EQTL3 Equatorial Energia

Equatorial Energia, currently named Equatorial S.A., is a publicly traded holding company predominantly focused on the Brazilian electric power sector. Incorporated on June 16, 1999 by PPL Global LLC with the initial purpose of participating in the privatization auction of the then Companhia Energética do Maranhão (CEMAR), the company has built over the years a track record of expansion through acquisitions and concessions across different links of the power sector value chain. The company’s common shares trade on B3 under the ticker EQTL3, and it migrated to the Novo Mercado corporate governance segment in 2007. On March 30, 2006, it obtained registration with the CVM and listing on the stock exchange and, since then, has expanded its activities beyond distribution in Maranhão to control assets in distribution, transmission, renewable generation, energy trading, related services and, more recently, basic sanitation.

Equatorial Energia’s corporate structure is typical of a holding company, with its corporate purpose centered on equity interests in other companies, consortia and ventures that operate mainly in the electric power sector or in related activities. The company is organized into distinct business segments that reflect the nature of its products and services: distribution, transmission, generation and trading of energy, sanitation, services and corporate administration. In the fiscal year ended December 31, 2024, the distribution segment accounted by far for the bulk of consolidated net operating revenue, with R$ 41.6 billion out of a total of R$ 45.4 billion, while generation, transmission, services and sanitation contributed smaller shares. This configuration reinforces Equatorial’s profile as a major power distribution group, even though it is diversified into other links of public-utility infrastructure.

Equatorial Energia’s main operating activity is concentrated in electric power distribution through several state-level concessionaires. The group directly or indirectly controls the distributors Equatorial Maranhão, Equatorial Pará, Equatorial Piauí, Equatorial Alagoas, CEEE-D (Companhia Estadual de Distribuição de Energia Elétrica, in Rio Grande do Sul), CEA (Companhia de Eletricidade do Amapá) and Equatorial Goiás. These distributors operate concession areas that fully cover the states of Maranhão, Pará, Piauí, Alagoas, Amapá and Goiás, in addition to a significant region of Rio Grande do Sul, jointly serving more than 14.4 million consumers in hundreds of municipalities. The operations of these distributors involve the regulated purchase of power in auctions in the Regulated Contracting Environment (ACR) through CCEAR contracts, complemented by programs such as Proinfa, physical guarantee quotas, Eletronuclear and Itaipu, and the delivery of energy through extensive high-, medium- and low-voltage networks with overhead and underground line infrastructure.

In power generation, Equatorial Energia built a relevant renewable platform through Echoenergia, indirectly controlled via Equatorial Transmissão. Echoenergia, headquartered in São Paulo, joined the group in 2022 and brought approximately 1.2 GW of installed capacity in wind farms, later complemented by solar projects under development and construction. Among the investments made by the group up to the end of 2024, the Ribeiro Gonçalves and Barreiras 1 solar parks stand out, adding up to hundreds of megawatts of installed capacity. Echoenergia’s projects are mostly backed by long-term power purchase agreements (PPAs), with average terms of around 17 years, and operate with high technical availability. In the same generation and free market front, Equatorial Renováveis and Equatorial Comercializadora operate in power trading and service provision, including advisory for free-market consumers and energy trading from hydroelectric, thermal, biomass, SHP, wind and solar sources, with customized contracts.

In the transmission segment, Equatorial Energia consolidated its presence from the mid‑2010s onward, after winning concession auctions for the construction and operation of lines in states such as Bahia, Piauí, Minas Gerais and Pará, in addition to acquiring Intesa Transmissora de Energia, with about 650 km of lines between Tocantins and Goiás. These activities were concentrated in the holding company Equatorial Transmissão, which groups several special-purpose entities responsible for lots awarded in ANEEL auctions, such as auctions 13/2015 and 005/2016. However, starting in 2024, the company initiated a full divestment process in this segment, including the sale of its entire interest in Intesa and certain transmission SPEs, as well as signing, in 2025, a contract for the disposal of 100% of the shares of Equatorial Transmissão itself. Once the planned transactions are completed, the company is expected to further concentrate its portfolio on distribution, renewable generation, services and sanitation, ceasing to hold relevant assets in transmission.

Equatorial Energia’s operations in basic sanitation began to gain relevance as of 2021, marking a diversification move within the universe of regulated infrastructure. Through Equatorial Participações III and the special-purpose company Companhia de Saneamento do Amapá (CSA), the group won the auction for the regionalized concession of water supply and sewage services in municipalities in the State of Amapá, assuming long‑term investment and operating commitments. In addition, the group holds an interest in a sanitation operation in São Paulo associated with SABESP, reinforcing its exposure to the water and sewage subsector. Although this segment represents a minority share of consolidated net revenue in 2024, at about R$ 246.6 million, and is still in a development phase, it expands the group’s base of public-utility services into lines adjacent to electric power.

Equatorial Energia’s geographic presence covers different regions of Brazil, with subsidiaries operating in the Northeast, North, Center‑West, Southeast and South. The company reports that its controlled companies ensure presence in approximately 28.34% of the national territory, with large concession areas in states with significant land area, such as Pará, Goiás and Maranhão. Operations are concentrated in the Brazilian market, with no indication of material revenue abroad, and are anchored in concession contracts and authorizations issued by federal regulators, especially the National Electric Energy Agency (ANEEL), as well as state regulatory frameworks in the case of sanitation. In 2024, consolidated capital expenditures (capex) totaled around R$ 8.9 billion, largely directed to power distribution, followed by investments in renewable generation, sanitation and services.

The regulatory environment has a direct and ongoing influence on Equatorial Energia’s business. As the parent company of concessionaires and authorized companies providing public services in power generation, distribution and transmission, the company operates under contracts regulated by ANEEL, which define tariff adjustment mechanisms and periodic reviews, providing predictability and partial protection against inflation through defined indexers. The Brazilian power sector’s regulation has undergone successive reforms since the 1990s, with the creation of ANEEL, the National System Operator (ONS) and the Electric Energy Trading Chamber (CCEE), as well as the implementation of the New Power Sector Model in 2004, which separated trading into the Regulated Contracting Environment (ACR) and the Free Contracting Environment (ACL). The group’s distributors are subject to specific rules for energy contracting, participation in regulated auctions, and quality and service continuity targets, while the generation and trading businesses are impacted by rules concerning renewable sources, long‑term contracts and the dynamics of the free market. In sanitation, the company operates under public concessions that follow the sector’s legal framework guidelines and requirements for universalization, service quality and investment targets.

In terms of corporate governance, Equatorial Energia is listed on B3’s Novo Mercado segment, which involves practices such as share capital composed exclusively of voting common shares and requirements for transparency and protection of minority shareholders. The ownership structure, which once had FIP PCP as its main shareholder, evolved to a profile with 100% free float in the mid‑2010s, after this investor’s exit. The company organizes its central administration functions and shared services among different subsidiaries, including Equatorial Distribuição, Equatorial Transmissão and several intermediate holdings, in order to standardize processes, integrate operations and capture synergies across its concessions. This organization is reflected in the administration segment, which concentrates corporate services provided to the group as a whole, even though it does not itself represent a material line of external revenue.