REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS AN EVALUATION OF THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED.

Transcription

1 (A free translation of the original in Portuguese) Brazilian Corporation Law REGISTRATION WITH CVM SHOULD NOT BE CONSTRUED AS AN EVALUATION OF THE COMPANY. COMPANY MANAGEMENT IS RESPONSIBLE FOR THE INFORMATION PROVIDED IDENTIFICATION 1 - CVM CODE 2 - COMPANY NAME 3 - CNPJ (Corporate Taxpayer s ID) CESP CIA ENERGETICA SÃO PAULO / NIRE (Corporate Registry ID) HEADQUARTERS 1 - ADDRESS Avenida Nossa Senhora do Sabará, DISTRICT PEDREIRA 3 - ZIP CODE CITY SÃO PAULO 5 - STATE SP 6 - AREA CODE TELEPHONE TELEPHONE TELEPHONE TELEX 11 - AREA CODE FAX FAX FAX presiden@cesp.com.br INVESTOR RELATIONS OFFICER (Company Mailing Address) 1- NAME ALMIR FERNANDO MARTINS 2 - ADDRESS AVENIDA NOSSA SENHORA DO SABARÁ, DISTRICT PEDREIRA 4 - ZIP CODE CITY SÃO PAULO 6 - STATE SP 7 - AREA CODE TELEPHONE TELEPHONE TELEPHONE TELEX 12 - AREA CODE finance@cesp.com.br 13 - FAX FAX FAX ITR REFERENCE AND AUDITOR INFORMATION CURRENT YEAR CURRENT QUARTER PREVIOUS QUARTER 1 - BEGINNING 2 - END 3 - QUARTER 4 - BEGINNING 5 - END 6 - QUARTER 7 - BEGINNING 8 - END 1/1/ /31/ /1/2010 6/30/ /1/2010 3/31/ INDEPENDENT AUDITOR DELOITTE TOUCHE TOMATSU AUDITORES INDEPENDENTES 10 - CVM CODE TECHNICIAN IN CHARGE IARA PASIAN 12 TECHNICIAN S CPF (Individual Taxpayer s Register)

2 (A free translation of the original in Portuguese) Brazilian Corporation Law IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / CAPITAL STOCK Number of Shares 1 CURRENT QUARTER 2 PREVIOUS QUARTER 3 SAME QUARTER, PREVIOUS YEAR (in thousands) 6/30/ /31/2009 6/30/2009 Paid-up Capital 1 - Common 109, , , Preferred 218, , , Total 327, , ,503 Treasury Stock 4 - Common Preferred Total COMPANY PROFILE 1 - TYPE OF COMPANY Commercial, Industrial and Other Types of Company 2 - STATUS Operational 3 - NATURE OF OWNERSHIP State-owned company 4 - ACTIVITY CODE Electricity 5 - MAIN ACTIVITY ELECTRICITY GENERATION 6 - CONSOLIDATION TYPE Not presented 7 - TYPE OF REPORT OF INDEPENDENT AUDITORS Unqualified Opinion COMPANIES NOT INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS 1 - ITEM 2 - CNPJ (Corporate Taxpayer s ID) 3 - COMPANY NAME CASH DIVIDENDS APPROVED AND/OR PAID DURING AND AFTER THE QUARTER 1 - ITEM 2 - EVENT 3 - APPROVAL 4 - TYPE 5 - DATE OF PAYMENT 6 - TYPE OF SHARE 7 - AMOUNT PER SHARE 01 AGO* 4/30/2010 Dividends 06/30/2010 Common AGO 4/30/2010 Dividends 06/30/2010 Class B Preferred RCA* 5/11/2010 Interest on Own Capital 07/08/2010 Class A Preferred RCA 5/11/2010 Interest on Own Capital 07/08/2010 Common RCA 5/11/2010 Interest on Own Capital 07/08/2010 Class B Preferred RCA 8/10/2010 Interest on Own Capital Common RCA 8/10/2010 Interest on Own Capital Class B Preferred * AGO Annual General Meeting * RCA Board of Directors Meeting 2

3 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / SUBSCRIBED CAPITAL AND CHANGES IN THE CURRENT YEAR 1 - ITEM 2 - DATE OF CHANGE 3 - CAPITAL STOCK INVESTOR RELATIONS OFFICER (In R$ thousands) 4 - AMOUNT OF CHANGE (In R$ thousands) 5 - NATURE OF CHANGE 7 - NUMBER OF SHARES ISSUED 8 - SHARE PRICE WHEN ISSUED (in thousands) (in R$) 1 - DATE 8/11/ SIGNATURE 3

4 (A free translation of the original in Portuguese) IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / BALANCE SHEET - ASSETS (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 6/30/ /31/ Total Assets 16,037,062 16,155, Current Assets 894, , Cash and Cash Equivalents 259, , Available Cash 13,518 8, Financial Investments 245, , Credits 334, , Clients 308, , Consumers 73,463 73, Distributors 235, , Sundry Credits 26,126 29, Accounts Receivable Free Energy/RTE Accounts Receivable - CCEE 25,196 33, Allowance for Doubtful Accounts (14,322) (14,322) Accounts Receivable (EMURB/DAEE) 15,252 9, Inventories 50,728 46, Other 249, , Recoverable Taxes and Contributions 41,231 44, Pledges and Restricted Deposits 122, , Expenses Paid in Advance - Insurance Claims 3,731 3, Other 81,790 66, Non-Current Assets 15,142,928 15,315, Long-term Assets 1,247,375 1,328, Sundry Credits Credits with Related Parties Direct and Indirect Associated Companies Subsidiaries Other Related Parties Other 1,247,375 1,328, Deferred Income Tax and Social Contribution 1,139,701 1,152, Pledges and Restricted Deposits 86,640 86, Other 21,034 90, Permanent Assets 13,895,553 13,987, Investments 8,172 8, In Direct and Indirect Associated Companies In Direct and Indirect Associated Companies - Goodwill In Subsidiaries In Subsidiaries Goodwill Other Investments 8,172 8, Property, Plant and Equipment 13,887,381 13,979, Intangible Assets Deferred Charges 0 0 4

5 (A free translation of the original in Portuguese) IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / BALANCE SHEET - LIABILITIES (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 6/30/ /31/ Total Liabilities 16,037,062 16,155, Current Liabilities 1,809,086 1,472, Loans and Financing 616, , Debentures Suppliers 56,050 41, Taxes, Fees and Contributions 80,889 86, COFINS 16,511 18, PIS 3,585 4, ICMS 2,350 2, Income Tax 5,637 10, Social Contribution 2,473 4, Withheld Income Tax - Interest on Own Capital 1,384 3, Income Tax on Remittance Abroad 8,881 3, Social Charges on Payroll 3,861 3, Taxes and Social Contributions - REFIS 35,094 35, Other 1,113 1, Dividends Payable 2 34, Provisions 187, , Estimated Liabilities and Payroll 34,361 35, Provision for Contingencies 152, , Debts with Related Parties 81,482 96, Accounts Payable Eletrobrás/Furnas 34,594 55, Employees Pension Entity 46,888 41, Other 786, , Receivables Securitization Fund 411, , Regulatory Fees 40,244 43, Electric Network Usage Charge 56,651 54, Interest on Own Capital 45,806 21, Other Liabilities 232, , Non-Current Liabilities 5,544,495 6,107, Long-Term Liabilities 5,544,495 6,107, Loans and Financing 2,382,944 2,764, Foreign Currency 1,337,258 1,721, Domestic Currency 1,045,686 1,043, Debentures Provisions 1,089,604 1,272, Provisions for Contingencies 1,089,604 1,272, Debts with Related Parties 196, , Accounts Payable Eletrobrás/Furnas 143, , Employees Pension Entity 52,768 68, Advance for Future Capital Increase 0 0 5

6 (A free translation of the original in Portuguese) IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / BALANCE SHEET - LIABILITIES (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 6/30/ /31/ Other 1,875,719 1,876, Receivables Securitization Fund 1,121,659 1,156, Deferred Income Tax and Social Contribution 404, , Taxes and Social Contributions - REFIS 130, , Electric Network Usage Charges 10,794 11, Other 208, , Deferred Income Shareholders Equity 8,683,481 8,575, Paid-in Capital Stock 5,975,433 5,975, Capital Reserves 1,929,098 1,929, Remuneration -Construction in Progress Own Capital 1,929,098 1,929, Revaluation Reserves Own Assets Subsidiaries/Direct and Indirect Associated Companies Profit Reserves 618, , Legal 38,136 38, Statutory For Contingencies Unrealized Profit 579, , Profit Retention Special Reserve for Undistributed Dividends Other Profit Reserves Assets Valuation Adjustments Securities Adjustments Accumulated Translation Adjustments Business Combination Adjustments Retained Earnings/Accumulated Losses 160,855 52, Advance for Future Capital Increase 0 0 6

7 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / INCOME STATEMENT (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 4/1/2010 to 6/30/ /1/2010 to 6/30/ /1/2009 to 6/30/ /1/2009 to 6/30/ Gross Revenue from Sales and/or Services 786,948 1,580, ,913 1,519, Gross Revenue Deductions (98,535) (1 96,673) (95,200) (1 92,266) 3.03 Net Revenue from Sales and/or Services 688,413 1,384, ,713 1,326, Cost of Goods and/or Services Sold (372,195) (732,458) (31 6,007) (635,529) Personnel (54,433) (1 00,673) (52,704) (94,193) Employees Pension Entity Plan Agreement (2,123) (4,016) (1,858) (3,468) Supplies (3,369) (6,383) (2,757) (5,536) Third-Party Services (21,993) (42,678) (1 7,21 0) (32,404) Financ. Purchase Use of Water Resources (43,941) 0(91,083) (43,522) (85,763) Purchased Energy (23,254) (45,593) 2 (3,379) Charges on Usage of Transmission/Service System (82,139) (164,492) (80,639) (161,397) Electricity Sector Tariffs (4,019) (8,044) (3,730) (7,453) COFINS/PIS Credits on Network Usage Charges 9,462 18,691 7,181 14, Depreciation (119,889) (239,999) (120,416) (240,423) Operating Provisions (18,680) (34,312) 8,011 (1,747) Other Expenses (7,817) (13,876) (8,365) (14,148) 3.05 Gross Income 316, , , , Operating Revenues/Expenses (1 99,193) (452,591) 535, , Selling General and Administrative Financial (1 66,455) (374,91 6) 228,646 74, Financial Revenues 23,204 39,050 24,951 55, Financial Expenses (1 89,659) (41 3,966) 203,695 19, Debt Charges/Other (95,233) (1 99,505) (98,530) (206,684) Interest on Own Capital (25,000) (50,000) (45,000) (75,000) Monetary Variations, Net (49,311) (99,919) (62,711) (137,053) Exchange Variations, Net (20,115) (64,542) 409, ,246 7

8 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / INCOME STATEMENT (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 4/1/2010 to 6/30/ /1/2010 to 6/30/ /1/2009 to 6/30/ /1/2009 to 6/30/ Other Operating Revenues , , Provision Reversal - CONFINS , , Other Operating Expenses (32,738) (77,675) (80,607) (117,307) Employees Pension Entity CVM Resolution 371/00 1,144 (10,181) 38,177 31, Other (expenses) revenue, net (33,882) (67,494) (118,784) (148,706) Equity in the Earnings of Subsidiary and Associated Companies Operating Income 117, , ,916 1,035, Non-Operating Income Revenues Expenses Income before Taxes/Holdings 117, , ,916 1,035, Provision for Income Tax and Social Contribution (27,403) (62,260) (60,152) (90,509) Income Tax (1 9,126) (44,178) (25,740) (47,706) Social Contribution (8,277) (1 8,082) (34,41 2) (42,803) 3.11 Deferred Income Tax 18,356 24,026 (147,319) (167,036) Deferred Income Tax 13,772 18,188 (100,177) (114,817) Deferred Social Contribution 4,584 5,838 (47,142) (52,219) 3.12 Statutory Holdings/Contributions Holdings Contributions Reversal of Interest on Own Capital 25,000 50,000 45,000 75, Income/Loss for the Period 132, , , ,442 NUMBER OF SHARES EX-TREASURY (in thousands) 327, , , ,503 EARNINGS PER SHARE (Reais) LOSS PER SHARE (Reais) 8

9 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / INCOME STATEMENT (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 4/1/2010 to 6/30/ /1/2010 to 6/30/ /1/2009 to 6/30/ /1/2009 to 6/30/2009 9

10 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / STATEMENT OF CASH FLOWS INDIRECT METHOD (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 4/1/2010 to 6/30/ /1/2010 to 6/30/ /1/2009 to 6/30/ /1/2009 to 6/30/ Net Cash from Operating Activities 424, , , , Cash Generated in Operations 422, , , , Net Income for the Period 132, , , , Depreciation 119, , , , Interest, Monetary and Exchange Variations 150, ,722 (280,952) (169,879) Write-Off of Investments due to Sales Write-Off of Fixed Assets due to Sales Deferred Income Tax and Social Contribution (Liabilities) (30,719) (51,330) 120, , Deferred Income Tax and Social Contribution (Assets) 12,363 27,304 26,449 39, Provision for Reversals of Expropriations Spun-Off (254) 424 Companies 2,270 17, Provision for Contingencies COFINS (Restatement) 0 0 4,098 8, Provision for environmental and civil lawsuits 38,675 63, Reversal (Provision) Contingencies COFINS 0 0 (387,171) (387,171) Other (1,138) (2,713) 806 1, Variation in Assets and Liabilities 135,565 95,873 61,715 (10,518) Accounts Receivable from Consumers and Distributors 18, ,880 5, Amounts Receivable Free Energy/RTE 8,893 (7,895) 8,331 (8,477) Amounts Receivable 4,767 26,253 (4,499) Recoverable Taxes and Social Contributions 3,628 4,620 5,367 7, Inventories (3,735) (2,561) (7,387) (10,301) Prepaid Expenses 154 (3,307) 15,808 36, Pledges and Restricted Deposits 2, (9,450) (14,505) Other Credits 43,243 48,104 16,507 6, Suppliers 14,782 8,982 (1,276) (6,190) Electricity Suppliers 879 2,394 (4,334) (6,928) Taxes and Social Contributions (5,878) (17,752) (3,926) (9,027) Payments to Employee Pension Entities (2,813) (11,110) (20,256) (26,550) 10

11 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / STATEMENT OF CASH FLOW INDIRECT METHOD (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 4/1/2010 to 6/30/ /1/2010 to 6/30/ /1/2009 to 6/30/ /1/2009 to 6/30/ Regulatory Fees (3,195) (1,737) (2,310) (14,146) Interest on own capital (10,732) (10,732) (14,697) (14,697) Payment of Contingencies (1 9,741) (32,759) (2,886) (5,252) Provision for Contingencies 6,583 15,137 (14,469) (14,832) Estimated Liabilities - Payroll (1,521) (1,662) 4,513 1, Employee Pension Entity (15,516) (15,516) (44,230) (44,230) Expropriation Lawsuits Paid in Installments 92,723 92, , , Electric Network Usage Charges Paid in Installments 1,821 1, Other (132,727) (136,227) Other (132,727) (136,227) Net Cash from Investment Activities (41,407) (76,821) (29,978) (56,119) Property, Plant and Equipment (41,407) (76,821) (29,978) (56,119) 4.03 Net Cash from Financing Activities (328,352) (667,252) (379,486) (697,745) Payment of Loans and Financing (320,852) (617,634) (369,577) (678,575) Payment of Principal - REFIS (7,500) (15,000) (9,909) (19,170) Dividends and Interest on Own Capital 0 (34,618) Exchange Variation on Cash and Cash Equivalents Increase (Decrease) in Cash and Cash Equivalents 55,214 29,593 (26,518) (31,993) Opening Balance of Cash and Cash Equivalents 203, , , , Closing Balance of Cash and Cash Equivalents 259, , , ,144 11

12 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY FROM 4/1/2010 TO 6/30/2010 (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 - CAPITAL STOCK 4 CAPITAL RESERVES 5 REVALUATION RESERVES 6 PROFIT RESERVES 7 - RETAINED EARNINGS/ ACCUMULATED LOSSES 8 ASSETS VALUATION ADJUSTMENTS 9 - TOTAL SHAREHOLDER S EQUITY 5.01 Opening Balance 5,975,433 1,929, ,095 52, ,575, Adjustments of Previous Years Adjusted Balance 5,975,433 1,929, ,095 52, ,575, Net Income/Loss for the Period , , Allocations (25,000) 0 (25,000) Dividends Interest on Own Capital (25,000) 0 (25,000) Other Allocations Realization of Profit Reserves Assets Valuation Adjustments Securities Adjustments Accumulated Translation Adjustments Business Combination Adjustments Increase/Reduction in Capital Stock Recording/Realization of Capital Reserves Treasury Shares Other Capital Transactions Other Closing Balance 5,975,433 1,929, , , ,683,481 12

13 (A free translation of the original in Portuguese) CVM BRAZILIAN SECURITIES AND EXCHANGE COMMISSION QUARTERLY INFORMATION ITR IDENTIFICATION 1 - CVM CODE COMPANY NAME CESP - CIA ENERGETICA SÃO PAULO 3 - CNPJ (Corporate Taxpayer s ID) / STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY FROM 1/1/2010 TO 6/30/2010 (in R$ thousands) 1 - CODE 2 - DESCRIPTION 3 - CAPITAL STOCK 4 CAPITAL RESERVES 5 REVALUATION RESERVES 6 PROFIT RESERVES 7 - RETAINED EARNINGS/ ACCUMULATED LOSSES 8 ASSETS VALUATION ADJUSTMENTS 9 - TOTAL SHAREHOLDER S EQUITY 5.01 Opening Balance 5,975,433 1,929, , ,522, Adjustments of Previous Years Adjusted Balance 5,975,433 1,929, , ,522, Net Income/Loss for the Period , , Allocations (50,000) 0 (50,000) Dividends Interest on Own Capital (50,000) 0 (50,000) Other Allocations Realization of Profit Reserves Assets Valuation Adjustments Securities Adjustments Accumulated Translation Adjustments Business Combination Adjustments Increase/Reduction in Capital Stock Recording/Realization of Capital Reserves Treasury Shares Other Capital Transactions Other Closing Balance 5,975,433 1,929, , , ,683,481 13

14 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS OPERATIONS AND ACCOUNTING PRACTICES (Data related to and electricity capacity and volumes were not revised by the independent auditors) 1.1. Operations CESP - Companhia Energética de São Paulo ( CESP or the Company ) is a publicly-held mixed capital corporation, controlled by the State of São Paulo Government and headquartered in the City of São Paulo. The Company s main activities are the planning, construction and operation of electricity generation and trading systems. It maintains other supplementary operating activities, such as forestation, reforestation and fish farming as a way of protecting the environmental areas modified by the construction of its reservoirs and facilities. The Company shares are mainly traded at the São Paulo Stock Exchange - Bovespa and since July 28, 2006, they started to be traded at Level 1 of Special Corporate Governance Practices of Bovespa. As a consequence, the Company s Management has been continuously improving the disclosure of information to the market. CESP has installed generation facilities of 7,456 MW (Note 12.2), fully hydraulic, corresponding to 53% (not reviewed by independent auditors) of the State of São Paulo installed hydraulic capacity, consisting of the Ilha Solteira, Três Irmãos, Jupiá, Engenheiro Sérgio Motta (Porto Primavera), Jaguari and Paraibuna power plants. As an electricity public utility, CESP s activities are regulated and inspected by the Brazilian Electricity Regulatory Agency (ANEEL), connected to the Ministry of Mines and Power, and operates its power plants on an integrated basis with the National Electric System Operator (ONS), being authorized to trade an average of 3,916 MW during the year, equivalent to approximately 34,000 GWh, which is nearly 8.4% of Brazil s assured hydraulic power. Production (MWh) Plants 1st Quarter 2nd Quarter YTD 1st Quarter 2nd Quarter YTD Ilha Solteira 4,655,590 4,261,713 8,917,303 4,307,694 4,399,374 8,707,068 Três Irmãos 1,172, ,443 1,908, , ,836 1,560,815 Jupiá 2,288,820 2,339,655 4,628,475 2,328,732 2,399,570 4,728,302 Porto Primavera 2,464,573 2,532,826 4,997,399 2,603,426 2,552,254 5,155,680 Paraibuna 176, , ,975 81,486 80, ,355 Jaguari 38,555 18,459 57,014 38,878 31,382 70,260 Total 10,796,152 10,062,926 20,859,078 10,040,195 10,344,285 20,384,480 In the quarter ended, 71% (68% on June 30, 2009) of the Company s operating revenues was related to the sale of electricity to Distributors (power purchase agreements, trading agents and customers from power auctions) and 25% (27% on June 30, 2009) from electricity supply (free consumers), as well as from the spot market power traded in the Electric Power Trade Chamber (CCEE) (Note 26.3). 14

15 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 1.2. Power Trading Power Auctions CESP has taken part in auctions for the electricity sales to distribution concessionaries operating in the Regulated Contracting Environment ( ACR ), four of which were auctions of power purchase from existing generation projects and two from new projects. CESP sold at auctions 2,288 average MW of existing power and 230 average MW of new power, broken down into groups of agreements, as follows: 2, EXISTING UNDERTAKINGS ENERGY AUCTIONS Supply period Energy sold CESP Weighted average by CESP price Reference date price of auction (in MWm) (R$) participants (*) Product to Jan Product to , Jan Product to Jan Product to May Product to Nov EXISTING Energy sold CESP Weighted average UNDERTAKINGS Supply period by CESP price Reference date price of auction ENERGY AUCTIONS (in MWm) (R$) participants (*) Product 2009 Hidro 2009 to Jul Product 2010 Hidro 2010 to Jan The prices obtained in auctions are being adjusted based on the IPCA (extended consumer price index) on the date of tariff adjustment of the distribution companies with ANEEL (Note 26.2). (*) Information not revised by the independent auditors Presentation of the Quarterly Information and Summary of the Main Accounting Practices The information herein must be analyzed jointly with the Company s financial statements for fiscal year ended December 31, They are presented in accordance with the accounting standards adopted in Brazil effective up to December 31, 2009, and in compliance with the provisions of the Brazilian Corporation Law and the Brazilian Securities and Exchange Commission (CVM), and include the changes introduced by Laws 11,638/07 and 11,941/ New Accounting Pronouncements Issued in 2009 and effective as of 2010 The enactment of Law 11,638/07 updated the in order to enable the process of convergence of BR GAAP with the international financial reporting standards (IFRS). As a result, the CPC (Accounting Pronouncements Committee) has been issuing new accounting rules and technical pronouncements pursuant to the international accounting standards. Until the preparation of this quarterly information, new technical pronouncements and technical interpretations had been issued by CPC and approved by CVM Resolutions, becoming effective as of January 1, The CPCs and ICPCs applicable to the Company, considering its operations, are the following: 15

16 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS CPC Title 20 Borrowing Costs 21 Interim Statements 23 Accounting Policies, Changes in Estimates e Correction of Errors 24 Subsequent Event 25 Provisions, Contingent Liabilities and Contingent Assets 26 Presentation of the Financial Statements 27 Fixed Assets 30 Revenues 32 Taxes on Income 33 Employees Benefits 37 First-Time Adoption of International Financial Reporting Standards 38 Financial Instruments: Recognition and Measurement 39 Financial Instruments: Presentation 40 Financial Instruments: Disclosures 43 First-Time Adoption of Technical Pronouncements CPC 15 through CPC 40 ICPC Title 01 Concession Agreements 03 Additional Aspects of Leasing Operations 08 Dividend Payment Proposal Accounting Interpretation on the First-Time Adoption of Technical Pronouncements CPC 27, 28, 37 and on Fixed Assets and Properties for Investment The Company s Management continues to analyze all impacts of changes introduced by these pronouncements, which was not possible to be concluded until the date of closure of the Quarterly Information (ITR), i.e.. In addition, CVM Resolution 603 authorized publicly-held companies to present the Quarterly Information (ITR) in accordance with the Accounting Standards applicable up to December 31, 2009, and extended the adoption of the CPC s Pronouncements, Interpretations and Dispositions approved by the CVM to December

17 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 2. CASH AND CASH EQUIVALENTS Type of investment Cash Demand deposits... 13,518 8,613 Cash equivalents Banco Nossa Caixa S.A. - SIAFEM... Fund 202, ,630 Banco Nossa Caixa S.A.... CDB / CDI 33,771 10,017 Banco Bradesco S.A.... CDB / CDI 1,443 1,176 Other financial institutions... CDB / CDI 7,358 4, , , , ,836 Short-term financial investments are readily convertible into a known cash amount and are subject to an insignificant risk of change in value. These investments refer to Bank Deposit Certificates (CDBs), characterized by the sale of the security with the financial institution s commitment to repurchasing it and the purchaser s commitment to reselling it in the future, and which pay interest at rates of 95% and 100% of the Interbank Deposit Certificate (CDI) variation, and the Integrated System of Financial Management for States and Municipalities (SIAFEM), a fund 95% indexed to Federal Treasury Bonds and 5% to State Treasury Bills, which pay interest at rates of 95% and 100% of the CDI variation. 3. CONSUMERS AND DISTRIBUTORS Total Total Consumers Industrial (a)... 58,893 58,495 Public services... 14,570 14,983 73,463 73,478 Distributors Electric power purchase contracts.. 8,761 8,489 Market agents... 21,111 26,106 Energy auctions , , , , , ,344 (a) The Company has recorded an allowance for doubtful accounts of R$4,172 to cover any losses from trade accounts receivable, in addition to R$10,150 related to other receivables recorded as other credits (Note 10 (a)). 17

18 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 4. RECEIVABLES - FREE POWER/SPOT MARKET ENERGY - CCEE Free energy CCEE... 25,196 33,726 25,196 34, Free Power The General Agreement for the Electric Power Sector was made up by the period of the Emergency Electric Power Rationing Program, occurred between June 2001 and February 2002, which in turn was implemented due to unfavorable hydrological conditions and the low level of reservoirs in various Brazilian regions, including the Southeast, where CESP is located, in which ONS restricted the generation of hydroelectric power and activated Free Generators (producers that had non-contracted power). The payment of Free Power was based on the prices charged at the Wholesale Power Market - MAE (currently the Electric Power Trade Chamber - CCEE), and this cost was split among the system generators, proportionally to each one s assured energy. At that time, CESP accounted for 12% of Brazil s assured energy. Part of this payment was made with funds from the National Bank for Economic and Social Development BNDES. This cost is being recovered through the Extraordinary Tariff Adjustment (RTE), a tariff increase that distributors collect monthly from their consumers and transfer in part to generators. The effectiveness period of the RTE for each distributor was determined by ANEEL Resolution 84/2002 (as of December 2001). CESP currently updates the balances of distributors in accordance with ANEEL Directive Release 2,212 of December 20, 2005 and ANEEL Directive Release 74 of January 23, 2006, which set forth the Selic (Central Bank overnight rate) accrued at the simple rate capitalized on a monthly basis, plus 1% p.a. for the amount financed by the BNDES; the Selic rate alone accrues on the remaining non-financed amount. With funds transferred by distributors, CESP amortized installments of the agreements signed with BNDES, balances of which were settled in advance on August 14, Breakdown: Free energy (RTE) Current Restated balance , ,976 Write-offs... (354,300) (346,085) Provision for credit realization (accumulated)... (10,169) (9,528) Total The balance receivable from this credit, R$364,469 on (R$355,976 on March 31, 2010) is being adjusted according to the amounts receivable from distributors whose terms for recovery determined by ANEEL have expired, as well as the reversal of the corresponding provision, in compliance with the SFF/ANEEL Official Letter 2,409/2007, item 16. For the other distributors, CESP has provisions recorded in the amount of R$10,169, based on internal projections, to meet the installments that are estimated not to be realized within the terms established by ANEEL. 18

19 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 4.2. Spot Market Energy - CCEE It represents the monthly ascertained variations resulting from the balance managed by the Electricity Trade Chamber - CCEE, among commitments taken on by the Company with its market and other CCEE Agents versus the actual behavior of each member of the system. In the quarter ended, the Company sold the amount of R$32,947 (R$43,617 in 2009), referring to uncontracted power (revenues) available for sale within the scope of the CCEE (Notes 26.3). 5. ACCOUNTS RECEIVABLE Current Debtor Description DAEE - Credit assignment... 15,252 9,721 15,252 9,721 Agreement executed on July 21, 2006, with the Water and Electricity National Department - DAEE, for receipt of 24 monthly installments, restated by CDI, plus 0.3% interest p.m., related to the loan assignment for settlement of agreement debt between CESP and Empresa Metropolitana de Águas e Energia S.A. EMAE, with final maturity on August 31, 2010; and agreement executed on November 30, 2009 expiring in April On March 26 and April 25, 2007, addenda to this agreement were executed changing the term of receipt to 40 monthly installments, besides riders in the amount of R$11.2 million, executed on January 21, 2008, and of R$ 10 million, executed on April 30, RECOVERABLE TAXES AND CONTRIBUTIONS Current Income tax (a)... 1,530 5,300 Social contribution (b) ,107 COFINS to offset... 2,130 1,722 PIS to offset (c)... 36,818 36,730 41,231 44,859 (a) Balance of income tax credits arising from withholdings, restated based on the SELIC rate and from collection by estimate, used to pay taxes and social contributions. (b) Refers to balances of social contribution originating from withholdings, restated based on the SELIC rate, and from collection by estimate, used to pay taxes and social contributions. (c) Refers to PIS tax credits in the amount of R$3,087 resulting from withholdings, tax overpayments and credits from court decision issued in favor of the Company on a lawsuit filed on June 8, 2005, in the amount of R$33,731 claiming repetition of undue payment referring to PIS collection on financial and not operating revenues (extension of the calculation basis), from June 2000 to December 2002, 19

20 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS approved on June 21, 2010, the Company will use these credits for offsetting the collection of taxes and social contributions falling due. 7. GUARANTEES AND RESTRICTED DEPOSITS Current Guarantees Subordinated quotas - FIDC (a) , ,100 Non-current Judicial deposits Civil lawsuits... 1,010 3,672 Labor lawsuits - appealable... 5,688 5,699 Other ,096 6,916 11,467 Guarantees Subordinated quotas - FIDC (a)... 79,724 74,538 86,640 86, , ,105 (a) Refers to pledged receivables equivalent to quotas belonging to CESP, linked to the Receivables Securitization Fund - FIDC (II and III 100 quotas each and IV 72 quotas), which can only be redeemed upon maturity of the last installments, simultaneously to the settlement of each fund, and in December 2009, FIDC I was paid, in August and October 2010, FIDC II and III will be paid and in May 2017, FIDC IV will be paid. The balances of the quotas are adjusted on a monthly basis according to market s quoted value. 8. DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION The Company has total (nominal) tax credits in the amount of R$3,156,052, of which: R$2,359,526 from tax losses (comprised of income tax of R$1,437,305 and non-deductible temporary differences of R$922,221), and social contribution tax loss carryforward of R$796,526 (comprised of social contribution of R$464,628 and non-deductible temporary differences of R$331,898). Under prevailing legislation, taxes losses and social contribution tax loss can be carryforward with future taxable income up to the limit of 30% of each year s result, not being subject to any limitation period. In 2000 and 2001, based on the analyses related to the multi-annual operating projections, the Company recognized tax credits related to tax losses and social contribution tax loss carryforward, as well as over temporary differences, pursuant to CVM Resolution 273/98. On December 27, 2002, guidelines were established by CVM Rule 371, for the accounting recognition of credits derived from tax losses and temporarily nondeductible expenses. Balances recorded up to December 31, 2009 of deferred income tax and social contribution assets are supported by financial projections for the next ten years prepared and reviewed by the Company s Management, as recommended by the Concession Authority and set forth by the Brazilian Securities and Exchange Commission CVM, which solidly state the realization of the balances of tax losses, social contribution tax loss carryforward and temporary differences. The projections adopt as basic assumptions for billing the physical amount of power (MWh) and prices agreed upon with distributors through power auctions (held from 2004 to 2006), with start of supply/billing from 2009 to 2016, from 2009 to 2038 and from 2010 to 2039 (Note 1.2), agreements for the purchase and sale of power with small distributors, power supply to free consumers, with services/supply terms until 20

21 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 2019, maintenance of operating expenses levels and take into account the reduction in financial expenses, which evidence the earning of future taxable income. Breakdown of balances: ASSETS LIABILITIES Income tax Recorded tax losses (a) , , Tax losses (unrecorded) , , Temporary differences (unrecorded) , , Net exchange variations on loans and financing , ,032 2,359,526 2,387, , ,032 Social contribution Recorded negative basis (a) , , Negative basis (unrecorded) , , Temporary differences (unrecorded) , , Net exchange variations on loans and financing , , , , , ,212 Allowance for unrecorded tax credits... (2,016,351) (2,042,157) - - 1,139,701 1,152, , ,244 As of 2003, the Company adopted the cash basis for the taxation of exchange variations accrued. As a result, the Company recognized in Liabilities the deferred income tax and social contribution at the rates of 25% and 9%, respectively, on taxable temporary differences represented by said unrealized exchange variations on loans and financing not settled (Note 29). (a) In the second quarter of 2010, the amount of R$12,363 was realized and offset with collections, with tax loss of R$8,816 and negative basis of R$3,547, due to taxable income verified and the addition of (positive) exchange variations and exclusion of (negative) exchange variations, due to the amortization of principal installments of foreign currency-denominated loan agreements (cash basis for taxation), at the expense of income. Tax credits recorded in the amount of R$1,139,701, shall be realized within 10 years, as outlined below: Years Up to 2019 Fiscal year to and 2019 Total Estimated realization installment 65, , , , , ,459 98,940 1,139,701 The estimated realization of tax claims arising from tax losses, social contribution tax loss carryforward and temporarily nondeductible provisions (see chart above) is supported by projections on the Company s taxable income, which are periodically reviewed and approved by Management bodies. Since those projections are based on assumptions, actual results may significantly differ from those projections. 21

22 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 9. PREPAID EXPENSES Current Insurance premium... 3,731 3,885 3,731 3, OTHER CREDITS Current Credits from sale of assets and rights... 1,468 1,453 Sundry credits (a)... 14,796 13,645 Restricted deposits - FIDC... 34,505 20,811 Project orders - R & D... 23,614 22,915 RGR quota difference credits (Eletrobrás)... 4,720 4,720 Other... 2,687 2,648 81,790 66,192 Non-current Credits from sale of assets and rights... 6,354 6,768 Assets for sale (b)... 1,361 70,058 Project orders... 13,319 13,319 Outros... 21,034 90, , ,337 (a) Balance of credits with various companies and entities with which the Company maintains operations. In order to cover possible risks in the realization of some receivables, an allowance for doubtful accounts at the total amount of R$10,150 was recorded (Note 3). (b) It included land accounting balance and costs of construction of commercial buildings (not associated with the concession), which were sold in May 2010 for R$91,000 with cash payment and a gain of R$10,289 from the sale (Note 28). 11. INVESTMENTS Other investments Funds invested in projects with FINAM funding... 7,857 7,857 Other investments ,172 8,172 22

23 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS 12. PROPERTY, PLANT AND EQUIPMENT Average annual depreciation Total Accumulated rates (%) cost depreciation Net Net In service Generation % 22,063,593 (6,768,421) 15,295,172 15,411,621 Management % 208,199 (143,034) 65,165 67,361 22,271,792 (6,911,455) 15,360,337 15,478,982 In progress Generation... 1,050,155-1,050,155 1,024,098 Management... 1,927-1,927 1,199 1,052,082-1,052,082 1,025,297 Subtotal 23,323,874 (6,911,455) 16,412,419 16,504,279 Provision for impairment (2,525,038) - (2,525,038) (2,525,038) Total 20,798,836 (6,911,455) 13,887,381 13,979,241 On June 2, 2009, the Brazilian Electricity Regulatory Agency (ANEEL) issued the Normative Resolution 367, which approves the Manual on Equity Control of the Electricity Sector MCPSE to be used by concessionaries, licensees and electricity authorized companies, whose assets and facilities, pursuant to prevailing laws are subject to reversal to the federal government, which will become effective as of January 1, Annual depreciation rates adopted in the electricity public utility for generation assets range between 2% and 7.1%. In addition, property, plant and equipment in service are classified by type of asset, comments of which are included in Notes 12.1 to 12.4: Total Accumulated Cost Depreciation Net Net In service Land , , ,981 Reservoirs, dams and w ater mains... 14,575,335 (4,183,898) 10,391,437 10,465,245 Buildings, civil construction and improvements... 2,861,873 (1,364,846) 1,497,027 1,516,192 Machinery and equipment... 4,068,010 (1,331,130) 2,736,880 2,764,360 Vehicles... 19,758 (16,139) 3,619 4,150 Furniture and fixtures... 28,007 (15,442) 12,565 13,054 22,271,792 (6,911,455) 15,360,337 15,478,982 In progress Reservoirs, dams and w ater mains , , ,129 Buildings, civil construction and improvements... 51,610-51,610 50,021 Machinery and equipment in maintenance... 84,442-84,442 78,802 Machinery and equipment being assembled , , ,275 Judicial deposits... 92,081-92,081 87,090 Expropriation, civil and environmental law suits , , ,528 Other... 12,293-12,293 15,452 1,052,082-1,052,082 1,025,297 Subtotal 23,323,874 (6,911,455) 16,412,419 16,504,279 Provision for impairment... (2,525,038) - (2,525,038) (2,525,038) Total 20,798,836 (6,911,455) 13,887,381 13,979,241 23

24 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS The breakdown of property, plant and equipment balances is represented by: In service Balance on Additions Depreciation Activation Reclassification (Reversal) Balance on Land , , ,738 Reservoirs, dams and w ater mains... 10,465,245 - (73,806) 1,160-10,392,599 Buildings, civil construction and improvements.. 1,516,192 - (18,533) 1 (632) 1,497,028 Machinery and equipment... 2,764,360 - (27,423) 671 (1,810) 2,735,798 Vehicles... 4,150 - (564) ,610 Furniture and fixtures... 13,054 - (499) 78 (69) 12,564 In progress 15,478,982 - (120,825) 4,667 (2,487) 15,360,337 Lands Reservoirs, dams and w ater mains ,129 20, (479) 141,150 Buildings, civil construction and improvements.. 50,021 1, ,610 Machinery and equipment in maintenance... 78,802 3, ,695 84,442 Machinery and equipment being assembled ,275 15,010 - (1,753) (87) 154,445 Judicial deposits... 87,090 1,280 - (2,828) 4,047 89,589 Expropriation, civil and environmental law suits.. 531, (15,465) 516,063 Other... 15, (86) (946) 14,783 1,025,297 42,687 - (4,667) (11,235) 1,052,082 Subtotal 16,504,279 42,687 (120,825) - (13,722) 16,412,419 Provision for impairment... (2,525,038) (2,525,038) Total 13,979,241 42,687 (120,825) - (13,722) 13,887, Property, plant and equipment in progress CESP s works in the Engenheiro Sérgio Motta (Porto Primavera) power plant and locks are completed, and the last generation unit (14 th ) of current expansion program started to operate in October Property, plant and equipment in progress mainly include balances of construction in progress and expenses on reservoir works, balances of the power plants machinery and equipment which are relevant for the generating plant maintenance, measurement values of advances to suppliers of materials and work contractors, replacement materials in inventory and purchases in progress. This account also includes judicial deposits of R$89,589, initial and as guarantee for civil, environmental lawsuits or other expropriations, involving mainly Engenheiro Sérgio Motta (Porto Primavera) power plant and other lawsuits involving CESP s power plants, in addition to provision balances for civil lawsuits, expropriations and environmental lawsuits, up to, in the amount of R$516,063 (civil R$334,231, expropriations R$80,421 and environmental R$101,411). Certain properties necessary for the implementation of the Company s projects, specifically for the construction of reservoirs or other projects related to its activities were expropriated pursuant to specific legislation and, in certain cases, have been discussed with their owners. In cases accurate estimates are difficult to reach, due to the time necessary to obtain court decisions or the unpredictability of the outcome of the negotiations, the Company records estimated cost of expropriation as part of property, plant and equipment. Late costs exceeding the recoverable amount of assets of Porto Primavera plant as of fiscal year 2009 are no longer capitalized and are now recorded directly in the income (Note 28). 24

25 (Free translation of the original document in Portuguese) Brazilian Corporation Law CESP - COMPANHIA ENERGÉTICA DE SÃO PAULO / NOTES TO THE FINANCIAL STATEMENTS Electricity concessions CESP s generation concessions were granted by Decrees related to each power plant at the time the studies and construction works started, and were grouped into a concession agreement executed on November 12, 2004, comprising all the Company s generation facilities: Total Installed Assured Hydroelectric operating capacity energy Place in Expiration of Basin plant machines (in MW) average MW (1) service (2) concession Paraná Ilha Solteira (3) 20 3,444 1, Jupiá 14 1, Três Irmãos (4) Engenheiro Sérgio Motta (5) 14 1,540 1, Paraíba Jaguari Paraibuna ,456 3,916 (5) (1) It is the power available for trading in the power plants of an interconnected system, verified in the plant s bar, connected with the National Interconnected System (Note 1.1). (2) Operation date of the first Generator Group. (3) Três Irmãos assured energy is included in Ilha Solteira s. (4) Located on Tietê River, but operates on an integrated manner with Ilha Solteira power plant, through Pereira Barreto Channel. (5) CESP s assured energy shall deduct consumption in power plants and transmission losses to the system s gravity center. These deductions vary each year, but they can be estimated by up to 3%. Data related to the power and power has not been revised by the independent auditors Assets linked to concession In accordance with Articles 63 and 64 of Decree 41,019 of February 26, 1957, assets and facilities used in the production, transmission and distribution of electricity, including trading, are connected with these services and cannot be withdrawn, sold or pledged as guarantee without the prior express consent of the Regulatory Agency. ANEEL Resolution 20/99 regulates the removal of assets from electricity public utility concessions, granting previous authorization for the removal of assets unworthy to concession, when intended for sale, and also determining that the proceeds from the sale of these assets be deposited in a restricted bank account and invested in the concession Asset impairment CESP s property, plant and equipment items were recorded in strict conformity with Brazilian accounting practices and specific rules for the electricity sector issued by the Brazilian Electricity Regulatory Agency (ANEEL). Brazilian legislation, particularly Decrees 24,643 of July 10, 1934, and 41,019 of February 26, 1957, both in effect and the basis for granting the concessions of the Company, guarantees that, at the end of the concession term, the residual value of assets will be the purpose of indemnification in the reversal process of these assets to the Concession Authority. The Management annually prepares internal studies in order to evaluate the capacity to recover the book value of property, plant and equipment of the Company s generation facilities in its future operations. Up to December 31, 2007, the Company, in the absence of a specific accounting rule on the subject, adopted the methodology to consider as the smaller cash generating unit the set of plants integrating each river basin of its generating facilities and also use the future cash flow, not discounted of its operations for the 25