Release 2Q17 July 26, 2017

Transcription

1 Release 2Q17 July 26, 2017 Main Indicators Indicators (R$ thousand) 2Q17 2Q16 Var. 6M17 6M16 Var. Gross Margin 861, , % 1,741,316 1,602, % PMTO (316,058) (326,120) -3.1% (635,721) (634,768) 0.2% EBITDA 533, , % 1,073,281 1,276, % Adjusted EBITDA¹ 510, , % 1,036, , % Net Income 141,998 97, % 276, , % Adjusted Net Income¹ 126,623 90, , , % Capex² 157, , % 323, , % Net debt 3,562,602 3,400, % 3,562,602 3,400, % 1 Excluding non-recurring effects. 2 Capex consider unconsolidated assets Growth of 7.8% Growth of 16.1% Growth of 45.1% -3.1%, below inflation rates 1.7x (Net Debt/EBITDA) in June, % of physical evolution -120 avg. MW in São Manoel; avg. MW in Jari; and -95 avg. MW in Cachoeira Caldeirão 91.6% in the 1H % when compared to 1H p.p. in EDP SP and p.p. in EDP ES % in the traded volume Market Value R$ 8.6 bi Treasury Shares: 713,223 Total Shares: 606,850,394 Free Float: 48.7% Portuguese 11:00 (BRA) +55 (11) (11) July 27, 2017 English 10:00 (NYC) USA: +1 (786) Others: +1 (888) ri@edpbr.com.br The conference call will be held in Portuguese with simultaneous translation in English. São Paulo, July 26, 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 second quarter and first half 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

3 Highlights of the Quarter Gross Margin: in the second quarter, EDP reported a Gross Margin of R$ million, a growth of 7.8% in relation to 2Q16. In the first half, growth was 8.7% and over the past 02 (two) years, reached 39.4%, confirming the consistent growth trajectory of the Company s results. Manageable Expenditures: the Company has been maintaining rigorous control on costs on the basis of the Zero Based Budget and reflecting in the reduction of 3.1% in PMTO in relation to 2Q16. For the first half as a whole, the PMTO remained in line with the results for 2016 and reaffirming the Company s commitment of reporting increases in manageable expenditures of less than inflation. The IPCA inflation index for the period was +3.0%. EBITDA (adjusted): in the quarter, EBITDA (adjusted) rose by 13.7% and in the first half the increase was 18.3%. Of the total registered in the quarter, 42.5% of the EBITDA reflects Hydro Generation, 33.5%, Distribution, 19.1% Thermal Generation and 9.7%, the Trading Company and EDP Grid 1. Net Debt: growth of 4.8% in the quarter, thus maintaining the Net Debt/EBITDA ratio at comfortable levels of 1.7x, and allowing the Company to continue developing its projects with the relevant risks under control. Distribution: growth of 43.4% of investments in the first half, with a focus on increasing the Base and maximizing returns to be captured on the occasion of the next tariff revision. For this purpose, since 2015 the Company has been investing amounts in excess of the Reintegration Quota. Hydro Plants: On May 29, São Manoel HPP decontracted energy through the Surplus and Deficits Compensation Mechanism (MCSD) under the A4 model (A4+) and on July 24, Santo Antonio do Jari and Cachoeira Caldeirão HPPs also decontracted 20.9 avmw and 95 avmw respectively through the same MCSD (A0). São Manoel HPP: physical work on construction at quarter-end was 91.4% complete. Pecém: the Company obtained an important court ruling with respect to the Emergency Water Charge (EWC) and instituted by the government of the state of Ceará in September In May 2017, the federal courts through a preliminary injunction in favor of the Company ruled that the accumulated cost of the charge be incorporated in full in the Unit Variable Cost (CVU). Additionally, the decision determines the suspension of any penalty imposed due to an eventual reduction and/or interruption of energy generation from the plant due to water supply problems. Consequently, and in view of maintenance work on the plant conveyer belt in the next few months, the Company expects to be able to reduce a non-manageable expenditures at the plant. Commercialization: gross margin reported growth of R$ 59.9 million between quarters, reflecting the year-on-year improvement in unit margin. Transmission: during IH17, the Company continued to execute the construction schedule for the Lot 24 Transmission Line in the state of Espírito Santo according to plan, disbursing R$ 2.6 million in the acquisition of land, for environmental studies. 1 Considering that -4.8% related to intragroup eliminations

4 Angra III Nuclear Power Plant Reserve Energy Fee (EER) From April 1, the reduction with respect to the reversal of the effects of inclusion of the Angra III Reserve Energy Fee (ERR) in consumer energy tariffs was applied following approval by the Board of ANEEL. The impact on residential consumer billings at EDP São Paulo was of the order of an 8.32% reduction in April. This breaks down into a reduction of 6.95% with respect to amounts collected in 2016 and 1.36%, the effect of removing the fee from the overall tariff calculation. The effect on the consumer will continue through to October, the month set for the distributor s annual tariff readjustment. At EDP Espírito Santo, the effect resulted in a decrease of 11.62% in billings in April, 10.37% with respect to values charged in 2016 and 1.25%, the removal of the fee from the overall tariff calculation. The effect on consumer invoices will continue through until August when the distributor s tariff readjustment will take place. 7 th Debenture Issue of EDP São Paulo and the 5 th Debenture Issue of EDP Espírito Santo On April 07, EDP São Paulo and EDP Espírito Santo issued debentures worth R$ 150 million and R$ 190 million, respectively, with a total term of 05 (five) years, semi-annual payments from the 36 th month and semi-annual interest without a grace period. An interest rate ceiling was set at 112% of CDI, although following conclusion of the bookbuilding process, the final interest rate was fixed at % of CDI. The reduced rate and the significant investor demand for the debentures in the Brazilian capital markets is a reflection of the excellent credit quality of the Company s distributors. EDP Energias do Brasil bids successfully for four lots in the Transmission Auction The Company made successful bids for lots 7,11,18 and 21 at the Public Service Transmission Auction 05/2016, held by ANEEL on April 24, CAPEX totaling R$ 3.0 billion based on Company estimates. EDP s results at the auction reinforce the Company s presence in the Transmission segment, so diversifying its operations along the electricity sector value chain with satisfactory returns and controlled risk as mentioned in Chapter 4.2. Reimbursement of the Emergency Water Charge of Pecém I TPP On May 08, Pecém obtained a preliminary injunction from a federal court permitting it to transfer the full amount charged by the State of Ceará to the CVU. Additionally, the decision determines the suspension of any penalty imposed by ANEEL due to an eventual reduction and/or interruption of energy generation from the plant resulting from water supply problems. It also 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. Decontracting of energy of São Manoel HPP On May 29, Empresa de Energia São Manoel S.A. (EESM) - owned on an equal tripartite basis by EDP, China Three Gorges and Furnas - received confirmation from the Electric Energy Trade Board (CCEE) as to the permanent reduction of 120 avmw of the power purchasing agreement in the Regulated Contracting Environment (CCEAR) through the Surpluses and Deficits Compensation Mechanism, A4+ (MCSD EN A4+) category, dated May 8. The amount originally contracted was avmw at a price of R$ /MWh (baseline date of December 2016) with annual restatement at the IPCA and effective between May 1, 2018 and December 31, Of the 120 avmw decontracted, 90 avmw was contracted by the Trading Companies of EESM s shareholders in the same proportion as their stakes in the company for the period from May 1, 2018 to December 31, 2038 (maturity date of the BNDES financing), the remaining 30 avmw being allocated to EESM for hedge purposes. Subsequent Events MME opens a public consultation for reforming the electric sector July 3, the Ministry of Mines and Energy (MME) announced a public consultation (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. Again on July 5, the MME published Technical Note 5/2017 under the Public Consultation number 33/2017 laying out 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. The model will continue to be discussed with investors and other sector entities until August 04. 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 02 (two) 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. Decontracting of energy of Santo Antonio do Jari and Cachoeira Caldeirão HPPs On July 24, 20.9 avmw of Santo Antônio do Jari HPP (Jari) and 95 avmw of Cachoeira Caldeirão HPP was decontracted through MCSD (A0). At Jari, of the decontracted 20.9 avmw, avmw will be held for hedging purposes and 3.40 avmw for recontracting. In the case of Cachoeira Caldeirão, of the 95.0 avmw decontracted, avmw will be held for hedging purposes and avmw for recontracting. Decontracting 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.

5 The information relates to the second quarter (2Q17) compared with the same period in 2016 (2Q16) and for the year to June 30 (1H17). The Group s average energy sales tariff 2 was R$ 226.3/MWh, a growth of 20.2%. For the year to June 30, the average tariff was R$ 217.7/MWh, an increase of 17.0%. Group 3 energy volume sold was 3,011 GWh, a 4.5% reduction. In 1H17 total volume was 6,080 GWh, a decline of 6.1%. 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 June 2017 and Hydroelectric Generation The average energy sale tariff was R$ 186.3/MWh, a growth of 14.5% due to: (i) an increase in average sales tariffs, a reflection of the annual readjustment for bilateral agreements and CCEARs; and (ii) new agreements involving Small Hydroelectric Plants - SHPs at amounts higher than those of the preceding quarter. Energy volume sold from the hydro plants was 1,668 GWh, a reduction of 7.8%, due lower energy volumes contracted from Enerpeixe, Energest and SHPs and the differences in seasonal strategy adopted for the two quarters under comparison, reflecting the outlook for increases in the Price of Settlement of Differences - PLD for 2H17. In 1H17, volumes amounted to 3,408 GWh, a decrease of 10.0%. For the year 2017, the percentage of energy decontracted for hedging purposes is 9.0% 4 (96 avmw) against 5.0% (51 avmw) reported for In addition, the Company acquired 70 avmw 5, for increasing the portion of total decontracted energy, this increasing to 16.0%, thus mitigating future risks with respect to the Generation Scaling Factor - GSF. The additional volume was purchased during the first months of the year and extends from May to December Unconsolidated Assets 2Q17 2Q16 Var 2Q17 2Q16 Var Lajeado 779, , % % Investco 8,441 8, % % Enerpeixe 451, , % % Energest 263, , % % PCH 108, , % % Costa Rica 23,605 22, % % Santa Fé 33,640 33, % % Total HPPs 1,667,918 1,809, % % Pecém² 1,343,160 1,343, % % Total Consolidated 3,011,078 3,153, % Asset Volume (MWh) Volume (MWh) Sales Price (R$/MWh)¹ Sales Price (R$/MWh) 2Q17 2Q16 Var 2Q17 2Q16 Var Cachoeira Caldeirão (50%) 136,677 75, % % Jari (50%) 223, , % % Total Unconsolidated 359, , % % The average energy sale tariff for these assets was R$ 140.8/MWh, an increase of 18.3% due to the 125.6% rise in the average energy sale tariff at Cachoeira Caldeirão, the result of new CCEARs relative to the same period in 2016.This was the result of the plant becoming operational ahead of schedule in May 2016 and selling energy output in the short-term market. In 1H17, the average tariff was R$ 140.2/MWh, an increase of 10.6%. Total energy volume sold by the Unconsolidated Assets amounted to GWh, an increase of 20.0%, due to the entry into operations of two machines from Cachoeira Caldeirão HPP in May In 1H17, volumes were GWh, representing growth of 38.7%. 2 Energy Sold does not include the Company s 50% stake in Jari and Cachoeira Caldeirão 3 Energy Sold does not include the Company s 50% stake in Jari and Cachoeira Caldeirão 4 Includes the 50% stake of the Company in Jari and Cachoeira Caldeirão

6 Consolidated Sales from Hydro Generation (GWh) Seasonlization of Hydro Generation (%) 3,408 3,784 26% 26% 25% 25% 1,668 1,810 25% 24% 25% 24% 2Q 6M 1Q 2Q 3Q 4Q GSF (Generation Scaling Factor) The average GSF for the quarter was 84.4%, representing exposure of 295 GWh to the average PLD of R$ /MWh (SE/C-W submarket). In 1H17, the average GSF was 97.4%, exposure of 128 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 first half. The Company has taken into consideration the renegotiation of the GSF at the end of 2015 and early 2016 for the purposes of these results. - Thermal Generation Energy volume sold from Pecém I TPP (Pecém) of 1,343 GWh was stable in relation to 2Q16. In 1H17, volumes reached 2,672 GWh, a reduction of 0.5% compared with 1H16. Average uptime at Pecém in 2Q17 fell quarter-on-quarter more especially at GU01 because of a programmed stoppage for annual maintenance work during the first 16 days of June. The programmed annual maintenance stoppage for GU02 is scheduled for September. 93% 89% 85% 85% 78% 82% 96% 91% 94% 94% 94% 94% 98% 81% 89% 2Q16 3Q16 4Q16 1Q17 2Q17 GU01 GU02 Average TPP Details in relation to the plant s revenue, cost and gross margin are shown in more detail in Chapter

7 - Installed Generation Capacity The Company s installed generation capacity at quarter end was 2.8 GW with a physical guarantee of 1.8 average GW, unchanged from year-end Installed Capacity in MW pro forma % 110 2, , , Sale of Pantanal Energética 1Q16 C. Caldeirão HPP 2Q17 São Manoel HPP 2018 Note: 1 Considers the proportional corporate participations in 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. Commercialized energy volume amounted to 3,818 GWh, an increase of 23.3%, due to: (i) greater price volatility in the quarter, varying between R$ 125/MWh and R$ 411/MWh (SE/C-W submarket), and a reflection of major market liquidity (SE/C-W submarket) benefiting both long- and short-term operations; (ii) greater energy allocation by sector agents to the 2H17 period, generating an increase in demand for short-term energy in order to comply with agreements in effect in 1H17; and (iii) an increase in energy sales to the new free consumers have recently migrated from the regulated sector. In 1H17, total commercialized energy amounted to 6,949 GWh, 23.0% greater than in 1H16. Volume (MWh) 2Q17 2Q16 Var Related Parts 371, , % Others 3,446,896 2,863, % Total Commercialization 3,817,947 3,095, % Average Tariff (R$/MWh) %

8 Distribution reported a decline in distributed energy volume due to the migration of clients from the captive to the free market. EDP São Paulo Volume (MWh) Volume (MWh) Customers (unit) 2Q17 2Q16 Var 6M17 6M16 Var Var Residential 920, , % 1,840,878 1,807, % 1,659,207 1,629, % Industrial 358, , % 676, , % 12,575 12, % Commercial 474, , % 960,632 1,148, % 127, , % Rural 20,420 20, % 41,170 41, % 7,932 7, % Others 224, , % 446, , % 13,663 13, % Energy Supplied to Final Customers 1,999,811 2,246, % 3,964,976 4,457, % 1,820,379 1,784, % Supply 11,279 11, % 22,877 21, % % Energy in transit (USD) 1,652,452 1,391, % 3,323,207 2,767, % % Free customers 1,587,218 1,333, % 3,198,675 2,651, % % Concessionaries 65,233 57, % 124, , % % Own consumption 1,612 1, % 3,136 3, % % Total Energy Distributed 3,665,153 3,650, % 7,314,196 7,249, % 1,820,961 1,785, % EDP Espírito Santo Residential 545, , % 1,196,812 1,231, % 1,193,734 1,168, % Industrial 169, , % 331, , % 11,273 11, % Commercial 312, , % 674, , % 122, , % Rural 205, , % 413, , % 184, , % Others 206, , % 418, , % 13,397 13, % Energy Supplied to Final Customers 1,439,159 1,602, % 3,035,545 3,329, % 1,525,554 1,495, % Supply 116, , % 233, , % % Energy in transit (USD) 901, , % 1,804,515 1,556, % % Free customers 876, , % 1,747,517 1,526, % % Concessionaries 24,949 12, % 56,999 30, % % Own consumption 1,891 2, % 4,000 4, % % Total Energy Distributed 2,458,178 2,523, % 5,077,390 5,179, % 1,526,025 1,495, % Residential 1,465,968 1,480, % 3,037,690 3,039, % 2,852,941 2,797, % Industrial 528, , % 1,007,854 1,497, % 23,848 24, % Commercial 787, , % 1,635,219 1,910, % 249, , % Rural 226, , % 454, , % 192, , % Others 431, , % 865, , % 27,060 27, % Energy Supplied to Final Customers 3,438,970 3,849, % 7,000,521 7,786, % 3,345,933 3,280, % Supply 127, , % 256, , % % Energy in transit (USD) 2,553,509 2,170, % 5,127,722 4,323, % % Free customers 2,463,326 2,100, % 4,946,191 4,178, % % Concessionaries 90,183 69, % 181, , % % Own consumption 3,503 3, % 7,136 7, % % Total Energy Distributed 6,123,331 6,173, % 12,391,586 12,428, % 3,346,986 3,281, % N o tes: Others = P ublic entities + P ublic lighting + P ublic services USD = Usage o f the D istributio n System - Captive Market Distribution Results for the captive market were affected by slower macro-economic activity as well as high levels of unemployment in Brazil of 13.3% and even higher rates in the States of São Paulo and Espírito Santo of 14.2% and 14.4%, respectively. Less extreme temperatures were also reported in the state of Espírito Santo (-0.8 C in relation to the same period in 2016). Energy sold to final Distribution clients reported a reduction of 10.7% and 10.1%, in 2Q17 and 1H17, respectively, due to the migration of a large number of clients from the captive to the free market, driven by the attractive prices in the free contracting environment (ACL) during the course of 2016 and The effect of this migration was mitigated by over-contracting which benefited from the high average PLD in the quarter, to be shown in more detail in Chapter

9 Excluding the impact of migration at EDP São Paulo, the commercial class would post an increase of 0.2% in the quarter and 0.7% in the first half. On the same basis, the industrial class would report growth of 2.0%, driven largely by the extractive and automotive, truck trailer and body industries. Again excluding the impact of migration, at EDP Espírito Santo the commercial class would report a decline of 5.1% in the quarter and 3.8% in the first half. The decrease in the industrial sector would be 3.0%, due to a decline in the pace of economic activity in the state and impacted by the non-metallic minerals sector (-4.2%) and by the food products sector (-4.6%), together representing approximately 56% of the consumption of the State s industrial class. At EDP São Paulo, total numbers migrating from the Captive Market to the Free Market was 190, of which: (i) 76 in the commercial class; (ii) 109 in the industrial class; (iii) 07 from the Government Services sector; (iv) 03 disconnections; and (v) 01 new entrant. At EDP Espírito Santo, total migration was 132, of which: (i) 66 in the commercial class; (ii) 65 in the industrial class; (iii) 02 from the Government Services sector; and (iv) 01 disconnection. - Average Tariff - Captive market The average sales tariff fell 17.0% at EDP São Paulo due to the October Tariff Readjustment, the average effect of which on consumer billing was %. Average sales tariff also fell -0.4% at EDP Espírito Santo due to the August 2016 tariff revision, which produced an average effect on consumer billing of -2.80%. Add to this, the distributors extraordinary tariff adjustment reversing the effects of the 2016 Angra III Reserve Energy Charge (EER) also contributed to the reduction in tariffs as already commented in the Significant Events Chapter. At EDP Espírito Santo, tariff increases for the rural and industrial classes reflect the reduction in off-peak consumption in the period. - Free Market Average Tariff (R$/MWh) EDP São Paulo EDP Espírito Santo 2Q17 2Q16 Var 2Q17 2Q16 Var Residential % % Industrial % % Commercial % % Rural % % Others % % Total % % Consolidated energy in transit in the distribution system (USD - Use of the Distribution System) for supply to free market clients rose 17.6% and 18.6% in 2Q17 and 1H17, respectively, due to migration from the ACR to the ACL. Total migration in the last 12 months amounted to 322 consumers. However, with the anticipated increase in PLD, migration of clients has declined over the quarters in line with the following figures: 96 in 3Q16, 148 in 4Q16, 44 in 1Q17 and 28 in 2Q17, as well as 09 from the government services sector, 04 disconnections and 01 new entrant. Total energy delivered to the system was 15,298 GWh. Total losses in transmission, sales and adjustments were 1,428 GWh. Required Energy amounted to 13,869 GWh and excluding 1,478 GWh in losses, resulted in a total for Distributed Energy of 12,392 GWh. Energy Balance - Distribution 1H17 (MWh) Itaipu + Proinfa Transmission Losses 2,119, ,497 Required Auction Losses from Itaipu 7,885,385 (-) 114,733 = Energy Others Short Term Sales 164,942-1,115,224 13,869,382 Energy in Transit Short Term Adjustments 5,127,722-28,712 Total 15,297,549 1,428,167 13,869,382 Wholesale Supply 256,207 Retail Supply 7,007,657 Losses and Diferences 1,477,797 Energy in Transit 5,127,722 13,869,382 Of the total Required Energy, 58% was destined for EDP São Paulo and 42% to EDP Espírito Santo.

10 Energy Balance - EDP São Paulo 1H17 (MWh) Itaipu + Proinfa Transmission Losses Wholesale Supply 1,338, ,864 Required 22,877 Auction Losses from Itaipu Retail Supply 4,519,963 73,088 Energy 3,968,112 Others Short Term Sales Losses and Diferences 5, ,112 8,051, ,055 Energy in Transit Short Term Adjustments Energy in Transit 3,323,207-17,582 3,323,207 Total 9,187,897 1,136,646 8,051,251 8,051,251 Energy Balance - EDP Espírito Santo 1H17 (MWh) Itaipu + Proinfa Transmission Losses 780,713 64,633 Required Auction Losses from Itaipu 3,365,422 ( - ) 41,646 = Energy Others Short Term Sales 159, ,112 5,818,131 Energy in Transit Short Term Adjustments 1,804,515-11,130 Total 6,109, ,521 5,818,131 Wholesale Supply 233,330 Retail Supply 3,039,544 Losses and Diferences 740,742 Energy in Transit 1,804,515 5,818,131 The Company s strategy of enhanced shielding of more than 60% of total consumption proved effective in prevention and combating energy fraud and theft. This resulted in an increase in billed energy volume despite the reduction in energy volume sold to final clients, consequently improving total losses. In relation to the quarter s total losses, 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 were adopted together with renegotiation of the Inspection Occurrence Terms (TOI), which permitted the recovery of energy. Accumulated losses in 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 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 ANEEL Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 ANEEL 15,921 15,901 15,916 15,947 15,959 12,253 11,874 11,522 11,457 11, ,043 1, ,458 1,395 1,415 1,396 1,393 1,716 1,688 1,599 1,571 1, % 5.48% 5.51% 5.51% 5.42% 4.59% 8.51% 8.68% 8.60% 8.57% 8.50% 7.14% 3.66% 3.29% 3.37% 3.25% 3.31% 3.29% 5.49% 5.53% 5.28% 5.14% 4.99% 4.61% 9.16% 8.77% 8.89% 8.75% 8.73% 7.88% 14.00% 14.21% 13.88% 13.71% 13.50% 11.75% Low Tension Accumulated losses in last 12 months (GWh or %) Low Tension Demand (D) Low Tension Commercial Losses (C/D) Total (C /D ) EDP São Paulo EDP Espírito Santo Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 ANEEL Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 ANEEL 5,362 5,389 5,384 5,397 5,416 4,607 4,606 4,505 4,505 4, % 9.71% 9.98% 9.60% 9.75% 9.55% 14.59% 14.27% 13.50% 13.08% 12.74% 11.45% 10.85% 9.71% 9.98% 9.60% 9.75% 9.55% 14.59% 14.27% 13.50% 13.08% 12.74% 11.45% The reduction in total losses at EDP São Paulo between comparable quarters was percentage points and a reduction in relation to the regulatory target. There was an even greater quarter-on-quarter reduction of percentage points at EDP Espírito Santo. Despite an adverse economic scenario, the consistent downward trend in total losses reflects the Company s performance and investment in combatting fraud and theft, thereby narrowing the regulatory gap and increasing volumes of billed energy. In addition, investments in expansion and improvements to the grid concluded in 2016 and now intensified in 2017, contributed to stability in overall losses at the Company. In 1H17, distributors spent R$ 46.3 million on programs for combatting losses. Out of the total, R$ 33.0 million was dedicated to operating investments (substitution of meters, installation of a special grid and telemetering) and R$ 13.3 million to manageable expenses (inspections and dismantling irregular connections). The distributors completed 86.1 thousand inspections, substituting 51.7 thousand obsolete meters and regularizing 39.6 thousand clandestine/irregular connections.

11 Service quality indicators remained within ANEEL s regulatory parameters, a reflection of prudent investment together with a strategy based on austerity in the control and reduction of repeat interruptions. As commented in the Chapter on Manageable Expenditures, in 2Q17, there was a year-on-year reduction in DIC/FIC/DMIC 6 - related fines. DEC (hours) FEC (times) Q16 1Q17 2Q17 EDP São Paulo EDP Espírito Santo 2Q16 1Q17 2Q17 EDP São Paulo EDP Espírito Santo Note: Distributor 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: 7.65 Items in R$ thousand or % Hydro Generation 2 Thermal Generation Distribution Comerc. + EDP GRID Consolidated 2 2Q17 2Q17 2Q17 2Q17 2Q17 Net Revenue 1 328, ,839 1,396, ,176 2,581,699 Non-manageable expenditures (78,428) (252,399) (985,478) (693,880) (1,719,799) Gross Margin 250, , ,984 63, ,900 PMTO (22,979) (33,540) (220,438) (11,491) (316,058) EBITDA 226, , ,848 51, ,547 Depreciation and amortization (37,880) (39,707) (46,931) (1,021) (139,898) Result of statutory participation (4,847) (1,293) Minority interests (34,858) (34,858) Net Income 79,240 9,056 58,576 33, ,998 Items in R$ thousand or % Hydro Generation² Thermal Generation Distribution Comerc. + EDP GRID Consolidated² 2Q16 2Q16 2Q16 2Q16 2Q16 Net Revenue 1 276, ,640 1,221, ,858 2,025,798 Non-manageable expenditures (40,542) (98,395) (857,220) (421,675) (1,226,019) Gross Margin 235, , ,356 1, ,779 PMTO (27,629) (37,467) (225,333) (10,561) (326,120) EBITDA 207, , ,471 (9,369) 459,567 Depreciation and amortization (35,599) (39,860) (43,933) (808) (134,016) Result of statutory participation (11,617) (11,520) Minority interests (37,716) (37,716) Net Income 82,031 35,591 30,829 (12,896) 97,846 6 DIC: Duration of individual interruption per consumer unit; FIC: Frequency of individual interruption per consumer unit; DMIC: Maximum duration of continuous interruption per consumer unit or connection point.

12 Items in R$ thousand or % Var Var Var Var Var Net Revenue % 30.7% 14.3% 79.1% 27.4% Non-manageable expenditures 93.4% 156.5% 15.0% 64.6% 40.3% Gross Margin 6.2% -31.7% 12.8% % 7.8% PMTO -16.8% -10.5% -2.2% 8.8% -3.1% EBITDA 9.0% -36.5% 42.5% n.a. 16.1% Depreciation and amortization 6.4% -0.4% 6.8% 26.4% 4.4% 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 -3.4% -74.6% 90.0% n.a. 45.1% 1 Do not consider construction revenue. 2 Consolidated: considers intragroup elimination. Hydro Generation² Thermal Generation Distribution Comerc. + EDP GRID Consolidated² The following non-recurring events affected the analysis for 2Q17 in relation to 2Q16: (i) Provision of R$ 33.4 million (gross of PIS/Cofins and R&D) with respect to the Emergency Water Charge at Pecém in 2Q17; and (ii) Results for 2Q16 considering the partial startup in operations at Cachoeira Caldeirão HPP ahead of schedule in the case of GU01 and GU02 (02 of the 03 Generator Units) on May 05 and June 07, 2016, respectively. The results for 2Q17 contemplate the operation of all 03 Generator Units. The following non-recurring events affected the analysis for 1H17 versus 1H16 in addition to the factors already mentioned: (i) Conclusion of the sale of Pantanal Energética in 1H16 with an impact on results of R$ million; and (ii) Booking of R$ 81.8 million (+R$ 66.7 million to the Gains and losses on deactivation/asset sales line and +R$ 15.1 million to the Compensation for unavailability line) with respect to insurance recoveries at Pecém in 1H16, 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. Consolidated Items in R$ thousand or % 2Q17 2Q16 Var 6M17 6M16 Var Net Operating Revenue 2,581,699 2,025, % 4,888,308 4,107, % Non-manageable expenditures (1,719,799) (1,226,019) 40.3% (3,146,992) (2,504,907) 25.6% Energy Purchased to Resell (1,410,601) (1,039,423) 35.7% (2,544,896) (2,096,132) 21.4% Charges for Usage of Basic Network (123,117) (114,331) 7.7% (247,591) (231,975) 6.7% Others (186,081) (72,265) 157.5% (354,505) (176,800) 100.5% Gross Margin 861, , % 1,741,316 1,602, % Itens in R$ thousand or % - Hydroelectric Generation Hydro Generation 2Q17 2Q16 Var 6M17 6M16 Var Net Operating Revenue 328, , % 617, , % Non-manageable expenditures (78,428) (40,542) 93.4% (108,215) (85,305) 26.9% Energy Purchased to Resell (58,394) (21,630) 170.0% (66,824) (47,302) 41.3% Charges for Usage of Basic Network (20,034) (18,912) 5.9% (41,391) (38,003) 8.9% Other - - n.a. - - n.a. Gross Margin 250, , % 509, , % Net Revenue reported growth of 19.0%, reflecting the increase in average sale tariffs as already described. In 1H17, Net Revenue grew 6.2%. Non-Manageable Expenditures posted an increase of 93.4%, a growth of 170.0% in energy purchased for resale, the effect of the GSF in the quarter, principally for Lajeado, Enerpeixe and SHPs. The increase was also driven by the acquisition of 70 avmw with for hedging requirements. In 1H17, Non-Manageable Expenditures posted an increase of 26.9%. In contrast to what was observed in 1Q17, in which there was secondary energy in the system, the average GSF in 2Q17 was 84.4%, generating a negative impact of R$ 81.4 million, with the main effect occurring in May in the amount of R$ 53.9 million due to the decline in GSF (79.6%) and the increase in the PLD (R$ 411.5/MWh). Year to date, the average GSF was 97.4%, generating a negative impact of R$ 56.0 million.

13 Given the adhesion to the repactuation, which takes into account the Flat GSF of 80.1% in 2Q17, the negative impact of R$ 81.4 million was offset by a positive impact of a R$ 23.0 million reimbursement in 2Q17, through the amortization of the quarterly premium of R$ 1.0 million. Therefore, the total impact related to the GSF in 2Q17 was negative in R$ 59.4 million. Year-to-date, Flat GSF was 89.1%. The negative impact of R$ 56.0 million associated to the amortization of the premium of R$ 2.0 million and the reimbursement of R$ 23.0 million ended up generating a total negative impact related to the GSF in the amount of R$ 35.3 million in Gross Margin increased 6.2%. The positive impact of R$ 52.5 million in net revenue was offset by the increase of R$ 37.9 million in the non-manageable expenditures due to the increase of R$ 36.8 million in energy purchases for resale, a function of the GSF scenario and the long position for the purposes of hedging, as mentioned above. In the first half, Gross Margin increased 2.7%. In 2Q17, there was a year-on-year increase of more than 300% in average PLD (R$ /MWh in 2Q17 versus R$ 62.2/MWh in 2Q16, SE/C-W submarket) and a deterioration in the GSF (84.4% in 2Q17 versus 89.9% in 2Q16), both factors key in determining the quarter s results. - 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$ 33.4 million due to the recognition of the right of transfer the full cost of the emergency water charge to the CVU for the period from September 2016 to June 2017; (iv) revenue related to the restoration of commercial backing capacity and settlement of the excess energy generated in the short-term market and other services in the amount of R$ 62.1 million; and (v) R$ 44.9 million from the booking of taxes (ICMS, PIS and COFINS, R&D and Supervision Fee) and incurred charges. Growth of 30.7% in Net Revenue relates to: (i) an increase of 7.9% in fixed revenue, R$ million in 2Q17 versus R$ million in 2Q16; (ii) an increase of 36.4% in the CVU, R$ /MWh in 2Q17 versus R$ /MWh in 2Q16; (ii) an increase of 19.7% of variable revenue related to energy dispatch of R$ million in 2Q17 versus R$ million in 2Q16; and (iii) an increase from R$ 29.1 million in revenue from short-term energy sales. In the first half, Net Revenue rose R$ million impacted by the effects already mentioned. Non-manageable expenditures increased R$ million as a result of: Energy Purchased for Resale, 2Q17 versus 2Q16: Thermal Generation 2Q17 2Q16 Var 6M17 6M16 Var Net Operating Revenue 387, , % 721, , % Non-manageable expenditures (252,399) (98,395) 156.5% (461,614) (220,263) 109.6% Energy Purchased to Resell (51,162) (13,318) 284.2% (75,328) (17,143) 339.4% Charges for Usage of Basic Network (17,415) (14,805) 17.6% (34,908) (30,880) 13.0% Other (183,822) (70,272) 161.6% (351,378) (172,240) 104.0% Gross Margin 135, , % 259, , % (i) + R$ 37.8 million of expenses with purchased energy, a function of the Uptime Generation Factor - FID (rolling average for the past 60 months) and reflecting the increase of more than 300% in the average price amount for the quarter (R$ 288.2/MWh in 2Q17 and R$ 66.5/MWh in 2Q16 in the NE submarket); Cost of raw material consumed, 2Q17 versus 2Q16: (ii) (iii) (iv) + R$ 52.3 million due to the increase of 42.3% in the average acquisition price of coal, R$ 343.0/ton in 2Q17 versus R$ 241.1/ton in 2Q16 and the cost of coal transportation by truck; + R$ 8.1 million in relation to the emergency water charge; and - R$ 53.1 million in the compensation for unavailability account due to the positive impact booked in 2Q16 with respect to the reversal of the provision for reimbursement of the rolling average for 60 months (reflecting operational improvements of the plant and variations in assumptions used for the calculation). In 1H17, Non-Manageable Expenditures increased 109.6%. - Emergency Water Charge at Pecém I TPP In September 2016, the state government of Ceará introduced an Emergency Water Charge (EWC), 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 EWC as well as to suspend the efficacy of existing legislation. Following negotiations between the parties in February 2017, the EWC was reduced to 3.1 times. Subsequently, in May a federal court granted a preliminary injunction allowing the full amount charged under the EWC 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. The amount in question to be reimbursed was provisioned in 2Q17 and the same procedure will be adopted in the next few months.

14 Gross Margin fell 31.7% while the increase of R$ 91.2 million in net revenue was attenuated by the increase of R$ million in non-manageable expenditures due to higher coal acquisition and transportation costs and the emergency water charge. In the first half, Gross Margin declined by 28.2%, largely a function of the increase of 109.6% in non-manageable expenditures. The Company is expecting a reduction in Non-Manageable Expenditures in the coming quarters in the light of the reduction in coal transportation costs in view of maintenance work on the conveyor belt used to carry the coal is scheduled for the next few months. In addition, EDP recognized R$ 33.4 million in the provision already made in the revenue in 2Q17, the full transfer of the additional cost with the water charge to the CVU, according to the federal injunction. In order to mitigate the financial risk of the reimbursement due to Dispatch by Order of Merit by Adjusted Price - ADOMP (implying a penalty) at Pecém, in July the Company structured a hedge using coal (Asiatic Coal CIF ARA Put) and exchange rate (Real/US Dollar) derivatives - for the period from July to December An energy purchase agreement was also entered into at market prices for mitigating the risks in PLD variation for the same July-December period. -Distribution Items in R$ thousand or % EDP São Paulo EDP Espírito Santo Total Distribution 2Q17 2Q16 Var 2Q17 2Q16 Var 2Q17 2Q16 Var Net Operating Revenue 807, , % 589, , % 1,396,462 1,221, % Non-manageable expenditures (584,260) (482,035) 21.2% (401,218) (375,185) 6.9% (985,478) (857,220) 15.0% Energy Purchased to Resell (531,872) (431,812) 23.2% (366,287) (342,996) 6.8% (898,159) (774,808) 15.9% Charges for Usage of Basic Network (52,388) (50,223) 4.3% (34,931) (32,189) 8.5% (87,319) (82,412) 6.0% Other - - n.a. - - n.a. - - n.a. Gross Margin 222, , % 188, , % 410, , % Items in R$ thousand or % Net Revenue 7 reached R$ 1.4 billion, an increase of 14.3%, reflecting: (i) over-contracting at EDP São Paulo of 118.9%, +R$ 36.6 million in 2Q17 versus -R$ 8.0 million in 2Q16; (ii) tariff impact, excluding components of Parcel A, of R$ 20.0 million at EDP Espírito Santo and R$ 15.0 million at EDP São Paulo, reflecting the positive result of the 2016 tariff adjustment processes 2016, both reporting growth for Parcel B; (iii) losses of -R$ 13.8 million at EDP Espírito Santo versus losses of -R$ 19.3 million in 2Q16; (iv) a reduction in the restatement of the financial asset subject to indemnification of +R$ 0.7 million at EDP São Paulo versus +R$ 6.1 million in 2Q16 and +R$ 0.8 million at EDP Espírito Santo versus +R$ 4.6 million in 2Q16; and (v) sectorial financial assets/liabilities and which will be compensated in the Non-Manageable Expenditures item. Non-Manageable Expenditures increased 15.0% due to the increase of 15.9% in expenditure for electric energy bought for resale, principally at EDP São Paulo for account of: (i) an increase in PLD between the quarters under comparison; and (ii) higher energy purchases. Gross Margin was R$ million, an increase of R$ 46.6 million (R$ 10.9 million at EDP São Paulo and R$ 35.7 million at EDP Espírito Santo) the result of the positive effects of over contracting at EDP São Paulo and tariff impact at EDP São Paulo and EDP Espírito Santo, mitigated by the losses at EDP Espírito Santo, the reduction in the restatement of the financial asset subject to indemnification, when compared to the same period of 2016, and other effects amounting to -R$ 20.9 million, being R$ 14.1 million from the adjustment of CDE's pro rata at EDP São Paulo in 2016, and adjustment of the P&D on the tariff flag also in 2016 with impact of -R$ 4 million. - Commercialization and EDP Grid EDP São Paulo EDP Espírito Santo Total Distribution 6M17 6M16 Var 6M17 6M16 Var 6M17 6M16 Var Net Operating Revenue 1,585,496 1,408, % 1,215,712 1,139, % 2,801,208 2,547, % Non-manageable expenditures (1,123,512) (1,014,416) 10.8% (806,509) (798,674) 1.0% (1,930,021) (1,813,090) 6.4% Energy Purchased to Resell (1,018,866) (913,164) 11.6% (736,554) (733,263) 0.4% (1,755,420) (1,646,427) 6.6% Charges for Usage of Basic Network (104,646) (101,252) 3.4% (69,955) (65,411) 6.9% (174,601) (166,663) 4.8% Other - - n.a. - - n.a. - - n.a. Gross Margin 461, , % 409, , % 871, , % Items in R$ thousand or % EDP Comercializadora EDP Grid Total Comercializadora + GRID 2Q17 2Q16 Var 2Q17 2Q16 Var 2Q17 2Q16 Var Net Operating Revenue 745, , % 11,660 8, % 757, , % Non-manageable expenditures (692,433) (420,956) 64.5% (1,447) (719) 101.3% (693,880) (421,675) 64.6% Energy Purchased to Resell (688,039) (417,823) 64.7% - - n.a. (688,039) (417,823) 64.7% Charges for Usage of basic network (3,460) (3,106) 11.4% - - n.a. (3,460) (3,106) 11.4% Others (934) (27) n.a. (1,447) (719) 101.3% (2,381) (746) 219.2% Gross Margin 53,083 (6,801) n.a. 10,213 7, % 63,296 1,183 n.a. 7 Net Revenue does not include Construction Revenue.

15 Items in R$ thousand or % EDP Comercializadora EDP Grid Total Comercializadora + GRID 6M17 6M16 Var 6M17 6M16 Var 6M17 6M16 Var Net Operating Revenue 1,217, , % 20,160 17, % 1,237, , % Non-manageable expenditures (1,137,941) (774,263) 47.0% (2,310) (1,315) 75.7% (1,140,251) (775,578) 47.0% Energy Purchased to Resell (1,130,048) (766,048) 47.5% - - n.a. (1,130,048) (766,048) 47.5% Charges for Usage of basic network (6,954) (6,217) 11.9% - - n.a. (6,954) (6,217) 11.9% Others (939) (1,998) -53.0% (2,310) (1,315) 75.7% (3,249) (3,313) -1.9% Gross Margin 79,800 (6,785) n.a. 17,850 16, % 97,650 9,407 n.a. Net Revenue from Commercialization reported growth of 80.0% reflecting increases in trading volume as well as the average sale tariff. In 1H17, Net Revenue increased by 58.7%. Non-Manageable Expenditures were 64.5% higher due to the increase in the average tariff for energy purchases and volumes traded during the quarter. In 1H17, Non-Manageable Expenditures rose 47.0%. Net Revenue from EDP GRID increased 34.0% due to the invoicing of a new Energy Efficiency project for a leading retail store network. The increase of 101.3% in Non-Manageable Expenditures is linked to the costs for the installation and operation of this project. Gross Margin from Commercialization reported growth of R$ 59.9 million, reflecting a significant evolution of unit margin between the compared quarters. Increased Gross Margin was also driven by the Company s strategy in capturing the effects of price volatility. EDP GRID s Gross Margin rose R$ 2.2 million boosted as from 2017 by a new Energy Efficiency project for a major retail chain. Breakdown of Gross Margin (R$ million) +8% Q16 Margin Hydro Generation Pecém Commercialization Others/ Distribution +GRID Eliminations 2Q17 Margin Items in R$ thousand or % Consolidated 2Q17 2Q16 Var 6M17 6M16 Var Personnel (116,532) (118,518) -1.7% (233,236) (229,838) 1.5% Material (13,269) (13,418) -1.1% (25,960) (24,826) 4.6% Third-party Services (122,465) (115,410) 6.1% (238,317) (221,957) 7.4% Provision (35,428) (43,152) -17.9% (74,723) (82,706) -9.7% Other (28,364) (35,622) -20.4% (63,485) (75,441) -15.8% PMTO (316,058) (326,120) -3.1% (635,721) (634,768) 0.2% Gain/Loss on the Aeactivation/Asset Sale (12,295) (14,092) -12.8% (32,314) 30,556 n.a. Infrastructure Construction Costs (127,105) (115,169) 10.4% (269,275) (184,847) 45.7% Depreciation and Amortization (139,898) (134,016) 4.4% (279,155) (267,264) 4.4% Manageable Expenditures (595,356) (589,397) 1.0% (1,216,465) (1,056,323) 15.2% The consistent reduction on PMTO expenditures reflect the Company s efforts and commitment to cost control. This is underscored by the Zero Based Budget program with initiatives for improving efficiencies and redirecting expenses to strategic items for enhancing revenue. In 2017, the Company introduced the Zero Based Budget 2.0, where the principal focus is on the distributors, including initiatives for managing the field crews, back office, service channels and actions for combating default and losses. In 2Q17, PMTO expenditure decreased 3.1% and below inflation rates for the past 12 months (IPCA: +3.0%/ IGP-M: -0.8%), principally a result of optimization initiatives and cost reduction, as well as actions for combatting losses, reducing PDD and default. Recently, the Analytics department was created to optimize and chart losses and PDD actions. In addition, the Company has been implementing, over the last few months, initiatives to automation and robotization of administrative processes, in order to increase efficiency and reduce costs.

16 Below is a breakdown of the variations and results for 2Q17 with PMTO. Personnel - reduction of 1.7% (+R$ 2.0 million): (i) Reduction in overtime (+R$ 2.7 million), principally at the Distributors and Pecém due to improvement in the controls and the creation of plans for optimizing activities; (ii) Reduction in expenditures with Profits and Results Sharing/Bonus - despite the increase in the amount per employee - Private Pension Plan and Severance Indemnification (+R$ 2.4 million); and (iii) Increase in expenses arising from the expenses following the collective bargaining agreement in November 2016 (-R$ 3.0 million). Material - reduction of 1.1% (+ R$ 0.1 million). Third Party Services - increase of 6.1% (-R$ 7.1 million): (i) Increase in IT overheads due to recontracting of outsourcing agreements for applications and infrastructure (readjustments of 17%, retroactive to 2016 (-R$ 2.9 million); (ii) Increase in expenses with actions for combating defaults (negativation at credit protection agencies and disconnections) with a view for reducing PDD as well as actions for combating Losses (-R$ 1.5 million); (iii) Increase of expenses with pruning and maintenance of the distributors electricity system (-R$ 1.1 million). Provisions - reduction of 17.9% (+R$ 7.7 million): (i) Reduction in PDD - Provision for Doubtful Accounts at the distributors (-R$ 4.4 million), see details under the heading below; and (ii) Decrease in provisions for contingencies (+R$ 3.3 million), related to the reversal of regulatory processes relative to the Transmission Use System Amount - MUST for reliability in 2016 (+R$ 2.1 million). Others - reduction of 20.4% (+R$ 7.3 million): (i) (ii) (iii) (iv) Reduction in costs following the sale of Pantanal in 2016 but with no effect in 2017 (+R$ 3.0 million); Reduction in insurance costs of Pecém following the negotiation of an agreement finalized in mid-2016 (-R$ 1.9 million); Reduction in fees relating to legal proceedings involving the Distributors (+R$ 0.6 million); and Reduction in DIC/FIC/DMIC fines due to actions for improving services rendered (+R$ 0.4 million). The gains and losses on deactivation/sales of assets account was a negative R$ 12.3 million, a reduction of R$ 1.8 million, the result of closing orders and deactivation of equipment for different projects at the Distributors. In 1H17, there was a positive impact due to the booking of insurance recoveries for Pecém on the replacement of the stator on the GU01 in The Depreciation and Amortization account increased 4.4% due to the capitalization of the operating licenses of the generating plants. This item also increased due to the accelerated depreciation of Investco s transmission line auctioned to Taesa (ANEEL Transmission Auction 13/2015), the increase in the depreciation of the value beginning in June 2016 and the respective assets to be transferred without cost to Taesa through to December 27, In 1H17, expenditures with PMTO remained stable in relation to the same period in the preceding year. The variations in the lines for Personnel of the following tables reflect the change in the criterion for transferring labor costs between Group companies. - Hydroelectric Generation PMTO posted a reduction of 16.8%, reflecting the average reduction of 17.6% principally for the Personnel and Third Party Services lines. Itens in R$ thousand or % Hydro Generation 2Q17 2Q16 Var 6M17 6M16 Var Personnel (10,831) (13,955) -22.4% (21,317) (25,254) -15.6% Material (1,017) (1,188) -14.4% (1,750) (1,958) -10.6% Third-party Services (8,665) (10,310) -16.0% (17,142) (20,148) -14.9% Provision (132) (133) -0.8% (565) (271) 108.5% Other (2,334) (2,043) 14.2% (4,625) (5,893) -21.5% PMTO (22,979) (27,629) -16.8% (45,399) (53,524) -15.2%

17 - Thermal Generation PMTO decreased by 10.5% due mainly to a reduction in the Third Party Services and Others items. The reduction in Third Party Services related largely to two non-recurring factors in 2Q16: (i) the engaging of engineering and environmental consultancies; and (ii) the intensification of surveillance and security. In Others, the reduction is due to the renegotiation of Pecém s insurance policy. Itens in R$ thousand or % Thermal Generation 2Q17 2Q16 Var 6M17 6M16 Var Personnel (12,010) (11,636) 3.2% (22,858) (21,088) 8.4% Material (4,532) (4,712) -3.8% (8,862) (9,000) -1.5% Third-party Services (12,460) (14,600) -14.7% (21,312) (22,206) -4.0% Provision (13) % (28) % Other (4,525) (6,526) -30.7% (8,466) (14,788) -42.8% PMTO (33,540) (37,467) -10.5% (61,526) (67,078) -8.3% - Distribution The reduction of 2.2% in PMTO expenditures reflects the reduction in the Provisions and Others items and impacted by the Provision for Doubtful Accounts - PDD (see greater details under the Chapter for PDD) and changes in the criterion for sharing rental expenditures. At EDP São Paulo, the reduction in the Personnel item is due to the lower headcount and the increase in the capitalization of labor for Investment Projects, mitigated in part by the collective bargaining agreement of November The increase under Third Party Services relates to: (i) readjustment in outsourcing agreements for Infrastructure and Meter Reading and Billing; and (ii) an increase in maintenance and conservation activities to the electricity system and the combat of delinquencies. The decrease in Provisions is due to the decline in PDD and the reversal of the regulatory contingency. Under Others, the reduction reflects largely the: (i) change of criterion for sharing rental expenses which is now to be borne by all the Group s companies; and (ii) expenses with DIC/FIC/DMIC fines. At EDP Espírito Santo, the increase in the Personnel item is due to the collective bargaining agreement of November 2016 and the increase in headcount. The increase in Third Party Services relates to an increase in Infrastructure and Applications outsourcing agreements besides intensified actions for maintaining and conserving the electricity system and initiatives for combating delinquency. Itens in R$ thousand or % EDP São Paulo EDP Espírito Santo Total Distribution 2Q17 2Q16 Var 2Q17 2Q16 Var 2Q17 2Q16 Var Personnel (39,700) (41,548) -4.4% (36,999) (34,180) 8.2% (76,699) (75,728) 1.3% Material (3,526) (3,987) -11.6% (3,723) (2,846) 30.8% (7,249) (6,833) 6.1% Third-party Services (43,603) (40,170) 8.5% (41,847) (39,574) 5.7% (85,450) (79,744) 7.2% Provision (12,369) (19,298) -35.9% (21,994) (22,558) -2.5% (34,363) (41,856) -17.9% Other (10,949) (15,287) -28.4% (5,728) (5,885) -2.7% (16,677) (21,172) -21.2% PMTO (110,147) (120,290) -8.4% (110,291) (105,043) 5.0% (220,438) (225,333) -2.2% Itens in R$ thousand or % EDP São Paulo EDP Espírito Santo Total Distribution 6M17 6M16 Var 6M17 6M16 Var 6M17 6M16 Var Personnel (82,274) (84,427) -2.6% (72,669) (66,551) 9.2% (154,943) (150,978) 2.6% Material (6,992) (6,934) 0.8% (7,588) (5,292) 43.4% (14,580) (12,226) 19.3% Third-party Services (86,868) (77,418) 12.2% (83,326) (78,503) 6.1% (170,194) (155,921) 9.2% Provision (32,516) (42,744) -23.9% (39,650) (38,174) 3.9% (72,166) (80,918) -10.8% Other (27,375) (30,474) -10.2% (14,360) (14,072) 2.0% (41,735) (44,546) -6.3% PMTO (236,025) (241,997) -2.5% (217,593) (202,592) 7.4% (453,618) (444,589) 2.0%

18 - PDD - Provision for Doubtful Accounts and Default The distributors reported a total reduction in PDD of R$ 4.6 million compared with 2Q16. EDP São Paulo EDP Espírito Santo % % 0.63% % % Q16 3Q16 4Q16 1Q17 2Q17 PDD - R$/million PDD/Revenue 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% % % % % % Q16 3Q16 4Q16 1Q17 2Q17 PDD - R$/million PDD/Revenue 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% The decrease of PDD at EDP São Paulo and EDP Espírito Santo relative to 2Q16 of R$ 3.6 million and R$ 1.0 million, respectively reflects Company initiatives in combating PDD as well as other actions involving renegotiations with defaulting consumers (feirões or consumer fairs). This tool was introduced in 2016, also in an attempt to collect from defaulting consumers and avoid potential losses. EDP São Paulo reported a quarter-on-quarter reduction in PDD of R$ 1.3 million. Conversely, EDP Espírito Santo recorded an increase in PDD of R$ 4.0 million, a total net increase in PDD of R$ 2.7 million. EDP São Paulo and EDP Espírito Santo disconnected 78.7 and 75.0 thousand installations in 2Q17, respectively, compared with 88.1 and 85.4 thousand in 2Q16. While the number of disconnections has fallen year-on-year, the Company has prioritized a process of segmentation of disconnections, the focus being on amount and consumer class, taking into account operating costs and reflecting in the optimization of results effectively achieved. It is worth emphasizing that the Company has undertaken actions to combat PDD and delinquency in such a way as not to have a negative impact on losses. The following are some actions for combating PDD and delinquency and being implemented, combined with greater austerity as from 2017: Segmentation of the disconnections, prioritizing amount; Alteration of the disconnection mix; Realization of disconnection with disconnection teams concentrated in areas with a high degree of delinquencies; Participation in feirões for negotiating overdue payments; On-site collection at all government organs; Personalized collection of medium and high voltage clients; Collection initiatives via SMS, negativation and credit protection agencies and administrative collection; Anticipation of time of suspending major clients; Protecting city governments from default and intensifying the negotiation of old debts. - Commercialization and EDP Grid Items in R$ thousand or % EDP Comercializadora EDP Grid Total Comercializadora + GRID 2Q17 2Q16 Var 2Q17 2Q16 Var 2Q17 2Q16 Var Personnel (2,194) (2,991) -26.6% (3,588) (2,269) 58.1% (5,782) (5,260) 9.9% Material (22) (20) 10.0% (248) (473) -47.6% (270) (493) -45.2% Third-party Services (1,044) (1,225) -14.8% (2,503) (1,673) 49.6% (3,547) (2,898) 22.4% Provision (183) (83) 120.5% (513) 33 n.a. (696) (50) n.a. Others (611) (734) -16.8% (585) (1,126) -48.0% (1,196) (1,860) -35.7% PMTO (4,054) (5,053) -19.8% (7,437) (5,508) 35.0% (11,491) (10,561) 8.8% The Commercialization segment reported PMTO of R$ 4.1 million, a 19.8% reduction, principally due to the Personnel item in the light of the reversal of a provision for management salaries and charges reflecting the current employee board. EDP Grid s PMTO was R$ 7.4 million, an increase of 35.0%, principally in the Personnel and Third Party Services and Provisions items. Growth in the Personnel and Third Party Services lines is due to the increase in proprietary headcount as well as outsourced manpower due to the volume of solar energy projects under development. There was an R$ 0.5 million increase in labor related provisions at APS Soluções, reflecting the revision of the base of processes in the context of risk and amount.

19 This item was affected by the non-recurring result of the accounting gain from the sale of Pantanal Energética concluded in 1Q16 for R$ million. In 2Q17, EBITDA was R$ million, a year-on-year increase of 16.1%. In 1H17, EBITDA was R$ 1,073.3 billion, a reduction of 15.9% in relation to the same period in Adjusted EBITDA, which excludes non-recurring effects and the update of non-indemnified financial asset (VNR), increased by 13.7% compared to 2Q16, confirming the Company's consistent EBITDA growth. Year to date, the growth was 18.3%. Items in R$ thousand or % 2Q17 2Q16 Var 6M17 6M16 Var EBITDA 533, , % 1,073,281 1,276, % Provision for Water Charge Reimbursement (21,847) - n.a. (30,000) - n.a. Sale of Pantanal Energética - - n.a. - (278,139) n.a. Withdrawal Refund of TPP Pecém Insurance - - n.a. - (81,800) n.a. Update of the Financial Asset to be Idemnified (1,449) (10,747) -86.5% (7,083) (40,714) -82.6% Adjusted EBITDA 510, , % 1,036, , % Minority Interests Result (1,293) (11,520) -88.8% (4,813) (19,909) -75.8% EBITDA in Accordance with CVM 527 Instruction 532, , % 1,068,468 1,256, % The Result from Corporate Participations reported an 88.8% improvement as shown in item 3.2. Items in R$ thousand or % 2Q17 2Q16 Var 6M17 6M16 Var Santo Antônio do Jari (50%) 1 2,630 (5,424) % 3,898 (11,963) % Cachoeira Caldeirão (50%) 1 (2,966) (5,690) -47.9% (7,295) (7,180) 1.6% São Manoel (33.34%) (601) (503) 19.5% (1,450) (1,029) 40.9% Others² (357) % % Minority Interests Result (1,294) (11,519) 88.8% (4,813) (19,909) 88.8% 1 Considers the surplus value of assets 2 Considers equivalence of Port of Pecém Ore Carrier (Pecém TM), Pecém Operation and Maintenance (Pecém OM) and Mabe. Financial Result (R$ thousand) Financial Revenue, a reduction of 22.7%, the result of: Consolidated 2Q17 2Q16 Var 6M17 6M16 Var Financial Revenue 93, , % 180, , % Revenue from financial investments 48,954 43, % 104,488 71, % Monetary variation and additions 40,807 61, % 71, , % Restatement of sectorial financial assets and liabilities - - n.a. - - n.a. SELIC on taxes and social contribution 2,648 8, % 8,438 18, % Adjustments to present value 1, % 1, % (-) PIS/COFINS over financial revenues (4,175) (4,445) -6.1% (13,427) (8,288) 62.0% Other financial income 3,717 11, % 7,649 25, % Financial Expenses (207,049) (263,266) -21.4% (440,181) (525,251) -16.2% Monetary variation and Adds (14,611) (55,448) -73.6% (44,231) (106,526) -58.5% Financial charges on debt (146,906) (167,867) -12.5% (312,699) (336,755) -7.1% Interest and fines on taxes (861) (1,542) -44.2% (2,111) (3,054) -30.9% Selic - Free Market (2,604) (3,017) -13.7% (5,564) (5,846) -4.8% Adjustments to present value (11,174) (425) n.a. (15,986) 570 n.a. (- ) Interest capitalized 1, % 4,013 1, % Other Expenses (27,130) (28,364) -4.4% (54,737) (57,483) -4.8% Net Foreign Exchange Result (5,178) (11,698) -55.7% (11,500) (70,347) -83.7% Update on sectorial financial assets/liabilities (2,032) 1,350 n.a. 2,513 23, % Total (121,114) (153,084) -20.9% (268,584) (354,286) -24.2% (i) Increase in revenue from financial investments, posting a positive year-on-year variation of R$ 5.2 million for the quarter and R$ 33.2 million for the first six months, reflecting the Company s strategy in managing cash flow and the management of payables to be effected over time. The Company has been successful in optimizing income from financial investments despite the current economic scenario of falling rates; (ii) Reduction of R$ 24.9 million in revenue from interest and fines on energy sold, with respect to a decline in delinquencies at the distributors; and (iii) Reduction in the Other Financial Income item for R$ 7.9 million, due mainly to the restating of the gain on the sale of Pantanal Energética. Financial Expense, a reduction of 21.4%, the result of:

20 (i) Reduction of R$ 10.6 million in the Monetary Variation and Adds from Purchased Energy item due to the amounts provisioned at the Distributors with respect to preliminary injunctions in effect in 2015 until the conclusion of the GSF renegotiations. (ii) Reduction of R$ 12.8 million in the Monetary Restatement in Local Currency, reflecting the reduction in outstanding debt at the Long-Term Interest Rate - TJLP with the Brazilian Development Bank - BNDES and finance linked to the inflation index (IPCA); (iii) Reduction of R$ 18.0 million in Monetary Restatement for the Use of Public Property due to the variation in IGPM between the two quarters under review, principally at Investco and Enerpeixe; and (iv) Reduction in the Financial Charges on Debt line of R$ 21.0 million with respect to the settlement of loans and debentures such as: (i) settlement of the Bank Credit Bill in the name of EDP Holding for R$ million with respect to the acquisition of the remaining 50% of Pecém in June 2016; (ii) payment of the 1 st Debentures Issue of Energest for R$ 60 million in April 2017; (iii) reduction of debt at EDP São Paulo; and (iv) reduction in financial indexers such as the CDI and IPCA between the compared periods. There was a variation in the Net Foreign Exchange Result of R$ 6.5 million due to the early payment IDB (Inter-American Development Bank) financing by Pecém jointly with the settlement of NDFs (Non-Deliverable Forward) derivatives and swaps contracted for protection against USD/Real and Libor oscillations. Consolidated Net Income amounted to R$ million, an increase of 45.1%, the result of the factors discussed above, mitigated by an increase in income tax and social contribution expenses of R$ 69.0 million, due to: Current taxes - reduction of R$ 70.5 million due to two effects, both of which in 2016: (i) realization of sectorial assets/liabilities with respect to the constitution of regulatory assets in 2015; and (ii) realization of fiscal income at Pecém, contributing to the increase in the balance of current taxes; Deferred taxes an increase of R$ million, reflecting the realization of sectorial financial assets/liabilities in Breakdown of Net Income 2Q17 (R$ million) +45% Net Income 2Q16 EBITDA Dep & Amort Result from corporate participation Financial Result Income tax and social contribution Attributable to noncontrolling shareholders Net Income 2Q17 JARI Consolidated Income Statement (R$ thousand) 2Q17 2Q16 Var 6M17 6M16 Var Net Operating Revenue 29,405 26, % 59,399 54, % Non-manageable expenditures (4,659) (5,171) -9.9% (9,651) (11,456) -15.8% Gross Margin 24,747 21, % 49,749 43, % Manageable expenditures (8,585) (8,075) 6.3% (17,456) (15,972) 9.3% EBITDA 23,106 19, % 46,144 39, % Net Financial Result (9,705) (15,935) -39.1% (21,442) (32,843) -34.7% Net Income 4,309 (3,744) n.a. 7,259 (8,602) n.a. Note: Amounts correspond to 50% of Jari Consolidated (ECE and CEJA), EDP Energias do Brasil s stake in the operation. Santo Antônio do Jari HPP reported consolidated net revenue of R$ 29.4 million, 9.2% higher than the same period in 2016 due to the readjustment of tariffs for inflation. Non-manageable expenditures were R$ 4.7 million, a reduction of 9.9%, a reflection of adjustments in settlement on the CCEE. Manageable expenditures were R$ 8.6 million, an increase of 6.3% due to the increase in the Depreciation and Amortization item, reflecting the restatement of the operating license amount as well as the transfer of assets with work in progress to assets in service.

21 EBITDA was R$ 23.1 million, an increase of 15.5%. In 1H17, EBITDA was R$ 46.1 million, 16.2% higher than the same period in 2016, the result of the factors already discussed. The net financial result was negative at R$ 9.7 million, a decrease of 39.1%, reflecting: (i) a reduction in debt servicing charges following the initial amortization of Jari Holding s 1st Debenture Issue in 4Q16; and (ii) a reduction of the TJLP from 7.5% in 2Q16 to 7.0% in 2Q17. Total net income from the plant and ECE was R$ 4.3 million in the quarter and R$ 7.3 million in 1H17. Cachoeira Caldeirão Consolidated Income Statement (R$ thousand) 2Q17 2Q16 Var 6M17 6M16 Var Net Operating Revenue 15,975 3, % 31,771 3, % Non-manageable expenditures (3,168) (1,338) 136.9% (7,230) (1,969) 267.3% Gross Margin 12,807 2, % 24,541 1,583 n.a. Manageable expenditures (7,626) (5,563) 37.1% (15,459) (7,220) 114.1% EBITDA 11, n.a. 21,225 (1,609) n.a. Net Financial Result (9,638) (5,210) 85.0% (20,069) (5,180) 287.4% Net Income (2,952) (5,691) -48.1% (7,268) (7,181) 1.2% Note: Amounts correspond to 50% of Cachoeira Calderão, EDP Energias do Brasil s stake in the operation. Cachoeira Caldeirão HPP recorded Net Revenue of R$ 16.0 million, the result of initial sales under energy sale agreements through the ACR in January For an analysis of results of Cachoeira Caldeirão in 2Q17, it should be pointed out that in 2Q16, two of the three generator units had gone into operation. GU01 and GU02 became operational on May 05 and June 07, 2016 respectively, while GU03 was in the final stages of the test phase. Non-manageable expenditures were R$ 3.2 million, of which R$ 1.1 million relates to the cost of electric energy purchased for resale and R$ 2.1 million were charges for use of the electricity grid. Due to the incidence of GSF in 2Q17, the plant was obliged to purchase short-term energy in the amount of R$ 0.6 million. In 1H17, non-manageable expenditures were R$ 7.2 million. Manageable expenditures were R$ 7.6 million, relating to the Company s operations and to the increase in the balance of quarterly depreciation and amortization, reflecting the full operation of all 3 machines in 2Q17. In 1H17, manageable expenditures were R$ 15.5 million. EBITDA was R$ 11.2 million, due to the above mentioned effects. In 1H17, EBITDA was 21.2 million. The financial result was a negative R$ 9.6 million due to the beginning of debt servicing charges. In 1H17, the financial result was a negative R$ 20.1 million. Finally, the Plant reported a loss of R$ 3.0 million in 2Q17 and a loss of R$ 7.3 million in 1H17. 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. The total energy originally sold in the A-5 auction of 2013 was avmw at the price of R$ /MWh (baseline date of December 2016) with annual restatement at the IPCA and effective between May 1, 2018 and December 31, As mentioned in Chapter 1, on May 29, 2017, Empresa de Energia São Manoel obtained confirmation from the CCEE for the permanent reduction of 120 avmw in its power purchasing agreement under the CCEAR through the Surplus and Deficit Compensation Mechanism in the A4+ model. Consequently, the shareholders of EESM have chosen to contract in the same proportion as their stakes in the company, 90 avmw of the 120 avmw decontracted amount for the period from May 1, 2018 and December 31, The remaining 30 avmw have been allocated to EESM for hedging purposes. By the end of 2Q17, the work on the plant was 91.4% complete, notably the concreting of the Number 1 Spillway crest. Current environmental initiatives proceeded according to plan during the quarter. Among these are the Environmental Management Plan for Construction and programs for reforestation, reinforcement of social infrastructure and equipment, disease control and prevention, monitoring of fauna, flora, ichthyofauna, fishing and mining activities, climatological aspects and support for reinsertion and fostering of local economic activities. The company also began the drilling of artesian wells in the villages of the local indigenous population as well as delivering equipment and materials as part of the indigenous component of the Basic Environmental Project.

22 Investments on work in progress during the quarter amounted to R$ million. The investment since the beginning of construction work was R$ 3.1 billion (in values adjusted for monetary restatement and disregarding interest). Built into this investment is the cost of switching the EPC contractor in January Consequently, the insurance for faithful fulfillment of R$ Million was activated and is currently under analysis. EDP s debut in the transmission segment is designed to diversify and complement its business along the electricity sector s value chain and representing an adequate return, predictable cash flows and controlled risk. The Company s competencies - already in evidence in the construction of generation projects and experience in the Distribution segment - stand it in good stead for executing these projects and is a new source of consistent returns for shareholders. The current Brazilian electricity framework reveals new generation plants located far from the major energy consuming centers as well as deficiencies in existing corridors for connecting the subsystems and in need of reinforcement to improve energy flows and reduce disparities in PLD. Consequently, there is a clear requirement for investment in the development of new transmission lines in Brazil over the next few years. According to Energy Research Company - EPE studies, current installed capacity in Brazil is 170 GW and estimates show that the transmission network must undergo an expansion of approximately 90 GW in installed transmission capacity over the next 8 years. EPE estimates also show that investments of the order of R$ 60 billion will be made in expanding the transmission network over the next three years. Given the volume of necessary investments, favorable rates of return (in excess of those of the NTNB - a domestic inflation protected bond), positive signs from the federal government, including ANEEL and the BNDES, combined with regulatory improvements in the sector, the transmission sector has been a key area of interest, attracting not only transmission companies themselves but also other public utility companies and investment funds. In this context, EDP made its debut in the Transmission segment at the Public Service Concession Auction 013/2015 of October 2016, winning lot 24, a 113 km transmission line and a substation in the state of Espirito Santo. EDP has since adopted a more aggressive stance at Transmission Concession Auction 05/2016 of April this year and expanding its participation in the segment winning lots 7,11,18 and 21, totaling 1.2 thousand km of lines, 3 substations with CAPEX worth R$ 3.0 billion as shown in the following map. Lot 7 - Auction 05/2016 Extension: 121 km RAP: R$ 66.3 Million COD: Aug/2022 MA Lot 11- Auction 05/2016 Extension: 203 km RAP: R$ 30.2 Million COD: Aug/2021 SC SP MG ES Lot 24 Auction 013/2015 Extension: 113 km RAP: R$ 20.7 Million COD: Aug/2020 Lot 18- Auction 05/2016 Extension: 375 km RAP: R$ Million COD: Aug/2022 Transmission RS COD: Commercial Operations Date Lot 21 - Auction 05/2016 Extension: 485 km RAP: R$ Million COD: Aug/2022 If the consolidated results for the October 2016 and April 2017 auctions are taken together, EDP s total Annual Allowed Revenue - RAP amounts to R$ million with an investment of R$ 3.1 billion representing 1.3 thousand km of line and 4 substations. The conditions obtained in the auctions reflect real returns between 12% and 14% to the shareholders for the lots acquired by the Company. In the case of Lot 21, EDP has signed a partnership with Celesc Geração S.A. ( Celesc ) through the Consórcio Aliança with stakes of 90% EDP and 10% Celesc.

23 The Company envisages anticipating startup in operations of the lots in relation to the dates in the Tender Notice of between 5 and 19 months - depending on the lot and region. Such anticipation in turn triggers the Annual Permitted Revenue - APR and ANEEL s release of the full compliance guarantee, conditional on the regulator s required dates for startup of each lot. The Company expects to employ between 70% and 80% of third party capital and is exploring alternative sources of finance. EDP has chosen its initial focus on regions where there are potential synergies. At a subsequent stage, it will be examining possibilities in other regions, always considering and avoiding risks related to (i) site access; (ii) environmental and land rights factors; and (iii) regulatory aspects. The Company has paid particularly careful attention to the engagement of EPC contractors, taken into account, among other factors, the economic-financial capacity of each player. The contractor engagement process involves several areas of the Company to ensure a precise analysis of each contract from all angles: Engineering, Financial, Regulatory, Tax, Legal and Accounting. Despite being an outsourced service, the engineering team has a 100% overview and control of the operation. It will be adopting the same standards for monitoring work in progress as adopted for the Company s highly successful hydroelectric projects which have been brought on stream ahead of schedule. In addition, the contracts signed with EPC contractors and suppliers are of the Turn Key type and include a package of guarantees customized for projects of this nature such as: (i) advanced payment guarantee; (ii) compliance guarantee; (iii) performance guarantee; (iv) technical guarantee; (v) global engineering insurance; (vi) third party liability insurance. Suppliers for each lots and substations are: Lot Supplyers for transmission lines CESBE CESBE Camargo Correa Camargo Correa Engelmig Supplyers for substations CESBE ABB Camargo Correa WEG GE It is important to point out that the Company has developed an extensive study with respect to budget for engineering, environment, land, social investment, contingencies and maintenance CAPEX, permitting an average 31% discount in relation to ANEEL regulatory parameters for CAPEX. Additionally, CAPEX expense contingencies have been taken into account for all lots at a 13% average. From the accounting point of view, the Company has examined all the possibilities for maximizing tax efficiency in order to obtain the highest return for the project and shareholder (presumed profit vs. real profit, Interest on Own Capital). Lots 7, 11, 18, 21 and 24 are eligible for the Special Incentives Regime for Infrastructure Development - REIDI tax break. Lots 7, 11 and 24 are eligible for the Northeast Development Authority - Sudene incentive scheme and lot 21 for the Pró-emprego tax incentive. In early July, the Ministry of Mining and Energy - MME published Ordinance 191/2017, approving the eligibility of lot 24 for the REIDI tax incentive program. On the same date, the Company submitted its request to the Brazilian Internal Revenue Service for ratification of the tax benefit. The schedule for CAPEX disbursement will take place as follows: %-10% 30%-40% 45%-55% 5%-10% In 2H17, the Company has invested R$ 2.6 million in the construction of lot 24, as shown below in Variation in Fixed Assets. EDP is pleased to have begun operations in one more important segment for the Brazilian economy. The intention is to continue expansion in the Transmission segment through possible M&A operations and participation in the next auction to be held by ANEEL. Consolidated Gross Debt amounted to R$ 5.6 billion and stable in relation to December 31, At the end of 2Q17, the Company had 4.1% in currency-denominated debt, totally protected against currency (USD) and interest rate (Libor) risks by derivative instruments. The Company s consolidated Gross Debt does not include debt held in the names of Santo Antônio do Jari, Cachoeira Caldeirão and São Manoel HPPs.

24 Gross Debt per company (R$ million) , , , EDP São Paulo EDP Espirito Santo Energest Enerpeixe Investco Pecém EDPE Holding Lajeado GRID Consolidated Santa Fé PCH Loans Debentures Intragroup loan Note: Intergroup eliminations of R$ million not considered. Investco s preferred shares are classified as debt. Trading company debt reflects intragroup loans. Net Debt was stable in relation to fiscal year 2016 at R$ 3.6 billion, factoring in cash and cash equivalents of R$ 2.0 billion. Funding shown in the following graph of R$ million, relates to debenture issues on April 07 at EDP São Paulo and EDP Espírito Santo for R$ 150 million and R$ 190 million, respectively. Amortization of Principal and Interest in the following graph relates to: (i) BNDES, FINEM credit line at EDP São Paulo, EDP Espírito Santo and Pecém; (ii) Law 4131 line at EDP Espírito Santo; (iii) 1st Debentures Issue at Energest; and (iv) 5th Debentures Issue at EDP São Paulo. Breakdown of Gross Debt (R$ million) 0.35% 5, ,590 Debt Dec/2016 Funding Monetary variation Interests Principal Amortization Interests Payment Market value adjustment Debt Jun/2017 The average cost of debt on June 30, 2017 was 13.5% 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 12.85% p.a. in June 2017) and in the IPCA inflation index (from 6.3% p.a. in December 2016 to 3.0% p.a. in June 2017). The consolidated average term of debt was 2.8 years, below the average term recorded for December 2016 of 3.0 years. 2,028 Debt Maturity Schedule 1 (R$ million) Gross Debt by Index 06/30/17 IPCA 12.4% Fixed Rate 4.7% TJLP 22.5% US$ 4.1% CDI, 56.4% 1, ,360 1, Note: considering that currency denominated financing is hedged against exchange rate risk (USD), the percentage of indexers would be: CDI 60.4%, the remaining indexers being unchanged. Availability After 2021 Note: 1 Amounts incorporate principal + charges + results from hedge operations