<SEC-DOCUMENT>0001193125-19-007293.txt : 20190312
<SEC-HEADER>0001193125-19-007293.hdr.sgml : 20190312
<ACCEPTANCE-DATETIME>20190111151505
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-19-007293
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20190111

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ENERGY CO OF MINAS GERAIS
		CENTRAL INDEX KEY:			0001157557
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC SERVICES [4911]
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		AVENIDA BARBACENA 1200
		STREET 2:		30190 131 BELO HORIZONTE
		CITY:			MINAS GERAIS BRAZIL
		STATE:			D5
		ZIP:			30190
		BUSINESS PHONE:		212-259-8000

	MAIL ADDRESS:	
		STREET 1:		C/O DEWEY & LEBOEUF LLP
		STREET 2:		1301 AVENUE OF THE AMERICAS
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Companhia Energ&eacute;tica de Minas Gerais &#150; CEMIG </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">January&nbsp;11, 2019 </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Via EDGAR </B></P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ms.&nbsp;Ta Tanisha Meadows </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Staff Accountant </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporate Finance </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Office of Consumer Products </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Re:&nbsp;&nbsp;&nbsp;&nbsp;ENERGY CO OF MINAS GERAIS </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Form <FONT STYLE="white-space:nowrap">20-F</FONT> for the Fiscal Year Ended December&nbsp;31, 2017 </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Filed May&nbsp;9, 2018 </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Form <FONT STYLE="white-space:nowrap">6-K</FONT> filed July&nbsp;19, 2018 </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>File <FONT STYLE="white-space:nowrap">No.&nbsp;001-15224</FONT> </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Ms.&nbsp;Meadows: </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We are writing in response to the
letter from the Securities and Exchange Commission (the &#147;Commission&#148;) dated November&nbsp;30, 2018 (the &#147;Comment Letter&#148;) in which the Staff of the Commission (the &#147;Staff&#148;) requested certain information regarding
Companhia Energ&eacute;tica de Minas Gerais &#150; CEMIG&#146;s (or the &#147;Company&#148;) Form <FONT STYLE="white-space:nowrap">20-F</FONT> for the fiscal year ended December&nbsp;31, 2017 (the &#147;Form
<FONT STYLE="white-space:nowrap">20-F&#148;),</FONT> and our Form <FONT STYLE="white-space:nowrap">6-K</FONT> filed July&nbsp;19, 2018 (&#147;Form <FONT STYLE="white-space:nowrap">6-K&#148;).</FONT> To assist in the Staff&#146;s review of our
responses, we precede the response below with the text of the comment (in bold type) as stated in the Comment Letter.&nbsp;We believe that we have replied to your comments in full. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Capitalized terms used in the responses set forth below and not otherwise defined herein have the meanings set forth in the
<FONT STYLE="white-space:nowrap">Form&nbsp;20-F</FONT> or in the Form <FONT STYLE="white-space:nowrap">6-K,</FONT> as applicable. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Form <FONT
STYLE="white-space:nowrap">20-F</FONT> for the Fiscal Year Ended December&nbsp;31, 2017 </U></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Consolidated Statement of Comprehensive Income, page
<FONT STYLE="white-space:nowrap">F-13</FONT> </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>1. Please tell us your consideration of disclosing the amount of income tax relating to each item
of other comprehensive income. Please refer to paragraph 90 of IAS 1. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company informs the Staff that the information related to income tax,
including the income tax effects allocated to the Statement of Comprehensive Income, is provided in note 10 to the Company&#146;s audited financial statements for the fiscal year ended December&nbsp;31, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Considering that the income tax effect on items of other comprehensive income only relates to the Company&#146;s Brazilian subsidiaries, which are subject to
a statutory tax rate of 34% (25% for income tax and 9% for social contribution tax), as disclosed in note 10 to the Company&#146;s audited financial statements for the fiscal year ended December&nbsp;31, 2017, the Company did not disclose the amount
of income tax relating to each item of other comprehensive income as required by paragraph 90 of IAS 1 in its Form <FONT STYLE="white-space:nowrap">20-F</FONT> for the year ended December&nbsp;31, 2017, since each such item is taxed at a rate of
34%. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company hereby informs the Staff that while not deemed material based on the discussion above, for purposes of the Company&#146;s <FONT
STYLE="white-space:nowrap">on-going</FONT> commitment to enhancing its disclosure, it will disclose the income tax effect allocated to each component of other comprehensive income in the Company&#146;s financial statements for the fiscal year ended
December&nbsp;31, 2018 and for years thereafter. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Companhia Energ&eacute;tica de Minas Gerais &#150; CEMIG </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>8. Customers, Traders and Power Transport Concession Holders, page <FONT STYLE="white-space:nowrap">F-49</FONT> </I></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>2. Please explain to us why you do not estimate credit losses for trade receivable balances not yet due and trade receivable balances up to 90 days past
due. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company hereby informs the Staff that the Company does not estimate credit losses for trade receivable balances not yet due and trade
receivable balances up to 90 days past due, due to the following factors: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Historical trends have demonstrated that certain customers (mainly residential customers) tend to delay the
payment of invoices (mostly in the first months of the year) for up to 90 days after they become due, but typically subsequently pay such invoices to avoid service interruption. Of the outstanding invoices that were past due as of December&nbsp;31,
2017, 95% of the total balance of such invoices was collected prior to March&nbsp;31, 2018. In addition, historical data shows that an additional 4% of such total balance is usually collected within one year from their due date. As for the remaining
1%, a portion of it is recovered after one year; </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The credit risk of these accounts receivable is low as amounts are widely distributed amongst several residential
customers and individual balances are not material; and </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">All material outstanding amounts related to customers with balances not yet due or overdue balances up to 90 days
are analyzed individually and no expected loss was identified. </P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based on the above, the Company believes that there are no material
expected losses to be recognized for trade receivable balances not yet due and trade receivable balances up to 90 days past due. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>21. Loans,
Financing and Debentures &#150; Debentures, page <FONT STYLE="white-space:nowrap">F-91</FONT> </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>3. We note your disclosure regarding bank debt
refinancing discussed under </B><B><I>CEMIG&#146;s Bank Debt Refinancing</I></B><B> on page 51 and in Management&#146;s Discussion and Results of Operations on page 126. Please tell us how you accounted for the bank debt refinancing transactions and
the basis for your accounting and what consideration you have to disclosing your accounting treatment, including the recognition of any gain or loss. </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company hereby informs the Staff that as described on pages 51 and 126 of the Company&#146;s <FONT STYLE="white-space:nowrap">20-F,</FONT> in 2017, the
Company and its subsidiaries entered into and concluded negotiations with its main creditors in order to refinance short and medium term indebtedness. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company accounted for the bank debt refinancing transactions in accordance with IAS 39, Financial Instruments: Recognition and Measurement (IAS 39)
paragraphs 40 and 41, which state that an exchange between an existing borrower and lender of debt instruments with &#147;substantially different terms&#148; should be accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability, or a part of it, (whether or not due to the financial difficulty of the debtor) should be accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. A gain or loss from extinguishment of the original financial liability is recognized in profit or loss. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">IAS&nbsp;39 considers the terms of exchanged or modified debt to be &#147;substantially different&#148; if the net present value of the cash flows under the
new terms (including any fees paid net of any fees received) discounted at the original effective interest rate is at least 10% different from the discounted present value of the remaining cash flows of the original debt instrument
(IAS&nbsp;39.AG62). This comparison is commonly referred to as the &#147;10% test.&#148; </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Companhia Energ&eacute;tica de Minas Gerais &#150; CEMIG </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Based on the Company&#146;s analysis and calculations based on the &#147;10% test,&#148; the terms of the refinanced debt were not substantially different
from those of the original debt and the discounted present value of the cash flows under the new terms did not present a material difference compared to the discounted present value of the remaining cash flows of the original financial liability.
Thus, no gain or loss was recognized in the Company&#146;s consolidated statement of income for the fiscal year ended December&nbsp;31, 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">While these
bank debt refinancing transactions did not have an impact in the Company&#146;s consolidated statement of income, as discussed above, the Company hereby informs the Staff that, for purposes of the Company&#146;s
<FONT STYLE="white-space:nowrap">on-going</FONT> commitment to enhancing its disclosure, it will include further details in relation to its accounting policy on refinancing transactions in line with the discussion above, and additional disclosures
in relation to the effect of refinancing transactions during 2017, as detailed above, in the Company&#146;s audited financial statements for the fiscal year ended December&nbsp;31, 2018, as well as in the Company&#146;s Form <FONT
STYLE="white-space:nowrap">20-F</FONT> for the year ended December&nbsp;31, 2018. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>25. Equity and Remuneration to Shareholders, page <FONT
STYLE="white-space:nowrap">F-110</FONT> </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>4. Please tell us your consideration of disclosing the pertinent rights, preferences and restrictions
attached to common shares and preferred shares. Please refer to paragraph 79(a)(v) of IAS 1. </B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company hereby informs the Staff that it has
considered the guidance of paragraph 79(a)(v) of IAS 1 and disclosed dividend rights of preferred and common shares in note 25(c) to the Company&#146;s audited financial statements for the fiscal year ended December&nbsp;31, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The rights, preferences and restrictions attached to the Company&#146;s common and preferred shares derive from the Brazilian Corporate Law (Law
No.&nbsp;6,404/76) and the Company&#146;s <FONT STYLE="white-space:nowrap">by-laws.</FONT> A description of the pertinent rights, preferences and restrictions are included on items &#147;3. Key Information&#150;Risk Factors&#150;Risks Relating to
the Preferred and Common Shares, and the Preferred and Common ADSs,&#148; &#147;6&#150;Directors, Senior Managers and Employees,&#148; &#147;7&#150;Major Shareholders and Related Party Transactions&#148; and &#147;10&#150;Additional
Information&#148; in the Company&#146;s <FONT STYLE="white-space:nowrap">Form&nbsp;20-F</FONT> for the year ended December&nbsp;31, 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company
hereby informs the Staff that it will also include the abovementioned information in the Company&#146;s audited financial statements for the fiscal year ended December&nbsp;31, 2018. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Form <FONT STYLE="white-space:nowrap">6-K</FONT> filed July&nbsp;19, 2018 </U></B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>First Quarter 2018 Results, page 110 </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>5. Please
tell us how your disclosures enable users to understand the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers. Please refer to the disclosure requirements in IFRS 15. </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company notes that IAS 34.16A (l)&nbsp;requires disaggregated disclosure of revenue from contracts with customers in paragraphs 114 and 115 of IFRS 15,
Revenue form Contracts with Customers (IFRS 15) . Paragraph 114 of IFRS 15 requires the Company to disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue
and cash flows are affected by economic factors. This information was disclosed in Note 25 to our First Quarter 2018 Results. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In addition, the Company
presented disaggregated revenue based on the type of goods or services provided to customers and the type of customers determined based on Company and industry-specific factors considered most meaningful to its business. The Company further provided
a more detailed description about each disaggregated revenue category&nbsp;on note 2.6 to its annual financial statements filed with the <FONT STYLE="white-space:nowrap">Form&nbsp;20-F</FONT> for the year ended December&nbsp;31, 2017. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Companhia Energ&eacute;tica de Minas Gerais &#150; CEMIG </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">While the Company believes that the disclosure contained in the Company&#146;s Form <FONT STYLE="white-space:nowrap">20-F</FONT> for the year ended
December&nbsp;31, 2017, and First Quarter 2018 Results are sufficient to enable readers to understand the nature, timing and uncertainty of revenue and cash flows in connection with the Company&#146;s contracts with customers, the Company hereby
informs the Staff that, for purposes of the Company&#146;s <FONT STYLE="white-space:nowrap">on-going</FONT> commitment to enhancing its disclosure, it will include more detailed information about the relationship between the disclosure of
disaggregated revenue and revenue information disclosed for each reportable segment in its annual financial statements to be filed with the <FONT STYLE="white-space:nowrap">Form&nbsp;20-F</FONT> for the year ended December&nbsp;31, 2018. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In closing, the Company acknowledges that the Company and its management are responsible for the
accuracy and adequacy of the Company&#146;s disclosures, notwithstanding any review, comments, action or absence of action by the Staff. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Should you have
any questions, please do not hesitate to contact us. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Sincerely, </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><U>/s/ Bernardo Afonso Salom&atilde;o de
Alvarenga</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P></TD></TR>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Bernardo Afonso Salom&atilde;o de Alvarenga</P></TD></TR>
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<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Chief Executive Officer</P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">cc:&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Bill Thompson, Division of Corporate Finance, Office of Consumer Products </P>
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