EQTL3

Equatorial Energia, currently named Equatorial S.A., is a publicly traded holding company with a predominant focus on the Brazilian electric power sector. It was 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), and over the years the company has built a growth track record through acquisitions and concessions in different links of the power chain. The company’s common shares are traded on B3 under the ticker EQTL3, and the company migrated to the Novo Mercado corporate governance segment in 2007. On March 30, 2006 it obtained registration with the CVM and a stock exchange listing and, since then, has expanded its activities beyond distribution in Maranhão, going on 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 a 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 economic 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 was by far the predominant contributor to 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 the distribution of electricity through different state 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 in concession areas that fully cover the states of Maranhão, Pará, Piauí, Alagoas, Amapá and Goiás, as well as 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 energy in auctions in the Regulated Contracting Environment (ACR) through CCEAR contracts, supplemented 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 has built a relevant renewable platform through Echoenergia, which is 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 plants 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 this same generation and free market area, Equatorial Renováveis and Equatorial Comercializadora are active in energy trading and service provision, including advisory services for free market consumers and trading of energy from hydro, thermal, biomass, small hydro (PCH), wind and solar sources, with customized contracts.

In the transmission segment, Equatorial Energia established a presence starting in the mid-2010s by 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 around 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 won in ANEEL auctions, such as auctions 13/2015 and 005/2016. However, starting in 2024, the company began a full divestment process in this segment, including the sale of its entire stake in Intesa and in certain transmission SPEs, as well as the signing, in 2025, of a contract to dispose of 100% of the shares of Equatorial Transmissão itself. Once the planned transactions are completed, the company tends to further concentrate its portfolio in distribution, renewable generation, services and sanitation, ceasing to hold relevant assets in transmission.

Equatorial Energia’s activities in basic sanitation began to gain relevance from 2021, marking a diversification move within the universe of regulated infrastructure. Through Equatorial Participações III and the special purpose entity Companhia de Saneamento do Amapá (CSA), the group won an auction for the regionalized concession of water supply and sewage services in the municipalities of the State of Amapá, taking on 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 accounted for a minority share of consolidated net revenue in 2024, at around R$ 246.6 million, and is still in a development stage, it broadens the group’s public utility services base in lines adjacent to electricity.

Equatorial Energia’s geographic footprint covers different regions of the country, with subsidiaries operating in the Northeast, North, Center-West, Southeast and South. The company reports that its controlled companies ensure a 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 regulatory agencies, especially the National Electric Energy Agency (ANEEL), as well as state regulatory frameworks in the case of sanitation. In 2024, consolidated investments (capex) totaled around R$ 8.9 billion, largely directed to power distribution, followed by allocations to renewable generation, sanitation and services.

The regulatory environment has a direct and ongoing impact on Equatorial Energia’s business. As the controlling shareholder of concessionaires and licensees of public services for power generation, distribution and transmission, the company operates under contracts regulated by ANEEL, which establish tariff adjustment mechanisms and periodic reviews, providing predictability and partial protection against inflation through defined indexers. The regulation of the Brazilian power sector 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 continuity targets for supply, while the generation and trading businesses are affected by rules related to renewable sources, long-term contracts and free market dynamics. In sanitation, the company operates under public concessions that follow the sector’s legal framework and requirements for universalization, service quality and investment targets.

In terms of corporate governance, Equatorial Energia is listed in B3’s Novo Mercado segment, which involves practices such as 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 the main shareholder, evolved into a profile with 100% free float in the mid-2010s, after this investor’s exit. The company organizes its central administration and shared services functions among different subsidiaries, including Equatorial Distribuição, Equatorial Transmissão and various intermediate holdings, in order to standardize processes, integrate operations and capture synergies in 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 in itself represent a relevant external revenue line.