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FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | 12 Months Ended
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Dec. 31, 2023
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT | NOTE 38 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 38.1- Capital risk management ​ The Company monitors capital based on the financial leverage ratio. This index corresponds to the net debt divided by the total capital. Financial leverage, in turn, corresponds to the total of loans, financing and short-and long-term debentures (see note 23), subtracted from the amount of cash and cash equivalents and securities - TVM (without considering restricted cash): see notes 6 and 8. Total capital is determined by adding net equity, as demonstrated in the consolidated balance sheet, to the net debt. ​
​ | ​ | ​ | ​ | ​ | ​
​ |  | 12/31/2023 |  | 12/31/2022 | ​
Total loans, financing and debentures |  | 60,780,290 |  | 59,106,522 | ​
(+) Derivative financial instruments - debt protection |  | 657,514 |  | — | ​
(-) Marketable securities |  | (6,352,895) |  | (12,605,747) | ​
(-) Cash and Cash Equivalents |  | (13,046,371) |  | (10,739,126) | ​
Net debt |  | 42,038,538 |  | 35,761,649 | ​
(+) Total Shareholders' Equity |  | 112,464,644 |  | 111,028,636 | ​
Total Capital | ​ | 154,503,182 | ​ | 146,790,285 | ​
Financial Leverage index | ​ | 27 | % | 24 | %
​ 38.2 - Classification by category of financial instruments The carrying amounts of financial assets and liabilities represent a reasonable approximation of fair value. The Company uses the following classification for its financial instruments and their respective levels of fair value: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Level |  | 12/31/2023 |  | 12/31/2022
FINANCIAL ASSETS |  |  |  |  |  |
Amortized cost |  | ​ |  | 19,534,449 |  | 21,864,644
Cash and cash equivalents | ​ | ​ | ​ | 13,046,371 | ​ | 10,739,126
Accounts Receivable, net |  | ​ |  | 5,859,928 |  | 5,497,979
Reimbursement rights |  | ​ |  | — |  | 3,341,835
Amounts Receivable, ENBPAR | ​ | ​ | ​ | — | ​ | 1,264,059
Loans, financing and debentures |  | ​ |  | 628,150 |  | 1,021,645
​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value through result |  | ​ |  | 6,726,501 |  | 13,592,609
Financial investments |  | 2 |  | 5,925,693 |  | 12,198,191
Beneficiary parties | ​ | 2 | ​ | 427,202 | ​ | 407,556
Derivative financial instruments |  | 2 |  | 373,606 |  | 986,862
​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value through other comprehensive income | ​ | ​ |  | 1,104,381 | ​ | 1,761,258
Investments (Interests) | ​ | 1 |  | 1,104,381 | ​ | 1,761,258
​ | ​ | ​ | ​ | ​ | ​ | ​
FINANCIAL LIABILITIES | ​ |  |  |  |  |
Amortized cost | ​ | ​ |  | 99,668,654 |  | 103,279,464
Loans, financing and debentures | ​ | ​ |  | 54,299,620 |  | 59,106,522
Obligations of Law No. 14,182/2021 | ​ | ​ | ​ | 39,519,406 | ​ | 36,659,454
Suppliers | ​ | ​ |  | 2,963,867 |  | 3,517,173
Compulsory loan – Agreements | ​ | ​ |  | 896,746 |  | —
Reimbursement obligations | ​ | ​ | ​ | — | ​ | 1,912,423
Shareholders compensation | ​ | ​ |  | 1,154,836 |  | 924,644
Leases | ​ | ​ |  | 216,747 |  | 753,168
Concessions payable - use of public property | ​ | ​ | ​ | 617,432 | ​ | 406,080
​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value through result |  | ​ |  | 7,138,184 |  | —
Loans, financing and debentures | ​ | 2 | ​ | 6,480,670 | ​ | —
Derivative financial instruments |  | 2 |  | 657,514 |  | —
​ The financial assets and liabilities recorded at fair value are classified and published in accordance with the following levels: ​ Level 1 - quoted prices (not adjusted) in active, liquid and visible markets for identical assets and liabilities that are accessible on the measurement date; ​ Level 2 - quoted prices (which may or may not be adjusted) for similar assets or liabilities in active markets, other unobservable inputs at level 1, directly or indirectly, under the terms of the asset or liability; and ​ Level 3 - assets and liabilities whose prices do not exist or where these prices or valuation techniques are supported by a small or non-existent, unobservable or liquid market. At this level, the estimate of fair value becomes highly subjective. ​ 38.3 - Financial risk management ​ In carrying out its activities, the Company is impacted by risk events that may compromise its strategic objectives. Risk management has aims to anticipate and minimize the adverse effects of such events on the Company’s business and economic-financial results. For the management of financial risks, the Company has defined operational and financial policies and strategies, approved by internal committees and by management, which aim to provide liquidity, security and profitability to its assets and maintain the levels of indebtedness and debt profile defined for the flows economic-financial aspects. ​ The sensitivity analyzes below were prepared with the objective of measuring the impact of changes in market variables on each of the Company’s financial instruments. These are, therefore, projections based on assessments of macroeconomic scenarios, which does not mean that the transactions will have the values presented in the analysis period considered. ​ The main financial risks identified in the risk management process are: ​ 38.3.1 - Exchange rate risk The Company monitors the risk of exposure to fluctuations in exchange rates with the potential to impact its assets, liabilities, results and cash flow. ​ In April 2023, the Company contracted the derivative operation denominated Cross Currency Swap with the objective of protecting the bonds issued in relation to exchange rate variation, taking the liability position in Brazilian reals and the change of value of the liability linked to the variable interest rate curve in Brazilian reals (CDI). ​ Below, it is exposed to financial risks that cause volatility in its results as well as in its cash flow. ​ a)Composition of foreign currency balances and sensitivity analysis Exchange rate appreciation risk ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | ​ |  | Balance on 12/31/2023 |  | Effect on income
​ | ​ | ​ | ​ | Foreign | ​ | ​ | ​ | Scenario I - | ​ | Scenario II | ​ | Scenario III
​ | ​ | ​ | ​ | Currency |  | Real |  | Probable 2024¹ |  | (+25%)¹ |  | (+50%)¹
EURO |  | Loans, financing and debentures |  | (38,223) |  | (204,552) |  | (5,290) |  | (57,751) |  | (110,211)
​ |  | Impact on the result |  | (38,223) |  | (204,552) |  | (5,290) |  | (57,751) |  | (110,211)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Impact on results in case of appreciation of exchange rates |  | ​ |  | ​ |  | (5,290) |  | (57,751) |  | (110,211)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(1) Assumptions adopted: |  | ​ |  | 12/31/2023 | ​ | Likely | ​ | +25% | ​ | +50%
​ |  | EURO |  | ​ |  | 5.35 |  | 5.49 |  | 6.86 |  | 8.24
​ 38.3.2 - Interest rate risk a)National indexes Interest rate appreciation risk ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | Effect on income | ​
​ | ​ | ​ | ​ | Balance on | ​ | Scenario I - | ​ | Scenario II | ​ | Scenario III | ​
​ | ​ | ​ |  | 12/31/2023 |  | Probable 20241 |  | (+25%)1 |  | (+50%)1 |
CDI | ​ | Loans, financing and debentures | ​ | (25,004,174) | ​ | (2,507,919) | ​ | (3,134,898) | ​ | (3,761,878) | ​
​ | ​ | Hedges - Swap US$ vs CDI | ​ | (7,352,802) | ​ | (737,486) | ​ | (921,858) | ​ | (1,106,229) | ​
​ | ​ | Impact on the result | ​ | (32,356,976) | ​ | (3,245,405) | ​ | (4,056,756) | ​ | (4,868,107) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
SELIC | ​ | Loans, financing and debentures | ​ | (2,492,397) | ​ | (230,547) | ​ | (288,183) | ​ | (345,820) | ​
​ | ​ | AIC Reimbursement | ​ | 356,173 | ​ | 32,946 | ​ | 41,183 | ​ | 49,419 | ​
​ | ​ | Impact on the result | ​ | (2,136,224) | ​ | (197,601) | ​ | (247,000) | ​ | (296,401) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
TJLP | ​ | Loans, financing and debentures | ​ | (3,441,837) | ​ | (224,752) | ​ | (280,940) | ​ | (337,128) | ​
​ | ​ | Impact on the result | ​ | (3,441,837) | ​ | (224,752) | ​ | (280,940) | ​ | (337,128) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
IGPM (General Market Price Index) | ​ | Leases | ​ | (216,747) | ​ | (8,735) | ​ | (10,919) | ​ | (13,102) | ​
​ | ​ | Financing and loans receivable | ​ | 171,609 | ​ | 6,916 | ​ | 8,645 | ​ | 10,374 | ​
​ | ​ | Impact on the result | ​ | (45,138) | ​ | (1,819) | ​ | (2,274) | ​ | (2,728) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Obligations of Law No. 14,182/2021 | ​ | (39,519,406) | ​ | (1,430,602) | ​ | (1,788,253) | ​ | (2,145,904) | ​
IPCA | ​ | Loans, financing and debentures | ​ | (26,335,933) | ​ | (953,361) | ​ | (1,191,701) | ​ | (1,430,041) | ​
​ | ​ | Right of reimbursement | ​ | 1,929,899 | ​ | 69,862 | ​ | 87,328 | ​ | 104,794 | ​
​ | ​ | Financing and loans receivable | ​ | 8,111 | ​ | 294 | ​ | 367 | ​ | 440 | ​
​ | ​ | Impact on the result | ​ | (63,917,329) | ​ | (2,313,807) | ​ | (2,892,259) | ​ | (3,470,711) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Impact on profit or loss in case of assessment of national indexes | ​ | ​ | ​ | (5,983,384) | ​ | (7,479,229) | ​ | (8,975,075) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(1) Assumptions adopted: | ​ | 12/31/2023 | ​ | Likely | ​ | +25% | ​ | +50% | ​
​ | ​ | CDI | ​ | 13.03 | % | 10.03 | % | 12.54 | % | 15.05 | %
​ | ​ | SELIC | ​ | 11.75 | % | 9.25 | % | 11.56 | % | 13.88 | %
​ | ​ | TJLP | ​ | 6.55 | % | 6.53 | % | 8.16 | % | 9.80 | %
​ | ​ | IGPM (General Market Price Index) | ​ | -3.22 | % | 4.03 | % | 5.04 | % | 6.05 | %
​ | ​ | IPCA | ​ | 4.41 | % | 3.62 | % | 4.53 | % | 5.43 | %
​ 38.3.3 - Liquidity risk ​ The table below analyzes, in nominal values, the non-derivative financial liabilities of the Company, by maturity range, for the period remaining on the balance sheet until the final contractual date. Contractual maturity is based on the most recent date the Company must settle obligations and includes the corresponding related contract interest, if any. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 12/31/2023
​ | ​ | Nominal payment flow
​ | ​ | Up to 1 year |  | From 1 to 2 Years |  | From 2 to 5 Years |  | Over 5 Years |  | Total
FINANCIAL LIABILITIES (Current / Non-Current) |  | 23,534,123 |  | 16,402,453 |  | 37,162,840 |  | 86,456,689 |  | 163,556,105
Obligations of Law No. 14,182/2021 | ​ | 2,196,092 | ​ | 2,832,052 | ​ | 11,675,962 | ​ | 64,112,911 | ​ | 80,817,017
Loans, financing and debentures |  | 16,742,978 |  | 13,246,030 |  | 25,311,936 |  | 21,856,170 |  | 77,157,114
Suppliers | ​ | 2,963,867 | ​ | — | ​ | — | ​ | — | ​ | 2,963,867
Reimbursement Obligations |  | 8,572 |  | — |  | — |  | — |  | 8,572
Shareholders remuneration | ​ | 1,522,866 | ​ | — | ​ | — | ​ | — | ​ | 1,522,866
Leases | ​ | 48,482 | ​ | 75,682 | ​ | 49,138 | ​ | 66,936 | ​ | 240,238
Concessions payable UBP |  | 51,266 |  | 248,689 |  | 125,804 |  | 420,672 |  | 846,431
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 12/31/2022
​ | ​ | Nominal payment flow
​ |  | Up to 1 year |  | From 1 to 2 Years |  | From 2 to 5 Years |  | Over 5 Years |  | Total
FINANCIAL LIABILITIES (Current / Non-Current) |  | 19,407,655 |  | 23,277,701 |  | 22,324,186 |  | 93,128,374 |  | 158,137,917
Obligations of Law No. 14,182/2021 |  | 1,486,080 |  | 2,094,252 |  | 9,931,788 |  | 65,206,735 |  | 78,718,856
Loans, financing and debentures | ​ | 11,305,856 | ​ | 20,906,210 | ​ | 12,091,000 | ​ | 27,503,632 | ​ | 71,806,698
Suppliers |  | 3,517,173 |  | — |  | — |  | — |  | 3,517,173
Reimbursement Obligations | ​ | 1,912,423 | ​ | — | ​ | — | ​ | — | ​ | 1,912,423
Shareholders remuneration | ​ | 924,644 | ​ | — | ​ | — | ​ | — | ​ | 924,644
Leases |  | 227,819 |  | 239,099 |  | 219,053 |  | 88,490 |  | 774,461
Concessions payable UBP |  | 33,660 |  | 38,140 |  | 82,345 |  | 329,517 |  | 483,662
​ 38.3.4 - Derivative financial instruments ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 12/31/2023 |  | 12/31/2022 |  | 12/31/2023 |  | 12/31/2022
​ | ​ | Asset | ​ | Liability
Derivative financial instruments for debt protection (38.3.4.1) |  | — |  | — |  | 657,514 |  | —
Derivative financial instruments - electrical power supply (38.3.4.2) |  | 373,606 |  | 986,862 |  | — |  | —
Total derivative financial instruments |  | 373,606 |  | 986,862 |  | 657,514 |  | —
​ 38.3.4.1 - Derivative financial instruments for debt protection ​ In April 2023, the Company contracted the derivative operation denominated Cross Currency Swap for the notional amount of R$6,325,200, with the objective of protecting the bonds issued in relation to exchange rate variation, assuming the liability position in Brazilian reals and the change of value of the liability linked to the variable interest rate curve in Brazilian reals (CDI). ​ ​ The effectiveness of the economic relation between the protected item (bonds) and the hedge instrument (derivative) is measured periodically. ​ Asset Position ​
​ | ​ | ​ | ​ | ​
​ |  | 12/31/2023 |  | 12/31/2022
​ |  | Liability
Debt protection derivative |  |  |  |
Swap - US$ vs CDI - Maturity 02/04/2025 |  | 220,165 |  | —
Swap - US$ vs CDI - Maturity 02/04/2030 |  | 425,137 |  | —
Swap - US$ vs CDI |  | 12,212 |  | —
​ |  | 657,514 |  | —
​ Earnings/(loss) recognized in the results ​
​ | ​ | ​ | ​ | ​
​ | ​ | 12/31/2023 | ​ | 12/31/2022
Variation of fair value of the derivative | ​ | ​ | ​ | ​
Swap - US$ vs CDI - Maturity 02/04/2025 |  | (275,755) |  | —
Swap - US$ vs CDI - Maturity 02/04/2030 |  | (512,050) |  | —
Swap - US$ vs CDI |  | — |  | —
Swap - US$ vs CDI - Maturity 08/29/2025 |  | (15,503) |  | —
Swap - US$ vs CDI - Maturity 06/20/2029 |  | (6,373) |  | —
​ | ​ | ​ | ​ | ​
Variation of fair value of the protected debt |  | ​ |  |
Bonds - Maturity 02/04/2025 |  | 49,395 |  | —
Bonds - Maturity 02/04/2030 |  | (129,796) |  | —
Credit agreement |  | (8,610) |  | —
KFW - Maturity 06/20/2029 |  | (9,689) |  |
​ | ​ | ​ | ​ | ​
Net financial result |  | (908,381) |  | —
​ 38.3.4.2 - Derivative financial instruments - electric power supply ​ This derivative financial instrument refers to a long-term contract to supply electric power with Alumínio Brasileiro S.A. - Albrás: the revenue from this long-term contract is associated with the payment of a premium linked to the international price of aluminum, quoted on the London Metal Exchange: this calculation includes the cap and floor band concept, related to the price of aluminum quoted on the LME, from which analyses were made of sensitivity of the power supply contracts with electricity-intensive consumers. ​ The contract signed with Albrás will end on December 31, 2024. ​ Accounting Policy ​ Recognition and measurement: ​ Financial assets and liabilities are recognized when Eletrobras, or one of its subsidiaries, is part of the contractual provisions of the instrument. ​ Financial assets and liabilities are initially recognized at fair value and, subsequently, measured at amortized cost or fair value, according to the rules of IFRS 9 – Financial Instruments. ​ Transaction costs directly attributable to the acquisition or issue of financial assets and liabilities (except for financial assets and liabilities recognized at fair value in profit or loss) are added to or deducted from the fair value of financial assets or liabilities, if applicable, after initial recognition. Transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in the income statement. ​
| ● | Financial assets
All regular purchases or sales of financial assets are recognized and written off on the trade date. Regular purchases or sales correspond to purchases or sales of financial assets that require the delivery of assets within the term established by market standard or practice. ​ All recognized financial assets are initially recognized at fair value and, subsequently, measured in full at amortized cost or fair value, depending on the classification of financial assets. ​ a) A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as measured at Fair Value Profit and Loss (FVPL): ​
| ● | It is maintained within a business model whose objective is to maintain financial assets receiving contractual cash flows; and
| ● | Its contractual terms generate, on specific dates, cash flows that are related only to the payment of the principal amount and interest on the principal amount outstanding.
b) A debt instrument is measured at Fair Value through Other Comprehensive Income – FVOCI if meet both of the following conditions and is not designated as measured to the FVPL: ​
| ● | It is maintained within a business model that has the objective of achieving and receiving contractual cash flows and the sale of financial assets; and
| ● | Its contractual terms generate, on specific dates, cash flows that are related only to the payment of the principal amount and interest on the principal amount outstanding.
​ Upon initial recognition of an investment in an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the fair value of the investment in Other comprehensive profits and losses. That choice is made investment by investment. ​ c) Financial assets not classified as measured at amortized cost or at FVOCI, as described above, are classified as measured at fair value through profit or loss. Upon initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or FVOCI as well as FVPL if this eliminates or significantly reduces an accounting mismatch that would otherwise arise. ​ Business model assessment: ​ The Company carries out an assessment of the objective of the business model in which a financial asset is kept in the portfolio because it better reflects the way in which the business is managed and the information is provided to Management. ​ Valuation on contractual cash flows: ​ For the purposes of assessing whether the contractual cash flows are only payment of principal and interest, the principal is defined as the fair value of the financial asset upon initial recognition. The interest is defined as a consideration for the time value of money and for the credit risk associated with the principal outstanding over a given period of time and for the other basic risks and costs of borrowing. ​ The Company considers the contractual terms of the instrument to assess whether the contractual cash flows are composed only of payments of principal and interest. This includes assessing whether the financial asset contains a contractual term that could change the timing or the value of contractual cash flows so that it would not meet this condition. ​
| ● | Financial liabilities
​ Financial liabilities, which include loans and financing, suppliers and other accounts payable, are initially measured at fair value and subsequently at amortized cost using the effective interest method. Interest expenses, foreign exchange gains and losses are recognized in the income statement. ​ The effective interest method is used to calculate the amortized cost of a financial liability and to allocate its interest expense over the respective period. The effective interest rate is the rate that exactly discounts estimated future cash flows (including fees and premiums paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) over the estimated life of the financial liability or, when appropriate, for a shorter period, for the initial recognition of the net book value. The Company writes off financial liabilities only when the Company’s obligations are extinguished and canceled or when they expire. ​ Financial guarantee contracts: ​ Financial guarantee contract consists of a contract that requires the issuer to make specified payments in order to reimburse the holder for loss that it incurs due to the fact that the specified debtor fails to make the payment on the scheduled date, in accordance with the initial or changed conditions of instrument of debt. ​ These estimates are defined based on the experience and judgment of the Company’s management. The fees received are recognized based on the straight-line method over the life of the guarantee, see note 23.2. Any increase in obligations in relation to guarantees is shown, when incurred, in operating expenses, see note 35.1. ​ Derivative financial instruments: ​ The Company has financial derivative financial instruments to administer its exposure to interest rate and exchange rate risk, including interest rate swap contracts. ​ Derivatives are initially recognized at fair value, on the contracting date, and are subsequently remeasured at fair value at the end of the year. Any gains or losses are recognized in the financial result immediately, unless the derivative is designated and effective as a hedge instrument; in this case, the moment of recognition in the result depends on the nature of the hedge relationship. ​ Hedge accounting: ​ The Company has a hedge accounting policy, in accordance with the Accounting Pronouncement IFRS 09. The current hedging operations of the Company are characterized, for accounting postage purposes, as hedge at fair value, whose gains or losses in the variations of fair value of the hedge instrument (derivative) and of the protected item (debt) are recognized in the result. ​ Estimates and critical judgments ​ The fair value of derivative financial instruments not traded on the active market is determined using valuation techniques. The Company uses its judgment to determine the method of measurement most coherent with each class of derivative instruments, as well as the assumptions to be observed. In general, the assumptions are based on the market conditions in place on the date of the balance.

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