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OPERATING COSTS AND EXPENSES

12 Months Ended

Dec. 31, 2021

28.

OPERATING COSTS AND EXPENSES

The operating costs are as follows:

	2021		2020		2019
Personnel (a)		1,240		1,276		1,272
Employees’ and managers’ profit sharing		134		142		263
Post-employment benefits (reversals) – Note 24 ⁽¹⁾		16		438		408
Materials		94		79		91
Outsourced services (b)		1,450		1,265		1,239
Energy purchased for resale (c)		16,101		12,111		11,286
Depreciation and amortization ⁽²⁾		1,049		989		958
Operating provisions and adjustments for operating losses (d)		375		423		2,401
Charges for use of the national grid		3,337		1,748		1,426
Gas bought for resale		2,011		1,083		1,436
Construction costs (e)		2,036		1,581		1,200
Other operating expenses, net (f)		394		297		494
Operating costs and expenses		28,237		21,432		22,474

(1)

Due to the changes made in the Collective Work Agreement for 2021–23, for offer and payment of life insurance for the employees and former employees, the Company believes that the post-retirement benefit in question had been canceled, in its entirety, and as a result wrote down the balance of the obligation. More information, see Note 24.

(2)

Net of PIS/Pasep and Cofins taxes applicable to amortization of the right-of-use assets in the amount of R$2.

Personnel

2021 Programmed Voluntary Retirement Plan (‘PDVP’)

On May 2021, the Company approved the Programmed Voluntary Retirement Plan for 2021 (‘the 2021 PDVP’). All the employees are eligible to join the program, except as provided for in the Program, from May 10 to 31, 2021. The program provided the standard legal payments for voluntary termination of employment and a bonus, as an indemnity, which is calculated by the application of a percentage determined by the length of time the employee has worked for Cemig, on the current remuneration, for each year of employment, according to the Program terms, and, for those employees whose job tenure in Cemig is longer than 36 years, the value of 10.5 remunerations.

The total amount of R$35 has been recorded as expense related to this program, corresponding to the enrollment of 324 employees.

Outsourced services

Schedule of outsourced services

	2021		2020		2019
Meter reading and bill delivery		134		127		128
Communication		148		116		69
Maintenance and conservation of electrical facilities and equipment		485		443		404
Building conservation and cleaning		72		63		110
Security services		17		19		18
Audit and consultant		43		41		24
Information technology		93		80		63
Disconnection and reconnection		82		39		70
Legal services		32		21		28
Tree pruning		46		48		46
Cleaning of power line pathways		92		75		61
Copying and legal publications		18		17		21
Inspection of customer units		33		35		14
Other expenses		155		141		183
Outsourced services		1,450		1,265		1,239

Energy purchased for resale

	2021			2020			2019
Supply from Itaipu Binacional		1,946			1,990			1,429
Physical guarantee quota contracts		832			780			715
Quotas for Angra I and II nuclear plants		244			303			269
Spot market		1,224			1,497			1,886
Proinfa Program		401			318			376
‘Bilateral’ contracts		418			333			311
Energy acquired in Regulated Market auctions		6,242			3,334			3,021
Energy acquired in the Free Market		4,976			3,977			4,098
Distributed generation (‘Geração distribuída’)		1,268			678			207
PIS/Pasep and Cofins credits		(1,450	)		(1,099	)		(1,026	)
		16,101			12,111			11,286

Operating provision (reversals)

	2021		2020		2019
Estimated losses on doubtful accounts receivables (Note 7) ⁽¹⁾		144		147		238
Estimated losses on other accounts receivables ⁽²⁾		21		—		11
Estimated losses on accounts receivables from related parties ⁽⁴⁾		—		37		688

Contingency provisions (reversals) (Note 25) ⁽³⁾
Labor claims		35		46		136
Civil		54		43		24
Tax		2		75		1,228
Other		19		22		12
		110		186		1,400
		275		370		2,337
Adjustment for losses
Put option – SAAG (Note 31)		100		53		64
		100		53		64
		375		423		2,401

(1)

The expected losses on receivables are presented as selling expenses in the Statement of Income.

(2)

This refers mainly to the estimated loss on credits for sharing of infrastructure (rental of overhead cable poles).

(3)

The provisions for contingencies are presented in the consolidated Statement of income as operating expenses.

(4)

Estimated losses on accounts receivable from Renova, as a result of the assessment of the jointly controlled entity credit risk.

Construction costs

Schedule of construction cost

	2021		2020		2019
Personnel and managers		100		83		85
Materials		1,150		775		595
Outsourced services		682		598		421
Others		104		125		99
Construction cost		2,036		1,581		1,200

Other operating expenses (revenues), net

	2021		2020			2019
Leasing and rentals		6		11			20
Advertising		12		7			9
Own consumption of energy		28		24			21
Subsidies and donations		27		22			40
Onerous concession		3		3			3
Insurance		29		25			12
CCEE annual charge		6		6			6
Net loss (gain) on deactivation and disposal of assets		97		81			88
Forluz – Administrative running cost		32		30			30
Collection agents		85		86			88
Obligations deriving from investment contracts ⁽¹⁾		11		9			32
Taxes and charges		16		7			10
Losses (gains) on investments ⁽²⁾		40		(13	)		—
Other revenues (expenses)		2		(1	)		135
Other operating expenses (revenues), net		394		297			494

(1)

This refers to claims under the agreement made between Aliança Geração, Vale S.A. and Cemig. The action is provisioned at the cost of R$149 (R$119 on December 31, 2020), of which Cemig is responsible for R$52 (R$41 on December 31, 2020).

(2)

The Company injected capital into UHE Itaocara S.A., to assist in compliance with the final Arbitration Ruling against the investee, given by the FGV in its Mediation and Arbitration Chamber, in the amount of R$40. This amount is proportional to its shareholding interest in the investee, and was recognized under Other expenses in the Company’s income statement.