionally, the ruling determines the suspension of any penalty imposed by ANEEL in the light of eventual reduction and/or interruption of energy generation from the plant due to water supply problems. The ruling also exempts Pecém from any penalties for downtime, suspension of commercial operations and restoration of commercial backing capacity and preventing any type of suspension of payment of the fixed revenue to which Pecém is entitled under the terms of the CCEARS. In this quarter a provision for revenues in the amount of R$ 11.0 million was made as a result of the reimbursement of the additional cost of the emergency water charge in full to CVU, as per the federal court order, for the months from July to September It is worth noting that the state of Ceará has maintained the emergency water charge indefinitely via a decree published in August In early October, Pecém received the reimbursement (cash) of R $ 32.0 million, referring to the Emergency Water Charge charged by the State of Ceará, for the period from September 2016 to May Conveyor Belt Maintenance at the Pecém I TPP Continuing the increase of Pecém s Gross Marning by reducing the additional cost of coal transportation, the Company made the first stoppage out of a total 03 to replace the 07 Conveyor Belt sections. The first maintenance procedure was carried out from August 25 to October 02 and involved the replacement of 02 sections in addition to electrical repairs to the Continuous Ship Unloader (CSU). The second stoppage is scheduled to take place in November and December, during which 03 further sections will be replaced. Finally, in early 2018, the remaining 02 sections will be replaced. In the light of repairs and equipment replacement since late 2016, it has already been possible to increase the conveyor belt s productivity and reduce the time spent unloading ships (with capacity for approximately 70 thousand tons of coal per ship) by 50%. -Distribution Items in R$ thousand or % 3Q17 3Q16 Var 3Q17 3Q16 Var 3Q17 3Q16 Var Net Operating Revenue 1,005, , % 775, , % 1,780,940 1,506, % Non-manageable expenditures (796,073) (526,172) 51.3% (573,631) (418,212) 37.2% (1,369,704) (944,384) 45.0% Energy Purchased to Resell (726,752) (475,833) 52.7% (492,063) (383,434) 28.3% (1,218,815) (859,267) 41.8% Charges for Usage of Basic Network (69,321) (50,339) 37.7% (81,568) (34,778) 134.5% (150,889) (85,117) 77.3% Other - - n.a. - - n.a. - - n.a. Gross Margin 208, , % 202, , % 411, , % Items in R$ thousand or % EDP São Paulo EDP Espírito Santo Total Distribution EDP São Paulo EDP Espírito Santo Total Distribution 9M17 9M16 Var 9M17 9M16 Var 9M17 9M16 Var Net Operating Revenue 2,590,562 2,141, % 1,991,586 1,912, % 4,582,148 4,054, % Non-manageable expenditures (1,919,585) (1,540,588) 24.6% (1,380,140) (1,216,886) 13.4% (3,299,725) (2,757,474) 19.7% Energy Purchased to Resell (1,745,618) (1,388,997) 25.7% (1,228,617) (1,116,697) 10.0% (2,974,235) (2,505,694) 18.7% Charges for Usage of Basic Network (173,967) (151,591) 14.8% (151,523) (100,189) 51.2% (325,490) (251,780) 29.3% Other - - n.a. - - n.a. - - n.a. Gross Margin 670, , % 611, , % 1,282,423 1,296, % Gross Margin was R$ million, a reduction of R$ million (+R$ 2.0 million at EDP SP and -R$ million at EDP ES) due to the positive effect of booking of the Restatement of Indemnifiable Financial Assets (VNR) in 3Q16 in the Tariff Revision at EDP ES (+R$ million). The quarter-on-quarter variation of the Consolidated Gross Margin would be + R$ 0.4 million if the effect of the VNR is disregarded. The principal quarter-on-quarter changes in Distributors operations are as follows: EDP SP: (i) positive Overcontracting effect of +R$ 9.5 million, as Overcontracting in 3Q17 is within regulatory limits because of the auctions of the MCSD, reaching 97.8% versus 115.1% in 3Q16 (-R$ 9.5 million); (ii) tariff impact, excluding Parcel A components, of +R$ 14.6 million; (iii) losses reduced by R$ 0.9 million (-R$ 6.2 million in 3Q17 versus -R$ 7.1 million in 3Q16); and (iv) energy volume of + R$ 6.0 million. EDP ES: (i) positive Overcontracting effect of %, for an impact of +R$ 22.9 million in 3Q17; (ii) tariff impact, excluding Parcel A components, of -R$ 13.3 million; (iii) losses reduced by R$ 12.8 million (-R$ 5.4 million in 3Q17 versus -R$ 18.2 million in 3Q16); and (iv) energy volume of -R$ 9.6 million. 17

18 - Commercialization and EDP Grid Items in R$ thousand or % 3Q17 3Q16 Var 3Q17 3Q16 Var 3Q17 3Q16 Var Net Operating Revenue 1,072, , % 13,104 5, % 1,085, , % Non-manageable expenditures (1,028,834) (481,351) 113.7% (2,156) (747) 188.6% (1,030,990) (482,098) 113.9% Energy Purchased to Resell (1,025,028) (477,872) 114.5% - - n.a. (1,025,028) (477,872) 114.5% Charges for Usage of Basic Network (3,574) (3,432) 4.1% - - n.a. (3,574) (3,432) 4.1% Others (232) (47) 393.6% (2,156) (747) 188.6% (2,388) (794) 200.8% Gross Margin 43,543 11, % 10,948 4, % 54,491 16, % Items in R$ thousand or % EDP Comercializadora EDP Grid Total Comercializadora + GRID EDP Comercializadora EDP Grid Total Comercializadora + GRID 9M17 9M16 Var 9M17 9M16 Var 9M17 9M16 Var Net Operating Revenue 2,290,118 1,260, % 33,264 22, % 2,323,382 1,283, % Non-manageable expenditures (2,166,775) (1,255,614) 72.6% (4,466) (2,062) 116.6% (2,171,241) (1,257,676) 72.6% Energy Purchased to Resell (2,155,076) (1,243,920) 73.2% - - n.a. (2,155,076) (1,243,920) 73.2% Charges for Usage of Basic Network (10,528) (9,649) 9.1% - - n.a. (10,528) (9,649) 9.1% Others (1,171) (2,045) -42.7% (4,466) (2,062) 116.6% (5,637) (4,107) 37.3% Gross Margin 123,343 5, % 28,798 20, % 152,141 25, % Net Revenue from Commercialization reported growth of R$ million due to the 53.7% increase in commercialized energy volume, as well as the 39.2% increase in the average sales tariff. In the year to September, Net Revenue grew 81.6%, reflecting the capture of gains stemming from the volatile price and increased liquidity scenario. Non-manageable expenditures were R$ million higher due to the increase in the average tariff for energy purchases to address the quarter s operations. In the year to September, Non-Manageable Expenditures increased 72.6%. Gross Margin from Commercialization reported growth of 264%, reflecting an increase in the unit margin quarter-on-quarter and the Company s strategy, which captured the effects of the price volatility seen this quarter, driving a significant increase in Gross Margin. In the year to September, the Gross Margin grew R$ million. Net Revenue from EDP GRID increased by R$ 8.0 million due to new commercial services rendered by EDP Soluções and to the progress of energy efficiency projects that feed through to increased sales. The R$ 1.4 million increase in Non-Manageable Expenditures is associated with the cost of implementing and operating these projects. In the year to September, Net Revenues grew 47.2% and Non-Manageable Expenditures, 116.6%. EDP GRID s Gross Margin rose 151.6% due to the progress in completing projects under way and services rendered. In the year to September, Gross Margin rose 40.2%. Breakdown of Gross Margin (R$ million) % Q16 Margin Hydro Generation Pecém Distribution Commerc. +GRID Others/ Eliminations 3Q17 Margin 18

19 3.1.3 MANAGEABLE EXPENDITURES Items in R$ thousand or % In 3Q17, PMTO expenditures remained stable (+ 0.2%), due to optimization and cost reduction initiatives through the OBZ program, as well as intensified loss and default-combat actions. The PMTO, disregarding PDD and Contingencies, increased 2.5% and 1.9% in 3Q17 and accumulated, respectively, both below inflation. The changes in 3Q17 from 3Q16 are detailed as follows: Personnel increase of 6.7% (+R$ 7.5 million): (i) Higher wages, charges and benefits due to the results of the collective bargaining agreement in November 2016 (7.9%), minimized by the reduction of job vacancies (R$ +4.5 million); (ii) Increased indemnities from severance due to processes optimization and synergy gains from the implementation of the Shared Services Center (Centro de Serviços Partilhados CSP) (+R$ 1.7 million); (iii) Intensified employee training and skills-building (+R$ 0.6 million); and (iv) Increased expenditures with Profit-Sharing/Bonus (+R$ 0.5 million). Materials reduction of 16.8% (- R$ 2.6 million): (i) Reduced expenditures on PPE/CPE in 3Q17 versus 3Q16 as a reflection of the materials procurement mismatch between the two periods (-R$ 1.5 million); and (ii) Adjustment to the vehicles maintenance plan, with a focus on preventive actions, in addition to the implementation of steps to reduce mileage, with an impact on fuel costs (-R$ 0.6 million). Third-Party Services increase of 6.4% (-R$ 6.4 million): (i) Increased IT expenditures due to the price realignment of the applications and infrastructure outsourcing contracts restatement of 17% retroactive to 2016 (-R$ 5.3 million); (ii) Increased expenditures on Meter Reading and Billing and Customer Service due to the growing customer base (-R$ 1.5 million); (iii) Reduction of the infrastructure and building maintenance agreement due to the new administrative building facilities (+R$ 2.2 million). Provisions reduction of 32.5% (+R$ 6.4 million): Consolidated 3Q17 3Q16 Var 9M17 9M16 Var Personnel (114,219) (107,063) 6.7% (347,455) (336,901) 3.1% Material (13,062) (15,706) -16.8% (39,022) (40,532) -3.7% Third-party Services (124,033) (116,555) 6.4% (362,350) (338,512) 7.0% Provision (13,242) (19,604) -32.5% (87,965) (102,310) -14.0% Other (29,072) (34,166) -14.9% (92,557) (109,607) -15.6% PMTO (293,628) (293,094) 0.2% (929,349) (927,862) 0.2% Gain/Loss on the Deactivation/Asset Sale (19,617) (15,739) 24.6% (51,931) 14,817 n.a. Infrastructure Construction Costs (149,276) (157,785) -5.4% (418,551) (342,632) 22.2% Depreciation and Amortization (144,223) (136,027) 6.0% (423,378) (403,291) 5.0% Manageable Expenditures (606,744) (602,645) 0.7% (1,823,209) (1,658,968) 9.9% (i) ahead. Reduction in PDD Provision for Doubtful Accounts at the distributors (+R$ 6.6 million). For details, see the PDD chapter Other reduction of 14.9% (+R$ 5.1 million): (i) Non-recurring effects related to the revision of the accounting standard for appropriating CCEE contributions (+R$ 3.4 million); (ii) Non-recurring event in 3Q16 concerning the booking of taxes on materials regularized in 4Q16 (+R$ 1.2 million). The Gains and losses on assets deactivation and property disposals was a negative R$ 19.6 million in 3Q17, up R$ 3.9 million, particularly at EDP ES, due to the closing of orders and deactivation of equipment for different projects at the Distributors. It is worth noting that, until 2016, losses were only booked when realized, but since January 2017 the provisions for deactivation and asset disposals have been included in this account. In the year to September, the positive effect is due to the booking of an insurance reimbursement for the replacement of the stator at GU01 of the Pecém plant. The Depreciation and Amortization account increased 6.0% due to the higher investments in the Distributors. In the year to September, PMTO expenditures remained stable compared with the same period in the previous year. 19

20 - Hydroelectric Generation PMTO posted a reduction of 3.4 %, reflecting the average reduction of 17.6%, principally in the Personnel line. Itens in R$ thousand or % Hydro Generation 3Q17 3Q16 Var 9M17 9M16 Var - Thermal Generation Personnel (11,035) (12,698) -13.1% (32,352) (37,952) -14.8% Material (1,116) (836) 33.5% (2,866) (2,794) 2.6% Third-party Services (11,234) (10,809) 3.9% (28,376) (30,957) -8.3% Provision (304) (20) % (869) (291) 198.6% Other (1,956) (2,177) -10.2% (6,581) (8,070) -18.5% PMTO (25,645) (26,540) -3.4% (71,044) (80,064) -11.3% PMTO posted an increase of 0.6%, due mainly to the increase in the Personnel line, mitigated by reductions in the Materials and Third-Party Services items. In Personnel, the increase is due to the sharing of costs from parallel areas of EDP Holding, which were incorporated into Pecém in In Third-Party Services, the reduction is due to the renegotiation of the infrastructure and building maintenance agreement. Itens in R$ thousand or % Thermal Generation 3Q17 3Q16 Var 9M17 9M16 Var - Distribution Personnel (11,421) (9,711) 17.6% (34,279) (30,799) 11.3% Material (6,028) (6,336) -4.9% (14,890) (15,336) -2.9% Third-party Services (13,878) (14,992) -7.4% (35,190) (37,198) -5.4% Provision % (15) % Other (5,737) (5,846) -1.9% (14,203) (20,634) -31.2% PMTO (37,051) (36,844) 0.6% (98,577) (103,922) -5.1% The reduction of 2.7% in PMTO expenditures reflects the reduction in the Materials and Provisions lines, impacted by the PDD (see the PDD chapter for additional details). Both at EDP São Paulo and at EDP Espírito Santo, the increase in Personnel is due to the collective bargaining agreement of November 2016, in addition to the higher cost of medical care and benefits. In Third-Party Services, the increase is due to: (i) the readjustment of Infrastructure and Meter Reading and Billing outsourcing agreements; and (ii) increased electrical system maintenance and conservation actions (increased tree-pruning frequency) and combating delinquency (increased number of field teams). Itens in R$ thousand or % 3Q17 3Q16 Var 3Q17 3Q16 Var 3Q17 3Q16 Var Personnel (39,026) (37,585) 3.8% (34,748) (30,163) 15.2% (73,774) (67,748) 8.9% Material (3,227) (5,298) -39.1% (2,219) (2,928) -24.2% (5,446) (8,226) -33.8% Third-party Services (40,143) (38,850) 3.3% (42,241) (39,705) 6.4% (82,384) (78,555) 4.9% Provision (2,948) (15,002) -80.3% (9,116) (9,090) 0.3% (12,064) (24,092) -49.9% Other (10,309) (11,496) -10.3% (7,691) (6,812) 12.9% (18,000) (18,308) -1.7% PMTO (95,653) (108,231) -11.6% (96,015) (88,698) 8.2% (191,668) (196,929) -2.7% Itens in R$ thousand or % EDP São Paulo EDP Espírito Santo Total Distribution EDP São Paulo EDP Espírito Santo Total Distribution 9M17 9M16 Var 9M17 9M16 Var 9M17 9M16 Var Personnel (121,300) (122,012) -0.6% (107,417) (96,714) 11.1% (228,717) (218,726) 4.6% Material (10,219) (12,232) -16.5% (9,807) (8,220) 19.3% (20,026) (20,452) -2.1% Third-party Services (127,011) (116,268) 9.2% (125,567) (118,208) 6.2% (252,578) (234,476) 7.7% Provision (35,464) (57,746) -38.6% (48,766) (47,264) 3.2% (84,230) (105,010) -19.8% Other (37,684) (41,970) -10.2% (22,051) (20,884) 5.6% (59,735) (62,854) -5.0% PMTO (331,678) (350,228) -5.3% (313,608) (291,290) 7.7% (645,286) (641,518) 0.6% 20

21 - PDD - Provision for Doubtful Accounts and Default The distributors reported a total reduction in PDD of R$ 6.6 million compared with 3Q % 1.11% % EDP São Paulo 0.63% % % Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 PDD - R$/million PDD/Revenue % % % EDP Espírito Santo 0.66% % % % Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 PDD - R$/million PDD/Revenue 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.70% % 0.40% 0.20% 0.00% The decrease of R$ 11.7 million at EDP SP and R$ 9.3 million at EDP ES, when compared to 2Q17, reflects company initiatives in combating PDD intended to reinstate customers and avoid potential losses. Collection efforts intensified in 2017, with an increase in total bills protested and activations via SMS, ARU and tele-collection. In addition, changes were made to the collection scale allowing temporary interruptions to supply for non-payment (disconnections) to be anticipated to 45 days past due (from 60 days in 2016), helping improve the quarter s results. Continuing the actions to combat delinquency and PDD, EDP continues the process of prioritizing higher value cuts, along with invoice routing through the digital tool to support field team management ("WPA"), allowing to increase the assertiveness of the Company's actions. Another measure relates to the increase in the suspension of self-reengineered customers (customers who reconnect without prior discharge of debits) representing an increase of 45.0%. It should be noted that the new actions occurred in conjunction with the new Analytics area, allowing for greater targeting and assertiveness of actions to combat delinquency and PDD. At EDP Espírito Santo, the increased PDD from 3Q16 is due to the high number of low-denomination bills and non-compliance with payment plans, reflecting the sluggish economy and the high unemployment rate in the state of Espírito Santo. In the accumulated of 2017, the consolidated PDD/Gross Revenue stood at 1.0%, demonstrating the Company's constant search of solid results, even in periods of economic slowdown and lower income for consumers. In 3Q17, 95.4 and thousand disconnections were made at EDP São Paulo and EDP Espírito Santo, respectively, from 80.8 and 95.5 thousand disconnections in 3Q16. It is worth noting that the Company has been taking actions to reduce PDD and defaulting to prevent a negative impact on losses. - Commercialization and EDP Grid Items in R$ thousand or % EDP Comercializadora EDP Grid Total Comercializadora + GRID 3Q17 3Q16 Var 3Q17 3Q16 Var 3Q17 3Q16 Var Personnel (2,641) (2,637) 0.2% (3,289) (2,318) 41.9% (5,930) (4,955) 19.7% Material (22) (14) 57.1% (245) (153) 60.1% (267) (167) 59.9% Third-party Services (1,302) (625) 108.3% (3,531) (2,577) 37.0% (4,833) (3,202) 50.9% Provision (293) (1,895) -84.5% 31 (67) n.a. (262) (1,962) -86.6% Others 312 (650) n.a. (495) (247) 100.4% (183) (897) -79.6% PMTO (3,946) (5,821) -32.2% (7,529) (5,362) 40.4% (11,475) (11,183) 2.6% Commercialization reported a PMTO of R$ 3.9 million, a reduction of 32.2%, principally in the Provisions and Other lines. The Other line, the decrease concerns to the revised accounting standard for CCEE contributions appropriation, which are now booked under Non-Manageable Expenditures. The EDP Grid reported a PTMO of R$ 7.5 million, an increase of 40.4%, principally in the Personnel and Third-Party Services lines. The growth in the Personnel and Third-Party Services lines is due to the larger number of own and outsourced employees because of the volume of solar energy projects to be executed GAIN ON DIVESTMENT/ACQUISITION OF INVESTMENT There were no significant effects related to gains on disposal and/or acquisition of investments in In the year 2016, the line was affected by the non-recurring effect of the book gain from the sale of Pantanal Energética, completed in 1Q16, in the amount of R$ million. 21

22 3.1.5 EBITDA In 3Q17, EBITDA was R$ million, a 16.1% reduction from 3Q16. In the year to September, EBITDA was R$ 1.6 billion, a 14.6% reduction from the same period in the previous year. Adjusted EBITDA, which excludes the following non-recurring effects: (i) the restatement of the financial asset not subject to indemnity (VNR); and (ii) Pecém s reimbursement by the insurance Company, which totaled R$ 16.4 million in 3Q17, reported a 14.3% increase from 3Q16, bearing witness to the consistent growth of the Company s EBITDA. In the year to September, the reported growth was 16.9%, when compared to 9M16. Items in R$ thousand or % 3Q17 3Q16 Var 9M17 9M16 Var EBITDA 551, , % 1,624,821 1,902, % Provision for Water Charge Reimbursement n.a. (30,000) - n.a. Sale of Pantanal Energética - - n.a. - (278,139) n.a. Withdrawal Refund of TPP Pecém Insurance (9,003) - - (9,003) (81,800) n.a. Update of the Financial Asset to be Idemnified (7,416) (158,524) -95.3% (14,499) (199,238) -92.7% Adjusted EBITDA 535, , % 1,571,319 1,343, % Minority Interests Result (2,573) (11,193) 77.0% (7,386) (31,102) 76.3% EBITDA in Accordance with CVM 527 Instruction 548, , % 1,617,435 1,871, % 1 Provision for Emergency Water Charge (EWC) reimbursement of R$ 33.4 million - gross of PIS/COFINS and R&D. For the calculation of Adjusted EBITDA, it considers the net EWC, excluding the effect of the charge accounted in 2Q Result from Corporate Participations The Result from Corporate Participations increase R$ 8.6 million, due to Jari and Cachoeira Caldeirão results. Items in R$ thousand or % 3Q17 3Q16 Var 9M17 9M16 Var Santo Antônio do Jari (50%) 919 (4,545) n.a. 4,817 (16,508) n.a. Cachoeira Caldeirão (50%) (2,133) (5,119) n.a. (9,428) (12,299) n.a. São Manoel (33.33%) (399) (680) n.a. (1,849) (1,709) n.a. Others (960) (849) n.a. (926) (586) n.a. Minority interests result (2,573) (11,193) n.a. (7,386) (31,102) n.a. 1 Considers added value on assets 2 Considers Porto do Pecém Transportadora de Minérios (Pecém TM), Pecém Operação e Manutenção (Pecém OM) and Mabe as result from corporate participation FINANCIAL RESULT Financial Result (R$ thousand) Financial Revenue reported a 52.2% decrease due to the following factors: Consolidated 3Q17 3Q16 Var 9M17 9M16 Var Financial Revenue 58, , % 230, , % Revenue from financial investments 44,108 86, % 148, , % Monetary variation 28,652 42, % 100, , % Restatement of sectorial financial assets and liabilities - - n.a. - - n.a. Adjustments to present value (800) 400 n.a % (-) PIS/COFINS over financial revenues (16,670) (5,568) 199.4% (30,097) (13,856) 117.2% Other financial income 2,916 (2,339) n.a. 10,565 22, % Financial Expenses (189,781) (244,854) -22.5% (627,851) (767,051) -18.1% Monetary variation and Adds (12,078) (28,235) -57.2% (56,309) (134,761) -58.2% Financial charges on debt (136,474) (172,885) -21.1% (449,173) (509,640) -11.9% Monetary variation - Free energy (2,401) (3,220) -25.4% (7,965) (9,066) -12.1% Adjustments to present value (7,168) (13,486) -46.8% (23,154) (12,916) 79.3% (- ) Interest capitalized 2,530 2, % 6,543 3, % Other Expenses (31,368) (27,754) 13.0% (86,105) (85,237) 1.0% Net Foreign Exchange Result (5,908) (21,811) -72.9% (17,408) (92,158) -81.1% Update on Sectoral Financial Assets / Liabilities 1,451 10, % 3,964 34, % Interest and fine on taxes 7,732 3, % 14,059 18, % Total (128,300) (130,787) -1.9% (396,884) (485,073) -18.2% (i) Reduced revenue from financial investments (-R$ 42.8 million), reflecting the reduced CDI between compared periods (11.53% in 3Q17 vs 14.13% in 3Q16), plus the lower cash balance; (ii) Reduction in revenue from interest and fines on energy sold (-R$ 8.7 million) on a decline in delinquencies at the distributors; 22

23 (iii) Higher PIS and COFINS levies (-R$ 11.1 million) on financial revenues following adhesion to the Special Tax Regularization Program - PERT; and (iv) Increase in the Other Financial Revenues line (+R$ 5.2 million), due principally to the restating of the gain from the sale of Pantanal Energética. Financial Expenses improved by 22.5% due to the following factors: (i) Reduction in the Monetary Restatement in Local Currency line (+R$ 14,7 million), due to the lower IPCA and TJLP, declining from 8.48% and 7.38% in September 2016 to 2.54% and 7.25% in September 2017, respectively; (ii) Reduction in Monetary Restatement for the Use of Public Property (+R$ 2.8 million), due to the variation in IGPM between the two quarters under review, principally at Investco and Enerpeixe; (iii) Reduction in the Financial Charges on Debt line (+R$ 36.4 million), due to the lower CDI for the period and the reduction of the consolidated gross debt as a result of the settlement of the Holding Company s 4th Debentures Issue (principal and interest); and (iv) Reduction in the Adjustment to Present Value line (+R$ 6.3 million), reflecting the reduced monetary restatement for the use of public property, as explained above. There was a variation in the Net Foreign Exchange Result of R$ 15.9 million due to the early settlement of IDB (Inter-American Development Bank) financing by Pecém, in December of 2016, together with the settlement of NDF (Non Deliverable Forward) derivatives and swaps contracted to hedge against USD/Real and Libor oscillations. Restatement of sectorial financial assets/liabilities reported a reduction (-R$ 9.4 million) due to the creditor balance constituted in 3Q16. Late-Payment Interest and Fines on Taxes reported an increase (+R$ 4.5 million), as follows: (i) At the distributors, reflecting the recalculation of taxes on sectorial assets and liabilities (IRPJ, CSLL, PIS and COFINS) and subsequent signing up to PERT. The recalculation reflects the change in tax-calculation methodology, which was previously based on effective energy consumption, that is, billings, and is now considered based on the booking of provisions, that is, the date of constitution of the CVA, on an accrual basis. In addition, the recalculation is retroactive to 2014, when recognition of sectorial assets and liabilities began 7 ; (ii) At Enerpeixe, reflecting the change of levying PIS and COFINS for some agreements entered into before December 31, 2003, which are now cumulative (3.65% PIS and COFINS tax rate) instead of non-cumulative (9.25% PIS and COFINS tax rate). The resulting debits have also been included in the PERT NET INCOME Consolidated Net Income was R$ million, a reduction of R$ 90.7 million due to the effects mentioned above, intensified by the R$ 20.7 million in additional Income Tax and Social Contribution expenditure, due to the non-recurring effects, detailed in the chart above: 3Q17 3Q16 Var Income before taxes on profit 276, ,552 (72,108) Aliquot 34% 34% n.a. IR/CS (93,991) (118,508) 24,517 Non-recurring effects Reduction of the current tax on agreement with Rede's Group - 11,787 (11,787) Unrecognized deferred taxes on tax losses (9,401) - (9,401) PERT - Special Tax Regularization Program under CVA (7,702) - (7,702) Tax Incentives P&D - 8,182 (8,182) SUDAM Enerpeixe - 7,170 (7,170) Others 2,914 3,883 (969) Total (108,180) (87,486) (20,694) Aliquot 39.1% 25.1% n.a. (i) Non-recurring effects impacted the IR / CS rate, from 25.1% in 3Q16 to 39.1% in 3Q17. The Company expects for the coming months the reversal of unrecognized deferred taxes on the tax loss in EDP and the recognition of SUDAM's tax incentives for Enerpeixe, which is currently awaiting the approval of the Federal Revenue on the new lawsuit. Adjusted Net Income adjusted by the non-recurring effects was R$ million, a 2.4% increase in the quarter. In the year to September, Adjusted Net Income reported an increase of 45.8%, reaching R$ million. 7 Starting December 2014, the Company s financial statements recognized amounts associated with sectorial assets and liabilities in the Parcel A Items Compensation and Variation CVA Account; 23

24 Breakdown of Net Income 3Q17 (R$ million) % Net Income 3Q16 EBITDA Dep & Amort Result from corporate participation Financial Result Income tax and social contribution Attributable to noncontrolling shareholders Net Income 3Q UNCONSOLIDATED PROJECTS SANTO ANTÔNIO DO JARI HPP Note: Amounts correspond to 50% of Jari Consolidated (ECE and CEJA), EDP Energias do Brasil s stake in the operation. The consolidated gross margin for Jari reached R$ 22.8 million, an increase of 4.2% due to gains from decontracted energy and the cost of purchasing energy at PLD so avoided. Manageable expenditures were R$ 8.4 million, an increase of R$ 0.2 million, ensuring a well-controlled trajectory in operating expenditures for the plant. EBITDA was R$ 21.3 million, an increase of 6.8%. In the year to September, EBITDA was R$ 67.5 million, 13.1% over the same period in the previous year, due to the effects mentioned above. Net financial income was a negative R$ 10.5 million, a 30.2% improvement reflecting: (i) reduced debt burden from the first amortization of the 1st Debentures Issue of the Jari Holding Company in 4Q16; (ii) reduction in CDI; and (iii) TJLP reduction from 7.5% in 2Q16 to 7.0% in 2Q17. Total net income from the Plant and ECE was R$ 2.6 million in the quarter and R$ 9.9 million in the year to September CACHOEIRA CALDEIRÃO HPP JARI Consolidated Income Statement (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Net Operating Revenue 28,852 29, % 88,251 83, % Non-manageable expenditures (6,042) (7,321) -17.5% (15,693) (18,776) -16.4% Gross Margin 22,810 21, % 72,559 64, % Manageable expenditures (8,402) (8,220) 2.2% (25,857) (24,191) 6.9% EBITDA 21,344 19, % 67,488 59, % Net Financial Result (10,541) (15,098) -30.2% (31,983) (47,941) -33.3% Net Income 2,601 (2,865) n.a. 9,860 (11,467) n.a. Cachoeira Caldeirão Consolidated Income Statement (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Net Operating Revenue 16,658 12, % 48,429 15, % Non-manageable expenditures (2,407) (3,337) -27.9% (9,637) (5,306) 81.6% Gross Margin 14,251 8, % 38,792 10, % Manageable expenditures (7,626) (6,434) 18.5% (23,084) (13,654) 69.1% EBITDA 12,724 8, % 33,949 6, % Net Financial Result (9,834) (10,112) -2.7% (29,902) (15,292) 95.5% Net Income (2,121) (5,110) -58.5% (9,389) (12,290) -23.6% Note: Amounts correspond to 50% of Cachoeira Calderão, EDP Energias do Brasil s stake in the operation. Cachoeira Caldeirão Gross Margin was R$ 14.3 million, 61,6% more than the same period in the previous year, for two reasons: (i) short-term bilateral agreements entered into in 2016 due to the anticipated entry into operation of Cachoeira Caldeirão s GUs, at lower market prices than for the same period in 2017, due to more favorable hydrological conditions, reflecting in the PLD; and (ii) energy decontracting in 2017, reflecting in an increase in revenues due to contracting at market values with the shareholders trading companies. 24

25 Manageable expenditures were R$ 7.6 million, an increase of 18.5% reflecting the fully operational nature of the company, the GUs entering operations in stages during In 9M17, manageable expenses were R$ 23.1 million, an increase of R$ 69.1%. EBITDA was R$ 12.7 million because of the above effects. In the year to September, EBITDA was 33.9 million. Financial income was a negative R$ 9.8 million, due to the start of debt servicing payments. In the year to September, the financial result was a negative R$ 29.9 million. Finally, the Plant reported a loss of R$ 2.1 million in 3Q17 and a loss of R$ 9.4 million in the year to September. 4. ASSETS UNDER CONSTRUCTION SÃO MANOEL HPP São Manoel HPP ( São Manoel ) (700 MW) is a partnership between EDP Energias do Brasil, CTG and Furnas Centrais Elétrica S.A., each with a one third stake in the project. The plant is located on the middle reaches of the Teles Pires River on the state divide between Mato Grosso and Pará. By the end of 3Q17, physical work on the plant was 97.2% complete. The quarter s main highlights were: (i) start of commissioning tests at GU01; (ii) assembly and pre-commissioning tests at GU02; and (iii) issuance of the operational license, secured on September 5. The reservoir filling began on October 6 and completion is expected in 60 days. Given the stage of work at the site, investment in the quarter was R$ million, total investments from the start of construction being R$ 3.3 billion (considering monetary restatement and disregarding interest). The total investment amount includes the replacement of the EPC contractor in January DEBT Consolidated Gross Debt was R$ 5.4 billion, a reduction of 3.8% from year-end The reduction is a reflection of the settlement of interest and principal of the 4th Issue of Simple Debentures of EDP Brasil in the total amount of R$ million on September 15. By the end of 3Q17, the Company had 4.3% of its debt denominated in foreign currency, with 100% derivatives-based hedging against foreign exchange (USD) and interest rate (Libor) risks. Consolidated Gross Debt excludes the debt of the Santo Antônio do Jari, Cachoeira Caldeirão and São Manoel HPPs. Gross Debt per company (R$ million) 1, , EDP São Paulo EDP Espirito Santo Energest Enerpeixe Investco Pecém EDPE Holding Lajeado Consolidado Grid Santa Fé PCH Loans Debentures Intragroup loan Note: Intergroup eliminations of R$ 327 million not considered. Investco s preferred shares are classified as debt. Net Debt was R$ 3.9 billion, an increase of 10.0% due to reduced cash and cash equivalents (-R$ million) relative to the fiscal year ending in 2016, standing at R$ 1,453.7 million in 3Q17. The reduction in cash and cash equivalents is due to: (i) payment of Interest on Capital (Juros sobre Capital Próprio JSCP) to shareholders of EDP Brasil (R$ million) and payment to minority shareholders of subsidiaries (R$ million); (ii) reduction of the balance of regulatory liabilities, in the amount of R$ million; and (iii) mitigated by the increase in working capital. The funds raised as illustrated in the graph below, in the amount of R$ million, concern the debenture issues made on April 7 for EDP São Paulo and EDP Espírito Santo, in the respective amounts of R$ 150 million and R$ 190 million, and the issue of Promissory Notes in the name of EDP São Paulo made on July 19, in the amount of R$ million. Principal and Interest payments illustrated in the graph below are principally reflect the following: (i) BNDES, FINEM line for EDP São Paulo, EDP Espírito Santo and Pecém; (ii) Foreign Working Capital Loan under Law 4131 at EDP Espírito Santo; (iii) 1st Issue of Debentures of Energest; (iv) 5th Issue of Debentures of EDP São Paulo, (v) 4th Issue of Debentures of EDP Energias do Brasil and (vi) 1st Issue of debentures of Lajeado. 25

26 Breakdown of Gross Debt (R$ million) -3.8% 5, ,362 Debt Dec/2016 Funding Monetary variation Interests Principal Amortization Interests Payment Swap Amortization Market value adjustment Debt Sep/2017 The average cost of debt was 12.3% p.a. compared to 14.5% p.a. in December This takes into account the capitalized interest on debt and charges incurred in the past 12 months. The reduction in average cost is the result of a decline in CDI - the Interbank Deposit Rate (from 14.0% p.a. in December 2016 to 11.53% p.a. in September 2017) and in the IPCA inflation index (from 6.3% p.a. in December 2016 to 2.5% p.a. in September 2017). The consolidated average term of debt was 2.7 years, below the average term recorded for December 2016 of 3.0 years. Gross Debt by Index on 09/30/17 IPCA, 13.0% Fixed Rate, 4.7% US$, 4.3% 1,454 Debt Maturity Schedule 1 (R$ million) 1,436 1,512 TJLP, 22.8% CDI, 55.1% 1, Note: considering that currency denominated financing is hedged against exchange rate risk (USD), the percentage of indexers would be: CDI 59.4%, the remaining indexers being unchanged. Availabilities After 2021 Note: A mounts incorporate principal + charges + results from hedge operations Net Debt/EBITDA Consolidated Consolidated & Participations 1 Period ND/EBITDA ND/EBITDA Sep/2016 1,3 x 1,6 x Dec/2016 1,5 x 2,0 x Mar/2017 1,8 x 2,3 x Jun/2017 1,7 x 2,2 x Sep/2017 1,9 x 2,4 x 1 Figures shown are proportional to EDP Energias do Brasil s participations The Net Debt/EBITDA ratio was 1.9 times. Based on EDP Energias do Brasil s stakes in Santo Antônio do Jari (50%), Cachoeira Caldeirão (50%) and São Manoel (33.34%), the Net Debt/EBITDA ratio would be 2.4 times, the average term of debt would be 3.8 years and average annual cost would be 11.8%. Considering unconsolidated assets, the breakdown of debt by indexer would be 47.3% in CDI, 31.7% in TJLP, 13.8% in IPCA, 3.4% in US Dollars and 3.8% at pre-fixed interest rates. 26

27 6. VARIATION IN FIXED ASSETS In the quarter, variation in fixed assets decreased 10.8% based on the consolidation criterion. Of the total amount, 88.9% is in distribution, 7.9% in generation, 2.3% in transmission and 1.0% in other. Year-to-date, the variation was 15.4%, an increase of R$ 65.1 million, reflecting the Company's commitment to increase investments, aiming at continuous improvement, especially in distribution. Capex (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Distribution 146, , % 412, , % EDP São Paulo 66,024 80, % 213, , % EDP Espírito Santo 80,018 79, % 199, , % Generation 12,902 16, % 57,941 54, % Enerpeixe 1, % 2, % Energest Consolidated 641 3, % 2,190 6, % EDP PCH (1) 2,344 2, % 5,782 4, % Lajeado / Investco 2,800 5, % 8,115 7, % Pecém (Consolidation) 4,832 4, % 37,733 35, % Costa Rica 50 - n.a n.a. Pantanal - - n.a. - - n.a. Santa Fé n.a. 1, n.a. Transmission 3,727 - n.a. 6,362 - n.a. Others 1,681 7, % 11,060 22, % Total 164, , % 488, , % Distribution segment investments totaled R$ million (net of special obligations and energy surplus revenue) due to reduced requests for new connections and network extension works because of the sluggish market demand. In the year to September, the increase is due to the Construction Plan increment, notably for Lines and Substations through recovery and improvement actions such as the installation of Multiplex and Spacer cables, as well as investments in loss-prevention with the replacement of meters and the implementation of telemetering. The Company has been significantly increasing its investment level at distributors, as the chart above illustrates, to improve the quality of services and its operational efficiency. As consequence, the investment increase reflects in the increase of return to be captured in the upcoming tariff revisions. EDP São Paulo Capex - Distribution (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Total Capex Net of Special Obligations 74,809 82, % 236, , % (+) Special Obligations 1,137 1, % 3,677 1, % Gross Value 75,946 83, % 240, , % (-) Interest Capitalization (9,922) (2,224) 346.1% (26,897) (8,214) 227.5% Gross Value less Interest Cap. 66,024 80, % 213, , % EDP Espírito Santo Capex - Distribution (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Total Capex Net of Special Obligations 80,487 84, % 208, , % (+) Special Obligations 1,393 1, % 2,866 1, % Gross Value 81,880 85, % 211, , % (-) Interest Capitalization (1,863) (6,371) -70.8% (12,282) (142,367) -91.4% Gross Value less Interest Cap. 80,017 79, % 199, , % Distribution 146, , % 412, , % Out of total gross investment at the Distributors in the quarter, 60% was allocated for the installation of metering systems, expansion of power lines, substations and distribution networks for connecting new clients. A further 33% went to improvements in the grid, substitution of equipment and obsolete as well as depreciated meters and the reconductoring of networks at the end of their useful life. The Company invested 6% in telecommunications, information technology and other activities such as infrastructure, commercial projects and the prevention of losses; and a further 1% was dedicated to the Light for All program and to urban and rural universalization for connection and access of consumers to energy services. The generation segment s investment was R$ 12.9 million. The reduction of 20.9% is a reflection of the investments made in 2016, including provisions for renewal of the Lajeado Plant s Operational License (+R$ 5.1 million) and equipment modernization at Energest (+R$ 1.3 million). 27

28 Capex (R$ thousand) 3Q17 3Q16 Var 9M17 9M16 Var Distribution 146, , % 412, , % Generation 131, , % 312, , % Genaration Others 12,902 16, % 57,941 54, % Santo Antonio do Jari HPP (1) 1, % 1,903 6, % Cachoeira Caldeirão HPP (1) 1,228 3, % 1,442 63, % São Manoel HPP (2) 115, , % 251, , % Transmission 3,727 - n.a. 6,362 - n.a. Others 1,681 7, % 11,060 22, % Total 282, , % 743, , % (1) Considers EDP participation = 50% (2) Considers EDP participation = 33.3% In the Others segment, the reduction is due to the 2016 investment in the project for constructing a steam boiler for a EDP Grid client. In the Transmission segment, investments totaled R$ 3.7 million due to the work on developing Lot 24 and studies for the other lots acquired in the 2017 auctions. If investments are considered according to the Company s stake in the hydroelectric generation projects, namely 50.0% in Jari (R$ 1.3 million) and in Cachoeira Caldeirão (R$ 1.3 million) and also the 33.33% in São Manoel (R$ million), total investments would have amounted to R$ million, a decrease of 16.9%. 7. REGULATORY ASSETS AND LIABILITIES On September 30, EDP São Paulo and EDP Espírito Santo both ended the period with a regulatory asset. At both Distributors, there was a negative variation in the charges line due to higher tariff coverage in the Energy Development Account - CDE and System Service Charges - ESS, negatively impacting the Company s cash position. The R$ million Appropriation relates to the difference between the average coverage tariff versus the average purchase price. This variation reflects manly to agreements of the uptime format, which are impacted by the increase in thermal dispatch, in addition to agreements in the quotas format, which are affected by the high transfer of hydrological risk. The R$ million Amortization contemplates the tariff recovery (billing revenues) returned to consumers in the year to September, principally at EDP São Paulo, in the light of the previous year s tariff adjustment. In Others, due to the increased hydrological risk, the change reflects the activation of tariff flags, which had extra charge for most of the past 9 months. The reduction in the regulatory balance in relation to 2016 is due to the reduction in CDE charge following changes in calculation methodology pursuant to ANEEL Ordinance 701/2017. Moreover, we would point out that booked into the CVA balance is the collection of the Angra III reserve energy fee, which since April 2017, is being reimbursed to consumers, thus reflecting in the reduction of the outstanding CVA liability. EDP Consolidated Energy acquisition/cost of Energy Itaipu Dec-16 Appropriation Amortization Update Others Sep-17 Accumulated Variation 74, , ,448 7,096 (219,141) 746, ,986 Charges (165,515) (306,049) 29,355 (16,207) 1 (458,415) (292,900) Overcontracting (100% a 105%) (54,699) (139,610) 62,453 6, (125,669) (70,970) Others (246,154) (51,870) 140,168 6, (150,916) 95,238 (391,598) 265, ,424 3,964 (219,088) 11, ,354 EDP São Paulo Energy acquisition/cost of Energy Itaipu Dec-16 Appropriation Amortization Update Others Sep-17 Accumulated Variation 15, , ,925 4,686 (136,167) 499, ,857 Charges (139,061) (171,370) 38,538 (7,925) - (279,818) (140,757) Overcontracting (100% a 105%) (48,043) (44,385) 44,515 5,686 - (42,227) 5,816 Others (236,493) (43,050) 109,231 3,945 - (166,367) 70,126 (407,620) 224, ,209 6,392 (136,167) 11, ,042 28

29 Energy acquisition/cost of Energy Itaipu EDP Espírito Santo Dec-16 Appropriation Amortization Update Others Sep-17 Accumulated Variation 58, ,170 (10,477) 2,410 (82,974) 246, ,129 Charges (26,454) (134,679) (9,183) (8,282) 1 (178,597) (152,143) Overcontracting (100% a 105%) (6,656) (95,225) 17, (83,442) (76,786) Others (9,661) (8,820) 30,937 2, ,451 25,112 16,022 40,446 29,215 (2,428) (82,921) 334 (15,688) 8. SUSTAINABLE PERFORMANCE EDP s commitment to sustainable development is illustrated by transparent dialog with stakeholders and the focus on adopting the best environmental, social and economic management practices internally. For more than ten years, EDP has been a component of B3 s 8 Corporate Sustainability Stock Index, substantiating the robustness of the Group s sustainability strategy and reinforcing alignment with the United Nations Sustainable Development Goals COMMITMENTS WITH SUSTAINABLE DEVELOPMENT In 2016, EDP embraced a series of commitments to sustainability through 2020 based on the Company s vision of being a global energy company, a leader in value creation, innovation and sustainability : Strategic Pillars Commitments for 2020 Status 3Q Limit the weighting of coal-fired technology in the energy generation portfolio to 25% in 2020 and promote projects for reducing CO2 emissions EDP has maintained 74% of installed capacity in generating renewable energy. 1. Generate economic value 1.2 Supply energy-efficient products and services to reduce the energy consumption of 100 GWh at the client by 2020 To the end of the third quarter, 22 energy efficiency and fuel substitution projects had been implemented with savings of 49.9 GWh and avoidance of a total of 24,330 tco2 emissions. - SDG 7 Affordable and Clean Energy - SDG 9 Industry, Innovation and Infrastructure - SDG 12 Responsible Consumption and Production 1.3 Invest R$ 100 million by 2020 in expanding the telemetering of low voltage customers Telemetering solutions were installed at 6,055 clients at EDP Espírito Santo and 5,646 clients at EDP São Paulo. 1.4 Invest R$ 100 MM in innovative projects by 2020 A total of 53 R&D projects in portfolio, 38 in the process of implementation and the remainder at various stages of approval, feasibility and prospection. 2. Manage environmental and climate issues - SDG 13 Climate Action - SDG 15 Life on Land 2.1 Achieve 100% environmental certification and ensure the implementation of a management system at critical suppliers 2.2 Internalize the circular economy concept in the Company and foster energy efficiency in buildings Study of opportunities for extending environmental and health and safety certification for Distribution assets in its final report-drafting stage. Restoration of 75% of the transformers, 2% of tools and 100% of oil refined. Furthermore, 100% of power line poles and 98% of metal fixtures were recycled. In generation, 28.29% of the ash produced is sent for co-processing as a sub-product for cement manufacture. 3. Develop our people - SDG 5 Gender Equality - SDG 8 Decent Work and Economic Growth 2.3 Enhance the value of environmental externalities at EDP relating to priority eco-systemic services 3.1 Maintain levels of employee engagement > 75% by Promote diversity, ensuring equality of access in hiring processes 3.3 Reach 100% of health and safety certification and ensure implementation of a management system at critical suppliers Valuation study of the ecosystemic service for the supply of water to the Pecém TPP in progress. EDP Brasil was the highlight in the EDP Group reaching 81% of engagement in the last survey, held every two years. The result reflects the implementation of the company's internal culture transformation program. Establishment of the Diversity Working Group for deciding and implementing actions with a focus on equality of opportunity. Study of opportunities for extending environmental and health and safety certification for Distribution assets in its final report-drafting stage. We held 45 social- and environmental aspects related independent audits this year within the scope of the Supplier Performance Index (Índice de Desempenho do Fornecedor - IDF). 8 BM&FBovespa 29

30 4.1 Keep EDP as one of the most Ethical Companies in Brazil (Pro-Ethics Seal) EDP Brasil is once more among the participants of the Proethics Seal Results for selected companies will be released in December Improve Level of Trust - SDG 11 Sustainable Cities and Communities 4.2 Reach > 80% in customer satisfaction 4.3 Implement periodic consultation mechanisms with stakeholders 4.4 Invest R$ 50 MM by 2020 to promote social businesses and sustainable life style initiatives Launch of the new layout of the Virtual Agency - EDP Online and of the customer-relations app. The consultation process has begun with Espírito Santo communities and clients in vulnerable situation benefited from the energy efficiency programs in São Paulo. Monitoring of 21 private social investment projects. The period s highlights include the Caravanas das Artes & Esportes" event in Serra-ES and support to the Jacareí rugby team, the Brazilian champions in SUSTAINABILITY INDICATORS Performance of the principal socio-environmental indicators and aspects: Indicator Unit 3Q16 3Q17 Water consumption m³ 9,258,436 8,501,307 Electric energy consumption MWh 336, ,654 Hazardous waste Ton 711 1,792 Non-hazardous waste Ton 119, ,296 Direct emissions of CO2 (scope 1)¹ Tons of CO2e 1,304,568 1,837,658 Indirect emissions of CO2 (scope 2) Tons of CO2e 68,719 58,704 NOX emissions Ton 4,070 3,638 SO2 emissions Ton 7,606 12,291 2 Emissions of particulate material Ton Environmental accidents Qty 0 0 Certified net power (ISO 14001) Distribution MVA 488 2,174 Certified net power (OHSAS 18001) Distribution MVA 3,481 3,597 Certified net power (ISO and OHSAS 18001) - Generation MW 2,407 2,407 Proportion of women on the payroll % Hours of training per employee Hours Frequency rate own employees Rate Frequency rate - third party employees Rate Severity rate own employees Rate 27 0 Severity rate - third party employees Rate 99 1,623 Suppliers Performance Index (IDF) Index 77% 80% Private social investment R$ thousand The Greenhouse Gas (GHG) emissions inventory may undergo changes after publication of this result because of updates to emission factors determined according to the Brazilian Green House Gas Protocol Program. n.a.- information not available for the same quarter in the previous year. 2 There was a change in the operation of the equipment for treatment of atmospheric effluents (FGD) from December 2016, without compromising compliance with the legal limits of SO2 emissions, which are within the parameters in force. 3 reference to the 12 months of OTHER INFORMATION ON SUSTAINABILITY EDP pursues the best market practices for the management and reporting of sustainability issues, adopting the Global Reporting Initiative (GRI G4) guidelines and the International Integrated Reporting Council (IIRC) Standard. See the Company s Investor Relations site, Annual Reports section for more information on the EDP report in GRI format. The first report according to the Integrated Report model was published in June 2017 and is also available in the Investor Relations site. FTSE4GOOD EDP Brasil remained one of the components of the FTSE4Good Emerging Index, a market rating that evaluates corporate performance in terms of Environmental, Social and Corporate Governance aspects. 30

31 SUSTAINABLE BRANDS EDP Brasil was a protagonist in the branding and sustainability-related dialogs in the Sustainable Brands São Paulo 2017 event. The event involved a gathering of business leaders, entrepreneurs and sustainability experts from around the world, and focused on redefining quality of life standards (Redefining the Good Life). EDP sponsored the Good Energy arena, hosting discussions on sustainability and innovation, addressing energy efficiency solutions, the future of the sector s technologies, and the importance of the organization s proposition. 9. CAPITAL MARKETS 9.1. SHARE PERFORMANCE On September 30, 2017, the shares of EDP Energias do Brasil (ENBR3) reported a closing price of R$ 15.14, an appreciation of 6.7% in the quarter, a underperforming the Ibovespa (+18.1%) and the Electric Energy Stock Index - IEE (+8.4%). The Company s shares were traded on all the days the stock market was open for business, totaling 93.8 million shares, a daily average of 1.5 million transacted and a financial volume of R$ 1.4 billion, at an average daily volume of R$ 21.8 million. The Company s market value on September 30 was R$ 9.2 billion. Share Price Evolution (R$) Average Daily Volume (R$ million) Sep, 16 Dec, 16 Mar, 17 Jun, 17 Sep, 17 3Q16 4Q16 1Q17 2Q17 3Q17 ENBR3 x Indices Performance (Base 100: 12/30/2014) (+89.9%) (+52.1%) (+48.6%) ENBR3 IBOV IEE 31

32 Dividends and Payout (R$ / Million) *Payout considering the adjusted profit from non-recurring effects in 2014, 2015 and The payment of interest on capital for fiscal year 2016 was made on September 25, CAPITAL STOCK On June 30, the Company s capital stock was represented exclusively by 606,850,394 common nominative shares. Of the total, 295,342,982 make up the free float pursuant to the Novo Mercado Listing Regulations of B3 (former BM&FBOVESPA). In 2017, there was a reduction of 71,860 in treasury stock which now totals 85,476 shares. This reduction is a reflection of the Incentive Program (ILP) whereby the Company transferred shares to the program s beneficiaries. For additional information on the ILP, see the Technical Notes in the ITRs. 32