20-F 1 elpform20f_2013.htm FORM 20-F 2013 elpform20f_2013.htm - Generated by SEC Publisher for SEC Filing

 

As filed with the Securities and Exchange Commission on April 29, 2014

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

Commission file number: 001-14668

                                                  

COMPANHIA PARANAENSE DE ENERGIA – COPEL

(Exact Name of Registrant as Specified in its Charter)

 

Energy Company of Paraná

(Translation of Registrant’s Name into English

The Federative Republic of Brazil

(Jurisdiction of Incorporation or Organization)

Rua Coronel Dulcídio, 800

80420-170 Curitiba, Paraná, Brazil

(Address of Principal Executive Offices)

Lindolfo Zimmer

+55 41 3222 2027 – ri@copel.com

Rua Coronel Dulcídio, 800, 3rd floor – 80420 – 170 Curitiba, Paraná, Brazil

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act

 

Title of Each Class

Name of Each Exchange on Which Registered

Preferred Class B Shares, without par value*

New York Stock Exchange

American Depositary Shares (as evidenced by American Depositary Receipts),

each representing one Preferred Class B Share

New York Stock Exchange

 

* Not for trading, but only in connection with the listing of American Depositary Shares on the New York Stock Exchange.

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of December 31, 2013:

145,031,080 Common Shares, without par value

381,702 Class A Preferred Shares, without par value

128,242,593 Class B Preferred Shares, without par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes        No ¨ 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ¨       No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes       No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):

Large accelerated filer        Accelerated filer ¨        Non-accelerated filer ¨ 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP               ¨                              IFRS                                     Other ¨ 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

N/A

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Yes ¨      No

 

                                                                        


 

 

Table of Contents

Presentation of Financial and Other Information

2

Forward-Looking Statements

2

Item 1.

Identity of Directors, Senior Management and Advisers

3

Item 2.

Offer Statistics and Expected Timetable

3

Item 3.

Key Information

4

Selected Financial Data

4

Exchange Rates

5

Risk Factors

5

Item 4.

Information on the Company

14

The Company

14

The Brazilian Electric Power Industry

38

Item 4A.

Unresolved Staff Comments

52

Item 5.

Operating and Financial Review and Prospects

52

Item 6.

Directors, Senior Management and Employees

70

Item 7.

Major Shareholders and Related Party Transactions

77

Related Party Transactions

78

Item 8.

Financial Information

79

Legal Proceedings

79

Dividend Payments

81

Item 9.

The Offer and Listing

84

Item 10.

Additional Information

86

Memorandum and Articles of Association

86

Material Contracts

88

Exchange Controls

88

Taxation

90

Dividends and Paying Agents

95

Documents on Display

95

Item 11.

Quantitative and Qualitative Disclosures about Market Risk

95

Item 12.

Description of Securities Other than Equity Securities

95

Item 12A.

Debt Securities

95

Item 12B.

Warrants and Rights

95

Item 12C.

Other Securities

95

Item 12D.

American Depositary Shares

95

Item 13.

Defaults, Dividend Arrearages and Delinquencies

96

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds

96

Item 15.

Controls and Procedures

96

Item 16A.

Audit Committee Financial Expert

97

Item 16B.

Code of Ethics

97

Item 16C.

Principal Accountant Fees and Services

98

Item 16D.

Exemption from the Listing Standards for Audit Committees

98

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

98

Item 16F.

Changes in Registrant’s Certifying Accountant

98

Item 16G.

Corporate Governance

99

Item 17.

Financial Statements

100

Item 18.

Financial Statements

100

Item 19.

Exhibits

100

Technical Glossary

101

Signatures

107

 

i


 

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, we refer to Companhia Paranaense de Energia ‒ Copel, and, unless the context otherwise requires, its consolidated subsidiaries as “Copel”, the “Company”, “we” or “us”.

References to (i) the “real”, “reais” or “R$” are to Brazilian reais (plural) and the Brazilian real (singular) and (ii) “U.S. dollars”, “dollars” or “US$” are to United States dollars. We maintain our books and records in reais. Certain figures included in this annual report have been subject to rounding adjustments.

Our consolidated financial statements as December 31, 2013 and 2012, of and for each of the three years ended December 31, 2013, have been audited, as stated in the report appearing herein, and are included in this annual report. We prepared our consolidated financial statements included in this annual report in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

References in this annual report to the “Common Shares”, “Class A Shares” and “Class B Shares” are to our common shares, class A preferred shares and class B preferred shares, respectively. References to “American Depositary Shares” or “ADSs” are to American Depositary Shares, each representing one Class B Share. The ADSs are evidenced by American Depositary Receipts (“ADRs”).

Certain terms are defined the first time they are used in this annual report. As used herein, all references to “GW” and “GWh” are to gigawatts and gigawatt hours, respectively, references to “kW” and “kWh” are to kilowatts and kilowatt hours, respectively, references to “MW” and “MWh” are to megawatts and megawatt hours, respectively, and references to “kV” are to kilovolts. These and other technical terms are defined in the “Technical Glossary” that begins on page 101.

 

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements. We may also make written or oral forward-looking statements in our annual report to shareholders, in our offering circulars and prospectuses, in press releases and other written materials and in oral statements made by our officers, directors or employees. These statements 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. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve only the current view of management and are subject to a number of inherent risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to:

·         Brazilian political and economic conditions;

·         economic conditions in the State of Paraná;

·         developments in other emerging market countries;

·         our ability to obtain financing;

·         lawsuits; 

2


 

·         technical and operational conditions related to the provision of electricity services;

·         changes in, or failure to comply with, governmental regulations;

·         competition; 

·         electricity shortages; and

·         other factors discussed below under “Item 3. Key Information―Risk Factors”

All forward-looking statements are expressly qualified in their entirety by this cautionary statement, and you should not place undue reliance on any forward-looking statement contained in this annual report.

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

 

3


 

Item 3. Key Information

SELECTED FINANCIAL DATA

The information set forth in this section should be read in conjunction with our consolidated annual financial statements (including the notes thereto) and “Presentation of Financial and Other Data” and “Item 5. Operating and Financial Review and Prospects”.

We have included information with respect to the dividends and interest attributable to shareholders’ equity paid to holders of our common shares and preferred shares since January 1, 2009 under “Item 8. Financial Information—Dividend Payments—Payment of Dividends”.

 

As of and for the year ended December 31,

 

2013

2012

2011

2010(1)

2009(1)

 

(R$ million)

Statement of income data:

 

 

Operating revenues

9,180

8,493

7,776

6,901

6,250

Cost of sales and services provided

(7,038)

(6,540)

(5,457)

(4,976)

(4,629)

Gross profit

2,142

1,953

2,319

1,925

1,621

Operational expenses/income

(916)

(953)

(961)

(893)

(564)

Profit before financial results and taxes

1,266

1,000

1,358

1,032

1,057

Financial results

280

(27)

226

348

7

Profit before income tax and social contribution

1,506

973

1,584

1,380

1,064

Income tax and social contribution on profit

(405)

(246)

(407)

(370)

(252)

Net income for the year

1,101

727

1,177

1,010

812

Statement of financial position data:

 

 

 

 

 

Current assets

4,680

4,682

3,700

4,158

3,612

Recoverable rate deficit (CRC)(2)

1,381

1,384

1,346

1,341

1,255

Non-current assets

7,224

6,297

5,656

4,805

3,807

Property, plant and equipment, net

7,984

7,872

7,209

6,664

6,660

Total assets

23,111

21,209

18,837

17,859

16,313

Loans and financing and debentures (current)

1,015

274

116

704

136

Current liabilities

3,348

2,833

2,058

2,537

1,723

Loans and financing and debentures (non-current)

3,517

2,988

2,058

1,281

1,538

Non-current liabilities

6,835

6,014

4,701

4,027

4,065

Equity

12,929

12,362

12,078

11,296

10,524

Attributable to controlling shareholders

12,651

12,097

11,835

11,030

10,296

Attributable to non-controlling interest

277

265

243

266

228

Share capital

6,910

6,910

6,910

6,910

4,460

                                                                      

(1)      Data for 2010 and 2009 have not been restated in application of IAS 19 – Employee Benefits (as revised in 2011) and IFRS 11 – Joint Arrangements, described in note 3.1 to our financial statements. In particular, data for 2010 and 2009 reflect the results of the joint-venture Dominó Holdings S.A l through proportional consolidation in 2010 and 2009, as opposed to the equity method of accounting applicable in 2013, 2012 and 2011.

(2)     Amounts due from the State of Paraná that were included in current assets totaled R$85.5 million in 2013, R$75.9 million in 2012, R$65.9 million in 2011, R$58.8 million in 2010 and R$49.5 million in 2009. Amounts due from the State of Paraná that were included in long-term assets totaled R$1,295.1 million in 2013, R$1,308.4 million in 2012, R$1,280.6 million in 2011, R$1,282.4 million in 2010 and R$1,205 million in 2009. See Note 8 to our consolidated financial statements. This item includes both current and non-current CRC Account receivables.

 

 

 

2013

2012

2011

2010

2009

 

(R$ million)

Basic and diluted earnings per share:

 

 

Common Shares

3.74

2.44

4.04

3.45

2.76

Class A Preferred Shares

4.49

4.17

5.33

5.20

3.70

Class B Preferred Shares

4.12

2.69

4.44

3.79

3.04

Number of shares outstanding at year end (in thousands):

 

 

 

 

 

Common Shares

145,031

145,031

145,031

145,031

145,031

Class A Preferred Shares

381

381

384

390

395

Class B Preferred Shares

128,243

128,243

128,240

128,234

128,229

Total

273,655

273,655

273,655

273,655

273,655

Dividends per share at year end:

 

 

 

 

 

Common Shares

1.96

0.94

1.47

0.98

0.87

Class A Preferred Shares

2.53

2.53

2.53

2.53

1.63

Class B Preferred Shares

2.15

1.03

1.62

1.08

0.96

 

4


 

Exchange Rates

The following table provides information on the selling exchange rate, expressed in reais per U.S. dollar (R$/US$), for the periods indicated.

 

Exchange rate of Brazilian currency per US$1.00

Year

Low

High

Average(1)

Year-end

2009

1.7024

2.4218

1.9905

1.7412

2010

1.6554

1.8811

1.7589

1.6662

2011

1.5345

1.9016

1.6709

1.8758

2012

1.7024

2.1121

1.9588

2.0435

2013

1.9528

2.4457

2.1741

2.3426

                                                                      

Source: Central Bank.

(1)     Represents the average of the exchange rates on the last day of each month during the relevant period.

 

 

Month

Low

High

December 2013

2.3102

2.3817

January 2014

2.3335

2.4397

February 2014

2.3334

2.4238

March 2014

2.2603

2.3649

April 2014 (until April 15, 2014)

2.1974

2.2811

                                                                      

Source: Central Bank.

 

5


 

Risk Factors

Risks Relating to Brazil

Brazilian political and economic conditions could affect our business and the market price of the ADSs and our common shares. In addition, uncertainty regarding such changes could affect our business and the market price of the ADSs and our common shares.

The Brazilian government’s economic policies have in the past involved, among other measures, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results of operations may be adversely affected by these economic policies in case they are reinstated. These and other measures could also affect the market price of the ADSs and our common shares.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. Frequent and significant intervention by the Brazilian government has often changed monetary, tax, credit, tariff and other policies to influence the course of Brazil’s economy. The Brazilian government’s actions to control inflation and implement other policies have at times involved wage and price controls, devaluation of the real in relation to the U.S. dollar, changes in tax policies as well as other interventionist measures, such as nationalization, raising interest rates, freezing bank accounts, imposing capital controls and inhibiting international trade in Brazil. Changes in policy involving tariffs, exchange controls, regulations and taxation could have an adverse effect on our business and financial results of the ADSs and our common shares.

Fluctuations in the value of the Brazilian real against foreign currencies may result in uncertainty in the Brazilian economy and the Brazilian securities market, and they could have a material adverse effect on our net income and cash flow.

In recent years, the Brazilian real has fluctuated against foreign currencies, and the value of the real may rise or decline substantially from current levels. For instance, depreciation of the real increases the cost of servicing our foreign currency-denominated debt and the cost of purchasing electricity from Itaipu, a hydroelectric facility that is one of our major suppliers and that adjusts electricity prices based in part on its U.S. dollar costs. Depreciation of the real also creates additional inflationary pressures in Brazil that may negatively affect us. Depreciation generally curtails access to international capital markets and may prompt government intervention. It also reduces the U.S. dollar value of our dividends and the U.S. dollar equivalent of the market price of our common shares and the ADSs. For additional information about historical exchange rates, see “Exchange Rates”.

If Brazil experiences substantial inflation in the future, our margins and the market price of the Class B Shares and ADSs may be reduced.

Brazil has in the past experienced extremely high rates of inflation. More recently, Brazil’s annual rates of inflation, measured in accordance with the variation of the Índice Geral de Preços - Disponibilidade Interna (“IGP-DI”) index, were 7.5%  for the three months ended March 31, 2014, 5.5% in 2013, 8.11% in 2012 and 5.0% in 2011. The Brazilian government has in the past taken measures to combat inflation, and public speculation about possible future government actions has had significant negative effects on the Brazilian economy. Although our concession contracts provide for annual readjustments based on inflation indexes, if Brazil experiences substantial inflation in the future, and the Brazilian government adopts inflation control policies similar to those adopted in the past, our costs may increase faster than our revenues, our operating and net margins may decrease and, if investor confidence lags, the price of the Class B Shares and ADSs may fall. Inflationary pressures may also curtail our ability to access foreign financial markets and could lead to further government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Brazilian economy.

 

Negative developments in other national economies, especially those in developing countries, may negatively impact foreign investment in Brazil and the country’s economic growth.

International investors generally consider Brazil to be an emerging market. Historically, adverse developments in the economies of emerging markets have resulted in investors’ perception of greater risk from investments in such markets. Such perceptions regarding emerging market countries have significantly affected the market value of securities of Brazilian issuers. Furthermore, although economic conditions are different in each country, investors’ reactions to developments in one country can impact the prices of securities in other countries, including those in Brazil and this may diminish investors’ interest in securities of Brazilian issuers, including ours.

Changes in Brazilian tax policies may have an adverse effect on us.

The Brazilian government has changed its tax policies in ways that affect the electricity sector, and it may do so again in the future. These changes include increases in the tax rates affecting energy companies and, occasionally, the collection of temporary taxes related to specific governmental purposes. If we are unable to adjust our tariffs accordingly, we may be adversely affected.

 

Risks Relating to Our Operations

We are controlled by the State of Paraná, the policies and priorities of which directly affect our operations and may conflict with the interests of our investors.

We are controlled by the State of Paraná, which holds 58.6% of our outstanding common voting shares as of the date of this annual report, and whose interests may differ from other shareholders. As a major shareholder, the State of Paraná has the power to control all of our operations, including the power to elect a majority of the members of our Board of Directors and determine the outcome of any action requiring common shareholder approval, including transactions with related parties and corporate reorganizations.

The operations of the Company have had and will continue to have an important impact on the commercial and industrial development of the State of Paraná. In the past, the State of Paraná has used, and may in the future use, its status as our controlling shareholder to decide whether we should engage in certain activities and make certain investments aimed, principally, to promote its political, economic or social objectives and not necessarily to meet the objective of improving our business and/or operational results.

6


 

We are largely dependent upon the economy of the State of Paraná.

Our distribution market for the majority of our sales of electricity is located in the State of Paraná. Although a more competitive market involving possible sales to customers outside Paraná might develop in the future, our business depends and is expected to continue to depend to a very large extent on the economic conditions of Paraná. We cannot assure you that economic conditions in Paraná will be favorable to us in the future. The GDP (gross domestic product) of the State of Paraná increased 5.0% in 2013, while Brazil’s GDP increased 2.3% during the same period.

We are involved in several lawsuits that could have a material adverse effect on our business if their outcome is unfavorable to us.

We are the defendant in several legal actions, mainly relating to civil, administrative, labor and tax claims. The outcome of these proceedings is uncertain and, if determined against us, may result in obligations that could materially affect our results of operations. At December 31, 2013 our provisions for probable and reasonably estimated losses were R$1,266.1 million. For additional information, see “Item 8. Financial Information—Legal Proceedings”.

The development of transmission and power generation projects is subject to substantial risks.

In connection with the development of transmission and generation projects, we generally must obtain feasibility studies, governmental concessions or authorizations, permits and approvals, condemnation agreements, equipment supply agreements, engineering, procurement and construction contracts, sufficient equity and debt financing and site agreements, each of which involves the consent of third parties over which we have no control. In addition, project development is subject to environmental, engineering and construction risks that can lead to cost overruns, delays and other impediments to timely complete within a project’s budget. We cannot assure you that all required permits and approvals for our projects will be obtained, that we will be able to secure private sector partners for any of our projects, that we or any of our partners will be able to obtain adequate financing for our projects or that financing will be available on a non-recourse basis to us. If we are unable to complete a project, whether at the initial development phase or after construction has commenced, we may not be able to recover our investment in such a project, which investment may be substantial.

We are subject to limitations regarding the amount and use of public sector financing, which could prevent us from obtaining financing and implanting our investment plan.

 

As a State controlled company, we are subject to certain National Monetary Council (Conselho Monetário Nacional - “CMN”) and Banco Central do Brasil (“Central Bank”) limitations regarding the level of credit financial institutions may offer to public sector entities. As a result, we may have difficulty in obtaining financing from Brazilian financial institutions, which could create difficulties in the implementation of our investment plan. Brazilian legislation also establishes that a state-controlled company may generally use commercial bank debt only to refinance financial obligations. As a result of these regulations, our capacity to incur debt is limited, which could negatively affect the implementation of our investment plan.

Security breaches and other disruptions could compromise our data centers and expose us to liability, which would cause our business and reputation to suffer.

In our ordinary course of business, we collect and store personal data of our customers in our data centers. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings under Brazilian laws that protect the privacy of personal information and damage our reputation, a fact that could adversely affect our results of operations.

7


 

Risks Relating to the Brazilian Electricity Sector

We are uncertain as to the renewal of certain of our concessions, some of which are due to expire in 2015.

Under the 2013 Concession Renewal Law, we may only renew our concessions that were in effect as of 1995 (and, in the case of generation facilities, generation concession contracts entered into prior to 2003) for an additional 30-year period (or an additional 20-year period in the case thermal plants), if we agree to amend the terms of the concession contract that is up for renewal to reflect certain new terms and conditions imposed by the 2013 Concession Renewal Law, which vary depending on whether the concession is for generation, transmission or distribution. If we do not agree to amend the concession contract to reflect these new conditions, the concession contract cannot be renewed and will be subject to a competitive bidding process upon its expiration, which we might not win. Up to now, we have decided not to renew our generation concession contracts that are set to expire by 2015 and are therefore subject to competitive bidding processes pursuant to the 2013 Concession Renewal Law, and we decided to renew pursuant to the 2013 Concession Renewal Law our one transmission concession contract that is set to expire by 2015. For distribution concessions, we are unsure of the conditions that the Ministry of Mines and Energy, or Ministério de Minas e Energia (“MME”), and the Brazilian Electricity Regulatory Agency, or the Agência Nacional de Energia Elétrica (“ANEEL”), will require in order to renew these concession contracts, and we cannot assure you that we will be able to renew our main distribution contract, which expires on July 7, 2015, on terms that are favorable to us. The request for extension of our main distribution concession was presented to ANEEL on May 31, 2012 and we confirmed our request for renewal as required under the 2013 Concession Renewal Law. Under our main distribution contract, ANEEL should have responded to our request by January 7, 2014, but the fact that we did not receive a response from ANEEL by this deadline does not itself impact our ability to renew this contract under the 2013 Concession Renewal Law. If we do not renew our main distribution concession or if it is renewed under less favorable conditions, our results of operations and financial condition could be materially adversely affected. For more information, see “Item 4. Information on the Company—Concessions”.

Our operating revenues could be adversely affected if ANEEL makes decisions relating to our tariffs that are unfavorable to us.

The tariffs that we charge for sales of electricity to captive customers are determined pursuant to a concession agreement with the Brazilian government through ANEEL. ANEEL has substantial discretion to establish the tariff rates we charge our customers, which are determined pursuant to a concession agreement with ANEEL and in accordance with ANEEL’s regulatory decision-making authority.

Our distribution concession agreement and Brazilian law establish a price cap mechanism that permits three types of tariff adjustments: (i) annual readjustment (reajuste anual), (ii) periodic revision (revisão periódica), and (iii) extraordinary revision (revisão extraordinária). We are entitled to apply each year for the annual readjustment, which is designed to offset some effects of inflation on tariffs and pass through to customers certain changes in our cost structure that are beyond our control, such as the cost of electricity we purchase from certain sources and certain other regulatory charges, including charges for the use of transmission facilities. In addition, ANEEL carries out a periodic revision every four years that is aimed at identifying variations in our costs as well as setting a factor based on our operational efficiency that will be applied against the index of our ongoing annual tariff readjustments, the effect of which is to ensure that we share the benefits of improved economies of scale with our customers. At any time, we may also request an extraordinary revision of our tariffs in the case of a significant and unexpected event, including if such an event significantly alters our cost structure.

We cannot assure you that ANEEL will establish tariffs at rates that are favorable to us. To the extent that any of our requests for adjustments are not granted by ANEEL in a timely manner, our financial condition and results of operations may be adversely affected. In addition, ANEEL’s decisions relating to our tariffs may be contested by public authorities or by our customers. Administrative and judicial decisions resulting from these challenges may modify ANEEL’s decisions in a manner that is unfavorable to us, which may adversely affect our financial condition and results of operations.

 

8


 

 

Table of Contents

We are subject to comprehensive regulation of our business, which fundamentally affects our financial performance.

 

Our business is subject to extensive regulation by various Brazilian legal and regulatory authorities, particularly the MME and ANEEL, which regulate and oversee various aspects of our business and establish our tariffs. Changes to the laws and regulations governing our operations, which have occurred in the past, could adversely affect our financial condition and results of operations.

For example, the Brazilian government has taken action to reduce tariffs in recent years. In order to substantially reduce the price paid by Final Customers for electricity, the Brazilian government enacted the 2013 Concession Renewal Law, which significantly changed the conditions under which concessionaires are able to renew concession contracts. Under the 2013 Concession Renewal Law, most generation, transmission and distribution concessionaires may be renewed at the request of the concessionaire for an additional period of 30 years, but only if the concessionaire agrees to amend the terms of the concession contract to reflect certain new terms and conditions. See “Item 4. Information on the Company—Concessions”.

In addition to the 2013 Concession Renewal Law, in recent years ANEEL has significantly reduced our transmission tariffs. See “Item 4. “Transmission and Distribution—Tariffs”.

If any further regulations or new laws are passed by the Brazilian government to lower electricity prices, these new laws and regulations could have a material adverse effect on our results of operations.

If we are required to conduct our business in a manner substantially different from our current operations as a result of regulatory changes, our results of operations and financial condition may be adversely affected.

Certain customers in our distribution concession area may cease to purchase energy from our distribution business.

Our distribution business generates a large portion of its revenues by selling energy that it purchases from generation companies. Large electricity customers within the geographic area of our concession that meet certain regulatory requirements may qualify as Free Customers (“Free Customers”). A Free Customer in our distribution concession area is entitled to purchase energy directly from generation companies rather than through our distribution business, in which case that Free Customer would cease to pay our distribution business for that energy that we previously supplied. Therefore, if the number of Free Customers within the geographic area of our concession increases, the revenues and results of operations of our distribution business would be adversely affected.

We generate a portion of our operating revenues from Free Customers who may seek other energy suppliers upon the expiration of their contracts with us.

As of December 31, 2013, we had 27 Free Customers, representing approximately 7.1% of our consolidated operating revenues and approximately 15.1% of the total volume of electricity we sold to final customers. From January 1, 2014 until March 31, 2014, we reached agreements with 4 additional Free Customers. Our contracts with Free Customers are typically for periods ranging between two years and five years.

Approximately 0.5% of the megawatts sold under contracts to such customers are set to expire in 2014. In addition, as of December 31, 2013, we had 38 customers that were eligible to purchase energy as Free Customers. These customers represented approximately 2.2% of the total volume of electricity we sold in 2013, and approximately 4.7% of our operating revenues from energy sales for that year. There can be no assurance that Free Customers will enter into contracts or extend their current contracts to purchase energy from us.

 

 

9


 

Our operating results depend on prevailing hydrological conditions and the availability of natural gas. The impact of an electricity shortage and related electricity rationing, as in 2001 and 2002, may have a material adverse effect on our business and results of operations.

We are dependent on the prevailing hydrological conditions throughout Brazil, and in the geographic region in which we operate. According to data from ANEEL, approximately 64% of Brazil’s installed capacity currently comes from hydroelectric generation facilities. Our region, and Brazil in general, is subject to unpredictable hydrological conditions because of non-cyclical deviations in average rainfall. We are currently experiencing a period of low rainfall. The most recent previous period of low rainfall was in the years prior to 2001, when the Brazilian government instituted the Rationing Program (“Rationing Program”), a program to reduce electricity consumption that was in effect from June 1, 2001 to February 28, 2002. A recurrence of poor hydrological conditions, which could result in a low supply of electricity to the Brazilian market, could cause, among other things, the implementation of broad electricity conservation programs, including mandated reductions in electricity consumption. We cannot assure you that periods of severe or sustained below-average rainfall like the current one will not adversely affect our future financial results.

In addition, if a shortage of natural gas were to occur, this would increase the general demand for energy in the market and therefore increase the risk that a rationing program would be instated.

The regulatory framework under which we operate is subject to legal challenge.

The Brazilian government implemented fundamental changes in the regulation of the electric power industry under the 2004 legislation known as the New Industry Model Law (Lei do Novo Modelo do Setor Elétrico) and, recently, under the 2013 Concession Renewal Law. Challenges to the constitutionality of both laws are still pending before the Brazilian Supreme Court. If all or part of these laws were held to be unconstitutional, it would have uncertain consequences for the validity of existing regulation and the further development of the regulatory framework. The outcome of the legal proceedings is difficult to predict, but they could have an adverse impact on the entire energy sector, including our business and results of operations.

We may be forced to purchase energy in the spot market at higher prices if our forecasts for energy demand are not accurate, if there is a shortage of energy supply available in the regulated market, or if energy we contract is not delivered, and we may not be entitled to pass on any increased costs to our Final Customers in a timely manner, or at all.

Under the New Industry Model Law, electric energy distributors, including us, must contract to purchase, through public bids conducted by ANEEL, 100% of the forecasted electric energy demand for their respective distribution concession areas, up to five years prior to the actual delivery of electric energy. We cannot guarantee that our forecasts for energy demand in our distribution concession area will be accurate. If our forecasts fall short of actual electricity demand, or if we are unable to purchase energy through the regulated market due to lack of energy supply in the market, or if a generation company fails to deliver energy that was previously contracted, we may be forced to make up for the shortfall by entering into short-term agreements to purchase electricity in the spot market where we may pay significantly more for energy without being able to pass on these increased costs to our Final Customers. In addition, if we underestimate our distribution energy needs, we may be subject to penalties imposed by the Electric Energy Trading Chamber (Câmara de Comercialização de Energia Elétrica, or “CCEE”). In addition, if our forecasts surpass actual demand by more than the allowed margin (105% of actual demand), we will not be able to pass on to our Final Customers the cost of the excess energy that we acquire.

Our equipment, facilities and operations are subject to numerous environmental and health regulations, which may become more stringent in the future and may result in increased liabilities and increased capital expenditures.

Our distribution, transmission and generation activities are subject to comprehensive federal, state and local legislation, as well as supervision by Brazilian governmental agencies that are responsible for the implementation of environmental and health laws and policies. These agencies could take enforcement action against us for our failure to comply with their regulations and with requirements established for the maintenance of our environmental licenses. These actions could result in, among other things, the imposition of fines and revocation of licenses, which could have a material adverse effect on our financial condition or results of operations. It is also possible that enhanced environmental and health regulations will force us to allocate capital towards compliance, and consequently, divert funds away from planned investments. Such a diversion could have a material adverse effect on our financial condition and results of operations.

10


 

 

ANEEL could penalize us for failing to comply with the terms of our concessions or with applicable laws and regulations, and we may not recover the full value of our investment in the event that any of our concessions are terminated.

Our concessions are for terms of 20 to 35 years and may be extended if certain conditions are met. In the event that we fail to comply with any term of our concessions or applicable law or regulation, ANEEL may impose penalties on us, which may include warnings, the imposition of potentially substantial fines (in some instances, up to 2% of our revenues in the fiscal year immediately preceding the assessment) and restrictions on our operations, among others. ANEEL may also terminate our concessions prior to the expiration of their terms if we fail to comply with their provisions or if ANEEL determines, through an expropriation proceeding, that terminating our concession would be in the public interest. If ANEEL terminates any of our concessions before its expiration, we would not be able to operate the segment(s) of our business that had been authorized by the concession. Furthermore, any compensation that we may receive from the federal government for the unamortized portion of our investment may not be sufficient for us to recover the full value of our investment. The early termination or non-renewal of any of our concessions or the imposition of severe fines or penalties by ANEEL could have a material adverse effect on our financial condition and results of operations. See “Item 4. Information on the Company—The Brazilian Power Industry—Concessions”.

The construction, expansion and operation of our generation, transmission and distribution facilities and equipment involve significant risks that may cause loss of revenues or increase of expenses.

The construction, expansion and operation of our generation, transmission and distribution of electricity facilities and equipment involve many risks, including the inability to obtain required governmental permits and approvals, supply interruptions, strikes, climate and hydrological interference, unexpected environmental and engineering problems, increase in losses of electricity (including technical and commercial losses), the unavailability of adequate financing and the unavailability of equipment

In the event we experience these or other problems, we might not be able to generate, transmit and distribute electricity in favorable quantities and on favorable terms, which may adversely affect our financial condition and the results of our operations.

If we are unable to conclude our investment program on schedule, the operation and development of our business could be adversely affected.

In 2014, we plan to invest approximately R$1,308.7 million in our generation and transmission activities (including Baixo Iguaçu HPP and Colíder HPP), R$895.9 million in our distribution activities and R$80.0 million in our telecommunications activities. Our ability to complete this investment program depends on multiple factors, including our ability to charge sufficient fees for our services and a variety of regulatory and operational contingencies. There is no assurance that we will have the financial resources to complete our proposed investment program, and our inability to do so may adversely affect the operation and development of our business leading to the imposition of fines levied by ANEEL as well as reduction in tariff levels.

We are strictly liable for any damages resulting from inadequate provision of electricity services and our insurance policies may not fully cover such damages.

We are strictly liable under Brazilian law for damages resulting from the inadequate provision of electricity distribution services. In addition, our distribution, transmission and generation utilities may be held liable for damages caused to others as a result of interruptions or disturbances arising from the Brazilian generation, transmission or distribution systems, whenever these interruptions or disturbances are not attributed to an identifiable member of the National Electric System Operator, the Operador Nacional do Sistema Elétrico (“ONS”). We cannot assure you that our insurance policies will fully cover damages resulting from inadequate rendering of electricity services, which may have an adverse effect on us.

 

 

11


 
Risks Relating to the Class B Shares and ADSs

As a holder of ADSs you will generally not have voting rights at our shareholders’ meetings.

In accordance with Brazilian Corporate Law and our bylaws, holders of the Class B Shares, and thus of the ADSs, are not entitled to vote at our shareholders’ meetings except in limited circumstances. That means, among other things, that you, as a holder of the ADSs, are not entitled to vote on corporate transactions, including any proposed merger.

In addition, in the limited circumstances where the holders of Class B Shares are entitled to vote, holders may exercise voting rights with respect to the Class B Shares represented by ADSs only in accordance with the provisions of the deposit agreement relating to the ADSs. There are no provisions under Brazilian Corporate Law or under our bylaws that limit ADS holders’ ability to exercise their voting rights through the Depositary with respect to the underlying Class B Shares. However, the procedural steps involved create practical limitations on the ability of ADS holders to vote. For example, holders of our Class B Shares will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. In accordance with the Deposit Agreement, we will provide the notice to the Depositary, which will in turn, as soon as practicable thereafter, mail to holders of ADSs the notice of such meeting and a statement as to the manner in which instructions may be given by holders. To exercise their voting rights, ADS holders must then instruct the Depositary how to vote their shares. Because of this extra procedural step involving the Depositary, the process for exercising voting rights will take longer for ADS holders than for direct holders of Class B Shares. ADSs for which the Depositary does not receive timely voting instructions will not be voted.

As a holder of ADSs you will have fewer and less well-defined shareholders’ rights in Brazil than in the United States and certain other jurisdictions.

Our corporate affairs are governed by our bylaws and Brazilian Corporate Law, which may differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States or in certain other jurisdictions outside Brazil. Under Brazilian Corporate Law you and the holders of the Class B Shares may have fewer and less well-defined rights to protect your interests in connection with actions taken by our Board of Directors or the holders of Common Shares than under the laws of the United States and certain other jurisdictions outside Brazil.

Although Brazilian law imposes restrictions on insider trading and price manipulation, the Brazilian securities markets are not as highly supervised as the United States securities markets or markets in certain other jurisdictions outside Brazil. For instance, rules and policies against self-dealing and regarding the preservation of minority shareholder interests may be less developed and not as robustly enforced in Brazil as in the United States and certain other jurisdictions outside Brazil, which could potentially disadvantage you as a holder of the preferred shares and ADSs. In addition, shareholders in Brazilian companies must hold 5% of the outstanding share capital of a corporation in order to have standing to bring shareholders’ derivative suits, and shareholders in Brazilian companies ordinarily do not have standing to bring a class action suit.

You may be unable to exercise preemptive rights relating to the preferred shares.

You will not be able to exercise the preemptive rights relating to the Class B Shares underlying your ADSs unless a registration statement under the United States Securities Act of 1933, as amended (“Securities Act”) is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. Therefore, the Depositary will not offer rights to you as a holder of the ADSs unless the rights are either registered under provisions of the Securities Act or are subject to an exemption from the registration requirements. We are not obligated to file a registration statement with respect to the shares or other securities relating to these rights, and we cannot assure you that we will file any such registration statement. Accordingly, you may receive only the net proceeds from the sale of your preemptive rights by the Depositary or, if the preemptive rights cannot be sold, they will be allowed to lapse. If you are unable to participate in rights offerings, your holdings may also be diluted.

12


 

If you exchange your ADSs for Class B Shares, you risk increased taxes and the inability to remit foreign currency abroad.

Brazilian law requires that parties obtain a certificate of registration from the Central Bank in order to be allowed to remit foreign currencies, including U.S. dollars, abroad. For the ADSs, the Brazilian custodian for the Class B Shares has obtained the necessary certificate from the Central Bank for the payment of dividends or other cash distributions relating to the preferred shares or upon the disposition of the preferred shares. If you exchange your ADSs for the underlying Class B Shares, however, you may only rely on the custodian’s certificate for five business days from the date of exchange. Thereafter, you must obtain your own certificate of registration or register in accordance with Central Bank and CVM rules in order to obtain and remit U.S. dollars abroad upon the disposition of the Class B Shares or distributions relating to the preferred shares. If you do not obtain a certificate of registration, you may not be able to remit U.S. dollars or other currencies abroad and may be subject to less favorable tax treatment on gains with respect to the preferred shares. Pursuant to Central Bank rules, obtaining this registration requires exchange transactions, which are subject to taxes in Brazil. For more information, see “Item 10. Additional Information—Taxation—Brazilian Tax Considerations—Other Brazilian Taxes”.

If you attempt to obtain your own certificate of registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to the preferred shares or the return of your capital in a timely manner. The custodian’s certificate of registration and any certificate of foreign capital registration you obtain may be affected by future legislative changes. Additional restrictions may be imposed in the future on the disposition of the underlying Class B Shares or the repatriation of the proceeds from disposition.

The Brazilian government may impose exchange controls and restrictions on remittances abroad which may adversely affect your ability to convert funds in reais into other currencies and to remit other currencies abroad.

In the past, the Brazilian government has imposed restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil and the conversion of Brazilian currency into foreign currencies. The Brazilian government could again choose to impose this type of restriction if, among other things, there is deterioration in Brazilian foreign currency reserves or a shift in Brazil’s exchange rate policy. Reimposition of these restrictions would hinder or prevent your ability to convert dividends, distributions or the proceeds from any sale of Class B Shares, as the case may be, from reais into U.S. dollars or other currencies and to remit those funds abroad. We cannot assure you that the Brazilian government will not take similar measures in the future.

The relative volatility and illiquidity of the Brazilian securities markets may impair your ability to sell the Class B Shares underlying the ADSs.

The Brazilian securities markets are substantially smaller, less liquid, more concentrated and more volatile than major securities markets in the United States and certain other jurisdictions outside Brazil, and are not as highly regulated or supervised as some of these other markets. The illiquidity and relatively small market capitalization of the Brazilian equity markets may cause the market price of securities of Brazilian companies, including our ADSs and Class B Shares, to fluctuate in both the domestic and international markets, and may substantially limit your ability to sell the Class B Shares underlying your ADSs at a price and time at which you wish to do so.

13


 

Item 4. Information on the Company

The Company

We are engaged in the generation, transmission, distribution and sale of electricity mainly in the Brazilian State of Paraná, pursuant to concessions granted by the Brazilian regulatory agency for the electricity sector, ANEEL. We also provide telecommunications and other services.

At December 31, 2013, we generated electricity from nineteen (19) hydroelectric plants, one (1) wind plant and one (1) thermoelectric plant, for a total installed capacity of 4,756.1 MW, approximately 99.7% of which is derived from renewable sources. Including the installed capacity of generation companies in which we have an equity interest, our total installed capacity is 5,354.7 MW. Our electric power business is subject to comprehensive regulation by ANEEL.

We hold concessions to distribute electricity in 394 of the 399 municipalities in the State of Paraná and in the municipality of Porto União in the State of Santa Catarina. At December 31, 2013, we owned and operated 2,173.5 km of transmission lines and 187,876.5 km of distribution lines, constituting one of the largest distribution networks in Brazil. Of the electricity volume we supplied to our Final Customers during 2013:

·         39.5% was to industrial customers;

·         25.6% to residential customers;

·         18.8% to commercial customers; and

·         16.1% to rural and other customers.

Key elements of our business strategy include the following:

·         expanding our power generation, transmission, distribution, and telecommunication systems;

·         expanding our generation business’ sales to Free Customers both inside and outside the State of Paraná;

·         seeking productivity improvements in the short term and sustained growth in the long term;

·         striving to keep customers satisfied and our workforce motivated and prepared;

·         seeking cost efficiency and innovation;

·         achieving excellence in data, image, and voice transmission; and

·         researching new technologies in the energy sector in order to expand power output with renewable and non-polluting sources.

Historical Background

We were formed in 1954 by the State of Paraná to engage in the generation, transmission and distribution of electricity, as part of a plan to bring the electric energy sector under state control. We acquired the principal private power companies located in the State of Paraná in the early 1970s. During the period from 1970 to 1977, we significantly expanded our transmission and distribution network and worked to increase the connectivity of our network to networks in other Brazilian states. In 1979, a change in state law permitted us to extend our generating activities to include production from sources other than hydroelectric and thermal power plants.

14


 

 

Currently, we are the largest energy company in the State of Paraná. We are a corporation incorporated and existing under the laws of Brazil, with the legal name Companhia Paranaense de Energia – Copel. Our head offices are located at Rua Coronel Dulcídio, 800, CEP 80420-170 Curitiba, Paraná, Brazil. Our telephone number at the head office is (55-41) 3322-3535 and our website is www.copel.com.

Relationship with the State of Paraná

The State of Paraná owns 58.6% of our Common Shares and, consequently, has the ability to control the election of the majority of the members of our Board of Directors, the appointment of senior management and our direction, future operations and business strategy.

Corporate Structure

Prior to 2001, we operated as a single corporation engaged in the generation, transmission and distribution of electricity and in certain related activities. In compliance with the changed regulatory regime, we transferred our operations to four wholly-owned subsidiaries one each for generation, transmission, distribution and telecommunications and our investments in other companies to a fifth wholly-owned subsidiary. This corporate restructuring was completed in July 2001.

In 2007, to comply with energy sector legislation, we divided the assets of our transmission business (“Copel Transmissão S.A.”) between our distribution business (“Copel Distribuição S.A.”) and our generation business, (“Copel Geração S.A.”). As a result, we changed the name of the latter entity to Copel Geração e Transmissão S.A. We also liquidated Copel Participações S.A. and distributed the equity interests it held in our controlled companies between Copel Geração e Transmissão and our holding company.

In 2013, the Company was restructured in order to enhance the efficiency of our corporate structure and reduce our operating costs. Copel has now five wholly-owned subsidiaries - Copel Geração e Transmissão, Copel Distribuição and Copel Telecomunicações, previously existing entities and “Copel Participações” and “Copel Renováveis”, which respective corporate purposes are (i) holding and management of our equity interest investments in special purpose entities (SPEs) operating in the energy, gas, telecommunications, sanitation and service sectors and (ii) to centralize company’s renewable energy generation projects.

The current organization of the group as of December 31, 2013 is as described below:

Business

In the past, our generation and distribution businesses were integrated, and we sold most of the electricity we generated to the customers of our distribution business. This changed as a result of the implementation of the New Industry Model Law, enacted in 2004. Today, open auctions on the regulated market are the primary channel by which our generation business sells energy, and they are one of the primary channels by which our distribution business purchases energy to resell to captive customers. Our generation business only sells energy to our distribution business through auctions in the regulated market. Our distribution business, like certain other Brazilian distribution companies, is also required to purchase energy from Itaipu Binacional (“Itaipu”), a hydroelectric facility equally owned by Brazil and Paraguay, in an amount determined by the Brazilian government based on our proportionate share in the Brazilian electricity market. Itaipu has an installed capacity of 14,000 MW. Pursuant to a 1973 treaty between Brazil and Paraguay, Brazilian companies purchase the substantial majority of the electricity generated by Itaipu. For more information, see “Item 4. Information on the Company—The Brazilian Power Industry”.

 
 

15


 

ORGANIZATION CHART - EQUITY OWNERSHIP

AS OF DECEMBER 31, 2013

                                                                                                                       
 

ESTATE OF PARANÁ

   

BNDESPAR

 

 

FREE FLOAT

   

ELETROBRAS

   

OTHER

 
       

 

         
 

58.63%

Voting

   

26.41%

Voting

 

 

13.70%

Voting

 

 

1.06%

Voting

   

0.20%

Voting

 
 

31.08%

Total

   

23.96%

Total

 

 

44.18%

Total

 

 

0.56%

Total

   

0.22%

Total

 
           

 

                     

 

         

 

 

 

 

 

 

 

 

 

 

 

 

           

 

                     

 

         
           

 

                     

 

         

 

BM&FBOVESPA

 

           

 

                     

 

         
           

 

                     

 

         

 

13.64%

Voting

 

           

 

                     

 

         
           

 

                     

 

         

 

31.73%

Total

 

           

 

                     

 

         
           

 

                     

 

         

 

 

 

 

 

 

 

 

 

 

 

 

           

 

                     

 

         
           

 

                     

 

         

 

NYSE

 

           

 

                     

 

         
           

 

                     

 

         

 

0.06%

Voting

 

           

 

                     

 

         
           

 

                     

 

         

 

12.43%

Total

 

           

 

                     

 

         
           

 

                     

 

         

 

 

 

 

 

 

 

 

 

 

 

 

           

 

                     

 

         
           

 

                     

 

         

 

LATIBEX

 

           

 

                     

 

         
           

 

                     

 

         

 

0.00%

Voting

 

           

 

                     

 

         
           

 

                     

 

         

 

0.02%

Total

             

 

                     

 

         
           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         
                                                           

 

                                                         
                                                 

COPEL

                                                 
                                                                                                   
                                                                                                   
                                                                                                   
             

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           

 

                                                         

 

 

 

 

 

 

 

           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                     

 

(1) COPEL DISTRIBUIÇÃO S.A.

                         

 

(1) NOVA EUROS IV ENERGIAS RENOVÁVEIS S.A.

 

 

(2) ELEJOR - CENTRAIS ELÉTRICAS DO RIO JORDÃO S.A.

 

 

(2) COMPANHIA PARANAENSE DE GÁS - COMPAGAS

 

 

                         

 

 

 

 

 

 

 

                         

 

 

 

 

 

 

 

100.0%

                         

 

100.0%

 

 

70.0%

Total

 

 

51.0%

Total

 

 

                                             

 

                     

 

                     

 

                     

 

(1) COPEL TELECOMUNICAÇÕES S.A.

                         

 

(1) NOVA ASA BRANCA I ENERGIAS RENOVÁVEIS S.A.

 

 

(4) CUTIA EMPREENDIMENTOS EÓLICOS SPE S.A. (b)

 

 

(3) CARBOCAMPEL S.A.

 

 

                         

 

 

 

 

 

 

 

                         

 

 

 

 

 

 

 

100.0%

                         

 

100.0%

 

 

49.9%

Total

 

 

49.0%

Total

 

 

                                             

 

                     

 

                     

 

                     

 

(1) COPEL PARTICIPAÇÕES S.A.

                         

 

(1) NOVA ASA BRANCA II ENERGIAS RENOVÁVEIS S.A.

 

 

(3) COPEL AMEC S/C LTDA. (Em Liquidação)

 

 

(3) SERCOMTEL S.A. TELECOMUNICAÇÕES

 

 

                         

 

 

 

 

 

 

 

                         

 

 

 

 

 

 

 

100.0%

                         

 

100.0%

 

 

48.0%

Total

 

 

45.0%

Total

 

 

                                             

 

                     

 

                     

 

                     

 

(1) COPEL RENOVÁVEIS S.A.

                         

 

(1) NOVA ASA BRANCA III ENERGIAS RENOVÁVEIS S.A.

 

 

(3) ESCOELECTRIC LTDA.

 

 

(3) FOZ DO CHOPIM ENERGÉTICA LTDA.

 

 

                         

 

 

 

 

 

 

 

                         

 

 

 

 

 

 

 

100.0%

                         

 

100.0%

 

 

40.0%

Total

 

 

35.8%

Total

 

 

                                             

 

                     

 

                     

 

                     

 

(1) COPEL GERAÇÃO E TRANSMISSÃO S.A.

                         

 

(1) SANTA MARIA ENERGIAS RENOVÁVEIS S.A.

 

 

(3) DOIS SALTOS EMPREEND. DE GERAÇÃO ENERGIA ELÉTRICA LTDA.

 

 

(3) DONA FRANCISCA ENERGÉTICA S.A.

 

 

                         

 

 

 

 

 

 
                           

 

 

 

 

 

 
 

100.0%

                         

 

100.0%

 

 

30.0%

Total

 

 

23.0%

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

                       

 

                     

 

                     

 

                     

 

                     

 

                     

 

(1) SANTA HELENA ENERGIAS RENOVÁVEIS S.A.

 

 

(2) UEG ARAUCÁRIA LTDA.

 

 

(4) DOMINÓ HOLDINGS S.A.

 

 

(4) MARUMBI TRANSMISSORA DE ENERGIA S.A.

 

 

(2) UEG ARAUCÁRIA LTDA.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100.0%

 

 

20.0%

Total

 

 

45.0%

Total

 

 

80.0%

Total

 

 

60.0%

Total

 

 

                     

 

                       

 

       

 

         

 

                     

 

                     

 

(1) VENTOS DE SANTO URIEL S.A.

 

 

(6) SÃO BENTO ENERGIA (c)

   

COMPANHIA DE SANEAMENTO DO PARANÁ - SANEPAR

 

 

(4) COSTA OESTE TRANSMISSORA DE ENERGIA S.A.

 

 

(5) CONSÓRCIO ENERGÉTICO CRUZEIRO DO SUL

 

 

 

 

     

 

 

 

     

 

     

 

 

 

   

100.0%

   

100.0%

Total

   

30.1%

Total

 

 

51.0%

Total

 

 

51.0%

Total

                                                                         

 

                     

 

                                                                                             

 

(4) GUARACIABA TRANSMISSORA DE ENERGIA (TP SUL) S.A.

 

 

(4) MATRINCHÃ TRANSMISSORA DE ENERGIA (TP NORTE) S.A.

                                                                         

 

 

 

                                                                         

 

 

 

                                                                         

 

49.0%

Total

 

 

49.0%

Total

                                                                         

 

                     

 

                       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) INTEGRAÇÃO MARANHENSE TRANS. DE ENERGIA S.A.

 

 

(4) CAIUÁ TRANSMISSORA DE ENERGIA S.A.

   

 

(1) Wholly Owned Subsidiary

                                         

 

 

 

 

 

   

 

(2) Subsidiaries with non-controlling interest.

                                               

 

 

 

 

 

   

 

(3) Associates

                                                   

 

 

 

49.0%

Total

 

 

49.0%

Total

   

 

(4) Joint ventures

                                                 

 

 

 

                     

 

                       

 

(5) Joint Operation

                                               

 

 

 

(5) CONSÓRCIO SÃO JERÔNIMO

 

 

(4) PARANAÍBA TRANSMISSORA DE ENERGIA S.A.

   

 

(6) Advance for future investment

                                     

 

 

 

 

 

   

 

                                                               

 

 

 

 

 

   

 

                                                               

 

 

 

41.2%

Total

 

 

24.5%

Total

   

 

Obs.: Copel also owns 0.82% of Total Capital Investco (HPP Lajeado).

 

 

 

                     

 

                       

 

(a)The participation in the consortium Baixo Iguaçu is subject to approval by ANEEL.

(b) The purchase agreement of Cutia Empreendimentos may be terminated if the unconditional approval of the stock purchase and sale and projects by the Brazilian Antitrust Authority - CADE is not obtained and seller is enforced to refund the capital injected, adjusted by IPCA (Extended Consumer Price Index) variation.

(c)The purchase agreement of São Bento Energia may be terminated if approvals by Aneel, Cade and Brazilian Development Bank - BNDES are not obtained and seller is enforced to refund the capital injected, adjusted by IPCA (Extended Consumer Price Index) variation. ​​

 

 

 

(4) TRANSMISSORA SUL BRASILEIRA DE ENERGIA S.A.

 

 

(5) CONSÓRCIO TAPAJÓS

   

 

 

 

 

 

 

   

 

 

 

 

 

 

   

 

 

 

 

20.0%

Total

 

 

11.1%

Total

   

 

 

 

 

                                               

 

 

 

 

(5) CONSÓRCIO BAIXO IGUAÇU (a)

                           

 

 

 

 

                           

 

 

 
                             

 

 

 
 

30.0%

Total

                           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
                                                                                                                       
                                                                                                                       

16


 

 

The following table sets forth the total electricity we generated and purchased in each of the last five years, by showing the total amount of electricity generated and purchased by Copel Geração e Transmissão and the total amount of electricity purchased by Copel Distribuição.

 

 

Year ended December 31,

 

2013

2012

2011

2010

2009

 

 

(GWh)

Copel Geração e Transmissão

 

 

 

 

 

 

Electricity generated

24,420

18,181

25,789

24,321

18,321

 

Electricity purchased from others(1)

2,505

3,981

952

696

4,093

 

Total electricity generated and purchased by Copel Geração e Transmissão

26,925

22,162

26,741

25,017

22,414

 

Copel Distribuição

 

 

 

 

 

 

Electricity purchased from Itaipu(2)

5,193

5,256

5,278

5,306

5,379

 

Electricity purchased from Auction – CCEAR – affiliates

832

1,316

1,328

1,230

1,488

 

Electricity purchased from Auction – CCEAR – other

14,814

17,457

16,771

15,405

14,185

 

Electricity purchased from other(3)

6,054

3,267

3,105

3,090

2,901

 

Total electricity purchased by Copel Distribuição

26,893

27,296

26,482

25,031

23,953

 

Total electricity generated and purchased by Copel Geração e Transmissão and Copel Distribuição

53,818

49,458

53,223

50,048

46,367

 

                                                                      

(1)     Includes capacity made available but not fully delivered (including energy from MRE and CCEE).

(2)     Distribution companies operating under concessions in the Midwest, South and Southeast regions of Brazil purchase electricity generated by Itaipu.

(3)     Includes capacity made available but not fully delivered (including energy from Elejor and CCEE).

 

 

The following table sets forth the total electricity we sold to Free Customers, captive customers, distributors, energy traders and other utilities in the south of Brazil through the Interconnected Transmission System that links the states in the south and southeast of Brazil, by showing the total amount of electricity sold by Copel Geração e Transmissão and Copel Distribuição in the last five years.

 

 

Year ended December 31,

 

2013

2012

2011

2010

2009

 

(GWh)

Copel Geração e Transmissão

 

Electricity delivered to Free Customers

4,082

1,404

919

1,054

1,044

Electricity delivered to bilateral agreements

5,233

1,367

1,051

1,455

1,051

Electricity delivered to Auction – CCEAR – affiliates

832

1,316

1,327

1,230

1,488

Electricity delivered to Auction – CCEAR – other

6,389

13,780

14,139

13,405

13,478

Electricity delivered to the Interconnected System(1)

9,793

3,856

8,625

7,233

4,874

Total electricity delivered by Copel Geração e Transmissão

26,329

21,723

26,061

24,377

21,935

Copel Distribuição

 

Electricity delivered to captive customers

22,926

23,248

22,454

21,304

20,242

Electricity delivered to distributors in the State of Paraná

620

635

600

568

524

Spot Market – CCEE

62

36

341

61

266

Total electricity delivered by Copel Distribuição

23,608

23,919

23,395

21,933

21,032

Subtotal

49,937

45,645

49,456

46,310

42,967

Losses by Copel Geração e Transmissão and Copel Distribuição

3,881

3,816

3,767

3,738

3,400

Total electricity delivered by Copel Geração e Transmissão and Copel Distribuição , including losses

53,818

49,458

53,223

50,048

46,367

                                                                      

 (1)     Includes capacity made available but not fully delivered.

 

17


 

Generation

 

Generation Facilities

 

At December 31, 2013, we operated nineteen hydroelectric plants, one wind plant and one thermoelectric plant, with a total installed capacity of 4,756.1 MW. If we include the installed capacity of the generation companies in which we have an equity interest, our total installed capacity is 5,354.7 MW. We produce electricity almost exclusively through our hydroelectric plants. Our assured energy totaled 2,069.4 average MW in 2013. Our generation varies year by year as a result of hydrological conditions and other factors. We generated 24,420.4 GWh in 2013, 18,180.9 GWh in 2012, 25,789 GWh in 2011, 24,321 GWh in 2010, and 18,321 GWh in 2009.

The generation of electrical energy at our power plants is supervised, coordinated and operated by our Generation Operation Center in the city of Curitiba. This operation center is responsible for coordinating the operations related to approximately 99.9% of our total installed capacity, including some of the plants in which we hold only partial ownership interests.

The following table sets forth certain information relating to our main plants in operation at December 31, 2013.

 

Type

Plant

Installed capacity

Assured energy (1)

Placed in service

Concession expires

 

 

(MW)

(GWh/yr)

 

 

Hydroelectric

Foz do Areia

1,676

5,045.8

1980

2023

Hydroelectric

Segredo

1,260

5,282.3

1992

2029

Hydroelectric

Salto Caxias

1,240

5,299.8

1999

2030

Hydroelectric

Capivari Cachoeira

260

954.8

1970

2015

Hydroelectric

Mauá

185(2)

883.3

2012

2042

                                                                      

(1)     Values used to determine volumes committed for sale.

(2)     Corresponds to 51% of the installed capacity of the plant (363 MW).  

 

 

Governador Bento Munhoz da Rocha Netto (“Foz do Areia” Plant). The Foz do Areia Hydroelectric Plant is located on the Iguaçu River, approximately 350 kilometers southwest of the city of Curitiba.

 

Governador Ney Aminthas de Barros Braga (“Segredo” Plant). The Segredo Hydroelectric Plant is located on the Iguaçu River, approximately 370 kilometers southwest of the city of Curitiba.

Governador José Richa (“Salto Caxias” Plant). The Salto Caxias Hydroelectric Power Plant is located on the Iguaçu River, approximately 600 kilometers southwest of the city of Curitiba.

Governador Pedro Viriato Parigot de Souza (“Capivari Cachoeira” Plant). The Capivari Cachoeira Hydroelectric Plant is the largest underground hydroelectric plant in Brazil. The reservoir is located on the Capivari River, approximately 50 kilometers north of the city of Curitiba, and the power station is located on the Cachoeira River, approximately 15 kilometers from the reservoir.

Mauá. The Mauá Hydroelectric Plant is located on the Tibagi River, in the State of Paraná. It was constructed between 2008 and 2012 by Consórcio Energético Cruzeiro do Sul, in which Copel has a 51.0% interest and Eletrosul Centrais Elétricas S.A. (“Eletrosul”) holds the remaining 49.0%. It is located approximately 250 kilometers from Curitiba, in the Municipality of Telêmaco Borba.

In addition to our generation facilities, we have ownership interests in several other generation companies. Between 2004 and 2010, we were required by law to retain a majority of the voting shares of any company in which we obtained an ownership interest. Starting in 2010, it became possible for us to hold non-controlling interests in companies.

18


 

The following table sets forth information regarding the generation plants in which we had a partial ownership interest as of December 31, 2013:

 

Type

Plant

Installed

capacity

Assured

energy

Placed in service

Our ownership

Concession

expires

 

 

(MW)

(GWh/yr)

 

(%)

 

Thermal

Araucária

484.1

3,419.0 (1)

September 2006

80.0

2029

Hydroelectric

Elejor Facility (Santa Clara and Fundão)

246.4

1,229.0

July 2005
June 2006

70.0

2036

Hydroelectric

Dona Francisca

125.0

683.3

February 2001

23.0

2033

Hydroelectric

Foz do Chopim

29.1

188.0

October 2001

35.8

2030

Hydroelectric

Lajeado (Investco S.A)

902.5

4,613.0

December 2001

0.8

2032

                                                                         

(1)     The assured energy of thermal plants such as Araucária varies depending on the price of natural gas, according to criteria established by the MME.

 

 

Araucária. We have an 80.0% interest in UEG Araucária Ltda., which owns the Araucária Thermoelectric Plant. In December 2006, UEG Araucária Ltda. entered into a lease agreement under which it leased the plant to Petróleo Brasileiro S.A. - Petrobras, and Petrobras entered into an operation and maintenance agreement with our subsidiary Copel Geração e Transmissão under which Copel Geração e Transmissão agreed to operate and maintain the plant. Both agreements expired on January 31, 2014. Therefore, as of February 1, 2014, UEG Araucária Ltda. is responsible for selling the energy produced by the Araucária Thermoelectric Plant. This energy is not sold in long-term contracts, but rather is distributed in the spot market as directed by the ONS.

Elejor Facility. The Elejor Facility consists of the Santa Clara and Fundão Hydroelectric Plants, both of which are located on the Jordão River in the State of Paraná. The aggregate total installed capacity of the units is 246.4 MW, which includes two smaller hydroelectric generation units installed in the same location. Centrais Elétricas do Rio Jordão S.A. (“Elejor”) signed a concession agreement with a term of 35 years for the Santa Clara and Fundão plants in October 2001. As of December 31, 2013, we own 70.0% of the common shares of Elejor, and Paineira Participações owns the remaining 30.0%.

Elejor is required to make monthly payments to the federal government for the use of hydroelectric resources, with total annual payments of R$19.0 million. This amount is adjusted on an annual basis by the Brazilian General Market Price Index, Índice Geral de Preços do Mercado (“IGP-M Index”). In 2013, the aggregate amount of concession payments paid by Elejor to the federal government was R$47.8 million.

We have a power purchase agreement with Elejor that provides that we will purchase all of the energy produced by the Santa Clara and Fundão facilities at a set rate until 2019, to be adjusted annually in accordance with the IGP-M Index. In 2013, Elejor’s net revenues and net profits were R$217.4 million and R$41.9 million, respectively, while in 2012 its net revenues and net profits were R$211.7 million and R$33.3 million, respectively.

Dona Francisca. We own 23.03% of the common shares of Dona Francisca Energética S.A. (“DFESA”). The other shareholders are Gerdau S.A. with a 51.82% interest, Celesc S.A. with a 23.03% interest and Desenvix S.A. with a 2.12% interest. DFESA Hydroelectric Power Plant is located on the Jacuí River in the State of Rio Grande do Sul. The plant began full operations in 2001. As of December 31, 2013, DFESA had loans and financing in the total amount of R$14.8 million. The debt is secured by a pledge of shares of DFESA. We have a power purchase agreement with DFESA, valued at R$72.0 million annually, which will expire in March 2015 and which obligates Copel Geração e Transmissão to purchase 100% of its assured energy. In 2013, DFESA’s net revenues and net profits were R$104.4 million and R$39.0 million, respectively, while in 2012 its net revenues and net profits were R$94.0 million and R$35.4 million, respectively.

19


 

 

Foz do Chopim. The Foz do Chopim Hydroelectric Plant is located on the Chopim River in the State of Paraná. We own 35.77% of the common shares of Foz do Chopim Energética Ltda., the entity that owns the Foz do Chopim Hydroelectric Plant. Silea Participações Ltda. owns the remaining 64.23%. The operation and maintenance of Foz do Chopim Hydroelectric Plant is performed by Copel Geração e Transmissão S.A. Energy supply agreements were executed at an average tariff of R$202.56/MWh. Foz do Chopim Energética Ltda. also has the authorization to operate Bela Vista SHP, a hydroelectric power plant which is located in the same river and has similar capacity. The process for obtaining the necessary environmental license is ongoing. In 2013, Foz do Chopim’s net revenues and net profits were R$38.8million and R$28.8 million, respectively, while in 2012 its net revenues and net profits were R$37.5 million and R$26.4 million, respectively.

 

Expansion of Generating Capacity

We expect to spend R$1,191.3 million in 2014 to expand our generation capacity, including participation in new businesses, of which R$199.3 million will be invested in wind power plants, R$409.8 million will be invested in the Colíder Hydroelectric Power Plant and R$316.0 million will be invested in the Baixo Iguaçu Hydroelectric Power Plant. The remaining amount will be spent on equipment maintenance, the modernization of the Foz de Areia Hydroelectric power plant, among other projects.

As described below, in 2013 we acquired seven wind parks, and executed an acquisition agreement for the 50.1% controlling interest that we did not already own of four other wind parks. We spent an aggregate amount of R$395.5 million in these acquisitions.

We have interests in several generation projects. The following table sets forth information regarding our planned major generation projects and recent acquisitions of generation facilities.

 

Facility

Installed capacity

Estimated

assured energy (1)

Budgeted completion cost

Beginning of operation (expected)

Our ownership

Status

 

(MW)

(GWh/year)

(R$ million)

 

(%)

 

São Jerônimo HPP

331.0

1,560

1,131

To be determined

41.2

Concession granted

Colíder HPP

300.0

1,573

1,570

2014

100.0

Concession granted

Baixo Iguaçu HPP

350.2

1,514

1,600

2016

30.0(3)

Concession granted

Wind Farms

277.6

1,213

1,680(2)

-

100.0(3)

Concession granted

                                                                         

(1)     Values used to determine volumes committed for sale.

(2)     Includes São Bento Energia.

(3)     The closing of (i) the acquisition of 50.1% of São Bento’s equity interest and (ii) Baixo Iguaçu’s 30% equity interest acquisition are pending regulatory and creditor approval.

 

 

São Jerônimo. The São Jerônimo Hydroelectric Power Plant will be located between the municipalities of Tamarana and São Jerônimo da Serra on the Tibagi River in the State of Paraná. The plant will have two generation units, with a total installed capacity of 331 MW. It is uncertain when the construction of the facility will begin. There are a number of issues that must be resolved before construction can begin, the most significant being that we must obtain permission from the Brazilian Congress to start construction because the future plant’s reservoir will be partially located in an indigenous area.

Colíder. In July 2010, we won an ANEEL auction for a 35-year concession to construct and operate the Colíder Hydroelectric Power Plant on the Teles Pires River in the State of Mato Grosso. The Colíder facility will have an installed capacity of 300.0 MW and will be located in the municipalities of Nova Canaã do Norte, Colíder, Itaúba and Cláudia. Construction began in 2011. Until December 2013 69% of the construction works were completed. The commercial generation is scheduled to begin in June 2015. From the facility’s assured energy of 179.6 average MW, 125.0 average MW are committed under a 30-year contract to distributors at a price of R$103.40/MWh, as of July 1, 2010 (adjusted annually in accordance with the IPCA inflation index), with supply starting in January 2015. The remaining 54.6 average MW power not sold under this contract has yet to be contracted for and is still available for sale to large customers in the free market.

20


 

Baixo Iguaçu. In June 2013, we acquired a 30% equity interest in the Baixo Iguaçu HPP through a consortium, with no premium payment. Baixo Iguaçu is the last energy project planned for the main river in the state of Paraná (Rio Iguaçu) and will be located around 30 km downstream from Governador José Richa HPP - the Salto Caxias Hydroelectric Power Plant, which is 100% owned by Copel. The Baixo Iguaçu facility will have an installed capacity of 350.2 MW and will be located in the municipalities of Capanema, Capitão Leonidas Marques, Planalto, Realeza and Nova Prata do Iguaçu. Construction began in 2013. The commercial generation is scheduled to begin in 2016. From the facility’s assured energy of 172.8 average MW, 120.96 average MW are committed under a 30-year contract to distributors at a price of R$98.98/MWh, as of July 1, 2008 (adjusted annually in accordance with the IPCA inflation index), with supply starting in April 2016. The remaining 51.84 average MW power not sold under this contract has yet to be contracted for and is still available for sale to large customers in the free market.

Wind Farms. In August 2013, we acquired 100% of the generation assets of Salus Fundos de Investimento em Participações, a company that owned seven wind farm special purposes entities (Asa Branca I, Asa Branca II, Asa Branca III, Eurus IV, Santa Helena, Santa Maria e Santo Uriel) located in the State of Rio Grande do Norte, with total installed capacity of 183.6 MW. An average of 52.2 MW (from WPPs Asa Branca I, Asa Branca II, Asa Branca III and Eurus IV), was committed under contract to electric power distributors in the alternative energy auction in August 2010, at a weighted average price of R$135.40/ MWh (adjusted annually by IPCA inflation index). An average of 40.7 MW (from WPPs Santa Helena, Santa Maria and Santo Uriel), was committed under contract in the reserve energy auction in August 2011, at a weighted average price of R$101.98/ MW/h (annually adjusted by the IPCA inflation index). The energy to be generated was sold through 20-year term contracts, with payments beginning in July 2014 (Santa Helena and Santa Maria) and March 2015 (Asa Branca I, Asa Branca II, Asa Branca III, Santo Uriel and Nova Eurus IV).

São Bento Energia. In 2011, we acquired 49.9% of São Bento Energia Investimentos e Participações, which owns four wind parks (GE Olho d´Água, GE Boa Vista, GE Farol e GE São Bento do Norte) located in the State of Rio Grande do Norte, with total installed capacity of 94 MW. In 2013, we executed an acquisition agreement for the remaining 50.1% The closing of this acquisition is pending regulatory and creditor approval. In August 2010, an average of 43.7 MWs of energy generated at a weighted average price of R$134.4/MWh (annually adjusted by IPCA index) was sold to fifteen distribution concessionaires in ANEEL public auctions. The energy to be generated by these wind farms was sold through 20-year term contracts. Although these wind farms have not yet begun producing energy due to lack of transmission lines, since they are ready for generation in line with ANEEL certification, we started receiving payment pursuant to these contracts in September 2013.

 

21


 

Proposed Projects

We are involved in various initiatives to study the technical, economic and environmental feasibility of certain hydroelectric generation projects. These proposed generation projects would have a total of 928.6 MW of installed capacity. The following table sets forth information regarding our proposed generation projects.

Hydroelectric Project

Estimated Installed

Capacity

Estimated Assured

Energy

Our ownership

 

(MW)

(GWh/yr)

(%)

SHP BelaVista

29.0

157.4

36

SHP Dois Saltos

25.0

119.1

30

SHP Pinhalzinho

10.9

52.1

30

SHP Burro Branco

10.0

45.1

30

SHP Foz do Turvo

8.8

41.2

30

SHP Foz do Curucaca

29.5

142.2

15

SHP Salto Alemã

29.0

139.7

15

SHP São Luiz

26.0

125.3

15

SHP Alto Chopim

20.3

98.0

15

SHP Rancho Grande

17.7

85.3

15

WPP Cutia Empreendimentos Eólicos

137.4

718.3

100

WPP Projects in Development

411.0

2,305.5

100

TPP Norte Pioneiro

144.0

1,051.2

100

 

 

In 2014, we plan to bid for concessions to construct and operate new hydroelectric power plants in power auctions in the regulated market for new generation projects. We are studying the feasibility of our participation in the hydroelectric projects planned to be listed in the A-5 Auctions of 2014. We will also conduct studies of new hydroelectric power plants.

In addition, we are also conducting studies related to future government auctions for wind farms, small hydroelectric plants and thermoelectric power plants in which we may eventually participate.

Other renewable energy projects under study or development include the use of municipal solid waste in power generation, cultivation of micro algae for energy production, wind energy, solar photovoltaic energy, energy from the crude vegetable oil and biogas production from micro algae.

 

 

 

 

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Table of Contents

 

Transmission and Distribution

General

Electricity is transferred from power plants to customers through transmission and distribution systems. Transmission is the bulk transfer of electricity from generating facilities to the distribution system by means of the Interconnected Transmission System, in tension greater than or equal to 230 kV. Distribution is the transfer of electricity to Final Customers, in tension lesser or equal to 138 kV.

The following table sets forth certain information concerning our transmission and distribution systems at the dates presented.

 

At December 31,

 

 

2013

2012

2011

2010

2009

 

Transmission lines (km):

 

 

 

 

 

 

230 kV and 500 kV

2,160.9

2,010.7

2,016.3

1,900.4

1,929.4

138 kV

7.2

7.2

7.2

7.2

7.2

69 kV(1)

5.4

5.4

5.4

5.4

5.4

Distribution lines (km):

 

 

 

 

 

230 kV

63.3

68.3

66.1

66.1

66.1

138 kV

5,054.7

4,880.1

4,705.3

4,586.3

4,578.8

69 kV

932.5

968.5

1,003.5

981.5

967.2

34.5 kV

81,546.1

81,253.3

80,662.2

79,496.2

78,357.4

13.8 kV

100,279.8

99,195.1

97,981.0

96,863.6

95,381.6

Transformer capacity (MVA):

 

 

 

 

 

Transmission and distribution substations (69 kV – 500 kV)(2)

20,576.5

19,454.8

19,415.3

18,398.6

18,112.8

Generation (step up) substations

5,006.8

5,006.8

5,006.8

5,006.8

5,004.1

Distribution substations (34.5 kV)

1,480.2

1,504.8

1,539.6

1,533.7

1,507.6

Distribution transformers

10,882.2

10,325.3

9,961.6

9,312.4

8,934.7

Total energy losses

7.2%

7.7%

7.1%

7.5%

7.3%

 (1)     As approved by ANEEL in 2008, these 69 kV transmission lines held by Copel Distribuição were transferred to Copel Geração e  Transmissão, since they were part of our transmission business segment.

 (2)     This figure includes transformers with primary tensions of 69 kV and 138 kV which belong to Copel Distribuição but are implemented in 230 kV and 525 kV substations, which belong to Copel Geração e Transmissão.

 

 

Transmission

Our transmission system consists of all our assets of 230 kV and greater and a small portion of our 69 kV and 138 kV assets, which are used to transmit the electricity we generate and the energy we receive from other sources. In addition to using our transmission lines to provide energy to customers in the State of Paraná, we also transmit energy through the Interconnected Transmission System. Two companies owned by the federal government, Eletrosul and Furnas Centrais Elétricas S.A. (“Furnas”), also maintain significant transmission systems in the State of Paraná. Furnas is responsible for the transmission of electricity from Itaipu, while Eletrosul’s transmission system links the states in the south of Brazil. Copel, like all other companies that own transmission facilities, is required to allow other parties access to its transmission facilities in exchange for a compensation at a level set by ANEEL.

The construction of new transmission facilities of 230 kV and higher must be awarded in a bidding process or otherwise authorized by ANEEL. We are permitted by ANEEL to make minor improvements to some of the existing 230 kV and 500 kV facilities.

In June 2010, Copel won a public auction for the construction and operation of two facilities, both located in the State of São Paulo. The first concession is a 356 km transmission line of 500 kV and the second is a 230 kV substation. We expect to complete the construction work of these facilities by December 2014.

In September 2011, SPC Costa Oeste, a strategic agreement between Copel (51%) and Eletrosul (49%), won an ANEEL public auction for the construction and operation of the 143 km Cascavel Oeste - Umuarama transmission line (230 kV) and the Umuarama substation (230/138 kV), both located in the State of Paraná. Construction is on schedule and the transmission line should come into operation in May 2014.

In December 2011, SPC Transmissora Sul Brasileira, a strategic agreement between Copel (20%) and Eletrosul (80%) won an ANEEL public auction for the construction and operation of 798 km of transmission lines in the States of Rio Grande do Sul, Santa Catarina e Paraná, and one substation in the State of Rio Grande do Sul. The signing of the concession agreement was in May 2012 and the start of operation is scheduled for May 2014.

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In the same ANEEL public auction, SPC Caiuá Transmissora, a strategic agreement between Copel (49%) and Elecnor (51%) won the right to construct and operate 136 km of transmission lines and two substations in the State of Paraná, and SPC Integração Maranhense Transmissora, a strategic agreement between Copel (49%) and Elecnor (51%), won the right to build and operate a 365 km transmission line in the State of Maranhão. We expect to complete the construction work of these facilities by May 2014.

Additionally, SPC Marumbi Transmissora, a strategic agreement between Copel (80%) and Eletrosul (20%) won an ANEEL auction for the construction and operation of 28 km of transmission lines and one substation in the State of Paraná. The start of operation of these assets is scheduled for December 2014.

In March 2012, Copel (49%), together with State Grid Brazil Holding (51%), through the SPC Matrinchã Transmissora and Guaraciaba Transmissora, won an ANEEL public auction for the construction and operation of 1,605 km of new transmission lines and four new substations that will transmit energy produced by five new hydroelectric plants that are planned to be constructed in Teles Pires River, in the North of Mato Grosso State, to the Southeast region of Brazil. These lines and substations are schedule to enter into operation in May 2015.

In June 2012, Copel won a public auction for the construction and operation of 98km of transmission lines. The concession won by Copel is for the construction of 230kV transmission lines that will link substations Londrina and Figueira, located in northern Paraná (88km) and Foz do Chopim and Salto Osório power plants, both located in southwest Paraná (10 km). Construction of these lines began in 2013 and they are scheduled to become operational in September 2014.