MATERIAL FACT. Currently, the corporate structure of the group and the shareholding composition of the Companies are summarized as follows:

EDP ENERGIAS DO BRASIL S.A. CNPJ/MF 03.983.431/0001-03 NIRE 35.300.179.731 BANDEIRANTE ENERGIA S.A. A Publicly-Held Company CNPJ/MF 02.302.100/0001-06 NIRE 35.300.153.235 IVEN S.A. A Publicly-Held Company CNPJ/MF 97.395.172/0001-43 NIRE 35.300.189.027 EMPRESA ELÉTRICA DE MATO GROSSO DO SUL ENERSUL A Publicly-Held Company CNPJ/MF 15.413.826/0001-50 NIRE 54.300.000.566 ESPÍRITO SANTO CENTRAIS ELÉTRICAS S.A. ESCELSA A Publicly-Held Company CNPJ/MF 28.152.650/0001-71 NIRE 32.300.002.471 MAGISTRA PARTICIPAÇÕES S.A. CNPJ/MF 01.775.954/0001-39 NIRE 32.300.027.695 MATERIAL FACT Pursuant to CVM Instruction 358 of January 3 2002 and CVM Instruction of December 3 1999, the management of EDP - ENERGIAS DO BRASIL S.A. ( Energias do Brasil ), BANDEIRANTE ENERGIA S.A. ( Bandeirante ), IVEN S.A. ( Iven ), ESPÍRITO SANTO CENTRAIS ELÉTRICAS S.A. ESCELSA ( Escelsa ), MAGISTRA PARTICIPAÇÕES S.A. ( Magistra ) and EMPRESA ENERGÉTICA DE MATO GROSSO DO SUL S.A. ENERSUL ( Enersul ) (Energias do Brasil, Bandeirante, Iven, Escelsa, Magistra and Enersul are jointly designated as the Companies ), wish to announce the signature by the managements of the Instrument of Justification and Protocol for a Partial Spin-Off and for Incorporation of Companies and Shares (the Protocol ), which establishes the terms and conditions of the proposal for the corporate reorganization involving the Companies to be submitted to their respective General Shareholders Meetings (the Reorganization ), as initially disclosed through a Material Fact published on April 19 2004. I. CURRENT CORPORATE STRUCTURE Currently, the corporate structure of the group and the shareholding composition of the Companies are summarized as follows: 69.55% of Voting Capital 23.98% of Total Capital Energias do Brasil Iven 97.75% of Voting Capital 96.50% of Voting Capital Market Market 52.3% of Voting Capital 52.3% of Total Capital Bandeirante 22.7% of Voting Capital 22.7% of Total Capital Escelsa 25% of Voting 25% of Total Capital GTD Participações 100% of Voting Capital 100% of Total Capital Market Magistra 87.86% of Voting Capital 65.20% of Total Capital Enersul

II. REORGANIZATION AND CORPORATE STRUCTURE AFTER THE REORGANIZATION The Reorganization shall contemplate the following corporate events which shall take place on the same date and in the following order: (i) partial spin-off of Magistra with the incorporation by Enersul of the spun-off assets and liabilities ( Partial Spin-Off of Magistra ); (ii) incorporation of Iven by Energias do Brasil ( Incorporation of Iven ); (iii) partial spin-off of Energias do Brasil, with incorporation by Escelsa of the spun-off assets and liabilities ( Partial Spin-Off of Energias do Brasil ); (iv) incorporation by Escelsa of the shares issued by Enersul ( Incorporation of Shares of Enersul ); and (v) incorporation by Energias do Brasil of the shares issued by Escelsa and of the shares issued by Bandeirante ( Incorporation of Shares of Escelsa and Bandeirante ). The Reorganization being approved by the Extraordinary General Meetings of the Companies, pursuant to the Protocol, assuming right of withdrawal is not exercised by the shareholders, the corporate structure of the group and the shareholding breakdown of the Companies shall be summarized as follows: GTD Participações EDP Portugal Electrica Pilmaiquen & Wisteria Holdings Market 9.9% of Voting Capital 9.9% of Total Capital 69.3% of Voting Capital 69.3% of Total Capital 9.2% of Voting Capital 9.2% of Total Capital 11.6% of Voting Capital 11.6% Total Capital Energias do Brasil 100% of Voting Capital 100% of Total Capital Escelsa Bandeirante 100% of Voting Capital 100% of Total Capital 100% of Voting Capital 100% of Total Capital Enersul Magistra 100% of Voting Capital 100% of Total Capital III. JUSTIFICATION FOR THE REORGANIZATION The proposed Reorganization is justified for the following reasons: (a) Concentration of and increased liquidity of the shares in the capital markets: With the Reorganization, Energias do Brasil shall consolidate the direct stake of the current shareholders not part of the controlling blocks of Iven, Bandeirante, Escelsa and Enersul and shall have their equities eligible for trading on the stock exchange, the intention being to adhere to the São Paulo Stock Exchange s ( Bovespa ) Novo Mercado segment, with the resulting concentration of the freely tradable shares of the Companies in Energias do Brasil and a probable increase in their liquidity in the capital markets. 2

(b) Simplification of group shareholding structure and reduction of costs: The Reorganization shall result in the rationalization and simplification of the corporate structure of the companies under the control of Energias do Brasil, resulting in benefits of an administrative, economic and financial nature through the reduction of combined operational expenses. (c) Improved tax planning at Enersul using goodwill: The Partial Spin-off of Magistra, a company which recorded goodwill on the acquisition of its stake in Enersul, with subsequent incorporation by Enersul of the spun-off assets and liabilities (represented by the said stake and the corresponding goodwill), will contribute to the improvement in Enersul s cash flow, resulting from the tax benefit generated by the amortization of the said goodwill. It should be particularly noted that (i) the operation involving the partial incorporation shall be structured in such a way as not to entail the transfer of debt from Magistra to Enersul, and equally, the reduction in dividends to be paid out to the shareholders of Enersul; and (ii) the outstanding balance of the goodwill has not been computed in the valuations for establishing the exchange ratio of shares involved in the Reorganization and the fiscal benefits generated by the amortization of goodwill shall be conveyed in favor of all Energias do Brasil s shareholders, once all stages of the Reorganization have been implemented. (d) Improved tax planning at Escelsa using goodwill: With the Incorporation of Iven by Energias do Brasil, Energias do Brasil shall book to its accounts a deferred asset reflecting goodwill recorded in relation to the investment held in Escelsa. The subsequent Partial Spin-Off of Energias do Brasil and incorporation by Escelsa, of the spun-off assets/liabilities of Energias do Brasil, represented by the said deferred asset, will contribute to the improvement in Escela s cash flow, resulting from the tax benefit generated by the amortization of the said deferred asset. It should be further noted that (i) the incorporation shall be structured in such a way as not to entail the transfer of debt from Iven or Energias do Brasil to Escelsa, and equally, the reduction in dividends to be paid out to the shareholders of Escelsa; and (ii) the outstanding balance of the goodwill has not been computed in the valuations for establishing the exchange ratio of shares in the Reorganization and the fiscal benefits generated by the amortization of the deferred asset shall be conveyed in favor of all Energias do Brasil shareholders, once all stages of the Reorganization have been implemented. (e) Compliance with a Legal Requirement Applicable to the Electricity Sector. Pursuant to Paragraph 5 of Article 4 of Law 9.074/95, as regulated in the text of Law 10.848/04, together with Article 20 of the said Law 10.848/04, Escelsa and Enersul, as electricity distribution concessionaires, may no longer exercise the activities of generation and transmission of electricity, neither may they hold stakes in the capital of other companies, this representing the legal obligation to promote the so-called process of deverticalization. The Reorganization, which establishes the transformation of Escelsa and Enersul into wholly owned subsidiaries of Energias do Brasil, either directly or indirectly, constitutes the preliminary measure prior to deverticalization, since Reorganization shall permit its implementation within the legal time frame without materially affecting the interests of the current minority shareholders of the said Companies. IV. IV.1 INFORMATION COMMON TO ALL OPERATIONS Criteria used for Valuations: The following specialized companies were chosen for the preparation of the required valuations, ad referendum of the Extraordinary General Meetings of the Companies, to which the said specialized companies have declared the absence of any conflict or communion of interests, current or potential, with the controlling shareholders of the Companies or in relation to a minority 3

shareholder or shareholder(s) of the same and other companies in the EDP group, their respective partners, or with respect to the Reorganization: (a) Valuation of Book Shareholders Equity: The specialized company PricewaterhouseCoopers Auditores Independentes ( Appraiser I ) was chosen to evaluate the book shareholders equity of the Companies; (b) Economic Evaluation for Determining the Exchange Ratios: The specialized company Ernst & Young Consultores Associados Ltda ( Appraiser II ) was chosen to undertake the economic evaluation of the Companies, on the basis of the discounted cash flow methodology, used for determining the exchange ratios of the minority shareholders for each stage of the Reorganization; (c) Valuation of the Shareholders Equity at Market Prices: Pursuant to Article 264 of Law 6.404/76, for the purposes of comparison with the criterion proposed for establishing the exchange ratios at each stage of the Reorganization, the shareholders equity of the Companies was evaluated at market prices according to the same criteria. For this purpose the specialized company ACAL Consultoria e Auditoria S/S ( Appraiser III ) was chosen. IV.2 Reorganization Costs The cost of the Reorganization, including expenses with publications, preparation of reports and fees of auditors, appraisers, consultants and attorneys is estimated at R$ 3,800,000.00. IV.3 Valuation baseline date The base-line date for all the valuations prepared for the purposes of Reorganization was established as December 31 2004. IV.4 Equity Variations With respect to the envisaged company spin-offs and incorporations between December 31 2004 and the date of approval of the Reorganization, any equity variations shall always be absorbed by the incorporating companies. In relation to the envisaged incorporations of shares, equity variations between December 31 2004 and the date of approval of the Reorganization shall be booked to the incorporated companies, but the effects on the book value of the incorporated shares shall be reflected in the incorporating entity as equity income. IV.5 Share Fractions At the Incorporation stage of Iven, and in the last stage of Incorporation of Shares of Escelsa and Bandeirante, should the exchange of the shares of one Company by shares of another Company result in share fractions, these shall be complemented, for the purposes of rounding up, as entire shares, through the delivery of shares pertaining to the controlling shareholder of the incorporating Company. V. STAGES OF THE REORGANIZATION V.1 Partial spin-off of Magistra and Incorporation of the Spun-Off Assets/Liabilities by Enersul 4

(a) Spun-Off Assets: The following assets and liabilities of Magistra shall be spun off and incorporated by Enersul ( The Spun-Off Assets and Liabilities of Magistra ): (i) investment in Enersul at the book value of R$339,047,499.31 (three hundred and thirty-nine million, forth-seven thousand, four hundred and ninety-nine reais and thirty-one centavos); (ii) goodwill on the acquisition of shares issued by Enersul at the book value of R$348,168,152.88 (three hundred and forty-eight million, one hundred and sixty-eight thousand, one hundred and fifty-two reais and eighty-eight centavos); and (iii) provision for preservation of dividends, to be constituted before the partial spin-off of Magistra, pursuant to CVM Instruction 349/01, at the book value of R$229,790,980.90 (two-hundred and twenty-nine million, seven hundred and ninety thousand, nine hundred and eighty reais and ninety centavos). The total net book value of the Spun-off Assets and Liabilities of Magistra to be incorporated by Enersul corresponds to R$457,424,671,29 (four hundred and fifty-seven million, four hundred and twenty-four thousand, six hundred and seventyone reais and twenty-nine centavos). (b) Cancellation of Shares and Substitution of Investment: The shares of the capital of Enersul held by Magistra shall be extinguished upon the act of incorporation, being substituted by the same number of shares issued by Enersul, to be attributed to Escelsa, the sole shareholder of Magistra on the date of the partial spin-off and incorporation, there therefore being no change in the number of existing shares making up the capital stock of Enersul. (c) Inexistence of Increase in the Capital Stock of Enersul: The incorporation of the Assets and Liabilities Spun Off from Magistra shall not result in an increase in the capital stock of Enersul. The net value of the Spun-Off Assets and Liabilities of Magistra shall be allocated in its entirety to a special reserve for goodwill on incorporation, to be registered in the shareholders equity of Enersul pursuant to Article 6 of CVM Instruction 319/99 ( Special Reserve ), without any change therefore in the amount of Enersul s subscribed capital, which shall remain at R$463,415.296.25 (four hundred and sixty-three million, four hundred and fifteen thousand, two hundred and ninety-six reais and twenty-five centavos), bearing in mind that the Special Reserve in question shall be capitalized, with the subsequent increase in capital of Enersul, in line with the amortization of the goodwill from which it originated, pursuant to item V.1 (d) below. (d) Goodwill to be Amortized: The amount of the goodwill to be conveyed to Enersul as a result of the incorporation of the Spun-Off Assets and Liabilities of Magistra, in the amount of R$348,168,152.88 (three hundred and forty-eight million, one hundred and sixty-eight thousand, one hundred and fifty-two reais and eighty-eight centavos), shall be amortized according to the curve based on the outlook for results of future fiscal years and within the period of Enersul s concession term, which may be revised annually in the manner provided in the Resolution of the National Electricity Agency - ANEEL which shall approve the Reorganization. Parallel with the amortization of goodwill and the recording of the respective tax benefit by Enersul, the portion of the Special Reserve to be constituted according to item V.1 (c) above corresponding to this benefit shall be capitalized in favor of its shareholder, Escelsa and, indirectly, of all the shareholders of Energias do Brasil at the time. With the purpose of ensuring that the amortization of the goodwill registered in the name of Magistra does not negatively impact Enersul s future results and eligible for distribution, on this date Magistra shall constitute a provision for maintaining the integrity of the shareholders equity of Enersul, pursuant to CVM Instruction 349/01. The reversal of this provision to Enersul shall permit the neutralization of the adverse effects of the amortization of the goodwill in its balance sheet. In this way, the dividends attributed to the shares of Enersul shall not be reduced by the value of the amortizable goodwill for each fiscal year. 5

(e) Succession in Rights and Obligations: Enersul shall succeed Magistra only in the rights and obligations transferred due to the Spun-Off Assets and Liabilities of Magistra, as permitted according to the Sole Paragraph of Article 233 of Law 6.404/76. V.2 Incorporation of Iven by Energias do Brasil (a) Incorporation: Through the incorporation of Iven, the total shareholders equity of Iven shall be transferred to Energias do Brasil, with its consequent extinguishment. For the purposes of the registration of the operation by Energias do Brasil, the shareholders equity of Iven to be conveyed to Energias do Brasil by incorporation, shall be valued at its book value. (b) Valuations: Pursuant to the valuations prepared by the specialized companies mentioned above, the following values were appraised: (i) (ii) (iii) (iv) (v) Valuation Report of Book Shareholders Equity of Iven: R$290,934,858.47 (two hundred and ninety million, nine hundred and thirty-four thousand, eight-hundred and fifty-eight reais and forty-seven centavos); Economic Valuation Report of Iven: R$832,867,000.00 (eight hundred and thirty-two million, eight hundred and sixty-seven thousand reais); Economic Valuation Report of Energias do Brasil: R$1,997,480,000.00 (one billion, nine hundred and ninety-seven million, four hundred and eighty thousand reais); Valuation Report of Shareholders Equity at Market Prices of Iven: R$355,198,000.00 (three hundred and fifty-five million, one hundred and ninety-eight thousand reais); Valuation Report of the Shareholders Equity at Market Prices of Energias do Brasil: R$1,955,999,000.00 (one billion, nine hundred and fifty-five million and nine hundred and ninety-nine thousand reais). (c) Proposed Exchange Ratio of Shares of Iven for Shares of Energias do Brasil: Pursuant to the valuation reports prepared by the Appraiser II, it is proposed that the share exchange ratio of Iven for shares of Energias do Brasil, established on the basis of their economic values, shall be as follows: Company Economic value (in R$): Economic value (in R$) per Exchange ratio share: (*) Iven 832,867,000.00 1.39 -- Energias do 1,997,480,000.00 38.52 0.03604 Brasil (*) Quantity of shares of Energias do Brasil which shall be received for each share held in Iven. (d) Comparative Calculation of the Exchange Ratios. Pursuant to Article 264 of Law 6.404/76, should the exchange ratio of shares of Iven for shares of Energias do Brasil be established on the basis of their respective shareholders equity at market prices pursuant to the valuation reports prepared by the Appraiser III, the said ratio would be as follows: Company Value of shareholders equity at Value (in R$) per share: Exchange ratio the market price (in R$): (*) Iven 355,198,000.00 0.59 -- Energias do 1,955,999,000.00 37.72 0.01569 Brasil (*) Quantity of shares of Energias do Brasil which shall be received for each share held in Iven. 6

According to the analysis of the foregoing tables, the exchange ratio of the shares of Iven for the shares of Energias do Brasil is more advantageous when both Companies are evaluated on the basis of their economic value. (e) Global Depositary Receipts. Procedures were begun for the cancellation of Iven s Global Depositary Receipts GDRs with the competent authorities. However, should the program still not have been cancelled by the time of the extraordinary general meetings which approved the incorporation of Iven by Energias do Brasil, the then holders of GDRs of Iven shall have their securities replaced by shares issued by Energias do Brasil, in compliance with the same exchange ratio proposed under item c above. (f) Succession in Rights and Obligations: Energias do Brasil shall succeed Iven in all rights and obligations of Iven related to the shareholders equity conveyed to Energias do Brasil pursuant to the Protocol. (g) Increase in the Capital Stock of Energias do Brasil: The capital stock of Energias do Brasil, in the amount of R$1,352,839,766.88 (one billion, three hundred and fifty-two million, eight hundred and thirty-nine thousand, seven hundred and sixty-six reais and eighty-eight centavos), shall be increased to R$1,573,972,462.18 (one billion, five hundred and seventy-three million, nine hundred and seventy-two thousand, four hundred and sixty-two reais and eighteen centavos), this increase being in the value of R$221,132,695,30 (two-hundred and twenty-one million, one hundred and thirty-two thousand, six hundred and ninety-five reais and thirty centavos), corresponding to the value of the shareholders equity of Iven, following the deduction of the portion represented by the investment held by Energias do Brasil in Iven, through the issue of 16,436,212 (sixteen million, four hundred and thirty-six thousand, two hundred and twelve) new common shares with no par value, these shares being paid in with the portion corresponding to the shareholders equity of Iven, and attributed to the shareholders of Iven, in the proportion of their respective stakes in the capital of Iven. V.3 Partial spin-off of Energias do Brasil and Incorporation of the Spun-Off Assets and Liabilities by Escelsa (a) Spun-Off Assets and Liabilities: The following assets and liabilities of Energias do Brasil shall be spun-off and incorporated by Escelsa (the Spun-Off Assets and Liabilities from Energias do Brasil ): (i) the deferred asset resulting from the registered goodwill in relation to the investment previously held in the accounts of Iven, in the book value of R$103,964,553.42 (one hundred and three million, nine hundred and sixty-four thousand, five hundred and fifty-three reais and fortytwo centavos); (ii) provision for losses in value equivalent to 100% of the value of the said goodwill, at the book value of R$103,964,553.42 (one hundred and three million, nine hundred and sixty-four thousand five hundred and fifty-three reais and forty-two centavos); and (iii) values of the capital account and cash equivalent, in the book value of R$1,000.00 (one thousand reais). For the purposes of registration of the operation by Energias do Brasil and Escelsa, the Spun-Off Assets and Liabilities from EDP were evaluated according to their book value. (b) Valuations: According to the valuations prepared by the specialized companies mentioned above the following values were calculated: (i) (ii) Valuation Report of the Book Shareholders Equity of the Spun-Off Assets and Liabilities of Energias do Brasil: R$1,000.00 (one thousand reais); and Economic Valuation of Escelsa: R$1,525,022,000.00 (one billion, five hundred and twenty million and twenty-two thousand reais); 7

(c) Proposed Ratio for Exchange of Shares of Energias do Brasil for Shares of Escelsa: Pursuant to the economic valuation report of Escelsa prepared by the Appraiser II, under which each share issued by Escelsa corresponds to the economic value of R$335.11, and assuming the economic value of the Spun-Off Assets and Liabilities of Energias do Brasil equal to the spun-off cash in the value of R$1,000.00 (one thousand reais), it is proposed that the non-controlling shareholders of Energias do Brasil receive the 3 (three) shares to be issued by Escelsa as a result of the incorporation of the Spun-Off Assets and Liabilities of Energias do Brasil. (d) Deferred Asset to be Amortized: The amount of the deferred asset to be conveyed to Escelsa as a result of the incorporation of the Spun-Off Assets and Liabilities of Energias do Brasil, in the value of R$103,964,553.42 (one hundred and three million, nine hundred and sixty-four thousand, five hundred and fifty-three reais and forty two centavos), shall be amortized according to the curve based on the outlook for results of future fiscal years and within the period of Escelsa s concession term, which may be revised annually in the manner provided in the Resolution of the National Electricity Agency - ANEEL which approves the Reorganization. The reversal of the provision for losses in a value equivalent to 100% of the value of the said deferred asset shall permit the neutralization of the adverse effects of the amortization in its balance sheet of Escelsa. Consequently, the dividends attributed to the shares of Escelsa shall not be reduced by the value of the deferred asset to be amortized in each fiscal year. (e) Increase in the Capital Stock of Escelsa: The capital stock of Escelsa, in the amount of R$153,946,942.07 (one hundred and fifty-three million, nine hundred and forty-six thousand, nine hundred and forty-two reais and seven centavos), shall be increased to R$153,947,942.07 (one hundred and fifty-three million, nine hundred and forty-seven thousand, nine hundred and forty-two reais and seven centavos), this increase, in the value of R$1,000.00 (one thousand reais) corresponding to the spun-off value of the shareholders equity of Energias do Brasil through the issue of 3 (three) new common shares, with no par value, these shares being paid in with the Spun- Off Assets and Liabilities of Energias do Brasil to be incorporated and attributed to the noncontrolling shareholders of Energias do Brasil, in the proportion of their respective stakes in the capital of Energias do Brasil. Consequently, the capital stock of Escelsa shall be represented by 4,550,836 (four million, five hundred and fifty thousand, eight hundred and thirty-six) common shares, all nominative and with no par value. (f) Reduction of Capital Stock of Energias do Brasil: Subsequent to the partial spin-off, the capital stock of Energias do Brasil shall be reduced from R$1,573,972,462.18 (one billion, five hundred and seventy-three million, nine hundred and seventy-two thousand, four hundred and sixtytwo reais and eighteen centavos) to R$1,573,971,462.18 (one billion, five hundred and seventythree million, nine hundred and seventy-one thousand, four hundred and sixty-two reais and eighteen centavos), a reduction therefore of R$1,000.00 (one thousand reais), without cancellation of shares. V.4 Incorporation of Shares of Enersul by Escelsa (a) Incorporation of Shares: Through the incorporation of the shares of Enersul by Escelsa, Enersul shall be transformed into a wholly owned subsidiary of Escelsa, pursuant to and for the purposes of Article 252 of Law 6.404/76. For the purposes of accounting registration of the shares of Enersul to be incorporated into the assets of Escelsa, the shareholders equity of Enersul was evaluated at its book value. 8

(b) Valuations: Pursuant to the valuations prepared by the specialized companies mentioned above, the following values were established: (i) (ii) (iii) (iv) (v) Valuation Report of the Book Shareholders Equity of Enersul: R$519,744,318.70 (five hundred and nineteen million, seven hundred and forty-four thousand, three hundred and eighteen reais and seventy centavos), which when the Special Reserve is computed will total R$638,121,490.68 (six hundred and thirty-eight million, one hundred and twenty-one thousand, four hundred and ninety reais and sixty-eight centavos); Economic Valuation Report of Enersul: R$1,276,025,000.00 (one billion, two hundred and six million and twenty-five thousand reais); Economic Valuation Report of Escelsa: R$ 1,525,022,000.00 (one billion, five hundred and twenty-five million and twenty-two reais); Shareholders Equity Valuation Report at Market Prices of Enersul: R$588,511,000.00 (five hundred and eighty-eight million, five hundred and eleven thousand reais); Shareholders Equity Valuation Report at Market Prices of Escelsa: R$595,489,000.00 (five hundred and ninety-five million, four hundred and eighty-nine thousand reais). (c) Proposed Exchange Ratio of Shares of Enersul for Shares of Escelsa: Pursuant to the valuation reports prepared by the Appraiser II, it is proposed that the exchange ratio of sharers of Enersul for shares of Escelsa, established on the basis of their economic values, shall be as follows: Company Economic Value (in R$): Economic value (in R$) per Exchange share: (*) Enersul 1,276,025,000.00 0.02 -- Escelsa 1,525,022,000.00 335.11 0.00007 (*) Quantity of shares of Escelsa which shall be received for each share held in Enersul. ratio (d) Comparative Calculation of the Exchange Ratios. Pursuant to Article 264 of Law 6.404/76, should the exchange ratio of shares of Enersul for shares of Esclesa be established on the basis of their respective shareholders equity at market prices pursuant to the valuation reports prepared by the Appraiser III, the said ratio would be as follows: Company Value of Value of Value (in R$) Value (in R$) Exchange shareholders shareholders equity per share: per pro-forma Ratio (**) equity at market at pro-forma share: price (in R$): market price (*) (in R$): Enersul 588,511,000.00 -- 0.01 -- -- Escelsa 595,489,000.00 595,490,000.00 130.85 130.85 0.00008 (*) Pro-forma to reflect the assets and liabilities incorporated by Escelsa in the Partial Spin-Off of Energias do Brasil. (**) Quantity of shares of Escelsa which would be received for each share held in Enersul. According to the analysis of the foregoing tables, the exchange ratio of the shares of Enersul for the shares of Escelsa is more advantageous for the shareholders of Enersul when both Companies are evaluated on the basis of their shareholders equity at market prices. (e) Increase in the Capital Stock of Escelsa: The capital stock of Escelsa, in the value of R$153,947,942.07 (one hundred and fifty-three million, nine hundred and forty-seven thousand, 9

nine hundred and forty-two reais and seven centavos), shall be increased to R$376,024,629.74 (three hundred and seventy-six million, twenty-four thousand, six hundred and twenty-nine reais and seventy-four centavos), this increase in the value of R$222,076,687.67 (two hundred and twenty-two million, seventy-six thousand, six hundred and eighty-seven reais and sixty-seven centavos), corresponding to the shareholders equity of Enersul, following the deduction of the portion represented by the investment held by Escelsa in Enersul, through the issue of 1,325,176 (one million, three hundred and twenty-five thousand, one hundred and seventy-six) new preferred shares, with no par value, these shares being paid in with the shares of Enersul to be incorporated and attributed to the non-controlling shareholders of Enersul, whether holders of common or preferred shares, in proportion to their respective stakes in the capital of Enersul. Consequently, the capital stock of Escelsa shall be represented by 4,550,836 (four million, five hundred and fifty thousand, eight hundred and thirty-six) common shares and by 1,325,176 (one million, three hundred and twenty-five thousand one hundred and seventy-six) preferred shares, all nominative and with no par value. The preferred shares issued by Escelsa shall guarantee their holders the right to receive dividends 10% higher than those attributed to the common shares, as well as priority in the reimbursement of capital, without a premium, in the event of the liquidation of the company. All preferred shares to be issued by Escelsa shall be replaced by common shares issued by Energias do Brasil upon the implementation of the final stage of the Reorganization. V.5 Incorporation of Shares of Bandeirante and Escelsa by Energias do Brasil (a) Incorporation of Shares: Through the incorporation of the shares of Bandeirante and Escelsa by Energias do Brasil, the former shall be transformed into wholly owned subsidiaries of Energias do Brasil, pursuant to and for the purposes of Article 252 of Law 6.404/76. For the purposes of registration in the accounts of the shares of Bandeirante and Escelsa to be incorporated into the assets of Energias do Brasil, the shareholders equity of Bandeirante and Escelsa was evaluated at its book value. (b) Valuations: The following values were calculated according to the valuations prepared by the aforementioned specialized companies: (i) (ii) (iii) (iv) (v) (vi) Valuation Report of the Book Shareholders Equity of Escelsa: R$473,726,944.01 (four hundred and seventy-three million, seven hundred and twenty-six thousand, nine hundred and forty-four reais and one centavo), the said Book Shareholders Equity, together with the increases in capital provided for in Sections 5 and 6 of this Protocol, shall total R$695,804,631.68 (six hundred and ninety-five million, eight hundred and four thousand, six hundred and thirty-one reais and sixty-eight centavos); Valuation Report of the Book Shareholders Equity of Bandeirante: R$699,331,858.24 (six hundred and ninety-nine million, three hundred and thirty-one thousand, eight hundred and fifty-eight reais and twenty-four centavos); Economic Valuation Report of Escelsa: R$1,525,022,000.00 (one billion, five hundred and twenty-five million, twenty-two thousand reais); Economic Valuation Report of Bandeirante: R$1,423,358,000.00 (um billion, four hundred and twenty-three million, three hundred and fifty-eight thousand reais); Economic Evaluation Report of Energias do Brasil: R$1,997,480,000.00 (one billion, nine hundred and ninety-seven million, four hundred and eighty thousand reais); Valuation Report of the Shareholders Equity at Market Prices of Escelsa: R$595,489,000.00 (five hundred and ninety-five million, four hundred and eighty-nine thousand reais); 10

(vii) (viii) Valuation Report of the Shareholders Equity at Market Prices of Bandeirante: R$1,248,466,000.00 (one billion, two hundred and forty-eight million, four hundred and sixty-six thousand reais); Valuation Report of the Shareholders Equity at Market Prices of Energias do Brasil: R$1,955,999,000.00 (one billion, nine hundred and fifty-five million, nine hundred and ninety-nine thousand reais). (d) Proposed Exchange Ratio of Shares of Bandeirante and Escelsa for Shares of Energias do Brasil: Pursuant to the valuation reports prepared by the Appraiser II, it is proposed that the share exchange ratio of Bandeirante for shares of Energias do Brasil, established on the basis of their economic values, shall be as follows: Company Economic value (in R$): Economic value (in R$) per Exchange ratio share: (*) Bandeirante 1,423,358,000.00 0.04 -- Energias do Brasil 1,997,480,000.00 38.52 0.00095 (*) Quantity of shares of Energias do Brasil which shall be received for each share held in Bandeirante. Pursuant to the valuation reports prepared by the Appraiser II, it is proposed that the exchange ratio of shares of Escelsa for shares of Energias do Brasil, established on the basis of their economic values, shall be as follows: Company Economic value (in R$): Economic value (in R$) per Exchange shares: (*) Escelsa 1,525,022,000.00 335,11 -- Energias do Brasil 1,997,480,000.00 38.52 8.69965 (*) Quantity of shares of Energias do Brasil which shall be received for each share held in Escelsa. ratio (d) Comparative Calculation of the Exchange Ratios: Pursuant to Article 264 of Law 6.404/76, should the exchange ratio of shares of Bandeirante for shares of Energias do Brasil be established on the basis of their respective shareholders equity at market prices pursuant to the valuation reports prepared by the Appraiser III, the said ratio would be as follows: Company Value of Value of Value (in R$) per Value (in Exchange shareholders shareholders equity share: R$) per ratio (**) equity at market at pro-forma pro-forma price (in R$): market price (*) (in R$): share: Bandeirante 1,248,466,000.00 -- 0.03 -- -- Energias do 1,955,999,000.00 2,226,008,275.00 37.72 32.60 0.00098 Brasil (*) Pro-forma to reflect the Incorporation of Iven and the assets and liabilities incorporated by Enersul in the Partial Spin-Off of Energias do Brasil. (**) Quantity of shares of Energias do Brasil which would be received for each share held in Bandeirante. According to the analysis of the foregoing tables, the exchange ratio of the shares of Bandeirante for the shares of Energias do Brasil is more advantageous for the shareholders of Bandeirante when both Companies are evaluated on the basis of their shareholders equity at market prices. 11

Further, pursuant to Article 264 of Law 6.404/76, should the exchange ratio of shares of Escelsa for shares of Energias do Brasil be established on the basis of their respective shareholders equity at market prices pursuant to the valuation reports prepared by the Appraiser III, the said ratio would be as follows: Company Value of shareholders equity at market price (in R$) Value of shareholders equity at pro-forma market price (*) (in R$) Value (in R$) per share: Value (in R$) per proforma share: Exchange ratio: Escelsa 595,489,000.00 800,301,428.00 130.85 136.20 -- Energias do 1,955,999,000.00 37.72 32.62 Brasil 2,269,643,557.00 4.17561 (*) Pro-forma to reflect the Incorporation of Iven and the assets and liabilities incorporated by Enersul in the Partial Spin-Off of Energias do Brasil and the incorporation of shares of Bandeirante. (**) Quantity of shares of Energias do Brasil which would be received for each share held in Bandeirante. According to the analysis of the foregoing tables, the exchange ratio of the shares of Escelsa for the shares of Energias do Brasil is more advantageous for the shareholders of Escelsa when both Companies are evaluated on the basis of their economic value. (e) Increase in Capital Stock of Energias do Brasil: The capital stock of Energias do Brasil, in the value of R$1,573,971,462.18 (one billion, five hundred and seventy-three million, nine hundred and seventy-one thousand, four hundred and sixty-two reais and eighteen centavos) shall be increased to R$2,012,583,258.12 (two billion, twelve million, five hundred and eighty-three thousand, two hundred and fifty-eight reais and twelve centavos), this increase, in the value of R$438,611,795.94 (four hundred and thirty-eight million, six hundred and eleven thousand, seven hundred and ninety-five and ninety-four centavos) corresponding to the value of the shareholders equity of Bandeirante and Escelsa, in addition to the variations pursuant to this instrument and following the deduction of the installments represented by investments held by Energias do Brasil in Escelsa and Bandeirante, through the issue of 31,717,054 (thirty-one million, seven hundred and seventeen thousand and fifty-four) new common shares, with no par value, these shares being paid in with the shares of Bandeirante and Escelsa to be incorporated and attributed to the noncontrolling shareholders of Bandeirante and Escelsa, irrespective of being common or preferred shares, proportional to their respective stakes in the capital of Escelsa and Bandeirante. VI. STATUTORY AMENDMENTS VI.1 Magistra. Pursuant to the Partial Spin-Off of Magistra, the capital stock of Magistra shall be reduced from R$668.482.733,63 (six hundred and sixty-eight million, four hundred and eightytwo thousand seven hundred and thirty-three reais and sixty-three centavos) to R$211,058.062.34 (two hundred and eleven million, fifty-eight thousand, sixty-two reais and thirty-four centavos), a reduction therefore of R$457,424,671.29 (four hundred and fifty-seven million, four hundred and twenty-four thousand, six hundred and seventy-one reais and twenty-nine centavos). VI.2 Escelsa. With the implementation of the Reorganization, the capital stock of Escelsa, in the amount of R$153,946,942.07 (one hundred and fifty-three million, nine hundred and forty-six thousand, nine hundred and forty-two reais and seven centavos), shall be increased to R$376,024,629.74 (three hundred and seventy-six million, twenty-four thousand, six hundred and twenty-nine reais and seventy-four centavos), this increase in the value of R$222,077,687.67 (two hundred and twenty-two million, seventy-seven thousand, six hundred and eighty-seven reais and 12

sixty-seven centavos), from henceforth being represented following the transformation of the company into a wholly owned subsidiary, by 5,876,012 (five million, eight hundred and seventy-six thousand and twelve) common shares, all nominative with no par value. The bylaws of Escelsa shall be amended in order to reflect the increase in the capital described above as well as to adjust them to the condition of the company as a wholly owned subsidiary of Energias do Brasil, undertaking the necessary adaptations. VI.3 Enersul. The bylaws of Enersul shall be amended in order to adjust them to the condition of the Company as a wholly owned subsidiary of Escelsa, undertaking the necessary adaptations. VI.4 Bandeirante. The bylaws of Bandeirante shall be amended in order to adjust them to the condition of the company as a wholly owned subsidiary of Energias do Brasil, undertaking the necessary adaptations. VI.5 Energias do Brasil. With the implementation of the Reorganization, the capital stock of Energias do Brasil in the value of R$1,352,839,766.88 (one billion, three hundred and fifty-two million, eight hundred and thirty-nine thousand, seven hundred and sixty-six and eighty-eight centavos), shall be increased to R$2,012,583,258.12 (two billion, twelve million, five hundred and eighty-three thousand two hundred and fifty-eight and twelve centavos), this increase of R$659,743,491.24 (six hundred and fifty-nine million, seven hundred and forty-three thousand, four hundred and ninety-one reais and twenty-four centavos), from henceforth to be represented by 100,009,232 (one hundred million, nine thousand, two hundred and thirty-two) common shares, all nominative with no par value. The Bylaws of Energias do Brasil shall be fully reformulated in order to reflect the increase in the capital described above as well as adjusting its provisions to the Regulations of Bovespa s Novo Mercado. In the event of the exercising of the right of withdrawal by shareholders dissenting from the resolutions of the General Shareholders Meetings which approved the operations contemplated in this Material Fact, all the necessary adjustments shall be made in the number of issued shares. VII. COMPARISON BETWEEN POLITICAL AND PATRIMONIAL ADVANTAGES OF THE SHARES VII.1 Political and Patrimonial Advantages of the Shares Prior to the Reorganization: Company Type of Share Voting Rights Iven Profit and Income Sharing / Priority in the event of Liquidation Common Yes - minimum mandatory dividend of 50% of the net adjusted income Preferred No - minimum mandatory dividend of 50% of the net adjusted income - dividends 10% (dez per cent) higher than attributed to the common shares - priority in reimbursement of capital, with no premium in the event of liquidation of the Company Tag Along (right of joint sale in the event of divestment of control) - 80% of the sale price of the shares with voting rights pertaining to the controlling block Not applicable 13

Escelsa Common Yes minimum mandatory dividend of 25% of the net adjusted income Enersul Bandeirante Common Yes - minimum mandatory dividend of 25% of the net adjusted income Preferred A No - minimum mandatory dividend of 25% of net adjusted income - priority in the reimbursement of capital without premium - priority in the distribution of minimum dividends of 10% per year on paid in capital represented by this class of share Preferred B No - minimum mandatory dividend of 25% of the net adjusted income - dividends 10% (dez per cent) higher than attributed to the common shares - priority in the reimbursement of capital without premium in the event of liquidation, following the full reimbursement of preferred class "A" shares Common Yes - minimum mandatory dividend of 25% of the net adjusted income Preferred No - minimum mandatory dividend of 25% of net adjusted income - priority in the reimbursement based on the paid in capital without rights to a premium, in the event of the liquidation of the Company - dividends of 10% (ten percent) higher than those attributed to the common shares - 80% of the sale price of the shares with voting rights pertaining to the controlling block - 80% of the sale price of the shares with voting rights pertaining to the controlling block Not applicable Not applicable - 80% of the sale price of the shares with voting rights, part of the controlling block Not applicable VII.2 Political and Patrimonial Advantages of the Shares Following the Reorganization: Company Type of Share Voting Rights Energias do Brasil Profit and Income Sharing / Priority in the event of Liquidation Common Yes - minimum mandatory dividend of 25% of net adjusted income Tag Along (right of joint sale in the event of divestment of control) - following admission to the Novo Mercado, 100% of the selling price of the shares with voting rights pertaining to the controlling block 14

VIII. RIGHT OF WITHDRAWAL The Reorganization stages pursuant to items V.2, V.4 and V.5 confer right of withdrawal to the dissenting shareholders of Iven, Escelsa, Enersul, Bandeirante and Energias do Brasil which can be substantiated as holders of these shares at the close of business of the Bovespa on April 7 2005. The holders of shares purchased as from April 8 2005, inclusive, shall not carry right of withdrawal with respect to the Reorganization. In the light of the above valuations and pursuant to the provisions in articles 230 and 264 c/c Article 45, of Law 6,404/76, we indicate below the maximum withdrawal values due to shareholders dissenting from the Reorganization, in accordance with the Company from which the shareholders originated, shareholders on April 7 2005 and irrespective of the stage at which the right of withdrawal is exercised. The shareholders of Iven / EDP Brasil and Escelsa dissenting from the Reorganization, which exercise their right of withdrawal as a result of the approval of the stages V.2, V.4 and V.5 of the Reorganization, as the case may be, shall have the right of withdrawal of the book value of their shares as at the baseline date of December 31 2004, pro-forma following the V.4 stage of the Reorganization. As a result the values due shall be as follows: Company Value of reimbursement per share (in R$) Iven / Energias do Brasil 23.2004 Escelsa 111.4034 The shareholders of Bandeirante and Enersul dissenting from the Reorganization, which exercise their right of withdrawal as a result of the approval of the stages V.4 and V.5 of the Reorganization, shall have the right of withdrawal of the value of shareholders equity at market prices of their shares, calculated as of the baseline date of December 31 2004. As a result, the values due shall be as follows: Company Value of reimbursement per share (in R$) Enersul 0.0111 Bandeirante 0.0319 The reimbursement to the dissenting shareholders of the Companies shall be effected after the ratification of the Reorganization or the lapsing of the period for reconsideration pursuant to Article 137, Paragraph 3 of Law 6,404/76, whichever occurs first. The procedures for withdrawal shall be announced following the implementation of the Reorganization, together with the beginning of the legal term for exercising this right. IX. DEVERTICALIZATION Following the implementation of the Reorganization, when Escelsa and Enersul are already wholly owned subsidiaries of Energias do Brasil, directly or indirectly, the Companies shall implement the operations with a view to the so-called deverticalization, which shall consist in (i) segregation of the activities of distribution, generation and transmission of Escelsa and Enersul, pursuant to Law 10.848/04, within the legal timeframe; and (ii) horizontal organization of the companies controlled 15

by Energias do Brasil, with consequent greater transparency in the disclosure and recording of the result of their respective operations and the monitoring of their activities by the regulatory bodies. The corporate operations with a view to deverticalization shall be announced in due course. X. LISTING OF CAPITAL; ADHESION TO NOVO MERCADO REGULATIONS; PUBLIC OFFERING OF SHARES. Procedures are already in hand in conjunction with the Brazilian Securities and Exchange Commission for the registration of Energias do Brasil as a publicly-held company, with the process of listing Energias do Brasil shares on Bovespa s Novo Mercado segment to begin shortly. Following the Reorganization, Energias do Brasil intends to make a public offering of shares depending on market conditions. The said operation may be conducted as a primary distribution or a primary and secondary distribution, pursuant to understandings with its shareholders. The terms and conditions of the said offering, if implemented, shall be notified in due course. The beginning of trading of the shares issued by Energias do Brasil on the Bovespa shall take place jointly with the subscription of the new shares issued by Energias do Brasil within the scope of the said public offering, with the proviso that the beginning of trading of the shares issued by Energias do Brasil on the Bovespa shall take place no later than November 30 2005. Until the first day of trading of the shares issued by Energias do Brasil on the Bovespa, the shareholders of Escelsa, Enersul, Iven and Bandeirante may trade their respective shares for the period up to that time. The shares of Escelsa, Enersul, Iven and Bandeirante shall be automatically substituted for shares of Energias do Brasil, according to the exchange ratios established herein on the first day of trading in the shares of Energias do Brasil. XI. AGREEMENTS WITH NON-CONTROLLING SHAREHOLDERS The following agreements were signed as of today s date: XI.1 Escelsa. The controlling shareholder of Energias do Brasil, with the intervention of Energias do Brasil and Iven, have on this date signed an agreement with GTD Participações S.A. ( GTD ), shareholder of Escelsa. Copy of the said agreement is filed at the registered offices of Energias do Brasil and Escelsa, and shall be forwarded to the CVM and Bovespa. XI.2 Enersul. The controlling shareholders of Energias do Brasil, Energias do Brasil, Escelsa, Enersul and Magistra have on this date signed agreements with Empresa Electrica Pilmaiquen S.A. and Wisteria Holdings LLC., shareholders of Enersul. Copy of the said agreement is filed at the registered offices of Energias do Brasil, Escelsa and Enersul, and shall be forwarded to the CVM and Bovespa. XII. CORPORATE APPROVALS The signing of the Protocol and other terms and conditions of the proposal for Reorganization were approved in meetings of the Boards of Directors of Energias do Brasil, Enersul, Escelsa, Iven and Bandeirante held as of this date. The Reorganization shall be submitted to the Extraordinary General Shareholders Meetings of the Companies to be convened for April 29 2005. 16