12. Summary
2007 Results
Investment Case CPFL Energia
12
13. CPFL Energia’s investment case combines current portfolio growth…
Competitiveness + Strategic Positioning = Sustainability
Current portfolio
• Organic growth and market-share leader
(13.8%)
Distribution • Operational efficiency: outperforming the
Reference Company costs
• Gains from acquired companies’ integration
13
14. Private group leader in the distribution market - High market growth
Concession Area Sales – 2007
8.3%
12.4%
6.0%1 CPFL Energia’s
5.7%
Brazil
energy sales in 2007
South
5.4% Southeast 5.3% had higher growth
5.0%
than Brazil,
Southeast and South
regions2
13.5% 12.5% 4.8% 27.7% 11.1% 17.2%
6.9% 6.9% -1.9% 4.4% 2.8% 15.2%
Residential Commercial Industrial Rural Others TUSD
With acquisitions Without acquisitions
1) Excluding the acquisition of the additional stake in RGE and the acquisitions of CPFL Santa Cruz and CMS Energy Brasil
14 2) Comparative between CPFL Energia and Southeast and South Regions, considering the distribution companies of each region only
15. Market growth with scale gains and operating efficiency
DISTRIBUTION
Growth by
IPO – Sep/041 Organic Growth Dec/07 Var. %
Acquisition
Municipalities (#) 523 - 45 568 8.6%
Distribution Network (km) 165,8272 15,332 14,196 196,749 18.6%
Customers (thousand) 5,411 459 350 6,256 15.6%
Concession Area Sales
33,2483 4,282 2,866 46,475 39.8%
(GWh/year)
Market Share 12.2% 0.8% 0.8% 13.8% 1.6 p.p.
Gains from acquired companies’ integration
• Organizational restructuring • IT optimization: software’s licenses and support and
programming services
• Improvement in the quality of services and
operational management • Cost of debt, banking taxes and insurance costs
reduction
• Centralization and optimization of processes:
synergy and productivity gains in operational and • Tax credit’s optimization
administrative processes (supply, human resources • Delinquency recovery
and infrastructure)
15 1) Considers 100% of RGE, except for Concession Area Sales 2) Data basis: Jun 2004 3) Considers 67.07% of RGE
18. CPFL Energia’s investment case combines current portfolio growth…
Competitiveness + Strategic Positioning = Sustainability
Current portfolio
• Organic growth and market-share leader
(13.8%)
Distribution • Operational efficiency: outperforming the
Reference Company costs
• Gains from acquired companies’ integration
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%)
18
20. CPFL Energia’s investment case combines current portfolio growth...
Competitiveness + Strategic Positioning = Sustainability
Current portfolio
• Organic growth and market-share leader
(13.8%)
Distribution • Operational efficiency: outperform the
Reference Company costs
• Gains from acquired companies integration
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%)
• Market share leader: 23%
• Expertise in free market sales and Value
Commercialization Added Services
• Consistent results
20
22. Commercialization business is CPFL’s key differential
Operations based on competitiveness and sustainability
• 23% market-share
Market • 91 clients in the free market in 2007
leader • 17 clients outside the Group’s concession area
• No fixed assets
Free Market Energy Sales (GWh)1
9,334 2007
8,951
Success in
7,120
free market
3,372 + 165%
438
2004 2005 2006 2007 2004
Contribution to the • 2007 EBITDA margin of 35.5%
Group’s results2 • 11% of Group’s EBITDA in 2007 (R$ 357 million)
• 13% of Group's Net Income in 2007 (R$ 241 million)
• Expansion of alternative energy source market: biomass and Small
Growth prospects Power Plants
• Diversification and expansion of value-added services (200 projects with
sales of R$ 49 million in 2007)
22 1) Including CPFL Sul Centrais Elétricas sales to free market 2) Don't consider eliminations
23. CPFL Energia’s investment case combines current portfolio growth…
Competitiveness + Strategic Positioning = Sustainability
Current portfolio
• Organic growth and market-share leader
(13.8%)
Distribution • Operational efficiency: outperforming the
Reference Company costs
• Gains from acquired companies’ integration
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%)
• Market share leader: 23%
• Expertise in free market sales and Value
Commercialization Added Services
• Consistent results
• Differentiated Corporate Governance: Level III ADR and Novo Mercado
Corporate Governance • Listed in the main indexes: MSCI, Ibovespa, IEE and others
• Free Float above 25%
Differentiated •Corporate Governance: Level IIIissuing reports
Wide analysts coverage: 25 institutions ADR and Novo Mercado
23
24. CPFL Energia : Investment Opportunity
Shares Performance - Bovespa1 Shares Performance - NYSE1
43,7% 63,9%
52,6%
23,7% 23,9%
9,1% 12,0%
6,4%
-4,6% -2,6% -7,6% -4,7%
2007 1Q08 2007 1Q08 2007 1Q08 2007 1Q08 2007 1Q08 2007 1Q08
IBOVESPA IEE CPFE3 Dow Jones DJ Br 20 CPL
CPFL Energia’s – Daily average volume
2005 2006 2007
CPFL Energia
presents a
Bovespa - ON 3,521 +160% 9,141 +116% 19,755 substantial increase
NYSE - ADR 3,506 +132% 8,128 +58% 12,807 in daily average
volume in 2007
Total 7,027 17,270 32,561
+363%
MSCI Indexes
24 1) Closing price adjusted for dividends
25. Dividend Policy:
minimum 50% of
Net Income in
semi-annual
basis
25
26. CPFL Energia’s investment case combines current portfolio growth with
acquisition opportunities
Competitiveness + Strategic Positioning = Sustainability
Current portfolio New portfolio
• Organic growth and market-share leader
(13.8%)
• Strategic distribution's
Distribution • Operational efficiency: outperforming the
companies
Reference Company costs
• Gains from acquired companies’ integration
Distribution • “Big bang”
• “Beach head”
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%)
• Market share leader: 23%
• Expertise in free market sales and Value
Commercialization Added Services
• Consistent results
• Differentiated Corporate Governance: Level III ADR and Novo Mercado
Corporate Governance • Listed in the main indexes: MSCI, Ibovespa, IEE and others
• Free Float above 25%
Differentiated •Corporate Governance: Level IIIissuing reports
Wide analysts coverage: 25 institutions ADR and Novo Mercado
26
27. Brazilian market has 64 distribution’s companies
Distribution Business: Distribution Market Share1 %
2007
Distributors (#) 64
CELESC 4.8%
Clients (million) 61 COPEL 6.7% EdB 5.7%
ENDESA 4.2%
Neoenergia
Distributed Energy (TWh) 376.9 7.3% Ashmore Energy
3.7%
CEMIG
Companhia
Energética
8.6%
Market Breakdown Brasiliana
Others 33.1%
Energia 12.1%
The 5 largest groups have 50% of market-share CPFL Energia
13.8%
State-owned companies: 34%
Private Company: 66%
Spreading proposes consolidation opportunities
1) 1Q07
27 Source: Aneel
28. Opportunities in distribution business in SP State
Distribution companies in SP State Rationale
São Paulo State Map • Scale gains, with optimization of
infrastructure and administrative
and operational processes
• Efficiency gains, with
implementation of the CPFL
standards
Key indicators – 2007
Net Revenue Market share Customers
R$ billion % # million
Eletropaulo 7,1 12,1 5,7
Elektro 2,3 3,7 2,0
Grupo CPFL
Eletropaulo Bandeirante Bandeirante 2,0 3,0 1,4
Elektro Grupo Rede Grupo Rede 3,3 4,8 3,2
28
29. Opportunities in distribution business: cooperatives and private network
Cooperatives of Eletrification Breakdown of Cooperatives by Region
South
34%
Northeast Southeast
33% 18%
Mid-West
North
14%
1%
5 states with
larger number of 125 cooperatives in Brazil: SP and RS
cooperatives States concentrate 26% of this market
Private Network
• Into CPFL’s concession area there are 35,000 Km of private network (equivalent to 17% of CPFL Energia’s total
network)
• Potential investment: R$ 400 million
• Additional amount to the reference company
29 Source: Atlas de Energia Elétrica do Brasil – Aneel, 2005
30. CPFL Energia’s investment case combines current portfolio growth with
acquisition opportunities
Competitiveness + Strategic Positioning = Sustainability
Current portfolio New portfolio
• Organic growth and market-share leader
(13.8%)
• Strategic distribution's
Distribution • Operational efficiency: outperforming the
companies
Reference Company costs
• Gains from acquired companies’ integration
Distribution • “Big bang”
• “Beach head”
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Existing assets
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%) • New energy auctions
• Alternative sources:
• Market share leader: 23%
Generation SPP and biomass
• Jirau and Belo Monte
• Expertise in free market sales and Value
Commercialization Added Services
HPPs
• Consistent results
• Differentiated Corporate Governance: Level III ADR and Novo Mercado
Corporate Governance • Listed in the main indexes: MSCI, Ibovespa, IEE and others
• Free Float above 25%
Differentiated •Corporate Governance: Level IIIissuing reports
Wide analysts coverage: 25 institutions ADR and Novo Mercado
30
31. Brazilian market has 1,600 generation companies.
The public sector concentrates 70% of these assets
Generation Business: Generation Market Share %
1Q08
Generation Companies (#) 1,695
Installed Capacity (MW) 108,852
Others 35%
CPFL Energia 2%
Chesf 10%
Duke 2%
AES Tietê 3%
Furnas 9%
Market Breakdown Copel 4%
Tractebel 6%
Eletronorte 9%
Cemig 6%
The 5 largest groups have 50% of the market CESP 7%
Itaipu 7%
State-owned companies: 70%
Private Company: 30%
Source: Aneel
31 Market breakdown: Acende Brasil
32. New HPP’s projects opportunities
Hydroelectric projects qualified by EPE in the last auctions that can be bid by ANEEL in the
next New Energy Auctions :
Projects River Instaled Capacity (MW)
HPP Cachoeirinha Chopin River/PR 45,0
HPP Salto Grande Chopin River/PR 53,3
HPP São João Chopin River/PR 60,0
HPP Barra dos Coqueiros Claro River/GO 90,0
HPP Caçu Claro River/GO 65,0
HPP Baixo Iguaçu Iguaçu River/PR 350,0
HPP Barra do Pomba Paraiba do Sul River/RJ 80,0
HPP Cambuci Paraiba do Sul River/RJ 50,0
HPP Salto Verde River/GO 108,0
HPP Salto do Rio Verdinho Verde River/GO 93,0
CPFL analyses with advance and in details the generation projects that will be bid by ANEEL – main
benefits:
• Higher knowledge about the project
• Better valuation of engineering and environmental risks
• Longer term to analysis and project economic feasibility
32
33. Small Power Plants
Green Field Projects
Discarded projects because didn’t reach the economic feasibility: high
CPFL has analyzed around investments, PPA's already signed with unattractive prices or
70 SPP’s projects in impracticable environmental requirements
Southeast, South and
It was established partnership to studies and implementation of SPPs in
Center-West regions the South Region
Technical studies and Estimated
investment:
enrollment in ANEEL for 4 feasible in short term: 76 MW (CPFL’s stake) R$ 285 million
10 projects
Feasible projects in the short term Basic projects
ANEEL’s and Installation
are in progress. Technical and
Fepam’s/ License and
studies and environmental
The conclusion of the Basic Projects IBAMA’s construction
enrollment in studies
and Environmental Studies is Approval of the SPP´s
ANEEL (necessary for the
estimated to 2008, when they will previous license)
be submitted to the ANEEL’s and 24
OK 2008 2008/09
FEPAM’s/IBAMA’s approval months(e)
33
34. Small Power Plants
Existing Assets
SPPs didn’t have assured energy approved by the Government (MME) –
they are included in the distribution
CPFL Jaguariúna: Installed capacity: 24,283 MW
9 SPP’s in São Paulo
Estimated assured energy for this SPPs (according to some studies): around
and Minas Gerais States 8.97 MWmedium
ANEEL’s approval expectation: 1H08
Annual estimated generation revenue: R$ 10 million
Assured Energy
Installed Capacity (MW)
SPP (MWmedium)
Feasibility Studies of Addition of
Current Forecast Current Forecast
Guaporé and Andorinhas 4,2 MWmedium:
Andorinhas 0.51 2.41 0.46 1.50
R$ 5 million/year
SPP’s repowering: Guaporé 0.67 5.00 0.62 3.78
Total 1.18 7.41 1.08 5.28
34
35. Jirau and Belo Monte HPP
Jirau HPP Belo Monte HPP
State: Rondônia State: Pará
Installed capacity: 3,300 MW Installed capacity: 11,182 MW
Assured energy: 1,966.4 MWmedium Viability Studies: Eletronorte
Commercial operation (1st turbine): 48 months CAPEX(e): R$ 37 bi
Construction period: 90 months
CAPEX(e): R$ 11 bi
2nd HPP in Madeira Complex 2nd largest HPP in Brazil
Auction: May 12th/08 Auction(e): 2H09/2010
35
36. CPFL Energia’s investment case combines current portfolio growth with
acquisition opportunities
Competitiveness + Strategic Positioning = Sustainability
Current portfolio New portfolio
• Organic growth and market-share leader
(13.8%)
• Strategic distribution's
Distribution • Operational efficiency: outperforming the
companies
Reference Company costs
• Gains from acquired companies’ integration
Distribution • “Big bang”
• “Beach head”
• High installed capacity growth
• High EBITDA margin
Generation • Long term energy contracted at attractive
prices
• Existing assets
• Addition of 150 MW in 2008 (+9.4%) and
436 MW in 2010 (+ 25.1%) • New energy auctions
• Alternative sources:
• Market share leader: 23%
Generation SPP and biomass
• Jirau and Belo Monte
• Expertise in free market sales and Value
Commercialization Added Services
HPPs
• Consistent results
• Differentiated Corporate Governance: Level III ADR and Novo Mercado
Corporate Governance • Listed in the main indexes: MSCI, Ibovespa, IEE and others
• Free Float above 25%
Differentiated •Corporate Governance: Level IIIissuing reports
Wide analysts coverage: 25 institutions ADR and Novo Mercado
36
