ISA CTEEP is part of the National Interconnected System (“SIN”) which incorporates the Brazilian electricity grid as a whole (with the exception of some isolated systems) and serves approximately 99% of the system’s total load. Through its activities and its wholly and jointly-owned subsidiaries, ISA CTEEP is present in 17 states in the country, transmitting approximately 25% of all electricity produced in Brazil, 60% of the energy consumed in the Southeast Region and nearly 100% of the energy in the State of São Paulo.

The coordination and control of the Company’s installations’ operations and all of SIN’s electric generation and transmission installations is the responsibility of the National Electric Energy System Operator (“ONS”), subject to the inspection and regulation of the National Electric Energy Agency (“ANEEL”).

The concessions that compose the transmission market in Brazil may be divided in 3 main categories:

Concessions prior to 1998
  • RAP annually adjusted by IPCA
  • Contracts renewed in 2013 (Provisional Measure 579/2012)
  • Tariff Reset every 5 years (O&M, WACC and RAB)
ISA CTEEP
RAP in operation: 72%
 
Concessions between 1999 and November 2006
  • RAP annually adjusted by IGP-M
  • RAP reduction in 50% on the 16th year of operation
  • No tariff reset
  • Reset of reinforcements and improvements, starting in July 2018 every 5 year
ISA CTEEP
RAP in operation: 1%
 
Concessions after November 2006
  • RAP annually adjusted by IPCA
  • 30 year contract, with 3 tariff reset (cost of debt applied at WACC)
  • Reset of reinforcements and improvements every 5 years
ISA CTEEP
RAP in operation: 13%
RAP under construction: 13%

The transmission companies’ revenue, also known as RAP (Allowed Annual Revenue) is approved by ANEEL and disclosed annually (normally in the month of June) in the Periodic Tariff Review, which establishes the RAP for the next 12 months, adjusted by inflation.

Please find below the composition of the RAP:

ISA CTEEP
 

RBSE: Receivables related to the non-depreciated assets in operation in May/2000
O&M: Revenues related to the operation and maintenance services
New Investments (NI): Organic growth (new investments)
Variable Parcel (PV): Revenue reduction due to unavailability
Adjustment Parcel (PA): Compensates excess or deficit of revenues in the previews tariff cycle

Updated on September 10, 2018.