Enel Distribuição Ceará, formerly known as Coelce, is the utility company responsible for electricity distribution throughout the State of Ceará. The company was created in 1971 through the unification of four state distributors – Cenorte, Celca, Cerne and Conefor – under State Law No. 9,477. Authorization to provide public electric power service was granted in the same year by Decree No. 69,469, consolidating its role as the central player in Ceará’s power distribution infrastructure. Originally, its capital was mostly held by municipal governments in the state, by Eletrobras and by the state government, reflecting the predominantly state-owned model then in force in Brazil’s power sector.

The company’s ownership structure went through significant changes with its IPO and privatization. In 1995, it was registered as a publicly held company with the CVM, and its shares began trading on B3 under the tickers COCE3, COCE5 and COCE6. In 1998, control was privatized through an auction on the former Rio de Janeiro Stock Exchange, acquired by the Distriluz consortium, formed by Enersis, Chilectra and CERJ (now Ampla Energia). Subsequently, the controlling group underwent a corporate reorganization that culminated in the centralization of control under Enel Brasil S.A., a holding company that became the majority shareholder. In 2017, after a capital increase subscribed by Enel Américas S.A. and subsequent transfer of the shares to Enel Brasil, the latter came to hold about 74% of the distributor’s total capital, consolidating its integration into the Enel group.

The core activity of Enel Distribuição Ceará is electricity distribution, the only operating segment reported in its financial statements. The utility operates under Electric Power Public Service Distribution Concession Contract No. 001/1998, signed with the federal government through the Brazilian Electricity Regulatory Agency (ANEEL), currently expiring on May 13, 2028, with the possibility of a 30-year extension under sector legislation. Current regulatory rules prevent the distributor from engaging in generation, transmission, direct energy sales to free consumers or holding interests in other companies not related to the concession. Its business model is based on purchasing energy in auctions and regulated contracts, in quotas of specific projects and through programs such as PROINFA, for subsequent supply to captive consumers and making the grid available to free consumers in exchange for a distribution system use fee.

The company’s operating base covers approximately 4.4 million consumer units across 184 municipalities in Ceará, over an area of about 149,000 km² with an estimated population of 8.8 million inhabitants. As of December 31, 2024, the concession area accounted for 4.8% of Brazil’s total number of electricity consumers and 2.4% of the volume of energy distributed in the country. Enel Distribuição Ceará’s power grid consists of approximately 159,000 kilometers of distribution lines, 5,600 kilometers of transmission lines and 128 substations, an infrastructure that enables the transport of energy from the interconnection points with the basic grid and other systems to end consumers at low and medium voltage. The company does not generate the energy it sells; it purchases it from generators, from quotas of plants such as Itaipu and Angra 1 and 2, and from alternative sources, following criteria set out in sector regulations.

From an economic and financial standpoint, Enel Distribuição Ceará’s net operating revenue totaled R$ 8.44 billion in the year ended December 31, 2024, a slight decline compared with the previous year. The distributor supplied and distributed around 13,656 GWh of energy (including short-term operations), with aggregate consumption higher than in 2023. In terms of demand profile, 2024 consumption was divided among residential, commercial, industrial, free consumers and other categories (including resale and self-consumption). The residential class accounted for the largest share of consumption, while free consumers showed significant expansion, even though the actual energy sales to these agents are carried out by other market participants, with the company receiving revenue from the Distribution System Use Tariff (TUSD). The company does not have individual customers accounting for more than 10% of total net revenue, which indicates a diversified billing base.

Enel Distribuição Ceará’s operations are fully concentrated in Brazil, with 100% of its activities in the State of Ceará and no revenue from abroad. The concession contract grants exclusivity to provide public distribution services in the concession area, characterizing a regulated natural monopoly in the grid segment. Competition in the sector is indirect, through economic regulation, periodic tariff reviews, efficiency incentives and service quality indicators monitored by ANEEL. The company must comply with continuity and service quality standards, such as frequency and duration of outages, and must pay financial compensation to consumers if regulatory limits are not met. In 2024, total energy losses in the distributed grid were around 17.8%, and the company operated with average indexes of 4.19 outages and 9.68 hours of annual outage duration per customer.

The Brazilian power sector’s regulatory environment has a direct impact on Enel Distribuição Ceará’s operations and results. ANEEL and the Ministry of Mines and Energy define the rules for energy purchase auctions, criteria for passing costs on to consumers, tariff review and adjustment processes, sector charges and conditions for extending concessions. Legislation also establishes ownership and operational restrictions, such as a ban on self-dealing in energy supply contracts between related parties, except in specific cases, as well as limits on market concentration, in accordance with ANEEL resolutions. The freedom of large consumers to choose their suppliers is governed by regulations for free and special consumers, who may contract energy from generators and traders while continuing to use the distributor’s grid by paying TUSD and TUST, which changes the revenue mix between energy sales and grid-use revenues.

The company adopts sustainability practices aligned with the guidelines of the Enel group in Brazil, integrating environmental, social and governance aspects into its corporate strategy. It publishes annual reports with ESG information prepared in accordance with Global Reporting Initiative (GRI) methodologies and referenced to the UN Sustainable Development Goals. Enel Brasil consolidates data from its subsidiaries in a sustainability report, including targets and performance indicators for topics such as safety, environmental impacts, community relations, service quality and corporate ethics. Enel Distribuição Ceará maintains a Sustainability Plan with targets monitored by the board of directors, and a double materiality analysis – conducted using a proprietary platform – identifies risks, opportunities and impacts that are relevant to the business and to society, guiding the distributor’s investment and management priorities.

Shares COCE3, COCE5 and COCE6, issued by Enel Distribuição Ceará, remain listed on B3, reflecting its status as a publicly held company with a dispersed shareholder base, albeit with control concentrated in Enel Brasil S.A. Trading on the stock exchange subjects the company to the corporate governance practices required in the Brazilian capital markets, including the disclosure of periodic information, communication of material facts and transparency regarding strategic decisions such as potential changes of control, concession renewal and capital structure. In this context, the regulatory evolution of the power sector, the operating performance of the distribution grid in Ceará, the energy consumption dynamics of different customer classes and ESG risk management are key variables for monitoring the company in the Brazilian equity market.