The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2021 was:2023 was

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes ☐ No

If this report is an annual or transition report, indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.1934 from their obligations under those Sections.

☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 daysdays.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards* provided pursuant to Section 13(a) of the Exchange Act. ☐

*The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☒ Yes ☐ No

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Yes ☒ No

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act.).

☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☐ Yes ☐ No

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TABLE OF CONTENTS

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EXHIBIT 12.1

CERTIFICATION

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EXHIBIT 12.2

CERTIFICATION

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EXHIBIT 13.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

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EXHIBIT 13.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, unless otherwise indicated or the context otherwise requires, all references to “we,” “our,” “ours,” “us” or similar terms refer to Centrais Elétricas Brasileiras S.A.—Eletrobras and its consolidated subsidiaries.

We have prepared our consolidated annual financial statements as of December 31, 2021, 20202023 and 20192022 and for each of the three years in the period ended December 31, 20212023 (“Consolidated Financial Statements”) in compliance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”IFRS Accounting Standards”), including the interpretations issued by the IFRS Interpretations Committee (IFRIC® Interpretations) or by its preceding body, Standing Interpretations Committee (SIC® Interpretations).

For certain statutory purposes, such as providing reports to our shareholders located in Brazil and determining dividend payments, other profit distributions and tax liabilities in Brazil, we also prepare, as is required, a parent company and consolidated statutory financial statements in accordance with accounting practices adopted in Brazil and with IFRS as issued by the IASB,Accounting Standards, which must be filed with the CVM within three months after the year’s end and approved by our shareholders’ general ordinary meeting within four months after the year’s end to comply with the Brazilian and U.S. Corporate Law.

On July 12, 2021, Law No. 14,182June 17, 2022, our Privatization was enacted, which establishedconsummated pursuant to the guidelines for our Proposed Privatization. Subsequently, certain CPPI and CNPE resolutions were passed providing that our further privatization should be conducted throughestablished by the Eletrobras Privatization Law. Our Privatization process included a primary and possibly secondary public offering of our common shares in and outside of Brazil and abroad intended to dilutewhich resulted in the dilution of the direct and indirect interest of the Brazilian Government in our common shares from 72.3% before the Privatization to the current interest of 46.64% of our common shares, corresponding to 10% of our voting capital to at most 45%.under our bylaws, as of December 31, 2022 In addition, we satisfied the other conditions precedent set out in these resolutions, set out the conditions precedent for our further privatization, including,which included, inter alia, (i) a corporate restructuring which decreased our total interest in Eletronuclear from 99.95% to 67.95%, resulting in Eletronuclear becoming our affiliate. As a result, Eletronuclear is no longer consolidated on a line-by-line basis in our financial statements. We also transferred our entire interest in Itaipu to ENBPar. This corporate restructuring was conducted to ensure that the Brazilian Government maintainsmaintained direct or indirect control over Eletronuclear and Itaipu, (ii) the conditions for the granting of new concession agreementsItaipu. In addition, we entered into certain New Concession Agreements as a replacement for certain of our existingprevious generation concessions and (iii)made certain amendments to our bylaws to prevent any shareholder or group of shareholders (including ADR holders) from exercising voting rights with respect to more than 10% of our voting shares following our further privatization.Privatization. See “Item 4A.4. Information on the Company—A. History and Development—Proposed Privatization” for further details about our Proposed Privatization as well as “Item 3.D. Key Information—Risk Factors—Risks Relating to our Privatization” for the risks related to our Proposed Privatization.

On December 1, 2020, the CVM issued the Circular Letter CVM / SNC / SEP 04/2020 which relates specifically to electricity transmission in Brazil. The Circular Letter does not conflict with IFRS 15 but provides further guidance to standardize the accounting treatment of transmission in Brazil due to its specific complexities related to differences in local regulation. The main changes that affected us were related to the accounting treatment of transmission assets held in the Existing Basic System Network (RBSE). Previously, the RBSE was classified as a financial asset under IFRS 9, and subsequently as per CVM’s guidance, the RBSE was accounted for as contract assets under IFRS 15. Therefore, the fair value adjustments related to these assets were no longer applied. The tariff review of the RBSE in 2020 classified the definition of the RBSE as a contractual asset (previously these assets were considered an indemnity) specifically considering the additions of the asset, the mechanisms to recover and the related remuneration (for further details see note 17 to our Consolidated Financial Statements). We also reviewed the remuneration rate of our other transmission assets, considering the new criteria established in the guidance issued by the CVM. Previously these assets were remunerated based on the value of Brazilian government bonds (NTN) as the Brazilian Government owns the concession. Based upon the new guidance we measured these assets in accordance with the implicit rate.

We also considered the related deferred tax effects asdetails. As a result of these adjustments. The adjustments were treatedour corporate restructuring as a changepart of the Privatization process, we reclassified the results of Eletronuclear and Itaipu to discontinued operations as of December 31, 2022, and for the prior years for comparison purposes. Accordingly. the comparative balances presented in accounting policy andthis annual report may differ from the retrospective adjustments were made to maintain the same comparative basis. The actuarial reserves and related impacts on comprehensive incomebalances disclosed in our Form 20-F for the year ended December 31, 2019 were revised to reflect an adjustment related to2021. See “Item 5. Operating and Financial Review and Prospects – Operating Results – Discontinued Operations” for further details about the fact that certain participantsaccounting treatment of one subsidiary were not includedour discontinued operations.

To meet the financial obligations arising from the adverse judgement in the actuarial calculation whose benefitsSAESA Arbitration, in July 2022, Furnas acquired control of MESA, the parent company of SAESA.  On July 8, 2022, the shareholders of MESA agreed to terminate the Shareholders’ Agreement of MESA.  As a result, Furnas became the controlling shareholder of MESA as it held a 72.36% stake in MESA as of that date.  As a consequence, we started to consolidate the results of MESA on a line-by-line basis into our results. This had a significant effect on our indebtedness as we now consolidate SAESA’s indebtedness and the guarantees we provide to SAESA. As of December 31, 2022, SAESA’s indebtedness was R$19.6 billion and its consolidation increased our consolidated indebtedness by 49.50%.  In November 2023, SAESA concluded a debt restructuring with BNDES FINEM and us. This restructuring comprised an increase in capital of R$2.04 billion, and such funds were calculated based on variable remuneration and indexedfully used to pre-pay part the debt.  We assumed the outstanding debt balance owned by the IGP-M. This adjustment did not affect our income statement and was being presented retrospectivelySAESA to BNDES FINEM in the groupamount of comprehensive results, as items that will not affect our financial results.

From January 1, 2019 we were required to adopt IFRS 16, which establishes the principles for the recognition, measurement, presentation and disclosure of lease transactions and requires that lessees account for all leases according to a single balance sheet model, similar to accounting for financial leases applied in accordance with IAS 17. We opted for the modified retrospective approach, applying the effects of the initial adoption of the standard as adjustments to the opening balance of retained earnings as of January 1, 2019 without the adjustments of comparative information. With the initial adoption of CPC 06(R2) / IFRS 16, assets and liabilities had an impact of R$340 million.

Within the framework of our 2023-2027 Strategic Plan, designed to position us as a global leader in creating value through infrastructure and renewable, low-emission solutions, we have showcased a positive track record of achievements, including: (i) simplification of our corporate structure; (ii) reduction of operating costs (PMSO); (iii) reduction in the number of SPEs/clusters; (iv) negotiation of compulsory loans; and (v) asset divestment and liability reduction.

Certain figures in this document have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Terms contained within this annual report have the following meanings:

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This annual report includes certain forward-looking statements, including statements regarding our intent, belief or current expectations or those of our officers with respect to, among other things, our financing plans, trends affecting our financial condition or results of operations and the impact of plans and strategies. These forward-looking statements are subject to risks, uncertainties and contingencies including, but not limited to, the following:

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

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ITEM 3. KEY INFORMATION

Not applicable.

Not applicable.

D. Risk Factors

Summary of Risk Factors

This section is intended to be a summary of more detailed discussions contained elsewhere in this annual report. The risks described below are not the only ones we face. Our business, results of operations or financial condition could be harmed if any of these risks materialize.

Risks Relating to our Privatization

Risks Relating to our Company

Risks Relating to our Management

Risks Relating to our Operations

Risks Relating to our Financial Condition

Risks Relating to Compliance, Legal and Regulatory Framework

Risks Relating to Brazil

Risks Relating to our Shares and ADS

Also, as consideration for the new concession agreements, our subsidiaries must pay a concession bonus equivalent to part of the additional economic benefits we will receive as a result of these new contracts. According to the CNPE, this benefit totals R$67.1 billion. The concession bonus was stipulated as R$25.4 billion, which we must pay to the Brazilian Government after the settlement of our Global Offering. Additionally, we will have to pay R$32.1 billion to the CDE Account, with a R$5.0 billion payment becoming due within 30 days of signing the new concession agreements and the remainder being paid over a twenty five-year period. Further, over a ten-year period, we will have to contribute R$8.8 billion for the continuing revitalization of the São Francisco and Parnaíba rivers basins, to reduce energy generation costs in the Brazilian territory known as the “Legal Amazon” and for certain projects in the areas surrounding the plants of our subsidiary Furnas. As established in the Eletrobras Privatization Law, we will be waiving the right to receive indemnification payments related to our current concession agreements when we execute the new concession agreements. If our further privatization is not consummated, it is unclear if, how and when we will receive such indemnification payments. See “—Risks Relating to our Company—Indemnification payments for investments in concessions renewed pursuant to Law No. 12,783/2013, which were not yet amortized or depreciated, may not be sufficient to cover those investments” for further details.Company

The macroeconomic and industry-specific assumptions used byFollowing the Brazilian Government to calculate the concession bonus may not be correct or accurately reflect actual conditions in the coming years. In addition, the cash flows from our operations or our available credit lines may not be sufficient to honor eachconsummation of our capital obligations under the terms of our Proposed Privatization and we may incur significant indebtedness, which may impair our ability to raise funds in the future.

According to the applicable law, the execution of the new concession contracts will be notified by ANEEL, and we will have up to 15 days to sign the contracts. However, it is currently unclear when ANEEL will summon us to sign the new concession agreements, which may adversely affect us.

In April 2022, the MME approved a change to the draft concession agreements to be entered into if our Proposed Privatization is consummated, pursuant to Administrative Proceeding No. 48330.000034/2022-11. The new draft was prepared considering TCU’s recommendation (Decision No. 296/2022) and CNPE’s Resolution No. 30/2021. Under the new terms we will be subject to two additional obligations: (i) to prepare and submit to ANEEL technical and economic feasibility studies in order to identify the optimal exploitation of hydropower plants potential (“aproveitamento ótimo do potencial hidrelétrico”), within 36 months of the execution date of the new concession agreements; and (ii) to implement the optimal exploitation of hydropower plants potential, if economically feasible, within 136 months from the execution date of the new concession agreements. These new obligations may result in additional costs to be borne by us and, any potential non-compliance, may result in the forfeiture of the new concessions.

As a condition precedent to our Proposed Privatization, we will need to conduct a corporate reorganization.

As a further condition to our Proposed Privatization, we are requiredsubject to transfer our controlling interests in Eletronuclear and Itaipucontinuing obligations that expose us to ENBPar, a newly formed entity controlled by the Brazilian Government, since both entities must remain under the direct or indirect control of the Brazilian Government. This corporate restructure will decrease our total installed generation capacity by 8,990 MW. With respect to Eletronuclear, we will also be required to capitalize credits to be received by us as dividends and AFACs of R$2.7 billion and R$3.5 billion, respectively. Following this corporate reorganization, we will hold 68% of Eletronuclear’s equity interest, but will retain only 36% of its voting capital.

Despite the fact that we will no longer be the controlling shareholder of Eletronuclear, the law governing our Proposed Privatization provides that we must continue to guarantee all existing obligations of Eletronuclear with respect to the development of the Angra 3 nuclear plant, in the amount of R$6.38 billion. In addition, by the date of consummation of our Proposed Privatization, we will have to enter into various agreements with ENBPar. These agreements include an investment agreement for the continued development of the Angra 3 nuclear plant. Under this agreement, we will commit to raise funds and grant guarantees in proportion to our participation in the voting capital of Eletronuclear. ENBPar will be responsible for obtaining any remaining funds and guarantees. We cannot assure you that we will obtain the funds necessary to meet our investment obligations or that ENBPar will be able to obtain all the necessary funds and guarantees, which could adversely affect the completion of the project as well as our ability to leverage and guarantee new projects. We may also be adversely affected if third parties seek to enforce their rights against Eletronuclear or ENBPar through the filing of claims against us.

In addition, the Brazilian Government’s decision to proceed withcertain aspects of our Proposed Privatization may still be affected by market conditions and political decisions, which could adversely impact our Global Offering and business. Potential presidential candidates, as well as other politicians, are campaigning against our Proposed Privatization. As a result, if our Proposed Privatization is consummated, the Proposed Privatization could be challenged by opposition parties as a resultchallenged. This has already occurred in respect of the upcoming electionsprovisions of our bylaws limiting the exercise of shareholders’ voting rights to up to 10% of our capital stock regardless of the number of common shares held by such shareholder, which was included to ensure we are a “true corporation.” In May 2023, the President of Brazil filed a direct action of unconstitutionality with the Supreme Federal Court of Brazil challenging this model. On December 19, 2023, a justice of the Supreme Federal Court suspended the proceedings for 90 days for the parties to come to an amicable resolution. The suspension was extended for a further 90 days. As of the date of this annual report, the negotiations are still in progress and no settlement has been reached. If the President is successful in contesting these provisions, the Brazilian Government couldmay try to regain voting control over us. us, which may cause us to reverse the Privatization and once again become a state-controlled company.

If our Proposed Privatization is not consummated or subsequentlycontinues to be challenged, weit may strugglenegatively affect our ability to raise capitalfinance our operations at favorable rates and maintain our investments and our current market share.

Risks Relating to In addition, such a challenge could have negative effects on our Companyratings and the price of our shares and ADS.

Transactions with related parties including as part of our Proposed Privatization, may not be properly identified and managed, which could expose us to lawsuits and affect our financial results.

Transactions with related parties must follow market standards and generate mutual benefit. Decision processes surrounding such transactions must be objective and documented. Further, we must comply with the rules of competition and adequate disclosure of information, in accordance with the applicable legislation and as determined by the CVM and the SEC.

We cannot guarantee that our related party transaction policy is or will be effective to avoid potential conflicts of interest between us and any related parties, or that any such party has complied or will strictly comply with good governance practices and rules to deal with conflicts of interest. A possible failure to comply with such requirements or policies may adversely affect our business, financial condition, as well as lead to regulatory assessments by agencies.

We may not receive all debt owed to us and our subsidiary, Eletronorte, by Amazonas Energia.

In 2019, we completed the transfer of control of our former subsidiary Amazonas D. At that time, Amazonas D owed us R$3.9 billion and R$0.4 billion, totaling approximately R$4.3 billion of exposure to us.

As of December 31, 2023, we are a party to debt confirmation agreements between: (i) Eletrobras and Amazonas Energia, for which we have provisioned R$4.6 billion, and (ii) Eletronorte and Amazonas Energia, for which we have provisioned R$2.6 billion.

In recent months, the risk of default by Amazonas Energia has been aggravated as a result of certain legal issues and a deterioration in its financial and operational condition. Between December 2021 and December 2023, Amazonas Energia partially defaulted in respect of its obligations related to certain energy trading agreements entered into with Eletronorte. As of December 31, 2023, the amount in default is R$1.1 billion, for which we have provisioned R$927.8 million. Given the worsening financial condition of Amazonas Energia, we may need to increase our provisions in the future to account for potential further defaults.

As a result of its repeated defaults, in November 2023, Eletronorte registered Amazonas Energia in ANEEL’s register of defaulters, pursuant to ANEEL Normative Resolution No. 917/2021. ANEEL recommended that the MME terminate Amazonas Energia’s electricity concession, despite Amazonas Energia requesting a transfer of corporate control as an alternative to termination. As of the date of this annual report, there have been no further developments in respect of ANEEL’s recommendation.

In July 2023, a working group on the Distribution of Concessions of the States of Amazonas and Rio de Janeiro (“GT CDAR”) reviewed the proposals of Amazonas Energia, Light Serviços de Eletricidade S.A. and Enel Distribuição Rio, which assessed the viability of their concessions. The GT CDAR presented the report on February 22, 2024, addressing the current economic and financial situation of the distribution of concessions in the State of Amazonas and recommended a number of regulatory measures for the viability of the concession and the feasibility of the change in corporate control. This report is now under review by the MME, which will make a determination on which proposals to adopt.  As of the date of this annual report, we cannot assure if or when the MME will make its determination.

Considering Amazonas Energia’s defaults, we are exposed to the risk of Amazonas Energia not being able to honor all its debt obligations to us if their current financial and operating conditions persist. As of December 31, 2023, we provisioned R$7.2 billion for both debt confirmation agreements, but we may need to increase these provisions to the extent that Amazonas Energia continues to default on its obligations set out in such agreements.

We are exposed to claims for our historic management of certain sectoral funds and governmental programs.

We managed the RGR Fund and sectoral funds such as the CDE Account and CCC Account until April 30, 2017 when the CCEE assumed management responsibilities. We also previously managed the Proinfa and Procel government programs until their management was transferred to ENBPar in June 2023 as part of our Privatization process. We continue to manage the Luz para Todos and Mais Luz para a state-controlled companyAmazônia government programs, but we expect that they will be transferred to ENBPar by June 17, 2024. Following the transfers to ENBPar, we continue to be liable for a five-year period for any actions taken by us during our period of management pursuant to the statute of limitations set out in TCU Ordinance No. 344/2022. A proceeding filed under this Ordinance may remain inactive for up to three years. Both statutes of limitation are subject to hindrance, suspension, and interruption rules.

We received capital resources associated with the contracts executed to cover the administrative costs incurred in certain circumstances, transactionsoperating the Luz para Todos and Mais Luz para a Amazônia programs. In respect of the expenses under the Procel program, we were reimbursed via the revenues obtained from this program in accordance with Law No. 13,280/2016 and its annual investment plan (PAR Procel). For the Proinfa program, our administrative costs were covered by revenues obtained from the Proinfa account (Conta Proinfa), the budget for which is annually approved by ANEEL, in accordance with Decree No. 5,025/2004.

In the event that the Brazilian authorities conclude that we enter intomismanaged any funds under these government programs, they may impose fines as well as criminal and civil liability. In July 2019, ANEEL imposed a fine of R$51.7 million for our non-compliance in respect of the management of the CCC Account. We appealed this decision and, as of December 31, 2023, we are awaiting a ruling on our appeal.

Risks Relating to Our Management

The success of our operations and implementation of our strategy partly depends on the technical qualifications of the members of our management and certain key employees, who we may not be able to maintain or replace with Brazilian state-controlled companiessuitable individuals.

Part of the success of our operations and the implementation of our strategy depends on the knowledge, skills, and Part of the success of our operations and the implementation of our strategy depends on the knowledge, skills, and effort of the members of our management team and certain key employees. If key members of our management team or governmental entities have no comparable market terms available,key employees leave our company, we may not be able to find equally qualified professionals to replace them in a timely manner. We also depend on the ability of our senior management and key personnel to work effectively as a team.

Our future success depends on our ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial, sales, IT and administrative personnel. Competition for such personnel is intense, and we cannot guarantee that these related party transactions have beenwe will successfully attract or will be done on arm’s length basis. This risk will remain even after the consummationretain a sufficient number of qualified personnel, as this is largely affected by perceptions of our Proposed Privatization becauseculture, profile in the Brazilian Governmentmarkets in which we operate and the professional opportunities we offer. In addition, the industry continues to experience more stringent regulation of employee compensation, which would adversely affect our ability to hire and retain the most qualified employees.

Failure to retain and attract the necessary technical, managerial, sales, IT and administrative personnel could adversely affect our business, financial condition and results of operations.

We may face substantial challenges in the implementation of our strategic plan and necessary high-performance culture, which will remain our significant shareholder.demand efficiency and excellence in problem solving.

In connectionline with our Proposed Privatization, we are requiredgoal to enter into several transactionsbe an innovative clean energy company, recognized for excellence and sustainability, our strategy aims to develop a high-performance culture comprising lean and agile management, increased competitiveness and reduced costs coupled with related parties as a condition for our Proposed Privatization. The transactions include the transferactive risk management and increased digitalization.

Our ambitious strategy requires us to implement key performance indicators at all levels of our controlling interestsorganization, which include lower financial leverage, higher operational efficiency, improved health and safety conditions, among other things. In order to achieve these, we will need to undertake significant operational and managerial changes in Eletronuclear and Itaipu to ENBPar, a newly formed entity controlled by the Brazilian Government, since both entities must remain under the direct or indirect controlall of the Brazilian Government.our group companies. We are also requireddependent on our ability to entertrain our new and existing hires and develop our systems to align with a culture focused on performance and results, which may take time and we cannot guarantee that all employees will assimilate into an investment agreement with ENBPar to further finance of the construction of the Angra 3 nuclear plant. In addition, our Proposed Privatization is conditioned on us entering into new concession agreements for certain existing generation plants in consideration for us making certain payments to Brazilian Government and the CDEsuch culture.

Account, including payments that will be made from the net proceedsIf we are not able to foster a culture of the Global Offering. See “Item 4.A. Historyefficiency and Development—Proposed Privatization” for further information aboutexcellence in addressing our Proposed Privatization.

Third partiescurrent and future challenges, we may question the assessment of the calculation for the value of the new electric power generation contracts and/or theface difficulties in reaching our full potential. As a result, this may adversely impact our future growth, profitability and price and structure of the transfer of our interests in Eletronuclearshares and Itaipu. See “—ADS.

Risks Relating to our Privatization,” for further details.Operations

Furthermore, we must comply with Brazilian antitrustOur increasing reliance on the commercialization on the Free Market exposes us to certain risks that may have an adverse effect on our revenues, results of operations and competition regulations, as well as withfinancial condition.

We currently commercialize the disclosure requirementsenergy generated at our plants on both the Regulated and Free Markets. However, pursuant to the New Concession Agreements, the commercialization of the CVM, the SEC, and the stock exchangesenergy generated at 17 of our hydroelectric plants on which our securities are listed. Any noncompliance with applicable requirements relating to related party transactions could adversely affect our financial condition, may result in lead to regulatory penalties and may expose us to lawsuits from third parties.

Our financial and operating performance may be adversely affected by epidemics, natural disasters, and catastrophes, such as the recent outbreak of COVID-19, and climate events.

Our operations may be negatively impacted by epidemics, natural disasters, or other catastrophes such as the current COVID-19 pandemic. More than two years after the World Health Organization declared the COVID-19 outbreak a global pandemic on March 11, 2020, it continues, through new strains and variants, to challenge health authorities and result in global economic uncertainty. The emergence of new variants, such as the gamma variant at the beginning of 2021 and the omicron variant in November 2021, forced many countries to adopt measures of varying severity in order to contain the accelerated spread of the COVID-19 virus and to avoid hospitals being overwhelmed with COVID-19 cases.

Uncertainties still remain regarding the possible impacts of measures intended to contain the spread of new variants and it is not possible to predict whether the major world economies will be able to sustainably recover in 2022 and onwards.

Our revenues from power generation are derived from sales on (i) the Regulated Market includingare being phased out at a 20% rate per annum since January 1, 2023. Consequently, within five years all the energy generated at those 17 plants that operate underwill be commercialized on the quota regime, (ii)Free Market. As the portion of our energy sales on the Free Market increases, energy commercialization becomes gradually more significant, representing a larger portion of revenues each year.

As opposed to the Regulated Market where tariffs are fixed and (iii)revenues tend to be relatively stable, the spot market. We cannot guarantee thatcommercialization of energy on the Free Market is much more dynamic and complex and depends on our analysis of, and assumptions about, several factors, including hydrological trends, expectations about supply and demand, forhistorical behavior of prices and market variables.

Accordingly, the gradual increase in our commercialization of energy will remain stable or growon the Free Market exposes us to various risks such as:

Since 2022, favorable hydrological conditions and the increase in the future. In particular, there can be no assurance thatinstalled capacity in Brazil reduced energy prices on the Free Market in the short and medium terms. At the time of our Privatization we expected a certain energy price for the coming years which did not yet materialize due to impact of the favorable hydrological conditions in 2022 on the price of energy we sell inon the Free Market. However, by the end of 2023, the price of energy on the Free Market will not decrease belowwas predicted to rise for the coming years.  Nevertheless, future conditions like those experienced in 2022 might again reduce the price at which we obtainof energy (as a result of a decrease in demand or otherwise). To the extent the sales price of the energy we sell inon the Free Market decreasesto below the pricelevels we expected at the time of our Privatization, which could have adverse effects on our results of operations.

Our commercialization planning considers the main conditions applicable to the market and our portfolio, outlining a wider commercialization strategy, aiming to mitigate market and liquidity risks through a level of controlled contracting over the years, whilst also maximizing the value of energy sales so that exposures to market risk in the periods closest to supply are residual. However, if our assumptions do not hold true or if our strategy is otherwise not successful, we obtain energy,may suffer a materially adverse effect on our margins andrevenues, results of operations may be adversely affected.

If the pandemic maintains its intensity, we cannot assure you that distribution companies will not experience an increase in consumer defaults. In addition, the amortization by the distribution companies of the loans entered into in connection with the “COVID Account” may still result in increased energy tariffs in 2022. Consumer defaults may negatively impact distribution companies and lead to impacts on the revenues of our generation companies. As a result, any of these factors could affect our revenues.

Our revenues from power transmission are derived from fixed tariffs established by ANEEL (through the RAP), which are reviewed periodically in accordance with applicable regulations. These revenues depend on the availability of our transmission assets in the Interconnected System and not on the flow of energy transmitted.

However, as some of our planned transmission lines are still under development, we may still experience delays in their construction if future restrictions are imposed. These restrictions can cause us or our contractors operational delays in the delivery of equipment or other inputs purchased abroad, delays in connecting new users to the Interconnected System, and in maintenance on our infrastructure, resulting in missed deadlines.

Regarding our workforce, due to the COVID-19 pandemic, the risk to the health of our employees has increased significantly.

Given the uncertainties regarding the future impacts or duration of the COVID-19 pandemic, the Brazilian electricity sector may still be subject to the adverse effects of the COVID-19 pandemic. Accordingly, we cannot predict the duration of potential restrictions on economic activity or what impacts they will have on our business. We are also unable to predict what actions or policies the Brazilian Government will take in response to the COVID-19 pandemic or how they will impact our operating performance, financial results, and cash flows.

Further, our operations are largely dependent on climate events, particularly those that could affect the volume of rainfall. Our energy matrix is mostly supported by hydroelectric power plants and a significant impact on water flow could interrupt our generationcondition.

and transmission activities and materially adversely affect our results of operations. See “—Climate change can have significant impacts on our generation and transmission activities” for further details.

If we do not remedy the material weakness in our internal controls, the reliability of our financial statements may be materially affected.

DuringOur management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the 2021 audit certificationeffectiveness of our system of internal control. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance IFRS Accounting Standards. As a public company, we are required to comply with the Sarbanes-Oxley Act and other rules that govern public companies. In particular, we are required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which requires us to furnish annually a report by management on the effectiveness of our internal control over financial reporting. In addition, our independent auditor conducted independent tests andregistered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.

We determined that we did not maintain effective internal control over financial reporting as of December 31, 2023, because a material weakness that was identified as of December 31, 2022 was not remediated.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis. In the course of completing our assessment of internal controls, which resulted in two material weaknesses included in our annual report for the year endedcontrol over financial reporting as of December 31, 2021. See “Item 15—Controls and Procedures” for further details with respect to material weaknesses in2023, we did not design nor maintain effective internal control over our internal controls.

These control deficiencies, specifically thefinancial reporting because a material weakness in internal controlscontrol over financial reporting could resultexisted as of that date. Specifically, we had not properly designed and maintained effective risk assessment control activities in misstatementsresponse to risks of accountsmaterial misstatement related to period end financial reporting controls including the completeness and disclosures that could result in a failure to prevent or detect material misstatements in our consolidated financial statements. Accordingly, our management has determined that these control deficiencies constitute material weaknesses.accuracy of the judicial deposits and legal lawsuits, their periodic reviews and updates, and the assessment of expected losses for accrual purposes; and the review and approval of impairment calculations.

Our internal controls department is responsible for overseeing the implementation of action plans and reports periodically to the Board of Directors and the Audit and Risk Committee. If our future efforts are not sufficient to remedy all the inconsistencies identified, we could continue to experience material weaknesses in our internal controls in the future. Any such material weaknesses could adversely affect our ability to accurately prepare our financial statements, which may result in a restatement of our historical financial statements or in misstatements in our future financial statements and, consequently, adversely affect our business and financial condition.

An arbitral award against Furnas See “Item 15—Controls and other equity holders of the Santo Antônio Plant could result in Furnas acquiring majority control over MESA, or a breach of SAESA’s financial covenants which could trigger significant obligationsProcedures” for us as we guarantee much of their debt.

Through our subsidiary Furnas, we own 43.06% of the capital stock of MESA, the wholly owned parent of SAESA, which, in turn, holds the concession to operate Santo Antônio Plant. As of March 31, 2022, the other shareholders of MESA were: (i) Novonor (18.25%); (ii) FIP (19.63%); (iii) SAAG (10.53%); and (iv) CEMIG (8.53%). MESA’s shareholders entered into the MESA Shareholders’ Agreement, that provides for a mutual obligation for all shareholders to participate in any capital increase of MESA in connection with an arbitral proceeding described in “Item 8—Financial Information—Litigation—Arbitration Relating to Santo Antônio.” The International Chamber of Commerce (“ICC”) decided in favor of a number of construction companies led by Novonor and ordered SAESA to pay the construction companies and other parties R$1,563 billion (based on the value from October 2021).

MESA held an extraordinary shareholders’ meeting on April 29, 2022, where the shareholders approved the following matters, among others, (i) the Capital Increase in order to enable the payment of the arbitral award determined in the SAESA Arbitration, and (ii) a preemptive rights period of 30 days, within which MESA’s shareholders will decide whether to subscribe for their respective portion of the newly issued common shares under the Capital Increase and to subscribe for any other common shares not subscribed by the other shareholders by such date. The capitalization is expected to be consummated within 30 days. Depending on whether other shareholders decide to participate in the Capital Increase, there is a possibility that Furnas will own a majority of the shares of SAESA following consummation of the Capital Increase. As a result, Furnas might be required to consolidate the results of MESA in the second quarter of 2022.

MESA’s shareholders entered into the following agreements which all confer capital support obligations on the shareholders to participate in any capital increase of MESA: (i) a supplemental equity support agreement that obliges the shareholders to increase MESA’s capital stock for any increase in relation to the project costs of the Santo Antônio Plant, (ii) a loan agreement entered into by the shareholders, SAESA and BNDES in the ambit of MESA’s debt reprofiling which obliges the shareholders to participate in any capital increase in SAESA’s capital stock to satisfy an arbitral award under the SAESA Arbitration, and (iii) the MESA Shareholders’ Agreement which includes a general obligation of the shareholders to ensure that the Santo Antônio Plant is concluded.

Since it is expected that not all of MESA’s shareholders will participate in the Capital Increase, the failure of all shareholders to participate (even if the other shareholders subscribe for the remainder of the Capital Increase) could result in a breach of the capital support obligations, which could be considered by SAESA’s creditors as an event of default under SAESA’s loan agreements and debentures. If those loan obligations are not met, we and / or Furnas could owe up to R$7 billion in guarantees of those obligations. A default of Furnas or us (with respect to our guarantees) could result in cross-defaults with respect to our other debt obligations.

If any of theour SPEs or affiliates default on their obligations, the guarantees we provided may be called upon, impacting our financial position.upon. Even if a default occurs with only one lender, any such default may trigger cross default clauses in theother financing contracts, of other SPEs, which could lead to other creditors requesting the acceleration of their loans. Any such cross acceleration would impact the enforcement of the guarantees provided by us and could adversely affect our financial condition.

Failures in our information technology systems, information security systems, and telecommunications systems may adversely impact us due to cyber security incidents or other reasons.

Our operations are heavily dependent on information technology and telecommunication systems and services. We also use information technology to process financial information and results of operations for internal reporting purposes and to comply with regulatory, legal, and tax requirements. In addition, we depend on information technology for electronic communications between our facilities, personnel, customers, and suppliers. We also process personal data of our employees and customers (business-to-business).

Interruptions in these systems, caused by obsolescence, technical failures, intentional acts or discontinuity in the implementation, maintenance, and evolution of technological solutions, can disrupt or even paralyze our business and adversely affect our operations and our reputation. In addition, security failures related to sensitive information could occur due to intentional or unintentional actions, such as cyberterrorism, or internal actions, including negligence or misconduct of our employees.

Cybersecurity attacks have increased worldwide in recent years, and we cannot assure that we will be able to address future attacks successfully. Also, the remote working arrangements implemented have increased our dependence on information technology systems and infrastructure, and they may further expand our vulnerability to this risk. In the event of such actions, we, our customers, and other third parties may be exposed to potential liability, litigation, and regulatory or other government action, damage to brand and reputation and other financial loss. In addition, if we are unable to prevent security breaches, we may suffer financial and reputational damage or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, or suppliers. The cost and operational consequences of responding to cybersecurity incidents and implementing remediation measures may be significant and may not receive the full value of receivables from the CCC Account transferred to us during the sale process of our distribution companies.be covered by insurance.

Our business may be impacted by political events, war, terrorism, and other geopolitical uncertainties.

In connection with the sale of our six distribution companies (Amazonas D, Ceron, Eletroacre, Cepisa, CealWar, terrorism, and Boa Vista Energia) certain receivables dueother geopolitical uncertainties have caused and could cause damage or disruption to the distributioneconomy and commerce on a global or regional basis, which could have a material adverse effect on our business, our customers, and the companies fromwith which we do business.

For instance, in 2023 the CCC Accountglobal markets were transferredoperating in a period of economic uncertainty, and significant volatility, following Russia’s full-scale invasion of Ukraine on February 24, 2022. Although the length and impact of the ongoing military conflict are still unpredictable, the conflict in Ukraine and any other geopolitical tensions could have an adverse effect on the economy and business activity globally and lead to:

Russian military actions, the resulting and potential sanctions and Russian counter measures or retaliatory actions could adversely affect the global economy and financial markets and lead to us. Asfurther instability and lack of December 31, 2021,liquidity in capital markets. Therefore, the current and future measures could adversely affect our business, financial condition, and results of operations. In addition, on October 7, 2023, Hamas launched an attack on Israel killing hundreds of Israeli civilians. In response, Israel declared war against Hamas, targeting the Gaza Strip. This could lead to an escalation of the conflict in the region, rise in oil and gas prices, more inflationary pressures and market volatility, among others.

these receivables totaled (i) R$2.8 billionAlthough we are not currently directly affected by such conflicts, it still exposes us to the macroeconomic risks set out above, which could lead to an increase in our operating costs and adversely affect our business.

Certain geopolitical and economic risks have increased over the past few years as a result of trade tensions between the United States and China, Brexit and other geopolitical issues. Any further escalation of tensions may lead, among other things, to further disruption in the global economy and in international trade flows and increased market pricing volatility.

We may not be paidable to prevent, detect, and timely implement corrective measures in relation to unlawful conduct in our operations by our management, employees, SPEs in which we hold interests and third-party contractors.

We are subject to the risk that our management, employees, contractors, the SPEs in which we hold interests or any person doing business with us may engage in fraudulent activity, corruption, or bribery, circumvent, or override our internal controls and procedures or misappropriate or manipulate our assets for their personal benefit or that of third parties. Further, such parties may, against our interests, misuse insider information or act in situations of conflicts of interests, where their personal interests conflict with our legitimate interests. This risk is heightened by the CCCfact that we have many complex, high value contracts, as well as the geographic distribution of our operations and CDE Accountsthe wide variety of counterparties involved in our business. We cannot guarantee that all our employees and contractors will comply with our principles and rules of ethical behavior and professional conduct aimed at guiding our management, employees, and service providers. Any failure, whether actual or perceived, to usabide by our ethical principles or to comply with applicable governance or regulatory obligations could harm our reputation, limit our ability to obtain financing and have a material adverse effect on our results and financial condition, if not detected in 60 monthly installments,a timely manner.

Our insurance policies may be insufficient to cover potential losses.

Our business is generally subject to several risks, including operational accidents, cybersecurity related risks, occupational accidents, unexpected geological and hydrological conditions, environmental hazards and weather, and other natural phenomena. Additionally, we and our subsidiaries are liable to third parties for losses and damages caused by any failure to provide generation and transmission services.

Our insurance policies cover only part of the losses that we may incur. If we are unable to eventually renew our insurance policies from time to time or losses or other liabilities occur that are not covered by insurance or that exceed our insurance limits, we could be updatedsubject to significant unexpected expenses, which may adversely impact our results of operations and financial condition.  For further information see “Item 5.C. Operating and Financial Review and Prospects—Research and Development, Patents and Licenses—Insurance.”

Strikes, work stoppages or labor unrest by our employees or by the IPCA index;employees of our suppliers or contractors could adversely affect our business.

Strikes, work stoppages, or other forms of labor unrest at our company, our subsidiaries or SPEs and (ii) R$2.9 billion relatedany of our major suppliers and contractors could impair our ability to credits dueoperate our business, complete major projects and may adversely impact the results of our operations, financial condition, and ability to economic efficiency disallowances (“inefficiency”), to be deducted from the added valueachieve our long-term objectives.

As of the new concessionsdate of this annual report, all of our employees are represented by labor unions, as determined by law. We face strikes and work stoppages from time to time. Disagreements on issues involving collective bargaining agreements, divestments, changes in our business strategy, reductions in our workforce, and other matters could lead to further labor unrest.

For further information regarding strikes and work stoppages, see “Item 4. Information on the Company—B. Business Overview—Operating Process—Types of Plants—Shutdowns and strikes in the last three fiscal years.”

Our financial and operating performance may be granted to usadversely affected by epidemics, pandemics, natural disasters, and catastrophes.

Our operations may be negatively impacted by epidemics, pandemics, natural disasters, or other catastrophes, such as COVID-19.

Our revenues from power generation are derived from sales on (i) the Regulated Market, including plants that operate under our Proposed Privatization, according to item II, paragraph 1º, article 5ºthe quota regime, (ii) the Free Market, and (iii) the spot market. In case an outbreak of Law No. 14,182/2021.

With respect to the R$2.8 billion, we already received the amount of R$ 187.9 million. However, we are uncertain if we will continue to receive the further payments onan epidemic, a monthly basis. Further, in respect of R$2.9 billion, if our Proposed Privatization is not consummated,natural disaster or a catastrophe, we cannot guarantee that wethe demand for energy will receive the “inefficiency” credits to be paid by the Brazilian Government, which are to be used to reduce the amount we pay for the concession bonus.

remain stable or grow. In addition, we are entitled to receive from Amazonas D R$442.4 million recorded as loans and financings in accordance with the terms of the reimbursement agreement entered into with Amazonas D, which is still subject to a grace period for the payment of the principal. We also recognized a provision of R$340.1 million in the third quarter of 2021 for the current credits of Ceron, Eletroacre and Boa Vista Energia (credits realized before the transfer of the right to us, must be returned to us) since the agreements have not yet been executed with these distribution companies for the reimbursement of that amount. Thereparticular, there can be no assurance that the price of energy we sell in the Free Market will receive any amountsnot decrease below the price at which we obtain energy (as a result of a decrease in demand or otherwise). In such a situation, due to us afterepidemics, natural disasters, and catastrophes, our margins and results of operations may be adversely affected.

Epidemics, pandemics, natural disasters and other catastrophes may impact the availability of our transmission assets and construction of our generation plants, the latter of which could lead to a default by our generation plants in their obligations under their respective power purchase agreements. We also cannot assure that distribution companies will not experience an increase in consumer defaults, which could negatively impact the financial condition of the distribution companies and lead to them defaulting on their obligations to generation companies. As a result, any of these factors could affect our revenues.

Furthermore, if a significant portion of our workforce or our suppliers or vendors are unable to work effectively due to prolonged illness, quarantines, shelter-in-place arrangements, government actions, facility closures or other reasons in connection with pandemics or other public health emergencies, our operations and ability to serve our clients could be materially impacted.

We do not have alternative supply sources for natural gas for our thermal plants.

Our thermal plants operate on natural gas and/or oil, representing 3% of our installed capacity as of December 31, 2023. As of the date of this annual report, we depend on a single supplier for the natural gas we use to fuel our thermal plants. If supplies of natural gas or oil become unavailable or they may not be purchased on reasonable terms for any reason, such as significant increases in price due to inflation, we do not have alternative supply sources and, therefore, the ability of our thermal plants to generate electricity would be adversely affected, which may impact our results of operations and financial condition. As of the date of this annual report, our supply has not been affected by the current conflict between Russia and Ukraine.

Risks Relating to our Financial Condition

We have substantial financial liabilities and may be exposed to liquidity constraints, which could make it difficult to obtain financing for our planned investments.

Our main sources of funding are capital markets issuances and loans from multilaterals, commercial banks and development banks and similar agencies in both the local and/or international markets. As there may be liquidity restrictions in the local or international capital markets, we may experience difficulties to finance our planned investments and to repay principal and interest under the terms of our existing credit facilities. Any difficulty in raising significant amounts of debt capital in the future may adversely affect our results of operations and payment conditionsour ability to fulfill our strategy and planned or future investments.

Any lowering of our credit ratings, as well as Brazil’s sovereign ratings, or adverse macroeconomic factors, could also have been determinednegative consequences on our ability to obtain financing in the market through debt or equity securities, or may impact our cost of financing, also making it more difficult or costly to refinance maturing obligations. The impact on our ability to obtain financing and the relevant agreements are executed.

Any failure to recover the full amountcost of the receivables owed to usfinancing may adversely affect our results of operations and financial condition.

We may not receive all the debt that Amazonas D owes to us and our subsidiary, Eletronorte.

In April 2019, we completed the transfer of control of our former subsidiary Amazonas D. At that time, Amazonas D owed us R$3.9 billion. Additionally, as of the same date, Amazonas D also owed R$0.4 billion to Amazonas GT in respect of the purchase of energy, totaling approximately R$4.3 billion of exposure to our economic group.

Between September 2019 and June 2021, Amazonas GT and Amazonas D entered into four debt confirmation agreements (“CCDs”) in the total amount of R$2.3 billion in order to renegotiate the debts. As of December 31, 2021, Amazonas D’s total debt with Eletronorte (which incorporated Amazonas GT in July 2021) was R$1.5 billion.

The original debt that Amazonas D owed us continues to be R$3.9 billion as of the date of this annual report. In October 2021, we entered into a new agreement with Amazonas D for R$435 million relating to fixed assets in progress (AIC). ANEEL recognized this agreement as part of Amazonas D’s remuneration structure,incur substantial financial liabilities as well as unexpected expenses until we complete the construction of the Angra 3 nuclear power plant.

In 2009, Eletronuclear started the construction of the Angra 3 nuclear plant. The construction of the plant was suspended during 2015, as Eletronuclear faced difficulties making the capital contributions required by the financing with BNDES. Additionally, in 2015, several investigations commenced to assess potential illegal activities by companies that provided engineering services to Eletronuclear in relation to the Angra 3 project and, as a result, the TCU suspended construction. The termination of the agreements and/or the suspension of payments to these engineering companies, led to civil lawsuits against Eletronuclear.

In 2020, we approved a plan to resume the revised tariff in November 2020, which was not consideredconstruction of Angra 3, however, no assurance can be made regarding the timely completion of construction on budget. In addition, Eletronuclear is still involved in the valuation of Amazonas D during the sales process. As a result, Amazonas D’s debt with us as of December 31, 2021, amounted to R$4 billion.

As of December 2021, Amazonas D stopped paying interest and principal on the contracts that renegotiated its debts, which ended the grace period. Accordingly, as of December 31, 2021, Amazonas D has not paid us the monthly installments due of approximately R$50 million, of which R$28 million represents interest and R$22 million represents principal. These amounts are outstanding as of the date of this annual report.

Accordingly, our exposure to Amazonas D increased to R$6.2 billion as of December 31, 2021 from the R$4 billion originally owed. This significant increase in the debt is due to the non-payment of interest and principal on the financings, the non-payment of the installments under the CCDs and the existing energy debts owed to Eletronorte.

Considering Amazonas D’s recent default to us and Eletronorte, and the current amount of its debt with us, there is a possibility that it will not be able to honor all of its debt obligations to us under current conditions. As of December 31, 2021, we recorded provisions of R$2.2 billion for the possibility of default given the history and current financial condition of Amazonas D, which generally enters into agreements to obtain more energy than it requires and has difficulty reaching the regulatory levels defined by ANEEL. If these provisions are not sufficient or if there are any further delays after renegotiations, our financial condition may be adversely affected.

We are exposed to mismanagement claims for managing certain sectoral funds and governmental programs.

We managed the RGR Fund and sectoral funds such as the CDE Account and CCC Account until April 30, 2017, when the CCEE took over the management of these funds. We are also managers of certain government programs, including Luz para Todos, Proinfa, Procel, and Mais Luz para a Amazônia. All these programs are subject to regulation by ANEEL, MME, and inspection agencieslawsuits mentioned above.

For further information, see “Item 4B. Information onEven though we are no longer the Company--Business Overview--Managementcontrolling shareholder of Government Programs” and “Item 8–Financial Information-Litigation” for about pending administrative and judicial proceedings regardingEletronuclear, the managementEletrobras Privatization Law provided that we must continue to guarantee all existing obligations of Eletronuclear with respect to the development of the CCC Account by us.

We receive capital resources associatedAngra 3 nuclear plant. In addition, we entered into various agreements with ENBPar, including an investment agreement for the contracts executed to cover the administrative costs incurred in operating the Luz para Todos and Mais Luz para a Amazônia programs. In respectcontinued development of the expenses underAngra 3 project. Under this agreement, we committed to raise funds and grant guarantees in proportion to our participation in the Procel program,voting capital of Eletronuclear, with any remaining funds and guarantees being provided by ENBPar. We cannot assure that we are reimbursed throughwill be able to obtain the revenues obtained from this program in accordance with Law No. 13,280/2016funds necessary to meet our investment obligations or that ENBPar will be able to obtain all the necessary funds and its annual investment plan (PAR Procel). The repayment to usguarantees, which could adversely affect the completion of the administrative costsproject as well as our ability to leverage and guarantee new projects.

The project also assumes a certain tariff to be charged for energy to be produced by the Angra 3 plant upon its completion. We cannot assure you that this tariff, which we incurexpect to be approved by the government later this year, will depend onguarantee the execution of new agreements regarding the administration of government programs, which could impact our operational results depending on the terms and timingeconomic-financial balance (considering a present value of the new agreements.

project equal to zero) nor be considered a reasonable tariff. If the Brazilian authorities conclude that we mismanagedactual tariff is lower than the funds from these government programs, they may impose fines on us, and we may be subjectone required to criminal and civil liability for any such mismanagement. For instance, in July 2019, ANEEL imposed a fine of R$51.7 million for our non-compliance withreach break-even, the managementviability of the CCC Account (Proceeding No. 48500.001106/2014-20). We appealedproject could be severely jeopardized, which in turn could have an adverse effect on Eletronuclear's results and, to courta lesser extent, our results.

As of December 31, 2023, Eletronuclear has completed approximately 68.7% of the original Angra 3 project. The total projected cost of completion is approximately R$20.0 billion, according to cancel this fine and asBNDES. As of the date of this annual report, it is estimated that Angra 3 will commence operations in June 2029, instead of November 2026 as previously assumed. As of December 31, 2023, Eletronuclear maintained total accumulated impairments of R$4.5 billion on its balance sheet. We no longer recognize any impairments related to Angra 3 on our balance sheet as we no longer consolidate Eletronuclear on a line-by-line basis.  However, any impacts on Eletronuclear's income statement continue to affect us, as we recognize their results using the equity method of accounting.

Works on the Angra 3 plant have been suspended since September 2023. If there are further delays to the start of commercial operations, we may be required to prepay the financing granted by BNDES to Eletronuclear (of which R$3.1 billion was outstanding as of December 31, 2023) as we are awaitingthe guarantor of this debt. We may also have difficulties repaying a final decision. loan granted by Caixa Econômica Federal (under which R$2.8 billion was outstanding as of December 31, 2023) which may lead Eletronuclear to record new provisions for impairments, in addition to other liabilities that we may have to record. The total costs of abandoning or interrupting the Angra 3 project and demobilizing the plant (to be divided between the shareholders) were estimated at R$13.6 billion as of March 2022 by Tractebel, who was hired by BNDES. The occurrence of any of these events could materially affect our financial condition.

We are subject to certain covenants, which in case of non-compliance may allow the lenders under the relevant facilities to accelerate our obligations to them.

We are party to several international and local financing facilities as borrower or guarantor.

The bonds we issued in the international capital markets, the debentures and commercial papers issued in the local market, as well as our existing credit facilities, require that we comply with several non-financial covenants, including the pledging of assets, provision of financial statements and audit reports, and compliance with environmental laws and licenses, among others. In other instances, we must obtain waivers from applicable creditors for certain acts, such as actions that result in a change of control or the sale of relevant assets.

We, our subsidiaries and SPEs are also subject, in certain local financings, to financial covenants requiring compliance with the following indexes: (i) net debt over EBITDA, with a maximum level dependent on the contracts executed by us and each subsidiary, however generally fewer than four; and (ii) debt service coverage ratios, generally higher than 1.2.

In terms of negative covenants, we are limited in certain international and local financings from making certain sales of assets, subject to various carve-outs and exemptions. In addition, certain of the financing agreements for the development of our plants, some of which are guaranteed by us, contain acceleration clauses which could be triggered upon default. Any defaults or the acceleration of any financing agreements may also give other lenders the right to accelerate indebtedness owed to them pursuant to cross-default provisions. The acceleration of any financing agreements could adversely affect our results of operations and financial condition.

See “Item 8–Financial Information-Litigation”4. Information on the Company—B. Business Overview—Lending and Financing Activities” for further information about pending administrative and judicial proceedings regarding the managementour financing agreements.

If our Proposed Privatization is consummated, the management and operation of the Luz para Todos, Proinfa, Procel, and Mais Luz para a Amazônia programs will be transferredWe are no longer entitled to ENBPar, which could lead to the risks described in “—Risks Relating to our Privatization—As a condition precedent to our Proposed Privatization, we will need to conduct a corporate reorganization.” See also “Item 4.A. History and Development—Proposed Privatization” for additional information regarding our Proposed Privatization.

Indemnificationindemnification payments for investments in concessions renewed pursuant to Law No. 12,783/2013, which were not yet amortized or depreciated, may not be sufficient to cover those investments.amortized.

Pursuant to Law No. 12,783/2013, by agreeing to the renewal of our generation and transmission concessions which were due to expire between 2015 and 2017, we agreed to receive certain payments as compensation for the unamortized, undepreciated portion of our assets that relate to the renewed concessions. The amount

In respect of anyour generation concessions, we are no longer entitled to receive indemnification payments for these plants as we agreed to be received following the renewalforego these payments as part of our Privatization.

Regarding our transmission concessions, may not be sufficient to cover our investments in these concessions, which we made to ensure continuity and modernization of service. Further, we cannot estimate when and on what terms we will receive indemnity payments for our generation concessions or if the amount will be sufficient to cover our investments in these concessions.

We have filed claims with ANEEL for our renewed transmission concessions, the RBSE assets and the RBNI assets. The indemnification relating to the RBNI assets was paid in installments between 2013 and 2015, at a book value of approximately R$8.1 billion, as of December 31, 2012. Between 2015 and 2016, ANEEL approved the indemnity payment in respect of the RBSE’s assets at a book value of approximately R$17.6 billion, as of December 31, 2012. The RBSE amounts were included in the transmission tariff as of July 2017. This amount has been challenged in court, which has delayed the timing of payment to us. As a result, in 2017, part of the compensation was excluded by ANEEL due to judicial injunctions. However, these injunctions were subsequently revoked, and the compensation was included in the revenue of theour transmission companies as ofin 2020.

On April 22, 2021, ANEEL’s executive board approved a proposal for the re-profiling of RBSE’sthe financial component.component of the RBSE. This decision assumescaused a reduction in the payment curve of these amounts between July 2021 and June 2023, and an increase in the flow of payments after July 2023, extending these installments until July 2028. Subsequently, after ANEEL’s

As a response to this decision, users of the transmission system submitted requests for reconsideration alleging that they identified inconsistencies in the valuesamounts approved by the agency.ANEEL. So far, ANEEL’s technical teams have carried out some studies, but ANEEL’s Board of Directors has not made a final decision. If ANEEL decides to grantuphold these requests, thereit may be negative impactsnegatively impact our transmission revenues. Nonetheless,The payment for the new payment scheme had already impacted our short-term cash flows by approximately R$8.0 billion.

Regarding our generation concessions, certain of our subsidiaries filed requests with ANEEL, between 2014 and 2015, in accordance with Decree No. 7,850/2012 and ANEEL Normative Resolution No. 596/2013. We recorded these assets at their historical value, since the form of realization of these components has not yet been defined, in a total amount of approximately R$1.5 billion, as of December 31, 2021.

On August 2, 2021, as a result of Public Hearing 03/2019, ANEEL published Resolution No. 942/2021, amending Resolution No. 596/2013, and establishing a methodology for valuing the residual indemnities, which relatesRBSE is also subject to differences between the basic and the executive project and the deadline for delivering the evaluation reports that should be sent by Chesf, Furnas and Eletronorte. ANEEL will carry out an administrative review process to evaluate the information presented in these reports and, once this process is completed,

The Angra 1 and Angra 2 plants operate under the supervision of the CNEN, and are subject to periodic inspections by international agencies, such as the International Atomic Energy Agency (IAEA) and the World Association of Nuclear Operators (WANO).

Eletronuclear may fail to receive sufficient amounts, or any amount at all, under insurance policies it has obtained for Angra 1 an Angra 2.

As a result of our equity interest in Eletronuclear either currently or after the Proposed Privatization is consummated, we may still be required to contribute amounts to cover any shortfalls in indemnification or may be found liable for any such shortfalls or damages arising fromSince nuclear accidents under Brazilian law.

A recent decision from Brazilian Court allowed for the inclusion of shareholders as defendants without piercing of the corporate veilare usually catastrophic, any accident could materially affect our financial condition and reputation, including result in lawsuits seeking compensation for environmental damages. The shareholders were included as defendants along with the company in the lawsuits. The plaintiffs were not required to prove the lack of resources of the company as a condition to seek compensation from the shareholders. This case could have implications for us in the event our subsidiaries or affiliates were accused of environmental damages.

criminal liability. If an accident occurs, we can provide no assurance regarding its impact on us, or if the insurance coverage will be sufficient to cover all associated costs. SinceAdditionally, Eletronuclear may fail to receive sufficient amounts, or any amount at all, under insurance policies it has obtained for Angra 1 and Angra 2 to pay for eventual damages.

For instance, on September 16, 2022, a non-programmed release of approximately 90 liters of water containing substances of low radioactive levels occurred at Angra 1. As the levels were well below the legal limits for the occurrence of a radioactive accident, Eletronuclear treated this event as an internal operational incident and informed the matter in the regular reports sent to the competent authorities. However, a press outlet reported this occurrence as a “radioactive accident,” which Eletronuclear disputes. Nonetheless, any events related to possible errors in the maintenance or operation of the nuclear accidents are usually catastrophic and given that we will maintainfacilities of Eletronuclear, could have negative effects on our reputation even though Eletronuclear is no longer our subsidiary.

As a 68%result of our current stake in Eletronuclear, even if we are privatized, accidents can materially adversely affect our financial condition and reputation, including as a result of criminal liability.

Moreover, we cannot assure that new material proceedings against its directors and officers, its managers or other senior employees, will not arise or that existing proceedings will not directly affect its business model and expansion plan, which may adversely affect our business and results of operations.

In the event that claims involving a material amount for which we have no provisions were to be decided against us, or in the event that actual losses are significantly greater than the provisions made, the aggregate cost of unfavorable decisions could have a material adverse effect on our financial condition. Our ability to estimate judicial losses was considered a material weakness as further described in “Item 8—Financial Information—Litigation.” In addition, our management may be required to direct its time and attention to defending these claims, which could preclude them from focusing on our core business. Depending on their outcome, certain litigation could restrict our operations and have a material adverse effect on certain of our businesses. Members of our management have in the past been and may in the future become parties to legal proceedings and may also be prevented from serving in their positions as a result of any civil or criminal proceedings brought against them.

In addition, we and certain of our and our subsidiaries’ officers and directors (as well as the SPEs and senior employees of the SPEs in which we hold an equity interest) have come or are currently under criminal investigation in respect of certain corruption related investigations. See “Item 4E. Information on the Company—Compliance—Independent Investigation” for further information. Ongoing and any future investigations may (1) distract the attention of our and our subsidiaries’ senior management (as well as the senior management of the SPEs in which we hold an equity interest), and (2) result in the filing of formal complaints and proceedings against us and such other persons and parties. In addition, all these factors could impact investor interest in the Global Offering, as well as adversely affect our reputation, business, results of operations and financial condition.

We and our subsidiaries are also parties to administrative and judicial proceedings involving environmental matters. If any of these proceedings are decided against us or them, we may, directly or indirectly, be subject to financial penalties, as well as the suspension or revocation of the relevant environmental license or the suspension of our operations, which could materially adverse effect onadversely affect our operations and financial condition.

Notwithstanding,Furthermore, we and our subsidiaries can also be held criminally responsible for acts committed by previously controlled companies involving environmental matters. As a result, we can be subject to potential fines and sanctions imposed under the Environmental Crimes Law, together with reputational damage.

We may incur losses in legal proceedings relating to compulsory loans made in the period between 1962 and 1993.

In 1962, Law No. 4,156/1962 established the compulsory loan program for electricity consumption in order to finance the expansion of the Brazilian electricity sector. The first phase of the compulsory loan program took place from 1964 to 1976 and the second phase took place from 1977 to 1993.

As discussed further below, weWe are party to numerous lawsuits concerning a variety of compulsory loan-related issues. These lawsuits span numerous different jurisdictions within Brazil, and many have been ongoing for several years. The litigation is enormously complex, and plaintiffs together seek significant total damages. Although we believe that the compulsory loan leading cases, decided by the STJ according to Brazil’s repetitive appeal regime, are supposed to have binding effect on judges and Courts, it is not possible to predict with the necessary certainty how this litigation will progress or resolve, as courts have in practice reached, and may continue to reach, different or even conflicting conclusions on a number of key issues. Our financial condition and results of operations could be materially adversely impacted in the event of unfavorable judicial decisions.

The provisions we record in respect of compulsory loan litigation require significant judgment, as well as monitoring and analysis of numerous individual lawsuits. These provisions may not be sufficient to cover future losses, including in the event that the future course of the lawsuits differs from our expectations. In addition, we assess our exposure to this litigation on an ongoing basis in light of available judicial authority, and we adjust our provisions from time to time, including, among other things, in response to new judicial decisions. We have in the past modified, and may again in the future modify, our provisions significantly. For example, during the third quarterAs of 2021, we made a decisionDecember 31, 2023, our provisions with respect to increase our provision for compulsory loan-relatedloan litigation byamounted to R$8.9 billion, based among other things on our assessment of the evolving judicial landscape.17.3 billion. Our financial condition and results of operations could be materially adversely impacted in the event that we are required to record additional provisions in respect of compulsory loan litigation.

The plaintiffs claimed to be holders of bearer bonds and American Depositary Receipts (ADRs) issued by us. Among other relief, the plaintiffs sought an injunction to prevent us from (i) making false or misleading statements or omissions with respect to liabilities related to bearer bonds and compulsory loan credits, (ii) making SEC filings containing false statements or misleading or omissions with respect to any potential privatization process that we may undergo; and (iii) make any filings with the SEC until we correct any alleged false or misleading statements or omissions with respect to liabilities related to bearer bonds and compulsory loan credits. The plaintiffs did not specify the number of damages claimed.

On February 3, 2021, the District Court issued a decision dismissing the lawsuit in its entirety. On March 3, 2021, the plaintiffs initiated an appeal against the decision with the United States Court of Appeals for the Second Circuit. Subsequently, the plaintiffs filed a stipulation, dated April 13, 2021, voluntarily withdrawing the appeal.

It is important to emphasize that the dismissal of this lawsuit in the United States does not eliminate or change our exposure to the lawsuits in Brazil with respect to bearer bonds and book-entry credits of compulsory loans. We believe that our prior disclosures about such proceedings and our exposure to them were and continue to be accurate, based on the information available at the time they were made. We also believe that the provisions recorded for these matters are reasonable and appropriate in view of the various contingencies faced by us.

There is considerable uncertainty inherent in any ongoing litigation and especially in proceedings relating to bearer bonds and book-entry compulsory loan claims, which together comprise a complex topic. Several of these lawsuits have been ongoing in Brazil for several years, and the status and provisions/liabilities with respect to such proceedings have evolved considerably, and often unpredictably, over time, due to an ever-evolving judicial landscape that has included, among other developments, the issuance of new contradicting court decisions. Our disclosures are subject to change over time as new information becomes available. Thus, we cannot predict with certainty the results of the processes, and we cannot give any guarantee on the course of ongoing and future actions.

Additionally, on April 20, 2021, we received a request for information from the SEC (Division of Enforcement) regarding an investigation by the SEC related to the compulsory loan program and related litigation made on our Forms 20-F. We are cooperating with the investigation, have provided documents in response to the SEC’s information request, and may provide additional documents or other information in the future. We are also continually assessing whether, based on the investigation and ongoing developments in legal proceedings in Brazil, any changes to our disclosures or provisions are appropriate.

WeEvery five years the assured energy of our hydroelectric plants can be adjusted, and we may incur additional costs to purchase energy to comply with existing agreements.

Decree No. 2,655/1998 provides that the assured energy of our subsidiarieshydroelectric plants must be reviewed every five years. Any potential reduction in the physical guarantee is limited to 10% of the original amount of the concession agreement. Any reduction in the assured energy during any given review may be required to make substantial contributionsnot exceed 5% compared to the pension plansprior review period.

MME Ordinance No. 178/2017 amended the amounts of the physical guarantee in force since 2018. As a result, the physical guarantees of our currentplants were reduced by 4% on average. This included our plants which had their concessions renewed under Law No. 12,783/2013, and former employeessome of our SPEs.

As part of our Privatization, new concessions were granted for a period of 30 years beginning on June 17, 2023, for the plants which we sponsor.had their concessions originally renewed under Law No. 12,783/2013, the plants Itumbiara and Sobradinho and the plants Tucuruí, Mascarenhas de Moraes and Curuá-Una. The physical guarantees of these plants were defined by Ordinances GM/MME No. 544/2021 and GM/MME No. 570/2021 and represented a total reduction of 7% in their physical guarantees.

WeIn 2022, the MME conducted a new ordinary review of the physical guarantees to be applied from 2023. The physical guarantees of our plants (including some of our SPEs) which were reviewed were reduced on average by 4%. Given that physical guarantees are reviewed periodically, the value attributed to our plants could be further reduced in the future. The next review is programmed for 2027 and any new values determined as part of this review will become effective in 2028.

Any further reduction in the assured energy could negatively impact our subsidiaries may be requiredrevenues and lead us to make contributionsincur expenses due to the pension plans of ourneed to purchase energy to comply with sale and purchase agreements already in effect.

Under the current rules for tariff reviews for generation and former employees. If there is a mismatchtransmission concessions, we might not receive full compensation for costs incurred in the reservesoperation and maintenance of these concessions and any expenses in relation to these assets.

In Brazil, the regulatory model for transmission companies is based on the revenue cap model. Under this model, ANEEL establishes the tariffs to be charged by the companies which must consider the reasonable costs of capital, operation, and maintenance. These tariffs are adjusted annually by inflation and may also undergo a periodic tariff review process, depending on the relevant contractual provisions. At the time of the pension planstariff review, ANEEL sets new benchmarks for the cost of capital and for the amountcost of resources available to the plans, in case these plans are defined benefit plans, we (as sponsors)efficient operation and maintenance of the pension plan beneficiaries may be required to contribute to the pension plan to top-up the balance to reach the required amount, as providedsystem managed by the specific regulations established bytransmission company. In addition to defining the regulatory body National Superintendency of Complementary Pensions (Superintendência Nacional de Previdência Complementar).

Additionally, we may need to recognize material actuarial liabilities if the equitycosts for operation and maintenance, ANEEL reviews efficiency gains (the so-called X Factor) which could result in the pension funds that we and our subsidiaries sponsor fluctuates because of a decrease in economic activity and its impact onrevenues from transmission services. In respect of the financial andcompensation capital markets.

Ascosts, most of December 31, 2021, we recorded a deficit of R$5.8 billion in our and our subsidiaries’ pension plans. In the same period, we and our subsidiaries made contributions of R$294 million to our respective pension plans. The implementation of a remediation plan may resultinvestments in the payment of extraordinary contributionstransmission sector are assessed by the participantsbenchmarking them to pre-determined regulatory prices for equipment and sponsors, to restore the balance of the plan. These amounts could be subject to litigation by the participants, due to a possible disagreement regarding the amounts. The making of such payments couldservices. Transmission services provided under contracts that are awarded at auctions currently do not have a material adverse effect on our cash flows and financial condition.

Our insurance policies may be insufficient to cover potential losses.

Our business is generally subject to several risks, including operational accidents, labor disputes, occupational accidents, unexpected geological and hydrological conditions, changesremuneration forecast for investments in small improvements, which are investments in the regulatory framework, environmental hazards and weather, and other natural phenomena. Additionally, we andupgrade of small equipment to maintain the provision of adequate services.

ANEEL is also responsible for determining the tariffs to be charged by generation companies with concession agreements renewed pursuant to Law No. 12,783/2013. The RAG is the amount that generation companies are entitled to receive as consideration for supplying energy produced at hydroelectric plants. As part of our subsidiariesPrivatization, a transitional rule applies for the gradual phasing out of legacy contracts, pursuant to CNPE Resolution No. 15/2021, amended by CNPE Resolution No. 30/2021 (where 20% per year are liable to third parties for losses and damages caused by any failure to provide generation and transmission services.discounted during the next five years).

Our insurance policies cover only partDepending on ANEEL’s review of the losses thattariffs to be charged by our transmission companies, we may incur. If we are unable to eventually renewnot be adequately compensated for the costs and expenses of our insurance policiesinvestments in our transmission assets, which could negatively impact our financial condition and results of operations.

Our subsidiaries entered into a Transmission Infrastructure Usage Agreement with Eletronet. Adverse decisions made by the relevant regulatory body in respect of this agreement may have adverse effects on our transmission revenues.

In 1999, our subsidiaries CGT Eletrosul, Chesf, Eletronorte, and Furnas entered into Transmission Infrastructure Usage Agreement No. ECE-1.166/1999 with Lightpar (now Eletronet). Concession contracts require that a portion of the additional revenues obtained from time to time or losses or other liabilities occur that are not covered by insurance or that exceed our insurance limits, we could bethe use of the transmission infrastructure subject to significant unexpected losses, which may adversely impact our results of operations and financial condition. Currently, the Candiota 3 plant does not have an operational risk insurance in place and, as a result, if any operational damage event occurs, the cost will notconcession be covered by any insurance.

Also, accordingallocated to Sections 8 and 8.2 of our D&O insurance policy, it is necessary to notify the insurer regarding the public offer of assets and specially the changes on our control to make an endorsement to balance the insured risk and, subsequently, pay an additional premium within 60 daysreducing tariffs for users of the public offer announcement. Our businesstransmission system.

An administrative proceeding is currently underway by ANEEL to determine the amounts resulting from the execution of Contract No. ECE-1.166/1999 which must be reallocated to reducing tariffs for users of the transmission system.  ANEEL may also extend the scope of this administrative proceeding to investigate other aspects of the Transmission Infrastructure Usage Agreement. A potential adverse decision resulting from this ongoing administrative proceeding could have a material adverse effect on the revenues we derive from the transmission segment.

We are subject to risks associated with failure to comply with the applicable data protection laws, and financial conditionswe may be adversely affected inby the eventimposition of fines and other types of sanctions.

Although we fail to timely notify our insurers.

We do not have alternative supply sources for the key raw materials that the thermal and nuclear plants use.

Our thermal plants operate on coal, natural gas and/or oil and Eletronuclear’s nuclear plants rely on processed uranium. In each case, we are entirely dependent on third parties, sometimes monopolies, for the provision of these raw materials. If supplies of these raw materials become unavailable or may not be purchased on reasonable terms for any reason, such as significant increases in price due to inflation, we do not have alternative supply sources and, therefore, the ability of our thermal and/or nuclear plants, as applicable, to generate electricity would be adversely affected, which may impact our results of operations and financial condition.

With respect to uranium, Eletronuclear’s has a single supplier, Indústrias Nucleares do Brasil S.A., which faces operational and financial challenges.

With respect to coal, we have two suppliers, Companhia Riograndense de Mineração, which also faces financial challenges, and Seival Sul Mineração, which does not have the installed capacity to meet the plant’s demand. If any of these suppliers are not ablealways seek to comply with and adapt to data protection laws (such as Law No. 12,965/2014 (“Brazilian Internet Act”) and the Brazilian General Law for Personal Data Protection (Law No. 13,709/2018) (“LGPD”) and their contractsrelated regulations), we cannot guarantee that our personal data processing activities will always be secure and will not be subject to fines and other types of sanctions.

The LGPD provides comprehensive regulation for the processing of personal data in Brazil. It established detailed rules for the collection, use, processing, storage, and disposal of personal data and applies to all economic sectors and the relationships between customers and companies, employees and employers and others where personal data is processed, both in the digital and physical environment.

The LGPD requires a comprehensive data protection governance to be implemented, comprising policies, data mappings, documentation of risk and decisions made, processes for fulfilling rights and dealing with data protection incidents, procedures to secure third-party compliance, and the appointment of a data protection officer.

Failure to comply with the LGPD, especially in ensuring data subjects’ rights, providing clear information about our personal data processing activities, adhering to the original purpose of data collection, observing legal data storage periods, and implementing required security standards, could subject us to certain administrative sanctions. These sanctions, which may be applied individually or have their production processes interrupted, totallycumulatively, include warnings, mandatory incident disclosure, temporary blocking or partially,deletion of personal data, suspension or prohibition of data processing activities, and fines of up to 2% of the company’s, group’s, or conglomerate’s revenue in Brazil for the last fiscal year, excluding taxes, with a maximum of R$50.0 million per violation.

Moreover, non-compliance with LGPD and other data protection laws may expose us to liability for material, moral, individual, or collective damages, being subject to risks, such as (i) the filing of lawsuits claiming damages resulting from violations, based not only on LGPD, but also on other sectorial legislation; and (ii) the application of penalties provided for in the Consumer Defense Code and the Brazilian Internet Act by relevant consumer protection agencies, such as any Federal or State Prosecutors' Office and the National Consumer Secretariat (Secretaria Nacional do Consumidor). Failure by us to adhere to the LGPD or any privacy laws or regulations also carries the risk of individual or collective lawsuits and claim for compensation for damages, especially in cases of information security incidents that result in unauthorized access to personal data.

The application of penalties, publicizing of infractions or obligations to compensate for failures in the protection of personal data or LGPD compliance could adversely impact our thermalreputation, and nuclear plants could be adversely affected.

Strikes, work stoppages or labor unrest by our employees or byresults and, consequently, the employeesvalue of our suppliers or contractors could adversely affect our business.

As of the date of this annual report, all our employees were represented by labor unions as determined by law. We face strikesshares and work stoppages from time to time. Disagreements on issues involving our privatization, divestments or changes in our business strategy, reductions in our personnel, as well as potential employee contributions and benefits, could lead to further labor unrest. For example, in the first quarter of 2022, there was a strike organized by our employee’s union relating to health care coverage and the profit-sharing payments to employees in 2018, which adversely affected our administrative operations. We cannot ensure that future strikes will not affect our operations or administrative routines or that such strikes will not affect the success of our Proposed Privatization.

Strikes, work stoppages, or other forms of labor unrest at our company, our subsidiaries or SPES or any of our major suppliers, contractors or their facilities could impair our ability to operate our business, complete major projects and adversely impact the results of our operations, financial condition, and ability to achieve our long-term objectives. For further information regarding strikes and work stoppages, see “Item 4.B. Business Overview—Operating Process—Types of Plants—Shutdowns and strikes in the last three fiscal years.”

Risks Relating to Brazil

We are controlled by the Brazilian Government, the policies and priorities of which directly affect our operations and may conflict with the interests of our investors.

The Brazilian Government, as our controlling shareholder, exercises substantial influence on the strategy of our business. The Brazilian Government also has the power to appoint eight out of the eleven members of our Board of Directors and, through them, influence the selection of most of the executive officers responsible for our day-to-day management.

Additionally, the Brazilian Government holds the majority of our voting shares. Consequently, the Brazilian Government has the majority of votes at our shareholders’ meetings, which empowers it to approve most matters prescribed by law, including the following: (i) the partial or total sale of the shares of our subsidiaries and affiliates; (ii) increase our capital stock (which could diluteADS.

Our generation and transmission activities are regulated and supervised by ANEEL. Our business could be adversely affected by regulatory changes, and we may be subject to penalties, administrative intervention or loss of our concessions for public service if we provide our services in an inadequate manner or violate contractual obligations.

Pursuant to Brazilian law, ANEEL has the Brazilian Government’s interest); (iii) determineauthority to regulate and supervise the generation and transmission activities of energy concessionaries, including investments, additional expenses, tariffs, and the passing of costs to customers, among other matters. Regulatory changes in the energy sector are hard to predict and may have an adverse impact on our dividend distribution policy, as long as it compliesbusiness. The applicable legislation authorizes ANEEL to intervene in electric power concessions and to penalize concessionaires that do not provide adequate levels of service or fail to comply with the minimum dividend distribution regulatedterms and conditions under the concession contract, regulations, and other relevant legal obligations. If ANEEL were ever to intervene in our concessions, we and our subsidiaries may be subject to an internal reorganization in accordance with a recovery plan, which may adversely affect us. In addition, our request for new licenses and our participation in public biddings may be subject to more stringent scrutiny by law; (iv) issuancesANEEL.

If we fail to adequately remedy violations and failures, our concessions may be terminated early through expropriation, forfeiture, or mandatory transfer of securitiescontrol by the concessionaire. Granting authorities may expropriate concessions in the domestic marketinterest of the public as expressly provided for by law, in which case they carry out the service during the concession period. Law No. 13,360/2016 sets forth that the concessionaire can submit a change of control plan as an alternative to the termination of the concession.

It is important to note that a significant portion of the equipment currently in operation is approaching the end of its regulatory lifespan, which may pose a challenge in terms of maintenance and internationally; (v) corporate spin-offsreplacement of these assets and mergers; (vi) swapswhich might impact the results of our shares or other securities;operations and (vii) the redemption of different classesfinancial results.

We cannot assure that we will not be penalized by ANEEL for a future violation of our shares, independent from approvalconcession agreements or that our concession agreements will not be terminated in the future, which could have an adverse impact on our financial condition and the results of our operations. Also, ANEEL may introduce regulatory changes that may be applicable to our transmission and generation assets. Our business could be adversely affected by holderssuch regulatory changes.

Certain of our subsidiaries adhered to instalments programs for tax debts and must comply with special rules, otherwise, these installments programs may be terminated, and the sharesbenefits may be cancelled.

Our subsidiaries Furnas and classes thatEletronorte and our indirect subsidiary, SAESA, are subject to redemption.instalments programs promoted by tax authorities in respect of certain debts. If they or any of our Proposedsubsidiaries that may adhere to similar programs from time to time, do not comply with these programs, the installments programs may be terminated and, therefore, the benefits may be cancelled. If any of these companies do not comply with the rules, the installments programs may be terminated. In this situation, the tax debts could be charged by the tax authorities, with legal increases pursuant to the legislation applicable at the time of the triggering events. This could have an adverse impact on our results and financial condition.

Following our Privatization, is consummated,we are now subject to the directBrazilian Bankruptcy Law. However, if any of our assets are deemed assets dedicated to providing an essential public service, they will not be available for liquidation and indirect interestwill not be subject to attachment to secure a judgement.

As a private company, we are subject to the Brazilian Bankruptcy Law.

However, we understand that a substantial portion of our assets, including our generation assets and our transmission network, would be deemed by Brazilian courts to be related to providing an essential public service. Accordingly, even if unrelated to concession agreements, these assets would not be available for liquidation or attachment to secure a judgment involving us or our subsidiaries, as Law No. 12,767/2012 provides that judicial and extrajudicial recovery do not apply to electric power concessionaires until the termination of their concession agreements. Eletronuclear, of which we own 35.90% of the voting capital and 67.95% of the total share capital, would also not subject to Brazilian Bankruptcy Law.

In the event of bankruptcy, these assets would revert to the Brazilian Government willpursuant to Brazilian law and our concession agreements would terminate. We cannot assure that any compensation we receive for such assets would be dilutedequal to the market value of the assets and, accordingly, our financial condition may be affected.

Our failure to protect our intellectual property may adversely impact us.

We rely on a combination of trademark, patent, copyright, software, and trade secret laws in Brazil, as well as license agreements, to protect our intellectual property assets. We also rely on several registered and unregistered trademarks to protect our brands. On the date of this annual report, we held several registered trademarks and trademark applications in Brazil. See “Item 5C. Research and Development, Patents and Licenses -Trademarks, Patents and Licenses” for further information about our intellectual property.

Unauthorized parties may copy or otherwise obtain and use our assets. In addition, if we intend to maintain international operations, copyright, trademark, software, patent, and trade secret protection may not be available or may be limited in foreign countries. Any significant impairment of our intellectual property rights could adversely affect our business or our ability to compete. Furthermore, competitor companies may own large numbers of patents, software, copyrights, and trademarks and may frequently threaten our rights, which could require us to expend substantial amounts in legal costs to protect our intellectual property rights.

If we fail to address issues related to the health and safety of our employees at most 45%work and the exercise of its voting rights willfacilities where we conduct our activities, we may be limited to only 10% of our voting shares.adversely affected.

Our operations impactare subject to comprehensive federal, state, and local health and safety legislation, the commercial, industrial,implementation of which is supervised by Brazilian Government agencies. The failure to comply with these laws and social development policies promotedregulations can result in administrative and criminal penalties, irrespective of the recovery of damages or indemnification payments for irreversible damages in the context of civil and labor proceedings.

Considering the risks inherent in power generation and transmission in a system that uses high voltage lines and equipment, which makes any accident by direct contact or proximity to energized systems possibly fatal or capable of serious injury, there is a real possibility of accidents if the technical and legal recommendations are not properly adopted by us, our employees and outsourced service providers.

Specifically, we are also required to meet a quota for people with disabilities, which ranges from 2% to 5% depending on the total number of employees, as well as to adapt our facilities to offer accessibility and reasonable accommodations for these employees. If we fail to fulfill the quota, fines may be applied by the Brazilian Government, andcompetent authority, as per the Brazilian Government may pursue someLaw on the Inclusion of its macroeconomic and social objectives through us. Therefore, we may, subjectPersons with Disabilities (Law No. 13,146/2015).

Risks Relating to legal and bylaws limitations, engage in activities that give preference to the objectives of the Brazilian Government rather than to our own economic and business objectives, which may incur costs or engage in transactions that may not necessarily meet the interest of our other investors.Brazil

Brazil’s economy is vulnerable to external and internal shocks, which may have an adverse effect on Brazil’s economic growth and on the trading markets for securities.

Brazil’s economy is vulnerable to external shocks, including adverse economic and financial developments in other countries. For example, an increase in interest rates in the international financial markets may adversely affect the trading markets for securities of Brazilian issuers. In addition, a drop in the price of commodities produced in Brazil could adversely affect the Brazilian economy. Aor a decline in the demand for exports of any of Brazil’s major trading partners could also have a negative impact on Brazil’s exports and adversely affect Brazil’s economic growth.

In addition, because international investors’ reactions to the events occurring in one emerging market country sometimesmay produce a “contagion” effect, Brazil could be adversely affected by negative economic or financial developments in other countries. Brazil has been affected by such effects on several occasions, including the debt crises in emerging countries during the 1990s and the 2008 global economic crisis. We cannot assure you that any situations like those described above will not negatively affect investors’ confidence in emerging markets, or the economies of Latin America, including Brazil.

Further, the military action by Russian forces in Ukraine in February 2022 has escalated tensions between Russia and the United States, the North Atlantic Treaty Organization, the European Union, and the UK. The United States and other countries have imposed, and are likely to impose, financial and economic sanctions and export controls against certain Russian organizations and/or individuals, with similar actions either implemented or planned to be administered by the EU, the UK, and other jurisdictions. See “—Our business may be impacted by political events, war, terrorism and other geopolitical uncertainties, such as the ongoing military conflict between Russia and Ukraine”uncertainties” for further details about the impacts of the military conflict between Russia and Ukraine.

The Brazilian Government frequently intervenes in the country’s economy and occasionally makes significant changes to monetary, credit, fiscal, regulatory, and other policies to influence the country’s economy, which could adversely impact our business and financial condition. Brazil’s economy is also subject to risks arising from several domestic macroeconomic factors. These include general economic and business conditions of the country, the level of consumer demand, the confidence in the political conditions, present and future exchange rates, the level of domestic debt, inflation, interest rates, the ability of the Brazilian Government to generate budget surpluses and the level of foreign direct and portfolio investment.investments.

Our operating conditions have been, and will continue to be, affected by the growth rate of GDP in Brazil, because of the correlation between GDP growth and energy demand. Therefore, any change in the level of economic activity may adversely impact our operations. This could also affect the liquidity of, and the market for, our securities and consequently our financial condition and the results of our operations.

The Brazilian Government has exercised, and continues to exercise, significant influence over the Brazilian economy, which can have a direct impact on our business.

The Brazilian Government frequently intervenes in the country’s economy and occasionally makes significant changes to monetary, credit, exchange, fiscal, regulatory, and other policies to influence Brazil’s economy. For example, the Brazilian Government’s actions in the past to control inflation have included wage and price controls, depreciation of the real, controls over remittances of funds abroad and, intervention by the Central Bank to affect interest rates.

Recessions can result in a material decrease in Brazil’s fiscal revenues and may require stimulus measures from the government. A significant depreciation of the real could affect Brazil’s debt/Brazilian GDP ratio, which could have an adverse effect on public finances and on the market price of our securities. The continuation of the current economic scenario may lead the Brazilian Government

A depreciation of the real relative to the U.S. dollar could create inflationary pressures in Brazil and cause the Brazilian government to, among other measures, increase interest rates. Any depreciation of the real may generally restrict access to the international capital markets and reduce the U.S. dollar value of our results of operations. Restrictive macroeconomic policies could reduce the stability of the Brazilian economy and harm our results of operations and profitability. In addition, domestic and international

consumption. Additional bills may also consider such wide-ranging tax reforms envisaged by the Brazilian government. More recently, the proposed Law No. 2,337/2021, was approved by Brazilian Chamber of Deputies, and will soon be voted on by the Brazilian senate. This law introduces a comprehensive reform of income tax rules, mainly seeking to revoke the income tax exemption on the distribution of dividends by Brazilian companies (and impose a 15% tax rate) and also ends the possibility of deducting expenses on the payment of equity interest, extends the minimum term for the amortization of intangibles, changes the income tax rules related to investments in Brazilian investment funds and reducing the tax rate of corporate tax (Imposto de Renda de Pessoa Jurídica) and social contribution on net profit (Contribuição Social sobre o Lucro Líquido), among other changes. Any such changes could have adverse effects on our results and operations, as well as on the taxation of the dividends distributed from our Brazilian subsidiaries. Tax reforms or any change in the laws and regulations that affect our taxes or tax incentives may directly or indirectly adversely affect our business and results of operations.

Moreover, as a result of the economic impact of the COVID-19 pandemic, tax revenues in Brazil were temporarily reduced, while government spending on public health and other key sectors has increased and may continue to increase. In this scenario, federal, state and municipal governments may enact legislation, permanently or temporarily, that increases the tax burden on our activities, which would have an adverse effect on our business and results of operations.

In addition, we benefit from tax incentives under a program called SUDENE (Superintendência do Desenvolvimento do Nordeste) and SUDAM (Superintendência do Desenvolvimento da Amazônia), which reduce our income tax burden on our operating profits by 75%. We cannot assure you that these tax incentives will be maintained or renewed or that we will be able to obtain new tax incentives. To guarantee the continuity of these tax incentives during their applicable terms, we must comply with several requirements that can be challenged in courts.

If we lose our existing tax incentives, due to our noncompliance with current obligations and future requirements or if the current tax programs and agreements from which we benefit are modified, suspended, cancelled or not renewed, we could be materially and adversely affected.

Furthermore, we may be subject to investigations by tax authorities at the federal, state and municipal levels. As a result of such investigations, our tax positions may be challenged. We cannot guarantee that the provisions for such proceedings will be correct, that no additional tax exposure will be identified, and that we will not be required to constitute additional tax reserves for any tax exposure. Any increases in the amount of taxation as a result of challenges to our tax positions may adversely affect us.

Any judicial and administrative proceedings related to tax matters before the courts, including CARF and state and municipal administrative courts, may adversely affect us.

Any further downgrading of Brazil’s credit rating could adversely affect the price of theour shares and ADS and our cost of funding in the capital markets.funding.

Credit ratings affect investor perception of risk and, as a result, the trading value of securities and yields required on future issuances in the capital markets. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on several factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the prospect of changes in any of these factors. Rating agencies reviewed Brazil’s sovereign credit ratings in SeptemberIn 2015 and consequently, Brazil lost its investment grade conditionrating by the three main rating agencies, which adversely affected the trading prices of debt and equity securities issued by Brazilian issuers. As of the date of this annual report, Brazil’s sovereign rating was BB-/B (having been revised as stable in AprilJune 2022), Ba2 (stable) and BB- (negative) by Standard & Poor’s, Moody’s and Fitch, respectively.

A prolongation of Now that we are no longer owned by the Brazilian Government inability to gathergovernment, we have been rated below the required support in the Brazilian congress to pass additional specific reforms,sovereign rating.

Political instability, along with a further economic slowdown, and/or the inability to effectively contain the COVID-19 outbreak could lead to further ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, negatively affect ourthe ratings which are aligned to the sovereign ratings.of Brazilian companies, such as us. This may increase our future cost of issuances in the capital markets and adversely affect the price of our shares and ADS.

Risks Relating to Environmental, Climate and Social Impacts

Construction, expansion and operation of our electricity generation and transmission facilities and equipment involve significant risks that may result in loss of revenue or increase in expenses.

The construction, expansion, and operation of facilities for the generation and transmission of electricity are exposed to many unmanageable risks, including:

For example, in January 2023 amid a wave of protests and acts of vandalism against power facilities across the country, some incidents involved our facilities (transmission towers were tumbled). At that time there was no interruption to services to consumers and the towers were quickly rebuilt, however, we cannot assure the same will happen if there are future attacks.

However, if we suffer any of these unforeseen risks, we may not be able to implement construction works in a timely manner and at planned cost, as well as generate and transmit electricity in amounts consistent with our projections. In addition, we may be subject to fines or other regulatory penalties, which could have a material adverse effect on our financial condition and results of operations.

We are exposed to risks relating to the inadequate management of socioenvironmental aspects of our enterprises and projects.

Our activities expose us to significant socioenvironmental risks, especially during the construction of our generation plants and transmission lines. As a result, the management of socioenvironmental aspects is crucial to our business.

Our two most pertinent socioenvironmental risks concern (i) collection of precise data for any studies in respect of the development of new projects; and (ii) correct identification of, and compliance with, the environmental requirements for the establishment and operation of a project. Any errors or imprecision with respect to these two activities may lead to substantial errors in the design, operational and financial condition of our projects. If the necessary licenses are not obtained, we would be at risk of incurring costs arising from delays, potential revenues not being realized and, in a worst-case scenario, criminal sanctions and a suspension of our activities, all of which may materially affect us.

Another relevant aspect is the environmental management of our operational processes, which if not managed properly may cause substantial socioenvironmental impacts. Mismanagement may occur as a result of deficiencies in our control systems and operational processes or a lack of human and financial resources necessary to satisfy the legal and operational requirements imposed on us. These failures may cause environmental impacts such as the inadequate treatment of residues and the consequent soil and water contamination of areas surrounding the relevant project, loss of local biodiversity, increase in toxic gases emissions, costs resulting from the need to implement corrective and compensatory measures, as well as adverse impacts on our reputation.

We refer to the incidents at our Pedra plant in respect of our subsidiary Chesf and our Furnas plant in respect of our subsidiary, Furnas, as examples. Due to heavy rains, Chesf activated the reservoir operation procedure, which led to flooding in Jequié and Ipiaú. As a result, two Public Civil Claims were brought by the State of Bahia and the Municipality of Jequié demanding the introduction of safety, contingency and recovery plans for the affected areas and the creation of a compensation fund of no less than R$280.0 million. As for our Furnas plant, a lack of maintenance at the Piumhi river reflux channel led to the city of Capitólio being flooded in January 2022. The Environmental Secretary of the State of Minas Gerais imposed a R$289.5 million on Furnas. Both incidents are pending decisions in respect of our appeals. We cannot assure that further legal action in respect of these two incidents will not be brought.

Any non-compliance with environmental laws and regulations and/or failures related to the use of materials and disposal of solid waste, contamination, our usage of water resources, possible impacts caused on protected areas, the suppression of vegetation without previous authorization, the breach of any requirement set forth in environmental licenses, may lead to the imposition of significant penalties, such as the shutdown of a plant and its consequent unavailability to the system, fines, reputational damage and, in certain cases, criminal liability.

Our businessWe may also be impacted by political events, war, terrorismsubject to material reputational risks related to our approach to traditional communities’ rights and other geopolitical uncertainties, suchresettlements. Generally, these matters are addressed through mitigation and compensation measures as part of the environmental licensing process. However, since several of our projects predate the environmental licensing legislation, there are ongoing discussions as to the need for additional measures, as well as the ongoing military conflict between Russiaadequacy of our mitigation and Ukraine.compensation measures and the Free, Prior and Informed Consent (“FPIC”) of the traditional communities. The concept of FPIC is enshrined within the Brazilian Constitution but is yet to be thoroughly regulated, thus posing procedural uncertainty, potential risks and controversies to recent and future projects involving indigenous and traditional communities. Non-compliance with any existing or future regulations may result in financial and operational losses.

War, terrorism,The failure to comply with these environmental laws and other geopolitical uncertainties have causedregulations can result in administrative and couldcriminal penalties, including fines, summons, bans and shutdowns, irrespective of the recovery of damages or indemnification payments for irreversible damages in the context of civil proceedings. Criminal sanctions including custodial sentences and temporary interdiction of rights may also apply to both individual transgressors and legal entities. In addition, the failure to comply with environmental laws and regulations can also cause damage to our reputation and image. See “Item 8.A. Consolidated Financial Statements and Other Information—Litigation” for further details about the environmental proceedings we are a party to. Any unfavorable decision in such proceedings may lead to financial penalties, as well as suspension or disruption to the economy and commerce on a global revocation of environmental licenses and/or regional basis,activities which couldmay have a material adverse effecteffects on our business, our customers, and the companies with which we do business.

For instance, the global markets are currently operating in a period of economic uncertainty, volatility, and disruption following Russia’s full-scale invasion of Ukraine on February 24, 2022. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine and any other geopolitical tensions could have an adverse effect on the economy and business activity globally and lead to: