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REVENUE

12 Months Ended

Dec. 31, 2021

27.

REVENUE

Revenues are measured at the fair value of the consideration received or to be received and are recognized on a monthly basis as and when: (i) Rights and obligations of the contract with the customer are identified; (ii) the performance obligation of the contract is identified; (iii) the price for each transaction has been determined; (iv) the transaction price has been allocated to the performance obligations defined in the contract; and (v) the performance obligations have been complied.

Schedule of net operating revenue

	2021			2020			2019
Revenue from supply of energy (a)		29,619			26,432			26,928
Revenue from use of the electricity distribution systems (TUSD) (b)		3,448			3,022			2,722
CVA, and Other financial components (c)		2,146			455			58
Reimbursement of PIS/Pasep and Cofins over ICMS credits to customers– realization ⁽¹⁾		1,317			266			—
Transmission revenue
Transmission operation and maintenance revenue (d)		355			280			352
Transmission construction revenue (d) (note 14)		252			201			312
Interest revenue arising from the financing component in the transmission contract asset (d) (note 14)		660			438			328
Distribution construction revenue		1,852			1,436			980
Adjustment to expectation of cash flow from indemnifiable financial assets of distribution concession (e)		54			16			18
Revenue on financial updating of the Concession Grant Fee (f)		523			347			318
Energy transactions on the CCEE (g)		1,157			154			432
Mechanism for the sale of surplus (h)		453			234			—
Supply of gas		3,470			2,011			2,298
Fine for violation of service continuity indicator		(70	)		(51	)		(58	)
Advances for services provided (i)		154			—			1,428
Other operating revenues (j)		1,935			1,709			1,721
Deductions on revenue (k)		(13,679	)		(11,722	)		(12,351	)
Net revenue		33,646			25,228			25,486

(1)

For more information, see note 9a from these financial statements.

Revenue from energy supply

These items are recognized upon delivery of supply, based on the tariff specified in the contractual terms and approved by the grantor for each class of customer or in effect in the market. Unbilled supply of energy, from the period between the last billing and the end of each month, is estimated based on the supply contracted. For the distribution concession contract, the unbilled supply is estimated based on the volume of energy delivered but not yet billed.

This table shows energy supply by type of customer:

	GWh ⁽¹⁾						R$
	2021		2020		2019		2021			2020		2019
Residential		11,186		10,981		10,538		11,124			9,875		9,668
Industrial		16,361		12,731		14,873		5,275			4,171		4,760
Commercial, services and others		8,334		8,571		9,335		5,520			4,979		5,439
Rural		3,975		3,766		3,795		2,566			2,190		2,058
Public authorities		729		714		905		583			522		654
Public lighting		1,226		1,243		1,357		718			550		614
Public services		1,418		1,362		1,373		879			722		725
Subtotal		43,229		39,368		42,176		26,665			23,009		23,918
Own consumption		33		34		38		—			—		—
Unbilled revenue		—		—		—		(14	)		9		134
		43,262		39,402		42,214		26,651			23,018		24,052
Wholesale supply to other concession holders ⁽²⁾		10,825		13,907		11,920		3,023			3,363		2,943
Wholesale supply unbilled, net		—		—		—		(55	)		51		(67	)
Total		54,087		53,309		54,134		29,619			26,432		26,928

(1)

Data not examined by external auditors.

(2)

Includes a CCEAR (Regulated Market Sales Contract), ‘bilateral contracts’ with other agents, and the revenues from management of generation assets (GAG) for the 18 hydroelectric plants of Lot D of Auction no 12/2015.

b) Revenue from Use of the Distribution System (the TUSD charge)

These are recognized upon the distribution infrastructure becoming available to customers, and the fair value of the consideration is calculated according to the TUSD tariff of those customers, set by the grantor. The total amount of energy transported, in MWh, is as follows:

	GWh ⁽¹⁾
	2021		2020		2019
Industrial		20,447		18,612		17,723
Commercial		1,535		1,300		1,320
Rural		44		32		17
Public authorities		4		—		—
Concessionaires		310		315		341
Total		22,340		20,259		19,401

(1)

Data not audited by external auditors

The CVA account, and Other financial components

The results from variations in the CVA account (Parcel A Costs Variation Compensation Account), and in Other financial components in calculation of tariffs, refer to the positive and negative differences between the estimated non-manageable costs of the subsidiary Cemig D and the cost actually incurred. The amounts recognized arise from balances recorded in the current year, homologated or to be homologated in tariff adjustment processes. For more information please see Note 14.

Transmission concession revenue

Construction revenue corresponds to the performance obligation to build the transmission infrastructure, recognized based on the satisfaction of performance obligation over time. They are measured based on the cost incurred, including PIS/Pasep and Cofins taxes over the total revenues and the profit margin of the project. For more information, see note 15.

Operation and maintenance revenue corresponds to the performance obligation of operation and maintenance specified in the transmission concession contract, after termination of the construction phase. They are recognized when the services are rendered and he invoices for the RAPs are issued.

Interest revenue in the contract asset recognized, recorded as transmission concession gross revenue in statement income. Revenue corresponds to the significant financing component in the contract asset and is recognized by the linear effective interest rate method based on the rate determined at the start of the investments, which is not subsequently changed. The average of the implicit rates is 6.86%. The rates are determined for each authorization and are applied on the amount to be received (future cash flow) over the contract duration. This includes financial updating by the inflation index specified for each transmission contract.

The margin defined for each performance obligation from the transmission concession contract is as follows:

	2021			2020			2019 ⁽¹⁾
Construction and upgrades revenue		252			201			312
Construction and upgrades costs		(183	)		(147	)		(220	)
Margin		69			54			92
Mark-up (%)		37.40	%		36.73	%		41.82	%
Operation and maintenance revenue		355			279			352
Operation and maintenance cost		(235	)		(223	)		(388	)
Margin		120			56			(36	)
Mark-up (%)		50.88	%		25,11	%		(9.28	%)

(1)

The negative margin observed in 2019 related to the performance obligation to operate and maintain is due the recognition of the non-recurring tax provision, in the amount of R$135.

Adjustment to expected cash flow from financial assets on residual value of infrastructure asses of distribution concessions

Income from fair value change of the Regulatory Remuneration Asset Base.

Revenue on financial updating of the Concession Grant Fee

Represents the inflation adjustment using the IPCA inflation index, plus interest, on the Concession Grant Fee for the concession awarded as Lot D of Auction 12/2015. See Note 14.

Energy transactions on the CCEE (Power Trading Chamber)

The revenue from transactions made through the Power Trading Chamber (Câmara de Comercialização de Energia Elétrica, or CCEE) is the monthly positive net balance of settlements of transactions for purchase and sale of energy in the Spot Market, through the CCEE, for which the consideration corresponds to the product of energy sold at the Spot Price.

Mechanism for the sale of energy surplus

The revenue from the surplus sale mechanism (‘Mecanismo de Venda de Excedentes – MVE’) refers to the sale of power surpluses by distributor agents. This mechanism is an instrument regulated by Aneel enabling distributors to sell over contracted supply – the energy amount that exceeds the quantity required to supply captive customers.

Advances for services provided

Corresponds to the negotiation with a free customer that resulted in a revenue recognition related to trading services provided in advance by the subsidiary ESCEE.

Other operating revenues

	2021		2020		2019
Charged service		17		11		17
Services rendered		53		139		183
Subsidies ⁽¹⁾		1,592		1,395		1,266
Rental and leasing		211		164		189
Reimbursement for decontracted supply ⁽²⁾		27		—		65
Other		35		—		1
Total		1,935		1,709		1,721

(1)

Includes the revenue recognized for the tariff subsidies applied to users of the distribution system, in the amount of R$986 in 2021 (R$1,035 in 2020). Includes the subsidies for sources that are subject to incentive, rural, irrigators, public services and the generation sources that are subject to the incentive; and also includes the tariff flag revenue in the amount of R$108 in 2021, recognized because of the creditor position assumed by the Company in CCRBT; and revenue recognized arising from subsidies, in the amount of R$205, relating to the Program to Encourage Voluntary Reduction of Energy Consumption.

(2)

Reimbursement for suspension of energy supply –Renova.

Deductions on revenue

	2021		2020		2019
Taxes on revenue
ICMS		6,993		6,098		6,358
Cofins		2,842		2,214		2,408
PIS/Pasep		618		481		524
Others		11		5		7
		10,464		8,798		9,297
Charges to the customer
Global Reversion Reserve (RGR)		15		16		16
Energy Efficiency Program (PEE)		74		73		69
Energy Development Account (CDE)		2,658		2,443		2,448
Research and Development (R&D)		34		43		41
National Scientific and Technological Development Fund (FNDCT)		55		43		41
Energy System Expansion Research (EPE of MME)		27		21		20
Customer charges – Proinfa alternative sources program		66		39		52
Energy services inspection fee		35		35		30
Royalties for use of water resources		37		62		43
Customer charges – the ‘Flag Tariff’ system		162		149		294
CDE on R&D		21		—		—
CDE on PEE		31		—		—
		3,215		2,924		3,054
		13,679		11,722		12,351