Pension FundFundação Cesp

March, 2013

How the expense is calculated?

The expense with Fcesp is calculated in accordance to CVM Resolution 695/2012

The projected expense of Fcesp for the following year is calculated through the difference

between the actuarial liabilities and the expected return on plan assets, added by the current

service costs. The return rate shall be equal to the discount rate

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How the cash disbursement i l l t d?is calculated?

Cash disbursement results from the valuation of FCesp’s actuarial liabilities, prepared by an

actuary and in accordance to the rules issued by Previc (National Superintendency ofactuary and in accordance to the rules issued by Previc (National Superintendency of

Pension Funds)

Actuarial valuation is reviewed on a annual basis at the end of the year Actuarial valuation is reviewed on a annual basis, at the end of the year

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Calculating the difference ofexpenditure and disbursement

ACCOUNTING EXPENSE

CASH DISBURSEMENT

expenditure and disbursement

CVMRegulatory AgencyRegulatory Agency PREVIC

Difference between interest on actuarial liabilities and plan assetsDeterminationDetermination Result of the FCesp actuarial valuation

Calculated in accordance to market value (National Treasury Notes/NTN-B)Discount rateDiscount rate

Calculated in accordance to a FCesp’s Study value (National Treasury Notes/NTN B)

on 12/31/2012: 3.75% p.a.Discount rateDiscount rate (Resolution CNPC No. 9): 5.5% p.a.

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Company Financial StatementsRecognitionRecognition FCesp Financial Statements

Main amendmentson accounting rulesg

Until 12.31.2012 (Res. CVM 600)¹

From 01.01.2013 (Res. CVM 695)(Res. CVM 600) (Res. CVM 695)

Determined by a study of a specialized company (6.79% for 2012)

Expected return on plan assets

Expected return on plan assets

Corresponds to the actuarial liabilities discount rate (3.75% for 2013)

Accrued over the years in the "corridor" (10% excess of actuarial liabilitiesActuarial Gains Actuarial Gains Fully recognized in the Company's balance (10% excess of actuarial liabilities

recognized in the income statement)and lossesand losses sheet (Liabilities and Shareholders‘ Equity)

Amortized over the average future service period of active participants and recognized in income statement

Corridor over 10% of plan liabilities

Corridor over 10% of plan liabilities

There is no impact (fully recognized in the balance sheet of the Company)

51 – Revoked by CVM Resolution 695, on December 13, 2012

Impact on the income statement due to changes imposed by CVM

2012R$ million

2013R$ milllion

16 3Service costService cost 29 3Discount rate decreases from 5 5% to 3 75%

g p y

916.6Rate costsRate costs 1,018.1Discount rate decreases from 5.5% to 3.75%

16.3Service costService cost 29.3Discount rate decreases from 5.5% to 3.75%

(788.6)Expected return on plan assets

Expected return on plan assets (696.5)Rate of return decreases from 6.79% to 3.75%

Amortization Amortization 15.3of actuarial

gains and lossesof actuarial

gains and losses-Extinction of the corridor method

159.7Total expenditureTotal expenditure 350.9

• Increase on expense shall be reversed through equity in the coming years due a grater expected

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p g q y g y g p

profitability of the plan compared to the expected return on plan assets used in the calculation

• Average return over the last five years on 16% (above the actuarial target period)

Cash impacts with the plan

Amendments set forth by CVM 695 has no influence on assumptions and on the calculation

method of the pension plan cash disbursement

2012 2013

Cash disbursementCash disbursement

2012R$ million

2013R$ million

IGP-DI discount rate decreases from +6% to +5.5%,

+4.4%

271.7Cash disbursement before and after CVM 695

Cash disbursement before and after CVM 695 283.6

IGP DI discount rate decreases from 6% to 5.5%, offset by marking securities to market

For 2014 is not expected a significant increase on cash disbursement, since the actuarial

assumptions were maintened

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Company's balance sheet x FCesp balance sheetp

Balance Sheet Fundação

(Dec/2012) CVM 600 CVM 695 CESP

Actuarial Liabilities 12 389 12 389 8 319

AES Eletropaulo

Will b d d i Oth

Actuarial Liabilities 12,389 12,389 8,319

Total Liabilities 12,289 12,289 10,120

Debt Agreement - - (1,802)

Value of Assets 8,525 8,525 8,365 Will be recorded in Other Comprehensive Income, in the Shareholders‘ Equity

Defic it / (Surplus) 3,963 3,963 (44)

Losses not recognized in the balance sheet ("corridor") (2,830) n/a n/a

Liability recorded on the balance sheet 1,133 3,963 n/a

Company's balance sheet: in accordance to the CVM’s rules

Calculation of actuarial liabilities in accordance to the market discount rate (NTN-B)

Assets at market value

Recognition of the liability and expense that affect the Company's income

Fundação CESP balance sheet: in accordance to the PREVIC’s rules

C l l ti f t i l li biliti di t th di t t t f th PREVIC’ l Calculation of actuarial liabilities according to the discount rate set forth on PREVIC’s rules

Part of the assets marked on the curve

Calculation of employer contributions (cash disbursement) 8

Conclusion

The variation of the liabilities has no correlation with the Company's cash

disbursement

Increase on cash disbursement may occur in case of amendments on Fcesp’s

actuarial assumptions if previously approved by Eletropauloactuarial assumptions, if previously approved by Eletropaulo

Amendments on accounting rules do not affect Company’s covenants.

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The statements contained in this document with regard to the businessprospects, projected operating and financial results, and growth potentialare merely forecasts based on the expectations of the Company’sManagement in the relation to its future performance. Such estimates arehighly dependent on the market behavior and on the conditions affectingBrazil’s macroeconomic performance as well as the electric sector andinternational market, and they are therefore subject to changes.