Furnas Centrais Elétricas S.A. Key information Headquarters Service area Type of utility Voltage level Number of employees 1 Revenues (2013) 2 Note 1: Including 1,340 outsourced workers; 2: Net operating revenue Sources: Furnas; Global Transmission Research Botafogo, Rio de Janeiro, Brazil 15 Brazilian states and the Federal District Vertically integrated electric utility 69 kv 750 kv AC; ±600 kv DC XXXX BRLXXXX million Overview Furnas Centrais Elétricas (Furnas) was established in 1957 to build and operate Brazil s first large scale hydroelectric power plant, the Furnas Hydroelectric Plant. Since then, the company has come to manage assets in the generation, transmission and power supply segments across 15 Brazilian states and the Federal District. State owned energy holding company Centrais Elétricas Brasileiras (Eletrobras) is the major shareholder with over 99 per cent equity stake. Furnas owns and operates XXXXX MW of electric power capacity (wholly owned, shared and in the form of special purpose entities [SPEs]) and generates XX per cent of Brazil s electricity. It owns around XXXXX km of transmission line networks at the 132 kv 750 kv voltage levels across eight Brazilian states and the Federal District. Existing network Furnas power transmission infrastructure comprises a line length of XXXXX km. In addition, it has stakes in over XXXX km of lines through private sector transmission partnerships. It owns XX substations (including two shared and 14 partnerships in the form of SPEs) with a transformer capacity of XXXXXX MVA. During 2013, BRLXXX million was invested in the transmission segment, with emphasis on the building of transmission lines included in the Programa de Aceleração do Crescimento or growth acceleration programme. In 2013, the company commissioned six new transmission lines. In 2013, Furnas deployed the ±600 kv high voltage direct current (HVDC) line (Porto Velho Araraquara II Collector Transmission Line), also regarded as the world s longest direct current (DC) line. The ±600 kv HVDC lines are instrumental in the operation of the Itaipu transmission system, which comprises five transmission lines of 900 km length from the state of Paraná to São Paulo. The Itaipu system has three 750 kv alternating current lines and two ±600 kv DC lines, in order to overcome the issue of the different frequencies used by Brazil and Paraguay.
Table 1: Growth in Furnas transmission line length (km) 1 Voltage 2009 2010 2011 2012 2013 2014E 750 kv XXXX XXXX XXXX XXXX XXXX XXXX 600 kv DC XXXX XXXX XXXX XXXX XXXX XXXX 525/500 kv XXXX XXXX XXXX XXXX XXXX XXXX 345 kv XXXX XXXX XXXX XXXX XXXX XXXX 230 kv XXXX XXXX XXXX XXXX XXXX XXXX 138 kv XXXX XXXX XXXX XXXX XXXX XXXX 132/13.8 kv XXX XXX XXX XXX XXX XXX Transmission line length (km) XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Note 1: Does not include transmission lines owned by Furnas in partnerships or SPEs As of December 2013, Furnas owned around XXXX km of transmission lines in partnerships or SPEs The 2014 data has been estimated based on projects that are expected to be completed during the year DC: Direct current Sources: Eletrobras (Form 20 F); Furnas Table 2: Growth in Furnas transformer capacity (MVA) 1 Voltage 2009 2010 2011 2012 2013 2014E Transformer capacity (MVA) XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX XXXXXX Note 1: Includes transformer capacity in partnerships and SPEs; The 2014 data has been estimated based on projects expected to be completed during the year; does not include HVDC capacity commissioned during the year DC: Direct current Table 3: Growth in Furnas substations 1 Voltage 2009 2010 2011 2012 2013 2014E Number of substations XX XX XX XX XX XX Note 1: Includes substations in partnerships and SPEs The 2014 data has been estimated based on projects expected to be completed during the year DC: Direct current Operational performance During 2013, Furnas transmission system had an average operational factor of XX per cent. Its load cut robustness indicator reached XX per cent for any level of load cuts; XX per cent for load interruptions exceeding 100 MW; XX per cent for those greater than 500 MW; and XX per cent for interruptions above 1,000 MW during 2013. The transmission losses reported during the year stood at XX per cent, as compared to XX per cent in the previous year.
Table 4: Furnas key operational performance indicators 2009 2010 2011 2012 2013 Operational factor (%) XX XX XX XX XX Load cut robustness indicator (%) XX XX XX XX XX Transmission loss (%) XX XX XX XX XX Note 1: Global electrical losses NA: Not available Financial performance Most of the company s business activities in transmission (as well as in generation and distribution) are carried out through concession contracts with the federal government. These are formalised through a bidding mechanism and can be renewed for extended periods of up to 20 years. Furnas revenues from the transmission segment comprise transmission tariffs paid by the users of the interconnected power transmission network, which are determined annually by the regulator based on the Receita Anual Permitida or annual permitted revenue of the transmission concessions. Furnas has secured an extension for its concession contracts in generation and transmission assets, which were due to expire in 2017. The legislation passed in this context impacted about 95 per cent of the transmission line length and 98 per cent of the transformation capacity owned and operated by the company. For the extended concessions, as per the policy, Furnas is entitled to receive compensation for the remaining value of the non depreciated or non amortised assets as of end December 2012. This compensation was determined at BRL3.6 billion, of which BRL2.87 billion is related to power transmission and BRL731 million is towards power generation assets. In 2013, Furnas registered a net loss of BRLXXX million. Compared to the previous year s loss of BRLXXXX million, the financial performance does not appear to be worsening. Yet, the profitability of the company appears to be weak. The company attributes this to regulatory stipulations which reduced its entitled revenues by over XX per cent. In 2013, Furnas allocated BRLXX billion for own and equity investments. The transmission segment had investments worth BRLXXX million. Table 5: Furnas key financial indicators (BRL million) 2009 2010 2011 2012 2013 Net operating revenue XXXX XXXX XXXX XXXX XXXX Operating costs and expenses XXXX XXXX XXXX XXXX XXXX EBITDA XXX XXXX XXXX XXXX XXX Net profit for the period XXX XXX XXX XXXX XXX Note EBITDA: Earnings before interest, tax, depreciation and amortisation
Table 6: Furnas capital expenditure on transmission (BRL million) 2009 2010 2011 2012 2013 Self owned XXX XXX XXX XXX XXX New projects XX XX XXX XX Reinforcements and improvements XXX XXX XXX XXX Transmission system expansion XX XX XX XXX XX SCADA/Smart grid technologies XX XX XX XX Transmission system maintenance XX XX XX XXX Investment in SPEs XX XX XXX XXX XXX Future plans and investments The company s roadmap for expansion is based on a projected generation capacity of XXXXX MW by 2019 against about XXXXX MW at present, as well as the diversification of energy sources to integrate renewable energy technologies. For the transmission segment, the aim is to reach XXXXX km of total line length by 2019, against XXXXX km at present. Meeting these targets will require an investment commitment of an estimated BRLX billion annually, of which the transmission segment s share will be about BRLXXX million. Roughly, BRLX billion worth of funding is to be contributed by the company through its internal accruals as well as the indemnities to be received for assets that have been extended but not yet amortised. The expansion of the transmission network is under way, with over XXXX km of new lines and XX substations under construction. Many of these are through the concession contracts that Furnas won during the auctions carried out by Agência Nacional de Energia Elétrica (ANEEL). An investment of around BRLXX billion has been earmarked for improving the network s operational efficiency by 2015. Under the Transmission Facilities in Operation Plan for 2011 15, the company will undertake the management of XXX projects and XX substations, and XX transmission and exchange lines, comprising more than XXXX pieces of equipment and about XXXXX components to modernise protection systems and switching equipment. Table 7: Planned additions to Furnas transmission network 2015 2016 2017 2018 2019 2020 Line length (km) XXX XXX XXX XXX XXX XXX Substation capacity (MVA) Number of new substations Sources: Furnas; ANEEL; Eletrobras XXX XXX XXX XXX XXX XXX X X X X X X
Table 8: Furnas planned capital expenditure on transmission (BRL million) Particulars 2015 2016 2017 2018 2019 2020 Total XXX XXX XXX XXX XXX XXX Note NA: Not available Project Table 9: Furnas key transmission projects SPE Line length (km)/ Substation capacity (MVA) Furnas stake (%) 230 kv Serra da Mesa Niquelândia Line Transenergia Goiás S.A. 100 km 49 Scheduled start up date December 2015 230 kv Niquelândia Barro Alto Line Transenergia Goiás S.A. 88 km 49 August 2015 500 kv Marimbondo II Assis Line Luziânia Substation Niquelândia Substation Triângulo Mineiro Transmissora S.A. Luziânia Niquelândia Transmissora S.A. Luziânia Niquelândia Transmissora S.A. 296.5 km 49 December 2015 225 MVA 49 April 2015 30 MVA 49 April 2015 Note SPE: Special Purpose Entity Sources: Furnas; ANEEL
Key recent contracts Table 10: Furnas key recent contractors Contractor/ Company Nexans May 2011 Date of contract award ABB September 2013 Siemens December 2013 GE April 2014 Source: Global Transmission Research Scope of work Supply of conductors for the 600 kv HVDC Madeira River Power Interconnection project Installation of 63 MVA GIS indoor substation in Grajau, near Maracanã stadium Supply nine transformers of 200 MVA each for the 145 kv GIS substation in Grajau Supply of B90 bus differential systems for the 230 kv Cachoeira Dourada and the 138 kv Poços de Caldas substations; supply of equipment for Furnas 765 kv reactors and 765 kv, 500 kv and 69 kv transformers at the Ivaipora and Itabera substations Key contacts Designation Name Email Chief Executive Officer XXXXX XXXX Director of Operations XXXXX XXXX Director of Finance XXXXX XXXX Address Rua Real Grandeza, 219, Botafogo, Rio de Janeiro/RJ 22283 900, Brazil Telephone +55 21 2528 3112 Email webfurnas@furnas.com.br Website www.furnas.com.br Note NA: Not available