Bradesco BBI | CEO Forum - The Leadership's View

1. São Paulo. 07 de março de 2012November 2015
CEO Forum
The Leadership's View
Bradesco BBI

2. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
2
5 Renewal of distribution concessions
6 Controllers

3. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
3
5 Renewal of distribution concessions
6 Controllers

4. Dry seasonWet Season
Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
80%LTA (Thermal Dispatch 90%) 90%LTA (Thermal Dispatch 70%)
100%LTA (Thermal Dispatch 50%) Average 1997-2014
2016 | Scenarios for reservoir levels
For 2016, the expectation is to reach a reservoir level in November similar to the average in the period
1997-2014 considering 90% of LTA and thermal dispatch of 70%
(85% of thermal
capacity)
4

5. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
5
5 Renewal of distribution concessions
6 Controllers

6. 6
Regulated Market (ACR): generator transfers the hydrological risk to the consumer
PM 688 | Renegotiation of Hydrological Risk
Free Market (ACL): generator does not transfer the hydrological risk
to the consumer, but contracts a hedge
• Choose a protection level against the GSF
• Transfer secondary energy gains to the consumer
• Keep risk of reduction in physical guarantee
P
SP
SPR
Product Generator Choices
• Choose a protection level against the GSF
• Keep gains with secondary energy
• Keep risk of reduction in physical guarantee
• Full protection against the GSF
• Transfer secondary energy gains to the consumer
• No risk of physical guarantee reduction
• Risk premium equivalent to
a reduction of 10% in the
price of the PPA
0%
11%
12.76
4.13
Risk
Premium
(R$/MWh)
Risk
0%
11%
9.31
0.68
Risk
• Existent reserve energy to be contracted until 2019 and additional reserve energy from 2020 until concession expiring
• Reference Price: R$ 207/MWh
Risk
Premium
(R$/MWh)

7. Higher flexibility of options allows
adhesion of agents with different
contracting levels and risk perception
PM 688 | Hydrological Risk Renegotiation
Adhering to the renegotiation, 2015 GSF will be reimbursed
 Proposal
 Next steps
 Protection against GSF, up to 100%, by the payment
of a risk premium
Regulated
Market
(ACR)
Need of a definition about the
regulation of reserve energy
contracting
 Generator contracts hedge to mitigate hydrological
risk
Free
Market
(ACL)
Approval by Senate
ANEEL
Regulation
Analysis and Internal Approvals
Generators
adhesion
Current text, that is already being discussed in Senate, does not bring significant
changes  Companies may proceed with analysis
If approved, new amendments to the PM688 should be regulated  agents still
wait for more details
7

8. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
8
5 Renewal of distribution concessions
6 Controllers

9. 9
Delinquency
 Energy Bills
CPFL Energia
 Energy Bills
Group B
Delinquency Evolution
R$ Million in D90/Revenues (LTM)
25 26
14
5
23 24
15
23 21
41
3234
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
 Allowance for doubtful accounts
R$ Million
Average
33
Disregard large
industrial customer in
bankruptcy
(R$ 7 million)
Average
2Q15-
3Q15:
Average 1Q13-1Q15:
R$ 20 million

10. Delinquency
 Energy Bills
CPFL Energia
 Energy Bills
Group B
3Q14
3.18%
3Q15
3.88%
Delinquency Evolution
R$ million in D90/Revenues (LTM)
25 26
14
5
23 24
15
23 21
41
3234
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
 Allowance for doubtful accounts
R$ million
Average
33
Disregard large
industrial customer in
bankruptcy
(R$ 7 million)
Average
2Q15-
3Q15:
Average 1Q13-
1Q15:R$ 20 million
10

11. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
11
5 Renewal of distribution concessions
6 Controllers

12. 4th Tariff Review Cycle CPFL Piratininga | Increase of Parcel B and
pass-through of accumulated CVA and others financial components
1) CAOM = Administration, Operation and Maintenance Cost and CAIMI = Annual costs for fixtures, vehicles and IT
Increase of 5.31% in Parcel B from R$
717 million to R$ 755 million
 Increase of Net RAB
 Increase of WACC from 7.50% to 8.09%
 Addition of special obligations remuneration
Accumulated CVA and other financial
components to be passed through to tariffs
 Pass-through of R$ 475 million in CVA and
others financial components
4TRC x ETR
7.13% 0.93% 13.05% 21.11%
Tariff Review final result|October, 2015 (R$ million)
Gross Regulatory Asset Base 3.020
Depreciation rate 3.65%
Depreciation Quota 110
Net Regulatory Asset Base 1.906
Pre-tax WACC 12.26%
Capital Return 234
Special Obligations 10
Regulatory EBITDA 354
OPEX1
= CAOM + CAIMI 447
Parcel B 801
Parcel B adjusted by market (-) Other revenues 755
Parcel A 3.649
Required Revenue 4.404
Reconciliation of Regulatory EBITDA | 3rd and 4th Tariff Review Cycle (R$ million)
12

13. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
13
5 Renewal of distribution concessions
6 Controllers

14. 14
65 55 2.81 | 7.005
7.74 | 7.63 5.28 | 6.47
23 20 3.19 | 7.005
7.55 | 8.08 5.20 | 6.49
26 22 3.64 | 7.005
9.62 | 9.45 6.30 | 7.15
15 12 6.32 | 7.005
5.41 | 7.00 4.32 | 6.00
19 16 3.22 | 7.005
6.42 | 8.79 5.88 | 7.40
Ratios: Financial and Quality
The quality and financial ratios do not represent a
risk to the CPFL Energia distributors which are
participating in the concession renewal process
Renewal of Distribution Concessions
 5 years of Test: The Disco can not break the financial and quality ratios for 2 consecutive years or at the 5th year
 6th year and onwards : the Disco can not break; (i) the financial ratios for 2 consecutive years and (ii) the quality
ratios for 3 years (during 5 years) – Start the Concession Expiration
 If the company does not meet requirements: limitation of dividends distribution and the company will not be
allowed to participate in greenfield projects
1) EBITDA 3Q15LTM; 2) DQ – Depreciation Quota (Anual Tariff Adjustment 2014); 3) Net Debt (Sep-15); 4) 2014; 5) Regulatory reference simulated with Selic Rate
of 12.87% p.a.
 19 Discos do not meet the financial
requirements ratios for 2020
 16 from 19 Discos do not meet the
quality requirements ratios for 2020
M&A
Possibilities

15. Topics for discussion
Storage scenarios1
2 Renegotiation of the hydrological risk
3 Delinquency
4 4th Tariff Review Cycle
15
5 Renewal of distribution concessions
6 Controllers

16. Evolution of the Stake of Controlling Shareholders
Previ: During the 1Q15 and 2Q15, Previ has reduced its stake from 30.0% to 29.5%, selling part of its free
shares
Stock dividend: A 3.19% stock dividend occurred on May 06, 2015, as approved in the Extraordinary General
Shareholders’ Meeting. These shares were unbounded from the control block
Camargo Correa: After the Stock Dividend, Camargo Correa sold its Unbound shares
Until October, there were no shares sales by the Controlling Shareholders
Source: Standardized Financial Statements (DFP) form, Quarterly Information (ITR) forms and CVM 358 form of CPFL Energia16
9.6%
3.4%
20,4%
24.3%
11.7%
30.5%
December/14
Previ
Free Float
Camargo
Bonaire
9.7%
3.8%
19.8%
23.6%
11.3%
31.9%
October/15
Previ
Free Float
Camargo
Bonaire
0.1%
P
C B
P
B