#1isa CTEEP INSTITUTIONAL PRESENTATION 2 Q 18 | RESULTS#2ISA CTEEP ISA CTEEP and the Transmission Sector isa CTEEP Sustainable °°ŷ Value $ Financial Highlights 2#3WHY INVEST IN ISA CTEEP? isa CTEEP Strong Cash Generation No demand and no default risks Dividends Capital remuneration according to cash generation Growth Organic growth, Greenfield & M&A Profitability Sustainable value Benchmark Company with consistent efficiency and quality track record Investment Grade Fitch: AAA(bra) Valuation Attractive valuation 3#4ISA CTEEP Largest publicly traded pure transmission utility in Brazil Responsible for the transmission of 24% of Brazil's power generation ◉ Present in 17 Brazilian States Responsible for >90% of the power load in the State of São Paulo ■ Benchmark player in operational efficiency and indicators of quality ■ 18,600 km of transmission lines ☐ 126 substations 65,500 MVA of transformation capacity ■ Regulatory Net Revenue¹: BRL 2.7 billion ■ Regulatory EBITDA¹: BRL 2.3 billion (margin of 85%) Nota: 1 Last 12 months ended on 06/30/2018 Transmission Lines (TL) In operation 14,300 km of transmission lines 110 substations isa CTEEP Substation ▲ Line Entrance 4#5ISA CTEEP Largest publicly traded company in Brazil's transmission sector ■Current investments ■ Organic growth: average CapEx of BRL 190 million/year and average revenue (RAP) of BRL 40 million/year Auctions¹: CapEx of BRL 2.9 billion and revenue (RAP) of BRL 448 million/year +1.3 thousand km of transmission lines ■ +7.5 thousand MVA of transformation capacity GREAT Melhores PLACE Empresas TO para Trabalhar 2016 WORK Brasil 17 PRÊMIO ABRASCA RELATÓRIO ANUAL EXAME Dinheiro 2017 #50 empresas do bem 500 Note: 1 ISA CTEEP's investments in 10 projects acquired in 2016, 2017 and 2018 auctions isa CTEEP Transmission Lines (TL) ― In operation Substation Under construction A Line Entrance 5#6ISA CTEEP Origin from CESP spin off and creation of Transmissão Paulista Transmissão Paulista merger with EPTE ISA acquires CTEEP and becomes the controlling shareholder 1999 2001 Thousand km of transmission lines Consolidated regulatory EBITDA in 0.1 BRL billion Note: 1 Last twelve months ending on June 30, 2018 11.5 A successful story of resilience and increase in operational assets and financial results isa CTEEP Extenson of Main Concession Contract (059/2001) for 30 years Expansion to 17 Brazilian states through greenfield projects and acquisitions Set up of RBSE compensation (Ordinance 120 Ministry of Mines and Energy) Winner bid for 3 lots in October auction 2006 2007 2012 2013 12.3 15.4 17.7 Winner bid for 5 lots in April auction Winner bid for 2 lots in June auction 2016 2017 2018¹ 18.6 18.6 0.7 1.4 1.6 0.2 0.7 1.4 2.3 6#7ISA CTEEP. CONTROLLED BY ISA FREE FLOAT OF 64% Shareholder Structure on 06/30/2018 isa 35.8% CTEEP Common shares: 64,484,433 Preferred shares: 100,236,393 Total: 164,720,826 ISA Capital do Brasil Common shares: 89.5% Preferred shares: 1.3% 35.4% 64.2% Free Float Common shares: 10.5% Preferred shares: 98.7% Eletrobras Common shares: 9.8% Preferred shares: 51.9% 28.8% Others Common shares: 0.7% Preferred shares: 46.8% ■ Tickers: TRPL31 and TRPL42 ■ Average daily volume in 2Q18: BRL 24.5 million Market cap³: BRL 9.6 billion ■ Free Float: 77% of Brazilian investors 23% of foreign investors isa CTEEP ■ American Depositary Receipt ("ADR"): "CTPTY" and "CTPZY" ■ Coverage of 15 institutions: 53% Buy 47% Hold Notes: 1 Common share | 2 Preferred share | 3On 06/30/2018 7#8isa CTEEP INTERCONEXIÓN ELÉTRICA, ISAS.A.E.S.P. Central America Transmission Telecom Ecuador Telecom Peru 21% of net income Transmission Telecom Chile 18% of net income Transmission Highway concessions Telecom Solid Presence in Latin America: 8 countries, 4 sectors, 40 companies Argentina Telecom Colombia 25% of net income Transmission Telecom Highway concessions Real Time Systems Brazil 34% of net income Transmission Telecom Bolivia Transmission ■ ISA CTEEP represents 31% of ISA's¹ net income ■ 2017 Net Income Breakdown: ■ Transmission: 77.2% ■ The largest energy transmission company in Colombia and Peru, with 70% of capacity in each market 2nd largest player in Chile with 18% of market share ■ 2nd largest player in Brazil with investments in ISA CTEEP and TAESA Highway concessions: 22.0% ■ Real Time Systems: 0.7% ■ Telecom: 0.1% ■ Benchmark player in sector ■ 44,200 km of transmission lines ■ 87,100 MVA of transformation capacity ■ 907 km of highways ■ Controlled by the Colombian government ■ Recognition in Corporate Governance Market Cap: USD 5.5 billion² Notes: 1 Considers 2017 IFRS Results adjusted by participation | 2 On 06/30/2018 8#9CORPORATE ISA CTEEP and its subsidiaries Assured STRUCTURE Annual Revenue (RAP) Annual Revenue (RAP) 2018/2019 Cycle BRL 3.4 billion Operation Status1 Location RAP Cycle 2018/20191 (BRL million) ISA CTEEP IE Madeira ERB 1 Operational Operational São Paulo 2,421 Rondônia / SP 497 RAP ISA CTEEP Cycle 2018/2019 (BRL million) 2,421 253 Share (%) ISA CTEEP 100% Consolidation Fully consolidated IE Paraguaçu IE Garanhuns Under construction Under construction Paraná 267 134 ISA CTEEP 51% / Furnas 24,5% / Chesf 24,5% ISA CTEEP 50% / TAESA 50% Equity method Equity method Bahia / MG 107 53 ISA CTEEP 50% / TAESA 50% Equity method Operational Pernambuco 87 44 ISA CTEEP 51% / Chesf 49% Equity method IE Aimorés Under construction Minas Gerais 71 36 ISA CTEEP 50% / TAESA 50% IE Pinheiros IE Serra do Japi Operational Operational São Paulo 54 54 ISA CTEEP 100% São Paulo 60 60 ISA CTEEP 100% Equity method Fully consolidated Fully consolidated IE Aguapeí IE Itaúnas IE Itaquerê IENNE Lot 13 Under construction Under construction Under construction São Paulo 54 54 ISA CTEEP 100% Fully consolidated Espírito Santo 47 47 ISA CTEEP 100% Fully consolidated São Paulo 46 46 ISA CTEEP 100% Fully consolidated Operational Tocantins 44 44 ISA CTEEP 100% Fully consolidated Under construction Santa Catarina 38 38 ISA CTEEP 100% Fully consolidated IE Tibagi Under construction SP / Paraná 18 18 ISA CTEEP 100% Fully consolidated IE Sul² IEMG Evrecy Operational Operational Operational Rio Grande do Sul 18 9 ISA CTEEP 100%² Minas Gerais 18 18 ISA CTEEP 100% Equity method² Fully consolidated Espírito Santo 7 7 ISA CTEEP 100% Fully consolidated IE Itapura Lot 103 Under construction São Paulo 11 11 ISA CTEEP 100% Fully consolidated Under construction São Paulo Total 10 3,876 10 ISA CTEEP 100% Fully consolidated 3,358 Notes: 1 RAP considers 100% of the project value. For projects under construction RAP of the bid | 2 Celebration of Purchase Agreement to acquire 50% of Share Capital in April/2018. The closing of the deal is subject to approvals. isa CTEEP 9#10BEST CORPORATE GOVERNANCE PRACTICE Corporate Governance Structure isa CTEEP Remuneration 09 Committee Board of Directors 8 effective members, of which 2 are independent and one is elected by the employees Board of Auditors 5 effective members and 5 substitute members 20 Audit Committee Ethics and Transparency recognized at ISA and at ISA CTEEP levels Listed in Level 1 of B3 CEO Reynaldo Passanezi Filho CFO and IRO Project Director Rinaldo Pecchio Weberson Abreu Institutional Relations Department Rafael Noda COO 17° PRÊMIO ABRASCA RELATÓRIO ANUAL Carlos Ribeiro 12 FTSE4Good 10#11CONNECTIONS THAT CREATE VALUE THROUGH SOCIOENVIRONMENTAL ACTIONS JAGUAR CONNECTION: Carbon neutral until 2020 ■Forest projects that reduce the impact of greenhouse gases ■ Climate change mitigation ■ Conservation of biodiversity in jaguar's habitat SOCIAL RESPONSIBILITY: ■ Barretos Cancer Hospital ■ GRAACC - Support group of teenagers and children with cancer 32nd Bienal of Art in São Paulo isa CTEEP CONEXIONS THAT INSPIRE 11#12isa FUTURE CHALLENGES CREATE CONNECTIONS TO GENERATE SUSTAINABLE VALUE 渋 сссо сссс Digitalization Safety optimization and operational reliability with cost reduction Energy Storage Ancillary business and new business models Leadership in transmission sector transformation in Brazil Proactivity in regulatory, legal and technological affairs Real Estate Development of real estate ventures 12#13ISA CTEEP isa CTEEP ISA CTEEP and the Transmission Sector Sustainable °°ŷ Value $ Financial Highlights 13#14Eletrobras ISA CTEEP IS THE LARGEST PURE TRANSMISSION COMPANY IN THE SECTOR IN BRAZIL isa CTEEP 2017 Market Share (thousand km of lines). ISA CTEEP 18 TAESA 11 Alupar 7 State Grid 6 Transmission Revenues¹ (2017/2018 cycle) 63 Total: 31% BRL 37 billion 38% 4% 9% 8% 10% Eletrobras ISA CTEEP TAESA State Grid Alupar Others SIN² is composed of 135 thousand km of transmission lines and serves 98% of the market The transmission sector is regulated and monitored by ANEEL³ and coordinated and controlled by ONS4 (--) Transmission companies are remunerated by the availability of its assets Notes: 1 Considers auctions held until June of 2018 | 2 Interconnected National System | 3 National Electric Energy Agency | 4 National Operator of the Electric System 14#15THE COMPANY'S MAIN CONCESSION CONTRACT IS IN CATEGORY 1 Concessions prior to 1998 isa CTEEP ■ Revenue (RAP) annually adjusted by IPCA ■ Contracts renewed in 2013 (Provisional Measure 579/2012) ■ Tariff Reset every 5 years (O&M, WACC and RAB1) isa CTEEP RAP in operation: 72% Concessions between 1999 and 2006 Concessions after 2008 ■ RAP annually adjusted by IGP-M ■ RAP reduction in 50% on the 16th year of operation ■ No tariff reset ■ Reset of reinforcements and improvements, starting in July 2019 every 5 years ■ RAP annually adjusted by IPCA ■ 30 year contract, with 3 tariff reset (cost of debt applied at WACC) Reset of reinforcements and improvements every 5 years isa CTEEP RAP in operation: 1% isa CTEEP RAP in operation: 13% RAP under construction: 13% Note: 1 Regulatory Asset Base 15#16DEMAND DOES NOT IMPACT TRANSCO'S REVENUE ■ ISA CTEEP Revenue (RAP) approved by ANEEL with periodic tariff reset ("PTR") ■ RBSE receivables related to the non depreciated assets in operation in May/2000 ■ O&M revenues related to the operation and maintenance services ■ New Investments (NI) organic growth with execution of authorized reinforcement and improvements ■ Variable Parcel (PV) revenue reduction due to unavailability ■ Adjustment Parcel (PA) compensates excess or deficit of revenues in the previews tariff cycle Annual Allowed Revenue (RAP) Breakdown PV RBSE (CAEE) isa CTEEP Annual Costs of Electric Assets (CAAE) Net Investment x Regulatory WACC + Gross Investment x Depreciation Rate O&M (AOM) O&M Revenue Gross Investment x %O&M NI (CAAE & AOM) OTHERS1 PA (AOM) Note: ¹Other revenue considers bilateral and sharing contracts 16#17ISA CTEEP isa CTEEP ISA CTEEP and the Transmission Sector Sustainable ✓✓ Value $ Financial Highlights 17#18Operation and Maintenance Cost efficiency, Service quality, Operational safety KI» Projects STRATEGY BASED ON SUSTAINABLE VALUE Subsidiaries Value Creation in Reinforcements and Corporate Governance Regulation Fair Value of Rights Legal Contingencies Reduction Improvements PEOPLE isa CTEEP Growth Value Creation on Greenfield and M&A 18#19EXECUTION OF STRATEGY GENERATES SOLID & SUSTAINABLE RESULTS isa CTEEP LAST 12 MONTHS1 (BRL million) OPERATIONAL HOLDING K O&M Greenfield SUBSIDIARIES Total RBSE Controlled Shared Control Adjusted 615 167 Net Revenue 1,623 314 273 2,992 Adjusted EBITDA 260 158 1,623 282 239 2,562 1 Note: Regulatory results of the last 12 months ending on 06/30/2018 19#20FREQ (times) Equivalent Frequency of Interruption DREQ (minutes) Equivalent Duration of Interruption IENS (%) Index of Non Supplied Energy ISA CTEEP 0.093 South 0.1 Southeast/ 0.11 Midwest SIN 0.26 Northeast 0.4 North 2017 Numbers 1.44 ISA CTEEP 1.86 Southeast/ 3.83 Midwest 6.7 South SIN 12.64 Northeast North 14.05 88.51 ISA CTEEP 0.0006% Southeast/ Midwest 0.0010% 0.0020% South SIN 0.0033% Northeast 0.0034% North Focus in cost efficiency, service quality and operational safety to maximize results 1 Focus in efficiency results in reduction of 41% of OPEX, excluding contingencies, going from BRL 915 million in 2006 to BRL 542 million in 2017¹ Note: 1 Considers controlled and affiliates weighted by the Company's share 0.0206% isa CTEEP 2 DREQ/FREQ indicators, in June/18, suggest that for every 12 years and 8 months, there would be 1 total shutdown of ISA CTEEP's system of approximately 17 minutes 3 In the city of São Paulo, ISA CTEEP is responsible for 3 minutes of every 16 hours of interruption 20 20#21ORGANIC GROWTH WITHOUT COMPETITION FROM REINFORCEMENTS & IMPROVEMENTS Reinforcements and Improvements CapEx (BRL million) Average: BRL 190 million/year 220 214 198 147 isa CTEEP 210 150 ■ Opportunity for organic growth (transmission capacity increase) Execution and project selection to guarantee proper profitability 2013 2014 2015 2016 2017 2018e Reinforcements and Improvements Revenue (BRL million) Average: BRL 40 million/year 61 31 26 47 41 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 21#22isa CTEEP MANAGEMENT OF SUBSIDIARIES WITH GOVERNANCE AND INTEGRATION ■ 8 subsidiaries fully in operation ■ 14 concession contracts ■ 4.5 thousand km of transmission lines ■ 17 substations ■ 16 thousand MVA of power transformation capacity Revenue (RAP) of ~BRL 490 million¹ IE Madeira (51%) TL: 2,375 km (±600 kVCC) Substation: 6,100 MVA RAP: BRL 253 million IE SUL² (100%) TL: 175 km (230kV) Substation: 750 MVA RAP: BRL 9 million IENNE (100%) TL: 710 km (500 kV) Substation: none RAP: BRL 44 million IE Garanhuns (51%) TL: 842 km (230/500 kV) Substation: 2,100 MVA RAP: BRL 44 million Evrecy (100%) TL: 154 km (230 kV) Substation: 450 MVA RAP: BRL 7 million IEMG (100%) TL: 172 km (500 kV) Substation: none RAP: BRL 18 million IE Pinheiros (100%) TL: 1.8 km (345 kV) Substation: 4,200 MVA RAP: BRL 54 million Notes: 1 RAP Cycle 2018/2019 weighted by ISA CTEEP's participation | 2 Celebration of Purchase Agreement to acquirë 50% of Share Capital in April/18. The closing of the deal is subject to approvals. Transmission Line (TL) - In operation Substation A Line Entrance IE Serra do Japi (100%) TL: 137 km (230 kV) Substation: 2,000 MVA RAP: BRL 60 million 22#23RBSE (BASIC NETWORK OF EXISTING SERVICE) CASH FLOW BOOSTS CASH GENERATION FOR THE NEXT YEARS isa CTEEP RBSE: receivables related to the non depreciated assets in operation in May/2000 BRL 12 billion to be received, of which approximately BRL 1.6 billion were paid in the 2017/2018 cycle April of 2017 injunction determined temporary exclusion of Ke ANEEL recalculated the RAP for 2018/2019 cycle, excluding Ke¹ and considering the linearization of the Economic Component so that payments will be flat until 2022/2023 cycle (REH 2,408/18) Bill for the restructuring of the electric sector proposes change from Ke to WACC from financial component Notes: 1 Technical Note 170/17 | 2 Net of PIS/COFINS RBSE Receivables Schedule² (BRL million) 1,812 1,714 1,714 1,714 1,714 1,714 246 253 253 253 253 253 1,335 729 253 750 750 750 750 750 1,003 253 750 837 711 711 711 711 711 750 332 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 2022/2023 2023/2024 2024/2025 Economic Component Financial Component ex-Ke Ke Assumptions pursuant to RES ANEEL 762/2017 IPCA (Dec/12-Jun/17): 34.45% WACC: 6.64% p.a. Cost of Equity (Ke): 10.74% p.a. (1H13) and 10.44% p.a. (from Jul/13 to Jun/17) Estimated amounts. WACC will be defined in tariff reset and asset base is subject to write-offs. 23#240222 ΣΟ || TO GUARANTEE FAIR TARIFF RESET Transmission concession contracts renewed in 2013 are subject to periodic tariff reset ("RTP") every five years ANEEL opened public hearing 41/2017 to discuss and improve 2018 RTP rules ANEEL still has not disclosed the results of the analysis of the contributions ■ Postponement of RTP from 2018 to 2019, with retroactive effects Regulatory Operational Costs (O&M) Cost of Capital (WACC) isa CTEEP es $ Regulatory Asset Base & Regulatory Price Reference 24#25EVOLUTION OF MAIN DISPUTES WITH FAVORABLE DECISIONS REINFORCES FOCUS IN CONTINGENCIES REDUCTION isa CTEEP Supplemental Retirement Case Law 4,819/58 Collective Action ■ Starting in 2004, the Treasury Office (SEFAZ) began to pass through 70%¹ of the amount that retirees would receive ■ ISA CTEEP, by provisory judicial decision, has to pay the remaining amount (30%), which is equivalent to an estimated cash disbursement of BRL 180 million/year Unanimous favorable decision in 2nd instance reinforces the merit of the case. In 2017, the payment was suspended for 4 months, but resumed by decision of the Federal Supreme Court injunction Eletrobrás / Eletropaulo Case Charge from Eletrobrás regarding the balance of a debt in 1986 ■ Eletropaulo's partial spin-off protocol, that constitutes EPTE, mergered with ISA CTEEP in 2001, states that obligations of any nature until the date of the spin-off are Eletropaulo's responsibility ■ Deal between Eletropaulo and Eletrobrás in 2018, in the amount of BRL 1.5 billion ■ In the approval of the agreement, ISA CTEEP was excluded from the case Debt Collection ■ Debt collection action against the State of São Paulo (SEFAZ) with unanimous favorable decision in the 2nd instance ■ Amount on June of 2018: BRL 1.9 billion² Note: 1 The main exclusions are (i) payments above the ceiling which is the Governor's salary (~R$ 22 thousand), and (ii) contributions to State retirement; 2 Does not consider monetary adjustment and interest since the filing of the case 25#2610 PROJECTS UNDER CONSTRUCTION WILL ADD BRL 448 MILLION OF RAP CapEx ISA CTEEP: BRL 2.9 billion¹ ■ Extension of lines: +1.3 thousand km Capacity: +7.5 thousand MVA IE Aguapeí (100%) TL: 107 km (440 kV) Substation: 1,400 MVA CAPEX ANEEL: BRL 602 million Deadline ANEEL: Aug/21 IE Tibagi (100%) TL: 18 km (230 kV) Substation: 500 MVA CAPEX ANEEL: BRL 135 million Deadline ANEEL: Aug/21 Lot 1 (100%)² TL: 57 km (230 kV) Substation: 300 MVA CAPEX ANEEL: BRL 641 millions Deadline ANEEL: Sep/23 Note: 1 Total CapEx ANEEL of BRL 5.2 billion | 2 Auction ANEEL 02/2018 Transmission Lines (TL) Under construction ☐ Substation ▲ Line Entrance IE Paraguaçu (50%) TL: 338 km (500 kV) Substation: none CAPEX ANEEL: BRL 510 million Deadline ANEEL: Feb/22 isa CTEEP 煞 IE Aimorés (50%) TL: 208 km (500 kV) Substation: none CAPEX ANEEL: BRL 341 million Deadline ANEEL: Feb/22 IE Itaúnas (100%) TL: 79 km (345 kV) Substation: 1,197 MVA 1 Static Component CAPEX ANEEL: BRL 298 million Deadline ANEEL: Feb/22 ERB I (50%) TL: 439 km (230/500 kV) Substation: 2,988 MVA IE Itaquerê (100%) 3 Synchronous Components (Araraquara Substation) CAPEX ANEEL: BRL 398 million Deadline ANEEL: Aug/21 Lot 10 (100%)² TL: 6 km (230/500 kV) Substation 1,200 MVA CAPEX ANEEL: BRL 238 million Deadline ANEEL: Sep/22 CAPEX ANEEL: BRL 1,937 million Deadline ANEEL: Aug/22 IE Itapura (100%) 1 Static Component (Bauru Substation) CAPEX ANEEL: BRL 126 million Deadline ANEEL: Feb/21 26#27isa GROWTH OPPORTUNITIES TO CREATE VALUE AUCTIONS New auctions expected until 2022 amount to BRL 30 billion of total investments and RAP4 of BRL 5 billion Auction 02/2018 on June 28, 2018 20 lots divided into 59 projects: 38 with a total of 2.7 thousand km of transmission line and 21 substations for installation of 12 thousand MVA ANEEL investment of BRL 6 billion, with RAP (discount) of BRL 451 million ■ Average discount of 51% ■ Average Regulatory WACC of 8.13% Outlook for Auction estimated for 4Q18 (Preliminary) Expectation of approximately 20 lots with estimated investments of BRL 15 billion Total estimated RAP¹ of approximately BRL 2.5 billion Construction of 4.9 thousand km of transmission lines and sectioning and installation of 13.8 thousand MVA ACQUISITIONS Always studying market opportunities Active player in the consolidation of the sector IE Sul Acquisition Purchase Agreement with CYMI to acquire 50% of share capital for BRL 20 million²in April of 2018 ■ After the closing of the acquisition, ISA CTEEP will hold 100% of the shares³ IENNE Acquisition Acquisition of 50% of shares from ISOLUX and 25% of shares from CYMI for BRL 101 million ISA CTEEP holds 100% of IENNE as of 3Q17 CTEEP Note: 1 RAP based on RAP / Investment of 17.1% observed in the Auction 002/2018 12 To be updated by IPCA (Source: IBGE) on the closing of the deal | 3 The closing is subject to approvals 14 Source: PET/PELP, MME Study consolidating the expansion constructions 27#28ISA CTEEP ISA CTEEP and the Transmission Sector isa CTEEP Sustainable °°ŷ Value $ Financial Highlights 28#29STRONG CASH GENERATION BOOSTED BY RBSE REGULATORY RESULTS HIGHLIGHTS Note: 1 Last twelve months ended on 06/30/2018 Margem EBITDA NET REVENUE (BRL MILLION) 2,719 1,778 890 955 isa CTEEP O&M COSTS ex-depreciation (BRL MILLION) 507 493 483 469 2015 2016 2017 LTM¹ 2015 2016 2017 LTM¹ EBITDA (BRL MILLION) NET INCOME (BRL MILLION) 46.2% 51.3% 76.0% 85.3% 1,114 2,318 890 488 1,351 247 246 635 2015 2016 2017 LTM¹ Net Revenue and EBITDA include only 100% owned subsidiaries. Shared control companies are accounted as equity shareholder. 2015 2016 2017 LTM¹ 29#30SOLID DEBT PROFILE WITH COMPETITIVE COST Low leverage allows growth cycle financing Investment Grade by Fitch: AAA(bra) Debt Profile on 6/30/2018 Gross Debt: BRL 2.5 billion Net Debt / Adjusted EBITDA: 0.7x ■ Average cost: 7.9% p.a ■ Average term: 3.6 years ■ Debt Amortization Schedule (BRL million) 421 429 90 90 227 71 67 62 362 881 2H18 2019 2020 2021 2022 2023 2024 2025 + Debt Breakdown 13% 23% 64% isa CTEEP Debentures CDI/IPCA BNDES TJLP Others#31Strong cash generation allows higher dividends for the next years GROWING DIVIDENDS ACCORDING TO CASH GENERATION (BRL million) Regulatory Payout 335 247 230 226 585 isa CTEEP 2013 2014 2015 2016 2017 2018+ N.A. 91% 123% 108% 95% Distribution of BRL 760 million in dividends in June of 2018, based on the profit retention reserve, correspondent to BRL 4.62 per share Proceeds practice with minimum payout of 75% of regulatory net income limited to the financial covenant of 3.0x Net Debt/EBITDA, with the possibility of interim dividends payments As of 2019, the Company will prioritize the distribution of proceeds via interest on capital Note: The Company registered net loss due to the provision for losses related to Law 4,819/58 31#32↓ MARKET VALUE DOES NOT REFLECT ISA CTEEP'S CASH GENERATION TARGET PRICE (BRL) isa CTEEP COVERAGE TARGET PRICE RATING DATE OF UPDATE Banco do Brasil BRL 73.00 Hold Feb/18 86 BofA-Merrill Lynch BRL 75.00 Hold Oct/17 ■ Eleven Financial 84 Bradesco BRL 82.00 Hold Nov/17 ■ Goldman Sachs Brasil Plural BRL 77.60 Buy May/18 82 ■ Bradesco BTG Pactual BRL 71.00 Buy Jun/18 88 80 Citi BRL 71.20 Hold May/18 Credit Suisse BRL 77.00 Hold Dec/17 78 Eleven Financial BRL 84.00 Buy Feb/18 ■ Credit Suisse 76 Goldman Sachs BRL 81.00 Buy Jul/18 HSBC BRL 75.00 Buy Jul/18 74 ■ Safra Itaú BBA BRL 77.00 Buy Jun/18 72 JP Morgan BRL 71.00 Hold Apr/18 ■ JP Morgan ■ Citi Merrill Lynch ■ Brasil Plural ■ Itau ■ HSBC ■ Santander ■ UBS ■ BTG Pactual Safra BRL 73.40 Hold Feb/18 70 Santander BRL 72.17 Buy Jul/18 68 UBS BRL 72.00 Buy Apr/18 Sell Hold Buy Average Target Price BRL 75.49 TRPL4 2Q18 BRL 60.64 Average#33INVESTOR RELATIONS. e-mail: [email protected] phone: +55 11 3138-7557 www.isacteep.com.br/ir 33#34ATTACHMENTS 34#35RTP REGULATORY OPERATIONAL COSTS (O&M) ✓ Revenue reduction much higher than efficiency gains isa CTEEP CONTRIBUTIONS IN PUBLIC HEARING Comparability assumptions: auctioned vs. non auctioned (existing) Holding synergies Impact Normalization by 3rd quartile (efficiency score) instead of quality adjustment Arbitrated weights for benchmarking variables PROPOSED OPERATIONAL REGULATORY COMPANY (MAIN CONCESSION CONTRACT) SCORES ADJUSTED SCORES OPERATIONAL COST 2016 BRL Million COSTS BRL Million CURRENT REGULATORY OPERATIONAL PROPOSED REGULATORY OPERATIONAL COSTS REGULATORY OPERATIONAL COSTS CHANGE BRL Million COSTS CEMIG-GT 91.3% 106.3% 178.3 215.8 189.5 -12.2% VS. CURRENT ISA CTEEP 89.5% 104.1% 527.1 719.1 548.9 -23.7% OPERATIONAL CEEE-GT 85.4% 99.4% 244.4 246.3 243.1 -1.4% REGULATORY CELG G&T 72.4% 84.2% 43.1 24.3 36.3 49.4% COSTS 1 FURNAS 55.5% 64.6% 1,340.6 862.1 865.9 0.4% COPEL-GT 48.5% 56.4% 179.2 164.2 101.1 -38.4% CHESF 38.1% 44.3% 1,122.1 716.2 497.6 -30.5% ELETROSUL 37.4% 43.6% 528.2 560.2 230.1 -58.9% ELETRONORTE 28.3% 33.0% 929.8 388.1 306.4 -21.1% AVERAGE 50.74% Note: 1 Technical Note ANEEL 164/2017 TOTAL 5,092.8 3,896.3 3,018.9 -22.5% 35#36RTP REGULATORY OPERATIONAL COSTS Exclusion of profitability margin does not guarantee economic- financial equilibrium RTP 2018 - PH 41 Technical Note 164/2017 Concession Renewal Technical Note 383/2012 & Ordinance 579/12 45% Score TRANSCO'S 7% 74% 22% 96% ISA CTEEP 14% 149% 39% Quality Adjustment Margin Revenue Score Quality Adjustment Margin Revenue 14.7% 89.5% 8.0% 58.8% 50.8% 104.1% Score Quality Adjustment Margin Revenue Score Quality Adjustment Margin Revenue isa CTEEP 36#37RTP WACC WEIGHTED AVERAGE COST OF CAPITAL Inconsistent methodology among sectors (Generation, Transmission, Distribution) CONTRIBUTIONS IN PUBLIC HEARING Adoption of Brazilian local inflation bond (NTNB) vs. US Treasury Bond (10 years) isa CTEEP Difference in timeframe to calculate risk-free rate and country risk premium Cost of debt does not consider "all in costs" Debt ratio of 44.33% VS. approximately of 20% in Dec/17 auction 10.63% 10.22% 9.98% WACCS(%) 9.18% 8.57% 8.49% 8.09% 7.95% 7.16% 6.64% 6.27% RAILWAYS TRANSMISSION 2015 PORT (Auction/2016) 2015 HIGHWAY TRANSMISSION AIRPORTS 2015 DISTRIBUTION 2015 (Auction/2017) 2015 COPASA 2017 GENERATION TRANSMISSION 2014 (Current) TRANSMISSION (Public Hearing 04/2017) 37#38✓ is isa CTEEP CTEEP REGULATORY ASSET BASE In 2017, the 1st Phase of Public Hearing 41/07 occurred to discuss the rules for the Regulatory Asset Base verification Main changes proposed by ANEEL: ■ Appraisal of RAB mainly by ANEEL's regulatory reference price Conciliation of Accounting Base with Regulatory Base Incremental Base Appraisal Report RTP REGULATORY ASSET BASE (RAB) Last step of the process REGULATORY PRICE REFERENCE ANEEL Letter 06/2016- SRM: requested data to concessionaires to update the regulatory reference price ISA CTEEP lead with ABRATE meetings to discuss with ANEEL a viable model to collect companies' information ANEEL's Public Hearing 03/2017: methodology validation to collect data for the price reference The model proposed by ISA CTEEP and ABRATE was accepted by the regulator ANEEL Letter 02/2017-SRM requested information in the model that was validated in ANEEL'S 03/2017 Public Hearing ■ ANEEL Public Hearing 31/18 opened from June to August of 2018 38