EMAE3

EMAE – Empresa Metropolitana de Águas e Energia S.A. is a publicly traded electric power generation company, with common and preferred shares traded on B3 under the tickers EMAE3 and EMAE4. Its origins date back to the late 19th century, with the incorporation in 1899 of The São Paulo Railway, Light and Power Company Limited in Canada, authorized to operate in Brazil by Decree No. 3,349. Over the first half of the 20th century, this group built out a broad hydro and thermal power system tied to the urban and industrial development of the São Paulo Metropolitan Region, highlighted by the construction of the Parnaíba, Paula Souza, Rasgão, Porto Góes plants and, above all, the Henry Borden complex in Cubatão. In 1998, as part of the State of São Paulo’s State Privatization Program, this legacy of generation assets was carved out from Eletropaulo, giving rise to EMAE, which took over the electricity generation concessions previously held by the former distributor.

Incorporated as a publicly held corporation and headquartered in the city of São Paulo, EMAE became responsible for planning, construction, operation, maintenance and commercialization of electricity from a set of strategic plants and hydraulic structures in the State of São Paulo. ANEEL Resolution No. 72/1998 formalized the transfer of rights to exploit public electricity generation services to the company. In 2004, Concession Agreement No. 002/2004 – ANEEL – EMAE consolidated the legal framework for exploiting hydraulic sites such as Henry Borden, Rasgão and Porto Góes, with terms subsequently extended through amendments to 2042 and 2043, depending on the asset. Over this period, the company also reorganized the management of thermal assets, such as the Piratininga Thermoelectric Plant, which is currently leased to Baixada Santista Energia S.A. (BSE), a transaction that generated significant financial income until the end of the lease.

EMAE’s business model is centered on electricity generation under public concession, with a strong predominance of hydroelectric plants and more recent complementarity from solar photovoltaic generation. The company operates both as a public service generation concessionaire – in the case of plants under the physical guarantee quota regime – and as the controlling shareholder of an independent power producer through Pirapora Energia S.A., owner of the Pirapora Small Hydroelectric Plant (PCH). Its activities cover the operation and maintenance of plants and associated hydraulic structures, the sale of energy in the Regulated Contracting Environment (ACR), the execution of investments and improvements in the granted assets, remunerated by regulated tariffs, as well as providing operation and maintenance services for third-party facilities. Despite the existence of different revenue lines, management monitors results on an integrated basis, with no separate reportable operating segments in the consolidated financial statements.

EMAE’s generation complex consists mainly of the Henry Borden hydroelectric complex in Cubatão, which brings together two high-head plants – External and Underground – with 14 generating units equipped with Pelton turbines, totaling 889 MW of installed capacity for a turbineable flow of 157 m³/s. Complementing this portfolio are the Rasgão hydroelectric plant in Pirapora do Bom Jesus, with 22 MW; Porto Góes, in Salto, with 24.8 MW; and the PCH Pirapora, with 25 MW, the latter operated by the subsidiary Pirapora Energia S.A. In 2024, the company inaugurated the Araucária Floating Photovoltaic Plant (UFF Araucária), with 5 MW of installed capacity in floating solar modules on the Billings reservoir, marking its entry into solar generation and the integration between hydro and photovoltaic sources. Long-term strategic planning calls for expanding photovoltaic capacity installed in this reservoir, reinforcing diversification of the generation mix.

EMAE plays a relevant role in the National Interconnected System (SIN) by making approximately 935.8 MW available in the load center of the Southeast Region, in a strategic position relative to the São Paulo Metropolitan Region and the Baixada Santista. The location of the Henry Borden plant, close to major consumer centers, contributes to the stability, restoration and reliability of electricity supply in areas of high economic importance. In addition to generation, the hydraulic system operated by the company plays a structural role in flood control in the Pinheiros and Tietê river basins, through a set of reservoirs, dams, lifting structures and canals. The pumping of waters from the Tietê and Pinheiros rivers to the Billings reservoir increases Henry Borden’s generation capacity and also enables volume management for flood mitigation, in accordance with environmental and operational rules defined by the government of the State of São Paulo.

The sale of energy from plants under EMAE’s direct concession is heavily conditioned by the legal regime of physical guarantee and capacity quotas, established by Provisional Measure 579/2012, converted into Law No. 12,783/2013. Since January 1, 2013, the plants have been remunerated through the Annual Generation Revenue (RAG), calculated and approved by ANEEL and paid in monthly installments by the distributors that receive the energy and capacity quotas. This tariff is intended to cover operating, maintenance and administrative costs, taxes and sector charges, as well as remunerating the investments required to modernize and adapt the assets, in line with the quality standards defined in the Tariff Regulation Procedure (PRORET). Tariff reviews occur in five-year cycles, with annual adjustments, and the hydrological risk of plants under the quota regime has been transferred to distributors, reducing the company’s exposure to hydrological volatility and price swings in the energy market.

On the regulatory and institutional front, EMAE is subject to oversight by the Ministry of Mines and Energy (MME), ANEEL and state environmental agencies, especially CETESB, as well as the rules of the CVM, B3, the National System Operator (ONS), the Energy Research Company (EPE), IBAMA and the Electric Energy Trading Chamber (CCEE). The company maintains accounting and operational separation between regulated and unregulated activities, in line with sector legislation, which covers hydro concessions under the public service regime and the operation of PCH Pirapora as an independent power producer. Consolidated net revenue reached R$ 621.4 million in 2024, with net income of R$ 54.7 million after a material adjustment related to the end of the Piratininga TPP lease, reflecting the transition of this asset from a long-term leasing model to a new contractual arrangement.

From an environmental, social and governance (ESG) standpoint, EMAE has structured a set of practices focused on licensing and regularizing projects, waste management, restoration of canal banks and monitoring impacts on biodiversity. A significant share of its structures was built before environmental licensing became legally mandatory, but expansions and new projects, such as PCH Pirapora and the Piratininga TPP, have undergone formal impact assessment processes, with the issuance of licenses and specific conditions. The company maintains ongoing programs for dredging and maintenance of the Pinheiros river channel, vegetation management, erosion control and environmental compensation. In terms of climate governance, it prepares a corporate greenhouse gas emissions inventory according to the Brazilian GHG Protocol Program methodology, with independent verification by BSI Group, and publishes an annual Sustainability Report aligned with GRI standards, including a materiality matrix and social, environmental and diversity indicators. These practices complement the company’s role as a predominantly renewable energy generator, reinforcing the integration between water resource management, energy security and socio-environmental responsibility, in a context in which its EMAE3 and EMAE4 shares remain listed and traded on B3.