UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-34129

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. –

ELETROBRAS

(exact name of registrant as specified in its charter)

BRAZILIAN ELECTRIC POWER COMPANY

(translation of registrant’s name into English)

Federative Republic of Brazil

(jurisdiction of incorporation or organization)

Avenida Presidente Vargas, 409 – 9th floor, Edifício Herm. Stoltz – Centro, CEP 20071-003, Rio de Janeiro, RJ, Brazil

(address of principal executive offices)

Armando Casado de Araujo

Chief Financial Officer and Chief Investor Relations Officer

(55 21) 2514-6435 – df@eletrobras.com.br

Avenida Presidente Vargas 409, 13th floor,

20071-003 - Rio de Janeiro – RJ – 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
American Depositary Shares, evidenced by American Depositary Receipts, each representing one Common Share	New York Stock Exchange
Common Shares, no par value*	New York Stock Exchange
American Depositary Shares, evidenced by American Depositary Receipts, each representing one Class B Preferred Share	New York Stock Exchange
Preferred Shares, no par value*	New York Stock Exchange

* Not for trading but only in connection with the registration of the American Depositary Shares pursuant to the requirements of the SEC.

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.

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2015 was:

1,087,050,297	Common Shares
146,920	Class A Preferred Shares
265,436,883	Class B Preferred Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ¨  Yes    x  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    x  No

Indicate by checkmark 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    x  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).    ¨  Yes    x  No

Indicate by check mark whether the registrant is a large accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12-b-2 of the Exchange Act.

Large accelerated filer  x                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  x Other   ¨ 

Indicate by check mark which financial statement item the registrant has elected to follow.    ¨  Item 17    x   Item 18

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 Exchange Act.).    ¨  Yes    x  No

TABLE OF CONTENTS

		Page
EXPLANATORY NOTE			1
ITEM 1.	Identity of Directors, Senior Management and Advisers		14
ITEM 2.	Offer Statistics and Expected Timetable		14
ITEM 3.	Key Information		14
ITEM 4.	Information on the Company		42
ITEM 4A.	Unresolved Staff Comments		99
ITEM 5.	Operating and Financial Review and Prospects		99
ITEM 6.	Directors, Senior Management and Employees		135
ITEM 7.	Major Shareholders and Related Party Transactions		141
ITEM 8.	Financial Information		143
ITEM 9.	The Offer and Listing		153
ITEM 10.	Additional Information		165
ITEM 11.	Quantitative and Qualitative Disclosures about Market Risk		181
ITEM 12.	Description of Securities other than Equity Securities		182
ITEM 13.	Defaults, Dividend Arrearages and Delinquencies		183
ITEM 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		183
ITEM 15.	Controls and Procedures		183
ITEM 15T.	Controls and Procedures		187
ITEM 16A.	Audit Committee Financial Expert		187
ITEM 16B.	Code of Ethics		188
ITEM 16C.	Principal Accountant Fees and Services		188
ITEM 16D.	Exemption from the Listing Standards for Audit Committees		189
ITEM 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers		189
ITEM 16F.	Change in Registrant’s Certifying Accountant		189
ITEM 16G.	Corporate Governance		189
ITEM 17.	Financial Statements		190
ITEM 18.	Financial Statements		190
ITEM 19.	Exhibits		190
Consolidated Financial Statements			F-1

EXHIBITS

EXHIBIT 3.2	BYLAWS
EXHIBIT 8.1	SUBSIDIARIES OF ELETROBRAS
EXHIBIT 12.1	CERTIFICATION
EXHIBIT 12.2	CERTIFICATION
EXHIBIT 13.1	CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
EXHIBIT 13.2	CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

EXPLANATORY NOTE

The filing of this annual report for 2015 was delayed because we required additional time to conduct an investigation into certain allegations relating to “Operação Lava Jato” (Operation Car Wash) and to complete the related disclosures in this annual report. We are filing our 2014 annual report on Form 20-F simultaneously with this annual report and the two annual reports should be read together.

In 2009, the Brazilian federal authorities initially focused the Lava Jato investigation at criminal organizations engaged in money laundering. The Lava Jato operation involves numerous investigations into several criminal practices focusing on crimes committed by individuals and organizations in Brazil. Since 2014, the Brazilian Federal Prosecutor’s focused part of the investigation on irregularities involving state owned companies’ contractors and suppliers and uncovered a broad payment scheme that involved a range of participants.

Although no criminal charges have been brought against the Company as part of Lava Jato, the Brazilian Federal Prosecutor’s Office made investigations on irregularities involving certain of the employees of the Company, contractors and suppliers, as well as certain contractors and suppliers of special purpose entities (“SPEs”) in which Eletrobras holds minority interests, involved in the construction of power generation plants.

As a response to allegations of potential illegal activities appearing in the media in 2015 relating to companies that provide services to the Company’s subsidiary, Eletrobras Termonuclear S.A. – Eletronuclear (“Eletronuclear”) (specifically, “NTU Angra 3” nuclear power plant), and to certain SPEs that Eletrobras holds a minority stake, Eletrobras’ Board of Directors, hired the law firm Hogan Lovells US LLP to undertake an independent internal investigation for the purpose of assessing the eventual existence of irregularities, including violations of the U.S. Foreign Corruption Practice Act (FCPA), the Brazilian Anticorruption Law and the Eletrobras’ code of ethics (the “Independent Investigation”).

The Independent Investigation is subject to oversight by a commission that was created by the Board of Directors of Eletrobras on July 31, 2015. This commission is composed of Ms. Ellen Gracie Northfleet, a former Federal Supreme Court judge, Mr. Durval José Soledade Santos, former director of the Comissão de Valores Mobiliários (Brazilian Securities Exchange Comission), and Mr. Manoel Jeremias Leite Caldas, (the “Independent Commission”).

The Company, Hogan Lovells and the Independent Commission have been closely monitoring the official investigations and cooperating with Brazilian and United States authorities, including the Federal Courts (Justiça Federal); the Federal Prosecutors’ Office (Ministério Público Federal or “MPF); the Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”); the Council for Economic Defense (Conselho Administrativo de Defesa Economica or “CADE”), United States Department of Justice (“DOJ”) and United States Securities & Exchange Commission (“SEC”), among others, and have responded to requests for information and documents from these authorities.

On April 29, 2015, the Federal Police commenced the “Radioactivity Operation” under the 16^th phase of Operation “Lava Jato”, which resulted in the imprisonment of a former officer of our subsidiary Eletrobras Termonuclear S.A – Eletronuclear. This former officer was sentenced to 43 years of prison, by the judge of the 7th Federal Criminal Court, for passive bribery, money laundering, obstruction of justice, tax evasion and participation in a criminal organization. On July 6, 2016, the Federal Police commenced “Operation Pripyat”, in which the Federal Police served arrest warrants issued by the judge of the 7^th Federal Court of the District of Rio de Janeiro against former officers, officers who had already been suspended by Eletrobras’ Board of Directors as well as other parties. Formal charges of corruption, money laundering and obstruction of justice were filed against such former officers by Federal Prosecutors on July 27^th, 2016. Eletrobras is assisting the prosecution in these criminal proceedings. Eletrobras intends, in the future, to persue civil remedies against these defendants.

Since the start of the investigation, the Company replaced its entire Board of Directors, hired a new CEO and a Compliance Officer, and created an independent Compliance Department to help coordinate compliance across subsidiaries. The Risk Management and Compliance Officer and her team oversee implementation of the new compliance program and liaise on a weekly basis with compliance managers at each subsidiary.

- 1 -

In instances where the Independent Committee identified contracts where irregularities may have occurred, Eletrobras evaluated those contracts and internal investigations and, when applicable, suspended those contracts. Eletrobras also took applicable administrative measures in relation to employees and officers involved in the irregularities identified by the investigation, including, when applicable, the suspension or termination of employees.

The Independent Investigation team has completed the investigation designed to identify misstatements to the Company’s consolidated financial statements. The Independent Investigation team is still in the process of performing some procedures, focusing on internal compliance matters. The Company will continue to implement compliance procedures following the conclusion of the investigation. Based on our current knowledge, the Company does not expect these additional procedures provide any additional relevant information that would materially impact its consolidated financial statements in future periods.

The investigations under Lava Jato are also still ongoing, however, and the Brazilian Federal Prosecutors Office may take a considerable amount of time to conclude its procedures. Therefore, new relevant information may be disclosed in the future, which could cause Eletrobras to recognize additional adjustments in its consolidated financial statements. The final reports from the Independent Investigation include certain findings with their related qualitative and estimated quantitative financial statements impacts (disclosure and/or accounting) in some but not all of the power generation projects included in the scope of the investigation. The Independent Investigation reports determined overpricing related to bribery and bid-rigging (a form of fraud in which a commercial contract is promised to one party even though for the sake of appearance several other parties also present a bid. This practice is illegal in most countries) activities deemed to be of an illicit nature in some contracts, since 2008, with certain contractors and suppliers of the affected projects. The range of bribery estimated impacts is from 1% to 6% of the contract price and certain other fixed amounts, and the bid-rigging estimated impact is 10% of payments related to one specific contract (R$ 16 million). The impacts of the Independent Investigation findings on the consolidated financial statements are presented in note 4 to the consolidated financial statements under item “Impacts on the Consolidated Financial Statements”.

The Independent Investigation includes findings related to bid-rigging and bribes that would have been paid by certain contractors and suppliers hired by subsidiaries of the Company, as well as certain contractors and suppliers of some of the SPEs not controlled by the Company.

The Independent Investigation includes findings related to bribes that would have been received by certain former personnel or personnel of subsidiaries or SPEs not controlled by the Company. The actions taken by the Company with respect to these people are mentioned below.

The Independent Investigation discovered bribes used to fund improper payments to political parties, elected officials or other public officials, individual contractor personnel, former personnel of subsidiaries or SPEs of Eletrobras and other individuals involved in payment schemes. Most of the alleged improper payments were made by the contractors and suppliers and by intermediaries acting on behalf of those contractors and suppliers.

In addition, the final reports from the Independent Investigation include separate findings related to possible overpricing on some of the power generation projects included within its scope of investigation. As the Independent Investigation did not conclude that such possible overpricing was caused by unlawful activity, the Company’s management does not believe that this possible overpricing would impact its consolidated financial statements.

The Independent Investigation also includes recommendations of remedial actions to be considered by the Company. The actions taken by the Company taking into consideration such recommendations are included below.

To determine the impacts to be recognized or disclosed in the Company’s financial statements, management took into consideration the conclusions reached and findings identified by the Independent Investigation, as included on each one of the final investigation reports issued for the purpose of the financial statements which were approved by the Independent Commission and those in charge of the Company’s governance, namely, the Board of Directors, the Audit Committee (Fiscal Council) and the Board of Executive Officer. The Company concluded that, under International Accounting Standard IAS 16 – Property, Plant and Equipment, the amounts attributable to overpricing due to bribes and/or to bid-rigging deemed to be of an illicit nature, should not have been capitalized as part of the cost of its property, plant and equipment – PP&E or to in PP&E of its SPEs not controlled by the Company. Those amounts that had been capitalized as part of the contract price are not a cost attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

However, the Company is unable to determine each of the periods prior to 2014 in which the adjustments should be recorded its consolidated financial statements because of the following:

• The information made available to the Company by the Independent Investigation or otherwise available to the Company identifies the contractors and suppliers involved in the overpricing scheme and a range period of time it was in effect and indicates certain affected contracts, but does not specify individual contractual payments that include overcharges or the reporting periods in which overpayments may have occurred (the investigation reports and findings determined that there was no reasonable basis to establish or estimate the specific periods and the amounts of overpricing that occurred);

- 2 -

• As most of these alleged overpayments were made by outside contractors and suppliers, we cannot identify the exact amounts and periods that the Company may have overpaid. The information to determine the amount by which the Company was potentially overcharged by these contractors and suppliers is not contained within the Company’s accounting records or internal control systems. Also, the information used in this investigation is limited to the Company’s internal information, and that of its subsidiaries and SPEs not controlled by the Company, did not provide sufficient information to determine the amounts of such overpayments prior to 2014 and a period by period basis.;

• Because the alleged overpayments are of an illicit nature, even though the depositions available to the investigation team revealed certain information that allowed the total estimate to be made, they did not provide sufficient information to determine the periods prior to 2014 when the overpayments have occurred, and specific records of these activities are not expected to be available; and

• The investigation underway by the Brazilian authorities is focused on determining the involvement of the people under investigation with illegal acts, and not on obtaining quantitative information on each one of the prior periods. In addition, Brazilian legislation does not allow unrestricted access to internal records and documents of suppliers in civil lawsuits and, therefore, we do not expect to have information with respect to prior periods.

As previously discussed, there is not sufficient information to allow the Company to determine the specific period during which the Company made specific overpayments, thus the Company understands that, after exhausting all reasonable efforts, it is impracticable to determine the period-specific effects prior to 2014 of the overpayments on its consolidated financial statement, accordingly, the adjustment for the overpayments incorrectly capitalized was recognized in 2014. The Company believes this approach is the most appropriate pursuant to the requirements of IFRS for the correction of an error.

In addition, the Company has evaluated the materiality of the impact of the payment scheme on prior periods presented in its financial statements for comparative purposes considering the allocation of the payments, since 2008, in order to estimate the allocation on a pro rata basis out of each of the actual contract payments and capitalized correspondingly. The allocation exercise indicated adjustment of the overpayment that was improperly capitalized would not have been material to any of the prior periods presented for comparative purposes.

Then, applying IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, due to the impracticability of the identification of the adjustments by each prior period affected, the Company adjusted the estimated amounts of illegal payments for periods prior to 2015 in the current period (2014).

For the amounts attributable to illegal payments identified by the Company which relate to contracts/amendments entered after December 31, 2014, they have been adjusted in 2015 consolidated financial statements.

The Company did not identify any amounts after December 31, 2015 that may have been affected by the overpricing scheme.

Due to the length of, the Company expensed the total of R$ 195.1 million of capitalized costs representing estimated amounts that Eletrobras subsidiaries overpaid for the acquisition of property, plant and equipment since 2008 of which includes R$ 132.4 million and, as a result, a reversal of impairment provision recognized in 2014.. Likewise, the Company recognized a loss of R$ 91.5 million in its results of equity method investments related to certain equity investees (SPEs not controlled by the Company). The amounts included both the findings from the final reports of the Hogan Lovells independent investigation and also the corresponding borrowing costs and other capitalized charges.

Additionally, based on the final reports of the Independent Investigation relating to financial and accounting matters, the Company expensed in 2015 R$ 16.0 million related to contracts/amendments entered after December 31, 2014, of which R$ 11.5 million was related to a reversal of a previously recognized impairment provision.

These amounts were not reported in the Company’s consolidated financial statements for the years ended December 31, 2014 and December 31, 2015, filed in Brazil with the CVM, as those statements have a different date of authorization for issue, which results in certain events being recorded in different periods in these two sets of consolidated financial statement. An English translation of the 2015 financial statements as filed in Brazil was furnished to the Securities and Exchange Commission (SEC) on Form 6-K on April 26, 2016 and an English translation of our

- 3 -

annual report for 2015 filed with the CVM in Brazil, Formulário de Referência, was furnished to the SEC on June 6, 2016. For a further discussion of certain differences between our 2015 financial statements filed with the CVM in Brazil and our 2015 consolidated financial statements included herein, see “Presentation of Financial and Other Information”.

Under Brazilian income tax legislation, amounts related to illegal acts are not recoverable, and accordingly, the adjustment does not have any income tax impact. Also, as the findings from the Independent Investigation relate to assets under construction, there is no depreciation expense impact.

The Company did not recognize in its consolidated financial statements any effects of potential overpricing other than the estimates related to briberies activities and bid-rigging deemed to be of an illicit nature, as the Independent Investigation did not conclude that such potential overpricing is linked to any illicit activity.

The Company has not recovered and cannot estimate the recoverable amounts potentially overpaid at this time. Once and if any amounts attributable to bribery, bid-rigging or any other type of overpricing become recoverable, virtually certain to be received or are in effect received, then they will be recognized in our financial statements.

The Company believes it has taken reasonable steps to investigate the allegations relating to Lava Jato, and it will pursue relevant civil and criminal remedies.

The following sections of this annual report contain disclosures related to Operação Lava Jato:

• Item 3, Risk Factors, contains risks related to any potential regulatory investigations, the pending civil litigation in the US, and material weaknesses in internal control over financial reporting;

• Item 4, Information on the Company, contains information regarding property, plant and equipment, which could be affected by the ongoing Investigation;

• Item 5, Operating and Financial Review and Prospects, contains a description of line items which may be affected by the ongoing Investigation;

• Item 15, Controls and Procedures, contains a discussion of the implications for effectiveness of internal control over financial reporting, and for effectiveness of disclosure controls and procedures; and

• Item 18, Financial Statements, Note 4, item XI, Accounting Estimates and Judgements – Risks related to compliance with laws and regulations contains a description of Operação Lava Jato, and a description of the potential line items affected by this

Under its code of ethics, the Company does not tolerate corruption or other any illegal business practices of its employees, contractors or suppliers, and it has therefore undertaken a number of initiatives involving its business activities and its corporate governance system.

With respect to material weakness related to our internal controls over financial reporting we would like to clarify that:

(i) in relation to the controls of the Company over the financial reporting process, the Company did not maintain an effective control environment, especifically regarding the lack of timely remedial actions related to previous years, including the proper execution of management review controls comprising completeness analysis, materiality threshold definition and accuracy determination of data to certain controls reviewed;

(ii) the Company did not maintain adequate controls regarding the preparation of the financial statements and related disclosures, including related parties transaction reconciliation; monitoring controls regarding the financial situation and the related accounting reflects of the transactions made with suppliers (Furnas); and analysis, reconciliation and monitoring of consumed fuel (Amazonas);

- 4 -

(iii) the Company did not maintain effective internal controls regarding the adequate monitoring of the investments in specif purpose entities (SPEs), as well as for the related parties transactions, including failure to identify and monitor the physical and financial execution of the relevant investment projects evaluated under the equity method, lack of technical and financial terms review related to construction contracts before the bid process, adequate analysis of the proposals made by suppliers and lack of evaluation and monitoring of progress and budget of projects;

(iv) the Company did not have effective internal controls over the Risk, Corruption Prevention and Compliance Program, considering the requirements of the North American legislation (FCPA - Foreign Corrupt Practices Act) and also of the Brazilian legislation (Law 12.846/2013 - anti-corruption law);

(v) the Company did not maintain adequate internal controls that would avoid management override to the high level controls, including failure to communicate and to obtain adherence to the ethical values prescribed in the Company’s code of conduct, and an ineffective whistleblower channel due to inadequate comprehensiveness controls; and

(vi) ineffective controls related to payments and capitalization of fixed assets, that would result in future economic benefits as well as the approvals related to internal controls over the capitalization process.

In order to remedy the material weakness related to our internal controls over financial reporting and implementing a compliance program, our new Board of Directors, together with our new CEO, are currently developing a series of measures and initiatives called the Eletrobras 5 Dimensions Program. The “Eletrobras 5 Dimensions Program” is a company-wide plan that we are developing at the Board of Directors and senior management level and implementing throughout the Company, including its subsidiaries, in order to comply with international corporate governance standards, laws and regulations, including the U.S. Sarbanes-Oxley Act of 2002, the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), the Brazilian Anticorruption Law (Law no. 12,846/2013), the rules and guidelines issued by the U.S. Securities and Exchange Commission (SEC), the Brazilian Securities Commission (CVM), the Brazilian Institute of Corporate Governance (IBGC) and the Organisation for Economic Co-operation and Development (OECD), among others.

The program seeks to:

• Develop a new compliance-focused company culture;

• Periodic risk assessment;

• Internal policies and Procedures improvement (hot lines, Code of Ethics review, independent whistleblower channel, compliance program manual, contractual clauses review, due diligence for suppliers, background check procedures and investments manual review);

• Internal promotion of improvement activities and training; and

• Continuous monitoring, internal audit process for compliance procedures, remediation and corrective action for investigation findings.

For a further description of the “Eletrobras 5 Dimensions Compliance Program”, see item 15 below of this Form 20-F.

- 5 -

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, unless otherwise indicated or the context otherwise requires, all references to “we,” “our,” “ours,” “us” or similar terms refer to Centrais Elétricas Brasileiras S.A. – Eletrobras and its consolidated subsidiaries.

We prepare our consolidated annual financial statements in compliance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

For certain statutory purposes, such as providing reports to our shareholders located in Brazil and determining dividend payments, other profit distributions and tax liabilities in Brazil, we also prepare, as is required, a parent company and consolidated statutory financial statements in accordance with accounting practices adopted in Brazil and with IFRS as issued by the IASB, which must be approved by our shareholders general ordinary meeting and filed with the Brazilian Exchange Commission (Comissão de Valores Mobiliários - CVM) within three months after the year end to comply with the Brazilian Corporate Law.

As we had to postpone the filing of the financial statements included herein until we were able to quantify the effects of the Independent Investigation, as explained in the Explanatory Note. Our financial statements included herein and our statutory financial statement have a different date of authorization for issue, which results in certain events being recorded in different periods in these two sets of financial statements.

In addition to the effects of the Independent Investigation, certain other subsequent events have occurred after the year ended December 31, 2014 that have required us to make adjustments to the consolidated financial statements as of and for the year then ended, which have been authorized for issuance on October 10, 2016 and are included herein.

Since the consolidated financial statements for statutory purposes had already been issued in Brazil, these events have been recorded in periods that are different than those being considered for purposes of the financial statements included herein.

Our 2015 consolidated financial statements included herein include the accounting of three subsequent events that have a quantitative impact under IAS 10 – Events after the Reporting Period, as they provided evidence of conditions that existed at the reporting date. First, our 2014 and 2015 consolidated financial statements reflect the conclusions of the Investigations which resulted, respectively, in the expensing of costs of R$ 195.127 million and R$ 15.996 million that had been improperly capitalized to our assets and a reversal of impairment losses recorded of R$ 132.443 million and R$ 11.514 million, respectively. Likewise, in 2014, the Company recognized a loss of R$ 91.464 million in its results of equity method investments related to a certain equity investee not controlled by the Company, as mentioned on Note 4.XI to the financial statements. Second, at the time we filed our 2014 statutory financial statements with the CVM on March 30, 2015, we had made certain estimates with respect to the value of some claims against Eletrobras with respect to the inflation component in the compulsory loans contingencies. In the 4th quarter of 2015 there was an adverse decision by the Brazilian Supreme Court that required us to revise and add R$ 4.141 billion to our estimates relating to this matter. This additional provision was recorded as an adjusting event in our 2014 financials included in this annual report. Third, our 2014 financial statements included herein reflect the reversal of a R$ 1.1 billion provision that we had recorded in our 2015 statutory financial statements filed with the CVM in view of the November 2015 judicial decision that conceded the merit to the ICMS (value added tax) reimbursement claim dispute in favor to our subsidiary Amazonas Distribuidora, as a subsequent adjusting event that brought information about facts and circumstances existing as of December 31, 2014. In our statutory financial statements filed with the CVM, we reflected the second and third adjustments above in our 2015 financial statements and the first one will be recognized in our 2016 statutory financial statements and in the 2016 third quarter interim financial statement to be filed with CVM. We have no intention to restate or adjust our 2014 or 2015 financial statements filed with the CVM in Brazil, which speak as of their respective date of authorization for its issue.

- 6 -

The table set forth below describes the differences between our 2015 statutory Brazilian Consolidated Financial Statements filed with the CVM and our 2015 Consolidated Financial Statements included herein:

	12/31/2015			12/31/2014
				(R$ Thousand)
Loss for the year under statutory Consolidated Financial Statements (CVM Filed)		(14,953,658	)		(2,962,502	)
Reversal Impairment Angra 3 - 2014		—			129,799
Reversal Impairment Simplicio - 2014		—			2,644
Reversal Impairment Angra 3 - 2015		11,514			—
subsequent events - Compulsory Loan - 2015		4,141,503			(4,141,503	)
subsequent events - Amazonas Energia - See Note 42		(1,100,499	)		1,100,499
Investigation Findings Angra 3		(11,514	)		(129,799	)
Investigation Findings Simplicio		—			(2,644	)
Investigation Findings Maua 3		(4,482	)		(62,684	)
Investigation Findings - equity (SPEs)		—			(91,464	)
Total		3,036,522			(3,195,151	)
Loss for the year under Consolidated Financial Statements (SEC Filed)		(11,917,136	)		(6,157,653	)

On September 26, 2014, our shareholders approved the acquisition of a 50.9% interest in CELG-D. This transaction closed on January 27, 2015 when we disbursed R$ 59.5 million in respect of the acquisition. Accordingly, the balance sheet of CELG-D is fully consolidated into our balance sheet as of December 31, 2014 and the results of operations and cash flows of CELG-D are fully consolidated into our income statement and cash flows from October 1, 2014. On May 13, 2015, the Brazilian Government enacted Decree No. 8,449, which included CELG-D in the National Privatization Program (PND, or Programa Nacional de Desestatização). Accordingly, Celgpar and we deposited our shares of CELG-D with the National Privatization Fund (FND, or Fundo Nacional de Desestatização). Our shareholders’ meeting held on December 28, 2015, approved the sale of our shares of CELG-D and since then CELG D has been available for sale. The privatization process was expected to be arranged by BM&FBOVESPA and to be held in the first half of 2016. However, the Commission of Bidding relating to the Privatization Auction of CELG-D, designated by the Ordinance PRESI 093/2016 – BNDES of June 29, 2016, announced on August 2016 that the bid was considered cancelled due to lack of bidders. Accordingly, the Investments Partnership Program of the Presidency of the Republic (Programa de Parceria de Investimentos da Presidência da República – PPI) reviewed, on September 14, 2016, the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid in 2016 to privatize CELG D. The Board of Investment Partnerships Program of the Federal Government approved the Resolution 7/2016 in which are being listed the new minimum conditions and new price for sale, by Eletrobras, of its shareholding participation in CELG Distribuição S.A (“Celg-D”). The new market value approved by the PPI for CELG D is R$ 4.448 billion (four billion, four hundred forty-eight million). However, considering the debts and other liabilities in the amount of R$ 2.656 billion (two billion, six hundred fifty-six million), as of June 2016, the net value of CELG D is R$ 1.792 billion (one billion, seven hundred ninety-two million). In the privatization process, Eletrobras intends to sell its entire stake in CELG D, equivalent to 50.9% of the share capital. The shareholders of Eletrobras are invited to attend the Extraordinary General Meeting to be held on October 24, 2016 to deliberate about this sale.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. Once the company decides about the conditions about this sales, the distribution segment may be classified as discontinued operations, based on IFRS 5.

We revised our consolidated financial statements as of and for the year ended December 31, 2013. Subsequent to the issuance of our 2013 consolidated financial statements, which were originally approved for issuance by the Board of Directors on March 27, 2014, our management determined that the measurement of our finance leasing had to be corrected for an error. As a result, the consolidated financial statements have been revised and corrected in specific lines of the balance sheet and income statement from the amounts previously reported to reflect the assets and liabilities at the adjusted present value of the minimum lease payments. . The effects of this

- 7 -

revision had no material impact on our net loss for the periods. See note 3.29 to our consolidated financial statements for the year ended December 31, 2014 for a description of the adjustment and its impact on our consolidated financial statements. Our financial information as of and for the years ended December 31, 2015, 2014 and 2013 reflects the effects of the adjustment and these consolidated financial statements are fully comparable. In 2013, we applied IFRS 11(Joint Arrangements) beginning on January 1, 2012, based on the issued amendments to IFRS 10, IFRS 11 (Joint Arrangements) and IFRS 12 revising the transition guidance to provide relief from full retrospective application.

In this annual report, the term “Brazil” refers to the Federative Republic of Brazil and the phrase “Brazilian Government” refers to the federal government of Brazil. The term “Central Bank” refers to the Central Bank. The terms “real” and “reais” and the symbol “R$ “ refer to the legal currency of Brazil. The terms “U.S. dollar” and “U.S. dollars” and the symbol “U.S.$” refer to the legal currency of the United States of America.

Certain figures in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Terms contained within this annual report have the following meanings:

• Amazonas Energia, which engaged in generation, transmission and distribution in the State of Amazonas until 2015 when our shareholders approved its corporate split into Amazonas D and Amazonas GT;

• Amazonas D or Amazonas Energia Distribuição: Amazonas Distribuidora de Energia S.A, a distribution company wholly owned by Eletrobras and operating in the State of Amazonas;

• Amazonas GT or Amazonas Energia Geração e Transmissão: Amazonas Geração e Transmissão de Energia S.A., a generation and transmission company wholly owned by Eletrobras and operating in the State of Amazonas;

• ANDE: Administración Nacional de Electricidad;

• ANEEL: Agência Nacional de Energia Elétrica, the Brazilian Electric Power Agency;

• Average tariff or rate: total sales revenue divided by total MWh sold for each relevant period, including unbilled electricity. Total sales revenue, for the purpose of computing average tariff or rate, includes both gross billings before deducting VAT and other taxes and unbilled electricity sales upon which such taxes have not yet accrued;

• Basic Network: interconnected transmission lines, dams, energy transformers and equipment with voltage equal to or higher than 230 kV, or installations with lower voltage as determined by ANEEL;

• BNDES: Banco Nacional de Desenvolvimento Econômico e Social, the Brazilian Development Bank;

• Boa Vista Energia, formally known as Boa Vista Energia S.A., a distribution company operating in the city of Boa Vista, in the State of Roraima;

• Brazilian Corporate Law: Law No. 6,404 of December 15, 1976, as amended;

• Capacity charge: the charge for purchases or sales based on contracted firm capacity whether or not consumed;

• CCC Account: Conta de Consumo de Combustível, or Fuel Consumption Account;

• CCEAR: Contratos de Comercialização de Energia no Ambiente Regulado, contracts for the commercialization of energy in the Regulated Market;

- 8 -

• CCEE: Câmara de Comercialização de Energia Elétrica, the Brazilian electric energy trading chamber;

• CDE Account: Conta de Desenvolvimento Energético, the energy development account;

• CEAL: Companhia Energética de Alagoas, a distribution company operating in the State of Alagoas (Ceal);

• CELG-D: CELG-Distribuição S.A., a distribution subsidiary of Eletrobras;

• Cepel: Centro de Pesquisas de Energia Elétrica, a research center of the Brazilian electric sector;

• CEPISA: Companhia Energética de Piauí, a distribution company operating in the State of Piauí (Cepisa);

• CERON: Centrais Elétricas de Rondônia, a distribution company operating in the State of Rondônia (Ceron);

• CGTEE: Companhia de Geração Térmica de Energia Elétrica, a generation subsidiary of Eletrobras;

• Chesf: Companhia Hidro Elétrica do São Francisco, a generation and transmission subsidiary of Eletrobras;

• CMN: Conselho Monetário Nacional, the highest authority responsible for Brazilian monetary and financial policy;

• CNEN: Comissão Nacional de Energia Nuclear S.A., the Brazilian national commission for nuclear energy;

• CNPE: Conselho Nacional de Política Energética, the advisory agency to the President of the Republic of Brazil for the formulation of policies and guidelines in the Energy sector;

• Concessionaires or concessionaire companies: companies to which the Brazilian Government transfers rights to supply electrical energy services (generation, transmission, distribution) to a particular region in accordance with agreements entered into between the companies and the Brazilian Government pursuant to Law No. 8,987 (dated February 1995), as amended, and Law No. 9,074 (the Power Sector Law, dated July 7, 1995), as amended (together, the “Concessions Laws”);

• Distribution: the transfer of electricity from the transmission lines at grid supply points and its delivery to consumers through a distribution system. Electricity reaches consumers such as residential consumers, small industries, commercial properties and public utilities at a voltage of 220/127 volts;

• Distributor: an entity supplying electrical energy to a group of customers by means of a distribution network;

• DNAEE: Departamento Nacional de Águas e Energia Elétrica, the Brazilian national department of water and electrical energy;

• Electricity Regulatory Law: Law No. 10,848 (Lei do Setor Elétrico), enacted on March 15, 2004, as amended, and which regulates the operations of companies in the electricity industry;

- 9 -

• Eletroacre: Companhia de Eletricidade de Acre, a distribution company operating in the State of Acre (Eletroacre);

• Eletrobras Participações S.A., a holding company subsidiary created to hold equity investments (formerly, Light Participações S.A. – LightPar);

• Eletrobras: Centrais Elétricas Brasileiras S.A. – Eletrobras;

• Eletronorte: Centrais Elétricas do Norte do Brasil S.A., a generation and transmission subsidiary of Eletrobras;

• Eletronuclear: Eletrobras Termonuclear S.A., a generation subsidiary of Eletrobras;

• Eletrosul: Eletrosul Centrais Elétricas S.A., a generation and transmission subsidiary of Eletrobras;

• Energy charge: the variable charge for purchases or sales based on actual electricity consumed;

• Environmental Crimes Act: Law No. 9,605, dated February 12, 1998, as amended;

• Final consumer (end user): a party who uses electricity for its own needs;

• FND: Fundo Nacional de Desestatização, the national privatization fund;

• Free consumers: customers that were connected to the system after July 8, 1995 and have a contracted demand above 3 MW at any voltage level; or customers that were connected to the system prior to July 8, 1995 and have a contracted demand above 3 MW at voltage level higher than or equal to 69 kV;

• Free Market or ACL: Ambiente de Contratação Livre, the Brazilian unregulated energy market;

• Furnas: Furnas Centrais Elétricas S.A., a generation and transmission subsidiary of Eletrobras;

• GCE: Câmara de Gestão da Crise de Energia Elétrica, the Brazilian energy crisis management chamber;

• Gigawatt (GW): one billion watts;

• Gigawatt hour (GWh): one gigawatt of power supplied or demanded for one hour, or one billion watt hours;

• High voltage: a class of nominal system voltages equal to or greater than 100,000 volts (100 kVs) and less than 230,000 volts (230 kVs);

• Hydroelectric plant or hydroelectric facility or hydroelectric power unity (HPU): a generating unit that uses water power to drive the electric generator;

• IFRS: International Financial Reporting Standards as issued by the International Accounting Standards Board;

• IGP-M: Índice Geral de Precos-Mercado, the Brazilian general market price index, similar to the retail price index;

• Installed capacity: the level of electricity which can be delivered from a particular generating unit on a full-load continuous basis under specified conditions as designated by the manufacturer;

- 10 -

• Interconnected Power System or SIN: Sistema Interligado Nacional, systems or networks for the transmission of energy, connected together by means of one or more links (lines and/or transformers);

• Isolated system: generation facilities not connected to the SIN;

• Itaipu: Itaipu Binacional, the hydroelectric generation facility owned equally by Brazil and Paraguay;

• Kilovolt (kV): one thousand volts;

• Kilowatt (kW): 1,000 watts;

• Kilowatt Hour (kWh): one kilowatt of power supplied or demanded for one hour;

• Megawatt (MW): one million watts;

• Megawatt hour (MWh): one megawatt of power supplied or demanded for one hour, or one million watt hours;

• Mixed capital company: pursuant to Brazilian Corporate Law, a company with public and private sector shareholders, but controlled by the public sector;

• MME: Ministério de Minas e Energia, the Brazilian Ministry of Mines and Energy;

• National Environmental Policy Act: Law No. 6,938, dated August 31, 1981, as amended;

• Northeast region: the States of Alagoas, Bahia, Ceará, Maranhão, Paraíba, Pernambuco, Piauí, Rio Grande do Norte and Sergipe;

• ONS: Operador Nacional do Sistema Elétrico, the national system operator;

• Power Sector Law: Law No. 9,074 of July 7, 1997, as amended;

• Procel: Programa Nacional de Combate ao Desperdício de Energia Elétrica, the national electrical energy conservation program;

• Proinfa: Programa de Incentivo às Fontes Alternativas de Energia, the program for incentives to develop alternative energy sources;

• Regulated Market or ACR: Ambiente de Contratação Regulada, the Brazilian regulated energy market;

• RGR Fund: Reserva Global de Reversão, a fund we administer, funded by consumers and providing compensation to all concessionaires for non-renewal or expropriation of their concessions used as source of funds for the expansion and improvement of the electrical energy sector;

• Selic rate: an official overnight government rate applied to funds traded through the purchase and sale of public debt securities established by the special system for custody and settlement;

• Small Hydroelectric Power Plants or PCHs: Pequena Central Hidrelétrica, hydroelectric power plants with capacity from 1 MW to 30 MW;

• Substation: an assemblage of equipment which switches and/or changes or regulates the voltage of electricity in a transmission and distribution system;

- 11 -

• TFSEE: Taxa de Fiscalização de Serviços de Energia Elétrica, the fee for the supervision of electricity energy services;

• Thermoelectric plant or thermoelectric power unity (TPU): a generating unit which uses combustible fuel, such as coal, oil, diesel natural gas or other hydrocarbon as the source of energy to drive the electric generator;

• Transmission: the bulk transfer of electricity from generating facilities to the distribution system at load center station by means of the transmission grid (in lines with capacity between 69 kV and 525 kV);

• TWh: Terawatt hour (1,000 Gigawatt hours);

• U.S. GAAP: generally accepted accounting principles in the United States;

• UBP Fund: Fundo de Uso de Bem Público, the public asset use fund;

• Volt (V): the basic unit of electric force analogous to water pressure in pounds per square inch; and

• Watt: the basic unit of electrical power.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This annual report includes certain forward-looking statements, including statements regarding our intent, belief or current expectations or those of our officers with respect to, among other things, our financing plans, trends affecting our financial condition or results of operations and the impact of future plans and strategies. These forward-looking statements are subject to risks, uncertainties and contingencies including, but not limited to, the following:

• general economic, regulatory, political and business conditions in Brazil and abroad;

• interest rate fluctuations, inflation and the value of the real in relation to the U.S. dollar;

• changes in volumes and patterns of customer electricity usage;

• competitive conditions in Brazil’s electricity generation, transmission and distribution markets;

• the effects of competition;

• our level of debt and ability to obtain financing;

• the likelihood that we will receive payment in connection with account receivables;

• changes in rainfall and the water levels in the reservoirs used to run our hydroelectric power generation facilities;

• our financing and capital expenditure plans;

• our ability to serve our customers on a satisfactory basis;

• existing and future governmental regulation as to electricity rates, electricity usage, competition in our concession area and other matters;

• our ability to execute our business strategy, including our growth strategy;

• adoption of measures by the granting authorities in connection with our concession agreements;

- 12 -

• changes in other laws and regulations, including, among others, those affecting tax and environmental matters;

• future actions that may be taken by the Brazilian Government, our controlling shareholder;

• the outcome of the ongoing corruption Investigations and any new facts or information that may arise in relation to Operação Lava Jato, including any accounting, legal, reputational and political effects;

• the outcome of our tax, civil and other legal proceedings, including class actions or enforcement or other proceedings brought by governmental and regulatory agencies; and

• other risk factors as set forth under “Item 3.D, Risk Factors.”

The forward-looking statements referred to above also include information with respect to our capacity expansion projects that are in the planning and development stages. In addition to the above risks and uncertainties, our potential expansion projects involve engineering, construction, regulatory and other significant risks, which may:

• delay or prevent successful completion of one or more projects;

• increase the costs of projects; and

• result in the failure of facilities to operate or generate income in accordance with our expectations.

The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking information, events and circumstances discussed in this annual report might not occur. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements.

- 13 -

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Background

The tables below present our selected financial data as of and for years ended December 31, 2015, 2014, 2013, 2012 and 2011. Our selected financial data as of December 31, 2015 and 2014 and for the three years ended December 31, 2013 were derived from our consolidated financial statements, which appear elsewhere in this annual report prepared in accordance with IFRS, as issued by the IASB. As in “Presentation of Financial and Other Information” and in further detail in note 3.29 to our audited consolidated financial statements, we also revised our selected financial data as of and for the year ended December 31, 2013 and 2012 as a result of an adjustment to reflect the assets and liabilities at the remeasured present value of the minimum lease payments.] You should read our selected financial data in conjunction with our consolidated financial statements and the related notes included in this annual report. Our selected financial data as of December 31, 2012 and 2011 and for the year ended December 31, 2011 were derived from our audited consolidated financial statements that are not included in this annual report. Because we did not restate these consolidated financial statements, and the related financial data to reflect the adoption of IFRS 11 at January 1, 2013, they are not comparable to our consolidated financial statements and the financial data as of and for the years ended December 31, 2015, 2014, 2013 and 2012. Following the completion of the Internal Investigation, the Company will continue to implement compliance procedures. Based on the findings to date, the Company does not expect these additional procedures to materially impact its financial statements in future periods.

On September 26, 2014, our shareholders approved the acquisition of a 50.9% interest in CELG-D. This transaction closed on January 27, 2015 from R$ 59.5 million. Accordingly, the balance sheet of CELG-D is fully consolidated into our balance sheet as of December 31, 2014 and the results of operations and cash flows of CELG-D are fully consolidated into our income statement and cash flows from October 1, 2014. On May 13, 2015, the Brazilian Government enacted Decree No. 8,449, which included CELG-D in the National Privatization Program (PND, or Programa Nacional de Desestatização). Accordingly, Celgpar and we deposited our shares of CELG-D with the National Privatization Fund (FND, or Fundo Nacional de Desestatização). Our shareholders’ meeting held on December 28, 2015, approved the sale of our shares of CELG-D and since then CELG D has been available for sale. The privatization process was expected to be arranged by BM&FBOVESPA and to be held in the first half of 2016. However, the Commission of Bidding relating to the Privatization Auction of CELG-D, designated by the Ordinance PRESI 093/2016 – BNDES of June 29, 2016, announced on August 2016 that the bid was considered cancelled due to lack of bidders. Accordingly, the Investments Partnership Program of the Presidency of the Republic reviewed, on September 14, 2016, the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid in 2016 to privatize CELG D. The Board of Investment Partnerships Program of the Federal Government approved the Resolution 7/2016 in the which is being listed the new minimum conditions and new price for sale, by Eletrobras, of its shareholding participation in CELG Distribuição S.A (“Celg-D”). The new market value approved by the PPI for CELG D is R$ 4.448 billion (four billion, four hundred forty-eight million). However, considering the debts and other liabilities in the amount of R$ 2.656 billion (two billion, six hundred fifty-six million), as of June 2016, the net value of CELG D is R$ 1.792 billion (one billion, seven hundred ninety-two million). In the privatization process, Eletrobras intends to sell its entire stake in CELG D, equivalent to 50.9% of the share capital. The shareholders of Eletrobras are invited to attend the Extraordinary General Meeting to be held on October 24, 2016 to deliberate about this sale. Since January 2016, Eletrobras is no longer consolidating the results of operations and cash flows of CELG-D.

- 14 -

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of CEPISA; CEAL; ELETROACRE; CERON; BOA VISTA ENERGIA; and AMAZONAS ENERGIA and that by December 31, 2017 Eletrobras will transfer the control of these distributions. Once the company decides about the conditions about this sales, the distribution segment may be classified as discontinued operations, based on IFRS 5.

The following paragraphs discuss some important features of the presentation of the selected financial data and our consolidated financial statements. These features should be considered when evaluating the selected financial data.

A. Selected Financial Data

Consolidated Balance Sheet Data

	As of December 31,
	2015			2014		2013(1)		2012(1)		2011(2)
	(R$ thousands)
Assets:
Cash and cash equivalents		1,393,973			1,407,078		3,597,583		2,501,515		3,109,844
Marketable securities		6,842,774			3,730,345		6,095,908		6,352,791		11,031,953
Accounts Receivable		4,137,501			4,427,216		3,587,282		4,082,695		4,069,402
Financial asset of concession agreements		965,212			3,437,521		1,168,002		318,293		1,271,365
Loans and financings		3,187,226			2,696,021		2,838,503		2,611,830		2,622,304
Reimbursement rights		2,265,242			3,673,639		10,910,073		7,302,160		3,498,606
Indemnifications – Law 12,783		—			3,738,295		3,476,495		8,882,836		—
Assets helds for sale		4,623,785			—		—		—		—
Other Receivables		6,021,683			7,441,078		7,405,987		9,817,716		8,364,697
Total current assets		29,437,396			30,551,193		39,079,834		41,869,836		33,968,171
Total non-current assets		120,049,383			113,926,357		99,514,556		100,784,392		105,435,645
Total assets		149,486,779			144,477,550		138,594,389		142,654,228		139,403,816
Liabilities and shareholders’ equity:
Current liabilities		28,099,643			19,284,008		25,620,305		25,232,091		21,130,177
Non-current liabilities		79,806,543			71,540,193		51,396,788		49,352,870		41,057,471
Capital stock		31,305,331			31,305,331		31,305,331		31,305,331		31,305,331
Other shareholders’ equity		10,275,262			22,348,018		30,271,965		36,763,936		45,910,837
Total liabilities and shareholders’ equity		149,486,779			144,477,550		138,594,389		142,654,228		139,403,816
Non-controlling interest		(352,792	)		308,949		195,198		196,648		372,659

(1) We revised our consolidated financial statements as of and for the year ended December 31, 2013 and 2012. See note 3.29 to our consolidated financial statements for a description of the adjustment and its impact on our consolidated financial statements. Our financial information as of and for the years ended December 31, 2015, 2014, 2013 and 2012 reflects the effects of the adjustment and these consolidated financial statements are fully comparable.

(2) We have not revised data for 2011 to reflect the adoption of IFRS 11 at December 31, 2013.

Consolidated Statements of Profit and Loss Data

	For the year ended December 31,
	2015			2014			2013(1)			2012(1)			2011(2)
	(R$ thousands)
Net operating revenue		32,588,838			30,137,807			23,835,644			28,014,296			29,532,744
Operating expenses / costs		(42,612,287	)		(33,786,137	)		(29,215,079	)		(27,652,911	)		(25,389,902	)
Investigation Findings		(15,996	)		(195,127	)		—			—			—
Financial result		(1,699,025	)		694,625			376,684			1,839,213			234,453
Result/(loss) before participation in associates and other investments		(11,738,470	)		(3,148,832	)		(5,002,751	)		2,200,598			4,056,037
Result of participation in associates and other investments		531,446			(1,308,304	)		177,768			612,202			482,785
Income/(loss) before effects of Law 12,783		(11,207,024	)		(4,457,135	)		(4,824,983	)		2,812,800			4,538,822
Effects – Law 12,783		—			—			—			(10,085,380	)		—
Income/(loss) before income tax and social contribution		(11,207,024	)		(4,457,135	)		(4,824,983	)		(7,272,580	)		4,538,822

- 15 -

	For the year ended December 31,
	2015			2014			2013(1)			2012(1)			2011(2)
	(R$ thousands)
Income tax and Social Contribution		(710,112	)		(1,700,518	)		(1,366,678	)		490,642			(776,803	)
Net income (loss) for the year		(11,917,136	)		(6,157,653	)		(6,191,661	)		(6,781,938	)		3,762,019
Attributable to controlling shareholders		(11,405,085	)		(6,226,206	)		(6,186,949	)		(6,735,202	)		3,732,565
Attributable to non-controlling shareholders		(512,051	)		68,553			(4,712	)		(46,736	)		29,454
Net Income (loss) of the year per share		(8.43	)		(4.60	)		(4.57	)		(4.98	)		2.78

(1) We revised our consolidated financial statements as of and for the year ended December 31, 2013 and 2012. See note 3.29 to our consolidated financial statements for a description of the adjustment and its impact on our consolidated financial statements. Our financial information as of and for the years ended December 31, 2015, 2014, 2013 and 2012 reflects the effects of the adjustment and these consolidated financial statements are fully comparable.

(2) We have not revised data for 2011 to reflect the adoption of IFRS 11 at December 31, 2013.

Brazilian Corporate Law and our by-laws provide that we must pay our shareholders mandatory dividends equal to at least 25% of our adjusted net income for the preceding fiscal year. In addition, our by-laws require us to give: (i) class “A” preferred shares a priority in the distribution of dividends, at 8% each year over the capital linked to those shares; and (ii) class “B” preferred shares that were issued on or after June 23, 1969 a priority in the distribution of dividends, at 6% each year over the capital linked to those shares. In addition, preferred shares must receive a dividend 10% over the dividend paid to the common shares. For further information regarding dividend payments and circumstances in which dividend payments may not be made see “Risk Factors—Risks Relating to our Shares and ADS—You may not receive dividend payments if we incur net losses or our net profit does not reach certain levels”.

The following table sets out our declared dividends for the periods indicated:

	Year
	2015(1)		2014(1)		2013(1)
	(R$ )
Common Shares		—		—		0.40
Class A Preferred Shares		—		—²		2.18
Class B Preferred Shares		—		—²		1.63

(1) Interest on own capital.

(2) In the Financial Statement of 31/12/2014 there was no Declared Dividends, but in our 55^th Shareholders Meeting held on April 30, 2015we approved the payment of the balance of the profit reserve account in the amount of R$ 26 million in favor of our Class A Preferred shareholders and Class B Preferred shareholders.This amount was paid in 2015.

The following table sets forth a summary of dividends/interest on own capital declared per share for the periods presented, at the time declared.

Dividend per Share

	Declared				Paid(1)(²)				Declared				Paid(1)
	On 12/31/2011				On 5/29/2012				On 12/31/2012				On 9/20/2013
	R$		U.S.$		R$		U.S.$		R$		U.S.$		R$		U.S.$
Common		1.231779162		2.310571353		0.399210837		0.195356416		0.399210837		0.195356416		1.280047007		0.641820601
Preferred A		2.178256581		4.085973695		2.178256581		1.065944008		2.178256581		1.065944008		2.263612588		1.134984250
Preferred B		1.633692440		3.064480279		1.633692440		0.799458008		1.633692440		0.799458008		1.697709445		0.851238189

	Declared				Paid(1)(²)				Declared				Paid(1)
	On 12/31/2013				On 5/29/2014				On 12/31/2014				On 6/30/2015
	R$		U.S.$		R$		U.S.$		R$		U.S.$		R$		U.S.$
Common		0.39921083663		0.17640779347		0.39921083663		0.17640779347		0,00		0,00		0,00		0,00
Preferred A		2.17825658673		0.96255262339		2.17825658673		0.96255262339		0,00		0,00		0,10384693436		0,03340311183
Preferred B		1.63369244005		0.72191446754		1.63369244005		0.72191446754		0,00		0,00		0,10384693436		0,03340311183

(1) Adjusted by Selic rate variation.

- 16 -

Exchange Controls and Foreign Exchange Rates

The Brazilian foreign exchange system allows the purchase and sale of foreign currency and the international transfer of reais by any person or legal entity, regardless of the amount, subject to certain regulatory procedures.

Since 1999, the Central Bank has allowed the real/U.S. dollar exchange rate to float freely, and since then, the real/U.S. dollar exchange rate has fluctuated considerably. Until early 2003, the value of the real declined relative to the U.S. dollar and then began to stabilize. The real appreciated against the U.S. dollar in 2004-2007. In 2008, as a result of the worsening of the global financial and economic crisis the real depreciated 31.9% against the U.S. dollar, and on December 31, 2008 the exchange rate of the real in relation to the U.S. dollar was R$ 2.34 per U.S.$1.00. In 2009, the real appreciated 25.5% against the U.S. dollar, due to improved economic conditions in Brazil. In 2010, the real appreciated 4.3% against the U.S. dollar. In 2011, the real depreciated 12.6% against the U.S. dollar. In 2012, the real depreciated 8.9% against the U.S. dollar. In 2013, the real depreciated 14.6% against the U.S. dollar. In 2014, the real depreciated 11.8% against the U.S. dollar. In 2015, the real depreciated 31.0% against the U.S. dollar. In the past, the Central Bank has intervened occasionally to control instability in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian Government will continue to allow the real to float freely or will intervene in the exchange rate market through a currency band system or otherwise. We cannot assure that the real will not continue to depreciate substantially or appreciate against the U.S. dollar in the near future.

The following table sets forth the period end, average, high and low selling rates published by the Central Bank expressed in reais per U.S.$ for the years and dates indicated.

	Reais per U.S. Dollar
Year Ended	Period-end		Average		Low		High
December 31, 2011		1.8758		1.6746		1.5345		1.9016
December 31, 2012		2.0435		1.9550		1.7024		2.1121
December 31, 2013		2.3426		2.1605		1.9528		2.4457
December 31, 2014		2.6562		2.3547		2.1974		2.7403
December 31, 2015		3.9048		3.3387		2.5754		4.1949

The following table sets forth the period end, high and low commercial market/foreign exchange market selling rates published by the Central Bank expressed in reais per U.S.$ for the periods and dates indicated.

	Reais per U.S. Dollar
Month	Period end		Average		Low		High
January 2016		4.0428		4.0524		3.9863		4.1558
February 2016		3.9796		3.9737		3.8653		4.0492
March 2016		3.5589		3.7039		3.5589		3.9913
April 2016		3.4508		3.5658		3.4508		3.6921
May 2016		3.5951		3.5393		3.4645		3.6168
June 2016		3.2098		3.4245		3.2098		3.6126
July 2016		3.2390		3.2756		3.2298		3.3388
August 2016		3.2403		3.2097		3.1302		3.2733
September 2016		3.2462		3.2564		3.1934		3.3326

Brazilian law provides that, whenever there is a serious imbalance in Brazil’s balance of payments or there are serious reasons to foresee a serious imbalance, temporary restrictions may be imposed on remittances of foreign capital abroad. We cannot assure you that such measures will not be taken by the Brazilian Government in the future. See “Item 3.D, Risk Factors – Risks Relating to Brazil.”

We currently maintain our financial books and records in reais. For ease of presentation, however, certain consolidated financial information contained in this annual report has been presented in U.S. dollars. See “Item 8, Financial Information.”

- 17 -

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Relating to our Company

As a state-controlled company involved in many large infrastructure projects in Brazil, we or our employees may be accused, in the media or otherwise, of accepting illegal payments.

As a result of our NYSE listing, we are subject to the U.S. Foreign Corrupt Practices Act (as amended), or FCPA, and the disclosure requirements under the U.S. Securities Exchange Act of 1934. In addition, we are subject to broad anti-corruption legislation that has recently become effective in Brazil.

In 2009, the Federal Police commenced an investigation called “Operação Lava Jato” (Operation Car-Wash, or the Lava Jato Investigations) which, according to official sources, investigates the existence of an alleged corruption scheme involving Brazilian companies acting various sectors of the Brazilian economy, including the oil and gas sector. Since 2014, the Brazilian Federal Prosecutor’s focused part of the investigation on irregularities involving state owned companies’ contractors and suppliers and uncovered a broad payment scheme that involved a range of participants. In addition to criminal charges in Brazil, the U.S. Securities and Exchange Commission (“SEC”) and Department of Justice (“DoJ”) have also commenced investigations in relation to Operação Lava Jato (although we are not aware of any SEC or DoJ investigation with respect to Eletrobras) and a group of plaintiffs in the United States have commenced a civil class action lawsuit against us under the U.S. Securities laws. In light of these actions, the Brazilian media and the CVM have begun to question some special purpose entity and other transactions between third party contractors and us referred to in Operação Lava Jato. Members of the news media associated us with Operação Lava Jato. For more detailed information please see “Explanatory Note.”

As a response to allegations of potential illegal activities appearing in the media in 2015 relating to companies that provide services to the Company’s subsidiary Eletrobras Termonuclear S.A. – Eletronuclear, a subsidiary of Centrais Elétricas Brasileiras S.A., (“Eletronuclear”) (specifically, “NTU Angra 3” nuclear power plant), and to certain SPEs that Eletrobras holds a minority stake, Eletrobras’ Board of Directors, although not required to do so, hired the law firm Hogan Lovells US LLP on June 10, 2015 to undertake an independent internal investigation for the purpose of assessing the eventual existence of irregularities, including violations of the U.S. Foreign Corruption Practice Act (FCPA), the Brazilian Anticorruption Law and the Eletrobras code of ethics (the “Independent Investigation”). The independent investigation is subject to oversight by an Independent Commission (Comissão Independente para Gestão da Investigação), whose creation was approved by Eletrobras’ Board of Directors on July 31, 2015. This Commission is composed of Ms. Ellen Gracie Northfleet, a former justice of the Brazilian Supreme Court, Mr. Durval José Soledade Santos, a former director of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM), and Mr. Manoel Jeremias Leite Caldas, the representative of minority shareholders.

The Company, Hogan Lovells and the Independent Committee have been closely monitoring the investigations and cooperating with Brazilian and United States authorities, including Federal Courts (Justiça Federal); Federal Prosecutors’ Office (Ministério Público Federal or “MPF); Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”); Council for Economic Defense (Conselho Administrativo de Defesa Economica or “CADE”) United States Department of Justice (“DOJ”), United States Securities & Exchange Commission (“SEC”), among others, and have responded to requests for information and documents from these authorities In instances where the Independent Committee identified contracts where irregularities may have occurred, Eletrobras evaluated those contracts and internal investigations and, when applicable, suspended those contracts. Eletrobras also took applicable administrative measures in relation to employees and officers involved in the irregularities identified by the investigation, including, when applicable, the suspension or termination of employees.

- 18 -

On April 29, 2015, the Federal Police commenced the “Radioactivity Operation” under the 16^th phase of Operation “Lava Jato”, which resulted in the imprisonment of a former officer of our subsidiary Eletrobras Termonuclear S.A – Eletronuclear. This former officer was sentenced to 43 years of prison, by the judge of the 7th Federal Criminal Court, for passive bribery, money laundering, obstruction of justice, tax evasion and participation in a criminal organization. On July 6, 2016, the Federal Police commenced “Operation Pripyat”, in which the Federal Police served arrest warrants issued by the judge of the 7^th Federal Court of the District of Rio de Janeiro against former officers, officers who had already been suspended by Eletrobras’ Board of Directors as well as other parties. Formal charges of corruption, money laundering and obstruction of justice were filed against such former officers by Federal Prosecutors on July 27^th, 2016. Eletrobras is assisting the prosecution in these criminal proceedings. For more information concerning civil charges filed against us, please see “ – We may incur losses and spend time and money defending pending litigation and administrative proceedings.”

We cannot assure you that we will not become the subject of any criminal or further civil anti-corruption action brought under U.S. or Brazilian law if any illegal acts or regulatory failures come to light. Any potential future anti-corruption-related action brought against us could result in charges against us, members of our management, significant fines and penalties, reputational harm, distraction from our ongoing business and other unforeseen material adverse effects.

We have been investigating events allegedly incompatible with our ethics and integrity standards. Eventual failures to timely detect or remedy any events of this nature could have material adverse effect on our results of operations and financial condition.

Our business, including relationships with third parties, is guided by ethical principles. We adopted a Code of Ethics and a number of conduct commitments and internal policies (such as Guidelines for Compliance with Anti-Corruption Policy) designed to guide our interested parties, such as management, employees and contractors and reinforce our principles and rules for ethical behavior and professional conduct.

We are subject to the risk that our employees and management, whether of our companies or of the special purpose entities (SPEs), in which we hold equity interests, contractors or any person doing business with us may engage in fraudulent activity, corruption or bribery, fail to comply with our internal controls and procedures, by means, for example, of misappropriation or manipulation of our assets for their personal or business advantage to our detriment. This risk is heightened by the fact that we conduct many of our operations through subsidiaries, as well as SPEs or consortia which we do not have corporate control. We have a number of systems for identifying, monitoring and mitigating these risks in place, but our systems may not be effective in all circumstances.

Any findings on allegations of lapses in these principles could lead to project delays, investigations, higher costs and expenses, less management focus on our ongoing business and lower levels of revenues and profits from any affected projects. In addition, certain of the financing agreements of our companies for the development of our plants, some of which are guaranteed by us, contain acceleration clauses which could be triggered upon default. In the event of a default, certain of these financing agreements could be accelerated. These defaults or the acceleration of these financing agreements may also give other lenders the right to accelerate pursuant to cross-default provisions. Accordingly, acceleration of these financing agreements could adversely affect our results of operations and financial condition. For more information relating to possible defaults under our financing and capital market obligations please see “ – We have substantial liabilities and are exposed to short-term liquidity constraints, which could make it difficult for us to obtain financing for our planned investments and adversely affect our financial condition and results of operations.”

We cannot ensure that all of our employees and members of our management as well as the employees and members of management of the SPEs in which we hold ownership interest, or partners and third parties, will comply with our ethical principles. Any failure – real or perceived – to follow these principles or in complying with applicable governance or regulatory obligations could harm our reputation, limit our ability to obtain financing and otherwise have a material adverse effect on our results of operations and financial condition.]

If we are unable to remedy the material weaknesses in our internal controls, the reliability of our financial reporting and the preparation of our consolidated financial statements may be materially adversely affected.

- 19 -

Pursuant to SEC regulations, our management, fiscal council and internal auditors, evaluate the effectiveness of our disclosure controls and procedures, including the effectiveness of our internal control over financial reporting. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. As a result of our management’s evaluation of the effectiveness of our disclosure, controls and procedures in 2015, our management determined that these controls and procedures were not effective due to material weaknesses in our internal controls over financial reporting. These material weaknesses included our lack of design and maintenance of effective operating controls over:

• an effective control environment, especifically regarding the lack of timely remedial actions related to previous years, including the proper execution of management review controls comprising completeness analysis, materiality threshold definition and accuracy determination of data to certain controls reviewed;

• adequate controls regarding the preparation of the financial statements and related disclosures, including related parties transaction reconciliation; monitoring controls regarding the financial situation and the related accounting reflects of the transactions made with suppliers (Furnas); and analysis, reconciliation and monitoring of consumed fuel (Amazonas);

• effective internal controls regarding the adequate monitoring of the investments in specif purpose entities (SPEs), as well as for the related parties transactions, including failure to identify and monitor the physical and financial execution of the relevant investment projects evaluated under the equity method, lack of technical and financial terms review related to construction contracts before the bid process, adequate analysis of the proposals made by suppliers and lack of evaluation and monitoring of progress and budget of projects;

• effective internal controls over the Risk, Corruption Prevention and Compliance Program, considering the requirements of the North American legislation (FCPA - Foreing Corrupt Practices Act) and also of the Brazilian legislation (Law 12,846/2013 - anti-corruption law);

• adequate internal controls that would avoid management override to the high level controls, including failure to communicate and to obtain adherence to the ethical values prescribed in the Company’s code of conduct, and an ineffective whistleblower channel due to inadequate comprehensiveness controls;

• effective controls related to payments and capitalization of fixed assets, that would result in future economic benefits as well as the approvals related to internal controls over the capitalization process.

If our efforts to remediate the material weaknesses are not successful, we may be unable to report our results of operations for future periods accurately and in a timely manner and make our required filings with government authorities, including the SEC. There is also a risk that there could be accounting errors in our financial reporting, and we cannot be certain that in the future additional material weaknesses will not exist or otherwise be discovered. Any of these occurrences could adversely affect our business and operating results and could generate negative market reactions, potentially leading to a decline in the price of our shares, ADS and debt securities.

Furthermore, in light of Operação Lava Jato, our material weaknesses on financial reporting may result in a situation whereby if an illegal act were to occur, our internal systems and controls may not be sufficient for any such action to come to the attention of our management.

Any potential SEC and DoJ investigations regarding the possibility of non-compliance with the U.S. Foreign Corrupt Practices Act could adversely affect us. Violations of this or other laws may require us to pay fines and expose us and our employees to criminal sanctions and civil suits.

We have not been notified and are not aware that, as of the date of this annual report, we are being investigated by the SEC or DoJ in relation to Operação Lava Jato. However, the SEC and the DoJ may investigate us in relation to Operação Lava Jato and any allegations regarding a violation of the U.S. Foreign Corrupt Practices Act in the future. In connection with any potential future SEC or DoJ investigation, there can be no assurance that we will not be required to pay penalties or provide other financial relief, or consent to injunctions or orders on future conduct or suffer other penalties, any of which could have a material adverse effect on us.

- 20 -

On August 30, 2016, the company received a letter from the SEC in which it informed the company about the possibility of the SEC commencing de-registration proceeding because Eletrobras failed to timely file its annual reports on Form 20-F for 2014 and 2015 with the SEC. We believe that once we file our annual reports on Form 20-Fs for 2014 and 2015, the SEC will be less likely to commence de-registration.

Operação Lava Jato investigations are still ongoing and new information may be disclosed. As such, our estimates may be under or overestimated, which could thus lead to the need of resubmitting our financial statements and to a materially adverse impact in our operational income and financial status. This could impact the market value of our securities.

Given that the investigations of Operação Lava Jato are still ongoing Eletrobras may have to make certain adjustments in certain lines of its financial statements in case the investigations lead to a discovery by Eletrobras of materially relevant differences between the accounted amounts in such lines.

Eletrobras’ internal investigations on the allegations made under Operação Lava Jato intend to identify possible illegal payments and other illegal acts that may have occurred in projects in which the Company and its subsidiaries hold equity interest, either directly or through special purpose entities. One of the possible consequences of illegal payments would be the capitalization of undue amounts in the accounting entries relating to any effected projects resulting from illegal arrangements made with consortium of constructors, suppliers or other service renderers.

To determine the financial impact to be recognized in our consolidated financial statements, management took into consideration the conclusions reached and findings identified by the hired internal investigation and the conclusions reached and findings identified to date by the still ongoing public investigation called Operação Lava Jato.

However the investigations under Operação Lava Jato are still ongoing and the Federal Prosecutors Office may take a considerable amount of time to conclude its investigation new relevant information may come to light in the future, which could cause Eletrobras to further adjust certain line items.

The operational and financial results of the SPEs and consortia in which we invested may adversely affect our strategies, results of operations and financial condition.

We hold equity interests in a number of SPEs and consortia which were created specifically to participate in public auctions for concessions in the generation and transmission segments. We generally use SPEs when we enter into partnerships to explore new ventures. Given the significant decrease in generation and transmission tariffs in recent years and the current adverse macro-economic conditions in Brazil, the operational and financial results of these SPEs and consortia may be adversely affected. Further, as we do not control the management of these SPEs or consortia their management practices may not be aligned with ours, which could lead to sanctions or penalties being imposed on them. Any deterioration in the results of operations or financial condition of the SPEs or consortia or any sanctions or penalties imposed on them may have a negative effect on our results of operations or financial condition.

In order to standardize the management of the SPEs in which we hold equity interests, we developed a uniform corporate governance model that we are currently implementing across all our subsidiaries which will aim to follow this model when they invest in future SPEs or consortia. If the uniform corporate governance model is not implemented fully we may not be fully protected against any possible penalties or sanctions that may be imposed on these SPEs or consortia for future conduct, which could in turn result in reputational harm and adverse effects on our results of operations and financial condition.

Due to the length of time required to fully implement our compliance program, we may be subject to sanctions and penalties related to the enforcement of the FCPA and the Brazilian Anti-Corruption Law.

- 21 -

In mid-2014 our Board of Directors approved our compliance program (Plano de Implementação do Programa de Compliance), pursuant to (i) the Brazilian anti-corruption Law No. 12,846/2013, and (ii) the U.S. laws and regulations applicable to companies that have their securities listed on the NYSE, such as the FCPA. Pursuant to our policies, all of Eletrobras companies’ employees, management, partners and third parties must follow all applicable anti-corruption laws and regulations, whether in Brazil or overseas. We implemented the compliance program at the Eletrobras group level and on December 22, 2014, our Board of Executive Officers approved our compliance manual (Manual de Compliance à Política Anticorrupção). Each of our subsidiaries nominated compliance managers and assistants (Gerentes e Assistentes de Compliance) which together form the compliance commission (Comissão Diretiva de Compliance) of Eletrobras’ companies.

In December 2015, the company updated its Guidelines for Compliance with Anti-Corruption Policy. In August 2016 the Board of Directors created a Compliance Officer (Diretoria de Conformidade) to specifically address issues relating to risks, controls and corporate integrity. The Board elected Mrs. Lucia Casasanta to fill this new compliance role. Our Board of Executive Officers monitors the implementation of our compliance program by reviewing advances and setbacks.

We are implementing our compliance program as part of the “Eletrobras 5 Dimensions Program proposed by the then existing General Conttroller’s office– CGU (Controladoria-Geral da União) for state-owned companies, in compliance with Decree 8,420/2015. Given the complexity of the new program, it may not be fully operational until early 2018. Our newly adopted practices will include: (i) the commitment of the company’s Board of Officers to implement the compliance program, the creation of the new Compliance Officer role as well as the periodic reporting directly to the Board of Directors and to the Fiscal Council related to the ongoing compliance procedures; (ii) the development of a corruption risk assessment program to identify and protect the areas of a company in the energy sector which are most vulnerable to corruption; (iii) formal guidelines for compliance with our Anti-Corruption Policy , training of the employees, members of the management and of the Fiscal Council of the guidelines and integration of a of the Code of Ethics and Conduct Commitments, including formalizing procedures to mitigate the risk of corruption; (iv) implementation of an independent whistleblower channel and training our employees regarding our compliance procedure and the risks of corruption; and (v) annual internal audits to evaluate our compliance, including implementing due diligence for third parties and conducting background checks when appointing the members of their Board of Directors, Board of Officers and Fiscal Council.

Until the program is fully implemented, or if the program fails to identify corruption or fraud once it is implemented or we do not successfully remediate future issues that arise, we could be exposed to financial losses, restrictions on securities offerings and civil and criminal liability in the United States and in Brazil.

The renewal of our concessions pursuant to Law No. 12,783/2013 or Law No. 13,182/2015, may adversely affect our financial condition and results of operations.

The Brazilian Government enacted Law No. 12,783/2013, or Law No. 12,783, in order to regulate the terms and conditions for the renewal of concessions for the generation, distribution and transmission of electricity which were due to expire between 2015 and 2017. Law No. 12,783 provides that companies may, only once, renew their generation, transmission and distribution concessions for a further thirty years term, provided they accept certain conditions established by ANEEL, such as the revised tariffs to be calculated by ANEEL, and submitting to the agency’s quality standards.

On December 4, 2012, we renewed the generation and transmission concessions which were due to expire between 2015 and 2017 of Chesf, Eletronorte, Eletrosul and Furnas for further 30 year terms pursuant to Law No. 12,783. By doing so, we accepted the application of the Annual Tariffs for generation and transmission (Receita Anual Permitida) as remuneration for the operation and maintenance of our generation and transmission activities in accordance with the MME’s Ordinance Nos. 578 and 579, both enacted in 2012.

Further, the Brazilian Government enacted Law No. 13,182/2015 to regulate the terms for the renewal, for a further thirty years, of the generation concessions and including the Sobradinho, Itumbiara hydroelectric power plants. On November 3, 2015 Chesf renewed the concessions of the Sobradinho hydroelectric power plant and on January 7, 2016 Furnas approved the renewal of the concession of the Itumbiara hydroelectric power plant, but Furnas decision has not yet become effective. Up to this date the Itumbiara’s auction to sell energy has not yet taken place, being this one of the conditions to affect the renewal of the concession. Recently, Law No. 13,299/2016,

- 22 -

enacted on June 21, 2016, amended certain provisions of Law No. 13,182/2015 with a view to make the sale of Itumbiara hydroelectric power plant’s energy more favorable and, consequently, make the renew of Itumbiara concession effective. However, we cannot guarantee that the legality of Law No. 13,182/2015 and of Law No. 13,299/2016 will not be questioned, neither that all conditions needed to turn the renewal of the Itumbiara concession into an economically feasible project will be met.

With respect to the distribution of electric energy activity, on June 3, 2015, the Brazilian Government enacted Decree No. 8,461/2013, or Decree No. 8,461, that regulates the criteria for the renewal of distribution concessions pursuant to Law No. 12,783. The renewal of distribution concessions pursuant to Decree No. 8,461 requires that concession holders meet certain criteria for: (i) the quality of the distribution services provided, and (ii) the compliance with certain financial ratios.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. The shareholders also approved that this distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary funds for these companies to keeping their operations ongoing, perform maintenance and make new investments will be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns these concessions, they will be subject to new bids in the future.

On August 3, 2016, the MME issued decrees Nos. 420, 421, 422, 424 and 425 naming, respectively, the Distributors Amazonas Energia, Eletroacre, Ceron, Cepisa, Ceal and Boa Vista as temporarily responsible for distributing public energy so as to assure the continuity of the service, in accordance with article 9, paragraph 1, of Law No. 12,783 of January 11, 2013.

According to these decrees, the Distributors will provide the indicated services, in a provisional manner, against payment of the proper compensation, until the effective transfer of control of the Distributors, or until December 31, 2017, whichever occurs first, in accordance with the terms provided in Decree MME 338 of July 26, 2016 and article 9 of Law No. 12,783/2013.

Under paragraph 4 of article 9 of Law No. 12,783/2013, during the temporary service provision period, the Distributors may apply the approved results of revisions and tariff adjustments, as well as borrow and receive funds from the CCC Account, the CDE Account and the RGR Fund, subject to Aneel’s regulation.

However, as Eletrobras continues to be a majority stakeholder of the Distributors, it is not possible to ensure that the Company will successfully transfer the corporate control of all its Distributors by the end of 2017. Accordingly, Eletrobras may have to bear the costs related to the dissolution of the companies that might remain under its control. Those costs could include the termination of employees and other obligations. Furthermore, Eletrobras may have to pay expenses related to obligations the Distributors might have had before the commencement of the temporary service provision period or related to obligations in which Eletrobras is the guarantor.

The amount of any indemnification payments to be received following renewal of our concessions, which were due to expire between 2015 and 2017, may not be sufficient to cover our investments in these concessions. Further, we cannot estimate when and on what terms indemnification payments in respect of generation concessions will be made.

In respect of our generation and transmission concessions, by agreeing to the renewal of the concessions, which were due to expire between 2015 and 2017, we accepted indemnification for the unamortized portion of our assets relating to those concessions. As of April 30, 2015, pursuant to Law No. 12,783/2013, we were awarded the total indemnification payments of R$ 15.2 billion. These indemnification payments relate to any generation and transmission assets that entered into operation after May 31, 2000, which consist of the so called Basic Network – New Installations – RBNI (Rede Básica – Novas Instalações – RBNI, or the Basic Network).

- 23 -

In 2014 we claimed indemnification from ANEEL (i) in relation to any transmission assets of the Basic Network, which became operational prior to May 31, 2000 and which have not yet been depreciated and/or amortized (RBSE) in accordance with Law No. 12,783 and ANEEL Resolution No. 589/2013; and (ii) for the modernization of any generation assets in accordance with Law No. 12,783 and ANEEL Resolution No 596/2013. Eletronorte, Eletrosul, Furnas and Chesf claimed indemnifications amounting to R$ 26.5 billion. ANEEL has acknowledged the requests for indemnification payments of R$ 1.007 billion made by Eletrosul, R$ 9 billion requested by Furnas and R$ 5,1 billion made by Chesf. The indemnification requested by Eletronorte is still being analyzed by ANEEL.

On April 20, 2016, MME enacted Instruction No, 120, which regulated the conditions under which the indemnifications in connection with the RBSE transmission assets shall be received and which established that the amounts homologated by ANEEL referring to these assets should be merged into the Regulatory Asset Basis (Base de Remuneração Regulatória). On December 2015, the amount of RBSE credits that had not yet been accounted for, however this has occurred in June 30, 2016 after the regulation issued under Instruction No, 120. As the Aneel may call a public hearing to discuss the accounting of the RBSE, new relevant information may come to light in the future, which could cause Eletrobras to further adjust certain line items, included the line items relating to Taxes. Also as the indemnification requested by Eletronorte is still being analyzed by ANEEL, its claim could be less than the value accounted, on June 30, 2016.

These amounts related to RBSE, once updated and paid, will be added to the Permitted Annual Revenues (“RAPs” - Receitas Anuais Permitidas) of the relevant projects, being recognized as from the 2017 review of tarrifs procedure, for an eight-year period. ANEEL has not yet defined the criteria for the indemnification of generation assets, which may be below the amount claimed by Eletrobras and which have not yet been accounted for by Eletrobras.

In respect of our distribution concessions, the Brazilian Government has not yet enacted rules or regulations for the indemnification of the unamortized portion of our assets relating to these concessions. Such rules or regulations, when enacted, may adversely affect the financial condition and results of operations of our distribution companies.

The value of the revised tariffs we calculated based on our expected expenses, costs and revenues may be lower than the tariffs we will eventually receive.

Law No. 12,783 determines, among other things, the tariffs to be charged by concessionaires based on costs of operation and maintenance, charges, taxes and payments for the use of the transmission and distribution systems. By agreeing to renew our concessions early, we made certain assumptions about the assets of Furnas, Chesf, Eletronorte and Eletrosul that may not materialize over time, particularly in relation to planned cost reductions. As a result, the tariffs our subsidiaries will receive in time may be lower than predicted or may be paid only after a significant amount of time, which could materially adversely affect our financial condition and results of operations.

There are no guarantees that our existing concession contracts will be renewed and, if so, on what terms.

We carry out our generation, transmission and distribution activities pursuant to concession agreements entered into with the Brazilian Government through ANEEL.

The Brazilian Government may renew any existing concessions that were not renewed pursuant to Law No. 12,783 and Law No. 13,182/2015, for an additional period of 30 years without the need to carry out a new public bidding process. If we request a renewal, the Brazilian Government may renew the concession on less favorable terms. This applies to approximately 33.6% of our generation assets and 8.03% of our transmission assets, other than Itaipu and our nuclear power plants, Angra I and Angra II.

Given the Brazilian Government’s discretion in relation to the renewal of concessions, we may face considerable competition during the renewal process. Consequently, we cannot give you any assurances that our concessions will be renewed or renewed on similar terms.

The value of any government bonds received by us in exchange for our credits in Itaipu might be less than the value of such credits.

- 24 -

Law No. 12,783 authorized the Brazilian Government to acquire any of the credits we hold against Itaipu as a result of our financing of the construction of the Itaipu hydroelectric power plant in exchange for Brazilian Government bonds (títulos da dívida pública mobiliária) of an equivalent value. Should the Brazilian Government acquire these credits, the value of any government bonds transferred to us in the future may be less than the value of our credits in Itaipu and could materially adversely affect our financial condition and results of operations.

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

The Brazilian Government, as our controlling shareholder, exercises substantial influence on the strategic orientation of our business. The Brazilian Government also has the power to appoint seven out of the ten members of our Board of Directors and, through them, a majority of the executive officers responsible for our day-to-day management. Additionally, the Brazilian Government currently holds the majority of our voting shares. Consequently, the Brazilian Government has the majority of votes at our shareholders’ meetings, which empowers it to approve most matters prescribed by law, including the following: (i) the partial or total sale of the shares of our subsidiaries and affiliates; (ii) increase our capital stock; (iii) determine our dividend distribution policy, as long as it complies with the minimum dividend distribution regulated by law; (iv) issuances of securities in the domestic market and internationally; (v) corporate spin-offs and mergers; (vi) swaps of our shares or other securities; and (vii) the redemption of different classes of our shares, independent from approval by holders of the shares and classes that are subject to redemption.

Our operations impact the commercial, industrial and social development promoted by the Brazilian Government. Therefore, we may incur costs or engage in transactions that may not necessarily meet the interest of our other investors.

We have substantial liabilities and are exposed to short-term liquidity constraints, which could make it difficult for us to obtain financing for our planned investments and adversely affect our financial condition and results of operations.

In order to finance the capital expenditures needed to meet our long-term growth objectives, we have incurred a substantial amount of debt. As our cash flow from operations in recent years has not been sufficient to fund our capital expenditures, debt service and payment of dividends, our debt has significantly increased since 2012. Our total debt (including accrued interest) increased by 17.3% to R$ 46,398 million as of December 31, 2015, compared to R$ 39,539 million as of December 31, 2014 and to R$ 32,476 million as of December 31, 2013. Our debt, net of cash, cash equivalents and marketable securities, increased by 11.1% to R$ 37,966 million as of December 31, 2015 compared to R$ 34,177 million as of December 31, 2014 and to R$ 22,590 million as of December 31, 2013. 57.1% of our existing debt (principal), or R$ 46.4 billion, will mature in the next five years. In order to meet out growth objectives, maintain our ability to fund our operations and amortize scheduled debt maturities, we will need to raise significant amounts of debt capital from a broad range of funding sources.

To service our debt after meeting our capital expenditure targets, we have relied upon, and may continue to rely upon, a combination of cash flows provided by our operations, drawdowns under our available credit facilities, our cash and short-term financial investments balance and the incurrence of additional indebtedness. Following the downgrade of the sovereign, we lost our Fitch’s, Moody’s and Standard & Poor’s investment grade ratings. Any further lowering of our credit ratings may have adverse consequences on our ability to obtain financing or may impact our cost of financing, also making it more difficult or costly to refinance maturing obligations. If, for any reason, we are faced with continued difficulties in accessing debt financing, this could hamper our ability to make capital expenditures in the amounts needed to maintain our current level of investments or our long-term targets and could impair our ability to timely meet our principal and interest payment obligations with our creditors, as our cash flow from operations is currently insufficient to fund such both planned capital expenditures and all of our debt service obligations. A reduction in our capital expenditure program or the sale of assets could significantly affect our results of operations and financial condition.

We are subject to certain covenants, non-compliance with which may allow the lenders under the relevant facilities to accelerate their commitments.

- 25 -

We are party to a number of international and Brazilian financing facilities as borrower and guarantor. The bonds we issued in the international capital markets and our existing credit facilities require that we comply with a number of financial and non-financial covenants, such as the provision of financial statements by certain dates and the provision of an unqualified audit report, among others. We may not be able to comply with such covenants, which could trigger certain events of defaults and, consequently, permit the relevant lenders to accelerate the loans, potentially allowing other lenders to rely on their cross-acceleration provisions. For example, in March 2015 we received waivers from certain lenders with respect to the qualified audit report as of and for the year ended December 31, 2015 included in our consolidated financial statements as of and for the year ended December 31, 2015 as filed with the CVM in Brazil. We cannot guarantee that the relevant lenders will grant us waivers for any breaches of our covenants in the future, and any covenant breach may result in circumstances that usually lead to defaults in other financing.

In addition, we are the guarantor of certain debentures issued by Teles Pires Participações S.A. As guarantor, we are required to comply with certain financial ratios. As of December 31, 2015, we did not comply with these ratios. We have renegotiated this guarantee with the holders and the holders granted a waiver on March 29, 2016 stating that they will not accelerate the debt for a period of 180 days. Since June 30, 2016, Eletrobras has complied with these financial ratios. However, any acceleration of any other guarantee, financing or security may adversely impact Eletrobras’ financial status.

We are subject to rules limiting borrowing by public sector companies and may not be able to obtain sufficient funds to complete our proposed capital expenditure programs.

In respect of capital expenditures for expansion, modernization, research, infrastructure and environmental projects, in 2014 we disbursed R$ 11.4 billion and in 2015 R$ 10.4 billion. For 2016 our current budget provides for approximately R$ 13.9 billion of capital expenditures. We cannot assure you that we will be able to finance our proposed capital expenditure programs from either our cash flow or external resources. Moreover, as a state controlled company, we are subject to certain rules limiting our indebtedness and investments and must submit our proposed annual budgets, including estimates of the amounts of our financing requirements and sources of our financing, to the Ministry of Planning, Budget and Management and the Brazilian Congress for approval. Thus, if our operations do not fall within the parameters and conditions established by such rules and the Brazilian Government, we may have difficulty in obtaining the necessary financing authorizations, which could create difficulties in raising funds.

Further, as our credit rating is sensitive to any change in the Brazilian Government rating, which Moody’s lowered on August 11, 2015 and further on December 9, 2015 and on February 25, 2016, Standard & Poor’s lowered on March 24, 2014 and further lowered on September 9, 2015 and on February 17, 2016, reaffirmed on May 19, 2016, and which Fitch lowered on October 15, 2015 and further lowered on December 16, 2015 and on May 10, 2016. The two most recent downgrades in ratings by Standard & Poor’s and Fitch resulted in a loss of the sovereign’s investment grade. Accordingly, any further lowering of the Brazilian Government rating may have additional adverse consequences on our ability to obtain funding and/or our cost of funding.

If we are unable to obtain funds, our ability to invest in capital expenditures for expansion and maintenance may be adversely impacted, which would materially adversely affect the execution of our growth strategy, particularly our investment in large scale projects, which could materially adversely affect our financial condition and results of operations.

We own a number of subsidiaries and invest in a number of affiliates and SPEs whose performance significantly influences our results.

We conduct our business mainly through our operating subsidiaries, including Eletronorte, CGTEE, Eletronuclear, Chesf, Furnas, Eletrosul, CEAL, Eletroacre, Amazonas Energia GT, Amazonas Energia D, CEPISA, CERON, Boa Vista Energia and, most recently, CELG-D. In addition, we and our subsidiaries invest in SPEs for the development of certain projects, such as the construction of our hydroelectric plants Santo Antonio and Jirau. For the purposes of Rule 3-09 of Regulation S-X, the SPEs that hold the Santo Antônio and Jirau projects are considered significant subsidiaries as of and for the year ended December 31, 2014. For the year ended December 31, 2015 the Rule 3-09 of Regulation S-X was not applicable. Our ability to meet our financial obligations is therefore related in part to the cash flow and earnings of our subsidiaries and SPEs and the distribution or other

- 26 -

transfer of those earnings to us in the form of dividends, loans or other advances and payment. Some of our subsidiaries or SPEs are, or may in the future be, subject to loan agreements that require that any indebtedness of these subsidiaries or SPEs to us be subordinate to the indebtedness under those loan agreements. Our subsidiaries and any SPEs are separate legal entities. Any right we may have to receive assets of any subsidiary or SPE or other payments upon their liquidation or reorganization will be effectively subordinated to the claims of that subsidiary’s or SPE’s creditors (including tax authorities, trade creditors and lenders to such subsidiaries), except to the extent that we are a creditor of that subsidiary or SPE, in which case our claims would still be subordinated to any security interest in the assets of that subsidiary or SPE and indebtedness of that subsidiary or SPE senior to that held by us.

The amounts we receive from the Fuel Consumption Account are insufficient to cover costs related to thermoelectric generation of energy

The Brazilian Government introduced the Fuel Consumption Account, or CCC Account, in 1973. The purpose of the CCC Account was to equalize the costs of energy generation for electricity companies located in areas where the generation is mainly thermoelectric and, therefore, more expensive in order to avoid peaks in the tariffs paid by end consumers in such locations. We have administered the CCC Account ever since, making the relevant payments to the beneficiaries. Until 2013, the CCC Account was funded through quotas paid by companies operating in the energy sector. However, following the enactment of Law No. 12,783, funds from the CDE Account are now the main fund of the CCC Account.

The generation costs of the isolated system are partially covered by the CCC Account. As a result of the delay in the transfer of funds from the CCC Account to our distribution subsidiaries, they have incurred substantial debt with third party fuel suppliers. If there is a delay in ANEEL releasing funds from the CCC Account, our distribution subsidiaries are subject to penalties and interest, which are not covered by the CCC Account.

In December 2014, certain of our distribution subsidiaries renegotiated overdue amounts with third party fuel suppliers. These amounts totaled approximately R$ 8.6 billion, which have been already negotiated and formalized through instruments of acknowledgment of debt. These agreements benefited from security over receivables of the CCC Account and a corporate guaranty provided by us. Due to the on-going delay in funds being transferred from the CCC Account to us, we and our distribution subsidiaries contracted additional debt. The distribution subsidiaries jointly with Eletrobras are negotiating further agreements with third party fuel suppliers for debt incurred from December 2014 through the present date.

On account of the default by the subsidiary Amazonas Energia on gas invoices for the period from December 2014 through June 2015, and outstanding debits of 2016, in April 26, 2016 Petrobras filed a lawsuit demanding approximately R$ 1.7 billion.

Any further delay in funds being transferred from the CCC Account to us and our distribution subsidiaries may cause certain of our distribution subsidiaries to breach existing agreements and incur a substantial amount of debt with their third party fuel suppliers as these distribution subsidiaries do not generate sufficient cash flows to fund these obligations, thus adversely impacting their financial status and income.

As the manager of certain sectorial funds we are exposed to mismanagement claims.

We manage certain accounts and funds such as the CCC Account, the CDE Account and the RGR Fund. These funds are managed pursuant to rules and regulations enacted by ANEEL. Accordingly, ANEEL and other oversight bodies, such as the Federal Audit Courts (the “TCU”) may not agree with how we interpret certain of the provisions for the management of these accounts and/or funds. Accordingly, we may be exposed to significant penalties for non-compliance with these rules. Further, we are subject to civil and criminal liability for the management of third party funds.

In January 2014, ANEEL commenced an administrative proceeding determining that we reimburse the RGR Fund the historical amount of approximately R$ 2 billion. We appealed against this decision. On May 10, 2016, ANEEL dismissed the first appeal and determined that we indemnify the RGR Fund for that amount. In June 2016 Law No. 13,299/2016 was enacted. As a result, we have filed a new appeal requesting compliance with the new law. On September 27, 2016, ANEEL partially granted Eletrobras’ appeal. The company will reimburse the RGR fund in the amount of R$ 2,037.8 million (the historical amount of December 31, 2011). This amount will have to be adjusted by

- 27 -

an annual interest of 5% due in monthly installments between January 2017 and the year 2026. Eletrobras disagrees with the amount of the inflation adjustment and, consequently, it will appeal against this decision. We cannot assure you, however, that this new appeal will be granted.

On June 22, 2016 the Federal Government enacted Provisional Measure No. 735 removing the administration of all sectorial funds, including RGR Fund, the CDE Account, CCC (Oil Consumption Account - Conta de Consumo de Combustível) from our responsibility after January 1, 2017. The management of sector-based funds was thus transferred to CCEE. However, to date, any allegation of mismanagement of such funds could implicate us, which could adversely affect the condition of the company and its financial results.

We may be unable to fully implement our strategy.

Our ability to reach the principal objectives of our strategy depends on a series of factors, among them, our ability to:

• Implement an operational efficiency plan aimed at reducing costs, increasing revenues and improving the quality and reliability of our services;

• Expand our business in a sustainable and profitable manner;

• Improve our business model, corporate governance and management; and

• Improve our human resources allocation in light of the new regulations of the Brazilian energy sector.

We cannot guarantee that we will be able to accomplish these objectives in their entirety or successfully. Any impact on the main elements of our strategy may adversely affect our financial condition and results of operations.

If any of our assets were deemed assets dedicated to providing an essential public service, they would not be available for liquidation in the event of our bankruptcy and could not be subject to attachment to secure a judgment.

Law No. 11,101/2005, or the New Bankruptcy Law, governs judicial recovery, extrajudicial recovery and liquidation proceedings and replaces the debt reorganization judicial proceeding known as concordata (reorganization) for judicial and extrajudicial recovery. The New Bankruptcy Law provides that its provisions do not apply to government owned and mixed capital companies (such as Eletrobras). However, the Brazilian Federal Constitution establishes that mixed capital companies, such as Eletrobras, which operate a commercial business, will be subject to the legal regime applicable to private corporations in respect of civil, commercial, labor and tax matters. Accordingly, it is unclear whether or not the provisions relating to judicial and extrajudicial recovery and liquidation proceedings of the New Bankruptcy Law would apply to us. Nevertheless, Law No. 12,767/2012 provides that judicial and extrajudicial recovery do not apply to public entity concessionaires until the termination of those concessions.

We believe that a substantial portion of our assets, including our generation assets, our transmission network and our limited distribution network, would be deemed by Brazilian courts to be related to providing an essential public service. Accordingly, these assets would not be available for liquidation in the event of our bankruptcy or available for attachment to secure a judgment. In either case, these assets would revert to the Brazilian Government pursuant to Brazilian law and the terms of our concession agreements. Although the Brazilian Government would in such circumstances be under an obligation to compensate us in respect of the reversion of these assets, we cannot assure you that the level of compensation received would be equal to the market value of the assets and, accordingly, our financial condition and results of operations may be affected.

We may be liable for damages, subject to further regulation and have difficulty obtaining financing if there is a nuclear accident involving our subsidiary Eletronuclear.

- 28 -

Our subsidiary Eletronuclear, as an operator of nuclear power plants, is subject to strict liability under Brazilian law for damages in the event of a nuclear accident caused by the operations of nuclear power plants Angra I and Angra II. The Vienna Convention on Civil Liability for Nuclear Accidents, or the Vienna Convention, became binding in Brazil in 1993. The Vienna Convention provides that an operator of a nuclear installation, such as Eletronuclear, in a jurisdiction which has adopted legislation implementing the Vienna Convention, will be strictly liable for nuclear damages. In addition, Eletronuclear is also regulated by several federal and state agencies.

As of December 31, 2015, our Angra I and Angra II nuclear power plants were insured for nuclear risk in the event of a nuclear accident for the total amount, per power plant, of U.S.$500 million for material damages and of U.S.$286.7 million for civil liability. The Brazilian nuclear regulatory authority, or CNEN, has not established any additional safety requirement for the nuclear power plants as a result of the Fukushima accident in Japan. Eletronuclear complied with all the requests of CNEN regarding the lessons learned from the Fukushima accident, including the performance of “stress tests” developed for European reactors in accordance with the technical guidelines set forth by the European Commission. The location of our existing plants was also subject to an extensive reevaluation prior to the Fukushima accident as part of the licensing application for the construction of Angra III and the adequacy of the safety designs were confirmed at that stage.

The technology applied in Brazilian nuclear power plants and the design, incorporating additional safety features such as double emergency supply systems and alternatives for passive reactor cooling, should withstand accidents beyond the design basis. Nonetheless, Eletronuclear established a comprehensive program to evaluate and enlarge its existing safety margins and allocated approximately US$188 million to be applied towards this through to 2016. The program involves studies and improvements to the nuclear power plants to increase their safety. For example, we have diesel generators and pumps at the site for any emergency which may occur. The Fukushima accident did not affect nuclear power generation in Brazil; our current plants remain operational and our projects have not been affected.

However, Eletronuclear cannot guarantee that its insurance will be sufficient in case of a nuclear accident. Accordingly, our financial condition and results of operations may be affected if a nuclear accident were to occur.

We do not have alternative supply sources for the key raw materials that our thermal and nuclear plants use.

Our thermal plants operate on coal, natural gas and/or oil and our nuclear plants operate on processed uranium. In each case, we are entirely dependent on third parties for the provision of these raw materials. In the event that supplies of these raw materials become unavailable or may not be purchased on reasonable terms for any reason, we do not have alternative supply sources and, therefore, the ability of our thermal and/or nuclear plants, as applicable, to generate electricity would be materially adversely affected, which may materially adversely affect our financial condition and results of operations.

Our distribution companies operate under challenging market conditions and historically, in the aggregate, have incurred losses.

Our distribution activities are carried out in the midwestern, northern and northeastern regions of Brazil and represented approximately 21.1% for 2014 and 31.8% for 2015 of our consolidated net revenue for the year ended December 31, 2014 and December 31, 2015. This percentage only reflects the net revenues of CELG-D for the final three-months of 2014, and not for the full year. Our distribution subsidiaries have historically incurred significant commercial losses due to, among others, illegal connections, tampering with electricity meters, as well as relatively high levels of default by consumers in those regions, which have adversely affected our consolidated results of operations.

We took several measures to reduce commercial losses and to renegotiate debts due by consumers in default with our distribution subsidiaries. However, the results of our distribution subsidiaries continue to be substantially affected by (i) adverse hydrological conditions which led to increased generation costs which were reflected in increased tariffs; higher tariffs, however, increased default rates and (ii) the contraction of the Brazilian economy, which reduced the demand for high tension power; accordingly, excess power was offered to the low tension power market, which is subject to greater illegal connections and customer defaults. Further, delays in the construction works for the expansion and modernization of the grid contributed to an increase in technical losses.

- 29 -

This was particularly exacerbated by unusually high temperatures and adverse hydrological conditions. Total losses increased by 1.07%, from 23.62% for the year ended December 31, 2014 to 24.69% for the year ended December 31, 2015. Customer default rates decreased by 0.9%, from 11.29% for the year ended December 31, 2014 to 10.39% for the year ended December 31, 2015.

In addition, the increase in tariffs, which contributed to the increase in our revenue (which increased by 46%, from R$ 11,456 million for the year ended December 31, 2014 to R$ 16,721 million for the year ended December 31, 2015) was insufficient to offset the greater costs incurred by our distribution subsidiaries. Further, delays in the transfer of funds from the CDE Account have substantially restricted the cash flows of our distribution subsidiaries, therefore impacting their investment and operational activities. Similar or other factors may occur in the future and might have adverse effects on our financial conditions.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions, in compliance with Provisory Measure 735/2016. The shareholder salso approved that these distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary funds for these companies to continue operating, perform maintenance and make new investments will be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns such concessions, they will be subject to new bids in the future.

On August 3, 2016, the MME issued decrees Nos. 420, 421, 422, 424 and 425 naming, respectively, the Distributors Amazonas Energia, Eletroacre, Ceron, Cepisa, Ceal and Boa Vista as temporarily responsible for distributing public energy so as to assure the continuity of energy distribution.

According to these decrees, the Distributors will provide the indicated services, in a provisional manner, against payment of the proper compensation, until the earlier of the effective transfer of control of the Distributors, or until December 31, 2017.

During the temporary service provision period, the Distributors may apply the approved results of revisions and tariff adjustments, as well as borrow and receive funds from the CCC Account, the CDE Account and the RGR Fund, subject to Aneel’s regulation.

However, as Eletrobras continues to be a majority stakeholder of the Distributors, it is not possible to ensure that the Company will successfully transfer the corporate control of all its Distributors by the end of 2017. Accordingly, Eletrobras may have to bear the costs related to the dissolution of the companies that might remain under its control. Those costs could include the termination of employees and other obligations. Furthermore, Eletrobras may have to pay expenses related to obligations the Distributors might have had before the commencement of the temporary service provision period or related to obligations in which Eletrobras is the guarantor. Also, if the Provisory Measure 735/2016 is not converted into law within sixty days after having been enacted (period that can be extended fpr another sixty days), or if the law which is enacted as a consequence of the provisory measure amends any provision of the Provisory Measure 735/2016, Eletrobras could not have the adequate conditions to transfer the corporate control of all its Distributors by the end of 2017 and, therefore, Eletrobras may have to bear the costs related to the dissolution of these companies.

We may incur losses and spend time and money defending pending litigation and administrative proceedings.

We are currently a party to numerous legal proceedings relating to civil, administrative, environmental, labor, tax and corporate claims filed against us. These claims involve substantial amounts of money and other remedies. Several individual disputes account for a significant part of the total amount of claims against us. We have established provisions for all amounts in dispute that represent a probable loss in the view of our legal advisors and in relation to those disputes that are covered by laws, administrative decrees, decrees or court rulings that have

- 30 -

proven to be unfavorable. As of December 31, 2014, we provisioned a total aggregate amount of approximately R$ 13.1 billion in respect of our legal proceedings, of which R$ 236 million were related to tax claims, R$ 11.9 billion were related to civil claims and R$ 943 million were related to labor claims. As of December 31, 2015, we provisioned a total aggregate amount of approximately R$ 14.1 billion in respect of our legal proceedings, of which R$ 12.5 billion were related to civil claims and R$ 1 billion were related to labor claims. (See “Item 8.A, Consolidated Financial Statements and Other Information – Litigation” and note 31 to our consolidated financial statements).

Our subsidiary Chesf is a defendant in a proceeding filed by Companhia Brasileira de Projetos e Obras and Mendez Júnior in respect of certain amendments to the construction agreement of the Xingó plant. An appeal is currently before the Brazilian Superior Court of Justice. One of the main issues relates to the application of a factor for monetary restatement. If the court decides against Chesf, it may have to pay up to R$ 1 billion to the plaintiffs. Furthermore, the Federal Court of Recife, in the state of Pernambuco, has blocked, in August 2016, R$ 497.2 million of Chesf’s assets in connection with this ongoing litigation.

In the event that claims involving a material amount and for which we have no provisions were to be decided against us, or in the event that the losses estimated turn out to be significantly higher that the provisions made, the aggregate cost of unfavorable decisions could have a material adverse effect on our financial condition and results of operations. In addition, our management may be required to direct its time and attention to defending these claims, which could preclude them from focusing on our core business. Depending on the outcome, certain litigation could result in restrictions in our operations and have a material adverse effect on certain of our businesses.

Between July 22, 2015 and August 15, 2015, two putative securities class action complaints were filed against us and certain of our employees in the United States District Court for the Southern District of New York (SDNY). On October 2, 2015, these actions were consolidated and the Court appointed lead plaintiffs, Dominique Lavoie and the City of Providence. The plaintiffs filed a consolidated amended complaint on December 8, 2015 purportedly on behalf of investors who purchased our U.S. exchange-traded securities between August 17, 2010 and June 24, 2015, and filed a second amended complaint on February 26, 2016..

The second amended complaint alleges, among other things, that we and the individual defendants knew or should have known about alleged fraud committed against us by a cartel of construction firms, as well as bribes and kickbacks allegedly solicited and received by our employees; that we and the individual defendants made material misstatements and omissions regarding the alleged fraud; and that our stock price declined when the alleged fraud was disclosed.

The plaintiffs have not specified an amount of damages they are seeking, although such amount, when specified, could be material to us. On April 15, 2016, we filed a motion to dismiss the second amended complaint, which was fully briefed and then submitted to the Court on June 17, 2016. The motion remains under consideration by the Court; oral argument has been requested but not yet scheduled. Eletrobras retained US legal counsel and is defending itself vigorously against the allegations made in these lawsuits. There has been no substantive decision as to the claim or specific definition as to the amounts involved. These legal proceedings could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows in the future.

We may incur losses in legal proceedings in respect of compulsory loans made from 1962 through to 1993

Pursuant to Law No. 4,156 of November 28, 1962 certain end-users of electricity were required to make “compulsory loans” to us (through collections by distributors) in order to provide funds for the development of the electricity sector. Industrial customers consuming over 2,000 kWh of electricity per month were required to pay an amount equivalent to 32.5% of each electricity invoice to us in the form of a compulsory loan, which was repayable by us within 20 years of draw-down. Interest on the compulsory loans accrues at IPCA – E plus 6.0% per annum. Law No. 7,181 of December 20, 1983, extended the compulsory loan program until December 31, 1993 and provided that such loans may, subject to shareholder approval, be repaid by us in the form of an issue of preferred shares at book value, in lieu of cash.

- 31 -

We made available to eligible customers upon the first and second conversion of credits from the compulsory loan approximately 42.5 billion class “B” preferred shares and upon the third conversion of credits from the compulsory loan, about 27.2 billion class “B” preferred shares. In addition, our shareholders approved on April 30, 2008 the issuance of additional preferred shares to eligible customers at book value in repayment of our remaining compulsory loans. If additional shares are issued in the future and the book value of such shares is less than their market value, the value of existing shareholders’ shares may be subject to dilution. On December 31, 2008, we recorded approximately R$ 215 million for debts for compulsory loans that had not yet been converted, which, at any time, by decision of our shareholders, may be refunded to industrial consumers, through issuing class “B” preferred shares, in accordance with the proceedings described above.

As of December 31, 2015 consumers have filed 5,216 lawsuits against us questioning the monetary adjustments, understated inflation and interest calculations related to the repayment of the compulsory loans. Of those lawsuits, 1,834 have been decided against us and are currently being enforced during 2015.    In the third quarter of 2015, the STJ issued decisions defining the parameters for the method to calculate such executions, accepting some of the claims made by Eletrobras, although not entirely, causing adjustments to the calculation methods adopted by Eletrobras and the risk classification of these claims and consequent difference in the provision for contingencies. The total amount involved in these lawsuits is unadjusted for monetary restatement and required expert assessment to be estimated reliably. The total amount paid by Eletrobras in the outstanding lawsuits is approximately R$ 6.1 billion. In the course of enforcement proceedings, we have been required to pledge certain of our assets, consisting mainly of preferred shares held by us in other electricity sector companies. As of December 31, 2015 we have provisioned in our consolidated financial statements filed with CVM the amount R$ 9.3 billion to cover losses arising from unfavorable decisions on these lawsuits.

We are also involved in approximately 2,100 lawsuits related to the repayment of the compulsory loans, in which consumers seek to exercise the option to convert their credits presented by bonds payable to the bearer. These bonds are called “obrigações da Eletrobras” and are subject to expiration, which has already passed. Although we believe that we have no further liability in respect of these bonds because they are expired, any legal interpretation that the bonds have not expired could adversely affect our results of operations and financial condition.

Judgment may not be enforceable against our directors or officers.

All of our directors and officers named in this annual report reside in Brazil. We, our directors and officers and our Fiscal Council members, have agreed to accept service of process in the United States only in specific transactions. Substantially all of our assets, as well as the assets of these persons, are located in Brazil. As a result, it may not be possible to effect service of process within the United States or other jurisdictions outside Brazil upon these persons, attach their assets, or enforce against them or us in United States courts, or the courts of other jurisdictions outside Brazil, judgments predicated upon the civil liability provisions of the securities laws of the United States or the laws of other jurisdictions.

We and our subsidiaries may be required to make substantial contributions to the pension plans of our current and former employees which we sponsor.

Pursuant to Supplementary Law No. 108/2001 and Supplementary Law No. 109/2001, we are required to make contributions to the pension plans of our current and former employees. If there is mismatch in the reserves of the pension plans and the amount of resources available to the plans, we (as sponsors) and the pension plan beneficiaries must contribute to the pension plan to re-establish the plan’s balance.

In 2015, the pension plans that we and our subsidiaries sponsor recorded a deficit of R$ 1.9 billion. In 2014, the deficit was R$ 2.2 billion. We contributed R$ 421.9 million and R$ 525.0 million to these pension plans in 2014 and 2015, respectively. Various pension plans which we sponsor are engaged in discussionswith PREVIC (Superintendência Nacional de Previdência Complementar), the pension plan supervisory body, to reduce or eliminate these plans’ deficits. If these discussions determine that the deficits need to be partially or fully reduced, they will require the pension plan beneficiaries and their sponsors, such as us, to make extraordinary contributions. The terms of these contributions, which will be agreed among the beneficiaries and sponsors, may be substantial and could adversely affect our results of operations and financial condition.

- 32 -

Our insurance coverage may be insufficient to cover potential losses.

Our business is generally subject to a number of risks and hazards, including industrial accidents, labor disputes, unexpected geological conditions, changes in the regulatory environment, environmental hazards and weather and other natural phenomena. Additionally, we and our subsidiaries are liable to third parties for losses and damages caused by any failure to provide generation, transmission and distribution services.

Our insurance covers only part of the losses that we may incur. We are currently in the process of renegotiating our insurance policies at a group level to ensure uniform coverage and adequate protection for all our operations. Nevertheless, we believe that we maintain insurance in amounts that are adequate to cover material damages to our plants caused by fire, general third-party liability for accidents and operational risks. If we are unable to renew our insurance policies from time to time or losses or other liabilities occur that are not covered by insurance or that exceed our insurance limits, we could be subject to significant unexpected additional losses.

Risks Relating to Brazil

The Brazilian Government has exercised, and continues to exercise, significant influence over the Brazilian economy. Brazilian economic and political conditions and investor perception of these conditions have a direct impact on our business, financial condition, results of operations and prospects.

The Brazilian economy has been characterized by the significant involvement of the Brazilian Government, which often changes monetary, credit, exchange and other policies to influence Brazil’s economy. The Brazilian Government’s actions to control inflation and effect other policies have often involved wage and price controls, depreciation of the real, controls over remittances of funds abroad, intervention by the Central Bank to affect base interest rates and other measures. We have no control over, and cannot predict, what measures or policies the Brazilian Government may take in the future. Our business, financial condition, results of operations and prospects may be adversely affected by changes in Brazilian Government policies, as well as general factors including, without limitation:

• Brazilian economic growth;

• inflation;

• interest rates;

• variations in exchange rates;

• exchange control policies;

• liquidity of the domestic capital and lending markets;

• fiscal policy and changes in tax laws;

• allegations of corruption against political parties, elected officials or other public officials, including allegations made in relation to Operação Lava Jato; and

• other political, diplomatic, social and economic policies or developments in or affecting Brazil.

Changes in, or uncertainties regarding the implementation of, the policies listed above could contribute to economic uncertainty in Brazil, thereby increasing the volatility of the Brazilian securities market and the value of Brazilian securities traded abroad.

Historically, the level of the country’s political stability has influenced the performance of the Brazilian economy and political crises have affected the confidence of investors and the general public, which resulted in economic deceleration and heightened volatility in the securities issued abroad by Brazilian companies. Currently, Brazilian markets are experiencing heightened volatility due to the uncertainties derived from the ongoing Lava Jato Investigations and its impacts on the Brazilian economy and political environment. Any developments in Operação Lava Jato (foreseeable and unforeseeable) could have a material adverse effect on the Brazilian economy and on our results of operations and financial condition.

- 33 -

Additionally, since 2011, Brazil has been experiencing an economic slowdown. In 2015, the Brazilian Gross Domestic Product, or GDP, contracted by 3.9%. Growth rates were 0.1% in 2014, 2.7% in 2013, 1.8% in 2012 and 3.9% in 2011, compared to a GDP growth of 7.5% in 2010. Our results of operations and financial condition have been, and will continue to be, affected by the growth rate of GDP in Brazil. In years in which the Brazilian GDP does not grow, there tends to be a decrease in the demand for power. Further, it may also lead to an increase in commercial losses and customer defaults. We cannot assure that GDP will increase or remain stable in the future. Future developments in the Brazilian economy may affect Brazil’s growth rates and, consequently, the consumption of energy. As a result, these developments could impair our results of operations and financial condition.

The stability of the Brazilian real is affected by its relationship with the U.S. dollar, inflation and Brazilian Government policy regarding exchange rates. Our business could be adversely affected by any recurrence of volatility affecting our foreign currency-linked receivables and obligations.

The Brazilian currency has experienced high degrees of volatility in the past, which after a relatively long period of stability, became extremely volatile again in 2014 and 2015. The Brazilian Government has implemented several economic plans, and has used a wide range of foreign currency control mechanisms. Nevertheless, the exchange rate between the real and the dollar reached R$ 3.90 to U.S.$1.00 on December 31, 2015, R$ 2.66 to U.S.$1.00 on December 31, 2014 and R$ 2.34 to U.S.$1.00 on December 31, 2013.

Because of the volatility and the uncertainty of the factors that impact the exchange rate, it is difficult to predict future movements in the exchange rate. In addition, the Brazilian Government may change its foreign currency policy. Any governmental interference in the exchange rate, or the implementation of exchange control mechanisms, could influence the exchange rate. These exchange rate scenarios may have adverse effects on us as they may adversely affect the value of our receivables from Itaipu which are denominated in U.S. dollars as well as any of our indebtedness denominated in U.S. dollars.

As of December 31, 2014, approximately 30% of our consolidated indebtedness (of R$ 39,539 million), which amounted to R$ 11,878 million, was denominated in foreign currencies, of which R$ 11,484 million (or approximately 29% of our consolidated indebtedness) was denominated in U.S. dollars. As of December 31, 2015, approximately 33% of our consolidated indebtedness (of R$ 46,398 million), which amounted to R$ 15,283 million, was denominated in foreign currencies, of which R$ 14,851 million (or approximately 32% of our consolidated indebtedness) was denominated in U.S. dollars.

Allegations of political corruption against the Brazilian federal government and the Brazilian legislative branch and ongoing impeachment proceeding could create economic and political instability.

Members of the federal government and the Brazilian legislative branch have faced allegations of political corruption. As a result, a number of politicians, including senior federal officials and congressmen, resigned or have been arrested. Currently, elected officials and other public officials in Brazil are being investigated for allegations of unethical and illegal conduct identified during Operação Lava Jato being conducted by the Office of the Brazilian Federal Prosecutor.

Furthermore, in December 2015, the opening of impeachment proceeding was authorized against President Dilma Rousseff alleging non-compliance with the fiscal responsibility law. On April 17, 2016, the lower house of the Brazilian legislature voted to allow the Senate to commence the impeachment proceeding of President Dilma Rousseff. On May 12, 2016, the upper house of the Brazilian legislature determined that the impeachment proceeding was admissible and, accordingly, commenced an impeachment trial. During the 180-day trial period, the Vice-President of Brazil acted as President. On August 10, 2016, the Senate approved the report of its special impeachment committee which recommended that President Dilma Rousseff should be brought to trial by the upper house of the Brazilian legislature. On August 31, 2016, President Dilma Rousseff was found guilty, losing her mandate and Vice-President Michel Temer took office for the remainder of the term of January 1, 2019. In September 2016 the result of the impeachment proceedings was appealed to the Supreme Court of Brazil (Supremo Tribunal Federal). The court has not ruled on this appeal.

- 34 -

The outcome of the appeals concerning the impeachment proceeding, as well as on-going political demonstrations in respect of the impeachment process and the corruption allegations against senior politicians led, and may lead, to further political instability and a further decline in confidence by consumers and foreign direct investors in the stability and transparency of the Brazilian government, and may continue to have a material adverse effect on Brazil’s economic growth. This in turn may have a material negative impact on our businesses. Political demonstrations in respect of the corruption-related issues discussed above have affected the Brazilian economy and investors’ perceptions about Brazil. For example, mass street protests, which have been taking place since mid-2013 and recently took place on March 13, 2016 across an estimated 150 cities in Brazil, demonstrate the public’s dissatisfaction with corruption and certain political measures, and represent a potential risk to the Brazilian political and economic outlook.

The potential outcome of Operação Lava Jato and the appeals concerning the impeachment proceeding is unknown and have had an adverse impact on general market perception of the Brazilian economy. In respect of Operação Lava Jato the conclusion or further allegations of illegal conduct could have additional adverse effects on the Brazilian economy. The President of Brazil has powers to indirectly appoint the majority of our directors. Accordingly, any change in the Brazilian government could lead to changes in our management. We cannot predict whether the outcome of Operação Lava Jato and the impeachment proceeding will lead to further instability or whether new allegations against Brazilian government officials will arise in the future. In addition, we cannot predict the outcome of any such allegations nor their effect on the Brazilian economy and, consequently, our results of operations.

Inflation, and the Brazilian Government’s measures to curb inflation, may further contribute significantly to economic uncertainty in Brazil and materially adversely impact our operating results.

Brazil has historically experienced high rates of inflation, particularly prior to 1995. Inflation, as well as government efforts to combat inflation, had significant negative effects on the Brazilian economy. More recently, inflation rates were 10.67% in 2015, 6.41% in 2014, 5.91% in 2013 and 5.84% in 2012, as measured by the IPCA, the National Consumer Price Index, compiled by IBGE (Brazilian Institute of Geography and Statistics).

Brazil may experience high levels of inflation in the future. The Brazilian government may introduce policies to reduce inflationary pressures, which could have the effect of reducing the overall performance of the Brazilian economy. Some of these policies may have an effect on our ability to access foreign capital or reduce our ability to execute our future business and management plans.

The Brazilian government’s measures to control inflation have often included maintaining a tight monetary policy with high real interest rates. These policies have contributed to limiting the size and attractiveness of the local debt markets, requiring borrowers like us to seek additional foreign currency funding in the international capital markets. To the extent that there is economic uncertainty in Brazil, which weakens our ability to obtain external financing on favorable terms, the local Brazilian market may be insufficient to meet our financing needs, which in turn may materially adversely affect us.

Risks Relating to the Brazilian Power Industry

We are subject to impacts related to the hydrological conditions.

We are subject to hydrological risks derived from adverse weather conditions such as flooding of certain rivers and excessively low flow rates in other rivers. Accordingly, the Interconnected Power System, or SIN, uses the MRE (Mecanismo de Realocação de Energia), an association of energy sellers to divide the hydrological risks existing in the market.

The Generation Scaling Factor, or GSF, represents the relation between the total production and collateral of the hydroelectric energy generators of the SIN that are part of the MRE, which represents the volume of energy in energy generation contracts. If there are excessively low flow rates, the hydroelectric generators will have to obtain energy in the short term market pursuant to the PLD.

- 35 -

As Brazil experience an unusually severe drought between 2012 and 2015, its energy generation was below its expected levels. Following the enactment of Law No. 12,783, only generation companies which hold concessions which were not renewed pursuant to its terms and are due to expire remain exposed to this risk. As some of our subsidiaries hold concessions due to expire we and our subsidiaries are exposed to this risk. Accordingly, in the event that there are unfavorable hydrological conditions our results of operations and financial condition may be affected. As this risk is systemic, and even though we are currently adopting strategies to reduce the impact of this risk, we cannot guarantee that this risk will be completely mitigated or avoided.

In addition, we act as commercial agent of the energy generated by Itaipu in the regulated market making available the total volume of energy agreed to the quota holders. Accordingly, the hydrological risks cannot be mitigated. Although there are expenses associated with the commercialization of energy, these expenses are only indemnified in the subsequent year, which significantly impacted our cash flows. However, following the enactment of Decree No. 8,401/2015, after considering the MRE, the Itaipu generation hydrological risk must be assured by distribution concessionaires when defining the tariffs, and not in the subsequent year. Accordingly, from 2015 onwards we will no longer bear expenses related to Itaipu hydrological risks. However, we cannot guarantee that we will not incur expenses relating to power generated by Itaipu. We depend on approval from the relevant regulatory authorities to increase tariffs for the power generated, despite the fact that we have the right to certain indemnification payments pursuant to Law No. 8,401/2015, as discussed above.

Generally, unfavorable hydrological conditions that result in a reduced supply of electricity to the Brazilian market could cause, among other things, the implementation of broad electricity conservation programs, including mandatory reductions in electricity consumption or the imposition of special taxes or charges on the sector to finance the costs of production of new thermal power plants, which are usually more expensive. In addition, we might incur higher costs in our distribution segment due to the need to purchase electricity for resale which would impact the cash flows of our distribution companies. Accordingly, it is possible that prolonged periods of reduced precipitation levels might adversely affect our financial condition and results of operations.

We could be penalized by ANEEL for failing to comply with the terms of our concession agreements and applicable legislation and we may not recover the full value of our investment in the event that any of our concession agreements are terminated.

We carry out our generation, transmission and distribution activities in accordance with concession agreements we execute with the Brazilian Government through ANEEL. The length of such concessions varies from 20 to 35 years. ANEEL may impose penalties on us in the event that we fail to comply with any provision of our concession agreements and of the legislation and regulation applicable to the electricity sector. Depending on the extent of the non-compliance, these penalties could include substantial fines (in some cases up to two percent of our gross revenues in the fiscal year immediately preceding the assessment), restrictions on our operations (such as exclusion from upcoming auctions), intervention or termination of the concession. ANEEL may also terminate our concessions prior to their due date in the event that we fail to comply with their provisions, are declared bankrupt or are dissolved, or in the event that ANEEL determines that such termination would serve the public interest (see “Item 4.B, Business Overview – Generation – Concessions”).

As of December 31, 2014 and 2015, we believe we were in compliance with all material terms of our concession agreements. However, we cannot assure you that we will not be penalized by ANEEL for a future breach of our concession agreements or that our concessions will not be terminated in the future. In the event that ANEEL were to terminate any of our concessions before their expiration date, the compensation we recover for the unamortized portion of our investment may not be sufficient for us to recover the full value of our investment and, accordingly, could have a material adverse effect on our financial condition and results of operations.

We may be subject to administrative intervention if we provide our services in an inadequate manner or violate contractual obligations, regulations and other legal obligations.

Law No. 12,767/2012 permits ANEEL to intervene in electric power concessions considered part of the public service in order to guarantee adequate levels of service as well as compliance with the terms and conditions under the concession contract, regulations and other relevant legal obligations.

If ANEEL were to intervene in concessions as part of an administrative procedure, management would have to present a recovery plan to correct any violations and failures that gave rise to the intervention. Should the recovery plan be dismissed or not presented within the timelines stipulated by the regulations, ANEEL may, among other things, expropriate or forfeit the concession, reallocate our assets or adopt measures which may alter our shareholding structure.

- 36 -

If the holders of our concessions are subject to an administrative intervention, we and our subsidiaries may be subject to an internal reorganization in accordance with the recovery plan presented by management, which may adversely affect our financial condition and results of operations. In addition, should the recovery plan be rejected by the administrative authorities, ANEEL would be able to use its powers described above, which could have an adverse impact on our financial condition and results of operations.

Our generation, transmission and distribution activities are regulated and supervised by the Brazilian Government. Our business could be adversely affected by any regulatory changes or by termination of the concessions prior to their expiration dates, and any indemnity payments for the early terminations may be less than the full amount of our investments.

According to Brazilian law, ANEEL has the authority to regulate and supervise the generation, transmission and distribution activities of electrical energy concessionaries, such as us and our subsidiaries, including in relation to investments, additional expenses, tariffs and the passing of costs to customers, among other matters. Regulatory changes in the electrical energy sector are hard to predict and may have a material adverse impact on our financial condition and results of operations.

Concessions may be terminated early through expropriation and/or forfeiture. Granting authorities may expropriate concessions in the interest of the public as expressly provided for by law, in which case granting authorities carry out the service during the concession period. A granting authority may declare the forfeiture of concessions after ANEEL or the MME conduct an administrative procedure and declare that the concessionaire (a) did not provide proper service for more than 30 consecutive days and did not present any acceptable alternative to ANEEL or to ONS, or failed to comply with the applicable law or regulation; (b) lost the technical, financial or economic conditions required to provide the service properly; and/or (c) did not comply with the fines charged by the granting authority.

Penalties are set forth in ANEEL Resolution No. 63, of 2004, and include warnings, substantial fines (in certain cases up to 2.0% of the revenue for the fiscal year immediately preceding the evaluation), restrictions on the concessionaire’s operations, intervention or termination of the concession.

We may contest any expropriation or forfeiture and will be entitled to receive compensation for our investments in expropriated assets that have not been fully amortized or depreciated. However, the indemnity payments may not be sufficient to fully recover our investments, which could materially adversely affect our financial condition and results of operations.

We are strictly liable for any damages resulting from inadequate supply of electricity to distribution companies, and our contracted insurance policies may not fully cover such damages.

Under Brazilian law, we are strictly liable for direct and indirect damages resulting from the inadequate supply of electricity to distribution companies, such as abrupt interruptions or disturbances arising from the generation, distribution or transmission systems. Accordingly, we may be held liable for such damages even if we are not at fault. As a result of the inherent uncertainty involved in these matters, we do not maintain any provisions in relation to potential damage, and these interruptions or disturbances may not covered by our insurance policies or may exceed the coverage limits of such policies.

Accordingly, if we are found liable to pay damages in a material amount, our financial condition and results of operations would be materially adversely affected to a greater degree than those claims where we have recorded provisions.

- 37 -

We are subject to strict safety, health and environmental laws and regulations that may become more stringent in the future and may result in increased liabilities and increased capital expenditures.

Our operations are subject to comprehensive federal, state and local safety, health and environmental legislation as well as supervision by agencies of the Brazilian Government that are responsible for the implementation of such laws. Among other things, these laws require us to obtain environmental licenses for the construction of new facilities or the installation and operation of new equipment required for our business. The rules are complex and may change over time, making our ability to comply with the applicable requirements more difficult, thereby precluding our continuing or future generation, transmission and distribution operations.

For example, the Ministry of Environment required us to fulfill 34 steps related to health and safety and the environment in order to receive a permit for operation of our Belo Monte project. We see increasing health and safety requirements as a trend in our industry. Moreover, private individuals, non-governmental organizations and the public have certain rights to commence legal proceedings to obtain injunctions to suspend or cancel the licensing process. In addition, Brazilian Government agencies could take enforcement action against us for any failure to comply with applicable laws. Such enforcement action could include, among other things, the imposition of fines, revocation of licenses and suspension of operations. Such failures may also result in criminal liability, irrespective of our strict liability to perform environmental remediation and to indemnify third parties for environmental damage. We cannot accurately predict the effect that compliance with enhanced environmental, health or safety regulations may have on our business. If we do not secure the appropriate permits, our growth strategy will be significantly adversely affected, which may materially adversely affect our results of operations and our financial condition.

Environmental regulations require us to perform environmental impact studies on future projects and obtain regulatory permits.

We must conduct environmental impact studies and obtain regulatory permits for our current and future projects. We cannot assure you that these environmental impact studies will be approved by the Brazilian Government, that public opposition will not result in delays or modifications to any proposed project or that laws or regulations will not change or be interpreted in a manner that could materially adversely affect our operations or plans for the projects in which we have an investment. We believe that concern for environmental protection is also an increasing trend in our industry. Although we consider environmental protection when developing our business strategy, changes in environmental regulations, or changes in the policy of enforcement of existing environmental regulations, could materially adversely affect our results of operations and our financial condition by delaying the implementation of electricity projects, increasing the costs of expansion.

Construction, expansion and operation of our electricity generation, transmission and distribution facilities and equipment involve significant risks that could lead to lost revenues or increased expenses.

The construction, expansion and operation of facilities and equipment for the generation, transmission and distribution of electricity involve many risks, including:

• the inability to obtain required governmental permits and approvals;

• the unavailability of equipment;

• supply interruptions;

• work stoppages;

• labor unrest;

• social unrest;

• interruptions by weather and hydrological conditions;

• unforeseen engineering and environmental problems;

• increases in electricity losses, including technical and commercial losses;

• construction and operational delays, or unanticipated cost overruns;

• issues related to the sale of energy;

- 38 -

• the unavailability of adequate funding; and

• expenses related to the operation and maintenance segment cannot be fully approved by ANEEL.

For example, we experienced work stoppages during the construction of our Jirau, Santo Antônio hydroelectric plants and the Belo Monte which is a plant we own through an SPE. We do not have insurance coverage for some of these risks, particularly for those related to weather conditions.

As a further example, we and our subsidiaries Chesf and Eletronorte are currently in conflict with the other shareholders of Norte Energia S.A. in relation to the Belo Monte project. The conflict relates to the interpretation of certain provisions of the shareholders’ agreement of Norte Energia S.A. in relation to the sale of power on the Free Market. In 2016 the shareholders of Norte Energia S.A. filed an arbitration proceeding against Eletrobras to dispute the reading of a section of that compay’s shareholders’ agreement. The section under dispute established a right of first refusal to enter into a purchase and sale agreement of 20% of the average secured power generated by Belo Monte and which was destinated to the Free Market (ACL). Notwithstanding the ongoing arbitration procedure the shareholders have been endeavoring to reach a consensus to enter into such Free Market agreements, which, once executed by the shareholders and submitted to BNDES, would allow the release of to R$ 2 billion. This amount has already been contracted with the bank and will be credited to the company by BNDES once it receives a copy of the purchase and sale agreement duly executed by all parties. If the reading of the disputed section of the shareholders’ agreement and the respective arbitration award are disfavorable to Eletrobras its financial status and operational income may be adversely impacted.

Furthermore, the implementation of investments in the transmission sector has suffered delays due to the difficulty to obtain the necessary government permits and approvals. This has led to delays in investments in generation due to the lack of transmission lines to drain production. If we experience any of these or other unforeseen risks, we may not be able to generate, transmit and distribute electricity in amounts consistent with our projections, which may have a material adverse effect on our financial condition and results of operations.

Risks Relating to our Shares and ADS

The New York Stock Exchange commenced procedures to delist our ADS. We cannot assure that the SEC will not move forward with the procedure to cancel our registration.

As a result of our failure to timely file this Annual Report on Form 20-F with the SEC, the NYSE informed us that we were not in compliance with the NYSE’s continued listing requirements under the timely filing criteria outlined in Section 802.01E of the NYSE Listed Company Manual and that we were subject to the procedures set forth in the NYSE’s listing standards related to late filings. Under the NYSE rules we were given an additional six months to file our 2014 annual report on Form 20-F with the SEC, subject to up to an additional six-month extension in the discretion of the NYSE. The NYSE granted us the further six-month extension until May 18, 2016 to file our delinquent report. Because Eletrobras has been unable to file its 2014 and 2015 annual reports on Form 20-F, the NYSE suspended trading in its ADS in May 2016 and commenced delisting proceedings. Although Eletrobras does not dispute that its ADS cannot currently be traded on the NYSE due to the filing delinquency, it has requested that the NYSE exercise its discretion to defer an ultimate delisting decision. In June 2016, the Brazilian Minister of Finance and Minister of Mines and Energy sent letters to the NYSE explaining the importance to the Brazilian government of an NYSE listing for Eletrobras. A hearing regarding the NYSE’s delisting proceedings has been scheduled for October 13, 2016.

The listing standards of the NYSE provide the NYSE with broad discretion regarding delisting matters. One of the factors described in the NYSE’s listing standards that could lead to a company’s delisting is its failure to make timely, adequate and accurate disclosures of information to our stockholders and the investing public.

Although we are filing our 2015 annual report on Form 20-F and our 2014 annual report on Form 20-F on this date, we cannot assure that, in the discretion of the NYSE, our ADS will not be delisted, or that they will resume trading on the NYSE. If our ADS were to be delisted, there could be no assurance whether or when it would again be listed for trading on the NYSE or another U.S. exchange. Further, the market price of our ADS might decline and become more volatile, and our ADS holders may find that their ability to trade in our ADS would be adversely affected. In addition, institutions whose charters do not allow them to hold securities in unlisted companies might sell our ADS, which could have a further adverse effect on the price of our ADS and underlying shares.

- 39 -

On August 30, 2016, the company received a letter from the SEC in which it informed the company about the possibility of having its registration cancelled because Eletrobras failed to file its annual reports on Form 20-F for 2014 and 2015 with the SEC. Even though the company is filing its annual reports on Form 20-F for 2014 and 2015 on the date hereof, we cannot assure that the SEC will not move forward with the procedure to cancel our registration. In the event we are no longer registrant, our ADS could not trade over our exchanged in the United States.

If you hold our preferred shares, you will have extremely limited voting rights.

In accordance with the Brazilian Corporate Law and our by-laws, holders of the preferred shares, and, by extension, holders of the ADS representing them, are not entitled to vote at our shareholders’ meetings, except in very limited circumstances. This means, among other things, that a preferred shareholder is not entitled to vote on corporate transactions, including mergers or consolidations with other companies. Our principal shareholder, who holds the majority of common shares with voting rights and controls us, is therefore able to approve corporate measures without the approval of holders of our preferred shares. Accordingly, an investment in our preferred shares is not suitable for you if voting rights are an important consideration in your investment decision.

Exercise of voting rights with respect to common and preferred shares involves additional procedural steps.

When holders of common shares are entitled to vote, and in the limited circumstances where the holders of preferred shares are able to vote, holders may exercise voting rights with respect to the shares represented by ADS only in accordance with the provisions of the deposit agreement relating to the ADS. There are no provisions under Brazilian law or under our by-laws that limit ADS holders’ ability to exercise their voting rights through the depositary bank with respect to the underlying shares. However, there are practical limitations upon the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. For example, holders of our shares will receive notice and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders, by comparison, will not receive notice directly from us. Rather, in accordance with the deposit agreement, we will provide the notice to the depositary bank, which will in turn, as soon as practicable thereafter, mail to holders of ADS 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 bank how to vote their shares. Because of this extra procedural step involving the depositary bank, the process for exercising voting rights will take longer for ADS holders than for holders of shares. ADS for which the depositary bank does not receive timely voting instructions will not be voted at any meeting.

If we issue new shares or our shareholders sell shares in the future, the market price of your ADS may be reduced.

Sales of a substantial number of shares, or the belief that this may occur, could decrease the prevailing market price of our common and preferred shares and ADS by diluting the shares’ value. If we issue new shares or our existing shareholders sell shares they hold, the market price of our common and preferred shares, and of the ADS, may decrease significantly. Such issuances and sales also might make it more difficult for us to issue shares or ADS in the future at a time and a price that we deem appropriate and for you to sell your securities at or above the price you paid for them. Our controlling shareholder, the Brazilian Government, may decide to capitalize us for a variety of reasons therefore diluting existing shareholders and ADS holders.

Political, economic and social events as well as the perception of risk in Brazil and in other countries, including the United States, European Union and emerging countries, may affect the market prices for securities in Brazil, including Eletrobras shares.

The Brazilian securities market is influenced by economic and market conditions in Brazil, as well as in other countries, including the United States, European Union and emerging countries. Despite the significant different economic conjecture between these countries and Brazil, investors’ reactions to events in these countries may have a relevant adverse effect on the market value of Brazilian securities, especially those listed on the stock

- 40 -

exchange. Crisis in the United States, European Union or emerging countries may reduce investors’ interest in Brazilian companies, including Eletrobras. For example, the prices of shares listed on BM&FBOVESPA have been historically affected by fluctuations of the American interest rate as well as the variations of the main indexes for North-American shares. Events in other countries and capital markets may adversely affect the market price of Eletrobras shares to the extent that, in the future, it could difficult or prevent access to capital markets and investment financing on acceptable terms.

Exchange controls and restrictions on remittances abroad may adversely affect holders of ADS.

You may be adversely affected by the imposition of restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil and the conversion of reais into foreign currencies. The Brazilian Government imposed remittance restrictions for approximately three months in late 1989 and early 1990. Restrictions like these would hinder or prevent the conversion of dividends, distributions or the proceeds from any sale of our shares, as the case may be, from reais into U.S. dollars and the remittance of the U.S. dollars abroad. We cannot assure you that the Brazilian Government will not take similar measures in the future.

Exchanging ADS for the underlying shares may have unfavorable consequences.

As an ADS holder, you benefit from the electronic certificate of foreign capital registration obtained by the custodian for our preferred shares underlying the ADS in Brazil, which permits the custodian to convert dividends and other distributions with respect to the preferred shares into non-Brazilian currency and remit the proceeds abroad. If you surrender your ADS and withdraw preferred shares, you will be entitled to continue to rely on the custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to the preferred shares unless you obtain your own electronic certificate of foreign capital registration or you qualify under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration you would not be able to remit abroad non-Brazilian currency. In addition, if you do not qualify under the foreign investment regulations you will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, our preferred shares.

If you attempt to obtain your own electronic certificate of foreign capital registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to our preferred shares or the return of your capital in a timely manner. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes.

You may not receive dividend payments if we incur net losses or our net profit does not reach certain levels.

Under Brazilian Corporate Law and our by-laws, we must pay our shareholders a mandatory distribution equal to at least 25% of our adjusted net profit for the preceding fiscal year, with holders of preferred shares having priority of payment. Our by-laws require us to pay holders of our preferred shares annual dividends equal to the greater of 8% (in the case of our class “A” preferred shares (subscribed up to June 23, 1969) and 6% (in the case of our class “B” preferred shares (subscribed after June 24, 1969), calculated by reference to the capital stock portion of each type and class of stock, subject to the restrictions explained in the preceding paragraph.

If we realize a net profit in an amount sufficient to make dividend payments, dividends are payable to holders of our preferred and common shares. If we incur net losses or realize net profits in an amount insufficient to make dividend payments, our management may recommend that dividend payments be made using the statutary profit reserve after accounting for the net losses for the year and any losses carried forward from previous years. In the event that we are able to declare dividends, our management may nevertheless decide to defer payment of dividends or, in limited circumstances, not to declare dividends at all. We cannot make dividend payments from our legal reserve and capital reserve accounts.

Additionally, in accordance with the Brazilian Corporate Law Law 6,404/1976, if Eletrobras posts net income for the year which is characterized, in whole or in part, as not having been financially unrealized, according to the parameters defined in this law, the management may choose to incorporate a reserve of unrealized profits, thus not declaring dividends. Also, according to the legal criteria, the amount of profits allocated to this reserve shall be paid to the shareholders in the period when the profit which is subject to this retention be financially realized.

- 41 -

You may not be able to exercise preemptive rights with respect to the preferred or common shares.

You may not be able to exercise the preemptive rights relating to the preferred or common shares underlying your ADS unless a registration statement under the United States Securities Act of 1933, as amended, (the “Securities Act”), is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the shares relating to these preemptive rights, and we cannot assure you that we will file any such registration statement. Unless we file a registration statement or an exemption from registration applies, 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 and accordingly your ownership position relating to the preferred or common shares will be diluted.

Changes in Brazilian tax laws may have an adverse impact on the taxes applicable to a disposition of our shares or ADS.

Law No. 10,833 of December 29, 2003 provides that the disposition of assets located in Brazil by a non-resident to either a Brazilian resident or a non-resident is subject to taxation in Brazil, regardless of whether the disposition occurs outside or within Brazil. This provision results in the imposition of income tax on the gains arising from a disposition of our common or preferred shares by a non-resident of Brazil to another non-resident of Brazil. There is no judicial guidance as to the application of Law No. 10,833 of December 29, 2003 and, accordingly, we are unable to predict whether Brazilian courts may decide that it applies to dispositions of our ADS between non-residents of Brazil. However, in the event that the disposition of assets is interpreted to include a disposition of our ADS, this tax law would accordingly result in the imposition of withholding taxes on the disposition of our ADS by a non-resident of Brazil to another non-resident of Brazil.

Because any gain or loss recognized by a U.S. Holder (as defined in “Item 10.E, Taxation – Material United States Federal Income Tax Consequences”) will generally be treated as a U.S. source gain or loss, unless such credit can be applied (subject to applicable limitations) against tax due on the other income treated as derived from foreign sources, such U.S. Holder would not be able to use the U.S. foreign tax credit arising from any Brazilian tax imposed on the disposition of our common or preferred shares or our ADS.

ITEM 4. INFORMATION ON THE COMPANY

Overview

Directly and through our subsidiaries, we are involved in the generation, transmission and distribution of electricity in Brazil. As of December 31, 2015, we controlled approximately 32% of the installed power generating capacity within Brazil. Through our subsidiaries, we are also responsible for approximately 47.1% of the installed transmission capacity above 230 kV in Brazil. Our revenues derive mainly from:

• the generation of electricity and its sale to electricity distribution companies and free consumers;

• the transmission of electricity on behalf of other electricity concessionaires; and

• the distribution of electricity to end consumers.

For the year ended December 31, 2015, we derived 52.7%, 16.4% and 29.9% of our net operating revenues (before eliminations) from our electricity generation, transmission, and distribution businesses, respectively. For the year ended December 31, 2015, our net revenues after eliminations were R$ 32.6 million, compared to R$ 30.1 million for the year ended December 31, 2014.

- 42 -

A. History and Development

General

We were established on June 11, 1962 as a mixed capital company with limited liability and unlimited duration. We are subject to Brazilian Corporate Law. Our executive offices are located at Avenida Presidente Vargas, 409, 13^th Floor, Edifício Herm. Stolz, CEP 20071-003, Rio de Janeiro, RJ, Brazil. Our telephone number is +55 21 2514 4637. Our legal name is Centrais Elétricas Brasileiras S.A. – Eletrobras and our commercial name is Eletrobras.

Capital Expenditures

In the last three years, as per the table below, we have invested an average of R$ 11.0 billion per year in expansion, modernization, research, infrastructure and environmental quality. Approximately 53.5% was invested in our generation segment, 33.6% in our transmission segment and the balance in our distribution segment and other investments.

Nature of Investments (R$ Millions)	2015		2014		2013
Subtotal Own Investments		6,059.52		6,264.54		7,259.06
Generation		2,162.98		2,182.88		2,630.91
Transmission		1,855.35		2,111.04		2,281.84
Distribution		791.20		577.46		741.17
Maintenance - Generation		330.97		393.75		427.40
Maintenance - Transmission		405.51		477.95		472.21
Maintenance - Distribution		212.19		151.35		204.38
Outros (Research, Infrastructure and Environmental Quality)		301.33		370.10		501.16
Subtotal Financial Investments		4,334.26		5,140.80		3,964.71
Generation		3,181.30		3,703.65		3,219.39
Transmission		1,152.96		1,437.14		745.32
Total		10,393.79		11,405.33		11,223.77

Our core business is the generation and transmission of energy and we intend to invest heavily in these segments in the upcoming years. With respect to the distribution of electricity, on June 3, 2015, the Brazilian Government enacted Decree No. 8,461 that establishes the criteria for the renewal of distribution concessions. Accordingly, concession holders must meet certain criteria with respect to the quality of the distribution services provided and certain financial ratios.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. The shareholdersalso approved that this distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary funds for these companies to keep their operations ongoing, perform maintenance and make new investments shall be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns such concessions, they will be subject to new bids in the future.

Companies are now selected to construct new generation units and transmission lines by a tender process. It is, therefore, difficult to predict the precise amounts that we will invest in these segments going forward. We are, however, working to secure a significant number of new contracts either alone or as part of a SPE including the private sector.

- 43 -

Under the EPE 10 Year Plan, it is estimated that Brazil will have 211,615 km of transmission lines and 206.4 GW of installed generation capacity by 2024 from 138.8 GW in 2014. These investments by Brazil will represent approximately R$ 376 billion. As the current largest market participant based on length of transmission lines, we expect to participate in the majority of these new investments. In accordance with the Business Plan, whose numbers and targets are under review, we believe that from 2015 to 2019 we will invest approximately R$ 50.3 billion in our generation, transmission and distribution businesses. Our Business Plan is under review. For these investments, we expect to use the funding derived from our net cash flows as well as from accessing national and international capital markets and through bank financing.

Our capital expenditures for fixed assets, intangible assets and concession assets in 2015, 2014 and 2013 were R$ 7,678 million, R$ 6,181.4 million and R$ 5,712 million, respectively.

B. Business Overview

Strategy

Our main strategic objectives are to achieve sustained growth and profitability, while maintaining our position as a leader in the Brazilian electricity sector. In order to achieve these objectives, our main strategies are as follows:

• Expand and improve efficiency in our generation and transmission business. Our business is focused on our core operations in the Brazilian generation and transmission markets. Our strategy is to select and optimize opportunities that arise in the auction process for new generation plants and transmission lines in accordance with the Electricity Regulatory Law. By focusing on generation and transmission, we believe that we will be able to maximize profits by improving efficiency in the operation and maintenance of our assets and capitalizing on opportunities arising from greenfield projects or from the selective acquisition of existing assets. Our recently released Corporate Strategy Plan for 2015 to 2030 reinforces our target to achieve a global leadership position in clean energy production by 2030, while maintaining our rates of return at competitive levels, as set forth in our Vision of the Eletrobras System for 2030: “To be among the top three global clean energy companies and among the ten largest electric energy companies in the world, with profitability comparable to the sector’s best and being recognized by all its stakeholders.”

• Limit our exposure to our distribution business. During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. The shareholders also approved that this distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary funds for these companies to keeping their operations ongoing, perform maintenance and make new investments shall be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns such concessions, they will be subject to new bids in the future.

• We seek to maintain high corporate governance standards and to promote sustainability in order to enhance our brand value as well as the market appreciation of our stock. Our shares are listed on three stock markets: the São Paulo Stock Exchange – BM&FBOVESPA (ELET3 and ELET6), in which it is listed as Corporate Governance Level 1; the Madrid Stock Exchange (XELTO and XELTB), through the LATIBEX Program; and the New York Stock Exchange – NYSE (EBR and EBR-B), in which it trades Level 2 American Depositary Receipts (ADRs), although currently our

- 44 -

ADRs are suspended from trading on the NYSE and the NYSE is seeking to de-list our ADRs, we are appealing to the NYSE’s not to de-list our ADRs. During the time our ADRs are suspended from trading, they are trading on the over the counter market in the United States (the “OTC”). We use compliance with the numerous regulations from the stock exchanges as a roadmap for the continuous implementation of best practices in corporate governance. Our current corporate governance standards fully reflect the orientations of our newly released Corporate Strategic Plan for 2015 to 2030 and are included in the audit and administration manuals, the internal regulations of the Board of Directors and Audit Committee as well as our by-laws. The investigation we have undertaken reflects the importance that we place on corporate governance standard and adherence with the FCPA – Foreign Corrupt Practices Act and also the Brazilian Anticorruption Law No.12,846 which took effect on January 29, 2014. For further information regarding the Investigation, see the “Explanatory Note.” We believe that the continuing improvement of our corporate governance standards will help us achieve growth, profitability and increased market share as a result of the positive effect these standards have on our brand, both domestically and internationally. As part of this strategy, we established controls and procedures, in accordance with the Sarbanes Oxley Act of 2002. For a further discussion of our internal controls please see “Item 15 – Controls and Procedures” and “Risk Factors – Risks Relating to our Company – If we are unable to remedy the material weaknesses in our internal controls, the reliability of our financial reporting and the preparation of our consolidated financial statements may be materially adversely affected.” In addition, we are a signatory to the United Nations Global Compact, the world’s largest corporate responsibility initiative, and, for the ninth consecutive year, were selected as a member of BM&FBOVESPA’s ISE Corporate Sustainability Index. From 2011 to 2016, we have been included in the Dow Jones Sustainability Emerging Markets Index. We believe that inclusion in these indices, and registration with organizations recognized for the most stringent governance standards in the world will enable us to significantly raise our global profile and reputation. We strive to maintain our leadership in an increasingly competitive market, positioning ourselves as a company that emphasizes social and environmental responsibility as a path to maintaining business sustainability, providing career development prospects as well as a good working environment for our employees and improved living standards for the communities that live close to our facilities and plants. In order to maintain our present market share, we are committed to the expansion of our generation, transmission and distribution businesses, focusing on improving the performance of our investments as well as our operational efficiency, restructuring our management model and expanding into international markets.

• Selectively identify growth opportunities in certain international markets. In accordance with our Corporate Strategic Plan for 2015 to 2030, our aim is to improve our generation and transmission businesses outside Brazil in order to achieve higher rates of return than those we realize in Brazil. Our strategic goal is to generate new energy that can be added to the Interconnected Power System and to integrate certain electrical power systems in the Americas. In order to achieve sustainable growth, we believe that certain international electricity markets offer attractive opportunities, which could present an interesting trade-off when compared to the domestic market. We plan to selectively identify opportunities in these markets in the future. We may also identify and pursue growth opportunities outside South and Central America, mainly in Africa, including renewable energy projects.

Generation

Our principal activity is the generation of electricity. Net revenues (including financial revenues at the holding company level) from generation represented 52.7%, 62.8% and 65.5% of our net operating revenues (before eliminations) in the years ended December 31, 2015, 2014 and 2013, respectively.

Pursuant to Law No. 5,899, of July 5, 1973, and Decree 4,550, of December 27, 2002, Eletrobras must sell all energy produced by Itaipu to distribution companies in the Southern, Southeastern and midwestern regions in Brazil (see “Item 5, Operating and Financial Review and Prospects – Electric Power Market – Itaipu”).

- 45 -

We had an installed capacity of 45,391 MW as of December 31, 2015, 44,156 MW as of December 31, 2014 and 42,987 MW as of December 31, 2013. The increase in capacity over these periods reflects continuous growth. Additionally, we have approximately 12,634 MW in planned projects throughout Brazil through 2018, which are currently under construction, and we have feasibility studies in partnership for an additional capacity of approximately 26,984 MW.

The map below shows the geographic location of our generation assets as of December 31, 2015:

Concessions

As of December 31, 2015, we operated under the following concessions/authorizations granted by ANEEL for our generation businesses:

- 46 -

Concessions/Authorizations	State		Type of Plant	Installed Capacity		End of Concession		Began Service or Expect to Begin
Operational projects
CGTEE
Candiota III – Phase C		Rio Grande do Sul	Thermal		350.00		July, 2041	January, 2011
P. Médici (Candiota)		Rio Grande do Sul	Thermal		320.00		July, 2015	January, 1974
Chesf
Araras		Ceará	Hydro		4.00		July, 2015	February, 1967
Boa Esperança (Castelo Branco)		Piauí	Hydro		237.30		December, 2042	January, 1970
Camaçari(1)		Bahia	Thermal		346.80		August, 2027	February, 1979
Complexo de Paulo Afonso e Piloto		Bahia	Hydro		4,281.60		December, 2042	January, 1955
Curemas		Paraíba	Hydro		3.52		November, 2024	June, 1957
Funil		Bahia	Hydro		30.00		December, 2042	March, 1962
Luiz Gonzaga (Itaparica)		Pernambuco	Hydro		1,479.60		December, 2042	February, 1988
Pedra		Bahia	Hydro		20.00		December, 2042	April, 1978
Sobradinho		Bahia	Hydro		1,050.30		February, 2052	April, 1979
Xingó		Sergipe	Hydro		3,162.00		December, 2042	April, 1994
Eletronorte
Coaracy Nunes		Amapá	Hydro		78.00		December, 2042	October, 1975
Complexo de Tucuruí		Pará	Hydro		8,535.00		July, 2024	November, 1984
Curuá-Una		Pará	Hydro		30.30		July, 2028	April, 1977
Rio Acre		Acre	Thermal		45.49		April, 2025	December, 1994
Rio Branco I(3)		Acre	Thermal		18.65		July, 2020	February, 1998
Rio Branco II(3)		Acre	Thermal		32.75		July, 2020	April, 1981
Rio Madeira(2)		Rondônia	Thermal		119.35		September, 2018	April, 1968
Samuel		Rondônia	Hydro		216.75		September, 2029	July, 1989
Santana		Amapá	Thermal		177.74		September, 2019	March, 1993
Santarém(4)		Pará	Thermal		18.75		Indefinido	June, 1914
Senador Arnon Afonso Farias de Mello		Roraima	Thermal		85.99		August, 2024	December, 1990
Furnas
Batalha		Minas Gerais	Hydro		52.50		August, 2041	May, 2014
Corumbá I		Goiás	Hydro		375.00		December, 2042	April, 1997
Funil		Rio de Janeiro	Hydro		216.00		December, 2042	April, 1969
Furnas		Minas Gerais	Hydro		1,216.00		December, 2042	March, 1963
Itumbiara		Goiás/Minas Gerais	Hydro		2,082.00		February, 2020	February, 1980
Luis Carlos Barreto (Estreito)		SP/Minas Gerais	Hydro		1,050.00		December, 2042	January, 1969
Manso(5)		Mato Grosso	Hydro		212.00		February, 2035	October, 2000
Marimbondo		SP/Minas Gerais	Hydro		1,440.00		December, 2042	April, 1975
Mascarenhas de Moraes		Minas Gerais	Hydro		476.00		October, 2023	April, 1973
Porto Colômbia		Minas Gerais/SP	Hydro		320.00		December, 2042	March, 1973
Roberto Silveira (Campos)		Rio de Janeiro	Thermal		30.00		July, 2027	April, 1977
Santa Cruz(6)		Rio de Janeiro	Thermal		500.00		July, 2015	March, 1967
Serra da Mesa(5)		Goiás	Hydro		1,275.00		November, 2039	April, 1998
Simplício		Rio de Janeiro	Hydro		305.70		August, 2041	June, 1913
Eletronuclear
Angra I		Rio de Janeiro	Nuclear		640.00		December, 2024	January, 1985
Angra II		Rio de Janeiro	Nuclear		1,350.00		August, 2040	September, 2000
Eletrosul
Barra do Rio Chapéu		Santa Catarina	Hydro		15.15		May, 2034	February, 2013
Capão do Inglês		Rio Grande do Sul	Wind		10.00		May, 2049	December, 2015
Coxilha Seca		Rio Grande do Sul	Wind		30.00		May, 2049	December, 2015
Wind Cerro Chato I		Rio Grande do Sul	Wind		30.00		August, 2045	January, 2012
Wind Cerro Chato II		Rio Grande do Sul	Wind		30.00		August, 2045	August, 2011
Wind Cerro Chato III		Rio Grande do Sul	Wind		30.00		August, 2045	June, 2011
Galpões		Rio Grande do Sul	Wind		8.00		May, 2049	December, 2015
João Borges		Santa Catarina	Hydro		19.00		December, 2035	July, 2013

- 47 -

Concessions/Authorizations	State		Type of Plant	Installed Capacity		End of Concession	Began Service or Expect to Begin
Mauá(7)		Paraná	Hydro		3.00	July, 2042		November, 2012
Megawatt Solar		Santa Catarina	Solar		0.93	não informado		September, 2014
Passo São João		Rio Grande do Sul	Hydro		77.00	August, 2041		March, 2012
São Domingos		Mato Grosso do Sul	Hydro		48.00	December, 2037		June, 2013
Amazonas GT
Aparecida		Amazonas	Thermal		282.50	July, 2020		February, 1984
Balbina		Amazonas	Hydro		277.50	March, 2027		January, 1989
Cidade Nova*		Amazonas	Thermal		121.10	July, 2015		August, 2008
Distrito*		Amazonas	Thermal		124.70	July, 2015		October, 2010
Electron*		Amazonas	Thermal		—	July, 2015		June, 2005
Flores		Amazonas	Thermal		73.40	August, 2016		February, 2008
Iranduba		Amazonas	Thermal		51.30	August, 2016		November, 2010
Mauá		Amazonas	Thermal		738.10	July, 2020		April, 1973
São José		Amazonas	Thermal		29.60	August, 2016		February, 2008
Amazonas Energia
Sistema Isolado		Amazonas	Thermal		439.75
Operational SPEs
Baguari		Minas Gerais	Hydro		140.00	August, 2041		September, 2009
Baraúnas I		Bahia	Wind		32.90	April, 2049		October, 2015
Caiçara I		Rio Grande do Norte	Wind		27.00	June, 2047		November, 2015
Caiçara II		Rio Grande do Norte	Wind		18.00	July, 2047		November, 2015
Cerro Chato IV, V, VI, Ibirapuitã e Trindade		Rio Grande do Sul	Wind		79.20	March, 2047		November, 2013
Chuí 09		Rio Grande do Sul	Wind		17.90	May, 2049		October, 2015
Chuí I to V, and Minuano I and II		Rio Grande do Sul	Wind		144.00	April, 2047		May, 2015
Dardanelos		Mato Grosso	Hydro		261.00	July, 2042		August, 2011
Foz de Chapecó		Rio Grande do Sul/Santa Catarina	Hydro		855.00	November, 2036		October, 2010
Geribatu I a X		Rio Grande do Sul	Wind		258.00	April, 2047		February, 2015
Jirau(8)		Rondônia	Hydro		3,750.00	August, 2043		September, 2013
Junco I		Rio Grande do Norte	Wind		24.00	July, 2047		November, 2015
Junco II		Rio Grande do Norte	Wind		24.00	July, 2047		November, 2015
Mangue Seco 2		Rio Grande do Norte	Wind		26.00	June, 2032		September, 2011
Morro Branco I		Bahia	Wind		32.90	April, 2049		October, 2015
Mussambê		Bahia	Wind		32.90	April, 2049		October, 2015
Parque Eólico Miassaba 3		Rio Grande do Norte	Wind		68.50	August, 2045		May, 2014
Parque Eólico Rei dos Ventos 1		Rio Grande do Norte	Wind		58.50	December, 2045		May, 2014
Parque Eólico Rei dos Ventos 3		Rio Grande do Norte	Wind		60.10	December, 2045		May, 2014
Pedra Branca		Bahia	Wind		30.00	February, 2046		March, 2013
Peixe Angical		Tocantins	Hydro		498.80	November, 2036		June, 2006
Retiro Baixo		Minas Gerais	Hydro		82.00	August, 2041		March, 2010
Rouar S.A.		Uruguai-	Wind		65.10	December, 2034		December, 2014
Santa Joana IX		Piauí	Wind		29.60	August, 2035		August, 2015
Santa Joana X		Piauí	Wind		29.60	August, 2035		July, 2015
Santa Joana XI		Piauí	Wind		29.60	August, 2035		July, 2015
Santa Joana XII		Piauí	Wind		28.90	August, 2035		July, 2015
Santa Joana XIII		Piauí	Wind		29.60	August, 2035		July, 2015
Santa Joana XV		Piauí	Wind		28.90	August, 2035		July, 2015
Santa Joana XVI		Piauí	Wind		28.90	August, 2035		July, 2015
Santo Antônio(9)		Rondônia	Hydro		3,568.30	June, 2043		March, 2012
São Pedro do Lago		Bahia	Wind		30.00	February, 2046		March, 2013
Serra das Vacas I		Pernambuco	Wind		23.90	June, 2049		December, 2015
Serra das Vacas II		Pernambuco	Wind		22.30	June, 2049		December, 2015
Serra das Vacas III		Pernambuco	Wind		22.20	June, 2049		December, 2015
Serra das Vacas IV		Pernambuco	Wind		22.30	June, 2049		December, 2015

- 48 -

Concessions/Authorizations	State	Type of Plant	Installed Capacity		End of Concession	Began Service or Expect to Begin
Serra do Facão	Goiás	Hydro		212.60	November, 2036		July, 2010
Serra do Navio	Amapá	Thermal		23.30	May, 2037		June, 2008
Sete Gameleiras	Bahia	Wind		30.00	February, 2046		March, 2013
Teles Pires(11)	Pará/Mato Grosso	Hydro		1,819.80	June, 2046		November, 2015
Três Irmãos(10)	SP	Hydro		807.50	October, 2044		October, 2014
Verace 24 to 27	Rio Grande do Sul	Wind		57.30	June, 2049		November, 2015
Verace 28 to 31	Rio Grande do Sul	Wind		57.30	June, 2049		December, 2015
Verace 34 to 36(12)	Rio Grande do Sul	Wind		48.30	June, 2049		December, 2015
Corporate projects in development
Angra 3	Rio de Janeiro	Nuclear		1,405.00	December, 2060		December, 2022
Anta	Rio de Janeiro/ Minas Gerais	Hydro		28.00	August, 2041		UG1 (September 2016) e UG2 (December 2016)
Capão do Inglês and Galpões(15)	Rio Grande do Sul	Wind		18.00	May, 2049		December, 2015
Casa Nova I	Bahia	Wind		180.00	January, 2046		December, 2016
Casa Nova II	Bahia	Wind		28.00	May, 2049		December, 2017
Casa Nova III	Bahia	Wind		24.00	May, 2049		December, 2017
Coxilha Rica(14)	Santa Catarina	Hydro		18.00	June, 2042		Not available
Mauá 3	Amazonas	Thermal		379.10	Not available		October, 2016
Santo Cristo(13)	Santa Catarina	Hydro		19.50	June, 2042		Indefinite
SPE projects in development
Acauã	Bahia	Wind		12.00	April, 2049		May, 2017
Angical 2	Bahia	Wind		14.00	April, 2049		April 2017
Arapapá	Bahia	Wind		10.00	April, 2049		June, 2017
Banda de Couro(16)	Bahia	Wind		29.70	July, 2049		March, 2016
Baraunas II(16)	Bahia	Wind		21.60	July, 2049		March, 2016
Belo Monte	Pará	Hydro		11,233.10	August, 2045		April, 2016
Bom Jesus	Ceará	Wind		18.00	April, 2049		May, 2018
Cachoeira	Ceará	Wind		12.00	April, 2049		May, 2018
Caititú 2	Bahia	Wind		14.00	April, 2049		September, 2017
Caititú 3	Bahia	Wind		14.00	April, 2049		September, 2017
Carcará	Bahia	Wind		10.00	April, 2049		August, 2017
Carnaúba I	Rio Grande do Norte	Wind		22.00	July, 2049		May, 2018
Carnaúba II	Rio Grande do Norte	Wind		18.00	July, 2049		May, 2018
Carnaúba III	Rio Grande do Norte	Wind		16.00	July, 2049		May, 2018
Carnaúba V	Rio Grande do Norte	Wind		24.00	July, 2049		May, 2018
Cervantes I	Rio Grande do Norte	Wind		16.00	July, 2049		May, 2018
Cervantes II	Rio Grande do Norte	Wind		12.00	July, 2049		May, 2018
Coqueirinho 2	Bahia	Wind		20.00	June, 2049		March, 2017
Corrupião 3	Bahia	Wind		14.00	April, 2049		August, 2017
Famosa I	Rio Grande do Norte	Wind		22.50	May, 2047		May, 2018
Jandaia	Ceará	Wind		28.80	August, 2047		July, 2019
Jandaia I	Ceará	Wind		19.20	July, 2047		July, 2019
Nossa Senhora de Fátima	Ceará	Wind		28.80	August, 2047		July, 2019
Papagaio	Bahia	Wind		18.00	June, 2049		April, 2017
Pau Brasil	Ceará	Wind		15.00	March, 2047		May, 2018
Pitimbu	Ceará	Wind		18.00	March, 2049		May, 2018
Punaú I	Rio Grande do Norte	Wind		24.00	July, 2049		May, 2018
Rosada	Rio Grande do Norte	Wind		30.00	May, 2047		May, 2018
Santa Joana I(16)	Piauí	Wind		30.00	June, 2049		January, 2016
Santa Joana III(16)	Piauí	Wind		30.00	June, 2049		January, 2016
Santa Joana IV(16)	Piauí	Wind		30.00	June, 2049		January, 2016
Santa Joana V(16)	Piauí	Wind		30.00	June, 2049		January, 2016
Santa Joana VII(16)	Piauí	Wind		30.00	June, 2049		January, 2016
Santo Augusto IV(16)	Piauí	Wind		30.00	June, 2049		January, 2016

- 49 -

Concessions/Authorizations	State	Type of Plant	Installed Capacity		End of Concession	Began Service or Expect to Begin
São Caetano	Ceará	Wind		25.20	April, 2049	May, 2018
São Caetano I	Ceará	Wind		18.00	April, 2049	May, 2018
São Clemente	Ceará	Wind		19.20	July, 2047	July, 2019
São Galvão	Ceará	Wind		22.00	March, 2049	May, 2018
São Januário	Ceará	Wind		19.20	June, 2047	July, 2019
São Manoel	Mato Grosso/Pará	Hydro		700.00	April, 2049	January, 2018
São Paulo	Ceará	Wind		17.50	March, 2047	May, 2018
Sinop	Mato Grosso	Hydro		400.00	December, 2047	January, 2018
Tamanduá Mirim 2	Bahia	Wind		24.00	June, 2049	June, 2017
Teiú 2	Bahia	Wind		14.00	April, 2049	July, 2017
Planned SPE projects
Arara Azul	Rio Grande do Norte	Wind		27.50	November, 2049	October, 2018
Bentevi	Rio Grande do Norte	Wind		15.00	November, 2049	October, 2018
Itaguaçu da Bahia	Bahia	Wind		28.00	September, 2049	February, 2019
Ouro Verde I	Rio Grande do Norte	Wind		27.50	November, 2049	October, 2018
Ouro Verde II	Rio Grande do Norte	Wind		30.00	November, 2049	October, 2018
Ouro Verde III	Rio Grande do Norte	Wind		25.00	November, 2049	October, 2018
Santa Rosa	Ceará	Wind		20.00	October, 2049	October 2018
Serra do Mel I	Rio Grande do Norte	Wind		28.00	October, 2049	October, 2018
Serra do Mel II	Rio Grande do Norte	Wind		28.00	October, 2049	October, 2018
Serra do Mel III	Rio Grande do Norte	Wind		28.00	November, 2049	October, 2018
Uirapuru	Ceará	Wind		28.00	October, 2049	October, 2018
Ventos de Angelim	Ceará	Wind		24.00	November, 2049	October, 2018
Ventos de Santa Luiza	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de Santa Madalena	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de Santa Marcella	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de Santa Vera	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de Santo Antônio	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de São Bento	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de São Cirilo	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de São João	Bahia	Wind		28.00	September, 2049	February, 2019
Ventos de São Rafael	Bahia	Wind		28.00	September, 2049	February, 2019

(1) The capacity corresponds to five machines, which total 346,803 MW. The plan can run on oil and natural gas. We requsted the cancellation of the concession for the Camaçari thermal plants. This request is currently being proceesed by ANEEL. Pursuant to ANEEL requirements, only unit number 3 is currently in operation, which can generate 69.12 MW. The total installed capacity will be adjusted when ANEEL makes a final decision.

(2) Pursuant to ANEEL Dispatch number 23, dated January 28, 2014, the assets of Rio Madeira have been declared unserviceable

(3) ANEEL Dispatch number 136, dated January 28, recommended the MME the extinction of the authorization of s Rio Branco I and Rio Branco II

(4) Transferred free of charge to Boa Vista Energia, as of February 10, 2010

(5) Only includes Furnas’ equity interest, for other assets the value corresponds to the total amount generated by the plant.

(6) The total of 500MW does not include the generation capacity of units 3 and 4, which have had their operations temporarily suspended by ANEEL, pursuant to Dispatch number 3,263 dated October 19, 2012. This value, however, includes 150 MW which is not currently available, due to delays in the construction of the plant. When the plant is complete, units 11 and 21 will funciontion in combination with units 1 and 2. The assured energy of 401.2 MW is in respect of the installed capacity of 500 MW.

(7) The values reported correspond to our interest in this project (Consórcio Mauá, in which Eletrosul holds 49%).

(8) The first turbine entered operations September 2013 bringing installed capacity to 75 MW. In the fouth quarter of 2015, we had 37 machines in operations, resulting in an installed capacity of 2,775 MW

(9) As of the fourth quart of 2015, 35 units, of a total of 50 units, were in operation, totallying 2,498.6 MW and total power of 3,568 MW. The physical guarantee corresponded to the units in operation.

(10) The concession for Três Irmão held by Cesp expired in November 2011 and was not renwered pursuant to Law No. 12,783. On March 28, 2014 the concession was awared to consortium which consists of Furnas (49.9%) and FIP Constantinopla (50.1%). The concession is valid for 30 years as of September 10, 2014

(11) As of the fourth quarter of 2015, two units, of five, were in operation totallying 727.9 MW of a total capacity of 1,819.8 MW. The physical guarantee corresponds to the units in operation.

(12) The amount in commercial operation corresponds to 30.4 MW

(13) Currently in the process of obtaining environmental permits.

(14) There is currently no estimate for when construction of this plant will begin, as the Brazilian National Institute of Historic and Artistic Heritage (Instituto do Patrimônio Histórico e Artístico Nacional) has not provided the required approvals.

(15) In commercial operation, which corresponds to 18 MW in June 2016.

(16) In 2015, these units were under construction. The operation begun in March 2016.

Source: Eletrobras System.

* Units no longer under operation in June 2016.

- 50 -

Types of Plants

Hydroelectric power plants accounted for 87.9% of our total power generated in 2015, compared to 87.7% in 2014 and 88.0% in 2013.

We also generate electricity through our thermal and nuclear plants. Thermal plants accounted for 5.0% of our total power generated in 2015, compared to 5.2% in 2014 and 5.1% in 2013. Nuclear plants accounted for 7.1% of our total power generated in 2015, compared to 7.1% in 2014 and 6.9% in 2013.

The following table sets out the total amount of electricity generated in the periods indicated, measured in megawatt hours, broken down by type of plant:

	Year Ended December 31,
	2015		2014		2013
	(MWh)
Type of plant:
Hydroelectric(1)		183,912,559.88		191,970,101.40		202,649,175
Thermal		10,519,882.87		11,411,711.52		11,761,506
Nuclear		14,808,265.57		15,433,251.78		15,829,384
Total(2)		209,240,708.32		218,815,064.70		230,240,065

(1) Including 100% of the Itaipu plant.

(2) Does not consider MWh produced by any wind plant.

Hydroelectric Plants

Hydroelectric plants are our most cost-efficient source of electricity, although efficiency is significantly dependent on meteorological factors, such as the level of rainfall. Based on our experience with both types of plants, we believe construction costs for hydroelectric plants are higher than for thermal plants; however, the average useful life of hydroelectric plants is longer. We use our hydro-powered plants to provide the bulk of our primary and back-up electricity generated during peak periods of high demand. During periods of rapid change in supply and demand, hydroelectric plants also provide greater production flexibility than our other forms of electric generation because we are able to instantly increase (or decrease) output from these sources, in contrast to thermal or nuclear facilities where there is a time lag while output is adjusted.

As of December 31, 2015, we owned and operated 47 hydroelectric plants. In addition, we hold a 50.0% interest in Itaipu, the other 50.0% of which is owned by a Paraguayan governmental entity and participations in the Peixe Angical (40.0%), Jirau (40.0%), Serra do Facão (49.5%), Retiro Baixo (49.0%), Foz do Chapecó (40.0%), Baguari (15.0%), Dardanelos (49%) Santo Antônio (39.0%), Teles Pires (49%) and Três Irmãos (49.9%) plants. Also, we have participation in the Serra Mesa (48.5%), Manso (70.0%) and Mauá (49.0%). The ONS is solely responsible for determining, in any year, how much electricity each of our plants should generate. As of December 31, 2015, the total installed capacity of our hydroelectric plants was 38,722 MW (including 50.0% of Itaipu and our participations in the SPEs referred to above). The following table sets out information with respect to hydroelectric plants owned by us and with partners as of December 31, 2015 and for the year then ended:

	Installed(1) Capacity		Assured Energy(2)		Began Service
	(MW)
Hydroelectric plants:
Araras		4.00		—		February 1967
Baguari(3)		140.00		80.00		September 2009
Balbina		277.50		32.59		January 1989
Barra do Rio Chapéu		15.15		8.61		February 2013
Batalha		52.50		48.80		May 2014
Boa Esperança (Castelo Branco)		237.30		143.00		January 1970
Coaracy Nunes(4)		78.00		—		October 1975
Complexo de Paulo Afonso and Piloto		4,281.60		2,225.00		January 1955
Corumbá I		375.00		209.00		April 1997
Curemas		3.52		1.00		June 1957
Curuá-Una		30.30		24.00		April 1977
Dardanelos(5)		261.00		154.90		August 2011

- 51 -

	Installed(1) Capacity		Assured Energy(2)		Began Service
	(MW)
Foz do Chapecó(6)		855.00		432.00		October 2010
Funil		216.00		121.00		April 1969
Funil (Chesf)		30.00		10.91		March 1962
Furnas		1,216.00		598.00		March 1963
Itaipu(7)		14,000.00		8,577.00		March 1985
Itumbiara		2,082.00		1,015.00		February 1980
Jirau(8)		3,750.00		2,184.60		September 2013
João Borges		19.00		10.14		July 2013
Luis Carlos Barreto (Estreito)		1,050.00		495.00		January 1969
Luiz Gonzaga (Itaparica)		1,479.60		959.00		February 1988
Manso (70%)(9)		148.40		92.00		October 2000
Marimbondo		1,440.00		726.00		April 1975
Mascarenhas de Moraes		476.00		295.00		April 1973
Mauá(10)		177.93		96.90		November 2012
Passo São João		77.00		41.10		March 2012
Pedra		20.00		3.74		April 1978
Peixe Angical(11)		498.80		280.50		June 2006
Porto Colômbia		320.00		185.00		March 1973
Retiro Baixo(12)		82.00		38.50		March 2010
Samuel		216.75		92.70		July 1989
Santo Antônio(13)		3,568.30		2,424.20		March 2012
São Domingos		48.00		36.40		Junee 2013
Serra da Mesa (48.5%)(9)		617.87		671.00		April 1998
Serra do Facão(14)		212.60		182.40		July 2010
Simplício		305.70		191.30		June 2013
Sobradinho		1,050.30		531.00		April 1979
Teles Pires		1,819.80		567.40		November 2015
Três Irmãos(15)		807.50		217.50		October 2014
Tucuruí		8,535.00		4,140.00		November 1984
Xingó		3,162.00		2,139.00		April 1994

(1) The installed capacity of Itaipu is 14,000 MW. Itaipu is equally owned by Brazil and Paraguay.

(2) Assured energy is the maximum amount per year that each plant is permitted to sell in auctions/supply to the Interconnected Power System, an amount determined by ONS. Any energy produced in excess of assured energy is sold in the Free Market.

(3) We own 15.0% of the Baguari plant. Figures in this table refer to the entire capacity/utilization of the plant.

(4) The Coaracy Nunes plant is part of the isolated system and does not have an assured energy restriction.

(5) We own 49.0% of the Dardanelos plant.

(6) We own 40.0% of the Foz do Chapecó plant. Figures in this table refer to the entire capacity/utilization of the plant.

(7) We own 50.0% of the Itaipú plant. Figures in this table refer to the entire capacity/utilization of the plant.

(8) We own 40.0% of the Jirau plant.

(9) We own 48.46% of the Serra Mesa plant and 70.0% of the Manso plant. Figures in this table refer to the entire capacity/utilization of each plant.

(10) We own 49.0% of the Mauá plant.

(11) We own 40.0% of the Peixe Angical plant. Figures in this table refer to the entire capacity/utilization of the plant.

(12) We own 49.0% of the Retiro Baixo plant. Figures in this table refer to the entire capacity/utilization of the plant.

(13) We own 39.0% of the Santo Antônio plant. As of December 31, 2014, the installed operating capacity was 2,498.5 MW.

(14) We own 49.5% of the Serra do Facão plant. Figures in this table refer to the entire capacity/utilization of the plant.

(15) We own 49.9% of the Três Irmãos plant.

The following table describes the energy generated by the hydroelectric plants owned by us, the assured energy and the actual operational utilization. We have converted the measurement of the assured energy to MWh so that we can compare it against the energy generated.

	Assured Energy		Generated Energy(1)		Actual Operational Utilization
	(MWh)				(%)
Hydroelectric plants:
Balbina		285,487		1,080,441		378.5	%
Barra do Rio Chapéu		75,424		98,375		130.4	%
Batalha		427,488		214,997		50.3	%
Boa Esperança (Castelo Branco)		1,252,680		996,305		79.5	%
Coaracy Nunes(2)		0		483,613		100.0	%
Complexo de Paulo Afonso e Piloto		19,491,000		8,664,312		44.5	%
Corumbá I		1,830,840		1,485,428		81.1	%
Curemas		8,760		0		0.0	%
Curuá-Uma		210,240		201,887		96.0	%
Funil(Furnas)		1,059,960		424,783		40.1	%
Funil (Chesf)		95,572		34,302		35.9	%
Furnas		5,238,480		1,206,737		23.0	%
Itumbiara		8,891,400		4,197,055		47.2	%
João Borges		88,826		85,703		96.5	%

- 52 -

	Assured Energy		Generated Energy(1)		Actual Operational Utilization
	(MWh)				(%)
Luis Carlos Barreto (Estreito)		4,336,200		1,535,084		35.4	%
Luiz Gonzaga (Itaparica)		8,400,840		3,734,294		44.5	%
Manso (70%)(3)		805,920		481,336		59.7	%
Marimbondo		6,359,760		2,182,636		34.3	%
Mascarenhas de Moraes		2,584,200		754,490		29.2	%
Mauá(4)		848,844		1,383,758		163.0	%
Passo São João		360,036		519,218		144.2	%
Pedra		32,762		10,114		30.9	%
Porto Colômbia		1,620,600		993,977		61.3	%
Samuel		812,052		919,109		113.2	%
São Domingos		318,864		344,919		108.2	%
Serra da Mesa(3)		5,877,960		2,169,448		36.9	%
Simplício		1,675,788		453,349		27.1	%
Sobradinho		4,651,560		1,683,900		36.2	%
Tucuruí		36,266,400		35,497,822		97.9	%
Xingó		18,737,640		9,683,895		51.7	%
Total		132,645,583		81,521,284		61.5	%

(1) Excluding (i) Itaipu, which is owned equally by Brazil and Paraguay; and (ii) any energy generated through our participation in SPEs.

(2) The Balbina, and Coaracy Nunes plants are part of the isolated system and do not have an assured energy restriction.

(3) We own 48.46% of the Serra Mesa plant and 70.0% of the Manso plant.

(4) This percentage is based on the average operational utilization.

(5) We own 49.0% of the Mauá plant.

See “ – Concessions” for information on the hydroelectric power plants operated by Chesf, Eletronorte and Furnas.

Hydroelectric utilities in Brazil are required to pay a royalty fee of 6.75% of the power generated to the Brazilian states and municipalities in which a plant is located or in which land may have been flooded by a plant’s reservoir for the use of hydrological resources. Fees are established independently by each state and/or municipality as applicable and are based on the amount of energy generated by each utility and are paid directly to the states and municipalities. Fees for the states and municipalities in which we operate were R$ 348.9 million in 2015, compared to R$ 387 million in 2014 and R$ 406 million in 2013. These fees are recorded as operating costs in our consolidated financial statements.

Our subsidiaries have acquired concessions for the construction of 8 new hydroelectric power plants. Information regarding these new plants is set out in the table below:

	Installed Capacity		Construction began		Service begins(1)
	(MW)
New plants:
Belo Monte		11,233.0		August 2011		April 2016
Coxilha Rica		18.0		—		—
Jirau(2)		3,750.0		December 2009		September 2013
Santo Antônio(3)		3,568.3		August 2008		March 2012
Santo Cristo		19.5		—		April 2016
São Manoel		700.0		August 2014		January 2018
Sinop		400.0		December 2013		January 2018
Teles Pires		1,820.0		August 2011		November 2015

(1) Estimated dates based on current timetable.

(2) 35 turbines operating, totaling 2,498.6 MW of installed capacity.

(3) 37 turbines operating, totaling 2,775 MW of installed capacity.

We intend to finance these plants from cash flow from operations, future indemnification payments received pursuant to Law No. 12,783/2013, receivables from loans granted to Itaipu and, if necessary, from financing obtained in the international capital markets and/or multilateral agencies.

Thermal Plants

As of December 31, 2015, we owned and operated 121 thermal plants, including a 49.00% interest in the Serra do Navio plant. Thermal plants include coal, oil and gas power generation units. The total installed capacity of our thermal plants was 3,782 MW as of December 31, 2015, compared to 4,150 MW as of December 31, 2014 and 4,567 MW as of December 31, 2013.

- 53 -

The following table sets out information regarding our thermal plants as of December 31, 2015 and for the year ended:

	Assured Energy		Generated Energy(1)		Actual Operational Utilization
	(MWh)				(%)
Aparecida		1,805,819		1,282,132		71.0	%
AS São José		167,283		235,618		140.9	%
Camaçari		401,208		272,991		68.0	%
Candiota III – Phase C		2,298,624		1,537,709		66.9	%
Electron		—		21,629		100.0	%
FO Flores		518,349		409,751		79.0	%
Iranduba		325,933		118,139		36.2	%
Mauá		3,729,684		1,312,081		35.2	%
P. Médici (Candiota)		1,606,584		674,267		42.0	%
Rio Acre		—		7		100.0	%
Rio Branco I		—		—		100.0	%
Rio Branco II		—		—		100.0	%
Rio Madeira		—		—		100.0	%
Roberto Silveira (Campos)		183,960		137,983		75.0	%
Santa Cruz		3,514,512		2,659,799		75.7	%
Santana		—		331,535		100.0	%
Santarém		—		3,330		100.0	%
Senador Arnon Afonso Farias de Mello		—		—		100.0	%
Serra do Navio		183,960		320		0.2	%
Others Isolated System		1,490,970		1,522,796		102.1	%
Total		16,226,886		10,520,087		64.8	%

(1) Assured Energy is only determined in respect of plants from the Interconnected Power System, but not the Isolated system. Most of our thermal plants are part of the Isolated system.

(2) Generated Energy does not include energy generated through our participations in SPEs.

Each of our thermal plants operates on coal, gas or oil. The fuel for the thermal plants is delivered by road, rail, pipeline or waterway, depending on the plant’s location.

We seek to operate our thermal plants at a consistent, optimal level in order to provide a constant source of electricity production. Our thermal plants are significantly less efficient and have significantly shorter useful lives, than our hydroelectric plants. We incurred gross expenditure for fuel purchased for energy production of R$ 1,250 million for 2015, compared to R$ 1,480 million for 2014 and R$ 1,492 million for 2013, which were reimbursed to us from the CCC Account in accordance with Law No. 12,111.

We have recovered a substantial portion of the thermal plants’ excess operating costs, which correspond to the difference between the cost of a thermal plant and the cost of a hydroelectric plant, through reimbursements pursuant to the CCC Account. The Brazilian Government created the CCC Account in 1973 for the purpose of building financial reserves to cover the costs of using fossil fuel thermal power plants, which are more expensive to operate than hydroelectric plants, in the Basic Network and the Interconnected Power System should a power shortage create a need for increased production of thermal power plants. Consumers through electricity distributors in Brazil were required to contribute annually to the CCC Account, which in effect served as an insurance fund against an extraordinary situation, such as a rainfall shortage, which would require increased use of thermal plants. The aggregate amount of the annual required contribution was calculated on the basis of the current year’s cost of fuel estimates for all thermal plants. Each utility was then allocated a proportional contribution towards the aggregate amount based on such utility’s total electricity sales during the previous year. In 1993, the scope of the CCC Account was extended to include a portion of the costs of thermal electricity generation in isolated, non-integrated grids in remote areas of Brazil’s northern region.

Each of Amazonas Energia DEletroacre, CERON and Eletronorte (up to 2015) receives CCC Account reimbursement for its thermal plant fuel and the difference between the costs associated with generation in the SIN and Isolated System. CGTEE receives amounts from the CCC Account to subsidize parts of its costs related with

- 54 -

the acquisition of coal. We administer the CDE and CCC Account. Pursuant to law No. 12,783 the CCC account is funded with amounts from the CDE account. The additional costs for fuel used in the operation of thermoelectric power plants in the Isolated System are now being covered by the CCC account. Reimbursements from the CCC Account for the fuel costs of thermal plants connected to the Basic Network were phased out in conjunction with the development of a competitive wholesale market. Following this phase out, we have had to bear the entire operating costs of our thermal plants connected to the SIN.

The following tables set forth information relating to the price paid and amount of fuel purchased for use in our thermal plants in the periods indicated:

	Year Ended December 31,
	2015		2014		2013
	(R$ thousands)
Type of fuel
Coal		86,832		161,000		138,676
Light oil		3,808,140		4,861,400		3,716,258
Crude Oil		60,295		51,000		32,079
Gas		747,640		686,930		990,070
Uranium		286,949		308,600		298,800
Total		4,989,856		6,068,930		5,175,883
	Year Ended December 31,
	2015		2014		2013
Type of fuel
Coal (tons)		2,263,988		2,346,210		3,196,524
Light oil (litres)		757,822,681		647,661,682		887,443,900
Crude Oil (tons)		33,728		33,829		29,351
Gas (m3)		1,736,823		1,603,888,527		1,556,833,498
Uranium (Kg)		228,784		255,672		251,596

Nuclear Plants

Nuclear power plants represent a relatively costly source of electricity for us. The Brazilian Government, however, has a special interest in the continuing existence of nuclear power plants in Brazil and is required by law to maintain ownership and control over these plants. Accordingly, we expect to continue to own 99.9% of Eletronuclear.

Through Eletronuclear, we operate two nuclear power plants, Angra I, with an installed capacity of 640 MW and Angra II, with 1,350 MW. In addition, Eletronuclear started the construction of a new nuclear plant, called Angra III, during the second half of 2009. IBAMA issued an installation license to Eletronuclear effective for 6 years, as of March 11, 2014.

As of December 31, 2014 we estimated that the construction would be concluded by 2018. As of December 31, 2015 we estimated that the construction would be concluded by 2020. However, due to the interruption of the construction of the Angra III plant refered to below, as of the date of this annual report, we estimate that the construction will be concluded by 2022. Once constructed, we estimate that Angra III will have an installed capacity of 1,405 MW. As of December 31, 2014 we estimated that the cost of its construction would be approximately R$ 13.1 billion. As of December 2015 we estimated that the cost of construction would be approximately R$ 20.5 billion. As of June 30, 2016, we estimated that the cost of construction would be around R$ 26 billion.

- 55 -

The following table sets out information regarding our nuclear plants as of December 31, 2015 and for the year then ended:

	Installed Capacity		Generated Energy(1)		Assured Energy(1)		Began Service(2)
	(MW)		(MWh)
Nuclear plant:
Angra I		640		4,102,082.49		4,465,848		January 1, 1985
Angra II		1,350		11,090,216		10,553,172		September 1, 2000
Total		1,990		15,192,306		15,019,020

(1) Gross Generated Energy.

(2) For our nuclear plants, assured energy is not limited by ONS, but by the regulatory body.

(2) Commercial operation in: Angra I – January 1985 and Angra II – September 2000.

Angra I operated at 72.50% capacity in 2015 in line with industry standards. Accordingly, the assured energy of Angra I was 4,465,848 MWh/yr in 2015.

Angra II operated at 90.4% capacity in 2015 in line with industry standards. Accordingly, the assured energy of Angra II was 10,553,172 MWh/yr in 2015.

Both Angra I and Angra II utilize uranium obtained pursuant to a contract with Indústrias Nucleares Brasileiras, or INB, a Brazilian Government-owned company responsible for processing uranium used at our Angra I and Angra II Nuclear Plants. The fuel elements are shipped by truck to the nuclear plant and under the terms of the contract; Eletronuclear bears responsibility for the safe delivery of that fuel. To date, Eletronuclear (and the previous owner of Angra I – Furnas) has experienced no material difficulty in the transportation of fuel to Angra I and Angra II. In addition, low-level nuclear waste (such as filters and certain resins) is stored in specially designed containers in an interim storage site on the grounds of the plants. As is the case with many other countries, Brazil has not yet devised a permanent storage solution for nuclear waste. High-level nuclear waste (spent nuclear fuel) is stored in the fuel cells (compact storage racks in the fuel pool) of the plants. The liability relating to the decommissioning of nuclear power plants Angra I and Angra II is provided for in our financial statements. The amount of this provision is supported by a technical report of a working group of Eletronuclear created in 2013. In relation to Angra I, the estimated decommissioning cost as of December 31, 2015 is, at present value, R$ 510.3 million and in relation to Angra II, the estimated decommissioning cost as of December 31, 2015 is, at present value, R$ 217.0 million. The economic useful life of the plants was estimated to be 40 years. Eletronuclear makes monthly provisions for the estimated present values of the decommissioning costs related to Angra I and Angra II.

The electricity generated by Eletronuclear during the year ended December 31, 2015 was sold pro rata among a group of energy distribution companies at a regulated price pursuant to ANEEL Resolution No. 1,842 of December 16, 2014. These sales resulted in a fixed income of R$ 2,246 million during the year ended December 31, 2015.

On September 2, 2015 Eletronuclear suspended the contract for the electrical-mechanical assembly of the Angra III in order to analyze certain qualification and economic and financial criteria for the remaining companies of the construction’s consortium. On September 28, 2015, Eletronuclear suspended the contract with one of these suppliers for the construction of Angra III. Further to the suspension of this agreement, we have taken measures to preserve the construction site. We have been negotiating the conditions to restart the construction of these projects with ANEEL, with the Federal Governanment and with CNPE (Conselho Nacional de Política Energica). On June 2016, we expected to have this project in operation in December 2022.

We have recorded impairments in respect of this project in the total amount of the asset. In respect of Angra III, we recorded an accumulated impairment of R$ 960.5 million and R$ 5.922 billion as of December 31, 2014 and 2015, respectively. For further information see note 19 to our financial statements.

Sales of Electricity Generated

We sold approximately R$ 19,576 million of electricity in 2015, compared to R$ 21,113.5 million in 2014 and R$ 16,435 million in 2013. These sales are made only to distribution companies (which constitute the main sources of sales of electricity generated) or free consumers. We own certain distribution companies that operate in the midwestern, northern and northeastern regions of Brazil and we sell a relatively small portion of the electricity we generate to these distribution companies, which does not give rise to revenues in our generation segment as discussed in “ – Distribution.”

- 56 -

We sell the electricity generated pursuant to both supply contracts with industrial end-users and to an auction process for sales to distribution companies. The following table sets forth, by type of sale, sales of electricity generated in the regions we served in the periods presented:

	Year Ended December 31,
	2015				2014				2013
	(MWh)		(R$ thousands)		(MWh)		(R$ thousands)		(MWh)		(R$ thousands)
Type of sale:
Through auctions and initial contracts (energy charge)		45,487,632		12,310,243		41,391,581		12,175,362		50,931,997		8,066,674
Maintenance and operating revenue		66,654,337		1,882,637		68,789,819		1,803,127		68,195,747		2,198,235
Through free market agreements or bilateral contracts (energy charge)		34,728,231		5,383,361		41,877,430		7,135,079		34,790,485		6,170,136
Total		146,870,200		19,576,241		152,058,830		21,113,568		153,918,229		16,435,045

(1) Energy sold in the regulated market and according to a new methodology which excludes CCEE’s energy liquidation, does not consider the energy sales from Itaipu.

With respect to supply contracts, the amount that we receive from each sale is determined on the basis of a “capacity charge” and “energy charge” (or, in some cases, both). A capacity charge is based on a guaranteed capacity amount specified in MW and is charged without regard to the amount of electricity actually delivered. The charge is for a fixed amount (and so is not dependent on the amount of electricity that is actually supplied). In contrast, an energy charge is based on the amount of electricity actually used by the recipient (and is expressed in MWh). Our purchases of Itaipu electricity, and our trade of Itaipu electricity to distributors, are paid for on the basis of a capacity charge (including a charge for transmission paid to Furnas). Our sales of electricity (through our subsidiaries Chesf and Eletronorte) to final consumers, especially to industrial customers, are billed on the basis of both a capacity charge and an energy charge. With respect to auction sales, as discussed in “The Brazilian Power Industry – Regulation under the Electricity Regulatory Law,” invitations to participate in auctions are prepared by ANEEL and, in the event that we are successful, we enter into sale and purchase contracts with the relevant distribution company for an amount of electricity that is proportionate to such company’s estimated demand over the contract period.

Transmission

Transmission of Electricity

Billings in our transmission segment are fixed by ANEEL, which sets a fixed billing each year. Net revenues (including financial revenues at the holding company level) from transmission represented 16.37% of our total net revenues before eliminations in 2015, compared to 16.52% in 2014 and 16.51% in 2013. The electricity that we generate is transported through Brazil’s tension transmission network, with 60,997 km of transmission lines belonging to us above 230 kV as of December 31, 2015, compared to 60,502 km as of December 31, 2014 and 53,706 km as of December 31, 2013. Including our partnerships with private companies in SPEs/Consortia we have approximately 68,085 km above 138 KV in operation as of December 31, 2015. For further information, see “ – Lending and Financing Activities – Equity Participation.” In Brazil, the majority of hydroelectric plants are located a considerable distance from the major load centers and therefore, in order to reach consumers, an extensive transmission system has been developed. Transmission is the bulk transfer of electricity, at very high voltages (from 230 kV to 750 kV), from the generation facilities to the distribution systems at the load centers by means of the transmission grid. SIN is an interconnected power system in Brazil that links the northern and northeastern regions to the southern and southeastern regions. Coordinating the transmission systems is necessary to optimize the investments and operating costs and to ensure reliability and adequate load supply conditions throughout SIN.

- 57 -

The map below shows the geographic location of our transmission assets as of December 31, 2014:

Transmission Concessions

As of December 31, 2015, our transmission operations were carried out pursuant to the following concessions granted by ANEEL (excluding transmission operations carried out through any SPEs):

	Total length		Voltage Levels		Average years remaining of concession
	(km)		(kV)
Furnas		19,906		69 – 750		26.5
Chesf		19,885		69 – 500		26.7
Eletrosul		10,720		69 – 500		26.3
Eletronorte		10,776		69 – 500		26.8
Eletrobras GT		439		230		Undefined
Amazonas Energia		322		69 – 138		Not applicable

Due to the development of the hydroelectric resources of the Amazon region, which requires the transmission of large amounts of energy, Brazil has developed the Interconnected Power System. A national transmission grid provides generators with access to customers in all regions. Furnas and Eletronorte built the first north-south transmission system linking the northern and southern regions of Brazil, which consists of approximately 1,250 km of 500 kV transmission lines and which began operation in 1998. A second north-south

- 58 -

transmission system, the construction of which was funded by the private sector, began operation in 2004. The following table sets forth the length of transmission lines (in km) by subsidiary and by voltage as of December 31, 2015:

	750 kV		600 kV (DC)(1)		525/500 kV		345 kV		230 kV		138 kV		132/ 13.8kV		Total
Company:
Chesf		—		—		5,207		—		13,904		463		311		19,885
Eletronorte		—		—		3,243		—		6,371		959		203		10,776
Eletrosul		—		—		3,709		—		5,092		1,851		69		10,720
Furnas		2,698		1,612		4,669		6,305		1,929		2,528		165		19,906
Eletrobras Amazonas GT		—		—		—		—		439		—		—		439
Amazonas Energia		—		—		—		—		—				322		322
Total(2)		2,698		1,612		16,828		6,305		27,735		5,800		1,070		62,049

(1) DC means direct current.

(2) This table does not include transmission lines owned by SPEs in which we participate. Had such transmission lines been included, the total would be 68,085 km.

The following table sets forth, on a consolidated basis, the percentage of the total transmission grid above 230 kV in Brazil that we were responsible for as of December 31, 2015, considering our participations in SPEs:

	750 kV		600 kV (DC)(1)		525/500 kV		400 kV		345 kV		230 kV		Total
Entity:
Eletrobras		100.00		30.88		44.94		0.00		61.54		43.88		47.08
Others		0.00		69.12		55.06		100.00		38.46		56.12		52.92
Total		100.00		100.00		100.00		100.00		100.00		100.00		100.00

(1) DC means direct current.

Except in relation to a small portion of transmission lines of Eletronorte located in the isolated system, the transmission lines in the Interconnected Power System are totally integrated.

As of December 31, 2015, we owned approximately 47% of all transmission lines in Brazil (230 kV and above) and, as a result, we received fees that are paid by consumers directly to the distribution subsidiaries. Net operating revenues from transmission were R$ 5,611 million in 2015, compared to R$ 4,701 million in 2014 and R$ 4,203 million in 2013. As a generation company, we must also pay a tariff in respect of our transmission of electricity over those transmissions that we do not own. Taking into account all transmission lines in Brazil (230 kV and above), this means we pay a tariff in respect of 77.37% of all transmission lines in Brazil.

Losses of electricity in the transmission system of Eletrobras were, in 2015, approximately 1.82% of all electricity transmitted in the system.

We operate as part of an integrated and coordinated national electricity system for Brazil. The Concessions Law authorizes us to begin to charge fees for the use of our transmission system by other electricity companies.

Through Furnas, we charge a tariff (approximately R$ 1,652.59 per MW/month as of December 31, 2014) for the transmission of electricity generated by Itaipu and purchased for resale. The transmission charge for the power Itaipu generates is used to compensate Furnas, which owns the applicable transmission line, for making its transmission system available for the exclusive use of plant-connection installations. This system comprises the 750 kV Itaipu/Ivaiporã and the 600 kV DC Itaipu/Ibiúna transmission lines that are not part of the Basic Network.

Expansion of Transmission Activities

In 2015, we invested R$ 3.4 billion on transmission activities, of which R$ 2.26 billion were invested on our facilities and R$ 1.15 billion were invested through partnerships, representing 80.0% of the total investment budget for 2015 in transmission activites in the amount of R$ 4.27 billion.

- 59 -

The major transmission projects currently under development are:

(i) Expansion of two transmission lines (1,067 km of a 525 kV transmission line and 735 km of a 230 kV transmission line) in the southern region of Brazil and construction of 8 new substations to transport wind energy generated in that region. The amount invested is R$ 3 billion and the project is expected to go live in 2018.

(ii) Development of a 987km long 230 kV transmission line interconnecting the state of Mato Grosso and Rondonia. The amount invested is R$ 923 million and the project is expected to go live in 2016.

(iii) Development of a 2,092km long 800kV transmission line with a transmission capacity of 4,000 MW for the integration of the Belo Monte hydroelectric plant, together with State Grid of China. The amount invested is R$ 4.5 billion and the project is expected to be completed in 2018.

Electric Power Transmission in Brazil

Transportation of large volumes of electricity over long distances is made by way of a grid of transmissions lines and substations with high voltages (from 230 kV to 750 kV), known as the Basic Network. Any electric power market agent that produces or consumes power is entitled to use the Basic Network.

Transmission lines in Brazil are usually very long, since most hydroelectric plants are usually located away from the large centers of power consumption. Today, the country’s system is almost entirely interconnected. Only the State of Roraima and parts of the states of Pará, Amazonas, Amapá and Rondônia are still not connected to the Interconnected Power System. In these states, supply is made by small thermal plants or hydroelectric plants located close to their respective capital cities.

The Interconnected Power System provides for the exchange of power among the different regions when a region faces problems generating hydroelectric power due to a drop in their reservoir levels. As the rainy seasons are different in the south, southeast, north and northeast of Brazil, the higher voltage transmission lines (500 kV or 750 kV) make it possible for locations with insufficient power output to be supplied by generating centers that are in a more favorable location.

The operation and management of the Basic Network is the responsibility of ONS, which is also responsible for managing power dispatching from plants on optimized conditions, involving use of the Interconnected Power System hydroelectric reservoirs and fuel thermal plants.

On December 2015 our transmission system, which consists of a set of transmission lines interconnected to substations, was comprised of approximately 60.997 kilometers of transmission lines, including participation in SPE corresponding to approximately 47% of the total lines in Brazil with a voltage higher or equal to 230 KV.

Besides operating and maintaining this system in accordance with the standards of performance and quality required by ANEEL, we have actively participated in the expansion of transmission lines through concessions in auctions conducted by ANEEL, alone or through consortiums, as well as through permits for reinforcements of the current system.

• Brazil has a total of six medium and large interconnections with other countries in South America, four of them operated by us, as set forth below:

• with Paraguay, through four 500 kV transmission lines connecting Usina de Itaipu to Margem Direita (Paraguay) substation and the Foz do Iguaçu in Brazil substation. Itaipu’s 50 Hz energy sector is then transported to the Ibiúna substation in São Paulo through a direct current transmission system with a capacity of 6,300 MW;

• with Uruguay, through Rivera’s frequency converter station in Uruguay, with a capacity of 70 MW and a 230 kV transmission line connecting it to the Livramento substation in Brazil;

- 60 -

• with Argentina, through Uruguaiana’s frequency converter station in Brazil, with a capacity of 50 MW and a 132 kV transmission line connecting it to Paso de los Libres in Argentina; and

• with Venezuela, through a 230 kV transmission line with a capacity of 200 MW, which connects the city of Boa Vista, in the State of Roraima, to the city of Santa Elena in Venezuela.

From 2002 to 2005, there was a gradual decline in the amounts of power contracted under Initial Supply Contracts, the generating companies paid for the use of the transmission line grid, whereas distributors were required to pay two types of transmission tariffs: (i) nodal tariffs, associated with each connection point from where these distributors demand voltage; and (ii) the transmission tariff, associated with the Initial Supply Contracts, which was applied to part of the demand contracted in that environment. Once the amounts under the Initial Supply Contracts dropped to zero, the power generating, distributing and selling companies and free consumers had free access agreements governing their use of transmission lines on equivalent terms with those of agents that entered the market after free access became compulsory. In this free market environment, transmission tariffs are determined based on the effective use that each party that accesses the Basic Network makes of it.

Distribution

Distribution of Electricity

We operate in distribution activities. Net revenues (including financial revenues at holding company level), from distribution represented 49.6% of our net operating revenues (before eliminations) in 2015, compared to 22.1% in 2014 and 17.7% in 2013.

On September 26, 2014, our shareholders approved the acquisition of a 50.9% interest in CELG-D. This transaction closed on January 27, 2015 from R$ 59.5 million. Accordingly, the balance sheet of CELG-D is fully consolidated into our balance sheet as of December 31, 2014 and the results of operations and cash flows of CELG-D are fully consolidated into our income statement and cash flows from October 1, 2014. On May 13, 2015, the Brazilian Government enacted Decree No. 8,449, which included CELG-D in the National Privatization Program (PND, or Programa Nacional de Desestatização). Accordingly, Celgpar and we deposited our shares of CELG-D with the National Privatization Fund (FND, or Fundo Nacional de Desestatização). Our shareholders’ meeting held on December 28, 2015, approved the sale of our shares of CELG-D and since then CELG D has been available for sale. The privatization process was expected to be arranged by BM&FBOVESPA and to be held in the first half of 2016. However, the Commission of Bidding relating to the Privatization Auction of CELG-D, designated by the Ordinance PRESI 093/2016 – BNDES of June 29, 2016, announced on August 2016 that the bid was considered cancelled due to lack of bidders. Accordingly, the Investments Partnership Program of the Presidency of the Republic (Programa de Parceria de Investimentos da Presidência da República – PPI) reviewed, on September 14, 2016, the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid in 2016 to privatize CELG D. The Investments Partnership Program of the Presidency of the Republic approved Resolution No. 7/2016 in which the new minimum conditions and new price for sale, by Eletrobras, of its shareholding participation in CELG D. The new market value approved by the PPI for CELG D is R$ 4.448 billion. However, considering the debts and other liabilities in the amount of R$ 2.656 billion, as of June 2016, the net value of CELG D is R$ 1.792 billion. In the privatization process, Eletrobras intends to sell its entire stake in CELG D, equivalent to 50.9% of the share capital. The shareholders of Eletrobras are invited to attend the Extraordinary General Meeting to be held on October 24, 2016 to resolve on this sale. Since January 2016 Eletrobras is no longer consolidating the operations results and cash flows of CELG-D. In connection with the acquisition, the State of Goiás will continue to maintain the FUNAC support fund for CELG-D for a further twenty-seven years to indemnify Eletrobras for certain litigation related expenses incurred prior to our acquisition. The State of Goiás initially allocated R$ 10.0 million for FUNAC.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. Once the company decides about the conditions about this sales, the distribution segment may be classified as discontinued operations, based on IFRS 5.

- 61 -

Distribution Companies

The following companies in our group undertake distribution activities pursuant to distribution concessions granted by ANEEL:

• Amazonas Energia D, which distributes electricity to the city of Manaus, in the State of Amazonas, pursuant to a concession that ends on July 7, 2015;

• Boa Vista Energia, which distributes electricity to the city of Boa Vista, in the State of Roraima, pursuant to a concession that ends on July 7, 2015;

• CEAL, which distributes electricity in the State of Alagoas pursuant to a concession that ends on July 12, 2015;

• CELG-D, which distributes electricity in the State of Goiás, pursuant to a concession that ends on July 7, 2015;

• CEPISA, which distributes electricity in the State of Piauí pursuant to a concession that ends on July 12, 2015;

• CERON, which distributes electricity in the State of Rondônia pursuant to a concession that ends on July 12, 2015; and

• ELETROACRE, which distributes electricity in the State of Acre pursuant to a concession that ends on July 12, 2015.

The table below indicates relevant operational numbers of our distribution companies as of December 31, 2015:

Company	Number of Consumers		Number of Municipalities		Distribution Lines (km)		Substations
Amazonas Energia D		898.365		62		47,806		24
CEAL		1,045,270		102		42,043		40
CEPISA		1,172,997		224		87,929		84
CERON		589,332		52		57,647		60
ELETROACRE		245,344		22		19,218		15
Boa Vista Energia		106,236		1		3,553		3
CELG-D		2,801,309		237		213,289		329

CEAL, CEPISA, CERON, ELETROACRE, CEAM and CELG-D were previously owned by the respective state governments of the states where each of these companies conducted their operations. Companhia Energética de Roraima, which is still owned by the state of Roraima, transferred the assets and liabilities relating to the capital of the state of Roraima to Boa Vista Energia, who, as from October 2012, became directly controlled by Eletrobras. Since 1996 investments have been made in these distribution companies in order to improve their financial conditions and prepare them for privatization. Companhia Energética de Roraima continued to be responsible for the assets and liabilities relating to the countryside of the state of Roraima. In 2008, as a result of the merger between Ceam and Manaus Energia S.A., Amazonas Energia was created. In 2015, Amazonas Energia was segregated into Amazonas Energia Distribuição and Amazonas Energia Geração & Transmissão. In 2016, Companhia Energética de Roraima, a company controlled by the state of Roraima, had its concession of electricity distribution services renewal request denied. The MME then appointed Boa Vista Energia as the company responsible for providing the electricity distribution public services for the countryside of the state of Roraima, where Companhia Energética de Roraima was authorized to operate through a concession. This appointment will remain in place until a new concessionaire is awarded under a new concession or until December 31, 2017, whichever occurs first.

- 62 -

Amazonas Energia D, CEAL, CEPISA, CERON, Boa Vista Energia and ELETROACRE operate in particularly challenging market conditions – the North and Northeastern regions of Brazil are among the poorest regions in the country. One of our principal continuing challenges in respect of these companies is reducing the amount of commercial losses (principally being the theft of electricity) and customer defaults that these companies suffer from. We are attempting to address these problems by developing mechanisms that make theft of electricity more difficult and by renegotiating debts that customers of these companies currently owe.

Management Structure for our Distribution Activities

Since May 2008, investments in Amazonas Energia, ELETROACRE, CEAL, CEPISA, CERON and in Boa Vista Energia, were managed by an Executive Officer who, until June 2014, acted as Executive Officer of these six distribution companies. Also, under that management structure, all the other officers for all the six companies would also be the same individuals in order to standardize procedures, strategies, indicators and monitoring the performance of the goals to improve the quality of the services and financial conditions of these companies.

This corporate governance structure was updated after 2014. Only the Chief Financial Officer of Amazonas Energia is part of the management teams of the other five distribution companies, being all the other officers and the Chief Executive Officer of Amazonas Energia part exclusively of Amazonas Energia management. Under the other five distribution companies, with the sole exception of their Chief Executive Officers, all the other officers for all five companies are the same, such as the Chief Commercial Officer, Chief Financial Officer, Chief Management Officer, Chief Planning and Expansion Officer and Chief Regulation and Special Projects Officer.

Transmission and Distribution System

Our transmission and distribution network consists of overhead transmission lines and sub-stations with varying voltage ranges. The clients we serve through our distribution network are classified by voltage level. With respect to our distribution to state utilities and industrial companies, we distribute electricity at higher voltage levels (up to 750 kV), while we distribute to residential and certain commercial companies at lower voltage levels (either at 230 kV, 138 kV or 69 kV).

System Performance

The following table sets forth information concerning our electricity losses for our distribution companies, and the frequency and duration of electricity outages per customer per year for the periods indicated:

	Year Ended December 31,
	2015			2014			2013(1)
Technical losses		9.57	%		9.51	%		9.70	%
Commercial losses		15.12	%		14.11	%		20.98	%
Total electricity losses		24.69	%		23.62	%		30.69	%
Outages:
Frequency of outages per customer per year (number of outages)		25.26			26.88			26.89
Duration of outages per customer per year (in hours)		38.68			39.89			40.61
Average response time (in minutes)		384.43			321.98			309.5

(1) Not including CELG D.

Electricity Losses

We experience two types of electricity losses: technical losses and commercial losses. Technical losses are those that occur in the ordinary course of our distribution of electricity. Commercial losses are those that result from illegal connections, fraud or billing errors. Total electricity losses for our distribution business were 24.69% of energy generated and bought in the year ended December 31, 2015 compared to 23.62% of energy generated and bought in the year ended December 31, 2014 and 30.69% of energy generated and bought in the year ended December 31, 2013.

- 63 -

Commercial losses at these companies have reached 15.12% of electricity generated and sold during the year. The change of the constant downward trend that had been occurring in recent years, with a growth of about 1 percentage point in 2015, is attributed to the extraordinary increase in tariffs (an increase, on average, exceeding 30%) and to the slowdown of the country’s economic activity, which caused a reduction in family incomes and in the consumption by industries.

This transition period in the economy and in the Brazilian electric sector, which was caused by a severe drought, created difficulties for the vast majority of the Brazilian distribution companies due to an increase of their expenses (i) with purchase of energy for resale; and (ii) operational measures to fight against clients’ default and power theft.

The renovation process for distribution concessions was meant to be held in 2015; however, this was postponed. Accordingly, these companies have not been able to access the financial markets. Further, increased costs have not been reflected in the tariffs but a request will be made to include these additional costs in the next tarrif review cycle.

Reducing the level of commercial losses in the distribution companies presents a continuing challenge to us. Other than CELG-D, which presents relatively low levels of commercial losses, our distribution subsidiaries have received funds from a loan agreement entered into with World Bank in the amount of U.S.$495 million in February 2011. This money is being used in the “Eletrobras Distribution Rehabilitation Project” (the name given by the World Bank to our project “Projeto Energia +”), with the main objective of improving the quality of our services and improving the economic and financial condition of our distribution companies. Once implemented, this project is intended to reduce our losses and consequently to strengthen the operational revenues of our distribution companies. In 2015 our loan with the World Bank was the only source of funds available to reduce losses.

In 2015 we recovered 272 GWh of power consumed which was not invoiced in the past. This recovery was largely due to inspections and the fact that we applied fines. Further, in 2015 we also added to our invoicing more than 560GWh of power by replacing obsolete power meters, installing protected cables in our low voltage power lines and external measurement sets for our medium voltage power. Accordingly, we reduced our total power losses from a peak of 36.4% for March 2010 to 24.69% for the year ended December 31, 2015. However, these recoveries were not enough to off-set technical and commercial losses.

The following table sets out information regarding total losses in our distribution segment recorded by each distribution company set forth below:

	Year Ended December 31,
	2015		2014		2013
	(percentages)
Company:
Amazonas Energia		40.43		37.63		38.34
Boa Vista Energia		11.57		11.53		12.12
CEAL		25.23		24.81		26.13
CELG-D		11.93		12.94		12.47
CEPISA		30.48		29.30		29.97
CERON		26.74		23.24		23.97
ELETROACRE		23.32		23.65		24.26

- 64 -

Power Outages

With respect to the Interconnected Power System, we aim to respond to repair requests within one and a half to two and a half hours, depending on the scale and nature of the problem. Our average response time in the Interconnected Power System in 2015 was 6.46 hours. The following table sets forth our average response time, in hours, to repair requests in the Interconnected Power System:

	Year Ended December 31,
	2015		2014
Company:
CEAL		3.92		5.07
CELG-D		6.71		5.29
CEPISA		6.53		5.93
CERON		4.84		4.30
ELETROACRE		7.04		8.12
Average		6.46		5.33

With respect to distribution operations in the Isolated system, we aim to respond to repair requests within half an hour to four hours, depending on the scale and nature of the problem. Our average response time in the Isolated system in 2015 was 5.53 hours. The following table sets forth our average response time, in hours, to repair requests in the Isolated system:

	Year Ended December 31,
	2015		2014
Company:
Amazonas Energia*		5.57		6.01
Boa Vista Energia		1.91		1.48
Average		5.53		5.97

* Although Amazonas Energia already has the capital of the state of Amazonas integrated to the Interconnected Power System, the countryside of the state is still under the Isolated system.

Customers

The following table sets forth our total distribution of electricity in terms of MWh and gross revenues, by type of user, for the periods indicated:

	Year Ended December 31,
	2015		2014		2013(1)
	(MWh)
Distribution to:
Industrial		5,262,677		5,566,288		3,083,189
Residential		11,527,085		10,971,668		6,115,359
Commercial		6,253,194		6,029,746		3,452,928
Rural		2,076,915		2,038,532		739,221
Public Lighting		1,436,622		1,331,245		750,068
Other		2,960,647		2,886,727		2,021,417
Total		29,517,140		28,824,206		16,162,182

(1) Not including CELG-D, which was acquired by Eletrobras on September 26, 2014.

Tariffs

We classify our customers into two different groups, Group A and Group B, based on the voltage level at which we supply the electricity to our customers. Each customer is placed in a certain tariff level defined by law and based on its respective activity. Group B customers pay higher tariffs, compensating the aggregated costs in all sub-systems in which electricity flows to supply them. There are differentiated tariffs in Group B by types of customer (such as residential, commercial, rural and industrial). Customers in Group A pay lower tariffs, depending on consumer levels established by ANEEL because they demand electricity at higher voltages, which requires a lower level of use of the energy distribution system. Tariffs we charge for sales of electricity to final customers are determined pursuant to our concession agreements and regulations established by ANEEL. These concession agreements and related regulations establish a cap on tariffs that provides for annual, periodic and extraordinary adjustments. For a discussion of the regulatory regime applicable to our tariffs and their adjustment, see “ – The Brazilian Power Industry.”

- 65 -

Group A customers receive electricity at 2.3 kV or higher. Tariffs for Group A customers are based on the voltage level at which electricity is supplied, and the time of year and the time of day electricity is supplied, although customers may opt for a differentiated tariff in peak periods. Tariffs for Group A customers are composed of two components: a “capacity charge” and an “energy charge,” as well as a surcharge for a lower power factor in certain circumstances.

The capacity charge, expressed in reais per MW, is based on the higher of: (i) contracted firm capacity; or (ii) power capacity actually used. The energy charge, expressed in reais per MWh, is based on the amount of electricity actually consumed. Tariffs charged to Group A customers are lower than those for Group B customers because Group A customers consume electricity at a higher voltage, and therefore avoid the costs associated with lowering the electricity voltage as is required for consumption by our Group B customers.

Group B customers receive electricity at less than 2.3 kV (220V and 127V). Tariffs for Group B customers consist solely of an energy consumption charge and are based on the classification of the customer.

Billing Procedures

The procedure we use for billing and payment for electricity supplied to our customers is determined by customer category. Meter readings and invoicing take place on a monthly basis for low voltage consumers, with the exception of rural consumers whose meters are read in intervals varying from one to three months, as authorized by relevant regulation. Bills are prepared from meter readings or on the basis of estimated usage. Low voltage customers are billed within five business days after the invoice date. In case of nonpayment, a notification of nonpayment accompanied by the next month’s invoice is sent to the customer and a period of 15 days is provided to satisfy the amount owed to us. If payment is not received within three business days after the 15-day period, the customer’s electricity supply is suspended. High voltage customers are billed on a monthly basis with payment required within five business days after the invoice date. In the event of non-payment, a notice is sent to the customer two business days after the due date, giving a deadline of 15 days to make payment. If payment is not made within three business days after the notice, the customer is subject to discontinuation of service.

As of December 31, 2015, 2014 and 2013, customers in default represented an average of 10.39%, 11.29% and 14.6%, respectively. These default rates have decreased over recent years and we do expect to see material changes in these default rates in the foreseeable future.

Purchase of Electricity for Distribution

We purchased 30,661 GWh of electricity for distribution in 2015, compared to 21,122 GWh in 2014 and 16,873 GWh in 2013. Our distribution companies purchase electricity in the public auction process from a pool of generation companies that provide bids setting out the maximum price at which they will supply electricity. After all bids are received, the average price of all bids is calculated and this is the price that we pay for the electricity. The purchase is made from all generation companies that provided bids.

Lending and Financing Activities

Loans Made by Us

Brazilian law allows us to only lend to our subsidiaries. Historically, Brazilian law allowed us to act as lender to our subsidiaries and to public energy utilities under our control. While certain of those subsidiaries are no longer in our group, the majority of our loans are to related parties. Prior to the privatization of the Brazilian electricity industry that began in 1996, this was a particularly widespread part of our operations because most companies in the industry were state-owned, allowing us to engage in lending activities to them. However, as the result of privatization, the number of companies to whom we may lend has diminished and lending is no longer a significant aspect of our business. The total amounts we recorded on our balance sheet: R$ 17.6 billion as of December 31, 2015, R$ 14.7 billion as of December 31, 2014 and R$ 15.2 billion as of December 31, 2013. Of this total amount, loans to Itaipu accounted for R$ 14.8 billion as of December 31, 2015, R$ 11.7 billion as of December 31, 2014 and R$ 11.9 billion as of December 31, 2013.

- 66 -

Sources of Funds

We obtain funding for our lending activities from loans from financial institutions and offerings in the international capital markets. As of December 31, 2015, our consolidated long-term debt was R$ 42,174 million, compared to R$ 34,608 million as of December 31, 2014 and R$ 30,507 million as of December 31, 2013, with the majority of our foreign currency debt (approximately 97% over the three-year period) denominated in U.S. dollars. Further details of our borrowings are set out in “ – Liquidity and Capital Resources – Cash Flows.”

In addition, we utilize borrowings from the RGR Fund, which we administer, to on-lend to our subsidiaries and other electricity companies. As of December 31, 2015, December 31, 2014 and December 31, 2013, we incurred interest at 5.0% in respect of borrowings from the RGR Fund and charge an average administrative fee of up to 2.0% on funds which we on-lend to subsidiaries and other entities.

Equity Participation

We act as a minority participant in private sector generation and transmission companies and joint ventures. We are also authorized to issue guarantees for those companies in which we participate as an equity investor. We are constantly considering investments in a number of such companies, focusing primarily on those in line with our strategy of building on our core businesses of generation and transmission (see “Item 7.B, Related Party Transactions”).

The current participations that we have are in private sector generation and transmission companies and joint ventures. Participation is determined primarily on merit and profitability criteria based on our managerial controls.

The table below shows an estimate of the total percentage of our participation in transmission lines as of December 31, 2015:

Special Purpose Company/Consortium	Object of investment	Eletrobras Participation
Belo Monte Transmissora de Energia S.A.	Estação Conversora CA/CC, ±800 kV, 3.850 MW, junto a SE 500 kV Estreito; e Linha de Transmissão em Corrente Contínua de ±800 kV Xingu - Estreito.	Eletronorte (24.5%) Furnas (24.5%)
Fronteira Oeste Transmissora de Energia S.A.	Santo Ângelo/Maçambará Pinhalzinho/Foz do Chapecó, circuito simples, C1 e C2 Seccionamento Alegrete 1 – Santa Maria 1 Pinhalzinho/Foz do Chapecó, circuito simples, C1 e C2 Seccionamento Alegrete 1 – Santa Maria 1	Eletrosul (51%)
Interligação Elétrica Garanhuns S.A.	LT Garanhuns/Angelim I,230 kV	Chesf (49%)
Lago Azul Transmissora S.A.	Barro Alto – Itapaci	Furnas (49.9%)
Linha Verde Transmissora de Energia S.A.	Porto Velho (RO) – Samuel (RO) – Ariquemes (RO) – Ji–Paraná (RO) – Pimenta Bueno (RO) – Vilhena (RO) – Jauru (MT)	Eletronorte (100%)
Mata de Santa Genebra Transmissora S.A.	Itatiba – Bateias; Araraquara II – Itatiba; Araraquara II – Fernão Dias	Furnas (49.9%)
Paraíso Transmissora de Energia S.A.	Paraíso 2-Chapadão; Campo Grande 2-Paraíso 2; Seccionamento LT Chapadão – Campo Grande 2 – C1 na SE Paraíso 2	Eletrosul (24.5%)
Paranaíba Transmissora de Energia S.A.	Barreiras II – Rio das Éguas; Rio das Éguas – Luziânia; Luziânia – Pirapora II	Furnas (24.5%)
TDG Transmissora Delmiro Gouveia S.A.	LT São Luiz II/ São Luiz III	Chesf (49%)
Transenergia Goiás S.A.	Serra da Mesa – Niquelândia; Niquelândia – Barro Alto	Furnas (99%)
Transnorte Energia S.A.	Eng. Lechuga (AM) – Equador (RR) e Equador (RR) – Boa Vista (RR), circuito duplo e SEs Equador (RR) Boa Vista (RR)	Eletronorte (49%)
Triângulo Mineiro Transmissora S.A.	Marimbondo II – Assis	Furnas (49%)
Vale do São Bartolomeu Transmissora de Energia S.A.	Luziânia – Brasília Leste; Samambaia – Brasília Sul; Brasília Sul – Brasília Geral	Furnas (39%)

- 67 -

The table below shows an estimate of the total percentage of our participation in transmission substations as of December 31, 2015:

Special Purpose Company/Consortium	Object of investment	Eletrobras Participation
Belo Monte Transmissora de Energia S.A.	Estação Conversora CA/CC,±800 kV, 4.000 MW, junto a SE 500 kV Xingu; Estação Conversora CA/CC, ±800 kV, 3.850 MW, junto a SE 500 kV Estreito	Furnas (24,5%)
Fronteira Oeste Transmissora de Energia S.A. (3)	Pinhalzinho, em 230/138 kV (ATF1); Pinhalzinho, em 230/138 kV (ATF 2 e ATF3); Ampliações SE Maçarambá, Foz do Chapecó e Santo Angelo; Ampliação da SE Santa Maria 3, 230/138 kV(4)	Eletrosul (51%)
Mata de Santa Genebra Transmissora S.A.	SE Santa Bárbara D’Oeste 440 kV, Compensador Estático (-300,+300) Mvar SE Itatiba 500 kV, Compensador Estático; (-300,+300) Mvar. SE 500/440 kV Fernão Dias 1.200 MVA – 1º Banco de Autotrafos SE 500/440 kV Fernão Dias 2.400 MVA 2º e 3º Bancos de Autotrafos	Furnas (49,9%)
Paraíso Transmissora de Energia S.A.	Campo Grande 2 EL 230 PAR2; Chapadão EL PAR2; Paraíso 2, 230/138 kV.	Eletrosul (24,5%)
Transmissora Sul Litorânea de Energia – TSLE	Ampliação SE Povo Novo 525/230 kV	Eletrosul (51%)
Triângulo Mineiro Transmissora S.A.	SE Marimbondo II	Furnas (49%)
Vale do São Bartolomeu Transmissora de Energia S.A.	SE Brasília Leste	Furnas (39%)

The table below shows an estimate of the total percentage of our participation in generation assets as of December 31, 2015:

Special Purpose Company/Consortium	Object of investment	Eletrobras Participation
Amapari Energia S.A.	Serra do Navio	Eletronorte (49%)
Baguari Geração de Energia S.A.	Baguari	Furnas (15%)
Baraúnas I Energética S.A.	UEE Baraúnas I	Chesf (49%)
Brasventos Eolo Geradora de Energia S.A.	Parque Eólico Rei dos Ventos 1	Eletronorte (24,5%) Furnas (24,5%)
Brasventos Miassaba 3 Geradora de Energia S.A	Parque Eólico Miassaba 3	Eletronorte (24,5%) Furnas (24,5%)
Chuí IX S.A.	Parque eólico Chuí 09	Eletrosul (99,99%)
Cia. Hidrelétrica Teles Pires	Teles Pires (8)	Furnas (24,5%) Eletrosul (24,5%)
EAPSA - Energia Águas Da Pedra S.A.	Dardanelos	Eletronorte (24,5%) Chesf (24,5%)
Enerpeixe S.A.	Peixe Angical	Furnas (40%)
Eólica –Chuí Holding S.A.	Parques eólicos Chuí I a V, e Minuano I e II	Eletrosul (49%)
Eólica Livramento S.A. (9)	Parques eólicos de Cerro Chato IV, V, VI, Ibirapuitã e Trindade	Eletrosul (59%)
Eólica Serra das Vacas I S.A. (5)	Serra das Vacas I	Chesf (49%)
Eólica Serra das Vacas II S.A. (5)	Serra das Vacas II	Chesf (49%)
Eólica Serra das Vacas III S.A. (5)	Serra das Vacas III	Chesf (49%)
Eólica Serra das Vacas IV S.A. (5)	Serra das Vacas IV	Chesf (49%)
ESBR Participações S.A.	Jirau (2)	Chesf (20%) Eletrosul (20%)
Foz de Chapecó Energia S.A.	Foz de Chapecó	Furnas (40%)
Hermenegildo I S.A.	Parques eólicos Verace 24 a 27	Eletrosul (99,99%)
Hermenegildo II S.A.	Parques eólicos Verace 28 a 31	Eletrosul (99,99%)
Hermenegildo III S.A. (10)	Parques eólicos Verace 34 a 36	Eletrosul (99,99%)
Madeira Energia S.A.	Santo Antônio (6)	Furnas (39%)
Morro Branco I Energética S.A.	UEE Morro Branco I	Chesf (49%)
Mussambê Energética S.A.	UEE Mussambê	Chesf (49%)
Pedra Branca S.A.	Pedra Branca	Chesf (49%)
Rei dos Ventos 3 Geradora de Energia S.A.	Parque Eólico Rei dos Ventos 3	Eletronorte (24,5%) Furnas (24,5%)

- 68 -

Special Purpose Company/Consortium	Object of investment	Eletrobras Participation
Retiro Baixo Energética S.A.	Retiro Baixo	Furnas (49%)
Santa Vitória do Palmar S.A.	Parques eólicos Geribatu I a X	Eletrosul (49%)
São Pedro do Lago S.A.	São Pedro do Lago	Chesf (49%)
Serra do Facão Energia S.A.	Serra do Facão	Furnas (49,47%)
Sete Gameleiras S.A.	Sete Gameleiras	Chesf (49%)
Tijoá Participações e Investimentos S.A.	Três Irmãos (7)	Furnas (49,9%)
U.E.E. Caiçara I S.A. (4)	UEE Caiçara I	Chesf (49%)
U.E.E. Caiçara II S.A. (4)	UEE Caiçara II	Chesf (49%)
U.E.E. Junco I S.A. (4)	UEE Junco I	Chesf (49%)
U.E.E. Junco II S.A (4)	UEE Junco II	Chesf (49%)
V. de Santa Joana IX Energia Renováveis S.A. (3)	Santa Joana IX	Chesf (49%)
V. de Santa Joana X Energia Renováveis S.A. (3)	Santa Joana X	Chesf (49%)
V. de Santa Joana XI Energia Renováveis S.A. (3)	Santa Joana XI	Chesf (49%)
V. de Santa Joana XII Energia Renováveis S.A. (3)	Santa Joana XII	Chesf (49%)
V. de Santa Joana XIII Energia Renováveis S.A. (3)	Santa Joana XIII	Chesf (49%)
V. de Santa Joana XV Energia Renováveis S.A. (3)	Santa Joana XV	Chesf (49%)
V. de Santa Joana XVI Energia Renováveis S.A. (3)	Santa Joana XVI	Chesf (49%)

Brazilian Government Programs

In addition to the Proinfa program created by the Brazilian Government in 2002 to create certain incentives for the development of alternative sources of energy (discussed more fully in “The Brazilian Power Industry – Proinfa”), we also participate in four additional Brazilian Government programs:

• the Programa Reluz (Relighting Program), a program introduced in order to bring basic lighting to the main public areas of certain municipalities in Brazil;

• the Programa Procel (Conservation Program), a program that aims to promote energy conservation and efficiency;

• Luz Para Todos (Light for All), a program that aims to bring electricity to an additional 12 million people in Brazil; and

• Programa de Desenvolvimento Tecnológico e Industrial (Program of Technological and Industrial Development), a program to coordinate research and development activities in the Brazilian electricity sector and promote the development and manufacture of equipment required to ensure the development of the sector.

Any funds used by us in respect of these programs come from the Brazilian Government itself, in the form of funds allocated for the sector, and accordingly we do not use our own funds for these programs.

We also participate in other initiatives using our own funds, one of which is the Projeto Ribeirinhas, or Riverbank Communities Project. Through this initiative, we aim to evaluate the applicability and sustainability of technologies based on renewable resources of energy in certain small communities living in the Amazon region.

Research and Development

See “Item 5.C, Research and Development, Patents and Licenses”

International Activities

As part of our strategy, we still continue to explore opportunities in international electricity markets and selectively identify profitable opportunities in those markets for the future, mainly related to the integration of the electrical power systems in the Americas. According to our internationalization plan, we have established representative offices in Lima, Peru; Panama City, Panama and Montevideo, Uruguay in order to comply with local rules, which provide that concessions may only be granted to companies that maintain a local representative office. Those offices also provide a connection between us and partners in Latin America. We are actively seeking to invest in renewable generation projects in other Latin American countries and we have already begun to commercialize power with some of these countries. We also hold equity interests in three SPEs, in Uruguay, Peru

- 69 -

and Nicaragua, for wind and hydro generation projects. We achieved an important milestone in 2014 as we started our first energy generation project abroad, a wind farm in Uruguay. Furthermore, we are completing the construction in Brazil of an interconnection line between Brazil and Uruguay, which is scheduled to start commercial operations in 2015. As part of the expansion strategy, we may also identify and pursue selected growth opportunities, including renewable generation and transmission lines, outside of South America, notably in Africa.

Uruguay

We hold an interest in Rouar S.A., a joint venture with the Administración Nacional de Usinas y Trasmisiones Eléctricas to develop the Artilleros wind farm. The Artilleros wind farm is a 65 MW power plant located in the department of Colonia in Uruguay. We also developed a new interconnection system between the Presidente Médici station in Brazil and the San Carlos station, close to Punta del Leste in Uruguay. This new interconnection supports 500MW and came into full operation in 2016.

Northern Arc Project

Eletrobras, the Inter-American Development Bank and power companies operating in Suriname, Guyana, and France are engaged in valuation studies for the Northern Arc (Arco Norte) project. The purpose of this project is to develop a 1,800 km long transmission system to establish a power connection between the Brazilian state of Roraima and Amapá which will pass through Guyana, Suriname and the French Guiana. The feasibility studies are financed by the Inter-American Development Bank, the first phase of which, the basic study, has been completed. We are currently involved in the pre-feasibility studies and expect to complete them by the end of 2016.

Nicaragua

On July, 2016, Centrales Hidrelectricas de Centroamerica (hereinafter “CHC”), in which Eletrobras holds 50% of its share capital, sold all the shares of its wholly owned subsidiary Centrales Hidrelectricas de Nicaragua (hereinafter “CHN”), by the total amount of US$ 44.2 million (“Price”). CHN holds the concession of the hydroelectric project Tumarín, located in Nicaragua, with installed capacity of 253 MW (“project”). The sale was made to the Empresa Nicaraguense de Electricidad - ENEL, a Nicaraguan state-owned energy company, and to the Distribuidora de Electricidad del Norte S.A. - Disnorte, which will be the buyer of the electric energy to be generated.

Environmental

General

Environmental issues can significantly impact our operations. For example, large hydroelectric plants can cause the flooding of large areas of land and the relocation of large numbers of people. The Brazilian Constitution gives both the Brazilian Government and state and local governments power to enact laws designed to protect the environment and to issue regulations under such laws. While the Brazilian Government has the power to promulgate general environmental regulations, state and local governments have the power to enact more stringent environmental regulations. Accordingly, most of the environmental regulations in Brazil are state and local rather than federal.

Any failure to comply with environmental laws and regulations may result in criminal liability, irrespective of the strict liability to perform environmental remediation and to indemnify third parties for environmental damages. These failures may also subject us to administrative penalties such as fines, suspension of public agency subsidies or injunctions requiring us to discontinue, temporarily or permanently, the prohibited activities.

In order to build a hydroelectric plant, Brazilian electricity companies must comply with a number of environmental safeguards. For projects for which the environment impact is considered significant, such as generation projects with an output above 10 MW, as well as transmission lines above 230 kV, together with certain other environmentally sensitive projects, first, a comprehensive environmental impact study (estudo de impacto ambiental, or EIA) must be prepared by external experts who make recommendations as to how to minimize the impact of the plant on the environment. The study, together with a specific environmental report (relatório de impacto ambiental, or RIMA) on the project prepared by the company, is then submitted to federal, state or local

- 70 -

governmental authorities, depending on the projected impact, for analysis and approval. Such study and report are used for the environmental licensing of the project, which is generally carried out by means of a three stage licensing process, which comprises (i) a license to attest the feasibility of the project (Licença Prévia or LP), (ii) a license to begin work (Licença de Instalação or LI), and (iii) a license to operate the project (Licença de Operação or LO).

In addition, the company is required by law to devote a percentage of the total cost of any investment in new projects with a significant environmental impact to environmental preservation. According to federal law and a recent decision by the Brazilian Supreme Court, such percentage shall range from zero to 0.5%. However, in the State of Rio de Janeiro, the State determined that the compensation percentage shall range from 0.5% to 1.1%. As federal and state law may provide for different percentages, this amount may be judicially challenged or changed by the competent authority by publication of a further law. Since the early 1980’s, the Brazilian electricity sector has endeavored to improve its treatment of the social and environmental aspects of power project planning, implementation and operation. In general, our generation subsidiaries are in compliance with applicable environmental regulations in Brazil, and the environmental policies and guidelines of the electricity sector. Our generation and transmission facilities benefit from certain exemptions to licensing requirements because their operations commenced before the applicable environmental legislation. Nonetheless, some environmental authorities have issued notices of infringement alleging the absence of environmental licenses. See “Item 8.A, Consolidated Financial Statements and Other Information – Litigation – Environmental Proceedings.”

As of December 31, 2014, our subsidiary Eletronuclear operated two nuclear power plants in the State of Rio de Janeiro, Angra I and Angra II and a third nuclear power plant, Angra III, is under construction. Because Eletronuclear initiated its activities before the enactment of an environmental legislation, Angra I was licensed by CNEN under the nuclear and environmental regulations in effect at that time. Currently, Brazilian law requires the issuance of: (i) an authorization for nuclear enterprises by CNEN; and (ii) an environmental license issued by the Instituto Brasileiro do Meio Ambiente e Recursos Naturais Renováveis (or IBAMA, the Brazilian Federal environmental authority).

Regarding the environmental licenses, a study group formed by the Federal Public Attorney’s Office, CNEN, IBAMA, the Fundação Estadual de Engenharia do Meio Ambiente (or FEEMA, which was one of the environmental authorities in the State of Rio de Janeiro, currently unified in one single entity, the Instituto Estadual do Ambiente or INEA), Eletronuclear and Eletrobras prepared a Termo de Ajustamento de Conduta (a Conduct Adjustment Agreement or TAC) according to which the guidelines for the environmental licensing update procedure should be established. Angra II has obtained all the environmental licenses necessary for its operations, but the Federal Public Attorney’s Office challenged its renewal, which it conditioned upon the compliance with a TAC and according to which Eletronuclear should implement a program in order to improve emergency plans, environmental monitoring programs and effluents treatment systems. Until these obligations are accomplished, IBAMA and CNEN should abstain from issuing any definitive licenses or authorizations for the operation of Angra II. An assessment comprising the accomplishments of the TAC was issued by IBAMA to the Public Attorney in June 2006. After evaluation of the status of completion of these conditions, IBAMA issued a report concluding that all technical conditions compiled in the TAC were satisfied. In March 2014, IBAMA issued an Unified LO for the nuclear installations in operation at the CNAAA site – Angra I, Angra II and the Radwaste Management Centre (including initial storage facilities), which is valid until March 2024. Eletronuclear also holds a LI in connection with the construction of Angra III, in effect until March 2020, and other applicable environmental licenses for other buildings and facilities within the site of the nuclear power plants.

With respect to CNEN’s license, both nuclear power plants currently have their own Authorization for Permanent Operation (Autorização de Operação Permanente – AOP). The AOP of Angra I will expire in August 2024, and the AOP of Angra II will expire in June 2041.

Eletronuclear is strictly liable for nuclear accidents as an operator of nuclear plants in Brazil. See “Item 3.D, Risk Factors – Risks Relating to Our Company – We may be liable for damages, subject to further regulation and have difficulty obtaining financing if there is a nuclear accident involving our subsidiary Eletronuclear.”

- 71 -

Energy Conservation

Over the past 20 years, the Brazilian Government has implemented a number of actions directed to energy conservation on the electricity sector. The Brazilian Government normally finances these actions and we administer them. The most important project in this area is the Procel.

The Programa de Conservação de Energia Elétrica – Procel (the national electric conservation program) was created in 1985 to improve energy efficiency and rationalization of the use of natural resources throughout Brazil. MME coordinates the program and we are responsible for its execution. The main objective of Procel is to encourage cooperation among various sectors of Brazilian society to improve energy conservation both on the production and consumer sides.

Alternative Electricity Sources

In 2002 the Brazilian Government created the Programa de Incentivo às Fontes Alternativas de Energia Elétrica – Proinfa (the program for the development of alternative electricity sources), with the objective of diversifying the Brazilian energy matrix by searching for regional solutions with the use of renewable energy sources.

The Brazilian Power Industry

General

According to Regulation No. 555, dated December 28, 2015, MME approved a ten-year expansion plan (Plano Decenal de Expansão de Energia Elétrica or PDE 2023), which provides guidance to the Brazilian government and to all agents in the Brazilian energy industry in order to ensure that there is a sustainable supply of energy in Brazil, including electricity, taking into consideration environmental needs, the Brazilian economy and a business’ technical capabilities.

The studies carried out in the PDE include a plan for the next ten years and are subject to annual reviews which take into account, among other aspects, changes in the forecast for the growth of electricity consumption and the re-evaluations of the economical and operational feasibility of the generation projects, as well as the estimates regarding the expansion of transmission lines.

According to ANEEL, in December 2015, when taking into account the SIN generating units, the power generators installed in the isolated systems and in the generators owned by individuals, Brazil had a total installed capacity of 140.8 MW.

Currently, the SIN is divided into four electric sub-systems: South-East/Mid-West, South, North-East and North.

In addition to the SIN, there are also the isolated systems, i.e., those systems that do not make part of the SIN, are generally located in the Northern and North-Eastern regions of Brazil, have as sole source of energy the electricity generated by coal-fired and oil-fuelled thermal plants which are extremely pollutants and have a generation cost three to four times higher than, for instance, a hydro-electric power station. The CCC account was introduced by article 13, III of Law No. 5899, of July 5, 1973, as amended, with the purpose of generating financial reserves payable to distribution companies and to some generation companies (all of which should make annual contributions to the CCC Account) in order to cover some of the costs of the operation of thermoelectric plants in the event of adverse hydrological conditions, and also of subsidizing the electricity generated by the “isolated systems” in order to allow consumers of the isolated systems to bear charges for electricity equivalent to the charges borne by consumers served by hydraulic generation (however Law No. 12,783 terminated the apportionment of the benefit of reduction of the costs for fuel consumption within electric energy generation). There is currently a significant discrepancy between charges paid by consumers in the Northern and Northeastern regions when compared to what is charged from the Southern/South-Eastern Region consumers. Therefore, interconnecting the isolated systems to the SIN would enable consumers from these regions to have access to hydroelectric energy sources, which results in reduced production costs and a convergence of prices in these regions to other regions of the country.

- 72 -

Accordingly, the PDE further intends to integrate the isolated systems to the SIN. Such integration would be carried out through the construction of the transmission lines of Jauru/Vilhena (230kV), Tucuruí/Manaus (Cariri) (500kV), Jurapari/Macapá (230kV), Manaus/Boa Vista (500kV) and Rio Branco/Feijó/Cruzeiro do Sul (230kV) within the shortest term possible, given that the preliminary analysis for implementing the integration project has already been concluded.

In addition to the integration of the isolated systems, the PDE also provides for the expansion of electricity generation through the improvement of the generation capacity, defined by the PDE as the execution of a set of works aimed at enhancing the capacity and efficiency while modernizing the already existing power plants, which should not represent a lot in terms of ensured power but would contribute to meet the increase in the highest level expected of electricity demand.

According to ANEEL, the total installed electricity generation capacity in Brazil in 2015 was 140,858,000 KW with 3,662 operating ventures. Currently, there are 220 ventures under construction and another 623 with permits granted. An additional generation capacity of of 39,009,532 KW is expected in the coming years.

Pursuant to the EPE 10 Year Plan, Brazil’s total installed power generation capacity is projected to increase to 206.4 GW by 2024, of which 117 GW is projected to be hydroelectric and 79 GW to be thermoelectric and from other sources.

We currently control approximately 32% of the installed power generating capacity within Brazil and are responsible for approximately 47.1% of the installed transmission capacity above 230 kV. In addition, some Brazilian states control entities involved in the generation, transmission and distribution of electricity. The remainder of the market is held by several companies including Cemig, Copel, Tractebel, CPFL, Duke and Brasil Energia. Certain of these companies have entered into joint venture arrangements in the past.

In net revenue terms, we believe we are the largest generation and transmission company in Brazil. We mainly compete for generation and transmission businesses through a competitive auction process.

Historical Background

The Brazilian Constitution provides that the development, use and sale of energy may be undertaken directly by the Brazilian Government or indirectly through the granting of concessions, permissions or authorizations. Historically, the Brazilian power industry has been dominated by generation, transmission and distribution concessionaires controlled by the Brazilian Government. This changed during Fernando Henrique Cardoso’s administration (1995-2002), during which many state controlled companies were privatized in an effort to increase efficiency and competition. In recent years, the Brazilian Government has taken a number of measures to remodel the power industry. In general, these measures were aimed at increasing the role of private investment and eliminating foreign investment restrictions, thus increasing overall competition in the power industry.

In particular, the Brazilian Government has taken the following measures:

• The Brazilian Constitution was amended in 1995 by Constitutional Amendment No. 6 to allow foreign companies to invest in Brazilian companies that hold power generation concessions. Prior to this amendment, all generation concessions were held either by a Brazilian individual or an entity controlled by Brazilian individuals or by the Brazilian Government;

• The Brazilian Government enacted Law No. 8,987 on February 13, 1995 as amended by Law No. 11,196 of November 21, 2005 and Law No. 11,445 of January 5, 2007 (or the Concessions Law) and Law No. 9,074 on July 7, 1995, as amended (or the Power Concessions Law), that together: (i) required that all concessions for the provision of energy related services be granted through public bidding processes; (ii) gradually allowed certain electricity consumers with significant demand, designated “free consumers,” to purchase electricity directly from suppliers holding a concession, permission or authorization; (iii) provided for the creation of generation entities (or Independent Power Producers) which, by means of a concession, permission or authorization, may generate and sell, for their own account and at their own risk, all or part of their electricity to free consumers, distribution concessionaires and trading agents, among others;

- 73 -

(iv) granted free consumers and electricity suppliers open access to all distribution and transmission systems; and (v) eliminated the need for a concession to construct and operate power projects with capacity from 1 MW to 30 MW, including PCHs, although an authorization or permission from ANEEL or MME is required, as the case may be;

• Beginning in 1995, a portion of the controlling interests held by us and various states in certain generation and distribution companies were sold to private investors. At the same time, certain state governments also sold their stakes in major distribution companies;

• In 1998, the Brazilian Government enacted Law No. 9,648 (or the Power Industry Law) to overhaul the basic structure of the electricity industry. The Power Industry Law provided for the following:

• the establishment of a self-regulated body responsible for coordinating the purchase and sale of electric energy available in the Interconnected System (Mercado Atacadista de Energia Elétrica – MAE), or the Wholesale Energy Market – MAE, an entity which replaced the prior system of regulated generation prices and supply contracts. The Wholesale Energy Market – MAE was later replaced by the CCEE;

• a requirement that distribution and generation companies enter into initial energy supply agreements (or the Initial Supply Contracts) generally “take or pay” commitments, at prices and volumes approved by ANEEL. The main purpose of the Initial Supply Contracts was to ensure distribution companies access to a stable electricity supply at prices that guaranteed a fixed rate of return for the electricity generation companies during the transition period leading to the establishment of a free and competitive electricity market;

• the creation of the National Electricity System Operator (Operador Nacional do Sistema Elétrico), or ONS, a non-profit, private entity responsible for the operational management of the generation and transmission activities of the Interconnected Power System; and

• the establishment of public bidding processes for concessions for the construction and operation of power plants and transmission facilities.

• In 2001, Brazil faced a serious energy crisis that lasted until the end of February 2002. As a result, the Brazilian Government implemented measures that included:

• a program for the rationing of electricity consumption in the most adversely affected regions, namely the southeast, central-west and northeast regions of Brazil; and

• the creation of the CGE, which passed a series of emergency measures that provided for reduced electricity consumption targets for residential, commercial and industrial consumers in the affected regions by introducing special tariff regimes that encouraged the reduction of electricity consumption.

• In March 2002, the CGE suspended the emergency measures and electricity rationing as a result of large increases in supply (due to a significant rise in reservoir levels) and a moderate reduction in demand, and accordingly, the Brazilian Government enacted new measures in April 2002 that, among other things, stipulated an extraordinary tariff readjustment to compensate financial losses incurred by the electricity suppliers as a result of the mandatory electricity rationing.

• On March 15, 2004, the Brazilian Government enacted the Law No. 10,848 and on July 30, 2004, the Decree No. 5.163, or the Electricity Regulatory Law, in an effort to further restructure the power industry with the ultimate goal of providing consumers with secure electricity supplies combined with low tariffs, which law was regulated by a number of decrees enacted by the Brazilian Government in July and August of 2004, and is still subject to further regulation to be issued in the future. See “– Challenges to the Constitutionality of the Electricity Regulatory Law.”

- 74 -

• At the end of 2012, the Brazilian Government enacted two Provisional Measures (Medidas Provisórias or MP) that have considerably changed the Brazilian electric energy sector overview, namely MP 577, dated as of August 29, 2012 and MP 579, dated as of September 11, 2012. Both of them were approved and converted into Law No. 12,767, dated as of December 27, 2012 and Law No. 12,783, dated as of January 11, 2013, respectively. In general, the MPs provided the regulation in connection with the intervention of the granting authority in the concessions as well as the renewal of the electric energy generation, distribution and transmission concessions, respectively.

• In 2016, two Provisional Measures (Medidas Provisórias or MP) were enacted by the Brazilian Government, namely MP 706, dated as of December 28, 2015 and MP 735, dated as of June 22, 2016. Both of them were approved, but only MP 706 was converted into Law No. 13,299, dated as of June 21, 2016. Especially for the distribution sector, such acts are of major relevance as they give special treatment to the distribution concessions located in the regions not integrated to the National Interconnected Grid – SIN yet. Such measures aimed to create a new regulatory framework capable to provide more sustainable financial conditions to such concessions to meet their outstanding duties with their fuel suppliers and, therefore, create a more favorable environment to potential investors in the midst on the National Privatization Program – PND. Nonetheless, as such acts provide for some kind of special treatment to part of the distribution companies and also authorize the utilization of the CDE funds to cover the fuel debts of the concessionaires, we cannot guarantee that they would not have their legality/constitutionality challenged by other agents of the industry who might be adversely impacted, including the consumers and other concessionaires which will not benefit from the legal measures.

Concessions

The companies or consortia that wish to build or operate facilities for generation, transmission or distribution of electricity in Brazil must apply to MME or to ANEEL, as representatives of the Brazilian Government, for a concession, permission or authorization, as the case may be. Concessions grant rights to generate, transmit or distribute electricity in the relevant concession area for a specified period, though a concession may be revoked at any time at the discretion of MME, following consultation with ANEEL. This period is usually 35 years for new generation concessions, and 30 years for new transmission or distribution concessions.

The Concession Law establishes, among other things, the conditions that the concessionaire must comply with when providing electricity services, the rights of the consumers, and the obligations of the concessionaire and the granting authority. Furthermore, the concessionaire must comply with regulations governing the electricity sector. The main provisions of the Concession Law are as follows:

• Adequate service. The concessionaire must render adequate service equally with respect to regularity, continuity, efficiency, safety, and accessibility.

• Use of land. The concessionaire may use public land or request the granting authority to expropriate necessary private land for the benefit of the concessionaire. In that case, the concessionaire must compensate the private landowners affected.

• Strict liability. The concessionaire is strictly liable for all damages arising from the provision of its services.

• Changes in controlling interest. The granting authority must approve any direct or indirect change in the concessionaire’s controlling interest.

• Intervention by the granting authority. The granting authority may intervene in the concession, by means of an administrative proceeding, to ensure the adequate performance of services, as well as full compliance with applicable contractual and regulatory provisions. Such intervention procedure was regulated by MP No. 577/2012, duly converted into Law No. 12,767/2012.

- 75 -

• Termination of the concession. The termination of the concession agreement may be accelerated by means of expropriation and/or forfeiture. Expropriation is the early termination of a concession for reasons related to the public interest that must be expressly declared by law. Forfeiture must be declared by the granting authority after a final administrative ruling that the concessionaire, among other things: (i) has failed to render adequate service or to comply with applicable law or regulation; (ii) no longer has the technical, financial or economic capacity to provide adequate service; or (iii) has not complied with penalties assessed by the granting authority. The concessionaire may contest any expropriation or forfeiture in the courts. The concessionaire is entitled to indemnification for its investments in expropriated assets that have not been fully amortized or depreciated, after deduction of any amounts for fines and damages due by the concessionaire.

• Expiration. When the concession expires, all assets, rights and privileges that are materially related to the rendering of the electricity services revert to the Brazilian Government. Following the expiration, the concessionaire is entitled to indemnification for its investments in assets that have not been fully amortized or depreciated at the time of expiration.

Penalties

Law No. 9,427 of December 26, 1996, as amended, enacted by the Brazilian Government and supplemented by ANEEL’s regulation govern the imposition of sanctions against the agents of the electricity sector and classify the appropriate penalties based on the nature and importance of the breach (including warnings, fines, temporary suspension from the right to participate in bidding procedures for new concessions, licenses or authorizations and forfeiture). For each breach, the fines can be up to 2.0% of the revenue of the concessionaire in the 12-month period preceding any assessment notice or, for independent producers or self producers, the estimated amount of energy produced in the same period. Some infractions that may result in fines relate to the failure of the agent to request ANEEL’s approval, including the following (pursuant to ANEEL Resolution No. 63/2004, as amended from time to time):

• entering into certain related party transactions;

• sale or assignment of the assets related to services rendered as well as the imposition of any encumbrance (including any security, bond, guarantee, pledge and mortgage) on them or any other assets related to the concession or the revenues of the electricity services;

• changes in direct or indirect controlling interest of the holder of the authorization or concession; and

• non-compliance with the schedule for the beginning of the commercial operation of the power plant, as previously approved by ANEEL through the relevant contract.

With respect to contracts executed between related parties that are submitted for ANEEL’s approval, ANEEL may seek to impose restrictions on the terms and conditions of these contracts and, in extreme circumstances, determine that the contract be terminated early.

Furthermore, ANEEL has the institutional role of controlling the transactions of the energy industry, requiring that such transactions (change of control of the agents of the electric energy sector) be submitted to its prior approval before its implementation.

Renewal of the Concessions – Law No. 12,783

In 2012, the Brazilian Government enacted MP No. 579/2012, which was converted into Law No. 12,783. Among other provisions, the main purpose of this normative act is to regulate the renewal conditions for electric energy generation, distribution and transmission concessions.

Law No. 12,783 (i) establishes the conditions for the renewal of electric energy generation, distribution and transmission concessions; (ii) assures a tariff reduction; and (iii) creates a quotas system, which isby the allocation of portions of the power generated by the hydroelectric plants to each distribution concessionaire operating in the SIN.

- 76 -

The concessions for the Sobradinho and Itumbiara hydroelectric plants are an exception to Law No. 12,783 and were renewed pursuant to Law No. 13,182. Accordingly, these concessions are not subject to the quote allocation system through February 9, 2022, when these concessions will gradually transition to the quota-allocation system. For further information see “Risk Factors—The renewal of our concessions pursuant to Law No. 12,783/2013 or Law No. 13,182/2015, adversely affected our financial condition and results of operations” and “Risk Factors—Any hydroelectric generation concessions renewed pursuant to Law No. 12,783 and Law No. 13,182/15 are subject to a quota allocation regime”.

(i) Conditions for the renewal of electric energy generation, distribution and transmission concessions

The granting authority may extend the maturing concessions of electric energy generation, distribution and transmission companies for a maximum period of 30 additional years, as long as the current concessionaires accept new specific conditions legally imposed in order to assure the continuity of the electric energy supply and the tariff-reduction.

The main terms and conditions for the renewal of concession imposed by Law No. 12,783 are:

• Hydroelectric generation: The renewal is subject to (i) a tariff determined by ANEEL, (ii) the commercialization in accordance with the quota allocation system and (iii) compliance with quality standards established by ANEEL;

• Self-Producer (Autoprodutor): For the renewal of the concession the Self-Producer will be deemed to provide additional payment for the use of the public assets which will be used by the Federal Government to reduce the energy tariff charged to consumers;

• Thermal Generation: The renewal must be requested by the concessionaire at least twenty four (24) months prior to expiration of the concession. If requested, the renewal will be granted for a maximum period of twenty (20) years;

• Power Transmission: The renewal of transmission concessions is subject to the reduction of the annual permitted revenue (Receita Anual Permitida or RAP, which is the annual value received by the concessionaire for rendering public transmission services) calculated by ANEEL as well compliance with quality standards established by ANEEL.

• Power Distribution: The renewal is subject to specific conditions set forth in Decree No. 8,461 that regulates the criteria for the renewal of distribution concessions pursuant to Law No. 12,783. The renewal of distribution concessions pursuant to Decree No. 8,461 requires that concession holders meet certain criteria for: (i) the quality of the distribution services provided, and (ii) the compliance with certain financial ratios. The concessions that are not renewed in accordance with the terms and conditions established by Law No. 12,783 will revert to ANEEL at the maturity of the existing concession. Any concessions reverted to ANEEL will be subject to a new bidding procedure conducted by ANEEL pursuant to Law No. 8,666/1993. As a result of the bidding procedure, the generation, transmission or distribution assets will be granted to a concessionaire for a maximum period of 30 years. The concession holder will remain responsible for rendering public services, under the terms and conditions set forth in Law No. 12,783, until the new concession holder takes over the relevant distribution assets. In December 2015, CELG-D renewed its distribution concession for a further 30 years. On July 22, 2016, our shareholders decided not to renew some of our distribution concessions in the Brazilian North and Northeast regions, namely those concessions held by: Companhia Energética do Piauí – CEPISA; Companhia Energética de Alagoas – CEAL; Companhia de Eletricidade do Acre – ELETROACRE; Centrais Elétricas de Rondônia S.A – CERON; Boa Vista Energia S.A; e Amazonas Distribuidora de Energia S.A. As a result of our decision to not renew such concessions, they shall be rebidded in the near future. According to the new rules established by the Provisional

- 77 -

Measure n. 735, for the bid of the concessions under its direct or indirect control, the Federal Government is also authorized to transfer the control of the companies. In addition to that, for these specific concessions, the Granting Authority is also authorized, as its own discretion and within the first 5 (five) years of the concession agreement, to defer the obligations undertaken by the new services provider upon the execution of an amendment to the agreement.

If a concession is renewed, the concessionaire will be entitled to an indemnification corresponding to the amount of investment made by the concessionaire for non-amortized reversible assets. These assets will be valued according to the methodology provided by ANEEL called the new replacement value (valor novo de reposição). Pursuant to this methodology, the value of an asset is calculated as if it were being acquired on the sate of the calculation of the new replacement value. In general terms, the accumulated depreciation and amortization of an asset are considered as of the start of operations of the through December 31, 2012.

The MME is responsible for determining the value of the non-amortized investments within these energy concessions to be renewed. As of December 31, 2015, we have received the full amount for the first tranche of indemnification payments made pursuant to Law No. 12,783. This amounted to R$ 14.4 billion reais, using values of December 2012.

The tables below show amounts requested to ANEEL for the second tranche of indemnification payments made pursuant to Law No. 12,783, which totaled R$ 26.4 billion.

Indemnification payments claimed for generation assets in accordance with Normative Resolution Aneel 596/2013:

	Amount accounted		Amount requested		Amount approved by ANEEL
	(millions of reais)
Eletronorte		—		—		—
Chesf		697		4,802		—
Furnas		996		1,312		—
Eletrosul		—		—		—
Total		1,693		6,114		—

Indemnification payments claimed for transmission assets, related to the Electricity Transmission Assets (RBSE), existent on May 31, 2000, and other Transmission Facilities—RPC, not depreciated and not amortized, as per the second paragraph of Article 15 of Law No. 12,783/2013:

	Amount accounted		Amount requested		Amount approved by ANEEL
	(millions of reais)
Eletronorte		1,733		2,926		—
Chesf		1,589		5,627		5,092
Furnas		4,530		10,699		9,000
Eletrosul		514		1,061		1,007
Total		8,366		20,313		15,099

On April 20, 2016, the MME published Ordinance No. 120, which regulates the conditions for receiving the credits related to the Electricity Transmission Assets (RBSE), existent on May 31, 2000, and other Transmission Facilities - RPC, not depreciated and not amortized, as per the second paragraph of Article 15 of Law No. 12,783/2013. According to MME Ordinance No. 120/2016, the remuneration of these assets will be as follows:

i. By the cost of capital corresponding to the assets, consisting of remuneration and depreciation, increased by the due tax as of the 2017 tariff process. The remuneration will be the result of the Weighted Average Capital Cost and depreciation, which will be paid according to the life useful for each asset incorporated into the Regulatory Remuneration Basis;

- 78 -

ii. The capital cost not incorporated, from the extension of the concessions to the tariff process, will be adjusted for inflation and remunerated by the capital cost;

iii. As of the 2017 tariff process, the cost of capital will be remunerated by the Weighted Average Capital Cost for a period of eight years.

In this way, on June 30, 2016, the Company made its estimate of the adjusted values of said credits, considering the conditions of the MME Ordinance No. 120/2016 and made the accounting register of such estimates in the second quarter of 2016. In the case of Eletronorte, which still did not have the pleaded values approved by Aneel until the end of the works to close the financial statements for the second quarter of 2016, it was considered as the management’s best estimate under the preliminary inspection report issued by ANEEL.

See the explanatory notes number 48 of Subsequent Events of the consolidated Financial Statements of 2014.

We are engaged in discussions with ANEEL to discuss on what terms these payments will be made. However, as of the date of this annual report, these discussions have not been conclusive.

(ii) Tariff-reduction

According to Law No. 12,783, the tariff reduction will be the result of: (i) the reduction of sector charges, such as CCC, CDE and RGR; (ii) the new calculation of tariffs and RAPs of the renewed concessions as mentioned above; and (iii) investments provided by Federal Government.

(iii) Quotas Allocation System

Law No. 12,783 also creates a mechanism for the allocation of the power generated by the hydroelectric plants connected to the SIN, whose concessions were renewed under this new regulatory framework, to the Regulated Market. The installed generation capacity of such plants is divided in equal quotas that are allocated to distribution companies, pursuant to regulations enacted by ANEEL. The purpose of the quotas allocation system is to increase the amount of energy available to the distribution concessionaires and reduce the tariff charged to the final consumer. The quotas and the portion of energy allocated to the distribution concessionaires will be reviewed from time to time by ANEEL.

Administrative Intervention in Concessions

In August 2012 the Brazilian Government enacted Law No. 12,767/2012 with the purpose to regulate ANEEL’s intervention in the concessionaires to ensure the quality of the services provided by concessionaires and the performance of legal, regulatory and contract obligations.

In addition, Law No. 12,767/2012 regulates the termination of the concession in case of extinguishment or bankruptcy of the concessionaire or forfeiture of the concession. Furthermore, this law sets forth an administrative proceeding which is required for the termination of the concession.

As to corporate reorganization procedures (recuperação judicial ou extrajudicial) involving energy concessionaires, Law No. 12,767/2012 changed the regulatory framework as it forbids energy concessionaires to initiate judicial or extrajudicial procedures. See “Item 3.D, Risk Factors – Risks Relating to the Brazilian Power Industry” for more details.

Power Contracting Deficit of Distribution Companies

At the beginning of 2014, due to adverse hydrological conditions, electricity distribution companies faced a contractual deficit in connection with their consumers’ demand of nearly 3,500 MW. Accordingly, energy distribution companies had to purchase electricity from thermoelectric plants to secure the supply of Brazilian’s national electricity demand. Such electricity was acquired at high rates.

- 79 -

The Federal Government announced, on March 13, 2014, certain measures to assist distribution companies to face these unexpected higher costs and expenses during the period between February to December, 2014, namely: (i) an electricity commercialization auction held by ANEEL and MME on April 2014, to off-set the power contracting deficit of power distribution companies; and (ii) a financial contribution by the National Treasury of R$ 11.2 billion, through the CDE account.

The Federal Government also allowed CCEE to enter into financial transactions in the amount of up to R$ 17.8 billion to assist distribution companies. Accordingly, the Federal Government issued Decree No, 8,221, dated April 1, 2014, creating the Regulated Market Account (Conta no Ambiente de Contratação Regulada or CONTA-ACR) which will receive the funding required for hiring and payment of financial obligations. With the purpose to make payments related to the financing contracted by CCEE, distribution companies shall, after the 2015 tariff review cycle, transfer specific amounts defined by ANEEL to CDE.

The first loan, for R$ 11.2 billion was disbursed in April, 2014 and the second loan, for R$ 6.6 billion, was disbursed in August 2014. Of this amount, R$ 537.6 million were allocated to the following distribution subsidiaries: CEAL (R$ 302.7 million), CEPISA (R$ 141 million), Amazonas Energia (R$ 27.2 million), CERON (R$ 11.3 million) and Eletroacre (R$ 55.4 million).

In May 2013, ANEEL created a multi-tariff system, which adjusts the tariffs to reflect the cost of generating power. This system was in tests until the end of 2014 and became fully effective as of January 2015. The main purpose of the multi-tariff system is to present to consumers in a transparent way the cost of producing energy.

Principal Authorities

Ministry of Mines and Energy

MME is the Brazilian Government’s primary regulator of the power industry acting as the granting authority on behalf of the Brazilian Government, and empowered with policy-making, regulatory and supervising capacities. The Brazilian Government, acting primarily through MME, will undertake certain duties that were previously under the responsibility of ANEEL, including drafting guidelines governing the granting of concessions and the issuance of directives governing the bidding process for concessions relating to public services and public assets.

ANEEL

The Brazilian power industry is regulated by ANEEL, an independent federal regulatory agency. ANEEL’s primary responsibility is to regulate and supervise the power industry in line with the policy dictated by MME and to respond to matters which are delegated to it by the Brazilian Government and by MME. ANEEL’s current responsibilities include, among others: (i) administering concessions for electricity generation, transmission and distribution activities, including the approval of electricity tariffs; (ii) enacting regulations for the electricity industry; (iii) implementing and regulating the exploitation of energy sources, including the use of hydroelectric energy; (iv) promoting the public bidding process for new concessions; (v) settling administrative disputes among electricity generation entities and electricity purchasers; and (vi) defining the criteria and methodology for the determination of transmission tariffs.

National Energy Policy Council

On August 6, 1997, pursuant to Article 2 of Law No. 9,478, CNPE was created to advise the Brazilian president with respect to the development and creation of national energy policy. The CNPE is presided over by the Minister of Mines and Energy, and the majority of its members are ministers of the Brazilian Government. The CNPE was created to optimize the use of Brazil’s energy resources, to assure the supply of electricity to the country and to periodically review the use of regular and alternative energy to determine whether the nation is properly using a variety of sources of energy and is not heavily dependent on a particular source.

National Electricity System Operator

The ONS was created in 1998 by Law No. 9.648 dated May 27, 1998. The ONS is a non-profit private entity comprised of concessionaires, other legal entities holding permissions or authorizations in the electrical energy market, and consumers connected to SIN. The Electricity Regulatory Law granted the Brazilian Government

- 80 -

the power to nominate three executive officers to ONS’s board of executive officers. The primary role of the ONS is to coordinate and control the generation and transmission operations in the Interconnected Power System, subject to ANEEL’s regulation and supervision. The objectives and principal responsibilities of the ONS include: operational planning for the generation industry, organizing the use of the domestic Interconnected Power System and international interconnections, guaranteeing that all parties in the industry have access to the transmission network in a non-discriminatory manner, assisting in the expansion of the energy system, proposing plans to MME for extensions of the Basic Network (which proposals must be taken into account in planning expansion of the transmission system) and submitting rules for the operation of the transmission system for ANEEL’s approval. Generators must declare their availability to ONS, which then attempts to establish an optimal electricity dispatch program.

Energy Trading Chamber

On August 12, 2004, the Brazilian Government enacted a decree setting forth the regulations applicable to CCEE. On November 10, 2004 the CCEE succeeded the Wholesale Energy Market – MAE, the market in which all large electricity generation companies, energy traders and importers and exporters of electricity had participated and on which the spot price of electricity was determined. CCEE assumed all of the assets and operations of the Wholesale Energy Market (which had previously been regulated by ANEEL).

One of the principal roles of CCEE is to conduct public auctions on the Regulated Market, see “– The Electricity Regulatory Law; the Free Market and the Regulated Market – The Regulated Market.” In addition, the CCEE is responsible, among other things, for: (i) registering all the energy purchased through CCEARs, and the agreements resulting from market adjustments and the volume of electricity contracted in the Free Market, see “– The Electricity Regulatory Law; the Free Market and the Regulated Market – The Free Market;” and (ii) accounting and clearing of short-term transactions.

CCEE’s members include generation, distribution and trading companies, as well as free consumers. Its board of directors is composed of four directors appointed by its members and one director, who serves as chairman of the board of directors, appointed by the MME.

MME determines the maximum price of the energy sold in the regulated market through auctions, as specified under Decree No. 5,163 of 2004.

Energy Research Company

On August 16, 2004 the Brazilian Government enacted a decree creating EPE, a state-owned company which is responsible for conducting strategic research on the energy industry, including with respect to electrical energy, oil, gas, coal and renewable energy sources. The research carried out by EPE is subsidized by the MME as part of its policymaking role in the energy industry. Furthermore, EPE is the entity in charge of the technical qualification of the projects participating in the bids promoted by ANEEL for sale of energy.

Energy Industry Monitoring Committee

The Electricity Regulatory Law authorized the creation, under Federal Decree No. 5,175 of August 9, 2004, of the Comitê de Monitoramento do Setor Elétrico (Energy Industry Monitoring Committee or CMSE), which acts under the direction of MME. The CMSE is responsible for monitoring the supply conditions of the system and for proposing preventive action (including demand-related action and contracting for a supply-side reserve) to restore service conditions where applicable.

Electric Power Transmission in Brazil

Transportation of large volumes of electricity over long distances is made by way of a grid of transmissions lines and substations with high voltages (from 230 kV to 750 kV), known as the Basic Network. Any electric power market agent that produces or consumes power is entitled to use the Basic Network.

Transmission lines in Brazil are usually very long, since most hydroelectric plants are usually located away from the large centers of power consumption. Today, the country’s system is almost entirely interconnected. Only the State of Roraima and parts of the states of Pará, Amazonas, Amapá and Rondônia are still not connected to the Interconnected Power System. In these states, supply is made by small thermal plants or hydroelectric plants located close to their respective capital cities.

- 81 -

The Interconnected Power System provides for the exchange of power among the different regions when a region faces problems generating hydroelectric power due to a drop in their reservoir levels. As the rainy seasons are different in the south, southeast, north and northeast of Brazil, the higher voltage transmission lines (500 kV or 750 kV) make it possible for locations with insufficient power output to be supplied by generating centers that are in a more favorable location.

The operation and management of the Basic Network is the responsibility of ONS, which is also responsible for managing power dispatching from plants on optimized conditions, involving use of the Interconnected Power System hydroelectric reservoirs and fuel thermal plants.

Our transmission system, which consists of a set of transmission lines interconnected to substations, is comprised of approximately 60,997 kilometers of transmission lines, corresponding to approximately 47% of the total lines in Brazil with a voltage higher or equal to 230 KV.

Besides operating and maintaining this system in accordance with the standards of performance and quality required by ANEEL, we have actively participated in the expansion of transmission lines through concessions in auctions conducted by ANEEL, alone or through consortiums, as well as through permits for reinforcements of the current system.

The major transmission projects under development are: (i) TL 525 kVGuaiba 3 – Capivari do Sul; (ii) TL 230 kV Camaçari IV – Pirajá Pituaçu – Pirajá; (iii) TL 800 kV Xingu – Estreito; (iv) ; (iv) LT 230 kV Eunapólis – Teixeira de Freitas II C2 (BA); (v) Interligação Manaus – Boa Vista (AM/RR); (vi) Interligação Brasil – Uruguai (RS); and (vii) LT 500 kV Bom Despacho 3 – Ouro Preto 2 (MG).

• Brazil has a total of six medium and large interconnections with other countries in South America, four of them operated by us, as set forth below:

• with Paraguay, through four 500 kV transmission lines connecting Usina de Itaipu to Margem Direita (Paraguay) substation and the Foz do Iguaçu in Brazil substation. Itaipu’s 50 Hz energy sector is then transported to the Ibiúna substation in São Paulo through a direct current transmission system with a capacity of 6,300 MW;

• with Uruguay, through Rivera’s frequency converter station in Uruguay, with a capacity of 70 MW and a 230 kV transmission line connecting it to the Livramento substation in Brazil;

• with Argentina, through Uruguaiana’s frequency converter station in Brazil, with a capacity of 50 MW and a 132 kV transmission line connecting it to Paso de los Libres in Argentina; and

• with Venezuela, through a 230 kV transmission line with a capacity of 200 MW, which connects the city of Boa Vista, in the State of Roraima, to the city of Santa Elena in Venezuela.

In the transitional environment (2002-2005), there was a gradual decline in the amounts of power contracted under Initial Supply Contracts, the generating companies paid for the use of the transmission line grid, whereas distributors were required to pay two types of transmission tariffs: (i) nodal tariffs, associated with each connection point from where these distributors demand voltage; and (ii) the transmission tariff, associated with the Initial Supply Contracts, which was applied to part of the demand contracted in that environment. Once the amounts under the Initial Supply Contracts dropped to zero, the power generating, distributing and selling companies and free consumers had free access agreements governing their use of transmission lines on equivalent terms with those of agents that entered the market after free access became compulsory. In this free market environment, transmission tariffs are determined based on the effective use that each party that accesses the Basic Network makes of it.

- 82 -

The Electricity Regulatory Law; the Free Market and the Regulated Market

The Electricity Regulatory Law introduced material changes to the regulation of the power industry with a view to: (i) remedying the deficiencies in the Brazilian electric system and (ii) creating incentives to ensure growth in the electrical energy sector to support Brazilian economic and social development. Through this law, legislators attempted to protect the distribution concessionaires’ captive consumers and to make low cost electrical energy continuity, which has a minimal environmental impact, available. The key features of the Electricity Regulatory Law included:

• Creation of: (i) the Regulated Market, in which the purchase and sale of electrical energy must follow rules imposed by ANEEL and must occur through CCEE; and (ii) a market specifically addressed to certain participants (e.g., free consumers and commercialization companies), that will permit a certain degree of competition with respect to the Regulated Market, called the Free Market, in which parties are free to negotiate the terms and conditions of their purchase and sale agreements;

• Restrictions on certain activities of distributors, so as to ensure that they focus only on their core business to guarantee more efficient and reliable services to captive consumers;

• Elimination of self-dealing, to provide an incentive to distributors to purchase electricity at the lowest available prices rather than buying electricity from related parties; and

• Respect for contracts executed prior to the Electricity Regulatory Law, in order to provide stability to transactions carried out before its enactment.

The Electricity Regulatory Law also excludes us and our subsidiaries Furnas, Chesf, Eletronorte, Eletrosul and CGTEE from the National Privatization Program, which is a program created by the Brazilian Government in 1990 with a view to promote the privatization process of state-owned companies. All Distribution companies of Eletrobras are included in the Investments Partnership Program of the Presidency of the Republic (Porgrama de Parceria de Investimentos da Presidência da República – PPI).

Challenges to the Constitutionality of the Electricity Regulatory Law

Some aspects of the Provisional Measure No. 144, as of December 10 2003, which originated the Electricity Regulatory Law, are being challenged in the Brazilian Supreme Court in Lawsuits No. 3090 and 3100. The provisional requests of both lawsuits were denied by the Brazilian Supreme Court in a decision published on October 26, 2007. A final decision on this matter is subject to majority vote of the 11 judges, provided that a quorum of at least eight justices must be present. To date, the Brazilian Supreme Court has not reached a final decision and we do not know when such a decision may be reached. The Brazilian Supreme Court ruled by six votes to four to deny the provisional measure requested to suspend the effects of the Electricity Regulatory Law until the final decision on the case has been made; however, a final decision remains pending. Therefore, the Electricity Regulatory Law is in force as of March 15, 2004 to present date. Regardless of the Supreme Court’s final decision, certain portions of the Electricity Regulatory Law relating to restrictions on distribution companies performing activities unrelated to the distribution of electricity, including sales of energy by distribution companies to free consumers and the elimination of self-dealing are expected to remain in full force and effect.

In the event all or a relevant portion of the Electricity Regulatory Law is determined unconstitutional by the Brazilian Supreme Court, the regulatory scheme introduced by the Electricity Regulatory Law may lose its effectiveness, generating uncertainty as to how the Brazilian Government will define the rules for the electrical energy sector. Considering that we have already purchased virtually all of our electricity needs through our subsidiaries both in the ACR and ACL and that the pass through to tariffs of such electricity is expected to continue to be regulated by the regime predating the Electricity Regulatory Law, irrespective of the outcome of the Supreme Court’s decision, we believe that in the short term, the effects of any such decision on our activities should be relatively limited. The exact effect of an unfavorable outcome of the legal proceedings on us and the electricity industry as a whole is difficult to predict, but it could have an adverse impact on our business and results of operations even in the short term (see “Risk Factors – Risks Relating to the Brazilian Power Industry”).

- 83 -

Also, the Electricity Regulatory Law and the electricity regulatory framework as a whole have been recently changed in some important aspects by the enactment of Law No. 13.299/16 and the Provisional Measure No. 735/16. Especially for the distribution sector, such acts are of major relevance as they give special treatment to the distribution concessions located in the regions not integrated to the National Interconnected Grid – SIN yet. Such measures aimed to create a new regulatory framework capable to provide more sustainable financial conditions to such concessions to meet their outstanding duties with their fuel suppliers and, therefore, create a more favorable environment to potential investors in the midst on the National Privatization Program – PND.

Nonetheless, as such acts provide for some kind of special treatment to part of the distribution companies and also authorize the utilization of the CDE funds to cover the fuel debts of the concessionaires, we cannot guarantee that they would not have their legality/constitutionality challenged by other agents of the industry who might be adversely impacted, including the consumers and other concessionaires which will not benefit from the legal measures.

Markets for the Trading of Electricity

Under the Electricity Regulatory Law, electricity purchase and sale transactions may be carried out in two different market segments: (i) the Regulated Market, which contemplates the purchase by distribution companies through public bids of all electricity necessary to supply their captive consumers; and (ii) the Free Market, which encompasses purchase of electricity by non-regulated entities (such as free consumers and energy traders).

Nevertheless, electricity generated by plants qualified under the Proinfa, nuclear power plants and Itaipu are governed by a special regime for commercialization and, therefore, are not subject to either the Regulated or the Free Market. The electricity generated by Itaipu, the most relevant among energy sources governed by a separate regime including Decree 4,550 of December 27, 2002, is sold to us and sold to distribution concessionaires in the south and center-south-eastern power markets in proportion to their market share in those markets. The rates at which Itaipu-generated electricity is traded are denominated in U.S. dollars and established pursuant to a treaty between Brazil and Paraguay. As a consequence, Itaipu rates rise or fall in accordance with the variation of the U.S. dollar/real exchange rate. Changes in the price of Itaipu-generated electricity are, however, subject to full pass-through to distribution tariffs.

The Regulated Market

Distribution companies must meet market demand by supplying electricity primarily purchased in public auctions in the Regulated Market. Distribution companies, however, may purchase electricity from: (i) generation companies that are connected directly to such distribution company, except for hydro generation companies with capacity higher than 30 MW and certain thermo generation companies; (ii) electricity generation projects participating in the initial phase of the Proinfa; and certain power distribution companies in the south and center-south-eastern power markets, and (iii) the Itaipu hydroelectric plant.

Electricity public auctions for new generation projects are held: (i) five years before the initial delivery date (referred to as “A-5” auctions); and (ii) three years before the estimated initial delivery date (referred to as “A-3” auctions). Electricity auctions from existing power generation facilities are held (i) one year before the estimated initial delivery date (referred to as “A-1” auctions) and/or (ii) the same year of the estimated initial delivery date (referred to as “A” auctions). Additionally, the Brazilian Government, directly or indirectly through ANEEL, carries out public auctions for the sale of electrical energy to energy distributors to allow distributors to adjust their volume of electrical energy as necessary to meet their customers’ demands, or Market Adjustments.

The public auctions are prepared by ANEEL in compliance with guidelines established by MME, including the requirement to use the lowest bid as the criteria to determine the winner of the auction.

Each generation company that participates in the auction must execute a contract for purchase and sale of electricity with each distribution company in proportion to the distribution companies’ respective estimated demand for electricity. The CCEARs for both “A-5” and “A-3” auctions have a term of between 15 and 30 years, and the CCEARs for “A-1” auctions have a term between three and 15 years. The CCEARs for “A” auctions have a term between one to 15 years. The CCEARS for alternative energy sources are between 10 and 30 years. The only exception to these rules relates to the market adjustment auction, in which the generation and the distribution companies will enter into two-year bilateral agreements that must be registered with ANEEL and CCEE.

- 84 -

The regulations also establish a pass-through tariff mechanism called Annual Reference Value, which limits the amounts of electric energy acquisition costs that can be passed through to final consumers. The Annual Reference Value corresponds to the weighted average of the electricity prices in the “A-5” and “A-3” auctions, calculated for all distribution companies.

The Annual Reference Value creates an incentive for distribution companies to contract for their expected electricity demand in the “A-5” auctions, where the prices are expected to be lower than in “A-3” auctions. ANEEL allows companies to pass on their electrical energy acquisition costs to final consumers pursuant to the following criteria: (i) in the A-5 auctions, companies are permitted to pass on all costs to consumers, subject to the limitations referred to below; (ii) in the A-3 auctions companies are permitted to: (a) pass all acquisition costs for energy acquired in A-5 auctions up to 2% of the difference between the energy acquired in A-3 auctions during the year and the distributor’s energy requirements; and (b) pass on whichever of the following is less – the A-5 auctions and in the A-3 auctions; (iii) in the A-1 auctions, companies are permitted to pass on all costs to consumer; (iv) in the Market Adjustments auctions and in the acquisitions of energy directly from a generation plant connected to the distributors’ electric system (except as set forth in law), companies are permitted to pass on all costs up to the Annual Reference Value to consumer; and (v) in the alternative energy source auctions and others determined by the Brazilian government, companies are permitted to pass on all costs to consumer.

ANEEL maintains the economic value of the Annual Reference Value by adjusting the Annual Reference Value pursuant to the monetary adjustment index agreed upon in the CCEARs.

The Electricity Regulatory Law establishes the following limitations on the ability of distribution companies to pass through costs to consumers:

• No pass-through of costs for electricity purchases that exceed 103.0% of actual demand;

• The pass-through of electricity acquisition costs from new electricity generation projects equal to the difference between the minimum purchase threshold (96% of repossessed energy contracted pursuant to the Electricity Regulatory Law) and the energy purchased in the A-1 auctions will be limited to the weighted average amount (in reais/MWh) of the acquisition prices in the A-1 auctions, except that this limit is applicable solely: (i) in the first three years following A-1 auctions in which the minimum purchase threshold was not reached; (ii) to the CCEARs relating to portion of energy acquired in A-3 and A-5 auctions with the highest price;

• MME will establish the maximum acquisition price for electricity generated by existing projects; and

• If distribution companies do not comply with the obligation to fully contract their demand, the pass-through of the costs from energy acquired in the CCEE short-term market will be the lower of the Price of Liquidation of Differences (PLD) and the Annual Reference Value.

Auctions in the Regulated Market, subject to the conditions set forth in the respective requests for proposals, may originate two types of CCEARs: (i) Contratos de Quantidade de Energia (Energy Agreements); and (ii) Contratos de Disponibilidade de Energia (Capacity Agreements).

Under an Energy Agreement, a generator commits to supply a certain amount of electricity and assumes the risk that the electricity supply could be adversely affected by hydrological conditions and low reservoir levels, among other conditions, that could interrupt the supply of electricity, in which case the generator will be required to purchase the electricity elsewhere in order to comply with its supply commitments. Under a Capacity Agreement, a generator commits to make a specified amount of capacity available to the Regulated Market. In this case, the revenue of the generator is guaranteed and the distribution companies face the risk of a supply shortage. However, the increased prices of electricity due to a supply shortage are passed on by the distribution companies to consumers.

- 85 -

The Electricity Regulatory Law sets forth that all electricity generation, distribution and trading companies, independent power producers and free consumers must inform MME, by the first of August of each year, of their estimated electricity demand or estimated electricity generation, as the case may be, for each of the subsequent five years. To encourage power distribution companies to make accurate estimates and to enter into power purchase agreements accordingly, pass-through tariffs, as mentioned above, are permitted provided that the purchased power stays within 103.0% of the distribution company’s actual power demand. Surpluses and shortages of power distribution companies concerning power acquisitions in the Regulated Market may be offset against each other by means of an offsetting mechanism managed by CCEE. According to the Electricity Regulatory Law, electricity distribution entities are entitled to pass on to their customers the costs related to electricity purchased through public auctions as well as any taxes and industry charges related to public bids, subject to certain limitations related to the inability of distribution companies to accurately forecast demand.

In this context, it is important to mention that 2015 was marked by a substantial augmentation in the tariffs, leading to a drop in the energy consumption and to the migration of potentially free consumers to the Free Market (ACL). Fearing that this scenario would get worse, ANEEL approved Normative Resolution No. 711/2016 (Resolução Normativa nº 711/2016) dated as of April 19, 2016, aiming the development of mechanisms that would adequate the levels of contracting of energy by distributors. The Resolution establishes criteria and conditions of possible bilateral agreements between signatory parties of CCEARs. The bilateral agreement may involve the following formats: (i) entire or partial temporary reduction of the contracted energy; (ii) partial permanent reduction of the contracted energy or; (iii) contract termination. Overall, the Normative Resolution nº 711/2016 brings an important regulatory alteration by eliminating both the postponement of the start of the supply period and the transferring of the contractual position to another distributor.

Electrical Energy Trading Convention

ANEEL Resolutions No. 109, of October 26, 2004, No. 210, of February 24, 2006 and No. 637, of December 5, 2014, are the most relevant regulation that govern the Convenção de Comercialização de Energia Elétrica (the Electrical Energy Trading Convention) which regulates the organization and functioning of CCEE and the electrical energy trading conditions and defines, among others: (i) the rights and obligations of CCEE agents; (ii) the penalties to be imposed on defaulting agents; (iii) the means of dispute resolution; (iv) trading rules in the Regulated and Free Markets; and (v) the accounting and clearing process for short-term transactions.

CCEE is a non-profit organization whose members are all agents of the Brazilian power sector (certain agents are not mandatory members of CCEE and may be represented by other members). CCEE is responsible for (i) registering the conditions concerning power amounts and terms set forth in all power purchase agreements, whether entered into in the Regulated Market or the Free Market; and (ii) the accounting and liquidation of the power market, including the power surpluses and shortages spot market, among other attributions. CCEE is governed by a board of directors comprised of five members, four being nominated by the referred agents while its president is nominated by MME.

The Free Market

The Free Market covers freely negotiated electricity sales between generation concessionaires, Independent Power Producers, self-generators, energy traders, importers of energy and free consumers. The Free Market also includes bilateral contracts between generators and distribution companies executed before the enactment of the Electricity Regulatory Law, until they expire. Upon expiration, new contracts must be entered into in accordance with the Electricity Regulatory Law guidelines.

Such an extended period of notice seeks to assure that, if necessary, the construction of cost-efficient new generation could be finalized in order to supply the re-entry of free consumers into the Regulated Market. State-owned generators may sell electricity to free consumers, but as opposed to private generators, they are obligated to do so through a public process that guarantees transparency and equal access for all interested parties.

Free Consumers

According to the Electricity Regulatory Law, a free consumer may elect to: (i) continue to procure power from a local distribution company; (ii) buy power directly from an independent producer or from self-producers with surplus power; (iii) buy power from a power trade agent; or (iv) purchase energy from other free consumers by mans of assignment.

- 86 -

The Electricity Regulatory Law does not permit distribution concessionaires to sell power to free consumers directly (except under certain regulatory conditions).

The Electricity Regulatory Law further establishes that the option to become a free consumer is subject to the prior expiration or termination of its power purchase agreement with the power distribution company. In the event that the power purchase agreement has an indefinite term, the migration to the Free Market is permitted only in the year following receipt of a migration notice by the power distribution company, provided that this notice is presented by July 15 of such year. Once a consumer has migrated to the Free Market, it may only return to the Regulated Market once it has given the relevant distribution company five years’ notice, although the distribution company may reduce that term at its discretion.

The Electricity Regulatory Law has, in principle, established some conditions and power and consumption thresholds that define which consumers could qualify as “free consumers.” These thresholds may be gradually reduced over the years by ANEEL so as to allow an increasing number of consumers to make this election, until such time as all consumers from all the different classes can choose which supplier they want to procure power from.

The law assures suppliers and their respective consumers free access to the grid subject to the payment of tariffs for the use of the electric power grids and connection costs. All regulatory charges to which captive consumers are subject are added to these tariffs in order to assure fair and equal treatment between captive and free consumers.

The regulations above are intended (i) to avoid arbitrage between captive and free markets by Free Consumers, prohibiting opportunistic migrations, as well as (ii) to protect power distribution companies by making the captive market more predictable. Further, ANEEL must regulate the migration to the Free Market without increasing captive market tariffs.

Restricted Activities of Distributors

Distribution companies are not permitted to, except as otherwise provided by Law 9,074/1995: (i) develop activities related to the generation or transmission of electricity; (ii) sell electricity to free consumers, except for those in their concession area and under the same conditions and tariffs maintained with respect to captive customers in the Regulated Market; (iii) hold, directly or indirectly, any interest in any other company, corporation or partnership; or (iv) develop commercial activities that are unrelated to their respective concessions, except for those permitted by law or in the relevant concession agreement. Generators are not allowed to hold equity interests in excess of 10.0% in distribution companies or to hold a controlling shareholding interest in distribution companies.

Elimination of Self-Dealing

Since the purchase of electricity for captive consumers will be performed through the Regulated Market, so-called self-dealing is no longer permitted, except in the context of agreements that were duly approved by ANEEL before the enactment of the Electricity Regulatory Law. Distribution companies may, however, enter into power purchase agreements with related parties, provided that such agreements are the result of power auctions conducted in the Regulated Market. Before the Electricity Regulatory Law, such companies were permitted to meet up to 30.0% of their electricity needs through electricity that was acquired from affiliated companies.

Ownership Limitations

In 2000, ANEEL established limits on the concentration of certain services and activities within the power industry. Under such limits, with the exception of companies participating in the National Privatization Program (which needed only to comply with such limits once their final corporate restructuring is accomplished) no power company (including both its controlling and controlled companies) could: (i) own more than 20.0% of Brazil’s installed capacity, 25.0% of the installed capacity of the southern/southeastern/mid-western region of Brazil or 35.0% of the installed capacity of the northern/northeastern region of Brazil, except if such percentage corresponded

- 87 -

to the installed capacity of a single generation plant; (ii) own more than 20.0% of Brazil’s distribution market, 25.0% of the southern/southeastern/mid-western distribution market or 35.0% of the northern/northeastern distribution market, except in the event of an increase in the distribution of electricity exceeding the national or regional growth rates; or (iii) own more than 20.0% of Brazil’s trading market with final consumers, 20.0% of Brazil’s trading market with non-final consumers or 25.0% of the sum of the above percentages.

In accordance with paragraph one, Article 31 of the Electricity Regulatory Law, we and our subsidiaries Furnas, Chesf, Eletronorte, Eletrosul and Eletrobras CGTEE were excluded from the National Privatization Program. Accordingly, we were subject to the limits and conditions imposed on the participation of agents in the activities of the electricity sector, in accordance with ANEEL Resolution No. 278/2000, which is aimed at achieving effective competition between agents and preventing a concentration in the services and activities undertaken by agents within the electricity sector.

On November 10, 2009, ANEEL issued Resolution No. 378, which revoked and replaced Resolution No. 278/2000 and established that ANEEL, upon identifying an act that may result in unfair competition or in significant control of the generation, transmission and distribution markets, must notify the Secretary of Economic Law (Secretaria de Direito Econômico, or SDE) of the Ministry of Justice, pursuant to art. 54 of Law No. 8,884 of June 11, 1994. After notification, the SDE must inform the antitrust authority, the Administrative Counsel of Economic Defense (Conselho Administrativo de Defesa Econômica), or CADE. If necessary, the SDE will require ANEEL to analyze potential infractions under Resolution No. 378, while CADE must determine any applicable punishment, which may vary from pecuniary penalties to the dissolution of the company, pursuant to articles 23 and 24 of the abovementioned law.

Although the legislation currently in force does not provide for specific thresholds for the identification of market concentration, as we hold a participation in the Brazilian market equivalent to 32% of the total installed capacity of the country, our activities are under constant supervision by the regulators and we are requested, on a regular basis, to update our corporate chain and investments, as well as to detail our activities and influence in the Brazilian electricity market.

Tariffs for the Use of the Distribution and Transmission Systems

ANEEL oversees tariff regulations that govern access to the distribution and transmission systems and establish tariffs for the use of and access to said systems. The tariffs are: (i) network usage charges, which are charges for the use of the proprietary local grid of distribution companies (or TUSD); and (ii) a tariff for the use of the transmission system, which is the Basic Network and its ancillary facilities (or TUST). Additionally, distribution companies in the Southern/Southeastern Interconnected Power System pay specific charges for the transmission of electricity generated at Itaipu and for access to the transmission system.

TUSD

The TUSD is paid by generators, free consumers and special consumers for the use of the distribution system of the distribution company to which the relevant generator or free consumer is connected and are revised annually according to an inflation index. The amount to be paid is based on a formula set forth by ANEEL Resolution No. 657/2015 and may vary pursuant to a number of different factors, including, for instance, costs of the network, operating costs and energy losses, among others. Our distribution companies receive the TUSD paid by free consumers in their concession areas and by some other distribution companies which are connected to our distribution system.

TUST

The TUST is paid by distribution companies and uses, including generators, free consumers and special consumers, for the use of the Basic Network. The amount to be paid is based on a formula set by ANEEL Resolution No. 67/2004, as amended by ANEEL Resolution No. 442/2011, and it may vary pursuant to a number of different factors. According to criteria established by ANEEL, owners of the different parts of the transmission grid have transferred the coordination of their facilities to the ONS in return for receiving regulated payments from users of the transmission system. Network users, including generation companies, distribution companies and free consumers, have signed contracts with the ONS entitling them to use the transmission grid in return for the payment

- 88 -

of published tariffs. Other parts of the grid that are owned by transmission companies but which are not considered part of the transmission grid are made available directly to the interested users who pay a specified fee to the relevant transmission company.

Contract for Access to the Intermediary Connection System – Access Charge

Some distribution companies, especially in the State of São Paulo, access the Basic Network through an intermediary connection system located between their respective distribution lines and the Basic Network. This connection is formalized by means of a Contract for the Access to the Intermediary Connection System entered into with transmission concessionaires that own such facilities. Compensation for the transmission companies is regulated by ANEEL and is defined in accordance with the cost of the assets used, whether they are their exclusive property or shared among the electricity industry agents. The correspondent compensation incidental to the use of the intermediary connection system is revised annually by ANEEL according to an inflation index and to the costs relating to the assets.

Itaipu Transportation Charge

The Itaipu plant has an exclusive transmission grid operated in alternating and continuous voltage, which is not considered to be part of the Basic Network or of the intermediary connection system. The use of such system is compensated by a specific charge, denominated the Itaipu transportation charge, paid by those companies entitled to quotas of the electricity from Itaipu, in proportion to their quotas.

Distribution Tariffs

Distribution tariff rates are subject to review by ANEEL, which has the authority to adjust and review tariffs in response to changes in electricity purchase costs and market conditions. When adjusting distribution tariffs ANEEL divides the costs of distribution companies between: (i) costs that are beyond the control of the distributor (or Parcel A costs); and (ii) costs that are under the control of distributors (or Parcel B costs). The readjustment of tariffs is based on a formula that takes into account the division of costs between the two categories.

Each distribution company’s concession agreement provides for an annual tariff adjustment (reajuste anual). In general, Parcel A costs are fully passed through to consumers. Parcel B costs, however, are adjusted for inflation in accordance with the IGP-M index.

Electricity distribution companies are also entitled to revisão periódica (revisions) every five years. These revisions are aimed at: (i) assuring that revenues are sufficient to cover Parcel B operating costs and that adequate compensation for essential investments for the services within the scope of each such company’s concession; and (ii) determining the “X factor,” which is an efficiency factor based on three components: (a) expected gains of productivity from increase in scale; (b) evaluations by consumers (verified by ANEEL); and (c) labor costs.

Accordingly, upon the completion of each periodic revision, application of the X factor requires distribution companies to share their productivity gains with final consumers.

The pass-through of electricity purchase costs under supply agreements negotiated before the enactment of the Electricity Regulatory Law is subject to a ceiling based on a value established by ANEEL for each different source of energy (such as hydroelectric, thermoelectric and alternative sources of energy). This ceiling is adjusted annually in order to reflect increases in costs incurred by generators. That adjustment takes into account: (i) inflation; (ii) costs incurred in hard currency; and (iii) fuel related costs (such supply of natural gas). Costs incurred correspond to at least 25.0% of all costs incurred by generators.

In addition, concessionaires of electricity distribution are entitled to revisão extraordinária (extraordinary review) of tariffs, on a case by case basis, to ensure their financial equilibrium and compensate them for unpredictable costs, including taxes, that significantly change their cost structure.

- 89 -

In terms of commercial conditions, ANEEL Resolution No. 547, of April 16, 2013 provided for a new informative system for the consumers, with the inclusion of flags (green, yellow and red) in the consumers’ invoice which indicate whether the energy provider expects an increase or decrease in the energy price for the following month, according to the energy prices established by ANEEL for each subsystem. The additional revenue obtained by the concessionaire due to the use of this flag system will be considered in the readjustment and review procedures described above.

According to the MP 735, the 2016 tariff review shall reflect the incorporation of the losses of 2015. Then, from 2017 to 2025, it will be applied an annual reducer of 10% of these incorporated losses, regarding the 2015 tariff review established by ANEEL. The new rule allows the use of the resources obtained by the Executive Power in connection with the bid of the concessions (bônus de outorga) to cover the fuel expenses incurred, until April, 2016, by the utilities companies located in the Isolated System, which did not have access to the resourced of CDE due to the non-compliance with the efficiency goals

For the concessions which were not renewed, the rules of MME Ordinance No. 388, dated July 26, 2016 will apply until the concession is rebidded and a new controller undertakes the services under a new concession agreement which will set forth the tariff policies. In general terms Ordinance n. 388/2016 establishes the following regarding the costs split between Parcel A and Parcel B:

Parcel A includes:

(i) Energy sector charges;

(ii) Electricity purchased;

(iii) Connection and usage charges for the transmission and distribution systems and;

(iv) Non-recoverable revenue.

Parcel B costs, as usual, are determined by subtracting the entire Parcel A costs from the distribution company’s revenues.

Finally, ANEEL has recently launched a Public Hearing to discuss with the industry the necessary changes in the calculation methodology of the distribution tariffs applicable to the renewed concessions. Also, the proposed regulation could eventually be extended to the non-renewed concession agreements upon express adhesion. The idea is to ANEEL to calculate yearly the revenues that each concession will require to cover their costs and return on investments. We cannot predict in which terms the new regulation will be approved but we expect a more favorable treatment to the future revenues as ANEEL is willing to mitigate the effects of the non-manageable costs and market fluctuation on the tariffs of the distribution companies.

ANEEL enacted, on September 13^th, 2016, a Resolution to establish the conditions that will guarantee the continuity of the services rendered by the utilities companies located in the North and Northeast of Brazil in the context of the termination of such concessions. The services will be temporarily rendered by Distribuition Companies of Eletrobras and the established conditions include the normalization of the transference of sectorial funds, adjustment and review of the tariffs in order to guarantee tariff coverage, and access to loans from Reversion Global Fund (Reserva Global de Reversão). Although the resolution is already valid, it is currently under the procedure of public hearing (from September 15^th to October 15^th), which may introduce some changes to the original text, according to ANEEL’s discretion.

Incentive Programs for Alternative Sources of Electricity

Thermoelectric Priority Program

In 2000, a federal decree created the Programa Prioritário de Termeletricidade (the Thermoelectric Priority Program or PPT), for purposes of diversifying the Brazilian energy matrix and decreasing its strong dependency on hydroelectric plants. The benefits granted to thermoelectric plants under the PPT include: (i) guaranteed gas supply for 20 years; (ii) assurance that costs related to the acquisition of the electricity produced by thermoelectric plants will be transferred to tariffs up to a normative value determined by ANEEL; and (iii) guaranteed access to a BNDES special financing program for the power industry.

- 90 -

Proinfa

In 2002, the Proinfa program was established by the Brazilian Government to create certain incentives for the development of alternative sources of energy, such as wind energy projects, Small Hydroelectric Power Plants and biomass projects. As with some other social programs, we are involved in the administration of the Proinfa program.

Under the Proinfa program, we purchase electricity generated by these alternative sources for a period of up to 20 years and transfer it to free consumers and certain electricity distribution companies (which are responsible for including the costs of the program in the tariffs for all final consumers in their respective concession area, except for low-income consumers). In its initial phase, the Proinfa program is limited to a total contracted capacity of 3,300 MW (1,100 MW for each of the three alternative energy sources).

In its second phase, which should start after the 3,300 MW limit is reached, the Proinfa program is intended, in a period of up to 20 years, to have contracted capacity equivalent to 10.0% of the annual domestic consumption of electricity. Upon the success of electricity auctions promoted by the Federal Governmental, the second phase of Proinfa has not yet been launched.

Research and Development – R & D

Concessionaires and companies authorized to engage in public power distribution, generation and transmission businesses are required to invest annually at least 1.0% of their net operating income in electric power research and development. Companies that only generate power from wind, biomass and Small Hydroelectric Power Plants are not subject to this requirement.

Regulatory Charges

Global Reversion Reserve Fund

In certain circumstances, power companies are compensated for assets used in connection with a concession if the concession is eventually revoked or is not renewed. In 1971, the Brazilian Congress created a Reserva Global de Reversão (a Global Reversion Reserve Fund or RGR Fund) designed to provide funds for such compensation. In February 1999, ANEEL revised the assessment of a fee requiring all distributors and certain generators operating under public service regimes to make monthly contributions to the RGR Fund at an annual rate equal to 2.5% of the company’s fixed assets in service, but not to exceed 3.0% of total operating revenues in any year. In recent years, no concessions have been revoked or have failed to be renewed, and in recent years the RGR Fund has been used principally to finance generation and distribution projects. With the introduction of MP No. 517/2010, the RGR Fund is scheduled to be phased out by 2035, and ANEEL is required to revise the tariff so that the consumer will receive some benefit from the termination of the RGR Fund. In accordance with Law No. 12,783, distribution concessions, transmission concessions granted after September 12, 2012 and all renewed generation and transmission concessions are no longer required to pay RGR charges as of January 1, 2013.

Public Use Fund

The Brazilian Government has imposed a fee on Independent Power Producers reliant on hydrological resources, except for Small Hydroelectric Power Plants, similar to the fee levied on public industry companies in connection with the RGR Fund. Independent Power Producers are required to make contributions to the Fundo de Uso de Bem Público (the Public Use Fund or UBP Fund) according to the rules of the corresponding public bidding process for the granting of concessions. We received the UBP Fund payments until December 31, 2002. All payments to the UBP Fund since December 31, 2002 are paid directly to the Brazilian Government.

Fuel Consumption Account

Distribution companies, and generation companies that sell directly to final consumers, must contribute to the Conta de Consumo de Combustível (the Fuel Consumption Account or CCC Account). The CCC Account was created in 1973 to generate financial reserves to cover elevated costs associated with the increased use of thermoelectric energy plants, in the event of a rainfall shortage, given the higher marginal operating costs of thermoelectric energy plants compared to hydroelectric energy plants. In February 1998, the Brazilian Government

- 91 -

provided for the phasing out of the CCC Account. Subsidies from the CCC Account have been phased out over a three-year period beginning in 2003 for thermoelectric energy plants constructed prior to February 1998 and belonging to the Interconnected Power System. Thermoelectric plants constructed after that date will not be entitled to subsidies from the CCC Account. In April 2002, the Brazilian Government established that subsidies from the CCC Account would continue to be paid to those thermoelectric plants located in isolated regions for a period of 20 years in order to promote generation of electricity in those regions.

Law No. 13,299, dated June 26, 2016 amended the formula for calculation of the CCC Account relating to the Isolated System, previously provided by Law No. 12,111 dated December 2009. According to the latter, the amount of the reimbursement through the CCC Account is equal to the total cost of generation minus the total amount of energy utilized by the agent at the average unitary energy price determined at auctions of the Interconnected system. The law determined that the energy sector fees were to be included in the calculation of the average cost of energy in the Regulated Market. Law No. 13,299, in turn, sets forth the exclusion of the fees related to the average energy price from January 1, 2017 to December 31, 2020, increasing the value to be reimbursed to energy distributors in the Isolated System. Each year, from January 2021 to December 2034, 1/15 of the energy sector fees will be added to the average energy price until 2035, when the totality of the fees shall be dully incorporated into the price again.

However, Law No. 12,783 extinguished the apportionment of the benefit of reduction of the costs for fuel consumption within electric energy generation.

Energy Development Account

In 2002, the Brazilian Government instituted the Conta de Desenvolvimento Energético (Energy Development Account or CDE Account), which is funded through annual payments made by concessionaires for the use of public assets, penalties and fines imposed by ANEEL and, since 2003, the annual fees to be paid by agents offering electricity to final consumers, by means of a charge to be added to the tariffs for the use of the transmission and distribution systems. These fees are adjusted annually. The CDE Account was created to support the: (i) development of electricity production throughout the country; (ii) production of electricity by alternative energy sources; and (iii) universalization of energy services throughout Brazil. The CDE Account will be in effect for 25 years and is regulated by ANEEL and managed by us.

The Electricity Regulatory Law establishes that the failure to pay the contribution to the RGR Fund, Proinfa program, the CDE Account, the CCC Account, or payments due by virtue of purchase of electricity in the Regulated Market or from Itaipu prevents the non-paying party from receiving a tariff readjustment (except for an extraordinary review) or receiving resources arising from the RGR Fund, CDE Account or CCC Accounts.

Electricity Reallocation Mechanism

The Mecanismo de Realocação de Energia (energy reallocation mechanism) provides financial protection against hydrological risks for hydro-generators according to energy commercialization rules in effect, to mitigate the shared hydrological risks that affect the generators and assure the optimal use of the hydroelectric resources of the Interconnected Power System.

The mechanism guarantees that all the generators that participate in it will be able to sell the amount of electricity which they have contracted to sell under long-term contracts as determined by ANEEL, which we refer to as “assured electricity,” irrespective of their actual electricity production, provided that the power plants participating in the mechanism, as a whole, have generated sufficient electricity. In other words, the mechanism reallocates electricity, transferring surplus electricity from those generators whose generation was in excess of their assured electricity, to those whose generation was less than assured electricity. The effective generation dispatch is determined by the ONS, which takes into account nationwide electricity demand, the hydrological conditions of the Interconnected Power System and transmission limitations.

Reimbursement of the generation costs of the relocated electricity is provided to compensate generators that relocate electricity to the system in excess of their assured electricity. Generators are reimbursed for their variable operational costs (except fuel) and costs for the use of water. The total costs of the relocated electricity (from all generators that provided electricity to the energy reallocation mechanism) are then combined and paid by the generators that receive electricity from the mechanism.

- 92 -

The mechanism includes all hydroelectric power plants subject to the centralized dispatching of the ONS, small hydroelectric stations that opt to participate in the mechanism and thermal power plants with centralized dispatching, included in the Initial Supply Contracts and whose fuel costs are subsidized by the Fuel Consumption Account. Since 2003, the Fuel Consumption Account power plants only partially participated in the mechanism, due to the gradual reduction of the subsidy.

Electric Power Services Supervision Fee – TFSEE

ANEEL also the Electric Power Services Supervision Fee (or TFSEE), which is a supervision fee from electric power services agents and concessionairespursuant to Law No. 9,427 of December 26, 1996, as amended by Law No. 12,111 of December 9, 2009, and Law No. 12,783/2013. The TFSEE is charged at the rate of 0.4% of the annual economic benefit posted by the agent or concessionaire. The economic benefit is determined based on the installed capacity of authorized generating and transmitting concessionaires or on annual sales income posted by distribution concessionaires. This fee is collected by ANEEL in twelve monthly installments.

Financial Compensation For Use Of Water Resources (CFURH)

The states, the Federal District, and municipalities, as well as direct public federal administration bodies all receive financial compensation from generating companies for use of water resources and loss of productive land due to the flooding of the area for the construction and generation of electric power. CFURH is based on power output and paid to the states and municipalities in which the plant or reservoir is situated. ANEEL is responsible for the collection and management of such fee. This charge is not assessed on Small Hydroelectric Power Plants, as they are exempt from this requirement.

Emergency Capacity Charge (ECE)

ECE was created as provided for in Article 1 of Law No. 10,438 of April 26, 2002, as amended by Law No. 12,212 of January 20, 2010. It is assessed proportionally to the final individual total consumption of all consumers served by the Interconnected Power System and classified as a specific tariff charge. ANEEL ruled that its basis would be the cost of contracting generating capacity or voltage estimated by Comercializadora Brasileira de Energia Emergencial (or CBEE) in any given year.

Rationing

The Electricity Regulatory Law establishes that, in a situation where the Brazilian Government decrees a compulsory reduction in the consumption of electricity in a certain region, all energy amount agreements in the Regulated Market, registered within CCEE in which the buyer is located, must have their volumes adjusted in the same proportion to the consumption reduction.

The Effects of the New Bankruptcy Law on Us

On February 9, 2005, the Brazilian Government enacted Law No. 11,101, or the New Bankruptcy Law. The New Bankruptcy Law, which came into effect on June 9, 2005, governs judicial recovery, extrajudicial recovery and liquidation proceedings and replaces the debt reorganization judicial proceeding known as concordata (reorganization) for judicial recovery and extrajudicial recovery. The New Bankruptcy Law provides that its provisions do not apply to government owned and mixed capital companies. However, the Brazilian Federal Constitution establishes that mixed capital companies, such as Eletrobras, which operate a commercial business, will be subject to the legal regime applicable to private corporations in respect of civil, commercial, labor and tax matters. Therefore it is unclear whether or not the provisions in connection with judicial and extrajudicial recovery and liquidation proceedings of the New Bankruptcy Law would apply to us.

- 93 -

Judicial Recovery

In order to request judicial recovery, a debtor must fulfill the following requirements: (i) conduct its business in a regular manner for more than two years; (ii) not be bankrupt (or, in the event that the debtor was bankrupt in the past, then all obligations arising therefrom must have been declared extinguished by a judgment not subject to appeal); (iii) not have been granted a judicial recovery or special judicial recovery in the five or eight years prior to its request, respectively; and (iv) not have been convicted of (or not have a controlling partner or manager who has been convicted of) a bankruptcy crime. All claims in existence at the time of the request for judicial recovery are subject to such procedure (including potential claims), except for claims of tax authorities, creditors acting as fiduciary owners of real or personal properties, lessors, owners or committed sellers of real estate, including for real estate developments, or owners under sale agreements with a title retention clause (paragraph 3 of Article 49 of the New Bankruptcy Law). The judicial recovery can be implemented by means of one or more of the following transactions, amongst others (i) the granting of special terms and conditions for the payment of the debtor’s obligations; (ii) spin-off, merger, transformation of the company, incorporation of a wholly-owned subsidiary or the assignment of quotas or shares; (iii) transfer of corporate control; (iv) partial or total replacement of the debtor’s management, as well as the granting to its creditors the right to independently appoint management and the power of veto; (v) capital increase; (vi) leasing of its premises; (vii) reduction in wages, compensation of hours and reduction of the workday, by means of collective bargaining; (viii) payment in kind or the renewal of the debtor’s debts; (ix) creation of a company composed of creditors; (x) partial sale of assets; (xi) equalization of the debtor’s financial charges; (xii) constitution of an usufruct on the company; (xiii) shared management of the company; (xiv) issuance of securities; and (xv) creation of a special purpose company for purposes of receiving the debtor’s assets.

However, pursuant to Law No. 12,767/2012, energy concessionaires may no longer initiate judicial or extrajudicial corporate reorganization procedures (recuperação judicial ou extrajudicial) until their concessions expire.

Extrajudicial Recovery

The New Bankruptcy Law also created the extrajudicial recovery mechanism, by means of which a debtor who meets the requirements for the judicial recovery (as outlined above) may propose and negotiate with its creditors an extrajudicial recovery plan, which must be submitted to the court for approval. Once approved, such a plan will constitute a valid means of enforcement. The extrajudicial recovery is not applicable, however, to any claims relating to labor- or workplace related accidents, as well as to any claims excluded from judicial recovery. In addition, the request for court approval of an extrajudicial recovery plan will does not impose a moratorium on the rights, suits and enforcement proceedings of creditors not subject to such plan, and those creditors will still be able to request the debtor’s bankruptcy.

As mentioned above, energy concessionaires may no longer initiate judicial or extrajudicial corporate reorganization procedures (recuperação judicial ou extrajudicial) until their concessions expire.

Liquidation

The New Bankruptcy Law changed the order in which claims are classified in the context of liquidation proceedings to the following order, which is set out in order of priority: (i) labor claims in general (limited to a maximum amount of 150 times the minimum monthly Brazilian wage per creditor) and labor claims related to indemnification for workplace accidents; (ii) claims of secured creditors (limited to the amount of the guarantee); (iii) tax claims (except for tax fines); (iv) personal claims enjoying special privileges (as defined in other statutes); (v) personal claims enjoying general privileges (among others, unsecured creditors who have provided goods or services to the debtor during its judicial recovery and creditors who are so defined in other statutes); (vi) unsecured debts (creditors not provided for in the preceding items, labor creditors whose claims exceed the 150-minimum monthly wages limitation, and creditors whose claims exceed the amount of their respective guarantees); (vii) contractual fines and monetary fines arising from the disobedience of statutes; and (viii) subordinated debts (as provided for by law or in an agreement, and creditors who are partners or managers of the debtor company but not in the context of a labor relationship). The New Bankruptcy Law establishes that only a creditor claiming for an amount in excess of 40 times the minimum monthly Brazilian wage can commence liquidation proceedings. However, it is permitted for creditors to commence a class action in order to comply with the minimum amount mentioned above. The New Bankruptcy Law also extended (i) the time period in which a debtor must present its defense in connection with a request for its bankruptcy from 24 hours to ten days, and (ii) the suspension period during which no assets may be sold or liquidated from 60 to 90 days (from either the date of filing the bankruptcy petition, the request for judicial recovery or from the date of the first protest of a note due to its non-payment by the company).

- 94 -

Compliance

The Company has been improving and enhancing its compliance program, in order to remedy the related material weakness, according to the FCPA’s requirements and the Brazilian Anticorruption Law. Throughout 2015 and 2016, the Company carried out a series of actions that increased the maturity of its compliance program.

The “Eletrobras 5 Dimensions Compliance Program” is a company-wide plan that we are developing and implementing in order to comply with international corporate governance standards, laws and regulations, including the U.S. Sarbanes-Oxley Act of 2002, the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), the Brazilian Anticorruption Law (Law no. 12,846/2013), Law of Government-Controlled Companies (Law no. 13,303/2016), the rules and guidelines issued by the SEC, CVM, the Brazilian Institute of Corporate Governance (IBGC) and the OECD, among others. A summary of our material weaknesses and remediation program is discussedin Item 15 of this Form 20-F.

As a response to allegations of potential illegal activities appearing in the media in 2015 relating to companies that provide services to the Company’s subsidiary, Eletrobras Termonuclear S.A. – Eletronuclear (“Eletronuclear”) (specifically, “ Angra 3” nuclear power plant), and to certain SPEs that Eletrobras holds a minority stake, Eletrobras’ Board of Directors, although not required to do so, hired the law firm Hogan Lovells US LLP to undertake an independent internal investigation for the purpose of assessing the eventual existence of irregularities, including violations of the U.S. Foreign Corruption Practice Act (FCPA), the Brazilian Anticorruption Law and the Eletrobras’ code of ethics (the “Independent Investigation”).

The Independent Investigation is subject to oversight by a commission that was created by the Board of Directors of Eletrobras on July 31, 2015. This commission is composed of Ms. Ellen Gracie Northfleet, a retired Federal Supreme Court judge, Mr. Durval José Soledade Santos, former director of the Comissão de Valores Mobiliários (Brazilian Securities Exchange Comission), and Mr. Manoel Jeremias Leite Caldas, representative of minority shareholders (the “Independent Commission”).

On April 29, 2015, the Federal Police commenced the “Radioactivity Operation” phase of Operation “Lava Jato”, which resulted in the imprisonment of a former officer of our subsidiary Eletrobras Termonuclear S.A – Eletronuclear. This former officer was sentenced to 43 years of prison, by the judge of the 7th Federal Criminal Court, for passive bribery, money laundering, obstruction of justice, tax evasion and participation in a criminal organization. On July 6, 2016, the Federal Police commenced “Operation Pripyat”, in which the Federal Police served arrest warrants issued by the judge of the 7^th Federal Court of the District of Rio de Janeiro against former officers, officers who had already been suspended by Eletrobras’ Board of Directors as well as other parties. Formal charges of corruption, money laundering and obstruction of justice were filed against such former officers by Federal Prosecutors on July 27^th, 2016. Eletrobras is assisting the prosecution in these criminal proceedings.

The Company, Hogan Lovells and the Independent Commission have been closely monitoring the official investigations and cooperating with Brazilian and United States authorities, including Federal Courts (Justiça Federal); Federal Prosecutors’ Office (Ministério Público Federal or “MPF); Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”); Council for Economic Defense (Conselho Administrativo de Defesa Economica or “CADE”), United States Department of Justice (“DOJ”), United States Securities & Exchange Commission (“SEC”), among others, and have responded to requests for information and documents from these authorities.

The Company evaluated the contracts with findings identified in external and internal investigations and, when applicable, suspended the contract. Eletrobras took the applicable administrative measures in relation to employees and officers involved in the situations identified by the investigation, including, when applicable, the suspension or termination of the employment agreement.

- 95 -

The Effects of Government-Controlled Companies Law on Us

Law No. 13,303 of June 30, 2016, establishes the rules applicable to state-owned companies, government-controlled companies and their subsidiaries, regulating the Article 173 of the Constitution of the Republic of 1988 (“Law of Government-Controlled Companies”).

The main subject of the Law of Government-Controlled Companies is linked to governance rules that have become applicable to state-owned and government-controlled companies, which are now forced to adopt higher standards of disclosure of technical and financial information, and to follow some specified criteria for the appointment of their officers and executives.

Among the new criteria set forth by the law, there are two highlights: the appointee is required to have an academic background and previous business experience in areas related to the business of the state-owned or government-controlled company where they would be working; and it is prohibited to appoint members of political parties or members of the legislative branch, as well as third parties related to them.

In addition, the law strengthens the entire governance structure and internal and external controls of state-owned and government-controlled companies, establishing the obligation for periodic public disclosure of technical and financial reports, maintenance of a statutory independent committee of internal audit, and mandatory submission to external auditing by independent audit firms, as well as by the audit bodies of public administration, such as the Federal, State and City Accounting Courts.

It was also defined by the Law of Government-Controlled Companies the social function of state-owned or government-controlled companies, which is the promotion of the public interest related to their business, which should be guided by an efficient economic management and a rational management of resources ensuring sustainable economic growth aiming to increase the access by consumers to the products and services provided by such company, to develop national technologies in order to for improve the products and provision of services and to promote environmentally sustained and socially responsible practices, always in an economically justified way.

Furthermore, the Law of Government-Controlled Companies establishes rules about public biddings for hiring and for the execution of contracts by state-owned or government-controlled companies, aiming to increase the transparency and effectiveness of internal and external controls connected to the appropriateness of the proceedings.

Although the rule came into force immediately after its publication, the state-owned or government-controlled companies have up to 24 (twenty four) months to adapt to the new legal requirements.

Regarding Eletrobras, many of the requirements set out in the Law of Government-Controlled Companies relating to the disclosure of technical and financial reports, as well as to the audit and internal control structure, are already met by the company and will be subject to review by the Board of Directors in order to strengthen and improve our governance structure, which already could be seen in the last election for the Board of Directors, which fully complied with the criteria for appointment of members and the percentage of participation of independent members set forth in the rule.

Other adjustments will be promoted by Eletrobras within the deadline established by the law for the adaptation of government-controlled companies to the new requirements.

C. Organizational Structure

In December 2015, we operated generation, transmission and distribution activities in Brazil through the following fourteen regional subsidiaries and Itaipu, 179 SPEs and non-controlling interests in 25 companies:

• Itaipu, a plant in which we and a Paraguayan governmental entity (ANDE) each hold a 50.0% interest and which we believe is one of the world’s largest hydroelectric plants by volume of energy generated;

- 96 -

• Furnas, which engages in generation and transmission activities in the southeast and part of the midwest regions of Brazil;

• Chesf, which engages in generation and transmission in the northeast region of Brazil;

• Eletronorte, which engages in generation, transmission and limited distribution activities in the north and part of the midwest regions of Brazil;

• Eletronuclear, which owns and operates two nuclear plants, Angra I and Angra II, and is planning to construct a third, Angra III;

• Amazonas Energia, which engages in generation, transmission and distribution in the State of Amazonas. Amazonas Energia operates in the interior of the State of Amazonas, an area that, until March, 2008, was operated by Ceam, which was previously directly held by Eletrobras but no longer exists as a standalone operating company;

• Amazonas GT: which engages in generation and transmission activites in the State of Aamazonas;

• Eletrosul, which engages in transmission activities in the State of Santa Catarina, Rio Grande do Sul, Mato Grosso do Sul and Paraná;

• CEPISA, which engages in distribution activities in the State of Piauí;

• CEAL, which engages in distribution activities in the State of Alagoas;

• CERON, which engages in distribution activities in the State of Rondônia;

• Boa Vista Energia, which engages in distribution activities in the State of Roraima;

• CGTEE, which owns and operates thermal plants in the south region of Brazil;

• Eletroacre, which engages in distribution activities in the State of Acre; and

• CELG-D, which engages in distribution activities in the State of Goiás.

We are also the main sponsor of Cepel, the largest technological research and development center in the electricity industry in Latin America.

We also hold a majority interest in Eletrobras Eletropar, a holding company that holds minority interests in the following five Brazilian distribution companies: (i) AES Eletropaulo Metropolitana de Eletricidade de São Paulo S.A – AES Eletropaulo; (ii) Energias do Brasil S.A. – Energias do Brasil; (iii) Companhia de Transmissão de Energia Elétrica Paulista – CTEEP; (iv) Empresa Metropolitana de Águas e Energia S.A. – EMAE; and (v) Companhia Piratininga de Força e Luz – CPFL.

- 97 -

The following organizational chart shows our summarized shareholder structure and subsidiaries as of the date of this annual report (we also have minority shareholdings in 26 utility companies throughout Brazil, not indicated in this chart):

On January 11, 2013, the shareholders of our subsidiary Eletrosul approved the incorporation of Artemis Transmissora de Energia S.A..

On October 2, 2013, Eletrobras acquired from Administración Nacional de Usinas Y Transmisiones Eléctricas a 50% equity interest in Rouar S.A., a company based in Montevideu, Uruguay and engaged in the generation of electricity by means of wind power.

On December 30, 2013, Eletronorte approved the merger of its wholly owned subsidiary Rio Branco Transmissora de Energia S.A. into Eletronorte.

In March 2014, the company Estação Transmissora de Energia S.A was merged into Eletronorte.    On December 31, 2014, Chesf acquired 100% of the equity of Extremoz and started to hold 83.01% of SPE Tamanduá Mirim.

On September 26, 2014, our shareholders approved the acquisition of a 50.9% interest in CELG-D. This transaction closed on January 27, 2015 when we disbursed R$ 59.5 million in respect of the acquisition. Accordingly, the balance sheet of CELG-D is fully consolidated into our balance sheet as of December 31, 2014 and the results of operations and cash flows of CELG-D are fully consolidated into our income statement and cash flows from October 1, 2014. On May 13, 2015, the Brazilian Government enacted Decree No. 8,449, which included CELG-D in the National Privatization Program (PND, or Programa Nacional de Desestatização). Accordingly, Celgpar and we deposited our shares of CELG-D with the National Privatization Fund (FND, or Fundo Nacional de Desestatização). Our shareholders’ meeting held on December 28, 2015, approved the sale of our shares of CELG-D and since than CELG D is available for sale. The privatization process was expected to be arranged by BM&FBOVESPA and to be held in the first half of 2016. However, the Commission of Bidding relating to the

- 98 -

Privatization Auction of CELG-D, designated by the Ordinance PRESI 093/2016 – BNDES of June 29, 2016, announced on August 2016 that the bid was considered cancelled due to lack of bidders. Accordingly, the Investments Partnership Program of the Presidency of the Republic reviewed, on September 14, 2016, the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid in 2016 to privatize CELG D. The Board of Investment Partnerships Program of the Federal Government approved the Resolution 7/2016 in the which is being listed the new minimum conditions and new price for sale, by Eletrobras, of its shareholding participation in CELG Distribuição S.A (“Celg-D”). The new market value approved by the PPI for CELG D is R$ 4.448 billion (four billion, four hundred forty-eight million). However, considering the debts and other liabilities in the amount of R$ 2.656 billion (two billion, six hundred fifty-six million), as of June 2016, the net value of CELG D is R$ 1.792 billion (one billion, seven hundred ninety-two million). In the privatization process, Eletrobras intends to sell its entire stake in CELG D, equivalent to 50.9% of the share capital. The shareholders of Eletrobras are invited to attend the Extraordinary General Meeting to be held on October 24, 2016 to deliberate about this sale.

On June 22, 2015, our shareholders approved the corporate split of Amazonas Energia into Amazonas GT and Amazonas D.

D. Property, Plant and Equipment

Our principal properties consist of hydroelectric generation plants and transmission networks which are located all over Brazil. The book value of our total property, plant and equipment as of December 31, 2015, December 31, 2014 and December 31, 2013 was R$ 29,547, R$ 31,168 million and R$ 30,247 million, respectively. As a result of the existing large hydroelectric power capacity still available in Brazil, we believe hydroelectric energy will continue to have a prominent role in providing for the growth in consumption of electrical energy.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with our audited Consolidated Financial Statements included elsewhere in this annual report.

Overview

Directly and through our subsidiaries, we are involved in the generation, transmission and distribution of electricity in Brazil. Our revenues derive mainly from:

• the generation of electricity through our subsidiaries and its sale to electricity distribution companies and free consumers, which in 2015, 2014 and 2013 accounted for R$ 18,242 million, or 52.7%, R$ 19,821 million, or 62.8% and R$ 16,688 million, or 65.5% of our total net revenues, respectively. In 2015, of R$ 18,242 million in revenue, R$ 1,748 million was from operation and maintenance and R$ 16,494 million was from exploration;

• the transmission of electricity, which in 2015, 2014 and 2013 accounted for R$ 5.665, or 16.4%, R$ 4,978 million, or 15.7% and R$ 4,203 million, or 16.5% of our total net revenues, respectively. In 2015, of R$ 5.665 million in revenue, R$ 3,826 million was from operation and maintenance and R$ 1,839 was from exploration;; and

• the distribution of electricity to end consumers, which in 2015, 2014 and 2013 accounted for R$ 10,352, or 29.9%, R$ 6,664 million, or 21.1%, R$ 4,499 million, or 17.7% of our total net revenues, respectively.

The primary drivers of our financial performance are demand for electricity (which in turn is impacted by macroeconomic conditions and external events such as electricity rationing, which occurred in 2001 and 2002) and

- 99 -

the pricing of electricity (which is determined as set out in “Item 4.B, The Brazilian Power Industry”). Although levels of electricity consumption now exceed those that existed before the energy crisis that occurred in 2001 and 2002, that energy crisis continues to impact our recognition of revenues and, accordingly, our results of operations.

Principal Factors Affecting our Financial Performance

The Effects of Law No. 12,783

In 2012, the Brazilian Congress converted Provisional Measure No. 579/2012 into Law No. 12,783, which materially changed the Brazilian electricity sector. The law allowed current holders of concessions to operate electricity generation and transmission assets, which were due to expire during the years 2015 through 2017, to renew those concessions for an additional maximum period of 30 years effective January 1, 2013, but at significantly lower tariff levels. As an option under the law, Eletrobras and other concessionaires could have entered into a potentially competitive bidding process to renew their generation and transmission concessions. Law No. 12,783 also affected distribution concessions by lowering the tariffs and, affected renewal of distribution concessions.

In 2013, there was a change of regime in the revenue framework with respect to renewed generation and transmission concessions requiring the exploration method and the operating and maintenance methods to be separately disclosed pursuant to Law 12,783/2013. For these reasons, as of 2013 companies that renewed generation and transmission concessions pursuant to Law No. 12,783 have received lower tariff payments in relation to these assets than the payments made before Law No. 12,783 was enacted. For renewal generation concessions there is a new business model, pursuant to which the tariff covers just a standard operating and maintenance cost plus a margin of 10%, rather than the non renewal generation concession which the company could sell the generated energy.

Under Law No. 12,783, the Federal Government agreed to indemnify Eletrobras and other electricity concessionaires for part of the value of non-amortized investments Eletrobras and other concessionaires made during the term of their concessions. Some of these indemnity payments have been agreed and paid, while others have been estimated for purposes of financial statements based on information available to Eletrobras, see explanatory notes of Subsequent Events of the financial statements.

The shareholders of Eletrobras approved the renewal of generation and transmission concessions under the new law despite the nonrecurring R$ 10.09 billion write off in our assets on December 31, 2012, and the significant expected negative impact on revenues from the relevant concessions in subsequent periods.

In respect of distribution concessions, in 2015, the Federal Government enacted Decree No. 8,461 that regulates the criteria for the renewal of distribution concessions pursuant to Law No. 12,783. The renewal of distribution concessions pursuant to Decree No. 8,461 requires that concession holders meet certain criteria for (i) the quality of the distribution services provided, and (ii) the compliance with certain financial ratios.The Provisional Measure No. 735/2016 also establishes the possibility that Eletrobras could transfer its shareholding in the distribution companies, which are subsidiaries of Eletrobras that do not have an approved extension of their concessions, or that the Federal Government could bid for those subsidiaries.

Generation Scaling Factor

Over the course of 2015, the financial effects of the Generation Scaling Factor, or GSF, on the generation companies which are part of the Energy Relocation Mechanism, or MRE, were discussed.

There was a broad sector debate on the effects of and solutions for the GSF from an administrative, regulatory, business and legal perspective. Law No. 13,203/2015, dated December 8, 2015, and ANEEL Resolution No. 684/2015, dated December 11, 2015, which established the criteria for the approval and the conditions for the renegotiation of the hydrological risk were enacted as a result of Provisional Measure No. 688/2015 (which was amended 78 times) and the ANEEL Public Hearing No. 32/2015.

- 100 -

We note that, before the enactment of Law No. 13,203/2015, all existing hydrological risk was entirely supported by the hydraulic generation agents which were part of the MRE. Accordingly, when the GSF was valued below 1.0, that is, when the total hydraulic generation for the power plants forming the MRE was below the total Physical Guarantee, the difference was split between all hydraulic generators, according to the proportions of their physical guarantees. Depending on the contracting situation of each hydraulic generator, it could be necessary to acquire the additional energy on the short term market. After the enactment of Law No. 13,203/2015, the generators may share the hydrologic risk with consumers, through the payment of the “risk premium”.

The GSF was valued below 1.0, that is, when the total hydraulic generation for the power plants forming the MRE was below the total Physical Guarantee, the difference was split between all hydraulic generators, according to the proportions of their physical guarantees. Depending on the contracting situation of each hydraulic generator, it could be necessary to acquire the additional energy on the short term market. After the enactment of Law No. 13,203/2015, the generators may share the hydrologic risk with consumers, through the payment of the “risk premium”.

We have acted in the GSF debates, particularly in the discussions relating to Itaipu’s GSF (addressed by Decree No. 8.401/2015), during public hearing held by ANEEL, in the discussions with the Associação Brasileira das Empresas Geradoras de Energia Elétrica, or ABRAGE, and on several meetings with the MME, and ABRAGE. Further, we also contributed by initiating proceedings with the aim of setting a limit to the GSF and removing the effects of defaults in the Câmara de Comercialização de Energia Elétrica, or CCEE.

The assessment of products available in the context of the renegotiation of the hydrological risk, such as those listed in Resolution No. 684/2015, took into account the following: plant marketing profile for the regulated contracting environment (ACR) and free environment (ACL), hedging strategy, contract termination predictions, energy simulations, Economic and Financial Feasibility studies (VPL by product type), analysis of the accounting impact, duration of Concession Agreements, cost of risk premium, legal analysis, additional risks related to the Contracting of Energy Reserves, projections for Net Price of Differences (PLD) and allocation of secondary energy, among others.

Investment in CELG-D and in Distribution Companies

On September 26, 2014, our shareholders approved the acquisition of a 50.9% interest in CELG-D. This transaction closed on January 27, 2015 from R$ 59.5 million. Accordingly, the balance sheet of CELG-D is fully consolidated into our balance sheet as of December 31, 2014 and the results of operations and cash flows of CELG-D are fully consolidated into our income statement and cash flows from October 1, 2014. On May 13, 2015, the Brazilian Government enacted Decree No. 8,449, which included CELG-D in the National Privatization Program (PND, or Programa Nacional de Desestatização). Accordingly, Celgpar and we deposited our shares of CELG-D with the National Privatization Fund (FND, or Fundo Nacional de Desestatização). Our shareholders’ meeting held on December 28, 2015, approved the sale of our shares of CELG-D. The privatization process was expected to be arranged by BM&FBOVESPA and to be held in the first half of 2016. However, the Commission of Bidding relating to the Privatization Auction of CELG-D, designated by the Ordinance PRESI 093/2016 – BNDES of June 29, 2016, announced on August 2016 that the bid was considered cancelled due to lack of bidders.Accordingly, Eletrobras will review the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid to privatize CELG D. Accordingly, the Investments Partnership Program of the Presidency of the Republic (Programa de Parceria de Investimentos da Presidência da República – PPI) reviewed, on September 14, 2016, the privatization conditions approved by the National Council on Privatization (“CND”) and BNDES, in order to launch a new bid in 2016 to privatize CELG D. The Board of Investment Partnerships Program of the Federal Government approved the Resolution 7/2016 in which is being listed the new minimum conditions and new price for sale, by Eletrobras, of its shareholding participation in CELG Distribuição S.A (“Celg-D”). The new market value approved by the PPI for CELG D is R$ 4.448 billion (four billion, four hundred forty-eight million). However, considering the debts and other liabilities in the amount of R$ 2.656 billion (two billion, six hundred fifty-six million), as of June 2016, the net value of CELG D is R$ 1.792 billion (one billion, seven hundred ninety-two million). In the privatization process, Eletrobras intends to sell its entire stake in CELG D, equivalent to 50.9% of the share capital. The shareholders of Eletrobras are invited to attend the Extraordinary General Meeting to be held on October 24, 2016 to deliberate about this sale.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. The shareholdersalso approved that this distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary

- 101 -

funds for these companies to keep their operations ongoing, perform maintenance and make new investments shall be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns such concessions, they will be subject to new bids in the future.

Brazilian Macroeconomic Conditions

Brazilian GDP

Brazil recorded a 4.61% decrease in its GDP as of June 30, 2016; a 3.85% decrease in its GDP for the year ended December 31, 2015; a 0.1% increase for the year ended 2014 and a 2.3% increase for the year ended December 31, 2013, as reported by the Central Bank of Brazil using data provided by the IBGE. The Central Bank has attributed this decrease to (i) the continued effects of macroeconomic measures enacted by the Brazilian Government, including inflation targeting, and (ii) non-economic events, such as the effects of Operação Lava-Jato on certain sectors of the economy and the breach of the Mariana dams in the final quart of 2015, which negatively affected iron ore production.

In its quarterly inflation report published in September 2016, the Central Bank stated that it expects the Brazilian GDP to decrease 3.5% in the year ended December 31, 2016. See “ We are controlled by the Brazilian Government, the current policies and priorities of which directly affect our operations and may conflict with interests of our investors” for more information regarding the effects of macroeconomic developments on our results of operations.

SELIC rate

As of April 18, 2013, the Central Bank began a monetary tightening cycle, pursuant to which it successively increased the SELIC rate, which is the benchmark interest rate for securities issued by the Brazilian government, from 7.25%, effective as of October 11, 2012, to 14.25% effective as of July 30, 2015. From July, 2015, to September 2016, the SELIC rate was 14.25%

Inflation

The IGP-M inflation index increased to 10.5% for the year ended December 31, 2015 from 3.7% for the year ended December 31, 2014 and 5.5% for the year ended December 31, 2013. From January, 2016 to September, 2016 the IGP-M inflation index increased to 6.46%. The IPCA inflation index increased to 10.6% for the year ended December, 2015 from 6.4 for the year ended December 31, 2014 and 5.9% for the year ended December 31, 2013. From January, 2016 to August, 2016 the IPCA inflation index increased to 5.42%. In its March quarterly inflation report, the Central Bank highlighted that the increase in inflationwas principally due to: (i) the depreciation of the real against the U.S. dolar, (ii) tax increases and (iii) seasonal preassure on the cost of food and education.

Exchange rate

The Brazilian real depreciated against the U.S. dollar to R$ 3.90 as of December 31, 2015 compared to R$ 2.66 as of December 31, 2014 and R$ 2.34 as of December 31, 2013. As of September 30, 2016, real depreciated against the U.S. dollar to R$ 3.24. In December 30, 2014 the Central Bank announced the extension of its foreign exchange intervention program, which it commenced in August 22, 2013. Pursuant to this program the Central Bank announced that it will offer U.S.$0.5 billion of derivatives (swap agreements) until the end of March 2015. On March 24, 2015, the Central Bank announced that it would not extend the programFor further information on how the real to U.S. dollar exchange rates affect our results, see “—Exchange Rate Variations.”

- 102 -

The following table shows data relating to Brazilian GDP growth, inflation and the real/U.S. dollar exchange rate for the years indicated:

	Year Ended December 31,
	2015			2014			2013
GDP growth rate		(3.85	)%		0.15	%		2.3	%
Inflation (IGP-M)		10.54	%		3.67	%		5.51	%
Inflation (IPCA)		10.67	%		6.41	%		5.91	%
Appreciation (depreciation) of the real vs. the U.S. dollar		47.01	%		13.39	%		14.64	%
Period-end exchange rate – U.S.$1.00	R$	3.9048		R$	2.6562		R$	2.3426
Average exchange rate – U.S.$1.00	R$	3.3387		R$	2.3547		R$	2.1605

Sources: Fundação Getúlio Vargas, Ipeadata Instituto Brasileiro de Geografia e Estatística and the Central Bank.

Electric Power Market

Electricity consumption in Brazil decreased 2.1% in 2015. This was a smaller rate of decrease than the GDP decrease for the same period, which was 3.85. This decrease was mainly caused by decreased demand in the industrial segment, which recoreded a reduction of 5.3%, and in the domestic segment, which recorded a reduction of 0.7%. Data published by Empresa de Pesquisa Energética – EPE shows that total power consumption in Brazil for 2015 was 464,683 GWh, which represents a decrease of 2.1% in relation to 2014.

The electric power consumption in Brazil by geographic region is presented below:

Energy Consumption in the Network (GWh):

Consumption Class									2015		2014		Variation
Region	Residential		Industrial		Commercial		Others		Total		Total		%
North		8,474		14,884		4,938		4,527		33,420		32,364		3.3
Northeast		26,073		24,622		14,091		15,213		79,998		80,746		(0.9	)
Southeast		64,761		90,189		48,808		30,849		234,608		242,513		(3.3	)
South		20,353		31,082		15,160		15,409		82,005		84,819		(3.3	)
Mid-West		11,056		8,797		7,385		7,413		34,651		34,381		0.8

Consumption Class									2014		2013		Variation
Region	Residential		Industrial		Commercial		Others		Total		Total		%
North		7,422		14,153		4,411		4,166		32,375		30,152		7.37
Northeast		23,856		28,736		12,633		14,601		80,546		79,827		0.90
Southeast		63,947		100,183		45,656		30,273		241,036		240,058		0.41
South		19,672		32,339		14,164		14,670		84,933		80,845		5.06
Mid-West		9,961		9,184		6,848		6,865		34,506		32,858		5.02

Source: Permanent Committee of Analysis and Monitoring of Electric Power Market – Copam/EPE.

Itaipu

Itaipu, one of the world’s largest hydroelectric plants, is jointly owned by Brazil and Paraguay and was established and is operated pursuant to a treaty between those countries.

Pursuant to the Itaipu treaty, we are entitled to trade not only the 50.0% of electricity produced by Itaipu that, through us, Brazil owns, but also that part of Paraguay’s share of electricity not used by Paraguay. As a result we act as a commercial agent of approximately 95.0% of the electricity produced by Itaipu. Articles 7 and 8 of Law No. 5,899 of July 5, 1973 set out the framework which distribution companies use to calculate the total amount of energy purchased from Itaipu.

While Itaipu produces a large amount of electricity, the Itaipu treaty requires that sales of Itaipu electricity be made on a no-profit basis, with no net effect on our results of operations.

In order to effect the “no profit” requirement, profits from the sale of Itaipu electricity are credited in subsequent periods to residential and rural consumers of electricity through the Interconnected Power System through their electricity bills and losses are taken into account by ANEEL in calculating tariffs for electricity in subsequent periods.

- 103 -

Pursuant to Law No. 11,480/2007, we were able to apply an “adjustment factor” to any financial contracts entered into between us and Itaipu and any credit assignments entered into between us and the Brazilian Federal Treasury prior to December 31, 2007. The aim of this “adjustment factor” was to offset the impact of the rate of inflation in the United States on the U.S. dollar payments. Accordingly, this “adjustment factor” measures the rate of inflation by reference to the consumer price index (CPI) and another index which tracks changes in industry prices. This law was repealed and Decree No. 6,265 of November 22, 2007 came into force which determines that a rate equivalent to the previous “adjustment factor” is to be passed on to distribution companies on an annual basis.

For discussion of accounting treatment of Itaipu, see note 3.10, subsection IV of our consolidated financial statements.

Exchange Rate Variations

Fluctuations in the value of the real against the U.S. dollar, particularly devaluations and/or depreciation of the real, have had and will continue to have an effect on the results of our operations. In particular, pursuant to the Itaipu treaty, all revenues from Itaipu are denominated in U.S. dollars. Because the financial statements of Itaipu Binacional are prepared in U.S. dollars and translated to reais at the exchange rate published by the Central Bank at the period end, any movement in the exchange rate between the real and the U.S. dollar can have a major impact on our results, in particular the “Foreign exchange and monetary gain” component of the line item “Financial income (expense), net.”

However, because pursuant to the Itaipu treaty the operation of Itaipu is not permitted to have any net effect on our operating results, any loss or gain incurred as a result of any appreciation or depreciation of the U.S. dollar against the real, among other things, will subsequently be compensated for by the tariffs we charge to our residential and rural consumers. In our income statement, the effects of Itaipu on the line items described above are netted out and recorded in the line item “Deferred loss from Itaipu.” Until that compensation takes place, the accumulated results of profits or losses from Itaipu operations, net of compensation through tariff adjustments, is carried on our balance sheet as a current asset under “Reimbursement rights.”

Regulated Distribution Tariffs

For 2015, 29.9% of our net operating revenues (before eliminations) were derived from the distribution of electricity. The distribution companies generally produce losses, which are likely to continue as the tariffs that may be charged by distribution companies are regulated and adjusted by ANEEL only in accordance with the process set out in “Item 4.B Business Overview – The Brazilian Power Industry – Distribution Tariffs.”

The Federal Government enacted Decree No. 8,461, that regulates the criteria for the renewal of distribution concessions pursuant to Law No. 12,783. The renewal of distribution concessions pursuant to Decree No. 8,461 requires that concession holders meet certain criteria for: (i) the quality of the distribution services provided, and (ii) the compliance with certain financial ratios.

During the Extraordinary General Meeting of Shareholders held on July 22, 2016, the shareholders approved not to renew the concessions of Companhia Energética do Piaui - CEPISA; Companhia Energética de Alagoas - CEAL; Companhia de Eletricidade do Acre - ELETROACRE; Centrais Elétricas de Rondônia S.A - CERON; Boa Vista Energia S.A.; and Amazonas Distribuidora de Energia and that by December 31, 2017 Eletrobras will transfer the control of these distributions. The shareholdersalso approved that this distributions companies can be responsible for the distribution of public energy until December 31, 2017 if all the necessary funds for these companies to keep their operations ongoing, perform maintenance and make new investments shall be allocated by customer charges or government funding. The shareholders also approved to return, at any time, the distribution companies to Government control if control has not been transferred by December 31, 2017, or if the Federal Government, at any time, ceases to allocate resources to fund these companies or the tariff does not represent proper compensation. If Eletrobras returns such concessions, they will be subject to new bids in the future.

On August 3, 2016, the MME issued decrees Nos. 420, 421, 422, 424 and 425 naming, respectively, the Distributors Amazonas Energia, Eletroacre, Ceron, Cepisa, Ceal and Boa Vista as temporarily responsible for distributing public energy so as to assure the continuity of the service, in accordance with article 9, paragraph 1, of Law No. 12,783 of January 11, 2013.

- 104 -

According to such decrees, the Distributors shall provide the indicated services, in a provisional manner, against payment of the proper compensation, until the effective transfer of control of the Distributors, or until December 31, 2017, whichever occurs first, in accordance with the terms provided in Decree MME 338 of July 26, 2016 and article 9 of Law No. 12,783/2013.

Fixed Transmission Revenues

Similarly to the energy generation, a large part of the electric transmission concessions were renewed under Law 12,783 and began to be remunerated through Operation and Maintenance tariff.

Transmission Lines, whose concessions were not renewed yet in accordance with Law 12,783, have a fixed annual remuneration, called Annual Allowed Revenue - RAP. This remuneration is allocated through an auction promoted by the Regulator Agency, in which the winner will be the one who offers the lowest RAP.

Due to the characteristics of the Brazilian generation park, predominantly hydro and the territorial dimension of Brazil, the transmission cost is shared by all users. The transmission use of system charges are collected through the Transmission use of System Tariff (TUST).

Critical Accounting Policies

In preparing our consolidated financial statements included in this annual report, we made estimates and assumptions that we consider reasonable based on our historical experience and other factors. The presentation of our financial condition and results of operations requires that our management make estimates about inherently uncertain matters, such as the book value of our assets, our liabilities and, consequently, our results of operations. Our financial presentation would be materially affected if we were to use different estimates or if we were to change our estimates in response to future events. To provide an understanding of how our management forms its judgments about future events, including the factors and assumptions underlying those estimates, we have identified the following critical accounting policies. We have set out below a summary of our critical accounting policies. For further information please refer to Note 3 to our Consolidated Financial Statements.

Deferred tax assets and liabilities

The estimates of taxable income, the basis for the analysis of realization of net deferred tax assets are based on annual budgets and strategic plan, both reviewed periodically. However, future taxable income may be higher or lower than estimates made by management when the need to register or not the deferred tax asset amount was defined.

Provision for impairment of long-lived assets

We adopt variables and assumptions in determining the recovery of long-lived assets in order to determine the recoverable value of assets and recognition of impairment when necessary. Our management established judgments based on historical experience related to the asset, the group of assets or of the cash-generating unit that are applied. These judgments may not materialize in the future. Also, the useful life adopted by us is in accordance with the practices determined by ANEEL as applicable on assets linked to the concession of power, which may vary due to the periodic review of the economic useful life of assets, in force. Additionally, the useful life is limited to the concession term only for the operations based on IFRIC 12.

Also the variables and assumptions used by us and our subsidiaries in determining discounted cash flows for recognition of impairment of long-lived assets may vary due to inherently uncertain events. These events include: maintenance of levels of energy consumption; growth rate of economic activity in the country; availability of water resources; and determination of the value of reversion at the end of the concession period. Law 12,783/2013, enacted on January 11, 2013, defined the new replacement value (VNR) as the identification basis for public service concessions. We have determined that the identification basis will be based on the VNR, for generation and transmission assets, and by the base value of Regulatory Asset Base (Base Remuneração Regulatória) for distribution assets, based on its VNR value. These are the bases used to determine the indemnity at the end of concession period for generation, transmission and distribution of electricity. For further information, please see Note 3.XI and changes in provisions made during the year in Note 20 to the consolidated Financial Statements. Another significant variable is the discount rate used to discount cash flows.

- 105 -

Basis of determination of indemnification by the Federal Government on concessions

Law 12,783/2013, enacted on January 11, 2013, defined the new replacement value (VNR) as the identification basis for public service concessions. We adopt, for the concessions not yet renewed, the assumption that the assets are reversible at the end of the concession contracts, with the right to receive indemnity from Federal Government on investments not yet amortized at the lower net book value and the new estimated replacement value. Following this assumption, for the concessions already renewed we have maintained the receivables with the Federal Government relating to the Rede Básica do Sistema Existente – RBSE, the investments made after the basic design of power plants and transmission lines (modernization and improvements), and the thermal generation assets. Such values are subject to approval by ANEEL. For further information regarding the effects of Law No. 12,7383, please see Note 2.1 to the Financial Statements.

We have defined the new replacement value (NRV) as a way of measuring the amount to be indemnified by the Federal Government for the share of generation and transmission assets not fully depreciated by the end of the concession. For transmission assets this was defined by the Regulatory Asset Base – RAB.

Useful life of fixed assets

We adopt the criteria defined in ANEEL Resolution 367 of June 2, 2009, in determining the estimated useful life of fixed assets, limited to the concession term for the operations that are based on IFRIC 12, pursuant to the understanding that they fairly represent such lifespan.

Provision for asset decommission

We recognize provisions for decommissioning liabilities for the assets related to our thermonuclear power plants. In order to calculate the amount of the provision, assumptions and estimates are made regarding the discount rates, the expected decommissioning cost and removal of the entire power plant from the location and the expected period of the referred costs. The cost estimate is based on legal and environmental requirements for decommission and removal of the entire plant, as well as the prices of goods and services to be used at the end of the useful life.

Actuarial liabilities

Actuarial liabilities are determined by actuarial calculations prepared by independent actuaries based on the life expectancy of the participant, average retirement age and inflation. However, the actual experiences could be different from these actuarial assumptions.

Provision for labor, tax and civil matters

Provisions for labor, tax and civil matters are based, on the evaluation of management and internal and external legal counsel. The provision amounts recognized based on the estimated amounts to settle the obligations. Contingent obligations do not result in recognition of provisions and the estimated possible losses are disclosed in consolidated financial statements. This assessment is supported by the judgment of management, along with its legal counsel, considering case law, decisions in the courts, the history of any agreements and decisions, the experience of management and legal counsel, as well as other relevant aspects.

Allowance for doubtful accounts

We recognize an allowance for doubtful accounts for accounts receivable that management believes is unlikely to be collected in full.

Valuation of financial instruments

We use valuation techniques that include information that are not based on observable market data to estimate the fair value of certain types of financial instruments. Note 43 of our consolidated financial statements

- 106 -

presents information on key assumptions used in determining the fair value of financial instruments, as well as the sensitivity analysis of these assumptions. We believe that the selected valuation techniques and assumptions used are appropriate for determining the fair value of financial instruments.

Onerous contracts

We use the assumptions related to economic costs and benefits of each contract to determine the existence or not of an onerous contract. In the case of long term commitments as sale and purchase of energy, the estimate in determining the amount of provision for the future sale of the contract is the historical average PLD approved by our management as a basis for the calculation of the provision for onerous contracts exclusively for accounting, as well as the discount rate applied to the cash flows. The actual values of the PLD over the years may be higher or lower to the assumptions we used. In addition, we may have onerous contracts on concessions where the current expected cost for operation and maintenance is not fully covered by the revenues.

As an example, Eletrobras was party to a number of contracts for the sale of electricity in connection with concessions that were scheduled to expire in the years 2015 through 2017. With the implementation of Law No. 12,783, many of these contracts have become “onerous” to Eletrobras, as they were based on old tariff levels. At the prior tariff levels, these contracts were expected to be profitable, but based on the new reduced tariff levels, the contracts will result in further losses for Eletrobras.

In 2014, we recognized reversals of provisions for onerous contract losses. Please refer to note 34 of our consolidated financial statements for a further discussion regarding the reversal of these provisions.

Description of Principal Line Items

Operating Revenues

Electrical Energy Sales

We derive our revenues from the generation, transmission and distribution of electricity, as set out below:

• revenues in our generation segment derive from the commercialization and sale to distribution companies and free consumers of electricity that we have generated. Revenues from our electricity generation segment are recognized based on the output delivered at rates specified under contract terms or prevailing regulatory rates. For generation concessions renewed pursuant to Law 12,783/2013, there was a change of regime in the revenue framework, whereas the exploration method and the operating and maintenance methods are required by the law to be separately disclosed beginning in 2013;

• revenues from our transmission segment derive from the construction, operation and maintenance of transmission networks for other electricity concessionaires and certain revenues arising from applying inflation and other indexes to the value of our investments. Revenues received from other concessionaires using our basic transmission network are recognized in the month that the services are provided to the other concessionaires. These revenues are fixed each year by the Brazilian Government. These revenues also include as financial revenue the value calculated over receivables registered as financial assets (formerly recorded as “Property, Plant and Equipment”), based on fees calculated from the receipt of annual permitted revenues (Receita Anual Permitida), or RAP (which is based on gross RAP minus the amount allocated for operations and maintenance revenue) until the concession agreements for energy transmission services terminate. For transmission concessions renewed pursuant to Law 12,783/2013, there was a change of regime in the revenue framework, whereas the exploration method and the operating and maintenance methods are required by the law to be separately disclosed beginning in 2013; and

• revenues in our distribution segment derive from the sale to end consumers of electricity that we purchase from generation companies and also some electricity that we generate in thermal plants in certain isolated areas in the north region of Brazil for distribution, as well as certain revenues from the construction, operation and maintenance of distribution networks. Electricity distribution

- 107 -

sales to final customers are recognized when power is provided. Invoices for these sales are rendered on a monthly basis. Unbilled revenues from the billing cycle up to the end of each month are estimated based on the prior month’s billing and are accrued at the end of the month. Differences between estimated and actual unbilled revenues, if any, are recognized in the following month.

• On November 25, 2014, ANEEL decided to add the concession and permit agreements of the Brazilian electricity distribution companies, incorporating the balances of the receivables from Parcel A and other financial items in calculation of indemnity, when the concession expires. The aforementioned event requires that the balance be recognized for any differences from Parcel A and other financial components not yet recovered or liquidated. The total revenue from Parcel A and other financial items on December, 31, 2015 is R$ 324 million. See Note 38 of the Consolidated Financial Statements for further information.

Other Operating Revenues

Other operating revenues derive from telecommunication companies using certain parts of our infrastructure to install telecommunication lines, and other revenues which are not related to the electricity services.

Taxes on Revenues

Taxes on revenues consist of Imposto sobre a Circulação de Mercadorias e Serviços – ICMS (or VAT), a sales tax charged on gross revenues. We are subject to different VAT rates in the different states in which we operate, with the VAT rates ranging from 7.0% to 27.0%. Pursuant to applicable regulations, we are not liable for any taxes on revenues in our transmission segment.

Additionally, we are subject to two federal taxes imposed on the gross revenues of corporate entities: the Program of Social Integration (Programa de Integração Social) – PIS/PASEP and Contribution for the Financing of Social Security (Contribuição para o Financiamento da Seguridade Social) – COFINS.

Regulatory Charges on Revenues

These deductions from gross revenues comprise payments made to the CCC Account, the RGR Fund, the CDE Account, PROINFA and similar charges levied on electricity sector participants. Regulatory charges are calculated in accordance with formulas established by ANEEL, which differ according to the type of sector charges, and thus there is no direct correlation between revenues and sector charges.

Operating Costs and Expenses

Personnel, Supplies and Services

Our operating costs and expenses related to personnel, supplies and services primarily consist of daily administrative expenses for employees, equipment and infrastructure, as well as expenses related to outsourcing security, maintenance and external consultants and advisors. Due to the diverse nature of these expenses, we apply certain subjective criteria to allocate such expenses to our operational activities. These expenses do not include raw material costs used to generate power.

Electricity Purchased for Resale

Our distribution and generation segments both purchase electricity for resale. Electricity purchased in the distribution segment is purchased from generators. Electricity purchased in the generation segment represents the Paraguayan portion of the energy from Itaipu that is sold to distribution companies defined under the Itaipu treaty as well as to other generators or traders with a view to complying with the powe load demand.

Fuel for Electricity Production

The cost of fuel is a significant component of our operating expenses. Most of these costs, under the Isolated System, are subsequently reimbursed from the CCC Account, pursuant to Law No. 12,111.

- 108 -

Use of the Grid

These costs represent charges for transmission of energy over the power lines of third parties.

Interest Payments and Penalties

These costs represent interest payments in respect of our financing with third parties as well as potential penalties for late payments.

Depreciation and Amortization

This represents depreciation and amortization for our property, plant, equipment and intangible assets. We record property, plant and equipment as construction or acquisition costs, as applicable, less accumulated depreciation calculated based on the straight-line method, at rates that take into consideration the estimated useful lives of the assets. Repair and maintenance costs that extend the useful lives of the related assets are capitalized, while other routine costs are charged to our result of operations. Interest relating to debt obtained from third parties incurred during the construction period is capitalized. Amortization of intangible and financial assets, included in the scope of IFRIC 12, is based on the concession period.

Operating Provisions

This reflects provisions we make in respect of: (i) legal proceedings to which we are party; (ii) allowances for doubtful accounts and impairments; (iii) onerous contracts and (iv) other provisions.

Donations and Contributions

This reflects expenses relating to investments in new information technology and research and development, as well as investments in cultural programs and sponsorships.

Other Operating Costs

Our other operating costs comprise a number of miscellaneous costs that we incur as part of our day-to-day operations. The most significant components are: (i) costs of leasing goods such as generation units for the Isolated System; (ii) costs of operations and maintenance of our facilities that provide for electricity services; (iii) telecommunication costs comprising primarily costs incurred for telephone and internet services; (iv) insurance costs, including insurance for our facilities and property; and (v) costs of disposal of assets, primarily transformers.

Results of Equity Investments

Results arising from the equity adjustment for our interests in other companies.

Financial Income (Expenses), Net

Financial Income

This reflects interest income and commissions we receive from loans we made in accordance with the provisions of Brazilian law that permitted us to act as a lender to certain public utility companies (see “Item 4.B, Business Overview – Lending and Financing Activities” for a description of our outstanding loans to other Brazilian utility companies).

Financial Expenses

This principally reflects payments of dividends to our shareholders, as well as debt and leasing expenses. This also reflects the U.S. dollar/real exchange rate variation relating to Itaipu.

Foreign Exchange and Monetary Gain (Loss)

Foreign exchange gain (losses) mainly relate to our financial loan to Itaipu, as the underlying currency of this loan is the U.S. dollar, and this represents our largest exposure to foreign currency risk. A devaluation or

- 109 -

depreciation of the real against the U.S. dollar increases our revenues, as it increases the value of our assets from Itaipu, although the effect of this contribution is netted out, as discussed above. An appreciation of the real decreases our revenues because it decreases the value of our assets from Itaipu, although the effect of this contribution is similarly netted out as a depreciation of the cost of construction of Itaipu.

A. Operating Results

Changes to the Presentation of our Operating Results

We revised our consolidated financial statements as of and for the years ended December 31, 2013 and 2012. Subsequent to the issuance of our 2013 consolidated financial statements, which were originally approved for issuance by the Board of Directors on March 27, 2014, our management determined that the measurement of our finance leasing had to be corrected for an error. As a result, the financial statements have been revised from the amounts previously reported to reflect the assets and liabilities at the adjusted present value of the minimum lease payments. The effects of this review had no material impact on our net loss for the periods. See note 3.29 to our consolidated financial statements for a description of the adjustment and its impact on our consolidated financial statements. Our financial information as of and for the years ended December 31, 2015, 2014, 2013 and 2012 reflects the effects of the adjustment and these consolidated financial statements are fully comparable. Management decided not to restate our consolidated financial statements as of and for the year ended December 31, 2011 because a restatement would not improve comparability due the adoption of IFRS 11. In 2013, we applied IFRS 11 beginning on January 1, 2012, based on the issued amendments to IFRS 10, IFRS 11 and IFRS 12 revising the transition guidance to provide relief from full retrospective application. As a result of these amendments, we retroactively adjusted our consolidated financial statements for the annual period immediately preceding the date of initial application (January 1, 2013). As we were not required to, and did not, fully revise our consolidated financial statements as of and for the year ended December 31, 2011, these consolidated financial statements are not directly comparable to our consolidated financial statements as of and for the years ended December 31, 2015, 2014, 2013 and 2012.

Presentation of Segmentation Information

Segment reporting is intended to provide a better view of how the Company manages and evaluates its businesses. The accounting policies for each segment are the same as those described in the summary of significant accounting policies. The Company continues to segment its core operations in the Brazilian generation, transmission, and distribution markets. Inter-segment balances have not been eliminated.

The segment information presented herein related to the year ended December 31, 2015 contemplates the adjusting subsequent events identified by the Company related to contingencies and investigation findings. Please see the explanatory notes 4 (item X.I), 31and 42, respectively, for further information.

Please see Note 45 in the Consolidated Financial Statements for information of revenue from external customers and intersegment revenues.

The following table shows our revenues and operating expenses as a percentage of net operating revenues with eliminations:

	Year Ended December 31,									Year Ended December 31,
	2015			2014			2013			2015			2014			2013
Revenues																	Revised
Eletricity sales:
Distribuition		48.6	%		27.2	%		22.9	%		15,846,942			8,188,785			5,462,274
Generation		60.0	%		69.3	%		72.2	%		19,538,758			20,890,550			17,198,906
Transmission		18.5	%		16.9	%		19.0	%		6,031,625			5,100,632			4,517,018
Other operating revenues		4.5	%		4.4	%		4.2	%		1,471,741			1,332,197			1,008,200
Taxes on revenues		-24.5	%		-14.5	%		-14.6	%		(7,986,568	)		(4,369,343	)		(3,470,337	)
Regulatory charges on revenues		-7.1	%		-3.3	%		-3.7	%		(2,313,660	)		(1,005,014	)		(880,418	)
Net operating revenues		100.0	%		100.0	%		100.0	%		32,588,838			30,137,807			23,835,643

- 110 -

Expenses
Operating expenses	-130.48	%	-112.8	%	-122.6	%	(42,628,284	)	(33,981,264	)	(29,215,078	)
Financial expenses, net	-5.2	%	2.3	%	1.6	%	(1,699,025	)	694,625		376,684
Gains on results of affiliated companies	1.6	%	-4.3	%	0.7	%	531,446		(1,308,304	)	177,768
Income before income tax and social contribution	-34.0	%	-14.8	%	-20.2	%	(11,207,024	)	—		(4,824,983	)
Income tax	-2.2	%	-5.6	%	-5.7	%	(710,112	)	(4,457,135	)	(1,366,678	)
Minority interests	0.0	%	0.0	%	0.0	%	—		(1,700,518	)	—
Net income	-36.26	%	-25.8	%	-26.0	%	(11,917,136	)	(6,157,653	)	(6,191,661	)

The following table shows our revenues and operating expenses as a percentage of net operating revenues without eliminations:

	Year Ended December 31,									Year Ended December 31,
	2015			2014			2013			2015			2014			2013
Revenues																	Revised
Eletricity sales:
Distribuition		45.8	%		26.0	%		21.5	%		15,846,942			8,188,785			5,462,274
Generation		61.8	%		70.7	%		73.9	%		21,374,540			22,289,159			18,813,835
Transmission		17.4	%		16.2	%		17.7	%		6,031,625			5,100,632			4,517,018
Other operating revenues		4.8	%		4.3	%		4.0	%		1,653,801			1,340,865			1,019,879
Taxes on revenues		-23.1	%		-13.9	%		-13.6	%		(7,986,568	)		(4,369,343	)		(3,470,337	)
Regulatory charges on revenues		-6.7	%		-3.2	%		-3.5	%		(2,313,660	)		(1,005,014	)		(880,418	)
Net operating revenues		100.0	%		100.0	%		100.0	%		34,606,680			31,545,084			25,462,251
Expenses
Operating expenses		-144.48	%		-114.5	%		-132.1	%		(50,112,665	)		(36,124,530	)		(33,631,080	)
Financial expenses, net		-4.7	%		2.2	%		1.3	%		(1,625,063	)		706,909			324,350
Loss on results of affiliated companies		-17.6	%		-5.0	%		-2.0	%		(6,091,974	)		(1,575,940	)		(519,762	)
Income before income tax and social contribution		-66.7	%		-17.3	%		-32.8	%		(23,090,578	)		(5,448,479	)		(8,364,241	)
Income tax		-2.1	%		-5.4	%		-5.4	%		(710,112	)		(1,700,518	)		(1,366,678	)
Minority interests		0.0	%		0.0	%		0.0	%		—			—			—
Net income		-69.2	%		-22.7	%		-38.2	%		(23,933,134	)		(7,148,997	)		(9,730,919	)

- 111 -

Year ended December 31, 2015 compared to year ended December 31, 2014

Consolidated Results

This section is an overview of our consolidated results of operations, net of inter-segment eliminations, which are discussed in greater detail with respect to each segment below.

Net Operating Revenues

Net operating revenues for 2015 increased by R$ 2,451 million, or 8.13%, to R$ 32,589 million in 2015 from R$ 30,138 million in 2014. This increase was due to:

• an increase of R$ 3,688 million, or 55.34%, in our distribution operating revenues to R$ 10,352 million in 2015 from R$ 6,664 million in 2014, principally due to the consolidation of CELG-D’s results with our results for 2015, whereas for 2014 CELG-D’s results were only consolidated with our results for the final three-month period of 2014; and

• an increase of R$ 686 million, or 13.80%, in our transmission operating revenues to R$ 5,665 million in 2015 from R$ 4,979 million in 2014, due to (i) a 22.5% increase in operating and maintenance revenue and (ii) a 17.3% increase in tariffs and annual permitted revenues. These increases are a result of the annual tariff revision, which was positively influenced by (a) an increase in inflation as measured by the IPCA of 10.67% for 2015, and (b) the deployment 503 km of new transmission lines.

This increase was partially off-set by:

• a decrease of R$ 1,580 million, or 8.0%, in our generation operating revenues to R$ 18,242 million in 2015 from R$ 19,821 million in 2014, due to decreases in revenues from: (i) energy sold on the Free Market; (ii) Eletronuclear, due to the scheduled interruption of operations of the Angra II plant in October 2015; and (iii) CGTEE, due to interruptions at the Candiota III plant, which resulted in the production of less energy and penalties for generation at less than the required levels. This decrease was partially off-set by an increase in the volume of energy sold to 234 TWh in 2015 from 229 TWh in 2014 and an increase in revenue from supply operations increased to R$ 3,572 million in 2015 from R$ 3,317 million in 2014.

Operating Costs and Expenses

Operating costs and expenses for 2015 increased by R$ 8,647 million, or 25.45%, to R$ 42,628 million in 2015 from R$ 33,981 million in 2014.

The increase was largely due to:

• operating provisions, which increased by R$ 6,924 million, or 148.47%, to R$ 11,587 million in 2015 from R$ 4,663 million in 2014, due to: (i) the recognition of impairments of R$ 5,980 million, R$ 4,962 million of which relate to the Angra III plant based on (a) the date that we expect the plant to become operational and (b) changes in the discount rate used to make the impairment tests, due to Brazilian macroeconomic conditions (For further information in respect of delays of the Angra III plant, please see note 20 to the 2015 financial statements, and; (ii) R$ the consolidation of CELG-D’s results with our results for 2015, whereas for 2014 CELG-D’s results were only consolidated with our results for the final three-month period of 2014;

• payroll and related charges, which increased by R$ 1,010 million, or 11.90%, to R$ 9,495 million in 2015 from R$ 8,485 million in 2014, due to (a) an increase in salaries following the 2015 collective bargaining agreement; and (b) the addition of further employees as a result of our acquisition of CELG-D in September 2014;

- 112 -

• electricity purchased for reselling, which increased by R$ 341 million, or 3.28%, to R$ 10,766 million in 2015 from R$ 10,425 million in 2014, due to an increase in electricity purchased for reselling, which increased to R$ 10,755 in 2015 from R$ 10,425 million in 2014, due to the consolidation of CELG-D’s results with our results for 2015, whereas for 2014 CELG-D’s results were only consolidated with our results for the final three-month period of 2014. Excluding CELG-D’s expenses for the purchase of energy for resale, the amount of energy purchased for resale increased to R$ 8,378 in 2015 from R$ 7,820 in 2014, principally due to: (i) a decrease in provisions for doubtful accounts and (ii) improved hydrological conditions in 2015.

The increase in these costs and expenses was partially offset by a decrease in:

• fuel for electricity production, which decreased by R$ 230 million, to R$ 1,250 million in 2015 from R$ 1,480 million in 2014, due to a decrease of generation of our thermal powered plants as a result of improved hydrological conditions in 2015; and

• the investigation findings in the amount of R$ 16.0 million in 2015 when compared to R$ 195.1 million in 2014.

Financial Income (Expenses), Net

Financial income (expenses), net resulted in expenses of R$ 1,699 million in 2015 compared to income of R$ 695 million in 2014. The increase in expenses was mainly due to:

• debt charges, which increased by R$ 2,891 million, or 83.8%, to R$ 6,340 million in 2015 from R$ 3,365 million in 2014, due to (i) increase in the SELIC rate from 11.75% as of December 31, 2014 to 14.15% as of December 31, 2015; and (ii) the depreciation of approximately 45% of the Brazilian real against the U.S. dollar in 2015; and,

• remuneration for indemnification - Law No. 12,783, which decreased by R$ 904 million, or 88.7%, to an expense of R$ 115 million in 2015 from R$ 1,019 million in 2014, due reimbursements made to the CDE Account for indemnification amounts received in excess in 2015.

This increase in expenses was partially offset by an increase in financial income from monetary restatement, net which increased by R$ 2,057 million, or 594.18%, to R$ 2,403 million in 2015 from R$ 346 million in 2014, due to an increase in the IPCA and IGP-M inflation indices that apply to loans granted by us.

Equity Investments

Equity investments increased by R$ 1,840 million, or 140.62%, to income of R$ 531 million in 2015 from an expense of R$ 1,308 million in 2014, due to the negative results of Madeira Energia, an SPE in which we hold an equity interest and account for using the equity pick-up method, which recorded income of R$ 7 million in 2015 compared to expense of R$ 861 million in 2014, and CEEE-GT, which recorded income of R$ 14 million in 2015 compared to an expense of R$ 91 million in 2014 and CEEE-D, which recorded an expense of R$ 10 million in 2015 comapred to an expense of R$ 145 million in 2014.

Income Taxes

Income taxes and social contribution decreased by R$ 990 million to an expense of R$ 710 million in 2015 from an expense of R$ 1,701 million in 2014. The decrease was primarily due to the fact that: (i) we recorded a greater gross loss in 2015 and (ii) we wrote-off certain of Chesf’s and Furnas’ tax credits in 2014.

Net Loss

As a result of the factors discussed above, our net loss increased by R$ 5,759 million, or 93.53%, to a net loss of R$ 11,917 million in 2015 from a net loss of R$ 6,158 million in 2014.

- 113 -

Results of Generation Segment

Net Operating Revenues

Net operating revenues for the generation segment decreased by R$ 1,580 million, or 8.0%, to R$ 18,242 million in 2015 from R$ 19,822 million in 2014 due to the factors set forth below.

Electricity Sales

Electricity sales decreased by R$ 1,153 million, or 6.81%, to R$ 15,772 million in 2015 from R$ 16,925 million in 2014. This decrease was due to decreases in revenues from: (i) energy sold on the Free Market; (ii) Eletronuclear, due to the scheduled interruption of operations of the Angra II plant in October 2015; and, (iii) CGTEE, due to interruptions at the Candiota III plant, which resulted in the production of less energy and penalties for generation at less than the required levels.

Regulatory Charges on Revenues

Regulatory charges on revenues decreased R$ 100 million, or 13.26%, to R$ 654 million in 2015 from R$ 754 million in 2014 due to decreased operational revenues. For a description of the calculation of regulatory charges on revenues please see “—Description of Principal Line Items—Operating Revenues— Regulatory Charges on Revenues.”

Operating Costs and Expenses

Operating costs and expenses for the generation segment increased R$ 7,954 million, or 50.24%, to R$ 23,803 million in 2015 from R$ 15,849 million in 2014.

The primary drivers of the increase in operating costs and expenses were:

• operating provisions, which increased by R$ 9,382 million, or 597.2%, to an expense of R$ 7,811 million in 2015 from income of R$ 1,571 million in 2014, due to the fact that (i) impairments increased to R$ 5,470 million in 2015 from R$ 252 million in 2014, R$ 4,962 million of which relate to the Angra III plant based on (a) the date that we expect the plant to become operational and (b) changes in the discount rate used to make the impairment tests, due to Brazilian macroeconomic conditions. For further information in respect of delays of the Angra III plant please see explanatory note No. 20 to the 2015 financial statements ; and (ii) onerous contracts changed to an expense of R$ 102 million in 2015 from income of R$ 1,577 million in 2014 due to reversions by Chesf in respect of the Itaparica and Camaçari plants and by Energia Sustentável do Brasil S.A. in respect of Jirau;

• the investigation findings in the amount of R$ 16.0 million in 2015 when compared to R$ 195.1 million in 2014; and

• other expenses, which increased by R$ 277 million, or 41.84% to R$ 939 million in 2015 from R$ 662 million in 2014, due to (i) an increase of R$ 87 million in amounts from leases and rents which increased in 2015 in line with inflation as reported by IPCA and (ii) doubtful accounts written-off in the amount of R$ 59 million.

This increase in these costs and expenses was partially offset by:

• electricity purchased for resale, which decreased by R$ 1,129 million, or 14.90% to R$ 6,448 million in 2015 from R$ 7,577 million in 2014, due to a decrease in the amount of energy sold on the Free Market; and

• fuel for electricity production, which decreased by R$ 270 million, or 18.22% to R$ 1,210 million in 2015, from R$ 1,480 million in 2014, due to decreased generation activity at our thermal plants due to improved hydrological conditions in 2015.

- 114 -

Income Taxes

Income taxes and social contribution decreased by R$ 3,872 million to an expense of R$ 127 million in 2015, from an expense of R$ 3,999 million in 2014. The decrease was primarily due to the fact that (i) we recorded a greater loss in 2015 and (ii) we wrote-off certain of Chesf’s and Furnas’ tax credits in 2014.

Results of Transmission Segment

Net Operating Revenues

Net operating revenues for the transmission segment increased R$ 687 million, or 13.80%, to R$ 5,665 million in 2015 from R$ 4,978 million in 2014, due to the factors set out below.

Operation and Maintenance

Operation and maintenance of revenue increased R$ 516 million, or 19.85%, to R$ 3,116 million in 2015 from R$ 2,600 million in 2014 primarily as a result of: (i) new revenues from investments to improve our transmission system, (ii) the deployment of new investments and (iii) the annual review of annual permitted revenues. For further information regarding the annual review of annual permitted revenues.

Regulatory Charges on Revenues

Regulatory charges on revenues increased R$ 4 million, or 2.84%, to an expense of R$ 161 million in 2015 from an expense of R$ 157 million in 2014 primarily as a result of the increase in our revenues in 2015. For a description of the calculation of taxes on revenues please see “—Description of Principal Line Items—Operating Revenues—Regulatory Charges on Revenues”.

Updates from the internal rate of return

Updates from the internal rate of return increased R$ 124 million, or 17.37%, to R$ 838 million in 2015 from R$ 714 million in 2014 due to a 17.3% increase in the annual permitted revenues, which increased in line with the IPCA inflation index.

Operating Costs and Expenses

Operating costs and expenses for the transmission segment increased R$ 2,559 million, or 54.41%, to R$ 7,262 million in 2015 from R$ 4,703 million in 2014.

The primary drivers of the increase in operating costs and expenses were:

• operating provisions, which increased by R$ 1,704 million, or 7718.05%, to an expense of R$ 1,683 million in 2015 from income of R$ 22 million in 2014, due to: (i) the enactment of new regulations by ANEEL in 2014 (Resolution ANEEL 642 e 643/2014), which allowed our transmission subsidiaries to constitute new financial assets and (ii) onerous contracts entered into by Chesf and Furnas.;

• payroll and related charges, which increased by R$ 286 million, or 10.36%, to R$ 3,046 million in 2015 from R$ 2,760 million in 2014, due to an increase in salaries in line with inflation;

• construction – transmission, which increased by R$ 292 million, or 16.35%, to R$ 2,078 million in 2015 from R$ 1,786 million in 2014, due to increased investments in the transmission segment, which resulted in the deployment 503 km of new transmission lines;

• other expenses, which increased by R$ 274 million, or 258.2% to an expense of R$ 382 million in 2015 from an expense of R$ 108 million in 2014, due to the elimination of accounting effects as a result of operations between two of our subsidiaries.

- 115 -

Income Taxes

Income taxes and social contribution decreased by R$ 2,241 million to a credit of R$ 277 million in 2015, from a credit of R$ 2,518 million in 2014. The decrease was primarily due to the fact that we wrote-off tax credits in 2014.

Results of Distribution Segment

Net Operating Revenues

Net operating revenues for the distribution segment increased R$ 3,688 million, or 55.34%, to R$ 10,352 million in 2015 from R$ 6,664 million in 2014 due to the factors set forth below. This increase was primarily due to an increase in revenues from sale of energy which increased R$ 7,520 million, or 102.9%, to R$ 14,835 million in 2015 compared to R$ 7,315 in 2014.

Taxes on Revenues

Taxes on revenues increased R$ 2,440 million, or 108.06%, to R$ 4,698 million in 2015 from R$ 2,258 million in 2014 primarily as a result of increased revenue due to the consolidation of CELG-D’s results with our results for 2015, whereas for 2014 CELG-D’s results were only consolidated with our results for the final three-month period of 2014. For a description of the calculation of taxes on revenues please see “—Description of Principal Line Items—Operating Revenues—Taxes on Revenues.”

Regulatory Charges on Revenues

Regulatory charges on revenues increased R$ 1,405 million, or 1,506.9%, to R$ 1,498 million in 2015 from R$ 93 million in 2014 primarily as a result of an increase in income from our distribution subsidiaries, which was substantially impacted by the results of CELG-D, which were consolidated with our results for 2015, whereas for 2014 CELG-D’s results were only consolidated with our results for the final three-month period of 2014. For a description of the calculation of regulatory charges on revenues please see “—Description of Principal Line Items—Operating Revenues—Regulatory Charges on Revenues.”.

Operating Costs and Expenses

Operating costs and expenses for the distribution segment increased R$ 3,813 million, or 59.05%, to R$ 10,270 million in 2015 from R$ 6,457 million in 2014.

The primary drivers of the increase in operating costs and expenses were:

• payroll and related charges increased by R$ 626 million, or 43.04%, to R$ 2,082 million in 2015 from R$ 1,456 million in 2014, due to increased headcount due to the acquisition of CELG-D and annual employee salary increases consistent with inflation as reported by the IPCA;

• electricity purchased for reselling increased by R$ 1,926 million, or 52.06%, to R$ 5,626 million in 2015 from R$ 3,699 million in 2014, due to the acquisition of CELG-D and the increased costs to purchase fuel Amazonas Energia Distribuição, which purchases petroleum for its generation and distribution;

• operating provisions increased by R$ 886 million, or 149.58%, from income of R$ 593 million in 2014 to an expense of R$ 294 million in 2015, due to impairment in the amount of R$ 94 million and an increase in provisions for doubtful accounts of R$ 643 million, which was mainly due to changes in the criteria used to classify doubtful accounts by our distribution subsidiaries, principally CELG-.

- 116 -

Income Taxes

Income taxes and social contribution decreased by R$ 11 million to a credit of R$ 11 million in 2015 from a credit of R$ 22 million in 2014. The decrease was primarily due to the fact that we recorded a greater loss in 2015.

Results of Administration Segment

Net Operating Revenues

Net operating revenues for the administration segment increased R$ 266 million, or 326.54%, to R$ 348 million in 2015 from R$ 82 million in 2014 primarily due to the acquisition of transmission concession 10/2009 from our subsidiary Eletrosul.

Operating Costs and Expenses

Operating costs and expenses for the administration segment decreased R$ 338 million, or 3.7%, to R$ 8,778 million in 2015 from R$ 9,116 million in 2014.

The primary drivers of the increase in operating costs and expenses were:

• operating provisions decreased by R$ 489 million, or 6.4%, from R$ 7,681 million in 2014 to R$ 7,192 million in 2015, due to: (i) amount of R$ 4.1 billion in compulsory loans which were recognized only in 2014 due to a register of subsequent events described in Note 47 and Note 30 of the consolidated financial statements, (ii) uncovered liabilities which increased at: (a) Amazonas Energia by R$ 1,929 million, to R$ 2,344 million in 2015 from R$ 415 million in 2014; (b) CEPISA by R$ 601 million, to R$ 563 million in 2015 from R$ 38 million in 2014; and (c) CERON by R$ 645 million to R$ 457 million in 2015 from R$ 189 million in 2014.

Equity Investments

Equity investments for the administration segment increased R$ 4,516 million, or 286.6%, to an expense of R$ 6,092 million in 2015 from an expense of R$ 1,576 million in 2014 mainly due to expenses which increased at: (a) Eletronuclear by R$ 3,792 million to R$ 4,791 million in 2015 from R$ 999 million in 2014; and (b) Eletrosul by R$ 876 million to an expense of R$ 912 million in 2015 from income of R$ 36 million in 2014.

Financial Results

Financial results for the administration segment increased R$ 1,496 million, or 60.71%, to R$ 3,959 million in 2015 from R$ 2,463 million in 2014 substantially due to:

• exchange variation, net which increased R$ 619 million, or 91.6%, to an income of R$ 1,295 million in 2015 from an income of R$ 676 million in 2014, due to a 45% depreciation of the real against the U.S. dollar in 2015 ; and

• revenue from financial investments, which increased by R$ 169 million, or 38.5%, to an income of R$ 608 million in 2015 from an income of R$ 439 million in 2014, due to increase in the SELIC rate from 11.75% as of December 31, 2014 to 14.15% as of December 31, 2015;

• revenue from financial and loans, which increased R$ 597 million, or 24.77%, to an income of R$ 3,008 million from an income of R$ 2,411 million in 2014, due to (i) increase in the SELIC rate from 11.75% as of December 31, 2014 to 14.15% as of December 31, 2015; and (ii) the depreciation of approximately 45% of the Brazilian real against the U.S. dollar in 2015.

This increase was partially off-set by an increase in:

• debt charges, which increased R$ 947 million, or 62.72%, to an expense of R$ 2,457 million in 2015 from an expense of R$ 1,510 million in 2014, due to (i) increase in the SELIC rate from 11.75% as of December 31, 2014 to 14.15% as of December 31, 2015; and (ii) the depreciation of approximately 45% of the Brazilian real against the U.S. dollar in 2015.

- 117 -

Income Taxes

Income taxes and social contribution for the administration segment increased R$ 629 million, or 259.72%, to an expense of R$ 871 million in 2015 from an expense of R$ 242 million in 2014. Despite the fact that our accounting loss increase substantially when compared to 2014, our expenses with income taxes increased due to the fact that in 2014 we recorded a net loss. In 2014, we did not recognize current taxes and only recognized deferred taxes on temporary differences incurred in 2014. In 2015, we incurred a fiscal profit, as a large portion of our accounting expenses corresponded to temporary and permanent differences that were used to calculate our fiscal profit, such as compulsory loans expenses, which increased to R$ 5.7 billion in 2015 from R$ 308 million in 2014, and equity pick-up expenses, which increased to R$ 6.1 billion in 2015 from R$ 278 million in 2014. This resulted in a current income tax expense and our deferred income taxes expenses increase to R$ 480 million in 2015 from R$ 236 million in 2014. See “Year ended December 31, 2014 compared to year ended December 31, 2013—Consolidated Results—Income Taxes and Social Contribution.”

Year ended December 31, 2014 compared to year ended December 31, 2013

Consolidated Results

This section is an overview of our consolidated results of operations, net of inter-segment eliminations, which are discussed in greater detail with respect to each segment below.

Net Operating Revenues

Net operating revenues for 2014 increased by R$ 6,302 million, or 26.4%, to R$ 30,138 million in 2014 from R$ 23,836 million in 2013. This increase was largely due to:

• an increase of R$ 3,133 million, or 18.8%, in our generation operating revenues to R$ 19,821 million in 2014 from R$ 16,688 million in 2013, due to an increase in the average price on the spot market. This increase was partially off-set by a 6.4% decrease in the volume of energy sales from 260.2 TWh in 2013 to 243.5 TWh in 2014 due to the fact that we produced less energy in 2014, as a result of the adverse hydrological conditions, which reduced production of our hydroelectric power plants.

• an increase of R$ 2,165 million, or 48.1%, in our distribution operating revenues to R$ 6,664 million in 2014 from R$ 4,499 million in 2013, due to (i) an overall increase in the tariffs which ranged from -1.34% to 39.2%, as a result of ANEEL’s periodic tariff review, which last occurred in November of 2013; (ii) an increase of 24.8% in the volume of energy sold from 16.1 TWh in 2013 to 20.1 TWh in 2014; and (iii) the fact that we acquired CELG-D on September 26, 2014 and commenced consolidating its results into our income statement from October 1, 2014.

• an increase of R$ 774 million, or 18.4%, in our transmission operating revenues to R$ 4,978 million in 2014 from R$ 4,203 million in 2013, due to (i) an increase in the volume of energy transmitted as further transmission lines become operational during 2014 (including Transmission Line Jardim – Penedo C1 with 110 Km; Transmission Line Extremoz II – C. Mirin II C1 and Transmission Line Bom Jesus da Lapa – Igaporã II with 115 Km, by Chesf), and (ii) an increase in the tariffs to line with inflation as measured by the IPCA, which increased to 6.5% for 12 month period ended December 31, 2014 from 5.9% for 12 month period ended December 31, 2013

Operating Costs and Expenses.

Operating costs and expenses for 2014 increased by 16.31% to R$ 33,981 million in 2014 compared to R$ 29,215 million in 2013.

- 118 -

The increase was largely due to:

• electric energy purchased for resale increased by R$ 4,910 million, or 89%, to R$ 10,424 million in 2014 from R$ 5,515 million in 2013, due to an increase in the production of thermal energy as we needed to supplement hydroelectric generation with thermal generation as a result of adverse hydrological conditions in 2014;

• depreciation and amortization increased by R$ 265 million, or 17.6%, to R$ 1,777 million in 2014 from R$ 1,512 million in 2013, due to (i) the incorporation of the further SPEs by Eletronorte and (ii) the fact that new assets, such as the “230 kV Transmission Line of 987 km: Porto Velho-Jauru” operated by Linha Verde Transmissora de Energia S.A. and the “500/±600 kV Conversion and Inversion Station 01” operated by Estação Transmissora de Energia S.A. transmission lines, became operational.

• operating provisions increased by R$ 1,405 million, or 43.12%, to R$ 4,663 million in 2014 from R$ 3,258 million in 2013, due to operating provisions increased by R$ 5,388 million, or 165.35%, to R$ 8,646 million in 2014 from R$ 3,258 million in 2013, due to the recognition in 2014 of subsequent events of Compulsory Loan and Amazonas Energia investiment lost as described in Note 47 and Note 30 of the consolidated financial statements and reversal impairment in 2014 by R$ 132 million due the investigation findings writte off, as per explanatory Note 4.XI to the 2014 financial statement

The increase was partially off-set by:

• other expenses decreased by R$ 414 million, or 19.8%, to R$ 1,675 million in 2014, from R$ 2,090 million in 2013 largely due to a reduction in the amount of uncollectable losses.

• construction costs decreased by R$ 648 million, or 18.3%, to R$ 2,900 million in 2014, from R$ 3,548 million in 2013 due to the fact that we conducted most of our projects through not consolidated SPEs rather than constructing the relevant projects ourselves;

• payroll and related charges decreased by R$ 760 million, or 8.2%, to R$ 8,485 million in 2014, from R$ 9,245 million in 2013 due to a reduction in the overall payroll following the latest redundancy incentive plan. This decrease was partially off-set by (i) an increase in salaries following the 2014 collective bargaining agreement; and (ii) the addition of further employees as a result of our acquisition of CELG-D in September 2014; and

• investigation findings in 2014 in the amount of R$ 195 million, as per explanatory Note 4.XI to the 2014 financial statements.

Financial Income (Expenses), Net

Financial income (expenses), net resulted in income of R$ 695 million in 2014 compared to income of R$ 377 million in 2013.

This increase was mainly due to

• revenue from financial investments increased by R$ 465 million, or 83.6% to R$ 1,021 million in 2014, from R$ 556 million in 2013 due the increase in the SELIC rate from 10.0% as of December 31, 2013 to 11.75% as of December 31, 2014, which increased our revenues from the fixed income securities issued by the Brazilian Federal Treasury we hold; and

• remuneration for the first tranche of indemnification - Law 12,783 increased by R$ 578 million, to R$ 1,019 million in 2014, from R$ 441 million in 2013 due to the remuneration by IPCA inflation plus 5.59% to which these indemnification payments are indexed.

- 119 -

This increase was partially off-set by decreases in:

• revenue from interest, commissions and fees decreased by R$ 75 million, or 6.5%, to R$ 1,071 million in 2014 from R$ 1,146 million in 2013, due to the fact that we converted the debt owed to us by certain of our subsidiaries (particularly in the distribution segment) into shares of those subsidiaries.

Equity in profits and losses of associates

Equity in profit and losses of associates decreased by R$ 1,486 million to a loss of R$ 1,308 million in 2014, from income of R$ 178 million in 2013, largely due to (i) operational losses of R$ 461 million incurred by Energia Sustentável do Brasil, which operates HPU Jirau, during 2014; (ii) operational losses of R$ 861 million incurred by Madeira Energia S.A.; and (iii) operating provisions of R$ 91.5 million in 2014 in connection with investigation findings of projects in which Eletrobras holds a minority ownership interest, as per explanatory Note 4.XI to the 2014 financial statements.

Income Taxes

Income taxes and social contribution expense increased by R$ 334 million, or 24.4%, to R$ 1,701 million in 2014, from R$ 1,367 million in 2013 due to (i) the derecognition of deferred tax credits that we do not expect to be able to utilize due to the reduction in our profits in an increase by R$ 1,104 million, to R$ 2,795 million in 2014, from R$ 1,691 million in 2013; and (ii) net of the recognition of a tax credit in the amount of R$ 1,150 million by Eletronorte in 2014.

Net Loss

As a result of the factors discussed above, our net loss for 2014 decrease by R$ 34.0 million, or 0.55%, to R$ 6,158 million in 2014 from R$ 6,192 million in 2013.

Results of Generation Segment

Net Operating Revenues

Net operating revenues for the generation segment increased by R$ 3,133 million, or 18.8%, to R$ 19,821 million in 2014 from R$ 16,688 million in 2013, due to the factors set out below.

Electricity Sales

Electricity Sales increased by R$ 4,888 million, or 40.6%, R$ 16,925 million in 2014, from R$ 12,036 million in 2013 to largely due to increased sales of electricity on the spot market, which increased to R$ 3,817 million in 2014 from R$ 2,395 million in 2013.

Taxes on Revenues

Taxes on Revenues increased by R$ 79 million, or 4.6%, to R$ 1,800 million in 2014, from R$ 1,721 million in 2013 due to our increased revenues. For a description of the calculation of taxes on revenues please see “—Description of Principal Line Items—Operating Revenues—Taxes on Revenues.”

Regulatory Charges on Revenues

Regulatory Charges on Revenues increased by R$ 89 million, or 13.4%, to R$ 754 million in 2014, from R$ 665 million in 2013 due to increased operational revenues. For a description of the calculation of regulatory charges on revenues please see “—Description of Principal Line Items—Operating Revenues—Regulatory Charges on Revenues.”

Construction Revenue

Construction Revenue decreased by R$ 497 million, or 67.4%, to R$ 240 million in 2014, from R$ 737 million in 2013 due to the fact that we conducted most of our projects through SPEs to be incorporated following completion of the construction rather than constructing the relevant projects ourselves.

- 120 -

Operating Costs and Expenses

Operating costs and expenses for the generation segment increased by R$ 2,401 million, or 17.9%, to R$ 15,849 million in 2014 from R$ 13,448 million in 2013.

The primary drivers of the increase in operating costs and expenses were:

• electricity purchased for reselling increased by R$ 3,022 million, or 66.3%, to R$ 7,577 million in 2014 from R$ 4,555 million in 2013, due to the adverse hydrological conditions, which reduced the production of our hydroelectric power plants and required us to acquire electricity on the spot market in order to meet our contractual obligations;

• redundancy incentive plan increased by R$ 113 million, or 106.6%, to an expense of R$ 219 million in 2014, from R$ 106 million in 2013 due to the fact that Eletronuclear implemented its redundancy incentive plan in 2014 (as opposed to other subsidiaries which implemented their plans in 2013);

• investigation findings in 2014 in the amount of R$ 195.1 million, as per explanatory note No. 4.XI to the 2014 financial statements; and operating provisions increased by R$ 102 million, or 6.9%, to income of R$ 1,571 million in 2014, from income of R$ 1,469 million in 2013 due to the investigation findings as per explanatory Note 4.XI of the 2014 financial statements.

The increase was partially off-set by decreases in:

• construction – generation decreased by R$ 497 million, or 67.4%, to R$ 240 million in 2014, from R$ 737 million in 2013 due the fact that we conducted most of our projects through SPEs to be incorporated following completion of the construction rather than constructing the relevant projects ourselves;

• other expenses decreased by R$ 185 million, or 21.8%, to R$ 661 million in 2014, from R$ 846 million in 2013 principally due to a reduction in labor related indemnities.

Income Tax and Social Contribution

Income Tax and Social Contribution expense increased by R$ 3,552 million, to R$ 3,999 million in 2014 from R$ 447 million in 2013 due to derecognition of certain deferred taxes assets in relation to Furnas and Chesf.

Results of Transmission Segment

Net Operating Revenues

Net operating revenues for the transmission segment increased by R$ 774 million, or 18.4%, to R$ 4,978 million in 2014, from R$ 4,203 million in 2013 due to the factors set out below.

Operation and Maintenance

Operation and Maintenance increased by R$ 432.4 million, or 20.0%, to R$ 2,600 million in 2014, from R$ 2,168 million in 2013 as ANEEL approved certain assets and investments, such as investments for improvements relating to contracts 061 and 062. Only following this approval were we able to recognize income from these assets and investments.

Regulatory Charges on Revenues

Regulatory Charges on Revenues increased by R$ 10 million, or 6.9%, to an expense of R$ 157 million in 2014, from an expense of R$ 147 million in 2013 due to the increase in our revenues in 2014. For a description of the calculation of regulatory charges on revenues please see “—Description of Principal Line Items—Operating Revenues—Regulatory Charges on Revenues.”

- 121 -

Other Operating Revenues

Other Operating Revenues increased by R$ 200 million, to R$ 342 million in 2014, from R$ 142 million in 2013 due to increased revenues from the rental of certain transmission infrastructure assets.

Taxes on Revenues

Taxes on Revenues remained stable at R$ 308 million in 2013 and 2014. For a description of the calculation of taxes on revenues please see “—Description of Principal Line Items—Operating Revenues—Taxes on Revenues.”

Operating Costs and Expenses

Operating costs and expenses for the transmission segment decreased by R$ 1,697 million, or 26.5%, to R$ 4,703 million in 2014 from R$ 6,400 million in 2013.

This decrease was largely due to:

• payroll and related charges decreased by R$ 473 million, or 14.6%, to R$ 2,760 million in 2014 from R$ 3,233 million in 2013. due to the implementation of our redundancy incentive plan in 2013;

• operating provisions decreased by R$ 1,058 million, or 102.1%, to income of R$ 22 million in 2014, from an expense of R$ 1,036 million in 2013 principally due to the reversal of onerous contracts, including a R$ 711 million reversal relating to contract number 062/2001 which relates to a large number of transmission lines;

• redundancy incentive plan decreased by R$ 320 million, to R$ 0 million in 2014, from an expense of R$ 320 million in 2013 due to the fact that no provisions were made in 2014 for the redundancy incentive plan which we implemented in 2013.

This decrease was partially off-set by an increase in:

• other expenses of R$ 169 million, to an expense of R$ 108 million in 2014, from income of R$ 60 million in 2013 due to an increase in various expenses, inter alia, rents and insurance premiums and a reduction in labour related indemnities.

Income Taxes

Income taxes and social contribution benefit increased by R$ 2,112 million, to R$ 2,518 million in 2014, from R$ 407 million in 2013 principally due to the fact that Eletronorte constituted tax credits in the amount of R$ 1,150 million, CHESF constituted tax credits in the amount of R$ 1,157 million and Furnas constituted tax credits in the amount of R$ 291 million.

Results of Distribution Segment

Net Operating Revenues

Net operating revenues for the distribution segment increased by R$ 2,165 million, or 48.1%, to R$ 6,664 million in 2014, from R$ 4,499 million in 2013 due to the factors set forth below.

Electricity Sales

Electricity sales increased by R$ 2,867 million, or 64.4%, to R$ 7,315 million in 2014, from R$ 4,449 million in 2013 due to: (i) an increase of R$ 1,634 million due to the fact that we acquired CELG-D in September 2014 and (ii) an increase in the average tariffs which ranged from -1.34% to 39.2%, as a result of ANEEL’s periodic tariff review, which last occurred in November of 2013.

- 122 -

Other Operating Revenues

Other Operating Revenue increased by R$ 285 million, or 52.6%, to R$ 827 million in 2014, from R$ 542 million in 2013 due to increased revenues from the rental of certain distribution infrastructure assets.

Taxes on Revenues

Taxes on Revenues increased by R$ 820 million, or 57.0%, to R$ 2,258 million in 2014 from R$ 1,438 million in 2013 in line with our increased revenue for the distribution segment in 2014. For a description of the calculation of taxes on revenues please see “—Description of Principal Line Items—Operating Revenues—Taxes on Revenues.”

Regulatory Charges on Revenues

Regulatory Charges on Revenues increased by R$ 26 million, or 39.2%, to R$ 93 million in 2014 from R$ 67 million in 2013 in line with our increased revenue for the distribution segment in 2014. For a description of the calculation of regulatory charges on revenues please see “—Description of Principal Line Items—Operating Revenues—Regulatory Charges on Revenues.”

Operating Costs and Expenses

Operating costs and expenses for the distribution segment decreased by R$ 165 million, or 2.5%, to R$ 6,457 million in 2014 from R$ 6,621 million in 2013.

This decrease was largely due to:

• operating provisions decreased by R$ 650 million, to income of R$ 593 million in 2014, from an expense of R$ 57 million in 2013 due to the reversal of certain impairments, such as for Amazonas Energia;

• construction – distribution decreased by R$ 140 million, or 13.8%, to R$ 873 million in 2014, from R$ 1,014 million in 2013 due to the fact that we have been investing less as a result of our decreased revenues over recent years; and

• charges upon use of electric network decreased by R$ 132 million, to R$ 184 million in 2014, from R$ 52 million in 2013 due to an increase in the volume of electricity sold.

This decrease was partially off-set by an increase in:

• electricity purchased for reselling increased by R$ 1,493 million, or 67.7%, to R$ 3,699 million in 2014,from R$ 2,206 million in 2013 due to adverse hydrological conditions, which reduced the production of our hydroelectric power plants;

• depreciation and amortization increased by R$ 185 million, to R$ 309 million in 2014, from R$ 125 million in 2013 due to an increase in the value of certain distribution concession assets;

• payroll and related charges increased by R$ 63 million, or 4.5%, to R$ 1,456 million in 2014, from R$ 1,393 million in 2013 due to the fact that we acquired CELG-D in September 2014.

Results of Administration Segment

Operating Costs and Expenses

Operating costs and expenses for the administration segment increase R$ 1,954 million, or 27.3%, to R$ 9,116 million in 2014 from R$ 7,161 million in 2013.

- 123 -

This increase was largely due to:

• valuation gains for an adjustment to market value of R$ 110 million, to R$ 110 million in 2014 from zero in 2013 due to changes in the value of our investments made on the stock market; and

• donations and contributions decreased by R$ 81 million, or 28.9%, to R$ 198 million in 2014 from R$ 279 million in 2013 due to our cost reduction strategy.

• Operating provision increased by R$ 2,007 million, or 35.4% to R$ 7,681 million, from R$ 5,674 million in 2013 due to the recognition in 2014 of subsequent events described in Note 47 and Note 30 of the consolidated financial statements.

Financial Results

Financial results for the administration segment increased by R$ 338 million, or 15.9%, to R$ 2,463 million in 2014, from R$ 2,126 million in 2013 due to:

• revenue from interest, commission and fees which increased by R$ 378 million, or 18.5%, from income of R$ 2,033 million in 2013 to income of R$ 2,410 million in 2014, due to the increase in SELIC rate to which certain debts are indexed; and

• revenue from financial investments, which increased by R$ 143 million, or 48.31%, to income of R$ 439 million in 2014, from income of R$ 296 million in 2013 due the increase in the SELIC rate to which most of our investments are linked.

Investigation Findings

Operating provisions of R$ 91.5 million in 2014 in connection with investigation findings of projects in which Eletrobras holds a minority ownership interest, as per explanatory note No. 4.XI to the 2014 financial statements. This amount has been deducted from Eletrobras’ equity investments.

Income Taxes

Income taxes and social contribution expense for the administration segment decreased by R$ 1,084 million, or 81.7%, to R$ 242 million in 2014, from R$ 1,326 million in 2013 due a reduction in our taxable income for this segment. See “—Year ended December 31, 2013 compared to year ended December 31, 2012—Consolidated Results—Income Taxes and Social Contribution.”

B. Liquidity and Capital Resources

Our main sources of liquidity derive from the cash generated by our operations and from loans received from various sources, including the RGR Fund (established to compensate electricity concessionaires for uncompensated expenses when the concessions ended), loans from third parties, including certain international agencies, and realizations of various investments we have made with Banco do Brasil S.A. and Caixa Econômica Federal, with whom we are required by law to deposit any surplus cash assets. In addition, on October 20, 2011 we issued U.S.$1.75 billion 5.75% notes due in 2021.

We require funding principally in order to finance the upgrade and expansion of our generation and transmission facilities and in order to repay our maturing debt obligations. In addition, through our subsidiaries, we are bidding in auctions for new transmission lines and new generation contracts. In the event that we are successful in any of these auctions, we will need additional cash to fund investments necessary to expand the applicable operations.

From time to time, we consider potential new investment opportunities and we may finance such investments with cash generated by our operations, loans, issuances of debt and equity securities, capital increases or other sources of funding that may be available at the relevant time. At present we have the ability to fund up to R$ 4.1 billion of capital expenditure out of existing resources without the need to access the capital markets. Those funds represent a portion of the revenues we have generated from our sales of electricity and the interest we have received from our lending activities.

- 124 -

Sources of financing for working capital and for investments in long-term assets

Our main sources of financing for working capital and investments in fixed assets in the last three years are: indemnities from concessions renewed under the terms in Law no. 12,783/2013 approved by the granting authority; (ii) receivables related to the financing granted to Itaipu3, (iii) its own operational cash flows; (iv) loans from domestic and international lenders such as Caixa Econômica Federal (“CEF”) Banco do Brasil S.A. (“BB”) and the National Bank for Social and Economic Development (“BNDES”); and (v) loans from international credit agencies. In addition, its sources of financing include investments that Eletrobras is required to make with BB, considering that Eletrobras is required to deposit available funds with these federal financial institutions.

The main uses of resources by Eletrobras refer to (i) payment or renegotiation of debt; (ii) funding the improvement and expansion of its generation, transmission and distribution projects; (iii) possibility of participation, through its subsidiaries, in public bidding processes in connection with new transmission lines and new generation agreements, since, if Eletrobras succeeds in any of the aforementioned bidding processes, it will need additional resources to fund the required investments to expand the applicable operations.

Similar to other companies of its industry, the Company monitors its obligations based on the financial leverage ratio. This ratio corresponds to the net debt divided by total capital. The net debt corresponds to total loans and financings (excluding amounts related to RGR and including short-term and long-term loans and financings, as set forth in the consolidated balance sheet), minus cash and cash equivalents. The total capital is calculated by adding-up the shareholders’ equity (as set forth in the consolidated balance sheet) and the net debt.

Our principal uses of funds in 2015 were for capital expenditures (of R$ 10,393.8 million and debt service obligations of R$ 10,818.7 million). We met these requirements with cash provided by operating activities (amounting to R$ 9,953.5 million, long-term financing (amounting to R$ 7,344.8 million) and cash provided by the indemnifications (amounting to R$ 3,967.2 million. Eletrobras’ management believes the Company has sufficient sources of liquidity to meet its financial commitments through the combined use of its operating cash flow, the receipt of all indemnities already approved by grantor as a result of Law No. 12,783/2013 and proceeds from loans and financing already contracted and that could be taken if necessary. Further, Eletrobras’ management believes that the working capital is sufficient for the Company’s present requirements.

Cash Flows

The following table summarizes our net cash flows for the periods presented:

	For the Year Ended December 31,
	2015			2014			2013(1)
	(in R$ thousand)
Net Cash Flows:
Provided by operating activities		6,980,474			5,192,461			9,329,355
Used in investing activities		(9,012,552	)		(10,637,002	)		(8,155,408	)
Provided by (used in) financing activities		2,018,973			3,254,036			(77,879	)

(1) We revised our consolidated financial statements as of and for the year ended December 31, 2013. Our financial information as of and for the years ended December 31, 2015, 2014 and 2013 reflects the effects of the adjustment and those consolidated financial statements are fully comparable.

Cash Flow from Operating Activities

Our cash flows from operating activities primarily result from:

• the sale and transmission of electricity to a stable and diverse base of retail and wholesale customers at fixed prices; and

• restricted deposits for legal proceedings in cases where we are a plaintiff in a proceeding and are ordered to pay a deposit to the relevant court. Cash flows from operating activities have been sufficient to meet operating and capital expenditures requirements during the periods under discussion.

- 125 -

In 2015, our cash flows from operating activities increased by R$ 1.8 billion, to R$ 6.98 billion in 2015 from R$ 5.2 billion in 2014. This variation was due to an increase in indemnity payments received to R$ 4.0 billion in 2015 from R$ 2.8 billion in 2014.

Cash Flows from Investing Activities

Our cash flows from investing activities primarily reflect:

• investment acquisitions, being partnerships we enter into with third parties in the private sector in relation to the operation of new plants;

• acquisitions of fixed assets, being primarily investments in equipment necessary for operational activities; and

• dividends paid by our subsidiaries.

In 2015, our cash flows from investing activities decreased R$ 1.6 billion, or 15.27%, to an outflow of R$ 9 billion in 2015 from an outflow of R$ 10.6 billion in 2014. This variation was due to a decrease of R$ 1.5 billion in capital contributions made to our subsidiaries and SPEs in the 2015 and an increase of R$ 2.0 billion in amounts received for loans and financing granted, which were partially off-set by an increase of R$ 1.3 billion in amounts disbursed to in relation to the deployment of the following fixed assets: Complexo Eólico Hermenegildo, VamCruz, Santo Sé II, Chapada do Piauí I, Geribatu, Chuí, Serra das Vacas, Santo Antônio and Jirau.

Cash Flows from Financing Activities

Our cash flows used in financing activities primarily reflect interest income we receive from short-term and long-term loans made to non-affiliated companies that operate in the Brazilian electricity sector.

In 2015, our cash flows from financing activities decreased R$ 1.2 billion, to an inflow of R$ 2 billion in 2015 from an inflow of R$ 3.2 billion in 2014. This variation was mainly due to an increase of R$ 2.1 billion in principal payments in respect of loans and financing entered into by us and partially off-set by a decrease of R$ 792 million of payments made to our shareholders for dividends and interest on capital.

Relationship between Appropriated Retained Earnings and Cash Flows

As of December 31, 2015, our balance sheet reflected retained reserves of R$ 26.0 million, which consisted of our statutory reserves but do not include unpaid shareholders’ remuneration (see “Item 8.A, Consolidated Financial Statements and Other Information—Policy on dividend distribution”).

Capital Expenditure

In the last three years, we have invested an average of R$ 11.0 billion per year in expansion, research and development. Approximately 53.5% was invested in our generation segment, 33.6% in our transmission segment and the balance in our distribution segment and other investments.

Our core business is the generation and transmission of energy and we intend to invest heavily in these segments in the upcoming years. Companies are now selected to construct new generation units and transmission lines by a tender process. It is, therefore, difficult to predict the precise amounts that we will invest in these segments going forward. We are, however, working to secure a significant number of new contracts either alone or as part of a consortium including the private sector.

Under the EPE 10 Year Plan, it is estimated that Brazil will have 211,615 km of transmission lines and 206.4 GW of installed generation capacity by 2024 from 138.8 GW in 2014. These investments by Brazil will represent approximately R$ 376 billion. As the current largest market participant based on length of transmission lines, we expect to participate in the majority of these new investments. In accordance with the Business Plan, whose numbers and targets are under review, we believe that from 2015 to 2019, we will invest approximately R$ 50.3 billion in our generation, transmission and distribution businesses. For these investments, we expect to use the funding derived from our net cash flows as well as from accessing national and international capital markets and through bank financing.

- 126 -

Our capital expenditures for fixed assets, intangible assets and concession assets in 2015, 2014 and 2013 were R$ 7.7 million, R$ 6.1 million and R$ 5.7 million, respectively. These values are the budgeted values and do not match the cash flow amounts due to the accounting consolidation process and intercompany elimination.

C. Research and Development, Patents and Licenses

Research and Development

The main activities of research, development and innovation for the Eletrobras System are carried out by the Electric Energy Research Center (Cepel), a non-profit entity founded in 1974 by Eletrobras and its subsidiaries: Chesf, Eletronorte, Eletrosul and Furnas. The Center’s mission is to develop and deploy sustainable technology solutions for the generation, transmission and distribution of electricity by means of Research, Development and Innovation activities (R & D + I) for the Brazilian electricity sector. Eletrobras is the primary sponsor of Cepel and has the technical support of the Center in the coordination of important national programs such as “Light for All” (Luz para Todos), the “National Electric Energy Conservation Program” (Procel), “Incentives for Alternative Sources of Electric Energy Program” (Proinfa) and “Efficient Public Lighting” (ReLuz). Cepel also participates in the elaboration of the National Energy and the Decennial Power Plans of Eletrobras. In order to support its research activities, Cepel created a complex of 34 laboratories, some accredited by the Instituto Nacional de Metrologia (the Brazilian National Metrology Institute), that perform a wide variety of experiments, technology services and tests. Noteworthy are the laboratories of High-Voltage and High-Power - the largest of their kind in the Southern Hemisphere - and the Laboratory of Ultra-High Voltage, in its final stages of implementation having only one similar worldwide. In addition, the Center has two reference and demonstration units: CRESESB, to promote the use of solar and wind energy, and CATE, to promote the efficient use of electricity. In line with the guidelines of the Committee of Technological Politics (CPT), Cepel prioritizes strategic and structuring projects, distributed among seven main research areas, each one carried on by specific department: (i) DEA – Energy Optimization and Environment; (ii) DRE – Electrical Networks; (iii) DAS – Systems Automation; (iv) DLE – Lines and Stations; (v) DTD – Distribution Technology; (vi) DTE – Special Technologies; and (vii) Laboratories (Experimental Research) – DLA and DLF Departments.

The Cepel’s activities have important role in supporting to our core business of generation, transmission, distribution and commercialization of electric energy.

Patents and Licenses

Among others, we have registered “Eletrobras” as a trademark with the Instituto Nacional de Propriedade Industrial – INPI (the Brazilian National Industrial Property Institute).Further, Cepel has twenty-eight patents, Eletronorte has fifty-one patents, Eletrosul has six patents and Furnas has nine patents registered with the INPI relating to equipment and manufacturing processes. In addition, Furnas has three patents registered in the United States, one patent registered in Canada and Cepel has six patents registered outside Brazil.

Insurance

We maintain insurance for, fire, natural disasters, accidents involving third parties, certain other risks associated with the transportation and assembly of equipment, construction of plants, and multirisks. Our subsidiaries and Itaipu have similar insurance coverage. We do not have insurance coverage for business interruption risk because we do not believe that the high premiums are justified by the low risks of a major disruption, considering the energy available in the Interconnected Power System. We believe that we maintain insurance that is both customary in Brazil and adequate for the business in which we engage.

- 127 -

D. Trend Information

Our management has identified the following key trends, which contain certain forward-looking information and should be read in conjunction with “Cautionary Statement Regarding Forward-Looking Information” and “Item 3.A, Risk Factors.” Fundamentally, we believe these trends will allow us to continue to grow our business and improve our corporate image:

• electricity is in constant demand: unlike certain industries which are particularly vulnerable to cyclical conditions in the market and/or seasonality, the demand for electricity is constant. We believe we will continue to have the ability to set tariffs in accordance with market conditions, particularly in the generation segment. Although tariffs in the transmission segment are set by the Brazilian Government each year, we believe that these tariffs will continue to increase;

• participation in future auctions will allow us to grow: we expect to participate in an increasing number of future new energy auctions, as well as new transmission auctions, and will, accordingly need to invest in new power generation plants (hydroelectric, wind, biomass and thermal) and new transmission lines in order to expand the existing grid and keep our current market share. We also believe that by focusing on generation and transmission, we will be able to maximize profits by improving efficiency in our existing infrastructure and capitalizing on opportunities arising from new infrastructure;

• revenues from third parties for maintenance of facilities: although the core of our business will remain the generation and transmission segments, we have successfully increased our revenues in recent periods by using our expertise to provide maintenance services for other companies in our industry. Our subsidiary Eletronorte has been the key conduit for this. We expect this trend to continue, thereby improving our financial position;

• an increasing focus on environmental, health and safety concerns: there is a trend in Brazil and globally towards increasing concerns for the protection of the environment. This impacts us in various ways, including dealing with social and political issues that may arise when we seek to construct new facilities (particularly in remote areas of Brazil) and reduced carbon emission targets from facilities that rely on fossil fuel. One of the key challenges for us will be to balance these environmental concerns against the growth of our business, as these concerns naturally can increase cost pressures. There is also an increasing trend in Brazil towards more stringent health and safety requirements with respect to operating permits for our facilities, which similarly imposes cost pressure challenges on our business; and

• effect of Law No. 12,783: Law No. 12,783 will continue to effect the manner in which we account for our concessions. We expect to renew additional contracts for the maximum period of 30 years at significantly lower tariff levels. As a result, we may continue to write down the value of our renewed concessions and provide “onerous contract” in cash generating.

- 128 -

E. Off-Balance Sheet Arrangements

The Company acts as guarantor, in proportion to its equity interest, to several projects whose guaranteed amounts are described below:

Company	Project	Financing Bank	Model	Subsidiary Share			Financed Value		Outstanding Balance on December 31, 2015		Guarantee Balance Eletrobras		Guarantee Term
Eletrobras	Norte Energia	BNDES	SPE		15.00	%		2,025,000		2,095,590		20,956		1/15/2042
Eletrobras	Norte Energia	CEF	SPE		15.00	%		1,050,000		1,105,927		11,059		1/15/2042
Eletrobras	Norte Energia	BTG Pactual	SPE		15.00	%		300,000		315,979		3,160		1/15/2042
Eletrobras	Norte Energia	Guarantee of Contract Compliance	SPE		15.00	%		156,889		94,140		941		4/30/2019
Eletrobras	Rouar	CAF	SPE		50.00	%		38,805		38,805		388		9/30/2017
Eletrobras	Mangue Seco 2	BNB	SPE		49.00	%		40,951		37,846		378		10/14/2031
Eletrosul	ESBR	BNDES	SPE		20.00	%		727,000		896,664		8,967		8/15/2034
Eletrosul	ESBR	BNDES	SPE		20.00	%		232,500		236,520		2,365		1/15/2035
Eletrosul	ESBR	BNDES REPASSE	SPE		20.00	%		717,000		905,294		9,053		8/15/2034
Eletrosul	ESBR	BNDES REPASSE	SPE		20.00	%		232,500		238,070		2,381		1/15/2035
Eletrosul	Cerro Chato I, II e III	Banco do Brasil	SPE		100.00	%		223,419		128,308		1,283		7/15/2020
Eletrosul	RS Energia	BNDES	SPE		100.00	%		126,221		65,321		653		6/15/2021
Eletrosul	Artemis Transmissora de Energia	BNDES	SPE		100.00	%		170,029		45,416		454		10/15/2018
Eletrosul	Porto Velho Transmissora de Energia	BNDES	SPE		100.00	%		283,411		258,645		2,586		8/15/2028
Eletrosul	UHE Mauá	BNDES	SPE		49.00	%		182,417		148,872		1,489		1/15/2028
Eletrosul	UHE Mauá	BNDES/Banco do Brasil	SPE		49.00	%		182,417		148,892		1,489		1/15/2028
Eletrosul	UHE Passo de São João	BNDES	Corporate		100.00	%		183,330		139,178		1,392		7/15/2026
Eletrosul	SC Energia	BNDES/Banco do Brasil	Corporate		100.00	%		50,000		17,297		173		5/15/2019
Eletrosul	SC Energia	BNDES/BDRE	Corporate		100.00	%		50,000		17,247		172		5/15/2019
Eletrosul	SC Energia	BNDES	Corporate		100.00	%		103,180		34,555		346		5/15/2019
Eletrosul	SC Energia	BNDES	Corporate		100.00	%		67,017		29,946		299		3/15/2021
Eletrosul	UHE São Domingos	BNDES	Corporate		100.00	%		207,000		185,737		1,857		6/15/2028
Eletrosul	RS Energia	BNDES	SPE		100.00	%		41,898		31,249		312		3/15/2027
Eletrosul	RS Energia	BNDES	SPE		100.00	%		9,413		8,270		83		8/15/2027
Eletrosul	RS Energia	BNDES	SPE		100.00	%		12,000		6,799		68		8/15/2027
Eletrosul	UHE Passo de São João	BNDES	Corporate		100.00	%		14,750		11,502		115		7/15/2026

- 129 -

Eletrosul	Projetos Corporativos Eletrosul	Banco do Brasil	Corporate	100.00	%	250,000	223,702	2,237	11/15/2023
Eletrosul	Teles Pires	BNDES	SPE	24.50	%	296,940	339,515	3,395	2/15/2036
Eletrosul	Teles Pires	BNDES/Banco do Brasil	SPE	24.50	%	294,000	338,346	3,383	2/15/2036
Eletrosul	Teles Pires	Debentures Issuance	SPE	24.50	%	160,680	211,162	2,112	5/30/2032
Eletrosul	Livramento Holding	BNDES	SPE	49.00	%	91,943	75,244	752	6/15/2030
Eletrosul	Chuí Holding	BNDES	SPE	49.00	%	186,082	188,903	1,889	12/15/2031
Eletrosul	Transmissora Sul Brasileira de Energia S.A.	BNDES	SPE	80.00	%	209,974	194,085	1,941	7/15/2028
Eletrosul	Transmissora Sul Brasileira de Energia S.A.	Debentures Issuance	SPE	80.00	%	62,040	76,152	762	9/15/2026
Eletrosul	Costa Oeste Transmissora de Energia S.A.	BNDES	SPE	49.00	%	17,846	16,198	162	11/1/2022
Eletrosul	Santa Vitória do Palmar Holding S.A.	BNDES	SPE	49.00	%	197,950	211,335	2,113	6/16/2031
Eletrosul	Santa Vitória do Palmar Holding S.A.	BRDE	SPE	49.00	%	98,000	107,021	1,070	6/16/2031
Eletrosul	Transmissora Sul Litorânea do Brasil	BNDES	SPE	51.00	%	252,108	247,485	2,475	2/15/2029
Eletrosul	Complexo São Bernardo	KfW	Corporate	100.00	%	29,854	56,503	565	12/30/2038
Eletrosul	Complexo São Bernardo	KfW	Corporate	100.00	%	136,064	195,298	1,953	12/30/2042
Eletrosul	Eólica Hermenegildo I S/A	Debentures Issuance	SPE	99.99	%	79,100	81,751	818	1/18/2016
Eletrosul	Eólica Hermenegildo I S/A	Debentures Issuance	SPE	99.99	%	32,000	33,073	331	1/18/2016
Eletrosul	Eólica Hermenegildo II S/A	Debentures Issuance	SPE	99.99	%	79,100	81,751	818	1/18/2016
Eletrosul	Eólica Hermenegildo II S/A	Debentures Issuance	SPE	99.99	%	17,100	17,673	177	1/18/2016
Eletrosul	Eólica Hermenegildo III S/A	Debentures Issuance	SPE	99.99	%	66,800	69,039	690	1/18/2016
Eletrosul	Eólica Hermenegildo III S/A	Debentures Issuance	SPE	99.99	%	21,500	22,221	222	1/18/2016
Eletrosul	Eólica Chuí IX S/A	Debentures Issuance	SPE	99.99	%	25,000	25,793	258	1/18/2016
Eletrosul	Eólica Chuí IX S/A	Debentures Issuance	SPE	99.99	%	11,000	11,369	114	1/18/2016
Eletrosul	Complexo Eólico Livramento - Entorno II	CEF	Corporate	100.00	%	200,000	213,130	2,131	8/7/2017
Eletrosul	Projetos Corporativos Eletrosul 2	BTG Pactual	Corporate	100.00	%	200,000	209,135	2,091	3/6/2016
Eletronorte	São Luis II e III	BNDES	Corporate	100.00	%	13,653	8,727	87	11/15/2024
Eletronorte	Miranda II	BNDES	Corporate	100.00	%	47,531	23,596	236	11/15/2024
Eletronorte	Ribeiro Gonç./Balsas	BNB	Corporate	100.00	%	70,000	60,278	603	6/3/2031
Eletronorte	Lechuga/J. Teixeira	BASA	Corporate	100.00	%	25,720	21,179	212	1/10/2029
Eletronorte	UHE Tucuruí	BNDES	Corporate	100.00	%	931,000	76,580	766	9/15/2016
Eletronorte	Substação Nobres	BNDES	Corporate	100.00	%	10,000	7,256	73	3/15/2028

- 130 -

Eletronorte	Subestação Miramar/Tucuruí	BNDES	Corporate	100.00	%	31,000	23,760	238	8/15/2028
Eletronorte	Ampliação da Subestação Lechuga	BNDES	Corporate	100.00	%	35,011	27,061	271	10/15/2028
Eletronorte	Norte Brasil Transmissora	BNDES	SPE	49.00	%	514,500	486,790	4,868	12/15/2029
Eletronorte	Norte Brasil Transmissora	Debentures Issuance	SPE	49.00	%	98,000	128,811	1,288	9/15/2026
Eletronorte	Linha Verde Transmissora	BASA	SPE	100.00	%	185,000	196,577	1,966	11/10/2032
Eletronorte	Manaus Transmissora	BNDES	SPE	30.00	%	120,300	104,315	1,043	12/15/2026
Eletronorte	Estação Transmissora de Energia	BNDES	Corporate	100.00	%	505,477	440,302	4,403	11/15/2028
Eletronorte	Estação Transmissora de Energia	BASA	Corporate	100.00	%	221,789	225,225	2,252	7/10/2031
Eletronorte	Estação Transmissora de Energia	BASA	Corporate	100.00	%	221,789	219,803	2,198	10/15/2030
Eletronorte	Rio Branco Transmissora	BNDES	Corporate	100.00	%	138,000	118,355	1,184	3/15/2027
Eletronorte	Transmissora Matogrossense Energia	BASA	SPE	49.00	%	39,200	39,819	398	2/1/2029
Eletronorte	Transmissora Matogrossense Energia	BNDES	SPE	49.00	%	42,777	32,073	321	5/15/2026
Eletronorte	Rei dos Ventos 1 Eolo	BNDES	SPE	24.50	%	30,851	30,851	309	12/31/2016
Eletronorte	Brasventos Miassaba 3	BNDES	SPE	24.50	%	30,984	30,984	310	12/31/2016
Eletronorte	Rei dos Ventos 3	BNDES	SPE	24.50	%	32,533	32,533	325	12/31/2016
Eletronorte	Belo Monte Transmissora de Energia S. A.	Itau BBA	SPE	24.50	%	49,735	57,237	572	6/18/2016
Eletronorte	Belo Monte Transmissora de Energia S. A.	Santander	SPE	24.50	%	49,000	55,674	557	6/18/2016
Eletronorte	Norte Energia	BNDES	SPE	19.98	%	2,697,300	2,791,326	27,913	1/15/2042
Eletronorte	Norte Energia	CEF	SPE	19.98	%	1,398,600	1,473,095	14,731	1/15/2042
Eletronorte	Norte Energia	BTG Pactual	SPE	19.98	%	399,600	420,884	4,209	1/15/2042
Eletronorte	Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporate	100.00	%	294,700	135,828	1,358	7/28/2029
Eletronorte	Implantação do PAR e PMIS	BNDES	Corporate	100.00	%	743,382	357,912	3,579	12/15/2023
Eletronuclear	Angra III	BNDES	Corporate	100.00	%	6,146,256	3,203,974	32,040	6/15/2036
Chesf	ESBR	BNDES	SPE	20.00	%	727,000	896,664	8,967	8/15/2034
Chesf	ESBR	BNDES	SPE	20.00	%	232,500	236,520	2,365	1/15/2035
Chesf	ESBR	BNDES REPASSE	SPE	20.00	%	717,000	905,294	9,053	8/15/2034
Chesf	ESBR	BNDES REPASSE	SPE	20.00	%	232,500	238,070	2,381	1/15/2035
Chesf	Manaus Transmissora	BNDES	SPE	19.50	%	78,195	67,540	675	12/15/2026
Chesf	Norte Energia	BNDES	SPE	15.00	%	2,025,000	2,095,590	20,956	1/15/2042
Chesf	Norte Energia	CEF	SPE	15.00	%	1,050,000	1,105,927	11,059	1/15/2042

- 131 -

Chesf	Norte Energia	BTG Pactual	SPE	15.00	%	300,000	315,979	3,160	1/15/2042
Chesf	IE Madeira	BASA	SPE	24.50	%	65,415	76,321	763	7/10/2032
Chesf	IE Madeira	BNDES	SPE	24.50	%	455,504	404,196	4,042	2/15/2030
Chesf	IE Madeira	Debentures Issuance	SPE	24.50	%	85,750	115,626	1,156	3/18/2025
Chesf	Projetos Corporativos Chesf 1	Banco do Brasil	Corporate	100.00	%	500,000	385,092	3,851	9/28/2018
Chesf	Projetos Corporativos Chesf 2	CEF	Corporate	100.00	%	400,000	354,678	3,547	2/27/2019
Chesf	IE Garanhuns s/a	BNDES	SPE	49.00	%	175,146	168,030	1,680	12/15/2028
Chesf	Projetos Corporativos Chesf 3	BNDES	Corporate	100.00	%	727,560	282,223	2,822	11/15/2023
Chesf	Projetos Corporativos Chesf 4	BNDES	Corporate	100.00	%	475,454	194,825	1,948	11/15/2023
Furnas	UHE Batalha	BNDES	Corporate	100.00	%	224,000	165,314	1,653	12/15/2025
Furnas	UHE Simplício	BNDES	Corporate	100.00	%	1,034,410	705,108	7,051	7/15/2026
Furnas	UHE Baguari	BNDES	Corporate	100.00	%	60,153	39,726	397	7/15/2026
Furnas	DIVERSOS	Banco do Brasil	Corporate	100.00	%	750,000	758,922	7,589	10/31/2018
Furnas	Rolagem BASA 2008	Banco do Brasil	Corporate	100.00	%	208,312	211,777	2,118	2/7/2018
Furnas	Projetos de Inovação	FINEP	Corporate	100.00	%	268,503	163,880	1,639	11/15/2023
Furnas	Financiamento corporativo	Banco do Brasil	Corporate	100.00	%	400,000	430,918	4,309	12/6/2023
Furnas	UHE Santo Antônio	BNDES	SPE	39.00	%	1,594,159	1,968,315	19,683	3/15/2034
Furnas	UHE Santo Antônio	BNDES	SPE	39.00	%	1,574,659	2,033,066	20,331	3/15/2034
Furnas	UHE Santo Antônio	BASA	SPE	39.00	%	196,334	247,102	2,471	12/15/2030
Furnas	UHE Santo Antônio	Debentures Issuance	SPE	39.00	%	163,800	204,398	2,044	1/24/2023
Furnas	UHE Santo Antônio	Debentures Issuance	SPE	39.00	%	273,000	318,042	3,180	3/1/2024
Furnas	UHE Foz do Chapecó	BNDES	SPE	40.00	%	435,508	405,692	4,057	9/15/2027
Furnas	UHE Foz do Chapecó	BNDES	SPE	40.00	%	217,754	205,308	2,053	9/15/2027
Furnas	UHE Foz do Chapecó	BNDES	SPE	40.00	%	4,009	3,083	31	9/15/2027
Furnas	Centroeste de Minas	BNDES	SPE	49.00	%	13,827	10,924	109	4/15/2023
Furnas	Serra do Facão	BNDES	SPE	49.47	%	257,263	218,804	2,188	6/15/2027
Furnas	Goiás Transmissão	BNDES	SPE	49.00	%	49,000	49,372	494	12/1/2031
Furnas	Goiás Transmissão	BNDES	SPE	49.00	%	64,435	58,977	590	1/15/2027
Furnas	MGE	BNDES	SPE	49.00	%	58,359	49,163	492	1/15/2027
Furnas	Transenergia São Paulo	BNDES	SPE	49.00	%	9,212	8,641	86	12/15/2028
Furnas	Rei dos Ventos 1 Eolo	BNDES	SPE	24.50	%	30,851	28,235	282	10/15/2029
Furnas	Brasventos Miassaba 3	BNDES	SPE	24.50	%	30,984	28,425	284	10/15/2029
Furnas	Rei dos Ventos 3	BNDES	SPE	24.50	%	32,533	29,757	298	10/15/2029
Furnas	IE Madeira	BASA	SPE	24.50	%	65,415	76,321	763	7/10/2032

- 132 -

Furnas	IE Madeira	BNDES	SPE	24.50	%	455,504	404,196	4,042	2/15/2030
Furnas	IE Madeira	Debentures Issuance	SPE	24.50	%	85,750	115,626	1,156	3/18/2025
Furnas	Teles Pires	BNDES	SPE	24.50	%	296,940	339,515	3,395	2/15/2036
Furnas	Teles Pires	BNDES	SPE	24.50	%	294,000	338,346	3,383	2/15/2036
Furnas	Teles Pires	Debentures Issuance	SPE	24.50	%	160,680	211,162	2,112	5/31/2032
Furnas	Caldas Novas Transmissão	BNDES	SPE	49.90	%	2,418	2,033	20	5/15/2023
Furnas	Caldas Novas Transmissão	BNDES	SPE	49.90	%	5,536	4,997	50	3/15/2028
Furnas	Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporate	100.00	%	294,700	139,274	1,393	7/28/2029
Furnas	Mata de Santa Genebra	Debentures Issuance	SPE	49.90	%	234,031	234,031	2,340	3/12/2016
Amazonas	Amazonas	Confissão de Dívida - Petrobras/BR	Corporate	100.00	%	2,405,979	2,297,400	22,974	1/30/2025
Eletroacre	Eletroacre	Confissão de Dívida - Petrobras/BR	Corporate	100.00	%	91,774	87,568	876	1/30/2025
Boa Vista	Boa Vista	Confissão de Dívida - Petrobras/BR	Corporate	100.00	%	19,320	17,665	177	12/31/2024
Cepisa	Projeto Corporativo	CEF	Corporate	100.00	%	94,906	50,146	501	8/30/2016
Total						46,270,960	41,822,565	418,226

The Company recorded under the operational provisions for noncurrent liabilities the fair value of the amounts guaranteed by the Company over resources already disbursed by the financing banks. The provision is made based on the fair value of the guarantee of Eletrobras, as shown below:

	Provision Value
Guarantees due on 12/31/2012		189,113
Charges in the period		83,682
Guarantees due on 12/31/2013		272,795
Charges in the period		115,165
Guarantees due on 12/31/2014		387,960
Charges in the period		30,266
Guarantees due on 12/31/2015		418,226

- 133 -

UHE Simplício – with an installed capacity of 337 MW, that belongs to FURNAS with financing fully guaranteed by the Company.

UHE Mauá – with an installed capacity of 361 MW, in partnership with the subsidiary Eletrosul (49%) and Copel (51%). This project has two contracts with BNDES, where the Company is the guarantor in proportion to its shareholding participation.

UHE Jirau – SPE Energia Sustentável do Brasil, with installed capacity of 3,750 MW. The project’s shareholders are: Eletrosul (20%), Chesf (20%) and GDF Suez Energy,. This project has two contracts with BNDES, to be paid in 240 monthly installments. The company is the guarantor in proportion to stake of its subsidiaries.

UHE Santo Antônio – SPE Santo Antônio Energia – with an installed capacity of 3,568.80 MW. The project’s shareholders are: Furnas (39%), Cemig, Fundo de Investimentos em Participação Amazônica Energia – FIP, Construtora Norberto Odebrecht S/A, Odebrecht Investimentos em Infraestrutura Ltda. and Andrade Gutierrez Participações S/A. The Company is a, intervening guarantor in financing with the BNDES and with the Banco da Amazônia, in proportion to Furnas shareholding participation.

UHE Foz do Chapecó – SPE Foz do Chapecó Energia, with an installed capacity of 855MW. The company is the guarantor of the contract with the BNDES, in substitution of the Bank Financing previously contracted, in proportion to the stake of Furnas (40%).UHE Baguari – with an installed capacity of 140MW that belongs to FURNAS. The Company is the guarantor of 15% of the financing contract with the BNDES

UHE Serra do Facão – SPE Serra do Facão, with an installed capacity of 212.58 MW. The project’s shareholders are: Furnas (49.47%), Alcoa Alumínio S.A. (34.97%), DME Energética (10.09%) and Camargo Corrêa Energia S.A. (5.47%). The company is the guarantor in the contract with the BNDES, in proportion to stake of Furnas.

Norte Brasil Transmissora – SPE – The project’s shareholders are Eletronorte (24.5%) and Eletrosul (24.5%) and its objective is the implementation, operation and maintenance of the Porto Velho/Araraquara transmission line, with an extension of 2,412 km.

Manaus Transmissora de Energia – SPE – The project’s shareholders are Eletronorte (30%) and Chesf (19.5%), and its objective is the implementation, operation and maintenance 4 substations and 587 km transmission line (LT Oriximiná/Itacoatiara/Cariri). The Company is the guarantor of two financing (BASA and BNDES) in proportion to stake of its subsidiaries.

Mangue Seco 2 – The project’s shareholders are Eletrobras (49%) and Petrobras (51%) its objective is the implementation, operation and maintenance of three wind farms in Guararé, in the State of Rio Grande do Norte. The company is the guarantor in the financing agreement with the BNB, in proportion to its stake.

UHE Batalha – with an installed capacity of 52.5 MW, that belongs to FURNAS with BNDES financing fully guaranteed by the Company

IE Madeira – SPE Interligação Elétrica – The project’s shareholders are Furnas (24.5%) and Chesf (24.5%). The company is the guarantor in the financing agreements with the BNDES, in proportion to its stake

UHE Belo Monte – SPE Norte Energia, with an installed capacity of 11,233 MW – The project’s shareholders are Chesf (15%), Eletronorte (19.98%) and Eletrobras (15%) among other partners. The company is the guarantor in relation to the insurer J MALUCELLI, under the guarantee insurance contract, in the in proportion to the stake of Company and its subsidiaries. The Company is also garantor in a loan agreement with the BNDES in the in proportion to the stake of Company and its subsidiaries.

Angra III – the company is the guarantor for the financing of Eletronuclear with the BNDES, to build the corporate project of the NTU Angra III.

The Company does not have any other off-balance sheet arrangements that have or reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources other than the transactions described above.

- 134 -

F. Contractual Obligations

We set out below, on a consolidated basis, our long-term debt, long-term purchase obligations, leasing obligations, actuarial debt and obligations for asset retiring for the periods, including contractual interest obligations, when applicable, presented as follows:

	Payments due by period as of December 31, 2015
	2017		2018		2019		2020		2021 and after
	(in R$ millions)
Long-term debt obligations		16,138		8,241		8,241		8,241		17,884
Leasing obligations		92		102		113		125		738
Post-employment benefits		1,006		1,124		1,257		1,404		1,211
Decommissioning of nuclear power plants (1)		—		—		—		—		2,090
Purchase obligations		5,664		3,640		3,777		3,679		299,117
Generation		1,349		1,307		1,342		1,301		11,998
Transmission		—		—		—		—		—
Distribution		4,315		2,333		2,435		2,378		287,119
TOTAL		22,900		13,107		13,388		13,449		321,040

(1) Decommissioning of nuclear power plants.

The decommissioning of nuclear power plants relates to the asset retirement obligation for these plants and the costs to be incurred at the end of their useful lives.

Decommissioning can be understood as a set of measures taken to safely decommission a nuclear plant, reducing residual radioactivity to levels that permit the site of the plant to be classified as of restricted use or of unrestricted use.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Board of Directors and Senior Management

We are managed by our Conselho de Administração (or Board of Directors), composed of up to ten members, and by our Board of Executive Officers, which currently consists of six members. Our by-laws also provide for a permanent Conselho Fiscal (or Fiscal Council), which is made up of five effective members and their respective alternates. Pursuant to our by-laws, all members of our Board of Directors, Board of Executive Officers and Fiscal Council must be Brazilian citizens.

Board of Directors

The members of our Board of Directors are elected at the general shareholders meeting for a renewable term of one year. As our majority shareholder, the Brazilian Government has the right to appoint seven members of our Board of Directors, of which six are appointed by the MME and one by the Ministério do Estado do Planejamento, Orçamento e Gestão (the Planning, Budget and Management Ministry). The minority shareholders have the right to elect one member, the holders of preferred shares without voting rights representing at least ten percent of our total capital have the right to elect one member and one director shall be elected as a representative of the employees of the company. Currently, our Board of Directors is composed of nine members. One of the members of the Board of Directors is appointed as Chairman. The address of our Board of Directors is Av. Presidente Vargas, 409 13º andar – Rio de Janeiro.

Historically, our Board of Directors meets once a month and when called by a majority of the directors or the Chairman. Among other duties, our Board of Directors is responsible for: (i) establishing our business guidelines; (ii) determining the corporate organization of our subsidiaries or any equity participation by us in other legal entities; (iii) approving our entering into any loan agreement and determining our financing policy; and (iv) approving any guarantee in favor of any of our subsidiaries in connection with any financial agreement.

- 135 -

The table below sets out the current members of our Board of Directors and their respective positions. The mandate of each member of our Board of Directors expires at the next Ordinary Shareholders’ Meeting. Each member was elected by the Brazilian Government except for Mozart de Siqueira Campos Araújo, who was elected by our minority shareholders and Jailson José Medeiros Alves who was elected as a representative of our employees. On August 2, 2016, Jailson José Medeiros Alves was replaced by Carlos Eduardo Rodrigues Pereira. Given the lack of the minimum quorum in our by-laws the holders of preferred shares representing at least ten percent of our total capital were not able to elect one member of the Board of Directors under the Extraordinary Shareholders’ Meeting held on July 22, 2016.

Name	Position
José Luiz Alqueres		Chairman
Wilson Pinto Ferreira Junior		Director
Vicente Falconi Campos		Director
Ana Paula Vitali Janes Vescovi		Director
Elena Landau		Director
Carlos Eduardo Rodrigues Pereira		Director
Mozart de Siqueira Campos Araújo		Director
Esteves Pedro Colnago Júnior		Director
José Pais Rangel		Director

José Luiz Alqueres – Board Member: Mr. José Luiz Alqueres holds a degree in engineer from Pontifícia Universidade Católica do Rio de Janeiro in 1966. He subsequently attended social science at IFCS-UFRJ and did post-graduation courses in Brazil, the United States and France. He was a professor at PUC-Rio, FAU-UFRJ, IBMEC and FGV. He was National Energy Secretary in 1992. He was CEO of CERJ, Eletrobras, Alstom do Brasil, MDU do Brasil, Light Serviços de Eletricidade S.A. He also worked at Banco Nacional de Desenvolvimento Econômico e Social - BNDES, and he also held the position of officer of BNDESPAR and Banco Bozano Simonsen in addition to being member of several boards of directors of companies such as Calyon-Credit Lyonnais, FIP-Pactual, Rio Bravo and large companies from the energy sector such as Itaipu, Furnas, Chesf, Eletrosul, Eletronuclear, Cesp, CEMIG, EDP, CPFL, among others. He is currently partner and officer of JLA – JL Alquéres Consultores Associados Ltda., Rio Bravo Investimento.

Wilson Pinto Ferreira Junior – Board Member: Mr. Wilson Pinto Ferreira Junior holds a degree in Electrical Engineering from Escola de Engenharia da Universidade Mackenzie in 1981 as well as a degree in Business Administration from Faculdade de Ciências Econômicas, Contábeis e Administrativas da Universidade Mackenzie in 1983. He subsequently obtained a master’s degree in Energy from Universidade de São Paulo (USP) as well as several specializations, among which Work Safety Engineering (Universidade Mackenzie), Marketing (Fundação Getúlio Vargas) and Electricity Distribution Administration (Swedish Power Co.). In Companhia Energética de São Paulo (Cesp) he has held several positions, including Distribution Officer (1995 to 1998). He was Chief Executive Officer of RGE from 1998 to 2000, chairman of the Board of Directors of Bandeirante Energia S.A. from 2000 to 2001 and Chief Executive Officer of CPFL Paulista between 2000 and 2002. In 2002 he also was appointed Chief Executive Officer of CPFL Energia, position he has occupied up to 2016. He has also acted as President of Brazilian Association of Electricity Distributors – Abradee (Associação Brasileira de Distribuidores de Energia Elétrica) between the years of 2009 and 2010. He is the chairman of the board of directors of Furnas, Chesf, Eletronorte and Eletrosul.

Vicente Falconi Campos - Board Member: Mr. Vicente Falconi Campos holds a degree in Engineering from Universidade Federal de Minas Gerais (UFMG) in 1963 and holds diplomas of M.Sc. and Ph. D. in Egineering by Colorado School of Mines, USA, obtained in 1968 and 1971. Founder and chariman of the board of directors of FALCONI – Consultores de Resultados, the largest management consulting company in Brazil. He is a Board member of AmBev, BRF- Brasil Foods and ELETROBRAS. He is an emeritus professor of UFMG. He has been awarded the Medal Order of Rio Branco for services rendered to the nation. Chosen by the American Society for Quality Control as one of the “21 voices of the 21st century”. He has worked on JUSE – Union of Japanese Scientists and Engineers.

Ana Paula Vitali Janes Vescovi – Board Member: Mrs. Ana Paula Vitali Janes holds a degree in Economics from Universidade Federal do Espírito Santo. She holds a master degree in Public Sector Economy from Universidade de Brasília (2001) and a master degree in Public Administration from Escola Brasileira de Administração Pública da Fundação Getúlio Vargas do Rio de Janeiro – FGV/RJ. Between 2007 and 2010 she was president of Instituto Jones dos Santos Neves and Secretary of the State of Espírito Santo. Between 2010 and 2014 she was assistant to Senator Ricardo Ferraço. Between 2015 and 2016 she was Finance Secretary of the State of Espírito Santo and is currently National Treasury Secretary.

- 136 -

Elena Landau – Board Member: Mrs. Elena Landau holds a degree in Economics from Pontifícia Universidade Católica do Rio de Janeiro (PUC-RIO) in 1976 and holds a master degree in Economics from PUC-RIO in 1982. Moreover, she is a lawyer graduated from PUC-RIO in 2006 and holds a post-graduation certificate on Corporate Law and Capital Markets from Fundação Getúlio Vargas FGV/RJ (2003) as well as a “Short Course on Regulation” from London School of Economics (2008). Since 2007 she is a partner at Sérgio Bermudes law firm. Between 2010 and 2011 she was Vice-President of the Electric Energy Commission from the Rio de Janeiro State Bar (OAB/RJ) and between 2007 and 2011 she was Coordinator of the Regulatory Legal Committee of ABCE – Associação Brasileira de Companhias de Energia Elétrica. Since 2010 she became general counsel of ABCE. Moreover, she has held several leadership positions in the public and private initiatives, such as Manager Officer of Bear Stearns Investment Bank in Brazil, officer of BNDES, responsible for the National Privatization Program (“Programa Nacional de Desestatização”), BNDES CEO Special Advisor, Sub-Chief of the Economic Department of National Industry Confederation (Confederação Nacional da Indústria).

Carlos Eduardo Rodrigues Pereira – Board Member: Mr. Carlos Eduardo Rodrigues Pereria holds a degree in Electric Engineer from Universidade Federal do Rio de Janeiro (UFRJ). He holds a master’s degree in Electricity Engineering from COPPE/UFRJ (with emphasis on Electromagnetic Transients). He holds a MBA in Economy and Energy Management from COPPEAD/UFRJ, a certificate from IBGC on Formation of Members of Boards of Directors, a certificate on International Accounting Rules from FIPECAFI and a certificate in Regulation from FGV. At the beginning of his career at the electric industry he worked at the Transmission Management Office of ONS, the National System Operator, where he remained between 2003 and 2004. He has also worked, between 2006 and 2010, at the laboratories of Centro de Pesquisas de Energia Elétrica (CEPEL), at the then denominated Lines and Stations Department (Departamento de Linhas e Estações), in researches related to the high-tension area. In 2010, he joined Eletrobras to work at the Transmission Planning Studies Division. In 2015, he started working at the Advisory Office for Regulation Management and Institutional Relations, where he remains up to this date.

Mozart de Siqueira Campos Araújo – Board Member: Mr. Mozart de Siqueira Campos Araújo holds a master degree in Electric Engineer from Univerisidade de Pernambuco (UPE) in 1976, and holds a Ph.D. degree in Electro technology from Institut National Polytechnique of Grenoble, France, in 1979. He is also an associate professor since 1996 of the graduation course of Electric Engineering at UPE as well as an executive of Itamarati Norte S.A. – Agropecuária (Energy/Investments company of the Brennand group). Since 2005 he is the chairman of the board of directors of ABAGEL – Associação Brasileira de Geração de Energia Limpa.

Esteves Pedro Colnago Júnior – Mr. Esteves Pedro Colnago Júnior holds a degree in Economics from Universidade de Brasília in 1996 and holds a master degree in Economic Sciences from Universidade de Brasília (2004). In addition, he has obtained a post-graduation certificate in Public Accounting, also from Universidade de Brasília, in 2000. Since 1998 he is an analyst of the Central Bank of Brazil. Moreover, he was the General Coordinator of the Economic Policy Secretariat of the Ministry of Finance between 2005 and 2011 as well as Programs Officer of the Executive Secretariat of the Ministry of Finance between 2011 and 2015. In 2015 he held the positions of Programs Officer and Deputy Executive Secretary to the Executive Secretariat of the Ministry of Planning, Budget and Management, position he currently holds. Mr. Esteves Colnago Júnior is a member of the board of directors of Instituto de Resseguros do Brasil (IRB), he was once chairman of Conselho de Recursos do Sistema Financeiro Nacional (CRSFN) and professor of Instituto de Ensino Superior de Brasília (IESB).

José Pais Rangel – Mr. José Pais Rangel is a Lawyer with great experience on publicly-held companies, having exercised the following roles at the Central Bank of Brazil: Capital Markets Inspector, Inspection Supervisor of Capital Markets, Inspection Regional Head of Capital Markets, Head of Public Debt Department, Market Transactions Manager, Project Coordinator and responsible for implementation of SELIC system in the Brazilian Financial Market, Founder and member of the Board of Trustees of CENTRUS – Fundação Banco Central de Previdência Privada, Coordinator of the Privatization Program of companies contolled by the Central Bank of Brazil, Chairman of the board of directors of Cia. América Fabril, member of the board of directors of Cia. Fábrica de Tecidos Dona Isabel, Advisor of the Presidency of the Republic – SEPLAN/Special Privatization Committee, Chief Executive Officer of Cia. Nacional de Tecidos Nova América, and liquidator of the following state-owned companies: DIGIBRÁS (Empresa Digital Brasileira S.A.), DIGIDATA (Eletrônica S.A.) and PROEL (Processos

- 137 -

Eletrônicos Ltda.). He currently holds the following positions: Vice-President of Banco Clássico S.A., member of the board of directors of Companhia Distribuidora de Gás do Rio de Janeiro — CEG, member of the board of directors of Tractebel Energia S.A., member of the board of directors of Kepler Weber S.A. and member of the board of directors of Cia. Energética de Minas Gerais — CEMIG (all publicly-held companies). He is an Investment Funds Manager duly authorized by CVM.

Board of Executive Officers

Our Board of Executive Officers is currently made up of seven members appointed by our Board of Directors for a three-year term. Historically, our Board of Executive Officers meets every week, or when called by a majority of the officers or by the Chief Executive Officer. Our Board of Executive Officers determines our general business policy, is responsible for all matters related to our day-to-day management and operations and is the highest controlling body with regards to the execution of our guidelines. We have no control over appointments of our officers because all such appointments are made by our board of directors. The address of our Board of Executive Officers is Av. Presidente Vargas, 409 13º andar – Rio de Janeiro.

The members of our current Board of Executive Officers were appointed by our Board of Directors and their names and titles are set out below:

Name	Position
Wilson Pinto Ferreira Junior	Chief Executive Officer
Armando Casado de Araújo	Chief Financial and Investor Relations Officer
Carlos Eduardo Gonzalez Baldi	Chief Generation Officer
Alexandre Vaghi de Arruda Aniz	Chief Administrative Officer
Luiz Henrique Hamann	Chief Distribution Officer
José Antonio Muniz Lopes	Chief Transmission Officer
Lucia Maria Martins Casasanta	Chief Compliance Officer

Mr. Wilson Pinto Ferreira Junior – Chief Executive Officer: See “ – Board of Directors.”

Mr. Armando Casado de Araújo – Chief Financial Officer and Investor Relations Officer: Mr. Araújo has over 30 years of experience in the domestic electric power sector. He worked for Eletronorte as Budget Superintendent from 1977. He was then appointed President of the Integração Transmissão de Energia S.A. He has worked at Eletrobras since June 2008 when he became the assistant to and substitute of the Chief Financial Officer. He was appointed as Chief Financial Officer and Investor Relations Officer on March 30, 2010. Mr. Araújo holds a degree in Business Administration from Faculdade de Ciências Exatas, Administrativas e Sociais de Brasília, and has completed several post-graduate courses in Finance. He is a member of the board of directors of Furnas, Chesf, CGTEE and Eletrosul.

Mr. Carlos Eduardo Gonzalez Baldi - Chief Generation Officer: Mr. Carlos Eduardo Gonzalez Baldi is a Mechanical Enggineer who graduated from Universidade Federal Fluminense (UFF) in 1988. He holds a post-graduation certificate in Solid Mechanics from Pontifícia Universidade Católica do Rio de Janeiro (PUC/RJ) obtained in 1994 and a specialization in Welding Engineering from the German Welding Association – DSV Mannheim GmbH obtained in 1995. He also holds a MBA in Business Management from Fundação Getúlio Vargas (2005) and is currently obtaining a certificate in Corporate Law at Fundação Getúlio Vargas. Since 2010 he is a partner and officer of HLCE – Consultoria e Assessoria Empresarial Ltda. Between 2011 and 2012 he was the Chief Executive Officer of the Pecém Harbor Project at Energia Pecém.

Mr. Alexandre Vaghi de Arruda Aniz – Administrative Officer: Mr. Aniz is a lawyer, graduated from Mackenzie University and specialized in Corporate Income Tax by Apet. He served as vice president and acting president of the Commercial Registry of the State of São Paulo and CEO of Ceret Foundation (now Workers’ Park), and has held, in São Paulo, the offices of subprefect of Ipiranga, chief of staff at the subprefecture of Vila Mariana and legal advisor and chairman of the Bidding Committee of the subprefecture of Cidade Tiradentes. Founding partner of Aniz e Araujo Sociedade de Advogados, in the private sector he was the CEO and chairman of the Board of Directors of 3e Energia e Participações S.A., a member of the Fiscal Council of companies of the group Jahu Construtora e Incorporadora S.A. and a member of the Commission of Environment and Risk Management of Abamec (current Apimec). He is a member of the board of directors of Eletronuclear.

- 138 -

Mr. Luiz Henrique Hamann – Distribution Officer: Luiz Henrique Hamann is a Business Administrator who graduated from Faculdade Católica de Ciências Humanas/DF and who holds a MBA in Business Management from Fundação Dom Cabral. Between 2011 and 2013, and also between 2015 and 2016, Mr. Luiz Henrique Hamann was Assistant to Eletrobras’ Chief Financial and Investor Relations Officer. Between 2013 and 2015 he was Chief Executive Officer of Companhia Energética de Roraima (CERR). He is the chairman of the board of directors of Amazonas Energia, Ceal, Cepisa, Ceron, Boa Vista Energia e Eletroacre.

Mr. José Antonio Muniz Lopes – Transmission Officer: Mr. Lopes was appointed Chief Executive Officer of Eletrobras on March 6, 2008. On March 4, 2008 at the Extraordinary General Stockholders Meeting he was elected a member of our Board of Directors. Mr. Lopes has held several executive positions in companies in the Eletrobras group, such as Chief Executive Officer and Director of Planning and Engineering at Eletronorte from 1996 to 2003, Chief Executive Officer, Managing Director and Chief Financial Officer at Chesf from 1992 to 1993 and Chief Executive Officer at Eletrobras from March 2008 to February 2011. Mr. Lopes was also Deputy Director of the National Department of Energy Development – DNDE of theMME, where he also served as the Executive Secretary. Mr. Lopes holds a degree in Electrical Engineering from the Universidade Federal de Pernambuco. He is an expert in the Brazilian electricity sector in which he has worked for more than 30 years.

Ms. Lucia Maria Martins Casasanta – Compliance Officer: Ms. Lucia Maria Martins Casasantais an Economist graduated from Universidade Federal de Minas Gerais in 1983, as well, as an Accountant graduated from Universidade Santa Úrsula, in Rio de Janeiro, in 1993. She also holds a post-graduation certificate in Financial Management from Fundação Dom Cabral, in Minas Gerais, obtained in 1984. Her professional experience includes 30 years working with Audit & Risk Management functions, of which 13 years as a Partner. Between 1984 and 2002 she acted as an auditor at Arthur Andersen, holding positions ranging from trainee to partner. From 2002 to 2013 she acted as an Audit and Risk Management partner at Deloitte. On April, 2014, she was elected as a coordinator of Rio de Janeiro’s chapter of Instituto Brasileiro de Governança Corporativa (IBGC). Also, she implemented and coordinated the Compliance Committee at Personal Service from October 2015 to July 2016, was a member of the Fiscal Council of Eneva S.A. from August 2015 to April 2016 and has been a member of the Compliance Committee at Brazilian Fast Food Corp. – BFFC, since August 2015.

B. Compensation

The compensation of our Board of Directors, Board of Executive Officers and Fiscal Council is determined by our shareholders at the Ordinary Shareholders’ Meeting held within the first four months of the financial year. That compensation may also include a profit sharing amount at the discretion of our shareholders.

For 2015, 2014 and 2013, the aggregate consolidated compensation paid to our Directors, Officers and members of the Fiscal Council (excluding that paid by Itaipu) was R$ 42.8 million, R$ 35.9 million, R$ 33.9 million respectively.

C. Board Practices

Service Contracts

We do not have service contracts with any member of our Board of Directors, Board of Executive Officers or Fiscal Council.

Fiscal Council

Our Fiscal Council is established on a permanent basis and consists of five members and five alternates elected at the annual shareholders meeting for renewable one-year terms. The Brazilian Government has the right to appoint three of the members of our Fiscal Council, and both the minority shareholders and the holders of our preferred shares without voting rights, have the right to appoint one member each. The fiscal Council was adapted in 2006 to comply with the requirements of the Sarbanes-Oxley Act and it functions like an Audit Committee.

In addition, the Fiscal council supervises management to ensure compliance with the Company’s By-Laws and constitutive documents obligations.

- 139 -

The current members of our Fiscal Council as of December 31, 2015, set out in the table below, and respective alternates were elected during the general shareholders meeting held during April 29, 2016 and in which we elected five members and respective alternates to the Fiscal Council. Their terms of office are due to end at the ordinary shareholder meeting scheduled for 2017.

The meetings occur monthly, although, meeting may also occur on an ad hoc basis whenever called by the President of the Council.

Member	Alternate
Eduardo Cesar Pasa	David Meister
Agnes Maria de Aragão da Costa	Leila Przytyk
Luis Felipe Vital Nunes Pereira	Fabiana Magalhães Almeida Rodopoulos
Ronaldo Dias	João Gustavo Specialski Silveira
Aloisio Macario Ferreira de Souza	Patrícia Valente Stierli

D. Employees

As of December 31, 2015, we (excluding Itaipu) had a total of 22,205 salaried employees compared to 22,215 employees as of December 31, 2014 and 25,500 as of December 31, 2013. Eletrobras, excluding Itaipu and other subsidiaries, had 1,016 employees as of December 31, 2015. For the past five years we have not experienced any strikes or other form of work stoppage that have affected our operations or had a significant impact on our results.

In 2013, as part of our cost reduction measures, we offered an early Voluntary Redundancy Scheme (Programa de Incentivo ao Desligamento), or PID, which 4,448 of our employees accepted. 4,221 and 557 employees left Eletrobras at the end of 2013 and 2014, respectively, as part of the PID. In 2014, this program was extended to our subsidiary Eletronuclear and 623 employees accepted its terms. This program provided us with an annual cost saving of R$ 1,266 billion in 2014.

The significant reduction in the number of employees as of December 31, 2014 when compared to December 31, 2013 is mainly related to the Voluntary Redundancy Scheme (please see note 29.2 of our consolidated financial statements for further information) affecting 4,778 employees and the restructuring of the corporate, organizational and managerial aspects of Eletrobras’ business model.

As a mixed capital company, we cannot hire employees without a public contest. A public contest involves us placing advertisements in the Brazilian press for open positions and inviting applicants to sit an examination. Our last public contest took place in 2010, as a result of which we hired approximately 35 new employees. Over the course of 2015, we hired 554 new employees, 479 thorugh a public contest and 75 were reinstated pursuant to court orders.

The following table sets out the number of employees hired by Eletrobras’s companies in the periods indicated:

Subsidiary	Number of Outsourced Employees as of December 31,
	2015		2014
Eletronorte		362		382
Furnas		1,178		1,330
Total		1,540		1,712

The national collective bargaining agreement encompasses all subsidiaries of Eletrobras and its purpose is to unify procedures and policies by having all negotiations with employees’ representatives taking place concurrently.

- 140 -

These negotiations are made on a national level with representatives of several unions and associations, such as: Federação Nacional dos Urbanitários; Federação Nacional dos Engenheiros; Federação Nacional dos Trabalhadores em Energia, Água e Meio Ambiente; Federação Nacional dos Administradores; Federação Interestadual do Sindicato de Engenheiros; Federação Nacional dos Técnicos Industriais; Federação Regional dos Urbanitários do Nordeste; Federação Nacional das Secretárias e Secretários; Sindicato Nacional dos Advogados e Procuradores de Empresas Estatais; and Sindicatos dos Urbanitários de Alagoas, Rio de Janeiro, Distrito Federal, Amapá, Rondônia, Roraima, Maranhão, Amazonas, Mato Grosso, amongst others.

The specific collective bargaining agreement has the same term and was entered into concurently with the national collective bargaining agreement. It contains specific provisions for each company and it was negotiated with the specific unions that apply to each company.

The 2015 collective bargaining agreement was concluded before the Vice President of the Superior Labor Court (Tribunal Superior do Trabalho – TST.

The provisions of the previously existing collective bargaining agreement were renewed, with the replacement of IPCA, as disclosed by Instituto Brasileiro de Geografia e Estatística – IBGE, for the previous existing period (May 2014 through May 2015).

E. Share Ownership

As of December 31, 2015, Manoel Jeremias Leite Caldas was the only member of our Fiscal Council to hold shares. He held 103,000 of our common shares. The following tables show current ownership of our shares by members of our Board of Directors and Board of Executive officers:

Board of Directors

Name	Number of Preferred Shares held		Number of Common Shares held
José Luiz Alqueres		—		—
Wilson Pinto Ferreira Junior		—		—
Vicente Falconi Campos		2,260,800¹		—
Ana Paula Vitali Janes Vescovi		—		—
Elena Landau		—		—
Esteves Pedro Colnago Júnior		—		—
Carlos Eduardo Rodrigues Pereira		—		—
José Pais Rangel		56,000		32,000
Mozart de Siqueira Campos Araújo		—		—

¹ Through exclusive fund Star Tours.

Board of Executive Officers

Name	Number of Preferred Shares held		Number of Common Shares held
Wilson Pinto Ferreira Junior		—		—
Armando Casado de Araújo		—		—
Carlos Eduardo Gonzalez Baldi		—		—
Alexandre Vaghi de Arruda Aniz		—		—
Luiz Henrique Hamann		—		—
José Antonio Muniz Lopes		—		1
Lucia Maria Martins Casasanta		—		—

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

As of December 31, 2015, the aggregate amount of our outstanding capital stock was R$ 31,305 million, consisting of 1,087,050,297 outstanding common shares, together with 146,920 outstanding class “A” preferred shares and 265,436,883 outstanding class “B” preferred shares. This represented 80.4%, 0.01% and 19.6% of our aggregate outstanding capital stock respectively.

- 141 -

As of December 31, 2014, the aggregate amount of our outstanding capital stock was R$ 31,305 million, consisting of 1,087,050,297 outstanding common shares, together with 146,920 outstanding class “A” preferred shares and 265,436,883 outstanding class “B” preferred shares. This represented 80.4%, 0.01% and 19.6% of our aggregate outstanding capital stock respectively.

As of September 30, 2016, we had 2,536 beneficial and 15 registered holders of ADS representing common shares and 830 beneficial and 8 registered holders of ADS representing preferred shares.

As of December 31, 2014, we had 21,394 beneficial and 17 registered holders of ADS representing common shares and 6,716 beneficial and 8 registered holders of ADS representing preferred shares.

The following tables show information relating to beneficial ownership in our common and preferred shares as of December 31, 2015 and December 31, 2014:

As of December 31, 2015

Shareholder	Common Shares					Class A Preferred Shares					Class B Preferred Shares					Total
	(number)		%			(number)		%			(number)		%			(number)		%
Brazilian Government		554,395,652		51.00	%							1,544		0.00	%		554,397,196		40.99	%
BNDES Participações S.A		141,757,951		13.04	%							18,691,102		7.04	%		160,449,053		11.86	%
BNDES		74,545,264		6.86	%							18,262,671		6.88	%		92,807,935		6.86	%
FND		45,621,589		4.20	%									0.00	%		45,621,589		3.37	%
FGHAB		1,000,000		0.09	%									0.00	%		1,000,000		0.07	%
CEF		8,701,564		0.80	%									0.00	%		8,701,564		0.64	%
FGI				0.00	%							8,750,000		3.30	%		8,750,000		0.65	%
Others		261,028,277		24.01	%		146,920		100.00	%		219,731,566		82.78	%		480,906,763		35.55	%
Under BM&FBOVESPA Custody		259,494,572		23.87	%		81,384		55.39	%		206,903,805		77.95	%		466,479,761		34.49	%
Resident		124,893,621		11.49	%		81,383		55.39	%		90,516,497		34.10	%		215,491,501		15.93	%
Non Resident		53,229,265		4.90	%		1		0.00	%		95,124,435		35.84	%		148,353,701		10.97	%
J.P. Morgan Chase Bank		81,371,686		7.49	%				0.00	%		21,262,873		8.01	%		102,634,559		7.59	%
Others		1,533,705		0.14	%		65,536		44.61	%		12,827,761		4.83	%		14,427,002		1.07	%
Resident		1,533,459		0.14	%		65,509		44.59	%		12,827,548		4.83	%		14,426,516		1.07	%
Non Resident		246		0.00	%		27		0.02	%		213		0.00	%		486		0.00	%
Total		1,087,050,297		100.00	%		146,920		100.00	%		265,436,883		100.00	%		1,352,634,100		100.00	%

As of December 31, 2014

Shareholder	Common Shares				Class A Preferred Shares	Class B Preferred Shares				Total
	(number)%				(number)%	(number)%				(number)%
Brazilian Government		554,395,652	51.00	%			1,544	0.00	%		554,397,196	40.99	%
BNDES Participações S.A		141,757,951	13.04	%			18,691,102	7.04	%		160,449,053	11.86	%
BNDES		74,545,264	6.86	%			18,262,671	6.88	%		92,807,935	6.86	%
FND		45,621,589	4.20	%							45,621,589	3.37	%
FGHAB		1,000,000	0.09	%							1,000,000	0.07	%
FGEDUC		8,279,030	0.76	%							8,279,030	0.61	%

- 142 -

Shareholder	Common Shares					Class A Preferred Shares					Class B Preferred Shares					Total
	(number)		%			(number)		%			(number)		%			(number)		%
CEF		8,701,564		0.80	%												8,701,564		0.64	%
FGI												8,750,000		3.30	%		8,750,000		0.65	%
Others		252,749,247		23.25	%		146,920		100.00	%		219,731,566		82.78	%		472,627,733		34.94	%
Under BM&FBOVESPA Custody		252,643,306		23.24	%		86,122		58.62	%		204,506,596		77.05	%		457,236,024		33.80	%
Resident		82,373,911		7.58	%		86,121		58.62	%		101,263,609		38.15	%		183,723,641		13.58	%
Non Resident		85,329,430		7.85	%		1		0.00	%		77,123,405		29.06	%		162,452,836		12.01	%
J.P. Morgan Chase Bank		84,939,965		7.81	%				0.00	%		26,119,582		9.84	%		111,059,547		8.21	%
Others		105,941		0.01	%		60,798					15,224,970		5.74	%		15,391,709		1.14	%
Resident		77,866		0.01	%		60,771		41.36	%		15,220,968		5.73	%		15,359,605		1.14	%
Non Resident		28,075		0.00	%		27		0.02	%		4,002		0.00	%		32,104		0.00	%
Total		1,087,050,297		100	%		146,920		100	%		265,436,883		100	%		1,352,634,100		100	%

B. Related Party Transactions

We administer certain funds, including the RGR fund, CCC Account and CDE Account, on behalf of the Brazilian Government, our controlling shareholder. According to Provisional Measure No. 735, as from January 2017 the funds will be transferred to CCEE.

We sometimes act together with other Brazilian state owned companies or governmental entities. These activities are mainly in the areas of technical cooperation and research and development. In 2000, our Board of Directors approved the execution of a Technical and Financial Cooperation Agreement between ourselves and the MME, for us to perform feasibility studies in relation to the Brazilian hydrographic base, with the purpose of identifying potential sites for the future construction of hydroelectric plants.

In addition, we have also made a number of loans to our subsidiaries. For further details please see the description in “Item 4. B, Information on the Company – Business Overview – Lending and Financing Activities – Loans Made by Us.”

We believe our transactions with related parties are conducted on market terms.

For further information see note 46 of the consolidated financial statements.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Financial Statements and Other Information

See “Item 18. Consolidated Financial Statements.”

Litigation

As of December 31, 2015, we were a party to numerous legal proceedings relating to civil, administrative, environmental, labor and tax claims filed against us. These claims involve substantial amounts of money and other remedies. Several individual disputes account for a significant part of the total amount of claims against us. We have established provisions for all amounts in dispute considering that in this cases where there is a present obligation (legal or constructive) as a result of a past event, it is probable (more likely than not) there will be an outflow of resources that embodies economic benefits to settle the referred obligation, and the amount to settle the obligation can be estimated reliably. As of December 31, 2015, we provisioned a total aggregate amount of approximately R$ 14,147 million in respect of our legal proceedings, of which R$ 644 million were related to tax claims, R$ 12,498 million were related to civil claims and R$ 1,005 million were related to labor claims.

- 143 -

Environmental Proceedings

We are required to comply with strict environmental laws and regulations that subjected us and/or our subsidiaries to be signatories to the following Conduct Adjustment and Consent Agreements (TAC):

Commitment Agreements entered by and between Eletrobras Eletronuclear and the Cities of Angra dos Reis, Paraty and Rio Claro

Eletronuclear has to comply with conditions set forth in Previous License No. 279/2008 and Installation License No. 591/2009 from IBAMA for the environmental licensing of the Angra 3 nuclear plant. TAC’s have been entered into by Eletronuclear with the Municipalities of Angra dos Reis in October 2009 and of Paraty and Rio Claro in February 2010. Eletronuclear has to implement public policy projects in the Environmental, Civil Defense, Social Assistance, Education, Construction and Public Services, Economic Activities, Health, Sanitation and Cultural areas of these Municipalities until the startup of Angra 3 operations. In the event of default Eletronuclear may ultimately fail to obtain the Operation License for Angra 3 plant.

Conduct Adjustment Agreement (TAC) entered by CGTEE

CGTEE entered into a TAC on April 13, 2011 (as amended on August 16, 2013) on account of (i) environmental adjustments of phases A and B of Presidente Médice plant, located in Candiota, state of Rio Grande do Sul; and (ii) the expiration of the Operation License No. 057/99 in connection with Candiota II thermoelectric plant. The TAC was entered into with the Brazilian Government, represented by the Federal Attorneys Agency (AGU), the MME, the Ministry of the Environment (MMA), IBAMA, CGTEE and Eletrobras. The TAC and its First Amendment set forth several obligations for CGTEE, with a total investment of R$ 241.8 million. After the TAC is concluded, the company expects the operation license for Presidente Médici Plant to be renewed. The TAC’s final deadline is on December 31, 2017, but each measure agreed under the TAC has a specific deadline for its completion.

Non-compliance with any provisions of the TAC subjects CGTEE to daily fines of R$ 30,000.00, as adjusted by official indexes, until the fulfillment of the agreed obligations. The imposition of the fines is independent to and does not prevent the imposition of other applicable penalties, such as administrative fines and embargo, whenever a violation to the environmental laws is verified, or prevent ordinary oversight procedures conducted by IBAMA in the use of its prerogatives. In addition, non-compliance with any of the following obligations within the terms and deadlines set forth in the TAC may result in the immediate shutdown of the Candiota II Complex: (i) shutdown of Phase A; (ii) conclusion of the environmental adequacy of the first unit of Phase B; (iii) conclusion of the environmental adequacy of the second unit of Phase B; and (iv) if the air quality violates the limits set forth in CONAMA Ruling No. 03/90.

Conduct Adjustment Term - TAC - UHE Simplício - Furnas

Furnas has entered on February 20, 2013 into a TAC with the Federal and State Prosecutors’ Offices, and the Municipality of Sapucaia, state of Rio de Janeiro, in connection with sewage treatment stations and water quality control in the influence area of UHE Simplício. Environmental issues identified in the municipalities affected by the Simplicio hydroelectric plant in the Paraiba do Sul river were the cause that led Furnas to enter into this TAC. Furnas committed to construct and maintain sewage treatment plants and collectors networks until such facilities are transferred to the respective municipalities, as well as to monitor the water flow quality. The TAC remains in force and it has 25 items for compliance, but only eight of them were not almost fully implemented. Some undertakings are effective for the duration of the concession.

In the event of delays of more than 15 days of schedule, without the proper information, a daily fine of R$ 10,000.00 will apply. In addition, non-compliance could result in the determination of flow increase in the reduced flow passage (TVR) and in decreased water discharge by the plant, which could lead to a reduction in the volume of energy generated by it.

- 144 -

Conduct Adjustment Term - TAC - LT Itaberá-Tijuco Preto – Furnas

Furnas has entered on December 15, 2000 into a TAC with the Federal Public Prosecutors’ Office, IBAMA; the National Indian Foundation – FUNAI and the Institute of Historical and Artistic Heritage National – IPHAN to remediate effects of deployment of transmission line in São Paulo due to the effects of the implementation of Itaberá Transmission Line - Tijuco Preto III and the Public Civil Action 1999.61.00.048465-6.

According to this TAC, Furnas committed to develop cultural and social projects and programs, programs aiming the protection and development of Animals, Indigenous Communities, the Historical and Archaeological Heritage, among others, related to environmental issues. Furnas understands that all commitments were fully implemented on September, 2016, and presented to the Federal Public Prosecutors’ Office a claim to terminate the TAC. Every action that is not fulfilled is subject to sanctions, and the TAC establishes fines of R$ 25 to R$ 100 depending on the time of default.

Investors’ Class Actions

Between July 22, 2015 and August 15, 2015, two putative securities class action complaints were filed against us and certain of our employees in the United States District Court for the Southern District of New York (SDNY). On October 2, 2015, these actions were consolidated and the Court appointed lead plaintiffs, Dominique Lavoie and the City of Providence. The plaintiffs filed a consolidated amended complaint on December 8, 2015 purportedly on behalf of investors who purchased our U.S. exchange-traded securities between August 17, 2010 and June 24, 2015, and filed a second amended complaint on February 26, 2016. The second amended complaint alleges, among other things, that we and the individual defendants knew or should have known about alleged fraud committed against us by a cartel of construction firms, as well as bribes and kickbacks allegedly solicited and received by our employees; that we and the individual defendants made material misstatements and omissions regarding the alleged fraud; and that our stock price declined when the alleged fraud was disclosed.

The plaintiffs have not specified an amount of damages they are seeking, although such amount, when specified, could be material to us On April 15, 2016, we filed a motion to dismiss the second amended complaint, which was fully briefed and then submitted to the Court on June 17, 2016. The motion remains under consideration by the Court; oral argument has been requested but not yet scheduled. Eletrobras retained US legal counsel and is defending itself against the allegations made in the lawsuits. There has been no substantive decision as to the claim or specific definition as to the amounts involved.

We believe the filings of these complaints do not create a present obligation or of the Company, under IAS 37. Because the litigation is still in its early stages, the discovery process has not yet begun, and the outcome of the litigation is subject considerable uncertainty, it is not possible at this stage for management of the Company to reliably estimate, the potential loss or range of loss, if any, that may result for the ultimate outcome of these legal proceedings. Therefore, no provision has been recognized in our consolidated financial statements. The ultimate outcome of these legal proceedings could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows in the future.

Criminal Proceedings

With respect to the criminal proceedings involving former Eletronuclear employees, Eletrobras is cooperating with the prosecution, resulting in the Company being given access to court documents and allowing it to question witnesses and co-defendants

Labor Proceedings

As of December 31, 2015, we were party to a number of labor proceedings brought by our employees, former employees and employees of some of our service providers against us, involving a total amount of R$ 1,005 million. Most of those proceedings relate to overtime compensation and its indirect effects, salary equalization, pension payments and payment of rescisory amounts. Although we are a party to a significant number of labor proceedings, we believe that none of those proceedings, when considered individually, could materially adversely affect our results of operations or financial condition.

- 145 -

In connection with successive attempts by the Brazilian Government to curb Brazil’s high inflation rates, Brazilian companies have in the past been required by law to disregard in each year part of the inflation for that year when calculating wage increases for its employees. Like most other Brazilian companies, we have been defendants in lawsuits brought before labor courts by labor unions or individual employees seeking compensation for lost wages resulting from the implementation of the Brazilian Government’s antiinflationary plans, in particular: (i) the plan implemented in 1987 by the then Minister of Finance, Luiz Carlos Bresser Pereira (the Bresser Plan); (ii) the plan implemented in early 1989 (the Summer Plan); and (iii) the plan implemented in 1990 by the then President, Fernando Collor de Melo (the Collor Plan). Some of the collective lawsuits brought against us in respect to such plans have been definitively decided by the Federal Supreme Court in our favor.

The Union of Workers in Urban Industries of the state of Alagoas, in the capacity of procedural substitute, brought a labor claim on behalf of employees of Ceal who are seeking supposed salary differences in light of the implementation of the Bresser Plan. The lawsuit is currently in execution process to ratify the lower court’s calculations in the amount of R$ 722 million. The amounts were contested by Ceal by submitting two arguments: one restricted to the reference date and another contesting the amounts presented by the Union without restriction to the reference date. If the restriction to the reference date is accepted, calculations will be reduced to R$ 3.4 million and the amount accrued by Ceal and assessed by legal counsels as the probable loss is restricted to the reference date. The 5^th Panel of the Superior Labor Court started to judge the appeal discussing the need to examine the pre-execution arguments. The reporting judge, Judge Emmanoel Pereira, and Judge Maria Helena Mallmann voted for non-granting of the appeal. The process is currently under analysis by Judge Caputo Bastos.As of December 31, 2015, we recognized a provision of R$ 5.2 million in our consolidated financial statements.

Labor Claim No. 010058-17.2012.5.18.0131 - Furnas

Overtime commuting due and overdue (four hours a day, two hours to go and two hours to return), plus an additional 50% on the value of regular time, and additional vacation time + 1/3, PLR, ATS, FGTS, Christmas time, additional fee for the performance of hazardous, unhealthy and painful activities, RSR, function gratification, accessory functions, nightshift, overtime and notice and attorney’s fees. Final decision. Claimed judged in favor of Plaintiff. Decision being enforced in the amount of R$ 21 million, as of December, 2015.

As of December 31, 2015, there were still individual lawsuits in process pending judgment, which we do not view as material therefore no provisions have been recognized. For further information, see Note 31 of our consolidated financial statements as of and for the year ended December 31, 2015.

Compulsory Loans

Pursuant to Law No. 4,156 of November 28, 1962 certain end-users of electricity were required to make “compulsory loans” to us (through collections by distributors) in order to provide funds for the development of the electricity sector. Industrial customers consuming over 2,000 kWh of electricity per month were required to pay an amount equivalent to 32.5% of each electricity invoice to us in the form of a compulsory loan, which was repayable by us within 20 years of draw-down. Interest on the compulsory loans accrues at IPCA – E plus 6.0% per annum. Law No. 7,181 of December 20, 1983, extended the compulsory loan program until December 31, 1993 and provided that such loans may, subject to shareholder approval, be repaid by us in the form of an issue of preferred shares at book value, in lieu of cash.

We made available to eligible customers upon the first and second conversion of credits from the compulsory loan approximately 42.5 billion class “B” preferred shares and upon the third conversion of credits from the compulsory loan, about 27.2 billion class “B” preferred shares. In addition, our shareholders approved on April 30, 2008 the issuance of additional preferred shares to eligible customers at book value in repayment of our remaining compulsory loans. If additional shares are issued in the future and the book value of such shares is less than their market value, the value of existing shareholders’ shares may be subject to dilution. On December 31, 2008, we recorded approximately R$ 215 million for debts for compulsory loans that had not yet been converted, which, at any time, by decision of our shareholders, may be refunded to industrial consumers, through issuing class “B” preferred shares, in accordance with the proceedings described above.

- 146 -

As of December 31, 2015, there were 5,216 outstanding lawsuits filed by consumers against us questioning the monetary adjustments, understated inflation and interest calculations related to the repayment of the compulsory loans. Of those lawsuits, 1,834 have been decided against us and are currently at the execution phase. The total amount involved in these lawsuits is unadjusted for monetary correction and required expert assessment to be estimated with accuracy. The total amount paid by Eletrobras in the outstanding lawsuits is approximately R$ 6.1 billion. In the course of execution proceedings, we have been required to pledge some of our assets, consisting mainly of preferred shares held by us in other electricity sector companies. We have provisioned R$ 9,279 millionlion to cover losses arising from unfavorable decisions on these lawsuits as of December 31, 2015.

The dispute was taken to the Superior Court of Justice (STJ), which ruled on the merits. An appeal, however, was filed at the Supreme Court (STF) and is pending judgment.

Although the matter was brought before the Supreme Court, in view of the Superior Court’s decision, issued according to Article 543-C of the 1973 Civil Procedure Code, the claims filed continue to be processed regularly and some decisions against Eletrobras have already been issued. The company has been ordered to pay the inflation adjustment differences for that period and, as a result, many enforcement claims have been filed. In such claims, the parties are discussing how to calculate the amount due.

However, during the third quarter of 2015, the Superior Court issued decisions setting the parameters for these calculations, taking into consideration some allegations by Eletrobras, but not all of them, which resulted in adjustments in Eletrobras’ calculation methodology and risk classification for these claims and the consequent changes in the provisions for contingencies. As this decision was considered a subsequent event for our 2014 financial statements, under IAS 10, we have reflected in additional R$ 4.1 billion in provisions relating to those compulsory loans.

We are also involved in approximately 2,100 pending lawsuits related to the repayment of the compulsory loans, in which consumers seek to exercise the option to convert their credits presented by bonds payable to the bearer. These bonds are called “obrigações da Eletrobras.” However, we believe we have no further liability in respect of these bonds because they have an expiration date for presentation and this date has now passed.

Tax Proceedings

Annulment Claim

This is a claim for annulment regarding a tax credit determined in the administrative proceeding No. 16682.720330/2012 (collection of PIS/COFINS on RTE and Itaipu), so that such a requirement was guaranteed by an escrow deposit in the files of the injunction attached to it, n° 064673-08.2015.4.02.5101. On July 6, 2015, Furnas made a judicial deposit in the amount required at the time, totaling R$ 117.3 million. Furnas is to file its response. No impact is expected considering that there was a judicial deposit of the amount involved. As of December 31, 2015 the total amount provisioned was R$ 126.3 million.Tax Judicial Proceeding No. 0075104-45.2016.814.030

Tax assessment notice concerning the lack of payment of the fee for the Control, Monitoring and Supervision of Activities of Exploration and Utilization of Water Resources (“TFHR”), intended to finance the monitoring and use of water resources in the state of Pará from April to June 2015.

At the administrative level, the impugnation, appeal and motion for review were rejected. The administrative proceeding was subsequently dismissed. A judicial lawsuit was filed and is being discussed before the Pará State Court (“TJPA”). An injunction was issued to suspend the need for payment of the debt, as well as to forbid any action regarding the collection of TFHR, even if relative to other periods. The State of Pará filed an interlocutory appeal. The injunction was suspended by the appeal judge responsible for the report on the interlocutory appeal. On account of this suspension Eletronorte filed a new appeal that is yet to be reviewed by TJPA. In addition, given that ANEEL informed it was an interested party to the lawsuit, the court records have been submitted to Federal Courts, but the Federal judge rejected acceptance of the lawsuit by arguing lack of authority, reason why the court records will be submitted back to TJPA, a State Court.

- 147 -

Without the above mentioned injunction the tax became once again due, thus enabling the State of Pará to file a Tax Foreclosure (Lawsuit No. 0023173-66.2016.4.01.3900 in course before the 6^th Federal Court of Belém). Under this lawsuit assets of the company have been indicated as being subject to judgment lien, but the State of Pará has not yet informed if they are in agreement with these assets. In addition, the State of Pará made an out-of-court protest of bill that caused Eletronorte to file a claim to suspend the protest of bill (Lawsuit No. 0023107-86.2016.4.01.3900), but up to this date no injunction has been obtained under this lawsuit.

Pará State law is also been disputed before the Federal Supreme Court (STF) by means of Direct Action of Unconstitutionality (Ação Direta de Inconstitucionalidade) No. 5374 filed by Confederação Nacional da Indústria – CNI. Eletronorte has asked to join this lawsuit as amicus curiae and is currently waiting to be accepted. Under this lawsuit the Federal Government Attorney’s Office (Procuradoria Geral da República) has issued an opinion in which it requests this state law of Pará to be declared unconstitutional and that its effectiveness should be suspended. The amount involved is of R$ 206.3 million as of December 31, 2015.

Tax Administrative Proceeding No. 16682.721.073/2014-51

Tax administrative proceedings relating to the collection of a fine regarding the social contribution due as a result of the offset made by Furnas without using PER/DCOMP. A tax assessment notice has been issued seeking the collection of the social contribution, default interest and a proportional fine because of the disallowance made by the tax agent due to the use of credits by Furnas related tax loss recorded in 2007. Procedure in the administrative appeal stage. The amount involved is of R$ 245.5 million as of Decemer, 2015.

Civil Proceedings

Expropriation of Lands

Our subsidiaries are normally involved in a number of legal proceedings related to the expropriation of land used for the construction of hydroelectric plants, particularly in the northern and northeastern regions. Most of those proceedings are related to the indemnification paid to the populations affected by the construction of the reservoirs and environmental or economic damages inflicted on the affected populations and neighboring cities. The main lawsuits related to expropriation involving our subsidiaries are described below.

In northern Brazil, Eletrobras Eletronorte is involved in several proceedings related to the expropriation of lands for the construction of the hydroelectric plant of Balbina, in the State of Amazonas. The lawsuits related to the Balbina expropriation involve the value to be paid for the expropriated land and the legality of the ownership of the affected land claimed by alleged landowners. The total amount involved, which has been recognized as a provision, was approximately R$ 375.4 million.

After a decision of the Supreme Court of March 2014 Eletronorte may raise the amount deposited in court. Nevertheless, the rescission lawsuits are still outstanding, although they are being gradually rejected by the Judiciary branch.

Mendes Jr.

As of December 31, 2012, Eletrobras Chesf was involved in significant litigation proceedings with Mendes Jr., a Brazilian construction contractor. Eletrobras Chesf and Mendes Jr. entered into an agreement in 1981 providing for certain construction work to be performed by Mendes Jr. The agreement, as amended, provided that, in the event of delays in payments due by Eletrobras Chesf to Mendes Jr., Mendes Jr. would be entitled to default interest at the rate of 1.0% per month, plus indexation to take account of inflation. During the performance of the work, payments by Eletrobras Chesf were delayed and Eletrobras Chesf subsequently paid default interest at the rate of 1.0%, plus indexation, on such delayed payments. Mendes Jr. alleged that as it had been required to fund itself in the market in order not to interrupt the construction work, it was entitled to be reimbursed in respect of such funding at market interest rates, which were much higher than the contractual default interest rate.

The lower court judge dismissed Mendes Jr.’s claims and Mendes Jr. appealed to the Appellate Court of the State of Pernambuco (or the Appellate Court). The Appellate Court reinstated Mendes Jr.’s claims and ultimately declared Eletrobras Chesf liable to reimburse Mendes Jr.’s funding costs in respect of the delayed payments at market rates,

- 148 -

plus legal fees of 20.0% of the amount of the dispute, with the total being indexed at market rates until the actual payment date. Eletrobras Chesf’s appeal from the Appellate Court’s order to the Federal Superior Court (or STJ) was dismissed on jurisdictional grounds. Mendes Jr. then filed a second lawsuit in a State court in Pernambuco to order Eletrobras Chesf to pay for the actual losses incurred by Mendes Jr., and to determine the amount payable. In the enforcement proceedings, the lower court ruled in favor of Mendes Jr., but the Appellate Court ruled in favor of Eletrobras Chesf, annulling the lower court’s judgment in the enforcement proceedings. Mendes Jr. appealed this ruling of the Appellate Court to the STJ and to the Federal Supreme Court, which were rejected. At the same time, the Brazilian government also requested the STJ to permit the government to participate in the proceedings as Eletrobras Chesf’s assistant. In December 1997, the STJ decided that: (i) the second proceedings should be recommenced from the trial court phase; (ii) the Brazilian government should participate in the proceedings as Eletrobras Chesf’s assistant; and (iii) the second proceedings should be heard before Brazilian federal courts instead of the state courts to which it was originally submitted. The second proceedings recommenced in the Brazilian federal courts to determine the final amount to be paid by Eletrobras Chesf to Mendes Jr. An expert was called to determine the amount of the claim, and had his finding challenged by Eletrobras Chesf. As a consequence, the court decided to reject the expert’s opinion but fixed the criteria which should be applied to determine the amount due. Mendes Jr. has appealed, requesting that the court require Eletrobras Chesf to pay the amount determined by the expert. Eletrobras Chesf and the Brazilian government have also appealed, requesting that the lawsuit should be terminated since there is no evidence Mendes Jr. obtained loans to conclude the construction. On October 25, 2010, the Regional Federal Court of the 5 Region held the appeals filed by Eletrobras Chesf and the Brazilian government and ruled the lawsuit had no merit. Mendes Junior filed an appeal against this decision before the 5 Region Federal Court, which was denied.

Mendes Junior filed an appeal against such denial, which is currently pending judgment before the Brazilian Superior Court of Justice. The initial amount pleaded by the plaintiffs was of approximately R$ 7 billion (not considering inflation). As of December 31, 2015, we had no provisions related to this matter. Considering the decision of the Regional Federal Court of the 5 Region, the risk of loss of such litigation has been assessed as remote. See Note 31 of the Consolidated Financial Statements.

Xingó Plant “K Factor”

As of December 31, 2015, Eletrobras Chesf was also involved in litigation with the consortium responsible for building the Xingó plant (or the Xingó Consortium) and we recognized a provision of R$ 1.072 million in our consolidated financial statements. In connection with building the Xingó plant, Eletrobras Chesf and the Xingó Consortium entered into a construction agreement that was amended in 1988 to provide that an additional inflation adjustment (referred to as the “K factor”) be added to certain monetary correction payments required to be made by Eletrobras Chesf to the Xingó Consortium under the agreement. This amendment resulted in payments by Eletrobras Chesf to the Xingó Consortium that were higher than the payments that the original Request For Proposal (or RFP) for this project indicated would be paid to the successful bidder.

In 1994, Eletrobras Chesf unilaterally ceased applying the K factor to its payments to the Xingó Consortium (and consequently reduced its payments to the Xingó Consortium to the amount that Eletrobras Chesf would have had to pay if the K factor had not been applied to such payments) and filed a lawsuit against the Xingó Consortium seeking reimbursement for the additional amounts paid pursuant to the K factor adjustment, claiming that the use of an indexation system more favorable to the Xingó Consortium than the one originally provided for by the RFP was illegal under public bidding rules. The Xingó Consortium also filed a lawsuit against Eletrobras Chesf requiring full payment of the amounts due applying the K factor. Eletrobras Chesf’s lawsuit was rejected and Xingó Consortium’s lawsuit was decided favorably to the plaintiff, ordering Eletrobras Chesf to pay the amounts corresponding to the application of the K factor. Eletrobras Chesf and the Brazilian government, which is acting as the first’s assistant on the lawsuit, have appealed to the Superior Court (STJ). In August, 2010, the Superior Court granted one of those special appeals submitted by Chesf, reducing the value of the cause, which means a substantial reduction in the honorariums that may be paid in the main lawsuit. The same Superior Court rejected the remaining special appeals submitted by Chesf and the Federal Union, and therefore maintained the decision of the Pernambuco State Court, which dismissed the declaratory action filed by Chesf and granted the counterclaim submitted by the defendants, which resulted in Chesf submitting requests for clarification, which went to trial in December 2012, and were concluded in December 2013, and were all rejected.

- 149 -

At the same time, and since the conclusion of the processing of the fact in the ordinary instances, the defendants have been taking various initiatives before the ordinary Pernambuco State Court, to obtain enforcement of the sum requested in the counterclaim.

In August 2013, the defendants took the initiative before the 12^th Civil Court of Recife, state of Pernambuco, to obtain provisional enforcement of the sums which, by their own calculations, would be the correction of the sum granted them by the Pernambuco State Court. In this case, Chesf was ordered to pay the sums in question, but submitted a “pre-enforcement challenge” (pointing out, supported by Superior Court case law, various irregularities in the procedures that would immediately disallow this provisional enforcement, without prejudice to other specific topics challenged in the calculations of the defendants themselves due to the Pernambuco State Court’s ruling). After a response from the defendants and a response from Chesf, on December 31, 2013 the process was awaiting court examination of this “challenge.” On August 22, 2014 the pre-enforcement challenge was dismissed, and the seizure via the Central Bank of Brazil electronic system of R$ 948,670 was ordered. A surety bond was offered for R$ 1.3 billion in place of the online seizure, which was accepted on August 28, 2014 by the Judge of the 12^th Civil Court, who ordered the immediate release of the sum seized. An appeal filed by the Consortium caused the suspension on September 15, 2014 of the effects of the decision which ordered the release of the sum; however, on September 24, 2014, the court quashed the Requests for Clarification filed by Chesf regarding the provisional execution, for lacking the condition of admissibility, and therefore revoked the constriction measures ordered incidentally.

The Consortium filed a claim, assigned to the 6^th Civil Chamber of the Pernambuco State Court on November 6, 2014. According to the second instance award published on January 13, 2015, the complaint was not acknowledged. In view of a motion for clarification filed by the defendants a new award was granted on February 3, 2015, in which the previous decision to not acknowledge the complaint was reversed. Under this new award the Court accepted the liquidation offered by the defendant with the subsequent submission of the court records to the judicial accountant for the proper calculations. Chesf filed an interlocutory appeal and an appeal for amendment of judgment in order to contest this new award granted by the Court, given that the first award had already resolved on not proceeding with the preliminary foreclosure. However, the interlocutory appeal was denied and, on April 13, 2015, the appeal for amendment of judgment was rejected under the argument that these were measures to simply postpone the effect of the award, having, therefore, the second award of the Court been maintained with the subsequent submission of the court records to the judicial accountant for the proper calculations. The Consortium submitted an interlocutory appeal which allowed the judge of the 12^th Civil Court of Recife to proceed with an account pledge of R$ 1 billion, excluding attorneys’ fees. As of December 31, 2015, Judiciary branch blocked R$ 360 million from that account. The Consortium appealed the requirement that 25% of Chesf’s revenues should be pledged and that the amount previously blocked should be released. However, the judge, and the Pernambuco State Court, rejected this appeal.

On February 24, 2016, a new decision of the 12^th Civil Court of Recife granted a request to pledge government bonds held by Chesf in order to, supplement the amount that had already been blocked. The 12^th Civil Court of Recife accepts preliminary procedures that seek to foreclose existing awards (“cumprimento provisório de sentença”). Under this procedure, which has been requested by the Consortium, (i) the judge approved the calculation elaborated by the judicial accountant that resulted in a preliminary principal amount award (dated as of April 2015) of approximately R$ 1.035 billion and with which Chesf disagrees; (ii) the guarantee insurance presented by Chesf, which had been accepted by the judge, was later rejected by the Pernambuco State Court; (iii) as of September 2016 financial banking assets of Chesf have been pledged in the approximate amount of R$ 500 million; and (iv) Chesf filed interlocutory appeal and a claim that are yet to be reviewed by the Pernambuco State Court. Chesf has also filed special and extraordinary appeals before the Superior Court of Justice (STJ) and before the Federal Supreme Court (STF), respectively. The special appeal is yet to be reviewed by the Superior Court of Justice (STJ) while extraordinary appeal will only be judged by the Federal Supreme Court (STF) after the Superior Court of Justice (STJ) has granted an award on the matter.

Considering the development of all of the proceedings referred to above and the appellate rulings Management, based on the opinion of its legal advisors and on calculations that took into account the suspension of payments related to Factor K and their respective monetary correction, determined it would record an R$ 1,071.9 million a provision as of December 31, 2015 under Non-Current Liabilities.

- 150 -

Eletrobras Chesf – Fazenda Aldeia Litigation

The trustees of the estate of Aderson Moura de Souza and his wife commenced a suit for damages against Eletrobras Chesf with respect to 14,400 hectares of land. A lower court determined that there were grounds for the claim and ordered Eletrobras Chesf to pay R$ 50 million, corresponding to the principal amount plus interest and monetary restatement. In December 2008, Eletrobras Chesf filed an appeal with Court of Justice of the State of Bahia. On March 2009, this lawsuit was transferred to the federal courts, which nullified the order for damages. The 1^st Region Federal Court partially affirmed the original order, but its decision has been suspended as one of the judges has requested more time to rule on the case. On June 30, 2011, Chesf’s appeal was granted partial relief. According to a decision published on June 24, 2011, the court rejected the plaintiff’s appeal. On September 30, 2011, a termination action was filed before the 1^st Region Federal Court. On December 31, 2011, an injunction to interrupt the execution of the main proceeding was granted. As of December 31, 2015, we had not yet received the judgment of the appeal. In January 2016, the Federal Prossecutor Officer opined for the termination of the action. Eletrobras Chesf has recognized a provision of R$ 100 million in relation to this proceeding. For a further discussion of this suit, see Note 31 of the financial statements as of and for the year ended December 31, 2015.

Amazonas Energia as debtor in several energy supply agreements

Amazonas Energia is defendant in lawsuits seeking payments, fines and charges for alleged delays and defaults caused by Amazonas Energia to fulfill obligations arising from contracts with Independent Power Producers - PIE’s. These lawsuits have been caused by Amazonas Energia lack of payment or delayed payment of invoices. These lawsuits were filed against the subsidiary Amazonas Energia, and Eletrobras has been named Defendant in them because it is the guarantor and main debtor of Amazonas Energia in several energy supply agreements.

As for the claims related to this subject matter, some have been dismissed (decision favorable to Eletrobras) by lower courts while others were granted (unfavorable to Eletrobras) also by lower courts, and others are pending judgment. In the cases that were judged against Eletrobras, the company has filed appeals that are currently pending judgment.

The cases that were dismissed or have not been judged yet by lower courts had their chances of loss, considering that there is no present obligation for each of these cases and therefore no provision have been recongnized.. However, the claims that were judged against Eletrobras processes had their risk rating adjusted to probable, since, as these are cases that are mainly related to the examination of facts and evidences, it is unlikely that higher courts will revert lower court decisions.

The amount recognized as a provision in December 31, 2015 was of R$ 173.2 million for Amazonas Energia and R$ 628.7 million for Eletrobras. The total consolidated amount for the year 2015 is R$ 665 million.

Indemnification Claim

Indemnification claim filed by Indústrias Reunidas Raimundo da Fonte S/A due to damages caused by the flooding of the São Francisco River in 1992. We provisioned R$ 0.004 million in our 2015 consolidated financial statements because of the several deposits in the judicial account already received from the author. The final ruling determined a provisional enforcement, and determined that an expert should calculate the values for damages and lost profits. An expert agronomist was appointed, who had powers only to calculate the amounts to be granted in respect of consequential damages. The report was contested by Chesf, who required the judge of the 1^st Civil Court to designate an accounting expert to calculate a value (even if approximate) corresponding to the loss of profits and based on the plaintiff’s activities. The plea was refused, as was an interlocutory appeal filed against such decision. A special appeal then addressed to the Superior Court of Justice was filed (which was denied by the Pernambuco State Court). Chesf appealed against that decision and such appeal was refused, causing Chesf to file a new special appeal,

- 151 -

which was also denied in April 2014, causing the process to be res judicata. The Company has made several deposits in the judicial account in the amount of R$ 61.0 million, which have been withdrawn by the opposing party and is waiting the decision to extinct the enforcing procedure.

Eletronorte civil lawsuit

A lawsuit claiming the reimbursement of amounts paid by Sul América Companhia Nacional de Seguros (plaintiff) to Albrás Aluminio Brasileiro S.A. (“Albras”) pursuant to obligations due under insurance contracts, having the insurance company filed this lawsuit against Eletronorte.

The main arguments of the plaintiff are the following: the responsibility of the insurance claim was allegedly the interruption of the supply of electricity to the industrial complex, which is the subject of a specific contract between Albras and Eletronorte.

The main arguments of the defendant are the following: the statute of limitations should apply, absence of strict liability, no fault and unforeseeable circumstances, which are causes to exclude liability.

The ruling of the 1^st instance judge upheld the request of the plaintiff and ordered Eletronorte to pay the plaintiff R$ 55.7 million, including monetary restatement pursuant to the variation of the INPC index from the date of preparation of the calculations presented in the lawsuit and interest at a rate of 1% per month since service of process. The parties submitted appeals against the decision, and the appeal filed by Eletronorte was dismissed and the Plaintiff’s appeal was upheld.

Eletronorte filed an appeal against such decision, and the decision of such additional appeal confirmed that in cases of late payments not involving individuals and upon absence of extrajudicial challenge by the party who caused the damage, the interest starts flowing from the moment service of process is made for the amounts paid administratively and, for payment of additional indemnification, from the moment service of process was made in the lawsuit filed by the insured entity against the insurers before the Justice of the State of Rio de Janeiro.

Eletronorte filed a motion for clarification, which was denied. Both the Plaintiff and Eletronorte then filed special appeals for the superior court of justice, which were admitted. The special appeals are pending distribution to higher courts. The amount involved is of R$ 236.7 million.

Explanatory Notes

For further discussion of ongoing litigation involving Eletrobras and its subsidiaries see Note 31 to our consolidated financial statements as of and for the year ended December 31, 2015.

Policy on Dividend Distribution

Brazilian Corporate Law and our by-laws provide that we must pay our shareholders a mandatory distribution equal to at least 25.0% of our adjusted net income for the preceding fiscal year. In addition, our by-laws require us to give: (i) class “A” preferred shares a priority in the distribution of dividends, at 8% each year over the capital linked to those shares; and (ii) class “B” preferred shares that were issued on or after June 23, 1969 a priority in the distribution of dividends, at 6% each year over the capital linked to those shares. In addition, preferred shares must receive a dividend 10% over the dividend paid to the common shares.

The following table sets out our dividends for the periods indicated:

	Year
	2015(1)		2014(1)			2013(1)
	(R$ )
Common Shares		—		—			0.40
Class A Preferred Shares		—		—	²		2.18
Class B Preferred Shares		—		—	²		1.63

(1) Interest on own capital.

- 152 -

(2) In the Financial Statement of 31/12/2014 there was no Declared Dividends, but in our 55^th Shareholders Meeting was approved the payment of the balance the profit reserve account in the amount of R$ 26 million in favor of our Class A Preferred shareholders and Class B Preferred shareholders. This amount adjusted was paid in 2015.

B. Significant Changes

None.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Offer and Listing Details – Common Shares

Our common shares commenced trading on the Brazilian stock exchanges on September 7, 1971. The following table sets forth the reported high and low closing sale prices for our common shares on the BM&FBOVESPA and the approximate average daily trading volume for the annual periods indicated.

	Nominal reais per Common Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
2011		25.40		15.35		1.087
2012		19.36		6.16		2.052
2013		8.10		4.41		2.510
2014		8.60		4.57		2.607
2015		8.66		4.72		2.037

Source: São Paulo Stock Exchange.

The following table sets forth the reported high and low closing sale prices for our common shares on the BM&FBOVESPA and the approximate average daily trading volume for the quarterly periods indicated.

	Nominal reais per Common Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
First Quarter 2013		8.10		6.13		2.330
Second Quarter 2013		6.95		4.54		2.716
Third Quarter 2013		6.34		4.41		2.615
Fourth Quarter 2013		7.55		5.69		2.365
First Quarter 2014		6.60		4.57		2.516
Second Quarter 2014		7.98		6.39		2.427
Third Quarter 2014		8.60		6.15		2.361
Fourth Quarter 2014		7.16		5.15		3.125
First Quarter 2015		6.04		4.90		1.711
Second Quarter 2015		8.66		5.88		1.189
Third Quarter 2015		6.17		4.72		1.371
Fourth Quarter 2015		6.34		4.97		1.908
First Quarter 2016		7.31		4.88		1.529
Second Quarter 2016		13.20		6.17		2.941
Third Quarter 2016		24.07		12.79		2,165

Source: São Paulo Stock Exchange.

- 153 -

The following table sets forth the reported high and low closing sale prices for our common shares on the BM&FBOVESPA and the approximate average daily trading volume for the periods indicated:

	Nominal reais per Common Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
June 2015		7.04		5.88		1.938
July 2015		6.17		5.26		1.295
August 2015		5.86		4.72		1.255
September 2015		5.53		4.81		1.567
October 2015		5.79		4.97		1.795
November 2015		6.34		5.42		2.025
December 2015		5.99		5.47		1.914
January 2016		5.82		4.88		1.454
February 2016		6.33		5.58		1.135
March 2016		7.31		5.70		1.936
April 2016		7.03		6.17		1.297
May 2016		8.20		6.95		3.290
June 2016		13.20		8.22		4.010
July 2016		17.63		12.79		2.697
August 2016		22.53		17.60		2.206
September 2016		24.07		12.79		2,165

Source: São Paulo Stock Exchange.

In the United States, our common shares trade in the form of ADS. The following table sets forth the reported high and low closing sale prices for our ADS representing common shares on the NYSE and the approximate average daily trading volume for the periods indicated:

	U.S.$ per ADS (common shares)				Average Daily Trading Volume
	High		Low
					(millions of shares)
June 2015		2.20		1.86		0.501
July 2015		1.93		1.56		0.524
August 2015		1.65		1.27		0.570
September 2015		1.40		1.17		0.560
October 2015		1.48		1.23		0.548
November 2015		1.62		1.30		0.456
December 2015		1.52		1.31		0.496
January 2016		1.42		1.14		0.329
February 2016		1.60		1.37		0.362
March 2016		1.99		1.44		0.524
April 2016		2.21		1.61		0.443
May 2016		2.27		1.89		1.449
June 2016		3.94		2.32		1.014
July 2016		5.34		3.82		0.439
August 2016		6.87		5.30		0.344
September 2016		7.44		5.84		0.169

Source: New York Stock Exchange.

- 154 -

Offer and Listing Details – Preferred Shares

The following table sets forth the reported high and low closing sale prices for our Class B preferred shares on the BM&FBOVESPA and the approximate average daily trading volume for the annual periods indicated.

	Nominal reais per Preferred Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
2011		31.46		20.34		0.736
2012		27.49		7.30		1.724
2013		13.70		8.03		2.013
2014		12.64		6.25		1.768
2015		11.17		5.85		1.639

Source: São Paulo Stock Exchange.

The following table sets forth the reported high and low closing sale prices for our Class B preferred shares on the BM&FBOVESPA and the approximate average daily trading volume for the quarterly periods indicated.

	Nominal reais per Preferred Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
First Quarter 2013		13.70		9.69		1.961
Second Quarter 2013		12.75		8.03		2.620
Third Quarter 2013		10.47		8.11		1.873
Fourth Quarter 2013		12.00		9.88		1.587
First Quarter 2014		10.88		8.50		1.916
Second Quarter 2014		12.64		9.55		1.721
Third Quarter 2014		12.53		10.10		1.461
Fourth Quarter 2014		10.66		6.25		1.989
First Quarter 2015		8.40		5.85		1.928
Second Quarter 2015		10.60		7.29		1.737
Third Quarter 2015		9.10		6.91		1.371
Fourth Quarter 2015		11.17		8.60		1.534
First Quarter 2016		11.21		8.16		1.797
Second Quarter 2016		18.68		10.14		2.052
Third Quarter 2016		29.70		17.42		1,658

Source: São Paulo Stock Exchange.

The following table sets forth the reported high and low closing sale prices for our Class B preferred shares on the BM&FBOVESPA and the approximate average daily trading volume for the periods indicated:

	Nominal reais per Preferred Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
June 2015		9.94		8.47		1.156
July 2015		9.04		8.05		1.114
August 2015		8.85		6.91		1.103
September 2015		9.10		7.51		1.908
October 2015		10.19		8.60		1.362

- 155 -

	Nominal reais per Preferred Share				Average Daily Trading Volume
	High		Low
					(millions of shares)
November 2015		11.17		9.93		2.124
December 2015		10.83		9.95		1.153
January 2016		10.14		8.16		1.640
February 2016		10.34		9.50		1.563
March 2016		11.21		9.90		2.135
April 2016		11.23		10.14		1.786
May 2016		13.51		11.65		2.034
June 2016		18.68		12.96		2.121
July 2016		22.04		17.42		1.860
August 2016		28.65		22.50		1.607
September 2016		29.70		23.87		1,512

Source: São Paulo Stock Exchange.

In the United States, our Class B preferred shares trade in the form of ADS. The following table sets forth the reported high and low closing sale prices for our ADS representing Class B preferred shares on the NYSE and the approximate average daily trading volume for the periods indicated:

	U.S.$ per ADS (Class B preferred shares)				Average Daily Trading Volume
	High		Low
					(millions of shares)
June 2015		3.14		2.69		0.066
July 2015		2.85		2.40		0.070
August 2015		2.56		1.94		0.078
September 2015		2.29		1.99		0.170
October 2015		2.66		2.18		0.148
November 2015		2.99		2.53		0.194
December 2015		2.83		2.36		0.126
January 2016		2.52		1.99		0.114
February 2016		2.66		2.34		0.106
March 2016		3.08		2.53		0.062
April 2016		2.23		1.59		0.194
May 2016		3.80		3.25		0.147
June 2016		5.73		3.57		0.091
July 2016		6.87		5.24		0.214
August 2016		8.85		6.86		0.044
September 2016		9.26		7.30		0.067

Source: New York Stock Exchange.

We have an insignificant number of Class A preferred shares, with no material effect on the trading volume on the BM&FBOVESPA.

As a result, as of December 31, 2015, our capital stock was comprised of a total of 1,352,634,100 shares, of which 1,087,050,297 are common shares, 146,920 are class “A” preferred shares and 265,436,883 are class “B” preferred shares.

There are no restrictions on ownership of our preferred shares or common shares by individuals or legal entities domiciled outside Brazil.

- 156 -

The right to convert dividend payments and proceeds from the sale of shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment regulations which generally require, among other things, that the relevant investments have been registered with the Central Bank. Banco Santander S.A., as custodian for our common and class “B” preferred shares represented by the ADS, has registered with the Central Bank on behalf of the Depositary the common and class “B” preferred shares that it will hold. This enables holders of ADS to convert dividends, distributions or the proceeds from any sale of such common and class “B” preferred shares, as the case may be, into U.S. dollars and to remit such U.S. dollars abroad. However, holders of ADS could be adversely affected by delays in, or a refusal to grant any, required government approval for conversions of Brazilian currency payments and remittances abroad of the common and preferred “B” shares underlying our ADS.

In Brazil, there are a number of mechanisms available to foreign investors interested in trading directly on the Brazilian stock exchanges or on organized over-the-counter markets.

Under the regulations issued by the Resolution No. 4,373 issued by the National Monetary Council, foreign investors seeking to trade directly on a Brazilian stock exchange or on an organized over-the-counter market must meet the following requirements:

• investments must be registered with a custody, clearing or depositary system authorized by CVM or the Central Bank;

• trades of securities are restricted to transactions involving securities for acquisition or sale traded on the stock exchanges or organized over-the-counter markets authorized by the CVM, or such other cases as may be set forth in the applicable CVM regulations from time to time;

• they must establish a representative in Brazil which must be a financial institution or an institution duly authorized by the Central Bank;

• they must appoint at least one custodian duly authorized by the CVM; and

• they must register with the CVM and register the inflow of funds with the Central Bank.

If these requirements are met, foreign investors will be eligible to trade directly on the Brazilian stock exchanges or on organized over-the-counter markets. These rules extend favorable tax treatment to all foreign investors investing pursuant to these rules. See “Item 10.E, Taxation.” These regulations contain certain restrictions on the offshore transfer of the title of the securities, except in the case of corporate reorganizations effected abroad by a foreign investor.

A certificate of foreign capital registration has been issued in the name of the Depositary with respect to the ADS and is maintained by Banco Santander S.A., as custodian for our common and class “B” preferred shares represented by the ADS, on behalf of the Depositary. Pursuant to such certificate of foreign capital registration, we expect that Depositary will be able to convert dividends and other distributions with respect to the common and class “B” preferred shares represented by ADS into foreign currency and remit the proceeds outside of Brazil.

In the event that a holder of ADS exchanges such ADS for common or class “B” preferred shares, such holder will be entitled to continue to rely on the Depositary’s certificate of foreign capital registration for five business days after such exchange, following which such holder must seek to obtain its own certificate of foreign capital registration with the Central Bank. Thereafter, any holder of common or class “B” preferred shares may not be able to convert into foreign currency and remit outside Brazil the proceeds from the disposition of, or distributions with respect to, such common and class “B” preferred shares, unless such holder qualifies under Resolution No. 4,373 or obtains its own certificate of foreign capital registration. A holder that obtains a certificate of foreign capital registration will be subject to less favorable Brazilian tax treatment than a holder of ADS. See “Item 10.E, Taxation – Material Brazilian Tax Considerations.”

Under current Brazilian legislation, the Brazilian Government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil’s balance of payments. For approximately six months in 1989 and early 1990, the Brazilian Government froze all dividend and capital repatriations held by the Central Bank that were owed to foreign equity investors in order to conserve Brazil’s foreign currency reserves. These amounts were subsequently released in accordance with Brazilian Government directives. There can be no assurance that the Brazilian Government will not impose similar restrictions on foreign repatriations in the future.

- 157 -

B. Plan of Distribution

Not applicable.

C. Markets

Our common shares are traded under the symbol “ELET3” and our class “B” preferred shares are traded under the symbol “ELET6” on the BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros (the São Paulo Stock Exchange or BM&FBOVESPA). The Rio de Janeiro Stock Exchange trades only Brazilian federal, state and municipal public debt or carries out privatization auctions. Stocks and bonds are traded exclusively on the BM&FBOVESPA. As of September 30, 2016 (the most recent date such information was available), we had approximately 23,330 record holders.

Our ADRs are listed on the NYSE. As of September 30, 2016 (the most recent date such information was available), we had 2,536 beneficial and 15 registered holders of ADS representing common shares and 830 beneficial and 8 registered holders of ADS representing preferred shares. Because Eletrobras failed to file its annual reports on Form 20-F for 2014 and 2015 with the Securities and Exchange Commission (SEC) by May 18, 2016, the NYSE suspended trading of the Company’s American Deposit Shares (“ADS”) (ticker EBR and EBR-B). The NYSE stated its intention to de-list the ADS, which Eletrobras has appealed. A hearing is scheduled for October 13, 2016. Currently our ADRs are suspended from trading on the NYSE and the NYSE is seeking to de-list our ADRs, although we are appealing the NYSE’s attempt to de-list our ADRs. During the time our ADRs are suspended from trading, they are trading on the over the counter market in the United States (the “OTC”).

Trading, Settlement and Clearance

Regulation of the Brazilian Securities Market

The Brazilian securities markets are regulated by the Comissão de Valores Mobiliários (the “CVM”), which was granted regulatory authority over the stock exchanges and securities markets by Brazilian Law No. 6,385, enacted on December 7, 1976 (“Brazilian Securities Law”) and Brazilian Law No. 6,404, enacted on December 15, 1976 (“Brazilian Corporate Law”), and also by Conselho Monetário Nacional (the “CMN”) and the Central Bank which possesses, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions.

The Brazilian securities markets are governed by the Brazilian Securities Law and the Brazilian Corporate Law, as well as regulations issued by the CVM, the Central Bank and the CMN. These laws and regulations provide for, among other things, disclosure requirements applicable to issuers of traded securities, restrictions on insider trading and price manipulation and protection of minority shareholders. On January 3, 2002, the CVM issued Instruction No. 358 which amended the rules applicable to the disclosure of relevant facts, which became effective on April 18, 2002. The CVM has also issued several instructions regarding disclosure requirements, namely, Instructions No. 361 and No. 400 for the regulation of public offerings, Instruction No. 380 for the regulation of internet offerings and Instruction No. 381 for the regulation of independent auditors. Instruction No. 480 for the regulation of the registration of security issuers admitted to negotiation in regulated markets in Brazil, and Instruction No. 481 for the regulation of information and the public request of proxy for shareholders meetings. Instruction No. 480 also requests that publicly held companies disclose a reference form (Formulário de Referência) which maintains a permanently updated record containing relevant information on the issuer. We believe we are currently in accordance with all applicable Brazilian corporate governance standards.

Under the Brazilian Corporate Law, a company is either public, a companhia aberta, or private, a companhia fechada. All public companies are registered with the CVM and are subject to reporting and regulatory requirements. A company registered with the CVM may have its securities traded either on the Brazilian stock exchange markets, including the BM&FBOVESPA, or in the Brazilian over-the-counter market. The shares of a public company may also be traded privately, subject to certain limitations. To be listed on the BM&FBOVESPA, a company must apply for registration with the BM&FBOVESPA and the CVM and is subject to regulatory requirements and disclosure requirements.

- 158 -

Trading on the BM&FBOVESPA

In 2000, the trading activities of shares in Brazil were reorganized through the execution of memoranda of understanding by the Brazilian regional stock exchanges. Under the memoranda, all Brazilian shares are publicly traded exclusively on the São Paulo Stock Exchange – BM&FBOVESPA (BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros).

BOVESPA was a not-for-profit entity owned by its member brokerage firms. In 2008, BOVESPA was converted into a Brazilian publicly-held company and renamed BM&FBOVESPA, as a result of a merger between BOVESPA and the Brazilian Mercantile & Futures Exchange (Bolsa de Mercadorias e Futuros – BM&F). BM&FBOVESPA is currently the most important Brazilian institution to intermediate equity market transactions and it is the only securities, commodities and futures exchange in the country. Trading on such exchange is carried out by member brokerage firms.

The trading of securities on the BM&FBOVESPA may be suspended at the request of a company in anticipation of material announcement. Trading may also be suspended on the initiative of the BM&FBOVESPA or the CVM based on or due to, among other reasons, a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the BM&FBOVESPA.

Trading in securities listed on the BM&FBOVESPA, including the Novo Mercado and Levels 1 and 2 Segments of Differentiated Corporate Governance Practices, may be carried out off the exchanges in the unorganized over-the-counter market in certain specific circumstances.

Although the Brazilian securities market is the largest in Latin America in terms of capitalization, it is smaller and less liquid than the major U.S. and European securities markets. Moreover, the BM&FBOVESPA is significantly less liquid than the NYSE, or other major exchanges in the world.

Although all of the outstanding shares of a listed company may be traded on the BM&FBOVESPA, fewer than half of the listed shares are actually available for trading by the public, the remainder being held by small groups of controlling persons, by government entities or by one main shareholder. The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell the preferred shares at the time and price you desire and, as a result, could negatively impact the market price of these securities.

In order to reduce volatility, the BM&FBOVESPA has adopted a “circuit breaker” system pursuant to which trading sessions may be suspended for a period of 30 minutes, one hour or a longer period whenever specified indices of the BM&FBOVESPA fall below the limits of 10%, 15% and 20% respectively, in relation to the index levels for the previous trading session.

When shareholders trade in shares on the BM&FBOVESPA, the trade is settled in three business days after the trade date. The delivery of and payment for shares are made through BM&FBOVESPA, which handles the multilateral settlement of both financial obligations and transactions involving securities. According to applicable regulations, financial settlement is carried out through a Central Bank system and the transactions involving the sale and purchase of shares are settled through BM&FBOVESPA. All deliveries against final payment are irrevocable.

Trading on the Brazilian stock exchanges by non-residents of Brazil is subject to registration procedures.

Corporate Governance Practices

In 2000, the BM&FBOVESPA introduced three special listing segments, known as Levels 1 and 2 of Differentiated Corporate Governance Practices and Novo Mercado, aimed at fostering a secondary market for securities issued by Brazilian companies listed on the BM&FBOVESPA, by prompting these companies to follow good practices of corporate governance. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance

- 159 -

the quality of information provided to shareholders. Recently, the BM&FBOVESPA has revised the Levels 1 and 2 of Differentiated Corporate Governance Practices and Novo Mercado rules in two occasions. The first round of amendments to the Novo Mercado rules became effective on February 6, 2006, and the first round of amendments to Levels 1 and 2 of Differentiated Corporate Governance Practices became effective on February 10, 2006. The second and most recent round of amendments to the Novo Mercado rules and the Levels 1 and 2 of Differentiated Corporate Governance Practices became effective on May 10, 2011.

Recently BM&FBovespa put in discussion changes to the Novo Mercado and Nível 2 rules, and a public hearing is ongoing to receive investors, law firms, banks and other capital markets participants’ contributions to improve the rules.

As of the effective date, in order to become a Nivel 1 (Level 1) company, in addition to the obligations imposed by applicable law, an issuer must agree to: (i) ensure that shares representing at least 25% of its total capital are effectively available for trading; (ii) adopt offering procedures that favor widespread ownership of shares whenever making a public offering; (iii) comply with minimum quarterly disclosure standards; (iv) follow stricter disclosure policies with respect to transactions made by its controlling shareholders, members of its board of directors and its officers involving securities issued by the issuer; (v) submit any existing shareholders’ agreements and stock option plans to the BM&FBOVESPA; (vi) make a schedule of corporate events available to its shareholders; (vii) elaborate and disclose a securities trading policy applicable to the company, its controlling shareholders, board members and management, as well as the members of other statutory bodies of the company with technical and consultancy functions; (viii) elaborate and disclose a code of conduct establishing the values and principles that shall serve as a guidelines for the company’s activities and relationship with the management, staff, service providers and other entities and individuals affected by the company; and (ix) prohibit holding dual positions as Chairman and Chief Executive Officer (or primary executive officer) of the company.

To become a Nivel 2 (Level 2) company, in addition to the obligations imposed by applicable law, an issuer must agree, among other things, to: (i) comply with all of the listing requirements for Level 1 companies; (ii) grant tag-along rights for all of its shareholders in connection with a transfer of control of the company, offering the same price paid per share for controlling block common shares; (iii) grant voting rights to holders of preferred shares in connection with certain corporate restructurings and related party transactions, such as: (a) any change of the company into another corporate entity; (b) any merger, consolidation or spin-off of the company; (c) approval of any transactions between the company and its controlling shareholder, including parties related to the controlling shareholder; (d) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital increase; (e) appointment of an expert to ascertain the fair value of the company’s shares in connection with any deregistration and delisting tender offer from Level 2; and (f) any changes to these voting rights, which will prevail as long as the agreement for adhesion to the Level 2 segment with the BM&FBOVESPA is in effect; (iv) have a board of directors comprised of at least five members, out of which a minimum of 20% of the directors must be independent, with a term limited to two years; (v) prepare annual consolidated financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or International Financial Reporting Standards, or IFRS; (vi) effect a tender offer by the company’s controlling shareholder (the minimum price of the shares to be offered will be determined by an appraisal process), if it elects to delist from the Level 2 segment; (vii) adhere exclusively to the rules of the BM&FBOVESPA Arbitration Chamber for resolution of disputes between the company and its investors; (viii) cause the Board of Directors to elaborate and disclose a previous and justified opinion in relation to any and all public offers for the acquisition of shares issued by the company analyzing, among other aspects, the impacts of the offer on the company’s and shareholders’ interests, as well as on the liquidity of the shares issued by the company, and containing a final and justified recommendation for the acceptance or rejection of the offer by the shareholders; and (ix) not to include in the company’s by-laws provisions that (a) restrict the number of votes of a shareholder or of a group of shareholders to percentages below 5% (five percent) of the voting shares, except for the cases of denationalization or of limits imposed by the laws and regulations applicable to the company; and, except as otherwise provided by the law or regulations (b) require a qualified quorum for matters that shall be submitted to the general shareholders’ meeting, or (c) restrict the exercise of a favorable vote by shareholders or burden shareholders that vote in favor of a suppression or change of by-laws provisions.

To be listed in the Novo Mercado segment of the BM&FBOVESPA, an issuer must meet all of the requirements described above under Level 1 and Level 2, in addition to issuing only common (voting) shares.

- 160 -

On September 26, 2006 we entered into an agreement with the BM&FBOVESPA to list our preferred shares on the Level 1 segment, effective on the date immediately after the date of publication of the announcement in Brazil of the listing, pursuant to which we agreed to comply, and continue to be compliant with all of the requirements of a Level 1 listing.

On September 2015, BM&FBovespa created a special corporate governance program named “Programa Destaque em Governança de Estatais” focused on state-owned publicly held companies, or state-owned companies that may issue an IPO, aiming to encourage these companies to improve their corporate governance practices.

The program intends to increase the trust in the relationship between investors and state-owned companies after the corruption episodes that occurred in Brazil. The program presents some concrete and direct measures that collaborate to decrease uncertainty regarding the management of the business as well as information disclosure, mainly regarding the public interest and its limits over the politician element related to it.

Joining the Program is voluntary and the companies can choose between two different categories according to their intended governance and disclosure levels.

In addition, on June 30, 2016, Brazilian government enacted Law No. 13,303 which establishes the rules applicable to state-owned companies, government-controlled companies and their subsidiaries, regulating Article 173 of the Brazilian Constitution of 1988 (“Law of State-owned Companies”) .

The main subject of the Law of State-owned Companies is linked to governance rules that have become applicable to state-owned and government-controlled companies, which are now forced to adopt higher standards of disclosure of technical and financial information, and to follow some specific criteria for the appointment of their officers and executives.

Among the new criteria set forth by the law, there are two highlights: the appointees are required to have an academic background and previous business experience in areas related to the business of the state-owned or government-controlled company where they would be working; and the state-owned companies are prohibited to appoint members of political parties or members of the legislative branch, as well as third parties related to them.

In addition, the law strengthens the entire governance structure and internal and external controls of state-owned and government-controlled companies, establishing the obligation for periodic public disclosure of technical and financial reports, maintenance of a statutory independent committee of internal audit, and mandatory submission to external auditing by independent audit firms, as well as by the audit bodies of public administration, such as the Federal, State and City Accounting Courts.

It was also defined by the Law of State-owned Companies the social function of state-owned or government-controlled companies, which is the promotion of the public interest related to their business, which should be guided by an efficient economic management and a rational management of resources ensuring sustainable economic growth aiming to increase the access by consumers to the products and services provided by such company, to develop national technologies in order to improve the products and provision of services and to promote environmentally sustained and socially responsible practices, always in an economically justified way.

Furthermore, the Law of State-owned Companies establishes rules about public biddings for hiring and for the execution of contracts by state-owned or government-controlled companies, aiming to increase the transparency and effectiveness of internal and external controls connected to the appropriateness of the proceedings.

Although the rule came into force immediately after its publication, the state-owned or government-controlled companies have up to 24 (twenty four) months to adapt to the new legal requirements.

Investment in our Preferred Shares by Non-Residents of Brazil

Investors residing outside Brazil, including institutional investors, are authorized to purchase equity instruments, including our preferred shares, on the Brazilian stock exchange provided that they comply with the registration requirements set forth in Resolution No. 4,373 of the CMN and CVM Instruction No. 560, as of March 27, 2015. With certain limited exceptions, under Resolution No. 4,373 investors are permitted to carry out any type of transaction in the Brazilian financial capital markets involving a security traded on a stock, future or organized over-the-counter market. Investments and remittances outside Brazil of gains, dividends, profits or other payments under our preferred shares are made through the exchange market.

- 161 -

In order to become a Resolution No. 4,373 investor, an investor residing outside Brazil must:

• appoint at least one representative in Brazil that will be responsible for complying with registration and reporting requirements and procedures with the Central Bank and the CVM. Such representative must be a financial institution or an institution duly authorized by the Central Bank that will be jointly and severally liable for the representative’s obligations;

• through its representative, register itself as a foreign investor with the CVM and register the investment with the Central Bank;

• appoint at least one custodian duly authorized by the CVM;

• appoint a representative in Brazil for taxation purposes;

• obtain a taxpayer identification number from the Brazilian federal tax authorities – Receita Federal (the Brazilian Internal Revenue); and

• securities and other financial assets held by foreign investors pursuant to Resolution No. 4,373 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading by foreign investors are generally restricted to transactions involving securities for acquisition or sale in stock exchanges or organized over-the-counter markets licensed by the CVM or such other cases as may be set forth in the applicable CVM regulations from time to time.

Significant Differences between our Corporate Governance Practices and NYSE Corporate Governance Standards

We are subject to the NYSE corporate governance listing standards. As a foreign private issuer, the standards applicable to us are considerably different to the standards applied to U.S. listed companies. Under the NYSE rules, we must comply with the following corporate governance rules: (i) we must satisfy the requirements of Rule 10A-3 of the Exchange Act, including having an audit committee (Fiscal Council) or audit board, pursuant to an applicable exemption available to foreign private issuers, that meets certain requirements, as discussed below; (ii) we must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules; (iii) we must provide prompt certification by our chief executive officer of any material non-compliance with any corporate governance rules; and (iv) we must provide a brief description of the significant differences between our corporate governance practices and the NYSE corporate governance practices required to be followed by U.S. listed companies. The discussion of the significant differences between our corporate governance practices and those required of U.S. listed companies follows below.

Majority of Independent Directors

The NYSE rules require that a majority of the board must consist of independent directors. Independence is defined by various criteria, including the absence of a material relationship between the director and the listed company. Although Brazilian law does not have a similar requirement, Novo Mercado and Level 2 rules require that listed companies have a board of directors comprised of at least five members, out of which a minimum of 20% of the directors must be independent pursuant to the different criteria defined in the regulations (such as absence of material relationship between a director and the listed company or the controlling shareholder). The Level 1 segment of BM&FBOVESPA in which we are listed only requires the board to be comprised of a minimum of three members and does not require any participation by independent directors and, therefore, under Brazilian law and the rules of the Level 1, neither our Board of Directors nor our management is required to test the independence of directors before their election to the board. Nevertheless, both Brazilian Corporate Law and the CVM have established rules that require directors to meet certain qualification requirements and that address the compensation and duties and responsibilities of, as well as the restrictions applicable to, a company’s executive officers and directors. While our directors meet the qualification requirements of Brazilian Corporate Law and the CVM, as well

- 162 -

as the Level 1 segment of BM&FBOVESPA, we do not believe that a majority of our directors would be considered independent under the NYSE test for director independence. Brazilian Corporate Law and our by-laws require that our directors be elected by our shareholders at a general shareholders’ meeting.

In addition, on June, 30, 2016, Brazilian government promulgated the Law of State-owned Companies that among other definitions, establishes minimum requirements for managers appointment, such as: I - (a) to have a minimum professional experience of ten years with public or private segment related to the intended state-owned company, or in other related segments regarding the superior managing position that he or she was appointed; or (b) to have a minimum professional experience of four years in one of such positions: superior manager position in similar companies considering the size or the business of the intended state-owned company; (b.1) to have occupied trustily positions or functions equal to and DAS-4 or superior in the public segment; (b.2) have been teacher or researcher in subjects related to the intended state-owned company business; (b.3) to have a minimum self-employed professional experience of four years in activities direct or indirectly related to the intended state-owned company business; (c) to have academic degree in areas that regard the intended state-owned company business; II – do not fall under the the non-admission hypothesis; and III – do not be declared ineligible regarding Complementary Law No. 64 of 1990.

Although the Law of State-owned Companies came into force immediately after its publication, the state-owned companies have up to 24 (twenty four) months to adapt to the new legal requirements. Regardless of this fact, the last election of our members of the Board of Directors and of our Executive Officers fully complied with these rules.

Executive Sessions

NYSE rules require that the non-management directors must meet at regularly scheduled executive sessions without management present. Brazilian Corporate Law does not have a similar provision. According to Brazilian Corporate Law, up to one-third of the members of the Board of Directors can be elected to the Board of Executive Officers. The remaining non-management directors are not expressly empowered to serve as a check on management, and there is no requirement that those directors meet regularly without management. As a result, the non-management directors on our board do not typically meet in executive session.

Nominating/Corporate Governance Committee

NYSE rules require that listed companies have a nominating/corporate governance committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among other things, identifying and selecting qualified board member nominees and developing a set of corporate governance principles applicable to the company. Brazilian law does not have a similar requirement.

The Law of State-owned Companies establishes that state-owned companies must have an Internal Committee to monitor and evaluate the appointment proceedings and the fulfillment of the minimum requirements for the new management members.

Although the Law of State-owned Companies came into force immediately after its publication, the state-owned companies have up to 24 (twenty four) months to adapt to the new legal requirements.

Compensation Committee

NYSE rules require that listed companies have a compensation committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among other things, reviewing corporate goals relevant to the chief executive officer’s compensation, evaluating the chief executive officer’s performance, approving the chief executive officer’s compensation levels and recommending to the board non-chief executive officer compensation, incentive-compensation and equity-based plans. We are not required under applicable Brazilian law to have a compensation committee.Under Brazilian Corporate Law, the total amount available for compensation of our directors and executive officers and for profit-sharing payments to our executive officers is established by our shareholders at the annual general meeting. The Board of Directors is then responsible for determining the

- 163 -

individual compensation and profit-sharing of each executive officer, as well as the compensation of our board and committee members. In making such determinations, the board reviews the performance of the executive officers, including the performance of our chief executive officer, who typically excuses himself from discussions regarding his performance and compensation.

Audit Committee

NYSE rules require that listed companies have an audit committee that: (i) is composed of a minimum of three independent directors who are all financially literate; (ii) meets the SEC rules regarding audit committees for listed companies; (iii) has at least one member who has accounting or financial management expertise; and (iv) is governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities. However, as a foreign private issuer, we need only to comply with the requirement that the audit committee meet the SEC rules regarding audit committees for listed companies. Brazilian Corporate Law requires State-Owned Companies to have a permanent Fiscal Council composed of three to five members who are elected at the general shareholders’ meeting.

In addition, the new Law of State-owned Companies establishes that state-owned companies must have an Internal Auditing Committee, which will have functions listed in the state-owned company’s bylaws, such as: (i) deciding about hiring and dismissing independent auditors; (ii) supervising the independent auditors activities, evaluating their independence, the provided service’s quality and if these services fit the company’s necessity; (iii) supervising the activities developed in the Internal Controls and Internal Auditing department and the activity of financial statements production of the state-owned company; (iv) monitoring the quality and the integrity of the internal control mechanisms and about the financial statements and releases that were disclosed by the state-owned company; (v) evaluating and monitoring the company’s risk exposures related to: (a) management pay; (b) assets utilization; and (c) expenses; (vi) evaluating and monitoring the Internal Audit Department and the thirty parties transactions fulfillment in accordance with the management; (vii) releasing an annual report regarding information about activities, results, conclusions and recommendations from the Audit Committee, registering conflictual opinions about the financial statements from the management, the Internal Audit Department and the Internal Fiscal Council; and (viii) evaluating the reasonability of the standards about actuarial calculations, as well as actuarial results of retirement plans which was kept by pension fund when the state-owned company sponsors closed pension entities. Although the Law of State-owned Companies came into force immediately after its publication, the state-owned companies have up to 24 (twenty four) months to adapt to the new legal requirements.

Shareholder Approval of Equity Compensation Plans

NYSE rules require that shareholders be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exceptions. Under Brazilian Corporate Law, shareholders must approve all stock option plans. In addition, any issuance of new shares is subject to shareholder approval.

NYSE rules require that listed companies adopt and disclose corporate governance guidelines. Although applicable Brazilian law does not have a similar requirement, we have adopted corporate governance guidelines which are set forth in the Code of Corporate Governance Practices of Eletrobras (“Código das Práticas de Governança Corporativa da Eletrobras”). Additionally, we have also adopted and observe a disclosure policy, which requires the public disclosure of all relevant information pursuant to guidelines set forth by the CVM, as well as an insider trading policy, which, among other things, establishes black-out periods and requires insiders to inform management of all transactions involving our securities.

Code of Business Conduct and Ethics

NYSE rules require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. BM&F Bovespa has a similar requirement for companies that are listed under Level 1, Level 2 or in the Novo Mercado corporate governance segments, and in 2010 we have introduced the Ethics Code of Eletrobras Companies (“Código de Ética Único das Empresas Eletrobras”) which provides for the ethical principles to be observed by all the members of the board of directors, executive officers, employees, outsourced staff, service providers, trainees and young apprentices.

- 164 -

The Law of State-owned Companies establishes that all the state-owned companies must have their own Code of Conduct which will provide guidelines and conduct standards for all the activities developed by the state-owned company. Companies must create a division to receive complaints and denouncements related to non-compliance with the Code.

Although the Law of State-owned Companies came into force immediately after its publication, the state-owned companies have up to 24 (twenty four) months to adapt to the new legal requirements.

Internal Audit Function

NYSE rules require that listed companies maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes and system of internal control. Brazilian law does not have a similar requirement.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Corporate Purpose

Our by-laws provide that our corporate purposes are:

(1) to construct and operate power plants and transmission lines to generate and distribute electric energy and to enter into related business transactions, such as the trade of electric energy;

(2) to cooperate with the government to establish national energy policy;

(3) to give financial support to our subsidiaries;

(4) to promote and support research of interest to the energy sector, connected with the generation, transmission and distribution of electric energy, as well as studies regarding the utilization of reservoirs for various purposes;

(5) to contribute to the training of the technical personnel required by the Brazilian electric energy sector by means of specialized courses; we may also grant assistance to educational entities in Brazil or abroad; and

(6) to cooperate technically and administratively with our subsidiaries and the government.

Our Board of Directors do not have the power to vote on compensation to themselves or to exercise borrowing powers. Only our shareholders may approve such matters. There are no prescribed age limits for retirement of members of our Board of Directors.

- 165 -

Description of our Capital Stock

General

We are a mixed capital company, authorized by and constituted in accordance with Brazilian Law No. 3,890-A of April 25, 1961. We are registered with the Brazilian tax authorities with CNPJ no. 00.001.180/0001-26.

Our share capital is divided into three types of shares: common shares, class “A” preferred shares (which were issued before June 23, 1969) and class “B” preferred shares (which have been issued since June 23, 1969).

In September 2006, we entered into an agreement with the BM&FBOVESPA to list our shares on the Level 1 segment of BM&FBOVESPA’s corporate governance, the effectiveness of which began on September 29, 2006. Trading in our shares on the Level 1 began on September 29, 2006.

History of our Capital Stock

Our share capital was R$ 31,305 million as of December 31, 2015.

Treasury Shares

We hold no treasury shares and we do not have a program for repurchasing our shares.

Rights Attaching to Our Shares

Common Shares

Each of our common shares entitles its holder to one vote on all matters submitted to a vote of shareholders at an annual or special shareholders’ general meeting. In addition, upon our liquidation, holders of our shares are entitled to share all of our remaining assets, after payment of all of our liabilities, ratably in accordance with their respective participation in the total amount of the issued and outstanding common shares. Holders of our common shares are entitled to participate on all future capital increases by us.

Preferred Shares

Our preferred shares have different attributes to our common shares as the holders of our preferred shares are not entitled to vote at annual or special shareholders’ general meetings but have preferential a right to reimbursement of capital, distribution of dividends and priority on insolvency. Our preferred shares cannot be converted into common shares.

Class “A” preferred shares, and bonus shares related to such shares, are entitled to a dividend of 8% per annum, in priority to the distribution of other dividends, to be divided equally between them. Class “B” preferred shares, and bonus shares related to such shares, are entitled to a dividend of 6% per annum, in priority to the distribution of other dividends, to be divided equally between them. An unpaid dividend is not payable in future years for Class “A” and Class “B” preferred shares. The Class “A” preferred shares and the class “B” preferred shares rank equally on a liquidation.

In addition, the preferred shares are entitled to receive a dividend at least ten percent above the dividend paid to each common share.

Transfer of Our Shares

Our shares are not subject to any share transfer restrictions. Whenever a transfer of ownership of shares occurs, the finance company with which such shares are deposited may collect from the transferring shareholder the cost of any services in connection with the Brazilian transfer thereof, subject to maximum rates established by the CVM.

- 166 -

Pre-emption Rights

No pre-emption rights apply on the transfer of our shares.

Redemption

We cannot redeem our shares.

Registration

Our shares are held in book-entry form with J.P. Morgan Chase Bank N.A., which will act as the custodian agent for our shares. Transfer of our shares will be carried out by means of book entry by J.P. Morgan Chase Bank N.A. in its accounting system, debiting the share account of the seller and crediting the share account of the buyer, upon a written order of the transferor or a judicial authorization or order to affect such transfers.

Notification of Interests in Our Shares

Any shareholder that acquires or disposes of 5% or more of our capital stock of any class is obliged to notify the Company immediately upon completion of the transaction. Such obligation also applies to the holders of ADRs, convertible debentures and stock options. After the receipt of such notification, the Company shall inform such transaction by means of a notice which shall be uploaded in the site of CVM and duly update its corporate information in its Reference Form (Formulário de Referência) within seven business days of the occurrence of the transaction.

Shareholders’ General Meetings

Brazilian corporation law does not allow shareholders to approve matters by written consent obtained as a response to a consent solicitation procedure. All matters subject to approval by the shareholders must be approved in a duly convened general meeting. There are two types of shareholders’ meetings: ordinary and extraordinary. Ordinary meetings take place once a year within 120 days of our fiscal year end and extraordinary meetings can be called whenever necessary.

Shareholders’ meetings are called by our board of directors. Notice of such meetings is posted to shareholders and, in addition, notices are placed in a newspaper of general circulation in our principal place of business and on our website at least 15 days before the meeting.

Shareholders’ meetings take place at our headquarters in Brasília. Shareholders may be represented at a shareholders’ meeting by attorneys-in-fact who are: (i) shareholders of the company; (ii) a Brazilian lawyer; (iii) a member of our management; or (iv) a financial institution.

At duly convened meetings, our shareholders are able to take any action regarding our business. The following actions can only be taken by our shareholders in general meeting:

• approving our annual accounts;

• electing and dismissing the members of our board of directors and our fiscal council;

• amending our by-laws;

• approving our merger, consolidation or spin-off;

• approving our dissolution or liquidation as well as the election and dismissal of liquidators and the approval of their accounts;

• granting stock awards and approving stock splits or reverse stock splits;

• approving stock option plans for our management and employees; and

• approving the payment of dividends.

- 167 -

Board of Directors, Board of Executive Officers and Fiscal Council

Our by-laws provide for a Board of Directors, composed of up to ten members, a Board of Executive Officers, of unlimited membership, and a permanent Fiscal Council, composed of five effective members.

Qualifications

All members of our Board of Directors, Board of Executive Officers and Fiscal Council must be Brazilian citizens. Our by-laws also provide that the certain people may not be appointed to the management of the company, including those who: are disqualified by the CVM, have been declared bankrupt or have been convicted of certain offenses such as bribery and crimes against the economy.

In addition, on June, 30, 2016, Brazilian government promulgated the Law of State-owned Companies that among other definitions, establishes minimum requirements for managers appointment, such as: I - (a) to have a minimum professional experience of ten years with public or private segment related to the intended state-owned company, or in other related segments regarding the superior managing position that he or she was appointed; or (b) to have a minimum professional experience of four years in one of such positions: superior manager position in similar companies considering the size or the business of the intended state-owned company; (b.1) to have occupied trustily positions or functions equal to and DAS-4 or superior in the public segment; (b.2) have been teacher or researcher in subjects related to the intended state-owned company business; (b.3) to have a minimum self-employed professional experience of four years in activities direct or indirectly related to the intended state-owned company business; (c) to have academic degree in areas that regard the intended state-owned company business; II – do not fall under the the non-admission hypothesis; and III – do not be declared ineligible regarding Complementary Law No. 64 of 1990.

The minutes of the shareholders’ or directors’ meeting that appoints a member of the Board of Directors or the Board of Executive Officers, respectively, must detail the qualifications of such person and specify the period of their mandate.

Appointment

The members of our Board of Directors are elected at the general shareholders meeting for a renewable term of one year.

As our majority shareholder, the Brazilian Government has the right to appoint seven members of our Board of Directors, of which six are appointed by the MME and one by the Planning, Budget and Management Ministry. The other common shareholders have the right to elect one member, the holders of preferred shares without voting rights representing at least ten percent of our total capital have the right to elect one member and one member shall be elected as the representative of the employees, by means of an election organized by the company and the union entities. One of the members of the Board of Directors is appointed President of the company.

Pursuant to Article 140 of Law 6,404, of December 15, 1976 (the “Brazilian Corporate Law”), the members of the Board of Directors shall be elected by means of Shareholders Meetings and may be removed at anytime.

Under Article 141, paragraph 4, of Brazilian Corporate Law, minority shareholders may appoint a member of the Board of Directors, as follows:

(i) holders of common shares representing at least 15% of the total common shares with voting rights may appoint one member to the Board of Directors and its respective alternate;

(ii) holders of preferred shares representing at least 10% of the total capital stock of a company may appoint one member to the Board of Directors and its respective alternate; and

- 168 -

(iii) if the percentages set forth in items (i) and (ii) are not met by the holders of common shares and preferred shares, holders of common shares and holders of preferred shares representing together more than 10% of the total capital of a company may jointly appoint one member to the Board of Directors and its respective alternate.

Those rights may only be exercised by shareholders that prove their continuous share ownership during the last three months prior to Eletrobras’ shareholders’ meeting.

Those rights are reflected in Eletrobras’ bylaws (as stated above) and, accordingly, are not applicable in addition to such provisions.

In addition, Article 141 of the Brazilian Corporate Law and CVM regulations determine that shareholders holding more than 5% of the voting capital are entitled to request that cumulative voting rights (voto múltiplo) so as to increase their chances of electing at least one member to the Board of Directors. Under the cumulative voting process, each voting share is entitled to a number of votes equal to the number of board seats being filled at the relevant shareholders’ meeting, such votes which can be cast to a single or more candidates. As a result of cumulative voting, controlling shareholders may be prevented from controlling all seats of the board, while minority shareholders may be allowed to appoint at least one member of that body. Shares participating in the cumulative voting process will not be counted for the purposes of appointing board members in the circumstances described in (i) through (iii) above (and vice versa).

In order to ensure that the majority of board members is elected by the controlling shareholder, Brazilian Corporate Law provides that whenever the election of board members uses cumulative voting and holders of common or preferred shares elect board members in separate elections, the controlling shareholder will always have the right to elect such board members in a number equal to the number elected by the other shareholders plus one member, even if that results in the board having more members than the number set forth in the company’s bylaws (Article 141, paragraph 7, of the Brazilian Corporate Law).

Brazilian Corporate Law also provides that, whenever cumulative voting is adopted and the general shareholders meeting removes any member from office, all members will be automatically removed from office and a new election shall take place. In other situations of vacancy, if no substitute members were elected along with effective members, the next shareholders’ meeting shall elect all members of the board.

The members of our Board of Executive Officers are appointed by our Board of Directors for a three-year term.

The Brazilian Government has the right to appoint three of the members of our Fiscal Council, and both the minority shareholders and the holders of our preferred shares have the right to appoint one member each.

Meetings

Under our by-laws, our Board of Directors shall meet at least once a year without the presence of the CEO and twice a year with the presence of our independent auditors. Historically, our Board of Directors meets once per month and when called by a majority of the directors or the Chairman. Among other duties, our Board of Directors is responsible for: (i) establishing our business guidelines; (ii) determining the corporate organization of our subsidiaries or any equity participation by us in other legal entities; (iii) determining our loans and financing policy; and (iv) approving any guarantee in favor of any of our subsidiaries on any financial agreement. Directors cannot participate in discussions or vote in relation to matters in which they are otherwise interested.

Our Board of Executive Officers ordinarily meets every week, or when called by a majority of the officers or by the President. Our Board of Executive Officers determines our general business policy, is responsible for all matters related to our day-to-day management and operations, and is the highest controlling body with regards to the execution of our guidelines. Members of our Board of Executive Officers cannot participate in discussions or vote in relation to matters in which they are otherwise interested.

The Fiscal Council meets once per month.

- 169 -

Disclosure Obligations

Our disclosure obligations are determined by the Manual de Divulgação e Uso de Informações Relevantes e Política de Negociação de Valores Mobiliários de Emissão da Eletrobras (Guide to Disclosure and Use of Relevant Information and Policy for the Negotiation of Securities issued by Eletrobras), a copy of which is available on our website. Information found at this website is not incorporated by reference into this annual report.

C. Material Contracts

Our Itaipu operations are made pursuant to a treaty entered into on April 26, 1973 between the Brazilian Government and the government of Paraguay. A translation of this treaty is included as an exhibit to this annual report. The material terms of this treaty are described in “Item 5. Operating and Financial Review and Prospects.”

D. Exchange Controls

The right to convert dividend or interest payments and proceeds from the sale of shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation which generally requires, among other things, that the relevant investments have been registered with the Central Bank and the CVM. Such restrictions on the remittance of foreign capital abroad may hinder or prevent the custodian for our preferred shares represented by our ADS or the holders of our preferred shares from converting dividends, distributions or the proceeds from any sale of these preferred shares into U.S. dollars and remitting the U.S. dollars abroad. Holders of our ADS could be adversely affected by delays in, or refusal to grant any, required government approval to convert Brazilian currency payments on the preferred shares underlying our ADS and to remit the proceeds abroad.

Resolution No. 4,373 of the National Monetary Council provides for the issuance of depositary receipts in foreign markets in respect of shares and other securities of Brazilian publicly-held issuers. The ADS program was approved under Annex V to Resolution No. 1,289, known as Annex V Regulations by the Central Bank and the CVM prior to the issuance of the ADS. Accordingly, the proceeds from the sale of ADS by ADR holders outside Brazil are free of Brazilian foreign investment controls, and holders of the ADS are entitled to favorable tax treatment. See “Item 10.E, Taxation – Material Brazilian Tax Considerations.”

Under Resolution No. 4,373 of the CMN, foreign investors registered with the CVM may buy and sell Brazilian securities, including our preferred shares, on Brazilian stock exchanges without obtaining separate certificates of registration for each transaction. Registration is available to qualified foreign investors, which principally include foreign financial institutions, insurance companies, pension and investment funds, charitable foreign institutions and other institutions that meet certain minimum capital and other requirements. Resolution No. 4,373 also extends favorable tax treatment to registered investors. See “Item 10.E, Taxation – Material Brazilian Tax Considerations.”

Pursuant to the Resolution No. 4,373 foreign investors must: (i) appoint at least one representative in Brazil with the ability to perform actions regarding the foreign investment and which must be a financial institution or an institution duly authorized by the Central Bank; (ii) appoint at least one custodian duly authorized by the CVM; (iii) obtain registration as a foreign investor with CVM; and (iv) register the foreign investment with the Central Bank.

The securities and other financial assets held by a foreign investor pursuant to Resolution No. 4,373 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or by the CVM or be registered in register, clearing and custody systems authorized by the Central Bank or by the CVM. In addition, the trading of securities is restricted to transactions carried out on the stock exchanges or over-the-counter markets licensed by the CVM or such other cases as may be set forth in the applicable CVM regulations from time to time.

- 170 -

Registered Capital

Amounts invested in our shares by a non-Brazilian holder who qualifies under Resolution No. 4,373 and obtains registration with the CVM, or by the depositary representing an ADS holder, are eligible for registration with the Central Bank. This registration (the amount so registered is referred to as registered capital) allows the remittance outside Brazil of foreign currency, converted at the commercial market rate, acquired with the proceeds of distributions on, and amounts realized through, dispositions of our shares. The registered capital per share purchased in the form of an ADS, or purchased in Brazil and deposited with the depositary in exchange for an ADS, will be equal to its purchase price (stated in U.S. dollars). The registered capital per share withdrawn upon cancellation of an ADS will be the U.S. dollar equivalent of: (i) the average price of a share on the Brazilian stock exchange on which the most shares were traded on the day of withdrawal or; (ii) if no shares were traded on that day, the average price on the Brazilian stock exchange on which the most shares were traded in the fifteen trading sessions immediately preceding such withdrawal. The U.S. dollar equivalent will be determined on the basis of the average commercial market rates quoted by the Central Bank on these dates.

A non-Brazilian holder of shares may experience delays in effecting Central Bank registration, which may delay remittances abroad. This delay may adversely affect the amount in U.S. dollars, received by the non-Brazilian holder.

A certificate of registration has been issued in the name of the depositary with respect to the ADS and is maintained by the custodian on behalf of the depositary. Pursuant to the certificate of registration, the custodian and the depositary are able to convert dividends and other distributions with respect to the shares represented by our ADS into foreign currency and remit the proceeds outside Brazil. In the event that a holder of ADS exchanges such ADS for shares, such holder will be entitled to continue to rely on the depositary’s certificate of registration for five business days after such exchange, following which such holder must seek to obtain its own certificate of registration with the Central Bank. Thereafter, any holder of shares may not be able to convert into foreign currency and remit outside Brazil the proceeds from the disposition of, or distributions with respect to, such shares, unless the holder is a duly qualified investor under Resolution No. 4,373 or obtains its own certificate of registration. A holder that obtains a certificate of registration will be subject to less favorable Brazilian tax treatment than a holder of ADS. See “Item 10.E, Taxation – Material Brazilian Tax Considerations.”

If the holder does not qualify under Resolution No. 4,373 by registering with the CVM and the Central Bank and appointing a representative in Brazil, the holder will be subject to less favorable Brazilian tax treatment than a holder of ADS. Regardless of qualification under Resolution No. 4,373, residents in tax havens are subject to less favorable tax treatment than other foreign investors. See “Item 10.E, Taxation – Material Brazilian Tax Considerations.”

Under current Brazilian legislation, the Brazilian Government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil’s balance of payments. For approximately six months in 1989 and early 1990, the Brazilian Government froze all dividend and capital repatriations held by the Central Bank that were owed to foreign equity investors, in order to conserve Brazil’s foreign currency reserves. These amounts were subsequently released in accordance with Brazilian Government directives. There can be no assurance that the Brazilian Government will not impose similar restrictions on foreign repatriations in the future. See “Item 3.D, Risk Factors – Risks Relating to Brazil.”

E. Taxation

The following discussion addresses the material Brazilian and United States federal income tax consequences of acquiring, holding and disposing of our shares or ADS.

This discussion is not a comprehensive discussion of all the tax considerations that may be relevant to a decision to purchase our shares or ADS and is not applicable to all categories of investors, some of which may be subject to special rules, and does not specifically address all of the Brazilian and United States federal income tax considerations applicable to any particular holder. It is based upon the tax laws of Brazil and the United States as in effect on the date of this annual report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Any change in such law may have an impact on the consequences described below. Each prospective purchaser is urged to consult its own tax advisor about the particular Brazilian and United States federal income tax consequences to it of an investment in our shares or ADS. This discussion is also based upon the representations of the depositary and on the assumption that each obligation in the deposit agreement among us, J.P. Morgan Chase Bank, N.A., as depositary, and the registered holders and beneficial owners of our ADS, and any related documents, will be performed in accordance with its terms.

- 171 -

Although there presently is no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. We cannot assure you, however, as to whether or when a treaty will enter into force or how it will affect holders of our shares or ADS.

Material Brazilian Tax Considerations

The following discussion is a summary of the material Brazilian tax considerations regarding the acquisition, ownership and disposition of our shares or ADS by a holder that is not domiciled in Brazil for purposes of Brazilian taxation and which has registered its investment in such securities with the Central Bank as a U.S. dollar investment (in each case, a Non-Resident Holder). The tax consequences described below do not take into account the effects of any tax treaties or reciprocity of tax treatment entered into by Brazil and other countries. The discussion also does not address any tax consequences under the tax laws of any state or municipality of Brazil.

Introduction

Pursuant to Brazilian law, foreign investors may invest in the shares under Central Bank Resolution No. 4,373.

Resolution No. 4,373 allows foreign investors to invest in Brazilian financial and capital markets, provided that some requirements therein described are fulfilled. In accordance with Resolution No. 4,373, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities, domiciled or headquartered abroad.

Pursuant to Resolution No. 4,373, foreign investors must: (i) appoint at least one representative in Brazil with powers to perform actions relating to the foreign investment and which must be a financial institution or an institution duly authorized by the Central Bank; (ii) register the foreign investment with the Central Bank; (iii) appoint at least one custodian duly authorized by the CVM; (iv) appoint a representative in Brazil for Taxation purposes; and (v) obtain a taxpayer identification number from the Brazilian Federal Tax Authorities (which will be requested by CVM). For more details about the requirements to be met in order to qualify as foreign investor under Resolution No. 4,373, see “Item 9.C, Markets – Investment in our Preferred Shares by Non-Residents of Brazil.”

Securities and other financial assets held by foreign investors pursuant to Resolution No. 4,373 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading is restricted to transactions carried out in stock exchanges or organized over-the-counter markets licensed by the CVM, except for such other cases as may be set forth in the applicable CVM regulations from time to time.

Income tax

For purposes of Brazilian taxation, there are two types of Non-Resident Holders of our shares or ADS: (i) Non-Resident Holders that are not resident or domiciled in a “Tax Haven” jurisdiction (i.e., a country or location that does not impose income tax or where the maximum income tax rate is lower than 17% - this rate was reduced from 20% to 17% as of December 1, 2014 - or where the internal legislation imposes restrictions to disclosure of shareholding composition or the ownership of the investment), and that, in the case of holders of our shares, are registered before the Central Bank and the CVM being able to invest in Brazil in accordance with Resolution No. 4,373 (“Registered Holder”); and (ii) other Non-Resident Holders, which include any and all non-residents of Brazil who invest in equity securities of Brazilian companies through any other means and all types of investor that are located in Tax Haven. The investors mentioned in item (i) above which are registered with the Central Bank and the CVM being able to invest in Brazil in accordance with Resolution No. 4,373, are subject to a favorable tax regime in Brazil, as described below. Nonetheless, there can be no assurance that the current preferential treatment for holders of ADS and Non-Resident Holders of preferred or common shares under Resolution No. 4,373 will continue or will not be changed in the future.

Dividends. Historically, dividends paid by a Brazilian company, such as ourselves, including dividends paid to a Non-Resident Holder, were not subject to income tax withholding in Brazil, to the extent that such amounts were related to profits generated as of January 1, 1996. Dividends related to profits generated prior to January 1, 1996 may be subject to Brazilian withholding tax at varying rates, depending on the year the profits were generated.

- 172 -

On May 13, 2014, Law No. 12,973 was enacted aiming to align the taxable basis of federal taxes with the accounting basis assessed pursuant to IFRS (as adopted in Brazil since 2008). According to such law, which will generally be in effect starting in 2015, dividends distributed based on accounting profits generated in 2014 and exceeding taxable profits (ascertained in accordance with the Brazilian Generally Accepted Accounting Principles valid up to December 31, 2007, or “BR GAAP 2007”) shall be subject to withholding tax at rates of 15% (general rule) or 25% (in case the beneficiary is located in a “Tax Haven” jurisdiction), unless the taxpayer opts to be submitted to the early effects of Law No. 12,973 in 2014 - in this scenario, both accounting profits and taxable profits would be the same and no taxation would occur. As the new taxation rules are mandatory for fiscal years beginning on or after January 1, 2015, dividends that relate to profits generated on or after January 1, 2015 are not subject to withholding tax.

Capital Gains. As a general rule, capital gains realized as a result of a disposition transaction are the positive difference between the amount received on the disposition of the assets and the respective acquisition cost. Under Brazilian law, income tax on such gains can vary depending on the domicile of the Non-Resident Holder, the type of registration of the investment by the Non-Resident Holder with the Central Bank and how the disposition is carried out, as described below.

(a) Sale of ADS

Gains realized outside Brazil by a Non-Resident Holder on the disposition of ADS to another Non-Resident Holder should not be subject to Brazilian tax. However, according to Law No. 10,833, enacted on December 29, 2003, or Law No. 10,833, gains recognized on the disposition of assets located in Brazil by a Non-Resident Holder, whether to other Non-Resident Holders or Brazilian holders, are subject to taxation in Brazil. This rule is applicable regardless of whether the disposition is conducted in Brazil or abroad. Although we believe that the ADS do not fall within the definition of assets located in Brazil for purposes of Law No. 10,833 because they represent securities issued and renegotiated in an offshore exchange market, considering the general and unclear scope of such provisions, as well as the lack of a judicial court ruling in respect thereto, we are unable to predict whether such understanding will ultimately prevail in the courts of Brazil.It is important to note, however, that even if ADS were considered assets located in Brazil, investors which are resident in non-Tax Haven locations could apply for exemption of capital gain tax according to article 81 of Law No. 8,981/95.

If such argument does not prevail, it is important to mention that with respect to the cost of acquisition to be adopted for calculating such gains, Brazilian law has conflicting provisions regarding the currency in which such amount must be determined. It is possible to sustain that the capital gains should be based on the positive difference between the cost of acquisition of the shares registered with the Brazilian Central Bank in foreign currency and the value of disposal of those shares in the same foreign currency. However, considering the unclear scope of applicable regulations, assessments have been issued adopting the cost of acquisition in Brazilian currency.

(b) Conversion of shares into ADS

The deposit of our shares in exchange for ADS may be subject to Brazilian tax on capital gains at the rate of 15%, or 25%, in the case of investors domiciled in a Tax Haven, if the acquisition cost of the shares, in the case of other market investors under Resolution No. 4,373, or the amount otherwise previously registered with the Central Bank as a foreign investment in the preferred or common shares is lower than:

(i) the average price per preferred or common share on a Brazilian stock exchange on which the greatest number of such shares were sold on the day of deposit; or

(ii) if no preferred or common shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of preferred or common shares were sold in the 15 trading sessions immediately preceding such deposit.

In such case, the difference between the amount previously registered, or the acquisition cost, as the case may be, and the average price of the shares calculated as set forth above will be considered to be a capital gain. Although there is no clear regulatory guidance, such taxation should not apply to the case of Non-Resident Holders registered under Resolution No. 4,373 which are not located in a Tax Haven.

- 173 -

(c) Conversion of ADS into shares

Although there is no clear regulatory guidance, the exchange of ADS for shares should not be subject to Brazilian tax. Non-Resident Holders may exchange ADS for the underlying shares, sell the shares on a Brazilian stock exchange and remit abroad the proceeds of the sale within five business days from the date of exchange (in reliance on the depositary’s electronic registration), with no tax consequences.

Upon receipt of the underlying shares in exchange for ADS, Non-Resident Holders may also elect to register with the Central Bank the U.S. dollar value of such shares as a foreign portfolio investment under Resolution No. 4,373, which will entitle them to the tax treatment referred above.

Alternatively, the Non-Resident Holder is also entitled to register with the Central Bank the U.S. dollar value of such shares as a foreign direct investment under Law 4,131/62, in which case the respective sale would be subject to the tax treatment applicable to transactions carried out of by a Non-Resident Holder that is not a registered holder.

(d) Common and Preferred shares negotiated in Brazil

Capital gains realized by Non-Resident Holder on the disposition of shares sold on the Brazilian stock exchange (which includes the transactions carried out on the organized over-the-counter market):

• are subject to the withholding income tax at a zero percent rate, when realized by a Non-Resident Holder that (a) has registered its investment in Brazil before the Central Bank. (a Registered Holder under the regulations of Resolution No. 4,373); and (b) is not resident in a Tax Haven; and

• are subject to income tax at a rate of 15% with respect to gains realized by a Non-Resident Holder that is not a Registered Holder (including a Non-Resident Holder who qualifies under Law 4,131/62) and gains earned by Tax Haven residents that are Registered Holders.In this case, a withholding income tax of 0.005% over the sale price shall be applicable and withheld by the intermediary institution (i.e., a broker) that receives the order directly from the Non-Resident Holder, which can be later offset against any income tax due on the capital gain and which will be collected by the Non-Resident Holder’s tax representative in Brazil.

Any other gains realized on the disposition of assets that are not carried out on the Brazilian stock exchange:

• are subject to income tax at a rate of 15% when realized by any Non-Resident Holder that is not a Tax Haven resident, no matter if a Registered Holder or not; and

• are subject to income tax at a rate of 25% when realized by a Tax Haven resident, no matter if a Registered Holder or not.

In the cases above, if the gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% shall also be applicable and withheld by the intermediary institution (i.e., a broker) that receives the order directly from the Non-Resident Holder, which can be later offset against any income tax due on the capital gain and which will be collected by the Non-Resident Holder’s tax representative in Brazil.The Non-Resident Holder will not need to file a Brazilian tax return with the Brazilian tax authorities.

On September 22, 2015, the Brazilian Government enacted Provisional Measure No. 692, which was subsequently converted into Law No. 13,259 on March 16, 2016. The purpose of this Law is to increase the applicable tax rate on capital gains derived by Brazilian individuals. As a consequence, this may affect the rates applicable to a non-resident holder that is not a registered holder (including a non-resident holder who qualifies under Law No. 4,131/62) with respect to transactions such non-resident holder conducts outside the Brazilian exchange markets. Law No. 13,259 provides for progressive tax rates that vary from 15% to 30%, depending on the amount of capital gain.

- 174 -

Any exercise of preemptive rights relating to the preferred or common shares or ADS will not be subject to Brazilian withholding income tax. Any gain on the sale or assignment of preemptive rights relating to shares by the depositary on behalf of holders of ADS will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposal of shares.

Payments of Interest Attributable to Shareholders’ Equity. In accordance with Law No. 9,249, dated December 26, 1995, as amended, Brazilian corporations may make payments to shareholders characterized as distributions of interest on own capital and treat those payments as a deductible expense for the purposes of calculating Brazilian corporate income tax and, as from 1997, social contribution on net profits, as far as certain limits are observed. Such interest is limited to the daily pro rata variation of the TJLP as determined by the Central Bank from time to time and the amount of deduction cannot exceed the greater of:

• 50% of the net income (after the social contribution on net profits and before the provision for corporate income tax, and the amounts attributable to shareholders as interest on net equity) for the period in respect of which the payment is made; or

• 50% of the sum of retained profits and profits reserves as of the date of the beginning of the period in respect of which the payment is made.

Payments of interest on own capital in respect of the preferred or common shares paid to shareholders who are either Brazilian residents or Non-Resident Residents, including holders of ADS, are subject to Brazilian income withholding tax at the rate of 15%, or 25% in case of shareholders domiciled in a Tax Haven and shall be deductible by us as long as the payment of a distribution of interest is approved by our shareholders.

These distributions may be included, at their net value, as part of any mandatory dividend. To the extent payment of interest on shareholders’ equity is so included, the corporation is required to distribute to shareholders an additional amount to ensure that the net amount received by them, after payment of the applicable Brazilian withholding income tax, plus the amount of declared dividends, is at least equal to the mandatory dividend. If we pay interest attributable to shareholders’ equity in any year, and the payment is not recorded as part of the mandatory distribution, no additional amounts would be required to be paid by the Company, with respect to the mandatory dividend amount. The payment of interest on owner capital may be determined by our board of directors. We cannot assure you that our board of directors will not determine that future distributions of profits may be made by means of interest on owner capital instead of by means of dividends. Payments of interest on shareholder’s equity to Non-Resident Holders may be converted into U.S. dollars and remitted outside Brazil, subject to applicable exchange controls, to the extent that the investment is registered with the Central Bank.

Discussion on Low or Nil Tax Jurisdictions

On June 24, 2008, Law 11,727 was enacted establishing the concept of a “privileged tax regime.” Under this new law, a “privileged tax regime” is considered to apply to a jurisdiction that meets any of the following requirements: (i) it does not tax income or taxes income at a maximum rate lower than 20%; (ii) it grants tax advantages to a non-resident entity or individual (a) without requiring substantial economic activity in the jurisdiction of such non-resident entity or individual or (b) to the extent such non-resident entity or individual does not conduct substantial economic activity in the jurisdiction of such non-resident entity or individual; (iii) it does not tax income generated abroad, or imposes tax on income generated abroad at a maximum rate lower than 20%; or (iv) restricts the ownership disclosure of assets and ownership rights or restricts disclosure about the execution of economic transactions.

In addition, on June 7, 2010, Brazilian Tax Authorities enacted Ordinance No. 1,037, listing (i) the countries and jurisdictions considered Tax Haven Jurisdictions, and (ii) the Privileged Tax Regimes. According to Section 24-B of Law 9,430, as amended by Law 11.727/08, the Executive Branch is empowered to reduce or reinstate the income tax rate of 20% as the element to define a Tax Haven Jurisdiction or a Privileged Tax Regime. Recently, on November 28, 2014, Ruling n° 488/2014 was published and established that the rate of 20% is reduced to 17% in connection with countries, locations and jurisdiction aligned with international tax transparency standards,

- 175 -

as per definition to be provided by Brazilian Federal Revenue Service. It is expected that further guidance will be provided by Brazilian Federal Revenue Service and also that the list of Tax Haven Jurisdictions and Privileged Tax Regimes be updated.

Although the interpretation of the current Brazilian tax legislation could lead to the conclusion that the above-mentioned concept of “privileged tax regime” should apply only for the purposes of Brazilian transfer pricing and thin capitalization rules, it is unclear whether such concept would also apply to investments carried out in the Brazilian financial and capital markets for purposes of this law. There is no judicial guidance as to the application of Law No. 11,727 of June 24, 2008 and, accordingly, we are unable to predict whether the Brazilian Internal Revenue Service or the Brazilian courts may decide that the “privileged tax regime” concept shall be applicable to deem a Non-Resident Holder as a Tax Haven resident when carrying out investments in the Brazilian financial and capital markets. In the event that the “privileged tax regime” concept is interpreted to be applicable to transactions carried out in the Brazilian financial and capital markets, this tax law would accordingly result in the imposition of taxation on a Non-Resident Holder that meets the privileged tax regime requirements in the same manner and to the same extent applicable to a Tax Haven resident.

Moreover, Law No. 12,249 of June 11, 2010, applied the privileged tax regime concept to other income remitted abroad. Although the concept of privileged tax regime should not affect the tax treatment of a Non-Resident Holder described above, it is not certain whether subsequent legislation or interpretations by the Brazilian tax authorities regarding the definition of “privileged tax regime” will extend such a concept to the tax treatment of a Non-Resident Holder described above.

Tax on Foreign Exchange and Financial Transactions

Foreign Exchange Transactions (IOF/Exchange)

Brazilian law imposes a Tax on Foreign Exchange Transactions, or “IOF/Exchange,” triggered by the conversion of reais into foreign currency and on the conversion of foreign currency into reais.

Pursuant to Decree No. 6,306/07, as amended, IOF/Exchange may be levied on foreign exchange transactions, affecting either or both the inflow or outflow of investments. The IOF rates are set by the Brazilian executive branch, and the highest applicable rate is 25%. Currently, for most exchange transactions, the rate of IOF/Exchange is 0.38%.

The rate of IOF/Exchange tax imposed on foreign exchange transactions carried out by a foreign investor for the purpose of investing in the financial and capital markets may vary from time to time as defined by the government and the rates may be different based on the type of investment as well as the time in which such investment is maintained in Brazil.

The inflow of foreign funds for the purchase of shares under Resolution No. 4,373 is subject to 0% IOF/Exchange rate and the same 0% rate levies on the remittance of dividends and payments of interest on shareholder’s equity. Although it is not clearly regulated, the conversion of reais into dollars for payment of dividends to holders of ADS should also benefit from the 0% IOF/Exchange rate. The inflow of funds derived from the ADS cancelation for purposes of investing in shares is also subject to a 0% rate of IOF/Exchange.

Tax on Transactions involving Bonds and Securities (IOF/Bonds Tax)

Brazilian law imposes a Tax on Transactions Involving Bonds and Securities, known as “IOF/Bonds Tax.” Currently, the rate of IOF/Bonds Tax applicable to transactions involving common or preferred shares is zero, although the Brazilian government may increase such rate at any time, up to 1.5% per day, but only in respect to future transactions.

The conversion of shares into ADRs or shares into ADS was not taxable before November 17, 2009. Following the enactment of Decree No. 7,011 of November 18, 2009, these transactions started to be taxed by the IOF/Bonds Tax at the rate of 1.5% over the transaction value (obtained by multiplying the number of shares/units converted by its closing price at the day before the conversion, or, in the case no negotiation was made on that day, by the last closing price available). However, in view of a recent change in the applicable legislation, starting as of December 24, 2013, the rate was reduced to 0%.

- 176 -

Other Relevant Brazilian Taxes

Some Brazilian states impose gift and inheritance tax on gifts or bequests made by individuals or entities not domiciled or residing in Brazil to individuals or entities domiciled or residing within such states. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of our shares or ADS.

Registered Capital. The amount of an investment in shares held by a Non-Brazilian Holder who qualifies under Resolution No. 4,373 and obtains registration with the CVM, or by the depositary, as the depositary representing such holder, is eligible for registration with the Central Bank. Such registration allows the remittance outside of Brazil of any proceeds of distributions on the shares, and amounts realized with respect to disposition of such shares. The amounts received in Brazilian currency are converted into foreign currency through the use of the commercial market rate. The registered capital for preferred or common shares purchased in the form of ADS or purchased in Brazil, and deposited with the depositary in exchange for ADS will be equal to their purchase price (in U.S. dollars) to the purchaser. The registered capital for shares that are withdrawn upon surrender of ADS, as applicable, will be the U.S. dollar equivalent of the average price of preferred or common shares, as applicable, on a Brazilian stock exchange on which the greatest number of such shares, as applicable, was sold on the day of withdrawal. If no preferred or common shares, as applicable, were sold on such day, the registered capital will refer to the average price on the Brazilian stock exchange on which the greatest number of such shares, as applicable, was sold in the 15 trading sessions immediately preceding such withdrawal. The U.S. dollar value of the preferred or common shares, as applicable, is determined on the basis of the average commercial market rate quoted by the Central Bank on such date or, if the average price of such shares is determined under the last preceding sentence, the average of such average quoted rates on the same 15 dates used to determine the average price of the shares.

A Non-Resident Holder of our shares may experience delays in effecting such action, which may delay remittances abroad. Such a delay may adversely affect the amount, in U.S. dollars, received by the Non-Resident Holder.

Material United States Federal Income Tax Consequences

The following discussion describes the material United States federal income tax consequences of purchasing, holding and disposing of our shares or ADS. This discussion applies only to beneficial owners of our ADS or shares that are “U.S. Holders,” as defined below. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing final, temporary and proposed Treasury Regulations, administrative pronouncements by the United States Internal Revenue Service, or IRS, and judicial decisions, all as currently in effect and all of which are subject to change (possibly on a retroactive basis) and to different interpretations.

This discussion does not purport to address all United States federal income tax consequences that may be relevant to a particular holder and you are urged to consult your own tax advisor regarding your specific tax situation. This discussion does not address any aspect of U.S. federal taxation other than U.S. federal income taxation (such as the estate and gift tax or the Medicare tax on net investment income). The discussion applies only to U.S. Holders who hold our shares or ADS as “capital assets” (generally, property held for investment) under the Code and does not address the tax consequences that may be relevant to U.S. Holders in special tax situations including, for example:

• financial institutions or insurance companies;

• tax-exempt organizations;

• broker-dealers;

• traders in securities that elect to mark to market;

• real estate investments trusts, regulated investment companies, partnership or grantor trusts;

- 177 -

• investors whose functional currency is not the United States dollar;

• United States expatriates;

• holders that hold our shares or ADS as part of a hedge, straddle or conversion transaction; or

• holders that own, directly, indirectly, or constructively, 10% or more of the total combined voting power, if any, of our shares or ADS.

Except where specifically described below, this discussion assumes that we are not a passive foreign investment company, or PFIC, for United States federal income tax purposes. Please see the discussion in “Item 10. E, Taxation – Material United States Federal Income Tax Consequences – Passive Foreign Investment Company Rules” below. Further, this discussion does not address the alternative minimum tax consequences of holding our shares or ADS or the indirect consequences to holders of equity interests in partnerships or other entities that own our shares or ADS. In addition, this discussion does not address the state, local and non-U.S. tax consequences of holding our shares or ADS.

You should consult your own tax advisor regarding the United States federal, state, local and non-U.S. income and other tax consequences of purchasing, owning, and disposing of our shares or ADS in your particular circumstances.

You are a “U.S. Holder” if you are a beneficial owner of shares or ADS and you are for United States federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation, or any other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

• an estate the income of which is subject to United States federal income tax regardless of its source; or

• a trust if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership holds shares or ADS, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities of the partnership. A prospective investor who is a partner of a partnership holding our shares or ADS should consult its own tax advisor regarding the specific tax consequences of the purchase, ownership and disposition of the shares or ADS.

Ownership of ADS in General

For United States federal income tax purposes, if you are a holder of ADS, you generally will be treated as the owner of the shares represented by such ADS. Deposits and withdrawals of shares by a U.S. Holder in exchange for ADS generally will not result in the realization of gain or loss for United States federal income tax purposes.

The U.S. Treasury has expressed concerns that parties to whom receipts similar to the ADS are released may be taking actions that are inconsistent with the claiming of foreign tax credits by U.S. Holders of ADS and that would also be inconsistent with the claiming of the reduced tax rate described below applicable to dividends received by certain non-corporate U.S. Holders. Accordingly, the analysis of the creditability of Brazilian taxes and the availability of the reduced rate for dividends received by certain non-corporate holders could be affected by actions taken by parties to whom the ADS are released.

- 178 -

Distributions on Shares or ADS

The gross amount of distributions made to you of cash or property with respect to your shares or ADS, before reduction for any Brazilian taxes withheld therefrom, will be includible in your income as dividend income to the extent such distributions are paid out of our current or accumulated earnings and profits as determined under United States federal income tax principles. Such dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders. Subject to applicable limitations, including holding period limitations, and the discussion above regarding concerns expressed by the U.S. Treasury, dividends paid to non-corporate U.S. Holders of ADS will be taxable at a maximum rate of 20.0%.

If you are a U.S. Holder, and we pay a dividend in Brazilian reais, any such dividend will be included in your gross income in an amount equal to the U.S. dollar value of Brazilian reais on the date of receipt by you or, in the case of ADS, the depositary, regardless of whether or when the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.

If you are a U.S. Holder, dividends paid to you with respect to your shares or ADS will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Brazilian tax withheld on dividends may be credited against your U.S. federal income tax liability. Instead of claiming a credit, you may, at your election, deduct such otherwise creditable Brazilian taxes in computing your taxable income, subject to generally applicable limitations under U.S. law. The rules governing foreign tax credits and deductions for non-U.S. taxes are complex and, therefore, you should consult your own tax advisor regarding the applicability of these rules in your particular circumstances.

Sale or Exchange or other Taxable Disposition of Shares or ADS

A U.S. Holder generally will recognize capital gain or loss upon the sale, exchange or other taxable disposition of our shares or ADS measured by the difference between the U.S. dollar value of the amount realized and the U.S. Holder’s adjusted tax basis in the shares or ADS. Any gain or loss will be long-term capital gain or loss if the shares or ADS have been held for more than one year. Long-term capital gains of certain U.S. holders (including individuals) are eligible for reduced rates of United States federal income taxation. The deductibility of capital losses is subject to certain limitations under the Code.

If Brazilian tax is withheld on the sale or other disposition of a share or ADS, the amount realized by a U.S. Holder will include the gross amount of the proceeds of that sale or other disposition before deduction of the Brazilian tax. Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of a share or ADS generally will be treated as United States source income or loss for United States foreign tax credit purposes. Consequently, in the case of a disposition of a share that is subject to Brazilian tax imposed on the gain (or, in the case of a deposit, in exchange for an ADS or share, as the case may be, that is not registered pursuant to Resolution No. 4,373, on which a Brazilian capital gains tax is imposed), the U.S. Holder may not be able to benefit from the foreign tax credit for that Brazilian tax unless the U.S. Holder can apply the credit against United States federal income tax payable on other income from non-U.S. sources in the appropriate income category. Alternatively, the U.S. Holder may take a deduction for the Brazilian tax if it does not elect to claim a foreign tax credit for any non-U.S. taxes paid during the taxable year.

Passive Foreign Investment Company Rules

In general, a non-U.S. corporation is a PFIC with respect to a U.S. Holder if, for any taxable year in which the U.S. Holder holds stock in the non-U.S. corporation, at least 75% of its gross income is passive income or at least 50% of the value of its assets (determined on the basis of a quarterly average) produce passive income or are held for the production of passive income. For this purpose, passive income generally includes, among other things, dividends, interest, rents, royalties and gains from the disposition of investment assets (subject to various exceptions). Based upon the nature of our current and projected income, assets and activities, we do not believe the shares or ADS were for the preceding taxable year nor do we expect them to be, shares of a PFIC for United States federal income tax purposes. However, the determination of whether the shares or ADS constitute shares of a PFIC is a factual determination made annually and thus may be subject to change. Because these determinations are based on the nature of our income and assets from time to time, as well as certain items that are not directly in our control, such as the value of our shares and ADS and involve the application of complex tax rules the application of which to our business is not always entirely clear, no assurances can be provided that we will not be considered a PFIC for the current or any past or future tax year.

- 179 -

If we are treated as a PFIC for any taxable year during which you are a U.S. Holder, various adverse consequences could apply to you. Neither gains nor dividends would be subject to the reduced tax rates discussed above that are applicable in certain situations. Rather, gain recognized by you on a sale or other disposition of the shares or ADS would be allocated ratably over your period for the shares or ADS. The amounts allocated to the taxable year of the sale or disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on such tax as if it had not been paid from the original due date for your tax return for such year. Further, any distribution in respect of shares or ADS in excess of 125 percent of the average of the annual distributions on shares or ADS received by you during the preceding three years or, if shorter, your holding period would be subject to taxation as described above. Certain elections may be available (including a mark to market election) to U.S. persons that may mitigate the adverse consequences resulting from PFIC status. In any case, you would be subject to additional U.S. tax form filing requirements.

Backup Withholding and Information Reporting

In general, dividends on our shares or ADS, and payments of the proceeds of a sale, exchange or other disposition of shares or ADS, paid within the United States or through certain United States-related financial intermediaries to a U.S. Holder are subject to information reporting and may be subject to backup withholding at a current maximum rate of 28% unless the holder: (i) establishes, if required to do so, that it is an exempt recipient; or (ii) in the case of backup withholding, provides an accurate taxpayer identification number and certifies that it is a U.S. person and has not lost its exemption from backup withholding has occurred.

You can credit amounts withheld under these rules against your United States federal income tax liability, or obtain a refund of such amounts that exceed your United States federal income tax liability, provided that the required information is furnished to the IRS.

You should consult your own tax advisors concerning any U.S. reporting requirements that may arise out of your ownership or disposition of ADS or shares in light of your particular circumstances. The penalty for failing to comply with reporting requirements can be significant.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

Statements contained in this annual report regarding the contents of any contract or other document are complete in all material respects, however, where the contract or other document is an exhibit to this annual report, each of these statements is qualified in all respects by the provisions of the actual contract or other documents.

We are subject to the informational requirements of the Exchange Act applicable to a foreign private issuer. Accordingly, we will be required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect reports and copy reports and other information filed with or furnished to the SEC at the SEC’s Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. For further information, call the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet website that contains filings, reports and other information regarding issuers who, like us, file electronically with the SEC. The address of that website is http://www.sec.gov.

As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and members of our Board of Directors and Board of Executive Officers and our principal shareholders are exempt from reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, as a foreign private issuer, we will not be required under the Exchange Act to file periodic reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

- 180 -

We also file periodic reports and consolidated financial statements with the CVM, located at Rua Sete de Setembro, 111, Rio de Janeiro, Rio de Janeiro 20159-900, Brazil.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The risks inherent in our market sensitive instruments are potential losses that may arise from adverse changes to interest rates and/or foreign exchange rates. We are subject to market risk resulting from changes in interest rates because such changes may affect the cost at which we obtain financing. We are subject to exchange rate risk with respect to our debt denominated in foreign currencies. We are also subject to the risk of volatility in the equity markets due to our investments in our affiliates and investments held at fair value.

Interest Rate Risks

As of December 31, 2015, our total indebtedness was R$ 46,398 million, of which 61%, or R$ 28,191 million, was linked to variable interest rates. Our debts are mainly indexed to the following interest rates: (i) CDI (24.6% of our indebtedness), (ii) TJLP (14.2% of our indebtedness), (iii) LIBOR (8.0% of our indebtedness) and (iv) SELIC (5.7% of our indebtedness).

Exchange Rate Risks

As of December 31, 2015, approximately 32.9% of our total consolidated indebtedness of R$ 15,283 million was denominated in foreign currencies. As of December 31, 2015, total consolidated indebtedness denominated in foreign currencies R$ 14,851 million, or approximately 32.0% of our total debt was denominated in U.S. dollars.

As a defense measure against these exposures Eletrobras has a Financial Hedge Policy, which has been approved by its Board of Executive Officers on October 30, 2009.

This policy contains a priority ranking, which emphasizes structural solutions by contemplating the natural balance of exposed positions.

Later, operations with other types of financial instruments may also be analyzed. Finally, the transactions with financial derivatives are analyzed, which will only be carried out in a complementary way and with the sole purpose of protecting those assets and liabilities indexed to Eletrobras and to its subsidiaries which evidence mismatches and which cannot constitute financial leverage or third parties lending operation.

With respect to the interest rate risk, much of the exposure to Libor was mitigated through derivative transactions in 2011 and 2012, and whose residual exposure is being reduced over time. As for the other floating rates to which the company is exposed, Eletrobras performs, in line with its Financial Hedge Policy, ongoing assessments of the risks of existing interest rates in order to ascertain the need to carry out new hedging transactions to mitigate the risks that are deemed relevant. However, there is no expectation that there will be a significant change in the Company’s exposure to interest rates.

With respect to the exchange rate risk, the company has has been privileging over the years the structural solution to mitigate the risk through foreign funding (between 2009 and 2011), thus substantially reducing the exchange rate risk to which Eletrobras was exposed. As a result, the main focus of this risk for the company has been having its cash flows in foreign currency. For that purpose, Eletrobras permanently asseses the need to conduct operations to mitigate the exchange rate risks that are deemed relevant. For the last fiscal year it is important to stress that (i) the USD 300 million bonds that expired on November 2015 consisted of the most relevant factor under the exchange rate risk, and (ii) no significant change is expected in the company’s risk level for the next fiscal year.

- 181 -

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.D. American Depositary Shares

Fees payable by the holders of our ADS

J.P. Morgan Chase Bank, N.A. serves as the depositary for both of our common and preferred ADS. ADR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.

ADR holders are required to pay the depositary: (i) an annual fee of U.S.$0.02 per ADS for administering the ADR program and (ii) amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, facsimile transmission, or conversion of foreign currency into U.S. dollars. In both cases, the depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions.

ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below:

Depositary Action	Associated fee
Issuance, delivery, reduction, cancellation or surrender of ADS	U.S.$5.00 per 100 ADS
Any cash distribution to registered ADS holders	U.S.$0.02 (or less) per ADS
Transfer rates (to the extent not prohibited by the rules of the primary stock exchange upon which the ADS are listed)	U.S.$1.50 per ADR or ADRs

Depositary reimbursements

In accordance with the deposit agreement entered between the depositary and us, the depositary reimburses us for certain expenses we incur in connection with the ADR program. From January 1 to December 31, 2015, our depositary bank reimbursed us the amount of U.S.$4.1 million.

- 182 -

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures

We carried out an evaluation under the supervision of, and with participation of, our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, including those defined in United States Exchange Act Rule 13a-15e, as of the year ended December 31, 2015. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective controls and procedures can only provide reasonable assurance of achieving their control objectives.

As a result of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2015, and that the design and operation of our disclosure controls and procedures were not effective to provide reasonable assurance that all material information relating to our company was reported as required because material weaknesses in the current operation of our internal control over financial reporting were identified as described below.

(b) Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal controls over financial reporting as of December 31, 2015. In 2015, the Company implemented COSO (2013) Internal Control – Integrated Framework. Based on this assessment, our management concluded that, as of December 31, 2015, our internal control over financial reporting was not effective because material weaknesses existed. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses identified were:

- 183 -

1 – We did not maintain an effective control environment, especifically regarding the lack of timely remedial actions related to previous years, including the proper execution of management review controls comprising completeness analysis, materiality threshold definition and accuracy determination of data to certain controls reviewed;

2 – We did not maintain adequate controls regarding the preparation of the financial statements and related disclosures, including related parties transaction reconciliation; monitoring controls regarding the financial situation and the related accounting reflects of the transactions made with suppliers (Furnas); and analysis, reconciliation and monitoring of consumed fuel (Amazonas);

3 – We did not maintain effective internal controls regarding the adequate monitoring of the investments in specific purpose entities (SPEs), as well as for the related parties transactions, including failure to identify and monitor the physical and financial execution of the relevant investment projects evaluated under the equity method, lack of technical and financial terms review related to construction contracts before the bid process, adequate analysis of the proposals made by suppliers and lack of evaluation and monitoring of progress and budget of projects;

4 – We did not have effective internal controls over the Risk, Corruption Prevention and Compliance Program, considering the requirements of the North American legislation (FCPA - Foreign Corrupt Practices Act) and also of the Brazilian legislation (Law 12,846/2013 - anti-corruption law);

5 – We did not maintain adequate internal controls that would avoid management override to the high level controls, including failure to communicate and to obtain adherence to the ethical values prescribed in the Company’s code of conduct, and an ineffective whistleblower channel due to inadequate comprehensiveness controls;

6 – We did not maintain effective controls related to payments and capitalization of fixed assets, that would result in future economic benefits as well as the approvals related to internal controls over the capitalization process.

Remediation of Material Weakness

We hired external consultants to assist us with the tests performed by our management, to remedy material weaknesses and to review internal controls in order to comply with Section 404a of the Sarbanes-Oxley Act, encompassing all companies included within the scope of this certification. We highlight that the tests conducted by our management are independent to the tests conducted by our external auditor. Accordingly, our management has assessed a broader set of internal controls than those reviewed by our external auditor.

In order to remedy the material weakness related to the significant number of deficiencies on reporting of financial information that have not been corrected in a timely manner, Eletrobras strengthened, together with its subsidiaries, the importance of appointing individuals to be in charge of the internal control environment throughout its different business areas and has also set targets for such areas’ managers. Additionally, with a view of reducing the existing deficiencies, the Eletrobras companies are promoting actions in corporate governance, risk management and management of internal controls areas.We are currently implementing plans to address these qualitative and quantitative deficiencies. Eletrobras is restructuring its operational structure, as well as changing its corporate governance process. The new Board of Directors and the new CEO will seek to make the company more ethical and efficient by focusing on five main priorities: ensuing financial sustainability of the company; pursuing operational excellence; strengthening corporate governance; focusing on generation and transmission; and disposing of non-core assets.

To remedy the material weaknesses in internal controls which ensure the review/proper monitoring of the preparation of financial statements and related disclosures, and to remedy the deficiencies related to monitoring the financial situation and accounting effects related to transactions with suppliers in Furnas, Eletrobras is implementing an integrated procurement process and contract management to reduce the risk of not timely identifying accounting adjustments caused by the failure from suppliers to deliver goods and services. Amazonas Energia is testing a monitoring system to monitor fuel consumption for power generation in its thermoelectric plants. Management of Amazonas Energia structured with business areas involved in fuel consumption process, physical inventory procedures for proper monitoring and validation of the information to be recorded.

- 184 -

The Company, with the support of specialized external consultants,is implementing an organizational structure that includes the redesign, standardization and centralization of transactional processes and decision making, which we believe will positively impact our accounting and financial statement disclosure controls and procedures.

Efforts to remedy the deficiencies regarding the material weakness related to controls to ensure the proper monitoring of the SPEs investments are currently ongoing, including implementation of integrated SPE management process. We are also implementing an action plan to ensure that related party and other unusual transactions are carried out by the Eletrobras companies in accordance with the Company’s policies, regulations and procedures, as well as current regulations (PCAOB AS 18, CVM 552 and Law No. 13,303/2016), and that these transactions are properly classified and reported in financial statements. At the end of 2015 the Company issued a SPE Manual describing and guiding the main practices on how to make and manage new investments. For pre-existing investments we are performing a gap analysis of the provisions of existing shareholders’ agreements with those described in the SPE Manual to the Board of Directors’ decision.

We have been improving and enhancing our compliance program, in order to remedy the related material weakness, according to the FCPA’s requirements and the Brazilian Anticorruption Law. Throughout 2015 and 2016 we have implemented a series of steps to increase the sophistication and effectiveness of our compliance program.

The “Eletrobras 5 Dimensions Compliance Program” is a company-wide plan that we are developing and implementing in order to comply with international corporate governance standards, laws and regulations, including the U.S. Sarbanes-Oxley Act of 2002, the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), the Brazilian Anticorruption Law (Law no. 12,846/2013), Law of Government-Controlled Companies (Law no. 13,303/2016), the rules and guidelines issued by the SEC, CVM, the Brazilian Institute of Corporate Governance (IBGC) and the OECD, among others. A summary of the program is discussed below:

1. Development of Company Culture:

(a) Setting the “tone at the top.” We have made significant management and governance changes during 2016, including turning over the membership of the entire Board of Directors, hiring a new CEO with extensive industry experience, creating an independent compliance structure and appointing a Chief Compliance Officer. The Compliance Officer reports to the CEO and to the board of directors, which approves compliance measures and internal regulations, as well as sponsoring the meetings and training sessions to support for compliance related initiatives.

(b) Creation of an Executive Compliance Commission within Eletrobras, led by the Compliance Officer, compliance managers and officers of all subsidiaries. On a weekly basis, the Executive Compliance Commission liaises internally with our subsidiaries to implement and improve our compliance program.

2. Periodic Risk Assessment:

The performance of the annual risk assessments of fraud, corruption, legal, human resources, financial issues and operational performance take into account the update and review of an array of corporate risks. The Holding’s Executive Office prioritizes the most relevant risks and establishes action plans to recommend controls or to improve existing controls in order to mitigate these risks. Monitoring of the effectiveness of mitigation is ongoing throughout the process. Our Compliance Program takes into account the areas that are more exposed to corruption risk, which are then subject to structuring and implementation of the related controls.

3. Policies and Procedures:

(a) Reporting Channel: we have our own reporting channel that assures anonymity and confidentiality of whistleblowing and other internal reporting. The channel is managed by the Ombudsman and the complaints are handled by different committees depending on their nature (aspects of conduct, ethics and corruption). Monthly reports of management and how complaints are dealt with are issued and submitted

- 185 -

to the Fiscal Council (adapted to the Audit Committee functions). We are currently reviewing the process design to receive, treat and answer complaints, seeking to improve their effectiveness design to receive, treat and answer complaints, seeking to improve their effectiveness and attractiveness by contracting a specialized third party channel and establishing a policy of consequences..

(b) Code of Ethics and Compliance Program Manual (and its orientation guidelines related to audience segments): the Code of Ethics and Conduct Commitments are in final phase of regulatory update to strengthen the aspects related to the Corporate Integrity.The Compliance Program Manual establishes the guidelines of the program as well as its management and internal and external application. We have produced the second version of the Compliance Manual, which contains guidelines for employees, management and members of the Fiscal Council.

(c) Contractual Provisions / Due Diligence: our contractual arrangements with third parties have compliance provisions to Brazilian and North American anti-corruption legislation. We are currently structuring and implementing forms, statements and other due diligence procedures for major third-party groups.

(d) Background Check: analyses are made on integrity as well as on requirements and impediments to select our officers and members of our Board of Directors, its subsidiaries and affiliated SPEs, according to the provisions of Law of Government-Controlled Companies (Law no. 13,303/2016).

(e) Special Purpose Entities (SPE) Manual:We created, at the end of 2015, an SPE manual describing and providing guidance on the main practices of constitution and management of new investments. For pre-existing investments we are performing a gap analysis of the provisions of existing shareholders’ agreements with those described in the SPE Manual to be delivered to the Board of Directors.

4. Promotion and Training:

We provide periodic training of employees and executives, as well as disseminating of the Compliance Program Manual, materials and policies to all employees and third parties of Eletrobras companies, including suppliers and partners. We have also provided courses on Eletrobras 5 Dimensions Compliance Program to certain employees (based on the level of exposure to corruption risk) at Universidade Corporativa and organized seminars at our subsidiaries. We have also developed a web-based training on ethics and compliance for all employees.

5. Continuous monitoring, remediation and application of penalties:

(a) Internal Audit: The Annual Internal Audit Plan is set based on corporate risk matrix and provides the annual test evidence on quality and effectiveness of the Compliance Program.

(b) Data System Integration: each entity within the Eletrobras group must follow strict accounting records and controls that allow timely presentation of accurate financial statements. A program to integrate data in one single database is currently ongoing, as well as, standardization of policies and procedures by means of which security and integrity of internal controls over financial reporting is strengthened.

(c) In 2015, in response to media reports of illegal activities, the Board of Directors created an independent special commission to oversee the Internal Investigation together with an experienced investigations team led by international law firm, Hogan Lovells.

In relation to the material of management overriding controls, we believe that the creation of the Compliance Officer and the consolidation of our compliance program will strengthen our internal controls as we strengthen our actions of corporate governance and business ethics.

Furthermore, we are implementing procedures, including integrated procurement and contractual management practices to remedy the deficiencies regarding the material weakness related to controls to ensure the proper monitoring of payments and capitalization of fixed assets are currently ongoing with an implemention of the integrated procurement and contract management process.

- 186 -

Independent Investigation

As a response to allegations of potential illegal activities appearing in the media in 2015 relating to companies that provide services to the Company’s subsidiary Eletrobras Termonuclear S.A. – Eletronuclear, a subsidiary of Centrais Elétricas Brasileiras S.A., (“Eletronuclear”) (specifically, “NTU Angra 3” nuclear power plant), and to certain SPEs that Eletrobras holds a minority stake, Eletrobras’ Board of Directors, although not required to do so, hired the law firm Hogan Lovells US LLP on June 10, 2015 to undertake an independent internal investigation for the purpose of assessing the eventual existence of irregularities, including violations of the U.S. Foreign Corruption Practice Act (FCPA), the Brazilian Anticorruption Law and the Eletrobras’ code of ethics (the “Independent Investigation”).

The independent investigation is subject to oversight by an Independent Commission whose creation was approved by Eletrobras’ Board of Directors in 2015. This Commission is composed of Ms. Ellen Gracie Northfleet, a former judge of the Brazilian Supreme Court, Mr. Durval José Soledade Santos, a former director of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM), and Dr. Manuel Jeremias Leite Caldas, representative of minority shareholders.

Eletrobras, Hogan Lovells and the Independent Commission have been closely monitoring the investigations and cooperating with Brazilian and United States authorities, including Federal Courts (Justiça Federal); Federal Prosecutors’ Office (Ministério Público Federal or “MPF”); Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”); Council for Economic Defense (Conselho Administrativo de Defesa Economica or “CADE”) United States Department of Justice (“DOJ”), United States Securities & Exchange Commission (“SEC”), among others, and have responded to requests for information and documents from these authorities.

Eletrobras evaluated the contracts with irregularities identified under the investigations and, when applicable, suspended the contract. Eletrobras took the applicable administrative measures in relation to employees and officers involved in the irregularities identified by the investigation, including, when applicable, the suspension and termination of the employment agreement.

On April 29, 2015, the Federal Police commenced the “Radioactivity Operation” phase of Operation “Lava Jato”, which resulted in the imprisonment of a former officer of our subsidiary Eletrobras Termonuclear S.A – Eletronuclear. This former officer was sentenced to 43 years of prison, by the judge of the 7th Federal Criminal Court, for passive bribery, money laundering, obstruction of justice, tax evasion and participation in a criminal organization. On July 6, 2016, the Federal Police commenced “Operation Pripyat”, in which the Federal Police served arrest warrants issued by the judge of the 7^th Federal Court of the District of Rio de Janeiro against former officers, officers who had already been suspended by Eletrobras’ Board of Directors as well as other parties. Formal charges of corruption, money laundering and obstruction of justice were filed against such former officers by Federal Prosecutors on July 27^th, 2016. Eletrobras is assisting the prosecution in these criminal proceedings.

In accordance with Eletrobras’s code of ethics, we do not tolerate corruption or other any illegal business practices of our employees, contractors or suppliers, and, accordingly, we have undertaken the corporate governance and compliance initiatives described in this Form 20-F.

ITEM 15T. CONTROLS AND PROCEDURES

Not applicable.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined thatLuis Felipe Vital Nunes Pereira, a member of our Fiscal Council, is an “audit committee financial expert” as defined by current SEC rules and meets the independence requirements of the SEC and the NYSE listing standards. For a discussion of the role of our Fiscal Council, see “Item 6.C, Board Practices – Fiscal Council.”

- 187 -

ITEM 16B. CODE OF ETHICS

On June 15, 2010, we adopted a code of ethics that applies to all our employees, including our chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions, as well as to directors and other officers. The objective of this code is: (i) to reduce the possibility of the misinterpretation of ethical principles as a result of subjective, personal interpretation; (ii) to be a formal and institutional benchmark for the professional conduct of our employees, including the ethical handling of actual or apparent conflicts of interests; (iii) to provide a standard for our internal and external relationships with our shareholders, investors, clients, employees, partners, suppliers, service providers, labor unions, competitors and society, the government and the communities in which we operate; and (iv) to ensure that daily concerns with efficiency, competitiveness and profitability do not override ethical behavior. The Code of Ethics is being updated, and its latest version will become available by the end of 2016. Our code of ethics is available free of charge by requesting a copy from our Investor Relations Department at the following address or website: Avenida Presidente Vargas, 409, 9^th Floor, Edifício Herm. Stolz, CEP 20071-003 Rio de Janeiro, RJ, Brazil; telephone: +55 21 2514 6331 or +55 21 2514 6333; fax: +55 21 2514 5964; e-mail: invest@eletrobras.com or http://www.eletrobras.com

We also created, in 2008, a “whistleblower channel” in order to receive “complaints,” by any person (provided such complaint is directly and monthly reported to the Fiscal Council), regarding any “dishonest or unethical conduct,” “accounting, internal accounting controls, or auditing matters” and any equally confidential and anonymous submissions of “concerns” of the same type by our employees and associates. The “whistleblower channel” can be accessed through our website or by letter sent to our headquarters marked for the attention of our Fiscal Council.

In 2015 we improved our process in order to report all the complaints directly to the Fiscal Council. In 2015 and 2016, respectively, 30 and 63 issues related to fraud and corruption conduct were reported to different channels, being eleven reported through the “whistleblower channel”. None of them had financial impact on our results of operations. We have not granted any implicit or explicit waivers from any provision of our code of ethics since its adoption.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth by category of service the total fees for services provided to Eletrobras by PricewaterhouseCoopers Auditores Independentes and KPMG Auditores Independentes, as applicable, during the fiscal years ended December 31, 2015 and 2014.

	2015		20141
	(R$ )
Audit Fees		16,156,966.56		12,009,016.36
Audit-Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total		16,156,966.56		12,009,016.36

(1) 2014 fiscal year audit performed by PricewaterhouseCoopersAuditores Independentes and KPMG Auditores Independentes.

R$ R$ R$ R$

Audit Fees

Audit fees consist of the aggregate fees billed by KPMG Auditores Independentes and PricewaterhouseCoopers Auditores Independentes, in connection with the audits of our annual consolidated financial statements and internal controls, interim reviews of our quarterly financial information comfort letters, procedures related to the audit of income tax provisions in connection with the audit and the review of our consolidated financial statements.

- 188 -

Tax Fees

No audit-related fees were paid to KPMG Auditores Independentes or PricewaterhouseCoopers Auditores Independentes, our prior auditors, for the fiscal years ended December 31, 2015, 2014 and 2013.

All Other Fees

No other fees were paid to KPMG Auditores Independentes or PricewaterhouseCoopers Auditores Independentes, our prior auditors, for the fiscal years ended December 31, 2015, 2014 and 2013.

Fiscal Council Pre-Approval Policies and Procedures

The Fiscal Council recommends to the Board of Directors for approval, the entity to be hired to provide independent audit services to Eletrobras and our subsidiaries and their compensation, as well as its replacement. The engagement of an independent auditor for non-audit services is subject to previous approval of the audit committee in respect to compliance with independence rules. For more information regarding our Board of Directors and Fiscal Council, see “Item 6.C. Board of Directors Practices.”

ITEM 16D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

We have designated and empowered our Fiscal Council to perform the role of an audit committee pursuant to Rule 10A-3 of the Exchange Act. We are required by both the SEC and the NYSE listed company audit committee rules to comply with Rule 10A-3 of the Exchange Act, which requires that we either establish an audit committee, composed of members of our Board of Directors, that meets specified requirements or designate and empower our Fiscal Council to perform the role of the audit committee in reliance on the exemption set forth in Rule 10A-3(c)(3) of the Exchange Act. We believe that our Fiscal Council satisfies the independence and other requirements of Rule 10A-3 of the Exchange Act, which would apply in the absence of our reliance on the exemption.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

See “Item 9.C, Markets – Significant Differences between our Corporate Governance Practices and NYSE Corporate Governance Standards.

- 189 -

PART III

ITEM 17. FINANCIAL STATEMENTS

See “Item 18, Financial Statements.”

ITEM 18. FINANCIAL STATEMENTS

Please see our consolidated financial statements beginning on page F-1. In 2015, none of our affiliated entities was a significant subsidiary under Rule 3-09 of Regulation S-X. In 2014, Madeira Energia S.A. and Energia Sustentável do Brasil Participações S.A. constituted significant subsidiaries under Rule 3-09 of Regulation S-X, and, accordingly, we will file financial statements for those entities as of and for the year ended December 31, 2015 as an amendment to this annual report. In addition, we have included beginning on page F-263 the audit reports by other auditors with respect to the financial statements of Madeira Energia S.A. and Norte Energia S.A. as of and for the year ended December 31, 2015. These audit reports are referred to in the report of our external auditors, KPMG Auditores Independentes, with respect to our consolidated financial statements as of and for the year ended December 31, 2015.

ITEM 19. EXHIBITS

  2.1 Amended and Restated Deposit Agreement dated October 18, 2002 between Centrais Elétricas Brasileiras S.A. – Eletrobras and J.P. Morgan Chase Bank, N.A., incorporated herein by reference from our Registration Statement on Form 20-F, filed July 21, 2008, File No. 001-34129.

  2.2 The total amount of long-term debt securities of our company and its subsidiaries under any one instrument does not exceed 10% of the total assets of our company and our subsidiaries on a consolidated basis. We agree to furnish copies of any or all such instruments to the SEC upon request.

  3.2 By-Laws of Centrais Elétricas Brasileiras S.A. – Eletrobras (English translation), dated December 23, 2011.

  4.1 Itaipu treaty signed by Brazil and Paraguay – Law No. 5,899 of July 5, 1973, incorporated herein by reference from our Registration Statement on Form 20-F, filed July 21, 2008, File No. 001-34129.

  8.1 List of subsidiaries.

12.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Centrais Elétricas Brasileiras S.A. – Eletrobras.

12.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Centrais Elétricas Brasileiras S.A. – Eletrobras.

13.1 Section 906 Certification of Chief Executive Officer of Centrais Elétricas Brasileiras S.A. – Eletrobras.

13.2 Section 906 Certification of Chief Financial Officer of Centrais Elétricas Brasileiras S.A. – Eletrobras.

- 190 -

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS
October 11, 2016	By:	/s/ Wilson Pinto Ferreira Junior
		Name:	Wilson Pinto Ferreira Junior
		Title:	Chief Executive Officer
	By:	/s/ Armando Casado de Araújo
		Name:	Armando Casado de Araújo
		Title:	Chief Financial and Investor Relations Officer

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. – ELETROBRAS

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2015 and 2014 and January 1, 2014, and for each of the years in the three-year period ended December 31, 2015.

Contents

Reports of Independent Registered Public Accouting Firm for the year ended December 31, 2014 and December 31, 2015 (KPMG)	F-2
Report of Independent Registered Public Accouting Firm for the year ended December 31, 2014 and December 31, 2015 (KPMG)	F-4
Report of Independent Registered Public Accouting Firm for the year ended December 31, 2013 (PWC)	F-6
Consolidated balance sheets as of December  31, 2015 and 2014 and January 1, 2014	F-7
Consolidated statements of profit and loss for the years ended December 2015, 2014 and 2013	F-9
Consolidated statements of comprehensive loss for the years ended December 31, 2015, 2014 and 2013	F-10
Consolidated statements of changes in equity for the years ended December 31, 2015, 2014 and 2013	F-11
Consolidated statements of cash flows for the years ended December  31, 2015, 2014 and 2013	F-12
Notes to the consolidated financial statements for the years ending December 31, 2015, 2014 and 2013	F-13
Independent Auditor’s Report of Madeira Energia S.A. – MESA on October 10, 2016.	F-263
Independent Auditor’s Report of Norte Energia S.A. on October 10, 2016.	F-264

F-1

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Centrais Elétricas Brasileiras S.A. – Eletrobras:

We have audited the accompanying consolidated balance sheets of Centrais Elétricas Brasileiras S.A. – Eletrobras and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of profit and loss, comprehensive loss, changes in equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Madeira Energia S.A (a 39.00 percent owned investee company) and Norte Energia S.A (a 49.98 percent owned investee company). The Company’s investment in Madeira Energia S.A at December 31, 2015 and 2014 was R$ 2,896,068 thousand and R$ 2,724,068 thousand, respectively, and its equity in net earnings was R$ 7,030 thousand and net loss of R$ 861,144 thousand for the years ended December 31, 2015 and 2014, respectively, and the investment in Norte Energia S.A at December 31, 2015 was R$ 3,378,325 thousand after consolidating adjustments, and equity in net loss after consolidating adjustments of R$ 23,958 thousand for the year ended December 31, 2015. The financial statements of Madeira Energia S.A. and Norte Energia S.A. were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for Madeira Energia S.A. and Norte Energia S.A. based solely on the reports of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Centrais Elétricas Brasileiras S.A. – Eletrobras and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years ended December 31, 2015 and 2014, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

As further described in Note 16 to the consolidated financial statements, the subsidiaries of the distribution segment and the power generations subsidiaries Eletrobras Termonuclear S.A. (Eletronuclear) and Companhia de Geração Térmica de Energia Elétrica (CGTEE) have continued to incur operating losses and have current liabilities in access of current assets, and the associates Norte Energia S.A, Madeira Energia S.A., ESBR Participações S.A., São Manoel S.A and Teles Pires Participações S.A. have current liabilities in excess of their respective current assets on December 31, 2015. The financial statements of these subsidiaries and associates have been prepared assuming these subsidiaries and associates will continue as a going concern. The Company’s consolidated financial statements to not include any adjustments that might result from the outcome of this uncertainty.

As further described in Note 4.XI to the consolidated financial statements, the Company is a defendant in two class action lawsuits initiated in the United States of America that alleges, among other things, that the Company and the individual defendants knew or should have known about alleged fraud committed against the Company by a cartel of construction firms, as well as bribes and kickbacks allegedly solicited and received by the Company’s employees; that the Company and the individual defendants made material misstatements and omissions regarding the alleged fraud; and that the Company’s stock price declined when the alleged fraud was disclosed. Although no provision has been made in the Company’s consolidated financial statements, the ultimate outcome of these legal proceedings could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows in the future. The Company´s net loss for the year ended December 31, 2014 and 2015 was increased by R$ 154,147 thousand and by R$ 4,482 thousand as a result of previously capitalized costs, net of impairment charges and investment on equity method investee which have been written off, representing the estimated amounts linked to unlawful activities that Eletrobras subsidiaries and associate overpaid for the acquisition of property, plant and equipment.

F-2

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated October 11, 2016 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG Auditores Independentes

Rio de Janeiro, Brazil

October 11, 2016

F-3

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Centrais Elétricas Brasileiras S.A. - Eletrobras

We have audited Centrais Elétricas Brasileiras S.A. – Eletrobras’s (“Company” or “Eletrobras”) internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Eletrobras’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Material weaknesses related to (i) previous internal control deficiencies remediation; (ii) the financial statements preparation process; (iii) SPEs and related party transactions; (iv) risk, corruption prevention and compliance program monitoring; (v) management review controls; and (vi) improper payments and capitalization of costs; has been identified and included in management’s assessment. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Eletrobras. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2015 consolidated financial statements, and this report does not affect our report dated October 11, 2016, which expressed an unqualified opinion on those consolidated financial statements.

F-4

In our opinion, because of the effects of the aforementioned material weaknesses on the achievement of the objectives of the control criteria, Centrais Elétricas Brasileiras S.A. – Eletrobras has not maintained effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We do not express an opinion or any other form of assurance on management’s statements referring to corrective actions taken after December 31, 2015, relative to the aforementioned material weaknesses in internal control over financial reporting.

/s/ KPMG Auditores Independentes

Rio de Janeiro, Brazil

October 11, 2016

F-5

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To board of directors and shareholders of

Centrais Elétricas Brasileiras S.A. – Eletrobras:

In our opinion, the consolidated statements of profit and loss, comprehensive income, changes in equity and cash flows for the year ended December 31, 2013 present fairly, in all material respects, the results of operations and cash flows of Centrais Elétricas Brasileiras S.A. – Eletrobras and its subsidiaries for the year ended December 31, 2013 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Auditores Independentes

Rio de Janeiro, Brazil

April 30, 2014

F-6

CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2015 AND 2014

( in thousands of reais )

ASSETS	NOTE		12/31/2015		12/31/2014
CURRENT
Cash and cash equivalent		5		1,393,973		1,407,078
Restricted cash		5		647,433		1,743,525
Marketable Securities		6		6,842,774		3,730,345
Accounts Receivable		7		4,137,501		4,427,216
Financial assets - concessions and Itaipu		18		965,212		3,437,521
Financing and loans		9		3,187,226		2,696,021
Fuel Consumption Account - CCC		26		195,966		521,964
Equity interest remuneration		10		309,360		289,574
Recoverable taxes		11		716,651		900,431
Income tax and social contribution		11		1,475,598		762,726
Reimbursement rights		12		2,265,242		3,673,639
Inventories				631,669		512,614
Nuclear fuel inventory		13		402,453		340,319
Indemnities - Law 12.783/2013		8		—		3,738,295
Derivative financial instruments		44		21,307		124,635
Hydrological risk		15		195,830		—
Assets held for sale		43		4,623,785		—
Others				1,425,416		2,245,290
TOTAL CURRENT ASSETS				29,437,396		30,551,193
NON-CURRENT
LONG-TERM ASSETS
Reimbursement rights		12		8,238,140		6,129,423
Financing and loans		9		14,400,394		11,988,543
Accounts Receivable		7		1,833,457		1,743,504
Marketable Securities		6		194,990		224,734
Nuclear fuel inventory		13		578,425		661,489
Recoverable taxes		11		2,623,186		2,538,131
Income tax and social contribution		11		3,067,591		2,467,631
Guarantees and restricted deposits				5,079,707		3,808,155
Fuel Consumption Account - CCC		26		13,331		3,944
Financial assets - Concessions and Itaipu		18		28,416,433		28,969,262
Derivative financial instruments		44		25,004		135,276
Advances for future capital increase		14		1,215,532		1,140,633
FUNAC refund				—		595,445
Hydrological risk		15		598,161		—
Others				1,487,335		1,070,214
				67,771,686		61,476,384
INVESTMENTS
Evaluated by the equity method		16		20,685,806		18,608,682
Maintained at fair value		16		1,177,260		1,370,371
				21,863,066		19,979,053
FIXED		17		29,479,479		31,105,548
INTANGIBLE		19		935,151		1,365,371
TOTAL NON-CURRENT ASSETS				120,049,383		113,926,357
TOTAL ASSETS				149,486,779		144,477,550

The accompanying notes are an integral part of these consolidated financial statements

F-7

CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2015 AND 2014

( in thousand reais )

LIABILITIES AND SHAREHOLDERS’ EQUITY	NOTE	12/31/2015			12/31/2014
CURRENT
Financing and loans	23		4,224,448			4,931,531
Debentures	24		357,226			325,732
Compulsory Loan	25		57,630			50,215
Suppliers	21		10,128,507			7,489,134
Advances from clients	22		648,236			501,572
Taxes payable	27		1,556,578			1,168,168
Income tax and social contribution	27		581,344			18,138
Fuel Consumption Account - CCC	26		—			301,471
Shareholders’ compensation	29		43,522			64,402
Estimated liabilities			1,018,788			1,174,679
Reimbursement obligations	12		396,208			702,728
Post-employment benefits	30		114,861			258,898
Provisions for contingencies	31		590,725			32,082
Regulatory fees	28		695,400			930,297
Leasing	23		132,972			74,507
Concessions payable - use of public property			3,920			3,645
Derivatives financial instruments	44		20,608			26,573
Liabilities associated to assets held for sale	43		5,575,009			—
Others			1,953,661			1,230,236
TOTAL CURRENT LIABILITIES			28,099,643			19,284,008
NON-CURRENT
Financing and loans	23		42,173,812			34,607,594
Suppliers	21		9,449,421			10,047,367
Debentures	24		205,248			434,191
Advances from clients	22		659,082			718,451
Compulsory Loan	25		466,005			469,459
Asset decommission obligation	32		1,201,186			1,314,480
Fuel Consumption Account - CCC	26		452,948			474,770
Provisions for contingencies	31		13,556,129			13,091,867
Post-employment benefits	30		1,858,824			2,001,268
Provisions for unfunded liabilities			257,907			97,449
Onerous contracts	34		1,489,292			1,130,201
Reimbursement obligations	12		2,483,378			2,529,893
Leasing	23		1,119,183			1,252,154
Concessions payable - use of public property			59,644			59,815
Advances for future capital increase	33		219,294			193,606
Derivatives financial instruments	44		78,521			70,336
Regulatory fees	28		462,195			609,721
Taxes payable	27		900,309			837,551
Income tax and social contribution	27		1,003,796			569,380
Others			1,710,369			1,030,640
TOTAL NON-CURRENT LIABILITIES			79,806,543			71,540,193
SHAREHOLDERS’ EQUITY
Capital stock	36		31,305,331			31,305,331
Capital reserves	36		26,048,342			26,048,342
Profit reserves			—			2,259,039
Adjustments to equity			39,452			42,947
Accrued losses			(12,339,801	)		(3,195,151	)
Accumulated other comprehensive loss			(3,113,481	)		(3,116,108	)
Values recognized in ORA classified as assets held for sale			(6,458	)		—
Non-controlling shareholders			(352,792	)		308,949
TOTAL SHAREHOLDERS’ EQUITY			41,580,593			53,653,349
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			149,486,779			144,477,550

The accompanying notes are an integral part of these consolidated financial statements

F-8

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PROFIT AND LOSS FOR THE YEARS ENDING ON

DECEMBER 31, 2015, 2014 AND 2013

( in thousands of reais )

	NOTE	12/31/2015			12/31/2014			12/31/2013
NET OPERATIONAL REVENUE	38		32,588,838			30,137,807			23,835,644
OPERATING EXPENSES
Energy purchased for resale	41		(10,766,227	)		(10,424,699	)		(5,515,206	)
Charges upon use of electricity network			(1,737,959	)		(1,523,379	)		(1,560,883	)
Fuel to produce electricity			(1,249,836	)		(1,479,633	)		(1,492,368	)
Construction			(3,237,537	)		(2,899,648	)		(3,547,863	)
Personnel, supplies and services	40		(9,495,417	)		(8,485,373	)		(9,244,586	)
Remuneration and indemnity			(348,874	)		(386,824	)		(405,809	)
Depreciation			(1,417,856	)		(1,387,034	)		(1,296,375	)
Amortization			(424,744	)		(390,262	)		(215,189	)
Donations and contributions			(215,116	)		(251,415	)		(332,031	)
Operational provisions / reversals	42		(11,586,767	)		(4,663,221	)		(3,258,205	)
Voluntary Redundancy Plan			—			(219,299	)		(256,860	)
Investigation Findings	4		(15,996	)		(195,127	)		—
Others			(2,131,954	)		(1,675,350	)		(2,089,704	)
			(42,628,283	)		(33,981,264	)		(29,215,079	)
OPERATIONAL LOSS BEFORE FINANCIAL RESULT			(10,039,445	)		(3,843,457	)		(5,379,435	)
FINANCIAL RESULT
Financial Revenue
Revenue from interest, commissions and fees			1,128,406			1,071,107			1,146,055
Revenue from financial investments			1,122,643			1,020,654			556,469
Additional interest on energy			709,404			323,300			305,404
Monetary adjustment gain			3,765,236			841,821			1,065,243
Exchange variation gain			10,251,948			3,293,940			3,488,842
Remuneration for indemnifications - Law 12,783/13			115,407			1,018,952			441,024
Updating regulatory asset			229,608			—			—
Gains on derivatives			—			382,614			—
Other financial revenues			629,589			747,433			269,666
Financial expenses
Debt charges			(6,340,459	)		(3,448,734	)		(2,031,402	)
Lease Charges			(273,391	)		(279,716	)		(269,032	)
Charges on shareholders’ funds			(40,511	)		(87,047	)		(189,967	)
Monetary adjustment loss			(1,362,380	)		(495,680	)		(610,609	)
Exchange variation loss			(10,219,318	)		(2,998,387	)		(2,949,783	)
Updating regulatory liabilities			(130,502	)		—			—
Loss on derivatives			(221,666	)		—			(238,938	)
Other financial expenses			(1,063,039	)		(695,632	)		(606,287	)
			(1,699,025	)		694,625			376,685
LOSS BEFORE RESULTS OF EQUITY INVESTMENTS, TAXES AND SOCIAL CONTRIBUTIONS			(11,738,470	)		(3,148,832	)		(5,002,750	)
RESULTS OF EQUITY METHOD INVESTMENTS	39		531,446			(1,308,304	)		177,768
LOSS BEFORE TAXES AND SOCIAL CONTRIBUTIONS			(11,207,024	)		(4,457,135	)		(4,824,982	)
Current income tax and social contribution	27		(546,812	)		(82,483	)		(60,424	)
Deferred income tax and social contribution	27		(163,300	)		(1,618,035	)		(1,306,254	)
LOSS FOR THE YEAR			(11,917,136	)		(6,157,653	)		(6,191,660	)
AMOUNT ATTRIBUTED TO CONTROLLING SHAREHOLDERS			(11,405,085	)		(6,226,206	)		(6,186,948	)
AMOUNT ATTRIBUTED TO NON-CONTROLLING SHAREHOLDERS			(512,051	)		68,553			(4,712	)
LOSS PER SHARE	37		(R$8.43	)		(R$4.60	)		(R$4.57	)

The accompanying notes are an integral part of these consolidated financial statements

F-9

CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR YEARS ENDING ON DECEMBER 31, 2015, 2014 AND 2013

( in thousands of reais )

	12/31/2015			12/31/2014			12/31/2013
Net loss in the year		(11,917,136	)		(6,157,653	)		(6,191,660	)
Other comprehensive income (loss) which may not be reclassified to net profit or loss
Accumulated conversion adjustment		121,353			(42,279	)		38,909
Actuarial gains and losses		(236,798	)		(971,565	)		1,362,551
Deferred Income tax and social contributions		—			(404,332	)		(463,267	)
Other comprehensive income (loss) which may be reclassified to net profit or loss
Cash flow hedge		(468	)		(12,320	)		(11,987	)
Deferred Income tax and social contributions		—			309			4,076
Fair value of financial instruments available for sale		(109,493	)		99,820			(244,465	)
Deferred Income tax and social contributions		37,228			(33,939	)		83,118
Comprehensive income of subsidiaries, affiliates and jointly-controlled companies		33,383			(464,478	)		(291,211	)
Deferred Income tax and social contributions		1,274			411,480			99,005
Other items in comprehensive income (loss)		(153,521	)		(7,574,957	)		576,729
Total comprehensive loss of the year		(12,224,178	)		(7,574,957	)		(5,614,931	)
Portion attributable to controlling shareholders		(11,562,437	)		(7,643,510	)		(5,610,219	)
Portion attributable to non-controlling shareholders		(661,741	)		68,553			(4,712	)
		(12,224,178	)		(7,574,957	)		(5,614,931	)

The accompanying notes are an integral part of these consolidated financial statements

F-10

CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AS OF DECEMBER 31, 2015, 2014 AND 2013

( in thousand reais )

					PROFIT RESERVES
	CAPITAL STOCK		CAPITAL RESERVES		LEGAL			STATUTORY			EQUITY VALUATION ADJUSTMENT EFFECTS			ACCRUED LOSSES			Accumu- lated other compre- hensive loss			SHARE- HOLDERS’ EQUITY PARENT COMPANY			SHARE- HOLDERS’ EQUITY NON- CONTROLLING SHAREHOLDERS			CONSOLI- DATED SHARE- HOLDERS’ EQUITY
On December 31, 2012 - Revised		31,305,331		26,048,342		2,233,017			9,916,882			208,672			—			(2,273,587	)		67,872,619			196,648			68,069,267
Additional dividends																					(433,962	)					(433,962	)
Accumulative conversion adjustments																		38,889			38,889						38,889
Post-employment benefit adjustments																		609,151			609,151						609,151
Fair value of available for sale financial instruments																		(180,080	)		(180,080	)					(180,080	)
Deferred Income tax and social contribution over other comprehensive income																		(277,069	)		(277,069	)					(277,069	)
Adjustment of Subsidiary / Associates																		398,028			398,028			3,262			401,290
Derivative Financial instruments - Hedge																		(12,190	)		(12,190	)					(12,190	)
Equity valuation adjustments												(140,304	)		127,927						(12,377	)					(12,377	)
Statutory reserves releases									(739,997	)					739,997						—						—
Net Income (Loss) for year															(6,186,949	)					(6,186,949	)		(4,712	)		(6,191,661	)
Proposed dividends															(433,962	)					(433,962	)					(433,962	)
Approval of additional dividend by Annual General Meeting															(433,962	)					—						—
Statutory reserves losses									(6,186,949	)					6,186,949						—						—
On December 31, 2013 - Revised		31,305,331		26,048,342		2,233,017			2,989,936			68,368			—			(1,696,858	)		61,382,098			195,198			61,577,296
Additional dividends																					(433,962	)					(433,962	)
Investment acquisition																					—			43,252			43,252
Encargos financeiros - Decreto 2.673/98																					—						—
Accumulative conversion adjustments																		(58,137	)		(58,137	)					(58,137	)
Post-employment benefit adjustments																		(407,875	)		(407,875	)					(407,875	)
Fair value of available for sale financial instruments																		77,888			77,888						77,888
Deferred Income tax and social contribution over other comprehensive income																		(26,482	)		(26,482	)					(26,482	)
Adjustment of Subsidiary / Associates																		(993,232	)		(993,232	)		1,946			(991,286	)
Derivative Financial instruments - Hedge																		(11,412	)		(11,412	)					(11,412	)
Equity valuation adjustments												(25,421	)		25,421						—						—
Statutory reserves releases									67,141						(67,141	)					—						—
Net Income (Loss) for year															—						—			68,553			68,553
Dividendos propostos															—						—						—
Unclaimed compensation to shareholders - Prescribed															41,720						41,720						41,720
Aprovação do dividendo adicional pela AGO															—						—						—
Statutory reserves losses									(3,031,055	)					3,031,055						—						—
As of December 31, 2014		31,305,331		26,048,342		2,233,017			26,022			42,947			(3,195,151	)		(3,116,108	)		53,344,400			308,949			53,653,349
Accumulative conversion adjustments																		67,482			67,482						67,482
Post-employment benefit adjustments																		247,803			247,803						247,803
Fair value of financial instruments available for sale																		(113,241	)		(113,241	)					(113,241	)
Deferred Income tax and social contribution over other comprehensive income																		38,502			38,502						38,502
Adjustment of Subsidiary / Associates															2,415			(243,909	)		(241,494	)		(149,690	)		(391,184	)
Financial instruments - hedge																		(468	)		(468	)					(468	)
Equity valuation adjustments												(3,495	)		3,495						—						—
Loss															(11,405,085	)					(11,405,085	)		(512,051	)		(11,917,136	)
Proposed dividends									(26,022	)											(26,022	)					(26,022	)
Unclaimed shareholders’ compensation - statute of limitations															21,508						21,508						21,508
Absorption of losses						(2,233,017	)								2,233,017						—						—
As of December 31, 2015		31,305,331		26,048,342		—			—			39,452			(12,339,801	)		(3,119,939	)		41,933,385			(352,792	)		41,580,593

The accompanying notes are an integral part of these consolidated financial statements

F-11

CENTRAIS ELÉTRICAS BRASILEIRAS S.A - ELETROBRAS AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDING ON

DECEMBER 31, 2015, 2014 AND 2013

(in thousand reais)

	NOTE	12/31/2015			12/31/2014			12/31/2013
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before income tax and social contribution			(11,207,024	)		(4,457,135	)		(4,824,983	)
Adjustments to reconcile net loss to net cash provided by operating activities :
Depreciation and amortization			1,842,600			1,777,296			1,511,564
Net monetary variations			(914,656	)		(1,329,742	)		(1,249,587	)
Net exchange variations			863,808			291,510			(424,537	)
Financial charges			2,001,687			(109,124	)		496,700
Revenue from financial assets	38		(838,087	)		(714,409	)		(552,106	)
Result of equity method	39		(531,446	)		1,308,304			(177,768	)
Provision (reversal) for doubtful credits	42		658,679			(122,662	)		(457,261	)
Provision (reversal) for contingencies	42		2,932,120			7,797,129			1,399,321
Provision (reversal) for impairment of assets	42		5,830,959			16,903			2,428,649
Provision (reversal) onerous contract	42		366,477			(1,800,401	)		(1,924,657	)
Provision (reversal) for plan for personnel adjustment			—			219,299			256,860
Provision (reversal) for investment loss	42		489,753			(1,414,171	)		142,622
Provision (reversal) for loss of financial asset	42		—			(791,868	)		791,868
Provision (reversal) for losses on fixed asset	42		—			235,064			—
Provision (reversal) for environmental compensations	42		—			104,904			—
Provision (reversal) hydrological risk - GSF	42		451,340			—			—
Fees on the global reversal reserve			253,348			308,167			347,949
Adjustment fair value / market value			157,066			170,509			94,000
Minor shareholders’ share			775,835			(103,868	)		7,139
Fees on shareholders’ share			40,511			87,047			189,967
Derivatives			221,666			(392,354	)		238,938
Investigation Findings			15,996			195,127			—
Others			333,761			513,693			559,371
			14,951,417			6,246,352			3,679,032
Changes in:
Accounts receivables			130,905			(441,152	)		413,625
Marketable securities			(2,886,138	)		2,366,099			404,758
Reimbursement rights	12		(700,320	)		2,991,052			(4,376,467	)
Inventories			(119,055	)		133,229			(168,450	)
Nuclear fuel inventory	13		20,930			(150,590	)		(8,972	)
Financial asset - Itaipu and public service concessions			1,886,785			136,864			36,229
Assets held for sale			(4,623,785	)		—			—
Hydrological risk			(342,651	)		—			—
Others			357,948			(317,166	)		(344,793	)
			(6,275,381	)		4,718,336			(4,044,070	)
Suppliers			3,094,034			7,669,536			2,686,542
Advances from clients	22		(57,349	)		(53,898	)		(50,655	)
Leasing			(74,506	)		(67,166	)		50,191
Estimated liabilities			(165,866	)		(153,105	)		115,035
Reimbursement obligations	12		2,491			(7,534,600	)		2,744,474
Regulatory fees	28		(382,423	)		29,997			8,231
Liabilities associated to assets held for sale			5,575,009			—			—
Others			1,152,395			(383,602	)		463,167
			9,143,785			(492,838	)		6,016,985
Cash generated from operations			6,612,797			6,014,715			826,964
Payment of financial charges			(2,805,404	)		(1,222,341	)		(1,305,876	)
Payment of global reverse reserve charges			(952,355	)		(216,209	)		(228,144	)
Amounts received from allowed annual revenue			965,764			703,266			674,102
Receipt of financial asset compensation	8		4,027,661			2,773,092			9,819,946
Receipt of financial charges			1,113,278			172,000			1,141,486
Payment of income taxes and social contributions			(610,223	)		(667,150	)		(650,161	)
Amounts received from remuneration of investment in equity interests			412,874			106,232			513,607
Additional pension payments			(201,469	)		(387,296	)		(488,016	)
Payment of legal contingencies	31		(904,505	)		(1,177,462	)		(920,002	)
Judicial deposits			(677,944	)		(906,386	)		(54,552	)
Net cash provided by operating activities			6,980,474			5,192,461			9,329,354
CASH FLOWS FROM FINANCING ACTIVITIES
Loans and financing			7,543,513			7,410,882			6,050,558
Payment of loans and financing - principal			(5,381,995	)		(3,238,117	)		(2,480,439	)
Payment of shareholders remuneration			(23,056	)		(814,993	)		(4,189,708	)
Payment of refinancing tax and contributions - principal			(117,058	)		(103,785	)		(98,522	)
Empréstimo compulsório e reserva global de reversão			—			—			485,594
Others			(2,431	)		49			154,639
Net cash provided by (used in) financing activities			2,018,973			3,254,036			(77,878	)
CASH FLOWS FROM INVESTMENT ACTIVITIES
Loans and financing - receipt			(751,524	)		(255,379	)		(598,577	)
Loans and financing - payment			2,539,101			506,264			1,999,115
Acquisition of fixed assets			(4,139,891	)		(2,801,858	)		(2,141,137	)
Acquisition of intangible assets			(384,307	)		(117,046	)		(157,209	)
Acquisition of concession assets			(3,153,701	)		(3,262,535	)		(3,413,719	)
Acquisition /capital increase in subsidiary			(2,433,066	)		(3,903,911	)		(3,555,414	)
Advances for future capital increases			(737,631	)		(906,024	)		(396,467	)
Net cash flow of subsidiary acquisition			—			159,703			—
Others			48,467			(56,216	)		108,000
Net cash used in investment activities			(9,012,552	)		(10,637,002	)		(8,155,408	)
Increase (reduction) of cash and cash equivalents			(13,105	)		(2,190,505	)		1,096,068
Cash and cash equivalents at the beginning of the year	5		1,407,078			3,597,583			2,501,515
Cash and cash equivalents at the end of the year	5		1,393,973			1,407,078			3,597,583

The accompanying notes are an integral part of these consolidated financial statements

F-12

CENTRAIS ELÉTRICAS BRASILEIRAS S.A. AND SUBSIDIARIES

Eletrobras

(Public Company)

CNPJ 00.001.180/0001-26

Notes to the consolidated financial statements for the years ending December 31, 2015, 2014 and 2013

(In thousands of Reais)

NOTE 1 – OPERATIONAL CONTEXT

Centrais Elétricas Brasileiras S.A. (Eletrobras or the Company) is corporation headquartered in Brasília-DF- Setor Comercial Norte, Quadra 4, Bloco B, 100, sala 203-Asa Norte, registered with the Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM) and the Securities and Exchange Commission-SEC, with shares traded on the stock exchanges of the São Paulo Stock Exchange (BM&F BOVESPA) – Brazil, Madrid (LATIBEX) – Spain and New York (NYSE) – United States of America. The Company is a joint stock company controlled by the Federal Government. It has as its corporate objective the performance of studies, projects, construction and operation of generating plants, transmission lines and distribution of electricity, as well as the conclusion of acts of commerce arising out of these activities. It has as its objective, in addition, to provide financing, to provide guarantees in Brazil and abroad, to the public service companies of electricity and that are under its control and in favor of technical-scientific research entities; to promote and support research of interest to the electricity sector, in particular activities of generation, transmission and distribution, as well as to conduct studies of the utilization of water catchment areas for multiple purposes; to contribute to the training of the technical personnel required by the Brazilian electrical sector, as well as in the preparation of skilled workers through specialized courses and it may also grant aid to educational institutions of the country or scholarships abroad and make agreements with entities that collaborate in the training of specialized technical personnel; to collaborate, technically and administratively, with companies in relation to which it participates in shareholding and with the Ministry of Mines and Energy.

The Company performs the function of holding, managing investments in corporate participations, holding a controlling share interest in six direct companies of generation and/or transmission of electric energy, as listed below:

• Furnas Centrais Elétricas S.A. – FURNAS;

• Centrais Elétricas do Norte do Brasil S.A. – ELETRONORTE;

• Companhia Hidro Elétrica do São Francisco – CHESF;

• ELETROSUL Centrais Elétricas S.A.;

• Eletrobras Termonuclear S.A. – ELETRONUCLEAR; and

• Companhia de Geração Térmica de Energia Elétrica – CGTEE.

F-13

Beyond the control of generation and/or transmission of electric energy, as listed above, the Company holds a direct controlling interest in seven electricity distribution companies:

• Boa Vista Energia S.A. – Boa Vista;

• Companhia de Eletricidade do Acre – Eletroacre;

• Centrais Elétricas de Rondônia – Ceron;

• Companhia Energética de Alagoas – Ceal;

• Companhia Energética do Piauí – Cepisa;

• CELG – Distribuição S.A. – CELG – D; and

• Amazonas Distribuidora Energia S.A. – Amazonas D.

On December 31, 2015, the Company classified assets and liabilities of the subsidiary CELG – D. as an asset held for sale, because the Company is committed with the sale of the equities held in that subsidiary and expects that the sale will be finished by December 31, 2016. More information is available in Note 43.

The Company still holds the controlling interest in Eletrobras Participações S.A.. – Eletropar. Additionally, it holds equity interest in Itaipu Binacional – Itaipu (under joint control pursuant to an international treaty signed between the Governments of Brazil and Paraguay), of Inambari Geração de Energia S.A., of Centrales Hidroelectricas de Centroamerica S.A.– CHC and of Rouar S.A., (under joint control with the Uruguyan State Usinas y Transmissiones Elétricas de Uruguay – UTE).

On July 1, 2015, the subsidiary Amazonas Energia started in the unbundling process, where electricity generation and transmission activities, until then provided by Amazonas Distribuidora, were separated from its distribution activity. Thus, a new company is created in the Eletrobras System, named Amazonas Geração e Transmissão de Energia S.A. (“Amazonas GT”), under direct control of Amazonas D. The second phase of the unbundling process, which is ongoing, will conclude the corporate restructuring, wherein Amazonas GT will be a wholly-owned subsidiary of Eletronorte.

The Company is an indirect controller or participates in a minority role directly or indirectly in a number of other companies in the segments of generation, transmission and distribution of electricity (see Note 16).

The commercialization of generated energy is based on two distinct market environments, being one regulated (energy destined for distribution concessionaires) and another characterized by freely contracted agreements (free market). Law No. 10.848, of March 15, 2004, provides differentiation between energy coming from new ventures and existing companies, determining the realization of separate auctions for each of these markets.

The Company is authorized, directly or through its associates or subsidiaries, to associate itself, with or without contribution of resources, to establish business consortia or participation in companies, with or without controlling power abroad, intended directly or indirectly for the exploration of production or transmission or distribution of electricity.

F-14

The Company has been responsible, in addition, for sectoral resource management, represented by the Global Reversion Reserve (Reserva Global de Reversão or RGR), Energy Development Account (Conta de Desenvolvimento Enegético – CDE), and Fuel Consumption Account Conta de Consumo de Combustíveis – CCC). These funds finance programs of the Federal Government for universalization of access to electricity, public lighting efficiency, incentives for alternative sources of electrical energy, electrical energy conservation and the purchase of fossil fuels used in isolated systems of electric power generation, whose financial movements do not affect the result of the Company (except for the administrative fee in certain Funds). For some recent developments, please see note 48.39.

The Company also acts as marketing agent of electric power for Itaipu Binacional and for agents participating in the Incentive Program to Alternate Sources of Electrical Energy (Programa de Incentivo às Fontes Alternativas de Energia Elétrica – PROINFA).

The issuance of these consolidated financial statements was authorized by the Board of Directors, on October 11, 2016.

NOTE 2 – PUBLIC SERVICE ELECTRIC POWER CONCESSIONS

Eletrobras, through its subsidiaries and Itaipu, owns 45,391 GW of installed capacity, 68.08 thousand kilometers* of transmission lines and seven power distributors that serve approximately 6.6* million consumers, with two being, Amazonas Energia and Eletrobras Distribuição Roraima, operating in isolated systems in the northern region of Brazil.

The Company, through its subsidiaries or minority interest investees, holds various public service electric power concessions, for which the details, installed capacity and expiration dates are listed below:

(*) Information not audited by the independent auditors)

F-15

I – Concessions under O&M System – renewed – Law No. 12,783/13

• Electric power generation and Authorization

Concessions under O&M System – GENERATION
Concessions/Permits	Location	Installed Capacity (MW)*		Expiration
UHE Paulo Afonso I	BA		180	12/31/2042
UHE Paulo Afonso II	BA		443	12/31/2042
UHE Paulo Afonso III	BA		794	12/31/2042
UHE Paulo Afonso IV	BA		2,462	12/31/2042
UHE Apolônio Sales	BA		400	12/31/2042
UHE Luiz Gonzaga (Itaparica)	BA		1,480	12/31/2042
UHE Xingó	SE		3,162	12/31/2042
UHE Furnas	MG		1,216	12/31/2042
UHE Luiz Carlos Barreto de Carvalho	SP / MG		1,050	12/31/2042
UHE Marimbondo	SP / MG		1,440	12/31/2042
UHE Porto Colômbia	SP / MG		320	12/31/2042
UHE Funil	MG		216	12/31/2042
UHE Corumbá I	GO		375	12/31/2042
UHE Serra da Mesa	GO		1,275	12/11/2039
UHE Funil	BA		30	12/31/2042
UHE Pedra	BA		20	12/31/2042
UHE Boa Esperança	PI		237	12/31/2042
UHE Coaracy Nunes	AP		78	12/31/2042

• Electric power transmission

Concessions under O&M System – TRANSMISSION
Contract	Holder	Period (years)	Expiration
057/2001	Eletrosul	30	12/31/2042
058/2001	Eletronorte	30	12/31/2042
061/2001	Chesf	30	12/31/2042
062/2001	Furnas	30	12/31/2043

F-16

II – Principal Concessions under Exploration System

• Electrical Power Generation

Concessions under Exploration System – GENERATION
Concessions/Permits	Location	Installed Capacity	Expiration Year
UHE Sobradinho	BA / PE	1,050.3	2052
UTE Camaçari	BA	68.7	2027
UHE Belo Monte	PA	11,233.1	2045
UHE Tucuruí	PA	8,535.0	2024
UHE Samuel	RO	216.8	2029
UTE Rio Madeira	RO	119.4	2018
UTE Santana	AP	177.7	2019
UTE Santarém	PA	14.8	2034
UTE Electron (7)	AM	121.1	2020
UHE Dardanelos	MT	261.0	2042
UHE Mauá	PR	177.9	2042
UHE Teles Pires	PA / MT	1,820.0	2046
UHE Jirau (1)	RO	3,750.0	2043
UTE Presidente Médici – Candiota I e II (2)	RS	446.0	2015
UTE Candiota III (3)	RS	350.0	2041
UTE Tabatinga	AM	316.4	2016
UTE Belem de Simões	AM	316.4	2016
UHE Balbina	AM	249.5	2027
UHE Aparecida	AM	282.5	2020
UTE Mauá	AM	409.5	2020
UTE Santa Cruz (6)	RJ	500.0	2015
UHE Mascarenhas de Moraes	MG	476.0	2023
UHE Itumbiara	MG / GO	2,082.0	2020
UHE Manso	MT	212.0	2035
UHE Simplício/Anta	RJ / MG	305.7	2041
UHE Peixe Angical	TO	498.8	2036
UHE Baguari	MG	140.0	2041
UHE Foz do Chapecó	Uruguai	855.0	2036
UTN Angra I	RJ	640.0	2024
UTN Angra II	RJ	1,350.0	2041
UTN Angra III	RJ	1,405.0	40 years
UHE Piloto (5)	BA	2.0	2015
UHE Araras (5)	CE	4.0	2015
UHE Curemas	PB	3.5	2024
EOL São Pedro do Lago	BA	30.0	2046
EOL Pedra Branca	BA	30.0	2046
EOL Sete Gameleiras	BA	30.0	2046
EOL Caiçara I	RN	27.0	2047
EOL Junco I	RN	24.0	2047
EOL Junco II	RN	24.0	2047
EOL Caiçara II	RN	18.0	2047

F-17

Concessions under Exploration System – GENERATION
Concessions/Permits	Location	Installed Capacity (MW)(*)	Expiration Year
Casa Nova	BA	180.0	2043
EOL Baraúnas I	BA	29.7	2049
Morro Branco I	BA	29.7	2049
Mussambê	BA	29.7	2049
Ventos de Santa Joana XI	PI	29.6	2049
Ventos de Santa Joana XVI	PI	28.9	2049
Ventos de Santa Joana X	PI	29.6	2049
Ventos de Santa Joana XIII	PI	29.6	2049
Ventos de Santa Joana XII	PI	28.9	2049
Ventos de Santa Joana XV	PI	28.9	2049
Ventos de Santa Joana IX	PI	29.6	2049
Acauã Energia S.A.	BA	12.0	2049
Arapapá Energia S.A.	BA	10.0	2049
Angical 2 Energia S.A.	BA	14.0	2049
Teiú 2 Energia S.A.	BA	14.0	2049
Caititú 2 Energia S.A.	BA	14.0	2049
Carcará Energia S.A.	BA	10.0	2049
Carcará Energia S.A.	BA	14.0	2049
Caititú 3 Energia S.A.	BA	14.0	2049
Papagaio Energia S.A.	BA	18.0	2049
Coqueirinho 2 Energia S.A.	BA	20.0	2049
Ventos de Santa Joana IV	PI	30.0	2049
Serra das Vacas I S.A.	PE	30.0	2049
Ventos de Santa Joana V	PI	30.0	2049
Serra das Vacas II S.A.	PE	30.0	2049
Serra das Vacas III S.A.	PE	30.0	2049
Serra das Vacas IV S.A.	PE	30.0	2049
Ventos de Santa Joana III	PI	30.0	2049
Ventos de Santa Joana I	PI	30.0	2049
Ventos de Santo Augusto IV	PI	30.0	2049
Ventos de Santa Joana VII	PI	30.0	2049
Tamanduá Mirim 2 Energia S.A.	BA	24.0	2049
Banda de Couro S.A.	BA	29.7	2049
Baraúnas II S.A.	BA	21.6	2049
UHE Curuá- Una	PA	30.3	2028
UTE Rio Acre	AC	45.5	2018
UTE Rio Branco I	AC	18.7	2020
UTE Rio Branco II	AC	31.8	2020
UTE- Senador Arnon Afonso Farias	RR	86.0	2024
UTE Serra do Navio	SE	23.3	2037
Parque Eólico Miassaba 3	RN	68.5	2045

F-18

Concessions under Exploration System – GENERATION
Concessions/Permits	Location	Installed Capacity (MW)(*)	Expiration Year
Parque Eólico Rei dos Ventos 3	RN	60.1	2045
UHE Passo São João	RS	77.0	2041
UHE São Domingos	MS	48.0	2037
PCH Barra do Rio Chapéu	SC	15.2	2034
PCH João Borges	SC	19.0	2035
PCH Coxilha Rica (4)	SC	18.0	2042
PCH Santo Cristo (3)	SC	19.5	2042
Coxilha Seca – Capão do Inglês	RS	10.0	2049
Coxilha Seca – Coxilha Seca	RS	30.0	2049
Coxilha Seca – Galpões	RS	8.0	2049
EOL Chuí I	RS	24.0	2047
EOL Chuí II	RS	22.0	2047
EOL Chuí IV	RS	22.0	2047
EOL Chuí V	RS	30.0	2047
EOL Chuí VI	RS	24.0	2047
EOL Chuí VII	RS	22.0	2047
EOL Chuí 09	RS	17.9	2049
Sant’Ana do Livramento – Cerro Chato IV	RS	10.0	2047
Sant’Ana do Livramento – Cerro Chato V	RS	12.0	2047
Sant’Ana do Livramento – Cerro Chato VI	RS	24.0	2047
Sant’Ana do Livramento – Cerro dos trindades	RS	8.0	2047
Sant’Ana do Livramento – Ibirapuitã	RS	24.0	2047
Parque Hermenegildo – Verace 24	RS	19.7	2049
Parque Hermenegildo – Verace 25	RS	7.2	2049
Parque Hermenegildo – Verace 26	RS	14.3	2049
Parque Hermenegildo – Verace 27	RS	16.1	2049
Parque Hermenegildo – Verace 28	RS	12.5	2049
Parque Hermenegildo – Verace 29	RS	17.9	2049
Parque Hermenegildo – Verace 30	RS	17.9	2049
Parque Hermenegildo – Verace 31	RS	9.0	2049
Parque Hermenegildo – Verace 34	RS	14.3	2049
Parque Hermenegildo – Verace 35	RS	12.5	2049
Parque Hermenegildo – Verace 36	RS	21.5	2049
Santa Vitória do Palmar – Verace I	RS	20.0	2047
Santa Vitória do Palmar – Verace II	RS	20.0	2047
Santa Vitória do Palmar – Verace III	RS	26.0	2047
Santa Vitória do Palmar – Verace IV	RS	30.0	2047
Santa Vitória do Palmar – Verace V	RS	30.0	2047
Santa Vitória do Palmar – Verace VI	RS	18.0	2047
Santa Vitória do Palmar – Verace VII	RS	30.0	2047
Santa Vitória do Palmar – Verace VIII	RS	26.0	2047
Santa Vitória do Palmar – Verace IX	RS	30.0	2047
Santa Vitória do Palmar – Verace X	RS	28.0	2047

F-19

Concessions under Exploration System – GENERATION

Concessions/Permits	Location	Installed Capacity (MW)(*)	Expiration Year
Megawatt Solar	SC	0.9	—
EOL Cerro Chato I	RS	30.0	2045
EOL Cerro Chato II	RS	30.0	2045
EOL Cerro Chato III	RS	30.0	2045
UTE São Jerônimo (2)	RS	20.0	2015
UTE Nutepa (2)	RS	24.0	2015
UTE Cidade Nova (7)	AM	29.7	2015
UTE Iranduba	AM	50.0	2020
UTE Distrito (7)	AM	124.7	2015
UTE São José	AM	73.4	2016
UTE Flores	AM	124.4	2016
UTE Roberto Silveira	RJ	30.0	2027
UHE Batalha	MG / GO	52.5	2041
UHE Retiro Baixo	MG	82.0	2041
Três Irmãos	Tietê	807.5	2044
Serra do Facão	GO	212.6	2036
Santo Antonio (Mesa)	RO	3,567.50	2043
Teles Pires	PA / MT	1,819.8	2046
Rei dos Ventos 1	RN	58.5	2045
Famosa 1	RN	22.5	2047
Pau Brasil	CE	15.0	2047
Rosada	RN	30.0	2048
São Paulo	CE	17.5	2047
Bom Jesus	CE	18.0	2049
Cachoeira	CE	12.0	2049
Pitimbu	CE	18.0	2049
Jandaia	CE	28.8	2047
Jandaia 1	CE	19.2	2047
São Caetano	CE	25.2	2049
São Caetano 1	CE	18.0	2049
São Clemente	CE	19.2	2047
São Galvão	CE	22.0	2049
Carnaúba I	RN	22.0	2049
Carnaúba II	RN	18.0	2049
Carnaúba III	RN	16.0	2049
Carnaúba V	RN	24.0	2049
Cervantes I	RN	16.0	2049
Cervantes II	RN	12.0	2049
Punaú I	RN	24.0	2049
Arara Azul	RN	27.5	2049
Bentevi	RN	15.0	2049
Ouro Verde I	RN	27.5	2049
Ouro Verde II	RN	30.0	2049
Ouro Verde III	RN	25.0	2049

F-20

Concessions under Exploration System – GENERATION

Concessions/Permits	Location	Installed Capacity	Expiration Year
Santa Rosa	CE	20.0	2049
Uirapuru	CE	28.0	2049
Ventos de Angelim	CE	24.0	2049
Serra do Mel I	RN	28.0	2049
Serra do Mel II	RN	28.0	2049
Serra do Mel III	RN	28.0	2049
Itaguaçu da Bahia	BA	28.0	2049
Ventos de Santa Luiza	BA	28.0	2049
Ventos de Santa Madalena	BA	28.0	2049
Ventos de Santa Marcella	BA	28.0	2049
Ventos de Santa Vera	BA	28.0	2049
Ventos de Santo Antônio	BA	28.0	2049
Ventos de São Bento	BA	28.0	2049
Ventos de São Cirilo	BA	28.0	2049
Ventos de São João	BA	28.0	2049
Ventos de São Rafael	BA	28.0	2049
São Januário	CE	19.2	2047
Nsa Sra de Fátima	CE	28.8	2047
UHE Jirau	RO	3,750.0	2043
UHE Sinop	MT	406.0	2045
UHE São Manoel	PA	700.0	2049
Brasventos Eolo	RN	58.5	2045

 1) In September 2013, the entity initiated its operation, and currently it is operation with 20 generating units, with 75 MW, for a total of 50 generating units.

 2) Concession contract no. 67.

(3) In licensing phase of Installation, initiation of operation 22 months after issuance of Installation License.

(4) Initiation of construction and indefinite operation in relation to negative opinion of National Institute of Historic and Artistic Heritage.

(5) Non-operating plants with expired concession agreements, pending ANEEL authorization to dissolve the contract.

(6) Plant not yet extended.

(7) Plant currently deactivated.

F-21

III – Concessions under O&M System without renewal

Generation Companies under special Management pursuant to Law No. 12,783/2013 without renewal Concessions under O&M System
Concessions/Permits	Installed Capacity (MW) (*)	Expiration Year	Expiration Year
Dona Rita	2,41	06.2013	(1)
Sinceridade	1,42	04.2013	(1)
Neblina	6,47	04.2013	(1)
Ervália	6,97	07.2015	(1)
Coronel Domiciano	5,04	07.2015	(1)

(1) These plants have been returned to the concession grantor under the responsibility of Furnas until the conclusion of the new tender for concession of PCHs.

(*) Unaudited

The concession contract No. 067/2000, of UTEs Presidente Médici (Phases A and B), São Jerônimo and Nutepa owned by subsidiary CGTEE ended on July 7, 2015.

As set forth in the concession contract and in the applicable legislation, the subsidiary CGTEE formalized, in the proper time, the interest to renew the concession of the plants.

To date, the concession grantor has no final position on the subsidiary and, therefore, until the end of the process, the subsidiary CGTEE will keep on exploring these units under the same terms as the current concession. The Concession Grantor has not provided an estimate term to conclude this process.

The legislation does not include indication on the terms applicable to the renewal of those concessions, and it is not possible to define the impacts affecting income or assets held by the subsidiary CGTEE. Nevertheless, CGTEE measured the possible amount of compensation, according to the New Replacement Value (VNR) and maintains a provision that reduces to zero the accounting balance of the assets of UTEs São Jerônimo, Nutepa and Presidente Médici (Phase A), reflecting the expectation of no-compensation of these assets due to them being outdated.

The decision on the renewal of the concession shall be subject to analysis by the Subsidiary CGTEE, following presentation of the position by the Concession Grantor.

F-22

IV. Electric Power Transmission

Project	State	Period (years)	Expiration
- LT Teresina II – Sobral – Fortaleza, in 500 kv	PI/CE	30	2034
- LT Colinas – Miracema – Gurupi – Peixe Nova – Serra da Mesa II, in 500kv	TO/GO	30	2036
- LT Coletora Porto Velho / Araraquara II, in 600kv	RO/SP	30	2039
- LT São Luiz II – São Luiz III, in 239 kv	MA/CE	30	2040
- LT Ceará-Mirim II – João Câmara III, in 500kv / LT Ceará-Mirim II – Campina Grande III, in 500kv/ LT Ceará-Mirim II – Extremoz II, in 230kv / LT Campina Grande III – Campina Grande II, in 230kv.	RN/PB	30	2041
- LT Luiz Gonzaga – Garanhuns, in 500kv / LT Garanhuns – Campina Grande III, in 500kv / LT Garanhuns – Pau Ferro, in 500kv / LT Garanhuns – Angelim I, in 230kv.	AL/PE/PB	30	2041
- Transmission Line Camaçari IV/Pirajá (BA), in 230 kV, in simple circuit with an approximate extension of 45 km and Transmission Line Pituaçu/Pirajá (BA), in 230 kV, in simple circuit with an approximate extension of 5 km.	BA	30	2042
- Transmission Line Eunápolis/Teixeira de Freitas II, circuit 1 (BA), in 230 kV, with an approximate extension of 145 km and Substation Teixeira de Freitas II, in 230/138 kV (BA).	BA	30	2038
- Transmission Line Russas/Banabuiu C2 (CE), in 230 kV, in simple circuit with an approximate extension of 110 km; Transmission Line Touros/Ceará MirimII (RN), in 230 kV, in simple circuit with an approximate extension of 56,17 km; Transmission Line Mossoró IV/Mossoró II (RN), in 230 kV, in simple circuit with an approximate extension of 40 km; Substation Touros, in 230 kV (RN); and Substation Mossoró IV, in 230 kV (RN).	CE / RN	30	2042
- Transmission Lines Paraíso/Açu II (RN), in 230 kV, circuit 3, with an approximate extension of 123 km, Açu/Mossoró II (RN), in 230 kV, circuit 2, with an approximate extension of 69 km and João Câmara/Extremoz II (RN), in 230 kV, C1, with an approximate extension of 82 km, Substation João Câmara, in 230 kV (RN) and Substation Extremoz II, in 230 kV (RN).	RN	30	2040
- Transmission Line Paraíso/Lagoa Nova (RN), in 230 kV, in simple circuit with an approximate extension of 65 km, and Substation Lagoa Nova, in 230/69 kV (RN).	RN	30	2041
- Transmission Line Teresina II/Teresina III (PI), in 230 kV, in double circuit, with an approximate extension of 26 km, and Substation Teresina III, in 230/69 kV (PI).	PI	30	2041
- Transmission Line Camaçari IV/Sapeaçu (BA), in 500 kV, in simple circuit with an approximate extension of 105 km.	BA	30	2041
- Transmission Line Igaporã III/Pindaí II (BA), in 230 kV, in simple circuit with an approximate extension of 46 km; Transmission Line Igaporã III/Igaporã II C1 and C2 (BA), in 230 kV, in simple circuit with an approximate extension of 2 km each; Substation Igaporã III, in 500/230 kV – (6+1) x 250 MVA (BA).	BA	30	2042
- Transmission Line Jardim/Nossa Senhora do socorro (SE), in 230 kV, in double circuit, with an approximate extension of 1,3 km; Transmission Line Messias/Maceió II (AL), in 230 kV, in double circuit, with an approximate extension of 20 km; Substation Nossa Senhora do Socorro, in 230/69 kV (SE) – 300MVA; Substation Maceió II, in 230/69 kV (AL) – 400MVA.; Substation Poções II, in 230/138 kV (BA) – 200MVA.	SE / AL / BA	30	2042
- Transmission Line Morro do Chapéu/Irecê (BA), in 230 kV, in simple circuit with an approximate extension of 65 km, and Substation Morro do Chapéu, in 230/69 kV (BA).	BA	30	2041
- Transmission Line Paraíso/Açu II (RN), in 230 kV, with extension of 132.8 km.	RN	30	2037
- Transmission Line Recife II/Suape II (PE), in 500 kV, in simple circuit with an approximate extension of 44 km.	PE	30	2041
- Transmission Line Sapeaçu/Santo Antônio de Jesus (BA), in 230 kV, in simple circuit with an approximate extension of 31 km.	BA	30	2041
- Transmission Lines Sobral III/Acaraú II (CE), in 230 kV, C2, with an approximate extension of 97 km, and Substation Acaraú II, in 230 kV (CE).	CE	30	2040
- Substation Arapiraca III, in 230/69 kV (AL), and Transmission Line, in double circuit, Rio Largo II/Penedo, in 230 kV, with an approximate extension of 44 km.	AL	30	2040

F-23

Project	State	Period (years)	Expiration
- Transmission Line Eunápolis/Teixeira de Freitas II, circuit 2 (BA), in 230 kV, with an approximate extension of 152 km.	BA	30	2039
- Transmission Line Funil/Itapebi (BA), in 230 kV, with an approximate extension of 223 km.	BA	30	2037
- Transmission Line Ibicoara/Brumado (BA), in 230 kV, with an approximate extension of 94.5 km.	BA	30	2037
- Transmission Lines Igaporã/Bom Jesus da Lapa II (BA), in 230 kV, C1, with an approximate extension of 115 km, and Substation Igaporã, in 230 kV (BA).	BA	30	2040
- Transmission Lines Pau Ferro/Santa Rita II (PE/PB), in 230kV, with an approximate extension of 85 km .	PE / PB	30	2039
- Substation Camaçari IV in 500 kV(BA)	BA	30	2040
- Substation Ibiapina, in 230/69 kV (CE).	CE	30	2041
- Substation Mirueira II, in 230/69 kV (PE) – 300MVA and Substation Jaboatão II, in 230/69 kV (PE) – 300MVA.	PE	30	2042
- Substation Suape II in 500 kV(PE)	PE	30	2039
- Transmission Line Jardim/Penedo (SE/AL), in 230 kV, with an approximate extension of 110 km.	SE / AL	30	2038
- Transmission Line Milagres/Coremas (CE/PB), in 230 kV, with extension of 119.8 km.	CE / PB	30	2035
- Transmission Line Picos/Tauá (PI/CE), in 230 kV, with an approximate extension of 183 km.	PI / CE	30	2037
- Transmission Line Pirapama/Suape III, with extension of 41.8 km; and Substation Suape III, in 230/69 kv (PE)	PE	30	2039
- Transmission Lines and Paulo Afonso III/Zebu (AL), in 230kV, with extension of 10.8 km	BA / AL	30	2039
- Substation Ibicoara in 500/230 kV(PE)	BA	30	2037
- Substation Pólo, in 230/69 kV (BA).	BA	30	2040
Expansion of Interconnection South-Southeast	PR/ SP	30	2031
LT 230 kV – SE Ribeiro Goncalves / SE Balsas	PI / MA	30	2039
LT 230 kV – SE São Luis II / SE São Luis III	MA	30	2038
34 tranmission substations, 1 frequency converter and 9,838.33 Km of transmission lines in 525 kv, 230kv and 138 kv.	—	30	2042
Substation Missões in 230/69 kv	—	30	2039
SE Ivinhema 2 230/138 kV with 2x150 MVA expansion)	—	30	2044
LT 230 kV Collection Porto Velho/Porto Velho “C” 1 – 22km	RO	30	2039
LT 230 kV Collection Porto Velho/Porto Velho “C” 2 – 22km	RO	30	2039
LT 230 kV Monte Claro/Garibaldi 33,5km	RS	30	2040
LT 230 kV Presidente Médice/Santa Cruz 1 – 237.4km	RS	30	2038
LT 500 kv – LT Jorge Teixeira/ LT Lechuga, double circuit	AM	30	2040
LT 500 kV – LT Presidente Dutra-São Luis II / SE Miranda II	MA	30	2039
LT 525 kV Campos Novos/Blumenau 357.8km and Substation Biguaçu 525 Kv	SC	30	2035
LT 525 kV Campos Novos/Nova Rita 257.43 km and Módulos na SE Nova Santa Rita and SE Campos Novos	SC,RS	30	2036
LT 525 kV Ivaiporã/Cascavel D’oeste 203.4km	PR	30	2034
LT 525 kV Salto Santiago/Ivaiporã 168.[5km	PR	30	2034
LT Bom Despacho 3 – Ouro Preto 2 – 500 kV	MG	30	2039
LT collection 500/230 Kv Porto Velho/Porto Velho and two converters CA/CC/CA back to back in 400 MW	RO	30	2039
LT Macaé – Campos C3	RJ	30	2035
LT Mascarenhas – Linhares 230 kV – CS SE Linhares – 230/138 kV	ES	30	2040
LT Tijuco Preto – Itapeti – Nordeste 345 kV	SP	30	2036
LT 345 kV Furnas – Pimenta 2, 62.7kv	MG	30	2035
LT 500 kV Rio Verde Norte – Trindade (193 km) / LT 230 kV Trindade – Xavantes (37 km) / LT 230 kV Trindade – Carajás (29 km)	GO	30	2040
LT Collection Porto Velho – Araraquara 2 (2.375 km) / Rectifier Station No. 2 CA/CC, in 500/±600 kV – 3,150 MW – Inverter	RO	30	2039
Station No. 02 CC/CA, in ±600/500 kV – 2.950 MW
LT 230 kV Serra da Mesa – Niquelândia 100 km	GO	30	2039
LT 230 kV Niquelândia – Barro Alto 88 km
LT 230 kV CS Barra dos Coqueiros – Quirinópolis 52 km
LT 230 kV CD Chapadão – Jataí 256 km
LT 230 kV CS Palmeiras – Edéia 60 km
LT 138 kV CS Jataí – Mineiros 65 km
LT 138 kV CS Mineiros – Morro Vermelho 60 km
LT 138 kV CS Jataí – UTE Jataí 51 km	—	30	2039
LT 138 kV CS Jataí – UTE Perolândia
LT 138 kV CS Mineiros – UTE Água Emendada
LT 138 kV CS Morro Vermelho – Alto Taquari 31 km
LT 138 kV CS Edéia – UTE Tropical Bioenergia I 49 km

F-24

Project	State	Period (years)	Expiration
2 LT 500 kV in section of LT Campinas – Ibiúna and SE Itatiba 500/138 kV	SP	30	2039
LT 230 kV Irapé – Araçuaí 2	MG	30	2035
LT 345 kV Itutinga – Juiz de Fora	MG	30	2035
Consórcio Caldas Novas – Expansion of Substation of Usina de Corumbá 345/138 kV (150 MVA) owned by Furnas	—	30	2041
SE Niquelândia 230/69 kV	—	30	2042
LT 500 kV Barreiras II – Rio das Éguas
LT 500 kV Rio das Éguas – Luziânia	—	30	2043
LT 500 kV Luziânia – Pirapora (967 km)
LT 500 kV Marimbondo II – Assis, CS (296,5 km)	—	30	2043
LT 500 kV Brasília Leste – Luziânia – C1 and C2
LT 230 kV Brasília Geral – Brasília Sul – C3	—	30	2043
LT 345 kV Brasília Sul – Samambaia – C3 (94,5 km)
LT 500 kV Itatiba – Bateias
LT 500 kV Araraquara 2 – Itatiba	—	30	2044
LT 500 kV Araraquara 2 – Fernão days (847 km)
LT 230 kV Barro Alto – Itapaci, C2 (69 km)	—	30	2044
LT-CC ±800 kV (2.092 km) – Xingu Converter Station ±800 kV 4.000 MW and Estreito Converter Station ±800 kV 3.850 MW.	—	30	2044
LT Xavantes – Pirineus, CS, in 230 Kv	GO	30	2041
SE – Caxias 6 (330 MVA) 230/69 Kv	RS	30	2040
SE – Foz do Chapecó (100 MVA) 230/138 Kv	SC	30	2041
SE – Ijuí 2 230/69Kv	RS	30	2040
SE – Lageado Grande (83 MVA) 230/69 Kv (enlargement)	RS	30	2040
SE – Nova Petrópolis 2 (166 MVA) 230/69 Kv	RS	30	2040
SE Zona Oeste (Transformador 500/138 kV)	RJ	30	2042
Substation Natal III, in 230/69kV (RN) Transmission Line Natal II/Natal III, com 23 km	RN	30	2039
Substation Santa Rita II, in 230/69kV (PB)	PB	30	2039
Substation Zebu, in 230/69kV (AL)	AL	30	2039
LT 230Kv Campos Novos – Santa Marta	SC/RS	30	2032
LT 525kv Ivaiporã – Cascavel	PR	30	2035
LT Coletora Porto Velho (RO) – Araraquara 2 (SP), ±600 kV com 2.375 Km	RO/SP	30	2039
LT 230kv Cascavel Oeste – Umuarama	PR	30	2042
LT 525kv Curitiba – Curitiba Leste	PR	30	2042
LT 230 kv Santo Ângelo-Maçambará; LT Pinhalzinho-Foz do Chapecó, simple circuit ,C1; LT Pinhailzinho-Foz do Chapecó, simple circuit, C2.	—	30	2044
Construction of LT Collection Porto Velho – Araraguara 2, assembly and associated services.	RO/SP	—	—
LT 230 kv Nova Santa Rita – Camaquã 3; LT 230Kv Camaquã 3 – Quinta; LT 525kv Salto Santiago – Itá; LT 525kv Itá – Nova Santa Rita.	RS	30	2042
LT 525 kv Nova Santa Rita – Povo Novo; LT 525Kv Povo Novo – Marmeleiro; LT 525kv Marmeleiro – Santa Vitória do Plamar;	RS	30	2042
Section of LT 230 kv Camaquã 3.
Basic Transmission Grid	Various	30	2042
SE Nobres 230/138 kV	MG	30	2041
SE Miramar 230/69 kV	Amazonas and	30	2041
	Roraima
SE Lucas do Rio Verde 230/ 138 kV	Mato Grosso	30	2031
LT Lechuga – Jorge Teixeira, C3, 230 kV, 3x150 MVA	Amazonas	30	2043
Rectifying Station No. 01 CA/CC, 800/+- 600kV – 310Mw and Inverter Station No. 01 CC/CA +- 600/500kV – 2950MW	RO/SP	30	2039
Transmission Line Porto Velho – Abunã (RO), Rio Branco (AC), com 487 Km de extensão and 230 kV	Various	30	2039
LT 230 kV Rio Branco I – Feijó; LT 230 kV Feijó – Cruzeiro do Sul; SE 230/69 kV Feijó – (3+1R) x 10 MVA; SE 230/69 kV Cruzeiro do Sul – (6+1R) x 10 MVA	AC	30	2034
LT Coxipó-Cuiabá- Rondonópolis (MT), in 230 kV with 193 Km and SE Seccionadora Cuiabá	MT	30	2034
LT Jauru-Juba (MT) and Maggi – Nova Mutum (MT), ambas in 230 kV and with 402 km, SE Juba and SE Maggi – 230/138 kV	MT	30	2038
LT Colinas-Miracema-Gurupi-Peixe Nova Serra da Mesa 2 (TO/GO), in 500 kV with 695 Km SE Serra da mesa 2 and SE Peixe 2	TO/GO	30	2036
LT Jaurú – Cuiabá (MT), com 500 kv and com 348 Km and SE Jaurú, with 500/230 kV	MT	30	2039
LT Oriximiná/Cariri, in 500 kV, with 586 Km, SE Silves 500/138kv and SE Lechuga 500/230 kv	PA/AM	30	2038
LT Coletora Porto Velho (RO) – Araraquara 2 (SP), ±600 kV with 2,375 Km	RO/SP	30	2039
LT Porto Velho – Samuel – Ariquemes – Ji-Paraná – Pimenta Bueno – Vilhena (RO), Jaurú (MT), with 987 Km, 230 kV	RO/MT	30	2039
LT Xingu – Estreito – Pará (PA) to Minas Gerais (MG), in 800 kV with 2,093 km.	PA/MG	30	2044
LT Lechuga (AM) – Equador – Boa Vista (RR), with 500 kV and with 715 km, and SE Equador 500kv, SE Boa Vista 500/230 kv	AM/RR	30	2032

F-25

• Energy Distribution

Concessions under Exploration System – DISTRIBUTION
Concessions/ Permits	Geographic Region	Cities served(*)		Expiration of Concession
Cia. de Eletricidade do Acre – Eletroacre	State of Acre		22	2015
Centrais Elétricas de Rondônia – Ceron	State of Rondônia		52	2015
Companhia Energétca de Alagoas – Ceal	State of Alagoas		102	2015
Companhia Energética do Piauí – Cepisa	State of Piauí		224	2015
Amazonas Energia	State of Amazonas		62	2015
Boa Vista Energia	State of Roraima		1	2015
CELG Distribuição S.A.¹	State of Goiás		237	2045

* Not audited by independent auditors

(1) Concession extended under the terms of the fifth amendment to the concession contract No. 63/2000 – ANEEL, executed on December 29, 2015.

2.1. Extensions of public electric power concessions

The following amounts of indemnities related to certain assets of concessions extended remained, until December 31, 2015, without approval by the concession grantor:

	12/31/2015
Description	Chesf		Eletronorte		Eletrosul		Furnas		CGTEE		Total
Generation
Modernizations and improvements		697,124		—		—		995,718		—		1,692,842
Thermal generation		—		—		—		557,409		356,937		914,346
Transmission
Basic grid – existing services (RBSE)		1,588,752		1,732,910		513,455		4,530,060		—		8,365,177
Total		2,285,876		1,732,910		513,455		6,083,187		356,937		10,972,365
	12/31/2014
Description	Chesf		Eletronorte		Eletrosul		Furnas		CGTEE		Total
Generation
Modernizations and improvements		487,822		—		—		995,718		—		1,483,540
Thermal generation		—		186,355		—		673,030		356,937		1,216,322
Transmission
Modernizations and improvements (RBNI)		289,676		—		—		552,138		—		841,814
Basic grid – existing services (RBSE)		1,187,029		1,732,910		513,455		3,977,922		—		7,411,316
Total		1,964,527		1,919,265		513,455		6,198,808		356,937		10,952,992

Until the concession grantor approves these compensation amounts, including definition on means, term to receive, and applicable compensation, these amounts will not be monetarily corrected, but kept at the historical cost.

F-26

Through Normative Resolutions 589 and 596, the National Electric Energy Agency – ANEEL, for purposes of indemnification, defined the criteria for calculating the New Replacement Value (Valor Novo de Reposição or VNR) for the existing transmission assets on May 31, 2000, which still has not been depreciated (Rede Básica do Sistema Existente – RBSE), and the criteria and procedures for calculating the share of investments linked to reversible assets, not yet amortized or depreciated, of hydroelectric plants, whose concessions were extended or not, pursuant to Law No. 12,783.

F-27

The subsidiary Eletrosul, according to ANEEL Normative Resolution number 589, of 12/10/2013, presented to ANEEL, its evaluation reports of electric power transmission assets existing on May 31, 2000 (“Evaluation Report”), for the purposes of indemnification of the so-called Existing Basic Grid System (Rede Básica do Sistema Existente or RBSE) provided for in article 15, §2 of Law No. 12,783/13, in the amounts of R$ 1,061,000. On July 14, 2015, ANEEL, by means of order No. 2,296, approved upon deliberation by the Executive Board, the value of R$ 1,007,043 related to these assets, while the book value is R$ 513,455.

On September 3, 2015, the subsidiary Eletronorte resubmitted to ANEEL the report of valuation of electricity transmission assets existing on May 31, 2000, for purposes of compensation of facilities named Basic Network Existing System – RBSE provided for under the terms in Article 15, §2 in Law No. 12,783/13, and the new claimed valued is R$ 2,926 million, while the value currently accounted for is R$ 1,733 million.

On March 6, 2015, the subsidiary Chesf submitted to ANEEL the report of valuation of electricity transmission assets existing on May 31, 2000, for purposes of compensation of facilities named RBSE and other transmission facilities – RPC, provided for under the terms in Article 15, §2 in Law 12,783/2013, in the amount of R$ 5,627,200, while the book value is R$ 1,588,752.

On May 21, 2015, the subsidiary Furnas submitted to ANEEL the report of valuation of electricity transmission assets existing on May 31, 2000, for purposes of compensation of facilities named RBSE and other transmission facilities – RPC, provided for under the terms in Article 15, §2 in Law 12,783/2013, in the amount of R$ 10,699,000. On December 15, 2015, ANEEL by means of order No. 4,042, approved upon deliberation by the Board, the amount of R$ 8,999,520 related to these assets, while the book value is R$ 4,530,060.

On October 2, 2015, the subsidiary Furnas submitted documents supporting investments linked to reversible assets, not amortized or depreciated, of hydro-electric plants Corumbá, Funil, Furnas, Luiz Carlos de Barreto de Carvalho, Maribondo, and Porto Colômbia, with total installed power of 4,617 MW*, which concessions had been renewed under the terms in Law No. 12,783/2013, for purposes of the process to request additional generation compensation. The documents submitted indicate the value of R$ 1,311,900 as base value for the additional compensation, while the residual accounting value of those assets, on the same date, was R$ 995,718.

The surplus between the amounts claimed in the mentioned assessment reports on transmission assets including the applicable remuneration (compensation due to time value of the money to be received), and the book values, has not been recognized in the consolidated financial statements, because these values are subject to approval by ANEEL, and, at December 31, 2015 there is no definition regarding means, term to receive, and applicable remuneration.

F-28

Please see note 48.4 for important subsequent events relating to the amounts relating to the “Transmission” indemnitization.

On April 20, 2016, the Ministry of Mines and Energy – MME has published the Ordinance No. 120, which regulated the earning conditions of remuneration relative to the transmission assets of electric energy existent on May 31, 2000, denominated facilities of Existent System Basic Network (Rede Básica do Sistema Existente or RBSE) and other facilities of Transmission – RPC, not yet depreciated nor amortized, as established in article 15, §2, of Law 12,783/2013. (See Note 48.4)

2.2. Extension of the distribution concessions

On October 15, 2012, the Eletrobras’ distributors whose concessions expired in 2015, had the right to express interest in an extension of the concession for a further period of 30 years, which they did within the time limit set.

Decree No. 8,461, dated June 2, 2015, regulating the extension of concessions for electricity distribution and authorizing the Ministry of Mines and Energy (“MME”) to extend concessions for electricity distribution under the terms in article 7, in Law No. 12,783, dated January 11, 2013, for thirty (30) years, set forth that the following criteria should be complied with:

I. Effective service quality, to be determined by means of indicators Equivalent Duration of Interruption with Internal Origin by Consuming Unit (“DECi”) and Equivalent Frequency of Interruption with Internal Origin by Consuming Unit (“FECi”);

II. Financial and economic effectiveness, to be determined by means of EBITDA and level of debt, which means the concessionaire ability to comply with its financial and economic obligations in a sustainable manner;

III. Operational and economic rationality; and

IV. Fee model.

These criteria should be complied with using metrics for continuous improvement established by the Concession Grantor, to be detailed in the amendments to the Concession Contracts, to be executed by the distributors. On November 5, 2015, MME by means of Order No. 3/2015-SE-MME, informed that the draft of the Amendment to the Concession Contract of Public Services of Electricity Distribution, approved by ANEEL by means of Order No. 3,540, dated October 20, 2015, should be submitted to decision-making bodies of each Distributor, with annual limits set forth to meet the criteria in items I (Effective service quality) and II (Economic and financial effectiveness) in article 1 in Decree No. 8,461/2015, under the terms in Exhibit II to Technical Note No. 0335/2015-SCT-SFE-SFF-SRDSRM.

F-29

Under the terms in the Amendment, failure to comply with these goals referred to in items I and II above, for five (5) years, starting on January 1, 2016, for two (2) consecutive years, or failure to comply with any of these goals by the end of the five-year term, shall cause termination of the concession.

Equally, starting in the sixth (6^th) year, the failure to comply with these goals shall characterize default and shall imply the opening of the termination process, according to the following: (i) Criterion I – Effective service quality: if there is non-compliance for three consecutive years; or (ii) Criterion II – Economic and financial effectiveness: if there is non-compliance for two consecutive years. However, in this case, the concessionaire may submit a plan to transfer the shareholding control as alternative to the termination, including the feasibility to alter the control and the benefit of this measure to adjust services provided.

The decree also establishes that concessions that are not extended or that have been subject to termination shall be subject to bids according to guidelines of the Ministry of Mines and Energy (MME). The compensation to be paid to a former concessionaire for investments on reversible assets that are not depreciated and not amortized should be calculated according to the new value of replacement -VNR and should consider the go-live of the facilities.

At the 164^th General Meeting of Eletrobras, held on December 28, 2015, upon request, by the representative of the Federal Government, the matters related to the extension of concession contracts of subsidiaries was removed from the agenda of matters related to the extension of concession contracts of subsidiaries – Cepisa, Ceal, Eletroacre, Ceron, Boa Vista and Amazonas D., due to the fact that these distribution companies requested, on December 28, 2015, extension of the term to execute the respective amendment, under the terms in Provisional Measure No. 706, to be deliberated at the Extraordinary Meeting of Eletrobras to be called.

Provisional Measure No. 706, dated December 28, 2015, amended the text of the paragraph two of article 11 in Law No. 12,783/2012, setting forth that the concessionaire should execute the amendment within 210 days, from the calling by the Concession Grantor.

The distribution concessions for these companies part of the Eletrobras group had contracts terminated in July 2015, however, in light of the terms in Law No. 8,987, dated February 13, 1995, article 42 “concessions shall remain in force for the period needed to prepare evaluations and calculations required to organize bidding processes that will grant the replacing concessions, which term shall not be less than 24 months.” (See Note 19).

On July 25, 2016, the 165th Extraordinary Shareholders Meeting resolved the non-extension and return at any time of the concessions and transfer of control of the controlled companies until December 31, 2017 of the distributors of energy of Eletrobras, as Provisional Measure 735, as of June 22, 2016.

In the 165th Extraordinary Shareholders Meeting was approved the transfer of control of the controlled companies, until December 31, 2017, of the distributors of energy of Eletrobras, under Law 12.783 / 2013, with the new wording given by Provisional Measure 735 of 22 June 2016, provided that, before the transfer of the distributor for the new controller, the distributor receives directly, by federal government or through rate, all the resources and remuneration necessary to operate, maintain and make investments that are related to public services respective distributor, maintaining the economic and financial balance of the distributor without any injection of funds, in any way, by Eletrobras and also was approved to be returned at any time, the granting of the sales and to be adopted the provisions of its settlement, in the following cases:

F-30

I. The transfer of control of the controlled companies is not performed until December 31, 2017; or

II. The respective distributor, stop receiving directly from the federal government or through rate, until his transfer to the new controller, all the resources and remuneration necessary to operate, maintain and make investments that are related to public services of the respective distributor, for maintenance the economic and financial balance of the distributor without any injection of funds, in any way, by Eletrobras.

The Company also decided that the distributors subsidiaries that did not have their extended concessions will, if have the consent of the Grantor, remain responsible for the operation and maintenance of public distribution services of their locations to transfer their equity controls under Provisional Measure 735/2016, which should occur by December 31, 2017.

During this period, as mentioned above, the distribution companies should receive adequate remuneration for the provision of distribution services, without any injection of funds by holding Eletrobrás, as approved by the 165th Extraordinary Shareholders Meeting.

Based on the decisions of the 165th Extraordinary Shareholders Meeting, the Company considered the IFRS 5 – Non-Current Assets Held for Sale, and estimated that at this moment these assets do not meet the criteria for classification as held for sale.

The Company will remeasure its intangible assets based on decisions of the 165th Extraordinary Shareholders Meeting and in accordance with Law 12,783 / 2013. (See Note 48.27).

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are defined below. These policies have been applied consistently in all of the periods presented, unless otherwise stated.

3.1. Basis of preparation

The preparation of consolidated financial statements requires the use of certain critical accounting estimates and, also, the exercise of judgment on the part of the directors of the Company, in the process of applying the accounting policies of the Eletrobras System. Those transactions, disclosures or balances that require a higher level of judgment, which have greater complexity and for which assumptions and estimates are significant, are disclosed in Note 4.

The consolidated financial statements have been prepared on the basis of historical cost, except for the following items: i) financial instruments that are measured by their fair value, such as investments; ii) financial instruments

F-31

that are measured by the fair value at result, such as securities and derivatives; iii) and some assets linked to concessions that were measured by the new replacement value – VNR (generating and transmission companies) or by Regulatory Remuneration Base – BRR (distributors) (see note 44). The historical cost is usually based on the fair value of considerations on the date of the transactions.

These consolidated financial statements are presented in Reais, which is the functional currency of the Company and its subsidiaries, associated companies and jointly-controlled companies. All financial information presented in Reais were rounded to thousands, except when otherwise indicated.

(a) Consolidated financial statements

The Company’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (IASB).

These consolidated financial statements are not equivalent to the statutory financial statement of the Company as issued under the requirements of the Brazilian jurisdiction. Also, because the date of authorization for issue of these consolidated financial statements is different from the date when the consolidated financial statements were issued in Brazil, there are differences due to adjusting events after the reporting period, under IAS 10 – Events after the Reporting Period

For certain statutory purposes, such as providing reports to our shareholders located in Brazil and determining dividend payments and other profit distributions and tax liabilities in Brazil, we have prepared and will continue to be required to prepare parent company and consolidated statutory financial statements in accordance accounting practices adopted in Brazil and with IFRS, filed in the Brazilian Exchange Commission (Comissão de Valores Mobiliários – CVM) and prepared, approved and filed in the CVM until three months after the year end to comply with the Brazilian Corporate Law.

F-32

(b) Changes in accounting policies and disclosures

(b.1) Changes to IFRs and new interpretations with mandatory application starting in this fiscal year without significant effects on the consolidated financial statements

In this fiscal year, the Company has applied the applicable amendments and new interpretations of IFRSs issued by IASB that come into effect for accounting periods starting on January 1, 2015. These amendments and annual improvements had no relevant effects on the consolidated financial statements.

(b. 2) New and revised standards and interpretations already issued and not yet adopted

The International Accounting Standards Board – IASB published or changed the following principal accounting pronouncements, guidelines or interpretations, whose adoption should be made mandatory in subsequent periods:

Applicable on or from January 1, 2016:

Revision IAS 16 and IAS 38 – the amendment aims to include information about the concept of future expectation of reduction in selling price and to clarify the method of depreciation based on income generated by an activity.

Changes to IAS 16 prohibit companies from using the depreciation method based on revenue for fixed assets. Changes to IAS 38 introduce the refutable premise that the revenue is not an appropriate basis to determine amortization of an intangible asset.

Currently, Eletrobras does not use the depreciation method based on revenue generated by an activity. The Management of the Company believes that application of these changes to IAS 16 will have no material impact on the consolidated financial statements of Eletrobras.

IFRS 11 – the amendment requires that the purchaser of a participation in a joint operation constitute a business, as defined in IFRS 3, applying the principles of IFRS 3, except for those that conflict with IFRS 11. A joint business also requires disclosure of relevant information required under IFRS 3 and other business combination rules.

F-33

Changes must be applied prospectively to acquisitions of equity in joint operations (where joint operations are business, as defined under the terms in IFRS 3) starting in annual periods starting on or after January 1, 2016. The Management of the Company believes that application of these changes to IFRS 11 may have impact on the consolidated financial statements in the future, should there be such transactions.

IFRS 10 and IAS 28 Revision – clarifies that in a transaction between an investor and associate or joint venture, the recognition of gain or loss depends on whether the goods sold or contributed constitute a business. The Management of the Company believes that application of these changes to IFRS 10 and IAS 28 may have impact on the consolidated financial statements in the future, should there be such transactions.

IAS 1 Revision – Clarifications concerning the judgment process of disclosures in the Financial Statements. Changes to IAS 1 offer guidelines regarding application of the concept of materiality in practical terms.

The Management of the Company believes that application of these changes to IAS 1 will have no material impact on the consolidated financial statements of Eletrobras.

Amendments to IFRSs – Annual Improvements Cycles 2012-2014

Annual Improvements to IFRs 2012-2014 Cycle include several changes to a series of IFRs, that are summarized below:

Changes to IFRS 5 introduce specific guidelines to IFRS 5 regarding when an entity reclassifies an asset (or set of disposal) from “held for sale” to “held for distribution to stakeholders” (or vice-versa). Changes clarify that these change must be considered as a continuity of the original plan of sale and, therefore, requirements set forth in IFRS 5 regarding the change to the sales plan are not applicable. Changes clarify also the guidelines related to discontinuity of accounting “held for distribution.”

Changes to IFRS 7 provided additional guidelines to clarify if a service contract is a continuous engagement in an asset transferred for purposes of disclosures required related to transferred assets.

Changes to IAS 19 clarify that the rate used to discount post-retirement benefits obligations must be determined based on market return by the end of the reporting period regarding high-quality corporate bonds. The evaluation of the market size for high-quality corporate bonds should be at the currency level (that is, the same currency used to pay the benefits). For currencies that do not have high liquidity market for such high-quality corporate bonds, the basis should be market return on governmental bonds denominated in that currency by the end of the reporting period.

F-34

The Management of the Company does not believe that application of these changes should have a relevant effect on the consolidated financial statement of Eletrobras.

Applicable on or from January 1, 2018

IFRS 15 – Revenue Recognition (new pronouncement) – specifies how and when recognition of revenue from contracts with clients will be done as well as requires that the entity provide users of financial statements more informative and relevant information.

IFRS 9 – Financial Instruments – its objective is to replace IAS 39 – Financial Instruments – Recognition and Measurement, and to establish principles for disclosure of financial assets and liabilities, as well as to add a new model for impairment and changes limited to classification and measurement requirements while introducing an evaluation criterion of “fair value recognized in other comprehensive income” for some simple debt instruments.

The Company is proceeding with its analysis of the impacts of these new pronouncements in its consolidated statements.

Applicable on or from January 1, 2019:

IFRS 16 – Leasing (new pronouncement) – the purpose is to introduce requirements for recognition, measurement, presentation, and disclosure of leasing. The pronouncement offers a unique accounting model for leases, requiring that the lessee recognizes assets and liabilities for all lease agreements, unless when the contract term is less than 12 months or the value of the asset object of the lease is low. For lessors, there are no substantial changes, and they should continue to classify lease agreements as operating or financial, as defined in IAS 17.

The Company is proceeding with its analysis of the impacts of these new pronouncements or changes in its consolidated statements.

F-35

3.2. Basis of consolidation and investments in subsidiaries

The following accounting policies are applied in the preparation of the consolidated financial statements, which include equity investments of the Company and its subsidiaries.

In the consolidated financial statements the financial information of the subsidiaries and of the jointly controlled and associated projects are recognized through the equity method and are initially recognized by their cost value and then adjusted for purposed of recognition of the Company in profit or loss and other comprehensive income of the associate.

When necessary, the financial statements of the jointly controlled and associated subsidiaries are adjusted to conform to the accounting policies adopted by the Company.

The subsidiaries, jointly controlled and associates are essentially domiciled in Brazil.

(a) Subsidiaries

Subsidiaries are all entities in which the Eletrobras system holds control. The Eletrobras system controls an entity when it is exposed or is entitled to variable returns arising from its involvement with the entity and has the capacity to interfere in these returns because of the power it exercises over the entity. The subsidiaries are fully consolidated from the date on which control is transferred to the Eletrobras system. The consolidation is interrupted from the date on which the Electrobras system ceases to have control.

The consolidated financial statements include the financial statements of the Company and its subsidiaries.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statements of income and comprehensive income from the effective date of acquisition until the effective date of disposal, as applicable.

All transactions, balances, income and expenses among the companies of the Company are eliminated in full in the consolidated financial statements.

The Company adopts the following consolidation practices:

a) Elimination of the investments of the investor in investee companies, to offset their participation in respective net equity assets;

b) Elimination of balances of intercompany receivables and payables;

c) Elimination of intercompany income and expenditures;

d) Highlighting of the minority non-controlling shareholder interest in shareholders’ equity and in the consolidated statement of profit and loss of the investee companies.

F-36

The Company uses the criteria of full consolidation, as described in the table below. Participation is given on the total capital of the subsidiary.

	12/31/2015						12/31/2014
	Equity						Equity
Subsidiaries	Direct			Indirect			Direct			Indirect
Amazonas Energia		100	%		—			100	%		—
Boa Vista Energia		100	%		—			100	%		—
Ceal		100	%		—			100	%		—
CELG- D(1)		51	%		—			51	%		—
Cepisa		100	%		—			100	%		—
Ceron		100	%		—			100	%		—
CGTEE		100	%		—			100	%		—
Chesf		100	%		—			100	%		—
Eletroacre		94	%		—			94	%		—
Eletronorte		99	%		—			99	%		—
Eletronuclear		100	%		—			100	%		—
Eletropar		84	%		—			84	%		—
Eletrosul		100	%		—			100	%		—
Furnas		100	%		—			100	%		—
Chuí IX		—			99.99	%		—			99.99	%
Coxilha Seca		—			99.99	%		—			99.99	%
Hermenegildo I		—			99.99	%		—			99.99	%
Hermenegildo II		—			99.99	%		—			99.99	%
Hermenegildo III		—			99.99	%		—			99.99	%
Linha Verde Transmissora		—			100	%		—			100	%
Uirapuru		—			75	%		—			75	%
Energia dos Ventos V(²)		—			99.99	%		—			—
Energia dos Ventos VI(²)		—			99.99	%		—			—
Energia dos Ventos VII(²)		—			99.99	%		—			—
Energia dos Ventos VIII(²)		—			99.99	%		—			—
Energia dos Ventos IX(²)		—			99.99	%		—			—
Extremoz Transmissora do Nordeste S/A(³)		—			100.00	%		—			—
Complexo Eólico Pindaí I
Acauã Energia S.A.		—			99.93	%		—			99.93	%
Angical 2 Energia S.A.		—			99.96	%		—			99.96	%
Arapapá Energia S.A.		—			99.90	%		—			99.90	%
Caititu 2 Energia S.A.		—			99.96	%		—			99.96	%
Caititu 3 Energia S.A.		—			99.96	%		—			99.96	%
Carcará Energia S.A.		—			99.96	%		—			99.96	%
Corrupião 3 Energia S.A.		—			99.96	%		—			99.96	%
Teiú 2 Energia S.A.		—			99.95	%		—			99.95	%
Complexo Eólico Pindaí II
Coqueirinho 2 Energia S.A.		—			99.98	%		—			99.98	%
Papagaio Energia S.A.		—			99.96	%		—			99.96	%
Complexo Eólico Pindaí III
Tamanduá Mirim 2 Energia S/A(³)		—			83.01	%		—			—

F-37

(1) Subsidiary classified as non-current asset held for sale (see Note 43)

(2) Acquisition of equity in 2015 by Subsidiary Furnas

(3) Acquisition of equity in 2015 by Subsidiary CHESF

The consolidated financial statements include the balances and transactions of exclusive funds whose only shareholders are the Company and its subsidiaries, composed of public, private securities and debentures of companies with a low credit rating and high paper liquidity.

(a.1) Changes in Group equity in existing subsidiaries

Changes in Company equity in subsidiaries that do not result in loss of Group shareholding control over the subsidiaries are recorded in financial statements as capital transactions. Accounting balances of Company equity and non-controlling shareholders are adjusted to reflect changes in the respective equity held on subsidiaries. The difference between the value under which non-controlling shareholders’ equity in subsidiaries are adjusted and the fair value of compensation paid or received is recorded directly in shareholders’ equity and attributed to Company shareholders.

When the Company loses the shareholding control on a subsidiary, the gain or loss is recognized in the financial statements and is calculated according to the difference between: (i) the sum of fair value of compensation received and the fair value of the residual equity; and (ii) the previous balance of assets (including goodwill) and liabilities of the subsidiary and non-controlling equity, if any. All values recognized before in “Other comprehensive income” related to the subsidiary are accounted for as if the Company had sold directly the corresponding assets or liabilities of the subsidiary (that is, reclassified as income nor transferred to another item in the shareholders’ equity, as required or permitted by applicable IFRS). The fair value of any investment held in the former subsidiary on the date when shareholding control is lost shall be recorded at fair value in the initial recognition to be accounted for subsequently under the terms in IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost in the initial recognition of an investment in an associate or joint venture.

(b) Investments in associates

Associates are all entities over which the Company has significant influence, and that are not configured as a subsidiary or a jointly-controlled subsidiary.

Any amount that exceeds the cost of the acquisition over the Company’s participation of the Company in the identifiable net fair value of assets, liabilities and contingent liabilities of the associate on the date of acquisition is recognized as goodwill. The premium is added to the book value of the investment. Any amount of the Company’s participation in the net fair value of assets, liabilities and contingent liabilities identifiable that exceeds the cost of acquisition, after revaluation, is recognized immediately in income.

F-38

When the portion of the Company exceeds the participation in that associate in prejudice to it (including any long-term participation which, in essence, is included in the net investment in the associate), the Company ceases to recognize its participation in additional losses. The additional losses are recognized only if the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

F-39

(c) Joint ventures

A joint venture is a contractual agreement by which the Company and other parties exercise an economic activity subject to joint control, a situation in which decisions on financial and strategic operating policies related to joint venture activities require approval from all the parties that share control.

When a subsidiary of the Company directly exercises its activities by means of a joint venture, the Company’s participation in jointly controlled assets and any liabilities incurred jointly with the other controllers is recognized in the financial statements of the respective subsidiary and classified according to its type. Costs and liabilities incurred jointly in relation to participations in jointly controlled assets are recorded in accrual-based accounting. Any gains from the sale or use of the Company’s participation in the income from jointly controlled assets and its share in any expenses incurred by the joint venture are recognized when it is likely that the economic benefits associated to the transactions will be transferred to/from the Company, and its value can be reliably measured.

3.3. Cash and cash equivalents

Cash and cash equivalents include cash, bank deposits and other short-term investments of high liquidity with original maturities of up to three months and with insignificant risk of change in value.

3.4. Accounts receivables and allowance for doubtful accounts

The accounts receivable from customers (consumers and resellers) are composed of credits from the provision and supply of electric energy, invoiced and not invoiced, the former by an estimate, including those resulting from energy transacted within the framework of the Chamber for Commercialization of Electric Energy (Conta de Comercialização de Energia Elétrica or CCEE), accounting for based on accrual accounting and are recognized initially at fair value and subsequently measured at amortized cost less an allowance for doubtful accounts(see also Note 4.VIII).

The balance also includes the supply of energy that has not been billed, originating substantially from distribution activity that is measured on the basis of estimates, based on the history of consumption of MW/hr.

Accounts receivable are normally settled in a period of up to 45 days, for which reason book values substantially represent the fair value on the date the books are closed.

If the period of receipt is equivalent to one year or less, the accounts receivable are classified under current assets. Otherwise, they are presented under non-current assets (Note 7).

F-40

3.5. Fuel Consumption Account – CCC

Per the terms of Law No. 8,631 of March 4, 1993, the Company administers the values relating to collections made by dealers of the public electric energy service, for credit in the Fuel Consumption Account – CCC, corresponding to annual quotas intended for expenditures for fuels for electric power generation. The values recorded in the current assets, offsetting current liabilities, correspond to the availability of resources, maintained in a connected bank account, and to quotas not paid by concessionaires. The values recorded in the assets are corrected by the profitability of application and represent a restricted account, and may not be used for other purposes.

Operations with the CCC do not affect the consolidated income or loss for the financial year of the Company.

3.6. Guarantees and Restricted Deposits

The amounts recorded are intended for legal and/or contractual services. They are valued at acquisition cost plus interest and monetary correction based on legal provisions and adjusted by the provision for loss on realization, when applicable. Their redemption is conditional on completion of the legal procedures to which these deposits are linked.

3.7. Inventories and Fuel

The inventory is recorded at the average purchase cost, net of provisions for losses, when applicable, and does not exceed the replacement cost or net realizable value. Inventory costs are determined by the average cost method. The net realizable value is the estimated selling price of stocks, less all estimated costs for its completion and costs necessary to make the sale.

The materials in warehouse inventory and fuel – CCC are classified as current assets and is recorded at the average cost of acquisition, which does not exceed market value.

3.8. Nuclear fuel inventory

Composed of the uranium concentrate in stock, the corresponding services and nuclear fuel elements used in the thermonuclear power plants Angra I and Angra II, and these are recorded at acquisition cost.

In its initial stages of formation, the uranium ore and the services needed for its manufacture are purchased, and classified for accounting purposes under non-current assets – realizable in long-term, presented under the heading of Nuclear Fuel Inventory. After the manufacturing process is completed, the portion concerning the forecast of consumption for the 12 months following is classified under current assets.

F-41

The consumption of nuclear fuel elements is appropriated to the income for the year in a proportional manner, considering the monthly energy effectively generated in relation to the total energy scheduled for each fuel element. Inventories and evaluations of used nuclear fuel elements which pass through the process of generating electricity and are stored in the used fuel storage tank are periodically conducted.

F-42

3.9. Fixed Assets

Fixed assets are measured by the historical cost deducted from accumulated depreciation and any accumulated impairment losses. The historical cost includes expenses directly attributable to the acquisition of the assets, and also includes, in the case of qualifying assets, the borrowing costs capitalized in accordance with the accounting policy of the Company. Such fixed assets are classified under the appropriate fixed asset categories when completed and ready for their intended use. The depreciation of these assets starts when they are ready for intended use on the same basis of other fixed assets.

Depreciation is recognized on the basis of the estimated useful life of each asset on the linear method, so that the value of the cost less its residual value after its useful life is fully written-off (except for land and construction in progress). The Company considers that the estimated useful life of each asset is similar to depreciation rates determined by the ANEEL, which are considered by the market as acceptable to express adequately the time of the useful life of the assets. Additionally, in connection with the Company’s understanding concerning the current regulatory framework of concessions, including Law 12,783/2013, the indemnification at the end of the concession was considered based on the lowest value between the VNR or the net book value, with this factor being considered in the measurement of fixed asset (See details in Note 17).

Assets held through financial commercial leasing are depreciated over the expected useful life in the same manner as the assets themselves or over a lesser period, if applicable, in accordance with terms of the lease in question.

An item of fixed assets is written off after disposal or when there are no future economic benefits arising from the continued use of the asset. Any gains or losses on the sale or write-down of a fixed assets item are determined as the difference between the amounts received in the sale and the book value of the asset and are recognized in income or loss for the financial year.

Please see note 4.XI for the effects of the Independent Investigation (as defined in that note), on the fixed assets of the Company.

3.9.1. Borrowing costs

Interest and where appropriate exchange variation for each month incurred in relation to loans and financing are added to the acquisition cost for the fixed asset in formation, considering the following criteria for capitalization:

a) The capitalization period occurs when the qualifying asset is under construction, ending with the capitalization of interest when the item is available for use;

b) Interest is capitalized considering the weighted average rate on the loans and financing in effect on the date of capitalization or, for those assets in relation to which specific loans were obtained, the rates of these specific loans;

c) Capitalized interest on a monthly basis does not exceed the value of the interest expenses determined in the capitalization period;

F-43

d) Capitalized interest is depreciated considering the same criteria and estimated useful life determined for the item in which it is incorporated.

Gains on investments, arising from the temporary application of the resources obtained with specific loans and financing still not expenses with the qualifiable asset are deducted from loans and financing costs eligible for capitalization, when the effect is material.

All other costs for loans and financing are recognized in the income or loss for the financial year in which they are incurred.

3.10. Concession contracts

The Company has concession contracts in the segments of generation, transmission and distribution of electricity, signed with the concession grantor (Brazilian federal government) for periods ranging between 20 years and 35 years, being all contracts, by segment, very similar in terms of rights and obligations of the concessionaire and the power grantor. The time periods of the principal concessions are described in Note 2.

Under Law 12.783, the grantor opted to renew concessions being operators and maintainers of the hydroelectric plants, receiving a fee for the cost of these activities. In this way, companies holding generation assets become providers of services, no longer selling electric energy at market price, the same have happened to the transmission segment.

This new law empowers the Union to extend, once only, maturing Concessions of generation, transmission and distribution of Electricity for a maximum of 30 (thirty) years and, in the case of thermoelectric generation, for a maximum of 20 (twenty) years.

I – Tariff System

a) The tariff system of electrical distribution is controlled by the ANEEL and these rates are adjusted annually and reviewed every four years, on the basis of the maintenance of the economic-financial balance of the concessionaire, taking into consideration the prudent investments made and the structure of costs and expenses of the Company of reference. Charges for services occurs directly to users, based on the volume of energy consumed and the rate authorized (See Note 18).

b) The tariff system for electric power transmission is regulated by the ANEEL and periodic revisions are carried out, being established a Permitted Annual Income – RAP, updated annually by an index of inflation and, subject to periodic revisions to cover new investments and possible aspects of economic-financial balance of the concession contracts. We emphasize that this tariff system was changed beginning with the renewal of concessions affected directly by Law No. 12,783/2013.

c) The tariff system of generation was, in general, based on a regulated tariff until 2004 and thereafter, in connection with the changes in the regulation of the sector, has changed from tariff basis for a price system, and the electricity generators can have the freedom to participate in auctions of electric energy intended for the regulated market. There is in this case a base price, being the final price determined through competition among participants in the auction. Additionally, the electric power generators can make bilateral contracts of sale with consumers who fit into the category of free consumers (definition based on power demanded in MW). We emphasize that this tariff system was changed beginning with the renewal of concessions affected directly by Law No. 12,783/2013.

F-44

II – Transmission and Distribution Concessions

The concession contracts regulate the exploitation of public services of distribution and transmission of electrical energy by the Company, where:

1) Electric power distribution

a) The contract establishes what services the operator must provide and to whom (consumer class) the services must be provided;

b) the contract establishes performance standards for public service provision, with respect to the maintenance and improvement of quality of service to consumers, and the dealer has an obligation, on delivery of the concession, to return the infrastructure under the same conditions under which it is received at the signature of those contracts. To comply with these obligations, ongoing investments are carried out throughout the term of the lease. Therefore, the assets connected with the concession can be replaced, several times, until the end of the concession;

c) At the end of the concession, the assets connected with the infrastructure must be reverted to the power grantor upon payment of compensation determined by the depreciated Regulatory Remuneration Base-BRR.

2) Electric power transmission

a) The price (tariff) is regulated and called the Permitted Annual Income (RAP). The electric power transmitting agency cannot negotiate prices with users. For some contracts, the RAP is fixed and updated monetarily by the price index once a year. For other contracts, the RAP is updated monetarily by the price index once a year and revised every five years. Generally, the RAP of any electric power transmission company is subject to annual review due to the increase of the asset and operating expenses resulting from modifications, replacements and expansions of facilities. The tariff levels (RAP) were changed beginning with the renewal of concessions affected directly by Law No. 12,783/2013.

b) The assets are reversible at the end of the concession, with the right to receive compensation (cash) of the concession grantor on investments not yet amortized, determined by the new replacement value – VNR. There are still active concessions renewed pending approval by the ANEEL, and, consequently, pending compensation.

II. 1 – Application of IFRIC 12 – Service concession contracts, applicable to contracts of public-private concession contracts in which the public entity:

F-45

a) Controls or regulates the type of services that can be provided using the underlying infrastructures;

b) Controls or regulates the price at which the services are provided;

c) Controls/owns a significant interest in the infrastructure at the end of the concession.

A public-private concession presents, typically, the following characteristics:

a) An underlying infrastructure for the concession which is used for providing services;

b) An agreement/contract between the grantor and the operator;

c) The operator provides a set of services during the concession;

d) The operator receives a remuneration throughout the concession contract, either directly from government authorities or from the users of the infrastructure, or both;

e) The infrastructures are transferred to the grantor at the end of the concession, typically for free or also for valuable consideration.

In accordance with IFRIC 12, the concession infrastructures in the context of the standard are not recognized by the concessionaire as fixed assets, since it is considered that the operator has no control over these assets to be recognized in accordance with one of the following accounting models, depending on the type of operator remuneration commitment assumed by the concession grantor under the contract:

1) The financial asset model

This model is applicable when the concessionaire has the unconditional right to receive certain monetary amounts regardless of the level of use of infrastructures covered by the concession and results in the recording of a financial asset, which was classified as loans and receivables (generation and transmission) or as available for sale (distribution).

2) Intangible asset model

This model is applicable when the concessionaire under the concession, is remunerated depending on the degree of utilization of the infrastructures (credit and demand risk) in relation to the concession and results in the recording of an intangible asset.

3) Mixed Model

This model applies when the award includes remuneration commitments simultaneously guaranteed by the concession grantor and remuneration commitments dependent on the level of use of infrastructures of the concession.

F-46

Based on the characteristics established in the concession contracts of the electric power distribution company and its subsidiaries and the requirements of the norm, the following assets are recognized in relation to the electrical distribution business:

a) Estimated portion of the investments and not amortized or depreciated until the end of the lease is classified as a financial asset to be an unconditional right to receive cash or another financial asset directly from the granting authority; and

F-47

b) The remaining portion to determine the financial asset (residual value) will be classified as an intangible asset by virtue of its recovery being subject to public service use, in this case, energy consumption by consumers.

The infrastructure received or constructed from the distribution activity is recovered through two cash flows, namely:

a) Partly through energy consumption made by consumers (issuance of the monthly invoices from the measurement of energy and power consumed/sold) during the period of the concession; and

b) Partly as compensation of reversible assets at the end of the term of the concession, this being received directly from government authorities or to whomever this task was delegated.

This compensation will be performed based on the investment installments connected with the reversible assets, not yet amortized or depreciated, that have been made with the objective of guaranteeing the continuity and timeliness of service provided.

The concessions of electric power distribution of its subsidiaries are free of charge. In this manner, there are no fixed financial obligations and payments to be made to the power grantor.

For the activity of electric power transmission the Permitted Annual Income – RAP is received from companies that use their infrastructure through a usage tariff for the transmission system (TUST). This tariff results from the apportionment among users of transmission of some specific values; (i) the RAP of all transmission companies; (II) the services provided by the National System Operator – ONS; and (iii) the regulatory charges.

The granting authority delegated to generators, distributors, consumers, exporters and importers the monthly payment of the RAP, which is guaranteed by the broadcasting regulatory framework, constitutes unconditional contractual right to receive cash or another financial asset, and therefore the credit risk is low.

Considering that the Company is exposed to credit and demand risks and that the income is earned based on the availability of transmission line, the whole infrastructure was recorded as a financial asset.

This financial asset includes furthermore the compensation that will be made based on the investment installments connected with the reversible assets, not yet amortized or depreciated, that have been made with the objective of guaranteeing the continuity and timeliness of service provided.

III. Generation Concessions

a) Hydroelectric and thermal generation – the concessions, not directly affected by Law No. 2,013/12,783 are within the scope of IFRIC 12, bearing in mind that the characteristics of price and not of regulated tariff. From January 1, 2013, the concessions affected directly by Law No. 12,783/2013, until then outside the scope of IFRIC 12, become part of the scope of these regulations, considering the change in price system, becoming a regulated tariff for these concessions, along the lines already applied to distribution concessions until then.

b) Nuclear generation – Has a defined tariff system, but differs from other generation contracts, due to being an authorization and not a concession. There is no defined period for the end of the authorization as well as the characteristics of significant control of assets by the grantor at the end of the authorization period.

F-48

IV. Itaipu Binacional

a) Itaipu Binacional is governed by a Binational Treaty of 1973 in which tariff conditions were established, and the basis of formation of the tariff is determined exclusively to cover expenses and debt service of this Company;

b) the tariff basis and terms of commercialization will be in effect until 2023, which corresponds to a significant part of the useful life of the plant, when the tariff basis and the terms of commercialization must be revised.

c) Itaipu’s tariff basis was established preponderantly in order to permit the payment of debt service, which has final maturity in 2023, and to maintain their operating and maintenance expenses;

d) The commercialization of Itaipu energy was subrogated to the Company, originating from previously signed contracts with the distributors in which the payment conditions were previously defined.

e) Through Law No. 10,438 of April 26, 2002 the purchasing and transfer commitments were subrogated to the Company for distribution of electricity services of Itaipu Binacional signed up to then by Furnas and Eletrosul, subsidiaries of the Company, with the electric power distribution concessionaires. Debts from energy commercialization of Itaipu Binacional were renegotiated with the Company giving rise to financing agreements. Such contracts were initially recorded at fair value and subsequently measured by the amortized cost, using the effective interest method.

f) The terms of the agreement guarantee the reimbursement the Company even in cases of absence of power generation capacity or operational problems with the plant. Thus, the Company acts substantially as marketing agent of electric power for Itaipu.

V. Financial asset – Public Service Concessions.

The Company recognizes a credit receivable from the power grantor (or form whomever the power grantor has granted it) when it has unconditional right to receive cash at the end of the concession in relation to compensation for investments made by distributors, electric power generators and transmitters, and not recovered through the provision of concession-related services. These financial assets are recorded at present value and are calculated based on the estimated portion of the investments and not amortized or depreciated until the end of the concession. The distribution assets are remunerated on the basis of the regulatory remuneration Weighted Average Cost of Capital -WACC (cost of capital), with this factor being included in the tariff base and the generation and transmission are remunerated on the basis of the internal rate of return of the project. In the case of generation, only the assets linked to concessions directly affected by Law No. 12,783/2013 and formed beginning with the mentioned Law, are considered financial assets that will be remunerated in the same forms as the transmitters, since the acquisition of such assets is approved by the MME and the ANEEL.

F-49

These accounts receivable are classified between current and non-current considering the expectation of receipt of these values, based on the date of closure of the concessions.

3.11. Intangible assets

The Company recognizes as an intangible asset the right to charge users for the services provided for distribution of electricity (for generation of the Amazonas Energia infrastructure, which has an exclusive connection with the distribution activity of this Company, and is also classified as intangible). The intangible asset is determined as being the residual value of construction income earned for the construction or acquisition of infrastructure held by the Company and the value of the financial asset in relation to the unconditional right to receive cash at the end of the grant as compensation.

The asset is presented net of accrued amortization and of losses due to the reduction in recoverable value (impairment), when applicable.

The amortization of intangible assets reflects the pattern in which the future economic benefits are expected to be consumed by the Company, or the end of the concession period, or whichever occurs first. The consumption pattern of assets is related to their economic useful life, considering that the assets constructed by the Company are part of the basis of calculation for measuring the tariff for concession services.

The amortization of the intangible asset begins when it is available for use, at its location and in the necessary condition for it to be able to operate in the manner intended by the Company. Depreciation ceases when the asset has been fully consumed or written down, or is no longer integrated in the calculation base of the tariff for concession services, whichever occurs first.

The Company performs annually recoverability of assets test using the present value method of the future cash flows generated by the asset, considering that there is no active market for the assets connected with the concession. (See Note 20).

Intangible assets comprise basically the usage rights of the concession, but also include goodwill on acquisition of investments and specific expenses associated with the acquisition of rights, plus the respective costs of deployment, when applicable.

F-50

Intangible assets with defined useful lives, purchased separately, are recorded at cost, deducting amortization and losses due to the reduction in the accrued recoverable value. Amortization is recognized linearly based on the estimated useful life of the assets. The estimated useful life and the depreciation method are reviewed at the end of each financial year and the effect of any changes in the estimate is accounted for prospectively.

Intangible assets with indefinite useful lives, purchased separately, are recorded at cost, deducting amortization and losses due to the reduction in the accrued recoverable value.

3.11.1. Concessions for Valuable Consideration (Use of Public Asset – UBP)

The Company and certain subsidiaries have contracts for concessions for valuable consideration with the Government for the use of public assets for the generation of electric power in certain plants.

The values identified in the contracts are the future prices and, therefore, the Company and those subsidiaries have adjusted these contracts to the present value based on the discount rate determined on the date of the obligation.

The update of the obligation in relation to the discount rate and monetary variation, defined in the concession agreement is capitalized in the asset, during the construction of the power plants and from the date of entry into commercial operation, it is recognized directly in the income.

These assets are recorded in intangible assets offsetting the noncurrent liabilities.

3.11.2. Expenses with Studies and Projects

Expenses incurred with studies and projects, including feasibility studies and hydroelectric plant inventories and power transmission lines, are recognized as operating expenditures, when incurred, and until it has effective proof of the economic viability of their use or the granting of the concession or authorization. From the concession and/or authorization for use of the public service of electricity or the evidence of economic viability of the project, the expenses incurred are capitalized as cost of development of the project. Currently, the Company does not have capitalized values regarding spending on studies and projects.

3.12. Recognition of the receivables and the Parcel A obligations and other financial components

On November 25, 2014, the ANEEL decided to add the concession contracts and permits, of the electricity distribution companies in Brazil, in order to eliminate any uncertainty, until then existing, with regard to the recognition and realization of time differences, whose values are passed annually on to the tariff for electrical energy distribution – Parcel A (CVA) and other financial components. Pursuant to the addendum issued by the ANEEL, the regulatory body guarantees that the CVA values and other financial components will be incorporated in the calculation of compensation, at the end of the concession.

F-51

The addendum to the Concession Contracts, represented a new element that ensures, from the date of its signature, the right or imposes an obligation on the concessionaire receiving or paying for the assets and liabilities in relation to the counterparty – the Granting Authority. This new event changes, from that date, the environment and the previously existing contractual terms and extinguishes the uncertainties regarding the ability of realization of the asset or enforcement of the liability. These are conditions, therefore, that differ in essence from those which occurred previously.

The effects of the addendum to the concession agreement and permission are not the nature of the accounting policy change, but, indeed, of a new situation and, consequently, their application was prospective. Therefore, the record of the amounts receivable (obligations) was effected in asset (or financial liability) accounts, where appropriate, in contrast to the income or loss for the financial year (income from sale of goods and services).

3.13. Impairment of non-financial assets, excluding goodwill

At the end of each financial year, the Company assesses whether there is any indication that their non-financial assets have suffered any impairment losses. If any such indication exists, the recoverable amount of the asset is estimated in order to measure the amount of that loss. For purposes of the impairment test of non-financial assets, excluding goodwill, assets are grouped at the smallest identifiable group that generates largely independent cash inflows from other assets or groups of assets, the cash-generating unit. When it is not possible to estimate the recoverable amount of an asset individually, the Company calculates the recoverable amount of the cash-generating unit to which the asset belongs.

When a reasonable and consistent allocation basis can be identified, the corporate assets are also allocated to the individual cash-generating units or to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

In assessing the usage value, estimated future cash flows are discounted to present value at a discount rate that reflects current market assessment: the time value of the currency and the risks specific to the asset for which the future cash flow estimation was performed.

If the recoverable value of an asset (or cash-generating unit) calculated is less than its book amount, the book value of the asset (or cash-generating unit) is reduced to its recoverable value. The impairment loss is recognized immediately in statement of profit and loss.

When the impairment loss is subsequently reversed, an increase in the book value of the asset (or cash-generating unit) occurs, in relation to the revised estimate of its recoverable value. This increase may not exceed the book value that would have been determined if no impairment loss had been recognized for the asset (or cash-generating unit) in previous fiscal years. The reversal of the impairment loss is recognized immediately in statement of profit and loss.

F-52

3.14. Goodwill

The goodwill arising from a business combination is stated at cost on the date of the business combination, net of accumulated loss in recoverable value, if applicable.

For the purpose of impairment test, the goodwill is allocated to each of the Company’s cash-generating units (or groups of cash-generating units) that will benefit from the synergies of the combination.

Considering that the investment operations of the Company are linked to operations that have concession contracts, the goodwill arising from the acquisition of such entities represents the entitlement right of concession with defined useful life, being recognized as an intangible asset of the concession, and the depreciation made in accordance with the period of the concession.

3.15. Non-current assets held for sale

Non-current assets and groups of assets are classified as held for sale should their accounting value be recovered mainly by means of a sale transaction and not by continuous use. This condition is met only when the asset (or group of assets) is available for immediate sale in their current status, subject only to usual terms for the sale of such asset (or group of assets), and its sale is deemed as highly probable. The Management must be committed with the sale, which is expected to be considered, upon recognition, as concluded sale within a year from the date of classification.

When the Company is committed with a sales plan that involves the loss of control of a subsidiary, when criteria in the above paragraph are met, all assets and liabilities held by this subsidiary are classified as held for sale in the consolidated financial statements, even when after the sale the Company still holds some equity in the company.

Non-current assets (or group of assets) classified as held for sale are measured by the lower value between the accounting value previously recorded and the fair value less cost of sale. Assets and liabilities related are presented separately at the balance sheet.

3.16. Business combinations

In the consolidated financial statements, business acquisitions are accounted for by the acquisition method. The consideration transferred in the business combination is measured at fair value. This fair value is calculated by the sum of the fair values of the assets transferred to the Company and of the liabilities entered into by the Company, at the date of purchase, with the old controllers of the purchased company and the shares issued by the Company in exchange for control of the purchased company. Acquisition-related costs are generally recognized in the statement of profit and loss when incurred.

F-53

At the date of acquisition, the assets acquired and liabilities assumed that are identifiable are recognized by the fair value at the date of acquisition, except for:

• assets or deferred tax liabilities and assets and liabilities related to benefit agreements with employees, which are recognized and measured in accordance with IAS 12 – Income Taxes and IAS 19 – Employee Benefits respectively;

• liabilities or equity instruments, related to payment arrangements based on shares of the purchased company or payment arrangements based on Group shares, concluded in substitution of payment arrangements based on shares of the purchased company that are measured in accordance with IFRS 2 – Payments Based on Shares at the date of purchase; and

• assets (or groups for disposal) classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, which are measured according to this standard.

The goodwill is measured as the excess of the sum: (1) of the consideration transferred; (2) for the value of the non-controlling shares of the purchased company and; (3) for the fair value of the shares of the purchaser previously held in the purchased company (if any) over the net values, at the date of purchase, of the assets acquired and liabilities assumed that are identifiable. If, after the valuation, the net values of the identifiable assets acquired and liabilities assumed at the date of acquisition are greater than the sum: (1) of the consideration transferred; (2) the value of the non-controlling shares in the purchased company and; (3) the fair value of the shares of the purchaser previously held in the purchased company (if any), the excess is recognized immediately in income as a gain.

The non-controlling shares, corresponding to the current holdings and which give their holders the right to a proportional share of the net assets of the entity, in the case of liquidation, may be initially measured at fair value. They may also be measured on the basis of the proportional part of the non-controlling shares in the recognized values of the identifiable net assets of the purchased company. The selection of the method of measurement is made on a transaction by transaction basis. Other types of non-controlling shares are measured at their fair value or, where applicable, as described in another IFRS.

When the consideration transferred by the Company, in a business combination, includes assets or liabilities resulting from an agreement of the contingent consideration, the contingent consideration is measured at fair value at the date of acquisition. In addition, it is included in the consideration transferred in the business combination. The variations in the fair value of contingent consideration, classified as measurement period adjustments, are adjusted retroactively, with the corresponding adjustments in the goodwill. Measurement period adjustments correspond to adjustments resulting from additional information obtained during the “measurement period” and the related facts and circumstances existing at the date of acquisition. The measurement period shall not exceed one year from the date of purchase.

F-54

Subsequent accounting for variations in the fair value of the contingent consideration, not classified as measurement period adjustments, depends on the form of classification of the contingent consideration. The contingent consideration classified as equity is not revalued on the dates of subsequent financial statements and its corresponding liquidation is accounted for in equity. The contingent consideration classified as an asset or liability is revalued on the dates of subsequent financial statements in accordance with IAS 39, or IAS 37 – Provisions, Contingent Liabilities and Contingent, as applicable, and the corresponding gain or loss is recognized in the income.

When a business merger is performed in stages, the shares previously held by the Company in the purchased company are revalued at fair value at the date of acquisition (i.e. the date on which the Company acquires the control) and the corresponding gain or loss, if any, is recognized in the income. The values of the shares in the purchased company prior to the date of acquisition, which were previously recognized in “other comprehensive income” are reclassified in the income, to the extent that such treatment is appropriate if that participation is divested.

If the initial accounting for a business combination is incomplete at the close of the period in which this combination occurred, the Company records the provisional values of the items whose accounting is incomplete. These provisional values are adjusted during the measurement period (see above), or additional assets and liabilities are recognized to reflect the new information obtained related to facts and circumstances existing at the date of acquisition which, if known, would have affected the values recognized at that date.

Business combinations that occurred up to December 31, 2008 were accounted for in accordance with CVM Instruction 247/1996. The goodwill and negative goodwill recorded on acquisitions of holdings of non-controlling shareholders after January ¹, 2009, the date of initial adoption of the IFRS, are allocated entirely to the concession contract and recognized in the intangible assets.

3.17. Taxation

Expenses related to income tax and social contributions represent the sum of the current and deferred taxes. Additionally, the option of calculating taxes on the results of the Company is by the method of actual profits.

3.17.1. Current taxes

The provision for income tax (IRPJ) and social contributions (CSLL) is based on the taxable income for the year. Taxable income differs from income presented in the statement of profit and loss because it excludes taxable income or expenses deductible in other periods, in addition to deleting items that are not taxable or not deductible on a permanent basis. The provision for income tax and social contributions is calculated individually for each company based on the Company’s current rates at the end of the period.

F-55

3.17.2. Deferred taxes

The deferred income tax and social contributions are recognized at the end of each reporting period, on temporary differences between the balances of assets and liabilities recognized in the financial statements and the corresponding tax bases used in the computation of taxable income, including the balance of tax losses, when applicable. The deferred tax liabilities are generally recognized for all taxable temporary differences and deferred asset taxes are recognized on all deductible temporary differences, only when it is probable that the Company will present sufficient future taxable income in relation to which these deductible temporary differences can be utilized, considering the profitability history as well.

The recovery of the balance of deferred asset taxes is reviewed at the end of each reporting period and, when it is no longer probable that future taxable income will be available to allow the recovery of all or part of asset the balance of the asset is adjusted by the amount which is expected to be recovered.

Deferred asset and liability taxes are measured by the tax rates applicable in the period in which the liability is expected to be settled or the asset is realized, based on tax rates provided for by the legislation in effect at the end of each reporting period, or when new legislation has been substantially approved. The measurement of deferred tax on liabilities and assets reflects the tax consequences that would result in the manner which the Company expects, at the end of each reporting period, to recover or liquidate the book value of these assets and liabilities.

The current and deferred taxes are recognized in the income, except when they correspond to items recorded in other comprehensive income, or directly in equity, in which case the current and deferred taxes are also recognized in other comprehensive income or directly in net equity, respectively. When the current and deferred taxes originate from the initial accounting for a business combination, the tax effect is considered in the accounting of the business combination.

3.18. Financial instruments

Assets and financial liabilities are recognized when an entity of the Company is a party to the contractual provisions of the instrument.

Assets and financial liabilities are initially measured at fair value.

Transaction costs directly attributable to the acquisition or issue of financial assets and liabilities (except for financial assets and liabilities recognized at fair value in the income) are added or deducted from the fair value of the assets or financial liabilities, if applicable, after the initial recognition. Transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through income or loss are recognized immediately in income.

F-56

3.18.1. Financial assets

Financial assets are classified into the following specific categories: financial assets at fair value through income or loss, investments held to maturity, financial assets available for sale and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined on the date of initial recognition.

1) Financial assets at fair value through income or loss

A financial asset is classified as held for negotiation if:

(a) It is purchased primarily to be sold in the short term; or

(b) On initial recognition is part of a portfolio of identified financial instruments that the Eletrobras system manages as a group and has a recent actual pattern of short-term income taking; or

(c) It is a derivative that has been designated as an effective hedge instrument.

A financial asset held for negotiation, in addition, can be designated at fair value through income or loss on initial recognition if:

(a) Such a designation eliminates or reduces significantly an inconsistent measurement or recognition that would otherwise would arise; or

(b) The financial asset is part of a managed group of assets or financial liabilities or both, and

(c) Their performance is evaluated on a fair value basis, in accordance with a documented risk management strategy or investment of the Company, and when information about the grouping is provided internally on the same basis; or

(d) It is part of a contract containing one or more embedded derivatives and IAS 39 – Financial instruments: Recognition and Measurement permits the combined contract (asset or liability) to be fully assigned to fair value through income or loss.

Financial assets are classified at fair value through income or loss when they are held for negotiation with the purpose of selling in the short term or designated by fair value through income or loss.

Financial liabilities at fair value through income or loss are shown at fair value, and gains or losses are recognized in the income. Net gains and losses recognized in the income incorporate the dividends or interest earned by the financial asset, being included under other financial income and expenses in the statement of profit and loss.

F-57

(a) Held to maturity investments

Investments held to maturity are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Company has the positive intention and ability to hold to maturity. After initial recognition, investments held to maturity are measured at amortized cost using the effective interest method, less any impairment losses.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade accounts receivable and others, cash and cash equivalents, accounts receivable of Parcel A and others) are initially recorded at their purchase price, which is the fair value of the price paid, including transaction expenses. After initial recognition, they are measured at amortized cost value using the effective interest method, less any impairment losses.

The interest income is recognized by applying the effective interest rate.

(a) Financial assets available for sale

Financial assets available for sale are non-derivative financial assets that are designated as available for sale and not classified as:

1) Financial assets at fair value through income or loss

2) Investments held to maturity, or

3) Loans and receivables.

Changes in the book value of financial assets available for sale related to variations in exchange rates, income from interest calculated using the effective interest method and dividends on stock investments available for sale are recognized in income. Changes in the fair value of available for sale financial assets are recognized in Other comprehensive results. When the investment is disposed of impairment, the cumulative gain or loss previously recognized in the Other comprehensive income account is reclassified to income.

3.18.2. Impairment of non-financial assets

Financial assets, except those designated at fair value through the income or loss, are evaluated for indicators impairment indexes in the end of each reporting period. The impairment losses are recognized if, and only if, there is objective evidence of impairment of the financial asset as a result of one or more events that occurred after their initial recognition, with an impact on the estimated future cash flows of that asset.

F-58

In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the title, below its cost, it is also evidence that the assets are deteriorated. If any evidence of this type exists for financial assets available for sale, the cumulative loss will be removed from equity and recognized in the consolidated statement of profit and loss. This cumulative loss is measured as the difference between the acquisition cost and the current fair value, less any impairment loss on recoverable value, over the financial asset previously recognized in the statement of profit and loss. Impairment losses recognized in the statement of profit and loss on equity instruments are not reversed through the consolidated statement of profit and loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event that occurred after impairment loss has been recognized in statement of profit and loss, the impairment loss is reversed through an entry in income.

For certain categories of financial assets, such as accounts receivable, assets are evaluated collectively, even if they do not present evidence that they are recorded for the value greater than that recoverable, when evaluated on an individual basis. Objective evidence of impairment for a credit portfolio of receivables may include: the past experience of the Company in the collection of payments and the increase in the number of late payments, after the average period of receipt, as well as observable changes in national or local economic conditions related to non-payment of receivables.

For financial assets recorded at the amortized cost value, the amount of the impairment recorded corresponds to: the difference between the book value of the asset and the present value of the estimated future cash flows, discounted by the original effective interest rate of the financial asset.

For financial assets recorded at cost, the impairment amount corresponds to the difference between the book value of the asset and the present value of the estimated future cash flows, discounted by the current rate of return for a similar financial asset. That loss due to the reduction in the recoverable value will not be reversed in subsequent periods.

The book value of the financial asset is reduced directly by impairment loss for all financial assets with the exception of receivables, where the book value is reduced through the use of a provision. Subsequent recoveries of amounts previously provisioned are credited to the provision. Changes in the book value of the provision are recognized in the statement of profit and loss.

For financial assets recorded at amortized cost, if in a subsequent period the amount of the loss from the reduction in the recoverable value decreases and the decrease can be related objectively to an event occurring after the reduction in the recoverable value has been recognized, the previously recognized loss is reversed through income, since the book value of the investment at the date of this reversal does not exceed the amortized cost if the reduction in the impairment had not been recognized.

F-59

3.18.3. De-recognition of financial assets

The Company desrecognize a financial asset only when the contractual rights to the cash flows from the asset expire or are transferred along with the risks and benefits of ownership. If the Company does not transfer or retain substantially all the risks and rewards of ownership of the financial asset, but continue to control the transferred asset, the Company recognizes the participation retained and its liabilities on the values that it will have to pay. If retains substantially all the risks and rewards of ownership of the financial asset transferred, the Company continues to recognize this asset, in addition to a loan guaranteed by the income received.

In the derecognition of a financial asset, the difference between the book value of the asset and the sum of the consideration received and receivable and the accrued gain or loss that has been recognized in the Other comprehensive income account and accrued in equity is recognized in statement of profit and loss.

3.18.4. Financial liabilities and equity instruments

Debt and equity instruments issued by an entity of the Eletrobras system are classified as financial liabilities or equity, in accordance with the nature of the contractual agreement and the definitions of financial liabilities and equity instruments. An equity instrument is a contract that evidences a residual interest in the assets of a company after deducting all its liabilities. Equity instruments issued by the Eletrobras system are recognized when resources are received, net of direct costs of issuance.

Financial liabilities are classified as financial liabilities at fair value through income or other financial liabilities.

The other financial liabilities, which include loans and financing, suppliers, and other accounts payable are measured at amortized cost value using the effective interest method.

The effective interest method is used for calculating the amortized cost of a financial liability and to allocate its interest expense for the period. The effective interest rate is the rate that exactly discounts the estimated future cash flows (including fees and points paid or received that constitute an integral part of the effective interest rate, transaction costs and other premiums or discounts) throughout the estimated life of the financial liability or, where appropriate, for a smaller period, for the initial recognition of the net book value.

3.18.5. De-recognition of financial liabilities

The Company reduces financial liabilities only when the Company’s obligations are extinguished and cancelled or when they expire. The difference between the book value of financial liabilities written down and the consideration paid and payable is recognized in statement of profit and loss.

F-60

3.18.6. Financial guarantee contracts

A financial guarantee contract consists of contract that requires the issuer to make specified payments in order to reimburse the holder for loss incurred due to the fact the debtor specified does not make the payment on the due date, according to the initial or amended terms of the debt instrument.

Financial guarantees are initially recognized in the financial statements at fair value on the date of issuance of the guarantee. Subsequently the obligations concerning guarantees are measured by the greatest initial value less the depreciation rates recognized, and the best estimate of the value required to liquidate the guarantee.

These estimates are defined on the basis of experience with similar transactions and in the history of past losses and in the judgment of the administration of the Company. Fees received are recognized based on the straight-line method over the life of the guarantee. Any increased obligations in relation to guarantees are presented when occurring in the operating expenses (see Note 23).

3.18.7. Derivative financial instruments

The Company has derivative financial instruments to manage its exposure to interest rate and foreign exchange risks, including fixed-term exchange contracts, interest rate and currency swaps. Note 44 includes more detailed information about the derivative financial instruments.

Derivatives are initially recognized at fair value on the date of the contract, and are subsequently remeasured at fair value at the end of the financial year. Any gains or losses are recognized in income immediately, unless the derivative is designated and effective as a hedge instrument; in this case, the moment of recognition in income depends on the nature of the hedging relationship.

(See item 3.18.9)

3.18.8. Embedded derivatives

Derivatives embedded in non-derivative, principal contracts are treated as a separate derivative when their risks and characteristics are not closely related to those of the principal contracts and these are not measured at fair value through profit or loss.

3.18.9. Hedge accounting

The Company has a hedge accounting policy and and derivative financial instruments accounting designated as hedging operations, which are initially recognized at fair value on the date on which the derivative contract is taken out, being also subsequently revalued at fair value. Derivatives are presented as financial assets when the fair value of the instrument is positive, and as liabilities when the fair value is negative.

F-61

At the beginning of the hedging relationship, the Company documents the relationship between hedging instrument and the hedged item, with its objectives in risk management and its strategy to assume various hedging transactions. Additionally, at the beginning of the hedge and in an ongoing manner, the Company documents if the hedge instrument used in a hedging relationship is highly effective in offsetting changes in fair value or cash flow of the hedged item attributable to the risk of the hedge.

F-62

For the purpose of hedge accounting, the Company uses the following classifications:

(a) Hedging at the fair value

Changes at the fair value of the derivatives are designated and classified as fair value hedges are recorded in income with any changes in the fair value of the hedged items attributable to the risk covered. Changes in the fair value of the hedging instruments and the hedged item, attributable to the risk of hedging are recognized in income.

The hedge accounting is discontinued prospectively when the Company cancels the hedging relationship, the hedging instrument expires or is sold, terminated or executed, or when it is no longer classified as hedge accounting. The adjustment to fair value of the hedge item, originating from the risk of hedging, is recorded in income or loss from that date.

(b) Cash flow hedging

The effective portion of changes in the fair value of derivatives, which is designated and qualified as hedging of cash flow, is recognized in the other comprehensive income account. The gains or losses related to the part not effective are recognized immediately in income.

The values previously recognized in other comprehensive income account and accrued in equity are reclassified to the income in the financial year in which the item which is the subject of the hedge is recognized in statement of profit and loss.

Hedge accounting is discontinued when the Company cancels the hedging relationship, the hedging instrument expires or is sold, terminated or executed, or does not qualify any more as hedge accounting. Any gains or losses recognized in other comprehensive income and accrued in equity, as of that date, remain in equity and are recognized when the forecasted transaction is ultimately recognized in income. When nothing more is expected than the projected transaction to occur, the gains or losses accrued and deferred in equity are recognized immediately in statement of profit and loss.

The Company uses derivative financial instruments for its management of financial risks, as described in Note 44. Beginning on October 1, 2013, the Company adopted accounting procedures for hedging in conformance with the provisions of IAS 39 for the purpose of reducing the volatility in the financial statements generated by the marketing of derivative financial instruments and greater transparency of the Risk Management activities of the Company.

From the initial date, the Company has designated its hedges of interest rates as a Cash Flow Hedge, and for this reason, the effective variation of the fair value of the hedging instruments will be represented in the Other comprehensive income account. As the debt protected is recognized in the financial results, the variation of the fair value represented in Other comprehensive income of the hedge is recognized in the financial results based on the effective interest rate. Each quarter effectiveness tests are performed to assess whether the derivative instruments effectively protect and should continue to protect related debt. If during the effectiveness test there is an ineffective portion, this value is recognized immediately in the financial results.

F-63

Each hedge relationship is documented so that the debt protected is identified, the derivative, the objective, the strategy of risk management, the contractual terms are designated for Hedge Accounting and the method of measurement of prospective and retrospective effectiveness is indicated.

3.19. Post-employment benefits

3.19.1. Retirement liabilities

The Company and its subsidiaries sponsor various pension plans, which are generally funded by payments to these pension funds, determined by periodic actuarial calculations. The Company has defined benefit plans and also defined and variable contribution plans. In defined contribution plans, the Company makes fixed contributions into a separate entity. Additionally, it does not have any legal obligations to make contributions, if the fund does not have sufficient assets to pay all employees the benefits relating to the services provided in the current and previous periods tied to this kind of plan. A defined benefit plan is different from a defined contribution plan, since, in these defined benefit plans, a retirement benefit amount that an employee will receive on retirement is established, usually dependent on one or more factors such as age, length of service and remuneration. In this type of plan, the Company has an obligation to honor the commitment, if the fund does not have sufficient assets to pay all employees the benefits relating to the services provided in the current and previous periods connected with this kind of plan.

The liability recognized in the Balance Sheet with respect to defined benefit plans is the present value of the defined benefit obligation on the date of the balance sheet, less the fair value of the assets of the plan. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows. Interest rates used in this discount are consistent with market securities, which are denominated in the currency in which the benefits will be paid and that have upcoming maturities of those of the respective obligation of the pension plan.

Actuarial gains and losses arising from adjustments based on experience, in changes in actuarial assumptions and the income of the assets of the plan, are debited or credited in other comprehensive income.

Service costs passed on are recognized immediately in statement of profit and loss in the period of occurrence of a change of the plan.

F-64

With regard to defined contribution plans, the Company makes the payment of contributions in a mandatory, contractual or voluntary manner. The Company has no additional payment obligations once the contributions is made. The contributions are recognized as employee benefit expense when due. Contributions made in advance are recognized as an asset in the proportion in which a cash refund or a reduction in the future payments may be available.

3.19.2. Other post-employment obligations

Some companies of the Company offer post-retirement health care benefits to their employees, in addition to life insurance for active and inactive employees. The entitlement to these benefits is usually conditional upon the employee staying in the job until retirement age and the completion of a minimum time of service, or the disability of the employee in relation to being an active employee.

The expected costs of these benefits are accrued over the period of employment, employing the same accounting methodology that is used for the defined benefit pension plans. Actuarial gains and losses arising from adjustments based on experience, in changes in actuarial assumptions, are debited or credited in other comprehensive income, in the period expected for remaining service of the employees. These obligations are evaluated annually by qualified, independent actuaries.

3.19.3 Termination Benefits

Termination benefits are payable when employment is terminated by the Eletrobras system before the normal retirement date, or whenever an employee accepts voluntary termination in exchange for these benefits. The Eletrobras System recognizes termination benefits on the first of the following dates: (i) when the Eletrobras System no longer can withdraw the offer of these benefits; and (ii) when the entity recognizes the restructuring costs that are within the scope of the IAS 37 and involve the payment of termination benefits. In the case of an offer made to encourage voluntary termination, termination benefits are measured based on the number of employees who, hopefully, will accept the offer. The benefits that expire after 12 months from the balance sheet date are discounted to present value.

3.20. Provisions

Provisions are recognized for present obligations (legal orconstructive) resulting from past events, for which is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of each reporting period, taking into consideration the risks and uncertainties related to the timing or amount of the liability. When the provision is measured on the basis of estimated cash flows to settle the obligation, its book value corresponds to the present value of those cash flows (in which the effect of the time value of money is relevant).

F-65

When some or all of the economic benefits, required to settle a provision, can be recovered from a third party, an asset is recognized if, and only if, the reimbursement is virtually certain and the value can be measured reliably.

3.20.1. Provision for assets decommissions

A provision throughout the economic useful life of thermonuclear plants is constituted. The purpose of this provision is to allocate to its period of operation the costs to be incurred in relation to its technical and operational deactivation, at the end of its useful life, estimated at 40 years.

The values are charged to income or loss for the financial year at present value based on annual rates fixed in U.S. dollars, the ratio of 1/40 of the estimated expenses, recorded immediately and converted by the exchange rate at the end of each period of validity (see Note 32).

3.20.2. Provision for legal obligations connected with legal proceedings.

Provisions for legal contingencies are recognized when it is considered more likely than not the Company’s defence will be unsuccessful and the amount to settle the obligation and be reliably esitimated.

3.20.3. Onerous Contracts

Present obligations resulting from contracts for valuable consideration are recognized and measured as provisions. A contract for valuable consideration exists when the unavoidable costs to satisfy the obligations of the contract exceed the economic benefits expected to be received throughout the same contract.

3.21. Advance for future capital increase

Advances of resources received from the controlling shareholder and for capital contribution shall be granted in an irrevocable character. They are classified as noncurrent liabilities and initially recognized at fair value and subsequently updated by the contractually established index.

3.22. Share capital

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction of the value entered, net of taxes.

F-66

When the Company purchases its own shares (treasury shares), the amount paid, including any directly attributable incremental costs (net of income taxes), is deducted from the shareholders’ equity of the Company until the shares are cancelled or reissued. When these shares are subsequently reissued, any value received, net of any additional costs of the transaction, directly attributable and the respective effects of the income tax and social contribution, is included in shareholders’ equity of the Company.

3.23. Interest on shareholders’ equity and dividends

Interest on shareholders’ equity is imputed to dividends for the year being calculated taking as a limit a percentage on the equity, using the Long-Term Interest Rate – TJLP established by the Brazilian Government, as required by law, limited to 50% of net income for the year or 50% of the income reserves, before including the income from the period, whichever is greater.

The value of dividends above the mandatory minimum established by Law or another legal instrument, not yet approved in the General Assembly, are presented in Shareholders’ Equity, in a specific account called additional proposed dividends.

3.24. Revenue recognition

Income is measured at the fair value of the consideration received or receivable, deducting any estimates of returns and other similar deductions.

3.24.1. Sale of energy and services

a) Generation and Distribution

Distribution and generation income are classified as: i) Supply (sale) of Electrical Power to distributors; ii) Electrical power supply to the consumer, and; iii) Electrical Power in the Short-Term market. Income is measured at the fair value of the consideration received or receivable, net of taxes and of any discounts incident on it. Income from energy sales and services is recognized when it is probable that the economic benefits associated with the transactions will flow to the Company; the value of the income can be measured reliably; the risks and benefits related to the sale were transferred to the buyer; the costs incurred or to be incurred related to the transaction can be measured reliably; and the Company no longer holds control and responsibility over the energy sold. Construction income connected with the segment of electric power distribution and part of generation covered in the scope of the IFRIC 12 are also included.

For generating concessions renewed under Law No. 12,783/2013, there was a change of the price system for tariffs, with periodic tariff review in the same manner already applied to the transmission activity up to then. The rate is calculated on the basis of operation and maintenance costs, plus the rate of 10%, with the income being recognized for coverage of operation and maintenance expenses on the basis of the cost incurred.

F-67

b) Transmission

1) Financial income arising from the remuneration of the financial asset, until the end of the concession period, earned in a prorated manner takes into consideration the average rate of return on investments.

2) Income for coverage of operation and maintenance expenses on the basis of the cost incurred.

3) Income from infrastructure development is recognized in the results in relation to the stage of completion of the work, in accordance with the stipulations in IAS 11 technical pronouncement and measured based on fair values. Infrastructure development costs are recognized as they are incurred. The margin of construction adopted is established as being equal to zero, considering that:

(i) The Company activity is the transmission of electricity;

(ii) The entire income of construction is related to the construction of infrastructure for its activity, i.e., the transmission of electricity.

(iii) The Company outsources the infrastructure construction with unrelated parties.

3.24.2. Income from dividends and interest

Income from dividends from investments is recognized when the shareholder’s right to receive this dividend is established and provided that it is probable that the future economic benefits will flow to the Company and the value of the income can be measured reliably.

Income from a financial asset with interest is recognized when it is probable that the future economic benefits will flow to the Company and the value of the income can be measured reliably. The interest income is recognized by the straight-line method, based on time and at the effective interest rate on the amount of the outstanding principal. The effective interest rate is the one that discounts exactly the estimated future cash receipts during the estimated life of the financial asset in relation to the initial net book value of this asset.

F-68

3.25. Leasing

Commercial Leasing Operations are capitalized in fixed assets that the Company holds rights over tangible assets intended for the maintenance of its activities, arising from financial commercial leasing that transfer to the lessee the benefits, risks and control of assets. At the beginning of the financial lease, these assets are capitalized at the lower value between the fair value of the leased and the present value of the minimum lease payments.

The financial leases are accounted for as if they were a financed purchase, recognizing, at the time of purchase, a fixed asset and a financing liability (lease). Each installment paid of the lease is allocated partly to liabilities and partly to financial charges, so that in this manner a constant rate on the open debt balance is obtained. The corresponding obligations, net of finance charges, are included in other long-term liabilities.

Interest and other financial expenses are recognized in the statement of profit and loss during the lease period, in order to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The fixed asset acquired through financial leasing (a) is classified as Non-Current Assets being amortized over its useful life (Note 23.3).

3.26. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will meet the related conditions and that the grants will be received. Government grants are recognized systematically in the results during the periods in which the Company recognizes as expenses the related costs that the subsidy intends to compensate. Government grants receivable as compensation for expenses already incurred, with the purpose of offering immediate financial support to the Company, without corresponding future costs, are recognized in results of the period in which they are received and allocated to the income reserve and are not intended for the distribution of dividends.

3.27. Scheduled downtimes

Costs incurred prior to and during the shutdowns of power plants and transmission lines are charged to statement of profit and loss in which they are incurred.

F-69

3.28. Earnings (Loss) per share

Basic earnings (loss) per share is calculated by dividing the income (loss) attributable to shareholders of the Company by the weighted average number of outstanding shares (total shares less the treasury shares). Diluted earnings (loss) per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all diluted potential shares.

3.29. Operating Segments, Geographic and Other Information

Operating segments are defined as components of an entity that: a) engages in business activities from which it may earn revenues and incur in expenses, b) whose operating results are regularly reviewed by the entity’s chief operating decision maker-CODM to make decisions about resources to be allocated to the segments and asses its performance, and c) for which discrete financial information is available. The Company’s chief operating decision maker is the Board of Directors. The Company has determined that is has the following operating segments:

(I) Generation, whose activities consist of the generation of electricity and its sale to electricity distribution companies and free customers, and trading activities;

(II) Transmission, whose activities consist of transmission of electricity on behalf of electricity concessionaires;

(III) Distribution, whose activities consist of transmission of electricity on behalf of electricity concessionaires; and

(IV) Management, whose activities comprises the items that cannot be attributed to the other segments, particularly those linked to the corporate financial management, compulsory loans, equity investments and other expenses;

(V) Eliminations, whose activities represents intercompany transactions eliminated for consolidation purposes.

Transactions between these operating segments are determined on a carried out at prices and conditions that are defined by the parties, that take into consideration the terms that could be applied in the market with unrelated parties.

The segment information presented herein related to the year ended December 31, 2014 contemplates the adjusting subsequent events identified by the Company related to investigation findings, compulsory loan and ICMS (value added tax) – Fuel accounting comsuption.

Segment net profit (loss) for the period, as included in the internal management reports reviewed by the Company’s CODM, is used to measure segment performance. Segment net profit (loss) for the period is determined using the same accounting policies to determined consolidated net profit and loss for the year.

F-70

Segment assets as included in the internal management reports reviewed by the Company’s CODM consists of fixed assets and intangible assets. Segment assets is determined using the same accounting policies used to determine consolidated fixed assets and consolidated intangible assets.

Segment liabilities information is not provided to the CODM and, therefore, have not been disclosed.

Substantially all of the Company’s revenue are from external customers located in Brazil and all of the Company’s non-current assets are physically substantially located in Brazil. Consequently, there is no further geographic revenue and non-current assets disclosure necessary.

Information about revenues by products and services from external customers is included in Note 38 and Note 45.

There are no revenues derived from a single customer that represents 10 percent or more of the Company’s consolidated revenue for the years ended December 31, 2015, 2014 and 2013.

NOTE 4 – ACCOUNTING ESTIMATES AND JUDGEMENTS

In applying the accounting policies, the Company Management must make judgments and prepare estimates regarding the book values of income, expenses, assets and liabilities, as well as the disclosures in the explanatory notes, on the base date of the consolidated financial statements, which are not easily obtained from other sources. The estimates and the respective assumptions are based on historical experience and other factors considered relevant. The estimates and underlying assumptions are revised on an ongoing basis. The effects of revisions made to accounting estimates are recognized in the period in which the estimates are revised, if the revision affects only that period, or also in later periods if the revision affects both the current period and future periods.

Although these estimates and assumptions are permanently monitored and reviewed by the Company Administration and its subsidiaries, the materialization in relation to the book value of income, expenses, assets and liabilities is inherently uncertain, due to its being based on judgment. Consequently, the Company may suffer effects arising out of the inaccuracy of these estimates and judgments that are substantial in future periods, that could have material adverse effects on the consolidated financial status, the result of activities and/or the cash flows.

Below, the main assumptions of the accounting estimates evaluated are presented as the most critical by the Administration of the Company and its subsidiaries, with respect to the future and other principal sources of uncertainty used which can lead to significant adjustments in financial values of assets and liabilities in the coming periods:

F-71

I. Deferred tax assets and liabilities

Estimates of taxable income, the basis for the analysis of realization of net deferred tax assets, are based on the annual budgets and on the strategic plan, both reviewed periodically, as well as the profitability history. However, the future taxable income may be greater or less than the estimates considered by the Administration at the time of the definition of the need to record or not the amount of the deferred tax asset (see note 11).

II. Impairment of long-term assets

The Administration of the Company has considered assumptions and technical data in determining long-term asset recovery, to check if the fixed asset is not recorded in value that is higher than the recoverable value in the future, impairment should be recognized. In this practice assumptions are applied, based on historical experience in asset management, together with the assets or cash-generating unit, and valuation practices usually used in the market. These assumptions may possible not be verified in the future, in particular in relation to the estimated economic useful life. Currently, the useful life adopted by the Company is in accordance with certain practices determined by the ANEEL, applicable on assets connected with the granting of the public electric power service, which may vary as a result of the periodic analysis of the economic useful life of assets, in effect. Additionally, the useful life is limited to the period of the concession only for operations within the scope of the IFRIC 12.

Also they impact on determining the variables and assumptions used by the Administration of the Company and its subsidiaries in the determination of future discounted cash flows, for the purposes of recognition of the recoverable value of long-term assets, with various inherently uncertain events. Among these events are: the maintenance of electric power consumption levels; growth rate of economic activity in the country; and availability of water resources; beyond those inherent to the purpose of the periods of public electric power service concessions, in particular with regard to the value of their reversal at the end of the concession period. In this point, the assumption was adopted that the compensation is contractually provided, where applicable, through the new replacement value (VNR), for generation and transmission. These are the expected values of compensation at the end of the period of the electric power generation and, transmission concessions (see accounting practice in Note 3.11 and movement of supplies made in the period in Note 20). The most relevant was the discount rate used on cash flows, with the definition of a specific percentage for the generation segment, 7.00%. The rate used for Angra 3 considered specific characteristics of the nuclear segment, as well as assumptions related to financing, capital structure specific to the project and leveraged beta calculated upon assumptions used by ANEEL. The percentage used was 5.47%.

III. Basis of determination of indemnification by the Federal Government on concessions

Law No. 12,783/2013, enacted on January 11, 2013, defined the new replacement value (VNR) as the indemnification for determining compensation by the power grantor in relation to public service concessions. The Company adopted, for the concessions still not extended, the assumption that the assets are reversible at the end of the concession contract. Following this assumption, for the concessions already extended, the values receivable from grantor, related to the Basic Grid of the Existing System – RBSE to investments made after the basic project of power plants and transmission lines (modernization and improvements) and thermal generation assets. These values are subject to approval by the ANEEL as disclosed in Note 2.1. The Company adopted the new replacement value (VNR), as a basis of measuring the value to be indemnified by the Concession Grantor, of the portion of generation and transmission assets not fully depreciated at the end of the concession. For distribution assets the Regulatory Basis of Remuneration – BRR was defined for this measurement.

F-72

IV. Useful life of fixed assets

The Administration of the Company uses the criteria defined in ANEEL resolution 367, of June 2, 2009, in determining the estimated useful life of fixed assets, limited to the period of concession for the operations that are under the scope of IFRIC 12, in order to understand that they present fairly the useful life (see Note 17).

V. Provision for assets decommission

The Company recognizes a provision for decommissioning liabilities in relation to deactivation of assets related to its thermonuclear plants. To determine the value of the provision, assumptions and estimates are made in relation to discount rates, the estimated cost for decommissioning liabilities and removal of the entire local power plant and at the time expected in relation to the referred costs (see Note 32). The cost estimate is based on the legal and environmental requirements for the decommissioning liabilities and removal of the entire plant as well as the prices of products and services to be used at the end of its useful life.

VI. Actuarial obligations

The actuarial obligations recorded are determined by actuarial calculations prepared by independent actuaries based on life expectancy of the participant (Table AT-2000), average age of retirement and inflation. However, the future actual results of benefits may be different from those existing and recorded in the accounting (see Note 30).

VII. Provision for labor, tax and civil matters

Provisions for labor, tax and civil matters, when applicable, are made when there is a present obligation (legal or constructive) as a result of a past event, it is probable (more likely than not) there will be an outflow of resources that embodies economic benefits to settle the obligation, and a reliable estimate of the amount to settle the obligation can be made. This assessment is made using the judgment of management, including advice from its legal counsel, considering case law, decisions in the courts, the history of any agreements and decisions, the experience of management and legal counsel, as well as other relevant aspects (See Note 31).

VIII. Allowance for doubtful accounts – ADA

The Company records a provision concerning accounts receivable and loans granted that the Management believes there is uncertainty in relation to receipt. The ADA for clients is created based on amounts receivable from the residential consumer class and overdue for more than 90 days, from the commercial class and overdue more than 180 days, and from the industrial, rural, government, public illumination and public service classes overdue for more than 360 days. It also considers an individual analysis of securities receivable and each consumer’s balance, based on the Management’s experience regarding effective losses in the stock of real guarantees.

F-73

The ADA on loans granted is created based on amounts receivable and overdue. This ADA is reversed whenever a debt is settled or renegotiated.

IX. Evaluation of financial instruments

As described in Note 44, the Administration of the Company uses valuation techniques that include information that are not based on observable market data to estimate the fair value of certain types of financial instruments. Note 44 presents information about the main assumptions used in determining the fair value of financial instruments, as well as the analysis of the sensitivity of these assumptions. The Administration of the Company and its subsidiaries believes that the selected evaluation techniques and assumptions used are suitable to determine the fair value of the financial instruments.

X. Onerous Contracts

The Company and the subsidiaries use assumptions related to economic costs and benefits of each contract for the determination of the existence or not of an onerous contract. In the case of long-term commitments such as purchase and sale of energy, one of the critical estimates in determining the amount of provision for the future sale of the contract is the Price of Settlement of Differences (PLD) the historical average approved by the Administration of the Company as a basis for the calculation of the provision of the onerous contract, exclusively for accounting purposes, as well as the discount rate used for the cash flows. The actual values of the PLD and/or of elements considered within the discount rate over the years can be higher or lower than the assumptions used by the Company. Additionally, the Company may have onerous contracts in concessions where the current expected cost for operation and maintenance is not fully covered by revenues (see Note 34).

XI. Risks related to compliance with laws and regulations

In 2009, the Brazilian federal authorities initially focused the Lava Jato investigation at criminal organizations engaged in money laundering. The Lava Jato operation involves numerous investigations into several criminal practices focusing on crimes committed by individuals and organizations in Brazil. Since 2014, the Brazilian Federal Prosecutor’s started focusing part of the investigation on irregularities involving state owned companies’ contractors and suppliers and uncovered a broad payment scheme that involved a range of participants.

Although no criminal charges have been brought against the Company as part of Lava Jato operation, the Brazilian Federal Prosecutor’s Office has been investigating irregularities involving certain Company’s employees, contractors and suppliers, as well as certain contractors and suppliers of special purpose entities (“SPEs”) in which Eletrobras holds minority interests, involved in the construction of power generation plants.

As a response to allegations of potential illegal activities in 2015 relating to companies that provide services to the Company’s subsidiary, Eletrobras Termonuclear S.A. – Eletronuclear (“Eletronuclear”) (specifically, “NTU Angra 3” nuclear power plant), and to certain Company’s SPEs, Eletrobras’ Board of Directors engaged the law firm Hogan Lovells US LLP to undertake an independent internal investigation for the purpose of assessing the eventual existence of irregularities, including violations of the U.S. Foreign Corruption Practice Act (FCPA), the Brazilian Anticorruption Law and the Eletrobras’ code of ethics (the “Independent Investigation”).

F-74

The Independent Investigation is subject to oversight by a commission that was created by the Board of Directors of Eletrobras on July 31, 2015. This commission is composed of Ms. Ellen Gracie Northfleet, a retired Federal Supreme Court judge, Mr. Durval José Soledade Santos, former director of the Comissão de Valores Mobiliários (Brazilian Securities Exchange Commission), and Mr. Manoel Jeremias Leite Caldas, representative of minority shareholders (the “Independent Commission”).

The Company, Hogan Lovells and the Independent Commission have been closely monitoring the official investigations and cooperating with Brazilian and United States authorities, including Federal Courts (Justiça Federal); Federal Prosecutors’ Office (Ministério Público Federal or “MPF); Brazilian Securities Commission (Comissão de Valores Mobiliários or “CVM”); Council for Economic Defense (Conselho Administrativo de Defesa Economica or “CADE”), United States Department of Justice (“DOJ”), United States Securities & Exchange Commission (“SEC”), among others, and have responded to requests for information and documents from these authorities.

On April 29, 2015, the Federal Police commenced the “Radioactivity Operation” phase of Operation “Lava Jato”, which resulted in the imprisonment of a former officer of our subsidiary Eletrobras Termonuclear S.A – Eletronuclear. This former officer was sentenced to 43 years in prison, by the judge of the 7th Federal Criminal Court, for passive bribery, money laundering, obstruction of justice, tax evasion and participation in a criminal organization. On July 6, 2016, the Federal Police commenced “Operation Pripyat”, in which the Federal Police served arrest warrants issued by the judge of the 7th Federal Court of the District of Rio de Janeiro against former officers and suspended officers of Eletronuclear as well against other parties. Eletrobras cooperated and participated with the prosecution against the defendants in these criminal proceedings. Eletrobras intends, in the future, to pursue civil remedies against these defendants.

Since the start of the investigation, the Company replaced its entire Board of Directors, hired a new CEO and a Compliance Officer, and created an independent Compliance Department to help coordinate compliance across subsidiaries. The Compliance Officer and her team direct the work and liaise on a weekly basis with compliance managers at each subsidiary.

In addition, the Company reviewed certain contracts where the investigations identified potential irregularities and, when applicable, suspended such contracts. Eletrobras took administrative measures in relation to employees and officers involved in the situations identified by the investigation, including the suspension and termination of the employment agreement

The Independent Investigation team has completed the investigation designed to identify misstatements to the Company’s consolidated financial statements. The Independent Investigation team is still in the process of performing some procedures, focusing on internal compliance matters. Accordingly to the best of Company’s current knowledge, these procedures are not expected to provide any additional relevant information that would materially impact the Company’s consolidated financial statements in future periods.

F-75

Notwithstanding, the investigations under Lava Jato are also still ongoing and the Federal Prosecutors Office may take a considerable amount of time to conclude its procedures. Therefore, new relevant information may be disclosed in the future, which could cause Eletrobras to recognize additional adjustments in its consolidated financial statements.

a) Summary of the conclusions of the Independent Investigation

The final reports from the Independent Investigation include certain findings with their related qualitative and estimated quantitative financial statements impacts (disclosures and/or accounting) in some but not all of the power generation projects included in the scope of the investigation. The Independent Investigation reports determined overpricing related to bribery and bid-rigging (a form of fraud in which a commercial contract is promised to one party even though for the sake of appearance several other parties also present a bid. This practice is illegal in most countries.) activities deemed to be of an illicit nature, in some contracts, since 2008, with certain contractors and suppliers of the affected projects. The range of bribery estimated impacts is from 1% to 6% of the contract price and certain other fixed amounts, and the bid-rigging estimated impacts is 10% of payments related to one specific contract (R$ 16 million). The impacts of the Independent Investigation on the financial statements are presented below under item “Impacts on the Consolidated Financial Statements”.

The Independent Investigation includes findings related to bid-rigging and bribes that would have been paid by certain contractors and suppliers hired by subsidiaries of the Company, as well as certain contractors and suppliers of some of SPEs not controlled by the Company.

The Independent Investigation includes findings related to bribes that would have been received by certain former personnel or personnel of subsidiaries or SPEs not controlled by the Company.

The Independent Investigation discovered bribes used to fund improper payments to political parties, elected officials or other public officials, individual contractor personnel, former personnel of subsidiaries or SPEs of Eletrobras and other individuals involved in bid-rigging. Most of alleged improper payments were made by the contractors and suppliers and by intermediaries acting on behalf of those contractors and suppliers.

In addition, the final reports from the Independent Investigation include separate findings related to possible overpricing on some of the power generation projects included on its scope of investigation. As the Independent Investigation did not conclude that such possible overpricing was caused by unlawful activity, the Company’s management does not believe that this possible overpricing would impact its consolidated financial statements.

b) Impacts on the consolidated financial statements

In order to determine the adjustments or disclosures in the Company’s consolidated financial statements as a result of the investigation, management took into consideration the conclusions reached and findings reported in each one of the final investigation reports which were approved by the Independent Commission, the Board of Directors, the Audit Committee (Fiscal Council) and the Board of Executive Officer, those in charge of the Company’s governance.

F-76

The Company concluded that, under International Accounting Standard IAS 16 – Property, Plant and Equipment, the amounts attributable to overpricing due to bribes and/or to bid-rigging activities deemed to be of an illicit nature, should not have been capitalized as part of the cost of its property, plant and equipment – PP&E or in the PP&E of its SPEs not controlled by the Company. Those amounts that had been capitalized as part of the contract price are not a cost attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

However, the Company is unable to determine each of the periods prior to 2014 in which the adjustments should be recorded in its consolidated financial statements because of the following:

- The information made available to the Company by the Independent Investigation or otherwise available to the Company identifies the contractors and suppliers involved in the overpricing scheme and a range period of time it was in effect and indicates certain affected contracts, but does not specify individual contractual payments that include overcharges or the reporting periods in which overpayments may have occurred (the investigation reports and findings determined that there was no reasonable basis to establish or estimate the specific periods and the amounts of overpricing that occurred);

- As most of these alleged overpayments were made by outside contractors and suppliers, we cannot identify the exact amounts and periods that the Company may have overpaid. The information to determine the amount by which the Company was potentially overcharged by these contractors and suppliers is not contained within the Company’s accounting records or internal control systems. Also, the information used in this investigation is limited to the Company’s internal information, and that of its subsidiaries and SPEs not controlled by the Company, did not provide sufficient information to determine the amounts of such overpayments prior to 2014 and a period by period basis;

- Because the alleged overpayments are of an illicit nature, even though the depositions available to the investigation team revealed certain information that allowed the total estimate to be made, they did not provide sufficient information to determine the periods prior to 2014 when the overpayments have occurred, and specific records of these activities are not expected to be available; and

- The investigation underway by the Brazilian authorities is focused on determining the involvement of the people under investigation with illegal acts, and not on obtaining quantitative information on each one of the prior periods. In addition, Brazilian legislation does not allow unrestricted access to internal records and documents of suppliers in civil lawsuits and, therefore, we do not expect to have information with respect to prior periods.

As previously discussed, there is not sufficient information to allow the Company to determine the specific period during which the Company made specific overpayments, thus the Company understands that, after exhausting all reasonable efforts, it is impracticable to determine the period-specific effects prior to 2014 of the overpayments on its consolidated financial statement, accordingly, the adjustment for the overpayments incorrectly capitalized was recognized in the 2014. The Company believes this approach is the most appropriate pursuant to the requirements of IFRS for the correction of an error.

In addition, the Company has evaluated the materiality of the impact of the payment scheme on prior periods presented in its financial statements for comparative purposes considering the allocation of the payments since 2008 in order to estimate the allocation on a pro rata basis out of each of the actual contract payments and capitalized correspondingly. The allocation exercise indicated adjustment of the overpayment that was improperly capitalized would not have been material to any of the prior periods presented for comparative purposes.

The Company also has not recovered and cannot estimate any recoverable amounts potentially overpaid at this time. Any amounts ultimately recovered would be recorded as income when received or when their realization becomes virtually certain.

F-77

Consequently, as permitted under IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, the Company charged to expense in its 2014 consolidated financial statements the cumulative estimated amounts of illegal payments made for all periods prior to 2015.

For the amounts of illegal payments identified by the Company, which relate to contracts/amendments entered after December 31, 2014, they were charged to expense in the Company’s 2015 financial statements.

The Company did not identify any amounts after December 31, 2015 that may have been affected by the overpricing scheme.

Therefore, in 2014, the Company expensed the total of R$ 195.1 million of capitalized costs representing estimated amounts that Eletrobras subsidiaries overpaid for the acquisition of property, plant and equipment since 2008, and, as a result, an amount of R$ 132.4 million related to impairment losses recorded in 2014 by these Eletrobras subsidiaries have been reversed. Likewise, the Company recognized a loss of R$ 91.5 million in its results from equity method investments related to certain equity investees (SPEs not controlled by the Company). The amounts included both the findings from the final reports of the Hogan Lovells independent investigation and the corresponding borrowing costs and other charges capitalized.

Additionally, based on the final reports of the Independent Investigation relating to financial and accounting matters, the Company expensed in 2015 R$ 16.0 million related to contracts/amendments entered after December 31, 2014, and, as a result, an amount of R$ 11.5 million related to impairment losses previously recorded by these Eletrobras subsidiaries have been reversed.

The summary of these cumulative adjustments to the 2015 and 2014 consolidated balance sheets and consolidated statement of profit or loss are as follows:

Investigation findings	Dec 2015		Dec 2014
Angra 3	(11,514	)	(129,799	)
Mauá 3	(4,482	)	(62,684	)
Simplício	—		(2,644	)
	(15,996	)	(195,127	)

Balance sheets	Dec 2015		Dec 2014
Fixed Assets
Cost	(15,996	)	(195,127	)
Impairment Provision	11,514		132,443
Equity method investments	—		(91,464	)
	(4,482	)	(154,147	)
Statments of profit and loss	Dec 2015		Dec 2014
Investigations findings	(15,996	)	(195,127	)
Impairment charges (Operating provisions)	11,514		132,443
Results of equity method investments	—		(91,464	)
	(4,482	)	(154,147	)

Under Brazilian income tax legislation, amounts related to illegal acts are not recoverable, therefore the adjustments do not have any income tax impact. Also, as the findings from the Independent Investigation relate to assets under construction, there was no depreciation expense impact.

F-78

As mentioned in “Summary of the conclusions of the Independent Investigation” above, the Company did not recognize on its financial statements any effects of potential overpricing other than the estimates related to briberies and bid-rigging activities deemed to be of an illicit nature, as the Independent Investigation did not conclude that such potential overpricing is linked to any illicit activity.

The Company has not recovered and cannot estimate the recoverable amounts potentially overpaid at this time. Once and if any amounts attributable to bribery, bid-rigging or any other type of overpricing become recoverable, virtually certain to be received or are in effect received, then they will be recognized in our financial statements.

The Company has taken reasonable steps to investigate the allegations relating to Lava Jato, and it will pursue relevant civil and criminal remedies.

c) Legal proceeding involving the Company

On July 22, 2015 and August 15, 2015, two putative securities class action complaints were filed against the Company and certain of the Company’s employees in the United States District Court for the Southern District of New York (SDNY). On October 2, 2015, these actions were consolidated and the Court appointed lead plaintiffs, Dominique Lavoie and the City of Providence. The plaintiffs filed a consolidated amended complaint on December 8, 2015 purportedly on behalf of investors who purchased the Company’ U.S. exchange-traded securities from August 17, 2010 to June 24, 2015, and filed a second amended complaint on February 26, 2016. The plaintiffs have not specified an amount of damages they are seeking, such amount, when specified, could be material to the Company.

The second amended complaint alleges, among other things, that the Company and the individual defendants knew or should have known about alleged fraud committed against the Company by a cartel of construction firms, as well as bribes and kickbacks allegedly solicited and received by the Company employees; that the Company and the individual defendants made material misstatements and omissions regarding the alleged fraud; and that the Company stock price declined when the alleged fraud was disclosed.

The plaintiffs have not specified an amount of damages they are seeking, although such amount, when specified, could be material to the Company. On April 15, 2016, the Company filed a motion to dismiss the second amended complaint, which was fully briefed and then submitted to the Court on June 17, 2016. The motion remains under consideration by the Court; oral argument has been requested but not yet scheduled. The Company intend to defend vigorously against the allegations made in the action.

Management of the Company believes the filings of the complaints do not create a present obligation of the Company under IAS 37. Because the litigation is still in its early stages, the discovery process has not yet begun, and the outcome of the litigation is subject to considerable uncertainty, it is not possible at this stage for management of the Company to reliably estimate the potential loss or range of losses, if any, that may result from the ultimate resolution of these legal proceedings. Therefore, no provision has been recognized in the Company’s consolidated financial statements. The ultimate outcome of these legal proceedings could have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows in the future.

F-79

NOTE 5 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

	12/31/2015		12/31/2014
I - Cash and cash equivalents:
Cash and Banks		656,505		251,031
Short term securities		737,468		1,156,047
		1,393,973		1,407,078
II - Restricted cash:
Resources of the CCC		346,874		355,095
Commercialization - Itaipu		47,082		729,560
Commercialization - PROINFA		232,785		585,201
RGR Funds		20,692		73,669
		647,433		1,743,525
		2,041,406		3,150,603

The financial resources are maintained in the Banco do Brasil S.A., in accordance with the specific legislation for Mixed-Capital Companies under the control of the Federal Government, issued in Decree Law No. 1,290 of December 3, 1973, with amendments arising from Resolution 4,034, of November 30, 2001, the Central Bank of Brazil, which established new mechanisms for the applications of the companies that are members of the Indirect Federal Administration.

Financial applications for immediate liquidity are found in financial-extra-market investment funds, which have as a goal profitability in relation to the average referential rate of the Special System of Liquidation and Custody - SELIC, for the acronym in Portuguese.

Restricted cash - Are the resources collected by the respective funds that are used exclusively to meet their own regulatory provisions, and are not available to the Company.

F-80

NOTE 6 – MARKETABLE SECURITIES

By means of Resolution No. 3.284, of May 25, 2005 by the Central Bank of Brazil, it was established that the applications arising from resources of public enterprises and mixed-capital companies, that are members of the Indirect Federal Administration, can only be made in the off-market sector investment funds managed by Caixa Economica Federal and Banco do Brasil S.A., after the Company and its subsidiaries apply their resources in off-market Funds backed by public securities with substantially long-term maturity, which include both the enterprise investment program in the short term and the maintenance of the Company’s operating cash.

In relation to shares, the adjustment is made to present value. Investment certificates resulting from tax incentives of the Fundo de Investimento do Nordeste - FINOR and the Fundo de Investimentos da Amazônia - FINAM, for the acronym in Portuguese, are adjusted by provisions for losses on their realization and therefore are liquid.

The details of the securities are as follows:

	CURRENT
Securities	Custodian Financing Agent		Expiration		Index		12/31/2015		12/31/2014
LFT		Banco do Brasil		After 90 days		SELIC		195,368		310,652
LTN		Banco do Brasil		After 90 days		Pre-fixed		4,691,729		1,879,832
LTN		CEF		After 90 days		Pre-fixed		214,210		13,315
NTN- B		Banco do Brasil		After 90 days		IPCA		467,735		182,029
NTN- F		Banco do Brasil		After 90 days		Pre-fixed		191,693		51,008
Committed Options		Banco do Brasil		—		—		—		1,160,926
Committed Options		CEF		—		—		1,082,039		132,583
TOTAL CURRENT								6,842,774		3,730,345
	NON-CURRENT
Securities	Custodian Financing Agent		Expiration		Index		12/31/2015		12/31/2014
NTN- B		Banco do Brasil		After 90 days		IPCA		405		352
FINOR/FINAM		—		—		—		916		1,240
BENEFICIARY SHARES		—		—		—		190,847		203,425
OTHERS		—		—		—		2,822		19,717
TOTAL NON-CURRENT								194,990		224,734

F-81

6.1. BENEFICIARY SHARES - Securities acquired as a result of the restructuring of the Company’s investment in the subsidiary INVESTCO S.A.. These assets guarantee annual income equivalent to 10% of the income of the companies mentioned below, paid together with dividends, and will be redeemed at maturity scheduled for October 2032, through their conversion into preferred shares of the capital stock of these companies, as shown below:

	12/31/2015			12/31/2014
Lajeado Energia		451,375			451,375
Paulista Lajeado		49,975			49,975
Ceb Lajeado		151,225			151,225
Face value		652,575			652,575
Adjustment to present value		(461,728	)		(449,150	)
Present value		190,847			203,425

F-82

NOTE 7 – ACCOUNTS RECEIVABLES

	12/31/2015															12/31/2014
	Coming due			Due after 90 days			+ 90 days			Renegotiated credits (b)			Total			Total
CURRENT
AES ELETROPAULO		18,072			—			—			—			18,072			54,004
AES SUL		24,294			—			—			—			24,294			35,904
AMPLA		26,661			—			—			—			26,661			28,902
CEA		9,271			9,782			—			225,514			244,567			202,735
CEB		5,366			454			—			—			5,820			10,370
CEEE		29,908			—			—			—			29,908			42,767
CELESC		44,085			—			—			—			44,085			41,932
CELPA		39,191			—			8,210			18,891			66,292			69,552
CELPE		22,508			—			60			—			22,568			26,046
CEMAR		23,803			—			—			—			23,803			24,630
CEMIG		37,797			—			—			—			37,797			50,591
CESP		6,428			—			—			—			6,428			2,882
COELBA		36,008			—			59			—			36,067			32,813
COELCE		30,935			—			—			—			30,935			31,450
COPEL		67,248			—			—			—			67,248			107,239
CPFL		14,082			—			165			—			14,247			42,427
EBE		7,968			—			—			—			7,968			9,035
ELEKTRO		42,180			—			—			—			42,180			56,250
ENERGISA		24,451			4,495			58,552			—			87,498			17,832
ENERSUL		14,767			—			1,601			—			16,368			18,493
ESCELSA		17,457			—			60			—			17,517			22,231
LIGHT		55,856			—			122			—			55,978			56,731
PIRATININGA		3,215			—			54			—			3,269			6,244
RGE		27,095			—			1			—			27,096			15,925
Debt Rollover		—			—			—			22,840			22,840			22,076
CCEE Trade		126,415			292,605			20,458			—			439,478			60,366
Use of Electric Grid		211,521			3,648			36,172			—			251,341			412,377
PROINFA (a)		379,214			—			—			—			379,214			399,132
Household consumer		266,504			313,916			120,646			113,311			814,377			843,953
Industrial consumer		317,729			43,641			183,214			94,062			638,646			608,273
Rural consumer		27,495			22,520			16,587			38,022			104,625			185,909
Commerce, services, and other activities		196,370			82,103			60,768			75,289			414,529			371,712
Public entities		118,925			78,999			236,844			60,918			495,686			794,810
Others		712,777			31,030			124,478			41,258			909,544			879,372
(–) PCLD (Doubtful Accounts) (c)		(24,417	)		(137,127	)		(1,013,837	)		(114,064	)		(1,289,445	)		(1,157,749	)
		2,961,180			746,067			(145,787	)		576,041			4,137,501			4,427,216
NON-CURRENT
CEB		—			—			14,111			—			14,111			—
CELPA		—			—			—			19,317			19,317			35,911
CCEE Trade		—			—			293,560			—			293,560			293,560
Use of Electric Grid		—			—			6,276			—			6,276			6,276
PROINFA (a)		—			—			125,383			—			125,383			174,324
Debt Rollover		—			—			—			489,556			489,556			930,380
Public entities		—			—			—			290,965			290,965			426,847
Household consumer		—			—			—			50,220			50,220			44,331
Industrial consumer		—			—			—			49,584			49,584			41,400
Rural consumer		—			—			—			65,673			65,673			60,196
Commerce, services, and other activities		—			—			—			175,812			175,812			192,403
Others		—			—			30,030			653,173			683,203			39,890
(–) PCLD (Doubtful Accounts) (c)		—			—			(326,699	)		(103,504	)		(430,203	)		(502,014	)
		—			—			142,661			1,690,796			1,833,457			1,743,504
		2,961,180			746,067			(3,126	)		2,266,837			5,970,958			6,170,720

(a) Eletricity Trading – PROINFA

F-83

Electric energy trading operations under the Incentive Program for Alternative Energy Sources – PROINFA generated a negative net balance in fiscal 2015 of R$ 355.526 (December 31, 2014 - positive in R$ 72,113), producing no effect on net income or loss for the financial year of the Company, and this figure is included under the item Compensation Obligations. In the balance of reseller consumers is recorded the amount of R$ 504,597 from PROINFA referring to the Parent Company (December 31, 2014 - R$ 573,456).

(b) Renegotiated credits

Are the amounts resulting from consolidating payments of debts on overdue energy supply accounts from consumers in default, or which are coming due, charged in energy bills.

Renegotiated credits from debt rollover are from a credit assignment contract between the Union and the subsidiaries Furnas and Eletrosul, in accordance with the Public Sector Finance Consolidation Program (Law no. 8,727, of November 5, 1993). The Union assumed, refinanced and rescheduled the debt into 240 monthly payments, which matured starting in April of 1994. If any amounts are outstanding after a 20-year term the payments will be extended for another 120 months, since the Union only passes on funds received from the states, which in turn are limited by law due to revenue commitment. These represent R$ 512,396 as of December 31, 2015 (R$ 952,456 as of December 31, 2014).

(c) Allowance for doubtful accounts

The subsidiaries constitute and maintainan allowance for doubtful accounts, from analysis of constant values of accounts receivable due and from the loss history, for which the amount is regarded by the Administration as sufficient to cover possible losses in the realization of these assets.

Subsidiaries that act in the Distribution sector use the following provision criteria:

Relevant Debts – Clients connected in High Tension

The provision includes values corresponding to (due) invoices of clients with due debts as they meet the following due scale, including the Non-Invoiced Income. This is the provision table:

CONSUMPTION CLASS	PROVISIONING PERIOD
Household		60 days
Industrial		180 days
Commercial, Rural		90 days
Public Entities		150 days
Public Service		120 days
Supply, Free Consumer, and PIE		60 days

F-84

Non-relevant Debts

Clients connected to Low Tension: The provision includes values corresponding to (due) invoices of clients with due debts as they meet the following due scale:

F-85

CONSUMPTION CLASS	PROVISIONING PERIOD
Household		90 days
Industrial, Rural, Public Entities and Public Service		180 days
Commercial and Public Lighting		150 days

Installment Payment of Doubtful Accounts

Installment Payment of Doubtful Accounts includes the sum of the balance that is due and will be due, including interest, which values have been included in the provision of due amounts prior to the installment payment, when the full adjustment in installment was unsecured and compliant with the following criteria:

Number of Installments	Provision or Reversal of Private Classes	Provision of Reversal of Public Classes
Up to 36	Actual payment of 5 installments	4 installments invoiced, due and not paid
From 37 to 60	Actual payment of 5 installments	4 installments invoiced, due and not paid
More than 60	Actual payment of 6 installments	6 installments invoiced, due and not paid

The ADA balance is comprised as follows:

	12/31/2015		12/31/2014
Consumers		609,403		651,875
Resellers		816,685		714,328
CCEE - Short Term Energy		293,560		293,560
		1,719,648		1,659,763

The subsidiary Furnas maintains a provision, initially recognized in 2007, amounting to R$ 293,560. This provision represents historical values relating to the marketing of energy within the framework of the now defunct Wholesale Energy Market – MAE, for the period from September 2000 to September 2002, whose financial settlement is suspended, on the basis of concession of injunctions in lawsuits proposed by electrical power distribution utilities, against the ANEEL and the MAE, today the CCEE.

F-86

The movements in the Allowance for doubtful Accounts of consolidated electric power customer accounts are as follows:

Balance on December 31, 2012	2,937,057
(+) Charged to bad debt expense for the year	338,313
(–) Reversal	(1,131,184	)
(–) Write off	(227,378	)
Balance on December 31, 2013	1,916,808
(+) Charged to bad debt expense for the year	559,141
(–) Reversal	(475,221	)
(–) Write off	(340,965	)
Balance on December 31, 2014	1,659,763
(+) Charged to bad debt expense for the year	832,632
(–) Reversal	(286,629	)
(–) Write off	(486,118	)
Balance on December 31, 2015	1,719,648

Bad debt expense and the reversal of the Allowance for doubtful Accounts are recorded in income or loss for the financial year as Operational Provisions (Note 42). The receivable and the related allowance amounts are written off when all collection efforts are exhausted and it is virtually certain no amount will be collected.

Bad debt expense during 2015 occurred in the subsidiaries Furnas in the amount of R$ 137,507 and Boa Vista in the amount of R$ 197,353.

For tax purposes, any excess provision calculated, in relation to the terms of Articles 9 and 10 of Law No. 9,430/1996, were added to Actual Income and to the taxable base for the Social Contribution on Net Income – CSLL, for the acronym in Portuguese.

NOTE 8 – INDEMNIFICATIONS – LAW 12,783/2013

When concessions were renewed, the subsidiaries, Eletronorte Eletrosul and Chesf opted for receipt of 50% of the value in cash and the remainder in installments, and the subsidiary Furnas opted for receiving the large part of the compensation in installments, pursuant to Ministerial Ordinance 580/MME/MF, of November 1, 2012.

As provided for in legislation, the installment value will be received in monthly installments up to the date of the original closure of the concession, updated by the IPCA, plus the remuneration for the weighted average cost of capital (WACC) of 5.59% per annum. The update is counted from December 4, 2012, the date of signature of the addendum to the concession contract.

F-87

The changes to values pertaining to the compensation receivable from the grantor in relation to Law No. 12,783/2013 is shown below:

	12/31/2015			12/31/2014			12/31/2013
Initial balance		3,738,295			5,496,179			14,437,272
Amounts received		(4,027,661	)		(2,773,092	)		(9,819,946	)
Monetary adjustment		289,366			1,015,208			878,853
Final balance		—			3,738,295			5,496,179
Total CURRENT		—			3,738,295			3,476,495
Total NON-CURRENT		—			—			2,019,684
		—			3,738,295			5,496,179

NOTE 9 – LOANS AND FINANCING

	12/31/2015
			CHARGES CURRENT			PRINCIPAL
	Avg. Rate		Value			CURRENT			NON CURRENT
ITAIPU		7.11		—			1,894,766			12,907,368
CEMIG		5.09		973			54,104			134,907
COPEL		6.39		471			35,102			50,744
CEEE		5.00		199			9,320			23,884
AES ELETROPAULO		10.00		338,017			10,561			—
CELPE		5.00		69			8,395			5,199
CELG		8.12		1,249			188,502			51,048
ENERGISA – MT		9.19		2,549			52,942			255,206
ENERGISA – TO		10.58		998			20,031			87,231
ENERGISA – MS		5.21		222			12,426			28,968
CELPA		5.00		70,479			248,059			274,415
CEMAR		2.12		1,080			69,842			205,017
CESP		5.09		123			5,569			15,056
COELCE		5.00		237			10,769			36,678
COSERN		5.00		23			2,161			2,499
COELBA		5.00		533			23,833			82,762
ESCELSA		5.00		206			12,593			28,609
GLOBAL		5.00		94,327			44,100			—
CELESC DISTRIB.		5.00		593			36,529			56,696
OTHERS				70,852			105,470			154,108
(–) PCLD				(163,607	)		(77,440	)		—
				419,593			2,767,633			14,400,394

F-88

	12/31/2014
			CHARGES CURRENT			PRINCIPAL
	Avg. Rate		Value			CURRENT			NON CURRENT
ITAIPU		7.11		—			1,584,773			10,071,923
CEMIG		5.07		1,343			74,126			184,709
COPEL		6.39		784			52,164			82,903
CEEE		5.00		311			12,009			32,191
AES ELETROPAUL		9.44		336,852			11,074			—
CELPE		5.00		117			10,185			12,729
CEMAT		5.00		2,512			44,669			306,419
CELTINS		5.00		932			21,044			105,701
ENERSUL		5.17		287			13,194			40,383
CELPA		5.00		70,869			204,048			295,882
CEMAR		2.92		1,420			55,030			273,621
CESP		5.09		153			5,571			20,208
COELCE		5.00		316			10,918			52,239
COSERN		5.00		34			2,289			4,532
COELBA		5.00		707			27,060			114,351
ESCELSA		5.00		269			13,177			40,546
GLOBAL		5.00		82,695			44,100			—
CELESC DIST.		5.00		793			49,954			89,774
OTHERS		6.44		63,627			121,909			260,430
(–) PCLD				(144,429	)		(80,864	)		—
				419,591			2,276,428			11,988,542

Financing and loans are made with the Company’s own resources, as well as sector resources and external resources obtained through international development agencies, financial institutions, and arising from the release of securities in the international financial market.

All financing and loans are backed by formal contracts signed with mutuals. The receipts from these securities, for the most part, are set out in monthly installments, repayable in an average period of 10 years, with the average interest rate being, weighted by the balance of the portfolio, 8.74% per annum.

Financing and loans conceded at controller, with a currency update clause, represent approximately 42% of the total portfolio (38% as of December 31, 2014). And those that project an update based on indices that represent domestic prices in Brazil have attained 58% of the balance of the portfolio (62% as of December 31, 2014).

The market values of these assets are close to their book values, because they are industry-specific operations and formed, in part, through resources of Sector Funds and which do not find similar conditions as an evaluation parameter for market values.

F-89

The increase of the balance of receivables from loans in the fiscal year is due, mainly, to exchange variation on loans granted to Itaipu, arising out of the appreciation of dollar compared to real, when compared to the exchange rate in December 2015 and December 2014. Dollar had positive variation of 47%.

The long-term installments of loans and financing granted, based on cash flows provided for contractually, expire in variable installments, as shown below:

	2017		2018		2019		2020		2021		After 2021		Total
Consolidated		2,309,540		2,501,514		2,566,158		2,584,985		2,707,376		1,730,821		14,400,394

9.1. – AES Eletropaulo/CTEEP – Court Action

The Company has receivables with Eletropaulo Eletricidade de São Paulo S.A. related to an ongoing lawsuit between AES Eletropaulo and CTEEP.

On September 18, 2015, a partial report was published under the process filed against Eletropaulo, saying that Eletropaulo is responsible for the payment of amounts due arising out of unpaid financing on the respective due dates, with Eletrobras and not Companhia de Transmissão de Energia Elétrica Paulista (“CTEEP”).

Thus the Company shall have a credit of R$ 2,382,255 (R$ 2,355,584 as of December 31, 2014), and R$ 348,578 (R$ 347,926 as of December 31, 2014) already recognized in its assets, under loans and financing, corresponding to the part considered undisputed by the Company. The final recognition of full credit should occur when it is classified as almost certain.

9.2 – Allowance for doubtful Accounts

The Company has an allowance for doubtful accounts in the amount of R$ 241,047 (R$ 225,293 as of December 31, 2014) corresponding to the principal and to the service of the debt of borrowers in default.

This volume of allowance is considered sufficient by the administration to cover likely losses on these assets, based on behavior analysis of the portfolio.

The allowance includes credits with Celpa, controlled by Equatorial Energia, amounting to R$ 14,194 (R$ 17,614 as of December 31, 2014). This allowance was considered necessary considering the process of judicial reorganization of Celpa.

F-90

The movements in the ADA (Allowance for Doubtful Accounts) of the financing and loans of the Company are the following:

Balance on December 31, 2012	388,113
(+) Charged to bad debt expense for the year	146,710
(–) Reversal / write off	(40,478	)
Balance on December 31, 2013	494,345
(+) Charged to bad debt expense for the year	49,985
(–) Reversal / write off	(319,037	)
Balance on December 31, 2014	225,293
(+) Charged to bad debt expense for the year	19,367
(–) Reversal / write off	(3,613	)
Balance on December 31, 2015	241,047

Bad debt expense and reversal of the allowance for doubtful accounts are recorded in income or loss for the financial year as Operational Provisions (see Note 42). The receivable and the related allowance amounts are written off when all collection efforts are exhausted and it is virtually certain no amount will be collected

NOTE 10 – EQUITY INVESTMENT INCOME

The figures refer to dividends and interest on shareholders’ equity, net of Income Tax Withheld at the Source, when applicable, resulting from equity investments held by the Company.

F-91

	12/31/2015		12/31/2014
CURRENT
Lajeado Energia		76,325		94,810
CEMAR		22,911		20,754
CTEEP		20		11,008
CEB Lajeado		16,767		14,606
Enerpeixe		34,686		26,059
Goiás Transmissão		23,857		20,051
Chapecoense		22,288		9,512
Transenergia Renovável		13,979		15,648
IE Madeira		27,589		14,917
Manaus Construtora		9,178		12,351
Transenergia São Paulo		4,275		15,934
MGE Transmissão		11,447		6,812
Serra do Facão		9,154		2,289
Baguari		2,462		7,294
Uirapuru		2,288		2,295
EAPSA		2,181		1,124
TSBE		—		2,660
Transudeste		1,033		1,033
Santa Vitória		—		1,163
Transirape		678		—
ETAU		257		39
Others		27,985		9,215
		309,360		289,574

F-92

As established by the Extraordinary Meeting of Eletronorte on October 30, 2015, there was a payment of the portion corresponding to 25% of the dividends declared by the subsidiary, which updated value, as to the date of this payment, was R$ 502,141,000.

NOTE 11 – RECOVERABLE TAXES AND INCOME TAX AND SOCIAL CONTRIBUTIONS – ASSETS

11.1. Tax credits

	12/31/2015		12/31/2014
Current Assets
Income tax - withheld		574,083		735,463
PIS/PASEP/COFINS payable		58,349		99,304
ICMS recoverable		40,538		31,084
Others		43,681		34,580
		716,651		900,431
Non- Current Assets
ICMS credits (a)		1,724,692		1,924,057
PIS/COFINS credits (a)		877,386		601,968
Others		21,108		12,106
		2,623,186		2,538,131

(a) ICMS, PIS/PASEP and COFINS credits

The Company has recorded under non-current assets the sum of R$ 2,602,078 (R$ 2,526,025 as of December 31, 2014) for PIS, COFINS and ICMS credits. Of this sum, R$ 2,150,827 (R$ 1,924,354 as of December 31, 2014) refer to taxes and contributions on the purchase of fuel from the subsidiary Amazonas.

According to Paragraph 8 of Law 12,111/2009, those taxes and contributions should be reimbursed to the CCC when paid, this maintains a liability in the same amount under the item Reimbursement Obligations (see Note 12).

(b) Unconstitutionality of the PIS/PASEP and COFINS taxes

The Supreme Court (STF) declared that paragraph 1 of Article 3 of Law No. 9,718/98 is unconstitutional, which had expanded the taxable base for the PIS/PASEP and COFINS, and repurposed that tax collection at the time. Those taxes had been changed to include all revenue earned by a legal entity, regardless of the type of activity performed and the accounting classification used. There was no constitutional support for that device, and a constitutional amendment was later approved.

F-93

Based on the National Tax Code (CTN, for the acronym in Portuguses), companies in the Eletrobras System are seeking recognition of their right to credit and reimbursement of the sums overpaid due the unconstitutionality of expanding the taxable base for those contributions. When these consolidated financial statements were concluded, there had been no final decision on the matter.

F-94

Therefore, the Eletrobras System companies have potential tax credits from the PIS/PASEP and COFINS, which is being determined, and therefore is not recognized in these consolidated financial statements, since the mentioned declaration of unconstitutionality only benefits the claimant companies in the extraordinary appeals judged.

11.2. Income tax and social contributions

	12/31/2015		12/31/2014
Current Assets:
Prepaid taxes / Negative Balance		1,475,598		762,726
Non-current assets:
Negative Balance IRPJ and CSLL		1,645,382		1,464,148
Deferred IRPJ/CSLL		1,422,209		1,003,483
		3,067,591		2,467,631
Non-current liabilities:
Deferred IRPJ/CSLL		1,003,796		569,380

11.3. Composition of deferred income tax and social contributions

	12/31/2015								12/31/2014
	Asset		Liabilities			Net effect assets (liabilities)			Asset		Liabilities			Net effect assets (liabilities)
Eletrosul		457,629		(345,368	)		112,261			—		—			—
Eletronorte		1,529,640		(219,692	)		1,309,948			1,204,951		(201,468	)		1,003,483
		1,987,269		(565,060	)		1,422,209			1,204,951		(201,468	)		1,003,483
Eletrobras		—		(733,289	)		(733,289	)		63,051		(354,929	)		(291,878	)
Eletrosul		—		—			—			271,534		(300,598	)		(29,064	)
Furnas		258,709		(453,084	)		(194,375	)		373,272		(373,272	)		—
Chesf		—		(65,070	)		(65,070	)		—		(199,523	)		(199,523	)
Eletropar		—		(11,062	)		(11,062	)		—		(11,428	)		(11,428	)
Celg-D		—		—			—			152,668		(190,155	)		(37,487	)
		258,709		(1,262,505	)		(1,003,796	)		860,525		(1,429,905	)		(569,380	)

F-95

	12/31/2015		12/31/2014
Deferres asset taxes:
Liabilities Exchange		—		1,322
Provision for contingencies		68,066		131,022
Allowance for doubtful		56,047		196,971
Provision for adjustments		—		4,500
Operational provisions		407,319		212,505
Expenses Studies and		—		214,470
Provision for unreceived		74,700		—
Tax credit without fiscal		1,532,766		1,233,312
Others		107,080		71,375
Total assets		2,245,978		2,065,476
Deferred liability taxes:
Asset Exchange Variations		416,810		—
Financial instruments		316,479		354,929
Accelerated depreciation		81,255		53,187
Income from renegotiated		221,871		184,890
Expenses Studies and		488,425		553,659
Tax debt		258,709		373,272
Others		44,016		111,436
Total Liabilities		1,827,565		1,631,373

In 2015, the Company has offset the amount of R$ 63,051 referring to Deferred Tax Assets due to the lack of expectations for the realization of these values.

11.4. Income tax and social contributions recognized in other comprehensive income

	12/31/2015		12/31/2014			12/31/2013
Deferred Taxes
Originated from income and expenses recognized in other comprehensive income
Adjustment for actuarial gains and losses		—		(404,332	)		(463,267	)
Remeasurement of the fair value of hedge instruments employed for hedging cash flow		—		309			4,076
Remeasurement of the fair value of financial instruments available for sale		37,228		(33,939	)		83,118
Participation in the comprehensive income of subsidiaries		1,274		411,480			99,005
Total income tax and social contributions recognized in other comprehensive income		38,502		(26,482	)		(277,068	)

F-96

NOTE 12 – REIMBURSEMENT RIGHTS AND OBLIGATIONS

Compensation rights	12/31/2015		12/31/2014
CURRENT ASSETS
CCC of isolated systems (a)		2,118,184		3,052,898
Nuclear energy		—		238,381
CDE reimbursement (b)		147,058		382,360
		2,265,242		3,673,639
NON- CURRENT ASSETS
CCC of isolated systems (a)		8,238,140		6,109,507
Nuclear energy		—		19,916
		8,238,140		6,129,423
Compensation obligations
PASSIVO CURRENT
CCC of isolated systems (a)		19,423		11,238
PROINFA		299,632		655,158
CDE reimbursement (b)		77,153		36,332
		396,208		702,728
NON- CURRENT LIABILITIES
CCC of Isolated Systems (a)		2,483,378		2,529,893
		2,483,378		2,529,893

a) Fuel consumption account (CCC) of isolated systems

With the advent of the Law 12,111/2009 and of Decree 7,246/2010, the method of subsidy for power generation in isolated systems was changed. The subsidy for the CCC which until then only subsidized fuel costs, shall reimburse the difference between the total cost of generation of electricity and the value of the corresponding quantity of electric power for the average cost of power and energy sold in the Regulated Contracting Environment – ACR, of the National Interconnected System – NIS, for the acronym in Portuguese.

In the total cost of electric power generation in isolated systems are included the costs relating to:

• energy and associated power contracting;

• generation itself for the distribution of electricity;

• charges and taxes;

• investments made; and

• purchase of fuel.

F-97

This includes, also, in the total cost of generating the remaining costs associated with the provision of the service of electric energy in remote regions of isolated systems, characterized by a great dispersion of consumers and the absence of economies of scale.

F-98

The fuel consumption account of isolated systems refers to amounts receivable and received of the CCC in the respective periods. The Company has a receivable of R$ 10,356,324 (R$ 9,162,405 as of December 31, 2014) and a liability of R$ 2,502,801 (R$ 2,541,131 as of December 31, 2014) for compensation obligations.

After the enactment of Law No. 12,783, Eletrobras no longer has the obligation to make contributions to the CCC Account. Despite this, the CCC Account has not been eliminated. Available balances will continue to be distributed to generation and distribution companies which incurred additional expenses as a result of the use of thermoelectric plants in case of unfavorable hydroelectric conditions. In order to ensure the continued viability of the CCC Account, Law No. 12,783 permits transfers to be made between the Energy Development Account (“CDE”) and the CCC Account.

b) CDE Reimbursement

Law No. 12,783/13, Decree No. 7,945/13 as amended by Decree No. 8,203/14 and the subsequent Decree No. 8,221/14, promoted some amendments on the contracting of energy and the objectives under the sector responsibility of the Energy Development Account – CDE, and also instituted (i) the transfer of resources from the CDE to concessionaires for the distribution costs of hydroelectric risks, involuntary exhibit, ESS – Energy Security and CVA ESS and Energy for the period 2013 to January 2014 and (ii) the transfer through the Electric Energy Trading Chamber (CCEE) to concession holders of the distribution of costs related to involuntary exposure and the order of thermoelectric plants from February, 2014.

The effects of these items were recorded as a cost reduction in relation to electric power purchased for resale (note 41) offsetting the compensation rights – CDE/CCEE reimbursement, in accordance with IAS 20 – Subsidy and Government Assistance.

NOTE 13 – NUCLEAR FUEL INVENTORY

Below is presented the composition of the inventory of long-term nuclear fuel intended for the operation of UTN Angra I and UTN Angra II is presented bellow:

	12/31/2015		12/31/2014
CURRENT
Finished elements		402,453		340,319
		402,453		340,319
NON- CURRENT
Finished elements		441,223		296,269
Uranium concentrate		7,723		130,396
In progress – nuclear fuel		129,479		234,824
		578,425		661,489
		980,878		1,001,808

F-99

Inventories are stated at cost or net realizable value, whichever is less, broken down as follows:

a) Uranium concentrate and ongoing services (for the transformation of the uranium concentrate into nuclear fuel elements) are recorded by their cost of acquisition;

b) Nuclear fuel elements – are available in the core of the reactor and the Used Fuel Pool inventory – PCU, being allocated to income or loss for the financial year on the basis of their use in the electric power generation process.

NOTE 14 – ADVANCES FOR FUTURE CAPITAL INCREASE

The Company and its subsidiaries present in non-current assets, values corresponding to advances for future capital increase in the following investments:

	12/31/2015		12/31/2014
Subsidiaries
Furnas		44,099		18,075
Chesf		348,887		590,015
Eletrosul		781,467		503,987
Eletronorte		37,079		24,556
		1,211,532		1,136,633
Other Investments		4,000		4,000
Total:		1,215,532		1,140,633

The figures presented in the consolidated statement refer to advances for future capital increase made by the subsidiaries into the SPEs, notably the AFACs into Transmissora Sul Litorânea de Energia S.A.), for R$ 84,847; into Chuí Holding S.A. for R$ 431,913; and into Livramento Holding S.A., for R$ 173,860; and Into TDG – Transmissora Delmiro Gouveia S.A., for R$ 101,000. These AFACs were made to enable the ventures.

F-100

NOTE 15 – HYDROLOGICAL RISK

In 2014 and 2015, the country has faced adverse hydrological conditions, which has given rise to a series of consequences to the electrical sector. Specifically, for generators that are part of the Mechanism to Reallocate Power – MRE, the low level of power generation at hydraulic plants at levels lower than the MRE Physical Guarantee has caused a reduction to the adjustment factor of MRE or the Generation Scaling Factor – GSF.

This reduction has direct effects on the delivery of power for compliance with supply agreements, due to the lack of power, generation companies have been exposed to the Difference Liquidation Price – PLD in the Short Term Market to be able to comply with their contracts, with negative financial and economic effects.

Law No. 13,203, dated December 8, 2015, sets forth, among other terms, the conditions to adjust the hydrological risk of power generation to the agents that are part of the Mechanism to Reallocate Power – MRE. According to the terms in Article 1 of this law, the hydrological risk may be adjusted, provided that upon agreement by ANEEL, and with retroactive effects starting on January 1, 2015, upon counterpart by the energy generation players.

Under the terms of the Law, by means of Normative Resolution No. 684, dated December 11, 2015, ANEEL established the criteria and other conditions applicable to such adjustment.

According to criteria and terms defined in the rule, the SFF (Office of Financial Supervision of ANEEL) understands that companies interested in the adjustment are fully able to qualify the eligible energy amounts, for ACR as well as ACL. Note that not only information of amounts is known by the companies, and as the decision for the adjustment is made by its managers, the Regulating Entity is responsible solely for approving the amounts. Once information submitted by adhering companies is consistent with assumptions set forth by the legislation, the regulating entity would not determine approval of the adjustment at its sole discretion. The GSF corresponding to 2015 was recalculated, resulting in an amount that will be compensated with risk premiums calculated by subsidiaries that choose to adhere to the adjustment – Eletronorte, Eletrosul, Furnas and Amazonas GT.

F-101

Law No. 13,203/2015 expressly sets forth that the effects of such adjustment should be applied starting on January 1, 2015 and, as such, financial statements for 2015, in order to reflect the reality of facts that occurred in that year should reflect the effects of the adjustment. The elements are: a) the amounts are submitted to ANEEL by the company; ii) the rule defining the criteria is known and was approved in 2015, producing effects starting in January 1, 2015; iii) the decision for the adjustment is made by the company management, and the regulating entity is not approving it at its own discretion; and iv) upon compliance with criteria defined by the rule, ANEEL shall be responsible solely for confirming data submitted by the companies, and the consequent approval.

The composition of amounts accounted in 2015 due to the adjustment of the hydrological risk, refers to contracts executed under the Regulated Contracting Scenario – ACR, is as follows:

	12/31/2015
UHE Tucuruí		312,414
UHE Serra da Mesa		189,367
UHE Mascarenhas de Moraes		79,076
UHE Itumbiara		67,487
UHE Simplício		54,371
UHE Batalha		25,939
UHE Balbina		24,928
UHE Mauá		14,968
UHE Manso		13,813
UHE Passo São João		5,919
UHE São Domingos		5,708
		793,991
Total Current Assets		195,830
Total Non- current Assets		598,161
TOTAL		793,991

F-102

NOTE 16 – INVESTMENTS

	12/31/2015			12/31/2014
Evaluated by the Equity Method
a) Affiliates
CTEEP		942,732			946,187
CEMAR		653,419			554,817
CEEE- GT		448,274			449,336
Energisa MT		385,318			376,031
EMAE		307,195			275,214
Lajeado Energia		219,173			206,282
Energética Águas da Pedra S.A.		208,795			184,632
CEB Lajeado		80,353			71,723
Paulista Lajeado		23,507			18,119
CEEE- D		—			7,476
		3,268,766			3,089,817
b) Jointly-controlled subsidiary
Norte Energia		3,378,325			2,585,114
Madeira Energia S.A.		2,896,068			2,724,068
ESBR Participações S.A.		2,807,626			2,907,364
Interligação Elétrica do Madeira S.A.		912,098			822,342
Norte Brasil Transmissora de Energia S.A.		887,528			842,103
Teles Pires Participações		662,564			496,425
Manaus Transmissora de Energia S.A.		621,873			547,784
Enerpeixe S.A.		561,282			555,860
Chapecoense Generation S.A.		415,501			364,522
Belo Monte Transmissora de Energia Total		391,058			12,081
Interligação Elétrica Garanhuns S.A.		318,972			181,526
Transmissora Sul Brasileira de Energia S.A.		270,252			275,960
Goiás Transmissão S.A.		190,245			138,436
Companhia Energética SINOP S.A.		179,052			177,772
STN – Sistema de Transmissão Nordeste S.A.		176,941			163,434
Integração Transmissora de Energia S.A.		175,572			169,450
Transnorte Energia S.A. Total		148,373			51,656
MGE Transmissão S.A.		136,755			118,953
Transmissora Sul Litorânea de Energia S.A.		134,739			139,719
Transenergia Renovável S.A.		128,418			96,813
Retiro Baixo Energia S.A.		121,774			111,906
Brasnorte Transmissora de Energia S.A.		120,873			115,568
Rouar		111,775			70,044
Empresa de Energia São Manoel		103,314			(594	)
Paranaíba Transmissora de Energia S.A.		100,726			67,383
CHC		98,514			79,081
Transmissora Matogrossense de Energia S.A.		97,154			85,368
Transenergia São Paulo S.A.		91,141			83,116
Baguari Energia S.A.		82,721			85,815
Vamcruz Participações S.A.		73,368			—
Santa Vitória do Palmar Holding S.A.		50,223			157,627
Mangue Seco II		16,889			16,726
Inambari		115			164
Others		1,445,077			1,275,443
		17,906,906			15,519,029
SUBTOTAL		21,175,672			18,608,846
Provision for investment losses		(489,866	)		(164	)
TOTAL		20,685,806			18,608,682

F-103

	12/31/2015		12/31/2014
Investments held at fair value
AES Tietê		437,532		547,862
Coelce		196,429		200,868
Energisa		124,104		85,353
Cesp		87,023		168,789
Celpa		42,379		26,782
Celesc		41,513		61,897
CELPE		28,859		15,407
COPEL		24,492		38,116
CGEEP		17,662		27,199
CEB		6,130		6,021
Tangara		—		21,738
AES Eletropaulo		17,603		18,148
Energias do Brasil		17,888		13,327
CPFL Energia		25,861		31,500
Others		109,785		107,364
		1,177,260		1,370,371

16.1 – Provisions for impairment losses on investments

	12/31/2015		12/31/2014
INAMBARI		115		164
CHC		98,513		—
ESBR Participações S.A.		15,500		—
Madeira Energia S.A.		97,010		—
Teles Pires Participações		230,823		—
Empresa de Energia São Manoel		47,905		—
		489,866		164

On December 31, 2015, the provision for impairment losses on investments was recognized in the amount of R$ 489,866 and the counterpart in the operating provisions account (Note 42), arising out of impairment losses in equity held at CHC, ESBR Participações, Madeira Energia S.A., Teles Pires Participações, and Empresa de Energia São Manoel.

16.2 Investigation Findings

As a result of investigation, in 2014 the Company recognized a loss of R$ 91,464 in its results of equity method investments related to SPE equity investee in which Eletrobras does not have control. (See Note 4 – XI)

F-104

16.3 Change of investments

The movement of the most relevant investments of the company is indicated below:

Subsidiaries and affiliates	Balance on 12/31/2014			Capital investment/Write off		Other comprehensive income			AFAC Capitalization		Capital Gain / Loss		Dividends and interest on equity			Others			Equity method			Balance on 12/31/2015
CHANGE OF INVESTMENTS
EÓLICA MANGUE SECO		16,726			—		—			—		—		—			—			163			16,889
CHC		79,081			—		33,187			—		—		—			—			(13,753	)		98,514
NORTE ENERGIA (BELO MONTE)		2,585,114			245,249		0			245,249		326,671		—			—			(23,958	)		3,378,325
INAMBARI		164			—		1			—		—		—			—			(50	)		115
CEEE-GT		449,336			—		(16,795	)		—		—		—			1,560			14,173			448,274
EMAE		275,214			—		9,271			—		—		(1,416	)		—			24,126			307,195
CTEEP		946,187			—		(949	)		—		—		(120,648	)		—			118,142			942,732
CEMAR		554,817			—		—			—		—		(23,176	)		—			121,778			653,419
REDE LAJEADO		206,282			—		39			—		—		(24,162	)		—			37,014			219,173
CEB LAJEADO		71,723			—		11			—		—		(8,966	)		—			17,586			80,353
CEEE-D		7,476			—		2,956			—		—		—			—			(10,432	)		—
PAULISTA LAJEADO		18,119			—		—			—		—		925			—			4,463			23,507
ROUAR		70,044			—		34,202			—		—		—			—			7,529			111,775
ENERGISA MT		376,031			—		587			—		—		(4,218	)		—			12,918			385,318
ESBR Participações S.A.		2,907,364			180,000		—			—		—		—			—			(279,738	)		2,807,626
Empresa de Energia São Manoel		(594	)		105,667		—			—		—		—			—			(1,759	)		103,314
Madeira Energia S.A.		2,724,068			164,970		—			—		—		—			—			7,030			2,896,068
Norte Brasil Transmissora de Energia S.A.		842,103			—		—			—		—		—			—			45,425			887,528
Interligação Elétrica do Madeira S.A.		822,342			—		—			—		—		(27,991	)		—			117,747			912,098
Enerpeixe S.A.		555,860			—		—			—		—		(62,685	)		—			68,107			561,282
Belo Monte Transmissora de Energia		12,081			194,040		—			—		194,040		—			—			(9,103	)		391,058
Paranaíba Transmissora de Energia S.A.		67,383			29,400		—			—		—		—			—			3,943			100,726
Transnorte Energia S.A.		51,656			—		—			—		106,330		—			—			(9,613	)		148,373
Manaus Transmissora de Energia S.A.		547,784			17,420		—			—		26,800		(50	)		—			29,919			621,873
Teles Pires Participações		496,425			252,278		—			—		—		—			—			(86,139	)		662,564
Chapecoense Generation S.A.		364,522			—		—			—		—		(22,288	)		—			73,267			415,501
Transmissora Sul Brasileira de Energia S.A.		275,960			16,000		—			—		—		2,660			—			(24,368	)		270,252
Energética Águas da Pedra S.A.		184,632			2,450		—			—		2,450		(3,455	)		—			22,718			208,795
Interligação Elétrica Garanhuns S.A.		181,526			116,865		—			—		—		(5,780	)		—			26,361			318,972
Companhia Energética SINOP S.A.		177,772			—		—			—		—		—			—			1,280			179,052
Integração Transmissora de Energia S.A.		169,450			—		—			—		—		(19,575	)		—			25,697			175,572
STN – Sistema de Transmissão Nordeste S.A.		163,434			—		—			—		—		(31,968	)		—			45,475			176,941
Santa Vitória do Palmar Holding S.A.		157,627			—		—			—		—		1,163			—			(108,567	)		50,223
Transmissora Sul Litorânea de Energia S.A.		139,719			—		—			—		—		0			—			(4,980	)		134,739
GOIÁS TRANSMISSÃO S.A.		138,436			—		—			—		—		(14,757	)		—			66,566			190,245
MGE TRANSMISSÃO S.A.		118,953			—		—			1,960		—		(4,634	)		—			20,476			136,755
Brasnorte Transmissora de Energia S.A.		115,568			—		—			—		—		(4,067	)		—			9,372			120,873
Retiro Baixo Energia S.A.		111,906			—		—			2,695		—		—			—			7,173			121,774
Transenergia Renovável S.A.		96,813			—		—			—		—		(7,172	)		—			38,777			128,418
VAMCRUZ PARTICIPAÇÕES S.A.		—			392		72,995			—		—		(523	)		—			504			73,368
BAGUARI ENERGIA S.A.		85,815			—		—			—		—		(9,320	)		—			6,226			82,721
Transmissora Matogrossense de Energia S.A.		85,368			—		—			—		—		(1,531	)		—			13,317			97,154
Transenergia São Paulo S.A.		83,116			—		—			1,960		—		—			—			6,065			91,141
Others		1,275,443			257,946		62,431			60,391		106,470		574,834			(766,887	)		(125,551	)		1,445,077
TOTAL INVESTMENTS		18,608,846			1,582,677		197,936			312,255		762,761		181,199			(765,327	)		295,326			21,175,672

F-105

Subsidiaries and affiliates	Balance on 12/31/2013		Capital investment/ Write off			Other comprehensive income			Capital Gain / Loss			Dividends and interest on equity			Equity method			Balance on 12/31/2014
CHANGE OF INVESTMENTS
ITAIPU BINACIONAL		117,130		—			15,680			—			—			—			132,810
EÓLICA MANGUE SECO		17,058		—			—			—			—			(332	)		16,726
CHC		29,119		49,613			5,866			—			—			(5,517	)		79,081
NORTE ENERGIA (BELO MONTE)		2,104,536		682,227			—			—			—			(201,649	)		2,585,114
INAMBARI		9,148		—			—			—			—			(8,984	)		164
CEEE-GT		544,711		—			(4,067	)		—			—			(91,308	)		449,336
EMAE		153,960		—			(28,446	)		—			(1,730	)		151,430			275,214
CTEEP		931,580		83,106			—			(30,005	)		(91,996	)		53,502			946,187
CEMAR		463,394		—			—			—			(20,865	)		112,288			554,817
REDE LAJEADO		232,907		—			50			—			(40,305	)		13,630			206,282
CEB LAJEADO		83,644		—			14			—			(19,354	)		7,419			71,723
CEEE-D		146,649		—			5,945			—			—			(145,118	)		7,476
PAULISTA LAJEADO		27,669		—			—			—			(6,454	)		(3,096	)		18,119
ROUAR		18,427		34,392			9,985			—			—			7,240			70,044
CEMAT		334,294		—			2,255			18,852			(4,861	)		25,491			376,031
ESBR PARTICIPAÇÕES S.A.		2,752,140		618,000			(1,200	)		—			—			(461,576	)		2,907,364
MADEIRA ENERGIA S.A.		2,506,082		1,079,130			—			—			—			(861,144	)		2,724,068
NORTE BRASIL TRANSMISSORA DE ENERGIA S.A.		462,170		386,245			—			—			—			(5,857	)		842,558
INTERLIGAÇÃO ELÉTRICA DO MADEIRA S.A.		685,927		80,850			—			—			(7,362	)		62,927			822,342
ENERPEIXE S.A.		525,379		—			—			—			(26,058	)		56,539			555,860
MANAUS TRANSMISSORA DE ENERGIA S.A.		525,558		—			—			—			—			22,226			547,784
TELES PIRES PARTICIPAÇÕES S.A.		525,582		—			—			—			—			(29,157	)		496,425
CHAPECOENSE GENERATION S.A.		345,388		—			—			—			(9,512	)		28,646			364,522
TRANSMISSORA SUL BRASILEIRA DE ENERGIA S.A.		167,403		98,400			—			—			(1,220	)		11,377			275,960
ENERGÉTICA ÁGUAS DA PEDRA S.A.		189,062		—			—			—			(12,838	)		8,408			184,632
INTERLIGAÇÃO ELÉTRICA GARANHUNS S.A.		98,659		66,150			—			—			—			16,717			181,526
COMPANHIA ENERGÉTICA SINOP S.A.		—		182,591			—			—			—			(4,819	)		177,772
INTEGRAÇÃO TRANSMISSORA DE ENERGIA S.A.		160,151		—			—			—			(13,091	)		22,390			169,450
STN – SISTEMA DE TRANSMISSÃO NORDESTE S.A.		195,154		—			—			—			(77,734	)		46,014			163,434
SANTA VITÓRIA DO PALMAR HOLDING S.A.		185,970		(29,400	)		—			—			(1,163	)		2,220			157,627
TRANSMISSORA SUL LITORÂNEA DE ENERGIA S.A.		16,901		125,455			—			—			—			(2,637	)		139,719
GOIÁS TRANSMISSÃO S.A.		131,579		—			7,350			—			—			(493	)		138,436
MGE TRANSMISSÃO S.A.		106,371		—			28,616			—			(6,812	)		(9,222	)		118,953
BRASNORTE TRANSMISSORA DE ENERGIA S.A.		105,921		—			—			—			—			9,647			115,568
RETIRO BAIXO ENERGIA S.A.		113,181		—			—			—			—			(1,275	)		111,906
TRANSENERGIA RENOVÁVEL S.A.		78,241		—			—			—			(5,744	)		24,316			96,813
PARANAÍBA TRANSMISSORA DE ENERGIA S.A.		17,801		47,285			—			—			—			2,297			67,383
BAGUARI ENERGIA S.A.		92,437		—			(315	)		—			(5,457	)		(850	)		85,815
TRANSMISSORA MATOGROSSENSE DE ENERGIA S.A.		75,656		—			—			—			(1,470	)		11,182			85,368
TRANSENERGIA SÃO PAULO S.A.		49,632		—			—			—			(10,493	)		43,977			83,116
OTHERS		989,998		621,071			(7,697	)		8			(38,877	)		(359,182	)		1,205,321
TOTAL INVESTMENTS		16,316,569		4,125,115			34,036			(11,145	)		(403,396	)		(1,452,333	)		18,608,846

F-106

Subsidiaries and affiliates	Balance on 12/31/2012		Capital investment/ Write off			Other comprehensive income			Capital Gain / Loss			Capital Decrease			Dividends and interest on equity			Equity method			Balance on 12/31/2013
CHANGE OF INVESTMENTS
ITAIPU BINACIONAL		102,175		—			14,955						—			—			—			117,130
CELPA		94,673		(94,673	)		—			—			—			—			—			—
CEEE-GT		738,009		—			(118,263	)		—			—			—			(75,034	)		544,712
CEMAT		507,251		—			(3,975	)		—			—			—			(168,982	)		334,294
EMAE		261,499		—			35,274			—			—			(575	)		(142,237	)		153,961
CTEEP		753,512		—			—			—			—			(71,770	)		249,838			931,580
CEMAR		411,463		—			—			—			—			(12,606	)		64,537			463,394
REDE LAJEADO		540,819		—			89			—			(180,394	)		(70,098	)		(57,510	)		232,906
CEB LAJEADO		79,672		—			24			—			—			(11,232	)		15,180			83,644
PAULISTA LAJEADO		27,425		—			—			—			—			(6,136	)		6,381			27,669
CEEE-D		343,875		—			(101,928	)		—			—			—			(95,298	)		146,649
INAMBARI		15,890		1,402			54			(6,126	)		—			—			(2,071	)		9,148
CHC		28,584		—			4,540			—			—			—			(4,004	)		29,119
EÓLICA MANGUE SECO		17,006		—			—			—			—			—			52			17,058
NORTE ENERGIA (BELO MONTE)		1,365,096		759,696			—			—			—			—			(20,255	)		2,104,537
ROUAR		—		17,788			1,071			—			—			—			(433	)		18,427
MADEIRA ENERGIA S.A.		1,870,691		654,069						—			—			—			(18,678	)		2,506,082
ESBR PARTICIPAÇÕES S.A.		1,879,649		950,000			133			—			—			—			(77,642	)		2,752,140
ENERPEIXE S.A.		514,735		—			—			—			—			(85,960	)		96,604			525,379
INTERLIGAÇÃO ELÉTRICA DO MADEIRA S.A.		514,112		139,651			—			—			—			(7,556	)		39,720			685,927
MANAUS TRANSMISSORA DE ENERGIA S.A.		476,619		21,318			—			—			—			—			27,621			525,558
TELES PIRES PARTICIPAÇÕES		92,988		439,396			—			—			—			—			(6,802	)		525,582
NORTE BRASIL TRANSMISSORA DE ENERGIA S.A.		388,108		61,250			—			—			—			805			12,007			462,170
CHAPECOENSE GERAÇÃO S.A.		303,627		—			—			—			—			(48,808	)		90,568			345,387
GOIÁS TRANSMISSÃO		101,646		51,499			—			—			—			(19,751	)		(1,815	)		131,579
STN – SISTEMA DE TRANSMISSÃO NORDESTE S.A.		188,861		—			—			—			—			(31,789	)		38,082			195,154
SANTA VITÓRIA DO PALMAR HOLDING S.A.		97,060		88,772			—			—			—			—			138			185,970
TRANSMISSORA SUL BRASILEIRA DE ENERGIA S.A.		6,301		157,754			—			—			—			(1,440	)		4,788			167,403
INTEGRAÇÃO TRANSMISSORA DE ENERGIA S.A.		147,902		—			—			—			—			(4,837	)		17,086			160,151
RETIRO BAIXO ENERGIA S.A.		110,078		—			—			—			—			—			3,103			113,181
MGE TRANSMISSÃO		63,431		45,570			—			—			—			201			(2,831	)		106,371
BRASNORTE TRANSMISSORA DE ENERGIA S.A.		109,609		—			—			—			—			—			(3,688	)		105,921
INTERLIGAÇÃO ELÉTRICA GARANHUNS S.A.		14,956		80,850			—			—			—			—			2,853			98,659
LIVRAMENTO HOLDING S.A.		35,280		73,031			—			—			—			—			(10,963	)		97,348
ENERGÉTICA ÁGUAS DA PEDRA S.A.		176,503		—			—			—			—			(14,483	)		27,042			189,062
CIA. HIDRELÉTRICA TELES PIRES		89,816		(89,816	)		—			—			—			—			—			—
BAGUARI ENERGIA S.A.		89,239		—			—			—			—			(1,837	)		5,035			92,437
TRANSENERGIA RENOVÁVEL S.A.		107,865		1,960			—			—			—			(9,904	)		(21,680	)		78,241
TRANSMISSORA MATOGROSSENSE DE ENERGIA S.A.		63,037		—			—			—			—			—			12,619			75,656
CHUÍ HOLDING S.A		33,606		41,797			—			—			—			—			(193	)		75,210
SERRA DO FACÃO ENERGIA S.A.		104,098		—			—			—			—			(16,812	)		(26,544	)		60,742
TDG—TRANSMISSORA DELMIRO GOUVEIA S.A.		45,183		—			—			—			—			(2,152	)		6,798			49,829
OTHERS		431,889		—			—			—			—			—			359,312			791,201
TOTAL INVESTMENTS		13,343,838		3,401,315			(168,026	)		(6,126	)		(180,394	)		(416,741	)		342,703			16,316,569

16.4 Information of the market value of invested companies

					Market Value (*)
Public companies	Evaluation Method	Share			12/31/2015		12/31/2014
CTEEP	Equity Method		35.37	%		2,589,826		2,395,593
CEMAR	Equity Method		33.55	%		989,887		910,593
AES Tiete	Market Value		7.94	%		437,532		547,862
ENERGISA MT	Equity Method		27.52	%		335,109		293,887
COELCE	Market Value		7.06	%		196,429		200,868
ENERGISA S.A	Market Value		2.99	%		116,497		85,353
CESP	Market Value		2.05	%		87,023		168,789
CEEE-GT	Equity Method		32.59	%		76,904		143,783
CEEE-D	Equity Method		32.59	%		65,302		102,492
EMAE	Equity Method		39.02	%		60,404		54,061
CELPA	Market Value		1.15	%		42,379		26,782
CELESC	Market Value		10.75	%		41,513		61,897
AES Eletropaulo	Market Value		1.25	%		32,098		32,098
CELPE	Market Value		1.56	%		28,859		15,407
COPEL	Market Value		0.56	%		24,492		38,116
Energias do Brasil	Market Value		0.31	%		20,357		20,357
CGEEP – DUKE	Market Value		0.47	%		17,662		27,199
CEB	Market Value		3.29	%		6,130		6,021
CELGPAR	Market Value		0.07	%		92		184

(*) Based on share prices from database

F-107

Closed-capital companies	Evaluation Method	Share			12/31/2015			12/31/2014
Angical 2 Energia S.A.	Equity Method		99.96	%		—			12,727
Arapapá Energia S.A.	Equity Method		99.90	%		—			5,128
Carcará Energia S.A.	Equity Method		99.96	%		—			12,000
Ceb Lajeado	Equity Method		40.07	%		351,756			330,218
Lajeado Energia	Equity Method		40.07	%		998,348			966,177
Paulista Lajeado	Equity Method		40.07	%		108,639			95,192
Acauã Energia S.A.	Equity Method		99.93	%		—			7,679
Amapari Energia S.A.	Equity Method		49.00	%		—			(1,542	)
Amazônia Eletronorte Transmissora de Energia S.A.	Equity Method		49.00	%		84,316			81,219
Baguari Energia S.A.	Equity Method		30.61	%		270,222			280,329
Banda de Couro Energética S.A.	Equity Method		49.00	%		1,893			1,962
Baraúnas I Energética S/A.	Equity Method		49.00	%		35,420			(54	)
Baraúnas II Energética S/A.	Equity Method		49.00	%		1,193			1,257
Bom Jesus Eólica	Equity Method		49.00	%		2,553			14,470
Brasnorte Transmissora de Energia S.A.	Equity Method		49.71	%		243,156			227,478
Brasventos Eolo Geradora de Energia S.A.	Equity Method		49.00	%		83,257			84,553
Brasventos Miassaba 3 Geradora de Energia S.A.	Equity Method		49.00	%		135,793			136,610
Cachoeira Eólica	Equity Method		49.00	%		1,565			9,559
Caititu 2 Energia S.A.	Equity Method		99.96	%		—			12,728
Caititu 3 Energia S.A.	Equity Method		99.96	%		—			12,727
Caldas Novas	Equity Method		49.90	%		27,175			25,744
Carnaúba I Eólica	Equity Method		49.00	%		17,724			17,013
Carnaúba II Eólica	Equity Method		49.00	%		14,094			13,763
Carnaúba III Eólica	Equity Method		49.00	%		12,521			12,262
Carnaúba V Eólica	Equity Method		49.00	%		18,515			18,277
Central Eólica Famosa I S.A.	Equity Method		49.00	%		15,262			14,310
Central Eólica Pau Brasil S.A.	Equity Method		49.00	%		9,946			9,518
Central Eólica Rosada S.A.	Equity Method		49.00	%		18,645			17,700
Central Eólica São Paulo S.A.	Equity Method		49.00	%		11,430			10,772
Cervantes I Eólica	Equity Method		49.00	%		11,228			12,336
Cervantes II Eólica	Equity Method		49.00	%		9,315			9,216
Chapecoense Generation S.A.	Equity Method		40.00	%		1,038,751			911,306
Chuí Holding S.A	Equity Method		49.00	%		(15,708	)		76,521
Chuí IX	Equity Method		99.99	%		—			(55	)
Companhia de Transmissão Centroeste de Minas S.A.	Equity Method		49.00	%		—			42,500
Companhia Energética Sinop S.A.	Equity Method		49.00	%		500,411			355,294
Construtora Integração Ltda	Equity Method		49.00	%		92,026			91,908
Corrupião 3 Energia S.A.	Equity Method		99.95	%		—			12,727
Costa Oeste Transmissora de Energia S.A.	Equity Method		49.00	%		63,984			43,899
Coxilha Seca	Equity Method		99.99	%		—			87
Coqueirinho 2 Energia S.A.	Equity Method		99.98	%		—			21,419
Energética Águas da Pedra S.A.	Equity Method		49.00	%		430,564			365,634
Energia dos Ventos I S.A. *	Equity Method		0.00	%		—			14,803
Energia dos Ventos II S.A. *	Equity Method		0.00	%		—			8,992
Energia dos Ventos III S.A. *	Equity Method		0.00	%		—			13,337
Energia dos Ventos IV S.A. *	Equity Method		0.00	%		—			19,458
Energia dos Ventos V S.A. **	Equity Method		99.99	%		—			1,897
Energia dos Ventos VI S.A. **	Equity Method		99.99	%		—			2,596
Energia dos Ventos VII S.A. **	Equity Method		99.99	%		—			2,816
Energia dos Ventos VIII S.A. **	Equity Method		99.99	%		—			1,856
Energia dos Ventos IX S.A. **	Equity Method		99.99	%		—			1,990
Energia dos Ventos X S.A. *	Equity Method		0.00	%		—			11,851

(*) The companies were sold during the first quarter

(**) The Alupar share purchase operation was concluded on December 31, 2015.

F-108

Closed-capital companies	Evaluation Method	Share			12/31/2015			12/31/2014
Enerpeixe S.A.	Equity Method		40.00	%		1,403,204			1,389,649
ESBR Participações S.A.	Equity Method		40.00	%		7,019,063			7,268,412
Etau – Empresa de Transmissão Alto Uruguai	Equity Method		27.42	%		89,859			92,190
Extremoz Transmissora do Nordeste – ETN S.A. ***	Equity Method		100.00	%		—			14,652
Fronteira Oeste Transmissora de Energia	Equity Method		51.00	%		49,873			23,183
Goiás Transmissão S.A.	Equity Method		49.00	%		388,255			282,522
Eólica Hermenegildo I	Equity Method		99.99	%		—			(374	)
Eólica Hermenegildo II	Equity Method		99.99	%		—			(146	)
Eólica Hermenegildo III	Equity Method		99.99	%		—			(113	)
Inambari Generation de Energia S.A.	Equity Method		29.40	%		405			559
Integração Transmissora de Energia S.A.	Equity Method		49.00	%		391,140			342,198
Interligação Elétrica do Madeira S.A.	Equity Method		49.00	%		1,996,044			1,543,620
Interligação Elétrica Garanhuns S.A.	Equity Method		49.00	%		650,964			370,460
Linha Verde Transmissora de Energia S.A.	Equity Method		100.00	%		—			(67,518	)
Livramento Holding S.A.	Equity Method		52.53	%		(306,324	)		(176,657	)
Luziânia – Niquelândia Transmissora S.A.	Equity Method		49.00	%		43,227			32,699
Madeira Energia S.A.	Equity Method		39.00	%		6,755,683			6,994,900
Manaus Construtora Ltda.	Equity Method		49.50	%		38,289			24,221
Manaus Transmissora de Energia S.A.	Equity Method		49.50	%		1,167,072			1,106,631
Marumbi Transmissora de Energia S.A.	Equity Method		20.00	%		94,893			45,214
MGE Transmissão S.A.	Equity Method		49.00	%		279,092			242,762
Morro Branco I Energética S.A.	Equity Method		49.00	%		34,733			31,734
Mussambê Energética S.A.	Equity Method		49.00	%		44,334			40,726
Norte Brasil Transmissora de Energia S.A.	Equity Method		49.00	%		1,809,867			1,715,791
Norte Energia S.A.	Equity Method		49.98	%		6,947,265			5,353,094
Papagaio Energia S.A.	Equity Method		99.96	%		—			13,380
Paranaíba	Equity Method		24.50	%		411,127			275,032
Pedra Branca S.A.	Equity Method		49.00	%		35,902			29,094
Pitimbu Eólica	Equity Method		49.00	%		2,117			14,265
Punaú I Eólica	Equity Method		49.00	%		18,362			18,187
Rei dos Ventos 3 Geradora de Energia S.A.	Equity Method		49.00	%		81,365			87,106
Retiro Baixo Energética S.A.	Equity Method		49.00	%		229,872			231,880
Santa Vitória do Palmar Holding S.A.	Equity Method		49.00	%		102,495			321,687
São Caetano Eólica	Equity Method		49.00	%		2,831			20,160
São Caetano I Eólica	Equity Method		49.00	%		2,320			14,395
São Galvão Eólica	Equity Method		49.00	%		2,740			19,000
São Pedro do Lago S.A.	Equity Method		49.00	%		33,516			33,198
Eólica Serra das Vacas Holding S.A.	Equity Method		49.00	%		183,076			102,467
Eólica Serra das Vacas I S.A.	Equity Method		49.00	%		—			26,546
Eólica Serra das Vacas II S.A.	Equity Method		49.00	%		—			25,486
Eólica Serra das Vacas III S.A.	Equity Method		49.00	%		—			24,706
Eólica Serra das Vacas IV S.A.	Equity Method		49.00	%		—			25,729
Serra do Facão Energia S.A.	Equity Method		49.47	%		91,022			3,314
Sete Gameleiras S.A.	Equity Method		49.00	%		46,711			42,447
STN – Sistema de Transmissão Nordeste S.A.	Equity Method		49.00	%		361,105			333,540
Tamanduá Mirim 2 Energia S.A. ***	Equity Method		83.01	%		—			21,295
TDG – Transmissora Delmiro Gouveia S.A.	Equity Method		49.00	%		59,569			114,169
Teles Pires Participações S.A.	Equity Method		49.40	%		1,393,056			998,870
Transenergia Goiás S.A.	Equity Method		49.00	%		62,239			32,455
Transenergia Renovável S.A.	Equity Method		49.00	%		262,077			197,578
Transenergia São Paulo S.A.	Equity Method		49.00	%		186,001			173,623
Cia. Transirapé de Transmissão S.A.	Equity Method		24.50	%		77,798			65,853
Cia. Transleste de Transmissão S.A.	Equity Method		24.00	%		73,226			65,066
Transmissora Matogrossense de Energia S.A.	Equity Method		49.00	%		192,049			164,875
Transnorte Energia S.A.	Equity Method		49.00	%		345,706			105,417
Cia. Transudeste de Transmissão S.A.	Equity Method		25.00	%		71,599			59,905
Triângulo Mineiro	Equity Method		49.00	%		168,480			79,753
Teiú 2 Energia S.A.	Equity Method		99.90	%		—			10,190
Transmissora Sul Brasileira de Energia S.A. – TSBE	Equity Method		80.00	%		337,815			344,950
Transmissora Sul Litorânea de Energia S.A. – TSLE	Equity Method		51.00	%		264,197			273,959

F-109

Closed-capital companies	Evaluation Method		Share			12/31/2015		12/31/2014
Complexo Eólico Vamcruz		Equity Method		49.00	%		252,689		148,971
Vale do São Bartolomeu		Equity Method		39.00	%		144,792		41,354
Complexo Eólico Chapada do Piauí II		Equity Method		49.00	%		249,030		179,310
Complexo Eólico Chapada do Piauí I		Equity Method		49.00	%		205,386		196,237
Mata de Santa Genebra		Equity Method		49.90	%		60,793		52,459
Belo Monte Transmissora		Equity Method		49.00	%		748,076		24,336
Lago Azul Transmissão		Equity Method		49.90	%		14,050		3,948
Ventos de São Rafael		Equity Method		0.00	%		—		(6	)
Ventos de São Cirilo		Equity Method		0.00	%		—		(4	)
Ventos de São Bento		Equity Method		0.00	%		—		(6	)
Ventos de Santo Antônio		Equity Method		0.00	%		—		(4	)
Ventos de Santa Vera		Equity Method		0.00	%		—		(4	)
Ventos de Santa Marcella		Equity Method		0.00	%		—		(5	)
Itaguaçu da Bahia		Equity Method		49.00	%		24,078		(6	)
Ventos de Santa Luzia		Equity Method		0.00	%		—		(5	)
Ventos de Santa Madalena		Equity Method		0.00	%		—		(6	)
Ventos de São João		Equity Method		0.00	%		—		(5	)
CSE Centro de Soluções Estratégicas		Equity Method		49.90	%		2,299		3,400
Tijoa Participações e Investimentos		Equity Method		49.90	%		11,355		1,635
Energia Olímpica S.A.		Equity Method		49.90	%		4,984		(426	)
Empresa de Energia São Manoel		Equity Method		33.33	%		213,945		(1,782	)

16.5 Summary of information of jointly controlled and associated projects

12/31/2015
				ASSET										LIABILITIES
				CURRENT				NON-CURRENT						CURRENT				NON-CURRENT
Projects under joint control and affiliates	Share			Cash and cash equivalent		Other assets		Financial, intangible, and fixed assets		Other assets		Total Assets		Loans and financing		Other liabilities		Loans and financing		Other liabilities		Shareholders’ equity		Total Liabilities
Belo Monte Transmissora de Energia		49.00	%		332,604		4,199		920,165		—		1,256,968		453,882		46,277		—		8,733		748,076		1,256,968
Brasnorte Transmissora de Energia S.A.		49.71	%		16,467		24,149		279,599		—		320,215		11,280		13,838		—		51,941		243,156		320,215
Chapecoense Generation S.A.		40.00	%		176,308		180,185		3,075,967		162,724		3,595,184		136,322		311,290		1,404,553		704,268		1,038,751		3,595,184
Companhia Energética Sinop		49.00	%		53,385		3,445		844,733		2,491		904,054		328,022		56,012		—		19,609		500,411		904,054
Energética Águas da Pedra S.A.		49.00	%		61,765		39,300		753,115		17,353		871,533		34,917		54,031		339,843		12,178		430,564		871,533
Enerpeixe S.A.		40.00	%		82,946		76,736		1,596,186		50,194		1,806,062		—		172,744		—		230,114		1,403,204		1,806,062
ESBR Participações		40.00	%		—		908,570		21,685,558		1,655,056		24,249,184		—		1,422,013		11,299,857		4,508,251		7,019,063		24,249,184
Interligação Elétrica do Madeira S.A.		49.00	%		41,833		646,081		4,149,365		—		4,837,279		197,250		151,399		2,215,079		546,746		1,726,805		4,837,279
Interligação Elétrica Garanhuns S.A.		49.00	%		—		33,485		1,114,685		16,723		1,164,893		—		—		339,848		174,081		650,964		1,164,893
Intesa – Integração Transmissora de Energia S.A.		49.00	%		36,235		112,742		496,085		—		645,062		31,182		9,001		120,166		93,573		391,140		645,062
Madeira Energia S.A.		39.00	%		299,963		1,308,256		22,180,387		1,182,376		24,970,982		450,779		1,700,678		14,061,238		1,507,190		7,251,097		24,970,982
Manaus Transmissora de Energia S.A.		49.50	%		32,198		188,813		2,376,236		9,351		2,606,598		69,707		272,606		786,943		310,270		1,167,072		2,606,598
Norte Brasil Transmissora de Energia S.A.		49.00	%		51,937		265,098		3,425,883		—		3,742,918		78,941		263,100		1,171,337		426,938		1,802,602		3,742,918
Norte Energia S.A		49.98	%		489,804		442,450		29,964,727		271,620		31,168,601		—		719,033		23,280,595		229,708		6,939,265		31,168,601
Santa Vitória do Palmar		49.00	%		—		31,227		1,004,762		22,957		1,058,946		—		182,126		749,633		24,692		102,495		1,058,946
Serra do Facão Energia S.A.		49.47	%		31		52,441		2,044,386		99,362		2,196,220		41,126		163,051		401,137		1,499,884		91,022		2,196,220
STN – Sistema de Transmissão Nordeste S.A.		49.00	%		—		60,313		699,181		3,866		763,360		—		—		162,093		240,162		361,105		763,360
Teles Pires Participações		49.40	%		130,877		98,058		4,886,124		236,137		5,351,196		191,893		293,229		3,392,921		80,097		1,393,056		5,351,196
TSBE		80.00	%		—		46,675		659,575		—		706,250		—		30,639		337,796		—		337,815		706,250
TSLE		51.00	%		—		49,433		914,407		—		963,840		—		91,522		495,271		112,850		264,197		963,840
Chapada do Piauí I Holding S.A.		49.00	%		—		51,418		809,359		132		860,909		—		—		523,242		160,933		176,734		860,909
Chapada do Piauí II Holding S.A.		49.00	%		—		85,298		864,913		—		950,211		—		—		512,068		189,113		249,030		950,211
Chuí Holding S.A.		49.00	%		—		65,150		609,778		12,747		687,675		—		57,429		373,979		413,628		157,361		687,675
Companhia Energética do Maranhão (CEMAR)		33.55	%		310,893		1,963,260		2,573,627		271,559		5,119,339		253,910		711,799		1,997,641		207,715		1,948,274		5,119,339
Lajeado Energia		40.07	%		161,062		92,153		48		1,445,794		1,699,057		6,483		243,394		448,216		2,616		998,348		1,699,057
CTEEP		35.37	%		3,120		580,539		45,812		6,217,757		6,847,228		213,312		155,268		665,649		476,794		5,336,205		6,847,228
CEEE-GT		32.59	%		38,171		454,210		555,108		1,871,335		2,918,824		29,247		298,881		282,253		826,489		1,481,954		2,918,824
Energisa MT		27.52	%		192,754		1,198,769		1,909,436		1,365,792		4,666,751		170,545		918,080		1,297,616		930,884		1,349,626		4,666,751
CEEE-D		32.59	%		73,961		801,912		2,165,618		274,473		3,315,964		4,954		1,346,254		474,965		1,973,387		483,596		3,315,964
Others					1,137,504		994,618		10,606,468		1,661,908		14,400,498		1,128,125		1,838,403		3,176,337		1,836,613		6,421,018		14,400,498

F-110

12/31/2015
Projects under joint control and affiliates	Net operating income		Financial income		Financial expenses			Tax on earnings			Net profit (loss)			Depreciation and amortization
Belo Monte Transmissora de Energia		881,398		55,344		(53,783	)		(8,599	)		(18,260	)		(52	)
Brasnorte Transmissora de Energia S.A.		36,641		1,623		(2,473	)		(9,035	)		20,099			—
Chapecoense Generation S.A.		738,792		32,149		(143,821	)		(119,721	)		183,166			(34,867	)
Companhia Energética Sinop		—		3,362		15,052			2,491			10,119			(179	)
Energética Águas da Pedra S.A.		188,908		5,194		(30,325	)		(7,187	)		37,489			(20,430	)
Enerpeixe S.A.		435,627		8,389		(46,278	)		(8,150	)		170,269			(49,385	)
ESBR Participações S.A.		2,412,946		13,446		(686,016	)		348,386			(699,349	)		(433,313	)
Interligação Elétrica Garanhuns S.A.		279,257		3,105		(25,245	)		(27,667	)		53,798			(26	)
Interligação Elétrica do Madeira S.A.		610,279		25,100		(249,207	)		(102,072	)		240,216			(103	)
Intesa – Integração Transmissora de Energia S.A.		92,484		3,701		(13,744	)		(13,408	)		51,267			—
Madeira Energia S.A.		2,604,869		161,751		(1,128,693	)		614,983			18,026			(480,611	)
Manaus Transmissora de Energia S.A.		174,519		5,064		(79,158	)		(29,656	)		52,446			—
Norte Brasil Transmissora de Energia S.A.		340,080		4,357		(138,058	)		(63,807	)		113,850			—
Norte Energia S.A		120,653		93,444		(86,679	)		23,886			(40,819	)		(6,195	)
Santa Vitória do Palmar Holding S.A.		94,618		2,061		(88,409	)		(3,499	)		(227,750	)		(46,109	)
Serra do Facão Energia S.A.		280,164		3,318		(272,574	)		62,402			(135,032	)		(43,587	)
STN – Sistema de Transmissão Nordeste S.A.		159,741		3,805		(28,589	)		(23,234	)		92,806			(111	)
Teles Pires Participações		354,316		14,978		(184,328	)		57,671			(188,695	)		(57,283	)
Transmissora Sul Brasileira de Energia S.A.		73,863		4,407		(35,495	)		(3,442	)		(31,964	)		(10	)
Transmissora Sul Litorânea de Energia S.A.		150,922		2,077		(63,619	)		495			(19,026	)		—
Chapada do Piauí I Holding S.A.		44,733		265		(44,205	)		(1,455	)		(19,511	)		(12,104	)
Chapada do Piauí II Holding S.A.		—		—		(4,590	)		0			(4,813	)		—
Chuí Holding S.A.		73,031		271		(23,104	)		(2,348	)		(233,111	)		(18,222	)
Companhia Energética do Maranhão (CEMAR)		2,738,793		388,912		(368,729	)		(79,311	)		363,803			(127,052	)
Lajeado Energia		489,975		23,351		(67,944	)		(26,879	)		92,373			(28,767	)
CTEEP		1,089,287		121,244		(125,566	)		(85,270	)		504,430			(7,776	)
CEEE-GT		671,279		247,884		(195,384	)		66,419			84,947			(26,445	)
Energisa MT		3,483,404		255,036		(378,233	)		(24,433	)		45,246			(118,601	)
CEEE-D		3,376,936		460,746		(532,921	)		40,766			(514,244	)		(58,633	)
Others		2,086,060		155,620		(308,281	)		(126,743	)		331,230			(87,497	)

12/31/2014
Projects under joint control and affiliates	Share			Financial, intangible, and fixed assets		Other assets		Loans and financing		Other liabilities		Shareholders’ equity
Brasnorte Transmissora de Energia S.A.		49.71	%		277,484		13,734		16,277		51,884		223,057
CEEE-D		32.59	%		1,850,160		1,112,005		386,406		2,487,750		88,009
CEEE-GT		32.59	%		731,744		2,286,349		434,369		1,139,970		1,443,754
Chapecoense Generation S.A.		40.00	%		3,134,622		335,294		1,665,317		893,293		911,306
Cia Hidrelétrica Teles Pires		49.44	%		4,459,508		134,736		3,363,629		231,745		998,870
CTEEP		35.23	%		1,856,289		5,285,850		572,630		1,404,464		5,165,045
Energética Águas da Pedra S.A		49.00	%		773,415		66,340		408,164		43,622		387,969
Enerpeixe S.A.		40.00	%		1,644,956		203,243		123,840		334,710		1,389,649
ESBR Participações S.A.		40.00	%		20,338,744		1,886,608		11,324,749		3,632,191		7,268,412
Inambari Generation de Energia		19.61	%		57		530		—		28		559
Integração Trasmissora de Energia S.A		49.00	%		611,931		13,331		181,519		101,545		342,198
Interligação Elétrica do Madeira S.A		49.00	%		4,382,731		163,607		2,435,751		566,967		1,543,620
Itaipu		50.00	%		37,866,871		4,330,771		33,681,427		8,250,655		265,560
Madeira Energia S.A		39.00	%		20,998,021		1,745,534		13,049,395		2,699,260		6,994,900
Manaus Transmissora de Energia S.A.		49.50	%		2,368,082		154,180		874,167		541,464		1,106,631
Norte Brasil Transmissora de Energia S.A.		49.00	%		3,456,889		69,655		1,276,121		534,632		1,715,791
Norte Energia S.A		49.98	%		21,536,053		1,527,473		16,759,221		951,211		5,353,094
Serra do Facão Energia S.A		49.47	%		1,979,783		88,407		529,311		1,535,565		3,314
Sistema de Transmissão Nordeste S.A		49.00	%		684,561		52,348		180,408		222,961		333,540
Others					17,618,999		7,097,495		7,658,275		6,354,105		10,704,114

F-111

II – Income

12/31/2014
Projects under joint control and affiliates	Net operating income		Financial income		Financial expenses			Tax on earnings			Net profit (loss)			Depreciation and amortization
Amapari Energia S.A.		30,527		1,285		(6,764	)		(3,509	)		(106,867	)		(5,175	)
Amazônia Eletronorte Transm. de Energia S.A.		33,051		859		(2,390	)		(1,600	)		23,217			(244	)
Belo Monte Transmissora de Energia S.A.		20,330		1,289		(19	)		(134	)		(665	)		(11	)
Brasnorte Transmissora de Energia S.A.		34,847		751		(2,803	)		(7,524	)		19,435			—
Brasventos Eolo Geradora de Energia S.A.		29,394		1,749		(9,449	)		(2,603	)		(5,316	)		(9,632	)
Brasventos Miassaba 3 Geradora de Energia S.A.		46,316		2,556		(9,854	)		(3,620	)		8,268			(10,879	)
CEEE-D		3,700,400		96,043		(96,948	)		(56,437	)		(445,282	)		(61,961	)
CEEE-GT		670,957		129,303		(30,738	)		95,241			(280,763	)		(31,772	)
CEMAR		2,484,218		384,315		(477,821	)		(65,821	)		334,684			(121,769	)
Chapecoense Generation S.A.		714,808		33,059		(136,412	)		(51,751	)		71,617			(62,773	)
Cia Hidrelétrica Teles Pires		—		23		(605	)		(22,588	)		(39,469	)		—
Companhia Energética Sinop		—		3,659		(61	)		—			(2,333	)		—
Construtora Integração Ltda		105,200		358		(1,414	)		(12,390	)		5,844			—
CTEEP		1,102,788		154,225		(142,334	)		(80,475	)		379,732			(8,860	)
Energética Aguas da Pedra S.A.		196,394		6,371		(33,988	)		(4,039	)		20,608			(21,066	)
Enerpeixe S.A.		433,025		8,784		(36,825	)		(11,464	)		141,349			(45,279	)
ESBR Participações S.A.		754,272		6,294		(183,578	)		674,872			(1,153,942	)		(123,066	)
Inambari Generation de Energia		—		23		—			—			(373	)		(15	)
Integração Trasmissora de Energia S.A		84,827		4,828		(17,109	)		(10,048	)		46,983			(3	)
Interligação Elétrica do Madeira S.A		532,206		12,827		(163,410	)		(62,614	)		121,617			—
Itaipu		9,773,571		166,378		(2,209,854	)		—			2,931,297			—
Linha Verde Transmissora de Energia S.A.		233,844		6,067		(36,352	)		1,887			(112,426	)		—
Livramento Holding S.A.		29,910		—		(4,276	)		(10,966	)		(283,386	)		—
Madeira Energia S.A		2,343,960		64,533		(797,759	)		6,424			(2,208,060	)		(375,533	)
Manaus Construtora Ltda		25,964		302		(19	)		(8,441	)		16,442			—
Manaus Transmissora de Energia S.A.		211,311		4,422		(70,893	)		(40,212	)		61,142			(4,677	)
Norte Brasil Transmissora de Energia S.A.		686,770		1,504		(116,087	)		1,135			(3,655	)		—
Norte Energia S.A		—		116,122		(115,154	)		110,092			(219,394	)		(1,394	)
Rei dos Ventos 3 Geradora de Energia S.A.		36,108		1,644		(9,987	)		(2,423	)		213			(9,854	)
Serra do Facão Energia S.A		159,838		3,888		(37,674	)		15,433			(119,463	)		(23,876	)
Sistema de Transmissão Nordeste S.A		147,533		3,274		(19,247	)		(21,088	)		93,908			(122	)
Transmissora Matogrossense de Energia S.A.		50,271		2,546		(14,210	)		(2,635	)		28,870			(85	)
Transnorte Energia S.A.		210,839		—		(17	)		(8,533	)		16,546			(33	)
Others		2,672,401		1,130,516		(886,730	)		(135,308	)		41,993			(60,186	)

16.5.1. Information of consolidated subsidiaries – Distribution Companies:

a) Distribuição Alagoas – holds concession for distribution of electricity in all municipalities of the State of Alagoas, under Concession Agreement 07/2001-ANEEL, Its main purpose is to plan, build, and explore public service electricity distribution to end consumers. This subsidiary holds negative net current capital of R$ 269,740 (December 31, 2014 – R$ 147,841), accrued losses of R$ 931,925 (December 31, 2014 – R$ 678,710) and unsecured liabilities of R$ 247,656 (R$ 11,075 on December 31, 2014), and it depends on the financial support of the Company.

b) Distribuição Rondônia – holds concession for distribution of electricity in all municipalities of the State of Rondônia under Concession Agreement 05/2001-ANEEL,. Its main purpose is to plan, build, and explore public service electricity distribution to end consumers. This subsidiary holds negative net current capital of R$ 1,010,468 (December 31, 2014 – R$ 512,717), accrued losses of R$ 1,781,895 (December 31, 2014 – R$ 1,221,058) and unsecured liabilities of R$ 456,558 (on December 31, 2014 – R$ 104,066), and it depends on the financial support of the Company.

c) Distribuição Piauí – holds concession for distribution of electricity in all municipalities of the State of Piauí under Concession Agreement 04/2001, dated February 12, 2001, executed with ANEEL. Its main activity is electricity distribution. This subsidiary holds negative net current capital of R$ 754,935 (December 31, 2014 – R$ 118,864), accrued losses of R$ 1,966,531 (December 31, 2014 – R$ 1, 403,544) and unsecured liabilities of R$ 701,150 (December 31, 2014 – R$ 141,058), and it depends on the financial support of the Company.

F-112

d) Amazonas D. – its main activities are generation, distribution, and commercialization of electricity in the State of Amazonas. Amazonas Energia generates (2,203.9 MW*) and supplements its needs to serve consumers by buying energy from independent producers. This subsidiary holds net current capital of R$ 2,447,607 (December 31, 2014 – R$ 442,063), accrued losses of R$ 8,971,348 (December 31, 2014 – R$ 7,570,404) and unsecured liabilities of R$ 4,363,598 (December 31, 2014 – R$ 2,962,486). On July 1, 2015, this subsidiary has started in the unbundling process, where electricity generation and transmission activities have been separated from its distribution activities (see Note 1).

e) Boa Vista Energia- Holds concession under Contract 21/2001 – ANEEL, dated March 21, 2001 and Addendum dated October 14, 2005, for electricity distribution in the municipality of Boa Vista – RR, valid through the end, 2015. This subsidiary holds negative net current capital of R$ 432,232 (December 31, 2014 – R$ 73,865), accrued losses of R$ 1,020,541 (December 31, 2014 – R$ 750,425) and unsecured liabilities of R$ 337,643 (R$ 69,726 on December 31, 2014), and it depends on the financial support of the Company.

f) Distribuição Acre – holds concession for distribution and commercialization of electricity for the entire State of Acre, under concession agreement 06/2001, signed with the National Electricity Agency (ANEEL) on February 12, 2001, with effective term through July 7, 2015. Supply of electricity for the capital city, Rio Branco, and for the six towns connected to the Rio Branco System, is provided by Eletronorte. The interior of the State, since 1999, under a lease agreement, has been supplied by GUASCOR do Brasil Ltda., as an Independent Energy Producer (PIE), through Isolated Generation Systems. Here it bears mention that electricity supply for the whole State is provided through Thermoelectric to Diesel (100%). This subsidiary holds net current capital of R$ 139,542 (December 31, 2014 – R$ 21,021), accrued losses of R$ 605,232 (December 31, 2014 – R$ 420,461) and unsecured liabilities of R$ 129,683 (R$ 54,906 on December 31, 2014).

g) Celg – Distribuição – CELG-D – On September 26, 2014, the Company acquired 51% of the ordinary stock of CELG – D, becoming the parent company of CELG – D (see Note 42). CELG – D is a privately held corporation, and holds concession for delivery of electricity; it was established on March 23, 2007. Eletrobras holds 51% of the capital stock, and CELGPAR holds 49%. On December 31, 2015, the Company classified this subsidiary as an asset held for sale, because it met the accounting criteria applicable to such classification (See Note 43).

CELG-D holds concessions for electricity distribution in 237 municipalities, 391 districts and towns in the State of Goiás, with 2,688,902 consumers, covering an area of 336,871 km²*, governed by Concession Agreement No. 63 of August 25, 2000, entered into by and between ANEEL, CELG – D, and the then majority shareholder.

F-113

The concession of CELG-D was extended according to the terms of the fifth amendment to the concession contract No. 63/2000 – ANEEL, executed on December 29, 2015, see Note 2.2.

(*) information not audited by independent auditors

16.5.2 Information of consolidated subsidiaries – Generation and Transmission Companies:

a) Eletrobras Termonuclear S.A. – wholly owned subsidiary, its main activity being construction and operation of nuclear power plants, and provision of related engineering services, such activities which are regulated and monitored by the ANEEL. The Company has essentially been performing exploration activities for the Angra 1 and Angra 2 plants, with rated power of 1,990 MW*, as well as construction of the Angra 3 plant. Beginning on January 1, 2013, electricity generated by the subsidiary was rated between all concessionaires, permit-holders, or other entities authorized for public utility distribution in the National Interconnected System (SIN), according to the methodology established Regulatory Resolution No. 530, published on December 21, 2012 by ANEEL, for calculation of the annual quotas/portions corresponding to the energy from the Angra 1 and Angra 2 power plants and the conditions for sale of that energy, as per Article 11 of Law No. 12.111/2009. The subsidiary has a negative net current capital of R$ 241,869 (December 31, 2014 – R$ 1,127,268), accrued losses of R$ 6,877,187 (as of December 31, 2014 – R$ 1,759,129); and unsecured liabilities of R$ 351,588 (shareholders’ equity as of December 31, 2014 – R$ 4,796,475), and depends upon the financial support granted by the Company.

b) Eletrosul Centrais Elétricas S.A. – its main purpose is transmission and generation of electricity directly or through holdings in Specific Purpose Companies. The Company performs studies, projects, construction, operation, and maintenance of facilities for electricity transmission and generation systems, such activities which are regulated.

c) Companhia Hidro Elétrica do São Francisco – CHESF – electricity utility concessionaire whose purpose is to generate, transmit, and commercialize electricity. Its generation and hydrothermal system predominantly uses hydroelectric plants, which account for 97% of total production. CHESF operations in electricity generation include 14 hydroelectric plants and 1 thermoelectric plant, for a total installed power of 10,615 MW*, and in the transmission activity the system is comprised of 115 substations and 19,669 Km* of high tension lines.

On December 31, 2015, procedures required for effective removal of CTEEP as shareholder of SPE Extremoz Transmissora do Nordeste – ETN S.A. were concluded before the regulating agency – ANEEL. Thus, the subsidiary Chesf now holds 100.0% of shares of Extremoz.

In the end of 2015, Chesf acquired shareholding control of SPE Tamanduá Mirim 2 Energia S.A., part of the Complexo Eólico Pindaí III, upon final dilution of the shareholding position of Sequoia Capital Ltda. in this enterprise.

Thus, the Subsidiary Chesf now holds 83.01% of the shares of this enterprise.

F-114

d) Centrais Elétricas do Norte do Brasil S.A. – Eletronorte – public utility electricity concessionaire, controlled by the Company, with operations primarily in the State of Acre, Amapá, Amazonas, Maranhão, Mato Grosso, Pará, Rondônia, Roraima, and Tocantins. The operations of the Company with electricity generation include 4 hydroelectric plants, with installed capacity of 8,860.05 MW* and 6 thermoelectric plants, with capacity of 479.97 MW*, giving an installed capacity of 9,340.02 MW*. Electricity transmission is made using a system comprised of 9,287.13 Km* of transmission lines, 45 substations in the National Interconnected System (SIN), 695.89 Km* of transmission lines, 10 substations in the isolated system, totaling 9,983.02 Km* of transmission lines and 55 substations.

e) Furnas Centrais Elétricas S.A. (FURNAS) – this Company subsidiary acts in generation, transmission, and commercialization, predominantly in the region covered by the Federal District and the States of São Paulo, Minas Gerais, Rio de Janeiro, Paraná, Espírito Santo, Goiás, Mato Grosso, Pará, Tocantins, Rondônia, Rio Grande do Sul, Santa Catarina, Rio Grande do Norte, Ceará, and Bahia, in addition to holding stakes in Specific Purpose Companies. The electricity production system operated by Furnas is comprised of 10 wholly owned hydroelectric plants, 2 hydroelectric plants in partnership with private enterprise, with an installed capacity of 8,327 MW*, and 2 thermoelectric plants with 962 MW* of capacity, totaling 9,289 MW*.

f) Companhia de Geração Térmica de Energia Elétrica – CGTEE – its main company purpose is to conduct studies, plans, construction, and operation of facilities for electricity transmission and generation systems, such activities which are regulated. The Company holds generation concessions for the following thermoelectric plants: Presidente Médici Plant, Phases A and B, located in the municipality of Candiota; São Jerônimo Plant, located in the municipality of São Jerônimo; and the NUTEPA Plant, located in the municipality of Porto Alegre, all in the State of Rio Grande do Sul. This subsidiary has negative net current capital of R$ 599,918 (December 31, 2014 – R$ 392,282).

On December 31, 2015, CGTEE showed accumulated retained losses of R$ 2,017,708, this after accumulated retained losses of R$ 1,369,341 reported on December 31, 2014. The statement of earnings established negative shareholders´equity of R$ 1,210,628 (negative shareholders´equity of R$ 553,052 on December 31, 2014).

Given the current scenario, CGTEE is in negotiations with Eletrobras to determine actions in order to allow technical and financial recovery, and depends on the financial support by Eletrobras for operational maintenance, as well as for any future investments which are necessary.

(g) Amazonas GT. – its main activities are power generation and transmission in the State of Amazonas. The subsidiary has negative net current capital of R$ 517,988, shareholders’ equity of R$ 192,667 and accumulated retained losses of R$ 243,206 and depends on the financial support of the Company. On July 1, 2015, the subsidiary was incorporated as subsidiary of Amazonas D, due to unbundling process of Amazonas Energia (see Note 1).

(*) information not audited by independent auditors

F-115

16.5.3 – Other Companies (associates, unless otherwise stated)

a) Companhia Energética do Maranhão – CEMAR – electricity utility concessionaire, which plans, constructs, and explores electricity sub-transmission, transformation, distribution, and commercialization systems.

The Company holds concessions for electricity distribution in 217 municipalities in the State of Maranhão, under Concession Agreement No. 60 of August 28, 2000, executed with ANEEL, which remains effective through August 2030, and can be extended for another 30-year period.

b) Eletrobras Participações S.A. – Eletropar – Company subsidiary with business purpose of investment in other companies. On December 15, 2015, the General Meeting of Creditors of Eletronet S.A., where Eletropar is shareholder, deliberated for the settlement of Eletronet obligations, requesting a judicial statement of extinction of obligations and end of bankruptcy, with resumption of the regular course of activities and production of other applicable effects.

c) Companhia Estadual de Geração e Transmissão de Energia Elétrica – CEEE-GT – a publicly traded company whose majority shareholder is the State of Rio Grande do Sul, through the Companhia Estadual de Energia Elétrica Participações – CEEE-Par, which holds 65.92% of the total capital stock. The Concessionaire has as its purpose to explore electricity production and transmission systems.

d) Companhia Estadual de Distribuição de Energia Elétrica – CEEE-D – a publicly traded company whose majority shareholder is the State of Rio Grande do Sul, through the Companhia Estadual de Energia Elétrica Participações – CEEE-Par, which holds 65.92% of the total capital stock. The Concessionaire has as its purpose the distribution of electricity in 72 municipalities of Rio Grande do Sul, serving some 4 million consumer units.

e) Companhia Transmissão de Energia Elétrica Paulista – CTEEP – a publicly traded company authorized to operate as electricity utility concessionaire, having as its main activities the planning, construction, and operation of electricity transmission systems.

f) Empresa Metropolitana de Águas e Energia S.A. – EMAE – the concessionaire of a hydroenergy complex located in Alto Tietê, centered on the Henry Borden Hydroelectric Plant. EMAE also has the UHE Rasgão and the UHE Porto Góes, both on the Tietê River. In the Paraíba Valley, municipality of Pindamonhangaba, UHE Isabel is installed, which is currently not operating. On December 31, 2015, this associate had net current capital of R$ 112,812 (December 31, 2014 – R$ 116,473).

g) Centrais Elétricas Matogrossenses S.A.- CEMAT – a publicly traded company under the equity control of Energisa, S.A., acting in the electricity distribution area, in addition to generation using thermal plants to serve isolated systems in its concession area, which covers the State of Mato Grosso, serving consumers in 141 municipalities. Pursuant to Concession Agreement 03/1997, signed on December 11, 1997, the concession term is for 30 years, with expiration on December 11, 2027, renewable for an additional 30-year period. In addition to the distribution agreement, the Company has Generation Concession Agreement 04/1997, for 3 Thermoelectric Plants with their respective associated substations, with expiration on December 10, 2027.

h) Norte Energia S.A. – a specific purpose company, privately held, with the purpose of conducting all activities necessary for installation, operation, maintenance, and exploration of the Belo Monte Hydroelectric Plant (UHE Belo Monte) on the River Xingu, located in the State of Pará, and of the facilities for transmission with interest restricted to the generating plant. The associate holds 49.98% of the capital stock of Norte Energia. This subsidiary has spent significant sums on costs for organization, development and pre-operation, which, according to estimates and projections, should be absorbed by revenue from future operations. The associate will need financial

F-116

resources from its shareholders and from third parties in significant amounts in order to complete its Hydroelectric Plant. On December 31, 2015, the subsidiary had negative net current capital of R$ 359,526 (December 31, 2014- net current capital of R$ 175,280).

i) Madeira Energia S.A. – a privately held company, incorporated on August 27, 2007, with the purpose of construction and exploration of the Santo Antonio Hydroelectric Plant located along the River Madeira, municipality of Porto Velho, State of Rondônia, and of its Associated Transmission System. The Company holds 39% of the capital stock of Madeira Energia. The associate is incurring expenses for development of the project for construction of the Santo Antonio Hydroelectric Plant, which, according to financial projections prepared by its administration, should be absorbed by future revenue from operations.

On December 31, 2015, the associate Madeira Energia S.A. (MESA), in which the subsidiary Furnas holds a 39% stake, had net current liabilities totaling R$ 543,238. In order to correct its negative current capital, the associate enjoys financial support from its shareholders. Part of the financial status of MESA is affected by recognition of a provision for losses on the part of the expected value of revenue from reimbursable expenditures with the Consórcio Construtor Santo Antônio (CCSA).

This receivable originated from the signing of the 2nd addendum to the Concession Agreement with the ANEEL, based on submission of a timeline for commercial operations by the CCSA, anticipating, for the second time, the launch of operations of the generating units, such commitment being signed then, as part of the Contract for Installation of the Santo Antonio UHE and the “Terms and Conditions”. However, this timeline was not fully met, meaning that the net result of this calculation generates for MESA a right to compensation with the CCSA.

In order to calculate this reimbursable expenditure, the CCSA requested application of Clause 31.1.2.1.1 of the EPC Contract, which presents a contractual limit of R$ 122.00/MWh* for transfer of the cost for purchase of energy. In light of this consideration, the MESA Administration conducted, during the fiscal year ending on December 31, 2014, additional review, including various legal aspects, changing its estimate as to the realizable value of the asset (the above-mentioned right to be refunded by CCSA). As such, for the total value of the reimbursable expenditure of R$ 1,509,441, a provision was recorded for losses and the amount in December 31, 2015 was R$ 678,551 (R$ 678,551 on December 31, 2014), reflecting the expected value to be received of R$ 830,890 (R$ 756,227 on December 31, 2014).

In order to solve questions regarding the use of the contractual limit considered in the calculation of part of the net results of anticipation of the go-live schedule of the plant, provided for in the second Amendment to the Concession Contract executed with the National Agency of Energy (“ANEEL”), which gave rise to the impairment, the Subsidiary has requested, before the International Chamber of Commerce (“ICC”), the filing of an arbitral procedure against CCSA, and such procedure is subject to confidentiality terms, under the terms in the Rules of Arbitration of the ICC. On December 31, 2015, the procedure waits for the creation of the arbitral tribunal.

MESA and CCSA are in talks to formalize an agreement regarding the method and term for settlement of the dispute.

The Board of Directors, during meeting No. 002/452, recommended that Furnas take the necessary actions in the appropriate government spheres, in order to preserve the debts owed by CCSA to SAESA, so as to review the damages to SPE, and as such, the effects for Furnas, given its equity stake in SPE.

F-117

j) ESBR Participações S.A. (ESBRP) – ESBR Participações S.A. (“ESBRP”), a privately held company, has its sole company purpose investment in the Specific Purpose Company (SPE) called Energia Sustentável do Brasil S.A. (“ESBR”), which holds the concessions for use of public good for exploration of the Jirau Hydroelectric Plant, currently being constructed on the Madeira River in the State of Rondônia. The Company holds 40% of ESBRP capital. On December 31, 2015, the associate had negative net current capital of R$ 513,443 (December 31, 2014 – R$ 212,793), accumulated retained losses of R$ 2,112,648 (December 31, 2014 – R$ 1,413,299) and shareholders’ equity of R$ 7,019,063 (December 31, 2014 – R$ 7,268,412).

k) Interligação Elétrica do Madeira S.A. (IEMadeira) – IEMadeira was incorporated on December 18, 2008 with the purpose of exploring the concession for public utility electricity transmission, particularly the transmission lines and substations connected to Lots D and F from Tender No. 007/2008 of ANEEL:

The Porto Velho – Araraquara transmission line entered into commercial operation on August 1, 2013. The Inverting and Correcting stations entered into commercial operation on May 12, 2014. The company holds 49% of IE Madeira capital.

l) Manaus Transmissora de Energia S.A. – Manaus Transmissora de Energia S.A. is a privately held company, incorporated on April 22, 2008, with the specific purpose of exploring public utility concessions for electricity transmission, provided by way of installation, operation, maintenance, and construction of transmission installations for the Brazilian interconnected electrical system, according to the standards established in legislation and regulations in effect.

The SPE holds concession for construction, operation, and maintenance of transmission installations for 500 kV* Oriximiná/Cariri CD, SE Itacoatiara 500/138 kV*, and SE Cariri 500/230kV* Transmission Line.

The concession agreement was signed on October 16, 2008 for a period of thirty years; operating activities began in 2013.

The Company holds 49.50% of the capital from Manaus Transmissora de Energia S.A.

(*) information not audited by independent auditors.

16.5.4. – Companies under Management

a) Companhia de Eletricidade do Amapá – CEA – on November 12, 2012, the Company signed a memorandum of understanding, seeking to participate in the financial restructuring process of the company Companhia de Eletricidade do Amapá – CEA.

The Company and the Government of the State of Amapá entered into a Shareholders Agreement and a Management Agreement on September 12, 2013, seeking to achieve economic/financial recovery of CEA which, after implementation in full, offers the option for purchase by the Company of equity control of the recovered company. To this end, the Company assumes executive management of CEA, through its majority representation on the Board of Directors, and through indication of two members of the Executive Board of CEA, which will subsequently be replaced by professionals contracted from the market.

F-118

In this process, the Government of the State of Amapá obtained financing from the Federal Government, in order to settle debts of CEA with the Eletrobras System and other providers, in addition to preparing a Contingency Plan that will be forwarded for approval by ANEEL.

b) Companhia Energética de Roraima – CERR – on November 26, 2012, the Company signed a memorandum of understanding, seeking to participate in the financial restructuring process of the company Companhia Energética de Roraima – CERR. This process establishes that the Company may assume control of CERR through acquisition of equity control of the company.

The Company and the Government of the State of Roraima initially entered into a Shareholders Agreement and a Management Agreement, respecting the necessary authorizations, seeking to achieve economic/financial recovery of CERR which, after implementation in full, offers the option for purchase by the Company of equity control of the recovered company. To this end, the Company assumes executive management of CERR, through its majority representation on the Board of Directors, and through indication of two members of the Executive Board of CERR, which will subsequently be replaced by professionals contracted from the market.

In this process, the Government of the State of Roraima obtained financing, in order to settle debts of CERR with the Eletrobras System and other providers, in addition to preparing a Contingency Plan that will be forwarded for approval by ANEEL.

16.5.5. – Specific Purpose Entities

During recent years, the Eletrobras System Companies have formalized investments in partners for projects with private business, where the Company serves as a minority shareholder, while retaining preferential shares. These projects seek to involve the Company in the electricity generation and transmission sector, and their values are reflected under Assets - Investments.

In this same regard, considering the need to expand investment in the Electricity Sector, the companies controlled by the Company hold stakes, also as minority shareholders, with ordinary shares, in various companies with concession to provide electricity services, classified under Assets - Investments. The most significant investments whereby the Company and its subsidiaries hold stakes in specific purpose companies are the following:

F-119

Investments on Subsidiaries under Joint Control
Name	Purpose	Company	% Share	Other shareholders	% share	Status	Office
Sistema de Transmissão Nordeste - STN	Transmission	Chesf	49%	Alusa	51%	In operation	Brazil
Manaus Construtora Ltda.	Construction - Transmission	Chesf	19.5%	Abengoa Holding	50.5%	In operation	Brazil
		Eletronorte	30%
Energia Sustentável do Brasil - ESBR	Generation - UHE Jirau	Chesf	20%	GDF Suez Energy Latin America Ltda.	40%	In operation	Brazil
		Eletrosul	20%	Mizha Participações S.A	20%
Intesa - Integração Transmissora de Energia	Transmission	Chesf	12%	FIP	51%	In operation	Brazil
		Eletronorte	37%
Interligação Elétrica do Madeira S.A	Transmission	Chesf	24.5%	CTEEP	51%	In operation	Brazil
		Furnas	25%
TDG - Transmissora Delmiro Gouveia S.A	Transmission	Chesf	49%	ATP Engenharia Ltda	51%	Pre-operation	Brazil
Norte Energia S.A	Generation - UHE Belo Monte	Chesf	15%	Petros	10%	Pre-operation	Brazil
		Eletronorte	19.98%	Outros	39.77%
		Eletrobras	15%
Empresa Transmissora do Alto Uruguai - ETAU	Transmission	Eletrosul	27.4%	TAESA	52.6%	In operation	Brazil
				DME Energetica	10%
				CGTEE - GT	10%
Enerpeixe S.A.	Generation - UHE Peixei Angical	Furnas	40%	EDP	60%	In operation	Brazil
Norte Brasil Transmissora de Energia S.A	Transmission	Eletronorte	49%	Abengoa Concessions Brasil Holding S.A	51%	In operation	Brazil

F-120

Investments on Subsidiaries under Joint Control
Name	Purpose	Company	% Share	Other shareholders	% share		Status	Office
Fronteira Oeste Trasnmissora de Energia S.A	Transmission	Eletrosul	51%	CEEE-GT		49%	In operation	Brazil
Amazônia Eletronorte Transmissora de Energia	Transmission	Eletronorte	49%	Bimetal		26.99%	In operation	Brazil
				Alubar		10.76%
				Linear		13.25%
Amapari Energia S.A	Generation - UTE Serra do Navio	Eletronorte	49%	MPX Energia S.A		51%	In operation	Brazil
Brasnorte Transmissora de Energia S.A.	Transmission	Eletronorte	49.71%	Taesa		38.7%	In operation	Brazil
Companhia Transudeste de Transmissão	Transmission	Furnas	25%	Alusa		41%	In operation	Brazil
				Cemig		24%
				EATE		10%
Companhia Transirapé de Transmissão	Transmission	Furnas	24.5%	Alusa		41%	In operation	Brazil
				Cemig		24%
				EATE		10%
Chapecoense	Generation - UHE Foz do Chapecó	Furnas	40%	CPFL		51%	In operation	Uruguay
				CEEE-GT		9%
Serra do Facão Energia	Generation - UHE Serra do Facão	Furnas	49.47%	Alcoa Alumínio		34.97%	In operation	Brazil
				DME Energética		10.08%
				Camargo Corrêa		5.48%
Retiro Baixo	Generation - Retiro Baixo	Furnas	49%	Orteng		25.5%	In operation	Brazil
				Arcadis Logos		25.5%
Baguari Energia	Generation - UHE Baguari	Furnas	30.62%	Cemig		69.38%	In operation	Brazil
Companhia de Transmissão Centroeste de Minas	Transmission	Furnas	49%	Cemig		51%	In operation	Brazil
Transenergia Renovável S.A.	Transmission	Furnas	49%	Malucelli		51%	In operation	Brazil
Eólicas Junco I, Junco II, Caiçara I e Caiçara II	Transmission	Chesf	49%	Empresa Francesa Votalia		51%	Pre-operation	Brazil
Complexo Sento Sé I	Generation - EOL Pedra Branca, EOL São Pedro do Lago, EOL Sete Gameleiras	Chesf	49%	Brennand Energia		51%	In operation	Brazil
Iterligação Elétrica Garanhuns S.A	Transmission	Chesf	49%	CTEEP		51%	Pre-operation	Brazil
Chuí Holding	Generation - Parque Eólico	Eletrosul	49%	Rio Bravo		51%	In operation	Brazil
Livramento	Generation - Cerro Chato	Eletrosul	52.5%	Rio Bravo		41%	In operation	Brazil
				Elos		6.5%
Santa Vitória do Palmar	Generation - Verace I ao X	Eletrosul	49%	Rio Bravo		51%	In operation	Brazil
TSBE - Transmissora Sul Brasileira de Energia S/A	Transmission	Eletrosul	80%	Copel		20%	In operation	Brazil
TSLE - Transmissora Sul Litorânia de Energia S.A	Transmission	Eletrosul	51%	CEEE		49%	In operation	Brazil
Marumbi Transmissora de Energia S.A	Transmission	Eletrosul	20%	Copel		80%	In operation	Brazil
Costa Oeste Transmissora de Energia	Transmission	Eletrosul	49%	Copel - 51%		51%	In operation	Brazil
Teles Pires Participações S.A	Generation - UHE Teles Pires	Eletrosul	24.7%	Neoenergia		50.6%	In operation	Brazil
		Furnas	24.7%

F-121

Investments on Subsidiaries under Joint Control
Name	Purpose	Company	% Share	Other shareholders	% share	Status	Office
Transmissora Matogrossense de Energia S.A.	Transmission	Eletronorte	49%	Alupar	46%	In operation	Brazil
				Mavi	5%
Construtora Integração	Transmission	Eletronorte	49%	Abengoa	51%	In operation	Brazil
Transnorte Energia S.A.	Transmission	Eletronorte	49%	Alupar	51%	Pre-operation	Brazil
Brasvento Eolo Geradora Energia	Generation -	Eletronorte	24.5%	J.Malucelli	51%	In operation	Brazil
	EOL Rei dos	Furnas	24.50%
Brasventos Miassaba 3 Geradora	Generation -	Eletronorte	24.5%	J.Malucelli	51%	Pre-operation	Brazil
	EOL Miassaba	Furnas	24.5%
Rei dos Ventos 3 Geradora	Generation -	Eletronorte	24.5%	J.Malucelli	51%	Pre-operation	Brazil
	EOL Rei dos	Furnas	24.5%
Luziânia – Niquelândia Transmissora S.A.	Transmission	Furnas	49%	State Grid Corporation of China	51%	Pre-operation	Brazil
Caldas Novas Transmissão	Transmission	Furnas	49.9%	Desenvix	22.5%		Brazil
				Santa Rita	12.5%
				CEL	12.52%
Goiás Trasnmissão S.A	Transmission	Furnas	49%	Bogotá	51%	In operation	Brazil
Madeira Energia S.A	Generation -	Furnas	39%	Odebrecht Energia	18.6%	In operation	Brazil
	UHE Santo			Andrade Gutierrez	12.4%
	Antônio			Cemig	10%
				FIP	20%
MGE - Transmissão	Transmission	Furnas	49%	Desenvix	20%	In operation	Brazil
				J.Malucelli Energia	31%
Triângulo Mineiro Transmissora S.A.	Transmission	Furnas	49%	FIP - 51%	51%		Brazil
Paranaíba Transmissora de Energia S.A.	Transmission	Furnas	24.5%	Copel	24.5%	In operation	Brazil
				State Grid	51%
Central Eólica Famosa I	Generation - Parque Eólico Famosa I	Furnas	49%	PF Participações Ltda	51%	Pre-operation	Brazil
Central Eólica Pau Brasil	Generation - Parque Eólico Pau Brasil	Furnas	49%	PF Participações Ltda	51%	Pre-operation	Brazil
Central Eólica Rosada	Generation - Parque EOL Rosada	Furnas	49%	PF Participações Ltda	51%	Pre-operation	Brazil
Central Eólica de São Paulo	Generation - Parque EOL Rosada	Furnas	49%	PF Participações Ltda	51%	Pre-operation	Brazil
Vale do São Bartolomeu	Transmission	Furnas	39%	FIP	51%	Pre-operation	Brazil
				CELG GT	10%
Punaú I	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Punaú I			CGE Punaú I	0.01%
Carnaúba I	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Carnaúba I			CGE Carnaúba I	0.01%
Carnaúba II	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Carnaúba			CGE Carnaúba II	0.01%

F-122

Investments on Subsidiaries under Joint Control
Name	Purpose	Company	% Share	Other shareholders	% share	Status	Office
Carnaúba III	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Carnaúba			CGE Carnaúba III	0.01%
Carnaúba V	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Carnaúba			CGE Carnaúba V	0.01%
Cervantes I	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Cervantes			CGE Cervantes I	0.01%
Cervantes II	Generation -	Furnas	49%	FIP	50.99%	Pre-operation	Brazil
	EOL Cervantes			CGE Cervantes II	0.01%
Bom Jesus	Generation - EOL Bom Jesus	Furnas	49%	FIP	51%	Pre-operation	Brazil
Cachoeira	Generation - EOL Cachoeira	Furnas	49%	FIP	51%	Pre-operation	Brazil
Pitimbu	Generation - EOL Pitimbu	Furnas	49%	FIP	51%	Pre-operation	Brazil
São Caetano I	Generation - EOL São Caetano I	Furnas	49%	FIP	51%	Pre-operation	Brazil
São Caetano	Generation - EOL São Caetano	Furnas	49%	FIP	51%	Pre-operation	Brazil
São Galvão	Generation - EOL São Galvão	Furnas	49%	FIP	51%	Pre-operation	Brazil
Companhia Energética Sinop S.A	Generation -	Eletronorte	24.5%	FIP	51%	Pre-operation	Brazil
	UHE Sinop	Furnas	25%
Belo Monte Transmissora de Energia S.A	Transmission	Eletronorte	24.5%	State Grid Brazil Holding (SGBH)	51%	Pre-operation	Brazil
		Furnas	24.5%
Três Irmãos	Generation - UHE Três Irmãos	Furnas	49.9%	Fundo de Investimento em Participações Constantinopla	50.1%	Pre-operation	Brazil
São Manoel	Generation -	Furnas	33.3%	CWEI (Brasil)	33.3%	Pre-operation	Brazil
	UHE São			Participações
	Manoel			EDP Brasil	33.4%
Itaguaçu da Bahia	Generation -	Furnas	49%	Salus Fundo de Investimento	49%	Pre-operation	Brazil
	EOL Itaguaçu
	da Bahia			Casa dos Ventos Energia Renovável	2%
Complexo Sento Sé II	Generation - EOL Baraúnas	Chesf	49%	Brennand Energia S.A	50.9%	In operation	Brazil
	I; Morro Branco I e			Brennand Energia Eólica	0.1%
Complexo Sento Sé III	Generation - EOL Baraúnas	Chesf	49%	Brennand Energia S.A	50.9%	In operation	Brazil
	II e Banda de Couro			Brennand Energia Eólica	0.1%

F-123

Investments on Subsidiaries under Joint Control
Name	Purpose	Company	% Share	Other shareholders	% share	Status	Office
Complexo Chapada do Piauí I	Generation - EOL Ventos de Santa Joana IX ao XIII; XV e XVI	Chesf	49%	ContourGlobal do Brasil Holding	36%	In operation	Brazil
				Salus - Fundo de Investimento em Participações	14.9%
				Ventos Santa Joana Energias	0.1%
Complexo Chapada do Piauí II	Generation - EOL Ventos de Santa Joana I, III ao V, VI e Ventos Santo Augusto IV	Chesf	49%	ContourGlobal do Brasil Holding	46%	In operation	Brazil
				Salus - Fundo de Investimento em Participações	4.9%
				Ventos Santa Joana Energias	0.1%
Complexo Serra das Vacas	Generation - EOL Serra das Vacas I - IV	Chesf	49%	PEC Energia	51%	In operation	Brazil
Transenergia São Paulo	Transmission	Furnas	49%	J.Malucelli	51%	In operation	Brazil
Lago Azul Transmissora	Transmission	Furnas	49.9%	Celg Generation e Transmissão	50.1%	In operation	Brazil
Mata de Sta. Genebra Transmissora	Transmission	Furnas	49.9%	Copel Generation e Transmissão	50.1%	In operation	Brazil
Energia Olímpica	Transmission	Furnas	49.9%	Light S.A	50.1%	Pre-operation	Brazil
Manaus Transmissora de Energia S.A	Transmission	Eletronorte	30%	Abengoa Concessions Brasil Holding	50.5%	In operation	Brazil
		Chesf	19.5%
Inambari	UHE Inambari	Furnas	19.6%	OAS	51%	Suspended	Brazil/ Peru
		Eletrobras	29.4%
Companhia Transleste de Transmissão	Transmission	Furnas	25%	Alusa	41%	In operation	Brazil
				Cemig	24%
				EATE	10%

(*) Information not audited by independent auditors.

F-124

16.6 – Stocks in guarantee

Taking into consideration the fact that the Company has several pending judicial proceedings in which it stands as defendant (See Note 31), stocks are offered in guarantee, in the appeals of these judicial proceedings, which represent 8.60% (7.25% on December 31, 2014) of the total investment portfolio, as follows:

12/31/2015
EQUITY	INVESTMENT VALUE		BLOCKING PERCENTAGE			BLOCKED INVESTMENT
CTEEP		924,185		99.55	%		920,026
EMAE		296,828		100.00	%		296,828
CESP		87,023		98.32	%		85,561
AES TIETE		437,532		100.00	%		437,532
COELCE		196,429		51.36	%		100,886
CGEEP		17,662		100.00	%		17,662
ENERGISA MT		385,318		89.06	%		343,164
CELPA		42,379		100.00	%		42,379
CELPE		28,859		100.00	%		28,859
CEEE - GT		448,274		100.00	%		448,274
CELESC		41,513		96.26	%		39,960
ENERGISA		124,104		90.29	%		112,054
CEMAR		653,419		97.62	%		637,868
SUBTOTAL		3,683,525		8.60	%		3,511,053

F-125

NOTE 17 – FIXED ASS ETS

The items under fixed assets relate primarily to infrastructure for electricity generation under non -extended concession, pursuant to the terms of Law No. 12,783/13.

The property that comprises the fixed assets of the Company, listed and identified as public utility concession assets, cannot be sold or given in guarantee to third parties.

Special Obligations (obligations relating to concessions) correspond to funds received from consumers with the purpose of contributing to the execution of the expansion projects necessary to meet electricity supply requests and are allocated to the corresponding projects. The assets acquired with the corresponding funds are recorded under the fixed assets of the Company, pursuant to the provisions established by ANEEL. By virtue of the nature of these contributions, they do not represent effective financial obligations, as they will not be returned to the consumers.

	12/31/2015
	Gross value		Accumulated depreciation			Obligations linked to the Concession			Impairment (a)			Net Value
In service
Generation		46,003,180		(21,740,065	)		(633,602	)		(8,540,131	)		15,089,382
Management		2,444,828		(1,445,137	)		(25,518	)		—			974,173
Distribution		1,398,468		(441,647	)		—			—			956,821
		49,846,476		(23,626,849	)		(659,120	)		(8,540,131	)		17,020,376
In progress													—
Generation		11,659,196		—			—			—			11,659,196
Management		799,908		—			—			—			799,908
		12,459,104		—			—			—			12,459,104
		62,305,580		(23,626,849	)		(659,120	)		(8,540,131	)		29,479,479
	12/31/2014
	Gross value		Accumulated depreciation			Obligations linked to the Concession			Impairment (a)			Net Value
In service
Generation		43,466,067		(19,292,806	)		(455,808	)		(2,955,233	)		20,762,220
Management		2,396,288		(1,302,020	)		(26,927	)		—			1,067,341
Distribution		1,398,468		(383,950	)		—			—			1,014,518
		47,260,823		(20,978,776	)		(482,735	)		(2,955,233	)		22,844,079
In progress
Generation		7,547,759		—			—			—			7,547,759
Management		713,710		—			—			—			713,710
		8,261,469		—			—			—			8,261,469
		55,522,292		(20,978,776	)		(482,735	)		(2,955,233	)		31,105,548

(a) See note 20, Impairment of long-term assets, and note 42, Operating Provisions, for further information.

(b) See note 4 - XI, Risks related to compliance with laws and regulations

F-126

Adjustments in Fixed Assets

	Balance on 12/31/2014			Additions			Transfers			Deductions			Reclassification of Financial Asset (Unbundling)			Investigation findings (b)			Reclassification of Intangible (Unbundling)			Balance on 12/31/2015
Generation / Trade
In service		43,466,067			886			776,531			(304,835	)		1,349,221			—			715,310			46,003,180
Accrued depreciation		(19,292,806	)		(1,226,683	)		(10,486	)		57,138			(914,576	)		—			(352,652	)		(21,740,065	)
In progress		7,547,759			3,908,372			(804,186	)		(54,567	)		1,022,207			(15,996	)		55,606			11,659,196
Provision for recovery of assets (impairment) (a)		(2,955,233	)		(5,729,304	)		—			167,261			—			11,514			(34,369	)		(8,540,131	)
Special Obligations Linked to the Concession		(455,808	)		—			(86,113	)		4,084			(87,157	)		—			(8,608	)		(633,602	)
		28,309,979			(3,046,729	)		(124,254	)		(130,919	)		1,369,695			(4,482	)		375,287			26,748,577
Distribution
Lease		1,398,468			—			—			—			—			—			—			1,398,468
Accrued depreciation		(383,950	)		(57,697	)		—			—			—			—			—			(441,647	)
		1,014,518			(57,697	)		—			—			—			—			—			956,821
Management
In service		2,396,288			24,358			34,701			(10,519	)		—			—			—			2,444,828
Accrued depreciation		(1,302,020	)		(132,790	)		(22,854	)		12,527			—			—			—			(1,445,137	)
In progress		713,710			206,275			(84,236	)		(35,841	)		—			—			—			799,908
Special Obligations Linked to the Concession		(26,927	)		—			—			1,409			—			—			—			(25,518	)
		1,781,051			97,843			(72,389	)		(32,424	)		—			—			—			1,774,081
TOTAL		31,105,548			(3,006,583	)		(196,643	)		(163,343	)		1,369,695			(4,482	)		375,287			29,479,479

	Balance on 12/31/2013 Revised			Additions			Transfers			Deductions			Acquisition of subsidiary			Investigation findings (b)			Balance on 12/31/2014
Generation / Trade
In service		41,832,824			2,694			1,549,753			80,796			—						43,466,067
Accrued depreciation		(18,140,950	)		(1,190,061	)		(5,887	)		44,092			—			—			(19,292,806	)
In progress		7,059,539			2,594,000			(1,798,121	)		(112,532	)		—			(195,127	)		7,547,759
Provision for recovery of assets (impairment) (a)		(2,699,425	)		(731,552	)		22,273			321,028			—			132,443			(2,955,233	)
Special Obligations Linked to the Concession		(460,289	)		—			—			4,481			—			—			(455,808	)
		27,591,699			675,081			(231,982	)		337,865			—			(62,684	)		28,309,979
																				—
Distribution																				—
Lease		1,398,468			—			—			—			—			—			1,398,468
Accrued depreciation		(326,310	)		(57,640	)		—			—			—			—			(383,950	)
		1,072,158			(57,640	)		—			—			—			—			1,014,518
																				—
Management																				—
In service		2,112,331			111,902			87,572			(31,768	)		116,251			—			2,396,288
Accrued depreciation		(1,179,851	)		(148,973	)		(20,889	)		47,693			—			—			(1,302,020	)
In progress		679,380			93,262			(78,532	)		(12,601	)		32,201			—			713,710
Special Obligations Linked to the Concession		(28,212	)		—			—			2,927			(1,642	)		—			(26,927	)
		1,583,648			56,191			(11,849	)		6,251			146,810			—			1,781,051
																				—
TOTAL		30,247,505			673,632			(243,831	)		344,116			146,810			(62,684	)		31,105,548

(a) See note 20 – Recoverable Value of Long-Term Assets and Note 42 – Operating Provisions ( reversions)

(b) See note 4 - XI, Risks related to compliance with laws and regulations

F-127

	Balance on 01/01/2013 Revised			Additions			Transfers			Deductions			Impairment			Depreciation			Balance on 12/31/2013 Revised
Generation / Trade
In service		37,524,420			224,330			4,121,201			(37,127	)		—			—			41,832,824
Accrued depreciation		(17,156,637	)		—			—			—			—			(1,239,918	)		(18,396,555	)
In progress		8,808,361			2,490,820			(4,158,791	)		(80,851	)		—			—			7,059,539
Lease		1,338,787			—			—			—			—			(11,024	)		1,327,763
Provision for recovery of assets (impairment) (a)		(1,803,142	)		—			—			—			(896,283	)		—			(2,699,425	)
		28,711,789			2,715,150			(37,590	)		(117,978	)		(896,283	)		(1,250,942	)		29,124,146
Management
In service		2,139,463			18,580			76,702			(122,415	)		—			—			2,112,331
Accrued depreciation		(1,130,055	)		—			—			—			—			(49,796	)		(1,179,851	)
In progress		486,352			302,497			(102,026	)		(7,443	)		—			—			679,380
		1,495,761			321,077			(25,324	)		(129,858	)		—			(49,796	)		1,611,860
(-)Special Obligations Linked to the Concession
Accumulated Reintegration		19,697			—			—			—			—			—			19,697
Consumer Contributions		—			—			—			—						—			—
Federal Government Participation		(177,802	)		—			—			2,835			—			—			(174,967	)
Donations and Grants for Investments		—			—			—			—			—						—
Federal Government, States and Municipality Participation		(19,389	)		—			—			—			—			—			(19,389	)
Amortization Reserves		(81,998	)		—			—			—			—			—			(81,998	)
Others		(233,210	)		(2,997	)		—			—			—			4,363			(231,844	)
		(492,702	)		(2,997	)		—			2,835			—			4,363			(488,501	)
TOTAL		29,714,848			3,033,230			(62,914	)		(245,001	)		(896,283	)		(1,285,351	)		30,247,505

(a) ^{See note 20 –Recoverable Value of Long-Term Assets and Note 42 – Operating Provisions ( reversions)}

Average rate of depreciation and accumulated depreciation :

	12/31/2015					12/31/2014
	Average depreciation rate			Accrued depreciation		Average depreciation rate			Accrued depreciation
Generation
Hydraulic		2.30	%		15,191,209		2.46	%		13,156,910
Nuclear		3.33	%		4,048,041		3.33	%		3,701,375
Thermal		3.80	%		2,418,294		2.43	%		2,350,124
Wind		6.88	%		81,935		4.00	%		62,051
Commericalization		3.16	%		586		3.15	%		22,346
					21,740,065					19,292,806
Distribution		3.00	%		441,647		3.33	%		383,950
					441,647					383,950
Administration		6.73	%		1,445,137		7.28	%		1,302,020
					1,445,137					1,302,020
Total					23,626,849					20,978,776

F-128

NOTE 18 – FINANCIAL ASSET – CONCESSIONS AND ITAIPU

	12/31/2015		12/31/2014
Transmission Concessions
Financial Assets Annual Permitted Revenue		10,807,585		8,769,660
Financial Assets - Indemnifiable Concessions (*)		8,365,177		8,253,130
		19,172,762		17,022,790
Distribution Concessions
Financial Assets - Indemnifiable Concessions		4,119,004		7,495,755
Parcel A and Other Financial		86,102		740,257
		4,205,106		8,236,012
Generation Concessions
Financial Assets - Indemnifiable Concessions		2,554,211		1,811,630
		2,554,211		1,811,630
		25,932,079		27,070,432
Financial Asset Itaipu		3,449,566		5,336,351
		3,449,566		5,336,351
Total financial assets		29,381,645		32,406,783
Financial Assets - Current		965,212		3,437,521
Financial Assets - Non-current		28,416,433		28,969,262
Total financial assets		29,381,645		32,406,783

(*) The amounts referring to the concession assets renewed according to Law 12,783/2013 and not yet ratified by the Grantor are presented in note 2.1.

F-129

18.1. – Financial Assets of Itaipu

	12/31/2015			12/31/2014
Accounts receivable		4,797,458			1,997,498
Compensation rights		1,513,373			1,184,475
Energy Suppliers - Itaipu		(2,368,925	)		(2,648,864	)
Compensation obligations		(3,570,899	)		1,854,513
Total current assets		371,007			2,387,622
Accounts receivable		1,043,873			1,007,361
Compensation rights		5,975,584			5,468,642
Compensation obligations		(3,940,898	)		(3,527,274	)
Total non-current assets		3,078,559			2,948,729
Total assets		3,449,566			5,336,351

The effects of establishing the Itaipu financial assets are shown above and are detailed as follows:

18.1.1. – Values Resulting from Commercialization of Binational Itaipu Electricity

a) Adjustment factor

Under Law 11,480/2007, the adjustment factor was withdrawn from the financing agreements formalized with Itaipu Binational, and of the debt assignment agreements signed with the National Treasury, since 2007, guaranteeing for the Company complete maintenance of its flow or receipts.

As a result, Decree No. 6,265 of November 22, 2007 was published, regulating the commercialization of electricity from Itaipu Binational, defining the differential to be applied in the rate of transfer, creating an asset relating to the part of the calculated annual differential, equal to the annual adjustment factor withdrawn from the financing, to be included annually in the rate of transfer, beginning in 2008, used by the Company, preserving the flow of resources, originally established.

In this manner, it came to be included in the rate of transfer of power from Itaipu Binational, beginning in 2008, the differential resulting from the removal of the annual adjustment factor, whose values are defined annually through joint ministerial directive of the Ministries of Treasury and Mines and Energy. In the rate of transfer in effect in 2015, the amount equal to US$ 386,085 is included, which was received by the Company through collection of distribution companies, authorized under directive MME/MF 598/2014.

F-130

The balance resulting from the adjustment factor of Itaipu Binational, included under Financial Assets, presented in Noncurrent Assets, totals R$ 5,975,584 on December 31, 2015, equal to US$ 1,530,318 (December 31, 2014 – R$ 5,468,642, equal to US$ 2,058,822, of which R$ 3,940,898, equal to US$ 1,009,244, will be transferred to the National Treasury through 2023, as a result of the debt assignment operation performed between the Company and the National Treasury, in 1999.

These values will realized by their inclusion in the rate of transfer to be used through 2023.

b) Commercialization of electricity

Law 10,438 of April 26, 2002, attributed to the Company the responsibility for acquisition of all of the electricity produced by Itaipu Binational to be consumed in Brazil, becoming seller of that electricity.

In this manner, the equivalent of 131,218 GWh* (132,506 GWh* in 2014) was sold during 2015, while the power supply rate (purchase) used by Itaipu Binational is US$ 22.60/kW*, and the rate of transfer (sale) is US$ 38.07/KkW* (US$ 22.60/kW* - supply; US$ 26.05/kM* = rate of transfer in 2014).

The result of commercialization of the Itaipu Binational electricity, pursuant to the terms of Decree No. 4,550 of December 27, 2002, observing the amendments introduced under Decree No. 6,265 of November 22, 2007, is allocated as follows:

1) if positive, it must be allocated, by proportional rating, to the individual consumer, as a credit applied to the energy bills of consumers in the National Interconnected Electrical System under residential and rural categories, with monthly consumption less than 350 kWh*.

2) if negative, it is incorporated by ANEEL in calculating the rate of transfer of power contracted in the year after the result.

This commercialization operation does not impact the Company’s earnings, while pursuant to current regulations, a negative result represents an unconditional right to receipt, and if negative, an effective obligation.

In 2015, there was a surplus in this activity of R$ 5,048,840 (R$ 3,242,451 deficit on December 31, 2014), the resulting obligation having been included under financial assets.

(*) Information not examined by independent auditors

F-131

18.2. – Financial Assets – Public utility electricity concession

The financial assets - concession header, in the amount of R$ 25,845,977 (December 31, 2014 - R$ 27,070,432) relates to the realizable financial assets held by the companies from the Eletrobras System, in the distribution concessions, calculated by applying the mixed model, and in generation and transmission concessions, by application of the financial model, both as established in IFRIC 12.

F-132

18.3 – Amounts receivable from Parcel A and other financial components

On November 25, 2014, ANEEL decided to add the concession and permit agreements of the Brazilian electricity distribution companies, incorporating the balances of the receivables from Parcel A and other financial items in calculation of indemnity, when the concession expires. The aforementioned event requires that the balance be recorded of any differences from Parcel A and other financial components not yet recovered or liquidated.

18.3.1. Parcel A Variation Compensation Account - CVA

Joint Ministerial Directive of the Ministers of Treasury and Mines and Energy No. 25 of January 24, 2002, established the “Parcel A” Variation Compensation Account - CVA, with the purpose of recording the variations in cost, negative and positive, occurred in the period between annual rate adjustments, with respect to the items established in the electricity distribution concession agreements.

These variations are calculated based on the difference between the expenses effectively incurred and the expenses estimated at the time the rate is established in the annual rate adjustment. The values considered in the CVA undergo monetary adjustment based on the SELIC rate.

The totals recorded under current assets and liabilities relate to values already approved by ANEEL upon completion of the rate adjustment in 2015, and the totals recorded under noncurrent assets and liabilities represent an estimate of the CVA to be approved at the next rate adjustment in 2016.

F-133

	12/31/2015			12/31/2014
Parcel “A”
CVA
CCC		1,219			1,161
CDE		208,466			16,934
Basic Grid		7,537			29,969
Cost of Acquisition of Electricity		169,591			542,755
Transportation Itaipu		—			157
Transfer Itaipu		—			546
PROINFA		(2,907	)		35,683
ESS and EER		(55,683	)		(152,751	)
Neutral Sector Fees		(658	)		(17,288	)
Overcontract		(169,615	)		156,916
Other Financial Items		(71,848	)		126,175
Total values of Parcel A and other financial items		86,102			740,257
Current Assets		578,654			606,984
Non-current assets		38,252			235,809
Current liabilities		(514,424	)		(96,863	)
Non-current liabilities		(16,380	)		(5,673	)
Total		86,102			740,257

18.3.2. Other financial items

• CUSD financial adjustment - in adherence with the provisions from Article 7 of the Joint Ministerial Directive No. 25/2002;

• Neutrality of Sector Charges - this refers to calculation of the monthly differences between the values of each item from sector charges in the period of reference and the respective amounts included in the previous process;

• Exposure to Price Differences between Sub-markets - this refers to the rating of financial risks resulting from price differences between sub-markets, pursuant to Article 28 of Decree No. 5,163/2004.

• Energy Overcontracting Transfer/Short-term Market Exposure - pursuant to REN No. 255/2007, as amended by REN No. 305/2008 and 609/2014, and in accordance with the criteria established in Dispatch No. 4,225/2013;

• Eletronuclear Differential - corresponds to the difference between the rate used and the rate of reference between Furnas and Eletronuclear, as established by Law No. 12,111/2009.

• Other - corresponds to the sum of all other values recorded by ANEEL as Financial Guarantees in regulated energy contracting (CCEAR), DIC/FIC compensation transfer, and others.

F-134

18.4 – Fee Adjustment

Concession contracts executed between power distribution companies and the Federal Government, with intermediation of ANEEL, set forth that annually there should be adjustment of the power value paid by the consumer. This adjustment, due to the method established by ANEEL, may be positive or negative and occurs annually, on the anniversary date of the distribution company.

According to the concession contract, the concessionaire income is split into two portions: A and B. The A portion, responsible for approximately 70% of the fee, includes costs deemed as non-manageable by the distribution company, that is, costs that do not depend on the direct control of the Company, as power purchased to be resold to consumers and fees and taxes that are legally determined.

The B portion, representing approximately 30% of the fee, include costs deemed as manageable. These are the costs that are subject to direct control of the concessionaire, which is fully able to manage them, including personnel costs, material costs and other activities directly related to operation and maintenance of distribution services, depreciation costs and compensation of investments made by the Company for the service.

Annual fee adjustments made in 2015, the value of the Power Development Account – CDE was subject to a significant increase compared to the fee adjustment in 2014, mainly due to the inclusion of the share set forth for the Concessionaire related to the ACR Account, that was not included in the calculation of the Extraordinary Fee Review that occurred in February 2015.

Note that this share is aimed to the beginning of the settlement of credit operations contracted by the Chamber of Trade of Power – CCEE in the management of the ACR Account, in compliance with the terms in Decree No. 8,221, from 2014, and Normative Resolution - REN No. 612, from 2014.

18.5 – Tariff Flags

Starting in 2015, power accounts shall apply the Tariff Flag System. Green, yellow, and red flags will be used to inform whether energy will cost more or less, based on power generation conditions.

In Brazil, electric power is mainly generated by hydroelectric power plants. In order to work, these power plants depend on rainfall and water levels of reservoirs. When not enough water is stored, thermoelectric power plants can be connected in order to save water from the reservoirs of the hydroelectric power plants. In this manner, generation costs increase, since such thermoelectric power plants use fuels such as natural gas, coal, fuel oil, and diesel. Additionally, when a lot of water is stored, it is not necessary to connect thermoelectric plants and generation costs will decrease.

Resolution number 1826, dated November 25, 2014, which ratified this and was published by ANEEL, determined the rates of the Company with already established prices for the rate structure. The application of these flags became a requirement starting in January, 2015.

F-135

Flags will be green, yellow, and red and will be applied according to load service conditions, which shall be the sum of Difference Settlement Price (PLD), Operative Marginal Costs (CMO) with charges for the Power Security System Services (ESS_SE)

Flags were adopted considering the following criteria: green flag is to be activated whenever power costs less than R$ 200/MWh, which means favorable conditions for power generation and there will be no addition to the fee. Yellow flag will be activated whenever the system operation cost is between R$ 200/MWh and R$ 350/MWh: less favorable generation conditions, and there will be an addition to the fee of R$ 2.50 for each 100kW/h consumed. Now, red flag will be activated whenever the operation cost is higher than R$ 350/MWh: more costly generation conditions, and fee will be added with R$ 4.50 for each 100kW/h consumed.

In short, the flag system, that started to be applied in January 2015, reflects the generation conditions and indicates to consumers the option to reduce consumption and influence the final cost of power generation. The system does not represent a proper increase in the fee, this is just a different way to present a cost that would be included in the fee, although with no visibility to the consumer, and that would be equally supported at the time of the annual fee adjustment.

(*) Information not audited by the independent auditors

F-136

NOTE 19 – INTANGIBLE ASSETS

	Balance on 12/31/2014			ADDITIONS			DEDUCTIONS			COST / SERVICE TRANSFERS			RECLASSIFICATION AS FIXED (UNBUNDLING)			Balance on 12/31/2015
Related to Concession - Generation		500,285			37,336			(8,826	)		(7,335	)		(375,287	)		146,173
In service		424,526			(5,897	)		(8,826	)		7,022			(326,105	)		90,720
Intangible asset		902,720			9,507			(15,506	)		7,022			(715,310	)		188,433
Accrued amortization		(434,599	)		(15,340	)		—			—			352,652			(97,287	)
Special obligations		(15,033	)		—			6,744			—			7,991			(298	)
Impairment		(28,562	)		(64	)		(64	)		—			28,562			(128	)
In Progress		75,759			43,233			—			(14,357	)		(49,182	)		55,453
Intangible asset		96,261			43,304			—			(14,357	)		(55,606	)		69,602
Special obligations		(14,695	)		(71	)		—			—			5,807			(8,959	)
Impairment		(5,807	)		—			—			—			617			(5,190	)
Related to Concession - Distribution		357,791			(93,029	)		(7,459	)		(8,785	)		—			248,518
In service		210,979			(122,113	)		(8,683	)		56,299			—			136,482
Intangible asset		1,764,919			150,278			(144,414	)		88,865			—			1,859,648
Accrued amortization		(1,469,338	)		(246,100	)		54,792			—			—			(1,660,646	)
Special obligations		(83,592	)		(26,291	)		80,939			(33,576	)		—			(62,520	)
Impairment		(1,010	)		—			—			1,010			—			—
In Progress		146,812			29,084			1,224			(65,084	)		—			112,036
Intangible asset		165,156			32,425			452			(66,324	)		—			131,709
Special obligations		(19,354	)		(3,341	)		772			2,250			—			(19,673	)
Impairment		1,010			—			—			(1,010	)		—			—
Related to Concession - Transmission		4,558			83,735			—			99			—			88,392
In service		3,233			83,734			—			124			—			87,091
Intangible asset		3,565			87,462			—			124			—			91,151
Accrued amortization		(332	)		(3,728	)		—			—			—			(4,060	)
In Progress		1,325			1			—			(25	)		—			1,301
Intangible asset		1,325			1			—			(25	)		—			1,301
Unrelated to Concession (Other intangible assets)		502,737			5,036			(16,692	)		(39,013	)		—			452,068
Management
In service		765,557			1,605			(2,698	)		66,851			—			831,315
Accrued amortization		(420,336	)		(56,295	)		146			(1,999	)		—			(478,484	)
Impairment		(42,595	)		—			1,852			—			—			(40,743	)
In Progress		141,483			59,726			(6,278	)		(34,781	)		—			160,150
Others		58,628			—			(9,714	)		(69,084	)		—			(20,170	)
Total		1,365,371			33,078			(32,977	)		(55,034	)		(375,287	)		935,151

F-137

	Balance on 12/31/2013			ADDITIONS			DEDUCTIONS			COST / SERVICE TRANSFERS			RECLASSIFICATION AS FIXED (UNBUNDLING)			Balance on 12/31/2014
Related to Concession - Generation		172,777			(52,569	)		14,884			365,193			—			500,285
In service		69,386			(72,144	)		16,652			410,632			—			424,526
Intangible asset		503,573			—			(5,193	)		404,340			—			902,720
Accrued amortization		(405,854	)		(72,144	)		—			43,399			—			(434,599	)
Special obligations		(28,333	)		—			—			13,300			—			(15,033	)
Impairment		—			—			21,845			(50,407	)		—			(28,562	)
In Progress		103,391			19,575			(1,768	)		(45,439	)		—			75,759
Intangible asset		118,086			19,575			(1,768	)		(39,632	)		—			96,261
Special obligations		(14,695	)		—			—			—			—			(14,695	)
Impairment		—			—			—			(5,807	)		—			(5,807	)
Related to Concession - Distribution		220,077			(213,998	)		65,730			182,822			103,160			357,791
In service		90,884			(237,636	)		(8,594	)		274,666			91,659			210,979
Intangible asset		1,478,117			1,729			(54,245	)		214,153			125,165			1,764,919
Accrued amortization		(1,061,958	)		(252,262	)		7,260			(162,378	)		—			(1,469,338	)
Special obligations		(280,405	)		—			22,922			207,397			(33,506	)		(83,592	)
Onerous concession contract		—			—			—			—			—			—
Impairment		(44,870	)		12,897			15,469			15,494			—			(1,010	)
In Progress		129,193			23,638			74,324			(91,844	)		11,501			146,812
Intangible asset		154,296			20,218			1,790			(22,649	)		11,501			165,156
Special obligations		(22,693	)		—			(156	)		3,495			—			(19,354	)
Impairment		(2,410	)		3,420			72,690			(72,690	)		—			1,010
Related to Concession - Transmission		7,359			(3,825	)		—			1,024			—			4,558
In service		2,252			(32	)		—			1,013			—			3,233
Intangible asset		2,552			—			—			1,013			—			3,565
Accrued amortization		(300	)		(32	)		—			—			—			(332	)
In Progress		5,107			(3,793	)		—			11			—			1,325
Intangible asset		5,107			(3,793	)		—			11			—			1,325
																	—
Unrelated to Concession (Other intangible assets)		388,369			116,461			(1,871	)		(222	)		—			502,737
Management
In service		637,973			149			—			127,435			—			765,557
Accrued amortization		(342,318	)		(58,970	)		(2,005	)		(17,043	)		—			(420,336	)
Impairment		—			2,733			—			(45,328	)		—			(42,595	)
In Progress		126,550			75,375			153			(60,595	)		—			141,483
Others (1)		(33,836	)		97,174			(19	)		(4,691	)		—			58,628
Total		788,582			(153,931	)		78,743			548,817			103,160			1,365,371

	BALANCE ON 31/12/2012			ADDITIONS			REDUCTIONS			IMPAIRMENT		AMORTIZATION			TRANSFERS COST / SERVICE			BALANCE ON 31/12/2013
Related to Concession - Generation		669,007			29,256			(749	)		—		(147,061	)		(377,676	)		172,777
In service		567,706			11,457			(749	)		—		(147,061	)		(361,967	)		69,386
Intangible Assets		841,268			11,457			(749	)		—		—			(361,771	)		490,205
Accumulated amortization		(217,156	)		—			—			—		(147,061	)		—			(364,217	)
Special obligations		(56,406	)		—			—			—		—			(196	)		(56,602	)
Underway		101,301			17,799			—			—		—			(15,709	)		103,391
Intangible Assets		116,053			17,904			—			—		—			(15,871	)		118,086
Special obligations		(14,752	)		(105	)		—			—		—			162			(14,695	)
Related to Concession - Distribution		190,555			42,576			(61,051	)		256,210		(33,138	)		(175,075	)		220,077
In service		134,022			(92	)		(61,051	)		174,694		(34,131	)		(122,558	)		90,884
Intangible Assets		1,761,894			61			(162,901	)		—		—			(131,329	)		1,467,725
Accumulated amortization		(1,033,561	)		—			—			—		(34,131	)		—			(1,067,692	)
Special obligations		(387,669	)		(153	)		101,850			—		—			5,567			(280,405	)
Impairment		(206,642	)		—			—			174,694		—			3,204			(28,744	)
Underway		56,533			42,668			—			81,516		993			(52,517	)		129,193
Intangible Assets		165,912			44,460			—			—		—			(56,076	)		154,296
Special obligations		(25,453	)		(1,792	)		—			—		993			3,559			(22,693	)
Impairment		(83,926	)					—			81,516		—			—			(2,410	)
Related to Concession - Transmission		—			8,113			(454	)		—		(300	)		—			7,359
In service		—			—			(454	)		—		(300	)		3,006			2,252
Intangible Assets		—			—			(454	)		—		—			3,006			2,552
Accumulated amortization		—			—			—			—		(300	)		—			(300	)
Underway		—			8,113			—			—		—			(3,006	)		5,107
Intangible Assets		—			8,113			—			—		—			(3,006	)		5,107
																			—
Not Related to the Concession (Other Intangible Assets)		345,001			77,264			(316	)		—		(34,690	)		1,108			388,369
Administration
In service		597,655			21,530			(322	)		—		—			19,110			637,973
Accumulated amortization		(287,628	)		—			—			—		(34,690	)		—			(322,318	)
Underway		68,818			55,734			—			—		—			(18,002	)		106,550
Other		(33,844	)		—			6			—		—			—			(33,836	)
Total		1,204,563			157,209			(62,570	)		256,210		(215,189	)		(551,643	)		788,582

F-138

Intangible assets are primarily amortized during the concession period.

The final term for concessions of distribution companies of Eletrobras ended on July 7, 2015. As mentioned in Note 2, ANEEL clarified that even with termination of contractual terms “Concessions shall remain in effect for the period needed to prepare evaluations and calculations required to organize bidding processes that will grant the replacing concessions, which term shall not be less than twenty-four months.” In view of this definition, distribution companies of the Eletrobras Group proceeded to reclassify the financial asset for the intangible asset proportionally, corresponding to the twenty-month period.

NOTE 20 – IMPAIRMENT OF LONG-LIVED ASSETS

The Company estimated the recoverable value of its long-lived assets based on the value in use, considering that there is no active market for the infrastructure related to the concession. The value in use is appraised based on the present value of the estimated future cash flow.

The assumptions used consider the best estimate by the Company Administration regarding future trends in the electricity sector and are based both on external sources of information and historic data of the cash generating units. The cash flow was projected based on the operating results and projections of the Company until the end of the concession. When the need is identified to establish an impairment provision of long-term assets, this provision is recorded in the period results under Operating Provisions.

The following assumptions were considered:

• Growth compatible with historic data and growth perspectives on the Brazilian economy;

• Discount rate (after tax) specific for each segment: 7.50% for generation, 7.00% for transmission, and 7.01% for distribution (6.69% for generation, 6.57% for transmission, and 6.14% for distribution in 2014) obtained using the methodology generally applied by the market, taking into consideration the average weighted cost of capital;

• The Company treated all of its projects as independent cash-generating units.

In the year ending on December 31, 2015, the subsidiary Eletronuclear recognized an impairment provision in the amount of R$ 4,961,597, related to the enterprise Usina Angra 3 power plant, causing a corresponding reduction in power, plant and equipments (see note 17), which counterpart is in the operating provisions account. On December 31, 2015, the accrued “impairment” value of Usina Angra 3 PP&E in fixed assets was R$ 5,922,141 (R$ 960,544 in December 2014).

F-139

The Company defines the Angra 3 power plant enterprise as a cash generating unit for purposes of impairment test and uses the value in use to determine the recoverable value.

Due to notifications received and negotiations in progress with enterprise suppliers, there has been a schedule change in the expectation for conclusion, due to temporary suspension of contracts for 90 days extendable to up to 120 days. With this rescheduling, the new conclusion date is in December 2020, with synchronization estimated to occur on December 31, 2018. These facts have also given rise to new risk evaluations imputable to the context of execution of the enterprise. The Company has evaluated that such events comprised, as of September 30, 2015, evidences sufficiently relevant for the impairment test of the period.

The method applied for the impairment test of the plant enterprise consider as recoverable asset the costs realized by the date of these consolidated financial statement, comparing with discounted cash flow extended by the termination of the economic use life of the Plant, which corresponds to 40 years, starting at the new go-live date, May 1, 2019, considering as economic use life the period of operation license compatible with Usina Angra as similar project.

The discount rate was calculated using the WACC (Weighted Average Cost of Capital) method, considering traditionally and usually accepted parameters.

Due to the impairment test in the period, the discount rate was increased, by 0.96%, from 4.51% (December 31, 2014) to 5.47% (September 30, 2015). This rate was maintained for the impairment test again on December 31, 2015. The main factors collaborating for such increase were:

1. Beta update: to calculate beta, beta weight of comparable companies used in Technical Note ANEEL 381/2012 was used, updated to December 31, 2015 and leveraged by the project capital structure. The adoption of this calculation for beta is due to the fact that no power generation company with open capital in Brazil holds nuclear power generation assets, contrary to the sample of companies used in the calculation of beta by ANEEL, that includes American companies with at least two nuclear power generation plants.

2. Consideration of an additional risk (alpha) related to project execution;

Another significant assumption used to calculate the impairment of the Angra 3 power plant is the synergy between the plants. Usinas Angra 2 and Angra 3 are result of similar projects and for this reason use the cost parameters of Angra 2 in Angra 3. There will be a gain in cost/productivity at Angra 3, because of the lack of need to duplicate all the cost generating activities, because common areas will be used by both plants.

The synergy for the project, considering internal studies based on the use of labor from the subsidiary Eletronuclear, pointed to a level of approximately 24.5% for the estimate of operating cost PMSO of Usina Angra 3 in the impairment test.

F-140

The total budget of the project was updated for December 2015, in order to reflect the impact of significant variations in inflation and exchange rates, as well as the rescheduling of activities due to the new work schedule.

It is important to note that on January 14, 2016, Law No. 13,255 was enacted, estimating the income and setting the expenses of the Federal Government for the fiscal year 2016, including the Investment Budget of the companies where the Federal Government, directly or indirectly, holds the majority of shares with voting rights, and including approval of the determination and execution for the Investment in the project “Deployment of Usina Termonuclear de Angra 3”, that is held by Eletronuclear. It is understood that upon evaluation by the Mixed Commission of Plans, Public Budgets, and Supervision by the National Congress, as well as the plenary session of the National Congress, the work “Deployment of Usina Termonuclear de Angra 3” is ready to maintain its physical, budget, and financial execution.

An audit procedure is ongoing at the Federal Court of Accounts, according to the electromechanic assembly contract of Usina de Angra 3. In February 2016, Eletronuclear was notified about the request of financial and economic information regarding power plant. According to said notification, the process is to be sent to the National Congress to be examined and evaluated regarding the proceeding or suspension of the physical, budget, and financial execution of the work. Eletronuclear has responded to the notification and is waiting for TCU’s analysis.

In June 2016, the Company has recognized an additional impairment over Usina de Angra 3. For more details, see note 48.6.

The Company continues to monitor estimates and risks associated to determine the recoverable value of this enterprise and, to the extent that new negotiations, new studies, or new information appear and require changes in the business plan of the enterprise, they will be updated to reflect such changes.

Analysis determined the need to establish/(reverse) provision for losses in the following projects in 2015:

F-141

Transmission

Cash Unit Generation	12/31/2014		Additions		Reversals			12/31/2015
CC 061- 2001		—		174,389		—			174,389
Estação Retificadora / Inversora		43,909		—		(43,909	)		—
CC 005- 2012 Jardim NSra Socorro		46,788		43,042		—			89,830
CC 018- 2012 Mossoró Ceará Mirim		61,681		38,816		—			100,497
CC 019- 2012 Igaporã Pindaí		59,678		—		(38,172	)		21,506
LT Ribeiro Gonçalves - Balsas		73,317		—		(37,743	)		35,574
Linha Verde Transmissora de Energia S/A		100,494		—		(35,788	)		64,706
SE Coletora Porto Velho		—		34,123		—			34,123
CC 010- 2011 Paraíso Lagoa Nova		12,246		32,554		—			44,800
CC 020- 2010 Igaporâ BJLapa		37,669		31,599		—			69,268
CC 018- 2009 Eunáp TFreitas C2		7,784		22,448		—			30,232
CC 015- 2012 Camaçari IV Pirajá		—		18,060		—			18,060
CC 006- 2009 Suape II e III		105,933		—		(17,832	)		88,101
CC 017- 2012 Mirueira Jaboatão		20,290		10,894		—			31,184
CC 014- 2008 Eunápolis TFreitas		53,962		10,811		—			64,773
CC 017- 2009 Natal III Sta Rita		48,837		10,680		—			59,517
LT Campos Novos - Nova Santa Rita		22,089		8,733		—			30,822
SE Miranda II		—		7,079		—			7,079
Others		275,043		66,978		—			342,021
Total		969,720		510,206		(173,444	)		1,306,482

F-142

Generation

Cash Unit Generation	12/31/2014		Additions		Reversals			12/31/2015
UTN Angra 3		960,544		4,961,597		—			5,922,141
Candiota II Fase B		35,412		84,527		—			119,939
Eólica Coxilha Seca		—		81,142		—			81,142
UHE Samuel		340,888		76,744		—			417,632
Eólica Hermenegildo III		—		75,598		—			75,598
Eólica Hermenegildo II		—		65,815		—			65,815
UHE Simplício		440,276		—		(60,056	)		380,220
Eólica Hermenegildo I		—		56,301		—			56,301
UTE Mauá		—		102,191		—			102,191
UTE Aparecida		—		50,508		—			50,508
UTE Camaçari		365,709		—		(21,944	)		343,765
UTE Batalha		553,622		5,723		—			559,345
UHE Passo São João		151,311		—		(33,179	)		118,132
Casa Nova		111,515		51,981					163,496
Others		230,853		—		(26,742	)		204,111
Total		3,190,130		5,612,127		(141,921	)		8,660,336

Distribution

Concession	12/31/2014		Additions		Reversals			12/31/2015
Amazonas D		119,041		—		(119,041	)		—
Cepisa		232,442		98,383		(40,578	)		290,247
Eletroacre		60,026		54,924		(24,142	)		90,808
Ceron		84,503		23,914		(48,532	)		59,885
Boa Vista		—		77,400		—			77,400
Total		496,012		254,621		(232,293	)		518,340

F-143

The impairment amount recognized in the balance sheet, by operational segment, is demonstrated below:

	12/31/2015
	Generation		Transmission		Distribution		Total
Fixed		8,540,131		—		—		8,540,131
Intangible		120,205		—		—		120,205
Financial Asset		—		1,306,482		518,340		1,824,822
Total		8,660,336		1,306,482		518,340		10,485,158
	12/31/2014
	Generation		Transmission		Distribution		Total
Fixed		2,955,233		—		—		2,955,233
Intangible		234,897		—		—		234,897
Financial Asset		—		969,720		496,012		1,465,732
Total		3,190,130		969,720		496,012		4,655,862

NOTE 21 – SUPPLIERS

	12/31/2015		12/31/2014
CURRENT
Goods, Materials, and Services		8,369,303		5,027,213
Energy Purchased for Resale		1,514,499		1,958,150
CCEE - Short - term energy		244,705		503,771
		10,128,507		7,489,134
NON- CURRENT
Goods, Materials, and Services		134,436		128,541
Energy Purchased for Resale		9,314,985		9,918,826
		9,449,421		10,047,367
		19,577,928		17,536,501

The balance of suppliers refers mainly to three Private Debt Acknowledgment Instruments and respective payment plan signed with Petrobras Distribuidora S/A by the subsidiary Amazonas Energia, for the supply of petroleum derivatives, signed on 12/31/2014, in the sums of i) R$ 3,257,366; ii) R$ 2,925,921; and iii) R$ 1,018,441. The instruments will be amortized in 120 (one hundred twenty) successive monthly payments, at the daily prorated variation, considered from the date of signing of the contract until the date of its maturation, where the first payment was due on 02/20/2015, and the last will be due on 01/30/2025.

F-144

NOTE 22 – CUSTOMER ADVANCES

	12/31/2015		12/31/2014
CURRENT
Advance sale of energy - ALBRAS		54,832		52,813
Customer advances - PROINFA		593,404		448,759
		648,236		501,572
NON- CURRENT
Advance sale of energy - ALBRAS		659,082		718,451
		659,082		718,451
TOTAL		1,307,318		1,220,023

22.1. – ALBRÁS

The subsidiary Eletronorte sold electricity to ALBRÁS in 2004 for supply during a 20-year period, at an average 750 MW/month, through December 2006, and an average 800 MW/month from January 2007 to December 2024, using the UHE Tucuruí balance rate as a parameter, plus an added premium, calculated based on the price of aluminum on the London Metal Exchange (LME) in England. This price establishment became an embedded derivative (See Note 43).

Based on these conditions, Albras made advance purchase of electricity credits, with advance payment of R$ 1,200,000, which was established as a credit, in MW, of an average 43 MW/month from June 2004 to December 2006 and average 46 MW/month from January 2007 to December 2024, to be amortized during the period of supply, in monthly portions expressed in those average MW, according to the rate current in the billing month, as detailed below:

	Contract Date
CLIENT	Start	End	Volume in Average Megawatts (MW)
Albrás	07/01/2004	12/31/2024	750 through 12/31/2006 and 800 beginning 01/01/2007
BHP	07/01/2004	12/31/2024	from 353,08 to 492

The position and movement of this liability are demonstrated as follows:

YEAR	AMOUNTS RELEASED		AMORTIZATIONS MADE			GAINS			BALANCE		CURRENT		NON-CURRENT
12/31/2015		1,200,000		(462,305	)		(23,781	)		713,914		54,832		659,082
12/31/2014		1,200,000		(408,237	)		(20,499	)		771,264		52,813		718,451
12/31/2013		1,200,000		(356,707	)		(18,131	)		825,162		48,910		776,252

F-145

22.2. – PROINFA

PROINFA, established by Law 10.438/2002 and amendments thereto, has the purpose of diversifying the Brazilian energy matrix with the use of renewable energy sources, through economic leveraging of available resources and applicable technologies.

F-146

The Company ensures the purchase of the electricity produced during the 20-year period, beginning in 2006, and transfers this energy to the distribution concessionaires, free consumers, and independent producers, excluding low-income consumers, in the proportion of their consumption.

The distribution and transmission concessionaires pay to the Company the value of energy in shares, equal to the cost corresponding to the interest held by captive consumers, free consumers, and independent producers connected to their installations, in twelfths, in the month prior to that of the energy consumption.

The operations relating to the purchase and sale of energy in the context of PROINFA do not affect the results of the Company.

(*) information not audited by independent auditors

NOTE 23 – FINANCING AND LOANS

23.1. Global Reversion Reserve (RGR)

The Company is authorized to withdraw resources from the RGR, applying them in the granting of funding earmarked for expansion of the Brazilian electric sector, improvement of the service and in the realization of the programs of the Federal Government.

In this manner, the company takes resources from the RGR, acknowledging a debt to this Fund, and applies specific investment projects, financed by it, which have as their objective:

a) expansion of electricity distribution services;

b) incentive for alternative sources of electric energy;

c) studies of inventory and feasibility of utilization of hydraulic potentials;

d) deployment of power generating plants up to 5,000 kW, intended solely for public service in populated communities served by an isolated electrical system;

e) efficient public lighting;

f) electrical energy conservation by improving the quality of products and services;

F-147

g) universalization of access to electricity.

Eletrobras will pay back the resources withdrawn from the RGR and used in granting loans to companies of the Brazilian electric sector, with interest of 5% per annum. On December 31, 2015, the balance of resources taken from the Fund totaled R$ 6,439,374 (December 31, 2014 - R$ 7,421,796), included under the item Financing and loans, liabilities.

F-148

The resources that make up the RGR Fund are not part of these statements, constituting a separate entity in relation to the Company.

23.2. Composition of loans and financing:

	12/31/2015
	CURRENT CHARGES						PRINCIPAL
	Avg. Rate			Value			CURRENT		NON CURRENT
Financial Institutions
Foreign currency
Banco Interamericano de Desenvolvimento - BID		4.40	%		2,197			102,130		551,140
Corporación Andino de Fomento - CAF		2.73	%		6,462			562,372		994,374
Kreditanstalt fur Wiederaufbau - KFW		2.73	%		19			—		251,801
Eximbank		2.00	%		839			71,187		106,769
BNP Paribas		1.57	%		396			136,192		685,780
Others					4,243			126,161		757,302
					14,156			998,042		3,347,166
Bonus
Expiration 07/30/2019		6.87	%		114,839			—		3,904,800
Expiration 10/27/2021		5.75	%		70,944			—		6,833,400
					185,783			—		10,738,200
					199,939			998,042		14,085,366
National Currency
Global Reverse Reserve					—			—		6,439,373
Banco do Brasil					76,226			402,598		5,861,368
Caixa Econômica Federal					97,404			196,538		6,759,638
BNDES					564,986			1,230,372		7,332,179
Promissory Notes					9,135			200,000		—
Other Financial Institutions					(9,227	)		258,435		1,695,888
					738,524			2,287,943		28,088,446
					938,463			3,285,985		42,173,812

F-149

	12/31/2014
	CURRENT FEES					PRINCIPAL
	Avg. Rate			Value		CURRENT		NON CURRENT
Financial Institutions
Foreign currency
Banco Interamericano de Desenvolvimento - BID		4.40	%		2,011		59,447		444,382
Corporación Andino de Fomento - CAF		2.25	%		7,802		764,924		1,058,960
Kreditanstalt fur Wiederaufbau - KFW		2.73	%		15		—		191,173
Eximbank		2.00	%		805		48,797		121,985
BNP Paribas		1.17	%		196		91,988		590,238
Others					1,709		18,693		222,912
					12,538		983,849		2,629,650
Bonus
Expiration 11/30/2015		7.75	%		6,077		796,860		—
Expiration 07/30/2019		6.87	%		89,281		—		2,656,200
Expiration 10/27/2021		5.75	%		55,153		—		4,648,350
					150,511		796,860		7,304,550
					163,049		1,780,709		9,934,200
National Currency
Global Reverse Reserve					—		—		7,421,796
Banco do Brasil					68,748		208,513		5,031,220
Caixa Econômica Federal					61,696		1,087,851		3,930,663
BNDES					351,669		846,501		6,419,772
Other Financial Institutions					42,933		319,862		1,869,943
					525,046		2,462,727		24,673,394
					688,095		4,243,436		34,607,594

Subsidiary Eletrosul, on September 8, 2015, issued commercial promissory notes, in a single series, with 200 (two hundred) commercial promissory notes, with par value of R$ 1.000, in a total of R$ 200,000, due in 180 days upon issuance, compensated at 111.5% CDI. On August 4, 2015, the amount of R$ 200,000 was acquired with Caixa Econômica Federal as loan to be used in the deployment of aeolic enterprises at the parks Coxilha Seca, Galpões and Capão do Inglês.

On June 28, 2013, a contract was executed between Subsidiary Eletronuclear and Caixa Econômica Federal (CEF) for the amount of R$ 3,800,000, to fund part of the enterprises in Angra 3. The contract term is for 25 tears, from the execution date, with interest rate at 6.5% p.a. On July 27, 2015, the first request of disbursement was submitted to CEF, in the amount of R$ 1,983,570.

Eletrobras signed a contract to open a credit in the gross amount of R$ 6,500,000, with the Caixa Econômica Federal and Banco do Brasil, with remuneration of 119.5% of the accumulated variation of the DI Rate, to meet its needs for working capital and its investment plan. As of December 31, 2014 the company had made the first two installments of disbursement totaling R$ 4,500,000, with R$ 2,769,231 being disbursed by the Banco do Brasil and R$ 1,730,769 by the Caixa Econômica Federal. The first and the second installment of the disbursement will have a grace period

F-150

for payment of the principal values until August 24, 2016 and November 25, 2016, respectively. The third installment of the disbursement, taken out on January 30, 2015 in the amount of R$ 2,000,000, with R$ 1,230,769 disbursed by the Banco do Brasil and R$ 769,231 by the Caixa Econômica Federal, has a grace period for payment of the principal values until February 25, 2016.

Debts are guaranteed by the Federal Government and/or Eletrobras, subject to fees, which average rate in 2015 is 9.40% p.a. (5.20% p.a. in 2014), and with the following profile:

	12/31/2015					12/31/2014
	Balance thousand reais		%			Balance thousand reais		%
Foreign currency
Unindexed USD		11,121,630		24	%		8,260,761		21	%
USD with LIBOR		3,729,245		8	%		3,222,835		8	%
EURO		251,820		1	%		221,513		1	%
YEN		178,794		0	%		171,586		—
Others		1,858		—			1,262		—
Subtotal		15,283,347		33	%		11,877,958		30	%
National Currency
CDI		11,410,983		25	%		9,598,423		24	%
IPCA		532,754		1	%		—		—
TJLP		6,594,316		14	%		5,826,925		15	%
SELIC		2,636,254		6	%		2,829,818		7	%
Others		3,287,732		7	%		1,793,468		5	%
Subtotal		24,462,039		53	%		20,048,634		51	%
Unindexed		6,652,874		14	%		7,612,533		19	%
Total		46,398,260		100	%		39,539,125		100	%

F-151

The long-term portion of loans and financing is scheduled to mature as follows:

	2017		2018		2019		2020		2021		Após 2021		Total
Consolidated		5,174,201		4,853,454		6,984,856		2,845,230		9,242,886		13,073,185		42,173,812

23.3. – Operation of financial leasing:

The nominal value used in the calculation of assets and liabilities arising from these contracts was determined by reference to the value set for contracting monthly power, multiplied by the installed capacity (60 to 65 MW) and by the number of months of the contract.

The reconciliation of the total of future minimum payments on financial leases of the Company and its current value is demonstrated in the table below:

	12/31/2015			12/31/2014
Less than one year		209,226			209,226
More than one year and less than five years		836,902			836,902
More than five years		924,081			1,133,305
Future financing costs on the financial leases		(718,054	)		(852,772	)
Total financial lease minimum payments		1,252,155			1,326,661
Less than one year		132,972			74,507
More than one year and less than five years		431,363			388,860
More than five years		687,820			863,294
Present value of payments		1,252,155			1,326,661

F-152

23.4. – GUARANTEES

The Company participates in the capacity of an intervening guarantor for several companies whose secured amounts, projections and amounts already paid are shown in the following tables:

Company	Project	Financing Bank	Model	Subsidiary Share			Financed value		Outstanding Balance on 12/31/2015		Guarantee Balance Eletrobras		Guarantee End
Eletrobras	Norte Energia	BNDES	SPE		15.00	%		2,025,000		2,095,590		20,956		1/15/2042
Eletrobras	Norte Energia	CEF	SPE		15.00	%		1,050,000		1,105,927		11,059		1/15/2042
Eletrobras	Norte Energia	BTG Pactual	SPE		15.00	%		300,000		315,979		3,160		1/15/2042
Eletrobras	Norte Energia	Contract Compliance Guarantee	SPE		15.00	%		156,889		94,140		941		4/30/2019
Eletrobras	Rouar	CAF	SPE		50.00	%		38,805		38,805		388		9/30/2017
Eletrobras	Mangue Seco 2	BNB	SPE		49.00	%		40,951		37,846		378		10/14/2031
Eletrosul	ESBR	BNDES	SPE		20.00	%		727,000		896,664		8,967		8/15/2034
Eletrosul	ESBR	BNDES	SPE		20.00	%		232,500		236,520		2,365		1/15/2035
Eletrosul	ESBR	BNDES REPASSE	SPE		20.00	%		717,000		905,294		9,053		8/15/2034
Eletrosul	ESBR	BNDES REPASSE	SPE		20.00	%		232,500		238,070		2,381		1/15/2035
Eletrosul	Cerro Chato I, II e III	Banco do Brasil	SPE		100.00	%		223,419		128,308		1,283		7/15/2020
Eletrosul	RS Energia	BNDES	SPE		100.00	%		126,221		65,321		653		6/15/2021
Eletrosul	Artemis Transmissora de Energia	BNDES	SPE		100.00	%		170,029		45,416		454		10/15/2018
Eletrosul	Porto Velho Transmissora de Energia	BNDES	SPE		100.00	%		283,411		258,645		2,586		8/15/2028
Eletrosul	UHE Mauá	BNDES	SPE		49.00	%		182,417		148,872		1,489		1/15/2028
Eletrosul	UHE Mauá	BNDES/Banco do Brasil	SPE		49.00	%		182,417		148,892		1,489		1/15/2028
Eletrosul	UHE Passo de São João	BNDES	Corporate		100.00	%		183,330		139,178		1,392		7/15/2026
Eletrosul	SC Energia	BNDES/Banco do Brasil	Corporate		100.00	%		50,000		17,297		173		5/15/2019
Eletrosul	SC Energia	BNDES/BDRE	Corporate		100.00	%		50,000		17,247		172		5/15/2019
Eletrosul	SC Energia	BNDES	Corporate		100.00	%		103,180		34,555		346		5/15/2019
Eletrosul	SC Energia	BNDES	Corporate		100.00	%		67,017		29,946		299		3/15/2021
Eletrosul	UHE São Domingos	BNDES	Corporate		100.00	%		207,000		185,737		1,857		6/15/2028
Eletrosul	RS Energia	BNDES	SPE		100.00	%		41,898		31,249		312		3/15/2027
Eletrosul	RS Energia	BNDES	SPE		100.00	%		9,413		8,270		83		8/15/2027
Eletrosul	RS Energia	BNDES	SPE		100.00	%		12,000		6,799		68		8/15/2027
Eletrosul	UHE Passo de São João	BNDES	Corporate		100.00	%		14,750		11,502		115		7/15/2026
Eletrosul	Corporate Projects Eletrosul	Banco do Brasil	Corporate		100.00	%		250,000		223,702		2,237		11/15/2023
Eletrosul	Teles Pires	BNDES	SPE		24.50	%		296,940		339,515		3,395		2/15/2036
Eletrosul	Teles Pires	BNDES/Banco do Brasil	SPE		24.50	%		294,000		338,346		3,383		2/15/2036
Eletrosul	Teles Pires	Emissão de Debêntures	SPE		24.50	%		160,680		211,162		2,112		5/30/2032
Eletrosul	Livramento Holding	BNDES	SPE		49.00	%		91,943		75,244		752		6/15/2030
Eletrosul	Chuí Holding	BNDES	SPE		49.00	%		186,082		188,903		1,889		12/15/2031
Eletrosul	Transmissora Sul Brasileira de	BNDES	SPE		80.00	%		209,974		194,085		1,941		7/15/2028
Eletrosul	nsmissora Sul Brasileira de Energia S	Emissão de Debêntures	SPE		80.00	%		62,040		76,152		762		9/15/2026
Eletrosul	Costa Oeste Transmissora de Energia S.A.	BNDES	SPE		49.00	%		17,846		16,198		162		11/1/2022
Eletrosul	Santa Vitória do Palmar Holding S.A.	BNDES	SPE		49.00	%		197,950		211,335		2,113		6/16/2031
Eletrosul	Santa Vitória do Palmar Holding S.A.	BRDE	SPE		49.00	%		98,000		107,021		1,070		6/16/2031
Eletrosul	Transmissora Sul Litorânea do Brasil	BNDES	SPE		51.00	%		252,108		247,485		2,475		2/15/2029
Eletrosul	Complexo São Bernardo	KfW	Corporate		100.00	%		29,854		56,503		565		12/30/2038
Eletrosul	Complexo São Bernardo	KfW	Corporate		100.00	%		136,064		195,298		1,953		12/30/2042
Eletrosul	Eólica Hermenegildo I S/A	Emissão de Debêntures	SPE		99.99	%		79,100		81,751		818		1/18/2016
Eletrosul	Eólica Hermenegildo I S/A	Emissão de Debêntures	SPE		99.99	%		32,000		33,073		331		1/18/2016
Eletrosul	Eólica Hermenegildo II S/A	Emissão de Debêntures	SPE		99.99	%		79,100		81,751		818		1/18/2016
Eletrosul	Eólica Hermenegildo II S/A	Emissão de Debêntures	SPE		99.99	%		17,100		17,673		177		1/18/2016
Eletrosul	Eólica Hermenegildo III S/A	Emissão de Debêntures	SPE		99.99	%		66,800		69,039		690		1/18/2016
Eletrosul	Eólica Hermenegildo III S/A	Emissão de Debêntures	SPE		99.99	%		21,500		22,221		222		1/18/2016
Eletrosul	Eólica Chuí IX S/A	Emissão de Debêntures	SPE		99.99	%		25,000		25,793		258		1/18/2016
Eletrosul	Eólica Chuí IX S/A	Emissão de Debêntures	SPE		99.99	%		11,000		11,369		114		1/18/2016
Eletrosul	Complexo Eólico Livramento - Entorno II	CEF	Corporate		100.00	%		200,000		213,130		2,131		8/7/2017
Eletrosul	Corporate Projects Eletrosul 2	BTG Pactual	Corporate		100.00	%		200,000		209,135		2,091		3/6/2016
Eletronorte	São Luis II e III	BNDES	Corporate		100.00	%		13,653		8,727		87		11/15/2024
Eletronorte	Miranda II	BNDES	Corporate		100.00	%		47,531		23,596		236		11/15/2024
Eletronorte	Ribeiro Gonç./Balsas	BNB	Corporate		100.00	%		70,000		60,278		603		6/3/2031
Eletronorte	Lechuga/J. Teixeira	BASA	Corporate		100.00	%		25,720		21,179		212		1/10/2029
Eletronorte	UHE Tucuruí	BNDES	Corporate		100.00	%		931,000		76,580		766		9/15/2016
Eletronorte	Substation Nobres	BNDES	Corporate		100.00	%		10,000		7,256		73		3/15/2028
Eletronorte	Substation Miramar/Tucuruí	BNDES	Corporate		100.00	%		31,000		23,760		238		8/15/2028

F-153

Company	Project	Financing Bank	Model	Subsidiary Share			Financed value		Outstanding Balance on 12/31/2015		Guarantee Balance Eletrobras		Guarantee End
Eletronorte	Expansion Substation Lechuga	BNDES	Corporate		100.00	%		35,011		27,061		271		10/15/2028
Eletronorte	Norte Brasil Transmissora	BNDES	SPE		49.00	%		514,500		486,790		4,868		12/15/2029
Eletronorte	Norte Brasil Transmissora	Emissão de Debêntures	SPE		49.00	%		98,000		128,811		1,288		9/15/2026
Eletronorte	Linha Verde Transmissora	BASA	SPE		100.00	%		185,000		196,577		1,966		11/10/2032
Eletronorte	Manaus Transmissora	BNDES	SPE		30.00	%		120,300		104,315		1,043		12/15/2026
Eletronorte	Power Transmission Station	BNDES	Corporate		100.00	%		505,477		440,302		4,403		11/15/2028
Eletronorte	Power Transmission Station	BASA	Corporate		100.00	%		221,789		225,225		2,252		7/10/2031
Eletronorte	Power Transmission Station	BASA	Corporate		100.00	%		221,789		219,803		2,198		10/15/2030
Eletronorte	Rio Branco Transmissora	BNDES	Corporate		100.00	%		138,000		118,355		1,184		3/15/2027
Eletronorte	Transmissora Matogrossense Energia	BASA	SPE		49.00	%		39,200		39,819		398		2/1/2029
Eletronorte	Transmissora Matogrossense Energia	BNDES	SPE		49.00	%		42,777		32,073		321		5/15/2026
Eletronorte	Rei dos Ventos 1 Eolo	BNDES	SPE		24.50	%		30,851		30,851		309		12/31/2016
Eletronorte	Brasventos Miassaba 3	BNDES	SPE		24.50	%		30,984		30,984		310		12/31/2016
Eletronorte	Rei dos Ventos 3	BNDES	SPE		24.50	%		32,533		32,533		325		12/31/2016
Eletronorte	Belo Monte Transmissora de Energia S. A.	Itau BBA	SPE		24.50	%		49,735		57,237		572		6/18/2016
Eletronorte	Belo Monte Transmissora de Energia S. A.	Santander	SPE		24.50	%		49,000		55,674		557		6/18/2016
Eletronorte	Norte Energia	BNDES	SPE		19.98	%		2,697,300		2,791,326		27,913		1/15/2042
Eletronorte	Norte Energia	CEF	SPE		19.98	%		1,398,600		1,473,095		14,731		1/15/2042
Eletronorte	Norte Energia	BTG Pactual	SPE		19.98	%		399,600		420,884		4,209		1/15/2042
Eletronorte	Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporate		100.00	%		294,700		135,828		1,358		7/28/2029
Eletronorte	Deployment PAR and PMIS	BNDES	Corporate		100.00	%		743,382		357,912		3,579		12/15/2023
Eletronuclear	Angra III	BNDES	Corporate		100.00	%		6,146,256		3,203,974		32,040		6/15/2036
Chesf	ESBR	BNDES	SPE		20.00	%		727,000		896,664		8,967		8/15/2034
Chesf	ESBR	BNDES	SPE		20.00	%		232,500		236,520		2,365		1/15/2035
Chesf	ESBR	BNDES REPASSE	SPE		20.00	%		717,000		905,294		9,053		8/15/2034
Chesf	ESBR	BNDES REPASSE	SPE		20.00	%		232,500		238,070		2,381		1/15/2035
Chesf	Manaus Transmissora	BNDES	SPE		19.50	%		78,195		67,540		675		12/15/2026
Chesf	Norte Energia	BNDES	SPE		15.00	%		2,025,000		2,095,590		20,956		1/15/2042
Chesf	Norte Energia	CEF	SPE		15.00	%		1,050,000		1,105,927		11,059		1/15/2042
Chesf	Norte Energia	BTG Pactual	SPE		15.00	%		300,000		315,979		3,160		1/15/2042
Chesf	IE Madeira	BASA	SPE		24.50	%		65,415		76,321		763		7/10/2032
Chesf	IE Madeira	BNDES	SPE		24.50	%		455,504		404,196		4,042		2/15/2030
Chesf	IE Madeira	Emissão de Debêntures	SPE		24.50	%		85,750		115,626		1,156		3/18/2025
Chesf	Corporate Projects Chesf 1	Banco do Brasil	Corporate		100.00	%		500,000		385,092		3,851		9/28/2018
Chesf	Corporate Projects Chesf 2	CEF	Corporate		100.00	%		400,000		354,678		3,547		2/27/2019
Chesf	IE Garanhuns s/a	BNDES	SPE		49.00	%		175,146		168,030		1,680		12/15/2028
Chesf	Corporate Projects Chesf 3	BNDES	Corporate		100.00	%		727,560		282,223		2,822		11/15/2023
Chesf	Corporate Projects Chesf 4	BNDES	Corporate		100.00	%		475,454		194,825		1,948		11/15/2023
Furnas	UHE Batalha	BNDES	Corporate		100.00	%		224,000		165,314		1,653		12/15/2025
Furnas	UHE Simplício	BNDES	Corporate		100.00	%		1,034,410		705,108		7,051		7/15/2026
Furnas	UHE Baguari	BNDES	Corporate		100.00	%		60,153		39,726		397		7/15/2026
Furnas	SEVERAL	Banco do Brasil	Corporate		100.00	%		750,000		758,922		7,589		10/31/2018
Furnas	Rolagem BASA 2008	Banco do Brasil	Corporate		100.00	%		208,312		211,777		2,118		2/7/2018
Furnas	Innovation project	FINEP	Corporate		100.00	%		268,503		163,880		1,639		11/15/2023
Furnas	Corporate fionancing	Banco do Brasil	Corporate		100.00	%		400,000		430,918		4,309		12/6/2023

F-154

Company	Project	Financing Bank	Model	Subsidiary Share			Financed value		Outstanding Balance on 12/31/2015		Guarantee Balance Eletrobras		Guarantee End
Furnas	UHE Santo Antônio	BNDES	SPE		39.00	%		1,594,159		1,968,315		19,683		3/15/2034
Furnas	UHE Santo Antônio	BNDES	SPE		39.00	%		1,574,659		2,033,066		20,331		3/15/2034
Furnas	UHE Santo Antônio	BASA	SPE		39.00	%		196,334		247,102		2,471		12/15/2030
Furnas	UHE Santo Antônio	Emissão de Debêntures	SPE		39.00	%		163,800		204,398		2,044		1/24/2023
Furnas	UHE Santo Antônio	Emissão de Debêntures	SPE		39.00	%		273,000		318,042		3,180		3/1/2024
Furnas	UHE Foz do Chapecó	BNDES	SPE		40.00	%		435,508		405,692		4,057		9/15/2027
Furnas	UHE Foz do Chapecó	BNDES	SPE		40.00	%		217,754		205,308		2,053		9/15/2027
Furnas	UHE Foz do Chapecó	BNDES	SPE		40.00	%		4,009		3,083		31		9/15/2027
Furnas	Centroeste de Minas	BNDES	SPE		49.00	%		13,827		10,924		109		4/15/2023
Furnas	Serra do Facão	BNDES	SPE		49.47	%		257,263		218,804		2,188		6/15/2027
Furnas	Goiás Transmissão	BNDES	SPE		49.00	%		49,000		49,372		494		12/1/2031
Furnas	Goiás Transmissão	BNDES	SPE		49.00	%		64,435		58,977		590		1/15/2027
Furnas	MGE	BNDES	SPE		49.00	%		58,359		49,163		492		1/15/2027
Furnas	Transenergia São Paulo	BNDES	SPE		49.00	%		9,212		8,641		86		12/15/2028
Furnas	Rei dos Ventos 1 Eolo	BNDES	SPE		24.50	%		30,851		28,235		282		10/15/2029
Furnas	Brasventos Miassaba 3	BNDES	SPE		24.50	%		30,984		28,425		284		10/15/2029
Furnas	Rei dos Ventos 3	BNDES	SPE		24.50	%		32,533		29,757		298		10/15/2029
Furnas	IE Madeira	BASA	SPE		24.50	%		65,415		76,321		763		7/10/2032
Furnas	IE Madeira	BNDES	SPE		24.50	%		455,504		404,196		4,042		2/15/2030
Furnas	IE Madeira	Emissão de Debêntures	SPE		24.50	%		85,750		115,626		1,156		3/18/2025
Furnas	Teles Pires	BNDES	SPE		24.50	%		296,940		339,515		3,395		2/15/2036
Furnas	Teles Pires	BNDES	SPE		24.50	%		294,000		338,346		3,383		2/15/2036
Furnas	Teles Pires	Emissão de Debêntures	SPE		24.50	%		160,680		211,162		2,112		5/31/2032
Furnas	Caldas Novas Transmissão	BNDES	SPE		49.90	%		2,418		2,033		20		5/15/2023
Furnas	Caldas Novas Transmissão	BNDES	SPE		49.90	%		5,536		4,997		50		3/15/2028
Furnas	Belo Monte Transmissora de Energia S. A.	State Grid Brazil S.A.	Corporate		100.00	%		294,700		139,274		1,393		7/28/2029
Furnas	Mata de Santa Genebra	Emissão de Debêntures	SPE		49.90	%		234,031		234,031		2,340		3/12/2016
Amazonas	Amazonas	Confissão de Dívida - Petrobras/BR	Corporate		100.00	%		2,405,979		2,297,400		22,974		1/30/2025
Eletroacre	Eletroacre	Confissão de Dívida - Petrobras/BR	Corporate		100.00	%		91,774		87,568		876		1/30/2025
Boa Vista	Boa Vista	Confissão de Dívida - Petrobras/BR	Corporate		100.00	%		19,320		17,665		177		12/31/2024
Cepisa	Corporate Project	CEF	Corporate		100.00	%		94,906		50,146		501		8/30/2016
Total								46,270,960		41,822,565		418,226

The Company recorded under the heading of operational provisions for noncurrent liabilities the fair value of the amounts guaranteed by the Company over resources already released by the financing banks. The provision is made based on the fair value of the guarantee of Eletrobras, as shown below:

	Provision Value:
Guarantee due on 12/31/2012		189,113
Changes in the period		83,682
Guarantee due on 12/31/2013		272,795
Changes in the period		115,165
Guarantee due on 12/31/2014		387,960
Changes in the period		30,266
Guarantee due on 12/31/2015		418,226

a) UHE Simplício - project of the subsidiary Furnas, with an installed generating capacity of 333.7 MW*. The project has 100% Furnas participation. Therefore, the guarantee of the Company is 100% of the financing.

b) UHE Mauá - project with an installed capacity of 361 MW, in partnership with the subsidiary Eletrosul (49%) and Copel (51%). In this hydroelectric power plant, there are two contracts with BNDES, direct and indirect, and the Company intervenes as the grantor of 49% of the two contracts.

F-155

c) UHE Jirau - SPE Energia Sustentável do Brasil, formed by the subsidiaries Eletrosul, CHESF and GDF Suez Energy, with installed capacity of 3,750 MW. For the project two loans were taken out with BNDES, one direct and the other indirect, via intermediary banks, to be paid in 240 months. The company is guaranteeing the participation of each of its subsidiaries-Eletrosul (20%) and CHESF (20%).

d) UHE Santo Antônio - SPE Santo Antônio Energia, formed by Furnas, CEMIG, Fundo de Investimentos em Participação Amazônica Energia - FIP, Construtora Norberto Odebrecht S/A, Odebrecht Investimentos em Infraestrutura Ltda. and Andrade Gutierrez Participações S/A, with an installed capacity of 3,568.80 MW*. The Company is a consenting intervening party in financing with the BNDES and with the Banco da Amazônia, with its intervention limited to the participation of Furnas (39%).

e) UHE Foz do Chapecó - SPE Foz do Chapecó Energia, whose power plant has an installed capacity of 855MW*, has the Company as guarantor of the contractual instruments with the BNDES, totaling, in substitution of Bank Financing previously contracted, limited to the percentage of Furnas in SPE (40%).

f) UHE Baguari - Corporate Project of Furnas, with 140MW* of installed capacity. The Company is the guarantor of 15% of the financing contract with the BNDES.

g) UHE Serra do Facão - SPE Serra do Facão, formed by Furnas (49.47%), Alcoa Alumínio S.A. (34.97%), DME Energética (10.09%) and Camargo Corrêa Energia S.A. (5.47%) with an installed capacity of 212.58 MW*. The guarantee by the Company in relation to the financing with the BNDES relates to the participation of Furnas in the project.

h) Norte Brasil Transmissora - SPE, with participation of Eletronorte (49%) and has as its objective the implementation, operation and maintenance of the Porto Velho/Araraquara transmission line, with an extension of 2,375 km*.

i) Manaus Transmissora de Energia - SPE, which has the participation of Eletronorte (30%) and Chesf (19.5%) has as its objective to implement and operate 4 substations and a 585 km* transmission line (LT Oriximiná/Itacoatiara/Cariri). The company provides guarantees on two loans in this project (BASA and BNDES).

j) Mangue Seco 2 - SPE with a 49% participation of the Company and 51% of Petrobras for the construction and operation of three wind farms in Guararé, in Rio Grande do Norte. In this project the Company provided a guarantee, proportional to its participation in the long-term financing agreement with the BNB.

k) UHE Batalha - Corporate project of Furnas with capacity to generate 52.5 MW, with financing with the BNDES. The Company acts as a guarantor of this contract.

l) IE Madeira - SPE Interligação Elétrica, with participation of Furnas (24.5%) and Chesf (24.5%). In this project, there is a counter guarantee of the Company in the Bank Financing Contracts, in guarantee of the short-term loan from the BNDES, limited to the participation of its subsidiaries. There is also a short-term loan from BNDES, in which the company acts as an intervening party in proportion to its subsidiaries.

F-156

m) UHE Belo Monte - SPE Norte Energia, with an installed capacity of 11,233 MW*, of Chesf (15%), Eletronorte (19.98%) and Eletrobras (15%) in addition to other partners. The provision of the guarantee of the Company in favor of the SPE for the obligations by the insurer JMALUCELLI, under the guarantee insurance contract. The Company is also involved in a short term loan agreement with the BNDES.

n) Angra III - the company is the guarantor for the financing of Eletronuclear with the BNDES, to build the corporate project of the UTN Angra III.

o) Norte Energia S.A. - specific purpose closed-capital company, which object is the engagement in every activity required for deployment, operation, maintenance, and exploration of Usina Hidrelétrica de Belo Monte (UHE Belo Monte). The Company holds 49.98% of the capital stock of Norte Energia.

(*) information not audited by independent auditors

F-157

NOTE 24 – DEBENTURES

Subsidiary

Issuer

Date of Issue

Principal characteristics

Interest rate

Expiration

Balance on 12/31/2015

Balance on 12/31/2014

Eletronorte

Issued by ETE (incorporated by Eletronor

June/2011

Private subscription of the first issuance by the Subsidiary, subscribed in favor of Fundo de Desenvolvimento da Amazônia - FDA, and maintained under custody of the operating agent of the Contract, Banco da Amazônia S.A., with guarantee under collateral, in four series, all convertible into shares of the SPE, with and without voting rights.

TJLP + 1.65% p.a.

07/10/2031

219,803

219,418

CELG-D

1st Issue

04/03/2014

Simple debenture, in single series, with additional guarantee, non-convertible into shares, subject to public distribution with limited distribution efforts.

100%CDI + 7.44% p.a.

04/03/2019

—

285,346

Eletrosul

SPE Chuí IX - 1st Issue

10/20/2014

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 1.90% p.a.

01/18/2016

25,807

25,516

Eletrosul

SPE Chuí IX - 2nd Issue

05/20/2015

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 3.45% p.a.

01/18/2016

11,355

—

Eletrosul

SPE Hermenegildo I - 1st Issue

10/20/2014

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 1.90% p.a.

01/18/2016

81,751

80,732

Eletrosul

SPE Hermenegildo I - 2nd Issue

05/20/2015

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 3.45% p.a.

01/18/2016

33,073

—

Eletrosul

SPE Hermenegildo II - 1st Issue

10/20/2014

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 1.90% p.a.

01/18/2016

81,751

80,732

Eletrosul

SPE Hermenegildo II - 2nd Issue

05/20/2015

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 3.45% p.a.

01/18/2016

17,673

—

Eletrosul

SPE Hermenegildo III - 1st Issue

10/20/2014

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread de 1.90% p.a.

01/18/2016

69,039

68,179

Eletrosul

SPE Hermenegildo III - 2nd Issue

05/20/2015

Simple debenture, non-convertible into shares, in single series, chirographic, with additional guarantee subject to public distribution with limited distribution efforts.

100% CDI + spread 3.45% p.a.

01/18/2016

22,222

—

562,474

759,923

On October 19, 2015, SPEs Eólica Hermenegildo I, Eólica Hermenegildo II, Eólica Hermenegildo III and Eólica Chuí IX made the first amendment of Debentures of 1st and 2nd issuance, in the total amount of R$ 331,600, changing the due date from October 20, 2015 to January 16, 2016 and changing the compensation fee to CDI + 3.45% p.a. Two dates were set for the payment of interest, on October 20, 2015, where R$ 44,169 were paid, and another one for the new due date.

NOTE 25 – COMPULSORY LOAN

The Compulsory Loan on the consumption of electric energy, established by Law No. 4,156/1962 in order to generate resources for expansion of the Brazilian electric sector, was eliminated by Law No. 7,181 of December 20, 1983, which set the date of December 31, 1993 as the deadline for the collection.

F-158

In the first phase of this compulsory loan, which ended with the advent of Decree-Law No. 1,512/1976, the collection of the tax reached many classes of energy consumers, and taxpayer credits were represented by bearer bonds issued by the Company.

The second time, which began with the provisions in the aforementioned Decree-Law, the Compulsory Loan in question began to be charged only from industries with a monthly energy consumption higher than 2,000 kwh*, and taxpayer credits were no longer represented by bonds, but simply carried by the Company.

The remaining Compulsory Loan balance, after the fourth conversion into shares, on April 30 of 2008, related to credits created from 1988 to 2004, is registered under current and non-current liabilities, maturing starting in 2008, and are remunerated at the rate of 6% a year, plus monetary update based on the variation of the IPCA-E, and as of December 31, 2015, correspond to R$ 523,635 (December 31, 2014 – R$ 519,674), of which R$ 466,005 are non-current (December 31, 2014 – R$ 469,459).

The Bearer Bonds issued due to the Compulsory Loan are not securities, are not tradable on the stock market, are not priced and are not payable. In this way, the Company’s administration clarifies that the Company has no debentures in circulation.

The emission of these securities derived from a legal imposition, and not a corporate decision by the Company. Likewise, its taking by bondholders was not an act of their will, but a legal duty, by force of Law No. 4,156/1962.

The CVM (Brazilian securities commission), in a decision by its collegiate issued in administrative process CVM RJ 2005/7230, lodged by holders of the mentioned securities, affirmed in a document that “the obligations issued by the Company due to Law No. 4,156/1962 cannot be considered market securities.”

F-159

The CVM also understood that there is no irregularity in the procedures adopted by the Company in its consolidated financial statements, with regards to the aforementioned obligations, neither in the publishing of the existence of legal action.

The unenforceability of those Bearer Obligations was reinforced by decisions of the Supreme Court, which corroborated the understanding that those securities have prescribed and are not valid for guaranteeing tax enforcement.

Therefore, the Bearer Obligations issued in the first phase of this compulsory loan, as decided by the CVM, are not to be confused with debentures. In addition, by force of the provisions of Article 4, § 11 of Law No. 4,156/1962, and Article 1 of Decree No. 20,910/1932, they are unenforceable, a condition confirmed in Informational 344 of the Supreme Court (STJ), which states that these Obligations cannot be used as guarantees for tax enforcement action, since they are not liquid and are not debentures.

As such, the liabilities related to the Compulsory Loan refer to residual credits, created from 1988 to 1994, from industrial consumers with consumption greater than 2,000 kWh*, in the second phase of this Compulsory Loan, as well as to interest on those credits not claimed, as shown:

	12/31/2015		12/31/2014
CURRENT
Interest payable		57,630		50,215
NON-CURRENT
Credits received		466,005		469,459
TOTAL		523,635		519,674

NOTE 26 – FUEL CONSUMPTION ACCOUNT – CCC

The Fuel Consumption Account (CCC), created by Decree No. 73,102, of November 7, 1973, is intended to combine the prorating of fuel consumption costs in the generation of thermoelectric energy, especially in the Northern region of the country.

According to Law No. 8,631, of March 04, 1993, the Company manages the sums collected by the concessionaire of the public service of electrical energy, and credits them to the Fuel Consumption Account (CCC), for the annual fees destined to expenditures with fuel for the generation of electrical energy. The sums recorded under current assets, in counterpart to current liabilities, are funds available, kept in a restricted account, and the amounts not paid by concessionaires.

F-160

	12/31/2015		12/31/2014
Current Assets		195,966		521,964
Non-current assets		13,331		3,944
Total		209,297		525,908
Current Liabilities		—		301,471
Non-current liabilities		452,948		474,770
Total		452,948		776,241

The enactment of Law No. 12,783/2013 extinguished the mandatory nature of contributing to this charge, for concessionaires of the public service of electrical energy.

NOTE 27 – TAXES PAYABLE AND INCOME TAX AND SOCIAL CONTRIBUTIONS - LIABILITY

27.1. Taxes payable

	12/31/2015		12/31/2014
Current Liabilities:
Taxes withheld at source (IRRF)		239,721		177,357
PASEP and COFINS		577,998		196,440
ICMS		211,659		286,142
PAES / REFIS		185,441		243,349
INSS/FGTS		139,792		120,135
Others		201,967		144,745
Total		1,556,578		1,168,168
	12/31/2015		12/31/2014
Non-Current Liabilities:
PASEP and COFINS		75,323		39,548
Deferred PASEP and COFINS		181,991		—
PAES / REFIS		595,691		756,478
INSS/FGTS		31,884		22,809
Others		15,420		18,716
Total		900,309		837,551

F-161

27.2. Income taxes and social contributions

	12/31/2015		12/31/2014
Current Liabilities
Current Income Tax		431,712		13,938
Current Social Contribution		149,632		4,200
		581,344		18,138
Non-Current Liabilities
Deferred IRPJ/CSLL		1,003,796		569,380

27.3. Reconciliation of the computed income tax and social contributions based on the losses before taxes and social contribution applied at the statutory rates to the actual expense

	12/31/2015						12/31/2014						12/31/2013 Revised
	IRPJ			CSLL			IRPJ			CSLL			IRPJ			CSLL
Loss before IRPJ and CSLL		(11,207,024	)		(11,207,024	)		(4,457,135	)		(4,457,135	)		(4,824,982	)		(4,824,982	)
Total IRPJ and CSLL calculated at the rates of 25% and 9%, respectively		2,801,756			1,008,632			1,114,284			401,142			1,206,246			434,248
Effect of additions and exclusions
Dividend revenue		15,563			20,350			25,555			9,198			25,319			9,115
Equity Method		132,862			47,830			(304,210	)		(109,516	)		44,442			15,999
Provision for decrease in market value		—			—			(27,726	)		(9,981	)		—			—
Operational Provision		—			—			(798,787	)		(287,563	)		(612,907	)		(220,647	)
Deferred taxes not recognized/write off		(4,001,603	)		(1,402,293	)		(2,006,687	)		(799,097	)		(1,451,467	)		(522,528	)
Fiscal incentives		18,088			—			111,197			2,075			—			—
Deferred taxes recognized from previous fiscal years		—			—			812,366			294,192			—			—
Other additions and exclusions		476,987			171,715			(94,020	)		(32,940	)		(227,812	)		(66,686	)
Total income (expense) IRPJ and CSLL		(556,347	)		(153,765	)		(1,168,029	)		(532,490	)		(1,016,179	)		(350,499	)
Effective rate		4.96	%		1.37	%		26.21	%		11.95	%		21.06	%		7.26	%

F-162

27.4. Tax Incentives - SUDENE

Provisional Measure 2,199-14, of August 24, 2001, amended by Law 11,196, of November 21, 2005, allowed companies located in the Northeast Region with ventures in the infrastructure sector considered by act of the Executive branch to be a priority for regional development, to reduce the income tax amount owed for the purpose of investing in projects of installation, expansion, modernization or diversification.

Regarding concession contracts no. 006/2004 of generation, and no. 061/2001 of transmission (both signed by the CHESF), the right to the incentive reducing 75% of income tax covers the years of 2008 to 2017. For transmission contracts numbers 008/2005 and 007/2005, the right to the reduction incentive was granted for the period, 2011 to 2020. For contracts with a tax incentive, the income tax rate of 25% becomes 6.25%.

27.5. Special payment plan - PAES

The subsidiaries Furnas, Eletrosul, Eletroacre and Distribuição Alagoas chose to refinance tax debts. The refinanced term is limited to 180 months, and the balance owed is corrected by the long-term interest rate (TJLP) and SELIC rate.

27.6. Tax Recovery Program (REFIS) - Law 12,865/2013

On December 30, 2013, Furnas chose the REFIS, for processes related to the PASEP, COFINS and PASEP/COFINS taxes.

The financing term is limited to 180 months and the outstanding balance is adjusted according to SELIC.

27.7- Deferred PASEP and COFINS on Active Foreign Exchange Variation

On April 1, 2015, Decree No. 8,426 was enacted, reestablishing to 0.65% and 4%, respectively, the PIS/PASEP and COFINS rates incurring on financial income from corporations subject to the non-accrual regime, in effect on July 1, 2015.

However, with Decree No. 8,451, published on May 19, 2015, the Federal Government reestablished to zero the PIS/PASEP and COFINS rates incurring on financial income arising out of monetary adjustments, due to the foreign exchange rate, for (I) exporting of goods and services abroad; and (ii) obligations undertook by the corporation, including loans and financing.

F-163

Considering that Decree No. 8,451 established the maintenance of the zero rate only for the above-mentioned operations, the Controller started paying, at the settlement of the corresponding transaction, the PIS/PASEP and COFINS contributions incurring on monetary changes arising out of foreign currency variations in loan agreements granted by the Company.

F-164

In this context, due to the deferred taxation of exchange variation for the time of settlement of the operation, the Controller recognized in non-current liabilities differed PIS/PASEP and COFINS in the amounts of R$ 25,440 and R$ 156,551, respectively.

NOTE 28 – REGULATORY FEES

	12/31/2015		12/31/2014
CURRENT LIABILITIES
RGR share		154,753		229,178
CDE share		38,979		8,827
PROINFA share		45,819		28,466
Compensation for the use of hydric resources		56,932		66,006
Rate for Energy Services Supervision		5,223		4,072
Research and Development R&D		356,920		371,367
Energy Efficiency Program - PEE		24,397		167,446
Others		12,377		54,935
		695,400		930,297
NON-CURRENT LIABILITIES
RGR share		8,184		32,975
Research and Development R&D		404,623		348,308
Energy Efficiency Program - PEE		49,388		48,844
Others		—		179,594
		462,195		609,721
TOTAL		1,157,595		1,540,018

28.1. Global Reversal Reserve - RGR

Concessionaires of the Public Service of Electrical Energy are responsible for contributing to the formation of the RGR, by paying a share named Reversal and Takeover of Electrical Energy Services, of up to 2.5% of the value of investments made by concessionaires and permit-holders, limited to 3% of annual revenue. The value of the share is calculated as a component of the cost of concessionaire’s service.

Concessionaires pay their annual share into the Fund, which is not controlled by the Company, in an attached bank account managed by the Company, which manages the account within the limits established by Law No. 5,655/1971 and later amendments, also not reflected in the Company’s Financial Statements, since it is an entity independent of the Company.

F-165

According to Art. 20 of Law No. 12,431, 2011, this fee was extended until 2035, whereas it had originally been established to expire at the end, 2010. With the publishing of Law No. 12,783/2013, starting on January 1, 2013, the following were no longer required to pay into the RGR annually:

a) Concessionaires and permit-holders of the public service of electrical energy distribution;

b) Concessionaires of the public service of electrical energy transmission tendered after September 12, 2012; and

c) Concessionaires of the public service of transmission and generation of electrical energy renewed in accordance with Law No. 12,783/2013.

28.2. Energy Development Account (CDE)

The Energy Development Account (CDE) is intended to promote the development of energy in the states, projects to universalize electrical energy services, the program to subsidize low-income consumers, and expansion of the natural gas grid to serve states that do not yet have pipelines.

The CDE was created on April 26, 2002 and is managed by the Company, fulfilling a program set out by the Ministry of Mines and Energy, and does not affect the Company’s results.

The CDE is also used to guarantee the competitiveness of energy produced from alternative sources (eolic, small hydroelectric plants and biomass) and from national mineral coal.

Starting in 2013, as one of the instruments to enable a reduction in light bills, this contribution was reduced to 25% of the current rate.

28.3. PROINFA

The Federal government program for the development of projects to diversify Brazil’s energy grid and foster alternative sources of electrical energy, created by Law 10.438, of April 2002, is managed by the Company and seeks regional solutions for the use of renewable energy sources.

The PROINFA establishes the operation of 144 plants, totaling 3,299.40 MW* of installed capacity. The plants in the program account for the generation of approximately 12,000 gWh/year – an amount capable of supplying about 6.9 million residences and equivalent to 3.2% o the total annual consumption in the country. The 3,299.40 MW* contracted are divided into 1,191.24 MW* from 63 Small Hydroelectric Plants (PCHs), 1,422.92 MW* from 54 eolic plants, and 685.24 MW* from 27 plants based on biomass. This energy is guaranteed contracting for 20 years by the Company. Operations performed under PROINFA do not affect the Company’s results (which is responsible for payment).

(*) information not audited by independent auditors

F-166

28.4. Financial compensation for the use of water resources

Financial compensation for the use of water resources for the purposes of generating electrical energy was instituted by the Federal Constitution of 1988, and are a percentage that concessionaires of hydroelectric generation pay for the use of water resources. ANEEL manages the collection and distribution of resources among beneficiaries: States, cities and entities directly managed by the Union.

As established by Law No. 8,001, of March 13, 1990, with the amendments given by Laws No. 9,433/1997, 9,984/2000 and 9,993/2000, 45% of the resources are destined for cities affected by the UHE reservoirs, while states are entitled to another 45%. The Union gets the remaining 10%. Generators characterized as Small Hydroelectric Plants (PCHs) are exempt from payment of this financial compensation.

The concessionaires pay 6.75% of the value of energy produced as Financial Compensation.

28.5. Fee for Oversight of Electrical Energy Services

The Fee for Oversight of Electrical Energy Services (TFSEE) was created by Law No. 9,427, of December 26, 1996, and regulated by Decree No. 2,410, of November 28, 1997, to create revenue for the National Electrical Energy Agency, to cover its administrative and operating expenses.

The TFSEE is equivalent to 0.5% of the economic value added by a concessionaire, permit-holder or authorization holder, including in cases of independent production and self-production, the exploration of services and electrical energy facilities.

The TFSEE is owed since January 1, 1997, and is set annually by ANEEL and paid in twelve monthly payments.

28.6 – Research and Development – R&D

Electricity concessionaires must, annually, apply the minimum amount equal to 1% of its net adjusted operating revenue on research and development for the electric sector, under the terms in Law No. 9,991, dated July 24, 2000.

The R&D funds aim to pay for studies and researches in planning the expansion of the energy system, as well as the inventory and feasibility needed to enjoy the hydro-electric potential.

Compliant with the terms in said regulations, as counterpart to amounts recorded in the liabilities, concessionaires account for in the result, in research and development, as operating income deduction.

F-167

NOTE 29 – SHAREHOLDERS´COMPENSATION

	12/31/2015		12/31/2014
CURRENT
Unclaimed dividends		40,518		58,091
Dividends Retained		3,004		6,311
		43,522		64,402

29.1. – Dividends Retained from Previous Fiscal Years

In January, 2010, the Company’s board of directors ordered payment of the balance of the Special Undistributed Dividend Reserve, in four annual payments starting in fiscal year 2010, inclusive.

29.2. – Unclaimed Dividends

The balance of the remuneration to shareholders, demonstrated in current liabilities, contain the sum of R$ 40,518 (R$ 58,091 on December 31, 2014), which was unclaimed remuneration from the fiscal years, 2012, 2013, and 2014. The remuneration for 2011 and earlier has prescribed, according to the Company’s bylaws.

NOTE 30 – POST-EMPLOYMENT BENEFITS

The companies in the Eletrobras System sponsor pension plans for their employees, as well as post-employment medical assistance plans and life insurance in certain cases. Those benefits are classified as defined benefits (BD) and defined contributions (CD).

F-168

Due to the decentralized structure of the Eletrobras system, each segment sponsors its own package of employee benefits. In general, the Group offers its current and future retirees and its dependents pension benefits, and post-employment medical assistance and life insurance, as presented in the following chart:

Types of post-employment benefits sponsored by Eletrobras System
	Pension benefit plans			Other post-employment
Company	BD Plan	Paid Plan	CD Plan	Life Insurance	Health Insurance
Eletrobras	X		X	X
Amazonas	X		X
Boa Vista	X		X		X
Ceal	X		X		X
Celg D	X		X		X
Cepisa	X		X
Ceron			X
CGTEE	X
Chesf	X	X	X	X
Eletroacre			X
Eletronorte	X		X	X	X
Eletronuclear	X				X
Eletrosul	X		X		X
Furnas	X		X	X	X

The pension benefit plan normally exposes the Group to actuarial risks, such as the risk of investment, interest rate risk, longevity risk and salary risk.

F-169

Investment Risk	The current value of the liability of the defined pension benefit plan is calculated using a set discount rate due to the remuneration of high quality private securities; if the return on the assets of the plan is under that rate, the plan will run a deficit. At the moment, the plan’s investment is relatively balanced in stocks, debt instruments and real estate. Due to the long-term nature of plan liabilities, the pension fund’s board considers it appropriate that a reasonable portion of the plan’s assets should be invested in shares and real estate, to leverage the return generated by the fund.
Interest rate risk	A reduction in the interest rate of the securities will increase the plan’s liability. However, this will be partially compensated by an increased return on the plan’s debt securities.
Longevity risk	The current value of the defined benefit plan’s liability is calculated by referencing the best estimate of the mortality of plan participants during and after employment. An increase in the life expectation of plan participants will increase the plan’s liability.
Salary risk	The current value of the defined benefit plan’s liability is calculated by referencing the future salaries of plan participants. Therefore, an increase in the salary of plan participants would increase the plan’s liability.

The charts below present a conciliation of the present value of the defined benefit obligations and the fair value of assets whose values are recorded on the balance sheets for pension benefits and for all other post-employment benefits. Next we will present the consolidated results of the Eletrobras group. The most recent actuarial valuation of plan assets and of the present value of the defined benefits obligation was conducted on December 31, 2015.

F-170

The balance of post-employment benefit obligations is presented below:

Post-employment benefit obligations - values recognized in balance sheet	2015		2014
Defined pension benefit plans		1,693,130		1,885,914
Health and life insurance plans		272,296		374,252
Other post-employment benefit obligations		8,259		—
Total post-employment benefit obligations		1,973,685		2,260,166
CURRENT		114,861		258,898
NON-CURRENT		1,858,824		2,001,268

a) Conciliation of the liability of pension plans and other benefits

Post-employment benefit obligations - values recognized in balance sheet and financial statements	2015			2014			2013
Present value of actuarial obligations, covered as a whole or in part		17,867,309			18,494,073			17,196,047
Fair value of plan assets (-)		(18,905,009	)		(19,300,597	)		(17,830,733	)
Net Liabilities / (Assets)		(1,037,700	)		(806,524	)		(634,686	)
Effect of restriction on asset		1,890,266			1,916,652			1,241,668
Actuarial debt contracted between sponsor and plan		842,672			1,271,936			949,797
Financial debt contracted between sponsor and plan		157,757			191,664			85,903
Value of post-employment benefits liability/(assets)		1,693,130			1,885,914			1,123,599
Current service cost		(53,494	)		(47,310	)		85,557
Cost of net interest		125,220			70,338			195,397
Actuarial Expenses / (Income) recognized in the fiscal year		71,727			23,028			280,954
Post-employment benefit obligations - values recognized in balance sheet and financial statements	2015			2014			2013
Present value of actuarial obligations, covered as a whole or in part		272,296			374,252			360,173
Fair value of plan assets (-)		—			—			—
Net Liabilities / (Assets)		272,296			374,252			360,173
Liabilities / (Asset) of other post-employment benefits		272,296			374,252			360,173
Current cost of service		14,147			19,238			—
Cost of net interest		43,639			42,626			36,383
Actuarial expense / (income) recognized in the year		57,786			61,864			36,383

b) Disclosure of Defined Benefit Pensions

F-171

Consolidated results of defined pension benefits - conciliation of the present value of defined benefit obligations:

Chart b.1 - Defined benefit pension plans - Activity of present value of actuarial obligations	2015			2014
Value of actuarial obligations in the beginning of the year		18,494,073			17,196,047
(Sale) / Acquisition of subsidiary (*)		(68,269	)		65,303
Current cost of service		86,483			84,100
Interest on actuarial obligation		2,167,943			2,009,652
Benefits paid in the year (-)		(1,455,594	)		(1,302,903	)
(Gain)/Loss on actuarial obligations arising out of remeasurement		(1,357,326	)		441,874
Actuarial (gains) losses due to changes in demographic assumptions		25,321			(74,348	)
Actuarial (gains) losses due to changes in financial assumptions		(1,309,909	)		455,898
Actuarial (gains) losses due to adjustments by experience		(72,738	)		60,324
Present value of actuarial obligations in the end of the year		17,867,309			18,494,073

Consolidated results of defined benefit pensions - conciliation of the fair value of assets of plans:

Chart b.2 - Defined pension benefits plans - Changes and composition of fair value of assets	2015			2014
Fair value of adssets at the beginning of year		19,300,597			17,830,733
Acquisition of subsidiary (*)		(63,327	)		52,699
Benefits paid during the year (-)		(1,455,594	)		(1,302,903	)
Participant’s contribution during the year		139,977			134,426
Employer’s contributions during the year		211,355			238,939
Assets expected return during the year		2,291,003			2,103,348
Gain/(Loss) on assets of the plan (excluding interest income)		(1,519,001	)		243,355
Fair value of assets at the end of the year		18,905,009			19,300,597
Effective income of assets in the year		772,002			2,346,703

* Acquisition of subsidiary (See Note 43)

Consolidated results of pension benefits - Amounts recognized in other comprehensive income:

	2015			2014			2013
Other comprehensive income (ORA) accrued Pension Program		2,321,962			1,945,074			646,897
	2015			2014			2013
Actuarial gains (losses) recognized in ORA in the year for deferred taxes - Pension Program		(376,887	)		(1.298.178	)		811,935

F-172

c) Disclosure of Other Post-employment Benefits

Consolidated results of other post-employment benefits - conciliation of present value of defined benefit obligations:

Chart c.1 - Other post-employment benefits – Activity of present value of actuarial obligations	2015			2014			2013
Value of actuarial obligations at the start of the year		364,821			360,173			433,695
Current cost of service		14,147			19,260			—
Interest on actuarial obligations		43,639			42,604			36,383
Benefits paid in the year		(11,249	)		(14,977	)		(10,197	)
(Gain)/loss on actuarial obligations arising from remeasurement		(139,062	)		(32,808	)		(99,708	)
Actuarial (gains) losses derived from changes in demographic premises		(29,682	)		29,384			—
Actuarial (gains) losses derived from changes in financial premises		(49,624	)		119,803			(179,178	)
Actuarial (gains) losses derived from adjustments for experience		(59,756	)		(181,995	)		79,470
Present value of actuarial obligations at year end		272,296			374,252			360,173

Consolidated results of other post-employment benefits – Sums recognized in Other Comprehensive Income:

	2015		2014		2013
Other accrued comprehensive income (ORA) - Other post-employment benefits		46,326		185,388		218,196
	2015		2014		2013
Actuarial gains (losses) recognized in ORA at exercise - Other post-employment benefits		139,062		32,808		99,708

d) Actuarial and economic assumptions

The actuarial assumptions presented below are used to determine the defined benefit obligation and expenses for the year.

F-173

Economic Hypothesis
	2015	2014
Annual actuarial discount rate (i)	13.16% to 13.27%	12.19% to 12.27%
Annual actual actuarial discount rate	7.26% to 7.36%	6.12% to 6.20%
Projected average increase in wages	5.50% to 9.57%	6.78% to 9.80%
Projected average increase in benefits	5.50%	5.72%
Actual annual rate of change in medical costs	0% to 6.18%	1.00% to 5.64%
Average annual inflation rate	5.50%	5.72%
Expected return on plan assets (ii)	13.16% to 13.27%	12.19% to 12.27%
Demographic Hypothesis
	2015	2014
Turnover rate	0%;2.80%;80% T1 Service Table	0%;(2/participant age)- 0,04;80% T1 Service Table
Mortality table, active and inactive	AT-2000;AT-2000 BASIC;AT-83 BASIC F;AT-2000 (D10);AT-2000 (suavizada 10%);AT-83 BASIC M	AT-2000;AT-83 BASIC F;AT- 2000 (D10);AT-2000 (softened 10%) M&F;AT-83 BASIC M;AT-83 M&F;AT-83 BASIC F
Disability mortality table	AT-83;AT-83 (D10);AT-49 DES 2 years;MI-85;AT-49 M;AT-49 M&F;AT-49 (M&F) AGR 100%;RP - 2000 Disable;AT-83M (atoned by 5%);RP 2000 Disable M&F;RRB 1983	AT-83;AT-83 (D10);AT-49 DES 2 years;MI-85;AT-49 M;AT-49 M&F;AT-49 (M&F) AGR 100%;RP - 2000 Disable;AT-83M (atoned by 5%);RP 2000 Disable M&F;RRB - 1983
Disability table	Light Weak, Medium, and Strong; Muller; Alvaro Vindas;TASA-1927 (Suavizada 30%)	Light Weak, Medium, and Stron; Alvaro Vindas;TASA-1927 (Suavizada 30%)
% of married at retirement date	95%	95%
Age difference between men and women	4 years	4 years

(i) Long-term interest rate

(ii) Represents the maximum and minimum return rates of asset plans.

The definition of this rate took into account the market practice of Federal government bonds, according to the criteria recommended by national and international standards, for terms similar to those of the flow of obligations of the benefits program, for the duration.

The global expected return rate is the weighted average of expected returns from the various categories of plan assets. The Management’s valuation of expected return is based on historical return trends and market analysts’ forecasts for the assets during the life of the respective obligation. The current return of BD plan assets on December 31, 2015 was R$ (153,404) (R$ 148,505 in 2014) at the Controller, and R$ 772,002 (R$ 2,346,703 in 2014) in the Consolidated group.

F-174

e) Employer contributions

On December 31, 2015, the contributions made by the Controller to the creation of mathematical provisions for benefits under the CD Plan reached R$ 16,983 (R$ 14,772 in 2014) and R$ 213,626 (R$ 183,145 in 2014) in the Consolidated group.

On December 31, 2015, the contributions made by the Controller to the creation of mathematical provisions for benefits under the BD Plan reached R$ 15,451 (R$ 12,385 in 2014) and R$ 211,355 (R$ 238,713 in 2014) in the Consolidated group.

The Controller expects to contribute R$ 29,696 to the defined benefit plan in the next year, and R$ 216,015 in the Consolidated.

The average weighted duration of the defined benefit obligation of the Controller is 8.16 years, and the average in the Consolidated group is 10.15 years.

An analysis of the expected maturation of non-discounted benefits of post-employment defined benefit plans:

Consolidated

Consolidated on December 31, 2015	Up to 1 year		From 1 to 2 years		From 2 to 5 years		Over 5 years		Total
Pension Program		1,547,230		1,553,554		4,639,378		31,212,694		38,952,856

f) The actuarial assumptions relevant to determining the defined obligation are: discount rate, medical cost, expected salary increase, and mortality. The following sensitivity analyses were determined based on reasonably possible changes to the respective assumptions which occurred at the end of the reporting period, all other assumptions remaining constant.

Parent Company

• If the discount rate were 0.25% higher (lower), the defined benefit obligation would be reduced by R$ 30,940 (increased by R$ 32,057).

• If life expectancy increased (decreased) in a year for men and women, the defined benefit obligation would increase by R$ 34,693 (decrease by R$ 35,550).

Consolidated group

• If the discount rate were 0.25% higher (lower), the defined benefit obligation would be reduced by R$ 380,518 (increased by R$ 396,007).

F-175

• If medical costs were 0.25% higher (lower), the defined benefit obligation would increase by R$ 10,672 (decrease by R$ 9,863).

• If life expectancy increased (decreased) in a year for men and women, the defined benefit obligation would increase by R$ 289,720 (decrease by R$ 299,407).

The sensitivity analysis presented may not be representative of the real change in the defined benefit obligation, since it is not likely that the change would occur in isolated assumptions, considering that some assumptions may be correlated.

Additionally, when presenting the sensitivity analysis, the present value of the defined benefit obligation was calculated by the projected unit credit method at the end of the reporting period, which is equal to that used to calculate the liability of the defined benefit obligation recognized on the balance sheet.

There was no change in relation to previous years in the methods and assumptions used to prepare the sensitivity analysis.

g) Sums included in the fair value of plan assets

Asset Category	2015			2014
Immediately available values		1,508			4,826
Payable		888,620			862,037
Credit on Private Deposits		394,430			397,668
Fixed income investments		13,720,841			12,779,880
Variable income investments		2,126,328			2,718,104
Investment funds		1,160,367			1,905,109
Estate investments		841,652			861,319
Structured investments		385,643			275,595
Loans and financing		526,007			593,423
Others		89,360			140,856
( – ) Funds receivable from sponsor		(408,644	)		(454,484	)
( – ) Operationable receivables		(97,585	)		(62,453	)
( – ) Contingence receivables		(437,104	)		(456,687	)
( – ) Investment funds		(91,827	)		(84,577	)
( – ) Administrative funds		(167,243	)		(163,708	)
( – ) Pension funds		(27,344	)		(16,310	)
Total assets		18,905,009			19,300,597

The fair value of capital and debt instruments is determined based on market prices quoted in active markets, while the fair value of securities investments are not based on market prices quoted in active markets.

NOTE 31 - PROVISION FOR CONTINGENCIES

The Company and its subsidiaries are partly involved in various lawsuits underway in the courts, especially in the labor and civil courts, and which are in various stages. The ultimate amounts and timing of the cash outflows for these lawsuits are uncertain and are dependent on the outcome of the specific court decisions.

F-176

a) – Provisions:

	12/31/2015		12/31/2014
CURRENT
Labor		21,100		12,589
Civil		569,625		19,493
		590,725		32,082
NON- CURRENT
Labor		984,066		930,375
Tax		644,466		236,593
Civil		11,927,597		11,924,899
		13,556,129		13,091,867
		14,146,854		13,123,949

On December 31, 2015, the Company has classified the amount of R$ 543,345 as current liabilities based on the history of payments of judicial causes made in the last three years.

These provisions evolved in the following way this year:

Balance on 12/31/2014	13,123,949
Provisions	2,885,869
Reversal of Provisions	(1,096,853	)
Monetary Adjustment	1,266,609
Write Off	(1,128,215	)
Payments	(904,505	)
Balance on 12/31/2015	14,146,854

a) Main legal proceedings against the Company and its subsidiaries resulted in the recognition of a provison as of December 31, 2015 follows:

a.1) Civil lawsuits

In the Parent Company

• Compulsory Loan

Civil lawsuits in the Parent Company are aimed at getting monetary correction criteria to be applied to accounting credits of the Compulsory Loan constituted in 1978.

F-177

There is an expressive judicial litigation involving the controller. The largest number of claims in this universe refers to claims aimed at getting monetary correction criteria to be applied to accounting credits of the Compulsory Loan on consumption of electricity.

These lawsuits were created in order to confute the monetary correction system determined by legislation governing the Compulsory Loan, and applied by the Company.

Credits of the compulsory loan were fully paid by the Company throughout of shares conversions with monetary correction based on legislation..

The difference has been presented to the Superior Court of Justice (STJ), and the merit has been decided by that Court. The matter, however, is currently subject to appeals to the Federal Supreme Court (STF), which are pending judgment.

Despite the fact that the matter had been submitted to the STF, due to the precedent of the STJ, decided under the terms in article 543-C in the Code of Civil Procedure of 1973, claims filed, have been following the regular course and, consequently, there have been several convictions for the payment of monetary adjustment differences related to this period, and as result of these, Eletrobras have been subject to many executions, and there is no agreement between Eletrobras and the plaintiffs as for the calculation of the due amount.

However, in the third quarter of 2015, the STJ issued decisions defining the parameters for the method to calculate such executions, accepting some of the claims made by Eletrobras, although not entirely, causing adjustments to the calculation methods adopted by Eletrobras and the risk classification of these claims and consequent difference in the provision for contingencies. Eletrobras adjusted the amounts recognized in the financial statements as of December 2014 to reflect such subsequent events that provided evidence of the conditions that existed at the end of the reporting period to which they relate date of issue of these financial statements. The amount of this subsequent adjustment arising from the compulsory loan had a net effect of R$ 4,141,503, no income tax effects apply.

In December 2015 there were approximately 3,868 lawsuits pursuing this same object, underway in various instances which The Company maintained provision for these civil contingencies, at the Controller, worth R$ 9,279,041 (December 31, 2014 – R$ 8,448,112) for these processes.

• Guarantor Contracts (Amazonas’ supply energy)

It is important to record the existence of processes filed against Amazonas Energia, where Eletrobras was included as defendant, as it appeared as guarantor and main debtor of Amazonas in several electricity supply contracts.

These processes arise out of payments, fines, and fees charged due to alleged delays and default by Amazonas in compliance with obligations related to such contracts.

Regarding processes related to this object, four of them have been judged to be inapplicable (decision favorable to Eletrobras) in lower courts, six have been judged as applicable (unfavorable to Eletrobras) in lower courts, and others are pending judgment. Processes judged to be applicable (unfavorable to Eletrobras) are currently pending judgment of appeals filed by Eletrobras.

F-178

Processes judged to be inapplicable or which decision has not been issued by the lower court are classified as possible risk. However, eight (8) processes which were judged to be applicable had their risk reassessed and the Company believes an it is more likely than not an outflow of resources will occur for this present obligation. Because this is a discussion related to the examination of facts and evidences, being hard to be reformed in higher courts,the Company recognize a provision of R$ 617,002.

Lastly, it is important to note a process related to the execution of a contractual guarantee provided for in contract executed with Companhia Energética Manauara, which risk classification should also be reassessed as more likely than not an outflow of resources will occur for this present obligation, to the extent that the obligation is expressly provided for in the contract, which makes Eletrobras’ defense much harder. The amount of this process sums R$ 11,739.

Specifically regarding these energy supply contracts where Eletrobras appears as guarantor, the Company maintains the provision of R$ 628,741 (R$ 419,855 on December 31, 2014) grounded on the asset with the same amount before the subsidiary Amazonas Energia.

Chesf

i. Chesf is the claimant in a lawsuit which is petitioning for an addendum (Factor K in the analytical correction of prices) to the contract for civil construction of the Hydroelectric Plant Xingó to be declared partially invalid. The contract was signed with the consortium formed by Companhia Brasileira de Projetos e Obras – CBPO, CONSTRAN S.A. – Construções e Comércio e Mendes Júnior Engenharia S.A., and for the refunding of sums paid for Factor K, approximately R$ 350,000 (value at that time, converted into reais), in double.

The Pernambuco State Courts dismissed the lawsuit filed by the Company, and accepted the counterclaim presented by the defendants.

Chesf and the Federal Union, which is assisting it in this process, submitted special and extraordinary appeals to the Supreme Court. In August, 2010, the Supreme Court granted one of those special appeals submitted by Chesf, reducing the value of the cause, which means a substantial reduction in the honorariums that may be paid in the main lawsuit. The same Supreme Court rejected the remaining special appeals submitted by Chesf and the Federal Union, and therefore maintained the decision of the Pernambuco Court, which dismissed the declaratory action filed by Chesf and granted the counterclaim submitted by the defendants, which resulted in Chesf submitting requests for clarification, which went to trial in December 2012, and were concluded in December 2013, and were all rejected.

At the same time, and since the conclusion of the processing of the fact in the ordinary instances, the defendants have been taking various initiatives before the ordinary Pernambuco State courts, to obtain enforcement of the sum requested in the counterclaim.

In August 2013, the defendants took the initiative before the 12^th Civil Court of Recife, PE, to obtain provisional enforcement of the sums which, by their own calculations, would be the correction of the sum granted them by the TJPE (Pernambuco State Court). In this case, CHESF was ordered to pay the sums in question, but submitted a

F-179

“pre-enforcement challenge” (pointing out, supported by Supreme Court case law, various irregularities in the procedures that would immediately disallow this provisional enforcement, without prejudice to other specific topics challenged in the calculations of the defendants themselves due to the TJPE’s ruling): After a response from the defendants and a response from Chesf, on December 31, 2013 the process was awaiting court examination of this “challenge.” On August 22, 2014 the pre-enforcement challenge was dismissed, and the seizure via Bacenjud of R$ 948,670 was ordered. A surety bond was offered for R$ 1.3 billion in place of the online seizure, which was accepted on August 28, 2014 by the Judge of the 12^th Civil Court, who ordered the immediate release of the sum seized. An appeal filed by the Consortium caused the suspension on September 15, 2014 of the effects of the decision which ordered the release of the sum; however, on September 24, 2014, the court quashed the Requests for Clarification filed by Chesf regarding the provisional execution, for lacking the condition of admissibility, and therefore revoked the constriction measures ordered incidentally.

The Consortium filed a Claim, assigned to the 6^th Civil Chamber of the TJE on November 6, 2014, which was awaiting trial on December 31, 2014.

Considering the development of all of the proceedings referred to above and all of the rulings on the appeals presented until then, the Management, based on the opinion of its legal advisors and on calculations that took into account the suspension of payments related to Factor K and their respective monetary correction, is keeping a provision record under Non-Current Liabilities, the sum of which, updated to December 31, 2015, is R$ 1,071,554 (December 31, 2014 – R$ 850,891), to cover any losses arising from this matter. The Company can not estimate with precision the moment (in future years) of settlement of of these proceedings.

ii. Lawsuit for compensation of 14,400 ha of land from the Aldeia farm, filed with the Sento Sé (BA) county on behalf of the estate of Anderson Moura de Souza and his wife. The sentence in the first instance granted the request and condemned Chesf to pay the sum of R$ 50,000 as principal, interest and monetary correction. Chesf filed an appeal to the Bahia state court and the process was transferred to the Federal Justice due to intervention by the Federal Union as assistant. Chesf’s Management, based on the opinion of its legal advisors, considers the likelihood of loss to be probable, that an outflow of resources will happen for this present obligation and therefore has a provision for R$ 100,000 recorded under its non-current assets (December 31, 2014 – R$ 100,000). As of December 31, 2015, the lawsuit was still pending judgment.

iii. Lawsuit for compensation filed by Indústrias Reunidas Raimundo da Fonte S/A (Vitivinicola Santa Maria S.A), due to the flooding caused by the 1992 flood of the São Francisco river.

The sentence, which is final ordered a provisional settlement, and remitted to experts for definition of the consequential damages and lost profit. A single agricultural engineer was designated, who has the competence to determine the consequential damages but not the lost profit. The report was challenged by Chesf, who requested that the 1^st Civil Court order an accounting expert report to be made in order to obtain an amount, even if approximate, for lost profits, considering the activity developed by the petitioner. The request was rejected, and an interlocutory appeal was filed, which upheld the dismissal, special appeal (which the TJPE declined to accept) and the Grievance on a special appeal (AREsp 377.209-PE), which was not granted, and Bill of Review that was not granted either, resulting in the final decision of the process. The Company has made judicial deposits in the amount of R$ 61,004, that has been withdrawn by the party and waits for the issuance of the decision extinguishing the execution.

F-180

Eletronorte

i. Expropriations filed by the Company with the intention of compensating the owners of the areas affected by the formation of the Balbina Hydroelectric Power Plant (AM) reservoir. Most of the proceedings are in the fulfillment of sentence phase. There is a discussion regarding the legitimacy of the deeds presented by the expropriated parties, and in fact the Federal Public Prosecutor has filed a class action lawsuit contesting those deeds. The provision created for this cause as of December 31, 2015 is R$ 375,449 (December 31, 2014 – R$ 364,549).

ii. Relates to the refund of values to Sul America Companhia Nacional de Seguros due to the payment made to Albrás Alumínio Brasileiro S.A. for the claim incurred because of interruption in the supply of electricity. The process value is R$ 236,731 (December 31, 2014 – R$ 229,835). The balance had significant increase mainly due to the change in the risk classification of the civil claim, from possible to probable.

a.2) Labor-related

Furnas:

i. Classification of process No. 010058-17.2012.5.18.0131, labor nature, as probable, in the amount of R$ 21,044, filed by the Union of Electric Workers of Furnas and DME, classified as possible risk by December 31, 2014, due to the presentation of calculation by the Plaintiff in Court.

ii. Inclusion of process No. 0171500-23.1995.5.01.0046, labor nature, in the amount of de R$ 5,957, related to supplement to retirement (equality). Process in the appeal phase due to the filing of a Bill of Review of Brief by Fundação Real Grandeza.

Ceal

The Alagoas State Union of Urban Industry Workers filed a labor claim on behalf of the Company’s employees, as procedural substitute, seeking to receive alleged wage differences not received by virtue of implementation of the so-called “Bresser Plan” (Decree-Law No. 2,335/87).

The claim was granted by the Honorable Second Board of Conciliation and Judgment of Maceió-AL, a decision which was confirmed by the Regional Labor Court of the 19^th Region, and the decision is final.

It so happens that, in execution of the sentence, the 2^nd Labor Court of Maceió understood at the time that there would be no limitation on the base date for the category, which make execution excessively burdensome.

F-181

Hence, the risk of of outflow of resources for this present obligation was evaluated as probable as far as the loss being limited to the base date, since the judgment limiting the base date on the category will be issued with the continued execution.

Payment of the wage differences was limited to the base date through Abstract 322 of the Supreme Labor Court (TST), which established: salary adjustments derived from so-called “triggers” and URPs (price reference unit), established legally as an advance, are owed only until the base date for each category.

F-182

We emphasize that among the applicable legal measures, stays of execution were filed, which would allow an examination of the limitation of calculations to the base date for the category, a procedure also adopted by the Attorney General of the Union.

Add to this the fact that the Union joined in the action, which reinforces the Company’s defense in the attempt to obtain a limitation on the base date. Also the decision dated March 15, 2011 by the Regional Labor Court of the 19^th Region, proc. 251900.68.5.19.1989.0002, for the Companhia de Abastecimento de Águas e Saneamento de Alagoas – CASAL, which limited their base date. CEAL has a contingency provision for this matter in the sum of R$ 5,281 (December 31, 2014 – R$ 4,687).

a.3) Tax

Eletronorte

There are two relevant provisions for Acts of Infringement and Fiscal Notification in the amount of R$ 319,529, specified below and other less relevant provisions involving the Tax on the Circulation of Goods and Services (ICMS) and federal taxes before the Office of the Federal Revenue of Brazil.

The Acts of Infringement and Fiscal Notification refer to the Fee to Control, Accompany, and Supervise Exploration and Use of Hydric Resources Activities – TFRH, regulated by Decree No. 1,227/2015, aimed to pay for the supervision and use of hydric resources in the territory of the state of Pará. The first Act of Infringement was filed on August 27, 2015 in the amount of R$ 206,316 related to the non-payment of TFRH in the period from April to June 2015. The second Act of Infringement was filed on November 11, 2015 in the amount of R$113,212, related to the period between July and September 2015. In the administrative and judicial sphere, the appeal related to the first Act of Infringement of the Company was not granted, regarding the second Act of Infringement, the Company has filed Objection, but there is no expectation of results different from the first one. Therefore, the Company proceeded to establish a provision for both Acts of Infringement.

Furnas

Inclusion of process No. 0084092-14.2015.4.02.510, tax nature, being an annulment claim discussing tax credit arising out of the administrative process No. 16682.720330/2012 (collection of PIS/COFINS on RTE and Itaipu) in the amount of R$ 126,377, and this requirement was guaranteed by judicial deposit made in the attached procedure, no. 064673-08.2015.4.02.5101. On July 6, 2015 Furnas made a judicial deposit in the total amount required at the time, summing R$ 117,309.

b) Lawsuits filed against the Company and its subsidiaries that are contingent liabilities and therefore no provision have been recognized.

F-183

For each of the lawsuits described below, the managements of the Company, based on the opinion of their legal advisors, considers there is no present obligation for each of these cases and therefore no provisions have been recognized. Management of the Company believes the aggregate amounts of possible loss for these contingent liabilities are as follows:

	12/31/2015		12/31/2014
Labor		1,228,770		1,212,589
Tax		6,253,906		7,802,015
Civil		23,715,573		14,650,667
		31,198,249		23,665,271

b.1) Civil

Parent Company

i. The value of possible causes against the controller is substantially formed by those related to the Compulsory Loan, which claims are not contained in the court decision of August 2009. Note 25 contains a description of the nature of the Compulsory Loan. In December, 2015, the value of possible causes related to the Compulsory Loan was R$ 3,306,781 (December 31, 2014 – R$ 3,207,639).

ii. With regards to the lawsuits for which the risk assessment is possible, we point out the administrative lawsuit filed by the National Electrical Energy Agency (ANEEL) by means of Dispatch no. 63, of January 13, 2014, which ordered Eletrobras to reimburse to the RGR account the historical sums of R$ 1,924,188 and R$ 113,577, mainly from amortizations of the balance owed on financing not refunded to the RGR and the appropriation of financial fees from said fund in the period of 1998 to 2011.

The above-mentioned dispatch also orders the amounts in question to be corrected at the rate of the Banco do Brasil extra-market rate from the date in which they should have been refunded to the RGR until they are effectively returned to that fund. Eletrobras, in disagreement with this contradictory position by ANEEL, filed an administrative appeal on January 24, 2014, alleging the expiration of claims for reimbursement of those sums, the non-existence of an unlawful act by itself, and objective good faith in the management of the resources. On December 31, 2015, the value of the cause was R$ 8,031,500.

iii. With regards to lawsuits for which the risk assessment is possible, we point out the lawsuits from the Independent Energy Producers (PIEs). These lawsuits are filed against the subsidiary Amazonas Energia, and Eletrobras was included as co-defendant, since it is guarantor and main debtor of Amazonas in many energy supply contracts, and result in the sum of R$ 664,931 (December 31, 2014 – R$ 773,900)

F-184

The lawsuits that were dismissed or in which a sentence was not yet handed down in the first instance are classified as a possible risk of contingent liabilities.

Those lawsuits derive from payments, fines and fees or supposed delays and default by Amazonas in the fulfillment of obligations from those contracts.

iv. For information relating to securities class actions, please see note 4.XI.c.

v. On December 19, 2013, ANEEL published Resolution No. 1,674, establishing the fee to transfer power from Itaipu for 2014 in the amount equivalent to US$26.05 a month, not taking into account the negative balance of the Itaipu energy trading account in the amount of R$ 881,785, as informed by Eletrobras.

Understanding that the agency decision is mistaken, Eletrobras has filed a claim for reconsideration on January 2, 2014, claiming that the resolution violates the terms in Decree No. 4,550/2002 in different aspects, therefore, being absolutely illegal, infringing the principles of hierarchy of laws and the prohibition against illicit enrichment.

Eletrobras’ claim was granted, recognizing that the amounts corresponding to the default of payments made by distribution companies to Eletrobras should be taken into account in the balance of the Itaipu energy trading account, determining that expenses incurred with the default and other debts held by shareholders could be offset, in an updated manner, upon defining the power transfer fee for 2015. On December 31, 2015, the value of the cause is R$ 1,109,973.

vi. This is an ordinary claim filed by Energimp aiming to obtain a judicial statement on the right to receive the full amount of energy generated, according to fees adopted under Proinfa, related to a specific period where it was not included in the program, due to the termination administrative procedure that aimed to determine irregularities in the qualification process.

The plaintiff obtained a preliminary decision determining that Eletrobras should transfer the due and payable payments and, later, the low court decision judged the claim as applicable.

Eletrobras has complied with the preliminary decision, transferring the fees from the Proinfa account, since the issuance of the preliminary order.

Notwithstanding compliance with the preliminary order, Eletrobras has filed an appeal claiming to reform the decision, and this appeal is pending judgment.

It is important to clarify that this claim refers to funds from the Proinfa account, which is managed by Eletrobras, but held by the Federal Government, not being related to ordinary funds of Eletrobras. On December 31, 2015, the value of the cause is R$ 316,353 (December 31, 2014 – R$ 263,004).

Chesf

The ordinary lawsuit filed by AES Sul Distribuidora Gaúcha de Energia, seeking the accounting and payment by ANEEL of market transactions related to the positive exposure (profit) obtained by not opting for the relief (insurance) in December of 2000. An interlocutory decision issued in the interlocutory appeal lodged by AES Sul against ANEEL resulted in a payment of approximately R$ 110,000.

F-185

Class action lawsuit filed by the Federal Public Prosecutor in the Judiciary Paulo Afonso – BA mid-lower region, which, in short, aims to obtain a court order declaring the non-existence of the Agreement Addendum of 1986, signed in 1991, between Chesf and representatives of the Union Hub of Rural Workers of the São Francisco mid-lower region. On March 26, 2014, the Appeal filed by AES Sul Distribuidora Gaúcha de Energia was judged and granted by the 1st Region TRF. Chesf filed a bill of review against the decision that granted the Appeal, and it was rejected. On December 31, 2015, the decision that rejected the bill of review was pending publication.

ii. Indemnity claim filed by Hidroservice, process No. 0009364-44.2003.4.05.8300 before the 2nd Federal Court - PE, aiming to annul the securitization agreement electric sector with indemnity for impairment in the negotiation of securities received, bank interest. The value attributed to the cause was R$ 250,000 (historical), estimated at R$ 598,500. Appeals were not granted, maintaining the decision that judged the claim to be inappropriate. Request for Clarification judged on November 26, 2013 to correct the material error identified by Chesf and reject the appeals of the parties. Filing of Special Appeal and Extraordinary Appeal by Hidroservice. Eletrobras and the Federal Government have filed Special Appeal claiming increase of the attorneys’ fees. The Extraordinary Appeal filed by Hidroservice and the Special Appeals filed by Eletrobras and the Federal Government have been rejected and the Special Appeal filed by Hidroservice was remitted to the STJ, where judgment is pending. Hidroservice, Eletrobras and the Federal Government have filed bills of review in order to have their appeals admitted.

iii. Process No. 2014.01.1.193316-6, before the 23rd Civil Court of the Judicial Section of Brasília – DF. This is an ordinary claim filed by Energia Potiguar Geradora Eólica S.A., Torres De Pedra Geradora Eólica S.A., Ponta do Vento Leste Geradora Eólica S.A., Torres de São Miguel Geradora Eólica S.A., Morro dos Ventos Geradora Eólica S.A., Canto da Ilha Geradora Eólica S.A., Campina Potiguar Geradora Eólica S.A., Esquina dos Ventos Geradora Eólica S.A., Ilha dos Ventos Geradora Eólica S.A., Pontal do Nordeste Geradora Eólica S.A., and Ventos Potiguares Comercializadora de Energia S.A., claiming for indemnity for material damages (consequential damages and loss of profit), in the amount of R$ 243,067, and that arise out of alleged delay in the go-live of LT Extremoz II – João Câmara II and SE João Câmara II. On December 31, 2015, the process was under the recognition phase, with the filing of a response.

iv. Process No. 33328-13.2015.4.01.3400 – 15th Federal Court of the Judicial Section of the Federal District. This is a public civil action filed by ANEEL aimed to collect from Chesf alleged losses that end users of electricity incurred with delays in works related to the so-called Shared Generation Facilities—ICGs. This loss sums R$ 1,470,885. Chesf received the notification on October 23, 2015, and filed its response on December 4, 2015. At this time, it is not possible to estimate the end of this cause, because this is the first claim in the country to discuss this issue (there is no history in Brazil of the filing of collective claims with a similar object).

Eletrosul

Compensation lawsuit brought by Mineradora Tibagiana Ltda., and which Consórcio Energético Cruzeiro do Sul is a party to. Eletrosul has a 49% stake in R$ 386,396, so R$ 189,334.

Furnas

i. Process no. 0018333-44.2005.4.01.3400, civil nature, ANEEL – National Regulatory Agency of Electricity, in the amount of R$ 103,000 (December 31, 2014 - R$ 112,270), invalidate the ANEEL act that forces Furnas to sign CUST with Empresa Produtora de Energia Cuiabá – the provisioned value refers to the value that Furnas did not pay

F-186

as fees because it has a favorable preliminary decision that suspends execution of CUST – the risk is possible considering that in the lower court the claim was judged to be inapplicable, but furnas obtained a preliminary decision by the panel that will judge the appeal to suspend the execution of the contract until final judgment of the claim.

ii. Inclusion of process No. 0230268-26.2015.8.19.0001, civil nature, in the amount of R$ 123,476, relates to the statement of non-existence of fine and collection for material damages by Consórcio Fornecedor Batalha (CONBAT). The claim aims to suspend, primarily, and annul, by the end of the claim, the improper fine imposed by the Defendant Furnas to Plaintiff CONBAT, avoiding inclusion of the consortium in CADIN and reestablishing the financial and economic balance of the administrative contract, claiming delay by the Defendant Furnas in compliance with its obligations. The amount included in the report refers to the provision value and not the cause. The possible risk was classified considering that the purpose of the claim needs to go through the discovery phase, and after this phase, the risk of disbursement is to be evaluated again.

iii. Updating process No. 0027531-15.2007.8.19.0001, civil nature, by Inepar S.A Indústria e Construções, related to material damage, variation of R$ 94,137, with current value at R$ 138,105 (R$ 43,968 on December 31, 2014).

b.2) Tax-related

Parent Company

It is a Special Appeal of Disagreement, filed by the National Finance Attorney, based on Article 7, II, of the Internal Regulations of the Superior Chamber of Tax Resources, against the rightful Ruling No. 202-19,201, unanimous, of the Second Chamber of the First Taxpayer Council.

In the case, a Notice of Infraction was served on Eletrobras, with the requirement to pay COFINS for taxable events which occurred in the period of February 1999 to November 2002, specifically regarding financial income earned from financing, loan and financial assignment contracts, and exchange fluctuations, derived from contracts between Eletrobras and Itaipu Binacional.

Eletrobras defended itself from the challenge, alleging that it excluded the revenue in question from the COFINS taxable based supported by Clause XII, subsection “b” of the Brazil-Paraguay treaty, which was the object of Legislative Decree No. 23, of May 30, 1973.

Despite the challenge submitted, the tax requirement made by the Office of the Brazilian Federal Revenue Service in Brasilia was maintained, where Eletrobras filed a voluntary appeal, which was granted by the 2^nd Chamber of the Taxpayer Council.

F-187

The Union (National Finance), filed a special appeal of disagreement, requesting annulment of the ruling, and that appeal is pending trial. In this manner, the last decision of the Taxpayer Council was favorable to Eletrobras, and we consider the decision to be fully consistent with Federal Supreme Court case law. The case value as of December 31, 2015: R$ 448,841 (December 31, 2014 - R$ 403,397).

Furnas

i. Process no. 16682.720.517/2011-98 in the administrative phase, regarding the notice of assessment from the Brazilian Federal Revenue Service (RFB) due to a fiscal procedure to verify the determination of corporate income tax (IRPJ) and CSLL for the calendar year of 2007, particularly with regards to amounts considered for: reduction of net income; depreciation expenses; and other operating expenses. Value on December 31, 2015: R$ 1,229,555 (December 31, 2014 - R$ 1,070,522).

ii. Process no. 16682.720.516/2011-43 in the administrative phase, regarding the notice of assessment from the Brazilian Federal Revenue Service (RFB) due to a fiscal procedure to verify a possible insufficiency in the collection or declaration of contributions to the PIS/Pasep and Cofins in the period of Oct/2006 to Dec/2009. Value as of December 31, 2015: R$ 1,160,978 (December 31, 2014 - R$ 1,010,814).

iii. Process no. 16682.720.878/2013-04 in the administrative phase, regarding the notice of assessment from the Brazilian Federal Revenue Service (RFB) due to a fiscal procedure to verify the use of an expense in 2000 (due to assuming a debt with the Real Grandeza Foundation) as a fiscal loss recorded in 2009, and consequently offset in the calendar years of 2009, 2010 and 2011. The tax authority states that the record was made incorrectly, since the expense should have been accounted for in its period of competence, in 2000. As such, it disallowed the expenses deducted in the calendar year, 2011. Value as of December 31, 2015: R$ 744,430 (December 31, 2014 - R$ 634,585).

iv. Process no. 16682.720.874/2013-18, a challenge filed against the notice of assessment from the Brazilian Federal Revenue Service (RFB) due to Furnas having treated the revenue from the use by Itaipu of the electrical network as exempt income. Default entry of difference in amounts owed for Pasep/Cofins and those declared by means in the DCTF (declaration of federal tax credits and debits). Value: R$ 107,303 (December 31, 2014 - R$ 182,114 ).

v. Inclusion of process No. 0085231-98.2015.4.02.5101, tax nature, in the amount of R$ 651,430, due to Tax Execution filed by the Federal Government to require tax credit arising out of administrative process No. 16682.720331/2012-10, that requires from Furnas differences found in IRPJ and CSLL due to compensations with no use of PER/DCOMP.

vi. Process No. 16682.722946/2015-23, tax nature, in the amount of R$ 558,631, by the Office of Federal Revenue of Brazil, collection of IRPJ and CSLL + interest and fine because: Furnas recorded, wrongly, in 2009, as fiscal loss, an expense incurred in 2000 because of a debt assumption contract with Fundação Real Grandeza, in order to improperly reduce the actual profit from the calculation base of CSLL in 2009, 2010, and 2011 and, consequently, tax paid; Furnas had improperly excluded, from the IRPJ base a fine collected due to the lack of recognition of monthly estimates of IRPJ and CSLL due to compensations and that were disregarded by the fiscal, and CSLL amounts as “reversion of balance of non-deductible provisions” and “other exclusions,” amounts related to payments made as interest over recognition of debt between Furnas and Real Grandeza. 3) Furnas has proceeded with the compensation of credits while calculating IRPJ and CSLL without per/dcomp, and the fiscal considered these compensation as non-existing, asking, additional to the amount that was not paid, for a fine for the non-payment of monthly payments.

F-188

vii. Process No. 16682.721.073/2014-51, tax nature, in the amount of R$ 245,543, by the Office of Federal Revenue of Brazil, collection of single fine related to CSLL because of compensation made by Furnas without per/dcomp – act of infraction – collection of CSLL, interest and proportional fine due to the portion determined by the fiscal because of the use of credits by Furnas for fiscal loss calculated in 2007 – collection of single fine related to IRPJ because of compensation made by Furnas without per/dcomp – collection of IRPJ, interest and proportional fine due to the portion determined by the fiscal because of the use of credits by Furnas for fiscal loss calculated in 2007.

c) Processes where the risk of disbursement is remote, not provisioned

Chesf

Collection lawsuit underway by the contractor Construtora Mendes Júnior S.A., hired to build the Itaparica hydroelectric plant, due to alleged financial losses resulting from a delay in the payment of invoices by the Company.

In this collection lawsuit, contractor Construtora Mendes Júnior S.A. obtained a sentence from the 4^th Civil Court, which was later annulled, which sentenced Chesf to pay a sum which, including attorney’s fees and monetary correction until August of 1996, calculated by the criteria determined by the court, would be approximately R$ 7,000,000, a sum which has not been updated since. The Federal Public Prosecutor submitted a statement requesting that the entire process be dismissed, and in the merits, requested that it be inadmissible. The contractor Construtora Mendes Júnior S.A. filed appeals to the Supreme Court (ARESP), and on December 31, 2012, in that instance, the Federal Public Prosecutor issued an opinion finding that the appeals should be rejected. The Federal Prosecution Office submitted an opinion for the rejection of the appeal, judged to be inapplicable on February 19, 2014. Mendes Junior has filed a Regulatory Appeal, converted into REsp and presented to be judged on December 4, 2014, with oral statements presented by the parties. Because Judge Benedito Gonçalves asked to see the files, the session was suspended, and resumed on December 18, 2014, when the First Panel, unanimously, decided upon rejecting the Special Appeal filed by Mendes Júnior. The decision was published on March 19, 2015. Mendes Júnior filed a request for clarification, and Chesf was granted the right to see the files. On December 31, 2015, the request of clarification was pending judgment by the STJ.

F-189

NOTE 32 – ASSET DECOMMISSION OBLIGATION

The Company recognizes decommissioning obligation in thermonuclear power plants, which consist of a program of activities required by the National Nuclear Energy Commission (CNEN), which allows dismantling these nuclear facilities safely and with a minimal impact on the environment, at the end of their operating cycle.

Given the specific characteristics of operating and maintaining thermonuclear power plants, whenever there are changes to the estimated cost of demobilization, due to new studies and new technological advancements, the decommissioning charges should be changed so as to adjust the balance of the obligation to the new reality.

The balance of the obligation recognized at current value, as of December 31, 2015, is R$ 1,201,186 (December 31, 2014 – R$ 1,314,480).

Balance of Liabilities, at present value, on 12/31/2012	988,490
Adjustment to present value / Dexchange variation in the period	147,852
Balance of Liabilities, at present value, on 12/31/2013	1,136,342
Adjustment to present value / Dexchange variation in the period	178,138
Balance of Liabilities, at present value, on 12/31/2014	1,314,480
Adjustment to present value / Dexchange variation in the period	(113,294	)
Balance of Liabilities, at present value, on 12/31/2015	1,201,186

NOTE 33 – ADVANCE FOR FUTURE CAPITAL INCREASE

The resources originated from the National Treasury, and are destined for the projects below:

	12/31/2015		12/31/2014
Acquisition of shares CEEE / CGTEE		196,544		173,521
Transmission line Banabuí - Fortaleza		3,318		2,929
UHE de Xingó		9,322		8,230
Transmission line in the State of Bahia		1,459		1,288
Fundo Federal de Eletrificação - Law 5,073/66		8,650		7,638
		219,294		193,606

F-190

NOTE 34 – ONEROUS CONTRACTS

	Balance on 12/31/2014		PROVISIONS		REVERSALS			Balance on 12/31/2015
Transmission
Contract 062/2001		608,488		120,990		—			729,478
LT Recife II - Suape II		7,657		43,367		—			51,024
LT Camaçari IV - Sapeaçu		2,917		96,163		—			99,080
Others		13,028		6,108		(2,669	)		16,467
		632,090		266,628		(2,669	)		896,049
Generation
Camaçari		91,122		—		(10,681	)		80,441
Funil		132,219		—		(48,431	)		83,788
Coaracy Nunes		30,361		197,730		—			228,091
Furnas		168,701		—		(168,701	)		—
Marimbondo		25,989		53,935		—			79,924
Others		51,406		78,666		—			130,072
		499,798		330,331		(227,813	)		602,316
		1,131,888		596,959		(230,482	)		1,498,365
Total Current Liabilities (*)		1,687		7,386		—			9,073
Total Non- Current Liabilities		1,130,201		589,573		(230,482	)		1,489,292
TOTAL		1,131,888		596,959		(230,482	)		1,498,365

(*) Amount recorded in item Other current liabilities

F-191

	Balance on 12/31/2013		PROVISIONS		REVERSALS			Balance on 12/31/2014
Transmission
Contract 062/2001		875,272		647,484		(914,268	)		608,488
Others		—		23,602		—			23,602
		875,272		671,086		(914,268	)		632,090
Generation
Itaparica		863,146		—		(863,146	)		—
Jirau		711,881		—		(711,881	)		—
Camaçari		267,117		—		(175,995	)		91,122
Funil		95,903		131,385		(95,068	)		132,220
Mauá- Klabin		19,853		—		(19,853	)		—
Coaracy Nunes		88,545		—		(58,184	)		30,361
Others		30,425		260,138		(44,468	)		246,095
		2,076,870		391,523		(1,968,595	)		499,798
Distribution
Intangible		295,259		—		(295,259	)		—
		295,259		—		(295,259	)		—
		3,247,401		1,062,609		(3,178,122	)		1,131,888
Total Current Liabilities (*)		3,066		221		(1,600	)		1,687
Total Non- Current Liabilities		3,244,335		1,062,388		(3,176,522	)		1,130,201
TOTAL		3,247,401		1,062,609		(3,178,122	)		1,131,888

	12/31/2015					12/31/2014
	BALANCE		DISCOUNT RATE			BALANCE		DISCOUNT RATE
Transmission		896,049		7.00	%		632,090		6.57	%
Generation		602,316		7.50	%		499,798		6.69	%
TOTAL		1,498,365					1,131,888

Of the provision for onerous contracts maintained on December 31, 2015, R$ 1,270,274 (R$ 1,101,527 on December 31, 2014) arise from concession contracts extended under Law No. 12,783/13, due to the tariff determined presenting an imbalance in regards to current operating and maintenance costs. Given this, the present obligation according to each contract was recognized and measured as a provision, and may be reversed due to adjustments in the cost reduction and/or tariff revision program.

Regarding transmission contracts, premises adopted to calculate the onerous contract included the transmission revenue from concession contracts authorized by Resolution No. 1,918, dated June 23, 2015, a discount rate of 7.00% and the effectiveness of the respective contracts.

F-192

The reversion in the provision due to onerous contract of UHE Furnas and Funil is due to two reasons: RAP increase, due to update for the 2015-2016 cycle, according to ANEEL Approving Resolution No. 1,918, dated June 23, 2015 (a 17.59% increase compared to the 2014 – 2015 cycle); and the reduction of costs in the item Services, that is affected when contracted employees leave, in 2018.

The variation seen in the item UHE Camaçari was due to the recording of reversion of onerous contract arising out of premises for calculation, that included generation revenue from plants, defined under the terms in Resolution No. 1,924, dated July 28, 2015, added with PIS/PASEP, COFINS and Financial Compensation for the Use of Hydric Resources– CFURH.

In 2015, the subsidiary Eletronorte has found that the contract of UHE Coaracy Nunes presented significant evidences of onerous aspects.

NOTE 35 – LONG-TERM OPERATING COMMITMENTS

The Company’s long-term operating commitments, mainly related to purchase agreements for electrical energy and fuel, are:

35.1. Purchase of energy

Companies	2017		2018		2019		2020		2021		After 2021
Amazonas D		635,888		662,606		716,042		750,154		785,509		3,093,977
CGTEE		210,360		210,360		210,360		172,884		172,884		345,768
Chesf		312,502		299,559		314,542		329,594		4,321,655		—
Distribuidora Alagoas		719,541		815,969		882,501		857,696		890,258		—
Distribuidora Piauí		803,686		854,142		836,801		770,165		773,796		281,575,369
Distribuidora Rondônia		2,156,151		—		—		—		—		—
Eletrosul		275,685		254,399		264,407		254,484		264,407		3,225,297
Furnas		551,187		542,988		552,359		544,462		541,816		3,126,539
Total		5,665,000		3,640,023		3,777,012		3,679,439		7,750,325		291,366,950

35.2. Fuel suppliers

Companies	2017		2018		2019		2020		2021		After 2021
Amazonas D		2,703,545		2,703,545		2,703,545		2,703,545		2,703,545		26,805,832
CGTEE		136,189		136,189		136,189		136,189		136,189		408,567
Eletronuclear		77,164		104,241		193,483		—		—		—
Total		2,916,898		2,943,975		3,033,217		2,839,734		2,839,734		27,214,399

The main activity in the purchase of fuel is in the subsidiary Eletronuclear, which has contracts signed with Indústrias Nucleares Brasileiras - INB for the purchase of Nuclear Fuel for the production of electrical energy, to recharge the thermonuclear power plants (UTN) Angra I and Angra II, as well as to deploy UTN Angra III and recharge it in the future.

The subsidiary Amazonas has a long-term commitment for the purchase of natural gas to generate thermoelectrical energy with Companhia de Gás Natural do Amazonas – CIGÁS. The final term of the contract is 11/30/2030.

F-193

35.3. Purchase of Energy from Independent Producers - PROINFA

The Company supports the development of projects to diversify the Brazilian energy grid, through the alternative electrical energy sources incentive program implemented by Law 10.438, of April 2002, seeking regional solutions for the use of renewable energy sources and providing incentives for the growth of national industry.

PROINFA establishes the operation of 144 power plants, totaling 3,299.40 MW of installed capacity. Power plants in the program will account for the generation of approximately 12,000GWh*/year, equivalent to 3.2% of the total annual consumption in the country. The 3,299.40 MW contracted are divided into 1,191.24 MW* from 63 Small Hydroelectric Power Plants (PCHs), 1,422,92 MW* from 54 eolic power plants, and 685.24 MW* from 27 biomass based power plants. In 2006, the Company agreed to purchase electrical energy produced by PROINFA for a period of 20 years, and to transfer this electrical energy to transmission and distribution concessionaires, which in turn will transfer the electrical energy to free and self-producing consumers, excluding low-income consumers, in the proportion of their consumption. Each transmission and distribution concessionaire pays the Company the annual cost of electrical energy provided to captive consumers, free consumers and self-producing consumers connected to their facilities, in twelve monthly payments, each of them made in advance in the month in which the energy is to be consumed.

* Information not audited by independent auditors

35.4. Sale of energy

Companies	2017		2018		2019		2020		2021		After 2021
CGTEE		557,520		557,520		557,520		557,520		557,520		1,672,560
Chesf		988,720		903,070		947,460		993,090		—		18,358,900
Distribuidora Rondônia		1,114,099		1,357,047		1,376,269		—		—		—
Eletrosul		594,084		587,877		482,746		448,757		447,736		7,097,965
Eletronuclear		2,246,260		2,246,260		2,246,260		2,246,260		2,246,260		—
Furnas		3,725,242		3,039,313		3,039,313		1,680,214		2,039,093		34,655,285
Total		9,225,925		8,691,087		8,649,568		5,925,841		5,290,609		61,784,710

F-194

35.5. Environmental Commitments

Companies	2017		2018		2019		2020		2021		After 2021
Eletronuclear		77,164		104,241		193,483		—		—		—
Eletronorte		20,000		20,000		20,000		20,000		20,000		36,000
Total		97,164		124,241		213,483		20,000		20,000		36,000

Angra III

Commitment agreements assumed with the cities of Angra dos Reis, Rio Claro and Paraty, in which Eletronuclear committed to sign specific agreements of an environmental nature linked to the UTN Angra III, to conduct programs and projects in accordance with the conditions established by IBAMA.

Tucurí

Due to legal requirements related to the expansion projects for the Hydroelectric Power Plant Tucuruí and raising its reservoir levels from 72 to 74 meters, there was a need to license this venture with the State Environmental Secretariat (Sema) for the state of Pará, and that agency set a condition for approval of the Installation Permit (LI) that Eletronorte implement various environmental mitigation and compensation programs.

Environmental Permits

The socio-environmental actions implemented for environmental risk contingency provisions in the business units of ELETROSUL ensure the commitment to obtain Environmental Permits, as well as authorization to cut vegetation, with the support of the Public Prosecutor, who will oversee the development of these investments.

35.6. Purchase of fixed and intangible assets

Companies	2017		2018		2019		2020
Chesf		27,223		—		—		—
Eletronuclear		3,018,398		3,654,154		1,193,289		18,848
Eletrosul		2,182,121		1,215,595		220,170		268,414
Total		5,227,742		4,869,749		1,413,459		287,262

Contracts signed with various suppliers to purchase replacement equipment in the permanent assets mainly of power plants Angra I, Angra II, and Angra III, necessary to the operational maintenance of those assets.

F-195

35.7. Acquisition of input materials

Companies	2017		2018		2019		2020
CGTEE		29,352		29,352		29,352		29,352
Total		29,352		29,352		29,352		29,352

The subsidiary GTEE acquires lime to control waste emissions in its plants.

35.8 Commitments – Jointly controlled ventures

The value of commitments to jointly controlled ventures are presented below at the proportion of participation by the companies.

35.8.1. – Purchase of fixed assets

The Company has procurement contracts for fixed asset goods with suppliers, for an interest in Special Purpose Companies (SPE), as presented below:

Companies	2017		2018		2019		2020		2021
Norte Energia		357,276		92,936		6,692		2,390		10,243
Total		357,276		92,936		6,692		2,390		10,243

35.8.2. – Use of public goods

Companies	2017		2018		2019		2020		2021		After 2021
Norte Energia		3,871		3,568		3,288		3,031		3,031		32,207
Energética Águas da Pedra		370		370		370		370		370		1,424
Total		4,241		3,938		3,658		3,401		3,401		33,631

F-196

35.8.3. – Capital contribution

The Company has future commitments signed regarding an interest in Special Purpose Companies (SPEs) in the form of advances for future capital increases, as presented below:

Companies	2017		2018
Belo Monte Transmissora de Energia SPE S.A.		105,085		60,205
Complexo Fortim		445,000		—
Complexo Baleia		174,554		—
Complexo Famosa III		154,420		—
Complexo Serra Do Mel		62,408		—
Complexo Eólico Itaguaçú Da Bahia		37,766		—
Complexo Acaraú		50,966		—
Empresa de Energia São Manoels.A.		14,000		45,000
Complexo Eólico Pindaí I		45,100		—
Complexo Eólico Pindaí II		24,400		—
Complexo Eólico Pindaí III		5,550		—
ESBR Participações S.A.		638,600		—
Norte Energia S.A.		154,988		23,000
Complexo Eólico Sento Sé III		9,645		—
Complexo Eólico Serra das Vacas		1,176		—
Extremoz Transmissora do Nordeste - ETN S.A.		15,000		—
Companhia Energética SINOP S.A.		12,250		16,188
Total		1,950,907		144,393

35.8.4. – Cost of construction

Companies	2017		2018		2019		2020
Eletronorte		148,843		—		—		—
Eletrosul		1,931,991		1,123,693		120,542		181,891
Total		2,080,834		1,123,693		120,542		181,891

F-197

NOTE 36 – SHAREHOLDERS’ EQUITY

36.1. – Capital Stock

The Capital Stock as of December 31, 2015 is R$ 31,305,331 (December 31, 2014 – R$ 31,305,331) and its shares have no face value. Preferred stocks have no voting rights and are not convertible into common stocks, however, they have priority in the reimbursement of capital and distribution of dividends at the annual rate of 8% for class “A” shares (subscribed to by June 24 of 1969) and 6% for class “B” shares (subscribed to by June 24 of 1969), calculated on the capital corresponding to each class of shares.

The capital stock is represented by 1,352,634,100 book-entry shares, and is distributed, by main shareholders and types of shares, on December 31, 2015, as follows:

12/31/2015 and 12/31/2014
	COMMON				PREFERRED								TOTAL CAPITAL
SHAREHOLDER	NUMBER		%		Series A		%		Series B		%		NUMBER		%
Federal Government		554,395,652		51.00		—		—		1,544		0.00		554,397,196		40.99
BNDESPAR		141,757,951		13.04		—		—		18,691,102		7.04		160,449,053		11.86
BNDES		74,545,264		6.86		—		—		18,262,671		6.88		92,807,935		6.86
FND		45,621,589		4.20		—		—		—		—		45,621,589		3.37
FGHAB		1,000,000		0.09		—		—		—		—		1,000,000		0.07
CEF		8,701,564		0.80		—		—		—		—		8,701,564		0.64
FGI		—		—		—		—		8,750,000		3.30		8,750,000		0.65
Others		261,028,277		24.01		146,920		100.00		219,731,566		82.78		480,906,763		35.55
		1,087,050,297		100.00		146,920		100.00		265,436,883		100.00		1,352,634,100		100.00

Of the total of 480,906,549 (after deducting the 214 common stocks for the Directors and Members of the Board of Directors of Eletrobras) shares in the possession of minority shareholders, 250,988,746, or 52.2%, are owned by non-resident investors, 134,601,197 of which are common, 28 are class “A” preferred stocks, and 116,387,521 are class “B” preferred stocks.

Of the total shareholders that reside abroad, 81,371,686 common shares and 21,262,873 class “B” preferred shares are custodied, and ballast the American Depositary Receipts (ADRs) program.

F-198

36.2. – Capital Reserves

	12/31/2015		12/31/2014
Compensation for insuficient compensation - CRC		18,961,102		18,961,102
Premium on the issuance of shares		3,384,310		3,384,310
Special - Decree- Law 54,936/1964		387,418		387,419
Monetary adjustment of balance sheet at the opening 1978		309,655		309,655
Monetary Adjustment Compulsory Loan - 1987		2,708,432		2,708,432
Donations and subventions - FINOR, FINAM and others		297,424		297,424
		26,048,342		26,048,342

36.3. – Profit Reserves

The Company’s bylaws establish the allocation of 50% of net profit in a year to the creation of an Investment Reserve, and 1% for a Studies and Projects Reserve, whose creation is limited to 75% and 2% of company capital.

	12/31/2015		12/31/2014
Legal (Article 193 - Law 6,404/1976)		—		2,233,017
Statutory (Article 194 – Law 6,404/1976)		—		26,022
		—		2,259,039

At the 55th General Meeting held on April 30, 2015, the payment of the total value of the balance of the statutory profit reserve dated December 31, 2014 was approved, as Interest on Equity, to shareholders holding “A” and “B” Class preferred shares.

On December 31, 2015, part of the balance of accrued losses was absorbed by the remaining balance of the profit reserve in the amount of R$ 2,233,017.

F-199

NOTE 37 – LOSS PER SHARE

(a) Basic and diluted

Basic earnings per common share is calculated by dividing the earnings attributable to Company’s Common shareholders by the weighted average amount of common shares outstanding during the year, wich excludes common shares bought by the Company and carried as treasury shares. The 12,018,738 dilutive potential common shares (Compulsory Loan – Note 25) were not included in the calculation of the weighted average number of common shares due to the anti-dilutive effect.

Basic earnings (loss) per preferred share is calculated by dividing the earnings (loss) attributable to Company’s preferred shareholders by the weighted average amount of preferred shares outstanding during the year. The net losses attributable to the Company’s shareholders are allocated to each class of shares on a pro-rata basis in accordance with the Company’s by laws.

12/31/2015
Numerator	Common			Preferred A			Preferred B			Total
Loss attributable to share class		(9,165,746	)		(1,239	)		(2,238,100	)		(11,405,085	)
Denominator	Common			Preferred A			Preferred B			Total
Weighted average number of shares		1,087,050			147			265,437			1,352,634
% shares compared to total		80.37	%		0.01	%		19.62	%		100.00	%
Basic result per share (R$)		(8.43	)		(8.43	)		(8.43	)
12/31/2014
Numerator	Common			Preferred A			Preferred B			Total
Loss attributable to share class		(5,003,718	)		(676	)		(1,221,811	)		(6,226,206	)
Denominator	Common			Preferred A			Preferred B			Total
Weighted average number of shares		1,087,050			147			265,437			1,352,634
% shares compared to total		80.37	%		0.01	%		19.62	%		100.00	%
Basic result per share (R$)		(4.60	)		(4.60	)		(4.60	)
12/31/2013 (Revised)
Numerator	Common			Preferred A			Preferred B			Total
Loss attributable to each class of shares		(5,003,718	)		(676	)		(1,221,811	)		(6,186,948	)
Denominator	Common			Preferred A			Preferred B			Total
Weighted average amount of shares		1,087,050			147			265,437			1,352,634
% of shares in relation to total		80.37	%		0.01	%		19.62	%		100.00	%
Basic and diluted profit per share (R$)		(4.65	)		(4.65	)		(4.65	)

F-200

NOTE 38 – NET OPERATING REVENUE

	12/31/2015			12/31/2014			12/31/2013
OPERATIONAL INCOME
Generation
Supply of energy to distribution companies		12,310,243			12,175,362			8,066,674
Supply of energy to final consumers		3,571,809			3,317,103			3,774,404
Short term energy		1,811,552			3,817,976			2,395,732
Income from operation and maintenance renewed concessions		1,882,637			1,803,127			2,198,235
Income from plant constructio		148,403			240,040			736,854
Financial effect Itaipu		234,425			(97,740	)		67,961
		19,959,069			21,255,868			17,239,860
Transmission
Income from operation and maintenance renewed lines		2,504,239			1,207,090			2,037,399
Income from operation and maintenance		191,372			994,178			118,382
Income from construction of renewed lines		2,077,616			1,786,195			1,797,324
Financial Return on investment		838,087			714,409			552,106
		5,611,314			4,701,872			4,505,211
Distribution
Energy supply / provision		14,835,424			7,310,337			4,419,444
Income from construction		1,011,518			873,413			1,013,684
CA and other financial items		324,120			38,477			—
		16,171,062			8,222,227			5,433,128
Other income		1,484,431			1,339,294			1,008,200
		43,225,876			35,519,261			28,186,399
(-) Deductions from oeprational income
(-) ICMS		(3,877,677	)		(1,683,781	)		(1,231,306	)
(-) PASEP and COFINS		(4,108,891	)		(2,685,562	)		(2,238,363	)
(-) Sector fees		(2,313,660	)		(1,005,014	)		(870,490	)
(-) Other deductions (including ISS)		(336,810	)		(7,097	)		(10,596	)
		(10,637,038	)		(5,381,454	)		(4,350,755	)
Net operational income		32,588,838			30,137,807			23,835,644

Generation revenue are classified as: i) Supply of energy to distribution companies – consists of the sale of electricity in the regulated market to distribution companies; ii) Supply of energy to final consumers – consists of the sale of electricity to end-consumers, which also includes bilateral contracts and sales to large electricity consumers, and; iii) Short term electricity – consists of the sale of electricity on the spot market using the difference settlement price (preço de liquidação das diferenças, “PLD”). The PLD is the price for power which is used to settle contracts on the spot market. It is determined by ONS (Operador Nacional do Sistema,the national system operator) using algorithms which optimize the use of the power grid. The PLD takes into account the predominance of hidroeletric generated power in Brazil and seeks to strike a balance between the current and expected water usage.

The revenue from electricity supply of the distribution sector increased R$ 7,525,087 from December 31, 2014 to December 31, 2015 due to the acquisition of CELG-D in September 2014, being the reason why the Company recognized only the results of the last quarter of the above-mentioned company. During the fiscal year 2015, CELG-D presented revenue from the supply of electricity in the amount of R$ 7,146,242, while in the fiscal year ended on December 31, 2014, the revenue recognized by the Company was R$ 1,626,908.

F-201

NOTE 39 – RESULTS OF EQUITY METHOD INVESTMENTS

	12/31/2015		12/31/2014			12/31/2013
Investment in affiliates
Interest on equity		—		10,611			98,236
Equity Method		379,743		(1,518,268	)		(104,393	)
		379,743		(1,507,657	)		(6,157	)
Other investments
Interest on equity		2,010		20,008			14,282
Dividends		62,045		98,477			101,275
Compnesation for investment in partnerships		10,402		24,429			20,707
Capital return - ITAIPU		77,246		56,439			47,661
		151,703		199,353			183,925
		531,446		(1,308,304	)		177,768

NOTE 40 – PERSONNEL, MATERIAL AND SERVICES

	12/31/2015		12/31/2014		12/31/2013
Personnel		6,004,845		5,609,320		6,650,154
Material		318,410		310,276		295,442
Services		3,172,162		2,565,777		2,298,990
		9,495,417		8,485,373		9,244,586

NOTE 41 – ENERGY PURCHASED FOR RESALE

	12/31/2015		12/31/2014		12/31/2013
Energy purchased for resale
Supply		4,931,606		5,030,149		2,142,924
Trade at CCEE		2,998,109		2,864,480		555,752
Proinfa		2,818,660		2,502,382		2,783,694
Others		17,852		27,689		32,836
		10,766,227		10,424,700		5,515,206

F-202

NOTE 42 – OPERATING PROVISIONS (REVERSALS)

	12/31/2015			12/31/2014			12/31/2013
Guarantees		30,265			115,166			83,681
Contingencies ¹		2,942,245			7,797,129			1,399,321
ADA - Consumers and Resellers		642,924			83,921			(792,871	)
ADA - Financing and loans ²		15,755			(269,051	)		106,232
Onerous contracts		366,477			(1,800,401	)		(1,924,657	)
Provision/(Reversal) for investment losses (a)		489,752			(1,414,171	)		142,622
Impairment ³		5,979,596			377,551			—
Adjustment to market value		67,107			110,902			—
Reversal for financial asset loss		—			(791,868	)		1,338,903
Impairment BRR ³		(148,637	)		(360,648	)		408
Provision for losses in fixed assets		—			235,064			791,868
Provision for environmental compensations		—			104,904			1,122,970
Hydrological risk (b)		451,340			—			—
Others		749,943			474,723			989,728
		11,586,767			4,663,220			3,258,205

1 Information related to contingencies is described in Note 31.

2 Information related to PCLD on financing and loans is described in Note 9.

3 Information related to impairment is described in Note 20

(a) Loss on Investments

Eletrobras set the amounts recognized in its financial statements to reflect subsequent events that demonstrate conditions that existed at the end of the reporting period referred to the financial statements, this way was made the adjustment as described below.

In order to refund concessionaire companies of Electricity Public Service that use thermal generation and that act in the Isolated System, Law No. 10,833/2003, that amended Law No. 8,631/1993, set forth that the Fuel Consumption Account - CCC would bear this cost, entirely, in 2004 and partially during the period from 2005 to 2008.

By means of Normative Resolution No. 303/2008, ANEEL established the methodology and the procedures to calculate, demonstrate and validate the ICMS amount considered as cost arising out of the acquisition of fuels, as well as calculation, demonstration, supervision, and payment of the liabilities to be returned to CCC-ISOL by beneficiary agents who received ICMS refund in amount higher than the effective cost incurred with this tax.

By means of Order No. 4,722/2009 SFF/ANEEL, that deals with the end of the fiscal year 2009, ANEEL determined the accounting recognition of the amount of liabilities to be refunded to the Fuel Consumption Account CCC related to the period between January 2004 and December 2007.

The Management of the subsidiary Amazonas Energia, supported by legal consultants, required in courts the suspension of effects of this resolution issued by the regulatory entity.

Under the terms in the judicial award issued on September 29, 2009, the subsidiary Amazonas Distribuidora in the financial statements of December 2009 has reverted this obligation from its Liabilities, and the counterpart was an operating revenue. This obligation represents the adjusted amount of R$ 1,100,499 referring to the value refunded by CCC ISOL in the period between 2004 and 2008.

F-203

However, considering the phase of the judicial lawsuit at the time, despite admissibility of the corresponding merit, there were some uncertainties regarding the end of the claim, reason why, the controller, during the fiscal years, have recognized a provision to cover for eventual losses related to these alleged debts with the CCC pertaining to ICMS.

In view of the judicial decision that conceded the merit to Amazonas Distribuidora, ANEEL has filed a Bill of Review. On 11/17/2015 this Bill of Review was denied by the Federal Regional Court of the 1st Region. Afterwards, the appeal has lost its object, due to the decision that judged the claim to be appropriate, granting the injunction claimed by Amazonas Distribuidora and ratifying the preliminary order issued before.

Therefore, Amazonas Distribuidora has obtained decisions that ensure the right not to return the ICMS value, thus, the company is not obliged to record these amounts as liabilities.

Faced with the facts and the negative of the interlocutory appeal dismissed on November 17, 2015, despite being a 2015 event, Eletrobras reversed as a subsequent event the provision made in the 2014 financial statements in the amount of R$ 1,100,499, no income tax effects apply.

On December 31, 2015, the provision for investment loss was established in the amount of R$ 489,752, arising out of the impairment test applicable to equity held in the Companies CHC, ESBR Participações, Madeira Energia S.A, Teles Pires Participações and São Manoel (see Note 16).

(b) Hydrological Risk – GSF

The subsidiary Eletronorte adhered to the Adjustment of Hydrological Risk set forth in Provisional Measure No. 688/2015, dated August 18, 2015. The amount claimed by the subsidiary was R$ 451,340 and, upon adhering to the adjustment, the preliminary order lost the suspension effect for the payment of this amount, and the amount was provisioned by verifying invoices issued at the period.

NOTE 43 – BUSINESS COMBINATION

43.1. Acquisition of shareholding control over CELG - D

On September 26, 2014, in an Extraordinary General Meeting, Eletrobras approved the acquisition of a controlling interest in CELG - Distribuição S.A.- CELG - D.

The Company concluded the process of purchasing CELG-D by paying and transferring, on 01/27/2015, 76,761,267 common shares issued by CELG-D, corresponding to 50.93% of the Distributor’s capital, for the sum of R$ 59,454.

On December 28, 2015, at an Extraordinary Meeting, Eletrobras approved the sale of the shareholding control of CELG-D at a privatization auction to be promoted by BM&FBOVESPA, according to the minimum price and conditions set forth in Resolution No. 11/2015 by the National Privatization Council – CND. The Management is committed with a sale plan of the subsidiary, and expects to have the sale concluded by December 31, 2016.

F-204

This sale was not considered as discontinued operation, because the Company will continue to act in the distribution sector with six distribution companies of the Eletrobras Group. For more information, see note 48.27.

Main assets and liabilities held by subsidiary CELG-D classified as held for sale are presented below:

	12/31/2015
Cash and cash equivalent		82,182
Accounts receivables		1,112,469
Taxes and social contributions		170,440
Judicial deposits		136,761
Financial asset		199,497
Fixed assets		43,328
Intangible assets		1,908,127
Refundable assets - FUNAC		672,615
Other assets		298,366
Total assets subsidiary Celg D classified as held for sale		4,623,785
Suppliers		1,983,890
Loans and financing		1,304,503
Taxes and social contributions		360,553
Sector fees		428,332
Post-employment benefits		146,800
Provisions for contingencies		568,100
Other liabilities		782,831
Liabilities of subsidiary Celg D associated to assets classified as held for sale		5,575,009

F-205

NOTE 44 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

44.1 – Management of Capital Risk

The Company’s objectives in managing its capital are safeguarding its continuity so as to offer a return to shareholders and benefits to other interested parties, in addition to pursuing an optimal capital structure so as to reduce this cost. The purchase or sale of financial assets are recognized on the date of negotiation.

In order to maintain or adjust capital structure, the Company may revise its dividend payment policy, return capital to shareholders, or issue new shares or sell assets in order to reduce, for example, the level of debt.

The Company, consistent with other companies in the sector, monitors capital based on the financial leveraging index. This index is the net debt divided by total capital. The net debt, in turn, is total loans (including short- and long-term loans, as demonstrated in the consolidated balance sheet), subtracted from cash and cash equivalents, and securities. Total capital is determined by adding net equity, as demonstrated in the consolidated balance sheet, to net debt.

	12/31/2015			12/31/2014
Total loans and financing		46,398,260			39,539,125
(-) Cash and cash equivalent and securities		8,431,737			5,362,157
Net debt		37,966,523			34,176,968
(+) Total Shareholders’ Equity		41,580,593			53,653,349
Total Capital		79,547,116			87,830,317
Financial Leveraging Index		48	%		39	%

F-206

44.2 – Classification by category of financial instruments

The book balances of financial assets and liabilities represent a reasonable approximation of their fair value. The Company uses hierarchy to measure the fair value of its financial instruments:

	Measurement	12/31/2015		12/31/2014
FINANCIAL ASSSETS (CURRENT / NON-CURRENT)
Cash and cash equivalents			1,393,973		1,407,078
Loans and receivables			59,238,499		58,567,412
Clients	Amortized Cost		5,970,958		6,170,720
Loans and financing	Amortized Cost		17,587,620		14,684,564
Refund rights	Amortized Cost		10,503,382		9,803,062
Financial Asset - Generation and Transmission	Amortized Cost		25,176,539		24,170,771
Indemnities - Law No. 12.783/2013	Amortized Cost		—		3,738,295
Maintained by Expiration			193,669		223,142
Securities	Amortized Cost		193,669		223,142
Measured by fair value by result			6,890,406		3,991,848
Securities	Fair value		6,844,095		3,731,937
Derivatives	Fair value		46,311		259,911
Available for sale			5,382,366		9,606,383
Investments (equity)	Fair value		1,177,260		1,370,371
Financial Asset - Distribution	Fair value		4,205,106		8,236,012
FINANCIAL LIABILITIES (CURRENT / NON-CURRENT)
Measured by amortized cost			70,733,967		62,458,291
Suppliers	Amortized Cost		19,577,928		17,536,501
Loans and financing	Amortized Cost		46,398,260		39,539,125
Debentures	Amortized Cost		562,474		759,923
Refund Obligations	Amortized Cost		2,879,586		3,232,621
Lease	Amortized Cost		1,252,155		1,326,661
Concessions Payable UBP	Amortized Cost		63,564		63,460
Measured by fair value by result			80,269		72,203
Derivatives	Fair value		80,269		72,203
Measured by fair value by result			18,860		24,706
Derivatives - Hedge	Fair value		18,860		24,706

F-207

44.2.1 – Fair value estimate:

The financial assets and liabilities recorded at fair value were classified and disclosed according to the following levels:

	12/31/2015
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
FINANCIAL ASSETS (CURRENT / NON-CURRENT)
Available for sale		1,177,260		4,205,106		—		5,382,366
Investments (Equity Stake)		1,177,260		—		—		1,177,260
Financial Asset - Distribution Concessions		—		4,205,106		—		4,205,106
Measured at fair value by result		6,844,095		46,311		—		6,890,406
Securities		6,844,095		—		—		6,844,095
Derivatives		—		46,311		—		46,311
FINANCIAL LIABILITIES (CURRENT / NON-CURRENT)
Measured at fair value by result		—		99,129		—		99,129
Derivatives		—		99,129		—		99,129
	12/31/2014
	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
FINANCIAL ASSETS (CURRENT / NON-CURRENT)
Available for sale		1,370,371		8,236,012		—		9,606,383
Investments (Equity Stake)		1,370,371		—		—		1,370,371
Financial Asset - Distribution Concessions		—		8,236,012		—		8,236,012
Measured at fair value by result		3,731,937		259,911		—		3,991,848
Securities		3,731,937		—		—		3,731,937
Derivatives		—		259,911		—		259,911
FINANCIAL LIABILITIES (CURRENT / NON-CURRENT)
Measured at fair value by result		—		72,203		—		72,203
Derivatives		—		72,203		—		72,203

F-208

Level 1 – prices quoted (not adjusted) on active markets, liquid and visible for identical assets and liabilities accessible on the date of measurement;

Level 2 – prices quoted (adjusted or not) for similar assets and liabilities on active markets, other entries not observable in level 1, directly or indirectly, in terms of asset or liability, and

Level 3 – assets and liabilities not priced or where prices or valuation techniques are supported by a small or non-existent market, not observable or liquid. In this level, the estimated fair value becomes highly subjective.

The fair value of financial instruments traded in active markets (such as securities carried for trading and available for sale) is based on market prices quoted on the balance sheet date. A market is seen as active if quoted prices are promptly and regularly available from an exchange, distributor, broker, group of industries, pricing service, or regulatory agency, and the prices represent real market transactions which occur regularly on purely commercial bases.

The quoted market price used for financial assets carried by the Company and its subsidiaries is the current competitive price. These instruments are in Level 1. The instruments in Level 1 include mainly equity investments of the FTSE 100 classified as securities for trade or available for sale.

The fair value of financial instruments not traded on active markets (such as over the counter derivatives) is determined using valuation techniques. These valuation techniques maximize the use of information adopted by the market where it is available, and rely as little as possible on the entity’s specific estimates. If all relevant information required for the fair value of an instrument is adopted by the market, the instrument will be included in Level 2. If one or more relevant pieces of information is not based on data adopted by the market, the instrument will be included in level 3.

Specific valuation techniques used to assess financial instruments include:

• Quoted market prices or quotes from financial institutions or brokers for similar instruments.

• The fair value of interest rate swaps is calculated by the present value of estimated future cash flows based on yield curves adopted by the market

• The fair value of forward exchange rate contracts is determined based on future exchange rates on the balance sheet date, with the resulting value discounted from the present value.

Other techniques, such as discounted cash flow analysis, which are used to determine the fair value of remaining financial instruments, and counterparty credit risk in swap operations.

F-209

44.3 – Financial Risk Management:

In the exercise of its activities, the Company is affected by risk events that could compromise its strategic objectives. The main objective of risk management is to anticipate and minimize the adverse effects of such events on the Company’s business and economic and financial results.

The Company defined operating and financial policies and strategies to manage financial risks, approved by internal committees and by management, which aim to confer liquidity, safety and profitability to its assets, and maintain set debt levels and profile for financial and economic flows.

The main financial risks identified in the process of risk management are:

44.3.1 – Exchange rate risk

This risk arises from the possibility of the Company having its economic and financial statements affected by exchange rate fluctuations. The Company is exposed to financial risks that cause volatility in its results and in its cash flow. The Company has significant exposure between assets and liabilities indexed in foreign currency, especially to the United States dollar, arising mainly from financing contracts with Itaipu Binacional.

In this context, the Company’s financial hedging policy was approved. The objective of the current policy is to monitor and mitigate the exposure to market variables that could impact the Company and its’ subsidiaries’ assets and liabilities, thus reducing the effects of undesirable fluctuations in these variables on their financial statements.

With this, said policy aims to get the Company’s results to accurately reflect its real operating performance, and its projected cash flow to be less volatile.

Along with the policy, the creation of a Financial hedge committee was formed within the scope of the Financial Office, whose main function is to define the strategies and hedge instruments to be submitted to the Company’s Executive Management.

Taking into account the various forms of hedging the Company’s unhedged items, the approved policy lists a scale of priorities. First a structural solution, and only in residual cases, the use of operations with derivative financial instruments.

When operations with financial derivatives are performed, the Company’s hedge policy is followed, and they may not constitute financial leveraging or the concession of credit to third parties.

F-210

a) – Composition of balances in foreign currency and sensitivity analysis:

In the following charts, scenarios were considered for indices and rates, with their respective effects on the Company’s profit and loss. For the sensitivity analysis, the probable scenario used for 2015 and 2016 was forecasts and/or estimates based fundamentally on macroeconomic assumptions obtained from the Focus report, published by the Central Bank, and Economic Outlook 86, published by the OECD (Organisation for Economic Co-operation and Development).

Sensitivity analyses were conducted on financial instruments, assets and liabilities, which present exposure to the exchange rate and which could bring material losses to the Company, in four different scenarios, based on the above-mentioned probable scenario: two considering currency valuation, and another two considering a devaluation of those currencies.

F-211

The sensitivity analyses were created in accordance with CVM Guidance 475/2008, with the objective of measuring the impact of changes in market variables on each of the Company’s financial instruments. Therefore, these are projections based on assessments of macroeconomic scenarios, and do not mean that the transactions will have the values presented in the analysis period considered.

a1) Risk of exchange rate valuation:

		Balance on 12/31/2015				Effect on result - income (expense)
		Foreign				Scenario I -			Scenario II			Scenario III
		Currency		Reais		Probable 2015 ¹			(25%) ¹			(50%) ¹
	Loans received		3,803,820		14,850,875		(1,315,361	)		(5,356,920	)		(9,398,479	)
USD	Loans granted		3,790,753		14,802,134		1,308,568			5,336,244			9,363,919
	Financial Asset - ITAIPU		883,417		3,449,566		304,955			1,243,586			2,182,216
	Effect on result - USD						298,163			1,222,909			2,147,656
EURO	Loans received		59,277		251,820		(31,562	)		(102,408	)		(173,253	)
	Effect on result - EURO						(31,562	)		(102,408	)		(173,253	)
YEN	Loans received		5,516,631		178,794		(16,587	)		(65,432	)		(114,277	)
	Effect on result - YEN						(16,587	)		(65,432	)		(114,277	)
	EFFECT ON RESULT IN CASE OF APPRECIATION OF EXCHANGE FEES						250,014			1,055,070			1,860,126
(¹) Assumptions adopted:							Provável			25%			50%
USD							4.250			5.313			6.375
EURO							4.781			5.976			7.171
YEN							0.035			0.044			0.053

F-212

a2) Risk of exchange rate depreciation:

		Balance on 12/31/2015				Effect on result - income (expense)
		Foreign Currency		Reais		Scenario I - Probable 2015 ¹			Scenario II (25%) ¹			Scenario III (50%) ¹
	Loans received		3,803,820		14,850,875		(1,315,361	)		2,726,198			6,767,757
USD	Loans granted		3,790,753		14,802,134		1,308,568			(2,719,107	)		(6,746,783	)
	Financial Asset - ITAIPU		883,417		3,449,566		304,955			(633,675	)		(1,572,305	)
	Effect on result - USD						298,163			(626,584	)		(1,551,331	)
EURO	Loans received		59,277		251,820		(31,562	)		39,283			110,129
	Effect on result - EURO						(31,562	)		39,283			110,129
YEN	Loans received		5,516,631		178,794		(16,587	)		32,258			81,104
	Effect on result - EURO						(16,587	)		32,258			81,104
	EFFECT ON RESULT IN CASE OF DEPRECIATION OF EXCHANGE FEES						250,014			(555,042	)		(1,360,099	)
(²) Assumptions adopted:							Probable			-25%			-50%
USD							4.250			3.188			2.125
EURO							4.781			3.585			2.390
YEN							0.035			0.027			0.018

44.3.2 – Interest rate risk

This risks associated to the possibility of the Company suffering accounting losses due to fluctuation in market interest rates, affecting its financial statements by raising financial expenses with foreign capital raising contracts, mainly, referenced by the Libor rate.

The Company monitors its exposure to the Libor rate and contracts derivative operations to minimize this exposure, as per its Financial Hedging Policy.

a) – Composition of balances by indexer and sensitivity analysis

The composition of debt by indexer, either in national or foreign currency, is broken down in Note 23, item a.

In the following charts, scenarios were considered for indices and rates, with their respective impacts on the Company’s results. For the sensitivity analysis, the probable scenario used for 2016 was forecasts and/or estimates based fundamentally on macroeconomic assumptions obtained from the Focus report, published by the Central Bank, and Economic Outlook 86, published by the OECD (Organisation for Economic Co-operation and Development)

F-213

Sensitivity analyses were conducted on financial instruments, assets and liabilities, which could bring material losses to the Company, in four different scenarios, based on the above-mentioned probable scenario: two considering the appreciation of indices, and another two considering a depreciation of those indices.

The sensitivity analyses were created in accordance with CVM Guidance 475/2008, with the objective of measuring the impact of changes in market variables on each of the Company’s financial instruments. Therefore, these are projections based on assessments of macroeconomic scenarios, and do not mean that the transactions will have the values presented in the analysis period considered.

All scenarios used a likely exchange rate for the dollar to convert into reais the effect on the results of risks linked to fluctuations of the LIBOR. In this sensitivity analysis, no exchange effect is being considered due to valuation or devaluation of the probable exchange rate scenario. The impact of valuation or devaluation of the dollar exchange rate in the probable scenario is presented in item (44.3.1.(a)) of this note.

a1) – LIBOR

• risk of appreciation of interest rates:

		Debt balance / Notional value on 12/31/2015				Effect on result - income (expense)
		In USD		In reais		Scenario I - Probable 2015 ¹			Scenario II (+25%) ¹			Scenario III (+50%) ¹
	Loans received		955,188		3,729,245		(34,350	)		(42,937	)		(51,525	)
LIBOR	Derivative		1,040,384		4,061,867		37,414			46,767			56,120
	Total						3,064			3,830			4,596
(¹) Assumptions adopted					12/30/2015		Probable			25%			50%
USD					3.9042		4.2500			5.31			6.38
LIBOR					n/a		0.85	%		1.06	%		1.27	%

F-214

a2) – National indexers

• risk of appreciation of interest rates:

				Effect on result - income (expense)
		Balance on 12/31/2015		Scenario I - Probable 2015 ¹			Scenario II (+25%) ¹			Scenario III (+50%) ¹
CDI	Loans received		11,410,983		(1,740,175	)		(2,175,219	)		(2,610,262	)
	Debentures issued		342,671		(52,257	)		(65,322	)		(78,386	)
	Effect on result - CDI				(1,792,432	)		(2,240,540	)		(2,688,648	)
TJLP	Loans received		6,594,316		(461,602	)		(577,003	)		(692,403	)
	Debentures issued		219,803		(15,386	)		(19,233	)		(23,079	)
	Effect on result - TJLP				(476,988	)		(596,235	)		(715,482	)
IGPM	Lease		1,252,155		(82,392	)		(102,990	)		(123,588	)
	Loans granted		237,361		15,618			19,523			23,428
	Effect on result - IGPM				(66,773	)		(83,467	)		(100,160	)
SELIC	Loans received		2,636,254		(402,029	)		(502,536	)		(603,043	)
	Effect on result - SELIC				(402,029	)		(502,536	)		(603,043	)
IPCA	Loans received		532,754		36,920			46,150			55,380
	Effect on result - IPCA				36,920			46,150			55,380
Effect on result - INDEX APPRECIATION					(2,701,303	)		(3,376,629	)		(4,051,954	)
(¹) Assumptions adopted:					Probable			25%			50%
	CDI				15.25	%		19.06	%		22.88	%
	IPCA				6.93	%		8.66	%		10.40	%
	TJLP				7.00	%		8.75	%		10.50	%
	IGPM				6.58	%		8.23	%		9.87	%
	SELIC				15.25	%		19.06	%		22.88	%
	LIBOR				0.85	%		1.06	%		1.27	%

F-215

• risk of depreciation of interest rates:

				Effect on result - income (expense)
		Balance on 12/31/2015		Scenario I - Probable 2015 ¹			Scenario II (-25%) ¹			Scenario III (-50%) ¹
CDI	Loans received		11,410,983		(1,740,175	)		(1,305,131	)		(870,087	)
	Debentures issued		342,671		(52,257	)		(39,193	)		(26,129	)
	Effect on result - CDI				(1,792,432	)		(1,344,324	)		(896,216	)
TJLP	Loans received		6,594,316		(461,602	)		(346,202	)		(230,801	)
	Debentures issued		219,803		(15,386	)		(11,540	)		(7,693	)
	Effect on result - TJLP				(476,988	)		(357,741	)		(238,494	)
IGPM	Lease		1,252,155		(82,392	)		(61,794	)		(41,196	)
	Loans granted		237,361		15,618			11,714			7,809
	Effect on result - IGPM				(66,773	)		(50,080	)		(33,387	)
SELIC	Loans received		2,636,254		(402,029	)		(301,522	)		(201,014	)
	Effect on result - SELIC				(402,029	)		(301,522	)		(201,014	)
IPCA	Loans received		532,754		36,920			27,690			18,460
	Effect on result - IPCA				36,920			27,690			18,460
Effect on result - INDEX DEPRECIATION					(2,701,303	)		(2,025,977	)		(1,350,651	)
(¹) Assumptions adopted:					Probable			-25%			-50%
	CDI				15.25	%		11.44	%		7.63	%
	IPCA				6.93	%		5.20	%		3.47	%
	TJLP				7.00	%		5.25	%		3.50	%
	IGPM				6.58	%		4.94	%		3.29	%
	SELIC				15.25	%		11.44	%		7.63	%
	LIBOR				0.85	%		0.63	%		0.42	%

F-216

According to interest rate swap contracts, the Company agrees to exchange the difference between fixed and floating interest rate values calculated from the notional value agreed to. Such contracts allow the Company to mitigate the risk of a change in interest rates on the fair value of debt issued at fixed interest rates, and in the exposure of cash flows to floating rate debt issued. The fair value of interest rate swaps at the end of the year and the inherent credit risk in this kind of contract, are shown next. The average interest rate is based on outstanding balances payable at the end of the year.

The following chart shows the value of principal and the remaining term for outstanding interest rate swap contracts at the end of the reporting period:

										Fair Values
Type	Transaction		Contracted amounts (notional)		Fees used			Expiration		12/31/2015			12/31/2014
Libor X Pre-tax		01/2011		20,192		2.4400	%		11/25/2015		—			(229	)
Libor X Pre-tax		02/2011		20,192		2.4900	%		11/25/2015		—			(235	)
Libor X Pre-tax		03/2011		50,000		3.2780	%		08/10/2020		(5,497	)		(5,422	)
Libor X Pre-tax		04/2011		100,000		3.3240	%		08/10/2020		(11,266	)		(11,109	)
Libor X Pre-tax		05/2011		50,000		2.1490	%		08/10/2015		—			(508	)
Libor X Pre-tax		06/2011		100,000		2.2725	%		08/10/2015		—			(1,087	)
Libor X Pre-tax		07/2011		100,000		2.1790	%		08/10/2015		—			(1,034	)
Libor X Pre-tax		08/2011		100,000		2.1500	%		08/10/2015		—			(1,017	)
Libor X Pre-tax		09/2012		25,000		1.6795	%		11/27/2020		(226	)		(231	)
Libor X Pre-tax		10/2012		25,000		1.6295	%		11/27/2020		(133	)		(135	)
Libor X Pre-tax		11/2012		75,000		1.6285	%		11/27/2020		(394	)		(398	)
Libor X Pre-tax		12/2012		75,000		1.2195	%		11/29/2017		(307	)		(715	)
Libor X Pre-tax		13/2012		75,000		1.2090	%		11/29/2017		(286	)		(684	)
Libor X Pre-tax		14/2012		50,000		1.2245	%		11/29/2017		(211	)		(486	)
Libor X Pre-tax		15/2012		50,000		1.1670	%		11/29/2017		(134	)		(375	)
Libor X Pre-tax		16/2012		50,000		1.1910	%		11/29/2017		(166	)		(421	)
Libor X Pre-tax		17/2012		50,000		1.2105	%		11/29/2017		(192	)		(459	)
Libor X Pre-tax		18/2012		25,000		1.1380	%		11/29/2017		(47	)		(160	)
		TOTAL		1,040,384							(18,860	)		(24,706	)

Operations classified as cash flow hedges generated a comprehensive loss of R$ 468 in the year.

With the designation of swaps for hedge accounting, in the year ending on December 31, 2015, the Company recognized R$ 20,996 as financial expenses related to swaps.

44.3.3 – Price risk – commodities

In 2004, the subsidiary Eletronorte signed long-term contracts for the supply of electrical energy to three of its main clients. Part of the income from these long-term contracts is associated with the payment of a premium linked to the international aluminum price, quoted on the London Metal Exchange (LME) as a base asset in determining monthly premiums.

F-217

The premium can be considered a component of a hybrid (combined) contract, which includes a non-derivative contract that harbors a derivative, so the cash flow of the combined instrument in certain circumstances varies as if it were an isolated derivative.

Following are the contract details:

	Contract date
Client	Start		End		Volume in Average Megawatts (MW)
Albrás		07/01/2004		12/31/2024	750 by 12/31/2006 and 800 starting on 01/01/2007
BHP		07/01/2014		12/31/2024	from 353,08 to 492

These contracts include the concept of a cap and floor band related to the price of aluminum as quoted on the LME. The maximum and minimum price limit on the LME are US$ 2,773.21/ton and US$ 1,450.00/ton, respectively.

In order to attribute a fair value to the hybrid part of a contract, it is necessary to identify the main components that quantify the amount billed monthly. The main contract variables are: the amount of energy sold (MWh), the price attributed to the LME and the exchange rate in the billing period.

Considering that the premium is associated to the price of the aluminum commodity on the LME, it is possible to attribute a fair value to these contracts. The LME price was quoted in December 2015 at US$ 1,495.35/ton, which represented a negative variance of 22.49% in relation to the price in December, 2014, which was US$ 1,929.2/ton.

In the same year of the analysis, the real lost value compared to the dollar, with the exchange rate going from R$ 2.66 to R$ 3.87. The decrease in aluminum price contributed to minimize the expected fair value of derivatives, compensating the devaluation of the dollar in the period.

The loss in the operation with derivatives in 2015 was R$ 213,599 (gains on 12/31/2014 R$ 139,522) and is shown in the statement of profit and loss.

a) – Sensitivity analysis on embedded derivatives indexed to aluminum price

Sensitivity analyses were conducted on energy supply contracts for intensive consumers Albras and BHP, since they have a contractual clause linking the premium to the variance in aluminum price on the international market.

In this way, a sensitivity was obtained for such hybrid contracts to the variance in the price of the premium earned, as per the chart below. The volatility components in the premium are basically: price of primary aluminum on the LME, the exchange rate, and CDI (interbank deposit) rate. Below we see the impact of each scenario on the company’s results.

F-218

For scenario II (50% reduction) the expected price per ton of aluminum offered on the LME is below the minimum price for determination of the contract premium (US$ 1,450), hence the value goes to zero, affecting the marking to market of the embedded derivative.

As to the variance obtained between scenarios III and IV (increase of 25% and 50%), the big variance seen is due to the application of those percentages to the exchange rate, aluminum price, and CDI.

The sensitivity analyses were created in accordance with CVM Guidance 475/2008, with the objective of measuring the impact of changes in market variables on each of the Company’s financial instruments. Therefore, these are projections based on assessments of macroeconomic scenarios, and do not mean that the transactions will have the values presented in the analysis period considered.

Balance on 12/31/2015	Scenario I (+25%) Indices and prices		Scenario II (+50%) Indices and prices
46,311		400,552		603,139

44.3.4 – Credit risk

This risk arises from the possibility of the Company and its subsidiaries suffering losses resulting from a difficulty to realize their receivables from clients, and from counterparty financial institutions in operations defaulting.

Through its subsidiaries, the Company operates in markets generating and transmitting electrical energy, supported by contracts signed in a regulated environment. The Company seeks to minimize its credit risk by means of guarantee mechanisms involving client receivables, and when applicable, through bank guarantees. In the distribution sector, the Company, through its subsidiaries, monitors default rates by analyzing specifics on its clients.

The credit risk related to client receivables (see note 7) is concentrated on distribution activities, in the sum of R$ 2,178,241 or 35%(R$ 2,561,241 or 42% on December 31, 2014) of the outstanding balance at the end of the year on December 31, 2015, and its main characteristic is the high level of diffusion since it considers a significant volume of sales to residential consumers.

Regarding loan receivables granted (see note 9), except for the financial operation with the joint subsidiary Itaipu, whose credit risk is low due to the inclusion of the cost of loans in the energy marketing fee of the joint subsidiary, as defined in the terms of the international treaty signed between the governments of Brazil and Paraguay, the concentration of credit risk with any other counterparty individually did not exceed 4% of the outstanding balance during the year.

F-219

The excess cash availability is invested in exclusive non-market funds, according to specific regulations from the Brazilian Central Bank. This fund is composed entirely of government bonds custodied by the Selic, with no exposure to counterparty risk.

In any relationships with financial institutions, the Company has a practice of performing operations only with low risk institutions as deemed by rating agencies, and which fulfill preset and formalized equity requirements. In addition, credit limits are defined, which are periodically revised.

When derivative operations are conducted on the over-the-counter market, they contain counterparty risks which, given the problems presented by financial institutions in 2008 and 2009, are relevant. In order to mitigate this risk, the Company instituted an accreditation standard for financial institutions, in order to perform derivative operations. This standard defines criteria regarding size, rating and expertise in the derivatives market, in order to select institutions that may perform operations with the Company. The Company currently selects the 20 best financial institutions twice a year, based on the mentioned criteria, as accredited institutions to perform derivative operations with the Company. In addition, the company has developed a methodology to control exposure to accredited institutions, that sets limits on the volume of operations to be performed with each one.

The Company monitors the credit risk of its swap operations, according to IFRS 13, but does not account for this risk of non-performance in the fair value balance of each derivative because, based on the net exposure to credit risk, the Company can record its swap portfolio on the books given a unforced transaction between the parties on the valuation date. The Company considers the risk of non-performance only in the backtesting analysis of each relationship designated for hedge accounting.

In addition, the Company is exposed to credit risk related to financial guarantees granted to banks by the Controller. The Company’s maximum exposure is the maximum amount the Company will have to pay if the guarantee is enforced.

44.3.5 – Liquidity risk

The liquidity needs of the Company and its subsidiaries are the responsibility of the treasury and fund-raising departments, which continually monitor short-, medium- and long-term cash flows, both estimated and realized, seeking to avoid possible discrepancies and resulting financial losses, and guarantee liquidity requirements for operating needs.

The tables below analyzes the non-derivative financial liabilities of the Eletrobras System by maturation range, for the period remaining on the balance sheet until the contractual maturation date. The contractual interests obligations are also contractual repayment/maturation is based on the most recent date the Eletrobras System must settle the respective obligations.

F-220

	12/31/2015
	Payment flow
	Up to 1 year		From 1 to 2 years		From 2 to 5 years		Over 5 years		Total
FINANCIAL LIABILITIES (CURRENT / NON-CURRENT)
Measured at amortized cost		18,331,212		19,570,442		28,492,678		23,999,600		90,393,931
Suppliers		10,128,507		3,163,442		3,195,654		3,090,325		19,577,928
Loans and financing		7,312,379		16,138,249		24,723,419		17,884,178		66,058,224
Debentures		357,226		31,668		57,202		116,378		562,474
Refund obligations		396,208		145,399		137,252		2,200,727		2,879,586
Lease		132,972		91,684		339,679		687,820		1,252,155
Concessions payable UBP		3,920		—		39,472		20,172		63,564
Measured at fair value by result		20,608		78,521		—		—		99,129
Derivatives		20,608		78,521		—		—		99,129
	12/31/2014
	Payment flow
FINANCIAL LIABILITIES (CURRENT / NON-CURRENT)
Measured at amortized cost		13,527,277		10,356,125		20,013,728		38,797,161		82,694,291
Suppliers		7,489,134		3,380,083		3,330,015		3,337,269		17,536,501
Loans and financing		4,931,531		4,338,641		16,138,687		34,366,266		59,775,125
Debentures		325,732		80,181		199,514		154,496		759,923
Refund obligations		702,728		2,472,684		—		57,209		3,232,621
Lease		74,507		82,650		306,210		863,294		1,326,661
Concessions payable UBP		3,645		1,886		39,302		18,627		63,460
Measured at fair value by result		26,573		70,336		—		—		96,909
Derivatives		26,573		70,336		—		—		96,909

F-221

44.4 – Embedded derivatives related to debentures convertible into stock

The subsidiary Eletronorte entered into an agreement for the issuance of debentures, in June, 2011, and the release of resources starting in 2013, along with Banco da Amazônia S.A. (BASA), which manages the resources of Fundo de Desenvolvimento da Amazônia (Amazon Region Development Fund or FDA), to raise funds for project implementation.

Since that agreement had a clause regarding the option to convert such debentures into Company stock, with a limit of 50% of issued debentures, Sudam’s opinion is that it is possible assign a value to the amount that would be assigned to Sudam if such conversion is made.

To determine the value, a valuation was made of the previously invested company, by estimating the value of its stock and the current value of the agreement, by using parameters for determining the value of the derivative.

The financial position on December 31, 2015 determined in this operation with derivatives is R$ 80,269. The estimated gains determined for the fiscal year ending on December 31, 2015 is R$ 27,292, and is presented in the profit and loss statement for the year.

44.4.1 – Sensitivity Analyses

Sensitivity analyses of the debentures agreement were carried out, since there is a contractual clause that refers to the option of converting such debentures into stock of the subsidiary Eletronorte.

In the following analysis, different scenarios for the TJLP (long-term interest rate) were taken into account, with the corresponding impacts on Company results. For the sensitivity analysis, for a potential scenario, estimates and/or expectations for 2015 and 2016 were used, which were basically based on macroeconomic assumptions obtained from the FOCUS Report, distributed by the Central Bank.

Sensitivity analyses were carried out for the curve of debt service payments of Fundo de Desenvolvimento da Amazônia (Amazon Region Development Fund or FDA), since it has a contractual clause regarding the option to convert 50 % of Company stock on the date of actual settlement of stock.

According to IAS 39, hybrid agreements with associated volatile elements, whether they are price indexes and/or commodities, must be marked to market. In this manner, financial statements will reflect the fair value of the operation on each date of evaluation.

Therefore, for the agreement, a variation on the expectation for the realization of the long-term interest rate was estimated.

F-222

It is possible to verify, below, the impact of each scenario on Company results.

	Balance on December 31		Scenario I (-25%) Indices and prices		Scenario II (-50%) Indices and prices		Scenario I (+25%) Indices and prices		Scenario II (+50%) Indices and prices
2015		80,269		59,963		70,981		87,874		94,045

NOTE 45 – OPERATING SEGMENT INFORMATION

Following are the operating segment results for December 31, 2015, December 31, 2014 and December 31, 2013:

	12/31/2015
				Generation						Transmission
	Management			Exploration System			O&M System			Exploration System			O&M System			Distribution			Eliminated Items			Total
Net operating income		348,022			16,493,690			1,747,836			1,839,339			3,826,056			10,351,737			(2,017,842	)		32,588,838
Costs and Operational Expenses		(8,777,628	)		(22,216,261	)		(1,586,974	)		(3,253,891	)		(4,008,317	)		(10,269,593	)		7,484,381			(42,628,283	)
Operating Profit before Financial Results		(8,429,606	)		(5,722,571	)		160,862			(1,414,552	)		(182,261	)		82,144			5,466,539			(10,039,445	)
Financial income		3,958,904			(2,361,203	)		(656,829	)		(573,184	)		(240,949	)		(1,751,802	)		(73,962	)		(1,699,025	)
Income from equity		(6,091,974	)		—			—			—			—			—			6,623,420			531,446
Income tax and social contribution		(870,858	)		(126,772	)		89			256,947			19,553			10,929			—			(710,112	)
Net profit (loss) of the year		(11,433,534	)		(8,210,546	)		(495,878	)		(1,730,789	)		(403,657	)		(1,658,729	)		12,015,997			(11,917,136	)
	12/31/2014
				Generation						Transmission
	Management			Exploration System			O&M System			Exploration System			O&M System			Distribution			Eliminated Items			Total
Net operating income		81,591			18,266,357			1,555,217			1,998,366			2,979,323			6,664,230			(1,407,277	)		30,137,807
Costs and Operational Expenses		(9,115,663	)		(14,093,237	)		(1,755,679	)		(1,911,569	)		(2,791,777	)		(6,456,606	)		2,143,267			(33,981,264	)
Operating Profit before Financial Results		(9,034,072	)		4,173,120			(200,462	)		86,797			187,546			207,624			735,990			(3,843,457	)
Financial income		2,463,318			(1,279,835	)		420,005			(270,551	)		(30,111	)		(595,919	)		(12,282	)		694,625
Income from equity		(1,575,940	)		—			—			—			—			—			267,636			(1,308,304	)
Income tax and social contribution		(242,095	)		(2,690,448	)		(1,308,867	)		3,422,263			(903,792	)		22,421			—			(1,700,518	)
Net profit (loss) of the year		(8,388,789	)		202,837			(1,089,324	)		3,238,509			(746,357	)		(365,874	)		991,344			(6,157,653	)
	12/31/2013 Revised
				Generation						Transmission
	Management			Exploration System			O&M System			Exploration System			O&M System			Distribution			Eliminated Items			Total
Net operating income		71,772			14,633,670			2,054,657			1,349,213			2,854,102			4,498,837			(1,626,607	)		23,835,644
Costs and Operational Expenses		(7,161,257	)		(11,407,123	)		(2,041,034	)		(2,485,406	)		(3,914,835	)		(6,621,425	)		4,416,001			(29,215,079	)
Financing		(7,089,485	)		3,226,547			13,623			(1,136,193	)		(1,060,733	)		(2,122,588	)		2,789,394			(5,379,435	)
Financial income		2,125,578			(1,466,380	)		217,828			(292,168	)		(88,706	)		(171,801	)		52,334			376,685
Income from equity		(519,762	)		—			—			—			—			—			697,530			177,768
Income tax and social contribution		(1,326,082	)		(242,139	)		(204,989	)		194,458			212,490			(416	)		—			(1,366,678	)
Net profit (loss) of the year		(6,809,751	)		1,518,028			26,462			(1,233,903	)		(936,949	)		(2,294,805	)		3,539,258			(6,191,660	)

F-223

Interest income and expense per segment:

	12/31/2015
	Management			Generation			Transmission			Distribution			Eliminated Items			Total
Interest Income		3,007,812			25,755			34,199			—			(1,939,360	)		1,128,406
Interest expense		(2,456,810	)		(2,997,888	)		(1,062,270	)		(1,688,888	)		1,865,397			(6,340,459	)
Total		551,002			(2,972,133	)		(1,028,071	)		(1,688,888	)		(73,963	)		(5,212,053	)
	12/31/2014
	Management			Generation			Transmission			Distribution			Eliminated Items			Total
Interest Income		2,410,701			24,682			34,139			—			(1,398,415	)		1,071,107
Interest expense		(1,510,250	)		(1,985,948	)		(817,066	)		(445,214	)		1,309,744			(3,448,734	)
Total		900,451			(1,961,266	)		(782,927	)		(445,214	)		(88,671	)		(2,377,627	)
	12/31/2013
	Management			Generation			Transmission			Distribution			Eliminated Items			Total
Interest Income		2,033,155			27,993			39,813			—			(954,906	)		1,146,055
Interest expense		(1,048,004	)		(773,471	)		(597,426	)		(189,968	)		577,467			(2,031,402	)
Total		985,151			(745,478	)		(557,613	)		(189,968	)		(377,439	)		(885,347	)

F-224

Income from external consumers per segment:

	12/31/2015
	Generation			Transmission		Distribution		Total
Supply (sale) of energy		12,310,243			—		—		12,310,243
Supply of energy		3,571,809			—		14,835,424		18,407,233
Short term energy		1,811,552			—		—		1,811,552
CVA and other financial items		—			—		324,120		324,120
Itaipu financial effect		234,425			—		—		234,425
Income from operation and maintenance		1,882,637			2,695,611		—		4,578,248
Construction income		148,403			2,077,616		1,011,518		3,237,537
Financial - Investment return		—			838,087		—		838,087
Total gross income		19,959,069			5,611,314		16,171,062		41,741,445
	12/31/2014
	Generation			Transmission		Distribution		Total
Supply (sale) of energy		12,175,362			—		—		12,175,362
Supply of energy		3,317,103			—		7,310,337		10,627,440
Short term energy		3,817,976			—		—		3,817,976
CVA and other financial items		—			—		38,477		38,477
Itaipu financial effect		(97,740	)		—		—		(97,740	)
Income from operation and maintenance		1,803,127			2,201,268		—		4,004,395
Construction income		240,040			1,786,195		873,413		2,899,648
Financial - Investment return		—			714,409		—		714,409
Total gross income		21,255,868			4,701,872		8,222,227		34,179,967
	12/31/2013
	Generation			Transmission		Distribution		Total
Supply (sale) of energy		8,066,674			—		—		8,066,674
Supply of energy		3,774,404			—		4,419,444		8,193,848
Short term energy		2,395,732			—		—		2,395,732
Itaipu financial effect		67,961			—		—		67,961
Income from operation and maintenance		2,198,235			2,155,781		—		4,354,016
Construction income		736,854			1,797,324		1,013,684		3,547,862
Financial - Investment return		—			552,106		—		552,106
Total gross income		17,239,860			4,505,211		5,433,128		27,178,199

F-225

Intersegment income:

	12/31/2015
	Management		Generation		Transmission		Total
Suply of energy from distribuition segment		—		928,927		—		928,927
Suply of energy from Generation segment		—		486,544		—		486,544
Transmission revenue - O&M from generation segment		—		—		489,478		489,478
Transmission revenue - O&M from distribuition segment		—		—		112,893		112,893
Interest income from generation segment		477,484		—		—		477,484
Interest income from transmission segment		757,365		—		—		757,365
Interest income from distribuition segment		704,511		—		—		704,511
Total		1,939,360		1,415,471		602,371		3,957,202
	12/31/2014
	Management		Generation		Transmission		Total
Suply of energy from distribuition segment		—		306,695		—		306,695
Suply of energy from Generation segment		—		698,061		—		698,061
Transmission revenue - O&M from generation segment		—		—		338,374		338,374
Transmission revenue - O&M from distribuition segment		—		—		64,147		64,147
Interest income from generation segment		252,750		—		—		252,750
Interest income from transmission segment		638,405		—		—		638,405
Interest income from distribuition segment		507,260		—		—		507,260
Total		1,398,415		1,004,756		402,521		2,805,692
	12/31/2013
	Management		Generation		Transmission		Total
Suply of energy from distribuition segment		—		475,280		—		475,280
Suply of energy from Generation segment		—		1,127,842				1,127,842
Transmission revenue - O&M from generation segment		—		—		—		0
Transmission revenue - O&M from distribuition segment		—		—		23,486		23,486
Interest income from generation segment		120,483		—		—		120,483
Interest income from transmission segment		504,117		—		—		504,117
Interest income from distribuition segment		330,307		—		—		330,307
Total		954,906		1,603,122		23,486		2,581,514

F-226

Additions to non-current assets by segment:

	12/31/2015
	Management		Generation		Transmission		Distribution		Total
Fixed		230,633		3,909,258		—		—		4,139,891
Intangible		61,331		52,811		87,463		182,703		384,308
Total		291,964		3,962,069		87,463		182,703		4,524,199

	12/31/2014
	Management		Generation		Distribution		Total
Fixed		205,164		2,596,694		—		2,801,858
Intangible		75,524		19,575		34,844		129,943
Total		280,688		2,616,269		34,844		2,931,801

	12/31/2013
	Management		Generation		Transmission		Distribution		Total
Fixed		321,077		2,715,150		—		—		3,036,227
Intangible		77,264		29,361		8,113		44,521		159,259
Total		398,342		2,744,511		8,113		44,521		3,195,486

Assets per segment:

	2015
	Management		Generation		Transmission		Distribution		Total
Non-current assets
Fixed		1,774,081		26,748,577		—		956,821		29,479,479
Intangible		452,068		146,173		88,392		248,518		935,151
Total		2,226,149		26,894,750		88,392		1,205,339		30,414,630
	2014
	Management		Generation		Transmission		Distribution		Total
Non-current assets
Fixed		1,781,051		28,309,979		—		1,014,518		31,105,549
Intangible		502,737		500,285		4,558		357,791		1,365,371
Total		2,283,788		28,810,264		4,558		1,372,309		32,470,920

F-227

Non-cash items per segment:

	2015
	Management			Generation			Transmission			Distribution			Total
Depreciation and amortization		189,085			1,242,709			3,728			407,078			1,842,600
Provision for asset impairment		(1,663	)		5,470,206			336,762			22,328			5,827,633
Provision (reversal) of onerous contract		—			102,518			263,959			—			366,477
Total		187,422			6,815,433			604,449			429,406			8,036,710
	2014
	Management			Generation			Transmission			Distribution			Total
Depreciation and amortization		205,016			1,255,492			32			316,756			1,777,296
Provision for asset impairment		13,935			5,470,206			336,762			22,328			5,843,231
Provision (reversal) of onerous contract		—			(1,577,072	)		(243,182	)		(295,259	)		(2,115,513	)
Total		218,951			5,148,626			93,612			43,825			5,505,014
	2013 Revised
	Management			Generation			Transmission			Distribution			Total
Depreciation and amortization		84,486			1,347,790			300			79,754			1,512,330
Provision for asset impairment		—			695,002			775,490			1,083,909			2,554,401
Provision (reversal) of onerous contract		—			(1,341,176	)		(585,880	)		15,867			(1,911,189	)
Total		84,486			701,616			189,910			1,179,530			2,155,542

NOTE 46 – TRANSACTIONS WITH RELATED PARTIES

The final controlling company of the Company is União (the Union) that holds 51% of common stock of the Company. (Please review Note 36.)

Company transactions with its subsidiaries, controlled companies and special purpose entities are carried out at prices and conditions that are defined by the parties, that take into consideration the terms that could be applied in the market with unrelated parties. Among the main operations that took place with related parties, we would like to point out loans and financing granted with the above-mentioned conditions and/or according to specific legislation on such matters. The rest of operations were based also taking into consideration conditions that could be usual in the market.

The main transactions and its natures are related below:

• Loans and financing: Refers to the funds raised from financial institutions as mentioned in Note 9. The Company guarantees certain loans raised by its subsidiaries, as note 23;

• Accounts receivable and payables: Refers basically to the purchase and sale of energy by distributors and generators through short or long-term contracts. These transactions, when on the free market, are carried out under conditions considered by the Company as being similar to the market at the time of negotiation. When performed in the regulated market, the prices charged are defined through mechanisms defined by the regulator;

F-228

• Finance expenses: The amounts refer to bank costs, comissions, monetary variatons;

• Interest, commissions, rates and exchange variations: Refers to interest income, mainly from loans, commissions and exchange variation on loans;

• Advance for future capital increase: Refers to advances for future capital increase in investees by the Company.

F-229

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
FEDERAL PUBLIC ENTITIES	Client		19,535		—		—			16,333		—		—
	Energy supply		—		—		—			—		—		43,716
	Other income		—		—		96,432			—		—		33,864
			19,535		—		96,432			16,333		—		77,580
REAL GRANDEZA	Other accounts receivable		911		—		—			—		—		—
	Other assets		—		—		—			3,127		—		—
	Pension contributions		—		2,872		—			—		4,312		—
	Suppliers		—		1,192		—			—		—		—
	Accounts payable		—		195,556		—			—		403,810		—
	Several obligations		—		6,265		—			—		5,466		—
	Actuarial debt contracts		—		2,528		—			—		15,542		—
	Other liabilities		—		55,426		—			—		38,120		—
	Financial income		—		—		9			—		—		—
	Other income		—		—		1,320			—		—		134,529
	Financial expenses		—		—		(17,216	)		—		—		(20,795	)
	Actuarial expenses		—		—		(10,862	)		—		—		8,312
	Other expenses		—		—		(93,514	)		—		—		(11,594	)
	Actuarial provision		—		—		—			—		—		38,120
			911		263,839		(120,263	)		3,127		467,250		148,572
CENTERS	Pension contributions		—		3,122		—			—		3,230		—
	Actuarial expenses		—		—		(8,892	)		—		—		(4,555	)
	Other expenses		—		—		(914	)		—		—		—
			—		3,122		(9,806	)		—		3,230		(4,555	)
NORTE BRASIL	Equity permanent stake		887,528		—		—			421,052		—		—
	Suppliers		—		1,459		—			—		23		—
	Other liabilities		—		—		—			—		1,555		—
	Income (Expenses) Equity Method		—		—		4,218			—		—		(3,517	)
	Income from equity		—		—		41,207			—		—		—
	Other expenses		—		—		(14,636	)		—		—		—
	Fees with the use of electric grid		—		—		—			—		—		(2,459	)
			887,528		1,459		30,789			421,052		1,578		(5,976	)
ETAU	Accounts receivable		9		—		—			9		—		—
	JCP / Dividends receivable		257		—		—			39		—		—
	Equity permanent stake		24,109		—		—			23,235		—		—
	Suppliers		—		3		—			—		2		—
	Equity method income		—		—		4,947			—		—		6,713
	Income from service provision		—		—		350			—		—		453
	Other income		—		—		9			—		—		—
	Fees with the use of electric grid		—		—		(38	)		—		—		(34	)
			24,375		3		5,268			23,283		2		7,132
ESBR	Clients		4,526		—		—			2,295		—		—
	Equity permanent stake		2,799,875		—		—			2,907,364		—		—
	Advancement for future capital increase		141,400		—		—			—		—		—
	Suppliers		—		27,876		—			—		9,872		—
	Other liabilities		—		—		—			—		600		—
	Expense with purchased energy		—		—		(219,637	)		—		—		(31,200	)
	Equity Method Expenses		—		—		(287,489	)		—		—		(461,576	)
			2,945,801		27,876		(507,126	)		2,909,659		10,472		(492,776	)
TELES PIRES PARTICIPAÇÕES	Equity permanent stake		547,152		—		—			496,425		—		—
	Income (Expenses) Equity Method		—		—		(86,139	)		—		—		(29,157	)
	Other expenses		—		—		(115,412	)		—		—		—
			547,152		—		(201,551	)		496,425		—		(29,157	)
INTEGRAÇÃO	Equity permanent stake		—		—		—			22,517		—		—
	Equity method income		—		—		1,508			—		—		63
			—		—		1,508			22,517		—		63
COSTA OESTE	JCP / Dividends receivable		1,713		—		—			300		—		—
	Advancement for future capital increase		—		—		—			1,146		—		—
	Equity permanent stake		30,058		—		—			21,510		—		—
	Suppliers		—		1		—			—		1		—
	Income (Expenses) Equity Method		—		—		6,249			—		—		(481	)
	Fees with the use of electric grid		—		—		(10	)		—		—		(3	)
			31,771		1		6,239			22,956		1		(484	)

F-230

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
TSBE - Transmissora Sul Brasileira de Energia S.A.	Accounts receivable		11		—		—			12		—		—
	JCP / Dividends receivable		—		—		—			2,660		—		—
	Advancement for future capital increase		—		—		—			16,000		—		—
	Equity permanent stake		270,252		—		—			275,960		—		—
	Suppliers		—		7		—			—		2		—
	Accounts payable		—		—		—			—		10,733		—
	Income from service provision		—		—		12,557			—		—		374
	Other income		—		—		76			—		—		70
	Income (Expenses) Equity Method		—		—		(24,368	)		—		—		11,377
	Fees with the use of electric grid		—		—		(70	)		—		—		(20	)
			270,263		7		(11,805	)		294,632		10,735		11,801
LIVRAMENTO	Other accounts receivable		—		—		—			10		—		—
	Advancement for future capital increase		173,860		—		—			73,500		—		—
	Redeemable preferred shares		64,310		—		—			61,910		—		—
	Other income		—		—		179			—		—		126
	Income (Expenses) Equity Method		—		—		(96,478	)		—		—		(150,370	)
	Fees with the use of electric grid		—		—		(2	)		—		—		—
			238,170		—		(96,301	)		135,420		—		(150,244	)
SANTA VITÓRIA	JCP / Dividends receivable		—		—		—			1,163		—		—
	Advancement for future capital increase		36,492		—		—			18,000		—		—
	Equity permanent stake		50,223		—		—			157,627		—		—
	Redeemable preferred shares		29,400		—		—			29,400		—		—
	Income (Expenses) Equity Method		—		—		(108,567	)		—		—		2,220
			116,115		—		(108,567	)		206,190		—		2,220
MARUMBI	Advancement for future capital increase		—		—		—			6,702		—		—
	JCP / Dividends receivable		775		—		—			553		—		—
	Equity permanent stake		18,418		—		—			9,043		—		—
	Suppliers		—		2		—			—		—		—
	Equity method income		—		—		2,894			—		—		1,930
	Other income		—		—		14			—		—		—
	Fees with the use of electric grid		—		—		(8	)		—		—		—
			19,193		2		2,900			16,298		—		1,930
CHUÍ	Equity permanent stake		—		—		—			37,495		—		—
	Advancement for future capital increase		431,913		—		—			330,500		—		—
	Equity Method Expenses		—		—		(114,602	)		—		—		(37,715	)
			431,913		—		(114,602	)		367,995		—		(37,715	)
FACHESF	Suppliers		—		1,720		—			—		10,719		—
	Pension contributions (regular)		—		11,415		—			—		10,220		—
	Actuarial expenses		—		—		(123,537	)		—		—		(105,121	)
	Operational Expenses		—		—		(20,411	)		—		—		(17,401	)
	Financial expenses		—		—		(133,698	)		—		—		(55,871	)
			—		13,135		(277,646	)		—		20,939		(178,393	)
TDG	Accounts receivable		355		—		—			429		—		—
	Equity permanent stake		7,236		—		—			28,013		—		—
	Advancement for future capital increase		101,000		—		—			101,000		—		—
	Suppliers		—		169		—			—		181		—
	Income from service provision		—		—		4,217			—		—		4,187
	Equity Method Expenses		—		—		(20,777	)		—		—		—
	Fees with the use of electric grid		—		—		(1,580	)		—		—		(1,787	)
			108,591		169		(18,140	)		129,442		181		2,400
MANAUS TRANSMISSÃO	JCP / Dividends receivable		50		—		—			—		—		—
	Equity permanent stake		621,873		—		—			215,793		—		—
	Advancement for future capital increase		26,800		—		—			39,181		—		—
	Other assets		1,067		—		—			1,338		—		—
	Suppliers		—		1,810		—			—		—		—
	Other liabilities		—		8		—			—		1,307		—
	Equity method income		—		—		29,919			—		—		22,226
	Other income		—		—		2,573			—		—		2,938
	Equity Method Expenses		—		—		—			—		—		(65,311	)
	Fees with the use of electric grid		—		—		(20,825	)		—		—		(7,902	)
			649,790		1,818		11,667			256,312		1,307		(48,049	)

F-231

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
IE MADEIRA	JCP / Dividends receivable		27,589		—		—			7,257		—		—
	Equity permanent stake		912,098		—		—			822,342		—		—
	Suppliers		—		1,475		—			—		5,752		—
	Accounts payable		—		526		—			—		579		—
	Equity method income		—		—		117,747			—		—		62,927
	Income from service provision		—		—		602			—		—		—
	Other income (expenses)		—		—		495			—		—		—
	Fees with the use of electric grid		—		—		(53,169	)		—		—		(49,776	)
			939,687		2,001		65,675			829,599		6,331		13,151
MANAUS CONSTRUÇÃO	JCP / Dividends receivable		9,178		—		—			12,351		—		—
	Equity permanent stake		33,251		—		—			4,724		—		—
	Income (Expenses) Equity Method		—		—		(592	)		—		—		10,570
			42,429		—		(592	)		17,075		—		10,570
STN	Other accounts receivable		273		—		—			263		—		—
	Equity permanent stake		176,941		—		—			163,434		—		—
	Suppliers		—		1,042		—			—		1,250		—
	Equity method income		—		—		45,475			—		—		46,014
	Income from service provision		—		—		3,231			—		—		2,841
	Fees with the use of electric grid		—		—		(10,362	)		—		—		(12,427	)
			177,214		1,042		38,344			163,697		1,250		36,428
INTESA - Integração Transmissora de Energia S.A.	JCP / Dividends receivable		1,209		—		—			—		—		—
	Equity permanent stake		42,084		—		—			41,064		—		—
	Other assets		317		—		—			—		—		—
	Suppliers		—		1,482		—			—		971		—
	Equity method income		—		—		6,727			—		—		5,573
	Other income		—		—		3,673			—		—		—
	Fees with the use of electric grid		—		—		(14,503	)		—		—		(9,496	)
			43,610		1,482		(4,103	)		41,064		971		(3,923	)
EAPSA - Energética Águas da Pedra S.A.	Clients		352		—		—			159		—		—
	JCP / Dividends receivable		2,181		—		—			1,124		—		—
	Equity permanent stake		208,795		—		—			89,580		—		—
	Other assets		—		—		—			161		—		—
	Equity method income		—		—		22,718			—		—		8,409
	Income from the use of electric grid		—		—		—			—		—		1,267
	Other income		—		—		1,557			—		—		—
			211,328		—		24,275			91,024		—		9,676
SETE GAMELEIRAS	Clients		8		—		—			7		—		—
	JCP / Dividends receivable		437		—		—			—		—		—
	Equity permanent stake		22,888		—		—			20,799		—		—
	Equity method income		—		—		2,526			—		—		556
			23,333		—		2,526			20,806		—		556
S. PEDRO DO LAGO	Clients		36		—		—			7		—		—
	JCP / Dividends receivable		371		—		—			—		—		—
	Equity permanent stake		16,423		—		—			16,268		—		—
	Income (Expenses) Equity Method		—		—		268			—		—		1,407
	Income from service provision		—		—		335			—		—		81
			16,830		—		603			16,275		—		1,488
PEDRA BRANCA	Clients		8		—		—			7		—		—
	JCP / Dividends receivable		542		—		—			—		—		—
	Equity permanent stake		17,592		—		—			14,256		—		—
	Income from service provision		—		—		—			—		—		192
	Income (Expenses) Equity Method		—		—		3,878			—		—		—
			18,142		—		3,878			14,263		—		192
BRASVENTOS MIASSABA	Clients		152		—		—			70		—		—
	Equity permanent stake		66,539		—		—			33,469		—		—
	Other assets		1		—		—			1		—		—
	Equity method income		—		—		(226	)		—		—		4,703
	Income from the use of electric grid		—		—		709			—		—		649
	Other income		—		—		604			—		—		—
	Equity Method Expenses		—		—		(200	)		—		—		—
			66,692		—		887			33,540		—		5,352

F-232

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
BRASVENTOS EOLO	Clients		129		—		—			60		—		—
	Advancement for future capital increase		316		—		—			316		—		—
	Equity permanent stake		40,163		—		—			20,750		—		—
	Other assets		1		—		—			—		—		—
	Income from the use of electric grid		—		—		605			—		—		554
	Other income		—		—		517			—		—		—
	Equity Method Expenses		—		—		(668	)		—		—		(1,495	)
	Income from equity		—		—		(634	)		—		—		—
			40,609		—		(180	)		21,126		—		(941	)
PREVINORTE	Other assets		7,174		—		—			63		—		—
	Other liabilities		—		—		—			—		7,958		—
			7,174		—		—			63		7,958		—
ENERPEIXE	Clients		282		—		—			232		—		—
	JCP / Dividends receivable		34,686		—		—			26,059		—		—
	Equity permanent stake		561,282		—		—			555,860		—		—
	Equity method income		—		—		68,107			—		—		56,539
	Income from service provision		—		—		13			—		—		255
	Income from the use of electric grid		—		—		2,287			—		—		2,220
			596,250		—		70,407			582,151		—		59,014
TRANSLESTE	Equity permanent stake		17,574		—		—			15,616		—		—
	Suppliers		—		164		—			—		166		—
	Equity method income		—		—		4,719			—		—		5,040
	Fees with the use of electric grid		—		—		(1,515	)		—		—		(1,539	)
			17,574		164		3,204			15,616		166		3,501
TRANSUDESTE	Clients		14		—		—			—		—		—
	Other accounts receivable		13		—		—			—		—		—
	JCP / Dividends receivable		1,033		—		—			1,033		—		—
	Equity permanent stake		17,900		—		—			14,978		—		—
	Other assets		—		—		—			25		—		—
	Suppliers		—		102		—			—		156		—
	Other income		—		—		165			—		—		159
	Income from service provision		—		—		157			—		—		148
	Equity method income		—		—		3,459			—		—		3,294
	Financial income		—		—		—			—		—		1,034
	Fees with the use of electric grid		—		—		(947	)		—		—		(968	)
			18,960		102		2,834			16,036		156		3,667
TRANSIRAPE	JCP / Dividends receivable		678		—		—			—		—		—
	Equity permanent stake		19,061		—		—			16,134		—		—
	Suppliers		—		90		—			—		107		—
	Equity method income		—		—		3,605			—		—		2,864
	Fees with the use of electric grid		—		—		(739	)		—		—		(666	)
			19,739		90		2,866			16,134		107		2,198
CENTROESTE	Clients		63		—		—			—		—		—
	JCP / Dividends receivable		59		—		—			894		—		—
	Equity permanent stake		18,709		—		—			20,825		—		—
	Other assets		—		—		—			10		—		—
	Suppliers		—		54		—			—		71		—
	Equity method income		—		—		4,361			—		—		4,089
	Income from service provision		—		—		1,068			—		—		900
	Other income		—		—		89			—		—		431
	Fees with the use of electric grid		—		—		(645	)		—		—		(666	)
			18,831		54		4,873			21,729		71		4,754
BAGUARI	Clients		22		—		—			15		—		—
	JCP / Dividends receivable		2,462		—		—			7,294		—		—
	Advancement for future capital increase		315		—		—			315		—		—
	Equity permanent stake		82,721		—		—			85,815		—		—
	Income (Expenses) Equity Method		—		—		6,226			—		—		(850	)
	Income from the use of electric grid		—		—		193			—		—		181
			85,520		—		6,419			93,439		—		(669	)
RETIRO BAIXO	Advancement for future capital increase		1,225		—		—			2,695		—		—
	Equity permanent stake		121,774		—		—			111,906		—		—
	Equity Method Expenses		—		—		—			—		—		(1,275	)
	Financial income (expenses)		—		—		7,173			—		—		—
	Financial income		—		—		—			—		—		111
			122,999		—		7,173			114,601		—		(1,164	)

F-233

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
SERRA FACÃO ENERGIA	JCP / Dividends receivable		9,154		—		—			2,289		—		—
	Equity permanent stake		45,032		—		—			1,640		—		—
	Income (Expenses) Equity Method		—		—		23,047			—		—		(59,102	)
	Income from service provision		—		—		154			—		—		80
			54,186		—		23,201			3,929		—		(59,022	)
Chapecoense	Clients		740		—		—			740		—		—
	JCP / Dividends receivable		22,288		—		—			9,512		—		—
	Equity permanent stake		415,501		—		—			364,522		—		—
	Equity method income		—		—		73,267			—		—		28,646
			438,529		—		73,267			374,774		—		28,646
MADEIRA ENERGIA	Equity permanent stake		2,799,058		—		—			2,724,068		—		—
	Income (Expenses) Equity Method		—		—		7,030			—		—		(861,144	)
	Other expenses		—		—		(97,010	)		—		—		—
			2,799,058		—		(89,980	)		2,724,068		—		(861,144	)
INAMBARI	Equity permanent stake		194		—		—			164		—		—
	Other income		—		—		30			—		—		6,017
	Income (Expenses) Equity Method		—		—		(31	)		—		—		(6,024	)
	Income from equity		—		—		(50	)		—		—		—
			194		—		(51	)		164		—		(7	)
TRANSENERGIA RENOVÁVEL	JCP / Dividends receivable		13,979		—		—			15,648		—		—
	Equity permanent stake		128,418		—		—			96,813		—		—
	Suppliers		—		57		—			—		80		—
	Equity method income		—		—		38,777			—		—		24,316
	Other income		—		—		—			—		—		8
	Fees with the use of electric grid		—		—		(706	)		—		—		(754	)
			142,397		57		38,071			112,461		80		23,570
MGE TRANSMISSÃO	Clients		15		—		—			—		—		—
	Other accounts receivable		148		—		—			149		—		—
	JCP / Dividends receivable		11,447		—		—			6,812		—		—
	Equity permanent stake		136,755		—		—			118,953		—		—
	Suppliers		—		119		—			—		100		—
	Income (Expenses) Equity Method		—		—		20,476			—		—		(9,222	)
	Income from service provision		—		—		1,685			—		—		2,974
	Other income		—		—		167			—		—		67
	Fees with the use of electric grid		—		—		(1,389	)		—		—		(477	)
			148,365		119		20,939			125,914		100		(6,658	)
GOIÁS TRANSMISSÃO	Other accounts receivable		229		—		—			203		—		—
	JCP / Dividends receivable		23,857		—		—			20,051		—		—
	Equity permanent stake		190,245		—		—			138,436		—		—
	Suppliers		—		204		—			—		225		—
	Income (Expenses) Equity Method		—		—		66,566			—		—		(493	)
	Income from service provision		—		—		2,331			—		—		2,293
	Fees with the use of electric grid		—		—		(2,327	)		—		—		(1,911	)
			214,331		204		66,570			158,690		225		(111	)
TRANS. SÃO PAULO	Clients		18		—		—			—		—		—
	Other accounts receivable		83		—		—			75		—		—
	JCP / Dividends receivable		4,275		—		—			15,934		—		—
	Advancement for future capital increase		—		—		—			1,960		—		—
	Equity permanent stake		91,141		—		—			83,116		—		—
	Suppliers		—		13		—			—		28		—
	Equity method income		—		—		6,065			—		—		43,977
	Income from service provision		—		—		976			—		—		890
	Other income		—		—		78			—		—		509
	Fees with the use of electric grid		—		—		(297	)		—		—		(276	)
			95,517		13		6,822			101,085		28		45,100
CALDAS NOVAS	Other accounts receivable		73		—		—			72		—		—
	JCP / Dividends receivable		452		—		—			—		—		—
	Equity permanent stake		13,560		—		—			12,846		—		—
	Suppliers		—		3		—			—		9		—
	Income (Expenses) Equity Method		—		—		1,166			—		—		3,084
	Income from service provision		—		—		724			—		—		720
	Other income		—		—		160			—		—		149
	Fees with the use of electric grid		—		—		—			—		—		(61	)
			14,085		3		2,050			12,918		9		3,892

F-234

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
IE GARANHUNS	JCP / Dividends receivable		5,780		—		—			—		—		—
	Equity permanent stake		318,972		—		—			181,526		—		—
	Equity method income		—		—		26,361			—		—		16,717
			324,752		—		26,361			181,526		—		16,717
LUZIÂNIA NIQUELÂNDIA TRANSMISSORA	Clients		6		—		—			—		—		—
	Equity permanent stake		21,181		—		—			16,863		—		—
	Suppliers		—		—		—			—		845		—
	Equity method income		—		—		4,318			—		—		4,594
	Income from service provision		—		—		110			—		—		115
	Other income		—		—		30			—		—		188
	Fees with the use of electric grid		—		—		(105	)		—		—		(41	)
			21,187		—		4,353			16,863		845		4,856
TSLE - Transmissora Sul Litorânea de Energia S.A.	Other accounts receivable		18		—		—			5		—		—
	Advancement for future capital increase		84,847		—		—			54,499		—		—
	Equity permanent stake		144,615		—		—			139,719		—		—
	Accounts payable		—		11		—			—		—		—
	Income from service provision		—		—		570			—		—		3,457
	Other income		—		—		51			—		—		39
	Equity Method Expenses		—		—		(4,980	)		—		—		(2,637	)
	Fees with the use of electric grid		—		—		(81	)		—		—		—
			229,480		11		(4,440	)		194,223		—		859
Energia dos Ventos I	Equity permanent stake		—		—		—			7,254		—		—
	Income (Expenses) Equity Method		—		—		(1	)		—		—		(39	)
			—		—		(1	)		7,254		—		(39	)
Energia dos Ventos II	Equity permanent stake		—		—		—			4,406		—		—
	Income (Expenses) Equity Method		—		—		—			—		—		(30	)
			—		—		—			4,406		—		(30	)
Energia dos Ventos III	Equity permanent stake		—		—		—			6,535		—		—
	Income (Expenses) Equity Method		—		—		—			—		—		(36	)
			—		—		—			6,535		—		(36	)
Energia dos Ventos IV	Equity permanent stake		—		—		—			9,535		—		—
	Income (Expenses) Equity Method		—		—		—			—		—		(43	)
			—		—		—			9,535		—		(43	)
Energia dos Ventos X	Equity permanent stake		—		—		—			5,807		—		—
	Income (Expenses) Equity Method		—		—		(1	)		—		—		(34	)
			—		—		(1	)		5,807		—		(34	)
NORTE ENERGIA (Belo Monte)	Clients		390		—		—			—		—		—
	Other assets		54		—		—			78		—		—
	Advancement for future capital increase		326,671		—		—			—		—		—
	Equity permanent stake		3,469,785		—		—			3,479,087		—		—
	Income from equity		—		—		(7,993	)		—		—		(32,909	)
	Equity Method Expenses		—		—		(7,225	)		—		—		(110,640	)
	Income from the use of electric grid		—		—		39,258			—		—		—
	Other income		—		—		423			—		—		—
			3,796,900		—		24,463			3,479,165		—		(143,549	)
AETE	Other assets		24		—		—			—		—		—
	Other liabilities		—		—		—			—		234		—
	Suppliers		—		160		—			—		—		—
	Equity method income		—		—		—			—		—		8,915
	Other income		—		—		2,251			—		—		—
	Fees with the use of electric grid		—		—		(2,126	)		—		—		(2,457	)
			24		160		125			—		234		6,458
BRASNORTE	Other assets		106		—		—			2,506		—		—
	Equity permanent stake		120,873		—		—			—		—		—
	Other liabilities		—		—		—			—		127		—
	Suppliers		—		88		—			—		—		—
	Equity method income		—		—		9,372			—		—		9,647
	Income from service provision		—		—		—			—		—		1,808
	Other income		—		—		3,523			—		—		—
	Fees with the use of electric grid		—		—		(1,176	)		—		—		(1,289	)
			120,979		88		11,719			2,506		127		10,166
ESTAÇÃO TRANSMISSORA	Fees with the use of electric grid		—		—		—			—		—		(3,735	)
			—		—		—			—		—		(3,735	)

F-235

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
INTEGRAÇÃO TRANS.	Other assets		—		—		—			290		—		—
	Equity permanent stake		133,488		—		—			—		—		—
	Other liabilities		—		—		—			—		709		—
	Equity method income		—		—		18,970			—		—		16,817
	Other income		—		—		—			—		—		3,838
	Fees with the use of electric grid		—		—		—			—		—		(7,132	)
			133,488		—		18,970			290		709		13,523
CONSTRUTORA INTEG	Equity permanent stake		49,461		—		—			—		—		—
	Equity method income		—		—		1,507			—		—		63
	Income from equity		—		—		(1,793	)		—		—		—
			49,461		—		(286	)		—		—		63
TME - TRANSMISSORA MATOGROSSENSE DE ENERGIA	Equity permanent stake		97,154		—		—			—		—		—
	Other liabilities		—		214		—			—		234		—
	Income from equity		—		—		13,317			—		—		—
	Equity method income		—		—		—			—		—		11,182
	Fees with the use of electric grid		—		—		(2,221	)		—		—		(2,545	)
			97,154		214		11,096			—		234		8,637
TRANSNORTE	Equity permanent stake		148,373		—		—			—		—		—
	Suppliers		—		36		—			—		—		—
	Income from equity		—		—		(9,613	)		—		—		—
	Equity method income		—		—		—			—		—		9,072
	Fees with the use of electric grid		—		—		(186	)		—		—		—
			148,373		36		(9,799	)		—		—		9,072
CTEEP	Financing and loans		196		—		—			—		—		—
	Equity permanent stake		942,732		—		—			946,187		—		—
	Dividends receivable		2,187		—		—			9,749		—		—
	Income from interest, commissions, fees, and ex		—		—		17			—		—		—
	Equity method income		—		—		2,380			—		—		53,503
	Income from JCP / Dividends		—		—		2,206			—		—		1,480
	Income from equity		—		—		114,813			—		—		—
	Loss in subscription		—		—		—			—		—		(679	)
			945,115		—		119,416			955,936		—		54,304
EMAE	Equity permanent stake		307,195		—		—			275,214		—		—
	JCP / Dividends receivable		1,416		—		—			54		—		—
	Equity method income		—		—		793			—		—		—
	Income from JCP / Dividends		—		—		—			—		—		64
	Income from equity		—		—		23,330			—		—		151,429
	Other expenses		—		—		(89	)		—		—		—
			308,611		—		24,034			275,160		—		151,493
Triângulo Mineiro Trans. S.A.	Other accounts receivable		11		—		—			—		—		—
	Other assets		—		—		—			724		—		—
	Advancement for future capital increase		—		—		—			6,223		—		—
	Equity permanent stake		82,555		—		—			36,246		—		—
	Income (Expenses) Equity Method		—		—		2,957			—		—		830
	Income from service provision		—		—		578			—		—		724
	Other income		—		—		25			—		—		38
			82,566		—		3,560			43,193		—		1,592
CEPEL	Operational Expenses		—		—		(11,525	)		—		—		(10,925	)
			—		—		(11,525	)		—		—		(10,925	)
Paranaíba Transmissora de Energia S.A.	Other accounts receivable		70		—		—			142		—		—
	Equity permanent stake		100,726		—		—			67,383		—		—
	Equity method income		—		—		3,943			—		—		2,297
	Income from service provision		—		—		792			—		—		849
			100,796		—		4,735			67,525		—		3,146
Centrais Eolica Famosa I S.A.	Advancement for future capital increase		—		—		—			1,059		—		—
	Equity permanent stake		1,305		—		—			838		—		—
	Income (Expenses) Equity Method		—		—		(592	)		—		—		(6,425	)
			1,305		—		(592	)		1,897		—		(6,425	)
Centrais Eolica Pau Brasil S.A.	Advancement for future capital increase		—		—		—			706		—		—
	Equity permanent stake		758		—		—			548		—		—
	Income (Expenses) Equity Method		—		—		(496	)		—		—		(4,292	)
			758		—		(496	)		1,254		—		(4,292	)

F-236

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
Centrais Eolica São Paulo S.A.	Advancement for future capital increase		—		—		—			823		—		—
	Equity permanent stake		971		—		—			648		—		—
	Income (Expenses) Equity Method		—		—		(500	)		—		—		(4,803	)
			971		—		(500	)		1,471		—		(4,803	)
Centrais Eolica Rosada S.A.	Advancement for future capital increase		—		—		—			1,333		—		—
	Equity permanent stake		1,418		—		—			955		—		—
	Income (Expenses) Equity Method		—		—		(870	)		—		—		(8,132	)
			1,418		—		(870	)		2,288		—		(8,132	)
FRONTEIRA OESTE	Other accounts receivable		1,042		—		—			—		—		—
	Advancement for future capital increase		14,155		—		—			3,641		—		—
	Equity permanent stake		12,091		—		—			11,824		—		—
	Equity method income		—		—		267			—		—		—
	Income from service provision		—		—		1,042			—		—		—
	Equity Method Expenses		—		—		—			—		—		(16	)
			27,288		—		1,309			15,465		—		(16	)
Vale do São Bartolomeu Transmissora de Energia S.A.	Other accounts receivable		220		—		—			229		—		—
	Advancement for future capital increase		7,943		—		—			—		—		—
	Equity permanent stake		56,469		—		—			16,128		—		—
	Income (Expenses) Equity Method		—		—		1,512			—		—		645
	Income from service provision		—		—		373			—		—		226
	Other income		—		—		1,704			—		—		7,950
			64,632		—		3,589			16,357		—		8,821
PUNAÚ I EÓLICA S.A	Equity permanent stake		10,829		—		—			1,880		—		—
	Income (Expenses) Equity Method		—		—		8,816			—		—		(7,313	)
			10,829		—		8,816			1,880		—		(7,313	)
CARNAÚBA I EÓLICA S.A.	Equity permanent stake		10,261		—		—			1,238		—		—
	Income (Expenses) Equity Method		—		—		8,906			—		—		(7,186	)
			10,261		—		8,906			1,238		—		(7,186	)
CARNAÚBA II EÓLICA S.A.	Equity permanent stake		8,293		—		—			936		—		—
	Income (Expenses) Equity Method		—		—		7,254			—		—		(5,959	)
			8,293		—		7,254			936		—		(5,959	)
CARNAÚBA III EÓLICA S.A.	Equity permanent stake		7,290		—		—			845		—		—
	Income (Expenses) Equity Method		—		—		6,358			—		—		(5,284	)
			7,290		—		6,358			845		—		(5,284	)
CARNAÚBA V EÓLICA S.A.	Equity permanent stake		10,777		—		—			1,212		—		—
	Income (Expenses) Equity Method		—		—		9,433			—		—		(7,981	)
			10,777		—		9,433			1,212		—		(7,981	)
CERVANTES I EÓLICA S.A.	Equity permanent stake		7,355		—		—			1,357		—		—
	Income (Expenses) Equity Method		—		—		5,910			—		—		(4,772	)
			7,355		—		5,910			1,357		—		(4,772	)
CERVANTES II EÓLICA S.A.	Equity permanent stake		5,474		—		—			644		—		—
	Income (Expenses) Equity Method		—		—		4,755			—		—		(3,958	)
			5,474		—		4,755			644		—		(3,958	)
BOM JESUS EÓLICA S.A.	Equity permanent stake		1,251		—		—			1,370		—		—
	Income (Expenses) Equity Method		—		—		(236	)		—		—		(5,794	)
			1,251		—		(236	)		1,370		—		(5,794	)
CACHOEIRA EÓLICA S.A	Equity permanent stake		767		—		—			871		—		—
	Income (Expenses) Equity Method		—		—		(191	)		—		—		(3,907	)
			767		—		(191	)		871		—		(3,907	)
PITIMBU EÓLICA S.A	Equity permanent stake		1,037		—		—			1,270		—		—
	Income (Expenses) Equity Method		—		—		(351	)		—		—		(5,894	)
			1,037		—		(351	)		1,270		—		(5,894	)
SÃO CAETANO EÓLICA S.A	Equity permanent stake		1,387		—		—			2,387		—		—
	Income (Expenses) Equity Method		—		—		(1,177	)		—		—		(7,952	)
			1,387		—		(1,177	)		2,387		—		(7,952	)
SÃO CAETANO I EÓLICA S.A	Equity permanent stake		1,137		—		—			1,867		—		—
	Income (Expenses) Equity Method		—		—		(847	)		—		—		(5,297	)
			1,137		—		(847	)		1,867		—		(5,297	)

F-237

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
SÃO GALVÃO EÓLICA S.A.	Equity permanent stake		1,342		—		—			1,684		—		—
	Income (Expenses) Equity Method		—		—		(505	)		—		—		(7,862	)
			1,342		—		(505	)		1,684		—		(7,862	)
Baraúnas I	Equity permanent stake		17,356		—		—			27		—		—
	Equity Method Expenses		—		—		(213	)		—		—		(27	)
			17,356		—		(213	)		27		—		(27	)
Mussambê	Equity permanent stake		21,724		—		—			19,955		—		—
	Equity Method Expenses		—		—		(25	)		—		—		(32	)
			21,724		—		(25	)		19,955		—		(32	)
Morro Branco I	Equity permanent stake		17,019		—		—			15,549		—		—
	Equity Method Expenses		—		—		(204	)		—		—		(22	)
			17,019		—		(204	)		15,549		—		(22	)
SINOP	Equity permanent stake		179,052		—		—			87,047		—		—
	Advancement for future capital increase		73,500		—		—			—		—		—
	Equity method income		—		—		2,479			—		—		—
	Equity Method Expenses		—		—		—			—		—		—
	Income from equity		—		—		(1,199	)		—		—		(4,249	)
			252,552		—		1,280			87,047		—		(4,249	)
MATA DE SANTA GENEBRA	Other accounts receivable		2		—		—			1		—		—
	Equity permanent stake		30,336		—		—			26,177		—		—
	Income (Expenses) Equity Method		—		—		1,415			—		—		(1,019	)
	Other income		—		—		292			—		—		894
	Other expenses		—		—		4			—		—		—
			30,338		—		1,711			26,178		—		(125	)
LAGOA AZUL TRANSMISSORA	Clients		396		—		—			—		—		—
	Other assets		—		—		—			1		—		—
	Equity permanent stake		8,632		—		—			1,970		—		—
	Income (Expenses) Equity Method		—		—		99			—		—		(151	)
	Other income		—		—		—			—		—		12
	Other expenses		—		—		395			—		—		—
			9,028		—		494			1,971		—		(139	)
EÓLICA ITAGUAÇU DA BAHIA SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		11,798		—		—			1,062		—		—
	Income (Expenses) Equity Method		—		—		102			—		—		(101	)
	Other expenses		—		—		(1	)		—		—		—
			11,798		—		101			1,063		—		(101	)
ITAGUAÇU DA BAHIA ENERGIAS RENOVÁVEIS	Advancement for future capital increase		34,300		—		—			—		—		—
	Equity permanent stake		11,798		—		—			—		—		—
	Income (Expenses) Equity Method		—		—		(4,396	)		—		—		—
			46,098		—		(4,396	)		—		—		—
EÓLICA VENTOS DE SANTA LUIZA SPE S.A.	Other assets		—		—		—			1		—		—
	Advancement for future capital increase		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(100	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(100	)
EÓLICA VENTOS DE SANTA MADALENA SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,062		—		—
	Income (Expenses) Equity Method		—		—		102			—		—		(101	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		101			1,063		—		(101	)
EÓLICA VENTOS DE SANTA MARCELLA SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(101	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(101	)
EÓLICA VENTOS DE SANTA VERA SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(100	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(100	)

F-238

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
EÓLICA VENTOS DE SANTO ANTONIO SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		102			—		—		(100	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		101			1,064		—		(100	)
EÓLICA VENTOS DE SÃO BENTO SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		102			—		—		(101	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		101			1,064		—		(101	)
EÓLICA VENTOS DE SÃO CIRILO SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(100	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(100	)
EÓLICA VENTOS DE SÃO JOÃO SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(100	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(100	)
EÓLICA VENTOS DE SÃO RAFAEL SPE S.A.	Other assets		—		—		—			1		—		—
	Equity permanent stake		—		—		—			1,063		—		—
	Income (Expenses) Equity Method		—		—		101			—		—		(101	)
	Other expenses		—		—		(1	)		—		—		—
			—		—		100			1,064		—		(101	)
BARAÚNAS II	Equity permanent stake		585		—		—			615		—		—
	Equity Method Expenses		—		—		(30	)		—		—		(7	)
			585		—		(30	)		615		—		(7	)
BANDA DE COURO	Equity permanent stake		928		—		—			961		—		—
	Equity Method Expenses		—		—		(33	)		—		—		(7	)
	Other expenses		—		—		—			—		—		—
			928		—		(33	)		961		—		(7	)
BELO MONTE TRANSMISSORA SPE S.A.	Equity permanent stake		391,058		—		—			6,119		—		—
	Advancement for future capital increase		194,040		—		—			—		—		—
	Other assets		—		—		—			1		—		—
	Income (Expenses) Equity Method		—		—		(4,630	)		—		—		(5	)
	Income from equity		—		—		(4,473	)		—		—		—
	Other expenses		—		—		(1	)		—		—		—
	Other income		—		—		—			—		—		424
			585,098		—		(9,104	)		6,120		—		419
ITAIPU	Financing and loans		14,802,134		—		—			11,656,696		—		—
	Dividends receivable		1,952				—			—		—		—
	Income from interest, commissions, fees, and ex		—		—		6,009,406			—		—		767,647
			14,804,087		—		6,009,406			11,656,696		—		767,647
SANTO ANTONIO ENERGIA	Clients		9,501		—		—			4,174		—		—
	Other accounts receivable		130,253		—		—			—		—		—
	Other assets		—		—		—			311		—		—
	Income from service provision		—		—		3,005			—		—		3,481
	Income from the use of electric grid		—		—		43,352			—		—		40,602
	Income from the sale of energy		—		—		64,924			—		—		—
	Other income									—		—		268
			139,754		—		111,281			4,485		—		44,351
ELETROS	Contributions payable - sponsor		—		23,555		—			—		10,652		—
	Provisions		—		244,685		—			—		448,407		—
	Sponsor contributions		—		—		(31,693	)		—		—		(34,423	)
	Fees		—		—		(2,410	)		—		—		(2,462	)
			—		268,240		(34,103	)		—		459,059		(36,885	)

F-239

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
CEEE-GT	Equity stake		448,274		—		—			449,336		—		—
	Financing and loans		4,883		—		—			13,254		—		—
	Income from equity		—		—		14,173			—		—		(91,308	)
	Income from interest, commissions, and fees		—		—		607			—		—		1,189
			453,157		—		14,780			462,590		—		(90,119	)
ENERGISA MT	Equity stake		385,318		—		—			376,031		—		—
	Financing and loans		310,697		—		—			353,596		—		—
	Dividends receivable		4,403		—		—			—		—		—
	Income from equity		—		—		12,918			—		—		25,491
	Income from interest, commissions, and fees		—		—		30,911			—		—		34,608
			700,417		—		43,829			729,627		—		60,099
CEMAR	Equity stake		653,419		—		—			554,817		—		—
	Dividends receivable		—		—		—			20,754		—		—
	Financing and loans		275,939		—		—			308,989		—		—
	Income from equity		—		—		121,778			—		—		112,288
	Income from interest, commissions, and fees		—		—		28,387			—		—		18,635
			929,358		—		150,165			884,560		—		130,923
Lajeado Energia	Equity stake		219,173		—		—			206,282		—		—
	Dividends receivable		86,589		—		—			94,810		—		—
	Income from equity		—		—		37,014			—		—		13,630
			305,762		—		37,014			301,092		—		13,630
CEB Lajeado	Equity stake		80,353		—		—			71,723		—		—
	Dividends receivable		13,980		—		—			14,606		—		—
	Income from equity		—		—		17,586			—		—		7,419
			94,333		—		17,586			86,329		—		7,419
Paulista Lajeado	Equity stake		23,507		—		—			18,119		—		—
	Dividends receivable		3,077		—		—			2,765		—		—
	Income from equity		—		—		4,463			—		—		(3,096	)
			26,584		—		4,463			20,884		—		(3,096	)
CEEE-D	Equity stake		—		—		—			7,476		—		—
	Financing and loans		28,520		—		—			31,258		—		—
	Income from equity		—		—		—			—		—		(145,118	)
	Income from interest, commissions, and fees		—		—		2,673			—		—		2,895
			28,520		—		2,673			38,734		—		(142,223	)
CHC Amé	Equity stake		98,514		—		—			79,081		—		—
	Income from equity		—		—		(13,753	)		—		—		(5,517	)
			98,514		—		(13,753	)		79,081		—		(5,517	)
EÓLICA MANGUE SECO	Equity stake		16,889		—		—			16,726		—		—
	Income from equity		—		—		163			—		—		(332	)
			16,889		—		163			16,726		—		(332	)
ROUAR	Equity stake		111,775		—		—			70,044		—		—
	Income from equity		—		—		7,529			—		—		7,240
			111,775		—		7,529			70,044		—		7,240
Companhia Celg de Participações - CELGPAR	Other liabilities - Loans		—		117,080		—			—		109,537		—
	Financial expenses		—		—		7,543			—		—		—
			—		117,080		7,543			—		109,537		—
CELG Generation e Transmissão - CELG GT	Suppliers		—		1,779		—			—		1,082		—
	Other liabilities		—		50,355		—			—		—		—
	Fees with the use of electric grid		—		—		13,493			—		—		2,577
	Actuarial expenses		—		—		484			—		—		—
	Financial expenses		—		—		129			—		—		—
			—		52,134		14,106			—		1,082		2,577

F-240

		12/31/2015							12/31/2014
COMPANIES	TYPE OF OPERATION	ASSET		LIABILITIES		RESULT			ASSET		LIABILITIES		RESULT
FOZ DO CHAPECÓ	Clients		434		—		—			458		—		—
	Income from service provision		—		—		134			—		—		137
	Income from the use of electric grid		—		—		4,672			—		—		4,257
			434		—		4,806			458		—		4,394
TIJOA PARTICIPAÇÕES E INVESTIMENTOS S.A.	Clients		352		—		—			362		—		—
	Advancement for future capital increase		—		—		—			649		—		—
	Equity permanent stake		5,666		—		—			167		—		—
	Income (Expenses) Equity Method		—		—		7,345			—		—		167
	Income from the use of electric grid		—		—		3,739			—		—		825
			6,018		—		11,084			1,178		—		992
CSE CENTRO DE SOLUÇÕES ESTRATÉGICAS S.A.	Advancement for future capital increase		—		—		—			1,996		—		—
	Equity permanent stake		1,147		—		—			299		—		—
	Income from service provision		—		—		167			—		—		—
	Income (Expenses) Equity Method		—		—		(1,049	)		—		—		(299	)
			1,147		—		(882	)		1,697		—		(299	)
EMPRESA DE ENERGIA SÃO MANOEL S.A.	Equity permanent stake		55,409		—		—			594		—		—
	Other income		—		—		—			—		—		1,029
	Income (Expenses) Equity Method		—		—		(1,759	)		—		—		(594	)
	Other expenses		—		—		(47,905	)		—		—		—
			55,409		—		(49,664	)		594		—		435
ENERGIA OLÍMPICA S.A.	Equity permanent stake		2,487		—		—			213		—		—
	Income (Expenses) Equity Method		—		—		2,700			—		—		(213	)
	Other income		—		—		1			—		—		—
	Other expenses		—		—		—			—		—		(1	)
			2,487		—		2,701			213		—		(214	)
CIA HIDREL TELES PIRES	Clients		1,954		—		—			—		—		—
	Accounts payable		—		2,218		—			—		—		—
	Income from service provision		—		—		3,253			—		—		5,759
	Other income		—		—		—			—		—		2,093
	Income from the use of electric grid		—		—		9,926			—		—		—
	Purchase of electricity		—		—		(18,614	)		—		—		—
			1,954		2,218		(5,435	)		—		—		7,852
PARAÍSO	Advancement for future capital increase		4,000		—		—			—		—		—
	Income (Expenses) Equity Method		—		—		(70	)		—		—		—
			4,000		—		(70	)		—		—		—
VAMCRUZ PARTICIPAÇÕES S.A.	Accounts receivable		—		—		—			—		—		—
	Dividends		523		—		—			—		—		—
	Equity permanent stake		73,368		—		—			72,993		—		—
	Advancement for future capital increase		66,892		—		—			—		—		—
	Income (Expenses) Equity Method		—		—		506			—		—		(42	)
			140,783		—		506			72,993		—		(42	)
Rei dos Ventos 3 Geradora de Energia S.A.	Accounts receivable		75		—		—			61		—		—
	Equity permanent stake		39,868		—		—			21,356		—		—
	Income from equity		—		—		(1,406	)		—		—		—
	Income from the use of electric grid		—		—		622			—		—		570
	Equity method income		—		—		(1,422	)		—		—		1,801
			39,943		—		(2,206	)		21,417		—		2,371
CHAPADA DO PIAUÍ I S.A.	Equity permanent stake		109,497		—		—			119,057		—		—
	Advancement for future capital increase		14,040		—		—			—		—		—
	Income (Expenses) Equity Method		—		—		(9,560	)		—		—		(1	)
			123,537		—		(9,560	)		119,057		—		(1	)
Chapada do Piauí II Holding S.A	Equity permanent stake		142,187		—		—			108,022		—		—
	Income (Expenses) Equity Method		—		—		(2,358	)		—		—		—
			142,187		—		(2,358	)		108,022		—		—
Eólica Serra das Vacas Holding S.A.	Equity permanent stake		97,374		—		—			57,877		—		—
	Advancement for future capital increase		25,005		—		—			—		—		—
	Income (Expenses) Equity Method		—		—		(592	)		—		—		(486	)
			122,379		—		(592	)		57,877		—		(486	)

F-241

NOTE 47 – SALARIES OF KEY PERSONNEL

Salaries of key personnel of the Company (directors and advisors) are the following:

	12/31/2015		12/31/2014		12/31/2013
Compensation of Executive Officers and Board Members		33,625		28,021		25,548
Salaries and social fees		6,511		5,934		5,698
Others		2,700		1,938		2,617
		42,836		35,893		33,863

NOTE 48 – SUBSEQUENT EVENTS

48.1 Bank guarantee Belo Monte Transmissora

The Subsidiary Eletronorte approved on February 25, 2016, the contracting of Bank Guarantee for the interim loan with BNDES in favour of Belo Monte Transmissora de Energia S.A. The guarantee shall be issued by the Bank Credit Suisse with the following conditions:

• Guarantee Value: R$ 100,000

• Remuneration: 4.00% p.a.

• Periodicity: Quarterly anticipated

• Issuance tariff: R$ 1,500.00

• Guarantee: fiduciary lien on Extra market shares

48.2 Amendment to Provisional Measure No. 677, of October 7, 2015 – Rearrangement of debt of the Subsidiary CELG D with Itaipu.

On October 7, 2015, an amendment to the Provisional Measure No. 677/2015 was approved in the Plenary, which deals about concession agreements in the electric sector, allows companies included in the National Privatization Program – NPP from 2015 to rearrange debts in foreign currency so it can be converted to national currency, with monthly remuneration based on the SELIC rate variation and with maximum period of 120 months considering the grace and amortization periods.

48.3 Ratification of the Appraisal Report of Assets of RBSE

48.3.1 Subsidiary Eletrosul

The National Agency of Electric Energy – ANEEL, through order No. 2,296, of July 14, 2015, ratified, through decision of its Management, the value of R$ 1,007,043, for the reference period of December 2012, corresponding

F-242

to the instalment of the transmission assets of electric energy existent on May 31, 2000, still not amortized for purposes indemnification for the facilities of Existent System Basic Network (Rede Básica do Sistema Existente - RBSE) and other transmission facilities – RPC of the subsidiary Eletrosul Centrais Elétricas S.A., as established in the article 15, §2, of Law 12,783/2013.

The Appraisal Report delivered by Eletrosul to ANEEL had certified initially the value of R$ 1,061 million, reference date of December 2012, as base value for the mentioned indemnification, whereby the residual current book value of the referred assets is of USD 514 million. The Economic-Financial Inspecting Authority (SFF), internal body of ANEEL, through Supervision Report No. 071/2014 of Non-Amortized and/or Depreciated Assets of the Company, existent on May 31, 2000, has estimated preliminarily in January 2015 the value of R$ 995 million, reference date December 31, 2012, for the mentioned indemnification. However, Eletrosul has presented clarifications to ANEEL, with the purpose of increasing the value of such indemnification by its ratification by the Management of ANEEL, in accordance with the presented Appraisal Report.

48.3.2 Subsidiary Furnas

The Subsidiary Furnas Centrais Elétricas S/A has received by the Economic-Financial Inspecting Authority (SFF), internal body of ANEEL, the Supervision Report No. 78/2015 regarding the non-amortized and/or depreciated assets of the Existent System Basic Network (Rede Básica do Sistema Existente - RBSE) of Furnas, existent on May 31, 2000, through which the supervision team of SFF presented its stance on the indemnification value established in the article 15, §2, of Law 12,783/2013, which Furnas has the right to be paid, establishing it in R$ 9,000,000, reference date December 31, 2012.

The Subsidiary Furnas, based on appraisal technical report, had requested the value of R$ 10,699,000. Furnas maintains registered the book value of R$ 4,530,000 in this regard, referring to the reference date of December 31, 2012.

48.3.3 Subsidiary CHESF

On July 13, 2016, the Economic-Financial Inspecting Authority (SFF), internal body of ANEEL, disclosed the Supervision Report No. 0084/2016-SFF regarding the non-amortized and/or depreciated transmission assets of the subsidiary Company Hidro Elétrica do São Francisco (“CHESF”), existent on May 31, 2000, in which SFF has presented its firs understanding related to the remuneration value established in article 15, §2, of Law 12,783/2013, which CHESF has the right to be paid, in the value of R$ 5,092.400, on the reference date December 31, 2012.

On August 3, 2016, ANEEL ratified, through resolution of its Management, the value of R$ 5,092,384, corresponding to the instalment of such assets.

48.4 Remuneration of assets of Generation and Transmission.

Through Norm Resolutions 589 and 596, ANEEL, for purposes of remuneration, has defined the criteria for calculation of the New Replacement Value (NRV) for the transmission assets existent on May 31, 2000, and not yet depreciated (Rede Básica do Sistema Existente - RBSE) and the criteria and procedures for calculation of the instalment of investments linked to reversionary property, not yet amortized nor depreciated, of hydroelectric facilities which concessions were postponed or not, under the terms of Law 12,783.

F-243

a) Assets of Energy Generation

On October 2, 2015, the subsidiary Furnas has presented evidence documentation of the investments linked to reversionary property, not yet amortized nor depreciated, of the hydroelectric plants Corumbá, Funil, Furnas, Luiz Carlos de Barreto de Carvalho, Maribondo and Porto Colômbia, with a total installed power of 4,617 MW*, which concessions were renewed under Law 12,783/2013, for the purposes of process of request of generation supplementary remuneration. The documentation presented indicates a value of R$ 1,311,900 as reference value for the mentioned supplementary remuneration, whereby the residual book value of the mentioned assets, on October 2, 2015, was of R$ 995,718.

On December 11, 2014, the subsidiary Chesf presented to ANEEL evidence documentation of investments linked to reversionary property, yet not amortized nor depreciated, of hydroelectric facilities Xingó, Paulo Afonso I, II, III and IV, Apolônio Sales (Moxotó), Luiz Gonzaga (Itaparica), Boa Esperança, Pedra and Funil, with total installed power of 9,208.5 MW, which concessions were renewed under Law 12,783/2013 for purposes of process of request of generation supplementary remuneration. The documentation presented indicated the value of R$ 4,802,300 as reference value for the indicated complementary remuneration, whereby the residual book value of such assets, on December 11, 2014, was of R$ 487,822.

The remuneration related to certain assets of postponed concessions in the following amounts remain without ratification by the Concession Grantor:

	06/30/2016
Description	Chesf		Furnas		CGTEE		Total
Generation
Betterments and improvements		487,822		995,718				1,483,540
Thermal generation		—		489,644		356,937		846,581
		487,822		1,485,362		356,937		2,330,121

Until the ratification is issued by the Concession Grantor, including the definition on the form, earnings’ period and applicable remuneration, such values shall not be subject to monetary adjustment, being maintained by the historic costs.

b) Energy Transmission Assets

In accordance to the Norm Resolution 589, from December 10, 2013, the controlled companies below presented to ANEEL their appraisal reports of electric energy transmission assets existent on May 31, 2000 (“Appraisal Report”), for the purposes of remuneration process of facilities of the Existent System Basic Network – ESBN, established in article 15, §2, of Law 12,783/2013.

F-244

Appraisal Report
Company	Date		R$
Eletrosul		07/14/2015		1,060,632
Chesf		03/06/2015		5,627,200
Furnas		05/21/2015		10,699,000
Eletronorte		09/03/2015		2,926,000

Aneel has presented, through orders, the ratification of remuneration of electric energy transmission assets existent on May 31, 2000, of the controlled companies Eletrosul, Chesf and Furnas as established in the Normative Resolution 589, on the reference date of December 31, 2012, as established below:

ANEEL Approval
Company	Date		R$
Eletrosul		07/14/2015		1,007,043
Furnas		12/15/2105		8,999,520
Chesf		08/03/2016		5,092,384

On April 20, 2016, the Ministry of Mines and Energy – MME has published the Ordinance No. 120, which regulated the earning conditions of remuneration relative to the transmission assets of electric energy existent on May 31, 2000, denominated facilities of Existent System Basic Network (Rede Básica do Sistema Existente - RBSE) and other facilities of Transmission – RPC, not yet depreciated nor amortized, as established in article 15, §2, of Law 12,783/2013.

The Ordinance are comprehended by the reversionary assets which were not depreciated until December 31, 2012, when these companies had the maturity date of concession agreements anticipated, under the terms of Law No. 12,783/13 (converted from PM 579/12).

The remuneration for these assets shall be given as follows:

(i) By the use of corresponding capital of the assets, composed by remuneration and depreciation in addition to due taxes from the tariff process of 2017; whereby the remuneration shall be given through Weighted Average Cost of Capital and the depreciation shall be paid in accordance to the useful life of each asset incorporated under Regulatory Remuneration Base;

(ii) The cost of capital not incorporated since the concessions postponement until the tariff process shall be updated and remunerated by the cost of equity;

From the tariff process of 2017, the capital cost shall be remunerated by the Weighted Average Cost of Capital for the period of eight years.

F-245

(iii) For the companies which did not have the values ratified yet, it was considered as the best alternative of the Management the supervision appraisal issued by ANEEL.

The referred Ordinance mentions that the owed values shall compose the regulatory remuneration base of the companies, i.e. shall be transferred to energy tariffs of the consumers and it shall begin from the tariff process of 2017. Besides the remuneration of assets, the Ordinance also establishes that the capital cost incurred by the companies may be included in these values.

On June 30, 2016, the Company effected its estimation of the updated values of the expenses related to investments, expansions and/or improvements in certain assets of the postponed concessions, as indicated below:

Transmission	06/30/2016
	Chesf			Eletronorte			Eletrosul			Furnas			Total
Basic Net - RBSE - Historical Result		1,187,029			1,732,910			513,455			4,530,060			7,963,454
Updating - IPCA and compensation		8,618,015			3,034,562			1,447,350			12,710,295			25,810,222
Financial asset total value (updated)		9,805,044			4,767,472			1,960,805			17,240,355			33,773,676
Income - recognized in profit and loss in 2016
Operating Income		8,618,015			3,034,562			1,447,350			12,710,295			25,810,222
Income Taxes		(2,930,125	)		(1,031,751	)		(492,099	)		(4,321,500	)		(8,775,475	)
Net profit		5,687,890			2,002,811			955,251			8,388,795			17,034,747

Such accounting was performed with basis on the premises defined above, considering the interpretation what regards the Ordinance MME 120/2016, aiming at reflecting in these quarterly information the most accurate economic and results situation. However, as a result of occasional regulation or act in a different sense, which might come to be performed by ANEEL, including in the tariff process of 2017, when the payment of such credits shall be initiated, the book values shall be reviewed and adjusted, with positive or negative effects reflected prospectively, with impact in the period result in which such facts occur.

48.5 Lawsuit for termination of the electro-mechanic assembly agreement- Angramon

A Lawsuit, proposed by the Angramon Consortium with the purpose of terminating the electro-mechanic assembly agreement, based on the payment default by Eletronuclear for more than 90 days, as well as on the non-application, also by Eletronuclear, of penalties or of enforcement of the contractual guarantee.

Eletronuclear has presented defence in the lawsuit through its lawyers and the Angramon Consortium has presented a reply. The anticipation of court decision`s effects has not been granted by the judge. In the same decision, the subpoena of the Federal Union has been determined in order to evaluate occasional interest in the litigation, what has been done on March 22, 2016.

48.6 Impairment Angra 3

In the fiscal year ended on December 31, 2015, the subsidiary Eletronuclear has recognized a provision for decrease of recoverable value (“impairment”) in the amount of R$ 4,973,111, being R$ 4,475,899 on September 30, 2015, and R$ 497,212 on December 31, 2015, related to the project Usina Angra 3, causing a reduction of the corresponding Fixed Assets (see Note 17), which had as counter entry the account of operational provisions. On December 31, 2015, the accumulated value of the “impairment” of Usina Angra 3 in the fixed asset is of R$ 6,063,454 (R$ 1,090,343 on December, 2014).

F-246

The Company defined the project Angra 3 as a cash generating unity for purposes of impairment and uses the value in use to determine the recoverable value.

By virtue of the received notices and negotiations underway with project suppliers, there was a change of schedule in the expectation of conclusion, arising out of the temporary suspension of agreements for 90 days, renewable for more 30. With this reschedule, the new date for the start of operations has become December, 2020, with synchronisation established for December 31, 2018. These facts also caused new risks evaluation attributable to the context of project execution. The Company evaluated that such events created, on the reference date of September 30, 2015, evidences sufficiently relevant for the performance of the impairment test in the period.

The methodology applied in the impairment test of the project considers as recoverable asset the costs already incurred until the date of these Financial Statements, comparing with a discounted cash flow extended until the end of the economic useful life of the Plant which corresponds to 40 years, starting from the new start date of the operation, May 1, 2019, considering as economic useful life the license period of the operation compatible with Plant Angra as a similar project.

The discount rate was calculated by the WACC methodology (Weighted Average Cost of Capital), considering the traditional parameters and usually employed in the market.

By virtue of the performance of the impairment test in the period, there was an increase at the discount rate in 0.96%, from 4.51% (December 31, 2014) to 5.47% (September 30, 2015). This rate was maintained for the impairment test performed again on December 31, 2015. The main factors that contributed for this increase were:

ü Beta update: for the beta calculation, a weighting of the betas of comparable companies used in the Technical Note of ANEEL 381/2012 was considered, updated to December 31, 2015, and leveraged by the project capital structure. The adoption of this calculation for the beta consists of the fact that no company of electric energy generation in Brazil possesses assets of nuclear energy generation, in opposition to the sample of companies used in the calculation of beta by ANEEL, which considers American companies with at least 2 nuclear plants of energy generation.

ü Consideration of an additional risk (alfa) related to the project execution.

Another relevant assumption used in the impairment calculation of the project Angra 3 is the synergy among the plants. The Plants Angra 2 and Angra 3 come from similar projects and for that reason the costs parameter of Angra 2 has been used in Angra 3. However, there will be a cost/productivity gain in the entry of Angra 3 as there is no need to duplicate all costs generating activities, since the common areas shall be serving both plants. The synergy evaluated for the project, considering internal studies based on the use of workers of the subsidiary Eletronuclear has pointed to a level of circa 24.5% for the estimation of the operational cost PMSO of Plant Angra 3 in the impairment test of the project.

The whole budget of the project was updated for the basis December 2015, as to reflect the impact of strong oscillations in the inflation and exchange rate indexes, besides the reprogramming of activities given the new project schedule.

F-247

It is important to point out that in January 14, 2016, Law 13,255 was approved, where the income was estimated and expenses established for the Union for the fiscal year of 2016, including therein the Investment Budget in the companies in which the Union, directly or indirectly, holds the majority of the corporate capital with voting rights, including the approval of budget allowance and execution for investment action in the project of “Implementation of Thermonuclear Plant Angra 3”, belonging to Eletronuclear, which is expected to be ready to maintain its physical, budgetary and financial execution after evaluation of the Public Budget Control Joint Committee of the National Congress, as well as by the plenary of the National Congress.

A compliance due diligence process of the electro-mechanic assembly agreement of the plant Angra 3 is underway before the Federal Court of Auditors and, on February 3, 2016, Eletronuclear was noticed to provide economic-financial data regarding the project. In accordance to such notice, the process shall be sent to the national congress for exam and evaluation concerning the continuing or paralysation of the physical, budgetary and financial execution of the project. Eletronuclear has answered the notice and is awaiting the analysis of the Court.

Despite the chronological alteration of the project, the Company is assuring the preservation and integrity of the services already performed, and besides that will adopt measures for the implementation of actions at a performance level with the purpose of trying to recover possible impacts in the project schedule for the Usina Angra 3 (December 2020). The company also believes that the net residual value verified after the impairment tests may be recovered throughout the commercial operation of this projet Angra 3.

During the first semester of 2016, the Company altered the expectation of the conclusion of the project Angra 3, whereby the new prediction for the start of operation is December 2022. On December 2015, this prediction was December 2020. In this same period, the entire project budget was updated for the basis of July 2016, reflecting the impact of strong oscillations in the inflation and exchange rate indexes, besides the reprogramming of activities given the new project schedule.

The Company, considering this new situation, reviewed the assumptions of the project Angra 3 and performed a new impairment test of it.

The main assumptions used in the impairment test of this project are depicted below:

ü Organic growth compatible with the historic data and contractual inflation tariff readjustment;

ü The discount rate used in the impairment test of the second quarter of 2016 was of 5.47%, calculated by the WACC methodology (Weighted Average Cost of Capital). The macroeconomic assumptions of the discount rate were updated considering the reference date of June 30, 2016. Such updates resulted in a small decrease, suggesting an immaterial oscillation in the impairment calculation. For this reason, it was not necessary the alteration of the rate used on December 31, 2015.

ü The project contractual tariff of Angra 3 is of R$ 148.65/MWh. For the impairment test, on the reference date of June 30, 2016, the used tariff was adjusted by the indexes established contractually, resulting in the value of R$ 234.18/MWh. The base used in the occasion for the calculation of this tariff had no equivalence with the service cost of the plant, as well as was not compatible with the average practiced in thermic auctions in the occasion, and thus is at a different and inferior level to its sequence and does not proportionate the economic and financial equilibrium of the project;

F-248

ü The Plants Angra 2 and Angra 3 come from similar projects and for this reason the costs parameter of Angra 2 has been used in Angra 3. However, there shall be a productivity/cost gain in the entry of Angra 3 as it is not needed to duplicate all cost generating activities, since common areas shall serve both plants.

The synergy verified for the project, considering internal studies based on the use of workers by the Company has pointed to a level of circa 25.4%, being this percentage used for estimation of operational cost PMSO of Plant Angra 3 in the impairment test.

The Company developed a cash flow from the result values projected for December 2022, at prices of June 2016 for the period of useful life of the plant under analysis. The estimated period is of 40 years for its similarity with Plant Angra 2, which enjoys an operation license for this period. This period is very conservative before the known expectation of operational life of this kind of installation.

The analysis performed by the Company verified a negative Net Present Value (NPV) of R$ 10,155,202. Such result determined a total negative register in the result of the second quarter of 2016 of R$ 4,091,748 and as counter entry an additional impairment write-down in the fixed asset of Angra 3 in the value of R$ 2,414,479 and an additional provision of recoverable value of Nuclear Plant Angra 3, on June 30, 2016, corresponding to R$ 8,477,433 (R$ 6,063,454 on December 31, 2015).

48.7 Renegotiation of the financing agreements debts

On July 07, 2016, through ECF 3,275/2016 a reprogramming of the financing agreements debt of the subsidiary Eletrosul against Eletrobras was executed, with suspension of the enforceability of the principal with incorporation of tax rates, from November to July 2016, in the amount of approximately R$ 168,500.

48.8 Extension of the insurance agreement of Projects Angra 1 and Angra 2

The subsidiary Eletronuclear renewed for another year the insurance of the nuclear plants Angra 1 and Angra 2, with BB Seguridade/Mapfre. The Statement of Insurance Coverage was issued on 10.29.2015 and has a coverage of 24 hours of the day 30.10.2015 to 24 hours of 10.30.2016, fact which was already communicated to the National Committee of Nuclear Energy (NCNE). This kind of guarantee is mandatory for the functioning of plants and its terms comply with the Treaty of Paris, in which Brazil is a signatory. The agreement covers risks up to R$ 1.3 billion.

On September 16, 2016, the subsidiary Eletronuclear has made public that it shall promote a bid in the form of on-site bidding for the provision of nuclear risk insurance services for the plants Angra 1 and Angra 2 for coverage one year after the agreement termination.

48.9 Electric energy purchase and sale agreement

The subsidiary Furnas, on March 3, 2016, exercised the option of the electric energy purchase agreement in free environment with the company Santo Antônio Energia S/A, which supply would be in the period comprehend between January 1, 2017, to January 31, 2020, proceeding to the collection of the amount of R$ 156,747, regarding the original value of the negotiation (R$ 130,000) for the future delivery of this energy and its corresponding update (R$ 26,747).

F-249

48.10 Credit line before Caixa Econômica Federal

The subsidiary Eletronorte has approved on January 19, 2016, the fundraising of a Bank Credit Note of R$ 400,000 before Caixa Econômica Federal, with the purpose of financial aid to the cash flow of the Company. The credit line shall be made available to the extent it is necessary.

48.11 Issuance of Commercial Papers

On March 7, 2016, the subsidiary Eletrosul performed the 2^nd issuance of commercial papers in single series composed of 500 commercial papers with single face value of R$ 500, amounting to the total value of R$ 250,000, with maturity on March 2, 2017, remunerated at 100% of the accumulated variation of the daily average rates of DI + spread of 3.5% p.a. The issuance costs paid to Bank BTG regarding the structuring and placement commission and firm guarantee was of R$ 6,917.

49 Injection of capital North Energia S.A.

On February 2016, the Management of the Subsidiary Eletronorte approved the injection of R$ 119,880 in the investee Norte Energia S.A. to be performed on March 4, 2016. This value is related to a 19.98% stake that Eletronorte has in the investee, which increased its corporate capital to R$ 9,000,000. After the injection, the Subsidiary holds as invested capital the amount of R$ 1,798,200.

48.12 Absorption of advancement for future capital increase by the corporate capital

On January 14, 2016, the controlled companies of Eletrosul increased their corporate capital through transfer of funds received as advancement for future capital increase as evidenced below:

Controlled Companies	Value
Chuí IX	BRL	49,892
Hermenegildo I	BRL	173,220
Hermenegildo II	BRL	173.244
Hermenegildo III	BRL	147,598

48.13 Advancement for Future Increase of Capital

On April 6, 2016, the Board of Directors of the Company approved the injection of funds in the Company in the amount of R$ 1 billion through Advancement for Future Increase of Capital to be performed by the controller shareholder Union.

The referred funds shall be destined to the coverage of capital expenses for the year of 2016, established in the Company’s budget, forbidden the use of these funds for transfer to the subsidiaries distributors of Eletrobras.

The Company establishes that the referred Advancement for Future Increase of Capital is necessary to aid the sources of necessary funds for compliance with the Global Expenses Program (GEP) 2016, approved by Decree No. 8,632, from December 30, 2015, given the frustration of ingression of some funds originally predicted in its capital budget, such as: (i) non-receipt of dividends expected from some investees given the losses suffered in the fiscal

F-250

year of 2015; (ii) non-receipt, up to this date, of the values referring to the supplementary indemnifications of the transmission and generation concessions, renewed under the terms of Law 12,783/2013, given the need to await the regulation by Concession Grantor of the conditions for such payment; and (iii) difficulties in accessing currently the debt market given the current macroeconomic and sector conditions.

48.14 Absorption of accumulated losses

On April 29, 2016, in the 56^th Ordinary General Shareholders’ Meeting, the destination of the results of the fiscal year ended on December 31, 2015 was approved, with use of capital reserve for the absorption of the amount equivalent to the account of losses accumulated in the fiscal year, which surpassed the profit reserves.

	04/29/2016
Capital reserves before absorption		26,048,342
Absorption of accrued losses -12/31/2015		(12,181,172	)
Capital reserves after absorption		13,867,170

48.15 Conclusion of ANEEL about Order No. 63/2014

The Management of ANEEL, unanimously, in the ordinary session held on May 10, 2016, has concluded: (i) to receive the Administrative Appeal presented by the Centrais Elétricas Brasileiras S.A. – Eletrobras against the Order ANEEL No. 63/2014, issued by the Economic and Financial Oversight (SFF) of ANEEL, to reject it in its merits; and (ii) to determine Eletrobras: (ii.a) that the amortization of debit balance performed by sector agents which entered into financing agreements shall be inscribed directly in the specific account of funds of the Reversion Global Reserve – RGR, within the period of 30 days; (ii.b) to return the value of R$ 1,924.188 – amount referring to the amortization of financing not transferred to Eletrobras to RGR, verified within the period of 1998 to 2011, applying the inflation adjustment based on the rate of the Exclusive Extra-market Fund 5 – EEF 5, since the date of receipt in the ordinary account of Eletrobras until the date of the effective transfer to the account of RGR within the period of 90 days; (ii.c) to return the value of R$ 113,576 – amount referring to the appropriation of Eletrobras of financial burdens of RGR (default interest rates, fines and credit reserve commission), verified within the period of 1998 to 2011 -, applying the inflation adjustment based on the rate of Exclusive Extra-market Fund 5 – EEF 5, since the date of the receipt in the ordinary account of Eletrobras until the date of the effective transfer to the account of RGR within the period of 90 days; (ii.d) to incorporate these incomes monthly in the control of economic flow of the movements of RGR so they can be demonstrated separately; (ii.e) to improve the management system of the funds of RGR, including the development of an information system which allows a regulatory and social control in a transparent and efficient manner within the period of 180 days; and (ii.f) to direct to Economic and Financial Oversight (SFF) the demonstration of the financial enforcement after the fulfilment of the determinations within the period of 30 days.

On May 10, 2016, ANEEL has determined the development by Eletrobras to RGR of funds allegedly not transferred within the fund management as order ANEEL No. 63/2014. Eletrobras, in disagreement with the conclusion of the Executive Management of ANEEL regarding the matter, appealed in the Judiciary aiming at the cancelation of the conclusion of ANEEL about such order.

F-251

On August 9, 2016, ANEEL Board approved the suspension until September 27, 2016, as the Company’s request of its decision issued on May 10, 2016, which ANEEL determined the return by Eletrobras, to RGR, of resources allegedly had not been transferred under the management of the fund, as per Order ANEEL 63/2014.

On September 27, 2016 the Board of the National Agency of Electric Energy-ANEEL decided to partially grant the Administrative application filed by Eletrobras in which Eletrobras must return the amount of R$ 1,924,188,432.99 referring to the historical amount for amortization of financing not transferred by Eletrobras to RGR, calculated from 1998 to 2011, applying monetary correction, and, must return the amount of R$ 113,576,621.62, referring to the historical amount to ownership of Eletrobras financial charges of RGR (default interest, penalties and credit reserve commission ), calculated from 1998 to 2011, applying monetary correction, from January 2017, in monthly payments. Despite the partial success, Eletrobras shall take appropriate measures to obtain recognition of the right provided for in Articles 21a and 21b of Law No. 12.783/2013, as amended by Law 13,299/2016.

48.16 Alteration of the dividends payment proposal of the Subsidiary Eletronorte

On April 29, 2016, in Ordinary General Shareholders’ Meeting (OGSM) of the Subsidiary Eletronorte, the shareholders rejected the proposal of destination of the results of the fiscal year referring to the retention of a fraction of the fiscal year’s profits and voted for the distribution as dividends of 100% of the adjusted profits under the terms of Law 6,404/76 in the amount of R$ 80,558.

The accounting reflexes of this decision were registered at the date of the meeting and await definition regarding the dividends payment date.

48.17 Acquisition of corporate interests

48.17.1 Subsidiary Eletrosul

b) Paraíso Transmissora de Energia S/A

On June 27, 2016 the Celeo and Copel exercised their right of withdrawal from the company by transferring all of the shares held by Paraíso Transmissora de Energia S/A to the subsidiary Eletrosul. The transfer of 75.5% of the shares to the subsidiary Eletrosul awaits approval by ANEEL.

48.17.2 Subsidiary Chesf

In compliance with the provisions of the shareholders’ agreement of the SPEs Banda de Couro Energética S.A. and Baraúnas II Energética S.A., in 04/04/2016, the shareholder Brennand Energia S.A. paid the subscribed capital and not paid by Chesf. In this sense, the equity interest of the Company in the SPEs was diluted.

48.18 Supply of Gas Agreement - CIGÁS

In accordance to the management’s proposal for the 165^th Extraordinary Shareholders Meeting, with respect to the Fuel Consumption Account (FCA) coverage amounts in generation costs of the subsidiary Amazonas Distribuidora de Energia, there is the possibility of non-neutrality of the gas agreement, imposed by Resolution No. 2005 of ANEEL, as of December 15, 2015, which approved the price of the installment of natural gas transportation

F-252

provided by CIGÁS - Companhia de Gás do Amazonas to such Distributor in an amount below of the agreement price and by the Order No. 314 as of February 2, 2016, which set the amount of natural gas to be reimbursed by the FCA in 2016, related to commitments of take-or-pay and ship-or-pay of the Urucu-Manaus pipeline, of 4,076,156 m3/day, a lower level than the Contracted Daily Amount (“CDA”) of 5,420,000 m3/day as provided in the Purchase and Sale of Natural Gas Agreement.

Reports prepared by external consultants showed that these two regulatory constraints, considering the premise of the perpetuity of those decisions could lead to an imbalance to the end of the term of the aforementioned Purchase and Sale of Natural Gas Agreement, implying in a risk of loss to the Distributor, in the estimated amount of approximately R$ 6.8 billion, however, the Company evaluates as a low risk of materialization of such loss, because the proposed restrictions were decided on a budget formation process for the CDE/FCA and not in a process to analyze the costs of the gas agreement.

Decree No. 7.246/10 which regulates Law 12.111/09 provides that the price of fuel for own power generation or from third parties is also recognized for FCA reimbursement effect, including transportation expenses, capacity reserve of pipeline transportation and minimum consumption reserve, provided they are not included in the contracted energy costs and of own generation, i.e., in the Company’s evaluation, it is clear legal right relating to the full reimbursement of FCA-Isol and also there are judicial decisions in similar matters already issued in the 2^nd instance in which favors the cause claimed by the Subsidiary Amazonas Distribuidora.

In addition, on February 29, 2016, the Company filed a Request for Reconsideration before ANEEL in light of a budgetary restrictions imposed by the Regulatory Agency for the year of 2016. Until the date of presentation of the financial statements (June 30, 2016), the Request for Reconsideration is still pending for ANEEL consideration.

48.19 Oil Reimbursement – Resolution Aneel No. 427/2011

The Company motivated by Resolution Aneel No. 427/2011, which limits the reimbursement of the costs of electricity generation in Isolated Systems, filed a lawsuit to mitigate its effects. The Company believes that the reimbursement of the FCA is a clear legal right without limitation, in accordance to Law 12.111/2009.

Through said court lawsuit, the Second Instance Decision was issued and guarantees to the Company the full reimbursement of generation costs, removing the effects of Resolution ANEEL 427/2011. Accordingly, the Company remains fully reimbursed of its generation costs.

The Company believes that the loss risk is low due to the Decision already made, which is reinforced by Law 13.299/16 which brought the benefit of providing funds for the payment of refunds of fuel acquisition costs incurred up to April 30, 2016 by the concessionaires holders of the concessions referred to in Law 12.111/2009, proven but not reimbursed pursuant to the requirements of economic and energy efficiency referred to in § 12 art. 3^rd of such Law. Until the date of presentation of such quarter financial statements (June 30, 2016), it was not possible to estimate the amount related to the process.

48.20 Payment of debentures of the subsidiary Eletrosul’s Specific Purposes Vehicles (SPE)

On January 18, 2016, the controlled companies settled the debentures, as follows:

F-253

Date	Company	Debentures	Value
01/18/2016	Chuí IX	1st and 2nd issue		37.478
01/18/2016	Hermenegildo I	1st and 2nd issue		115.660
01/18/2016	Hermenegildo II	1st and 2nd issue		100.148
01/18/2016	Hermenegildo III	1st and 2nd issue		91.924
				345.210

48.21 Payment of financing and loans of the Subsidiary Eletrosul’s Specific Purposes Vehicles

On January 18, 2016, the controlled companies of Eletrosul effected the settlement of short-term bridge loan with BNDES, as follows:

Date	Company	Type	Financial Institution	Value
01/18/2016	Chuí IX	Bridge Loan	BNDES		13.145
01/18/2016	Hermenegildo I	Bridge Loan	BNDES		49.681
01/18/2016	Hermenegildo II	Bridge Loan	BNDES		47.244
01/18/2016	Hermenegildo III	Bridge Loan	BNDES		39.994
					150.064

48.22 Amendments to Law 13.299/2016

On June 21, 2016, it was converted into Law No. 13.299 / 2016, the Conversion Law project No. 11/2016 of Provisional Measure No. 706/2015 (“PLC 11/2016”).

Among other matters, the said project of law recommended different and consistent treatment with the specific challenges of the North region, in order to improve the legal environment governing the electricity sector, which at the time of the enactment of Law No. 12.111 as of December 9, 2009, were not connected to the National Interconnected System – SIN. Among the challenges, we highlight: structural dependence on fossil fuels and operating and maintenance higher costs.

In this context, and applying the amendment to item IX of art. 13 of Law 10.438/2002, which authorized the reimbursement by CDE of the proven fuel expenses and not reimbursed by requirements of economic and energy efficiency, including monetary restatement incurred until April 30, 2016, the Company recorded the amount of R$ 286,014 to monetary restatement linked to this item.

From the amount of R$ 581,221 recognized in the period January to June 2016 regarding the update of the credit balance, R$ 295,207 relates to the update of the renegotiated credits and R$ 286,014 relates to the update of the current outstanding balance until April/2016.

48.23 Judicial Blocks – Process Fator K – UHE Xingó

On May 31, 2016 the Company had blocked funds for the 12^th Civil Court of Recife County in the amount of R$ 125.5 million as seizure, regarding the lawsuit of Fator K, in the blocked amount of R$ 497.2, until this date. These legal blocks may impact the financial capacity of the Company and its business, in the short term, especially considering its status as a public electricity service concessionaire, however, the Company’s Management is taking the applicable legal measures to addressing this situation.

F-254

48.24 Sale of interests and termination of subsidiaries

On July 22, 2016, the Centrales Hidrelectricas de Centroamerica (hereinafter the “CHC”), in which the Company holds 50% of the capital stock, sold all the shares of its wholly owned subsidiary Centrales Hidrelectricas de Nicaragua (hereinafter “CHN”), which holds the concession of hydro electrical project of Tumarin, located in Nicaragua, with installed capacity of 253 MW (“Project”), by the total amount of US$ 44,200 (“Price”). The sale was made to the Nicaraguan company Eletricidad – ENEL, Nicaraguan state-owned energy company and to the Distribuidora de Electricidad del Norte S.A. – Disnorte, which will be the buyer of the electricity to be generated, which will enable the continuation of the project.

Whereas the project was the one developed by CHC, through the wholly owned subsidiary CHN, which was sold, measures will also be adopted for the discontinuance of Eletrobras’ participation in CHC.

The investment of Eletrobras in CHC, registered on June 30, 2016 is of R$ 87,800, existing, however, a provision for losses of such investment in the total amount invested.

48.25 Merger of the investee Linha Verde Transmissora de Energia S.A. by the subsidiary Eletronorte

Until June 30, 2016, the subsidiary had not received the “agreed” of the Department of Coordination and Governance of State Owned Companies (DEST) to implement the merger of the investee Linha Verde Transmissora de Energia S.A.

DEST issued its approval on July 8, 2016, and thus Eletronorte provides for the processing of the merger of the investee in the next quarter of 2016.

48.26 Renegotiation of acknowledgment of indebtedness agreements of the subsidiary Amazonas Energia

Amazonas Energia renegotiated with Br Distribuidora S.A. and with Companhia de Gás do Amazonas (“Cigas”) acknowledgment of indebtedness agreements incurred until December 2014, taking as collateral the Fuel Consumption Account receivables (“FCA”), and personal guarantee (fidejussória) from its parent company, Eletrobras.

Due to the mismatch of the transfer of FCA funds, Amazonas Energia continues to negotiate new agreements with fuel suppliers to incurred debts as of December 2014, totaling approximately R$ 5.5 billion.

On April, 2016, Br Distribuidora entered in court to collect the amount of R$ 1.7 billion, which is a part of the amount that Amazonas is renegotiating.

Amazonas Energia and Eletrobras are adopting the possible measures to remedy the debt in case. In this regard, on July 4, 2016, the amount of R$ 432,780 related to this debt was paid with funds received from the FCA.

F-255

48.27 Extension Disapproval and Return at Any Time of the Concessions and Transfer of Controlling Interest of the distributors CEPISA, CEAL, ELETROACRE, CERON, Boa Vista Energia and Amazonas Distribuidora de Energia.

On July 25, 2016, the 165^th Extraordinary Shareholders Meeting resolved the non-extension and return at any time of the concessions and transfer of control of the controlled companies until December 31, 2017 of the distributors of energy of Eletrobras, as Provisional Measure 735, as of June 22, 2016.

The Company also decided that the distributors who not had their concessions extended, shall, if they have the consent of the Concession Grantor, remain responsible for the operation and maintenance of public distribution services of their locations until the transfer of their equity controls, in accordance with Provisional Measure 735/2016, which should occur until December 31, 2017.

Due to the fact that these are federal state owned companies, the transfer of control of the Distribution companies must observe the rules of the National Privatization Plan (“ND”), in particular Law No. 9491 as of September 9, 1997, competing to the National and Privatization Council (“CND “) to approve the operational mode to be applied to each privatization.

Eletrobras also informs that the Distribution companies were included in the Partnership and Investment Program (“PPI”) created by Provisional Measure 727/2016, in order to facilitate the privatization.

On August 3, 2016, the Ordinances of the Ministry of Mines and Energy numbers 420, 421, 422, 423, 424 and 425 were issued, naming respectively the Distributors Amazonas Distribuidora de Energia S.A, Companhia e Eletricidade do Acre – ELETROACRE; Centrais Elétricas e Rondônia S.A – CERON; Companhia Energética do Piauí – CEPISA; Companhia Energética de Alagoas – CEAL; and Boa Vista Energia S.A, responsible for providing public services of electricity distribution, temporarily, in order to ensure continuity of the services, in accordance with Article 9^th, first paragraph, of Law 12,783, of January 11, 2016.

Given this definition, the Eletrobras Group distribution companies will carry out re-bifurcation of the portion of the financial asset in the corresponding proportion, until December 31, 2017, deadline of the distributors to remain responsible for the operation and maintenance of public services.

48.28 Order from MME regarding to Companhia Energética de Roraima (“CERR”)

As per the Order of the Ministry of Mines and Energy – MME, of August 3, 2016, the Companhia Energética de Roraima (“CERR”), a company under control of the state of Roraima, had rejected its application for renewal of the concession of electricity distribution services, granted by Ordinance MME 920, as of November 5, 2016.

In this sense, pursuant to Article 9^th, first paragraph, of Law 12,783/2013, the Ministry of Mines and Energy appointed the subsidiary of Eletrobras Boa Vista Energia S.A. (“Boa Vista”), as the responsible for providing the distribution of public service of electricity in the area related to the concession of CERR in the state of Roraima, until there is assumption of new concessionaire in new auction to be held or until December 31, 2017, whichever occurs first.

F-256

Due to non-renewal of the concession of the Companhia Energética de Roraima – CERR, the shareholders’ agreement entered between Eletrobras and the State of Roraima, on September 12, 2013, to shared management of CERR lost its validity in accordance with the provision of such instrument.

The obligations of Boa Vista in the temporary provision of service will be taken by the new concessionaire, in accordance with the bidding documents to be released by the Concession Grantor and it is not entitled to Eletrobras or Boa Vista, during the provision of temporary services, to make any contribution of resources in CERR, even for maintenance or operation of distribution services.

48.29 Suspension of the Conclusion of ANEEL regarding the Order No. 63/2014

On August 9, 2016, ANEEL Board approved the suspension until September 30, 2016, as the Company’s request of its decision issued on May 10, 2016, which ANEEL determined the return by Eletrobras, to RGR, of resources allegedly not transferred under the management of the fund, as per Order ANEEL 63/2014.

48.30 Cancelation of the Auction of Privatization of CELG-D

On August 16, 2016, the Company informed the market that the bid regarding the Privatization Auction of the subsidiary CELG-D was considered deserted for lack of interested parties and therefore the public session of Auction of CELG-D, which should take place in August 19, 2016 at BM & FBOVESPA, was canceled.

The Company informs that the privatization conditions approved by the National Council on Privatization (“CND”) and the National Bank for Economic and Social Development (“BNDES”), pursuant to the rules of the National Privatization Plan (“PND”) will be reassessed, in particular the Law. 9.491 as of September 9, 1997, to launch a new bid to privatize CELG-D.

48.31 Renegotiation of Debts with BNDES

It was authorized by the National Economic and Social Development Bank – BNDES, on July 12, 2016, the suspension of the start of the debt principal payment and the partial suspension of the payment of interest monthly calculated arising out the agreement with BNDES to implementation of Angra 3 Plant. As per the original agreement clause in case, the early repayment of the principal debt would be on July 15, 2016.

According to the renegotiation, the suspension of the payment of the principal for 24 months was set out, comprising the period from July 15, 2016 until June 15, 2018. With regard to the debt burden, the payment of 70% of interest during the period from July 15, 2016 until February 15, 2017 was suspended. As of March 15, 2017, the subsidiary Eletronuclear will have to pay the full amount of charges monthly calculated.

48.32 Amendment of the prognosis and addition of contingencies

48.32.1 Subsidiary CGTEE

F-257

On September 19, 2016, CGTEE controlled amended the prognosis for probable loss of a process in the amount of R$ 28,478.

On September 19, the subsidiary CGTEE added six new processes with possible prognosis of loss in the total amount of R$ 106,427.

48.32.2 Subsidiary Eletrosul

On September 19, 2016, contingencies already accrued suffered an update in the amount of R$ 4,876.

On the same base date, the subsidiary Eletrosul increased in R$ 5,784 the risk provision accounted for and, based on the change of prognosis of the existing claims, decreased in R$ 241,456 the claims that were classified as possible loss.

48.32.3 Subsidiary Ceron

On September 19, 2016, the subsidiary Ceron increased in R$ 5,084 the risk provision accounted for and increased in R$ 8,639 the new claims classified as possible loss.

48.33 Suspension of the operations of Candiota thermoelectric power plant

On September 12, 2016, the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) fined in R$ 75,000 and ordered the suspension of operations of Candiota thermoelectric power plant, which belongs to the subsidiary CGTEE.

According to IBAMA, the power plant was not complying with the agreements it had entered into with the environmental governmental body with a view to reducing the release of gases and oil to the environment. To resume operation CGTEE will have to comply with the pollutant reduction determinations.

48.34 Beginning of Commercial Operation – Belo Monte

The second UG (management unit) of Belo Monte site and the third UG (management unit) of Pimental site started to operate on July 16, 2016 and on August 5, 2016, respectively.

48.35 Judicial reorganization Abengoa

The Company has been aware of the request of judicial reorganization filed on January 29, 2016, by the companies Abengoa Concessões Brasil S.A. (“Abengoa Concessões”) and Abengoa Greenfield Brasil Holding S.A. (“Abengoa Greenfield”) under the terms of Law 11,101/05. The request was distributed at the 6^th State Court of Rio de Janeiro and awaits acceptance.

F-258

Abengoa Concessões is shareholder of companies in which the Subsidiary Eletronorte holds equity ownership. This fact does not imply the judicial reorganization of companies in which the Company and Abengoa Concessões Brasil Holding S.A. hold stakes, since these companies are in operation and intent to keep performing their activities, as well as fulfilling their duties regularly.

To the present date, this process of judicial reorganization did not have impact in the operations of the Company, neither in the preparation and presentation of the financial statements related to the fiscal year ended on December 31, 2015. The Management shall keep monitoring the unfolding of this matter, as well as the occasional direct and indirect consequences for the Company, should they exist.

48.36 RBSE Recognition – Investees

a) CTEEP

On June 30, 2016 CTEEP – Company of Electricity Transmission Paulista, in which Eletrobras participates in minority form with 35,40% of the share capital, made the disclosure of its interim financial statements with the audit report containing qualified opinion on valuation and accounting of assets RBSE.

The management of CTEEP understand that although the basic values relating to RBSE facilities are available and approved by the Board of ANEEL, there are still many uncertainties, it is not possible to estimate reliably the updated value of this right and, therefore, keep in its records the historical balance of these assets until they get more detailed guidance by regulatory agencies to measure reliably the asset.

Thus, Eletrobras, with the use of public data and proprietary methodology, simulated updating and accounting of these assets on the base date of September 30, 2016 and the reflexes that would impact the results from the equity.

The simulated values are as follows:

F-259

Transmission	09/30/2016
	CTEEP *
Basic Net - RBSE - Historical result		1,490,996
ANEEL Approval assets value		3,896,328
Updating - IPCA and compensation		2,421,651
Financial asset total value (updated)		7,808,975
% equity ownership		35.40	%
Profit and Loss
Operating Income		6,317,979
Income taxes Allowance		(2,148,113	)
Estimated net profit on CTEEP		4,169,866
Equity income		1,476,133
Potential effect on Eletrobras’s results		1,476,133

b) CEEE GT

CEEE-GT invested in which Eletrobras participates in minority way with 32.59% of the capital had on June 30, 2016 the amount of R$ 1,333,934 related to the portion of non-depreciated transmission assets and existing on May 31 2000 belonging to the Basic Network of the existing system – RBSE.

Following this compensation process for assets linked to RBSE, Aneel published Normative Resolution No. 589, of December 10, 2013, defining the criteria for calculating the New Replacement Value (NRV) of transmission facilities, for compensation purposes.

In this sense, considering the commands of ANEEL Resolution, CEEE-GT, on December 27, 2013, sent to the regulator the schedule for completion of the evaluation report value that these assets considering the criterion of new replacement value.

As Order No. 1643 issued by ANEEL on June 16, 2016, CEEE-GT obtained as approved amount of appropriate compensation to assets not fully depreciated and existing on May 31, 2000, the amount of R$ 836,283 on the basis of 31 December 2012. Since the gross value of property for compensation purposes (New Replacement value – VNR) totaled R$ 2,741,278.

Within this context, was issued on April 20, 2016 Ordinance No. 120 MME, which established that the amounts approved by ANEEL under the non-depreciated assets on May 31, 2000, start to compose the Regulatory Asset Base of the transmission and the cost of capital of these added to its Annual Revenue Allowed – RAP.

F-260

Also determined the Ordinance, the capital cost of these assets will be recognized from the 2017 tariff process, through the adjustment and revision as the rules in the concession agreements and should incorporate the RAP from said process for a period of eight years. In addition, Ordinance No. 120 MME determined that the cost of capital is not built from the extension of the concessions to the tariff review, should be updated and paid for the cost of equity, real, the transmission segment, defined by ANEEL.

In this way, the final amount of R$ 1,333,934 consists of the approved amount for compensation purposes, the relevant property of the Basic Network Existing System – RBSE added capital cost (compensation and depreciation) date to the period from June 2016, which is paid for the cost of equity segment.

Therefore, the CEEE-GT recorded a gain of R$ 606,482 net of taxes, and reflexively registered by Eletrobras by equity amounting to R$ 197.652 million.

48.37 Belo Monte Arbitration

Eletrobras hold a total of 49% of the capital of Norte Energia SPE SA (NESA), responsible for the construction of the hydroelectric plant of Belo Monte. There is a divergence between the partners as the application of the clause in the Shareholders’ Agreement that deals with the purchase and sale of energy generated by the Belo Monte dam, to be aimed at hiring Free Environment – ACL, a portion of. While the partners interpret that Eletrobras must acquire this energy, this Company believes that such an obligation does not exist. The Shareholders ‘Agreement provides that disputes be settled by arbitration and on April 2016 the Shareholders’ Meeting of North Energy AS (“NESA”) ruled by the introduction of such a procedure.

48.38 Compulsory Loan

Eletrobras adjusted the amounts recognized in financial statements as of December 2014 to reflect subsequent events that provided evidence of the conditions that existed at the end of the reporting period to which they relate date of issue of these financial statements, this way, the total of subsequent adjustments arising from the compulsory loan had a net effect of R$ 4,141,503 in financial statement as of December 2014 and, consequently, in the present financial statement, reflecting effect such adjustments brought about a reversal of R$ 4,141,503. See Note 31.

In the first half of 2016, the Company revised its measurement estimates and the loss probability of certain judicial lawsuits relating to the compulsory loan. These facts resulted in an increase of R$ 2,060,106 in the provision for contingencies in the period ended on June 30, 2016.

48.39 Subsequent events – ICMS (valued added tax) – Fuel accounting consumption

F-261

Eletrobras set the amounts recognized in its financial statements to reflect subsequent events that demonstrate conditions that existed at the end of the reporting period referred to the financial statements, this way was made the adjustment as described on note 42.

48.39 Provisional Measure No. 735

On June 23, 2016, Provisional Measure No. 735 stablishes that from 1 January 2017, the activities related to the management and administration of sector funds RGR, CDE and CCC will be transferred to the Electricity Trading Chamber – CCEE.

Once the these activities are transferred to the CCEE, Eletrobras will continue to engage with more exclusivity to its business generation, transmission, distribution and sale of electricity, according to its strategic vision to act in an integrated way in the energy markets , profitable and sustainable.

Wilson Ferreira Júnior

President

Armando Casado de Araújo	Carlos Eduardo Gonzalez Baldi
Financial and Investor Relationship Director	Generation Director
Lucia Casasanta	Alexandre Vaghi de Arruda Aniz
Compliace Director	Administrative Director
Luiz Henrique Hamann	José Antônio Muniz Lopes
Director of Distribution	Director of Transmission

Rodrigo Vilella Ruiz

Accountant

F-262

Independent Auditor’s Report

To the Board of Directors and Shareholders

Madeira Energia S.A. – MESA

We have audited the accompanying consolidated balance sheet of Madeira Energia S.A. – MESA and its subsidiaries (the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, changes in equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the auditing standards generally accepted in the United States of America and in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Madeira Energia S.A. – MESA and its subsidiary at December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The accompanying consolidated statements of operations, comprehensive loss, changes in equity and of cash flows of the Company for the year ended December 31, 2013 was not audited, reviewed, or compiled by us and, accordingly, we do not express an opinion or any other form of assurance on them.

São Paulo - Brazil

October 10, 2016

/s/ Pricewaterhouse Coopers

Auditores Independentes

F-263

Independent Auditor’s Report

To Board of Directors and Shareholders

Norte Energia S.A.

We have audited the balance sheet of Norte Energia S.A. (the “Company”) as of December 31, 2015, and the related statements of operations, comprehensive loss, of changes in equity and of cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Company as of December 31, 2014 and for the year then ended were audited by other auditors whose report dated February 2, 2015 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with the auditing standards generally accepted in the United States of America and in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Norte Energia S.A. at December 31, 2015, and the results of its operations and cash flows for the year then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Brasília - Brazil

October 10, 2016.

/s/ PricewaterhouseCoopers

Auditores Independentes

F-264