Centrais Elétricas de Santa Catarina S.A. – CELESC, issuer of shares CLSC3 and CLSC4 traded on B3, was created on December 9, 1955 by the government of Santa Catarina to organize and integrate the state’s power system. Until then, service was provided by small and medium-sized private companies operating regional systems with no unified planning, which proved insufficient in the face of urbanization and industrial expansion, especially in the developmentalist context of President Juscelino Kubitschek’s administration. Federal authorization to operate came in 1956, and at the beginning of its operations Celesc enabled Santa Catarina to join the South-Southeast Interconnected Power System, ensuring more adequate supply for the state’s industrial base. In its early years, the company acted as the planning body for the state power system and then took on the role of holding company, initiating a cycle of mergers of regional energy companies that led it to cover virtually the entire territory of Santa Catarina and to consolidate itself as the state’s main state-owned company in this segment.

Throughout the 1960s and 1970s, Celesc expanded its operations by acquiring control of several regional power distributors, such as Elfa, Empresul, Videluz, Cosel, ForçaLuz, among others, incorporating their assets in exchange for shares and reorganizing the power sector of Santa Catarina under centralized management. In 1973, it obtained registration as a publicly held company, listing its shares on the stock exchange, and over time implemented stock bonuses, reverse stock splits and bylaw adjustments to comply with prevailing corporate legislation. Following the new regulatory framework for the Brazilian power sector between 2003 and 2004, Celesc went through an unbundling process that resulted, in 2006, in its current configuration as a pure holding company with two wholly owned subsidiaries: Celesc Distribuição S.A. and Celesc Geração S.A. In parallel, it became a shareholder in generation and transmission ventures such as Dona Francisca Energética (DFESA) and Empresa Catarinense de Transmissão de Energia (ECTE), and later also entered the natural gas distribution segment by acquiring control of Companhia de Gás de Santa Catarina (SCGÁS).

Today, the Celesc group operates in three main areas: power distribution, power generation and natural gas distribution. The corporate structure is led by the holding company Celesc S.A., controlled by the State of Santa Catarina, which holds 50.18% of the common shares, equivalent to 20.20% of total capital. Among other relevant shareholders is EDP – Energias do Brasil S.A., with a significant stake in both common and preferred shares, according to market transactions carried out between 2017 and 2018. The company’s shares, represented mainly by tickers CLSC3 (common) and CLSC4 (preferred), have a high free float, which supports the liquidity of the stock on B3. The holding company also maintains equity interests in energy and sanitation companies such as DFESA, ECTE and CASAN, and in special purpose entities focused on hydropower generation projects in partnership with private investors.

The subsidiary Celesc Distribuição S.A. accounts for most of the group’s revenue and holds the power distribution concession that serves, in whole or in part, 285 municipalities, covering 3,465,509 consumer units, mainly in Santa Catarina and, to a lesser extent, in Paraná. Of the total number of municipalities served, 264 are covered by the concession contract – 263 in Santa Catarina and one in Rio Negro, Paraná – while 21 are served on a precarious basis, for technical and economic convenience, in areas originally granted to other distributors. Celesc Distribuição also supplies power to four concessionaires and 20 permit holders that operate in municipalities in Santa Catarina outside its direct service area. In 2024, it distributed 29,468 GWh and posted gross revenue of R$ 16.2 billion, ranking as the 6th largest public power distribution service provider in Brazil. Its business model is heavily regulated by ANEEL and is based on remuneration for the transportation and commercialization of power within its concession area, with tariffs defined under a price cap regime and returns associated mainly with the volume of investments recognized in the tariff base.

Celesc Distribuição’s customer base is diversified, covering residential, industrial, commercial, rural, public sector, public lighting, public service companies, self-consumption and other power companies, including cooperatives. The service is provided through an extensive high- and low-voltage network, with about 5 thousand kilometers of 138 kV and 69 kV lines and approximately 318 power transformers, totaling 7.8 thousand MVA of capacity. The distribution concession, originally established under ANEEL contract no. 56/1999, was extended for another 30 years by an amendment signed in December 2015, which imposed service quality and economic-financial sustainability targets. Operations are subject to regulatory requirements such as affordable tariffs, universal access and advance contracting of power to meet demand growth, as well as rules on tariff seasonality and system loading, which especially affect high-voltage consumers and coastal regions with strong load variation in the summer.

Celesc Geração S.A. is the subsidiary engaged in power generation, commercialization and, to a lesser extent, transmission. Its own portfolio consists of thirteen hydropower plants – twelve in operation and one in the process of being reactivated – all located in Santa Catarina, plus five photovoltaic solar plants under a remote distributed generation model. As of December 31, 2024, installed capacity in commercial operation totaled 136.51 MW, of which 125.27 MW in own plants and 11.24 MW corresponding to minority stakes in six hydropower generation ventures developed through SPEs with private investors. The company also has a minority stake in a power transmission venture in partnership with EDP, with 230 kV and 525 kV lines and an associated substation, although it has approval to divest this interest. Since January 2024, Celesc Geração has been licensed as a retail energy trader, allowing it to serve eligible consumers in the Free Contracting Environment (ACL), where prices and conditions are freely negotiated between generators, traders and clients.

The group’s third pillar is Companhia de Gás de Santa Catarina – SCGÁS, a mixed-capital company created in 1994, in which Celesc holds a majority stake in voting capital. SCGÁS has an exclusive concession to distribute piped natural gas throughout the State of Santa Catarina, under a 50-year contract signed in 1994. Supply is mainly via the Bolivia-Brazil Gas Pipeline, with guaranteed supply under contract for at least 20 years, and the gas is directed to industrial, commercial, residential and vehicular use. Although SCGÁS’s results are recognized by Celesc using the equity method – and not as a separate operating segment in the consolidated financial statements – its operations reinforce the group’s presence in regulated public utility services beyond electricity.

Celesc’s operations are strongly shaped by the regulatory environment. In the power sector, the company is subject to federal concession laws, specific rules of the sectoral model, oversight by the National Electric Energy Agency (ANEEL) and the frameworks that promoted the unbundling of generation, transmission and distribution activities. The restructuring into a holding company and wholly owned subsidiaries in 2006 complied with Federal Law no. 10,848/2004 and specific state legislation, with ANEEL’s consent. In addition, Celesc joined the former BM&FBovespa’s Level 2 Corporate Governance segment in 2002, adopting governance practices aimed at protecting shareholders and other stakeholders. Its recent history includes the implementation of long-term strategic planning, such as the “Celesc 2030” plan, and initiatives to optimize resources between the holding and subsidiaries, subject to approval by the regulator. For investors following CLSC3 and CLSC4 on B3, Celesc presents itself as a public utility holding company with a core focus on power distribution, complemented by generation, transmission interests and natural gas distribution, in a highly regulated environment with long-term contracts.