CMIG4 CEMIG

Companhia Energética de Minas Gerais – CEMIG was founded on May 2, 1952, with the goal of providing the State of Minas Gerais with the infrastructure needed for development in the power generation, transmission, and distribution segments. Throughout the 1950s and 1960s, the company inaugurated its first hydropower plants, such as Tronqueiras, Itutinga, and Salto Grande, and began transmission and distribution operations, consolidating its presence in the Brazilian power sector. In the following decades, it expanded its generation fleet with plants such as São Simão and Emborcação and, in the 1980s, created Gasmig and adopted its current name, Companhia Energética de Minas Gerais – CEMIG. During this phase, it also launched programs to expand service to low‑income populations, environmental protection initiatives, and research into alternative energy sources, reinforcing its profile as a public utility company with a relevant role in public policy.

From the 1990s onward, CEMIG intensified its partnerships with the private sector to build hydropower plants, such as the Igarapava plant, which went into operation in 1998. In 2000, it simultaneously built the Porto Estrela, Queimado, and Funil hydropower plants and joined the Dow Jones Sustainability Index, where it has remained ever since. In 2001, it built 12 new hydropower plants and had its shares listed directly on the New York Stock Exchange (NYSE), in addition to beginning trading on Latibex, a segment of the Madrid Stock Exchange, in 2002. In 2004, the company carried out the corporate unbundling of its operations, creating the wholly owned subsidiaries Cemig Geração e Transmissão S.A. (Cemig GT) and Cemig Distribuição S.A. (Cemig D), and began operating as a holding company responsible for the group’s control and strategic coordination. CEMIG shares, traded on B3 under the tickers CMIG3 and CMIG4, represent ownership in a group that has consolidated over decades as one of the leading players in the national power sector.

The current structure of the CEMIG Group is composed of the holding company Cemig H, the subsidiaries Cemig GT, Cemig D, Companhia de Gás de Minas Gerais (Gasmig), Sete Lagoas Transmissora de Energia S.A., and Cemig Soluções Inteligentes em Energia S.A. (Cemig SIM), as well as several subsidiaries and jointly controlled entities. In total, there are 87 companies and 44 consortia, with assets and businesses in several Brazilian states, although with operational focus concentrated in Minas Gerais. The business model covers power generation, transmission, distribution, sales, and trading, as well as natural gas distribution and energy solutions. In 2024, consolidated net revenue was R$ 39.8 billion, with no material concentration in a single customer, as no individual billing exceeded 10% of that amount, indicating a diversified base of consumers and contracting parties across its different operating segments.

In power generation, CEMIG operates a 100% renewable fleet, composed of hydro, wind, and solar projects. As of December 31, 2024, Cemig GT held interests in 48 centralized generation plants, including 36 hydropower plants, 10 solar photovoltaic plants, and 2 wind farms, located in the states of Ceará, Espírito Santo, Minas Gerais, Pará, and Rio de Janeiro, with total installed capacity of 4,679 MW. The generation mix is predominantly hydro, accounting for 96.8% of output in 2024, complemented by wind (2.5%) and solar (0.7%) sources. The group monitors the availability of its plants using the FID (Availability Factor) indicator, which reached 96.44% in December 2024, a result associated with more efficient scheduled maintenance shutdowns and low levels of unscheduled events. CEMIG’s share of the country’s total installed generation capacity is 2.21%, according to ANEEL data, underscoring its relevance in the National Interconnected System (SIN).

In transmission, Cemig GT operates and maintains 42 own extra‑high‑voltage substations and approximately 5,060 km of transmission lines at 230, 345, and 500 kV, integrated into the SIN Basic Grid. These assets represent about 2.95% of the total 171,640 km of transmission lines in the Brazilian system, according to data from the National System Operator (ONS). In addition to its own assets, the company provides operation and maintenance services for substations and transmission lines owned by other agents, maintaining contracts with 10 companies covering 14 substations and 95 km of lines. Transmission is regulated by ANEEL and operated in a coordinated manner by ONS, in an environment with strong government oversight and compensation based on allowed annual revenues, subject to periodic reviews and compliance with availability and quality standards.

In the distribution segment, operated by Cemig D, the group holds the largest power distribution concession in Brazil in terms of number of customers and energy distributed, according to ANEEL reports. The concession area covers approximately 567,478 km², about 97% of the territory of Minas Gerais, with a 574,606 km network spanning urban and rural areas, in addition to distribution lines. In December 2024, the market served totaled 9.404 million customers, including captive consumers in the Regulated Contracting Environment (ACR) and eligible consumers in the free market (ACL). The company also serves around 1.320 million beneficiaries of the social tariff, equivalent to about 17% of the residential class, placing Cemig D among the distributors with the largest number of low‑income customers served. Distribution revenues arise both from energy sales to the captive market and from compensation for the use of the distribution system by free consumers.

Beyond the traditional power chain, CEMIG operates in energy trading, energy solutions, and natural gas. In the free market, it operates through Cemig Trading S.A. and Empresa de Serviços de Comercialização de Energia Elétrica S.A. (ESCEE), offering power purchase and sale services to free and special consumers, price and consumption scenario analysis, representation before the CCEE, contract structuring, and technical consulting. In 2024, CEMIG maintained its leadership in serving the free market, with approximately 14% market share, with customers in all Brazilian states, especially in Minas Gerais, São Paulo, and Rio Grande do Sul. The company also trades renewable energy certificates, such as Cemig REC and I‑REC, and reached 1,746 average MW of incentivized energy sold, equivalent to nearly 15% of this segment, according to CCEE data.

Activities in energy solutions and natural gas complement the group’s portfolio. Cemig SIM, created in 2019, operates in distributed generation, energy efficiency, cogeneration, electric mobility, and other innovative energy solutions, focusing on commercial, industrial, and service customers. In 2024, it invested R$ 342 million in photovoltaic plants and reached 35,500 solar subscription consumer units. Gasmig, in which CEMIG holds 99.57% of the capital, is the exclusive distributor of piped natural gas in Minas Gerais, with its concession extended until 2053. In 2024, it distributed about 2.8 million m³ per day to 103,800 customers in 49 cities, including industrial and commercial customers, CNG stations, cogeneration companies, and more than 100,000 residential units, with investments of R$ 358.4 million in the expansion of an additional 211 km of gas pipelines. All of these operations, combined with the strong regulatory framework of the power and piped gas sectors, shape CEMIG’s risk‑return profile, with CMIG3 and CMIG4 shares traded on B3 reflecting investors’ exposure to an integrated public utility group with a significant presence in the Brazilian energy market.

The regulatory environment is central to CEMIG. Its power generation, transmission, and distribution activities depend on concessions, authorizations, and permits granted by the Federal Government, under the supervision of the Ministry of Mines and Energy (MME), the Brazilian Electricity Regulatory Agency (ANEEL), the National System Operator (ONS), and other authorities. Laws such as the Concessions Law (Law 8,987), Law 9,074, Law 9,648, and Law 10,848 structured unbundling, concession auctions, open access to distribution and transmission systems, and the regulated and free contracting model. These rules, along with subsequent amendments, directly impacted revenues, concession terms, and the economic conditions of Cemig GT and Cemig D contracts, including a significant reduction in allowed annual transmission revenue in 2013 and processes for indemnification of non‑depreciated assets. In addition, the company benefits from tax incentives for projects located in the Sudene area, with a 75% reduction in income tax. These amounts are accounted for as government grants and allocated to a tax incentive reserve, adding another relevant regulatory component to its results.