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Investments and Outlooks

The investments made by CTEEP in 2010 amount to R$ 504.9 million. Most of it, R$ 222.2 million, refers to company promoted contributions to the subsidiaries. Moreover, the significant portion of R$ 147 million, was allocated to a set of planned works to be implanted in the following five years that may be:

• Reinforcements Type 1 (implanted upon specific consent by ANEEL, with preset Annual Allowable Revenue – RAP).
• Reinforcements Type 2 (implanted also upon consent by ANEEL, but, in such case the RAP is incorporated in the next tariff revisions).
• New connections (reinforcements made to connect free consumers and biomass power plants).

In 2010, through Authorization Resolution issued by ANEEL or Agreements for Connection to the Transmission System (CCT), signed with free customers, CTEEP energized 82 undertakings, six being basic Grid and 76 in the DITs, that accounted for an addition of R$ 28.7 million to RAP (Annual Allowable Revenue) of the Company. Said undertakings, corresponded to investments of R$ 60.3 million and R$ 139.7 million, respectively, amounting to R$ 200 million.

The undertakings made available added to the system 1,119.25 MVA of transformation capacity, with special prominence to the Água Vermelha substation, located in the city of Iturama (MG), where the third bank of autotransformers (500-440 kV) was installed, with addition of 750 MVA, plus a 250 MVA Reserve Phase to increase the capacity of transformation installed to the system, improving the energy exchange between the States of Mato Grosso, Minas Gerais and São Paulo.

Works have also been carried out along 401 km of the transmission lines, such as the recapacitation of the 138 kV TLs Bariri-Barra Bonita and Votuporanga II-São José do Rio Preto and of the 88 kV TLs Salto Grande-Chavantes and Assis-Canoas I-Canoas II, all bringing an increase in the transmission capacity and more reliability to the operations.

Other important projects were the reconstruction of 88kV salto grande-chavantes transmission lines and the launching of the second circuit on 138kV flórida paulista-tupã line and part of 138 kV ribeirão preto-euclides da cunha line.

In 2010, three CTEEP subsidiaries started up: the Interligação Elétrica Pinheiros, with completion of the works of the Araras substation; and IESul, with energization of the Scharlau substation; and IENNE. In the same period, seven sugar cane bagasse thermoelectric plants, accounting for a total of 520 MW of the installed capacity, were connected to CTEEP network.

In addition to the investments made in its network, CTEEP is alert to the possibility of growth, with purchase of new transmission lines auctioned by ANEEL. The Company participated in two auctions conducted by the agency in 2010 and, although it has not purchased any lot, the Company will keep on participating in auctions, making stringent analysis and always exercising restraint when using the financial resources.

Outlooks

In line with the preceding years, the outlooks for the sector of electricity in Brazil continue to be very promising. According to data of the Decennial Plan for Energy Expansion (PDE), 2019, of the Energy Research Company (EPE), between 2010 and 2019 the final energy consumption in Brazil will increase at an annual average rate of 5,4%. To supply the electricity demand, the total required investment will be R$ 952 billion. To assure electricity Exchange between the regions of the country, the transmission works will receive investments at the amount of R$ 39 billion over a 10-year period.

Reliant on the country's economic growth and, as a consequence on a demand increase for infrastructure projects, CTEEP will continue to invest in projects for expansion, reinforcements, new connections, maintenance and telecommunications, in addition to contributions to its subsidiaries.

To this end, in early 2010 the Company approved a Pluriannual Investment Plan based on its estimates of investment that will allocate R $ 1,604.20 million between 2011 and 2013. To guarantee said investments, the Company will pursue the support from different finance sources.