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Conference Call 4Q17 with Simultaneous Translation

Date: 03/26/2017

Portuguese 11h00 (Brasília Time) 10h00 (New York Time) 15h00 (London Time) Tel.: +55 11 2188-0155 Code: CESP Replay: +55 11 2188-0400 Password: CESP

Translation to English 11h00 (Brasília Time) 10h00 (New York Time) 15h00 (London Time) EUA: (1 646) 843 6054 Other countries: (1 866) 890 2584 Code: CESP Replay: +55 11 2188-0155 Password: CESP

IR Contacts: Tel.: +55 11 5613-3626 Fax: +55 11 5613-3657 ricesp@cesp.com.br www.cesp.com.br

2017 Results

• Net Operating Revenue of R$ 1.5 billion

• Gross Operating Profit of R$ 292 million

• Adjusted EBITDA of R$ 389 million e Margin of 26.3%

• Loss of R$ 168.5 milhões

• Dividend Proposal of R$ 25.6 million

4Q17 4Q16 Chg% 2017 2016 Chg%

Net Operating Revenue 394,266 345,415 14.1% 1,476,615 1,668,590 -11.5%

Gross Operation Profit 14,059 157,278 -91.1% 291,676 878,725 -66.8%

Gross Margin 3.6% 45.5% 41.9 p.p. 19.8% 52.7% 32.9 p.p.

EBITDA 2,120 34,072 -93.8% 197,276 581,937 -66.1%

Adjusted EBITDA 30,270 161,544 -81.3% 388,819 907,842 -57.2%

Adjusted EBITDA Margin 7.7% 46.8% 39.1 p.p. 26.3% 54.4% 28.1 p.p.

Financial Result 39,916 72,840 -45.2% 50,843 217,687 -76.6%

Net Income (Loss) (102,065) 71,341 - (168,528) 350,874 -

Dividends/JCP - - - 25,680 294,834 -91.3%

Financial and Operating Highlights (R$ thousand)

São Paulo, March 21, 2017: CESP - Companhia Energética de São Paulo (BM&FBOVESPA: CESP3, CESP5 e CESP6) releases its results for the fourth quarter of 2017 (4Q17). The statement were produced according to the International Financial Reporting Standards (IFRS) and accounting practices adopted in Brazil, compared to the same period in 2016, except as otherwise indicated in this publication.

2017

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MAIN EVENTS

In 2017, events occurred that impacted the Financial Statements for the year:

A) Expenses with electricity purchased at CCEE

The Company was heavily impacted by the GSF - Generation Scaling Factor and by the High Settlement Fees (PLD), which reflected the amount recorded as an expense on energy purchases at CCEE of R$ 627 million (R$ 123.6 million in 2016).

B) Update of the balance of judicial deposits

After conducting studies and legal support from a tax specialist, the Company voluntarily changed its policy and began to update the balance of judicial deposits in 2017, with retroactive effect, in accordance with item 14 (a) of the Pronouncement Technical CPC 23 - Accounting Policies, Change of Estimate and Error Rectification. The impacts of the update are summarized below:

C) Provision / reversal of impairment

The impairment test in 2017 implied a reversal of part of the impairment recorded in previous years related to the Engº Sérgio Motta HPP (Porto Primavera) and a complement referring to the Jaguari HPP, as shown below:

D) Reduction of loans and financing

Total loans and financing (current and non-current liabilities) increased from R $ 651.5 million in 2016 to R $ 388.7 million on December 31, 2017 (reduction of 40.3%).

Year AssetShareholders

' Equity

Deferred

TaxesResult Liquid

2015 255,301 156,628 98,673 - 156,628

2016 82,484 - 31,881 78,648 50,603

Soma 337,785 156,628 130,554 78,648 207,231

2017 73,002 - 28,216 69,607 44,786

Total 410,787 156,628 158,770 148,255 252,017

(In thousands of R$)

(In thousands of R$)

UHE Book Value Fair ValueAdjustment in

Result

UHE Jaguari 38,946 37,148 (1,798)

UHE Paraibuna 62,724 62,724 -

UHE Eng° Sérgio Motta 6,347,281 6,512,672 165,391

Total 6,448,951 6,612,544 163,593

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E) Debt Agreement with Fundação CESP

The balance of the Mathematical Reserves agreement, which was R$ 129.8 million at 12.31.2016, had its balance reduced to zero, due to the surplus of the social security plan registered at Fundação CESP, of R$ 204.4 million at 12.31.2017.

F) Economic Conjuncture

In 2017, the General Market Price Index (IGP-M) recorded deflation of 0.52%, compared to inflation of 7.17% in 2016. Inflation as measured by the Extended Consumer Price Index (IPCA) also declined, reaching 2,95% against 6.29% in 2016. The Real depreciated 1.5% against the US dollar, against a valuation of 16.54% registered in the previous year.

GENERATOR COMPLEX

CESP – Companhia Energética de São Paulo holds the concession for three hydroelectric plants, operating under the price regime, with 18 generating units and a total installed capacity of 1,654.6 MW and 1,081.0 MW physical guarantee. The plants are located in the hydrographic basins of the Paraná River in the west of the state São Paulo and the Paraíba do Sul River in the east of the state and comprising the following generator facilities:

On March 17, 2017, the Company filed a lawsuit against the Federal Government, seeking the annulment of Administrative Ordinance N°. 258/2016, which reduced the physical guarantee of the Porto Primavera Plant to 992.6 MW. On 08.01.2017, the Federal Government filed a defense, and so far there has been no manifestation of judgment.

On May 3, 2017, the MME - Ministry of Mines and Energy published Ordinance N°. 178, reviewing the physical guarantees of power plants throughout the country, and reducing from 2018 the physical guarantee of the Porto Primavera UHE from 992.6 to 941.8 average MW, from the Paraibuna UHE of 50.0 to 47.5 average MW, and Jaguari UHE from 14.0 to 13.3 average MW. So the physical guarantee marketable in 2018 will decrease from the current 1,056.6 to 1,002.6 average MW.

Três Irmãos Hydroelectric Plant

On July 9, 2014, the Company entered in to the Federal Court, in Brasilia, with an Ordinary Proceeding Action with an Application for Preliminary Injunction, in the face of the Federal Government, requesting compensation for the investments not yet amortized, in view of the reversal of the assets and facilities of Plant. In the same action, CESP demands the payment of the uncontroversial amount, which amounts

Power

Plants

Date of

Conclusion

Generating

Units

Installed

Capacity

(MW)

Physical

Guarantee

(Average MW)

End of

Concessions

Porto Primavera 1999 14 1,540.0 1,017.0 13/07/2028

Paraibuna 1978 2 87.0 50.0 09/03/2021

Jaguari 1972 2 27.6 14.0 20/05/2020

Total 18 1,654.6 1,081.0

(*) Ordinance N° 258 of 12/2/2016 modify the physical guarantee of Porto Primavera to 992,6 MW.

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to R$ 1.7 billion (at 2012 prices), and is still pending the final decision of the Federal Regional Court. On September 9th, 2015 the court granted the production of engineering expert requested by CESP, being that the expertise began “in loco” in the second fortnight of the month of April of 2017 and is currently awaiting the presentation of the report to be offered by the expert of the court. On February 29, 2016, there was a favorable decision on the admission of the State of São Paulo to the case as interested, based on art. 5th, sole paragraph of Law 9,469/97.

Ilha Solteira e Jupiá Plants On July 7, 2015, the concessions of the two largest hydroelectric plants of the company were closed down, Ilha Solteira and Jupiá, which together represented 75% of the installed capacity. As the Company did not adhere the conditions established in MP 579 for the renewal of concessions, as from July 8, 2015, all physical guarantee of these plants was allocated to the quota system, with CESP being responsible for the operation and maintenance of the plants until 30 June, 2016, when the new concessionaire was assumed. During this period, CESP was remunerated at a tariff defined by ANEEL. On October 9, 2015, CESP filed an indemnification action against the Federal Government, in order to pay the Company the amount due for the reversal of the assets and installations linked to the exploration of concession of the Ilha Solteira and Jupiá Plants, not yet depreciated. The Company understands that it should receive the updated recorded in its accounts. The amount claimed for these assets is R$ 1.6 billion at the time of action. The Federal Government presented its response to the lawsuit on February 16, 2016 and CESP, on May 3, 2016, reinforced its claims and rights and requested accounting and documentary evidence. The designation of the expert is still pending. On 08/26/2016, the State of São Paulo petitioned for admission as a simple assistant to CESP. On 03/27/2017, the court granted the entry of the State of São Paulo. On July 10, 2017, CESP filed a petition stating the documents and information gathered by the federal government.

ELECTRIC ENERGY PRODUCTION

In the fourth quarter of 2017, CESP's Electric Power Production, following the commands of the National Electric System Operator - ONS, reached 2,419.7 GWh in the fourth quarter. In 2017, the volume reached 9,473.9 GWh, approximately the same level as the previous year.

Power Plants 4Q17 4Q16 2017 2016

Porto Primavera 2,264,208 2,364,692 9,027,089 9,314,075

Paraibuna 124,553 19,436 354,862 95,979

Jaguari 30,995 34,903 91,959 49,577

Total 2,419,756 2,419,031 9,473,910 9,459,631

Production GWh

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COMMERCIALIZATION

CESP's customers are: (i) the country's electricity distributors that buy energy in auctions on the regulated market through long-term contracts; (ii) traders and free consumers, who acquire energy through public offers in short, medium and long-term bilateral contracts.

CESP sells energy under the following market: Free Contracting Market – ACL: through short-, medium- and long-term Power Purchasing Agreements with volumes, conditions and prices negotiated with trading companies and free consumers. Regulated Contracting Market – ACR: through power purchasing auctions organized by ANEEL and held through the intermediation of the CCEE to supply the distributors.

Electric Energy Trading Chamber - CCEE: where the differences between the produced, net physical guarantee and contracted energy are booked and settled in part to meet requirements under the Energy Reallocation Mechanism at regulated tariffs which cover the variable costs of energy generation only and partly as surplus and secondary energy at Prices for the Settlement of Differences - PLD as determined by the CCEE.

REVENUES

In 2017, Energy Sales Revenue reached R$ 1,746.7 million, a reduction of 14.6% in relation to 2016 (R$ 2,045.9 million), especially in the free market, of 19.9% over the previous year. The total volume of energy was 11,131.3 MWh, representing a positive oscillation of 9.4% compared to 2016. Of this energy, 1,682.9 MWh was destined to the MRE - Energy Relocation Mechanism.

4Q17 4Q16 Chg. 4Q17 4Q16 Chg.

Free Market - ACL 1,903,191 1,543,379 23.3% 327,760 258,667 26.7%

Regulated Market - ACR 515,759 754,345 -31.6% 116,425 153,816 -24.3%

Spot Market - PLD - - - - - -

Regime of Quotas - - - - - -

Settlement of Prior Periods - - - - 8,105 -

Spot Market - MRE 670,041 327,821 104.4% 11,161 4,048 175.7%

Total 3,088,991 2,625,545 17.7% 455,346 424,636 7.2%

Other Operating Income - - - 609 1,913 -68.2%

Total 3,088,991 2,625,545 17.7% 455,955 426,549 6.9%

2017 2016 Chg. 2017 2016 Chg.

Free Market - ACL 7,240,825 6,103,465 18.6% 1,242,259 1,035,756 19.9%

Regulated Market - ACR 2,014,619 2,947,012 -31.6% 448,408 576,547 -22.2%

Spot Market - PLD 192,969 - - 24,126 - -

Energy Power - - - - 5 -

Regime of Quotas - - - 1,016 385,342 -99.7%

Settlement of Prior Periods - - - 8,610 35,097 -75.5%

Spot Market - MRE 1,682,925 1,125,700 49.5% 22,266 13,164 69.1%

Total 11,131,338 10,176,177 9.4% 1,746,685 2,045,911 -14.6%

Other Operating Income - - - 3,275 6,870 -52.3%

Total 11,131,338 10,176,177 9.4% 1,749,960 2,052,781 -14.8%

R$ thousandEnergy Sales Breakdown

MWh

Energy Sales BreakdownMWh R$ thousand

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REVENUE BREAKDOWN

In 2017, the Free Contracting Environment (ACL) accounted for the highest volume of revenues, marketed at an average price of R$ 171.56/MWh. The average price of the Regulated Contracting Market (ACR) was R$ 222.58 / MWh. The average price of Commercialized Energy in the Short-Term Market (PLD) was R$ 125.03 MWh. The graph below shows the quarterly comparison of the revenue distribution in reais.

Free Contracting Market – ACL

In 4Q17, revenues in this environment were R$ 327.8 million, and in 2017, its revenue share was 71.1% and corresponded to R$ 1,242.3 million. The volume of energy allocated to the ACL was 1,903.2 GWh in 4Q17 and 7,240.8 GWh in the year, representing a 61.6% and 65.0% share, respectively, in the amount of energy traded. Regulated Contracting Market - ACR

Revenue in this environment, in 4Q17, was R$ 116.4 million. In the year 2017 the participation was of 25.6%, registering R$ 448.4 million. The volume of energy allocated to the ACR totaled 515.8 GWh in 4Q17 and represented a 16.7% share of the total amount traded. In the year, the energy destined to the ACR totaled 2,014.7 GWh representing 18.1% of the total. Spot Market

In 4Q17, the revenue obtained by the company at CCEE, the Energy Reallocation Mechanism (MRE), was R$ 11.2 million. In 2017, revenue was R$ 22.3 million, representing 1.3% of total revenue. The Short-Term Market (PLD) and the Settlement of Prior Periods in 2017 reached R$ 32.7 million, representing 1.9% of Total Revenue.

28.2%

50.6%

1.7% 18.8%

0.6%

2016

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Quotas Regime In 2017, Revenue from the Quotas Regime was R$ 1.0 million, concerning the reimbursement of expenses and had been R$ 385 million in 2016. Renegotiation CESP adhered to the renegotiation of hydrological risk in the manner proposed in Law 13.203/2015 (MP 688/2015), for the portion of its energy marketed in the ACR for which, by means of payment of premium, it will be protected from hydrological risks until the year of 2028, when the end of the current Porto Primavera HPP concession will occur. In the Free Contracting environment, the company has no protection.

DEDUCTIONS FROM OPERATING REVENUE

Revenue Deductions represented 13.5% of Gross Operating Revenue in 4Q17 and recorded an amount of R$ 61.7 million in the period. In the year 2017, the accumulated amount was R$ 273.3 million, representing 15.6% of Gross Operating Revenue.

OPERATING COSTS AND EXPENSES

Operating Costs and Expenses in 4Q17 totaled R$ 475.9 million, 19.0% higher than the R$ 400.0 million recorded in 4Q16 and represented, respectively, 120.7% and 115.8% of Net Revenue.

As a highlight in 4Q17, related to expenses reduction, we have: (i) -14.2% in Personnel, due to the reduction in the number of employees; (ii) -7.8% in Third Party Services.

On the other hand, there was a strong increase in the item Energy Purchased, which reached R$ 258.8 million in 4Q17 (against R$ 57.7 million in 4Q16), due to the GSF (average of 0.695 in 4Q17), which demanded the purchase of energy at the cost of PLD (average of R$ 397.66 in 4Q17).

The Provision for Legal Risks account increased from R$ 127.5 million in 4Q16 to R$ 191.7 million in 4Q17.

Deductions from Operating Revenues - R$ '000 4Q17 4Q16 Chg. 2017 2016 Chg.

Global Reserve for Reversion Quota - RGR (3,561) (21,645) -83.5% (47,573) (44,543) 6.8%

Research and Development (3,937) (3,437) 14.5% (14,738) (16,625) -11.4%

Services tax - ISS (32) (31) 3.2% (168) (184) -8.7%

COFINS tax on Operating Revenues (33,851) (31,890) 6.1% (129,971) (154,004) -15.6%

PIS tax on Operating Revenues (7,349) (6,924) 6.1% (28,217) (33,435) -15.6%

Compensations for Use of Water Resources (12,229) (15,617) -21.7% (47,881) (124,510) -61.5%

Inspection fee of electricity services - TFSEE (730) (1,590) -54.1% (4,797) (10,890) -56.0%

Total (61,689) (81,134) -24.0% (273,345) (384,191) -28.9%

% Gross Revenues 13.5% 19.0% 5.5 p.p. 15.6% 18.7% 3.1 p.p.

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Operating Costs and Expenses in 2017 totaled R$ 1,594.5 million, 14.3% higher than the amount of R$ 1,395.0 million in 2016, representing respectively 108.0% and 83.6% of Net Revenue .

The main reductions in expenses in 2017 were: (i) -21.3% in Personnel, due to a reduction in the number of employees; (ii) -22.8% in Third Party Services, following the lowest contracting; (iii) -55.8% in Sector Charges, as a consequence of the end of the Ilha Solteira and Jupiá Usinas assisted operation.

On the other hand, there was a strong increase in the item Energy Purchased, which reached R$ 712.9 million in 2017 (against R$ 147.8 million in 2016), due to the GSF of the last two quarters of the year.

The Provision for Legal Risks account increased from R$ 325.9 million in 2016 to R$ 355.1 million in 2017, a 9% increase.

Costs and Expenses - 4T17

Cost with

eletric

power

Cost with

operation

Expenses

general and

administrative

Other

operating

expenses

Other

(expenses) net

revenues (Note

27.2)

4Q17 4Q16 Chg. %

Purchased energy (258,804) - - - - (258,804) (57,695) 348.6%

Regulatory charges (30,730) - - - - (30,730) (29,821) 3.0%

COFINS/PIS credits on transmission system charges 5,938 - - - - 5,938 2,765 114.8%

Personnel - (6,437) (30,401) - - (36,838) (42,919) -14.2%

PDV - voluntary resignation program - - - - - - - -

Administrators - - (656) - - (656) (698) -6.0%

Social security entity - CPC 33/IAS 19 - (1,063) - - - (1,063) (1,946) -45.4%

Material - (618) (462) - - (1,080) (1,593) -32.2%

Third-party services - (6,319) (11,033) - - (17,352) (18,821) -7.8%

Depreciation - (82,150) (1,380) - (271) (83,801) (88,675) -5.5%

Other charges - ONS/CCEE - - (246) - - (246) (244) 0.8%

Rents - - (1,382) - - (1,382) (1,756) -21.3%

Fees ad exitum - - - - - - (38,271) -

Installment PERT 2017 - - - - - - - -

Execution of Hazardous Agreement - - - - (5,077) (5,077) - -

Reversion to fee ad exitum - - - - - - (20,271) -

Provision for fair value warehouse reduction - - - (3,778) - (3,778) (16,487) -77.1%

Provision for legal risks - - - (191,781) 38 (191,743) (127,472) 50.4%

Reversion to provision for fair value adjustment - - - 163,593 - 163,593 - -

Provision PIS/COFINS for legal deposits updates - - - (3,395) - (3,395) (3,836) -11.5%

Estimated credit loss - - - 4,723 - 4,723 (5,872) -180.4%

Provision for socio-environmental commitments - - - - (26,845) (26,845) 25,700 -

Late cost - - - - (3,591) (3,591) (2,481) 44.7%

Other expenses - (24) (896) (720) 17,820 16,180 30,375 -46.7%

Total (283,596) (96,611) (46,456) (31,358) (17,926) (475,947) (400,018) 19.0%

% of Net Revenue 120.7% 115.8% 4.9 p.p.

Costs and Expenses - Acumulated

Cost with

eletric

power

Cost with

operation

Expenses

general and

administrative

Other

operating

expenses

Other (expenses)

net revenues

(Note 27.2)

2017 2016 Chg. %

Purchased energy (712,984) - - - - (712,984) (147,839) 382.3%

Regulatory charges (120,853) - - - - (120,853) (273,181) -55.8%

COFINS/PIS credits on transmission system charges 17,655 - - - - 17,655 25,031 -29.5%

Personnel - (24,041) (113,577) - - (137,618) (174,906) -21.3%

PDV - voluntary resignation program - (2,868) (14,951) - - (17,819) - -

Administrators - - (2,689) - - (2,689) (2,867) -6.2%

Social security entity - CPC 33/IAS 19 - (4,254) - - - (4,254) (7,786) -45.4%

Material - (2,342) (1,640) - - (3,982) (6,624) -39.9%

Third-party services - (22,118) (36,455) - - (58,573) (75,875) -22.8%

Depreciation - (309,442) (4,603) - (1,078) (315,123) (308,370) 2.2%

Other charges - ONS/CCEE - - (944) - - (944) (2,350) -59.8%

Rents - - (4,566) - - (4,566) (5,503) -17.0%

Fees ad exitum - - - - (5,419) (5,419) - -

Installment PERT 2017 - - - - (7,616) (7,616) - -

Execution of Hazardous Agreement - - - - - - (38,271) -

Reversion to fee ad exitum - - - - 5,177 5,177 (20,271) -125.5%

Provision for fair value warehouse reduction - - - (3,778) - (3,778) (16,487) -77.1%

Provision for legal risks - - - (358,953) 3,817 (355,136) (325,905) 9.0%

Reversion to provision for fair value adjustment - - - 163,593 - 163,593 - -

Provision PIS/COFINS for legal deposits updates - - - (3,395) - (3,395) (3,836) -11.5%

Estimated credit loss - - - 2,558 - 2,558 (13,379) -119.1%

Provision for socio-environmental commitments - - - - (26,845) (26,845) 25,700 -204.5%

Late cost - - - - (14,047) (14,047) (2,481) 466.2%

Other expenses - (3,692) (3,242) (3,079) 22,209 12,196 (19,823) -161.5%

Total (816,182) (368,757) (182,667) (203,054) (23,802) (1,594,462) (1,395,023) 14.3%

% of Net Revenue 108.0% 83.6% 24.4 p.p.

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EBITDA Adjusted EBITDA totaled R$ 30 million in 4Q17, 81.3% lower than 4Q16 (R$ 161 million), and R$ 389 million in 2017, 57.2% lower than in 2016 (R$ 908 million). The Adjusted EBITDA Margin in 2017 reached 26.3%, against 54.4% in 2016.

COMPOSITION OF EBITDA

4Q17 4Q16 2017 2016

30161

389

908

7.7% 46.8%

26.3%

54.4%

Adjusted EBITDA - R$ milhões

-81.3%

-57.2%

EBIT / EBITDA - R$ thousand 4Q17 4Q16 Chg% 2017 2016 Chg%

Net Income (102,065) 71,341 - (168,528) 350,874 -

Tax and Social Contribution (Net) 60,300 (53,104) - 101,524 140,380 -27.7%

Financial Result (39,916) (72,840) -45% (50,843) (217,687) -77%

EBIT (81,681) (54,603) 49.6% (117,847) 273,567 -

Depreciation 83,801 88,675 -5.5% 315,123 308,370 2.2%

EBITDA 2,120 34,072 -93.8% 197,276 581,937 -66.1%

Contingent Asset Provision (163,593) - - (163,593) - -

Provision for Legal Risks 191,743 127,472 50.4% 355,136 325,905 9.0%

Ajusted EBITDA 30,270 161,544 -81.3% 388,819 907,842 -57.2%

Adjusted EBITDA Margin 7.7% 46.8% 3909.1% 26.3% 54.4% 2807.6%

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FINANCIAL RESULT

In 2017, Financial Revenues totaled R$ 184.4 million, 56.4% lower than the R$ 422.9 million in 2016, mainly due to positive exchange variations in 2016. Total Financial Expenses for the year, including Charges for Debts and Other Financial Expenses, was R$ 75.2 million, 0.9% higher than the same period in 2016.

In 2017, the Net Monetary and Foreign Exchange Variations added up to a negative amount of R$ 58.3 million, against a negative amount of R$ 130.6 million in 2016.

NET RESULT

In 4Q17 the Loss was R$ 102.0 million against a Net Income of R$ 71.3 million in 4Q16. For the accumulated amount for 2017, a Loss of R$ 168.5 million was recorded against a Net Income of R$ 350.8 million in the previous year, mainly due to the item Energy Purchased (R$ 712.9 million in 2017, compared to R$ 147.8 million in 2016).

Breakdown of Financial Results - R$ thousand 4Q17 4Q16 Chg. 2017 2016 Chg.

REVENUES 82,842 136,546 -39.3% 184,439 422,934 -56.4%

Revenues from Investments 7,688 19,165 -59.9% 53,696 81,031 -33.7%

Updating od subordinated quotas - FIDC - 2,148 - 1,833 8,950 -79.5%

Update of judicial deposits 207 443 (1) 3,215 15,962 -79.9%

Judicial balance 73,002 82,484 -11.5% 73,002 82,484 -11.5%

Exchange variation 2,212 33,319 -93.4% 55,203 239,303 -76.9%

Others 99 (1) - 295 214 37.9%

(-) PIS/COFINS on financial income (366) (1,012) -63.8% (2,805) (5,010) -44.0%

EXPENSES

DEBT CHARGES (7,389) (10,867) -32.0% (33,979) (51,832) -34.4%

Foreign Currency (7,200) (10,255) -29.8% (32,481) (47,293) -31.3%

Local Currency (189) (612) -69.1% (1,498) (4,539) -67.0%

OTHER FINANCE EXPENSES (16,565) (11,550) 43.4% (41,302) (22,763) 81.4%

Income tax on financial operations (93) (19) 389.5% (261) (51) 411.8%

Financial Operation Expenses - FIDC - (63) - (125) (305) -59.0%

Updating R&D - projects (1,120) (2,774) -59.6% (7,240) (11,441) -36.7%

Installment PERT 2017 (66) - - (12,254) - -

Adjusted Pronouncement CPC 33 (19,535) (7,330) 166.5% (19,535) (7,330) 166.5%

Other charges 4,249 (1,364) - (1,887) (3,636) -48.1%

TOTAL FINANCIAL EXPENSES (23,954) (22,417) 6.9% (75,281) (74,595) 0.9%

GROSS INCOME 58,888 114,129 -48.4% 109,158 348,339 -68.7%

MONETARY AND EXCHANGE VARATIONS, NET (18,971) (41,289) -54.1% (58,315) (130,652) -55.4%

Local Currency - (3,512) - (1,155) (24,677) -95.3%

Foreign Currency (18,971) (37,777) -49.8% (57,160) (105,975) -46.1%

FINANCIAL RESULT 39,917 72,840 -45.2% 50,843 217,687 -76.6%

11

DIVIDENDS The distribution of R$ 25.7 million of dividends to shareholders is being proposed, in this way:

INDICATORS

The table below lists the main indicators that impacted CESP's results.

FINANCIAL DEBT

The Financial Debt on 12/31/2017 was R$ 390.6 million, -51.5% lower than 12/31/2016 (which is of R$ 809.1 million).

Considering the cash of R$ 310.5 million, Net Debt at the end of 2017 was R$ 80.1 million.

(In thousands of R$)

2017

Dividend Allocation 25,680,351.43

Interest on own capital already distributed -

Balance to be distributed 25,680,351.43 R$/share

Share ON (4,153,962.76) 0.038051

Share PNA (10% on capital) (13,500,030.62) 1.824545

Share PNB (8,026,358.05) 0.038051

Total Mandated Dividends (25,680,351.43)

Balance -

Financial and Economic Indexes 4Q17 4Q16 Chg. 2017 2016 Chg.

Average Price Contract - R$ per MWh 183.63 179.52 2.3% 181.49 178.15 1.9%

Margin of Gross Operating Income 3.6% 45.5% -41.9 p.p. 19.8% 52.7% -32.9 p.p.

Variation Real x Dolar 4.4% 0.4% 4.0 p.p. -1.5% 16.5% -18.0 p.p.

IGP-M (General Market Price Index) 1.6% 0.7% 0.9 p.p. -0.5% 7.2% -7.7 p.p.

IPC-A (Extended Consumer Price Index) 1.1% 0.7% 0.5 p.p. 2.95% 6.3% -3.3 p.p.

Current Liquidity - - - 0.91 0.98 -6.8%

12/31/2017 12/31//2016

12 256

379

553

391

809

Company Debt - R$ million

Local Currency Foreign Currency Total

-51.7%

12

Foreign currency debt was US$ 114.5 million as of 12/31/2017, including charges incurred to date, against US$ 170.0 million as of 12/31/2016.

(*) Note: debt agreements with Fundação Cesp which based on actuarial valuation performed by an independent actuary following criteria determined by CPC 33, reported zero in current and noncurrent liabilities on 12/31/2017 and 12/31/2016.

CAPITAL MARKET

The preferred shares of Class B (CESP6), which represent 64.4% of the Company's total capital and which are the most traded, registered a devaluation of 2.15% in 2017. Common shares (CESP3), representing 33,3% of the capital, closed the year with a reduction of 11.12%. The Class A Preferences (CESP5), which represent 2.3% of the capital, achieved a valuation of 3.63%.

The IEE (Electric Energy Index) closed the year of 2017 with a positive oscillation of 10.0% and the IBOVESPA showed a high of 26.75%.

The table below shows the closing prices and the market value of CESP in the last trading session of December 2016 and December 2017, as well as the total points of the IBOVESPA and IEE indexes on the same dates.

Financial Debt Position in 12/31/2016

(R$ thousand) Charges Current Long Term Total Total Chg.

Foreign Currency 1,300 198,077 179,400 378,777 553,333 -31.5%

BNDES 1,230 198,077 178,457 377,764 552,196 -31.6%

Other 70 - 943 1,013 1,137 -10.9%

Local Currency 3 5,152 4,752 9,907 15,061 -34.2%

ELETROBRÁS 3 5,152 4,752 9,907 15,061 -34.2%

Other Debts - 186 1,771 1,957 240,709 -99.2%

FIDC - - - - 83,151 -

Social Security Entity (*) - 186 1,771 1,957 157,558 -98.8%

Total of Financial Debt (1) 1,303 203,415 185,923 390,641 809,103 -51.7%

Resources (2) - 310,536 - 310,536 587,180 -47.1%

Cash and Cash Equivalents FIDC Subordinated Quotas - 310,536 - 310,536 587,180 -47.1%

NET DEBT (1) - (2) 1,303 (107,121) 185,923 80,105 221,923 -63.9%

12/31/2017

Share / IndexClosing

December/2016

Closing

December/2017 Chg. %

Number

of Shares

(thousand)

Market Value

(R$ thousand)

December /2017

CESP3 - ON 12.50 11.11 -11.1% 109,168 1,212,854

CESP5 - PNA 19.30 20.00 3.6% 7,399 147,982

CESP6 - PNB 13.49 13.20 -2.1% 210,936 2,784,353

327,503 4,145,189

IBOV 60,277 76,402 26.8%

IEE 36,108 39,732 10.0%

TOTAL CESP

13

SHARE PERFORMANCE

0

50.000

100.000

150.000

200.000

250.000

60

80

100

120

140

160

180

Volume Ibovespa IEE Cesp 3

CESP3 - ON (Price on 12/28/2017 - R$ 11.11)

Ind

ex

Bas

e 1

00

Q.

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

60

80

100

120

140

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180

Volume Ibovespa IEE Cesp 5

CESP5 - PNA (Price on 12/28/2017 - R$ 20.00)

Ind

x B

ase

1

00

Q.

14

LEGAL NOTICE

The statements contained in this document relating to business prospects, operating and financial results and those related to CESP's growth prospects are merely estimates and, as such, are based exclusively on management's expectations about the future of the business. These expectations depend, substantially, on market conditions, on the performance of the Brazilian economy, on the sector and on the international markets and, therefore, subject to temporal changes.

0

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

12.000.000

60

80

100

120

140

160

180

Volume Ibovespa IEE Cesp6

CESP6 - PNB (Price on 12/28/2017 - R$ 13.20)

Ind

ex

Bas

e 1

00

Q.

15

(*) (*)

Income Statement - R$ thousand 4Q17 4Q16 Chg% 2017 2016 Chg%

GROSS OPERATING REVENUE 455,955 426,549 6.9% 1,749,960 2,052,781 -14.8%

Energy revenue

Energy Supply 180,384 141,977 27.1% 672,640 560,777 19.9%

Power Supply - Contracts 147,376 116,690 26.3% 569,619 474,979 19.9%

Auctions Power Supply 116,425 153,816 -24.3% 448,408 576,547 -22.2%

Power Supply - Potency - - - - 5 -

Short-Term Energy 11,161 12,153 -8.2% 55,002 48,261 14.0%

Energy Supply - System of quotas - - - 1,016 385,342 -99.7%

Other income 609 1913 -68.2% 3,275 6,870 -52.3%

DEDUCTIONS FROM OPERATING REVENUESQuota for the reversal of global reserves - RGR (3,561) (21,645) -83.5% (47,573) (44,543) 6.8%

Research and Development (3,937) (3,437) 14.5% (14,738) (16,625) -11.4%

Taxes on Services - ISS (32) (31) 3.2% (168) (184) -8.7%

COFINS on operating revenues (33,851) (31,890) 6.1% (129,971) (154,004) -15.6%

PIS on operating income (7,349) (6,924) 6.1% (28,217) (33,435) -15.6%

Financial compensation for use of water resources (12,229) (15,617) -21.7% (47,881) (124,510) -61.5%

Inspection fee of electricity services - TFSE (730) (1,590) -54.1% (4,797) (10,890) -56.0%

NET OPERATING REVENUE 394,266 345,415 14.1% 1,476,615 1,668,590 -11.5%

COST OF ENERGY SERVICECost with eletric energy (283,596) (84,751) 234.6% (816,182) (395,989) 106.1%

Charges of use on transmisssion system/system service (30,730) (29,821) 3.0% (120,853) (273,181) -55.8%

Purchased energy (258,805) (57,695) 348.6% (712,985) (147,839) 382.3%

COFINS/PIS credits on charges of purchased power grid 5,939 2,765 114.8% 17,656 25,031 -29.5%

Cost with operation (96,611) (103,386) -6.6% (368,757) (393,876) -6.4%

Personnel (6,437) (6,598) -2.4% (24,041) (44,219) -45.6%

PDV - Voluntary Dismissal Program - - - (2,868) - -

Material (618) (840) -26.4% (2,342) (3,232) -27.5%

Thirdy-party services (6,319) (7,210) -12.4% (22,118) (34,056) -35.1%

Private pension entity (1,063) (1,946) -45.4% (4,254) (7,786) -45.4%

Generating depreciation (82,151) (86,757) -5.3% (309,443) (302,878) 2.2%

Other expenses (23) (35) -34.3% (3,691) (1,705) 116.5%

GROSS OPERATING RESULT 14,059 157,278 -91.1% 291,676 878,725 -66.8%

Operating Expenses

General and administrative expenses (46,456) (54,751) -15.2% (182,667) (196,175) -6.9%

Other operating expenses (31,358) (134,028) -76.6% (203,054) (318,417) -36.2%

Other (expenses) net revenues (17,926) (23,102) -22.4% (23,802) (90,566) -73.7%

INCOME (LOSS) OPERATIONAL BEFORE FINANCIAL RESULT (81,681) (54,603) 49.6% (117,847) 273,567 -

Financial income 82,842 136,546 -39.3% 184,439 422,934 -56.4%

Financial expenses (42,926) (63,706) -32.6% (133,596) (205,247) -34.9%

FINANCIAL RESULT 39,916 72,840 -45.2% 50,843 217,687 -76.6%

INCOME (LOSS) BEFORE TAX AND SOCIAL CONTRIBUTION (41,765) 18,237 - (67,004) 491,254 -

Income tax - current 20,051 47,638 -57.9% - (28,864) -

Socail contribution - current 9,767 16,168 -39.6% - (13,576) -

Deferred income tax (63,055) (7,803) 708.1% (71,101) (71,391) -0.4%

Deferred social contribution (27,063) (2,899) 833.5% (30,423) (26,549) 14.6%

Total income tax and social contribution (60,300) 53,104 - (101,524) (140,380) -27.7%

- -

NET INCOME / (LOSS) OF THE YEAR (102,065) 71,341 - (168,528) 350,874 -

Income / (Loss) basic and attributable per share (0.31) 0.22 - (0.51) 1.07 -

(*) 4Q17 and 2016 Results - Resubmitted.

16

(Resubmitted)

ASSET 12/31/2017 12/31/2016

CURRENT 677,261 833,534

Cash and cash equivalents 310,536 504,029

Receivables 196,465 165,141

Taxes and contributions for offset 60,995 77,702

Other credits 93,502 70,576

Prepaid expenses 15,763 16,086

- -

NON-CURRENT 10,454,276 10,779,269

Pledges and Restricted Deposits 1,262,028 1,266,077

Deferred Taxes and Social Contribution 583,165 684,689

Warehouse 3,584 6,977

Other Receivables 1,478 1,885

Prepaid Expenses 22,532 37,554

Intangible Assets 39,860 40,388

Assets available for reversal 6,337,256 6,337,256

Provision asset available for reversal (4,387,826) (4,387,826)

Immobilized 6,592,199 6,792,269

TOTAL ASSETS 11,131,537 11,612,803

(Resubmitted)

LIABILITIES AND SHAREHOLDERS 'EQUITY 12/31/2017 12/31/2016

CURRENT 741,110 852,390

Suppliers 14,421 10,546

Purchased Energy 200,117 11,924

Loans and financing 204,532 186,817

Rceivebles Investment Fund - FIDC - 83,151

Taxes and Social Contributions 36,626 21,074

Sector charges 187,695 217,907

Dividends and interest on capital 27,023 156,167

Estimated liabilities and payroll 23,136 19,588

Other obligations 47,560 145,216

NON-CURRENT 3,275,862 3,418,229

Loans and financing 184,152 381,577

FIDC - -

Sector charges 1,466 11,192

Provision for legal risks 2,950,766 2,874,295

Social and Environmental Obligations 104,895 78,050

Other obligations 34,583 73,115

EQUITY 7,114,565 7,342,184

Capital Stock 5,975,433 5,975,433

Capital reserve 1,929,098 1,929,098

Adjustment of equity valuation (997,645) (1,018,677)

Other comprehensive income (370,669) (337,258)

Income reserve 578,348 612,941

Income reserve - 180,647

TOTAL LIABILITIES AND SHAREHOLDERS 'EQUITY 11,131,537 11,612,803

17

ANNEX I – Electricity Sector Glossary

ACL – Free Contracting Market – The segment of the market in which energy is purchased and sold through freely negotiated bilateral contracts, among generators, sellers and free consumers in accordance with specific selling rules and procedures. Distribution agents (distributors) are not permitted to purchase energy in this environment.

General Agreement on the Electric Sector – Agreement signed between generators and distributors with the objective of defining rules to offset the financial losses generated by the energy rationing 2001/2002. The agreement, dated December 2001, provided for financing by the Brazilian National Bank for Economic and Social Development (BNDES) and extraordinary tariff adjustments for consumers, with the exception of low-income consumers, as the compensation for losses.

ACR – Regulated Contracting Market ‐ The segment of the market in which energy is purchased and sold among generators and distributors, preceded by auctions except in cases envisaged by the Law, in accordance with specific selling rules and procedures.

Agent – Agent of the Electric Energy Trading Board (CCEE) – Concessionaires, authorized companies or permit holders of energy services and facilities, sellers and free consumers, members of the CCEE and subject to the obligations and rights in the Trading Agreement, Rules and Procedures.

ANEEL – Brazilian Electricity Regulatory Agency – Regulatory body of the Brazilian energy industry. A special regime governmental agency, linked to the Ministry of Mines and Energy ‐ MME, created by Law 9,427, of December 26, 1996. The Agency has the following responsibilities: regulating and monitoring the generation, transmission, distribution and commercialization of energy, responding to complaints of agents and consumers with fairness to the benefit of society; mediating conflicts of interest between energy sector agents and between energy sector agents and consumers; granting, permitting and authorizing energy facilities and services; ensuring fair tariffs; doing everything to ensure the best possible service quality; requiring investments; encouraging competition among operators; and ensuring service universalization.

Installed Capacity (Installed Power) – Maximum amount of electricity that can be delivered by a generating unit, a hydroelectric plant or a generating plant.

CAR – Risk Aversion Curve - Mechanism that establishes the minimum level of water storage of the hydroelectric reservoirs necessary for the production of energy safely for the interconnected system. The CAR was established in January 2002 by Resolution 109, which established criteria and guidelines for the energy operation policy and dispatch of thermoelectric generation carried out by ONS, as well as for price formation in the electricity market.

CCE – Energy Purchase Agreement – Contract with regulated tariff that establishes the general terms and conditions regulating the sale of energy among current generators and distributors with a market lower than 500 GWh/year, to serve its market.

CCEAR – Energy Trading Agreement in the Regulated Market – A contracted between each generator and all distributors that participate in the auction for the sale of energy from existing or future projects.

18

CCEE – Electric Energy Commercialization Chamber - A non-profit private legal entity that acts under the authorization of the Granting Authority and regulated and supervised by the ANEEL, with the purpose of enabling the purchase and sale of electricity between the Agents of the CCEE , restricted to the National Interconnected System (SIN). It is in the CCEE context that every agent is accountable monthly for its energy rights, and that electric energy movements are accounted for.

CCVEE – Energy Purchase and Sale Agreement – Also called Bilateral Contract. It is an agreement that formalizes the sale of energy (volume, prices, conditions, etc) resulting from the free negotiation among generators, sellers, free consumers and importers in the Free Contracting Market.

CNPE – National Energy Policy Council ‐ CNPE is a committee created in August 1997 that advises the President of Brazil on the development of national energy policy. The CNPE was created to optimize the use of Brazil’s energy resources and to guarantee national energy supply.

Traded Company – That acts in the intermediation of businesses of purchase and sale of electric energy.

Captive Consumers – Consumer only allowed to buy power from the distributor, whose network is connected.

Free Consumers – Consumer with a contracted demand equal to or greater than 3.0 MW, who has exercised the option to declare himself free, in order to negotiate the contractual conditions with the supplier of his interest (regulated by articles 15 and 16 of Law no. 9,074, July 7, 1995).

Bilateral contract - A legal instrument that formalizes the purchase and sale of electricity between CCEE Agents, in the Free Contracting Environment, with the purpose of establishing prices, terms and amounts of supply at determined time intervals.

Concession Agreement – Legal instrument established between the Granting Authority and the Concessionaire, formalizer of the concession, and which shall contain essential clauses, including those relating to the object, area and term, as well as the main conditions for the provision of the public service.

Quotas Cotas – See quota system.

CVM – Brazilian Securities Commission

Distributors – Holder agent of federal concession to provide the public electricity distribution service under the terms of the applicable legislation, which serves the captive consumers of its concession area.

EBIT e EBITDA – Defined by the rules established by CVM Instruction 527/2012.

Assured Energy – See Physical Warranty

Short-Term Energy – This is the energy accounted by CCEE arising from the differences between what was produced or consumed and what was contracted. The positive or negative differences are settled in the Short-Term Market and are valued at the PLD (Settlement Price of Differences).

Energy from Existing Enterprises – Electric energy produced by enterprises that were already in commercial operation until December 31, 1999, also called Old Energy.

19

Energy from New Projects – Electric energy from new plants, new projects in the bidding process and projects granted or authorized until March 16, 2004, which began commercial operations as of January 1, 2000 and whose energy was not contracted until March 16, 2004. It is also called New Energy.

GSF (Generation Scaling Factor, MRE Factor) – is an Adjustment Factor on Assured Generated Energy that consider a reduction of assured energy of the MRE units when the total energy generated is less than the total assured energy. GSF = Hydraulic Generation in SIN / Total Generation in SIN. Then a GSF <100% indicates that the MRE plants generated less than their physical security.

FIDC – Credit Rights Investment fund, as established by the rules of the Brazilian Securities and Exchange Commission (CVM). Receivables securitization.

Supply of energy – Sale of energy to large consumers.

Physical Assurance – This is the amount of energy that an agent is authorized to market in contracts, such as electricity supply, measured in average megawatts (MW). Determined by ANEEL as the amount of electricity, on average, that a plant can produce and trade on a sustainable basis 365 days per year, with a risk factor of 5%. (It replaces the concept of assured energy).

Generator – A company that produces energy.

GSF (Generation Scaling Factor) – See Adjustment Factor on Assured Generated Energy.

Energy Auctions – Bidding process for the purchase of electric energy, governed by the bid and its related documents, where Distributors can buy energy to attend to their market.

MCSD – Mechanism for Compensating Surpluses and Deficits – Reallocation process between Distribution Agents who participate in the Electric Energy Trading Board – CCEE, of surpluses and deficits in sums of energy contracted in the Regulated Contracting Market ‐ ACR. Through this process, distributors can transfer up to 3% of those sums they maintain under purchase agreement with generators to other distributors per year.

Short-Term Market – Segment of the Electric Energy Trading Chamber - CCEE where the differences between the amounts of electricity contracted and registered by the CCEE Agents and the amounts of generation or consumption effectively verified and attributed to the respective Agents are traded.

Free Market –See ACL.

Regulated Market – See ACR.

MME ‐ Ministry of Mines and Energy – The MME is the Brazilian government’s primary authority the power industry. Its main duties are drafting guidelines for the granting of concessions and issuing directives governing the bidding process for concessions that relate to public services and public assets.

MRE ‐ Energy Reallocation Mechanism – A mechanism for sharing the water source risks associated to the electric energy optimization of the National Interconnected System (SIN) relating to the centralized dispatch of the electric energy generation units. This means that eventual generation shortages by a plant under the ONS may be covered by another plant in the system, with a view to optimize the system. These compensations are remunerated by the Optimization Energy Tariff ‐ TEO. MW- Megawatt – Measurement

20

unit of mechanical or electrical energy, thermal flow and energetic radiation flow, equivalent to one million watts.

MW- Megawatt – Unit of measurement of mechanical or electrical energy, of thermal flow and energy flux of radiation, equivalent to one million Watts.

MWh - Megawatt-hour – Unit of measurement equivalent to one megawatt of electricity supplied or requested per hour or one million Watts-hour.

MW average - Megawatt average – Measurement unit related to energy in MegaWatt-hour (MWh) divided by number of hours of the period. MWh - Megawatt-hour – Measurement unit equivalent to one megawatt of power supplied or demanded for one hour or a million Watts-hour.

ONS ‐ National Electrical System Operator – An agent instituted by Law 9,648, of 1998, based on the text contained in Law 10,848, of 2004, which is responsible for coordinating and controlling the generation and transmission of electric energy in the National Interconnected System (SIN).

PLD - Settlement Price of Differences - Price disclosed by CCEE, calculated in advance, weekly, based on Marginal Cost of Operation, limited by minimum and maximum prices, by which the energy traded in the Short-Term Market is valued.

Installed Power – See Installed Capacity.

Basic Network – Transmission installations of the National Interconnected System - SIN, owned by public service concessionaires of transmission in a voltage equal or greater than 230 kV, defined according to the criteria established in Normative Resolution No. 67, of June 8, 2004.

Quota system – The mechanism used for proration of physically guaranteed energy and power from the Hydroelectric Plants, renewed in accordance with Law 12.783 (MP 579) and allocated to the National Interconnected System electric energy distribution concessionaires, as per specific ANEEL regulation, aiming to tariff moderateness

RGR – Global Reversal Reserve – a charge paid on a monthly basis (quota) by energy companies with the purpose of providing funds for the reversal and/or nationalization of energy public services. There is also the legal reserve to finance the expansion and improvement of these services, as well as alternative energy sources for inventory and feasibility studies to use new hydraulic potentials, and to develop and implement programs and projects focused on preventing waste and promoting the efficient use of energy. The annual charge to be collected is equivalent to 2.5% of the fixed assets related to the provision of energy services, limited to 3.0% of its annual revenue.

RTE – Extraordinary Tariff Recomposition – Temporary tariff increase authorized for distributors of regions where energy was rationed in 2001 and 2002, in compliance with Law 10,438, of 2002. Part of the proceeds from this compensation was transferred to generators as a refund for the energy purchased.

SIN – National Interconnected System – Electrically interconnected installations, comprising plants and transmission facilities, responsible for providing electric energy to all regions of the country, covering 97% of the Brazilian consumption.

Energy Supply – sale of energy to distributors and traders, for resale to their customers.

21

TAC – Conduct Adjustment Agreement – A legal instrument entered into between those responsible for certain actions or measures (CESP, in this case) and the federal, state or municipal Prosecution Office to defend the public or collective interest. It generally refers to environment preservation, mitigation or recovery initiatives through the establishment of technical obligations and conditions.

UHE – Power Plant