EQPA5 Equatorial Energia

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

Equatorial Pará’s recent history includes a period of significant financial restructuring. In February 2012, the distributor entered judicial recovery proceedings with the Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica – ANEEL), with the plan approved at a creditors’ meeting in September of the same year. On November 1, 2012, control was taken over by Equatorial S.A. (now Equatorial Energia), which began to lead the operational and economic turnaround process, subject to approval by ANEEL and the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – CADE). In 2013, after a capital increase ratified at a shareholders’ meeting, Equatorial came to hold more than 96% of the distributor’s total capital. The formal closing of the judicial recovery process was ordered by the Court of Justice of Pará in December 2014, consolidating the reorganization phase. Later, 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 retained control of the distributor in Pará and other group concessionaires.

Equatorial Pará’s core 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 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 a concession, as well as equity interests in similar companies. In practice, however, all of Equatorial Pará’s net operating revenue and profit come from the distribution segment, resulting in a business model concentrated on delivering power to end consumers within 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, distributed 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%. Power distributed totaled 11,610,107 MWh in fiscal year 2024, with 43.42% going 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% increase in residential consumption. The base of billed consumers grew 2.49% in the same period. In terms of service quality, DEC (Equivalent Duration of Interruption per Consumer Unit) was 19.4 hours per customer per year in 2024, while FEC (Equivalent Frequency of Interruption) was 8.0 times per customer per year. Energy losses as a percentage of energy required stood at 28%, an increase of 1 percentage point compared to 2023, a relevant indicator for the distributor’s economic and 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 (Contratos de Comercialização de Energia no Ambiente Regulado – CCEAR). These contracts serve the Regulated Contracting Environment (Ambiente de Contratação Regulada – ACR) and follow rules established by the New Electric 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, about 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 CCEARs with 609 suppliers, with a diversified generation mix: 50.9% hydropower, 33.8% fossil fuel and 15.3% 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, which connect the national transmission system to urban and rural end consumers.

Equatorial Pará’s operations take place entirely in Brazil and are fully concentrated in the state of Pará, with no revenue generated abroad. Nationally, the electricity distribution segment is made up of 53 concessionaires, which together serve more than 82 million consumer units. The company accounts for a significant share when territorial size is considered: in 2024, its concession area represented 14.7% of Brazil’s territory, while its share of customer volume 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 defined by ANEEL under a price-cap system, in which the agency sets the maximum amount that can be charged. The tariff structure distinguishes Parcel A, which reflects costs with generation, transmission and sector charges, and Parcel B, which covers the distributor’s own costs, under the concessionaire’s management. Annual tariff adjustments seek to preserve the economic and financial balance of the concession, updating 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 single customer accounted for more than 10% of net revenue.

The concession to operate the public electricity distribution service was formalized by Concession Agreement No. 182/98, executed on July 28, 1998 between Equatorial Pará and the Federal Government, through ANEEL, for a 30-year term. This term may be extended, at the discretion of the granting authority, for an equal period, provided the distributor expresses its interest up to 36 months before the contract expires. As the 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 & development and energy efficiency programs. In addition, operations in Pará benefit from the SUDAM regional incentive framework which, under the federal tax incentive policy, may allow a 75% reduction in Corporate Income Tax for companies in priority development areas, provided 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 electricity distributors in the future.

In environmental, social and corporate governance matters, Equatorial Pará follows Grupo Equatorial’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 on indicators reported to ANEEL, including a materiality matrix built with the participation of more than 350 stakeholders, such as customers, employees, shareholders, communities, government and suppliers. Key material topics 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, with a focus 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-related aspects into its business strategy.