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This is CTEEP Annual and Sustainability Report that, for the third consecutive year, reports its results in line with GRI (Global Reporting Initiative) international guidelines. One of the highlights in 2010 was the evolution on the level of application that came from C to B. This report also follows the recommendation of ANEEL (Agência Nacional de Energia Elétrica) model to prepare the annual and social-environmental responsibility report of electric energy companies. [GRI 3.2, 3.3]

The report covers operating, economic-financial, social-environmental results of the operations maintained in Brazil by CTEEP, as well as its subsidiaries, related to the period from January 1, 2010 to December 31, 2010. The financial information is presented based on consolidated amounts in BRL Reais, in compliance with the corporate Law in force and effect, and was submitted to Ernst & Young Auditores Independentes S.S. external auditors. The operating, social and environmental information was internally ascertained and has not been submitted to external verification. All the comparisons made refer to the same period of 2009, except where stated otherwise. [GRI 3.1, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.13]

In addition to counting on the engagement of employees of several areas and levels of the Company, the process of developing and defining this report content is coordinated by the areas of Communication and Strategic Management and by the Finance and Investor Relation Executive Board. The final Information validation involves the Chief Executive Officer, officers and managers. [GRI 3.5]

Materiality Matrix [GRI 3.5]

This year, CTEEP took an important step towards strengthening the relationship with its stakeholders: the process of setting the contents of this annual and sustainability report was developed based on a tool called materiality matrix.

The application of a materiality matrix consists of identifying the opinions on the topics regarded as priority for the several groups of interest, on one side, and for the Company on the other side.

The survey for such information was conducted through a questionnaire, which was prepared following the GRI guidelines to assure that the engagement would be fully aligned with the process of preparing CTEEP sustainability reports – that is guided by such precepts since 2008.

The questionnaire questions on materiality were divided into three main aspects: social, economic and environmental aspects, reaffirming the importance of the sustainability tripod. The questionnaire was accessed from an electronic address sent by e-mail to the four defined groups of stakeholders – customers, suppliers, employees and stockholders – and was available for answering for 45 days. [GRI 4.14]

This process is expected to develop in the following years, enabling deeper engagement with the publics already selected and inclusion of new groups of interest. [GRI 4.16]

Committed to the materiality matrix results, from 2011 on, CTEEP will start reporting the PR1 and PR2 indicators, directly related to the topics regarded as relevant. Both indicators were not addressed in previous reports, but their monitoring has already been started, in order for the Company, over the following years, to improve their results and show the stakeholders the efforts promoted in the search for an ever more comprehensive content report. [GRI PR1, PR2]

The data presented below show the final result of this engagement process, of which information is addressed and presented throughout the report. [GRI 4.17]