Transmissora Aliança de Energia Elétrica S.A. (Taesa), traded on B3 under the tickers TAEE3, TAEE4 and TAEE11, is a Brazilian publicly traded company dedicated exclusively to the high-voltage electric power transmission segment. Originally incorporated in January 2006 as Donnery Holdings S.A., its corporate name was changed to Terna Participações S.A. later in 2006, in a move to concentrate in Brazil the transmission assets of the Italian company Terna S.p.A. In the same year, it received control of the transmission companies TSN – Transmissora Sudeste Nordeste S.A. and Novatrans Energia S.A., with prior approval from the Brazilian Electricity Regulatory Agency (ANEEL). The initial public offering took place in October 2006, when the shares began trading on the then BM&FBOVESPA, now B3, with adhesion to the Level 2 Corporate Governance segment. In 2009, after Terna S.p.A. sold its stake, the company adopted its current name, Taesa, consolidating itself as a transmission asset holding company under a new control group led by Brazilian investors.

Taesa’s history is marked by successive acquisitions and mergers of electric power transmission concessions, expanding its asset base and diversifying its geographic footprint. TSN was originally incorporated in 2000 to develop the concession for the Southeast–Northeast interconnection, comprising around 1,139 km of transmission lines between Goiás and Bahia, at voltages of 500 kV and 230 kV, with stakes in several substations. Novatrans, also created in 2000, operates the North–South II interconnection, with approximately 1,278 km of 500 kV lines connecting Maranhão to the Federal District. Over the years, Taesa has gone on to control other transmission companies, such as Munirah, GTESA, PATESA, ETEO, ETAU and Brasnorte, among others, through equity acquisitions and mergers, expanding its concession portfolio in different regions of the country and reinforcing its position as one of the largest pure-play power transmission companies in Brazil.

Taesa’s business model is based on operating public service concessions for electric power transmission, focusing on the implementation, construction, operation and maintenance of transmission lines and substations that are part of the Basic Grid of the National Interconnected System (SIN) and Other Transmission Installations (DIT). The company operates at voltages equal to or above 230 kV, transporting energy from generating plants to major load centers and connection points with distributors and large consumers. Taesa’s revenue comes predominantly from the Permitted Annual Revenue (RAP), a remuneration set in auctions and concession contracts approved by ANEEL. This revenue is linked to the availability of the facilities and not to the volume of energy actually transmitted, which gives its cash generation greater predictability, subject to annual adjustment rules by inflation indexes (IGP-M or IPCA) and periodic tariff reviews defined by the regulatory authority.

Taesa’s revenue structure also involves its relationship with the National Electric System Operator (ONS), via the Transmission Service Provision Agreement (CPST). This agreement sets out the terms for the ONS to manage and coordinate the provision of transmission services to Basic Grid users. Based on it, the ONS signs Transmission System Usage Agreements (CUST) directly with generators, distributors, free consumers and other market agents, defining the transmission system usage charge (EUST) owed by each user. Thus, Taesa and its subsidiaries do not determine who uses their lines nor how much each agent pays; their remuneration is received via RAP consolidated into the charges billed by the ONS, reinforcing the regulated and indirect nature of the commercial relationship with the grid’s end users.

From an operational standpoint, Taesa carries out activities involving construction and assembly of facilities, availability, operation and maintenance of lines and substations spread across several regions of Brazil. The group’s transmission system totals more than 15 thousand kilometers of lines in operation and under construction, distributed across projects such as the North–South II and Southeast–Northeast interconnections, in addition to important regional stretches in states such as São Paulo, Bahia, Rio Grande do Norte, Paraíba, Pernambuco, Mato Grosso, Tocantins, Maranhão, Rio Grande do Sul and Santa Catarina. These facilities include 230 kV, 440 kV, 500 kV and 525 kV lines, connecting strategic substations and reinforcing the SIN transmission network. The company is subject to operational risks typical of power infrastructure, such as equipment failures, severe weather events and other contingencies, and it uses property and liability insurance to mitigate potential losses associated with incidents affecting assets under its responsibility.

Taesa operates in a highly regulated and concentrated market, in which ANEEL plays a central role in granting, regulating and overseeing electricity services. Transmission concessions are obtained through public auctions or privatization processes and, during the term of the contract, there is no direct competition in the area covered by the concession. Competition occurs essentially in the bidding processes for new concessions, which may include participation by other transmission companies, generators and private agents, except for electricity distributors, which are barred from operating in this segment of the chain. Legislation also prohibits transmission companies from engaging in distribution activities to end consumers, maintaining separation among the generation, transmission and distribution segments of the Brazilian power sector. In terms of physical participation in the grid, Taesa holds a significant share of the total transmission lines in operation and construction in the country, within a universe of slightly fewer than 200 thousand kilometers of lines with voltage equal to or above 230 kV.

Regarding economic regulation, part of Taesa’s concession contracts provide for a 50% reduction in RAP starting from the 16th year of commercial operation of the facilities, according to parameters established by ANEEL. This rule affects legacy concessions, such as Novatrans, TSN, ETEO, Munirah, GTESA, PATESA, ETAU, and stakes in transmission companies such as ATE, ATE II, ATE III, EATE, ECTE, ETEP, ENTE, NTE, STE, ERTE and others, in different proportions and on different dates. On the other hand, new contracts signed as of 2008 follow a different logic, with periodic tariff reviews in five-year cycles and, in some cases, no RAP reduction in the second half of the concession, as is the case for projects such as Brasnorte, Miracema, Janaúba and several more recent SPEs. ANEEL has also introduced mechanisms for capturing “business efficiency gains” in tariff reviews, associated with reductions in financial and operating costs, although the current capture rate for auctioned transmission companies is set at 0%.

Taesa is influenced by public policies for regional development and benefits from tax incentives in certain concessions located in the areas covered by the Amazon Development Agency (SUDAM) and the Northeast Development Agency (SUDENE). These incentives, granted for projects in states such as Bahia, Maranhão, Tocantins, Rio Grande do Norte, Paraíba, Pernambuco and others, generally consist of a 75% reduction in corporate income tax due on income from the transmission concessions, subject to specific obligations such as setting up a tax incentive reserve and using the funds for activities related to production in the incentivized region. This tax structure, combined with long-term contracts and the sector’s regulatory framework, shapes the company’s cash generation and economic-financial structure.

From a corporate governance standpoint, Taesa is listed on B3’s Level 2, which entails transparency practices, shareholder rights and corporate rules that go beyond the minimum legal requirements of the traditional market. The company operates exclusively in Brazil and in a capital-intensive segment with a heavy asset base, under close oversight by bodies such as ANEEL and ONS. Although the reference form describes operational, regulatory and economic aspects in detail, there is no emphasis on specific environmental, social and governance (ESG) initiatives in the excerpt presented, beyond the regulatory framework itself, operational safety and insurance, which are typical of electric infrastructure companies. In this context, TAEE3, TAEE4 and TAEE11 shares represent ownership in a public utility company specialized in power transmission, with predominantly regulated revenues based on the availability of an extensive network of lines and substations spread across several Brazilian states, with no involvement in power generation or distribution to end consumers.