GEPA3 Rio Paranapanema Energia

Rio Paranapanema Energia is a Brazilian publicly held company incorporated in 1999, created from the partial spin-off of Companhia Energética de São Paulo (CESP) into three generation companies. Initially called Companhia de Geração de Energia Elétrica Paranapanema S.A. (CGEEP), it grouped the generation assets located along the Paranapanema River basin, between the states of São Paulo and Paraná. Still in 1999, its controlling interest was privatized and acquired by companies of the Duke Energy group, and in 2000 it was renamed Duke Energy International, Geração Paranapanema S.A. The current corporate name, Rio Paranapanema Energia, was adopted in 2017, after China Three Gorges Corporation (CTG) became the controlling shareholder, consolidating the company’s integration into one of the largest private power generation groups in the country. The company’s shares, traded on B3 under the tickers GEPA3 and GEPA4, represent an interest in a business focused on hydroelectric generation and energy trading in the Brazilian market.

Rio Paranapanema Energia’s main activity is the generation and commercialization of electric power from hydroelectric assets. The company operates exclusively in the generation link, with no participation in transmission or distribution activities, in a highly regulated environment. Its business model is centered on the efficient operation of a generation complex composed of hydroelectric power plants and small hydroelectric plants (PCHs), on the management of energy sales contracts, and on participation in the free energy market (ACL). The company reports that approximately 100% of its gross revenue comes from the generation and sale of electric power, which underscores the single-business nature of its operations. In 2024, its net operating revenue was R$ 1.204 billion, with net income of R$ 431.3 million and EBITDA of R$ 843.9 million, reflecting an asset-intensive business profile, strongly influenced by hydrological conditions and prices in the energy market.

Rio Paranapanema Energia’s generation complex totals 2,297.8 MW of installed capacity, entirely from hydro sources. The company operates eight hydroelectric power plants (UHEs) along the Paranapanema River, with 2,265.3 MW of installed capacity in 29 generating units, and two PCHs, Palmeiras and Retiro, on the Sapucaí-Mirim River, which add up to 32.5 MW in 2 turbines. Notable UHEs include Jurumirim, Chavantes, Salto Grande, Capivara, Taquaruçu, Rosana, Canoas I and Canoas II, the last two operated in consortium with Companhia Brasileira de Alumínio (CBA), in which Rio Paranapanema Energia holds 49.7% of the energy generated. In 2024, the company recorded generation of 6,842.8 GWh, a volume that represented about 0.97% to 0.98% of total electricity generation in Brazil, according to data from the National Electric System Operator (ONS). Net physical guarantee in 2024 was 1,069.8 average MW, mostly associated with the UHEs on the Paranapanema River, complemented by the PCHs on the Sapucaí River.

Rio Paranapanema Energia’s assets are concentrated in a region considered strategically relevant for the Brazilian power system. The eight UHEs in the Paranapanema basin benefit from the hydrometeorological regimes of the South and Southeast regions, and their reservoirs account for approximately 5.8% of the energy storage capacity of the Southeast/Midwest subsystem. The hydroelectric plant concessions are governed by contracts signed with the Federal Government, through the Brazilian Electricity Regulatory Agency (ANEEL). Concession Contract No. 76/1999 covers the hydroelectric developments of Jurumirim, Chavantes, Salto Grande, Capivara, Taquaruçu and Rosana, with an original 30-year term, extended under Law 14,052/2020, with main expirations in 2032. Concession Contract No. 183/1998 governs Canoas I and Canoas II, with the current term ending in 2037. The Palmeiras and Retiro PCHs operate under specific ANEEL Authorizing Resolutions, expiring in 2034 and 2042, respectively.

Rio Paranapanema Energia’s energy trading activities are framed within the Brazilian power sector’s regulatory model, which divides the market into the Regulated Contracting Environment (ACR) and the Free Contracting Environment (ACL). The company’s main product is the electric power sold, with a significant presence in the ACL, where it negotiates contracts with free consumers, special consumers, traders and other agents. All of its net operating revenue is associated with energy sales, and in 2024 there was at least one customer accounting for more than 10% of net revenue, highlighting the existence of sizable contracts. The company seeks to improve management of its contract portfolio by combining structured energy sales operations with directional trading strategies, hydrological risk management and the use of market intelligence for price and trend forecasting, always within the limits established by sector regulation.

The company’s head office is located in the city of São Paulo, and since December 2016 it has been part of the CTG group in Brazil, the local arm of China Three Gorges Corporation, which reports 8.3 GW of installed generation capacity. Although Rio Paranapanema Energia operates in a single operating segment, it is a relevant participant in the Energy Reallocation Mechanism (MRE), which redistributes energy among participating hydroelectric plants to partially mitigate hydrological risk. ANEEL provides ongoing supervision of the company, both in terms of grants and concessions and regarding operation, dam safety, energy metering and compliance with sector obligations. In 2025, an ANEEL ratifying resolution approved the remaining extension of grants for plants participating in the MRE, including the company’s assets, as compensation for impacts resulting from energy flow constraints related to the Belo Monte Plant, still subject to final formalization through addenda to the concession contracts.

On the operational front, Rio Paranapanema Energia adopts processes aimed at high availability of its generating units, with structured preventive maintenance programs, equipment modernization and real-time monitoring. Billing metering systems, remote equipment supervision and a telemetric hydrometry network are maintained in compliance with regulatory requirements, with data sent to entities such as the Electric Energy Trading Chamber (CCEE), ONS and the National Water Agency (ANA). The plants’ availability factor (FID), calculated over 60-month windows and validated by ONS, is a relevant indicator of its maintenance policy, directly affecting the accounting and settlement of energy contracts. In 2024, operational performance was affected by an unfavorable hydrological scenario and increased participation of intermittent sources, resulting in a 38% reduction in generation compared with 2023.

In terms of risk management and socioenvironmental responsibility, Rio Paranapanema Energia maintains systems and procedures focused on dam safety, flood management and drought periods, in line with Brazilian legislation. The company operates an Emergency Situation Operation System (SOSEm), with action plans for extreme hydrological events and communication mechanisms with civil defense agencies and municipalities, including information bulletins on water flows and a 24-hour customer service channel. It also maintains hydrological monitoring programs with continuous collection of rainfall and river level data, used to optimize water use, ensure the integrity of projects and mitigate impacts on riverside communities and the environment. Internally, the company indicates guidelines for valuing employees, promoting inclusion and combating harassment practices, incorporating these topics into its agenda of operational excellence, commercial efficiency and financial discipline.

GEPA3 and GEPA4 shares, listed on B3, provide exposure to a public-utility hydroelectric generation business whose revenue is concentrated on the sale of electric power in both regulated and free markets, influenced by factors such as rainfall patterns, reservoir levels, MRE rules, sector costs and price volatility in the short- and long-term markets. Operation under long-term concessions, supervised by ANEEL, and integration into an international group focused on renewable energy shape Rio Paranapanema Energia’s economic and operational profile within the Brazilian power sector.