Message
from the Administration

GRI 1.1, 1.2, 4.12

CTEEP activities are based on a commitment to sustainable development. Sustainability is part of the Company's investment in continually improving the services it provides.

In 2011, we overcame major operational challenges, we maintained the high performance of our indicators, which are among the best in the industry, and we made investments in expanding our systems, increasing the availability of assets and increasing the reliability of services.

Investments in reinforcements, modernizations and improvements of assets, capitalization of labor and funding subsidiaries totaled BRL661.4 million in 2011. ANEEL authorization resolutions granted in 2011 will account for investments of BRL160 million and additional future revenue of BRL20 million.

In 2011, the Company made 65 projects operational which will reinforce the reliability of our transmission system. Through the Pinheiros and Serra do Japi subsidiaries, CTEEP started operations on three new substations (Mirassol, Getulina and Piratininga), as well as starting operations at the Salto, Jandira and Atibaia substations in the first three months of 2012, with a total of 4,400 MVA and 10% more installed capacity for serving the high demand of the São Paulo market.

Outside of the State of São Paulo, start-up on operations at the IESul Forquilhinha substations will expand supply capacity in southern Santa Catarina.

Investments were made by a Company that is responsible for 30% of the energy transported in a country of continental proportions, clearly showing our drive to grow with Brazil. With these investments CTEEP is once again highlighting the level of its Non-Supplied Energy (NSE) and has some of the best transmission company rates in Brazil. Moreover, for the third year in a row the Company was given the highest additional Allowed Annual Revenue (RAP) premium for the availability of its transmission assets.

We have also continued our strategy of growing by taking part in ANEEL bids. In 2011, we won the bid on a lot comprising the Itapeti substation, adding another 800 MVA to our systems and improving the quality of our services in the Mogi das Cruzes (SP) region.

The Pau Ferro (1,500 MVA) and Garanhuns (600 MWA) substations and the four power lines (Luis Gonzaga-Garanhuns, with 224 km, Garanhuns – Campina Grande III, with 190 km, Garanhuns – Pau Ferro, with 239 km, Garanhuns – Angelim I, with 13 km) in Paraíba and Pernambuco were included in the same bid and will give rise to the Interligação Elétrica Garanhuns, the latest CTEEP company, in partnership with CHESF.

Among the highlights of our financial performance in 2011 are a 28.6% higher net operating revenue, which reached BRL2.9 billion, and an EBITDA that is up by 23.8%, totaling 1.45 billion with a 50.2% margin.

In 2011, our Research & Development Program also completed ten years, the results of which have been fundamental to raising the excellence of our services. We will continue our process of incorporating technology and innovation in 2012, with the goal of improving our productivity and efficiency.

Our employees' competencies and know- how represent a strategic asset for overcoming challenges and looking for new targets of excellence and quality. With this vision we are implementing the Competencies Model to assist our employees in identifying and developing the skills required to expand our business.

With the intention of raising awareness among our employees about the importance of a sustainable attitude, we also launched the Education for Sustainability project in 2011, aimed at offering a holistic vision of our business, covering the commitments we have with customers, shareholders, suppliers, the environment and society.

Another initiative that is symbolic of how sustainability is a part of our business strategy was our adhesion to the United Nations Global Compact, formalizing practices that are already a part of the day to day at CTEEP: respect for human right, labor rights and environmental rights.

Results and the major achievements for 2011 that are described in this Report are backed by a partnership built during the day to day of an honest, ethical and transparent relationship with our stakeholders.

Here, we express our gratitude to everyone who has added value to our business: to our employees for their dedication and untiring search for excellence; to our suppliers for their commitment to quality and Company values; to the shareholders for their confidence in our management; and to our customers, whose satisfaction drives us to pursue increasingly bolder targets of performance and reliability.