Growth

CTEEP invested R$ 835.3 million in infrastructure in 2013. The Company started up 50 new projects and acquired new equipment for substations; as a result, there was an increase of 1035 MVA in installed capacity in the electric system.

Because of the 2014 World Cup in Brazil, CTEEP concluded major projects to increase the capacity and reliability of the electricity transmission system. These investments were considered priorities by the Ministry of Mines and Energy's World Cup Workgroup and were authorized by ANEEL.

Overall, there were nine reinforcement and maintenance projects. Among them is the installation of the fourth set of transformers (345-88/138 KV, 400 MVA) at the Bandeirantes Substation (SS) in operation in the Southern part of São Paulo City, which supplies power to important areas of the city. investments in this substation will total R$ 28 million. In turn, R$ 30.7 million will be invested in Norte SS, in the São Paulo Metropolitan Area, to install a fourth set of transformers (345-138/88 kV), thus increasing by 400 MVA the installed transforming capacity in Greater São Paulo.

The Madeira Electrical Interconnection (EI), a consortium made up of CTEEP, CHESF and Furnas, put the Complexo Madeira (Madeira Complex) transmission lines into operation in 2013 as well. This subsidiary has 2,375 km of transmission lines, a transforming capacity of 6,100 MVA and serves 82 cities and towns. Therefore, the Madeira EI is Brazil's and the world's largest direct current line. It integrates the hydropower plants along the Madeira, Santo Antônio and Jirau Rivers with the Interconnected National System and carries the energy generated in Northern Brazil to the rest of the country, A joint venture with Furnas and CHESF, Complexo Madeira is extremely important for Brazil's energy infrastructure.

CTEEP's goal for 2014 is to continue managing the investments in its current projects in a conservative manner and focusing on operational excellence. In addition, there are important initiatives aimed at unpaid amounts related the concession extension, such as the unpaid compensation connected with assets prior to May 2000, which corresponds to a sizable percentage of CTEEP's current shareholders' equity and will allow the Company to recover its ability to grow.

How is the expansion of the electric system planned?
(GRI EU19)

The expansion of the Brazilian electrical system is planned on the basis of the 10-Year Transmission Plan, coordinated by EPE (Empresa de Pesquisa Energética, or Energy Research Company), whose purpose is to conduct research and studies to support planning in the electricity industry. Based on the 10-Year Transmission Plan designed by EPE, the Transmission Expansion Program (PET), which covers a five-year period, is developed. PET is the result of studies conducted by EPE jointly with electric utilities through this Regional Transmission Study Groups. In turn, the Enlargement and Reinforcement Plan (PAR), which covers three years, is developed by the Brazilian Electric System Operator (ONS) considering short and medium-term scenarios. Both are based on an analysis of load flows in transmission lines and the short-circuit levels in each busbar of the Interconnected National System (SIN). After these Regional Study Groups reach a consensus on solutions, the infrastructure works required for the expansion of the Brazilian electric system are determined and presented in a document named ''Consolidation of Works'', published by the Ministry of Mines and Energy (MME). Further information can be found on EPE's and MME's websites (www.epe.gov.br and www.mme.gov.br )