Investors - ENGIE Brasil

Glossary

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Annual Generation Revenue (RAG)

Amount in Reais per year (R$ year) to which the concessionaire will be entitled to make available the physical energy and power guarantee of the hydroelectric plant in quota system, composed of Generation Assets Management Cost (GAG) and Grant Bonus Return (RBO), in addition to charges and taxes, including charges for connection and use of transmission or distribution systems.

Annual Reference Value

The weighted average cost of acquiring electricity from new enterprises in Aneel's auctions for the Regulated Contracting Environment, with a minimum of 5 and 3 years in advance, calculated for all the Distributors in Brazil.

Areas of Permanent Preservation (APPs)

Areas of Permanent Preservation is a protected area, covered or not by native vegetation, with the environmental function of preserving water resources, landscape, geological stability and biodiversity, facilitate gene flow of fauna and flora, land protection and ensure the well-being of human populations, as established by Law 12.651, of May 25, 2012.

Assured Energy

The Assured Energy is the Physical Guarantee of the hydroelectric plant, which constitutes its contracting limit. Assured Energy of a hydroelectric plant is the fraction allocated to it from the overall Assured Energy of the system. The allocation of Assured Energy and its revisions are defined by the Mining and Energy Ministry (MME), based on methodology applied by the National Electric System Operator (ONS)/MME, according to Decrees 5,163/2004 and 2,655/ 1998. The term Assured Energy is used in relation to the maximum amount of energy that can be used for commercialization, both by thermoelectric plants and by hydroelectric plants. Therefore, it is similar to the concept of Physical Guarantee.

Biomass

Organic sources used to produce energy to be converted into electricity, fuel or heat. Examples of biomass used in generating electricity are: sugarcane bagasse, rice skin and timber waste, among others.

Bilateral Contracts

Power purchase and sale contracts freely negotiated between Generators and Distributors for delivery as from 2003, when the energy contracted through Initial Contracts began to be reduced by 25% per year, in accordance with Law 10.848 / 2004, known as Law of the Electric Sector, in addition to the agreements entered into between Generators and Free Consumers as well as Generators and Distributors.

Boiler

Static equipment for steam generation. The boiler is basically divided into two environments: one is formed by a network of tubes or coils where circulates the demineralized water that will turn into steam; the other is the region where the fuel is burned and the hot gases from that combustion circulate. A boiler can burn various types of fuels such as coal, diesel oil, heavy oil, natural gas, wood, rice hulls, sugarcane bagasse, etc. In a thermoelectric plant, the steam generated in the boiler goes to the turbine (to transform the thermal energy into kinetics), which is connected to the rotor of an electric power generator.

Brazilian Agency for the Environment and Renewable Resources (Ibama)

Federal government autarchy under the aegis of the Ministry for the Environment (MMA), responsible for executing the national environment policy and developing activities for the preservation and conservation of the natural heritage, exercising control and supervision over the use of natural resources.

Basic Network

Facilities belonging to the Interconnected System identified according to rules and conditions established by Aneel.

Captive Consumer

The consumer who purchases energy from the distributor supplying the consumer’s geographical area.

Certified Emission Reduction (RCE)

Unit of reduction of greenhouse effect gases, generated and certified in accordance with the provisions of the Kyoto Protocol for Clean Development Mechanism (CDM).

Chamber for Managing the Energy Crisis (CGE)

The CGE created by the Federal Government to manage the electric energy crisis that arose in 2001.

Comercialization

The commercialization agent is responsible for purchasing, import, export and sale of electric energy through bilateral agreements whereby prices are freely negotiated between the parties involved.

Concession contracts

Concession contracts for public good use for generating electricity, signed between ENGIE or, as the case may be, one of its subsidiaries and the authorizing entity.

Distribution

Is the activity of distributing energy, the regulation of which is the responsibility of National Electric Energy Agency (Aneel) and, just as with transmission, must grant free access to all market agents.

Distribution Company

A corporate entity with a concession for the exploration of the public utility services of distribution of electric energy.

Electric Power Trade Board (CCEE)

Enacted by Law 10,848/04 and established by Decree 5,177/04, it assimilated the Wholesale Electric Energy Market's (MAE) functions and its organizational and operational structures. Some of its main duties are: the calculation of the spot price (PLD), used to value the transactions carried out in the short-term market; the recording of the amounts of electric energy traded; the financial liquidation of the values resulting from the purchase and sale of electric energy carried out in the short-term market, and the conduction of auctions for purchase and sale of energy at the Regulated Contracting Environment (ACR), as delegated by National Electric Energy Agency (Aneel).

Energy Development Account (CDE)

Enacted by Law 10,438, of April 26, 2002, as CCC's successor in what concerns the subsidy of the fuel costs to the thermoelectric generation plants that use national mineral coal. It was created to support the development of energy production, the production of energy through alternative energy sources and the universalization of energy services throughout the country.

Electric Power Sector Monitoring Committee (CMSE)

Agency created in the scope of the Brazilian Mining and Energy Ministry (MME), under its direct coordination, with the purpose of following up on and evaluating the continuity and safety of the electric supply across the national territory. Its main duties include: following up on the development of the generation, transmission, distribution, trading, importing and exporting of electric energy; evaluating supply and service conditions; carrying out a periodical integrated analysis of the supply safety and of the service; identifying difficulties and obstacles that affect supply regularity and safety and expansion of the sector, and elaborating proposals for adjustments and preventive actions that may restore the safety in the electrical energy supply and service.

Electrostatic precipitator

Electromechanical equipment used to retain particulate material found in gases. In the case of thermoelectric plants, the electrostatic precipitator retains ash resulting from the burning of coal or fuel oil mixed with gases arising from burning. This equipment is indispensable for the control of emissions of particulate material, thus preserving the environment. The equipment consists of a filter that retains the ash through the creation of an electrostatic field produced in its interior. By passing through this electric field, the ash ionizes and is retained in metallic plates impeding its passage through the smoke stack.

Energy Planning Agency (EPE)

Enacted by Law 10,847/04 and established by Decree 5,184/04, EPE is a company linked to the Mining and Energy Ministry (MME), whose purpose is to provide services in the studies and research area, aiming at subsidizing the electric power sector's planning. Its main duties include carrying out studies and forecasts on the Brazilian energy matrix and studies that allow the integrated planning of energetic resources, developing studies that allow the expansion planning of energy short, medium and long term generation and transmission, carrying out analyses of plants' technical-economic and social-environmental feasibility, as well as obtaining the previous environmental license for hydroelectric and electric energy transmission utilizations.

Energy Reallocation Mechanism (MRE)

Aimed at distributing the hydrological risk among the generators, as it is guaranteed to each generator the payment for the amount of its assured and contracted energy while the MRE members are capable of complying with the MRS's levels of Assured Energy.

Free Contracting Environment (ACL)

Segment of the market in which the purchase and sale of electric energy is carried out through bilateral contracts freely negotiated between the parties.

Free Consumer or Free Client

Consumers who are able to choose the company from which they purchase electricity. Demand must be equal or more than 3MW to qualify as a free consumer. Tension also has to be equal or more than 69 thousand volts in cases where the consumer was already connected to the grid prior to July 1995. Another group of free consumers, with demand greater than or equal to 500 kW served in any voltage, can also choose their supplier, provided that the energy comes from renewable encouraged sources: solar, wind, biomass and small hydroelectric plants (PCHs).

Fundação de Meio Ambiente (Fatma)

Environmental protection agency pertaining to the state of Santa Catarina. With its head offices in Florianópolis, its mission is to guarantee the preservation of the natural resources of the state of Santa Catarina.

Fundação Estadual de Proteção Ambiental (Fepam)

The agency is responsible for environmental licensing in the state of Rio Grande do Sul, under the aegis of the State Environmental Secretariat. Is one of the executive agencies in the State Environmental Protection System, the objective of which is the integrated action of the state environmental agencies in coordination with the work of the municipalities.

Generation Company

A corporate entity with a concession or authorization for exploration of public utility services for generation of electric energy.

Gross Natural Inflow (ENA)

It is the energy that is obtained when the natural flow of an affluent (water line that ends in a main river) is turbinated in the plants located downstream, from a point of observation.

Generation Scaling Factor (GSF)

Index reached by applying the total amount of hydroelectric energy produced by all MRE participants against the latter’s respective assured energy. A GSF of less than 1 means that production of hydroelectric generation will be less than the allocated guaranteed energy and as such, the hydroelectric energy companies are exposed to the short term market.

Generation Assets Management (GAG)

Share of the Annual Generation Revenue (RAG) related to the regulatory costs of operation, maintenance, administration, compensation and amortization, as well as investments in improvements of the hydroelectric plant.

Generation

An activity open to competition, where all generators are guaranteed free access to the transportation systems (transmission and distribution) and may freely commercialize energy both for the distributor and commercialization companies as well as to free consumers.

Generator

Rotation equipment responsible for converting mechanic energy from the turbine rotation into electric energy. The electric generator is also composed of a moving part, comprised of the shaft and a set of coils or mobile winding, and of a stationary part, comprised of a set of coils or winding attached to the generator's casing. The mechanical energy originating from the turbine is used to turn the rotor, which induces a tension in the winding terminals which, by means of transformers and transmission lines, are connected to the charges or electric energy consumers, allowing the electric current circulation.

Global Reversal Reserve (RGR)

Instituted by Law 5,655 of May 20, 1971, with the purpose of providing funds for the payment of eventual indemnities to companies in the Brazilian electricity sector in given instances of revocation or expropriation of the respective concessions. In recent years, RGR has been used principally to finance generation and distribution projects.

Generators

Concessionaires or companies authorized to use the public good for generation of energy or provision of public utility services for generation of energy.

Gigawatt (GW)

Unit equivalent to one billion watts.

Gigawatt-hour (GWh)

Unit equivalent to one gigawatt of electric energy supplied or requested per hour, or one billion of watts-hour.

Hydroelectric Power Plant (UHE) and Thermoelectric Power Plant (UTE)

Power plant, composed of one or more turbines, hydroelectric or thermal (gas or steam), coupled to generators.

Hydrological risk

With the lack of rainfall and shortage of water in the reservoirs in several regions, hydroelectric generators have been observing a gradual reduction of their capacity to generate electricity. The situation in which the plants end up buying energy in the short-term market to compensate for the smaller production, usually due to lack of water.
This energy is acquired in the market based on the Settlement Price of Differences (PLD), generally at higher costs than those contracted. This has spawned a lengthy legal dispute. Since 2015, many traders have filed injunctions to avoid paying amounts in the short-term energy market.

Installed Capacity

The maximum amount of electricity that can be delivered by a generating unit, or in the set of generating units of a plant. The installed capacity is generally expressed in MW and is defined under standard conditions of temperature, pressure and relative humidity.

Industrial Consumers

Industries served by electricity energy suppliers in their capacity as Free Consumers.

Independent Producer

Corporate entity or associated companies which receive a concession or authorization from the government to produce electricity for commercialization.

ISO 9001

International standard with the objective of improving internal corporate procedures. Its focus lies in the continuous improvement of products and services. The Brazilian version of this standard is the ABNT NBR ISO 9001:2000.

ISO 14001

International Standard for Environmental Management Systems for ensuring compatibility between environmental management and prevention of pollution with the socio-economic growth of the companies. Periodically, the certified company analyzes and evaluates its environmental management system, seeking to identify opportunities for improvement and ways of implementing them. The Brazilian version of this standard is the ABNT NBR ISO 14001:2004.

Kilovolt or Quilovolt (KV)

Unit equivalent to one thousand volts.

Kilowatt or Quilowatt (KW)

Unit equivalent to one thousand watts.

Kilowatt-hour or Quilowatt-hour (KWh)

Unit equivalent to one kilowatt of electric energy supplied or requested per hour, or one thousand watts-hour.

Kyoto Protocol

International agreement that came into effect in February 2005 and seeks to limit the world emissions of gases that contribute to the greenhouse gas effect, in turn contributing to the reduction in global warming and consequently stabilizing climate change.

Long-Term Agreement

An agreement with a validity equal or more than 6 (six) months.

Mining and Energy Ministry (MME)

Federal Government Agency responsible for conducting the country's energy policies. Its main duties include formulating and implementing policies for the energy sector, according to the guidelines established by the National Energy Policy Council (CNPE). The MME is responsible for establishing the planning for the national energy sector, monitoring the safety of the Brazilian electric power sector supply and defining preventive actions to restore the supply safety in case of conjunctural imbalances between energy supply and demand.

Megawatt (MW)

Unit equivalent to one million watts.

Megawatt-hour (MWh)

Unit equivalent to one megawatt of electric energy supplied or requested per hour, or one million watts-hour.

National System Operator (ONS)

Is a not-for-profits private law entity responsible for the coordination and control of the operation of the electrical energy generation and transmission installations, part of the National Interconnected System (SIN), under the inspection and regulation of the National Electric Energy Agency (Aneel).

New and Old Energy

Is a not-for-profits private law entity responsible for the coordination and control of the operation of the electrical energy generation and transmission installations, part of the National Interconnected System (SIN), under the inspection and regulation of the National Electric Energy Agency (Aneel).

New and Old Energy

New Energy is the energy produced by newly built plants whose investments have not yet been amortized and which, for this reason, is more expensive than the Old Energy.
Old Energy is the energy produced by state hydroelectric plants whose investments have already been partially or totally amortized. Because of this, the price of energy produced by these plants is lower than that of newly built plants that have not yet recovered their investment.

National Interconnected System (SIN)

System comprised of the Basic Grid and other transmission installations, which interconnects the generation and distribution units in Brazil's South, Southeast, Midwest and Northeast systems.

National Energy Policy Council (CNPE)

Inter-ministry Agency which provides assistance to the Presidency, and whose main duties are to formulate energy policies and guidelines and ensure the supply of energetic inputs to the most remote or most difficult to reach areas of the country. It is also responsible for periodically revising the energetic matrices applied to the several different regions of the country, establishing guidelines for specific programs, such as those for use of natural gas, alcohol, other biomass, coal, and thermoelectric nuclear energy, in addition to establishing guidelines for import and export of petroleum and natural gas.

National Electric Energy Agency (Aneel)

Autarchy set up under a special regime and linked to the Mining and Energy Ministry, created to regulate the Brazilian electric sector, enacted by Law 9,427/1996 and Decree 2,335/1997.

Operational Network

The basic network in conjunction with the complementary network and integrated power plants over which the ONS has coordination, supervision and control of National Interconnected System (SIN) operations.

Peak Energy

This is electric energy supplied at peak consumption hours between 3:00 and 7:00 p.m.

Physical assurance

The Physical Assurance of a generation undertaking, defined by the Mining and Energy Ministry (MME) and included in a concession agreement or authorization act, corresponding to the maximum amount of energy that can be used for trading by means of agreements, pursuant to the provisions in Decree 5,163/04.

Price for the Settlement of Differences (PLD)

Represents the price at which the net positions of the agents that trade energy in the wholesale market are settled. The PLD value is determined on a weekly basis for each load category, limited by the maximum and minimum price prevailing for each calculation period and submarket.

Program for Incentive to the Alternative Sources of Electric Energy (PROINFA)

Enacted by Law 10,438/2002, coordenated by the Mining and Energy Ministry (MME), with the objective of increasing the share of electricity produced by Autonomous Independent Producers projects, based on wind, biomass and small hydroelectric power plants (SHPP), in the National Interconnected Electric System.

Regulated Contracting Environment (ACR)

Segment of the market in which the purchase and sale of electricity between selling and distribution agents takes place through auctions organized by the government.

Self-Producer

Is a natural or corporate entity or consortium of companies which produce electric energy for their own use either individually or in consortium.

Short Term Market (Spot Market)

Segment of the market for the purchase and sale of energy where energy leftovers from bilateral contracts and /or not contracted bilaterally energy are negotiated.

Short-Term Agreement

An agreement with a validity of less than 6 (six) months.

Scheduled Stoppage

The stoppage of equipment or generation units provided for in the preventive maintenance plans made by the agent responsible for their operation. Each and every mechanical or electric equipment requires maintenance, aiming at reaching an optimal operational condition.

Solar Energy

Energy produced through the use of sunlight. There are two uses: thermal and photovoltaic. In thermal utilization, sunlight is only used as a heat source for heating systems. In photovoltaic, sunlight is transformed into electrical energy.

Small Hydroelectric Power Plants (PCHs)

Plants with installed capacity between 1 MW and 30 MW that meet the requirements proposed at Aneel Resolution 652, of December 9, 2003.

Thermoelectric Power Plants

Thermoelectric power plants are characterized by the production of electric energy from thermal energy. Fuels mostly used to directly or indirectly drive generators of thermoelectric plants are oil products (diesel, fuel oil and asphalt residues), coal, natural gas and nuclear fuels. In co-generation processes (technology designed to achieve greater thermoelectric efficiency) the use of so-called ecological or biomass (such as sugar cane bagasse, rice husks, wood waste and others) are commonplace.

Traders

Companies authorized by National Electric Energy Agency (Aneel) to act as electric energy selling agents within the scope of Electric Power Trade Board (CCEE).

Transmission

The basic network’s transmission networks have become channels that are available to all, being used by any entity against the payment of remuneration, the value of which is regulated by National Electric Energy Agency (Aneel).

Transmission Companies

Electric energy transmission concessionaires that operate in the Brazilian electric energy market, among them ENGIE Brasil Energia.

Transmission Company

A corporate entity with a concession for the exploration of public utility services for transmission of electric energy.

Turbine

Rotation equipment responsible for converting thermoelectric energy from steam or gas into mechanical work, called steam or gas turbines. There are also hydraulic turbines, more frequently used in Brazil, which convert the potential energy of the water into mechanical rotation energy. The turbine is composed of two main parts, the set of moving blades (rotating) attached to the turbine shaft interspersed with stationary blades, and connected to the turbine casing, which redirects the steam or gas as they expand in the turbine. The heated gas or steam, when entering the turbine at high temperature and pressure, meets the resistance of the moving blades, making them turn. That rotating movement makes the generator convert the mechanical energy into electric energy. Hydraulic turbines are comprised of only one set of moving and stationary blades.

Tariff for the Use of the Distribution Grid (TUSD)

Tariff paid by users (Generators and Free Consumers) to Distributors for the use of their distribution network (voltage less than 230kV).

Tariff for Use of the Transmission System (TUST)

Payable by users (Generators and Free Consumers) to the Transmission Companies for the use of the transmission network (tension more than 230Kv).

Volt (V)

Basic unit of electric power voltage.

Wholesale Electric Energy Market (MAE)

Organized environment, in which the purchase and the sale of energy among its participants have been processed up to the Industry New Model Law (Law 10.848/2004), through both Bilateral Agreements and energy balance settlements, limited by the country's interconnected systems.

Wind Energy

Energy generated from the force of the winds. The kinetic energy of the wind is transformed by a turbine into mechanical energy which, through a generator connected to the turbine, is transformed into electrical energy.

Watt (W)

Basic unit of electric power.

Watt-hour (Wh)

Amount of energy used to feed a charge with a 1 watt (W) power for one hour.