Transmission Sector

ISA ENERGIA BRASIL is part of the National Interconnected System ("SIN"), a large-scale electricity generation and transmission system operated by public and private companies, managed by the National Electric System Operator ("ONS") under the supervision and regulation of ANEEL. ONS conducts studies and actions on the system to manage different energy sources and the transmission network, ensuring continuous supply security throughout the country. The Transmission Service Provision Contract ("CPST") is signed with ONS, which is responsible for signing transmission service contracts with concessionaires, where they assume responsibility for the operation and maintenance of the facilities and receive the RAP based on the availability of the facilities, which are subject to discounts in case of asset unavailability. These revenues are independent of the volume of energy transmitted in the system and the price of energy.

ISA ENERGIA BRASIL is part of the National Interconnected System (“SIN”) which incorporates the Brazilian electricity grid as a whole (with the exception of some isolated systems) and serves approximately 99% of the system’s total load. Through its activities and its wholly and jointly-owned subsidiaries, ISA ENERGIA BRASIL is present in 18 states in the country, transmitting approximately 30% of all electricity produced in Brazil and 94% of the energy in the State of São Paulo.

The coordination and control of the Company’s installations’ operations and all of SIN’s electric generation and transmission installations is the responsibility of the National Electric Energy System Operator (“ONS”), subject to the inspection and regulation of the National Electric Energy Agency (“ANEEL”).

The concessions that compose the transmission market in Brazil may be divided in 3 main categories:

Concessions prior to 1998
Revenue (RAP) annually adjusted by IPCA Contracts renewed in 2013 (Provisional Measure 579/2012) Tariff Reset every 5 years (O&M, WACC and RAB¹)	RAP in operation: 56%

 

Concessions between 1999 and 2006
RAP annually adjusted by IGP-M 50% RAP reduction on the 16th year of operation No tariff reset Reset of reinforcements and improvements, starting in July 2019 every 5 years	RAP in operation: 0,3%

 

Concessions after 2008
RAP annually adjusted by IPCA 30 year contract, with 3 tariff resets (cost of debt applied at WACC) Reset of reinforcements and improvements every 5 years	RAP in operation: 28% RAP under construction: 16%

Note: ¹ Regulatory Asset Base.

The transmission companies’ revenue, also known as RAP (Allowed Annual Revenue) is approved by ANEEL and disclosed annually (normally in the month of June) in the Periodic Tariff Review, which establishes the RAP for the next 12 months, adjusted by inflation.

Please find below the composition of the RAP:

 
RBSE: Receivables related to the non-depreciated assets in operation in May/2000
O&M: Revenues related to the operation and maintenance services
New Investments (NI): Organic growth (new investments)
Variable Parcel (PV): Revenue reduction due to unavailability
Adjustment Parcel (PA): Compensates excess or deficit of revenues in the previews tariff cycle

 

Updated on July 30, 2025.