Using ArcGIS for Regulatory Compliance.....and Beyond

Brazilian Electric Sector Overview

Free Market

Consumers80.0 million Consumers4

1,882 Consumers5

114 TWh of billed energy2

Captive Market

79.0 million Consumers4

346 TWh of billed energy2

Transmission

• 104 Companies³

• 129,713 km of transmission lines4

• Eletrobrás: ~47% of total assets

Distribution

• 63 Companies

• 460 TWh of billed energy2

• Top 5: ~45% of the market

Competitive Power Supply

Generation

• 143 GW of installed capacity1

• 82.74% Renewableenergy1

• Eletrobrás: ~32.4% of total assets

UHEs

A Little Bit About CPFL… Largest private player in Brazilian electricity sector

EBITDA: US$ 635 million and Net Profit of US$ 123 million

Presence in the most developed regions of Brasil

Leadership in distribution segment, trough nine companies and market share of 14,3%

High potential in per capita consumption

Distribution, 40%Generation;

34%

Comercial. & Services,

18%

Renewables, 8%

EBITDA per Segment

CPFLPaulista

CPFL Piratininga

CPFL Jaguariúna

CPFLSanta Cruz RGE RGE Sul Total

Cities 234 27 18 27 255 118 679Substations 270 52 44 27 76 62 531Distribution Grid (‘000 km) 122 23 11 10 81 65 312

Concession area (‘000 km2) 90.4 6,8 8.8 11.8 90.7 98.5 307

Customers (millions) 4.3 1.7 0.23 0.21 1.5 1.3 9.24Energy (TWh) 29.2 13.5 1.6 1.0 10.0 8.0 63.3

Distribution Companies

In the Brazilian Regulatory Framework, all of a utiltity’s revenue is determined through a strictregulatory review process

Utilities make no money on the sale of electricity – it’s just a pass trhough agentRevenue and tariffs/rates determined by a periodic regulatory review process (RTP)

In other words, and as far as revenue is concerned, utilities are viewed strictly as serviceproviders (deliverying power) and not as suppliers of electricity (energy) as a product

This tariff review is carried out by the Federal Electrical Regulator – ANEEL – with theutility every 4 or 5 years

The Challenges Brazilian Utilities Face

ANEEL – National Agency for Eletric Energy

ANEEL began operations in December 1997, having as its main responsibilities:

Regulate the generation (production), transmission, distribution and commercialization of electric energy, establishing and implementing government policies and regulations regarding the electrical sector

One of the its main duties within its mission is to establish electrical tariffs and rates

The main regulatory mandates and rules are established through:

MCPSE / MCSE – Electrical Sector Asset Accounting Manual and Accounting ManualsPRODIST – Distribution ProceduresPRORET – Tariff Review Procedures

The PRODIST and MCPSE/MCSE procedures set out what needs to be handed in to the regulator

PRORET sets out how the regulatory rate review process is carried out

The Regulatory model is one of incentive-based regulation, not cost-plus

ANEEL – National Agency for Eletric Energy

Distribution Geo Database (Esri)

GIS Server with applications to validate data

WEB GIS to internally share data

Online Content and

Services

Access Security

ANEEL Users

ETL

AM/FMAsset Accounting DataBilling DataLosses dataQoS (SAIDI/SAIFI Data)

Utility Companies

ANEEL Side

Internet

Why is this important?

WHY IS THIS IMPORTANT?

Why is this important?

Why is this Important?

ManagedRevenue

Return onNetwork

Investments(WACC x gRAB)

QRR(Depreciation x

nRAB)

Losses andLoss Trajectory

QoS(XQ + identifications)

OPEXX

Benchmark

Regulatory Deliverables

The R-GIS (“BDGD”) – Georeferenced Electrical Distribution Database

Of special interest to us in GIS is the R-GIS

• Regulatorily required annual deliverable• Single data model at a National Level – ALL utilities have to use it!• Over 45 entities, 1400 fields and close to 1000 relationships• Covers:

• Asset description (technical data, location, entry into service dates);• Accounting data (mean or unit costs depending on type of asset);• Metering; and Billing;• Commercial;• Engineering;• QoS;• Balance of Energy, Technical and Non Technical Losses;• Management KPIs.

• Shapefile-based• Integrated by ANEEL into a national distribution database• Reconciled against other accounting deliverables (e.g. MCPSE/MCSE)

• If an asset doesn’t reconcile between the physical asset database (BDGD) and the accounting database (MCPSE), it’s coming out of the shareholder’s pocket

• All regulatory audits and inspections based on the R-GIS

Why is this Important?

ManagedRevenue

Return onNetwork

Investments(WACC x gRAB)

QRR(Depreciation x

nRAB)

Losses andLoss Trajectory

QoS(XQ +

indemnifications))

OPEXX

Benchmark

PGR:PCP

PGR:GPER

Regulatory Deliverables

PGR:ETLPGR:VER

PGR:GEAT

PGR:GQUAL

PGR:GSER

PGR

Tabular and Spatial Reports

Asset ManagementDashboardGIS

FI/AA and PM

CCS

Engineering

QualityAnalysis

KPIs

Data modelDomains

Validation

Reconciliation

Quality RegulatoryDeliverables

BDGD - ShapefilesRCP - Excel

BDGD

ETL

Importing andConverting

Regulatory Management Portal

RCPBDGD

PRO

DIST

Mod

ule

10

Regulatory LossManagement

Strategic AssetManagement

Corp

orat

e Sy

stem

s

... Simulation

Regulatory Compliance requires large investments in both financialand human resources

Compliance generates vast amounts of business and operational data

How can we leverage this data to generate internal business value,over and above complying with the regulator?

Digital Transformation is about effectively using information to bettermanage real-world assets and realities

Why aren’t we generating more value from this?

LossesRegulator sets out loss calculation parametersThese don’t always reflect real world situationLet’s use the data and framework we have:

To improve our losses,TechnicalNon-technical

To build a case for the regulator to consider our realityinstead of ad-hoc network parameters

Beyond Compliance: Two initial Applications

Asset Management

Where is the Money?Where and what in is my investment going toWhere and what in is my revenue coming fromWhere and in what should I be investing and where should I becutting backHow is my QoS affecting my revenue and my costs?

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Loss Calculations

Beyond Compliance: Two initial Applications

Asset Management – Return on Investment (ROI)

Beyond Compliance: Two initial Applications

Asset Management – Regulatory Revenue

Beyond Compliance: Two initial Applications

Asset Management – QoS (SAIDI)

Beyond Compliance: Two initial Applications

Asset Management - QoS (SAIDI)

Beyond Compliance: Two initial Applications

Asset Management

Beyond Compliance: Two initial Applications

Asset Management

Beyond Compliance: Two initial Applications

Leverage the power of the Platform to:Get this data out to as many people as possible in theorganization

Use Portal for ArcGIS

Use new components and tools to effectively empowerpeople to use this information in multiple ways, reflecting themultidiciplinary nature of the electric business

e.g. ArcGIS for PowerBI

Beyond Compliance: Looking Ahead

Beyond Compliance: Looking Ahead

Thank You!

Beyond Compliance: Looking Ahead

Alexandre Nogueira AleixoCPFL Groupaaleixo@cpfl.com.br+55 16 993297058

Augusto César de CarvalhoImagemacarvalho@img.com.br+55 12 996038991