EBR.B Centrais Eletricas Brasileiras SA Eletrobras

DEPRECIATION AND AMORTIZATION

TABLE 09: OPERATING PROVISIONS

FINANCIAL RESULT

TABLE 13: FINANCIAL INCOME AND EXPENSES

OTHER OPERATING REVENUE AND EXPENSES

Marketletter 3Q21

 

1.2 EBITDA Consolidated

TABLE 12: EBITDA DETAIL

EBITDA	2021	2020	%	3Q21	3Q20	%
Resulto of the period	5.104	4.511	13%	965	2.814	-66%
+ Income Tax and Social Contribution Provision	5.096	2.817	81%	3.069	1.465	109%
+ Financial Result	1.122	2.097	-46%	1.059	622	70%
+ Depreciation and Amortization	1.408	1.399	1%	503	468	8%
= EBITDA	12.730	10.824	18%	5.596	5.369	4%
Non recurring adjustments
Other revenues and expenses	-772	-25	2982%	-772	0	-
Reversal of Energy Revenue between Brazil and Uruguay	8	0	-	0	0	-
Interruption of Angra I and II Retroactive and Candiota Inflexibility	277	269	3%	34	269	-87%
Regulatory remeasurements - Transmission Contracts	-4,859	-4,228	15%	-4,859	-4,228	15%
Renegotiation of the hydrological risk, arising from resolution No. 2.932021 which ratified the term for extending the concession of the hydroelectric plants.	-4,266	0	-	-4,266	0	-
Record of GSF expense for adherence to hydrological risk renegotiation	378	0	-	378	0	-
Transfer of coal from Material/Interest and Monetary Variation on debentures fixed in September/21	13	0	-	0	0	-
Incentive Plans (PAE, PDC)	-7	-23	-69%	-2	-15	-84%
Dismissal Eletronorte	79	0	-	1	0	-
Reversal of contributions to foundations - CVM 600 adjustment	-22	0	-	-8	0	-
Indemnities (Labor Claims) - Furnas	69	0	-	21	0	-
Retroactive ACT Releases and Historical Hour Bank 25%	1	0	-	53	12	339%
Transfer of coal to Fuel account	-13	0	-	0	0	-
PIS/COFINS credit – prior periods of TPP Candiota III	-4	0	-	0	0	-
Furnas Outsourced	0	95	-100%	0	68	-100%
Loss with CCC corresponding to the inspection of Boa Vista	58	0	-	58	0	-
Income tax not collected from conviction paid in 2015	42	0	-	0	0	-
IR arising from Transfer of Amz GT	40	0	-	0	0	-
Court costs and fess – Parent Compant and Furnas	48	0	-	3	0	-

Marketletter 3Q21

 

Note: As of 2019, the Company started to consider, in its recurring EBITDA, the RBSE revenue from concessions extended under Law 12,783/2013, in order to maintain a protocol similar to the debenture covenants issued in 2019. Considering the privatization of the distributors was completed in April 2019, and these operations are no longer part of its core business, the company treated as non-recurring the relevant effects of financial income, expenses, PL reversals and prospective allowance for loan losses ( CPC 48) of loans contracted with them before or as a result of the privatization process, although revenues and eventual provisions arising from contracted loans may continue to affect the company's accounting result until its complete exhaustion. However, they were treated as recurring PCLDs of outstanding effective debt of distributors as well as debts related to energy supply.

Recurring Cash Generation with Adjustment of Regulatory Transmission RAP

	3Q21	3Q20
1. EBITDA Recurrent	5,581	3,290
2. (-) Total Corporate Revenue from Transmission	4,894	2,769
O&M Revenue	1,522	1,447
Construction Revenue	97	46
Finance - Return on Investment - RBSE	742	150
Contractual Revenue Transmission	2,533	1,126
Periodic Tariff Revenue	0	0
3. (+) Total Payment of Allowed Annual Revenue	4,015	3,305
Revenue of RAP and indemnities	2,494	1,857
O & M Revenue	1,522	1,447

Marketletter 3Q21

 

Marketletter 3Q21

 

1.3       Consolidated Results by Continued Operations segment:

TABLE 14: FINANCIAL STATEMENT BY SEGMENT – R$ THOUSAND

Marketletter 3Q21

 

1.3.1. INDEBTEDNESS AND RECEIVABLES

TABLE 15: GROSS DEBT AND NET DEBT

¹ See Explanatory Note 15b to the Financial Statements.

TABLE 16: Debt Maturity Schedule and Debentures of the Holding and Subsidiaries included:

* For further information, see note 20 to ITR 3Q21.

Gross Consolidated Debt Total – R$ billion

Parent Company Gross Debt – R$ billion

Marketletter 3Q21

 

Ratings

TABLE 18: Ratings

Agency	National Classification / Perspective	Last Report
Moody’s BCA	“Ba3”: / Estável	09/16/2020
Moody’s Senior Unsecured Debt	“Ba2”: / Estável	09/16/2020
Fitch - Issuer Default Ratings (Foreign Currency)	“BB-”: / Negativa	06/02/2021
Fitch - Issuer Default Ratings (Local Currency)	“BB-”: / Negativa	06/02/2021
S&P LT Local Currency – Escala Nacional Brasil	brAAA/Estável	03/12/2021
S&P Issuer Credit Rating – Escala Global	BB-/Estável	03/12/2021

*CreditWatch

Financing and loans granted (receivables)

TABLE 19: Receivables

	Average Rate				CONSOLIDATED
	09/30/2021		12/31/2020		09/30/2021		12/31/2020
Itaipu	6.47		6.93		1,625,944		4,200,471
CEAL	3.79		3.45		1,293,613		1,505,961
Eletropaulo	3.50		3.75		673,567		1,008,052
Amazonas D	5.98		5.78		4,005,534		3,998,324
CEPISA	4.49		2.50		496,894		571,127
Boa Vista	3.58		2.22		143,916		147,764
Outras	-		-		197,512		248,201
(-) PECLD	-		-		(764,903)		(755,002)
Total					7,672,078		10,924,899

The graphs and table below exclude charges, allowance for loan losses and financial assets of Itaipu.

*For more information, see explanatory note 9 of ITR 3Q21.

Marketletter 3Q21

 

Total Consolidated Loans and Financing Receivables – R$ billion

Does not include: receivable from Itaipu's financial assets of R$941 million and PCLD of R$765 million and current charges.

Loans and financing receivable Parent company - R$ billion

Does not include charges and allowance for loan losses.

Loans and Financing receivable Parent Company - R$ billion

Does not include charges and PCLD.

Marketletter 3Q21

 

Table 20: CCC credits assigned by Privatized Distributors

In the process of privatizing the distributors, credits contained in the right of reimbursement account recorded in the assets of the distributors in June/17 and which were being analyzed and inspected by Aneel, in processes closed in September 2021, were assigned to Eletrobras. activated in the Company's Financial Statements, of 09/30/2021, in two accounts, namely Right to Reimbursement and Financing receivable, according to Explanatory Notes 15 and 11 of 3Q21, and detailed below:

REIMBURSEMENT RIGHT

Registered Net Assets – R$ thousand

R$ thousand	Amazonas	Ceron	Eletroacre	Boa Vista	Total
NT Aneel + Claims under analysis Aneel + "inefficiency"	2,366,317	3,008,691	116,173	120,023	5,611,205
Current Rights
Total (a)	2,366,317	3,008,691	116,173	210,249	5,611,205

Conversion into Loans

Note: The R$ 442.4 million credit in the table above was also a CCC credit, given by Amazonas to Eletrobras, however, as it is not part of the aforementioned inspection period, and as it is a current credit, it has already been paid by CCC to Amazonas Distribuidora, and could not have been assigned to Eletrobras, so it was converted into debt of the distributor with Eletrobras.

Total Credits Granted (Note 9 + Note 13)

Marketletter 3Q21

 

The National Electric Energy Agency - Aneel recognized, by decision of its collegiate board, on March 10, 2020, (i) the right to receive credits from the Ceron Fuel Consumption Account, in the amount of R$ 1,904.0 million (at July 2019 prices), referring to the inspection of benefits due in the period from July 30, 2009 to June 30, 2016, considered as the first period of the inspection process ("First Inspection Period"), credits assigned to Eletrobras at the time of privatization of said distributor; and (ii) the right to receive credits from the Fuel Consumption Account – CCC to the Electricity Company of Acre (“Eletroacre”), in the amount of R$ 191.6 million (at July 2019 prices), referring to the inspection of benefits due from July 30, 2009 to June 30, 2016, credits which were also assigned to Eletrobras on the occasion of the privatization of the aforementioned distributor.

Aneel's Board of Directors also approved, on March 10, 2020, the obligation to return R$ 2,061.4 million (at March 2019 prices), referring to the CCC inspection and monthly reprocessing process paid to Amazonas Distribuidora de Energia SA (“Amazonas Energia”), from July 2016 to April 2017, referring to the Second Inspection Period. With this decision, Amazonas Energia had completed its entire inspection process, as Aneel's Board of Directors had already deliberated, on March 19, 2019, the result of the First Inspection Period of CCC reimbursements to Amazonas Energia, with the company entitled to receive a credit in the order of R$1,591.7 million (at September 2018 prices), to be offset against the credits to be returned.

The net balance of credits granted by Amazonas Energia, positive in R$ 2.81 billion, refers, in addition to the contract signed with the distributor, with the payment of the amount of R$ 442.4 million in current credits, upon revenue of disallowances of the CCC arising from the economic and energy efficiency criteria, a right recognized by Law 13,299/2016, and later by Law 14,182/2021, in the historical amount of R$ 1,978.1 million, which will be deducted from the grant amount to be paid by the Eletrobras for new generation concessions. The new law increased by 14 months the term of coverage of "inefficiency", going from Apr/16 (Law 13,299/2016) to until Jun/17. This increase in coverage, updated by the IPCA for Sep/21, brought a gain of R$ 771 million for Amazonas' “inefficiency” credits. However, the exchange of Selic for IPCA to update these credits had a negative effect of R$ 423 million. Eletrobras changed the way of correction of “inefficiency” credits in 3Q21, starting to use the IPCA, as it was the form of correction used in CNPE Resolution No. 15/2021, which defined the grant amount to be paid by Eletrobras for the new generation concessions in the company's capitalization process.

On June 15, 2021, Aneel approved the result of the inspection and monthly reprocessing of the benefits reimbursed by CCC to Boa Vista Energia, setting the amount to be reimbursed by CCC to the distributor at R$ 103.9 million, February 2020 position , and establishing that the payment to Eletrobras, holder of the credits, should await the final result (first and second periods) of the inspections carried out at Amazonas Energia, Ceron, Eletroacre and Boa Vista Energia.

In a meeting held on September 28, 2021, Aneel's board deliberated on the CCC inspection processes, which are still pending analysis, according to the inspection period of Ceron, Eletroacre and Boa Vista. The amounts approved by Aneel's board were in line with the amounts presented in the latest technical notes issued by SFF-SFG-SRG/ANEEL. The amount of R$ 806.6 million (position Apr/21) was approved as a result of Ceron's second inspection period, as well as the negative amount of R$ 97.5 million (position Apr/21) to be returned to the CCC as a result of Eletroacre's second inspection period, and the negative amount of R$29.7 million (Apr/21) position for Boa Vista's second inspection period.

Thus, all eight inspection processes (first and second periods of Amazonas, Eletroacre, Ceron and Boa Vista) were closed and the payment conditions to Eletrobras of the net final value of the eight inspection processes were defined. Aneel defined the final amount on the CCC inspection reimbursed to Amazonas Energia, Ceron, Eletroacre and Boa Vista Energia in the amount of R$ 2,670.5 million, updated by the IPCA of Aug/2021, which shall be reimbursed by the CCC to Eletrobras, as holder of the assumed credits of these distributors. This amount will be received in 60 months, in equal installments, duly updated by the IPCA, with the beginning of monthly payments being considered in the Annual Budget of the CDE 2022.

Marketletter 3Q21

 

In 3Q21, Eletrobras recorded the amount of R$ 6,053.6 million in credits assumed by distributors in their privatization processes. The amount of R$ 2,705.2 million as the final result of the CCC inspection processes carried out by Aneel and which will be paid by the Fund to Eletrobras, the amount of R$ 2,906.0 million in “inefficiency” credits assumed by Amazonas and Boa Vista, which will be used to deduct the grant amount to be paid by Eletrobras for new generation concessions in the company's capitalization process, and R$ 442.4 million recorded in the loans and financing account referring to the current credit return contract signed with Amazonas Energia, which is still in the grace period for payment of the principal. It is important to highlight that Eletrobras made a provision in the amount of R$ 340.1 million in 3Q21 referring to current credits of Ceron, Eletroacre and Boa Vista Energia (credits made before the transfer of the right to Eletrobras, and therefore, must be returned to Eletrobras) since contracts have not yet been signed with these three distributors for the refund of the amount. Currently, Eletrobras has been discussing with the three companies the amount to be paid to Eletrobras. After defining the amounts and payment conditions, the contracts will be signed and Eletrobras will revert part or all of this R$340.1 million provision made.

Thus, as a summary of the changes in credits assumed by distributors in 3Q21, a breakdown can be made into 5 items: i) Increase of R$ 622.0 million in “inefficiency” credits with the additional 14 months of coverage provided by Law 14.182/2021, including only the principal amount, still uncorrected; ii) financial income in the amount of R$286.3 million, with the update by the IPCA of the additional 14 months of “inefficiency” credits, and the update by the IPCA of the result of the CCC inspection of Ceron, Eletroacre and Boa Vista; iii) financial expense in the amount of R$446.6 million arising from the exchange of the correction of the Amazonas and Boa Vista de Selic “inefficiency” credits to the IPCA, and the correction of the net result of the inspection by Amazonas (first and second periods); iv) R$340.1 million in the provision for current credits, given that contracts have not yet been signed with Ceron, Eletroacre and Boa Vista to refund the amounts paid by the distributors themselves before the assignment of credits to Eletrobras; v) losses of R$ 57.6 million resulting from the incorporation of the result of the second inspection period on Boa Vista's CCC credits.

RBSE REPROFILING

In April 2021, ANEEL approved the reprofiling of the financial component of RBSE, of the subsidiaries Furnas, Eletronorte, CGT Eletrosul and Chesf. The decision provides for a reduction in the payment curve of amounts related to the periodic review of RAPs associated with transmission facilities for cycles 2021/2022 and 2022/2023 and an increase in the flow of payments in cycles after 2023, extending such installments until the 2027/2028 cycle, preserving, however, the remuneration by the WACC.

In September 2021, the reprofiling of the financial component of the Existing System Basic Network - RBSE was accounted for. ANEEL's decision caused a reduction in the payment curve of amounts related to the periodic review of RAPs associated with transmission facilities for cycles 2021/2022 and 2022/2023 and an increase in the flow of payments in cycles after 2023, extending such installments until the 2027/2028 cycle, preserving, however, the remuneration for the cost of equity (Ke). For more details, see note 14 of the 3Q21 financial statements.

Marketletter 3Q21

 

In 3Q21, the contractual transmission assets increased significantly, mainly due to the remeasurement of the concession assets referring to RBSE, as follows:

1. Reprofiling of the RBSE financial component, approved by ANEEL in April 2021. The decision caused a reduction in the payment curve of the amounts related to the periodic review of the RAPs associated with transmission facilities for cycles 2021/2022 and 2022/2023 and an increase the flow of payments in cycles after 2023, extending such installments until the 2027/2028 cycle, preserving, however, the remuneration for the cost of equity (Ke) for RBSE;

2. Complementary recognition of the cost of equity (Ke). In 2020, ANEEL ratified only the correction by the IPCA of the RBSE amounts not paid between 2017 and 2020, resulting from the ABRACE injunction. In cycle 2021/2022, in response to a request from the Transmitters, ANEEL recognized, in addition to the correction by the IPCA, the remuneration of this amount by the Ke.

3. Completion of inspection of the appraisal report of the Regulatory Remuneration Basis – BRR of Chesf's Contract No. 061/2001. With this, the definitive values ​​of the Periodic Review of the 2018/2023 cycle of the Allowed Annual Revenue - RAP were approved, through the publication of Ratifying Resolution No. 2935/2021.

The amounts above include TFSEE charges (Electric Energy Services Inspection Fee) and resources for R&D and Energy Efficiency, and do not include PIS and Cofins. Furthermore, the data refer to the tariff cycle and not the calendar year.

The values approved in the reprofiling were updated by the IPCA.

Marketletter 3Q21

 

1.4. Investment

IN 3Q21, R$ 1,024 MILLION WERE INVESTED OF THE R$ 1,861 MILLION BUDGET FOR THE QUARTER.

In generation, the total investment was R$572 million, R$431 million of which related to the expansion of corporate projects, with emphasis on: Angra 3 R$375 million, Angra 1 and 2 R$70 million. In generation SPEs, the realization was only R$ 2 million at Brasil Ventos. In generation maintenance, R$139 million were realized, with an emphasis on R$21 million at Furnas and R$26 million at Chesf.

In transmission, the total investment was R$ 378 million, of which R$ 34 million in expansion and exclusive of Chesf referring to ( LT São Luiz II/São Luiz III; / - LT Paraíso-Açu C3; / - LT Pau Ferro /Santa Rita C1; /- TL Mossoro/Açu C2; /- TL Banabuiu/Russas 230K C2). In reinforcements and improvements, R$300 million was invested, with emphasis on: Chesf R$178 million, CGT R$49 million, Furnas R$38 million and R$36 million for Eletronorte. There was no performance in transmission SPE in 3Q21

As for non-realization of investments, there was a frustration of R$ 837 million, of which -R$ 647 million in generation, with emphasis on the non-realization of -R$ 333 million in Angra 3 due to delay in the bidding process for resumption of works and release of AFAC, frustration of -R$ 86 million in maintenance of Angra 1 and 2 due to the impacts of the pandemic. In SPE, there was a frustration of R$ 26 million in Teles Pires due to the postponement of contributions and -R$ 34 million in Brasil Ventos due to planned contributions to subsidiaries and not made.

Marketletter 3Q21

 

In transmission, investments were not made in the amount of R$ 147 million, highlighting: -R$ 20 million due to delays in environmental licensing, -R$ 17 million due to impacts from COVID-19 and -R$ 12 million due to problems with tenders . The budget for transmission SPES was only R$1 million.

1.5. COMMERCIALIZATION

1.5.1. ENERGY SOLD IN 3Q21 – GENERATORS - TWH

In terms of the evolution of the energy market, Eletrobras Companies, in 3Q21, sold 46.3 TWh of energy, against 52.1 TWh traded in the same period of the previous year, which represents a decrease of 11%. These volumes include the energy sold from the plants under the quota regime, renewed by Law 12.783 / 2013, as well as by the plants under the exploration regime (ACL and ACR).

Sales: includes projects under Law 13,182 / 15

Average ACR Prices in the chart do not include Itaipu and O&M. Include Eletronuclear.

1.5.2. ENERGETIC BALANCE

TABLE 23: ENERGETIC BALANCE

Energetic Balance (MWmed)		2021	2022	2023	2024	2025
Ballast		9,288	9,313	9,277	9,257	8,563
	Own resources	8,119	8,183	8,183	8,183	7.707
	Energy Purchase	1,168	1,130	1,094	1,074	855
Sales		7,190	6,344	5,843	4,711	3,123
	ACL - Bilateral Contracts + MCP realized	5,101	4,188	3,691	2,559	1.377
	ACR - Except quotas	2,090	2,156	2,152	2,152	1.746
	Average Selling Price R$/MWh	228.96	224.83	218.12	227.88	228.91
	Average Purchase Price R$/MWh	283.32	247.60	254.38	256.79	247.58
	Average Selling Price R$/MWh (1)	186.18	184.03	171.50	169.63	178.85
	Average Purchase Price R$/MWh (1)	263.85	228.16	235.24	235.99	235.99
Balance (Ballast - Sales)		2,097	2,969	3,434	4,546	5,440
Uncontracted Energy *		23%	32%	37%	49%	64%

* The uncontracted portion includes energy reserved for the company's hedge, strategically defined according to the GSF estimate for the period.

Contracts entered into until 09/30/2021.

The consequences of Law 14.182/2021, the decotization process of plants under the Physical Guarantee Quotas regime and the creation of the new state-owned company are not being considered in the balance sheet.

* A parcela descontratada inclui energia reservada para hedge da companhia, definido estrategicamente conforme estimativa de GSF para o período.

Marketletter 3Q21

 

The installments of Physical Guarantee Quotas and Nuclear Energy Quotas are not included in the balance.

Marketletter 3Q21

 

II.
Result Analysis of
Parent Company

In 3Q21, Eletrobras Holding posted net income of R$924 million, a reduction of 66% compared to the net income of R$2,751 million in 3Q20. The result for 3Q21 was decisively influenced by: (i) Equity Interest, of R$ 10,756 million, mainly influenced by the results of the controlled companies as a result of the GSF agreement pursuant to Law 14,052/20 which extended the deadline for granting of several hydroelectric plants and the effect of the RBSE reprofiling; (ii) registration of Other Revenues in R$ 772 million, which refer, first, to the recognition of R$ 622 million due to the increase of 14 months (May 2016 to June 2017) in the period covered by Law No. 14.182/2021 , which regulates the CCC reimbursement credit related to economic and energy "inefficiency" that Eletrobras may compensate for the added value to be paid in the case of decotization of hydroelectric plants and the granting of new 30-year concessions, within the scope of the privatization of Eletrobras and, second, the reimbursement of R$ 150 million from the AIC (fixed assets in progress) to be paid by the privatized distributors to Eletrobras. This was partially offset by: (iii) negative effect on provisions for legal contingencies, with emphasis provisions related to compulsory loan lawsuits in the amount of R$9,059 million; and (iv) constitution, in 3Q21, of R$ 340 million in ANEEL CCC Provision due to the adjustment of current credits granted to Parent Company by the privatized distribution ocmpanies. In addition to the (iv) negative impact of the Financial Result in the amount of R$927 million in 3Q21, mainly due to the negative effect of the exchange rate fluctuation in the period (R$503 million) and the negative result of net monetary restatements (R$473 million ).

Marketletter 3Q21

 

EVOLUTION OF RESULT - R$ MILLION

Note: The analysis of the results of each subsidiary can be found in Appendix II of the Investor Report.

2.1       Shareholdings in the Parent Company

In 3Q21, the Equity Interest result positively impacted the Company's result by R$10,756 million, mainly due to the Equity Income from investments in subsidiaries, while the result in 3Q20 was R$4,178 million (the amount in 3Q20 was restated due to the remeasurement of transmission assets – see Note 4.4 to the Financial Statements). Highlight for the improvement in the results of Chesf (+R$3,323 million), Eletronorte (+R$2,816 million), Furnas (+R$557 million) and partially offset by the lower result of CGT Eletrosul (-R$217 million).

2.2       Operating Provisions of Parent Company

In 3Q21, Operating Provisions had a negative impact on the Parent Company's results by R$9,552 million, compared to a provision of R$921 million in 3Q20. This variation is mainly explained by: (i) negative effect on provisions for legal contingencies, with emphasis on the compulsory loan lawsuits in the amount of R$9,059 million, compared to a provision of R$379 million in 3Q20; and (ii) constitution, in 3Q21, of R$340 million in ANEEL CCC Provision due to the adjustment of current credits granted to the Holding by the privatized distributors, as mentioned in the consolidated analysis.

Marketletter 3Q21

 

Table 24: Operating Provisions (R$ million)