GEPA3

Rio Paranapanema Energia is a Brazilian publicly traded company founded in 1999, created from the partial spin-off of Companhia Energética de São Paulo (CESP) into three generation companies. Initially named Companhia de Geração de Energia Elétrica Paranapanema S.A. (CGEEP), it brought together generation assets located along the Paranapanema River basin, between the states of São Paulo and Paraná. Still in 1999, its controlling stake 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 trading 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 generating fleet composed of hydroelectric power plants and small hydroelectric plants (PCHs), on the management of power sale contracts, and on activity in the free energy market (ACL). The company reports that approximately 100% of its gross revenue comes from the generation and trading of electric power, which reinforces 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 a business profile that is asset-intensive and strongly influenced by hydrological conditions and prices in the energy market.

Rio Paranapanema Energia’s generating fleet totals 2,297.8 MW of installed capacity, entirely from hydropower. 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 together add 32.5 MW in 2 turbines. Notable UHEs include Jurumirim, Chavantes, Salto Grande, Capivara, Taquaruçu, Rosana, Canoas I, and Canoas II, the latter two operated under a consortium with Companhia Brasileira de Alumínio (CBA), in which Rio Paranapanema Energia holds 49.7% of the energy generated. In 2024, the company reported generation of 6,842.8 GWh, a volume that represented around 0.97% to 0.98% of total electric power generation in Brazil, according to data from the National Electric System Operator (ONS). Net assured energy 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 electric 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 storage capacity of the Southeast/Central-West subsystem. The concessions for the hydroelectric plants are governed by contracts signed with the Federal Government, through the Brazilian Electricity Regulatory Agency (ANEEL). Concession Agreement No. 76/1999 covers the Jurumirim, Chavantes, Salto Grande, Capivara, Taquaruçu, and Rosana hydroelectric developments, with an original term of 30 years, extended under Law 14,052/2020, with main expirations in 2032. Concession Agreement No. 183/1998 governs Canoas I and Canoas II, with an updated expiration in 2037. The PCHs Palmeiras and Retiro operate under specific ANEEL Authorizing Resolutions, expiring in 2034 and 2042, respectively.

Rio Paranapanema Energia’s power trading takes place within the regulatory model of the Brazilian electricity sector, which divides the market into the Regulated Contracting Environment (ACR) and the Free Contracting Environment (ACL). The company’s main product is the electricity it sells, with significant activity in the ACL, where it negotiates contracts with free and 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 presence of sizable contracts. The company seeks to improve the management of its contract portfolio by combining structured power sale 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 is headquartered in the city of São Paulo and has been part of the CTG group in Brazil since December 2016, the local arm of China Three Gorges Corporation, which reports 8.3 GW of installed generation capacity in the country. Although Rio Paranapanema Energia operates in a single operating segment, it has significant participation in the Energy Reallocation Mechanism (MRE), which redistributes energy among participating hydroelectric plants to partially mitigate hydrological risk. ANEEL exercises continuous oversight of the company, both in terms of authorizations and concessions and in aspects of operation, dam safety, energy metering, and compliance with sector obligations. In 2025, an ANEEL ratification resolution approved the remaining extension of authorizations for plants participating in the MRE, including company assets, as compensation for impacts arising from power transmission constraints related to the Belo Monte Plant, still requiring final formalization through addenda to the concession agreements.

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 hydrometric telemetry 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 plant availability factor (FID), calculated over 60-month windows and validated by ONS, is a key indicator of its maintenance policy, directly impacting the accounting and settlement of energy contracts. In 2024, operational performance was affected by an unfavorable hydrological scenario and the increased share 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 Operation System (SOSEm), with action plans for extreme hydrological events and communication mechanisms with civil defense authorities and municipalities, including flow information bulletins and a 24-hour hotline. It also maintains hydrological monitoring programs with continuous data collection on rainfall and river levels, used to optimize water use, ensure the integrity of projects, and mitigate impacts on neighboring 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.

The GEPA3 and GEPA4 shares, listed on B3, provide exposure to a public utility hydroelectric generation business whose revenue is concentrated in the sale of electricity in both regulated and free environments, 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 its inclusion in an international group focused on renewable energy, shape the economic and operational profile of Rio Paranapanema Energia within the Brazilian electricity sector.