2. Disclaimer
This presentation may contain statements that represent expectations about future events or results
according to Brazilian and international securities regulators. These statements are based on certain
assumptions and analysis made by the Company pursuant to its experience and the economic
environment and market conditions and expected future events, many of which are beyond the
Company's control. Important factors that could lead to significant differences between actual results and
expectations about future events or results include the Company's business strategy. Brazilian and
international economic conditions, technology, financial strategy, developments in the utilities industry,
hydrological conditions, financial market conditions, uncertainty regarding the results of future
operations, plans, objectives, expectations and intentions, among others. Considering these factors, the
Company's actual results may differ materially from those indicated or implied in forward-looking
statements about future events or results.
The information and opinions contained herein should not be construed as a recommendation to
potential investors and no investment decision should be based on the truthfulness, timeliness or
completeness of such information or opinions. None of the advisors to the company or parties related to
them or their representatives shall be liable for any losses that may result from the use or contents of
this presentation.
This material includes forward-looking statements subject to risks and uncertainties, which are based on
current expectations and projections about future events and trends that may affect the Company's
business.
These statements may include projections of economic growth, demand, energy supply, as well as
information about its competitive position, the regulatory environment, potential growth opportunities
and other matters. Many factors could adversely affect the estimates and assumptions on which these
statements are based.
5. Planning scenarios place strategic challenges in
CPFL’s future
1 3
Macroeconomic Regulatory
Scenario Scenario
Main scenarios
evaluated in the 2012-
2017 Strategic Plan
2 4
Competitive
Market Scenario
Scenario
6. Planning scenarios place strategic challenges in
CPFL’s future
1 3
Macroeconomic Regulatory
Scenario Scenario
Main scenarios
evaluated in the 2012-
2017 Strategic Plan
2 4
Competitive
MarketScenario
Scenario
7. We are estimating a world with low growth in the mature
economies (effect of the crisis) and greater participation from
the emerging economies1
Mature economies will have low growth, due to the financial World: +4.2% p.a.
1 crisis on the European continent and the uncertainties brought by the
Europe: +1.5% p.a.
US “fiscal cliff”
USA: +2.4% p.a.
The emerging countries will continue gaining importance
2 on the world economy, led by China China: +7.5% p.a.
PIIGS debt crisis – Portugal, Ireland, Italy, Greece and Spain –
will continue contaminating the main economies of the
region (France and Germany); however, there should be no
more critical economic events 2012: -0.5%
3 2013: -0.3%
The austerity measures will contribute to reduce demand (and 2014-2017: +1.9%
GDP growth) and will not be enough to restore confidence
in the short term
1) LCA Scenario.
8. We estimate Brazil with sustainable economic growth and
monetary stability1
1 Growth of Brazilian GDP : average of 4.2% p.a. between 2013 and 2017
2 Inflation slightly higher than the target: average IPCA of 4.8% p.a.
Domestic market continues to stimulate growth between 2013 and 2017
3 (Payroll: 4.3%; Retail: 5.6%; Unemployment: 5.2%)
Per capita income growth: +3.5% p.a. Low unemployment and economic
4 growth will sustain the expansion of the middle class and poverty reduction
Virtuous investment cycle: infrastructure, decline in the real interest rate,
5 World Cup, Olympic Games and other measures to stimulate investments
Institutional stability, low country risk and a comfortable level of
6 reserves will keep the country attractive to external investment
1) LCA Scenario.
9. Planning scenarios place strategic challenges in CPFL’s
future
1 3
Macroeconomic Regulatory
Scenario Scenario
Main scenarios
evaluated in the 2012-
2017 Strategic Plan
2 4
Market Sompetitive
Scenario Scenario
10. Market Scenario | Energy Demand
National Interconnected System (SIN) load grows at an average rate of 3.8% p.a. over the 2012-2031
period, with a highlight being the growth of the North (5.3% p.a.) and Northeast (4.5% p.a.) regions
CPFL Scenario (GW average)1
CPFL Scenario 2013-2017 2018-2021
Average GDP1 4.2% 3.7%
Average Growth2 4.2% 3.7%
Southeast / Center-West South Northeast North
1) Considers supply to ANDE and Manaus/Macapá connection to the North submarket as of July/2013 (1,284 MW average);
2) Growth excluding Manaus/Macapá connection: 4.1%; Source: CPFL (OP); EPE; LCA
11. Market Scenario | National Energy Balance
The system is in balance until 2016, despite the problems with the construction of Bertin and Multiner
thermoelectric plants
Supply and Demand of the National Interconnected System (SIN)
GW average
0.0% 4.8% 7.0% 6.1% 3.8% 3.4% 3.4% 0.1% -3.4% -6.8%
-1.0% 3.0% 4.3% 3.3% 1.1% -0.9% -0.7% -3.8% -7.2% -10.5%
12. Market Scenario | Expansion of supply will be mostly
through hydroelectric sources, complemented by renewable
sources and natural gas thermal plants
The expansion of supply will be mainly through hydroelectric plants supplemented by Natural Gas TPPs
and Renewable Sources. Nuclear plants will play an important role in the second half of the 2020s
Expansion of Planned Supply
CPFL Scenario (GW average)
13. Planning scenarios place strategic challenges in
CPFL’s future
1 3
Macroeconomic Regulatory
Scenario Scenario
Main scenarios
evaluated in the 2012-
2017 Strategic Plan
2 4
Market Competitive
Scenario Scenario
14. Regulatory Scenario | Pressure for tariff reductions | PM 579
Concessions renewal and tariff reduction
• Government package for the reduction of energy tariffs on 2 fronts:
• Concession renewal: PM 579
• Reductions of electric sector charges
• Objective: to promote domestic industry competitiveness, once the correlation between the
reduction of energy costs and the promotion of development has been identified
• Benefits: generation of jobs, reduction of inflation and an increase in investments
• Breaking of market expectations versus breaking of contracts
• “(...) the regulatory, and even economic and development, logic is that the investments must be
conducted with investors’ capital to be remunerated when the energy is made available for
consumption.” (Paulo Pedrosa, Abrace)
• Amount foreseen in indemnities is less than the market agents expected – indications that some
companies will not sign the new contract
15. Regulatory Scenario | Pressure for tariff reductions | PM 579
The Distribution sector’s tariffs were always pressured in order to achieve efficiency and lower tariffs,
whereas the Generation and Transmission segments did not suffer the same regulations
Industrial Tariffs1 (CPFL Piratininga) - [R$/MWh]2
+5%
Impacts on the tariff
R$/MWh % • Sector charges and
(26%) 1.3 2% Taxes: increase in the
Taxes (22%)
(22%) tariff of R$23.4/MWh
(8%) (120% and 2%
Sector charges (7%) (15%) 22.1 120% respectively)
Distribution (13%) (9%) -16.1 -41%
(15%) • Distribution: reduction of
(6%) R$16.1/MWh due to the
(8%) -2.2 -10%
Transmission (9%)
tariff reviews (-41%)
• Generation:
Increase of R$7.4/MWh
Generation (47%) 7.4 6% due to tariff realignment
(47%) (47%)
(6%)
1st CRTP 2nd CRTP 3rd CRTP
1) Proxy of the industrial segment represented by the Average Tariff of Group A; 2) Real values in October 2011 | Source: CPFL Energia.
Amount adjusted by IPCA.
16. Amounts proposed by the PM 579
The average amount of O&M tariff is R$ 9.80/MWh and takes into account a profit margin of 10%
(R$ 0.90/MWh). It is estimated that the amount of the final tariff (O&M, Sector Charges and
Network Use) will be R$ 27/MWh.
Distribution of O&M amounts of the projects with capacity above 100 MW
4,280 4,252
3,162
Capacity (MW)
1,480 1,551 1,440
1,216 O&M (R$/MWh)
1,048
396 380 375 319 260
180 237 102 158
Corumbá I
I. Solt. - T. Irmãos
Furnas
Jupiá
Volta Grande
Porto Colômbia
Salto Grande
Parigot de Souza
Itaparica
Boa Esperança
Jacuí
Passo Real
Xingó
Paulo Afonso
Marimbondo
Estreito
Três Marias
Source: Based on APINE data
17. Adjustment in the contracting level of the distribution
companies 8.6 GW med
11.4 GW med
1.5 GW avg
Contracting Level 10.2 GW avg
RA RA RA EE
Angra Angra
Quotas
CCEAR CCEAR CCEAR
Angra
EE EE EE CCEAR EE Angra
CCEAR EE
CCEAR EE
CCEAR NE CCEAR NE CCEAR NE CCEAR NE CCEAR NE CCEAR NE
BILATERAL BILATERAL BILATERAL BILATERAL BILATERAL BILATERAL
Itaipu Itaipu Itaipu Itaipu Itaipu Itaipu
+ 1 + + 2 + 3 + 4 + 5
Proinfa Proinfa Proinfa Proinfa Proinfa Proinfa
2012 2013 2013 2013 2013
Before the PM After the PM After the After the PM
CCEARs Reduced PM Final Composition
Quotas of the Resource
(1) Situation in the case there is no allocation of quotas (shutdown CCEARs recontracted in the A-1 as Reposition Amount - RA)
(2) Reposition Amount (RA) will be reduced from the Angra I and II quotas (REN 505/2012)
(3) CCEAR EE parcel ballasted by TPPs with renewed concessions will be reduced
(4) EE Quota is allocated to the Distribution resource and the RA is absorbed. Momentarily, over-contracting is generated
(5) Frustration of the thermoelectric projects absorbs an eventual excess of quotas
The maintenance of the contracting level is not guaranteed. There is a provision for dealing with
an imbalance upon contracting, although it still must be regulated
Source: Based on APINE data
18. Adjustment in the contracting level of the distribution
companies 8.6 GW med
11.4 GW med
1.5 GW avg
Contracting Level 10.2 GW avg
RA RA RA
Angra Angra EE
Quotas
CCEAR CCEAR CCEAR
Angra
EE EE EE CCEAR EE Angra
CCEAR EE
CCEAR EE
CCEAR NE CCEAR NE CCEAR NE CCEAR NE CCEAR NE CCEAR NE
BILATERAL BILATERAL BILATERAL BILATERAL BILATERAL BILATERAL
Itaipu Itaipu Itaipu Itaipu Itaipu Itaipu
+ 1 + + 2 + 3 + 4 + 5
Proinfa Proinfa Proinfa Proinfa Proinfa Proinfa
2012 2013 2013 2013 2013
Before the PM After the PM After the After the PM
CCEARs Reduced PM Final Composition
Quotas of the Resource
(1) Situation in the case there is no allocation of quotas (shutdown CCEARs recontracted in the A-1 as Reposition Amount - RA)
(2) Reposition Amount (RA) will be reduced from the Angra I and II quotas (REN 505/2012)
(3) CCEAR EE parcel ballasted by TPPs with renewed concessions will be reduced
(4) EE Quota is allocated to the Distribution resource and the RA is absorbed. Momentarily, over-contracting is generated
(5) Frustration of the thermoelectric projects absorbs an eventual excess of quotas
The maintenance of the contracting level is not guaranteed. There is a provision for dealing with
an imbalance upon contracting, although it still must be regulated
Source: Based on APINE data
19. PM 579 | Expiration schedule of CPFL Energia’s concessions
2015 … 2027 2028 2032 2035 2036 2039
Distribution CPFL CPFL HPP Luis HPP HPP Foz do HPP
~3% Paulista Piratininga Eduardo Campos Chapecó Serra da
CPFL Santa
EBITDA Magalhães Novos Mesa
Cruz
CPFL RGE HPP Barra
CPFL Jaguari Energia Grande
CPFL Sul 19 SHPPs
Paulista (CPFL HPP Castro
CPFL Leste Renováveis) Alves
Paulista
CPFL Mococa <1% 1 TPP HPP Monte
Installed (Carioba) Claro
capacity
CPFL HPP 14 de
Generation
Energia Julho
SHPP Rio do
Peixe (I/II)
SHPP Macaco
Branco CPFL Energia requested Aneel to
renewal all the expiring concessions
20. PM 579 | Expected Effects
Segment For the sector For CPFL
• Tariff = operational cost + spread • Long-term concessions (expiring as of
• Amortization of the non-depreciated 2032)
Conventional amounts calculated by the New • Exposure: almost no impact (<1% of
Generation Replacement Value (VNR) installed capacity)
• Cost of O&M lower than the band
presented by the PM 579
• Renewed energy (cheaper) will destined • More competitive environment for the
exclusively to regulated market commercialization segment, pressure on
margins
Commercialization • Restriction of conventional energy
liquidity on the 2013-15 horizon
• Migration A4: from 6 months to 5 years
• New quality rules and requirements • Limited impact in view of the low
being detailed by ANEEL exposure of assets whose concessions
are expiring in 2015
Distribution • Changes in energy contracting due to
the allocation of quotas • Larger assets will begin to expire as of
2027 (CPFL Paulista/RGE)
21. Regulatory Scenario | Other regulatory agenda topics
Besides pressure to reduce tariffs, quality and technology have been focal points
• Electronic Meters and Intelligent Networks
• DER/FER regulation – Commercial quality control indicators
• DER (Average Duration of Response to Complaint) – average time to solve
complaints
• FER (Average Frequency of Response to Complaint) – frequency of occurrence
of a complaint for every thousand consumer units
• Methodology of the 4th Tariff Review Cycle
Topics that will be on the sector’s radar in the upcoming years
22. Planning scenarios place strategic challenges in
CPFL’s future
1 3
Regulatory
Macroecomic
scenario
scenario
Main scenarios
evaluated in the 2012-
2017 Strategic Plan
2 4
Market Competitive
scenario scenario
23. With the Brazilian electricity market growing, competition
in the sector has been getting tougher
The Brazilian electricity market is notable in the world due to its growth and
1 investment opportunities
Major international players continue to be highly interested in remaining and
2 boosting their business in Brazil, as a result of the crisis in United States and Europe
The very attractive market has increased competition, whether through
3 acquisition of assets or in disputing auctions
Large domestic companies have continued their strategy of diversification
4 and may use indemnification funds (PM 579) for growth
Some agents could erroneously interpret the recent measures as an
5 increase in the institutional risk for the sector
25. CPFL’s corporate ambition
CPFL 2017 AMBITION
To be the leader of the domestic electric sector, focusing
on excellence, maximizing value for shareholders and
guaranteeing the sustainability of business
26. Total Shareholder Return | History
The results of shares performance and the dividend policy resulted in CPFL’s TSR being above the
market average over the past few years
Total Shareholder Return1 | 2007 – 20122 | % p.a. Dividends
Share appreciation
3.3
11.6
0.8% 7.1
4.8 -0.2
2.0% 6.9 17.7%
3.5 0.5 -10.3
10.8% 8.1% 9.0%
5.1% 7.0% 5.1% 4.4% 4.2%
-0.1% -3.3% -3.9%
-1.6% -9.2%
-14.4% -14.6%
For the next few years there is an estimate of reduction in the average TSR of the electric sector
due to the macroeconomic stabilization and decline in the cost of capital
Note: 1) TSR = shareholder IRR – Market cap values in Sep/2007 and Sep/2012; 2) Amounts corrected by the IGP-M (Dec/2011) | Source:
Economatica
28. CPFL’s Strategic Plan
Transformation | Culture and Behavior
Projects were implemented seeking gains in efficiency and productivity
Project Description Objectives
• Installation of intelligent meters • Application of the smart grid concept
and remotely commanded • Productivity and efficiency gains
Tauron Program switches/reconnectors
Smart Grid • Transformation of management profile focusing on
• Intelligent dispatching of teams new skills
seeking optimal operating
• Annual benefit of around R$ 106 million
• Implementation of the Zero • Efficiency gains facing the regulatory challenges
Base Budget methodology • Improvements in the organization’s budgeting
ZBB
Zero Base Budget process and cost culture
• Annual average gains of R$ 50 million in 5 years
• Transfer of the transactional • Increase in operational productivity and efficiency
CSC corporate activities to the • Reduction of corporate costs
Shared Services CPFL Shared Services Center
Center • Sustenance of Group’s growth at a lower
incremental cost
30. CPFL’s Strategic Plan
Strategic Growth Avenues | Distribution
Efficiency Benchmarking | ANEEL Methodology
Companies with MORE than 400,000 clients | In %
Companies with LESS than 400,000 clients | In %
31. CPFL’s Strategic Plan
Strategic Growth | Distribution
Regulatory Remuneration
Higher efficiency in capital
Improvement in macro scenario
allocation
leads to smaller returns
Brazil Consolidation and gains in
3 largest distribution companies scale being reverted into
have a 34% market share productivity
Fragmented Market 42
Relevant number of small 31 South/Southeast Sector consolidation
32 small
companies concentrated in the large
21 opportunities
South and Southeast regions North/Northeast
Center-West
1) Large companies: market higher than 1TWh (Source: ANEEL 2009)
32. CPFL Strategic Plan | Strategic Growth | Generation
Estimated growth in Generation | Installed capacity (MW)
Foz Chapecó
CAGR 2000-14e = 25% p.a Epasa
Enercan Ceran
Baldin
Creation
Semesa Baesa CPFL Renováveis
1,715 1,934 2,094
1,537
1,297
686 803 835
- - -
42 100 257
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Ativos da privatização
Privatization assets Brownfield Greenfield
CPFL Energia: Conventional Generation + Renewables Ranking | Generators in Brazil
EBITDA (12M3Q12) | R$ billion
2009 2011 2012 2014
Eletrobras 7.2
CPFL Renováveis Santa Clara wind farm Tractebel 3.1
TPP Bio Formosa Atlântica wind farm Cesp 2.4
TPP Bio Buriti TPP Bio Ipê e Bio
Jantus wind farm Pedra Cemig 1.9
TPP Ester AES Tietê 1.5
1,737 MW 2,644 MW 2,948 MW CPFL
EDP 1.2
Duke 0.8
33. Solar Energy | Outlook
Photovoltaic solar energy is still little Solar energy is abundant and variability
exploited in the world is low
5 countries → 88% of installed 0.01% of solar radiation = worldwide
capacity (31 GW ) - Brazil still taking demand for energy – Brazil: radiation ≈
its first steps two times the developed nations
49.7% 2,400
1,850 1,650
1,250
11.2% 10.0% 10.4% 7.2%
Germany Spain Italy Japan USA Brazil Spain France Germany
Brazil CPFL – Tanquinho Plant
• Current capacity in operation in • 1st Solar Plant in the state of São Paulo
Brazil: 2,578 kW (10 plants) • Possibility of redesign of the energy matrix
• Just between 10/31 and 11/05 some and development of a new industry
1.0 GW in projects were requested • 5,380 photovoltaic panels
• Photovoltaic Plant with connection to
Medium Voltage (1,05 MWp) and
connection in Low Voltage (0.075 MWp)
34. CPFL’s Strategic Plan
Strategic Growth | Energy Commercialization
Number of free clients in Brazil
Competitive Client (#) Special Client (#)
Greater than 3 MW 0.5 to 3 MW
CAGR: 4.1% CAGR: 45.1%
857
514 570 587
456 446 485
455
192 219
Dec/08 Dec/09 Dec/10 Dec/11 Aug/12 Dec/08 Dec/09 Dec/10 Dec/11 Aug/12
Number of sellers
CPFL Brasil is in an advantageous position to
Sales agents (#) confront the challenges
CAGR: 29.6% 144
107 • Diversified portfolio and large energy volume
83 Renowned team of market specialists
51 62 •
• Governance and firm finances
• Culture of structured risk management in place
2008 2009 2010 2011 2012
Source: Aneel and CCEE
• Ballast already contracted
35. CPFL’s Strategic Plan | Strategic Growth | Services
nect serviços
In 2012 the service operations were consolidated and the companies are ready to reach
their growth potentials
2012 Highlights
• Modernization of network construction (CCM)
• Construction of the largest solar power plant in the
country (Tanquinho)
• Consolidation of the group’s call center operations and the
startup of negotiations with the market
Solid growth plan
• Creation of CPFL Total through 2017
36. CPFL in 2017
Leadership among private companies in the electric sector,
with a diversified portfolio in different businesses related to Energy
GENERATION DISTRIBUTION
• Operational Excellence, with • Market leader, with up to
the greatest profitability of the 30% of the market share in
sector Brazil
• Operational excellence,
• Growth in installed capacity using innovation and new
in hydro and thermal plants technologies
• Leader in renewable
sources (> 4 GW by 2020)
COMMERCIALIZATION
SERVICES
• Leadership in
commercialization of renewable • Strong growth of sales
energy on the free market • Strong integration with the
Group’s other businesses and
• Maximize profitability, given clients
the new market conditions
