CPFL Energia

ed by the large investments made in electricity generation, distribution and commercialization capacity increase. This confidence is also reflected in the commitment to the company’s stability, to the management system’s excellence, to the impacts of its businesses on the Brazilian society, to the management of all its relationships and to the efficiency and quality in all its activities. We believe that our development and outlook are reflections of the following strong features:

Solid distribution base;
Operation in the States of São Paulo, Rio Grande do Sul, Paraná and Minas Gerais, major economic and industrial centers in Brazil;
Large experience in the planning, management and implementation of generation projects;
Strength and relevance of our shareholders;
Successful commercialization business. The Company’s activities are regulated by Brazilian laws and its subsidiaries also follow the electricity sector’s regulations. The concession contracts are granted by Federal Government through its regulatory agency, National Electricity Agency - Agência Nacional de Energia Elétrica (Aneel). Operating Segments
Distribution
With 13.0% of the market share, CPFL Energia heads the distribution segment through its eight distributors. All together, these distributors serve 569 municipalities, and in 2011 accounted for the distribution of electric energy to 7.0 million customers in the States of São Paulo, Rio Grande do Sul, Paraná and Minas Gerais. In 2011, of particular note was the growth in sales within the distribution companies’ concession areas, which totaled 54,590 GWh, a 4.9% increase. Sales to the captive market totaled 39,917 GWh, up 1.7%. In the distribution segment, CPFL Energia controls the following companies:

» Companhia Paulista de Força e Luz (CPFL Paulista)
» Companhia Piratininga de Força e Luz (CPFL Piratininga)
» Rio Grande Energia S.A. (RGE)
» Companhia Luz e Força Santa Cruz (CPFL Santa Cruz)
» Companhia Leste Paulista de Energia (CPFL Leste Paulista)
» Companhia Sul Paulista de Energia (CPFL Sul Paulista)
» Companhia Jaguari de Energia (CPFL Jaguari)
» Companhia Luz e Força de Mococa (CPFL Mococa)

Commercialization
CPFL Energia operates in the segment of commercialization of energy through its subsidiary CPFL Comercialização Brasil S.A. (CPFL Brasil), selling electric energy nationwide. CPFL Brasil holds direct stakes in the following operating subsidiaries:

» CPFL Meridional
» CPFL Sul Geradora
» CPFL Cone Sul

In the commercialization segment, CPFL Energia also controls:

» CPFL Planalto

Services
CPFL Energia operates in the segment of value-added services through the following operating subsidiaries:

» CPFL Serviços
» CPFL Atende
» CPFL Total
» Nect Serviços

Conventional Generation
CPFL Energia operates in the segment of generation of conventional energy through its subsidiarie CPFL Geração de Energia S.A. (CPFL Geração). CPFL Geração holds stakes in the following subsidiaries:

» BAESA - Energética Barra Grande S.A.
» CERAN - Companhia Energética Rio das Antas
» ENERCAN - Campos Novos Energia S.A.
» Foz do Chapecó Energia S.A.
» Centrais Elétricas da Paraíba S.A. - EPASA

Renewable Energy
CPFL Energia operates in the segment of generation of energy of renewable sources through CPFL Energias Renováveis S.A. (CPFL Renováveis). It owns a 63.0% interest in CPFL Renováveis through CPFL Geração, with 35.5% and CPFL Brasil with 27.5%. History

CPFL Energia has its origins in Companhia Paulista de Força e Luz - CPFL Paulista, created on November 16, 1912, out of the merger of four small energy companies which operated in the interior of the state of São Paulo. During this period of 99 years, CPFL Paulista’s corporate history has been marked by several important turning points in its development. In 1927, after 15 years under Brazilian control, the US group, American Foreign Power Co. (AMFORP), incorporated CPFL Paulista, remaining part of this group until 1964, when it became a subsidiary of Eletrobrás, a federal government-owned holding company. In 1975, CPFL Paulista’s shareholding control was transferred to Companhia Energética de São Paulo – CESP, a company controlled by the São Paulo state government. On November 7, 1997, the company was privatized, the current shareholding group taking over control. Following privatization, CPFL Paulista began a process of expansion according to a business plan established by its controllers, culminating in August 2002 in a restructuring - the conclusion of which was the creation of CPFL Energia as a controlling holding company. In 2004, the Initial Public Offering (“IPO”), held on September 29, was the most important event of corporate nature of CPFL Energia. It represented an evolution in its corporate structure, through the increase in the free float from 3.42% - exclusively held by BNDES in 2003 to 15.65% (5.09% BNDES and 10.56% non-controlling shareholders), by the end of 2004. Aiming at further simplifying the corporate structure and concentrate shares’ liquidity in the holding company’s shares, in 2005, CPFL Energia transformed CPFL Geração’s into CPFL Energia’s wholly-owned subsidiary through stock merger. Additionally, it concluded the total conversion of the loan contracted with IFC (International Finance Corporation), of US$ 40 million, in CPFL Energia’s stocks and also completed the stock merger of subsidiaries CPFL Paulista and CPFL Piratininga. Since then, the Company has already announced the following acquisitions:

Acquisition of the remaining 32.69% stake in RGE in May 2006. RGE is a distribution company operating in the north of the State of Rio Grande do Sul;

Acquisition of a 11% stake in Foz do Chapecó Hydroelectric Power Plant, increasing its stake in the power plant consortium by 51%. The project construction began in the end of 2006 and its commercial operation is expected for the third quarter of 2010;

Acquisition of Companhia Luz e Força Santa Cruz (“CPFL Santa Cruz”) in October 2006. This electricity distribution company operates in the State of São Paulo and Paraná;

Acquisition of CMS Energy Brasil (currently called CPFL Jaguariúna S.A.) in April 2007. This company operates in the States of São Paulo and Minas Gerais, and added to the group 4 distribution companies, 9 SHPs and a stake in Paulista Lageado Energia S.A.;

Constitution, in August 2008, of CPFL Bioenergia and signature of a partnership agreement between CPFL Bioenergia and Baldin Bioenergia, for the development of the first project of energy generation from biomass of CPFL Group;

Acquisition, in September 2009, of a 51% stake in Centrais Elétricas da Paraíba S.A. - EPASA (“EPASA”), by CPFL Geração. EPASA is a private corporation set up for the specific purpose of developing, implementing, operating and exploiting two thermoelectric plants (“UTE Termoparaíba” and “UTE Termonordeste”), both powered by fuel oil;

Acquisition, in September 2009, by CPFL Geração, of 7 companies for the construction of wind farms: Santa Clara I Energias Renováveis Ltda., Santa Clara II Energias Renováveis Ltda., Santa Clara III Energias Renováveis Ltda., Santa Clara IV Energias Renováveis Ltda., Santa Clara V Energias Renováveis Ltda., Santa Clara VI Energias Renováveis Ltda. and Eurus VI Energias Renováveis Ltda;

Constitution, in October 2009, of CPFL Bio Formosa and signature, in November 2009, of a partnership agreement between CPFL Bio Formosa and Farias Group, for the development of the second project of energy generation from biomass of CPFL Group (Baía Formosa Project);

Constitution, in January 2010, of CPFL Bio Buriti, CPFL Bio Ipê and CPFL Bio Pedra and signature, in March 2010, of a partnership agreement with Pedra Agroindustrial Group, for the development of three projects of energy generation from biomass of CPFL Group (Pedra Project);

Acquisition, in July 2010, by CPFL Geração, of 6 companies for the construction of wind farms: Campo dos Ventos I Energias Renováveis S.A., Campo dos Ventos II Energias Renováveis S.A., Campo dos Ventos III Energias Renováveis S.A., Campo dos Ventos IV Energias Renováveis S.A., Campo dos Ventos V Energias Renováveis S.A. and Eurus V Energias Renováveis S.A.;

On April 7, 2011, we entered into a Sale and Purchase Agreement for the acquisition of 100% of the shares of Jantus SL. Jantus has: (i) four wind farms in operation in the state of Ceará with installed capacity of 210 MW and 20-year term agreements with Eletrobrás for the sale of energy, (ii) a portfolio of wind farm projects with total installed capacity of 732 MW in the states of Ceará and Piauí, of which 412 MW has already been certified and eligible for participation in the next electricity auctions. The acquisition was completed on December 19, 2011, in compliance with certain conditions provided for in the Sale and Purchase Agreement, including authorizations from regulatory authorities; still must be ratified by our shareholders;

On April 19, 2011, we entered into a Joint Venture Agreement with Energias Renováveis S.A. (“ERSA”) to combine assets and projects relating to renewable energy sources (wind, biomass and small hydroelectric power plants). The joint venture encompassed: (i) the transfer of wind, biomass and small hydroelectric plants owned and operated by CPFL Geração and CPFL Comercialização Brasil S.A. (“CPFL Brasil”) to certain companies, which subsequently would transfer the wind, biomass and small hydroelectric plants to a holding company (“New CPFL”); (ii) the establishment of New CPFL by CPFL Geração and CPFL Brasil; (iii) the incorporation of New CPFL by ERSA, of which CPFL Geração and CPFL Brasil would own 63.0%; and (iv) the change of ERSA’s corporate name to CPFL Energia Renováveis S.A.. The joint venture was completed on August 24, 2011, in compliance with certain conditions provided for in the Joint Venture Agreement, including authorizations from regulatory authorities, the corporate restructuring of our subsidiaries and with conditions provided for in the Sale and Purchase Agreement for the acquisition of Jantus. The Joint Venture Agreement was ratified by our shareholders at the Extraordinary General Shareholders' Meeting held on December 19, 2011.