Is Smart Grid and AMI Feasible for the Brazilian Utilities? Lessons learned from completing a two year project in Brazil with 5 different Distribution Companies in 4 different states.

1. “Brazilian Utility - Lessons Learned from
Smart Grid Strategy and Business Case”
Speakers:
Ricardo Botelho – CEO, Energisa SA
John Chowdhury – Utility Innovation

2. About the Speaker: Ricardo Botelho
• Chief Executive Officer and Member of Executive Board at
Energisa S.A. since April 2008. A utility company with $1.4B
USD in revenue with five different distribution companies in
four states. He serves as the Vice Chairman of the Board of
Directors of Energipe, SAELPA, CELB, Companhia Energetica da
Borborema‐CELB and Energisa.
– Mr. Botelho served as the Chief Executive Officer of Nova América S.A.
– He serves as the Chairman of the Board of Cat‐Leo Cise.
– He served as an Engineer at GTE Laboratories, and GTE Communications
Products ‐ Tempe, in Arizona (USA).
– He served as the Development Team Chief ... of Micron Technology ‐
Signal Processing Group, Arizona (USA).

3. About the Speaker: John Chowdhury
• Utility Innovation Practice
25‐year consulting career working with electric utility
and telecom businesses to increase performance (including
several years in Brazil and Latin America)
– Advised US/international energy entities on
Smart Grid/AMI/distribution automation; business case
development; CRM and telecom/wireless networks
– Architected first Smart Grid solution at Houston‐based
CenterPoint Energy and first Smart Grid city in Brazil
– MBA – University of Texas at Dallas; BSBA/MIS – Tulsa University
Professional Background Memberships
• Author and Frequent Speaker • UTC Smart Networks Board Member
• Director and Vice President ‐ KEMA/DEKRA • Advisor to Tulsa University Masters of
• Energy and Utilities Leader – North America – IBM Energy Program
Global Services • GridWise Architecture Council
• President and CTO – NetKnowledge Technologies • IEEE‐Power Engineering Society
• Senior Manager ‐ Ernst & Young & Price Waterhouse • Advisor to National Rural Electric
Utility Consulting Association ‐ TechAdvantage
• Utility Innovation Council – Board Member

4. Agenda
Energisa – Company Background
Smart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s Next

5. Grupo Energisa
107 years old public traded investor owned utility
2011 Distribution – 5 utilities
2011 Consolidated Financial Highlights  Total Energy Distributed – 8,708 GWh
Total Consumers : 2,453,410
 Consol. Net Revenue US$ Milion: 1.448,6
 # Substations/capacity (MVA): 141 / 2,573
 Consolidated EBITDA US$ Million: 331,3
 HV Lines (69/138kV/230kV) (km): 4,231
 Net Income US$ Million : 126,6
 MV and LV distribution lines (22/13.8/11.
4/ 0.38/0.22kV) (km): 123,355
 Net revenues - US$ Million : 1,366
 Yearly Investment US$ million = 165
Renewable Generation Portfolio
Operating SHP plants/capacity: (4)/ 35 MW O&M and Trading Services
Under construction SHP (2013): (1)/8MW  Largest Independent O&M Service
Developing SHP plants (2017): (3)/50 MW Operator of Hydroplants: 130 units
Operating Biomass Cogens plants/capacity:  Total capacity under contract: 8,704 MW
O&M
(2)/60 MW  Specialized eletrical contractor services
Developing Biomass Cogens plants/capacity for Industrial clients and utilities
(2016): (2)/110MW  Construction/Maintenance of Substations
Wind Park under construction (2013): 150MW and Transmission lines
Distrib. PCH’s Eólicas Termelétricas  Net revenues US$ Million –36.4
Developing Wind Park (2017): 90 MW
Expected Total Energy production (operating
and construction)- 2013: 532 GWh/year  Wholesale Electricity Traded– 78 MW avg
Trading
Total Energy production (developing) 2016-  45 clients among largest
2017: 361 GWh/year industrial/commercial clients
Total Investment (2012-2017) : US$ 572 million  Net Revenues – US$ Million – 63.4

6. Energisa Growth History in numbers
Distribution Transformers
Total number of Consumers (000) (Qty and Installed Capacity MVA)
2.453
2.253 2.338 3.181
3.054
2.167 2.930
2.067 2.643 2.693 2.736
1.979
145.369
140.557
134.357
Growth rate 4.4% p.a
121.344
113.502
106.312
Growth rate 6.5% p.a
166 192
233 259 279 313
2006 2007 2008 2009 2010 2011 2006 2007 2.008 2009 2010 2011
Rural Consumers Total Number Consumers Quantity Capacity Installed MV/LV (MVA)
MV/LV Lines Extension and Consumer/power density Total Energy Distributed -Avg Residential Consumption/month
113,3
110,5
Growth rate: 4.3% p.a
121,6 123,4 104,2
116,1 100,7
109,9 98,0
100,0 105,8 96,8 8.709
57 59 59 8.474
55 57 7.629 7.878
57 6.966 7.280
Growth Rate: 4.6% p.a
20 20 20 19 19 20
Growth Rate: 7.4% p.a
1.931 2.042 2.187 2.353 2.593 2.765
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011
Residential Consumption (GWh) Total Energy Distributed (GWh)
MV/LV lines (km ´000) MWh/Km Consumer/Km KWh/residential consumer/mo

7. Energisa Performance Indicators
(*)
Total Energy Losses Energisa vs Brazil average Energisa Target SAIDI/SAIFI vs Actuals
18,3%
17,8% 27,0
27,0 26,2
16,7% 17,0% 17,0% Brazil Avg 25,4
23,6
25,3 24,7 22,2
23,9
14,6% 14,5% 22,4
13,4% 13,0% 19,6
12,5% 31,0 31,7 17,2
11,2%
5,3% 5,5% 24,5 26,3
5,2% 4,8% 23,7 22,6
4,3% 2,8%
15,6 15,7 16,5
14,0 13,9 13,8
9,3% 8,9% 8,2% 8,2% 8,2% 8,3%
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011
Line Losses Commercial Losses SAIDI (hours) SAIFI (#) Target SAIDI Target SAIFI
Consumer/Workforce employed vs Comparable IOUs ABRADEE Customer Satisfaction Survey
Average 340 79,9
76,8 77,4 77,3 76,7
76,8
478 494
422 431
338 338 371
333
266 284
A B C D E F G H I ENERGISA 2006 2007 2008 2009 2010 2011
Companies Peer Group Avg (2010) EPB EBO ESE EMG ENF Brazil Average

8. Agenda
Energisa – Company Background
Smart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s Next

9. Smart Grid – Around The world
South Korea Europe and UK
• Developing Intellectual property • Vision 20-20-20
• Reducing usage by 10 percent • Smart grid efforts are a specific part of
• Lowering the average annual blackout a low carbon agenda
minutes per household from 15 minutes • Sweden is the first country in the world
to nine to hit 100-percent penetration for smart
• Reduce line loss to 3 percent. meters
• Capture 30 % of renewables
• Create 50,000 annual jobs
•
•
US$43 billion in avoided energy imports
$3 billion in avoided power generation
China
costs. • Ecological rationale is not a factor
• Energy Efficiency
Australia •
•
Develop Distributed Generation
Deploy 280 million smart meters by
• Energy Efficiency 2016.
Major generators and substations to be
•
•
Operational Efficiencies
Improve Reliability
USA •
equipped with smart sensors
• Renewable Integration • Energy Efficiency
• Operational Efficiencies
• Improve Reliability
• Improve Customer Service
• Renewable Integration

10. Smart Grid –Investment by Government in
2010
China is the
leader in both
categories, with
$7.3 billion total
investment, or
$1,400 per $US
million of GDP. As
China builds out
its modern grid to
accommodate
extraordinarily
rapid growth

11. US Smart Grid Progress - Govt. Stimulus and
Using Cost recovery methods
Cost Recovery fall into one of the
following categories regardless of state Case Study Trend Observations
jurisdiction: Most Least
PGE Duke Con Ed Often Often Comments
Used Used
Trackers: A mechanism that follows or “tracks”
Good means for focused recovery
unpredictable costs that the utility incurs. Typically,
in lieu of full rate case process;
trackers are determined at the end of the year and Trackers saves time; limits utility exposure
then recovered over a 12-month period. with large unknowns
Balancing Accounts Links these programs to normal
/Rate Base rate case filing process
Balancing Accounts/Rate Base: A balancing account is
an accounting procedure developed by a utility
commission to track and recover reasonable and Marginal Cost approach; Texas,
Customer
prudent costs unrecovered through retail bills due to Surcharge Michigan, e.g. suggested
the application of applicable rate freezes or ceilings. approach
Can be a Long Process would
Customer Surcharge: A mechanism that has no
State Funding require legislative action
standard statutory definition, but typically is a charge
defined by the governing utility commission and
imposed on customers to recover utility expenses.
State Funding: It varies state-by-state, but this
approach includes funding for projects provided
from existing or newly created state accounts.

12. Agenda
Energisa – Company Background
Smart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s Next

13. Sustentability Trilemma for the investor owned utility
business in Brazil: Social Economic Sustentability
ENERGISA Retail Electricity Rates - 2011 (1US$ = 1,67 R$ )
Segments US$c/KWh R$c/KWh
Residential 29,80 49,91
Low Income residential (subsidized) 14,98 25,09
Industrial 19,96 33,44
Commercial 27,41 45,91
Rural 14,66 24,55
Other segments 18,44 30,89
Total 22,70 38,02
Year: 2011 Residencial Baixa Renda
Average Residential Monthly Bill (US$) 46,32 11,08
Avg. Yearly Resid. Consumption (KWh) 1.359 889
Resource allocation of Brazilian utility bill (2011) Average Residential Electricity Rate (US$c/KWh, 2010)
35,6
Taxes and other Rate Charges Total Rate
31,9
Distribution
Taxes and
26,1 25,7
24%
25,1 23,0
several 22,9 22,5
Tariff 21,5 21,5
Charges 18,8 18,0 18,0
17,8
Generation 45% 11,6
and Grid 8,9
19,8 7,2
Costs 5,1 5,0
13
8,7 7,8 7,1 8,5 7,1 5,8 5,5
31%
4,5 4,3 3,7 3,9 2,7 2
Germany
Sweden
Argentina
Danemark
China
Portugal
Turkey
Russia
India
Poland
Brazil
Norway
Finland
Holand
Spain
UK
Italy
Chile
USA

14. Sustentability Trilemma for the investor
owned utility business in Brazil: Investment
Sustentability
• High growth markets needs to
be bankable - i.e generate
Energisa Distribution Utilities ROCE and EBIT margins
sufficient margins to meet
ROCE (%) EBIT margin (%) growing investment needs;
21.7
• Pressure from regulator to
lower rates to consumers by
reducing the utility operators
distribution margins are not
sustainable in a long term;
14.8
14.1 • Regulator wants more reliability
12.6
but doesn´t provided adequate
economic signals;
• Utilities are compelled to
2007 2008 2009 2010 2011 2012 2013 2014 2015 increase efficiency and asset
utilization with better service
1st 2nd Rate Case Cycle 3rd Rate Case Cycle
delivered in order to sustain
profitability.

15. Sustentability Trilemma for the investor owned utility business
in Brazil: Environmentally Sustentable
Projected Installed Capacity by energy source (MW)
PDE-2011 (2010-2020) - source:EPE
• Brazil has one of the cleanest
energy supply matrix in the
World – 82% renewable non- 25.461
nuclear 3.412
27.142
• Challenge is to introduce
reliable renewable sources cost 15.499 115.123
effectively for the long term 2.007
9.133
(SHP, biomass, wind and solar)
82.939
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Hydros Other Renewables Nuclear Fossil Fuel Plants

16. Smart Utility - Energisa
Timeline
Substitution Substitution
of SCADA of GIS
Pilot Case:
Roadmap Review
Smart
Utility Smart Grid
Substation
Management Business
Systems Case
Roadmap
Smart Grid Pilot Case:
Business Self
Expansion
Case Healing
Automated
Workforce Reclosures
AMI
Largest Automation Pilot Case:
Clients SIGOD / LIS Current
Fault
Indicators
AMR
Pilot
2008 2009 2010 2011 2012
Investments (USD Million) 2008 2009 2010 2011 2012 TOTAL
Distribution Investments 174,20 246,98 229,01 147,6 183,8 981,52
Smart Utility Investment 2,13 2,37 2,19 2,92 10,61 20,22
Percentage 1,2% 1,0% 1,0% 2,0% 5,8% 2,1%

17. Pathways to Smart Utility - Energisa
Our motivations and needs for a Smart Grid deployment and towards a Smart
Utility are different than in USA and Europe;
 USA/Europe: aging infrastructure, promote energy
efficiency and lower CO2 footprint, tech & innovative
industry drive
 Brasil : opt-in meter replacement (REN-502/12),
continuous pressure to improve reliability and efficiency
and reduce commercial losses within a declining share
of the rates.
Our hurdles:
 High deployment costs and not perceivable positive NPV yet
 Low consumption per capita base
 Cost recovery mechanism that doesn´t burden consumers or investors and
deliveries benefits in short term
 No Time of Use rates for LV retail customers still not effective
 Lack of local manufacturing base or trained personnel
 Reliable telecom network for wireless data not available in rural and smaller t

18. Pathways to Smart Utility - Energisa
AMI – Project Cost (full deployment at Energisa ) – from 2009 Business Case:
INVESTMENTS (%)
Results
10.0% 3.0%
Meters
28.0%
Shielding
 Investment :
57.0%
Implementation  623 Feeders
TI/Telecom
 2,4 Millions
-83%
Meters
AMI – Main Benefits evaluated:  U$ 565 Million
BENEFITS (%)  Negative NPV in:
9.2%
7.7% (U$ 467 Million)
22.5%
Non Technical Losses
 Negative IRR in:
Reactive Energy
AMR+remote C&D (8,51%)
60.6%
Others

19. Pathways to Smart Utility - Energisa
Reduction of Commercial Losses – sometimes the
solution is simpler than we think!
 Commercial Losses higher than US$ 180/residential
customer/ year in higher concentrated commercial loss
feeders  utilize simplified smart meter (AMI)
Commercial losses lower than US$ 180/residential
customers/year in dispersed areas  utilize low cost
alternatives of electronic meters with shielded cables and
meter borne – Energisa patented : DLCB Energisa
Chastity Belt
(DLCB )

20. Pathways to Smart Utility - Energisa
Distribution Automation
 Projects with NPV positive based on our 2009 business case:
 More stringent quality requirements and cost constraints
 Focus is to reduce penalties and improve reliability with add on Opex
 Several Pilots currently being tested
 Smart Substation
 Current Fault Indicators
 Self Healing
 Our Roadmap of Smart Utility also points to PoC in several other areas:
DMS/OMS
Fault Detection isolation and restoration (FDIR)
Volt-VAR optimization
 Treatment of large amount of Data
 Power Quality Management

21. Pathways to Smart Utility - Energisa
Distributed Generation:
 Very low penetration of Distributed Generation
 In April 2012 federal regulator released rule REN 482/2012 introducing net
metering scheme for DG and provided for the first time mechanism to introduce
micro-mini generation (<1 MW) with net-metering. Surplus produced beyond
consumption can be credited and used in 36 months.
 Parity to grid in some locations but economics are not favorable for mass
deployment without subsidies.
 With TOU and other liberalized movements on energy trading, DG could be
potential disruptive business model for traditional utilities

22. Impact of Smart Grid in the Operating
Environment
AMI Infrastructure
Integration Services
Smart Home Infrastructure SMART Grid Infrastructure
(Smart Meter, Data
(Smart Thermostat, Load (Sensors, Grid Control Infrastructure
Concentrators, AMI
Transformation
Control Devices, Gateways.) Devices, Grid head end)
Other Services
head end)
Services
Wide Area Network (WAN)
Local Area Network Network
Home Area Network (HAN) (Wireless, Fiber &
(LAN) Communications
Substation)
Development &
Meter Data Management Demand Response Customer Relationship
Data Service
Management
Maintenance
Management Management
Application
Customer
Cut-over
Service
Customer Portal Credit and Revenue Metering and Billing
Management Protection Service Management
Security, Standards & Interoperability
Business Change
Management
Distribution
SCADA Distribution Management Outage Management
Intelligence
(Roadmap,
Consulting
Management
Business
Strategy)
Telecom
Network Solutions Network
Network Planning Work Management Planning &
& Planning Management
Operations
IS Infrastructure
Management
Management
Integration
Data Center Data
Systems
Project
Communications / Cloud Management Storage Management Center
Failover Management

23. Smart Grid Requires Resilient
Communications Systems - CTO’s Approach
 One multi-purpose Communications network to avoid the implementation of multiple single-purpose
networks
 A Communications network that can grow as functional requirements change and technology evolve
 Incorporating commercially available, non-proprietary solutions allowing for future-proofing against today’s
investments cycles and technology obsolescence timeliness
 Leverage industry standards thereby lowering the overall cost to implement and support
 Create capacity and infrastructure for secure and fault tolerant requirements
Smart Grid • Comprehensive Coverage
Automation • Multi-protocol
Network • Scalable and Future Proof
• Low Latency Network
• QoS at the core layer Control & Utility
• Secure and Protection Network
Fault Tolerant Network Innovation
• Resilient Data Center
Utility Operations Network Network
- Data Center • QoS at the core layer
- Voice, Video and Data • Secure and
Fault Tolerant
* DUKE Energy CTO Speech, 2010‐2011

24. Telecom Alternatives Considered
Wireless Option Application Pro Con
RF Mesh: Bit rate up to 1 Mbps, Smart meters, distribution Able to be customized for specific Proprietary, lack economies of
variable range, variable frequency automation deployments, self‐organizing, self‐ scale, equipment can be expensive
healing
GPRS: Bit rate at 20‐200 kbps, Smart meters (AMI), mobile work Able to leverage existing networks, Recurring cost per megabyte, lack
frequency 700 MHz to 2.1 GHz force management low upfront capital investment, of direct utility control over
short time‐to‐market, low module network
cost
PLC and Broadband Over Power Substations, smart meters, Robust capabilities, integrated High capital costs, expensive chips
Lines (BPL): Bit rate at 48 kbps to monitoring/ control at customer communications throughout grid and equipment, not widely
10 Mbps, variable range, frequency premise, distribution automation and home area network adopted
at 1.6 to 80 MHz electric carrier environments, low recurring costs
WiMAX: Bit rate up to 3 Mbps, Smart meters, mobile work force Robust capabilities, integrated High equipment cost and initial
range of 10‐15 miles, frequency management, distribution communications throughout grid. build out cost.
700 MHz to 2.3‐3.5 GHz automation High bandwidth capabilities, low
latency
VSAT: Bit rate 14 Kbps‐1Mbps, Smart meters, mobile work force Low‐cost equipment, ubiquitous, High latency for DA and limited
management, distribution low latency growth potential
automation
24

25. Agenda
Energisa – Company Background
Smart Grid Trends – Around the world
Feasibility of Smart Grid in Brasil – Our findings
Conclusion – What’s Next

26. What’s Next- Energisa
Projects to be initiated in 2013 - 2015:
1. Conclude upgrading Utility Management Systems as prescribed in
our RoadMap
Power Quality management
Digitalization: Protection and Automation
OMS / DMS
 Modelling Dispatch
2 . Study on handling massive amount of data – BIG DATA
 analytics
 handling, storage and integrity
Our View of the
Future
3. DG pilot case – handling distributed resources and
otimizing dispach of DG solar power
4 . Evaluate low cost SG meters – REN-502/12 complaint

27. Thank you!
Ricardo Botelho
rbotelho@energisa.com.br
55-21-2122-6904
John Chowdhury
Chowdhury.john@gmail.com
+1 214-213-6226