Operations

Neoenergia is an integrated power company operating in the four segments of the electricity sector: generation, transmission, distribution and sales. The focus is on distribution, supported by generation operations, taking advantage of any opportunities for transmission and building up the trading business. In this way the company seeks to maintain and enhance its standards of quality and performance.

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Distribution and Transmission

Our four distribution subsidiaries provide energy to a total of 13.4 million captive customers, with tariffs regulated by the granting authority in the States of Bahia, Pernambuco and Rio Grande do Norte, and in part of the States of Paraíba (one municipality), São Paulo (223 municipalities) and Mato Grosso do Sul (five municipalities), encompassing a population of over 30 million people (as at September 2017). In the twelve-month period ended September 30, 2017, we distributed 55 GWh of electricity through our companies Coelba, Celpe, Cosern and Elektro, using more than 600 thousand km of distribution grids comprising a net asset base worth R$15.7 billion, the largest among the distribution groups.

We also operate in electricity transmission, transporting high-voltage electricity over long distances to the SIN – the National Interconnected System, for which we are remunerated at regulated tariffs. Through our companies Afluente T, Narandiba and Potiguar Sul, we operate 679,2 km of transmission lines and 11 transmission sub-stations (five of our own and six shared) operating in the States of Bahia, Paraíba and Rio Grande do Norte. Following the merger of Elektro Holding, on August 24, 2017, we added 583 km to our electricity network, plus four transmission sub-stations (one of our own and four shared) in the states of Mato Grosso do Sul, São Paulo, Santa Catarina and Ceará, acquired by Elektro Holding at the ANEEL auctions in April 2017 (Transmission Auction No. 05/2016). Thus, when we add the assets resulting from the merger of Elektro, on the date of this offering document we have achieved a portfolio of 1,262 km of transmission lines and 15 transmission sub-stations (six of our own and nine shared), including operating assets and projects under development (as at September 2017).

Generation

We operate in both conventional and renewable energy generation. Our hydroelectric and gas-fired generating plants have a total installed capacity of 2.6 GW in operation, in addition to approximately 1.0 GW of projects under development, totaling more than 3.5 GW of installed capacity from 2020 onward.

Our generation portfolio mainly consists of assets that use clean and renewable sources, such as wind and hydroelectric power, and we also have a combined-cycle gas-fired thermal plant.

We have installed capacity of 484.3 MW of electrical energy, operated by Arizona, Calango 1-6, Caetité 1-3 Mel 2, Santana 1-2, Lagoa 2, Canoas and Rio do Fogo, this last the result of the merger of Elektro on August 24, 2017. In 2017, with Lagoa 1 (31.5MW) starting commercial operations, we shall attain total installed capacity of 515.8MW. In the twelve-month period ended September 30, 2017, we generated 170.5 average MW of energy from our wind farms, including the Calango 6, Santana 1 and Santana 2 complexes which came on stream in December 2016, and Lagoa 2 and Canoas which came on stream in September 2017. If we include the power generated by the Rio do Fogo wind farm during this period, the average is 187.6MW (as at September 2017).

Our hydroelectric plants have over 2,000 MW of installed capacity in operation at the Teles Pires, Itapebi, Dardanelos, Baguari, Corumbá III and Belo Monte hydroelectric plants. Together with our projects under construction, which include our participation in the Belo Monte and Baixo Iguaçu hydroelectric plants, we intend to achieve a total installed capacity from hydroelectric plants of 3,562 MW in 2020.

We have a conventional combined-cycle gas-fired generation plant, the Termopernambuco (Termope) thermal plant located in the State of Pernambuco, with 532.7 MW of installed capacity in operation, which has an energy supply agreement (PPA – Purchase Power Agreement) for 455 average MW, valid until 2023. In the twelve-month period ended September 30, 2017, we generated 446.66 average MW of electricity at our thermal power plants.

Trade

In 2016, we sold 1,032 average MW of energy on the free market through our subsidiary NC Energia. Following the merger of Elektro on August 24, 2017, we acquired yet another energy trading company, Elektro Comercializadora. NC Energia was responsible for sales of 1,358 average MW in 2017, being the country’s sixth-largest energy trading company. Elektro Comercializadora, in turn, accounted for sales of around 115 average MW in the same period.

In addition to the trading activities themselves, energy trading companies also provide a wide range of services such as integrated energy management, risk management, representation of consumers and producers on the CCEE and in getting energy projects off the drawing board.

We also provide services involving energy management for both our affiliates and non-affiliated parties.