EQPA3

Equatorial Pará Distribuidora de Energia S.A. is the concessionaire responsible for distributing electricity throughout the State of Pará, and is part of the Equatorial Energia Group, whose shares are traded on B3 under the tickers EQPA7, EQPA5, EQPA6 and EQPA3. Incorporated in 1962 under the original name Centrais Elétricas do Pará S.A. – CELPA, the company was created with the purpose of electrifying the state of Pará, taking on the position of the state’s sole power distributor. In 1969, it merged with Força e Luz do Pará S.A. – Forluz, becoming the new local concessionaire and, from 1981 onward, began to receive energy from the North–Northeast Interconnected System, which increased supply security in the region. In 1998, in the context of the Brazilian power sector privatization process, the company was acquired at auction by a consortium formed by Inepar and Rede Energia, becoming part of the sector’s private structure.

Equatorial Pará’s recent trajectory includes a period of significant financial restructuring. In February 2012, the distributor entered a judicial reorganization process with the Brazilian Electricity Regulatory Agency (ANEEL), with the plan approved at a creditors’ meeting in September of the same year. On November 1, 2012, control was assumed by Equatorial S.A. (now Equatorial Energia), which took the lead in the operational and economic turnaround process, upon approval by ANEEL and the Administrative Council for Economic Defense (CADE). In 2013, after a capital increase approved at a shareholders’ meeting, Equatorial came to hold more than 96% of the distributor’s total capital. The formal conclusion of judicial reorganization was determined by the Court of Justice of Pará in December 2014, consolidating the reorganization phase. Subsequently, in 2019, a corporate transaction was structured with Itaú Unibanco S.A., which became a minority preferred shareholder of Equatorial Energia Distribuição S.A., while Equatorial maintained control of the distributor in Pará and other group concessionaires.

Equatorial Pará’s main activity is the distribution of electricity under a public concession regime. The company operates exclusively in the State of Pará, whose territory covers around 1.248 million km² and approximately 8.6 million inhabitants spread across 144 municipalities. The company’s corporate purpose includes the construction and operation of power generation, transmission, transformation and distribution systems, as well as related services, in areas where it holds or may obtain concessions, as well as participation in similar companies. In practice, however, all of Equatorial Pará’s net operating revenue and profit is derived from the distribution segment, resulting in a business model focused on delivering electricity to end consumers in its concession area. As of December 31, 2024, the company had no subsidiaries, reinforcing its profile as the group’s direct operating vehicle in the state.

From an operational standpoint, Equatorial Pará ended 2024 with 3,064,204 customers, split among residential, industrial, commercial and other classes. Residential consumers accounted for 87.96% of the total base, while industrial customers made up 0.15%, commercial 5.00% and other categories 6.89%. Energy distributed reached 11,610,107 MWh in the 2024 fiscal year, with 43.42% allocated to the residential segment, 14.35% to industrial, 19.11% to commercial and 15.37% to other classes. The volume of energy sold (captive and free market) reached 11,610 GWh, up 6.77% versus 2023, driven, among other factors, by a 5.30% expansion in residential consumption. The billed consumer base grew 2.49% in the same period. In terms of service quality, the DEC (Equivalent Duration of Interruption per Consumer Unit) was 19.4 hours per customer per year in 2024, while the FEC (Equivalent Frequency of Interruption) stood at 8.0 times per customer per year. Energy losses over required energy were 28%, a 1 percentage point increase compared with 2023, a relevant indicator for the distributor’s economic–regulatory performance.

Equatorial Pará’s energy supply chain is based on the purchase of virtually all required electricity in regulated auctions held by ANEEL, through Regulated Market Power Purchase Agreements (CCEAR). These contracts serve the Regulated Contracting Environment (ACR) and follow rules established by the New Power Sector Model Law and Decree No. 5,163/2004, as well as Decree No. 9,143/2017, which governs mandatory auctions with different delivery horizons (A-3, A-4, A-5, A-6 and A-1). As of December 31, 2024, around 82.6% of the company’s contracted energy was tied to CCEARs, while the remaining 17.4% came from programs and mechanisms such as PROINFA, Physical Guarantee Quotas and Eletronuclear. On that date, Equatorial Pará had 746 CCEAR contracts with 609 suppliers, with a diversified energy source portfolio: 50.9% hydroelectric power, 33.8% from fossil fuels and 15.3% from alternative sources such as wind and solar. The distribution process involves high-, medium- and low-voltage networks, with subtransmission lines between 69 kV and 138 kV, transformers and metering, control and protection systems that connect the national transmission system to urban and rural end consumers.

Equatorial Pará operates entirely within Brazil and is fully concentrated in the territory of Pará, with no revenue generated abroad. At the national level, the power distribution segment is composed of 53 concessionaires, which together serve more than 82 million consumer units. The company accounts for a relevant share when considering territorial coverage: in 2024, its concession area represented 14.7% of the national territory, while its share of total customers was 3.3% and, in energy distributed over the last 12 months, 2.2%, according to ANEEL data. The business remuneration model is regulated, with tariffs set by ANEEL under a price-cap regime, in which the agency sets the maximum amount that can be charged. The tariff structure distinguishes between Portion A, which reflects generation, transmission and sector charge costs, and Portion B, which covers the distributor’s own distribution costs, under the concessionaire’s management. Annual tariff adjustments seek to preserve the concession’s economic–financial balance, adjusting costs for inflation (IGP-M or IPCA, depending on the contract) and via the X Factor mechanism, linked to efficiency gains. The company does not have revenue concentration in large consumers: in 2024, no customer accounted for more than 10% of net revenue.

The concession for the public electricity distribution service was formalized by Concession Agreement No. 182/98, entered into on July 28, 1998 between Equatorial Pará and the Federal Government, through ANEEL, for a term of 30 years. This term may be extended, at the discretion of the granting authority, for an equal period, provided that the distributor expresses its interest up to 36 months before the contract expires. As a concessionaire of an essential public service, Equatorial Pará is subject to sector legislation and ANEEL’s technical and economic regulation, including quality standards, loss targets, investment requirements and research and development and energy efficiency programs. In addition, operations in Pará benefit from SUDAM’s regional framework which, under the federal tax incentive policy, may allow a 75% reduction in Corporate Income Tax for companies in priority development areas, provided that reinvestment conditions in the region are met. Changes in regulatory frameworks under discussion, such as Bill No. 414/2021, may impact the business environment for power distributors in the future.

In the environmental, social and corporate governance arena, Equatorial Pará follows the Equatorial Group’s sustainability guidelines. The group’s policy emphasizes socio-environmental risk management, operational safety and the pursuit of positive impacts on the environment and communities. Each year, the group publishes a Sustainability Report prepared based on the GRI and SASB methodologies and indicators disclosed to ANEEL, including a materiality matrix developed with the participation of more than 350 stakeholders, such as customers, employees, shareholders, communities, government and suppliers. Material topics highlighted include service safety and quality, access to energy, human and labor rights, innovation, customer relations, waste management, grid reliability, biodiversity protection, social investment, occupational health and safety, ethics and compliance, risk management, opportunities in renewable energy, diversity and climate strategy. The company has been a signatory to the UN Global Compact since 2021, focusing on SDG 4 (Quality Education), SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). In line with best reporting practices, the group is in the process of aligning with the ISSB’s IFRS S1 and IFRS S2 standards, which will serve as a basis for alignment with TCFD recommendations, and Equatorial Pará has already published a greenhouse gas emissions inventory for scopes 1, 2 and 3, assured by an independent auditor, reinforcing the integration of climate aspects into its business strategy.