COMMENTS ON THE ECONOMIC AND FINANCIAL PERFORMANCE FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2017 AND

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4 COMMENTS ON THE ECONOMIC AND FINANCIAL PERFORMANCE FOR THE PERIOD FROM JANUARY 1 TO MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais, except when designated otherwise) The sale process to sell all the shares from the capital share of Duke Energy International Brazil Holdings S.à.r.l. ( DEIBH ) from Duke Energy International Group. S.à.r.l. (the Company s indirect Controlling shareholder) to the company China Three Gorges (Luxembourg) Energy S.à.r.l. ( CTG Lux ) was concluded on December 29, 2016, after all approvals from the competent regulatory bodies. As a result of the transfer of the shareholding ownership of the Company, Duke Energy International Geração Paranapanema S.A had its corporate name changed to Rio Paranapanema Energia S.A., and its Controlled Company was named Rio Sapucaí-Mirim Energia Ltda. Main indicators (BRL Thousand) 1Q2017 1Q2016 % Variance Economic indicators Gross operating revenue 419, , (-) Deductions from the operating revenue (42,880) (41,907) 2.3 Net operating revenue 376, , (-) Cost of electric power service / Operating expenses (154,782) (159,375) -2.9 Service result 221, , Ebitda 277, , Ebitda margin - % 73.8% 67.9% 5.9 pp Finance income (28,063) (53,957) Operating income 193, , Net income of the period 127,904 71, Net margin - % 34.0% 22.2% 11.8 pp Shares Outstanding shares (in thousands of shares) 94,433 94,433 Net income per one thousand-share batch (in Brazilian Reais ) 1, From the consolidated amounts presented above, the Controlled Company represents 2.0% of the net operating revenue, or BRL 7.6 million (2.6% or BRL 8.3 million in the 1st quarter of 2016), 3.4% of the operating expenses, or BRL 5.3 million (3.8% or BRL 6.0 million in the 1st quarter of 2016) and 2.5% of the net income recorded in the period representing BRL 3.2 million (2.0% or BRL 1.4 million in the 1st quarter of 2016). 3/31/2017 3/31/2016 % Variance Financial indicators Total assets 4,308,307 4,109, Debts in national currency (1,467,610) (1,409,872) 4.1 Shareholders equity (1,900,233) (1,901,242)

5 Cost of electric power service and operating expenses (BRL Thousand) 1Q2017 1Q2016 % Variance Depreciation and amortization (56,291) (56,293) 0.0 Charges for the use of electric power grid (29,109) (26,388) 10.3 Personnel (27,085) (22,664) 19.5 Financial offset from the use of water resources (18,315) (23,392) Third-party services (9,992) (9,779) 2.2 Others (4,600) (2,081) Insurances(2,781) (2,442) 13.9 Constitution of estimate for doubtful accounts (2,726) (4,091) Electric power service inspection fee (TFSEE) (1,403) (1,416) -0.9 Material (1,385) (1,060) 30.7 Rentals (925) (933) -0.9 Electric power purchased for resale (223) (7,439) Provision / (reversal) for tax, labor and environment risks 53 (1,397) (154,782) (159,375) -2.9 The operating expenses amounted to BRL million in the first quarter of 2017, a decrease of 2.9% in comparison to the same period in the previous year (BRL million). The main factors that impacted the operating expenses were: Charges for the use of electric power grid: increase of BRL 2.7 million or 10.3% in the quarter is due to adjustments to these charges during 2017; Financial offset from the use of water resources: decrease of BRL 5.1 million or 21.7% in comparison to the same period in the previous year, and this variance was mainly due to the 22.7% decrease in the Restated Reference Rate (TAR), which decreased from BRL 93.35/MWh to BRL 72.20/MWh as from January 1, 2017; Other expenses: increase in the amount of BRL 2.5 million in the 1st quarter of 2017 in comparison to the same period of 2016, represented, mainly, by asset write-offs related to the modernization and reconstruction of the Chavantes and Capivara plants; Estimate constitution for doubtful accounts: decrease of BRL 1.3 million or 3.3% in comparison to the same period of the previous year, and this variation was mainly due to effects of short-term market liquidation; Electric power purchased for resale: decrease of BRL 7.2 million, or 97% in comparison to the same period in the previous year due to an improvement in the hydrological scenario when compared to the period, represented by the increase in the levels of Generation Scaling Factor (GSF); 5

6 Ebitda and Ebitda margin (BRL Thousand) 1Q2017 1Q2016 % Variance Net income of the period 127,904 71, % Income tax and social contribution 65,557 37, % Finance income (net) 28,063 53, % Depreciation and amortization 56,291 56, % Ebitda 277, , % Ebitda margin 73.8% 67.9% Ebitda (Lajida - income before interest, income tax including social contribution on net income, depreciation and amortization) is calculated with the net income added to the net finance income, income tax and social contribution, depreciation and amortization. Ebitda is a nonaccounting measurement calculated according to the provisions in CVM Instruction Nº 527/2012. The Ebitda should not be considered as an alternative to the cash flow as a liquidity indicator. The Company s Management believes that the Ebitda provides a useful measure of its performance, which is largely used by investors and analysts to evaluate performance and compare companies. Ebitda increased 27.1% in comparison to the same period of the previous year, mainly due to the increase in the net operating revenue that resulted from a better hydrological scenario in comparison to the same period in the previous year. Finance income (BRL Thousand) 1Q Q 2016 % Variance Revenues 24,216 16, Expenses (52,279) (70,619) Net finance income (28,063) (53,957) The net finance income presented in the first quarter of 2017 was negative BRL 28.1 million, which represents a negative impact of 48.0% in comparison to the same period of the previous year. This variance resulted from the increase in the financial revenues mainly due to the higher average volume invested in the period, added to the decrease in the finance expenses arisen from the decrease in the Company s debts, which are linked to the Amplified Consumer Price Index (IPCA). Debentures (BRL Thousand) Issue Series Remuneration Maturity 3/31/2017 3/31/2016 3rd Single CDI(*) Variance % per year 1/10/ ,242 4th 1 CDI Variance % per year 7/16/ , ,622 4th 2 IPCA variance % per year 7/16/ , ,688 5th 1 CDI Variance % per year 5/20/ , ,942 5th 2 IPCA Variance % per year 5/20/ , ,054 6th Single CDI Variation % per year 9/10/ ,331-1,229,562 1,203,548 (*) Interbank Deposit Certificates (CDI) 6

7 The balance of debentures of the in the first quarter of 2017, amounted to BRL 1,229.6 million, 2.2% higher in comparison to BRL 1,203.5 million in the same period of the previous year. Such variance is mainly due to payment of principal from the 3rd and 4th issues, added to payment of interest of 3rd, 4th, 5th and 6th issues, offset by the decrease in the appropriation of monetary adjustment payable of debts linked to the IPCA, in addition to the funding of proceeds from the 6th debentures issue, performed in September, Loans (BRL Thousand) Remuneration Maturity 3/31/2017 3/31/2016 Bank Credit Note (CCB) CDI Variance + 1.4% per 05/05/ , ,324 In 2015, the raised funds with Citibank, in the amount of BRL 181 million, being the same updated at 100% of CDI accumulated variance, plus interest of 1.4% per year. The maturity term of this loan is two years. There are no assets given as guarantee to obtain this financial transaction and there are no covenants. Net financial debt (BRL Thousand) 3/31/2017 3/31/2016 % Variance Loan 238, , Debentures 1,229,562 1,203, Short-Term 210, , Long-Term 1,019, , Cash (770,167) (451,236) 70.7 Net debt 697, , The consolidated net debt, is made up of the indebtedness, less cash proceeds and cash equivalents. In comparison to the same period in 2016, it decreased 27.2% mainly due to the increase in the balance of cash and cash equivalents derived from the normal operation of the Company and its Controlled Company. Net income for the period As a result of the abovementioned items, the Company recorded in the first quarter of 2017 a net income of BRL million, BRL 56.7 million or 79.5% higher than the results recorded in the same period of the previous year. The recorded as an equity result, as an effect of the result assessed from its Controlled Company, the amount of BRL 3.2 million (BRL 1.4 million on 03/31/2016). 7

8 BALANCE SHEETS AS AT MARCH 31, 2017 AND DECEMBER 31, 2016 (In thousands of Brazilian Reais - BRL) ASSETS Note 3/31/ /31/2016 3/31/ /31/2016 Current Cash and cash equivalents 6 711, , , ,563 Trade receivables 7 175, , , ,892 Recoverable taxes 8 10,052 9,999 11,528 11,276 Services in progress 7,963 13,092 7,963 13,092 Prepaid expenses 3, , Sundry debtors 1,280 1,458 1,643 1,815 Related parties Other assets Total current assets 909, , ,659 1,015,250 Non-current Recoverable taxes ,241 2,220 Legal deposits 9 48,647 47,612 48,647 47,612 Restricted funds Prepaid expenses 3,010 3,075 3,010 3,075 Investments 218, , Controlled Companies , , Others Property, Plant and Equipment 11 3,088,670 3,129,346 3,248,126 3,290,784 Intangible assets 12 28,034 28,801 32,380 29,033 Total non-current assets 3,387,981 3,425,159 3,334,648 3,372,873 Total assets 4,297,911 4,381,811 4,308,307 4,388,123 The Management notes are an integral part of the financial statements. 8

9 BALANCE SHEETS AS AT MARCH 31, 2017 AND DECEMBER 31, 2016 (In thousands of Brazilian Reais - BRL) LIABILITIES AND SHAREHOLDERS EQUITY Note 3/31/ /31/2016 3/31/ /31/2016 Current Trade payables , , , ,623 Salaries and social charges 13,448 19,006 13,721 19,282 Loans , , , ,228 Debentures , , , ,383 Taxes payable 8 77, ,816 78, ,756 Dividends and interest on equity , , , ,692 Estimated obligations 8,175 7,948 8,319 8,105 Cibacap Regulatory charges 22 20,348 27,815 20,355 27,822 Deferred revenues 6,627 8,739 6,627 8,739 Other liabilities , Total current liabilities 1,112,972 1,328,613 1,122,249 1,333,786 Non-current Debentures 16 1,019,214 1,012,140 1,019,214 1,012,140 Deferred revenues 9,649 4,544 10,375 5,303 Special obligations 21 1,769 1,758 1,769 1,758 Provision for tax, labor and environmental risks 20 32,709 32,701 33,102 33,081 Cibacap 18 10,011 9,936 10,011 9,936 Deferred income tax and social contribution 8 181, , , ,797 Tariff for the use of distribution system (TUSDg) 13 15,063 13,960 15,063 13,960 Regulatory charges 22 9,056 8,647 9,056 8,647 Other regulatory obligations (RGR ) 4,947 4,947 4,947 4,947 Other liabilities Total non-current liabilities 1,284,706 1,281,210 1,285,825 1,282,349 Shareholders Equity Capital , , , ,138 Capital reserves , , , ,804 Earnings reserves , , , ,753 Retained earnings / (losses) , ,418 - Valuation adjustment to equity , , , ,293 Total shareholders equity 1,900,233 1,771,988 1,900,233 1,771,988 Total liabilities and shareholders equity 4,297,911 4,381,811 4,308,307 4,388,123 The Management notes are an integral part of the financial statements. 9

10 INCOME STATEMENTS THREE-MONTH PERIODS ENDED ON MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais, except when designated otherwise) Note 3/31/2017 3/31/2016 3/31/2017 3/31/2016 Net operating revenue , , , ,611 Cost of electric power service Personnel (12,118) (12,852) (12,640) (13,375) Material (1,114) (908) (1,307) (1,029) Third-party services (5,621) (5,607) (7,087) (6,576) Electric power service inspection fee (TFSEE) (1,383) (1,396) (1,403) (1,416) Electric power purchased for resale 25.2 (164) (7,236) (223) (7,439) Charges for the use of electric power grid 25.3 (28,992) (26,269) (29,109) (26,388) Financial offset from the use of water resources (18,315) (23,392) (18,315) (23,392) Depreciation and amortization 11.b and 12.b (53,348) (53,550) (55,801) (55,866) Constitution / (Reversal) of provision for tax, labor and environmental risks 154 (790) 154 (1,156) Rentals (2) (37) (7) (37) Insurances (2,697) (2,367) (2,781) (2,442) Others (375) (360) (416) (405) (123,975) (134,764) (128,935) (139,521) Gross profit 244, , , ,090 Operating expenses Personnel (14,445) (9,289) (14,445) (9,289) Material (76) (31) (78) (31) Third-party services (2,797) (3,051) (2,905) (3,203) Depreciation and amortization 11.b and 12.b (481) (421) (490) (427) Provision for tax, labor and environmental risks (101) (241) (101) (241) Constitution of estimate for doubtful accounts 7 (2,726) (3,051) (2,726) (4,091) Rentals (844) (868) (918) (896) Others (4,081) (1,617) (4,184) (1,676) (25,551) (18,569) (25,847) (19,854) Income from equity interest Equity result 10 3,200 1, Operating income 222, , , ,236 Finance income 26 Revenues 22,522 15,271 24,216 16,662 Expenses (52,236) (69,136) (52,279) (70,619) (29,714) (53,865) (28,063) (53,957) Profit before income tax and social contribution 192, , , ,279 Income tax and social contribution 8.2 Current (75,207) (60,198) (76,021) (60,952) Deferred 10,464 23,923 10,464 23,923 (64,743) (36,275) (65,557) (37,029) Net income for the period 127,904 71, ,904 71,250 Earnings per share from continuing operations (in BRL per share) Basic and diluted earnings per preferred share (PN) Basic and diluted earnings per common share (ON) The Management notes are an integral part of the financial statements. 10

11 STATEMENTS OF COMPREHENSIVE INCOME THREE-MONTH PERIODS ENDED ON MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais, except when designated otherwise) 3/31/2017 3/31/2016 Net income for the period 127,904 71,250 Actuarial gains on defined benefit pension plan Deferred income tax and social contribution on actuarial gains (175) (81) Comprehensive income for the period 128,245 71,407 The Management notes are an integral part of the financial statements. 11

12 STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY PERIODS ENDED ON MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais - BRL) Capital Capital Reserves Earnings Retained Earnings Valuation adjustment to equity (see Note 23.6) Shareholders equity of the Controlling Company and Balances on December 31, , , , ,293 1,771,988 Comprehensive income for the period Net income of the period , ,904 Actuarial gains on defined benefit pension plan Deferred income tax and social contribution on actuarial gains (175) (175) Reclassifications of net actuarial gains - CPC 33 (R1) (341) , ,245 Contributions and distributions to shareholders Realization of valuation adjustments to equity (see Note 23.6) ,052 (28,052) - Deferred tax on valuation adjustments to equity (9,538) 9, ,514 (18,514) - Balances on March 31, , , , , ,779 1,900,233 Capital Capital Reserves Earnings Retained Earnings Valuation adjustments to equity Shareholders equity of the Controlling Company and Balances on December 31, , , , ,143 1,813,883 Comprehensive income for the period Net income of the period ,250-71,250 Actuarial gains on defined benefit pension plan Deferred income tax and social contribution on actuarial gains (81) (81) Reclassifications of net actuarial gains - CPC 33 (R1) (157) ,250-71,407 Contributions and distributions to shareholders Realization of valuation adjustments to equity (see Note 23.6) ,560 (26,560) - Deferred tax on valuation adjustments to equity (9,031) 9, ,529 (17,529) - Capital reserve related to reimbursement of Rio Paranapanema Participações S.A. (former Duke Brasil) to the Controlling company referred to the arbitration payment of the controlled company - 15, ,952-15, ,952 Balances on March 31, , , ,291 88, ,614 1,901,242 The Management notes are an integral part of the financial statements. 12

13 (501) STATEMENTS OF CASH FLOWS THREE-MONTH PERIODS ENDED ON MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais - BRL) Cash flows from operating activities Net income of the period127,904 71, ,904 71,250 3/31/2017 3/31/2016 3/31/2017 3/31/2016 Adjustments to: Depreciation and amortization 53,829 53,971 56,291 56,293 Losses for property, plant and equipment/intangible assets offset 3, , Gain from the non-recoverability of the assets - - (25) (20) Deferred income tax and social contribution (10,464) (23,923) (10,464) (23,923) Constitution of estimate for doubtful accounts 2,727 3,051 2,727 4,091 Interest on CCB loans 7,820 7,199 7,820 7,199 Interest on debentures 29,767 30,295 29,767 30,295 Monetary variance on debentures 6,645 17,780 6,645 17,780 (Reversal) / constitution of provision for tax, labor and environmental risks (53) 1,031 (53) 1,396 Monetary variance on provision for tax, labor and environmental risks Monetary variance on legal deposits (1,104) (1,071) (1,105) (1,071) Financial updating by arbitral proceeding Equity result (3,200) (1,402) - -. Variation in assets and liabilities Trade receivables (44,967) 15,715 (45,444) 16,886 Sundry debtors 178 (202) 172 (208) Related parties (25) 76 (25) 76 Services in progress (987) (1,361) (987) (1,361) Restricted funds (95) - (95) - Prepaid expenses (2,939) (7,737) (3,029) (7,978) Trade payables 18,650 50,813 18,508 49,114 Salaries and social charges (5,558) (2,589) (5,561) (2,599) Taxes, fees and contributions 64,077 50,718 64,653 50,556 Estimated obligations Deferred revenues 2,993 (1,033) 2,960 (930) Cibacap Provision for tax, labor and environmental risks (203) (501) (210) Other active and passive variations (392) 3,894 3,850 3,878 Cash generated in operations 248, , , ,327 Interest and monetary variance paid on debentures (29,373) (29,185) (29,373) (29,185) Income tax and social contribution - paid (162,248) (127,370) (163,025) (127,370) Payment related to arbitration proceeding (see Note 14) (15,952) Net cash from operating activities 56, ,517 65, ,820 Cash flows from investment activities Capital reserve related to the reimbursement of the Company for the payment of arbitration of the Controlled Company - 15,952-15,952 Income from property, plant and equipment sale Additions to property, plant and equipment (15,627) (10,025) (15,985) (10,347) Additions in intangible assets(36) (92) (4,270) (92) Net cash provided by (used in) financing activities (15,493) 6,016 (20,085) 5,694 Cash flows from financing activities Payment of debentures (75,000) (75,000) (75,000) (75,000) Dividends and interest on equity - paid (52,995) (44,347) (52,995) (44,347) Net cash used in financing activities (127,995) (119,347) (127,995) (119,347) Net decrease in cash and cash equivalents (86,754) (1,814) (82,396) (12,833) Cash and cash equivalents in the beginning of the period 798, , , ,069 Cash and cash equivalents at the end of the period 711, , , ,236 The Management notes are an integral part of the financial statements. 13

14 STATEMENTS OF VALUE ADDED THREE-MONTH PERIODS ENDED ON MARCH 31, 2017 AND 2016 (In thousands of Brazilian Reais - BRL) 3/31/2017 3/31/2016 3/31/2017 3/31/2016 Revenues Electric power sales 411, , , ,474 Revenues related to the construction of own assets 15,627 10,065 15,984 10,387 Reversal of estimate for doubtful accounts (2,727) (3,051) (2,727) (4,091) 424, , , ,770 Inputs acquired from third-parties Electric power purchased and charges for the use of electric grid (29,156) (33,505) (29,332) (33,827) Materials and services from third parties (25,235) (19,662) (27,360) (21,224) Other operating costs (6,543) (4,833) (6,672) (5,287) (60,934) (58,000) (63,364) (60,338) Gross value added 363, , , ,432 Depreciation and amortization (53,829) (53,971) (56,291) (56,293) Net value added produced 309, , , ,139 Rentals Equity result 3,200 1, Financial revenues 22,522 15,271 24,216 16,662 Value added received in a transfer 25,861 16,716 24,355 16,705 Value added to be distributed 335, , , ,844 Distributed Value added Personnel Direct compensation 13,912 12,045 14,176 12,319 Benefits 2,796 2,689 2,898 2,802 FGTS (Government Severance Indemnity Fund for Employees) 2,481 2,137 2,503 2,159 Provision for gratuities (bonuses) 2,746 1,387 2,778 1,406 Profit sharing , Social charges (except for INSS) ,863 19,786 24,333 20,254 Taxes, fees and contributions Federal 124, , , ,611 State 5,592 5,126 5,594 5,128 Municipal , , , ,788 Remuneration from third party s capital Rentals Interest on debentures 29,757 30,295 29,757 30,295 Interest on loans 7,821 7,199 7,821 7,199 Monetary variance on debentures 6,645 17,780 6,645 17,780 Other financial expenses 8,013 13,862 8,056 15,345 53,082 70,041 53,204 71,552 Others Retained earnings 146,418 88, ,418 88,779 Realization of deemed cost of property, plant and equipment (18,514) (17,529) (18,514) (17,529) 127,904 71, ,904 71,250 Distributed value added 335, , , ,844 The Management notes are an integral part of the financial statements. 14

15 MANAGEMENT NOTES TO THE QUARTERLY INFORMATION - ITR - MARCH 31, 2017 (Amounts expressed in thousands of Brazilian Reais, except when designated otherwise) 1. GENERAL INFORMATION 1.1. Corporate reorganization On December 29, 2016, after all approvals released by regulating authorities, represented by Administrative Council of Economic Defense (CADE) and National Electric Energy Agency (ANEEL), it was concluded the sale process of all shares of the capital of Duke Energy International Brazil Holdings S.à.r.l. (DEIBH) from Duke Energy International Group. S.à.r.l. (indirect Controlling company) to the company China Three Gorges (Luxembourg) Energy S.à.r.l. (CTG Lux). The purchase and sale agreement represented the direct acquisition, on the part of CTG Lux, of all 735,023 preferred shares issued by the then so-called Duke Energy International Geração Paranapanema S.A, currently named Rio Paranapanema Energia S.A. (the Company) held by DEIBH (indirect Controlling company), and the indirect acquisition of the 31,180,723 common shares and 57,849,548 preferred shares held by Duke Energy International Brasil Ltda. (the current Rio Paranapanema Participações S.A.), direct of the Company, representing in total 99.06% of the voting capital of the Company and its Controlled Company. The enterprise value of the closing of operation between Grupo Duke Energy and CTG was US$ 1.2 billion. As a result of this transaction and according to Article 254-A of the Corporate Law and Company s By-Laws, the new (CTG) shall perform a public offering for the acquisition of the remaining common and preferred shares issued by the Company that are still outstanding (OPA [Public Offering for the Acquisition]) Operating context Rio Paranapanema Energia S.A. (the or Company) is a publicly-held corporation and a public utility concessionaire, operating as independent generator, with registered office in São Paulo, which is mainly engaged in the generation and sale of electric power, operations that are regulated and supervised by ANEEL, which reports to the Ministry of Mines and Energy (MME). The Company's installed capacity is 2,241.3 MW, consisting of the following generation plants in operation in the State of São Paulo: hydroelectric power plant (UHE) Capivara, UHE Chavantes, UHE Jurumirim, UHE Salto Grande, UHE Taquaruçu, UHE Rosana and 49.7% of the Canoas Complex consisting of the UHEs Canoas l and ll. As mentioned in Note 10, the Company holds 99.99% of the equity interest in Sapucaí-Mirim Energia Ltda. (previously named Duke Energy International Geração Sapucaí-Mirim Ltda.) (the Controlled Company or Sapucaí Mirim). The installed capacity of the Controlled Company is 32.5 MW, consisting of the Small Hydroelectric Plants (PCH) Retiro and PCH Palmeiras, located in Sapucaí River, in the municipalities of Guará and São Joaquim da Barra, both in the State of São Paulo. On March 31, 2017, the Company presented a negative Net Current Capital (CCL) in the amount of BRL 203,042 in the and of BRL 148,590 in the (BRL 371,961 and BRL 318,536 respectively on 12/31/2016). This decrease in the balance of CCL derives mainly from the increase in provisioned amounts receivable from Câmera de 15

16 Comercialização de Energia Elétrica (CCEE), in addition to the increase in cash generating due to the increase in the Company s operating activities. In order to equalize such scenario, the Company has continuous cash generation from operating activities Injunction on the Generation Scaling Factor (GSF) Brazil is still feeling the effects of the severe hydrologic crisis suffered in the last years, which caused the reduction of the reservoirs and increased to the maximum the level of dispatch of the thermoelectric plants. As a consequence, the Differences Settlement Price (PLD) reached its cap in 2014 and 2015, which elevated the exposure of electric power generators in the Short- Term Market (MCP) due to GSF. The Associação Brasileira dos Produtores Independentes de Energia Elétrica (APINE) filed an injunction to mitigate the exposure of its generators to this level of GSF until the appropriate allocation of disposal costs out of a merit order. On July 2, 2015, this preliminary injunction was granted in favor of APINE, limiting the Company s exposure and other generators to GSF, until the moment of the judgment of the merits of the claim. It was filed as an interlocutory appeal, but an appeal has not been granted yet and the injunction has remained stabilized since then. The Company records provision of amounts effectively received as a result of the GSF injunction in the line-item Trade Payables (see Note 13). The outcome of the lawsuit is still uncertain and the decision, when rendered in the lower court, is subject to appeal. Thus, it is not possible to foresee the impact on the Company and its Controlled Company. On December 8, 2015, the federal government enacted Law 13203/2015 which presented guidelines for the renegotiation proposal of hydrologic risk of Electric Power Reallocation Mechanism (MRE), both in the Deregulated Contracting Framework (ACL) and in the Regulated Contracting Framework (ACR), establishing a new legal provision for renegotiating hydrologic risk of MRE participants for a determined period of time. In general, ACL s proposal offered economic benefit for the purchase of electric power in 2015, by means of relief with the creation of an intangible asset from part of this amount. In addition to that, the renegotiation agreement provided an extension to the concession period, equivalent to the amount of the intangible asset and the acquisition of insurance in the form of electric power reserve for the period 2016 to Finally, the agreement required the acquisition of additional insurance, as incremental electric power reserve for the period of 2019 until the end of concession. The acquisition result of this incremental insurance and its use, if negative, would also be an object of the extension of concession arrangement. As counterparties, the agents that would adhere to the renegotiation of hydrologic risk, in ACR or ACL, would have to waive any and all lawsuits related to hydrologic risk within the MRE scope. With these assumptions, after analysis related to the amount from this option and considering uncertainties from the variables involved, the Company and its Controlled Company decided to not renegotiate. Currently it is under discussion in Public Hearing of ANEEL, which will define the payment rules of the Generation Cost Out of Merit Order contained in the Law 13203/2015, amended by Law 13360/16. The result of this Public Hearing will define the course of the renegotiation that has been under discussion for almost two years. 16

17 1.4. Revision of the physical guarantees of the hydroelectric power plants According to Decree No. 2655/1998, the ordinary revision of the physical guarantees of the hydroelectric power plants of the system should occur every five years, starting in Later, this revision was postponed to 2015, and then to In December 2016, this revision was postponed again by the MME to 2018, and the amounts of the physical guarantees shall be disclosed until April 30, Approval of the financial statements The issuance of these financial statements was approved by the Company's Board of Directors on May 11, SUMMARY OF PRINCIPAL ACCOUNTING POLICIES AND PRESENTATION OF THE FINANCIAL STATEMENTS 2.1. Basis for preparation Individual and consolidated financial statements The interim financial statements were prepared according to the Technical Pronouncement CPC 21 (R1) Interim Statement and with international accounting standards IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), and presented in a form that is compliant with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Quarterly Information (ITR). Consequently, as described in Circular Letter CVM/SNC/SEP 03/2011, the Company opted to present the notes to this ITR in a summarized manner in those cases of redundancy of the information presented in the annual financial statements. In these cases, we have included a reference to the complete Note to the annual financial statements to avoid any misunderstanding of the financial position and the individual and consolidated performance of the Company and its Controlled Company for the interim period. The Management states that the basis for preparation and the accounting policies are the same used in the annual financial statements of The related information is disclosed in Notes 2.1 to 2.23 to the financial statements mentioned. The analyzed the new CPC/IFRS pronouncements and interpretations effective beginning January 1, 2017 and concluded that they do not have a significant impact on the financial statements Consolidation financial statements The following are the accounting practices adopted in the preparation of the consolidated financial statements. 17

18 a) Controlled Company A Controlled Company is an entity over which the has the power to determine financial and operating policies, while also holding more than half of the voting rights thereof (voting capital). The Controlled Company is consolidated as of the date when control is transferred to the. Consolidation is interrupted as of the date that control ceases. Transactions between the companies, balances and gains not realized in transactions between the companies are eliminated. Unrealized losses are also eliminated, unless the operation provides evidence of impairment of the transferred asset. The Controlled Company's accounting policies are changed as needed to assure consistency with the policies adopted by the Company. On March 31, 2016, the Company held control over Rio Sapucaí-Mirim Energia Ltda., as described in Note Concession agreements ANEEL Concession Agreement The information related to concession agreements is the same as described in Note to the annual financial statements of Authorizing resolutions Controlled Company Plant Type State River The information related to authorizing resolutions is the same as described in Note to the annual financial statements of Impairment of non-financial assets Installed Capacity (MW) Assured Energy (average MW) Initial term of the Concession Concession Maturity 76/1999 Jurumirim UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1999 Chavantes UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1999 Salto Grande UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1999 Capivara UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1999 Taquaruçu UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1999 Rosana UHE - Hydroelectric SP Paranapanema /22/1999 9/21/ /1998 Canoas I UHE - Hydroelectric SP Paranapanema /30/1998 7/29/ /1998 Canoas II UHE - Hydroelectric SP Paranapanema /30/1998 7/29/2033 2, ,110.5 ANEEL Authorization Resolution Plant Type State River Installed Capacity (MW) Assured Energy (average MW) Start of Authorization Authorization Expiration 549/2002 Retiro PCH - Hydroelectric SP Sapucaí /10/ /9/ /2002 Palmeiras PCH - Hydroelectric SP Sapucaí /18/ /17/ The Company declares that the information on impairment of non-financial assets described in the annual financial statements of 2016 is the same as that included in this ITR, as presented in Note 2.14 to those financial statements. 3. KEY ESTIMATES AND CRITICAL ACCOUNTING JUDGMENTS The Company hereby declares that the key estimates and critical accounting judgments described in the 2016 annual financial statements are applicable to this ITR, as presented in Note 3 of those financial statements. 18

19 4. BUSINESS RISK MANAGEMENT The information on the financial risk factors described in the 2016 annual financial statements are applicable to this ITR, as presented in Note 4 to those financial statements, except for the sensitivity analysis and capital management, as described below: 4.1. Sensitivity analysis The Company and its Controlled Company, in accordance with item 40 of CPC 40 (R1) - Financial Instruments, for evidence, disclose the statement of sensitivity analysis for each type of market risk considered as relevant by Management, arising from financial instruments consisting of debentures, loans and cash and cash equivalents, to which the Company and its Controlled Company are exposed at the end of the fiscal year. The sensitivity for the probable scenario was calculated taking into consideration the variance in the rates and indexes for the last 12 months and also took into consideration four other scenarios, with favorable and unfavorable stress of 25% and 50% on interest rates and floating indexes compared to the probable scenario. The following table shows the impacts on the finance income for the and the in the five scenarios estimated for the next 12 months: Debt Debentures Issue Indexer 3/31/2017 Scenario Scenario Probable Scenario Scenario Scenario 4th T1 CDI % p.y. (170,820) (12,854) (18,726) (24,598) (30,470) (36,342) 4th T2 IPCA % p.y. (337,434) (28,193) (32,048) (35,903) (39,758) (43,613) 5th T1 CDI % p.y. (249,860) (19,402) (27,990) (36,580) (45,168) (53,757) 5th T2 IPCA % p.y. (311,117) (28,918) (32,474) (36,027) (39,582) (43,136) 6th CDI % p.y. (160,331) (14,229) (19,741) (25,252) (30,764) (36,275) Loan CDI % p.y. (238,048) (19,698) (27,881) (36,064) (44,247) (52,430) Cash and cash equivalents (1,467,610) (123,294) (158,860) (194,424) (229,989) (265,553) CDI 711,366 48,906 73,359 97, , ,718 Total net exposure (756,244) (74,388) (85,501) (96,612) (107,724) (118,835) Debt Debentures Issue Indexer 3/31/2017 Scenario Scenario Scenario Probable Scenario Scenario 4th T1 CDI % p.y. (170,820) (12,854) (18,726) (24,598) (30,470) (36,342) 4th T2 IPCA % p.y. (337,434) (28,193) (32,048) (35,903) (39,758) (43,613) 5th T1 CDI % p.y. (249,860) (19,402) (27,990) (36,580) (45,168) (53,757) 5th T2 IPCA % p.y. (311,117) (28,918) (32,474) (36,027) (39,582) (43,136) 6th CDI % p.y. (160,331) (14,229) (19,741) (25,252) (30,764) (36,275) Loan CDI % p.y. (238,048) (19,698) (27,881) (36,064) (44,247) (52,430) (1,467,610) (123,294) (158,860) (194,424) (229,989) (265,553) Cash and cash equivalents CDI 770,167 52,949 79, , , ,847 Total net exposure (697,443) (70,345) (79,436) (88,526) (97,616) (106,706) Indexes Scenario Scenario Scenario Scenario Scenario Variance Probable IPCA 2.29% 3.43% 4.57% 5.71% 6.86% CDI 6.88% 10.31% 13.75% 17.19% 20.63% 19

20 4.2. Capital management 3/31/ /31/2016 3/31/ /31/2016 Loans (see Note 17) 238, , , ,228 Debentures (see Note 16) 1,229,562 1,297,523 1,229,562 1,297,523 Cash and cash equivalents (see Note 6) (711,366) (798,120) (770,167) (852,563) Net debt 756, , , ,188 Shareholders equity 1,900,233 1,771,988 1,900,233 1,771,988 Total capital 2,656,477 2,501,619 2,597,676 2,447,176 Financial leverage ratio (%)* * Net debt/ total capital The changes in the capital management balance are the result of regular changes in the period Estimate of fair value The Company declares that the information on the fair value estimate described in the 2016 annual financial statements is applicable to this ITR, as presented in Note 4.3 to those financial statements. 5. CREDIT QUALITY OF FINANCIAL ASSETS The quality credit of the financial assets that are not overdue can be assessed through a reference of external credit ratings, according to the table below: Cash and cash equivalents Standard Moodys & Poor's 3/31/ /31/2016 3/31/ /31/2016 B BR-1 588, , , ,078 B - 122, , , ,482 * * , , , ,563 * As at March 31, 2017, the balance of BRL 3 (BRL 3 as at December 31, 2016) refers to cash funds and, therefore, it does not have a risk rating. 6. CASH AND CASH EQUIVALENTS 3/31/ /31/2016 3/31/ /31/2016 Cash and Banks ,015 Financial investments Bank deposit certificate (CDB) 710, , , ,289 Fixed income fund , , , ,563 Financial investments correspond to transactions involving CDBs and fixed-income investment funds, which are carried out with institutions operating in the domestic financial market and are contracted under regular market conditions and rates, which are highly liquid, pose low credit risk and yield interest based on market practices. 20

21 The characteristics of the balances are the same as described in Note 6 to the 2016 annual financial statements. 7. TRADE RECEIVABLES 3/31/ /31/2016 Current Non-current Current Non-current Receivables from bilateral agreements 113, , Receivables from auction agreements 4,271-4,381 - Short-term electric power (MRE/MCP) 62,795-13, , , Estimate for doubtful accounts (5,318) (285) (2,592) (285) 175, ,371 - Activity of estimate for doubtful accounts (ECLD): 3/31/ /31/2016 Current Non-current Current Non-current Receivables from bilateral agreements 116, , Receivables from auction agreements 4,271-4,381 - Short-term electric power (MRE/MCP) 63,262-13, , , Estimate for doubtful accounts (5,318) (413) (2,592) (413) 178, ,892 - Balance on December 31, 2016 (2,877) (3,005) Constitution (3,508) (3,508) Reversal Balance on March 31, 2017 (5,603) (5,731) Variance in Provision for doubtful accounts is mainly due to the effects of short-term market liquidation in the first quarter of 2017, as well as amounts related to the electric power supply from the auction agreements. The other variances in the balance of trade receivables arise from normal changes in this period, and all information on trade receivables is described in Note 7 to the 2016 annual financial statements. 21

22 8. RECOVERABLE/PAYABLE TAXES Assets IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income) PIS (Employees Profit Participation Program) and COFINS (Social Contribution on Billings) 3/31/ /31/ Current Non-Current Current Non-Current Current Non-Current Current Non-Current 8, , , , , , INSS (National Institute of Social Security) ,281-1,260 10, , ,528 2,241 11,276 2,220 Liabilities IRPJ and CSLL 61, ,672-62, ,473 - PIS and COFINS 13,632-11,420-13,745-11,521 - ICMS 1,924-1,782-1,924-1,782 - IRRF (Withholding Income Tax) on JSCP (Interest on Equity) - - 9, ,483 - Others , ,816-78, ,756 - Assets from deferred taxes Temporary differences - (131,685) - (130,950) - (131,685) - (130,950) Tax benefit - (23,663) - (24,488) - (23,663) - (24,488) Deferred revenues - (5,509) - (4,491) - (5,509) - (4,491) Deferred tax liability Valuation adjustment to equity - 330, , , ,151 Actuarial adjustment - pension plan - 2,892-2,716-2,892-2,716 Surplus - Investments in controlled company - 8,859-8,859-8,859-8,859 Deferred tax liability (net) - 181, , , ,797 The Controlled Company has opted for the deemed profit tax regime. Variances in the balance of Recoverable/Payable Taxes arose from normal changes in this period, and the complete information thereon is disclosed in Notes 8 and 8.1 to the 2016 annual financial statements Tax benefit - Merged goodwill The Company recognized a provision to keep the integrity of equity, whose reversal will neutralize the effect arising from the amortization of goodwill on the balance sheet. The composition of the balance is as follows: and 3/31/ /31/2016 Goodwill Provision Net Value Net Value Balances from incorporation (see Note 23.2) 305,406 (201,568) 103, ,838 Realization (235,795) 155,621 (80,174) (79,350) Balances at the end of the period 69,611 (45,947) 23,664 24,488 Net amount corresponding to the tax benefit - income tax and social contribution: and 3/31/2017 3/31/2016 Amortization of goodwill (2,426) (2,717) Reversal of provision 1,601 1,793 Tax benefit Net effect in the fiscal period

23 Realization of the tax benefit related to the merged goodwill of Duke Sudeste. and 2026 and Total after Estimated realization 2,474 2,946 2,630 2,348 2,097 6,367 4,802 23,664 Variances in the balance of Tax Benefit - Merged Goodwill arose from the normal changes in the current period, and complete information thereon is disclosed in Note 8.2 to the 2016 annual financial statements Statements of income tax and social contribution calculation Reconciliation between income tax and social contribution expenses at nominal and effective rate is presented below: 3/31/2017 3/31/2016 IRPJ CSLL Total IRPJ CSLL Total Accounting profit before IRPJ and CSLL Nominal rate of IRPJ and CSLL 25% 192,647 9% 34% 25% 107,525 9% 34% IRPJ and CSLL to rates provided by law 48,162 17,338 65,500 26,881 9,677 36,558 Adjustments for the calculation of the effective rate Amortization charge, inflation creditor (565) 18 (547) (565) 18 (547) Non-deductible expenses Temporary differences on income from previous years Valuation adjustments to equity from controlled companies (785) (283) (1,068) (350) (126) (476) Others (28) (4) (32) IRPJ and CSLL with effect in income 47,536 17,207 64,743 26,636 9,639 36,275 Current IRPJ and CSLL 55,230 19,977 75,207 44,226 15,972 60,198 Deferred IRPJ and CSLL (7,694) (2,770) (10,464) (17,590) (6,333) (23,923) Total IRPJ and CSLL with effect in income 47,536 17,207 64,743 26,636 9,639 36,275 Effective tax rate 24.7% 8.9% 33.6% 24.8% 9.0% 33.8% 3/31/2017 3/31/2016 IRPJ CSLL Total IRPJ CSLL Total Accounting profit before IRPJ and CSLL Nominal rate of IRPJ and CSLL 25% 193,461 9% 34% 25% 108,279 9% 34% IRPJ and CSLL to rates provided by law 48,365 17,411 65,776 27,070 9,745 36,815 Adjustments for the calculation of the effective rate Amortization charge, inflation creditor (565) 18 (547) (565) 18 (547) Non-deductible expenses Temporary differences on income from previous years Difference per taxation of deemed income in controlled companies (11) Others (813) (287) (1,100) IRPJ and CSLL with effect in income 48,112 17,445 65,557 27,164 9,865 37,029 Current IRPJ and CSLL 55,806 20,215 76,021 44,754 16,198 60,952 Deferred IRPJ and CSLL (7,694) (2,770) (10,464) (17,590) (6,333) (23,923) Total IRPJ and CSLL with effect in income 48,112 17,445 65,557 27,164 9,865 37,029 Effective tax rate 24.9% 9.0% 33.9% 25.1% 9.1% 34.2% The Controlled Company has chosen the deemed profit tax regime and does not have a provision for Deferred Income Tax and Social Contribution. The variances in the balances of Current and Deferred Income Tax and Social Contribution arose from normal changes in this period, and the complete information thereon is disclosed in Note 8.3 to the 2016 annual financial statements. 23

24 9. LEGAL DEPOSITS a) Breakdown and 3/31/ /31/2016 Environmental 5,999 5,875 Tax: 10,256 10,058 IPTU (Municipality of Primeiro de Maio ) 1,499 1,471 Debits under claim on IRRF, IRPJ and CSLL Debits under claim related to PIS, COFINS, IRPJ, CSLL and IOF 8,625 8,458 Tusd-g 32,392 31,679 48,647 47,612 This line-item only includes the legal deposits made for appeals, or otherwise, and those not related to provision for the probable risks (described in Note 20), and all are adjusted for inflation. The characteristics of the balances are the same as described in Note 9 to the 2016 annual financial statements. 10. INVESTMENT a) Controlled Company Controlled Company Rio Sapucaí-Mirim Energia Ltda. (former Duke Energy International Geração Sapucai- Mirim Ltda.) Number of quotas Direct Interest (%) 3/31/ /31/2016 Equity Value Equity Value 398,617, % 218, ,216 b) Activity of s investments Controlled Company Balance on December 31, ,216 Equity result 3,200 Balances on March 31, ,416 c) Financial information of the Controlled Company Controlled Company 3/31/ /31/2016 Shareholders equity 218, ,216 Net income of the period 3,200 28,268 Total assets 228, ,527 Net revenues for the period 7,619 31,144 24

25 11. PROPERTY, PLANT AND EQUIPMENT a) Breakdown In services Cost Accumulated depreciation Net value 12/31/2016 Net value Land 213, , ,865 Reservoirs, dams and water mains 3,408,128 (1,253,982) 2,154,146 2,190, % Buildings, civil construction and improvements 454,849 (174,677) 280, , % Machinery and equipment 899,533 (344,810) 554, , % Vehicles 7,710 (2,940) 4,770 5, % Furniture and fixtures 1,867 (1,493) % (-) Reserve - Canoas I and II plants (200,675) - (200,675) (200,675) In progress 3/31/2017 4,785,277 (1,777,902) 3,007,375 3,029,611 Land 1,046-1,046 1,046 Reservoirs, dams and water mains 4,838-4,838 3,067 Buildings, civil construction and improvements Machinery and equipment 75,265-75,265 95,310 Furniture and fixtures ,295-81,295 99,735 4,866,572 (1,777,902) 3,088,670 3,129,346 (-) Special obligations (see Note 21) (1,514) 374 (1,140) (1,035) 4,865,058 (1,777,528) 3,087,530 3,128,311 Depreciation annual average rate In services Cost Accumulated depreciation Net value 12/31/2016 Net value Land 223, , ,271 Reservoirs, dams and water mains 3,642,961 (1,272,277) 2,370,684 2,408, % Buildings, civil construction and improvements 492,412 (177,838) 314, , % Machinery and equipment 1,021,241 (358,327) 662, , % Vehicles 7,770 (2,976) 4,794 5, % Furniture and fixtures 2,000 (1,518) % (-) Reserve - Canoas I and II plants (200,675) - (200,675) (200,675) In progress 3/31/2017 5,188,980 (1,812,936) 3,376,044 3,400,531 Land 11,009-11,009 10,960 Reservoirs, dams and water mains 4,838-4,838 3,067 Buildings, civil construction and improvements Machinery and equipment 75,442-75,442 95,384 Furniture and fixtures ,561-91, ,757 5,061,062 (1,812,936) 3,248,126 3,290,784 (-) Special obligations (see Note 21) (1,514) 374 (1,140) (1,035) 5,059,548 (1,812,562) 3,246,986 3,289,749 Depreciation annual average rate 25

26 b) Activities of property, plant and equipment Net value Reclassification Net value Additions Depreciation Write-offs on 12/31/2016 and transfer on 03/31/2017 Land 214, ,911 Reservoirs, dams and water mains 2,194,040 1,648 (38,135) - 1,431 2,158,984 Buildings, civil construction and improvements 283,798 - (3,672) ,172 Machinery and equipment 631,536 14,024 (11,073) (3,047) (1,452) 629,988 Vehicles 5,264 - (254) (240) - 4,770 Furniture and fixtures (17) - (25) 520 (-) Reserve - Canoas I and II plants (200,675) (200,675) 3,129,346 15,762 (53,151) (3,287) - 3,088,670 (-) Special obligations (see Note 21) (1,035) (135) (1,140) 3,128,311 15,627 (53,121) (3,287) - 3,087,530 Net value Reclassification Net value Additions Depreciation Write-offs on 12/31/2016 and transfer on 03/31/2017 Land 234, ,280 Reservoirs, dams and water mains 2,411,783 1,648 (39,340) - 1,431 2,375,522 Buildings, civil construction and improvements 318, (3,875) ,700 Machinery and equipment 740,641 14,241 (12,003) (3,070) (1,452) 738,357 Vehicles 5,289 - (257) (240) - 4,792 Furniture and fixtures (18) - (25) 629 (-) Reserve - Canoas I and II plants (200,675) (200,675) Loss from the non-recoverability of the assets (CPC 01) 3,510,288 16,120 (55,493) (3,310) - 3,467,605 (219,504) (219,479) 3,290,784 16,120 (55,493) (3,285) - 3,248,126 (-) Special obligations (see Note 21) (1,035) (135) (1,140) 3,289,749 15,985 (55,463) (3,285) - 3,246,986 The additional depreciation expense, calculated on the adjustments to the deemed cost in the periods ended March 31, 2017 and 2016 amounted to BRL 25,768 and BRL 26,177, respectively. The other information on deemed cost of property, plant and equipment is described in Note 11.1 of the 2016 annual financial statements. The other variances in the balance of property, plant and equipment arose from normal changes in this period. All information on property, plant and equipment is described in Note 11 to the 2016 annual financial statements. 26