-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CK3YyyLjGTsY0vrm2ZhLEBFlpAeU4pi13eSdp09zM8HPc2Hot+8b12GafgvjzdqG oE3LVpRCTkfFKLn57LrFLw== 0001292814-10-002081.txt : 20100618 0001292814-10-002081.hdr.sgml : 20100618 20100618093803 ACCESSION NUMBER: 0001292814-10-002081 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20100630 FILED AS OF DATE: 20100618 DATE AS OF CHANGE: 20100618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENERGY CO OF PARANA CENTRAL INDEX KEY: 0001041792 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14668 FILM NUMBER: 10904765 BUSINESS ADDRESS: STREET 1: RUA CORONEL DULCIDIO 800 STREET 2: 80420 170 CURITIBA PARANA CITY: FEDERATIVE REPUBLIC STATE: D5 ZIP: 00000 MAIL ADDRESS: STREET 1: CT CORPORATION SYSTEM STREET 2: 1633 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 6-K 1 elpdfp09_6k.htm FINANCIAL STATEMENTS elpdfp09_6k.htm - Provided by MZ Technologies
 
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 June, 2010

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

FINANCIAL STATEMENTS

2009

December 2009


FINANCIAL STATEMENTS

Balance Sheets
As of December 31, 2009 and 2008
(In thousands of reais)

ASSETS  N  Parent Company  Consolidated 
    2009  2008  2009  2008 
CURRENT ASSETS           
Cash and cash equivalents  5  479,044  318,455  1,696,152  1,813,576 
Customers and distributors  6  -  -  1,063,840  976,668 
Services to third parties, net  -  -  -  8,718  7,904 
Dividends receivable  15  696,279  719,061  5,135  5,247 
Services in progress  -  -  -  92,472  64,765 
CRC transferred to State Government  7  -  -  49,549  47,133 
Recoverable taxes  8  121,541  94,009  352,412  257,339 
Deferred regulatory assets - CVA  9  -  -  218,500  111,098 
Other regulatory assets  10  -  -  17,526  31,511 
Bonds and securities  34  78,959  2  78,959  2 
Collaterals and escrow accounts  11  161  436  113,701  150,794 
Other receivables  12  2  2  36,591  42,856 
Inventories  13  -  -  94,190  64,260 
 
    1,375,986  1,131,965  3,827,745  3,573,153 
 
NON-CURRENT ASSETS           
Long-term receivables           
Customers and distributors  6  -  -  51,377  81,930 
Telecommunications services  -  -  -  1,011  3,211 
CRC transferred to State Government  7  -  -  1,205,025  1,272,770 
Recoverable taxes  8  62,521  121,338  438,978  462,609 
Deferred regulatory assets - CVA  9  -  -  98,963  53,494 
Other regulatory assets  10  -  -  -  11,085 
Bonds and securities  34  -  69,063  40,103  69,063 
Collaterals and escrow accounts  11  -  -  24,195  37,868 
Judicial deposits  14  25,662  26,268  73,436  113,497 
Investees and subsidiaries  15  988,421  929,293  -  - 
Other  12  1,759  3,132  16,949  12,214 
    1,078,363  1,149,094  1,950,037  2,117,741 
 
Investments  16  7,674,713  7,472,829  395,565  395,938 
Property, plant, and equipment  17  -  -  7,528,432  7,048,675 
Intangible assets  18  19,798  20,552  131,717  118,119 
 
    8,772,874  8,642,475  10,005,751  9,680,473 
 
TOTAL ASSETS    10,148,860  9,774,440  13,833,496  13,253,626 
The accompanying notes are an integral part of these financial statements.

 

2


Balance Sheets
As of December 31, 2009 and 2008
(In thousands of reais)

LIABILITIES  N  Parent Company  Consolidated 
    2009  2008  2009  2008 
CURRENT LIABILITIES           
Loans and financing  19  15,868  24,896  81,698  98,461 
Debentures  20  17,238  169,233  54,195  195,000 
Suppliers  21  579  564  543,529  497,832 
Taxes and social contribution  8  102,465  57,993  536,453  407,072 
Dividends payable  -  84,630  239,265  90,806  245,166 
Payroll, social changes and accruals  22  271  243  206,957  159,388 
Post-employment benefits  23  45  34  22,505  22,066 
Deferred Regulatory Liabilities - CVA  9  -  -  25,020  28,327 
Other regulatory liabilities  10  -  -  8,315  26,192 
Regulatory charges  24  -  -  29,523  43,123 
Research and Development and Energy Efficiency  25  -  -  121,005  126,484 
Other accounts payable  26  15  4  121,156  114,383 
 
    221,111  492,232  1,841,162  1,963,494 
 
LONG-TERM LIABILITIES           
Loans and financing  19  388,254  414,959  784,144  769,056 
Debentures  20  600,000  600,000  753,384  802,116 
Reserves for contingencies  27  26,642  214,162  474,544  593,365 
Suppliers  21  -  -  175,796  214,157 
Taxes and social contribution  8  82,792  -  174,406  29,528 
Post-employment benefits  23  -  -  352,976  425,879 
Deferred Regulatory Liabilities - CVA  9  -  -  25,020  2,373 
Other regulatory liabilities  10  -  -  26  7,257 
Research and Development and Energy Efficiency  25  -  -  90,493  72,079 
Deferred revenues  16  -  -  74,994  74,994 
Other accounts payable  26  -  -  2,953  6,674 
 
    1,097,688  1,229,121  2,908,736  2,997,478 
 
 
NONCONTROLLING INTERESTS    -  -  253,537  239,567 
 
SHAREHOLDERS' EQUITY  28         
Stock capital    4,460,000  4,460,000  4,460,000  4,460,000 
Capital reserves    838,340  838,340  838,340  838,340 
Profit reserve    3,531,721  2,754,747  3,531,721  2,754,747 
 
    8,830,061  8,053,087  8,830,061  8,053,087 
 
 
TOTAL LIABILITIES    10,148,860  9,774,440  13,833,496  13,253,626 
The accompanying notes are an integral part of these financial statements.

 

3


Consolidated Statements of Income
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

  N  Parent Company  Consolidated 
    2009  2008  2009  2008 
OPERATING REVENUES  29         
Electricity sales to final customers    -  -  3,253,687  2,968,880 
Electricity sales to distributors    -  -  1,394,806  1,363,094 
Use of main transmission grid    -  -  3,635,969  3,473,098 
Telecommunications revenues    -  -  104,844  80,604 
Distribution of piped gas    -  -  261,325  283,709 
Other    -  -  146,045  136,010 
    -  -  8,796,676  8,305,395 
 
DEDUCTIONS FROM OPERATING REVENUES  30  -  -  (3,179,365)  (2,846,617) 
 
NET OPERATING REVENUES    -  -  5,617,311  5,458,778 
 
Operating costs  31         
Electricity purchased for resale    -  -  (1,681,876)  (1,615,086) 
Use of main transmission grid    -  -  (609,649)  (466,652) 
Personel and management    -  -  (630,037)  (531,031) 
Pension and healthcare plans    -  -  (13,479)  (25,737) 
Materials and supplies    -  -  (58,390)  (49,175) 
Raw materials and supplies for electricity generation    -  -  (21,231)  (19,274) 
Natural gas and supplies for the gas business    -  -  (135,353)  (163,846) 
Third-party services    -  -  (228,536)  (190,269) 
Depreciation and amortization    -  -  (363,597)  (376,789) 
Other    -  -  (23,962)  (35,583) 
    -  -  (3,766,110)  (3,473,442) 
 
GROSS OPERATING INCOME    -  -  1,851,201  1,985,336 
 
Other Income (Expenses)  31         
Sales expenses    -  -  (45,566)  (29,769) 
General and administrative expenses    (75,140)  (13,365)  (388,226)  (256,912) 
Other revenues (expenses), net    187,068  (39,861)  (70,132)  (252,015) 
    111,928  (53,226)  (503,924)  (538,696) 
 
 
 
RESULT OF OPERATIONS    111,928  (53,226)  1,347,277  1,446,640 
 
Interest income (expenses)  32         
Interest income    133,892  107,428  365,918  488,620 
Interest expenses    (211,757)  (172,633)  (300,294)  (394,257) 
    (77,865)  (65,205)  65,624  94,363 
 
EQUITY IN RESULTS OF INVESTEES  16  1,048,689  1,227,542  14,327  13,956 
INCOME BEFORE INCOME TAX AND SOCIAL           
CONTRIBUTION    1,082,752  1,109,111  1,427,228  1,554,959 
 
INCOME TAX AND SOCIAL CONTRIBUTION  8         
Income tax and social contribution    -  (18,372)  (287,602)  (352,064) 
Deferred income tax and social contribution    (56,319)  (11,995)  (89,724)  (106,082) 
    (56,319)  (30,367)  (377,326)  (458,146) 
 
NET INCOME BEFORE           
NONCONTROLLING INTERESTS    1,026,433  1,078,744  1,049,902  1,096,813 
 
NONCONTROLLING INTERESTS    -  -  (23,469)  (18,069) 
 
NET INCOME FOR THE YEAR    1,026,433  1,078,744  1,026,433  1,078,744 
NET INCOME PER OUTSTANDING SHARES AT YEAR END           
/EXPRESSED IN BRAXILIAN REAIS  28  3.7508  3.9420  3.7508  3.9420 
The accompanying notes are an integral part of these financial statements.

 

4


  N  Parent Company  Consolidated 
    2009  2008  2009  2008 
OPERATING REVENUES  29         
Electricity sales to final customers    -  -  3.253.687  2.968.880 
Electricity sales to distributors    -  -  1.394.806  1.363.094 
Use of main transmission grid    -  -  3.635.969  3.473.098 
Telecommunications revenues    -  -  104.844  80.604 
Distribution of piped gas    -  -  261.325  283.709 
Other    -  -  146.045  136.010 
    -  -  8.796.676  8.305.395 
 
DEDUCTIONS FROM OPERATING REVENUES  30  -  -  (3.179.365)  (2.846.617) 
 
NET OPERATING REVENUES    -  -  5.617.311  5.458.778 
 
Operating costs  31         
Electricity purchased for resale    -  -  (1.681.876)  (1.615.086) 
Use of main transmission grid    -  -  (609.649)  (466.652) 
Personel and management    -  -  (630.037)  (531.031) 
Pension and healthcare plans    -  -  (13.479)  (25.737) 
Materials and supplies    -  -  (58.390)  (49.175) 
Raw materials and supplies for electricity generation    -  -  (21.231)  (19.274) 
Natural gas and supplies for the gas business    -  -  (135.353)  (163.846) 
Third-party services    -  -  (228.536)  (190.269) 
Depreciation and amortization    -  -  (363.597)  (376.789) 
Other    -  -  (23.962)  (35.583) 
    -  -  (3.766.110)  (3.473.442) 
 
GROSS OPERATING INCOME    -  -  1.851.201  1.985.336 
 
Other Income (Expenses)  31         
Sales expenses    -  -  (45.566)  (29.769) 
General and administrative expenses    (75.140)  (13.365)  (388.226)  (256.912) 
Other revenues (expenses), net    187.068  (39.861)  (70.132)  (252.015) 
    111.928  (53.226)  (503.924)  (538.696) 
 
OPERATING INCOME BEFORE FIANCIAL RESULTS AND           
EQUITY IN RESULTS OF INVESTEES    -  -  1,347,277  1,446,278 
 
RESULT OF OPERATIONS    111.928  (53.226)  1.347.277  1.446.640 
 
Interest income (expenses)  32         
Interest income    133.892  107.428  365.918  488.620 
Interest expenses    (211.757)  (172.633)  (300.294)  (394.257) 
    (77.865)  (65.205)  65.624  94.363 
 
EQUITY IN RESULTS OF INVESTEES  16  1.048.689  1.227.542  14.327  13.956 
INCOME BEFORE INCOME TAX AND SOCIAL           
CONTRIBUTION    1.082.752  1.109.111  1.427.228  1.554.959 
 
INCOME TAX AND SOCIAL CONTRIBUTION  8         
Income tax and social contribution    -  (18.372)  (287.602)  (352.064) 
Deferred income tax and social contribution    (56.319)  (11.995)  (89.724)  (106.082) 
    (56.319)  (30.367)  (377.326)  (458.146) 
 
NET INCOME BEFORE           
NONCONTROLLING INTERESTS    1.026.433  1.078.744  1.049.902  1.096.813 
 
NONCONTROLLING INTERESTS    -  -  (23.469)  (18.069) 
 
NET INCOME FOR THE YEAR    1.026.433  1.078.744  1.026.433  1.078.744 
NET INCOME PER OUTSTANDING SHARES AT YEAR END           
/EXPRESSED IN BRAXILIAN REAIS  28  3,7508  3,9420  3,7508  3,9420 
The accompanying notes are an integral part of these financial statements.

 

5


Consolidated Statements of Changes in Shareholders’ Equity
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

  Capital  Capital  Legal Investments  Retained   
  stock  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 year  -  -  -  -  1,078,744  1,078,744 
Appropriation of net income             
Legal reserve  -  -  53,937  -  (53,937)  - 
Interest on equity  -  -  -  -  (228,000)  (228,000) 
Dividends  -  -  -  -  (33,834)  (33,834) 
Investment reserve  -  -  -  762,973  (762,973)  - 
Balance as of December 31, 2008  4,460,000  838,340  377,590  2,377,157  -  8,053,087 
Net income for the year  -  -  -  -  1,026,433  1,026,433 
Appropriation of net income             
Legal reserve  -  -  51,322  -  (51,322)  - 
Interest on equity  -  -  -  -  (230,000)  (230,000) 
Dividends  -  -  -  -  (19,459)  (19,459) 
Investment reserve  -  -  -  725,652  (725,652)  - 
Balance as of December 31, 2009  4,460,000  838,340  428,912  3,102,809  -  8,830,061 

 

6


Consolidated Statements of Cash Flows
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

  Note  Parent Company  Consolidated 
    2009  2008  2009  2008 
Cash flows from operating activities           
Net income for the period    1,026,433  1,078,744  1,026,433  1,078,744 
 
Adjustments to reconcile net income to cash provided by operating activities:           
Reversal of allowance for doubtful accounts  31.f  -  -  16,448  (5,824) 
Depreciation  17.e  -  -  384,336  395,312 
Amortization of intangible assets - concession  18.e  754  63  3,829  3,829 
Amortization of intangible assets - goodwill  18.e  -  -  -  1,791 
Amortization of intangible assets - other  18.e  -  -  3,383  3,811 
Unrealized monetary and exchange variations, net    14,117  80,034  52,823  98,526 
Equity in results of investees  16.b  (1,048,689)  (1,227,542)  (14,327)  (13,956) 
Deferred income tax and social contribution  8.a  56,319  11,995  89,724  106,082 
Variations in the regulatory assets and liabilities - CVA  9.b  -  -  (113,154)  (204,425) 
Variations in other regulatory assets and liabilities, net    -  -  232  (51,643) 
Provision (reversal) for tax incentives  16.b  733  23,902  733  23,902 
Accruals for long-term liabilities  31.f  (8,478)  8,246  111,098  104,718 
Reversal of provision for post-employment benefits  23.c  -  -  (61,385)  (38,329) 
Provision for R&D and energy efficiency  25  -  -  28,115  - 
REFIS installments - Law no. 11,941/2009  8.d  (42,088)  -  7,118  - 
Loss on disposal of investments    -  -  -  8,742 
Loss on disposal of property, plant, and equipment, net  17.e  -  -  38,618  14,565 
Loss on disposal of intangible assets, net  18.e  -  -  487  516 
Noncontrolling interests    -  -  23,469  18,069 
 
Increase (decrease) in assets           
Customers and distributors    -  -  (73,640)  86,522 
Telecommunications services    -  -  809  4,439 
Dividends and interest on capital received from investees    869,004  759,256  15,846  13,444 
Services in progress    -  -  (27,707)  (13,422) 
CRC transferred to State Government  7.b  -  -  130,967  120,048 
Recoverable taxes    (25,034)  (4,205)  (84,965)  (61,253) 
Inventories    -  -  (29,930)  (12,065) 
Judicial deposits    317  8,794  14,511  (1,931) 
Other receivables    1,375  (360)  1,786  19,543 
 
Increase (decrease) in liabilities           
Loans and financing - interest paid    (40,020)  (38,799)  (119,102)  (156,512) 
Debentures - interest paid    (81,172)  (94,216)  (110,035)  (122,984) 
Provisions for contigencies  27  -  -  (36,155)  (28,921) 
Suppliers    15  (568)  1,747  131,322 
Taxes and social contribution charges    (10,722)  6,100  10,095  8,297 
Payroll and labor accruals    28  81  47,569  13,269 
Post-employment benefits    11  11  (11,079)  (10,423) 
Regulatory charges    -  -  (13,600)  10,401 
Research and development and energy efficiency    -  -  (28,432)  (1,239) 
Other accounts payable    11  (22)  12,552  28,087 
Noncontrolling interests    -  -  (9,499)  (10,029) 
Net cash provided by operating activities    712,914  611,514  1,289,718  1,561,023 
(next page)           

 

7


Consolidated Statements of Cash Flows
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

(continued)           
 
  Note  Parent Company  Consolidated 
    2009  2008  2009  2008 
Cash flows from investing activities           
Bonds and securities    -  (69,063)  (14,989)  (69,063) 
Collaterals and escrow accounts    279  2,287  18,499  1,508 
Loans to related parties    (15,000)  -  -  - 
Payments under loans to related parties    -  176,027  -  - 
Acquisition of control in Dominó Holdings - net of acquired cash    -  -  -  (108,962) 
Disposal (acquisition) of other investments - net of acquired cash  16.b  (150)  (58,584)  (151)  134 
Additions to property, plant, and equipment  17.e  -  -  (957,313)  (697,713) 
Additions to intangible assets  18.e  -  -  (21,566)  (8,416) 
Special obligations  17.e  -  -  57,421  79,673 
Proceeds from sale of property, plant and equipment 
 17.e 
 - 
 - 
 6,373 
 11,297 
Net cash used in investing activities    (14,871)  50,667  (911,726)  (791,542) 
 
Cash flows from financing activities           
Now of loans and financing  19  -  -  144,262  34,818 
Payment of the principal amount of loans and financing    -  -  (62,987)  (86,492) 
Payment of the principal amount of debentures    (133,360)  (133,320)  (163,175)  (176,072) 
Dividends and interest on capital paid 
   (404,094) 
 (266,592) 
 (413,516) 
 (269,030) 
Net cash used in financing activities    (537,454)  (399,912)  (495,416)  (496,776) 
 
 
Net increase in cash and cash equivalents    160,589  262,269  (117,424)  272,705 
 
Cash and cash equivalents at the beginning of the year  5  318,455  56,186  1,813,576  1,540,871 
Cash and cash equivalents at the end of the year  5  479,044  318,455  1,696,152  1,813,576 
 
Variation in cash    160,589  262,269  (117,424)  272,705 
The accompanying notes are an integral part of these financial statements

 

Supplementary cash flow information       
 
Income tax paid       
Transactions not affecting cash       
Business acquisitions       
Assets acquired including goodwill  -  - -  116,713 
Liabilities assumed  -  - -  (6,487) 
 
Acquisition price paid  -  - -  110,226 
Cash and cash equivalents acquired  -  - -  (1,264) 
 
Acquisition price, net of acquired cash and cash equivalents  -  - -  108,962 
 
Income tax and social contribution paid on net income  5,422  - 331,676  348,916 

 

8


Consolidated Statements of Added Value
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

  Note  Parent Company  Consolidated 
    2009  2008  2009  2008 
Revenues           
Sales of electricity, services, and other revenues  29  -  -  8,796,676  8,305,395 
Allowance for doubtful accounts  31-f  -  -  (16,448)  5,824 
Other operating revenues (expenses)    591  (23,514)  (32,015)  (30,059) 
Total    591  (23,514)  8,748,213  8,281,160 
 
( - ) Supplies acquired from third parties           
Electricity purchased for resale    -  -  1,885,246  1,787,845 
Use of the main transmission grid ( - ) ESS    -  -  569,140  458,067 
Materials, supplies, and services from third-parties    4,351  3,923  406,836  353,885 
Natural gas and supplies for the gas business    -  -  179,362  195,265 
Emergency capacity charges and PROINFA    -  -  326  254 
Other    (185,790)  16,994  8,549  160,573 
Total    (181,439)  20,917  3,049,459  2,955,889 
 
( = ) GROSS ADDED VALUE    182,030  (44,431)  5,698,754  5,325,271 
 
( - ) Depreciation and amortization  31  754  63  391,548  404,743 
 
( = ) NET ADDED VALUE    181,276  (44,494)  5,307,206  4,920,528 
 
( + ) Transferred Added Value           
Interest income  32  133,892  107,428  376,352  488,620 
Equity pick up in results of investees    1,048,689  1,227,542  14,327  13,956 
 
Total    1,182,581  1,334,970  390,679  502,576 
 
ADDED VALUE TO DISTRIBUTE    1,363,857  1,290,476  5,697,885  5,423,104 
(next page)           

 

9


Consolidated Statements of Added Value
for the years ended on December 31, 2009 and 2008
(In thousands of reais)

(continued)                   
  Note  Parent Company  Consolidated 
    2009  %  2008  %  2009  %  2008  % 
DISTRIBUTION OF ADDED VALUE:                   
 
Personnel                   
Salaries and wages  31-c  5,657    4,806    538,665    484,257   
Pension and healthcare plans  23-c  222    140    14,177    30,016   
Meal assistance and education allowance  31-c  -    -    55,695    49,078   
Social charges - FGTS    342    271    38,555    34,694   
Labor indemnifications (reversal)  31-c  -    -    56,852    (825)   
Profit sharing  31-c  -    -    64,995    65,816   
Transfer to construction in progress  31-c  -    -    (86,746)    (80,214)   
Total    6,221  0.5  5,217  0.4  682,193  12.0  582,822  10.7 
 
Government                   
Federal    119,282    33,792    1,862,542    1,747,205   
State    -    -    1,785,795    1,595,280   
Municipal    -    -    2,636    3,019   
Total    119,282  8.7  33,792  2.6  3,650,973  64.1  3,345,504  61.8 
 
Financing agents                   
Interests and penalties    211,757    172,568    301,110    385,166   
Leases and rents  31-g  164    155    13,707    12,799   
Total    211,921  15.5  172,723  13.4  314,817  5.5  397,965  7.3 
 
Shareholders                   
Noncontrolling interest    -    -    23,469    18,069   
Interest on capital    230,000    228,000    230,000    228,000   
Proposed dividends    19,459    33,834    19,459    33,834   
Profit reserves    776,974    816,910    776,974    816,910   
Total    1,026,433  75.3  1,078,744  83.6  1,049,902  18.4  1,096,813  20.2 
 
    1,363,857  100.0  1,290,476  100.0  5,697,885  100.0  5,423,104  100.0 
The accompanying notes are an integral part of these financial statements.

 

10


NOTES TO THE FINANCIAL STATEMENTS
for the years ended on December 31, 2009 and 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 Corporate Governance Level 1 of BOVESPA’s Special Listings and on stock exchanges in 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 Mining and Energy - MME. 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 and other subsidiaries, and consortium are featured below. Non financial/accounting information, such as information about supplied market, installed capacity, and assured power, has not been audited by the independent auditors.

a) Copel Geração e Transmissão S.A.

COPEL Geração e Transmissão S.A. operates the company’s power generation, which is based on the operation of 17 hydroelectric power plants and one thermal power plant, listed below, amounting to total installed capacity of 4,549.61 MW, and power transmission business, based on 30 substations at voltages equal to or greater than 230 kV and 1,942.0 km of transmission lines in Paraná, most of which are part of the Brazilian Basic Transmission Network. The concession for 1,773.3 km of these lines expires in July 2015, the concession for 137.1 km (Bateias – Jaguariaíva 230 kV line) expires in August 2031, and the concession for 31.6 km (Bateias – Pilarzinho 230 kV line) expires in March 2038, subject to extension at the discretion of the granting authority (Note 29.a).

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Power Plants  River  Installed  Assured  Date   
    capacity  power  concession  Year of 
    (MW)  (avg MW)  was issued  expiration 
Hydroelectric facilities  .         
Gov. Bento Munhoz da Rocha Netto           
(Foz do Areia)  Iguaçu  1,676.00  576.00  05.24.1973  05.23.2023 
Gov. Ney Aminthas de Barros Braga           
(Segredo)  Iguaçu  1,260.00  603.00  11.14.1979  11.15.2029 
Gov. José Richa (Caxias)  Iguaçu  1,240.00  605.00  05.02.1980  05.04.2030 
Gov. Pedro Viriato Parigot de Souza  Capivari-Cachoeira  260.00  109.00  04.23.1965  07.07.2015 
Guaricana  Arraial  36.00  13.60  08.13.1976  08.16.2026 
Chaminé  São João  18.00  11.60  08.13.1976  08.16.2026 
Apucaraninha  Apucaraninha  10.00  6.71  10.13.1975  10.12.2025 
Mourão  Mourão  8.20  5.30  01.20.1964  07.07.2015 
Jordão River Diversion  Jordão  6.50  5.85  11.14.1979  11.15.2029 
Marumbi(a)  Ipiranga  4.80  3.94  -  - 
São Jorge  Pitangui/Tibagi  2.30  1.62  12.04.1974  12.03.2024 
Chopim I  Chopim  1.98  1.27  03.20.1964  07.07.2015 
Rio dos Patos  Rio dos Patos/Ivaí  1.72  1.13  02.14.1984  02.14.2014 
Cavernoso  Cavernoso/Iguaçu  1.30  0.86  01.07.1981  01.07.2031 
Salto do Vau(b)  Palmital  0.94  0.60  01.27.1954  - 
Pitangui(b)  Pitangui  0.87  0.57  12.05.1954  - 
Melissa(b)  Melissa  1.00  0.57  10.08.1993  - 
Thermal facility           
Figueira    20.00  10.30  03.21.1969  03.26.2019 
Total    4,549.61  1,956.92     
(1) Submitted to approval by ANEEL.
(2) Facilities under 1 MW are only subject to registration before ANEEL.

 

b) Copel Distribuição S.A.

COPEL Distribuição S.A. is the wholly-owned subsidiary which runs the Company's power distribution and regulated sales to 1,109 locations in 392 out of the 399 municipalities in the State of Paraná, and also to the town of Porto União, in the State of Santa Catarina. Its current concession, which is set to expire on July 7, 2015, may be extended for another 20 years, at the discretion of the granting authority.

c) Copel Telecomunicações S.A.

COPEL Telecomunicações S.A. is a wholly-owned subsidiary engaged in providing communications and telecommunications services and in conducting studies, projects, and planning in the field of telecommunications, as well as any related activities, as authorized by law, for an indeterminate period of time, on a non-exclusive basis, both nationally and internationally, with a service area comprising the State of Paraná and Region II of the General Grants Plan of the National Telecommunications Agency - ANATEL, which reports to the Ministry of Communications.

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d) Companhia Paranaense de Gás - Compagas

Compagas is a mixed capital company in which COPEL holds a 51% interest and whose main activity is the supply of piped natural gas, through a 520-km long distribution network set up throughout Paraná in the municipalities of Araucária, Curitiba, Campo Largo, Balsa Nova, Palmeira, Ponta Grossa, and São José dos Pinhais. Compagas supplies a total of 6,731 customers, comprising 102 industrial customers, 34 vehicular gas stations, 253 commercial customers, 6,338 households, 2 co-generation plants, one company which uses natural gas as a raw material, and the Araucária Thermal Power Plant.

e) Elejor – Centrais Elétricas do Rio Jordão S.A.

ELEJOR is a special purpose company in which COPEL holds a 70% voting interest and which was set up to implement and run the Fundão – Santa Clara Power Complex, on the Jordão River, within the Iguaçu River sub-basin, in the State of Paraná, comprising the Santa Clara and Fundão Power Plants. These facilities feature 240.34 MW of installed capacity, in addition to small hydropower units embedded in the Santa Clara and Fundão dams, with 3.6 MW and 2.4 MW of installed capacity, respectively. The concession for the project was signed on October 25, 2001 for a 35-year term, renewable for up to 20 years upon request by the holder and at ANEEL’s discretion.

f) COPEL Empreendimentos Ltda.

COPEL Empreendimentos Ltda. is limited liability company wholly-owned by COPEL Geração e Transmissão and set up to provide services in connection with the planning, coordination, and organization of companies involved in power generation and transmission, and with power plant management, construction, operation, and maintenance, in addition to holding interests in other companies.

g) UEG Araucária Ltda.

UEG Araucária Ltda. is a limited liability company in which COPEL holds an 20% interest and COPEL Empreendimentos holds a 60% interest, and which was set up to generate and sell electric power, using natural gas as fuel. The Araucária Power Plant has an installed capacity of 484.15 MW. Its authorization to operate as an independent power producer was issued by ANEEL on December 22, 1999 for a 30-year term, renewable upon request by the holder and at the granting authority’s discretion.

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On December 28, 2006, UEG Araucária signed an agreement with Petróleo Brasileiro S.A. -Petrobras, a minority shareholder, leasing the Araucária Thermal Power Plant for a period of one year, ended on December 31, 2007 and extended a few times until December 31, 2008. On February 19, 2009, the lease was renewed for another three years, as of January 1, 2009 and until December 31, 2011, subject to early termination should UEG Araucária successfully participate at ANEEL-sponsored power auctions. The lease provides for the use of the Araucária Power Plant for power generation by Petrobras, at its own expense; UEG Araucária is entitled to lease payments comprising a fixed and a variable portion, pursuant to the lease agreement.

h) Centrais Eólicas do Paraná Ltda.

Centrais Eólicas do Paraná Ltda. is a limited liability company held by Copel (with a 30% interest) and Copel Generation and Transmission (with a 70% interest). It has been set up to build, assemble, and operate a 2.5 MW wind power plant, in the region of Palmas, in the State of Paraná.

i) Dominó Holdings S.A.

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. Since January 2008, when it became the holder of 45% of Dominó Holding' share capital by acquiring the 30% interest held by Sanedo Participações Ltda., COPEL has exercised joint control of the company together with the remaining shareholders.

j) Consórcio Energético Cruzeiro do Sul

Consórcio Energético Cruzeiro do Sul is an independent power producer, owned by COPEL Geração e Transmissão (51%), and by Eletrosul Centrais Elétricas S.A. (49%). On October 10, 2006, at Auction of Power from New Projects 004/2006, this company won the rights to the concession of the Mauá Hydroelectric Power Plant, which will feature 361 MW of installed capacity; the concession is valid for 35 years from the date of signature, which took place on July 3, 2007.

2 Presentation of the Financial Statements

Authorization for the publication of these financial statements was granted at Meeting of the Board of Officers held on March 15, 2010.

The financial statements are in accordance with the accounting practices adopted in Brazil, with the provisions of the Brazilian Corporate Law, as amended by Law no. 11,638/2007 and Law no. 11,941/2009, with the specific legislation enacted by ANEEL, and with the regulations of the Brazilian Securities and Exchange Commission (CVM).

14


Consolidation

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

The financial statements of jointly-controlled subsidiary Dominó Holdings have been adjusted to comply with COPEL’s accounting practices and have been proportionally consolidated, applying COPEL’s ownership percentage to each item of these statements.

All other subsidiaries observe the same accounting practices adopted by COPEL.

The dates of the financial statements of investees, which have been used for the calculation of the results of equity in these companies and for consolidation purposes, coincide with those of the Parent Company. The balance sheets and statements of operations of the companies included in the consolidation are shown in Note 37 and 38, reclassified for the purpose of ensuring consistency with the chart of accounts adopted by COPEL.

The Parent Company’s investments in the shareholders’ equities of subsidiaries, their shareholders’ equities, as well as the balances of assets, liabilities, revenues, costs, and expenses arising from intercompany operations, have been eliminated upon consolidation, and the non controlling interests are shown separately in the liabilities section of the balance sheets and in the statement of operations, so that the consolidated financial statements effectively represent the balances of transactions with third parties.

Expenditures in connection with Consórcio Energético Cruzeiro do Sul are recorded as property, plant, and equipment in progress, proportionally to COPEL’s share in the consortium.

The balance sheets and the statements of operations of the wholly-owned subsidiaries and other subsidiaries are featured in Note 37, and their statements of operations are featured in Note 38, reclassified for the purpose of ensuring consistency with the account classification adopted by COPEL.

For purposes of presentation and comparison, the following reclassifications have been made in the statements as of December 31, 2008:

.     
Original account  Reclassified account  Consolidated 
    12.31.2008 
Long-term receivables  Long-term receivables   
Investments (a)  Property, plant, and equipment  56,517 
 
a) Consórcio Energético Cruzeiro do Sul, pursuant to ANEEL Ruling no. 3,467, dated 18.09.2008, applicable as of 01.01.2009 (Note 17.g)

 

15


We have not identified any adjustments which could have an impact on the Company’s income and on its shareholders’ equity as of December 31, 2008.

3 Changes in the Brazilian Accounting Practices

With the enactment of Law no. 11,638/2007, which has updated the Brazilian corporate legislation so as to bring the accounting practices adopted in Brazil closer to the International Financial Reporting Standards (IFRS), new technical accounting rules and pronouncements have been published, in compliance with the IFRS, by the Accounting Pronouncements Committee (CPC).

As of the date of these financial statements, 27 new technical pronouncements have been issued by CPC and approved by CVM rulings, for mandatory application as of 2010. The technical pronouncements (CPCs) and technical interpretations (ICPCs) applicable to COPEL, in light of its operations, are:

CPC/IPC no.  Title 
 
CPC 15  Business combinations 
CPC 16  Inventories 
CPC 18  Investments in subsidiaries and investees 
CPC 19  Investments in joint ventures 
CPC 20  Cost of loans 
CPC 21  Interim statements 
CPC 22  Information by segments 
CPC 23  Accounting policies, changes in estimates, and error correction 
CPC 24  Subsequent event 
CPC 25  Provisions, contingent liabilities, and contingent assets 
CPC 26  Presentation of financial statements 
CPC 27  Property, Plant, and Equipment 
CPC 30  Revenues 
CPC 31  Noncurrent assets maintained for sale and discontinued operations 
CPC 32  Taxes on income 
CPC 33  Employee benefits 
CPC 36  Consolidated statements 
CPC 37  Initial adoption of international accounting standards (IFRS 1) 
CPC 38  Financial instruments: recognition and measurement 
CPC 39  Financial instruments: presentation 
CPC 40  Financial instruments: evidence 
CPC 43  Initial adoption of CPC Pronouncements 15 to 40 
ICPC 01  Concession agreements (IFRIC 12) 
ICPC 03  Complementary aspects of leasing operationsl (IFRIC 4, SIC 15, and SIC 27) 
ICPC 08  Accounting for proposed dividend payments 
ICPC 09  Individual financial statements, separate financial statements, consolidated financial statements, and aplication of the equity method 
 ICPC 10  Interpretation of the initial application to p., p.,& e. and investment assets of technical pronouncements CPCs 27,28,37, and 43 

 

16


Company management is currently reviewing the impacts of the changes introduced by these new pronouncements. In the case of adjustments resulting from the adoption of the new accounting practices as of January 1, 2010, COPEL will assess the need to recalculate the effects these changes would have had on its 2009 financial statements, for purposes of comparison, as if they had been in effect since the beginning of the fiscal year ended of December 31, 2009.

4 Main Accounting Practices

a) General Accounting Practices

1) Cash and cash equivalents

Comprises cash balances, checking account balances, and financial investments. These are shown at cost, plus earnings accrued as of the final date of the fiscal year, have immediate liquidity, and are subject to an insignificant risk of change in value.

2) Customers and distributors

This item comprises billed energy sales to final customers and to distributors, estimated energy supplied but unbilled as of the date of the statements, and supply of natural gas, accounted for on an accrual basis.

3) Materials and supplies (including those under property, plant, and equipment)

Materials and supplies in inventory, classified under current assets, have been recorded at their average purchase cost, and those assigned for investments, classified under property, plant, and equipment, have been recorded at their actual purchase cost (goods in bulk, such as poles and cables, are recorded according to average cost). Recorded amounts do not exceed their replacement costs or realization figures.

4) Bonds and Securities

This item comprises National Treasury bonds classified as held until maturity, thus recorded at cost plus yield calculated according to the respective yield curves.

5) Investments

Permanent interests in subsidiaries and investees have been recorded under the equity method. Other investments have been recorded at their purchase cost, net of provision for losses, when applicable.

17


6) Goodwill based on expected future profitability

Goodwill on acquisition of investments whose economic basis is future profitability has been amortized linearly over a 10-year period, until December 31, 2008.

7) Intangible assets - concessions

Amounts recorded as intangible assets at the time of acquisitions of interests in companies companies which holds concessions have been amortized over the respective remaining terms of each concession.

8) Impairment test

Property, plant, and equipment and intangible assets are reappraised annually to detect evidence of unrecoverable losses or whenever significant events or changes in circumstances indicate that the book value of any such asset may not be recoverable. Whenever there is a loss, resulting from situations where an asset’s book value exceeds its recoverable value, defined as the greater between the asset’s value in use and its net sale value, this loss is charged to the statements of operations.

9) Loans, financing, and debentures

Loans, financing, and debentures are adjusted according to monetary and exchange rate variations up to the date of the financial statements, including interest and other contractual charges.

10) Taxes and social contributions

Operating revenues (sales of energy and revenue services) are subject to value-added tax (Imposto sobre Circulação de Mercadorias e Serviços or ICMS) and service tax (Imposto sobre Serviços or ISS), at the applicable rates, and to the PIS (Social Integration Program), COFINS (Contribution for the Financing of Social Security), and PASEP (Program for the Formation of the Civil Servants' Fund) social contributions.

Credits resulting from the non-cumulative nature of PIS/PASEP and COFINS charges are featured as deductions from the cost of products sold in the statement of income.

Recoverable advance payments of amounts eligible for offsetting are featured in current or noncurrent assets, according to their expected realization.

Income tax and social contribution tax credits, which are calculated based on taxable income (adjusted income), at the applicable rates, which are: 15%, plus 10% on any amounts exceeding R$ 240 a year, for corporate income tax, and 9% for social contribution. Thus, the additions of temporarily non deductible expenses or the exclusion of temporarily non taxable revenues are adjusted in the profit for the year to calculate taxable income and generate deferred tax assets and liabilities.

.

18


Deferred tax credits resulting from tax losses or negative bases for the calculation of social contribution are recognized only as long as there is a possibility of a positive tax basis against which they may be settled. Deferred income tax and social contribution assets have been calculated on tax losses, negative bases for the calculation of social contribution, and temporary discrepancies, at the applicable rates, and take into account the expected future generation of taxable income, discounted at present value and based on technical feasibility studies approved by the Company’s Board of Directors.

COPEL, as allowed under Provisional Measure no. 449/2008, has chosen the Transitional Tax System (RTT) for fiscal years 2008 and 2009.

11) Pension and healthcare plan

The costs incurred in connection with the COPEL Foundation’s pension and healthcare plan are recorded pursuant to CVM Instruction no. 371, dated December 13, 2000.

12) Reserve for contingencies

These are recorded until the date of the financial statements based on likely estimates of losses, in light of the nature of each contingency.

13) Other rights and obligations

All other assets and liabilities, whenever required by law or by contract, are adjusted until the date of the financial statements.

14) Use of estimates

The preparation of financial statements, in accordance with the accounting practices adopted in Brazil, requires that COPEL’s senior management make estimates and adopt assumptions that indeed affect the reported figures of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the balance sheet, and the reported figures of revenues and expenses. Actual figures may may differ than these estimates. The main estimates in the financial statements refer to the recording of the effects resulting from the provision for doubtful accounts, the useful lives of property, plant, and equipment, the reduction of the recoverable value of noncurrent assets, the reserve for contingencies, income tax, pension plan and post-employment benefit assumptions, unbilled energy supply to final customers, and the sale and purchase of energy in the Electric Energy Trading Chamber (CCEE), whose billing and settlement are subject to review by CCEE parti cipants.

19


15) Calculation of income

Revenues, costs, and expenses are recognized on the accrual basis, i.e., when products are delivered and services actually rendered, regardless of when cash is received or paid.

The operating revenues are recognized when: (i) the amount of the sale is reliably measurable; (ii) the costs incurred or to be incurred in the transaction are reliably measurable; (iii) it is likely that the economic benefits will be received by the Company; and (iv) the risks and benefits have been fully transferred to the respective final customer or buyer.

16) Tax Incentives

Tax incentives are recorded at their historical cost, adjusted to their estimated realizable amount .

17) Net income per outstanding share

Net income per outstanding share is calculated based on the number of shares outstanding at the balance sheet date.

18) Fair Value of Financial Instruments

The fair values of publicly quoted investments are based on the current purchase prices. The Company sets the fair value of financial instruments with no active market or published prices through valuation techniques. These include the use of recent transactions with third parties, reference to other instruments which are substantially similar, analysis of discounted cash flows, and price-setting models which use the largest amount of information generated by the market and the lowest amount of information generated by Company management.

b) Power Sector-Specific Regulated Accounting Practices

1) Regulatory assets and liabilities

The rate setting mechanism in Brazil guarantees the recovery of certain COPEL Distribuição’s costs in connection with the purchase of power and with regulatory charges through annual rate increases. Following ANEEL instructions, COPEL Distribution records variations of these costs as deferred regulatory assets and liabilities, when there is a likely expectation that future revenues, equivalent to the incurred costs, will be billed and collected, as direct result of the inclusion of such costs in an adjusted rate set according to the parametric formula established in the company’s concession agreement.

Deferred regulatory assets and liabilities are realized upon authorization by the granting authority for their inclusion in COPEL Distribuição’s rate basis, which is adjusted annually on the anniversary date of its concession agreement.

20


2) Allowance for doubtful accounts

The allowance for doubtful accounts is deemed sufficient by COPEL’s senior management to cover potential losses on the realization of customer receivables and others whose recovery is considered unlikely.

This allowance is set up based on the amounts overdue by residential customers for over 90 days, the amounts overdue by commercial customers for over 180 days, and the amounts overdue by industrial and rural customers, public agencies, public lighting, and public services for over 360 days, pursuant to the Electric Utility Accounting Manual. It comprises receivables billed until the date of the balance sheets, accounted for on an accrual basis.

3) Property, Plant, and Equipment in service

Recorded at their acquisition or construction cost. Depreciation is calculated under the straight line method, based on accounting balances recorded in the respective Record Units, pursuant to DNAEE Ordinance no. 815, dated November 30, 1994, supplemented by ANEEL Resolution no. 15, dated December 24, 1997. Annual depreciation rates are set in the tables annexed to ANEEL Resolution no. 240, dated December 5, 2006, replaced by Resolution no. 367, dated June 26, 2009.

4) Construction work in progress

Overhead expenses are allocated to property, plant, equipment and other construction in progress. The allocation of direct expenses with personnel and third-party services is based on criteria permitted by ANEEL. These costs are recovered through the rate-setting mechanism.

Financial charges, interest, and monetary variation on financing from third-parties in connection with property, plant, and equipment in progress are allocated to these items of property, plant, and equipment in progress during the construction period (Note 19).

5) Special obligations

In compliance with Accounting Instruction 6.3.23 of the Electric Utility Accounting Manual, special obligations related to the concession, corresponding to contributions received from federal, state, or municipal governments and from customers in general for investments on the electric energy distribution network, are recorded in a specific subgroup of the noncurrent liabilities and are presented as a reduction of property, plant, and equipment. The amortization is calculated based on the use of the same average depreciation rates applicable to the corresponding assets.

6) Intangible assets

Recorded at their purchase or development cost. Amortization, when applicable, is calculated under the linear method.

21


7) Unbilled revenues

Unbilled revenues correspond to revenues from sales of power to final customers which have been delivered but not yet billed and to revenues from the use of the distribution grid not yet billed, both of which are calculated based on estimates covering the period from the meter reading day to the last day of the month.

8) Power purchase and sale transactions in the Spot Market (CCEE)

Power purchase and sale transactions in CCEE are recorded on the accrual basis according to the information disclosed by the Trading Chamber or to estimates prepared by COPEL’s senior management, when this information is not available in time.

9) Energy Efficiency Programs (EEPs), Research and Development (R&D), National Scientific and Technological Development Fund (FNDCT), and Ministry of Mining and Energy (MME)

These are research and development and energy efficiency programs to which utilities are required by ANEEL to allocate 1% of their net operating revenues.

The funds are applied to projects approved by ANEEL and in contributions to FNDCT and to the Ministry of Mining and Energy (MME).

10) Environmental Issues

Environmental assets are capitalized when the allocation of expenses in connection with certain items of property, plant, and equipment is in compliance with the rules set forth under the Electric Utility Accounting Manual. Expenses not attributable to property, plant, and equipment are recognized directly to the statements of operations for the year.

Environmental liabilities are recognized under liabilities when their occurrence is likely and may be reasonably estimated.

5 Cash and cash equivalents

22


       
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Cash and banks  166  2,196  79,617  88,161 
Short term investments         
Federal banks  478,878  316,259  1,614,023  1,720,936 
Private banks  -  -  2,512  4,479 
  478,878  316,259  1,616,535  1,725,415 
  479,044  318,455  1,696,152  1,813,576 

 

Short-term investments are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value. These short-term investments comprise Certificates of Deposit (CDs) issued by official banks; transactions with buyback commitments - the issuer (Bank) is committed to buying a security back, and the buyer is committed to selling it; and quotas in investment funds which hold government issued securities (managed by official banks). These investments have yielded on average 100% of the variation of the Interbank Deposit Rate as of December 31, 2009 and 2008.

23

 

6 Customers and Distributors, Net

    Not yet  Overdue for  Overdue for    Consolidated 
    due  up to 90 days  over 90 days    Total 
          2009  2008 
Consumers             
Residential    103,803  82,437  3,488  189,728  164,189 
Industrial    114,796  26,150  36,026  176,972  155,920 
Commercial    78,145  28,020  3,358  109,523  93,828 
Rural    14,469  6,347  134  20,950  18,575 
Public agencies    18,456  15,705  3,993  38,154  24,948 
Public lighting    12,888  250  179  13,317  14,341 
Public services    11,969  417  2  12,388  12,286 
Unbilled    170,960  -  -  170,960  151,659 
Energy installment plan    83,915  4,220  9,287  97,422  91,614 
Energy installment plan - long-term    48,036  -  -  48,036  78,123 
Low income customer rates (a)    11,386  -  -  11,386  28,800 
Penalties on overdue bills    3,625  3,713  2,647  9,985  9,101 
State Government-"Luz Fraterna" Program  1,793  2,234  3  4,030  7,500 
Gas supply    14,155  466  105  14,726  22,450 
Other receivables    1,023  8,342  6,067  15,432  17,256 
Other receivables - long-term    3,341  -  -  3,341  3,732 
    692,760  178,301  65,289  936,350  894,322 
Distributors             
Bulk supply             
Bulk supply - CCEE (Note 33)    40,504  -  105  40,609  9,931 
Power auction    127,854  -  -  127,854  96,074 
Bilateral contracts    27,713  -  -  27,713  74,026 
Reimbursement to generators    282  -  21  303  571 
Reimbursement to generators - long-term  -  -  -  -  321 
Short-term bulk supply    -  -  123  123  126 
    196,353  -  249  196,602  181,049 
Charges for use of power grid             
Power grid    11,873  858  2,378  15,109  16,246 
Basic Network and connection grid    20,926  104  144  21,174  23,511 
    32,799  962  2,522  36,283  39,757 
 
Provision for doubtful accounts (b)    -  -  (54,018)  (54,018)  (56,530) 
    921,912  179,263  14,042  1,115,217  1,058,598 
31.12.2009  Current  870,535  179,263  14,042  1,063,840   
  Long-term  51,377  -  -  51,377   
31.12.2008  Current  821,363  147,530  7,775    976,668 
  Long-term  81,930  -  -    81,930 

 

a) Low income customers rate

In September 2002, the Company started applying the low income rate to electricity bills based on the new criteria for eligibility as low income customers.

24


On December 17, 2002, Law no. 10,604 modified the means of compensation to utilities, authorizing the granting of an economic subsidy, in order to contribute to the low price of the low income rate. This subsidy is funded by the dividend surplus owed by Centrais Elétricas Brasileiras S.A. -Eletrobrás to the Federal Government, in connection with the sale of power by Federal Government-owned generation companies at power auctions, and by Global Reversal Reserve (RGR) funds.

ANEEL, through different resolutions, set forth a new methodology for the calculation of the economic subsidy to which utilities are entitled, in order to offset the effects of the rate policy applicable to low income customers. As of December 2009, the low income rate was applied to 706,652 customers, who account for 24.71% of the total of 2,859,738 residential customers supplied by COPEL.

The balance receivable as of December 31, 2009 refers to installments which have already been approved by ANEEL and which are yet to be passed by Eletrobrás.

b) Allowance for doubtful accounts

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

      Additions /     
   Consolidated  (reversals)  Write-offs  Consolidated 
    2008      2009 
Consumers and distributors           
Residential    5,544  9,969  (9,268)  6,245 
Industrial    40,735  4,800  (5,434)  40,101 
Commercial    8,506  275  (2,918)  5,863 
Rural    177  297  (289)  185 
Public agencies    947  325  -  1,272 
Public lighting    169  (20)  -  149 
Public services    -  1  (1)  - 
Utilities    206  (3)    203 
Utilities - long-term    246  (246)  -  - 
    56,530  15,398  (17,910)  54,018 
  Current total  56,284  15,644  (17,910)  54,018 
  Long-term total  246  (246)  -  - 

 

The applied criteria, in addition to taking into account management’s experience as far as the record of actual losses, also comply with the parameters recommended by ANEEL.

25


7 Recoverable Rate Deficit (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 (Account for Compensation of Income and Losses) 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.

a) Maturity of noncurrent installments

     
    Consolidated 
  2009  2008 
2010    50,268 
2011  52,845  53,611 
2012  56,359  57,176 
2013  60,107  60,979 
2014  64,105  65,034 
2015  68,368  69,359 
2016  72,915  73,972 
2017  77,764  78,892 
2018  82,936  84,138 
2019  88,451  89,734 
2020  94,334  95,702 
2021  100,607  102,066 
2022  107,298  108,854 
after 2022  278,936  282,985 
  1,205,025  1,272,770 

 

b) Changes in CRC Transferred to the Government of the State of Paraná

26


  Current  Noncurrent  Consolidated 
Balances  portion  portion  total 
As of 2007  40,509  1,209,853  1,250,362 
Interest and fees  79,539  -  79,539 
Monetary variation  1,286  108,764  110,050 
Transfers  45,847  (45,847)  - 
Amortization  (120,048)  -  (120,048) 
As of 2008  47,133  1,272,770  1,319,903 
Interest and fees  83,834  -  83,834 
Monetary variation  (192)  (18,004)  (18,196) 
Transfers  49,741  (49,741)  - 
Amortization  (130,967)  -  (130,967) 
As of 2009  49,549  1,205,025  1,254,574 

 

8 Taxes and Social Contribution

       
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Current assets         
Deferred IRPJ and CSLL (a)  5,625  3,127  41,238  40,183 
IRPJ and CSLL paid in advance (b)  115,916  90,882  279,241  189,135 
VAT (ICMS) paid in advance (c)  -  -  29,868  26,863 
PIS/Pasep and Cofins taxes paid in advance  -  -  908  - 
Other taxes paid in advance  -  -  1,157  1,158 
  121,541  94,009  352,412  257,339 
Long-term receivables         
Deferred IRPJ and CSLL (a)  62,521  121,338  355,021  400,141 
VAT (ICMS) paid in advance (c)  -  -  83,957  62,468 
  62,521  121,338  438,978  462,609 
Current liabilities         
Deferred IRPJ and CSLL (a)  -  -  80,443  48,630 
IRPJ and CSLL due  -  -  123,486  115,476 
VAT (ICMS) due  -  -  164,209  132,380 
PIS/Pasep and Cofins taxes due  13,948  14,706  24,687  38,353 
Tax recovery programs (d)  81,114  35,068  107,974  35,068 
Income tax withheld on interest on capital  6,534  7,378  29,027  30,791 
Other taxes  869  841  6,627  6,374 
  102,465  57,993  536,453  407,072 
Long-term liabilities         
Deferred IRPJ and CSLL (a)  -  -  42,756  28,910 
VAT (ICMS) due  -  -  547  618 
Tax recovery programs (d)  82,792  -  131,103  - 
  82,792  -  174,406  29,528 
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%.

27


Tax credits related to 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 accruals 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, without expiration period.

Tax credits have been recorded as follows:

.         
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Current assets         
Pension and healthcare plans  5,545  3,073  5,545  3,073 
Tax losses  -  -  4,172  4,405 
Passive CVA  -  -  8,507  9,631 
Temporary additions  80  54  23,014  23,074 
  5,625  3,127  41,238  40,183 
Noncurrent assets         
Tax losses and negative tax basis  8,006  3,487  17,802  13,283 
Pension and healthcare plans  -  -  119,669  144,552 
Temporary additions:  -  -  -  - 
Provisions for contingencies  32,068  94,389  149,066  181,711 
Provision for doubtful accounts  1,839  1,839  22,350  22,959 
FINAN provision  3,291  4,563  3,291  4,563 
Passive CVA  -  -  8,507  - 
Provisions for regulatory liabilities  -  -  7,705  7,062 
Provision for effects of network charges  -  -  6,922  6,923 
Amortization of goodwill  17,317  17,060  19,709  19,088 
  62,521  121,338  355,021  400,141 
(-) Current liabilities         
Active CVA  -  -  74,290  34,438 
Surplus power  -  -  195  928 
Temporary exclusions  -  -  5,958  13,264 
  -  -  80,443  48,630 
(-) Noncurrent liabilities         
Temporary exclusions         
Active CVA  -  -  33,647  17,068 
TUSD, aquiculture, and irrigation rates  -  -  155  32 
Regulatory assets  -  -  -  3,982 
Gas supply  -  -  8,954  7,828 
  -  -  42,756  28,910 
  68,146  124,465  273,060  362,784 

 

28


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, discounted at present value, which points out to the realization of deferred taxes. The consolidated estimated realizable amount for 2010 is negative on account of the realization of deferred income tax and social contribution liabilities. According to the estimate 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 
2009  6,173  63,839    66,942  100,994   
2010  -  -  5,625  -  -  (39,205) 
2011  -  -  18,603  -  -  71,822 
2012  -  -  2,721  -  -  35,274 
2013  -  -  2,338  -  -  60,524 
2014  -  -  2,684  -  -  29,288 
2015 to 2017  -  -  1,839  -  -  37,740 
until 2019  -  -  34,336  -  -  77,617 
  6,173  63,839  68,146  66,942  100,994  273,060 

 

Projected future income will be revised by management upon the approval of the financial statements for fiscal year 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) Recoverable ICMS (VAT)

The amounts recorded as recoverable ICMS (VAT) refer to credits from the acquisition of property, plant, and equipment under Supplemental Law no. 87/96, which shall be recovered monthly at the rate 1/48 pursuant to Supplemental Law no. 102, dated July 11, 2000.

d) Tax recovery programs - REFIS

.  Parent Company 
  Debt  Benefits - Law    Updated debt  Advance  Updated debt 
  amount  no. 11,941  SELIC interest  amount  payment  amount 
Refis program - INSS (1)  35,068  -  -  35,068  -  35,068 
.             
Law no. 11,941/09 (2)             
COFINS tax - lawsuit  196,839  (60,174)  1,321  137,986  (9,148)  128,838 
  196,839  (60,174)  1,321  137,986  (9,148)  128,838 
  231,907  (60,174)  1,321  173,054  (9,148)  163,906 

 

29


.  Consolidated 
  Debt  Benefits - Law    Updated debt  Advance  Updated debt 
  amount  no. 11,941 SELIC interest  amount  payment  amount 
Refis program - INSS (1)  35,068  -  -  35,068  -  35,068 
Law no. 11,941/09 (2)             
IRPJ  42,538  (8,762)  326  34,102  (2,231)  31,871 
CSLL  5,925  (1,460)  43  4,508  (311)  4,197 
COFINS tax  43,956  (9,853)  330  34,433  (2,305)  32,128 
PIS/PASEP tax  9,543  (2,139)  72  7,476  (501)  6,975 
COFINS tax - lawsuit  196,839  (60,174)  1,321  137,986  (9,148)  128,838 
  298,801  (82,388)  2,092  218,505  (14,496)  204,009 
  333,869  (82,388)  2,092  253,573  (14,496)  239,077 

 

The effects on 2009 income are shown below:

.     
  Parent Company  Consolidated 
Reversal of provision for contingencies (Note 31.c)  178,753  178,753 
Taxes (PIS/PASEP and COFINS) - deductions from revenues (Note 30)  -  (31,359) 
Taxes - operating expenses (Note 31.g)  (61,872)  (61,872) 
Financial expense - interest (Note 32)  (73,555)  (90,164) 
Financial expense - penalties (Note 32)  (1,238)  (2,476) 
  42,088  (7,118) 

 

1) REFIS Program

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 installments an outstanding debt to the National Social Security Institute (INSS) in the consolidated amount (net of interest and fines) of R$ 82,540, retroactive to March 1, 2000. At the end of this period, a balance remained, pending a ruling by the fiscal authority regarding the right by COPEL to use certain tax credits, which were later rejected.

On September 14, 2006, COPEL signed up for a new tax recovery program, called Special Installment Plan or PAEX, created under Provisional Measure no. 303/06, to pay off the remaining balance under REFIS taking advantage of the benefits of this plan (80% discount off the penalties imposed and 30% off interest due), resulting, according to Social Security's initial calculation, in the amount of R$ 37,782 to be paid in six installments, adjusted according to the SELIC interest rate. 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). For purposes of provisioning, this amount has been restated and lowered 30%, pursuant to the benefit afforded under article 9 of Provisional Measure 303/96. COPEL, however, has disputed this claim, requesting that the calculations that supposedly justify this charge be presented. As of the date of these statements, 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.

30


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.

2) Installment Plan – Law no. 11,941/09

Pursuant to a ruling by the 4th District Federal Court, which became final on August 18, 1998, COPEL was granted immunity from the levy of COFINS tax on power sales from 1995 until June 2001. Even though this ruling was final, the Federal Revenue Service (RFB) issued COPEL two notices for failure to collect COFINS tax: on February 19, 2002, notice no. 10980.000932/2002-90, for fiscal year 1997, and on August 22, 2003, notice no. 10980.007831/2003-21, for the first three quarters of 1998. Simultaneously, it filed a lawsuit requesting the cancellation of the immunity ruling, which, after a long legal battle regarding the lapse of RFB's right to dispute the ruling, has been submitted to 4th District Federal Court for judgment on the merits. COPEL has thus reclassified the corresponding risk of loss as probable, since there’s consolidated legal precedent in favor of the federal government.

As this lawsuit was reclassified as probable loss, in November 2009 COPEL chose to apply for the installment plan created under Law no. 11,941, dated May 27, 2009, to pay off the COFINS-related debt in connection with the two notices mentioned above. Since there has been a provision in connection with this lawsuit in the amount of R$ 184,037, and in light of the reduced penalties afforded under Law no. 11,941/09, the original amount of this debt became R$ 136,665, which, restated according to the SELIC interest rate as of December 31, 2009 (pursuant to article 3, paragraph 3, of that law), totals R$ 137,986.

The Company also included in this installment plan fiscal debts owed by COPEL Distribuição in connection with income tax and social contribution in February 2004, and income tax in December 2007, March 2008, and April 2008, which amount to R$ 48,463. These taxes were paid through compensation statements, which have not been approved by RFB. Taking into account reduced penalties and restatement by the SELIC interest rate (pursuant to Law no. 11,941/2009), the amount of this debt as of December 31, 2009 was R$ 38,610. COPEL further included debts resulting from revised bases for calculation of PIS/PASEP and COFINS taxes for 2005 to 2008, in the amount of R$ 53,499, which, taking into account reduced penalties and restatement by the SELIC interest rate (pursuant to article 3, paragraph 3, of Law no. 11,941/2009), amounted to R$ 41,909 as of December 31, 2009.

With the payment of two installments and the accrual of SELIC interest as of December 31, 2009, pursuant to article 3, paragraph 3, of Law no. 11,941, the total outstanding debt is R$ 253,573.

As of the date of these statements, there has been no consolidation of installments by RFB.

COPEL has rigorously fulfilled its obligations in connection with these installment plans.

31


e) 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 
  2009  2008  2009  2008 
Income before IRPJ and CSLL  1,082,752  1,109,111  1,427,228  1,554,959 
IRPJ and CSLL (34%)  (368,136)  (377,098)  (485,258)  (528,686) 
Tax effects on:         
Interest on capital  78,200  77,520  78,200  77,520 
Dividends  142,680  136,806  3,295  2,882 
Equity in investees  70,660  150,825  1,575  1,305 
FINAM - (losses) and gains  (183)  (5,976)  (183)  (5,976) 
Present value adjustment - Compagas  -  -  (912)  (819) 
Non-deductible expenses  -  (829)  (917)  (1,627) 
Tax benefits - Law no. 11,941/09  20,460  -  27,904  - 
Tax incentives  -  -  3,530  4,699 
Other  -  (11,615)  (4,560)  (7,444) 
Current IRPJ and CSLL  -  (18,372)  (287,602)  (352,064) 
Deferred IRPJ and CSLL  (56,319)  (11,995)  (89,724)  (106,082) 
Actual rate - %  5.2%  2.7%  26.4%  29.5% 

 

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.

Under Resolution no. 839, dated June 23, 2009, ANEEL authorized COPEL Distribuição to apply, as of June 24, 2008, an average rate increase of 18.04% to its rates for sales to final customers, of which 11.42% correspond to the annual rate review and 6.62% correspond to financial components, including the Portion A regulatory asset (CVA), which amounts to R$ 252,951, composed of two installments: CVA being processed for rate year 2008-2009, in the amount of R$ 264,025, and CVA balance from previous years to be offset, in the amount of (R$ 11,074).

COPEL expects that the amounts classified as noncurrent assets will be recovered by June 2011.

32


a) Breakdown of CVA balances

  Current  Long-term 
Consolidated  assets  receivables 
  2009  2008  2009  2008 
Recoverable Portion A variations, 2008 rate review         
Fuel Consumption Account - CCC  -  17,966  -  - 
Charges for use of trans.sys. (Basic Network)  -  15,908  -  - 
Power purchased for resale (Itaipu)  -  11,611  -  - 
Charges for system services - ESS  -  9,133  -  - 
Energy Development Account - CDE  -  169  -  - 
Incentives to Alternative Energy Sources - Proinfa  -  2,817  -  - 
  -  57,604  -  - 
Recoverable Portion A variations, 2009 rate review         
Fuel Consumption Account - CCC  7,482  8,512  -  8,512 
Charges for use of trans.sys. (Basic Network)  21,052  12,412  -  12,412 
Power purchased for resale (Itaipu)  49,036  16,588  -  16,588 
Charges for system services - ESS  17,038  13,121  -  13,121 
Energy Development Account - CDE  6,139  204  -  204 
Incentives to Alternative Energy Sources - Proinfa  10,986  -  -  - 
Power purchased for resale (CVA Energy)  6,191  1,881  -  1,881 
Transport of purchased power (Itaipu)  1,613  776  -  776 
  119,537  53,494  -  53,494 
Recoverable Portion A variations, 2010 rate review         
Fuel Consumption Account - CCC  17,166  -  17,166  - 
Charges for use of trans.sys. (Basic Network)  18,277  -  18,277  - 
Power purchased for resale (Itaipu)  23,042  -  23,042  - 
Energy Development Account - CDE  2,830  -  2,830  - 
Incentives to Alternative Energy Sources - Proinfa  252  -  252  - 
Power purchased for resale (CVA Energy)  36,547  -  36,547  - 
Transport of purchased power (Itaipu)  849  -  849  - 
  98,963  -  98,963  - 
  218,500  111,098  98,963  53,494 

 

  Current  Long-term 
Consolidated  liabilities  liabilities 
  2009  2008  2009  2008 
Portion A variations subject to offsetting, 2008 rate review         
Power purchased for resale (CVA Energy)  -  25,727  -  - 
Transport of purchased power (Itaipu)  -  227  -  - 
  -  25,954  -  - 
Portion A variations subject to offsetting, 2009 rate review         
Incentives to alternative sources (Proinfa)  -  2,373  -  2,373 
  -  2,373  -  2,373 
Portion A variations subject to offsetting, 2010 rate review         
Charges for system services - ESS  25,020  -  25,020  - 
  25,020  -  25,020  - 
  25,020  28,327  25,020  2,373 

 

33


b) Changes in the CVA

.  Balance in          Balance in 
  2008  Deferral Amortization   Restatement   Transfers   2009 
Assets             
Fuel Consumption Account - CCC  34,990  30,874  (26,329)  2,279  -  41,814 
Charges for use of trans. syst. (Basic Network)  40,732  51,833  (38,872)  3,913  -  57,606 
Power purchased for resale (Itaipu)  44,787  106,811  (64,172)  7,694  -  95,120 
Charges for system services - ESS  35,375  5,875  (27,831)  3,619  -  17,038 
Energy Development Account - CDE  577  17,080  (6,762)  904  -  11,799 
Incentives to Alternative Sources - Proinfa  2,817  21,878  (14,668)  1,463  -  11,490 
Power purchased for resale (CVA Energy)  3,762  79,692  (6,704)  2,535  -  79,285 
Transport of purchased power (Itaipu)  1,552  3,223  (1,701)  237  -  3,311 
  164,592  317,266  (187,039)  22,644  -  317,463 
Current  111,098  113,480  (187,039)  17,728  163,233  218,500 
Non-current  53,494  203,786  -  4,916  (163,233)  98,963 
Liabilities             
Charges for system services - ESS  -  49,260  -  780  -  50,040 
Incentives to Alternative Sources - Proinfa  4,746  (4,712)  -  (34)  -  - 
Power purchased for resale (CVA Energy)  25,727  -  (27,214)  1,487  -  - 
Transport of purchased power (Itaipu)  227  -  (261)  34  -  - 
  30,700  44,548  (27,475)  2,267  -  50,040 
Current  28,327  7,880  (27,475)  1,794  14,494  25,020 
Non-current  2,373  36,668  -  473  (14,494)  25,020 

 

10 Other Regulatory Assets and Liabilities

Consolidated balances are shown below:

  Assets  Liabilities 
    Non      Non   
  current  current  total  current  current  total 
            2009 
Copel Distribuição             
Adj. installments - transmission charges (a)  6,088  -  6,088  7,255  -  7,255 
Uncovered amount - CIEN contract (b)  11,438  -  11,438  -  -  - 
Other  -  -  -  1,060  26  1,086 
  17,526  -  17,526  8,315  26  8,341 
 
 
  Assets  Liabilities 
    Non      Non   
  current  current  total  current  current  total 
            2008 
Copel Distribuição             
Adj. installments - transmission charges (a)  11,458  6,088  17,546  14,511  7,255  21,766 
Uncovered amount - CIEN contract (b)  20,053  4,997  25,050  -  -  - 
Other  -  -  -  2  2  4 
  31,511  11,085  42,596  14,513  7,257  21,770 
Copel Geração e Transmissão             
Adj. installments - transmission charges (a)  -  -  -  11,679  -  11,679 
  31,511  11,085  42,596  26,192  7,257  33,449 

 

34


a) Basic Network Charge Adjustment

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 a “review adjustment share”.

This balance, which has been accrued by transmission utilities, was offset over 24 months, from July 2007 until June 2009.

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 Distribution to COPEL Transmission. As far as the “basic network review adjustments", the application of COPEL Distribution's participation percentage to the total adjustment share 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$ 14,511, which correspond to the “basic network review adjustments”, have been taken into account in COPEL Distribution’s June 2008 rate review, and the remainder was taken into account in the June 2009 rate review and shall be settled by June 2010.

b) Contracted Energy Shortfall – 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 Ordinance no. 294/2006. This amount was tentatively taken into account in COPEL Distribuição’s June 2008 rate review. The discrepancies resulting from the review of the amounts recorded provisionally in advance amounted to R$ 22,875, which was taken into account in the 2009 rate review and which shall be settled by June 2010.

11 Collaterals and Escrow Accounts

35


  Parent Company  Consolidated 
  2009  2008  2009  2008 
Current assets         
Escrow accounts  161  436  113,701  150,794 
  161  436  113,701  150,794 
 
Noncurrent assets         
Collateral under STN agreement (Note 19.b)  -  -  24,195  37,868 
  -  -  24,195  37,868 

 

There is a sum of R$ 21,072 invested in Unibanco S.A., restated as of December 31, 2009, yielding 100% of the variation of the DI rate (R$ 19,730 as of 2008, 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.

There are R$ 59,787, restated as of December 31, 2009 (R$ 54,403 as of 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

  Consolidated 
  2009  2008 
Current assets     
Advance payments to employees  8,352  8,264 
Advance payments  8,149  9,305 
Decommissioning in progress  6,181  4,795 
Disposal of property and rights  4,535  1,872 
Installment plan for Onda Provedor de Serviços  4,349  4,348 
Recoverable salaries of transferred employees  3,663  3,819 
Services to third-parties  3,577  1,347 
Advance payments to suppliers  2,381  5,187 
Compulsory loans  926  1,806 
Acquisition of fuels under the Fuel Consumption Account (CCC)  638  185 
Lease of the Araucária Power Plant  550  7,474 
Provision for doubtful accounts  (10,896)  (9,531) 
Other receivables  4,186  3,985 
  36,591  42,856 
Noncurrent assets     
Advance payments to suppliers  8,290  2,435 
Disposal of property and rights  4,437  4,788 
Compulsory loans  3,814  3,561 
Other receivables  408  1,430 
  16,949  12,214 

 

36


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

13 Inventories

Consolidated      Property, plant, and equipment in 
  Operation / Maintenance  progress - inventories 
  2009  2008  2009  2008 
Copel Geração e Transmissão  9,683  10,423  17,911  19,286 
Copel Distribuição  76,170  48,150  167,529  100,094 
Copel Telecomunicações  7,166  5,151  17,641  14,507 
Compagás  1,171  536  6,576  5,071 
Elejor  -  -  1,051  1,051 
  94,190  64,260  210,708  140,009 

 

14 Judicial Deposits

The balances of judicial deposits under noncurrent receivables are shown below:

Consolidated  Total  Deduction of  Long-term  Long-term 
  judicial deposits  contingencies  receivables  receivables 
      2009  2008 
Labor claims  61,642  (23,722)  37,920  58,637 
Civil claims:         
Suppliers  22,822  (22,822)  -  - 
Civil claims  16,932  (10,568)  6,364  14,846 
Easements  2,391  -  2,391  10,660 
Customer claims  1,426  (1,426)  -  1,835 
  43,571  (34,816)  8,755  27,341 
Tax claims  53,722  (27,029)  26,693  26,671 
Others  68  -  68  848 
  159,003  (85,567)  73,436  113,497 
 
 
 
 
Parent Company  Total  Deduction of  Long-term  Long-term 
  judicial deposits  contingencies  receivables  receivables 
      2009  2008 
Tax claims  52,666  (27,004)  25,662  25,653 
Civil claims  288  (288)  -  - 
Others  -  -  -  615 
  52,954  (27,292)  25,662  26,268 

 

Escrow Accounts have been classified under Reserve for Contingencies and are detailed in Note 27.

37


15 Dividends Receivable

  Parent Company  Consolidated 
  2009  2008  2009  2008 
Investees         
Sanepar         
Dividends and/or interest on capital  -  -  5,135  5,247 
.  -  -  5,135  5,247 
Subsidiaries         
Copel Geração e Transmissão         
Dividends and/or interest on capital  473,108  562,618  -  - 
  473,108  562,618  -  - 
Copel Distribuição         
Dividends and/or interest on capital  206,481  141,100  -  - 
Transferred financing - STN (a)  64,279  94,006  -  - 
Loan agreement (b)  658,724  597,227  -  - 
  929,484  832,333  -  - 
Copel Telecomunicações         
Dividends and/or interest on capital  1,156  3,655  -  - 
  1,156  3,655  -  - 
Compagas         
Dividends and/or interest on capital  4,196  5,515  -  - 
  4,196  5,515  -  - 
Elejor         
Loan agreement (c)  265,418  238,060  -  - 
Dividends and/or interest on capital  5,005  936  -  - 
  270,423  238,996  -  - 
Centrais Eólicas do Paraná         
Dividends and/or interest on capital  1,685  -  -  - 
  1,685  -  -  - 
Dominó Holdings         
Dividends and/or interest on capital  4,648  5,237  -  - 
  4,648  5,237  -  - 
  1,684,700  1,648,354  -  - 
  1,684,700  1,648,354  5,135  5,247 
Current assets - Dividends receivable  696,279  719,061  5,135  5,247 
Noncurrent receivables  988,421  929,293  -  - 

 

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 are also recorded under the Parent Company.

These loans and financing are transferred with the same interest and charges agreed by the Parent Company and are shown separately as receivables from the wholly-owned subsidiaries, and as loans and financing liabilities owed by the subsidiaries. (Note 19.b).

38


b) Loan Agreement – COPEL Distribuição

On February 27, 2007, ANEEL approved the loan agreement signed by COPEL (lender) and COPEL Distribution (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 Distribution, which were due on March 1, 2007.

c) ELEJOR Loan Agreement

On April 7, 2004, COPEL signed a loan agreement with Elejor, to ensure the continuity of the construction of the power plants that make up the Fundão-Santa Clara Power Complex; the agreement provides for payment in 120 monthly and consecutive payments, plus prorated interest corresponding to 3.198% a year and a spread equivalent to the variation of the Interbank Deposit Rate, as from the date of each transfer. The loan’s grace period was extended to February 2016, in the second amendment to the ELEJOR Shareholders’ Agreement, on April 18, 2005.

16 Investments

a) Main information about COPEL’s investees and subsidiaries

  Number of shares or quotas  COPEL's  Paid in    Net 
  held by COPEL stake  share  Shareholders'  income 
  Common  Preferred  Quotas  %  capital  Equity (2)  (losses) (2) 
Investees              2009 
Sanepar  51,797,823  12,949,456  -  34.75  374,268  858,059  65,243 
Sercomtel - Telecom.  9,018,088  4,661,913  -  45.00  246,896  88,584  (59,383) 
Foz do Chopim  -  -  8,227,542  35.77  23,000  46,452  27,371 
Dona Francisca  153,381,798  -  -  23.03  66,600  85,013  40,308 
Sercomtel Celular  9,018,029  4,661,972  -  45.00  36,540  -  (11,265) 
Dois Saltos Empreend. (1)  -  -  300,000  30.00  1,000  1,000  - 
Copel Amec (1)  -  -  48,000  48.00  100  321  11 
Carbocampel (1)  1,336,742  -  -  49.00  2,728  2,279  (49) 
Escoelectric Ltda. (1)  -  -  3,220,000  40.00  7,217  (4,259)  (1,691) 
 
Subsidiaries               
Copel Geração e Transm.  3,400,378,051  -  -  100.00  3,505,994  3,661,700  654,786 
Copel Distribuição  2,171,927,626  -  -  100.00  2,624,841  3,175,667  319,713 
Copel Telecomunicações  194,754,542  -  -  100.00  194,755  219,456  24,892 
Compagas  5,712,000  11,424,000  -  51.00  111,140  189,434  34,644 
Elejor  42,209,920  -  -  70.00  69,450  101,536  30,106 
Copel Empreendimentos (1)  -  -  397,983,311  100.00  397,983  399,106  (5,355) 
UEG Araucária  -  -  565,951,934  80.00  707,440  651,265  (9,861) 
Centrais Eólicas (1)  -  -  3,061,000  100.00  3,061  3,845  784 
Dominó Holdings  113,367,832  -  -  45.00  251,929  672,409  44,596 
(1) Unaudited by independent auditors             
(2) Shareholders' equity and net income have been adjusted to COPEL's accounting practices       

 

39


b) Changes to the investments in investees and subsidiaries

Parent Company      Additions  Proposed     
Balance as of   Result of  and  dividends    Balance as of 
  2008  equity  APFCI  and IOC  Prov.  2009 
Investees             
Sercomtel S.A. - Telecomunicações  84,886  (9,096)  -  -  -  75,790 
Sercomtel Telecom. - Impairment (e)  (18,301)  (17,626)  -  -  -  (35,927) 
Foz do Chopim Energética Ltda.  16,519  9,790  -  (9,693)  -  16,616 
Dona Francisca Energética S.A.  10,332  9,284  -  -  -  19,616 
Dois Saltos Empreend. Geração Ener. Eletr. Ltda.  300  -  -  -  -  300 
Copel Amec S/C Ltda.  149  5  -  -  -  154 
Escoelectric Ltda.  (1,027)  (677)  -  -  -  (1,704) 
Escoelectric Ltda. - APFCI  1,025  -  -  -  -  1,025 
Carbocampel S.A.  (69)  (23)  1,209  -  -  1,117 
Carbocampel - APFCI  1,059  -  (1,059)  -  -  - 
Sercomtel Celular S.A.  6,195  -  -  -  -  6,195 
Sercomtel Celular - Impairment (e)  (6,195)  -  -  -  -  (6,195) 
  94,873  (8,343)  150  (9,693)  -  76,987 
Subsidiaries             
Copel Geração e Transmissão S.A.  3,628,961  654,786  -  (622,047)  -  3,661,700 
Copel Distribuição S.A.  3,042,285  319,713  -  (186,331)  -  3,175,667 
Copel Telecomunicações S.A.  203,924  24,892  -  (9,360)  -  219,456 
Dominó Holdings S.A. (d)  286,745  20,069  -  (4,230)  -  302,584 
(-) Discount - Dominó Holdings (d)  (74,402)  -  -  -  -  (74,402) 
UEG Araucária Ltda.  132,225  (1,972)  -  -  -  130,253 
Cia. Paranaense de Gás - Compagas  86,803  17,669  -  (7,861)  -  96,611 
Elejor - Centrais Elétricas do Rio Jordão S.A.  54,450  21,640  -  (5,015)  -  71,075 
Centrais Eólicas do Paraná Ltda.  2,603  235  -  (1,685)  -  1,153 
  7,363,594  1,057,032  -  (836,529)  -  7,584,097 
Other investments             
Amazon Investment Fund (FINAM) (c)  30,012  -  -  -  -  30,012 
FINAM - Nova Holanda (c)  14,868  -  -  -  -  14,868 
Northeastern Investment Fund (FINOR) (c)  9,870  -  -  -  -  9,870 
Finam - Investco (d)  7,903  -  -  -  -  7,903 
Other tax incentives  2,315  -  -  -  -  2,315 
Provision for losses - Finam/Finor (c)  (35,835)  -  -  -  (733)  (36,568) 
Provision for losses - Nova Holanda (c)  (14,868)  -  -  -  -  (14,868) 
Other investments  97  -  -  -  -  97 
  14,362  -  -  -  (733)  13,629 
  7,472,829  1,048,689  150  (846,222)  (733)  7,674,713 
APFCI - Advance Payment for Future Capital Increase             

 

40


        Proposed    Incorporated  Balance 
  Balance as of  Result of    dividends    from  as of 
Parent Company  2007  equity    Additions  and IOC  Prov.  COPEL Par  2008 
Investees               
Sercomtel - Telecomunicações  -  161  -  (1,637)  -  86,362  84,886 
Sercomtel Telecom. - Impairment (e)  -  -  -  -  -  (18,301)  (18,301) 
Foz do Chopim  -  653  -  (715)  -  16,581  16,519 
Dona Francisca  -  471  -  -  -  9,861  10,332 
Dois Saltos Empreend.  -  -  -  -  -  300  300 
Copel Amec  -  1  -  -  -  148  149 
Escoelectric  -  (16)  -  -  -  (1,011)  (1,027) 
Escoelectric - APFCI  -  -  -  -  -  1,025  1,025 
Carbocampel  -  (2)  -  -  -  (67)  (69) 
Carbocampel - APFCI  -  -  -  -  -  1,059  1,059 
Sercomtel Celular  -  -  -  -  -  6,195  6,195 
Sercomtel Celular - Impairment (e)  -  -  -  -  -  (6,195)  (6,195) 
  -  1,268  -  (2,352)  -  95,957  94,873 
Subsidiaries               
Copel Geração e Transmissão  3,144,442  623,177  -  (592,018)  -  453,360  3,628,961 
Copel Distribuição  2,663,911  544,374  -  (166,000)  -  -  3,042,285 
Copel Telecomunicações  193,735  13,844  -  (3,655)  -  -  203,924 
Copel Participações  1,226,802  42,212  67,000  (17,000)  -  (1,319,014)  - 
Dominó Holdings (d)  -  (1,629)  -  (1,260)  -  289,634  286,745 
(-) Discount - Dominó Holdings (d)  -  -  -  -  -  (74,402)  (74,402) 
UEG Araucária  -  835  -  -  -  131,390  132,225 
Compagas  -  717  -  (5,515)  -  91,601  86,803 
Elejor  -  1,476  -  (935)  -  53,909  54,450 
Centrais Eólicas do Paraná  -  1,268  -  -  -  1,335  2,603 
  7,228,890  1,226,274  67,000  (786,383)  -  (372,187)  7,363,594 
Other investments               
Amazon Investment Fund (FINAM) (c)  30,012  -  -  -  -  -  30,012 
FINAM - Nova Holanda (c)  14,868  -  -  -  -  -  14,868 
Northeastern Investment Fund (FINOR) (c)  9,870  -  -  -  -  -  9,870 
Finam - Investco (c)  7,903  -  -  -  -  -  7,903 
Other tax incentives  2,315  -  -  -  -  -  2,315 
Provision for losses - Finam/Finor (c)  (26,801)  -  -  -  (9,034)  -  (35,835) 
Provision for losses - Nova Holanda (c)  -  -  -  -  (14,868)  -  (14,868) 
Other investments  7  -  -  -  -  90  97 
  38,174  -  -  -  (23,902)  90  14,362 
  7,267,064  1,227,542  67,000  (788,735)  (23,902)  (276,140)  7,472,829 

 

41


Consolidated      Additions  Proposed     
  Balance as of  Result of  and  dividends    Balance as of 
  2008  equity  APFCI  and IOC  Other  2009 
Investees             
Sercomtel - Telecomunicações  84,886  (9,096)  -  -  -  75,790 
Sercomtel Telecom. - Impairment (e)  (18,301)  (17,626)  -  -  -  (35,927) 
Foz do Chopim  16,519  9,790  -  (9,693)  -  16,616 
Dona Francisca  10,332  9,284  -  -  -  19,616 
Dois Saltos Empreend.  300  -  -  -  -  300 
Copel Amec  149  5  -  -  -  154 
Escoelectric  (1,027)  (677)  -  -  -  (1,704) 
Escoelectric - APFCI  1,025  -  -  -  -  1,025 
Carbocampel  (69)  (23)  1,209  -  -  1,117 
Carbocampel - APFCI  1,059  -  (1,059)  -  -  - 
Sercomtel Celular  6,195  -  -  -  -  6,195 
Sercomtel Celular - Impairment (e)  (6,195)  -  -  -  -  (6,195) 
Sanepar  281,524  22,670  -  (6,041)  -  298,153 
  376,397  14,327  150  (15,734)  -  375,140 
Other investments             
Amazon Investment Fund (FINAM) (c)  30,012  -  -  -  -  30,012 
FINAM - Nova Holanda (c)  14,868  -  -  -  -  14,868 
Northeastern Investment Fund (FINOR) (c)  9,870  -  -  -  -  9,870 
FINAM - Investco (c)  7,903  -  -  -  -  7,903 
Other tax incentives  2,315  -  -  -  -  2,315 
Provision for losses - Finam/Finor (c)  (35,835)  -  -  -  (733) (1)  (36,568) 
Provisão for losses - Nova Holanda (c)  (14,868)  -  -  -  -  (14,868) 
Property for future service use  3,821  -  -  -  1,776(2)   5,597 
Other investments  1,455  -  1  -  (160) (3)  1,296 
  19,541  -  1  -  883  20,425 
  395,938  14,327  151  (15,734)  883  395,565 
(1) Supplemental provision for losses on tax incentives
(2) Transfers from p.,p.,&e., of which R$ 1,465 are in service and R$ 311 are in progress
(3) Reclassification of additions to Consórcio Cruzeiro do Sul (Mauá Power Plant)

 

42


      Additions Proposed     
  Balance as of  Result of  and  dividends    Balance as of 
Consolidated  2007   equity  APFCI  and IOC  Other  2008 
Investees             
Dominó Holdings (d)  90,155  -  -  -  (90,155) (1) - 
Sercomtel - Telecomunicações  82,153  4,371  -  (1,638)  -  84,886 
Sercomtel Telecom. - Impairment (e)  -  (18,301)  -  -  -  (18,301) 
Foz do Chopim  16,353  8,966  -  (8,478)  (322) (2) 16,519 
Dona Francisca  5,931  4,401  -  -  -  10,332 
Dois Saltos Empreend.  -  -  -  -  300 (3) 300 
Copel Amec  140  9  -  -  -  149 
Escoelectric  (1,390)  363  -  -  -  (1,027) 
Escoelectric - APFCI  1,025  -  -  -  -  1,025 
Carbocampel  (56)  (13)  -  -  -  (69) 
Carbocampel - APFCI  1,059  -  -  -  -  1,059 
Sercomtel Celular  8,759  (2,564)  -  -  -  6,195 
Sercomtel Celular - Impairment (e)  -  (6,195)  -  -  -  (6,195) 
Braspower - APFCI  176  -  20  -  (196) (4) - 
Sanepar  -  23,158  -  (6,173)  264,539 (1) 281,524 
  204,305  14,195  20  (16,289)  174,166  376,397 
Other investments             
Amazon Investment Fund (FINAM) (c)  30,012  -  -  -  -  30,012 
FINAM - Nova Holanda (c)  14,868  -  -  -  -  14,868 
Northeastern Investment Fund (FINOR) (c)  9,870  -  -  -  -  9,870 
FINAM - Investco (c)  7,903  -  -  -  -  7,903 
Other tax breaks  2,315  -  -  -  -  2,315 
Provision for losses - Finam/Finor (c)  (26,801)  -  -  -  (9,034) (5)  (35,835) 
Provisão for losses - Nova Holanda (c)  -  -  -  -  (14,868) (5)  (14,868) 
Property for future service use  4,588  -  120  -  (887) (6)  3,821 
Other investments  1,508  (239)  247  239  (300) (3)  1,455 
  44,263  (239)  367  239  (25,089)  19,541 
  248,568  13,956  387  (16,050)  149,077  395,938 
(1) Inclusion of Dominó Holdings in the consolidation of financial statements
(2) Dividends from the previous year
(3) Balance transferred from other investments to investees
(4) Interest sold in October 2008
(5) Constitution/supplement of provision for losses on tax incentives
(6) Transfers of R$ 933 thousand property assigned for disposal and R$ 46 thousand from p.,p.,&e. in service

 

c) Tax Incentives

In 2009, COPEL recalculated the market value of its investments in FINAM and FINOR, based on their average prices on the São Paulo Stock Exchange (BOVESPA). Based on the FINAM and FINOR prices on December 21, 2009, the Company recorded an addition to the provision for the devaluation of these investments in the amount of R$ 733, thus raising the total balance to R$ 36,568.

d) Dominó Holdings

On January 14, 2008, COPEL 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 expected future profitability of the company. Upon consolidation of the balance sheets, this discount was reclassified to Deferred Revenues, under Noncurrent Liabilities.

43


With this acquisition, COPEL 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 operations of Dominó Holdings, as well as the corresponding consolidated shares, are shown below:

Dominó Holdings S.A.  Balances as of 2009 
    Revaluation    COPEL's stake 
  Full amounts  reserve (1)  Adjusted balance  (45%) 
ASSETS  728,193  (44,756)  683,437  307,547 
Current assets  14,187  -  14,187  6,384 
Long-term receivables  714,006  (44,756)  669,250  301,163 
.  .       
LIABILITIES  728,193  (44,756)  683,437  307,547 
Current liabilities  11,021  -  11,021  4,959 
Long-term liabilities  7  -  7  4 
Shareholders' equity  717,165  (44,756)  672,409  302,584 
  .       
STATEMENT OF INCOME         
Operational expenses  (4,829)  -  (4,829)  (2,173) 
Financial income (losses)  (953)  -  (953)  (428) 
Result of equity in investees  47,775  2,603  50,378  22,670 
Net income for the period  41,993  2,603  44,596  20,069 
(1) Balances have been adjusted due to accounting practices not adopted by the Parent Company

 

e) Impairment Tests

The conclusion in December 2009 of impairment tests on COPEL’s assets, based, when applicable, on the same assumptions mentioned in the Property, Plant, and Equipment note (Note 17.f), indicated, with an adequate level of certainty, that a part of the assets in Sercomtel Telecomunicações S/A (R$ 35,927) and Sercomtel Celular S/A (R$ 6,195) were valued above their recoverable amount, thus requiring the accrual of corresponding losses due to impossibility of recovering these amounts through future profits by these companies. In 2009, COPEL recorded R$ 17,626 in the statement of income (R$ 24,496 in 2008).

No need to record provisions for devaluation of investments was identified in 2009 for the remaining investments of the Company.

f) Centrais Eólicas and Copel Empreendimentos

The Company held a 30% interest in Centrais Eólicas do Paraná (Ceopar). On September 6, 2007, COPEL acquired, through COPEL Generation and Transmission, 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 Deferred Revenues, under Noncurrent Liabilities.

44


As part of the ongoing restructuring of COPEL, the incorporation of COPEL Empreendimentos and Centrais Eólicas do Paraná, with transfer of their assets and liabilities to COPEL Geração e Transmissão, has been submitted to ANEEL for authorization.

17 Property, Plant, and Equipment

    Accumulated  Consolidated    Accumulated  Consolidated 
  Cost  Depreciation  net value  Cost  Depreciation  net value 
      2009      2008 
In service (a)             
Copel Geração e Transmissão  5,313,956  (2,201,518)  3,112,438  5,250,080  (2,070,575)  3,179,505 
Copel Distribuição  5,279,874  (2,461,909)  2,817,965  4,816,165  (2,288,653)  2,527,512 
Copel Telecomunicações  370,972  (231,162)  139,810  358,300  (206,587)  151,713 
Compagas  188,948  (50,881)  138,067  159,486  (42,324)  117,162 
Elejor  606,816  (63,077)  543,739  606,737  (46,689)  560,048 
UEG Araucária  645,229  (139,522)  505,707  641,682  (107,978)  533,704 
Centrais Eólicas do Paraná  4,129  (2,632)  1,497  4,129  (2,424)  1,705 
Dominó Holdings  1  -  1  1  -  1 
  12,409,925  (5,150,701)  7,259,224  11,836,580  (4,765,230)  7,071,350 
Construction in progress             
Copel Geração e Transmissão  519,759  -  519,759  350,721  -  350,721 
Copel Distribuição  586,423  -  586,423  470,643  -  470,643 
Copel Telecomunicações  48,776  -  48,776  29,874  -  29,874 
Compagas  29,005  -  29,005  33,671  -  33,671 
Elejor  8,292  -  8,292  8,292  -  8,292 
UEG Araucária  7,000  -  7,000  881  -  881 
  1,199,255  -  1,199,255  894,082  -  894,082 
  13,609,180  (5,150,701)  8,458,479  12,730,662  (4,765,230)  7,965,432 
Special obligations (b)             
Copel Geração e Transmissão  (187)  -  (187)  (187)  -  (187) 
Copel Distribuição  (994,099)  64,239  (929,860)  (936,678)  20,108  (916,570) 
  (994,286)  64,239  (930,047)  (936,865)  20,108  (916,757) 
  12,614,894  (5,086,462)  7,528,432  11,793,797  (4,745,122)  7,048,675 

 

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, however, 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.

Financial charges and interest on loans from third-parties for investments in construction in progress have been recorded through transfers to Property, Plant, and Equipment in Progress, for a total of R$ 7,113 in 2009 (R$ 1.470 in 2008).

45


a) Property, plant, and equipment in service by nature of asset

    Accumulated  Consolidated    Accumulated  Consolidated 
  Cost  Depreciation  net value  Cost  Depreciation  net value 
      2009      2008 
Machinery and equipment  8,379,806  (3,540,961)  4,838,845  7,874,370  (3,258,316)  4,616,054 
Reservoirs, dams, and headrace cha  2,874,228  (1,134,126)  1,740,102  2,869,541  (1,069,984)  1,799,557 
Facilities  726,077  (340,870)  385,207  710,019  (320,950)  389,069 
Land  123,185  -  123,185  121,357  -  121,357 
Gas pipelines  146,896  (31,862)  115,034  115,738  (27,504)  88,234 
Vehicles  140,369  (90,281)  50,088  127,128  (77,327)  49,801 
Furniture and implements  19,364  (12,601)  6,763  18,427  (11,149)  7,278 
  12,409,925  (5,150,701)  7,259,224  11,836,580  (4,765,230)  7,071,350 

 

The fully depreciated amount of property, plant, and equipment in service was R$ 832,974 as of December 31, 2009, and R$ 695,508 as of December 31, 2008.

b) Special obligations

Special obligations comprise customers’ contributions, Federal Government budget grants, federal, State, and municipal funds, and special credits assigned to the investments in facilities tied to a concession. Special obligations are not onerous liabilities and are not credits owned by shareholders.

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, as amended by Resolution no. 338, dated November 25, 2008, 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. 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 obligations, 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 Obligations will no longer be included in the B Portion of the companies’ revenues.

46


c) Energy Universalization Plans and the Luz para Todos Program

ANEEL set forth the overall conditions for the Universalization of Electric Energy Supply under Law no. 10,438, dated April 26, 2002, as amended by Law no. 10,762, dated November 11, 2003, aiming to supply new customers connected at low voltage (lower than 2.3 kV), with loads of up to 50 kW. ANEEL Resolution no. 223, dated April 29, 2003, set forth the general conditions for Electric Energy Universalization Plans, and was later amended by Resolution no. 52, dated March 25, 2009. To guide the process of review of Universalization Plans, ANEEL issued Resolution no. 175, dated November 28, 2005, and amended by Resolution no. 365, dated May 19, 2009.

On November 11, 2003, Decree no. 4,873 established the National Program for the Universalization of Electric Energy Use and Access, named Luz para Todos (“Light for Everyone”), which aims to provide electricity to the share of Brazil’s rural population, focused on family agriculture, which does not yet have access to this public service. This program is coordinated by the Ministry of Mining and Energy and carried out with the participation of Eletrobrás. In Paraná, the Ministry is represented by Eletrosul, and the participants are the State Government and COPEL. Furthermore, the program is integrated with several social and rural development programs implemented by the Federal Government and by State Governments, to ensure that the rural electrification efforts result in increased agricultural output, in increased income and in social inclusion, providing better standards of living to the rural communities. Originally scheduled to achieve 100% electrification throughout Brazil by 2008, the program has been extended until 2010 under Decree no. 6,442/2008, due to new customer demand throughout virtually all Brazilian states.

In 2009, the program connected 16,756 new customers, reaching roughly 60,000 since its inception; this figure is expected to reach 78,500 by December 2010, thus concluding universalization within COPEL's concession area.

COPEL signed with Eletrobrás three financing and subsidy agreements, in the amount of R$ 231,010. The first two agreements have already been concluded, while agreement ECF no. 206/2007 is still in progress, with the release of R$ 63,215 out of a total of R$ 126,430. A fourth agreement is being negotiated for the connection of another 16,000 customers.

The total estimated investments under the contracts for the program are broken down below:

Source  R$  Share 
Federal Government - CDE subsidy  62,882  19% 
Government of the State of Paraná  33,002  10% 
RGR Financing  168,129  51% 
Contractor - COPEL  66,007  20% 
Program total  330,020  100% 

 

As of December 2009, the total amount invested in the Luz para Todos program was R$ 228,515.

47


d) Depreciation rates

The main depreciation rates, pursuant to ANEEL Resolution no. 240, dated December 5, 2006, as replaced by Resolution no. 367, dated June 26, 2009, and to Ministry of Communications Ordinance no. 96/1995 are:

.   
  % 
Generation   
General equipment  10.00 
Generators  3.30 
Reservoirs, dams, and headrace channels  2.00 
Hydraulic turbines  2.50 
Gas and steam turbines  5.00 
Water cooling and treatment facilities  5.00 
Gas conditioning equipment  5.00 
Transmission   
System structure and conductors < 69 kV  5.00 
System structure and conductors => 69 kV and power transformers  2.50 
General equipment  10.00 
Reconnectors  4.30 
Distribution   
System structure and conductors => 69 kV  2.50 
System structure and conductors < 69 kV and distribution transformers  5.00 
Capacitor boards < 69 kV  6.70 
Capacitor boards => 69 kV  5.00 
General equipment  10.00 
Central administration   
Facilities  4.00 
Office machinery and equipment  10.00 
Furniture and implements  10.00 
Vehicles  20.00 
Telecommunications   
Power and transmission equipment (telecommunications)  10.00 
Overhead and underground cabling, wiring, and private switching center  10.00 
Natural gas supply   
Gas pipelines  3.30 
Gas pipeline operating equipment  10.00 

 

48


e) Changes in property, plant, and equipment

  Construction  Special  Consolidated 
Balances  In service  in progress  liabilities  Total 
As of 2007  6,973,238  725,895  (857,192)  6,841,941 
Reclassif. of additions to Cons. Cruzeiro do Sul  -  50,067  -  50,067 
Expenditure program  -  647,646  -  647,646 
Transfer to p.,p.,&e. in service  537,430  (537,430)  -  - 
Depreciation quotas charged to income  (415,420)  -  20,108  (395,312) 
Write-offs  (12,560)  (2,005)  -  (14,565) 
Sales  (11,297)  -  -  (11,297) 
Customer contributions  -  -  (79,673)  (79,673) 
Transfer of assets assigned for future use  (46)  -  -  (46) 
Transfers between p., p., &e. and intangible assets  5  (3,164)  -  (3,159) 
Supplemental provision for contingencies  -  13,073  -  13,073 
As of 2008  7,071,350  894,082  (916,757)  7,048,675 
Reclassif. of additions to Cons. Cruzeiro do Sul  -  160  -  160 
Expenditure program  -  957,313  -  957,313 
Transfer to p.,p.,&e. in service  646,251  (646,251)  -  - 
Depreciation quotas charged to income  (428,467)  -  44,131  (384,336) 
Depreciation quotas transf. to p.,p.,&e. in progress  (11,091)  11,091  -  - 
Write-offs  (11,250)  (27,368)  -  (38,618) 
Sales  (6,373)  -  -  (6,373) 
Customer contributions  -  -  (57,421)  (57,421) 
Transfer of assets assigned for future use  (1,465)  (311)  -  (1,776) 
Transfers between p., p., &e. and intangible assets  269  -  -  269 
Supplemental provision for contingencies  -  10,539  -  10,539 
As of 2009  7,259,224  1,199,255  (930,047)  7,528,432 

 

f) Impairment tests

The Company has a policy of periodically evaluating and monitoring the projected future performance of its assets. Accordingly, and in light of Technical Ruling CPC 01 – Writing Assets down to their Recoverable Value, whenever there is clear evidence that the Company has assets recorded at unrecoverable values or whenever events or changes in circumstances indicate that the book value of an asset may not be recoverable in the future the Company must immediately account for such discrepancies by means of a provision for losses.

The main principles underpinning the conclusions of COPEL’s impairment tests are listed below:

1) Lowest level of cash generating unit: held concessions are analyzed individually;

2) Recoverable Value: use value, or an amount equivalent to the discounted cash flows (before taxes) resulting from the continuous use of an asset until the end of its useful life;

3) Assessment of use value: based on future cash flows in constant currency, converted to current value according to a real discount rate, before income taxes.

49


The respective cash flows are estimated based on actual operational results, on the Company's annual corporate budget, as approved by the Board of Directors, on the resulting multi-year budget, and on future trends in the power sector.

As for the time frame for the analysis, the Company takes into account the expiration date of each concession.

As for market growth, COPEL’s projections are consistent with historical data and the Brazilian economy's growth prospects.

The respective cash flows are discounted at average discount rates, obtained through a methodology commonly employed on the market and supported by the regulatory agency, taking into account the weighed average cost of capital (WACC).

Management believes it has a contractually guaranteed right to compensation for the assets tied to concessions upon their expiration, and it accepts, for the time being and until further regulation is issued on this matter, that such compensation be valued according to the book value of the respective assets. Thus, the principle of valuation of residual assets upon expiration of concessions has been established as the book value of these assets.

In light of the principles discussed above, COPEL has not identified the need to set aside a provision for impairment of its assets.

g) 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 October 10, 2006, at the ANEEL Auction of Power from New Projects 004/2006, the rights to build and run the Mauá Hydroelectric Power Plant for 35 years.

This project is included in the Federal Government’s Growth Acceleration Program (PAC) and will comprise a main powerhouse rated 350 MW and a secondary powerhouse rated 11 MW, for a total of 361 MW of installed capacity, which is enough to supply approximately one million 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 at the top and a maximum height of 85 m and will be built with roller-compacted concrete. The dam’s total solid volume will be around 630,000 m3.

Total estimated expenditures amount to approximately R$ 1.069.000 as of April 2008, of which 51% (R$ 545,190) will be invested by COPEL Geração e Transmissão, while the remaining 49% (R$ 523,810) will be invested by Eletrosul Centrais Elétricas S.A.

50


On November 17, 2008, the board of Banco Nacional de Desenvolvimento Econômico e Social –

BNDES approved the financing for the Mauá Hydroelectric Power Plant. The financed amount corresponds to approximately 70% of COPEL's total expenditures in connection with the Mauá Power Plant.

The facility’s total power output was sold at an ANEEL auction at a price of R$ 112.96/MWh, as of November 1, 2006, restated annually according to the variation of the IPCA inflation index. The company sold 192 average MW, for supply starting in April 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.

Pursuant to the contract, the consortium in charge of construction will only be entitled to a bonus if each generating unit becomes operational ahead of schedule. This bonus equals 50% of the net revenues earned during the period ahead of schedule. The intended commercial operation of the facility ahead of schedule shall be informed to the other party by the consortium with minimum advance notice of 390 days from the new dates and formally ratified with minimum advance notice of 150 days.

Given the current stage of the construction, Company management believes that the consortium will not request authorization for commercial operation of the facility ahead of schedule.

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, which comprises 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 basic project has been concluded and approved by ANEEL. The project has an Environmental Impact Study and an Environmental Impact Report, which have been discussed at public hearings and meetings 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.

The construction site has been fully set up, with area cleanup, terrain leveling, landfill compaction, and construction of industrial and administrative facilities and personnel quarters. The following tasks have also been concluded: excavation of ordinary soil and exposed rock in the river diversion structure, the load chamber, the powerhouse, the tailrace channel, and the dam area (left bank of the river); excavation of underground rock in the river diversion tunnels, the access tunnels to the penstocks, the vertical and underground sections of the penstocks, and the drainage tunnel; excavation of ordinary soil around the intake tunnel and the rock quarry; laying of concrete in the intake structures of the diversion tunnels.

51


On September 1, 2009, the soil and rock barriers which separated the diversion tunnels from the riverbed were removed. Since then, the Tibagi River has been also flowing through the diversion tunnels. On November 10, 2009, the base of the upstream cofferdam was completed, diverting the river entirely through the tunnels and allowing construction of the main dam to begin on the riverbed.

The following tasks are currently being carried out: excavation of underground rock in the intake tunnel; laying of concrete in the powerhouse; excavation of rock in the dam area (riverbed); laying of roller-compacted concrete in the dam structure on the right bank (blocks 8 to 16); leveling and compacting of the substation landfill; and manufacture of electromechanical equipment.

As of January 2009, in compliance with ANEEL Ruling no. 3,467, dated 18.09.08, expenditures in this project have been recorded under Property, Plant, and Equipment, proportionally to the Company’s stake. In December 2009, COPEL Geração e Transmissão’s balance under Property, Plant, and Equipment in progress related to this project was R$ 247,947.

(1) Technical information unaudited by the independent auditors.

52


18 Intangible assets

Rights of use   Concession Accumulated         Consolidated 
 of software   and goodwill  amortization  Easements   R&D  Other  net value 
              2009  2008 
In service                 
Assets with estimated useful lives                 
Copel Geração e Transmissão  12,044  -  (9,522) (1)  14,730  -  -  17,252  13,679 
Copel Distribuição  28,996  -  (24,903) (1)  21,392  -  -  25,485  25,556 
Copel Telecomunicações  3,799  -  (3,560) (1)  -  -  -  239  973 
Compagas  3,481  -  (1,812) (1)  -  -  -  1,669  1,997 
Elejor  -  -  -  101  -  -  101  101 
UEG Araucária  90  -  (73) (1)  -  -  -  17  23 
Dominó Holdings  1  -  -  -  -  -  1  1 
Concession - Elejor (a)  -  22,626  (2,828)  -  -  -  19,798  20,552 
Concession - Copel Empreend. (b)  -  53,954  (7,037)  -  -  -  46,917  49,262 
Concession - Sanepar (d)  -  10,942  (8,025)  -  -  -  2,917  3,647 
Goodwill - Sercomtel Telecom. (c)  -  42,289  (42,289)  -  -  -  -  - 
Goodwill - Sercomtel Celular (c)  -  5,814  (5,814)  -  -  -  -  - 
  48,411  135,625  (105,863)  36,223  -  -  114,396  115,791 
Assets without estimated useful lives                 
Copel Geração e Transmissão  -  -  -  -  -  30  30  30 
Copel Distribuição  -  -  -  -  -  103  103  103 
Compagas  -  -  -  -  -  -  -  20 
  -  -  -  -  -  133  133  153 
  48,411  135,625  (105,863)  36,223  -  133  114,529  115,944 
In progress                 
Copel Geração e Transmissão  -  -  -  1,434  86  -  1,520  249 
Copel Distribuição  618  -  -  1,891  12,313  -  14,822  1,764 
Copel Telecomunicações  819  -  -  -  -  -  819  135 
Elejor  -  -  -  27  -  -  27  27 
  1,437  -  -  3,352  12,399  -  17,188  2,175 
              131,717  118,119 
(1) Annual amortization rate: 20%                 
    Concession
and Goodwill 		 Accumulated
amortization 		 Net
Parent Company 
             2009  2008 
In service                 
Assets with estimated useful lives               
Concession - Elejor (a)      22,626  (2,828)   19,798  20,552 
Goodwill - Sercomtel Telecom. (c)      42,289  (42,289)   -  - 
Goodwill - Sercomtel Celular (c)      5,814  (5,814)   -  - 
      70,729  (50,931)   19,798  20,552 
             19,798  20,552 
(1) Annual amortization rate: 20%                 

 

The fully depreciated amount of intangible assets in service was R$ 78,318 as of December 31, 2009, and R$ 76,426 as of December 31, 2008.

53


a) Concession - 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$ 19,798 as of December 31, 2009, under the Parent Company. 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 operations as of December 31, 2009 was R$ 754 (R$ 754 as of December 31, 2008).

b) Concession - 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 of R$ 46,917 as of December 31, 2009. 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 December 31, 2009 was R$ 2,345 (R$ 2,345 as of December 31, 2008).

c) Goodwill - Sercomtel

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. 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.

d) Concession - Sanepar

In 1998, the acquisition by Dominó Holdings S.A. of an interest in SANEPAR resulted in goodwill of R$ 24,316, with a balance of R$ 6,484 as of December 31, 2009. This balance, proportionally to COPEL's stake (45%), corresponds to R$ 2,917, and has been amortized over 15 years as of 1999, at the rate of R$ 61 a month, with a charge to income of R$ 730 as of December 31, 2009 (R$ 730 as of December 31, 2008).

54


e) Changes in intangible assets

  Intangible assets  Consolidated 
Balances  in service  in progress  Total 
As of 2007  112,888  3,603  116,491 
Consolidation of Dominó Holdings - Sanepar concession  4,378  -  4,378 
Expenditure program  -  4,038  4,038 
Capitalizations  8,630  (8,630)  - 
Amortization quotas - concession  (3,829)  -  (3,829) 
Amortization quotas - goodwill  (1,791)  -  (1,791) 
Amortization quotas - other intangible assets  (3,811)  -  (3,811) 
Write-offs  (516)  -  (516) 
Transfers between intangible assets and p., p.,&e.  (5)  3,164  3,159 
As of 2008  115,944  2,175  118,119 
Expenditure program  -  21,566  21,566 
Capitalizations  6,739  (6,739)  - 
Amortization quotas - concession  (3,829)  -  (3,829) 
Amortization quotas - goodwill  (3,383)  -  (3,383) 
Amortization quotas transf. to int. assets in progress  (186)  186  - 
Write-offs  (487)  -  (487) 
Transfers between intangible assets and p., p.,&e.  (269)  -  (269) 
As of 2009  114,529  17,188  131,717 

 

19 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 
      2009  2008  2009  2008 
  Principal amount  Charges  Total  Total     
Foreign currency             
IDB (a)  18,615  533  19,148  25,938  9,189  36,552 
National Treasury (b)  4,944  681  5,625  8,647  58,654  85,359 
Banco do Brasil (c)  -  -  -  6,517  -  - 
Eletrobrás  5  -  5  7  22  36 
  23,564  1,214  24,778  41,109  67,865  121,947 
Local currency             
Banco do Brasil (c)  163  10,246  10,409  16,410  330,190  330,389 
Eletrobrás (d)  38,168  14  38,182  34,411  261,142  275,207 
Eletrobrás - Elejor (e)  -  -  -  -  117  26,092 
BNDES - Compagas (f)  6,349  -  6,349  6,526  6,394  13,111 
Finep (g)  145  11  156  5  6,940  2,310 
BNDES (h)  -  884  884  -  55,748  - 
Banco do Brasil (i)  -  940  940  -  55,748  - 
  44,825  12,095  56,920  57,352  716,279  647,109 
  68,389  13,309  81,698  98,461  784,144  769,056 

 

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Parent Company  Current  Long-term 
  liabilities  liabilities 
      2009  2008  2009  2008 
  Principal amount  Charges  Total  Total     
Foreign currency             
National Treasury (b)  4,944  681  5,625  8,647  58,654  85,359 
Local currency             
Banco do Brasil (c)  -  10,243  10,243  16,249  329,600  329,600 
  4,944  10,924  15,868  24,896  388,254  414,959 

 

Breakdown of loans and financing by currency and index

.         
Currency (equivalent in reais ) / Index  Consolidated 
  2009  %  2008  % 
Foreign currency         
U.S. dollar  64,306  7.43  94,049  10.84 
Yen  -  -  6,517  0.75 
IDB currency basket  28,337  3.27  62,490  7.20 
  92,643  10.70  163,056  18.79 
Local currency         
Long-term Interest Rate's Reference Unit (URTJLP)  132,055  15.25  2,335  0.27 
General Price Index - Market (IGP-M)  874  0.10  930  0.11 
Fiscal Reference Unit (UFIR)  94,651  10.93  71,361  8.23 
Eletrobrás Financing Rate (FINEL)  204,671  23.64  264,349  30.47 
BNDES Monetary Unit (UMBND)  1,105  0.13  19,637  2.26 
Interbank Deposit Certificate (CDI)  339,843  39.25  345,849  39.87 
  773,199  89.30  704,461  81.21 
  865,842  100.00  867,517  100.00 

 

Variations in the main foreign currencies and rates applied to the Company’s loans and financing

.     
Currency/index  Variation (%) 
  2009  2008 
U.S. dollar  (25.49)  31.94 
Yen  (27.10)  62.89 
IDB currency basket  0.17  6.22 
TJLP  6.12  6.27 
IGP-M  (1.72)  9.81 
Finel  (0.35)  1.90 
UMBND  (25.66)  33.86 
CDI  (37.22)  21.82 

 

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Maturity of noncurrent installments

  Foreign  National     
  currency  currency    Consolidated 
      2009  2008 
2010  -  -  -  73,988 
2011  14,138  50,163  64,301  68,064 
2012  3,643  50,130  53,773  50,069 
2013  2,337  50,665  53,002  48,257 
2014  1,172  380,128  381,300  376,151 
2015  -  48,748  48,748  44,368 
2016  -  32,545  32,545  26,767 
2017  -  16,158  16,158  6,719 
2018  -  15,248  15,248  5,975 
2019  -  12,500  12,500  3,726 
2020  -  10,628  10,628  2,456 
2021  -  6,970  6,970  5 
2022  -  6,968  6,968  - 
after 2022  46,575  35,428  82,003  62,511 
  67,865  716,279  784,144  769,056 

 

Changes in loans and financing

    Foreign currency    National currency  Consolidated 
Balances  Current  Long-term  Current  Long-term  Total 
As of 2007  30,498  118,282  62,186  716,986  927,952 
Funds raised  -  -  -  34,818  34,818 
Capitalized charges  -  -  -  12,062  12,062 
Charges  7,327  -  67,918  2,781  78,026 
Monetary and exchange variation  12,421  31,042  176  14,024  57,663 
Transfers  27,377  (27,377)  133,562  (133,562)  - 
Amortization - principal amount  (17,656)  -  (68,836)  -  (86,492) 
Amortization - interest  (18,858)  -  (137,654)  -  (156,512) 
As of 2008  41,109  121,947  57,352  647,109  867,517 
Funds raised  -  -  -  144,262  144,262 
Capitalized charges  -  -  -  2,267  2,267 
Charges  6,199  -  63,265  1,073  70,537 
Monetary and exchange variation  (8,290)  (27,161)  (57)  (1,144)  (36,652) 
Transfers  26,921  (26,921)  77,288  (77,288)  - 
Amortization - principal amount  (17,221)  -  (45,766)  -  (62,987) 
Amortization - interest  (23,940)  -  (95,162)  -  (119,102) 
As of 2009  24,778  67,865  56,920  716,279  865,842 

 

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 fourth quarter of 2009 was 4.14% p.a. The agreement features provisions providing for termination in the following cases:

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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;

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 
        2009  2008 
Par Bond  30  04.15.2024  30  27,787  37,296 
Capitalization Bond  20  04.15.2014  10  10,673  17,507 
Debt Conversion Bond  18  04.15.2012  10  6,568  12,368 
Discount Bond  30  04.15.2024  30  19,251  25,896 
New Money Bonds  15  04.15.2009  7  -  466 
Flirb  15  04.15.2009  9  -  473 
        64,279  94,006 

 

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 

 

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As collateral for this agreement, the Company has 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 Accounts of R$ 9,990 and R$ 14,205 as of December 31, 2009 (R$ 15,460 and R$ 22,408 as of December 31, 2008), respectively, recorded under guarantees and escrow Accounts, in noncurrent assets (Note 11).

c) Banco do Brasil S.A.

The Company has the following contracts with Banco do Brasil:

1) Agreement 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; This loan was settled upon maturity, in September 2009.

2) Private Credit Assignment Agreement with the Federal Government, through Banco do Brasil, 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 following Parent Company credit notes:

  Issue  Principal  Financial charges  Principal     
Credit notes  date  maturity  due semi-annually  amount  Charges  Total 
Commercial no. 330.600.129  01.31.2007  01.31.2014  106.5% of the average CDI rate  29,000  1,084  30,084 
Industrial no. 330.600.132  02.28.2007  02.28.2014  106.2% of the average CDI rate  231,000  6,944  237,944 
Industrial no. 330.600.151  07.31.2007  07.31.2014  106.5% of the average CDI rate  18,000  673  18,673 
Industrial no. 330.600.156  08.28.2007  08.28.2014  106.5% of the average CDI rate  14,348  432  14,780 
Industrial no. 330.600.157  08.31.2007  08.31.2014  106.5% of the average CDI rate  37,252  1,110  38,362 
        329,600  10,243  339,843 

 

As a guarantee, Banco do Brasil has been 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 has also been 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.

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d) Eletrobrás – Centrais Elétricas Brasileiras S.A.

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 were economic subsidies 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. In April 2009, COPEL received R$ 11,066, of which R$ 6,320 came from RGR funds and R$ 4,746 from CDE funds; as of this date, the Company received R$ 63,104, of which R$ 36,056 came from RGR funds and R$ 27,048 from CDE funds. There will be no further disbursements under this agreement.

Contract ECFS – 206/2007, was signed on March 3, 2008 by COPEL Distribuição and Eletrobrás, in the amount of R$ 126,430, 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 were economic subsidies 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 08.13.08, COPEL withdrew R$ 37,929, of which R$ 32,511 came from RGR funds and R$ 5,418 from CDE funds. On June 5, 2009, the Company received R$ 25,286, of which R$ 21,674 came from RGR funds and R$ 3,612 from CDE funds.

These loans are secured by COPEL’s own revenues, 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 consolidated financial statements, the value of the shares to be redeemed by ELEJOR has been reclassified from minority interest to loans and financing, under noncurrent liabilities.

The 59,000,000 preferred shares in Elejor held by Eletrobrás, in the amount of R$ 59,900, were to 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.

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The paid in amounts are restated according to the IGP-M index, pro rata temporis, 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.

In December 2008, 29,035,700 shares were bought back by Elejor, for R$ 35,133, plus financial charges of R$ 54,867, for a total of R$ 90,000.

In August 2009, 2,883,810 shares were bought back by Elejor, for R$ 3,489, plus financial charges of R$ 8,211, for a total of R$ 11.600.

In October 2009, 2,411,006 shares were bought back by Elejor, for R$ 2,917, plus financial charges of R$ 5,083, for a total of R$ 8,000.

In December 2009, 2,322,609 shares were bought back by Elejor, for R$ 2,810, plus financial charges of R$ 5,216, for a total of R$ 8.026.

The remaining balance of R$ 117 as of December 2009 corresponded to financial 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

1) 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 total credit amounts to R$ 5,078. The first installment, in the amount of R$ 1,464, was released in April 2008, the second one, in the amount of R$ 2,321, was released in May 2009, and the remaining ones will be deposited 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.

2) Loan agreement no. 02070790-00, signed on November 28, 2007 to partially cover expenses incurred in the preparation of the "Transmission Research and Development Project for 2007".

The total credit amounts to R$ 3,535. The first installment, in the amount of R$ 844, was released in October 2008, the second one, in the amount of R$ 2,451, was released in December 2009, and the remaining ones will be deposited 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 6.13 % 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$ 393.

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.

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h) BNDES - COPEL Geração e Transmissão

On March 17, 2009, COPEL Geração e Transmissão signed with BNDES Loan Agreement no. 08.2.0989.1, with COPEL as a intervening agent, to fund the construction of the Mauá Hydroelectric Power Plant and its transmission system, in consortium with Eletrosul. The loan amounts to R$ 169,500, which will be released in installments as funds are required and pursuant to BNDES' financial scheduling.

This loan will be paid off in 192 monthly installments, starting on February 15, 2012 and ending on January 15, 2028, bearing interest of 1.63% above the Long-Term Interest Rate (TJLP), which will be paid quarterly during the grace period and monthly after the first payment of the principal amount.

As a guarantee for the payment of all amounts due under this agreement, COPEL Geração e Transmissão has pledged in favor of BNDES a lien on all the revenues from the sale of energy under Agreements for Energy Trade on the Regulated Power Market (“Contratos de Compra de Energia no Ambiente Regulado” or CCEARs) in connection with this project, which shall be collected in a special main account for this purpose. The Company shall also set up two "reserve accounts" to cover any shortfalls in the main account. This guarantee will be operated under an Agreement on Revenue Transfer and Attachment, Account Management, and Other Covenants signed by COPEL Geração e Transmissão, BNDES, and Banco do Brasil.

The first installment was made available in July 2009, in the amount of R$ 55,748. The contract contains provisions on accelerated maturity in certain conditions.

i) Banco do Brasil – Transfer of BNDES funds

On April 16, 2009, COPEL Geração e Transmissão signed with Banco do Brasil Loan Agreement no. 21/02000-0, with COPEL as an intervening agent, to fund the construction of the Mauá Hydroelectric Power Plant and its transmission system, in consortium with Eletrosul. The loan amounts to R$ 169,500, which will be released in installments pursuant to the Uses and Sources Schedule attached to the agreement.

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This loan will be paid off in 192 monthly installments, starting on February 15, 2012 and ending on January 15, 2028, bearing interest of 2.13% above the Long-Term Interest Rate (TJLP), which will be paid quarterly during the grace period and monthly after the first payment of the principal amount. As a guarantee for the payment of all amounts due under this agreement, COPEL Geração e Transmissão has pledged in favor of Banco do Brasil a lien on all the revenues from the sale of energy under Agreements for Energy Trade on the Regulated Power Market (“Contratos de Compra de Energia no Ambiente Regulado” or CCEARs) in connection with this project, which shall be collected in a special main account for this purpose. The Company shall also set up two "reserve accounts" to cover any shortfalls in the main account. This guarantee will be operated under an Agreement on Revenue Transfer and Attachment, Account Management, and Other Covenants signed by COPEL Geração e Transmissão, BNDES, and Banco do Brasil.

The first installment was made available in August 2009, in the amount of R$ 55,748.

The contract contains provisions on accelerated maturity in certain conditions.

20 Debentures

The balance of debentures is broken down below:

  Current  Long-term 
  liabilities  liabilities 
      2009  2008  2009  2008 
  Principal amount  Charges  Total  Total     
Parent Company (a)  -  17,238  17,238  169,233  600,000  600,000 
Elejor (b)  34,665  2,292  36,957  25,767  153,384  202,116 
  34,665  19,530  54,195  195,000  753,384  802,116 

 

Maturity of noncurrent installments

     
  Consolidated 
  2009  2008 
2010  -  36,455 
2011  636,054  638,454 
2012  36,054  38,454 
2013  36,054  38,454 
2014  33,005  35,409 
2015  11,105  13,290 
2016  1,112  1,600 
  753,384  802,116 

 

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Changes in the balances of debentures

  Current  Long-term  Consolidated 
Balances  liabilities  liabilities  Total 
As of 2007  171,827  1,002,674  1,174,501 
Charges  121,025  -  121,025 
Monetary variation  8  638  646 
Transfers  201,196  (201,196)  - 
Amortization - principal amount  (176,072)  -  (176,072) 
Amortization - interest  (122,984)  -  (122,984) 
As of 2008  195,000  802,116  997,116 
Charges  83,416  -  83,416 
Monetary variation  23  234  257 
Transfers  48,966  (48,966)  - 
Amortization - principal amount  (163,175)  -  (163,175) 
Amortization - interest  (110,035)  -  (110,035) 
As of 2009  54,195  753,384  807,579 

 

a) Debentures - Parent Company

1) Fourth Issue of Debentures

The issuance of 60 thousand debentures constituted the fourth single issuance carried out by the Company on September 1, 2006, in the amount of R$ 600,000, completed on October, 6, 2006, with full subscription totaling R$ 607,899, valid for five years as from date of issuance and with final maturity, in sole series, on September 1, 2011. Debentures are single, non-convertible into shares, book-entry, nominative and without guarantee.

These securities 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 temporis manner according to the number of business days elapsed. Interest corresponding to the capitalization period is 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.

The debentures feature provisions setting forth accelerated maturity in the following cases:

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1) Bankruptcy ruling against the issuer or any subsidiary controlled, directly or indirectly, by the issuer, or filing for business reorganization in bankruptcy by the issuer or by any subsidiary controlled, directly or indirectly, by the issuer (or any similar judicial proceeding similar which replaces or complements the current legislation on bankruptcy and business reorganization, including judicial or extrajudicial recovery);

2) Non-payment of any amounts due to debenture holders on the dates set forth in the agreement;

3) Court ruling for intervention in the concession or for termination of the concession for the services of distribution, transmission, or generation of power by the issuer or by the subsidiaries of the issuer;

4) Notwithstanding the provision in item (2) above, the default by the issuer or by COPEL Generation on any non-financial obligation or the untruthfulness of any statement contained in this agreement or in the pledge agreement, not remedied in ten business days from the date of default or of proof of untruthfulness. This ten business day deadline is not applicable to obligations for which a specific deadline has been set;

5) Legitimate protest against any security of the issuer or of any subsidiary controlled, directly or indirectly, by the issuer, with single or aggregate value equal to or greater than R$ 25,000, such an amount being restated annually according to the variation of the IGP-M index calculated and published by Fundação Getúlio Vargas, except in the event such protest is made in error or bad faith by third parties, provided that such situation is proven validly by the issuer or subsidiary controlled, directly or indirectly, by the issuer, as the case may be, or in the event it is cancelled within thirty days of its filing;

6) Final court or arbitration ruling against the issuer or any subsidiary controlled, directly or indirectly, by the issuer in aggregate amount greater than R$ 40,000, such an amount being restated annually according to the variation of the IGP-M index, provided the issuer or any subsidiary controlled, directly or indirectly, by the issuer fails to prove payment of the aggregate amount to the fiduciary agent, within ten business days from such supposed payment, in compliance with the schedule and conditions set forth in such final court or arbitration ruling;

7) Accelerated maturity of any debt of the issuer or of any subsidiary controlled, directly or indirectly, by the issuer in a single or aggregate amount equal to or greater than R$ 25,000, such an amount being restated annually according to the variation of the IGP-M index;

8) Lack of payment by the issuer or by any subsidiary controlled, directly or indirectly, by the issuer of any financial obligations in aggregate amount equal to or greater than R$ 25,000, such an amount being restated annually according to the variation of the IGP-M index;

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9) Violation by the issuer or by any subsidiary controlled, directly or indirectly, by the issuer, during the term of this agreement, of laws, rules, and regulations, including those of environmental nature, which affect or may affect the issuer’s ability to legitimately fulfill its obligations set forth in this agreement; and

10) Any change in the corporate object contained in the issuer’s by-laws which modifies the primary business activity of the issuer.

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. These debentures matured and were paid off on February 1, 2009.

b) Debentures - Elejor

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

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.

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 nominal, convertible into common shares and into class C preferred shares, at the discretion of the debenture holders.

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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 was 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.

Advance payments of the 2nd issue of debentures

In December 2008, R$ 42,621 were paid in advance, plus financial charges of R$ 2,379, for a total of R$ 45,000.

In August 2009, R$ 5,487 were paid in advance, plus financial charges of R$ 313, for a total of R$ 5.800.

In October 2009, R$ 3,784 were paid in advance, plus financial charges of R$ 216, for a total of R$ 4,000.

In December 2009, R$ 4,256 were paid in advance, plus financial charges of R$ 244, for a total of R$ 4.500.

The agreement contains the following guarantees:

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

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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.

21 Suppliers

.       
    Consolidated 
    2009  2008 
Transmission network use charges       
Use of the Basic Network    63,209  57,096 
Energy transmission    4,310  4,182 
Connections    274  265 
    67,793  61,543 
Electricity suppliers       
Eletrobrás (Itaipu)    80,104  100,040 
Furnas Centrais Elétricas S.A.    34,375  32,757 
Companhia Hidro Elétrica do São Francisco - Chesf    33,696  32,108 
Companhia Energética de São Paulo - Cesp    12,031  11,488 
Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A.    11,330  10,234 
Centrais Elétricas do Norte do Brasil S.A. - Eletronorte    10,856  10,316 
CPFL Energia S.A.    10,041  994 
Itiquira Energética S.A.    10,000  9,247 
Companhia Energética de Minas Gerais - Cemig    6,530  4,660 
Dona Francisca Energética S.A.    5,100  5,128 
Cia. Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE    3,819  3,632 
Utilities - CCEE (Note 33)    1,859  27,976 
Other suppliers    26,656  13,789 
    246,397  262,369 
Materials and services       
Petróleo Brasileiro S.A. - Petrobras - gas acquired by Compagas    23,166  36,775 
Petróleo Brasileiro S.A. - Petrobras - renegotiation (a)    43,949  - 
Petróleo Brasileiro S.A. - Petrobras - renegotiation - long-term (a)    175,796  214,157 
Other suppliers    162,224  137,145 
    405,135  388,077 
    719,325  711,989 
  Current  543,529  497,832 
  Noncurrent  175,796  214,157 

 

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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 Generation, with COPEL as guarantor, acknowledged a R$ 150,000 debt to Petrobras, as grantor of Compagas’ credits to COPEL Generation, which shall be paid in 60 monthly installments restated by the Selic rate, starting in January 2010.

On May 30, 2006, COPEL Generation 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 Generation remains.

b) Main power purchase agreements

.  Period of  Purchased power  Date of  Average purchase 
  Supply  (Avg. MW)  auction  price (R$) 
Auction of power from existing facilities         
1st Auction - 2005 Product  2005 to 2012  915.00  December 7, 2004  57.51 
1st Auction - 2006 Product  2006 to 2013  421.58  December 7, 2004  67.33 
1st Auction - 2007 Product  2007 to 2014  4.86  December 7, 2004  75.46 
2nd Auction - 2008 Product  2008 to 2015  58.32  April 2, 2005  83.13 
4th Auction - 2009 Product  2009 to 2016  29.82  October 11,2005  94.91 
5th Auction - 2007 Product  2007 to 2014  159.38  December 14, 2006  104.74 
    1,588.96     
Auction of power from new facilities         
1st Auction - 2008 Hydro Product  2008 to 2037  3.61  December 16, 2005  106.95 
1st Auction - 2008 Thermal Product  2008 to 2022  28.56  December 16, 2005  132.26 
1st Auction - 2009 Hydro Product  2009 to 2038  3.26  December 16, 2005  114.28 
1st Auction - 2009 Thermal Product  2009 to 2023  41.59  December 16, 2005  129.26 
1st Auction - 2010 Hydro Product  2010 to 2039  66.32  December 16, 2005  114.57 
1st Auction - 2010 Thermal Product  2010 to 2024  64.30  December 16, 2005  121.81 
3rd Auction - 2011 Hydro Product  2011 to 2040  57.66  October 10, 2006  120.86 
3rd Auction - 2011 Thermal Product  2011 to 2025  54.22  October 10, 2006  137.44 
4th Auction - 2010 Thermal Product  2010 to 2024  18.32  July 26, 2007  134.64 
5th Auction - 2012 Hydro Product  2012 to 2041  52.50  October 16, 2007  129.14 
5th Auction - 2012 Thermal Product  2012 to 2026  117.27  October 16, 2007  128.37 
6th Auction - 2011 Thermal Product  2011 to 2025  51.07  September 17, 2008  128.42 
7th Auction - 2013 Hydro Product  2013 to 2042  12.24  September 30, 2008  98.98 
7th Auction - 2013 Thermal Product  2013 to 2027  303.99  September 30, 2008  145.23 
Santo Antonio  2012 to 2041  106.00  December 10, 2007  78.87 
Jirau  2013 to 2042  141.51  May 19, 2008  71.37 
    1,122.42     

 

The table features the main power purchase agreements signed in the regulated power trading environment. These contracts are restated annually according to the IPCA inflation index.

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22 Accrued Payroll Costs

.     
  Consolidated 
  2009  2008 
Payroll     
Profit sharing  64,995  65,816 
Taxes and social contribution  28,574  26,659 
Payroll, net  178  103 
Compensation - Voluntary Redundancy (Note 31.c.2)  15,859  - 
Assignments to third-parties  -  5 
  109,606  92,583 
Labor accruals     
Paid vacation and annual bonus  55,602  50,909 
Social charges on paid vacation and 13th salary  17,458  15,896 
Voluntary redundancy (Note 31.c.2)  24,291  - 
  97,351  66,805 
  206,957  159,388 

 

23 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.

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. 371/00. The economic 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. Based on legal opinions by external and internal legal experts who reviewed specific clauses of this agreement and concluded that the corresponding liabilities had expired, 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.

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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). After the submission of requested clarifications and the conduction of an actuarial audit recommended by the SPC, in October 2008 the SPC requested further clarifications about the report and the opinion of the consulting company in charge of the audit, which had been submitted by the COPEL Foundation in July 2008. As of the date of these financial statements, SPC has not ruled on the matter.

The outcome of this issue will not affect the amounts which have already been recorded as an actuarial liability pursuant to CVM Instruction no. 371/00. In fact, it 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 operations

Amounts recognized in the balance sheet, under Post-Employment Benefits, are summarized below:

      Consolidated 
      Total 
    2009  2008 
Pension Plan       
Pension Plan - Plans I and II (DB)    -  95,436 
Pension Plan - Plan III (VC) - employees    10,235  9,111 
    10,235  104,547 
Healthcare Plan    365,246  343,398 
    375,481  447,945 
  Current  22,505  22,066 
  Noncurrent  352,976  425,879 

 

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

.     
  Consolidated 
  2009  2008 
Pension plan - periodic post-employment cost  (95,436)  (31,420) 
Pension plan (DC)  53,922  48,138 
Pension plan (DC) - managers  217  137 
Healthcare plan - post-employment  34,051  (6,909) 
Healthcare plan contributions  28,797  27,459 
Healthcare plan contributions - managers  5  3 
  21,556  37,408 
(-) Transfers to construction in progress  (7,379)  (7,392) 
  14,177  30,016 

 

The annual estimated cost for 2009, 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.

Changes in the Post-Employment Benefits balance

  Current  Noncurrent  Consolidated 
Balances  liabilities  liabilities  Total 
As of 2007  42,286  454,411  496,697 
Appropriation of actuarial calculation  -  (38,329)  (38,329) 
Pension and healthcare contributions  75,737  -  75,737 
Transfers  (9,797)  9,797  - 
Amortizations  (86,160)  -  (86,160) 
As of 2008  22,066  425,879  447,945 
Appropriation of actuarial calculation  -  (61,385)  (61,385) 
Pension and healthcare contributions  82,941  -  82,941 
Transfers  11,518  (11,518)  - 
Amortizations  (94,020)  -  (94,020) 
As of 2009  22,505  352,976  375,481 

 

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d) Actuarial assessment pursuant to CVM Ruling no. 371/00

Actuarial assumptions

The actuarial assumptions used to determine the amounts of liabilities and costs for 2009 and 2008 are shown below:

  .  
  Consolidated 
  Real  Nominal 
Economics     
Inflation p.a.  -  5.20% 
Projected rate of discount/return p.a.  6.00%  11.51% 
Wage increase p.a.  2.00%  7.30% 
Demographics     
Death rate    AT - 83 
Disabled death rate    AT - 49 
Disability rate    Light 

 

Number of participants and beneficiaries:

  Pension  Healthcare 
Number of participants (1)  plan  plan 
  2009  2008  2009  2008 
Number of active participants  8,735  8,364  8,384  8,213 
Number of inactive participants  5,863  5,781  4,677  4,636 
Number of dependents  -  -  23,674  24,437 
Total  14,598  14,145  36,735  37,286 
(1) Unaudited by the independent auditors         

 

Actuarial assessment

  Pension  Healthcare  Consolidated 
Benefits plan  plan  plan  Total 
      2009  2008 
Totally or partially covered liabilities  2,915,084  476,227  3,391,311  3,067,284 
Fair value of plan's assets  (3,509,658)  (110,981)  (3,620,639)  (3,496,623) 
State of plan coverage  (594,574)  365,246  (229,328)  (429,339) 
Deferred actuarial gains  564,461  -  564,461  868,173 
  (30,113)  365,246  335,133  438,834 
Unrecognized asset  30,113  -  30,113  - 
Total liability  -  365,246  365,246  438,834 

 

In light of the Brazilian legislation on pension funds, particularly Supplemental Pension Management Council’s Rule no. 26, the Company does not record the net assets as of the end of the fiscal year.

The actuarial assessment of defined benefit plans is calculated by the projected unit credit cost method (PUC). The net assets of the benefit plan are assessed according to market values (mark to market).

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Since the year ended on December 31, 2006, COPEL has chosen to not defer future actuarial gains and losses recorded in the healthcare plan, rather recording them immediately in the statement of income.

On December 31, 2009, the balance of accumulated amounts in the defined contribution plan was R$ 1,420,320 (R$ 1,142,537 on December 31, 2008).

Changes in actuarial liabilities

Pension  Healthcare 
  plan  plan 
Current value of net actuarial liability in 2007  2,518,605  476,830 
Cost of current service  15,963  1,492 
Interest cost  282,252  52,527 
Benefits paid  (199,381)  (24,889) 
Actuarial gains (losses)  (3,742)  (52,373) 
Current value of net actuarial liability in 2008  2,613,697  453,587 
Cost of current service  20,398  1,534 
Interest cost  289,985  50,274 
Benefits paid  (200,067)  (31,672) 
Actuarial gains (losses)  191,071  2,504 
Current value of net actuarial liability in 2009  2,915,084  476,227 

 

Changes in actuarial assets

.  Pension  Healthcare 
  plan  plan 
Fair value of plan's assets as of 2007  3,255,449  114,392 
Projected return on plan assets  363,364  12,372 
Contributions and additions  4,226  62,771 
Benefits paid  (199,381)  (73,540) 
Actuarial gains (losses)  (37,332)  (5,698) 
Fair value of plan's assets as of 2008  3,386,326  110,297 
Projected return on plan assets  384,655  12,519 
Contributions and additions  14,254  63,057 
Benefits paid  (200,067)  (70,668) 
Actuarial gains (losses)  (75,510)  (4,224) 
Fair value of plan's assets as of 2009  3,509,658  110,981 

 

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Estimated costs

The estimated net periodic plan costs (gains) for 2009, according to the actuarial criteria of CVM

Ruling no. 371/00, for each plan are shown below:

  Pension  Healthcare   
  plan  plan  Consolidated 
      2010 
Cost of current service  15,760  6,179  21,939 
Estimated interest cost  311,160  47,278  358,438 
Projected return on plan assets  (393,702)  (12,776)  (406,478) 
Projected employee contributions  (14,166)  (12,695)  (26,861) 
Amortization of gains and losses  (22,422)  -  (22,422) 
Costs (revenues)  (103,370)  27,986  (75,384) 

 

24 Customer Charges Due

  Consolidated 
  2009  2008 
Energy Development Account - CDE  17,818  14,904 
Global Reversal Reserve - RGR  7,245  6,045 
Fuel Consumption Account - CCC  4,460  22,174 
  29,523  43,123 

 

25 Research and Development and Energy Efficiency

Pursuant to ANEEL regulation, power distribution, generation, and transmission utilities are required to allocate an annual share of 1% of their net operating revenues to power sector research and development and energy efficiency programs.

Through the Manuals for Research and Development and Energy Efficiency, ANEEL has established the criteria and procedures for the calculation, application, and collection by concession, permission, and authorization holders of the funds to be assigned monthly to Energy Efficiency and Research and Development projects, to the National Fund for Scientific and Technological Development (FNDCT), and to the Ministry of Mining and Energy (MME), pursuant to Law no. 9,991/00.

COPEL’s balances allocated to Research and Development and Energy Efficiency are detailed down below:

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.  Applied and  Balance to  Balance to  Balance as of  Balance as of 
  unfinished  collect  apply  2009  2008 
Research and Development - R&D           
FNDCT  -  1,325  -  1,325  18,649 
MME  -  682  -  682  9,345 
R&D  25,196  -  79,365  104,561  85,596 
  25,196  2,007  79,365  106,568  113,590 
Energy Efficiency Program - EEP  20,428  -  84,502  104,930  84,973 
  45,624  2,007  163,867  211,498  198,563 
      Current  121,005  126,484 
      Noncurrent  90,493  72,079 

 

Changes in the balances of R&D and EEP

The changes in these balances are shown below:

  FNDCT  MME    R&D    EEP Consolidated  
Balances  Current  Current  Current  Noncurrent  Current  Noncurrent  Total 
As of 2007  20,157  10,287  75,893  -  78,943  -  185,280 
Additions  14,111  7,056  14,111  -  18,338  -  53,616 
SELIC interest rate  -  -  7,818  -  6,704  -  14,522 
Tranfers  -  -  (37,509)  37,509  (34,570)  34,570  - 
Disbursements  (15,619)  (7,998)  -  -  -  -  (23,617) 
Concluded projects  -  -  (12,226)  -  (19,012)  -  (31,238) 
As of 2008  18,649  9,345  48,087  37,509  50,403  34,570  198,563 
Additions  14,831  7,415  2,900  11,933  3,023  16,182  56,284 
SELIC interest rate  -  -  1,383  5,448  1,236  5,185  13,252 
Tranfers  -  -  (18)  18  20,352  (20,352)  - 
Disbursements  (32,155)  (16,078)  -  -  -  -  (48,233) 
Concluded projects  -  -  (2,699)  -  (5,669)  -  (8,368) 
As of 2009  1,325  682  49,653  54,908  69,345  35,585  211,498 

 

26 Other Accounts Payable

  Consolidated 
  2009  2008 
Current liabilities     
Concession charge - ANEEL grant  36,576  38,649 
Financial compensation for use of water resources  19,402  17,601 
Collected public lighting charge  17,989  18,669 
Reimbursements of customer contributions  15,304  18,037 
Participation in consortia  7,309  4,833 
Collaterals  4,521  1,723 
Advance payments from customers  3,945  93 
Reparations to the Apucaraninha indian community  2,596  2,498 
Insurance companies - premiums due  2,251  3,181 
Other liabilities  11,263  9,099 
  121,156  114,383 
Noncurrent liabilities     
Reparations to the Apucaraninha indian community  2,596  4,995 
Other liabilities  357  1,679 
  2,953  6,674 

 

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27 Reserve 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, maintais a reserve for contingencies in connection with lawsuits whith problable chance of an unfavorable outcome. The balances of the Company’s reserve for contingencies, net of escrow deposits, are shown below:

Consolidated    Judicial  Net  Net 
  Contingencies  deposits  provision  provision 
      2009  2008 
Labor (a)  158,431  (23,722)  134,709  104,354 
Regulatory (b)  37,010  -  37,010  36,851 
Civil:         
Suppliers (c)  84,024  (22,822)  61,202  52,209 
Civil and administrative claims (d)  57,213  (10,568)  46,645  23,213 
Easements (e)  14,902  -  14,902  15,615 
Condemnations and real estate (e)  125,339  -  125,339  119,645 
Customers (f)  5,324  (1,426)  3,898  4,571 
Environmental claims (g)  10  -  10  - 
  286,812  (34,816)  251,996  215,253 
Tax:         
COFINS tax (Note 8.d.2)  -  -  -  178,753 
Other taxes (h)  77,858  (27,029)  50,829  58,154 
  77,858  (27,029)  50,829  236,907 
  560,111  (85,567)  474,544  593,365 

 

Parent Company    Judicial  Net  Net 
  Contingencies  deposits  provision  provision 
      2009  2008 
Regulatory claims (b)  9,249  -  9,249  9,249 
Civil claims  328  (288)  40  434 
Tax claims:         
COFINS tax (Note 8.d.2)  -  -  -  178,753 
Other taxes (h)  44,357  (27,004)  17,353  25,726 
  44,357  (27,004)  17,353  204,479 
  53,934  (27,292)  26,642  214,162 

 

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Changes in reserve for contingencies

Consolidated  Balance as of  Additions  Additions to    Balance as of 
  2008  (reversals)  p., p., &e.  Payments  2009 
Labor  129,699  53,551  4  (24,823)  158,431 
Regulatory  36,851  151  -  8  37,010 
Civil:           
Suppliers  52,209  31,815  -  -  84,024 
Civil and administrative claims  29,987  32,743  -  (5,517)  57,213 
Easements  15,615  -  4,825  (5,538)  14,902 
Condemnations and real estate  119,645  -  5,710  (16)  125,339 
Customers  5,465  128  -  (269)  5,324 
Environmental claims  -  10  -  -  10 
  222,921  64,696  10,535  (11,340)  286,812 
Tax:           
COFINS tax  178,753  (178,753)  -  -  - 
Other taxes  85,158  (7,300)  -  -  77,858 
  263,911  (186,053)  -  -  77,858 
  653,382  (67,655)  10,539  (36,155)  560,111 

 

Parent Company  Balance as of  Additions  Balance as of 
  2008  (reversals)  2009 
Regulatory  9,249  -  9,249 
Civil  434  (106)  328 
Tax:       
Cofins tax  178,753  (178,753)  - 
Other taxes  52,729  (8,372)  44,357 
  231,482  (187,125)  44,357 
  241,165  (187,231)  53,934 

 

The amount related to cases classified as reasonably possible losses, estimated by the Company and its subsidiaries as of December 31, 2009, reached R$ 1,879,460, of which R$ 110,706 correspond to labor claims; R$ 1,195,126 to regulatory claims; R$ 115,942 to civil claims; and R$ 457,686 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 33 herein, under the title “Electric Energy Trading Chamber (CCEE)”.

a) Labor claims

Labor claims comprise claims filed by former employees of COPEL in connection with the payment of overtime, hazardous working conditions, transfer bonuses, wage equality/reclassification, and other matters, and also claims by former employees of contractors (joint liability) and third-parties (secondary liability) involving reparations and other matters. They also include labor claims by retired COPEL employees against the COPEL Foundation, which will reflect on the Company.

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b) Regulatory claims

COPEL is disputing on the administrative and on the judicial level notices issued by the regulatory agency in connection with supposed regulatory violations. The main lawsuits currently in progress, in the amount of R$ 30,373, are those involving Companhia Estadual de Energia Elétrica - CEEE and Dona Francisca Energética S.A., in which ANEEL Ruling no. 288/2002 is being disputed. The likely success in these lawsuits will result in changes in CCEE accounting, which requires the constitution of a provision for these amounts, since COPEL will be required to pay off the amounts due.

c) 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 and on the current stage of the lawsuits, decided to set aside a reserve for contingencies in the original amount of the debt, restated according to the original contractual terms, which amounted to R$ 84,024 as of December 31, 2009.

d) Civil and administrative claims

These claims usually involve reparations for accidents involving power grids and vehicle accidents.

e) 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.

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Ivaí Engenharia de Obras S.A.

In a lawsuit filed by Ivaí Engenharia de Obras S.A., COPEL Geração e Transmissão 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 set aside a reserve for contingencies in the amount of R$ 113,795, in light of the evaluation conducted by its Chief Legal Office, which estimates that a loss is probable.

f) Customer claims

These claims usually involve reparations for damage to electric appliances, moral damages on account of service-related issues (such as suspension of supply), and lawsuits filed by industrial customers disputing the legality of a rate increase during the Brazilian Government’s “Cruzado Plan” period and pleading refunds. COPEL set up a provision based on the supposed discrepancy in the rates charged to industrial customers from March through November 1986, plus financial charges, in an amount believed to be sufficient to cover probable losses.

g) Environmental claims

Environmental claims involving COPEL and its subsidiaries usually comprise class actions whose goal is to stop the environmental licensing process for new projects or the recovery of permanent protection areas around power plant reservoirs which have been illegally used by individuals. COPEL estimates that unfavorable outcomes would result only in the cost of new environmental studies and of the recovery of Company-owned land.

Furthermore, COPEL had on December 31, 2009 commitments to environmental agencies in the amount of R$ 89,541 (R$ 17,674 as of 2008), which shall be realized over the next few years, so that this amount will mostly be incorporated into the Company's property, plant, and equipment as disbursements are made, thus significantly reducing the risk of environmental damage.

h) Other taxes

1) Service Tax (ISS)

These claims involve tax penalties imposed on COPEL for not having withheld service tax on the services rendered to the Company by third-parties.

81


2) Value-Added Tax on Sales and Services (ICMS)

The majority of the discussions involve the filing of a judicial claim by the Group A consumers against the inclusion of the contracted demand in the calculation basis of ICMS. However, in almost all of these judicial claims, the judiciary has removed the Company from the defendant position of the demand and maintains the State of Paraná as legitimate defendant to respond for the possible incorrect collection of ICMS amounts on the contracted demand of electric energy.

3) Urban Real Estate Tax (IPTU)

COPEL is disputing both administratively and judicially the levy of IPTU charges on its concession-related properties, on grounds that these are tax exempt. In fact, the Company has been successful in some cases of tax executions filed by State municipalities against it.

4) Social Security Contributions

COPEL is party to a wide range of administrative and judicial proceedings involving social security contributions. Most claims, however, involve COPEL’s joint liability for the collection of social security contributions levied on services rendered by third-parties.

5) Rural Real Estate Tax (ITR)

The discussions on ITR involve, basically, the questioning of the incidence of this tax on the flooded areas resulting from the construction of hydroelectric plants, as well as on the areas currently in possession of people settled due to the Resettling Programs which are, also, due to the construction of hydroelectric plants.

6) Contribution for Intervention in the Economic Domain (CIDE/FUST/FUNTTEL)

The Company has filed administrative claims disputing Assessment Notices issued by the National Telecommunications Agency (ANATEL) and by the Ministry of Communications, on account of supposed balances owed from 2001 to 2006 to the Telecommunications Universalization Fund (FUST) and to the Telecommunications Technology Development Fund (FUNTTEL). COPEL Telecommunications has argued that the basis for calculation of these charges is correct, pursuant to the applicable legislation, so that no outstanding balances exist.

28 Shareholders' Equity

a) Share capital

As of December 31, 2009, 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:

82


  In 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 
Stock Exchanges                 
BM&FBOVESPA (1)  19,465,551  13.42  127,327  32.25  60,515,455  47.19  80,108,333  29.27 
NYSE (2)  152,436  0.11  -    40,077,562  31.26  40,229,998  14.70 
Latibex (3)  -  -  -  -  301,167  0.23  301,167  0.11 
Municipalities  178,393  0.12  12,797  3.24  -  -  191,190  0.07 
Other shareholders  376,553  0.25  254,717  64.51  39,625  0.03  670,895  0.25 
  145,031,080  100.00  394,841  100.00  128,229,454  100.00  273,655,375  100.00 
(1) São Paulo Stock Exchange
(2) New York Stock Exchange
(3) Latin American Securities Market in Euros, linked to the Madrid Stock Exchange

 

Each share entitles its holder to one vote in the general shareholders’ meetings. Preferred shares, which do not carry voting rights, are divided into classes A and B.

Class “A” preferred shares 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.

Class “B” preferred shares have priority in the reimbursement of capital and the right to the distribution of minimum dividends, calculated as 25% of adjusted net income, pursuant to the corporate legislation and to the Company’s by-laws, calculated proportionately to the capital represented by the shares of this class. 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 Federal Law 6,404/76, dividends paid to preferred shares must be at least 10% higher than those paid to common shares.

83


b) Shareholder Breakdown

COMPANHIA PARANAENSE DE ENERGIA - COPEL As of 31/12/2008
(In shares) 

SHAREHOLDING POSITION OF THE HOLDERS OF MORE THAN 5% OF EACH CLASS OF STOCK (ENTITIES AND INDIVIDUALS)
 
      Class A Preferred  Class B Preferred     
  Common Shares  Shares  Shares  Total
 SHAREHOLDER  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. It holds a shareholders' agreement with the State Government.

 

COMPANHIA PARANAENSEDE ENERGIA -COPEL As of 31/12/2009
(In shares) 

SHAREHOLDING POSITION OF THE HOLDERS OF MORE THAN 5% OF EACH CLASS OF STOCK (ENTITIES AND INDIVIDUALS)
 
      Class A Preferred  Class B Preferred     
  Common Shares  Shares  Shares Total 
SHAREHOLDER                 
  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 
CREDIT SUISSE HEDGING-GRIFFO CV S.A                 
(FUNDS)  9,774,900  6.74  -  -  175,830  0.14  9,950,730  3.64 
BLACKROCK INC. (FUNDS)  -  -  -  -  7,817,189  6.10  7,817,189  2.86 
TREASURY STOCK  -  -  -  -  -  -  -  - 
OTHER SHAREHOLDERS  11,928,807  8.23  394,841  100.00  92,940,790  72.47  105,264,438  38.47 
TOTAL  145,031,080  100.00  394,841  100.00  128,229,454  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. It holds a shareholders' agreement with the State Government.

 

84


COMPANHIA PARANAENSEDE ENERGIA -COPEL As of 31/12/2008
(In shares) 

CONSOLIDATED SHAREHOLDING POSITION OF THE MAJORITY SHAREHOLDERS AND SENIOR MANAGEMENT OF THE COMPANY AND FREE-FLOATING STOCK
      Class A Preferred  Class B Preferred     
  Common Shares  Shares  Shares Total 
SHAREHOLDERS                 
  Shares  %  Shares  %  Shares  %  Shares  % 
MAJORITY SHAREHOLDER  123,327,373  85.04  -  -  27,295,645  21.29  150,623,018  55.04 

S. MANAGEMENT
  BOARD OF DIRECTORS 9  -  -  -  -  -  9  - 
               
 
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  100,930,473  78.71  123,032,246  44.96 

 

COMPANHIA PARANAENSEDE ENERGIA -COPEL As of 31/12/2009 
(In shares) 

CONSOLIDATED SHAREHOLDING POSITION OF THE MAJORITY SHAREHOLDERS AND SENIOR MANAGEMENT OF THE COMPANY AND FREE- FLOATING STOCK
      Class A Preferred  Class B Preferred     
  Common Shares  Shares  Shares Total 
SHAREHOLDERS                 
  Shares  %  Shares  %  Shares  %  Shares  % 
MAJORITY SHAREHOLDER  123,327,373  85.04  -  -  27,295,645  21.29  150,623,018  55.04 

S. MANAGEMENT
  BOARD OF DIRECTORS 9  -  -  -  -  -  9  - 
               

 BOARD OF OFFICERS 		 102  -  -  -  -  -  102  - 
FISCAL COUNCIL  -  -  -  -  -  -  -  - 
TREASURY STOCK  -  -  -  -  -  -  -  - 
OTHER SHAREHOLDERS  21,703,596  14.96  394,841  100.00  100,933,809  78.71  123,032,246  44.96 
TOTAL  145,031,080  100.00  394,841  100.00  128,229,454  100.00  273,655,375  100.00 
FREE-FLOAT  21,703,596  14.96  394,841  100.00  100,933,809  78.71  123,032,246  44.96 

 

c) Capital reserves

   
  Parent Company 
  2009  2008 
Contributions and grants for investments  702  702 
Recoverable Rate Deficit Account (CRC)  790,555  790,555 
Tax incentives - FINAM  47,083  47,083 
  838,340  838,340 

 

85


d) Profit reserves

   
  Parent Company 
  2009  2008 
Legal reserve  428,912  377,590 
Investment reserve  3,102,809  2,377,157 
  3,531,721  2,754,747 

 

The legal reserve is made of 5% of the net income for the fiscal year, before any distributions, limited to 20% of share capital.

The investment reserve is designed to cover the Company’s program of expenditures in property, plant, and equipment, pursuant to article 196 of the Brazilian Corporate Law. It is funded by retaining any remaining net income for the fiscal year, after the legal reserve and interest on capital are assigned.

e) Proposed distribution of dividends

.     
  Parent Company 
  2009  2008 
Net income for the fiscal year  1,026,433  1,078,744 
Tax effects on COPEL for distributing interest on capital  (78,200)  (77,520) 
Net income for the year net of the tax effects of     
interest on capital  948,233  1,001,224 
Theoretical legal reserve out of the above income  (47,412)  (50,061) 
Basis for calculation of minimum dividends  900,821  951,163 
Mandatory minimum dividends (25%)  225,205  237,791 
Income tax withheld (IRRF) on interest on capital  24,254  24,043 
Adjusted minimum dividend, incl. effects of income tax withheld (IRRF)  249,459  261,834 
Suitable return on capital  230,000  228,000 
Distribution of dividends  19,459  33,834 
Distributed dividends allocated to:     
Common shares  126,126  132,398 
Class A preferred shares  644  648 
Class B preferred shares  122,689  128,788 
Dividends per share:     
Common shares  0.86965  0.91289 
Class A preferred shares  1.62979  1.62979 
Class B preferred shares  0.95679  1.00438 

 

Interest on capital is recorded in interest expenses and, for the presentation purposes of the financial statements, is shown as an allocation of the net income for the fiscal year. In the statement of income, its reversal was made under a specific item in financial expenses, as required by CVM.

On October 29, 2009, the 126th Meeting of the Board of Directors approved the payment of interest on capital in lieu of dividends, up to the legal limit, by the wholly-owned subsidiaries to the parent company, and by the parent company to its shareholders, after the General Shareholders' Meeting in the first four months of 2010, or before then, should the Board of Officers so choose.

86


The Board of Officers, at a meeting on November 11, 2009, decided to start payment of advance interest on capital in lieu of dividends for fiscal year 2009 on December 7, 2009, to shareholders who held shares on November 12, 2009. This payment amounted to R$ 168,000, pursuant to Law no. 9,249/95, and will be deducted from the annual dividends for 2009, once they're determined.

29 Operating Revenues

.     
  Consolidated 
  2009  2008 
Electricity sales to final customers     
Residential  1,071,740  935,934 
Industrial  1,107,740  1,069,201 
Commercial, services, and other activities  697,997  622,046 
Rural  135,520  123,071 
Public agencies  95,853  86,334 
Public lighting  73,883  67,005 
Public services  67,902  63,403 
Network charge adjustment share  3,052  1,886 
  3,253,687  2,968,880 
Electricity sales to distributors     
Agreements for Power Trade on the Regulated Market - CCEAR (auction)  1,098,636  818,585 
Bilateral contracts  197,207  496,380 
Electric Energy Trading Chamber - CCEE  98,963  48,129 
  1,394,806  1,363,094 
Charges for the use of the transmission grid     
Rate for the use of the distribution system (TUSD)     
Residential  1,142,061  1,054,150 
Industrial  1,030,657  1,043,588 
Commercial, services, and other activities  748,765  687,563 
Rural  144,807  138,138 
Public agencies  102,078  96,529 
Public lighting  78,839  74,943 
Public services  72,440  70,925 
Consumidores livres  138,706  150,605 
Basic Network and Basic Network Connections  168,945  140,503 
Connection grid  2,720  3,439 
Basic Network charge adjustment share  5,951  12,715 
  3,635,969  3,473,098 
.     
Revenues from telecommunications  104,844  80,604 
.     
Distribution of piped gas  261,325  283,709 
Other operating revenues     
Leases and rents  97,696  95,316 
Revenues from services  38,040  30,445 
Charged service  9,179  9,316 
Other revenues  1,130  933 
  146,045  136,010 
  8,796,676  8,305,395 

 

87


a) Basic Network – rate for the use of the transmission system (TUST)

Transmission companies are entitled to Annual Allowed Revenues (RAP), whose initial amounts and adjustment criteria are set forth in the companies' concession agreements. COPEL Generation and Transmission holds four transmission concession agreements, with different rate review criteria and revenue structures.

Concession Agreement no. 060/2001 covers the concession for the public service of power transmission comprising the facilities in operation as of December 31, 1999, collectively named Existing Basic Network (RBSE), and the facilities and network upgrades authorized by ANEEL since then, collectively named New Facilities of the Basic Network (RBNI). In addition to the basic network, this agreement grants COPEL the operation of facilities collectively named Other Transmission Facilities (DITs) and the sharing of facilities with other transmission utilities. This concession has a 20-year term from the date of publication of Law no. 9,074/1995 and expires on July 7, 2015. The current agreement features a rate review clause which covers only the new authorized facilities, while the revenues from the existing system are isolated, i.e., they will not be increased until the expiration of the concession, but only restated according to the IGP-M inflation index.

Transmission Concession Agreement no. 075/2001, granted to the Company on August 7, 2001, covers the concession the implementation of the 230-kV transmission line between the Bateias substation, in Campo Largo, and the Jaguariaíva substation, the respective line inputs, and other facilities required for the operation of the line. This concession has a 30-year term from the date of signature of the agreement, i.e., it expires on August 17, 2031, but may be extended for another 30 years, at ANEEL’s discretion. This agreement does not include a rate review clause, and its allowed revenues are restated annually according to the IGP-M index.

On March 17, 2008, COPEL signed with ANEEL Concession Agreement no. 006/2008, covering the 230-kV transmission line between the Bateias and Pilarzinho substations in Curitiba. The agreement has a 30-year term and provides for rate review in the 5th, 10th, and 15th year after signature. In the years between rate reviews, its allowed revenues will be restated according to the IPCA inflation index. The facility became commercially operational on September 12, 2009.

On November 19, 2009, COPEL signed concession agreement no. 27/2009 with ANEEL, for the concession to build the 525-kV transmission line connecting the Foz do Iguaçu substation and the Cascavel-West substation. This project is currently under construction and is scheduled to enter operation two years from the signature of the concession agreement.

88


30 Deductions from Operating Revenues

.     
  Consolidated 
  2009  2008 
Taxes and social contributions on revenues     
VAT (ICMS)  1,802,096  1,600,758 
COFINS  677,458  642,930 
COFINS - Tax Recovery Program (Note 8.d)  25,765  - 
PIS/PASEP  147,162  139,579 
PIS/PASEP - Tax Recovery Program (Note 8.d)  5,594  - 
ISSQN  1,786  1,834 
  2,659,861  2,385,101 
Customer charges     
Energy Development Account (CDE)  204,186  189,561 
Fuel Consumption Account (CCC)  180,148  153,208 
Global Reversal Reserve (RGR)  78,560  64,877 
Research and development and energy efficiency -R&D and EEP  56,284  53,616 
Other  326  254 
  519,504  461,516 
  3,179,365  2,846,617 

 

31 Operating Costs and Expenses

Consolidated operating costs and expenses are broken down below:

  Costs of    General and  Other   
Nature of costs and expenses  goods and/or  Sales  administrative  rev. (exp.),  Consolidated 
  services  expenses  expenses  net  Total 
          2009 
Electricity purchased for resale (a)  (1,681,876)  -  -  -  (1,681,876) 
Charges for use of power grid (b)  (609,649)  -  -  -  (609,649) 
Personnel and management (c)  (630,037)  (4,764)  (167,749)  -  (802,550) 
Pension and healthcare plans (Note 23)  (13,479)  (321)  (377)  -  (14,177) 
Materials and supplies (d)  (58,390)  (2,862)  (6,679)  -  (67,931) 
Raw materials and supplies for power generation  (21,231)  -  -  -  (21,231) 
Natural gas and supplies for the gas business  (135,353)  -  -  -  (135,353) 
Third-party services (e)  (228,536)  (25,137)  (52,435)  -  (306,108) 
Depreciation and amortization  (363,597)  (10)  (24,111)  (3,830)  (391,548) 
Provisions and reversals (f)  -  (16,448)  -  67,655  51,207 
Other costs and expenses (g)  (23,962)  3,976  (136,875)  (133,957)  (290,818) 
  (3,766,110)  (45,566)  (388,226)  (70,132)  (4,270,034) 

 

89


  Costs of    General and  Other   
Nature of costs and expenses  goods and/or  Sales  administrative  rev. (exp.),  Consolidated 
  services  expenses  expenses  net  Total 
          2008 
Electricity purchased for resale (a)  (1,615,086)  -  -  -  (1,615,086) 
Charges for use of power grid (b)  (466,652)  -  -  -  (466,652) 
Personnel and management (c)  (531,031)  (3,652)  (139,144)  -  (673,827) 
Pension and healthcare plans (Note 23)  (25,737)  (280)  (3,999)  -  (30,016) 
Materials and supplies (d)  (49,175)  (2,999)  (5,300)  -  (57,474) 
Raw materials and supplies for power generation  (19,274)  -  -  -  (19,274) 
Natural gas and supplies for the gas business  (163,846)  -  -  -  (163,846) 
Third-party services (e)  (190,269)  (22,867)  (55,112)  -  (268,248) 
Depreciation and amortization  (376,789)  (13)  (22,321)  (5,620)  (404,743) 
Provisions and reversals (f)  -  5,824  -  (104,718)  (98,894) 
Other costs and expenses (g)  (35,583)  (5,782)  (31,036)  (141,677)  (214,078) 
  (3,473,442)  (29,769)  (256,912)  (252,015)  (4,012,138) 

 

Parent Company operating costs and expenses are broken down below:

  General and  Other  Parent 
Nature of costs and expenses  administrative  rev. (exp.),  Company 
  expenses  net  Total 
      2009 
Management (c)  (7,083)  -  (7,083) 
Pension and healthcare plans  (222)  -  (222) 
Materials and supplies  (13)  -  (13) 
Third-party services (e)  (4,338)  -  (4,338) 
Depreciation and amortization  -  (754)  (754) 
Provisions and reversals (f)  -  187,231  187,231 
Other expenses  (63,484)  591  (62,893) 
  (75,140)  187,068  111,928 
 
 
  General and  Other  Parent 
Nature of costs and expenses  administrative  rev. (exp.),  Company 
  expenses  net  Total 
      2008 
Management (c)  (5,965)  -  (5,965) 
Healthcare plan  (140)  -  (140) 
Materials and supplies  (14)  -  (14) 
Third-party services (e)  (3,909)  -  (3,909) 
Depreciation and amortization  -  (63)  (63) 
Provisions and reversals (f)  -  (8,246)  (8,246) 
Other expenses  (3,337)  (31,552)  (34,889) 
  (13,365)  (39,861)  (53,226) 

 

90


a) Electricity purchased for resale

.     
  Consolidated 
  2009  2008 
Eletrobrás - Centrais Elétricas Brasileiras S.A. (Itaipu)  478,383  502,417 
Furnas Centrais Elétricas S.A. - auction  322,514  295,615 
Companhia Hidro Elétrica do São Francisco - Chesf - auction  305,207  283,870 
Itiquira Energética S.A.  116,195  107,894 
Companhia Energética de São Paulo - Cesp - auction  115,162  104,722 
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte - auction  99,748  92,794 
Câmara de Comercialização de Energia - CCEE  81,902  148,635 
CPFL Energia S.ª - auction  74,927  8,828 
Program for incentive to alternative energy sources - Proinfa  63,764  63,239 
Dona Francisca Energética S.A.  60,303  55,496 
Companhia Energética de Minas Gerais - Cemig - auction  58,578  42,877 
Cia. Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE - auction  34,773  32,472 
Power purchased for resale - CVA  (100,204)  (71,990) 
(-) Pasep/Cofins taxes on power purchased for resale  (203,370)  (172,759) 
Other utilities - auction  173,994  120,976 
  1,681,876  1,615,086 

 

b) Charges for the use of the main transmission grid

.     
  Consolidated 
  2009  2008 
Furnas Centrais Elétricas S.A.  123,697  113,415 
System Service Charges - ESS  95,468  71,261 
Cia. Transmissora de Energia Elétrica Paulista - Cteep  65,323  60,477 
Companhia Hidro Elétrica do São Francisco - Chesf  59,594  56,193 
Eletrosul Centrais Elétricas S.A.  44,790  39,651 
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte  42,975  40,518 
Companhia Energética de Minas Gerais - Cemig  25,037  20,255 
TSN Transmissora Nordeste Sudeste de Energia S.A.  19,795  18,477 
Novatrans Energia S.A.  19,521  18,722 
National System Operator - ONS  19,206  16,429 
Cia. Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE  17,457  16,217 
Empresa Amazonense de Transmissão de Energia - Eate  16,545  15,344 
ATE II Transmissora de Energia S.A.  8,407  8,018 
Empresa Norte de Transmissão de Energia S.A. - Ente  8,403  7,858 
Itumbiara Transmissora de Energia Ltda  7,990  7,611 
Expansion Transmissora de Energia Elétrica S.A.  7,649  7,253 
Empresa Transmissora de Energia Oeste Ltda - Eteo  6,759  6,381 
STN Sistema de Transmissão Nordeste S.A  6,740  6,386 
NTE Nordeste Transmissora de Energi S.A  5,905  5,570 
ATE Transmissora Energia S.A  5,508  5,279 
Integração Transmissão Energia - INTESA  4,679  2,921 
ATE III Transmissora de Energia S.A  4,381  2,641 
Arthemis Transmissora de Energia S.A  3,583  3,411 
(-) Pasep/Cofins taxes on charges for use of power grid  (54,959)  (62,676) 
CVA - charges  (13,216)  (64,319) 
Other utilities  58,412  43,359 
  609,649  466,652 

 

91


c) Personnel and management expenses

  Parent Company  Consolidated 
  2009  2008  2009  2008 
Personnel         
Wages and salaries  -  -  530,168  476,552 
Social charges on payroll  -  -  171,319  153,999 
  -  -  701,487  630,551 
Profit sharing (1)  -  -  64,995  65,816 
Meal assistance and education allowance  -  -  55,695  49,078 
Provision (rev) for compensation - volunt. red./retirement(2)  -  -  24,291  (825) 
Compensation - volunt. redundancy/retirement(2)      16,702  - 
Compensation - PDV (2)  -  -  15,859  - 
  -  -  879,029  744,620 
(-) Transfers to construction in progress  -  -  (86,567)  (80,043) 
  -  -  792,462  664,577 
Management         
Wages and salaries  5,657  4,806  8,473  7,705 
Social charges on payroll  1,426  1,159  1,770  1,716 
Other expenses  -  -  24  - 
  7,083  5,965  10,267  9,421 
(-) Transfers to construction in progress  -  -  (179)  (171) 
  7,083  5,965  10,088  9,250 
  7,083  5,965  802,550  673,827 

 

1) Profit sharing

Since 1996, the Company has carried out an employee profit sharing program, which is paid to the extent previously established operational and financial goals are met. The amount of profit sharing has been accrued as follows:

  Consolidated 
  2009  2008 
Copel Geração e Transmissão  14,721  16,289 
Copel Distribuição  46,102  45,580 
Copel Telecomunicações  3,528  3,534 
Compagas  644  413 
  64,995  65,816 

 

2) Voluntary Redundancy and Retirement Incentive Programs

On December 14, 2009, Company management launched, effective as of that date, a Voluntary Redundancy Program (PDV), which provides special compensation to employees who have been with the Company for at least 10 years, who have obtained Social Security retirement benefits, and who choose to resign from the Company.

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The deadline for applications by employees who had been granted retirement benefits by INSS until December 14, 2009 expired on January 13, 2010, and the deadline for employees who are granted INSS retirement benefits as of December 15, 2009 expires 30 days from COPEL's receipt of retirement confirmation letters from INSS.

The termination timeframe from employees who had been granted retirement benefits by INSS until December 14, 2009 was March 1 to March 15, 2010, and the timeframe for employees who are granted INSS retirement benefits as of December 15, 2009 runs from the first to the 15th day of the first month after application to the program.

Employees who quit by December 2009 under the voluntary redundancy programs launched in January 2009 received supplemental compensation pursuant to the new rules created on December 14, 2009.

d) Materials and Supplies

  Consolidated 
  2009  2008 
Fuel and vehicle parts  22,586  21,565 
Materials for the electric system  18,517  13,573 
Cafeteria supplies  6,179  5,048 
Office supplies  5,849  5,160 
Materials for civil construction  3,782  3,320 
Tools  2,763  1,529 
Safety supplies  2,269  2,211 
IT equipment  1,635  725 
Lodging supplies  1,049  997 
Other materials  3,302  3,346 
  67,931  57,474 

 

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e) Third-Party Services

.         
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Transmission grid  -  -  74,986  57,830 
Technical, scientific, and adm. Consulting  1,382  1,119  25,437  22,886 
Postal services  -  1  24,960  22,683 
Authorized and registered agents  -  -  21,274  19,605 
Telephone services  -  -  16,243  15,513 
Administrative support services  -  -  15,889  15,202 
Data processing and transmission  -  -  15,708  20,032 
Security  -  -  14,589  12,648 
Travel  52  167  13,139  11,340 
Meter reading and bill delivery  -  -  11,003  7,918 
Personnel training  -  1  8,678  7,680 
Upkeep of right of way areas  -  -  8,316  5,235 
Civil maintenance services  -  -  8,015  5,619 
Services in "green areas"  -  -  5,735  5,069 
Customer service  -  -  5,707  4,365 
Vehicle maintenance and repairs  -  -  4,498  4,012 
Cargo shipping  -  -  3,854  2,980 
Satellite communications  -  -  3,722  4,948 
Telephone operator  -  -  3,133  2,604 
Auditing  2,173  2,077  3,097  2,803 
Advertising  356  349  1,434  1,504 
Other services  375  195  16,691  15,772 
  4,338  3,909  306,108  268,248 

 

f) Allowance and reversals

  Parent Company  Consolidated 
  2009  2008  2009  2008 
Provision (reversals) for doubtful accounts         
Customers and distributors (Note 6)  -  -  15,398  (3,583) 
Third-party services and other credits  -  -  1,050  (2,241) 
  -  -  16,448  (5,824) 
Provision (reversals) for contingencies (Note 27)         
Labor  -  -  53,551  51,786 
Regulatory  -  9,249  151  34,690 
Suppliers  -  -  31,815  2,255 
Civil and administrative law  (106)  418  32,743  17,387 
Customers  -  -  128  (1,048) 
Environmental  -  -  10  (163) 
COFINS tax  -  7,140  -  7,140 
Other taxes  (8,372)  (8,561)  (7,300)  (7,329) 
  (8,478)  8,246  111,098  104,718 
Reversal of Contingencies - Tax Recovery Program         
COFINS Lawsuit - Law no. 11941/09 (Note 8.d)  (178,753)  -  (178,753)  - 
  (178,753)  -  (178,753)  - 
  (187,231)  8,246  (51,207)  98,894 

 

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g) Other operating costs and expenses

.         
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Financial compensation for use of water resources  -  -  80,227  86,513 
Taxes  7  2,473  11,212  10,930 
Taxes - Tax Recovery Program (Note 8.d)  61,872  -  61,872  - 
Reparations  698  -  51,705  5,164 
Concession charge - ANEEL grant (1)  -  -  35,905  45,710 
Losses in the decommissioning and disposal of assets  -  -  32,984  6,829 
ANEEL inspection fee  -  -  15,403  17,821 
Leases and rents (2)  164  155  13,707  12,799 
Insurance  -  1  6,868  6,118 
Own energy consumption  -  -  5,868  5,678 
Donations - Rouanet Law and fund for the rights of children and teenagers - FIA  -  -  5,897  7,312 
Advertising  -  -  3,464  3,633 
Provision (reversal) for devaluation of tax incentives  733  23,902  733  23,902 
Recovery of costs and expenses  -  (27)  (41,760)  (39,967) 
Other costs and expenses (revenues), net  (581)  8,385  6,733  21,636 
  62,893  34,889  290,818  214,078 

 

1) Concession charges – ANEEL grant

These are charges for the concession of Use of Public Property (Uso de Bem Público or UBP) in connection with the start of operation of the Santa Clara Hydroelectric Power Plant (Elejor), which are recorded under liabilities, proportionately to the actual number of days until the respective collection month and the expiration date of the concession.

As compensation for the use of the public property under this concession contract, ELEJOR shall pay to the Federal Government, from the 6th until the 35th year of the concession, or as long as it runs the corresponding hydropower projects, monthly installments equivalent to 1/12 of the annual proposed payment of R$ 19,000, pursuant to the Bidding Confirmation.

These installments are restated annually or at the legally applicable intervals, according to the IGP-M inflation index, starting in May 2001.

The main amount on the date of signature of the concession contract was R$ 570,000. This amount, restated monthly according to the IGP-M inflation index, totaled R$ 1,130,521, distributed as follows:

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  Consolidated 
  Nominal Value  Present Value 
Payments made until December 2009  107,512  107,512 
2010  37,918  36,356 
2011  36,712  32,477 
2012  36,712  29,968 
2013  36,712  27,653 
After 2013  874,955  277,972 
  1,130,521  511,938 

 

The calculation of present value was made taking into account an actual net discount rate of around 8% p.a., compatible with the estimated long-term rate and not tied to the expected rate of return of the project.

In 2009, the Company recorded to income the amount of R$ 35,905 (R$ 45,710 in 2008). The current concession was granted on October 23, 2001, with contract signature on October 25, 2001 and final date on October 25, 2036.

2) Leases and rents

  Consolidated 
  2009  2008 
Facilities  12,100  9,668 
Copying machines  3,353  3,408 
Other  699  775 
(-) PIS and COFINS credits  (1,262)  (345) 
(-) Transfers to p.,p.,&e. in progress  (1,183)  (707) 
  13,707  12,799 

 

COPEL’s estimate for expenses with property rentals in 2010 is basically the same as 2009, plus two properties located in Curitiba and the contractual monetary restatement rates; there are no risks in connection with contract rescission. (1)

Of the total R$ 12,100 spent in rental properties, R$ 8,300 refer to the rental of the Km 3 Center facilities, signed by COPEL and the COPEL Foundation, and which is the most significant rental agreement held by the Company. In future periods, this amount will be restated according to a real estate appraisal of the property.

(1) Information unaudited by the independent auditors.

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32 Financial Income (Losses)

.         
  Parent Company  Consolidated 
  2009  2008  2009  2008 
Financial revenues         
Income from financial investments  47,868  36,313  171,821  205,046 
Income from CRC transferred         
to State Government (Note 7.b)  -  -  83,834  79,539 
Penalties on overdue bills  -  -  59,420  55,096 
Interest on taxes paid in advance  6,596  4,247  27,168  10,113 
Return on Portion A (CVA)  -  -  22,343  11,630 
Fines  -  -  9,407  11,879 
Interest and commissions on loan agreements  77,770  63,908  -  - 
Monetary variation of CRC transferred         
to State Government (Note 7.b)  -  -  (18,196)  110,050 
Other financial revenues  1,658  2,960  10,121  5,267 
  133,892  107,428  365,918  488,620 
(-) Financial expenses         
Debt charges  96,553  137,235  149,134  210,136 
Interest - Tax Recovery Program (Note 8.d)  73,555  -  90,164  - 
PIS/PASEP-COFINS on interest on capital  39,085  35,331  39,644  36,198 
Interest on R&D and EEP  -  -  13,252  14,522 
IOF tax  -  65  9,619  8,354 
Penalties - Tax Recovery Program (Note 8.d)  1,238  -  2,476  - 
Interest on tax installments  1,321  -  2,092  - 
Return on Portion A (CVA)  -  -  1,966  9,489 
Late fees, tax penalties, and other penalties  -  -  1,438  8,977 
Monetary and exchange variations  4  1  (10,434)  68,341 
Other financial expenses  1  1  943  38,240 
  211,757  172,633  300,294  394,257 
  (77,865)  (65,205)  65,624  94,363 

 

33 Spot Market (CCEE)

The Wholesale Energy Market or 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.

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), currently CCEE, in 2000, 2001, and the first quarter of 2002. These figures 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.

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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 by the regulatory agency, only to fulfill contractual obligations to customers on the southeastern market. The estimated amount of discrepancies in calculation was approximately R$ 1,176,000 (restated as of December 31, 2009), 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)

To make up for the supply under the terminated agreement with CIEN, COPEL has participated in all power sale mechanisms under the applicable legislation, pursuant to MME Ordinance no. 294/2006. The shortage of offer by power generators at the auctions of power from existing facilities (A-1) in 2007 and 2008, however, has not allowed COPEL to fully make up for the lost supply under the CIEN contract.

COPEL’s participation in adjustment auctions and the Mechanism for the Offsetting of Surpluses and Deficits (MCSD), however, has allowed the Company to partially make up for the CIEN volume, so that it will be able to fully meet the projected demand for 2009, 2010, 2011, and 2012.

In 2008, COPEL had already made up for a part of the CIEN volume through the 2008 A-5 auction of power from new projects and a contract with the Jirau Power Plant, starting in 2013.

b) Current transactions at CCEE(1)

The accumulated balances of transactions carried out by the Company are:

  Copel           
  Geração e  Copel    UEG     
  Transmissão  Distribuição  Elejor  Araucária  Consolidated 
          2009  2008 
Current assets (Note 6)             
As of December 2008  642  14  -  105  761  9,931 
From January through March 2009  225  -  -  -  225  - 
From July through September 2009  10,095  747  -  -  10,842  - 
From October through December 2009  27,758  140  883  -  28,781  - 
  38,720  901  883  105  40,609  9,931 
Current liabilities (Note 21)             
As of December 2008  -  -  -  -  -  27,976 
From October through December 2009  -  1,859    -  1,859  - 
  -  1,859  -  -  1,859  27,976 

 

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c) Changes in the CCEE balances (1)

  Amount to      Amount to 
  be settled  Settlement  Appropriation  be settled 
  2008      2009 
Current assets         
As of December 2008  9,931  (8,824)  (346)  761 
From January to March 2009  -  (23,024)  23,249  225 
From July to September 2009  -  (19,613)  30,455  10,842 
From October to December 2009  -  (9,151)  37,932  28,781 
  9,931  (60,612)  91,290  40,609 
(-) Current liabilities         
Up to December 2008  27,976  (32,584)  4,608  - 
From January to March 2009  -  (36,338)  36,338  - 
From April to June 2009  -  (30,223)  30,223  - 
From July to September 2009  -  (649)  649  - 
From October to December 2009  -  -  1,859  1,859 
  27,976  (99,794)  73,677  1,859 
Net total  (18,045)  39,182  17,613  38,750 
(1) Information unaudited by the independent auditors.

 

34 Financial Instruments

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

a) Market Value of Financial Instruments

The market values of the Company’s main financial instruments as of December 31, 2009, which are close to their carrying values, are shown below:

Financial Instruments       
Consolidated  Market Value  Book Value 
  2009  2009  2008 
Cash and cash in equivalents  1,696,152  1,696,152  1,813,576 
Accounts receivable from government agencies  132,191  132,191  172,854 
CRC transferred to State Government  1,254,574  1,254,574  1,319,903 
Bonds and securities  119,064  119,062  69,065 
Collaterals and escrow deposits - bonds as security  113,310  113,308  150,761 
Loans and financing  865,842  865,842  867,517 
Debentures  795,784  807,579  997,116 
Eletrobrás (Itaipu)  80,104  80,104  100,040 
Petrobras (Compagas)  23,166  23,166  36,775 

 

1) The market values of quotas in investment funds was calculated according to criteria established by the respective by-laws and ratified by the managing banks.

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2) The market value of the Company’s debentures was calculated according to the Unit Price quote on December 31, 2009, obtained from the National Association of the Financial Market Institutions (ANDIMA), and the value of ELEJOR’s debentures was obtained from C&D Distribuidora de Títulos e Valores Mobiliários.

b) 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 mitigate 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.

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.

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 passed on to customers 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 Company's results. Compagas continually negotiates with its customers, trying whenever possible to pass these costs on to them.

The Company’s exposure to foreign currency risk is shown below:

      Net 
Foreign Currency  Assets  Liabilities  exposure 
      2009 
Collaterals and escrow deposits  24,195  -  24,195 
Loans and financing  -  (92,643)  (92,643) 
Suppliers       
Eletrobrás (Itaipu)  -  (80,104)  (80,104) 
Petrobras (Compagas)  -  (23,166)  (23,166) 
  24,195  (195,913)  (171,718) 

 

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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.

According to the 2009 Annual Power Operation Plan, published annually at www.ons.org.br, the National System Operator projects a comfortable situation in terms of supply to the power market over the next 5 years, from May 2009 until December 2013, based on the probability analyses used in this kind of study. The criteria for guarantee of supply established by the National Power Policy Council (CNPE) (risk of power deficit below 5%) is easily met in all regions of Brazil during this five-year period)(1).

(1) Information unaudited by the independent auditors.

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 Mining and Energy (MME) 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.

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7) Financial Instruments - Derivatives

Pursuant to CVM Ruling no. 550, dated October 17, 2008, COPEL reviewed its transactions and did not identify any derivative instruments.

8) Risk of failure to observe the construction schedule under Concession Contract no. 001/2007 – MME – Mauá Power Plant

In the event of failure to observe the construction schedule for the Mauá Power Plant, the members of Consórcio Energético Cruzeiro do Sul are subject to the penalties established in the applicable legislation, particularly those established under ANEEL resolutions. In addition to penalties, the members of the consortium are liable to fulfill the power sale agreements signed in the regulated environment (CCEARs), pursuant to ANEEL regulation.

Delays in the delivery of power from the Mauá Power Plant will need to be attributable to court orders which prevented the beginning of construction or interrupted it, i.e., an obligation affected by the acts of third-parties, particularly those of the government, or to an act of God or force majeure. In these circumstances, the concession contract itself provides for the waiver of liability of the concession holders.

c) Sensitivity Analysis

COPEL conducted a sensitivity analysis for the financial instruments above, in compliance with CVM Instruction no. 575, dated December 17, 2008, which requires the presentation of two additional risk scenarios with 25% and 50% deterioration of each risk variable. These scenarios may have impacts on the future income and/or cash flows of the Company, as shown below:

Assumptions:

1) Baseline: maintenance of rates at the same levels observed in the average market expectations for 2010, according to the Focus Report issued the Brazilian Central Bank as of December 31, 2009;

2) Adverse Scenario: deterioration of 25% compared to the baseline in the main risk factor for each financial instrument;

3) Remote Scenario: deterioration of 50% compared to the baseline in the main risk factor for each financial instrument.

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.  Basis    Adverse  Remote 
Operation  31.12.2009  Baseline  Scenario  Scenario 
.         
Financial Assets         
Financial Investments  1,616,535  1,779,161  1,738,505  1,697,849 
CRC transferred to State Government  1,254,574  1,311,031  1,296,917  1,282,803 
  2,871,109  3,090,192  3,035,422  2,980,652 
Financial Liabilities         
Loans and financing         
Foreign currency  92,643  93,111  116,389  139,667 
National currency  773,199  819,635  831,243  842,852 
Debentures  807,579  885,351  904,795  924,238 
  1,673,421  1,798,097  1,852,427  1,906,757 

 

This sensitivity analysis aims to measure the impact of changes in the market variables on each financial instrument used by the Company. The balances as of December 31, 2009 have been used as the basis for the projection of future balances as of December 31, 2010. The actual behavior of each debt balance will follow the respective contracts, and the balance of financial investments may fluctuate as the need or availability of cash is affected by the Company's regular operations and the operations of its subsidiaries and investees. Nevertheless, the settlement of transactions involving these estimates may result in different amounts than those estimated due to the inherent subjectivity of the process of preparation of sensitivity analyses.

35 Related-Party Transactions

a) Parent Company

  Parent Company 
Related party / Nature of operation  Assets  Liabilities  Income  Assets  Liabilities  Income 
      2009      2008 
.             
Controlling Shareholders             
Government of the State of Paraná             
Dividends payable  -  73,958  -  -  77,635  - 
BNDESPAR             
Dividends payable  -  51,193  -  -  54,218  - 
Senior management             
Wages, social charges, and others (Note 31.c)  -  -  (7,083)  -  -  (5,965) 
Pension and healthcare contributions (Note 23.c)  -  -  (222)  -  -  (140) 

 

The main balances of transactions between the Parent Company and its subsidiaries and investees are shown in Note 15, Receivables from Related Parties, and 16, Investments.

The Parent Company became in 2002 guarantor of the loans signed by its investee Dona Francisca Energética S.A. with the National Economic and Social Development Bank (BNDES) (joint debtor), and with Bradesco (joint debtor). As of December 31, 2009, the outstanding debt was R$ 32,697 and R$ 19,816, respectively.

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b) Consolidated

  Consolidated 
Related party / Nature of operation  Assets Liabilities  Income  Assets Liabilities  Income 
      2009      2008 
.             
Controlling Shareholders             
Government of the State of Paraná             
Supply to final customers (1)  57,137  -  79,088  74,150  -  95,461 
Power bill installments (2)  35,267  -  3,959  50,712  -  7,024 
Telecommunications services (1)  6,292  -  9,618  7,731  -  6,000 
Telecom bill installments (2)  4,113  -  560  6,231  -  1,018 
CRC (Note 7)  1,254,574  -  65,638  1,319,903  -  189,589 
ICMS (VAT) (Note 8)  113,825  164,756  -  89,331  132,998  - 
Wages and social charges of             
transferred employees (3)  2,155  -  -  2,185  -  - 
Dividends payable  -  73,958  -  -  77,635  - 
BNDES (4)             
Financing for investments in gas pipelines             
Financing for investments in gas pipelines (N. 19.f)  -  12,743  (1,073)  -  19,637  (2,781) 
Financing for the Mauá HPP and its Associated             
Transmission System (Note 19.h)  -  -  (3,769)  -  -  - 
BNDESPAR (4)             
Debentures (Note 20.b)  -  190,341  (21,133)  -  227,883  (26,862) 
Dividends payable  -  51,193  -  -  54,218  - 
Investees             
Dona Francisca Energética             
Purchase of power (5)  -  5,100  (60,303)  -  5,128  (55,496) 
Sanepar             
Dividends receivable from Dominó Holdings  5,135  -  -  5,247  -  - 
Senior management             
Wages, social charges, and others (Note 31.c)  -  -  (10,267)  -  -  (9,421) 
Pension and healthcare contributions (Note 23.c)  -  -  (222)  -  -  (140) 
Other related parties             
Petrobras             
Lease of Araucária TPP (Note 1.g)  550  -  40,583  7,474  -  45,246 
Suppy and transport of gas (6)  188  -  11,422  949  -  11,302 
Purchase of gas for resale (6)  -  23,166  (135,256)  -  36,775  (163,748) 
Advance payment to suppliers (6)  8,290  -  -  3,196  -  - 
Fundação Copel             
Rent of facilities (Note 31.g.2)  -  -  (8,300)  -  -  (6,847) 
Pension and healthcare plans (Note 23)  -  375,481  14,177  -  447,945  30,016 
Instit. de Tecnol. p/ o Desenvolvimento - Lactec (7)             
Services rendered and R&D  23,419  211  (7,643)  11,509  16  (13,325) 

 

1) The amounts resulting from the operating activities of COPEL Distribuição involving other related parties are billed at the rates approved by ANEEL, and those of COPEL Telecomunicações are accounted for according to terms and conditions similar to those in effect in transactions with independent parties.

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2) Agreement for renegotiation of power bills and Luz Fraterna Program bills with COPEL Distribuição, in the original amount of R$ 84,883, and agreement for renegotiation of the bills for internet connection at public schools with COPEL Telecomunicações, in the amount of R$ 12,000. These agreements were signed on April 20, 2007, for payment in 45 monthly installments, restated according to the SELIC interest rate, generating the financial revenues shown in the table above.

3) Reimbursement of wages and social charges for employees transferred to the Paraná State Government. The Company set aside a provision in the amount of R$ 2,036 in connection with the 2008 and 2009 balances.

4) BNDESPAR holds 26.41% of the Company’s common shares and has the right, under a shareholders’ agreement, 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 19, and a debenture issue agreement (ELEJOR debentures), described in Note 20.b.

5) Power purchase agreement signed by Dona Francisca Energética and COPEL Geração e Transmissão, expiring on October 6, 2015.

6) These balances refer to transactions with Petrobras, which holds a 24.5% interest in Compagas, and with its subsidiaries, Petrobras Distribuidora S.A. - BR and Petrobras Gás SA – Gaspetro. The supply and transport of piped gas and the purchase of gas for resale are conducted at market prices and conditions. Advance payments to suppliers refer to the gas purchase contract covering guaranteed volumes and transport capacity, higher than those actually consumed and used, which contains a future compensation clause. Compagas has the right to receive unused gas in subsequent months, and it may offset amounts under contract but not consumed over a period of up to 10 years. In light of the prospects of increased consumption by the market, Company management believes it will consume the accumulated gas volumes as of December 31, 2009 in the next fiscal years.

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7) The Institute of Technology for Development (LACTEC) was constituted on February 6, 1997 as a nonprofit organization whose goal is to promote economic, scientific, technological, and social development and the sustainable conservation of the environment. In 2000, it was qualified by the Ministry of Justice, based on Law no. 9,970, as a Public Interest Civil Society Organization (OSCIP), which allows it, among other things, to enter partnerships with government agencies with no need for competitive bidding. Its members are: COPEL, the Federal University of Paraná (UFPR), the Engineering Institute of Paraná (IEP), the Paraná Federation of Industries (FIEP), and the Commercial Association of Paraná (ACP). LACTEC has service and R&D contracts with COPEL Geração e Transmissão and COPEL Distribuição, which are subject to prior or later control and approval by ANEEL. The asset balances refer to Energy Efficiency and R&D programs, recorded under current assets, in service in progress, until the respective projects are concluded, pursuant to ANEEL.

36 Insurance

The types of risk coverage and the term of the Company’s main insurance policies are shown below.

  Expiration  Consolidated 
Policy  date  Amount insured 
Specified risks (a)  8/24/2010  1,834,870 
Fire - Company-owned and rented facilities (b)  8/24/2010  368,907 
Civil liability - COPEL (c)  8/24/2010  6,000 
Civil liability - Compagas (c)  8/30/2010  4,200 
Engineering risks - COPEL (d)  8/24/2010  dependent on each event 
Domestic and international transport - export and import (e)  8/24/2010  dependent on each event 
Multi-risk - Compagas (f)  8/10/2010  5,767 
Multi-risk - Compagas (f)  9/20/2010  720 
Multi-risk - Elejor (f)  6/5/2010  1,961 
Vehicles (g)  5/20/2010  market value 
Miscellaneous risks (h)  8/24/2010  717 
Operational risks - Elejor (i)  9/25/2010  612,000 
Operational risks - UEG Araucária (j)  5/31/2010  469,966 
Court guarantee (k)  2/5/2012  33,223 

 

a) Insurance against specified risks

This policy covers substations and power plants, listing their main equipment and respective insured amounts. It provides basic coverage against fire, lightning strikes, explosions of any kind, and additional coverage against potential electrical damage, miscellaneous risks, and risk to electronics and computers.

106


b) Fire insurance

This policy covers both Company-owned and rented facilities and part of their contents. It ensures payment of reparations to the insurance holder or property owner for the damages resulting from basic fire hazards, lightning strikes, and explosions of any kind, plus additional coverage against windstorms.

c) Civil liability insurance

This insurance provides coverage against liability for involuntary damages, bodily and/or material and/or moral, caused to third-parties as a result of the Company’s commercial and/or industrial operations.

d) Insurance against engineering risks - COPEL

This insurance provides coverage against risks of installation, assembly, disassembly, and testing of new equipment, particularly at substations and power plants. Policies are purchased before each risk event, according to the occurrence and need for coverage against risks of carrying out engineering services.

e) Transportation insurance

This insurance provides coverage against losses and damages caused to products transported by any appropriate means within both the domestic and foreign marketplace and during import and export operations to and from foreign markets. Policies are purchased before each risk event, and are basically used to cover the transport of electrical, electronic, and telecommunications equipment.

f) Multi-risk insurance

This policy comprises the assets of the Company and provides coverage against potential damages caused by fire, lighting strikes, explosions, electrical malfunctions, risks to electronic equipment, recovery of records and documents, windstorms, smoke, and theft or aggravated larceny.

g) Vehicle insurance

This insurance covers the payment of reparations of damage suffered and expenses incurred as a result of risks to which Compagas’ 15 insured vehicles are subject. It provides basic coverage for the vehicles and additional and optional civil liability coverage against material, bodily, and moral damages caused to third-parties. Coverage limits for damages to third-parties are R$ 150 for material damages and R$ 300 for bodily damages, for each vehicle.

107


h) Insurance for miscellaneous risks - COPEL

This insurance covers losses and material damage caused to the assets listed in the policy by any accidents with an external cause, including transport risks.

This type of insurance covers mobile and/or stationary electric equipment, computers, and electronics, whether in use at the Company's facilities or leased or loaned to third-parties.

i) Insurance for operational risks - Elejor

This insurance covers sudden, unforeseen, and accidental losses and material damage to ELEJOR buildings, merchandise, raw materials, unfinished and finished products, packages, machinery, tools, furniture, and other devices and facilities which are part of the insured establishment, in addition to loss of profits.

j) Insurance against operational risks – UEG Araucária

This policy provides coverage against all risks (all legally insurable risks), including machinery failure, for all the facilities of the Araucária Thermal Power Plant.

k) Court guarantee

This insurance covers the settlement of final rulings in lawsuits against Compagas. It has the same standing as a judicial bond, replacing judicial deposits in cash, attachment of assets, and bank guarantees.

This performance bond is aimed at companies which, being under contract, are bound to guarantee to its customers that such contracts, as far as pricing, deadlines and other specifications, will be performed in full. Public agencies within the direct or indirect public administration may also, pursuant to Law no. 8,666/93 and to Law no. 8,883/94, receive insurance policies as guarantee from its suppliers of goods and services, contractors, and public tender participants.

This type of insurance is designed to guarantee full performance of a contract. It does not cover damages but rather liabilities for breach of contract, and it is a form of contractual guarantee provided for by Brazilian law, which may replace bank guarantees, cash bonds, or government bonds.

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37 Wholly-owned Subsidiaries

Shown below are the financial statements, reclassified for purposes of standardizaiton of the chart of accounts, as of December 31, 2009 and 2008, of the following subsidiaries of COPEL: Copel Geração e Transmissão (GET), Copel Distribuição (DIS), Copel Telecomunicações (TEL), Compagas (COM), Elejor (ELE), UEG Araucária (UEG), Copel Participações (PAR), Copel Empreendimentos (CEM), Centrais Eólicas (CEO), and Dominó Holdings (DOM). In order to allow the analysis of the statement of operations according to the nature of the expenses, the operating costs and expenses are presented in aggregate form.

ASSETS  GET  DIS  TEL  COM  ELE  UEG  CEM  CEO  DOM 
2009                   
 
TOTAL ASSETS  5,384,160  5,929,073  256,770  263,264  610,415  658,550  399,106  9,490  307,547 
CURRENT ASSETS  1,145,067  1,708,450  56,063  64,047  58,016  145,581  8,347  7,993  6,384 
Cash and cash equivalents  784,032  192,468  31,889  41,177  19,581  131,257  8,043  7,849  812 
Customers and distributors  235,752  835,788  -  19,993  16,326  -  -  83  - 
Telecommunications services  -  -  12,079  -  -  -  -  -  - 
Dividends receivable  3,931  -  -  -  -  -  -  -  5,135 
Services in progress  18,497  73,975  -  -  -  -  -  -  - 
CRC transferred to the State Government  -  49,549  -  -  -  -  -  -  - 
Recoverable taxes  9,479  202,283  4,113  556  -  13,645  304  54  437 
Deferred regulatory assets - CVA  -  218,500  -  -  -  -  -  -  - 
Other regulatory assets  -  17,526  -  -  -  -  -  -  - 
Collaterals and escrow deposits  72,061  19,626  -  195  21,631  27  -  -  - 
Other receivables  11,632  22,565  816  955  478  652  -  7  - 
Inventories  9,683  76,170  7,166  1,171  -  -  -  -  - 
NONCURRENT ASSETS  4,239,093  4,220,623  200,707  199,217  552,399  512,969  390,759  1,497  301,163 
Long-term receivables  137,614  1,701,435  11,063  30,474  240  245  -  -  91 
Customers and distributors, net  -  51,377  -  21,067  -  -  -  -  - 
Telecommunications services  -  -  1,011  -  -  -  -  -  - 
CRC transferred to the State Government  -  1,205,025  -  -  -  -  -  -  - 
Recoverable taxes  86,747  279,166  10,020  524  -  -  -  -  - 
Deferred regulatory assets - CVA  -  98,963  -  -  -  -  -  -  - 
Bonds and securities  40,103  -  -  -  -  -  -  -  - 
Collaterals and escrow deposits  -  24,195  -  -  -  -  -  -  - 
Judicial deposits  8,883  38,098  32  185  240  245  -  -  91 
Advance payments to suppliers  -  -  -  8,290  -  -  -  -  - 
Other receivables  1,881  4,611  -  408  -  -  -  -  - 
Investments  403,750  4,250  -  2  -  -  390,759  -  298,153 
Property, Plant, and Equipment  3,632,010  2,474,528  188,586  167,072  552,031  512,707  -  1,497  1 
Intangible Assets  65,719  40,410  1,058  1,669  128  17  -  -  2,918 

 

109


LIABILITIES  GET  DIS  TEL  COM  ELE  UEG  CEM  CEO  DOM 
2009                   
 
TOTAL LIABILITIES  5,384,160  5,929,073  256,770  263,264  610,415  658,550  399,106  9,490  307,547 
CURRENT LIABILITIES  893,028  1,299,058  20,920  56,800  89,770  3,685  -  5,645  4,959 
Loans and financing  52,616  12,490  -  6,349  -  -  -  -  - 
Debentures  -  -  -  -  36,957  -  -  -  - 
Suppliers  121,657  433,800  5,158  24,275  3,337  2,604  -  2  7 
Taxes and social contributions  133,505  282,590  2,706  11,848  2,734  367  -  27  300 
Dividends due  473,108  206,481  1,156  8,228  7,150  -  -  5,616  4,647 
Payroll and labor provisions  54,006  139,562  10,730  2,240  111  32  -  -  5 
Post-employment benefits  5,969  15,501  990  -  -  -  -  -  - 
Deferred regulatory liabilities - CVA  -  25,020  -  -  -  -  -  -  - 
Other regulatory liabilities  -  8,315  -  -  -  -  -  -  - 
Customer charges due  3,791  25,732  -  -  -  -  -  -  - 
R&D and EEP  11,741  106,761  -  -  1,830  673  -  -  - 
Concession charge - ANEEL grant  -  -  -  -  36,576  -  -  -  - 
Other accounts payable  36,635  42,806  180  3,860  1,075  9  -  -  - 
NONCURRENT LIABILITIES  829,432  1,454,348  16,394  17,030  419,109  3,600  -  -  4 
Loans and financing  300,809  147,224  -  6,394  117  -  -  -  - 
Debentures  -  -  -  -  153,384  -  -  -  - 
Provisions for contingencies  213,223  229,129  1,983  320  190  3,053  -  -  4 
Intercompany loans  -  658,724  -  -  265,418  -  -  -  - 
Suppliers  196,863  -  -  -  -  -  -  -  - 
Taxes and social contributions  -  82,114  -  8,953  -  547  -  -  - 
Post-employment benefits  96,013  241,546  14,411  1,006  -  -  -  -  - 
Deferred regulatory liabilities - CVA  -  25,020  -  -  -  -  -  -  - 
Other regulatory liabilities  -  26  -  -  -  -  -  -  - 
R&D and EEP  19,928  70,565  -  -  -  -  -  -  - 
Other accounts payable  2,596  -  -  357  -  -  -  -  - 
SHAREHOLDERS' EQUITY  3,661,700  3,175,667  219,456  189,434  101,536  651,265  399,106  3,845  302,584 
Stock capital  3,505,994  2,624,841  194,755  111,140  69,450  707,440  397,983  3,061  113,368 
Capital reserves  -  -  -  -  1,322  -  39,618  -  - 
Profit reserves  155,706  550,826  24,701  78,294  30,764  -  -  784  189,216 
Accumulated losses  -  -  -  -  -  (56,175)  (38,495)  -  - 

 

STATEMENT OF INCOME  GET  DIS  TEL  COM  ELE  UEG  CEM  CEO  DOM 
2009                   
 
OPERATING REVENUES  1,894,220  6,702,849  142,366  269,049  181,637  40,583  -  1,088  - 
Electricity sales to final customers  161,174  3,096,604  -  -  -  -  -  -  - 
Electricity sales to distributors  1,445,063  63,841  -  -  181,637  -  -  1,088  - 
Use of main transmission grid  251,797  3,471,023  -  -  -  -  -  -  - 
Telecommunications revenues  -  -  142,072  -  -  -  -  -  - 
Distribution of piped gas  -  -  -  264,009  -  -  -  -  - 
Leases and rents  1,136  57,178  -  -  -  40,583  -  -  - 
Other operating revenues  35,050  14,203  294  5,040  -  -  -  -  - 
DEDUCTIONS FROM OPERATING REVENUES  (273,075)  (2,812,768)  (24,582)  (56,167)  (8,669)  (3,754)  -  (350)  - 
NET OPERATING REVENUES  1,621,145  3,890,081  117,784  212,882  172,968  36,829  -  738  - 
OPERATING COSTS AND EXPENSES  (806,827)  (3,613,317)  (89,324)  (163,287)  (81,862)  (59,795)  (35)  (458)  (2,173) 
Energy purchased for resale  (73,679)  (1,902,998)  -  -  (2,022)  -  -  -  - 
Use of main transmission grid  (181,159)  (490,646)  -  -  (10,674)  (14,021)  -  -  - 
Personnel and management  (195,554)  (549,050)  (38,822)  (9,867)  (1,767)  (380)  -  -  (27) 
Pension and healthcare plans  13,356  (24,993)  (1,165)  (1,153)  -  -  -  -  - 
Materials and supplies  (12,268)  (52,841)  (1,294)  (645)  (576)  (66)  -  (227)  (1) 
Raw materials and supplies for electricity                   
generation  (21,979)  -  -  -  -  (1,936)  -  -  - 
Natural gas and supplies for gas business  -  -  -  (135,353)  -  -  -  -  - 
Third-party services  (62,230)  (250,563)  (11,429)  (4,567)  (8,599)  (10,551)  (1)  (56)  (1,332) 
Depreciation and amortization  (136,274)  (165,185)  (31,111)  (9,003)  (16,387)  (31,896)  -  (208)  (730) 
Provisions and reversals  (31,352)  (102,886)  (1,564)  (32)  (190)  -  -  -  - 
Concession charge - ANEEL grant  -  -  -  -  (35,905)  -  -  -  - 
Other operating costs and expenses  (105,688)  (74,155)  (3,939)  (2,667)  (5,742)  (945)  (34)  33  (83) 
 
OPERATING INCOME BEFORE FINANCIAL                   
RESULTS AND EQUITY IN RESULTS OF                   
INVESTEES  814,318  276,764  28,460  49,595  91,106  (22,966)  (35)  280  (2,173) 
Interest income (expenses)  68,019  100,246  4,228  2,604  (45,756)  13,105  741  730  (428) 
Result of equity in investees  (4,806)  -  -  -  -  -  (5,917)  -  22,670 
OPERATING INCOME (EXPENSES)  877,531  377,010  32,688  52,199  45,350  (9,861)  (5,211)  1,010  20,069 
Provision for income tax and s. contribution  (220,340)  (27,270)  (7,645)  (16,733)  (15,244)  -  (144)  (226)  - 
Deferred income tax and social contribution  (2,405)  (30,027)  (151)  (822)  -  -  -  -  - 
INCOME (EXPENSES) FOR THE PERIOD  654,786  319,713  24,892  34,644  30,106  (9,861)  (5,355)  784  20,069 

 

110


ASSETS  GET  DIS  TEL  COM  ELE  UEG  PAR  CEM  CEO  DOM 
2008                     
 
TOTAL ASSETS  5,380,379  5,483,670  243,934  260,485  620,177  670,698  -  404,461  9,905  292,375 
CURRENT ASSETS  1,261,255  1,603,722  48,259  80,942  51,478  136,090  -  7,785  8,200  7,199 
Cash and cash equivalents  920,861  354,286  29,638  55,892  136  117,189  -  7,598  8,097  1,424 
Customers and distributors  220,963  759,209  -  22,450  15,300  -  -  -  96  - 
Telecommunications services, net  -  -  10,837  -  -  -  -  -  -  - 
Dividends receivable  -  -  -  -  -  -  -  -  -  5,247 
Services in progress  10,541  54,224  -  -  -  -  -  -  -  - 
CRC transferred to the State Government  -  47,133  -  -  -  -  -  -  -  - 
Recoverable taxes  7,530  141,399  2,076  556  1,634  9,420  -  187  -  528 
Deferred regulatory assets - CVA  -  111,098  -  -  -  -  -  -  -  - 
Other regulatory assets  -  31,511  -  -  -  -  -  -  -  - 
Collaterals and escrow deposits  79,079  37,208  -  -  34,042  29  -  -  -  - 
Other receivables  11,858  19,504  557  1,508  366  9,452  -  -  7  - 
Inventories  10,423  48,150  5,151  536  -  -  -  -  -  - 
NONCURRENT ASSETS  4,119,124  3,879,948  195,675  179,543  568,699  534,608  -  396,676  1,705  285,176 
Long-term receivables  113,219  1,768,466  12,980  26,691  231  -  -  -  -  3 
Customers and distributors, net  75  81,855  -  23,650  -  -  -  -  -  - 
Telecommunications services  -  -  3,211  -  -  -  -  -  -  - 
CRC transferred to the State Government  -  1,272,770  -  -  -  -  -  -  -  - 
Recoverable taxes  89,433  241,987  9,417  434  -  -  -  -  -  - 
Deferred regulatory assets - CVA  -  53,494  -  -  -  -  -  -  -  - 
Other regulatory assets  -  11,085  -  -  -  -  -  -  -  - 
Collaterals and escrow deposits  -  37,868  -  -  -  -  -  -  -  - 
Judicial deposits  21,830  64,698  352  115  231  -  -  -  -  3 
Advance payments to suppliers  -  -  -  2,435  -  -  -  -  -  - 
Other receivables  1,881  4,709  -  57  -  -  -  -  -  - 
Investments  412,646  2,474  -  2  -  -  -  396,676  -  281,524 
Property, Plant, and Equipment  3,530,039  2,081,585  181,587  150,833  568,340  534,585  -  -  1,705  1 
Intangible Assets  63,220  27,423  1,108  2,017  128  23  -  -  -  3,648 

 

LIABILITIES  GET  DIS  TEL  COM  ELE  UEG  PAR  CEM  CEO  DOM 
2008                     
 
TOTAL LIABILITIES  5,380,379  5,483,670  243,934  260,485  620,177  670,698  -  404,461  9,905  292,375 
CURRENT LIABILITIES  942,890  1,124,075  21,960  66,455  75,516  5,901  -  -  1,228  5,626 
Loans and financing  61,373  14,313  -  6,526  -  -  -  -  -  - 
Debentures  -  -  -  -  25,767  -  -  -  -  - 
Suppliers  68,791  415,006  5,287  38,769  4,597  3,501  -  -  2  4 
Taxes and social contributions  128,827  206,295  1,922  8,842  1,209  375  -  -  1,226  383 
Dividends due  562,618  141,100  3,655  10,814  1,538  -  -  -  -  5,237 
Payroll and labor provisions  39,664  109,161  8,737  1,421  119  41  -  -  -  2 
Post-employment benefits  5,908  15,106  1,018  -  -  -  -  -  -  - 
Deferred regulatory liabilities - CVA  -  28,327  -  -  -  -  -  -  -  - 
Other regulatory liabilities  11,680  14,512  -  -  -  -  -  -  -  - 
Customer charges due  3,548  39,575  -  -  -  -  -  -  -  - 
R&D and EEP  28,352  93,506  -  -  2,652  1,974  -  -  -  - 
Concession charge - ANEEL grant  -  -  -  -  38,649  -  -  -  -  - 
Other accounts payable  32,129  47,174  1,341  83  985  10  -  -  -  - 
NONCURRENT LIABILITIES  808,528  1,317,310  18,050  23,828  466,875  3,671  -  -  -  4 
Loans and financing  246,927  153,326  -  13,111  26,092  -  -  -  -  - 
Debentures  -  -  -  -  202,116  -  -  -  -  - 
Provisions for contingencies  183,421  191,483  958  284  -  3,053  -  -  -  4 
Intercompany loans  -  597,227  -  -  238,060  -  -  -  -  - 
Suppliers  237,807  -  -  -  -  -  -  -  -  - 
Taxes and social contributions  -  20,869  -  8,041  -  618  -  -  -  - 
Post-employment benefits  130,054  278,005  17,092  728  -  -  -  -  -  - 
Deferred regulatory liabilities - CVA  -  2,373  -  -  -  -  -  -  -  - 
Other regulatory liabilities  -  7,257  -  -  -  -  -  -  -  - 
R&D and EEP  5,324  66,755  -  -  -  -  -  -  -  - 
Other accounts payable  4,995  15  -  1,664  607  -  -  -  -  - 
SHAREHOLDERS' EQUITY  3,628,961  3,042,285  203,924  170,202  77,786  661,126  -  404,461  8,677  286,745 
Stock capital  3,400,378  2,171,928  194,755  85,143  69,848  707,440  -  397,983  3,061  113,368 
Capital reserves  -  -  -  -  1,134  -  -  39,618  -  - 
Profit reserves  228,583  870,357  9,169  85,059  6,804  -  -  -  5,616  173,377 
Accumulated losses  -  -  -  -  -  (46,314)  -  (33,140)  -  - 

 

111


STATEMENT OF INCOME  GET  DIS  TEL  COM  ELE  UEG  PAR  CEM  CEO  DOM 
2008                     
 
OPERATING REVENUES  1,804,035  6,264,057  113,734  289,839  172,127  45,247  -  -  1,070  - 
Electricity sales to final customers  165,006  2,804,767  -  -  2,538  -  -  -  -  - 
Electricity sales to distributors  1,385,477  60,722  -  -  169,589  -  -  -  1,070  - 
Use of main transmission grid  228,129  3,330,176  -  -  -  -  -  -  -  - 
Telecommunications revenues  -  -  113,734  -  -  -  -  -  -  - 
Distribution of piped gas  -  -  -  286,120  -  -  -  -  -  - 
Leases and rents  891  50,245  -  -  -  45,247  -  -  -  - 
Other operating revenues  24,532  18,147  -  3,719  -  -  -  -  -  - 
DEDUCTIONS FROM OPERATING REVENUES  (259,947)  (2,498,139)  (19,435)  (56,103)  (8,602)  (4,185)  -  -  (206)  - 
NET OPERATING REVENUES  1,544,088  3,765,918  94,299  233,736  163,525  41,062  -  -  864  - 
OPERATING COSTS AND EXPENSES  (739,606)  (3,180,801)  (77,098)  (190,328)  (93,464)  (54,327)  (7,632)  -  1,701  (2,149) 
Energy purchased for resale  (70,065)  (1,789,931)  -  -  (815)  -  -  -  -  - 
Use of main transmission grid  (163,618)  (366,561)  -  -  (14,599)  (7,081)  -  -  -  - 
Personnel and management  (160,350)  (462,382)  (32,570)  (7,641)  (1,574)  (402)  (2,927)  -  -  (16) 
Pension and healthcare plans  (415)  (27,464)  (1,627)  37  -  -  (407)  -  -  - 
Materials and supplies  (10,281)  (44,466)  (1,659)  (542)  (215)  (67)  (1)  -  (228)  (1) 
Raw materials and supplies for generation  (19,577)  -  -  -  -  (2,230)  -  -  -  - 
Natural gas and supplies for gas business  -  -  -  (163,846)  -  -  -  -  -  - 
Third-party services  (59,533)  (207,434)  (12,295)  (4,454)  (7,573)  (13,159)  (262)  -  (478)  (1,373) 
Depreciation and amortization  (135,704)  (176,081)  (29,731)  (9,364)  (16,483)  (31,722)  (4,656)  -  (209)  (730) 
Provisions and reversals  (20,919)  (75,316)  3,081  (116)  -  -  -  -  2,625  (3) 
Concession charge - ANEEL grant  -  -  -  -  (45,710)  -  -  -  -  - 
Other operating costs and expenses  (99,144)  (31,166)  (2,297)  (4,402)  (6,495)  334  621  -  (9)  (26) 
OPERATING INCOME BEFORE FINANCIAL                     
RESULTS AND EQUITY IN RESULTS OF                     
INVESTEES  804,482  585,117  17,201  43,408  70,061  (13,265)  (7,632)  -  2,565  (2,149) 
Interest income (expenses)  23,956  146,909  3,603  5,924  (60,464)  12,471  23,680  816  3,110  (359) 
Result of equity in investees  5,759  -  -  -  -  -  26,872  (655)  -  23,158 
OPERATING INCOME (EXPENSES)  834,197  732,026  20,804  49,332  9,597  (794)  42,920  161  5,675  20,650 
Provision for income tax and s. contribution  (205,537)  (100,483)  (5,237)  (15,791)  (3,121)  -  (2,230)  (170)  (1,117)  (6) 
Deferred income tax and social contribution  (5,483)  (87,169)  (1,723)  (1,234)  -  -  1,522  -  -  - 
INCOME (EXPENSES) FOR THE PERIOD  623,177  544,374  13,844  32,307  6,476  (794)  42,212  (9)  4,558  20,644 

 

38 Segment Information

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. These statements feature the results of operations of 2009 and 2008, not taking into account the equity in the results of subsidiaries.

112


STATEMENT OF INCOME                  Subtractions   
  GET  DIS  TEL  COM  ELE  UEG Outras    COPEL  and  Consolidated 
2009                  minority int.   
OPERATING REVENUES  1,894,220  6,702,849  142,366  269,049  181,637  40,583  1,088  -  (435,116)  8,796,676 
Electricity sales to final customers  161,174  3,096,604  -  -  -  -  -  -  (4,091)  3,253,687 
Electricity sales to distributors  1,445,063  63,841  -  -  181,637  -  1,088  -  (296,823)  1,394,806 
Charges for the use of the power grid  251,797  3,471,023  -  -  -  -  -  -  (86,851)  3,635,969 
Telecommunications revenues  -  -  142,072  -  -  -  -  -  (37,228)  104,844 
Distribution of piped gas  -  -  -  264,009  -  -  -  -  (2,684)  261,325 
Leases and rents  1,136  57,178  -  -  -  40,583  -  -  (1,200)  97,697 
Other operating revenues  35,050  14,203  294  5,040  -  -  -  -  (6,239)  48,348 
DEDUCTIONS FROM OPERATING REVENUES  (273,075)  (2,812,768)  (24,582)  (56,167)  (8,669)  (3,754)  (350)  -  -  (3,179,365) 
NET OPERATING REVENUES  1,621,145  3,890,081  117,784  212,882  172,968  36,829  738  -  (435,116)  5,617,311 
OPERATING COSTS AND EXPENSES  (806,827)  (3,613,317)  (89,324)  (163,287)  (81,862)  (59,795)  (2,666)  111,928  435,116  (4,270,034) 
Power purchased for resale  (73,679)  (1,902,998)  -  -  (2,022)  -  -  -  296,823  (1,681,876) 
Charges for the use of the power grid  (181,159)  (490,646)  -  -  (10,674)  (14,021)  -  -  86,851  (609,649) 
Personnel and management  (195,554)  (549,050)  (38,822)  (9,867)  (1,767)  (380)  (27)  (7,083)  -  (802,550) 
Pension and healthcare plans  13,356  (24,993)  (1,165)  (1,153)  -  -  -  (222)  -  (14,177) 
Materials and supplies  (12,268)  (52,841)  (1,294)  (645)  (576)  (66)  (228)  (13)  -  (67,931) 
Raw materials and supplies - generation  (21,979)  -  -  -  -  (1,936)  -  -  2,684  (21,231) 
Natural gas and supplies - gas business  -  -  -  (135,353)  -  -  -  -  -  (135,353) 
Third-party services  (62,230)  (250,563)  (11,429)  (4,567)  (8,599)  (10,551)  (1,389)  (4,338)  47,558  (306,108) 
Depreciation and amortization  (136,274)  (165,185)  (31,111)  (9,003)  (16,387)  (31,896)  (938)  (754)  -  (391,548) 
Provisions and reversals  (31,352)  (102,886)  (1,564)  (32)  (190)  -  -  187,231  -  51,207 
Concession charge - ANEEL grant  -  -  -  -  (35,905)  -  -  -  -  (35,905) 
Compensation for use of water resources  (75,819)  -  -  -  (4,408)  -  -  -  -  (80,227) 
Other operating costs and expenses  (29,869)  (74,155)  (3,939)  (2,667)  (1,334)  (945)  (84)  (62,893)  1,200  (174,686) 
RESULT OF OPERATIONS  814,318  276,764  28,460  49,595  91,106  (22,966)  (1,928)  111,928  -  1,347,277 
Financial income (losses)  68,019  100,246  4,228  2,604  (45,756)  13,105  1,043  (77,865)  -  65,624 
Result of equity in investees  -  -  -  -  -  -  22,670  (8,343)  -  14,327 
OPERATING INCOME (LOSSES)  882,337  377,010  32,688  52,199  45,350  (9,861)  21,785  25,720  -  1,427,228 
Provision for income tax and s. contribution  (220,340)  (27,270)  (7,645)  (16,733)  (15,244)  -  (370)  -  -  (287,602) 
Deferred income tax and social contribution  (2,405)  (30,027)  (151)  (822)  -  -  -  (56,319)  -  (89,724) 
Minority interests  -  -  -  -  -  -  -  -  (23,469)  (23,469) 
INCOME (LOSSES) FOR THE PERIOD  659,592  319,713  24,892  34,644  30,106  (9,861)  21,415  (30,599)  (23,469)  1,026,433 

 

113


STATEMENT OF INCOME                  Subtractions   
  GET  DIS  TEL  COM  ELE  UEG  Other  COPEL  and  Consolidated 
2008                  minority int.   
 
OPERATING REVENUES  1,804,035  6,264,057  113,734  289,839  172,127  45,247  1,070  -  (384,714)  8,305,395 
Electricity sales to final customers  165,006  2,804,767  -  -  2,538  -  -  -  (3,431)  2,968,880 
Electricity sales to distributors  1,385,477  60,722  -  -  169,589  -  1,070  -  (253,764)  1,363,094 
Charges for the use of the power grid  228,129  3,330,176  -  -  -  -  -  -  (85,207)  3,473,098 
Telecommunications revenues  -  -  113,734  -  -  -  -  -  (33,130)  80,604 
Distribution of piped gas  -  -  -  286,120  -  -  -  -  (2,411)  283,709 
Leases and rents  891  50,245  -  -  -  45,247  -  -  (1,067)  95,316 
Other operating revenues  24,532  18,147  -  3,719  -  -  -  -  (5,704)  40,694 
DEDUCTIONS FROM OPERATING REVENUES  (259,947)  (2,498,139)  (19,435)  (56,103)  (8,602)  (4,185)  (206)  -  -  (2,846,617) 
NET OPERATING REVENUES  1,544,088  3,765,918  94,299  233,736  163,525  41,062  864  -  (384,714)  5,458,778 
OPERATING COSTS AND EXPENSES  (739,606)  (3,180,801)  (77,098)  (190,328)  (93,464)  (54,327)  (8,080)  (53,226)  384,792  (4,012,138) 
Power purchased for resale  (70,065)  (1,789,931)  -  -  (815)  -  -  -  245,725  (1,615,086) 
Charges for the use of the power grid  (163,618)  (366,561)  -  -  (14,599)  (7,081)  -  -  85,207  (466,652) 
Personnel and management  (160,350)  (462,382)  (32,570)  (7,641)  (1,574)  (402)  (2,943)  (5,965)  -  (673,827) 
Pension and healthcare plans  (415)  (27,464)  (1,627)  37  -  -  (407)  (140)  -  (30,016) 
Materials and supplies  (10,281)  (44,466)  (1,659)  (542)  (215)  (67)  (230)  (14)  -  (57,474) 
Raw materials and supplies - generation  (19,577)  -  -  -  -  (2,230)  -  -  2,533  (19,274) 
Natural gas and supplies - gas business  -  -  -  (163,846)  -  -  -  -  -  (163,846) 
Third-party services  (59,533)  (207,434)  (12,295)  (4,454)  (7,573)  (13,159)  (2,113)  (3,909)  42,222  (268,248) 
Depreciation and amortization  (135,704)  (176,081)  (29,731)  (9,364)  (16,483)  (31,722)  (5,595)  (63)  -  (404,743) 
Provisions and reversals  (20,919)  (75,316)  3,081  (116)  -  -  2,622  (8,246)  -  (98,894) 
Concession charge - ANEEL grant  -  -  -  -  (45,710)  -  -  -  -  (45,710) 
Compensation for use of water resources  (81,493)  -  -  -  (5,020)  -  -  -  -  (86,513) 
Other operating costs and expenses  (17,651)  (31,166)  (2,297)  (4,402)  (1,475)  334  586  (34,889)  9,105  (81,855) 
RESULT OF OPERATIONS  804,482  585,117  17,201  43,408  70,061  (13,265)  (7,216)  (53,226)  78  1,446,640 
Financial income (losses)  23,956  146,909  3,603  5,924  (60,464)  12,471  27,247  (65,205)  (78)  94,363 
Result of equity in investees  -  -  -  -  -  -  12,687  1,269  -  13,956 
OPERATING INCOME (LOSSES)  828,438  732,026  20,804  49,332  9,597  (794)  32,718  (117,162)  -  1,554,959 
Provision for income tax and s. contribution  (205,537)  (100,483)  (5,237)  (15,791)  (3,121)  -  (3,523)  (18,372)  -  (352,064) 
Deferred income tax and social contribution  (5,483)  (87,169)  (1,723)  (1,234)  -  -  1,522  (11,995)  -  (106,082) 
Minority interests  -  -  -  -  -  -  -  -  (18,069)  (18,069) 
INCOME (LOSSES) FOR THE PERIOD  617,418  544,374  13,844  32,307  6,476  (794)  30,717  (147,529)  (18,069)  1,078,744 

 

39 Subsequent Event

On March 5, 2010, COPEL provided R$ 126,000 to investee ELEJOR, corresponding to its 70% interest in the company; Paineira, the other shareholder, also provided funds corresponding to its 30% interest. ELEJOR then made a payment of R$ 179,647 to BNDESPAR to settle debentures issued by the company and held by BNDESPAR.

114


 
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 

 

REPORT BY THE INDEPENDENT AUDITORS

To the
Shareholders, Directors, and Officers of
Companhia Paranaense de Energia – COPEL
Curitiba – PR

1. We have reviewed the balance sheets of Companhia Paranaense de Energia – COPEL (Parent Company and consolidated) and its subsidiaries as of December 31, 2009 and 2008 and the corresponding statements of income, of changes in shareholders' equity (Parent Company), of cash flows, and of added value for the fiscal years ended on those dates, prepared under the responsibility of the Company’s senior management. Our duty is to issue an opinion about these financial statements.

2. Our reviews were carried out in compliance with the audit rules applicable in Brazil and comprised: (a) planning, considering the importance of balances, the volume of transactions, and the accounting and internal control systems of the Company and of its subsidiaries, (b) the verification, based on testing, of the evidence and of the records on which the disclosed accounting amounts and information are based, and (c) the evaluation of the most representative accounting practices and estimates adopted by the management of the Company and of its subsidiaries, as well as the presentation of the financial statements as a whole.

3. We believe the financial statements discussed in paragraph 1 adequately convey, in all material aspects, the balance sheet and financial position of Companhia Paranaense de Energia –COPEL (Parent Company and consolidated) and its subsidiaries as of December 31, 2009 and 2008, and the results of operations, the changes in shareholders’ equity (Parent Company), the cash flows, and the added values in connection with the operations conducted in the fiscal years ended on those dates, in compliance with the accounting practices adopted in Brazil.

Curitiba, March 15, 2010.

DELOITTE TOUCHE TOHMATSU  Iara Pasian 
Independent Auditors  Accountant 
CRC nº 2 SP 011609/O-8 F-PR  CRC nº 1 SP 121517/O-3 S/PR 

 

115


SUMMARY OF THE ANNUAL REPORT BY THE AUDIT COMMITTEE

The Audit Committee of Companhia Paranaense de Enegia – COPEL, pursuant to its annual schedule of meetings, previously discussed and approved by its members, held regular bimonthly meetings; quarterly meetings with the Fiscal Council, to review the Company’s financial statements; and monthly meetings with the Company’s executive officers, independent auditors, and the internal audit team in order to make inquiries and to review other matters within the scope of its powers.

In 2009, the Committee focused on evaluating the internal control and risk management systems; on evaluating the work of the external auditors (Deloitte Touche Tohmatsu) and its results as far as the Company’s financial statements and reports; on analyzing the aspects concerning the preparation process for snapshot statements and balance sheets, notes, and financial reports published in conjunction with the consolidated financial statements; on reviewing the relevant practices used by COPEL for the preparation of its financial statements; and on analyzing and keeping track of the work done by the Internal Audit team, in order to improve its performance.

The regulatory duties of the Committee included, among other activities:

a) analysis and report on the balance sheet for 2008; b) evaluation and approval of the results and the financial information for the four quarters of 2009; c) monitoring of the progress of the Company's budget; d) review of the financial statements and how they are prepared and presented; e) monitoring and approval of the hiring of an independent auditing company; f) monitoring and supervision of the work conducted by the Company's Internal Audit Team; g) monitoring of the review of alternative accounting treatment methods for accounting and financial information; h) monitoring of the review of the Company’s r isk assessment and management policies; i) evaluation of the main activities by the Chief Executive Office, the Chief Management Office, the Chief Finance, Investor Relations, and Corporate Partnerships Office, and the Chief Power Distribution Office; j) analysis, approval, and monitoring of the Internal Audit Team's planning for 2009; k) monitoring of complaints submitted to the Company’s Ombudsman’s Office through the Confidential Communication Channel, as well as monitoring of the actions taken by the Ombudsman’s Office as regards the automation and advertising of this channel; l) approval of the Company’s 20-F Form; m) monitoring of the management of the companies in which COPEL holds interests; n) analysis and monitoring of the reports prepared by the Internal Audit Team; o) monitoring of the work conducted by the Independent Auditors; p) presentation of the Comment Letter by the Independent Auditors for 2007 and 2008; q) verification of the recommendations made by COPEL’s internal audit, by the independent auditing company, and by the Audit

116


Committee itself; r) monitoring of the main business risks; s) monitoring the results of the evaluations of the process to improve internal controls in compliance with the requirements of the Sarbanes-Oxley Act, submitted by the Independent Auditors, and also through a self-evaluation questionnaire filled out by the members of the Audit Committee.

Based on the review by the Committee, the procedures and actions adopted to monitor the control and risk management systems, in all material aspects, are well established and properly organized, and no material exceptions that could affect their effectiveness were detected. The Committee only detected minor exceptions, which are being addressed, in order to improve the quality of the financial information, to eliminate risks, and to strengthen the internal control system as a whole.

Based on these reviews and on information provided by Deloitte itself, the Committee attests to the objectivity and independence of the Independent Auditors, since it has not detected any situations which might compromise them. COPEL’s Internal Audit structure, the qualifications of its technical and managerial staff, and the results of their work have also been evaluated as adequate by the Committee.

There has been no record of any reports of violation of rules, lack of controls, actions or omissions by COPEL’s senior management which indicated the existence or evidence of fraud, flaws, or errors which jeopardized the continuity of COPEL or the credibility of its financial statements.

In light of the existing internal control systems, of the range and effectiveness of the work conducted by the independent auditors, and of their opinion, the Audit Committee believes the financial statements as of December 31, 2009 adequately convey the balance sheet and financial position of Companhia Paranaense de Energia – COPEL, in compliance with the accounting practices adopted in Brazil, with the Brazilian Corporate Law, with the rules issued by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários or CVM), and with the regulations issued by the National Electric Energy Agency (Agência Nacional de Energia Elétrica or ANEEL) and by the National Telecommunications Agency (Agência Nacional de Telecomunicações or ANATEL), and recommends to the Board of Dir ectors that these statements be approved.

Curitiba, March 16, 2010

Laurita Costa Rosa

117


     Chairwoman

Jorge Michel Lepeltier

Rogério de Paula Quadros

118


REPORT BY THE FISCAL COUNCIL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON DECEMBER 31, 2009

The members of the Fiscal Council of COMPANHIA PARANAENSE DE ENERGIA - COPEL, undersigned herein, pursuant to their legal powers and duties, reviewed the Financial Statements, the Annual Management Report, and the Management’s Proposal for Distribution of Net Income for the fiscal year ended on December 31, 2009, and, based on their analyses, on further clarifications by the senior management, and on the Report by the Independent Auditors, Deloitte Touche Tohmatsu, concluded that the reviewed documents are adequately presented, in all material aspects, so that they are favorable to the submission of these statements for review and approval at the General Shareholders’ Meeting.

Curitiba, March 16, 2010.

OSMAR ALFREDO KOHLER
Chairman

HERON ARZUA

CASSIO MARTINS CAMARGO PENTEADO JÚNIOR

MARCIO LUCIANO MANCINI

WILSON PORTES

119


STATEMENT

The Chief Executive Officer and the other Chief Officers of Companhia Paranaense de Energia -COPEL, a mixed capital public corporation headquartered at Rua Coronel Dulcídio 800, Curitiba –PR, registered under Corporate Taxpayer (CNPJ) no. 76,483,817/0001-20, for the purposes of items V and VI of article 25 of CVM Instruction no. 480, dated December 7, 2009, hereby declare that:

(I) they have reviewed, discussed, and agreed with the opinions contained in the report by Delloite Touche Tohmatsu Independent Auditors as regards COPEL's financial statements for the fiscal year ended on December 31, 2009; and

(II) they have reviewed, discussed, and agreed with the financial statements of COPEL for the fiscal year ended on December 31, 2009.

Curitiba, March 15, 2010.

RUBENS GHILARDI  ANTONIO RYCHETA ARTEN 
Chief Executive Officer and  Chief Finance, Investor Relations, and 
  Corporate Partnerships Officer and Chief Acting 
Chief Management Officer  Legal Officer 
 
 
RONALD THADEU RAVEDUTTI  LUIZ ANTONIO ROSSAFA 
Chief Power Distribution Officer  Chief Engineering Officer 
 
 
 
MARLENE ZANNIN  RAUL MUNHOZ NETO 
Chief Environmental and Corporate Citizenship  Chief Power Generation and Transmission and 
Officer  Telecommunications Officer 

 

120


EXPENDITURE BUDGET FOR 2010

In compliance with CVM Instruction no. 480, dated December 7, 2009 and in effect on January 1, 2010, the table below features the proposed capital expenditures for fiscal year 2010 by Companhia Paranaense de Energia - COPEL; its source of funds is tied to financing, generation of cash, and retained earnings, pursuant to article 196 of Law no. 6,404/76.

  . 
EXPENDITURE PROGRAM  In millions of R$ 
 
Generation and Transmission  499.7 
Mauá Hydroelectric Power Plant  323.3 
Other  176.4 
Distribution  761.8 
Telecommunications  81.4 
TOTAL  1,342.90 

 

121

 
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: June 18, 2010
 
COMPANHIA PARANAENSE DE ENERGIA – COPEL
By:
/S/  Ronald Thadeu Ravedutti
 
Ronald Thadeu Ravedutti
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.

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