ACTIVE PARTICIPATION IN THE FREE AND REGULATED MARKETS.

As of 2004, two energy commercialization environments were created: the free contracting environment (known as ACL, for Ambiente de Contratação Livre) and the regulated contracting environment (known as ACR, for Ambiente de Contatação Regulada). They are the electricity negotiation frameworks within the scope of the National Interconnected System. In 2008, a reserve energy framework was also established to guarantee the continuity of the electricity supply.

In the free contracting environment, energy is negotiated in bilateral contracts whose terms can be freely agreed. Contract items including price, term, volume of energy, termination and penalties are agreed between the parties. Agents of the generation, trader and free and special consumer categories can trade energy under this framework.

In the regulated contracting environment, energy is negotiated in regulated contracts known as Electrical Energy Contracts under the Regulated Environment (CCEAR). Contract terms are defined in specific bid notices and cannot be negotiated. Agents of the generation, commercialization (depending on the terms of the bid notice) and distributor categories can trade energy under this framework.

The reserve energy framework is similar to the regulated environment. The terms of Reserve Energy Contracts (known as CER) are also defined in specific bid notices and cannot be negotiated. Only new generation ventures that sell energy to end users can trade energy under this framework.

Queiroz Galvão Energia has several energy generation projects and contracts in place under both the free contracting and reserve energy frameworks. Today, 88% of the company’s portfolio is negotiated under the free contracting environment and 12% under the reserve energy framework.