March, 2013
Corporate
Presentation
May 2017
1
2 2 1) On May 12, 2017; 2) Considering CPFL’s stake on each generation project.
Company Overview
Largest integrated private player in the Brazilian electricity sector
Market Cap of R$ 26.5 billion1, listed on BM&FBOVESPA – Novo Mercado and on NYSE (ADR Level III)
In LTM1Q17, EBITDA of R$ 4,287 million and Net Income of R$ 879 million
Presence concentrated in the most developed regions of Brazil
Leadership in distribution through 9 subsidiaries and a 14.3% market share
3rd largest private generator with 3,258 MW2 of installed capacity, of which 94% from renewable source
Leader in Renewable Energy in Brazil with the largest capacity in operation
One of the most profitable operations of energy Trading and a world-class provider of Value-Added Services
Power Plants
3 3 1) 51.54% stake of the availability of power and energy of Serra da Mesa HPP, regarding the Power Purchase Agreement between CPFL Geração and Furnas; 2) CPFL Energia holds a stake in RGE Sul through the CPFL Jaguariúna.
Company Profile
Lajeado HPP
5.94%
Nect Serviços/Authi
CPFL Centrais Geradoras
DISTRIBUTION 100%
SERVICES 100%
RENEWABLES 51.61%
65% 48.72% 51%
25.01%
Serra da Mesa HPP
51.54%1 53.34%
GENERATION 100%
TRADING 100%
Commercialization, Services & Others
213
CPFL Energia – Consolidated | 4,287
LTM1Q17 EBITDA Breakdown | R$ million Concession’s expiration
2045
CPFL Santa Cruz
CPFL Jaguari
CPFL Sul Paulista
CPFL Leste Paulista
CPFL Mococa
Free Float
45.4%
Conventional Generation
1,141
Distribution 1,870
44%
27%
5%
25% Renewable Generation
1,062
54.6%
2
CPFL GD
2027 2028 2032 2035 2036
CPFL Paulista
CPFL Piratininga
HPP Luis Eduardo
Magalhães
HPP Campos Novos
HPP Foz do Chapecó
RGE HPP Serra da
Mesa2 HPP Barra
Grande
RGE Sul HPP Castro
Alves
19 SHPPs (CPFL
Renováveis)
HPP Monte Claro
HPP 14 de Julho
Distribution Segment
• 9.3 million customers
• 679 municipalities
• Footprint: most developed regions
• High potential in per capita consumption
• Market size: 56.6 TWh/year
1st Market share: 14.3%
Industrial
Commercial
Residential
Others
1) RGE Sul (Nov-16/Mar-17); 2) Source: EPE; 3) Excluding RGE Sul (Nov-16/Mar-17). 4
29% 37%
17% 17%
5 small discos + RGE Sul1
44%
14%
17%
25%
RGE
CPFL Piratininga
LTM1Q17 EBITDA Breakdown
R$ million
CPFL Paulista
Tariff review Sales CAGR by Region2,3
2012 – LTM1Q17 4th Tariff Review Cycle
CPFL Piratininga Oct-15
CPFL Santa Cruz
Mar-16
CPFL Leste Paulista
CPFL Jaguari
CPFL Sul Paulista
CPFL Mococa
CPFL Paulista Apr-18
RGE Sul Apr-18
RGE Jun-18
LTM1Q17 Sales Breakdown
GWh
Growth Projects | Synergistic growth with RGE Sul
Debt restructuring: debentures issue in the amount of R$ 1.1 billion (Cost: 114.50% of CDI and term of 4 years)
Acquisition funding: debentures issues in CPFL Energia (R$ 620 million) and in CPFL Brasil (R$ 400 million) (Cost: 114.50% of CDI and term of 4 years)
Completion of the acquisition of AES Sul
Change of the corporate name to RGE Sul Distribuidora de Energia S.A.
Election of the new members of the Board of Directors and of the Board of Executive Officers
Results Consolidation
• Balance sheet as of Oct 31st, 2016
• Income statement as of Nov 1st, 2016
Completed steps:
Periodic Tariff Review Date: April-18
5
Development of the Integration Plan
• Diagnosis step and implementation of the Integration Plan
• Sharing of the best practices, processes and technologies adopted in the distribution companies of CPFL Group, as well as from RGE Sul to the other companies
• Improvement action plan in the quality of services established by
ANEEL
Expected conclusion of
Integration Plan:
Dec-17
Next step:
6 6
Generation Segment
• 3,258 MW of installed capacity
• 1,602 avg-MW of physical guarantee
• Long Term Concessions
• Brazil’s largest Portfolio in Alternative Energy
• Renewable Sources: 94%
3rd Market share: 2.2% Installed Capacity | %
• Contracted portfolio in the long term with low risk exposure
• Agreements average price: R$219/MWh
• Agreements average tenor: 12.9 years
Contract Profile
62% 5%
7%
6%
20%
HPP TPP
SHPP
BIO
WIND
Contracting Level | %
Total: 3,258 MW
2017 2018 2019 2020 2021
100% 100% 100% 98% 98%
2,3% 2,3%
Contract Energy Available Energy
1998 2004 2005 2007 2007 2008 2008 2010 2010-11
1,275.0 130.0 690.0 880.0 902.5 130.0 100.0 855.0 341.6
671.0 59.0 380.6 377.9 526.6 64.0 50.0 432.0 247.6
51.54% 65.00% 25.01% 48.72% 6.93% 65.00% 65.00% 51.00% 53.34%
657.1 84.5 172.5 428.7 62.5 84.5 65.0 436.1 182.2
345.8 38.4 95.2 184.1 36.5 41.6 32.5 220.3 132.1
1.784 1.4 95.0 32.9 630 5.0 5.0 80.0 -
0.7 92.9 7.3 26.7 1.4 26.0 20.0 10.7 -
2028 2036 2036 2035 2032 2036 2036 2036 2042
Conventional generation | 2,199 MW of installed capacity
CPFL Energia’s power plants – state-of-the-art environmental efficiency
7
(MW)
CPFL Renováveis (Aug-11) 652
2Q12 25 Free market -
2Q12 70 Reserve auction Revenue(e): R$ 20 million/year
2Q12 155 PROINFA Acquisition price: R$ 1,062 million
3Q12 188 Reserve auction Revenue(e): R$ 115 million/year
4Q12 40 Auction and free market Acquisition price: R$ 111.5 million
4Q12 1 Free market -
4Q12 20 Alt. Sources auction Revenue(e): R$ 112 million/year
3Q13 50 Free market Revenue(e): R$ 22.6 million/year
4Q13 30 Reserve auction Revenue(e): R$ 18.5 million/year
4Q13 50 Free market Revenue(e): R$ 22.6 million/year
1Q14 14 PROINFA Acquisition price: R$ 103.4 million
1Q14 120 Alt. Sources auction Revenue(e): R$ 76.7 million/year
2Q14 78 Alt. Sources auction Revenue(e): R$ 52.6 million/year
3Q14 278 - Partnership with Dobrevê
2Q15 29 Reserve Auction Revenue(e): R$ 17.9 million/year
2Q16 24 Free market Revenue(e): R$ 18.1 million/year
4Q162 231 Free market -
Current portfolio 2,054
CPFL Renováveis | Track record Installed capacity of 2,054 MW
1) Revenue estimated by the terms of the 16th LEN 2013; 2) Gradual commercial start-up since 2Q16. 8
Growth Projects: Generation |Greenfield projects
9
Commercial Start-up
2018-2020(e)
75 MW of installed capacity
41 average-MW
of assured energy
Pedra Cheirosa Wind Farms Boa Vista II SHPP
Commercial Start-up 20181 2020
Installed Capacity 48.3 MW 26.5 MW
Assured Energy 26.1 average-MW 14.8 average-MW
PPA2 18th LEN 2014 R$ 156.50/MWh until 2037
21st LEN 2015 R$ 225.53/MWh
until 2049
Financing BNDES and BNB (under analysis)
BNDES (under analysis)
3 GW pipeline
1) Gradual commercial operation from 1H18; 2) Constant Currency (Mar-17).
Launch of the Solar Generation Company
10
Solar energy. From generation to generation.
Inaugurated on May 2,
Envo offers clean and
renewable energy and a
reduction of up to 95%
in the energy bill of its
customers
Envo offers solution for families to be able to generate solar electricity at home and, thus, obtain a significant savings in the energy bills.
The solution delivers a project that evaluates the individual potential of each residence, management of the homologation with the local distributor,
supply and installation of all necessary equipment.
The Solution
Area of activity
In this first moment, the sales efforts and the initial focus of action of Envo will be the cities of the region of Campinas, Sorocaba, Jundiaí and
surroundings. The company already has plans to expand in other locations in the state.
690 free clients (2016 vs. 2015: 180%), of which 616 special clients (2016 vs. 2015: 224%)
Special client market: current ~ 2.5 avgGW
Competitive client market: current ~ 12.4 avgGW
Nationwide outreach
Synergy with CPFL Renováveis
New activities: Energy Efficiency and Retail Commercialization
Foundation: 2006
Offers a wide range of value-added services:
Engineering projects for transmission and distribution grids
Equipment maintenance and recovery
self-generation grids
Collection of utilities’ bills through an established authorized network
CPFL Energia – Commercialization & Services
11
2016 - 182 transmission contracts
- 17 construction sites
Foundation: 2012
Management of partnership with companies that use the energy bill to collect their services
Main services charged to the energy bill: affinity insurance, newspaper, discount cards, funeral plans, health plans, water purifier, etc
More convenience to customers, especially for those who do not have a bank account
Increased loyalty of payments and less delinquency for the business
2016 - 40 partners companies - 10 million collection
Foundation: 2008
Provision of customer relationship services to utility companies:
Call center
Face-to-face service
Back-office
Credit recovery
Ombudsman
Help desk and sales
2016 - 10,7 million phone calls
- 48,9 million speaking time minutes
CPFL Energia Strategy
• Be a benchmark in sustainability
• Maintain the highest levels of Corporate Governance
• People management, promoting workplace safety and respect to diversity
• Be the leader in operating efficiency by investing in technology, automation and innovation
• Act on both institutional and regulatory fronts to ensure sustainability of the sector
• Focus on technical services, through technology and productivity
• Mitigate risks of services by hiring qualified labor and suppliers
• Maximize value in the Free Market and be recognized for its profitability
• Expand the presence in retail through acommercial front and customer energy management
• Add new products to energy Commercialization
• Grow while creating value through acquisitions and new projects
• Be the leader in operating efficiency in the Renewable Energy segment
• Operating Efficiency with Innovation & Technology
• Act in both institutional and regulatory levels
• Strategic Growth
Distribution Generation Renewable Commercialization Services
12
13 13 1) Includes Holding’s EBITDA. EBITDA is calculated from the sum of net income, taxes, financial result, depreciation/amortization, as CVM Instruction no. 527/12; 2) Including Holding result and amortization of merged goodwill.
2012 2013 2014 2015 2016 LTM1Q17 CAGR 2012 –LTM1Q17
LTM1Q17 vs. 2016
Distribution 12,398 11,568 13,665 16,968 15,040 15,975 5.2% 6.2%
Generation 2,350 1,943 2,437 2,582 2,676 2,793 3.5% 4.4%
Trading & Serv. 2,031 2,031 2,497 2,094 2,487 2,694 5.8% 8.3%
EBITDA1 3,436 3,547 3,761 4,142 4,126 4,287 4.5% 3.9%
Distribution 1,914 2,115 2,180 2,144 1,845 1,870 -0.5% 1.4%
Generation 1,674 1,378 1,343 1,893 2,093 2,203 5.6% 5.2%
Trading & Serv. 289 74 263 173 241 265 -1.8% 9.9%
NET INCOME2 1,207 949 886 875 879 879 -6.2% 0.0%
Distribution 958 853 948 626 407 335 -18.9% -17.6%
Generation 361 261 -48 226 364 443 4.2% 21.6%
Trading & Serv. 130 52 168 140 166 170 5.5% 2.1%
Key Financial Figures | R$ million
2012 2013 2014 2015 2016 LTM1Q17 CAGR 2012 –LTM1Q17
LTM1Q17 vs. 2016
TOTAL 56.7 58.5 60.0 57.6 57.0 59.6 1.0% 4.5%
Captive 40.7 41.1 43.2 41.7 41.3 42.8 1.0% 3.7%
TUSD 16.0 17.3 16.8 15.8 15.7 16.7 0.9% 6.6%
Energy Sales - Distribution | TWh
CPFL Energia | Operational and Financial figures
14
Indebtedness | Financial Covenant Management
Adjusted EBITDA1,2 R$ million
Nominal
Real
Leverage1 l R$ billion
Gross debt cost3,4 l LTM Gross Debt Breakdown by
Indexer | 1Q171,4
Adjusted Net Debt1
/Adjusted EBITDA2
CDI
Prefixed
TJLP
3,399 3,736 3,584 4,117 4,192
1) Financial covenants criteria; 2) LTM recurring EBITDA; 3) Adjusted by the proportional consolidation since 2012; 4) Financial debt (-) hedge
Inflation
15
Debt Profile | March 31, 2017
1) Considers Debt Principal, including hedge; 2) Financial covenants criteria; 3) Short-term (Apr-17 – Mar-18) = R$ 3,441 million.
Debt amortization schedule1,2 l Mar-17 | R$ million
Cash Coverage:
1.39x Short term amortization (12M)
Average tenor: 2.80 years
Short term (12M): 18.9% of total
4,510
Short-term3
Long-term
Annex
16
Energy sector in Brazil: business segments
Consumers
1) Source: ANEEL – Mar-17; 2) Source: ONS ; 3) Source: Ministry of Mines and Energy (MME) – Dec-16; 4) Source: EPE and CCEE; 5) Dec-16.
Free Market
Captive Market
80.0 million Consumers3
3,229 Consumers5
118 TWh of billed energy4
80.0 million Consumers3
346 TWh of billed energy4
Transmission
• 104 Companies2
• 133,330 km of transmission lines3
• Eletrobrás: ~53% of total assets
Distribution
• 63 Companies
• 461 TWh of billed energy4
• Top 5: ~46% of the market
Competitive Power Supply
Generation
• 152 GW of installed capacity1
• 81% Renewable energy1
• Eletrobrás: ~31% of total assets
17
Brazilian electricity matrix
1) Source: 10-Year Energy Expansion Plan - PDE 2024 (current plan), published in Dec-15; 2) Others: considers coal, oil, diesel and process gas; 3) Abeeólica.
Brazil’s electricity matrix is predominantly renewable, with hydro installed capacity totaling 68% of the
total supply, while biomass, wind, SHPPs and solar account for 16%. In the next years, it is expected that
other sources will grow, mainly wind and solar, reaching 12% and 3% respectively of total installed
capacity in 2024.
Brazilian Electricity Matrix
133 GW 206 GW
2014 2024
18
Wind Potential: 350GW3
Installed capacity: 3.8GW 1%
SHPP Potential: 17.5GW Installed capacity: 5.0GW
29%
Biomass Potential: 17.2GW
Installed capacity: 9.3GW 54%
Potential Realized
Potential to be Explored in Brazil
Evolution of Installed Capacity (GW) 2014-20241
19
Smart distribution was a key theme addressed by the Project
"Energy in the City of the Future"
• The smart grid technology will provide increased network monitoring capabilities and greater quality and commercial opportunities
• Smart Grids will boost the amount of information available, which will be used in innovative ways to optimize operations and services
Smart Grid | The Future of Distribution
Vision of the Future of Distribution is directly associated with Smart Grids:
20
Emergency Dispatch
The past:
The future:
System intervention or self-healing
Automatic failure detection Real-time information for customers
Intelligent meter
• Reduced unnecessary travel;
• Shorter average service;
• Reduced SAIDI (optimization of possibilities of network maneuvering);
• Greater customer satisfaction (real-time information);
• Optimization of service to nearly 600,000 tickets every year.
Gains
21
Reading and Delivery
Reading Energy bill Delivering the bill Payment
Making the payment Smart Metering Center and/or automatized
software
Data network Intelligent meters
Bill via e-mail and/or app
(cons. manag.)
The past:
The future:
• Greater employee safety (reduced travel and exposure to risk)
• Data gathering from load curve and customer consumption profile;
• More sustainable process (reduced use of paper).
Gains
Sustainability at CPFL: Incorporation of strategic guidelines
22
Energy is essential for
the welfare of people
and the development
of society.
We believe that
producing and using
energy in a
sustainable manner
is vital for the future of
humanity.
Vision
To provide
sustainable energy
solutions with
competitiveness and
excellence, acting in a
manner that is
integrated with the
community.
Mission
• Value Creation
Commitment
• Safety and Quality of
Life
• Austerity
• Sustainability
• Trust and Respect
• Overcoming
• Entrepreneurship
Principles
CPFL Energia is the
largest private group in
the Brazilian electricity
sector which, through
innovative strategies
and talented
professionals, offers
sustainable energy
solutions.
Positioning
CPFL Energia built its Sustainability Platform in 2013 in order to define the issues material to its growth strategy and the development of goals and indicators related to each of these issues at each business unit. The Platform consolidation process covered the company as a whole, meaning that sustainability is not just
an element of our principles and values but included in strategic planning.
Sustainability Platform
Actions
Raising awareness about the strategic
relevance of the Sustainability
Platform
Structuring a Climate Platform
Results - 2016
Integrated platform based on the
strategic plan, with 6 themes, 17 leverages, 91 indicators and short
and medium-term goals
Development of projects directed to the
Brazil's Nationally Determined
Contribution (NDC), such as carbon
pricing, financing and climate risks
Recognition
Welfare Until 1999
Social Responsibility 2000 to 2006
Corporate Sustainability Added to business from 2007
Level of incorporation of the theme Sustainability
Increasingly more comprehensive concept of responsibility
CPFL Energia | Sustainability
• Component of ISE since its 1st edition, in 2005
• 40 companies of 19 industries - Market cap of R$ 1.2 trillion
• Component of DJSI Emerging Markets for the 5th consecutive year
• 95 companies achieved the Dow Jones requirements (13 Brazilian, of which 2 are in the power industry)
• Component of MSCI for the 2nd consecutive year
• Formed by companies with the highest ESG1 standards in their industries
• Transparent reporting of greenhouse gas emissions since 2006
• Component of ICO2 since 2016 • 31 shares of 29 companies - Market cap of R$ 1.4 trillion
23 1) Environmental, Social and Governance .