SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of September, 2016
Commission File Number 1-34129
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS
(Exact name of registrant as specified in its charter)
BRAZILIAN ELECTRIC POWER COMPANY
(Translation of Registrant's name into English)
Avenida Presidente Vargas, 409 - 13th floor,
Edifício Herm. Stoltz - Centro, CEP 20071-003,
Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No___X____
Annex 1. PPI - Resolution Numer 07 of September 13, 2016 - Low Price
(free translation of the original text in Portuguese)
RESOLUTION No. 7 OF 13 OF 2016 SEPTEMBER
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Amending Resolution No. 11 of November 18, 2015, the National Privatization Council to approve the continuation of the privatization process of CELG Distribuição S.A. and to establish the conditions and the minimum price of sale of shares of its shareholding control.
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THE BOARD OF THE PROGRAM OF INVESTMENT PARTNERSHIPS OF THE BRAZILIAN
REPUBLIC’s PRESIDENCY
., using the powers conferred by arts. 4, 5 and 7 of Provisional Measure No. 727, of May 12, 2016 and:
Whereas that CELG Distribution S.A - CELG D was included in the National Privatization Program - PND on May 13, 2015, through Decree No. 8,449, of May 13, 2015, which designated the Ministry of Mines and Energy in charge for the implementation and the monitoring of CELG D privatization process in accordance with art. 6, § 1, of Law 9,491 of September 9, 1997 and the
Banco
Nacional
do
Desenvolvimento Econômico e Social
- BNDES responsible for hiring the services and provide the necessary technical support for the implementation of the CELG D privatization;
Whereas that the shareholding control of CELG D is owned by Centrais Elétricas Brasileiras S.A - Eletrobras, which holds approximately 50.93% (fifty point ninety-three percent) of the total share capital and voting of CELG D, and 49.00% (forty nine percent) of the CELG D shares are held by the
Companhia Celg
de
Participações
- Celgpar, whose control is held by the State of Goiás, and that the amendment to the concession contract signed on December 30, 2015 extended the concession contract of CELG D until July 7, 2045;
Whereas that the previous bidding procedure to sell the shareholding control of CELG D, referred to in the Auction Notice PND No. 01.12016/CELG-D, it was considered desert on August 16, 2016; and
Whereas that the Ministry of Mines and Energy requested for this Board, through Notice No. 170 of September 1, 2016, and BNDES, through Official Letter No. 414/2016-GM-MME, the continuation of the privatization process of CELG D, including the determination of the conditions of privatization and approval of the minimum price of sale of shares issued relating to the shareholding control owned by Eletrobras, decides:
Art. 1 The Resolution No. 11 of November 18, 2015, of the National Privatization Council, becomes effective with the following amendments:
"Art. 1
...............................................................................
Sole Paragraph - The minimum sale value of 76.761.267 (seventy-six million, seven hundred and sixty-one thousand, two hundred sixty-seven) common shares belonging to Eletrobras will be R$ 912,678,375.87 (nine hundred and twelve million, six hundred seventy-eight thousand, three hundred seventy-five reais and eighty-seven cents) including the amount related to the offer to employees and retirees of CELG D "(NR)
"Art. 4...............................................................................
§ 1 The shares belonging to CelgPar, deposited at FND may only be withdrawn in the following cases:
I - if the auction of CELG D shares not take place until March 31, 2017;
II - if the auction take place until March 31, 2017, but there is the sale of shares; and
III - by motivated decision by the Board of Investment Partnerships Program of the Brazilian
Republic’s
Presidency at any time
........................................................................................
"(NR)
" Art. 5 The minimum price of each share of CELG D for selling shares purposes by Eletrobras in the auction pursuant to art. 1 will be approximately R$ 11.91 (eleven reais and ninety-one cents) in case of sale of CELG D shares held only by Eletrobras, in which case should be offered 75,355,789 (seventy five million, three hundred and fifty-five thousand, seven hundred and eighty-nine) common shares of CELG D owned by Eletrobras, totalizing R$ 897,611,651.71 (eight hundred ninety-seven million, six hundred and eleven thousand, six hundred fifty-one reais and seventy one cents).
§ 1 In order to permit the transfer of the shareholding control of CELG D, in the occurrence of the event provided for in the caput, will be offered to employees and retirees of CELG D 1,405,478 (one million, four hundred and five thousand, four hundred seventy-eight) common shares issued by CELG D, corresponding to approximately 093% (ninety three percent) of the shares representing the total share capital and voting of CELG D owned by Eletrobras, priced at RS 10.72 (ten reais and seventy two cents) per share, which amounts to the value of R$ 15,066,724.16 (fifteen million, sixty-six thousand, seven hundred and twenty-four reais and sixteen centavos), already included the discount of approximately 10% (ten percent) compared to the minimum price referred to in the heading of this article.
" Art. 6 In the event that Celgpar decide to sell all the shares held jointly with Eletrobras, the minimum price for each CELG D share held by Eletrobras and the Celgpar for auction sale purposes, will to be approximately R$ 11.95 (eleven reais and ninety-five cents), totalizing R$ 1,708,131,367.30 (one billion, seven hundred and eight million, one hundred thirty-one thousand, three hundred and sixty-seven reais and thirty cents).
§ 1 As provide in the caput of this article, the price of each share of CELG D, under the offer to employees and retirees of CELG D, will be R$ 10.76 (ten reais and seventy-six cents), which totalize R$ 82,595,126.52 (eighty-two million five hundred ninety-five thousand, one hundred twenty-six reais and fifty-two cents)., already included the discount of approximately 10% (ten percent) compared to the minimum price referred to in the caput of this article.
.................................................................................................
"(NR)
"Art. 7
...............................................................................
§ 3 The remains of the second offer to employees and retirees of CELG D should be acquired by the (s) winner (s) of the auction for the price equivalent to the value offering to employees and retirees of CELG D within a maximum thirty days from the date of disclosure of these leftovers.
§ 5. In the privatization tender, should be an obligation to repurchase the winner(s) of the event all shares that shareholders who have acquired under the offer to employees and retirees of Celg D, wish divested, pelo. the minimum price of the sale of control, duly updated by the positive variation of the National Index of Consumer Price Index - IPCA, published by the Brazilian Institute. of Geography and Statistics - IBGE, with additional compensation of 8% (eight percent) per year, in the event does not occur the opening of capital of CELG D and the listing of its shares within three years from the signing date of the agreement of purchase and sale of shares.
§ 7 The right to sell as provided for in § 5 is the exclusive prerogative of the originating acquirer of the offer to employees and retirees of CELG D, provided in the Offer Manual for the Employee, not being extended to subsequent purchasers. "(NR )
Art. 2 New public hearing should be held to differ more transparency to the CELG D privatization process in accordance with art. 39 of Law No. 8,666 of June 21, 1993.
Art. 3 This Resolution shall enter into force on the date of its publication.
Art. 4 is repealed the § 4 of art. 7 of Resolution No. 11, of November 2015, of the National Privatization Council.
WELLINGTON MOREIRA FRANCO
Executive Secretary of the Council
Annex 2. BNDES - Share Deposit Receipt No.
01/2015, of May 19, 2015
BNDES
Classification:
Controlled Document
–
Corporate and Industrial Confidential Information
Access Restriction
: Companies from the BNDES System / Recipient
SHARE DEPOSIT RECEIPT No. 1 /2015
Pursuant to Article 9 of Law No. 9491, of September 9, 1997, and Decree No. 8449, of May 13, 2015, aligned with Resolution No. 5 of the National Privatization Council (CND), of May 5, 2015, we received from
Centrais Elétricas Brasileiras S.A. (Eletrobras)
, as a deposit, linked to the National Privatization Fund (FND), a receipt corresponding to the blockage of 76,761,268 common shares, representative of the social capital of
Celg Distribuição S.A. (CELG D)
,
This receipt will be automatically cancelled, for all legal purposes and effects, pursuant to Article 9, § 3, of the same Law, at the time of completion of the privatization process.
Rio de Janeiro
–
May 19, 2015
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Regards,
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[contains signature]
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[contains signature]
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Denis Chelegati de Castro
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Fernanda Saraiva Loureiro
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Manager
–
AF/DEFIN/GVAL2
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Deputy Head
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AF/DEFIN
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Tel.: (21) 3747-9972
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Tel.: (21) 2172-7945
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Annex 3. Decree No. 8,449 of May 13, 2015 -Inclusion in the PND
OFFICIAL FEDERAL GAZETTE
Federative Republic of Brazil
–
National Press
In circulation since October 1, 1862
Year CLII No. 90
Brasilia - DF, Wednesday, May 14, 2015
Executive Acts
DECREE NO. 8449, OF MAY 13, 2015
Rules on the inclusion of CELG Distribuição S.A. in the National Privatization Program (PND), among other provisions.
THE PRESIDENT OF THE REPUBLIC
, exercising the powers conferred by Article 84,
heading
, Sections IV and V,
heading
, su
bparagraph “a”
of the Constitution, and in view of the provisions set forth in Law No. 9491, of September 9, 1997,
DECREES:
Article 1: CELG Distribuição S.A. is included in the National Privatization Program (PND), for the purposes of Law No. 9491, of September 9 1997.
Article 2: The Ministry of Mines and Energy is designated as the party responsible for the implementation and monitoring of the privatization process of CELG Distribuição S.A., pursuant to Article 6 § 1, of Law No. 9491, of 1997.
Article 3: The Brazilian Development Bank is designated as the party responsible for contracting the services and providing the technical support needed to implement the privatization of CELG Distribuição S.A.
Article 4: This Decree will go into effect on the date of its publication.
Brasilia
–
May 13, 2015; 194
th
year of Independence and 127
th
year of the Republic
DILMA ROUSSEFF
Armando Monteiro
Eduardo Braga
Annex 4. CND - Resolution No. 7 of July 9, 2015 - IFC Hiring and Resolution CND No. 11 of November 18, 2015
–
Minimum Price
RESOLUTION No. 7, OF JULY 9, 2015
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Authorizes the Brazilian Development Bank (BNDES), as the party responsible for contacting the services needed to privatize CELG Distribuição S.A. (CELG D), in accordance with Article 3 of Decree No. 8449, of May 13, 2015, to carry out a tender process in the form of an electronic auction to hire independent external auditing services for the privatization process of CELG D, to directly hire the International Finance Corporation (IFC), through a waiver of the tender process, to provide services for the structuring and privatization of CELG D, as well as approve the procedure for reimbursement of expenditures on third-party services arising from the privatization of CELG D, as set forth in Article 26 of Decree No. 2594, of May 15, 1998.
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The
CHAIRMAN OF THE NATIONAL PRIVATIZATION COUNCIL
(CND), in exercise of the prerogative established in § 4 of Article 5 of Law No. 9491, of September 9, 1997, and based on Article 12, of Decree No. 2594, of May 15, 1998, resolves,
ad referendum
of the collegiate:
Article 1: Authorizes the Brazilian Development Bank (BNDES), as the party responsible for contacting the services needed to privatize CELG Distribuição S.A. (CELG D), in accordance with Article 3 of Decree No. 8449, of May 13, 2015, to carry out a tender process in the form of an electronic auction to hire independent external auditing services for the privatization process of CELG D, as well as directly hire the International Finance Corporation (IFC), through a waiver of the tender process, to provide services for the structuring and privatization of CELG D.
Article 2: Given the provisions set forth in § 3 of Article 22 of Decree No. 2594, of May 15, 1998, independent external auditing services may be contracted to accompany the privatization process of CELG D from the data room.
Article 3: Expenditures on third-party services, referred to in Article, 26 of Decree No. 2594, of May 15, 1998, incurred by BNDES through the contracting of services needed to privatize CELG D, will be reimbursed by
the selling party or parties at the time of financial settlement of the sale of the shares.
Article 4: The holder(s) of CELG D shares deposited in the National Privatization Fund (FND) will reimburse BNDES within up to 24 (twenty four) months of the date of the last expenditure incurred by BNDES, if the sale of the shares has not occurred.
Article 5: If the funds raised through the sale of the CELG D shares are not sufficient to reimburse the expenditures referred to in Article 3, the selling party or parties whose shares are deposited in the FND will reimburse BNDES within 60 days of the auction sale.
Article 6: For the purposes of complying with Articles 4 and 5 above, an agreement may be signed between the holder(s) of shares deposited in the FND and BNDES, in order to define the reimbursement of expenditures incurred through the contracting of third party services to privatize CELG D.
Article 7: This Resolution will go into effect on the date of its publication.
Armando Monteiro Chairman of the Council
Warning No 259/ 2015 / GM-MME
Brasilia, November 18, 2015.
His Excellency
ARMANDO QUEIROZ MONTEIRO NETO
Minister of Development, Industry and Foreign Trade and President of the National Privatization Council CND-Brasilia-DF
Subject:
setting the minimum selling price for CELG Distribuição S.A. CELG D
Minister,
1. I please request your Excellence for the editing proposal of the resolution of The National Privatization Council-CND to be examined, providing for CELG Distribuição S.A the approval of the privatization conditions, and approval of the minimum price for the issuing of its shares, aiming to alienate the representative share of its shares control through auction, as required by art. 4º, § 3º, of Law Nº 9.491, from September 9, 1997.
2. Therefore, I forward herewith the AEP/SUP letter No. 26, of November 13, 2015 of Banco Nacional de Desenvolvimento Econômico e Social
–
BNDES (National Economic and Social Development Bank) together with the Privatization Modeling Report of CELG Distribuição S.A. - CELG D, prepared by the International Finance Corporation IFC, dated of November 5, 2015; CND resolution draft; and Note AEP/JUREP No 10, of November 13 of 2015.
3. In addition, Mr. Minister, the Technical Notes No. 121 and No 122, of the Economic Consulting, dated of November 16 and 18, 2015, and Note No 254, of the Legal Consulting, November 17, 2015, are being sent to justify the urgency of the adoption of the proposed resolution, ad referendum of the Board.
Yours faithfully,
EDUARDO BRAGA
Ministry of Mines and Energy
National Privatization Council - CND
RESOLUTION No 11, OF NOVEMBER 18, 2015
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Approves the privatization conditions of CELG Distribuição S.A. - CELG D and minimal price of shares issued for sale purposes of equity interest representing its controlling interest through auction, as required by art. 4º,§3º, of Law No. 9.491, of September 9, 1997, and other related measures.
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THE PRESIDENT OF THE NATIONAL PRIVATIZATION COUNCIL - CND
, using the prerogative established in the art. 5º,§ 4º, of Law No. 9491, of September 9, 1997, and to focus on art. 12 of Decree No. 2594 of May 15, 1998,
Whereas:
CELG Distribuição S.A.-CELG D was included in the National Privatization Program
–
PND on May 13, 2015, by Decree 8449 of May 13, 2015;
Referred decree appointed the Ministry of Mines and Energy as responsible for the implementation and monitoring of CELG D privatization process in accordance with art. 6º,§ 1º of Law 9491 of September 9, 1997, and designated the Banco Nacional de Desenvolvimento Econômico e Social - BNDES as responsible for hiring the services and provide technical support needed for the implementation of the privatization CELG D;
A shares control in CELG D is owned by Centrais Elétricas Brasileiras S.A. -Eletrobras, which owns approximately 50.93% (fifty point ninety-three percent) of the total and voting capital of CELG D;
49.00% (forty-nine percent) of the shares of CELG D are owned by Companhia Celg de Participações - CELGPar, whose control is held by the State of Goiás;
The Law 12783, of January 11, 2013, on its art. 7º, authorized that the electricity distribution concessions achieved by art. 22 of Law No. 9074, of July 7, 1995, can be extended, under the granting authority's criteria, only once, for a period of thirty (30) years, in order to ensure continuity, efficiency of service delivery, low tariff and meeting the operational and economic rationality criteria;
Decree No. 8461 of June 2, 2015, authorized the Ministry of Mines and Energy to extend the electricity distribution concessions under the scope of art. 7º of Law 12783, of January 11, 2013, for thirty (30) years, since there is expressed acceptance by the concessionaire conditions set out in concession contract or its amendment agreement;
Resolution CNDne 11, of November 18, 2015 Fls. 2
Agência Nacional de Energia Elétrica
–
ANEEL (National Agency of Electric Energy) promoted in July 2015, the first phase of the Public Hearing 38/2015, and in September 2015, its second phase, aiming to receive contributions to elaborate the concession agreement draft to distributors;
ANEEL published on October 26, 2015, in the Official Gazette (Diário Oficial da União), the Order No. 3540, which approved the draft Amendment to the Concession Agreement, to be signed by CELG D, and recommended to the Ministry of Mines and Energy the grant extension under Decree No. 8461 of June 2, 2015; and
The Ministry of Mines and Energy, on November 5, 2015, through the Circular letter No. 03/2015-SE-MME, provided to the electricity distributors the Amendment draft to the Concession Agreement for approval of their deliberative bodies and subsequent signing;
Decides,
ad referendum
of the collegiate, to approve the following conditions for the CELG D privatization:
Art. 1º The privatization of CELG D will be given in the form provided on art. 4º, section l, Law No. 9491, of September 9, 1997, upon the disposition of 76,761,267 (seventy-six million, seven hundred sixty-one thousand two hundred sixty-seven) common shares owned by Eletrobras, which represent approximately 50.93% (fifty point ninety-three percent) of the total and voting capital of CELG D.
Sole paragraph: The minimum sale value of 76,761,267 (seventy-six million, seven hundred sixty-one thousand two hundred sixty-seven) common shares owned by Eletrobras will be 1,427,474,200.79 (one billion, four hundred twenty-seven million, four hundred seventy-four thousand, two hundred reais and seventy-nine cents), including the corresponding amount of the offer to employees and retirees.
Art. 2º As part of the privatization of CELG D, can also be sold
pari passu
with Eletrobras, in whole or in part, shares owned by CELGPar representing the capital of CELG D, since so authorized by CELGPar and that such shares of its ownership in CELG D that are of sale under the privatization of CELG D are free and clear of any liens, encumbrances or restrictions, also observed procedures applicable along with its controlling shareholder.
Art. 3 The privatization public notice of CELG D will define the lots of shares to be offered, and in the case of more than one lot the purchase must be fully made by the same purchaser.
Art. 4 Is hereby authorized deposit in the National Privatization Fund - FND of shares owned by Celgpar in the share capital of CELG D, in case Celgpar decide to divest all or part of their shares on CELG D.
Resolution CNDne 11, of 18 November 2015 Fls. 3
Once deposited in the FND, Celgpar's shares may only be removed from the FND in the following cases: I - non-occurrence of CELG D shares auction until November 30, 2016; II - occurring the auctions until November 30, 2016, but with no alienation of the shares, and Ill - by reasoned decision of the CND at any time, or whichever comes first.
§ 2 to under the heading of this article, Celgpar should grant to BNDES powers to sell their shares in CELG D.
§ 3 BNDES will receive payment of 0.2% referred to in art. 21 of Law No. 9,491, of September 9, 1997, also levied on the shareholding of Celgpar.
§ 4 the resources from the sale of Celgpar shares ownership will be passed on, in domestic currency, by BNDES directly to Celgpar following art. 42 of Decree No. 2,594, of May 15, 1998, after deduction of the payment provided for in paragraph 3 of this article. as well as the expenses incurred by hiring third parties by the BNDES, in proportion to the percentage sold by Celgpar.
Art. 5º the minimum price of each CELG D share aiming to dispose the respective shares by Eletrobras within the auction referred to in art. 1º will be approximately R$ 18.63 in case of sale of CELG D shares owned only by Eletrobras, in which case should be offered 75,355,789 common shares of CELG D owned by Eletrobras, which reaches the total amount of R$ 1,403,904,334.73 for the lot.
§ 1 In order to allow the transfer of share control of CELG D, in case of the hypothesis provided in this Article caput, will be offered to employees and retirees of CELG D 1,405,478 common shares issued by CELG D, corresponding to approximately 0.93% of the total capital share and voting of CELG D owned by Eletrobras, at the price of R$ 16.77 per share, which reaches the value of R$ 23,569,866.06.
§ 2 the price of each share mentioned in 1 was calculated after applying the discount of approximately 10% compared to the respective minimum price referred in the caput of this article.
Resolution CND ng 11, of November 18, 2015-Fls. 4
Art. 6º In case that Celgpar decides to sell all the shares held jointly with Eletrobras, the minimum price of each CELG D share held by Eletrobras and Celgpar, for disposal purposes, will be approximately of R$ 18.69, totaling a lot of R$ 2,671,672,506.21.
§ 1 in case of what´s in the caput, the price of each share of CELG D in the scope of the offer to employees and retirees of CELG D will be R$ 16.82, which total the amount of R$ 129,112,456.14 already included the discount of approximately 10% compared to the minimum price referred in this article.
§ 2 if it is not offered in the auction all of CELG shares ownership of Celgpar the values specified in the caput of art. 6º, and its §1, should be revised in proportion to the shares actually offered in CELG D privatization notice to ensure Eletrobras full price defined in the sole paragraph of art. 1
§ 3 The review provided for in §2 should ensure the control of CELG D sale, seek to maximize the number of actions offered to employees and retirees and keep the full price of the company, observing the actual percentage of shares offered by Celgpar in the public notice of privatization and the discount of approximately 10% over the revised minimum price.
Art. 7 The enabling conditions for employees and retirees will be defined in the privatization public notice.
§ 1 The total amount of shares of CELG D to be offered to employees and retirees will be divided pro rata and equally among all those considered eligible for the purposes of this article.
§ 2 The remains of the offer to employees and retirees of CELGD could be acquired by employees and retirees of CELG D who have expressly made the reservation in the first offer, limited to twice the amount gained in the first offer.
3 The remains of the second offer to employees and retirees of CELG D should be acquired by the winner of the event, by the price equal to the offering value done to employees and retirees of CELG D and in no later than sixty (60) days counted from the settlement date of the second offer to employees and retirees of CELG D
§4 observing the provisions of §5, the employee or retired of CELG D may only dispose the shares acquired after a period of three (3) years, starting on the signature date of Shares Purchase and Sale Agreement.
Resolution CND ne 11, of November 18, 2015-Fls. 5
§ 5 In the privatization bid should be an obligation to repurchase, by the winners of the event, all CELG D shares acquired by employees and/or retirees CELG D that wish to sell such shares at the minimum price for the sale of control, duly updated by the positive variation of the National Index of Consumer Price (IPCA), published by the Brazilian Institute of Geography and Statistics (IBGE), with additional remuneration of 8% per year, in case of not occurring the opening of CELG D capital and the listing of its shares within three years counting from the signature date of the Agreement for Shares Purchase.
§ 6 The financial settlement of the shares acquired by employees and retirees of CELG D will be in cash and in local currency.
Art. 8 In the privatization bid of CELG D should be set if and in what volume of shares, Celgpar participate in the privatization auction of CELG D.
Art. 9 should be made public hearing pursuant to art. 39 of Law 8666 of June 21, 1993 in order to give greater transparency to the privatization process of CELG D.
Art. 10, payment of CELG D shares offered in auction will be cash and in domestic currency.
Art. 11. The financial settlement of the CELG D sale of shares and the share transfer of ownership to CELG D to winner buyers will be subject to approval by the National Electric Energy Agency ANEEL and the Administrative Council for Economic Defense CADE, in the form of the respective legislation and applicable standards.
Art. 12. The National Bank for Economic and Social Development BNDES, responsible for hiring the services needed for the privatization of CELG D, in accordance with art. 3º of Decree 8449 of May 13, 2015, is authorized to hire specialized services of technical advice and operational support, related to the procedures needed to carry out the auction of share sale issued by CELG D, including by waiver of bidding, observed in the Law No. 8666, of 1993.
Art. 13. It is authorized the opening of information room
–
data room - before public notice, which shall contain the information and documents of CELG D so that concerned parties can perform acts.
§ 1 opening of information room - data room, does not depend of the participation definition of Celgpar.
§ 2 should be prepared a manual of diligence procedure, which can define, among others, the following matters:
I - opening and closing schedule of the information room; ll - form of visits scheduling; Resolution CND ne 11, of November 18, 2015-Fls. 6
III - payment and/or collateral for access to information room; and
IV - only limited access to qualified groups, according to art. 28, § 3º, of Decree 2594 of May 15, 1998.
§ 3º the diligence procedure by stakeholders in the privatization comprise the following main activities:
I - documents evaluation, II - technical visits, and
III - meetings with managers, which are accompanied by the external auditor, according to powers under the procedure manual.
§ 4º the operating procedure of stakeholders in the CELG D privatization should be disclosed through the Official Gazette, in notorious national newspaper, as well as in electronic sites of the Ministry of Mines and Energy, CELGDe National Bank for Economic and Social Development -BNDES.
§ 5º The diligence activities by the parties do not rule out the future possibility of holding events of details concerning the privatization notice of CELG D, whose conditions will be provided.
Art. 14 the term between the publication of the notice and the date of sale of CELG D shares shall comply with the minimum interval of 15 days.
Art. 15, the legal, technical and financial qualification requirements, will be established in the privatization bid of CELG D.
Art. 16. This Resolution shall enter into force the date of its publication, and the publication of the privatization notice of CELG D conditioned to the extension of the concession agreement of CELG D.
ARMANDO MONTEIRO
Council President
Annex 5. Accounting and Tax Due Diligence of CELG D
Annex 6. Operational Projections Report CELG D
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Table of Contents
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1. Introduction
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6
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2. Projections
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7
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2.1.
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Required Income and Distribution Taxes
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7
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2.2.
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Market
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7
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2.2.1.
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Introduction
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7
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2.2.2.
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Methodology
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8
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2.2.3.
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Demand Projection with Brazil's GDP
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10
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2.2.4.
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Summary of results
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28
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2.2.5.
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Projection of Demand with Goiás' GDP
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29
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2.3.
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Investments
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31
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2.3.1.
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Introduction
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31
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2.3.2.
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Work Methodology
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31
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2.3.3.
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Investments Proposed by Celg D for the 10 years period (2015 to 2024)
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31
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2.3.4.
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Projection of Investments for Celg D for 30 Years – Period from 2015 to 2045
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38
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2.4.
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BRR and depreciations
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43
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2.4.1.
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Results
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44
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2.4.2.
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Graphics
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48
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2.5.
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Operational Costs – Efficacy
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49
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2.5.1.
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Operational costs of 3CRTP
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49
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2.5.2.
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Operational costs 4CRTP
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52
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2.5.3.
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Projections Operational Costs
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53
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2.6.
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Quality
|
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58
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2.6.1.
|
Compensations
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58
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2.6.2.
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Costs for quick improvement of quality
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59
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2.7.
|
Losses
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60
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2.7.1.
|
Introduction
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60
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2.7.2.
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Work Methodology
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60
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2.7.3.
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Losses on energy output Performed and Expected
|
60
|
2.8.
|
Irretrievable Revenues and Other Revenues.
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63
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2.8.1.
|
Irretrievable Revenues (RI)
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63
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2.8.2.
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Other Revenues (OR)
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Glossary
ANEEL: National Agency of Electric Energy
Test Year: defined as the period of twelve months immediately previously to the month of the Periodic Tax Review.
BAR: Regulatory Annuity Base BRR: Regulatory Remuneration Base Celg D or CELG D: Celg Distribuição SA
COLS: Corrected Ordinary Least Squares CRTP: Periodic Tax Review Cycle DEA: Date Envelopment Analysis
DIC: Duration of Individual Interruption per Consumer Unit
DMIC: Maximum duration of Continuous Interruption per Consumer Unit
FIC: Frequency of individual interruption per Consumer Unit
OPEX: Operational Costs
PDD: Distribution Development Program
PLpT: Program Luz para Todos
PMSO: Personnel, Material, Services from Third Parties and Others
RT: Tax review
Ses: Electric Substations
SPARTA: System for Yearly Tax Automated Review/adjustment Processes, developed by ANEEL
TAC: Conduct Adjustment Term
UC: Consumer Units VPB: Value of Part B
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Figure Index
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Figure 1: Projection Brazil's GDP and Goiás' GDP
|
8
|
Figure 2: Unit consumption Residential Clients in MWh
-
Period 2003
-
2015
|
11
|
Figure 3: Sale of Residential Energy in GWh
-
Period 2010
-
2045
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12
|
Figure 4: Sales of commercial energy in GWh –
Period 2000
-
2045
|
16
|
Figure 5: Sales of Industrial Energy in GWh
-
Period 2000
-
2015
|
16
|
Figure 6: Sales of Industrial Energy in GWh
-
Period 2000
-
2045
|
20
|
Figure 7: Sales of Public Lighting energy in GWh
-
Period 2000
-
2014
|
20
|
Figure 8: Sales of Public Lighting Energy
-
period 2007
-
2015
|
21
|
Figure 9: Sales of Public Lighting Energy in GWh
-
Period 2000
-
2045
|
21
|
Figure 10: Sales of Others Energy in GWh
-
Period 2001
-
2015
|
22
|
Figure 11: Sales of Energy Others in GWh
-
Period 2000
-
2045
|
22
|
Figure 12: Rural Clients (UC)
-
Period 2010
-
2045
|
23
|
Figure 13: Sale of Rural energy in GWh
-
Period 2000
-
2045
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27
|
Figure 14: Energy per class, with Brazil's GDP – Period 2000
-
2045.
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28
|
Figure 15: Energy for class, with Goiás' GDP – Period 2000
-
2045.
|
30
|
Figure 16: Total investments CELG D, per type (2015
-
2024)
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35
|
Figure 17: Total investments without universalization
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36
|
Figure 18: Comparison of the investments in AT and MT + BT
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37
|
Figure 19: Comparison Total Investments and Expansion, (without universalization)
|
37
|
Figure 20: Comparison of the Total investments and Improvements.
|
38
|
Figure 21: Projections of Investment Base Scenario (2016
-
2045)
|
40
|
Figure 22: Projections of Investment Three Year Scenario (2016
-
2045)
|
41
|
Figure 23: Projections of Investment Goiás' GDP Scenario (2016
-
2045)
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42
|
Figure 24: Investments for three scenarios
-
Source: Own
|
43
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Figure 25: Projections of the Base of Gross, Net Remuneration and accrued Depreciation, Base
|
Scenario (in face values)
|
48
|
Figure 26: Projections of the Base of Gross, Net Remuneration and accrued Depreciation, Three Year
|
Scenario (in face values)
|
48
|
Figure 27: Projections of the Base of Gross, Net Remuneration and accrued Depreciation, Goiás' GDP
|
Scenario (in face values)
|
49
|
Figure 28: Updating of operational costs
-
Source: ANEEL
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49
|
Figure 29: Updating of operational costs
-
Source: ANEEL
|
51
|
Figure 30: Evolution of Technical and Non
-
Technical Losses on Energy Output (Performed and
|
Expected)
-
: Report PNT Celg 2015 and Projection Quantum 2015
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62
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Figure 31: Irretrievable revenues per consumption class
-
Source: ANEEL
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Table Index
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Table 1: Relation of works of the Distribution Development Plan (PDD) 2015
-
2024
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32
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Table 2: Additional investments to PDD proposed by Celg D
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33
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Table 3: Investments in assets of the Regulatory Yearly Installment Basis (BAR) proposed by Celg D
. 33
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Table 4: Summary of the investments proposed by Celg D
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34
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Table 5: Total investments without Universalization
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36
|
Table 6: Updating of operational costs
-
Source: ANEEL – RT 3C of CELG.
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50
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Table 7: Range of operational costs
-
Source: ANEEL – AP 40/2010.
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51
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Table 8: Updating of actual operational costs of the distributor
-
Source: ANEEL – RT 3C of CELG
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52
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Table 9: Range of operational costs
-
Source: ANEEL – RT 3C of CELG.
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52
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Table 10: Range of operational costs 4C
-
Source: ANEEL – AP23/2014.
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53
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Table 11: Range of operational costs 4C, corrected
-
Source: ANEEL – AP23/2014
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53
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Table 12: Regulatory Limits ANEEL
-
Source: Report PNT Celg 2015 and ANEEL 2015
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60
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Table 13: Table with Index for Technical and non
-
technical Losses on Energy Output (Performed and
|
Expected)
-
Source: Report PNT Celg 2015 and Projection Quantum
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Table 14: Evolution of Trajectory and Expected Speed of Losses on Energy Output
-
Source: Report
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PNT Celg 2015 and Projection Quantum 2015
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This report presents details of the projections of Operational Due Diligence of
Celg Distribuição S.A. –CELG D
describing the information sources, methodologies, premises and analyses used for preparing the following projections:
• Market
• Investments
• BRR and depreciations
• Losses
• Operational costs
• Quality
• Irretrievable revenues
• Other Revenues
Three projection scenarios were defined which difference resides in the growth projection for the market and future investments. The prepared scenarios are:
(I)
Base Scenario,
growth of the market projected using Goiás' GDP until 2019 and the Brazil's GDP the following years. In this scenario, the new grantee does the necessary investments to improve the service indicators in five years;
(II)
Three Year Scenario
, market growth identical to the Base Scenario and anticipation of investments to meet the quality limits throughout the three first years, decreasing the fines and capturing part of these investments in the tax review of 2017 and
(III)
Goiás' GDP Scenario
, considering Goiás' GDP to project the market growth and on account of a larger market has higher investments in the long term.
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Scenario / Variable
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Growth of the Market
|
Investments
|
|
|
|
Investments in quality improvement
|
|
GDP of Goiás until 2019 and
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|
|
throughout the first three years and
|
Three Years
|
National GDP until the end of
|
|
|
|
necessary investments to follow the market
|
|
the concession.
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|
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growth in the long term.
|
|
|
|
Investments in quality improvement
|
|
GDP of Goiás until 2019 and
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|
Base
|
|
throughout the first five years and necessary
|
|
National GDP until the end of
|
|
(5 years)
|
|
investments to follow the market growth in
|
|
the concession.
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the long term.
|
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Investments in quality improvement
|
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GDP of Goiás throughout the
|
throughout the first five years and higher
|
Goiás' GDP
|
|
|
|
period of the concession.
|
investments in the long term to follow the
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expected market growth from Goiás' GDP.
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2.
Projections
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2.1.
Required Income and Distribution Taxes
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The operational income of the company will be stipulated to the recognition by the regulating agency (Aneel) of effective costs necessary for the installment of the service of distribution of electric energy; these costs, which consider effective levels of operational costs, costs of capital, technical losses and not technical and breach of contract and costs of purchase of the energy, responsibilities and transport integrate what is called with Required Income of the distributor, who will have to be rehabilitated through the application of the tax structure to the consumer market.
The Required Income is composed by two parts:
·
Part A: considering the “non manageable” costs for the company such as purchase of energy, transport and partial responsibilities and it will have to be neuter for the management of the distributor (go over again of the real costs for the consumer – Passthrough) being that it considers effective levels of technical losses and not technical.
·
Part B: considering the "manageable" costs for the company such as costs of capital (remuneration and depreciation) and the effective operational costs (including effective levels of breach of contract).
So, considering the methodology regulatory of recognition of effective costs, there were modeled each one of the concepts that compose the Required Income, when the object of the study is always the calculation of the Value of the Piece B (VPB), so it represents the principal vector of generation of value for the company.
For end, being that the purpose of this work will be to determine the value of the company, the calculation of the taxes of distribution for class lacks for sense, since they will only represent the form of recovering the costs recognized through the market.
In the items following in this document the methodologies will be detailed and turned out to be from the modeling of the principal variables used for the economical evaluation of the company.
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2.2.
Market
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2.2.1.
Introduction
|
The goal of this chapter will be to describe the studies carried out to appreciate the projections of demand of electric energy of the distributor CELG D for the period understood between the 2016 years to 2045; there were carried out two projections that consider the GDP of Brazil and the GDP of the State of Goiás respectively.
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·
(2001
-
2014): The series in current prices were obtained of the IBGE, Brazilian Institute of Geography and Statistic
(www.ibge.gov.br)
and were converted at constant prices of the 2012 year, with ends of performing the projections of market.
·
(2015
-
2019): There were used the growth rates of the GDP informed by the publication Focus of the Central Bank of Brazil.
·
(2020
-
2045): There was maintained constantly the fee informed for the year of 2019 of the publication Focus.
II.
GDP Goiás
·
(2001
-
2014): Institute Mauro Borges of Statistics and Socio
-
economical Studies
(www.imb.go.gov.br
).
III.
Demographic data: The data were obtained of the IBGE, Brazilian Institute of Geography and Statistic
(www.ibge.gov.br).
·
The projection of the residential and rural consumers was based on analytical method using the data of population and residences of Goiás, obtained of the population censuses of 2000 and 2010.
·
The information of electric covering was obtained of different sources. For the case of the home electric covering, for the 2001 year the least value was used for the region of Goiás of the publication of the Aneel “Atlas of Electric Energy
-
2nd Publication”
2
. To define the value of the level of rural electric covering of the 2001 year, present information were used in the article
“Evaluation of the Regional Diversity of the Country for implementation of the Program of Rural Electrification “Shines in the Field””
3
,
of the CEPEL (Center of Researches of Electric Energy). For the 2010 year, the electric coverings were calculated in function of the data of the censuses of quantity of residences with electric energy regarding the total residences.
·
The projections of the population from 2010 to 2030 were obtained of the IBGE. For the period 2030
-
2045 was projected the population maintaining constantly to fee of the 2030 year of the IBGE.
The econometric method of esteem used was it of Least Ordinary Squares and the software the E
-
Views version 7.
The selection of the most appropriate model was carried out considering:
·
The kindness of the agreement of the model (R
2
adjusted),
·
The individual and joint signification of the coefficients through the values of statistical t and F respectively,
·
The presence of correct signs in the value of the coefficients,
·
That the wastes were not showing autocorrelation (statistical D
-
W or Breusch
-
Godfrey Test), not even heteroskedascity (White Test) or seasonality (Increased Dickey Fuller
-
Test of Unit Root).
For the cases in which autocorrelation signs were observed or seasonality in the wastes, there were used techniques of Dynamic Econometrics (including late variables). The presence of heteroskedascity in the wastes was corrected using the favorite method of White.
Finally, in the cases where was not it possible the models use econometrics was used models of tendency (linear or logarithmic),or well, models with specific criteria that will be described in the near items.
2
http://www.aneel.gov.br/aplicacoes/atlas/aspectos_socioeconomicos/11_2_1.htm
3
http://www.ecoeco.org.br/conteudo/publicacoes/encontros/v_en/Mesa5/7.pdf
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2.2.5.
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Projection of Demand with Goiás' GDP
|
The second projection of demand of electric energy was carried out considering the GDP of Goiás as macroeconomical variable in the development of the models.
The series of GDP of Goiás were prepared in the following form:
·
(2001
-
2014): The series in current prices were obtained of the Institute Mauro Borges,
(www.imb.go.gov.br
) and were converted at constant prices of the 2012 year.
·
(2015
-
2019): There were calculated growth rates as result of a regression between the GDP of Brazil and the history GDP of Goiás. The model used for the regression was an ARIMA (1,0,1).
·
THE GDP per capita of Goiás was calculated as the quotient between the GDP Goiás at constant prices of 2012 and the population of Goiás. Already, the population of Goiás was obtained of the IBGE up to the 2030 year and then projected maintaining constantly the growth rate of the last available year.
The other demographic data used for the projection were same that the considered ones in the previous projection.
The projections of quantity of clients maintain the same results when variable GDP of Brazil was obtained with.
For another part, for the energy projections there were maintained the criteria detailed in the previous projection, however, with some agreements in the econometric models. Following, the changes are detailed as to the projections when Brazil is using the GDP:
·
Commercial energy: It was
projected by means of a econometric model by Least Ordinary Squares, finding
the history values
from 2005 to 2015. The difference of the model used for the projection with GDP Brazil, was not necessary to use as independent variable “Commercial Clients” delayed in a period. Simply, a regression was done between “Commercial Clients” and GDP Goiás.
·
Industrial energy: It
was projected by means of a econometric model by Least Ordinary Squares finding the history values from 2008 to 2015. The difference of the model used for the projection with the GDP of Brazil, was used the GDP Goiás and besides the model was corrected by means of the incorporation of an AIR (1) and an AIR (2).
Following, the results are presented for each class:
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2.3.
Investments
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2.3.1.
Introduction
|
This report presents the information, premises and analyses adopted for the preparation of the programs of investments of Celg D in the period of 2015
-
2045.
The programs of investments open to question were developed from information supplied by Celg D and there are a relevant part of Due Diligence performed by the Quantum in that dealership.
Celg D made available in the work environment an assembly of documents with information as to the investments for her predicted for the period 2015
-
2024, there found the investments relative to the expansion and improvement in the electric system, which will be going to compose the Base of Remuneration Regulatory, as well as investments in real
-
estate facilities and vehicles, which will be going to compose the Base of Annuity Regulatory – BAR. The principal documents made available in the environment of work were the Plan of Results handed by Celg D to the ANEEL in April of 2015, the Plan of Development of the Distribution – PDD 2015
-
2024 and a relation of necessary additional investments.
Also documents were made available with general information on the current conditions of the electric system, starting point for the analyses of the Quantum. These analyses looked to value the correspondence between the proposed investments and the projections of market and number of consumers, as well as the conditions of the electric system reflected by the levels of load and voltage and obsolescence of substations, lines and nets.
There were countless meetings with the technical team of Celg D in Goiânia to treat the appeared doubts, as well as several solicitations of additional information subsequently put in the environment of work.
In elapsing of the work they were visited to significant samples of the electric system, understanding substations and lines of High voltage and lines and nets of Middle and Low Voltage, storerooms and workshops.
The foresight of investment relative to the solution of detected environmental liabilities was prepared by the Quantum from diagnosis done by expert of this consultancy and discussions and alignments with the team of Environmental Management of the dealership.
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|
2.3.3.
|
Investments Proposed by Celg D for the 10 years period (2015 to 2024)
|
For service of the determinations of the ANEEL and commitments of adjustment of conduct secured by the dealership, a Plan of Results was developed by CELG, including a period of four years, containing the actions and related resources associated with the improvement of the rates of service quality, among others.
These programs are inserted and are contained in the Plan of Development of the Distribution (PDD), demanded of the distributors in the Procedures of Distribution
-
PRODIST, covering a horizon of ten years to the front.
Complementarily to these resources, the dealership relates additional programs, understanding obligations of universalization of service and necessary resources of automation of nets and for maintenance of substations (CATHEDRAL) – acquisition of movable SEs.
The investments quoted above integrate the Base of Remuneration Regulatory (BRR).
Also investments were informed in facilities and fleet of vehicles / equipments, which compose the Base of Annuity Regulatory (BAR), but investments were not informed in computer science resources.
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(2015 to 2024) constantly of the PDD, the additional investments and the investments in facilities and fleet of vehicles
-
BAR proposed by Celg D.
To the investments proposed by Celg D the investments appreciated by the Quantum were added to remove liabilities associated to the environmental and estimative questions of investments in computer science.
The premises and criteria adopted in the Base Scenario for preparation of the projections of investment were:
§
Period 2015
-
2020:
ü
When the values proposed by Celg D in the PDD for expansion were adopted, improvements and works predicted in the Terms of Adjustment of Conduct – TAC, added to the data of the document Necessary Investments that contemplate the Program It Shines for All and Rural universalization, besides some investments of improvement related to the acquisition of re
starters and movable substations. The values relative to Rural universalization and Light for All tell to commitments assumed by Celg D with the ANEEL in the context of the public audience 045/2015 to themselves, what spreads the deadline out for universalization up to 2020.
ü
There were adopted the investments predicted by Celg D for facilities and fleet of vehicles up to 2019 and from then on a value defined by the consultancy up to the end of the concession.
There is no foresight of Celg D for computer science and it was adopted by the Quantum a value R$ 4 million per year up to the end of the concession, on basis of values usually practiced in the market.
ü
The necessary investment values were added from 2016 to the regularization of the environmental liabilities predicted in the evaluation prepared by the consultancy.
ü
The initial foresight of investment of Celg D for 2015 will not be carried out in the totality. The most recent expectation of realization informed by the dealership is of R$280,000,000.00. The difference between the initial foresight and the realization expectation was deferred then for four following years, from 2016 to 2019, of uniform way, thinking that there are investments in fact necessary and that they will be carried out.
§
Period 2021
-
2045
ü
A deferment of the Investments was done in Expansion AT and Improvement AT of the 2021 years to 2024 in five years, from 2021 to 2025. The reason is that the values informed by CELG
D if they were maintaining in the same level of the period 2016
-
2020, which seems unjustifiable thinking that the principal limitations of the electric system would be already resolved up to 2020 according to commitments assumed in the Plan of Results.
ü
From 2025 (end of the period of deferment) the investments in Expansion and Improvement AT (except Movable SEs) grow for equal fee to 66,6 % of the growth of the market. The reason is which part of the growth of market is attended for densification, without necessity of expansion of the electric system. She is usual practice in the sector to use the growth of the market as driver of investments projection.
ü
Growth of the investments from 2020 in Expansion MT and BT and Improvement MT (except Movable SEs and Automation of Nets) and BT for equal fee to 66,6 % of the growth of the market, the same criterion established adapts previous item.
ü
In the period of 2025 in before projection of the Celg was adopted for Rural universalization and My House My Life constant in the document Necessary Investments, overstepped up to 2045.
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d)
Goods capitalized after the third cycle up to June of 2015 (50.867 registers) updated by the rates defined by ANEEL (IPA
-
34, INCC, IPCA, IGP
-
M).
e)
Goods capitalized in July, August and September (12.508 registers) corrected by the rates established by ANEEL (IPA
-
34, INCC, IPCA and IGPM) and when the works susceptible to capitalization were added up to December of 2015 in the value of R$ 76.900.454,00.
In this way, the BRR was calculated up to the 30th of June of 2015 and tie on 31st of December of 2015. Leaving from there, the BRR was added of the values of the yearly investments predicted for the years from 2016 to 2045 and when the depreciations were calculated in the period in accordance with the fees established by ANEEL.
According to the standards contained in the sub
-
module 2.3 of the PRORET, the assets and administrative constructions, the software, the general equipments and the vehicles were withdrawn of the calculation of the BRR, since they are recognized as Regulatory Yearly Installment Basis
-
BAR, in the capital cost.
The investments done with capital input from third parties were registered as Special Obligations and the rates of Use of Substations and Lands and the totally devalued goods were knocked down of the value of the Base of Gross Remuneration, according to the standards of the ANEEL.
As relevant considerations we can still quote:
·
BRB (Base of Gross Remuneration
-
year n) = BRB (Base of Gross Remuneration
-
year n
-
1) + Electric Investments (year n) – You Go down (year n)
·
BRL (Base of Net Remuneration) = BRB (year n) – Accrued Depreciation (year n)
·
QRR (Quota of Reintegration Regulatory
-
year n) = BRB (year n) x Fee of Middle Depreciation The fee of middle depreciation is calculated and approved by ANEEL in the Periodic Tax Reviews when each company is taking into account the not totally devalued electric assets of.
The considered values are demonstrated in the spreadsheets down.
Following, there will be presented the principal results of the projections of the base of remuneration of the CELG D: Base of Gross Remuneration, accrued Depreciation, Fee of depreciation, Quota of Reintegration Regulatory and finally the Base of Net Remuneration.
Besides, for each one of the scenarios the investments values will be presented in electric assets.
The values are expressed in Rated R$ of each year.
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that it defined the level of efficacy of the current costs of the distributor and its potential of decrease of same. For that, we apply the score of efficacy obtained by ANEEL in the models of the AP 23/2014. In case of the CELG, the efficacy range was the following thing:
Table 10: Range of operational costs 4C
-
Source: ANEEL – AP23/2014.
These results will have to be corrected by the medium one of the companies with upper efficacy to 50 %, turning in factor of agreement of 76 %. The finally applicable scores on the real costs of the CELG are those who follow:
Table 11: Range of operational costs 4C, corrected
-
Source: ANEEL – AP23/2014.
So, in 4CRTP there was defined the new landing of effective costs to be recognized by the regulator, being the range between 85 % and 97,6 % of the real costs of the distributor (taking as reference the average of real costs between 2011 and 2013).
It is important to notice that the efficacy landing regulatory of the CELG presents an improvement between the third thing and the fourth cycle of tax review, passing of 63,24 % for 68,9 % of efficacy and, in the short term, it is waited what the operational costs of the distributor get regulatory reaches the effective landing.
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|
2.5.3.
|
Projections Operational Costs
|
In the analysis period, the tax reviews will be carried out to each five years from the 2017 year, when the 4th RTP of the CELG will happen.
First of all, it is necessary to explain that the definition and calculation of the operational costs were performed in the different form for the
recognized
operational costs defined with criteria regulatory, and the
real
operational costs defined in base the criteria that there has to see with the management and evolution of the distributors. The behavior of both groups of costs is of certainty independent form, however, the methodology regulatory is based on the real costs observed in the companies.
By another part, due to the exvoltage of the period in analysis, some premises must be adopted to supply the landmark of modeling necessary for the esteem of the operational costs.
For end, the treatment of the operational costs be detailed in the following items.
|
|
2.5.3.1.
|
Actual Operational costs
|
The real operational costs were modeled to appreciate the performance waited from the distributor in the period in analysis. For that, the following premises were adopted:
1.
For the history years, there were thought the information of the REPORTS OF QUARTERLY INFORMATION – RIT (that are of public access), sent by the Distributor for Aneel.
a.
The information of the RIT were adjusted to pass of calendar year for years regulatory (September / August).
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b.
The Personnel concepts were segregated, Materials, Services of Third and Other (PMSO), of the total of the real costs, for comparison with the recognized costs, and, too many real costs were considered in a specific line as “COSTS NOT RECOGNIZED”.
2.
NOT RECOGNIZED” they consider the “COSTS:
a.
Costs associated to the difference between losses real and recognized, which produces a deficit in the energy purchase.
b.
Operational costs associated to the program of improvement of the Quality, which were modeled for each scenario, being which less terms for improvement require efforts more maximum of cost.
c.
Assets annuities not electric what regulatory are recognized by the Base of Annuity Regulatory (BAR) and what compose part of the real operational costs of the company, such as rents. These costs evolve with the variation of the market and X are updated also by the inflation and by the component Productivity of the Factor.
3.
The treatment of the real PMSO is what it follows:
a.
Initially, the real PMSO were divided in two pieces, one that represents the "effective" costs (calculated in function of the result that the CELG obtained in the benchmarking for it 4CRTP), and a complementary piece of inefficient costs, which the company might decrease or to remove. They were modeled this excess of costs to be removed up to the 2018 year. Being that from the 2019 year the company always carries out bottom effective costs to the regulatory.
For another part, the effective costs are modeled in function of the growth of the market and decreased by the productivity.
b.
Finally, for the separation of the costs in the principal counts of operational costs (Personnel, Materials, Services of Third and Different), there was maintained the proportion observed in the real costs in the 2013's.
|
|
2.5.3.2.
|
Acknowledged costs (regulatory)
|
Already for the case of the definition of the costs regulatory, the modeling is somewhat more complex, since it involves methodologies of benchmarking established by the regulator that they observe, in its definition, the behavior of the real costs of the distributors, besides other considerations regulatory what were put by ANEEL for its determination.
Following there are described shortly the principal premises considered in the modeling of same:
1.
For the history years, there were thought the constant values in the reviews and tax adjustments of the CELG for each year.
2.
In the years of tax review, the modeling was performed considering the methodology of 4CRTP, what will be detailed better in the near items of this report.
3.
In the years between the reviews, when the yearly tax adjustments (IRT) happen, the PMSO are calculated considering the value of PMSO of the previous year when X updated by the growth of the market and the application of the Factor.
|
|
2.5.3.3.
|
Acknowledged costs (regulatory) – Calculation in tax reviews
|
The calculation regulatory of the operational costs to be recognized in the taxes of the distributors is performed following the traces of the Technical Note N ° 66/2015
-
SRM/SGT/ANEEL, and of its respective Procedure of Tax Regulation, PRORET, submodule 2.2.
In these documents, the agency defines, in general lines:
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For the RTP of 2017, the efficacy score for the 4th RTP of the CELG (68,9 %), corrected by the average of the sector
14
(68,9 % / 76 % = 90,65 %), it is applied on the real costs used in the benchmarking, corrected by the evolution of the products (nets, consumers, market, etc.) to define the real scores of efficacy of the distributor in the year of the review, defining the target of effective costs.
It is considered in the following tax reviews that the companies will have you distinguish us scores of performance obtained in the benchmarking, in function to the performance that each one of them have shown up., the scores of performance of the CELG for the near tax reviews were still modeled considering an improvement that is proportional to the improvement shown up in the unit costs (R$/MWh) of the distributor.
|
|
2.5.3.3.2.2.
|
Average performance of the sector
|
The average efficacy of the sector presents a modeling of improvement, in the understanding of which the methodologies of incentives of the type of Benchmarking favor the improvement of the performance of the distributors of the whole sector, lifting up the middle landing of the performance and, in consequence, reducing the correction of the original scores of performance of the companies (prizes and punishments).
As well as the CELG manages to capture the opportunities of this approach, others so many companies also will respond to these incentives, doing that the complete sector improves its efficacy.
|
|
2.5.3.3.3.
|
Limit to the yearly variation of operational costs (component T)
|
The methodologies of 4CRTP define the most maximum value of absolute variation of the operational costs in the years between the tax reviews, what it is defined in 5 % of the PMSO per year. This restriction was considered, even that its variations should never exceed this limit.
So, the difference between the target values regulatory and the income of operational costs of each year will be that it was deducting or added to the taxes of gradual form along the cycle of review of the dealership.
However, the variation determined in the difference between the PMSO meddles and of the Test Year, defines the value of the component one T what soon is considered in the Factor X. As the factor X is applied on the total of the Piece B, this value must be adjusted to represent the participation of the PMSO in same (the limit of 5 % per year of variation in PMSO is equal to 2,36 % of variation in the VPB, for the average of the Brazilian electric sector).
The value of the operational costs regulatory to be considered in the tax review and Component T of the Factor X be calculated then according to the following expressions.
14
Technical note N ° 66/2015-SRM/SGT/ANEEL, of 22/4/2015 and Clause 25 of the Submodule 2.2 of the PRORET, second review, of 06/05/2015, Aneel
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The service of the quality limits of service is one of the subjects of more maximum importance in the context of management of the CELG D due to the economical impact of the payment of the compensations for not service of the limits, to the necessities of investments and to the consequences predicted in the agreement of renovation of the concession of the distributor.
So, the modeling considered premises based on the necessary years to attend the quality indicators:
1-
Three Year Scenario:
to develop actions of management and necessary investments to reach the quality level regulatory in 3 years (2018).
2-
Base Scenario (5 years)
: to develop actions of management and necessary investments to reach the quality level regulatory in 5 years (2020).
So, the modeling of the scenarios above impact the evolution of the quality, which has right influence in the following costs:
1-
Compensations
2-
Costs for the quick improvement of the Quality (3 years)
Following, there show up the criteria used in the projection of these costs, according to each scenario.
The compensations that the distributor will have to carry out for the clients for the violation of the limit of individual continuity of the indicators DIC, FIC and DMIC they are defined for the ANEEL, being that the CELG has been paying elevated compensations in the last years.
For modeling aims, one considered, through methodology of benchmarking, the existent relation between the value of the compensations and the income of supply for series of companies, including the CELG, in the 2014 year. The result was that the CELG occupies the last positions, being one of the companies with more maximum level of paid compensations.
For such a reason, as premise to model, it was considered the assumption that the CELG must be inside the first percentile of the companies with better indicators.
It is important to point out that, even that he should present values less than its levels regulatory of DEC and FEC, the company has to pay compensations to its clients. This because the fines are paid on violations in the individual indicators, meanwhile that the DEC and FEC are indicative of assembly continuity.
On basis of this criterion, the modeling was done for each scenario of the following way:
-
Three Year Scenario:
1-
One considered the valuable relation of compensations and income of supply of the Celg for the 2014 year
2-
One proposes that for the 2018 year the CELG has a relation (compensations / income) as of the best companies.
3-
A function was created exponential to define the value of the relation in the intermediary years.
4-
One projected the values of the compensations from the relation obtained in the previous point and the value of the compensations in 2014. So, the compensations level is going to decrease up to 2018, when the company reaches quality values in acceptable parameters.
5-
For the subsequent years, the compensations are going to grow with the market increase percentage .
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-
Base Scenario:
1-
One considered the valuable relation of compensations and income of supply of the Celg for the 2014 year
2-
One proposes that for the 2020 year the CELG has a relation (compensations / income) as of the best companies.
3-
A function was created exponential to define the value of the relation in the intermediary years.
4-
One projected the values of the compensations from the relation obtained in the previous point and the value of the compensations in 2014. So, the compensations level is going to decrease up to 2020, when the company reaches quality values in acceptable parameters.
5-
For the subsequent years, the compensations are going to grow with the market increase percentage.
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|
2.6.2.
|
Costs for quick improvement of quality
|
Since the scenarios depend of the necessary years to reach the quality level established by Aneel, then there must be considered the “costs for quick improvement of the quality”.
By a side, in case of the Base Scenario, it was assumed that the levels of operational costs are sufficient to reach to the quality in this period. Therefore, it was thought an additional cost.
But, for the Three Year Scenario, it was assumed that it is necessary to carry out more maximum efforts to be able to reach with more maximum speed the wanted quality, which drifts in more maximum costs.
On basis of the attachment of the Plan of Result of the CELG D, where were the actions of management detailed for improvement of the quality indicators DEC – FEC calculated the yearly cost adapted to be necessary with this premise.
These values are reflected in the lines “I cost MILLSTONE (Labor) for quick improvement of the Quality” and “I cost (MAT) Materials for quick improvement of the Quality”. Both lines compose part of the
operational costs not recognized
of the company.
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For end, the values of RI jut out in too many years (that are not RT) indexing the value calculated from the growth of the Piece B.
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|
2.8.2.
|
Other Revenues (OR)
|
Inside the methodologies established for the 4th CRTP, Aneel establishes mechanisms for sharing Other Receipts of the distributors, which, in general form, there establishes a value of 60 % of these receipts to be reverted for the tax moderateness.
For the calculation of other receipts there was used the value of Other Receipts in the last tax review of the company (file SPARTA
17
2013) and the qualitative composition of these receipts (sharing of infrastructure, taxed services, etc.). These values were projected for other years considering the growth of market and when it was finally adjusted by a factor that represents the percentage of Other Receipts of the 2013 year that grow with the market.
Finally, in the years of tax review, there was applied the value of 60 % of Other Receipts of the test year to compose the decrease of the Piece B (tax moderateness), which will be applied in the years of the following tax cycle.
17
System for Yearly Tax Automated Review/adjustment Processes (ANEEL)
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Annex 6.A. Update of Projections Due Diligence Operational CELG D
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Table of Content
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|
|
1.
|
Introduction
|
|
3
|
2.
|
Updates of the Projections
|
3
|
|
2.1.
|
Market
|
|
3
|
|
2.2.
|
Investments
|
3
|
|
2.
3
.
|
Regulatory Asset Base
|
3
|
|
2.
4
.
|
Operational Expenditures
|
4
|
|
2.
5
.
|
Quality
|
|
4
|
|
2.
6
.
|
Losses
|
|
5
|
3.
|
Exhibit I
|
|
6
|
|
3.1.
|
Market
|
|
6
|
|
|
3.1.1.
|
Market Projections with BRAZIL’S GDP
|
6
|
|
|
3.1.2.
|
Market Projections with GOIÁS’ GDP
|
7
|
|
3.2.
|
Regulatory Asset Base
|
8
|
|
|
3.2.1.
|
Base Scenario
|
8
|
|
|
3.2.2.
|
Goiás’ GDP Scenario
|
9
|
|
3.3.
|
OPEX
|
|
10
|
|
|
3.3.1.
|
Base Scenario
|
10
|
|
|
3.3.2.
|
Goiás’ GDP Scenario
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10
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This addendum to
the “CELG D OPERATING DUE DILIGENCE PROJECTIONS – Projections Report” Report, delivered on 11/13/2015, updates CELG D’s operating projections.
The scope of this work basically involved the incorporation of current data obtained by CELG D in its statements and reports until 6/30/2016.
The same economic
– Brazil’s GDP, Goiás’ GDP, market projections, etc. –
and efficiency
–
operating and investment projections
–
assumptions
–
used in the final projection and diligence reports
–
were maintained.
Therefore, the full understanding of this Addendum depends on prior reading of the final
“CELG D
OPERATING DUE DILIGENCE PROJECTIONS
–
Projections
Report” and “CELG DISTRIBUIÇÃO OPERATING
DUE DILIGENCE
– TECHNICAL CONSULTANCY” reports.
Finally, the same limitations of the final reports apply.
|
2. Updates of the Projections
|
|
2.1. Market
|
The market projections initially made were maintained observing the projected quantity of energy, and the only information, which was updated, was the market values until June 2016.
The detailed projection of quantity of energy per category and year are in Exhibit I of this document.
The criteria to project the investments have not changed, and the general rule for the update and adjustment of the projected investments was to delay for one year the investments initially set forth in the model; thus, the investments set forth for 2016 were allocated to 2017 and so forth.
In addition, the investments were subject to the following adjustments:
·
Incorporation of amounts for 2016 set forth for CELG in the 2016 Distribution Development Program (PDD).
·
Update of amounts of the Universalization Program, Housing Program (
Minha Casa, Minha Vida
), and Energy Program (
Programa Luz Para Todos
)
–
PLPT, considering the amounts set forth in the PDD presented by CELG-D.
The projections of the investment amount for each year are in Exhibit I of this document, together with the projection of the Regulatory Asset Base (1
st
line of the table).
|
2.3. Regulatory Asset Base
|
The Regulatory Asset Base (RAB) of CELG D was calculated until June 30, 2016, considering the files of the Shielded Bases (RABs) of the 1
st
, 2
nd
and 3
rd
Tariff Cycle and the Incremental RAB of the 4
th
Cycle and Write-Offs informed until June 30, 2016.
The model used to calculate the Gross and Net RAB took into account the criteria and methodologies defined by ANEEL for the Periodical Tariff Review process of the electric energy distributors.
Thus, the RAB was calculated until June 30, 2016 and projected until 2045, and the projection criteria were maintained.
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Index
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|
|
ACL
|
|
Ambiente de Contratação Livre (Free Market)
|
ACR
|
|
Ambiente de Contratação Regulada (Regulated Market)
|
ANEEL
|
|
Agência Nacional de Energia Elétrica (Brazilian Electricity Regulatory Agency)
|
ANP
|
|
Agência Nacional de Petróleo (National Petroleum Agency)
|
APINEE
|
|
Associação Brasileira dos Produtores Independentes de Energia Elétrica
|
Auctions
|
A-1
|
Energy auctions held one year before the initial delivery date energy
|
Auctions
|
A-3
|
Energy auctions held three years before the initial delivery date energy
|
Auctions
|
A-5
|
Energy auctions held five years before the initial delivery date energy
|
BACEN
|
|
Banco Central do Brasil (Central Bank of Brazil)
|
BAR
|
|
Base de Remuneração Regulatória
|
BCV
|
|
Banco de Crédito e Varejo S.A.
|
BM&FBOVESPA
|
Bolsa de Valores, Mercadorias e Futuros (Brazilian Stock Exchange)
|
BNDES
|
|
Banco Nacional de Desenvolvimento (National Economic and Social Development Bank)
|
Brasiliana
|
|
Companhia Brasiliana de Energia S.A.
|
BRL
|
|
Brazilian Currency (Real)
|
BRL/MWh
|
|
Reais per megawatt hour
|
BRR
|
|
Base de Remuneração Regulatória
|
Bullet
|
|
American Amortization System
|
CAGR
|
|
Compound annual growth rate
|
Capex
|
|
Capital Expenditure
|
CAPM
|
|
Capital Asset Pricing Model
|
CCB
|
|
Cédula de Crédito Bancário (Bank Credit Bill)
|
CCEAR
|
|
Contratos de Comercialização de Energia no Ambiente Regulado (Energy Purchase Agreements in the Regulated
|
|
|
Market)
|
CCEE
|
|
Câmara de Comercialização de Energia Elétrica (Chamber of Electric Energy Commercialization)
|
CDG
|
|
Capital de Giro (Working Capital)
|
Celg D
|
|
Celg Distribuição S.A.
|
CELGPAR
|
|
Companhia Celg de Participações
|
CELP
|
|
Centras Elétricas do Pará S.A
|
CELPE
|
|
Companhia Energética de Pernambuco
|
CEMAR
|
|
Companhia Energética do Maranhão
|
CMSE
|
|
Comitê de Monitoramento dos Sistemas Elétricos (Brazilian Monitoring Committee of Electrical Systems)
|
CNPE
|
|
Conselho Nacional de Política Energética (Brazilian National Energy Policy Council)
|
Index
|
|
Coelce
|
Companhia Energética do Ceará
|
COFINS
|
Contribuição para Financiamento da Seguridade Social
|
Company
|
Celg Distribuição S.A.
|
Copom
|
Comitê de Política Monetária
|
COSERN
|
Companhia Energética do Rio Grande do Norte
|
Country
|
Brazil
|
CPC 46
|
Brazilian Accounting Pronouncements Committee
–
about Fair Value
|
CPI
|
Consumer Price Index
|
CSLL
|
Contribuição social sobre o lucro líquido (Social Contribution on Net Profit)
|
CVA
|
Compensação de Variação de Valores de Itens da Parcela A
|
CVM
|
Comissão de Valores Mobiliários
|
DCF
|
Discounted Cash Flow
|
DEC
|
Duração Equivalente de Interrupção por Unidade Consumidora (Equivalent Interruption time per Consumer Unit)
|
DGC
|
Desempenho Global de Continuidade (Continuity Global Performance)
|
EBITDA
|
Earnings before interest, taxes, depreciation and amortization
|
EBT
|
Earnings Before Taxes
|
Eletra
|
Fundação Celg de Seguros e Previdência
|
Eletrobrás
|
Centrais Elétricas Brasileiras S.A.
|
Embi+
|
Brazil Risk
|
EPE
|
Empresa de Pesquisa Energética (Brazilian Energy Research Company)
|
EY
|
Ernst & Young Assessoria Empresarial Ltda.
|
FCD
|
Fluxo de Caixa Descontado
|
FCFE
|
Free Cash Flow to Equity
|
FCFF
|
Free Cash Flow for the Firm
|
FEC
|
Frequência Equivalente de Interrupção por Unidade Consumidora (Frequency of Interruptions per Consumer Unit)
|
FER
|
Frequência Equivalente de Reclamação (Equivalent Complaining Frequency)
|
FGV
|
Fundação Getúlio Vargas
|
FIDC
|
Fundo de Investimentos em Direitos Creditórios (Receivables investment Fund)
|
FM
|
Free Market
|
GCM
|
Guideline Company Method
|
GDP
|
Gross Domestic Product
|
GOR
|
Gross Operating Revenues
|
|
Strictly confidential
|
4
|
Index
|
|
HPP
|
Hydroelectric Power Plants - HPP
|
IAB
|
Índice de Abandono (Dropouts Index)
|
IASC
|
Índice Aneel de Satisfação do Consumidor (Aneel Consumer Satisfaction Index)
|
ICMS
|
Imposto sobre operações relativas à circulação de mercadorias e sobre prestações de serviços de transporte
|
|
interestadual, intermunicipal e de comunicação (State Value-Added tax on the Circulation of Goods, Interstate
|
|
and Intercity Transportation and Communication Services)
|
ICO
|
Índice de Chamadas Ocupadas (Busy Request Index)
|
ICSD
|
Índice de Cobertura do Serviço da Dívida (Debt Service Coverage Rate)
|
IFC
|
International Finance Corporation
|
IFRS 13
|
Brazilian Accounting Pronouncements Committee
|
IGP-M
|
Índice Geral de Preços do Mercado (Brazilian General Price Index
–
Market)
|
INPC
|
Índice Nacional de Preços ao Consumidor (Consumer Retail Price Index)
|
INS
|
Indicador de Nível de Serviço (Level Indicator of Service)
|
IPCA
|
Índice de Preços ao Consumidor Amplo (Brazilian Official Index Price)
|
IPCA x CPI
|
Diferencial de inflação (Inflation Differential)
|
IRPJ
|
Imposto de Renda Pessoa Jurídica (Income Tax)
|
IRT
|
Índice de Reposicionamento Tarifário
|
kd
|
Custo de capital de terceiros (Cost of Third-party Capital)
|
ke
|
Custo de capital próprio (Cost of Equity Capital)
|
LC
|
Índice de Liquidez Corrente (Current Liquidity Index)
|
LG
|
Índice de Liquidez Geral (General Liquidity Index)
|
LI
|
Índice de Liquidez Imediata (Immediate Liquidity Index)
|
LT
|
Long-term
|
LS
|
Índice de Liquidez Seca (Quick Ratio)
|
Management
|
It refers to the Management of Celg D, if not specified
|
MME
|
Ministério de Minas e Energia (Ministry of Mines and Energy)
|
MWh/year
|
Megawatt hour per year
|
NOR
|
Net Operating Revenues
|
OECF
|
Overseas Economic Cooperation Fund
|
ONS
|
Operador Nacional do Sistema Elétrico
|
OTC
|
Over the Counter
|
p.p.
|
Percentage Points
|
PASEP
|
Programa de Formação do Patrimônio do Servidor Público (Program of Formation of the Patrimony of the Public
|
|
Strictly confidential
|
5
|
Index
|
|
|
Server)
|
PCLD
|
Provisão para créditos de liquidação duvidosa (Allowance for Doubtful Accounts)
|
PIS
|
Programa de Integração Social (Contribution to the Social Integration Plan)
|
PLD
|
Preço de Liquidação das Diferenças (Settlement Price for the Differences)
|
PM
|
Provisional measure
|
PMSO
|
Projeção das despesas operacionais inclui despesas de pessoal, manutenção, operação e outros (Projection of
|
|
Operating Expenses)
|
PN
|
Promissory Notes
|
Price
|
French System of Amortization (Price Table)
|
Proret
|
Tariff Regulation Procedure
|
Quantum
|
Quantum América
|
Reference date
|
June 30th 2015
|
REFIS
|
Acordo de Empréstimo Internacional e Recuperação Fiscal (Tax Recovery Program)
|
Report
|
This Report, dated on November 13th, 2015
|
Republic
|
Brazil
|
RM
|
Regulated Market
|
RV
|
Reference Value
|
SAC
|
Sistema de Amortização Constante (Constant Amortization System)
|
SCL
|
Sistema de Contabilização e Liquidação (Accounting and Settlement System)
|
Selic
|
Sistema Especial de Liquidação e de Custódia (Brazilian Basic Interest Rate)
|
SIN
|
Sistema Interligado Nacional (National Interconnected System)
|
SRF
|
Secretaria da Receita Federal (Brazilian Federal Revenue)
|
STM
|
Similar Transactions Method
|
TJLP
|
Taxa de Juros de Longo Prazo (Long-Term Interest Rate)
|
UCG
|
Unidades consumidoras (Consumer Unit)
|
Union
|
Brazilian Federal Government
|
USD or US$
|
American Currency (US Dollar)
|
VNR
|
Valor novo de reposição (New Values of Replacement)
|
VCA
|
Value of Component A
|
VCB
|
Value of Component B
|
WACC
|
Weighted Average Cost of Capital
|
|
|
|
Strictly confidential
|
6
|
Index
|
|
|
1. Executive summary
|
|
9
|
|
1.1 Engagement Overview
|
10
|
|
1.2 General considerations
|
12
|
|
1.3 Valuation results
|
15
|
2. Macroeconomic analysis
|
|
18
|
|
2.1 Macroeconomic analysis
|
19
|
3. Markey Overview
|
|
21
|
|
3.1 Energy Market Overview
|
22
|
4. Celg Distribuição S.A.
|
|
34
|
|
4.1 Celg D overview
|
35
|
|
4.2 Historical financial analysis
|
36
|
|
4.3 Debt analysis
|
37
|
|
4.4 Concession agreement covenants
|
48
|
5. Projections
|
|
|
|
|
50
|
|
5.1 General considerations
|
51
|
|
5.2 Operating Assumptions
|
52
|
|
5.3 Projected financial information
|
60
|
6. Economic-financial valuation
|
|
63
|
|
6.1 Standard value
|
64
|
|
6.2 Selected methodology analysis
|
65
|
|
6.3 Discounted Cash Flow Implementation
|
66
|
|
6.4 Non-operating assets and liabilities
|
69
|
7. Conclusion
|
|
70
|
|
7.1 Conclusion
|
71
|
8. Appendix
|
|
74
|
|
Strictly confidential
|
7
|
Index
|
|
|
|
8.1 Statement of limiting conditions
|
75
|
|
8.2 Valuation approached and methods
|
77
|
|
8.3 Discount rate derivation
|
79
|
|
8.4 Selected comparable companies
|
82
|
9. Attachment
|
|
85
|
|
9.1 Debt agreements
|
86
|
|
9.2 Data provided by Quantum
|
90
|
|
9.3 Projected income statements
|
102
|
|
9.4 Projected free cash flow to the firm
|
111
|
|
9.5 Concession agreement covenants
|
114
|
|
|
|
|
Strictly confidential
|
8
|
|
|
|
1. Executive Summary
|
|
|
|
|
1.1 Engagement Overview
|
|
|
1.2 General Considerations
|
|
|
1.3 Valuation results
|
|
|
|
|
Strictly confidential
|
9
|
|
General Considerations
Purpose
and
objective
We
understand
that the
IFC
will use our work only for the
purpose described
in this
Report.
In
addition,
our fair value
estimate
should not be
considered
as an advice or
investment advice, fairness opinions
or used for
fundraising,
as well as any other
purpose except
as
described above.
Value
Standard
According
to
generally accepted practices
of
economic financial valuation,
our
understanding
is that the
concept
of fair value, used in this study, is in line with its
objective.
In
addition,
IFRS
13/CPC
46
specify
that fair value should reflect
market expectations
about the
probability
that the future
economic benefits associated
with the asset will flow to an
acquirer. Therefore,
any
analysis
should
generally
reflect
assumptions
which would be
common
to any
market participant
if it were to buy or sell each
identified
asset on an
individual
basis.
Definition
of fair value
IFRS
13/CPC
46: The price that would be
received
to sell an asset or paid to
transfer
a
liability
in an
orderly transaction between market participants
at the
measurement
date
(Paragraph
9).
Thus, the fair value should be
estimated
with
reference
to
‘market participants’
in
general
but
exclude
synergistic
values that are
unique
to a
particular
buyer. In this
context, market participants
would
include potential buyers
that have an ability to
acquire
and would take an active part in
managing
the
acquired company
or
assets.
Such ability would be
evaluated
in the
context
of
financial
ability as well as a
plausible
post-
combination operating strategy.
In
accordance
with this
definition
of fair value, all
projected financial information
used in our
valuation excluded acquirer
-
specific synergies
but
included
those
common
to
market participants
The
estimated
fair value of the
company
was
calculated following
the
assumption
of
closing activities
by the end of the
concession agreement amendment.
Methodology
For this
business valuation,
the
Income Approach
was
adopted, through
the
Discounted
Cash Flow (DCF)
method. According
to the DCF
method,
the value of a
business
is equal to the
present
value of the
expected
cash flows that it will
generate.
The DCF
analysis
here
presented
refers to
operating
cash flow, also known as Free Cash Flow for the Firm (FCFF). The
projections
of FCFF are
considered
cash flows from
operating
and
investment activities
of the
evaluated company.
The FCFF is
discounted
by a rate that
reflects
the cost of all the
company's
capital
structure,
called WACC -
Weighted Average
Cost of
Capital.
The
Present
Value of FCLF is the
Enterprise
Value, which is
adjusted
based on the
balances
of non-
operating
assets and
liabilities
of the
company,
to
calculate
the Equity Value.
General Considerations
As
requested
by the
IFC
,
EY
has
performed
a
valuation analysis
of
Celg D
on
reference
date of June 30, 2015.
The
results
of our
analysis
will be used only for the
purposes
of
supporting
the
estimated
Fair Value of
Celg D
.
In order to
calculate
the
estimated
Fair Value of the
Company
we
considered
the
following procedures:
„
Obtaining Market information;
„
Obtaining
the
operating projections
from
Quantum company, technical consultant
hired by
IFC
,
considering
three
scenarios;
„
Discussions
and
meetings
with
executives
and
employees
of
Celg D
during the work;
„
Obtaining historical accounting, operating
and
managerial
data of
Celg D
;
„
Analysis
of the
market
in which
Celg D
operates;
„
Projection
of
financial statements
of
Celg D
(Income Statements, Balance
Sheet and Cash Flows) based on
financial information provided
by
Managament
and in
market analysis;
„
Business valuation
of
Celg D
performed
by
applying
the
Discounted
Cash Flow
methodology
(DCF); and
„
Calculation
of the
discount
rate that best
represents
Celg D
and its
market sector,
used to
estimate
the
present
value of cash flows and its
residual
value.
The
results
on this report
depend
on the
assumptions
that serve as basis for the
projections.
The
Discounted
Cash Flow
methodology
does not
anticipate changes
in the
external
and
internal environments
in which
Celg D
is
involved,
except for those
mentioned
in this
Report.
General Considerations
General assumptions
„
Value
Standard:
Fair value;
„
Reference
date:
June 30
th
, 2015;
„
Methodology:
Income Approach
–
Discounted
Free Cash Flow to the Firm;
„
Projected period:
from July 1
st
, 2015 to July 7
th
, 2045;
„
Currency:
Free Cash Flows were
projected
in
Brazilian
Reais (BRL) in
nominal
terms
(considering
the
impact
of
inflation);
„
Discount
rate:
WACC
10,79%
p.a. in
nominal
terms, details on page 65 and
Appendix
8.3;
„
Adjustments:
Non-
operating Assests
and
Liabilities
were not
considered
in the cash flow
projections.
When
observed,
it was
treated separately
and added or
subtracted
from the
present
value of cash flows,
impacting
the
Enterprise
Value; and
„
Specific assumptions:
Assumptions
were based on
financial statements provided
by
Company
,
managerial
data
provided
by
Management
and
information provided
by
Quantum, transaction technical consultant
hired by
IFC
.
Valuation results
It is
important
to
highlight
that we did not
independently investigate
or
otherwise
verify the data
provided
by
Celg D
or any other
consultants
hired by
IFC
, and do not
express
an
opinion
or offer any form of
assurance regarding
its
accuracy
or
completeness. Additionally,
our
recommendations
and
calculations, presented
in this
report,
are based on
industry market expectations
as well as on the
existing macroeconomic conditions
on the
reference
date of our work, which may be
different
in the future and hence
impact
the
operations
of the
evaluated company.
We
assume
that
Management
consistently analysed
the
factors
that may affect the
presented forecasts,
as well as not
omitted
any
relevant information
that can
significantly impact
the result of our
analysis.
|
|
|
|
2.
|
Macroeconomic Analysis
|
|
|
|
|
|
2.1 Macroeconomic Analysis
|
Macroeconomic Analysis
Macroeconomic overview
In
undertaking
the
valuation
of a
business
and its
assets,
it is
important
to
understand
the
economic
trends
prevalent
in the
country
in which the
business operates.
Given that
Celg D
operates
in Brazil, a brief
overview
of the
country economy
is
presented
in the
following sections.
The
analysis
below refers to the
information
as of 14th
August,
2015, and has been
prepared passed
on
information
from the
Central
Bank of Brazil
(BACEN),
Focus
Report, Getúlio Vargas Foundation
(FGV), Global
Insight
and JP
Morgan
.
Brazilian economy
3
Economic Activity
In 2014,
economic activity reported
a 0.1%
growth, reflecting
the weak
performance
of the
industry segment,
which
dropped
1.2% in year-over-year terms. Both
agricultural
and
services sectors posted positive growth
in the
period,
of 0.4% and 0.7%,
respectively.
For 2015, main
financial indicators anticipate
a
decrease
in GDP
growth
of 1.99% in 2015 and of 0.10% in 2016.
Inflation
The
Brazilian official inflation
index, the IPCA
4
, was
reported
at 6.4% in 2014.
According
to
market expectations,
the IPCA is
projected
at 9.34% in 2015 and 5.50% in 2016. On the other hand, the IGP-M index
posted
a 3.75%
increase
in 2014. For 2015,
market expectations
point to IGP-M
5
variation
of
7.74%, decelerating
to 5.62% in 2016.
3
Market expectations
refer to
projections
of
expectation systems,
as of
August
14
th
, 2015,
provided
by the
Brazilian Central
Bank.
4
Índice de preços ao
consumidor
amplo
(IPCA) -
Extended National Consumer
Price Index.
5
Índice Geral de
Preços
do
Mercado
(IGP-M) -
Market General
Price Index.
Calculated
by
Getúlio Vargas Foundation
(FGV).
Strictly confidential
19
Macroeconomic Analysis
Monetary
Policy
In the
meetings
of July 28 and 29, the
COPOM
6
took into
account
the
macroeconomic situation
and the
Brazilian inflation perspectives,
and
decided
to raise the Selic rate by 0.5 b.p., to
14.25%
p.a. To
determine
this
decision,
the
COPOM considered
the
persistent
high
inflation
levels.
Country specific
risk
7
The EMBI +, better known as Brazil
Country
Risk, is
calculated
by JP
Morgan,
bank of
relevance
in
dealing
with
securities
in
emerging market countries.
The index
explains
the
difference
in daily
performance
of the U.S and
emerging countries
debt
securities
and it is an
indicator
of the
financial
health of the
relevant country.
The index ended May at 294 basis
points,
which
indicates
a
difference
of 2.94%
between
the
performance
of
Brazilian
bonds and the U.S.
securities.
The
monthly average
was 281 basis points and the
average
for the last twelve
months
was 258 basis
points.
The
macroeconomic assumptions
used as the basis for the
transaction
are
presented
in the table below. After 2020 values
remain constant,
except for the
exchange
that is
adjusted
for
inflation differential
(IPCA x CPI).
|
|
|
|
|
|
|
Index
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
GDP Goiás
|
-0.4%
|
2.1%
|
3.3%
|
3.8%
|
3.9%
|
3.9%
|
GDP Brazil
|
-2.0%
|
-0.1%
|
1.5%
|
2.1%
|
2.2%
|
2.2%
|
GDP Brazil Services
|
-1.3%
|
0.0%
|
1.4%
|
1.7%
|
1.7%
|
1.7%
|
GDP Brazil Industry
|
-3.7%
|
-0.6%
|
1.2%
|
1.6%
|
1.9%
|
1.9%
|
GDP Brazil Agricultural
|
2.6%
|
2.2%
|
2.8%
|
3.1%
|
3.2%
|
3.2%
|
IPCA
|
9.3%
|
5.5%
|
4.7%
|
4.7%
|
4.6%
|
4.6%
|
IGP-M
|
7.7%
|
5.6%
|
5.1%
|
4.9%
|
4.8%
|
4.8%
|
Exchange (BRL/ USD)
|
3.2
|
3.5
|
3.5
|
3.6
|
3.6
|
3.7
|
Selic
|
13.6%
|
13.2%
|
11.2%
|
10.4%
|
10.1%
|
10.1%
|
U.S. Inflation (CPI)
|
0.7%
|
1.8%
|
2.0%
|
2.1%
|
2.1%
|
2.1%
|
Differential inflation (IPCA x CPI)
|
8.6%
|
3.6%
|
2.7%
|
2.5%
|
2.5%
|
2.5%
|
Sorce: BCB, J.P. Morgan, BMI Research and Quantum
|
|
|
|
|
|
|
|
|
6
Comitê de Política Monetária do Banco Central
–
Brazilian Central Bank Monetary Policy Committee.
|
|
7
Source: Embi+, calculated by JP Morgan.
|
Strictly confidential
|
20
|
|
|
|
|
3.
|
Market Overview
|
|
|
|
|
|
3.1 Energy Market Overview
|
Energy market overview
„
CMSE
The CMSE was
created
10
to
monitor
and
permanently measure
the
continuity
and
security
of
energy
supply
throughout
the
national territory, proposing preventive measures
to
restore
the
proper service conditions, including actions involving demand,
hiring
contingent reserve
for supply and other.
According
to the
Decree
nº
5,175/
2004, the CMSE is
chaired
by MME and is
composed
as
follows:
•
Four
representatives
of MME; and
•
Members
of the
following organs:
I.
ANEEL;
II. ANP
–
National Petroleum Agency;
III. CCEE; IV. EPE; e V. ONS.
„
CNPE
The CNPE is an
agency
that advice the
president.
It
establishes
a
national energy
policy, and its main
responsibility structurally secures
the supply in the
country.
It was
created
in order to
promote
the
rational
use of
energy resources
in Brazil and
ensure
the supply of
energy throughout
the
country, including
in
remote
areas and
difficult
to
access.
„
EPE
The EPE was
created
by Law.
10,847
/ 2004 and
regulated
by
Decree.
5,184 / 2004.
Linked to the MME, EPE is
responsible
for
conducting strategic research
in the
energy sector, including electricity,
oil, gas, coal and
renewable energy sources.
In other
words,
it is
responsible
for the design of the
expansion
of
generation
and
transmission systems.
The
research conducted
by EPE will be used to
support
the MME's
actions.
|
|
|
10
Law nº. 10,848/ 2004.
|
Strictly confidential
|
24
|
Energy market overview
The
energy produced
by Itaipu is sold in the CCEE by
Eletrobrás, through contracts registered
with the
Accounting
and
Settlement System
(SCL
„
Free
Market
In the Free
Market, electricity
is traded
between generation concessionaires, independent
power
producers,
self-
producers, marketing agents, importers
of
energy
and free
consumers, essentially
in line with the
current institutional
model before the
enactment
of the Law of New
Electricity
Sector
Model. Potentially
free
consumers,
with
agreements
that do not stat the supply
period,
can only opt for Free
Market.
Once the
consumer
has
chosen
the Free
Market,
it can only return to the
Regulated Market
by notice to the local
distributor
five years in
advance
or within a
shorter period,
at the
discretion
of the
distributor.
The
purpose
of this
advance
notice is to
prevent opportunistic behavior
on the part of
potentially
free
consumers
by
ensuring
that the
distributor
can buy
additional energy
in the
Regulated Market without
the fact that it does not
constitute additional
costs to their
captive market.
In order to
minimize
the
effects
of losses
arising
from
consumers
who
choose
to act as free
consumers, distributors
can
reduce
the
amount
of
energy purchased
from
generators according
to the
amount
of
energy
that will not be
distributed
for free
consumers.
State-owned
generators
may sell
electricity
to free
consumers,
but unlike
generating private sector,
they should do so
through
public
processes
that will
ensure transparency
and equal access for
interested
parts.
The new rules
establish
that
energy distributors
must
comply
its
energy contracting obligations, primarily, through
public
auctions.
Existing Energy Auction,
New
Enterprises
and
Adjustments
The
energy auctions
are
extremely important
for the
sustainability
of the
Brazilian electric sector,
and
through
these that the
granting
of new plants and the
closure
of
contracts
is
carried
out to meet the future
demand
of
energy distribution.
The
notices
of the
auctions
are
prepared
by
ANEEL,
in
accordance
with the
guidelines established
by the MME.
•
New
Energy Auction:
are
intended
for
energy
’s
procurement provided
by
power plants in the design phase or under
construction.
For new
generation projects, auctions
are held (i) five years from the date of hire (called A-5
auctions),
and (ii) three years from the
contract
date (called A-3
auction)
.
•
Existing energy auction: designed
to serve the
distributors
in the year after the
agreement,
the
energy
will be
provided
by
enterprises
that are
already
in
operation.
These
auctions
are
conducted
a year before the initial
delivery
date
(referred
to as A-1).
Energy market overview
Purchase Transfer
Limits
The rules also set limits for the
transfer
of power
purchase
costs to the final
consumers.
The
current reference
value (RV)
corresponds
to the
average energy
prices
between
A-5 and A-3,
calculated
for all
distribution companies.
Thus, it
establishes
an
incentive
for
distribution companies
to
contract
their
energy demands
in the A-5
auction
which will have lower prices than the A-3
auction.
Supply
–
Itaipu
Energy
The
energy generated
by Itaipu is traded by
Eletrobrás through contracts recorded
in the SCL. The
volumes
that must be
purchased individually
by the
distribution utilities
are set by
quotas
set by
ANEEL,
in
proportion
to the
consumer market
for each
distributor.
The
energy generated
by Itaipu is traded in US
dollars,
and the rate
determined according
to the Brazil-
Paraguay treaty.
As a result, Itaipu rate
suffers
an
increase
or
decrease according
to the
exchange
rate of the dollar.
Energy market overview
Restricted Activities
Distribution companies
linked to the SIN are
prohibited:
(i) to
develop activities related
to power
generation
and
transmission,
(ii) to sell
electricity
to free
consumers,
(iii) to hold,
directly
or
indirectly,
any
interest
in any other
company,
or (iv) to
develop activities
that are
unrelated
to their
respective concessions,
except those
permitted
by
applicable
law or stated in the
concession agreement.
Draft of New
Concession Contracts
for Public
Service Provision
of Power
distribution
Technical
Note
–
ANEEL
On
September
4, 2015, was
published
by
ANEEL Technical
Note No. 033 512 015-SCT-SFE-SFF-SRD-SRM / ANEE which
presents
the
results
of the public
hearing
No.
038/2015, established
in order to
improve
the new
concession agreements
for
provision
of public
electric
power
distribution, pursuant
to
Decree
n °
8461/2015
and Law
12783
of
January
11, 2013.
According
to the
Decree number 8,461,
the
concessionaire operations
should follow
standards
and pre-
defined criteria
such as:
„
Efficiency
in terms of
service
’s
quality
: the
distributors
will be
evaluated
by
continuity
of
service, characterized
by the
frequency
and
duration
of power
outages
(FEC and DEC). For the five years of the
valuation
period the
distributors
must meet the
continuity
limits to be set by
ANEEL, through
a
continuous improvement
path;
„
Efficiency
in terms of
economic
-
financial management:
the
distributors
must
commit
to
preserving, throughout
the
concession,
the
condition
of
economic
-
financial sustainability
in
managing
their costs and
expenses,
the level and
structure
of its debt, the
replacement investments, improvement
and
expansion, beyond
the
payment
of taxes and
distribution
of
dividends;
„
Operational
and
economic rationality
and
reasonable tariffs:
the
distributors
do not have full
autonomy
to set the rates
charged
to users, since the
Brazilian
power
distribution segment
has a
number
of
features
that create
market
power for
companies
that hold
concessions,
for
example,
the
monopoly conferred
by the public
concession service.
These
criteria
should be
achieved through continues improved metrics,
as
established
by the Union. The
technical
note points out that in the case of
noncompliance
of the goals set out in the
concession extension criteria
for two
consecutive
years, or any of the goals at the end of the period five years, the
process
of
concession
’s
termination
will start. The
operator
may,
however, submit
a
transfer
of
corporate control
plan as an
alternative
to such
extinction.
Tariff
Adjustment
Concession agreements
for
energy distribution
rely on the
definition
of review
mechanisms
and tariff
adjustments.
These
mechanisms determine
the
amount
of fees to be used by
companies
for the supply of
electricity.
Tariff
Adjustment
are
determined
in order to
ensure economic
-
financial balance
for the
electricity distributors.
In order to
achieve
the
necessary balance
and
consequently
meet the costs,
expenses
and
Energy market overview
II. VPB0: The
remaining
value of the
concessionaire's revenue
minus the
"Component
A";
calculated
based on the
difference between
the
annual distribution
of
revenues
in the
previous
12
months
and the value of
"Component
A"
referring
to the
previous
12
months,
ie, based on
prevailing conditions
at the time of the
previous adjustment;
III. RA0:
Revenue calculated considering
the rates
approved
in the
previous reference
date and the
reference market,
not
including
the PIS /
PASEP, COFINS
and ICMS;
IV. IVI: the index
number obtained
by
dividing
the
contents
of the IGP-M
(Brazilian
Index) or index to
succeed
him, the month prior to the
adjustment processing
and the month prior to the
"Previous Reference
Date". In the event there is no a
substitute
index,
ANEEL
will
establish
new index to be
adopted;
V. X
Factor:
index for
passing
on to
customers
the gains made by the
concessionaire
in future
periods (between
tariff
adjustments)
.
The
concession agreement
of each
distributor provides
for an
Annual
Tariff
Adjustment.
The
adjustment
can be done with a
maturity
of less than one (1) year if the
legislation
will thus allow.
Energy market overview
Periodic
Tariff
Adjustment
The
Periodic
Tariff
Adjustment
aims to
analyze
after a
predetermined
period in the
contract,
the
economic
-
financial balance
of the
concession.
So, it is
calculated
a new value of
revenue
for the
distribution service,
that is, for
"Component
B" of the
annual adjustment.
It is an
ordinary review, provided
in the
concession agreements,
to be
performed considering
the
changes
in the cost
structure
and the
distribution market,
tariff levels
observed
in similar
companies
in the
domestic
and
international context,
and
incentives
for
efficiency
and low
tariffs.
The return on capital of a
distributor depends fundamentally
on the
regulatory
asset base and the cost of
regulatory
capital
(regulatory WACC)
. The
regulatory
asset base is
calculated according
to the
procedure
set by
ANEEL
and
includes
the assets of
concessionaires
linked to the
concession
of the public
service
of power
distribution.
The
regulatory
WACC
defined
as tariff
regulation procedures effective
from March 2015 to
December
2017 is 8.09% p.a. in real terms and net of taxes. During the review
process
are also
defined regulatory percentage
of non-
technical
losses and the X
14
Factor,
both
metrics
will be used in
subsequent
tariff
readjustment process review.
Extraordinary
Tariff
Adjustment
The
Extraordinary
Tariff
Adjustment
may occur at the
request
of the
distributor, whenever
there is any
significant
event that
generates significant economic
-
financial imbalance
for the
concession.
It also can be
ordered
in the case of
creation, modification
or
termination
of legal taxes or
charges,
if it is shown that it can
impact
the
company’s activities.
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14
Percentage to be subtracted from the Inflation Variation Indicator - IVI, when the implementation of the annual tariff
|
|
adjustments between periodic reviews with a view to share with consumers productivity gains estimated for the period.
|
Strictly confidential
|
33
|
4. Celg
Distribuição
S.A.
|
|
|
|
|
4.1 Celg D
Overview
4.2
Historical financial analysis
4.3 Debt
Analysis
4.4
Concession agreement covenants
|
Historical Financial Information
Payment
and
receipts periods
of
Celg D
are not
constant,
in this sense, it is worth
mentioning
some of which have
considerable variation
in recent
periods
and that can
impact positively
or
negatively
the
working
capital of the
company.
In this
context,
the
Clients account increased
from an
average
of 77 days to 93 days,
indicating
major delays in the
receipt
of
amounts
owed by
customers
of the
Company,
on the other hand the
ongoing services
has
reduced
its term of 59.8 days to 37.3,
anticipating
the
receipt
of these
services.
The
Working Capital Sources decreased
in the period for
payment
of
Celg D
’s
Suppliers
(from 71 to 54.6
between
2014 and
6M2015)
. Also, there was a period of
increase
over the same period for
payment
of the
Accrued liabilities
from 35 days to 56 days, a factor that can
balance
the point
mentioned above.
Finally, checking
the
amounts incurred
of uses and
sources
for
Celg D
we
conclude
a
negative
result in three years of
analysis, resulting
of
payments balances
higher than the
receivables balances.
The
working
capital
sources
have been higher than the
application
which
creates
some
flexibility
of cash and does not
require investments
in
working capital.
Debt
Analysis
Amortization
The
amortization schedule
of
existing
debt of CELG D is shown in this graph on the left.
Note that there is a large
concentration
of
payments
until
December
2015 which is when some
existing contracts
will be
finalized.
After this
period,
there is a
constant
in the
amortization
of debts, this occurs once that the most of the debt was
contracted
by the
depreciation system
SAC and a few by Price. The non-
occurrence
of Bullet
contracts encourages
the
amortization schedule
of the
company.
Finacial Indicators (Covenants
16
)
Despite current contracts
of CELG D not
present clauses
that
determine minimum covenants
to
achieve
the
disbursements,
it were
defined
two
indexes
(as
market parameters)
for
checking
the
financial conditions
of the
company,
these being: DSCR
17
(Debt
Service Coverage
Ratio) and the ratio of net debt to
EBITDA.
As the limit of
indexes
that will be used for the
measurement
of the CELG D
results,
will be used the
figures provided
by
BNDES (National Development
Bank) as
limiting
for the
abstraction
of
financing.
This way, for the DSCR will be
considered
the value of 1.3
18
as a limit and the net debt /
EBITDA
is 3.5x.
However,
as
presented
in the
Intermediary Financial Information Audited
(30 June
2015),
the
operating
cash flow for the period was
negative
and
consequently EBITDA calculated
is also
negative.
For the
covenant
of net debt /
EBITDA,
we used the
following values:
Gross debt = BRL
2,609,437,501.65
Cash and cash
equivalents
= BRL
142,113,000.00 EBITDA
= -BRL
394,310,868.72
(EY) So has net debt /
EBITDA
<0.
For the DSCR, they
considered
the values below:
16
Financial Restrictive conditions.
17
DSCR
calculation:
Cash flow
available
for debt service /
(principal
+
Interest)
.
18
The Debt Service
Coverage
Ratio (DSCR)
designed
for each year of the
project's operational
phase should be at least 1.3
(BNDES)
.
Debt
Analysis
Operational
flow = -BRL
510,721,000.00 Amortization (Financing
Flow) = - BRL
82,406,000.00
The result of DSCR was -6.20.
Thus, the
results
do not meet the limits
established
by the
BNDES,
as
previously described.
Debt
Analysis
Itaipu Debt
The debt under
discussion
was
contracted
in two
contracts,
signed
between
2006 and 2010, during the period which the CELG D not
settled
its
obligations related
to
purchased energy
from Itaipu.
With the
federalization
of CELG D in 2014, the
economic
and
financial restructuring operation
of the
company proposed renegotiation
of debts,
among
them the
liability
with Itaipu. As per the
balance
in the
balance
sheet of CELG D, in the first
semester
of 2015 the
foreign currency
debt with Itaipu was US $
349,498
(three
hundred
forty-nine
million,
four
hundred
ninety-eight
thousand dollars)
. The
Company's balance
sheet at the
effective measurement
date
considers
the
exchange
rate of June 30, 2015,
released
by the CCB, BRL
3.1026,
which
results
in
balance
in real BRL
1,084,354
(one billion, eighty four
million,
three
hundred
fifty-four
thousand
reais).
The law
13,182, approved
on
November
3rd, 2015,
authorizes
the
conversion
of debt into local
currency
to
monthly remuneration
by SELIC. Note that this law sets the
effective
date of the
renegotiation
of this debt is the first
working
day of the year in which it gave the
inclusion
of CELG D on PND
–
Programa Nacional
de
Desestatização (National Privatization Program),
which
corresponds
to 02
January
2015. The
calculation presented
by the
Company's management considers
the dollar
exchange
rate on
January
2, 2015, and the
amount
of debt is the net of the
difference determined between
the
payments actually
made and the values that should have been paid if the
calculation
had been made
based on Law
13,182.
It’s
important
to
emphasizing
that there is no formal
evidence
in the Law that
affirms
the
calculation
is
retroactive. However,
the value
reported
by the
Company involves
a refund and / or
reduction
of the total debt
balance
of
approximately
R $
9,063.
In
addition
to the debt with Itaipu
subject
to the Law
13,182,
the
balance
also
considers
the
installment
values with Itaipu
previously
fixed in Reais, of R $
26,191.
Source: Composition
of
account balances
for
accounts: "22012000003
-
electricity
supply - TCRD
29/06/2012 Itaipu"; "21012000003
-
electricity
supply - TCRD
29/06/2012 Itaipu"; "21012000002
-
electricity
supply -
national currency"
and
"22012000002
-
electricity
supply -
national currency", calculation memory "Repac
_Itaipu_
Pagamentos.
MP.677".
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5.
|
Projections
|
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5.1 General Considerations
|
|
|
|
5.2 Operating Assumptions
|
|
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|
5.3 Projected Financial Information
|
General Considerations
The
concession agreement
of
Celg D
for the
operation
of public power
distribution services
is
expired
since July 7th, 2015.
During
our work
period,
the
process
that may result in the
renewal
of this
agreement
is being
discussed
by the
competent agencies,
and the
parameters
of the new
agreement
have been
adjusted.
On
September
9, 2015 the
Brazilian Federal
Court of
Auditors (Tribual
de
Contas
da União)
authorized
the
Ministry
of Mines and
Energy
(MME) to
continue
the
renewal process
of the power
distribution concessions maturing
2014 and 2017. In more recent news, dated
October,
21 2015,
ANEEL approved
the
outcome
of the Public
Hearing
No.
38/2015
with the
recommendation,
to the
Granting Authority (Ministry
of Mines and
Energy),
to
extend
40 power
distribution concessions including
Celg D
. The
process
that will result in the actual
signing
of the
concession contract addendum
is
underway
on the
closing
date of our work.
The
economic financial valuation
of
Celg D
assumes
the
renewal
of the
concession contract
after the
signing
of an
addendum
term. Our
analyzes
are based on the
Technical
Note No.
033512015
-SCT-SFE-SFF-SRD-SRM /
ANEEL
which
features, among others,
the draft
addendum
to the
concession contract
for power
distribution.
Thus, the
projection
period
includes
the
extension
of the
concession contract
until July 7, 2045. The
projected
cash flows relate to the period from July 1, 2015 and July 7, 2045. The
projections
were
structured annually
except the
second
half of 2015 that is
designed separately.
Operating Assumptions
The
operating assumptions considered
in the
valuation
were based on
projections provided
by
Quantum, technical advisor
of the
transaction
hired by
IFC
.
Monetary
values
provided
by
Quantum,
were
delivered
in
nominal
terms,
already including
the
effects
of
inflation
over the
projection period.
There were not made any
adjustments
in the
received
data. We have
identified
below the data
provided
by the
company
and the
treatment
given to the
projection
of
operating results
of
Celg D
. The raw data
provided
by
Quantum
are in Annex 9.2 Data
supplied
by
Quantum. Assumptions defined
by
EY
over the
analysis
are
specified
in the text.
There have been
evaluated
three
scenarios
sent by
Quantum
that differ
fundamentally
in
relation
to the
conversion
time of the
CELG D
service quality parameters
for
regulatory targets, investments
and
market growth forecasts.
The
service quality
goals
include
the
indicators
that make up the
component
"Q" of the X
Factor:
DEC, FEC, INS, ICO, IAb, RES and IASC. The
scenarios
used were
defined
in
workshops
with the
participation
of
Quantum,
IFC,
BNDES
and
Accenture.
The main
differences between
the three
scenarios analyzed
are
presented
in the table below.
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Quality
|
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Scenario
|
adjustment
|
Market growth projection
|
Capex
|
|
period
|
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3 years
|
3 years.
|
GDP Goiás growth applies to the
five initial years and GDP Brazil
applied to the remaining projected
period.
|
Investments to meet the quality limits and restrained
demand are anticipated and partially captured by the
tariff review of 2017; and investments to keep up with
market growth in the long run.
|
Base 5 years
|
5 years.
|
GDP Goiás growth applies to the
five initial years and GDP Brazil
applied to the remaining projected
period.
|
Investments in quality improvement over the first five
years and investments needed to support the long-
term market growth.
|
GDP Goiás
|
5 years.
|
GDP Goiás growth applies to all
projected period.
|
Investments in quality improvement over the first five
years and investments needed to support the long-
term market growth.
|
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Source: Quantum/IFC
|
Strictly confidential
52
Operating Assumptions
Consumer market
The
consumer market
of
Celg D
corresponds
to the
energy consumption
of all units in the state of Goiás.
Quantum provided
the
projections
of
consumption,
in
Megawatt
-hours per year (MWh / year), the total
consumer market, segmented
into the
following consumption categories:
•Residential;
•Commercial;
•Industrial;
•
Others.
As
reported
by
Quantum,
the whole
market
is
included
in the above
consumer categories.
The
market segmentation
in
captive
and free was also
provided.
Free
consumers
are those with the right to
choose
their
energy supplier, usually
large
industrial consumers. Captive consumers
are tied to the utility that serves their
address
and must buy
CELG D
energy
in this case. The
projections
for each
scenario
are
presented
in Annex 9.2.
Required
power
In
addition
to the
required energy
to meet
consumer,
it has to be
considered
that not all
generated energy
is
delivered
to the end
consumer. Energy
losses are
inherent
in the nature of the
transformation process, transmission
and
distribution
of
energy. Therefore,
to meet the
projected consumer market
is
necessary
to
purchase
a higher
amount
of
energy. Losses
can be
segmented between
losses in the Basic Grid, which are
external
to the utility
distribution system
and have
eminently technical
origin, and the losses in
distribution,
which can be of a
technical
or non-
technical nature. Quantum provided
the
percentage
and the
regulatory calculation methodology
of
losses.
It is
noteworthy
that
among
the
market consumption
units are free
consumers.
Not
purchase energy
from
Celg D
and only use the
distribution network
to
transport
the
energy
to their
address.
Thus, the
calculation
of the
energy required considers
the losses
inherent
in the
overall consumer market
and sold
energy,
which
represents
all
energy
billed by the utility of its
captive market,
own
consumption
and
energy supplied
to other
distributors.
The
modeling
of the
Energy Balance
of
Celg D
takes the
assumption
that the
company
will not have
unintended exposures
on the need for not
contracted
power
purchase
in the long term. Short-term
exposures
were
simulated
by
Quantum
and its
impacts
are
reflected
in the
presented numbers.
Operating Assumptions
Energy
Sales Price after Taxes and
Charges
The selling price of
energy
to
consumers consists
of the
energy
tariff, set,
adjusted
and
reviewed periodically
by
ANEEL,
and
applicable indirect
taxes. The fee
represents
the sum of all
components
of the
generation, transportation (transmission
and
distribution)
and sale of
energy manufacturing process.
There are still added the
charges related
to fund the
implementation
of public
policies.
The fee set by the
regulatory agency
must have the
necessary amount
to
ensure
the power
supply, ensure
the
providers sufficient
gains to cover
efficient operating
costs,
adequately remunerate
the
investment needed
to
expand capacity
and
ensure
good
quality
of care. The
calculation
of the sales price of
energy
was
structured
in net terms, i.e. after
discounting
of
indirect
taxes and the
applicable
sector
charges.
For the
calculation
of the sales price were used three
parameters designed
by
Quantum
for
defining
the tariff:
•
Value of
Component
A (VCA)
The
Component
A
comprises
the
acquisition
costs of
energy,
the costs
related
to
connections
and use of
distribution
and / or
transmission
and the sector
charges.
In this case, costs have
unmanageable structure.
As the prices were
calculated
after taxes and
charges,
in our
modeling
we
considered
only the first two items.
Recognition
of
Component
A in the tariff occurs
through
a so-called pass-
through system,
where costs and even its
variations (Component
A
Variation Compensation)
are
recognized directly
in the tariff. In
practice,
as the tariff
adjustments
occur once every year and are based on cost
estimates
for the next twelve
months,
there are timing
differences between disbursements
and
receipts deviations
from the values
initially considered
in the
adjustment. Projections
of
Quantum assume
that there will be no
variation between
the costs
recognized
in the
readjustment
or tariff
revision
and the actual costs
incurred,
which could have an effect on the
Celg D
cash flow. The
company's operation
is
projected
in a
normal scenario
where there will not be an
involuntary exposure
ahead of the need for not
contracted
power
purchase
in the long term.
Variations expected
in the first years of
projection, resulting
from
involuntary exposure,
are
included
in the
figures presented
by
Quantum.
The values of
purchase
costs and
energy transport
were
provided
by
Quantum
in Reais per MWh (BRL / MWh) and are equal for all
consumer categories.
•
Value of
Component
B (VCB)
The
Component
B
comprises
the cost of own
distribution business
and
commercial management
of
customers, subject
to the
control
or
influence
of
management practices adopted
by the
concessionaire.
Thus, the parcel of the tariff
corresponding
to the
Component
B is
defined
based on
manageable
costs for the
Management
of
Celg D
. The value set for
component
B takes into
account
the
recognition
of
Operating Assumptions
costs,
investments
and
regulatory parameters,
and the
concessionaire's
ability to
optimize
them at the time of its
completion.
This ability is a major driver of value in a power
distributor company.
The values of
Component
B, in Reais per
megawatt
hour (BRL / MWh) and for each
consumer
class, were
provided
by
Quantum.
The
projection
of these values is the result of
annual
tariff
adjustments
and
periodic reviews expected
during the
projection period.
The rate
charged
to free
consumers
was not
treated separately
by
Quantum
and
according
to
information obtained,
the
estimated
tariff for
industrial consumers
is an
average
that
considers
the
amounts
billed to free
customers.
•
Losses
in the Basic Grid and
Losses
in the
Distribution
Losses
in the core
network
or the
distribution
are
passed
on to
customers.
Thus,
Component
A costs are
calculated
based on the
required energy, explained above.
The selling price of each MWh of
energy
is the result of the sum of unit values of the
Component
B and items
considered
in
Component
A
including losses.
Operating Revenues
The
operating revenues projected
refer to
revenues
from supply of
energy
and other
revenues.
Net
energy
supply
revenue
is the
product
of the selling price of
energy
and the total
consumer market.
The other
income
was
projected annually
by
Quantum
and refers to the
revenue
from
sharing
of power
distribution structure
with other
companies.
Projected Financial Information
Based on the
assumptions described
it is
possible
to
project
the
results
of
Celg D
, the
income statement projected
for each
scenario
is
summarized
below.
Detailed results
of the entire
projection
period are
presented
in Annex 9.3.
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|
|
Income Statement
–
Base 5 years
|
Income Statement (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Net operating revenue
|
1,989
|
4,096
|
4,519
|
5,089
|
5,538
|
5,981
|
6,464
|
Electricity Supply
|
1,965
|
4,044
|
4,462
|
5,028
|
5,472
|
5,910
|
6,388
|
Other revenues
|
24
|
53
|
57
|
61
|
66
|
71
|
76
|
Electricity Supply Costs
|
(1,423)
|
(2,850)
|
(3,120)
|
(3,402)
|
(3,710)
|
(4,022)
|
(4,365)
|
Electricity purchased for resale
|
(1,337)
|
(2,679)
|
(2,933)
|
(3,198)
|
(3,487)
|
(3,780)
|
(4,102)
|
Transmission System Usage Charges
|
(85)
|
(171)
|
(187)
|
(204)
|
(223)
|
(242)
|
(262)
|
Gross profit
|
567
|
1,247
|
1,398
|
1,687
|
1,828
|
1,959
|
2,099
|
Operating expenses
|
(446)
|
(901)
|
(912)
|
(927)
|
(987)
|
(1,049)
|
(1,119)
|
PMSO
|
(436)
|
(880)
|
(889)
|
(902)
|
(960)
|
(1,019)
|
(1,087)
|
Losses
|
(10)
|
(20)
|
(23)
|
(25)
|
(28)
|
(30)
|
(32)
|
EBITDA
|
121
|
346
|
486
|
760
|
841
|
910
|
980
|
Depreciation/Amortization
|
(44)
|
(100)
|
(126)
|
(153)
|
(178)
|
(201)
|
(221)
|
EBIT
|
77
|
245
|
360
|
607
|
663
|
709
|
759
|
Financial result
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
EBT
|
77
|
245
|
360
|
607
|
663
|
709
|
759
|
Income taxes
|
(26)
|
(83)
|
(123)
|
(206)
|
(225)
|
(241)
|
(258)
|
Net profit
|
51
|
162
|
238
|
401
|
437
|
468
|
501
|
Indicators
|
|
|
|
|
|
|
|
Net revenue growth yoy
|
NA
|
NA
|
10.3%
|
12.6%
|
8.8%
|
8.0%
|
8.1%
|
% Gross profit
|
28.5%
|
30.4%
|
30.9%
|
33.1%
|
33.0%
|
32.8%
|
32.5%
|
% EBITDA
|
6.1%
|
8.4%
|
10.8%
|
14.9%
|
15.2%
|
15.2%
|
15.2%
|
Income taxes effective rate
|
0.0%
|
23.7%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
NWC, % Net operating revenue
|
-1.4%
|
1.2%
|
1.2%
|
0.9%
|
1.4%
|
0.1%
|
0.1%
|
Capex , % Net operating revenue
|
-9.6%
|
-14.3%
|
-15.8%
|
-13.0%
|
-12.6%
|
-8.5%
|
-8.3%
|
Source: EY
|
|
|
|
|
|
|
|
Projected Financial Information
|
|
|
|
|
|
|
|
Income Statement
–
3 years
|
Income Statement (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Net operating revenue
|
1,989
|
4,096
|
4,531
|
5,150
|
5,604
|
6,051
|
6,538
|
Electricity Supply
|
1,965
|
4,044
|
4,474
|
5,088
|
5,537
|
5,980
|
6,462
|
Other revenues
|
24
|
53
|
57
|
61
|
66
|
71
|
76
|
Electricity Supply Costs
|
(1,423)
|
(2,850)
|
(3,120)
|
(3,402)
|
(3,710)
|
(4,022)
|
(4,365)
|
Electricity purchased for resale
|
(1,337)
|
(2,679)
|
(2,933)
|
(3,198)
|
(3,487)
|
(3,780)
|
(4,102)
|
Transmission System Usage Charges
|
(85)
|
(171)
|
(187)
|
(204)
|
(223)
|
(242)
|
(262)
|
Gross profit
|
567
|
1,247
|
1,410
|
1,748
|
1,894
|
2,029
|
2,174
|
Operating expenses
|
(448)
|
(934)
|
(948)
|
(958)
|
(986)
|
(1,051)
|
(1,121)
|
PMSO
|
(438)
|
(913)
|
(925)
|
(933)
|
(958)
|
(1,021)
|
(1,088)
|
Losses
|
(10)
|
(20)
|
(23)
|
(26)
|
(28)
|
(30)
|
(33)
|
EBITDA
|
119
|
313
|
462
|
789
|
908
|
978
|
1,053
|
Depreciation/Amortization
|
(44)
|
(105)
|
(138)
|
(170)
|
(191)
|
(204)
|
(222)
|
EBIT
|
75
|
208
|
324
|
619
|
717
|
774
|
831
|
Financial result
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
EBT
|
75
|
208
|
324
|
619
|
717
|
774
|
831
|
Income taxes
|
(25)
|
(71)
|
(110)
|
(210)
|
(244)
|
(263)
|
(282)
|
Net profit
|
49
|
137
|
214
|
408
|
474
|
511
|
548
|
Indicators
|
|
|
|
|
|
|
|
Net revenue growth yoy
|
NA
|
NA
|
10.6%
|
13.7%
|
8.8%
|
8.0%
|
8.1%
|
% Gross profit
|
28.5%
|
30.4%
|
31.1%
|
33.9%
|
33.8%
|
33.5%
|
33.2%
|
% EBITDA
|
6.0%
|
7.6%
|
10.2%
|
15.3%
|
16.2%
|
16.2%
|
16.1%
|
Income taxes effective rate
|
0.0%
|
23.5%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
NWC, % Net operating revenue
|
1.0%
|
2.3%
|
2.2%
|
-0.4%
|
0.0%
|
0.1%
|
0.1%
|
Capex , % Net operating revenue
|
-9.6%
|
-20.3%
|
-19.3%
|
-15.4%
|
-4.8%
|
-7.5%
|
-7.2%
|
Source: EY
|
Projected Financial Information
|
|
|
|
|
|
|
|
Projected Financial Information - Goiás GDP
|
Income Statement (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Net operating revenue
|
1,989
|
4,096
|
4,519
|
5,089
|
5,540
|
6,015
|
6,527
|
Electricity Supply
|
1,965
|
4,044
|
4,462
|
5,028
|
5,474
|
5,943
|
6,450
|
Other revenues
|
24
|
53
|
57
|
61
|
66
|
71
|
77
|
Electricity Supply Costs
|
(1,423)
|
(2,850)
|
(3,120)
|
(3,402)
|
(3,710)
|
(4,043)
|
(4,406)
|
Electricity purchased for resale
|
(1,337)
|
(2,679)
|
(2,933)
|
(3,198)
|
(3,487)
|
(3,800)
|
(4,141)
|
Transmission System Usage Charges
|
(85)
|
(171)
|
(187)
|
(204)
|
(223)
|
(243)
|
(265)
|
Gross profit
|
567
|
1,247
|
1,398
|
1,687
|
1,831
|
1,971
|
2,121
|
Operating expenses
|
(446)
|
(901)
|
(912)
|
(927)
|
(988)
|
(1,055)
|
(1,130)
|
PMSO
|
(436)
|
(880)
|
(889)
|
(902)
|
(961)
|
(1,026)
|
(1,098)
|
Losses
|
(10)
|
(20)
|
(23)
|
(25)
|
(28)
|
(30)
|
(33)
|
EBITDA
|
121
|
346
|
486
|
760
|
842
|
916
|
990
|
Depreciation/Amortization
|
(44)
|
(100)
|
(126)
|
(153)
|
(178)
|
(201)
|
(221)
|
EBIT
|
77
|
245
|
360
|
607
|
664
|
714
|
769
|
Financial result
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
EBT
|
77
|
245
|
360
|
607
|
664
|
714
|
769
|
Income taxes
|
(26)
|
(83)
|
(123)
|
(206)
|
(226)
|
(243)
|
(261)
|
Net profit
|
51
|
162
|
238
|
401
|
438
|
471
|
507
|
Indicators
|
|
|
|
|
|
|
|
Net revenue growth yoy
|
NA
|
NA
|
10.3%
|
12.6%
|
8.9%
|
8.6%
|
8.5%
|
% Gross profit
|
28.5%
|
30.4%
|
30.9%
|
33.1%
|
33.0%
|
32.8%
|
32.5%
|
% EBITDA
|
6.1%
|
8.4%
|
10.8%
|
14.9%
|
15.2%
|
15.2%
|
15.2%
|
Income taxes effective rate
|
0.0%
|
23.7%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
23.8%
|
NWC, % Net operating revenue
|
-1.4%
|
1.2%
|
1.2%
|
0.9%
|
1.4%
|
0.1%
|
0.1%
|
Capex , % Net operating revenue
|
-9.6%
|
-14.3%
|
-15.8%
|
-13.0%
|
-12.6%
|
-8.5%
|
-8.2%
|
Source: EY
|
|
|
|
|
6.
|
Economic Financial Valuation
|
|
|
|
|
|
6.1 Standard Value
|
|
|
|
6.2 Selected Methodology Analysis
|
|
|
|
6.3 Discounted Cash Flow (DCF) Implementation
|
|
|
|
6.4 Non-operating assets and liabilities
|
Standard
Value
According
to
generally accepted practices
of
economic financial valuation,
our
understanding
is that the
concept
of fair value, used in this study, is in line with its
objective.
In
addition,
IFRS
13/CPC
46
specify
that fair value should reflect
market expectations
about the
probability
that the future
economic benefits associated
with the asset will flow to an
acquirer. Therefore,
any
analysis
should
generally
reflect
assumptions
which would be
common
to any
market participant
if it were to buy or sell each
identified
asset on an
individual
basis
Definition
of fair value
IFRS
13/CPC
46: The price that would be
received
to sell an asset or paid to
transfer
a
liability
in an
orderly transaction between market participants
at the
measurement
date
(Paragraph
9).
Thus, the fair value should be
estimated
with
reference
to
‘market participants’
in
general
but
exclude
synergistic
values that are
unique
to a
particular
buyer. In this
context, market participants
would
include potential buyers
that have an ability to
acquire
and would take an active part in
managing
the
acquired company
or
assets.
Such ability would be
evaluated
in the
context
of
financial
ability as well as a
plausible
post-
combination operating strategy.
In
accordance
with this
definition
of fair value, all PFI used in our
valuation excluded acquirer
-
specific synergies
but
included
those
common
to
market participants
The
estimated
fair value of the
company
was
calculated following
the
assumption
of
closing activities
by the end of the
concession agreement amendment.
Strictly confidential
64
Selected Methodology Analysis
For this
business valuation,
the
Income Approach
was
adopted, through
the
Discounted
Cash Flow (DCF)
method. According
to the DCF
method,
the value of a
business
is equal to the
present
value of the
expected
cash flows
available
to the
owners
of the
capital
or debt of the
business.
In the
valuation
of a
company,
the value
drivers
are
developed
by
discounting
free cash flows
available
for
distribution
to their
present
value at the rate that
represents
the return
required
by the
market
and the risks
inherent
to a
specific investment.
Among
the
methods
to
calculate
the
existing
cash flow, we chose the Free Cash Flow to the Firm (FCFF). In the
projection
of the FCFF the
Operating
and the
Investment
cash flows of the
company
are
considered.
The FCFF is
discounted
by a rate that
reflects
the cost of all the
company's
capital
structure,
called WACC -
Weighted Average
Cost of
Capital.
The
present
value of the FCFF is the
operating
value of the
company (Enterprise Value), adjusted
based on the
balances
of non-
operating
assets and
liabilities resulting
in the
business
value
(equity
value). Thus, the cash flows of the
company's financing activities
were not
projected
and are WACC
calculations, detailed
in the
section Implementation
of the
discounted
cash flow of this
report.
The choice of FCFF for the
valuation
of
Celg D
was
defined
due to their
complex
debt
position
on the
reference
date of our work, as
indicated
in this report Debt
Analysis section.
The
projection
of the cash flows of
Celg D
financing activities
would
involve
the
definition
of a
restructuring
plan that would took into
consideration assumptions
such as
deciding
which
funding sources
should be used, the
renegotiation
of
existing
debt
contracts
and the
negotiation
of new
contracts.
We
understand
that the debt
restructuring
plan of
Celg D
will be
aligned
with the
strategy
and the ability of each
potential
buyer, which would be
impossible
to
capture
in a single
projection.
Thus, when
dealing
with the
company's
debt in
defining
the cost of capital rate used to
discount
the FCFF to the
present
value, we
assumed
the
adequacy
of the capital
structure
and debt cost of
Celg D
to
industry standards.
The
strategy
and the ability are
inherent
in every
potential
buyer in the
company's
debt
restructuring
that will result in gains or losses of each
unique company.
Discount
Cash Flow
Implementation
Based on the
assumptions described
an the
projected income statement
of
Celg D
, it is
possible
to
estimate
the Free Cash Flow to the Firm
(FCFF), summarized
below for each
scenario.
The FCFF for the entire
projected
period is
presented
on
Attacment
9.4.
|
|
|
|
|
|
|
|
Free Cash Flow to the Firm
–
Base 5 years
|
FCFF (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Cash flow from operating activities
|
67
|
310
|
416
|
601
|
694
|
674
|
728
|
(+) EBITDA
|
121
|
346
|
486
|
760
|
841
|
910
|
980
|
(-) Taxes
|
(26)
|
(83)
|
(123)
|
(206)
|
(225)
|
(241)
|
(258)
|
(+/-) Changes in working capital
|
(27)
|
48
|
52
|
48
|
78
|
5
|
6
|
Cash flow from investing activities
|
(191)
|
(586)
|
(713)
|
(664)
|
(697)
|
(510)
|
(535)
|
(-) Capex
|
(191)
|
(586)
|
(713)
|
(664)
|
(697)
|
(510)
|
(535)
|
(+) indemnification
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Free cash flow to the firm
|
(124)
|
(276)
|
(297)
|
(63)
|
(3)
|
164
|
194
|
Source: EY
|
|
|
|
|
|
|
|
Free Cash Flow to the Firm
–
3 years
|
FCFF (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Cash flow from operating activities
|
114
|
337
|
451
|
559
|
662
|
720
|
776
|
(+) EBITDA
|
119
|
313
|
462
|
789
|
908
|
978
|
1.053
|
(-) Taxes
|
(25)
|
(71)
|
(110)
|
(210)
|
(244)
|
(263)
|
(282)
|
(+/-) Changes in working capital
|
21
|
94
|
99
|
(20)
|
(2)
|
5
|
6
|
Cash flow from investing activities
|
(191)
|
(831)
|
(875)
|
(793)
|
(269)
|
(452)
|
(473)
|
(-) Capex
|
(191)
|
(831)
|
(875)
|
(793)
|
(269)
|
(452)
|
(473)
|
(+) indemnification
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Free cash flow to the firm
|
(77)
|
(494)
|
(424)
|
(234)
|
393
|
268
|
303
|
Discount
Cash Flow
Implementation
|
|
|
|
|
|
|
|
Free Cash Flow to the Firm
–
GDP
|
FCFF (BRL Millions)
|
2S15
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
Cash flow from operating activities
|
67
|
310
|
416
|
601
|
694
|
678
|
736
|
(+) EBITDA
|
121
|
346
|
486
|
760
|
842
|
916
|
990
|
(-) Taxes
|
(26)
|
(83)
|
(123)
|
(206)
|
(226)
|
(243)
|
(261)
|
(+/-) Changes in working capital
|
(27)
|
48
|
52
|
48
|
78
|
5
|
7
|
Cash flow from investing activities
|
(191)
|
(586)
|
(713)
|
(664)
|
(697)
|
(511)
|
(536)
|
(-) Capex
|
(191)
|
(586)
|
(713)
|
(664)
|
(697)
|
(511)
|
(536)
|
(+) indemnification
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Free cash flow to the firm
|
(124)
|
(276)
|
(297)
|
(63)
|
(3)
|
167
|
200
|
Source: EY
|
|
|
|
|
7.
|
Conclusion
|
|
|
|
|
|
7.1
Conclusion
|
Conclusion
2015. The
assumption
of
reducing
the debt
amount
with Itaipu was
indicated
by
IFC
oriented
by
BNDES
and the
Ministry
of Mines and
Energy.
The
estimated
fair value range does not
consider contingencies, shortcomings
or
supervening
assets or
liabilities
that are not
registered
in the
Company
’s equity and
financial position. Consequently
even if
these
contingencies shortcomings, supervening
assets or
liabilities
do exist, the
results presented
do not
consider
its
effects,
in case it exists.
Power
distribution companies comparable
to
Celg D
,
detailed
in
Appendix
8.4, have a range of value based on
multiple Enterprise
Value/
Adjusted
Net
Operating Revenue
19
, for the twelve
months
prior to June 30, 2015, from 0.44x to 1.82x. The simple
arithmetic average
of the
multiple sample selected corresponds
to 1.06x.
Based on the
valuation results presented
above the
implicit multiple
of
Celg D
as of June 30, 2015 is in a range from 1.24x to 1.26x. The
implied multiple
range is within the range of
market multiples
values and it is above the
average.
|
|
|
19
Net
Operating Revenue resulting subtracted from the construction revenue and from the financial asset.
|
Strictly confidential
|
72
|
|
|
|
|
8.
|
Appendix
|
|
|
|
|
|
8.1 Statement of limiting conditions
|
|
|
|
8.2 Valuation approaches and methods
|
|
|
|
8.3 Discount rate derivation
|
|
|
|
8.4 Selected Comparable Companies
|
Appendix
8.1
Statement
of
limiting conditions
1. Our
analysis
is based on
information provided
by
Management
and by
Quantum,
which is the
transaction technical advisor
hired by
IFC
.
According
to
professional practices,
the
analysis
is
derived
from the
application
of the
income approach
using the DCF
methodology.
To
calculate
the DCF it has been
considered
the Free Cash Flow to the Firm.
2.
To
achieve
the work’s
objective,
it has been
applied procedures
based on
historical, economic
an
d
market
events dated on June 30, 2015. The values
presented
in this
Report
are result of
historical
data
analysis (financial
and
managerial),
and the
projections
of future
events.
3. The
comments
made in this
Report
have been
developed
by
professionals
from
EY
with
information provided
by
Management
and by
Quantum,
as well as
external sources,
as
indicated.
4. None of the
partners
or
professionals
of
EY
’s team who
participated
in the
preparation
of this
report had any
financial interest
in the
Company
, which
characterize
EY
’s
independence
. The
estimated
fees for the
execution
of this work were not based and it had no
relationship
to the
results reported
here.
5. This work has been
carried
based on
information provided
by
Manageme
nt, and
considered
as
reliable
and
accurate;
so it is not part of the
project
scope any kind of audit
procedure
as well. For not having
carried
out audit
procedures,
EY
can’t
assume responsibility regarding
the
historical
information
used in this
Report.
6. The
projections
are based on
financial statements information provided
by
Management
,
including experience gained
in
meetings
and
discussions
with their
executives.
7. It was part of our work to obtain
Company
’s
information
that we
consider reliable,
but the
responsibility
of its
veracity
is
exclusively
of
Management
.
8. No
investigations
were
carried
out on the
Company
’s
properties,
or
compliance
with the
existence
of liens or
encumbrances.
9.
EY
has no
responsibility
to
update
this
Report
for any events and
circumstances
that may occur after the
reference
date.
10. This report does not
include
audit, due
diligence
and / or tax advice
process.
11. It has not been
calculated
the value per share or any
reward
for
explicit control
in the
valuation. Therefore,
it has been
considered
that the
estimated
fair value of the
Company
represents
100% of its
shares.
12. We did not have the
opportunity
to
expose
the
business
or assets of the
Company
,
individually
or
jointly,
to the
market.
As a result, we could not
conclude whether
if there are
potential buyers
that may
exceed
our
estimated business
value.
Appendix
8.1
Statement
of
limiting conditions
13. The
expectation
/
estimated
fair value of the
Company
contained
in this
Report
has been
calculated
based on the DCF’s
methodology
so it does not
necessarily
reflect the
eventual trading
price of it.
The DCF’s
methodology
has some
limitations,
as
mentioned
in this Repo
rt.
14. This
report,
as well as the
opinions
and
conclusions contained therein,
are for use of IFC, giving full and wide
dissemination
of its
content, exempting,
EY as any
liabilities arising
from the
disclosure
made.
Anyway,
it is
noteworthy
that this
Report consists
of 114 pages, and its
exhibits
, it
shouldn’t
be
handled
or
distributed
in parts.
15. This
Report
has been
prepared
solely for the
purpose described
in our
contract
and may not be used for any other
purpose.
EY
will not
assume
any
responsibility
for any third-
party’s
use and
in case of use of this
Report outside
of the stated
purpose.
16.
Certain historical financial
data used in our
valuation
were
derived
from
audited and/or unaudited financial statements
and it is
responsibility
of
Celg D
. The
financial statements
may
include disclosures required
by
generally accepted accounting principles.
We have not
independently verified
the
accuracy
or
completeness
of the data
provided
and do not
express
an
opinion
or offer any form of
assurance regarding
its
accuracy
or
completeness.
17. We
assume
no
responsibility
for any
financial
and tax
reporting judgments,
which are
appropriately
those of
Celg D
’s
Management.
It is our
understanding
that
Management
accepts responsibility
for any
financial statement
and tax
reporting
issues with
respect
to the assets
covered
by our
analysis,
and for the
ultimate
use of our
Report.
18.
Before issuing
the final
version
of this
Report,
IFC
will send us a
signed
“Representation
Letter
, as
confirmation
from key
statements
of
EY
and
assumptions
based on which we
performed
our
valuation analysis
of the
Company
.
19. Our
valuation
is
performed
on the basis of
elements,
which can be
reasonably expected
and
therefore
does not take into
account possible extraordinary
and
unforeseeable
events (new
regulations
of the
Company
,
changes
in tax rules,
natural catastrophes,
major social and
political events, nationalizations,
etc.).
20. Our
economic
-
financial valuation
is based on the best
available information
and
estimates. However,
like any
projection
it
involves
risk and
uncertainties,
actual
results
may
present differences
when
compared
to
projections.
21. The
factors
that may result in
differences between
the
projected
cash flows and actual
results include changes
in the
external environment, changes
in the
Company
's
internal operating environment
and
modeling differences.
The DCF
method
does not
anticipate changes
in
external
and
internal environments
in which the
Company
operates,
except those
outlined
in this
Report.
22. This
Report version
is a draft,
internally revised
by
EY
professionals
who
participated
in this work,
but it is
subject
to
change
after the review and any
assumption’s discussions
with
Brazilian Federal
Court of
Auditors
Appendix
8.2
Valuation approaches
and
methods
Overview
Business enterprises, tangible
and
intangible
assets should be valued based on the
appropriate application
of the
Market,
Cost and
Income Approaches. Although
all three
approaches
should be
considered
in a
valuation analysis,
the fact
pattern surrounding
the
acquisition,
the nature of the
business
or
assets,
and the
availability
of data will
dictate
which
approach
–
or
approaches
–
is/are
ultimately utilized
to
calculate
value. The
following discussion provides
an
overview
of the three
approaches
to value as well as the most
common
or
relevant valuation methodologies
within each
approach.
Market Approach
The
Market Approach measures
value based on what other
purchasers
in the
market
have paid for assets or
business interests
that can be
considered reasonably
similar to those being
valued.
When the
Market Approach
is
utilized,
data are
collected
on the prices paid for
reasonably comparable
assets or
interests. Adjustments
are made to the prices paid to
compensate
for
differences between
those assets or
interests
and the asset or
interest
being
valued.
The
application
of the
Market Approach results
in an
estimate
of the price
reasonably expected
to be
realized
from the sale of the asset or
business interest.
In
practice,
sales
prices, especially
for
intangible
assets and
specialized tangible assets,
are rarely
available
since these are
typically transferred
as part of the sale of a
business,
not in
piecemeal transactions. Furthermore, because
many assets are often
unique
to a
particular enterprise,
a
comparison between enterprises
is
difficult.
For these
reasons,
it is often
problematic
to apply the
Market Approach
for the
valuation
of many
intangible
assets and many
specialized tangible assets.
It is
however typically
used for assets that are
commonly
traded in the
market
such as
certain
real
property assets, general
plant and
equipment,
motor
vehicles,
etc. Some
intangible assets, however,
are traded on an
individual
basis, in which case a
Market Approach
may be an
appropriate approach
to value.
Income Approach
The
Income Approach focuses
on the
income
-
producing capability
of the
identified
asset or
business.
The
underlying premise
of this
approach
is that the value of an asset or
business
can be
measured
by the
present
worth of the net
economic benefit
(cash
receipts
less cash
outlays)
to be
received
over its life. The steps
followed
in
applying
this
approach include estimating
the
expected
after-tax cash flows
attributable
to the asset or
business
over its life and
converting
these after-tax cash flows to
present
value
through ‘discounting’
. The
discounting process
uses a rate of return th
at
accounts
for both the time value of
money
and
investment
risk
factors. Finally,
the
present
value of the after-tax cash flows over the life of the asset is
totaled
to arrive at an
indication
of value.
Appendix
8.2
Valuation approaches
and
methods
Discounted
cash flow and
capitalization methods
are
commonly
used to
estimate
the value of
businesses, intangible assets,
and
income producing
real
property
assets such as
commercial
office
buildings.
The
income capitalization method
is
defined
in (The
Appraisal
of Real
Estate, Thirteenth Edition), Appraisa
l
Institute
as: “The
process
of
analyzing
a
property’s capacity
to
generate
future
benefits
and
capitalizes
the
income
into an
indication
of
present
value. The
principle
of
anticipation
is
fundamental
to the
approach. Techniques
and
procedures
from this
approach
are used to
analyze comparable
sales data
and to
measure obsolescence
in the cost
approach.
”
The
Income Approach
is
generally
not
considered
to be
appropriate
to
estimate
values for plant and
equipment
assets
because
it is not
usually feasible
to
attribute income
to an
individual property
unit or the units of
equipment
that
constitute
an
operating
entity, since the assets
contribute
to
earnings
only in
concert
with all other
economic factors
of the
business.
Cost
Approach
The Cost
Approach
is based on the
premise
that a
prudent investor
would pay no more for an asset than its
replacement
or
reproduction
cost. The cost to
replace
the asset would
include
the cost of
constructing
a
similar
asset of
equivalent
utility at prices
applicable
at the time of the
valuation analyses.
This
estimate
may then be
adjusted
by losses in value
attributable
to
obsolescence (physical, functional
and/ or
economic)
.
The Cost
Approach
is used to
determine
values in
circumstances
where it is not
possible
to
determine
values using a
Market Approach
or an
Income Approach.
In
valuing tangible assets,
the Cost
Approach
relies on the
principle
of
substitution
and
recognizes
that a
prudent investor
will pay no more for an asset than the cost to
replace
it new with an
identical
or
similar
unit of
equivalent
utility. Under this
approach,
the Fair
Market
Value of an asset is
determined
by
reference
to the
reproduction
or
replacement
cost new of
modern equivalent assets, optimized
for over-
design,
over-
capacity
and
redundant assets,
and
adjusted
to reflect losses in value
attributable
to
physical depreciation
and
obsolescence.
Appendix
8.3
Discount
rate
derivation
The
application
of
Discounted
Cash-Flow
Methods requires
the
determination
of an
appropriate discount
rate.
Discounted
Cash-Flow
Methods
are
applied
under
conditions
of
uncertainty.
In
common
usage, the word risk refers to any
exposure
to
uncertainty
in which the
exposure
has
potential negative consequences.
It is
assumed
that
marketplace participants
are said to be risk
adverse.
A risk-averse
market participant prefers situations
with a
narrower
range of
uncertainty
over
situations
with a
greater
range of
uncertainty relative
to an
expected outcome. Marketplace participants
seek
compensation, referred
to as a risk
premium,
for
accepting uncertainty.
Therefore,
the
determination
of the
discount
rate
implies
the
comparison
of the cash flows
generated
by the asset with the cash flows
generated
with the most
favorable alternative investment.
In this
respect,
it must be
carefully observed
that the cash flows from the asset being valued and the
alternative investment
are
equivalent
in terms of risk and
maturity.
The
discount
rate to be used
depends
on the DCF
method
used. When used Free Cash Flow to Firm
(FCFF),
the rate to be used is the
WACC.
In the case of use of Free Cash Flow to Equity
method (FCFE),
the
discount
should be done based on the
CAPM.
The
determination
of the
discount
rate is based on
WACC.
The
following formula
is
applied
to
calculate WACC:
WACC = W
E
* K
E
+ W
D
* K
D
With:
W
E
= value of equity / value of total capital K
E
=
market
value of equity
W
D
= value of
interest bearing
debt / value of total capital K
D
= after tax costs of
interest bearing
debt
Since the WACC
reflects
the
specific
risk of an
enterprise, adjustments
have to be
considered
based on the asset-
specific
risk
profile.
Appendix
8.3
Discount
rate
derivation
The
average market
risk
premium
must be
modified
to reflect the
specific
risk
structure.
The CAPM
accounts
for the
company
-
specific
risk within the beta
factor.
Beta
factors represent
a
weighting
figure for the
sensitivity
of the
company’s returns compared
to the trend of the entire
market.
They are thus a
measure
of
volatility
for the
systematic
risk. Beta
factors
of more than one reflect a higher
volatility;
beta
factors
of less than one reflect a lower
volatility
than the
market average.
Beta
factors
are ideally
determined
with
reference
to the entire equity
market,
since the
concept
of
systematic
and
specific
risk
requires
that
individual
shares are
measured
in
relation
to the
market portfolio.
The beta
coefficient
used in the
assessment
was
calculated
based on the
average
beta of
comparable companies,
from a
weekly
time series of the 24
months
prior to the
measurement
date. The
unlevered
beta
calculated
was 0.45. The
detailed calculation
can be found in the "Data of
Comparable Companies"
in this
section.
When
activities
in
different countries
are taken into
consideration,
it might be
appropriate
to use
country specific
risk
premiums.
Cost of Debt
The cost of debt was based on the cost of
comparable companies
in the
market
with
10.79%
p.a. before taxes. The
calculations
for
setting
this
premise
were
performed
from the
audited financial statements
of each
comparable company
and
represent
the
relationship between
the
adjusted financial results
and net debt for the year ended
December
31, 2014. The
detailed calculation
can be found in topic "Data of
Comparable Companies"
in this
section.
Capital Structure
The capital
structure
used was the
average structure
of
comparable companies
in the
market
and
corresponds
to
52.35%
of Debt and
47.65%
of
Equity, resulting
in a D / E ratio of
109.86% (average structure
of the last two years
observed
in each
company)
. The
detailed calculation
can be found in the "Data of
Comparable Companies"
in this
section.
Appendix
8.4
Selected
c
omparable companies
In order to
calculate
the
company
Beta, we
performed
a search
through
which we
identified
the
comparable companies,
using the
following assumption:
„
Companies
with
private controlling shareholder;
„
Companies
with
exclusively operations
in the
Brazilian
power
distribution industry
or
income
from
energy distribution activities
more than 90% of total
revenues;
and
„
Companies
with public and
sufficient
data to carry out our
analyzes.
As
mentioned throughout
the
report.
The
assumptions defined
from the
sample
of
comparable companies
are the beta
coefficient,
capital
structure,
cost of debt and the goals of
adequacy
of
customers
and
suppliers accounts
in the
calculation
of
working capital.
Below is a brief
description
of the
selected companies:
„
Elektro Eletricidade
e
Serviços
S.A.:
engages
in the
distribution
of
energy
by
planning, designing, constructing,
and
operating energy distribution
and trade
systems
in Brazil. The
company distributes energy
to
approximately
223 cities in the state of São Paulo and 5 cities in the state of Mato
Grosso
do Sul. It serves
residential, industrial, commercial,
rural, and real estate
customers,
as well as public
authorities.
The
company
was
founded
in 1998 and is
headquartered
in
Campinas,
Brazil.
Elektro Eletricidade
e
Serviços
S.A. is a
subsidiary
of
Iberdrola Energia
do Brasil Ltda..
„
Light S.A.:
through
its
subsidiaries, engages
in the
generation, transmission, distribution,
and
commercialization
of
electric
power in Brazil. It
operates
in 31
municipalities
of the state of Rio de
Janeiro, covering
a region with
approximately
10 million
customers.
The
company
also
provides advisory services
to free and
captive consumers.
It serves
residential, commercial,
and
industrial customers.
The
company
was
founded
in 1899 and is
headquartered
in Rio de
Janeiro,
Brazil.
„
Centras Elétricas
do Pará S.A.:
distributes energy residential, corporate customers,
and real estate
consumers
in Brazil. The
company
was
founded
in 1902 and is based in
Belem,
Brazil.
„
Companhia Energética
de
Pernambuco
–
CELPE:
is
engaged
in the
marketing
and
distribution
of
energy
to
consumers
in
Pernambuco, District
of
Fernando
de
Noronha,
and
Paraíba.
It also
engages
in the
generation
of
energy.
The
company
was
founded
in 1965 and is
headquartered
in
Recife,
Brazil.
Companhia Energética
de
Pernambuco
- CELPE
operates
as a
subsidiary
of
Neoenergia
S.A.
„
Companhia Energética
do Ceará
–
Coelce:
engages
in the
distribution
of
electric energy
in Brazil. The
company
serves
residential
and
business customers.
It
supplies energy
to
approximately
3 million
customers.
The
company
is based in
Fortaleza,
Brazil.
Appendix
8.4
Selected comparable companies
„
Companhia Energética
do Rio
Grande
do Norte
–
COSERN:
is
engaged
in the
production, transmission, processing, distribution,
and
marketing
of
energy.
The
company distributes
its
energy
to
residential, commercial, industrial,
rural, and public
government consumers through
its own
distribution
grid
comprising
60
energy substations.
It serves 1,074 million
customers
in 167
municipalities
in the
Brazilian
State of Rio
Grande
do Norte. The
company
was
founded
in 1961 and is
headquartered
in Natal, Brazil.
Companhia Energética
do Rio
Grande
do Norte
–
COSERN operates
as a
subsidiary
of
Neoenergia
SA.
„
Eletropaulo Metropolitana Eletricidade
de São Paulo S.A.:
is
primarily engaged
in the
distribution
and sale of
electric
power in the
metropolitan
region of São Paulo. It serves
customers
in
residential, industrial, commercial,
rural, public
lighting
and
services,
and other
sectors.
The
company
was
founded
in 1899 and is based in
Barueri,
Brazil.
„
Companhia Energética
do
Maranhão
–
CEMAR:
distributes energy
to
residential, corporate,
real
estate,
and
government customers
in Brazil. It serves
approximately
2 million
customers
in 217
municipalities
in the State of
Maranhão.
The
company
was
founded
in 1958 and is
headquartered
in São Luís, Brazil.
|
|
|
|
|
Assumptions obtained from comparable companies
|
|
|
|
|
|
Company
|
Unlevered Beta
|
D/E
|
Net Debt
|
kd
|
|
|
|
BRL millions
|
|
Elektro Eletricidade e Serviços
|
0.76
|
92.87%
|
1,617
|
8.34%
|
Light
|
0.48
|
148.14%
|
5,987
|
9.97%
|
Centras Elétricas do Pará
|
0.54
|
81.22%
|
2,131
|
11.21%
|
Companhia Energética de Pernambuco
|
0.24
|
116.84%
|
1,322
|
11.61%
|
Companhia Energética do Ceará - Coelce
|
0.42
|
32.65%
|
1,080
|
9.11%
|
Companhia Energética do Rio Grande do Norte - COSERN
|
0.47
|
25.25%
|
594
|
6.64%
|
Eletropaulo Metropolitana Eletricidade de São Paulo
|
0.30
|
343.45%
|
2,879
|
13.09%
|
Companhia Energética do Maranhão - CEMAR
|
0.38
|
38.45%
|
1,055
|
11.46%
|
Average
|
0.45
|
109.86%
|
-
|
10.56%
|
Source: S&P Capital IQ and Financial Statements 2014 of each company.
|
|
|
|
|
|
|
|
|
LTM, December 31, 2014 (days)
|
NOR
|
accounts
|
accounts
|
|
|
(BRL millions)
|
receivable
|
payable
|
|
|
Strictly confidential
|
83
|
|
|
|
|
Appendix
8.4
Selected comparable companies
|
|
|
|
Light
|
9.230
|
55
|
57
|
Elektro
|
4.763
|
56
|
37
|
Eletropaulo
|
10.557
|
62
|
53
|
COELCE
|
3.622
|
67
|
43
|
COSERN
|
1.470
|
71
|
43
|
CELPE
|
3.940
|
71
|
40
|
CELPA
|
3.987
|
79
|
75
|
CEMAR
|
2.484
|
80
|
42
|
Simple Average
|
|
68
|
49
|
Standard Deviation
|
|
9
|
12
|
lower limit (Simple Average - Standard Deviation)
|
|
58
|
36
|
Upper limit (Simple Average + Standard Deviation)
|
|
77
|
61
|
Weighted average per revenue adjusted to the limits
|
|
65
|
48
|
Source: S&P Capital IQ
|
Strictly confidential
84
9.
Attachment
|
|
|
|
|
9.1 Debt
agreements
9.2 Data
provided
by
Quantum
9.3
Projected income statement
9.4
Projected
free cash flow to the firm
9.5
Concession agreement covenants
|
Strictly confidential
85
Annex 7.A-Appendix 8.5: Economic and
financial evaluation of CELG Distribution SA -
Ernst Young
Appendix 8.5
Valuation update for June 30, 2016
On the Table 1 there is an update of the macroeconomic assumptions from June 2015 for June 2016, resulting in a variation of 0.68 p.p.; at the Table 2 is presented the updated methodology used on the updated of the fair value, resulting in an additional variation of 0.14 p.p. Therefore, is possible to verify that the main component of these updated on the WACC rate were the new macroeconomic assumptions.
With the variations presented on the tables, the general composition of WACC was changed from 10.79% to 11.61%. As a very sensitive model, the impact on the estimated fair value of Celg D is huge, as seen on the new results.
Annex 7.B-Annex I Report of the Economic and
Financial Evaluation
–
Accenture
Other non-
operational
assets and
liabilities.
|
|
|
|
Non-operational assets / liabilities balance (R$ mm)
|
|
Current Assets
|
144
|
Current Liabilities
|
515
|
Regulatory components - CVA and financial items
|
25
|
Private pension fund
|
35
|
Tariff discount – CDE
|
25
|
Labor provisions
|
48
|
Others – Funac
|
94
|
Others
|
431
|
|
Long term assets
|
734
|
Long term liabilities
|
1,055
|
Debts payed in advance
|
0
|
Taxes and social contributions
|
0
|
Regulatory components - CVA and financial items
|
0
|
Sector charges
|
99
|
Deposit checks / linked deposit
|
172
|
Private pension fund
|
102
|
Others
|
561
|
Regulatory components - CVA and financial items
|
282
|
|
|
Legal liabilities
|
572
|
|
(=) Total assets
|
877
|
(=) Total liabilities
|
1,570
|
|
Non-
opera onal assets / liabili es balance: - 693 mm
|
|
|
1
Source: CELG D financial statement, from June 30
th
, 2016.
|
Non-
operational assumptions
|
28
|
Annex 8. Technical and operational Due
Diligence CELG D
|
|
|
|
|
Index
|
|
|
|
1. Introduction
|
21
|
2. Due Diligence
|
22
|
2.1.
|
Company’s De
scription
|
22
|
|
2.1.1.
|
Introduction
|
22
|
|
2.1.2.
|
History
|
23
|
|
2.1.3.
|
Share capital and Shareholding interest
|
24
|
|
2.1.4.
|
Electric System Distribution
|
26
|
|
2.1.5.
|
Market
|
28
|
|
2.1.6.
|
Consuming units
|
31
|
|
2.1.7.
|
Power purchase
|
33
|
|
2.1.8.
|
Net Operational Revenue
|
35
|
|
2.1.9.
|
Luz Para Todos Program
|
36
|
|
2.1.10. Benchmarking with Brazil and Latin America
|
37
|
|
2.1.11. Brazil Benchmarking
|
38
|
2.2.
|
Operational Costs
–
Efficiency
|
43
|
|
2.2.1.
|
3CRTP Operational Costs
|
43
|
|
2.2.2.
|
4CRTP Operational Costs
|
45
|
|
2.2.3.
|
X Factor
|
47
|
2.3.
|
Description of the distribution system
|
49
|
|
2.3.1.
|
Work Methodology
|
49
|
|
2.3.2.
|
General Characteristics of the Distribution Electric System
|
49
|
2.4.
|
Operations
|
55
|
|
2.4.1.
|
Electric System Operation
|
55
|
|
2.4.2.
|
Electric System Maintenance
|
70
|
|
2.4.3.
|
Assessment of the Technical and Physical Conditions of the Assets
|
91
|
|
2.4.4.
|
Main critical points
|
99
|
|
2.4.5.
|
Required investments in the distribution system within 30 years
|
105
|
2.5.
|
Quality
|
|
108
|
|
2.5.1.
|
Service quality
|
108
|
|
2.5.2.
|
ANEEL Index of Consumer’s Satisfaction
- IASC
|
119
|
|
2.5.3.
|
Satisfaction of the Urban Residential Consumer of Electric Power
|
123
|
|
2.5.4.
|
Result Plan
|
127
|
2.6.
|
Losses
|
|
132
|
|
2.6.1.
|
Contextualization
|
132
|
|
|
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|
|
|
2.6.
2.
|
Regulatory Limits of Losses in the Distribution Network
|
133
|
|
2.6.3.
|
Global Losses
|
134
|
|
2.6.4.
|
Technical and Non-
Technical on injected power
|
139
|
|
2.6.5.
|
PT and PNT on injected power
–
Realized and Projected
|
148
|
|
2.6.6.
|
Benchmarking of Losses on injected power
|
151
|
|
2.6.7.
|
Programs of reduction of Losses
|
153
|
|
2.6.8.
|
Details of the program of fighting against the non-
technical losses
|
157
|
|
2.6.9.
|
Results of Fighting against Non-Technical Losses
|
164
|
|
2.6.10. Reference of Files of Losses
|
166
|
2.7.
|
Replacement costs
|
168
|
|
2.7.1.
|
Determination of the New Replacement Value
–
VNR
|
168
|
|
2.7.2.
|
Determination of the New Replacement Value
–
VNR
|
168
|
|
2.7.3.
|
Composition of the Regulatory Remuneration Base
–
BRR
|
171
|
2.8.
|
Social and environmental matters
|
174
|
|
2.8.1.
|
Work Methodology
|
174
|
|
2.8.2.
|
Results
|
175
|
|
2.8.3.
|
Accidents with Environmental and Social Repercussions
|
187
|
|
2.8.4.
|
Social-
environmental Risks and Conflicts
|
192
|
|
2.8.5.
|
Environmental Liabilities
|
195
|
|
2.8.6.
|
Environmental Regularization and Licensing
|
195
|
|
2.8.7.
|
Notifications, Fines, and Conduct Adjustment Terms
|
195
|
|
2.8.8.
|
Technical Registrations
|
196
|
|
2.8.9.
|
Environmental Map Analysis of the Current and Future Electric System
|
196
|
|
2.8.10. Final Considerations
|
197
|
|
2.8.11. Estimative of Investments and Expenses
|
198
|
2.9.
|
Personnel
|
208
|
|
2.9.1.
|
Personnel Characterization
|
209
|
|
2.9.2.
|
Evolutionary and comparative analysis of productivity
|
216
|
|
2.9.3.
|
Qualification and Training Courses
|
224
|
|
2.9.4.
|
Benchmarking with national and international references
|
227
|
|
2.9.5.
|
Structure of Positions
|
228
|
|
2.9.6.
|
Collective Bargaining Agreement - ACT
|
235
|
|
2.9.7.
|
Restructuring of the Workstations
|
237
|
|
2.9.8.
|
Reference of Personnel Files
|
244
|
2.10. Annexes -
Operations
|
245
|
2.11. Annexes
–
Description of the distribution system
|
246
|
2.12. Annexes
–
Service quality and efficiency
|
247
|
2.13. Annexes
–
Social and environmental questions
|
248
|
|
|
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List of Tables
|
|
Table 1: Kilometers of total networks per voltage level (km) - Source: CELG D
|
27
|
Table 2: Main electric assets
|
28
|
Table 3: Evolution of the Power Consumption (GWh) - Source: CELG D
–
Administration
Reports
|
28
|
Table 4: Evolution of Power Consumption of Exclusive Market (Gwh)
–
Source: CELG D
–
Administration
|
Reports
|
29
|
Table 5: Consuming Units per Class (#) - Source: CELG D
|
31
|
Table 6: % Growth per Class
–
Source: CELG D
|
32
|
Table 7: Consuming Units per Voltage Level (#)
–
Source: CELG D
|
33
|
Table 8: Balance of Purchased Power (MWh)
–
Source: CELG D
–
Administration Reports
|
34
|
Table 9: Power Balance (GWh) Source: CELG D
–
Administration Reports
|
34
|
Table 10: Tariff Adjustments approved for CELG (2011-
2014) - Source IRT and SPARTA (ANEEL)
|
35
|
Table 11: Net Operational Revenue (R$ Million) Source CELG D
|
35
|
Table 12: Total Turnover (R$ Million)
–
Source CELG D
|
36
|
Table 13: Turnover not received up to Dec/2014 (R$ Million)
–
Source CELG D
|
36
|
Table 14: Resume do Programa Luz para Todos - Fonte CELG D
|
37
|
Table 15: Companies used to the construction of indicators
–
Source:
Quantum
|
38
|
Table 16: Evolution of the Distributed MWh/Consumer per companies (in MWh-year/Consumer)
–
Source:
|
Quantum
|
41
|
Table 17: PMSO/Distributed MWh, per companies (in R$/MWh-year)
–
Source: Quantum
|
42
|
Table 18: Update of the operational costs. Source: ANEEL
–
RT 3C of CELG.
|
44
|
Table 19: Interval oaf the operational costs. Source: ANEEL
–
AP 40/2010.
|
45
|
Table 20: Update of the real operational costs of the distributor. Source: ANEEL
–
RT 3C of CELG.
|
45
|
Table 21: Interval of the operational costs. Source: ANEEL
–
RT 3C of CELG
|
45
|
Table 22:
Interval of the operational costs 4C. Source: ANEEL
–
AP23/2014.
|
46
|
Table 23: Interval of the operational costs 4C, corrected
. Source: ANEEL
–
AP23/2014.
|
46
|
Table 24: Pd and T Components. Source: ANEEL
–
RT 3C of CELG
|
48
|
Table 25: Components of the X Factor 2014. Source: ANEEL
–
IRT 2014 of CELG.
|
48
|
Table 26: Pd Component of RT of 4C. Source: Quantum.
|
48
|
Table 27: Substations and Lines Source: CELG D
|
51
|
Table 28: MV and LV Network Extension in Km Source: CELG D
|
51
|
Table 29: Summary of the General Numbers of Electric Facilities Source: CELG D
|
52
|
Table 30: Number of Voltage Reclosers Source: CELG D
|
52
|
Table 31: Number of Capacitors Source: CELG D
|
52
|
|
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|
Table 32: No. of Employees of the System Operation Center - COS Source: CELG D
|
58
|
Table 33: Main applications developed and used by COS Source: CELG D
|
59
|
Table 34: Indicators of the quality system Source: CELG D
|
63
|
Table 35: Structure of Titles and Quantity of collaborators of COD. Source: CELG D
|
64
|
Table 36: Quantity of Employees of the Distribution Department Source CELG D
|
69
|
Table 37: Diagram of the Technical Board of Directors
. Source: CELG D
|
71
|
Table 38: No. of Employees per Maintenance Department Source: CELG D
|
73
|
Table 39: No. of Own Employees in the Maintenance Coordination
. Source: CELG D
|
73
|
Table 40: No. of Outsourced Employees in the Maintenance Coordination
. Source: CELG D D
|
73
|
Table 41: Vehicles in the Maintenance Coordination
. Source: CELG D
|
73
|
Table 42: No. of Own Employees in the Maintenance Coordination
. Source: CELG D
|
74
|
Table 43: No. of Outsourced Employees in the Maintenance Coordination
. Source: CELG D
|
74
|
Table 44: Vehicles in the Maintenance Coordination Source: CELG D
|
74
|
Table 45: No. of Own Employees. Source: CELG D
|
74
|
Table 46: Quantity of Vehicles Source: CELG D
|
74
|
Table 47: No. of Own Employees. Source: CELG D
|
75
|
Table 48: No. of Own Employees. Source: CELG D
|
75
|
Table 49: No. of Own Employees Source: CELG D
|
75
|
Table 50: Quantity of Vehicles. Source: CELG D
|
75
|
Table 51: Own Personnel Source: CELG D
|
75
|
Table 52: Quantity of Vehicles Source: CELG D
|
76
|
Table 53: List of Plates of Vehicles per coordination Source: CELG D
|
76
|
Table 54: Summary of Substations and Transformers Source: CELG D
|
76
|
Table 55: Equipment effectively in operation Source: CELG D
|
77
|
Table 56: Technical Reserve - Storeroom Source: CELG D
|
78
|
Table 57: Power of Total Available in the Technical Reserve Source: CELG D
|
78
|
Table 58: Annual deficits of preventive maintenances Source: CELG D
|
80
|
Table 59: Anomaly Chart Source: CELG D
|
81
|
Table 60: Anomalies record of SE Rio Claro - RCL Source: CELG D
|
82
|
Table 61: List of Advanced maintenance stations in the Regions Source: CELG D
|
84
|
Table 62: List of Advanced Stations per Own and Outsourced Personnel Source: CELG D
|
85
|
Table 63: Vehicles per Advanced Stations Source: CELG D
|
85
|
Table 64: Maintenance Plan of 2015 Source: CELG D
|
88
|
Table 65: Compliance with the Maintenance Plan in 2014 Source: CELG D
|
89
|
Table 66: List of Services, with respective values and quantity. Source: CELG D
|
90
|
|
|
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|
Table 67: Description of Emergency and Supply Services. Source: CELG D
|
90
|
Table 68: Information of Transmission Lines and Loading Percentage Source: CELG D
|
92
|
Table 69: Information on Transformers and Loading Percentage Source: CELG D
|
94
|
Table 70: Information on Supplies
–
Loading Percentage Source: CELG D
|
94
|
Table 71: Failures of transformers and autotransformers Source: CELG D
|
95
|
Table 72: Loading of Supplies Source: CELG D
|
98
|
Table 73: Loading of the Supplies Source: CELG D
|
98
|
Table 74: Compliance indicators of the voltage level in permanent regime
–
CELG D
|
99
|
Table 75: Compliance indicators of the voltage level in permanent regime
–
EMT
|
99
|
Table 76: Poles per type in MV and LV Source: CELG D
|
100
|
Table 77: Distribution Development Program Source: CELG D
|
106
|
Table 78: TMAE Evolution in minutes and annual percent growth
. Source: CELG D
|
109
|
Table 79: NIE Evolution, No
. of events and PNIE. Source: CELG D
|
110
|
Table 80: Annual DEC and FEC Evolution for CELG D and Country level - Source: ANEEL
|
111
|
Table 81: FEC Values and FEC per Set of Consuming Units - 2014 - Source: ANEEL
|
113
|
Table 82: Global Continuity Performance Indicator 2014: Market greater than 1 TWh - Source: ANEEL
|
115
|
Table 83: DGC Evolution of CELG D - Source: ANEEL
|
116
|
Table 84: Evolution of the compensations in cash and quantity
–
Source: ANEEL
|
117
|
Table 85: % Annual growth of the quantity and value paid for the compensations
–
Source: ANEEL
|
117
|
Table 86: Technical and commercial indicators to be considered in the X Factor - Source: ANEEL
|
118
|
Table 87: Transition of the weights of the indicators for concessionaires with more than 60 thousand
|
consuming units - Source: ANEEL
|
119
|
Table 88: Questionnaires per interviewed cities - Source: IASC
|
119
|
Table 89: Assessment of the assessment items of IASC 2014 - Source: IASC 2014
|
122
|
Table 90: Main works of the Expansion Plan for improvement of the Continuity Indicators
–
Source: Result
|
Plan of CELG D
|
130
|
Table 91: ANEEL Regulatory Limits Source: PNT Report of Celg 2015 and ANEEL 2015
|
134
|
Table 92: Monthly Projected and Realized Course of Global Losses - 2015 Source: PNT Report of Celg 2015
|
|
137
|
Table 93: Projection and Reduction Speed of Global Losses CELG D Source: Report of Result Plan 2014
|
138
|
Table 94: Monthly Projected and Realized Course of Non-Technical Losses
–
2015
Source: PNT Report Celg
|
2015
|
145
|
Table 95: Course of the Technical and Non-Technical Losses on Injected Power (Realized and Projected)
|
Source: PNT Report Celg 2015 and Quantum Preliminary Projection 2015.
|
148
|
Table 96: Monthly Projected and Realized Course of PNT/BT Market - 2015 Source: PNT Report Celg 2015
|
|
151
|
|
|
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|
Table 97: UC without measurement per connection and class on December, 2010, 2011, and 2012
–
|
Source: CELG D 2012
|
160
|
Table 98: UC evolution without measurement per connection and class
. Source: Own.
|
160
|
Table 99: UC without measurement per sub-
type on December, 2010, 2011 and 2012. Source: CELG 2012
|
|
161
|
Table 100: Evolution of UC without measurement per sub-
type. Source: Own
|
162
|
Table 101: Expenditures with environmental management of the operational activities Source: CELG D
|
Reports of Administration of the years 2012,2013 and 2014
|
187
|
Table 102: Expenditures with health and safety management of the operational activities Source: CELG D
|
Reports of Administration of the years 2012,2013 and 2014
|
187
|
Table 103: Analysis of the main Causes Source: CELG D
|
190
|
Table 104: Action Plan Source: CELG D
|
191
|
Table 105: Expected Results
–
TG and TF Indicators from 2014 to
2017 Source: CELG D
|
192
|
Table 106: Average TG and TF Indicators 2014-
2017 Source: Action Plan - Accident prevention
|
192
|
Table 107: Expected Reduction in the No. of Accidents
2014
-2017 Source: CELG D
|
192
|
Table 108: Estimative of costs for Preliminary Environmental Assessment
–
Phase I Source: Drawn up by
|
the technical team of Quantum
|
203
|
Table 109: Estimative of costs for Confirmation Environmental Assessment
–
Phase II Source: Drawn up by
|
the technical team of Quantum
|
204
|
Table 110: Estimative of costs with the environmental monitoring over the operation (2017 to 2045)
|
Source: Drawn up by the technical team of Quantum
|
205
|
Table 111: Price reference used for the implementation of the environmental control in the Substations
|
Source: ANEEL Prices Base - 06/2012 - Central West Region
|
207
|
Table 112: Central Structure of Personnel CELG D Real in 2015. Source: Report of Employees
–
Salaries,
|
Remuneration, Benefits and Others CELG D 2015
|
209
|
Table 113: No. of Own Personnel 2011 to 2015. Source: Administration Report 2012-
2014 and Report of
|
Employees
–
Salaries, Remuneration, Benefits and Others
CELG D 2015
|
209
|
Table 114: Chart of Quantity and Percentage of Collaborators of 2011-
2014 Source: Administration Report
|
2012-2014
|
210
|
Table 115: Allocations of Own Personnel in 2015 per Board of Directors. Source: Report of Employees
–
|
Salaries, Remuneration, Benefits, and Others CELG 2015
|
211
|
Table 116: Age Bracket of Own Personnel in 2015 per level type (Superior and Medium) and Position
|
Source: Report of Employees
–
Salaries, Remuneration, Benefits and Others CELG D 2015
|
212
|
Table 117: No. of Employees over 45 years old Source: Administration Reports 2012-
2014 and Report of
|
Employees
–
Salaries, Remuneration, Benefits and Others CELG D 2015
|
212
|
Table 118: Chart of Seniority in 2015. Report of Employees
–
Salaries, Remuneration, Benefits, and Others
|
CELG D 2015
|
213
|
Table 119: Statemen of Salary per superior and medium levels and per type of position in 2015. Source:
|
Report of Employees
–
Salaries, Remuneration, Benefits, and Others CELG D 2015
|
214
|
|
|
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|
Table 120: Statement of Salary per Occupational Group and Educational Level per Position in 2015.
|
Source: Report of Employees
–
Salaries,
Remuneration, Benefits, and Others CELG D 2015
|
215
|
Table 121: Comparison of Expenditures with Own and Outsourced Personnel (current values of each year)
|
Source: Administration Reports 2012-
2014, PMSO CELG D 2011 to 2014.
|
217
|
Table 122: Chart of Indicators of Expenditures with Personnel per Unit of Consumers (UC) and Power
|
Consumption (MWh) (current values of each year) Sources: Administration Reports 2012-
2014 and PMSO
|
CELG D 2011 to 2014.
|
218
|
Table 123: Benchmarking of Expenditures with Personnel per Unit of Consumers (UC) and Market. Source:
|
Administration Reports 2012-
2014, PMSO CELG D 2011 to 2014 (Quantum preparation)
|
220
|
Table 124: Benchmarking of Expenditures with Personnel per Distributed Power (including Free Market).
|
(current values of each year) Source: Administration Reports 2014, PMSO CELG D 2014 (Quantum
|
preparation)
|
221
|
Table 125: Comparison of Personnel with Consuming Units (UC)and Exclusive Market (MWh) Source:
|
Administration Report 2012-
2014.
|
222
|
Table 126: Number of Training Courses and Qualification in 2012-
2014 Source: Administration Report
|
2012 to 2014
|
224
|
Table 127: Description of Qualification and Development Programs Source: Administration Reports 2012-
|
2014
|
226
|
Table 128: Educational Level of Own Personnel of CELG D Source: Report of Employees
–
Salaries,
|
Remuneration, Benefits, and Others CELG D 2015
|
227
|
Table 129: Occupational Groups and Positions Source: PCR CELG D 2015
|
229
|
Table 130: Chart of Changes
–
Medium Level Source: PCR CELG D 2015
|
230
|
Table 131: Chart of Changes
–
Superior Level Source: PCR CELG D 2015
|
231
|
Table 132: Specification and Description of the Positions and Functions Source: PCR CELG D 2015
|
232
|
Table 133: Gratified Functions Source: PCR CELG D 2015
|
233
|
Table 134: Value of the Gratifications Source: PCR CELG D 2015
|
234
|
Tabela 135: Temporary Staff Source: PCR CELG D 2015
|
234
|
Table 136: Salary Ranges per Position Source: PCR CELG D 2015
|
235
|
Table 137: Salary Matrix Source: PCR CELG D 2015
|
235
|
Table 138: Personnel Dismissed from CELG D during 2013 to 2015 Source: CELG D 2015
|
243
|
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List of Figures
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|
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Figure 1: State of Goiás
-
Source: Plan of Results for Improvement of the distribution services
–
CELG
|
22
|
Figure 2: Shareholding interest in Celg D Source: CELG D
|
24
|
Figure 3: Financial Result - Source: CELG D
–
Administration Reports
|
25
|
Figure 4: Indebtedness level - Source: CELG D
–
Administration Reports
|
26
|
Figure 5: Evolution of the km of constructed networks of the company - Source: CELG D
|
27
|
Figure 6: Composition of Km of network to 2014- Source: CELG D
|
28
|
Figure 7: Evolution of the Power Consumption (GWh) - Source: CELG D
–
Administration Reports
|
29
|
Figure 8: Annual Growth Rates of the Power Consumption
–
Source: CELG D
–
Administration Reports
|
29
|
Figure 9: Power Consumption of the Exclusive Market and Participation per Class (Gwh)
–
Source: CELG D
|
–
Administration Reports
|
30
|
Figure 10: Growth Rates of the Exclusive Market - Source: CELG D
–
Administration Reports
|
31
|
Figure 11: Consuming Units per Class (#) - Source: CELG D
|
32
|
Figure 12: Consuming Units per Voltage Level (#)
–
Source: CELG D
|
33
|
Figure 13: Power Balance (GWh) Source: CELG D
–
Administration Reports
|
34
|
Figure 14: Investments x Services Relationship - Source: CELG D
–
Administration Reports
|
37
|
Figure 15: Quantity of companies per countries - Source: Quantum
|
38
|
Figure 16: Consumption mix 2014 - Source: Quantum
|
39
|
Figure 17: Distributed MWh/Consumer 2014 (in MWh-year/Consumer)
–
Source: Quantum
|
40
|
Figure 18: Evolution of Distributed MWh/Consumer (in MWh-year/Consumer)
–
Source: Quantum
|
40
|
Figure 19: PMSO/Distributed MWh 2014 (in R$
/MWh
-year)
–
Source: Quantum
|
41
|
Figure 20: Evolution of PMSO/Distributed MWh (in R$/MWh-year)
–
Source: Quantum
|
42
|
Figure 21: Update of the operational costs. Source: ANEEL.
|
43
|
Figure 22: Update of operational costs
. Source: ANEEL.
|
45
|
Figure 23: Map of the High Voltage system Source: CELG D
|
51
|
Figure 24: Telecommunications system of Celg D Source: CELG D
|
53
|
Figure 25 : Detailing Telecommunications system of Celg D Source: CELG D
|
54
|
Figure 26: Diagram of the Distribution Board of Directors Source: CELG D
|
56
|
Figure 27: Organization charge of the System Operation Center - COS Source: CELG D
|
58
|
Figure 28: Energy Management System Source: CELG D
|
59
|
Figure 29: Map of the processes that compose the quality system. Source: CELG D
|
62
|
Figure 30: Diagram of the Distribution Operation Center
–
COD Source: CELG D
|
64
|
Figure 31: Flow of the activities Source: CELG D
|
66
|
Figure 32: Operation of the distribution system using OPER software Source: CELG D
|
66
|
|
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Figure 33: SDT Schematic Diagram Source: CELG D
|
67
|
Figure 34: Geographic distribution of such departments Source: CELG D
|
69
|
Figure 35: Transformers and autoransformers per time of Use Source: CELG D
|
79
|
Figure 36: MOB available for the Maintenance activity Source: CELG D
|
79
|
Figure 37: SMS: Substation Maintenance and SPM: Protection Maintenance and Maneuver Source: CELG D
|
|
80
|
Figure 38: Comparison of Current x Required Scenario of Quantity Man-
hour Source: CELG D
|
80
|
Figure 39: Autal Scenario of MDO of the maintenance of High Tension SEs (DT-SMS, DT-
SPM) Source: CELG
|
D
|
81
|
Figure 40: Structuring of 7 regional maintenance centers Source: CELG D
|
83
|
Figure 41: Goiás Map per region Source: CELG D
|
84
|
Figure 42: Management Structure Source: CELG D
|
87
|
Figure 43: Process of Service Planning and Execution DD DPMT - Source: CELG D
|
88
|
Figure 44: Goiás Map per region and departments Source: CELG D
|
89
|
Figure 45: Failure rate of transformers and autotransformers per year and per nominal voltage (1979 up to
|
March, 2015) Source: CELG D
|
95
|
Figure 46: Transformers and autotransformers per use time Source: CELG D
|
95
|
Figure 47: Geoelectric Regions of Celg D
|
101
|
Figure 48: Accidental DEC per component of the system (Accumulated 2014) Source: CELG D
|
103
|
Figure 49: Accidental DEC per component of the system (Accumulated 2015) Source: CELG D
|
103
|
Figure 50: Accidental FEC per component of the system (Accumulated 2014) Source: CELG D
|
104
|
Figure 51: Accidental FEC per component of the system (Accumulated 2015) Source: CELG D
|
104
|
Figura 52: Additional investments Source: CELG D
|
107
|
Figura 53: Investments in Buildings and Fleet - Source: CELG D
|
107
|
Figure 54: TMAE (minutes) - Source: CELG D
|
109
|
Figure 55: PNIE Evolution in %. Source: CELG D
|
110
|
Figure 56: DEC Evolution and Limit DEC of CELG D. Source: ANEEL
|
112
|
Figure 57: FEC Evolution and Limit FEC of CELG D. Source: ANEEL.
|
112
|
Figure 58: Performance of the sets in relation to the DEC and FEC limit in 2014
–
Source: ANEEL
|
114
|
Figure 59: Global Continuity Performance Indicator (big-
sized companies) - Source: ANEEL
|
116
|
Figure 60: Evolution of the compensations in cash and quantity
–
Source: ANEEL
|
117
|
Figure 61: Model - Source: IASC
|
120
|
Figure 62: IASC Brazil Concessionaires and International Benchmarks
|
121
|
Figure 63: IASC - CELG D - Source:
|
121
|
Figure 64: Result of the Model Source: IASC 2014
|
122
|
|
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Figure 65: Results of the Main Indexes of ABRADEE, CELG D and Benchmark - Source: 17
th
ABRADEE
|
research
|
124
|
Figure 66: Results of ABRADEE Research of
2015
- Source: 17
th
ABRADEE research.
|
125
|
Figure 67: Results of IASC (continuation) - Source: ABRADEE.
|
126
|
Figure 68: DEC Projection - Source: CELG D Result Plan
|
129
|
Figure 69: FEC Projection - Source: CELG D Result Plan
|
129
|
Figure 70: Example of the Calculation of the Electric Power Losses Source: ANEEL 2015
|
133
|
Figure 71: Evolution of Global Losses in the Distribution (2009 - 2014) Source: PNT Report Celg 2015 and
|
ANEEL 2015
|
134
|
Figure 72: Index of Global Losses on injected power (%) per distributor - 2014 Source: ANEEL 2015
|
136
|
Figure 73: Index of Global Prices (%) on injected power Source: PNT Report of Celg 2015
|
137
|
Figure 74: Projection of Global Losses of CELG D (2015
-
2019) Source: Report of the Result Plan 2014
|
138
|
Figure 75: Course of the Global Losses on Injected Power (Realized and Projected) Source: PNT Report of
|
Celg 2015, ANEEL 2015, and Report of Result Plan 2014
|
139
|
Figure 76: Balance of Technical and Non-
Technical Losses on injected power (%) Source: PNT Report of
|
Celg 2015 and ANEEL 2015
|
140
|
Figure 77: Balance of Technical and Non-
Technical Losses on injected energy (absolute values) Source: PNT
|
Report of Celg 2015 Evolution of Technical Losses
|
141
|
Figure 78: Evolution of the Technical Losses on injected power (%) Source: ANEEL2015
|
142
|
Figure 79: Index of Technical Losses on injected power (%) per distributor - 2014
Source: ANEEL 2015
|
143
|
Figure 80: Evolution of the Non-
Technical Losses on injected energy (%) Source: PNT Report of Celg 2015
|
and ANEEL2015
|
144
|
Figure 81: Index of Non-
Technical Losses (%) on Injected Power Source: PTN Report of Celg 2015
|
145
|
Figure 82: Index of Non-
Technical Losses on injected power (%) per distributor on May, 2015 Source: PNT
|
Report Celg 2015
|
146
|
Figure 83: Details of the Non-
Technical Losses on Injected Power on May, 2015
. Source: PNT Report Celg
|
2015
|
147
|
Figure 84: Evolution of the Technical and Non-
Technical Losses on Injected Power (Realized and Projected)
|
Source: PNT Report Celg 2015 and Quantum Preliminary Projection 2015.
|
149
|
Figure 85: Evolution of the Non-
Technical Losses on BT Market Source: PNT Report Celg 2015 and
|
Evolution of Technical Losses CELG D 2015
|
150
|
Figure 86: Index of Non-
Technical Losses (%) on the Low Voltage Market Source: PNT Report Celg 2015150
|
Figure 87: Benchmarking of Global Losses/injected power with more than 1 million of conumers - 2014
|
Source: ANEEL 2015
|
152
|
Figure 88: Benchmarking of Technical Losses/injected power with more than 1 million of consumers - 2014
|
Source: ANEEL 2015
|
152
|
Figure 89: Benchmarking of Non-Technical Losses/injected power with more than 1 million of consumers
–
|
May, 2015 Source: PNT Report Celg
2015
|
153
|
|
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Figure 90: Area of great social-
economical complexity (surrounding Goiania) Source: Google Maps 2015.
|
|
154
|
Figure 91: Area of great social-economical complexity (surrounding Brasília) Source: Google Maps 2015.
|
|
155
|
Figure 92: No. of Inspections in UC of Groups A and B Source: Administration Reports Celg (2012, 2013 and
|
2014)
|
158
|
Figure 93: No. of Negotiations of Irregular Process Source: Administration Reports Celg (2012, 2013 and
|
2014)
|
159
|
Figure 94: Index of Assertiveness Source: Administration Reports CELG D (2012, 2013 and 2014)
|
159
|
Figure 95: Increment of Revenue (R$
) - IP Project Aggregated, Recovered, and Invoiced Power Source:
|
Report Celg 2015
|
165
|
Figure 96: General layout of the Yards and Warehouses of the Logistic and Supplies Superintendence of
|
the Central Unit of Goiânia
|
182
|
Figure 97: Quantity of Accidents 2010-
2014
stratified per Segment
–
Source: Action Plan
–
Accident
|
prevention CELG D
|
188
|
Figure 98: Seriousness of Accidents 2010-2014 stratified per seriousness level Source: Action Plan
–
|
Accident prevention CELG D
|
188
|
Figure 99: Seriousness of Accidents in 2014 stratified per seriousness level and per segment. Source: C
|
Action Plan
–
Accident prevention CELG D
|
188
|
Figure 100: Frequency Rate of Accidents 2010 to 2014 stratified per segment Source: Action Plan
–
|
Accident
prevention CELG D
|
189
|
Figure 101: Seriousness Rate of Accidents 2010 to 2014 per segment Source: Action Plan
–
Accident
|
prevention CELG D
|
189
|
Figure 102: CELG D Organization Chart Source: Report of Employees
–
Salaries, Remuneration, Benefits
|
and Others CELG D 2015
|
208
|
Figure 103: Evolution of Own Personnel 2011-2015 Source: Report of Employees
–
Salaries, Remuneration,
|
Benefits, and Others CELG D 2015
|
210
|
Figure 104: Evolution of No
. of Collaborators in CELG D Source: Administration Report 2012-2014
|
211
|
Figure 105: Evolution of Employees over 45 years old Source: Administration Reports 2012-
2014 and
|
Report of Employees
–
Salaries, Remuneration, Benefits, and Others CELG D 2015
|
212
|
Figure 106: Average Monthly Salary of Superior Level per type of Position, in 2015. Source: Report of
|
Employees
–
Salaries, Remuneration, Benefits, and Others
–
CELG D 2015.
|
214
|
Figure 107: Average Monthly Salary of Medium Level per type of Position, in 2015. Source: Report of
|
Employees
–
Salaries, Remuneration, Benefits, and Others CELG D 2015.
|
215
|
Figure 108: Average Monthly Salary per Occupational Group and Educational Level per Position, in 2015.
|
Source: Report of Employees
–
Salaries, Remuneration, Benefits, and Others CELG D 2015.
|
216
|
Figure 109: Evolution of Expenditures with Own and Outsourced Personnel from 2011 to 2014 (current
|
values of each year) Source: PMSO CELG D 2011 to 2014
|
217
|
Figure 110: List of total Expenditure per total quantity of Personnel (current values of each year) Source:
|
Administration Report 2012-
2014, PMSO CELG D 2011 to 2014
|
218
|
|
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Figure 111: Evolution of the Indicator of Expenditures with Personnel per Unit of Consumers (UC) (current
|
values of each year) Source: Administration Reports 2011-
2014 and PMSO CELG D 2011 to 2014.
|
219
|
Figure 112: Evolution of the Indicator of Expenditures with Personnel per Power Consumption (MWh)
|
(current values of each year) Sources: Administration Reports 2012-
2014 and PMSO CELG D 2011 to 2014.
|
|
219
|
Figure 113: Benchmarking of Expenditures with Personnel per Unit of Consumers (UC) and Market
|
(current values of each year) Source: Administration Reports 2012-
2014, PMSO CELG D 2011 to 2014
|
(Quantum preparation)
|
220
|
Figure 114: Benchmarking of Expenditures with Personnel per Distributed Power (including Free Market
|
(current values of each year) Source: Administration Reports 2014, PMSO CELG D 2014 (Quantum
|
preparation)
|
221
|
Figure 115: Evolution of Consuming Units (UC) per own employee Source: Administration Report 2012-
|
2014
|
222
|
Figure 116: Evolution of Consuming Units (UC) per own employees + Outsourced Source: Administration
|
Report 2012-
2014.
|
223
|
Figure 117: Market Evolution (MWh) per Own Personnel Source: Administration Reports 2012-
2014,
|
Report of Employees
–
Salaries, Remuneration, Benefits, and Others CELG D 2015, and CELG
–
Preliminary
|
Projections (Quantum)
|
223
|
Figure 118: Market Evolution (MWh) per Own + Outsourced Personnel Source: Administration Reports
|
2012-
2014,
|
224
|
Figure 119: Evolution of the Number of Training Course and Qualification in 2012-2014 Source:
|
Administration Report 2012 to 2014
|
225
|
Figure 120: Number of contemplated participants Source: Administration Report CELG D
|
225
|
Figure 121: Benchmarking [UC/Own + Outsourced Employees] of the distributors in Brazil in 2012 Source:
|
Own Preparation Quantum Data Benchmarking
|
227
|
Figure 122: Benchmarking [UC/
Own
+ Outsourced Personnel] Latin America distributors in 2012
|
Source:
|
Own
.
|
228
|
Figure 123: Forecast of growth of Staff in Engineering Companies to 2015 (Per Region) Source: O Setor
|
Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015
.
|
239
|
Figure 124: Growth forecast of Staff in Engineering Companies for 2015 (Per Region) Source: O Setor
|
Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015
.
|
240
|
Figure 125: Average Annual Growth of Sales of the Engineering and Consultancy Companies in 2014 (Per
|
Region) Source: O Setor Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015
.
|
|
241
|
Figure 126: Forecast of Growth of sales of the Engineering Companies for 2015 (Per Region) Source: O
|
Setor Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015
|
241
|
Figure 127: Forecast of Growth of the Total Annual Size of the Engineering Market for 2015 (Per Region)
|
Source: O Setor Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015.
|
241
|
Figure 128: Average Annual Growth of the Installation Companies in 2014 (Per Region) Source: O Setor
|
Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015
|
242
|
Figure 129: Forecast of Growth of the Installation Companies for 2015 (Per Region) Source: O Setor
|
Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015.
|
242
|
|
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Figure 130: Forecast of Growth of the Total Annual Size of the Installation Market for 2015 (Per Region)
|
Source: O Setor Elétrico magazine
–
Research
–
Engineering and installation companies July, 2015.
|
243
|
Figure 131: Evolution of Personnel Dismissed from CELG D Source: CELG D 2015
|
244
|
|
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Glossary
|
|
ABNT: Brazilian Association of Technical Standards
|
Abradee: Brazilian Association of Electric Energy distributors
|
ACSI: American Consumer Satisfaction Index the
|
ACT: Collective Bargaining Agreement
|
AIS: Fixed asset in service
|
AMMA: Municipal Environmental Agency of Goiânia
|
ANC: Non-Contaminated Area
|
ANEEL: National Electric Energy Agency
|
APC: Potentially Contaminated Area
|
ASC: Area with Suspicion of Contamination
|
AT: High Voltage
|
AVCB: Self Survey of the Fire Department
|
BAR: Regulatory Annuity Base
|
BRR : Regulatory Remuneration Base
|
BT: Low Voltage
|
CA: Additional Costs
|
CA/CC : Alternating Current/Continuous Current
|
CAT: Occupational Accident Communication
|
CCEE: Electric Power Commercialization Chamber
|
CDE: Energy Development Account
|
CEB : Energy Company of Brasilia
|
Celg D ou CELG D : Celg Distribution SA
|
CELG GT: CELG Generation and Transmission
|
CELG GT : Celg Generation and Transmission SA
|
Celtins : Electric Company of the state of Tocantins, current Energisa Tocantins.
|
CEPEL : Research Center of Electric Energy
|
CIPA: Commission Internal Accident Prevention
|
COD : Center of operation of Distribution
|
COM : Minor Components
|
COS : Center of System Operation
|
CRTP: Periodic Tariff Review Cycle
|
CSC : Contracted Service Center
|
CTF/IBAMA: Technical Federal IBAMA Register
|
|
|
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CUB: Unit Cost Basic building
|
CUT: Single Central of Workers
|
CVA: Accounting Statements
|
DA: Administrative Board CELG D
|
DA-DPSV: Engineering Department of Health, Safety and Quality of Life
|
DD: Distribution Board CELG D
|
DEC: Duration of Interruption per Consuming Unit
|
DGC: Global Continuity Performance
|
DIC: Duration of individual interruption by Consuming Unit
|
DICRI: Duration of individual interruption occurred in critical day by consuming unit
|
DMIC: Duration Maximum of continuous interruption by Consuming Unit
|
DRC : Duration of the transgression for Critical Voltage
|
DRCE : Duration relative of the transgression for Critical Voltage equivalent
|
DRP : Duration relating the transgression to precarious Voltage
|
DRPE : Duration of precarious Voltage transgression to precarious equivalent
|
DT: Technical Board of CELG D
|
DT-AMB: Technical Board spokesperson for the environment of CELG D
|
EIA: Environmental Impact Study
|
EMS : Energy Management System
|
EP : Main equipment
|
EPI: Protective Equipment
|
FEC: Frequency of Interruption per Consuming Unit
|
FGV: Getulio Vargas Foundation
|
FIC: Frequency individual interrupt by Consuming Unit
|
GIS : Geographic Information System
|
GWh: Gigawatt-hora
|
IAD: Depreciated Use Index
|
IAI: Full Use Index
|
IAS
C: ANEEL Index of consumer’s satisfaction
|
IBAMA: Brazilian Institute of the Environment and Renewable Natural Resources
|
ICMS: Tax on Operations concerning the movement of goods and on services of Interstate Transportation,
|
Intermunicipal Communication
|
IFC : International Finance Corporation - International Financial Corporation
|
IGP-M: General Price Index - Market
|
IP: Lighting Public
|
|
|
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IP : Internet Protocol
|
IPCA: Index Broad National Consumer Price
|
ISO 14001: Environmental Management
|
JOA: Interest on ongoing works
|
Km : kilometer(s)
|
kV : Kilo Volts
|
LD: Line of Distribution
|
LDAT : Distribution Line at High Voltage (69 or 138 kV)
|
LDMT: Distribution of medium voltage
|
LT: transmission line
|
MCPSE: Control Manual Electrical Sector Asset
|
MCSE: Accounting Manual of the electric sector
|
MI: Ministry of National Integration
|
MIC: Ministry of Industry and Trade
|
MME: Ministry of Energy and Mines
|
MT: Media voltage
|
MTE: Ministry of Labor and Employment
|
MVA : Mega Volts Ampère
|
MW : Mega Watt
|
MWh: megawatt-hour
|
NBR: ABNT guideline
|
NCSI-UK : National Consumer Satistaction Index-UK
|
NR: Regulatory standard of the Ministry of Labor and Employment
|
OE : Emergency Occurrences
|
OECF: Overseas Economic Cooperation Fund
|
OHSAS 18001: Health and Occupational Security
|
ONS : System National Operator
|
OPEX: Costs Operacionias
|
OPGW : Optical Ground Wire
|
OPLAT : Carrier wave on the high voltage line
|
P&D : Research and development
|
PCB: Polychlorinated biphenyl
|
PCMSO: Program of Medical Control and Occupational Health
|
PCS: Plan of positions and salaries
|
PDD: Program for developing the distribution
|
|
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|
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PDV: Plan of voluntary resignation
|
PLpT: Light for All Program
|
PLS: Partial Least Squares
|
PMSO: Personnel, Maintenance, Services, and Others
|
PNIE: Percentage of the number of emergency events with interruption of power
|
PNT : Losses not Technical
|
POE : Jobs Stations Operation
|
PPRA: Program for Prevention of Environmental Risks
|
PR-DPCK: Department of Social Communication and Marketing of CELG D
|
PRODIST: Procedures of Electric Power Distribution in the National Electric System
|
PRONI: National Program of Irrigation and Funding
|
PRORET: Procedures of Tariff Review
|
RGR: Global Reversion Reserve
|
RIMA: Environmental Impact Report
|
RTP: Periodic Tariff
|
SAGE : System open a power management
|
SAMP: System for monitoring of market information for Adjustment
|
SANEAGO: Sanitation of Goiás (water and sewer concessionaire in the state of Goiás)
|
SCADA : Supervisory Control and Data Acquisition
|
SE: Electric power substation
|
SEAT: High voltage distribution substations
|
SECIMA: Environment, Water Resources, Infrastructure, Cities, and Metropolitan Affairs Office
|
SEMARH: Secretary of the Environment and Water Resources
|
SEP: Power System
|
SESMT: service specialised in security engineering and in Labor Medicine
|
SGA: Environmental Management System
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SGSASST: System of Environmental Management, Health and Labor Safety
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SINDUSCON: Syndicate of the Construction Industry
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SINERGIA: Syndicate of Energy of the State of São Paulo
|
SPLS: Superintendence of Logistics and Supplies
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TAC: Conduct Adjustment Terms
|
TF: Frequency Fee - Number of rough terrain per million of worked hours of exposure to the risk, in
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particular period
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TG: Rate of Gravity - number that expresses the quantity of days computed in accidents with departures
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per 1 million man-hours of exposure to risk
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TMAE: Average Time of Service to Emergencies
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TMD: Average Displacement Time
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TME: Average Execution Time
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TMP: Average Preparation Time
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UAR: Addition and/or Removal Units
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UC: Consuming Unit
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UHE : Hydroelectric Plant
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UTR : Remote Terminal Unit
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VMU: Market Value in use
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VNR : New Replacement Value
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WACC: Weighted Average Cost of Capital
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WBG: World Bank Group
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The present report presents a technical diagnosis of
Celg Distribuição S.A.
–
CELG D
, an electric power distributor of the State of Goiás.
In general, the report will comprehend the following topics:
•
General data of the concession,
•
Characterization of the electric power market in the concession area;
•
Efficient Operational Costs;
•
Description of the distribution system, containing the main characteristics of the distribution systems (urban and rural): lines, substations, protection systems, etc.;
•
Description of the situation of the operational and technical and commercial infrastructure of CELG D, approaching the loading of the substations, supplies, and distribution transformers;
•
Assessment of the physical and technical conditions of the assets of CELG D;
•
Estimate of replacement costs;
•
Analysis of the Service Quality Indicators;
•
Analysis of Technical and Non-Technical Losses;
•
Social and environmental questions;
•
People management.
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Values:
·
Sustainability and commitment;
·
Creation of value to all stakeholders;
·
Ethics, transparency, and trust in the relationships;
·
Work with health and safety with the people it interacts.
Certainly, the company is responsible for the commercialization of electric power in 237 cities of Goiás, which correspond to more than 98.7% of the State territory. Currently, it serves more than 2,700,000 consuming units and represents 2.4% of the consumption of electric power in Brazil.
The origin of Celg Distribution was the Centrais Elétricas de Goiás S.A., created on February 16, 1956, upon Public Constitution Deed, which had as base the State Law No. 1.087, as of August, 1955, which authorized the creation of the company. From March 13, 1956, through the Federal Decree No. 38.868, Centrais Elétricas de Goiás S.A. was authorized to work as concessionaire of electricity public services, acting as generator, transmitter, and distributor of electric power. So, it incorporated the small centers and the distribution networks belonging to the municipal companies. In 1955, right after its creation was authorized, it started the construction of Rochedo Hydroelectric Power Plant, to serve Goiânia and locations of the South of the State. With power of 4 MW, Rochedo Hydroelectric Power Plant started up in 1956.
Additionally, Celg was responsible to construct the generator that would supply the Federal Capital at implementation start. Thus, still in 1956 the project of Cachoeira Dourada Hydroelectric Power Plant was started, which motorization occurred in 1959, with 32 MW of installed power.
The development of the State from the change of the Federal Capital required from Celg the investment in the increase of the power production and the implementation of an electric system that would meet the increasing demand. Thus, between 1965 and 1970 the second stage of Cachoeira Dourada started up, with 156 MW. The plants of Lageado, in middle North, and Lages, in extreme North, were built, as well as systems of lines and substations at 138 kV, 69 kV, and 34.5 kV, associated thereto.
In the 1970’s, the third
stage of Cachoeira Dourada was built, aggregating 255 MW to the system, and a set of big sized works at 138 and 230 kV, especially in South and middle North. The extreme North, then counting with a reinforcement of a thermal generator of 5 MW in Araguaína, was interconnected to Tucuruí system through a line at 138 kV, from Imperatriz substation. On the other side, the reinforcement to the middle North in such occasion came with the construction of Isamu Ikeda Hydroelectric Power Station, with 16 MW, and the Northeast of the State received São Domingos Hydroelectric Power Plant, with 12 MW. For both systems, the power flowed through 69-kV lines.
In 1989, with the division of the State of Goiás on North of parallel 13, the company’s facilities, which
included lines and substations of 138 KV, 69 KV, and 34.5 KV, urban and rural networks, in addition to the hydroelectrical centers already mentioned, totalizing 24.92 MW, were transferred to the new state of Tocantins.
In the 1990’s, it was completed the use of Cachoeira Dourada with the construction of the fourth stage,
adding 200 MW to the system, and invested US$ 250 million in lines, substations, and rural one-phase and three-phase electrification, with own resources of the National Program of Irrigation and Funding (PRONI), of Overseas Economic Cooperation Fund (OECF), body of Japanese government.
In 1996, State of Goiás proceeded with the spin-off of the Company, creating Centrais Elétricas de Cachoeira Dourada, which was sold to the private initiative. Cachoeira Dourada at that time generated
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Even though, the efficient baseline defined by the regulator lets a substantial margin to the improvement by the distributor.
In the proposal for 3CRTP
1
, it was sought for preserving the principles and bases that guide the definition of X Factor, adding to the methodology improvements that are checked as required, among which the simplification of the method; the introduction of a mechanism of incentive to the improvement of quality of the provided service, bringing a clearer relationship between the quality and rates; the minimization of dispute around the projections of revenues and expenses.
To reach the mentioned purposes, there is the introduction of tools that until then were not used in the definition of the X Factor, but that are extensively used by Regulatory Agencies of the sectors of energy worldwide. Methodologies less intensive in data and less susceptible to disputes in their application in the specific rate processes.
ANEEL’s proposal established that the X Factor is composed of three components that aim at reaching the
purposes proposed to 3CRTP:
·
Distribution productivity: Pd component;
·
Quality: Q component; and
·
Transition course of the operational costs: T component.
Such components may have their
ex-ante
definition, that is, defined at the time of rate repositioning, or
ex-post
, where they would be defined at every rate adjustment. The three components are summed and applied in the rate adjustments between cycles and, with exception of the Q component in 3C, in the rate revisions.
The X Factor has as main purpose to guarantee that the balance between efficient revenues and expenses, established at the time of the rate revision, is maintained over the rate cycle. The X Factor is used in the rate adjustments to correct the value of Portion B. Thus, the purpose pursued in the definition of the X Factor is to estimate the potential productivity gains of Portion B over the effectiveness period of the rates established in the rate adjustments, according to Pd Component previously defined.
The productivity gains associated to the distribution result from the relationship between the growth of the invoiced market and the evolution of the costs with power distribution, sub-divided in operational costs and capital costs. As the markets, in average, grow in a pace faster that the costs, the distributors, in average, would have gained productivity. The value of
Pd Component
to be defined in each rate revision would depend on the market evolution and on the increase of the historical number of consuming units of each concessionaire. While growths of market over the average would result in greater productivities, the number of consuming units connected over the average would reduce the potential productivity gains, because it would require greater investments and operational expenses.
Finally, to obtain Pd of each distributor, an equation is applied, which takes into consideration the average productivity of the distribution sector, the average growth of the invoiced market, and the number of consuming units of the concessionaires between the rate revisions of 2 CRTP and 3 CRTP.
A second evaluation consists of considering the question of the quality of the service provided for the calculation of the X Factor. It was proposed the introduction of a mechanism of incentive to the improvement of the provided service, through
Q Component
, so that if the distributor improved the continuity indicator, it would have its X Factor reduced (negative Q Component) and, as a consequence, its rates increased. To the companies that had deterioration of the provided service, the X Factor would be increased (positive Q Component) and, consequently, the rates reduced.
1
Also applied to 4CRTP with some additional improvements.
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2.3. Description of the distribution system
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This report presents the results of the technical assessment of the Distribution System of CELG D, result of the due diligence carried out in such company within the period from 07/27/15 to 08/31/15.
The technical analysis has as purpose to assess the conditions of the electric system, its current performance before the regulatory requirements, the main processes associated to the Operation and Maintenance of the distribution electric system. At the end, it is made an estimative of the investments required to allow the proper performance of the assets considering the regulatory requirements and the market growth.
The due diligence carried out in the area of operations of Celg Distribution (CelgD) comprehended (i) information survey from previous request and subsequent availability of documents at internal site of the concessionaire especially developed for such purpose, with access granted to the consultants upon registration and previous authorizations; (ii) analysis of the information, including requests of additional information and/or clari
fications; (iii) field surveys in the concessionaire’s facilities; (iv) interviews with key
people of the concessionaire.
The first requests of documents were made upon the start of the works associated to the operation in question and their supply occurred from the initial visit to Goiânia, carried out in the period from July 27 to July 31, 2015. The information provided by the concessionaire was analyzed in terms of adhesion to what was requested and comprehensiveness and sufficiency of data, generating new requests of information to the concessionaire.
The processes used by the concessionaire for the management of assets were analyzed, comprehending operation and maintenance, planning of the expansion, engineering and maintenance of High- and Medium-Voltage Facilities, in the scope of the Distribution and Technical Board of Directors of the Company.
The information of the concessionaire was checked in field visits and sampling portion of the
concessionaire’s facilities, as well as in interviews with manag
ers and key personnel of the company. The field visits and interviews occurred in the period from July 27 to July 31, 2015, and from August 10 to 14, and August 26 and 27, 2015, comprehending bodies of the organizational structure and facilities of the metropolitan area of Goiânia and Rio Verde, including the course from Goiânia to such city.
It was interviewed managers of the Superintendences of System Operation, Engineering, and Maintenance of High Voltage and Electric Systems. Among the facilities, it was visited the System Operation Center (COS) and System Distribution Center (COD), the shops and laboratories of High Voltage maintenance, Ferroviária, Campinas and Goyá substations, and stretches of distribution lines in 138 kV located in Goiânia. It was also visited the facilities of South Services Department, of the Service Superintendence, located in rio Verde, in addition to the substations of Guapó (69 kV), Cezarina (69 kV), Acreúna (138 kV), Rio Verde Celg (138 kV), Cabriúva (69 kV) and Montividiu (69 kV) and stretches of the distribution lines Guapó
–
Inhúmas (69 kV), Guapó
–
Cezarina (69 kV), Rio Verde Furnas
–
Acreúna (138 kV), Rio Verde Furnas
–
Rio Verde Celg (138 kV), Rio Verde Celg
–
Cabriúva (69 kV), Rio Verde Celg
–
Quirinópolis (138 kV), Rio Verde
–
Santa Helena (69 kV), Rio Claro
–
Montividiu (69 kV).
It was also visited facilities of the medium- and low-voltage networks and Goiânia and Rio Verde, including stretches of urban and rural network.
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2.3.2.
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General Characteristics of the Distribution Electric System
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The electric system of Celg D is connected to the National Interconnected System through connection points with several transmitters.
The trunk system serving the State of Goiás and the Federal District is constituted by three circuits of 345 kV from Intumbiara HPP; by eight circuits of 500 kV, being four from Serra da Messa HPP, one from Rio Verde Norte SE, one from Itumbiara HPP, one from Emborcação HPP, and one from Paracatu SE; and by two circuits at 230 kV from Cachoeira Dourada HPP. Such system serves not only the loads of such area, but it is also an integral part of the North/Northeast
–
Southeast/Middle West interconnection system of the Basic Network being, for such, strongly influenced by the interchange (volume and direction) practiced in such interconnection.
The Southwest region of the State of Goiás is supplied by three circuits at 230 kV from Itumbiara HPP, which extend up to the State of Mato Grosso.
The service to the North area is made by three circuits at 230 kV, one from Brasília Sul SE, and two from Serra da Mesa HPP.
The interconnection network of supplying systems also comprehends four systems at 138 kV: one in South of the State, from Cachoeira Dourada HPP, interconnecting the cities of Rio Verde, Jataí, and Mineiros; a second one interconnecting the systems of Celg D and CEB, in Santa Maria and Sobradinho; a third one, from Emborcação HPP and Serra do Facão HPP, interconnecting Catalão; and a fourth one, from Serra da mesa HPP, passing through Porangatu and extending up to Gurupi, in the State of Tocantins. Such interconnection between Celg D and Celtins allows mutual services in special conditions during contingency situations in their respective systems.
The High-Voltage electric system of Celg D comprehends the substations and the distribution lines at voltages of 69 and 318 kV.
There are 110 transformation substations, with 3826 MVA of installed capacity, in addition to facilities in
16 third parties’ stations, with installed transformation capacity of 697 MVA, acc
ording to table of
Annex A.
The distribution lines at 69 kV sum 3,598.5 km and the distribution lines at 138 kV sum 2,117.5 km of extension. Their characteristics are described in the tables of
Annex B
followed by the pictures of the typical structures in
Annex B1.
The figure below presents the maps with the configuration of the High Voltage system:
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2.4. Operations
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2.4.1. Electric System Operation
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2.4.1.1. Operation Structure
|
The electric system of CELG D is part of the National Interconnected System in the Middle West region. The operation
of the concessionaire’s electric system is intended to the Distribution Board of Directors
that counts on a System Operation Superintence organized in three Departments:
·
Operation Automation Engineering Department
–
responsible for the development and implementation of the automation resources in the facilities and Operation Centers
·
Substation Management Department
–
responsible for the High Voltage substations (AT), at the voltages of 69 and 138 kV and management of the Operation Points of Stations
·
Department of the Integrated Operation Center
–
responsible for the System Operation Center (COS) and by the Distribution Operation Center (COD), which take care of the operation
stricto sensu
of the HV and Medium and Low Voltage (MV/LH) systems, respectively.
Such structure is showed in the diagram below:
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The need of activation of such human resources during occurrences in the system encumbers the service time due to the involved logistics: preferably, the operators in working hours or that are under stand-by regime are called. However, the POE operators, in their majority, do not have transportation means provided by the company, displacing between stations on vehicles of their property, being reimbursed of the displacement expenses per traveled km.
Some operational procedures serving the occurrences require previous inspection of the facility that went through shutting-off before the remote reclosing by COS. For example, upon the shutting-off of transformers by protection actuation, even if back protection, it is required the local inspection of the transformer before reclosing it. Such inspection, in general, is made by the personnel of POE, that, eventually, has to displace up to the facility, with reflexes in the service time and duration of the power interruption.
The operation of the AT stations is based on instructions and documents systematically maintained updated. Expedite analysis of such documentation shows comprehensiveness, sufficiency, and adequacy to the needs of the operation. The records of every kind associated to the routine of the operation are centralized in COS, maintaining at the facilities, as local protection, unifilr diagrams of operations and forms associated to the procedures for execution of release of equipment for maintenance services.
It is highlighted the operation unifilr diagram, printed and plastified, where it is the unifilar diagram of the facility associated to the physical arrangement, main nominal characteristics of equipment, schemes of actuation of the protection logic, among others, meeting in a single diagram the basic information to subsidize the performance of maneuvers and analysis of occurrences.
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2.4.1.1.2.
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System Operation Center (COS)
|
The System Operation System
–
COS is the sector responsible for the coordination, supervision, and control of the operation of the High Volgate Distribution System of CELG D, by the remote operation of the substations and transmission lines of 69 kV and 138 kV, including the operation of the gantries of the outputs of 34.5 kV and 13.8 kV of such substations. The operation is carried out within own operational Standards, in compliance with the Distribution Procedures
–
PRODIST of ANEEL, ONS Network Procedures and with the effective legislation.
The Supervision and Control System allows COS to operate at distance 111 (one hundred and eleven) substations telesupervised and/or digitalized out of a total of 125. Therefore, almost 90% of the facilities of the high voltage distribution system of CELG D are equipped with telecommand system, telecontrol and supervision at real time. The substations not digitalized are simulated in COS, maintaining under its control the local operation of the said facilities.
All assignments of the System Operation Center
–
COS are performed by 36 employees (11 new employees that joined in the last public exam 2014/2015, held by the concessionaire) distributed among the areas of the sector, organized according the structure below:
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Item
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Application Name
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Description
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the shift.
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7
|
HOLIDAY
|
Management of vacation of COS’ collaborators.
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8
|
HE
|
Control of overtime and electronic issuance of BHE.
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Registration of the history of relevant events within the transmission
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9
|
HISTORIC
|
|
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|
facilities.
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10
|
LIVE LINE
|
Control of “labeling” and/or “delivery” of distribution circuits.
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Management of MUST: Application that generates report of the
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measurements of MUST (Use Amount of the Transmission System)
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11
|
MUST
|
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graphically presenting the contracted and measured value, highlighting
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|
when there are violations
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12
|
NEWPESQ
|
Research program of the records of occurrences in the electric system.
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13
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PCO
|
Program for Certification of System Operators.
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14
|
PROSD2
|
Issuance and control of service orders in CELG substations
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Daily Event Report
–
It allows the treatment, consistency, and
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15
|
RDO
|
distribution of the affected areas, related to the events recorded in the
|
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|
electric system.
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It issues report on the number of automatic opening operations of
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16
|
RERD
|
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reclosers and circuit breakers, as evidence to the maintenance areas.
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Automatic acquisition of the records of events directly from SAGE and
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17
|
ROC
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pre-treatment of them: supply to RDO.
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Reading of measures of voltage, current, power, and other ones in the
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18
|
SCM 2
|
equipment of the substations. Calculation of the time (min) of
|
|
|
extrapolation of the voltages in relation to the allowed ranges
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Management system of documents, indicators, infrastructure, non-
|
|
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compliances, preventive actions, improvement opportunities,
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19
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SigDoq 3
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managerial reports, treatment of clients’ claims and calibration and
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adjustment plan of electric magnitudes of the substations
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Management system of transportation and setup of travel of COS
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20
|
SIGVIA
|
|
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collaborators.
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Application that generates a dynamic report of charging of all power
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|
|
transformers of Celg system, graphically presenting the percent of
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21
|
OVERLOAD
|
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|
charging in real time, the variation gradient in addition to alarms for
|
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better management in shift.
|
The operation is also subsidized by a detection system of atmospheric discharges - NetRaios
–
plotted on the geo-
referenced base of the concessionaire’s operation assets (GIS),
result of a P&D Project of CELG D in partnership with INPE (Brazilian National Institute of Space Researches). Such system allows the operation to dispose resources to the allocation of maintenance and support teams for relocation of
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circuits and other actions that aim at anticipating potential problems from contingency situations. Another P&D project is in progress, which shall consider, in addition to the time and weather forecast, a forecast of atmospheric discharges and burning.
In addition to the coordination of the operation in real time, COS is also responsible for the centralization of the scheduling activities of services and shutdowns, standardization, analysis of the operation in the short run, creation and update of instructions, including the Modules of the Operational Agreements and the management of associated procedures.
COS is also responsible for the operational relationship with other interconnected companies (currently 11 companies), as well as with the other agents connected in the system of CELG D at any voltage level, in addition to several accessing parties, being responsible for the preparation of the respective Operational Agreements. Currently, there are almost sixty agents among independent producers, self-producers, free and exclusive clients. The list of the existing Operational Agreements may be found in
Annex D.
It is applicable to observe the absence of document that formalizes the operational agreement between COS and CELG GT, which provides on the operation, by COS of Celg D, of the facilities of CELG GT.
The Internal Operation Standards and Instructions are listed in
Annex E
.
It is implemented in COS a Quality System comprehending the Pre-Operation, Real Time, and Post-Operation activities, certified since 2000 by NBR ISO 9001:2008 and previous. COS maintains 17 processes inherent to its activities standardized and under control through performance indicators, including two strategic indicators for organization. Additionally, the results of COS processes are also supplies for calculation of the continuity indicators of the distributor.
The map of the processes that compose the quality system is showed in the following figure:
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The indicators of the quality system are:
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Table 34: Indicators of the quality system Source: CELG D
|
|
Indicator
–
Quality Purposes
|
Definition
|
RC
– Clients’ Complaints
|
Relevant complaints received from clients
related to COS processes and registered as
non-compliance of SGQ of COS.
|
CPR
–
Compliance with the Response Time
|
When it intends a response to the client, it is
measured by CPR, considering the RC and the
observations/researches.
|
TMC
–
Average Time of Response to the Client
|
When it intends a response to the client, the
checked time to the effective response will
compose the measurement of such indicator
(considering
the
RC
and
observations/researches)
|
IEP
–
Schedule Efficiency Index
|
It assesses “how much” the collaborators are
working to the performance of schedules and
how much of such “service” is really
performed.
|
IFEM
–
Failure Index in Preparation of
Maneuvers
|
It assesses “how much” the collaborators are
preparing incorrect maneuvers.
|
ICT
–
Voltage Control Index
|
It measures the value (%) of the time the bars
considered critical maintained within the
established ranges.
|
IRM
–
Manual Reclosing Index
|
Obtained from the time for the quantity of
reclosing of 34.5 and 13.8
kV of
telecommanded SE. It has as purpose to
measure the actuation of the system
operator.
|
NAT
–
Number of Occupational Accidents
|
It measures the quantity of accidents checked
with the involvement of COS.
|
DRS
–
Non-Compliance of the Safety
Requirements
|
It measures the number of violations of the
safety items, potential or real, with the
purpose of assessing the operation safety.
|
NDS
–
Number of Shutdowns for Overload
|
It measures the performance of the system
operator and in events of overload in
transmission lines and power transformers.
|
|
|
2.4.1.1.3.
|
Distribution Operation Center (COD)
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worsened by incentivized dismissal programs, by the use of non-standardized methodologies in each COD and by the absence of an effective operation engineering related to medium and low voltage.
With the purpose of optimizing COD processes, reducing the operational costs, and maximizing the efficiency in relation to the regulatory limits, as well as the need of greater use of the human resources made available to the operation/distribution, and considering the need of modernization of its structure, it was sought for the centralization of CODs in Goiânia, especially aiming at guaranteeing greater agility and safety, and also the rationalization of the distribution operation, with the use in a more effective manner of the existing synergy between the technicians that executed the tasks, in addition to the standardization of the operation actions in the whole distribution system of medium and low voltage of CELG D, aiming at a greater technical reliability.
However, the centralization was not followed by the full transfer of the technicians of regional CODs to COD Goiânia, which made that the centralized COD absorbed the activities of the regional centers without the corresponding required personnel, generating overload of work to the operators. The increase in the number of events, especially in connection branches, associated to the low productivity of the field teams for delay in the dispatch of the services, helps to explain the expressive increase of TMAE - Average time of Emergency Care checked from 2012.
The great amount of individual events and the high number of teams dispatched per distribution operator, made that it was proposed the revision of the centralization concept, becoming to be forecast
the dispatch of the emergency services of BT and the commercial services by the Contractor’s Service
Centers - CSC. Such CSCs will be responsible for the control of the emergency services related to the consuming units, sending and receiving data from the field teams in a monitored manner and at real time and sending the completed services in an electronic manner to COD. CSCs will be decentralized, supervised, and monitored by COD. The contracting process of such services is under progress. Bids are being made by stages and have already been initiated. Scheduled for completion of the mobilisation of new contractors is April 2016.
Telecommunications System
More than 85% of the COD communication with the emergency service teams is performed via satellite, the remaining is performed with the use of cellular phone, being that all calls from the operation room of COD are recorded, allowing to speeding up the service, greater reliability of the information, and better control of the vehicles available, and Record all information exchanges required to the good fulfillment of
the consumers’ requests, and of the proper operation of the electric system of medium and low voltage
distribution.
COD receives the requests of service from the consumers, in its absolute majority by transmission of data between the Consumer Service Center, where they are registered, and the control process of the operational times as established in the relevant legislation starts. COD dispatches the Emergency Events
–
OE, to the field teams, through communication via satellite or cell phone, being that all times and movements of the recomposition actions of the normal working conditions of the system, in each event are stored at real time in the database of interruptions of the supply of power to the consumers.
The flow of the activities is described in the figure below:
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The Registration module, is currently formed by the following applications:
·
ADM
–
Set of functionalities that has as purpose to maintain the information of the database related
to the company’s Standards, system parameters, and preset attributes
.
·
VIEW
–
Set of functionalities that has as purpose to refer to information of the database related to the distribution network, consumers, topographic base, as well as, topology of the circuits, among others.
·
MAPA
–
Set of functionalities that has as purpose to update (include, exclude, and change) information of the database related to the distribution network and consumers in order to guarantee the relational integrity and the business rules.
·
CALC
–
Set of functionalities that has as purpose to periodically update the information of electric calculation, through algorithm that simulates the supply conditions of the distribution network.
Currently, the Operation module is formed by the following applications:
·
ATC
–
Set of functionalities that has as purpose to Record complaints of lack of power, inform data of the service and affected areas, back-up system to CBILL to serve the consumer.
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OPER
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Set of functionalities that has as purpose to carry out the service of the events of lack of power through the use of communication via satellite (AVL) and carries out impact studies of the lack of energy through simulation of operations in the network.
·
INTERFACE
–
Set of functionalities that has as purpose to carry out the integration with the internal and external systems with which it interacts, such as, commercial system, ERP and CRM.
In addition to OPER system, COD has SAGE
–
Open Power Management System developed by CEPEL installed to perform the Supervision and Control of the Medium Voltage Distribution System of CELG D, process that started in 2014. Currently, COD supervises and controls 68 reclosers of network, 86 Substations of 34.5 kV, in addition, it has the supervision of all barb uses of 34.5 kV and 13.8 kV of the Substations of COS, enabling greater agility in the decision making.
In addition to OPER and SAGE System, COD has several support systems to the operation of the medium voltage system, support system to the decision making to the dispatch of the services, which automatizes the dispatch of teams (COGNARE). It also has a portal (PORTAL COD) of reports used by the pre- and post-operation teams, and Real Time team, also used by the network maintenance and service teams. From the managerial point of view, PORTAL COD is used to follow-up TMAE- Average time of Emergency Care, DEC - Duration of Interruption per Consuming Unit, and FEC - Frequency of Interruption per Consuming Unit indicators.
2.4.1.2. MT and BT Operation
Supplementing the operation activities of Medium Voltage (MT) and Low Voltage (BT) coordinated by COD are the field teams, own and outsourced. Such teams are under responsibility of the Service Superintendence DD-SPSE, which also has the assignments of planning and performing the Maintenance activities of MT and BT networks.
The Service Superintendence has four service departments located in Goiânia, Rio Verde, Luziânia, and Anápolis.
The geographical distribution of such departments is showed below:
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It is expected an expressive increase of productivity of such light teams, reduction of costs, elimination of the overload in the dispatch by COD and reduction of TMAE.
The service bathes were already bided in such new model starting in August, and the process is in final phase of agreement upon prices for signature of the contracts.
Progressively up to the end of this year, the other seventeen batches will be bided.
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2.4.2.
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Electric System Maintenance
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The maintenance of the electric system of Celg D is divided into Technical (DT) and Distribution (DD) Boards of Directors. The first one is liable for the maintenance of the High Voltage equipment and facilities, comprehending the distribution lines at 69 and 138 kV and the substations at such voltage level, including the equipment of the bus bars of 34.5 and 13.8 kV and equipment of Celg D at the generation and transmission facilities that compose the electric system of Goiás. The Distribution Board of Directors is liable for the maintenance of the Medium and Low Voltage system, comprehending lines, networks, and substations at the voltages of 34.5, 13.8 kV, and lower.
The organizational structure of the Technical Board of Directors is showed in the following figure. The maintenance of the High voltage is assignment of the High Voltage Engineering and Maintenance Superintendence, which is structured in four departments:
·
AT Substation Engineering Department
·
AT Line Engineering Department
·
AT Maintenance Department
·
AT Maintenance Engineering and Control Department.
The whole structure is located in Goiânia, including shops and laboratories.
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regeneration of oil (vacuum term) and for analysis of degree of paper polymerization. To the tap changers under load, the preventive maintenance is actuated in relation, basically, to the number of operations accumulated since the last intervention and the follow-up of the individual conditions.
Regularly, inspections of hot points in the substations are performed, using thermal imaging, with the intervention for scheduled recovery in relation to the location, intensity, etc.
For protection, control, and measurement systems, the preventive maintenance is carried out every three years, comprehending panels, protection relays, transducers, UTR, meters, recorders, concentrators, etc.
The preventive maintenance of the CA/CC auxiliary services is called with semestral periodicity, involving rectifiers, battery bank, panels.
In the circuit breakers, reclosers, and other maneuver equipment under load, the preventive maintenance
is individually scheduled according to manufacturers’ recommendations and operation conditions of the
equipment (maneuvers under short circuit and under load). It involves revisions of the command mechanisms, inspections, recoveries and/or replacements in the extinction systems and in the contacts, etc.
The corrective maintenance, on the other side, is deployed to restore the operational conditions of an item of equipment after the occurrence of defect or failure. Although it is possible to schedule the corrective maintenance, depending on the type of defect presented and on the possibility of extension of the defect and progression for failure and degree of importance of the equipment in the electric system, in general, the need of execution is imposed by urgency or emergency situations, with risks to people and facilities and interruption of supply of power in the electric system.
The concessionaire also has electromechanic shop with resources to repairs and refurbishment of transformation and maneuver equipment, in addition to analysis laboratory of conditions of isolating materials.
It is important to highlight the existence and use of movable substations, which make it feasible the performance of comprehensive maintenances in the equipment of the substations minimizing or eliminating interruption times of power supply to consumers.
The maintenance of AT substations, currently, is predominantly made with own personnel of the concessionaire.
To the High Voltage distribution lines (69 and 138 kV), the approach of maintenance is the performance of visual periodical inspections, including a thermal imager, with going up on towers, if required, concurrently with the performance of the repairs detected during the inspection. The inspections comprehend the cables, grounding system (light rod cable and counterweight), structures, isolators, hardware, connections, situation of easements (invasions, vegetation), crossing, fences, accesses, etc.
Teams outsourced under contract are used, with capacity of intervention in live line, individually followed
by the concessionaire’s inspector
. In the event of impossibility of immediate performance of the interventions detected in the field (due to atmospheric conditions, systemic conditions of operation, etc.) the services are scheduled for performance on a timely basis. The cleaning of the easement is the subject matter of specific contract.
The periodical schedule of the maintenance services of lines and AT substations is performed with intervenience of the operation and maintenance bodies involved, in a centralized manner, in Goiânia, aiming at uses of shutdowns and unavailabilities and optimization of use of resources.
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2.4.2.1.2.
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Dimensioning of Resources
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The maintenances of the Substations and Transmission lines of 69 kV and 138 kV, and repairs on equipment are performed by the High Voltage Maintenance Department and by the Engineering and
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Table 42: No. of Own Employees in the Maintenance Coordination. Source: CELG D
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Own Personnel
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Quantity
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Engineer (coordinator)
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1
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Engineer
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2
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Industrial Technician
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18
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Electrician
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16
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Technical Assistant
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5
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Administrative (trainee + Pro-Cerrado)
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1+1
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Table 43: No. of Outsourced Employees in the Maintenance Coordination. Source: CELG D
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Outsourced Personnel
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Quantity
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2 teams of Live Line Maintenance
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Foreman
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2
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Electrician
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8
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Driver
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2
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4 teams of SE Maintenance
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Electrician-driver
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1
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Electrician
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2
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Table 44: Vehicles in the Maintenance Coordination Source: CELG D
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Vehicles
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Quantity
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Double-Cabin Pick-Up
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5
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Simple-Cabin Pick-Up
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6
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Truck
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3
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PROTECTION, MEASUREMENT, AND CONTROL COORDINATION - SPM
Responsible for scheduling, controlling, coordinating, and performing the maintenance and commissioning activities of the protection, measurement, command, control, and supervision systems of the substations with voltage level of 69 kV and 138 kV, centralized in Goiânia, with actuation in the whole concession area of CELG.
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Table 45: No. of Own Employees. Source: CELG D
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Own Personnel
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Quantity
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Engineer (coordinator)
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1
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Engineer
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3
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Industrial Technician
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18
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Electrician
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2
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Designer
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1
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Table 46: Quantity of Vehicles Source: CELG D
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Vehicles
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Quantity
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Double-Cabin Pick-Up
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2
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Simple-Cabin Pick-Up
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2
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MAINTENANCE ENGINEERING AND CONTROL DEPARTMENT
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DT-DPEM:
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Responsible for the planning, coordination, and supervision of the maintenance services of the Substations and Transmission Lines at the voltages of 69 kV and 138 kV, is structured in three actuation areas centralized in Goiânia, with actuation in the whole concession area of CELG D.
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Table 47: No. of Own Employees. Source: CELG D
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Personnel
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Quantity
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Engineer (manager)
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1
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Administrative Assistant
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1
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MAINTENANCE ENGINEERING COORDINATION
Responsible for the establishment of procedures, registration, and control of maintenance and commissioning of equipment and diagnoses using predictive techniques, in substations with voltage level of 69 kV and 138 kV, centralized in Goiânia, with actuation in the whole concession area of CELG.
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Table 48: No. of Own Employees. Source: CELG D
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Own Personnel
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Quantity
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Technician (coordinator)
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1
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Industrial Technician
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2
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ISOLATING MATERIAL LABORATORY COORDINATION
Responsible for the collection of oil and performance of chromoatography, physical-chemical tests, located in Goiânia, with actuation in the whole concession area of CELG.
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Table 49: No. of Own Employees Source: CELG D
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Own Personnel
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Quantity
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Chemist (coordinator)
|
1
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Chemist
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3
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Chemistry Technician
|
1
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Table 50: Quantity of Vehicles. Source: CELG D
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Vehicles
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Quantity
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Automobile
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1
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ELECTROMECHANIC SHOP COORDINATION
Responsible for the analysis, diagnosis, recovery, and tests of damaged equipment with voltage level of up to 138 kV, as well as treatment and drying of oil of transformers, is installed in Goiânia, receives equipment of the whole concession area of CELG. It is also responsible by the treatment and supply of isolating oil to the whole company.
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Table 51: Own Personnel Source: CELG D
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Own Personnel
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Quantity
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Mechanic Engineer (coordinator)
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1
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Industrial Technician (electrotechnical
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1
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engineering)
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Industrial Technician (mechanics)
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1
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·
Assist in the loading and unloading services of materials and equipment;
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Assist in the performance of services of electro-mechanic assemblies in the substations of CELG-D system for improvement of the operational conditions;
·
Assist in the performance of improvement services in the grounding system of the Substations of CELG-D system;
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Perform other tasks related and similar to the activity of preventive and corrective maintenance in Substations;
TRANSMISSION LINES:
This service is outsourced at the moment, with teams already decentralized, followed by own personnel.
The main activities carried out are the following:
·
Preventive maintenance of the transmission lines;
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Corrective maintenance of the transmission lines;
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Inspection of transmission lines;
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Cleaning of track of transmission lines
Required resources:
The implementation of such advanced stations require the following minimum infrastructure of vehicles, tools, instruments, and own and outsourced personnel to their working:
Personnel:
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Table 62: List of Advanced Stations per Own and Outsourced Personnel Source: CELG D
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Advanced Stations
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Own Personnel
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Outsourced Personnel
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Formosa
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6 Electrotechnicians
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1 ERMS Team
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Uruaçu
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6 Electrotechnicians
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1 ERMS Team
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Rio Verde
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6 Electrotechnicians
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1 ERMS Team
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Catalão
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6 Electrotechnicians
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1 ERMS Team
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Vehicles (Location):
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Table 63: Vehicles per Advanced Stations Source: CELG D
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Advanced
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Double-Cabin
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Sedan
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Stations
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Pick-Up
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Automobile
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Formosa
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1
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1
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Uruaçu
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1
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1
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Rio Verde
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1
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1
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Catalão
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1
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1
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Current Stage:
Currently, the four teams of maintenance of Substations are already contracted, composed by 03 electricians, 01 truck with Auto-crane and tools and some basic instruments. Teams of Live Line and Cleaning of Track for Maintenance of the High Voltage Lines are in phase of contracting.
Summarizing, based on the philosophy and proposal previously described, the concessionaire is adopting a maintenance plan of High Voltage to the period from2015, comprehending:
HIGH VOLTAGE DISTRIBUTION LINES:
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Cleaning of the tracks of all high voltage distribution lines (69 kV and 138 kV) using 04 (four) teams.
Service forecast to be performed within 18 months;
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Detailed preventive maintenance in all high voltage distribution lines (69 kV and 138 kV) using 04 (four) teams of live line. Service forecast to be performed within 18 months;
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Recovery of the grounding system of the high voltage distribution lines (69 kV and 138 kV) that are deteriorated;
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Replacement of porcelain isolators of poor quality to others of polymeric type of the high voltage distribution lines (69 kV and 138 kV);
HIGH VOLTAGE SUBSTATIONS:
·
Replacement of obsolete and/or overcome reclosers of 13.8 kV and 34.5 kV of the high voltage substations;
·
Recovery and recomposition of capacitating banks with reduced capacity and/or out of operation in the high voltage substations;
·
Revitalization of degraded auxiliary CA/CC services of high voltage substations;
PREVENTIVE MAINENTANCE BASED ON PREDITIVE TECHNIQUES:
·
Control of maintenance of circuit breakers and reclosers taking into account the numbers of operation per maneuver and per short-circuit;
·
Control of maintenance of switches under load of power transformers, taking into account the operation numbers per maneuver and characteristics of the equipment;
·
State control of the power transformers through physical-chemical and chromatography tests;
·
Control of hot spots in facilities and equipment of high voltage substations using thermal imaging technique;
·
Implementation of level control of partial discharges in power transformers through acoustic emission tests;
DESCENTRALIZATION OF THE MAINTENANCE AND RECOMPOSITION OF TEAMS:
·
Implement the Maintenance Decentralization Program;
·
Recomposition of the technical staff of the maintenance teams, aiming at reverting the current staff of preventive/corrective maintenance, that is, prioritize the preventive maintenances, which does not occur at the moment;
ELECTRO-MECHANIC SHOP:
·
Recovery of reclosers of 13.8 kV and 34.5 kV for recomposition of high voltage substations and to meet the need of technical reserve of the system;
·
Recovery of medium and big power transformers to meet the need of the technical reserve of the system;
·
Regeneration of isolating mineral oil to meet demands of the whole system of CELG D.
TECHNICAL RESERVE:
·
Maintain the control of the minimum quantities of equipment in technical reserve to meet the high voltage system.
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2.4.2.2. MT/BT Maintenance
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2.4.2.2.1. Maintenance philosophy
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The maintenance philosophy of medium and high voltage of CELG D is based on the traditional concepts of preventive and corrective maintenance.
The MT maintenance is responsibility of two different Superintendences.
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2.4.3.
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Assessment of the Technical and Physical Conditions of the Assets
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The due diligence comprehended, in addition to the analysis of the information made available by the
concessionaire at the consultancy’s request, interviews with key p
ersonnel of the company and visits to facilities associated to the electric system of the concessionaire. The provided data was incomplete, obsolete, and sometimes conflicting or divergent, not allowing to obtain a credible image of the situation of the co
ncessionaire’s electric system and organization, its main problems and the corresponding
proposed solutions. Thus, the visits and interviews performed were essential to supplement the assessment of the operational technical conditions that it were intended to obtain from Celg D.
Taking into account all such information sources, it is checked that structural problems, resulting from the adoption in the past of solutions that may be considered palliative, currently affect the operation and performance of the distribution electric system of CELG D.
Due to the allocation of financial resources, the use in the past of the extension of distribution networks at 34.5 kV to supply regions, when the most proper solution would be the service at higher voltage levels, which works were naturally more expensive, led to the localized depletion of such voltage level to face the market expansion, which today forces, obligatorily, the construction of lines and substations at 69 and/or 138 kV, which has to occur from the available knots in the system, or even reinforcement through the Basic Network.
The said palliative solution resulted in a very long supplies, without proper switching, automation, or alternative supply resources, with the associated foreseeable problems of voltage control and performance. Today Medium Voltage (MT) substations are found with two or more transformers and demand around 10 MVA and high loading and/or overload in several AT/MT step down transformers.
Also, another option adopted in the past, of developing the High Voltage system of Celg D at the level of 69 kV, resulted in the implementation of very extensive lines and cables with gauges relatively small, eventually without installation of cable for radius along the whole route, causing problems associated with regulation and performance.
Several works forecast in previous cycles of planning were postponed or are delayed, in the system under responsibility of Celg D, as well as at the level of the transmission system. It is highlighted in such condition the suspension without determined term of the implementation of LDAT - Distribution Line at High Voltage 138 kV Carajás
–
Atlântico/Campinas, work that aims at solving several problems of service in Goiânia.
Over the supply system, there are several transformers with loading over 100% and an expressive portion of such equipment with loading between 80 and 100%, recommending since then the adoption of actions to enhance the transformation capacity.
Several substations in the metropolitan area of Goiânia and Anápolis are within the limit of the service capacity, counting on three step down transformers and extensive bus bars at 13.8 kV to the output of supplies, which number is also in the limit of the physical arrangement of the substation and of the geo-electric capacity of flow.
Increasing difficulties for acquisition of lands or of easements and rights of way get complicated and encumber the implementation of new facilities, whether substations or transmission lines, notably in the big urban centers.
In some regions of the State of Goiás, projects of power generation were implemented, but without the corresponding reinforcement or adequacy of the electric system where they were connected, with problems of losses and control of voltage.
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The said budget contentions in the recent years and their consequences (reduction of performance of preventive maintenance, increase of the number of events with failure, etc.) also led to the adoption of simplified solutions, whether in enhancements or serving events: some substations have operational
flexibility compromised by the “slavery” of circuit breakers/reclosers of coupling or general
(dedicated to maneuver of some specific equipment of the station) due to the removal of forced operation of maneuver equipment of supplies, or with a circuit breaker maneuvering two transformers, etc.
In summary, whether the performance of the existing system, evidenced in the continuity indexes presented by the concessionaire and in the difficulties of voltage control at satisfactory levels, and the fulfillment of the need of switching-on of new loads in the concession area are now compromised or suppressed, recommending the adoption of exceptional measures to its solution.
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2.4.3.1.
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Transmission Lines
|
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The distribution lines at High Voltage (69 and 138 kV) sum, respectively, 3598.5 km and 2217.5 km. The
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concessionaire did not make available recent loading data, only the data related to the year of 2013,
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insufficient to assess the current loading condition of the lines. However, a report of the System Operation
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indicates the lines that are currently under overload, showed in the following tables:
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Table 68: Information of Transmission Lines and Loading Percentage Source: CELG D
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Operation Information
–
Critical 69-kV Lines
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|
LDAT
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Loading %
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LDAT Inhumas
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Itaberaí
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110%
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LDAT Paranaíba
–
Itumbiara Nova
|
98%
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LDAT Rio Verde - Cabriúva
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103%
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LDAT Rio Verde
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Santa Helena
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95%
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Operation Information
–
Critical 38-kV Lines
|
|
LDAT
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Loading %
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LDAT Carajás
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Goiá
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103%
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LDAT Carajás
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Independência
|
120%
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LDAT Jundiaí
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Santana 1
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116%
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LDAT Rio Verde
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R. Verde Furnas
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97%
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LDAT Xavantes -Arisco-Ferroviário
|
115%
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The analysis of the data, the interviews made and the visits assesses the following verifications:
·
There are older lines with structures assembled with metal trails, which make it difficult the maintenance works, with restrictions for services in live line.
·
Older lines were built with low height of cable/ground (6.5 m).
·
Some lines were constructed with light rod cables installed only in the arrivals of the substations.
·
Ceramic, tempered glass, and polymeric isolators are used. Some 69-kV lines count only with 4 (four) isolators in the suspension and anchoring chains.
·
In some lines, the installation of counter-weight was made at small depth, vulnerable to the action of agricultural machines and implements.
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Absence of air signaling in several crossings of roads and similar.
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Out of the LDAT in operation, only two count on OPGQ cable, the other ones have light rod cable HS 5/16.
·
Problems of invasion of easements in the urban stretches are common. Such invasions are documented (not the total of the cases) to make it feasible the removal process of invaders.
·
The existing accesses to the structures are reminiscent from the time of construction of the lines. There is no systematic process of preservation of accesses.
·
The track cleaning process is outsourced. In the visited lines, the track was reasonably clean.
Information makes it clear that there is delay in the performance of the required cleaning.
·
Cohabitation of lines with agricultural exploration activity is subject of continuous attention.
·
There is need of reforms of several LDAT, comprehending re-conducting and/or re-tensioning, insertion of structures, replacement of grounding system
–
light rod cables, counterweight, connections, etc.)
·
LDAT performance indexes were not informed.
·
The process of maintenance of lines comprehends the performance of inspection and correction of the anomalies found immediately, unless in the event of operational restrictions or inadequate weather conditions. There is no previous inspection. The maintenance team, contracted with live line resources, displaces along the line under maintenance, followed by a fiscal of the concessionaire, performing the inspection and the repairs. The repairs that may not be immediately performed compose records of pending anomalies for future schedule.
In
annex F
, pictures of the stretches of the LDATs visited in this due diligence.
The 110 substations at High Voltage (36 and 139 kV) property of Celg D has installed capacity of 3826 MCA
that, added to the 697 MVA of transformers of Celg D at third parties’ facilities, sum 4523 MVA of installed
capacity.
The analysis of the loading measurements of the installed transformers indicates that within the period from January, 2014 to June, 2015, 36.7% of the equipment presented loading reading greater than 100% of the nominal power. If we consider the 22.3% of the equipment that presented load measurements between 80% and 100% of the nominal capacity, we checked that around 59% of the equipment demand short/medium term actions to adequate the transformation capacity with the required demand. Such data is gathered in the following table, which summarizes the data from the System Operation
.
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Such hypothesis justifies as we joint consider the presented continuity indexes, the current situation of the AT maintenance (with low rate of performance of preventive maintenances) and the records of anomalies in each facility, maintained by COS.
In
Annex H
, as an example, the records of anomalies of the substations visited in this due diligence are showed, according to the control of the Operation Center in report of July/2015.
The visits to Ferroviária, Campinas, and Goiá substations, which are located in Goiânia; to Guapó, Cezarina, Acreúna, and Montividiu substations, in the respective cities; and Rio Verde Celg and Cabriúva substations, located in Rio Verde, representing 8% of the AT substations of Celg D, allowed the visual assessment of the state of preservation of the facilities, which may be extrapolated to the remaining substations. It is checked:
·
The satisfactory cleaning and working state of the facilities of the command rooms.
·
Reasonable cleaning of the yard covered with crushed rock and circulation roads. Such areas are cleaned by chemical cleaning, but the remainings of vegetation were found in the place. In one of the SEs it was checked fire signs in the vegetation of slopes, apparently resulting from fire for burning of vegetation removed from the yard.
·
Absence of containment basin of isolating oil on the bases of transformers.
·
Crushed rock with inadequate granulometry in some yards.
·
Compromising of drainage in some SE, with reduction of the yard covered with crushed rock and the paving of the circulation road.
·
Presence of watchmen in some SE of the metropolitan region; in other ones, use of local system of alarms and in contracted watching Center. Invasion alarms (opening of doors) are not transmitted at real time to COS.
·
Existence of installed equipment of transformation, maneuver, protection, and control of several technologies and update degrees, demanding tools, instrumentation, and comprehending knowledge of the maintenance teams.
·
Some analogic meters are being removed from the command panels.
·
There is no signaling or labeling of equipment in special conditions in the stations. Such information is in COS, although it is in the books of occurrences and anomalies existing in the command rooms.
·
Existence of several damaged or removed equipment (isolators, racks, and plates of switches of 13.8 kV, TCs, fuses, and units of bank of capacitators, block coil).
·
Corrosion in some structures of gantries.
·
Existence of emergency motor/generator group in some stations.
·
Absence of padlocks of operation block in the mechanical command mechanisms of switches.
·
Low height of powered parts in some arrangements used in the substations, in the several voltages (13.8, 34.5, 69, and 138 kV).
·
Presence of fire extinguishers proper for electric facilities, although the dimensioning needs to be revised.
·
Limiting wire fences with no crossed wire in some SEs; in others, fences with wood stakes, short, with excessive spacing between wires, with no proper switching and grounding.
·
Several substations with wall, supplemented with anti-invasion fence.
·
SE Rio Verde Celg with compact physical arrangement that difficults and compromises the maintenance activities.
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Several banks of capacitators with reduced power (absent fuses and/or capacitators)
·
Dropping of oil in several power transformers.
·
Presence of big birds in the gantries of some SE, with evidences of events of discharges caused by such animals.
·
Existence of preset points and facilities for connection of mobile SE.
·
Areas of the lands of SE (much) longer than the current (or future) need.
·
Rests of kites and their lines on bus bars and equipment.
·
Limitation and signaling of area for enhancement works insufficient from the point of view of
personnel’s safety.
Trenches opened for services without signaling.
·
Operators of the Points of Station Operation (POE) with assignments restricted to the operation of the stations, under actuation of COS. They do not perform any maintenance activities, but some activities associated to the preservation of the facilities. They do not perform systematic routine of inspection of the substations, although there is guide/form for inspections.
·
Training process of the POE personnel is not systematized and certified.
·
Periodical operational tests are not performed on the equipment not maneuvered for a long time, for verification/certification of proper working.
·
Some units of banks of non-sealed batteries presenting deposits and deformed plates.
·
Local communication resources with cell phone
–
extension and/or OPLAT.
·
Existence of updated plastified unifilar diagrams, event and anomaly record books, forms, and instructions for services on the equipment, operation instructions, and standardized maneuvers.
·
Existence of signaling and identification of equipment and clearances in the yards, although some of them are in need of revitalization, since they are partially faded away.
Visual conditions of the visited facilities do not show negligence or abandonment, but reflect the restrictions of maintenance and preservation resources faced by the concessionaire.
The pictures of the visited Substations are in
Annex I.
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2.4.3.3. MT/BT Networks
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2.4.3.3.1.1.
Loading levels
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The loading levels of MT and BT were assessed based on the loading of the supplies and the distribution transformers.
The information provided by CELG D based on loading calculations made by SGT from the installed capacity of the transformers.
The table below presents the situation of the supplies:
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Problems in the service to several cities
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Montes Claros, Paraúna, Ponte de Pedra, Cezarina, Indiara, Varjão, Anicuns, Nazário (restriction to the connection of new loads, unsatisfactory voltage levels, low service continuity levels).
Middle-North Region
·
Depletion of transformation capacity of the SE of Anápolis;
·
Difficulty to voltage control in Corumbá;
·
Problems in the service to Goianópolis, Pirenópolis, Abadiânia, and Silvânia (restriction to connection of new loads, unsatisfactory voltage levels, low continuity levels of service).
South Region
·
High loading in the circuits of 69 kV;
·
Low voltage levels;
·
Restrictions for release of new loads;
·
Seasonality and growth of load of the region of Caldas Novas.
Southwest Region
·
Overload in transformers;
·
Located depletion of the 34.5-kVnetwork;
·
Problems in the service to Rio Verde, Mineiros, and Santa Helena (restriction to the connection of new loads, unsatisfactory voltage levels, low service continuity levels).
·
Restrictions to connections of irrigators in Acreúnas, Caçu, and Quirinópolis.
East Region
·
Low voltage levels;
·
Depletion of the 34.5-kV network to serve irrigators;
·
Great urban expansion of the cities surrounding Brasília;
·
Low service continuity levels;
·
Repressed demand;
·
Overloads in transformers;
·
Problems in the service to Águas Lindas, Luziânia, Pamplona, Cristalina, and Santo Antônio do Descoberto (it with total depletion of the existing resources).
2.4.4.1.3. Performance analysis
The problems listed in the previous item are reflected in the concessionaire’s continuity indexes
. The performance of the electric system of CELG D has showed to be precarious in the last few years, with results of duration and frequency of interruptions that extrapolate a much the regulatory limits.
The evolution of TMAE, DEC, and FEC shows a progressive worsening in the performance of the electric system. Such subject will be detailed in depth in the chapter Quality.
The information obtained indicate the following as the main causes of this worsening:
·
Low investment level indicated in the period in maintenance, expansion, and improvement in AT, MT, and BT, generating several points of narrowing in the electric system and insufficient repositioning of assets;
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It is easy to notice that the challenge imposed to CELG D so that it is able to comply with the directions above, especially of DEC, is very great. The Result Plan points out the actions required to reach the proposed purposes, which may be grouped in three great axles:
·
Expressive investment program in the period of five years, 2015-2019, especially comprehending expansion and improvements in AT and MT, aiming at solving the most critical problems of overload and voltage level, repressed demand and renewal of assets. It is important to highlight that the works of capacity increase and new facilities also have significant reflexes on the performance of the electric system, upon reducing the failure rates and allowing greater flexibility in the system operation.
·
Structural changes in the contracting forms of the companies providing services to emergencies and commercial services, which will become to make the dispatch of the BT emergency services, will work with multifunctional teams, and will be compensated for performed services and not more for Hh. The purposes are to release the dispatch of the teams by COD to the MT emergencies, reducing the preparation time, and at the same time increasing the productivity of the field teams from 3 to 4 services/day to 7 services/day. The multifunctionality contributes to increase the productivity of the teams and reduce the times of service to emergencies. The impact expected in the reduction of TMAE
–
Average Time of Emergency Services is expressive, with direct reflexes in the DEC reduction.
·
Revision of the coordination of the protection of MT networks, with implementation of more reclosers of network, removal, and repositioning of fuse switches and knife switches. The current problems resulting from the lack of coordination of the protection have strong impacts on DEC, upon causing that interruptions that would be momentaneous become sustained and increasing the area and the number of affected consumers in each supply interruption.
Anyway, such actions will demand an effort with no precedents in CELG in terms of investments and improvement of processes within a period of five years, essential so that such DEC and FEC goals are reached.
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2.4.5.
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Required investments in the distribution system within 30 years
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The so
lution of the problems Celg D faces to meet the consumers’ needs in its concession area demands,
among other measures, the execution of several works that convert into an expressive volume of investments.
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2.4.5.1.
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Investments proposed by Celg D for the period of ten years (2015 to 2024)
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To meet the determinations of ANEEL and the commitments of conduct adjustments executed by the concessionaire, a Result Plan was developed, comprehending a period of two our four years, containing the related actions and resources associated with the improvement of the quality indexes of service, among others. The two terms informed refer, the first, to the term initially established by the Agency, and the second, to the term required by the concessionaire (which justifications were accepted by the Agency).
Such programs enter and are contained in the Distribution Development Plan (PDD), required from the distributors in the Distribution Procedures, covering a period of ten years ahead.
Supplementary to such resources, the concessionaire lists additional programs, comprehending obligations of universalization of service and resources required of automation of networks and for maintenance of substations
–
acquisition of mobile SEs.
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Thus, analyzing the table and the graph, it may be observed that in general the assessed items are smaller than the average of the concessionaires similar to CELG D as well as to the total of Brazilian companies.
In first place, the perceived quality was validated as “regular performance” in 2014. CELG D demonstrated
a worsening in the performance, having a variation of -
20% regarding 2013. The company’s quality is 11
points below the average of the concessionaires of the middle-east region and 17.6 points of the average of Brazil.
In second place, the client’s satisfaction index, it is also validated as “regular performance”, demonstrated
a slight improvement in 2014 regarding 2013, in the order of 5.1% (56.75 in 2014). However, the indicator is 7.5 points below the average of the companies of its sector and 11 points lower than the average of the country.
On the other side, the confidence index showed a drop in the order of -20% between 2013 and 2014, reaching a value of 47.32. Once more, the indicator is lower than the averages of the companies and concessionaires of Brazil and, therefore, the benchmark 2014.
Regarding fidelity, it was assessed as poor performance, showing to 2014 an indicator of 27.76 points, having a great drop regarding the previous year, in the order of 54.8% lower than 2013.
Finally, upon assessing the item Value, note that it is the only indicator that is over the average of the companies similar to CELG D and the average of the country. However, it is far from the benchmark 2014.
For further details, refer to item Annexes
–
Quality of service and efficiency and
Annex K
–
DD (DEC
–
FEC)
Management Plan of the Quality Management.
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2.5.3.
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Satisfaction of the Urban Residential Consumer of Electric Power
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Brazilian Association of Electric Power Distributors (Abradee) carries out on a year-by-year basis the so-called Satisfaction Research of the Urban Residential Consumer of Electric Power. The purpose of such study is to give the possibility to the residential users of presenting their opinions in relation to their satisfaction with the electric power distribution service.
Additionally, the research generates indexes that allow the comparison of the results between all distributors, as well as support matrices to the definition of improvement actions.
The methodology of the research was prepared by the Association, being annually used since 1999, providing the distributors with instruments and incentives towards the improvement of its performance.
The indexes the research reaches are the following:
·
IAC:
Consumer’s Approval Index
·
IDAT:
Attribute Performance Index
·
IDAR:
Area Performance Index
·
ISQP:
Index of Satisfaction with the Perceived Quality
·
IEQP:
Index of Excellence of the Perceived Quality
·
IIQP:
Index of Dissatisfaction with the Perceived Quality
·
ISCP:
Index of Satisfaction with the Perceived Price
·
ISC:
Consumer’s Satisfaction Index
·
IESC:
Excellence Index
·
IIC:
Consumer’s Dissatisfaction Index
·
ISG
: General Satisfaction Index
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The Excellence Index of the perceived quality (IEQP) in 2015 was 26.1 recording a drop of 3.8% in relation to 2014. The benchmark was 51.4.
In the event the Index of Dissatisfaction with the perceived quality (IIQP), unfortunately it is recorded an increase in relation to 2014 of 3.8%. Thus, for 2015 the score was 16.3, although the benchmark was 1.9.
Such fact indicates a clear worsening in the company’s quality one year ago.
On the other side, the Social Responsibility Index (RS) reached a score of 58.6, being 5% smaller than in 2014. The benchmark is 89.7 points.
The Public Lighting Index (IP) was the only indicator that presented greater values in 2015, being for such year of 60.8 points (52.4 in 2014), although far from the benchmark of 84.8 points.
In relation to the Price Index (PR), it was 20 points in 2015, recording a difference of -5.7% in relation to 2014. Additionally, the Indexes of Satisfaction with the price perceived (ISCP) and of Satisfaction of the consumer (ISC) were 18.5 and 45.7 points, respectively. Thus, the two indexes show decreases in relation to 2014 at 6.3% and 4.1%.
Finally, the General Satisfaction Index (ISG) was 48.6 points in 2015. If such indicator is compared to the indicator in 2014, so it may be noticed a drop of almost 23% (index of 71.4 points), which means a great
drop in the clients’ satisfaction. If, additionally, it is compared with the benchmark defined in 2015, it is
86.1 points. It may be seen that CELG D is very far from the excellence in general satisfaction.
In summary, CELG D clearly has in the present serious quality problems, having worsened its indicators in relation to the previous years. As it was said, the only indicators that increased this year, were the ones related to Public lighting and, unfortunately, the Index of Dissatisfaction with the perceived quality. It confirms the fact of the worsening in the service provision. Additionally, the indicators are very far from the benchmarks of 2015.
For such reason, the Result Plan of CELG D will be presented, whi
ch had to be made at ANEEL’s request, to
improve the quality at global level of the company.
For further details, refer in the item Annexes
–
Quality of service and efficiency the
Annex L
–
DC (IASC)
Consumer’s Satisfaction Index (IASC).
The Brazilian National Agency of Electric Power (ANEEL), through the Official Letter no. 32/2015 DIR/ANEEL, presented the current diagnosis on the provision of the distribution service carried out by CELG D, where three areas with unsatisfactory performances in quality were identified, which are:
·
Continuity indicators
·
Complaints
·
Annex Consumer’s Satisfaction Anee (IASC)
Thus, the Regulator requested the adoption of short- and medium-term measures for the reestablishment of the Service Quality in the form of a
Result Plan. For such, CELG D prepared the “Result
Plan
– Service Quality Improvement”, where the main points will be following approached.
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2.5.4.1. Continuity Indicators - DEC and FEC
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The assessment of the continuity levels assessed by ANEEL is made through the annual DEC and FEC
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(global indicator and per electric set).
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The service quality depends especially on actions of maintenance, coordination, and selectivity of the protection and of the logistics of emergency services, as well as the improvement works to recover the components of the Electric System at the end of the service life.
In the concession area of CELG D, such assessment of the service quality, made by ANEEL is obtained upon follow-up of the data of the 148 electric sets (grouping of consuming units) that will compose the annual global indicator.
Thus, the DEC and FEC indexes had significant worsening in the last few years. CELG D explains that the sudden variation of DEC, from 2012, is due to a group of factors:
·
Change of methodology of data gathering,
·
The low level of investments in the three-year period of 2010/2012, and
·
A centralization of the dispatch of all emergency services in a single Distribution Operation Center
–
COD in Goiania, without recommended conditions in quantitative and qualitative terms of Distribution Operators.
In the last three years, DEC maintained stable (the value in 2012, in relation to 2013 and 2014) it occurs that the methodological change of assessment adopted from August of that year, which was only completely captured from 2013.
As a consequence, the actions for improvement of the Continuity Indicators proposed by the company, are based on the macro actions listed below. All of them gave rise to several other actions related to each macro action:
·
Maintenance actions in 52 medium voltage distribution lines
–
LMDT
·
Execution of pruning of trees and cleaning of track in LDMT
·
Revitalization of 1,536 low-voltage circuits
·
Dismemberment of231 transforming circuits
·
Maintenance actions in 48 high-voltage distribution lines
–
LDAT
·
Revitalization actions of 38 substations of high voltage distribution
–
SEAT
·
Structural changes in the dispatch of the services
·
Contracting and implementation of the multifunctional teams
·
Coordination of the protection of the medium-voltage distribution lines
·
Optimization of the medium-voltage distribution networks
·
Implementation of Regional High-Voltage Maintenance Centers
Expected results:
CELG D identified the components of the electric system that are causing greater impact on the indicators of those electric sets selected for priority actuation. Next, the causes of such interruptions were identified (tree in the network, defective connections, lack of coordination and selectivity of the protection, coordination of the protection, isolator giving passage, atmospheric discharges, etc.) and chosen the action of maintenance, coordination of the protection of improvement work to be taken to its reduction.
As already observed, the Continuity Indicators assessed by CELG D in the last few years were very superior to the limit values established by ANEEL. Additionally, the Regulator defined the limits the company shall reach, established at 13.94 to DEC and 11.49 to FEC, reaching them by CELG D in so short term, represents a very big difficulty.
The company assures that, with the additional actions defined in the Result Plan, it will present a decreasing course of its indicators, aiming at reaching the regulatory limits in 2019 through a continuous and consistent improvement action. Such term is important, considering the implementation of a more aggressive Plan in 2016 and 2017 by the budget and rate impacts, difficulties to its management by the
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registered with ANEEL, which increased approximately 70% in relation to 2013, highlighting the complaints on Quality of the Supply and Commercial Services.
CELG emphasizes that the low performance of the indicator for 2014 was strongly influenced by circumstantial problems faced by the company in the performance of the Commercial Technical Services, due to the abandonment of the contracts by two service provision companies.
The first abandonment of contract hindered the quality of the services in the city of Goiania in the period from April to August, 2014, the second abandonment occurred in the North and West regions of the State, comprehending the period from September to December, 2014.
For such reasons, it is required actions that promote a best assessment of the indicators in question. In
relation to the Client’s satisfaction, it is expected over the period of performance of the Result Plan, to
increase to the IASC items, where CELG D was assessed with regular performance or worst, at least up to IASC Brazil average.
Finally, regarding complaints, it is known that the main causes of complaints refer to the quality of the service supply and quality. However, after the implementation of the Understanding Path and Program of Great Events (PGO), from January, 2015, there was a significant improvement in TMR (Average Response Time) to the consumers, with the practice of the directioning of the same previously to the channels of services of the concessionaire.
Also, the company acquired a new Manifestation (complaint) Control System, including to meet the methodology of the Understanding path. Additionally, a training will be ministered to all involved companies, which are: Call Center of the
Ombudsman’s
Office, Superintendents, Department Managers, Sectors, segregating the topics per typology and defining scripts for issuance of the answers.
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In this chapter of Losses, initially it will be approached the concepts of losses, as well as the calculation and separation of the global losses, technical losses, and non-technical losses are made, detailing the regulatory limits of losses established by ANEEL and the way of CELG D over the last few years and projections.
In this chapter, it will also be exposed the levels of losses, with the purpose of comparing the situation of CELG D over the years, as well as a comparison of the levels of losses is made in relation to other electric power distribution companies in Brazil.
In general, CELG D is in a good situation regarding the losses, in technical losses and in non-technical losses, being next to the goals established by ANEEL, being that, with the loss reduction programs effective and planned, added of the projected investments in network, there is a big probability that CELG
D achieves ANEEL’s goals by the end of 2017.
The electric system is divided in generation, transmission, and distribution of electric power. The distributors receive the power from the supplying agents (transmitters, generators, or other distributors), delivering to the end consumers, whether residential, commercial, rural, industrial, or of the other classes.
The power measured by the distributors in the consuming units will always be inferior to the power received from the supplying agents. Such difference is called power loss and is segregated according to its origin:
Losses in the Basic Network (or Transmission):
are those that occur between the generation of electric power in the plants up to the limit of the distribution systems. They are assessed on a monthly basis by the Electric Power Commercialization Chamber
–
CCEE, according to data of measurement of generation and the power delivered to the distribution networks. The difference between them results in the value of Losses in the Basic Network and its cost is prorated in 50% for generation and 50% for consumption.
Losses in the Distribution Network:
those that occur within the distribution system itself and may be divided into two categories, according to their cause:
·
Technical Losses:
inherent to the transportation of the electric power, related to the transformation of electric power into thermal power in the conductors (joule effect), losses in the cores of the transformers, dielectric losses, etc. They may be understood as the consumption of the equipment responsible for the power distribution.
·
Non-Technical Losses
: correspond to the difference between the total losses and the technical losses, considering, therefore, all other losses associated to the distribution of electric power, such as power theft, measurement errors, errors in the invoicing process, consuming units without measurement equipment, etc. Such type of loss is directly associated to the commercial management of the distributor.
Following it is a simplified example of the calculation of the losses of Electric Power, approaching the three chains (generation, transmission, and distribution) up to the delivery to the end consumers.
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readings and in the measurement of frontier, as well as to the delay in expansion investment and to the greater loading of the existing networks, such that in the late 2014, the global losses reached 13.72%, with a growth of the losses of 10.40% in relation from 2009 to 2014.
Analyzing the indexes of Global Losses on injected power (%) per distributor in 2014, we may visualize that CELG D in addition to be over its regulatory limit set forth by ANEEL (11.28%), the company is at a level of 13.7% over the average of the sample of companies that is 10.96%.
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Although the fighting against the non-technical losses is the junction of operational management actions focused on results, defining the goals to be achieved in relation to the potential of recovery of the characteristics of each region, and supplemented by investments in more protected networks in areas of big losses, such as, for example, insertion of multicomplexed cables, increase of the height of the poles and greatest quantity of displacements of teams to inspect, among others.
The distributor, in the last few years, had serious difficulties of investments, since in the period of 2006-2012 it was disabled of increasing its rates, causing delays in investment in the more protected network as well as in a limited budget to fight the non-technical losses.
It shall also be mentioned the internal difficulties, because CELG Dis a quasi-public company and, therefore, is subject to law 8.666/93, which causes delays in the acquisition of materials, contracting, and performance of investments.
In addition to such difficulties, we may list the following:
·
Absence of police station specialized in the theft of electric power
: the inspections carried out in medium and big consumers, especially in the cases of derivation and handling, are hindered by the lack of experts, since such consumers difficult at the most the entrance of inspection teams in their establishments, with the goal to make the characterization of the irregularity more difficult, as well as at gaining time to the decharacterization thereto, which affects the charge of the consumption registered and not invoiced;
·
Lack of police structure for support
: the inspections carried out in places with high indexes of criminality may only be carried out with the support of the civil and military polices, which in many cases do not have the proper structure to provide such support, such as lack of fuel, lack of criminal experts, among other needs, generating difficulties to the performance of inspection with calm, and causing the exposure of employees to the risk;
·
Sophistication of the irregularity types
: At the extent technological progresses are achieved, the violators also get specialized, being increasingly frequent sophisticated artifices, especially in electronic meters. It makes that a longer time is spent in the identification of such irregularities, hindering the productivity of the teams;
·
Great number of UCs in the rural zone
: CELG D has approximately 7% (seven percent) of its consumers classified in the Rural class, being that some, due to the great territorial extension of the state of Goiás, are more than 80 km from the closest city, which reduces the quantity of inspections carried out on a daily basis. In the 2
nd
Cycle, the Average Displacement Time, used in the definition of the productivity of the inspection teams, did not consider such particular, failing to grant to CELG D approximately R$ 1 million/day;
·
Normative Resolution 414/10
: The Normative Resolution 414/10 brought advances in relation to the previous Resolution, 456/00. However, the reduction of the maximum collection period for 36 months hinders the concessionaires, since that, due to the limitation of costs imposed by the Reference Company, we could not inspect a greater number of consumers, which may lead to irregular period superior to the allowed maximum. Additionally, in the cases of defect in the measurement, so that it may make the collection of the consumption not invoiced, respecting the maximum limit of 3 cycles, TOI shall be issued, which makes that we perform an inspection in that UC, so that we do not take the risk the consumer, when inspected in another occasion, to use §2 of art. 132 of the said resolution. Such requirement of § 7 of art. 115 results in the performance of inspections in UCs that would not be normally inspected, delaying the identification of UCs with irregularity, which makes the irregular period longer;
·
Lack of support of the Judiciary Branch
: The judges that judge the actions of violating consumers, in many cases, disregard the Normative Resolution 414/10, which ends up nullifying the administrative collection, so incentivizing the performance of irregularities in the measurement.
The presence of the Technical-Scientific Police, through its experts, provides public credit, which
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favors the gain of causes. However, for the reasons exposed above, the lack of experts makes that the same follow-up an insignificant portion of the inspections carried out, which generates such legal unsafety.
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2.6.7.2.1.
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Activities of fighting against PNT
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The activities related to the fighting against PNT, carried out by own personnel and by outsourced personnel, are divided in INSPECTION/REGULARIZATION and NEGOTIATION, carried out in a continuous manner, in consuming units served at low voltage (Group B) and high voltage (Group A), with direct and indirect measurement, located in the whole concession area of CELG D, being subdivided into:
INSPECTION / REGULARIZATION
1. Inspection with or without suspension of the supply, without notification;
2. Inspection with or without suspension of the supply, with notification;
3. Inspection with Installation and/or Removal of the Meter, with or without suspension of the supply, without notification;
4. Inspection with Installation and/or Removal of the Meter, with or without suspension of the supply, with notification;
5. Inspection with Replacement of Meter, with or without suspension of the supply, without notification;
6. Inspection with Replacement of Meter, with or without suspension of the supply, with notification;
7. Inspection with Removal of the Service Branch, without notification;
8. Inspection with Removal of the Service Branch, with notification;
9. Inspection with Removal of Clandestine Connection.
NEGOTIATION
1. Calculation of the retroactive difference of not invoiced consumption;
2. Assembly of the Irregularity Processes;
3. Issuance and Delivery of Notifications, with Suspension of the Supply in the Circuit Breaker, Shroud Box, or Pole;
4. Suspension of the Electric Power Supply;
5. Cut Inspection;
6. Analysis and Inspection of Opinion
in consumers’ Resource;
7. Negotiation of the Irregularity Processes;
It is CELG D’ exclusive liability
for the management of the activities, audit, preparation of procedures, procedure of irregularity proceedings, and preparation of technical reports in the measurement equipment.
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2.6.8.
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Details of the program of fighting against the non-technical losses
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Upon such context, CELG D, concerned on the increase of the non-technical losses, and aiming at getting suitable to the new methodology of regulatory treatment to the non-technical losses to the current cycle of periodical rate revision of the distribution concessionaires, the distributor concentrated on the search for the best manner of fighting against the non-technical losses with the best cost/benefit relationship.
In such sense, the company contracted outsourced labor specialized in fighting against the losses, which culminated in the preparation of a new project aiming at the contracting of outsourced company so that the performance of the technical services of fighting against the irregularities in the measurement, which will enable CELG D to enhance even more the reach of the actions of fighting against the irregularities in the measurement.
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concession area, except the city of Goiania, which was bided and the service was carried out and completed on 07/20/2015.
To the city of Goiania, it was already performed, being in phase of contract signature.
The investment plan indicates the performance of a recounting of IP and Shared Use in 2016, it will be repeated every 2 years, with projected investment of approximately R$ 6.5 million per contract.
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2.6.8.3.
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Project of Fighting to Irregularities in the measurement.
|
In addition to the problems related above, undue enhancements occur, by default of the distributor, of the telephony, internet, and cable TV networks, generating financial losses to CELG D, for the non-
collection of revenue through the sharing of the distributor’s distribution network, which makes the
situation more serious.
Upon it, CELG, through its Board of Directors, prepared a project of fighting against the irregularities in the measurement aiming at the contracting of company specialized in the performance of services of inspection and regularization, calculation of the retroactive differences, analysis of resources and negotiation of processes of irregularity/deficiency in the measurement, in a continuous manner, in consuming units served at low voltage (Group B), with direct and indirect measurement, located in the whole concession area of CELG.
Thus, the project of fighting against the irregularities in the measurement was estimated in 10 years of duration, the same will be continuous, unless indication to the contrary, at the cost of R$ 14 million a year.
The Research and Development project no. 334/2015
9
was also started, aiming at the development of software of data mining, which purpose is the identification of UCs with irregularity, through the use of business rules.
Other projects are being analyzed, but are in preparation phase, not having defined costs.
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2.6.8.4.
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Future Projects of Fighting to Non-Technical Losses
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Aiming at improving the performance of the fighting against the non-technical losses, CELG D plans to adopt the following actions in the future:
·
Contract inspection service of UCs and negotiation of processes of irregularities in the measurement:
ü
120,000 Inspections/year
ü
25,000 Negotiations/year
·
Develop smart methodology to point out frauds with characteristics checked in the concession area of CELG D (P&D 334 and GAUSS).
·
Install remote measurement in all UCs of Group A.
·
Implement new stage in the invoicing process, between the generation of supplies and issuance of invoices.
However, up to the closing of this report the opening related to the period and values of the projects, have not been made available to greater deepening and details of the fighting programs and reduction of losses.
9
The software Click View and Gauss are also part of this project, which will supplement the P&D project.
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2.6.9.
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Results of Fighting against Non-Technical Losses
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In the last few years (2012-2014), implementation of the management program of non-technical losses of CELG D presented the following results, according to the reports of Administration of CELG D:
·
Annual recovered power of 60 GWh, in the value of R$ 13 million in 2014
·
Reduction of the annual required Power of 1.3 Gwh, in the value of R$ 500,000.00 in 2014
·
Annual aggregated power of 16 GWh, in the value of R$ 3 million in 2014
·
Increase of the recovered retroactive power from 15 to 19 GWh, in 2012
·
Increase of the power aggregated to the invoicing, due to the regularization of the irregularities in the measurement from 18 to 20 GWh, in 2012.
Until the closing of this report, the gap related to the results, including calculations, calculation, course of the Reduction/Increase, and projection of power, and monetary values, were not made available for greater deepening and details.
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2.6.9.1.
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Expected and Achieved Results in Recounting of IP and Shared Use.
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It is expected that the economic benefit with the execution of the contract to perform technical survey services of the public lighting park and shared use of poles, in the whole area of concession, except the city of Goiania, which termination was on July/2015, has the following results:
·
Power aggregated to its revenue with the update of the quantitative and power of lamps and reactors (approximately 100 GWh)
·
Retroactive collection of irregularities (approximately 180 GWh)
·
Additional revenue earned with an index of non-technical losses lower than the regulatory standard.
The results following presented are related to 133 cities out of the total of 237, such that still in August, 2015, CELG D forecasts to launch the re-registration of more than 103 cities.
The values informed below are restricted to the cities already re-registered and invoiced, totalizing 125 cities and respective locations, out of the total of 237 cities.
Following it is showed the results achieved up the present with such project.
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The item Previous revenue of the graph, refers to the revenue of Public Lighting (IIP) CELG held with the IP before the re-registration.
It shall be highlighted the forecast of invoicing of R$ 10,879,455.82, related to the power aggregated to the invoicing within the period from June/2015 to April/2016.
The item Realized revenue of the graph deals with the IP revenue the company had after the performance of the re-registration, comprehending the power aggregated to the invoicing and the monthly portions of the retroactive consumption.
Additionally, we may highlight that the invoicing forecast is R$ 24,543,094.98, related to the future portions of retroactive consumption within the period from June/2015 to June/2019.
Analyzing the project as a whole, we may highlight that the following impacts of the re-registration of public lighting and shared use, had as result:
·
Increment of monthly net revenue over R$ 3 million.
·
Cities as Anápolis, Catalão, Águas Lindas, among others, had addition over 400,000 kWh/month.
·
Cities as Rio Verde, Jataí, Itumbiara, Cidade Ocidental, Novo Gama, Goianara, and Trindade had an increment of or over 200,000 kWh/month.
To the city of Goiania that is in process of bidding completion and contracting of company to perform the re-registration service, the company expects that the economical result with the performance of the contract to perform technical survey services of the public lighting park and shared use of poles, in the city, which start is scheduled for August/2015, will have the following benefits:
·
Power aggregated to its revenue with the update of the quantitative and power of lamps and reactors (approximately 1 GWh)
·
Retroactive collection of irregularities (approximately 1 GWh),
·
Additional revenue earned with an index of non-technical losses lower than the regulatory standard.
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2.6.9.2.
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Expected Results in the Fighting against Irregularities in the measurement
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The economic benefit expected with the performance of the contract to the execution of technical services of fighting against the irregularities in the measurement, which forecast of start is November/2015, will be constituted by the following expected results, according to the PNT Report of Celg 2015:
·
Power aggregated to CELG D revenue with the regularization of consuming units (approximately 30 GWh),
·
Reduction of the required power (approximately 13 GWh).
·
Retroactive collection of irregularities (approximately 86 GWh).
·
Additional revenue earned with an index of non-technical losses lower than the regulatory standard.
Until the closing of this report, the opening related to the results, including calculations, accountability, course of the Reduction/Increase, and projection of power and monetary values, were not made available for further deepening and details.
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2.6.10. Reference of Files of Losses
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The information demonstrated in the item Losses were taken from the following files:
·
CELG D 1.1.4000001
–
ADMINISTRATION REPORT 2012
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CELG D 1.1.4000002
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ADMINISTRATION REPORT 2013
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CELG D 1.1.4000003
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ADMINISTRATION REPORT 2014
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CELG D 10.11.000089 - 2.10
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NON-TECHNICAL LOSSES
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CELG D 10.12.000089 - 2.10
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NON-TECHNICAL LOSSES - REPORT
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CELG D EVOLUTION OF THE TECHNICAL LOSSES ITEM 2.11
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CELG D 08.1.7000004 - ITEM 2.8.7.4_RESULT PLAN CELG DISTRIBUIÇÃO
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ANEEL and CELG D 1.1.2000004 - SPARTA CELG
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ANEEL BASE_PERDAS_INTERNETJUL2014_26_05
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ANEEL SUBMODULE 2.6 OF PRORET
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The Replacement Cost Method establishes that each asset is valued through all expenses required to its replacement to an identical, similar, or equivalent one that carries out the same services and that has the same capacity of the existing asset.
To the complete definition of the Remuneration Base, it is required to establish the following values:
New Replacement Value (VNR): It refers to the value of the new asset, identical or similar to the evaluated
one, obtained from the concessionaire’s price base, or from the reference pr
ice base, when homologated, or of the updated accounting cost.
Market Value in Use (VMU): It is defined as the New Replacement Value
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VNR deduced out of the depreciation portion, which shall always respect the percentages of accumulated depreciation recorded in the accountancy to the considered asset, from the date of its immobilization.
Remuneration Base Value (VBR): It is defined by the multiplication of the Use Index by the Market Value in Use. The Use Index is defined as a percentage that shows the use of the asset in the public service of electric power distribution.
The situations related to the general refurbishments and/or re-potentialization of assets shall be conducted according to criteria established in MCSE and MCPSE.
For
the group of “Land” assets, “
Buildings,
Civil Works, and Improvements”, and “Substations”, it is
applied a percentage that shows the use of the asset in the public service of electric power distribution, so defining the index of use for such assets.
The Use Index of lands, buildings, and substations is applied on the New Replacement Value
–
VNR, defining the Full Use Index
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IAI, and on the Market Value in Use
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VMU, defining the Depreciated Use Index
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IAD.
For application of the use index, it is required a qualified analysis of the use, function and/or allocation of the asset, differentiating convenience from need, regarding the granted activity of electric power distribution.
The assessment of such assets shall be made taking as base the depreciated New Replacement Value, respecting the depreciation criteria and accumulated depreciation percentage, recorded in the accountancy.
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2.7.1.
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Determination of the New Replacement Value
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VNR
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The costs of Refitting is the way that ANEEL uses to gauge the slenderness tariff item and the prudent investment and that outline the companies in the electrical sector in the budgeting of investments so that they are recognized on the basis of the Remuneration regulatory compliance.
The rules take in consideration the weighted average prices of the purchases of the last two years or exceptionally, when not occurred the purchase of that material in the last two years, using the four last years.
This way, it is very important that companies have a control of the additional costs (labor, third service itself, project, transport, etc.) in order not to exceed the established parameters and deadlines for their implementation, aiming to improve the gains achieved at the time of Periodic Tariff.
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2.7.2.
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Determination of the New Replacement Value
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VNR
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The equity assessment does not represent the market value, but a reference value, arising from the application of the use and depreciation on the replacement costs for equipment, improvements, and civil works in operation (considering the expenditures with facilities and other additional costs and eliminating the expenditures with recoverable taxes (ICMS); but the non-recoverable taxes are considered in the formation of costs).
Thus, the items that compose the final value of the fixed assets (New Replacement Value
–
VNR) considered in the assessment are described in the following portions:
VNR = EP + COM + CA + JOA
EP
–
Main Equipment
–
equipment represented by the Registration Units (UC/UAR), according to MCPSE;
COM
–
Minor Components
–
set of fixed components bound to a certain main equipment;
CA
–
Additional Costs
–
comprehend the costs required to the placement of the asset in operation, including the costs of project, management, assembly, and freight, being applied on the value of the main equipment added of the smallest component;
JOA
–
Interests on Ongoing Works
–
represent the remuneration of the ongoing work and is applied on the total of the previous items, for substations, lines, and distribution networks.
The main equipment is that defined in the Registration Units
–
UC, or Addition and/or Removal Units
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UAR, by MCPSE. For the main equipment, the value of a new asset, identical or similar to the assessed one is obtained from the Reference Price Base.
The a
ssets that are not in the concessionaire’s price base shall be considered as
an assets of similar characteristics to the purpose of assessment. If a similar asset is not found, it shall be assessed through the update of the historical accounting values through the application of the index of the Transformation Industry
–
Machines, Electric Devices and Materials, column 34, assessed by FGV.
The accessory materials of the main equipment, identified as Minor Components
–
COM, will have their costs aggregated to the values of such equipment. The identification of such materials will be made in compliance with the criteria defined in the instructions of MCPSE.
The Additional Cost is the cost required to put the asset in operation, formed by the costs of design, management, assembly, and freight, being applied on the value of the equipment added of the minor components.
JOA is regulatory defined and calculated considering the real WACC after taxes, and applying the following formula, according to the following considerations:
Average construction terms: 3 months for air and underground distribution networks, 12 months for Substations and Underground Distribution Networks; 8 months for Distribution Lines (operating at a voltage over 34.5 kV);
Financial flow: for substations and distribution lines, it shall be considered the disbursement of 40% distributed in a homogeneous manner over the first half of the considered construction term, and 60% distributed in a homogeneous manner over the second and last half of the considered construction term; for distribution networks, it shall consider the financial flow of 26.7%, 33.3%, and 40% of disbursement distributed respectively in the 1
st
, 2
nd
, 3
rd
within the considered construction term.
The monthly disbursement will be so defined:
For substations and underground distribution lines:
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D1
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D2
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D3
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D4
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D5
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D6
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D7
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D8
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D9
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D10
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D11
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D12
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6.67%
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6.67%
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6.67%
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6.67%
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6.66%
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6.66%
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10%
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10%
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10%
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10%
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10%
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10%
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For distribution lines:
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D1
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D2
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D3
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D4
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D5
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D6
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D7
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D8
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10%
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10%
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10%
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10%
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15%
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15%
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15%
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15%
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For distribution lines:
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D1
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D2
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D3
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26.7%
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33.3%
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40.0%
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The use index established to the group of assets that compose a substation (power transformation, circuit breaker, switches, busbar, current and potential transformers, and reclosers that oppose the bay, of the substation transformer), results from the application of an index that considers the use factor of the substation and the expectancy to the next 10 (ten) years, of the percent growth of the load served by the substation.
The assets related to lands and easements were assessed from the update of accounting values, by IPCA, provided that it is checked that there are no relevant distortions between the physical assets effectively
existing and the assets in the concessionaire’s equity control.
a) the percentage of use of a land under assessment is defined by the ratio between the area effectively used (or usable area) and the total area of the land used for the construction of works and/or installation of assets for the public service of electric power distribution. It shall be included as areas of effective use (or usable areas) the areas of safety, maintenance, circulation, maneuver, and parking, applicable, in relation to type, size, and characteristics of the existing building or facility.
b) in the event of land of existing substations and substations in service, when the substation does not occupy the whole usable area of the land, and it may not be legally divided for purposes of disposal, it may also be considered, as usable area, as operational reserve, an additional percentage of up to 20% calculated on the percentage of use, calculated according to the criteria set forth in the previous item.
c) in the specific case of lands of buildings, it may be considered an additional percentage of up to 10% of the total area of the land, for green areas effectively existing, also recognized as usable areas.
The assets related to the easements were assessed from the update of accounting values, by IPCA, provided that it is checked that there are no relevant distortions between the physical assets effectively
existing and the assets in the concessionaire’ equity control.
It shall be subject matter of assessment all assets and facilities that characterize registration units in the equity control, as MCPSE recommends, coun
ted in the subgroup of accounts related to “Buildings, civil works, and improvements”. The shelters, equipment bases, tanks, silos, and others, which are part of the
structure of the building, are also included in this type of assets the facilities that shall be assessed, provided that they meet the determinations of MCPSE and MCSE and updated by INCC
–
National Index of the Construction Cost.
For the vehicles, the replacement value of such values was determined through the update of the respective accounting values by IPCA.
For the furniture and appliances, the replacement value of such assets was determined through the update of the respective accounting values by IPCA.
Software was assessed through the update of the respective accounting values by IPCA.
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For the determination of the market value in use
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VMU, it shall be used only the Method of the Straight Line Method 1 for the depreciation, obligatorily considering the percentage of the accumulated depreciation, recorded in the accountancy for each item of the considered asset.
In no hypothesis, the accounting criteria and procedures, the depreciation rates and the percentages of accumulated depreciation of each asset registered in the accountancy may be changed. It is not accepted the use of any other depreciation criteria. The situations related to general refurbishments of assets shall be conducted according to criteria established in MCSE and MCPSE.
The market value in use for the composition of the remuneration base will be obligatorily equal to zero when the asset is fully depreciated, as identified in the respective accounting record.
For effect of depreciation, annual depreciation rates are used to the assets of use and similar characteristics, in the scope of the electric power distribution, according to MCPSE.
The Special Obligations are resources related to the consumer’s financial participation, of the
budget allocations of the Federal Government, federal, state, and municipal moneys and special credits bound to the investments applied in the projects linked to the concession, as forecast in art. 1 of Decree no. 28.545, as of August 24, 1950, art. 142 of Decree no. 41.019, as of February 26, 1957, and art. 18 of Law no. 4.156, as of November 28, 1962.
The Special Obligations are not interest bearing liabilities and are not credits of the stockholder. They were updated with the same criteria and indexes used to correct the assets recorded in the Fixed Asset of the agents, that is, using the variation checked between the total new replacement value, and the original accounting value, not depreciated, of the Machine and Equipment account, on the balance of the Obligations.
Special (corrected balance, without deducing the depreciation), for determination of the updated value of the Special Considerations to be considered as reducing portion on the remuneration base.
For the investments related to Luz para Todos Program, in the participation of the sources of resources related to the Energetic Development Account
–
CDE, States, Cities, and Global Reserve of Reversion
–
RGR, it will be considered the amounts effectively realized, if the contract has already had fully physically performed and settled before ELETROBRAS, or are made proportional when the contract is in execution.
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2.7.3.
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Composition of the Regulatory Remuneration Base
–
BRR
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The Regulatory Remuneration Base (BRR) is composed by the values of the following items:
I
–
Fixed asset in service (AIS), assessed and depreciated (or amortized, according to the specific case);
II
–
Operation storeroom; III
–
Deferred asset; and IV
–
Special obligations.
The following groups of the concessionaire’s asset accounts are considered
: I
–
intangible; II
–
lands; III
–
reservoirs, dams, and ducts; IV
–
buildings, civil works, and improvements; V
–
machine and equipment; VI
–
vehicles; and
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VII
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furniture and appliances.
For effect of assessment of the remuneration base, it is only considered the assets bound to the concession and classified in the activities of distribution, administration, commercialization, and associated generation. In the use of plants, the assets that belong to a certain distributor will be only assessed to the cases that meet the requirements forecast in § 6 of art. 4 of Law no. 9.074, of 1995.
The groups of asset accounts related to Intangible; Land; Buildings, Civil Works, and Improvements; Machines and Equipment; Vehicles and Furniture and Appliances, bound to the public service of electric power distribution, related to the activities of Electric Power Distribution and Administration, are subject ma
tter of assessment, aiming at the composition of the concessionaires’ remuneration base.
For the assessment of the assets aiming at the definition of the remuneration base, the following guidelines were observed:
a) the remuneration base approved in the th
ird cycle of rate revision (3CRTP) shall be “shielded”.
It is understood as shielded base the adjusted values approved by report of assessment, including the movements occurred (additions, write-offs, depreciation) and the respective updates;
b) the inclusion between the base dates of the third cycle of rate revision and June, 2015, provided that still in operation, composes the Incremental Base and are assessed using the methodology defined in the Submodule 2.3 of PRORET;
c) the final values of the assessment are obtained summing the updated values of the shielded Remuneration base (item a) with the values of the inclusions occurred between the base dates of the third cycle of rate revision and June, 2015
–
incremental base (item b);
For assessment of the assets that compose the shielded base, the following procedures were adopted, in this sequence:
a) The write-offs occurred between the base dates of the third cycle of rate revision and June, 2015 were eliminated;
b) After the exclusion of such write-offs, the remaining values of each asset of the shielded base shall be updated, year by year, by the variation of IGP-M;
c) The monetary value related to the Special Obligations of the shielded base was obtained updating the value approved in the 3CRTP by the variation of IGP-M.
No value was deducted from the Special Operations as write-offs made in the shielded base;
d) It was taken into consideration the effect of the accumulated depreciation occurred between the base dates of the third rate revision and June, 2015, obtaining the value of the updated shielded remuneration base;
e) In relation to the storeroom of operations, the average balances of the last 12 (twelve) months were assessed, and the accounting values by IPCA shall be updated to the Deferred Asset.
For the assessment of the assets that have been added to the equity, provided that still in operation the following procedures were adopted, in this sequence:
a) The inclusions between the base dates of the third cycle of rate revision and June, 2015, provided that still in operation, are assessed using the methodology defined in Sub-module 2.3 of PRORET;
b) The calculation of the not used portion was applied. For substations, lands, buildings, works, and improvements, it shall be indicated the percentages considered to the use index, for the purposes of its inclusion in the remuneration base, from the verification and qualified analysis of the effective use of the respective asset in the public service of electric power distribution;
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c) It was taken into consideration the effect of the accumulated depreciation occurred between the start-up date and the base date of the third cycle of rate revision and June, 2015, obtaining the value of the remuneration base;
Out of the fixed asset in service, it was excluded, for effect of determination of the Regulatory Remuneration Base
–
BRR, the following assets and facilities that compose the Regulatory Annuity Base
–
BAR: software; hardware; administrative sites; buildings, civil works, and administrative improvements; machines and administrative equipment; vehicles; and furniture and appliances. The remuneration, amortization, and depreciation (except for sites) related to such assets, and facilities are given as annuities. The model used for the calculation and the evolution of the Gross and Net Remuneration Base took into account the same format used by ANEEL during its inspections of the Regulatory Remuneration Base in the Periodical Rate Revisions. The Fixed Asset in Service was added of the values of the annual investments and updated in currency from December, 2015 or by the corresponding IGP-M.
Our calculations were made with all assets of the Shielded Base of 1
st
Cycle (244,806 records), Incremental Base of the 2
nd
Cycle (112,035 records), Incremental Base of the 3
rd
Cycle (149,081 records), and assets paid up until June, 2015 (50,867 records), removing the respective write-downs and corrected by the indexes established by ANEEL (IPA-34, INCC, IPCA, and IGP-M).
Depreciations occurred in the period were also calculated according to ANEEL rates and the 100% depreciated assets, the special obligations, and the use indexes of Substations were removed, according to the lines demonstrated in the investment spreadsheet.
In the evolution of the Bases, it was taken into account that the behavior of the assets paid up after June, 2015 would be similar to the assets paid up in 2014 to the development of the 100% depreciated values, and that were analyzed up to the end of the Concession.
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2.8. Social and environmental matters
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In general, the assessments carried out considered the following topics:
·
Organizational Structure;
·
Occupational Health, Safety, and Environment Management System;
·
Management of Occupational Health, Safety, and Environment Aspects and Impacts;
·
Accidents by Violation of Environmental and Occupational Safety Standards;
·
Social-environmental Risks and Conflicts;
·
Environmental Liabilities;
·
Environmental Regularization/Licensing;
·
Notifications/Fines/Terms of Conduct Adjustment;
·
Federal, State, and Municipal Technical Registrations;
·
Spatial Environmental Analysis of the Current and Future Electric System (Forecast Investments);
It is worth noticing that were considered, for orientation of content of this assessment, the indications of technical guidelines of the SFI/World Bank Group (International Financial Corporation / World Bank Group), with emphasis on:
·
Environmental, Health, and Safety Guidelines for Electric Power Transmission and Distribution;
·
Environmental, Health, and Safety General Guidelines.
·
Performance standards on environmental sustainability.
These documents cited above are available, respectively, in the following links:
·
http://www.ifc.org/wps/wcm/connect/66b56e00488657eeb36af36a6515bb18/Final%2B-%2BElectric%2BTransmission%2Band%2BDistribution.pdf?MOD=AJPERES&id=1323162154847
·
http://www.ifc.org/wps/wcm/connect/554e8d80488658e4b76af76a6515bb18/Final%2B-%2BGeneral%2BEHS%2BGuidelines.pdf?MOD=AJPERES
·
http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/ifc+sustainability/our+approach/risk+management/performance+standards/environmental+and+social+perf ormance+standards+and+guidance+notes
It is integral part of the present document the preliminary assessment related to the occupational health, safety, and environment aspects of CELG Distribuição (CELG D). The assessments were divided in the following stages:
ü
Stage 1
–
Assessment of the Database (WORK ENVIRONMENT), made available on 07/28/2015 by CELG D. Such assessment was carried out within the period from 07/28/2015 to 08/26/2015.
ü
Stage 2
–
Performance of interviews and assessment meetings (Due Diligence) for confirmation of the data made available in the WORK ENVIRONMENT. It is also highlighted that visits to some facilities were also made with highlight to:
·
Electromechanical Shop (Date: 07/30/2015
–
Location: Goiania);
·
Isolating Material Laboratory (Date: 07/30/2015
–
Location: Goiania);
·
Central Storeroom (Date: 07/30/2015
–
Location: Goiania);
·
Yards of Useless and Disposed Items (Date: 07/30/2015
–
Location: Goiania);
·
Railroad Substations, Campinas, Guapo, Cezarina, Acreuna, Cabreuva, and Rio Verde, and Operational Unit of Rio Verde (Date: 08/10/2015 to 08/14/2015).
ü
Stage 3
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Consolidation of the data and information and preparation of the present Report.
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In the initial assessments integrating the Stage1, it was specifically used the data, information, documents, and technical reports integrating items 12.1
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SOCIAL-ENVIRONMENTAL MANAGEMENT, 20.1.07
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OCCUPATIONAL HEALTH, SAFETY, AND WORK ENVIRONMENT CONDITIONS.
Upon executing Stage 1, in relation to the environmental licenses of the facilities (substations, distribution lines (69 kV and 138 kV), telecommunications towers, shops, storerooms, etc.), the assessments made were limited to the verification of existences, validities, and evidences of formalization of the respective requests of renewal/revalidation.
Also in Stage 1, the assessments related to the inspection/infraction records, behavior adjustment terms (TACs), investments and expenses related to the management of health, safety, and environmental aspects and impacts (performed and to perform) were made through the verification of consolidated spreadsheets and some documents themselves. Thus, it was considered that the information that was made available reflec
ts the company’s reality.
The CELG D has no environmental certifications and occupational safety and health, as for example, as the standards ISO 14001 (Environmental Management), and OHSAS 18001 (Occupational Health and Safety). Therefore, the company does not have an environmental management system, health and labor safety composed by systematic procedures and indicators for monitoring the management of these aspects.
It was not identified the existence of environmental certifications, such as, for example, according to standard ISO 14001 (Environmental Management) and OSHSAS 18001 (Occupational Health and Safety). No document and/or specific certificate on such topic was identified in the WORK ENVIRONMENT, as well as an assessment of the operational effectiveness of a health, safety, and environment management system, through the existence of systematized procedures and follow-up indicators of the management.
During Stage 2, new information was requested and obtained before CELG D, which contributed to a more detailed assessment of the company in relation to that previously made in Stage 1. The new information requested was also entered by CELG D in the WORK ENVIRONMENT.
During the performance of the work, it may be noticed the existence of knowledge, by the team integrating the Environment Advisory Board (DT-AMB) and of the Safety Engineering, Health, and Life Quality Department (DA-DPSV), of the existing fragilities and problems, as well as of the actions that shall be triggered to the continuous improvement of the occupational health, safety, and environmental management process in the company, but the human and financial resources available are insufficient to a more effective work and with more satisfactory results.
During the work, we can notice the existence of knowledge on the part of the team an integral part of the spokesperson for Environment (DT-AMB) and the Engineering Department of Health, Safety and Quality of Life (DA-DPSV), the weaknesses and existing problems, as well as the actions that should be taken to the continuous improvement of the process of environmental management, health and safety of working in the company, but the available financial and human resources are insufficient for a work more effective and more satisfactory results.
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2.8.2. Results
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2.8.2.1. Organizational Structure
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This item is restricted to the evaluation of the organizational structure of the spokesperson for Environment (DT-AMB) and the Engineering Department of Health, Safety and Quality of Life (DA - DPSV)
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Environment:
In corporate terms, the Environment Advisory Board (DT
–
AMB) reports to the Technical Board of Directors (DT) of CELG D;
DT-AMB has as professional responsible for the area Mrs. Ivene Gomes de Paiva (Civil Engineer with Specialization/Post-Graduation in the Environmental Area). Such Professional has experience of 34 years of actuation in CELG D.
Currently, the technical team of DT-AMB is integrated by an Environmental Engineer, two trainees of Environmental Engineer and an Administrative Assistant. The Environmental Engineer and the Administrative Assistant were approved in the last Public Exam held by the company and have been for 6 to 4 months, respectively, at CELG D. Previously, the staff was only composed by Mrs. Ivene and the two trainees of Environmental Engineer.
In general lines, it is observed that the operational framework of the current DT-AMB is insufficient for the demands and environmental obligations of the company. Current professionals are responsible for the areas of licensing / environmental regularization, environmental management, environmental monitoring of works and invasion of tracks from bondage, management system and internal audits, in addition to the monitoring of environmental studies and projects, outsourced for environmental licensing purposes.
As part of the actuation of the Environment Advisory Board, it was informed that this area, although reporting to the Technical Board of Directors, in terms of organization chart, participates in the environmental discussions and related activities of the several areas of CELG D and, at some times, also of CELG GT. An important aspect and that was informed is that DT-AMB has participated in the definition of the preliminary layouts of the new transmission and distribution lines, and that, also in the conception of the designs, has attempted to minimize the occurrence of obstacles in the environmental licensing processes before the environmental bodies, highlighting SECIMA (Environment, Water Resources, Infrastructure, Cities, and Metropolitan Affairs Office) and IBAMA (Brazilian Institute of the Environment and Renewable Natural Resources).
It may be checked, during Stage 2, that DT-AMB acts much more as someone that orients and as an inspector than, effectively, as a performer of the actions of control of the environmental aspects of the operational activities of CELG D. It shall be highlighted that the inspection actions are restricted to eventual follow-ups, given the insufficiency of human and material resources to develop such activities. In a conversation with the responsible for the area, it was mentioned that the environmental control actions are responsibilities of the maintenance and operational areas, that is, they are assignments that are triggered and operationalized by the areas responsible for the main activities themselves, being DT-AMB liable for the follow-up.
As part of the works of DT-AMB, Environmental Management Plans are prepared for implementation and operation, which are agreed with the responsible areas (design, operation, and maintenance). Such fact imposes greater responsibility to the design, maintenance, and operational areas, but, on the other side, it demands inspection and follow-up by the environmental area, which is made difficult by the current organizational structure of DT-AMB, as exposed above.
Occupational Health and Safety:
In corporate terms, the Safety, Health, and Life Quality Engineering Department (DA
–
DPSV) reports to the Administrative Board of Directors (DA) of CELG D. Thus, the health, safety, and environment aspects and impacts are not guided by a same Board of Directors of CELG D, which ends up generating an own particular view of each area and less coordinated and orientated towards an Integrated Management System.
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Currently, DA-DPSV has as responsible Professional Mrs. Eugenia M. de Faria (Occupational Safety and Electrotechnical Technician). This professional is experienced in more than 15 years of actuation in CELG D. It is highlighted that the managerial function is opened, with the dismissal of one Engineer in charge of such function.
Currently, the following professionals integrate the technical team of DA-DPSV, including the Professional aforementioned:
·
10 Occupational Safety Technicians (06 in the Central Unit of Goiânia and 06 in the Units in the Countryside);
·
01 Occupational Safety Engineer;
·
01 Occupational Nursery Assistant;
·
01 Occupational Nurse;
·
01 Occupational Doctor.
Such professionals integrate the Service Specialized in Safety Engineering and in Occupational Medicine (SESMT) of CELG D. On 01/30/2015, CELG D filed with the Regional Superintendence of Labor and Employment of the State of Goiás the requirement of update of SESMT, in compliance with the Directive 3.214 of the Ministry of Labor and Employment (approves the Regulatory Standards
–
NR - of Chapter V, Title II, of the Consolidation of the Labor Laws, related to the Occupational Safety and Medicine), and NR-4. Upon such protocol, CELG D counted on 1712 employees in its staff, being 1 with working hours of 4 hours, 211 with 6 daily hours, and 1612 with 8 daily hours.
During Stage 2, in general, it was presented a report of concern by DA-DPSV in relation to the staff of such area, taking into consideration the legal demands and obligations of occupational health and safety of the company, as well as of relationship with the operational areas. Basically, the actuation is being restricted to the registration of outsourced companies providing operation and maintenance services, not there being time to the risk preventive, mapping, and management actions.
As part of the actuation of DA-DPSV, it was informed that this area, although reporting to the Administrative Board of Directors (DA) in terms of organization chart, is continuously demanded by the Distribution Board of Directors (DD), generating some divergences of positioning in relation to the occupational health and safety matters. It was reported by the coordination that, at some times, divergent
positioning between such areas occurs, one focusing on the employees’ health and safety,
and another focusing on the operation and maintenance of the electric system working. As reported, there is no, by part of CELG D, a culture of occupational safety and health yet.
It is worth noticing that CELG D has internal commissions for the prevention of accidents (CIPAs), as recommended by the Regulatory Standard of the Ministry of Labor and Employment (NR-5). The CIPA has as objective, by definition, the prevention of accidents and diseases resulting from work, so as to make it compatible with the permanent preservation of life and the promotion of the health of workers. Aspects related with the constitution, organization, tasks and operation of CELG were submitted by the company. However, we must highlight that it was not possible to assess the effectiveness of the same before their attributions and importance within the company.
Analogous to DT-AMB, it may be checked, during Stage 2, that DA-DPSV acts much more as someone that gives orientations than, effectively, as a promoter of health and safety actions of the operational activities of CELG D.
In addition to the search for assistance of legal requirements, a participation more directed at the promotion of actions for health and safety in the work environment has the potential to promote physical, mental and social well-being of workers, from motivational aspects. You can also contribute to the reduction of accidents and occupational diseases, increasing the productivity and the credibility of the company.
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2.8.2.2.
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Occupational Health, Safety, and Environment Management System
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Environment:
CELG D does not have an Environmental Policy, nor an Environmental Management System (SGA) structured and formalized. Although the company does not have an Environmental Management System implemented, and technical operational procedures registered and systematized, a lot due to the available organizational structure.
Anyway, in practice, it is noticed the effort of the current technical team for the performance of environmental management actions, among which it is highlighted the follow-up of the environmental licensing/regularization process of the facilities and structures and the management of solid waste generated in the operation and maintenance activities.
As part of its investment plan, CELG does not foresee the implementation of an SGA, for example, consistent with relevant technical standards, such as ABNT NBR ISO 14001
–
Environmental Management System. Thus, effectively, CELG has not undertaken the commitment of including in its organizational structure activities of planning, definition of responsibilities, training courses, formalization of specific technical, operational, and environmental procedures, processes and resources to the implementation and maintenance of the management of their environmental aspects and impacts yet, including the establishment of goals and indicators. It shall be highlighted the fact that the environmental management actions are developed resulting from the effort of the professionals of DT
–
AMB, but in a non-formalized manner.
The company does not have, in a systematized manner, a follow-up of the legal and normative environmental aspects either, for example, through advice of specialized company. Such follow-up is made by the professionals of DT
–
AMB themselves.
Anyway, it is applicable to highlight that CELG D has Mission, Vision, and Values expressed at its site on the internet (
available at: https://www.celg.com.br/paginas/institucional/mvv.aspx
), being:
Vision:
• Be among the leading companies of the sector of electric power dist
ribution, grounded on excellence and competitiveness.
Mission:
• Provide electric power, in a sustainable manner, focused on the return to the shareholder
and on the quality of the services.
Values:
·
Sustainability and commitment;
·
Creation of value to all stakeholders;
·
Ethics, transparency, and trust in the relationships;
·
Work with health and safety with the people it interacts.
Occupational Health and Safety
CELG D has expressed as one of it Values, as presented below, to work with health and safety with the people that Interact, even if in practice, as reported by the Department of Safety, Health, Life Quality Engineering (DA
–
DPSV), the company needs to evolve in such understanding. As informed, CELG D considers the questions connected to health and safety as important, but not a priority nor a value. Priority means preference and attention shall be put thereto, since priorities change, being possible to
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pass to a second plan. But the value is what does not pass. Nothing justifies work without health and safety.
Within such context, it is understood that the focus of the Occupational Health and Safety Management by CELGD has been, basically, on the compliance of the effective legislation, even if, in some cases, points of questions arose during the performance of Stage 2, with the suspicion of non-compliance with Regulatory Standards (NRs) of the Ministry of Labor and Employment (MTE).
As example, as defined in item 10.7.3 of NR-10 (Safety in Facilities and Electricity Services), the services in electric facilities powered on at High Voltage, as well as those performed in the Power System (SEP) may not be performed individually. It has not been occurred in Substations of CELG D, where the work has been made in an individualized manner, as report of the employees themselves. Another aspect that deserves to the highlighted refers to the current conditions of Safety Signaling in the Substations, point to be also improved as recommended by item 10.10.1 also of NR-10 and detailed in NR-26 (Safety Signaling). During the visit to the Substations, at some times, proper signaling and blocks were not identified. In the event of non-compliance with the definitions in, for example, NR-10, TEM may adopt the measures established in NR-3 (Embargo or Interdiction).
Additionally, it was reported that with the available organizational structure and the geographic characteristics of actuation of CELG D it has not been possible an effective and preventive actuation from the point of view of occupational health and safety. As example, it was informed that approximately 400 employees of CELG D are with the periodical exams expired.
In document terms, CELG D has the occupational health and safety management promoted from the basic documents required by the legislation, highlighting the Environmental Risk Prevention Program (PPRA), the Medical and Occupational Health Control Program (PCMSO), and the Regulation of Occupational Safety and Medicine for Contractors and/or Execution of Private Works.
It shall be highlighted that it was not clear that the understanding considered by CELG D to the preparation of the PPRA is proper to the recommendations in the effective legislation (NR-9
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Environmental Risk Prevention). CELG D presented more than one PPRA, the great majority to the Development Agencies where the risks are related to the office activities, highlighting the ergonomic risks. No PPRA was presented for the activities in the Distribution Lines and in the Substations. NR-9 presents, in item 9.1.2, that:
“
The actions of the PPRA shall be developed in the scope of each establishment of the company, under the responsibility of the employer, with the participation of the workers, being its comprehensiveness and
depth dependent on the characteristics of the risks and control needs” (NR
-9
–
item 9.1.2).
By the foregoing, the understanding is that all operational and support areas shall be considered. On the other side, it may not be said that it is incorrect to prepare a PPRA to each operational area/unit of the company. Such aspect needs to be better understood and discussed for the issuance of a conclusive assessment. It is understood that the existence of more than one document makes the management process of the health and safety questions by the company difficult.
On the other side, CELG D provided only one PCMSO. Such type of document has as main reference the PPRA itself, that is, it is based on the recognition of the risks related to the activities developed in the company.
PPRA, as well as PCMSO shall be updated. Specifically, in relation to PPRA, item 9.2.1.1 of NR-9 mentions:
“
It shall be made, whenever required and at least once a year, a
global analysis of PPRA
for assessment of its development and performance of the required adjustments and establishment of new goals and prioriti
es”
(NR-9
–
item 9.2.1.1).
As a consequence, if a change in the PPRA occurs, the PCMSO shall be revised.
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PCMSO presented by CELG D does not have cover, does not indicate the preparation date and its validity, as well as it considers a staff with 1819 employees, different from the information filed with the Regional Superintendence of Labor and Employment of the State of Goiás, on 01/30/2015, related to the requirement of update of SESMT. Upon such protocol, it was informed by CELG D a technical staff with 1712 employees. In relation to PPRAs, evidences that all of them are updated and analyzed were not presented.
The management of the supply of Personal Protective Equipment (PPE) also deserves to be discussed. It is not made by DA-DPSV, but by the Logistic and Supplies Superintendence (SPLS). In such sense, it was questioned of CELG D has a PPE Delivery Control Sheet and the answer was that it is part of the supply system, generating doubts on its existence. Such type of sheet contributes to guarantee the control by the company that the employee received the equipment required to the performance of his/her function, avoiding frauds in case of accidents and labor claims. To the worker, such sheet is also important since it guarantees to him/her the labor right of receiving the correct equipment to his/her activity in the company. Likewise, such aspect needs to be better managed by CELG D, avoiding problems to occur.
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2.8.2.3.
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Management of the Occupational Health, Safety, and Environmental Aspects and Impacts
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Currently, the management of the environmental aspects and impacts of the operational activities of CELG D is exclusively guided to the meeting of services and demands generated by the environmental licensing/regularization processes of its facilities and structures. Thus, the company has complied, basically, with the conditionals established by the environmental licensing/regularization processes. Within such context, there are no environmental indicators defined and followed by the company. Basically, activities are developed, still starting, related to the management of solid waste.
The management of the health and safety aspects is theoretically guided by the operational and guiding procedures integrating the basic documents required by the legislation, highlighting the Environmental Risk Prevention Program (PPRA), the Medical Control and Occupational Program (PCMSO), and the Occupational Safety and Medicine Regulation for Contractors and/or Execution of Particular Works, the latest an internal agreement of CELG D itself.
Following it is presented the agreements given by CELG D to the main issues of health, safety, and environment management of its facilities.
The facilities of CELG D use, in its majority, water from the public supply network. In a conversation with the Environment Advisory Board (DT-AMB), the same does not promote the follow-up of the monthly and/or annual consumption, as well as it does not develop specific actions of management and use of such natural resource.
It was also informed that the company does not uses in its facilities and operational structures water from well and water course, and that do not need the obtainment of grants/authorizations to the use of such resource. On the other side, during the field visits, it was identified the presence of wells and tankers in some Substations, which deserves attention to the regularization and obtainment of grants of qualification and use of such resource, even if for negligible use.
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2.8.2.3.2.
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Solid Waste and Useless Materials
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The management of solid waste is carried out through several actions of collection, stowage, temporary storage and final destination. The centralization of the waste management process is made in the Central Unit of Goiânia, place to where all residues that deserve a differentiated final destination should be sent for load composition and feasibility of treatment process and/or final destination. Following it is listed all forms of treatment and final destination commonly operationalized by CELG D:
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The obligations of support, auxiliary and foster the integration and the development of cooperatives of the Recyclable Material Gatherers members of the Program Goiânia Selective Collection, upon the payment of the sum of R$ 220.000,00 (two hundred and twenty thousand reais), and also to support and encourage the auxiliary, environmental education, by means of sponsoring the XX Brazilian environmentalist in Cerrado Symposium, with the amount of R$ 25,000.00 per (five and twenty thousand reais).
Within the context above, in a conversation with the Environment Advisory Board (DT
–
AMB), it was informed that CELG does not have in its transformers askarel (PCB
–
polychlorinated biphenils) in concentrations over 50 mg/kg (50 ppm). In the mineral insulating oil. The analyzes of control of concentrations of PCBS are made by own CELG D by means of laboratory of insulating materials. In a general way, at the Laboratory of the CELG D are made tests that has as its purpose to identify the quality of the mineral insulating oil, among which one can cite: neutralization index (measurement of the acidic compounds present in the oil), water content (amount of water present in the oil), color (color index evaluation), interfacial tension (indicator of the force of attraction between the molecules of molecular oil and water present on the interface), dielectric strength (ability to resist the electrical voltage without fail), loss tangents, analysis of contaminants (such as for example the concentration of PCB's), chromatography (analysis of dissolved gases in insulating mineral oil) and Gran polymerization (indicative of determination of paper insulation on equipment in use - Units of β-existing anhydrous glucose In the chair of the pulp through the polymeric viscosimétrico method).
In 1981, the Brazilian legislation (Interminsterial Directive MIC/MI/MME no. 19, as of 01/29/1981) forbidded the manufacturing of equipment that used such substance, but also allowed the use of the existing equipment up to the end of its service life, maintaining the limits aforementioned.
The Spreadsheet of the Official Circular no. 0010/2012
–
SFE ANEEL made available by ANEEL at its site (
www.aneel.gov.br/arquivos/Excel/Planilha%20Ascarel.xlsx)
does not list the name of CELG D as holder of assets contaminated with askarel.
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2.8.4.1.2. Erosion Processes
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During Stage 2, in a conversation with the Environment Advisory Board (DT-AMB), it was informed that
the actions of containment of erosion processes are reported and controlled by the operation and maintenance areas of CELG D, without an effective follow-up of the environmental area. However, it shall be highlighted that the occurrence of erosion focus is a dynamic process and that needs to be assessed in a more effective manner, being essential a deepening in such assessments, in the Substations and in the towers of the Distribution Lines (69 and 138 kV). In some of the substations visited were visualized, in a timely manner, portions of the interlocked floor with the sinking of the soil. However, it was not possible to make complete analysis of all installations of CELG D with regard to the occurrence of erosive processes.
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2.8.4.1.3.
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Invasions of Easements
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An electric power transmission and distribution system requires the definition of a band pass, taken in relation to the axle of the Transmission (LT) and Distribution (LD) Lines, required to their proper implementation and its full operation, and performance of the maintenance services, also considering the safety of people and assets in its surroundings. Such band pass, whether of domain or easement, considers a safety zone, to which there are restrictions regarding the use and occupation of its space.
In Brazil, the definition of the width of the safety zone is based on NBR 5422/85, which establishes technical parameters for such, according to the characteristics of LT/LD. Regarding the use and occupancy of the safety zone, there is no specific legislation. However, it is taken as reference the document entitled
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Social-equity Management System/97, generated by ANEEL in partnership with the main Brazilian power concessionaires, and that revises the Directive of the Ministry of Mines and Energy (MME) 170/87, regarding the restrictions established to the users of areas under concession of public power services.
Paragraph 6 of art. 37 of the Federal Constitution of 1988 attributes assignments to the public service providers, having to be understood as responsibility of the power concessionaire to inspect its areas to avoid occurrences as irregular occupancies under LTs/LDs, meet the effective safety Standards, and also establish the good performance of the electric system of its consumers. Therefore, the concessionaires are liable to maintain their domain and easement zones within the Brazilian Standards.
CELG D is conditioned to the Technical Specification LTP-AA1.039/00, which establishes the general conditions and the technical requirements necessary to the limitation of the domain, easement, and safety zones of the air lines of subtransmission and transmission of its electric system. Thus, the shared use of such zones depends on technical and safety analyses of CELG D itself, not being forbidden, however, uses that do not expose people to risk conditions, nor represent difficulties or limitations to the full operation of the system.
Notwithstanding, in Brazil, there is an increasing number of irregular occupancies in such areas and invasions of domain zones. The insufficient inspection, the lack of awareness of the population in relation to the safety zone, and the increasing demand for housing contribute to the expressive number of invasions occurred in the stretches of electric power transmission and distribution, especially in urban areas.
Specifically, CELG D presents in its distribution network of lines of69 kV and 138kV several invasion points already identified, as the maps presented in
Annex M
.
Internally, the control of the invasions has been done by the Department of Administration of the Patrimony (of - DGAP), belonging to the Executive Administrative (OF), even in the initial phase of structuring and little effective. Surveillance actions and patrimonial security, within the possible, are being stepped up.An illustration of one of the types of invasion is showed in the following Picture, regarding an area right in front the Substation of Guapó.
Upon such scenario, it is required the adoption, by CELG D, of control and management actions of the use and occupancy of the soil in its easement and domain zones, which promote the maintenance of the safety in the sense of avoiding new invasions, in addition to start a re-establishment process of the points already invaded. Ultimately, the actions shall have the purpose of eliminating the risks to the operation of the line
s and to people’s integrity.
During the performance of Stage 2, it was not possible to estimate the costs with the replacement of distribution lines, due to invasions of easements. It was informed by CELG D that such aspect has deep implications with the manner of soil occupancy in the cities, and a work for eventual solution, would certainly go through specific studies on a case by case basis, taking into account that the solution for a certain line would not be applicable to another, and so on. Therefore, it is a subject extremely complex.
On the other hand, was informed by the technical staff of the Department of Administration of the Patrimony (OF-DGAP), managed by Mr. Fausto Almeida Dos Santos, with technical support from Mr. Guaraci Da Silva Junior, that the CELG D is in the initial phase of structuring a commission of Land Regularization that has as its purpose to promote an update practicinga (legal registrations, records, tuition and the scriptures of the buildings used by protocolização CELG D) and of this information from the Public Power, mainly due to the fact of some situations represent a risk to the safety of the population.
CELG D provided information related to the occurrence of residential and commercial invasions, predominantly in urban areas. Since it is a dynamic process, if the inspection actions are not effective, it is understood that even the information provided by CELG D is obsolete. Having the information provided
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and using geo-processing resources, it was estimated the existence of 4,300 of invaded easements, according to the maps presented in
Annex M
.
Before this scenario, it is necessary the adoption, by the CELG D, actions of control and management of the use and occupation of the soil in their tracks from bondage and field, which promote the maintenance of security in order to avoid new invasions, in addition to starting a process of restoration of the points already flooded, with communication actions and engagement with all stakeholders. In the last instance the actions should aim to eliminate the risks to the operation of the lines and to the integrity of persons.
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2.8.4.1.4.
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Write-off Certificate and Occupancy Permit of the Administrative Facilities and Support Structures
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Drew the attention of the technical team of quantum the fact that the facilities of the Central Unit of Goiânia (administrative buildings, warehouse, Electromechanical Workshop, Laboratory of insulating materials and patios) do not have low Certificate of construction and dwell, as well as project of fire fighting system approved, with the issue of self-inspection of the Fire Department (AVCB). The certificate of Low OF CONSTRUCTION AND DWELL is attests that a building was constructed in accordance with local legal requirements established by the Municipal Administration for the approval of a project. In this way, the abovementioned installations are erratic before the City Hall of Goiânia. It is also highlighted that this irregularity has made impossible to obtain licenses for the operation of these facilities next to the Municipal Environmental Agency (AMMA) in the city of Goiania, generating a deadlock which must be regularized.
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2.8.5.
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Environmental Liabilities
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Considering the history of operations of the Central Unit of Goiânia and Units of the Countryside, with highlight to the Electromechanic Shop, Yards, and Storeroom, including the inadequate temporary waste storage, new and reserve transformers, as well as the handling of scraps and useless materials, it is understood that it is important the performance of an investigation study of environmental liabilities as reported in the present document.
As previously presented, CELG D experienced a problem for the inadequate storage of burnt transformers in Xavantes Substation, having been notified by SEMARH (current SECIMA). According to report of CELG D itself, there was no contamination of the area and generation of environmental liability with need of remediation of the place.
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2.8.6.
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Environmental Regularization and Licensing
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According to DT-AMB, CELG D maintains its activities updated according to the identification of legal requirements and other environmental requirements, much because of the effort and dedication of the professional in charge of the environmental area.
In
Annex N
it is presented a synthetic spreadsheet of follow-up of the environmental licensing and regularization processes.
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2.8.7. Notifications, Fines, and Conduct Adjustment Terms
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In terms of notifications and fines, no major highlight was
identified.
In
relation
to
the
Conduct
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Adjustment Terms (TAC), the following are highlighted, both under control:
TAC
–
Carajás (Atlântico
–
Campinas)
–
1:
·
Purpose: Environmental commitment undertaken by CELG D to the requirements of the Environmental Legislation in effect, to the implementation works of the Transmission Line 2 x 138 kV SE Carajás (Campinas
–
Atlântico), in the city of Goiânia;
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Obligations: Make the pecuniary installment in the value of R$ 28,609.00 that will be converted into services of provision, improvement, and recovery of the environmental quality, according to orientation of the Green Areas and Conservation Units Directorate (DIRUC) of Goiânia City Hall;
·
Settlement term: dated as of August 17, 2012.
TAC
–
Carajás (Atlântico
–
Campinas)
–
2:
·
Interlocutory Appeal with request of precautionary measure and suspensive effect by Grupo Ecológico Guardiões do Verde;
·
Precautionary measure determining the immediate interruption of the implementation of the high voltage network at Avenida Contorno Sul, Setor Parque Anhanguera 1, requirement of EIA/RIMA;
·
Revoked the decision that granted the precautionary measure, authorizing to proceed with the installation program of the transmission line 2 x 138 kV SE Carajás (Campinas
–
Atlântico), in the city of Goiânia, observing all environmental preservation and compensation standards imposed by the respective licenses. Determined the plantation of the imperial palm trees in another place, in addition to more 5 palm trees to each removed palm tree. Dated as of 10/09/2012;
·
Seeding Supply Term to the Municipal Environmental Agency
–
AMMA as compensation for the removal of landscape vegetation. Dated as of December, 2012.
TAC
–
Transformers
–
Xavantes Substation:
·
Purpose: as a form of environmental compensation for the disposal of electric power transformers in inadequate places, CELG D undertakes the responsibility for supporting, assisting, and fostering the integration and the development of the Centers of Recyclable Material Cooperatives, upon the payment of the sum of R$ 220,000.00. It also undertakes the responsibility for supporting, assisting, and fostering the environmental instruction through sponsorship of the XX Brazilian Environment Symposium in Cerrado, in the amount of R$ 25,000.00.
Filing: Dated as of August 26, 2014, upon the payments made.
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2.8.8.
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Technical Registrations
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According to the WORK ENVIRONMENT, CELG D has Federal Technical Registration (CTF/IBAMA) valid until 09/01/2015. The registration number is 590345 and was issued on 06/01/2015. It shall be highlighted that CTF (has validity of 3 months) was valid upon its consultation.
CELG D has Debt Clearance Certificate of IBAMA (number 5213818) with issuance on 07/01/2015 and validity until 0/31/2015, having to be, therefore, updated. It shall be highlighted that it was valid upon its consultation. It is worth noticing that this certificate is valid for 30 days and was valid when in your query.
It also has Environmental Debt Clearance Certificate
–
Tax Assessment Notices and Inspection Rates of SECIMA with issuance on 07/01/2015 and validity until 07/31/2015, having to be, therefore, updated. Likewise, it was valid upon its consultation. In the same way, this certificate is valid for 30 days and was valid when in your query.
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2.8.9.
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Environmental Map Analysis of the Current and Future Electric System
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Whereas the current electrical system of CELG D and overlapping in thematic aspects of the State of Goias, was generated a set of maps and which are presented in
Annex M
of item 2.13. The objective of the elaboration of these maps was to permit a spatial visualization of electrical system (lines 69 and 138 kV) superimposed on the following aspects:
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Indigenous Areas and Traditional Communities;
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Geology;
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Hydrography;
·
Pedology;
·
Land Relief;
·
Topography;
·
Preservation Units.
These maps could be used for future assessments of the CELG espacializadas socioenvironmental D.
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2.8.10. Final Considerations
|
From the present preliminary assessment, some important aspects arose in relation to the health, safety, and environmental questions of CELG D.
Among such aspects, the following are highlighted:
·
The company does not have a system of environmental management, Health and Safety in the workplace, with goals, systemized targets, indicators and operational procedures. The developed actions are oriented to the compliance with the legislation applicable, reactively and proactively not;
·
The staffs of the Environmental Advisory Board (DT-AMB) and of the Safety, Health, and Life Quality Engineering Department (DA-DPSV) are insufficient to the compliance with the
company’s demands and obligations;
·
Environmental aspects and impacts, health and safety are not guided by a same board inside the CELG D, which ultimately generate a particular own vision of each area and little coordinated and oriented toward an Integrated Management System. The spokesperson for Environment (DT-AMB) integrates the Technical Board (DT) and the Engineering Department of Security and Quality of Life (DA-DPSV) The Administrative Board (DA);
·
The expenses with environmental management and occupational health and safety are insufficient for an adequate management of the environmental aspects and of occupational health and safety and the resources are applied little significant in relation to the net revenue of CELG D;
·
There are indicators of the compliance with and follow-up of the environmental licensing processes, as well as controls inherent to the occupational health and safety questions. There are evidences of satisfactory controls and that were checked during the performance of the work, but centralized in the professionals responsible for the Environment Advisory Board (DT-AMB) and by the Safety and Life Quality Engineering Department (DA-DPSV). Special attention shall be given to the compliance with the Regulatory Standards of the Ministry of Labor and Employment, highlighting NR-10 (Safety in Electricity Facilities and Services);
·
In relation to the environmental liabilities, it was not reported nor identified studies related to the topic. Anyway, due to the inefficiency of the management of residues and useless materials in the Central Unit of Goiânia and Units in the Countryside, the performance of an investigation study about it was forecast. In the light of the weaknesses identified in the management of waste and of materials in the Central Unit of lators Goiânia and units of the Interior, was recommended by the technical team of quantum the realization of a research study of environmental liabilities;
·
In relation to the notifications/fines, a significant amount is not observed. It shall be highlighted that such verification does not effectively reflex that there are no situations liable
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to penalties. In fact, it has occurred much more because of the non-performance of inspection actions by the public bodies than for the non-compliance, by CELG D, with its obligations;
·
The completion of Step 2, verification process in loco to confirmation of the data made available in the work environment, even when carried out in a short period of time and whereas few operational units of CELG D, showed the necessity of structural improvements, as shown at item 5 (estimate of investments and expenditure). Deserve attention environmental controls in the Central Unit of Goiânia and units of the Interior (Workshops and stockrooms), with the construction of canvas of temporary storage of waste and materials not usable, improvements in paving and in the pluvial drainage system. Specifically, in the Central Unit of Goiania also suggests that are made adaptations to the exhaust system and treatment of emissions in the area of the painting of electromechanical Workshop;
·
The need of development and deployment of a program aimed at the management of the use and occupation of the bondage of Delivery Lines (69 and 138 kV).
In a conclusive perspective, the social-environmental, occupational health and safety actuation practiced and demonstrated by CELG D is important. In thesis, which is aimed while a provider of essential public service is an ethical, responsible relationship aligned to the interests of the society and with the public authorities, complying with the legal and regulatory requirements.
However, when analyzed in a broader manner, it is possible to notice a need in the consideration of social-environmental, occupational health and safety variables required to the sustainability and perpetuation of the business. Currently, it may be said that the focus on such questions is restricted. The actions before the external environment are diffused and separate from variables directly related to the operation and maintenance of the electric system that overpass great rural and urban territories of the state of Goiás. It is applicable to consider who and what effectively are the stakeholders and how they influence the working of the business and what are the essential health, safety, environmental elements/topics.
However, when analyzed in a more extensive way, it is possible to perceive shortcomings with regard to socio-environmental variables and the health and safety of work necessary for the sustainability and the perpetuation of the business of CELG D.In such sense, it is also highlighted the need of knowing the interrelationships between CELG D and the territories effectively overcome thereby, its use and occupancy conditions, and the effective relationship condition existing between the owners/residents of the band passes/easements and surroundings of the Distribution Lines and Substations. Even if not addressed in the annual reports, there are problems related to invasions of domain zones, and irregular occupancies of easements, resulting in operational and safety problems, which has the potential to generate liabilities and, consequently, costs that may hinder the business prosperity. Additionally, situations as such harm
the ethics and transparency guiding the company’s social
-environmental actions. Therefore, it shall be identified what could in fact interfere in the good working, competitiveness, and prosperity of the business, in the scope of a world economy, and how the company could act to enable the effectiveness of such aspects at the same time the territorial development in its human (social-economical), environmental and legal aspects, in a responsible and social-environmentally sustainable contribution.
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2.8.11. Estimative of Investments and Expenses
|
As part of the present work, it is suggested that some actions are developed as investments and expenses, with follow-up and verification of compliance by CELG D, according to the following lines. It was considered as expense, consultancy activities, and investments those actions that promoted improvement of the asset of CELG D. And having as reference the performance standards on environmental sustainability and the Reference Guides of the SFI/World Bank, who from this evaluation were considered as gaps. It is worth noticing that the actions listed below do not reflect, necessarily, a prioritization, i.e. they were not listed in order of importance or prioritization.
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Action 01
–
Development and implementation of a Health, Safety, and Environment Management System (SGASST), guided by the international Standards NBR ISO 14001:2004 and OHSAS 180001:2007;
·
Action 02
–
Implementation of a plan to assess, correct and/or monitor potential environmental and social, health and safety responsibilities associated to the existing facilities and operations (maintenance waste management; useless material management; maintenance control and control of leakage of oil from the transformers in the substations);
·
Action 03
- Implementation and operationalization of a plan to follow-up eventual non-compliances in the occupational health, safety, and environment management of the existing works and operations, including the updated follow-up of legal requirements;
·
Action 04
–
Development and implementation of a program intended to the management of use and occupancy of the easements of the Distribution Lines;
·
Action 05
–
Construction of warehouses of temporary storage of waste and useless materials, including improvements in the paving and in the rain drainage system and concreting of part of the yards of the Central Unit of Goiânia (Storeroom and Yards) and in 03 Units in the Countryside (Rio Verde, Anápolis, and Luziânia); Specifically, in the Central Unit of Goiania also need to be made to make adaptations to the exhaust system and treatment of emissions in the area of the painting of electromechanical Workshop;
·
Action 06
–
Performance of investigation study of environmental liabilities in the Central Unit of Goiânia (Storeroom and Yards) and in the 03 Units in the Countryside (Rio Verde, Anápolis, and Luziânia), with maintenance of the monitoring of water and soil throughout the operation;
·
Action 07
–
Improvement of the staff of the Environment and Health and Safety Advisory Board;
·
Action 08
–
Implementation of improvements in the environmental controls of the existing substations (containment Box and water and oil separators);
·
Action 09
–
Follow-up by external company of the development and operationalization of actions 01 to 08.
As expenditure were considered consulting activities and those actions which will promote investments improving asset of CELG D.
It becomes important to highlight that the values to the investments and expenses herein presented are initial estimates, having to be subject matter of analysis and obtainment of budgets with specialized companies. It is not intended, at the moment, to affirm that such values are accurate and reflect the amount effectively required to the development of each of such actions. Anyway, they serve as reference for future assessment works of CELG D. It is understood that the greater contribution of this item is to present the actions that, in the understanding of the technical team responsible for the present assessment, will contribute to a change of level of CELG D in relation to the management and to the occupational health, safety, and environment management currently practiced.
The distribution of the values to be invested/spent considered the period between 2016 and 2045, with no type of correction (prices of the present).
The distribution of values to be invested/spending considered the period between the years 2016 and 2045, without any type of correction (today's prices), as defined criterion by Quantum.
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2.8.11.1.
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Action 01
–
Development and implementation of a Health, Safety, and Environment Management
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System (SGASST), guided by the international Standards NBR ISO 14001:2004 and OHSAS 180001:2007
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For development and implementation of a Health, Safety, and Environment Management System (SGASST) of CELG D it is estimated a total expense of R$ 1,900,000.00 (period from 2016 to 2045), according to details and disbursement flow suggested and presented in
Annex O
.
The implementation model of the Health, Safety, and Environment Management System (SGASST) shall consider the following requirements.
·
Requirement 1:
Health, Safety, and Environment Policy (Integrated): It is the statement of intention of the company in relation to its performance in occupational health, safety, and environment management; Including actions for engagement with the stakeholders concerned.
·
Requirement 2:
Planning: It shall be considered the occupational health, safety, and environment aspects of the activities, products, or services that CELG D may have control and on which the company has direct influence, so that it is able to identify and determine those aspects that may have significant impacts on the environment, health, and safety of its employees and collaborators. Special attention shall be paid to the compliance with the applicable legal and normative requirements. Another relevant aspect is related to the definition of purposes and goals by the company, with the definition of assignments and responsibilities of all involved ones, as well as the means and terms to reach them. Goals and socioenvironmental indicators and of occupational safety and health. These must be clearly defined and related with the roles and responsibilities of all those involved, as well as with the means and the deadlines for achieving them.
·
Requirement 3:
Implementation and Working
–
so that the implementation of SGASST is effective, it is essential that technical, human, and financial resources are made available by the company, aiming at the compliance with the principles defined in the Policy, in the purposes and goals. As part of such requirement, it is considered actions of structuring and definition of responsibilities, sensibilization, and internal and external communication, development of the specific documentation, and definition of the control and management mechanisms.
·
Requirement 4
: Verification and Corrective Actions
–
this requirement is related to the monitoring
and measurement of the main characteristics of CELG D’s activities that may have a significant
environmental impact. It is also considered the treatment of the non-compliances and the establishment of corrective and preventive actions, as well as records, audits, and periodical revisions of the system.
·
Requirement 5
: Revision by the Board of Directors
–
this type of action aims at assuring that the management of the System maintains as proper and efficient.
Thus, it is understood that the implementation of Health, Safety, and Environment Management System
(SGASST) of CELG D will contribute to the improvement of the company’s health, safety, and environment
performance, through the adoption of good management practices of its operational and support facilities.
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2.8.11.2.
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Action 02
–
Implementation of a plan to assess, correct and/or monitor potential environmental and
|
|
social, health and safety responsibilities associated to the existing facilities and operations
|
It is suggested that the survey and planning are made to assess and monitor potential environmental and social, health and safety responsibilities associated to the current facilities and operations of CELG D. he operation and maintenance model adopted by the company, ends up neglecting basic aspects of health, safety, and environment management, especially of the Support Units in Goiânia and in the Countryside.
Even if, in the future, such type of action may be considered within the context of a Health, Safety, and Environment Management System (SGASST), as provided in Action 01, it is suggested that, in the very short term, such plan is developed, highlighting:
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Maintenance waste management, highlighting those residues contaminated with oils, greases, and paints;
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Management of useless materials and correct temporary storage in Yards of the Central Unit of Goiânia and Units of the Countryside;
·
Effective maintenance control, and control of leakage of oils of transformers in the substations.
For this work, it is estimated an expense in the order of R$ 1,650,000.00 (2016 to 2045), logically, without considering effective actions of destination of waste and maintenance of the facilities themselves, and according to details and flow of disbursement suggested and presented in
Annex O
. It is exclusively the triggering of follow-
up and inspection actions of the company’s operational activities, through inspections
and action plans by the Environment Advisory Boards (DT-AMB) and by the Safety, Health, and Life Quality Engineering Department (DA-DPSV).
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2.8.11.3.
|
Action 03 - Implementation and operationalization of a plan to follow-up eventual non-compliances in
|
|
the occupational health, safety, and environment management of the existing works and operations,
|
|
including the updated follow-up of legal requirements
|
The follow-up of the environmental licensing processes of CELG D has been made by the Environment Advisory Board (DT-AMB), as well as the occupational health and safety aspects by the Safety, Health, and Life Quality Engineering Department (DA-DPSV).
Such controls need to be made through a management system, allowing that information is shared, internally accessed by the operation and maintenance areas of CELG D, as well as audited. In general, it is understood that such information needs to be better democratized within CELG D.
Also, within such context, it is suggested that it is made the Management of Legal Occupational Health, Safety, and Environment Requirements through online software of specialized companies.
For this work, it is estimated a total expense in the order of R$ 805,000.00 (2016 to 2045), according to details and flow of disbursement suggested and presented in
Annex O.
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2.8.11.4.
|
Action 04
–
Development and implementation of a program intended to the management of use and
|
|
occupancy of easements
|
The company has started through the creation of a Land Regularization Commission the development of actions of registry update, formalization of actions and understandings before the Public Authority, obtainment of updated deeds of the real estate properties, and transfers of the real estate properties between CELG D and CELG GT.
However, such actions do not specifically consider the situations of violation of the right of way, use and occupancy of easements of the Distribution Lines of CELG D yet. Due to the complexity of such topic, it is suggested that it is developed and implemented a specific program for such purpose, led by the Distribution Board of Directors (DD), with the technical operational support of the Equity Administration Department (DA-DPAP), Safety, Health, and Life Quality Engineering Department (DA-DPSV), Environment Advisory Board (DT-AMB), and Social Communication and Marketing Department (PR-DPCK) of CELG D.
For this work, it is estimated an expense in the order of R$ 1,700,000.00 (2016 to 2045), according to the details and flow of disbursement suggested and presented in
Annex O
, but without considering effective actions of expropriation and/or indemnification.
|
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2.8.11.5.
|
Action 05
–
Construction of warehouses of temporary storage of waste and useless materials,
|
|
including improvements in the paving and in the rain drainage system and concreting of part of the
|
|
yards of the Central Unit of Goiânia (Storeroom and Yards) and in 03 Units in the Countryside (Rio
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Verde, Anápolis, and Luziânia)
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It is understood as required the implementation of 03 warehouses in the countryside of Goiás (Rio Verde, Anápolis, and Luziânia) with, approximately, 400 m² of sheltered area, for improvement of the infrastructure of management of waste and useless materials, totalizing an investment of approximately 400,000.00/warehouse.
In addition to such R$ 400,000.00, it is estimated that 3% (R$ 120,000.00) of this value is required to the costs with designs and regularizations of such buildings (environmental, urban regulation, among others). Such estimative has as reference the Construction Basic Unit Cost (CUB) of R$ 614.00/m², for industrial warehouse of the table of SINDUSCON-GO, related to July, 2015, added of R$ 300.00/m² (other items not part of CUB). The value of R$1,000.00/m² was considered in a rounded manner, without considering the design project. Costs with the acquisition of land by CELG D were not considered specifically for such purpose.
To the Central Unit of Goiânia, it is estimated a greater investment. In addition to the warehouse, it is understood that interventions/improvements will be required in the existing rain drainage system, in the internal accesses and yards, in an area of 160,000 m², as already provided by CELG D itself in the Table called Building Facilities
–
Need of Investment for the period up to 2019, totalizing, according to estimates of the company an investment in the order of R$ 10,700,000.00.
Considering the enhancement of such investments also to the Units of Rio Verde, Anápolis, and Luziânia, it is understood the quantitative forecast by CELG D (R$ 10,700,000.00) is not sufficient. Therefore, it is suggested that such amount is approximately R$ 15,000,000.00, including the construction of warehouses with 400 m² in Rio Verde, Anápolis, and Luziânia, construction of yards in concrete, improvements in the rain drainage system and paving of the internal accesses.
The investment flow suggested to the period from 2016 to 2045 is pretend in
Annex O
to the present document.
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2.8.11.6.
|
Action 06
–
Performance of investigation study of environmental liabilities in the Central Unit of
|
|
Goiânia (Storeroom and Yards) and in the 03 Units in the Countryside (Rio Verde, Anápolis, and
|
|
Luziânia)
|
By the foregoing, especially in relation to the visits to the Central Unit of Goiânia and Unit of Rio Verde, it is suggested that the investigation of environmental liabilities in the areas of CELG is performed considering two Phases, being:
·
Phase I: Preliminary Environmental Assessment
·
Phase II: Confirmation Environmental Assessment It shall be highlighted that the Units of Anápolsis and Luziânia were not visited. They were considered by similarity.
The Preliminary Environmental Assessment (Phase I) has as purpose to prepare a document containing, in details, the current environmental conditions of the areas, according to the standards of the applicable legislation and to present facts, signs, and evidences that contribute to the suspicion of the existence of contamination of the soil and of the underground water. In methodological terms, it is suggested that the Preliminary Environmental Assessment is carried out according to Standard ABNT 15515-1:2001
–
Environmental Liability in Soil and Underground Water Part 1: Preliminary Assessment
, according to the Contaminated Area Management Manual of CETESB, defining the Conceptual Contamination Model, with justifications to the selection of possible contaminants of interest, and selection of the sampling points to an eventual Confirmation Environmental Assessment (Phase II).
In Phase I, information is analyzed, provided that available, on:
·
History of use and occupancy of the areas;
·
Records of waste storage and disposal;
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Documentations and requirements of the control body in relation to the areas; records of incidents and accidents with potential of environmental damages;
·
Use of hazardous substances, highlighting dielectric oils containing PCBs;
·
Documentation related to the hydro-geological characteristics of the areas (lithological profiles, depth of the water table, and direction of the flow of underground water); and
·
Environmental monitoring reports already performed.
In addition to the information above, it is performed during Phase I studies on the physical medium, with the purpose of identifying transportation roads of contaminant, hydro-geological characteristics listed above, as well as to characterize the areas to be protected, with highlight to the neighborhood and respective uses of the soil and superficial and underground water. The consolidation of Phase I occurs through recognition/inspection of the studied area, joint analysis of the surroundings by qualified technical professional. With such assessment, it shall be consolidated a Conclusive Report of Phase I with the classification of the areas, such as, for example:
·
Area with Suspicion of Contamination (ASC);
·
Potentially Contaminated Area (APC);
·
Non-Contaminated Area (ANC).
Therefrom, and if reported the suspicion and/or potentiality of contamination of an area, it shall be established a planning containing purposes, methods, and strategies to perform Phase II
–
Confirmation Assessment, including:
·
Quantity and location in plant of recognition sounding;
·
Quantity and location in plant of the points for collection of soil samples;
·
Quantity and location in plant and technical specifications of the underground water monitoring wells; and
·
The parameters to be analyzed in laboratory in the samples of soil and superficial and underground water.
Table 108 ,
Table 109 and
Table 110 present the estimates of costs to perform investigation studies of environmental liabilities (Phases I and II) in the Central Unit of Goiânia (Storeroom and Yards) and in the 03 Units of the Countryside (Rio Verde, Anápolis, and Luziânia), as well as the environmental monitoring of such areas until 2045, totalizing an expense approximately of R$ 8,267,000.00, according to details and disbursement flow suggested and presented in
Annex O.
It is applicable to highlight that, if the need of remediation of such areas is checked, new expenditures will be required. In the present, it is not possible to estimate them.
Table 108: Estimative of costs for Preliminary Environmental Assessment
–
Phase I Source: Drawn up by the technical team of Quantum
|
|
|
|
|
Scope
|
Place/Area
|
Quantity
|
Unit Value (R$)
|
Total Value (R$)
|
Phase I:
Preliminary
Environmental
Assessment
|
Area 01 - Central
Unit of Goiânia
(Storeroom and
Yards)
|
01
|
60,000.00
|
60,000.00
|
Area 02 – Unit of
Rio Verde
|
01
|
45,000.00
|
45,000.00
|
Area 03
–
Unit of
Luziânia
|
01
|
45,000.00
|
45,000.00
|
Area 04
–
Unit of
|
01
|
45,000.00
|
45,000.00
|
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Anápolis
|
|
|
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Total
–
R$
|
R$ 195,000.00
|
Table 109: Estimative of costs for Confirmation Environmental Assessment
–
Phase II Source: Drawn up by the technical team of Quantum
|
|
|
|
|
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Phase II:
Confirmation
Environmental
Assessment
|
Area 01 -
Central Unit of
Goiânia
(Storeroom and
Yards)
~ 160,000 m
2
|
Sounding and
Installation of
Monitoring Wells
|
30 monitoring
wells
|
8,000.00
|
240,000.00
|
Sampling of Soil
and Underground
Water
|
30 samples of
soil and 30
samples of
water
|
1,500.00
|
45,000.00
|
Analytical Services
of Underground
Water
|
30
|
1,500.00
|
45,000.00
|
Analytical Services
of Soil
|
30
|
1,500.00
|
45,000.00
|
Field and office
technical services
|
vb
|
50,000.00
|
50,000.00
|
|
|
|
|
Subtotal
–
R$
|
425,000.00
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Phase II:
Confirmation
Environmental
Assessment
|
Area 02 - Rio
Verde Unit
~ 5,000 m
2
|
Sounding and
Installation of
Monitoring Wells
|
08 monitoring
wells
|
8,000.00
|
64,000.00
|
Sampling of Soil
and Underground
Water
|
10 samples of
soil and 10
samples of
water
|
1,000.00
|
10,000.00
|
Analytical Services
of Underground
Water
|
10
|
1,000.00
|
10,000.00
|
Analytical Services
of Soil
|
10
|
1,500.00
|
15,000.00
|
Field and office
technical services
|
vb
|
50,000.00
|
50,000.00
|
|
|
|
|
Subtotal
–
R$
|
149,000.00
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Phase II:
Confirmation
Environmental
Assessment
|
Area 03 -
Luziânia Unit
~ 5,000 m
2
|
Sounding and
Installation of
Monitoring Wells
|
08 monitoring
wells
|
8,000.00
|
64,000.00
|
Sampling of Soil
and Underground
Water
|
10 samples of soil
and 10 samples
of water
|
1,000.00
|
10,000.00
|
Analytical Services
|
10
|
1,000.00
|
10,000.00
|
|
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|
|
of Underground
Water
|
|
|
|
Analytical Services
of Soil
|
10
|
1,500.00
|
15,000.00
|
Field and office
technical services
|
vb
|
50,000.00
|
50,000.00
|
|
|
|
|
Subtotal
–
R$
|
149,000.00
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Phase II:
Confirmation
Environmental
Assessment
|
Area 04 -
Anápolis Unit
~ 5,000 m
2
|
Sounding and
Installation of
Monitoring Wells
|
08 monitoring
wells
|
8,000.00
|
64,000.00
|
Sampling of Soil
and Underground
Water
|
10 samples of
soil and 10
samples of
water
|
1,000.00
|
10,000.00
|
Analytical Services
of Underground
Water
|
10
|
1,000.00
|
10,000.00
|
Analytical Services
of Soil
|
10
|
1,500.00
|
15,000.00
|
Field and office
technical services
|
vb
|
50,000.00
|
50,000.00
|
|
|
|
|
|
Subtotal
–
R$
|
149,000.00
|
|
|
|
Estimated Total (Phase II)
–
R$
|
951,000.00
|
|
|
|
|
|
|
Table 110: Estimative of costs with the environmental monitoring over the operation (2017 to 2045) Source: Drawn up by the
|
technical team of Quantum
|
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Environmental
Monitoring
|
Area 01 -
Central Unit of
Goiânia
(Storeroom
and Yards)
~ 160,000 m
2
|
Sampling of Soil
and Underground
Water
|
30 samples of
soil and 30
samples of water
|
1,500.00
|
45,000.00
|
Analytical
Services of
Underground
Water
|
30
|
1,000.00
|
30,000.00
|
Analytical
Services of Soil
|
30
|
1,000.00
|
30,000.00
|
Field and Office
Technical
Services
|
vb
|
15,000.00
|
15,000.00
|
|
|
|
|
Subtotal
–
R$
|
120,000.00
|
Scope
|
Place/Area
|
Items
|
Quantity
|
Unit Value
(R$)
|
Total Value
(R$)
|
Environmental
Monitoring
|
Areas 02,03
and 04 of the
Countryside
|
Sampling of Soil
and Underground
Water
|
10 samples of
soil and 10
samples of
|
1,000.00
|
60,000.00
|
|
|
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A collective bargaining agreement (ACT), is a legal act executed between a labor union entity and one or more corresponding companies, where it is established rules in the labor relationship existing between both parties.
Differently from the collective bargaining agreement, which is valid to the whole represented category, the effects of an Agreement are limited only to the agreeing companies and their respective employees.
It may be negotiated clauses of economic and social nature, which discuss, for example, on salary adjustment, value of the extra pay for overtime, duration of the working hours, and temporary stabilities, however, it is not allowed in the ACT the suppression of rights granted in the legislation (CLT).
Thus, the report aims at analyzing in a brief manner the last ACTs, from 2012 to 2014, between CELG and its employees, approaching the main points established in such agreements, which are following described:
·
Salary Replacement for employees of CELG D in 2014 was
6.28% a.y.
, from 05/01/2014, value similar to the IPCA assessed in the last 12 months.
·
Profit Sharing decided in the ACT of 2011, established that the percentage will be divided in an equal manner according to a reduction goal.
·
Food/Meal Allowance established in 2014 was R$ 880.00 a month, having a discount of 2% in consideration to the employee, as well as 13
th
of Food/Meal Voucher.
·
Day Care/Kindergarten Allowance agreed in 2014 was R$ 400.00
·
Education Allowance agreed in 2014 was R$ 400.00
·
According to ACT of 2008, it is allowed the fraction in 15/15 or 10/10 plus bonus of the remaining.
·
PCR
–
Career and Remuneration Plan is being revised, in order to be unified to PCR of Eletrobrás.
·
Overtime, stand-by, preparedness, hazard conditions complied with 100% of the effective legislation.
·
For employees with special dependent, in ACT 2014, they have 50% of allowance in the salary floor.
·
In 2014, the public exam was carried out to provide more than 250 openings between medium and superior level, due to the need of replacement of the staff due to the voluntary dismissal programs of the last few years.
·
Vacation bonus will be annually adjusted at the same index applied in the salary replacement and the current value of bonus was adjusted, from R$ 1,768.80 to R$1,900.00 from May, 2014.
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2.9.6.1.
Competence Assessment and Results
|
Through the Collective Bargaining Agreement CELG D 2014/2015, the company granted to all employees 1 (one) salary reference, as progression for merit, limited to the ceiling of the function, from May 1, 2014, having the Competence Assessment and Results to occur in 2014 only for purposes of development and training.
For 2015, CELG D will make the Competence Assessment and Results, without prejudice of the functional progression for merit or for seniority.
All employees that would be entitled to functional progression for seniority in 2014, regardless progression for merit, will receive the seniority benefit on September, 2015, so settling the right to seniority of 2014.
As well as to the employees comprehended by the benefit of seniority of 2014, they will also have the right to seniority maintained.
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2.9.7.
Restructuring of the Workstations
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The following summary form in the report analyzes the consequences of the privatization of companies distributing electrical energy for workers between the years 1990 to 2000, highlighting the issues of relations and working conditions and the situation of the jobs post-privatisation.
In addition, in the following paragraphs we approached the possible impacts in the human capital of CELG
D and absorption of the labor market of officials dismissed arising from a possible privatization of CELG D.
2.9.7.1.
Analysis of privatization,
restructuring
and
changes
in
working
conditions
in
the
companies
distributing electricity.
|
At this point in the report, took as a basis the article of 2002 on "privatisation, restructuring and changes in working conditions: the case of the electrical energy sector" of Rosemeire Aparecida Scopinho, a researcher at the Federal University of São Carlos (UFSCar). Integral part of the Working Group on productive restructuring of SYNERGY PRO-CUT/ Union of Energy of the State of São Paulo.
In this work, the researcher looks at the consequences of the privatization of companies distributing electrical energy for workers between the years 1990 to 2000.
Through the realization of observations in the work environments, Semi-strutured interviews and discussion groups with the workers of the electric sector, specifically electricians from dealers for electrical power distribution.
The study of the researcher (Scopinho, 2002) identified the changes introduced in the technical basis, in division and in the organization of work and the impacts generated for the health and safety of workers in the power distribution companies privatized, it stands out that the main impacts were the increase of night work and shift work, the movements and repetitive efforts as the main sources of wear
In addition, according to the study, with the privatisation has significantly increased the labor of the psychic nature loads generated by stepping up the pace of activities, by awareness of the increase of unsanitary conditions, aggressiveness and how hard the work and by the organizational climate of instability caused by privatisation.
Finally, the article concludes that with the privatization process of the electric energy distribution concessionaires between years 1990 to 2000 generated as consequences, on the one hand, the unemployment and, on the other, the intensification of the rhythm of the activities of those who remained in the distribution companies, the increase of unsanitary conditions, of danger and of how hard working environments, the worsening situation of health, the increase of the frequency and severity of accidents.
Thus, through the analysis of Article (Scopinho, 2002) in a general way we can observe that the privatisation which relates to jobs, generated, besides the increase in unemployment, the increased precariousness of relations and working conditions of regiments, from changes deployed in the sector in the context of privatization, such that, if the password by a CELG D privatization process in the future their workers could face frames similar to those observed with workers of privatized enterprises between the years 1990 and 2000 in Brazil.
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2.9.7.1.
Assessment of possible impacts on human capital CELG D resulting from privatization.
|
The human capital of the organizations shall receive a differentiated attention in merger and acquisition processes, at the time before the closing of the commercial proposal, through the compatibility analysis between different organizational cultures, or after the agreement, so that the talents may be retained and there is acceptance and cooperation for the proposal transaction plan.
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So, one of the critical points of the process is the management of people and restructuring of the Workstations. If poorly managed, the human factor may generate productivity losses.
Generally, the merger or acquisition process of a company generally means dismissal of employees or change of levels of positions, since there will not be two presidents, two heads of departments, two managers of sector, and soon n. Such dismissals initially affect especially the senior management and subsequently the lower levels.
In the first two months, it is common that the companies make an inventory of talents and key people that may not leave the company. At such time, the managers may detect duplicity of positions, which causes dismissals in some situations. In such cases, the area of human resources shall talk individually.
The strategic importance of the change management and of the role of the human resources area in complex transactions, such as an acquisition or merger, is essential. The changes from transition processes need to be properly managed so that the intended results are effectively achieved. For such, it is important to follow some steps to mitigate risks of the restructuring of the Workstations.
As much important as to investigate fiscal, labor, social security risks, among others, which may generate a tangible liability to the purchasing company, is to invest in the understanding of the organizational culture and policies of people management.
It is required that a change management committee is built, to be ahead of the plan, having in such group people with support in the organization that may understand the real impacts. Thus, upon the official announcement of the change, such committee may be presented to give safety to the people and serve as an information source.
Another important point is that the company shall adopt a clear and continuous communication with the impacted public on the restructuring of the Workstations. It shall not use only the written communication as a way of transmitting information, but the face-to-face communication shall be stimulated, maintain open channels for manifestations and feedback, and adopt new forms of measurement of the efficacy of the communication.
It is common to see in the companies in merger processes the leaving of brilliant professionals, essential to the business, simply for lack of information on their future in the new organization. The change management, together with the people management, shall prioritize an action plan to retain the best professionals. It shall be informed, at the right time, what is coming and what is planned to such professionals.
There are many actions of change management that may be conducted, but there is no way of excluding the analysis of organizational impacts, regarding the dismissals of employees, and deeply know the impacts the change brings, in their different dimensions.
The organizational change management does not have a standard recipe, which may be successfully applied in any case. It is needed to analyze case by case, understand the context and develop a customized planning.
However, it is recommended to use a formal methodology, able of instrumentalizing and systematizing the actions, so that such process is fast in the integration of the work process and of people.
Through research regarding the merger or acquisition process, we may observe that the dismissals occur more between the permanent/own employees of the acquired company, aiming at contracting temporary employees or workers with flexible time, expecting, with such measure, to reduce costs, especially fixed costs.
The companies justify themselves alleging that, in general, the reduction of the permanent work is an accepted measure of the restructuring process.
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Annex A
–
High Voltage Substations of Celg D
Annex B
–
High Voltage Distribution Lines of Celg D
Anexo B1
–
Typical structures deployed in the LDAT of Celg D
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2.11.Annexes
–
Description of the distribution system
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Annex C
–
Structure of the Points of Operation of Stations
–
POE Annex D
–
List of the existing Operational Agreements Annex E
–
Internal Operation Standard and Instructions of COS
Annex F
–
Pictures of the stretches of LDAT visited during the due diligence in Celg D.
Annex G
–
Power transformers considered critical by the System Operation
Annex H
–
Records of Anomalies of the Substations visited during the due diligence
–
Ref.: July /2015 Annex I
–
Pictures of the substations visited during the due diligence Annex J
–
Annual Investment Programs proposed by Celg D for the period from 2015 to 2024.
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2.12.Annexes
–
Service quality and efficiency
|
Annex K
–
DD (DEC -FEC) Management Plan of the Quality Management
Annex L
– DC (IASC) Consumer’s Satisfaction Index (IASC)
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2.13.Annexes
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Social and environmental questions
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Annex M
–
Illustrative and Spatialization Maps of CELG D Electric System
Annex N
–
Synthetic Spreadsheet of Follow-up of the Environmental Licensing and Regularization Processes
Annex O
–
Preliminary Estimative of Investments and Expenses
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Annex 9. Legal Due Diligence CELG D
I. INTRODUCTION
1. This executive summary (“
Executive Summary
”) was prepared based on the due diligence report (“
Report
”) issued upon the request of the International Finance Corporation ("
IFC
"), which was aimed at assessing the legal status of CELG Distribuição S.A. – CELG-D (“
CELG-D
” or "
Company
") and the main red flags identified as of the date of the Report in the context of the limited and sampling legal due diligence (
diligência legal limitada e por amostragem
) that our firm carried out in relation to the Company.
2. Our work was conducted in the context of the privatization transaction of CELG-D, which is currently underway and is expected to be implemented through the sale of the controlling equity stake held by Centrais Elétricas Brasileiras S.A. - Eletrobrás (“
Eletrobrás
”) in CELG-D, as well as the potential sale of the shares held by Companhia CELG de Participações - Celgpar (“
Celgpar
”) in the capital stock of CELG-D through the same sale process, whether in whole or in part (the “
Transaction
”).
3. IFC was hired by Banco Nacional de Desenvolvimento Econômico e Social –BNDES (“
BNDES
”) to provide specialized structuring services in connection with the Transaction, in accordance with the Unfeasibility of Tender procedure (processo de
Inexigibilidade de Licitação
) No. 107/2015, based on articles 13, I, and 25, II, both from Law No. 8,666/1993, which was authorized on July 7, 2015, pursuant to BNDES’ Board Decision No. 385/2015, dated July 7, 2015, based on IP AEP/DEPEP3/GEPEP5 No. 01/2015, dated July 7, 2015. The aforementioned hiring was further ratified by Resolution No. 07/2015, issued by the National Privatization Council (
Conselho Nacional de Desestatização
) (“
CND
”) on July 9, 2015 and then published in the Brazilian Official Gazette (
Diário Oficial da União
- DOU) on July 13, 2015, in keeping with the provisions of Federal Decree No. 8,449/2015, which gives BNDES powers to hire services and provide the technical support needed to implement CELG-D’s privatization.
4. Pinheiro Neto Advogados, following the completion of bidding process (
processo de concorrência
) No. 1187575, which was conducted by IFC, and pursuant to Contract No. 7176203, dated July 24, 2015, was subcontracted to advise IFC in relation to (i) legal matters pertaining to the structuring and
- 2 -
implementation of the Transaction; and (ii) the performance of limited and sampling due diligence (
diligência legal limitada e por amostragem
) works in connection with the Company, which works consist of the subject matter of the Report.
5. The Report was prepared upon IFC’s request and is addressed to our client IFC only. No person or entity other than IFC shall rely upon it. Reference to the Report in any other document is also prohibited and so it is its registration or presentation to third parties without our prior written permission and consent. Notwithstanding the foregoing, and provided that the attorney-client relationship (and related rights and obligations) is exclusively limited to IFC and our firm, (a) BNDES, IFC and its advisors are authorized to use the Report to analyze the legal feasibility of the Transaction as well to support its economic and financial structuring and other related purposes; and (b) the Report may be transmitted or disclosed to third parties at the sole discretion and responsibility of IFC, which logically includes the full disclosure thereof to prospective bidders interested in the in the Transaction and their respective advisors.
6. All provisos and caveats applicable to the Report shall likewise apply to this Executive Summary. In addition to the foregoing, this Executive Summary may be disclosed to Eletrobrás and its shareholders within the scope of the Transaction’s analysis, provided, however, that such disclosure shall be made at the sole discretion and responsibility of IFC. No direct relationship either exists or shall be created between, on one hand, Pinheiro Neto Advogados, and, on the other, Eletrobrás, its shareholders and/or any other interested parties who might have access to this Executive Summary as a result of Eletrobrás’ legal reporting obligations, whether in whole or in part.
7. The investigation conducted at CELG-D was based on the documents and information made available by the Company in a virtual data room during the period between August 7, 2015 and September 11, 2015
1
, as well as the information provided by the Company’s representatives in several meetings, e-mail exchanges and phone calls with our team, notably based on the legal due diligence list prepared by the our firm and subsequent information/document
1
That was the cutoff date for receiving CELG-D’s documents. Some additional information and clarifications, however, were provided by the Company until October 22, 2015 (inclusive). There have been several other materials produced by our firm to its client in the context of our legal due diligence works.
- 3 -
requests submitted to CELG-D. The information and conclusions presented in the Report (and, therefore, in this Executive Summary) are based on the assumption that all documents and information provided by the Company to us are true, complete, legitimate, valid and current in all aspects and, as for copies thereof, we assume that they match their respective originals. No independent investigation or of factual matters was conducted by our firm, except if otherwise expressly indicated in the Report (or else in this Executive Summary). It is important to point out that, as usual in every due diligence of this magnitude, some requested documents and information were not disclosed to us by the closing date of this Report.
8. The scope of our investigation encompassed the following areas: (i) corporate; (ii) contracts; (iii) real estate; (iv) environmental; (v) civil and criminal litigation; (vi) tax litigation; (vii) labor; (viii) social security; (ix) occupational health and safety; (x) intellectual property; (xi) regulatory –energy industry; (xii) administrative/public agreements; (xiii) certificates; and (xiv) insurance.
9. We emphasize that accounting, financial and tax procedures, routines and labor remuneration agreements adopted by the Company, as well as investigations regarding potential anticorruption practices (also known as FCPA, the corresponding North American statute) were
not
subject to our analysis.
10. Furthermore, in view of the volume of documents disclosed in the data room and the relevance of some specific matters, we defined some materiality parameters to delimit our analysis of the documents provided by CELG-D. Thus, we highlight that our legal analysis was made by sampling, in accordance with the materiality parameters adopted by each area as indicated in the respective sections of the Report.
11. Additionally, we highlight that the only purpose of the Report (and, therefore, of this Executive Summary) is to inform IFC about the main aspects surrounding the legal and regulatory status of CELG-D as identified by the date hereof, in view of the intended purposes of the Transaction and respective matters to be considered for its structuring and implementation.
P
INHEIRO
N
ETO
A
DVOGADOS
- 4 -
II. EXECUTIVE SUMMARY
1. This Executive Summary highlights in a concise manner some of the most relevant matters identified in our legal due diligence of CELG-D. Additional and detailed information in relation to each of the items addressed below are available in the corresponding Sections of the Report.
2.
Tag-along
. In view of the current scenario – where Eletrobrás intends to sell its shares and the renewal of CELG-D’s concession is not yet formalized –and the rules set forth in the Federalization SPA, CelgPar should be granted,
only after renewal of concession
, a 30-day period so that the latter can express – on sole discretion – the wish to jointly sell or not its stake in CELG-D. For further information on the matter, please refer to
Section III – Corporate
of the Report.
3.
Accelerated Maturity due to Transfer of Control in Financial Agreements and Other Instruments
. A large portion of the financial agreements entered into by CELG-D contains a debt accelerated maturity as a result of the Company’s transfer of control, as well as other financial instruments related to the Company’s debt. In light of the intended transaction, we recommend that CELG-D obtain authorization from the lender financial institutions and all necessary counterparties before its privatization, under penalty of accelerated maturity of the agreements that contain such provision and also those containing cross default provisions. Such item is addressed in
Section IV –Financial Agreements and Agreements with Related Parties
of the Report.
4.
Compulsory Insurance
. The lack of compulsory insurance can subject CELG-D to assessment from regulatory agencies, in particular ANEEL. Hence, we recommend taking compulsory insurance, according to the rules issued by the regulatory electric sector agency. This item is addressed in
Section XVII –Insurance
of the Report.
5.
Restrictions on Acquisition/Lease – Foreign
. Considering the existence of rural properties herein, it should be stressed that currently there are restrictions applicable to the acquisition or lease of land by foreigners or Brazilian companies controlled by foreigners, which require prior authorization by the National Institute of Colonization and Agrarian Reform (“
INCRA
”) or the National Congress, as the case may be. Additionally, it should be mentioned that such restrictions also apply to corporate transactions resulting in the transfer of rural properties to foreign legal persons, such as mergers, acquisitions, consolidations
and transfers of control. The acquisition and/or lease of rural property by foreigners or Brazilian companies controlled by foreigners in noncompliance with the applicable legislation (Law No. 5709/71 and Law No. 8629/93) can be considered as null by operation of law. For further information on the matter, please refer to
Section VI – Real Estate
of the Report.
6.
Real Estate Licensing
. As informed by the Company, no Operating Permits and Fire Department Inspection Certificates were issued for all Relevant Properties. The lack of real estate license and/or possible irregularities can result in the application of administrative sanctions and penalties (warnings, fines, etc.), whose amount can vary according to the case and, in the worst scenario, cause the discontinuance of activities upon closing of the establishment. This item is addressed in
Section VII – Real Estate
of the Report
.
7.
Built Area
. As informed by the Company, no occupancy permit (“Habite-se”) was issued for any of the Relevant Properties. Possible irregularities in the built area of properties can make unfeasible (i) the issuance of certain licenses, such as LF and AVCB; (ii) the registration/annotation of possible lease agreements; as well as give rise to (iii) the imposition of administrative sanctions and penalties (warnings, fines, etc.), possibly resulting in the closing of the establishment. This item is addressed in
Section VI – Real Estate
of the Report.
8.
Environmental licensing.
Article 14, 4, of Supplementary Law No.
140/2011 determines that the renewal of environmental licenses should be requested within at least one hundred and twenty (120) days before the validity period, so that the expired environmental license is considered valid until the environmental agency issues an opinion on the renewal request. However, it was possible to note that, in many cases, such period was not met by the Company when requesting the renewal of environmental licenses relating to its projects, which means that until the issuance of the new licenses, its activities can be considered as lacking valid environmental license. The installation and performance of potentially pollutant activity without the necessary environmental licenses and/or permits characterizes administrative and criminal infraction. This item is addressed in
Section VII – Environmental
of the Report.
9.
Vegetation clearing
.
The Company did not submit the documents showing that the vegetation clearing made for the implementation of transmission lines and substations were preceded by the proper permits. The irregular vegetation
JUR_SP - 22848211v4 910004.379234
- 6 -
clearing (without permit) characterizes administrative and criminal infraction. Moreover, possible damages caused by the clearing are subject to strict civil, environmental liability. This item is addressed in
Section VII – Environmental
of the Report.
10.
Permanent Preservation Areas (PPA)
.
The Company did not submit the documents showing that the interventions in PPA performed for the implementation of transmission lines and substations were preceded by the proper permits. The irregular PPA intervention (without permit) characterizes administrative and criminal infraction. Moreover, possible damages caused by the irregular PPA intervention are subject to strict civil, environmental liability. This item is addressed in
Section VII – Environmental
of the Report.
11.
Archaeological Heritage
.
Pursuant to the documents provided by the Company, there are archaeological reports pending approval by IPHAN. Should the Company has intervened in the areas that are the subject of such reports without IPHAN’s consent, it will be subject to administrative and criminal liability. This item is addressed in
Section VII – Environmental
of the Report.
12.
Civil Litigation
. We highlight the following items:
(i)
CELG-D is involved in a total contingency of one billion, seven hundred and eighty million, one hundred and ninety-three thousand and two hundred and forty reais and four cents (R$1,780,193,240.04), of which a total of four hundred and twenty-four million, four hundred and ninety-seven thousand reais (R$424,497,000.00) was indicated as a probable loss;
(ii)
we were able to analyze thirty-four (34) public class actions discussing the legality of billing different electricity supply values between August and December 2014 in the north and west regions of Goiás, which may pose a significant contingency to the Company, given that a possible conviction may result in the restitution of the overpaid values to consumers; the Company estimates possible contingencies arising from these actions at thirty-two million, five hundred and thirteen thousand, six hundred and thirty-eight reais (R$ 32,513,638.00);
(iii)
the Company is involved in lawsuits filed by municipalities in relation to government incentive programs (i.e., Programs FOMENTAR/PRODUZIR/PROTEGE), which would be represented by one hundred and forty (140) lawsuits amounting to a total estimated contingency of one billion, three hundred and fifty-one million, six hundred and eighty-four thousand, five hundred and seventy-four reais and two centavos (R$1,351,684,574,02), assessed as possible or remote loss in view of the track record of favorable decisions rendered to the Company;
(iv)
CELG-D is also a defendant in thirty-three (33) lawsuits amounting to a total contingency of three
JUR_SP - 22848211v4 910004.379234
- 7 -
besides another three thousand, four hundred and thirty (3,430) outsourced employees, amounting to four thousand and nine hundred (4,900) outsourced workers providing services for CELG D. We were also informed that, in addition to these electricians, there are other employees that are outsourced, even though we have not received information regarding the total number of these professionals. The Labor Prosecutor of the 18
th
Region filed a public class action (No. 0033700-17.2009.5.18.0004) challenging the outsourcing of CELG-D’s core activity/business. The Company was sentenced not to keep workers employed by interposed companies engaged in the core business of the Company and to use only employees approved through public contests. For further information on this topic, please refer to
Section X – Labor
of the Report.
15.
Installment payment program (
Parcelamento
) - Social Security
. We found out that CELG-D includes social security debts in the federal amnesty (
Parcelamento Excepcional
- PAEX). The value of the remaining balance of this installment payment program as of August, 2015 totaled three million reais (R$3 million). For further information on this topic, please refer to
Section XI -Social Security
of the Report.
16.
Public class actions over administrative misconduct acts.
The Company has disclosed three (3) partial copies of public administrative misconduct class actions involving CELG-D. We highlight that such lawsuits involve the accountability of individuals for such acts (i.e., managers/officers of the Company). Therefore, we do not see such risks as applicable to CELG-D, both rather to their managers/officers only. For further information on this topic, please refer to
Section XV - Administrative
of the Report.
17.
FUNAC
. Any contingencies arising from facts prior to the completion of sale of controlling shares of CELG-D to Eletrobrás must be secured by the Contribution Fund of CELG-Distribuição S.A. - FUNAC. Nonetheless, there are risks related to FUNAC. FUNAC was created by a state law that can, on any time, be revoked or amended without the interference of CELG-D and/or its shareholders. Moreover, the maintenance of FUNAC may rely on the budget availability of the State of Goiás, which is also beyond the control/reach of CELG-D and/or its shareholders. Also, we identified gaps in FUNAC’s regulation that can impair its operation. For further information on the matter, please refer to
Section XVIII – FUNAC
of the Report
.
18.
Concession Agreement.
The effective period of the concession agreement of CELG-D has expired on July 07, 2015, therefore, the continuity of
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- 9 -
performance of activities by the Company will rely on the extension of concession. The extension process has not been completed yet and also relies on ANEEL’s and MME’s resolution, which is still pending. Moreover, the extension of electric power concession agreements is being discussed at the court, which can impact CELG-D’s concession, depending on the final court ruling to be handed down. For further information on the matter, please refer to
Section XIV –Regulatory
of the Report.
19.
Sharing of Administrative Expenses
. The Company is subject to the risk of being penalized for the sharing of administrative expenses with its related parties, in light of the regulatory prohibition of such practice, arising from the need to maintain the individuality of concession. For further information on the matter, please refer to
Section XIV – Regulatory
of the Report.
20.
Intellectual Property.
Currently, there might be no “CELG” trademark registered by the Company, which weakens the exclusivity of the term and symbols used and possibility of preventing third parties from using the trademark. However, the term and symbols can be safeguarded by the protection of the corporate name; for this reason, there are no substantial risks related to trademarks. For further information on the matter, please refer to
Section XIII – Intellectual Property
of the Report.
21.
General analysis of materialized contingencies.
For ease of reference, we prepared the contingency chart below, which summarizes CELG-D’s exposure to material contingencies in judicial and administrative proceedings, notably with respect to tax, civil, social security and labor areas. We emphasize that the estimates provided in the chart for the qualitative chance of loss of most of the lawsuits analyzed by our team – per the sampling analysis addressed in the Report –, generally matched the estimates provided by the Company's advisors.
|
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Explanatory Notes
|
|
i.
|
The allocation of cases among the different areas provided in this chart ("Area"
|
|
column) follows the respective classification informed by the Company. Please note,
|
|
however, that, as indicated in the Civil and Tax Sections of the Report, the Company
|
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classified some civil lawsuits as tax lawsuits.
|
ii.
|
We were not informed by the Company of the existence of lawsuits which triggering
|
|
events/facts were subsequent to January 27, 2015 (i.e., the cut-off date for FUNAC
|
|
according to Section XVII of the Report). As for the lawsuits disclosed, we did not
|
|
identify those which triggering events/facts were subsequent to such date.
|
iii.
|
Total number of cases reported in the Company's Interim Financial Information as of
|
|
June 30, 2015 ("Number of cases", "Company" columns) and confirmed by the
|
|
Company's legal department. Please note that we were not able to confirm these
|
|
numbers in reports/worksheets made available in the data room, as such documents
|
|
had several discrepancies/inconsistencies. The columns "Company" and "PNA" refer,
|
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respectively, to the number of cases reported by the Company and the number of
|
|
cases reviewed by Pinheiro Neto Advogados in the course of the legal due diligence
|
|
covered in the Report.
|
iv.
|
When referring to lawsuits of which the loss estimate is either is probable or possible,
|
|
the involved amount indicated in this column (column "Amount involved",
|
|
"Company") and the corresponding loss classification are reported in the Company's
|
|
Interim Financial Information as of June 30, 2015 and were confirmed by the
|
|
Company's legal department. The amounts related to lawsuits for which the loss
|
|
estimation is remote were informed by the Company, but not included in the
|
|
Company's Interim Financial Information as of June 30, 2015. Please note that we
|
|
were not able to confirm these numbers in reports/charts made available in the data
|
|
room, since such documents had several discrepancies/inconsistencies.
|
v.
|
We were informed by the Company that the only amounts related to lawsuits in
|
|
which the loss estimate is probable are provisioned by the Company. Values
|
|
indicated in this column ("Provisions") were identified in note 25 to the Company's
|
|
Interim Financial Information as of June 30, 2015, and were confirmed by the
|
|
Company's legal department.
|
vi.
|
According to the note 12 (a) of the Company's Interim Financial Information as of
|
|
June 30, 2015: "whenever there is a registration of provision for judicial claims, the
|
|
Company registers ( ) the same value in ‘assets’ in item ‘others - Goiás – FUNAC’
|
|
( ) ". See Section XVIII of the Report for further information about FUNAC,
|
|
including related risks.
|
vii.
|
Judicial deposits disclosed in note 11 to the Company’s Interim Financial Information
|
|
as of June 30, 2015. Please note that these values differ from the values informed by
|
|
the Company's legal department in the documents made available in the data room.
|
viii. Please note that all lawsuits estimated as probable losses would, in theory, be
|
|
provisioned by the Company, as indicated in the preceding notes. Thus, the total
|
|
exposure (column "Total Exposure") would only refer to lawsuits which loss
|
|
estimates are either possible or remote. In this regard, please refer to the notes in
|
|
this chart related to provisions.
|
ix.
|
Please note that most of the copies of lawsuits made available regarding the tax area
|
|
either had a civil nature or a value below the R$5,000,000.00 threshold. Moreover,
|
|
despite having analyzed three different lawsuits, they were all related to the same
|
|
case (please see Section IX - Tax for more information).
|
x.
|
In addition to the specific cases examined, according to Section VIII - Civil Litigation,
|
|
the 212 cases total encompasses: (a) 173 lawsuits filed by municipalities of Goiás
|
|
against CELG-D, which according to the Company involve identical legal thesis, out of
|
|
which we analyzed 27 cases by sampling; and (b) 34 public class actions that,
|
|
according to the Company, also involve similar discussions, out of which we analyzed
|
|
9 cases by sampling. Additionally, please note that the Company classifies some of
|
|
the lawsuits filed by municipalities as tax ones (even though they classify identical
|
|
lawsuits as civil) - for this reason, some of these lawsuits would be indicated and
|
provisioned in the tax area (as opposed to the civil area). xi. Although the total number of cases analyzed is identical to the number of cases appointed by the Company, we were unable to confirm whether the lawsuits reviewed correspond to the 6 indicated cases, as in the Company’s Interim Financial Statements as of June 30, 2015 there is no information regarding the lawsuits (only of the amount involved and loss estimates).
- 13 -
Annex 10. Annex 21 of CVM Instruction 481/2009
4
–
Describe any relevant relationship in the past three (3) years between the recommended appraisers and parties related to the company, as defined by accounting rules that deal with this subject
Not applicable.
Rio de Janeiro, September 23, 2016.
José Luiz Alquéres
Chairman of the Board of Directors
3
Annex 11. Opinion of Eletrobras Legal Department
Annex 12. Financial Technical Note GDF/DFN
No 001/2016
Annex 12.A- Financial Technical Note GDF/DF
No 002/2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRÁS
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By:
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/
S
/
Armando Casado de Araujo
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Armando Casado de Araujo
Chief Financial and Investor Relation Officer
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FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
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