EKTR3

Neoenergia Elektro S.A., which uses the corporate name Elektro Redes in its distribution operations, is an electric power utility with shares traded on B3 under the tickers EKTR3 and EKTR4. The company was incorporated in 1998 following a restructuring of CESP, when power distribution assets were contributed to the new company and its employees were transferred to the new operating structure. In August 1998, the federal government granted the company, through a concession agreement, the right to provide public electricity distribution and generation services in specific municipalities. The company’s capital was initially dispersed, but its corporate history has undergone significant changes, including a change of control and the launch of a tender offer.

The most significant change in its shareholder structure took place in 2011, when the then indirect controlling shareholder AEI sold to Iberdrola Energia do Brasil Ltda. all the shares it held in the company, a transaction that involved approximately 99.68% of total capital and 99.97% of voting capital. This transaction, approved by the Brazilian Electricity Regulatory Agency (ANEEL), marked the effective entry of the Spanish group Iberdrola into the utility’s control, with the goal of expanding its presence in the Brazilian power market. As a result of this transaction, a tender offer was launched for the outstanding common shares, in accordance with article 254-A of the Brazilian Corporations Law and CVM regulations, further reducing the free float of EKTR3 and EKTR4 shares. Later, in 2016, the company adopted the name Neoenergia Elektro S.A., aligning itself with the corporate brand of its current parent company, Neoenergia S.A., which merged the former Elektro Holding S.A. in 2017.

Elektro Redes’ business model is fully focused on electricity distribution, a segment that accounted for 100% of the company’s net revenue and profit in recent fiscal years and in the first half of 2025. As a distributor, the company does not generate the energy it sells: it receives power from the National Interconnected System (SIN) at high voltage, through border metering points, steps the voltage down to commercial levels, and delivers it to end consumers in its concession area. Its remuneration comes mainly from supplying energy to the captive market and from revenue from the use of the distribution system by free consumers, who contract energy from generators or traders but continue to use the utility’s grid. Tariff regulation and the pass-through of non-manageable costs, such as power purchases and sector charges, shape the formation of the distributor’s revenues and margins, in line with the Brazilian electricity sector’s regulatory framework.

Neoenergia Elektro’s concession area covers around 120,000 km² and includes 228 municipalities, 223 of which are in the state of São Paulo and 5 in Mato Grosso do Sul. The customer base is growing steadily, reaching approximately 2.98 million consumer units in 2024, with 20,829 GWh of energy distributed in the same year, considering captive, free and distributed generation markets. The electrical infrastructure under the company’s responsibility includes medium and low-voltage distribution networks, high-voltage distribution lines, substations, transformers, poles, and a large fleet of operation and maintenance vehicles. In June 2025, the company operated 121,400 kilometers of distribution network, about 2,600 kilometers of high-voltage lines, 162 substations and more than 200,000 distribution transformers, reflecting a business that is intensive in regulated assets.

The market served by Elektro Redes is diversified across consumer classes, which influences demand dynamics and revenue mix. The main consumer categories include residential, industrial, commercial, rural and other public service classes, government, public lighting and own use. In the first half of 2025, energy delivered grew 2.1% compared to the same period in 2024, with expansion in segments such as residential, industrial and commercial, driven by factors such as income growth, improved economic indicators and the advance of distributed micro and mini-generation. The industrial class recorded growth associated, among other factors, with the performance of sectors such as non-metallic minerals and food and beverages, while the rural class contracted in the period, highlighting different behaviors by consumption segment.

Neoenergia Elektro’s competitive environment is characterized as a natural monopoly within its concession area, where there is no direct competition in the provision of electricity distribution services. Nonetheless, part of its consumers can migrate to the free energy market, contracting supply from generators or traders, although use of the distribution grid continues to be remunerated via system usage tariffs. Ongoing regulatory changes, such as those envisaged in Provisional Measure No. 1,300/2025, are expected to gradually alter the power contracting structure, expanding access to the free market and creating new entities, such as the Supplier of Last Resort (SUI). These changes, however, preserve the distributors’ role in operating local grids, maintaining the relevance of the distribution business within the electricity value chain.

Neoenergia Elektro’s operations are heavily conditioned by electricity sector regulation, with ANEEL playing a central role in defining tariffs, quality targets, tariff review criteria and concession oversight. The Ministry of Mines and Energy sets energy policy guidelines, while bodies such as the National Energy Policy Council, the Electricity Sector Monitoring Committee, the National System Operator (ONS), the Electric Energy Trading Chamber (CCEE) and the Energy Research Company (EPE) make up the sector’s institutional framework. The utility is subject to supply continuity indicators, such as SAIDI (DEC, equivalent outage duration) and SAIFI (FEC, equivalent outage frequency), whose results influence quality perception and may have economic effects, including through penalty or incentive mechanisms defined by the regulator.

In terms of customer relations and operational efficiency, Elektro Redes has been expanding the use of digital channels and remote service solutions. The company offers a 24-hour call center, service via WhatsApp, a smartphone app in the main app stores, a web agency and an active presence on social networks, concentrating a large volume of requests in digital channels. The gradual migration of services to these channels aims to increase resolution and reduce service effort, while adjusting the structure of in-person and accredited channels. The geographic dispersion and socioeconomic diversity of the served area result in heterogeneous consumption profiles, with seasonality associated with climatic factors, industrial cycles, agricultural harvests and demand variations in coastal regions.

On environmental, social and governance matters, Neoenergia Elektro is part of Neoenergia group’s corporate sustainability strategy. ESG performance is disclosed annually in a sustainability report, published since 2004, which uses as references standards such as GRI, SASB for the electric utilities sector, recommendations aligned with the former TCFD and current ISSB standards (IFRS S1 and S2), in addition to following Aneel’s guidelines for social and environmental reports. The document is subject to internal audit review and independent assurance, and was recently reviewed by Deloitte Touche Tohmatsu Auditores Independentes Ltda. It incorporates a materiality matrix based on environmental, social and governance topics, in line with international benchmarks and the UN Sustainable Development Goals. All of the company’s revenue is generated in Brazil, with no exposure to operating revenue in other countries, which reinforces the domestic nature of its asset base and regulation.