EDP Energias do Brasil : Guidance 4Q16 - Market Release

São Paulo, January 19th, 2017 - EDP Energias do Brasil S.A. (BM&FBOVESPA: ENBR3) releases the electricity market data related to its business unities and controlled companies for the fourth quarter of 2016 and year to date.

Volume (MWh)		Chg. 4Q16/ 4Q15	Volume (MWh)		Chg.	Customers (unit)		Chg. 2016/ 2015
4Q16	4Q15		2016	2015	2016/ 2015	4Q16	4Q15
EDP Distribution São Paulo
Residential	903,021	902,489	0.1%	3,586,887	3,548,841	1.1%	1,646,098	1,625,456	1.3%
Industrial	407,639	611,590	-33.3%	1,854,865	2,367,321	-21.6%	12,402	12,300	0.8%
Commercial	499,655	602,820	-17.1%	2,141,011	2,286,662	-6.4%	123,741	120,558	2.6%
Rural	19,965	20,562	-2.9%	80,191	82,571	-2.9%	7,962	8,002	-0.5%
Other	243,331	241,871	0.6%	933,702	923,013	1.2%	13,674	13,574	0.7%
Energy Supplied to Final Customers	2,073,611	2,379,332	-12.8%	8,596,655	9,208,408	-6.6%	1,803,877	1,779,890	1.3%
Supply	10,395	10,894	-4.6%	43,200	44,622	-3.2%	2	2	0.0%
Energy in transit (UDS)	1,614,836	1,312,124	23.1%	5,855,492	5,363,111	9.2%	379	174	117.8%
Free customers	1,555,475	1,253,657	24.1%	5,622,006	5,131,310	9.6%	377	172	119.2%
Concessionaries	59,361	58,467	1.5%	233,485	231,802	0.7%	2	2	0.0%
Own consumption	1,515	1,614	-6.1%	6,206	6,417	-3.3%	167	162	3.1%
Total Energy Distributed	3,700,357	3,703,964	-0.1%	14,501,553	14,622,558	-0.8%	1,804,425	1,780,228	1.4%
EDP Distribution Espírito Santo
Residential	533,535	568,679	-6.2%	2,254,981	2,261,076	-0.3%	1,182,668	1,152,580	2.6%
Industrial	178,104	268,763	-33.7%	890,090	1,102,846	-19.3%	11,470	11,856	-3.3%
Commercial	317,633	380,507	-16.5%	1,380,566	1,484,811	-7.0%	122,213	121,013	1.0%
Rural	169,494	225,370	-24.8%	798,807	839,270	-4.8%	181,478	177,539	2.2%
Other	223,168	226,415	-1.4%	809,709	784,533	3.2%	13,326	13,162	1.2%
Energy Supplied to Final Customers	1,421,935	1,669,734	-14.8%	6,134,153	6,472,537	-5.2%	1,511,155	1,476,150	2.4%
Supply	143,097	157,908	-9.4%	573,263	619,087	-7.4%	1	1	0.0%
Energy in transit (UDS)	850,642	850,078	0.1%	3,207,845	3,991,018	-19.6%	230	81	184.0%
Free customers	849,682	845,803	0.5%	3,171,505	3,976,163	-20.2%	210	61	244.3%
Concessionaries	960	4,275	-77.5%	36,340	14,855	144.6%	1	1	0.0%
Own consumption	1,866	2,098	-11.1%	7,755	8,137	-4.7%	208	209	-0.5%
Total Energy Distributed	2,417,539	2,679,818	-9.8%	9,923,016	11,090,779	-10.5%	1,511,594	1,476,441	2.4%
DISTRIBUTION
Residential	1,436,556	1,471,168	-2.4%	5,841,868	5,809,917	0.5%	2,828,766	2,778,036	1.8%
Industrial	585,743	880,354	-33.5%	2,744,955	3,470,167	-20.9%	23,872	24,156	-1.2%
Commercial	817,289	983,327	-16.9%	3,521,577	3,771,473	-6.6%	245,954	241,571	1.8%
Rural	189,459	245,932	-23.0%	878,998	921,841	-4.6%	189,440	185,541	2.1%
Other	466,499	468,286	-0.4%	1,743,411	1,707,546	2.1%	27,000	26,736	1.0%
Energy Supplied to Final Customers	3,495,545	4,049,066	-13.7%	14,730,808	15,680,945	-6.1%	3,315,032	3,256,040	1.8%
Supply	153,492	168,803	-9.1%	616,463	663,710	-7.1%	3	3	0.0%
Energy in transit (UDS)	2,465,478	2,162,202	14.0%	9,063,337	9,354,130	-3.1%	609	255	138.8%
Free customers	2,405,157	2,099,460	14.6%	8,793,511	9,107,473	-3.4%	587	233	151.9%
Concessionaries	60,320	62,742	-3.9%	269,826	246,657	9.4%	3	3	0.0%
Own consumption	3,381	3,712	-8.9%	13,961	14,554	-4.1%	375	371	1.1%
Total Energy Distributed	6,117,896	6,383,783	-4.2%	24,424,568	25,713,338	-5.0%	3,316,019	3,256,669	1.8%
Note: Other = Public entities + Public lighting + Public services UDS: Usage of the Distribution Sys tem

1

Commercial

13.5%

Industrial

11.0%

Rural 0.6%

Other 6.6%

Energy in Transit 43.6%

Commercial

13.1%

Industrial

7.4%

Rural 7.0%

Other 9.2%

Energy in Transit 35.2%

Residential 24.4%

Supply + Own Consump.

0.3%

Residential 22.1%

Supply + Own Consump.

6.2%

Energy supplied to final customers: 13.7% decrease in the 4Q16 reflects the migration of costumers from the captive market to the free market, the milder weather conditions, especially in the state of Espírito Santo, and the maintenance of levels of economic recession. The reduction of 6.1% in the year reflects, in addition to the aforementioned effects, the electricity tariff increases occurred during the course of 2015.

• Residential and Commercial: residential and commercial consumption declined by 2.4% and 16.9%, respectively, as a result of the effects already mentioned. In the year, the consumption of the residential segment increased 0.5%, while the commercial segment presented a reduction of 6.6%, reflecting the economic conditions throughout the year (unemployment1 rate reached 11.9% and real average income1 reduced 2.2 % in the last 12 months), together with the increase in inflation2 (IPCA: 6.3%) and the decrease of retail sales3 volume, which fell by 6.4%.

  EDP Distribution São Paulo: consumption of the residential segment remained stable (0.1%), while the consumption of the commercial segment declined by 17.1%. In the residential segment, the result reflects the higher average number of billing days for customers of low voltage (+1.2 day), the "green tariff flag" and the expansion of the customer base. In the commercial segment, the decline is due to the 81 customers' migration to the free market (two in 1Q16, 22 in 2Q16, 16 in 3Q16 and 41 in 4Q16), the economy slowdown and the lower average number of billing days for the medium and high voltage costumers. In 2016, the consumption of the residential segment increased by 1.1%, while in the commercial segment consumption fell by 6.4%, impacted by the effects already mentioned. Excluding the effect of these migrations, the commercial segment would have declined by 3.8% in the quarter and 1.8% in the year. EDP Distribution Espírito Santo: residential and commercial consumption declined by 6.2% and 16.5%, respectively, reflecting the decrease in temperatures recorded in the city of Vitória (-3.2°C), the economy slowdown and specifically in the commercial segment, the 80 costumers' migration to the free market (seven in 1Q16, 25 in 2Q16, 22 in 3Q16 and 26 in 4Q16). In 2016, consumption of the residential segment remained stable (-0.3%) and consumption of the commercial segment declined 7.0%, impacted by the effects already mentioned. Excluding the effect of these migrations, the commercial segment would have declined by 10.1% and 3.5%, respectively, in the quarter and in the year.

• Source: IBGE. National Household Sample Survey (Pnad) -November/16;

• Source: IBGE. National Index of Price for Consumers - IPCA- December/16;

• Source: IBGE. Monthly Trade Survey -November/16;

  Consumption per Customer

  Residential Segment	Consumption per Customer (KWh)		Var. 4Q16/ 4Q15	Consumption per Costumer (MWh)		Var. 2016/ 2015
  	4Q16	4Q15		2016	2015
  EDP Distribution São Paulo	183.1	186.1	-1.6%	183.2	185.1	-1.0%
  EDP Distribution Espírito Santo	150.8	165.0	-8.6%	160.8	166.1	-3.2%

• Industrial: reduction of 33.5% and 20.9%, in the quarter and in the year, respectively, as a result of the captive market migration to the free market, due to the tariff increase in the captive market and the decrease of PLD (spot price of energy).

  EDP Distribution São Paulo: decline of 33.3% and 21.6% in the quarter and in the year, respectively. During the year, 121 costumers migrated to the free market (nine in 1Q16, 23 in 2Q16, 38 in 3Q16 and 51 in 4Q16), together with the contraction of industrial production in São Paulo (reduction of 5.6%4 from January to November 2016, highlighting the decrease of 12.1% in automotive segment), were the main responsible for the reduction in consumption. Excluding the effects of the migrations and the return of two customers, the industrial segment would have declined 6.5% and 11.2% in the quarter and in the year, respectively.

  EDP Distribution Espírito Santo: retraction of 33.7% and 19.3%, respectively, in the quarter and in the year. During the year, the 68 customers' migration to the free market (one in 1Q16, 16 in 2Q16, 19 in 3Q16 and 32 in 4Q16), combined with the deceleration of the domestic economy, resulted in the retraction of the segment in the analyzed periods. Disregarding the effect of such migrations, the reduction of the segment would have been of 11.3% and 8.7%, in the quarter and in the year, respectively.
  • Rural: reduction of 23.0% (2.9% in EDP Distribution São Paulo and 24.8% in EDP Distribution Espírito Santo). In the quarter, the reduction in EDP Distribution Espírito Santo reflects the increase in the rainfall, reducing the need of energy consumption for irrigation. In the year, the 4.6% reduction is due to the drought that occurred in the State of Espírito Santo in 2015, causing the increase in energy consumption for irrigation in that year. Additionally, in 2016, the actions of the Espirito Santo government, which limited water collection for agriculture and industry, negatively influenced the consumption of electricity for irrigation.

The consolidated energy in transit in the distribution system (UDS), destined for the free customer's consumption, increased by 14.0% in the quarter, reflecting the migrations to the free market. In 2016, the segment declined 3.1% due to the production stoppage of a relevant costumer in EDP Escelsa's concession area. EDP Distribution São Paulo: increase of 23.1% and 9.2% in the quarter and in the year due to the migration of customers from the captive market. Excluding this effect, the segment would have increased by 3.5% and 0.5% in 4Q16 and in the year, respectively. EDP Distribution Espírito Santo: remained stable in the quarter (0.1%), reflecting the migration of customers from the captive market. In 2016, the 19.6% reduction reflects the stoppage of a relevant mineral extraction costumer, which represented about 28% of the segment in 2015. Excluding this effect, the segment would have presented an increase of 15.8% and 6.0%, in the quarter and in the year, respectively. In the "Concessionaires" line, the reduction of 77.5% in the quarter and the 144.6% increase in the year represent the partial consumption of Santa Maria, after its disqualification in the category of "supplies" by ANEEL from January 2016 on, after exceeding 500 GWh, reflecting the variations of consumption in the contract. Excluding these effects, the segment would have increased by 2.9% in the quarter and decreased by 1.3% in the year.

1. Source: IBGE. Monthly Survey of Regional Industry - November/16;

The volume of energy sold by the group reached 3,218 GWh in the quarter, reduction of 2.3% when compared to 4Q15, while the full year volume reached 12,948 GWh, 12.2% higher than in 2015.

Disregarding the volume of UTE Pecém I and only considering the energy sold by hydro power plants of the group based on the consolidation criterion, the volume of energy sold posted a reduction of 3.9% in the quarter. The difference of energy sold between the periods is due to the sale of Pantanal Energética in January 29, 2016, the renewal of existing contract with lower volumes and the effect of the seasonality. In 2016, the volume decreased by 7.4%, as explained in the quarter.

Considering the availability volume of Pecém I TPP, in both periods, and EDP's share of 50% of Jari HPP (224 GWh) and 50% of Cachoeira Caldeirão HPP (124 GWh), the group volume reached 3,592 GWh in 4Q16, an increase of 1.7% due to the start-up of Cachoeira Caldeirão HPP, which occurred during the year. In 2016, the volume reached 14,205 GWh, 5.5% above 2015.

Below, we present the chart with the seasonality strategy of energy sold by hydro power plants in 2015 and 2016, according to the consolidation criteria.

2015 2016

2015 2016 (e)

2,267

1,976

2,014 1,935 1,936

1,810 1,899 1,861

28%

26%

25%

25%25%

24%

23% 24%

1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q

*Figures referring to previous quarters were changed due to adjustments in provisions

The average GSF (Generation Scaling Factor) presented in the quarter was 87.2%, representing an exposure of 237 GWh, excluding the impact of Jari HPP and Cachoeira Caldeirão HPP, with an average spot price of R$ 162.8/MWh (SE/Central-Western submarket). The average GSF presented in 2016 was 86.8%, which means an exposure of 1,020 GWh, excluding the impact of Jari HPP and Cachoeira Caldeirão HPP, considering the average spot price of R$ 93.9/MWh (SE/Central-Western submarket). For the 2016 results, the Company will take into consideration the renegotiation of the GSF, which occurred in the end of 2015 and early 2016.

The volume of energy traded reached 4,017 GWh, 54.1% above the 2,606 GWh traded in the 4Q15. This increase is due to the spot price´s volatility over the quarter, allowing greater liquidity in the market, a higher number of trades and an increase in the number of customers. In 2016, the total energy sold was 12,980 GWh, 22.5% higher than 2015, reflecting the same effects mentioned in the quarter.