Pursuant to Rule 13a-16 or 15d-16 of the
80420-170 Curitiba, Paraná
Federative Republic of Brazil
(5541) 3222-2027
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____Companhia Paranaense de Energia - COPEL
CNPJ/MF 76.483.817/0001-20
State Taxpayer Number 10146326-50
Public Company - CVM 1431-1
www.copel.com copel@copel.com
Rua Coronel Dulcídio, 800, Batel - Curitiba - PR
CEP 80420-170
2008 ANNUAL MANAGEMENT AND
SUSTAINABILITY REPORT
December 2008
TABLE OF CONTENTS | ||||||
1. OVERVIEW | 5 | |||||
1.1. | Message from the C.E.O. | 5 | ||||
1.2. | Strategic Frame of Reference | 7 | ||||
1.3. | Strategy and Analysis: corporate management aimed at sustainability | 7 | ||||
1.4. | Subsequent Facts | 9 | ||||
1.5. | Corporate Sustainability Goals | 9 | ||||
1.6. | About the Annual Management and Sustainability Report | 12 | ||||
1.7. | Organizational Profile | 14 | ||||
1.8. | Operational Structure | 17 | ||||
1.9. | COPEL’s Products: Market Share | 27 | ||||
1.10. | Capital Raising in 2008 for Projects and Programs | 27 | ||||
1.11. | Corporate Responsibility and Commitment to Stakeholders | 27 | ||||
1.12. | Main Certifications and Accolades | 30 | ||||
2. CORPORATE GOVERNANCE | 31 | |||||
2.1. | Corporate Governance Structure and Best Practices | 31 | ||||
2.2. | Corporate Governance is Made with Energy - Main Activities in 2008 | 33 | ||||
2.3. | General Shareholders’ Meeting | 33 | ||||
2.4. | Board of Directors | 33 | ||||
2.5. | Audit Committee | 34 | ||||
2.6. | Fiscal Council | 35 | ||||
2.7. | Board of Officers | 35 | ||||
2.8. | Code of Conduct | 35 | ||||
2.9. | Ethical Guidance Council | 36 | ||||
2.10. | Confidential Reporting Channel | 36 | ||||
2.11. | Permanent Committee for Disclosure of Material Acts and Facts | 37 | ||||
2.12. | Relations with Shareholders and Investors | 37 | ||||
2.13. | Distribution of Dividends and Interest on Capital (IOC) | 38 | ||||
2.14. | Shareholders’ Agreement | 38 | ||||
2.15. | Securities Issued by COPEL: Bovespa and Latibex Indicators | 38 | ||||
2.16. | Internal and External Auditing | 39 | ||||
2.17. | Risk Management | 39 | ||||
2.18. | Corporate Sustainability and Citizenship Policy: Environmental Impact Studies and Reports | 40 | ||||
2.19. | Information Technology | 41 | ||||
3. ECONOMIC AND FINANCIAL PERFORMANCE | 42 | |||||
3.1. | Net Operating Revenues | 42 | ||||
3.2. | Operating Costs and Expenses | 43 | ||||
3.3. | EBITDA | 44 | ||||
3.4. | Financial Income (Losses) | 45 | ||||
3.5. | Indebtedness | 45 | ||||
3.6. | Net Income | 46 | ||||
3.7. | Added Value | 46 | ||||
3.8. | Stock Performance | 48 | ||||
3.9. | Economic Value Added - EVA | 48 | ||||
3.10. | Expenditures in the Concession | 49 | ||||
3.11. | Cash Flows | 50 | ||||
3.12. | Default within the Power Sector | 51 | ||||
3.13. | Customer Default | 51 | ||||
4. SOCIAL AND POWER SECTOR PERFORMANCE | 52 | |||||
4.1. | Social and Cultural Performance | 52 | ||||
4.2. | Power Sector Performance | 67 | ||||
5. ENVIRONMENTAL PERFORMANCE | 71 | |||||
5.1. | Commitment to the Environment | 71 | ||||
5.2. | Environmental Management | 71 |
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5.3. | Biodiversity | 77 | ||||
5.4. | Compensatory Actions for the Use of Natural Resources and Negative Environmental Impacts | 79 | ||||
5.5. | Policies of Relations with Environmental and Inspection Agencies | 79 | ||||
5.6. | Recovery of Degraded Areas | 79 | ||||
5.7. | Environmental Education | 81 | ||||
5.8. | Environment-Oriented R&D Projects | 84 | ||||
5.9. | Clean Development Mechanisms - CDMs | 85 | ||||
5.10. | Water Consumption | 86 | ||||
5.11. | Power 86 | |||||
5.12. | Paper consumption | 86 | ||||
5.13. | Use of Non-Renewable Fuel | 87 | ||||
5.14. | Emissions, Effluents, and Waste | 87 | ||||
5.15. | Environmental Licensing | 90 | ||||
5.16. | Management of Fines, Statements of Commitment, and Environmental Notices | 91 | ||||
5.17. | Environmental Indicators | 92 | ||||
6. SOCIAL BALANCE SHEET | 96 | |||||
7. GRI CONTENT AND CORRELATION INDEX | 100 | |||||
8. COMPOSITION OF THE GROUPS IN CHARGE OF CORPORATE GOVERNANCE | 106 | |||||
FINANCIAL STATEMENTS | 107 | |||||
Balance Sheets | 107 | |||||
Statement of Income | 109 | |||||
Statement of Changes in Shareholders’ Equity | 110 | |||||
Statement of Cash Flows | 111 | |||||
Statement of Added Value | 113 | |||||
NOTES TO THE FINANCIAL STATEMENTS | 115 | |||||
1. | Operations | 115 | ||||
2. | Presentation of the Financial Statements | 118 | ||||
3. | Consolidated Financial Statements | 119 | ||||
4. | Changes in Accounting Policies | 120 | ||||
5. | Main Accounting Practices | 121 | ||||
6. | Cash and Cash Equivalents | 126 | ||||
7. | Consumers and Distributors | 126 | ||||
8. | Provision for Doubtful Accounts | 128 | ||||
9. | CRC Transferred to the Government of the State of Paraná | 128 | ||||
10. | Taxes and Social Contribution | 129 | ||||
11. | Account for Compensation of “Portion A” Variations | 133 | ||||
12. | Other Regulatory Assets and Liabilities | 135 | ||||
13. | Guarantees and Escrow Deposits | 136 | ||||
14. | Other Receivables | 137 | ||||
15. | Judicial Deposits | 137 | ||||
16. | Investees and Subsidiaries | 138 | ||||
17. | Investments | 138 | ||||
18. | Property, Plant, and Equipment | 145 | ||||
19. | Intangible Assets | 150 | ||||
20. | Loans and Financing | 152 | ||||
21. | Debentures | 158 | ||||
22. | Suppliers | 161 | ||||
23. | Accrued Payroll Costs | 162 | ||||
24. | Post-Employment Benefits | 162 | ||||
25. | Customer Charges Due | 165 | ||||
26. | Research and Development and Energy Efficiency | 165 | ||||
27. | Other Accounts Payable | 166 | ||||
28. | Provisions for Contingencies | 166 | ||||
29. | Shareholders’Equity | 171 | ||||
30. | Operating Revenues | 173 | ||||
31. | Deductions from Operating Revenues | 175 | ||||
32. | Operating Costs and Expenses | 176 |
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33. | Financial Income (Losses) | 182 | ||||
34. | Electric Energy Trading Chamber (CCEE) | 182 | ||||
35. | Financial Instruments | 184 | ||||
36. | Related-Party Transactions | 187 | ||||
37. | Insurance | 188 | ||||
38. | Wholly-Owned Subsidiaries | 190 | ||||
39. | Segment Information | 193 |
REPORT BY THE INDEPENDENT AUDITORS | 195 | |||||
SUMMARY OF THE ANNUAL REPORT BY THE AUDIT COMMITTEE | 196 | |||||
REPORT BY THE FISCAL COUNCIL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON | ||||||
DECEMBER 31, 2008 | 198 | |||||
ACKNOWLEDGEMENT | 199 |
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1. OVERVIEW
1.1. Message from the C.E.O.
We are glad and proud to present COPEL's Annual Management and Sustainability Report for 2008, which has been prepared based on the strategic guidelines and the sustainability commitments adopted by the Company as a signatory of the United Nations’ Global Compact, as a member of the Global Reporting Initiative (GRI), and as a member of the Brazilian Corporate Governance Institute (Instituto Brasileiro de Governança Corporativaor IBGC).
Very worthy of mention is the Company's performance in 2008, recording net income of R$ 1,078.7 million, which is a reflection of its solidity and of the special care it has received from the Government of the State of Paraná and from its Senior Management and Fiscal Council.
Other achievements include the completion, during the year, of several advances which have helped further consolidate COPEL as an organization which is fully committed to sustainability. One such achievement is COPEL’s qualifying to Corporate Governance Level 1 of the São Paulo Stock Exchange (BOVESPA), the level where its stock is now listed.
COPEL also started working on the legal and by-law aspects of creating a Chief Environmental and Corporate Citizenship Office within the structure of the Company, a measure that not only underscores but also duly formalizes COPEL's focus on a subject that is precious, strategic, and fundamental to its activities and operations.
COPEL practices, supports, and advocates sustainability, reaffirming to recognize it as the only way capable of offering society, related parties and the environment the opportunity to share in the growth and development of the Company. Thus, COPEL is committed to acting on the vision of sustainability today and tomorrow, building its strategic planning on these very principles.
Based on these principles and guided by the philosophy of growing while providing benefits and better quality of life to all with whom the Company deals, COPEL has played with zeal, dedication, and efficiency its role of fostering and promoting the social and economic development of the State of Paraná, serving the people with quality and setting the conditions for its own growth as a company, contributing to the well-being of the community of which it is a part, and yielding suitable economic and financial results to its shareholders.
We are pleased to report the letter we received from Morley Fund Management, a London-based organization which is one of the largest investment fund managers in the world, congratulating COPEL for having been chosen by the UN’s Global Compact for the "submission of a remarkable Progress Report".
We are equally proud of the UN certification received by our subsidiary Centrais Elétricas do Rio Jordão – ELEJOR, which is in charge of building, managing, and operating a hydroelectric complex in Paraná which has been recognized as a pioneering Clean Development Mechanism (CDM) project in Brazil. Thus, ELEJOR has been authorized to issue and sell carbon credits, pursuant to the Kyoto Protocol.
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Also in the field of sustainable energy generation, COPEL carried out during 2008 initiatives aimed at generating energy from natural, clean, and renewable sources – other than hydropower – taking advantage of different forms of biomass, such as the pulp resulting from sugar cane processing and the methane gas obtained from the biodigestion of organic waste.
Furthermore, in 2008 COPEL was honored, for the eighth time in a row and tenth since the inception of the survey, as the most remembered company in Paraná according to the Top of Mind survey, which is traditionally conducted by the Amanhã magazine from Porto Alegre in cooperation with the Bonilha Institute. In the same survey, COPEL’s name once again was featured among the companies most concerned with social issues and the best companies to work for.
In the area of social inclusion, COPEL launched its new website with accessibility features aimed at the visually impaired, allowing them to conduct searches, find information, and request services. Under a cooperation agreement, experts from the Regional Engineering, Architecture, and Agronomy Council of Paraná (CREA-PR) will teach courses to COPEL’s employees to train them and guide them on the measures to be taken while designing facilities, planning spaces, and setting specifications for furniture and other equipment, in order to ensure easy access and safety to all people, particularly those with physical disabilities or limited mobility.
As we come to the end of this message, it is our duty to thank the Governor of Paraná, Mr. Roberto Requião, who, as representative of COPEL’s controlling shareholder, has guided the Company’s activities with zeal, social sensitivity, and attention to the public interest, combining sustainability with corporate responsibility without neglecting corporate results, in a company where efficiency, profitability, and excellence are side by side with the lowest power rates in Brazil among all major utilities.
Likewise, we would like to thank the members of the Board of Directors and of the Fiscal Council for their always dedicated and attentive work. In closing, on behalf of the entire Board of Officers, we would like to thank COPEL’s workforce for its commitment to the ideals and principles upheld by the Company and their effort towards accomplishing all the achievements discussed in this message.
Curitiba, March 20, 2009
Rubens Ghilardi
Chief Executive Officer
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1.2. Strategic Frame of Reference
Vision
To be the best company in the areas in which COPEL operates and to be a reference in corporate governance and corporate sustainability.
MissionTo generate, transmit, distribute and sell power and to render related services, promoting sustainable development and maintaining a balance between the interests of the people of Paraná and the interests of shareholders.
Principles and ValuesThe following values underpin COPEL’s strategic, organizational, and personnel management and guide all of its internal and external actions and decisions, as well as those of its subsidiaries:
- Transparency- accounting for all decisions and actions by the Company to inform all stakeholders about their positive and/or negative aspects;
- Ethics- the result of a collective agreement which sets forth individual conducts in line with a common goal;
- Respect- regard for the fellow man;
- Social and Environmental Responsibility- conducting corporate businesses in a sustainable manner, with due respect for the rights of all stakeholders, including future generations, and committing to the protection of all forms of life;
- Safety- a safe organizational environment, which will ensure the Company’s perpetuity.
1.3. Strategy and Analysis: corporate management aimed at sustainability
COPEL has established as a priority the implementation of a corporate management model geared towards sustainability, with a view to focusing efforts on reaching and ensuring, based on COPEL's values and on optimized procedure management, balanced economic, social, and environmental results to all stakeholders, as well as the sustainable development and growth of the Company, while bringing it into compliance with international corporate governance, transparency, and sustainability standards, pursuant to its renewed commitment to the Global Compact, of which it has been a member since 2000.
In 2008, COPEL focused its efforts on achieving results in two major strategic fronts:
- operational excellence, with increased productivity and cost optimization, quality in service, and continued customer satisfaction; and
- sustainable expansion, concentrating on social and environmental investments in sync with the State Government’s objectives and on the generation of benefits to the community in Paraná, diversifying energy sources and minimizing social and environmental risks.
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The focus of the Company’s corporate planning was the execution of its strategic plan, and the corporate planning activities in 2008 comprised the further analysis of the corporate map’s objectives, focusing on indicators, goals and initiatives, programs, and projects.
Based on the guidelines set by the senior management for the pursuit of productivity in the short-term and of growth in the long-term; on the excellence in costs, in the relationship with stakeholders, and in technological innovation in data, image, and voice transmission; and on new technologies for the diversification of the sources of power using renewable and non-polluting sources, COPEL reviewed its strategic map, which is shown below, to better guide the actions of the Company and the fulfillment of its vision. The map comprises five perspectives and two strategic themes: operational excellence in the Company's business and sustainable growth; these two themes are divided into 25 goals, monitored by 44 indicators and 30 corporate programs.
To improve COPEL's management model, the Company chose as a reference in 2008 the excellence criteria set by the National Quality Foundation (Fundação Nacional de Qualidadeor FNQ). Thus, actions have been taken towards the review and formalization of the main corporate processes and the training of managers to carry out their activities in compliance with the FNQ excellence criteria: systemic thought; organizational learning; culture of innovation; leadership and consistency in goals; guidance by processes and information; forward-looking approach; generation of value; priority to people; knowledge about customers and the marketplace; development of partnerships; and social responsibility, with a view to fulfilling the Company’s vision by 2010.
Accordingly, COPEL held in 2008 a workshop to conduct a self-review of its management, to identify priorities for the improvement of managerial procedures and practices, and to achieve sustainable economic, social, and environmental results. At the same time, the Company’s senior management made efforts to communicate to all employees the strategies that have been set, in order to ensure their commitment to the achievement of the proposed corporate goals.
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1.4. Subsequent Facts
1.4.1. Lease of the Araucária Thermal Power Plant
UEG Araucária Ltda. (UEGA), a company controlled by COPEL, signed with Petrobras a renewal of the lease of the Araucária Thermal Power Plant for three years, starting on January 1, 2009. UEGA will receive fixed monthly payments, plus additional variable payments whenever power from the facility is dispatched. Petrobras also signed a contract with COPEL Geração e Transmissão to secure operation and maintenance services for the facility, for the duration of the lease. The facility is located in the town of Araucária, in the State of Paraná, and its installed capacity is 484.15 MW. This contract may be partially or fully terminated in the event of UEGA’s successful participation in the power auctions to be conducted by ANEEL.
1.4.2. COPEL signs purchase agreements for power generated from biogas
COPEL, in compliance with CVM Instruction no. 358/2002, signed on February 3, 2009 the first agreements in the Brazilian power sector for power generated from the biodigestion of organic waste. The Company signed a total of six contracts, amounting to installed capacity of up to 524 kW (which is enough to supply one hundred average-consumption households), with four producers: Sanepar, Cooperativa Lar, Granja Colombari, and Star Milk. These contracts will be in effect until the end of 2012.
1.4.3. Creation of the Chief Environmental and Corporate Citizenship Office
After 54 years since its creation, COPEL now has a woman as one of its chief officers. Ms. Marlene Zannin has been elected for the Company's new Chief Environmental and Corporate Citizenship Office by the 175th Extraordinary Shareholders' Meeting, on March 13, 2009.This office will be charged with coordinating the social and environmental issues and activities of COPEL, focusing on social and community development initiatives and on the promotion and respect for human rights. COPEL is the first company in the Brazilian power sector to assign environmental and social isues to an exclusive chief office.
1.5. Corporate Sustainability GoalsThe following table features the corporate sustainability goals set in our 2007 Annual Management and Sustainability Report and the Company's performance in pursuing these goals during 2008:
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1.5.1. Performance relative to the goals for 2008
ACHIEVED GOALS |
CORPORATE GOVERNANCE |
Fulfillment of the criteria for the corporate governance level 1 of the São Paulo Stock Exchange (BOVESPA) |
Achievement of level A+ of implementation of the GRI/G3 guidelines issued by the Global Reporting Initiative - GRI |
SOCIAL PERFORMANCE |
Dialogue with 10% of the Company’s registered suppliers |
POWER SECTOR PERFORMANCE |
Connection of 12,000 customers through theLuz para Todos(Light for All) Program |
GOALS IN PROGRESS |
ENVIRONMENTAL PERFORMANCE |
Quantification of total consumption of materials by type |
Quantification of total amount of land owned, leased, or managed for purposes of production or extraction |
Quantification of business units operating/planning operations in environmentally protected or sentitive areas or their surroundings |
Location and dimension of land owned, leased, or managed by the Company in biodiversity-rich habitats |
Identification of all chemical spills (oil and fuel in transmission facilities) |
Identification of significant environmental impacts caused by the Company’s main products and services |
Identification of impacts of activities and operations on protected or sensitive areas |
Preparation of objectives, programs, and goals for the protection and recovery of ecosystems and native species in depleted areas |
Monitoring of greenhouse gas emissions |
Conduction of studies on a) the analysis of solid waste generated and treated and/or properly disposed of (classes I, IIA, and IIB); and b) liquid effluents which are either properly disposed of, by volume, or not, by type (taking into account those of industrial nature, by volume), as well as their incorporation into the implementation processes for the Basic Environmental Plan (PBA) and the Environmental Control Plan (PCA) for COPEL’s facilities. |
Development of alternative energy source projects, including the assessment of the availability of biomass throughout Paraná |
SOCIAL PERFORMANCE |
Identification of the impacts on human rights as part of the decision-making regarding investments and acquisitions, including the selection of suppliers and outsourced services |
Description of policies, procedures, management systems, and compliance mechanisms for the observance of voluntary standards and codes regarding advertising |
Identification of the number and types of violations of advertising regulations |
Implementation of the Workplace Safety and Health Management Program, a control system aimed at eliminating workplace hazards, complying with the applicable legislation, training personnel, standardizing high-risk activities, conducting inspections, setting goals, and carrying out permanent campaigns, in full compliance with the guidelines of the International Labor Organization – ILO. According to the policy of implementation of the Program, each area shall undergo diagnosis, planning, periodic control, verification, annual review, and auditing |
Creation of mechanisms and procedures for: a) the monitoring of actual fulfillment of obligations by suppliers of materials and services to the Company; and b) supervision of the maintenance of qualification of those already inspected and of others yet to be qualified, for non-compliance with COPEL's social responsibility criteria or with SA 8000 certification |
Preparation of the records and control of the activities of the safety technicians and their inspections under the Safety and Health Portal – Hunt for the Corporate Risk program |
GOALS YET TO BE ACHIEVED |
SOCIAL PERFORMANCE |
Achievement of a 65.5% Customer Satisfaction Index (IASC), as published by ANEEL, instead of the 75.5% set goal |
Fulfillment of the criteria for continued participation in the São Paulo Stock Exchange’s Corporate Sustainability Index |
1.5.2. Corporate goals set for 2009
Corporate Governance:
- fulfillment of the criteria for qualification to the São Paulo Stock Exchange’s Corporate Sustainability Index;
- auditing of the 2009 Annual Management and Sustainability Report, by a specialized independent auditing company, to assess the Company's sustainability performance, in compliance with the GRI
(G3) guidelines and as a means of conveying management's commitment to sustainability; - as far as the qualitative aspects of corporate management aimed at sustainability, the continued development, in compliance with the Company’s vision in 2009, of the main programs and projects of its corporate portfolio (those related to social, power sector, and environmental performance are discussed in the respective sections herein): COPEL Excellence in Management Program (Excelência de Gestão COPEL or PEG); implementation of the project management process throughout the Company; and the Integrated Corporate Risk Management Program (Programa de Gestão Integrada de Riscos Corporativos or GIRC).
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Power sector performance:
- Connection of 20,000 new customers under the Luz para Todos (Light for All) Program, which was launched by the Federal Government, under Presidential Decree no. 4,783, dated November 11, 2003, and extended until 2010 under Decree no. 6,442/2008;
- as far as the qualitative aspects of corporate management aimed at sustainability:a)technological upgrade of IP networks and services and expansion of the Company’s data transmission network in connection with its telecommunications business;b)for greater availability and reliability of COPEL’s power grid: construction of transmission facilities - Basic Network and 69-kV and 138-kV Networks; upgrades in substations, transmission lines (and transformers rated 230 to 500 kV), and generation facilities; andc)increased revenues through new assets and renewable energy sources, to open new markets for COPEL's businesses.
- the achievement of a 71.0% Customer Satisfaction Index (IASC), as published by ANEEL;
- engagement of another 10%, comparatively to 2008, of the registered suppliers of the Company participating in its chain of production in dialogue throughout COPEL’s concession area;
- tripling of the number of visually-impaired customers who receive electricity bills in Braille, over 2008;
- traininga)of customer service employees in Brazilian Sign Language to better serve hearing- impaired customers; andb)of 720 employees in accessibility awareness, through seminars, lectures, and courses conducted under a cooperation agreement between COPEL and the Regional Engineering, Architecture, and Agronomy Council of Paraná.
- Social-Environmental Urban Forestation Program:a)transfer of 15,000 seedlings to municipal governments for improved environmental quality in the municipalities within COPEL’s concession area; andb)a 54-hectare increase in green areas in municipalities within Paraná through recovery of degraded areas;
- Effluents: percentage of industrial effluents to be treated: 100 %;
- Management of hazardous waste: percentage of equipment to be replaced by insulating mineral oil without PCB (askarel) in the process of power distribution and of bulbs to be decontaminated out of the total bulbs replaced by the Company: 100%;
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- Control and monitoring of environmental risks and liabilities: the Company has allocated funds in the amount of:a)R$ 800,000.00, for mitigation of potential damage to the environment resulting from the handling of insulating mineral oil during power distribution operations; andb)R$ 4,178,763.00, to several programs in connection with power generation and transmission, including those regarding waterside vegetation, regularization of environmental licenses for the operation of transmission facilities, elimination of askarel use in power plants, recovery of areas degraded by solid waste and domestic effluents around power plants and employee residential areas, environmental control and education within the river basins affected by the proliferation of algae, and studies on the regularization of the disposal of coal waste and ashes from the Figueira Thermal Power Plant; and
- Energy efficiency programs aimed at developing a culture of saving power and using it rationally: quantitative goals for 2009 detailed in the table of environmental indicators in the environmental section herein.
1.6. About the Annual Management and Sustainability Report
Through the Annual Management and Sustainability Report, COPEL presents a summary of its actions and its economic, social, and environmental performance, in compliance with the transparency and social and environmental responsibility guidelines of:
- the National Electric Energy Agency, under Ruling no. 3034, dated December 21, 2006 – which provides power concession and permission holders a model for annual reports of their activities in the areas of general business, corporate governance, economic and financial performance, social and power sector performance, and environment, with focus on rendering a socially responsible public service with respect to the needs of society and meeting the regularity, continuity, efficiency, safety, and low rate requirements of the agency;
- The Global Reporting Initiative – GRI (GRI/G3 version), an organization created in 1997 and linked to the United Nations Environment Programme;
- “Making the Connection - Using the GRI/G3 Reporting Guidelines to Report on the Progress of the UN’s Global Compact”;
- the Brazilian Social and Economic Analysis Institute (Instituto Brasileiro de Análises Sociais e Econômicas or Ibase);
- Brazilian Accounting Rule – NBC T15; and
- the Brazilian Securities and Exchange Commission(Comissão de Valores Mobiliários – CVM).
The current report features information regarding the fiscal year of 2008, comparing them to those from the previous annual report, and is also available in English and Spanish. The main stakeholders who are expected by the Company to make use of this report are: COPEL’s internal audience, customers, suppliers, government, shareholders, society at large, and local communities.
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This report will be subject to direct review by the Global Reporting Initiative, which will grade it as far as compliance with the GRI/G3 guidelines.
COPEL declares itself level “A” compliant, as shown by the following seal:
The essential and additional GRI/G3 indicators considered irrelevant to the business and to the stakeholders of COPEL are indicated in the location and correlation matrix as such. Relevant indicators with unavailable information due to lack of systematic collection until then were treated as a goal for inclusion in future reports. Except for financial statements and economic-financial performance information, which comply with Brazilian legislation, all other environmental and social indicators followed the parameters and bases for calculation set forth by the GRI/G3 protocols.
The financial statements, including the social balance sheet, also consolidate the performance of Companhia Paranaense de Gás - Compagas, Centrais Eólicas do Rio Jordão S.A. - Elejor, COPEL Empreendimentos, UEG Araucária, and Centrais Eólicas do Paraná, companies in which COPEL holds a majority interest, and, as of January 2008, Dominó Holdings S.A. (controlled jointly with other shareholders).
The Descriptions of Management Models for each group of indicators set forth in the GRI/G3 guidelines are distributed throughout this report as follows:
- Description of the Economic Performance Management Model – chapter 3
- Description of the Environmental Performance Management Model – chapter 5
- Description of the Social Performance Management Model – chapter 4
- Labor Practices and Humane Work – chapter 4
- Human Rights – chapter 4
- Society – chapter 4
- Responsibility for Products – chapter 4
The means through which stakeholders can obtain additional information about COPEL’s economic, environmental, and social aspects as well as comment or suggest improvements for the next edition of this report are listed in item 7, which covers the Composition of the Groups in Charge of Corporate Governance.
ComparabilityFor purposes of allowing data comparison, and in compliance with ANEEL Ruling no. 3,034, we present three-year historical data for all operational, productivity, social, and environmental indicators. Economic items feature data for the last two years in the social balance sheet.
ReliabilityWe have established for 2009 the goal of having all social and environmental data for the 2009 Annual Management and Sustainability Report reviewed by external organizations, in order to ensure greater transparency and credibility, with the publication of a corresponding opinion.
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1.7. Organizational Profile
Companhia Paranaense de Energia – COPEL, headquartered at Rua Coronel Dulcídio, 800, Batel, Postal Code 80420-170, in Curitiba, State of Paraná, is a publicly traded mixed capital company, controlled by the Government of the State of Paraná, which is engaged, through subsidiaries, in researching, studying, planning, building, and exploiting the production, transformation, distribution, sales and transportation of energy, in any form, but particularly electric energy, and in participating, alongside other private or state-owned companies, in consortiums and other companies set up to operate in the areas of power, telecommunications, and natural gas.
1.7.1. Operational PerformanceWe feature below summarized data of our operational and productivity performance from 2006 to 2008. This data reflects the results achieved by the Company in accordance with its strategic planning as far as the goals of adding value to customers - offering competitive quality and price both on the captive and free markets - and the excellence in productivity and process management - ensuring a business infrastructure with adequate costs, schedules, and quality; improving the continuity, availability, and reliability of services; and managing costs and the value of processes:
Operational Performance and Productivity Indicators | ||||||
2008 | 2007 | 2006 | ||||
Number of employees | 8,405 | 8,347 | 8,119 | |||
Number of customers supplied (captive customers) | 3,523,543 | 3,437,061 | 3,345,315 | |||
Number of customers supplied (unregulated) | 14 | 17 | 16 | |||
Number of customers per employee (captive + unregulated ÷ number of employees) | 419 | 412 | 412 | |||
Total Population Supplied (in thousands) | 10,128 | 9,974 | 9,822 | |||
- Urban | 8,745 | 8,578 | 8,411 | |||
- Rural | 1,383 | 1,396 | 1,411 | |||
Number of localities served | 1,119 | 1,116 | 1,111 | |||
Total available power (GWh) | 44,929 | 42,845 | 39,232 | |||
Concession area (km2) | 194,854 | 194,854 | 194,854 | |||
Generated power (GWh) | 20,372 | 18,134 | 10,358 | |||
Installed power plant capacity in COPEL plants (MW) | 4,550 | 4,550 | 4,550 | |||
Power sold to employee ratio (MWh) | 2,477 | 2,394 | 2,302 | |||
Retail market: captive + unregulated (GWh) | 20,818 | 19,984 | 18,690 | |||
Billed power market: captive + unregulated + wholesale (GWh) | 21,313 | 20,458 | 19,148 | |||
Power Supply (captive market) – National Market Share (%) | 6.8 | 6.8 | 6.7 | |||
Power Supply (captive market) – Market Share in Southern Brazil (%) | 35.1 | 34.2 | 33.9 | |||
Average Annual Rate to Final Customers (R$/MWh) (excluding PASEP/COFINS and VAT taxes) | 207.60 | 207.48 | 215.60 | |||
- Residential (including low income subsidies paid by Federal Government) | 254.68 | 254.65 | 271.79 | |||
- Industrial (excluding use of the power grid (unregulated customers)) | 182.84 | 181.38 | 185.83 | |||
- Commercial | 226.19 | 226.67 | 233.60 | |||
- Rural | 150.09 | 150.54 | 158.61 | |||
Purchased power (GWh) | 22,857 | 21,736 | 21,413 | |||
1. Itaipu Power Plant | 5,468 | 4,666 | 4,665 | |||
2. Initial contracts | - | - | - | |||
3. Bilateral contracts (other contracts) | 3,065 | 3,797 | 5,333 | |||
5. PROINFA Program | 349 | 220 | 83 |
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Operational Performance and Productivity Indicators | ||||||
2008 | 2007 | 2006 | ||||
6. Agreements for Energy Trade on the Regulated Power Market (CCEAR) | 13,975 | 13,053 | 11,332 | |||
Overall power losses (GWh)(¹) (*) | 2,111 | 2,561 | 2,553 | |||
Total power losses - percentage of power demand | 8.2 | 8.7 | 8.6 | |||
Technical losses - percentage of power demand | 7.0 | 5.3 | 7.5 | |||
Non-technical losses - percentage of power demand | 1.3 | 3.4 | 1.1 | |||
Billed power (GWh): | 21,313 | 20,458 | 19,148 | |||
Residential customers | 5,379 | 5,143 | 4,826 | |||
Low income | 728 | 754 | 746 | |||
Regular | 4,651 | 4,389 | 4,080 | |||
Industrial customers (including COPEL Geração e Transmissão'sunregulated ones) | 7,955 | 7,740 | 7,200 | |||
Captive | 6,770 | 6,278 | 6,021 | |||
Unregulated (supplied by COPEL Geração e Transmissão S.A.) | 1,185 | 1,462 | 1,179 | |||
Commercial customers | 3,967 | 3,722 | 3,407 | |||
Rural customers | 1,606 | 1,522 | 1,431 | |||
Public agencies | 562 | 533 | 513 | |||
Public lighting | 747 | 725 | 716 | |||
Public services | 579 | 576 | 574 | |||
Own consumption | 23 | 23 | 23 | |||
Other utilities | 495 | 474 | 458 | |||
TRANSMISSION | ||||||
Operational Performance and Productivity Indicators | ||||||
2008 | 2007 | 2006 | ||||
Total length (in km) of the power grid: | 1,835.2 | 1,829.8 | 1,747.8 | |||
500kV | 161.3 | 161.3 | 161.0 | |||
230kV | 1,660.7 | 1,660.7 | 1,579.0 | |||
138kV | 7.8 | 7.8 | 7.8 | |||
69kV | 5.4 | - | - | |||
Number of substations: | 30 | 30 | 29 | |||
500kV | 4 | 4 | 5 | |||
230kV | 26 | 26 | 24 | |||
Installed capacity (in MVA) of the 230 and 500 kV transmission substations (not including power plant step-up substations) | 10,284.7 | 9,684.7 | 9,193 | |||
Automated substations (230 and 500 kV) | 30 | 30 | 29 | |||
DISTRIBUTION | ||||||
Operational Performance and Productivity Indicators | ||||||
2008 | 2007 | 2006 | ||||
Total length (in km) of the distribution grid: | 179,187.6 | 177,046.5 | 171,220.1 | |||
138kV | 4,495.7 | 4,290.7 | 4,238.5 | |||
88kV | 58.2 | 58.2 | 58.2 | |||
69kV | 1,185.0 | 1,173.2 | 1,166.0 | |||
34.5kV | 76,903.0 | 76,524.7 | 74,460.8 | |||
13.8kV | 96,545.7 | 94,999.7 | 91,296.6 | |||
Number of substations: | 344 | 341 | 338 | |||
34.5kV | 238 | 238 | 237 | |||
69kV | 32 | 31 | 30 | |||
138kV | 74 | 72 | 71 | |||
Installed capacity of substations rated 34.5 to 138 kV (MVA) | 9,195.1 | 8,641.5 | 8,469.9 | |||
Poles | 2,422,197 | 2,353,097 | 2,264,214 | |||
Distribution transformers (in units) | 331,601 | 322,115 | 315,289 |
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DISTRIBUTION | ||||||
Operational Performance and Productivity Indicators | ||||||
2008 | 2007 | 2006 | ||||
Installed transformer capacity (MVA) | 8,565 | 8,216 | 6,651 | |||
Non-automated substations (34.5 to 138 kV) | 4 | 13 | 29 | |||
Automated substations (34.5 to 138 kV) | 340 | 328 | 309 | |||
Switchboards | 29 | 29 | 29 | |||
Sale of power to installed capacity ratio (GWh/MVA(*)no. of hours/year) | 0.52 | 0.50 | 0.47 | |||
Sale of power (GWh): Percentage of total sales: | ||||||
Residential customers | 25.8 | 25.7 | 25.8 | |||
Low income | 3.6 | 3.8 | 4.0 | |||
Regular | 22.2 | 21.9 | 21.8 | |||
Industrial customers (including COPEL Geração e Transmissão'sunregulated ones) | 38.2 | 38.7 | 38.5 | |||
Captive | 32.5 | 31.4 | 32.2 | |||
Unregulated (supplied by COPEL Geração e Transmissão S.A.) | 5.7 | 7.3 | 6.3 | |||
Commercial customers | 19.1 | 18.6 | 18.2 | |||
Rural customers | 7.7 | 7.6 | 7.7 | |||
Public agencies | 2.7 | 2.7 | 2.7 | |||
Public lighting | 3.6 | 3.7 | 3.9 | |||
Public services | 2.8 | 2.9 | 3.1 | |||
Own consumption | 0.1 | 0.1 | 0.1 | |||
Other utilities | 2.4 | 2.3 | 2.4 | |||
DEC(2) | 12.18 | 13.54 | 14.79 | |||
FEC(3) | 10.69 | 12.41 | 13.66 | |||
TELECOMMUNICATIONS | ||||||
Operational Performance and Productivity Indicators | ||||||
COPEL’s Telecommunications Infrastructure | 2008 | 2007 | 2006 | |||
Length of optical cables within the main ring (km) | 5,381 | 5,054 | 4,704 | |||
Length of self-sustained optical cables (km) | 6,629 | 5,571 | 4,542 | |||
Cities served | 197 | 181 | 170 | |||
Customers | 573 | 504 | 389 | |||
(1) | OBS: COPEL’s total power losses reached 7.3% of total available power (44,929 GWh). The calculation took into account technical and commercial losses, including basic network losses and losses under contracts signed by the Company. Even though COPEL’s commercial losses are low, due to an upward trend, the Company has taken preventive measures, such as inspections to check for illegal connections throughout its concession area. As an additional preventive measure, COPEL has expanded the number of centralized measuring facilities to 7,000 locations, thus improving service to needy areas and preventing illegal connections. |
(2) | DEC indicates the period of time, on average, in which each customer of a given group was deprived of power supply during the assessment period, taking into account outages at least 3 minutes long. |
(3) | FEC indicates the number of outages, on average, each customer of a given group suffered during the assessment period, taking into account outages at least 3 minutes long. |
(*) | Does not include basic network losses and contract losses. |
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1.7.2. Chart of shareholders and interests in other companies
1.8. Operational Structure
1.8.1. Generation
In 2008, in order to expand COPEL’s set of power plants, the Company incorporated the Palmas Wind Power Plant, owned by Centrais Eólicas do Paraná, located in the town of Palmas, and composed of five wind power generators with total power of 2.5 MW. COPEL has also carried on the following priority strategies:
- participation at power auctions, particularly those where projects within Paraná may be offered; and
- investment in small hydropower projects, by itself and under partnerships with private-owned companies, so as to promote sustainable development by means of the installation of projects which boost regional development.
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COPEL has implemented projects and conducted improvement works in the area of power generation – specially in the Governor José Richa (Salto Caxias), Governor Bento Munhoz da Rocha Netto (Foz do Areia), and Apucaraninha Hydroelectric Power Plants – with investments of R$ 24 million, in order to ensure greater reliability in the operation of COPEL's power generation facilities (which are listed in a table in Note 1 herein) and, thus, of the entire power system.
The Company started replacing the hydrological data sensors at the telemetry stations of its main power plants with better quality ones, taking advantage of the Company's fiber optics network, and also replacing cameras for real-time water level reading. The goal is to improve the quality of the hydrological data collection and improve safety and reliability in the operation of reservoirs.
Power Trading in 2008In 2008, in the Regulated Trading Environment (Ambiente de Contratação Reguladaor ACR), COPEL acquired:
- at the auction of power from new facility Jirau Hydroelectric Power Plant: 141.60 average MW, for delivery starting in 2013, at an average price of R$ 71.37/MWh, with a 30-year term;
- at the 6thauction of power from new facilities: 51.1 average MW (thermal), for delivery starting in 2011, at an average price of R$ 128.42/MWh, with a 15-year term;
- at the 7thauction of power from new facilities: 12.5 average MW (hydroelectric – Baixo Iguaçu facility), for delivery starting in 2013, at a price of R$ 98.98/MWh, with a 30-year term, and 304.16 average MW (thermal), for delivery starting in 2013, at an average price of R$ 145.23 MWh, with a 15-year term.
In the Free Trading Environment (Ambiente de Contratação Livreor ACL), new contracts for 496.5 average MW were signed, for delivery starting in 2013 and terms of 5 years or longer.
Generation ConcessionCOPEL’s power generation concession is established under:(i) Concession Contract no. 188/98, signed on 08/28/1998;(ii) Concession Contract no. 45/99, signed on 06/24/1999;(iii) ANEEL Resolution no. 278/1999, published on 09/29/1999;(iv) ANEEL Resolution no. 351/1999, published on 12/23/1999;(v) ANEEL Resolution no. 114/2000, published on 04/24/2000;(vi) Concession Contract no. 125/2001, signed on 10/25/2001;(vii) ANEEL Resolution no. 753/2002, published on 12/19/2002;(viii) ANEEL Resolution no. 757/2002, published on 12/19/2002; and(ix) Concession Contract no. 001/2007, signed on 07/03/2008.
Since 1999, all the Company’s facilities whose concessions expired (nine in total) had their concession contracts extended by the granting authority for another 20 years, pursuant to the applicable legislation. The Company expects the contracts for its other facilities, which haven't expired yet, to be extended for another 20 years from the respective expiration dates. Concession contracts for new facilities, such as COPEL’s Mauá Power Plant, cannot be extended.
Information about Concession Contract no. 045/1999 is featured below:
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Concession Contract no. 045/1999 | |||||
Type | Power Plant | Granted | Final term | Extension | New final term |
Hydroelectric | Gov. Bento Munhoz da Rocha Neto (Foz do Areia) | Decree 72,293, dated 05/24/1973 | 05/24/2003 | MME Ordinance no. 22, dated 01/25/2001 | 05/23/2023 |
Hydroelectric | São Jorge | Decree 75,033, dated 12/04/1974 | 12/12/2004 | MME Ordinance no. 249, dated 04/17/2003 | 12/03/2024 |
Hydroelectric | Apucaraninha | Decree 76,432, dated 10/13/1975 | 10/13/2005 | MME Ordinance | 10/12/2025 |
Hydroelectric | Guaricana | Decree 78,238, dated 08/13/1976 | 08/15/2006 | MME Ordinance no. 367, dated 08/18/2005 | 08/16/2026 |
Hydroelectric | Chaminé | Decree 78,238, dated 08/13/1976 | 08/15/2006 | MME Ordinance no. 367, dated 08/18/2005 | 08/16/2026 |
Hydroelectric | Gov. Ney Aminthas de Barros Braga (Segredo) | Decree 84,209, dated 11/14/1979 | 11/15/2009 | Under review by the MME | - |
Hydroelectric | Jordão River Diversion Project | (i) Decree 84,209, dated 11/14/1979 (ii) DNAEE Ordinance no. 476, dated 06/07/1994 | 11/15/2009 | Under review by the MME | - |
Hydroelectric | Gov. José Richa (Salto Caxias) | Decree 84,680, dated 05/02/1980 | 05/04/2010 | Under review by the MME | - |
Hydroelectric | Cavernoso | Decree 85,628, dated 01/07/1981 | 01/07/2011 | Under review by the MME | - |
Hydroelectric | Rio dos Patos | Decree 89,378, dated 02/14/1984 | 02/14/2014 | possible | - |
Hydroelectric | Gov. Parigot de Souza (Capivari/Cachoeira) | (i) Decree 56,027, dated 04/23/1965 (ii) Decree 69,475, dated 10/05/1971 | 05/25/1995 | MME Ordinance no. 195, dated 06/22/1999 | 07/07/2015 |
Hydroelectric | Mourão | Decree 53,419, dated 01/20/1964 | 01/26/1994 | MME Ordinance no. 195, dated 06/22/1999 | 07/07/2015 |
Hydroelectric | Chopim I | Decree 53,770, dated 03/20/1964 | 03/24/1994 | MME Ordinance no. 195, dated 06/22/1999 | 07/07/2015 |
Thermal | Figueira | (i) Decree 64,258, dated 03/21/1969 (ii) Decree 68,757, dated 06/16/1971 | 03/26/1999 | MME Ordinance no. 195, dated 06/22/1999 | 03/26/2019 |
The Company has already requested to ANEEL the extension of the concessions for the following power plants, which are scheduled to expire in 2009, 2010, and 2011: Governor Ney Aminthas de Barros Braga (Segredo) Hydroelectric Power Plant, Jordão River Diversion Small Hydropower Project, Governor José Richa (Salto Caxias) Hydroelectric Power Plant, and Cavernoso Small Hydropower Project. Further information is available in Note 1 herein.
The following tables feature information about the concession contracts for projects in which the Company holds interests:
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Concession Contract no. 188/98 | |||||
Type | Power Plant | Consortium | Granted | Final term | Extension |
Hydroelectric | Dona Francisca | Dona Francisca Energética SA - Dfesa | Decree 83,767, dated 07/24/1979 Decree dated 08/08/1997 Decree dated 06/15/98 | 08/27/33 | possible |
Concession Contract no. 125/01 | |||||
Type | Power Plant | Consortium | Granted | Final term | Extension |
Hydroelectric | Santa Clara | Centrais Elétricas do Rio Jordão - Elejor | Decree dated 10/23/2001 | 10/24/36 | possible |
Fundão | |||||
Concession Contract no. 001/07 | |||||
Type | Power Plant | Consortium | Granted | Final term | Extension |
Hydroelectric | Mauá | Consórcio Energético Cruzeiro do Sul | Decree dated 06/28/2007 | 07/02/42 | not possible |
ANEEL Resolution no. 278/99 | ||||
Type | Power Plant | Consortium | Final term | Extension |
Wind power | Palmas | Centrais Eólicas do Paraná Ltda. | 09/28/29 | possible |
ANEEL Resolution no. 351/99 | ||||
Type | Power Plant | Consortium | Final term | Extension |
Natural gas-powered thermal | Araucária | UEG Araucária Ltda. | 12/22/29 | possible |
ANEEL Resolution no. 114/00 | ||||
Type | Power Plant | Consortium | Final term | Extension |
Small hydropower plant Foz do Chopim | Foz do Chopim | Foz do Chopim Energética | 04/23/30 | possible |
ANEEL Resolution no. 753/02 | ||||
Type | Power Plant | Consortium | Final term | Extension |
Small hydropower plant | Fundão I | Centrais Elétricas do Rio Jordão - Elejor | 12/18/32 | possible |
ANEEL Resolution no. 757/02 | ||||
Type | Power Plant | Consortium | Final term | Extension |
Small hydropower plant | Santa Clara I | Centrais Elétricas do Rio Jordão - Elejor | 12/18/32 | possible |
1.8.2. New power generation projects
Mauá Hydroelectric Power Plant
Note 17-e features detailed information about the Mauá Hydroelectric Power Plant, which is part of the Growth Acceleration Program of the Federal Government.
São Jerônimo Hydroelectric Power PlantThe São Jerônimo project comprises the future São Jerônimo Hydroelectric Facility, on the Tibagi River, in the State of Paraná. It will have two generating units rated 165.5 MW each, for a total of 331 MW of installed capacity, and minimum assured power of 165.5 average MW. The implementation of the project is based on a concession for the use of public property won by the São Jerônimo consortium at ANEEL Auction 002/2001. The beginning of construction work depends on National Congress authorization, pursuant to article 231, 3rd paragraph, of the Federal Constitution, since the facility’s reservoir reaches Indian areas.
Dois Saltos Small Hydropower ProjectThis project comprises the use of the existing infrastructure (a reservoir) of the Rio dos Patos Small Hydropower Project, on the Rio dos Patos River, in the State of Paraná. The new facility will have two generating units rated 13.75 kVA each, for a total of 25.0 average MW of installed capacity. The implementation of this project is dependent on ANEEL approval and later approval by the environmental agencies.
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1.8.3. Transmission
COPEL’s transmission business primarily involves the transport and transformation of power, and the construction, operation, and maintenance of all power transmission substations and lines.
Under the concept of power transmission set forth by the current power sector framework, which comprises lines and substations rated 230 kV and over, the Company operates, under the coordination of the National System Operator (Operador Nacional do Sistemaor ONS), a part of the National Interconnected Power System in southern Brazil. COPEL's system comprises 30 substations. Through wholly-owned subsidiary COPEL Geração e Transmissão S.A., COPEL holds three transmission concessions, comprising:
- the existing basic network and connection facilities as of December 31, 1998, in addition to several facilities authorized afterwards and which have been incorporated into the concession;
- the 230-kV transmission line connecting the Bateias substation, in the town of Campo Largo, and the Jaguariaíva substation, with total length of 130 km; and
- the 230-kV transmission line connecting the Bateias and Pilarzinho substations, with total length of 31.6 km, currently under construction; the concession was won at an auction and the corresponding contract was signed in 2008.
Transmission System: major investments and works in 2008
In order to sustain the quality of supply to the customers in Paraná in light of growing demand for power, COPEL invested in 2008 R$ 163.7 million in the construction, upgrade, and repair of transmission substations and lines throughout all regions of the State.
The Company added to its existing transmission system 358.34 MVA of substation transforming capacity, 26.6 km of new transmission lines, and upgrades on 182.15 km of existing transmission lines.
The Expenditure Program for the Basic Network Transmission System and for the 69 and 138 kV networks was carried on, and several projects are scheduled to be completed in 2009 and 2010.
COPEL, in order to expand its Basic Network transmission system, has continued to monitor transmission assets which may become available through ANEEL auctions.
Transmission rate review
In 2007, through Ratification Resolution no. 487/2007, ANEEL ratified the results of the first periodic rate review of COPEL Transmissão S.A., which covered only new facilities (authorized facilities). The review rate was set at -15.08%, applicable to the RBNI (New Facilities within the Basic Network, which correspond to facilities authorized by ANEEL since 2000) and RCDM (New Connection Facilities and Remaining Transmission Facilities, also authorized since 2000) installments effective as of July 1st, 2005.
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ANEEL postponed the rate review of transmission utilities from 2005 to 2007, which resulted in revenue discrepancies from July 1, 2005 through June 30, 2007. Due to retroactive effects, new revenues will be offset over 24 months, through the contract mechanism of adjustment installments, and will be incorporated into gross transmission revenues.
The RBSE (Existing Basic Network Facilities) and RPC (Connection Network and other Existing Transmission Facilities) installments have been excluded from the rate review process on account of clause 6 of the concession agreement, and their revenues were restated according to the IGP-M inflation index for the period. On account of this adjustment, the impact on COPEL Transmissão's total revenues was 5.69% .
The Annual Allowed Revenue (Receita Anual Permitidaor RAP) was restated since July/2008, under ANEEL Ratification Resolution no. 670/2008, according to the accumulated IGP-M inflation index for the period, which was 11.52% .
Pursuant to Concession Agreement 060/2001, which covers 95% of COPEL's transmission revenues, the second rate review is scheduled for June 30, 2009, and the adjusted rates will be in effect as of July 1, 2009. The concession agreement for the Bateias/Jaguariaíva, on the other hand, does not provide for rate reviews, as its rate is annually restated according to the IGP-M inflation index.
Transmission Concession
COPEL operates transmission assets (Basic Network) under the following concession agreements: (i) Concession Agreement no. 060/2001, signed on June 20, 2001; (ii) Concession Contract no. 075/2001, signed on August 17, 2001; and (iii) Concession Agreement no. 006/2008, signed on March 17, 2008.
Agreements no. 075/2001 and 006/2008 provide for the possibility of 30-year extensions upon expiration. Concession agreement no. 60/2001 provides for a 20-year extension.
1.8.4. Distribution
COPEL’s power distribution business comprises the provision, operation, and maintenance of power distribution infrastructure and the rendering of related services. These activities are aimed at supplying over 3.5 million customers, in 1,119 locations in 392 out of 399 municipalities in Paraná, in addition to the town of Porto União, in the state of Santa Catarina. In addition to operating and maintaining facilities rated up to 34.5 Kv due to the split of COPEL Transmissão S.A., pursuant to ANEEL Authorization Resolution no. 1,120, dated November 27, 2007, as of 2008 COPEL Distribuição S.A. took over the facilities rated 69 and 138 kV, which used to be run by COPEL Transmissão S.A.
In addition to working to supply customers and improve the power distribution system, COPEL Distribuição has also focused on socially-oriented activities, aimed at providing universal access to electricity.
To better serve its customers, COPEL has a toll-free call center, operated by Company employees and by outsourced physically-challenged employees from several associations of people with disabilities throughout Paraná; a virtual customer service office on the internet; 113 offices throughout the state; and 15 mobile service stations, which operate in different neighborhoods in the major cities of the state and in locations with no permanent office; the Company also makes available prepaid envelopes at post offices so customers can send requests and documents to COPEL free of charge.
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Market share and market growth in 2008
In 2008, COPEL’s distribution market recorded a 6.0% increase in power consumption and a 2.5% increase in the number of customers (86,479 new customers).
Total power consumption billed by COPEL in 2008 increased 4.2%, for a total of 21,313 GWh, against 20,458 GWh in 2007. Consumption by the Company’s captive market, which accounted for 92.1% of its sales, grew 6.0% in 2008, while consumption by unregulated customers fell 18.9% (due to the expiration of certain agreements), and supply to small utilities grew 4.6% . COPEL’s grid market, which comprises all customers connected to the distribution grid within the Company’s concession area, grew 5.6% .
During the year, power market performance was influenced mostly by the residential, industrial, and commercial customer categories, which accounted for 25.2%, 37.3%, and 18.6% of total billed consumption, respectively, on account of the following factors: greater availability and better terms of credit, due to interest rate cuts, good performance of the economy in the first half of the year, and increased consumption due to the high sales of electric appliances during a period of rising household incomes, which boost overall consumption.
In 2008, 86,479 new customers were connected to COPEL’s grid, out of which 68,941 were residential, 4,860 were industrial, 8,415 were commercial, 2,099 were rural, and 2,164 were customers from other categories. In December 2008, the Company billed 3,523,557 customers, of which 2,782,404 were residential, representing a 2.5% increase over the previous year. The residential category consumed in 2008 5,379 GWh, with 4.6% growth over 2007. Average consumption by residential customer was 161.1 kWh/month, with a 2.0% increase over 2007. Higher incomes and greater availability of credit, which supported the sales of electric and electronic equipment, contributed to this growth.
Total industrial consumption billed by COPEL in 2008 was 7,955 GWh, with 2.8% growth over 2007. This performance was influenced mostly by the following industrial segments: automotive, printing, machinery and equipment, and pulp and paper. At the end of 2008, COPEL billed 63,655 industrial customers, a figure 8.3% higher than the one for 2007.
With 6.6% increase over 2007, commercial customers consumed in 2008 a total of 3,967 GWh. This category comprises, in addition to retail and wholesale, a wide variety of economic activities, from lodging to restaurants and to banking services. The continuous connection of new high consumption customers (shopping malls and supermarkets) and the increase in economic activity during the first nine months of the year contributed to the good performance of the commercial segment. A total of 8,415 new commercial customers were connected to COPEL’s grid, for a total of 294,866 customers as of December 31, 2008.
Rural customers recorded a 5.5% increase in billed consumption, for a total of 1,606 GWh in 2008.
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Average rural consumption increase 4.9% over 2007, reaching 398.7 kWh/month. A total of 335,666 rural customers were billed by COPEL as of December 2008, a figure 0.6% higher than the one recorded in the previous year.
The remaining customer categories, i.e., public agencies, public lighting, public services, and own power consumption, round out COPEL’s power distribution market, and recorded 2.9% growth and consumption of 1,911 GWh in 2008.
COPEL Distribuição’s rate review
The periodic rate review process is designed to review, after a period previously set in the concession agreement (usually four years), the economic and financial balance of the concession. While in annual rate adjustments the “Portion B” of revenues is restated according to the IGP-M inflation index, the periodic rate review calculates the revenues required for the coverage of efficient operating costs and the adequate return on capital invested, with caution.
The periodic rate review is conducted through the calculation of the rate adjustment and the establishment of the X Factor. The first stage of the process is to determine rates which are compatible with the coverage of efficient operating costs and a fair and adequate return on the capital invested with due caution. The second stage is to determine the X Factor, whose goal is to share economies of scale with customers.
Under ANEEL Ratification Resolution no. 663, dated June 23, 2008, COPEL was imposed a provisional average reduction of 3.35% on its rates for sales to final customers, effective June 24, 2008. Out of this total, minus 7.17% correspond to the Annual Rate Review, and 3.82% to financial components outside the range of the annual rate review. Due to the exclusion from the rate basis of a negative 3.27% financial component, which had been included in the 2007 annual adjustment, customers will be charged, from June 24, 2008 to June 23, 2009, an average increase of 0.04% .
The second stage comprises the calculation of the X Factor, which is the establishment of efficiency goals for the second rate period and which will reflect on rates. Based on the methodology set forth under Resolution no. 234/2006, the preliminary calculation of COPEL Distribuição's X Factor was 2.09% .
The published figures are still not final, since the review methodology was subject to ANEEL Public Hearing no. 52/2007. Thus, the Reference Company set for COPEL, in the amount of R$ 686.0 million, and the 2.09% X Factor should be changed. The return on investment, in the amount of R$ 590.4 million, resulting from the return basis methodology, as well as expenses outside the control of the Company (Portion A) shall be maintained, since their calculation methodologies haven't changed.
ANEEL Regulatory Resolution no. 338/2008 changed the provisions of Regulatory Resolution no. 234/2006, which regulates the matter, and established new general concepts, applicable methodologies, and initial procedures for the conduction of the second cycle of periodic rate review for power distribution utilities. Thus, in the next rate review, scheduled for June 2009, in addition to the application of the parametric adjustment formula and to the transfer to customers of costs outside the control of the Company (Portion A), the percentages published in 2008 for the rate review (ANEEL Ratification Resolution no. 663, dated June 23, 2008) will be reviewed, in light of new figures for the Reference Company and X Factor.
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Distribution Concession
The Company runs its distribution business pursuant to Concession Agreement no. 46/1999, signed on June 24, 1999.
The term of the concession was extended by MME Ordinance no. 196, dated June 22, 1999, until July 7, 2015. The contract provides for another 20-year extension.
1.8.5. Telecommunications
COPEL provides communications and telecommunications services and conducts specific studies and projects, within an area comprising the State of Paraná and Region II of the General Grants Plan, pursuant to Act no. 31,337 by the National Telecommunications Agency - ANATEL, which reports to the Ministry of Communications. The rendering of these services is authorized for an indeterminate period of time, on a non-exclusive basis, both nationally and internationally.
COPEL Telecommunications offers multimedia communication services since 2002.
Fiber optics network: major investments in 2008
In 2008, the Company added 1,058 km of optical urban access cables, thus significantly increasing the capillarity of its optical network. This investment marks the completion of the Paraná Digital program, whose goal is to take the benefits of information technology and the internet to the State's public schools. Out of the 2,101 schools which have been interconnected, 1,222 are using fiber optics and 886 using satellite.
Through this network, COPEL provides speed and reliability to 573 companies which invest in Paraná and rely on its services. In a recent survey, 98% of these customers said they were satisfied or very satisfied with COPEL Telecommunications, which currently serves customers in several different business areas such as schools, banks, supermarkets, ISPs, industries, public agencies, shops, and telephone and cell phone operators, providing a range of services that include dedicated communications channels, broadband internet, private IP/MPLS-VPN networks, videoconferencing, internet hosting with cutting edge technology such as SDH, PI/MPLS, and Giga Ethernet over fiber optics.
1.8.6. Corporate Partnerships
COPEL holds interests in other companies or consortiums in several business areas. In order to focus on investments most in sync with its core business and its strategic frame of reference, the Company is carrying on a review of its portfolio.
COPEL currently holds five partnerships in independent power producers, all of which are operational, with a total installed capacity of 887.4 MW. It also holds interests in the sanitation, gas, telecommunications, and service sectors. Note 1 features detailed information about COPEL's interests in other companies.
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In the power sector, COPEL has interests in seven power generation projects with total installed capacity of 1,790MW, as shown below:
Power Plants | Installed Capacity | Partners | PPA signed with | |||||
Dona Francisca | 125.0 | COPEL - 23.03% Gerdau - 51.81% Celesc - 23.03% Desenvix - 2.12% | COPEL Geração | |||||
Foz do Chopim | 29.1 | COPEL - 35.77% Silea Participações - 64.23% | Free customers | |||||
Elejor | Santa Clara PP | 120.16 | COPEL - 70.00%(* ) Paineira - 30.00%(* ) | COPEL Distribuição( **) Free customers** | ||||
Santa Clara I SHP | 3.6 | |||||||
Fundão PP | 120.16 | |||||||
Fundão I SHP | 2.47 | |||||||
Eólica do Paraná | 2.5 | COPEL - 30% COPEL Geração e Transmissão - 70% | Free customers | |||||
Araucária | 484.5 | COPEL - 80.00% Petrobras - 20.00% | ( *** ) | |||||
Lajeado (Investco S.A.) | 902.5 | CEB Lajeado - 16.68% EDP Lajeado Energia - 23.34% Paulista Lajeado Energia - 5.91% Lajeado Energia - 39.28% Finam - 4.15% EDP Energias do Brasil - 2.20% COPEL - 0.89%(****) Furnas Centrais Elétricas - 0.23% Other - legal entities - 6.17% Other - individuals - 2.99% | ( ***** ) | |||||
Total | 1,790 | |||||||
(*) Common shares.
(**) The Santa Clara and Fundão power plants have signed PPAs with COPEL Distribuição, and the Santa Clara and Fundão SHPs sell power to free customers.
(***) The Araucária Thermal Power Plant is currently leased to partner Petrobras.
(****) This interest refers to the total stock capital. COPEL only holds class A preferred shares (PNA).
(*****)The assets of the Lajeado Hydroelectric Power Plant are leased to its other concession holders in proportional shares of the existing assets.
COPEL also holds interests in companies in the gas, telecommunications, sanitation, and service sectors, as shown below:
Company | Sector | Partners | ||
Compagas | gas | COPEL - 51.0% Gaspetro - 24.5% Dutopar - 24.5% | ||
Sercomtel S.A. Telecom | telecommunications | COPEL - 45.0% City of Londrina - 55.0% | ||
Sercomtel S.A. Celular | telecommunications | COPEL - 45.0% City of Londrina - 55.0% | ||
Dominó Holdings S.A. | sanitation | COPEL - 45.0% Andrade Gutierrez - 27.5% Daleth Participações Ltda. - 27.5% | ||
Escoelectric Ltda. | services | COPEL - 40.0% Lactec - 60.0% | ||
COPEL-Amec Ltda(*) | services | COPEL - 48.0% Amec - 47.5% Lactec - 4.5% | ||
Carbocampel S.A. | coal mining | COPEL – 49.0% Carbonífera Cambuí – 51.0% | ||
(*)Currently being liquidated |
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1.9. COPEL’s Products: Market Share | ||||||
Market share in 2008 | ||||||
Main Products | Brazil | Southern Region | Paraná | |||
Power generation(1) | 4.6% | (2)26.7% | (2)60.5% | |||
Power transmission(2) (3) | 2.6% | 14.5% | 45.2% | |||
Power distribution(4) | 6.8% | 34.2% | (5)96.8% | |||
Gas distribution | 3.9% | 32.6% | 100.0% | |||
(1) | share of assured power in the National Interconnected System in December 2008. |
(2) | does not include the Itaipu Power Plant. |
(3) | refers to transmission revenues. COPEL ranked 10thamong the 40 largest transmission utilities in Brazil. |
(4) | (3) share of supply to the captive market. |
(5) | estimated data. |
1.10. Capital Raising in 2008 for Projects and Programs
In 2008, the Company engaged financing agents in order to raise funds for the following projects and programs:
Mauá Hydroelectric Power Plant: On November 17, 2008, the Board of Officers of the National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Socialor BNDES) approved financing for the Mauá Hydroelectric Power Plant.
Luz para TodosProgram: In 2008, Centrais Elétricas Brasileiras S.A. – Eletrobrás released R$ 37.2 million for construction work under theLuz para Todos(Light for All) Program.
Finep: In 2008, the Study and Project Financing Agency (Financiadora de Estudos e Projetosor FINEP) released R$ 2.3 million for the Research and Development (R&D) Program of COPEL Geração e Transmissão.
•Corporate RatingsOn October 22, 2008, Fitch Ratings raised COPEL’s long-term national rating and the rating of its fourth issue of debentures from "AA- (bra)" to "AA (bra)". At the same time, it also raised the long-term national rating of the Company’s third issue of debentures from “AA (bra)” to “AA+ (bra)”.
On November 26, 2008, Moody's Latin America raised COPEL’s corporate rating from “Ba2” to “Baa3” in the global scale and from "Aa2.br" to "Aa1.br" in the Brazilian National Scale. Moody’s also raised the rating for COPEL’s third issue of debentures from “Ba1” to “Baa3” in the Global Scale and confirmed its “Aa1.br” rating in the Brazilian National Scale.
1.11. Corporate Responsibility and Commitment to Stakeholders
Commitment and Dialogue
In 2007-2008, the stakeholders directly and systematically engaged by the Company were: COPEL’s internal audience, customers, suppliers, public agencies, shareholders and investors, society at large, and environmental organizations. This year stood out as a period in which the dialogue with COPEL’s internal audience was intensified, as part of the second cycle of Rule AA1000, with the categorization and the further development of specific interest groups, in order to address critical matters associated to each group, particularly in the areas of racial, ethnic, gender, and disabilities issues.
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The third cycle of implementation of Rule AA1000, which had been postponed until 2008, allowed it to be better aligned with the new model of Management for Sustainability.
Dialogue Channels
The full range of COPEL’s dialogue channels is available online, at www.copel.com.
The response to inquiries received through the Contact Us channel is also available through the copel@copel.com e-mail address. COPEL has been committed to promptly responding to every inquiry, an approach which has encouraged further use of this channel by stakeholders.
Dialogue with COPEL’s Internal Audience
COPEL maintains an annual Organizational Climate Survey as a direct channel for communication with all employees. The latest surveys indicated the following factors on which COPEL must work collectively to improve performance: Leadership and Professional Growth and Development. As for Leadership, COPEL has launched the Organizational Environment Management Program, designed to address the possibilities of improvement suggested by employees and managers regarding behavior requirements (relationship, leadership, or communication factors) which have an impact on workplace relations in their areas. As for Professional Growth and Development, the Company’s Training and Development and Career and Wage Planning Departments held lectures to raise employees’ awareness about their subject matters.
Under the Promotion of Diversity Program, during the period from 2007 to 2008 several dialogue sessions were held with groups which present special needs and characteristics within the Company.
The most critical topics were raised by the disabilities group and involve mostly the physical and architectural unsuitability of the Company’s facilities, the lack of translation of events and audiovisual materials for the hearing impaired and of printed materials for the visually impaired, the lack of workforce training to employ people with disabilities effectively, and the achievement of their full potential. These issues will be addressed in specific action plans. One of these will be geared towards the promotion of diversity and another one will focus specifically on accessibility issues.
Dialogue with Suppliers
COPEL makes available to its suppliers within its concession area a dialogue channel, through strategic points throughout the State of Paraná, which provides to all participants, such as suppliers, contract managers, and worksite supervisors, an open and objective communication channel, contributing to the progress of the Company’s value chain, which, through the use of the Ethos indicators for Sustainability and Contract Management, advanced significantly during the year.
In 2008, in light of State Decree no. 6,252/2006, which addresses sustainability in procurement, COPEL established a goal of engaging in dialogue with 126 suppliers, i.e., 10% of the total. The Company, however, went beyond that. Taking into account suppliers, contracts currently in effect, and the service providers of other stakeholders, COPEL exceeded the estimated figures, reaching 251 suppliers.
In direct dialogue with suppliers, the Company addresses basic sustainability concepts and issues concerning contract management, workplace safety, and the importance of social balance sheets. In each dialogue session, suppliers were given the opportunity to contribute countless suggestions, resulting in actions with the Company regarding processes and relationships involving suppliers of products or services.
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A survey conducted among COPEL’s suppliers indicated the values most upheld by the Company during the year: workplace safety, ethics, and environmental responsibility. Practices under sustainability and corporate responsibility policies; information made available to suppliers through COPEL’s website; service through the Company’s record of suppliers; participation of suppliers in electronic bidding through COPEL's website; dialogue, welcoming attitude, and great professionalism and service provided by the Company as well as corporate reliability and credibility are all factors which have been positively evaluated in this survey. COPEL’s notices to prospective bidders have been rated excellent as far as clarity, objectivity, and quality standards required of its suppliers. The high level of bureaucracy involved in bidding processes was considered an aspect that requires improvement. COPEL’s occasional failures in making its actions in the social and environmental areas known have been pointed out by suppliers as negative aspects.
COPEL’s contract managers held regular meetings with representatives of hired companies, to discuss relevant technical, administrative, workplace safety and medicine, and environmental and labor legislation aspects. They also held periodic meetings with the unions representing the contractors working on Company projects.
In 2009, COPEL aims to engage in dialogue with another 10% of the members of its value chain, repeating the cycle of dialogue and development within its concession area. Thus, the Company set new goals towards a permanent communication channel with its suppliers, tied to the addition of new companies, to develop its productive value chain.
Dialogue with Shareholders and Investors
COPEL maintains an effective channel for communication with its shareholders and investors which comprises its website (www.copel.com/ri), e-mail (ri@copel.com and acionistas@copel.com), a call center (0800-41-2772), and quarterly publications ("Informe RI COPEL", "Quarterly Report", and other reports and releases), which are mailed to capital market professionals and shareholders and also made available online at the Company’s website.
COPEL’s Doors Open to You
Developed as a means of establishing dialogue with customers and the community, the “COPEL’s Doors Open to You” Program has consolidated COPEL’s proactive approach towards greater contact and dialogue with the public.
Since its inception in 2005, in compliance with the standards of Rule AA1000 for direct dialogue with stakeholders, the program has held events in all regions of the State which are open to the participation of any interested individual or organization. These events have also been attended by regional and local Company managers. The goal of the program is to provide stakeholders with information about COPEL's operations in each region; to provide commercial support through mobile offices; and to educate people about the safe and efficient use of power, customers' rights and duties, and access to social programs. Informative materials are also distributed. Through this program, COPEL was able to identify within the community the existence of specific doubts about the proper use of power, the demand for certain services, and the need for changes in the Company’s internal customer service processes.
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The Program’s events are made public through invitations to community associations and through advertising in local newspapers and on the radio. In 2008, COPEL held 15 events in large, medium, and small cities throughout the State, with 380 participants.
Surveys among Stakeholders
The main goal of these surveys is to evaluate the quality of the services rendered by the Company, its brand, and its corporate image within its business segment by collecting specific feedback comprising the expectations, opinions, and wishes of stakeholders. The results of these surveys support the strategic decisions by COPEL’s senior management and point out positive aspects and opportunities for improvement. These surveys have been conducted every year or, at worst, every two years, since 1999. In 2008, nine surveys were conducted, covering the following segments: customers and market participants, shareholders, suppliers, internal audience, environmental organizations, society at large, media, government, and regulatory agencies.
1.12. Main Certifications and Accolades
Below are COPEL’s most important certifications and accolades in 2008:
Award/Accolade/Certification | Sponsor/Certifying Agent | |
2008 Paraná Corporate Profile Award (Premio Perfil Empresarial do Paraná 2008): 2008 Company of the Year in the Social and Environmental Areas: 1stRanking of Social and Environmental Balance Sheets in the Social and Environmental Areas and 3rdRanking of Corporations. COPEL - Companhia Paranaense de Energia: 1stplace in the segment of Energy and Related Industries; 1stplace in Net Income; 1stplace in Actual Shareholders’ Equity; 2ndplace in Net Operating Revenues; 2ndplace in Total Assets, among all corporations in Paraná, according to a review of balance sheets published in the State Register in 2008. (in recognition for a management model geared towards social and environmental sustainability.) | Social Studies Foundation of Paraná (FESP), Federation of Commercial and Corporate Associations of Paraná (FACIAP), National Federation of Accounting Firms and Support, Inspection, Information, and Research Companies (FENACON), Union of Accounting Firms and Support, Inspection, Information, and Research Companies in Paraná (SESCAP), Indicare Institute of Corporate Analyses and Certifications, and Indústria & Comércio Press Group. | |
Top of Mind Award in the categories of “Great Companies of Paraná” (tenth time overall and eighth time in a row), “Company Where You’d Like to Work", and "Company Most Concerned with Social Issues". | AmanhãMagazine and Bonilha Survey Institute | |
ABRADEE Award for Best Power Distribution Utility in Southern Brazil, among utilities with over 500 thousand customers (awarded for the third time). | Brazilian Association of Power Distribution Utilities (ABRADEE). | |
2008 Greatest and Leading Companies Awards (based on the review by independent auditors PricewaterhouseCoopers of published financial statements): “3rd Largest Company in Paraná”, ranking 5thamong the 500 largest companies in Southern Brazil; and “Largest Company in the Energy Industry". | AmanhãMagazine | |
Expo Money Award 2008, in the category of “Respect to Individual Investors” | Expo Money 2008 | |
2007 Innovation Champions Awards, in the "Energy" category, for the development of new products and services. | AmanhãMagazine and Edusys | |
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2. CORPORATE GOVERNANCE
With the vision of being the best company in the segments in which it operates and a reference in corporate governance and corporate sustainability, Companhia Paranaense de Energia - COPEL acts in a socially responsible manner, in pursuit of operational excellence and sustainable growth.
In order to improve its best corporate governance practices, COPEL sets its goals with a focus on sustainability and on striving for corporate responsibility, with sustainable economic development, international governance and management standards, and the promotion of social and environmental development.
While adopting as a parameter the framework proposed by the Brazilian Corporate Governance Institute (Instituto Brasileiro de Governança Corporativaor IBGC), in its Code of Best Practices, and complying with the legislation applicable to mixed-capital companies, COPEL seeks to direct its actions in a transparent and reliable manner, within an environment where the Company’s management feels at ease to conduct business with transparency, ethics, respect, social and environmental responsibility, and safety.
COPEL adopts internal by-laws for all of its collegiate bodies, containing guidance for the treatment of potential conflicts of interest, an issue which is also addressed by the Company's Code of Conduct.
COPEL’s commitment to the ten principles of the United Nations’ Global Compact has been continuously reaffirmed and validated by the Company’s practices, aimed at protecting and ensuring the dignity of labor, the transparency in management, the honesty in financial issues, and the protection of the environment. Furthermore, COPEL has also contributed to the spread and fulfillment of the Millennium Development Goals, which are aimed at fighting poverty, famine, disease, illiteracy, environmental degradation, and discrimination against women, and which are scheduled to be met by 2015.
A management self-evaluation workshop held in 2008, with the participation of senior managers, management assistants and advisors, junior managers, and other professionals, led the Board of Officers, upon approval by the Board of Directors, to inform to the Company’s employees the strategies adopted by senior management, in order to ensure their effort towards the achievement of the proposed corporate goals, and to direct the current Management Excellence Program towards sustainability, in order to standardize organizational criteria and processes, improve management, and monitor the Company's performance.
2.1. Corporate Governance Structure and Best Practices
Tag-Along Rights
COPEL ensures tag-along rights to its minority holders of common shares, guaranteeing a minimum price of 80% of the amount paid for the shares in the controlling stake sold.
COPEL Participações' split and dissolution
In 2007, COPEL began its corporate restructuring process, in order to meet regulatory requirements and achieve a more transparent and cost-effective structure. Thus, ANEEL Authorization Resolution no. 1,120/2007, dated November 27, 2007, authorized the split and dissolution of COPEL Transmissão S.A., which was completed on December 1, 2007, in order to meet the schedule of COPEL Distribuição S.A.’s rate review.
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In 2008, as the corporate restructuring continued, COPEL obtained ANEEL authorization to split and then dissolve COPEL Participações S.A., transferring its assets to COPEL’s Parent Company and to COPEL Geração e Transmissão S.A.. The transaction was approved by ANEEL under Authorization Resolution no. 1,683, dated November 25, 2008, and implemented on December 1, 2008. Based on an appraisal report, the book value of the net assets transferred to COPEL (Parent Company) was R$ 865.5 million, while the book value of the net assets transferred to COPEL Geração e Transmissão S.A. was R$ 453.4 million. The terms of the corporate transaction are set forth in article 8 of Law no. 10,848/2004, which changed article 4 of Law no. 9,074/1995.
Organizational Chart
The diagram below features the new organizational structure, with only three wholly-owned subsidiaries, and the official committees and councils responsible for supervising, implementing, and auditing COPEL’s economic, environmental, social, and related policies:
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Senior Management Compensation
COPEL specifies, in Shareholders’ Meetings, the stakes held in the Company and the individual or aggregate compensation earned by its senior management, highlighting changes in these stakes during each year, explaining the variable compensation mechanisms, as the case may be, and their impact on the Company’s results.
Internal Controls
The Audit Committee is in charge of reviewing and supervising the internal control and risk management systems of the Company, and their effectiveness is reviewed annually, at minimum.
2.2. Corporate Governance is Made with Energy - Main Activities in 2008
Admittance to BOVESPA’s Level 1
COPEL qualified for Corporate Governance Level 1 of BOVESPA’s Special Listing Segments, which lists only companies which are formally committed to best management practices, such as ethical conduct and full transparency of information disclosed to the market.
New Code of Conduct
After public hearings, COPEL released its new Corporate Code of Conduct, whose goal is to guide the actions of all people working on behalf of COPEL, such as employees, managers, and outsourced labor, who are bound to abide by its provisions and to fulfill its contents.
New Corporate Website
COPEL launched a new version of its website, with significant improvements in the Investor Relations, Corporate Governance, and Sustainability sections.
Compliance with IBGC’s Questionnaire
COPEL reached in 2008 a level of 80.4% compliance with the IBGC’s questionnaire, compared to 56.4% compliance at the beginning of its Corporate Governance system’s improvement process, in 2005.
2.3. General Shareholders’ Meeting
The General Shareholders' Meeting is the forum in which shareholders exercise their power to decide on all matters connected to the Company’s corporate purpose and to take measures deemed convenient for its defense and its accomplishment.
The General Shareholders’ Meeting is held in the first third of each year. Shareholders may convene, however, whenever deemed necessary, at Extraordinary Shareholders' Meetings, which have usually been held twice a year.
2.4. Board of Directors
The role and the powers of the Board of Directors are set forth by its own charter, by COPEL’s by- laws, and by the Corporate Law. All members of the Board are elected for simultaneous two-year terms, and may be reelected. One of its members is a Company employee, appointed by the other employees, and two others are appointed by BNDES Participações S.A. - BNDESPAR, on account of a shareholders’ agreement. Among chief officers, only the Chief Executive Officer is a member of the Board of Directors, acting as chairman of the Board. The positions of chairman of the Board of Directors and Chief Executive Officer are held by the same person.
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Out of the nine members of the current Board of Directors, five are considered independent, pursuant to the Sarbanes-Oxley Act, one of whom is a financial expert and chairman of the Audit Committee, a permanent advisory body, which reports directly to the Board.
In 2008, the Company carried on the formal mechanism for the periodic evaluation of the Board of Directors and its members individually. Regular meetings of the Board of Directors are held four times a year. Members may convene, however, whenever deemed necessary, at extraordinary meetings of the Board, which have usually been held three times a year. There are no specific rules or requirements concerning economic, environmental, and social issues. Company management takes these concerns into account in the decision-making process, and material issues, on account of subject matter or figures involved, are submitted to the Board of Directors.
The duties of COPEL's Board of Directors include the mission of protecting and adding value to the Company's assets and maximizing return on investment, without neglecting its nature as a mixed-capital company, thus always promoting sustainable development.
To operate effectively, the Board interacts with other collegiate bodies, requesting periodic presentations and reports on different issues, and with shareholders as well, in order to enable the fulfillment of the sustainability goals set by COPEL and of its vision to become the best company in the business segments in which it operates and a reference in corporate governance and sustainability.
2.5. Audit Committee
The Audit Committee is composed of three independent members who are also members of the Board of Directors, pursuant to the Sarbanes-Oxley Act, and who hold two-year terms. Among its duties, set forth in the Sarbanes-Oxley Act and in its charter, the Committee is responsible for reviewing and supervising the process of preparation of quarterly and annual financial statements and the internal control and risk management procedures, ensuring their quality and efficiency. In the performance of its duties, the Committee must report to the Company’s Board of Directors any violation of legal and regulatory rules which may place the continuity of COPEL’s business at risk.
The Audit Committee holds quarterly meetings with the Fiscal Council, to review the Company's financial statements. Regular meetings of the Committee take place every two months. Members may, however, whenever deemed necessary, call meetings, which have usually been held ten times a year, with the chief officers of the Company, with independent auditors, and with internal audit members to verify the implementation of their recommendations or to obtain answers to any inquiries, including any issues involving the planning of audit work, the suitability of the resources allocated to any such audit, and any other issues deemed material.
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The Committee evaluates such aspects as efficiency in the use of resources and in setting controls that protect the Company against potential losses in light of the risks of the respective activities; the issue of reports on the suitability of reporting and decision-making processes; and compliance of the Company’s operations and businesses with the law, regulations, and respective policies.
2.6. Fiscal Council
The members of the Fiscal Council are also elected at a general shareholders’ meeting. It is a permanent body composed of five members and five alternates, who hold one-year terms. Three members are appointed by the controlling shareholder, one by minority holders of common shares, and another one by minority holders of preferred shares. Its role and powers are set forth by COPEL’s by-laws, by its own charter, and by the Corporate Law. The Fiscal Council convenes quarterly to carry out its main duty, which is to review and report on the Company’s quarterly and annual financial statements. Under special circumstances, however, it may assemble to address other issues within their powers, whenever necessary, provided it is summoned by its chairman. The members of this Council, or at least one of them, participate in general shareholders’ meetings, in Board of Directors’ meetings, and in Audit Committee’s meetings which address matters within their competences.
2.7. Board of Officers
The seven members of the Board of Officers are elected by the Board of Directors for three-year terms. They are responsible for executive duties within the Company, and are exclusively charged with representing it. Their individual powers, duties, and responsibilities are set forth by the Company’s by-laws, and their conduct is regulated by an internal charter. The Board of Officers holds regular meetings on a weekly basis and, under special circumstances, at the request of the Chief Executive Officer, of the Board itself, or of any officer. The compensation of executive officers is not tied by the Company to the achievement of financial and non-financial goals.
•Creation of the Chief Engineering Office
In May 2008, COPEL had its organization structure upgraded, with the creation of the Chief Engineering Office, which is in charge of planning, expanding, designing, and building power generation and transmission facilities, as well as fostering research and development (R&D) projects in all areas of the Company, as far as alternative technologies and alternative energy sources.
•Relationship with the Granting Authorities
In 2008, COPEL created, within the Chief Finance, Investor Relations, and Corporate Partnerships Office, a department charged with coordinating the Company’s relationship with the granting authorities, specifically the National Electric Energy Agency (ANEEL) and the Ministry of Mines and Energy.
2.8. Code of Conduct
In 2003, COPEL implemented its Code of Conduct, based on its corporate values and culture and in compliance with the international principles contained in the Sarbanes-Oxley Act. This tool has been consolidated dynamically, in a way that reflects the integrity of its procedures on all its relations, be them internal, with the workforce, or with all other stakeholders. Its articles and sections have been discussed with stakeholders, including managers, employees, suppliers, clients, shareholders, and consumers.
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In 2008, the Code of Conduct was amended and submitted to review at public hearings for approval of the final version by the Ethic Guidance Council. The final version of the Cod is available online in the Corporate Governance section of the Company’s website (www.copel.com) is currently being distributed to all employees together with a letter of commitment to the Code.
2.9. Ethical Guidance Council
The Ethical Guidance Council’s goal is to discuss and to guide COPEL's actions and to review any cases submitted to it, making recommendations in order to ensure that the Company is permanently in compliance with sound moral principles in the conduct of business, striving to make public and to effectively enforce the Code of Conduct among COPEL’s workforce. The Council is composed of nine members, eight of which are Company employees, and it is coordinated by a representative of civil society, which ensures greater transparency and participation by stakeholders. In 2008, the Ethical Guidance Council held seven meetings to discuss, to guide COPEL's actions, and to review cases submitted to it.
2.10. Confidential Reporting Channel
COPEL maintains a policy to receive confidential reports on violations of the Code of Conduct, of legal provisions, and of internal rules concerning accounting, internal controls, or applicable audit issues. These reports are received through the Confidential Reporting Channel, created to report directly to the Audit Committee and the Board of Directors.
These reports are received and registered by the Company's Ombudsman's Office. After review by Internal Audit, these reports are addressed directly by COPEL’s auditors whenever they affect the responsibilities of the Audit Committee or, through the Ombudsman's Office, they are treated in an ethical, legal, and reserved manner by the manager in charge of the matter being reported.
The adopted policy complies with the Company's corporate governance procedure improvements and with the requirements of the Sarbanes-Oxley Act, encouraging the responsible and confidential use by stakeholders and ensuring non-retaliation. The Confidential Reporting Channel received 15 reports in 2008, six of which were classified as inquiries regarding administrative issues, and the remaining nine were reports of misuse of Company resources or moral harassment cases. None of these cases had any material impact on the Company’s results. The Confidential Reporting Channel is available by phone (0800-643-5665), mail (Mailbox 5505, Postal Code 80231-970, Curitiba-PR), or in person, at the Company’s Ombudsman’s Office (Rua Visconde do Rio Branco, 1,680 - Centro (Downtown) –Curitiba – Paraná).
•Ombudsman’s Office
In order to consolidate a strong set of management tools, COPEL created in 2003 an Ombudsman’s Office within its organizational structure, with a specific policy in line with the goals of the planning model for sustainability and with the need to implement the best practices in corporate governance.
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The Ombudsman’s Office operates as a dialogue channel for the development of an ethical, respectful, and transparent relationship between COPEL and all stakeholders. This office amplifies the potential of a corporate ombudsman and turns it into a component of an integrity, monitoring, and control system for the Company, its shareholders, employees, and society at large.
The Ombudsman’s Office is available by phone (0800-647-0606), mail (Mailbox 5505, Postal Code 80231-970, Curitiba-PR), online (ouvidoria@copel.com), or in person, at Rua Visconde do Rio Branco, 1,680 - Centro (Downtown) – Curitiba – Paraná.
2.11. Permanent Committee for Disclosure of Material Acts and Facts
The Committee for Disclosure of Material Acts and Facts was set up with the goal of preserving the image and the credibility of COPEL among shareholders, investors, analysts, and capital market professionals, in addition to promoting the disclosure and distribution of information in a proactive, transparent, complete, and equitable manner, in compliance with the applicable legal and regulatory requirements. The Committee is composed of at least two representatives from the Chief Finance, Investor Relations, and Corporate Partnerships Office, two representatives from the Chief Executive Office, one representative from the Chief Legal Office, and a chairman. The main duty of the Committee is to assist the Chief Financial, Investor Relations, and Corporate Partnerships Officer in enforcing COPEL’s Disclosure Policy. Its members are charged with reviewing and approving the information to be disclosed to the capital markets by any means.
2.12. Relations with Shareholders and Investors
COPEL has 25,254 shareholders, who hold the Company’s share capital, in the amount of R$ 4,460.0 million, represented by 273,655 thousand shares with no par value.
The Chief Financial, Investors Relations, and Corporate Partnerships Office was visited during 2008 by a significant number of shareholders, investors, and capital market analysts from Brazil and from abroad. The Company also participated in conferences, seminars, and meetings, and took a road show to the main financial centers in Brazil, in Europe, and in North America.
After the enactment of Law no. 9,249/1995, COPEL has adopted a policy of partially or fully replacing distributions of dividends with distributions of interest on capital. The minimum distribution equals 25% of the adjusted net income, pursuant to article 202 and subsequent paragraphs of Law no. 6,404/1976, in the following order:
1) | Class A preferred shares shall have dividend priority of at least 10% a year, to be distributed equally among them, calculated based on the class’ outstanding share capital at the end of the fiscal year; after the deduction of the amounts allocated to Class A preferred shares, |
2) | provided there are still amounts available, class B shares shall have dividend priority, to be distributed equally among them, calculated proportionally to the class’ outstanding share capital at the end of the fiscal year; |
3) | should there remain any amounts to be distributed after the deductions of dividends to class A and class B preferred shares, common shares shall be assigned an amount calculated proportionally to the class’ outstanding share capital at the end of the fiscal year. |
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The calculated amount to be distributed to each preferred share, regardless of class, shall be at least 10% higher than the one allocated to each common share, pursuant to section II of paragraph 1 of article 17 of Law no. 6,404/1976, as amended by Law no. 10,303/2001. Preferred shares shall have voting rights if, for three consecutive fiscal years, they are not paid the minimum dividends or interest on capital to which they are entitled.
2.13. Distribution of Dividends and Interest on Capital (IOC) | ||||||
(thousands of R$) | 2008 | 2007 | 2006 | |||
Approval by the GSM | 04/23/09 | 04/17/08 | 04/27/07 | |||
Payment date | to be determined | 05/16/08 | 06/26/07 | |||
income | 1,078,744 | 1,106,610 | 1,242,680 | |||
% of income | 25 | 25 | 25 | |||
Amount distributed to Common Shares | 132,398 | 135,395 | 142,132 | |||
Amount distributed to Class A Shares | 648 | 650 | 565 | |||
Amount distributed to Class B Shares | 128,788 | 131,705 | 138,253 | |||
Distributed Total | 261,834 | 267,750 | 280,950 | |||
2.14. Shareholders’ Agreement
The Company is subject to a shareholders' agreement between the State of Paraná and BNDES Participações S.A. - BNDESPar, which grants BNDESPar the right to appoint two members of COPEL’s Board of Directors and to have prior knowledge of corporate matters submitted to the Board and to the General Shareholders’ Meeting.
2.15. Securities Issued by COPEL: Bovespa and Latibex Indicators
The securities issued by COPEL are part of the following indicators measured by BOVESPA (the São Paulo Stock Exchange):
- IBOVESPA: the most important indicator of average stock performance on the Brazilian stock market. Its importance results from the fact it reflects the behavior of the most traded stocks at BOVESPA. This index has suffered no disruptions throughout its history and has not undergone any methodological changes since its inception in 1968.
- IEE: the first industry-specific indicator by BOVESPA, the Electric Energy Index or IEE was launched in August 1996, with the goal of assessing the performance of the power industry, and quickly became a tool for the evaluation of the performance of portfolios specializing in this segment.
- IBrX 50: this index assesses the total profitability of a theoretical portfolio composed of 50 securities selected among the most traded at BOVESPA for their liquidity, weighed against the market value of all free floating shares. It was conceived to provide a reference to investors and portfolio managers and to allow the issue of derivatives (futures, futures options, and index options).
Furthermore, the Company’s securities are part of the following indicators measured by the Madrid Stock Exchange’s LATIBEX (the Euro-Denominated Market for Latin American Securities):
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- FTSE Latibex All share: includes all shares listed on Latibex;
- FTSE LatibexBrazil: includes the Brazilian securities with highest liquidity on Latibex; and
- FTSE Latibex TOP: includes the 15 securities with highest liquidity on Latibex.
2.16. Internal and External Auditing
•Internal Audit
Since 2005, COPEL’s Internal Audit has been subordinated to the Audit Committee conducted its activities in compliance with the rules of the Institute of Internal Auditors – IIA and of the Brazilian Institute of Internal Auditors - Audibra, according to which Internal Audit shall help the Company achieve its goals by adopting a systematic and disciplined approach towards the assessment and improvement of risk management, control, and corporate governance processes.
As far as risk management and controls, Internal Audit helps the Company identify and assess significant exposure to risks and contribute to the continuous improvement and maintenance of such systems.
As far as corporate governance, these rules determine that Internal Audit shall evaluate and make suitable recommendations for the improvement of the corporate governance process, contributing to the promotion of ethics and of appropriate values within the Company, ensure the efficient management of corporate performance and accountability, report efficiently any information concerning risks and control, and support the information exchange between the external and internal auditors and senior management.
•External Audit
Pursuant to CVM Instruction no. 381, dated January 14, 2003, the Company and its wholly-owned subsidiaries have engaged Deloitte Touche Tohmatsu Auditores Independentes for the rendering of financial statement auditing services. Since its engagement, Deloitte Touche Tohmatsu has only rendered services related to independent auditing. The Company is committed to not hiring any other consulting services which may interfere with the independence of the work conducted by its external auditors.
In order to comply with the requirements of the Sarbanes-Oxley Act, as of 2005 the main controls over the cycles which may cause errors in the financial statements, above the level of materiality, are tested by both the internal and external audit teams. As a measure of corporate governance, the internal audit procedures for the conduction of these tests are evaluated by the external auditors.
2.17. Risk Management
In 2006, COPEL started improving the monitoring of the risk management and internal control environment by setting up its Risk Management and Control Policy, whose goal is to set guidelines for the conduct of the Company and the responsibilities as far as risk management and internal control of processes which may interfere with corporate goals.
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While carrying on the efforts which had initially been planned, in 2007 the Company began implementing the Integrated Corporate Risk Management Project (Projeto de Gestão Integrada de Riscos Corporativosor GIRC), based on the concepts and criteria set forth in the COSO II -ERM Framework document, issued by the Committee of Sponsoring Organizations of the Treadway Commission - COSO.
The main highlights of the project so far are:
- evaluation of the Integrated Corporate Risk Management model prior to 2007;
- proposal of potential improvements towards making the Integrated Corporate Risk Management compliant with the best market practices;
- identification and evaluation of the key business risks which may hamper the fulfillment of COPEL’s strategic goals,
- understanding and breakdown of the key controls which mitigate key business risks;
- presentation of plans of action for the key business risks which are beyond the limits acceptable by the Company;
- design of the future vision of the Integrated Corporate Risk Management model, comprising the main opportunities for improvement identified during the evaluation stage; and
- preparation of a detailed schedule for the implementation of the future vision of the Integrated Risk Management model.
2.18. Corporate Sustainability and Citizenship Policy: Environmental Impact Studies and Reports
COPEL has pioneered in Brazil the preparation of Environmental Impact Studies and Environmental Impact Reports, for the construction of the Governor Ney Braga Power Plant, inaugurated in 1992. Since then, environmental studies have been increasingly more thorough. The Basic Environmental Plan for the Governor José Richa Power Plant, inaugurated in 1998, comprised 26 environmental programs, and the total social-environmental cost associated with the project corresponded to 21% of its overall cost, leading the Company to win several international awards for its work to resettle all affected families. All actions are based on an environmental management model underpinned by the principles of COPEL’s Corporate Citizenship and Sustainability Policy, which is available online at www.copel.com and is fully compliant with the five corporate values of the Company’s strategic frame of reference, with the eight Millennium Goals, and with the ten principles of the UN Global Compact.
Factors such as the commitment to the appreciation, conservation, and defense of the environment and to wide social inclusion and justice; a proactive approach towards the law; the promotion of the sustainable development of the communities with which the Company interacts; dialogue, communication, and transparency; respect to social-environmental dynamics; continuous improvement actions; internal development of individual accountability, by educating the workforce so that they commit to an approach marked by respect and accountability towards all stakeholders; and appreciation of diversity in all of its multiple aspects are what makes COPEL a company truly committed to social-environmental issues, from the application of the principle of precaution, which results in the minimization of the environmental risks posed by its operations, to the mitigation or compensation of environmental impacts caused by the construction of new power facilities.
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2.19. Information Technology
COPEL’s corporate strategies in the field of information technology for the 2008-2012 period are aimed at meeting the Company’s business requirements as defined in its strategic planning, ensuring consistent and required technological advance, with a focus on: system upgrades, centralized planning, open standards based on the web, and adoption of viable open source software solutions.
In 2008, the TI area continued the strategy of aligning its systems to the Company's business processes, using as basis for the development of new solutions the business process modeling – with the goal of improving quality and productivity controls and gains –-, through the Control Objectives for Information and Related Technology – COBIT, defined by the IT Governance Institute and the IT Infrastructure Library – ITIL, as well as through the Central Computer Telecommunications Agency -CCTA, for service management. COPEL’s strategy also includes compliance with the State Government's IT policy, continuous improvement of the safety and availability of services, and cost reduction.
While seeking solutions for the Company’s business needs, the IT area has made huge efforts to upgrade its systems and infrastructure, through the following programs: Integrated Corporate Management (Gestão Empresarial Integradaor ERP), Customer Management (Gestão de Consumidoresor CIS), Substation Automation Systems Upgrade (Modernização dos Sistemas de Automação de Subestaçõesor SASE), Infrastructure for IT Programs and Projects (Infraestrutura para Programas e Projetos da Tecnologia da Informaçãoor Pilares), and Georeferencing Systems Upgrade (Modernização Sistemas Georeferenciadosor Migrageo).
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3. ECONOMIC AND FINANCIAL PERFORMANCE
The financial statements featured in this report are in accordance with the provisions of the Brazilian Corporate Law, with the accounting practices adopted in Brazil, with the specific legislation enacted by ANEEL, and with the regulations of the Brazilian Securities and Exchange Commission (CVM). The financial statements for the fiscal year ended on December 31, 2007 have been reclassified to allow readers to better compare them to the current statements (see Note 2 for further information).
The amounts below are shown in thousands of reais, except where otherwise indicated.
COPEL in Figures | 2008 | 2007 | D% 2008-2007 | |||
Accounting Indicators | ||||||
Operating revenues or gross sales | 8,305,395 | 7,920,094 | 4.9 | |||
Unrecoverable revenues(1) | 69,911 | 73,938 | (5.4) | |||
Deductions from revenues | 2,846,617 | 2,716,433 | 4.8 | |||
Net operating revenues or net sales | 5,458,778 | 5,203,661 | 4.9 | |||
Service operating costs and expenses | 4,012,500 | 3,635,398 | 10.4 | |||
Result of operations | 1,446,278 | 1,568,263 | (7.8) | |||
EBITDA | 1,851,021 | 1,998,220 | (7.4) | |||
Financial income (losses) | 94,363 | 20,243 | 366.2 | |||
Income tax/social contribution | 458,146 | 460,315 | (0.5) | |||
Net income | 1,078,744 | 1,106,610 | (2.5) | |||
Shareholders' Equity | 8,053,087 | 7,236,177 | 11.3 | |||
Interest on capital | 228,000 | 200,000 | 14.0 | |||
Distributed dividends | 33,834 | 67,750 | (50.1) | |||
Economic-Financial Indicators | ||||||
Current liquidity (index) | 1.82 | 1.69 | 7.7 | |||
Overall liquidity (index) | 1.15 | 1.05 | 9.5 | |||
EBITDA margin (%) | 33.9 | 38.4 | (11.7) | |||
Wealth (net added value) per employee - in thousands of R$ | 578 | 570 | 1.4 | |||
Operating expenses per MWh sold - in thousands of R$ | 0.171 | 0.163 | 4.9 | |||
Wealth (value to be distributed) per operating revenues (%) | 1.0 | 1.0 | - | |||
Income per share - in R$ | 3.9 | 4.0 | (2.5) | |||
Shareholders' equity per share - in R$ | 29.4 | 26.4 | 11.4 | |||
Indebtedness as a percentage of shareholders' equity | 23.2 | 29.1 | (20.3) | |||
Gross margin (net income/gross operating revenues) (%) | 13.0 | 14.0 | (7.1) | |||
Net margin (net income/net operating revenues) (%) | 19.8 | 21.3 | (7.0) | |||
Return on shareholders' equity (%) | 15.5 | 18.1 | (14.4) | |||
Capital structure(2) | ||||||
Own capital (%) | 60.8 | 58.0 | 4.8 | |||
Third-party capital at a cost (%) (loans and financing) | 14.1 | 16.9 | (16.6) | |||
Customer default (overdue bills for up to 90 days/gross operating revenues for past 12 months) (%) | 2.2 | 2.3 | (4.3) | |||
(1) | According to the amounts reported for purposes of rate review, pursuant to item I.4.2 of Resolution no. 234, dated 07/11/2006. |
(2) | % of Total Liabilities. |
In 2008, Net Operating Revenues increased R$ 255.1 million, or 4.9%, over the year of 2007. This variation resulted from:
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1) | Revenues from Sales of Power to Final Customers, which recorded 8.1% growth on account of: |
a) | a 4.2% increase in total billed power consumption, which corresponds to an additional 887.5 GWh supplied, mostly in the following categories: residential, industrial, and commercial, which recorded growth rates of 4.6%, 7.8%, and 6.6%, respectively; |
b) | a 2.5% increase in the number of customers, which corresponds to 86,479 new customers; and |
c) | an average 0.04% rate increase in June 2008, whereas in 2007 rates were cut 1.22% on average. For further information about Net Operating Revenues, see Note 30. |
2) | Revenues from the Use of the Power Gridgrew 4.7%, due mostly to increased balances under the distribution system account, thanks to a 5.6% increase in COPEL’s grid market, i.e., all customers within its concession area, and to rate increases authorized by ANEEL. For further information, see Note 30; |
3) | Telecommunications Revenuesgrew 26.2%, on account of a 13.0% increase in the number of customers, a 27.0% increase in network usage sales, and increased connections sold to cell phone operators using 3G technology and high-speed networks (155 Mbps and 622 Mbps). |
4) | Revenues from the Distribution of Piped Gasgrew 16.2%, mostly on account of a 54.0% increase in the number of customers and a rate increase in September 2008; |
5) | Other Operating Revenuesfell 24.4%, mostly due to the R$ 30.5 million drop under Leases and Rents and the R$ 14.5 million drop under Revenues from Services. These drops were caused mostly by the interruption in the operation of the Araucária Thermal Power Plant from January to May 2008, for technical reasons; |
6) | Deductions from Revenuesgrew R$ 130.2 million, mostly on account of increased taxable income and the resulting increases in: VAT (ICMS), R$ 92.9 million; COFINS tax, R$ 48.3 million; PIS/PASEP taxes, R$ 9.3 million; offset by the drop in Fuel Consumption Account (Conta de Consumo de Combustívelor CCC), in the amount of R$ 25.9 million, due to the effects of the Account for Compensation of Portion A Amounts (CVA). For further information, see Note 31. |
3.2. Operating Costs and Expenses
Operating expenses grew R$ 377.1 million in 2008, or 10.4%, due mostly to:
1) | A R$ 335.8 million increase inPower Purchased for Resale, mostly on account of increased volumes acquired from: Auctions, R$ 140.2 million; from the Itaipu Power Plant, R$ 117.1 million; from the CCEE, R$ 103.5 million; in addition to the reversal of R$ 100.9 million in 2007 (non recurring in 2008) in connection with CIEN invoices. The increases above were offset by the expiration of the CIEN power purchase agreement, which accounted for R$ 111.2 million, and by the R$ 22.7 million increase in the PIS/PASEP and COFINS tax credits on power purchased for resale; |
2) | A 3.7% increase inPersonnel, due to the 7.54% wage increase resulting from the collective bargaining agreement that went into effect in October 2008. Further information is available in Note 32-c; |
3) | A R$ 43.9 million increase inPension and Healthcare Planson account of the accrual of the effects of the actuarial calculation, defined annually by a third-party actuary; |
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4) | A R$ 28.2 million increase inRaw Materials and Supplies for Power Generation, mostly on account of the reversal of R$ 29.9 million in COFINS and PASEP taxes, whose accrual was not necessary pursuant to a ruling by the Federal Revenue Service, in light of the renegotiation of the debt to Petrobras in May 2006, resulting in an accounting reclassification in 2007, which was non recurring. |
5) | A 23.4% increase inNatural Gas for Resale and Supplies for the Gas Business, on account of increased gas prices and the significant variation of the U.S. dollar exchange rate in the fourth quarter; |
6) | An 11.3% increase inThird-Party Services, mostly on account of increased expenses with maintenance resulting from the higher number of contractors hired, in compliance with Regulation NR 10 issued by the Labor Ministry, which requires a minimum number of professionals under contract for contingencies. Out of the total spent, R$ 12.0 million refer to the maintenance of the Araucária Power Plant. For further information, see Note 32.e; |
7) | A R$ 25.2 million drop inDepreciation and Amortization, thanks to the amortization of the deferred assets of UEG Araucária still in 2007, which resulted in a R$ 17.9 million reduction in 2008, and to the accrual of COFINS/PASEP taxes and Special Liabilities as of January and July 2008, respectively; this drop was offset by increased depreciation and amortization quotas resulting from additions to property, plant, and equipment in service. |
3.3. EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) reached R$ 1.8 billion in 2008, with a 33.9% margin. COPEL’s EBITDA for 2008 is broken down below:
EBITDA Calculation | Consolidated | |||
2008 | 2007 | |||
Income for the period | 1,078,744 | 1,106,610 | ||
Deferred income tax and social contribution | 106,082 | (75,853) | ||
Provision for income tax and social contribution | 352,064 | 536,168 | ||
Result of equity in subsidiaries and investees | (14,318) | (9,509) | ||
Financial expenses (revenues), net | (94,363) | (20,243) | ||
Minority interest | 18,069 | 31,090 | ||
EBIT | 1,446,278 | 1,568,263 | ||
Depreciation and amortization | 404,743 | 429,957 | ||
EBITDA - ajusted | 1,851,021 | 1,998,220 | ||
Net Operating Revenues (NOR) | 5,458,778 | 5,203,661 | ||
EBITDA margin %(1) | 33.9% | 38.4% | ||
(1)EBITDA ÷ NOR |
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EBITDA History
3.4. Financial Income (Losses)
Financial Income (Losses) was mostly affected by the following:
- Financial Revenues, which recorded a R$ 92.6 million increase over 2007, mostly on account of gains under Revenues from Financial Transactions totaling R$ 60.7 million, resulting from the cash amounts invested during the year, and of the increase under Monetary Variations on the CRC transferred to the State Government, which is restated according to the IGP-DI index, which was 9.1% from January through December 2008; and
- Financial Expenses, which increased R$ 18.5 million, on account of:
a) | the added expenses with foreign-currency denominated loans, mostly because of the 31.9% devaluation of the real against the U.S. dollar in 2008, whereas in 2007 the real appreciated 17.1%; |
b) | lower charges on account of the payment of the 2nd installment of the 3rd issue of single-series debentures, which took place in February 2008; |
c) | a R$ 41.9 million reduction on account of the extinction of the CPMF tax. |
3.5. Indebtedness
Short and long-term debts fluctuated in 2008 mostly on account of R$ 34.8 million in capital raising, of which R$ 32.5 million were a partial withdrawal under the agreement with Eletrobrás for the“Luz para Todos” Electrification Program, and R$ 2.3 million were a partial withdrawal under two agreements with FINEP for R&D. The Company’s payments in 2008 totaled R$ 542.1 million, broken down below:
Amortization of princ. amts. | Charges | Total | ||||
Loans and financing | 86.5 | 156.5 | 243.0 | |||
Debentures | 176.1 | 123.0 | 299.1 | |||
Total payments | 262.6 | 279.5 | 542.1 | |||
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The changes in short and long-term indebtedness, comprising principal amounts and interest, are shown below:
3.6. Net Income
In 2008, COPEL recorded net income of R$ 1,078.7 million, a figure 2.5% lower than that recorded in 2007 (R$ 1,106.6 million). This performance resulted in a rate of return on shareholders’ equity of 15.5% (net income ÷ shareholders’ equity – net income), with a 14.4% drop compared to 2007.
3.7. Added Value
In 2008, COPEL recorded R$ 5.4 billion in Total Added Value, a figure 3.9% or R$ 0.2 billion higher than the one recorded in 2007. However, it is important to point out that the Company distributed a significant amount to the State government, boosting the State economy with approximately R$ 3.1 billion resulting from tax collection, wages, earnings retained by the Company, and the State Government's interest, representing 57.0% of the total amount distributed by COPEL, as shown below:
Distribution of Added Value to the State of Paraná (thousands of R$) | 2008 | 2007 | ||
Value added tax (VAT) | 1,605,782 | 1,512,346 | ||
Other State and municipal taxes | 4,706 | 4,565 | ||
Payroll | 582,822 | 523,217 | ||
Retained earnings | 816,910 | 838,860 | ||
31.1% of dividends(1) | 10,522 | 21,070 | ||
31.1% of return on capital(1) | 70,908 | 62,200 | ||
Total | 3,091,650 | 2,962,258 | ||
(1)Percentage corresponding to the State Government’s share |
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Distribution of Added Value - 2008
Added Value Distribution Breakdown | ||||||||||
Sales of power and services and other revenues | 2008 | % | D% 2008-2007 | 2007 | % | |||||
Supply to final customers | 2,968,880 | 35.7 | 8.1 | 2,747,680 | 34.7 | |||||
Residential | 876,336 | 10.6 | 32.7 | 660,166 | 8.3 | |||||
Low income residential | 59,598 | 0.7 | (72.4) | 216,121 | 2.7 | |||||
Industrial | 1,069,202 | 12.9 | 8.5 | 985,685 | 12.4 | |||||
Commercial | 622,046 | 7.5 | 9.1 | 570,418 | 7.2 | |||||
Rural | 123,071 | 1.5 | 8.2 | 113,720 | 1.4 | |||||
Public agencies | 86,333 | 1.0 | 5.1 | 82,165 | 1.0 | |||||
Public lighting | 67,005 | 0.8 | 5.5 | 63,518 | 0.8 | |||||
Public services | 63,403 | 0.8 | 2.3 | 61,992 | 0.8 | |||||
Network charges - adjustment installments | 1,886 | - | (130.9) | (6,105) | (0.1) | |||||
Supply to distributors | 1,363,094 | 16.4 | (0.3) | 1,367,595 | 17.3 | |||||
Short-term power - CCEE | 48,128 | 0.6 | (30.5) | 69,238 | 0.9 | |||||
Other supply contracts | 1,314,966 | 15.8 | 1.3 | 1,298,357 | 16.4 | |||||
Use of the power grid | 3,473,098 | 41.9 | 4.7 | 3,316,963 | 41.8 | |||||
Telecommunications revenues | 80,604 | 1.0 | 26.2 | 63,893 | 0.8 | |||||
Distribution of piped gas | 283,709 | 3.4 | 16.2 | 244,080 | 3.1 | |||||
Other operating revenues | 136,010 | 1.6 | (24.4) | 179,883 | 2.3 | |||||
Total | 8,305,395 | 100.0 | 4.9 | 7,920,094 | 100.0 | |||||
Government | 2008 | % | D% 2008-2007 | 2007 | % | |||||
FEDERAL | 1,747,437 | 52.2 | 2.0 | 1,713,370 | 53.0 | |||||
Social charges - INSS | 120,932 | 3.6 | 7.4 | 112,649 | 3.5 | |||||
Income tax and social contribution | 458,146 | 13.7 | (0.5) | 460,315 | 14.2 | |||||
PIS/Pasep taxes | 139,579 | 4.2 | 7.2 | 130,249 | 4.0 | |||||
COFINS tax | 642,930 | 19.2 | 8.1 | 594,658 | 18.4 | |||||
CPMF and IOF taxes | 9,090 | 0.3 | (84.2) | 57,515 | 1.8 | |||||
Other federal taxes | 3,123 | 0.1 | 215.5 | 990 | - | |||||
Customer charges: | 636,856 | 19.0 | 7.7 | 591,133 | 18.3 | |||||
Global Reversal Reserve - RGR | 64,877 | 1.9 | 6.2 | 61,105 | 1.9 | |||||
Energy Development Account - CDE | 189,560 | 5.7 | 2.9 | 184,294 | 5.7 | |||||
Fuel Consumption Account - CCC | 153,208 | 4.6 | (14.4) | 179,071 | 5.5 | |||||
Research & Development and Energy Efficiency - R&D and EEP | 53,616 | 1.6 | (4.8) | 56,347 | 1.7 | |||||
Financial Compensation for Use of Water Resources - CFURH | 86,513 | 2.6 | 17.0 | 73,938 | 2.3 | |||||
Electric Energy Service Inspection Fee - TFSEE | 17,821 | 0.5 | 3.3 | 17,246 | 0.5 | |||||
System Service Charges - ESS | 71,261 | 2.1 | 272.5 | 19,132 | 0.6 | |||||
( - ) Pasep/Cofins taxes paid in advance on supplies | (263,219) | (7.9) | 12.4 | (234,139) | (7.2) | |||||
STATE | 1,594,946 | 47.7 | 5.4 | 1,513,381 | 46.9 | |||||
VAT (ICMS) (on sales to final customers) | 1,600,758 | 47.8 | 6.2 | 1,507,882 | 46.8 | |||||
IPVA tax, tolls, and other taxes and fees | 1,687 | 0.1 | 63.0 | 1,035 | 0.1 | |||||
VAT (ICMS) | 5,024 | 0.2 | 12.5 | 4,464 | 0.1 | |||||
( - ) VAT (ICMS) paid in advance on supplies | (12,523) | (0.4) | - | - | - | |||||
MUNICIPAL | 3,019 | 0.1 | (14.5) | 3,530 | 0.1 | |||||
Service tax (ISSQN) | 1,834 | 0.1 | (28.7) | 2,571 | 0.1 | |||||
IPMC and ICS taxes | 89 | - | - | - | - | |||||
IPTU tax, mandatory contributions, and other taxes and fees | 1,096 | - | 14.3 | 959 | - | |||||
Total | 3,345,402 | 100.0 | 3.6 | 3,230,281 | 100.0 | |||||
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The full Statement of Added Value, in greater detail, is featured herein, together with the financial statements.
3.8. Stock PerformanceAs reported by BOVESPA, the closing price of COPEL’s common shares on the last trading day of the period was R$ 22.00 per share (a 25.42% drop), class A preferred shares were traded at R$ 23.00 per share (a 25.81% drop), and class B preferred shares were traded at R$ 24.00 per share (a 10.45% drop), while the Ibovespa and IEE indicators dropped 41.22% and 11.64%, respectively. As reported by the New York Stock Exchange (NYSE), the closing price of COPEL’s common shares (ELPVY) on the last trading day of the period was US$ 9.75 per share (a 40.18% drop), and class B preferred shares (ELP) were traded at US$ 10.54 per share (a 30.15% drop), while the Dow Jones index fell 33.84% . As reported by Latibex (the Market for Latin-American Securities in Euros), linked to the Madrid Stock Exchange, the closing price of COPEL’s class B preferred shares (XCOP) on the last trading day of the period was € 7.50 per share (a 28.44% drop), while the Latibex index fell 51.78% .
3.9. Economic Value Added - EVA
Economic Value Added – EVA represents economic profit, i.e., how much wealth the company created with the capital employed in its operations, after deducting the return on this capital.
COPEL has maintained in the past few years a good Operating Return on Investments, with a rate of 15.1% in 2008. This was the main contributing factor to adding value to shareholders in the amount of R$ 360.5 million, indicating the Company is indeed focused on creating value by obtaining return on investments made in previous years, which are now operational.
The 12% rate of return on capital was maintained since it suits the Brazilian power sector standards in light of a Beta index of 0.63 as of December 31, 2008.
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STATEMENT OF ECONOMIC VALUE ADDED | ||||||
As of December 31, 2008 and 2007 | ||||||
(In millions of reais) | ||||||
Consolidated | ||||||
2008 | 2007 | |||||
1. | Sales | 8,305.4 | 7,920.1 | |||
2. | Operating costs and expenses | (6,859.1) | (6,351.8) | |||
3. | Equity in investees and subsidiaries | 14.3 | 9.5 | |||
4. | Financial revenues | 488.6 | 396.0 | |||
5. | Income tax and social contribution on profits generated by assets | (574.3) | (568.6) | |||
6. | Operating income generated by assets, net of taxes | 1,374.9 | 1,405.2 | |||
7. | Operating margin ( 6 ÷1 ) | 0.1655 | 0.1774 | |||
8. | Third-party capital | 1,864.6 | 2,102.5 | |||
9. | Own capital | 7,215.5 | 6,516.7 | |||
10. | Capital eligible for return - ( 8 + 9 ) | 9,080.1 | 8,619.2 | |||
11. | Capital turnover ( 1 ÷ 10 ) | 0.9147 | 0.9189 | |||
12. | Operating Return on Investment ( 7 x 11) | 15.14% | 16.30% | |||
or ORI in millions ofreais | 1,374.7 | 1,404.9 | ||||
13. | Gross Financial Expenses with third-party capital | 210.1 | 230.2 | |||
14. | Tax savings | (61.9) | (66.3) | |||
15. | Net Financial Expenses with third-party capital ( 13 - 14 ) | 148.2 | 163.9 | |||
16. | Average rate of return on third-party capital | 7.95% | 7.80% | |||
net of tax effects (15 ÷ 8) | ||||||
17. | Participation of third-party capital ( 8 ÷ 10 ) | 20.54% | 24.39% | |||
18. | Rate of return on own capital | 12.00% | 12.00% | |||
considering a Beta index of 0,628 | ||||||
19. | Participation of own capital ( 9 ÷ 10 ) | 79.46% | 75.61% | |||
20. | Weighed average capital cost - WACM ( 16 x 17 + 18 x 19 ) | 11.17% | 10.98% | |||
or WACM in millions ofreais | 1,014.3 | 946.4 | ||||
21. | Net operating assets | 12,416.1 | 11,753.5 | |||
22. | Operating liabilities | (3,335.9) | (3,134.4) | |||
23. | Capital eligible for return | 9,080.2 | 8,619.1 | |||
Economic Value Added ( 12 - 20 x 23 ) | 360.5 | 458.5 |
3.10. Expenditures in the Concession
COPEL’s 2009 expenditure program was approved at the 86th Extraordinary Meeting of the Board of Directors, on December 19, 2008.
The projected expenditures in permanent assets in 2009, comprising interests in other companies, property, plant, and equipment, and intangible assets, are broken down below:
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Companies | Actual | Actual | % Variation | Estimated | ||||
In millions of reais | 2007 | 2008 | 2008-2007 | 2009 | ||||
Interests in other companies | ||||||||
Copel Geração e Transmissão | ||||||||
Consórcio Energético Cruzeiro do Sul | 6.5 | 50.3 | 673.8 | 180.3 | ||||
Centrais Eólicas do Paraná | 2.1 | - | - | - | ||||
Copel Participações and Parent Company | ||||||||
UEG Araucária | 1.0 | - | - | - | ||||
Dominó Holdings | - | 110.2 | - | - | ||||
Property, plant, and equipment and intangible assets | ||||||||
Copel Geração e Transmissão(Basic Network)(1) | 19.7 | 93.1 | 372.6 | 107.5 | ||||
Copel Transmissão | 74.2 | - | - | - | ||||
Copel Distribuição | 380.1 | 497.7 | 30.9 | 774.7 | ||||
Copel Telecomunicações | 31.6 | 24.7 | (21.8) | 51.3 | ||||
Total | 515.2 | 776.0 | 50.6 | 1,113.8 | ||||
(1)The amount estimated for 2009 includes R$ 54.4 million in connection with the Basic Transmission Network
This table does not include expenditures with the property, plant, and equipment and with the intangible assets of investees.
In addition to its expenditure program, which covers property, plant, and equipment and intangible assets, COPEL also invests in interests in other companies. These investments include the acquisition of a controlling interest in Centrais Eólicas do Paraná Ltda. in 2007 by COPEL Geração S.A., for R$ 2.1 million. In 2008, COPEL Participações S.A. acquired 30% of the stock of Dominó Holdings for R$ 110.2 million.
3.11. Cash Flows
In 2008 | In 2007 | Variation | ||||
(thousands of R$) | (thousands of R$) | (thousands of R$) | ||||
Initial balance | 1,540,871 | 1,468,716 | 72,155 | |||
Operating activities | 1,493,468 | 1,315,966 | 177,502 | |||
Investments | (723,987) | (480,003) | (243,984) | |||
Financing | (496,776) | (763,808) | 267,032 | |||
Final balance | 1,813,576 | 1,540,871 | 272,705 | |||
In 2008, cash flows from operating activities reached R$ 1,493.5 million, with a R$ 177.5 million increase over 2007 (R$ 1,316.0 million). This increase reflects mostly the effects on cash of increased revenues from sales of power to final customers coupled with better collection performance.
Investment activities consumed R$ 724.0 million in 2008, already taking into account the effect of customer contributions and sales of property, plant, and equipment items, in the amount of R$ 91.0 million. A total of R$ 815.0 million were invested in permanent assets, of which R$ 158.9 million in corporate partnerships, R$ 647.7 million in property, plant, and equipment, and R$ 8.4 million in intangible assets. Compared to 2007, investments increased R$ 244.0 million, mostly on account of the acquisition of joint control of Dominó Holdings, for R$ 110.2 million, and of a R$ 131.2 million increase in property, plant, and equipment expenditures.
In 2008, cash flows from financing activities reflected negatively on the balance, generating an effect of R$ 496.8 million, due to:
- the signature of loans, in the amount of R$ 34.8 million;
- the amortization of loans(historical principal amounts), in the amount of R$ 86.5 million;
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- the amortization of debentures (historical principal amounts), in the amount of R$ 176.1 million; and
- the payment of dividends proposed in previous years, in the amount of R$ 269.0 million.
In 2007, cash flows from financing activities reflected negatively on the balance, generating an effect of R$ 763.8 million, due to:
- the signature of loans, in the amount of R$ 346.6 million;
- the amortization of loans (historical principal amounts), in the amount of R$ 99.9 million;
- the amortization of debentures (historical principal amounts), in the amount of R$ 717.7 million; and
- the payment of dividends proposed in previous years, in the amount of R$ 292.8 million.
COPEL started off 2008 with R$ 1,540.9 million in cash and obtained from its activities a R$ 272.7 million increase, reaching a final amount of R$ 1,813.6 million at the end of the year. In 2007, the increase was R$ 72.2 million. These increases in cash in hand, recorded consecutively, have made possible the application of resources required for the continuity of the activities conducted by the Company.
3.12. Default within the Power Sector
The Company did not have any records of default in connection with the power purchased for sale and with power sector charges as of December 31, 2008 and 2007, in line with COPEL’s policy of paying its liabilities within the time frames set in the respective contracts.
3.13. Customer Default
Since the accounting period of 2003, COPEL has calculated the overdue bill index for power supply to final customers, according to the following calculation method:
OBS:
1. | Bills are deemed overdue if not paid for over 15 days, pursuant to the overdue notice term (ANEEL Resolution no. 456/2000). |
2. | Losses recognized by the Company are excluded from overdue amounts. |
3. | The drop in the level of overdue bills, from 1.29% in December 2007 to 1.17% in December 2008, was a result of increased actions by the Company to fight default, including negotiations of pending bills due by major customers. |
Overdue Bill Level for Supply to Final Customers (in millions of reais / %)
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4. SOCIAL AND POWER SECTOR PERFORMANCE
4.1. Social and Cultural Performance
4.1.1. Human Rights
The Company has pledged to be fully committed to the United Nations’ Global Compact since its inception, in 2000. COPEL has made systematic efforts towards aligning its corporate initiatives and policies with the principles of the Compact, fully incorporating this global ethical frame of reference into the Company’s day-to-day business through three major courses of action.
The first one concerns the internal dimensions of the Company and involves the constant improvement of management systems and corporate policies. The second one, considered a structural one, concerns the Company’s actions towards the outside world and involves the support to the development, implementation, and improvement of social inclusion policies which promote greater sustainability of society at large. The third one concerns the direct involvement, usually under partnerships with other companies, institutions, or organizations, in social and environmental projects and initiatives.
Broken down for purposes of greater clarity, these three fronts are addressed as strategically convergent and complementary. The table below summarizes these fronts and their relation to the Principles of the Global Compact.
Incorporation of the Principles of the Global Compact: caption | ||||||||||
1 | To respect and protect human rights | 5 | To abolish child labor | 9 | To encourage environmentally- friendly technologies | |||||
2 | To prevent human rights violations | 6 | To eliminate discrimination in respect of employment or occupation | 10 | To fight all forms of corruption, including extortion and bribery | |||||
3 | To support freedom of association | 7 | To support a precautionary approach to environmental challenges | * | Unspecified timetable | |||||
4 | To abolish forced labor | 8 | To promote environmental responsibility |
Projects / Programs / Management Systems / Participations and Internal Policies | Global Compact Principles with which they comply | Start | Conclusion | |||
Management Policies and Systems | ||||||
Social and environmental management program | All | 2008 | 2010 | |||
Program for dialogue and development of relations with suppliers, aimed at implementing evaluation practices for suppliers of materials and auditing at the first level of the chain of suppliers | All | 2008 | * | |||
Establishment of the internal commission and the action plan for the promotion of human rights | 1, 2, 3, 4, 5, 6, 8 | 2008 | * | |||
Accessibility Program in the distribution unit (comprising facilities, communications, and individual behavior) | 1, 2, 6 | 2007 | 2010 | |||
Nutritional Safety and Sustainable Community Development Program – test project implemented at the Araucária Thermal Power Plant | 1, 2, 3, 4, 5, 6, 7, 8, 9 | 2007 | 2010 | |||
COPEL’s Doors Open to You: dialogue with stakeholders, at public meetings, with the participation of senior management. | All | 2006 | * | |||
Support to Public Policies and Management Improvement | ||||||
Participation in the Brazilian Global Compact Committee | All | 2000 | * | |||
Participation in power sector organizations which address and promote energy efficiency and environmental improvements: Brazilian Association of Electric Utilities (ABCE), Energy Planning Company (EPE), Association of Independent Power Producers (APINE), CIGRÉ Environmental Committee, Brazilian Association of Power Generation Utilities (ABRAGE), Brazilian Committee of Large Dams (CBDB) | All | Different dates | * | |||
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Projects / Programs / Management Systems / Participations and Internal Policies | Global Compact Principles with which they comply | Start | Conclusion | |||
Participation in associations which address and promote environmental improvements: Agenda 21; the Permanent Council on Infrastructure and the Environment of the Federation of Industries of Paraná (FIEP-PR); the Interinstitutional Commission on Environmental Education of the National Environmental Education Program (PRONEA); Iguaçu and Tibagi River Basin Committees; Consortium for the Environmental Protection of the Tibagi River Basin (COPATI); Technical Chamber on Cartography and Geoprocessing of the State of Paraná | 7, 8, 9 | Different dates | * | |||
Support to Public Policies and Management Improvement | ||||||
Participation in the Committee of Institutions against Starvation and for Life (COEP) and in the State Committee for Nutritional and Feeding Safety (CONSEA - PR) | 1, 2, 3, 4, 5, 6, 7, 8, 9 | 1995/ 2003 | * | |||
Participation in the Paraná Council for Corporate Citizenship (CPCE) for joint promotion of social responsibility within the State | All | 2005 | * | |||
Voluntary participation in theParaná CompetitivoMovement and in the judging panels of the following awards: National Quality Awards, Public Service Quality Awards, Corporate Success Awards, and Paraná Management Quality Awards | All | 2000 | * | |||
Coordenation ofGespúblicain Paraná: a system designed for the promotion of excellence, ethics, transparency, participation, decentralization, and social control in public management | All | 2003 | * | |||
Participation in the Integrated Environmental Management Program (PGAI) of COPEL, SANEPAR, and State Departments, to create synergies among the actions taken under the program, in the area of microbasins, in order to promote improved quality and availability of water through better use, management, and conservation of soil, water, and forests | 1, 2, 7, 8,9 | 2008 | * | |||
Social and Environmental Programs, Projects, and Activities: Highlights | ||||||
Non-profit program for the collection of donations to charities and social service institutions through power bills; this program currently benefits 74 charities. To sign up for it, entities must be non-profit charities or collective interest organizations and must provide all required documentation. | All | 1999 | * | |||
Annual donation program through tax incentives for the Fund for the Rights of Children and Teenagers (FIA). | 1, 2, 5 | 2006 | * | |||
Corporate Volunteering Program –EletriCidadania:license of 4 hours a month to employees who engage in volunteer work. | 1, 2 | 2001 | * | |||
Literacy Program for Youngsters and Adults –“Luz das Letras”– Stage II | 1, 8 | 2009 | * | |||
Luz FraternaProgram: cooperation agreement with the State government to provide payment exemption to low income customers who consume up to 100 kWh/month. | 1, 2, 4, 5, 10 | 2005 | * | |||
Energy Universalization -Luz para TodosProgram - connection of the entire rural population in the State to COPEL's grid. | 1, 2, 4, 5, 10 | 2003 | * | |||
Night Aviculture Program: promotes the increase of poultry farming and export by providing rate discounts to rural customers engaged in this business and supplied at low voltage. | 1, 2, 4, 5 | 2007 | 2010 | |||
Night Irrigation Program: incentives to the use of irrigation to increase agricultural output and improve life standards in rural areas. Subsidized rate and equipment to rural customers. | 1, 2, 4, 5, 7, 8, 9 | 2003 | 2007 | |||
Luz LegalProgram: establishment of regular power supply to areas occupied irregularly and later regularized by the State Housing Company (COHAPAR). | 1, 2 | 2003 | * | |||
Paraná em AçãoProgram: a program promoted by the Special Department for Community Relations, with the goal of offering free services that promote citizenship and social inclusion. COPEL participates by providing commercial service and instructions on how to use power safely and efficiently. | 1, 2 | 2003 | * | |||
Paraná DigitalProgram: digital inclusion by means of the connection of public schools to the internet. | 1, 2, 4, 5, 6, 10 | 2003 | * | |||
Aprendiz(Young Apprentice) Program: a State-sponsored educational program for teenagers between 14 and 18 years old, both male and female, who have been sentenced to social and educational measures or granted a stay of prosecution. It is coordinated by the State Department for Children and Teenagers and relies on the participation of government bodies and State-run institutions, educational institutions, and entities in charge of enforcing those measures. | 1, 2, 4, 5, 10 | 2003 | * | |||
Special power rates for social organizations which meet certain criteria set by COPEL and for low income customers, which may be granted discounts of up to 65%, provided their average monthly consumption is up to 220 kWh. | 1, 2, 4, 5, 10 | 2003 | * | |||
Tribute to the Waters Program: support to the sustainable development of surrounding communities | 1, 2, 5, 7, 8, 9, 10 | 2004 | 2014 | |||
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Projects / Programs / Management Systems / Participations and Internal Policies | Global Compact Principles with which they comply | Start | Conclusion | |||
Corporate Waste Management Program: aimed at reducing, reusing, and recycling all waste generated by the Company. | 7, 8, 9, 10 | 2005 | * | |||
Environmental education program at the Iguaçu Regional Museum: a community-oriented program | 7, 8, 9, 10 | Different dates | * | |||
Energy Efficiency Program: aimed at promoting the efficient use of power in households and industrial, commercial, and public facilities within COPEL's concession area | 7, 8, 9 | 2000 | * | |||
Programs at the Experimental Station for Ichthyological Studies: monitoring and repopulation of rivers and reservoirs in Paraná. | 7, 8, 9 | 2005 | * | |||
Control of invading species: monitoring of the entry of the golden mussel (Limnoperna fortunei) and other species. | 7, 8, 9 | 2000 | * | |||
Social and Environmental Programs, Projects, and Activities: Highlights | ||||||
Recovery of degraded areas: harvest and replacement of native vegetation in degraded and protection areas. | 7, 8, 9 | 1999 | * | |||
Guiding plans for the use of reservoirs and their surroundings: these plans set forth actions for the management and occupation of reservoirs and their surroundings within a 1,000-meter range. | 7, 8, 9 | 1992 | * | |||
Environmental Education for Sustainability Program | 7, 8, 9,10 | 2003 | * | |||
Social-Environmental Urban Forestation Program: designed to help local administrations make adjustments to their urban vegetation so as to allow trees and power grids to coexist harmoniously | 7, 8, 9 | 1992 | * | |||
Projects for the biological recovery of areas contaminated by insulating mineral oil (Atuba, Mandirituba, Fazenda Rio Grande, Piên, and Araucária) | 7, 8, 9 | 2004 | 2009 | |||
Program for the Corporate Management of Greeenhouse Gas Emissions: aimed at assessing emissions and proposing mechanisms for their reduction/neutralization, with further measures in the future. | 7, 8, 9 | 2007 | * | |||
4.1.2. Social Corporate Projects and Programs
In 2008, mankind celebrated the 60th-year anniversary of the Universal Declaration of Human Rights, and companies throughout the world, particularly those most responsible, which have signed the Global Compact, have acted to protect, respect, and restore human rights within their range.
COPEL was committed to this global effort and invited all its suppliers, partners, customers, and other stakeholders to join in. Thus, in 2008 COPEL upheld the cause of the wide promotion of universally-accepted human rights as part of its corporate responsibility approach, through social initiatives and policies. Among these initiatives, the most important were:
Literacy Program for Youngsters and Adults –“Luz das Letras”
In 2008, in cooperation with the State Education Department, COPEL concluded the new version of theLuz das Letras –Stage II literacy software, which is a tool designed to help youngsters, adults, and the elderly to learn to read and write, inspired by the theme “A Story to Tell”. It will be fully implemented by the first half of 2009.
Program for the Promotion of Diversity
Launched in August 2007, this program is divided into different fronts which comprise, in particular, people with disabilities (for direct interaction with the Accessibility Group, aiming to pursue solutions for the adaptation of the Company’s facilities and internal culture as far as people with disabilities of all kinds), racial, and ethnic groups within the Company’s workforce.
Corporate Nutritional Safety and Sustainable Community Development Program
COPEL, as a member of the State Food Safety Council (CONSEA), has conducted a program for the promotion of the nutritional value of different foods, which has already resulted in the creation of the Organic Food Safety Test Project. This program not only aims to change the eating habits of the Company’s employees and their relatives but also reinforce its commitment to sustainability, encouraging family-based organic agriculture, in favor of better quality of life, and promoting social inclusion through job creation. The program was implemented in the first half of 2008 at the Araucária Thermal Power Plant, with the participation of organic farmers, COPEL employees, third-party employees, food handlers, relatives, and managers who will further spread these concepts throughout the Company.
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COPEL’s initiative is based on the Nutritional and Food Safety Act (LOSAN), discussed and proposed by civil society and approved by the Chamber of Representatives and by the Federal Senate without any reservations.
Corporate Accessibility Program
COPEL’s Corporate Accessibility Program, implemented in August 2007, made significant progress during its first year in the area of social inclusion, particularly that of people with limited mobility and special needs.
In 2008, through the Internal Workplace Accident Prevention Week (Semana Interna de Prevenção de Acidentes de Trabalhoor SIPAT), the program was promoted throughout the Company, with the participation of over one thousand employees.
COPEL has adopted architectural accessibility measures, in order to comply with the requirements of the NBR 9050 standard. In 2008, over one hundred employees received training through specific courses and seminars. Furthermore, the Company signed a cooperation agreement with the Regional Engineering, Architecture, and Agronomy Council of Paraná (Conselho Regional de Engenharia, Arquitetura e Agronomia do Paranáor CREA-PR) to provide training to over three thousand COPEL technicians and engineers.
In its 2008 employee admission tests, COPEL offered for the first time a full-time position for an architect, who will be charged with monitoring all construction and renovation work and all new projects by the Company, in order to ensure accessibility to all, in compliance with Laws no. 10,048 and 10,098, dated December 2000, and Decree no. 5,296, dated December 2004.
COPEL’s electricity bills in Braille, which were launched in December 2007 to better serve the Company’s visually impaired customers, is another important accessibility measure currently under way. This service, which is currently used by over 200 customers throughout the State, has been widely advertised through the media and through the power bills themselves to further increase its range. COPEL’s very own website, which was redesigned in 2008, has also been made accessible to visually impaired customers.
Support to Public Policies
As a sponsor of the social and economic development of the State of Paraná, COPEL has historically supported and participated in several joint initiatives with government agencies, non-governmental organizations (NGOs), and other institutions aimed at the wide promotion of citizenship, particularly within the neediest communities. Some of these initiatives are highlighted below:
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•The Nutritional Safety Council of Paraná (CONSEA/PR)
A forum for dialogue and coordination between the State Government, civil society organizations, and the Federal Government, the Council plays a consulting role, proposing policies, programs, and activities that uphold the right to food as a core human right.
In 2003, the Government of Paraná, in an interinstitutional initiative coordinated by the State Labor and Social Promotion Department with the other State Departments and with COPEL, and in cooperation with civil society organizations, designed theFome Zero (Zero Hunger) Paraná Program. Since then, COPEL has participated in all surveys, diagnoses, project designs, and analyses of public policies concerning nutritional safety in Paraná and in Brazil. In 2008, ten regular meetings were held, for a total of 160 annual hours, in addition to meetings with regional commissions throughout the State of Paraná.
In Brazil, the festivities for the World Food Day on October 16 were extended into a World Food Week, during which civil society organizations, federal ministries, state and municipal governments promoted initiatives concerning the theme of “Strengthening Family Agriculture to Ensure Food Security”.
In November 2008, the Nutritional and Food Security Law (Lei Orgânica de Segurança Alimentar e Nutricionalor LOSAN) was discussed prominently at the college extension seminar titled “Investing in Family and Ecological Agriculture to Ensure Sustainable Food and Nutritional Security”. The event was promoted by the Nutrition Department of the Federal University of Paraná (Universidade Federal do Paranáor UFPR) and by the Southern Cooperation Center for Food and Nutrition (Centro Colaborador de Alimentação e Nutrição da Região Sulor CECAN-Sul), with the support of CONSEA-PR and several other entities from throughout the State.
Tax incentives
In 2008, contributions under the Rouanet Law, in the amount of R$ 5.6 million, were made to projects duly approved by the Federal Ministry of Culture.
Under the Rouanet Law, COPEL contributed to the “Japanese Art: from modern to contemporary” exhibit, which was proposed by the Society of Friends of the Oscar Niemeyer Museum (MON).
Inspired by the spirit of volunteering, the Company encouraged donations to the Fund for the Rights of Children and Teenagers (FIA). In 2008, COPEL donated a total of R$ 1.3 million (not including contributions by subsidiaries), making use of tax incentives, to several projects registered at the FIA. These projects include the Program for the Support of Innovation and Humane Hospital Care at the Pequeno Príncipe Children’s Hospital and the Mission Children: Sowing the Future Program by the Pequeno CotolengoInstitution.
Through the FIA, COPEL has contributed to the Program for the Support of Innovation and Humane Hospital Care at the Pequeno Príncipe Children’s Hospital, in Curitiba, which serves children and teenagers from throughout the State of Paraná.
COPEL has turned this practice into a policy. From now on, the Company will maximize the use of resources from tax incentives in connection with the FIA, based on annual estimates of the amounts of tax due, allocating them to social projects. COPEL invites its partner companies and suppliers to do the same, since by joining forces we can really make a difference to the children and teenagers of our State. The following table features information about cultural and social projects and the funds allocated by the Company from 2006 through 2008:
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COPEL’s performance in the cultural and social areas | 2008 | 2007 | 2006 | |||||||||
Information about the cultural and social projects sponsored by COPEL(1) | ||||||||||||
Rouanet Law | FIA | Rouanet Law | FIA | Rouanet Law | FIA | |||||||
Funds allocated to cultural projects (in thousands of R$) | 5,602 | 1,340 | 5,006 | 1,676 | 8,305 | 2,035 | ||||||
Number of projects sponsored by the Company | 14 | 2 | 21 | 4 | 22 | 10 | ||||||
Funds allocated to the single largest cultural project (in thousands of R$) | 1,300 | 1,000 | 500 | 1,000 | 1,200 | 1,300 | ||||||
(1)These amounts do not include COPEL’s subsidiaries |
4.1.3. Government and Society
COPEL’s Social Investment Program aims to promote human rights, citizenship, and social and environmental responsibility, through the transfer of funds, in a planned and aware manner, to projects which promote social change, for the benefit of sustainable development with returns to the society of Paraná. Thus, the Company strives to ensure that its investments contribute to the Millenium Development Goals (MDGs) and to the principles of the Global Compact and that they are in sync with COPEL’s strategic objectives.
The table below summarizes COPEL’s social performance, from 2006 to 2008, as regards the government and society at large:
COPEL’s social performance | 2008 | 2007 | 2006 | |||
Government and Society: events and use of COPEL funds in campaigns and programs | ||||||
Funds allocated to federal, state, and municipal government programs (not mandatory by law) (in thousands of R$) | 655 | 6,491 | 18,331 | |||
Number of events in favor of: food security | 10 | 43 | 15 | |||
Advertising funds allocated to institutional campaigns promoting the development of citizenship (in thousands of R$) | 3,633 | 2,384 | 12,929 | |||
Funds invested in programs which employ tax incentives/total funds allocated to social expenditures (in thousands of R$) | 7,262 | 7,285 | 11,399 | |||
Community: volunteering and use of COPEL funds in social actions | ||||||
Funds applied to education (in thousands of R$)(1) | 655 | 6,615 | 19,020 | |||
Funds applied to healthcare and sanitation (in thousands of R$)(1) | 94,460 | 23,873 | 80,195 | |||
Funds applied to culture (in thousands of R$)(1) | 5,902 | 5,510 | 9,207 | |||
Other funds applied to social actions (in thousands of R$)(1) | 4,106 | 4,380 | 5,304 | |||
Funds allocated to social action (not including legal obligations, taxes, and benefits to employees) (% of net revenues) | 1.8 | 0.8 | 2.3 | |||
Percentage of cash donations out of total funds allocated to social action(2) | - | - | - | |||
Percentage of expenditures in the Company’s own social projects out of total funds allocated to social action | 1.5 | 1.7 | 0.4 | |||
Community: volunteering and use of COPEL funds in social actions | ||||||
Percentage of employees who perform volunteer work in the community outside COPEL, out of total workforce | 1 | 1 | 1 | |||
Annual hours donated by COPEL (out of regular working hours) to volunteer work by its employees | 868 | 869 | 730 | |||
(1) | These amounts include COPEL’s subsidiaries. |
(2) | COPEL does not make donations in cash but rather contributes to cultural and FIA projects |
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4.1.4. Customers
Customer relations
With several communications channels available to the different customer segments of the Company and listed on www.copel.com, COPEL adds quality and agility in providing information and responding to requests, suggestions, and complaints.
The Company’s call center (0800-51-00-116), being the main customer service channel, provided service to 614 thousand customers a month, on average, in 2008, while COPEL's 113 in-person service units received an average of 146 thousand service requests a month.
Specific customer segments, such as high voltage customers, receive separate service provided by specialized staff (0800-643-7575). Large industrial and commercial customers can rely on business analysts who are trained to provide personalized commercial and technical support, and on the Distribution Operation Center, for power supply-related emergencies.
Customers are represented through COPEL Distribuição’s Customer Council, set up by the Company’s Board of Officers in November 1993, with the task of reviewing issues involving power supply, rates, and proper service to final customers and of submitting suggestions for the improvement of the Company's relations with its customers and with the community at large. The Council is composed of representatives of the residential, commercial, industrial, public agencies, and industrial categories, in addition to a representative of the State Coordination Office for Customer Protection and Defense (PROCON).
The Company is currently acquiring new customer management and integrated corporate management systems, which will contribute to the continuous reliability and the improvement of the management of relations with customers from different segments.
Customer needs, satisfaction, and complaints
Among the actions taken in the continuous pursuit of improved customer service, the highlights were the installation of a voice and video recording system in the Company's call centers, which will support the service quality management, and a workforce management system, which will allow the Company to make the proper adjustments to its call center structure and personnel.
Customer satisfaction is monitored through annual surveys. In 2008, the surveys conducted as part of the annual ABRADEE (Brazilian Association of Distribution Utilities) Awards indicated that COPEL, a member of the Association, enjoys a level of residential customer satisfaction of 85.7% . ANEEL’s surveys, on the other hand, have indicated that 65.5% of all residential customers are satisfied with the Company. Another survey showed that 98.0% of COPEL’s telecommunications customers believe the services they receive have high added value. These results attest to significant progress in customer satisfaction.
Opportunities for improvement identified in each segment are reviewed by multidisciplinary groups, which propose actions to be taken towards excellence in customer satisfaction and continuous improvement of procedures.
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The following table features information about the monitoring of COPEL’s customer portfolio, from 2006 through 2008:
CUSTOMER SERVICE | ||||||
Sale of power (GWh): Percentage of total sales | 2008 | 2007 | 2006 | |||
Residential customers | 25.8 | 25.7 | 25.8 | |||
Low income residential customers | 3.6 | 3.8 | 4.0 | |||
Industrial customers | 38.2 | 38.7 | 38.5 | |||
Commercial customers | 19.1 | 18.6 | 18.2 | |||
Rural customers | 7.7 | 7.6 | 7.7 | |||
Public agencies | 2.7 | 2.7 | 2.7 | |||
Public lighting | 3.6 | 3.7 | 3.9 | |||
Public services | 2.8 | 2.9 | 3.1 | |||
Own consumption | 0.1 | 0.1 | 0.1 | |||
Other utilities | 2.4 | 2.3 | 2.4 | |||
Customer Satisfaction | ||||||
Satisfaction levels according to the IASC (ANEEL) Survey | 65.50 | 70.87 | 69.96 | |||
Customer Satisfaction Index (ISC) (price and quality) | 60.20 | 66.50 | 52.70 | |||
ISQP (perceived quality) | 85.70 | 84.20 | 85.30 | |||
Service Requests | ||||||
Total number of calls received (call center) | 7,366,847 | (*) | (*) | |||
Number of customers served in regional offices | 1,757,276 | (*) | (*) | |||
Complaint-to-received-calls ratio (%) | 1,5 | (*) | (*) | |||
Average waiting time during a call (seconds) | 49’ | (*) | (*) | |||
Average service time (min) | 3’12” | (*) | (*) | |||
Number of Customer Complaints | ||||||
To the Company | 111,027 | 102,334 | 124,602 | |||
To Procon (customer defense agency) | 273 | 282 | 496 | |||
To Courts | 2,012 | 958 | 705 | |||
Complaints: Main Reasons (%) | ||||||
Number of Customer Complaints to COPEL's Ombudsman's Office | 5,702 | 5,436 | 4,782 | |||
Main reasons for complaints to the Ombudsman's Office: (percentages) | ||||||
Irregular procedures: includes self-reconnection, diverted power, and tampered meters | 19.0 | 16.3 | 14.8 | |||
Customer service: includes waiting times, response, respect/courtesy | 17.3 | 14.0 | 17.7 | |||
Cost of power bills: includes meter reading, rate, and pending debits | 12.2 | 16.3 | 19.0 | |||
Connection/reconnection: includes the charging of fees, waiting time for connections, service inspections,postinho de luz | 12.0 | 10.0 | 7.7 | |||
Other issues: administrative and records issues | 9.2 | 4.5 | 6.4 | |||
Power outages: includes unscheduled/scheduled/requested outages, duration and frequency of outages | 8.3 | 10.9 | 7.9 | |||
Power bills: includes issue of replacement bills, direct debits, payments, deliveries, and linked accounts | 5.1 | 3.4 | 4.4 | |||
Power grid/lines: increased loads/grid reinforcements, extension works, and waiting times | 5.3 | 6.5 | 7.1 | |||
Reparations: includes material, moral, and physical damages, loss of profits, and waiting times | 3.2 | 3.8 | 4.3 | |||
Voltage: includes voltage levels and variations/oscillations | 3.2 | 3.1 | 2.7 | |||
Main reasons for complaints to the Ombudsman's Office: (percentages) | 2008 | 2007 | 2006 | |||
Public lighting: bulbs/posts, charges, and waiting times | 2.4 | 4.8 | 3.5 | |||
Environment: includes tree trimming/cutting, construction work | 1.1 | 1.7 | 0.0 | |||
Interruption of supply: includes complaints about technical issues, default, and undue suspensions | 1.0 | 2.6 | 2.5 | |||
Social program: inquiries about registration, universalization, and waiting times | 0.8 | 2.1 | 1.9 | |||
Complaints deemed justified out of the total number of cases closed | 30.1 | 47.9 | 47.4 | |||
(*)not measured |
Technical quality and continuity of services: indicators
The following table features information about the technical quality of rendered services and safety in the end use of power from 2006 through 2008:
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Technical Quality of the Services | 2008 | 2007 | 2006 | |||
Average Outage Duration by Customer (DEC)(1), COPEL overall (actual) | 12.21 | 14.67 | 14.79 | |||
Average Outage Duration by Customer (DEC), COPEL overall (set limit) | 13.20 | 13.70 | 14.26 | |||
Average Outage Frequency by Customer (FEC)(2), COPEL overall (actual) | 10.79 | 13.27 | 13.65 | |||
Average Outage Frequency by Customer (FEC), COPEL overall (set limit) | 12.78 | 13.34 | 13.99 | |||
Customer Safety in the End User of Power | 2008 | 2007 | 2006 | |||
Severity Rate – overall rate of accidents with third-parties involving electric shock within the utility’s grid | (*) | 2.264 | 1.066 | |||
(1) | DEC indicates the period of time, on average, in which each customer of a given group was deprived of power supply during the assessment period, taking into account outages at least 3 minutes long. |
(2) | FEC indicates the number of outages, on average, each customer of a given group suffered during the assessment period, taking into account outages at least 3 minutes long. |
(*) | not measured |
Client and Consumer Health and Safety
The analysis and control of risks related to the safety and health of employees are integrated into all steps of COPEL’s activities, through joint actions carried out by the workplace safety, occupational health, social service, training, and environment areas, pursuant to the Workplace Safety Policy.
COPEL’s workforce participates in the identification of factors that influence their health and safety by participating in local safety meetings, in Internal Accident Prevention Commissions (CIPAs), of which there are 43 within COPEL, and in workshops, where specific issues are discussed.
Safety and healthcare actions for outsourced employees are disciplined by a specific manual and integrate their service agreements. The Company, in compliance with the applicable legislation, provides training to outsourced labor on workplace safety and supervises the fulfillment of legal safety requirements by contractors through periodic inspections of Individual Protection Gear, Collective Protection Gear, and tools, reviewing the standard procedures for work in risk areas. The control of minimum mandatory training in electricity-related work is conducted with the aid of specific software, which contains information about contractors’ employees, about contractors themselves, and about the contracts signed with them.
4.1.5. Commercial and Institutional Marketing
COPEL strives for economic, social, and environmental balance with a view to corporate sustainability and the fulfillment of its strategic frame of reference.
The Company’s evolution towards sustainability has led to significant changes in corporate management and communication. The Company’s focus has shifted based on wider interest groups, the impact of new technologies, and the adoption of new paradigms for relations with the market and with society at large. Changing scenarios, in reality, impose the expansion and refinement of concepts, the resizing of relations channels with stakeholders, with a view to better dialogue, the interaction of institutional and market issues, and the consolidation of communication as a strategic component within the Company.
COPEL’s actions in the economic-financial, social, and environmental areas are the current parameters used by stakeholders in their judgment of the Company's corporate image. In sync with these parameters, COPEL’s marketing communication actions have been aimed at supporting the Company’s social and environmental programs as well as its commercial programs. Thus, COPEL’s institutional and marketing communication activities meet specific objectives and are coordinated towards the publicity of the Company’s vision and mission statements, with a view to the fulfillment of its strategic objectives and the reinforcement of its corporate image.
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In 2008, COPEL conducted a corporate image survey comprising its stakeholders, to assess the Company’s corporate brand and image, through the use of qualitative (in-depth interviews and discussion groups) and quantitative (individual surveys) approaches. The qualitative approach allowed all those surveyed – suppliers, shareholders, government officials, members of the Company's Board of Directors, regulatory agency officials, the community (neighborhood associations in urban areas), society at large (NGOs representing the environmental, cultural, and social areas), the media (radio, TV, newspaper, advertising firms), and customers (unregulated, residential, industrial, and service customers, COPEL's employees, and outsourced labor) - to issue an opinion in a free, unstructured manner, providing a better understanding of the reasoning and the motivations associated with COPEL’s brand and image.
In order to self-regulate the use of marketing tools in connection with its activities and products, COPEL implemented and published in 2008, with wide internal publicity, its corporate communication policy, based particularly on the Company's core values and on the principles of the Global Compact.
Safe and rational use of power: communications actions
The spread of information on the safe use of electric power to prevent accidents, which has been a constant concern for COPEL, has evolved in the past few years into a more sustainable action, incorporating concepts such as citizenship and environmental protection. The content made available through COPEL’s annual Summer on the Beach campaigns and the annual National Electric Energy Safety Week – comprising the distribution of informational materials in schools, civil construction firms, and public venues as squares, supermarkets, bus stations, and malls – attest to this evolution.
In addition, to minimize the negative aspects of its products and services on the community, the Company promotes lectures (at companies, rural cooperatives, associations, and to the community in general) and conveys educational messages through power bills and envelopes, fairs and events, rural calendars (which allow self-reading of consumption levels), and the Company’s website (www.copel.com), which was redesigned in 2008, for easier and faster browsing by all stakeholders, including those with visual impairment.
A new power consumption simulator, which allows users to assess the electricity expenses in their households or by individual appliance, has also been included in the Company’s website. COPEL’s online content is also available on mobile devices such as cellphones or PDAs. COPEL’s website averages over 160 thousand visitors a month.
Information on the safe use of electric energy to prevent accidents and preserve life is also made available on the radio – through a cooperation agreement with the Radio Broadcasters Association of Paraná, which comprises about 240 broadcasters, transmitting educational messages eight times a day. In 2008, the Company rewrote its radio messages as short theatre plays about everyday life situations. Through the voluntary participation of its employees, COPEL conveys more sympathetic messages, which strike a chord with the Company’s customers by being closer to their reality. Greater credibility among the community is also achieved through the work of COPEL’s employees, which uphold the Company’s values.
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Other noteworthy institutional and marketing communications actions by COPEL include:
School Kit
The school kit is a booklet on the safe use of electricity and on the prevention of accidents at schools, which is accompanied by a notebook, a ruler, and a memory game. In 2008, 200 thousand kits were distributed at 1321 schools, during lectures given by safety technicians and 645 volunteers throughout Paraná, reaching 125,981 4th grade students in 358 municipalities. In 2009, the Company expects to distribute its school kit to 130 thousand students.
Collection agentsSince 1985, COPEL maintains cooperation agreements with a network of collection agents. The Company has pioneered the use of this alternative bill collection channel. Currently comprising 2,030 establishments in Paraná, in both urban and rural areas, COPEL's network of collection agents is responsible for collecting payment of around 40% of all electricity bills, which corresponds to about 1.2 million bills a month. These cooperation agreements also provide for the distribution of informational materials on the safe and efficient use of power.
Mobile service stations
With 15 mobile stations visiting small towns and major city neighborhoods which do not have COPEL service offices, the Company provides access to its services and information on the safe and efficient use of power, on rights and duties, and on social programs. In 2008, these units held 333 events.
4.1.6. Suppliers
COPEL procures goods and services in compliance with Law no. 8,666/93 (Public Tender Law) and with other applicable legislation, thus it cannot choose suppliers according to geographic area. The law provides for the equality of all bidders, and the Company is responsible for establishing technical and commercial requirements and ensuring the publicity of the process. In 2008, approximately 49.0% of the total amount under contracts for goods and services signed by COPEL was paid to suppliers within the State of Paraná, 50.9% to suppliers from other states, and 0.1% to foreign suppliers.
In the process of supplier registration and bidder qualification, COPEL requires a declaration, signed by a duly identified partner, owner, or manager, that the company does not assign night, dangerous, or hazardous work to employees under 18 years of age and any work at all to individuals under 16. Applicants are also required to declare whether they employ individuals at the age of 14 or older as apprentices. During the process of qualification of suppliers, which are ranked according to the kind of service provided and to company size, COPEL evaluates legal, tax, economic, financial, and technical aspects; qualified companies receive proof of registration, which is used by them to apply for future tenders by the Company.
Contracts for goods and services signed by COPEL with its suppliers are managed by contract managers who are present in all Company offices and who are responsible for the continuous and comprehensive supervision, inspection, and control of the execution of these agreements and of the fulfillment of all contractual terms and conditions until their expiration, pursuant to the Company’s own technical and administrative rules and manuals.
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In 2008, COPEL’s priority was not only to create mechanisms to monitor the actual execution of contract provisions about social responsibility and human rights but also to provide guidance about the monitoring procedures. Thus, COPEL allowed suppliers to take part in the process and receive, at specific workshops held by the Company, information about the interpretation of the agreements they have signed.
In compliance with a State Government guideline, COPEL has conducted public tenders, whenever legally possible, through electronic bidding. This initiative aims to ensure greater transparency to all actions taken by management, to make the process more accessible by increasing its publicity, and to allow suppliers from all over Brazil to participate without the need for travel to the place where the bidding process is being conducted. Very small businesses or small enterprises (as defined by Brazilian Law) participating in a bidding process will be granted priority in the event of a tie, pursuant to Complementary Law no. 123/2006.
4.1.7. Workforce
COPEL’s 8,405 regular employees are distributed into four careers according to the nature of their duties and the requirements for their positions: operational (2,746 employees), administrative (2,474 employees), high school level technicians (1,778 employees), and college level professionals (1,407 employees). The Company has been expanding its workforce and in 2008 it hired, through public admission tests, 500 new employees (not including personnel hired by subsidiaries Compagas and Elejor). During the year, 444 employees left the Company, most of them on account of retirement, and the employee turnover rate was 5.66% .
Every regular employee of COPEL is hired through public admission tests, which are open to native-born or naturalized citizens of Brazil, regardless of gender, race, or religious beliefs. COPEL sets aside a share of the jobs available through public admission tests for applicants with disabilities and for African-Brazilians. In 2008, the Company assigned 5% of the available administrative jobs to applicants with disabilities. Thirteen African-Brazilian and 45 “mixed” (“pardos”) applicants were also hired.
In the past 12 years, COPEL's own workforce has grown. During this time, however, there was a downward curve from 1995 to 2002, due to a policy of outsourcing and incentives to early retirement and voluntary redundancy, in preparation for the Company's privatization process, which was never completed. The increase in personnel since 2003 reflects the decision to no longer privatize the Company, to expand its workforce to meet the restrained demand for labor, and to conduct essential services which are directly tied to COPEL’s business in-house.
Professional Development
The Company relies on several forms of training to qualify its employees and continually improve their performance, making use mostly of internal courses to supply demands resulting from the implementation of new technologies and procedures. In 2008, 2,497 training events took place (courses, seminars, and lectures), out of which 2,029 were conducted internally and 468 externally, with a total attendance of 35,292 COPEL employees and 596 workers from contractors. One of the highlights was the training provided to almost 500 employees (managers, supervisors, and professionals) on the regulatory aspects of the power sector, so they can add technical knowledge to their everyday activities. The average overall training hours per employee ratio was 61.7, distributed as follows among COPEL’s career tracks:
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Employee training by career | 2008 (average hours) | |
Operational staff | 67.9 | |
Administrative staff | 35.2 | |
Technical staff | 71.6 | |
College-level professionals | 81.7 | |
COPEL has a personnel training and development committee composed of representatives of all areas of the Company and which is responsible for strategic decisions regarding personnel training and development, such as institutional post-graduate programs, participation in events abroad, among others. The Company also adopts a consistent policy to improve the educational levels of its employees, with significant investments in post-graduate courses and incentives to self-development, through an allowance-for-education program. The Company currently has 3,322 college-graduated employees, of whom 946 have also attended postgraduate courses at the specialization level, 134 have been awarded Master’s Degrees, and 15 are PhDs.
Salary Policy
COPEL’s policies concerning wages, performance recognition and incentive are based on a model structured upon two pillars: a fixed remuneration (compatible with the job market and the individual merit) and a variable remuneration (employee profit sharing or participation in results). COPEL and CENPRL, a commission set up to address employee profit sharing, have made significant progress in their negotiations, establishing corporate goals, which were renegotiated in 2008. COPEL’s Career and Salary Plan was restructured to reflect the Company’s occupational reality, and serves as a reference for the fixed remuneration, to ensure the wages paid by the Company are compatible with market values and to enforce its salary policy. The ratio between the lowest salary paid by the Company on December 31, 2008 (R$ 822.52) and the national minimum wage in effect on that date (R$ 415.00) was 198%, and there wasn’t any significant discrepancy last year between women’s and men’s basic wages.
Benefits
In addition to the benefits mandated by labor laws, COPEL directly grants its employees the following ones: allowance for education, a vacation bonus, food allowance, allowance for day nursery, assistance to persons with special needs, and others made possible under an agreement between COPEL and Social Security (INSS). In addition, the COPEL Foundation (Fundação COPEL de Previdência e Assistência Social), sponsored by the Company, provides the following benefits: a private pension plan, additional to the pensions paid by Social Security, and an extensive healthcare and dental assistance plan, one of the best on the market.
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Freedom of Association and Collective Bargaining
All employees are represented in their labor relations with the Company by independent labor unions, which, pursuant to the applicable Brazilian legislation, may be established according to employee category and territorial basis (municipality).
COPEL maintains a close relationship with all 18 unions that represent its employees: unions representing basic categories (power industry employees) and professional and/or specialized categories. Union representatives have free access to local managers and Company facilities to talk to employees, besides having a formal channel of communications with Human Resources.
Employee participation in the labor negotiations is very important and extends from attending the meetings called by the unions to discuss the agenda of labor demands to voting for accepting or rejecting the Company’s proposals. COPEL also fosters employee participation in trade associations, professional councils, and other entities.
Additionally, COPEL strives to inform its employees about significant changes in its operations, always with as much advance notice as possible, and with the participation of unions, when applicable.
Workplace Health and Safety
Factors which influence the health and safety of COPEL’s employees are identified and addressed through the following specific corporate actions:
- Environmental Risk Prevention Program (PPRA);
- Occupational Health Control Program (PCMSO);
- “Give Life Preference” - Permanent Safety and Health Campaign;
- Workplace Fitness and Physical Conditioning Program;
- Workplace Safety and Health Management Program (GSST);
- A systematic risk assessment application, available on the Company's intranet, to record and control the solutions to near-accidents and accident risk situations in the Company’s internal and external facilities;
- The Workplace Safety and Health Portal, available on the Company's intranet to all employees and outsourced personnel, to collect news, files, and information about workplace health and safety;
- Program for the Elimination of Risk Situations within the Power Distribution Grid, designed to correct specific risks within the Company’s distribution network.
Furthermore, COPEL manages the activities of its workplace safety professionals, through the signature of agreements specifying service to the respective areas.
Specific measures regarding the provision of temporary grounding such as grounding saddles, fiber ladders, harnesses, training and communication about sustainability and social responsibility, baskets in utility trucks to reduce electrician workload, modular frames in technical support vehicles, among others, also contribute to the prevention of accidents and the promotion of health in the workplace, in addition to the activities conducted by the Internal Accident Prevention Commissions (Comissões Internas de Prevenção de Acidentesor CIPAs), of which there are 43 within COPEL.
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4.1.8. Employment Indicators
The following table features information about employment at COPEL from 2006 through 2008:
Employment Indicators | 2008 | 2007 | 2006 | |||
Employees aged up to 30 (%) | 23.31 | 24.25 | 22.38 | |||
Employees aged between 31 and 40 (%) | 20.75 | 22.13 | 21.53 | |||
Employees aged between 41 and 50 (%) | 41.29 | 41.39 | 42.74 | |||
Employees aged over 50 (%) | 14.64 | 12.23 | 13.35 | |||
Number of women relative to total workforce (%) | 17.93 | 17.79 | 17.72 | |||
Percentage of women in management-level positions | 12.07 | 11.20 | 11.42 | |||
Female African-Brazilian employees (black and mixed-race) in the workforce (%) | 0.79 | 0.71 | 0.70 | |||
Male African-Brazilian employees (black and mixed-race) in the workforce (%) | 8.97 | 2.58 | 2.23 | |||
Management-level positions occupied by African-Brazilian employees (black and mixed- race) (%) | 5.01 | 4.95 | 5.08 | |||
Percentage of interns in the workforce (%) | 5.54 | 11.06 | 11.04 | |||
Employees hired under the apprenticeship program(***) (%) | 1.04 | 1.01 | 0.92 | |||
Employees with disabilities (%) | 74 | 54 | 52 | |||
Wages paid during the year (in thousands of R$) | 484,257 | 451,156 | 434,479 | |||
Gross payroll | 630,551 | 587,021 | 579,944 | |||
Mandatory social charges | 155,715 | 144,643 | 146,955 | |||
Benefits | ||||||
Education allowance | 2,526 | 2,296 | 2,130 | |||
Food allowance | 58,031 | 54,505 | 49,586 | |||
Healthcare | 20,553 | 57,076 | 26,501 | |||
COPEL Foundation | 16,855 | 64,348 | 52,620 | |||
Labor claims, supplemental sick leave pay, insurance, surplus transportation tickets, disability pay, accidental death, and nursery allowance. | 1,746 | 10,628 | 10,161 | |||
Profit sharing (totals for each year) | ||||||
Total expenditures with COPEL’s profit sharing program (in thousands of R$) | 65,816 | 54,254 | 52,028 | |||
Amounts distributed compared to total payroll (%) | 10.4 | 9.2 | 9.0 | |||
COPEL’s stock held by employees (%) | 0.01 | 0.01 | 0.01 | |||
Ratio between the highest and lowest wage paid in cash by COPEL (includes profit sharing and bonuses) | 27 | 29 | 27 | |||
Ratio between COPEL’s lowest wage and the legal minimum wage (includes profit sharing and bonuses) | 1.98% | 2.01% | 2.07% | |||
Wage profile (percentage of employees in each monthly wage bracket), in R$: as of December | ||||||
Up to 2,000.00 | 51.76 | 57.64 | 60.92 | |||
From 2,001 to 4,000 | 35.02 | 30.90 | 28.23 | |||
From 4,001 to 6,000 | 5.83 | 4.85 | 4.51 | |||
Over 6,000 | 7.39 | 6.61 | 6.34 | |||
Average salary by employee category (in thousands of R$) | ||||||
Management-level positions | 7,605 | 7,041 | 8,848 | |||
Administrative positions | 1,785 | 1,537 | 1,546 | |||
Production positions | 2,582 | 2,357 | 2,289 | |||
Workplace health and safety (annual figures) | ||||||
Average overtime hours by employee/year | 12.29 | 11.35 | 13.40 | |||
Total number of workplace accidents involving employees | 153 | 208 | 210 | |||
Number of accidents typical of COPEL’s core activities involving employees | 120 | 166 | 162 | |||
Total number of travel accidents involving employees | 28 | 36 | 36 | |||
Number of occupational illnesses involving employees | 7 | 6 | 12 | |||
Number of Company employees who were victims of accidents | 155 | 211 | 215 | |||
Number of days lost on account of accidents involving Company employees | 16,253 | 27,361 | 19,996 | |||
Total number of workplace accidents involving outsourced labor/contractors | 136 | 111 | 91 | |||
Workplace accident average per employee/year | 0.018 | 0.025 | 0.026 | |||
Accidents resulting in temporary leave by employees and/or contractors (%) | 50.97 | 58.60 | 60.90 | |||
Accidents resulting in mutilation or other injuries to employees and/or service providers, with permanent disability leave, including RSIs (%) | - | - | - | |||
Accidents resulting in the death of employees and/or service providers (%) | 0.69 | 1.94 | 1.33 |
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Total Frequency Rate for COPEL employees | 9.85 | 13.72 | 14.02 | |||
Expenditures in specific programs for HIV-positive employees (in thousands of R$) | N/A(*) | N/A(*) | N/A(*) | |||
Expenditures in alcohol and drug addiction prevention and treatment programs (in thousands of R$) | 20 | 14 | 17 | |||
Formal education and professional development (as of December): percentage of the workforce | ||||||
Employees with only elementary school education | 5.78 | 5.95 | 6.20 | |||
Employees with high school education | 54.68 | 56.26 | 55.81 | |||
Employees with college education | 39.53 | 37.79 | 38.00 | |||
Employees with postgraduate education: specializations/master’s degrees/PhDs | 13.01 | 12.04 | 12.37 | |||
Illiterate employees | - | - | - | |||
Amount invested in professional development and education | - | - | - | |||
Professional development hours per employee/year | 61.7 | 70.0 | 59.3 | |||
Workforce totals, hirings, and layoffs | ||||||
Total number of employees at the end of the period | 8,405 | 8,347 | 8,119 | |||
Hirings during the period | 500 | 645 | 930 | |||
Labor claims by laid off employees during the period (%) | 7.88 | 6.15 | 11.82 | |||
Labor claims | ||||||
Total labor claims during the period(1) | 35 | 26 | 61 | |||
Amounts claimed in lawsuits (in thousands of R$)(2) | 40,512 | 42,343 | 36,718 | |||
Provisions under liabilities (in thousands of R$)(3) | 94,961 | 80,892 | 77,321 | |||
Number of existing lawsuits(4) | 2,117 | 1,889 | 1,692 | |||
Number of employees involved in lawsuits(5) | 362 | 295 | 162 | |||
Number of beneficiaries of COPEL’s pension plan | 8,852 | 8,258 | 8,039 | |||
Number of beneficiaries of the retirement preparation program | 279 | 56 | - | |||
Outsourced labor (as of December)** | ||||||
Number of outsourced/contractor employees | 5,080 | 2,237 | 2,227 | |||
(*) | N/A: not applicable | |
(**) | Since COPEL hires outsourced labor though service providers, it does have any records about the wage, education, and Severity Rate levels of outsourced/contractor employees | |
(***) | COPEL is subject to State Decree no. 3,492/2004, which has established the Teenager Labor Market Insertion Program. Teenagers are hired for one year, extendable to two years, for four hours of daily work, from Mondays through Fridays. | |
(1) | Claims filed against COPEL by former employees and those registered under CPJ | |
(2) | Estimated and restated amounts, excluding interest, of lawsuits by former employees in progress as of December 2008 | |
(3) | Estimated amounts, with interest, of lawsuits by former employees | |
(4) | Number of lawsuits excluding those nearing conclusion or suspended by court-approved settlement, as well as those filed by COPEL | |
(5) | Lawsuits filed in 2008 and still in progress |
COPEL informs that each active member of the Board of Directors and of the Fiscal Council receives monthly compensation corresponding to 15% of the average salary paid to each Chief Officer, including Christmas bonus (13th salary), subject to the terms of article 11 of the Regulation approved under State Decree no. 6,343/1985.
4.2. Power Sector Performance
Energy Universalization and theLuz para TodosProgram
Under Resolution no. 223, dated April 29, 2003, later amended by Resolution no. 52, dated March 25, 2004, and Resolution no. 175, dated November 28, 2005, ANEEL set forth the overall conditions for the development of Electric Energy Universalization Plans, regulating the provisions of articles 14 and 15 of Law no. 10,438, dated April 26, 2002, as amended by Law no. 10,762, dated November 11, 2003, and 10,848, dated March 15, 2004.
On November 11, 2003, the Ministry of Mines and Energy (MME), under Decree no. 4,873, established the National Program for the Universalization of Electric Energy Use and Access, namedLuz para Todos (“Light for Everyone”), which aims to provide electricity to the share of Brazil’s rural population, focused on family agriculture, which does not yet have access to this public service.
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Priority of service is granted to current inhabitants of former fugitive slave camps and other racial minorities; rural settlements and native-Brazilian communities, through requests by the National Colonization and Rural Reform Institute (Instituto Nacional de Colonização e Reforma Agráriaor INCRA) and the National Native Brazilian Foundation (Fundação Nacional do Índioor FUNAI), respectively.
The table below features information about COPEL’s progress, from 2006 through 2008, in supplying customers under the program and about the sources of the invested funds:
Luz para TodosProgram | ||||||||
2008 | 2007 | 2006 | ||||||
Number of connections | 12,000 | 8,419 | 10,009 | |||||
Sources of funds (in thousands of R$) | ||||||||
Federal Government | Energy Development Account - CDE | 5,086 | 12,744 | 12,703 | ||||
Global Reversal Reserve - RGR | 32,066 | 16,992 | 16,937 | |||||
State Government(1) | - | 15,228 | - | |||||
Own funds | 55,504 | 5,234 | 62,460 | |||||
Other | - | - | - | |||||
Total funds applied | 92,656 | 50,198 | 92,100 | |||||
(1) The Letter of Commitment and Cooperation Agreement with the State Government for 2008 is currently being formalized. In 2007, the Company recorded the amounts corresponding to the State Government's share for the 2006/2007 period.
Further information about the program is available on Note 18-c.
Creation of Special Rates for Rural Customers
Given the high consumption of other forms of energy by rural customers, particularly by poultry farmers, COPEL created the Late Hours Rural Rate (which is the same rate applied to irrigation customers supplied at low voltage), in order to encourage customers to use electricity instead of other forms of energy, without the need for additional investments in the distribution grid, and to foster consumption during late night hours, contributing to the environment.
4.2.1. Power Distribution Programs
Sustainability-wise, it is essential for power utilities to create conditions for the universal access to the public service they provide. In addition to theLuz para Todos Program, COPEL conducts other integrated programs, in cooperation with the Federal and State Governments, as shown below.
Luz Legal Program
The socially-orientedLuz LegalProgram was implemented in December 2003, under a cooperation agreement signed by the Paraná State Government, the Housing Company of Paraná (Companhia de Habitação do Paranáor COHAPAR), and COPEL, with the goal of eliminating illegal connections by providing official connections to families living in squatted areas, improving their social conditions and promoting safe use of electricity.
COHAPAR is in charge of selecting the communities and regularizing the occupation of the squatted areas, while COPEL extends its distribution grids, as necessary, and builds access points for the electricity meters, financing the costs to customers in 24 installments with no interest and no monetary restatement, charged to each customer’s electricity bill. In 2003-2008, 3,942 customers benefited from the program.
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Low Income Program
The Federal Government, by means of Law no. 10,438, dated April 26, 2002, established the Energy Development Account (Conta de Desenvolvimento Energéticoor CDE), to ensure, among other goals, funds for the economic subsidies that support low income electricity rates to final customers in the low income residential customer subcategory. ANEEL set forth a new methodology for the calculation of the economic subsidy to which utilities are entitled, in order to offset the effects of the rate policy applicable to low income customers.
Thus, the Low Income Program, in association with the Federal Government, provides discounts of up to 65% to residential customers with monthly consumption of up to 220 kWh. The following table features information about COPEL’s service to low income customers from 2006 through 2008:
Low Income Rate | 2008 | 2007 | 2006 | |||
Number of “low income” households served(*) | 722,764 | 745,956 | 784,477 | |||
Percentage of low income households out of all households served (residential customers)(**) | 25.97 | 27.49 | 29.15 | |||
(*)Monthly average (**) Recalculated amount for 2006 and 2007, taking into account all residential customers (regular residential customers and low income customers). |
Luz FraternaProgram
This program has been implemented in cooperation with the State Government to provide full exemption from payment to low income and rural customers with monthly consumption up to 100 kWh, whose bills are paid by the State Government.
The table below features the number of customers who benefited from theLuz FraternaProgram from 2006 through 2008:
Luz FraternaProgram | 2008 | 2007 | 2006 | |||
Number of customers served | 237,596 | 255,361 | 250,765 | |||
Night Irrigation Program
This program has been implemented in cooperation with the State Agriculture and Food Supply Department, the Paraná Institute for Technical Assistance and Rural Extension (Instituto Paranaense de Assistência Técnica e Extensão Rural or EMATER), the State Environmental Department, and other government agencies, with the goal of promoting increased agricultural productivity through discounts off the energy used at night – which vary from 60 to 70% from 9:30 pm to 6 am – for the deployment of irrigation systems, thus resulting in increased incomes and better quality of life for the rural producers eligible for the National Family Agriculture Support Program (Programa Nacional de Fortalecimento da Agricultura Familiaror PRONAF). In 2008, 868 farmers benefited from the special irrigation rate.
Night Aviculture ProgramThis program, which was set up under a Technical Cooperation Agreement by COPEL and the State Agriculture and Food Supply Department (Secretaria da Agricultura e do Abastecimento do Paranáor SEAB), is aimed at encouraging poultry farmers throughout the State, classified as Group B rural customers, to use electricity between 9:30 pm and 6 am, with a 60% discount, thus reducing costs and increasing output and exports of poultry from Paraná. In 2008, 2,350 farmers benefited from the special night aviculture rate.
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4.2.2. Energy Efficiency Program (EEP)
COPEL conducts an annual Energy Efficiency Program, in compliance with its concession agreement and with Law no. 9,991/2000, applying funds in projects whose goal is to promote energy efficiency among end users of electricity.
Investment criteria and the types of eligible projects are established by the National Electric Energy Agency (ANEEL), and the projects involve residential, industrial, and commercial customers, in addition to public agencies, comprising activities aimed at improving the efficiency of the main uses of power, such as lighting, mechanical power, refrigeration, and air conditioning.
With the use of “energy efficiency vans” – mobile units for interactive learning about the efficient use of electricity, outfitted with cutting-edge educational resources, whose content complies with the national school program and the Law of National Education Guidelines, COPEL spreads information about the efficient use of energy, contributing to changes in its customers' habits, with a view to fighting the waste of electricity. In 2008, 92 events were held, reaching 36,000 people.
This year, the Company invested R$ 7.3 million in actions to improve energy efficiency in low income households, charities, public buildings (municipal, State, and Federal), industries, commercial and service establishments, and educational facilities.
4.2.3. Technological and Scientific Research and Development (R&D)
In compliance with Law no. 9,991/2000, which regulates investments in research and development by concession, permission, and authorization holders in the power sector, in 2008 COPEL invested R$ 12,226 thousand in R&D projects. Further information is available in Note 26 herein.
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5. ENVIRONMENTAL PERFORMANCE
5.1. Commitment to the Environment
In the field of corporate management models for sustainability, COPEL has striven to focus efforts on ensuring balanced economic, social, and environmental results to all stakeholders, as well as the sustainable development and growth of the Company. In the past few years, the Company’s strategic focus has been placed on implementing this corporate management system for sustainability and on incorporating it into the Company’s corporate culture and everyday activities, thus upholding COPEL’s renewed commitment to the Global Compact.
All projects, programs, and actions developed by the Company are guided by its Sustainability and Corporate Citizenship Policy, discussed in the Corporate Governance section of this report, and which comprises six principles:
- 1stPrinciple:Commitment:We declare ourselves committed to the appreciation, conservation, and defense of the environment and to wide social inclusion and social justice, considering the guidelines for sustainable development in the conduct of our business.
- 2ndPrinciple:Proactive approach towards the law:We commit to complying with the applicable environmental legislation and to respecting universal human rights in the conduct of our business, and to doing more than what is required by law, whenever necessary and possible, in order to support and promote the sustainable development of the communities with which we interact.
- 3rdPrinciple:Dialogue, Communication, and Transparency:We interact transparently with different social segments, which are directly or indirectly interested in our activities, effectively taking into account their opinions and expectations.
- 4thPrinciple:Respect to Social and Environmental Dynamics:We pay close attention to the factors that determine social and environmental dynamics, constantly revising our principles, in the pursuit of better performance.
- 5thPrinciple:Individual Responsibility:We encourage our workforce to adopt a respectful and responsible attitude towards all stakeholders, ensuring daily corporate practices that are consistent with their personal values and with the Company's values.
- 6thPrinciple:Appreciation of Diversity:We appreciate the diversity of natural and social ecosystems, in all their multiple aspects.
5.2. Environmental Management
COPEL’s corporate environmental management is set up to respond to the challenges of leading the Company and its wholly-owned subsidiaries to the accomplishment of the strategic references set forth in its mission and vision statements, and to reaffirm before all stakeholders the commitments the Company has undertaken.
Accordingly, the recently established Chief Environmental and Corporate Citizenship Office has taken measures, taking into account the specific characteristics of each subsidiary, through matrix workgroups, in the following areas:
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- Institutional area: to systematically integrate processes and to perform institutional representation;
- Legal area: to proactively conduct internal processes, with a view to complying with the environmental legislation;
- Sustainability area: to align the Company’s sustainability tripod, covering the environmental, social, and economic areas, with its strategic frame of reference; and
- Research and Development (R&D), Science and Technology (S&T), and Innovation area: to drive the Company’s internal processes towards sustainability, with a view to the search of new renewable energy sources to diversify its range of energy options and of technologies which can mitigate social and environmental impacts.
5.2.1. Environmental Impacts
The social and environmental aspects and impacts of COPEL’s projects are identified through such legal instruments and mechanisms as Environmental Impact Assessments and Reports, Basic Environmental Projects, Environmental Control Plans, Simplified Environmental Reports, and environmental licensing, in addition to both internal and external environmental auditing. These practices are integrated into COPEL’s Risk Management and Control Policy. The table below features information about these practices and the mitigation, elimination, or compensation of negative social and environmental impacts:
ENVIRONMENTAL IMPACTS | ||||||||||
Actions | ||||||||||
A | Construction, operation, and maintenance of hydroelectric power plants | |||||||||
B | Construction, operation, and maintenance of thermal power plants | |||||||||
C | Operation, maintenance, and new projects for distribution and transmission systems | |||||||||
D | Storage, handling, transport, and final disposal of waste | |||||||||
Potential negative environmental impacts | ||||||||||
1 | Permanent flooding of land areas | A | ||||||||
2 | Soil degradation for dam construction | A | ||||||||
3 | Loss or changes in biodiversity | A | ||||||||
4 | Changes in bodies of water | A | ||||||||
5 | Changes in the use of soil | A | ||||||||
6 | Changes in regional landscapes | A | ||||||||
7 | Mandatory resettlement of affected populations | A | ||||||||
8 | Breakdown of social relations and cultural elements | A | ||||||||
9 | Production of waste | A | B | C | ||||||
10 | Production of effluents | A | B | |||||||
11 | Contamination of soil and/or water on the surface or underground (accidental spills, release of effluents or inadequate disposal of waste) | A | B | D | ||||||
12 | Emissions of gases and particles into the atmosphere, resulting from the operation of facilities | B | ||||||||
13 | Noise | B | C | |||||||
14 | Changes in the everyday life of the communities surrounding the Company's facilities | B | ||||||||
15 | Elimination of vegetation | C | ||||||||
16 | Visual pollution | C | ||||||||
17 | Accidents involving the population | C | ||||||||
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Practices for the treatment of social and environmental impacts | Impacts | |
Guiding plan for the use of reservoirs and their surroundings | 1,5,6 | |
Program for the Recovery of Degraded Areas: Waterside Forest Program | 2,3 | |
Program for the creation of conservation units | 3 | |
Monitoring of ichthyofauna | 3 | |
Program for the repopulation of rivers with native species | 3 | |
Monitoring of the water quality in reservoirs | 4 | |
Tribute to the Waters Program | 4,8 | |
Program for the resettlement of populations within areas affected by power plant reservoirs | 7,8 | |
Iguaçu Regional Museum | 8 | |
Corporate waste management: Zere Program (power plant waste management); regeneration of insulating mineral oil | 9,11 | |
Preservation of the vegetation under transmission lines | 9,15 | |
Urban forestation management | 9,15,17 | |
Power distribution technologies: Isolated compact-design lines, secondary isolated lines, and photovoltaic systems | 9,15,17 | |
Project for the evaluation of the use of vegetable oils as insulation in electric equipment | 11 | |
Biorecovery of areas contaminated by insulating mineral oil | 11 | |
Corporate management of greenhouse gases | 12 | |
Underground grids and sheltered substations | 13,15,16,17 | |
Program for Information and Relations with the Community | 14,17 | |
Call center for the protection of COPEL-owned land: a toll-free call center to receive reports, which are verified and addressed through inspection and delimitation of risk areas to prevent invasions and accidents | 17 | |
5.2.2. Technologies and Practices Adopted to Control Environmental Impacts
Control of invading species
Foreign plant species with great invading power and which alter the natural environment of the areas where they spread must also be eliminated, contributing to the environmental recovery of these areas.
In 2008, COPEL carried on the measures to detect and fight the so called golden mussel, an invading species which has been found in the reservoirs of several power plants in Brazil, by conducting specific campaigns and research about control methods in cooperation with the Institute of Technology for Development (LACTEC). Studies have been conducted to find alternatives for the disposal of the mussels’ waste, which has been collected and stored in barrels, and samples have been collected, after they were dried, for analysis and classification pursuant to the specific rules on solid waste issued by ABNT (NBR 10,004/2004). Measures will be taken, based on the results of this analysis, to: process this waste so as to make it a compound which may be incorporated into the soil; use it as seedbed for seedlings in the forest greenhouses maintained by the Company; and to establish a protocol for its collection and storage.
The method for the control of the golden mussel infestation at the Governor José Richa Hydroelectric Power Plant is electronic, through the use of specific software which controls the injection of sodium hydroxide in the water of the pipeline cooling system to raise its pH level, thus preventing the attachment of new mussel larvae and eliminating those which have already attached themselves. The Company conducts periodic cleaning to remove patches formed by mussel colonies which are eliminated by the sodium hydroxide and attach themselves to filters or system bottlenecks.
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Power plant resettlement program
COPEL, in order to improve the quality of life of the families surrounding its power plants and prevent their exodus into cities, provides technical support to the resettled families to help them work again and generate income, in a sustainable manner, in their new communities.
In 2008, the Company carried on georeferenced topography assessments and surveys of the use of land in rural properties, with a view to the technical and legal regularization under the resettlement program of the Governor José Richa Hydroelectric Power Plant, which is scheduled to be concluded in 2012.
Also in 2008, COPEL transferred title to the land occupied by 77 families which have been resettled in the Segredo IV settlement, in the town of Mangueirinha, in central-southern Paraná, which has welcomed part of the population affected by the construction of the Governor Ney Aminthas de Barros Braga Hydroelectric Power Plant. The Company has set up an entire range of infrastructure projects in this area, including houses, warehouses, and community facilities such as churches, a school, a community center, a medical station, among others, to ensure service to the community.
Monitoring of Power Plant Reservoirs
COPEL monitors the water quality and the ichthyofauna within its 18 hydroelectric power plant reservoirs, in compliance with the requirements for the operating licenses issued for its facilities. The Company also conducts research for purposes of scientific development and conservation and preservation of the surrounding habitats.
Control and monitoring of environmental risks and liabilities
Based on the environmental risk and liability assessment process conducted by COPEL in 2007, multi-year action plans have been set up and carried out during 2008 to remedy identified weaknesses, in order to minimize the social and environmental risks to which COPEL is exposed. To carry out these actions, COPEL invested funds in several different projects such as biorestoration of areas contaminated by insulating mineral oil leaked by power distribution operations, reforestation of waterside areas, elimination of the use of askarel in power plants, and assessment of nutrient loads –algae proliferation in power generation projects, for a total of R$ 1,711.4 million. This assessment is reviewed and updated annually, providing a guideline for the actions to be taken in the next year.
Technical Instruction Manual – Environment: operating procedures
COPEL maintains an updated set of procedures to be followed within the Company to ensure that its activities result in the minimum environmental impact possible. These procedures are published in the Technical Instruction Manual – Environment. When it is necessary to cut down vegetation to expand power distribution grids, the Company focuses first on areas surrounding access ways and areas which have already been occupied by man to implement new projects.
In order to preserve native vegetation in light of the construction of new transmission lines, COPEL raised the supports of transmission lines in several areas. The criteria for minimization of impacts such as minimum tree trimming in easement areas and the raising of transmission line structures has preserved, in the past three years, about 140 hectares of vegetation.
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In 2008, COPEL launched the transformer decommission program, to identify and remove transformers which are not in use and which are subject to theft and vandalism, thus mitigating the risk of environmental pollution by oil spills.
Controls of the large-scale environmental process
The processes which have the largest environmental impact are controlled under SOX, by internal auditors, and audited by independent auditors, through the survey of internal controls, which are classified as insufficient, ineffective or non-existing, and the establishment, by the relevant areas of the Company, of action plans to make them effective, thus resulting in improved management and greater reliability of these internal controls.
5.2.3. Policies for Operations in Environmental Preservation Areas
In compliance with ANEEL Resolution no. 456/2000, COPEL does not provide connections in federal, state, or municipal environmental preservation areas. Environmental agencies have a pivotal role in this matter, since they are consulted by COPEL before service requests in these areas are completed and asked for authorization to provide service to customers with potentially pollutant activities, pursuant to the applicable legislation and to the guidelines issued by the Environmental Institute of Paraná (Instituto Ambiental do Paranáor IAP).
Authorization by the Regional Administration of Federal Property (GRPU) is required for power connections to properties owned by the Federal Government in the coastal area of Paraná, which creates an obstacle to their illegal occupation.
In 2008, COPEL negotiated a cooperation agreement with the State Environment and Water Resources Department (Secretaria de Estado do Meio Ambiente e Recursos Hídricos or SEMA) and the towns of Pontal do Paraná and Guaratuba, with the goal of preserving the remaining swamplands in the Paraná coastal area. The agreement, which has already been approved by COPEL’s Board of Officers, has been subject to ANEEL approval, after which COPEL will be able to provide 5,100 meters of eucalyptus poles to local administrations which will then set them up along swamplands which are threatened by heavy vehicle and human traffic, thus allowing these areas to naturally regenerate.
5.2.4. Renewable Energy Sources
In compliance with the guidelines issued by the Company's Board of Directors, COPEL has developed several studies with a view to analyzing the feasibility of the diversification of the current range of energy sources. The highlights are:
Wind power
In 2008, COPEL issued updated versions of Paraná’s wind power atlas and wind power maps, both in paper and in digital format (CD-ROM), for distribution to potentially interested entities. The State’s wind power potential, with winds over 7 m/s at a height of 50 m, went from 128 MW (as estimated in 1999) to 312 MW. At the height of 75 m, the estimated potential is 1,363 MW. COPEL began in 2008 technical, economic, and environmental feasibility studies for the participation in future auctions of power from wind power sources or in the second stage of the Program for Incentives to Alternative Electric Energy Sources (Programa de Incentivo às Fontes Alternativas de Energia Elétricaor PROINFA), to set up a portfolio of about 1,500 MW. The Company is currently seeking partnerships with companies which have already conducted wind power potential studies.
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Distributed power generation
COPEL participates, under a partnership with Itaipu Binacional and SANEPAR, in a project for the diversification of energy sources through the implementation of distributed power generation based on biogas from hog waste.
A test project for distributed generation using biomass connected to COPEL’s grid achieved very significant results, with satisfactory operational performance of the prototype facility. Institutional restrictions to the program have been overcome, and the purchase of microgenerators shall be formalized in 2009. The test project, comprising six facilities, is scheduled to be concluded in the first half of 2009. COPEL will only be able to develop a more thorough State-wide program, which will require approval by ANEEL, after the test project is completed and its results analyzed.
Biomass
COPEL has already conducted an assessment of the biomass potential in the State of Paraná and identified potential in the area surrounding the town of Tunas for the installation of a Small Thermal Power Plant running on wood waste.
Biofuels
The Company carried on in 2008 an economic, technical, and financial pre-feasibility study for the implementation of a small biodiesel plant, with nominal daily capacity of five thousand liters of biodiesel. This project will be developed as an R&D project, and COPEL is currently in negotiations with potential partners and other parties involved.
In addition, a technical and economic feasibility study was conducted under Petrobras coordination for the construction of an alcohol pipeline for transport of ethanol from the producing areas in the states of Mato Grosso do Sul and Paraná to the Port of Paranaguá. The final report indicated the project was economically and financially unfeasible due to insufficient alcohol volume to be transported over the useful life of the pipeline. The project is, however, still being debated, and the study may be reviewed in the future.
Thermal power plants running on sugarcane pulp
COPEL published in 2008 a tender notice to select alcohol and sugar processing facilities interested in establishing partnerships for the development and implementation of small thermal power projects running on sugarcane pulp. One proposal was chosen and is currently being reviewed and approved. Due to the interest shown by some plants, a new process to select alcohol and sugar processing facilities is currently under development, through a new tender notice, which will be permanent.
The Company’s goal is to secure majority interests in such projects up to 120 MW of installed capacity, with investments of R$ 260 million, to be provided by all partners.
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Alcohol and sugar processing facilities will provide the sugarcane pulp and the water necessary to the operation of the thermal facilities, receiving – under long-term contracts – steam and a share of the generated power for their own use. Surplus power will be sold at power auctions in the regulated environment or through tender notices for the procurement of distributed generation to supply the Company’s captive market. Any amounts of power which are not committed under such arrangements may be sold on the free market. The chosen selling arrangement shall be the one which is most advantageous to the facility.
According to estimates by COPEL, the sugarcane pulp surpluses available in Paraná would be enough to feed a set of thermal facilities with total capacity of 600 MW.
Microalgae
COPEL is currently conducting research on the development of microalgae for the large-scale production of oil for energy purposes.
Electric vehicles
COPEL is currently engaged in a partnership agreement with Itaipu Binacional, Swiss company Kraftwerke Oberhasli Ag – KWO, and Fiat Automóveis, among others, for the acquisition of three electric vehicles, to support research on batteries and charging stations.
Photovoltaic system
Photovoltaic systems are an alternative for supply to customers from different categories such as residential, conservation units, or customers in areas where regular grids would pose a high environmental impact, that employs solar energy to provide electricity to environmental parks, lighthouses, surveillance stations, and others, in remote and difficult to reach locations. Government agencies such as the Brazilian Environment and Renewable Natural Resources Institute (Instituto Brasileiro do Meio Ambiente de Recursos Naturais Renováveisor IBAMA), the Brazilian Navy, and the Forest Police have already been served by COPEL using photovoltaic systems.
5.3. Biodiversity
COPEL, in order to actively contribute to the preservation of biodiversity in Paraná, launched in 2008 the Biodiversity Management Program, whose strategies area)to use the potential of well preserved natural areas belonging to the Company and which are not permanent preservation or legal reserve areas, for later transformation into conservation units, more specifically private natural wealth reservations;b)to promote the environmental recovery of natural areas belonging to the Company, representative of the different vegetation and geographic regions of the State and located in administrative and operational areas, and the preservation of biodiversity in the river basins that feed COPEL’s reservoirs;c)to implement actions that contribute to the development of biodiversity corridors in Paraná;d) to encourage the construction and maintenance departments of the Company to adopt methods which minimize impacts on biodiversity in their projects; ande) to promote synergy with existing corporate programs.
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5.3.1. Tribute to the Waters
COPEL has actively participated in the Integrated Microbasin Environmental Management Program (PGAIM), developed by the State Government, to promote improved quality and availability of water through better use, management, and conservation of soil, water, and forests. It is a cooperative effort by COPEL, SANEPAR, and State Departments, to create synergies among the actions taken by each organization in the respective fields, as regards microbasins. Through the Tribute to the Waters Program, COPEL participates in the PGAIM, supported by the assurance of multiple uses of power generation reservoirs. The Company's contributions include the availability of a geographic information system with a single database and the alignment of internal projects with the PGAI proposal. These projects include: Education for Sustainability, Waterside Forests, Recovery of Degraded Areas, Repopulation of Fish Species, and Monitoring of Water Quality and Ichthyofauna.
5.3.2. Social-Environmental Urban Forestation Program
This program aims to help local administrations adequately manage urban forestation, ensure safety, and mitigate the impacts of tree trimming. By reducing entanglements between power distribution grids and urban vegetation, COPEL seeks to maximize the benefits of both. Furthermore, this activity reduces the risks of accidents and improves the reliability of power supply, promoting a more professional management of urban vegetation by local administrations, through projects using seedlings provided by the Company. In 2008, the Company served 11 municipalities, providing 3,934 seedlings for the improvement of the environmental quality in those areas.
In 2008, COPEL became a member of the Brazilian Society of Urban Forestation (Sociedade Brasileira de Arborização Urbanaor BAU) and a sponsoring member of the International Society of Arboriculture (ISA), with a view to keeping up-to-date on techniques for urban vegetation management, which may be added to its procedures and spread to the municipalities within its concession area.
5.3.3. Recovery of Biodiversity in Degraded Areas
Several tree species which inhabited Paraná’s forests are on the verge of extinction, due to indiscriminate exploitation by logging companies, to the expansion of agriculture, to the general lack of environmental awareness, among other reasons. As a form of minimizing this impact and contributing to the preservation of forests, COPEL’s Forest Greenhouses produced, among others, 320,000 seedlings of native Paraná species, such asperoba-rosa, cabriúva, imbuia,and farinha seca, which have major ecological, economic, aesthetic, scientific, and genetic significance.
5.3.4. Power Distribution Grid Technologies
For the harmonious coexistence of vegetation and power grids in areas with dense vegetation or rural areas with vegetation protected by law, COPEL adopts alternative technologies instead of conventional overhead grids. These technologies account for 22.9% of the total urban distribution grids, and 0.5% of the total rural distribution grids.
These alternative technologies include Isolated Compact-Design Distribution Lines (Redes deDistribuição Compacta Protegidaor RDCs), which are preferably used in urban areas with trees or where trees might be planted in the future, as they minimize the area of interference with vegetation and the need for tree trimming. Isolated Secondary Distribution Lines (Redes de Distribuição Secundária Isoladaor RSIs), on the other hand, have been used since 2004 as the single standard for power distribution grids at low voltages. The isolation and clustering of the lines allows them to be placed closer to tree branches, with no risk of outage in the event of occasional and temporary contact between the lines and the branches. RSIs mitigate the impact of power distribution on the flora and fauna, reducing the need for trimming and reducing accidents with birds or monkeys, for instance.
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5.4. Compensatory Actions for the Use of Natural Resources and Negative Environmental Impacts
5.4.1. Repopulation of the Rivers of Paraná
COPEL’s power generation and transmission units produce fry of native species in the Experimental Ichthyology Studies Station maintained at the Governor Ney Aminthas de Barros Braga Power Plant, in order to supply the program for the repopulation of the rivers of Paraná. In 2008, the Company released 810 thousand fry in the main reservoirs of its hydroelectric power plants and in the tributaries of the Iguaçu basin, under a cooperation agreement with IBAMA and Sadia, and under partnerships with the municipal administrations surrounding its facilities.
The implementation in 2007 of a network of channels downstream from the reservoir of the Governor José Richa Power Plant, interconnecting wells and hollows within the Iguaçu riverbed, has allowed fish to circulate, minimizing the impacts on the local water fauna.
5.5. Policies of Relations with Environmental and Inspection Agencies
COPEL continued in 2008 to implement the policy of furthering its relations with environmental agencies, with the goal of reducing the review time for the projects it submits and improving the environmental quality of its activities. Accordingly, a workgroup was set up by the Curitiba Municipal Environment Department and COPEL for the discussion of techniques employed in the management of vegetation, resulting in the achievement of the proposed goal.
Under the Company's cooperation agreement with the Environmental Institute of Paraná (IAP), COPEL has carried on the production of seedlings used in the recovery of waterside forests, pursuant to the master plans for power plant reservoirs, contributing to the increase of the workforce employed at IAP’s greenhouses.
5.6. Recovery of Degraded Areas
5.6.1. Waterside Forests: Promoting the Kyoto Protocol
Since the inception of the Waterside Forests Program in 2005, COPEL has conducted reforestation to recover the permanent preservation areas around its reservoirs. According to the 2005 estimates by the Forest Research Foundation of Paraná (FUPEF), approximately 262,130 tons of CO 2 will be removed from the atmosphere after the reforestation of 580 hectares around reservoirs. Based on that calculation, since the beginning of the program, COPEL has already recovered 204 hectares and removed from the atmosphere a total of 92,197 tons of CO2, with the recovery of 35 hectares through the planting of 160,000 thousand seedlings of native species suitable to each biome. To inform local communities about the measures taken, hundreds of signs were posted in the areas covered by the program, containing information about the extent of the environmental preservation areas.
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5.6.2. Preservation of Areas Belonging to the Federal Government
Program for the creation of conservation units
COPEL considers as sensitive those areas which warrant priority in environmental conservation processes, as well as other areas where usage restrictions must be imposed, comprising: permanent preservation areas, as defined by the Brazilian Forest Code, under Law no. 4,771/65, as amended (Law no. 7,803/89, Provisional Measure 2166-67/2000, CONAMA Resolutions no. 302 and 303/2002); and conservation units, which include full protection units, ecological stations, biological reserves, national parks, natural monuments, and wildlife sanctuaries, and also sustainable use units, including Environmental Protection Areas (Áreas de Proteção Ambientalor APAs) and others, as defined by Law no. 9,985/2000.
The table below features information about COPEL’s facilities and properties located close to or within sensitive areas:
COPEL’s facilities located close to or within sensitive areas | ||||||||
Project | Area (ha) | Municipality | Sensitive areas | Environmental importance | ||||
São Jorge HPP | 22.40 | Ponta Grossa | Campos Gerais National Park | high | ||||
66.32 | Carambeí | and Escarpa Devoniana APA | ||||||
Marumbi HPP | 225.98 | Morretes | Pico Marumbi State Park | very high | ||||
Gov. Parigot de Souza HPP | 865.18 | Antonina | Pico do Paraná State Park | very high | ||||
Chaminé HPP | 1,613.24 | São José dos Pinhais | Guaratuba APA | very high | ||||
1,900.10 | Tijucas do Sul | |||||||
Guaricana HPP | 541.54 | São José dos Pinhais | Guaratuba APA | very high | ||||
270.50 | Morretes | |||||||
Gov. Bento Munhoz | 114.56 | União da Vitória - PR | Wetlands | very high | ||||
da Rocha Neto HPP | 247.55 | Porto União - SC | ||||||
COPEL’s properties located close to or within sensitive areas | ||||||||
Name of property | Area (ha) | Municipality | Sensitive areas | Environmental importance | ||||
Castelhanos | 1,210.00 | São José dos Pinhais | Guaratuba APA | very high | ||||
Cubatão Grande | 1,210.00 | Guaratuba | Guaratuba APA | very high | ||||
Cubatão Grande (Easement) | 2,724.77 | Guaratuba | Guaratuba APA | very high | ||||
Ribeirão do Salto | 1,836.78 | Guaratuba | Guaratuba APA | very high | ||||
Salto Cubatão Grande | 166.25 | Guaratuba | Guaratuba APA | very high | ||||
Canavieiras | 1,580.80 | Guaratuba | Guaratuba APA | very high | ||||
As a way of protecting the diversity of environments and ecosystems in Paraná, COPEL maintains and protects areas of significant environmental quality, particularly in the Coastal Mountain Range and in wetlands. Furthermore, in compliance with the requirements of the Environmental Institute of Paraná (IAP), COPEL mitigates the impacts of the construction of major power generation projects by setting up conservation units, as shown in the table below, which also features Company properties located in conservation units, based on the National System of Conservation Units (Sistema Nacional de Unidades de Conservaçãoor SNUC):
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Conservation units created by COPEL (1) | ||||||
Name of property | Area (ha) | Municipality | Sensitive areas | |||
Mourão HPP | 560.40 | Campo Mourão | Lago Azul State Park | |||
1,266.96 | Campo Mourão, Luiziana | |||||
Gov. Ney Braga HPP | 1,231.06 | Pinhão | Touros River Ecological Station | |||
Jordão River Diversion HPP | 423.12 | Condoí and Reserva do Iguaçu | Tia Chica Ecological Station | |||
Gov. José Richa HPP | 107.27 | Capitão Leônidas Marques | Guarani River State Park | |||
(1)Conservation units created by COPEL as a result of its projects and managed by IAP |
COPEL properties located within conservation units | ||||
Sustainable use units | Municipalities | Area (in ha) | ||
Guaratuba State Environmental Protection Area | São José dos Pinhais and Tijucas do Sul | 3,513.34 | ||
São José dos Pinhais and Guaratuba | 6,073.93 | |||
Guaratuba, Morretes and São José dos Pinhais | 812.14 | |||
Escarpa Devoniana Environmental Protection Area | Ponta Grossa and Carambeí | 88.72 | ||
Castro | 40.10 | |||
Total | 10,528.23 | |||
Full protection units | Municipalities | Area (in ha) | ||
Pico do Marumbi State Park | Morretes | 225.98 | ||
Pico do Paraná State Park | Antonina | 865.18 | ||
Lago Azul State Park | Campo Mourão e Luiziana | 1,827.36 | ||
Tia Chica Ecological Station | Candói and Reserva do Iguaçu | 423.12 | ||
Touros River Ecological Station | Pinhão | 1,231.06 | ||
Guarani River State Park | Três Barras do Paraná | 2,235.00 | ||
Total | 6,807.70 | |||
Grand total | 17,335.93 | |||
5.7. Environmental Education
COPEL promotes environmental education through its Corporate Environmental Education for Sustainability Program, aimed at its internal audience, and through comprehensive actions involving all other stakeholders.
5.7.1. Internal Audience
COPEL’s Environmental Education for Sustainability Program contributes to the fulfillment of the Company’s mission statement and is aimed at promoting greater awareness by employees of their connection to the environment they live in, inspiring them to adopt a responsible and environmentally sustainable behavior.
In 2008, COPEL’s employees participated in 95 events, promoted either by COPEL or by third-parties, for a total of 1,987 individual participations and 1,861 hours of training, at a cost of R$ 333.6 thousand. The subject matters addressed in these events comprise sustainability, environmental management, handling of vegetation near power grids, environmental licensing, waste management, recovery of degraded areas, accessibility, and others.
The integration of this work with events held during the Internal Workplace Accident Prevention Weeks (SIPATs), addressing environmental issues, was an environmental education project also conducted in 2008.
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5.7.2. Community
COPEL promotes environmental education within its community through:
1) | a Summer Campaign, which has been held every year since 2000 on the beaches of Paraná and which comprises such activities as: |
- educational lectures as part of a campaign titled “I take care of the environment”, in which volunteer COPEL technicians visit Municipal Educational Centers promoting changes in the habits of children, who receive, after the lectures, the school kit, comprising a booklet, a ruler, a memory game, and a sticker album, which help kids retain the lessons learned, as they will use these items all school year long. In the 2007/2008 summer, lectures were held in Matinhos, Pontal do Paraná, and Guaratuba, with over 400 children in attendance. This work is supported by Tourism college students who act as promoters and multipliers of COPEL during the"Viva o Verão”Operation. This initiative is part of the cooperation agreement signed by COPEL, the State Environment and Water Resources Department, and the towns of Pontal do Paraná and Guaratuba, with the goal of preserving the remaining swamplands in the Paraná coastal area.
- distribution of kits to beachgoers containing information about COPEL and the services it provides and reusable bags;
- theatre plays written specially for children and performed in a playful manner, focusing on such current issues as recycling and citizenship.
2) | the Social-Environmental Education Program, set up through a network of social-environmental agents, the practice of dialogue, and the scheduling of events focusing on responsible habits and on corporate culture aimed at sustainability. In this area, COPEL promotes the engagement of the communities in the management and the protection of the river basins where the Company operates, with a view to improving the environmental situation of each river and thus prevent the eutrophization of its reservoirs. | |
3) | the Iguaçu Regional Museum, which features one of the most important regional collections in Paraná, highlighting the people, the fauna, and the flora of the Middle Iguaçu region. It received 15,189 visitors in 2008. | |
4) | the Environmental Education Center of the Faxinal do Céu Greenhouse, which promoted in 2008 environmental education activities attended by 11,946 people and comprising:a)educational monitoring on ecological trails;b)tree planting along the trails;c) a debate with students about environmental issues;d)story telling;e)puppet theatre and an interactive panel about the environment. These activities were one of the highlights of the XI Paraná Environmental Education Meeting, whose theme was: “Analysis of the perception of environmental degradation by 4th to 8th grade students on a visit to the Faxinal do Céu Greenhouse, Pinhão – PR”, held in October 2008, in Londrina, Paraná. | |
5) | the Unified Agenda, through a partnership with the State Environmental Department (SEMA), the Environmental Institute of Paraná (IAP), and other State agencies. The Unified Agenda promotes greater synergy among the efforts of all its participants and greater visibility of the Company’s environmental programs, which are continually realigned with the State Government’s policy. Under the Unified Agenda, activities are promoted within the community on special dates, with the participation of COPEL employees who oversee the planting of trees, with the distribution of seedlings, the restoration of waterside forests, the cleaning of lakes, the repopulation of fish, give lectures, and distribute environmental education materials, rallying the workforce and the community. |
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6) | ThePingo D’água(Drop of Water) Environmental Education Program, under a partnership with the consortium for the Environmental Protection of the Tibagi River and with the support of the 36 municipalities which are part of the consortium. In 2008, the program reached 35,742 students and 2,514 educators, with the goal of developing positive environmental perceptions and habits; the training of municipal school teachers on addressing environmental issues with their students and their communities, encouraging them to conduct field work in connection with the rational use of water and the proper disposal of waste. Under the program, the Company held theatre plays and rallies, published newspapers and pamphlets addressing environmental issues such as reforestation, and promoted exhibits and other activities for the education and transformation of the communities as far the protection of the environment. | |
7) | different events, such as:a)the four external events held by the environmental department of COPEL's distribution unit at schools, reaching 296 4th and 5th grade students, during 20 hours of training;b)the three lectures given during the Internal Workplace Accident Prevention Weeks (SIPATs), reaching an audience of 90 people, for 3.5 hours of traning;c)thanks to COPEL’s expertise in the management of urban vegetation, the technical lectures given at the 1st State Seminar on Urban Accessibility and Vegetation, held in Curitiba and promoted by the Regional Engineering, Architecture, and Agronomy Council of Paraná (CREA-PR), and at the 2nd Seminar on the Management of Vegetation Under Distribution Lines, held in Belo Horizonte (State of Minas Gerais) and promoted by Companhia Energética de Minas Gerais – CEMIG. |
5.7.3. Third-Party Employees
COPEL promotes an Environmental Awareness Program, whose goal is to promote changes in the behavior of workers engaged in the construction and renovation of the Company’s power generation and transmission facilities, leading them to become more environmentally aware and responsible and to think about the environmental impacts of COPEL’s projects and about ways to minimize these impacts. In 2008, approximately 100 employees from contractors and from COPEL itself participated in the program. Furthermore, employees from contractors involved in the maintenance (vegetation trimming and clearing) of power distribution lines received instructions through 10 events, which were attended by 138 people, with 38 hours of training.
5.7.4. Public Agencies
In November 2007, under a partnership with the State Urban Development Department (Secretaria Estadual de Desenvolvimento Urbanoor SEDU) and the Paraná Environmental Institute (IAP), COPEL started holding a training course named "The Right Tree in the Right Place”, an initiative that was integrated into the State Program for the Professional Qualification of Municipal Servants. The goal of the course is to train municipal managers and servants on the implementation and management of urban vegetation. The course is open to members of the community as well. The benefits for COPEL, the municipalities, and society are improved safety, better quality of life, and compliance with the applicable legislation.
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The course enables the Company to spread basic knowledge about the issue in a quick and practical manner, filling conceptual and technical blanks as regards street forestation, a subject matter which has only begun to be addressed in technical and college courses. With this initiative, COPEL aims to increase the effectiveness of its actions under the Urban Forestation Social-Environmental Responsibility Program, leveraging the signature of cooperation agreements for tree replacement and trimming, thus addressing one of the main causes of the rise of the DEC/FEC power outage indicators.
In 2008, 309 participants were trained in 123 municipalities. Thanks to the excellent results of the event, as attested by the opinion and the interest of local administrations in signing agreements with COPEL, in 2009 this partnership will be extended to other associations of municipalities within the State of Paraná. The current debate has encouraged local administrations to better organize and train their technical staffs and to rethink urban forestation. With this partnership, in addition to meeting strategic and operational interests, COPEL reinforces its commitment to environmental and educational programs in the State of Paraná.
5.8. Environment-Oriented R&D Projects
The projects developed in 2008 allowed the Company to acquire new technologies and new technical knowledge which support management decisions and the development of new programs. These acquired assets are aligned with COPEL’s organizational strategies to underpin the achievement of corporate sustainability. In this regard, some of the highlights were studies on:
- the water quality and the evolution of the use of land within the Tibagi River basin, to allow, based on a geographic database and on the evaluation of the use and occupation of land, the identification of relations between water quality and territorial occupation. In addition to supporting management decisions and the implementation of environmental management plans, this project will provide a model for other river basins;
- ecological oils: since 2005, COPEL has developed projects concerning the performance evaluation of power distribution transformers and voltage regulators insulated with vegetable oils such as sunflower, soy, rice, and castor oil plant. The Company evaluates and determines minimum characteristics which are required to ensure the same performance and expected useful lives as those of equipment insulated by mineral oil. This evaluation has been conducted through accelerated aging of the vegetable oils in a lab; filling of transformers and voltage regulators with vegetable oil; research on the losses while empty and in short circuit and at rising temperatures; and physical-chemical analyses of new and used (after testing) vegetable oils.
In 2008, the Company installed new equipment within its distribution grids and substations to monitor and evaluate performance. In order to assess the environmental impact of vegetable oil spills, lab analyses of the biodegradation of vegetable oils in the soil or in the water have been conducted. Since 2006, COPEL has invested R$ 1,210.8 million in research projects, of which R$ 701.7 thousand were invested in 2008;
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- minimization of the maintenance costs of areas under distribution lines, a project developed by LACTEC to assess the possibilities of multiple use of the easement areas under the Company’s distribution lines. This research took into account environmental and economic factors as well as the health and safety of the employees involved, comparing the regular clearing of land, the planting of low growth native species, and the planting of agricultural species. Concluded in 2008, the project will support the implementation of specialized vegetation management actions under distribution lines;
- bioremediation of areas contaminated by insulating mineral oil, with the development of a soil decontamination methodology for use in test projects of environmental recovery of areas contaminated by insulating mineral oil, through bioremediation. The bioremediation process involves the use of bacteria which consume hydrocarbons in their cycles, turning them into harmless substances, thus decontaminating the affected area. This pioneering project was presented at the National Power Distribution Seminar (Seminário Nacional de Distribuição de Energia Elétricaor SENDI) in 2008. Since 2006, COPEL has invested R$ 1,752.6 million in research projects, of which R$ 221.1 thousand were invested in 2008;
- qualitative and quantitative evaluation of the phytoplankton in reservoirs with episodes of blooming; of Mourão macrophytes; of loads, nutrients, and organic matter flowing into the Foz do Areia reservoir and of the water quality of the reservoir and the surrounding tributaries; and of invading species within the Iguaçu River basin;
- control and monitoring of invading water species within the Iguaçu River basin;
- analysis and classification of the golden mussel waste at the Governor José Richa (Salto Caxias) Hydroelectric Power Plant; and
- statistical analysis of the water quality variables within COPEL’s reservoirs.
5.9. Clean Development Mechanisms - CDMs
COPEL, in sync with the requirements of Clean Development Mechanisms, has reviewed projects under study or under way with a view to contributing to the sustainable development of the communities within which these projects are carried out. The diagnosis indicated opportunities for the acquisition of carbon credits in power generation and transmission projects, whose studies are underway. One such CDM opportunity is the Waterside Forests Program, which according to studies by the Forest Research Foundation of Paraná (FUPEF), has already removed approximately 92,197 tons of CO2 from the atmosphere.
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5.10. Water Consumption
COPEL’s power distribution business operations do not interfere with the wetlands listed by the Ramsar Convention (1971), which addresses the preservation and rational use of wetlands, nor does its water consumption significantly affect ecosystems/natural habitats. In terms of industrial power generation, the water from the reservoirs, which only passes through turbines, is not considered consumed water.
COPEL’s power plants employ water from rivers, lakes, and reservoirs for cooling in an open circuit, without any recirculation.
COPEL does not recycle the water used in its administrative facilities. The water consumption by its administrative facilities in 2008, provided by the public water supply network, was 545,905 m3, with a 2.0% reduction compared to 2007 (556,875 m3).
5.11. Power
5.11.1. Energy Balance Sheet of Paraná (Balanço Energético do Paraná or BEP)
Since the State Government does not have a Department of Mines and Energy, COPEL, pursuant to State Decree no. 1,869, dated January 30, 1980, is the entity in charge of Statewide energy planning. The information gathered by COPEL supports energy planning studies and programs by companies and government agencies, in addition to being part of the national energy balance sheet, compiled by the Energy Research Company (Empresa de Pesquisa Energéticaor EPE), linked to the Ministry of Mines and Energy.
The Executive Summary of the 2008 Paraná Balance Sheet, base year 2007, features a social and economic overview of the State, its current energy scenario, supply and demand data for primary and secondary energy sources, power consumption by the main segments of the State economy, the main centers of energy transformation and interchange, regional distribution of energy, the useful energy balance sheet, in addition to consolidated balance sheets for 1980, 1990, 2000, 2006, and 2007.
•Power Consumption
COPEL’s own power consumption refers to the power required for the operation of its administrative facilities and substation support facilities. COPEL consumed 23,028.9 MWh in 2008, with a 1.6% reduction compared to 2007, when consumption was 23,400.6 MWh.
5.12. Paper consumption
Implemented in 2007, the meter reading and simultaneous bill printing process, which represents paper savings of 60% compared to the conventional system, was improved in 2008, with implementation in the Paranavaí region for 130 thousand customers, and totaled 5.5 million bills, reaching 838 thousand customers throughout the State.
The following table features COPEL’s paper consumption from 2006 through 2008:
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COPEL’s paper consumption | ||||||||
Use of paper | Unit | 2008 | 2007 | 2006 | ||||
Paper consumption | Sheets | 89,805,622 | 96,687,367 | 103,290,034 | ||||
Paper consumption by employee(1) | Sheets | 4,186 | 4,245 | 5,005 | ||||
Consumption of chlorine-free paper (non bleached) | Sheets | 4,183,455 | 8,907,192 | 1,379,277 | ||||
(1)Except for centralized printers |
Once again, COPEL’s total power consumption fell 7%, and consumption by employee fell 2%. As for chlorine-free paper (non bleached), the Company reduced its usage somewhat due to technical issues noticed by employees when printing on it. There is an evident need to raise employee awareness and improve the control mechanisms for consumption of recycled paper.
5.13. Use of Non-Renewable Fuel
COPEL has two power plants which run on non-renewable fuels: the Figueira and Araucária Thermal Power Plants, the former running on coal, and the latter running on natural gas.
The table below features information about the consumption of non-renewable fuels by these facilities from 2006 through 2008:
Use of non-renewable fuels by COPEL’s facilities | ||||||
Figueira Thermal Power Plant | ||||||
Primary Energy Source | 2008 | 2007 | 2006 | |||
Mineral coal (in tons) | 70,617.66 | 72,888.38 | 73,018.30 | |||
Mineral coal (MWh) | 77,800 | 82,492 | 80,505 | |||
Mineral coal (J) | 2.80 x 1014 | 2.97 x 1014 | 2.90 x 1014 | |||
Araucária Thermal Power Plant | ||||||
Primary Energy Source | 2008 | 2007 | 2006 | |||
Natural gas (m3) | 149,429,548 | 356,936,073 | 129,411,335 | |||
Natural gas (MWh) | 1,619,236 | 3,867,800 | 1,402,316 | |||
Natural gas (J) | 5.83 x 1015 | 1.39 x 1016 | 5.05 x 1015 | |||
5.14. Emissions, Effluents, and Waste
5.14.1. Emissions
Initiatives for the reduction of emissions of greenhouse gases
Since its implementation in 2007, the Program for the Corporate Management of Greenhouse Gas Emissions has achieved the following goals:a)alignment of potential CDM concepts and projects in connection with hydroelectric power plants and waterside forests;b)detailed diagnosis of the situation of COPEL’s vehicle fleet based on the available information;c)participation in events and representation in several workgroups;d)communication with companies and research centers interested in this matter; ande)diagnosis of programs and projects conducted by the distribution unit and by other corporate areas of COPEL.
In 2008, there was thorough discussion about the inventory of greenhouse gas emissions, with a view to defining the most appropriate methodology for the conduction of the Program’s activities. COPEL decided, in cooperation with a group of Brazilian companies, to adapt the tool of the Brazilian Greenhouse Gas Protocol (GHG Protocol), launched in May 2008 in Brazil, to increase the companies’ technical and institutional capacity to manage their greenhouse gas emissions, as a methodology which will underpin COPEL’s actions.
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For the Company’s operational activities and for the transportation of people on duty, COPEL preferably acquires vehicles which run on alcohol. When the acquisition of vehicles running on diesel is required, the Company seeks to ensure compliance with the legal emissions thresholds, and its drivers are trained on the importance of conducting preventive and corrective maintenance, particularly on catalyzers and exhaust systems, to ensure adequate control of emissions.
The table below features CO2 emissions by COPEL's vehicle fleet from 2006 through 2008:
Management of CO2emissions by COPEL | ||||||||||||
CO2 emissions by COPEL’s vehicle fleet(1) | ||||||||||||
Fuel | 2008 | 2007 | 2006 | |||||||||
Volume | CO2emissions (in tons) | Volume | CO2emissions (in tons) | Volume | CO2emissions (in tons) | |||||||
Gasoline (l) | 1,617,555.3 | 3,510.1 | 2,800,156.0 | 6,076.3 | 3,284,562.0 | 7,127.5 | ||||||
Alcohol (l) | 1,108,699.9 | 1,530.0 | 512,349.3 | 707.0 | 427,854.0 | 590.4 | ||||||
Natural gas (m3) | 0.0 | 0.0 | 0.0 | 0.0 | 3.950.0 | 7.7 | ||||||
Diesel (l) | 4,253,255.7 | 11,143.5 | 3,789,745.1 | 9,929.1 | 3,520,388.0 | 9,223.4 | ||||||
Total | 6,979,510.9 | 16,183.6 | 7,102,250.4 | 16,712.5 | 7,236,754.0 | 16,949.1 | ||||||
CO2emissions by COPEL’s thermal power plants(2) | ||||||||||||
Figueira TPP(3) | 81,000 | 162,063 | 170,707 | |||||||||
Araucária TPP | 173,000 | 621,925 | 61,496 | |||||||||
(1) | OBS: CO2 emissions were calculated based on the following figures: Gasoline (Brazilian gas, with 22% ethanol) = 2.17 Kg CO2 /liter; Alcohol = 1.38 KgCO2 /liter; Natural gas = 1.96 KgCO2 /m3; and Diesel = 2.62 Kg CO2 /liter. | |
(2) | Information reported semi-annually to the Environmental Institute of Paraná (IAP). | |
(3) | Calculated based on a carbon rate of 63.76% in coal (coal with 17% ashes). |
Nitrogen Oxides (NOx) and Sulphur Dioxide (SO2) were emitted by the Figueira and Araucária Thermal Power Plants in the following amounts from 2006 through 2008:
Emissions | 2008 | 2007(1) | 2006(1) | |||
NOx(t) | 529.96 | 806.80 | 590.77 | |||
SO2(t) | 1,480.06 | 5,400.00 | 7,243.37 | |||
(1)Amounts changed relatively to 2007 on account of new calculation method. |
5.14.2. Effluents
Guided by the principles of the Figueira Thermal Power Plant’s Environmental Management Plan, COPEL conducts quarterly monitoring of the environmental processes in the facility, including the quality of water. The water from the Laranjinha River, the drainage system for rainwater, and the solid waste decantation tanks are all points of operational monitoring, for the detection of environmental non-compliance situations and of improvements in the environmental aspects of power generation, resulting in plans of action. In 2008, the Company did not detect any episodes of environmental non-compliance, but only situations requiring minor adjustments and improvements.
The monitoring and management of environmental issues in the Araucária Thermal Power Plant is conducted monthly and comprises the evaluation of the results of physical-chemical and microbiological tests of water samples from the Barigui River and the Saldanha stream, collected upstream and downstream from the point of release of treated effluents, pursuant to the facility's Plan for the Monitoring of Effluents and Receiving Bodies of Water. Another test conducted regularly aims to assess the efficiency of the water/oil separator, measuring the levels of oil and grease in the facility’s effluents. In 2008, the facility’s effluent parameters remained within the reference levels.
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5.14.3. Waste
COPEL handles hazardous Class I waste in such a manner as to avoid potential negative social and environmental impacts.
Insulating mineral oil is treated internally at the regeneration units of regional facilities and in mobile plants which regenerate oil inside charged transformers. In 2008, COPEL regenerated and reused approximately 270.7 thousand liters of insulating mineral oil taken from its electrical equipment. Waste contaminated by insulating mineral oil is sent to co-processing, a safe method whereby the waste is eliminated at high temperatures in sintering furnaces.
Another practice adopted by COPEL to reduce the production of waste is the use of industrial cloths which, after being washed in specific supplier-controlled facilities, may be reused.
Other dangerous waste is disposed of through properly trained and licensed companies. The Company takes care while disposing of different kinds of materials, such as the seals of power meters removed from customers’ properties, which are separated into polycarbonate, polypropylene, and lead, to make final disposal easier.
Non-hazardous Class IIA and IIB waste are reused internally or sold at public auctions for recycling and reuse.
Power meters from customers’ properties and transformers from the distribution grids are sorted and evaluated internally to determine whether it is technically feasible to reuse them. Small repairs are done in-house, while devices which require more extensive repairs and part replacements are sent to specialized repair shops. In the next stage, the meters are sent to the testing facility authorized by the National Metrology, Normalization, and Industrial Quality Institute (Instituto Nacional de Metrologia, Normalização e Qualidade Industrialor INMETRO) within COPEL, where metrological tests and technical inspections are conducted before the meters are allowed to be reused. In 2008, around 63.2 thousand meters were refurbished. About 97.8% of damaged meters removed from customers' properties are recovered and reused.
All unusable paper generated at COPEL, such as sheets, cardboard, and boxes in general, is sent for recycling, yielding social and environmental benefits. The ratio between used paper and paper sent for recycling has been increasing annually, thus attesting to the greater awareness of COPEL’s employees.
The following table features information about the proper social and environmental handling of waste generated by COPEL from 2006 through 2008:
Treated and Disposed Waste | ||||||||||
Waste | Unit | Volume | Treatment Method / Final Disposal | |||||||
2008 | 2007 | 2006 | ||||||||
Class I Waste | ||||||||||
Askarel(1) | tons | - | 46.38 | 45.00 | Decontamination and recycling of impermeable metallic equipment frames. Incineration of oil and contaminated permeable solids. | |||||
Lead-acid batteries | pieces | - | - | 3,141 | recycling | |||||
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Treated and Disposed Waste | ||||||||||
Waste | Unit | Volume | Treatment Method / Final Disposal | |||||||
2008 | 2007 | 2006 | ||||||||
Class I Waste | ||||||||||
Fluorescent bulbs (mercury vapor and mixed bulbs) | pieces | 234,329 | - | 68,000 | Removal of mercury and recycling | |||||
Insulating mineral oil | liters | 270,687 | 300,027(2) | 237,099(2) | regeneration | |||||
Cloth contaminated by oils and solvents | pieces | 50,880 | N/A | N/A | Reused after industrial wash | |||||
Waste contaminated by oils and solvents | tons | 30.51 | 25.34(3) | 55.07 | Co-processing in cement factory ovens | |||||
Transformers with insulating mineral oil | pieces | 1,709 | 3,620 | 1,528 | Internal recovery and reuse | |||||
5,963 | 6,595 | 4,042 | Sale through public bidding for recycling and/or reuse | |||||||
Class IIA and IIB Waste | ||||||||||
Power meters | pieces | 63,229 | N/A | N/A | Internal recovery and reuse | |||||
Paper | kg | 151,314 | 143,610 | 135,870 | recycling | |||||
(1) | Waste that qualifies under the Basel Convention: disposed of by company under contract (public bidding) for transportation and final disposal within the country. |
(2) | Data reported in 2006 and 2007 was rounded up, and the corrected totals are featured on this table. |
(3) | Corrected amounts, different from previously reported figures. |
OBS: COPEL adopts as evidence the fiscal document (manifest or invoice) issued at the time each waste is removed. |
5.15. Environmental Licensing
5.15.1. Power Generation and Transmission Projects
In compliance with the National Environmental Policy, COPEL has obtained the first operating license for the Governor Bento Munhoz Hydroelectric Power Plant, renewed the operating licenses for the Governor José Richa, Governor Ney Braga and Jordão River Diversion Hydroelectric Plants, and requested the renewal of the operating licenses of the Governor Parigot de Souza, Mourão, Salto do Vau, São Jorge, and Melissa Hydroelectric Power Plants. The Company has obtained 17 licenses for power transmission projects, comprising all of their stages: planning, construction, and operation, attesting to the effectiveness of the measures taken by COPEL and to its commitment to environmental control over the physical, biological, and anthropic aspects of the areas directly and indirectly affected by its projects.
5.15.2. Power Distribution Technologies
COPEL’s forest technicians at its regional distribution units work on guiding the licensing of project activities and on the maintenance of distribution grids. The Company obtains environmental licensing by fully complying with the applicable legislation, thus reducing the risk of environmental violations and improving the quality of the work it conducts.
The environmental impact of power distribution activities on a regional scale is not significant. In light of the social, economic, and environmental benefits to the State of Paraná, the potential impact of distribution lines may be considered relatively insignificant. Accordingly, environmental agencies do not require detailed environmental impact studies for power distribution activities. As for 69 kV and 138 kV lines, licensing is obtained through the submission of Simplified Environmental Reports (Relatório Ambiental Simplificadoor RAS). Licensing for assets of up to 34.5 kV is obtained through environmental authorization and forest authorization, when necessary.
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5.16. Management of Fines, Statements of Commitment, and Environmental Notices
COPEL keeps track of all environmental fines, statements of commitment, and notices through a management system that enables the Company not only to comply with legal requirements but to reduce the costs of administrative fines and to minimize the risks of criminal prosecution against employees and managers.
In 2008, COPEL was charged with six violations, four of which have resulted in administrative fines, all of which have been contested. To avoid new violations in connection with tree trimming around distribution and transmission lines, COPEL has provided training to its personnel in charge of this task to ensure their procedures are compatible with the needs of the Company and with the applicable environmental legislation. A workgroup with the participation of experts from COPEL and from the Municipal Environmental Department (Secretaria Municipal de Meio Ambienteor SMMA) has been set up to discuss the management of vegetation in the city of Curitiba.
The table below features the environmental fines and notices issued against COPEL in 2008:
No. | Type | Date | Place | Original Amount (thousands of R$) | Paid | Description | ||||||
1 | fine | October 2008 | Campo Mourão | 70 | Under appeal | Notice of Violation no. 76105, issued by IAP on account of the environmental impact caused by the depletion of the MOU HPP reservoir. | ||||||
2 | fine | December 2008 | Campo Mourão | 70 | Under appeal | Notice of Violation no. 87602, issued by IAP on account of the environmental impact caused by the depletion of the MOU HPP reservoir. | ||||||
3 | fine | November 2008 | Curitiba | 10 | Under appeal | Notice of Violation no. 62019, issued by IAP on account of the mineral oil spill into the GNB HPP reservoir (leak from the GBM HPP transformer). | ||||||
4 | fine | August 2008 | Curitiba | 128 | Under appeal | Fine levied on account of the trimming of 64 trees in a public property, even though COPEL had a specific authorization. COPEL’s appeal is under review by SMMA. | ||||||
5 | notice | January 2008 | Curitiba | No penalty | No penalty | Notice for the clearing and cleanup of waste in an administrative area, disposed by neighbors. | ||||||
6 | notice | August 2008 | Curitiba | No penalty | No penalty | Failure to collect waste from tree trimming within 48 hours. Case addressed with no penalties. | ||||||
COPEL’s power distribution unit is still appealing eight cases, which may result in the disbursement of R$ 321.2 thousand. The Company has striven to reduce the amounts of the fines imposed, proposing environmental recovery projects and filing administrative appeals, always prepared with the participation of COPEL’s Chief Legal Office. Only one case still in progress, in connection with the clearing of land without environmental authorization in the das Pontes Municipal Park, in Araucária, Paraná, had an environmental recovery project underway in 2008, whose completion may reduce the corresponding administrative penalty by up to 90%.
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5.17. Environmental Indicators
Environmental Performance | ||||||||||
Environmental Indicators | ||||||||||
Recovery of degraded areas | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Area that has been preserved and/or recovered through sustainable vegetation management under distribution lines (in hectares) | no goal | 3 | 3 | - | (1) | |||||
Area that has been preserved and/or recovered through sustainable vegetation management under transmission lines (in hectares) | no goal | 45.21 | 83.98 | 10.45 | (2) | |||||
Preserved area/total area to be cleared for transmission line works (%) | no goal | 87 | N/A | N/A | (3) | |||||
Preserved area/total preserved area within concession area as required by law (%) | no goal | 74 | 64 | 63 | ||||||
Contribution to the increase of vegetated areas in municipalities by the Social-Environmental Urban Forestation Program (in hectares) | 54 | 14.2 | 1.54 | - | (4) | |||||
Isolated protected lines (ecological or green lines) in urban areas (in km) | no goal | 4,590 | 3,442 | 2,636 | ||||||
Percentage of isolated protected lines/total distribution grids in urban areas | no goal | 22.8 | 15.6 | 13.3 | ||||||
Expenses with environmental impact management (forestation, sustainable management, protected equipment and grids)(thousands of R$) | no goal | 74,560 | 21,283 | 26,890 | ||||||
Number of accidents resulting from violations of environmental safety legislation | 0 | - | - | - | ||||||
Number of notices and/or fines for violations of environmental legislation | 0 | 4 | 3 | 1 | ||||||
Amount charged for notices and/or fines for violations of environmental legislation (in thousands of R$) | 0 | 278.0 | 37.0 | 3.5 | (5) | |||||
(1) | Refers to the research project named “Studies for the Reduction of the Costs of Distribution Line Maintenance”, conducted in 2007 and 2008. | |
(2) | Takes into account the area where line supports were raised to preserve the vegetation under the transmission lines. | |
(3) | Corresponds to the percentage of areas preserved during the construction of transmission lines. | |
(4) | For an area of 36m² for each tree, i.e., 6x6 meter spacing. In 2008, 3,934 seedlings were given to municipalities. | |
(5) | Amounts correspond to penalties imposed during the year and not penalties paid. | |
Production and treatment of waste | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Emissions | ||||||||||
Annual volume of greenhouse gases (CO2, CH4, N2O, HFC, PFC, SF6) released into the atmosphere (in equivalent tons of CO2 ) – COPEL’s fleet | no goal | 16,184 | 16,712 | 16,949 | (6) | |||||
Annual volume of greenhouse gases (CO2, CH4, N2O, HFC, PFC, SF6) released into the atmosphere (in equivalent tons of CO2) by the Figueira and Araucária Thermal Power Plants | no goal | 254,000 | 783,988 | 232,203 | ||||||
Annual volume of ozone-depleting emissions (in tons) | no goal | N/A | N/A | N/A | ||||||
Effluents | ||||||||||
Total volume of industrial effluents | no goal | 50.19*106 m³/year | 50.19*106 m³/year | 50.19*106 m³/year | (7) | |||||
Total volume of industrial effluents treated | no goal | 50.19*106 m³/year | 50.19*106 m³/year | 50.19*106 m³/year | ||||||
Percentage of industrial effluents treated | 100% | 100 | 100 | 100 | ||||||
Solid Waste | ||||||||||
Annual volume (in tons) of solid waste produced by COPEL (waste, garbage, junk, etc.) | no goal | N/A | N/A | N/A | ||||||
92
Percentage of waste sent to recycling with no ties to the Company | Not applicable | N/A | N/A | N/A | ||||||
Percentage of waste recycled by units or entities tied to the Company (specific projects) | Not applicable | not applicable | - | - | ||||||
Expenditures with waste recycling (in thousands of R$) | Not applicable | not applicable | - | - | ||||||
Percentage of consumable materials reused (raw materials, equipment, electric wiring and cabling) | Not applicable | N/A | N/A | N/A | ||||||
Expenditures with final disposal of non- hazardous waste (in thousands of R$) | Not applicable | not applicable | - | - | (8) | |||||
(6) | OBS: CO2 emissions were calculated based on the following figures: Gasoline (Brazilian gas, with 22% ethanol) = 2.17 KgCO2 /liter; Alcohol = 1.38 KgCO2 /liter; Natural gas = 1.96 KgCO2 /m3 ; and Diesel = 2.62 Kg CO2 /liter. |
(7) | The Figueira Thermal Power Plant accounts for 98% of the effluent volume produced by COPEL. |
(8) | All unusable materials are sold by the Company, pursuant to the rulings of the industry’s regulatory agency. |
Management of hazardous waste | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Percentage of equipment replaced by other equipment with PCB (Askarel)* free insulating mineral oil in the distribution business | 100 | 100 | 100 | 100 | (9) | |||||
Percentage of equipment replaced by other equipment with PCB (Askarel)* free insulating mineral oil in the generation business | no goal | 72 | 72 | 27 | (10) | |||||
Percentage of decontaminated light bulbs out of all bulbs replaced by the Company | 100 | 100 | 0 | 100 | ||||||
Percentage of decontaminated light bulbs out of all bulbs replaced at consumer facilities | no goal | N/A | N/A | N/A | ||||||
Expenses with treatment and disposal of toxic waste (incineration, landfills, biotreatment, etc.)(thousands of R$) | no goal | 656.8 | 1,368.4 | 1,947.3 | ||||||
(9) | All registered equipment with Askarel insulation was replaced in 2006. |
(10) | This percentage refers to disposed waste and not only removal of equipment. |
Use of resources in COPEL's production process and management processes | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Total power consumption by source (in kWh) | no goal | 23,028,866 | 23,400,610 | 23,694,399 | ||||||
- hydroelectric | no goal | N/A | N/A | N/A | ||||||
- fossil fuels | no goal | N/A | N/A | N/A | ||||||
- alternative sources (gas, wind power, solar power, etc.) | no goal | N/A | N/A | N/A | ||||||
Power consumption by kWh distributed (sold) | no goal | 0.001081 | 0.001144 | 0.001237 | ||||||
Total consumption of fossil fuels by COPEL’s vehicle fleet per km driven | no goal | 6,979,511 | 7,102,250 | 7,232,804 | ||||||
- diesel | no goal | 0.137 | 0.147 | 0.157 | ||||||
- gasoline | no goal | 0.097 | 0.123 | 0.135 | ||||||
- alcohol | no goal | 0.116 | 0.110 | 0.147 | (11) | |||||
- natural gas | no goal | 0 | 0 | 0.260 | ||||||
Total water consumption (in m3) | no goal | 545,905 | 556,875 | N/A | ||||||
Water consumption per employee (in m3) | no goal | 65.0 | 66.7 | N/A | ||||||
Use of resources in COPEL's production process and management processes | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Cost reduction obtained by reduced consumption of energy, water, and consumable materials (in thousands of R$) | no goal | 142.0 | 61.0 | N/A | ||||||
Origin of products – consumable materials | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Percentage of materials acquired in compliance with COPEL’s environmental criteria/total materials acquired | no goal | N/A | N/A | N/A | ||||||
Percentage of materials acquired with the Green Seal or others (PROCEL, INMETRO, etc.) | no goal | N/A | N/A | N/A | ||||||
Percentage of materials acquired with forest certification (IMAFLORA, FSC, and others) | no goal | 0 | 0 | 0 | ||||||
Environmental Education and Awareness | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Environmental education within the Company | ||||||||||
93
Number of employees trained in environmental education programs | no goal | 1,987 | 1,188 | 808 | ||||||
Percentage of employees trained in environmental education programs / total employees | no goal | 23.6 | 14.2 | 10.0 | ||||||
Number of environmental training man- hours/total training man-hours | no goal | 3.88 | N/A | N/A | ||||||
Funds applied (in thousands of R$) | no goal | 334 | 26 | 84 | ||||||
Environmental education - Community | ||||||||||
Number of elementary and high schools served | no goal | 67 | 111 | 81 | ||||||
Percentage of schools served/ total number of schools within concession area | - | - | - | - | (12) | |||||
Number of students served | no goal | 3,723 | 5,533 | 3,707 | ||||||
Percentage of students served/ total number of school children within concession area | - | - | - | - | (12) | |||||
Number of teachers trained | no goal | 200 | N/A | N/A | ||||||
Number of technical schools and colleges served | no goal | 11 | 5 | 7 | ||||||
Percentage of schools served/ total number of schools within concession area | - | - | - | - | ||||||
Number of students served | no goal | 520 | 110 | 223 | ||||||
Percentage of students served/ total number of students within concession area | - | - | - | - | ||||||
Funds applied (in thousands of R$) | no goal | 821 | 55 | 699 | ||||||
Energy efficiency programs aimed at developing a culture of saving power and using it rationally | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Number of low income households supplied by the program (in thousands) | 60.0 | 88.0 | 50.0 | 180.0 | ||||||
Percentage of low income households supplied by the program out of all low income households | 15.9 | 23.2 | 13.2 | 47.7 | ||||||
Number of energy efficient devices donated (in thousands) | 192.0 | 262.7 | 151.8 | 550.8 | ||||||
Number of households which had their electrical systems upgraded | 529 | - | - | - | ||||||
Number of electricians trained by the program | - | - | - | - | ||||||
Energy Efficiency Program – solar heating | 1,116,691.03 | 181,648.78 | - | 87,482.35 | ||||||
Number of solar heating systems installed | 296 (***) | 1 (**) | - | 1 (*) | (13) | |||||
Energy Efficiency Program – Municipal energy management | 1,600,065 | (*) | 620,500 (***) | 1,900,000 (**) | (14) | |||||
Number of municipalities served by the municipal energy management program | 25 | (*) | 39 (***) | 36 (**) | (15) | |||||
Percentage of municipalities served out of total municipalities within COPEL’s concession area | 6.4 | (*) | 19.1 | 9.2 | (16) | |||||
Continued | |
(11) | Alcohol is a renewable, non-fossil fuel |
(12) | Environmental education activities under MRI are conducted at registered schools regardless of their geographic location; no priority is given to serving schools exclusively within COPEL’s concession area. |
(13) | (*)Hospital system with 75 1.70-m² panels; |
(**)Commercial system with 131 1.00-m² panels; | |
(***)Residential systems with one 2.00 m² panel each, to 296 customers. | |
(14) | (*)Multi-year plan concluded in 2006 and 2007 |
(**)Started in 2005 and concluded in 2006 | |
(***)Balance from previous year | |
(15) | (*)Multi-year plan concluded in 2006 and 2007 |
(**)Started in 2005 and concluded in 2006 | |
(***)Started in 2006 and concluded in 2007 | |
(16) | (*)Multi-year plan concluded in 2006 and 2007 |
Environment-Oriented R&D Projects | Goal for 2009 | 2008 | 2007 | 2006 | Observations | |||||
Funds applied - ANEEL (in thousands of R$) | no goal | 115.2 | - | - | ||||||
Funds applied - COPEL (in thousands of R$) | 365.4 | 1,396.6 | 1,024.3 | 1,016.2 | ||||||
Number of patents registered before the National Industrial Property Institute (INPI) | no goal | - | - | - | ||||||
94
National Electric Energy Agency (ANEEL): model data | COPEL data | |||||||||
Performance indicators | Measurement unit | Goal of the indicator | 2006 | 2007 | 2008 | |||||
Removal of vegetation | m² of cleared areas per quarter (COPEL’s control comprises the number of trees cut down in construction of substations or maintenance activities) | to measure the areas subject to removal of vegetation, for clearing of easement areas. | 130,907 | 153,013 | 189,129 | |||||
trees cut down (maintenance of distribution grids) | ||||||||||
Tree trimming | volume of waste in m3/month (COPEL’s control comprises the number of trees cut down in maintenance activities) | to measure the volume of waste produced while trimming vegetation during grid maintenance | 907,879 | 1,123,721 | 978,401 | |||||
trees trimmed in maintenance activities | ||||||||||
Occurrence offorest fires | number of occurrences and degraded area per year | to measure the efficiency of preventive and corrective measures against forest fires | N/A | |||||||
Oil spills | points of leakage each month | to measure the efficiency of the preventive and corrective measures against equipment oil spills | N/A | |||||||
Use ofalternative energy sources in environmentally protected areas | number of households supplied | to measure the efficiency of programs aimed at mitigating the impacts caused by utilities in areas of major environmental interest and protection | N/A | |||||||
Research and Development (R&D) actions aimed at preventing pollution | physical/financial progressreport for each project (the description and status of each project is featured in the Environmental Performance section herein) | to measure the efficiency of programs designed to prevent pollution | Bioremediation projects described herein | |||||||
95
6. SOCIAL BALANCE SHEET
ANNUAL SOCIAL BALANCE SHEET - IBASE Model
As of December 31, 2008 and 2007
(In thousands of reais)
Consolidated | ||||||||||||||||||
2008 | 2007 | |||||||||||||||||
1 - BASIS FOR CALCULATION | ||||||||||||||||||
NE 30 & 31 | Net Revenues - NR | 5,458,778 | 5,203,661 | |||||||||||||||
Result of Operations - RO | 1,554,959 | 1,598,015 | ||||||||||||||||
NE 32-c | Gross Payroll - GP | 630,551 | 587,021 | |||||||||||||||
Total Value Added - TVA | 5,423,104 | 5,220,292 | ||||||||||||||||
2 - INTERNAL SOCIAL INDICATORS | % of: | % of: | ||||||||||||||||
GP | NR | TVA | GP | NR | TVA | |||||||||||||
Meal assistance (Meal tickets and others) | 58,031 | 9.2 | 1.1 | 1.1 | 54,505 | 9.3 | 1.0 | 1.0 | ||||||||||
NE 32-c | Mandatory social charges | 155,715 | 24.8 | 2.9 | 2.9 | 144,643 | 24.7 | 2.8 | 2.8 | |||||||||
NE 24 | Pension plan | 16,855 | 2.7 | 0.3 | 0.3 | (64,348) | -10.9 | -1.2 | -1.2 | |||||||||
NE 24 | Healthcare plan | 20,553 | 3.3 | 0.4 | 0.4 | 57,076 | 9.7 | 1.1 | 1.1 | |||||||||
Workplace safety and medical support | 3,441 | 0.5 | 0.1 | 0.1 | 3,177 | 0.5 | 0.1 | 0.1 | ||||||||||
Education | 2,526 | 0.4 | - | - | 2,296 | 0.4 | - | - | ||||||||||
Culture | 1,334 | 0.2 | - | - | 916 | 0.2 | - | - | ||||||||||
Personnel training and development | 11,013 | 1.7 | 0.2 | 0.2 | 7,848 | 1.3 | 0.2 | 0.2 | ||||||||||
Children's daycare assistance | 551 | 0.1 | - | - | 500 | 0.1 | - | - | ||||||||||
NE 32-c | Employee profit sharing | 65,816 | 10.4 | 1.2 | 1.2 | 54,254 | 9.2 | 1.0 | 1.0 | |||||||||
(1) | Other benefits | 1,195 | 0.2 | - | - | 10,128 | 1.7 | 0.2 | 0.2 | |||||||||
Total | 337,030 | 53.5 | 6.2 | 6.2 | 270,995 | 46.2 | 5.2 | 5.2 | ||||||||||
NE - Note to the Financial Statements |
96
(continued) | ||||||||||||||||||
Consolidated | ||||||||||||||||||
2008 | 2007 | |||||||||||||||||
3 - EXTERNAL SOCIAL INDICATORS | % of: | % of: | ||||||||||||||||
RO | NR | TVA | RO | NR | TVA | |||||||||||||
Education | 655 | - | - | - | 6,615 | 0.4 | 0.1 | 0.1 | ||||||||||
(2) | Paraná Digital Program | 655 | - | - | - | 6,491 | 0.4 | 0.1 | 0.1 | |||||||||
Schools at Power Plants | 0 | - | - | - | 124 | - | - | - | ||||||||||
Culture | 5,902 | 0.4 | 0.1 | 0.1 | 5,510 | 0.3 | 0.1 | 0.1 | ||||||||||
NE 32-g | Misc. cultural projects - Rouanet (8813) Law | 5,852 | 0.4 | 0.1 | 0.1 | 5,401 | 0.3 | 0.1 | 0.1 | |||||||||
Municipal cultural incentives and other | 50 | - | - | - | 109 | - | - | - | ||||||||||
Healthcare and sanitation | 94,460 | 6.1 | 1.7 | 1.7 | 23,873 | 1.5 | 0.5 | 0.5 | ||||||||||
(3) | Luz para Todos Program | 87,570 | 5.7 | 1.6 | 1.6 | 22,226 | 1.4 | 0.5 | 0.5 | |||||||||
(4) | Night Irrigation Program | 5,282 | 0.3 | 0.1 | 0.1 | 422 | - | - | - | |||||||||
Other programs | 1,608 | 0.1 | - | - | 1,225 | 0.1 | - | - | ||||||||||
Fight against starvation/nutritional safety | 160 | - | - | - | 4 | - | - | - | ||||||||||
Other | 3,946 | 0.3 | - | - | 4,376 | 0.2 | - | - | ||||||||||
Reparations to the Apucaraninha indians | 2,482 | 0.2 | - | - | 2,240 | 0.1 | - | - | ||||||||||
NE 32-g | Fund for the rights of children and teenagers | 1,410 | 0.1 | - | - | 1,775 | 0.1 | - | - | |||||||||
Donations, contributions, and subsidies | 0 | - | - | - | 312 | - | - | - | ||||||||||
Other programs | 54 | - | - | - | 49 | - | - | - | ||||||||||
Total of contributions to society | 105,123 | 6.8 | 1.8 | 1.8 | 40,378 | 2.4 | 0.7 | 0.7 | ||||||||||
Taxes (excluding social charges) | 3,224,483 | 207.4 | 59.2 | 59.6 | 3,117,702 | 195.1 | 59.9 | 59.7 | ||||||||||
Total | 3,329,606 | 214.2 | 61.0 | 61.4 | 3,158,080 | 197.5 | 60.6 | 60.4 | ||||||||||
4 - ENVIRONMENTAL INDICATORS | % of: | % of: | ||||||||||||||||
RO | NR | TVA | RO | NR | TVA | |||||||||||||
Investments connected to the operations of | ||||||||||||||||||
the Company | 121,704 | 7.9 | 2.2 | 2.2 | 122,820 | 7.7 | 2.4 | 2.4 | ||||||||||
Research and Development and Energy | ||||||||||||||||||
Efficiency Programs | 42,166 | 2.7 | 0.8 | 0.7 | 78,988 | 4.9 | 1.6 | 1.6 | ||||||||||
Compact-design and "green" Lines | 74,332 | 4.8 | 1.3 | 1.4 | 38,069 | 2.4 | 0.7 | 0.7 | ||||||||||
Fauna and Flora protection programs | 4,053 | 0.3 | 0.1 | 0.1 | 4,229 | 0.3 | 0.1 | 0.1 | ||||||||||
Waste management | 1,153 | 0.1 | - | - | 1,534 | 0.1 | - | - | ||||||||||
Investments in external programs and/or | ||||||||||||||||||
projects | 673 | - | - | - | 299 | - | - | - | ||||||||||
Env. Education and Iguaçu Regional Museum | 401 | - | - | - | 126 | - | - | - | ||||||||||
(5) | Carbon credit program | 19 | - | - | - | 64 | - | - | - | |||||||||
Other programs | 253 | - | - | - | 109 | - | - | - | ||||||||||
Total | 122,377 | 7.9 | 2.2 | 2.2 | 123,119 | 7.7 | 2.4 | 2.4 | ||||||||||
In terms of annual goals for the reduction of waste andoverall consumption in production and operation and forthe increase in the efficiency of the use of naturalresources, the Company | ( ) does not have goals | ( ) does not have goals | ||||||||||||||||
( ) meets 0-50% of goals | ( ) meets 0-50% of goals | |||||||||||||||||
( ) meets 51-75% of goals | ( ) meets 51-75% of goals | |||||||||||||||||
( X ) meets 76-100% of goals | ( X ) meets 76-100% of goals | |||||||||||||||||
NE - Note to the Financial Statements |
97
(continued) | ||||||||||||||||
Consolidated | ||||||||||||||||
2008 | 2007 | |||||||||||||||
5 - WORKFORCE INDICATORS (includes subsidiaries) | ||||||||||||||||
(6) | Employees at the end of the year | 8,518 | 8,441 | |||||||||||||
School attendance by employees: | Total | Men | Women | Total | Men | Women | ||||||||||
College or post-graduate | 3,409 | 2,470 | 939 | 3,223 | 2,333 | 890 | ||||||||||
High school | 4,623 | 4,064 | 559 | 4,721 | 4,138 | 583 | ||||||||||
Elementary school | 486 | 450 | 36 | 497 | 463 | 34 | ||||||||||
Faixa etária dos empregados(as): | ||||||||||||||||
Employee age brackets: | 1,984 | 1,904 | ||||||||||||||
Under 30 | 3,534 | 3,799 | ||||||||||||||
Between 30 and 45 | 3,000 | 2,738 | ||||||||||||||
45 and older | 530 | 665 | ||||||||||||||
Female employees | 1,534 | 1,507 | ||||||||||||||
% Women in management-level positions: | ||||||||||||||||
out of the total number of female employees | 3.6 | 2.9 | ||||||||||||||
out of the total number of managers | 12.2 | 11.0 | ||||||||||||||
African-Brazilian (A-B) employees | 821 | 792 | ||||||||||||||
% A-B in management-level positions: | ||||||||||||||||
out of the total number of A-B employees | 2.7 | 2.4 | ||||||||||||||
out of the total number of managers | 4.9 | 4.9 | ||||||||||||||
People with disabilities | 74 | 54 | ||||||||||||||
Dependents | 20,030 | 19,367 | ||||||||||||||
(7) | Interns | 484 | 943 | |||||||||||||
(8) | Outsourced personnel | 5,090 | 2,244 |
Consolidated | ||||
2008 | Goals for 2008 | |||
6 - RELEVANT INFORMATION CONCERNING THE EXERCISE OF CORPORATE | ||||
CITIZENSHIP | ||||
Ratio between the highest and the lowest | ||||
salary within the Company | 27 | 27 | ||
Total number of workplace accidents | ||||
(includes outsourced personnel) | 293 | 234 | ||
Social and environmental projects developed by | ||||
the Company were determined by: | senior management | senior management | ||
Workplace safety and hazardous environment | ||||
standards were set by: | all employees and IAPCs | all employees and IAPCs | ||
In terms of freedom for employee unions, right to | ||||
collective bargaining, and internal workers' | will follow and promote ILO | |||
representation, the Company: | follows and promotes ILO guidelines | guidelines | ||
The Company’s pension plan benefits: | all employees | all employees | ||
Profit sharing benefits: | all employees | all employees | ||
In selecting suppliers, the same ethical and social | ||||
and environmental responsibility standards | ||||
adopted by the Company: | are suggested | will be required | ||
Employees’ participation in volunteer work | is supported and encouraged by the | will be supported and encouraged | ||
programs: | Company | by the Company |
98
(continued) | Consolidated | |||
2008 | Goals for 2008 | |||
Total number of customers complaints filed: | ||||
at the Company | 111,027 | 108,642 | ||
at Procon | 273 | 267 | ||
in court | 2,012 | 1,969 | ||
% of complaints addressed or solved: | ||||
at the Company | 100.0% | 100.0% | ||
at Procon | 85.0% | 87.0% | ||
in court | 21.4% | 35.0% | ||
% of customer complaints out of the total number of customers: | ||||
at the Company | 3.15% | 2.99% | ||
at Procon | 0.08% | 0.07% | ||
in court | 0.06% | 0.05% | ||
Consolidated | ||||
2008 | 2007 | |||
Distribution of Value Added (DVA) : | ||||
Financing agents | 7.3% | 6.3% | ||
Workforce | 10.7% | 10.0% | ||
Government | 61.8% | 61.9% | ||
Shareholders | 4.8% | 5.1% | ||
Retained | 15.4% | 16.7% | ||
7 - ADDITIONAL INFORMATION
(1) Other Benefits include: labor indemnifications, supplemental sick leave, insurance, surplus public transportation tickets, and disability and accidental death pay.
(2) The Paraná Digital promotes digital inclusion by connecting State public schools to the Internet. Under a cooperation agreement with the State government, COPEL provides network infrastructure all the way to the schools, while the State provides computers. Since its inception, the program has already installed 4,607 km of cables connecting 2,101 schools, while also resulting in higher revenues for COPEL, as an expanded network has allowed it to serve more corporate customers throughout the State.
(3) The variation under theLuz para TodosProgram is due to the increase in the number of customers supplied in order to meet the program's goals, which required higher expenditures in grid expansion work.
(4) The variation under the Night Irrigation Program is due to State Government actions in cooperation with COPEL to further advertise and demonstrate to family agriculturalists the benefits of the program -- which makes production possible, increases productivity, and provides protection against losses due to droughts -- as well as the criteria for power grid extension or supplementation and financing terms and conditions.
(5) These amounts refer to expenses under the Contract for Validation of Carbon Credits signed by subsidiary ELEJOR. (6) COPEL's workforce included 87 underage apprentices in 2008, and 82 in 2007.
(7) With the publication of the Intership Law - Law no. 11,788 - on 25/09/08, new intern hirings have been suspended so COPEL can adjust to the new law. Interns who had already been hired and whose terms of intership expired left the Company, which resulted in the reduction in the number of interns compared to 2007. In February 2009, the Company started hiring new interns again as usual.
(8) The variation under third-party labor was due to the higher number of construction projects, of vegetation trimming, and area clearing, and to compliance with Labor Ministry Rule NR 10, which requires a mininum number of workers in certain situations, which resulted in the hiring of more contractors.
• The notes are an integral part of the financial statements.
• This Social Balance Sheet includes data from subsidiaries Compagas, Elejor, UEG Araucária, COPEL Empreendimentos, and Centrais Eólicas do Paraná (CEOPAR) (as of September 6, 2007), on account of the consolidation of their results with COPEL's.
• COPEL operates in the power sector within the State of Paraná, under Corporate Taxpayer Number 76.483.817/0001-20.
• COPEL does not employ children or slave labor (except for its apprenticeship program, under Law no. 10,097/00), does not engage in the prostitution or sexual exploitation of children and teenagers, and does not engage in corruption.
• Our Company appreciates and respects diversity both internally and externally.
• For further details about the information disclosed herein:
Accounting Management Department - Enio Cesar Pieczarka - phone 41-3331-2160 e-mail: enio@copel.com
99
7. GRI CONTENT AND CORRELATION INDEX
The table below represents an effort to establish a correlation between the GRI indicators and the Global Compact Principles. The Global Compact is considered by the Company as the platform to establish the context and to measure results in terms of sustainability. The Compact is currently the most consistent and disseminated platform for the promotion of corporate sustainability. The Company is totally responsible for this matrix, which reflects its view on management, and the process of testing the tool “Making the Connection – using the G3/GRI Reporting Guidelines for the UN Global Compact’s Communication on Progress”.
Caption:
GRI G3 | Topic | Global Compact | Chapter/Item | Page |
PROFILE | ||||
1 | STRATEGY AND ANALYSIS | |||
1.1 | Statement from the most senior decision-maker of the organization about the relevance of sustainability and its strategy. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.1 | 5 |
1.2 | Description of key impacts, risks and opportunities related to sustainability and their effects on the stakeholders. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.1; 1.2; 1.3; 2.16; 2.17; 2.18; 2.19; 4.1.4 | 5; 7; 39; 40; 41; 58 |
2 | ORGANIZATIONAL PROFILE | |||
2.1 | Name of the organization. | 1.7 | 14 | |
2.2 | Primary brands, products, and/or services. | 1.7; 1.9 | 14; 27 | |
2.3 | Operational structure of the organization, including main divisions, operating companies, subsidiaries and joint ventures. | 1.7 | 14 | |
2.4 | Location of organization’s headquarters. | 1.7 | 14 | |
2.5 | Number of countries where the organization operates. | 1.7; 1.9 | 14; 27 | |
2.6 | Nature of ownership and legal form. | 1.7 | 14 | |
2.7 | Markets served. | 1.7; 1.8; 1.9 | 14; 17; 27 | |
2.8 | Scale of reporting organization. | 1.7; 1.8 | 14; 17 | |
2.9 | Significant changes during the reporting period regarding size, structure or ownership. | 1.7.2; 2.1 | 17; 31 | |
2.10 | Awards received in the reporting. | 1.12 | 30 | |
3 | REPORT PARAMETERS | |||
Report Profile | ||||
3.1 | Reporting period (e.g. fiscal/calendar year) for information provided. | 1.6 | 12 | |
3.2 | Date of most recent previous report (if any). | 1.6 | 12 | |
3.3 | Reporting cycle (annual, biennial, etc.). | 1.6 | 12 | |
3.4 | Contact point for questions regarding the report or its contents. | 1.6; 8; acknowledgement | 12; 106 | |
Report Scope and Boundary | ||||
3.5 | Process for defining report content. | 1.6 | 12 | |
3.6 | Boundary of the report. | 1.6 | 12 | |
3.7 | State of any specific limitations on the scope or boundary of the report. | 1.6 | 12 | |
3.8 | Basis for reporting that can significantly affect comparability. | 1,2,10 | 1.6; 2.1 | 12; 31 |
3.9 | Data measurement techniques and the bases of calculations. | 1.6 | 12 | |
3.10 | Explanation of the effect of any re-statements of information provided in earlier reports. | 1,2,10 | 1.6 | 12 |
3.11 | Significant changes from previous reporting periods | 1.6 | 12 | |
GRI Content Index | ||||
3.12 | Table identifying the location of the Standard | 1.6; 7 | 12; 100 |
100
Disclosures in the report. | ||||
Assurance | ||||
3.13 | Policy and current practice with regard to seeking external assurance for the report. | 1.6; 2.16 | 12; 39 | |
4 | GOVERNANCE, COMMITMENTS AND | |||
ENGAGEMENT | ||||
Governance | ||||
4.1 | Governance structure of the organization, including committees under the highest governance body. | 1, 2, 10 | 2; 2.1; 2.4; 2.5; 2.6; 2.7; 2.9; 2.11 | 31; 33; 34; 35; 36; 37 |
4.2 | Indication of whether the Chair of the highest governance body is also an executive officer. | 1, 2, 10 | 2; 2.1; 2.4 | 31; 33 |
4.3 | For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members. | 1, 2, 10 | 2; 2.1; 2.4 | 31; 33 |
4.4 | Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. | 1, 2, 10 | 2; 2.1; 2.3; 2.10; 2.12 | 31; 33; 36; 37 |
4.5 | Linkage between compensation for members of the highest governance body and the organization’s performance. | 1, 2, 10 | 2; 2.1; 2.7 | 31; 35 |
4.6 | Processes in place for the highest governance body to ensure conflicts of interest are avoided. | 1, 2, 10 | 2; 2.1; 2.4; 2.9; 2.10 | 31; 33; 36 |
4.7 | Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organization’s strategy. | 1, 2, 10 | 2; 2.1; 2.4 | 31; 33 |
4.8 | Internally developed statements of mission or values, codes of conduct, and principles relevant to the economic, environmental and social performance. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.2; 2; 2.1; 2.8; 2.9 | 7; 31; 35; 36 |
4.9 | Procedures of the highest governance body for overseeing the organization’s identification and management of the economic, environmental and social performance. | 1, 2, 10 | 2; 2.1; 2.8; 2.10 | 31; 35; 36 |
4.10 | Processes for evaluating the highest governance body’s own performance, particularly with respect to the economic, environmental and social performance. | 1, 2, 10 | 2; 2.1; 2.7 | 31; 35 |
Commitments to External Initiatives | ||||
4.11 | Explanation of whether and how the precautionary approach or principle is addressed by the organization. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 2.18 | 40 |
4.12 | Externally developed economic, environmental and social charters, principles or other initiatives to which the organization subscribes or endorses. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.2; 2; 4.1.1 | 7; 31; 52 |
4.13 | Memberships in association (such as industry association) and/or national/international advocacy organizations. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 4.1.1 | 52 |
Stakeholder Engagement | ||||
4.14 | List of stakeholder groups engaged by the organization. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.11 | 27 |
4.15 | Basis for identification and selection of stakeholders with whom to engage. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.11 | 27 |
4.16 | Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.11; 2.12; 4.1.4; 4.1.6 | 27; 37; 58; 62 |
4.17 | Key topics and concerns that habe been raised through stakeholder engagement and how the organization has responded to those key topics and concerns. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.11; 2.12; 4.1.4; 4.1.6 | 27; 37; 58; 62 |
ECONOMIC PERFORMANCE INDICATORS | ||||
DMA | Description about the economic performance management system | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | ||
Economic Performance | ||||
EC1 | Direct economic value generated and distributed. | 1.7.1; 1.8.4; 3; 3.7; 6 | 14; 22; 42; 46; 96 | |
EC2 | Financial implications and other risks and opportunities for the organization’s activities due to climate change. | 7, 8, 9 | 1; 5.2.1; 5.2.4; 5.6.1; 5.7.2; 5.8; 5.9; 5.14.2; 5.16; 6; NE 28; NE 35; NE 37 | 5; 72; 75; 79; 82; 84; 85; 88; 91; 96; 166; 184; 188 |
EC3 | Coverage of the organization’s defined benefit plan obligations. | 1 | 4.1.7; 4.1.8; 6; NE 24 | 63; 66; 96; 162 |
101
EC4 | Significant financial assistance received from the government. | 1.10; 4.1.2; 4.2; NE 11; NE 17 d); NE 26 | 27; 54; 67; 133; 142; 165 | |
Market Presenc | ||||
EC5 | e Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. | 1, 2, 6 | 4.1.7; 4.1.8 | 63; 66 |
EC6 | Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation. | 1.5.1; 1.5.2; 1.11; 2.8; 4.1.1; 4.1.6; NE 22 | 10; 27; 35; 52; 62; 161 | |
EC7 | Procedures for local hiring and proportion of senior management hired from the local community. | 6 | 4.1.1.; 4.1.7; 4.1.8 | 52; 63; 66 |
Indirect Economic Impacts | ||||
EC8 | Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.3; 1.8.5; 4.1.1; 4.1.3; 4.2.3; 6; NE 26 | 7; 25; 52; 57; 70; 96; 165 |
EC9 | Understanding and describing significant indirect economic impacts. | 1, 7, 8, 9 | 4; 4.2.1 | 52; 68 |
ENVIRONMENTAL PERFORMANCE INDICATORS | ||||
DMA | Description about the environmental performance management system | 7, 8, 9 | ||
Materials | ||||
EN1 | Materials used by weight or volume. | 8 | 5.14.3 – partially measured indicator* | 89 |
EN2 | Percentage of materials used that are recycled input materials. | 8, 9 | 5.14.3 – partially measured indicator* | 89 |
Energy | ||||
EN3 | Direct energy consumption by primary source. | 8 | 5.13 | 87 |
EN4 | Indirect energy consumption by primary source | 8 | 5.11 | 86 |
EN5 | Energy saved due to conservation and efficiency improvements. | 8, 9 | 5.7; 4.2.2 | 81; 70 |
EN6 | Initiatives to provide energy-efficient or renewable energy based products and services | 8, 9 | 5.2.4; 5.7 | 75; 81 |
EN7 | Initiatives to reduce indirect energy consumption and reductions achieved. | 8, 9 | 5.7 | 81 |
Water | ||||
EN8 | Total water withdrawal by source. | 8 | 5.10 | 86 |
EN9 | Water sources significantly affected by withdrawal of water. | 8 | 5.10 | 86 |
EN10 | Percentage and total volume of water . | 8, 9 | 5.10 | 86 |
Biodiversity | ||||
EN11 | Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas. | 8 | 5.3; 5.6.2 | 77; 80 |
EN12 | Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas. . | 8 | 5.3; 5.3.1; 5.3.2; 5.3.3; 5.3.4 | 77; 78 |
EN13 | Habitats protected or restored. | 8 | 5.3; 5.6.2 | 77; 80 |
EN14 | Strategies, current actions and future plans for managing impacts on biodiversity. | 8 | 5.3; 5.3.1; 5.3.2; 5.3.3; 5.3.4; 5.6.2 | 77; 78; 80 |
EN15 | Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations by level of extinction risk. | 8 | 5.3 | 77 |
Emissions, Effluents and Waste | ||||
EN16 | Total direct and indirect greenhouse gas emissions by weight. | 8 | 5.14.1 | 87 |
EN17 | Other relevant indirect greenhouse gas emission by weight. | 8 | 5.14.1 | 87 |
EN18 | Initiatives to reduce greenhouse gas emissions and reductions achieved. | 8, 9 | 5.6.1; 5.9; 5.14.1 | 79; 85; 87 |
EN19 | Emissions of ozone-depleting substances by weight. | 8 | 5.14.1 | 87 |
EN20 | NO, SO and other significant air emissions by type and weight. | 8 | 5.14.1 | 87 |
EN21 | Total water discharge by quality and destination. | 8 | 5.10 | 86 |
EN22 | Total weight of waste by type and disposal methods. | 8 | 5.14.3 | 89 |
102
EN23 | Total number and volume of significant spills. | 8 | 5.8 | 84 |
EN24 | Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annexes I, II, III and VIII and the percentage of transported waste shipped internationally. | 8 | 5.12; 5.14.3 | 86; 89 |
EN25 | Identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by the reporting organization’s discharges of water and runoff. | 8 | 5.2.2; 5.3 | 73; 77 |
Products and Services | ||||
EN26 | Initiatives to mitigate environmental impacts of products and services and the extent of impact mitigation. | 8, 9 | 4.1.6; 5.2.1; 5.2.2; 5.3.1; 5.3.2; 5.3.3; 5.3.4; 5.4.1; 5.7; 5.8 | 62; 72; 73; 78; 79; 81; 84 |
EN27 | Percentage of products sold and their packaging materials that are reclaimed by category | 8, 9 | ** | |
Compliance | ||||
EN28 | Monetary value of significant fines and total number of non-monetary santions for non-compliance with environmental laws and regulations. | 8 | 5.16 | 91 |
Transport | ||||
EN29 | Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations and of transporting members of the workforce | 8 | 5.17 | 92 |
Overall | ||||
EN30 | Total environmental protection expenditures and investments by type. | 7, 8 , 9 | 6.0 | 96 |
SOCIAL PERFORMANCE INDICATORS | ||||
DMA | Description about the social performance management system | 1, 2, 3, 4, 5, 6 | ||
LABOR PRACTICES AND DECENT WORK PERFORMANCE INDICATORS | ||||
DMA | Description about the labor practices management system | 1, 2, 3, 4, 5, 6 | ||
Employment | ||||
LA1 | Total workforce by employment type, employment contract and region. | 4.1.7; 4.1.8 | 63; 66 | |
LA2 | Total number and rate of employee turnover by age group, gender and region. | 1, 2, 3, 4, 5, 6 | 4.1.7; 4.1.8 | 63; 66 |
LA3 | Benefits provided to full time employees that are not provided to temporary or part-time employees. | 6 | 4.1.7; 4.1.8 | 63; 66 |
Relations between the workforce and the Governance bodies | 4.1.7 | 63 | ||
LA4 | Percentage of employees covered by collective bargaining agreements. | 1, 2, 3 | 4.1.7 | 63 |
LA5 | Minimum notice period(s) regarding operational chenges. | 1, 2, 3 | 4.1.7 | 63 |
Occupational Health and Safety | ||||
LA6 | Percentage of the total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs | 1 | 4.1.4 | 58 |
LA7 | Rates of injury, occupational diseases, lost days and absenteeism and the number of work-related fatalities by region. | 1 | 4.1.8 | 66 |
LA8 | Education, training, counseling, prevention and risk control programs in progress to assist workforce members, their families or community members regarding serious diseases. | 1 | 4.1.7; 4.1.8 | 63; 66 |
LA9 | Temas relativos a segurança e saúde cobertos por acordos formais com sindicatos. | 1 | 4.1.7 | 63 |
Training and Education | ||||
LA10 | Average hours of training per year per employee by employee category. | 1 | 4.1.7; 4.1.8 | 63; 66 |
LA11 | Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings. | 1 | 4.1.7; 4.1.8 | 63; 66 |
LA12 | Percentage of employees receiving regular performance and career development reviews. | still not a current practice at Copel | ||
Diversity and Equal Opportunity |
103
LA13 | Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership and other indicators of diversity. | 1, 2, 6 | 4.1.8; 8 | 66; 106 |
LA14 | Ratio of basic salary of men to women by employee category. | 1, 2, 6 | 4.1.7; 4.1.8 | 63; 66 |
HUMAN RIGHTS PERFORMANCE INDICATORS | ||||
DMA | Description about the human rights management system | 1, 2, 3, 4, 5, 6 | 4.1.1 | 52 |
Investment and Procurement Practices | ||||
HR1 | Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening. | 1, 2, 4, 5, 6 | 4.1.1; 4.1.6 | 52; 62 |
HR2 | Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. | 1, 2, 4, 5, 6 | 4.1.1 | 52 |
HR3 | Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations. | 1, 2, 3, 4, 5, 6, 10 | 2.8; 4.1.1 | 35; 52 |
Non-discrimination | ||||
HR4 | Total number of incidents of discrimination and actions taken. | 1, 2, 6 | 4.1.1 | 52 |
Freedom of association and collective bargaining | ||||
HR5 | Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk and actions taken to support these rights .. | 1, 2, 3 | 4.1.1; 4.1.7 | 52; 63 |
Child labor | ||||
HR6 | Operations identified as having significant risk for incidents of child labor and measures taken to contribute to the elimination of child labor. | 1, 2, 5 | 4.1.1; 4.1.6 | 52; 62 |
Forced and compulsory labor | ||||
HR7 | Operations identified as having significant risk for incidents of forced or compulsory labor and measures to contribute to the elimination of forced or compulsory labor. | 1, 2, 4 | 4.1.1; 4.1.6 | 52; 62 |
Security practices | ||||
HR8 | Percentage of security personnel trained in the organization’s policies or procedures concerning aspects of human rights that are relevant to operations. | 1, 2 | 4.1.1 | 52 |
Indigenous rights | ||||
HR9 | Description of policies, guidelines and procedures to deal with indigenous needs. | 1, 2 | 4.1.1 | 52 |
SOCIETY PERFORMANCE INDICATORS | ||||
DMA | Description about the management system related to the society | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 1.11 | 27 |
Community | ||||
SO1 | Nature, scope and effectiveness of any programs and practices that assess and manage the impacts of operations on communities | 1, 7 | 1.11; 2.18 | 27; 40 |
Corruption | ||||
SO2 | .Percentage and total number of business units analysed for risks related to corruption. | 10 | *** | |
SO3 | Percentage of employees trained in the organization’s anti-corruption policies and procedures. | 10 | 2.8 | 35 |
SO4 | Actions taken in response to incidents of corruption. | 10 | 2.9 | 36 |
Public Policies | ||||
SO5 | Public policy positions and participation in public policy development and lobbying. | 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 | 4.1.1 | 52 |
SO6 | Total value of financial and in-kind contributions to political parties, politicians and related institutions by country. | considered not applicable at Copel | ||
Anti-competitive Behaviour | ||||
SO7 | Total number of legal actions for anti-competitive behaviour, anti-trust, monopoly practices and their outcomes. | considered not applicable at Copel | ||
Compliance | ||||
SO8 | Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations related to the provision and use of products and services. | 1 | 4.1.4 | 58 |
104
PRODUCT RESPONSIBILITY PERFORMANCE INDICATORS | ||||
DMA | Description about the management system related to the society | 1, 8 | ||
Customer Health and Safety | ||||
PR1 | Life cycle stages in which health and safety impacts of products and services are assessed for improvement. | 1 | 4.1.4 | 58 |
PR2 | Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle. | 1 | 4.1.4 | 58 |
Product and Service Labeling | ||||
PR3 | Type of product and service information required by procedures and the percentage of significant products and services subject to such information requirements. | 1, 8 | considered not applicable at Copel as it delivers electric power and telecommunications services, which do not allow labeling | |
PR4 | Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling. | 1, 8 | considered not applicable at Copel | |
PR5 | Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. | 1.11; 4.1.4 | 27; 58 | |
Marketing Communication | ||||
PR6 | Programs for adherence to laws, standard and voluntary codes related to marketing communication. | 4.1.5 | 60 | |
PR7 | Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communication. | 4.1.4 | 58 | |
Customer Privacy | ||||
PR8 | Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. | 4.1.4; 4.1.5 | 58; 60 | |
Compliance | ||||
PR9 | Monetary value of significant fines for non- compliance with laws and regulations concerning the provision and use of products and services. | 1 | 4.1.4 | 58 |
*Our company has been able to implement full control only of paper consumption and final destination. A complete schedule of other materials is under construction, with implementation forescast for 2010
**Considered not applicable at Copel, as our product is electricity and thus not subject to packaging and/or reclaiming
***Treating this indicator as a percentage of business units analysed is considered non-material, since the company is institutionally organized as one single business unit, with all rules and procedures applying to the whole company
105
8. COMPOSITION OF THE GROUPS IN CHARGE OF CORPORATE GOVERNANCE
BOARD OF DIRECTORS | ||
Chairman | JOÃO BONIFÁCIO CABRAL JÚNIOR | |
Members: | RUBENS GHILARDI | |
JORGE MICHEL LEPELTIER | ||
LAURITA COSTA ROSA | ||
LUIZ ANTONIO RODRIGUES ELIAS | ||
MUNIR KARAM | ||
NELSON FONTES SIFFERT FILHO | ||
ROGÉRIO DE PAULA QUADROS | ||
NILDO ROSSATO | ||
AUDIT COMMITTEE | ||
Chairwoman | LAURITA COSTA ROSA | |
Members: | JORGE MICHEL LEPELTIER | |
ROGÉRIO DE PAULA QUADROS | ||
FISCAL COUNCIL | ||
Chairman | OSMAR ALFREDO KOHLER | |
Members: | HERON ARZUA | |
BEATRIZ OLIVEIRA FORTUNATO | ||
MÁRCIO LUCIANO MANCINI | ||
WILSON PORTES | ||
BOARD OF OFFICERS | ||
Chief Executive Officer | RUBENS GHILARDI | |
Chief Finance, Investor Relations, and Corporate Partnerships | ||
Officer | PAULO ROBERTO TROMPCZYNSKI | |
Chief Management Officer | ANTÔNIO RYCHETA ARTEN | |
Chief Power Distribution Officer | RONALD THADEU RAVEDUTTI | |
Chief Power Generation and Transmission and Telecommunications | ||
Officer | RAUL MUNHOZ NETO | |
Chief Legal Officer | ZUUDI SAKAKIHARA | |
Chief Engineering Officer | LUIZ ANTONIO ROSSAFA | |
Chief Environmental and Corporate Citizenship Officer | MARLENE ZANNIN | |
ACCOUNTANT | ||
Accountant – CRC-PR-024769/O-3 | ENIO CESAR PIECZARKA | |
For further information about this Report, please contact: | ||
rsustentabilidade@copel.com - | Phone: +55 (41) 3331-2903 | |
For information about Investor Relations, please contact: | Phones: +55 (41) 3222-2027/ +55 (41) 3331- 4359 Fax: +55 (41) 3331-2849 | |
ri@copel.com - |
106
FINANCIAL STATEMENTS
Balance Sheets
As of December 31, 2008 and 2007
(In thousands ofreais)
ASSETS | N | Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | 6 | 318,455 | 56,186 | 1,813,576 | 1,540,871 | |||||
Customers and distributors | 7 | - | - | 1,032,952 | 1,089,694 | |||||
Provision for doubtful accounts | 8 | - | - | (56,284) | (71,592) | |||||
Services to third parties, net | - | - | - | 7,904 | 8,303 | |||||
Dividends receivable | 16 | 719,061 | 700,225 | 5,247 | 2,767 | |||||
Services in progress | - | - | - | 64,765 | 51,343 | |||||
CRC transferred to State Government | 9 | - | - | 47,133 | 40,509 | |||||
Recoverable taxes | 10 | 94,009 | 79,328 | 257,339 | 281,564 | |||||
Account for Compensation of Portion A | 11 | - | - | 111,098 | 67,614 | |||||
Other regulatory assets | 12 | - | - | 31,511 | 17,186 | |||||
Collaterals and escrow accounts | 13 | 436 | 2,806 | 150,794 | 145,161 | |||||
Other receivables | 14 | 4 | 8 | 42,858 | 62,760 | |||||
Inventories | - | - | - | 64,260 | 52,195 | |||||
1,131,965 | 838,553 | 3,573,153 | 3,288,375 | |||||||
NON-CURRENT ASSETS | ||||||||||
Long-term receivables | ||||||||||
Customers and distributors | 7 | - | - | 82,176 | 139,125 | |||||
Provision for doubtful accounts | 8 | - | - | (246) | (11,469) | |||||
Telecommunications services | - | - | - | 3,211 | 7,251 | |||||
CRC transferred to State Government | 9 | - | - | 1,272,770 | 1,209,853 | |||||
Recoverable taxes | 10 | 121,338 | 125,712 | 462,609 | 449,652 | |||||
Account for Compensation of Portion A | 11 | - | - | 53,494 | 25,478 | |||||
Other regulatory assets | 12 | - | - | 11,085 | 5,729 | |||||
Bonds and securities | 35 | 69,063 | - | 69,063 | - | |||||
Collaterals and escrow accounts | 13 | - | - | 37,868 | 22,423 | |||||
Judicial deposits | 15 | 26,268 | 34,512 | 113,497 | 121,122 | |||||
Investees and subsidiaries | 16 | 929,293 | 795,933 | - | - | |||||
Other | 14 | 3,132 | - | 12,214 | 8,450 | |||||
1,149,094 | 956,157 | 2,117,741 | 1,977,614 | |||||||
Investments | 17 | 7,472,829 | 7,267,064 | 452,455 | 255,018 | |||||
Property, plant, and equipment | 18 | - | - | 6,992,158 | 6,835,491 | |||||
Intangible assets | 19 | 20,552 | - | 118,119 | 116,491 | |||||
8,642,475 | 8,223,221 | 9,680,473 | 9,184,614 | |||||||
TOTAL ASSETS | 9,774,440 | 9,061,774 | 13,253,626 | 12,472,989 | ||||||
The accompanying notes are an integral part of these financial statements. |
107
Balance Sheets
As of December 31, 2008 and 2007
(In thousands of reais)
LIABILITIES | N | Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||||
CURRENT LIABILITIES | ||||||||||
Loans and financing | 20 | 24,896 | 20,223 | 98,461 | 92,684 | |||||
Debentures | 21 | 169,233 | 168,599 | 195,000 | 171,827 | |||||
Suppliers | 22 | 564 | 1,132 | 497,832 | 366,510 | |||||
Taxes and social contribution | 10 | 57,993 | 51,818 | 407,072 | 375,425 | |||||
Dividends payable | - | 239,265 | 244,023 | 245,166 | 252,362 | |||||
Payroll and labor provisions | 23 | 243 | 162 | 159,388 | 146,119 | |||||
Post-employment benefits | 24 | 34 | 23 | 22,066 | 42,286 | |||||
Account for Compensation of Portion A | 11 | - | - | 28,327 | 143,436 | |||||
Other regulatory liabilities | 12 | - | - | 26,192 | 46,476 | |||||
Customer charges due | 25 | - | - | 43,123 | 32,722 | |||||
Research and Development and Energy Efficiency | 26 | - | - | 126,484 | 185,280 | |||||
Other | 27 | 4 | 26 | 114,383 | 85,465 | |||||
492,232 | 486,006 | 1,963,494 | 1,940,592 | |||||||
NON-CURRENT LIABILITIES | ||||||||||
Loans and financing | 20 | 414,959 | 400,032 | 769,056 | 835,268 | |||||
Debentures | 21 | 600,000 | 733,360 | 802,116 | 1,002,674 | |||||
Provisions for contingencies | 28 | 214,162 | 206,199 | 593,365 | 514,052 | |||||
Suppliers | 22 | - | - | 214,157 | 190,394 | |||||
Taxes and social contribution | 10 | - | - | 29,528 | 19,317 | |||||
Post-employment benefits | 24 | - | - | 425,879 | 454,411 | |||||
Account for Compensation of Portion A | 11 | - | - | 2,373 | 22,330 | |||||
Other regulatory liabilities | 12 | - | - | 7,257 | 18,935 | |||||
Research and Development and Energy Efficiency | 26 | - | - | 72,079 | - | |||||
Deferred revenues | 17 | - | - | 74,994 | 592 | |||||
Other | 27 | - | - | 6,674 | 6,720 | |||||
1,229,121 | 1,339,591 | 2,997,478 | 3,064,693 | |||||||
Non controlling interest | - | - | 239,567 | 231,527 | ||||||
SHAREHOLDERS' EQUITY | 29 | |||||||||
Share capital | 4,460,000 | 4,460,000 | 4,460,000 | 4,460,000 | ||||||
Capital reserves | 838,340 | 838,340 | 838,340 | 838,340 | ||||||
Income reserve | 2,754,747 | 1,937,837 | 2,754,747 | 1,937,837 | ||||||
8,053,087 | 7,236,177 | 8,053,087 | 7,236,177 | |||||||
TOTAL LIABILITIES | 9,774,440 | 9,061,774 | 13,253,626 | 12,472,989 | ||||||
The accompanying notes are an integral part of these financial statements. |
108
Statement of Income
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
N | Parent Company | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | |||||||
OPERATING REVENUES | 30 | |||||||||
Power sales to final customers | - | - | 2,968,880 | 2,747,680 | ||||||
Power sales to distributors | - | - | 1,363,094 | 1,367,595 | ||||||
Charges for the use of the power grid | - | - | 3,473,098 | 3,316,963 | ||||||
Telecommunications revenues | - | - | 80,604 | 63,893 | ||||||
Distribution of piped gas | - | - | 283,709 | 244,080 | ||||||
Other | - | - | 136,010 | 179,883 | ||||||
- | - | 8,305,395 | 7,920,094 | |||||||
DEDUCTIONS FROM OPERATING REVENUES | 31 | - | - | (2,846,617) | (2,716,433) | |||||
NET OPERATING REVENUES | - | - | 5,458,778 | 5,203,661 | ||||||
Operating costs | 32 | |||||||||
Power purchased for resale | - | - | (1,615,086) | (1,279,335) | ||||||
Charges for the use of the power grid | - | - | (466,652) | (446,067) | ||||||
Payroll | - | - | (531,031) | (463,865) | ||||||
Pension and healthcare plans | - | - | (25,737) | 14,169 | ||||||
Materials and supplies | - | - | (49,175) | (50,308) | ||||||
Raw materials and supplies for power generation | - | - | (19,274) | 8,954 | ||||||
Natural gas and supplies for the gas business | - | - | (163,846) | (132,726) | ||||||
Third-party services | - | - | (190,269) | (161,319) | ||||||
Depreciation and amortization | - | - | (376,789) | (399,387) | ||||||
Other | - | - | (35,583) | (11,784) | ||||||
- | - | (3,473,442) | (2,921,668) | |||||||
Gross Operating Income | - | - | 1,985,336 | 2,281,993 | ||||||
Other Operating Revenues (Expenses) | 32 | |||||||||
Sales expenses | - | - | (29,769) | (31,140) | ||||||
General and administrative expenses | (13,365) | (12,050) | (256,912) | (298,830) | ||||||
Other revenues (expenses), net | (40,223) | (184,220) | (252,377) | (383,760) | ||||||
(53,588) | (196,270) | (539,058) | (713,730) | |||||||
Operating income before financial results and | ||||||||||
equity in results of investees | (53,588) | (196,270) | 1,446,278 | 1,568,263 | ||||||
Financial income (losses) | 33 | |||||||||
Financial revenues | 107,428 | 90,891 | 488,620 | 396,017 | ||||||
Financial expenses | (172,633) | (193,806) | (394,257) | (375,774) | ||||||
(65,205) | (102,915) | 94,363 | 20,243 | |||||||
Equity in results of investees | 17 | 1,227,904 | 1,346,836 | 14,318 | 9,509 | |||||
OPERATING INCOME | 1,109,111 | 1,047,651 | 1,554,959 | 1,598,015 | ||||||
INCOME BEFORE TAX | ||||||||||
AND SOCIAL CONTRIBUTION | 1,109,111 | 1,047,651 | 1,554,959 | 1,598,015 | ||||||
INCOME TAX AND SOCIAL CONTRIBUTION | 10 | |||||||||
Income tax and social contribution | (18,372) | (2,619) | (352,064) | (536,168) | ||||||
Deferred income tax and social contribution | (11,995) | 61,578 | (106,082) | 75,853 | ||||||
(30,367) | 58,959 | (458,146) | (460,315) | |||||||
NET INCOME BEFORE | ||||||||||
NON CONTROLLING INTEREST | 1,078,744 | 1,106,610 | 1,096,813 | 1,137,700 | ||||||
NON CONTROLLING INTEREST | - | - | (18,069) | (31,090) | ||||||
NET INCOME FOR THE YEAR | 1,078,744 | 1,106,610 | 1,078,744 | 1,106,610 | ||||||
NET INCOME PER SHARE/ IN R$ | 29 | 3.9420 | 4.0438 | 3.9420 | 4.0438 | |||||
The accompanying notes are an integral part of these financial statements. |
109
Statement of Changes in Shareholders’ Equity
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
Note | Share | Capital | Legal | Income | Retained | |||||||||
capital | reserves | reserve | reserve | earnings | Total | |||||||||
Balance as of December 31, 2006 | 3,875,000 | 817,293 | 268,323 | 1,415,654 | - | 6,376,270 | ||||||||
Share capital increase | - | 585,000 | - | - | (585,000) | - | - | |||||||
Tax breaks | 17.d | - | 21,047 | - | - | - | 21,047 | |||||||
Net income | - | - | - | - | - | 1,106,610 | 1,106,610 | |||||||
Allocation proposed at the G.S.M.: | ||||||||||||||
Legal reserve | 29.c | - | - | 55,330 | - | (55,330) | - | |||||||
Interest on capital | 29.c | - | - | - | - | (200,000) | (200,000) | |||||||
Dividends | 29.c | - | - | - | - | (67,750) | (67,750) | |||||||
Investment reserve | 29.c | - | - | - | 783,530 | (783,530) | - | |||||||
Balance as of December 31, 2007 | 4,460,000 | 838,340 | 323,653 | 1,614,184 | - | 7,236,177 | ||||||||
Net income | - | - | - | - | - | 1,078,744 | 1,078,744 | |||||||
Allocation proposed at the G.S.M.: | ||||||||||||||
Legal reserve | 29.c | - | - | 53,937 | - | (53,937) | - | |||||||
Interest on capital | 29.c | - | - | - | - | (228,000) | (228,000) | |||||||
Dividends | 29.c | - | - | - | - | (33,834) | (33,834) | |||||||
Investment reserve | 29.c | - | - | - | 762,973 | (762,973) | - | |||||||
Balance as of December 31, 2008 | 4,460,000 | 838,340 | 377,590 | 2,377,157 | - | 8,053,087 | ||||||||
The accompanying notes are an integral part of these financial statements. |
110
Statement of Cash Flows
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
Note | Parent Company | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||||
Net income for the period | 1,078,744 | 1,106,610 | 1,078,744 | 1,106,610 | ||||||
Adjustments for the reconciliation of net income with the generation | ||||||||||
of cash by operating activities: | ||||||||||
Reversal of provision for doubtful accounts | 8 | - | - | (3,583) | (4,353) | |||||
Depreciation | 18.e | - | - | 395,312 | 418,143 | |||||
Amortization of intangible assets - concession | 19.e | 63 | - | 3,829 | 3,100 | |||||
Amortization of intangible assets - goodwill | 19.e | - | - | 1,791 | 4,808 | |||||
Amortization of intangible assets - other | 19.e | - | - | 3,811 | 3,906 | |||||
Unrealized monetary and exchange variations, net | - | 80,034 | 67,175 | 98,526 | 82,633 | |||||
Equity in results of investees | 17.b | (1,227,904) | (1,346,836) | (14,318) | (9,509) | |||||
Deferred income tax and social contribution | - | 11,995 | (61,578) | 106,082 | (75,853) | |||||
Variations in the account for compensation of Portion A, net | 11 | - | - | (204,425) | 797 | |||||
Variations in other regulatory assets and liabilities, net | 12 | - | - | (51,643) | 45,904 | |||||
Contract renegotiation - CIEN | - | - | - | - | (62,862) | |||||
Provisions for long-term liabilities | 28 | 8,246 | 197,992 | 104,718 | 248,385 | |||||
Provision (reversal) for tax incentives | 17.b | 23,902 | (12,789) | 23,902 | (12,789) | |||||
Write-off of investments | - | - | - | 8,742 | 2,240 | |||||
Write-off of property, plant, and equipment, net | - | - | - | 14,565 | 29,141 | |||||
Write-off of intangible assets, net | - | - | - | 516 | 13,972 | |||||
Noncontrolling interest | - | - | - | 18,069 | 31,090 | |||||
Increase (decrease) in assets | - | |||||||||
Customers and distributors | - | - | 86,522 | (77,696) | ||||||
Telecommunications services | - | - | 4,439 | (5,066) | ||||||
Dividends and interest on capital received | 759,618 | 429,857 | 13,806 | 20,342 | ||||||
Services in progress | - | - | (13,422) | (31,305) | ||||||
CRC transferred to State Government | - | - | 120,048 | 111,267 | ||||||
Taxes and social contribution | (4,205) | (10,063) | (61,253) | 74,441 | ||||||
Bonds and securities | (69,063) | - | (69,063) | - | ||||||
Collaterals and escrow deposits | 2,287 | 32,482 | 1,508 | (41,308) | ||||||
Inventories | - | - | (12,065) | (751) | ||||||
Judicial deposits | 8,794 | (3,693) | (1,931) | (9,900) | ||||||
Other receivables | (360) | (6) | 17,302 | (21,860) | ||||||
Increase (decrease) in liabilities | - | |||||||||
Loans and financing - interest due and paid | (38,799) | - | (156,512) | (75,260) | ||||||
Debentures - interest due and paid | (94,216) | (196,207) | (122,984) | (229,544) | ||||||
Suppliers | (568) | 566 | 131,322 | (25,976) | ||||||
Taxes and social contribution | 6,100 | (15,901) | 8,297 | (52,618) | ||||||
Payroll and labor provisions | 81 | 70 | 13,269 | 11,901 | ||||||
Post-employment benefits | 11 | 8 | (48,752) | (125,425) | ||||||
Customer charges due | - | - | 10,401 | (18,983) | ||||||
Research and development and energy efficiency | - | - | (1,239) | 10,964 | ||||||
Other accounts payable | (22) | - | (834) | (17,151) | ||||||
Noncontrolling interest | - | - | (10,029) | (5,469) | ||||||
Net cash generated by operating activities | 544,738 | 187,687 | 1,493,468 | 1,315,966 | ||||||
(next page) |
111
Statement of Cash Flows
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
(continued) | ||||||||||
Note | Parent Company | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | |||||||
Cash flows from investing activities | ||||||||||
Payments under loans to related parties | - | 176,027 | - | - | - | |||||
Acquisition of Centrais Eólicas do Paraná - net of acquired cash | 17.g | - | - | - | (1,393) | |||||
Acquisition of control in Dominó Holdings - net of acquired cash | 17.f | - | - | (108,962) | - | |||||
Additions to other investiments - net of acquired cash | - | (58,584) | (5,836) | (49,933) | (12,953) | |||||
Additions to property, plant, and equipment | 18.e | - | - | (647,646) | (516,483) | |||||
Additions to intangible assets | 19.e | - | - | (8,416) | (4,406) | |||||
Customer contributions | 18.e | - | - | 79,673 | 48,580 | |||||
Sale of property, plant, and equipment | - | - | - | 11,297 | 6,652 | |||||
Net cash generated (used) by investing activities | 117,443 | (5,836) | (723,987) | (480,003) | ||||||
Cash flows from financing activities | ||||||||||
Loans and financing from third-parties | 20 | - | 329,600 | 34,818 | 346,592 | |||||
Loans and financing from related parties | - | - | 5,382 | - | - | |||||
Amortization of the principal amount of loans and financing | - | - | - | (86,492) | (99,853) | |||||
Amortization of the principal amount of debentures | - | (133,320) | (717,738) | (176,072) | (717,738) | |||||
Dividends and interest on capital paid | - | (266,592) | (292,323) | (269,030) | (292,809) | |||||
Net cash used by financing activities | (399,912) | (675,079) | (496,776) | (763,808) | ||||||
Increase (decrease) in cash and cash equivalents | 262,269 | (493,228) | 272,705 | 72,155 | ||||||
Cash at the beginning of the period | 6 | 56,186 | 549,414 | 1,540,871 | 1,468,716 | |||||
Cash at the end of the period | 6 | 318,455 | 56,186 | 1,813,576 | 1,540,871 | |||||
Variation in cash | 262,269 | (493,228) | 272,705 | 72,155 | ||||||
The accompanying notes are an integral part of these financial statements |
Supplemental information about cash flows
Business acquisitions | ||||||||
Assets acquired | - | - | 116,713 | 2,164 | ||||
Liabilities acquired | - | - | (6,487) | (21) | ||||
Acquisition price paid | - | - | 110,226 | 2,143 | ||||
Cash in hand acquired | - | - | (1,264) | (750) | ||||
Acquisition price, net of acquired cash in hand | - | - | 108,962 | 1,393 |
112
Statement of Added Value
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
Note | Parent Company | Consolidated | ||||||||
2008 | 2007 | 2008 | 2007 | |||||||
Revenues | ||||||||||
Sales of power, services, and other revenues | 30 | - | - | 8,305,395 | 7,920,094 | |||||
Provision for doubtful accounts | 32-f | - | - | (5,824) | (3,899) | |||||
Other operating income (losses) | (23,876) | 12,910 | (30,421) | (31,039) | ||||||
Total | (23,876) | 12,910 | 8,269,150 | 7,885,156 | ||||||
( - ) Supplies acquired from third parties | ||||||||||
Power purchased for resale | 32-a | - | - | 1,787,845 | 1,429,417 | |||||
Charges for the use of the power grid ( - ) ESS | 32-b | - | - | 458,067 | 495,318 | |||||
Materials, supplies, and services from third-parties | 3,923 | 5,255 | 353,885 | 295,206 | ||||||
Natural gas and supplies for the gas business | - | - | 195,265 | 148,400 | ||||||
Emergency capacity charges and PROINFA | - | - | 254 | 256 | ||||||
Other | 16,994 | 198,084 | 148,925 | 271,836 | ||||||
Total | 20,917 | 203,339 | 2,944,241 | 2,640,433 | ||||||
( = ) GROSS ADDED VALUE | (44,793) | (190,429) | 5,324,909 | 5,244,723 | ||||||
( - ) Depreciation and amortization | 63 | - | 404,743 | 429,957 | ||||||
( = ) NET ADDED VALUE | (44,856) | (190,429) | 4,920,166 | 4,814,766 | ||||||
( + ) Transferred Added Value | ||||||||||
Financial revenues | 33 | 107,428 | 90,891 | 488,620 | 396,017 | |||||
Result of equity in subsidiaries and investees | 1,227,904 | 1,346,836 | 14,318 | 9,509 | ||||||
Total | 1,335,332 | 1,437,727 | 502,938 | 405,526 | ||||||
ADDED VALUE TO DISTRIBUTE | 1,290,476 | 1,247,298 | 5,423,104 | 5,220,292 | ||||||
113
Statement of Added Value
for the years ended on December 31, 2008 and 2007
(In thousands of reais)
(continued) | ||||||||||||||||||
Note | Parent Company | Consolidated | ||||||||||||||||
2008 | % | 2007 | % | 2008 | % | 2007 | % | |||||||||||
DISTRIBUTION OF ADDED VALUE: | ||||||||||||||||||
Personnel | ||||||||||||||||||
Salaries and wages | 32-c | 4,806 | 4,615 | 484,257 | 451,156 | |||||||||||||
Pension and healthcare plans | 24 | 140 | 89 | 30,016 | (13,851) | |||||||||||||
Meal assistance and education allowance | 32-c | - | - | 49,078 | 45,675 | |||||||||||||
Social charges - FGTS | 271 | 234 | 34,694 | 31,994 | ||||||||||||||
Labor indemnifications (reversal) | 32-c | - | - | (825) | 8,293 | |||||||||||||
Profit sharing | 32-c | - | - | 65,816 | 54,254 | |||||||||||||
Transfer to construction in progress | 32-c | - | - | (80,214) | (54,304) | |||||||||||||
Total | 5,217 | 0.4 | 4,938 | 0.4 | 582,822 | 10.7 | 523,217 | 10.0 | ||||||||||
Government | ||||||||||||||||||
Federal | 33,792 | (49,613) | 1,747,539 | 1,713,440 | ||||||||||||||
State | - | 1 | 1,594,946 | 1,513,381 | ||||||||||||||
Municipal | - | - | 3,019 | 3,530 | ||||||||||||||
Total | 33,792 | 2.6 | (49,612) | (4.0) | 3,345,504 | 61.8 | 3,230,351 | 61.9 | ||||||||||
Financing agents | ||||||||||||||||||
Interests and penalties | 172,568 | 185,266 | 385,166 | 318,259 | ||||||||||||||
Leases and rents | 32-g | 155 | 96 | 12,799 | 10,765 | |||||||||||||
Total | 172,723 | 13.4 | 185,362 | 14.9 | 397,965 | 7.3 | 329,024 | 6.3 | ||||||||||
Shareholders | ||||||||||||||||||
Noncontrolling interest | - | - | 18,069 | 31,090 | ||||||||||||||
Interest on capital | 29-d | 228,000 | 200,000 | 228,000 | 200,000 | |||||||||||||
Proposed dividends | 29-d | 33,834 | 67,750 | 33,834 | 67,750 | |||||||||||||
Retained earnings | 816,910 | 838,860 | 816,910 | 838,860 | ||||||||||||||
Total | 1,078,744 | 83.6 | 1,106,610 | 88.7 | 1,096,813 | 20.2 | 1,137,700 | 21.8 | ||||||||||
1,290,476 | 100.0 | 1,247,298 | 100.0 | 5,423,104 | 100.0 | 5,220,292 | 100.0 | |||||||||||
The accompanying notes are an integral part of these financial statements. |
114
NOTES TO THE FINANCIAL STATEMENTS
as of December 31, 2008 and 2007
(In thousands of reais, except where otherwise indicated)
1. Operations
Companhia Paranaense de Energia - COPEL (COPEL, the Company or the Parent Company) is a public company with shares traded on Corporate Governance Level 1 of BOVESPA’s Special Listings and on stock exchanges in the United States of America and Spain. COPEL is a mixed capital company, controlled by the Government of the State of Paraná, engaged, through its subsidiaries, in researching, studying, planning, building, and exploiting the production, transformation, transportation, distribution, and sale of energy, in any form, but particularly electric energy. These activities are regulated by the National Electric Energy Agency - ANEEL, which reports to the Ministry of Mines and Energy - MME. Additionally, COPEL takes part in consortiums, private enterprises, or mixed capital companies in order to operate mostly in the areas of energy, telecommunications, natural gas, and water supply and sanitation.
In 2007, the Company’s corporate restructuring was initiated with the dissolution of COPEL Transmissão S.A., with a view to meeting regulatory requirements and achieving a more transparent and less expensive corporate structure. In 2008, while carrying on this corporate restructuring, COPEL was granted ANEEL authorization to split and later on terminate COPEL Participações S.A., transferring its assets to Companhia Paranaense de Energia (COPEL’s Parent Company) and to COPEL Geração e Transmissão. This operation was conducted pursuant to article 8 of Law no. 10,848/2004, which changed article 4 of Law no. 9,074/1995 (Note 17.c).
COPEL’s wholly-owned subsidiaries and other subsidiaries are featured below. Non financial/accounting information, such as information about supplied market, installed capacity, and assured power, has not been audited by the independent auditors.
a) COPEL Geração e Transmissão S.A.
COPEL Geração e Transmissão S.A. is charged with the Company’s power generation business, which is based on the operation of 17 hydroelectric power plants and one thermal power plant, listed below, amounting to total installed capacity of 4,549.61 MW, and power transmission business, based on 30 substations at voltages equal to or greater than 230 kV and 1,835.2 km of transmission lines in Paraná, most of which are part of the Brazilian Basic Transmission Network. The concession for 1,698.1 km of these lines expires in July 2015, and the concession for the remaining 137.1 km expires in August 2031, subject to extension at the discretion of the granting authority (Note 30.a).
115
Power Plants | River | Installed | Assured | ANEEL | Concession | |||||
capacity | power | concession | expiration | |||||||
(MW)(1) | (avg MW)(1) | date | date | |||||||
Hydroelectric facilities | ||||||||||
Gov. Bento Munhoz da Rocha Netto | ||||||||||
(Foz do Areia) | Iguaçu | 1,676.00 | 576.00 | 24.05.1973 | 23.05.2023 | |||||
Gov. Ney Aminthas de Barros Braga | ||||||||||
(Segredo) | Iguaçu | 1,260.00 | 603.00 | 14.11.1979 | 15.11.2009 | |||||
Gov. José Richa (Caxias) | Iguaçu | 1,240.00 | 605.00 | 02.05.1980 | 04.05.2010 | |||||
Gov. Pedro Viriato Parigot de Souza | Capivari-Cachoeira | 260.00 | 109.00 | 23.04.1965 | 07.07.2015 | |||||
Guaricana | Arraial | 36.00 | 13.60 | 13.08.1976 | 16.08.2026 | |||||
Chaminé | São João | 18.00 | 11.60 | 13.08.1976 | 16.08.2026 | |||||
Apucaraninha | Apucaraninha | 10.00 | 6.71 | 13.10.1975 | 12.10.2025 | |||||
Mourão | Mourão | 8.20 | 5.30 | 20.01.1964 | 07.07.2015 | |||||
Jordão River Diversion | Jordão | 6.50 | 5.85 | 14.11.1979 | 15.11.2009 | |||||
Marumbi(a) | Ipiranga | 4.80 | 3.94 | - | - | |||||
São Jorge | Pitangui/Tibagi | 2.30 | 1.62 | 04.12.1974 | 03.12.2024 | |||||
Chopim I | Chopim | 1.98 | 1.27 | 20.03.1964 | 07.07.2015 | |||||
Rio dos Patos | Rio dos Patos/Ivaí | 1.72 | 1.13 | 14.02.1984 | 14.02.2014 | |||||
Cavernoso | Cavernoso/Iguaçu | 1.30 | 0.86 | 07.01.1981 | 07.01.2011 | |||||
Salto do Vau(b) | Palmital | 0.94 | 0.60 | 27.01.1954 | - | |||||
Pitangui(b) | Pitangui | 0.87 | 0.57 | 05.12.1954 | - | |||||
Melissa(b) | Melissa | 1.00 | 0.57 | 08.10.1993 | - | |||||
Thermal facility | ||||||||||
Figueira | 20.00 | 10.30 | 21.03.1969 | 26.03.2019 | ||||||
Total | 4,549.61 | 1,956.92 | ||||||||
(1)Submitted to approval by ANEEL. | ||||||||||
(2)Facilities under 1 MW are only subject to registration before ANEEL. |
The Company has already applied for extension by ANEEL of the power plant concessions expiring in 2009, 2010, and 2011: Governor Ney Aminthas de Barros Braga (Segredo), Governor José Richa (Salto Caxias), Jordão River Diversion Small Hydropower Project, and Cavernoso Small Hydropower Project. ANEEL, under Ruling no. 455, dated February 3, 2009, has recommended to the Ministry of Mines and Energy the extension of the concessions, pursuant to the following terms:
Concession Contract no. 045/1999 | Extension | Final Expiration | ||
Power Plants | ||||
Governor Ney Braga (Segredo) | 20 years | 2029 | ||
Governor José Richa (Salto Caxias) | 20 years | 2030 | ||
Jordão River Diversion | 20 years | 2029 | ||
Cavernoso | 8.5 years | 2019 | ||
COPEL has disputed ANEEL’s recommendation that the Cavernoso concession be extended for only 8.5 years, since it believes it should be extended for 20 years as its other concessions. The Ministry of Mines and Energy is reviewing COPEL’s claim and ANEEL’s recommendation, but it has not ruled on the matter yet.
b) COPEL Distribuição S.A.
COPEL Distribuição S.A. runs the Company's power distribution and regulated sales to 1,119 locations in 392 out of the 399 municipalities in the State of Paraná, and also to the town of Porto União, in the State of Santa Catarina. Its current concession, which is set to expire on July 7, 2015, may be extended for another 20 years, at the discretion of the granting authority.
c) COPEL Telecomunicações S.A.
116
COPEL Telecomunicações S.A. is engaged in providing communications and telecommunications services and in conducting studies, projects, and planning in the field of telecommunications, as well as any related activities, as authorized by law, for an indeterminate period of time, on a non-exclusive basis, both nationally and internationally, with a service area comprising the State of Paraná and Region II of the General Grants Plan of the National Telecommunications Agency - - ANATEL, which reports to the Ministry of Communications.
d) Companhia Paranaense de Gás – Compagas
Compagas is a mixed capital company in which COPEL holds a 51% interest and whose main activity is the supply of piped natural gas, through a 499-km long distribution network set up throughout Paraná in the municipalities of Araucária, Curitiba, Campo Largo, Balsa Nova, Palmeira, Ponta Grossa, and São José dos Pinhais. Compagas supplies a total of 4,510 customers, comprising 95 industrial customers, 26 vehicular gas stations, 227 commercial customers, 4,158 households, 2 co-generation plants, one company which uses natural gas as a raw material, and the Araucária Thermal Power Plant.
e) Elejor – Centrais Elétricas do Rio Jordão S.A.
ELEJOR is a special purpose company in which COPEL holds a 70% voting interest and which was constituted to implement and run the Fundão – Santa Clara Power Complex, on the Jordão River, within the Iguaçu River sub-basin, in the State of Paraná, comprising the Santa Clara and Fundão Power Plants. These facilities feature 240.3 MW of installed capacity, in addition to small hydropower units embedded in the Santa Clara and Fundão dams, with 3.6 MW and 2.4 MW of installed capacity, respectively. The concession for the project was granted on October 23, 2001 for a 35-year term, renewable upon request by the holder and at ANEEL’s discretion.
f) COPEL Empreendimentos Ltda.
COPEL Empreendimentos Ltda. is limited liability company wholly-owned by COPEL and set up to provide services in connection with the planning, coordination, and organization of companies involved in power generation and transmission, and with power plant management, construction, operation, and maintenance, in addition to holding interests in other companies.
g) UEG Araucária Ltda.
UEG Araucária Ltda. is a limited liability company in which COPEL holds an 80% interest and which was set up to generate and sell electric power, using natural gas as fuel. The Araucária Power Plant has an installed capacity of 484.5 MW. Its authorization to operate as an independent power producer was issued by ANEEL on December 22, 1999 for a 30-year term, renewable upon request by the holder and at ANEEL’s discretion.
On December 28, 2006, UEG Araucária signed an agreement with Petróleo Brasileiro S.A. - Petrobras, leasing the Araucária Thermal Power Plant in return for monthly payments, over a period of one year, extended until December 31, 2008. On March 4, 2009, the lease was renewed, for another three years, as of January 1, 2009, subject to partial or total termination should UEG Araucária successfully participate at ANEEL-sponsored power auctions.
117
h) Centrais Eólicas do Paraná
Centrais Eólicas do Paraná is a limited liability company which has been controlled by COPEL (with a 100% interest) since September 6, 2007, and which has been set up to build, assemble, and operate a 2.5 MW wind power plant, in the region of Palmas, in the State of Paraná (Note 17.g).
i) Consórcio Energético Cruzeiro do Sul
Consórcio Energético Cruzeiro do Sul isan independent power producer, owned by COPEL Geração e Transmissão (51%), and by Eletrosul Centrais Elétricas S.A. (49%). On November 10, 2006, at Auction of Power from New Projects 004/2006, this company won the rights to the concession of the Mauá Hydroelectric Power Plant, which will feature 361 MW of installed capacity; the concession is valid for 35 years from the date of signature, which took place on July 3, 2007 (Note 17.e).
j) Dominó Holdings S.A.
Dominó Holdings S.A. is a company which owns 34.75% of the share capital of the Sanitation Company of Paraná – SANEPAR, a mixed capital company whose business comprises basic sanitation services, including water supply and sewage collection and treatment. Since January 2008, when it became the holder of 45% of Dominó Holding' share capital by acquiring the 30% interest held by Sanedo Participações Ltda., COPEL has exercised joint control of the company together with the remaining shareholders.
2. Presentation of the Financial Statements
Authorization for the completion of these financial statements was granted at the Meeting of the Board of Officers held on March 16, 2009.
The financial statements featured in this report are in accordance with the provisions of the Brazilian Corporate Law, as amended by Law no. 11,638/2007 and by Provisional Measure no. 449/2008, with the accounting practices adopted in Brazil, with the specific legislation enacted by ANEEL, and with the regulations of the Brazilian Securities and Exchange Commission (CVM).
Certain reclassifications were made to the financial statements as of December 31, 2007, to allow readers to properly compare them to the current statements. The main reclassifications are shown below:
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Original account | Reclassified account | Consolidated | ||
Current assets | Current liabilities | |||
Taxes and social contribution (a) | Taxes and social contribution | 125,965 | ||
Long-term receivables | Long-term liabilities | |||
Taxes and social contribution (b) | Taxes and social contribution | (12,775) | ||
Noncurrent assets | Noncurrent assets | |||
Deferred assets (c) | Property, plant, and equipment | 3,112 | ||
Deferred assets (c) | Intangible assets | 2,115 | ||
Investments (d) | Intangible assets | 1,791 | ||
Long-term liabilities | Long-term liabilities | |||
Income from future periods - negative | ||||
goodwill (c) | Deferred revenues | 592 | ||
Deductions from operating revenues | Cost of goods and/or services sold | |||
PIS/Pasep and Cofins taxes (e) | Power purchased for resale | (150,082) | ||
PIS/Pasep and Cofins taxes (e) | Charges for the use of the power grid | (68,383) | ||
Equity in results of investees and subsidiaries | Other operating revenues (expenses) | |||
Amortization of goodwill (d) | Other revenues (expenses), net | (7,908) | ||
Non-operating income (losses) | Other operating revenues (expenses) | |||
Non-operating revenues (expenses) (c) | Other revenues (expenses), net | (31,109) | ||
a) Reversal of offset of taxes and social contribution between current assets and current liabilities;
b) Offset of taxes and social contribution between long-term receivables and long-term liabilities;
c) Pursuant to Law no. 11,638/07 and Provisional Measure no. 449/08 (Note 4);
d) Reclassification of goodwill pursuant to Technical Ruling CPC 04 (Note 4);
e) Pursuant to Technical Interpretation no. 01/04 from the Institute of Independent Auditors of Brazil - Ibracon.
3. Consolidated Financial Statements
The financial statements of subsidiaries and investees are adjusted to comply with the accounting practices adopted by COPEL.
COPEL has consolidated the financial statements of its wholly-owned subsidiaries and of the subsidiaries listed in Note 1.
The financial statements of COPEL Participações S.A. were consolidated until November 30, 2008 (Note 17.c).
The balance sheets and statements of income of the companies included in the consolidation are shown in Note 38, reclassified for the purpose of ensuring consistency with the account classification adopted by COPEL.
The Company’s investments in the shareholders’ equities of subsidiaries, as well as the assets, liabilities, revenues, and expenses arising from intercompany operations, have been eliminated upon consolidation, and the noncontrolling interest are shown separately, so that the consolidated financial statements effectively represent the balances of transactions with third parties.
The dates of the financial statements of investees, which have been used for the calculation of equity in their results and for consolidation purposes, coincide with those of the Parent Company.
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4. Changes in Accounting Policies
Law no. 11,638/07 and Provisional Measure no. 449/08 have changed, revoked, and introduced new provisions in the Brazilian Corporate Law, particularly in the chapter covering the disclosure and preparation of financial statements. Some of these provisions have changed, among other aspects, the criteria for recognition and valuation of assets and liabilities.
The main purpose of this new law is to update the Brazilian corporate legislation so as to bring the accounting practices adopted in Brazil closer to the International Financial Reporting Standards (IFRS) and to allow new accounting rules and procedures to be issued by the Brazilian Securities and Exchange Commission (CVM), in compliance with IFRS.
Furthermore, on account of the enactment of the legislation mentioned above, during 2008 the Accounting Standards Committee (Comitê de Pronunciamentos Contábeisor CPC) issued several rules where are mandatory for the preparation of financial statements for the year ended on December 31, 2008.
The financial statements for the years ended on December 31, 2008 and 2007 reflect, in all material aspects, the changes introduced by Law no. 11,638/07 and by Provisional Measure no. 449/08. In compliance with CVM Ruling no. 565/08, which approved Technical Ruling CPC-13 - Initial Adoption of Law no. 11,638/07 and Provisional Measure no. 449/08, the Company and its subsidiaries have chosen to record the introduced changes retroactively. Thus, the financial statements for the year ended on December 31, 2007 have been reclassified to make their comparison to the 2008 statements possible, and the effects of this reclassification are described in Note 2. The Company did not identify any adjustments which could have an impact on its income and on its shareholders’ equity as of December 31, 2007.
A summary of the assessment of the application of the new accounting provisions, conducted by COPEL's management, is shown below:
Introduced Changes | Impact on the Company |
Elimination of the revaluation reserve. Any existing balances in revaluation reserves shall be maintained until their actual realization or reverted by the end of the fiscal year in which the Law came into force. | Jointly-controlled subsidiary Dominó Holdings and subsidiaries Sercomtel Telecomunicações and Sercomtel Celular have revaluation reserve balances which have been excluded for purposes of equity and consolidation and to adjust the accounting practices of these subsidiaries to those of the parent company (Note 17). |
Creation of a new subset of accounts for intangible items, including goodwill, for purposes of presentation as part of the balance sheet. This set of accounts shall record any rights to non-physical assets assigned to the operation of the Company or exercised with this purpose, including acquired stock in trade (CPC 04). | The Company has conducted the required reclassifications (Notes 2 and 19). |
Mandatory recording under property, plant, and equipment of any rights to physical assets assigned to the operation of the Company, including those resulting from transactions which transfer to the Company the benefits, risks, and control of these assets (such as finance leases – CPC 06). | The Company’s leasing agreements are characterized as operational leases. |
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Introduced Changes | Impact on the Company |
Modification of the criteria for amounts recorded under deferred assets/liabilities. Only pre-operational expenses and restructuring expenses which effectively contribute to the increase in the income of more than one fiscal year and which do not characterize only a cost reduction or operational efficiency gain shall be recorded in this subset (CPC 04). | The Company has reclassified the balances in its deferred assets account to its p.,p.&e. and intangible assets accounts, according to the nature of each asset (Note 2). |
Requirement that the Company periodically assess its ability to recover the amounts recorded under property, plant, and equipment, intangible assets, and deferred assets, in order to ensure that: (i) any losses due to non-recovery of these assets are recorded as the result of a decision to discontinue the activities related to these assets or when there is evidence that the results of operations will not be sufficient to ensure the realization of these assets; and (ii) the criteria used to determine the estimated remaining useful lives of these assets for purposes of recording their depreciation, amortization, and depletion are reviewed and adjusted (CPC 01). | The Company already adopts this practice. Most assets comprising the property, plant, and equipment of the Company and its subsidiaries are linked to the concession. According to the concession agreements signed by the Company as a public service concession holder, any residual value of these assets shall be refunded to it upon expiration of the based on specific legislation. This fact significantly reduces the risk of any impact to the Company’s financial statements in connection with the recovery of assets (Notes 17 and 18). |
Requirement that all financial instruments, including derivatives, be recorded: (i) at market value or equivalent value, in the case of instruments assigned to trading or available for sale; and (ii) at acquisition cost or face value, restated in compliance with legal and contractual provisions and adjusted to the likely realization value, whenever the latter is lower than the former (CPC 14). | The Company has reclassified its financial investments and financial resources. The securities classified as held- to-maturity have been valued at amortized cost (Note 35). These securities have only been acquired in 2008, so they bear no impact on the 2007 statements. |
Elimination of the Non-Operating Income (Losses) item | Due to the elimination of the Non-Operating Income (Losses) item set forth under Provisional Measure no. 449/08, COPEL now presents the amounts previously classified under that item as “other net operating revenues (expenses)” and in a note to its financial statements (Note 2). |
a) Transitional Tax System (Regime Tributário Transitórioor RTT)
The amounts featured in the financial statements as of December 31, 2008 take into account the adoption of the Transitional Tax System by the Company and its subsidiaries, pursuant to the option afforded by Provisional Measure no. 449/08, whose goal is to ensure that the corporate legislation changes introduced by Law no. 11,638/07 and by Provisional Measure 449/08 itself are tax neutral. Permanent adoption of the Transitional Tax System will only be confirmed at the time of submission of the Company’s Corporate Economic and Financial Information Statement to the tax authorities.
5. Main Accounting Practices
a) General Accounting Practices
Cash and cash equivalents
Cash and cash equivalents includes cash, bank deposits, and temporary short-term financial investments with immediate liquidity. Temporary short-term investments are recorded at fair value as of the date of the balance sheets (Note 6).
Customers and distributors
This item comprises billed power sales to final customers and to distributors, estimated power supplied but unbilled as of the date of the statements, and supply of natural gas, accounted for on an accrual basis (Note 7).
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Materials and supplies (including those under property, plant, and equipment)
Materials and supplies in inventory, classified under current assets, have been recorded at their average purchase cost, and those assigned for investments, classified under property, plant, and equipment, have been recorded at their actual purchase cost (goods in bulk, such as poles and cables, are recorded according to average cost). Recorded amounts do not exceed their replacement costs or realization figures.
Bonds and Securities
This item comprises National Treasury bonds classified as held-to-maturity, thus recorded at amortized cost. These securities have only been acquired in 2008, so they have no impact on the 2007 statements (Note 35).
Investments
Permanent interests in subsidiaries and investees have been recorded under the equity method. Other investments have been recorded at their purchase cost, net of provision for losses, when applicable (Note 17). Equity on subsidiaries has been eliminated upon consolidation
Goodwill based on expected future profitability
Goodwill on acquisition of investments whose economic basis is future profitability has been amortized on a straight line basis over a 10-year period. As of December 31, 2008 the amount of goodwill had already been entirely amortized (Note 19).
Intangible assets - concessions
Amounts recorded as intangible assets at the time of acquisitions of interests in companies companies which holds concessions have been amortized over the respective remaining terms of each concession (Note 19).
Assessment of the recoverable value of assets
Property, plant, and equipment and intangible assets are tested annually to detect evidence of unrecoverable losses or whenever significant events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. Whenever there is a loss, resulting from situations where an asset’s carrying amount exceeds its recoverable value, defined as the greater between the asset´s fair value less costs to sell and its value in use, this loss is charged to the statements of operations.
Loans, financing, and debentures
Loans, financing, and debentures are restated according to monetary and exchange rate variations occurring until the date of the balance sheets, including interest and other contractual charges, on their amortized cost.
Taxes and social contributions
Sales and services revenues are subject to value-added tax (Imposto sobre Circulação de Mercadorias e Serviçosor ICMS) and service tax (Imposto sobre Serviçosor ISS), at the applicable rates, and to the PIS (Social Integration Program), COFINS (Contribution for the Financing of Social Security), and PASEP (Program for the Formation of the Civil Servants' Fund) social contributions.
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Credits resulting from the non-cumulative nature of PIS/PASEP and COFINS charges are featured as deductions from the cost of products sold in the statement of income.
Advance payments of amounts eligible for offsetting are featured in current or noncurrent assets, according to their expected realization.
Income tax comprises corporate income tax and social contribution, which are calculated based on taxable income (adjusted income), at the applicable rates, which are: 15%, plus 10% on any amounts exceeding R$ 240 a year, for corporate income tax, and 9% for social contribution. Thus, the addition to the book income of temporarily non-deductible expenses or temporarily non-taxable revenue exclusions, taken into account for purposes of calculating the current taxable income, results in deferred tax credits or debits.
Deferred tax credits resulting from tax losses or negative bases for the calculation of social contribution are recognized only as long as there is a possibility of a positive tax basis against which they may be settled. Deferred income tax and social contribution assets have been calculated on tax losses, negative bases for the calculation of social contribution, and temporary discrepancies, at the applicable rates, and take into account the expected future generation of taxable income, discounted at present value and based on technical feasibility studies approved by the Company’s Board of Directors.
Pension and healthcare plan
The costs incurred in connection with the COPEL Foundation’s pension and healthcare plan are recorded pursuant to CVM Instruction no. 371, dated December 13, 2000 (Note 24).
Provision for contingencies
These are recorded until the date of the financial statements based on likely estimates of losses, in light of the nature of each contingency. The bases and the nature of each provision are described in Note 28.
Other rights and obligations
All other assets and liabilities, whenever required by law or by contract, are restated until the date of the financial statements.
Use of estimates
The preparation of financial statements, in compliance with the accounting practices adopted in Brazil, requires that COPEL’s senior management make estimates and adopt assumptions that indeed affect the reported figures of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the balance sheet, and the reported figures of revenues and expenses. Actual figures may be different than these estimates. The main estimates in the financial statements refer to the recording of the effects resulting from the provision for doubtful accounts, the useful lives of property, plant, and equipment, the reduction of the recoverable value of noncurrent assets, the provision for contingencies, income tax, pension plan and post-employment benefit assumptions, unbilled power supply to final customers, and the sale and purchase of power in the Electric Energy Trading Chamber (CCEE), whose billing and settlement are subject to review by CCEE participants.
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Calculation of income
Revenues, costs, and expenses are recorder under the accrual method, i.e., when products are delivered and services actually rendered, regardless of receipt or payment.
Revenues for the sales of products are recognized when:(i) the amount of the sale is reliably measurable;(ii) the costs incurred or to be incurred in the transaction are reliably measurable;(iii) it is likely that the economic benefits are received by the Company; and(iv) the risks and benefits have been fully transferred to the respective buyer.
Tax incentives
Tax incentives are recorded at their historical cost, adjusted to their estimated realizable amount (Note 17).
Net income per share
Net income per share is determined based on the amount of paid in share capital outstanding as of the date of the balance sheet (Note 29).
b) Power Sector-Specific Regulated Accounting Practices
Deferment of distribution costs
The rate setting mechanism in Brazil guarantees the recovery of certain COPEL Distribuição’s costs in connection with the purchase of power and with regulatory charges through annual rate increases. Following ANEEL instructions, COPEL Distribuição records variations of these costs as deferred regulatory assets and liabilities, when there is a likely expectation that future revenues, equivalent to the incurred costs, will be billed and collected, as direct result of the inclusion of such costs in an adjusted rate set according to the parametric formula established in the company’s concession agreement. Deferred regulatory assets and liabilities are realized upon authorization by the granting authority for their inclusion in COPEL Distribuição’s rate basis, which is adjusted annually on the anniversary date of its concession agreement.
Allowance for doubtful accounts
The allowance for doubtful accounts is deemed sufficient by COPEL’s senior management to cover potential losses on the realization of customer receivables and others whose recovery is considered unlikely.
This allowance is set up based on the amounts overdue by residential customers for over 90 days, the amounts overdue by commercial customers for over 180 days, and the amounts overdue by industrial and rural customers, public agencies, public lighting, and public services for over 360 days, pursuant to the Electric Utility Accounting Manual. It comprises receivables billed until the date of the balance sheets, accounted for on an accrual basis (Note 8).
Property, Plant, and Equipment
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Recorded at their purchase or construction cost. Depreciation is calculated under the straight line method, based on accounting balances recorded in the respective Record Units, pursuant to DNAEE Ordinance no. 815, dated November 30, 1994, supplemented by ANEEL Resolution no. 15, dated December 24, 1997. Annual depreciation rates are set in the tables annexed to ANEEL Resolution no. 240, dated December 5, 2006, and Ministry of Communications Ordinance no. 96/1995, and are featured in Note 18.
Property, plant, and equipment in progress
General management expenses are added monthly and proportionally to property, plant, and equipment items. The allocation of direct expenses with personnel and third-party services is provided for under the Electric Utility Accounting Manual. These costs are recovered through the rate-setting mechanism.
Financial charges, interest, and monetary restatement on financing from third-parties in connection with property, plant, and equipment in progress are added to these items of property, plant, and equipment in progress during the construction period (Note 18).
Special liabilities
In compliance with Accounting Instruction 6.3.23 of the Electric Utility Accounting Manual, special obligations attached to the concession, corresponding to contributions received from federal, state, or municipal governments and from customers in general for expenditures on power grids, are recorded in a specific subgroup of the long-term liabilities and are presented, for Financial Statements purposes as a reduction of property, plant, and equipment. This amortization is calculated based on the same average depreciation rate of the corresponding assets (Note 18).
Intangible assets
Recorded at their purchase or development cost. Amortization, when applicable, is calculated under the straight line method (Note 19).
Unbilled revenues
Unbilled revenues correspond to revenues from sales of power to final customers which have been delivered but not yet billed and to revenues from the use of the distribution grid not yet billed, both of which are calculated based on estimates covering the period from the meter reading day to the last day of the month.
Power purchase and sale transactions in the Electric Energy Trading Chamber (CCEE)
Power purchase and sale transactions in CCEE are recorded on the accrual basis according to the information disclosed by the Trading Chamber or to estimates prepared by COPEL’s senior management, when this information is not available in time (Note 34).
Energy Efficiency Programs (EEPs), Research and Development (R&D), National Scientific and Technological Development Fund (FNDCT), and Ministry of Mines and Energy (MME)
These are research and development and energy efficiency programs to which utilities are required by ANEEL to allocate 1% of their net operating revenues.
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The funds are applied to projects approved by ANEEL and to contributions to FNDCT and to the Ministry of Mines and Energy (MME) (Note 26).
6. Cash and Cash Equivalents
Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Cash and banks | 2,196 | 660 | 88,161 | 194,208 |
Financial investments | ||||
Federal banks | 316,259 | 55,526 | 1,720,936 | 1,343,378 |
Private banks | - | - | 4,479 | 3,285 |
316,259 | 55,526 | 1,725,415 | 1,346,663 | |
318,455 | 56,186 | 1,813,576 | 1,540,871 | |
Most of the financial investments of the Company and of its subsidiaries have been made in official financial institutions, comprising mostly fixed income securities tied to federal bonds, which bear an average yield of 100% of the Interbank Deposit Certificate rate, which was in 2008 12.28%, and in 2007, 11.92% . These investments are recorded at fair value and may be redeemed at any time, with no loss of any accrued earnings, as they were in 2007.
7. Consumers and Distributors
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Not yet | Overdue for | Overdue for | Consolidated | |||
due | up to 90 days | over 90 days | Total | |||
2008 | 2007 | |||||
Consumers | ||||||
Residential | 89,831 | 71,497 | 2,861 | 164,189 | 157,698 | |
Industrial | 100,159 | 20,182 | 35,579 | 155,920 | 170,828 | |
Commercial | 63,973 | 22,489 | 7,366 | 93,828 | 93,099 | |
Rural | 13,010 | 5,375 | 190 | 18,575 | 18,271 | |
Public agencies | 15,393 | 8,288 | 1,267 | 24,948 | 27,161 | |
Public lighting | 12,185 | 1,888 | 268 | 14,341 | 12,174 | |
Public services | 11,209 | 660 | 417 | 12,286 | 12,568 | |
Unbilled | 151,659 | - | - | 151,659 | 143,921 | |
Energy installment plan | 78,205 | 3,938 | 9,471 | 91,614 | 96,772 | |
Energy installment plan - long-term | 78,123 | - | - | 78,123 | 118,032 | |
Low income customer rates | 28,800 | - | - | 28,800 | 99,417 | |
Penalties on overdue bills | 3,638 | 3,445 | 2,018 | 9,101 | 13,230 | |
State Government-"Luz Fraterna" Program | 2,996 | 4,504 | - | 7,500 | 9,785 | |
Red. of rate for use of distribution system | 2,635 | - | - | 2,635 | 2,969 | |
Gas supply | 19,243 | 2,508 | 699 | 22,450 | 15,985 | |
Other receivables | 11,679 | 1,712 | 1,230 | 14,621 | 18,464 | |
Other receivables - long-term | 3,732 | - | - | 3,732 | 1,834 | |
686,470 | 146,486 | 61,366 | 894,322 | 1,012,208 | ||
Distributors | ||||||
Bulk supply | ||||||
Bulk supply - CCEE (Note 32) | 9,931 | - | - | 9,931 | 7,158 | |
Power auction | 96,074 | - | - | 96,074 | 86,914 | |
Bilateral agreements | 59,853 | - | - | 59,853 | 49,186 | |
Reimbursement to generators | 571 | - | - | 571 | 1,492 | |
Reimbursement to generators - long-term | 321 | - | - | 321 | 12,004 | |
Contracts with small utilities | 14,173 | - | - | 14,173 | 6,522 | |
Short-term bulk supply | - | - | 126 | 126 | 126 | |
180,923 | - | 126 | 181,049 | 163,402 | ||
Charges for use of power grid | ||||||
Power grid | 12,932 | 976 | 2,338 | 16,246 | 16,507 | |
Basic Network | 23,041 | 68 | 229 | 23,338 | 29,335 | |
Basic Network - long-term | - | - | - | - | 7,255 | |
Connection grid | 173 | - | - | 173 | 112 | |
36,146 | 1,044 | 2,567 | 39,757 | 53,209 | ||
903,539 | 147,530 | 64,059 | 1,115,128 | 1,228,819 | ||
2008 | Current total | 821,363 | 147,530 | 64,059 | 1,032,952 | |
Long-term total | 82,176 | - | - | 82,176 | ||
2007 | Current total | 864,450 | 152,465 | 72,779 | 1,089,694 | |
Long-term total | 139,125 | - | - | 139,125 | ||
a) Low income rate
In September 2002, the Company started applying the low income rate to electricity bills based on the new criteria for eligibility as low income customers.
On December 17, 2002, Law no. 10,604 modified the means of compensation to utilities, authorizing the granting of an economic subsidy, in order to contribute to the low price of the low income rate. This subsidy is funded by the dividend surplus owed by Centrais Elétricas Brasileiras S.A. -Eletrobrás to the Federal Government, in connection with the sale of power by Federal Government-owned generation companies at power auctions, and by Global Reversal Reserve (RGR) funds.
ANEEL, through different resolutions, set forth a new methodology for the calculation of the economic subsidy to which utilities are entitled, in order to offset the effects of the rate policy applicable to low income customers. As of December 2008, the low income rate was applied to 716,627 customers, who account for 25.76% of the total of 2,782,404 residential customers supplied by COPEL.
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The balance receivable as of December 31, 2008 refers to installments which have already been ratified by ANEEL and which are yet to be transferred by Eletrobrás.
b) Power generator reimbursement rights
Power generator reimbursements rights refer to free energy amounts sold within MAE (the Wholesale Power Market) – which has become the current Electric Energy Trading Chamber (CCEE) – during the emergency power consumption program, from June 1, 2001 to February 28, 2002, and which were not covered by initial contracts or similar agreements and by bilateral contracts. To make up for part of the losses incurred by utilities due to the power rationing, ANEEL created the Extraordinary Rate Adjustment (RTE). This measure sets forth procedures for the recovery and transfer to generation companies, starting in February 2003, of free energy amounts, calculated as a percentage of RTE revenues.
8. Provision for Doubtful Accounts
After review of overdue receivables, COPEL’s senior management has considered the following amounts as sufficient to cover potential losses on the realization of receivables:
Additions / | |||||
Consolidated | (reversals) | Write-offs | Consolidated | ||
2007 | 2008 | ||||
Consumers and distributors | |||||
Residential | 16,268 | (623) | (10,101) | 5,544 | |
Industrial | 41,941 | 7,549 | (8,755) | 40,735 | |
Commercial | 8,454 | 3,913 | (3,861) | 8,506 | |
Rural | 38 | 475 | (336) | 177 | |
Public agencies | 1,725 | (778) | - | 947 | |
Public lighting | 146 | 23 | - | 169 | |
Public services | 288 | (288) | - | - | |
Utilities | 2,726 | (2,625) | 105 | 206 | |
Utilities - long-term | 11,469 | (11,223) | - | 246 | |
Gas supply | 6 | (6) | - | - | |
83,061 | (3,583) | (22,948) | 56,530 | ||
Current total | 71,592 | 7,640 | (22,948) | 56,284 | |
Long-term total | 11,469 | (11,223) | - | 246 | |
The applied criteria, in addition to taking into account management’s experience as far as the record of actual losses, also comply with the parameters recommended by ANEEL.
9. CRC Transferred to the Government of the State of Paraná
Under an agreement dated August 4, 1994 and amended in December 1995, the remaining balance of the Recoverable Rate Deficit Account (CRC) was negotiated with the Government of the State of Paraná to be reimbursed in 240 monthly installments, restated by the General Price Index - Internal Availability (IGP-DI) plus annual interest of 6.65% . On October 1, 1997, the outstanding balance was renegotiated for payment in the following 330 months, under the Price amortization system, with the first installment due on October 30, 1997 and the last one due on March 30, 2025. The restatement and interest provisions of the original agreement remained unchanged.
By means of a fourth amendment dated January 21, 2005, the Company again renegotiated with the Government of Paraná the outstanding CRC balance as of December 31, 2004, in the amount of R$ 1,197,404 (original amount), to be paid in 244 installments under the Price amortization system, the first one due on January 30, 2005 and the others due in subsequent and consecutive months.
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The State Government has been in compliance with the payments of the renegotiated installments according to the terms of the fourth amendment to the CRC agreement. Amortizations are secured by resources from dividends.
Maturity of long-term installments:
Consolidated | ||
2008 | 2007 | |
2009 | - | 43,203 |
2010 | 50,268 | 46,077 |
2011 | 53,611 | 49,141 |
2012 | 57,176 | 52,409 |
2013 | 60,979 | 55,895 |
2014 | 65,034 | 59,612 |
2015 | 69,359 | 63,576 |
2016 | 73,972 | 67,805 |
2017 | 78,892 | 72,314 |
2018 | 84,138 | 77,123 |
2019 | 89,734 | 82,252 |
2020 | 95,702 | 87,722 |
2021 | 102,066 | 93,556 |
After 2021 | 391,839 | 359,168 |
1,272,770 | 1,209,853 | |
Changes in CRC Transferred to the Government of the State of Paraná:
Current | Long-term | Consolidated | |
Balances | assets | receivables | total |
As of 2006 | 35,205 | 1,158,898 | 1,194,103 |
Interest and fees | 76,062 | - | 76,062 |
Monetary variation | 1,867 | 89,597 | 91,464 |
Transfers | 38,642 | (38,642) | - |
Amortization | (111,267) | - | (111,267) |
As of 2007 | 40,509 | 1,209,853 | 1,250,362 |
Interest and fees | 79,539 | - | 79,539 |
Monetary variation | 1,286 | 108,764 | 110,050 |
Transfers | 45,847 | (45,847) | - |
Amortization | (120,048) | - | (120,048) |
As of 2008 | 47,133 | 1,272,770 | 1,319,903 |
10. Taxes and Social Contribution
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Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Current assets | ||||
Deferred IRPJ and CSLL (a) | 3,127 | 3,354 | 40,183 | 112,253 |
IRPJ and CSLL paid in advance (b) | 90,882 | 75,974 | 189,135 | 146,054 |
VAT (ICMS) paid in advance | - | - | 26,863 | 20,511 |
PIS/Pasep and Cofins taxes paid in advance | - | - | - | 1,332 |
Other taxes paid in advance | - | - | 1,158 | 1,414 |
94,009 | 79,328 | 257,339 | 281,564 | |
Non-current assets | ||||
Deferred IRPJ and CSLL (a) | 121,338 | 121,187 | 400,141 | 400,592 |
IRPJ and CSLL paid in advance (b) | - | 4,525 | - | 4,525 |
VAT (ICMS) paid in advance | - | - | 62,468 | 44,535 |
121,338 | 125,712 | 462,609 | 449,652 | |
Current liabilities | ||||
Deferred IRPJ and CSLL (a) | - | - | 48,630 | 24,664 |
IRPJ and CSLL due | - | - | 115,476 | 124,633 |
VAT (ICMS) due | - | - | 132,380 | 126,322 |
PIS/Pasep and Cofins taxes due | 14,706 | 8,845 | 38,353 | 37,627 |
REFIS Installment plan (c) | 35,068 | 35,068 | 35,068 | 35,068 |
Income tax withheld on interest on capital | 7,378 | 6,851 | 30,791 | 21,194 |
Other taxes | 841 | 1,054 | 6,374 | 5,917 |
57,993 | 51,818 | 407,072 | 375,425 | |
Non-current liabilities | ||||
Deferred IRPJ and CSLL (a) | - | - | 28,910 | 19,317 |
VAT (ICMS) due | - | - | 618 | - |
- | - | 29,528 | 19,317 | |
IRPF = Corporate income tax | ||||
CSLL = Social contribution on net income |
a) Deferred income tax and social contribution
The Company records deferred income tax, calculated at the rate of 15%, plus an additional rate of 10%, and deferred social contribution, at the rate of 9%.
Taxes levied on the pension and healthcare plans are being realized according the movement of the related provision based on the actuarial assessment conducted annually by an independent actuary, pursuant to the rules set forth in CVM Instruction no. 371/2000. Deferred taxes on all other provisions will be realized as judicial rulings are issued and regulatory assets are realized.
Under current tax legislation, tax losses and negative bases for social contributions may be offset against future income, up to the limit of 30% of the taxable income for each year, and do not lapse.
Tax credits have been recorded as follows:
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Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Current assets | ||||
Pension and healthcare plans | - | - | 4,405 | 26,928 |
Tax losses | 3,073 | 3,175 | 3,073 | 3,176 |
Passive CVA | - | - | 9,631 | 48,768 |
Temporary differences | 54 | 179 | 23,074 | 33,381 |
3,127 | 3,354 | 40,183 | 112,253 | |
Non-current assets | ||||
Pension and healthcare plans | - | - | 144,552 | 138,990 |
Tax losses and negative tax basis | 3,487 | 8,591 | 13,283 | 20,324 |
Temporary additions: | - | - | - | - |
Provisions for contingencies | 94,389 | 103,037 | 181,711 | 175,958 |
Provision for doubtful accounts | 1,839 | 1,839 | 22,959 | 32,287 |
FINAN provision | 4,563 | 2,412 | 4,563 | 2,412 |
Provisions for regulatory liabilities | - | - | 7,062 | 5,670 |
Provision for effects of network charges | - | - | 6,923 | 6,923 |
Amortization of goodwill | 17,060 | 5,101 | 19,088 | 17,821 |
Other | - | 207 | - | 207 |
121,338 | 121,187 | 400,141 | 400,592 | |
(-) Current liabilities | ||||
Active CVA | - | - | 34,438 | 19,654 |
Surplus power | - | - | 928 | 1,009 |
Temporary differences | - | - | 13,264 | 4,001 |
- | - | 48,630 | 24,664 | |
(-) Long-term liabilities | ||||
Temporary exclusions | ||||
Active CVA | - | - | 17,068 | 7,543 |
TUSD, aquiculture, and irrigation rates | - | - | 32 | 605 |
Regulatory assets | - | - | 3,982 | 3,341 |
Gas supply | - | - | 7,828 | 7,828 |
- | - | 28,910 | 19,317 | |
124,465 | 124,541 | 362,784 | 468,864 | |
The Company’s Board of Directors and Fiscal Council have approved the technical study prepared by the Chief Finance, Investor Relations, and Corporate Partnerships Office on future profitability projections, discounted at present value, which points out to the realization of deferred taxes. According to the estimate of future taxable income, the realization of deferred taxes is broken down below:
. | Parent Company | Consolidated | ||||
Estimated | Actual | Estimated | Estimated | Actual | Estimated | |
realizable | realized | realizable | realizable | realized | realizable | |
. | amount | amount | amount | amount | amount | amount |
2008 | 3,354 | 25,564 | - | 92,191 | 103,708 | |
2009 | - | - | 6,173 | - | - | 66,942 |
2010 | - | - | 3,634 | - | - | 25,056 |
2011 | - | - | 6,369 | - | - | 28,433 |
2012 | - | - | 9,286 | - | - | 31,389 |
2013 | - | - | 176 | - | - | 23,402 |
2014 to 2016 | - | - | 1,839 | - | - | 45,709 |
Until 2018 | - | - | 96,988 | - | - | 141,853 |
3,354 | 25,564 | 124,465 | 92,191 | 103,708 | 362,784 | |
Projected future income was evaluated by management upon the approval of the financial statements for fiscal year 2008.
b) Income tax and social contribution paid in advance
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Amounts recorded as corporate income tax (IRPJ) and social contribution on net income (CSLL) paid in advance refer to corporate tax return credits and amounts withheld.
c) Tax recovery program - REFIS
On December 16, 2000, COPEL signed up for the Tax Recovery Program (REFIS), established by Law no. 9,964, dated April 10, 2000, in order to pay in 60 monthly and equal installments an outstanding debt to the National Social Security Institute (INSS) in the consolidated amount of R$ 82,540, retroactive to March 1, 2000.
The Brazilian Internal Revenue Service (SRF) included in the Company’s REFIS account, without COPEL’s awareness, income tax and social contribution claims in the amount of R$ 11,100, retroactively to the date of consolidation, March 1, 2000, thus raising total debt to R$ 93,640.
In September 2003, the Company, based on a legal opinion, set up a provision for the tax installments which hadn't been amortized until then. This provision, restated as of September 30, 2006, amounted to R$ 73,844, net, which corresponded to the restated balance of its REFIS account, taking into account amortizations and interest charges (TJLP).
On August 31, 2006, COPEL filed for withdrawal from REFIS, only so it could sign up for the new tax installment plan established by Provisional Measure no. 303/2006, called Special Installment Plan or PAEX. By doing so, COPEL can now take advantage of the benefits of this plan by paying off the outstanding debt in six installments, with an 80% discount off the penalties and a 30% discount off the interest due. The Company’s application was completed on September 14, 2006.
Meanwhile, COPEL filed a lawsuit disputing the SRF's claims, which, in the Company's understanding, where wrongly included in REFIS I. The SRF recognized the rights of COPEL, which won the lawsuit. Thus, the new installment plan includes only the remaining debt to INSS which was included in REFIS, i.e., net of payments already made, resulting in the amount, according to the INSS' initial calculation, of R$ 37,782, restated according to the SELIC interest rate, to be paid in six installments. These installments have already been paid.
Nevertheless, the INSS has already indicated it plans to “restore” the interest charges that were waived under REFIS I, in the amount of R$ 38,600 (as of September 2006). INSS has not yet made a final decision on how it will calculate the grand total of this debt, thus it has suspended the collection of the respective credits. Thus, the INSS has not offered any guarantees that their calculations are final, claiming that "final consolidation" of the debt has not been concluded yet.
Accordingly, in light of these circumstances, the Company maintained the provision in the amount of R$ 35,068 to cover the new INSS claim under PAEX.
d) Conciliation of the provision for income tax and social contribution
The conciliation of the provision for income tax (IRPJ) and social contribution (CSLL), calculated at the applicable rates, with the amounts recorded in the statement of income is shown below:
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Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Income before IRPJ and CSLL | 1,109,111 | 1,047,651 | 1,554,959 | 1,598,015 |
IRPJ and CSLL (34%) | (377,098) | (356,201) | (528,686) | (543,325) |
Tax effects on: | ||||
Interest on capital | 77,520 | 68,000 | 77,520 | 68,000 |
Dividends | 917 | 243 | 2,882 | 3,088 |
Equity in investees | 286,714 | 344,056 | 1,305 | (595) |
FINAM - (losses) and gains | (5,976) | 3,197 | (5,976) | 3,197 |
Present value adjustment - Compagas | - | - | (819) | (736) |
Non-deductible expenses | (829) | - | (1,627) | - |
Tax incentives | - | - | 4,699 | 4,735 |
Other | (11,615) | (336) | (7,444) | 5,321 |
Current IRPJ and CSLL | (18,372) | (2,619) | (352,064) | (536,168) |
Deferred IRPJ and CSLL | (11,995) | 61,578 | (106,082) | 75,853 |
IRPJ = Corporate income tax | ||||
CSLL = Social contribution on net income |
11. Account for Compensation of “Portion A” Variations
The Account for Compensation of “Portion A” Variations (CVA) records variations of the following Portion A cost items, as approved at the time of the annual rate reviews and as actually disbursed by companies during the year: Purchase of Power (Bilateral Contracts, Itaipu, and Auctions), Power Transport Costs (Transport of Power from Itaipu and Basic Network Charges), and Power Sector Charges – Fuel Consumption Account (CCC) quota; Energy Development Account (CDE) quota; System Service Charges (ESS); and Program of Incentives for Alternative Energy Sources (Proinfa) quotas.
ANEEL has ordered COPEL Distribuição to apply, as of June 24, 2008, an average provisional reduction of 3.35% to its rates for sales to final customers, pursuant to Resolution no. 663, dated June 23, 2008. Out of this percentage, - 7.17% correspond to the annual rate review, and 3.82% to financial components outside the range of the annual rate review. CVA is part of the latter group, amounting to R$ 74,441, and is made up of two installments: CVA being processed for rate year 2007-2008, in the amount of R$ 50,103, and CVA balance from the previous year to be offset, in the amount of R$ 24,337.
COPEL expects that the amounts classified as long-term assets will be recovered in up to two years.
The balance of the Account for Compensation of Portion A is broken down below:
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Current | Long-term | |||
Consolidated | assets | receivables | ||
2008 | 2007 | 2008 | 2007 | |
Recoverable Portion A variations, 2007 rate review | ||||
Fuel Consumption Account - CCC | - | 1,869 | - | - |
Power purchased for resale (Itaipu) | - | 22,289 | - | - |
Charges for system services - ESS | - | 7,082 | - | - |
Energy Development Account - CDE | - | 6,125 | - | - |
Incentives to Alternative Energy Sources - Proinfa | - | 4,560 | - | - |
Transport of purchased power (Itaipu) | - | 211 | - | - |
- | 42,136 | - | - | |
Recoverable Portion A variations, 2008 rate review | ||||
Fuel Consumption Account - CCC | 17,966 | 5,659 | - | 5,659 |
Charges for use of trans.sys. (Basic Network) | 15,908 | 4,074 | - | 4,074 |
Power purchased for resale (Itaipu) | 11,611 | 12,309 | - | 12,309 |
Charges for system services - ESS | 9,133 | 372 | - | 372 |
Energy Development Account - CDE | 169 | 1,922 | - | 1,922 |
Incentives to Alternative Energy Sources - Proinfa | 2,817 | 1,105 | - | 1,105 |
Transport of purchased power (Itaipu) | - | 37 | - | 37 |
57,604 | 25,478 | - | 25,478 | |
Recoverable Portion A variations, 2009 rate review | ||||
Fuel Consumption Account - CCC | 8,512 | - | 8,512 | - |
Charges for use of trans.sys. (Basic Network) | 12,412 | - | 12,412 | - |
Power purchased for resale (Itaipu) | 16,588 | - | 16,588 | - |
Charges for system services - ESS | 13,121 | - | 13,121 | - |
Energy Development Account - CDE | 204 | - | 204 | - |
Power purchased for resale (CVA Energy) | 1,881 | - | 1,881 | - |
Transport of purchased power (Itaipu) | 776 | - | 776 | - |
53,494 | - | 53,494 | - | |
111,098 | 67,614 | 53,494 | 25,478 | |
Current | Long-term | |||
Consolidated | liabilities | liabilities | ||
2008 | 2007 | 2008 | 2007 | |
Portion A variations subject to offsetting, 2007 rate review | ||||
Fuel Consumption Account - CCC | - | 34,146 | - | - |
Charges for use of trans.sys. (Basic Network) | - | 31,803 | - | - |
Power purchased for resale (CVA Energy) | - | 54,155 | - | - |
Transport of purchased power (Itaipu) | - | 1,002 | - | - |
- | 121,106 | - | - | |
Portion A variations subject to offsetting, 2008 rate review | ||||
Fuel Consumption Account - CCC | - | 855 | - | 855 |
Charges for use of trans.sys. (Basic Network) | - | 1,186 | - | 1,186 |
Charges for system services - ESS | - | 3,722 | - | 3,722 |
Power purchased for resale (CVA Energy) | 25,727 | 16,511 | - | 16,511 |
Transport of purchased power (Itaipu) | 227 | 56 | - | 56 |
25,954 | 22,330 | - | 22,330 | |
Portion A variations subject to offsetting, 2009 rate review | ||||
Incentives to alternative sources (Proinfa) | 2,373 | - | 2,373 | - |
2,373 | - | 2,373 | - | |
28,327 | 143,436 | 2,373 | 22,330 | |
The changes in the balances of deferred rate costs restated by the SELIC interest rate are shown on the following table:
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Balance | Deferral | Amortization | Restatement | Transfers | Balance | |
2007 | 2008 | |||||
Assets | ||||||
Fuel Consumption Account - CCC | 13,187 | 39,939 | (20,258) | 2,122 | - | 34,990 |
Charges for use of trans. syst. (Basic Network) | 8,148 | 46,740 | (16,614) | 2,458 | - | 40,732 |
Power purchased for resale (Itaipu) | 46,907 | 30,768 | (35,697) | 2,809 | - | 44,787 |
Charges for system services - ESS | 7,826 | 41,988 | (17,310) | 2,871 | - | 35,375 |
Energy Development Account - CDE | 9,969 | (3,282) | (6,710) | 600 | - | 577 |
Incentives to Alternative Sources - Proinfa | 6,770 | 3,165 | (7,851) | 733 | - | 2,817 |
Power purchased for resale (CVA Energy) | - | 4,090 | - | (328) | - | 3,762 |
Transport of purchased power (Itaipu) | 285 | 1,443 | (211) | 35 | - | 1,552 |
93,092 | 164,851 | (104,651) | 11,300 | - | 164,592 | |
Current | 67,614 | 77,532 | (104,651) | 8,089 | 62,514 | 111,098 |
Non-current | 25,478 | 87,319 | - | 3,211 | (62,514) | 53,494 |
Liabilities | ||||||
Fuel Consumption Account - CCC | 35,856 | (1,710) | (36,119) | 1,973 | - | - |
Charges for use of trans. syst. (Basic Network) | 34,175 | (2,372) | (32,579) | 776 | - | - |
Charges for system services - ESS | 7,444 | (7,194) | - | (250) | - | - |
Incentives to Alternative Sources - Proinfa | - | 4,712 | - | 34 | - | 4,746 |
Power purchased for resale (CVA Energy) | 87,177 | 15,153 | (83,054) | 6,451 | - | 25,727 |
Transport of purchased power (Itaipu) | 1,114 | 258 | (1,320) | 175 | - | 227 |
165,766 | 8,847 | (153,072) | 9,159 | - | 30,700 | |
Current | 143,436 | 562 | (153,072) | 8,690 | 28,711 | 28,327 |
Non-current | 22,330 | 8,285 | - | 469 | (28,711) | 2,373 |
12. Other Regulatory Assets and Liabilities
Consolidated balances are shown below:
Assets | Liabilities | |||||
Non | Non | |||||
Current | current | total | Current | current | total | |
2008 | ||||||
Copel Distribuição | ||||||
Adj. installments - transmission charges (a) | 11,458 | 6,088 | 17,546 | 14,511 | 7,255 | 21,766 |
Uncovered amount - CIEN contract (b) | 20,053 | 4,997 | 25,050 | - | - | - |
Other | - | - | - | 2 | 2 | 4 |
31,511 | 11,085 | 42,596 | 14,513 | 7,257 | 21,770 | |
Copel Geração e Transmissão | ||||||
Adj. installments - transmission charges (a) | - | - | - | 11,679 | - | 11,679 |
31,511 | 11,085 | 42,596 | 26,192 | 7,257 | 33,449 | |
Assets | Liabilities | |||||
Non | Non | |||||
Current | current | total | Current | current | total | |
2007 | ||||||
Copel Distribuição | ||||||
Adj. installments - transmission charges (a) | 17,186 | 5,729 | 22,915 | 21,765 | 7,255 | 29,020 |
17,186 | 5,729 | 22,915 | 21,765 | 7,255 | 29,020 | |
Copel Geração e Transmissão | ||||||
Adj. installments - transmission charges (a) | - | - | - | 24,711 | 11,680 | 36,391 |
17,186 | 5,729 | 22,915 | 46,476 | 18,935 | 65,411 | |
a) Adjustment installments – transmission charges
The concession agreements signed by the transmission utilities contain a clause which sets the date of July 1, 2005 as the date of the first periodic review of annual allowed revenues. The rate review was concluded and its results were approved on July 1, 2007, applicable retroactively to July 1, 2005. Thus, it became necessary to calculate the retroactive discrepancy for the period from 2005 to 2007, which has been treated as a “review adjustment share”.
135
This balance, which has been accrued by transmission utilities, has been offset over 24 months, starting July 2007.
ANEEL has calculated the discrepancy corresponding to the “connection point review adjustments” for all distribution utilities, resulting in a balance of R$ 22,915 to be paid by COPEL Distribuição to COPEL Transmissão. As far as the “basic network review adjustments", the application of COPEL Distribuição's participation percentage to the total adjustment installments resulted in the amount of R$ 29,020 to be collected from the remaining transmission utilities which underwent the rate review process.
Out of the amounts that are being settled with the transmission utilities, R$ 10,739, which correspond to the “connection point review adjustments”, and R$ 14,511, which correspond to the “basic network review adjustments”, have been taken into account in COPEL Distribuição’s June 2008 rate review, and the remainder will be taken into account in the June 2009 rate review. The Company expects that the amounts classified as long-term will be recovered within two years.
b) Involuntary uncovered amount – CIEN Contract
The amount of R$ 30,112 refers to an advance for the coverage of COPEL's uncovered power demand, which had to be supplied through spot market transactions from January through April 2008, due to the termination of the agreement withCompanhia de Interconexão Energética –CIEN, authorized under MME Ordinance no. 294/2006. This amount was tentatively taken into account in COPEL Distribuição’s June 2008 rate review. Out of this amount, R$ 15,056 were amortized as of December 2008, and R$ 15,056 shall be amortized over the following six months. The discrepancies resulting from the review of the advanced amounts total R$ 9,994, which shall be included in the 2009 rate review.
13. Guarantees and Escrow Deposits
Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Current assets | ||||
Escrow deposits | 436 | 2,806 | 150,794 | 145,161 |
436 | 2,806 | 150,794 | 145,161 | |
Long-term receivables | ||||
Collateral under STN agreement (Note 18.b) | - | - | 37,868 | 22,423 |
- | - | 37,868 | 22,423 | |
There is a sum of R$ 19,730 invested in Unibanco S.A., restated as of December 31, 2008, yielding 100.5% of the variation of the DI rate (R$ 9,272 as of 2007, yielding 98.5% of the variation of the DI rate), in a reserve account set up to secure a debt to BNDESPAR, in connection with the issue of ELEJOR debentures, pursuant to a Private Agreement on Revenue Attachment and Other Covenants.
There are R$ 54,403 (restated as of December 31, 2008) invested in Banco do Brasil, yielding 100% of the variation of the DI rate, in a reserve account set up to secure to ANEEL the construction of the Mauá Power Plant by COPEL Geração e Transmissão.
136
The remaining deposits meet the requirements of the Electric Energy Trading Chamber (CCEE) and are tied to the operations conducted at power auctions, CCEE settlements, and ANEEL auctions.
14. Other Receivables
Consolidated | ||
2008 | 2007 | |
Current assets | ||
Advance payments | 9,305 | 8,686 |
Advance payments to employees | 8,264 | 7,999 |
Lease of the Araucária Power Plant | 7,474 | 14,223 |
Advance payments to suppliers | 5,187 | 18,077 |
Decommissioning in progress | 4,795 | 1,962 |
Installment plan for Onda Provedor de Serviços | 4,348 | 4,348 |
Recoverable salaries of transferred employees | 3,819 | 3,751 |
Disposal of property and rights | 1,872 | 1,267 |
Compulsory loans | 1,806 | 837 |
Services to third-parties | 1,347 | 1,437 |
Use of the Araucária P.P. transmission system | - | 5,327 |
Provision for doubtful accounts | (9,531) | (9,443) |
Other receivables | 4,172 | 4,289 |
42,858 | 62,760 | |
Long-term receivables | ||
Disposal of property and rights | 4,788 | 4,203 |
Compulsory loans | 3,561 | 4,185 |
Advance payments to suppliers | 2,435 | - |
Advance payments | 57 | 62 |
Other receivables | 1,373 | - |
12,214 | 8,450 | |
The provision for doubtful accounts refers to the balance of installments owed by Onda Provedor de Serviços, whose realization is unlikely, and to an unrealizable amount mostly comprising wages of loaned employees.
15. Judicial Deposits
The balances of judicial deposits under long-term receivables are shown below:
Consolidated | Total | Deduction of | Long-term | Long-term |
judicial deposits | contingencies | receivables | receivables | |
2008 | 2007 | |||
Labor claims | 83,982 | (25,345) | 58,637 | 56,656 |
. | ||||
Civil claims: | ||||
Easements | 10,660 | - | 10,660 | 10,515 |
Civil claims | 21,620 | (6,774) | 14,846 | 15,269 |
Customer claims | 2,729 | (894) | 1,835 | 2,508 |
35,009 | (7,668) | 27,341 | 28,292 | |
. | ||||
Tax claims | ||||
Other taxes | 53,675 | (27,004) | 26,671 | 35,611 |
53,675 | (27,004) | 26,671 | 35,611 | |
. | ||||
Other | 848 | - | 848 | 563 |
173,514 | (60,017) | 113,497 | 121,122 | |
137
Parent Company | Total | Deduction of | Long-term | Long-term |
judicial deposits | contingencies | receivables | receivables | |
2008 | 2007 | |||
Tax claims | ||||
Other taxes | 52,656 | (27,003) | 25,653 | 34,512 |
52,656 | (27,003) | 25,653 | 34,512 | |
. | ||||
Other | 615 | - | 615 | - |
53,271 | (27,003) | 26,268 | 34,512 | |
Escrow deposits have been classified under Provisions for Contingencies and are detailed in Note 28.
16. Investees and Subsidiaries
Parent Company | Consolidated | |||
2008 | 2007 | 2008 | 2007 | |
Subsidiaries | ||||
Copel Geração e Transmissão | ||||
Dividends receivable | 562,618 | 504,688 | - | - |
562,618 | 504,688 | - | - | |
Copel Distribuição | ||||
Dividends receivable | 141,100 | 178,300 | - | - |
Transferred financing - STN (a) | 94,006 | 78,034 | - | - |
Loan agreement (b) | 597,227 | 683,052 | - | - |
832,333 | 939,386 | - | - | |
Copel Telecomunicações | ||||
Dividends receivable | 3,655 | - | - | - |
3,655 | - | - | - | |
Copel Participações | ||||
Dividends receivable | - | 17,237 | - | - |
- | 17,237 | - | - | |
Compagas | ||||
Dividends receivable | 5,515 | - | - | - |
5,515 | - | - | - | |
Elejor | ||||
Loan agreement | 238,060 | - | - | - |
Dividends receivable | 936 | - | - | - |
238,996 | - | - | - | |
Copel Empreendimentos | ||||
Loan agreement | - | 34,847 | - | - |
- | 34,847 | - | - | |
Dominó Holdings | ||||
Dividends receivable | 5,237 | - | - | 2,159 |
. | 5,237 | - | - | 2,159 |
1,648,354 | 1,496,158 | - | 2,159 | |
Investees | ||||
Dividends receivable | ||||
Foz do Chopim Energética | - | - | - | 608 |
Sanepar | - | - | 5,247 | - |
. | - | - | 5,247 | 608 |
1,648,354 | 1,496,158 | 5,247 | 2,767 | |
Current assets - Dividends receivable | 719,061 | 700,225 | 5,247 | 2,767 |
Long-term receivables | 929,293 | 795,933 | - | - |
17. Investments
a) Main information about COPEL’s investees and subsidiaries
138
Number of shares or quotas | COPEL's stake % | Paid in share capital | Shareholders' Equity(3) | Net income (losses)(3) | |||
held by COPEL | |||||||
Common | Preferred | Quotas | |||||
Investees | 2008 | ||||||
Sanepar | 51,797,823 | 12,949,456 | - | 34.75 | 374,268 | 810,201 | 66,648 |
Sercomtel - Telecom. | 9,018,088 | 4,661,913 | - | 45.00 | 246,896 | 147,968 | 7,723 |
Foz do Chopim | - | - | 8,227,542 | 35.77 | 23,000 | 46,180 | 25,060 |
Dona Francisca | 153,381,798 | - | - | 23.03 | 666,000 | 44,865 | 19,111 |
Sercomtel Celular | 9,018,029 | 4,661,972 | - | 45.00 | 36,540 | - | (7,275) |
Dois Saltos Empreend.(1) | - | - | 300,000 | 30.00 | 1,000 | 1,000 | - |
Copel Amec(1) | - | - | 48,000 | 48.00 | 100 | 310 | 18 |
Carbocampel(1) | 127,400 | - | - | 49.00 | 260 | (140) | (25) |
Escoelectric Ltda.(1) | - | - | 3,220,000 | 40.00 | 6,532 | (2,359) | 816 |
Subsidiaries | |||||||
Copel Geração e Transm. | 3,400,378,051 | - | - | 100.00 | 3,400,378 | 3,628,961 | 623,177 |
Copel Distribuição | 2,171,927,626 | - | - | 100.00 | 2,171,928 | 3,042,285 | 544,374 |
Copel Telecomunicações | 194,754,542 | - | - | 100.00 | 194,755 | 203,924 | 13,844 |
Copel Participações (c) | 1,165,500,361 | - | - | 100.00 | - | - | 42,212 |
Compagas | 5,712,000 | 11,424,000 | - | 51.00 | 85,143 | 170,202 | 32,307 |
Elejor | 42,209,920 | - | - | 70.00 | 69,848 | 77,786 | 6,476 |
Copel Empreendimentos(1) | - | - | 397,983,311 | 100.00 | 397,983 | 404,461 | (9) |
UEG Araucária | - | - | 565,951,934 | 80.00 | 707,440 | 661,126 | (794) |
Centrais Eólicas(1) | - | - | 3,061,000 | 100.00 | 3,061 | 8,677 | 4,558 |
Dominó Holdings(2) | 113,367,832 | - | - | 45.00 | 251,929 | 637,212 | 45,877 |
(1)Unaudited by independent auditors | |||||||
(2)Joint control as of January 2008 | |||||||
(3)Shareholders' equity and net income have been adjusted to COPEL's accounting practices |
b) Changes to the investments in investees and subsidiaries
139
Proposed | Incorporated | Balance | |||||
Balance as of | Result of | dividends | from | as of | |||
Parent Company | 2007 | equity | Additions | and IOC | Prov. | COPEL Par | 2008 |
Investees | |||||||
Sercomtel Telecom. | - | 161 | - | (1,637) | - | 86,362 | 84,886 |
Sercomtel Telecom. -Impairment(h) | - | - | - | - | - | (18,301) | (18,301) |
Foz do Chopim | - | 653 | - | (715) | - | 16,581 | 16,519 |
Dona Francisca | - | 471 | - | - | - | 9,861 | 10,332 |
Dois Saltos Empreend. | - | - | - | - | - | 300 | 300 |
Copel Amec | - | 1 | - | - | - | 148 | 149 |
Escoelectric Ltda. | - | (16) | - | - | - | (1,011) | (1,027) |
Escoelectric Ltda. - APFCI | - | - | - | - | - | 1,025 | 1,025 |
Carbocampel | - | (2) | - | - | - | (67) | (69) |
Carbocampel - APFCI | - | - | - | - | - | 1,059 | 1,059 |
Sercomtel Celular | - | - | - | - | - | 6,195 | 6,195 |
Sercomtel Celular -Impairment(h) | - | - | - | - | - | (6,195) | (6,195) |
- | 1,268 | - | (2,352) | - | 95,957 | 94,873 | |
Subsidiaries | |||||||
Copel Geração e Transmissão | 3,144,442 | 623,177 | - | (592,018) | - | 453,360 | 3,628,961 |
Copel Distribuição | 2,663,911 | 544,374 | - | (166,000) | - | - | 3,042,285 |
Copel Telecomunicações | 193,735 | 13,844 | - | (3,655) | - | - | 203,924 |
Copel Participações (c) | 1,226,802 | 42,212 | 67,000 | (17,000) | - | (1,319,014) | - |
Dominó Holdings (c,f) | - | (1,629) | - | (1,260) | - | 289,634 | 286,745 |
(-) Discount - Dominó Holdings (c) | - | - | - | - | - | (74,402) | (74,402) |
UEG Araucária (c) | - | 835 | - | - | - | 131,390 | 132,225 |
Compagas (c) | - | 717 | - | (5,515) | - | 91,601 | 86,803 |
Elejor (c) | - | 1,476 | - | (935) | - | 53,909 | 54,450 |
Centrais Eólicas do Paraná (c) | - | 1,268 | - | - | - | 1,335 | 2,603 |
7,228,890 | 1,226,274 | 67,000 | (786,383) | - | (372,187) | 7,363,594 | |
Other investments | |||||||
Amazon Investment Fund (FINAM) (d) | 30,012 | - | - | - | - | - | 30,012 |
FINAM - Nova Holanda (d) | 14,868 | - | - | - | - | - | 14,868 |
Northeastern Investment Fund (FINOR) (d) | 9,870 | - | - | - | - | - | 9,870 |
Finam - Investco (d) | 7,903 | - | - | - | - | - | 7,903 |
Other tax breaks | 2,315 | 362 | - | (362) | - | - | 2,315 |
Provision for losses - Finam/Finor (d) | (26,801) | - | - | - | (9,034) | - | (35,835) |
Provision for losses - Nova Holanda (d) | - | - | - | - | (14,868) | - | (14,868) |
Other investments | 7 | - | - | - | - | 90 | 97 |
38,174 | 362 | - | (362) | (23,902) | 90 | 14,362 | |
7,267,064 | 1,227,904 | 67,000 | (789,097) | (23,902) | (276,140) | 7,472,829 | |
APFCI - Advance payment for future capital increase
Proposed | Transf. | Balance | ||||||
Balance as of | Result of | dividends | Split - | to SE | as of | |||
Parent Company | 2006 | equity | Additions | and IOC | Copel TRA | Rev. | Cap. Res. | 2007 |
Subsidiaries | ||||||||
Copel Geração e Transmissão | 2,509,233 | 542,451 | - | (515,328) | 608,086 | - | - | 3,144,442 |
Copel Transmissão | 1,063,740 | 152,816 | - | (43,710) | (1,172,846) | - | - | - |
Copel Distribuição | 1,689,286 | 581,460 | - | (171,595) | 564,760 | - | - | 2,663,911 |
Copel Telecomunicações | 184,287 | 3,288 | 6,160 | - | - | - | - | 193,735 |
Copel Participações (c) | 1,180,415 | 66,107 | - | (19,720) | - | - | - | 1,226,802 |
6,626,961 | 1,346,122 | 6,160 | (750,353) | - | - | - | 7,228,890 | |
Other investments | ||||||||
Amazon Investment Fund (FINAM) (d) | 24,706 | - | 5,306 | - | - | - | - | 30,012 |
FINAM - Nova Holanda (d) | 7,761 | - | 7,107 | - | - | - | - | 14,868 |
Northeastern Investment Fund (FINOR) (d) | 9,870 | - | - | - | - | - | - | 9,870 |
FINAM - Investco (d) | 7,903 | - | - | - | - | - | - | 7,903 |
Other tax breaks | 2,315 | 714 | - | (714) | - | - | - | 2,315 |
Provision for losses - Finam/Finor (d) | (47,900) | - | - | - | - | 12,789 | 8,310 | (26,801) |
Other investments | 7 | - | - | - | - | - | - | 7 |
4,662 | 714 | 12,413 | (714) | - | 12,789 | 8,310 | 38,174 | |
6,631,623 | 1,346,836 | 18,573 | (751,067) | - | 12,789 | 8,310 | 7,267,064 | |
140
Additions, | Proposed | Inclusion of | Balance | ||||
Balance as of | Result of | Investments, | dividends | Dominó in | as of | ||
Consolidated | 2007 | equity | APFCI | and IOC | consolidation | Other | 2008 |
Investees | |||||||
Dominó Holdings | 90,155 | - | - | - | (90,155) | - | - |
Sercomtel Telecom. | 82,153 | 4,371 | - | (1,638) | - | - | 84,886 |
Sercomtel Telecom. - Impairment (h) | - | (18,301) | - | - | - | - | (18,301) |
Foz do Chopim | 16,353 | 8,966 | - | (8,478) | - | (322)(1) | 16,519 |
Dona Francisca | 5,931 | 4,401 | - | - | - | - | 10,332 |
Dois Saltos Empreend. | - | - | - | - | - | 300(2) | 300 |
Copel Amec | 140 | 9 | - | - | - | - | 149 |
Escoelectric | (1,390) | 363 | - | - | - | - | (1,027) |
Escoelectric - APFCI | 1,025 | - | - | - | - | - | 1,025 |
Carbocampel | (56) | (13) | - | - | - | - | (69) |
Carbocampel - APFCI | 1,059 | - | - | - | - | - | 1,059 |
Sercomtel Celular | 8,759 | (2,564) | - | - | - | - | 6,195 |
Sercomtel Celular - Impairment (h) | - | (6,195) | - | - | - | - | (6,195) |
Braspower - APFCI | 176 | - | 20 | - | - | (196)(3) | - |
Sanepar | - | 23,158 | - | (6,173) | 264,539 | - | 281,524 |
204,305 | 14,195 | 20 | (16,289) | 174,384 | (218) | 376,397 | |
Other investments | |||||||
Amazon Investment Fund (FINAM) (d) | 30,012 | - | - | - | - | - | 30,012 |
FINAM - Nova Holanda (d) | 14,868 | - | - | - | - | - | 14,868 |
Northeastern Investment Fund (FINOR) (d) | 9,870 | - | - | - | - | - | 9,870 |
FINAM - Investco (d) | 7,903 | - | - | - | - | - | 7,903 |
Other tax breaks | 2,315 | 362 | - | (362) | - | - | 2,315 |
Provision for losses - Finam/Finor (d) | (26,801) | - | - | - | - | (9,034)(4) | (35,835) |
Provisão for losses - Nova Holanda (d) | - | - | - | - | - | (14,868)(4) | (14,868) |
Consórcio Energ. Cruzeiro do Sul (e) | 6,450 | - | 50,067 | - | - | - | 56,517 |
Property for future service use | 4,588 | - | 120 | - | - | (887) | 3,821 |
Other investments | 1,508 | (239) | 247 | 239 | - | (300)(2) | 1,455 |
50,713 | 123 | 50,434 | (123) | - | (25,089) | 76,058 | |
255,018 | 14,318 | 50,454 | (16,412) | 174,384 | (25,307) | 452,455 | |
(1)Dividends from the previous year. | |||||||
(2)Balance transferred from other investments to investees. | |||||||
(3)Interest sold in October 2008. | |||||||
(4)Constitution/addition to provision. |
141
Investments | Proposed | Balance | ||||||
Balance as of | Result of | and | dividends | as of | ||||
Consolidated | 2006 | equity | APFCI | and IOC | Reversal | Write-off | Other | 2007 |
Investees | ||||||||
Dominó Holdings (f) | 91,522 | 808 | - | (2,175) | - | - | - | 90,155 |
Sercomtel Telecomunicações | 83,463 | (1,310) | - | - | - | - | - | 82,153 |
Foz do Chopim | 16,362 | 9,077 | - | (8,370) | - | - | (716)(1) | 16,353 |
Sercomtel Celular | 12,369 | (3,610) | - | - | - | - | - | 8,759 |
Dona Francisca Energética | 2,023 | 3,908 | - | - | - | - | - | 5,931 |
Centrais Eólicas do Paraná | 1,050 | 122 | - | - | - | - | (1,172)(2) | - |
Copel Amec | 467 | 23 | (350) | - | - | - | - | 140 |
Carbocampel | 232 | (288) | - | - | - | - | - | (56) |
Carbocampel - APFCI | 199 | - | 860 | - | - | - | - | 1,059 |
Escoelectric | (3,304) | 1,914 | - | - | - | - | (1,390) | |
Escoelectric - APFCI | 2,500 | - | (1,475) | - | - | - | - | 1,025 |
Braspower - APFCI | 176 | - | - | - | - | - | - | 176 |
210,363 | 5,426 | 949 | (10,545) | - | - | (1,888) | 204,305 | |
Other investments | ||||||||
Amazon Investment Fund (FINAM) (d) | 24,706 | - | 5,306 | - | - | - | - | 30,012 |
FINAM - Nova Holanda (d) | 7,761 | - | 7,107 | - | - | - | - | 14,868 |
Northeastern Investment Fund (FINOR) ( | 9,870 | - | - | - | - | - | - | 9,870 |
FINAM - Investco (d) | 7,903 | - | - | - | - | - | - | 7,903 |
Other tax breaks | 2,315 | 714 | - | (714) | - | - | - | 2,315 |
Provision for losses - Finam/Finor (d) | (47,900) | - | - | - | 12,789 | - | 8,310 | (26,801) |
Consórcio Energ. Cruzeiro do Sul (e) | - | - | 6,450 | - | - | - | - | 6,450 |
Property for future service use | 6,825 | - | - | - | - | (2,237) | - | 4,588 |
Other investments | 1,511 | - | - | - | - | (3) | - | 1,508 |
Other | - | 3,369 | - | - | (3,369)(3) | - | ||
12,991 | 4,083 | 18,863 | (714) | 12,789 | (2,240) | 4,941 | 50,713 | |
223,354 | 9,509 | 19,812 | (11,259) | 12,789 | (2,240) | 3,053 | 255,018 | |
(1)Dividends from the previous year. | ||||||||
(2)Inclusion of Centrais Eólicas in the consolidation of financial statements. | ||||||||
(3)Complementary equity in results of investees Compagas and Elejor from previous years. |
c) COPEL Participações S.A.
With the dissolution of COPEL Participações on November 30, 2008, the book value of its net assets was transferred to the Parent Company and to COPEL Geração e Transmissão, as shown below:
Copel Participações as of 30.11.2008 | Incorporated share | ||||
Parent Company | Copel Geraçãoe Transmissão | ||||
ASSETS | 1,334,703 | 880,179 | 454,524 | ||
CURRENT ASSETS | 20,032 | 19,771 | 261 | ||
Non-current assets | 1,314,671 | 860,408 | 454,263 | ||
Long-term receivables | 251,920 | 250,277 | 1,643 | ||
Investments | 1,062,675 | 610,131 | 452,544 | ||
Property, plant, and equipment | 75 | - | 75 | ||
Intangible assets | 1 | - | 1 | ||
. | |||||
LIABILITIES | 1,334,703 | 880,179 | 454,524 | ||
Current liabilities | 15,353 | 14,525 | 828 | ||
Long-term liabilities | 336 | - | 336 | ||
Shareholders' equity | 1,319,014 | 865,654 | 453,360 | ||
d) Tax incentives
In 2007, COPEL conducted reclassifications of the amounts applied to the Amazon Investment Fund (FINAM). The effects of these reclassifications on shareholders’ equity amounted to R$ 21,047, of which R$ 4,510 were tied to the Nova Holanda S.A. project, R$ 7,903 to the Investco S.A. project, and R$ 8,310 were a reduction to the provision for devaluation of tax incentives, and R$ 324 were accrued income tax. COPEL also reversed a provision for the devaluation of FINAM and of the Northeast Investment Fund (FINOR), in the amount of R$ 12,789.
142
In 2008, COPEL recalculated the market value of its investments in FINAM and FINOR, based on their average prices on the São Paulo Stock Exchange (BOVESPA). Based on the FINAM prices on December 29, 2008, and on the FINOR prices on December 22, 2008, the Company recorded an addition to the provision for the devaluation of these investments in the amount of R$ 9,034, thus raising the total balance to R$ 35,835. As for the Nova Holanda investment, COPEL recorded in 2008 a provision for its devaluation in the amount of R$ 14,868, due to the successive losses Nova Holanda has suffered over the years. The total effect of these provisions on the 2008 income was R$ 23,902.
e) Consórcio Energético Cruzeiro do Sul(1)
Consórcio Energético Cruzeiro do Sul, an independent power producer owned by COPEL Geração e Transmissão (with a 51% interest) and by Eletrosul Centrais Elétricas S.A. (49%), won, on October 10, 2006, at the ANEEL Auction of Power from New Projects 004/2006, the rights to the 35-year concession of the Mauá Hydroelectric Power Plant.
This project is included in the Federal Government’s Growth Acceleration Program (PAC) and will comprise a main power plant rated 350 MW and an additional small hydropower unit rated 11 MW, for a total of 361 MW of installed capacity, which is enough to supply approximately 900 thousand people. The facility will take advantage of the hydroelectric potential discovered in the middle section of the Tibagi River, between the towns of Telêmaco Borba and Ortigueira, in mideastern Paraná. The plant’s reservoir will have a perimeter of 80 km and a surface of 83.8 km2. The dam will have a length of 745 m and a maximum height of 85 m and will be built with roller-compacted concrete and a clay-filled embankment. The dam’s total solid volume will be around 580,000 m3.
Total estimated expenditures amount to approximately R$ 1,000,000 as of October 2006, of which 51% (R$ 510,000) will be invested by COPEL Geração e Transmissão, while the remaining 49% (R$ 490,000) will be invested by Eletrosul.
In November 2007, the National Monetary Council (CMN) authorized an exception to Central Bank Resolution no. 2,827/2001, which limited credit to state-owned companies, in order to allow COPEL to obtain financing from the National Economic and Social Development Bank (BNDES), in the amount of approximately R$ 383,000, for the Company’s share of construction expenditures in connection with the Mauá Hydroelectric Power Plant.
The power from the Mauá Power Plant was sold at an ANEEL auction at the final rate of R$ 112.96/MWh, restated according to the IPCA inflation index starting on November 1, 2006. The company sold 192 average MW, for supply starting in January 2011. The assured power of the project, established in its concession agreement, was 197.7 average MW, after full motorization, and the maximum reference rate set in the auction notice was R$ 116.00/MWh.
Expenditures in this project are recorded as investments, proportionally to COPEL’s share in the consortium, pursuant to the Accounting Manual for Electric Energy Utilities.
Work began in May 2007 with the procurement of the basic project and the beginning of the executive project for the facility and its associated transmission system, the preparation of technical specifications, calculation records, designs, and other documents regarding the different structures within the facility, additional geological surveys, and topography services. The basic project has been concluded and approved by ANEEL. The project’s Environmental Impact Study and Environmental Impact Report have been disclosed at a public hearing and approved by the licensing authority, resulting in the issue of Installation License no. 6,496/2008. The service order for the beginning of the construction of the Mauá Hydroelectric Power Plant was signed on July 21, 2008, and commercial generation is scheduled for 2011.
143
Currently, the construction site is being set up, with area cleanup, terrain leveling, landfill compaction, and construction of industrial and administrative facilities and personnel quarters. Superficial excavation has also been started for the construction of diversion tunnels for the Tibagi River at the dam’s construction site.
Total expenditures already owed to suppliers of equipment and services amounted to R$ 754,000 as of December 31, 2008 (51% owed by COPEL and 49% owed by Eletrosul).
(1) Technical information unaudited by the independent auditors.
f) Dominó Holdings
On January 14, 2008, COPEL became the holder of 45% of the share capital of Dominó Holdings S.A., by acquiring a 30% interest held by Sanedo Participações Ltda. for R$ 110,226, with an approximate discount of R$ 74,402, based on the expected future profitability of the company. Upon consolidation of the balance sheets, this discount was reclassified to Deferred Revenues, under Long-Term Liabilities.
With this acquisition, COPEL acquired joint control of the company in cooperation with the remaining shareholders. Dominó Holdings has been consolidated into COPEL’s balance sheets proportionally to the Company’s interest on it.
The main items of assets, liabilities, and the statement of income of Dominó Holdings, as well as the corresponding consolidated shares, are shown below:
144
Dominó Holdings S.A. | Balances as of 2008 | |||||||
Full amounts | Revaluation reserve(1) | Adjusted balance | COPEL's stake (45%) | |||||
ASSETS | 697.081 | (47.359) | 649.722 | 292.375 | ||||
Current assets | 15.998 | - | 15.998 | 7.199 | ||||
Long-term receivables | 681.083 | (47.359) | 633.724 | 285.176 | ||||
LIABILITIES | 697.081 | (47.359) | 649.722 | 292.375 | ||||
Current liabilities | 12.503 | - | 12.503 | 5.626 | ||||
Long-term liabilities | 7 | - | 7 | 4 | ||||
Shareholders' equity | 684.571 | (47.359) | 637.212 | 286.745 | ||||
. | ||||||||
STATEMENT OF OPERATIONS | ||||||||
General and administrative expenses | (3.153) | - | (3.153) | (1.419) | ||||
Financial income (losses) | (798) | - | (798) | (359) | ||||
Result of equity in investees | 47.543 | 2.298 | 49.841 | 22.428 | ||||
Provision for income tax and social contribution | (13) | - | (13) | (6) | ||||
Net income for the period | 43.579 | 2.298 | 45.877 | 20.644 | ||||
(1)Balances have been adjusted due to accounting practices not adopted by the Parent Company |
g) Centrais Eólicas do Paraná
The Company held a 30% interest in Centrais Eólicas do Paraná (Ceopar). On September 6, 2007, COPEL acquired, through COPEL Geração e Transmissão, the remaining 70% interest held by Wobben Windpower Indústria e Comércio Ltda., thus becoming the holder of 100% of the share capital of Ceopar. This transaction resulted in a discount of R$ 592, which was reclassified upon consolidation to Deferred Revenues, under Long-Term Liabilities.
h) Asset impairment
The conclusion of impairment tests on COPEL’s assets, based, when applicable, on the same assumptions mentioned in the Property, Plant, and Equipment note (Note 18.f), indicated, with an adequate level of certainty, that a part of the assets in Sercomtel Telecomunicações S/A (R$ 18,301) and Sercomtel Celular S/A (R$ 6,195) were valued above their recoverable amount, thus requiring the accrual of corresponding losses due to impossibility of recovering these amounts through future profits by these companies.
No impairment of investments was identified for the remaining assets of the Company.
18. Property, Plant, and Equipment
145
Accumulated | Consolidated | Accumulated | Consolidated | |||||||||
Cost | Depreciation | net value | Cost | Depreciation | net value | |||||||
2008 | 2007 | |||||||||||
In service (a) | ||||||||||||
Copel Geração e Transmissão | 5,250,080 | (2,070,575) | 3,179,505 | 5,171,655 | (1,937,690) | 3,233,965 | ||||||
Copel Distribuição | 4,816,165 | (2,288,653) | 2,527,512 | 4,462,250 | (2,116,451) | 2,345,799 | ||||||
Copel Telecomunicações | 358,300 | (206,587) | 151,713 | 326,892 | (179,894) | 146,998 | ||||||
Copel Participações | - | - | - | 341 | (237) | 104 | ||||||
Compagas | 159,486 | (42,324) | 117,162 | 145,149 | (33,811) | 111,338 | ||||||
Elejor | 606,737 | (46,689) | 560,048 | 605,480 | (30,333) | 575,147 | ||||||
UEG Araucária | 641,682 | (107,978) | 533,704 | 634,288 | (76,315) | 557,973 | ||||||
Centrais Eólicas do Paraná | 4,129 | (2,424) | 1,705 | 4,129 | (2,215) | 1,914 | ||||||
Dominó Holdings | 1 | - | 1 | - | - | - | ||||||
11,836,580 | (4,765,230) | 7,071,350 | 11,350,184 | (4,376,946) | 6,973,238 | |||||||
Construction in progress | ||||||||||||
Copel Geração e Transmissão | 294,204 | - | 294,204 | 272,364 | - | 272,364 | ||||||
Copel Distribuição | 470,643 | - | 470,643 | 377,070 | - | 377,070 | ||||||
Copel Telecomunicações | 29,874 | - | 29,874 | 39,177 | - | 39,177 | ||||||
Compagas | 33,671 | - | 33,671 | 22,463 | - | 22,463 | ||||||
Elejor | 8,292 | - | 8,292 | 8,371 | - | 8,371 | ||||||
UEG Araucária | 881 | - | 881 | - | - | - | ||||||
837,565 | - | 837,565 | 719,445 | - | 719,445 | |||||||
12,674,145 | (4,765,230) | 7,908,915 | 12,069,629 | (4,376,946) | 7,692,683 | |||||||
Special liabilities (b) | ||||||||||||
Copel Geração e Transmissão | (187) | - | (187) | (4,925) | - | (4,925) | ||||||
Copel Distribuição | (936,678) | 20,108 | (916,570) | (852,267) | - | (852,267) | ||||||
(936,865) | 20,108 | (916,757) | (857,192) | - | (857,192) | |||||||
11,737,280 | (4,745,122) | 6,992,158 | 11,212,437 | (4,376,946) | 6,835,491 | |||||||
Under Articles 63 and 64 of Decree no. 41,019, dated February 26, 1957, the assets and facilities used mostly in the generation, transmission, distribution, and sale of power are attached to these services and cannot be withdrawn, sold, assigned, or mortgaged without the prior written consent of the Regulatory Agency. ANEEL Resolution no. 20/1999 regulates the release of assets from the concessions of the Public Electric Energy Utilities, granting prior authorization to the release of assets that are deemed useless to the concession, when intended for sale, provided that the proceeds from such transaction be deposited in a special bank account assigned to investment in the concession.
Financial charges and interest on loans from third-parties for investments in construction in progress have been recorded through transfers to Property, Plant, and Equipment in Progress, for a total of R$ 1,470 in 2008 (Note 20).
a) Property, plant, and equipment in service by category
Accumulated | Consolidated | Accumulated | Consolidated | |||||||||
Cost | Depreciation | net value | Cost | Depreciation | net value | |||||||
2008 | 2007 | |||||||||||
Machinery and equipment | 7,874,370 | (3,258,316) | 4,616,054 | 7,416,653 | (2,969,262) | 4,447,391 | ||||||
Reservoirs, dams, and headrace channels | 2,869,541 | (1,069,984) | 1,799,557 | 2,865,020 | (1,006,005) | 1,859,015 | ||||||
Facilities | 710,019 | (320,950) | 389,069 | 693,230 | (300,756) | 392,474 | ||||||
Land | 121,357 | - | 121,357 | 118,812 | - | 118,812 | ||||||
Gas pipelines | 115,738 | (27,504) | 88,234 | 113,273 | (22,786) | 90,487 | ||||||
Vehicles | 127,128 | (77,327) | 49,801 | 124,168 | (67,161) | 57,007 | ||||||
Furniture and implements | 18,427 | (11,149) | 7,278 | 19,028 | (10,976) | 8,052 | ||||||
11,836,580 | (4,765,230) | 7,071,350 | 11,350,184 | (4,376,946) | 6,973,238 | |||||||
The fully depreciated amount of property, plant, and equipment in service was R$ 695,508 as of December 31, 2008, and R$ 616,203 as of December 31, 2007.
b) Special liabilities
146
Special liabilities comprise customers’ contributions, Federal Government budget grants, federal, State, and municipal funds, and special credits assigned to the investments in facilities tied to a concession. Special liabilities are not onerous liabilities and are not credits owned by shareholders. The scheduled date for settlement of these liabilities was the concession expiration date.
ANEEL, by means of Regulatory Resolution no. 234/2006, dated October 31, 2006, established the guidelines, the applicable methodologies, and the initial procedures for the conduction of the second cycle of the periodic rate review involving the Brazilian power distribution utilities, changing the characteristics of these liabilities. Both the outstanding balance and new additions have been amortized as of July 1, 2008, pursuant to ANEEL Ruling no. 3,073/06 and Circular Letter no. 1,314/07. This amortization is calculated based on the same average depreciation rate of the corresponding assets.
For purposes of calculating the compensation for the assets linked to the concession and transferable to the Federal Government, on the concession expiration date the remaining balance of special liabilities, if any, will be deducted from the residual value of the assets, both assessed according to criteria set by ANEEL.
The change in the characteristics of these liabilities results from the new rate-setting mechanism introduced by this new Regulatory Resolution, which establishes that the depreciation of assets acquired with funds from Special Liabilities will no longer be included in the B Portion of the companies’ revenues.
c) Electric Energy Universalization Plans(1)
ANEEL set forth the overall conditions for the development of Electric Energy Universalization Plans aimed at supplying new customers or increasing the capacity of supply to existing customers, set the duties of the holders of electric energy distribution concessions and permits, and made changes which include a reorganization of the priority of service to municipalities, emphasizing municipalities with a lower rate of electrification and lower Human Development Index ratings, and limiting service to new customers connected at low voltage (lower than 2.3 kV), with loads of up to 50 kW.
This program is coordinated by the Ministry of Mines and Energy and carried out with the participation of Eletrobrás. In Paraná, the Ministry is represented by Eletrosul, and the participants are the State Government and COPEL. Furthermore, the program is integrated with several social and rural development programs implemented by the Federal Government and by State Governments, to ensure that the rural electrification efforts result in increased agricultural output, in increased income and in social inclusion, providing better standards of living to the rural communities.
Originally scheduled to achieve 100% electrification throughout Brazil by 2008, the program has been extended until 2010 under Decree no. 6,442/2008, due to new customer demand throughout virtually all Brazilian states.
In 2008, the program connected 12,000 new customers, adding up to a little over 40,000 customers since its inception, i.e., 4,000 customers above the originally estimated demand. An advertising and re-registration campaign launched in the first quarter of 2008 revealed the existence of a remaining demand of around 34,000 connections, of which 20,000 are scheduled to be completed in 2009 and 14,000 in 2010.
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COPEL signed with Eletrobrás three financing and subsidy agreements, as follows: Agreement 002/2004, in the amount of R$ 30,240, of which R$ 17,280 are from RGR (Global Reversal Reserve) funds and R$ 12,960 are from CDE (Energy Development Account) funds; Agreement 142/2006, in the amount of R$ 74,340, of which R$ 42,480 are from RGR funds and R$ 31,860 are from CDE funds; and Agreement 206/2007, in the amount of R$ 126,431, of which R$ 108,369 are from RGR funds and R$ 18,062 are from CDE funds. All funds under contract 002/2004 have already been withdrawn, R$ 52,038 have been withdrawn under contract 142/2006, and R$ 37,929 have been withdrawn under contract 206/2007.
The total estimated investments under the contracts for the program are broken down below:
Source | R$ | Share | ||
Federal Government - CDE subsidy | 62,882 | 19% | ||
Paraná State Government | 33,002 | 10% | ||
RGR Financing | 168,129 | 51% | ||
Contractor - COPEL | 66,007 | 20% | ||
Program total | 330,020 | 100% | ||
d) Depreciation rates
The main depreciation rates, pursuant to ANEEL Resolution no. 240, dated December 5, 2006, and to Ministry of Communications Ordinance no. 96/1995 are:
148
% | ||
Generation | ||
General equipment | 10.00 | |
Generators | 3.30 | |
Reservoirs, dams, and headrace channels | 2.00 | |
Hydraulic turbines | 2.50 | |
Gas and steam turbines | 5.00 | |
Water cooling and treatment facilities | 5.00 | |
Gas conditioning equipment | 5.00 | |
Transmission | ||
System structure and conductors < 69 kV | 5.00 | |
System structure and conductors => 69 kV and power transformers | 2.50 | |
General equipment | 10.00 | |
Reconnectors | 4.30 | |
Distribution | ||
System structure and conductors => 69 kV | 2.50 | |
System structure and conductors < 69 kV and distribution transformers | 5.00 | |
Capacitor boards < 69 kV | 6.70 | |
Capacitor boards => 69 kV | 5.00 | |
General equipment | 10.00 | |
Central administration | ||
Facilities | 4.00 | |
Office machinery and equipment | 10.00 | |
Furniture and implements | 10.00 | |
Vehicles | 20.00 | |
Telecommunications | ||
Power and transmission equipment (telecommunications) | 10.00 | |
Overhead and underground cabling, wiring, and private switching center | 10.00 | |
Natural gas supply | ||
Gas pipelines | 3.30 | |
Gas pipeline operating equipment | 10.00 | |
Construction | Special | |||||||
Balances | In service | in progress | liabilities | Consolidated | ||||
As of 2006 | 6.880.637 | 660.791 | (808.612) | 6.732.816 | ||||
Consolidation of Centrais Eólicas' p.,p., &e. | 1.983 | - | - | 1.983 | ||||
Expenditure program | - | 516.483 | - | 516.483 | ||||
Transfer to PP&E in service | 528.352 | (528.352) | - | - | ||||
Depreciation quotas | (418.143) | - | - | (418.143) | ||||
Write-offs | (19.394) | (30.208) | - | (49.602) | ||||
Customer contributions | - | - | (48.580) | (48.580) | ||||
Transfers between PP&E and intangible assets | (197) | 1.606 | - | 1.409 | ||||
Supplemental provision for contingencies | - | 99.125 | - | 99.125 | ||||
As of 2007 | 6.973.238 | 719.445 | (857.192) | 6.835.491 | ||||
Expenditure program | - | 647.646 | - | 647.646 | ||||
Transfer to PP&E in service | 537.430 | (537.430) | - | - | ||||
Depreciation quotas | (415.420) | - | 20.108 | (395.312) | ||||
Write-offs | (23.857) | (2.005) | - | (25.862) | ||||
Customer contributions | - | - | (79.673) | (79.673) | ||||
Transfers between PP&E and intangible assets | 5 | (3.164) | - | (3.159) | ||||
Transfer of assets assigned for future use | (46) | - | - | (46) | ||||
Other | - | 13.073 | - | 13.073 | ||||
As of 2008 | 7.071.350 | 837.565 | (916.757) | 6.992.158 | ||||
e) Changes in property, plant, and equipment
f) Asset impairment
The Company has a policy of periodically evaluating and monitoring the projected future performance of its assets. Accordingly, and in light of Technical Ruling CPC 01 – Writing Assets down to their Recoverable Value, whenever there is evidence that the Company has assets recorded at unrecoverable values or whenever events or changes in circumstances indicate that the book value of an asset may not be recoverable in the future the Company must immediately account for such discrepancies by means of a provision for losses.
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The main principles underpinning the conclusions of COPEL’s impairment tests are listed below:
1)Lowest level of cash generating unit: held concessions are analyzed individually;
2)Recoverable Value: use value, or an amount equivalent to the discounted cash flows (before taxes) resulting from the continuous use of an asset until the end of its useful life;
3)Assessment of use value: the Company’s method for calculating the use value of an asset was based on future cash flows in constant currency, converted to current value according to a real discount rate, before income taxes, pursuant to the recommendation contained in Technical Ruling CPC 01.
The respective cash flows have been estimated based on actual operational results, on the Company's annual corporate budget, as approved by the Board of Directors, on the resulting multi-year budget, and on future trends in the power sector.
As for the time frame for the analysis, the Company has taken into account the expiration date of each concession.
As for market growth, COPEL’s projections are consistent with historical data and the Brazilian economy's growth prospects.
The respective cash flows have been discounted at average discount rates, obtained through a methodology commonly employed on the market and supported by the regulatory agency, taking into account the weighed average cost of capital (WACC).
Management believes it has a contractually guaranteed right to compensation for the assets linked to concessions upon their expiration, and it accepts, for the time being and until further regulation is issued on this matter, that such compensation be valued according to the book value of the respective assets. Thus, the principle of valuation of residual assets upon expiration of concessions has been established as the book value of these assets.
In light of the principles discussed above, COPEL has not identified the need to set aside a provision for impairment of its assets.
19. Intangible Assets
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Rights of use | Accumulated | Consolidated | |||||
of software | Goodwill | amortization | Easements | Other | Net value | ||
2008 | 2007 | ||||||
In service | |||||||
Assets with estimated useful lives | |||||||
Copel Geração e Transmissão | 11,788 | - | (8,700) | 10,591 | - | 13,679 | 9,714 |
Copel Distribuição | 30,336 | - | (24,675) | 19,895 | - | 25,556 | 24,139 |
Copel Telecomunicações | 4,093 | - | (3,120) | - | - | 973 | 1,698 |
Copel Participações | - | - | - | - | - | - | 1 |
Compagas | 3,455 | - | (1,458) | - | - | 1,997 | 2,362 |
Elejor | - | - | - | 101 | - | 101 | 101 |
UEG Araucária | 90 | - | (67) | - | - | 23 | 7 |
Dominó Holdings | 1 | - | - | - | - | 1 | - |
49,763 | - | (38,020) (1) | 30,587 | - | 42,330 | 38,022 | |
Assets without estimated useful lives | |||||||
Copel Geração e Transmissão | - | - | - | - | 30 | 30 | 27 |
Copel Distribuição | - | - | - | - | 103 | 103 | 113 |
Compagas | - | - | - | - | 20 | 20 | 20 |
Concession - Elejor (a) | - | 22,626 | (2,074) | - | - | 20,552 | 21,306 |
Concession - Copel Empreend. (b) | - | 53,954 | (4,692) | - | - | 49,262 | 51,609 |
Goodwill - Sercomtel Telecom. (c) | - | 42,289 | (42,289) | - | - | - | 1,568 |
Goodwill - Sercomtel Celular (c) | - | 5,814 | (5,814) | - | - | - | 223 |
Concession - Sanepar (d) | - | 10,942 | (7,295) | - | - | 3,647 | - |
- | 135,625 | (62,164) | - | 153 | 73,614 | 74,866 | |
49,763 | 135,625 | (100,184) | 30,587 | 153 | 115,944 | 112,888 | |
In progress | |||||||
Copel Geração e Transmissão | - | - | - | 249 | - | 249 | 874 |
Copel Distribuição | 476 | - | - | 1,288 | - | 1,764 | 2,702 |
Copel Telecomunicações | 135 | - | - | - | - | 135 | - |
Elejor | - | - | - | 27 | - | 27 | 27 |
611 | - | - | 1,564 | - | 2,175 | 3,603 | |
118,119 | 116,491 | ||||||
(1)Annual amortization rate: 20% |
The fully depreciated amount of intangible assets in service was R$ 28,323 as of December 31, 2008, and R$ 23,674 as of December 31, 2007.
a) Concession - ELEJOR
The acquisition of the shares held by Triunfo Participações S.A., in December 2003, resulted in total goodwill of R$ 22,626, which corresponded to a balance of R$ 20,552 as of December 31, 2008, under the Parent Company. The linear amortization of goodwill was economically determined by the expected income from the commercial operation of the concession, which expires in October 2036, and its effect on the statement of income for 2008 was R$ 754 (R$ 754 in 2007).
b) Concession - COPEL Empreendimentos
The acquisition on May 31, 2006 of COPEL Empreendimentos, which was previously known as El Paso Empreendimentos e Participações Ltda. and which held a 60% interest in UEG Araucária Ltda., resulted in net final goodwill of R$ 53,954, with a balance of R$ 49,262 as of December 31, 2008. The linear amortization of goodwill was economically determined by the expected income from the commercial operation of the concession, which expires in December 2029, and its effect on the 2008 statement of income was R$ 2,346 (R$ 2,346 as of 2007).
c) Goodwill - Sercomtel
151
The investments in Sercomtel S.A. Telecomunicações and in Sercomtel Celular S.A. include goodwill on acquisition (R$ 42,289 and R$ 5,814), which have been fully amortized at the annual rate of 10%, with a charge to income of R$ 1,791 (R$ 1,568 + R$ 223) in 2007 and of R$ 4,808 (R$ 4,228 + R$ 580) in 2007. The payment of goodwill was determined by the expected future profitability, resulting from the assessment of the return on investment based on discounted cash flows.
d) Concession - Sanepar
In 1998, the acquisition by Dominó Holdings S.A. of an interest in SANEPAR resulted in goodwill, which is being amortized over 15 years as of 1999, at the rate of R$ 135 a month, for a total of R$ 729 in 2008, which is proportional to COPEL’s interest in the company.
e) Changes in intangible assets
Balances | In service | In progress | Consolidated | |||
As of 2006 | 116,702 | 8,769 | 125,471 | |||
Expenditure program | - | 4,406 | 4,406 | |||
Capitalizations | 7,966 | (7,966) | - | |||
Amortization quotas - concession | (3,100) | - | (3,100) | |||
Amortization quotas - goodwill | (4,808) | - | (4,808) | |||
Amortization quotas - other intangible assets | (3,906) | - | (3,906) | |||
Write-offs | (163) | - | (163) | |||
Transfers between intangible assets and p., p.,&e. | 197 | (1,606) | (1,409) | |||
As of 2007 | 112,888 | 3,603 | 116,491 | |||
Consolidation of Dominó Holdings - Sanepar concession | 4,378 | - | 4,378 | |||
Expenditure program | - | 4,038 | 4,038 | |||
Capitalizations | 8,630 | (8,630) | - | |||
Amortization quotas - concession | (3,829) | - | (3,829) | |||
Amortization quotas - goodwill | (1,791) | - | (1,791) | |||
Amortization quotas - other intangible assets | (3,811) | - | (3,811) | |||
Write-offs | (516) | - | (516) | |||
Transfers between intangible assets and p., p.,&e. | (5) | 3,164 | 3,159 | |||
As of 2008 | 115,944 | 2,175 | 118,119 | |||
20. Loans and Financing
The breakdown of the consolidated and of the Company’s loans and financing balances is shown below:
Consolidated | Current | Long-term | ||||||||||
liabilities | liabilities | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
Principal amount | Charges | Total | Total | |||||||||
Foreign currency | ||||||||||||
IDB (a) | 24,740 | 1,198 | 25,938 | 18,808 | 36,552 | 43,898 | ||||||
National Treasury (b) | 7,567 | 1,080 | 8,647 | 7,602 | 85,359 | 70,432 | ||||||
Banco do Brasil (c) | 6,383 | 134 | 6,517 | 4,083 | - | 3,919 | ||||||
Eletrobrás (d) | 7 | - | 7 | 5 | 36 | 33 | ||||||
38,697 | 2,412 | 41,109 | 30,498 | 121,947 | 118,282 | |||||||
National currency (reais) | ||||||||||||
Banco do Brasil (c) | 157 | 16,253 | 16,410 | 12,762 | 330,389 | 330,450 | ||||||
Eletrobrás (d) | 34,401 | 10 | 34,411 | 43,096 | 275,207 | 272,798 | ||||||
Eletrobrás - Elejor (e) | - | - | - | - | 26,092 | 94,709 | ||||||
BNDES - Compagas (f) | 6,526 | - | 6,526 | 6,328 | 13,111 | 19,029 | ||||||
Finep (g) | - | 5 | 5 | - | 2,310 | - | ||||||
41,084 | 16,268 | 57,352 | 62,186 | 647,109 | 716,986 | |||||||
79,781 | 18,680 | 98,461 | 92,684 | 769,056 | 835,268 | |||||||
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Parent Company | Current | Long-term | ||||
liabilities | liabilities | |||||
2008 | 2007 | 2008 | 2007 | |||
Principal amount | Charges | Total | Total | |||
Foreign currency | ||||||
National Treasury (b) | 7,567 | 1,080 | 8,647 | 7,602 | 85,359 | 70,432 |
. | ||||||
National currency (reais) | ||||||
Banco do Brasil (c) | - | 16,249 | 16,249 | 12,621 | 329,600 | 329,600 |
7,567 | 17,329 | 24,896 | 20,223 | 414,959 | 400,032 | |
Breakdown of loans and financing by currency and index:
Currency (equivalent inreais) / Index | Consolidated | |||
2008 | % | 2007 | % | |
Foreign currency | ||||
U.S. dollar | 94,049 | 10.84 | 78,072 | 8.41 |
Yen | 6,517 | 0.75 | 8,002 | 0.86 |
IDB currency basket | 62,490 | 7.20 | 62,706 | 6.76 |
163,056 | 18.79 | 148,780 | 16.03 | |
National currency (reais) | ||||
Long-term Interest Rate's Reference Unit (URTJLP) | 2,335 | 0.27 | 23,242 | 2.50 |
General Price Index - Market (IGP-M) | 930 | 0.11 | 95,639 | 10.31 |
Fiscal Reference Unit (UFIR) | 71,361 | 8.23 | 41,531 | 4.48 |
Eletrobrás Financing Rate (FINEL) | 264,349 | 30.47 | 274,363 | 29.57 |
BNDES Monetary Unit (UMBND) | 19,637 | 2.26 | 2,176 | 0.23 |
Interbank Deposit Certificate (CDI) | 345,849 | 39.87 | 342,221 | 36.88 |
704,461 | 81.21 | 779,172 | 83.97 | |
867,517 | 100.00 | 927,952 | 100.00 | |
Variations in the main foreign currencies and rates applied to the Company’s loans and financing:
Currency/index | Variation (%) | |
2008 | 2007 | |
U.S. dollar | 31.94 | (17.15) |
Yen | 62.89 | (11.78) |
IDB currency basket | 6.22 | 3.94 |
URTJLP | 0.24 | 0.36 |
TJLP | 6.27 | 6.47 |
IGP-M | 9.81 | 7.75 |
Finel | 1.90 | 1.51 |
UMBND | 33.86 | (17.02) |
CDI | 21.82 | (15.05) |
Maturity of long-term installments:
153
Foreign | National | |||
currency | currency | Consolidated | ||
2008 | 2007 | |||
2009 | - | - | - | 68,830 |
2010 | 31,011 | 42,977 | 73,988 | 64,256 |
2011 | 18,827 | 49,237 | 68,064 | 71,950 |
2012 | 4,889 | 45,180 | 50,069 | 56,886 |
2013 | 3,137 | 45,120 | 48,257 | 54,516 |
2014 | 1,572 | 374,579 | 376,151 | 382,689 |
2015 | - | 44,368 | 44,368 | 51,739 |
2016 | - | 26,767 | 26,767 | 31,637 |
2017 | - | 6,719 | 6,719 | 3,106 |
2018 | - | 5,975 | 5,975 | 2,115 |
2019 | - | 3,726 | 3,726 | 114 |
2020 | - | 2,456 | 2,456 | 49 |
2021 | - | 5 | 5 | 1 |
After 2021 | 62,511 | - | 62,511 | 47,380 |
121,947 | 647,109 | 769,056 | 835,268 | |
Changes in loans and financing:
Foreign currency | National currency | Consolidated | |||
Current | Long-term | Current | Long-term | Total | |
As of 2006 | 36.056 | 173.097 | 54.096 | 431.209 | 694.458 |
Funds raised | - | - | - | 346.592 | 346.592 |
Capitalized charges | - | - | - | 12.129 | 12.129 |
Charges | 9.613 | - | 55.907 | 2.398 | 67.918 |
Monetary and exchange variation | (4.591) | (24.756) | 353 | 10.962 | (18.032) |
Transfers | 30.059 | (30.059) | 86.304 | (86.304) | - |
Amortizations | (40.639) | - | (134.474) | - | (175.113) |
As of 2007 | 30.498 | 118.282 | 62.186 | 716.986 | 927.952 |
Funds raised | - | - | - | 34.818 | 34.818 |
Capitalized charges | - | - | - | 12.062 | 12.062 |
Charges | 7.327 | - | 69.388 | 2.781 | 79.496 |
Charges transf. to PP&E (Note 18) | - | - | (1.470) | - | (1.470) |
Monetary and exchange variation | 12.421 | 31.042 | 176 | 14.024 | 57.663 |
Transfers | 27.377 | (27.377) | 133.562 | (133.562) | - |
Amortizations | (36.514) | - | (206.490) | - | (243.004) |
As of 2008 | 41.109 | 121.947 | 57.352 | 647.109 | 867.517 |
a) Inter-American Development Bank - IDB
Loan for the Segredo Hydroelectric Power Plant and for the Jordão River Diversion Project, received on 15 January 1991, in the amount of US$ 135,000. This debt is amortized semi-annually, with final maturity in January 2011. Interest is calculated according to the IDB funding rate, which in the fourth quarter of 2008 was 4.23% p.a. The agreement features provisions providing for termination in the following cases:
1)Default by the debtor on any other obligation set forth in the agreement or agreements signed with the bank for financing of the project;
2)Withdrawal or suspension of the Federal Republic of Brazil as a member of the IDB;
3)Default by the guarantor, if any, of any obligation set forth in the guaranty agreement;
4)Ratio between current assets and total short-term commercial and bank financing, except for the current share of long-term indebtedness and dividends to be reinvested, lower than 1.2; and
154
5)Ratio between long-term indebtedness and shareholders’ equity exceeding 0.9.
This agreement is guaranteed by the Federal Government and by mortgage and fiduciary guarantees.
b) Department of the National Treasury – (Secretaria do Tesouro Nacionalor STN)
The restructuring of medium and long-term debt, signed on May 20, 1998, in connection with the financing received under Law no. 4,131/62, is shown below:
Term | Final | Grace period | |||
Bond type | (years) | maturity | (years) | Consolidated | |
2008 | 2007 | ||||
Par Bond | 30 | 15.04.2024 | 30 | 37,296 | 28,294 |
Capitalization Bond | 20 | 15.04.2014 | 10 | 17,507 | 15,703 |
Debt Conversion Bond | 18 | 15.04.2012 | 10 | 12,368 | 12,133 |
Discount Bond | 30 | 15.04.2024 | 30 | 25,896 | 19,755 |
New Money Bonds | 15 | 15.04.2009 | 7 | 466 | 1,067 |
Flirb | 15 | 15.04.2009 | 9 | 473 | 1,082 |
94,006 | 78,034 | ||||
The annual interest rates and repayments are as follows:
Bond type | Annual interest rates (%) | Payments |
Par Bond | 6.0 | single |
Capitalization Bond | 8.0 | semi-annual |
Debt Conversion Bond | Six-month LIBOR + 0.8750 | semi-annual |
Discount Bond | Six-month LIBOR + 0.8125 | single |
New Money Bonds | Six-month LIBOR + 0.8750 | semi-annual |
Flirb | Six-month LIBOR + 0.8125 | semi-annual |
As collateral for this agreement, the Company assigned and transferred to the Federal Government, conditioned to the non-payment of any financing installment, the credits that are made to the Company’s centralized revenues account, up to a limit sufficient to cover the payment of installments and other charges payable upon each maturity. For the Discount and Par Bonds, there are collateral deposits of R$ 15,460 and R$ 22,408 (R$ 9,246 and R$ 13,177 as of December 31, 2007), respectively, recorded under guarantees and escrow deposits, in long-term receivables (Note 13).
c) Banco do Brasil S.A.
The Company has the following contracts with Banco do Brasil:
1)Agreements denominated in Japanese yen for the gas-insulated substation at Salto Caxias, repayable in 20 semi-annual installments, starting on March 7, 2000, bearing interest of 2.8% p.a. and a 3.8% p.a. brokerage commission. This debt is secured by COPEL’s revenues;
2)Private Credit Assignment Agreement with the Federal Government, through Banco do Brasil S.A., signed on March 30, 1994, repayable in 240 monthly installments based on the Price amortization system starting on April 1, 1994, monthly restated by the TJLP and IGP-M plus interest of 5.098% p.a. and secured by COPEL’s revenues.; and
3)The following credit notes:
155
Issue | Principal | Financial charges | ||
Credit notes | date | maturity | due semi-annually | R$ |
Commercial no. 330.600.129 | 31.01.2007 | 31.01.2014 | 106.5% of the average CDI rate | 29,000 |
Industrial no. 330.600.132 | 28.02.2007 | 28.02.2014 | 106.2% of the average CDI rate | 231,000 |
Industrial no. 330.600.151 | 31.07.2007 | 31.07.2014 | 106.5% of the average CDI rate | 18,000 |
Industrial no. 330.600.156 | 28.08.2007 | 28.08.2014 | 106.5% of the average CDI rate | 14,348 |
Industrial no. 330.600.157 | 31.08.2007 | 31.08.2014 | 106.5% of the average CDI rate | 37,252 |
329,600 | ||||
As a guarantee, Banco do Brasil has been authorized to deduct any amounts credited, on any grounds, to the Company's deposit account to cover, in part or in full, the outstanding balance due under the line of credit. It has also been irrevocably authorized, regardless of prior notice, to offset the bank’s receivable, which corresponds to the outstanding balance due under the line of credit, with any credits the Company has or accrues at Banco do Brasil.
d) Eletrobrás – Centrais Elétricas Brasileiras S.A.
Loans originated from the Eletrobrás Financing Fund (FINEL) and from the Global Reversal Reserve (RGR) for the expansion of the generation, transmission, and distribution systems. Repayments started in February 1999, and the last payment is due in August 2021. Interest of 5.0% to 8.0% p.a. and principal are repaid monthly, adjusted by the FINEL and Federal Reference Unit (UFIR) rates.
Contract ECFS – 142/2006, was signed on May 11, 2006 by COPEL Distribuição and Eletrobrás, in the amount of R$ 74,340, for use in the “Luz para Todos” rural electrification program. Out of the total amount, R$ 42,480 came from RGR funds, and R$ 31,860 were economic subsidies from CDE (Energy Development Account) funds. This loan has a grace period of 24 months and bears interest of 5% p.a. plus a commission of 1% p.a. It is repayable in 120 equal monthly installments, with final maturity on September 30, 2018.
Contract ECFS – 206/2007, was signed on March 3, 2008 by COPEL Distribuição and Eletrobrás, in the amount of R$ 126,431, for use in the “Luz para Todos” rural electrification program. Out of the total amount, R$ 108,369 came from RGR funds, and R$ 18,061 were economic subsidies from CDE (Energy Development Account) funds. This loan has a grace period of 24 months and bears interest of 5% p.a. plus a commission of 1% p.a. It is repayable in 120 equal monthly installments, with final maturity on August 30, 2020. On July 28, 2008, COPEL withdrew R$ 37,929, of which R$ 32,511 came from RGR funds and R$ 5,418 from CDE funds.
These loans are secured by the revenues of COPEL’s subsidiaries, pursuant to a mandate issued by public act, and by the issue of promissory notes in the same number of outstanding installments.
e) Eletrobrás - Elejor
For purposes of presentation of the consolidated financial statements, the value of the shares to be redeemed by ELEJOR has been reclassified from noncontrolling interest to loans and financing, under long-term liabilities.
The 59,000,000 preferred shares in Elejor held by Eletrobrás, in the amount of R$ 59,900, shall be reacquired by the issuer (Elejor) in 32 consecutive quarterly installments, each in the amount of 1,871,875 shares, starting in the 24th month from the beginning of commercial operation of the project, which took place after the last generating unit entered operation on August 31, 2006. The paid in amounts are restated according to the IGP-M index,pro rata temporis,between the date the shares were paid in and the actual payment date, plus interest of 12% p.a In August 2007, nine installments were bought back in advance by Elejor, for R$ 20,385, plus financial charges of R$ 18,725, for a total of R$ 39,110. In December 2008, 29,035,700 shares were bought back by Elejor, for R$ 35,133, plus financial charges of R$ 54,867, for a total of R$ 90,000. As of December 2008, the outstanding balance comprised a principal amount of R$ 9,217 plus R$ 16,875 in charges.
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f) | BNDES - Compagas |
The BNDES balance includes four agreements signed by Compagas on December 14, 2001, repayable in 99 monthly installments, with interest of 4% p.a Two of these agreements were signed for the purchase of machinery and equipment, subject to the TJLP rate (limited to 6% p.a.), and two were signed for construction, facilities, and services, subject to the BNDES monetary unit (UMBND)rate. | |
This financing is secured by Compagas’ gas supply receivables, which shall be deposited exclusively in a checking account at Banco Itaú S.A. | |
g) | Financiadora de Estudos e Projetos - FINEP |
1) | Loan agreement no. 02070791-00, signed on November 28, 2007 to partially cover expenses incurred in the preparation of the "Generation Research and Development Project for 2007". The total credit, in the amount of R$ 5,078, will be made available in six installments. The first one, in the amount of R$ 1,464, was withdrawn in April 2008, and the remaining ones will be deposited every 90 days, to the extent there is financial and budget availability. A share of 1% of the funds will be allocated to cover inspection and supervision expenses. The principal amount of this debt will be subject to equalized interest of 6.37% p.a., due on the 15th day of each month, including the months of the grace period. The outstanding balance will be paid to FINEP in 49 monthly and successive installments, the first one due on December 15, 2010, and the last one on December 15, 2014. COPEL Geração e Transmissão has committed to pay a share of the project preparation costs, with its own resources, in the minimum amount of R$ 564. To secure the contract, COPEL Geração e Transmissão has authorized Banco do Brasil to withhold the amounts due to FINEP from the checking account in which its monthly revenues are deposited. In the event of breach of contract, COPEL shall lose the benefit of interest equalization. |
2) | Loan agreement no. 02070790-00, signed on November 28, 2007 to partially cover expenses incurred in the preparation of the "Transmission Research and Development Project for 2007". The total credit, in the amount of R$ 3,535, will be made available in six installments. The first one, in the amount of R$ 844, was withdrawn in October 2008, and the remaining ones will be deposited every 90 days, to the extent there is financial and budget availability. A share of 1% of the funds will be allocated to cover inspection and supervision expenses. The principal amount of this debt will be subject to equalized interest of 6.13 % p.a., due on the 15th day of each month, including the months of the grace period. The outstanding balance will be paid to FINEP in 49 monthly and successive installments, the first one due on December 15, 2010, and the last one on December 15, 2014. COPEL Geração e Transmissão has committed to pay a share of the project preparation costs, with its own resources, in the minimum amount of R$ 393. To secure the contract, COPEL Geração e Transmissão has authorized Banco do Brasil to withhold the amounts due to FINEP from the checking account in which its monthly revenues are deposited. In the event of breach of contract, COPEL shall lose the benefit of interest equalization. |
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21. Debentures
The balance of debentures is broken down below:
Current | Long-term | |||||
liabilities | liabilities | |||||
2008 | 2007 | 2008 | 2007 | |||
Principal amount | Charges | Total | Total | |||
Parent Company (a) | 133,360 | 35,873 | 169,233 | 168,599 | 600,000 | 733,360 |
Elejor (b) | 22,843 | 2,924 | 25,767 | 3,228 | 202,116 | 269,314 |
156,203 | 38,797 | 195,000 | 171,827 | 802,116 | 1,002,674 | |
Maturity of long-term installments:
Consolidated | ||
2008 | 2007 | |
2009 | - | 156,148 |
2010 | 36,455 | 42,123 |
2011 | 638,454 | 646,037 |
2012 | 38,454 | 46,037 |
2013 | 38,454 | 46,037 |
2014 | 35,409 | 42,998 |
2015 | 13,290 | 20,164 |
2016 | 1,600 | 3,130 |
802,116 | 1,002,674 | |
Changes in the balances of debentures:
Current | Long-term | Consolidated | |
Balances | liabilities | liabilities | Total |
As of 2006 | 838,355 | 1,129,230 | 1,967,585 |
Charges | 138,112 | - | 138,112 |
Monetary variation | 3,784 | 12,302 | 16,086 |
Transfers | 138,858 | (138,858) | - |
Amortizations | (947,282) | - | (947,282) |
As of 2007 | 171,827 | 1,002,674 | 1,174,501 |
Charges | 121,025 | - | 121,025 |
Monetary variation | 8 | 638 | 646 |
Transfers | 201,196 | (201,196) | - |
Amortizations | (299,056) | - | (299,056) |
As of 2008 | 195,000 | 802,116 | 997,116 |
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a) Parent Company Debentures
1) Fourth Issue of Debentures
A single series of 60,000 debentures makes up the fourth issue of simple debentures conducted by the Company on September 1, 2006, in the amount of R$ 600,000, and concluded on October 6, 2006, with full subscription in the total amount of R$ 607,899, with a five-year term from issue date and final maturity on September 1, 2011. These are simple, nominative debentures, non-convertible into stock, issued in book-entry form, and unsecured.
These securities yield interest on their face value of 104% of the average one-day Interfinance Deposit (DI - over) rates, extra-group, expressed in an annual percentage rate based on 252 business days, calculated and published daily by CETIP (the “DI rate”) in exponential and cumulative “pro rata tempore” manner according to the number of business days elapsed. Interest corresponding to the capitalization period is due and paid semi-annually, with the first due date on March 1, 2007 and the last on September 1, 2011. There will be no renegotiation of these debentures.
The resources obtained with the issue of these debentures were used to optimize the Company’s debt profile, by means of payment of its financial obligations, and to reinforce its cash flow. The resources from this issue were used to settle 1/3 of the principal amount of the Company's 3rd issue of debentures, due on February 1, 2007, and the principal amount of the Company’s 2nd issue of debentures, due on March 1, 2007.
2) Third Issue of Debentures
A single series of 40,000 debentures makes up the third issue of simple debentures, concluded on May 9, 2005, fully subscribed for R$ 400,000, with a four-year term. Final maturity is scheduled for 2009, with the first repayment (1/3) being scheduled for January 1, 2007, the second repayment (1/3) for February 1, 2008, and the third one (1/3) for February 1, 2009.
These are simple, nominative debentures, non-convertible into stock, issued in book-entry form, and secured by real estate. The funds were used to pay off securities issued on the international market (Euronotes) by the Company on May 2, 1997 and due on May 2, 2005, in the amount of US$ 150,000.
The pledged security is COPEL Geração e Transmissão’s bank account in Banco do Brasil S.A., in which all resources earned by it in connection with power sales agreements, both current and future, will be deposited.
These securities yield interest on their face value (minus previously amortized amounts) of 115% of the average one-day Interfinance Deposit rates, extra-group, expressed in an annual percentage rate based on 252 business days, calculated and published daily by CETIP (the “DI rate”) in exponential and cumulative “pro rata tempore” manner according to the number of business days elapsed. Interest corresponding to the capitalization periods is due and paid semi-annually, with the first due date on August 1, 2005 and the last on February 1, 2009. There will be no renegotiation of these debentures.
The debentures feature provisions setting forth accelerated maturity in certain conditions.
b) Debentures - Elejor
159
The contract for Elejor’s first issue of debentures was signed with BNDES Participações S.A. – BNDESPAR, with COPEL intervening as “Guarantor Shareholder”.
These funds were raised to be employed in the following:
1)Investments in the Fundão-Santa Clara Power Complex, on the Jordão River, in the State of Paraná;
2)Investments in two small hydropower plants, the Santa Clara I SHP and the Fundão SHP;
3)Payment of 50% of the amounts borrowed between July 1, 2004 and September 30, 2004 under the loan agreement signed on April 7, 2004 with the Guarantor Shareholder;
4)Full payment of the funds loaned by the Guarantor Shareholder from October 1, 2004 until the date the first debentures were paid in;
5)Payment of operating expenses inherent to the issuer's business, including the purchase of power to meet supply obligations; and
6)Financing of the social and environmental programs in connection with the investments in the Fundão-Santa Clara Power Complex.
One thousand debentures were issued in book-entry form, without the issue of guarantees or certificates. They were issued in two series, the first one comprising 660 debentures, and the second one, 340. Both of them are nominative, convertible into common shares and into class C preferred shares, at the discretion of the debenture holders.
The total amount of this issue was R$ 255,626. The debentures had a face value of R$ 256 on the issue date, February 15, 2005, and this value is restated according to the variation of the long term interest rate (TJLP).
The final maturity of the first series is scheduled for February 15, 2015. After the grace period for the principal amount of 48 months from the issue date, amortization will take place in 24 quarterly installments pursuant to the agreement. The first amortization payment is due on May 15, 2009.
The final maturity of the second series is scheduled for February 15, 2016. After the grace period for the principal amount of 60 months from the issue date, amortization will take place in 24 quarterly installments pursuant to the agreement. The first amortization payment is due on May 15, 2010.
The first and second series yield interest based on the variation of TJLP, plus a 4% p.a. spread on the outstanding balance of each series. Interest on the first series is due annually, in the first twelve months from the issue date, and quarterly thereafter. The first payment was due on February 15, 2006, and the last one, on February 15, 2015. Interest on the second series is due annually, in the first 24 months from the issue date, and quarterly thereafter. The first payment was due on May 15, 2007, and the last one, on February 15, 2016.
In December 2008, R$ 42,621 were paid in advance, plus financial charges of R$ 2,379, for a total of R$ 45,000.
The agreement contains the following guarantees:
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1)Letter of guarantee signed by COPEL pledging an unsecured guarantee and taking main responsibility for payment to debenture holders;
2)Lien on rights resulting from the concession agreement: pursuant to the terms and provisions of the private agreements for lien on revenues and other covenants between the issuer, the fiduciary agent, and the depositary bank, an irrevocable lien was constituted, with due authorization by ANEEL; and
3)Lien on revenues and reserve of funds for payment: pursuant to the agreement between the issuer, the fiduciary agent, and the depositary bank, a centralizing account and a reserve account were constituted and shall be in effect until final settlement of all obligations under this agreement.
The debentures feature provisions setting forth accelerated maturity in certain conditions.
22. Suppliers
Consolidated | ||||
2008 | 2007 | |||
Charges for the use of the power grid | ||||
Use of the Basic Network | 57,096 | 50,291 | ||
Transport of power | 4,182 | 3,028 | ||
Use of connections | 265 | 237 | ||
61,543 | 53,556 | |||
Power suppliers | ||||
Eletrobrás (Itaipu) | 100,040 | 74,090 | ||
Furnas Centrais Elétricas S.A. | 32,757 | 30,849 | ||
Companhia Hidro Elétrica do São Francisco - Chesf | 32,108 | 28,430 | ||
Utilities - CCEE (Note 34) | 27,976 | 1,229 | ||
Companhia Energética de São Paulo - Cesp | 11,488 | 9,763 | ||
Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A. | 10,234 | 8,293 | ||
Centrais Elétricas do Norte do Brasil S.A. - Eletronorte | 10,316 | 8,834 | ||
Itiquira Energética S.A. | 9,247 | 8,468 | ||
Dona Francisca Energética S.A. | 5,128 | 4,567 | ||
Companhia Energética de Minas Gerais - Cemig | 4,660 | 4,052 | ||
Other suppliers | 18,415 | 14,523 | ||
262,369 | 193,098 | |||
Materials and services | ||||
Petróleo Brasileiro S.A. - Petrobras - renegotiation - long-term (a) | 214,157 | 190,394 | ||
Petróleo Brasileiro S.A. - Petrobras - gas acquired by Compagas | 36,775 | 21,031 | ||
Other suppliers | 137,145 | 98,825 | ||
388,077 | 310,250 | |||
711,989 | 556,904 | |||
Current | 497,832 | 366,510 | ||
Long-term | 214,157 | 190,394 | ||
a) Petróleo Brasileiro S.A. - Petrobras
On March 6, 2006, COPEL signed an agreement with Petrobras to settle the pending issues regarding the gas purchase agreement for the Araucária Thermal Power Plant. This settlement comprised the signature of an Out-of-Court Agreement, under which COPEL Generation, with COPEL as guarantor, acknowledged a R$ 150,000 debt to Petrobras, as grantor of Compagas’ credits to COPEL Generation, which shall be paid in 60 monthly installments restated by the Selic rate, starting in January 2010.
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On May 30, 2006, COPEL Generation signed a Mutual Release Agreement with Compagas under which both companies fully and irrevocably release each other from all obligations and rights under the Natural Gas Purchase and Sale Agreement signed by them on May 30, 2000 and terminated on May 31, 2005, renouncing any claims against each other, on any grounds, as of the date of the Out of Court Settlement and Confession of Indebtedness signed by them and by Petrobras, with the participation of COPEL. The debt acknowledged by COPEL Generation remains.
23. Accrued Payroll Costs
Consolidated | ||||
2008 | 2007 | |||
Payroll | ||||
Profit sharing (Note 32.c) | 65,816 | 54,254 | ||
Taxes and social contribution | 26,659 | 22,177 | ||
Payroll, net | 103 | 132 | ||
Assignments to third-parties | 5 | 3 | ||
92,583 | 76,566 | |||
Labor provisions | ||||
Paid vacation | 50,909 | 49,390 | ||
Social charges on paid vacation and annual bonus | 15,896 | 15,533 | ||
Provisions for voluntary quits | - | 4,630 | ||
66,805 | 69,553 | |||
159,388 | 146,119 | |||
24. Post-Employment Benefits
a) Pension Plan
The Company and its subsidiaries sponsor retirement and pension plans (Pension Plans I, II, and III) and a medical and dental care plan (Healthcare Plan) to both current and retired employees and their dependents.
Pension Plans I and II are defined benefit plans, while Plan III is a defined contribution plan.
The cost shares borne by the plans’ sponsors are recorded according to an actuarial assessment prepared annually by independent actuaries pursuant to the rules of CVM Ruling no. 371/2000. The actuarial and financial assumptions, for purposes of actuarial assessment, are discussed with the independent actuaries and approved by the sponsors’ senior management.
As of July 2007, the flow of payment of contributions under Plans I and II was guaranteed under an agreement called “Private Agreement for Adjustment of Mathematical Reserves for the Basic and Supplemental Pension Plans”, signed on January 20, 1999. This agreement provides for the extinction of liabilities under certain conditions. Based on legal opinions by external and internal legal experts, the Company notified the senior management of Fundação COPEL de Previdência e Assistência Social, on July 27, 2007, that no contribution payments would be made under that agreement as of August 2007, since the obligations contained therein expired.
In September 2007, Fundação COPEL disputed COPEL's interpretation, which led to a joint request for review and ruling by the State Department of Supplemental Pension Plans (SPC).
In November 2007, the State Department of Supplemental Pension Plans requested further information and suggested the conduction of an independent actuarial audit in order to review the settlement process and to issue a conclusive report on the suitability of the actuarial assumptions used and on whether the debt and/or contract at hand was settled/terminated.
162
In July 2008, the COPEL Foundation submitted to the SPC an audit report prepared by their actuarial consultants, and in October 2008, the SPC sent a letter to the COPEL Foundation requesting further information and evidence supporting that report.
The outcome of this issue will not affect the amounts which have already been recorded as an actuarial liability pursuant to CVM Instruction no. 371/2000. In fact, it will only affect the cash flow of the payment of contributions between COPEL and the COPEL Foundation.
b) Healthcare Plan
The Company and its subsidiaries allocate resources for the coverage of healthcare expenses incurred by their employees and their dependents, within rules, limits, and conditions set in specific regulations. Coverage includes periodic medical exams and is extended to all retirees and pensioners for life.
c) Balance sheet and statement of income
The consolidated and recognized amounts in the balance sheet, under Post-Employment Benefits, are summarized below:
plan | plan | Total | ||||||
2008 | 2007 | |||||||
Pension Plan - Plans I and II (DB) | 95,436 | 343,398 | 438,834 | 489,535 | ||||
Pension Plan - Plan III (VC) - employees | 9,111 | - | 9,111 | 7,162 | ||||
104,547 | 343,398 | 447,945 | 496,697 | |||||
Current | 22,066 | 42,286 | ||||||
Long-term | 425,879 | 454,411 | ||||||
The consolidated amounts recognized in the statement of income are shown below:
Consolidated | ||||
2008 | 2007 | |||
Pension plan - periodic post-employment cost | (31,420) | (110,345) | ||
Pension plan (VC) | 48,275 | 45,997 | ||
Healthcare plan - post-employment | (6,909) | 38,746 | ||
Healthcare plan contributions | 27,462 | 18,330 | ||
37,408 | (7,272) | |||
(-) Transfers to construction in progress | (7,392) | (6,579) | ||
30,016 | (13,851) | |||
1)The annual estimated cost for 2008, calculated by an independent actuary, resulted in income due to the actuarial gains which are being amortized and whose amounts exceed the regular periodic cost of the plans.
d) Actuarial assessment pursuant to CVM Ruling no. 371/2000
Actuarial assumptions
The actuarial assumptions used to determine the amounts of liabilities and costs for 2008 and 2007 are shown below:
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Consolidated | ||||
Economics | Real | Nominal | ||
Inflation p.a. | - | 5.20% | ||
Projected rate of discount/return p.a. | 6.00% | 11.51% | ||
Wage increase p.a. | 2.00% | 7.30% | ||
Demographics | ||||
Death rate | AT - 83 | |||
Disabled death rate | AT - 49 | |||
Disability rate | Light | |||
Number of participants and beneficiaries:
Number of participants in 2008(1) | plan | plan | ||
Number of active participants | 8,364 | 8,213 | ||
Number of inactive participants | 5,781 | 4,636 | ||
Number of dependents | - | 24,437 | ||
Total | 14,145 | 37,286 | ||
(1)Unaudited by the independent auditors |
Actuarial assessment
Benefits plan | plan | plan | Total | |||||
2008 | 2007 | |||||||
Totally or partially covered liabilities | 2,613,697 | 453,695 | 3,067,392 | 2,995,435 | ||||
Fair value of plan's assets | (3,386,326) | (110,297) | (3,496,623) | (3,369,841) | ||||
Subtotal | (772,629) | 343,398 | (429,231) | (374,406) | ||||
Deferred actuarial gains | 868,065 | - | 868,065 | 863,941 | ||||
Total net liability | 95,436 | 343,398 | 438,834 | 489,535 | ||||
The actuarial assessment of defined benefit plans is calculated by the projected unit credit cost method (PUC). The net assets of the benefit plan are assessed according to market values (mark to market).
Since the year ended on December 31, 2006, COPEL has chosen to not defer future actuarial gains and losses recorded in the healthcare plan, rather recording them immediately in the statement of income.
On December 31, 2008, the balance of accumulated amounts in the variable contribution plan was R$ 1,142,537 (R$ 1,044,835 on December 31, 2007).
Changes in actuarial liabilities
plan | plan | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Current value of net actuarial liability as of 2007 | 2,518,605 | 2,239,135 | 476,830 | 463,346 | ||||
Cost of current service | 15,963 | 14,279 | 1,492 | 2,013 | ||||
Interest cost | 282,252 | 243,846 | 52,527 | 50,310 | ||||
Benefits paid | (199,381) | (186,308) | (24,889) | (36,669) | ||||
Actuarial gains (losses) | (3,742) | 207,653 | (52,265) | (2,170) | ||||
Current value of net actuarial liability as of 2008 | 2,613,697 | 2,518,605 | 453,695 | 476,830 | ||||
Changes in actuarial assets
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plan | plan | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Fair value of plan's assets as of 2007 | 3,255,449 | 2,906,979 | 114,392 | 120,324 | ||||
Projected return on plan assets | 363,364 | 324,401 | 12,372 | 13,476 | ||||
Contributions and additions | 4,226 | 46,645 | 62,771 | 57,269 | ||||
Benefits paid | (199,381) | (186,308) | (73,540) | (72,840) | ||||
Actuarial gains (losses) | (37,332) | 163,732 | (5,698) | (3,837) | ||||
Fair value of plan's assets as of 2008 | 3,386,326 | 3,255,449 | 110,297 | 114,392 | ||||
Estimated costs
The estimated costs for 2009, according to the actuarial criteria of CVM Ruling no. 371/2000, for each plan are shown below:
plan | plan | Consolidated | ||||
2009 | ||||||
Cost of current service | 20,398 | 1,534 | 21,932 | |||
Estimated interest cost | 289,985 | 50,274 | 340,259 | |||
Projected return on plan assets | (384,655) | (12,519) | (397,174) | |||
Projected employee contributions | (11,369) | (12,490) | (23,859) | |||
Amortization of gains and losses | (37,023) | - | (37,023) | |||
(122,664) | 26,799 | (95,865) | ||||
25. Customer Charges Due
Consolidated | ||||
2008 | 2007 | |||
Fuel Consumption Account - CCC | 22,174 | 12,642 | ||
Energy Development Account - CDE | 14,904 | 14,677 | ||
Global Reversal Reserve - RGR | 6,045 | 5,403 | ||
43,123 | 32,722 | |||
26. Research and Development and Energy Efficiency
ANEEL set forth criteria for the application of funds in Energy Efficiency Programs (EEPs) by power distribution concession and permission holders, pursuant to the regulations issued by the regulatory agency. Under the same resolution, the Manual for the Energy Efficiency Program was approved.
ANEEL also approved the Manual for Technological Research and Development Programs in the Power Sector. In October 2006, ANEEL established the criteria and procedures for the calculation, application, and collection by concession, permission, and authorization holders of the funds to be assigned monthly to Energy Efficiency and Research and Development projects, to the National Fund for Scientific and Technological Development (FNDCT), and to the Ministry of Mines and Energy (MME), pursuant to Law no. 9,991/00.
The regulatory agency, under Regulatory Resolution no. 316, dated May 13, 2008, determined that the amounts owed to the MME and FNDCT for 2008 should be paid in a single payment, thus the amount paid by COPEL in February 2009 was R$ 21,015. For 2009, payments will be made until the fifth business day of the second month after the respective accounting records.
COPEL’s balances allocated to Research and Development and Energy Efficiency are broken down below:
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unfinished | collect | apply | 2008 | 2007 | ||||||
Research and Development - R&D | ||||||||||
FNDCT | - | 18,649 | - | 18,649 | 20,157 | |||||
MME | - | 9,345 | - | 9,345 | 10,287 | |||||
R&D | 14,407 | - | 71,189 | 85,596 | 75,893 | |||||
14,407 | 27,994 | 71,189 | 113,590 | 106,337 | ||||||
Energy Efficiency Program - EEP | 10,386 | - | 74,587 | 84,973 | 78,943 | |||||
24,793 | 27,994 | 145,776 | 198,563 | 185,280 | ||||||
Current liabilities | 126,484 | 185,280 | ||||||||
Long-term liabilities | 72,079 | - | ||||||||
The changes in these balances are shown below:
Consolidated | ||||||||||
Balances | FNDCT | MME | R&D | EEP | Total | |||||
As of 2006 | 22,058 | 29,581 | 59,881 | 62,796 | 174,316 | |||||
Additions | 15,994 | 7,998 | 15,994 | 16,361 | 56,347 | |||||
SELIC interest rate | - | - | 6,126 | 5,139 | 11,265 | |||||
Disbursements | (17,895) | (27,292) | - | - | (45,187) | |||||
Concluded projects | (6,108) | (5,353) | (11,461) | |||||||
As of 2007 | 20,157 | 10,287 | 75,893 | 78,943 | 185,280 | |||||
Additions | 14,111 | 7,056 | 14,111 | 18,338 | 53,616 | |||||
SELIC interest rate | - | - | 7,818 | 6,704 | 14,522 | |||||
Disbursements | (15,619) | (7,998) | - | - | (23,617) | |||||
Concluded projects | (12,226) | (19,012) | (31,238) | |||||||
As of 2008 | 18,649 | 9,345 | 85,596 | 84,973 | 198,563 | |||||
27. Other Accounts Payable
Consolidated | ||||
2008 | 2007 | |||
Current liabilities | ||||
Concession charge - ANEEL grant | 38,649 | 27,084 | ||
Collected public lighting charge | 18,669 | 16,320 | ||
Reimbursements of customer contributions | 18,037 | 12,284 | ||
Financial compensation for use of water resources | 17,601 | 13,155 | ||
Participation in consortia | 4,833 | 105 | ||
Insurance companies - premiums due | 3,181 | 1,952 | ||
Reparations to the Apucaraninha indian community | 2,498 | 2,240 | ||
Customers and suppliers | 1,864 | 1,633 | ||
Escrow deposits | 1,723 | 1,622 | ||
ANEEL inspection fee | 1,451 | 1,380 | ||
Other liabilities | 5,877 | 7,690 | ||
114,383 | 85,465 | |||
Long-term liabilities | ||||
Advance payments from customers | 1,665 | - | ||
Reparations to the Apucaraninha indian community | 4,995 | 6,720 | ||
Other liabilities | 14 | - | ||
6,674 | 6,720 | |||
28. Provisions for Contingencies
The Company is a party to several labor, tax, and civil claims filed before different courts. COPEL’s senior management, based on the opinion of its legal counsel, has kept a provision for contingencies in connection with lawsuits with probable loss outcome.
The balances of the Company’s provisions for contingencies, net of escrow deposits, are shown below:
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Consolidated | Judicial | Net | Net | |||||
Contingencies | deposits | provision | provision | |||||
2008 | 2007 | |||||||
Labor (a) | 129,699 | (25,345) | 104,354 | 80,092 | ||||
Regulatory (b) | 36,851 | - | 36,851 | 2,169 | ||||
Civil: | ||||||||
Suppliers (c) | 52,209 | - | 52,209 | 49,954 | ||||
Civil and administrative claims (d) | 29,987 | (6,774) | 23,213 | 14,712 | ||||
Easements (e) | 15,615 | - | 15,615 | 16,070 | ||||
Condemnations and real estate (e) | 119,645 | - | 119,645 | 107,083 | ||||
Customers (f) | 5,465 | (894) | 4,571 | 6,427 | ||||
Environmental claims (g) | - | - | - | 163 | ||||
222,921 | (7,668) | 215,253 | 194,409 | |||||
Tax: | ||||||||
Cofins tax (h) | 178,753 | - | 178,753 | 171,613 | ||||
Other taxes (i) | 85,158 | (27,004) | 58,154 | 65,769 | ||||
263,911 | (27,004) | 236,907 | 237,382 | |||||
653,382 | (60,017) | 593,365 | 514,052 | |||||
Parent Company | Judicial | Net | Net | |||||
Contingencies | deposits | provision | provision | |||||
2008 | 2007 | |||||||
Regulatory claims (b) | 9,249 | - | 9,249 | - | ||||
Civil claims | 434 | - | 434 | 16 | ||||
Tax claims: | ||||||||
Cofins tax (h) | 178,753 | - | 178,753 | 171,613 | ||||
Other taxes (i) | 52,729 | (27,003) | 25,726 | 34,570 | ||||
231,482 | (27,003) | 204,479 | 206,183 | |||||
241,165 | (27,003) | 214,162 | 206,199 | |||||
Changes in these provisions are shown below:
Consolidated | Balance of | Additions | Add. (rev.) to | Balance of | ||||||
provision | (reversals) | p., p., &e. | Payments | provision | ||||||
2007 | 2008 | |||||||||
Labor | 102,474 | 51,786 | 13 | (24,574) | 129,699 | |||||
Regulatory | 2,169 | 34,690 | - | (8) | 36,851 | |||||
Civil: | ||||||||||
Suppliers | 49,954 | 2,255 | - | - | 52,209 | |||||
Easements | 16,070 | - | 229 | (684) | 15,615 | |||||
Civil and administrative claims | 15,975 | 17,387 | - | (3,375) | 29,987 | |||||
Customers | 6,523 | (1,048) | - | (10) | 5,465 | |||||
Condemnations and real estate | 107,083 | - | 12,831 | (269) | 119,645 | |||||
Environmental claims | 163 | (163) | - | - | - | |||||
195,768 | 18,431 | 13,060 | (4,338) | 222,921 | ||||||
Tax: | ||||||||||
Cofins tax | 171,613 | 7,140 | - | - | 178,753 | |||||
Other taxes | 92,488 | (7,329) | - | (1) | 85,158 | |||||
264,101 | (189) | - | (1) | 263,911 | ||||||
564,512 | 104,718 | 13,073 | (28,921) | 653,382 | ||||||
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Parent Company | Balance of | Additions | Balance of | |||
provision | (reversals) | provision | ||||
2007 | 2008 | |||||
Regulatory | - | 9,249 | 9,249 | |||
Civil | 16 | 418 | 434 | |||
Tax: | ||||||
Cofins tax | 171,613 | 7,140 | 178,753 | |||
Other taxes | 61,290 | (8,561) | 52,729 | |||
232,903 | (1,421) | 231,482 | ||||
232,919 | 8,246 | 241,165 | ||||
The amount tied to cases classified as possible losses, estimated by the Company as of 31/12/08, reached R$ 1.820.062, of which R$ 108,751 correspond to labor claims; R$ 1.072.052 to regulatory claims; R$ 132,402 to civil claims; and R$ 506,857 to tax claims. It is important to point out that COPEL has a good chance of success in the lawsuit it filed to dispute the effects of ANEEL Ruling no. 288/2002, based on the opinion of its legal counsel, as discussed in Note 36 herein, “Electric Energy Trading Chamber (CCEE)”.
a) Labor claims
Labor claims comprise claims filed by former employees of COPEL in connection with overtime, hazardous working conditions, transfer bonuses, wage equality/reclassification, and other matters, and also claims by former employees of contractors (joint liability) and third-parties (secondary liability) involving reparations and other matters. They also include labor claims by retired COPEL employees against the COPEL Foundation, which will reflect on the Company.
b) Regulatory claims
COPEL is disputing on the administrative and on the judicial level notices issued by the regulatory agency in connection with supposed regulatory violations. The main lawsuits currently in progress, in the amount of R$ 30,373, are those involving Companhia Estadual de Energia Elétrica - CEEE and Dona Francisca Energética S.A., in which ANEEL Ruling no. 288/2002 is being disputed. The likely success in these lawsuits will result in changes in CCEE accounting, which requires the constitution of a provision for these amounts, since COPEL will be required to pay off the amounts due.
c) Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A.
COPEL Distribuição is disputing in court the validity of the terms and conditions of the power purchase and sale agreements signed with Rio Pedrinho Energética S.A. and Consórcio Salto Natal Energética S.A., based on the argument that they grant benefits to the selling companies that hurt the public interest. At the same time, both companies, after having rescinded the agreements, filed for arbitration before the Arbitration Chamber of Fundação Getúlio Vargas, which sentenced COPEL to the payment of contractual penalties for having caused the rescission of the agreement. COPEL has filed for a court order making the arbitration ruling void.
Management, based on the opinion of its legal counsel that it is likely to lose this case, on the available information, and on the current stage of the lawsuits, decided to set aside a provision for contingencies in the original amount of the debt, restated according to the original contractual terms, which amounted to R$ 52,209 as of December 31, 2008.
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d) Civil and administrative claims
These claims usually involve reparations for accidents involving power grids and vehicle accidents.
e) Easements, condemnation, and real estate
COPEL’s real estate claims comprise mostly cases of condemnation and easements, in which compensation is always mandatory pursuant to the Federal Constitution, which requires that the Federal Government pay just compensation, in cash, prior to condemnation of private property or to the imposition of restrictions on the use of property without transfer of title. Lawsuits are usually filed when parties fail to agree on the amount of compensation due.
Ivaí Engenharia de Obras S.A.
In a lawsuit filed by Ivaí Engenharia de Obras S.A., COPEL was sentenced to the payment of R$ 180,917 as compensation for a supposed economic-financial imbalance under Contract D-01, concerning construction work for the Jordão River diversion project. COPEL appealed this decision and was partially successful, avoiding the application of the SELIC interest rate on top of the penalty interest. COPEL will continue to dispute this claim in court, through all means legally available.
The Company set aside a provision for contingencies in the amount of R$ 109,245, in light of the evaluation conducted by its Chief Legal Office, which estimates that a loss is probable.
f) Customer claims
These claims usually involve reparations for damage to electric appliances, moral damages on account of service-related issues (such as suspension of supply), and lawsuits filed by industrial customers disputing the legality of a rate increase during the Cruzado Plan period and pleading refunds. COPEL set up a provision based on the supposed discrepancy in the rates charged to industrial customers from March through November 1986, plus financial charges, in an amount believed to be sufficient.
g) Environmental claims
Environmental claims involving COPEL and its subsidiaries usually comprise class actions whose goal is to stop the environmental licensing process for new projects or the recovery of permanent protection areas around power plant reservoirs which have been illegally used by individuals. COPEL estimates that unfavorable outcomes would result only in the cost of new environmental studies and of the recovery of Company-owned land.
Furthermore, COPEL had on December 31, 2008 commitments to environmental agencies in the amount of R$ 17,674, which shall be realized over the next few years, so that this amount will mostly be incorporated into the Company's property, plant, and equipment as disbursements are made.
h) COFINS tax
COPEL did not collect COFINS tax on revenues from power sales based on a final ruling by the 4th District Federal Court, dated August 18, 1998, which granted the Company immunity pursuant to the Federal Constitution. A special lawsuit requesting annulment of this ruling, filed in August 2000, was rejected on grounds that the right of the Federal Government to take legal action had lapsed. The Federal Government’s special appeal was rejected by the Superior Court of Justice. Thus, COPEL reversed the provision it had set aside, based on the opinion by its counsel that the possibility that the Company might be required to disburse any amounts in connection with the COFINS tax was remote. At the end of 2007, however, the Superior Court of Justice, against all forecasts, ruled in favor of an appeal for clarification by the Federal Government, judging that the Government's right to take legal action had not lapsed, and sent the lawsuit back to the 4th District Federal Court for trial. Even though this ruling is not final yet, since COPEL has appealed it, the Company’s counsel believes the risk of loss is no longer remote, but rather probable. Thus, COPEL set aside a provision corresponding to the restated principal amount plus charges, which totals R$ 178,753, already having excluded tax credits which have already lapsed.
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i) Other taxes
Service Tax (ISS)
These claims involve tax penalties imposed on COPEL for not having withheld service tax on the services rendered to the Company by third-parties.
State Value-Added Tax (ICMS)
Most of these claims comprise lawsuits filed by Class A customers disputing the inclusion of their contractual power demand in the basis for calculation of ICMS. In almost all of these lawsuits, courts have excluded COPEL as one of the defendants, leaving the State of Paraná as the single defendant, who is liable for a potential refund of ICMS charged illegally on customers’ contractual power demand.
Urban Real Estate Tax (IPTU)
COPEL is disputing both administratively and judicially the levy of IPTU charges on its concession-related properties, on grounds that these are tax exempt. In fact, the Company has been successful in some cases of tax executions filed by State municipalities against it.
Social Security Contributions
COPEL is party to a wide range of administrative and judicial proceedings involving social security contributions. Most claims, however, involve COPEL’s joint liability for the collection of social security contributions levied on services rendered by third-parties.
Rural Real Estate Tax (ITR)
These claims usually involve disputes over ITR levied on areas flooded on account of the construction of power plants and on areas currently in possession of individuals who have been resettled, also on account of the construction of power plants.
Contribution for Intervention in the Economic Domain (CIDE/FUST)
The Company has filed administrative claims disputing five Assessment Notices issued by the National Telecommunications Agency (ANATEL) on account of supposed balances owed from January to June 2006 to the Telecommunications Universalization Fund (FUST). COPEL Telecomunicações argues that the basis for calculation of FUST charges is correct, pursuant to the applicable legislation, so that no outstanding balances exist.
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29. Shareholders’Equity
a) Share capital
As of December 31, 2008, COPEL’s paid in share capital, represented by shares with no par value, was R$ 4,460,000. The different classes of shares and main shareholders are detailed below:
In shares | ||||||||||||||||
Shareholders | Common | Class A Preferred | Class B Preferred | Total | ||||||||||||
% | % | % | % | |||||||||||||
State of Paraná | 85,028,598 | 58.63 | - | - | 13,639 | 0.01 | 85,042,237 | 31.08 | ||||||||
BNDESPAR | 38,298,775 | 26.41 | - | - | 27,282,006 | 21.28 | 65,580,781 | 23.96 | ||||||||
Eletrobrás | 1,530,774 | 1.06 | - | - | - | - | 1,530,774 | 0.56 | ||||||||
Free float: | ||||||||||||||||
Bovespa(1) | 14,202,488 | 9.79 | 127,587 | 32.04 | 74,423,942 | 58.04 | 88,754,017 | 32.43 | ||||||||
NYSE(2) | 5,415,233 | 3.73 | - | 26,352,280 | 20.55 | 31,767,513 | 11.61 | |||||||||
Latibex(3) | - | - | - | - | 116,067 | 0.09 | 116,067 | 0.04 | ||||||||
Municipalities | 178,393 | 0.12 | 14,711 | 3.70 | - | - | 193,104 | 0.07 | ||||||||
Other shareholders | 376,819 | 0.26 | 255,879 | 64.26 | 38,184 | 0.03 | 670,882 | 0.25 | ||||||||
145,031,080 | 100.00 | 398,177 | 100.00 | 128,226,118 | 100.00 | 273,655,375 | 100.00 | |||||||||
(1)São Paulo Stock Exchange | ||||||||||||||||
(2)New York Stock Exchange | ||||||||||||||||
(3)Latin American Securities Market in Euros, linked to the Madrid Stock Exchange |
Each share entitles its holder to one vote in the general shareholders’ meetings. Preferred shares, which do not carry voting rights, are divided into classes A and B.
Class “A” preferred shares enjoy priority in the reimbursement of capital and in the right to non-cumulative annual dividends of 10%, calculated proportionately to the capital represented by the shares of this class.
Class “B” preferred shares enjoy priority in the reimbursement of capital and the right to the distribution of minimum dividends, calculated as 25% of adjusted net income, pursuant to the corporate legislation and to the Company’s by-laws, calculated proportionately to the capital represented by the shares of this class. Class “B” shareholders have priority only over the common shareholders in the distribution of mandatory dividends, which shall only be paid out of the remaining net income after the payment of priority dividends to class “A” shareholders.
According to Article 17 and following paragraphs of Federal Law 6,404/76, dividends paid to preferred shares must be at least 10% higher than those paid to common shares.
b) Shareholder Breakdown
171
COMPANHIA PARANAENSE DE ENERGIA - COPEL | As of 31.12.2008 (In shares) | ||||||||
SHAREHOLDING POSITION OF THE HOLDERS OF MORE THAN 5% OF EACH CLASS OF STOCK (ENTITIES AND INDIVIDUALS) | |||||||||
SHAREHOLDER | Common Shares | Class A Preferred Shares | Class B Preferred Shares | Total | |||||
Shares | % | % | % | Shares | % | ||||
CONTROLLING SHAREHOLDERS | STATE OF PARANÁ | 85,028,598 | 58.63 | - | - | 13,639 | 0.01 | 85,042,237 | 31.08 |
BNDES PARTICIPAÇÕES S.A. - BNDESPAR | 38,298,775 | 26.41 | - | - | 27,282,006 | 21.28 | 65,580,781 | 23.96 | |
TREASURY STOCK | - | - | - | - | - | - | - | - | |
OTHER SHAREHOLDERS | 21,703,707 | 14.96 | 398,177 | 100.00 | 100,930,473 | 78.71 | 123,032,357 | 44.96 | |
TOTAL | 145,031,080 | 100.00 | 398,177 | 100.00 | 128,226,118 | 100.00 | 273,655,375 | 100.00 |
Obs.: BNDES Participações S.A. - BNDESPAR is a public company, wholly-owned by Banco Nacional de Desenvolvimento Social - BNDES, which is 100.0% owned by the Federal Government.
COMPANHIA PARANAENSE DE ENERGIA - COPEL | As of 31.12.2008 (In shares) | ||||||||
CONSOLIDATED SHAREHOLDING POSITION OF THE MAJORITY SHAREHOLDERS AND SENIOR MANAGEMENT OF THE COMPANY AND FREE-FLOATING STOCK | |||||||||
SHAREHOLDERS | Common Shares | Class A Preferred | Class B Preferred Shares | Total | |||||
Shares | % | Shares | % | % | Shares | % | |||
MAJORITY SHAREHOLDER | 123,327,373 | 85.04 | - | - | 27,295,645 | 21.29 | 150,623,018 | 55.04 | |
SENIOR MANAGEMENT | BOARD OF DIRECTORS | 9 | - | - | - | - | - | 9 | - |
BOARD OF OFFICERS | 102 | - | - | - | - | - | 102 | - | |
FISCAL COUNCIL | - | - | - | - | - | - | - | - | |
TREASURY STOCK | - | - | - | - | - | - | - | - | |
OTHER SHAREHOLDERS | 21,703,596 | 14.96 | 398,177 | 100.00 | 100,930,473 | 78.71 | 123,032,246 | 44.96 | |
TOTAL | 145,031,080 | 100.00 | 398,177 | 100.00 | 128,226,118 | 100.00 | 273,655,375 | 100.00 | |
FREE-FLOAT | 21,703,596 | 14.96 | 398,177 | 100.00 | 100,930,363 | 78.71 | 123,032,136 | 44.96 |
c) Capital reserves
Parent Company | ||||
2008 | 2007 | |||
Donations and subsidies for investments | 702 | 702 | ||
Recoverable Rate Deficit Account (CRC) | 790.555 | 790.555 | ||
Tax incentives - FINAM | 47.083 | 47.083 | ||
838.340 | 838.340 | |||
d) Income reserves
Parent Company | ||||
2008 | 2007 | |||
Legal reserve | 377,590 | 323,653 | ||
Investment reserve | 2,377,157 | 1,614,184 | ||
2,754,747 | 1,937,837 | |||
The legal reserve is made of 5% of the net income for the fiscal year, before any distributions, limited to 20% of share capital.
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The investment reserve is designed to cover the Company’s program of expenditures in property, plant, and equipment, pursuant to article no. 196 of the Brazilian Corporate Law. It is funded by retaining any remaining net income for the fiscal year, after the legal reserve and interest on capital are assigned.
The proposed distribution of dividends is shown below:
Parent Company | ||||
2008 | 2007 | |||
Net income for the fiscal year | 1,078,744 | 1,106,610 | ||
Tax effects on COPEL for distributing interest on capital | (77,520) | (68,000) | ||
Net income for the year net of the tax effects of | ||||
interest on capital | 1,001,224 | 1,038,610 | ||
Theoretical legal reserve out of the above income | (50,061) | (51,931) | ||
Basis for calculation of minimum dividends | 951,163 | 986,679 | ||
Mandatory minimum dividends (25%) | 237,791 | 246,670 | ||
Income tax withheld (IRRF) on interest on capital | 24,043 | 21,080 | ||
Adjusted minimum dividend, incl. effects of income tax withheld (IRRF) | 261,834 | 267,750 | ||
Suitable return on capital | 228,000 | 200,000 | ||
Distribution of dividends | 33,834 | 67,750 | ||
Distributed dividends allocated to: | ||||
Common shares | 132,398 | 135,397 | ||
Class A preferred shares | 649 | 649 | ||
Class B preferred shares | 128,787 | 131,704 | ||
Interest on capital is recorded in financial expenses and, for the purposes of the financial statements, is shown as an allocation of the net income for the fiscal year. In the statement of income, its reversal was made under a specific item in financial expenses, as required by CVM.
30. Operating Revenues
173
. | ||||
Consolidated | ||||
2008 | 2007 | |||
Power sales to final customers | ||||
Residential | 935,934 | 876,287 | ||
Industrial | 1,069,201 | 985,685 | ||
Commercial, services, and other activities | 622,046 | 570,418 | ||
Rural | 123,071 | 113,720 | ||
Public agencies | 86,334 | 82,165 | ||
Public lighting | 67,005 | 63,518 | ||
Public services | 63,403 | 61,992 | ||
Network charge adjustment share | 1,886 | (6,105) | ||
2,968,880 | 2,747,680 | |||
Power sales to distributors | ||||
Agreements for Power Trade on the Regulated Market - CCEAR (auction) | 818,585 | 721,899 | ||
Bilateral contracts | 439,409 | 515,656 | ||
Electric Energy Trading Chamber - CCEE | 48,129 | 69,239 | ||
Contracts with small utilities | 56,971 | 60,801 | ||
1,363,094 | 1,367,595 | |||
Availability of the power grid | ||||
Rate for the use of the distribution system (TUSD) | ||||
Residential | 1,054,150 | 1,023,847 | ||
Industrial | 1,194,193 | 1,136,137 | ||
Commercial, services, and other activities | 687,563 | 657,504 | ||
Rural | 138,138 | 133,400 | ||
Public agencies | 96,529 | 95,785 | ||
Public lighting | 74,943 | 74,211 | ||
Public services | 70,925 | 72,318 | ||
Basic Network and Basic Network Connections | 140,503 | 141,663 | ||
Connection grid | 3,439 | 764 | ||
Network charge adjustment share | 12,715 | (18,666) | ||
3,473,098 | 3,316,963 | |||
. | ||||
Revenues from telecommunications | 80,604 | 63,893 | ||
. | ||||
Distribution of piped gas | 283,709 | 244,080 | ||
Other operating revenues | ||||
Leases and rents | 95,316 | 125,768 | ||
Revenues from services | 30,445 | 44,900 | ||
Charged service | 9,316 | 8,393 | ||
Other revenues | 933 | 822 | ||
136,010 | 179,883 | |||
8,305,395 | 7,920,094 | |||
a) Basic Network – rate for the use of the transmission system (TUST)
Transmission companies are entitled to Annual Allowed Revenues (RAP), whose initial amounts and adjustment criteria are set forth in the companies' concession agreements. COPEL Geração e Transmissão holds three transmission concession agreements, with different rate review criteria and revenue structures.
Concession Agreement no. 060/2001 covers the concession for the public service of power transmission comprising the facilities in operation as of December 31, 1999, collectively named Existing Basic Network (RBSE), and the facilities and network upgrades authorized by ANEEL since then, collectively named New Facilities of the Basic Network (RBNI). In addition to the basic network, this agreement grants COPEL the operation of facilities collectively named Other Transmission Facilities (DITs) and the sharing of facilities with other transmission utilities. This concession has a 20-year term from the date of publication of Law no. 9,074/1995 and expires on July 7, 2015. The current agreement features a rate review clause which covers only the new authorized facilities, while the revenues from the existing system are isolated, i.e., they will not be increased until the expiration of the concession, but only restated according to the IGP-M inflation index.
174
Transmission Concession Agreement no. 075/2001, granted to the Company on August 7, 2001, covers the concession the implementation of the 230-kV transmission line between the Bateias substation, in Campo Largo, and the Jaguariaíva substation, the respective line inputs, and other facilities required for the operation of the line. This concession has a 30-year term from the date of signature of the agreement, i.e., it expires on August 17, 2031, but may be extended for another 30 years, at ANEEL’s discretion. This agreement does not include a rate review clause, and its allowed revenues are restated annually according to the IGP-M index.
On March 17, 2008, COPEL signed with ANEEL Concession Agreement no. 006/2008, covering the 230-kV transmission line between the Bateias and Pilarzinho substations in Curitiba. This project is currently under construction and is estimated to enter operation on June 17, 2009. The agreement has a 30-year term and provides for rate review in the 5th, 10th, and 15th year after signature. In the years between rate reviews, its allowed revenues will be restated according to the IPCA inflation index.
According to COPEL Geração e Transmissão’s concession agreements discussed above, the revenue structure throughout the term of the concessions and their review criteria are summarized below:
Contract | Type | Revenues in 2008 | Revenue adjustment criteria | |||
060/01 | RBSE | 61,315 | Isolated revenue. Cannot be reduced until concession expires, on 07.07.2015. | |||
RBNI | 142,967 | Out of this total, R$ 41,925 are subject to rate review in 2009 and R$ 101,042 were reviewed in 2007. These revenues are reviewed every four years. | ||||
RPC | 10,826 | Isolated revenue. Cannot be reduced until concession expires, on 07.07.2015. | ||||
RCDM | 3,115 | Authorized revenues with no future reductions set. They will be reviewed every four years, though, and this criterion may change. | ||||
075/01 | RAP | 9,906 | 50% reduction as of 17.08.2016 | |||
006/08 | RAP | - | There were no revenues under this contract in 2008, since it is scheduled to enter operation in June 2009. | |||
Other revenues | 2,731 | Out of this total, R$ 624 are from transmission facility sharing contracts and are restated annually according to the IGP-M index with no further reductions. R$ 2,107 refer to the rendering of technical services to third parties and are variable annually. | ||||
Total | 230,860 | |||||
Agreements no. 075/2001 and 006/2008 provide for the possibility of 30-year extensions upon expiration. Concession agreement no. 60/2001 provides for a 20-year extension.
31. Deductions from Operating Revenues
175
Consolidated | ||||
2008 | 2007 | |||
Taxes and social contributions on revenues | ||||
VAT (ICMS) | 1,600,758 | 1,507,882 | ||
COFINS | 642,930 | 594,658 | ||
PIS/PASEP | 139,579 | 130,249 | ||
ISSQN | 1,834 | 2,571 | ||
2,385,101 | 2,235,360 | |||
Customer charges | ||||
Energy Development Account (CDE) | 189,561 | 184,294 | ||
Fuel Consumption Account (CCC) | 153,208 | 179,071 | ||
Global Reversal Reserve (RGR) | 64,877 | 61,105 | ||
Research and development and energy efficiency -R&D and EEP | 53,616 | 56,347 | ||
Other | 254 | 256 | ||
461,516 | 481,073 | |||
. | ||||
2,846,617 | 2,716,433 | |||
32. Operating Costs and Expenses
The breakdown of costs and expenses in 2008 and 2007 is shown below:
Costs of | General and | Other | ||||||||
Nature of costs and expenses | goods and/or | Sales | administrative | rev. (exp.), | Consolidated | |||||
services | expenses | expenses | net | Total | ||||||
2008 | ||||||||||
Power purchased for resale (a) | (1,615,086) | - | - | - | (1,615,086) | |||||
Charges for use of power grid (b) | (466,652) | - | - | - | (466,652) | |||||
Personnel and management (c) | (531,031) | (3,652) | (139,144) | (673,827) | ||||||
Pension and healthcare plans (Note 24) | (25,737) | (280) | (3,999) | - | (30,016) | |||||
Materials and supplies (d) | (49,175) | (2,999) | (5,300) | - | (57,474) | |||||
Raw materials and supplies for | ||||||||||
power generation | (19,274) | - | - | - | (19,274) | |||||
Natural gas and supplies for the gas business | (163,846) | - | - | - | (163,846) | |||||
Third-party services (e) | (190,269) | (22,867) | (55,112) | - | (268,248) | |||||
Depreciation and amortization | (376,789) | (13) | (22,321) | (5,620) | (404,743) | |||||
Provisions and reversals (f) | - | 5,824 | - | (104,718) | (98,894) | |||||
Other costs and expenses (g) | (35,583) | (5,782) | (31,036) | (142,039) | (214,440) | |||||
(3,473,442) | (29,769) | (256,912) | (252,377) | (4,012,500) | ||||||
Costs of | General and | Other | ||||||||
Nature of costs and expenses | goods and/or | Sales | administrative | rev. (exp.), | Consolidated | |||||
services | expenses | expenses | net | Total | ||||||
2007 | ||||||||||
Power purchased for resale (a) | (1,279,335) | - | - | - | (1,279,335) | |||||
Charges for use of power grid (b) | (446,067) | - | - | - | (446,067) | |||||
Personnel and management (c) | (463,865) | (2,263) | (183,589) | (649,717) | ||||||
Pension and healthcare plans (Note 24) | 14,169 | (99) | (219) | - | 13,851 | |||||
Materials and supplies (d) | (50,308) | (1,271) | (11,639) | - | (63,218) | |||||
Raw materials and supplies for | ||||||||||
power generation | 8,954 | - | - | - | 8,954 | |||||
Natural gas and supplies for the gas business | (132,726) | - | - | - | (132,726) | |||||
Third-party services (e) | (161,319) | (21,535) | (58,088) | - | (240,942) | |||||
Depreciation and amortization | (399,387) | (18) | (22,644) | (7,908) | (429,957) | |||||
Provisions and reversals (f) | - | 3,899 | - | (246,334) | (242,435) | |||||
Other costs and expenses (g) | (11,784) | (9,853) | (22,651) | (129,518) | (173,806) | |||||
(2,921,668) | (31,140) | (298,830) | (383,760) | (3,635,398) | ||||||
176
General and | Other | Parent | ||||
Nature of costs and expenses | administrative | rev. (exp.), | Company | |||
expenses | net | Total | ||||
2008 | ||||||
Management (c) | (5,965) | - | (5,965) | |||
Pension and healthcare plans | (140) | - | (140) | |||
Materials and supplies | (14) | - | (14) | |||
Third-party services (e) | (3,909) | - | (3,909) | |||
Depreciation and amortization | - | (63) | (63) | |||
Provisions and reversals (f) | - | (8,246) | (8,246) | |||
Other expenses | (3,337) | (31,914) | (35,251) | |||
(13,365) | (40,223) | (53,588) | ||||
General and | Other | Parent | ||||
Nature of costs and expenses | administrative | rev. (exp.), | Company | |||
expenses | net | Total | ||||
2007 | ||||||
Management (c) | (5,621) | - | (5,621) | |||
Pension and healthcare plans | (89) | - | (89) | |||
Materials and supplies | (6) | - | (6) | |||
Third-party services (e) | (5,249) | - | (5,249) | |||
Provisions and reversals (f) | - | (197,130) | (197,130) | |||
Other expenses | (1,085) | 12,910 | 11,825 | |||
(12,050) | (184,220) | (196,270) | ||||
a) Power Purchased for Resale
Consolidated | ||||
2008 | 2007 | |||
Eletrobrás - Centrais Elétricas Brasileiras S.A. (Itaipu) | 502,417 | 385,359 | ||
Furnas Centrais Elétricas S.A. - auction | 295,615 | 280,608 | ||
Companhia Hidro Elétrica do São Francisco - Chesf - auction | 283,870 | 256,302 | ||
Electric Energy Trading Chamber (CCEE) | 148,635 | 45,100 | ||
Itiquira Energética S.A. | 107,894 | 98,175 | ||
Companhia Energética de São Paulo - Cesp - auction | 104,722 | 93,949 | ||
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte - auction | 92,794 | 84,724 | ||
Program for incentive to alternative energy sources - Proinfa | 63,239 | 41,363 | ||
Dona Francisca Energética S.A. | 55,496 | 51,536 | ||
Companhia Energética de Minas Gerais - Cemig - auction | 42,877 | 37,239 | ||
Cia. Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE - auction | 32,472 | 30,946 | ||
Companhia de Interconexão Energética - Cien | - | 111,193 | ||
(-) Contract renegotiation - CIEN | - | (100,862) | ||
Power purchased for resale - passive Portion A (CVA) | (66,080) | (52,250) | ||
(-) Pasep/Cofins taxes on power purchased for resale | (172,759) | (150,082) | ||
Other utilities - auction | 123,894 | 61,337 | ||
Other utilities | - | 4,698 | ||
1,615,086 | 1,279,335 | |||
b) Charges for the Use of the Power Grid
177
Consolidated | ||||
2008 | 2007 | |||
Furnas Centrais Elétricas S.A. | 113,415 | 106,504 | ||
System Service Charges - ESS | 71,261 | 19,132 | ||
Cia Transmissora de Energia Elétrica Paulista - Cteep | 60,477 | 55,549 | ||
Companhia Hidro Elétrica do São Francisco - Chesf | 56,193 | 53,814 | ||
Centrais Elétricas do Norte do Brasil S. A. - Eletronorte | 40,518 | 36,490 | ||
Eletrosul Centrais Elétricas S.A. | 39,651 | 36,315 | ||
Companhia Energética de Minas Gerais - Cemig | 20,255 | 18,443 | ||
Novatrans Energia S.A. | 18,722 | 17,160 | ||
TSN Transmissora Nordeste Sudeste de Energia S.A. | 18,477 | 16,797 | ||
National System Operator - ONS | 16,429 | 17,484 | ||
Cia Estadual de Geração e Transmissão de Energia Elétrica S.A. - CEEE | 16,217 | 15,188 | ||
Empresa Amazonense de Transmissão de Energia - Eate | 15,344 | 14,103 | ||
ATE II Transmissora de Energia S.A. | 8,018 | 7,917 | ||
Empresa Norte de Transmissão de Energia S.A. - Ente | 7,858 | 7,474 | ||
Itumbiara Transmissora de Energia Ltda | 7,611 | 7,131 | ||
Expansion Transmissora de Energia Elétrica S.A. | 7,253 | 6,702 | ||
STN Sistema de Transmissão Nordeste S.A | 6,386 | 5,926 | ||
Empresa Transmissora de Energia Oeste Ltda - Eteo | 6,381 | 5,942 | ||
ATE Transmissora Energia S.A | 5,279 | 4,981 | ||
(-) Pasep/Cofins taxes on charges for use of power grid | (62,676) | (68,383) | ||
CVA - charges | (64,319) | 22,997 | ||
Other utilities | 57,902 | 38,401 | ||
466,652 | 446,067 | |||
c) Personnel and Management
Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Personnel | ||||||||
Wages and salaries | - | - | 476,552 | 443,906 | ||||
Social charges on payroll | - | - | 153,999 | 143,115 | ||||
- | - | 630,551 | 587,021 | |||||
Meal assistance and education allowance | - | - | 49,078 | 45,675 | ||||
Labor indemnifications (reversals) | - | - | (825) | 8,293 | ||||
Profit sharing (1) | - | - | 65,816 | 54,254 | ||||
- | - | 744,620 | 695,243 | |||||
(-) Transfers to construction in progress | - | - | (80,043) | (54,174) | ||||
- | - | 664,577 | 641,069 | |||||
Management | ||||||||
Wages and salaries | 4,806 | 4,615 | 7,705 | 7,250 | ||||
Social charges on payroll | 1,159 | 1,006 | 1,716 | 1,528 | ||||
5,965 | 5,621 | 9,421 | 8,778 | |||||
(-) Transfers to construction in progress | - | - | (171) | (130) | ||||
5,965 | 5,621 | 9,250 | 8,648 | |||||
5,965 | 5,621 | 673,827 | 649,717 | |||||
Profit sharing
Since 1996, the Company has carried out an employee profit sharing program, which is paid to the extent previously established operational and financial goals are met. The shared amount has been allocated as follows:
178
Consolidated | ||||
2008 | 2007 | |||
Copel Geração e Transmissão | 16,289 | 13,431 | ||
Copel Distribuição | 45,580 | 37,126 | ||
Copel Telecomunicações | 3,534 | 2,831 | ||
Copel Participações | - | 461 | ||
Compagas | 413 | 405 | ||
65,816 | 54,254 | |||
Voluntary Redundancy and Retirement Incentive Programs
On January 20, 2009, COPEL’s management launched two voluntary quit programs for its employees, effective as of February 2009.
The first one is the Voluntary Quit Program (Programa de Desligamento Voluntárioor PDV): This program provides special compensation to employees who have applied for Social Security retirement benefits by January 31, 2009 and who choose to resign from the Company; this compensation is 40% of the total amount deposited by COPEL in the employee’s unemployment protection fund (Fundo de Garantia do Tempo de Serviçoor FGTS) during the term of his or her employment. The application deadline is March 20, 2009, and the resignation deadline is December 15, 2009.
The second program is the Permanent Retirement Incentive Program (Programa Permanente de Incentivo à Aposentadoriaor PIA): this program provides special compensation to employees who become eligible for Social Security retirement benefits as of February 1, 2009 and then choose to resign from the Company; this compensation is 40% of the total amount deposited by COPEL in the employee’s unemployment protection fund (Fundo de Garantia do Tempo de Serviço or FGTS) during the term of his or her employment. Employees should resign within 30 days of confirmation of their Social Security retirement filing.
On April 13, 2009, the Company’s management decided that the employees who receive retirement benefits from de INSS (National Social Security Institute) will be withdrawn from the Company in a planned manner, as per the withdrawal and replacement schedule to be concluded within 30 days, and that the employees who hereafter voluntarily receive retirement benefits from INSS and do not join the PIA (Retirement Encouragement Program) will be dismissed from the Company without cause. We estimate approximately R$ 50 million in costs with this program.
d) Materials and Supplies
Consolidated | ||||
2008 | 2007 | |||
Fuel and vehicle parts | 21,565 | 24,663 | ||
Materials for the electric system | 13,573 | 12,892 | ||
Office supplies | 5,160 | 3,318 | ||
Cafeteria supplies | 5,048 | 4,315 | ||
Materials for civil construction | 3,320 | 2,920 | ||
Safety supplies | 2,211 | 1,973 | ||
Tools | 1,529 | 1,550 | ||
Lodging supplies | 997 | 1,446 | ||
Apparel and uniforms | 956 | 918 | ||
Lubricants for vehicles and automotive equipment | 937 | 872 | ||
IT equipment | 725 | 2,527 | ||
Other materials | 1,453 | 5,824 | ||
57,474 | 63,218 | |||
179
e) Third-Party Services
Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Power grid maintenance | 57,830 | 42,884 | ||||||
Auditing and technical, scientific, and adm. consulting | 3,195 | 3,333 | 25,689 | 23,232 | ||||
Postal services | 1 | 1 | 22,683 | 18,997 | ||||
Data processing and transmission | - | - | 20,032 | 16,730 | ||||
Authorized and registered agents | - | - | 19,605 | 19,563 | ||||
Administrative support services | - | - | 15,202 | 15,164 | ||||
Telephone services | - | - | 15,513 | 12,757 | ||||
Security | - | - | 12,648 | 9,996 | ||||
Travel | 167 | 146 | 11,027 | 9,866 | ||||
Meter reading and bill delivery | - | - | 7,918 | 7,350 | ||||
Personnel training | 1 | - | 7,680 | 6,321 | ||||
Civil maintenance services | - | - | 5,619 | 3,933 | ||||
Upkeep of right of way areas | - | - | 5,235 | 4,337 | ||||
Services in "green areas" | - | - | 5,069 | 5,427 | ||||
Satellite communications | - | - | 4,948 | 4,650 | ||||
Customer service | - | - | 4,365 | 5,699 | ||||
Vehicle maintenance and repairs | - | - | 4,012 | 4,006 | ||||
Cargo shipping | - | - | 2,980 | 4,521 | ||||
Legal fees | 516 | 1,080 | 1,547 | 2,202 | ||||
Advertising | 349 | 98 | 1,504 | 1,847 | ||||
Other services (reversals) | (320) | 591 | 17,142 | 21,460 | ||||
3,909 | 5,249 | 268,248 | 240,942 | |||||
f) Provisions and Reversals
Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Provision (reversals) for doubtful accounts | ||||||||
Customers and distributors (Note 5) | - | - | (3,583) | (6,275) | ||||
Third-party services and other credits | - | - | (2,241) | 2,376 | ||||
- | - | (5,824) | (3,899) | |||||
Provision (reversals) for contingencies | ||||||||
Labor | - | - | 51,786 | 45,509 | ||||
Regulatory | 9,249 | - | 34,690 | 86 | ||||
Civil and administrative law | 418 | 1 | 17,387 | 4,979 | ||||
Suppliers | - | - | 2,255 | 880 | ||||
Environmental | - | - | (163) | 7 | ||||
Customers | - | - | (1,048) | (4,147) | ||||
Cofins tax | 7,140 | 171,613 | 7,140 | 171,613 | ||||
Other taxes | (8,561) | 25,516 | (7,329) | 27,407 | ||||
8,246 | 197,130 | 104,718 | 246,334 | |||||
8,246 | 197,130 | 98,894 | 242,435 | |||||
g) Other Operating Costs and Expenses
180
Consolidated | ||||
2008 | 2007 | |||
Financial compensation for use of water resources | 86.513 | 73.938 | ||
Concession charge - ANEEL grant (1) | 45.710 | 33.497 | ||
Provision (reversal) for devaluation of tax incentive | 23.902 | (12.789) | ||
ANEEL inspection fee | 17.821 | 17.246 | ||
Leases and rents (2) | 12.799 | 10.765 | ||
Taxes | 10.930 | 7.448 | ||
Unrecoverable credits - RTE (Note 7.b) | 9.619 | 14.169 | ||
Donations - Rouanet Law and fund for the rights of children and teenagers - FIA | 7.262 | 7.176 | ||
Losses in the decommissioning and disposal of assets | 6.829 | 14.670 | ||
Insurance | 6.118 | 7.693 | ||
Own power consumption | 5.678 | 5.596 | ||
Rights of way - gas business | 3.008 | - | ||
Advertising | 3.633 | 2.384 | ||
Losses in studies and projects | - | 29.878 | ||
Recovery of costs and expenses | (39.967) | (53.196) | ||
General costs and expenses | 14.585 | 15.331 | ||
214.440 | 173.806 | |||
Concession charges – ANEEL grant
These are charges for the concession of Use of Public Property (Uso de Bem Públicoor UBP) in connection with the start of operation of the Santa Clara Hydroelectric Power Plant (Elejor), which are recorded under liabilities, proportionately to the actual number of days until the respective collection month and the expiration date of the concession.
As compensation for the use of the public property under this concession contract, ELEJOR shall pay to the Federal Government, from the 6th until the 35th year of the concession, or as long as it runs the corresponding hydropower projects, monthly installments equivalent to 1/12 of the annual proposed payment of R$ 19,000, pursuant to the Bidding Confirmation.
These installments are restated annually or at the legally applicable intervals, according to the IGP-M inflation index, starting in May 2001.
The concession amount restated monthly according to the IGP-M was, on December 31, 2008, R$ 1,137,521, of which the principal amount on the date of signature of the concession agreement was R$ 570,000.
This concession was granted at an auction on June 28, 2001, the respective contract was signed on October 25, 2001, and it expires on October 25, 2036.
Leases and rents
Consolidated | ||||
2008 | 2007 | |||
Facilities | 8,881 | 5,235 | ||
Copying machines | 3,408 | 3,447 | ||
Miscellaneous equipment | 120 | 1,523 | ||
Other | 390 | 560 | ||
12,799 | 10,765 | |||
COPEL’s estimate for expenses with property rentals in 2009 is basically the same as 2008, plus contractual monetary restatement rates, and there are no risks in connection with contract termination.(1)
181
Out of the total R$ 8,881 spent in rental properties, R$ 6,071 refer to the rental of the Km 3 Center facilities, signed by COPEL and the COPEL Foundation, and which is the most significant rental agreement held by the Company. In future periods, this amount will be restated according to a real estate appraisal of the property.
(1) Information unaudited by the independent auditors.
33. Financial Income (Losses)
Parent Company | Consolidated | |||||||
2008 | 2007 | 2008 | 2007 | |||||
Financial revenues | ||||||||
Income from financial investments | 36,313 | 21,930 | 205,046 | 144,357 | ||||
Monetary variation of CRC transferred | ||||||||
to State Government (Note 9.b) | - | - | 110,050 | 91,464 | ||||
Income from CRC transferred | ||||||||
to State Government (Note 9.b) | - | - | 79,539 | 76,062 | ||||
Penalties on overdue bills | - | - | 45,234 | 46,477 | ||||
Return on Portion A (CVA) | - | - | 11,630 | 10,553 | ||||
Interest on taxes paid in advance | 4,247 | 4,664 | 10,113 | 15,612 | ||||
Interest and commissions on loan agreements | 63,908 | 63,718 | - | - | ||||
Other financial revenues | 2,960 | 579 | 27,008 | 11,492 | ||||
107,428 | 90,891 | 488,620 | 396,017 | |||||
(-) Financial expenses | ||||||||
Debt charges | 137,235 | 152,370 | 210,136 | 230,203 | ||||
Monetary and exchange variations | 1 | 6 | 68,341 | 8,431 | ||||
PIS/PASEP-COFINS on interest on capital | 35,331 | 30,930 | 36,198 | 31,132 | ||||
Interest on R&D and EEP | - | - | 14,522 | 11,265 | ||||
Late fees, tax penalties, and other penalties | - | - | 8,977 | 3,845 | ||||
Return on Portion A (CVA) | - | - | 9,489 | 21,969 | ||||
IOF tax | 65 | 6,223 | 8,354 | 14,831 | ||||
CPMF tax | - | 2,317 | 736 | 42,684 | ||||
Other financial expenses | 1 | 1,960 | 37,504 | 11,414 | ||||
172,633 | 193,806 | 394,257 | 375,774 | |||||
(65,205) | (102,915) | 94,363 | 20,243 | |||||
34. Electric Energy Trading Chamber (CCEE)
MAE has ceased its operations, and as a consequence its activities, assets, and liabilities were absorbed on November 12, 2004 by the Electric Energy Trading Chamber (CCEE), a private corporate entity subject to ANEEL regulation and inspection.
COPEL has not recognized as actual and final the data concerning the sale of electric energy by COPEL Distribuição on the Wholesale Energy Market (MAE) in 2000, 2001, and the first quarter of 2002. These data were calculated according to criteria and amounts that take into account decisions by the Regulatory Agency which have been challenged by the Company both administratively and judicially.
The Company's claim is substantially based on the fact that it conducted power sale transactions, which should not serve as basis for calculations made by the regulatory agency, only to fulfill contractual obligations to customers on the southeastern market. The estimated amount of discrepancies in calculation was approximately R$ 1,062,000 (restated as of December 31, 2008), which has not been recognized by the Company as a supplier liability.
182
Based on the opinion of its legal counsel, management considers it possible that the final rulings in these lawsuits will be favorable to the Company.
a) AES SUL
In Notice to Agents CAM 1313/08, dated October 22, 2008, the Electric Energy Trading Chamber (CCEE) published the amounts to be settled on account of the preliminary injunction issued by the 15th Federal Court, from the Federal District Court Jurisdiction, in Lawsuit no. 2002.34.00.026509 -0, in favor of AES Sul, filed to dispute the retroactive application of ANEEL Ruling no. 288/2002. On account of that, COPEL paid R$ 26,398 on November 7, 2008.
When the amounts due for the period 2000-2002 were calculated, COPEL had already obtained a similar injunction revoking the application of ANEEL Ruling no. 288/2002 and allowing the accounting and settlement to be made by the former Wholesale Energy Market (MAE), taking into account Itaipu's share of the Southeast market. On July 30, 2008, in the ruling of interlocutory appeal no. 2002.01.00.028632 -7, this decision was upheld, maintaining in favor of COPEL the accounting published by the former MAE on March 13, 2002 (Note 32).
The ruling in Lawsuit no. 2002.34.00.026509 -0, filed by AES Sul to dispute the retroactive application of ANEEL Ruling no. 288/2002, confirms the grounds for the favorable ruling obtained previously by COPEL.
b) CIEN Contract Renegotiation(1)
To make up for the supply under the terminated agreement with CIEN, COPEL has participated in all power sale mechanisms under the applicable legislation, pursuant to MME Ordinance no. 294/2006. The shortage of offer by power generators at the auctions of power from existing facilities (A-1) in 2007 and 2008, however, has not allowed COPEL to fully make up for the lost supply under the CIEN contract, and the Company is still 188 average MW short of fully covering its demand.
In 2008, COPEL sought to make up for the CIEN supply through auctions of power from new facilities. It acquired 141 average MW at the Jirau Hydroelectric Power Plant auction, 51 average MW at the 2008 A-3 auction, and 316 average MW at the 2008 A-5 auction, which, together and according to the respective delivery schedules, will be enough to meet its growing demand and make up for the CIEN supply.
c) Current transactions at CCEE(1)
The accumulated balances of transactions carried out by the Company are:
183
Copel | ||||||||||||
Geração e | Copel | UEG | ||||||||||
Transmissão | Distribuição | Elejor | Araucária | Consolidated | ||||||||
2008 | 2007 | |||||||||||
Current assets (Note 7) | ||||||||||||
As of December 2007 | 7 | 14 | - | 105 | 126 | 7,158 | ||||||
From October to December 2008 | 9,157 | 648 | 9,805 | - | ||||||||
9,164 | 14 | 648 | 105 | 9,931 | 7,158 | |||||||
Current liabilities (Note 22) | ||||||||||||
As of December 2007 | - | - | - | - | - | 1,229 | ||||||
From October to December 2008 | - | 27,962 | 14 | - | 27,976 | - | ||||||
- | 27,962 | 14 | - | 27,976 | 1,229 | |||||||
Changes in spot-market energy amounts (CCEE) in 2008 are shown below:
Amount to | Amount to | |||||||
be settled | Settlement | Appropriation | be settled | |||||
2007 | 2008 | |||||||
Current assets | ||||||||
Up to December 2007 | 7,158 | (2,884) | (4,148) | 126 | ||||
From January to March 2008 | - | (481) | 481 | - | ||||
From April to June 2008 | - | (8,833) | 8,833 | - | ||||
From July to September 2008 | - | (21,627) | 21,627 | - | ||||
From October to December 2008 | - | (5,997) | 15,802 | 9,805 | ||||
7,158 | (39,822) | 42,595 | 9,931 | |||||
(-) Current liabilities | ||||||||
Up to December 2007 | 1,229 | (4,266) | 3,037 | - | ||||
From January to March 2008 | - | (96,301) | 96,301 | - | ||||
From April to June 2008 | - | (41,703) | 41,703 | - | ||||
From July to September 2008 | - | (53,020) | 53,020 | - | ||||
From October to December 2008 | (38,700) | 66,676 | 27,976 | |||||
1,229 | (233,990) | 260,737 | 27,976 | |||||
Net total | 5,929 | 194,168 | (218,142) | (18,045) | ||||
(1) Technical information unaudited by the independent auditors.
35. Financial Instruments
a) Overview
The use of financial instruments by the Company is restricted to Cash and cash equivalents, Bonds and Securities, Customers and Distributors, Accounts Receivable from government agencies, CRC Transferred to State Government, Loans and Financing, Debentures, and Suppliers.
b) Market Value of Financial Instruments
The market values of the Company’s main financial instruments as of December 31, 2008, which are close to their book value, are shown below:
184
Financial Instruments | Market Value | Book Value | ||||
2008 | 2008 | 2007 | ||||
Cash and chash equivalents | 1.813.576 | 1.813.576 | 1.540.871 | |||
Accounts receivable from government agencies | 171.345 | 171.345 | 303.839 | |||
CRC transferred to State Government | 1.319.903 | 1.319.903 | 1.250.362 | |||
Bonds and securities | 70.438 | 69.063 | - | |||
Loans and financing | 867.517 | 867.517 | 927.952 | |||
Debentures | 974.454 | 997.116 | 1.174.501 | |||
Eletrobrás (Itaipu) | 100.040 | 100.040 | 74.090 | |||
Petrobras (Compagas) | 36.775 | 36.775 | 21.031 | |||
On December 31, 2008, COPEL reviewed its financial investments in light of Technical Ruling CPC 14 and reclassified the amount of R$ 69,063 (R$ 70,438 at market value) in National Treasury bonds (Letras do Tesouro Nacionalor LTN) to the bonds and securities item, under long-term receivables, on account of the Company's intention and ability to only redeem these bonds at maturity. These securities have only been acquired in 2008, so they bear no impact on the 2007 statements.
The market value of the Company’s debentures was calculated according to the Unit Price quote on December 31, 2008, obtained from the National Association of the Financial Market Institutions (ANDIMA).
c) Risk Factors
Credit risk
The Company’s credit risk comprises the possibility of losses due to non-payment of power bills. This risk is closely tied to factors that are either internal or external to COPEL. To minimize this risk, the Company focuses on the management of receivables, detecting customer segments which are most likely not to pay their bills, suspending power supply, and implementing specific collection policies, tied to real estate or personal securities whenever possible.
Doubtful accounts are properly covered by provisions to offset potential losses in their realization.
Foreign currency risk
This risk comprises the possibility of losses due to fluctuations in exchange rates, which may reduce assets or increase liabilities denominated in foreign currencies.
The financial investments classified under cash and cash equivalents held by the Company its subsidiaries comprise almost entirely fixed-income securities tied to federal bonds. The Company’s foreign currency indebtedness is not significant and it is not exposed to foreign exchange derivatives. The Company monitors all relevant exchange rates.
The effect of the exchange rate variation resulting from the power purchase agreement with Eletrobrás (Itaipu) is recorded under the account for compensation of Portion A as invoices are paid and it is passed on to customers in COPEL Distribuição's annual rate reviews.
The exchange rate variation resulting from the purchase of gas from Petrobras by Compagas has a direct impact on the Company's results. Compagas continually negotiates with its customers, trying whenever possible to pass these costs on to them.
185
The Company’s exposure to foreign currency risk is shown below:
Net | ||||||
Foreign Currency | Assets | Liabilities | exposure | |||
2008 | ||||||
Collaterals and escrow deposits | 37,868 | - | 37,868 | |||
Loans and financing | - | (163,056) | (163,056) | |||
Suppliers | ||||||
Eletrobrás (Itaipu) | - | (100,040) | (100,040) | |||
Petrobras (Compagas) | - | (36,775) | (36,775) | |||
37,868 | (299,871) | (262,003) | ||||
Interest rate risk
This risk comprises the possibility of losses due to fluctuations in interest rates, which may increase the financial expenses in connection with liabilities on the market.
The Company has not engaged in transactions with derivatives to cover this risk, but it has continued to monitor interest rates, in order to assess the potential need for such transactions as a way of protecting against interest rate risks.
Accelerated maturity risk
This risk results from the potential breach of restrictive contract provisions, such as those contained in the loan, financing, and debenture agreements of the Company, which usually require that certain economic and financial indicators, which are calculated and analyzed periodically for compliance, be kept at determined levels (financial covenants).
Power shortage risk
This risk results from the possibility of periods with low levels of rainfall, since Brazil relies heavily on hydroelectric sources, which depend on the water levels in their reservoirs to operate.
A long period of drought may reduce the water levels in power plant reservoirs and result in losses due to reduced revenues if a new rationing program is implemented.
This risk is calculated by the National Power System Operator (ONS), which does not anticipate the need for any rationing programs in the next two years(1), as reported in its Power Operation Plan, published annually at www.ons.org.br.
(1) Information unaudited by the independent auditors.
Risk of non-renewal of concessions
COPEL holds concessions for power generation, transmission, and distribution services, with the expectation that they will be renewed by the Ministry of Mines and Energy with the support of ANEEL. If the extension of these concessions is not approved by the regulatory authority or even if it occurs at additional costs to the Company ("costly concession"), current profitability and activity levels may be affected.
Financial Instruments - Derivatives
Pursuant to CVM Ruling no. 550, dated October 17, 2008, COPEL reviewed its transactions and did not identify any derivative instruments.
186
36. Related-Party Transactions
The main balances of related party transactions in COPEL’s balance sheet are:
Related party | Nature of operation | Consolidated | ||||
2008 | 2007 | |||||
Current assets | . | |||||
Sanepar | Customers and distributors | 8,672 | 8,672 | |||
Government of the State of Paraná | Customers and distributors | 47,174 | 50,163 | |||
Telecommunications services | 4,520 | 8,899 | ||||
CRC (Note 9) | 47,133 | 40,509 | ||||
VAT (ICMS) paid in advance | 26,863 | 20,511 | ||||
Petrobras | Lease of the Araucária Thermal Power Plant | 7,474 | 14,223 | |||
. | ||||||
Long-term receivables | . | |||||
Sanepar | Customers and distributors | 8,672 | 17,343 | |||
Government of the State of Paraná | Customers and distributors | 26,976 | 49,717 | |||
Telecommunications services | 3,211 | 6,805 | ||||
CRC (Note 9) | 1,272,770 | 1,209,853 | ||||
VAT (ICMS) paid in advance | 62,468 | 44,535 | ||||
Petrobras | Advance payment to suppliers | 2,435 | - | |||
. | ||||||
Current liabilities | . | |||||
BNDES | Financing for investments in gas pipelines (Note 20.f) | 6,526 | 6,328 | |||
BNDESPAR | Debentures (Note 21.b) | 25,767 | 3,228 | |||
Dona Francisca Energética | Purchase of power (Note 22) | 5,128 | 4,567 | |||
Eletrobrás | Financing (Note 20.d) | 34,418 | 43,101 | |||
Eletrobrás (Itaipu) | Purchase of power (Note 22) | 100,040 | 74,090 | |||
Government of the State of Paraná | VAT (ICMS) due | 132,380 | 126,322 | |||
Petrobras | Purchase of gas for resale (Note 22) | 36,775 | 21,031 | |||
. | ||||||
Long-term liabilities | . | |||||
BNDES | Financing for investments in gas pipelines (Note 20.f) | 13,111 | 19,029 | |||
BNDESPAR | Debentures (Note 21.b) | 202,116 | 269,314 | |||
Eletrobrás | Financing (Note 20.d) | 275,243 | 272,831 | |||
Eletrobrás | ELEJOR shares to be repurchased (Note 20.e) | 26,092 | 94,709 | |||
Petrobras | Purchase of gas - renegotiation (Note 22) | 214,157 | 190,394 | |||
The main balances of related party transactions in COPEL’s statement of income are:
187
Related party | Nature of operation | Consolidated | ||||
2008 | 2007 | |||||
Gross revenues from sales and/or services | ||||||
Sanepar | Power supply | 122,205 | 123,237 | |||
Government of the State of Paraná | Power supply | 95,461 | 94,284 | |||
Telecommunications revenues | 6,000 | 6,000 | ||||
Petrobras | Lease of the Araucária Thermal Power Plant | 45,246 | 79,144 | |||
Power supply | 11,453 | 11,330 | ||||
Distribution of piped gas | 7,585 | 7,020 | ||||
Gas transport services | 3,717 | 7,120 | ||||
Power purchased for resale | ||||||
Dona Francisca Energética | Purchase of power (Note 32.a) | 55,496 | 51,536 | |||
Eletrobrás (Itaipu) | Purchase of power (Note 32.a) | 502,417 | 385,359 | |||
Natural gas and supplies for the gas business | ||||||
Petrobras | Natural gas purchased for resale | 163,748 | 132,510 | |||
Senior Management | ||||||
Officers and Directors | Wages, social charges on payroll, pension and | |||||
healthcare contributions | 9,561 | 8,868 | ||||
Other operating expenses | ||||||
COPEL Foundation | Rent of facilities | 6,847 | 4,449 | |||
Financial revenues | ||||||
Government of the State of Paraná | Income from CRC (Note 33) | 189,589 | 167,526 | |||
Income from renegotiated bills | 8,042 | 7,501 | ||||
Financial expenses | ||||||
BNDES | Charges on financing for gas pipelines (Note 20.f) | 2,781 | 2,398 | |||
BNDESPAR | Charges on Elejor debentures (Note 21.b) | 26,862 | 27,378 | |||
Eletrobrás | Charges on financing (Note 20.d) | 29,889 | 26,390 | |||
Charges on Elejor stock to be repurchased (N. 20.e) | 21,763 | 19,351 | ||||
Petrobras | Charges on gas contract renegotiation (Note 22.a) | 23,764 | 20,227 | |||
. | ||||||
The balances of transactions between the Company and its subsidiaries are shown in Note 16.
BNDES - BNDES Participações S.A. - BNDESPAR holds 26.41% of the Company’s common shares and has the right to appoint two members of the Board of Directors. BNDESPAR is a wholly-owned subsidiary of BNDES, with which the Company has financing agreements, described in Note 20.
Dona Francisca Energética S.A. - The Company became guarantor of the loans signed by its indirect affiliate Dona Francisca Energética S.A. with the National Economic and Social Development Bank (BNDES) (joint debtor), and with Bradesco (joint debtor). As of December 31, 2008, the outstanding debt was R$ 40,367 and R$ 23,391, respectively.
Eletrobrás –Eletrobrás holds 1.06% of the Company’s common shares; COPEL, in turn, has obtained financing from Eletrobrás, described in Note 20.
The amounts resulting from operating activities involving related parties are billed at the rates approved by the regulatory agency.
37. Insurance
The types of risk coverage and the term of the Company’s main insurance policies are shown below. Insurance-related information has not been audited by the independent auditors.
188
Expiration | Consolidated | |||
Policy | date | Amount insured | ||
Specified risks (a) | 24/8/2009 | 1,821,072 | ||
Fire - Company-owned and rented facilities (b) | 24/8/2009 | 301,322 | ||
Civil liability - COPEL (c) | 24/8/2009 | 5,780 | ||
Civil liability - Compagas (c) | 30/8/2009 | 3,000 | ||
Engineering risks - COPEL (d) | 24/8/2009 | dependent on each event | ||
Domestic and international transport - export and import (e) | 24/8/2009 | dependent on each event | ||
Multi-risk - Compagas (f) | 10/8/2009 | 3,953 | ||
Multi-risk - Compagas (f) | 20/9/2009 | 500 | ||
Multi-risk - Elejor (f) | 5/6/2009 | 1,424 | ||
Vehicles (g) | 20/5/2009 | market value | ||
Miscellaneous risks (h) | 24/8/2009 | 672 | ||
Operational risks - Elejor (i) | 24/7/2009 | 528,743 | ||
Operational risks - UEG Araucária (j) | 31/5/2009 | 630,778 | ||
Court guarantee (k) | 5/2/2009 | 7,200 |
a) Insurance against specified risks
This policy covers substations and power plants, listing their main equipment and respective insured amounts. It provides basic coverage against fire, lightning strikes, explosions of any kind, and additional coverage against potential electrical damage, miscellaneous risks, and risk to electronics and computers.
b) Fire insurance
This policy covers both Company-owned and rented facilities and part of their contents. It ensures payment of reparations to the insurance holder or property owner for the damages resulting from basic fire hazards, lightning strikes, and explosions of any kind, plus additional coverage against windstorms.
c) Civil liability insurance
This insurance provides coverage against liability for involuntary damages, bodily and/or material and/or moral, caused to third-parties as a result of the Company’s commercial and/or industrial operations.
d) Insurance against engineering risks - COPEL
This insurance provides coverage against risks of installation, assembly, disassembly, and testing of new equipment, particularly at substations and power plants. Policies are purchased before each risk event, according to the occurrence and need for coverage against risks of carrying out engineering services.
e) Transport insurance
This insurance provides coverage against losses and damages caused to products transported by any appropriate means within both the domestic and foreign marketplace and during import and export operations to and from foreign markets. Policies are purchased before each risk event, and are basically used to cover the transport of electrical, electronic, and telecommunications equipment.
f) Multi-risk insurance
This policy comprises the assets of the Company and provides coverage against potential damages caused by fire, lighting strikes, explosions, electrical malfunctions, risks to electronic equipment, recovery of records and documents, windstorms, smoke, and theft or aggravated larceny.
189
g) Vehicle insurance
This insurance covers the payment of reparations of damage suffered and expenses incurred as a result of risks to which Compagas’ 15 insured vehicles are subject. It provides basic coverage for the vehicles and additional and optional civil liability coverage against material, bodily, and moral damages caused to third-parties. Coverage limits for damages to third-parties are R$ 150 for material damages and R$ 300 for bodily damages, for each vehicle.
h) Insurance against miscellaneous risks - COPEL
This insurance covers losses and material damage caused to the assets listed in the policy by any accidents with an external cause, including transport risks. This type of insurance covers mobile and/or stationary electric equipment, computers, and electronics, whether in use at the Company's facilities or leased or loaned to third-parties.
i) Insurance against operational risks - Elejor
This insurance covers sudden, unforeseen, and accidental losses and material damage to ELEJOR buildings, merchandise, raw materials, unfinished and finished products, packages, machinery, tools, furniture, and other devices and facilities which are part of the insured establishment, in addition to loss of profits.
j) Insurance against operational risks – UEG Araucária
This policy provides coverage against all risks (all legally insurable risks), including machinery failure, for all the facilities of the Araucária Thermal Power Plant.
k) Court guarantee
This insurance covers the settlement of final rulings in lawsuits against Compagas. It has the same standing as a judicial bond, replacing judicial deposits in cash, attachment of assets, and bank guarantees.
This performance bond is aimed at companies which, being under contract, are bound to guarantee to its customers that such contracts, as far as pricing, deadlines and other specifications, will be performed in full. Public agencies within the direct or indirect public administration may also, pursuant to Law no. 8,666/93 and to Law no. 8,883/94, receive insurance policies as guarantee from its suppliers of goods and services, contractors, and public tender participants.
This type of insurance is designed to guarantee full performance of a contract. It does not cover damages but rather liabilities for breach of contract, and it is a form of contractual guarantee provided for by Brazilian law, which may replace bank guarantees, cash bonds, or government bonds.
38. Wholly-Owned Subsidiaries
Shown below are the financial statements, reclassified for purposes of standardization of the chart of accounts, as of December 31, 2008 and 2007, of the following subsidiaries of COPEL: COPEL Geração e Transmissão (GET), COPEL Distribuição (DIS), COPEL Telecomunicações (TEL), Compagas (COM), Elejor (ELE), UEG Araucária (UEG), COPEL Participações (PAR), COPEL Empreendimentos (CEM), Centrais Eólicas (CEO), and Dominó Holdings (DOM). In order to allow the analysis of the statement of income according to the nature of the expenses, the operating costs and expenses are presented in aggregate form.
190
ASSETS 2008 | GET | DIS | TEL | COM | ELE | UEG | CEM | CEO | DOM | |||||||||
TOTAL ASSETS | 5.380.379 | 5.483.670 | 243.934 | 260.485 | 620.177 | 670.698 | 404.461 | 9.905 | 292.375 | |||||||||
CURRENT ASSETS | 1.261.255 | 1.603.722 | 48.259 | 80.942 | 51.478 | 136.090 | 7.785 | 8.200 | 7.199 | |||||||||
Cash and cash equivalents | 920.861 | 354.286 | 29.638 | 55.892 | 136 | 117.189 | 7.598 | 8.097 | 1.424 | |||||||||
Customers and distributors, net | 220.963 | 759.209 | - | 22.450 | 15.300 | - | - | 96 | - | |||||||||
Telecommunications services, net | - | - | 10.837 | - | - | - | - | - | - | |||||||||
Dividends receivable | - | - | - | - | - | - | - | - | 5.247 | |||||||||
Construction in progress | 10.541 | 54.224 | - | - | - | - | - | - | - | |||||||||
CRC transferred to the State Government | - | 47.133 | - | - | - | - | - | - | - | |||||||||
Taxes and social contributions | 7.530 | 141.399 | 2.076 | 556 | 1.634 | 9.420 | 187 | - | 528 | |||||||||
Account for compensation of Portion A | - | 111.098 | - | - | - | - | - | - | - | |||||||||
Other regulatory assets | - | 31.511 | - | - | - | - | - | - | - | |||||||||
Collaterals and escrow deposits | 79.079 | 37.208 | - | - | 34.042 | 29 | - | - | - | |||||||||
Other receivables | 11.858 | 19.504 | 557 | 1.508 | 366 | 9.452 | - | 7 | - | |||||||||
Inventories | 10.423 | 48.150 | 5.151 | 536 | - | - | - | - | - | |||||||||
NONCURRENT ASSETS | 4.119.124 | 3.879.948 | 195.675 | 179.543 | 568.699 | 534.608 | 396.676 | 1.705 | 285.176 | |||||||||
Long-term receivables | 113.219 | 1.768.466 | 12.980 | 26.691 | 231 | - | - | - | 3 | |||||||||
Customers and distributors, net | 75 | 81.855 | - | 23.650 | - | - | - | - | - | |||||||||
Telecommunications services | - | - | 3.211 | - | - | - | - | - | - | |||||||||
CRC transferred to the State Government | - | 1.272.770 | - | - | - | - | - | - | - | |||||||||
Taxes and social contributions | 89.433 | 241.987 | 9.417 | 434 | - | - | - | - | - | |||||||||
Account for compensation of Portion A | - | 53.494 | - | - | - | - | - | - | - | |||||||||
Other regulatory assets | - | 11.085 | - | - | - | - | - | - | - | |||||||||
Collaterals and escrow deposits | - | 37.868 | - | - | - | - | - | - | - | |||||||||
Judicial deposits | 21.830 | 64.698 | 352 | 115 | 231 | - | - | - | 3 | |||||||||
Other receivables | 1.881 | 4.709 | - | 2.492 | - | - | - | - | - | |||||||||
Investments | 469.163 | 2.474 | - | 2 | - | - | 396.676 | - | 281.524 | |||||||||
Property, Plant, and Equipment | 3.473.522 | 2.081.585 | 181.587 | 150.833 | 568.340 | 534.585 | - | 1.705 | 1 | |||||||||
Intangible Assets | 63.220 | 27.423 | 1.108 | 2.017 | 128 | 23 | - | - | 3.648 | |||||||||
LIABILITIES 2008 | GET | DIS | TEL | COM | ELE | UEG | CEM | CEO | DOM | |||||||||
TOTAL LIABILITIES | 5,380,379 | 5,483,670 | 243,934 | 260,485 | 620,177 | 670,698 | 404,461 | 9,905 | 292,375 | |||||||||
CURRENT LIABILITIES | 942,890 | 1,124,075 | 21,960 | 66,455 | 75,516 | 5,901 | - | 1,228 | 5,626 | |||||||||
Loans and financing | 61,373 | 14,313 | - | 6,526 | - | - | - | - | - | |||||||||
Debentures | - | - | - | - | 25,767 | - | - | - | - | |||||||||
Suppliers | 68,791 | 415,006 | 5,287 | 38,769 | 4,597 | 3,501 | - | 2 | 4 | |||||||||
Taxes and social contributions | 128,827 | 206,295 | 1,922 | 8,842 | 1,209 | 375 | - | 1,226 | 383 | |||||||||
Dividends due | 562,618 | 141,100 | 3,655 | 10,814 | 1,538 | - | - | - | 5,237 | |||||||||
Payroll and labor provisions | 39,664 | 109,161 | 8,737 | 1,421 | 119 | 41 | - | - | 2 | |||||||||
Post-employment benefits | 5,908 | 15,106 | 1,018 | - | - | - | - | - | - | |||||||||
Account for compensation of Portion A | - | 28,327 | - | - | - | - | - | - | - | |||||||||
Other regulatory liabilities | 11,680 | 14,512 | - | - | - | - | - | - | - | |||||||||
Customer charges due | 3,548 | 39,575 | - | - | - | - | - | - | - | |||||||||
R&D and EEP | 28,352 | 93,506 | - | - | 2,652 | 1,974 | - | - | - | |||||||||
Concession charge - ANEEL grant | - | - | - | - | 38,649 | - | - | - | - | |||||||||
Other accounts payable | 32,129 | 47,174 | 1,341 | 83 | 985 | 10 | - | - | - | |||||||||
LONG-TERM LIABILITIES | 808,528 | 1,317,310 | 18,050 | 23,828 | 466,875 | 3,671 | - | - | 4 | |||||||||
Loans and financing | 246,927 | 153,326 | - | 13,111 | 26,092 | - | - | - | - | |||||||||
Debentures | - | - | - | - | 202,116 | - | - | - | - | |||||||||
Provisions for contingencies | 183,421 | 191,483 | 958 | 284 | - | 3,053 | - | - | 4 | |||||||||
Investees and subsidiaries | - | 597,227 | - | - | 238,060 | - | - | - | - | |||||||||
Suppliers | 237,807 | - | - | - | - | - | - | - | - | |||||||||
Taxes and social contributions | - | 20,869 | - | 8,041 | - | 618 | - | - | - | |||||||||
Post-employment benefits | 130,054 | 278,005 | 17,092 | 728 | - | - | - | - | - | |||||||||
Account for compensation of Portion A | - | 2,373 | - | - | - | - | - | - | - | |||||||||
Other regulatory liabilities | - | 7,257 | - | - | - | - | - | - | - | |||||||||
R&D and EEP | 5,324 | 66,755 | - | - | - | - | - | - | - | |||||||||
Other accounts payable | 4,995 | 15 | - | 1,664 | 607 | - | - | - | - | |||||||||
SHAREHOLDERS' EQUITY | 3,628,961 | 3,042,285 | 203,924 | 170,202 | 77,786 | 661,126 | 404,461 | 8,677 | 286,745 | |||||||||
Share capital | 3,400,378 | 2,171,928 | 194,755 | 85,143 | 69,848 | 707,440 | 397,983 | 3,061 | 113,368 | |||||||||
Capital reserves | - | - | - | - | 1,134 | - | 39,618 | - | - | |||||||||
Income reserves | 228,583 | 870,357 | 9,169 | 85,059 | 6,804 | - | - | 5,616 | 173,377 | |||||||||
Accrued losses | - | - | - | - | - | (46,314) | (33,140) | - | - | |||||||||
191
STATEMENT OF OPERATIONS 2008 | GET | DIS | TEL | COM | ELE | UEG | CEM | CEO | DOM | |||||||||
OPERATING REVENUES | 1.804.035 | 6.264.057 | 113.734 | 289.839 | 172.127 | 45.247 | - | 1.070 | - | |||||||||
Power sales to final customers | 165.006 | 2.804.767 | - | - | 2.538 | - | - | - | - | |||||||||
Power sales to distributors | 1.385.477 | 60.722 | - | - | 169.589 | - | - | 1.070 | - | |||||||||
Charges for the use of the power grid | 228.129 | 3.330.176 | - | - | - | - | - | - | - | |||||||||
Telecommunications revenues | - | - | 113.734 | - | - | - | - | - | - | |||||||||
Distribution of piped gas | - | - | - | 286.120 | - | - | - | - | - | |||||||||
Other operating revenues | 25.423 | 68.392 | - | 3.719 | - | 45.247 | - | - | - | |||||||||
DEDUCTIONS FROM OPERATING REVENUES | (259.947) | (2.498.139) | (19.435) | (56.103) | (8.602) | (4.185) | - | (206) | - | |||||||||
NET OPERATING REVENUES | 1.544.088 | 3.765.918 | 94.299 | 233.736 | 163.525 | 41.062 | - | 864 | - | |||||||||
OPERATING COSTS AND EXPENSES | (738.654) | (3.173.767) | (77.569) | (190.381) | (93.464) | (54.327) | - | 1.701 | (2.149) | |||||||||
Power purchased for resale | (70.065) | (1.789.931) | - | - | (815) | - | - | - | - | |||||||||
Charges for the use of the power grid | (163.618) | (366.561) | - | - | (14.599) | (7.081) | - | - | - | |||||||||
Personnel and management | (160.350) | (462.382) | (32.570) | (7.641) | (1.574) | (402) | - | - | (16) | |||||||||
Pension and healthcare plans | (415) | (27.464) | (1.627) | 37 | - | - | - | - | - | |||||||||
Materials and supplies | (10.281) | (44.466) | (1.659) | (542) | (215) | (67) | - | (228) | (1) | |||||||||
Raw materials and supplies for generation | (19.577) | - | - | - | - | (2.230) | - | - | - | |||||||||
Natural gas and supplies for gas business | - | - | - | (163.846) | - | - | - | - | - | |||||||||
Third-party services | (59.533) | (207.434) | (12.295) | (4.454) | (7.573) | (13.159) | - | (478) | (1.373) | |||||||||
Depreciation and amortization | (135.704) | (176.081) | (29.731) | (9.364) | (16.483) | (31.722) | - | (209) | (730) | |||||||||
Provisions (reversals) for contingencies | (20.919) | (75.316) | 3.081 | (116) | - | - | - | 2.625 | (3) | |||||||||
Concession charge - ANEEL grant | - | - | - | - | (45.710) | - | - | - | - | |||||||||
Other operating costs and expenses | (98.192) | (24.132) | (2.768) | (4.455) | (6.495) | 334 | - | (9) | (26) | |||||||||
OTHER REVENUES (EXPENSES), NET | (952) | (7.034) | 471 | 53 | - | - | - | - | - | |||||||||
RESULT OF OPERATIONS | 804.482 | 585.117 | 17.201 | 43.408 | 70.061 | (13.265) | - | 2.565 | (2.149) | |||||||||
Financial income (losses) | 23.956 | 146.909 | 3.603 | 5.924 | (60.464) | 12.471 | 816 | 3.110 | (359) | |||||||||
Result of equity in investees | 5.759 | - | - | - | - | - | (655) | - | 23.158 | |||||||||
OPERATING INCOME (LOSSES) | 834.197 | 732.026 | 20.804 | 49.332 | 9.597 | (794) | 161 | 5.675 | 20.650 | |||||||||
Provision for income tax and s. contribution | (205.537) | (100.483) | (5.237) | (15.791) | (3.121) | - | (170) | (1.117) | (6) | |||||||||
Deferred income tax and social contribution | (5.483) | (87.169) | (1.723) | (1.234) | - | - | - | - | - | |||||||||
INCOME (LOSSES) FOR THE PERIOD | 623.177 | 544.374 | 13.844 | 32.307 | 6.476 | (794) | (9) | 4.558 | 20.644 | |||||||||
ASSETS | GET | DIS | TEL | COM | ELE | UEG | PAR | CEM | CEO | |||||||||
2007 | ||||||||||||||||||
TOTAL ASSETS | 4,814,581 | 5,157,255 | 228,421 | 249,065 | 694,923 | 678,960 | 1,245,777 | 439,377 | 4,123 | |||||||||
CURRENT ASSETS | 1,177,056 | 1,583,595 | 22,568 | 88,945 | 111,140 | 120,980 | 65,897 | 42,046 | 2,209 | |||||||||
Cash and cash equivalents | 873,192 | 314,549 | 7,204 | 70,656 | 84,396 | 80,540 | 45,811 | 7,818 | 519 | |||||||||
Customers and distributors, net | 200,181 | 833,179 | - | 15,980 | 13,686 | 105 | - | - | 1,676 | |||||||||
Telecommunications services, net | - | - | 10,850 | - | - | - | - | - | - | |||||||||
Dividends receivable | - | - | - | - | - | - | 11,262 | - | - | |||||||||
Construction in progress | 7,448 | 43,895 | - | - | - | - | - | - | - | |||||||||
CRC transferred to the State Government | 40,509 | - | - | - | - | - | - | - | ||||||||||
Taxes and social contributions | 13,946 | 167,393 | 1,475 | 1,231 | 2,425 | 7,114 | 8,650 | 2 | - | |||||||||
Account for compensation of Portion A | - | 67,614 | - | - | - | - | - | - | - | |||||||||
Other regulatory assets | - | 17,186 | - | - | - | - | - | - | - | |||||||||
Collaterals and escrow deposits | 60,447 | 24,244 | - | 39 | 10,131 | 13,267 | - | 34,226 | - | |||||||||
Lease of the Araucária T.P.P. | - | - | - | - | - | 14,223 | - | - | - | |||||||||
Other receivables | 17,303 | 30,353 | 571 | 524 | 502 | 5,731 | 174 | - | 14 | |||||||||
Inventories | 4,539 | 44,673 | 2,468 | 515 | - | - | - | - | - | |||||||||
NONCURRENT ASSETS | 3,637,525 | 3,573,660 | 205,853 | 160,120 | 583,783 | 557,980 | 1,179,880 | 397,331 | 1,914 | |||||||||
Long-term receivables | 114,605 | 1,673,676 | 17,980 | 23,935 | 137 | - | 229,338 | - | - | |||||||||
Customers and distributors, net | 6,527 | 127,121 | - | 21,239 | - | - | - | - | - | |||||||||
Telecommunications services | - | - | 7,251 | - | - | - | - | - | - | |||||||||
CRC transferred to the State Government | - | 1,209,853 | - | - | - | - | - | - | - | |||||||||
Taxes and social contributions | 79,761 | 219,205 | 10,360 | 2,629 | - | - | 11,985 | - | - | |||||||||
Account for compensation of Portion A | - | 25,478 | - | - | - | - | - | - | - | |||||||||
Other regulatory assets | - | 5,729 | - | - | - | - | - | - | - | |||||||||
Collaterals and escrow deposits | - | 22,423 | - | - | - | - | - | - | - | |||||||||
Judicial deposits | 27,368 | 58,186 | 369 | 5 | 137 | - | 545 | - | - | |||||||||
Investees, subsidiaries, and parent company | - | - | - | - | - | - | 215,050 | - | - | |||||||||
Other receivables | 949 | 5,681 | - | 62 | - | - | 1,758 | - | - | |||||||||
Investments | 10,901 | 2,428 | - | 2 | - | - | 875,732 | 397,331 | - | |||||||||
Property, Plant, and Equipment | 3,501,404 | 1,870,602 | 186,175 | 133,801 | 583,518 | 557,973 | 104 | - | 1,914 | |||||||||
Intangible Assets | 10,615 | 26,954 | 1,698 | 2,382 | 128 | 7 | 74,706 | - | - | |||||||||
192
LIABILITIES 2007 | GET | DIS | TEL | COM | ELE | UEG | PAR | CEM. | CEO | |||||||||
PASSIVO TOTAL | 4.814.581 | 5.157.255 | 228.421 | 249.065 | 694.923 | 678.960 | 1.245.777 | 439.377 | 4.123 | |||||||||
CURRENT LIABILITIES | 860.461 | 1.213.092 | 14.655 | 63.340 | 44.871 | 11.594 | 18.724 | 61 | 4 | |||||||||
Loans and financing | 57.964 | 15.771 | - | 6.328 | - | - | - | - | - | |||||||||
Debentures | - | - | - | - | 3.228 | - | - | - | - | |||||||||
Suppliers | 42.795 | 321.545 | 3.673 | 22.105 | 9.626 | 9.615 | 3 | - | 1 | |||||||||
Taxes and social contributions | 132.193 | 171.217 | 1.257 | 17.666 | 1.132 | 3 | 75 | 61 | 3 | |||||||||
Dividends due | 504.687 | 178.319 | - | 15.922 | 894 | - | 17.237 | - | - | |||||||||
Payroll and labor provisions | 36.217 | 99.788 | 7.445 | 1.167 | 74 | 32 | 1.234 | - | - | |||||||||
Post-employment benefits | 8.748 | 31.569 | 1.783 | - | - | - | 163 | - | - | |||||||||
Account for compensation of Portion A | - | 143.436 | - | - | - | - | - | - | - | |||||||||
Other regulatory liabilities | 24.711 | 21.765 | - | - | - | - | - | - | - | |||||||||
Customer charges due | 3.970 | 28.752 | - | - | - | - | - | - | - | |||||||||
R&D and EEP | 31.320 | 149.987 | - | - | 2.172 | 1.801 | - | - | - | |||||||||
Concession charge - ANEEL grant | - | - | - | - | 27.084 | - | - | - | - | |||||||||
Other accounts payable | 17.856 | 50.943 | 497 | 152 | 661 | 143 | 12 | - | - | |||||||||
NON-CURRENT LIABILITIES | 809.678 | 1.280.252 | 20.031 | 27.938 | 532.247 | 5.148 | 251 | 34.847 | - | |||||||||
Loans and financing | 280.377 | 111.553 | - | 19.029 | 49.978 | - | - | - | - | |||||||||
Debentures | - | - | - | - | 269.314 | - | - | - | - | |||||||||
Provisions for contingencies | 155.131 | 147.606 | 1.903 | 160 | - | 3.053 | - | - | - | |||||||||
Investees and subsidiaries | - | 683.052 | - | - | 212.955 | 2.095 | - | 34.847 | - | |||||||||
Suppliers | 211.633 | - | - | - | - | - | - | - | - | |||||||||
Taxes and social contributions | 53 | 12.043 | - | 7.221 | - | - | - | - | - | |||||||||
Post-employment benefits | 144.084 | 290.421 | 18.128 | 1.528 | - | - | 251 | - | - | |||||||||
Account for compensation of Portion A | - | 22.330 | - | - | - | - | - | - | - | |||||||||
Other regulatory liabilities | 11.680 | 7.255 | - | - | - | - | - | - | - | |||||||||
Other accounts payable | 6.720 | 5.992 | - | - | - | - | - | - | - | |||||||||
SHAREHOLDERS' EQUITY | 3.144.442 | 2.663.911 | 193.735 | 157.787 | 117.805 | 662.218 | 1.226.802 | 404.469 | 4.119 | |||||||||
Share capital | 2.947.018 | 2.171.928 | 194.054 | 71.365 | 113.800 | 707.440 | 1.098.500 | 397.983 | 3.061 | |||||||||
Capital reserves | - | - | 701 | - | 1.134 | - | - | 39.618 | - | |||||||||
Income reserves | 197.424 | 491.983 | - | 86.422 | 3.767 | - | 128.302 | - | 1.058 | |||||||||
Accrued losses | - | - | (1.020) | - | (896) | (45.222) | - | (33.132) | - | |||||||||
STATEMENT OF OPERATIONS 2007 | GET | DIS | TEL | COM | ELE | UEG | PAR | C.EMP. | CEO | |||||||||
OPERATING REVENUES | 1.502.310 | 5.929.575 | 92.799 | 273.119 | 158.038 | 164.913 | - | - | 504 | |||||||||
Power sales to final customers | 164.935 | 2.582.762 | - | - | 3.986 | 113 | - | - | - | |||||||||
Power sales to distributors | 1.275.980 | 76.221 | - | - | 154.052 | 85.656 | - | - | 504 | |||||||||
Charges for the use of the power grid | 18.122 | 3.207.601 | - | - | - | - | - | - | - | |||||||||
Telecommunications revenues | - | - | 92.799 | - | - | - | - | - | - | |||||||||
Distribution of piped gas | - | - | - | 265.954 | - | - | - | - | - | |||||||||
Other operating revenues | 43.273 | 62.991 | - | 7.165 | - | 79.144 | - | - | - | |||||||||
DEDUCTIONS FROM OPERATING REVENUE | (220.873) | (2.377.640) | (14.148) | (50.507) | (7.989) | (10.459) | - | - | (18) | |||||||||
NET OPERATING REVENUES | 1.281.437 | 3.551.935 | 78.651 | 222.612 | 150.049 | 154.454 | - | - | 486 | |||||||||
OPERATING COSTS AND EXPENSES | (549.573) | (2.827.861) | (75.279) | (153.524) | (81.948) | (133.735) | (13.677) | (15) | (276) | |||||||||
Power purchased for resale | (55.490) | (1.412.068) | - | - | (1.678) | (34.917) | - | - | - | |||||||||
Charges for the use of the power grid | (169.278) | (548.598) | - | - | (15.062) | (10.205) | - | - | - | |||||||||
Personnel and management | (111.744) | (416.529) | (28.716) | (6.001) | (1.506) | (419) | (4.792) | - | - | |||||||||
Pension and healthcare plans | 16.679 | (1.646) | (226) | (811) | - | - | (301) | - | - | |||||||||
Materials and supplies | (8.701) | (48.324) | (950) | (425) | (81) | (35) | (5) | - | (180) | |||||||||
Raw materials and supplies for generation | 10.673 | - | - | - | - | (25.419) | - | - | - | |||||||||
Natural gas and supplies for gas business | - | - | - | (132.726) | - | - | - | - | - | |||||||||
Third-party services | (48.125) | (185.054) | (11.263) | (3.450) | (6.608) | (10.813) | (312) | (15) | (10) | |||||||||
Depreciation and amortization | (106.033) | (171.380) | (28.243) | (7.314) | (16.310) | (49.427) | (7.939) | - | (69) | |||||||||
Provisions (reversals) for contingencies | (2.209) | (33.877) | (3.503) | (429) | - | - | - | - | - | |||||||||
Concession charge - ANEEL grant | - | - | - | - | (33.497) | - | - | - | - | |||||||||
Other operating costs and expenses | (75.345) | (10.385) | (2.378) | (2.368) | (7.206) | (2.500) | (328) | - | (17) | |||||||||
OTHER REVENUES (EXPENSES), NET | (29.805) | (11.469) | (81) | - | - | 1 | 376 | - | - | |||||||||
RESULT OF OPERATIONS | 702.059 | 712.605 | 3.291 | 69.088 | 68.101 | 20.720 | (13.301) | (15) | 210 | |||||||||
Financial income (losses) | 30.452 | 108.004 | 1.615 | 3.083 | (60.117) | 6.584 | 27.646 | (649) | 19 | |||||||||
Result of equity in investees | 148 | - | - | - | - | - | 51.598 | 12.527 | - | |||||||||
OPERATING INCOME (LOSSES) | 732.659 | 820.609 | 4.906 | 72.171 | 7.984 | 27.304 | 65.943 | 11.863 | 229 | |||||||||
Provision for income tax and s. contribution | (182.575) | (246.293) | (3.140) | (24.284) | (1.873) | (11.100) | (2.373) | - | (17) | |||||||||
Deferred income tax and social contribution | (7.633) | 7.144 | 1.522 | - | - | 4.675 | 2.537 | - | - | |||||||||
INCOME FOR THE PERIOD | 542.451 | 581.460 | 3.288 | 47.887 | 6.111 | 20.879 | 66.107 | 11.863 | 212 | |||||||||
39. Segment Information
In order to allow the analysis of the statement of operations according to the nature of the expenses, the operating costs and expenses are presented in aggregate form. These statements feature the results of operations of 2008 and 2007, not taking into account the equity in the results of subsidiaries.
193
STATEMENT OF OPERATIONS | Subtractions and non controlling interest | |||||||||||||||||||
GET | DIS | TEL | COM | ELE | UEG | Other | COPEL | Consolidated | ||||||||||||
2008 | ||||||||||||||||||||
OPERATING REVENUES | 1.804.035 | 6.264.057 | 113.734 | 289.839 | 172.127 | 45.247 | 1.070 | - | (384.714) | 8.305.395 | ||||||||||
Power sales to final customers | 165.006 | 2.804.767 | - | - | 2.538 | - | - | - | (3.431) | 2.968.880 | ||||||||||
Power sales to distributors | 1.385.477 | 60.722 | - | - | 169.589 | - | 1.070 | - | (253.764) | 1.363.094 | ||||||||||
Charges for the use of the power grid | 228.129 | 3.330.176 | - | - | - | - | - | - | (85.207) | 3.473.098 | ||||||||||
Telecommunications revenues | - | - | 113.734 | - | - | - | - | - | (33.130) | 80.604 | ||||||||||
Distribution of piped gas | - | - | - | 286.120 | - | - | - | - | (2.411) | 283.709 | ||||||||||
Leases and rents | 891 | 50.245 | - | - | - | 45.246 | - | - | (1.067) | 95.315 | ||||||||||
Other operating revenues | 24.532 | 18.147 | - | 3.719 | - | 1 | - | - | (5.704) | 40.695 | ||||||||||
DEDUCTIONS FROM OPERATING REVENUES | (259.947) | (2.498.139) | (19.435) | (56.103) | (8.602) | (4.185) | (206) | - | - | (2.846.617) | ||||||||||
NET OPERATING REVENUES | 1.544.088 | 3.765.918 | 94.299 | 233.736 | 163.525 | 41.062 | 864 | - | (384.714) | 5.458.778 | ||||||||||
OPERATING COSTS AND EXPENSES | (738.654) | (3.173.767) | (77.569) | (190.381) | (93.464) | (54.327) | (8.894) | (29.713) | 384.792 | (3.981.977) | ||||||||||
Power purchased for resale | (70.065) | (1.789.931) | - | - | (815) | - | - | - | 245.725 | (1.615.086) | ||||||||||
Charges for the use of the power grid | (163.618) | (366.561) | - | - | (14.599) | (7.081) | - | - | 85.207 | (466.652) | ||||||||||
Personnel and management | (160.350) | (462.382) | (32.570) | (7.641) | (1.574) | (402) | (2.943) | (5.965) | - | (673.827) | ||||||||||
Pension and healthcare plans | (415) | (27.464) | (1.627) | 37 | - | - | (407) | (140) | - | (30.016) | ||||||||||
Materials and supplies | (10.281) | (44.466) | (1.659) | (542) | (215) | (67) | (230) | (14) | - | (57.474) | ||||||||||
Raw materials and supplies - generation | (19.577) | - | - | - | - | (2.230) | - | - | 2.533 | (19.274) | ||||||||||
Natural gas and supplies - gas business | - | - | - | (163.846) | - | - | - | - | - | (163.846) | ||||||||||
Third-party services | (59.533) | (207.434) | (12.295) | (4.454) | (7.573) | (13.159) | (2.113) | (3.909) | 42.222 | (268.248) | ||||||||||
Depreciation and amortization | (135.704) | (176.081) | (29.731) | (9.364) | (16.483) | (31.722) | (5.595) | (63) | - | (404.743) | ||||||||||
Provisions and reversals | (20.919) | (75.316) | 3.081 | (116) | - | - | 2.622 | (8.246) | - | (98.894) | ||||||||||
Concession charge - ANEEL grant | - | - | - | - | (45.710) | - | - | - | - | (45.710) | ||||||||||
Compensation for use of water resources | (81.493) | - | - | - | (5.020) | - | - | - | - | (86.513) | ||||||||||
Other operating costs and expenses | (16.699) | (24.132) | (2.768) | (4.455) | (1.475) | 334 | (228) | (11.376) | 9.105 | (51.694) | ||||||||||
OTHER REVENUES (EXPENSES), NET | (952) | (7.034) | 471 | 53 | - | - | 814 | (23.875) | - | (30.523) | ||||||||||
RESULT OF OPERATIONS | 804.482 | 585.117 | 17.201 | 43.408 | 70.061 | (13.265) | (7.216) | (53.588) | 78 | 1.446.278 | ||||||||||
Financial income (losses) | 23.956 | 146.909 | 3.603 | 5.924 | (60.464) | 12.471 | 27.247 | (65.205) | (78) | 94.363 | ||||||||||
Result of equity in investees | - | - | - | - | - | - | 12.687 | 1.631 | - | 14.318 | ||||||||||
OPERATING INCOME (LOSSES) | 828.438 | 732.026 | 20.804 | 49.332 | 9.597 | (794) | 32.718 | (117.162) | - | 1.554.959 | ||||||||||
Provision for income tax and s. contribution | (205.537) | (100.483) | (5.237) | (15.791) | (3.121) | - | (3.523) | (18.372) | - | (352.064) | ||||||||||
Deferred income tax and social contribution | (5.483) | (87.169) | (1.723) | (1.234) | - | - | 1.522 | (11.995) | - | (106.082) | ||||||||||
Minority interests | - | - | - | - | - | - | - | - | (18.069) | (18.069) | ||||||||||
INCOME (LOSSES) FOR THE PERIOD | 617.418 | 544.374 | 13.844 | 32.307 | 6.476 | (794) | 30.717 | (147.529) | (18.069) | 1.078.744 | ||||||||||
STATEMENT OF OPERATIONS | Subtractions and noncontrolling interest | |||||||||||||||||||||
GET | TRA | DIS | TEL | COM | ELE | UEG | Other | COPEL | Consolidated | |||||||||||||
2007 | ||||||||||||||||||||||
OPERATING REVENUES | 1.502.310 | 390.991 | 5.929.575 | 92.799 | 273.119 | 158.038 | 164.913 | 504 | - | (592.155) | 7.920.094 | |||||||||||
Power sales to final customers | 164.935 | - | 2.582.762 | - | - | 3.986 | 113 | - | - | (4.116) | 2.747.680 | |||||||||||
Power sales to distributors | 1.275.980 | - | 76.221 | - | - | 154.052 | 85.656 | 504 | - | (224.818) | 1.367.595 | |||||||||||
Charges for the use of the power grid | 18.122 | 387.753 | 3.207.601 | - | - | - | - | - | - | (296.513) | 3.316.963 | |||||||||||
Telecommunications revenues | - | - | - | 92.799 | - | - | - | - | - | (28.906) | 63.893 | |||||||||||
Distribution of piped gas | - | - | - | - | 265.954 | - | - | - | - | (21.874) | 244.080 | |||||||||||
Leases and rents | 245 | 1.168 | 46.219 | - | - | - | 79.144 | - | - | (1.009) | 125.767 | |||||||||||
Other operating revenues | 43.028 | 2.070 | 16.772 | - | 7.165 | - | - | - | - | (14.919) | 54.116 | |||||||||||
DEDUCTIONS FROM OPERATING REVENU | (220.873) | (36.660) | (2.377.640) | (14.148) | (50.507) | (7.989) | (10.459) | (18) | - | 1.861 | (2.716.433) | |||||||||||
NET OPERATING REVENUES | 1.281.437 | 354.331 | 3.551.935 | 78.651 | 222.612 | 150.049 | 154.454 | 486 | - | (590.294) | 5.203.661 | |||||||||||
OPERATING COSTS AND EXPENSES | (549.573) | (149.515) | (2.827.861) | (75.279) | (153.524) | (81.948) | (133.735) | (13.968) | (209.180) | 590.294 | (3.604.289) | |||||||||||
Power purchased for resale | (55.490) | - | (1.412.068) | - | - | (1.678) | (34.917) | - | - | 224.818 | (1.279.335) | |||||||||||
Charges for the use of the power grid | (169.278) | - | (548.598) | - | - | (15.062) | (10.205) | - | - | 297.076 | (446.067) | |||||||||||
Personnel and management | (111.744) | (74.606) | (416.529) | (28.716) | (6.001) | (1.506) | (419) | (4.792) | (5.621) | 217 | (649.717) | |||||||||||
Pension and healthcare plans | 16.679 | 245 | (1.646) | (226) | (811) | - | - | (301) | (89) | - | 13.851 | |||||||||||
Materials and supplies | (8.701) | (4.665) | (48.324) | (950) | (425) | (81) | (35) | (185) | (6) | 154 | (63.218) | |||||||||||
Raw materials and supplies - generation | 10.673 | - | - | - | - | - | (25.419) | - | - | 23.700 | 8.954 | |||||||||||
Natural gas and supplies - gas business | - | - | - | - | (132.726) | - | - | - | - | - | (132.726) | |||||||||||
Third-party services | (48.125) | (15.632) | (185.054) | (11.263) | (3.450) | (6.608) | (10.813) | (337) | (5.249) | 45.589 | (240.942) | |||||||||||
Depreciation and amortization | (106.033) | (43.242) | (171.380) | (28.243) | (7.314) | (16.310) | (49.427) | (8.008) | - | - | (429.957) | |||||||||||
Provisions and reversals | (2.209) | (5.287) | (33.877) | (3.503) | (429) | - | - | - | (197.130) | - | (242.435) | |||||||||||
Concession charge - ANEEL grant | - | - | - | - | - | (33.497) | - | - | - | - | (33.497) | |||||||||||
Compensation for use of water resources | (69.472) | - | - | - | - | (4.466) | - | - | - | - | (73.938) | |||||||||||
Other operating costs and expenses | (5.873) | (6.328) | (10.385) | (2.378) | (2.368) | (2.740) | (2.500) | (345) | (1.085) | (1.260) | (35.262) | |||||||||||
OTHER REVENUES (EXPENSES), NET | (29.805) | (2.659) | (11.469) | (81) | - | - | 1 | 376 | 12.910 | (382) | (31.109) | |||||||||||
RESULT OF OPERATIONS | 702.059 | 202.157 | 712.605 | 3.291 | 69.088 | 68.101 | 20.720 | (13.106) | (196.270) | (382) | 1.568.263 | |||||||||||
Financial income (losses) | 30.452 | 6.523 | 108.004 | 1.615 | 3.083 | (60.117) | 6.584 | 27.016 | (102.915) | (2) | 20.243 | |||||||||||
Result of equity in investees | - | - | - | - | - | - | - | 8.795 | 714 | - | 9.509 | |||||||||||
OPERATING INCOME (LOSSES) | 732.511 | 208.680 | 820.609 | 4.906 | 72.171 | 7.984 | 27.304 | 22.705 | (298.471) | (384) | 1.598.015 | |||||||||||
Provision for income tax and s. contribution | (182.575) | (61.894) | (246.293) | (3.140) | (24.284) | (1.873) | (11.100) | (2.390) | (2.619) | - | (536.168) | |||||||||||
Deferred income tax and social contribution | (7.633) | 6.030 | 7.144 | 1.522 | - | - | 4.675 | 2.537 | 61.578 | - | 75.853 | |||||||||||
Minority controlling interest | - | - | - | - | - | - | - | - | - | (31.090) | (31.090) | |||||||||||
INCOME (LOSSES) FOR THE PERIOD | 542.303 | 152.816 | 581.460 | 3.288 | 47.887 | 6.111 | 20.879 | 22.852 | (239.512) | (31.474) | 1.106.610 | |||||||||||
194
REPORT BY THE INDEPENDENT AUDITORS
To the
Shareholders, Directors, and Officers of
Companhia Paranaense de Energia - COPEL
Curitiba - PR
1. We have reviewed the balance sheets of Companhia Paranaense de Energia – COPEL (Parent Company and consolidated) as of December 31, 2008 and 2007 and the corresponding statements of income, of changes in shareholders' equity (Parent Company), of cash flows, and of added value for the fiscal years ended on those dates, prepared under the responsibility of the Company’s senior management. Our duty is to issue an opinion about these financial statements.
2. Our reviews were carried out in compliance with the audit rules applicable in Brazil and comprised: (a) planning, considering the importance of balances, the volume of transactions, and the accounting and internal control systems of the Company and of its subsidiaries, (b) the verification, based on testing, of the evidence and of the records on which the disclosed accounting amounts and information are based, and (c) the evaluation of the most representative accounting practices and estimates adopted by the management of the Company and of its subsidiaries, as well as the presentation of the financial statements as a whole.
3. We believe the financial statements discussed in paragraph 1 adequately convey, in all material aspects, the balance sheet and financial position of Companhia Paranaense de Energia – COPEL (Parent Company and consolidated) as of December 31, 2008 and 2007, and the results of operations, the changes in shareholders’ equity (Parent Company), the cash flows, and the added values in connection with the operations conducted in the fiscal years ended on those dates, in compliance with the accounting practices adopted in Brazil.
4. As mentioned in note 4, due to changes in the accounting practices adopted in Brazil during 2008, the financial statements for the year ended on December 31, 2007, presented for purposes of comparison, have been reclassified and are being republished. We have not identified any adjustments which could have an impact on the Company’s income and on its shareholders’ equity as of December 31, 2007.
Curitiba, March 18, 2009.
DELOITTE TOUCHE TOHMATSU | Iara Pasian | |
Independent Auditors | Accountant | |
CRC nº 2 SP 011609/O-8 F-PR | CRC nº 1 SP 121517/O-3 S/PR |
195
SUMMARY OF THE ANNUAL REPORT BY THE AUDIT COMMITTEE
The Audit Committee of Companhia Paranaense de Enegia – COPEL, pursuant to its annual schedule of meetings, previously discussed and approved by its members, held regular bimonthly meetings; quarterly meetings with the Fiscal Council, to review the Company’s financial statements; and monthly meetings with the Company’s executive officers, independent auditors, and the internal audit team in order to make inquiries and to review other matters within the scope of its powers.
In 2008, the Committee focused on evaluating the internal control and risk management systems; on evaluating the work of the external auditors (Deloitte Touche Tohmatsu) and its results as far as the Company’s financial statements and reports; on analyzing the aspects concerning the preparation process for snapshot statements and balance sheets, notes, and financial reports published in conjunction with the consolidated financial statements; on reviewing the relevant practices used by COPEL for the preparation of its financial statements; and on analyzing and keeping track of the work done by the Internal Audit team, in order to improve its performance.
The regulatory duties of the Committee included, among other activities:
a) analysis and report on the balance sheet for 2007;b) evaluation and approval of the results and the financial information for the four quarters of 2008;c) monitoring of the progress of the Company's budget;d)review of the financial statements and how they are prepared and presented;e) monitoring and approval of the hiring of an independent auditing company;f) monitoring and supervision of the work conducted by the Company's Internal Audit Team;g) monitoring of the review of alternative accounting treatment methods for accounting and financial information;h) monitoring of the review of the Company’s risk assessment and management policies;i)evaluation of the main activities by the Chief Executive Office, the Chief Power Generation and Transmission and Telecommunications Office, the Chief Management Office, the Chief Power Distribution Office, and the Chief Finance, Investor Relations, and Corporate Partnerhips Office;j) analysis, approval, and monitoring of the Internal Audit Team's planning for 2008;k) monitoring of complaints submitted to the Company’s Ombudsman’s Office through the Confidential Communication Channel, as well as monitoring of the actions taken by the Ombudsman’s Office as regards the automation and advertising of this channel;l)approval of the Company’s 20-F Form;m)monitoring of the Asset Management System (Sistema de Gestão de Ativosor SIGA), created to monitor the management of the companies in which COPEL holds interests;n) analysis and monitoring of the reports prepared by the Internal Audit Team;o) monitoring of the work conducted by the Independent Auditors;p)verification of the recommendations made by COPEL’s independent auditing company and by the Audit Committee itself;q)monitoring of the continuity of the work under the Integrated Corporate Risk Management (Gestão Integrada de Riscos Corporativosor GIRC) program;r)certification of the Affidavit of Independence of the external auditors;s) evaluation of the Auditing Plan and report on the activities by Deloitte Touche Tohmatsu in 2008, in light of Law no. 11,638/07; t) monitoring the results of the evaluations of the process to improve internal controls in compliance with the requirements of the Sarbanes-Oxley Act, submitted by the Independent Auditors, and also through a self-evaluation questionnaire filled out by the members of the Audit Committee.
196
Based on the review by the Committee, the procedures and actions adopted to monitor the control and risk management systems, in all material aspects, are well established and properly organized, and no material exceptions that could affect their effectiveness were detected. The Committee only detected minor exceptions, which are being addressed, in order to improve the quality of the financial information, to eliminate risks, and to strengthen the internal control system as a whole.
Based on these reviews and on information provided by Deloitte itself, the Committee attests to the objectivity and independence of the Independent Auditors, since it has not detected any situations which might compromise them. COPEL’s Internal Audit structure, the qualifications of its technical and managerial staff, and the results of their work have also been evaluated as adequate by the Committee.
There has been no record of any reports of violation of rules, lack of controls, actions or omissions by COPEL’s senior management which indicated the existence or evidence of fraud, flaws, or errors which jeopardized the continuity of COPEL or the credibility of its financial statements.
In light of the existing internal control systems, of the range and effectiveness of the work conducted by the independent auditors, and of their opinion, the Audit Committee believes the financial statements as of December 31, 2008 adequately convey the balance sheet and financial position of Companhia Paranaense de Energia – COPEL, in compliance with the accounting practices adopted in Brazil, with the Brazilian Corporate Law, with the rules issued by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliáriosor CVM), and with the regulations issued by the National Electric Energy Agency (Agência Nacional de Energia Elétricaor ANEEL) and by the National Telecommunications Agency (Agência Nacional de Telecomunicaçõesor ANATEL), and recommends to the Board of Directors that these statements be approved.
Curitiba, March 18, 2009
Laurita Costa Rosa
Chairwoman
Jorge Michel Lepeltier
Rogério de Paula Quadros
197
REPORT BY THE FISCAL COUNCIL ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED ON DECEMBER 31, 2008
The members of the Fiscal Council of Companhia Paranaense de Energia - COPEL, undersigned herein, pursuant to their legal powers and duties, reviewed the Financial Statements, the 2008 Annual Management and Sustainability Report, and the Management’s Proposal for Distribution of Net Income for the fiscal year ended on December 31, 2008, and, based on their analyses, on further clarifications by the senior management, and on the Report by the Independent Auditors, Deloitte Touche Tohmatsu, dated March 18, 2009, concluded that the reviewed documents are adequately presented, in all material aspects, so that they are favorable to the submission of these statements for review and approval at the General Shareholders’ Meeting.
Curitiba, March 18, 2009.
HERON ARZUA
MÁRCIO LUCIANO MANCINI
WILSON PORTES
BEATRIZ OLIVEIRA FORTUNATO
198
ACKNOWLEDGEMENT
This report was written with the participation of several areas within the company and staff. We are grateful for their hard work, especially to the employees listed below, who contributed a great deal to the production of this document:
Afra Maria Miceli • Adelcio Luiz Volpi • Adriano Fedalto • Anelize Miyuki Kanda • Alvacelia Serenato • Aparecido Izabel Massi • Carlos Alberto Correia Lucio • Carlos Eduardo Almeida • Carmen Lucia Canalli • Carolina de O. Lobato da Costa • Claudemir Gonçalves Ricardo • Denise Mazzali J. de Souza • Denise Teixeira Gomes • Edilson Antonio Catapan • Eduardo Drongek Filho • Eduardo M. de Camargo Filho • Ênio César Pieczarka • Fausto Luso Barreiros • Franklin Kelly Miguel • Hildamara Brondani Coelho • Ivete Hitomi Eurich • Jamilton Watanabe Lobo • Josmar Roberto Santoro • Leonardo da Silva Mendes • Luís Gustavo Socher • Luiz Gustavo Martins • Marcelo Sanchotene Cunha • Marcos Aurelio Cassias Pereira • Margarete Pisetta Almeida • Maria Cristina Navarro Lins Paul • Marilene Bescrovaine • Marlene Zannin • Marlos Gaio • Maristela Pereira Purkot • Maurício Rocco • Murilo Batista Júnior • Neide Regina Fazolo Spanholi • Norton Frehse Nicolazzi • Paulo Afonso Ritter Gomes • Ricardo Augusto Hauer • Rita de Cássia G. Cerqueira • Roberto Marchioro Junior • Rosana Aparecida Varassin Rezende • Rosane de Souza • Solange Elizabeth M. Gomide • Susie Cristina Pontarolli • Waldemiro Pedroso Sobrinho
Editor: Denise Mazzali Jorge de Souza
Final revision: Denise Mazzali Jorge de Souza • Sandi Luiz Bartnik Godinho • Christiane Elizabeth Righetto
Coordination area: Secretaria da Administração Societária e de Gestão de Documentação Corporativa da Copel
Rua Coronel Dulcídio, 800 - 8º andar - Batel • 80420-170 • Curitiba - PR • Fone: (41) 3331-4722
Report coordinators: Marlos Gaio (marlos.gaio@copel.com) • Denise Mazzali Jorge de Souza (denise.mazzali@copel.com)
199
COMPANHIA PARANAENSE DE ENERGIA – COPEL | ||
By: | /S/ Rubens Ghilardi | |
Rubens Ghilardi CEO |
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.