In the second quarter of 2014, CPFL Energia maintained its trajectory of sustained growth despite the challenging scena-rio faced by the electricity sector. After the all-time record in the first quarter, sales in the concession area of its distributors, excluding the effect of the fewer billing days, increased 3%, driven by the residential and business segments, which regis-tered consumption growth of 7.9% and 8.2%, respectively.

The solid operational performance, combined with the tariff increase, reflected in net operating revenue (excluding construction revenue), which increased 10.1% in the second quarter to reach R$ 3.7 billion. In the first half of the year, net operating revenue increased 9.1% to R$ 7.4 billion. Cash ge-neration also increased: EBITDA according to IFRS increased 49.7% to reach R$ 772 million in the second quarter. Net in-come according to IFRS totaled R$ 145 million in the quarter and R$ 320 million in the first half of the year, for growth of 17.9% year on year.

In line with its strategy of growing while creating value, CPFL invested R$ 280 million between April and June, of whi-ch R$ 178 million went to the distribution segment, R$ 74 million to generation (R$ 71 million to CPFL Renováveis and R$ 3 million to conventional generation), and R$ 28 million to the commercialization and services segment. Investments in the first half of the year totaled R$ 520 million, allocated as follows: R$ 348 million to distribution, R$ 117 million to gene-ration and R$ 55 million to commercialization and services.

Sales growth continues in the second quarter

3Association agreement with Desa

4Electric mobility project making progress

2IR team elected the best in the sector in Latin America

The year 2014 has been full of chal-lenges for the electricity sector. The drought since the start of the year reduced the water level at reservoirs, increased the thermal dispatch and drove up spot market prices. In this scenario, we are actively participating in the pursuit of solutions to make sure that the economic and financial ba-lance of the sector is maintained. The efforts culminated in a series of mea-sures announced by the government in recent months, such as the crea-tion of the ACR account, which allows the Electric Energy Trading Chamber (CCEE) to raise funds from banks to settle the bills related to thermal dis-

patch and involuntary exposure of distribution companies. A sum of R$ 11.2 billion was disbursed in the initial months of the 2014 and an additional R$ 6.6 billion was approved in August.

The CPFL Energia Group continues to grow and focus its investments on improving operational efficiency. We are continuing our rigorous cost control measures, resulting from the adoption of zero-based budgeting, which have already saved nearly R$200 million in real terms since 2011. We are also focused on implementing the smart grid technology in our network and have already installed 22,000 me-

ters. Our target is to install more than 24,000 meters by this year-end. With this, we should reduce the operating costs of our distribution assets and offer better service to our consumers.

Another positive highlight is our commercialization and services seg-ment. Our correct positioning, stron-gly backed by our risk monitoring and control models, resulted in EBITDA of R$ 70 million in 2Q14, similar to what we registered in the first quarter of the year.

Wilson Ferreira Jr.CEO of CPFL Energia

Message from the CEO

Highlights 2Q14 Increase of 3.0% (adjusted) in sales in the

concession area - residential (+7.9%), commercial (+8.2%) and industrial (-3.1%)

Disbursement from sector funding (ACR Account) in the amount of R$ 805 million in 2Q14, to cover the involuntary exposure and thermal dispatch

Economic tariff readjustment of 21.82% for RGE, in Jun/14

Commercialization and Services - EBITDA of R$ 70 million in 2Q14

AA+ credit rating maintained on national scale, with stable outlook, by Standard and Poor’s, for CPFL Energia and its subsidiaries CPFL Paulista, CPFL Piratininga and RGE

CPFL Energia’s shares were up 12.7% on BM&FBOVESPA and 15.0% on NYSE in 2Q14

Increase of 6.8% in the daily average volume (BM&FBOVESPA + NYSE), reaching R$ 41.9 million in 1H14

Increase of 38.0% in the number of trades (BM&FBOVESPA), reaching a daily average of 5,819 in 1H14

CPFL InvestorINVESTOR RELATIONS | 52 | YEAR 10 | JULY - SEPTEMBER 2014

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In this edition

To publicize its growth strategy, CPFL Energia takes part of a series of events in Brazil and abroad:

August 21st 15th Santander Annual Conference,

promoted by the bank in São Paulo

September 8th and 9th

17th Annual Latin America Conference, promoted by Morgan Stanley in LondonBy the end of September 2014, CPFL stocks were covered by 14 financial

institutions: 86% recommending Buy or Hold and 14% Sell.

CPFL distributes R$ 422 million in dividends

Sharing its healthy results with all its sha-reholders is a premise of the business model of CPFL Energia, which announced the distribu-tion of R$ 422 million as interim dividends, or R$ 0.438746730 per share, for the first half of the year. The dividends were paid on October 1. The divi-dend yield relating to the first half of the year, cal-culated based on the average of the closing prices during the period (R$ 18.35 per share), is 2.4% (or 5.4% in the last 12 months). Since going public in 2004, the company has distributed around 95% of its net income to shareholders, which is well abo-ve what the law stipulates.

Capital Markets – Performance in the stock exchange

IR team elected the best in the sector in Latin America

Source: Economática Variations adjusted by dividends

CPL DJBr20 DJIA

Share Performance NYSE – YTD 2014

12/30/2013 US$ 15.36 24,919 16,50409/30/2014 US$ 15.55 24,025 17,043

CPFE3 IEE IBOV12/30/2013 R$ 18.14 26,250 51,50709/30/2014 R$ 19.11 27,596 54,115

Share Performance Bovespa – YTD 2014

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The IR program of CPFL Energia was widely recog-nized by the Institutional Investor magazine, whi-ch elected CPFL Energia’s investor relations team as the best in the Latin America’s electricity sector. The company’s CEO, Wilson Ferreira Jr, was elected the best CEO, while CFO Gustavo Estrella was elected the second best executive in his function. Eduardo Takeiti was elected the best IR professional and so was the IR team. This recognition attests to CPFL’s commitment to keeping the market informed of all its actions in a transparent manner, aligned with its strategy of crea-ting value for all its stakeholders.

EVENTS

Analysts and Consensus

Dividends and Dividend Yield Dividend Yiel

CPFL has presented payout ratio close to 100% since its IPO,reaching the mark of 11.6 billion distributed. Declaration of dividend for

1S14: 422 million | 0.44/share

1) Considering last two half year’s dividend yield. 2) Refers to declared dividend. Payment in the next half year.3) Considers share price adjusted for reversal stock slplit of shares on June 29, 2011 (not adjusted by dividends).

Declared dividends 2 (R$ milhões)

Dividend Yield 1

(LTM)CPFL average price

(R$/ORD)

486

2H10 1H11 1H122H11

748 758640

2H12

456

1H13

363

2H13

568

1H14

422

2H04 2H09 1H10

655722

2H06

498

2H05

401

1H05

140

1H07

842

2H07

719 774

1H08 1H09

602 572

2H08

606612

1H06

7.9%

3.7%

9.1% 8.7% 9.6% 10.9% %6.8%7.97.6% 7.3%6.5% 6.9% 6.0% 6.1% 4.6% 3.9% 4.8% 5.4%

7.1%7.6%

8.299.43

11.6715.02 14.13

15.87 17.99 18.05 18.4416.69 15.7720.18 22.05 21.95 26.30 22.78 21.11 19.80 18.3516.51

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Position in the Utilities ranking

Category Buy side

Sell side

Wilson Ferreira Jr. 1º 1º

Gustavo Estrella 2º 2º

Eduardo Takeiti 2º 1º

Best IR Team 1º 2º

-3.6%1.3% 3.3%5.1%5.4% 5.1%

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Government decree saves distribution segment from financial distress

CPFL in Dow Jones Sustainability and MSCI indexes

On April 1, 2014, the Brazilian government published decree no. 8,221, which created the ACR Account for the purpose of meeting, fully or partially, the expenses incurred by distribution companies due to the involuntary exposure in the spot market and the dispatch from thermal power plants bound by energy sale agreements in the regulated market.

With the creation of the account, the CCEE received permission to raise funds from banks to avoid financial distress in the distribution segment. A sum of R$11.2 billion was raised in the initial months of 2014. In early August, an additional R$6.6 billion was announced to cover these costs until this year-end. The funding enabled the consumer tariff increases to be postponed.

For the third consecutive year, CPFL Energia has joined the select group of 86 companies from around the world to be listed in the Dow Jones Sustainability Index Emerging Markets, and also the Morgan Stanley Capital International Global Sustainability Index (MSCI Global

Sustainability Index), which selects the leaders in sustainability in emerging markets, based on a long-term analysis of the economic, environmental and social actions. Both indices bring together companies with the highest levels of ESG (Environmental, Social and Governance) compared to their industry

peers on business sustainability aspects, based on an evaluation of general aspects related to the environment, corporate governance, economic and financial aspects, social responsibility and climate change. This honor underlines CPFL Energia’s commitment to sustainability. 

Association agreement with Desa

In September, CPFL Renováveis announced that it concluded the association with Arrow – Fundo de Investimento em Participações, WF2 Holding S.A. and Dobrevê Energia S.A. (DESA), which established the terms and conditions for the association of DESA with CPFL Renováveis.

DESA operates in the renewable energies segment, with contracted capacity of 330.8 MW, of which 277.6 MW are in operation and 53.2 MW under construction.

With the association, the capital of the Company was increased by R$ 481,833,915.27 and a capital reserve of R$ 37,434.506.25 will be created, corresponding to the portion of the issue price of the new shares in excess of the book value per share of the Company. CPFL Energia, through CPFL Geração, will hold 51.61% of the stock in CPFL Renováveis and remained its controlling shareholder.

After the association, CPFL Renováveis will have 2,108.2 MW of capacity in operation and under construction, with a significant presence in the four main renewable energy technologies currently employed in the country - wind farms, SHPs, biomass-fired thermal power plants and solar power projects.

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CPFL INVESTOR is a publication of the Investor Relations Department of CPFL Energia, published by the Corporate Communication and Institutional Affairs Department, Rodovia Engenheiro Miguel Noel Nascentes Burnier, 1.755, Km 2,5 - Campinas/SP, Zipcode 13.088-900. Phone: (19) 3756-8197 Fax: (19) 3756-8040 – Chief Financial and Investor Relations Officer: Gustavo Estrella, IR Officer: Leandro Cappa, Corporate Communications and Institutional Relations Officer: Augusto Rodrigues. Content: Rockmann Press. Editing: Karam Valdo. Design: Produção Coletiva - website: Investor Relations: www.cpfl.com.br/ir - e-mail:ri@cpfl.com.br. Phone: (+55 19) 3756-6083 / Fax: (+55 019) 3756-6089.

CPFL Energia is Company of the Year in the energy sector

TV Cultura airs Café Filosófico CPFL on “7 Capital Pleasures”

CPFL Energia was elected the best company in the energy sector by the third edition of the Época NEGÓCIOS 360º yearbook, published by the Época NEGÓCIOS magazine, which is known for not just considering the financial performan-ce of the companies analyzed. The yearbook

also analyzes other fundamental management aspects such as the quality of corporate gover-nance, level of social and environmental res-ponsibility, human resource policies, innovation capacity and vision of the future (how the com-pany plans for the future).

Since September 7, the TV Cultura television channel has been airing on Sundays at 10 p.m. a new series of the Café Filosófico CPFL program. This edition deals with the seven capital sins: slo-th, pride, greed, wrath, envy, gluttony and lust.

Historian Leandro Karnal, the module curator, opened the series of debates with the program entitled “O orgulho nosso de cada dia”. In the de-bate, he analyzed the idea put forth by St. Augus-tine that pride is the source of all human weak-nesses and vices. The other “capital pleasures” will be addressed on Sundays until October 19.

Electric mobility project making progress

The Electric Mobility Program, a research and development project carried out by CPFL Energia under the auspices of the Brazilian Electricity Regu-latory Agency (Aneel), continues to make progress. The initiative, which aims to introduce electric vehi-cles in corporate fleets across Brazilian cities in the next five years, gained momentum in May when four electric cars were added to the company’s fleet.

Since May, when fleet expansion was announ-ced, the vehicles have covered 14,738 km and consumed 2,450 KWh of electricity, which is rou-ghly equivalent to the monthly consumption of 12 households. These vehicles prevented the emission of 1.61 tons of carbon dioxide into the atmosphere,

which is the same as remo-ving from the streets around 27 economy cars running 15 km per day for one mon-th. The cost of this electricity consumption by the vehicles was R$ 850, while the equivalent cost of running a conventional car on ethanol would be R$ 2,800.

Currently, research is being conducted using six vehicles and involving three partner companies – the distributor CPFL Paulista, 3M and Natura – apart from the corporate area of CPFL Energia. Charging stations to recharge the vehicles were built at the units of all partner companies.