6-K 1 elpitr3q08_6k.htm QUARTERLY INFORMATION 3Q08 Provided by MZ Data Products
 
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 December, 2008

Commission File Number 1-14668
 

 
COMPANHIA PARANAENSE DE ENERGIA
(Exact name of registrant as specified in its charter)
 

Energy Company of Paraná
(Translation of Registrant's name into English)
 

Rua Coronel Dulcídio, 800
80420-170 Curitiba, Paraná
Federative Republic of Brazil
(5541) 3222-2027
(Address of principal executive offices)
 

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____


Companhia Paranaense de Energia - COPEL
CNPJ/MF 76.483.817/0001-20
State Taxpayer Number 10146326-50
Public Company - CVM 1431-1
www.copel.com      copel@copel.com
Rua Coronel Dulcídio, 800, Batel - Curitiba - PR
CEP 80420-170

 

QUARTERLY INFORMATION

ITR

 

 

September 2008


TABLE OF CONTENTS

FINANCIAL STATEMENTS    3 
   Balance Sheet - Assets    3 
   Balance Sheet – Liabilities    4 
   Statement of Income    5 
   Statement of Income – Third Quarter Variations    6 
NOTES TO THE QUARTERLY INFORMATION    7 
   1 Operations    7 
   2 Presentation of the Quarterly Information    7 
   3 Cash in Hand    9 
   4 Consumers and Distributors    10 
   5 Provision for Doubtful Accounts    11 
   6 Dividends Receivable    11 
   7 CRC Transferred to the Government of the State of Paraná    11 
   8 Taxes and Social Contribution    13 
   9 Account for Compensation of “Portion A” Variations    16 
   10 Other Regulatory Assets and Liabilities    18 
   11 Guarantees and Escrow Deposits    19 
   12 Other Receivables    20 
   13 Judicial Deposits    21 
   14 Receivables from Related Parties    22 
   15 Investments    23 
   16 Property, Plant, and Equipment    29 
   17 Intangible assets    31 
   18 Loans and Financing    32 
   19 Debentures    37 
   20 Suppliers    41 
   21 Accrued Payroll Costs    42 
   22 Post-Employment Benefits    42 
   23 Customer Charges Due    44 
   24 Research and Development and Energy Efficiency    44 
   25 Other Accounts Payable    45 
   26 Provisions for Contingencies    45 
   27 Shareholders’ Equity    48 
   28 Gross Revenues from Sales and/or Services    50 
   29 Deductions from Gross Revenues    51 
   30 Operating Costs and Expenses    51 
   31 Financial Income (Losses)   56 
   32 Electric Energy Trading Chamber (CCEE)   56 
   33 Financial Instruments    58 
   34 Related-Party Transactions    60 
   35 Wholly-Owned Subsidiaries' Balance Sheets    62 
   36 Statement of Income Broken Down by Company    64 
   37 Changes in Accounting Policies    65 
   38 Statement of Cash Flows    70 
   39 Statement of Added Value    72 
   40 Subsequent Event    74 
COMMENTS ON THE PERFORMANCE OF THE COMPANY IN THE QUARTER    75 
   1 Distribution    75 
   2 Management    78 
   3 Investor Relations    78 
   4 Rates    79 
   5 Economic and Financial Performance    80 
OTHER INFORMATION DEEMED MATERIAL BY THE COMPANY (1)   83 
SENIOR MANAGEMENT AND COMMITTEES    84 
AUDITOR REPORT ON THE SPECIAL REVIEW OF THE QUARTERLY INFORMATION    85 


Table of Contents

FINANCIAL STATEMENTS

Balance Sheet - Assets
As of September 30, 2008 and June 30, 2008
(In thousands of
reais)

             
CODE  DESCRIPTION  N. 
no.
 
Parent Company  Consolidated 
             
      30/09/2008  30/06/2008  30/09/2008  30/06/2008 
 
1  TOTAL ASSETS    9.520.238  9.349.151  13.083.881  12.734.862 
1.01  CURRENT ASSETS    639.406  588.472  3.532.869  3.251.020 
1.01.01  Cash in hand  374.792  497.198  1.832.804  1.587.994 
1.01.02  Receivables    264.614  91.274  1.642.703  1.607.692 
1.01.02.01  Customers    -  -  981.168  979.452 
1.01.02.01.01  Customers and distributors  1.062.195  1.058.072 
1.01.02.01.02  Provision for doubtful accounts  (91.448) (86.426)
1.01.02.01.03  Telecommunications services, net    10.421  7.806 
1.01.02.02  Other Receivables    264.614  91.274  661.535  628.240 
1.01.02.02.01  Dividends receivable  189.477  10.437  3.529  3.529 
1.01.02.02.02  Service in progress    59.672  53.155 
1.01.02.02.03  CRC transferred to State Government  45.189  43.353 
1.01.02.02.04  Taxes and social contribution  74.686  80.396  230.309  188.420 
1.01.02.02.05  Account for Compensation of Portion A  100.544  115.208 
1.01.02.02.06  Other regulatory assets  10  33.682  40.851 
1.01.02.02.07  Collaterals and escrow deposits  11  448  437  134.475  116.419 
1.01.02.02.08  Other receivables  12  54.135  67.305 
1.01.03  Inventories    -  -  57.362  55.334 
1.02  NON-CURRENT ASSETS    8.880.832  8.760.679  9.551.012  9.483.842 
1.02.01  Long-Term Receivables    815.372  790.496  2.065.109  2.050.301 
1.02.01.01  Other Receivables    151.586  155.704  2.065.109  2.050.301 
1.02.01.01.01  Customers and distributors  97.778  104.082 
1.02.01.01.02  Provision for doubtful accounts  (9.739) (9.739)
1.02.01.01.03  Telecommunications services    5.016  5.210 
1.02.01.01.04  CRC transferred to State Government  1.275.754  1.273.517 
1.02.01.01.05  Taxes and social contribution  127.287  131.078  504.284  497.792 
1.02.01.01.06  Account for Compensation of Portion A  42.415  19.230 
1.02.01.01.07  Other regulatory assets  10  9.132  12.176 
1.02.01.01.08  Collaterals and escrow deposits  11  24.547  20.413 
1.02.01.01.09  Judicial deposits  13  24.299  24.626  107.499  119.179 
1.02.01.01.10  Other Receivables  12  8.423  8.441 
1.02.01.02  Receivables from Related Parties  14  663.786  634.792  -  - 
1.02.01.02.01  From subsidiaries    663.786  634.792 
1.02.02  Permanent Assets    8.065.460  7.970.183  7.485.903  7.433.541 
1.02.02.01  Investments  15  8.065.460  7.970.183  463.436  449.928 
1.02.02.01.01  Equity in investees    398.535  392.800 
1.02.02.01.02  Equity in investees - goodwill    3.830  4.012 
1.02.02.01.03  Equity in subsidiaries    8.027.286  7.932.009 
1.02.02.01.04  Other investments    38.174  38.174  61.071  53.116 
1.02.02.02  Property, Plant, and Equipment  16  -  -  6.904.454  6.864.588 
1.02.02.03  Intangible Assets  17  -  -  113.067  113.962 
1.02.02.04  Deferred Assets    -  -  4.946  5.063 
             

The accompanying notes are an integral part of these quarterly financial statements.

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Table of Contents

Balance Sheet – Liabilities
As of September 30, 2008 and June 30, 2008
(In thousands of
reais)

             
CODE  DESCRIPTION  N. 
no.
 
Parent Company  Consolidated 
             
      30/09/2008  30/06/2008  30/09/2008  30/06/2008 
 
2  TOTAL LIABILITIES    9,520,238  9,349,151  13,083,881  12,734,862 
2.01  CURRENT LIABILITIES    337,745  295,775  1,820,237  1,631,408 
2.01.01  Loans and financing  18  13,459  19,975  80,737  85,487 
2.01.02  Debentures  19  143,078  162,639  161,603  165,943 
2.01.03  Suppliers  20  742  871  448,217  409,361 
2.01.04  Taxes, fees, and contributions  37,470  35,917  366,413  344,200 
2.01.05  Dividends payable    142,813  76,184  142,832  80,267 
2.01.06  Accrued payroll costs  21  135  149  161,067  97,829 
2.01.08  Other    48  40  459,368  448,321 
2.01.08.01  Post-employment benefits  22  17  19,331  17,506 
2.01.08.02  Account for Compensation of Portion A  42,300  51,908 
2.01.08.03  Other regulatory liabilities  10  32,029  37,869 
2.01.08.04  Customer charges due  23  44,731  36,386 
2.01.08.05  R & D and Energy Efficiency  24  203,819  194,918 
2.01.08.06  Other accounts payable  25  31  31  117,158  109,734 
2.02  NON-CURRENT LIABILITIES    1,205,281  1,204,180  3,041,865  3,015,784 
2.02.01  Long-Term Liabilities    1,205,281  1,204,180  2,966,871  2,940,790 
2.02.01.01  Loans and financing  18  402,238  390,004  842,285  807,430 
2.02.01.02  Debentures  19  600,000  600,000  854,582  869,638 
2.02.01.03  Provisions for contingencies  26  203,043  214,176  530,087  532,382 
2.02.01.06  Other    -  -  739,917  731,340 
2.02.01.06.01  Suppliers  20  207,006  200,730 
2.02.01.06.02  Taxes and social contributions  25,017  18,195 
2.02.01.06.03  Post-employment benefits  22  479,476  479,438 
2.02.01.06.04  Account for Compensation of Portion A  10,109  11,732 
2.02.01.06.05  Other regulatory liabilities  10  10,882  14,510 
2.02.01.06.06  Other payables  25  7,427  6,735 
2.02.02  Income from future years  15  -  -  74,994  74,994 
2.03  MINORITY INTEREST    -  -  244,567  238,474 
2.04  SHAREHOLDERS' EQUITY    7,977,212  7,849,196  7,977,212  7,849,196 
2.04.01  Paid-In Share Capital  27  4,460,000  4,460,000  4,460,000  4,460,000 
2.04.02  Capital Reserves    838,340  838,340  838,340  838,340 
2.04.04  Income Reserves    1,937,837  1,937,837  1,937,837  1,937,837 
2.04.04.01  Legal reserves    323,653  323,653  323,653  323,653 
2.04.04.02  Retained earnings    1,614,184  1,614,184  1,614,184  1,614,184 
2.04.05  Accrued Earnings    741,035  613,019  741,035  613,019 
             

The accompanying notes are an integral part of these quarterly financial statements.

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Table of Contents

Statement of Income
For the periods ended on September 30, 2008 and 2007
(In thousands of
reais)

             
CODE  DESCRIPTION  N. 
no. 
Parent Company  Consolidated 
             
      30/09/2008  30/09/2007  30/09/2008  30/09/2007 
3  STATEMENT OF INCOME           
3.01  GROSS REVENUES FROM SALES AND/OR SERVICES  28  -  -  6,145,638  5,876,835 
3.01.01  Power sales to final customers    2,214,660  2,015,820 
3.01.02  Power sales to distributors    978,975  1,039,988 
3.01.03  Use of the power grid    2,587,189  2,480,394 
3.01.04  Telecommunications revenues    57,623  46,584 
3.01.05  Distribution of piped gas    206,751  184,581 
3.01.06  Other operating revenues    100,440  109,468 
3.02  DEDUCTIONS FROM GROSS REVENUES  29  -  -  (2,089,678) (2,052,051)
3.03  NET REVENUES FROM SALES AND/OR SERVICES    -  -  4,055,960  3,824,784 
3.04  COST OF SALES AND/OR SERVICES  30  -  -  (2,523,678) (2,128,975)
3.04.01  Power purchased for resale    (1,186,106) (931,066)
3.04.02  Charges for the use of the power grid    (317,602) (363,140)
3.04.03  Payroll    (367,811) (290,769)
3.04.04  Pension and healthcare plans    (46,301) (1,701)
3.04.05  Materials and supplies    (35,428) (34,699)
3.04.06  Raw materials and supplies for power generation    (12,599) 16,728 
3.04.07  Natural gas and supplies for the gas business    (109,325) (102,233)
3.04.08  Third-party services    (140,751) (110,432)
3.04.09  Depreciation and amortization    (282,453) (299,641)
3.04.11  Other costs    (25,302) (12,022)
3.05  RESULT OF OPERATIONS    -  1,532,282  1,695,809 
3.06  OPERATING EXPENSES/REVENUES    903,889  737,200  (234,724) (503,827)
3.06.01  From sales  30  (34,562) (10,223)
3.06.02  General and administrative expenses/revenues  30  (8,036) (9,143) (194,385) (208,179)
3.06.03  Financial Expenses/Revenues  31  (44,618) (80,632) 94,566  (14,763)
3.06.03.01  Financial revenues    75,280  68,069  372,258  266,345 
3.06.03.02  Financial expenses    (119,898) (148,701) (277,692) (281,108)
3.06.05  Other Operating Expenses  30  2,037  (181,705) (125,788) (282,554)
3.06.06  Result of equity in subsidiaries and investees    954,506  1,008,680  25,445  11,892 
3.06.06.01  Equity in subsidiaries and investees  15  954,310  1,008,522  29,912  17,665 
3.06.06.02  Amortization of goodwill  15  (4,663) (5,931)
3.06.06.03  Interests in other companies    196  158  196  158 
3.07  OPERATING INCOME (LOSSES)   903,889  737,200  1,297,558  1,191,982 
3.08  NON-OPERATING INCOME (LOSSES)   1  116  (6,278) (38,129)
3.08.01  Revenues    116  4,176  250 
3.08.02  Expenses    (10,454) (38,379)
3.09  INCOME (LOSSES) BEFORE TAXES/EQ. INVESTMENTS    903,890  737,316  1,291,280  1,153,853 
3.10  PROVISION FOR INCOME TAX AND SOCIAL CONT.  (3,191) (186) (354,328) (404,189)
3.11  DEFERRED INCOME TAX  (1,664) 57,238  (20,727) 68,904 
3.14  MINORITY INTEREST    -  -  (17,190) (24,200)
3.15  NET INCOME FOR THE PERIOD    899,035  794,368  899,035  794,368 
 
  NET INCOME PER SHARE - in reais    3.2853  2.9028     
             

The accompanying notes are an integral part of these quarterly financial statements.

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Table of Contents

Statement of Income – Third Quarter Variations
For the quarters ended on September 30, 2008 and 2007
(In thousands of
reais)

           
CODE  DESCRIPTION    Consolidated 
           
    01/07/2008  01/01/2008  01/07/2007  01/01/2007 
    - 30/09/2008  - 30/09/2008  - 30/09/2007  - 30/09/2007 
3  STATEMENT OF INCOME         
3.01  GROSS REVENUES FROM SALES AND/OR SERVICES  2,135,259  6,145,638  2,030,530  5,876,835 
3.01.01  Power sales to final customers  760,399  2,214,660  713,447  2,015,820 
3.01.02  Power sales to distributors  354,700  978,975  352,869  1,039,988 
3.01.03  Use of the power grid  884,412  2,587,189  805,450  2,480,394 
3.01.04  Telecommunications revenues  20,846  57,623  16,754  46,584 
3.01.05  Distribution of piped gas  76,789  206,751  65,408  184,581 
3.01.06  Other operating revenues  38,113  100,440  76,602  109,468 
3.02  DEDUCTIONS FROM GROSS REVENUES  (747,827) (2,089,678) (675,494) (2,052,051)
3.03  NET REVENUES FROM SALES AND/OR SERVICES  1,387,432  4,055,960  1,355,036  3,824,784 
3.04  COST OF SALES AND/OR SERVICES  (915,171) (2,523,678) (714,188) (2,128,975)
3.04.01  Power purchased for resale  (411,903) (1,186,106) (342,938) (931,066)
3.04.02  Charges for the use of the power grid  (136,001) (317,602) (95,001) (363,140)
3.04.03  Payroll  (147,048) (367,811) (96,954) (290,769)
3.04.04  Pension and healthcare plans  (15,556) (46,301) (11,801) (1,701)
3.04.05  Materials and supplies  (13,601) (35,428) (10,839) (34,699)
3.04.06  Raw materials and supplies for power generation  (4,325) (12,599) 23,128  16,728 
3.04.07  Natural gas and supplies for the gas business  (44,902) (109,325) (35,815) (102,233)
3.04.08  Third-party services  (45,214) (140,751) (40,376) (110,432)
3.04.09  Depreciation and amortization  (88,193) (282,453) (100,754) (299,641)
3.04.11  Other costs  (8,428) (25,302) (2,838) (12,022)
3.05  RESULT OF OPERATIONS  472,261  1,532,282  640,848  1,695,809 
3.06  OPERATING EXPENSES/REVENUES  (113,744) (234,724) (290,440) (503,827)
3.06.01  From sales  (6,626) (34,562) (15,978) (10,223)
3.06.02  General and administrative expenses/revenues  (77,723) (194,385) (72,651) (208,179)
3.06.03  Financial Expenses/Revenues  7,930  94,566  9,379  (14,763)
3.06.03.01  Financial revenues  120,641  372,258  105,895  266,345 
3.06.03.02  Financial expenses  (112,711) (277,692) (96,516) (281,108)
3.06.05  Other Operating Expenses  (44,263) (125,788) (217,455) (282,554)
3.06.06  Result of equity in subsidiaries and investees  6,938  25,445  6,265  11,892 
3.06.06.01  Equity in subsidiaries and investees  7,883  29,912  8,263  17,665 
3.06.06.02  Amortization of goodwill  (957) (4,663) (1,977) (5,931)
3.06.06.03  Interests in other companies  12  196  (21) 158 
3.07  OPERATING INCOME (LOSSES) 358,517  1,297,558  350,408  1,191,982 
3.08  NON-OPERATING INCOME (LOSSES) (2,310) (6,278) (3,662) (38,129)
3.08.01  Revenues  927  4,176  250 
3.08.02  Expenses  (3,237) (10,454) (3,668) (38,379)
3.09  INCOME (LOSSES) BEFORE TAXES/EQ. INVESTMENTS  356,207  1,291,280  346,746  1,153,853 
3.10  PROVISION FOR INCOME TAX AND SOCIAL CONT.  (70,997) (354,328) (78,049) (404,189)
3.11  DEFERRED INCOME TAX  6,900  (20,727) 14,127  68,904 
3.14  MINORITY INTEREST  (6,094) (17,190) (13,058) (24,200)
3.15  NET INCOME FOR THE PERIOD  286,016  899,035  269,766  794,368 
           

The accompanying notes are an integral part of these quarterly financial statements.

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Table of Contents

 NOTES TO THE QUARTERLY INFORMATION
As of September 30, 2008
(In thousands of
reais, except where otherwise indicated)

1 Operations

Companhia Paranaense de Energia - COPEL (COPEL, the Company or the Parent Company) is a public company with shares traded on stock exchanges in Brazil, the United States of America and Spain. COPEL is a mixed capital company, controlled by the Government of the State of Paraná, engaged, through its subsidiaries, in researching, studying, planning, building, and exploiting the production, transformation, transportation, distribution, and sale of energy, in any form, but particularly electric energy. These activities are regulated by the National Electric Energy Agency - ANEEL, which reports to the Ministry of Mines and Energy. Additionally, COPEL takes part in consortiums, private enterprises, or mixed capital companies in order to operate mostly in the areas of energy, telecommunications, natural gas, and water supply and sanitation.

COPEL’s wholly-owned subsidiaries are: COPEL Geração e Transmissão, COPEL Distribuição, COPEL Telecomunicações, and COPEL Participações.

On November 30, 2007, COPEL Transmissão was split and incorporated by COPEL Geração e Transmissão and by COPEL Distribuição.

COPEL Geração e Transmissão holds a 51% interest in Consórcio Energético Cruzeiro do Sul and, in September 2007, it acquired a controlling interest in Centrais Eólicas do Paraná Ltda. (Notes 15.d and 15.f).

The companies controlled by COPEL Participações are: Companhia Paranaense de Gás – Compagas, Elejor – Centrais Elétricas do Rio Jordão S.A., COPEL Empreendimentos, UEG Araucária Ltda. and, as of January 2008, Dominó Holdings S.A., controlled jointly with the other shareholders (Note 15.e).

On December 28, 2006, UEG Araucária signed an agreement with Petróleo Brasileiro S.A. - Petrobras, leasing the Araucária Thermal Power Plant in return for monthly payments, over a period of one year, extended until December 31, 2008.

2 Presentation of the Quarterly Information

Authorization for the completion of this quarterly report was granted at Meeting of the Board of Officers held on November 10, 2008.

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The information featured in this report has been prepared in accordance with the provisions of the Brazilian Corporate Law, with the accounting practices adopted in Brazil, with the specific legislation enacted by ANEEL, and with the regulations of the Brazilian Securities and Exchange Commission (CVM), including CVM Instruction no. 469/2008.

COPEL has consolidated the financial statements of its wholly-owned subsidiaries and of the investees listed in Note 1.

The financial statements of Dominó Holdings S.A. have been consolidated into COPEL’s statements as of this fiscal year, proportionally to COPEL Participações’ 45% interest in the company.

Expenditures in connection with Consórcio Cruzeiro do Sul are recorded as investments, proportionally to COPEL’s share in the consortium, pursuant to the Accounting Manual for Electric Energy Utilities.

The balance sheets of the wholly-owned subsidiaries (consolidated with those of the companies in which they have a controlling interest) are featured in Note 35, and their statements of income are featured in Note 36, reclassified for the purpose of ensuring consistency with the account classification adopted by COPEL.

The Company’s investments in the shareholders’ equities of subsidiaries, as well as the assets, liabilities, revenues, and expenses arising from intercompany operations, have been eliminated upon consolidation, and the minority interests are shown separately, so that the consolidated quarterly statements effectively represent the balances of transactions with third parties.

All subsidiaries follow the accounting practices adopted by COPEL, and the accounting practices adopted in the preparation of this quarterly report are consistent with those adopted in the financial statements as of December 31, 2007.

The dates of the financial statements of investees, which have been used for the calculation of equity in their results and for consolidation purposes, coincide with those of the Parent Company.

For purposes of comparison, the following reclassifications have been made in the statement of income as of September 30, 2007:

     
Original account:  Reclassified account:  Consolidated 
     
Operating revenues (a) Operating revenues (a) 2,267,214 
   Power sales to final customers       Use of the power grid  2,267,214 
 
Deductions from operating revenues (b) Cost of sales and/or services (b) (163,424)
   PIS/Pasep and Cofins taxes     Power purchased for resale  (110,529)
   PIS/Pasep and Cofins taxes     Charges for the use of the power grid  (52,895)
   .     
     
a) Amount refers to the rate for the use of the dist. system, pursuant to ANEEL Circular Letter no. 2.409, 14.11.2007.
b) Pursuant to Technical Interpretation no. 01/04 by the Institute of Independent Auditors of Brazill - Ibracon.

The Statements of Cash Flows and Added Value are featured in Notes 38 and 39, respectively.

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3 Cash in Hand

         
  Parent Company  Consolidated 
         
  30.09.2008  30.06.2008  30.09.2008  30.06.2008 
Cash and banks  624  93  42,378  35,924 
Financial investments         
   Federal banks  374,168  497,105  1,784,995  1,546,792 
   Private banks  5,431  5,278 
  374,168  497,105  1,790,426  1,552,070 
         
  374,792  497,198  1,832,804  1,587,994 
         

Most of the financial investments of the Company and of its subsidiaries have been made in official state-owned financial institutions, comprising mostly fixed income securities tied to federal bonds, bearing an average yield of 100% the Interbank Deposit Certificate rate. These investments can be redeemed at any time, with no loss of any accrued earnings.

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4 Consumers and Distributors

                 
    Not yet    Overdue for    Overdue for    Consolidated 
    due    up to 90 days    over 90 days    Total 
                 
              30.09.2008  30.06.2008 
Consumers                 
   Residential    95,878    68,871    7,717  172,466  169,629 
   Industrial    116,336    18,419    45,326  180,081  179,121 
   Commercial    65,774    19,390    9,165  94,329  89,634 
   Rural    12,909    4,451    385  17,745  17,195 
   Public agencies    24,855    1,716    2,004  28,575  39,789 
   Public lighting    13,846    124    266  14,236  14,014 
   Public services    11,776    349    170  12,295  11,609 
   Unbilled    154,467      154,467  145,885 
   Energy installment plan    80,736    3,878    13,889  98,503  98,195 
   Energy installment plan - long-term  84,474      84,474  90,737 
   Low income customer rates    29,143      29,143  28,502 
   Penalties on overdue bills    4,022    3,531    6,474  14,027  14,476 
   State Government-"Luz Fraterna" Program  1,924    5,052    6,976  24,157 
   Red. of rate for use of distribution system  4,024      4,024  5,271 
   Gas supply    19,036    236    695  19,967  19,469 
   Other receivables    8,427    2,547    2,207  13,181  17,499 
   Other receivables - long-term    3,220      3,220  3,071 
    730,847    128,564    88,298  947,709  968,253 
Distributors                 
   Bulk supply                 
   Bulk supply - CCEE (Note 32) 8,724      105  8,829  3,449 
   Power auction    93,451      93,451  83,744 
   Bilateral agreements    49,020      49,020  43,235 
   Reimbursement to generators    723      723  824 
   Reimbursement to generators - long-term  10,084      10,084  10,274 
   Contracts with small utilities    6,842      6,842  6,872 
   Short-term bulk supply        126  126  126 
    168,844    -    231  169,075  148,524 
   Charges for use of power grid               
   Power grid    12,973    231    2,329  15,533  16,289 
   Basic Network    27,223    27    217  27,467  28,899 
   Connection grid    189      189  189 
    40,385    258    2,546  43,189  45,377 
                 
    940,076    128,822    91,075  1,159,973  1,162,154 
                 
30.09.2008  Current total  842,298    128,822    91,075  1,062,195   
  Long-term total  97,778    -    -  97,778   
                 
30.06.2008  Current total  812,580    134,441    111,051    1,058,072 
  Long-term total  104,082    -    -    104,082 
                 

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5 Provision for Doubtful Accounts

COPEL’s senior management has considered the following amounts as sufficient to cover potential losses on the realization of receivables:

 
        Additions /    Reversal of         
Consolidated    (reversals)   write-offs        Consolidated 
 
    31.12.2007            30.09.2008    30.06.2008 
Consumers and distributors                     
   Residential    16,268    9,075      25,344    23,364 
   Industrial    41,941    6,397      48,338    46,841 
   Commercial    8,454    3,758      12,215    10,883 
   Rural    38    145      183    111 
   Public agencies    1,725    635      2,360    2,235 
   Public lighting    146    21      167    151 
   Public services    288    (278)     10    10 
   Utilities    2,726      105    2,831    2,831 
   Utilities - long-term    11,469    (1,730)     9,739    9,739 
   Gas supply      (6)      
 
    83,061    18,017    109    101,187    96,165 
 
Current total    71,592    19,747    109    91,448    86,426 
Long-term total    11,469    (1,730)   -    9,739    9,739 
 

6 Dividends Receivable

 
                 
        Parent Company        Consolidated 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Investees and subsidiaries                 
   COPEL Geração e Transmissão    94,754       
   COPEL Distribuição    80,273       
   COPEL Participações    14,450    10,437     
   Sanepar        3,529    3,529 
 
  189,477    10,437    3,529    3,529 
 

7 CRC Transferred to the Government of the State of Paraná

By means of a fourth amendment dated January 21, 2005, the Company again renegotiated with the Government of Paraná the outstanding CRC balance as of December 31, 2004, in the amount of R$ 1,197,404, to be paid in 244 installments under the Price amortization system, restated according to the IGP-DI inflation index plus interest of 6.65% p.a., with the first installment due on January 30, 2005 and the others due in subsequent and consecutive months.

The State Government has been in compliance with the payments of the renegotiated installments according to the terms of the fourth amendment to the CRC agreement. Amortizations are secured by resources from dividends.

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a) Maturity of long-term installments

 
       
        Consolidated 
 
    30.09.2008    30.06.2008 
2009    11,984    23,517 
2010    49,912    49,369 
2011    53,232    52,652 
2012    56,772    56,153 
2013    60,548    59,888 
2014    64,574    63,871 
2015    68,869    68,119 
2016    73,449    72,649 
2017    78,334    77,480 
2018    83,543    82,633 
2019    89,099    88,129 
2020    95,025    93,990 
2021    101,345    100,240 
After 2021    389,068    384,827 
 
    1,275,754    1,273,517 
 

b) Changes in the CRC balance

 
    Current    Long-Term    Consolidated 
Balances    Assets    Receivables    Total 
 
As of December 31, 2007    40,509    1,209,853    1,250,362 
   Interest and fees    40,095      40,095 
   Monetary variation    807    85,629    86,436 
   Transfers    21,965    (21,965)  
   Amortization    (60,023)     (60,023)
As of June 30, 2008    43,353    1,273,517    1,316,870 
   Interest and fees    19,805      19,805 
   Monetary variation    265    14,016    14,281 
   Transfers    11,779    (11,779)  
   Amortization    (30,013)     (30,013)
As of September 30, 2008    45,189    1,275,754    1,320,943 
 

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8 Taxes and Social Contribution

 
                 
        Parent Company        Consolidated 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Current assets                 
   Deferred IRPJ/CSLL (a)   115    9,967    75,227    70,996 
   IRPJ/CSLL to be offset (b)   74,571    70,429    126,763    88,847 
   ICMS (VAT) to be offset        26,735    26,927 
   PIS/Pasep and Cofins taxes to be offset        429    491 
   Other taxes to be offset        1,155    1,159 
    74,686    80,396    230,309    188,420 
Long-term receivables                 
   Deferred IRPJ/CSLL (a)   122,762    126,553    441,000    439,042 
   IRPJ/CSLL to be offset (b)   4,525    4,525    4,525    4,525 
   ICMS (VAT) to be offset        58,759    54,225 
    127,287    131,078    504,284    497,792 
Current liabilities                 
   Deferred IRPJ/CSLL (a)       43,758    51,622 
   IRPJ/CSLL payable        109,672    91,100 
   ICMS (VAT) payable        137,467    131,110 
   PIS/Pasep and Cofins payable    1,573      31,250    29,668 
   REFIS Installments (c)   35,068    35,068    35,068    35,068 
   Income tax withheld on interest on capital        2,550   
   Other taxes    829    847    6,648    5,632 
    37,470    35,917    366,413    344,200 
Long-term liabilities                 
   Deferred IRPJ/CSLL (a)       24,332    17,178 
   ICMS (VAT) payable        685    1,017 
    -    -    25,017    18,195 
 
IRPF = Corporate income tax 
CSLL = Social contribution on net income 

a) Deferred income tax and social contribution

The Company records deferred income tax, calculated at the rate of 15%, plus an additional rate of 10%, and deferred social contribution, at the rate of 9%.

Taxes levied on the pension and healthcare plans are being realized according to the actuarial assessment conducted annually by an independent actuary, pursuant to the rules set forth in CVM Instruction no. 371/2000. Deferred taxes on all other provisions will be realized as judicial rulings are issued and regulatory assets are realized.

Under current tax legislation, tax losses and negative bases for social contributions may be offset against future income, up to the limit of 30% of the taxable income for each year, and do not lapse.

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Deferred income tax and social contribution credits have been recorded as follows:

 
                 
        Parent Company        Consolidated 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Current assets                 
   Pension and healthcare plans        4,070    3,866 
   Tax losses      9,815      9,815 
   Passive CVA        14,382    17,648 
   Temporary additions    115    152    56,775    39,667 
    115    9,967    75,227    70,996 
Long-term receivables                 
   Pension and healthcare plans        162,503    162,490 
   Tax losses and negative tax basis    10,858    11,466    22,592    23,200 
   Temporary additions:         
       Provisions for contingencies    89,465    92,648    167,614    156,300 
       Provision for doubtful accounts    1,839    1,839    46,725    34,465 
       REFIS/FINAN provision    14,805    14,805    14,805    14,805 
       Provisions for regulatory liabilities        3,733    4,964 
       Provision for effects of network charges        3,310    3,310 
       Amortization of goodwill    5,120    5,120    19,036    18,732 
       Other    675    675    682    20,776 
    122,762    126,553    441,000    439,042 
(-) Current liabilities                 
   Active CVA        30,850    35,836 
   Surplus power        1,377    1,792 
   Temporary exclusions        11,531    13,994 
    -    -    43,758    51,622 
(-) Long-term liabilities                 
   Temporary exclusions                 
   Active CVA        13,301    5,418 
       TUSD, aquiculture, and irrigation rates        99   
       Regulatory assets        3,104    4,140 
       Gas supply        7,828    7,620 
    -    -    24,332    17,178 
 
    122,877    136,520    448,137    441,238 
 

The Company’s Board of Directors and Fiscal Council have approved the technical study prepared by the Chief Finance, Investor Relations, and Corporate Partnerships Office on future profitability projections, which points out to the realization of deferred taxes. According to the estimates of future taxable income, the realization of deferred taxes is broken down below:

    Parent Company    Consolidated 
     
    Estimated    Actual    Estimated    Estimated    Actual    Estimated 
    realizable    realized    realizable    realizable    realized    realizable 
    amount    amount    amount    amount    amount    amount 
 
2008    3,354    1,665      92,191    85,638     
2009        3,073        25,262 
2010        4,905        31,516 
2011              22,620 
2012              15,342 
2013              13,700 
After 2013        114,899        339,697 
 
    3,354    1,665    122,877    92,191    85,638    448,137 
 

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Projected future income will be revised by management upon the approval of the financial statements for fiscal year 2008, in April 2009.

b) Income tax and social contribution paid in advance

Amounts recorded as corporate income tax (IRPJ) and social contribution on net income (CSLL) paid in advance refer to corporate tax return credits and amounts withheld.

c) Tax recovery program - REFIS

On December 16, 2000, COPEL signed up for the Tax Recovery Program (REFIS), established by Law no. 9,964, dated April 10, 2000, in order to pay in 60 monthly and equal installments an outstanding debt to the National Social Security Institute (INSS) in the consolidated amount of R$ 82,540, retroactive to March 1, 2000.

The Brazilian Internal Revenue Service (SRF) included in the Company’s REFIS account, without COPEL’s awareness, income tax and social contribution claims in the amount of R$ 11,100, retroactively to the date of consolidation, March 1, 2000, thus raising total debt to R$ 93,640.

In September 2003, the Company, based on a legal opinion, set up a provision for the tax installments which hadn't been amortized until then. This provision, restated as of September 30, 2006, amounted to R$ 73,844, net, which corresponded to the restated balance of its REFIS account, taking into account amortizations and interest charges (TJLP).

On August 31, 2006, COPEL filed for withdrawal from REFIS, only so it could sign up for the new tax installment plan established by Provisional Measure no. 303/2006, called Special Installment Plan or PAEX. By doing so, COPEL can now take advantage of the benefits of this plan by paying off the outstanding debt in six installments, with an 80% discount off the penalties and a 30% discount off the interest due. The Company’s application was completed on September 14, 2006.

Meanwhile, COPEL filed a lawsuit disputing the SRF's claims, which, in the Company's understanding, where wrongly included in REFIS I. The SRF recognized the rights of COPEL, which won the lawsuit. Thus, the new installment plan includes only the remaining debt to INSS which was included in REFIS, i.e., net of payments already made, resulting in the amount, according to the INSS' initial calculation, of R$ 37,782, restated according to the SELIC interest rate, to be paid in six installments. These installments have already been paid.

Nevertheless, the INSS has already indicated it plans to “restore” the interest charges that were waived under REFIS I, in the amount of R$ 38,600 (as of September 2006). INSS has not yet made a final decision on how it will calculate the grand total of this debt, thus it has suspended the collection of the respective credits. Thus, the INSS has not offered any guarantees that their calculations are final, claiming that "final consolidation" of the debt has not been concluded yet.

Accordingly, in light of these circumstances, the Company maintained the provision in the amount of R$ 35,068 to cover the new INSS claim under PAEX.

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d) Conciliation of the provision for income tax and social contribution

The conciliation of the provision for income tax (IRPJ) and social contribution (CSLL), calculated at the applicable rates, with the amounts recorded in the statement of income is shown below:

 
                 
        Parent Company        Consolidated 
 
    30.09.2008    30.09.2007    30.09.2008    30.09.2007 
Income before IRPJ and CSLL:    903,890    737,316    1,291,280    1,153,853 
   IRPJ and CSLL (34%)   (307,323)   (250,687)   (439,035)   (392,310)
Tax effects on:                 
   Interest on capital    53,720    45,900    53,720    45,900 
   Dividends    55    39    2,092    1,922 
   Equity in investees    248,674    261,783    6,667    3,626 
   Adjustments from previous years in connection                 
   with pension and healthcare plans          2,066 
   Tax breaks        3,086    1,040 
   Present value adjustment - Compagas        (606)   (545)
   Non-deductible expenses        (673)  
   Other    19    17    (306)   3,016 
Tax effects on:                 
   Current IRPJ and CSLL    (3,191)   (186)   (354,328)   (404,189)
   Deferred IRPJ and CSLL    (1,664)   57,238    (20,727)   68,904 
 
IRPJ = Corporate income tax 
CSLL = Social contribution on net income 

9 Account for Compensation of “Portion A” Variations

The Account for Compensation of “Portion A” Variations (CVA) records variations of the following Portion A cost items, as approved at the time of the annual rate reviews and as actually disbursed by companies during the year: Purchase of Power (Bilateral Contracts, Itaipu, and Auctions), Power Transport Costs (Transport of Power from Itaipu and Basic Network Charges), and Power Sector Charges – Fuel Consumption Account (CCC) quota; Energy Development Account (CDE) quota; System Service Charges (ESS); and Program of Incentives for Alternative Energy Sources (Proinfa) quotas.

ANEEL has ordered COPEL Distribuição to apply, as of June 24, 2008, an average reduction of 3.35% to its rates for sales to final customers, pursuant to Resolution no. 663, dated June 23, 2008. Out of this percentage, - 7.17% correspond to the annual rate review, and 3.82% to financial components outside the range of the annual rate review. CVA is part of the latter group, amounting to R$ 74,441, and is made up of two installments: CVA being processed for rate year 2007-2008, in the amount of R$ 50,103, and CVA balance from the previous year to be offset, in the amount of R$ 24,337.

COPEL expects that the amounts classified as long-term assets will be recovered in up to two years.

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a) Breakdown of CVA balances

 
        Current        Long-term 
Consolidated        assets        receivables 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Recoverable Portion A variations, 2008 rate review                 
   Fuel Consumption Account - CCC    26,949    35,931     
   Charges for use of trans.sys. (Basic Network)   23,863    31,816     
   Power purchased for resale (Itaipu)   17,416    23,222     
   Charges for system services - ESS    13,699    18,266     
   Energy Development Account - CDE    253    338     
   Incentives to Alternative Energy Sources - Proinfa    4,226    5,635     
    86,406    115,208    -    - 
Recoverable Portion A variations, 2009 rate review                 
   Fuel Consumption Account - CCC    3,364      10,092    1,022 
   Charges for use of trans.sys. (Basic Network)   3,220      9,660    5,012 
   Charges for system services - ESS    7,331      21,995    12,967 
   Energy Development Account - CDE    102      305    229 
   Transport of purchased power (Itaipu)   121      363   
    14,138    -    42,415    19,230 
 
    100,544    115,208    42,415    19,230 
 
 
 
        Current        Long-term 
Consolidated        liabilities        liabilities 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Portion A variations subject to offsetting, 2008 rate review             
   Power purchased for resale (CVA Energy)   38,590    51,453     
   Transport of purchased power (Itaipu)   341    455     
    38,931    51,908    -    - 
Portion A variations subject to offsetting, 2009 rate review             
   Power purchased for resale (Itaipu)   788      2,366    1,533 
   Incentives to alternative sources (Proinfa)   21      64   
   Power purchased for resale (CVA Energy)   2,560      7,679    10,138 
   Transport of purchased power (Itaipu)         61 
    3,369    -    10,109    11,732 
 
    42,300    51,908    10,109    11,732 
 

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b) Changes in the CVA

 
                         
    Balance    Deferral    Amortization    Restatement     Transfers   Balance 
 
    31.12.2007                    30.09.2008 
Assets                         
   Fuel Consumption Account - CCC    13,187    37,196    (11,063)   1,085      40,405 
   Charges for use of trans. syst. (Basic Network)   8,148    35,475    (8,307)   1,427      36,743 
   Power purchased for resale (Itaipu)   46,907    (2,152)   (29,504)   2,165      17,416 
   Charges for system services - ESS    7,826    45,989    (12,397)   1,607      43,025 
   Energy Development Account - CDE    9,969    (3,270)   (6,569)   530      660 
   Incentives to Alternative Sources - Proinfa    6,770    3,165    (6,318)   609      4,226 
   Transport of purchased power (Itaipu)   285    408    (211)       484 
    93,092    116,811    (74,369)   7,425    -    142,959 
Current    67,614    58,691    (74,369)   5,605    43,003    100,544 
Non-current    25,478    58,120    -    1,820    (43,003)   42,415 
                         
Liabilities                         
   Fuel Consumption Account - CCC    35,856    (1,710)   (36,119)   1,973     
   Charges for use of trans. syst. (Basic Network)   34,175    (2,372)   (32,579)   776     
   Power purchased for resale (Itaipu)     3,019      135      3,154 
   Charges for system services - ESS    7,444    (7,193)     (251)    
   Incentives to Alternative Sources - Proinfa      85          85 
   Power purchased for resale (CVA Energy)   87,177    24,865    (69,447)   6,234      48,829 
   Transport of purchased power (Itaipu)   1,114    258    (1,190)   159      341 
    165,766    16,952    (139,335)   9,026    -    52,409 
Current    143,436    3,181    (139,335)   8,171    26,847    42,300 
Non-current    22,330    13,771    -    855    (26,847)   10,109 
 

10 Other Regulatory Assets and Liabilities

Consolidated balances as of September 30, 2008 are shown below:

 
            Assets            Liabilities 
     
        Non            Non     
    Current    current    Total    Current    current    Total 
 
COPEL Distribuição                         
Adj. installments - transmission charges (a)   11,098    9,132    20,230    14,510    10,882    25,392 
Uncovered amount - CIEN contract (b)   22,584      22,584       
    33,682    9,132    42,814    14,510    10,882    25,392 
COPEL Geração e Transmissão                         
Adj. installments - transmission charges (a)         17,519      17,519 
 
    33,682    9,132    42,814    32,029    10,882    42,911 
 

a) Adjustment installments – transmission charges

The concession agreements signed by the transmission utilities contain a clause which sets the date of July 1, 2005 as the date of the first periodic review of annual allowed revenues. The rate review was concluded and its results were approved on July 1, 2007, applicable retroactively to July 1, 2005. Thus, it became necessary to calculate the retroactive discrepancy for the period from 2005 to 2007, which has been treated as “review adjustment installments”.

This balance, which has been accrued by transmission utilities, is being offset over 24 months, starting July 2007.

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ANEEL has calculated the discrepancy corresponding to the “connection point review adjustments” for all distribution utilities, resulting in a balance of R$ 22,915 to be paid by COPEL Distribuição to COPEL Transmissão. As far as the “basic network review adjustments", the application of COPEL Distribuição's participation percentage to the total adjustment installments resulted in the amount of R$ 29,020 to be collected from the remaining transmission utilities which underwent the rate review process.

Out of the amounts that are being settled with the transmission utilities, R$ 10,739, which correspond to the “connection point review adjustments”, and R$ 14,510, which correspond to the “basic network review adjustments”, have been taken into account in COPEL Distribuição’s June 2008 rate review, and the remainder will be taken into account in the June 2009 rate review. The Company expects that the amounts classified as long-term will be recovered within 2 years.

b) Involuntary uncovered amount – CIEN Contract

The amount of R$ 30,112 refers to an advance for the coverage of COPEL's uncovered power demand, which had to be supplied through spot market transactions from January through April 2008, due to the termination of the agreement with Companhia de Interconexão Energética – CIEN, authorized under MME Ordnance no. 294/2006. This amount was tentatively taken into account in COPEL Distribuição’s June 2008 rate review and will be reviewed at the time of the calculation of the transfer to customers of the cost of excess power under contract for calendar year 2008, which will be processed in the 2009 rate review.

As of September 2008, R$ 7,528 have been amortized, with an outstanding balance of R$ 22,584 to be amortized over the next 9 months.

11 Guarantees and Escrow Deposits

 
        Parent Company        Consolidated 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Current assets                 
   Escrow deposits    448    437    134,475    116,419 
    448    437    134,475    116,419 
Long-term receivables                 
   Collateral under STN agreement (Note 18.b)       24,547    20,413 
    -    -    24,547    20,413 
 

There is a sum of R$ 29,264 (R$ 12,001 as of June 30, 2008) invested in Unibanco – União de Bancos Brasileiros S.A., yielding 100.5% of the variation of the DI rate, in a reserve account set up to secure a debt to BNDESPAR, in connection with the issue of ELEJOR debentures, pursuant to a Private Agreement on Revenue Attachment and Other Covenants.

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There are R$ 52,656 (restated as of September 30, 2008) invested in Banco do Brasil, yielding 100% of the variation of the DI rate, in a reserve account set up to secure to ANEEL the construction of the Mauá Power Plant by COPEL Geração e Transmissão.

The remaining deposits meet the requirements of the Electric Energy Trading Chamber (CCEE) and are tied to the operations conducted at power auctions, CCEE settlements, and ANEEL auctions.

12 Other Receivables

 
        Parent Company        Consolidated 
 
    30.09.2008    30.06.2008    30.09.2008    30.06.2008 
Current assets                 
   Advance payments to employees        17,934    18,963 
   Advance payments        9,450    5,721 
   Advance payments to suppliers        7,040    6,819 
   Installment plan for Onda Provedor de Serviços    4,348    4,348    4,348    4,348 
   Decommissioning in progress        4,011    3,929 
   Disposal of property and rights        3,974    2,681 
   Recoverable salaries of transferred employees        3,864    3,735 
   Advance payments for judicial deposits        3,758    2,496 
   Services to third-parties        1,582    2,842 
   Global Reversal Reserve (RGR) - discrepancies        1,502    2,151 
   Purchase of fuels under CCC        779    822 
   Lease of the Araucária Thermal Power Plant        525    7,145 
   Use of Araucária's transmission system          10,427 
   Provision for doubtful accounts    (4,348)   (4,348)   (9,518)   (9,463)
   Other receivables        4,886    4,689 
    3    4    54,135    67,305 
Long-term receivables                 
   Disposal of property and rights        4,875    4,962 
   Compulsory loans        3,486    3,417 
   Advance payments        62    62 
    -    -    8,423    8,441 
 

The provision for doubtful accounts under Parent Company refers to the balance of installments owed by Onda Provedor de Serviços, whose realization is unlikely, and, under Consolidated, refers to Onda and to an unrealizable amount mostly comprising wages of loaned employees.

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13 Judicial Deposits

The balances of judicial deposits are shown below:

 
Consolidated  Total  Deduction of  Long-term  Long-term 
  judicial deposits  contingencies  receivables  receivables 
         
      30.09.2008  30.06.2008 
Labor  84,399  (32,903) 51,496  57,129 
         
Civil:         
   Easements  10,660  10,660  10,746 
   Civil claims  23,252  (6,659) 16,593  22,012 
   Customer claims  3,205  (834) 2,371  2,656 
  37,117  (7,493) 29,624  35,414 
         
Tax:         
   Tax claims  52,318  (27,004) 25,314  25,571 
   PIS/PASEP tax claims  14,686  (14,686)
  67,004  (41,690) 25,314  25,571 
         
Other  1,065    1,065  1,065 
         
  189,585  (82,086) 107,499  119,179 
         

 
 
Parent Company  Total  Deduction of  Long-term  Long-term 
  judicial deposits  contingencies  receivables  receivables 
         
      30.09.2008  30.06.2008 
Tax:         
   Tax claims  51,302  (27,003) 24,299  24,626 
   PIS/PASEP tax claims  14,686  (14,686) -  - 
         
  65,988  (41,689) 24,299  24,626 
         

Escrow deposits have been classified under Provisions for Contingencies and are featured as a deduction from this item in Note 26.

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14 Receivables from Related Parties

         
    Parent Company    Consolidated 
         
  30.09.2008  30.06.2008  30.09.2008  30.06.2008 
Subsidiaries         
   COPEL Geração e Transmissão         
       Dividends receivable (Note 6) 94,754 
  94,754  -  -  - 
   COPEL Distribuição         
       Dividends receivable (Note 6) 80,273 
       Transferred financing - STN (a) 81,636  67,245 
       Loan agreement (b) 582,150  567,547 
  744,059  634,792  -  - 
   COPEL Participações         
       Dividends receivable (Note 6) 14,450  10,437 
  14,450  10,437  -  - 
         
  853,263  645,229  -  - 
Investees         
   Dividends receivable (Note 6)        
       Sanepar  -  -  3,529  3,529 
  -  -  3,529  3,529 
         
  853,263  645,229  3,529  3,529 
         
Dividends receivable (Note 6) 189,477  10,437  3,529  3,529 
Long-term receivables  663,786  634,792  -  - 
         

a) Transferred financing - STN

The Company transferred existing loans and financing to its wholly-owned subsidiaries at the time of their constitution in 2001. Nevertheless, since the agreements for transfer to the respective subsidiaries have not been formalized before the financial institutions, these amounts have also been recorded under the Parent Company.

The remaining balance in the amount of R$ 81,636 (R$ 67,245 as of June 30, 2008) corresponds to a debt to the National Treasury (STN), transferred with the same interest and charges agreed by the Parent Company, which is featured as a receivable from COPEL Distribuição and as loans and financing liability owed by the same subsidiary (note 18.b).

b) Loan Agreement

On February 27, 2007, ANEEL approved the loan agreement signed by COPEL (lender) and COPEL Distribuição (borrower), in the amount of R$ 1,100,000. This loan has a five-year term, bearing interest corresponding to 104% of the DI rate, and its funds were used in the expenditure program for the concession and in the payment of debentures transferred to COPEL Distribuição and due on March 1, 2007.

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15 Investments

         
    Parent Company    Consolidated 
         
  30.09.2008  30.06.2008  30.09.2008  30.06.2008 
Interests in investees         
   Cia. Paranaense de Saneamento - Sanepar  281,560  275,819 
   Sercomtel S.A. - Telecomunicações  83,063  83,040 
   Foz do Chopim Energética Ltda. (1) 16,694  16,781 
   Dona Francisca Energética S.A.  8,982  8,000 
   Sercomtel Celular S.A.  6,607  7,636 
   Dois Saltos Empreend. Geração Energia Eletr. Ltda.(1) 300 
   Copel Amec S/C Ltda. (1) 147  144 
   Carbocampel S.A. (1) (63) (55)
   Carbocampel S.A. - Adto.Futuro Aum.Capital - AFAC(1) 1,059  1,059 
   Escoelectric Ltda. (1) (1,035) (825)
   Escoelectric Ltda. - AFAC (1) 1,025  1,025 
   Braspower International Engineering S/C Ltda. - AFAC (1) 196  176 
  -  -  398,535  392,800 
Interests in investees - goodwill (c)        
   Cia. Paranaense de Saneamento - Sanepar  3,830  4,012 
  -  -  3,830  4,012 
Interests in subsidiaries         
   COPEL Geração e Transmissão S.A.  3,480,326  3,411,788 
   COPEL Distribuição S.A.  3,008,972  2,993,896 
   COPEL Telecomunicações S.A.  203,254  197,407 
   COPEL Participações S.A.  1,334,734  1,328,918 
  8,027,286  7,932,009  -  - 
Other investments         
   Amazon Investment Fund (FINAM) 30,013  30,013  30,013  30,013 
   FINAM - Nova Holanda  14,867  14,867  14,867  14,867 
   Northeastern Investment Fund (FINOR) 9,870  9,870  9,870  9,870 
   FINAM - Investco  7,903  7,903  7,903  7,903 
   Provision for losses on tax incentives  (26,801) (26,801) (26,801) (26,801)
   Consórcio Energético Cruzeiro do Sul (c) 17,910  9,738 
   Real estate for future service use  3,701  3,701 
   Other investments  2,322  2,322  3,608  3,825 
  38,174  38,174  61,071  53,116 
         
  8,065,460  7,970,183  463,436  449,928 
         
   (1) Unaudited by independent auditors         

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a) Main information about COPEL’s investees and subsidiaries

               
  Shares or quotas 
held by COPEL
       
             
  Common Preferred Quotas COPEL's
stake

%
Paid-in
share 
capital 
Adjusted
 shareholders' 
equity
 
Net 
income
 
(losses)
               
Investees              30.09.2008 
Sanepar  51,797,823  12,949,456  34.75  374,268  810,305  60,932 
Sercomtel - Telecom.  9,018,088  4,661,913  45.00  246,896  184,584  972 
Foz do Chopim (1) 8,227,542  35.77  23,000  46,669  19,049 
Dona Francisca  15,338,180  23.03  66,600  38,999  13,245 
Sercomtel Celular  9,018,029  4,661,972  45.00  36,540  14,683  (5,207)
Dois Saltos Empreend. (1) 300,000  30.00  1,000  1,000 
Copel Amec (1) 48,000  48.00  100  306  14 
Carbocampel (1) 127,400  49.00  260  (128) (13)
Escoelectric Ltda. (1) 3,220,000  40.00  8,050  (2,750) 797 
Braspower (1) 808,500  49.00  1,650  (409)
 
Subsidiaries               
COPEL Geração e Transm.  2,947,018,158  100.00  2,947,018  3,480,326  447,359 
COPEL Distribuição  2,171,927,626  100.00  2,171,928  3,008,972  439,500 
COPEL Telecomunicações  194,754,542  100.00  194,755  203,254  9,519 
COPEL Participações  1,165,500,361  100.00  1,165,500  1,334,734  57,932 
Compagas  5,712,000  11,424,000  51.00  85,143  179,104  30,394 
Elejor  42,209,920  43.54  113,800  122,739  4,576 
COPEL Empreendimentos (1) 397,983,311  100.00  397,983  403,890  (579)
UEG Araucária  565,951,934  80.00  707,440  660,484  (1,435)
Centrais Eólicas (1) 930,000  100.00  3,061  4,545  426 
Dominó Holdings (2) 251,928,516  45.00  251,929  637,393  41,401 
               
   (1) Unaudited by independent auditors             
   (2) Joint control as of January 2008               

b) Changes to the investments in investees and subsidiaries

           
Parent Company  Balance as of  
31
.12.2007 
Result of 
equity 
Investments  Proposed 
dividends
and IOC
 
Balance 
as of
  
30.09.2008
 
         
Subsidiaries           
   COPEL Geração e Transmissão  3,144,442  447,359  (111,475) 3,480,326 
   COPEL Distribuição  2,663,911  439,500  (94,439) 3,008,972 
   COPEL Telecomunicações  193,735  9,519  203,254 
   COPEL Participações  1,226,802  57,932  67,000  (17,000) 1,334,734 
           
  7,228,890  954,310  67,000  (222,914) 8,027,286 
           
 
 
 
           
Parent Company  Balance as of  
31
.12.2007 
Result of 
equity 
Investments  Proposed 
dividends
and IOC
 
Balance 
as of
  
30.09.2007
 
         
Subsidiaries           
   COPEL Geração e Transmissão  2,509,233  387,424  (106,572) 2,790,085 
   COPEL Transmissão  994,523  130,915  69,217  (43,711) 1,150,944 
   COPEL Distribuição  1,689,286  420,562  (71,747) 2,038,101 
   COPEL Telecomunicações  184,287  5,373  6,160  195,820 
   COPEL Participações  668,889  64,248  511,526  (16,543) 1,228,120 
           
  6,046,218  1,008,522  586,903  (238,573) 7,403,070 
           

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Consolidated  Balance as of  31.12.2007  Result of  equity  Amortization 
 of goodwill 
AFCI Addition of  
Dominó in 
 consolidation 
Proposed 
dividends 
and IOC 
Other  Balance 
as of   30.09.2008 
           
Investees                 
   Dominó Holdings (e) 90,155  (90,155)
   Sercomtel Telecom.  82,153  910  83,063 
   Foz do Chopim  16,353  6,815  (6,152) (322) (1) 16,694 
   Dois Saltos Empreend.  300 (2)  300 
   Sercomtel Celular  8,759  (2,152) 6,607 
   Dona Francisca  5,931  3,051  8,982 
   Copel Amec  140  147 
   Carbocampel  (56) (7) (63)
   Carbocampel - AFCI  1,059  1,059 
   Escoelectric  (1,390) 355  (1,035)
   Escoelectric - AFCI  1,025  1,025 
   Braspower - AFCI  176  20  196 
   Sanepar  21,172  264,539  (4,151) 281,560 
  204,305  30,151  -  20  174,384  (10,303) (22) 398,535 
Investees - goodwill (c)              
   Sercomtel - Telecom.  1,568  (1,568)
   Sercomtel Celular  223  (223)
   Sanepar  (547) 4,377  3,830 
  1,791  -  (2,338) 4,377  -  -  3,830 
Subsidiaries - goodwill               
   Elejor (Note 17.a) (566) 566 
   COPEL Empreend.(N. 17.b) (1,759) 1,759 
  -  -  (2,325) -  -  2,325 (3) - 
Other  -  (239) -  -  -  239  - 
                 
  206,096  29,912  (4,663) 20  178,761  (10,303) 2,542  402,365 
                 
AFCI - advance for capital increase               
(1) Dividends from previous year.               
(2) Balance transferred from other investments.               
(1) Balances and changes reclassified under intangible assets in progress.           

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        Investments  Proposed    Balance 
  Balance as of  Result of  Amortization  and  dividends    as of 
Consolidated  31.12.2006  equity  of goodwill  AFCI  and IOC  Other  30.09.2007 
               
Investees               
   Dominó Holdings (e) 91,522  7,107  (1,350) 97,279 
   Sercomtel Telecomunicações  83,463  625  84,088 
   Foz do Chopim  16,362  7,150  (5,652) (716) (1) 17,144 
   Sercomtel Celular  12,369  (1,716) 10,653 
   Dona Francisca Energética  2,023  2,919  4,942 
   Centrais Eólicas do Paraná  1,050  122  (1,172) (2)
   Copel Amec  468  21  (350) 139 
   Carbocampel  232  (16) 216 
   Carbocampel - AFCI  198  198 
   Escoelectric - AFCI  2,500  (1,914) 439  1,025 
   Braspower - AFCI  176  176 
  210,363  14,298  -  89  (7,002) (1,888) 215,860 
Investees - goodwill (c)              
   Sercomtel - Telecomunicações  5,796  (3,171) 2,625 
   Sercomtel Celular  803  (435) 368 
  6,599  -  (3,606) -  -  -  2,993 
Subsidiaries - goodwill               
   Elejor (Note 17.a) (566) 566 
   COPEL Empreend. (N. 17.b) (1,759) 1,759 
  -  -  (2,325) -  -  2,325 (3) - 
Other  -  3,367  -  -  -  (3,367) (4) - 
               
  216,962  17,665  (5,931) 89  (7,002) (2,930) 218,853 
               
   AFCI - advance for capital increase               
   (1) Dividends from previous year.               
   (2) Inclusion of Centrais Eólicas in the consolidation of financial statements.         
   (3) Balances and changes reclassified under intangible assets in progress.         
   (4) Balances from subsidiaries Compagas and Elejor which haven't been eliminated upon consolidation from previous years and whose equity results were recorded in 2007. 

c) Interests in subsidiaries - goodwill

The investments in Sercomtel S.A. Telecomunicações and in Sercomtel Celular S.A. include goodwill on acquisition (R$ 42,289 and R$ 5,814), which have been fully amortized at the annual rate of 10%, with a charge to income of R$ 1,791 (R$ 1,568 + R$ 223) in 2008 and of R$ 3,606 (R$ 3,171 + R$ 435) in 2007. The payment of goodwill was determined by the expected future profitability, resulting from the assessment of the return on investment based on discounted cash flows.

In 1998, the acquisition by Dominó Holdings S.A. of an interest in SANEPAR resulted in goodwill, which is being amortized over 15 years as of 1999, at the rate of R$ 135 a month, for a total of R$ 547 in 2008, which is proportional to COPEL Participações' interest in the company.

d) Consórcio Energético Cruzeiro do Sul (1)

Consórcio Energético Cruzeiro do Sul, an independent power producer owned by COPEL Geração e Transmissão (with a 51% interest) and by Eletrosul Centrais Elétricas S.A. (49%), won, on November 28, 2006, at the Auction of Power from New Projects, the rights to the 35-year concession of the Mauá Hydroelectric Power Plant.

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This project is included in the Federal Government’s Growth Acceleration Program (PAC) and will comprise a main power plant rated 350 MW and an additional small hydropower unit rated 11 MW, for a total of 361 MW of installed capacity, which is enough to supply approximately 892,400 people. The facility will take advantage of the hydroelectric potential discovered in the middle section of the Tibagi River, between the towns of Telêmaco Borba and Ortigueira, in mideastern Paraná. The plant’s reservoir will have a perimeter of 80 km and a surface of 83.8 km2. The dam will have a length of 745 m and a maximum height of 85 m and will be built with roller-compacted concrete and a clay-filled embankment. The dam’s total solid volume will be around 580.000 m3.

Total estimated expenditures amount to approximately R$ 1,000,000 as of October 2006, of which 51% (R$ 505,554) will be invested by COPEL Geração e Transmissão, while the remaining 49% (R$ 485,729) will be invested by Eletrosul.

In November 2007, the National Monetary Council (CMN) authorized an exception to Central Bank Resolution no. 2,827/01, which limited credit to state-owned companies, in order to allow COPEL to obtain financing from the National Economic and Social Development Bank (BNDES), in the amount of approximately R$ 360.000, for the Company’s share of construction expenditures in connection with the Mauá Hydroelectric Power Plant.

The power from the Mauá Power Plant was sold at an ANEEL auction at the rate of R$ 112.96/MWh, restated according to the IPCA inflation index starting on November 1, 2006. The company sold 192 average MW, for supply starting in January 2011. The assured power of the project, established in its concession agreement, was 197.7 average MW, after full motorization, and the maximum reference rate set in the auction notice was R$ 116.00/MWh.

Expenditures in this project are recorded as investments, proportionally to COPEL’s share in the consortium, pursuant to the Accounting Manual for Electric Energy Utilities.

Work began in May 2007 with the procurement of the basic project and the beginning of the executive project for the facility and its associated transmission system, the preparation of technical specifications, calculation records, designs, and other documents regarding the different structures within the facility, additional geological surveys, and topography services. The project has been concluded and approved by ANEEL. The project’s Environmental Impact Study and Environmental Impact Report have been disclosed at a public hearing and approved by the licensing authority, resulting in the issue of Installation License no. 6,496/2008. The service order for the beginning of the construction of the Mauá Hydroelectric Power Plant was signed on July 21, 2008, and commercial generation is scheduled for 2011.

Currently, the construction site is being set up, with area cleanup, terrain leveling, landfill compaction, and construction of industrial and administrative facilities and personnel quarters. Superficial excavation has also been started for the construction of diversion tunnels for the Tibagi River at the dam’s construction site.

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Table of Contents

(1) Technical information unaudited by the independent auditors.

e) Dominó Holdings

Dominó Holdings S.A. is a company which owns 34.75% of the share capital of the Sanitation Company of Paraná – SANEPAR, a mixed capital company whose business comprises basic sanitation services, including water supply and sewage collection and treatment. On January 14, 2008, COPEL, through its wholly-owned subsidiary COPEL Participações, became the holder of 45% of the share capital of Dominó Holdings S.A., by acquiring a 30% interest held by Sanedo Participações Ltda. for R$ 110,226, with an approximate discount of R$ 74,402, based on the on the expected future profitability of the company. Upon consolidation of the balance sheets, this discount was reclassified to income from future periods.

With this acquisition, COPEL Participações acquired control of the company in cooperation with the remaining shareholders. Dominó Holdings has been consolidated into COPEL’s balance sheets proportionally to the Company’s interest in it.

The main items of assets, liabilities, and the statement of income of Dominó Holdings, as well as the corresponding consolidated shares, are shown below:

         
Dominó Holdings S.A.  Balances as of 30.09.2008 
       
  Full amounts  Revaluation 
reserve (1)
Adjusted
balance
 
COPEL's
stake
 
(45%)
         
ASSETS  694,683  (47,978) 646,705  291,017 
Current assets  12,498  12,498  5,624 
Long-term receivables  682,185  (47,978) 634,207  285,393 
 
LIABILITIES  694,683  (47,978) 646,705  291,017 
Current liabilities  9,312  9,312  4,190 
Shareholders' equity  685,371  (47,978) 637,393  286,827 
         
STATEMENT OF INCOME         
General and administrative expenses  (2,071) (2,071) (932)
Financial income (losses) (504) (504) (227)
Result of equity in investees  43,976  1,857  45,833  20,625 
Net income for the period  41,401  1,857  43,258  19,466 
         
(1) Balances have been adjusted due to accounting practices not adopted by the Parent Company     

f) Centrais Eólicas do Paraná

The Company, through COPEL Participações, held a 30% interest in Centrais Eólicas do Paraná (Ceopar). On September 6, 2007, COPEL acquired, through COPEL Geração e Transmissão, the remaining 70% interest held by Wobben Windpower Indústria e Comércio Ltda., thus becoming the holder of 100% of the share capital of Ceopar. This transaction resulted in a discount of R$ 592, which was reclassified upon consolidation to income from future periods.

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16 Property, Plant, and Equipment

             
  Cost  Accumulated   depreciation  Consolidated 
net
value
 
Cost  Accumulated 
depreciation
 
Consolidated 
net
value
 
             
      30.09.2008      30.06.2008 
In service (a)            
 COPEL Geração e Transmissão  5,211,289  (2,032,890) 3,178,399  5,202,294  (2,000,835) 3,201,459 
 COPEL Distribuição  4,711,703  (2,245,641) 2,466,062  4,641,460  (2,202,788) 2,438,672 
 COPEL Telecomunicações  348,606  (199,380) 149,226  334,444  (193,476) 140,968 
 COPEL Participações  314  (232) 82  322  (235) 87 
 Compagas  153,014  (40,149) 112,865  149,553  (38,216) 111,337 
 Elejor  605,880  (42,598) 563,282  605,899  (38,509) 567,390 
 UEG Araucária  641,046  (100,050) 540,996  640,205  (92,098) 548,107 
 Centrais Eólicas do Paraná  4,129  (2,371) 1,758  4,129  (2,319) 1,810 
  11,675,981  (4,663,311) 7,012,670  11,578,306  (4,568,476) 7,009,830 
Construction in progress             
 COPEL Geração e Transmissão  284,714  284,714  274,791  274,791 
 COPEL Distribuição  439,847  439,847  392,984  392,984 
 COPEL Telecomunicações  28,903  28,903  39,135  39,135 
 Compagas  26,501  26,501  25,162  25,162 
 Elejor  9,029  9,029  8,828  8,828 
 UEG Araucária  520  520  553  553 
  789,514  -  789,514  741,453  -  741,453 
  12,465,495  (4,663,311) 7,802,184  12,319,759  (4,568,476) 7,751,283 
Special liabilities (b)            
 COPEL Geração e Transmissão  (4,925) (4,925) (4,925) (4,925)
 COPEL Distribuição  (902,629) 9,824  (892,805) (881,770) (881,770)
  (907,554) 9,824  (897,730) (886,695) -  (886,695)
             
             
  11,557,941  (4,653,487) 6,904,454  11,433,064  (4,568,476) 6,864,588 
             

Under Articles 63 and 64 of Decree no. 41,019, dated February 26, 1957, the assets and facilities used mostly in the generation, transmission, distribution, and sale of power are attached to these services and cannot be withdrawn, sold, assigned, or mortgaged without the prior written consent of the Regulatory Agency. ANEEL Resolution no. 20/1999 regulates the release of assets from the concessions of the Public Electric Energy Utilities, granting prior authorization to the release of assets that are deemed useless to the concession, when intended for sale, provided that the proceeds from such transaction be deposited in a special bank account assigned to investment in the concession.

a) Property, plant, and equipment in service

             
    Accumulated  Consolidated    Accumulated  Consolidated 
  Cost  depreciation  net value  Cost  depreciation  net value 
             
      30.09.2008      30.06.2008 
Machinery and equipment  7,728,668  (3,180,991) 4,547,677  7,630,797  (3,110,324) 4,520,473 
Reservoirs, dams, and headrace channels  2,865,152  (1,052,944) 1,812,208  2,865,095  (1,037,302) 1,827,793 
Buildings  701,409  (315,944) 385,465  700,634  (310,712) 389,922 
Land  119,700  119,700  118,882  118,882 
Gas pipelines  115,723  (26,541) 89,182  115,636  (25,576) 90,060 
Vehicles  125,932  (75,004) 50,928  127,745  (72,798) 54,947 
Furniture and implements  19,397  (11,887) 7,510  19,517  (11,764) 7,753 
             
  11,675,981  (4,663,311) 7,012,670  11,578,306  (4,568,476) 7,009,830 
             

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b) Special liabilities

Special liabilities comprise customers’ contributions, Federal Government budget grants, federal, State, and municipal funds, and special credits linked to the investments in facilities tied to a concession. Special liabilities are not onerous liabilities and are not credits owned by shareholders. They are restated according to the same criteria and indicators used to restate the assets under the property, plant, and equipment of the corresponding agents. The scheduled date for settlement of these liabilities was the concession expiration date.

ANEEL, by means of Regulatory Resolution no. 234/2006, dated October 31, 2006, established the guidelines, the applicable methodologies, and the initial procedures for the conduction of the second cycle of the periodic rate review involving the Brazilian power distribution utilities, changing the characteristics of these liabilities. Both the outstanding balance and new additions have been amortized as of July 1, 2008, pursuant to ANEEL Ruling no. 3,073/06 and Circular Letter no. 1,314/07. This amortization is calculated based on the same average depreciation rate of the corresponding assets.

For purposes of calculating the compensation for the assets linked to the concession and transferable to the Federal Government, on the concession expiration date the remaining balance of special liabilities, if any, will be deducted from the residual value of the assets, both assessed according to criteria set by ANEEL.

The change in the characteristics of these liabilities results from the new rate-setting mechanism introduced by this new Regulatory Resolution, which establishes that the depreciation of assets acquired with funds from Special Liabilities will no longer be included in the B Portion of the companies’ revenues.

c) Changes in property, plant, and equipment

         
    Construction  Special   
Balances  In service  in progress  liabilities  Consolidated 
         
As of December 31, 2007  6,972,542  717,029  (857,192) 6,832,379 
   Expenditure program  282,918  282,918 
   Transfer to p.,p.,&e. in service  253,549  (253,549)
   Depreciation quotas  (203,383) (203,383)
   Write-offs  (12,837) (573) (13,410)
   Customer contributions  (29,503) (29,503)
   Transfers between p.,p.,&e. and intangible assets  (3,164) (3,159)
   Transfers of assets assigned for future use  (46) (46)
   Reversal of provisions for contingencies  (1,208) (1,208)
As of June 30, 2008  7,009,830  741,453  (886,695) 6,864,588 
   Expenditure program  155,086  155,086 
   Transfer to p.,p.,&e. in service  110,789  (110,789)
   Depreciation quotas  (92,659) (92,659)
   Write-offs  (15,290) (1,141)   (16,431)
   Customer contributions  (11,035) (11,035)
   Supplemental provision for contingencies  4,905  4,905 
As of September 30, 2008  7,012,670  789,514  (897,730) 6,904,454 
         

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17 Intangible assets

           
  Rights of use      Accumulated    Consolidated 
  of software  Easements  Other amortization (1)   Net value 
           
          30.09.2008  30.06.2008 
In service             
   COPEL Geração e Transmissão  11,782  9,177  29  (8,494) 12,494  12,606 
   COPEL Distribuição  29,228  17,730  109  (23,991) 23,076  23,591 
   COPEL Telecomunicações  4,093  (2,956) 1,137  1,306 
   COPEL Participações 
   Compagas  640  20  (454) 206  228 
   Elejor  101  101  101 
   UEG Araucária  90  (66) 24  26 
  45,833  27,008  159  (35,961) 37,039  37,859 
In progress             
   COPEL Geração e Transmissão  714  714  654 
   COPEL Distribuição  1,575  3,022  4,597  3,957 
   COPEL Telecomunicações  100  100  100 
   Elejor  27  27  27 
   Goodwill - Elejor (a) 22,626  (1,885) 20,741  20,929 
   Goodwill - Copel Empreendimentos (b) 53,954  (4,105) 49,849  50,436 
  1,675  3,763  76,580  (5,990) 76,028  76,103 
             
          113,067  113,962 
             
   (1) Annual amortization rate for intangible assets in service: 20%           

a) Goodwill - ELEJOR

The acquisition of the shares held by Triunfo Participações S.A., in December 2003, resulted in total goodwill of R$ 22,626, which corresponded to a balance of R$ 20,741 as of September 30, 2008. The linear amortization of goodwill was economically determined by the expected income from the commercial operation of the concession, which expires in October 2036, and its effect on the statement of income as of September 30, 2008 was R$ 566 (R$ 566 as of September 30, 2007).

b) Goodwill - COPEL Empreendimentos

The acquisition on May 31, 2006 of COPEL Empreendimentos, which was previously known as El Paso Empreendimentos e Participações Ltda. and which held a 60% interest in UEG Araucária Ltda., resulted in net final goodwill of R$ 53,954, with a balance as of September 30, 2008 of R$ 49,849. The linear amortization of goodwill was economically determined by the expected income from the commercial operation of the concession, which expires in December 2029, and its effect on the statement of income as of September 30, 2008 was R$ 1,759 (R$ 1,759 as of September 30, 2007).

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c) Changes in intangible assets

       
Balances  In service  In progress  Consolidated 
       
As of December 31, 2007  36,067  76,518  112,585 
   Expenditure program  1,799  1,799 
   Capitalizations  3,828  (3,828)
   Amortization quotas  (1,707) (1,550) (3,257)
   Write-offs  (324) (324)
   Transfer between intangible assets and p.,p.,&e.  (5) 3,164  3,159 
As of June 30, 2008  37,859  76,103  113,962 
   Expenditure program  809  809 
   Capitalizations  109  (109)
   Amortization quotas  (856) (775) (1,631)
   Write-offs  (73) (73)
As of September 30, 2008  37,039  76,028  113,067 
       

18 Loans and Financing

The breakdown of the consolidated and of the Company’s loans and financing balances is featured below:

             
Consolidated      Current  Long-term 
      liabilities  liabilities 
             
      30.09.2008  30.06.2008  30.09.2008  30.06.2008 
  Principal amount  Charges  Total  Total     
Foreign currency             
   IDB (a) 19,562  414  19,976  17,609  28,901  33,054 
   STN (b) 6,961  2,037  8,998  6,841  72,638  60,404 
   Banco do Brasil (c) 4,449  17  4,466  3,826  1,854 
   Eletrobrás (d) 33  27 
  30,978  2,469  33,447  28,281  101,572  95,339 
National currency (reais )            
   Banco do Brasil (c) 153  4,465  4,618  13,287  330,411  330,421 
   Eletrobrás (d) 36,271  13  36,284  37,632  282,957  257,777 
   Eletrobrás - Elejor (e) 111,466  106,682 
   BNDES - Compagas (f) 6,385  6,385  6,283  14,415  15,747 
   Finep (g) 1,464  1,464 
  42,809  4,481  47,290  57,206  740,713  712,091 
             
  73,787  6,950  80,737  85,487  842,285  807,430 
             

             
Parent Company        Current    Long-term 
        liabilities    liabilities 
             
      30.09.2008  30.06.2008  30.09.2008  30.06.2008 
  Principal amount  Charges  Total  Total     
Foreign currency             
   National Treasury (b) 6,961  2,037  8,998  6,841  72,638  60,404 
           
National currency (reais )            
   Banco do Brasil (c) 4,461  4,461  13,134  329,600  329,600 
             
  6,961  6,498  13,459  19,975  402,238  390,004 
             

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Maturity of long-term installments

         
  Foreign  National     
  currency  currency    Consolidated 
         
      30.09.2008  30.06.2008 
2009  2,721  9,051  11,772  34,048 
2010  24,708  37,318  62,026  62,769 
2011  15,075  60,796  75,871  73,385 
2012  4,005  65,584  69,589  58,879 
2013  2,570  65,584  68,154  57,048 
2014  1,288  388,713  390,001  385,453 
2015  58,661  58,661  54,380 
2016  37,451  37,451  33,479 
2017  6,357  6,357  3,113 
2018  5,614  5,614  2,122 
2019  3,365  3,365  119 
2020  2,215  2,215  50 
2021 
After 2021  51,205  51,205  42,581 
         
  101,572  740,713  842,285  807,430 
         

Changes in loans and financing

               
      Foreign currency      National currency  Consolidated 
Balances  Current    Long-term  Current    Long-term  Total 
               
As of December 31, 2007  30,498    118,282  62,186    716,986  927,952 
   Funds raised      1,463  1,463 
   Capitalized charges      5,653  5,653 
   Charges  3,884    31,513    975  36,372 
   Monetary and exchange variation  (2,302)   (8,795) 262    9,738  (1,097)
   Transfers  14,148    (14,148) 22,724    (22,724)
   Amortization  (17,947)   (59,479)   (77,426)
As of June 30, 2008  28,281    95,339  57,206    712,091  892,917 
   Funds raised      32,511  32,511 
   Capitalized charges      3,132  3,132 
   Charges  1,301    19,070    859  21,230 
   Charges transferred to p.,p.&e.    (864)   (864)
   Monetary and exchange variation  5,339    16,456  (78)   2,364  24,081 
   Transfers  10,223    (10,223) 10,244    (10,244)
   Amortization  (11,697)   (38,288)   (49,985)
As of September 30, 2008  33,447    101,572  47,290    740,713  923,022 
               

a) Inter-American Development Bank - IDB

Loan for the Segredo Hydroelectric Power Plant and for the Jordão River Diversion Project, received on 15 January 1991, in the amount of US$ 135,000. This debt is amortized semi-annually, with final maturity in January 2011. Interest is calculated according to the IDB funding rate, which in the third quarter of 2008 was 4.06% p.a. The agreement features provisions providing for termination in the following cases:

1) Default by the debtor on any other obligation set forth in the agreement or agreements signed with the Bank for financing of the project;

2) Withdrawal or suspension of the Federal Republic of Brazil as a member of the IDB;

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3) Default by the guarantor, if any, of any obligation set forth in the guaranty agreement;

4) Ratio between current assets and total short-term commercial and bank financing, except for the current share of long-term indebtedness and dividends to be reinvested, lower than 1.2; and

5) Ratio between long-term indebtedness and shareholders’ equity exceeding 0.9.

This agreement is guaranteed by the Federal Government and by mortgage and fiduciary guarantees.

b) Department of the National Treasury - STN

The restructuring of medium and long-term debt, signed on May 20, 1998, in connection with the financing received under Law no. 4,131/62, is shown below:

           
  Term  Final  Grace period     
Bond type  (years) maturity  (years)   Consolidated 
           
        30.09.2008  30.06.2008 
   Par Bond  30  15.04.2024  30  31,018  25,407 
   Capitalization Bond  20  15.04.2014  10  15,960  13,061 
   Debt Conversion Bond  18  15.04.2012  10  11,691  9,710 
   Discount Bond  30  15.04.2024  30  21,414  17,778 
   New Money Bonds  15  15.04.2009  771  641 
   Flirb  15  15.04.2009  782  648 
           
        81,636  67,245 
           

The annual interest rates and repayments are as follows:

     
Bond type  Annual interest rates (%) Payments 
     
   Par Bond  6.0  single 
   Capitalization Bond  8.0  semi-annual 
   Debt Conversion Bond  Six-month LIBOR + 0.8750  semi-annual 
   Discount Bond  Six-month LIBOR + 0.8125  single 
   New Money Bonds  Six-month LIBOR + 0.8750  semi-annual 
   Flirb  Six-month LIBOR + 0.8125  semi-annual 
     

As collateral for this agreement, the Company assigned and transferred to the Federal Government, conditioned to the non-payment of any financing installment, the credits that are made to the Company’s centralized revenues account, up to a limit sufficient to cover the payment of installments and other charges payable upon each maturity. For the Discount and Par Bonds, there are collateral deposits of R$ 10,120 and R$ 14,427 (R$ 8,416 and R$ 11,997 as of June 30, 2008), respectively, recorded under guarantees and escrow deposits, in long-term receivables (Note 11).

c) Banco do Brasil S.A.

The Company has the following contracts with Banco do Brasil:

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1) Agreements denominated in Japanese yen for the gas-insulated substation at Salto Caxias, repayable in 20 semi-annual installments, starting on March 7, 2000, bearing interest of 2.8% p.a. and a 3.8% p.a. brokerage commission. This debt is secured by COPEL’s revenues;

2) Private Credit Assignment Agreement with the Federal Government, through Banco do Brasil S.A., signed on March 30, 1994, repayable in 240 monthly installments based on the Price amortization system starting on April 1, 1994, monthly restated by the TJLP and IGP-M plus interest of 5.098% p.a. and secured by COPEL’s revenues.; and

3) The Parent Company has the following credits notes from Banco do Brasil, in connection with its debt service:

         
  Issue    Financial charges due   
Credit notes  date  Maturity  semi-annually  R$ 
         
 Commercial no. 330.600.129  31.01.2007  31.01.2014  106.5% of average CDI rate  29,000 
 Industrial no. 330.600.132  28.02.2007  28.02.2014  106.2% of average CDI rate  231,000 
 Industrial no. 330.600.151  31.07.2007  31.07.2014  106.5% of average CDI rate  18,000 
 Industrial no. 330.600.156  28.08.2007  28.08.2014  106.5% of average CDI rate  14,348 
 Industrial no. 330.600.157  31.08.2007  31.08.2014  106.5% of average CDI rate  37,252 
         
        329,600 
         

As a guarantee, Banco do Brasil was authorized to deduct any amounts credited, on any grounds, to the Company's deposit account to cover, in part or in full, the outstanding balance due under the line of credit. It was also irrevocably authorized, regardless of prior notice, to offset the bank’s receivable, which corresponds to the outstanding balance due under the line of credit, with any credits the Company has or accrues at Banco do Brasil.

d) Eletrobrás

Loans originated from the Eletrobrás Financing Fund (FINEL) and from the Global Reversal Reserve (RGR) for the expansion of the generation, transmission, and distribution systems. Repayments started in February 1999, and the last payment is due in August 2021. Interest of 5,0% to 8,0% p.a. and principal are repaid monthly, adjusted by the FINEL and Federal Reference Unit (UFIR) rates.

Contract ECFS – 142/2006, was signed on May 11, 2006 by COPEL Distribuição and Eletrobrás, in the amount of R$ 74,340, for use in the “Luz para Todos” rural electrification program. Out of the total amount, R$ 42,480 came from RGR funds, and R$ 31,860 from CDE (Energy Development Account) funds. This loan has a grace period of 24 months and bears interest of 5% p.a. plus a commission of 1% p.a. It is repayable in 120 equal monthly installments, with final maturity on September 30, 2018. As of December 2007, COPEL had withdrawn R$ 52,028, of which R$ 29,736 came from RGR funds.

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Contract ECFS – 206/2007, was signed on March 3, 2008 by COPEL Distribuição and Eletrobrás, in the amount of R$ 126,431, for use in the “Luz para Todos” rural electrification program. Out of the total amount, R$ 108,369 came from RGR funds, and R$ 18,061 from CDE (Energy Development Account) funds. This loan has a grace period of 24 months and bears interest of 5% p.a. plus a commission of 1% p.a. It is repayable in 120 equal monthly installments, with final maturity on August 30, 2020. On July 28, 2008, COPEL withdrew R$ 37,929, of which R$ 32,511 came from RGR funds.

These loans are secured by the revenues of COPEL’s subsidiaries, pursuant to a mandate issued by public act, and by the issue of promissory notes in the same number of outstanding installments.

e) Eletrobrás - Elejor

For purposes of presentation of the quarterly financial information report, the value of the shares to be redeemed by ELEJOR has been reclassified from minority interest to loans and financing, under long-term liabilities.

The 59,000,000 preferred shares in Elejor held by Eletrobrás, in the amount of R$ 59,900, shall be reacquired by the issuer (Elejor) in 32 consecutive quarterly installments, each in the amount of 1,871,875 shares, starting in the 24th month from the beginning of commercial operation of the project, which took place after the last generating unit entered operation on August 31, 2006.

The paid in amounts are restated according to the IGP-M index, pro rata, between the date the shares were paid in and the actual payment date, plus interest of 12% p.a..

In August 2007, nine installments were bought back in advance by Elejor, for R$ 20,385, plus financial charges of R$ 18,725, for a total of R$ 39,110.

As of September 2008, the outstanding balance comprised a principal amount of R$ 44,731 plus R$ 66,735 in charges.

f) BNDES - Compagas

The BNDES balance includes four agreements signed by Compagas on December 14, 2001, repayable in 99 monthly installments, with interest of 4% p.a.. Two of these agreements were signed for the purchase of machinery and equipment, subject to the TJLP rate (limited to 6% p.a.), and two were signed for construction, facilities, and services, subject to the BNDES monetary unit (UMBND) rate.

This financing is secured by Compagas’ gas supply receivables, which shall be deposited exclusively in a checking account at Banco Itaú S.A.

g) Financiadora de Estudos e Projetos - FINEP

Loan agreement no. 02070791-00, signed on November 28, 2007 to partially cover expenses incurred in the preparation of the "Generation Research and Development Project for 2007".

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The funds, in the amount of R$ 5,078, will be made available in six installments. The first one, in the amount of R$ 1,464, was withdrawn in April 2008, and the remaining ones will be deposited every 90 days, to the extent there is financial and budget availability.

A share of 1% of the funds will be allocated to cover inspection and supervision expenses.

The principal amount of this debt will be subject to equalized interest of 6.37% p.a., due on the 15th day of each month, including the months of the grace period.

The outstanding balance will be paid to FINEP in 49 monthly and successive installments, the first one due on December 15, 2010, and the last one on December 15, 2014.

COPEL Geração e Transmissão has committed to pay a share of the project preparation costs, with its own resources, in the minimum amount of R$ 564.

To secure the contract, COPEL Geração e Transmissão has authorized Banco do Brasil to withhold the amounts due to FINEP from the checking account in which its monthly revenues are deposited. In the event of breach of contract, COPEL shall lose the benefit of interest equalization.

19 Debentures

The balance of debentures is broken down below:

             
        Current    Long-term 
        liabilities    liabilities 
             
      30.09.2008  30.06.2008  30.09.2008  30.06.2008 
  Principal amount  Charges  Total  Total     
Parent Company (a) 133,360  9,718  143,078  162,639  600,000  600,000 
Elejor (b) 15,219  3,306  18,525  3,304  254,582  269,638 
             
  148,579  13,024  161,603  165,943  854,582  869,638 
             

Maturity of long-term installments

     
    Consolidated 
     
  30.09.2008  30.06.2008 
2009  7,610  22,816 
2010  42,200  42,174 
2011  646,120  646,092 
2012  46,120  46,092 
2013  46,120  46,092 
2014  43,076  43,050 
2015  20,201  20,188 
2016  3,135  3,134 
     
  854,582  869,638 
     

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Changes in the balances of debentures

       
   Current  Long-term  Consolidated 
Balances  liabilities  liabilities  Total 
       
As of December 31, 2007  171,827  1,002,674  1,174,501 
   Charges  56,667  324  56,991 
   Transfers  133,360  (133,360)
   Amortization  (195,911) (195,911)
As of June 30, 2008  165,943  869,638  1,035,581 
   Charges  31,701  164  31,865 
   Transfers  15,220  (15,220)
   Amortization   (51,261) (51,261)
As of September 30, 2008  161,603  854,582  1,016,185 
       

a) Parent Company Debentures

1) Fourth Issue of Debentures

A single series of 60,000 debentures makes up the fourth issue of simple debentures conducted by the Company on September 1, 2006, in the amount of R$ 600,000, and concluded on October 6, 2006, with full subscription in the total amount of R$ 607,899, with a five-year term from issue date and final maturity on September 1, 2011. These are simple, nominative debentures, non-convertible into stock, issued in book-entry form, and unsecured.

These securities will yield interest on their face value of 104% of the average one-day Interfinance Deposit (DI - over) rates, extra-group, expressed in an annual percentage rate based on 252 business days, calculated and published daily by CETIP (the “DI rate”) in exponential and cumulative “pro rata tempore” manner according to the number of business days elapsed. Interest corresponding to the capitalization period will be due and paid semi-annually, with the first due date on March 1, 2007 and the last on September 1, 2011. There will be no renegotiation of these debentures.

The resources obtained with the issue of these debentures were used to optimize the Company’s debt profile, by means of payment of its financial obligations, and to reinforce its cash flow. The resources from this issue were used to settle 1/3 of the principal amount of the Company's 3rd issue of debentures, due on February 1, 2007, and the principal amount of the Company’s 2nd issue of debentures, due on March 1, 2007.

2) Third Issue of Debentures

A single series of 40,000 debentures makes up the third issue of simple debentures, concluded on May 9, 2005, fully subscribed for R$ 400,000, with a four-year term. Final maturity is scheduled for 2009, with the first repayment (1/3) being scheduled for January 1, 2007, the second repayment (1/3) for February 1, 2008, and the third one (1/3) for February 1, 2009.

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These are simple, nominative debentures, non-convertible into stock, issued in book-entry form, and secured by real estate. The funds were used to pay off securities issued on the international market (Euronotes) by the Company on May 2, 1997 and due on May 2, 2005, in the amount of US$ 150,000.

The pledged security is COPEL Geração e Transmissão’s bank account in Banco do Brasil S.A., in which all resources earned by it in connection with power sales agreements, both current and future, will be deposited.

These securities will yield interest on their face value (minus previously amortized amounts) of 115% of the average one-day Interfinance Deposit rates, extra-group, expressed in an annual percentage rate based on 252 business days, calculated and published daily by CETIP (the “DI rate”) in exponential and cumulative “pro rata tempore” manner according to the number of business days elapsed. Interest corresponding to the capitalization periods will be due and paid semi-annually, with the first due date on August 1, 2005 and the last on February 1, 2009. There will be no renegotiation of these debentures.

The debentures feature provisions setting forth accelerated maturity in certain conditions.

b) Debentures - Elejor

The contract for Elejor’s first issue of debentures was signed with BNDES Participações S.A. – BNDESPAR, with COPEL Participações intervening as “Guarantor Shareholder” together with COPEL.

These funds were raised to be employed in the following:

1) Investments in the Fundão-Santa Clara Power Complex, on the Jordão River, in the State of Paraná;

2) Investments in two small hydropower plants, the Santa Clara I SHP and the Fundão SHP;

3) Payment of 50% of the amounts borrowed between July 1, 2004 and September 30, 2004 under the loan agreement signed on April 7, 2004 with the Guarantor Shareholder;

4) Full payment of the funds loaned by the Guarantor Shareholder from October 1, 2004 until the date the first debentures were paid in;

5) Payment of operating expenses inherent to the issuer's business, including the purchase of power to meet supply obligations; and

6) Financing of the social and environmental programs in connection with the investments in the Fundão-Santa Clara Power Complex.

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One thousand debentures were issued in book-entry form, without the issue of guarantees or certificates. They were issued in two series, the first one comprising 660 debentures, and the second one, 340. Both of them are nominative, convertible into common shares and into class C preferred shares, at the discretion of the debenture holders.

The total amount of this issue was R$ 255,626. The debentures had a face value of R$ 256 on the issue date, February 15, 2005, and this value is restated according to the variation of the long term interest rate (TJLP).

The final maturity of the first series is scheduled for February 15, 2015. After the grace period for the principal amount of 48 months from the issue date, amortization will take place in 24 quarterly installments pursuant to the agreement. The first amortization payment is due on May 15, 2009.

The final maturity of the second series is scheduled for February 15, 2016. After the grace period for the principal amount of 60 months from the issue date, amortization will take place in 24 quarterly installments pursuant to the agreement. The first amortization payment is due on May 15, 2010.

The first and second series yield interest based on the variation of TJLP, plus a 4% p.a. spread on the outstanding balance of each series. Interest on the first series is due annually, in the first twelve months from the issue date, and quarterly thereafter. The first payment was due on February 15, 2006, and the last one, on February 15, 2015. Interest on the second series is due annually, in the first 24 months from the issue date, and quarterly thereafter. The first payment was due on May 15, 2007, and the last one, on February 15, 2016.

The agreement contains the following guarantees:

1) Letter of guarantee signed by COPEL Participações pledging an unsecured guarantee and taking main responsibility for payment to debenture holders;

2) Lien on rights resulting from the concession agreement: pursuant to the terms and provisions of the private agreements for lien on revenues and other covenants between the issuer, the fiduciary agent, and the depositary bank, an irrevocable lien was constituted, with due authorization by ANEEL; and

3) Lien on revenues and reserve of funds for payment: pursuant to the agreement between the issuer, the fiduciary agent, and the depositary bank, a centralizing account and a reserve account were constituted and shall be in effect until final settlement of all obligations under this agreement.

The debentures feature provisions setting forth accelerated maturity in certain conditions.

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20 Suppliers

       
      Consolidated 
       
    30.09.2008  30.06.2008 
Charges for the use of the power grid       
   Use of the Basic Network    57,158  51,779 
   Transport of power    4,193  3,743 
   Use of connections    264  237 
    61,615  55,759 
Power suppliers       
   Eletrobrás (Itaipu)   82,122  72,738 
   Furnas Centrais Elétricas S.A.    32,319  30,191 
   Controladora Hidro Elétrica do São Francisco - Chesf    31,495  29,272 
   Utilities - CCEE (Note 32)   32,863  20,522 
   Controladora Energética de São Paulo - Cesp    11,444  10,412 
   Rio Pedrinho Energética S.A. e Consórcio Salto Natal Energética S.A.    9,814  9,383 
   Centrais Elétricas do Norte do Brasil S.A. - Eletronorte    10,277  9,293 
   Itiquira Energética S.A.    8,966  8,764 
   Dona Francisca Energética S.A.    4,420  4,420 
   Companhia Energética de Minas Gerais - Cemig    4,642  4,223 
   Other utilities    21,578  15,509 
    249,940  214,727 
Materials and services 
     
   Petróleo Brasileiro S.A. - Petrobras - renegotiation - long-term (a)   207,006  200,730 
   Petróleo Brasileiro S.A. - Petrobras - gas acquired by Compagas    35,015  28,556 
   Other suppliers    101,647  110,319 
    343,668  339,605 
       
    655,223  610,091 
       
  Current  448,217  409,361 
  Long-term  207,006  200,730 
       

a) Petróleo Brasileiro S.A. - Petrobras

On March 6, 2006, COPEL signed an agreement with Petrobras to settle the pending issues regarding the gas purchase agreement for the Araucária Thermal Power Plant. This settlement comprised the signature of an Out-of-Court Agreement, under which COPEL Geração e Transmissão, with COPEL as guarantor, acknowledged a R$ 150,000 debt to Petrobras, as grantor of Compagas’ credits to COPEL Geração, which shall be paid in 60 monthly installments restated by the Selic rate, starting in January 2010.

On May 30, 2006, COPEL Geração signed a Mutual Release Agreement with Compagas under which both companies fully and irrevocably release each other from all obligations and rights under the Natural Gas Purchase and Sale Agreement signed by them on May 30, 2000 and terminated on May 31, 2005, renouncing any claims against each other, on any grounds, as of the date of the Out of Court Settlement and Confession of Indebtedness signed by them and by Petrobras, with the participation of COPEL. The debt acknowledged by COPEL Geração remains.

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21 Accrued Payroll Costs

     
    Consolidated 
     
  30.09.2008  30.06.2008 
Payroll     
   Taxes and social contribution  16,588  17,622 
   Payroll, net  105  150 
   Assignments to third-parties 
  16,694  17,774 
Labor provisions     
   Paid vacation and annual bonus  69,798  59,257 
   Social charges on paid vacation and annual bonus  25,124  20,798 
   Profit sharing (Note 30.c) 49,451 
  144,373  80,055 
     
  161,067  97,829 
     

22 Post-Employment Benefits

a) Pension Plan

The Company and its subsidiaries sponsor retirement and pension plans (Pension Plans I, II, and III) and a medical and dental care plan (Healthcare Plan) to both current and retired employees and their dependents.

Pension Plans I and II are defined benefit plans, while Plan III is a defined contribution plan. On the date of retirement, the defined contribution plan becomes a monthly income for life.

The cost shares borne by the plans’ sponsors are recorded according to an actuarial assessment prepared annually by independent actuaries pursuant to the rules of CVM Ruling no. 371/2000. The actuarial and financial assumptions, for purposes of actuarial assessment, are discussed with the independent actuaries and approved by the sponsors’ senior management.

The flow of payment of contributions under Plans I and II, as of July 2007, was guaranteed under an agreement called “Private Agreement for Adjustment of Mathematical Reserves for the Basic and Supplemental Pension Plans”, signed on January 20, 1999. This agreement provides for the extinction of liabilities under certain conditions. Based on legal opinions by external and internal legal experts, the Company notified the senior management of Fundação COPEL de Previdência e Assistência Social, on July 27, 2007, that no contribution payments would be made under that agreement as of August 2007, since COPEL believed that the obligations contained therein expired.

In September 2007, Fundação COPEL disputed COPEL's interpretation, which led to a joint request for review and ruling by the State Department of Supplemental Pension Plans (SPC).

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In November 2007, the State Department of Supplemental Pension Plans requested further information and suggested the conduction of an independent actuarial audit in order to review the settlement process and to issue a conclusive report on the suitability of the actuarial assumptions used and on whether the debt and/or contract at hand was settled/terminated.

In July 2008, the COPEL Foundation submitted to the SPC an audit report prepared by their actuarial consultants, and in October 2008, the SPC sent a letter to the COPEL Foundation requesting further information and evidence supporting that report.

The outcome of this issue will not affect the amounts which have already been recorded as an actuarial liability pursuant to CVM Instruction no. 371/2000. In fact, the final decision will only affect the cash flow of the payment of contributions between COPEL and the COPEL Foundation.

b) Healthcare Plan

The Company and its subsidiaries allocate resources for the coverage of healthcare expenses incurred by their employees and their dependents, within rules, limits, and conditions set in specific regulations. Coverage includes periodic medical exams and is extended to all retirees and pensioners for life.

c) Balance sheet and statement of income

The consolidated and recognized amounts in the balance sheet, under Post-Employment Benefits, are summarized below:

         
  Pension  Healthcare    Consolidated 
  plan  plan    Total 
         
      30.09.2008  30.06.2008 
Pension plan - Plans I and II (DB) 106,457  384,991  491,448  490,810 
Pension plan - Plan III (VC) - employees  7,359  7,359  6,134 
         
  113,816  384,991  498,807  496,944 
         
    Current  19,331  17,506 
    Long-term  479,476  479,438 
         

The consolidated amounts recognized in the statement of income are shown below:

     
    Consolidated 
     
  30.09.2008  30.09.2007 
Pension plan - periodic post-employment cost (1) (20,641) (55,172)
Pension plan (VC) 35,224  36,936 
Healthcare plan - post-employment  31,136  10,811 
Healthcare plan contributions  19,155  19,776 
(-) Transfers to p.,p.,&e.  (5,452) (4,921)
     
  59,422  7,430 
     

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1) The annual estimated cost for 2008, calculated by an independent actuary, resulted in income due to the actuarial gains which are being amortized and whose amounts exceed the regular periodic cost of the plans.

23 Customer Charges Due

     
    Consolidated 
     
  30.09.2008  30.06.2008 
Energy Development Account - CDE  14,904  14,904 
Fuel Consumption Account - CCC  23,782  15,437 
Global Reversal Reserve - RGR  6,045  6,045 
     
  44,731  36,386 
     

24 Research and Development and Energy Efficiency

The balances of COPEL’s provisions for R&D and EEP are broken down below:

           
  Applied and  Balance  Balance  Balance as of  Balance as of 
  unfinished  due  applicable  30.09.2008  30.06.2008 
           
Research and Development - R&D           
   FNDCT  18,843  18,843  19,137 
   MME  9,442  9,442  9,586 
   R&D - projects  15,757  69,403  85,160  82,203 
  15,757  28,285  69,403  113,445  110,926 
Energy Efficiency Program - EEP  15,098  -  75,276  90,374  83,992 
           
  30,855  28,285  144,679  203,819  194,918 
           

Changes in the balances of R&D and EEP

           
        Payments/   
  Consolidated  Provision  SELIC rate  Use of funds  Consolidated 
           
  31.12.2007        30.09.2008 
Research and Development - R&D           
   FNDCT  20,157  10,386  (11,700) 18,843 
   MME  10,287  5,193  (6,038) 9,442 
   R&D - projects  75,893  10,386  5,402  (6,521) 85,160 
  106,337  25,965  5,402  (24,259) 113,445 
Energy Efficiency Program - EEP  78,943  13,702  4,575  (6,846) 90,374 
           
  185,280  39,667  9,977  (31,105) 203,819 
           

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25 Other Accounts Payable

     
    Consolidated 
     
  30.09.2008  30.06.2008 
Current liabilities 
   
   Concession charge - ANEEL grant  33,369  31,454 
   Court settlement  27,238  30,673 
   Compensation for use of water resources  14,892  13,008 
   Collected public lighting charge  14,640  15,259 
   Pledged collateral  6,667  1,384 
   Reimbursement - customer contributions - (ERD) 3,366  8,385 
   Insurance companies - premiums due  3,181  19 
   Reparations to the Apucaraninha Indian community  2,471  2,240 
   ANEEL Inspection Fee  1,451  1,451 
   Other liabilities  9,883  5,861 
  117,158  109,734 
Long-term liabilities 
   
   Reparations to the Apucaraninha Indian community  7,412  6,720 
   Other liabilities  15  15 
  7,427  6,735 
     

26 Provisions for Contingencies

The Company is a party to several labor, tax, and civil claims filed before different courts. COPEL’s senior management, based on the opinion of its legal counsel, has kept a provision for contingencies in connection with lawsuits which are likely to result in losses.

The balances of the Company’s provisions for contingencies, net of escrow deposits, are shown below:

         
Consolidated    Judicial  Net  Net 
  Contingencies  deposits  provision  provision 
         
      30.09.2008  30.06.2008 
Labor  122,047  (32,903) 89,144  91,094 
Regulatory  98  -  98  107 
Civil:         
   Suppliers (a) 51,991  51,991  51,383 
   Civil and administrative claims  29,853  (6,659) 23,194  18,331 
   Easements (b) 11,022  11,022  10,005 
   Condemnation and real estate claims (b) 114,854  114,854  111,253 
   Customers  5,939  (834) 5,105  4,139 
  213,659  (7,493) 206,166  195,111 
Tax:         
   Tax claims  84,754  (27,004) 57,750  71,028 
   Pasep tax  14,904  (14,686) 218  218 
   Cofins tax (c) 176,711  176,711  174,824 
  276,369  (41,690) 234,679  246,070 
         
  612,173  (82,086) 530,087  532,382 
         

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Parent Company    Judicial  Net  Net 
  Contingencies  deposits  provision  provision 
         
      30.09.2008  30.06.2008 
Civil  434  -  434  416 
Tax:         
   Tax claims  52,683  (27,003) 25,680  38,718 
   Pasep tax  14,904  (14,686) 218  218 
   Cofins tax (c) 176,711  176,711  174,824 
  244,298  (41,689) 202,609  213,760 
         
  244,732  (41,689) 203,043  214,176 
         

Changes in provisions for contingencies

           
Consolidated  Balance of  Additions  Additions (rev.)   Provision 
  Provision  (Reversals) to p.,p.,&e.  Payments  Balance 
           
  31.12.2007        30.09.2008 
Labor  102,474  36,887  20  (17,334) 122,047 
Regulatory  2,169  (2,071) -  -  98 
Civil:           
   Suppliers  49,954  2,037  51,991 
   Easements  16,070  (4,364) (684) 11,022 
   Civil and administrative claims  15,975  14,875  (997) 29,853 
   Customers  6,523  (573) (11) 5,939 
   Condemnations  107,083  8,041  (270) 114,854 
   Environmental claims  163  (163)
  195,768  16,176  3,677  (1,962) 213,659 
Tax:           
   Tax claims  92,488  (6,681) (1,053) 84,754 
   Pasep tax  14,776  128  14,904 
   Cofins tax  171,613  5,098  176,711 
  278,877  (1,455) -  (1,053) 276,369 
           
  579,288  49,537  3,697  (20,349) 612,173 
           

         
Parent Company  Balance of  Additions    Provision 
  Provision  (Reversals) Payments  Balance 
         
  31.12.2007      30.09.2008 
Civil  16  418  -  434 
Tax:         
   Tax claims  61,290  (7,553) (1,054) 52,683 
   Pasep tax  14,776  128  14,904 
   Cofins tax  171,613  5,098  176,711 
  247,679  (2,327) (1,054) 244,298 
         
  247,695  (1,909) (1,054) 244,732 
         

The breakdown of the types of lawsuits in which COPEL is involved as of September 30, 2008 is consistent with the one featured in the Company's financial statements as of December 31, 2007.

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The amount tied to cases classified as possible losses, estimated by the Company and its subsidiaries as of September 30, 2008, reached R$ 1.824.070, of which R$ 72,367 correspond to labor claims; R$ 1,028,094 to regulatory claims; R$ 152,193 to civil claims; and R$ 571,416 to tax claims. It is important to point out that COPEL has a good chance of success in the lawsuit it filed to dispute the effects of ANEEL Ruling no. 288/2002, based on the opinion of its legal counsel, as discussed in Note 32 herein, under the title “Electric Energy Trading Chamber (CCEE)”.

a) Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A.

COPEL Distribuição is disputing in court the validity of the terms and conditions of the power purchase and sale agreements signed with Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A., based on the argument that they grant benefits to the selling companies that hurt the public interest. At the same time, both companies, after having rescinded the agreements, filed for arbitration before the Arbitration Chamber of Fundação Getúlio Vargas, which sentenced COPEL to the payment of contractual penalties for having caused the rescission of the agreement. COPEL has filed for a court order making the arbitration ruling void.

Management, based on the opinion of its legal counsel that it is likely to lose this case, on the available information, and on the current stage of the lawsuits, decided to set aside a provision for contingencies in the original amount of the debt, restated according to the original contractual terms, which amounted to R$ 51,991 as of September 30, 2008.

b) Easements, condemnation, and real estate

COPEL’s real estate claims comprise mostly cases of condemnation and easements, in which compensation is always mandatory pursuant to the Federal Constitution, which requires that the Federal Government pay just compensation, in cash, prior to condemnation of private property or to the imposition of restrictions on the use of property without transfer of title. Lawsuits are usually filed when parties fail to agree on the amount of compensation due.

Ivaí Engenharia de Obras S.A.

In a lawsuit filed by Ivaí Engenharia de Obras S.A., COPEL was sentenced to the payment of R$ 180,917 as compensation for a supposed economic-financial imbalance under Contract D-01, concerning construction work for the Jordão River diversion project. COPEL appealed this decision and was partially successful, avoiding the application of the SELIC interest rate on top of the penalty interest. COPEL will continue to dispute this claim in court, through all means legally available.

The Company, in light of the evaluation conducted by its Chief Legal Office, set aside a provision of R$ 108,127 for probable losses, under Provisions for Real Estate Contingencies.

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c) COFINS tax

COPEL did not collect COFINS tax on revenues from power sales based on a ruling by the 4th District Federal Court, dated August 18, 1998, which granted the Company immunity pursuant to the Federal Constitution. A special lawsuit requesting annulment of this ruling, filed in August 2000, was rejected on grounds that the right of the Federal Government to take legal action had lapsed. The Federal Government’s special appeal was rejected by the Superior Court of Justice. Thus, COPEL reversed the provision it had set aside, based on the opinion by its counsel that the possibility that the Company might be required to disburse any amounts in connection with the COFINS tax was remote. At the end of 2007, however, the Superior Court of Justice, against all forecasts, ruled in favor of an appeal for clarification by the Federal Government, judging that the Government's right to take legal action had not lapsed, and sent the lawsuit back to the 4th District Federal Court for trial. Even though this ruling is not final yet, since COPEL has appealed it, the Company’s counsel believes the risk of loss is no longer remote, but rather probable. Thus, COPEL set aside a provision corresponding to the restated principal amount plus charges, which totals R$ 176,711, already having excluded tax credits which have already lapsed.

27 ShareholdersEquity

a) Share capital

As of September 30, 2008, COPEL’s paid in share capital, represented by shares with no par value, was R$ 4.460.000. The different classes of shares and main shareholders are detailed below:

               
              In number of shares 
               
Shareholders  Common 
Class A preferred 
Class B preferred  Total 
             
    %    %    %    % 
State of Paraná  85,028,598  58.63  13,639  0.01  85,042,237  31.08 
BNDESPAR  38,298,775  26.41  27,282,006  21.28  65,580,781  23.96 
Eletrobrás  1,530,774  1.06  1,530,774  0.56 
Free float:                 
       Bovespa (1) 14,124,394  9.74  127,607  32.05  75,125,777  58.59  89,377,778  32.65 
       NYSE (2) 5,494,357  3.79  25,636,846  19.99  31,131,203  11.38 
       Latibex (3) 69,267  0.05  69,267  0.03 
Municipalities  178,393  0.12  14,711  3.69  193,104  0.07 
Other shareholders  375,789  0.25  255,859  64.26  98,583  0.08  730,231  0.27 
                 
  145,031,080  100.00  398,177  100.00  128,226,118  100.00  273,655,375  100.00 
                 
   (1) São Paulo Stock Exchange 
   (2) New York Stock Exchange 
   (3) The Market for Latin-American Securities in Euros, linked to the Madrid Stock Exchange 

Each share entitles its holder to one vote in the general shareholders’ meetings.

Class “A” preferred shares do not carry any voting rights, but they do enjoy priority in the reimbursement of capital and in the right to non-cumulative annual dividends of 10%, calculated proportionately to the capital represented by the shares of this class.

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Class “B” preferred shares do not carry any voting rights, but they do enjoy priority in the distribution of minimum dividends, calculated as 25% of net income, adjusted in compliance with corporate legislation and with the Company’s by-laws. Class “B” shareholders have priority only over the common shareholders in the distribution of mandatory dividends, which shall only be paid out of the remaining net income after the payment of priority dividends to class “A” shareholders.

According to Article 17 and following paragraphs of Law 6,404/1976, dividends paid to preferred shares must be at least 10% higher than those paid to common shares.

b) Statement of changes in shareholders’ equity

For the quarters ended on June 30, 2008 and September 30, 2008:

             
  Share  Capital  Legal  Income  Retained   
  capital  reserves  reserve  reserve  earnings  Total 
             
Balance as of December 31, 2007  4,460,000  838,340  323,653  1,614,184  -  7,236,177 
             
 Net income for the period  613,019  613,019 
             
Balance as of June 30, 2008  4,460,000  838,340  323,653  1,614,184  613,019  7,849,196 
             
 Net income for the quarter  286,016  286,016 
 Allocation proposed at the GSM:           
     Interest on capital  (158,000) (158,000)
             
Balance as of September 30, 2008  4,460,000  838,340  323,653  1,614,184  741,035  7,977,212 
             

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28 Gross Revenues from Sales and/or Services

     
    Consolidated 
     
  30.09.2008  30.09.2007 
Power sales to final customers     
   Residential  700,129  646,065 
   Industrial  801,594  714,230 
   Commercial, services, and other activities  459,564  419,177 
   Rural  91,543  83,301 
   Public agencies  63,657  60,101 
   Public lighting  49,820  47,171 
   Public services  47,410  45,775 
   Installment for Adjustment of Network Charges  943 
  2,214,660  2,015,820 
Power sales to distributors     
   Agreements for Power Trade on the Regulated Market - CCEAR (auction) 598,056  525,887 
   Bilateral contracts  313,597  406,085 
   Electric Energy Trading Chamber - CCEE  30,031  64,338 
   Contracts with small utilities  37,291  43,678 
  978,975  1,039,988 
Availability of the power grid     
   Power grid - rate for the use of the distribution system (TUSD)    
       Residential  783,565  771,723 
       Industrial  898,295  844,668 
       Commercial, services, and other activities  507,799  493,851 
       Rural  102,909  100,076 
       Public agencies  71,191  71,618 
       Public lighting  55,740  56,300 
       Public services  53,055  54,562 
   Basic Network and basic interface network  103,642  109,747 
   Connection grid  1,253  439 
   Installment for Adjustment of Basic Network charges  9,740  (22,590)
  2,587,189  2,480,394 
     
Revenues from telecommunications  57,623  46,584 
     
Piped gas distribution  206,751  184,581 
Other operating revenues     
   Leases and rents  72,199  70,453 
   Revenues from services  20,781  32,038 
   Charged service  6,798  6,389 
   Other revenues  662  588 
  100,440  109,468 
     
  6,145,638  5,876,835 
     

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29 Deductions from Gross Revenues

     
     
    Consolidated 
     
  30.09.2008  30.09.2007 
Taxes and social contributions on revenues     
   VAT (ICMS) 1,191,709  1,117,101 
   COFINS  476,182  449,642 
   PASEP  103,378  97,705 
   ISSQN  1,392  1,756 
  1,772,661  1,666,204 
Customer charges     
   Energy Development Account - CDE  144,443  137,065 
   Fuel Consumption Account - CCC  85,971  161,475 
   Global Reversal Reserve - RGR  46,743  44,895 
   Research and development and energy efficiency - R&D and EEP  39,667  42,212 
   Other  193  200 
  317,017  385,847 
     
     
  2,089,678  2,052,051 
     

30 Operating Costs and Expenses

The breakdown of consolidated costs and expenses as of September 30, 2008 is shown below:

           
     Costs of    General and  Other   
Nature of costs and expenses  goods and/or  Sales  administ.  operating  Consolidated 
     services  expenses  expenses  expenses  Total 
           
          30.09.2008 
Power purchased for resale (a) (1,186,106) (1,186,106)
Charges for use of power grid (b) (317,602) (317,602)
Personnel and management (c) (367,811) (2,454) (99,096)   (469,361)
Pension and healthcare plans (Note 22) (46,301) (271) (12,850) (59,422)
Materials and supplies (d) (35,428) (2,297) (4,119) (41,844)
Raw materials and supplies           
     for power generation  (12,599) (12,599)
Natural gas and supplies for gas business  (109,325) (109,325)
Third-party services (e) (140,751) (17,005) (43,774) (201,530)
Depreciation and amortization  (282,453) (11) (16,527) (298,991)
Provisions and reversals (f) (15,777) (49,409) (65,186)
Other costs and expenses (g) (25,302) 3,253  (18,019) (76,379) (116,447)
           
  (2,523,678) (34,562) (194,385) (125,788) (2,878,413)
           

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The breakdown of consolidated costs and expenses as of September 30, 2007 is shown below:

           
     Costs of    General and   Other   
Nature of costs and expenses  goods and/or  Sales  administ.  operating  Consolidated 
     services  expenses  expenses  expenses  Total 
           
          30.09.2007 
Power purchased for resale (a) (931,066) (931,066)
Charges for use of power grid (b) (363,140) (363,140)
Personnel and management (c) (290,769) (1,645) (118,307)   (410,721)
Pension and healthcare plans (Note 22) (1,701) (97) (5,632) (7,430)
Materials and supplies (d) (34,699) (526) (11,956) (47,181)
Raw materials and supplies           
     for power generation  16,728  16,728 
Natural gas and supplies for gas business  (102,233) (102,233)
Third-party services (e) (110,432) (15,649) (38,781) (164,862)
Depreciation and amortization  (299,641) (14) (16,680) (316,335)
Provisions and reversals (f) 4,458  (212,079) (207,621)
Other costs and expenses (g) (12,022) 3,250  (16,823) (70,475) (96,070)
           
  (2,128,975) (10,223) (208,179) (282,554) (2,629,931)
           

The Parent Company’s expenses as of September 30, 2008 are broken down below:

       
  General and  Other  Parent 
Nature of costs and expenses  administrative  operating  Company 
  expenses  expenses  Total 
       
      30.09.2008 
 Management (c) (4,010) (4,010)
 Healthcare plan  (87) (87)
 Materials and supplies  (8) (8)
 Third-party services (e) (3,345) (3,345)
 Provisions and reversals (f) 2,037  2,037 
 Other expenses  (586) (586)
       
  (8,036) 2,037  (5,999)
       

The Parent Company’s expenses as of September 30, 2007 are broken down below:

       
  General and  Other  Parent 
Nature of costs and expenses  administrative  operating  Company 
  expenses  expenses  Total 
       
      30.09.2007 
 Management (c) (3,992)   (3,992)
 Healthcare plan  (65) (65)
 Materials and supplies  (4) (4)
 Third-party services (e) (3,972) (3,972)
 Provisions and reversals (f) (181,705) (181,705)
 Other expenses  (1,110) (1,110)
       
  (9,143) (181,705) (190,848)
       

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a) Electricity purchased for resale

     
     
    Consolidated 
     
  30.09.2008  30.09.2007 
Eletrobrás - Centrais Elétricas Brasileiras S.A. (Itaipu) 367,338  282,188 
Furnas Centrais Elétricas S.A. - auction  218,323  208,044 
Companhia Hidro Elétrica do São Francisco - Chesf - auction  209,438  190,517 
Câmara de Comercialização de Energia - CCEE  95,870  40,924 
Itiquira Energética S.A.  80,106  72,868 
Companhia Energética de São Paulo - Cesp - auction  77,183  69,712 
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte - auction  68,310  63,002 
Program for incentive to alternative energy sources - Proinfa  43,620  30,897 
Dona Francisca Energética S.A.  40,374  38,029 
Companhia Energética de Minas Gerais - Cemig - auction  31,602  27,573 
Cia. Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE - auction  23,908  23,024 
Companhia de Interconexão Energética - Cien  90,046 
(-) Contract renegotiation - Cien  (100,862)
Power purchased for resale - Passive CVA  (47,475) (48,687)
(-) Pasep/Cofins tax on power purchased for resale  (125,766) (110,529)
Other utilities - auction  103,275  50,074 
Other utilities  4,246 
     
  1,186,106  931,066 
     

b) Charges for the use of the power grid

     
     
    Consolidated 
     
  30.09.2008  30.09.2007 
Furnas Centrais Elétricas S.A.  82,976  81,336 
Cia Transmissora de Energia Elétrica Paulista - Cteep  44,642  40,985 
Companhia Hidro Elétrica do São Francisco - Chesf  41,559  40,407 
System Service Charges - ESS  41,181  12,199 
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte  29,883  27,008 
Eletrosul Centrais Elétricas S.A.  29,123  26,995 
Companhia Energética de Minas Gerais - Cemig  14,933  13,654 
Novatrans Energia S.A.  13,864  12,623 
TSN Transmissora Nordeste Sudeste de Energia S.A.  13,600  12,446 
National System Operator - NOS  12,448  13,215 
Cia Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE  11,937  11,303 
Empresa Amazonense de Transmissão de Energia - Eate  11,319  10,427 
ATE II Transmissora de Energia S.A.  5,927  5,999 
Empresa Norte de Transmissão de Energia S.A. - Ente  5,823  5,568 
Itumbiara Transmissora de Energia Ltda  5,630  5,298 
Expansion Transmissora de Energia Elétrica S.A.  5,353  4,964 
STN Sistema de Transmissão Nordeste S.A  4,714  4,397 
Empresa Transmissora de Energia Oeste Ltda - Eteo  4,712  4,413 
ATE Transmissora Energia S.A  3,899  3,716 
(-) Pasep/Cofins taxes on charges for the use of the power grid  (46,786) (52,895)
CVA - charges  (60,958) 47,502 
Other utilities  41,823  31,580 
     
  317,602  363,140 
     

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c) Personnel and management

         
         
    Parent Company    Consolidated 
         
  30.09.2008  30.09.2007  30.09.2008  30.09.2007 
Personnel         
   Wages and salaries  316,254  295,767 
   Social charges on payroll  110,248  102,249 
  -  -  426,502  398,016 
   Provision for profit sharing  49,451 
   Meal assistance and education allowance  35,704  33,743 
   Labor indemnifications (reversal) (825) 9,664 
  510,832  441,423 
   (-) Transfers to construction in progress  (47,907) (36,976)
  -  -  462,925  404,447 
Management         
   Wages  3,225  3,275  5,341  5,260 
   Social charges on payroll  785  717  1,219  1,110 
  4,010  3,992  6,560  6,370 
   (-) Transfers to construction in progress  (124) (96)
  4,010  3,992  6,436  6,274 
         
  4,010  3,992  469,361  410,721 
         

As of the third quarter, Company management decided to set aside a monthly provision for its employees’ profit sharing. Until September 2008, the amount estimated pursuant to the criteria and conditions agreed on by COPEL and the employees’ committee in the profit sharing negotiation amounted to R$ 49,451. In 2007, a provision was set aside only in December. The amount for the period from January through September 2007 would have been approximately R$ 41,000.

d) Materials and Supplies

     
                                                         
    Consolidated 
     
  30.09.2008  30.09.2007 
Fuel and vehicle parts  15,540  18,525 
Materials for the electric system  11,357  12,250 
Cafeteria supplies  3,621  3,132 
Office supplies  3,791  2,253 
Materials for civil construction  2,560  1,701 
Safety supplies  1,307  1,299 
Lodging supplies  673  1,041 
Tools  880  947 
Information technology equipment and supplies  505  2,350 
Other materials and supplies  1,610  3,683 
     
  41,844  47,181 
     

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e) Services from third-parties

         
         
    Parent Company    Consolidated 
         
  30.09.2008  30.09.2007  30.09.2008  30.09.2007 
Power grid maintenance  44,018  16,488 
Technical, scientific, and administrative consulting  907  770  17,400  15,602 
Postal services  16,726  13,890 
Data processing and transmission  14,965  12,070 
Authorized and registered agents  14,575  14,188 
Administrative support services  11,463  11,260 
Telephone services  11,186  8,078 
Security  9,628  7,518 
Travel  105  108  7,894  7,122 
Meter reading and bill delivery  5,941  5,522 
Personnel training  4,766  4,248 
Civil maintenance services  4,451  3,104 
Upkeep of easement areas  3,799  2,830 
Services in "green areas"  3,653  4,027 
Access to satellite communications  3,554  3,581 
Customer service  3,181  4,198 
Vehicles - maintenance and repairs  2,824  2,889 
Auditing  1,670  1,888  2,203  2,501 
Freight services  2,172  2,277 
Tree trimming  2,081  2,645 
Telephone operator  1,929  2,063 
Advertising  332  109  1,356  1,720 
Legal fees  399  1,055  1,188  1,904 
Other services (reversal) (70) 41  10,577  15,137 
         
  3,345  3,972  201,530  164,862 
         

f) Provisions and reversals

         
                                     
    Parent Company    Consolidated 
         
  30.09.2008  30.09.2007  30.09.2008  30.09.2007 
Provision (reversal) for doubtful accounts (PDA)        
   PDA - customers and distributors (Note 5) 18,017  (4,448)
   PDA - third-party services and other receivables  (2,240) (10)
  -  -  15,777  (4,458)
Provision (reversal) for contingencies         
   Labor  36,887  29,681 
   Regulatory  (2,071) 65 
   Suppliers  2,037  824 
   Civil and administrative law  418  14,875  4,433 
   Customers  (573) (4,649)
   Environmental  (163)
   Tax  (7,553) 181,705  (6,681) 11,202 
   Cofins tax  5,098  5,098  170,518 
  (2,037) 181,705  49,409  212,079 
         
  (2,037) 181,705  65,186  207,621 
         

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g) Other operating costs and expenses

     
     
    Consolidated 
     
  30.09.2008  30.09.2007 
Compensation for the use of water resources  60,764  56,182 
Concession charge - ANEEL grant  31,637  25,031 
ANEEL Inspection Fee  13,340  12,954 
Leases and rents  9,295  8,464 
Taxes  4,928  5,876 
Insurance  4,677  5,873 
Own power consumption  4,292  4,167 
Donations - Rouanet Law and children's and teenagers' rights fund - FIA  4,019  948 
Easements - gas business  2,866 
Advertising  2,744  1,473 
Cost and expense recovery  (31,141) (35,538)
General costs and expenses  9,026  10,640 
     
  116,447  96,070 
     

31 Financial Income (Losses)

         
                   
    Parent Company    Consolidated 
         
  30.09.2008  30.09.2007  30.09.2008  30.09.2007 
Financial revenues         
   Income from financial investments  22,339  20,173  138,268  106,455 
   Monetary variation of CRC transferred         
      to State Government (Note 7.b) 100,717  51,464 
   Revenues from CRC transferred         
      to State Government (Note 7.b) 59,900  57,260 
   Penalties on overdue bills  36,479  21,203 
   Return on Portion A (CVA) 7,425  9,416 
   Interest on taxes paid in advance  5,424  2,489  7,108  7,942 
   Interest and commissions on loan agreements  44,588  45,103 
   Other financial revenues  2,929  304  22,361  12,605 
  75,280  68,069  372,258  266,345 
(-) Financial expenses         
   Debt charges  99,209  118,416  153,470  177,892 
   Monetary and exchange variations  39,442  4,768 
   Court settlement  30,673 
   PIS/Pasep and Cofins taxes on interest on capital  20,623  22,083  21,294  22,208 
   Interest on R&D and EEP  9,977  8,509 
   Interest on Portion A (CVA) 9,026  19,751 
   IOF tax  64  6,224  6,066  12,019 
   CPMF tax  1,974  736  32,497 
   Other financial expenses  7,008  3,464 
  119,898  148,701  277,692  281,108 
         
  (44,618) (80,632) 94,566  (14,763)
         

32 Electric Energy Trading Chamber (CCEE)

MAE has ceased its operations, and as a consequence its activities, assets, and liabilities were absorbed on November 12, 2004 by the Electric Energy Trading Chamber (CCEE), a private corporate entity subject to ANEEL regulation and inspection.

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COPEL has not recognized as actual and final the data concerning the sale of electric energy by COPEL Distribuição on the Wholesale Energy Market (MAE) in 2000, 2001, and the first quarter of 2002. These data were calculated according to criteria and amounts that take into account decisions by the Regulatory Agency which have been challenged by the Company both administratively and judicially.

The Company's claim is substantially based on the fact that it conducted power sale transactions, which should not serve as basis for calculations made the regulatory agency, only to fulfill contractual obligations to customers on the southeastern market. The estimated amount of discrepancies in calculation was approximately R$ 1,018,181 (restated as of September 30, 2008), which has not been recognized by the Company as a supplier liability.

Based on the opinion of its legal counsel, management considers it possible that the final rulings in these lawsuits will be favorable to the Company.

a) CIEN Contract Renegotiation(1)

Until 2007, in order to replace the amounts which should have been supplied under the CIEN agreement, COPEL adopted a strategy of participating in all legally allowed means of acquiring power from existing facilities, i.e., the A-1 Auctions and the Mechanism for the Offset of Surpluses and Deficits (MCSD). Thus, it acquired 211 average MW until 2007, out of a total of 400 average MW required and, due to the failure of the A-1/2007 Auction due to total lack of offer by power generation utilities, COPEL revised its strategy and sought to make up for the CIEN amounts at auctions of power from new facilities.

In 2008, in order to make up for the CIEN amounts, COPEL acquired 141.5 average MW from the Jirau project, which, added to the Company’s purchases at the A-5/2008 Auction, will cover the CIEN amounts during the entire period of CIEN agreement, at prices similar to those under that agreement, starting in 2013. The Company expects to acquire additional power at the A-1/2008 Auction, for the period from 2009 to 2013.

(1) Technical information unaudited by the independent auditors.

b) Current transactions at CCEE(1)

             
  COPEL           
  Geração e  COPEL    UEG     
  Transmissão  Distribuição  Elejor  Araucária    Consolidated 
             
          30.09.2008  30.06.2008 
Current assets (Note 4)            
   Until December 2007  14  105  126  126 
   From April through June 2008  1,799  1,799  3,323 
   From July through September 2008  6,008  896  6,904 
  7,814  14  896  105  8,829  3,449 
Current liabilities (Note 20)            
   From April through June 2008  17,000  17,000  20,522 
   From July through September 2008  15,863  15,863 
  -  32,863  -  -  32,863  20,522 
             

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c) Changes in the CCEE balances (1)

         
  Amount to be      Amount to be 
  settled  Settlement  Appropriation  settled 
         
  30.06.2008      30.09.2008 
Current assets         
   Until December 2007  126  126 
   From April through June 2008  3,323  (7,034) 5,510  1,799 
   From July through September 2008  (12,800) 19,704  6,904 
  3,449  (19,834) 25,214  8,829 
(-) Current liabilities         
   From April through June 2008  20,522  (18,119) 14,597  17,000 
   From July through September 2008  (19,414) 35,277  15,863 
  20,522  (37,533) 49,874  32,863 
         
Net total  (17,073) 17,699  (24,660) (24,034)
         
 
(1) Information unaudited by the independent auditors.       

33 Financial Instruments

a) Overview

The use of financial instruments by the Company is restricted to Cash in Hand, Customers and Distributors, Accounts Receivable from government agencies, CRC Transferred to State Government, Loans and Financing, Debentures, and Suppliers.

b) Market Value of Financial Instruments

The market values of the Company’s main financial instruments as of September 30, 2008, which are close to their book value, are shown below:

     
     
Financial instruments    Consolidated 
     
  30.09.2008  30.06.2008 
   Cash in hand  1,832,804  1,587,994 
   Accounts receivable from government agencies  180,557  219,502 
   CRC transferred to State Government  1,320,943  1,316,870 
   Loans and financing  923,022  892,917 
   Debentures  1,016,185  1,035,581 
   Eletrobrás (Itaipu) 82,122  72,738 
   Petrobras  35,015  28,556 
     

c) Risk Factors

1) Credit risk

The Company’s credit risk comprises the possibility of losses due to non-payment of power bills. This risk is closely tied to factors that are either internal or external to COPEL. To minimize this risk, the Company focuses on the management of receivables, detecting customer segments which are most likely not to pay their bills, suspending power supply, and implementing specific collection policies, tied to real estate or personal securities whenever possible.

Doubtful accounts are properly covered by provisions to offset potential losses in their realization.

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2) Foreign currency risk

This risk comprises the possibility of losses due to fluctuations in exchange rates, which may reduce assets or increase liabilities denominated in foreign currencies.

Most of the financial investments of the Company and of its subsidiaries comprise fixed-income securities tied to federal bonds. The Company’s foreign currency indebtedness is not significant and it is not exposed to foreign exchange derivatives. The Company monitors all relevant exchange rates.

The effect of the exchange rate variation resulting from the power purchase agreement with Eletrobrás (Itaipu) is recorded under the account for compensation of Portion A as invoices are paid and it is recognized in COPEL Distribuição's annual rate reviews.

The exchange rate variation resulting from the purchase of gas from Petrobras by Compagas has a direct impact on the latter's results and is passed on to customers through negotiation.

3) Interest rate risk

This risk comprises the possibility of losses due to fluctuations in interest rates, which may increase the financial expenses in connection with liabilities on the market.

The Company has not engaged in transactions with derivatives to cover this risk, but it has continued to monitor interest rates, in order to assess the potential need for such transactions as a way of protecting against interest rate risks.

4) Accelerated maturity risk

This risk results from the potential breach of restrictive contract provisions, such as those contained in the loan, financing, and debenture agreements of the Company, which usually require that certain economic and financial indicators, which are calculated and analyzed periodically for compliance, be kept at determined levels (financial covenants).

5) Power shortage risk

This risk results from the possibility of periods with low levels of rainfall, since Brazil relies heavily on hydroelectric sources, which depend on the water levels in their reservoirs to operate.

A long period of drought may reduce the water levels in power plant reservoirs and result in losses due to reduced revenues if a new rationing program is implemented.

This risk is calculated by the National Power System Operator (ONS), which does not anticipate the need for any rationing programs in the next two years(1), as reported in its Power Operation Plan, published monthly at www.ons.org.br.

(1) Information unaudited by the independent auditors.

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6) Risk of non-renewal of concessions

COPEL holds concessions for power generation, transmission, and distribution services, with the expectation that they will be renewed by the Ministry of Mines and Energy with the support of ANEEL. If the extension of these concessions is not approved by the regulatory authority or even if it occurs at additional costs to the Company ("costly concession"), current profitability and activity levels may be affected.

34 Related-Party Transactions

COPEL has carried out transactions with unconsolidated related parties, including the sale of power to final customers, at rates approved by ANEEL, resulting in billed amounts which are not material for purposes of disclosure.

The main balances of related party transactions in COPEL’s balance sheet are:

       
       
Related party   Nature of operation    Consolidated 
       
    30.09.2008  30.06.2008 
Current assets       
Sanepar  Customers and distributors  19,080  18,797 
Government of the State of Paraná  Customers and distributors  46,053  92,767 
  Services to third-parties  8,755  9,322 
  Recoverable Rate Deficit - CRC (Note 7) 45,189  43,353 
  ICMS tax paid in advance  26,735  26,927 
Petrobras  Advance payment to suppliers  2,658  2,853 
       
Long-term receivables       
Sanepar  Customers and distributors  12,433  13,007 
Government of the State of Paraná  Customers and distributors  32,157  38,381 
  Services to third-parties  5,016  8,235 
  Recoverable Rate Deficit - CRC (Note 7) 1,275,754  1,273,517 
  ICMS tax paid in advance  58,759  54,225 
       
Current liabilities       
BNDES  Financing for gas pipeline network (Note 18.f) 6,385  6,283 
BNDESPAR  Debentures (Note 19.b) 18,525  3,304 
Dona Francisca Energética  Purchase of power (Note 20) 4,420  4,420 
Eletrobrás  Financing (Note 18.d) 36,291  37,637 
Eletrobrás (Itaipu) Purchase of power (Note 20) 82,122  72,738 
Government of the State of Paraná  ICMS tax due  137,467  131,110 
Petrobras  Purchase of gas for resale (Note 20) 35,015  28,556 
       
Long-term liabilities       
BNDES  Financing for gas pipeline network (Note 18.f) 14,415  15,747 
BNDESPAR  Debentures (Note 19.b) 254,582  269,638 
Eletrobrás  Financing (Note 18.d) 282,990  257,804 
Eletrobrás  Elejor shares to be repurchased (Note 18.e) 111,466  106,682 
Government of the State of Paraná  ICMS tax due  685  1,017 
Petrobras  Gas for power generation - renegotiation (N. 20) 207,006  200,730 
       

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The main balances of related party transactions in COPEL’s statement of income are:

       
Related party  Nature of operation    Consolidated 
       
    30.09.2008  30.09.2007 
Gross revenues from sales and/or services       
Sanepar  Sale of power  91,333  92,207 
Government of the State of Paraná  Sale of power  70,789  60,013 
  Telecommunications revenues  4,500  4,500 
Petrobras  Lease of the Araucária Thermal Power Plant  35,446  35,513 
  Sale of power  9,721  8,441 
  Distribution of piped gas  5,575  5,185 
  Gas transport services  2,624  3,074 
 
Power purchased for resale       
Dona Francisca Energética  Purchase of power (Note 30.a) 40,374  38,029 
Eletrobrás (Itaipu) Purchase of power (Note 30.a) 367,338  282,188 
 
Natural gas and supplies for the gas business     
Petrobras  Natural gas purchased for resale  109,227  102,051 
 
Other operating expenses       
COPEL Foundation  Rents  5,046  3,549 
 
Financial revenues       
Government of the State of Paraná  Revenues under CRC agreement (Note 31) 160,617  108,724 
  Revenues from renegotiated bills  6,121  5,348 
 
Financial expenses       
 
Charges on financing for gas pipeline
   
BNDES           network (Note 18.f) 1,835  1,825 
BNDESPAR  Charges on Elejor debentures (Note 19.b) 20,285  20,575 
Eletrobrás  Charges on financing (Note 18.d) 22,851  22,456 
 
Charges on Elejor shares to be bought
   
           back (Note 18.e) 17,115  13,537 
Petrobras  Charges on gas contract renegotiation (Note 20.a) 16,613  15,324 
       

The balances of transactions between the Company and its wholly-owned subsidiaries are shown in Note 14.

BNDES - BNDES Participações S.A. - BNDESPAR holds 26.41% of the Company’s common shares and has the right to appoint two members of the Board of Directors. BNDESPAR is a wholly-owned subsidiary of BNDES, with which the Company has financing agreements, described in Note 18.

Dona Francisca Energética S.A. - The Company became guarantor of the loans signed by its indirect affiliate Dona Francisca Energética S.A. with the National Economic and Social Development Bank (BNDES) (joint debtor), and with Bradesco (joint debtor). As of September 30, 2008, the outstanding debt was R$ 40,658 and R$ 24,270, respectively.

Eletrobrás – Eletrobrás holds 1.06% of the Company’s common shares; COPEL, in turn, has obtained financing from Eletrobrás, described in Note 18.

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35 Wholly-Owned Subsidiaries' Balance Sheets

Shown below are the balance sheets as of September 30, 2008, reclassified for purposes of standardization of the chart of accounts, of COPEL’s wholly-owned subsidiaries COPEL Geração e Transmissão (Consolidated) (GET), COPEL Distribuição (DIS), COPEL Telecomunicações (TEL) and COPEL Participações (PAR) (Consolidated):

         
ASSETS  GET  DIS  TEL  PAR 
  Consolidated      Consolidated 
         
TOTAL ASSETS  4,689,656  5,400,299  239,208  2,190,241 
CURRENT ASSETS  1,083,126  1,589,448  45,075  416,117 
Cash in hand  764,433  349,128  24,845  319,606 
Customers and distributors, net  210,445  772,891  35,043 
Telecommunications services, net  13,220 
Dividends receivable  3,529 
Construction in progress  8,161  51,511 
CRC transferred to State Government  45,189 
Taxes and social contributions  12,143  119,546  1,907  22,027 
Account for compensation of Portion A  100,544 
Other regulatory assets  33,682 
Collaterals and escrow deposits  67,086  37,032  29,909 
Other receivables  14,512  33,289  1,293  5,433 
Inventories  6,346  46,636  3,810  570 
NON-CURRENT ASSETS  3,606,530  3,810,851  194,133  1,774,124 
Long-Term Receivables  114,239  1,767,600  14,767  39,940 
Customers and distributors, net  345  87,694  23,023 
Telecommunications services  5,016 
CRC transferred to State Government  1,275,754 
Taxes and social contributions  89,414  264,049  9,503  14,031 
Account for compensation of Portion A  42,415 
Other regulatory assets  9,132 
Collaterals and escrow deposits  24,547 
Judicial deposits  22,599  59,287  248  1,066 
Other receivables  1,881  4,722  1,820 
Permanent Assets  3,492,291  2,043,251  179,366  1,734,184 
Investments  19,137  2,474  405,014 
Property, plant, and equipment  3,459,946  2,013,104  178,129  1,253,275 
Intangible assets  13,208  27,673  1,237  70,949 
Deferred assets  4,946 
         

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LIABILITIES  GET  DIS  TEL  PAR 
  Consolidated      Consolidated 
         
 
TOTAL LIABILITIES  4,689,656  5,400,299  239,208  2,190,241 
CURRENT LIABILITIES  423,140  1,150,981  15,377  142,295 
Loans and financing  53,956  15,935  6,385 
Debentures  18,525 
Suppliers  46,990  395,178  3,618  43,546 
Taxes and social contributions  110,566  200,977  2,335  15,065 
Dividends due  94,754  80,292  14,450 
Payroll and labor provisions  39,334  110,984  8,497  2,117 
Post-employment benefits  5,105  13,262  862  85 
Account for compensation of Portion A  42,300 
Other regulatory liabilities  17,519  14,510 
Customer charges due  3,548  41,183 
R & D and Energy Efficiency  31,062  168,335  4,422 
Concession charge - ANEEL grant  33,369 
Other accounts payable  20,306  68,025  65  4,331 
NON CURRENT LIABILITIES  784,827  1,240,346  20,577  468,645 
Long-term liabilities  784,235  1,240,346  20,577  394,243 
Loans and financing  245,129  141,675  125,881 
Debentures  254,582 
Provisions for contingencies  155,958  166,314  1,368  3,404 
Subsidiaries and investees  582,150 
Suppliers  230,029 
Taxes and social contribution  16,505  8,512 
Post-employment benefits  145,707  312,696  19,209  1,864 
Account for compensation of Portion A  10,109 
Other regulatory liabilities  10,882 
Other accounts payable  7,412  15 
Income from future periods  592  -  -  74,402 
MINORITY INTEREST  1,363  -  -  244,567 
SHAREHOLDERS' EQUITY  3,480,326  3,008,972  203,254  1,334,734 
Share capital  2,947,018  2,171,928  194,755  1,165,500 
Income reserves  197,424  491,983  128,302 
Retained earnings  335,884  345,061  8,499  40,932 

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36 Statement of Income Broken Down by Company

In order to allow the analysis of the statement of income according to the nature of the expenses, the operating costs and expenses are presented in aggregate form for the nine-month period ended on September 30, 2008. The Parent Company's statement represents the results of its activities, not taking into account the results of equity in its subsidiaries.

               
STATEMENT OF INCOME  GET  DIS  TEL  PAR  COPEL Subtractions  Consolidated 
  Consolidated      Consolidated       
               
 
GROSS REVENUES  1,309,483  4,665,305  81,963  373,679  -  (284,792) 6,145,638 
Power sales to final customers  123,450  2,091,882  1,900  (2,572) 2,214,660 
Power sales to distributors  1,001,341  40,424  125,172  (187,962) 978,975 
Charges for the use of the power grid  167,238  2,483,090  (63,139) 2,587,189 
Telecommunications revenues  81,963  (24,340) 57,623 
Distribution of piped gas  208,535  (1,784) 206,751 
Leases and rents  642  36,909  35,446  (799) 72,198 
Other operating revenues  16,812  13,000  2,626  (4,196) 28,242 
DEDUCTIONS FROM GROSS REVENUES  (192,955) (1,833,370) (14,108) (49,245) -  -  (2,089,678)
NET REVENUES  1,116,528  2,831,935  67,855  324,434  -  (284,792) 4,055,960 
OPERATING COSTS AND EXPENSES  (518,682) (2,339,478) (56,236) (242,888) (5,999) 284,870  (2,878,413)
Power purchased for resale  (44,586) (1,328,681) (801) 187,962  (1,186,106)
Charges for the use of the power grid  (120,565) (245,074) (15,102) 63,139  (317,602)
Personnel and management  (111,098) (323,264) (22,153) (8,836) (4,010) (469,361)
Pension and healthcare plans  (10,613) (45,230) (2,702) (790) (87) (59,422)
Materials and supplies  (7,218) (33,097) (1,013) (508) (8) (41,844)
Raw materials and supplies - generation  (12,726) (1,779) 1,906  (12,599)
Natural gas and supplies - gas business  (109,325) (109,325)
Third-party services  (44,726) (153,280) (8,863) (22,380) (3,345) 31,064  (201,530)
Depreciation and amortization  (97,180) (136,726) (22,004) (43,081) (298,991)
Provisions and reversals  (9,166) (60,417) 2,532  (172) 2,037  (65,186)
Concession charge - ANEEL grant  (31,637) (31,637)
Other operating costs and expenses  (60,804) (13,709) (2,033) (8,477) (586) 799  (84,810)
RESULT OF OPERATIONS  597,846  492,457  11,619  81,546  (5,999) 78  1,177,547 
FINANCIAL INCOME (LOSSES) 22,079  129,323  2,336  (14,476) (44,618) (78) 94,566 
Financial revenues  68,839  243,105  2,363  27,259  75,280  (44,588) 372,258 
Financial expenses  (46,760) (113,782) (27) (41,735) (119,898) 44,510  (277,692)
EQUITY IN RESULTS OF INVESTEES  -  -  -  25,377  196  (128) 25,445 
OPERATING INCOME (LOSSES) 619,925  621,780  13,955  92,447  (50,421) (128) 1,297,558 
NON-OPERATING INCOME (LOSSES) (1,156) (5,661) 407  131  1  -  (6,278)
INCOME (LOSSES) BEFORE TAXES               
   AND MINORITY INTERESTS 
618,769  616,119  14,362  92,578  (50,420) (128) 1,291,280 
Provision for IRPJ and CSLL  (174,127) (154,149) (4,868) (17,993) (3,191) (354,328)
Deferred IRPJ and CSLL  2,845  (22,470) 25  537  (1,664) (20,727)
Minority interests  (128) (17,190) 128  (17,190)
INCOME (LOSSES) FOR THE PERIOD  447,359  439,500  9,519  57,932  (55,275) -  899,035 
               
IRPJ = Corporate income tax 
CSLL = Social contribution on net income 

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37 Changes in Accounting Policies

On December 28, 2007, Law no. 11,638 was enacted, changing, revoking, and introducing new provisions in the Brazilian Corporate Law, particularly in the chapter covering the disclosure and preparation of financial statements. Some of these provisions have changed, among other aspects, the criteria for recognition and valuation of assets and liabilities. These changes have been in effect since January 1, 2008.

The main goal of this new law is to update the Brazilian corporate legislation so as to bring the accounting practices adopted in Brazil closer to the International Financial Reporting Standards (IFRS) and to allow new accounting rules and procedures to be issued by the Brazilian Securities and Exchange Commission (CVM) in compliance with international accounting standards.

Even though this law is in effect, some of the changes introduced by it need to be regulated. During the transition period until these regulations are issued, CVM, through Instruction no. 469, has made the full application of these rules optional for quarterly financial information issued in 2008 and has determined that some provisions shall be mandatory (articles 3 to 14).

Based on that, COPEL’s management has assessed the potential impacts of the new law, in particular the impact of articles 3 to 14 of CVM Instruction no. 469, and has not identified any material adjustments to be made to the financial information for the quarter ended on September 30, 2008.

As for the remaining provisions of the new law, management has chosen to record the related impacts, if any, during fiscal year 2008, as soon as the new regulations are issued.

A summary of the preliminary assessment of the application of the provisions of the new law, conducted by COPEL's management, is shown below:

a) Mandatory application of articles 3 to 14 of CVM Instruction no. 469/2008 as of January 1, 2008:

 
Changes introduced by Law no. 11,638/2007    Impact on the Company 
 
The interests of debenture holders, of employees and managers, even in the form of financial instruments, and of employee pension or healthcare organizations or funds, which do not qualify as expenses, shall be included in the Statement of Income for the respective period, after the income before income tax and the provision for income tax. 
Not applicable to the Company. 
 

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All public companies shall disclose information about stock-based compensation in their quarterly reports and in their financial statements pursuant to the guidelines contained in item 25.10 of Letter CVM/SNC/SEP no. 01, dated February 14, 2007, until CVM issues specific regulation about this matter. 
The Company does not adopt stock-based compensation. 
 
Introduction of the concept of present value adjustment for long-term asset and liability transactions and for material short-term transactions. 
The Company has reviewed its accounts, taking into consideration the introduction of this concept, and has not identified any material amounts to be recorded. 
 
Elimination of the possibility of recording: 
(i) premiums received in the issue of debentures; and 
(ii) donations and subsidies for investments (including tax breaks) directly as capital reserves under shareholders’ equity. That means donations and subsidies for investments will now be recorded to income. To avoid their distribution as dividends, the amount of donations and subsidies may be allocated, after being recorded to income, to a tax break reserve. 
Does not apply to the Company in this quarter. 
 
Elimination of the revaluation reserve. Any existing balances in revaluation reserves shall be maintained until their actual realization or reverted by the end of the fiscal year in which the Law came into force. 
Jointly-controlled subsidiary Dominó Holdings and subsidiaries Sercomtel Telecomunicações and Sercomtel Celular have revaluation reserve balances which have been excluded for purposes of equity and consolidation and to adjust the accounting practices of these subsidiaries to those of the parent company. 
 

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The reconciliation note referred to in article 5, paragraph 2, section III of CVM Instruction no. 331, dated April 4, 2000, shall not be required of companies which sponsor Brazilian Depositary Receipt (BDR) programs and whose financial statements, in the country of origin or which are disclosed in foreign markets for purposes of registration, are prepared in compliance with the international accounting rules issued by the International Accounting Standards Board (IASB).    Not applicable to the Company. 
 
Requirement that the assets and liabilities of a company in the process of being incorporated as a result of transactions that involve incorporation, merger, or split between independent parties resulting in actual transfer of control be recorded at market value.    Does not apply to the Company in this quarter. 
 
Elimination of the materiality threshold for the adjustment of investments in subsidiaries and investees under the equity method and replacement of the parameter of 20% of the investee’s stock capital by the parameter of 20% of the investee’s voting stock.    Does not apply to the Company in this quarter. 
 
Changes to article 5 of CVM Instruction no. 331, dated April 4, 2000, which addresses the registration of companies for the issue and trading of Brazilian Depositary Receipts - Level II and III BDR Programs tied to securities issued by public companies or similar entities headquartered abroad.    Not applicable to the Company. 
 

b) Application of the remaining provisions of the new law, which at the Company’s discretion shall be recorded in its financial statements, should they have any material impact, during fiscal year 2008:

 
Changes introduced by Law no. 11,638/2007    Impact on the Company 
 
Replacement of the Statement of Changes in Financial Position by the Statement of Cash Flows.    The Company has already presented this statement quarterly in compliance with ANEEL requirements. 
 

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Addition of the Statement of Added Value, applicable to public companies, which features the value added by the Company and a breakdown of the sources and allocations of these amounts.    The Company has already presented this statement quarterly in compliance with ANEEL requirements. 
 
Possibility of maintaining separate recording of transactions for purposes of tax legislation and then make any necessary adjustments to ensure their compliance with the accounting practices.    The Company is waiting for regulation of this issue and for a statement by the tax authorities. 
 
Creation of a new subset of accounts for intangible items, including goodwill, for purposes of presentation as part of the balance sheet. This set of accounts shall record any rights to non-physical assets assigned to the operation of the Company or exercised with this purpose, including acquired stock in trade.    The Company will reclassify R$ 3,830 in goodwill recorded in the acquisition of interests in investees, which are currently recorded under Investments, to the Intangible Assets and Liabilities subset. 
 
Mandatory recording under property, plant, and equipment of any rights to physical assets assigned to the operation of the Company, including those resulting from transactions which transfer to the Company the benefits, risks, and control of these assets (such as finance leases).    Not applicable to the Company. 
 
Modification of the criteria for amounts recorded under deferred assets/liabilities. Only pre-operational expenses and restructuring expenses which effectively contribute to the increase in the income of more than one fiscal year and which do not characterize only a cost reduction or operational efficiency gain shall be recorded in this subset.    The Company is waiting for the issue of regulation concerning this matter so it can assess any potential impacts to the income of the current year. The maximum adjustment amount, if any, is R$ 1,124. 
 

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Requirement that the Company periodically assess its ability to recover the amounts recorded under property, plant, and equipment, intangible assets, and deferred assets, in order to ensure that: 
(i) any losses due to non-recovery of these assets are recorded as the result of a decision to discontinue the activities related to these assets or when there is evidence that the results of operations will not be sufficient to ensure the realization of these assets; and 
(ii) the criteria used to determine the estimated remaining useful lives of these assets for purposes of recording their depreciation, amortization, and depletion are reviewed and adjusted. 
  The Company already adopts this practice. Most assets which make up the property, plant, and equipment of the Company and its subsidiaries are tied to the concession, and, according to the concession agreements signed by the Company as a public service concession holder, any residual value of these assets shall be refunded to it upon expiration of the concession. This fact significantly reduces the risk of any impact to the Company’s financial statements in connection with the recovery of assets. 
 
Creation of a new subset of accounts, named equity evaluation adjustments, under shareholders’ equity, to allow the recording of certain market value evaluations, particularly those of financial instruments; the recording of exchange rate variations on equity investments abroad assessed under the equity method (until December 31, 2007, these variations were recorded to income); and market value adjustments to liabilities and assets, due to mergers and incorporations between unrelated parties resulting in actual transfer of control.    The Company is waiting for the issue of regulation concerning this matter so it can assess any potential impacts on its 2008 financial statements. 
 
Requirement that all financial instruments, including derivatives, be recorded: 
(i) at market value or equivalent value, in the case of instruments assigned to trading or available for sale; and 
(ii) at acquisition cost or face value, restated in compliance with legal and contractual provisions and adjusted to the likely realization value, whenever the latter is lower than the former. 
  The Company is waiting for the issue of regulation concerning this matter so it can assess any potential impacts on its 2008 financial statements. 
 

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38 Statement of Cash Flows

For the periods ended on September 30, 2008 and 2007:

  Parent Company  Consolidated 
       
  2008  2007  2008  2007 
 
Cash flows from operating activities 
       
 Net income for the period  899,035  794,368  899,035  794,368 
 
 Adjustments to reconcile the net income for the period with the         
 generation of cash by operating activities:         
     Provision (reversal) for doubtful accounts  18,016  (4,911)
     Depreciation and amortization  298,991  316,335 
     Unrealized monetary and exchange variations, net  64,474  100,871  36,086  164,246 
     Equity in the results of subsidiaries and investees  (954,310) (1,008,522) (29,912) (17,665)
     Deferred income tax and social contribution  1,664  (57,238) 20,727  (68,904)
     Variations in Account for Compensation of Portion A, net  (164,825) 42,588 
     Variations in other regulatory assets and liabilities, net  (42,399) 7,259 
     Contract renegotiation - Cien  (62,862)
     Provisions under long-term liabilities  (2,036) 181,704  49,420  211,962 
     Write-off of investments  4,364  2,241 
     Write-off of property, plant, and equipment, net  19,221  41,283 
     Write-off of intangible and deferred assets, net  397  429 
     Amortization of goodwill on investments  4,665  5,931 
     Minority interests  17,190  24,200 
 
 Changes in assets         
     Customers and distributors  71,034  (95,834)
     Telecommunications services  118  (5,108)
     Dividends received  733,662  415,515  9,541  8,278 
     Construction in progress  (8,329) (26,418)
     CRC transferred to State Government  90,036  25,423 
     Taxes and social contribution  1,403  (28,494) 37,318 
     Collaterals and escrow deposits  2,358  (38,903) 15,176  (73,061)
     Inventories  (5,167) 3,544 
     Judicial deposits  10,147  (3,692) (3,100) (5,704)
     Other  (11) 9,741  (14,843)
 
 Changes in liabilities         
     Loans and financing - interest due and paid  (42,343) (28,571) (86,332) (98,739)
     Debentures - interest due and paid  (94,133) (280,537) (113,852) (307,163)
     Suppliers  (390) (106) 81,707  (27,957)
     Taxes and social contribution  (14,348) 10,698  (27,422) 27,080 
     Payroll and labor provisions  (27) 33  14,948  (23,453)
     Post-employment benefits  (6) (6) 2,110  (92,507)
     Customer charges due  12,009  (13,582)
     R & D and Energy Efficiency  8,561  6,149 
     Other  (1,048) 12,043  (3,603)
     Minority interests  (4,150) 2,850 
         
Net cash generated by operating activities  604,107  57,109  1,209,654  779,170 
         
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(continued)        
         
  Parent Company    Consolidated 
       
  2008  2007  2008  2007 
 
Cash flows from investing activities         
 Loans granted to related parties  (16,307)
 Payments of loans granted to related parties  176,027 
 Acquisition of joint-controlling interest in Dominó - net of cash acquired  (108,962)
 Additions to interests in other companies and other investments  (67,000) (6,160) (11,244) (5,276)
 Additions to property, plant, and equipment:  (438,005) (354,248)
 Additions to intangible assets  (2,608) (2,745)
 Additions to deferred assets  (105) (290)
 Customer contributions  40,538  24,603 
 Sale of property, plant, and equipment  10,620  136 
         
Net cash generated (used) by investing activities  109,027  (22,467) (509,766) (337,820)
         
 
Cash flows from financing activities         
 Loans and financing obtained  329,600  33,974  329,600 
 Loans and financing - amortization of principal amounts  (1,998) (417) (41,079) (57,261)
 Debentures - amortization of principal amounts  (133,320) (633,320) (133,320) (633,320)
 Dividends and interest on capital paid  (259,210) (208,138) (267,530) (216,943)
         
Net cash used by financing activities  (394,528) (512,275) (407,955) (577,924)
         
 
 
 
Total effect on cash in hand  318,606  (477,633) 291,933  (136,574)
         
 
 Cash in hand at the beginning of the period  56,186  584,702  1,540,871  1,504,004 
 Cash in hand at the end of the period  374,792  107,069  1,832,804  1,367,430 
 
Variation in cash  318,606  (477,633) 291,933  (136,574)
         

The statement of cash flows for the period ended on September 30, 2008 was prepared in compliance with CVM Ruling no. 547, dated August 13, 2008. For purposes of comparison, the statement of cash flows for the period ended on September 30, 2007 was reclassified pursuant to the same rules.

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39 Statement of Added Value

For the periods ended on September 30, 2008 and 2007:

 
Consolidated 
     
  2008  2007 
 
Revenues     
   Sales of power, services, and other revenues  6,145,638  5,876,835 
   Provision for (reversal of) doubtful accounts  (15,777) 4,458 
   Non-operating income (losses) (6,278) (38,129)
Total  6,123,583  5,843,164 
 
( - ) Supplies acquired from third-parties     
   Power purchased for resale  1,186,106  931,066 
   Charges for the use of the power grid ( - ) ESS  276,421  350,941 
   Materials, supplies, and services from third-parties  255,973  195,315 
   Natural gas and supplies for the gas business  109,325  102,233 
   Emergency capacity charges and PROINFA  196  200 
   Other  77,528  224,673 
Total  1,905,549  1,804,428 
 
( = ) GROSS ADDED VALUE  4,218,034  4,038,736 
 
( - ) Depreciation and amortization  298,991  316,335 
 
( = ) NET ADDED VALUE  3,919,043  3,722,401 
 
( + ) Transferred Added Value     
   Financial revenues  372,258  266,345 
   Equity in the results of subsidiaries and investees  25,445  11,892 
Total  397,703  278,237 
 
ADDED VALUE TO DISTRIBUTE  4,316,746  4,000,638 
     
(next page)    

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(continued)        
         
      Consolidated 
       
  2008  %  2007  % 
DISTRIBUTION OF ADDED VALUE:         
 
Personnel         
   Salaries and wages  321,595    301,027   
   Pension and healthcare plans  59,422    7,430   
   Meal assistance and education allowance  35,704    33,743   
   Social charges - FGTS  25,548    23,455   
   Labor indemnifications and severance pay  (825)   9,664   
   Provision for profit sharing  49,451     
   Transfer to construction in progress  (48,031)   (37,072)  
Total  442,864  10.3  338,247  8.5 
 
Government         
   ICMS (VAT) 1,191,708    1,117,102   
   Income tax and social contribution  375,055    335,285   
   Cofins tax  476,182    449,641   
   Social charges - INSS  85,919    79,904   
   Pasep tax  103,378    97,705   
   CPMF and IOF taxes  6,802    44,516   
   ISSQN  1,392    1,756   
   Customer charges ( - ) Em. Cap. Charges/PROINFA  316,822    385,647   
   System Service Charges - ESS  41,181    12,199   
   Other taxes  79,033    75,012   
Total  2,677,472  62.0  2,598,767  64.9 
 
Financing agents         
   Interest and penalties  270,890    236,592   
   Leases and rents  9,295    8,464   
Total  280,185  6.5  245,056  6.1 
 
Shareholders         
   Retained earnings  741,035    659,368   
   Interest on capital  158,000    135,000   
   Minority interests  17,190    24,200   
Total  916,225  21.2  818,568  20.5 
 
  4,316,746    4,000,638   
         
 
Added value (average) per employee  520    486   
Shareholders' equity contribution rate - %  54.1    56.9   
Wealth generation rate - %  33.0    33.0   
Wealth retention rate - %  21.2    20.5   
         

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40 Subsequent Event

a) Electric Energy Trading Chamber (CCEE)

In Notice to Agents CAM 1313/08, dated October 22, 2008, the Electric Energy Trading Chamber (CCEE) published the amounts to be settled on account of the preliminary injunction issued by the 15th Federal Court, from the Federal District Court Jurisdiction, in Lawsuit no. 2002.34.00.026509 -0, in favor of AES Sul, filed to dispute the retroactive application of ANEEL Ruling no. 288/2002. On account of that, COPEL paid R$ 26,398 on November 7, 2008, for which there was no provision as of September 30, 2008.

When the amounts due for the period 2000-2002 were calculated, COPEL had already obtained a similar injunction revoking the application of ANEEL Ruling no. 288/2002 and allowing the accounting and settlement to be made by the Wholesale Energy Market (MAE), taking into account Itaipu's share of the Southeast market. On July 30, 2008, in the ruling of interlocutory appeal no. 2002.01.00.028632 -7, this decision was upheld, maintaining in favor of COPEL the accounting published by MAE on March 13, 2002 (Note 32).

The ruling in Lawsuit no. 2002.34.00.026509 -0, filed by AES Sul to dispute the retroactive application of ANEEL Ruling no. 288/2002, confirms the grounds for the favorable ruling obtained previously by COPEL.

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COMMENTS ON THE PERFORMANCE OF THE COMPANY IN THE QUARTER
(In thousands of reais, except where otherwise indicated)

1 Distribution

Customer connections – In September 2008, COPEL supplied 3,491,945(1) customers (3,398,522(1) in September 2007), with an increase of 93,423(1) customers (2.7%) over the past 12 months.

Compact-design distribution lines – COPEL has continued to implement compact-design distribution lines in urban areas with a high concentration of trees surrounding the distribution grids. This technology helps to preserve the environment, as trees in the vicinity of power grids do not need to be cut off or severely trimmed, and to improve the quality of power supply by reducing the number of unplanned outages. The total length of urban compact-design distribution lines in operation as of September 2008 was 1,507 km(1) (1,318 km(1) as of September 2007), with an increase of 189 km(1) (14.3%) over the past 12 months.

Secondary Isolated Lines – COPEL has also invested in low-voltage (127/220 V) secondary isolated lines, which offer such significant advantages over regular overhead lines as:

- improvement in DEC and FEC distribution performance indicators;

- defense against illegal connections;

- improved environmental conditions and reduced tree areas subject to trimming; - improved safety; - reduced voltage drops throughout the grid; and

- increased transformer useful life due to the reduction of short-circuits, among other advantages.

The total length of secondary isolated lines in operation as of September 2008 was 3,363 km(1) (2,348 km(1) as of September 2007), with an increase of 1,015 km(1) (43.2%) over the past 12 months.

Market breakdown The generation of energy by COPEL from January through September 2008 was 14,316 GWh(1) (13,706 GWh(1) in the same period of 2007). The Company purchased 10,405 GWh(1) from CCEAR (auction) (against 9,715 GWh(1) in the same period of 2007) and 4,093 GWh(1) from Itaipu (against 3,488 GWh(1) in the same period of 2007), as shown in the flowchart below:

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Energy flowchart (GWh) (1) (a) (b)   January through September 2008 
   

Notes: 
(a) Includes amounts dealt between COPEL's subsidiaries 
(b) Amounts subject to change after final accounting by CCEE 
(c) CG = Center of gravity of the submarket (difference between energy under contract and energy received in the CG - set forth under contract). 
 

Power sales by customer category (MWh) Power sales by COPEL from January through September 2008, including free customers and other utilities within Paraná, are broken down by customer category on the following table:

 
Category(1)     In MWh 
       
  Jan - Sep 2008  Jan - Sep 2007  Variation 
   Residential  4,008,569  3,827,040  4.7% 
   Industrial  5,077,271  4,660,134  9.0% 
   Commercial  2,936,934  2,764,932  6.2% 
   Rural  1,201,678  1,131,504  6.2% 
   Other  1,420,890  1,384,990  2.6% 
Total for captive customers  14,645,342  13,768,600  6.4% 
   Free customers - COPEL Geração e Transmissão  896,682  1,056,495  -15.1% 
Total for final customers  15,542,024  14,825,095  4.8% 
   Utilities within the State of Paraná  373,118  353,869  5.4% 
Grand total  15,915,142  15,178,964  4.8% 
       

Power sales within COPEL Distribuição’s captive market amounted to 14,645 GWh from January through September 2008, with 6.4% growth compared to same period last year. Total power sales by COPEL, which includes supply to captive and free customers and supply to other distribution utilities within Paraná, reached 15,915 GWh, with 4.8% growth. This performance resulted mostly from the continuing combination of certain economic factors such as:

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(i) good agricultural yields coupled with high commodity prices, resulting in higher income for farmers; (ii) growing domestic demand, thanks to increased disposable income on account of increased availability of credit, social programs, and minimum wage increases;

(iii)increased exports, particularly in the agricultural sector; and

(iv) the creation of 154,896 new jobs in the first nine months of 2008, with 7.95% growth compared to the same period of 2007. This was the best performance among Southern states and the third best among all states of Brazil.

Captive market – The breakdown of COPEL Distribuição’s captive market shows that residential customers consumed 4,009 GWh, with 4.7% growth and a 27.4% share of the market. Average consumption by residential customer was 161.7 kWh a month, with 1.9% growth. In September 2008, COPEL supplied power to 2,754,584 residential customers.

Industrial customers consumed 5,077 GWh and accounted for 34.7% of consumption by captive customers, with 9% growth. This was the best performance out of all customer categories supplied by COPEL and was due largely to the performance of the following industrial segments: motor vehicles, machinery and equipment, editing and printing, and paper and cellulose. In September 2008, COPEL supplied power to 61,903 industrial customers, a figure 7.0% higher than the one recorded in September 2007.

Commercial customers consumed 2,937 GWh and accounted for 20.1% of consumption by captive customers, with 6.2% growth. In September 2008, COPEL supplied power to 292,791 commercial customers.

Rural customers consumed 1,202 GWh and accounted for 8.2% of consumption by captive customers, with 6.2% growth. In September 2008, COPEL supplied power to 336,311 rural customers.

The other consumption categories (public agencies, public lighting, public services, and own consumption) consumed 1,421 GWh and accounted for 9.7% of consumption by captive customers, with 2.6% growth. In September 2008, COPEL supplied power to 46,341 customers in these categories.

Free customers - Power consumption by free customers supplied by COPEL Geração e Transmissão fell 15.1% due to the expiration of certain agreements.

Number of customers The number of customers billed by COPEL in September 2008 was 3,491,945, representing growth of 2.7% over the same month of 2007.

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Category      Customers(1)
 
  September 2008  September 2007  Variation 
   Residential  2,754,584  2,680,617  2.8% 
   Industrial  61,903  57,851  7.0% 
   Commercial  292,791  283,500  3.3% 
   Rural  336,311  332,231  1.2% 
   Other  46,341  44,306  4.6% 
Total for captive customers  3,491,930  3,398,505  2.7% 
   Free customers - COPEL Geração e Transmissão  15  17  -11.8% 
Grand total  3,491,945  3,398,522  2.7% 
       

2 Management

Workforce COPEL’s workforce at the end of the third quarter of 2008 amounted to 8,270(1) employees assigned to the Company’s wholly-owned subsidiaries and 106(1) employees assigned to the companies controlled by COPEL Participações, as follows:

 
    Employees(1)
     
  September 2008  September 2007 
Wholly-owned subsidiaries     
   COPEL Geração e Transmissão  1,492  991 
   COPEL Transmissão (a) 1,085 
   COPEL Distribuição  6,416  5,903 
   COPEL Telecomunicações  332  331 
   COPEL Participações  30  28 
  8,270  8,338 
Companies controlled by COPEL Participações     
   Compagas  97  79 
   Elejor (Santa Clara)
   UEG Araucária 
  106  89 
     
(a) On December 1, 2007, all the employees of COPEL Transmissão were transferred to COPEL Geração e  Transmissão and to COPEL Distribuição. 

3 Investor Relations

From January through September 2008, COPEL’s common shares (ON - code CPLE3) and class B preferred shares (PNB - code CPLE6) were traded on 89% and 100%, respectively, of the São Paulo Stock Exchange (BOVESPA) trading sessions.

COPEL’s free floating shares accounted for 45.0% of the Company’s stock capital. COPEL’s market value, based on the BOVESPA stock prices at the end of September 2008, was approximately R$ 7,456,000. Out of the 66 securities that make up the Ibovespa index, COPEL’s class B shares ranked 36th, accounting for 0.75% of the portfolio, with a Beta index of 0.81.

COPEL also accounts for 6.57% of the IEE (Electric Energy Index) portfolio. Out of the 30 companies that make up BOVESPA’s Corporate Sustainability Index (ISE), COPEL ranked 14th, accounting for 1.00% of the portfolio.

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As reported by BOVESPA, the closing price of COPEL’s common shares on the last trading day of the period was R$ 28.00 (a negative variation of 5.08%), and class B preferred shares were traded at R$ 26.40 (a negative variation of 1.49%) . From January through September 2008, the Ibovespa index fell 22.45% .

On the New York Stock Exchange (NYSE), COPEL’s class B preferred shares, represented by American Depositary Shares (ADSs), are traded at Level 3, under the code ELP. As reported by NYSE, COPEL’s ADSs were traded on 100% of the trading sessions and had a closing price of US$ 13.72 at the end of the period (a negative variation of 9.08%) . Over this period, the Dow Jones index fell 18.20% .

On LATIBEX (The Euro Market for Latin-American Securities), linked to the Madrid Stock Exchange, COPEL’s Class B preferred shares are traded under the symbol XCOP. As reported by LATIBEX, COPEL’s XCOPs were traded on 99% of the trading sessions and had a closing price of 9.55 euros at the end of the period (a negative variation of 8.87%) . From January through September 2008, the Latibex index fell 25.93% .

 
Stock performance (1) - January - September 2008  ON  PNB 
 
  Total  Daily average  Total  Daily average 
Bovespa         
   Trades  1,160  189,313  1,012 
   Number of shares  10,806,800  65,101  153,397,900  820,310 
   Volume (in thousands of reais ) 306,818  1,848  4,379,504  23,420 
   Trading sessions  166  89%  187  100% 
Nyse         
   Number of shares  1,153,700  18,608  92,373,970  488,751 
   Volume (in thousands of US dollars) 19,290  311  1,559,425  8,251 
   Trading sessions  62  33%  189  100% 
Latibex         
   Number of shares  296,274  1,601 
   Volume (in thousands of euros) 3,337  18 
   Trading sessions  185  99% 
         

4 Rates

The average rate for sales to final customers in September 2008 reached R$ 210.46/MWh (1), representing a 0.84% increase compared with the rate effective in September 2007.

Average rates for sales to final customers are shown below:

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Average rates to final customers (a)     R$/MWh (1)
       
  September 2008  September 2007 Variation 
   Residential  257.26  251.99  2.1% 
   Industrial (b) 186.42  187.35  -0.5% 
   Commercial  229.38  226.22  1.4% 
   Rural  151.31  149.03  1.5% 
   Other  176.45  173.97  1.4% 
       
Total for sales to final customers  210.46  208.71  0.8% 
       
Notes:       
(a) Net of ICMS (VAT)      
(b) Does not include free customers       

Under ANEEL Resolution no. 671, dated June 24, 2008, the rate for transport of power from Itaipu Binacional was set at R$ 3,378.86/MW (a 12.2% increase), effective July 1, 2008.

The main rates for power purchased by COPEL are shown below:

 
Rates for power purchases      R$/MWh (1)
       
  September 2008  September 2007  Variation 
   Itaipu  91.46  85.81  6.6% 
   Cien  84.54 
   Auction - CCEAR 2005-2012  67.33  63.79  5.5% 
   Auction - CCEAR 2006-2013  78.78  74.66  5.5% 
   Auction - CCEAR 2007-2014  85.87  82.26  4.4% 
       
   Auction - CCEAR 2007-2014 (A-1) 112.56  104.73  7.5% 
   Auction - CCEAR 2008-2015  94.86 
   Auction - CCEAR 2008-H30  118.61 
   Auction - CCEAR 2008-T15 (a) 146.60 
       
Note:       
(a) Average auction price restated according to the IPCA inflation index      

The main rates for power sold by COPEL to distributors are shown below:

 
Rates for sales to distributors(1)     R$/MWh (1)
       
  September 2008  September 2007  Variation 
   Auction - CCEAR 2005-2012  67.00  63.61  5.3% 
   Auction - CCEAR 2006-2013  78.47  74.66  5.1% 
   Auction - CCEAR 2007-2014  87.76  83.36  5.3% 
   Auction - CCEAR 2008-2015  93.27 
   Utilities within Paraná  123.07  119.27  3.2% 
       

5 Economic and Financial Performance

Revenues (Note 28)

As of September 2008, net operating revenues reached R$ 4,055,960, an amount 6.0% greater than the R$ 3,824,784 recorded from January through September 2007.

This increase resulted mostly from the following factors:

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(i) a 9.9% increase in revenues from sales to final customers, which reflects only actual sales revenues, not including revenues from the use of the distribution system (TUSD), due to the expansion of the Company’s total market demand (4.8% until September 2008);

(ii) a 5.9% reduction in revenues from sales to distributors, due mostly to the situation of the Araucária Thermal Power Plant, which sold power in 2007 and only yielded revenues from its lease to Petrobras in 2008;

(iii) a 23.7% increase in telecommunications revenues due to service to new customers and added services to existing ones; and

(iv) a 12.0% increase in revenues from sales of gas due to increased distribution of gas to third-parties and to the rate increase passed on to customers during the period.

Operating Costs and Expenses (Note 30)

At the end of September 2008, operating costs and expenses amounted to R$ 2,878,413, representing an increase of 9.4% over the R$ 2,629,931 recorded in the same period of 2007. The main variations were:

A 27.4% increase in power purchased for resale due mostly to: (i) the reversal, in the first quarter of 2007, of R$ 100,862 in cancelled invoices by CIEN; and (ii) the increase in power acquired at auctions (R$ 104,316), from Itaipu (R$ 85,150), and at CCEE (R$ 54,946). These variations were partially offset by the expiration of the agreement with CIEN and by the effect of PASEP/COFINS taxes on power purchased for resale, in the amount of (R$ 15,237).

The 12.5% drop in charges for the use of the transmission system, which resulted mostly from the negative effects of CVA, in the amount of R$ 153,205, partially offset by the R$ 73,728 increase in the ESS (System Service Charge) quota, as charged by CCEE.

A 14.3% increase in personnel expenses – which amounted to R$ 469,361 as of September 2008 – compared to the same period last year. This increase was due basically to the 5.5% wage increase applied as of October 2007 and to the provision for profit sharing covering the first nine months of 2008, in the amount of R$ 49,451, which in 2007 was only set aside in December.

The 11.3% drop in materials compared to the same period of 2007 was due mostly to lower purchases of materials and supplies for the power system, of fuel and vehicle parts, and of computer equipment.

The 22.2% increase in third-party services was due mostly to higher expenses with power grid maintenance, mail services, and telephone services.

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The reduction in provisions and reversals was due to the impact of the provision for doubtful accounts recorded in 2008 in the amount of R$ 15,777 (while R$ 4,458 were reversed in the same period of 2007) and of provisions for contingencies in the amount of R$ 49,409 (while in 2007 the corresponding amount was R$ 212,079). In the amount recorded in 2007, R$ 170,518 corresponded to the provision in connection with the COFINS tax lawsuit, which was a non-recurring event.

The 12.1% increase in other operating expenses was due mostly to the ANEEL concession charges and to the rights of way paid in connection with the supply of gas by Compagas.

Adjusted EBITDA (1)

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached R$ 1,476,538 in September 2008, a figure 2.29% lower than the one recorded in the same period of last year (R$ 1,511,188), as shown below:

     
Calculation of EBITDA    Consolidated 
     
  September 2008  September 2007 
   Income for the period  899,035  794,368 
   Deferred IRPJ and CSLL  20,727  (68,904)
   Provision for IRPJ and CSLL  354,328  404,189 
   Equity in results of investees  (25,445) (11,892)
   Financial expenses (revenues), net  (94,566) 14,763 
   Non operating expenses (revenues), net  6,278  38,129 
   Minority interests  17,190  24,200 
   EBIT  1,177,547  1,194,853 
   Depreciation and amortization  298,991  316,335 
     
   Adjusted EBITDA  1,476,538  1,511,188 
     

Net Income

From January through September 2008, COPEL recorded net income of R$ 899,035, corresponding to R$ 3.2853 per share.

(1) Information unaudited by the independent auditors.

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OTHER INFORMATION DEEMED MATERIAL BY THE COMPANY (1)

In compliance with the provisions of the BOVESPA’s Regulation of Level 1 Special Corporate Governance Practices, we provide below a list of the shareholders who hold more than 5% of any type of Company stock, the consolidated shareholding situation of the controlling parties and senior management, and COPEL’s free-float:

COMPANHIA PARANAENSE DE ENERGIA - COPEL  As of 30/09/2008 
(in shares)
SHAREHOLDING POSITION OF THE HOLDERS OF MORE THAN 5% OF EACH CLASS OF STOCK (ENTITIES AND INDIVIDUALS)
SHAREHOLDERS  Common Shares  Class A Preferred 
Shares
 
Class B Preferred 
Shares
 
Total 
Shares  %  Shares  %   Shares  %   Shares  % 
CONTROLLING 
SHAREHOLDERS 
STATE OF PARANÁ  85.028.598  58,63  13.639  0,01  85.042.237  31,08 
BNDES PARTICIPAÇÕES S.A. - BNDESPAR  38.298.775  26,41  27.282.006  21,28  65.580.781  23,96 
TREASURY STOCK 
OTHER SHAREHOLDERS  21.703.707  14,96  398.177  100,00  100.930.473  78,71  123.032.357  44,96 
TOTAL  145.031.080  100,00  398.177  100,00  128.226.118  100,00  273.655.375  100,00 
Obs.: BNDES Participações S.A. - BNDESPAR is a public company, wholly-owned by Banco Nacional de Desenvolvimento Social - BNDES, which is 100.0% owned by the Federal Government.
HEDGING-GRIFFO CV S.A.-"FUNDOS" is an investment fund manager. None of the managed funds holds by itself an interest greater than 5% of the Company's stock. 

 

COMPANHIA PARANAENSE DE ENERGIA - COPEL  As of 30/09/2008 
(in shares)
CONSOLIDATED SHAREHOLDING POSITION OF THE MAJORITY SHAREHOLDER AND SENIOR MANAGEMENT OF THE COMPANY AND FREE-FLOATING STOCK
SHAREHOLDERS  Common Shares  Class A Preferred 
Shares
 
Class B Preferred 
Shares
 
Total 
 Shares  %  Shares  %  Shares  %  Shares  % 
MAJORITY SHAREHOLDER  123.327.373  85,04  27.295.645  21,29  150.623.018  55,04 
SENIOR MANAGEMENT  BOARD OF DIRECTORS 
BOARD OF OFFICERS  102  102 
FISCAL COUNCIL 
TREASURY STOCK 
OTHER SHAREHOLDERS  21.703.596  14,96  398.177  100,00  100.930.473  78,71  123.032.246  44,96 
TOTAL  145.031.080  100,00  398.177  100,00  128.226.118  100,00  273.655.375  100,00 
FREE-FLOAT  21.703.596  14,96  398.177  100,00  100.930.363  78,71  123.032.136  44,96 

(1) Information unaudited by the independent auditors.

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SENIOR MANAGEMENT AND COMMITTEES

 
BOARD OF DIRECTORS 
 
Chairman   JOÃO BONIFÁCIO CABRAL JÚNIOR 
Executive Secretary   RUBENS GHILARDI 
Members   JORGE MICHEL LEPELTIER 
   LAURITA COSTA ROSA 
   LUIZ ANTONIO RODRIGUES ELIAS 
   MUNIR KARAM 
   NELSON FONTES SIFFERT FILHO 
   NILDO ROSSATO 
   ROGÉRIO DE PAULA QUADROS 
   
AUDIT COMMITTEE 
   
Chairwoman   LAURITA COSTA ROSA 
Members   JORGE MICHEL LEPELTIER 
   ROGÉRIO DE PAULA QUADROS 
   
FISCAL COUNCIL 
   
Chairman   OSMAR ALFREDO KOHLER 
Members   BEATRIZ OLIVEIRA FORTUNATO 
   HERON ARZUA 
   MÁRCIO LUCIANO MANCINI 
   NELSON PESSUTI 
   
BOARD OF OFFICERS 
   
Chief Executive Officer   RUBENS GHILARDI 
Chief Finance, Investor Relations, and Corporate Partnerships Officer   PAULO ROBERTO TROMPCZYNSKI 
Chief Engineering Officer   LUIZ ANTONIO ROSSAFA 
Chief Corporate Management Officer   ANTONIO RYCHETA ARTEN 
Chief Power Distribution Officer   RONALD THADEU RAVEDUTTI 
Chief Power Generation and Transmission and Telecommunications Officer   RAUL MUNHOZ NETO 
Chief Legal Officer   ZUUDI SAKAKIHARA 
   
ACCOUNTANT 
   
Accountant - CRC-PR-024769/O-3   ENIO CESAR PIECZARKA 
   

For information about Investor Relations, please contact: ri@copel.com - Phone: +55 (41) 3222-2027/ +55 (41) 3331-4359 Fax: +55 (41) 3331-2849

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  Deloitte Touche Tohmatsu 
  Rua Pasteur, 463 - 5º andar 
  Curitiba – PR – 80250-080 
  Brasil 
   
  Tel: + 55 (41) 3312-1400 
  Fax:+ 55 (41) 3312-1470 
  www.deloitte.com.br 

AUDITOR REPORT ON THE SPECIAL REVIEW OF THE QUARTERLY INFORMATION

To the
Senior Management and Shareholders of
COMPANHIA PARANAENSE DE ENERGIA – COPEL
Curitiba - PR

1. We have reviewed the financial information contained in the Quarterly Information Report (ITR) of Companhia Paranaense de Energia – COPEL (parent company and consolidated) for the quarter ended on September 30, 2008, comprising the balance sheets, the statements of income, the statements of cash flows and added value, the performance report, and the accompanying notes, prepared under the responsibility of the management of the Company.

2. Our review was carried out in compliance with the specific standards set forth by the Institute of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting Council (CFC), and basically comprised: (a) inquiries of and discussions with the senior managers responsible for the accounting, financial, and operating areas of the Company and its subsidiaries, with regard to the main criteria adopted in the preparation of the quarterly information; and (b) a review of the information and of the subsequent events which have, or may have, significant effects on the financial position and operations of the Company and its subsidiaries.

3. Based on our review, we are not aware of any material modifications that should be made to the accounting information contained in the present Quarterly Information Report so as to make such information compliant with the regulations issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of mandatory quarterly information, including CVM Instruction no. 469/08.

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Table of Contents

Deloitte Touche Tohmatsu

4. As mentioned in Note 37, on December 28, 2007 Law no. 11,638 was enacted, effective as of January 1, 2008. This law has changed, revoked and introduced new provisions in Law no. 6,404/76 (the Brazilian Corporate Law), causing changes to the accounting practices adopted in Brazil. While the new law is already in effect, some changes introduced by it are pending regulation by the regulatory agencies before they can be fully implemented by corporations. Thus, during the transition period, CVM, under Instruction no. 469/08, has made the application of all the provisions of Law no. 11,638/07 on the preparation of Quarterly Information Reports optional. Thus, the financial information contained in the ITR for the quarter ended on September 30, 2008 have been prepared in compliance with the specific regulations by CVM and do not include all the changes in accounting practices introduced under Law no. 11,638/07.

Curitiba, November 11, 2008.

 

DELOITTE TOUCHE TOHMATSU    Iara Pasian 
     
Independent Auditors    Accountant 
     
CRC n.º 2 SP-011.609/O-8 F-PR    CRC n.º 1 SP 121.517/O-3 S/PR 

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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.

Date: December 02, 2008

 
COMPANHIA PARANAENSE DE ENERGIA – COPEL
By:
/S/  Rubens Ghilardi

 
Rubens Ghilardi
CEO
 

 

 
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 of future 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.