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Concession Financial and Sector Assets and Liabilities | 12 Months Ended
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Dec. 31, 2024
Concession Financial and Sector Assets and Liabilities |
Concession Financial and Sector Assets and Liabilities | 12. CONCESSION FINANCIAL AND SECTOR ASSETS AND LIABILITIES
| Dec. 31, 2024 |  | Dec. 31, 2023
Concession financial assets related to the infrastructure |  |  |
Energy distribution concession | 2,714 |  | 1,881
Gas distribution concession | 92 |  | 38
Indemnifiable receivable – Generation (12.b) | 871 |  | 785
Concession grant fee – Generation concessions (12.c) | 3,099 |  | 3,031
| 6,776 |  | 5,735
Sector financial assets |  |  |
Amounts receivable from Parcel A (CVA) and Other Financial Components (12.d) | 1,296 |  | 805
Total assets | 8,072 |  | 6,540
Sector financial liabilities |  |  |
Account for compensation of variation of parcel A items (CVA) and Other financial components (12.d) | (16) |  | -
Total liabilities | (16) |  | -
Current assets | 1,190 |  | 814
Non-current assets | 6,882 |  | 5,726
Current liabilities | (16) |  | -
The changes in concession financial assets are as follows:
| Energy Distribution |  | Generation |  | Gas Distribution |  | Total
Balances at December 31, 2021 | 684 |  | 3,608 |  | 34 |  | 4,326
Transfers from contract assets | 670 |  | - |  | - |  | 670
Transfers from (to) intangible assets | (22) |  | - |  | - |  | (22)
Monetary updating | 39 |  | 514 |  | 3 |  | 556
Fair Value Adjustments | - |  | (172) |  | - |  | (172)
Disposals | (1) |  | - |  | - |  | (1)
Amounts received | - |  | (308) |  | - |  | (308)
Balances at December 31, 2022 | 1,370 |  | 3,642 |  | 37 |  | 5,049
Transfers from contract assets | 363 |  | - |  | - |  | 363
Monetary updating | 148 |  | 505 |  | 1 |  | 654
Disposals | - |  | - |  | - |  | -
Amounts received | - |  | (331) |  | - |  | (331)
Balances at December 31, 2023 | 1,881 |  | 3,816 |  | 38 |  | 5,735
Transfers from contract assets | 731 |  | - |  | 51 |  | 782
Monetary updating | 104 |  | 534 |  | 3 |  | 641
Disposals | (2) |  | - |  | - |  | (2)
Amounts received | - |  | (343) |  | - |  | (343)
Classification as held for sale | - |  | (37) |  | - |  | (37)
Balances at December 31, 2024 | 2,714 |  | 3,970 |  | 92 |  | 6,776
a) Distribution - Financial assets The energy and gas distribution concession contracts are within the scope of IFRIC 12. The financial assets under these contracts refer to the investments made in infrastructure that will be paid by grantor at the end of the concession period. The financial assets are measured at fair value through income or loss, in accordance with regulation of the energy segment and concession contracts executed by CEMIG and its subsidiaries and the granting authorities. b) Generation - Indemnity receivable Various concession contracts for various plants operated under Concession Contract 007/1997 began to expire as from August 2013. Upon expiration of the concession contract, the Company has a right to receive an amount corresponding to the residual value of the assets not yet amortized, as specified in the concession contract. The accounting balances corresponding to these assets were recognized in financial assets, at fair value through profit or loss. On July 28, 2022 ANEEL revoked Normative Resolution (ReN) 942, by publication of ReN 1,027, establishing the general methodology and criteria for calculation - to be based on New Replacement Value, which is calculated, as first priority, based on the reference database of prices - then as second priority by the concession holder’s own prices database, then, as the last alternative, by the updated inspected accounting cost. The movement in the balance is as follows:
Generation plant | Concession expiration date |  | Installed capacity (MW) (information of MW not audited) |  | Net balance of assets on December 31, 2023 |  | Financial Update |  | Net balance of assets on December 31, 2024
Lot D |  |  |  |  |  |  |  |  |
UHE Três Marias | July 2015 |  | 396.00 |  | 203 |  | 22 |  | 225
UHE Salto Grande | July 2015 |  | 102.00 |  | 104 |  | 11 |  | 115
UHE Itutinga | July 2015 |  | 52.00 |  | 12 |  | 1 |  | 13
UHE Camargos | July 2015 |  | 46.00 |  | 24 |  | 2 |  | 26
PCH Piau | July 2015 |  | 18.01 |  | 6 |  | 1 |  | 7
PCH Gafanhoto | July 2015 |  | 14.00 |  | 7 |  | 1 |  | 8
PCH Peti | July 2015 |  | 9.40 |  | 7 |  | 1 |  | 8
PCH Dona Rita | Sep. 2013 |  | 2.41 |  | 2 |  | 0 |  | 2
PCH Tronqueiras | July 2015 |  | 8.50 |  | 10 |  | 1 |  | 11
PCH Joasal | July 2015 |  | 8.40 |  | 8 |  | 1 |  | 9
PCH Martins | July 2015 |  | 7.70 |  | 6 |  | 1 |  | 7
PCH Cajuru | July 2015 |  | 7.20 |  | 23 |  | 3 |  | 26
PCH Paciência | July 2015 |  | 4.08 |  | 5 |  | 0 |  | 5
PCH Marmelos | July 2015 |  | 4.00 |  | 3 |  | 0 |  | 3
Other |  |  |  |  |  |  |  |  |
UHE Volta Grande | Feb. 2017 |  | 380.00 |  | 0 |  | 0 |  | 0
UHE Miranda | Dec. 2016 |  | 408.00 |  | 110 |  | 12 |  | 122
UHE Jaguara | Aug. 2013 |  | 424.00 |  | 168 |  | 19 |  | 187
UHE São Simão | Jan. 2015 |  | 1,710.00 |  | 87 |  | 10 |  | 97
|  |  | 3,601.70 |  | 785 |  | 86 |  | 871
The balance of R$871 represents management’s best estimate for the right to receive cash from the grantor related to the generation entities, based on the evaluation criteria set by grantor (Aneel). The Valuation Report on the assets is subject to inspection by Aneel, which may request complementary documentation. As a result, there may be adjustments to the amounts resulting from the valuation process - in which case the concession holder has the right of defense and reply. The due date and form of payment of the investments made after entry into operation of the basic plant plans, which have not yet been amortized or depreciated, will be decided by the Grantor after inspection and ratification of the reimbursements amounts. c) Concession grant fee - Generation concessions The concession grant fee paid by the Company for a 30-year concession contracts No. 08 to 16/2016, related to 18 hydroelectric plants of Auction 12/2015, won by Cemig GT, was an amount of R$2,216. The amount of the concession fee was recognized as a financial asset measured at amortized cost, as Cemig GT has an unconditional right to receive the amount paid, updated by the IPCA Index and remuneratory interest (the total amount of which is equal to the internal rate of return on the project), during the period of the concession. The changes in concession financial assets are as follows:
SPE |  | Plants |  | Dec. 31, 2023 |  | Monetary updating |  | Amounts received |  | Classification as held for sale |  | Dec. 31, 2024
Cemig Geração Três Marias S.A. |  | Três Marias |  | 1,716 |  | 242 |  | (184) |  | - |  | 1,774
Cemig Geração Salto Grande S.A. |  | Salto Grande |  | 539 |  | 76 |  | (58) |  | - |  | 557
Cemig Geração Itutinga S.A. |  | Itutinga |  | 204 |  | 32 |  | (25) |  | - |  | 211
Cemig Geração Camargos S.A. |  | Camargos |  | 152 |  | 24 |  | (18) |  | - |  | 158
Cemig Geração Sul S.A. |  | Coronel Domiciano, Joasal, Marmelos, Paciência e Piau |  | 201 |  | 33 |  | (26) |  | (22) |  | 186
Cemig Geração Leste S.A. |  | Dona Rita, Ervália, Neblina, Peti, Sinceridade e Tronqueiras |  | 137 |  | 25 |  | (20) |  | - |  | 142
Cemig Geração Oeste S.A. |  | Cajurú, Gafanhoto e Martins |  | 82 |  | 15 |  | (12) |  | (14) |  | 71
Total |  |  |  | 3,031 |  | 447 |  | (343) |  | (36) |  | 3,099
SPE |  | Plants |  | Dec. 31, 2022 |  | Monetary updating |  | Amounts received |  | Dec. 31, 2023
Cemig Geração Três Marias S.A. |  | Três Marias |  | 1,672 |  | 222 |  | (178) |  | 1,716
Cemig Geração Salto Grande S.A. |  | Salto Grande |  | 525 |  | 70 |  | (56) |  | 539
Cemig Geração Itutinga S.A. |  | Itutinga |  | 198 |  | 30 |  | (24) |  | 204
Cemig Geração Camargos S.A. |  | Camargos |  | 148 |  | 22 |  | (18) |  | 152
Cemig Geração Sul S.A. |  | Coronel Domiciano, Joasal, Marmelos, Paciência e Piau |  | 195 |  | 31 |  | (25) |  | 201
Cemig Geração Leste S.A. |  | Dona Rita, Ervália, Neblina, Peti, Sinceridade e Tronqueiras |  | 133 |  | 23 |  | (19) |  | 137
Cemig Geração Oeste S.A. |  | Cajurú, Gafanhoto e Martins |  | 79 |  | 14 |  | (11) |  | 82
Total |  |  |  | 2,950 |  | 412 |  | (331) |  | 3,031
SPC |  | Plants |  | Dec. 31, 2021 |  | Monetary updating |  | Amounts received |  | Dec. 31, 2022
CEMIG Geração Três Marias S.A. |  | Três Marias |  | 1,584 |  | 254 |  | (166) |  | 1,672
CEMIG Geração Salto Grande S.A. |  | Salto Grande |  | 497 |  | 80 |  | (52) |  | 525
CEMIG Geração Itutinga S.A. |  | Itutinga |  | 187 |  | 33 |  | (22) |  | 198
CEMIG Geração Camargos S.A. |  | Camargos |  | 140 |  | 25 |  | (17) |  | 148
CEMIG Geração Sul S.A. |  | Coronel Domiciano, Joasal, Marmelos, Paciência and Piau |  | 184 |  | 34 |  | (23) |  | 195
CEMIG Geração Leste S.A. |  | Dona Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras |  | 125 |  | 26 |  | (18) |  | 133
CEMIG Geração Oeste S.A. |  | Cajurú, Gafanhoto and Martins |  | 75 |  | 15 |  | (11) |  | 79
Total |  |  |  | 2,792 |  | 467 |  | (309) |  | 2,950
d) Account for compensation of variation of parcel A items (CVA) and Other financial components Sector financial assets and liabilities refer to the differences between: (i) the non-manageable costs expected by Aneel and recognized in the tariff at the beginning of the tariff period, and (ii) the non-manageable costs actually incurred over the period of validity of the tariff. These differences constitute an asset, when the costs incurred are higher than the expected costs in the tariff calculation; and a liability when the costs incurred are lower than the expected costs. The variations found are inflation-adjusted, based on the Selic rate, and compensated in the subsequent tariff adjustments. The amendment to the concession contract guarantee to the Company the right to the indemnity of the assets and/or the liabilities not amortized by the termination of the concession. The balances of these sectoral financial assets and liabilities are presented at net value per tariff cycle, in accordance with the tariff adjustments approved or to be approved.
Sectoral financial assets | Dec. 31, 2023 |  | Additions |  | Amortization |  | Remuneration |  | Transfer |  | Dec. 31, 2024 |  | Amortization cycle |  | Constitution cycle |  | Current |  | Non-current
CVA assets | (685) |  | 1,581 |  | (1,653) |  | 170 |  | 728 |  | 141 |  | - |  | 141 |  | 76 |  | 65
Energy acquisition (CVA energy) | (1,109) |  | 1,271 |  | (952) |  | 113 |  | 997 |  | 320 |  | - |  | 320 |  | 182 |  | 138
Itaipu energy costs | 29 |  | - |  | (151) |  | 2 |  | 42 |  | (78) |  | - |  | (78) |  | (46) |  | (32)
Program of Incentives for Alternative Electricity Sources – PROINFA | (20) |  | 6 |  | - |  | - |  | 20 |  | 6 |  | - |  | 6 |  | 3 |  | 3
Transport basic charges | 413 |  | 305 |  | (381) |  | 38 |  | (126) |  | 249 |  | - |  | 249 |  | 147 |  | 102
Transport of Itaipu supply | 67 |  | 18 |  | (58) |  | 6 |  | (37) |  | (4) |  | - |  | (4) |  | (2) |  | (2)
System service charges – ESS | (62) |  | (42) |  | (97) |  | 11 |  | (31) |  | (221) |  | - |  | (221) |  | (131) |  | (90)
CDE | (3) |  | 23 |  | (14) |  | - |  | (137) |  | (131) |  | - |  | (131) |  | (77) |  | (54)
Other sectoral financial assets | 1,490 |  | 1,088 |  | (1,430) |  | 129 |  | (122) |  | 1,155 |  | - |  | 1,155 |  | 783 |  | 372
Quotas from nuclear energy | 138 |  | 105 |  | (121) |  | 14 |  | (47) |  | 89 |  | - |  | 89 |  | 52 |  | 37
Neutrality of Parcel A | 29 |  | 142 |  | (101) |  | 8 |  | 13 |  | 91 |  | - |  | 91 |  | 54 |  | 37
Estimated neutrality on distributed generation credits | 357 |  | 296 |  | - |  | 39 |  | - |  | 692 |  | - |  | 692 |  | 692 |  | -
Energy over contracting | 922 |  | 526 |  | (774) |  | 37 |  | (304) |  | 407 |  | - |  | 407 |  | 241 |  | 166
Tariff refunds | (88) |  | - |  | - |  | - |  | 16 |  | (72) |  | - |  | (72) |  | (48) |  | (24)
Other | 132 |  | 19 |  | (434) |  | 31 |  | 200 |  | (52) |  | - |  | (52) |  | (208) |  | 156
Total sectorial financial assets | 805 |  | 2,669 |  | (3,083) |  | 299 |  | 606 |  | 1,296 |  | - |  | 1,296 |  | 859 |  | 437
Sectorial financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CVA liabilities | - |  | (1,490) |  | 2,286 |  | (208) |  | (728) |  | (140) |  | (140) |  | - |  | (140) |  | -
Energy acquisition (CVA energy) | - |  | (998) |  | 1,861 |  | (193) |  | (997) |  | (327) |  | (327) |  | - |  | (327) |  | -
Itaipu energy costs | - |  | (113) |  | 97 |  | (15) |  | (42) |  | (73) |  | (73) |  | - |  | (73) |  | -
Program of Incentives for Alternative Electricity Sources – PROINFA | - |  | (18) |  | 30 |  | (2) |  | (20) |  | (10) |  | (10) |  | - |  | (10) |  | -
Transport basic charges | - |  | - |  | 30 |  | - |  | 126 |  | 156 |  | 156 |  | - |  | 156 |  | -
Transport of Itaipu supply | - |  | (5) |  | - |  | 1 |  | 37 |  | 33 |  | 33 |  | - |  | 33 |  | -
System service charges – ESS | - |  | (224) |  | 266 |  | (2) |  | 31 |  | 71 |  | 71 |  | - |  | 71 |  | -
CDE | - |  | (132) |  | 2 |  | 3 |  | 137 |  | 10 |  | 10 |  | - |  | 10 |  | -
Other sector financial liabilities | - |  | (715) |  | 755 |  | (33) |  | 117 |  | 124 |  | 124 |  | - |  | 124 |  | -
Quotas from nuclear energy | - |  | - |  | 2 |  | - |  | 47 |  | 49 |  | 49 |  | - |  | 49 |  | -
Neutrality of Parcel A | - |  | (33) |  | 82 |  | (2) |  | (13) |  | 34 |  | 34 |  | - |  | 34 |  | -
Energy over contracting | - |  | - |  | - |  | - |  | 304 |  | 304 |  | 304 |  | - |  | 304 |  | -
Tariff refunds | - |  | (99) |  | 88 |  | (3) |  | (16) |  | (30) |  | (30) |  | - |  | (30) |  | -
Other | - |  | (583) |  | 583 |  | (28) |  | (205) |  | (233) |  | (233) |  | - |  | (233) |  | -
Total sector financial liabilities | - |  | (2,205) |  | 3,041 |  | (241) |  | (611) |  | (16) |  | (16) |  | - |  | (16) |  | -
Total sectoral financial assets and liabilities (net) | 805 |  | 464 |  | (42) |  | 58 |  | (5) |  | 1,280 |  | (16) |  | 1,296 |  | 843 |  | 437
ANNUAL REPORT AND FORM 20-F | 2024 | F-50
Table of Contents
Sectorial financial assets | Dec. 31, 2022 |  | Additions |  | Amortization |  | Remuneration |  | Transfer (2) |  | Dec. 31, 2023 |  | Amortization cycle |  | Constitution cycle |  | Current |  | Non-current
CVA assets | (345) |  | 1,597 |  | (2,527) |  | 4,260 |  | 330 |  | (685) |  | (434) |  | (251) |  | (584) |  | (101)
Energy acquisition (CVA energy) | (1,787) |  | 1,213 |  | (1,223) |  | 161 |  | 527 |  | (1,109) |  | (443) |  | (666) |  | (837) |  | (272)
Itaipu energy costs | 594 |  | (40) |  | (455) |  | 44 |  | (114) |  | 29 |  | 143 |  | (114) |  | 75 |  | (46)
Program of Incentives for Alternative Electricity Sources – PROINFA | 31 |  | - |  | (42) |  | 1 |  | (10) |  | (20) |  | (19) |  | (1) |  | (20) |  | -
Transport basic charges | 215 |  | 388 |  | (265) |  | 40 |  | 35 |  | 413 |  | 114 |  | 299 |  | 291 |  | 122
Transport of Itaipu supply | 18 |  | 60 |  | (20) |  | 4 |  | 5 |  | 67 |  | 14 |  | 53 |  | 45 |  | 22
System service charges – ESS | 583 |  | (24) |  | (380) |  | 7 |  | (248) |  | (62) |  | (242) |  | 180 |  | (136) |  | 74
CDE | 1 |  | - |  | (142) |  | 3 |  | 135 |  | (3) |  | (1) |  | (2) |  | (2) |  | (1)
Other sectoral financial assets | 1,289 |  | 1,254 |  | (1,388) |  | 205 |  | 130 |  | 1,490 |  | 523 |  | 967 |  | 1,077 |  | 413
Quotas from nuclear energy | 105 |  | 103 |  | (86) |  | 16 |  | - |  | 138 |  | 51 |  | 87 |  | 102 |  | 36
Neutrality of Parcel A | 203 |  | 168 |  | (51) |  | 5 |  | 61 |  | 386 |  | (29) |  | 415 |  | 363 |  | 23
Energy over contracting (1) | 750 |  | 643 |  | (529) |  | 58 |  | - |  | 922 |  | 349 |  | 573 |  | 688 |  | 234
Tariff refunds | (71) |  | - |  | - |  | - |  | (17) |  | (88) |  | (25) |  | (63) |  | (67) |  | (21)
Other | 302 |  | 340 |  | (722) |  | 126 |  | 86 |  | 132 |  | 177 |  | (45) |  | (9) |  | 141
Total sectorial financial assets | 944 |  | 2,851 |  | (3,915) |  | 465 |  | 460 |  | 805 |  | 89 |  | 716 |  | 493 |  | 312
Sectorial financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CVA liabilities | - |  | (1,706) |  | 2,380 |  | (343) |  | (331) |  | - |  | - |  | - |  | - |  | -
Energy acquisition (CVA energy) | - |  | (1,179) |  | 1,941 |  | (234) |  | (528) |  | - |  | - |  | - |  | - |  | -
Itaipu energy costs | - |  | (109) |  | - |  | (5) |  | 114 |  | - |  | - |  | - |  | - |  | -
Program of Incentives for Alternative Electricity Sources – PROINFA | - |  | (31) |  | 25 |  | (4) |  | 10 |  | - |  | - |  | - |  | - |  | -
Transport basic charges | - |  | - |  | 35 |  | - |  | (35) |  | - |  | - |  | - |  | - |  | -
Transport of Itaipu supply | - |  | - |  | 5 |  | - |  | (5) |  | - |  | - |  | - |  | - |  | -
System service charges – ESS | - |  | (506) |  | 371 |  | (113) |  | 248 |  | - |  | - |  | - |  | - |  | -
CDE | - |  | 119 |  | 3 |  | 13 |  | (135) |  | - |  | - |  | - |  | - |  | -
Other sector financial liabilities | - |  | (729) |  | 908 |  | (47) |  | (132) |  | - |  | - |  | - |  | - |  | -
Neutrality of Parcel A | - |  | (58) |  | 124 |  | (5) |  | (61) |  | - |  | - |  | - |  | - |  | -
Tariff refunds | - |  | (88) |  | 73 |  | (2) |  | 17 |  | - |  | - |  | - |  | - |  | -
Other | - |  | (583) |  | 711 |  | (40) |  | (88) |  | - |  | - |  | - |  | - |  | -
Total sector financial liabilities | - |  | (2,435) |  | 3,288 |  | (390) |  | (463) |  | - |  | - |  | - |  | - |  | -
Total sectoral financial assets and liabilities (net) | 944 |  | 416 |  | (627) |  | 75 |  | (3) |  | 805 |  | 89 |  | 716 |  | 493 |  | 312
(1) | Reversal of the over contracting amounts passed on to consumers in the 2018 and 2019 tariff adjustments because they were previously recognized by ANEEL as involuntary over contracting, made possible by the publication of the involuntariness orders, recognizing over contracting as voluntary. Regarding the amount constituted in the period, there is a high volume of surplus energy, mainly due to the growing increase in the energy injected by MMGD facilities, settled at a low PLD.
(2) | In addition to the transfers between sectoral financial assets and liabilities, there was a transfer of R$1,550 to the "Other assets" group.
Accounting policy Energy Distribution and Gas segment The portion of the infrastructure to be amortized during the concession period is recorded as an intangible asset, as provided for in IFRIC 12. The portion of the value of the assets which will not be fully amortized by the end of the concession is reported as a financial asset because it is an unconditional right to receive cash or another financial asset directly from the grantor. Account for compensation of variation of parcel A items (CVA) and Other financial components The financial assets and liabilities originate from the difference in time between the costs forecast (Parcel A and other financial components) included in the tariff at the start of the tariff period, and those actually incurred over the tariff period. This tariff repositioning mechanism guarantees the economic and financial balance of energy distributors. The calculations are in line with current regulations, and if the concession is terminated for any reason, the remaining balances of these assets or liabilities that have not been passed on in the tariff must be included in the compensation base at the end of the concession. These sectoral financial assets and liabilities are measured at amortized cost. The variations calculated are monetarily restated based on the Selic rate and offset in subsequent tariff adjustments. Transmission segment Only after the satisfaction of the performance obligation to operate and maintain the infrastructure, the contract asset is classified as a financial asset (accounts receivable - concessionaires - energy transport), considering that the receipt of the consideration only depends on the passage of time. Financial portion of the transmission concession contracts renewed in accordance with Law 12,783/2013 Corresponding to the financial portion of remuneration for the assets related to the Existing Basic System Network (Rede Básica do Sistema Elétrico, or ‘RBSE’), that represents the amount payable from the date of the extension of the concessions until it was incorporated into the tariff (January 1, 2013 until June 30, 2017), to be collected over a period of eight years. The amounts to be received are subject to the applicable regulatory rules in the tariff process, including the mechanisms that monitor and measure efficiency. In this new context, the unconditional right to consideration depends on the satisfaction of the performance obligation to operate and maintain, and is, thus, characterized as a contract asset. It is classified to financial assets only after an authorizing dispatch by Aneel. Additional information on the accounting policies relating to assets linked to the transmission activity is described in note 13. Generation segment – Concession grant fee The concession fee right paid for the concession contracts granted by the Aneel in November 2015, has been classified as a financial asset, at amortized cost, as it represents an unconditional right to receive cash, adjusted by the IPCA index, and remuneratory interest, during the period of the concession. Estimations and judgments The energy distribution activity The amortization reflects the pattern of their consumption and are measured based on the asset carrying amount using the straight-line method, using the rates based on the expected useful life of the energy distribution assets, that are used by the grantor during the tariff process. The part of the value of the assets that will not be completely amortized by the end of the concession agreement period is reported as a financial asset, since it is an unconditional right to receive cash or other financial asset directly from the concession-granting power. This component is valued on the basis of new replacement cost, which is equivalent to fair value – having as a reference the amounts approved by Aneel for the remuneration base of assets in tariff review processes. The amounts added after the Periodic Tariff Review process are estimated, and may be altered, for purposes of decision on compensation payable at the end of the concession period. The calculations made are in line with the regulations in force. If the concession is terminated, for any reason, the remaining balances of these assets or liabilities that have not been passed through to the tariff are to be included in the basis for compensation at the end of the concession lifetime. The gas distribution activity The amortization reflects the pattern of consumption of the rights acquired. It is calculated on the balance of the assets linked to the concession, by the straight-line method, based on the application of rates which take into account the expected useful life of the gas distribution assets, which are taken into consideration by the grantor during the process of tariff review. The part of the value of the assets that will not be completely amortized by the end of the concession period is reported as a financial asset, because it is an unconditional right to receive cash or other financial asset directly from the concession-granting power, or a party appointed by it. This portion is valued based on its fair value corresponding to its cost of acquisition updated by the Expanded National Consumer Price Index (IPCA), as determined by the concession contract. Generation – Indemnities receivable The Company is entitled to compensation for the assets not yet amortized of plants whose concessions ended in or after 2013. The Company has estimated the amount of this indemnity based on a normative resolution issued by Aneel, which specifies the methodology and general criteria for the calculation, taking new replacement value as its basis.

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