2016 Sustainability
Report

Check out the main highlights of AES Eletropaulo in the last year or access the
complete PDF to learn more about our strategy, initiatives and performance


Message from the CEO

Charles Lenzi CEO of AES Eletropaulo

At AES Eletropaulo, we assume the responsibility and commitment to providing quality service and ensuring the satisfaction of our customers. By 2016, we exceeded the 7 million-customer mark: families, industries, schools, hospitals, public buildings, and companies that constantly depend on our energy.

We are committed to recovering company value by improving quality indicators and customer service. In 2016 alone, we invested BRL 791.5 million in customer services, in the expansion of the energy distribution system, in operational reliability, in recovery of nontechnical losses, in information technology, and in other initiatives that will yield greater efficiency and streamline our operations. With this, we seek to improve quality in energy distribution, reducing the number of outages, and ensuring that energy is restored as fast as possible.

Compared with 2015, we have already achieved a 33% reduction in the SAIDI (System Average Interruption Duration Index), an indicator that measures the outage time in a 12-month period. This reduction was possible thanks to the hiring of new teams and the investments we are making to modernize and automate the distribution network. Our objective is to obtain increasingly better indicators.

In 2016, we also operated with greater focus on customers, by improving our relationship channels and management systems. Our intent is to progressively become more agile so that the main demands of our customers can be addressed using digital tools. We are committed to increasing levels of satisfaction with the quality perceived by customers, and to this end, our investments to enhance services are essential.

The safety of our employees, contractors, and the population continues to be a top priority. We reinforced our safety programs with operating teams and developed several campaigns promoting safety among the communities where we operate, calling their attention to risks associated with accidental contact with the power grid.

Even in an adverse economic scenario, with the increase in unemployment and market downturn, which reflect the decline in the domestic economic activity, we managed to maintain the global loss index practically unaltered. We carried out 45,600 regularizations in low-income communities, benefiting over 180,000 people with safe and reliable electricity and contributing to the recovery of 127 GWh of energy billed by the company.

I would also like to highlight the important external recognition we achieved in 2016: AES Eletropaulo was included in the ISE portfolio, the Corporate Sustainability Index, for the 12th consecutive year; we ranked among the 150 Best Companies to Work For, and featured in Guia Exame de Sustentabilidade (Exame magazine’s Sustainability Guide) as the best company in the energy sector. These are the results of our best practices in management and relations with various stakeholders based on our values, which we commit to putting into practice daily.

By 2017, we will move forward in our initiatives aimed toward recovering value, driven by innovation, risk reduction, and operational efficiency, ensuring customer satisfaction as our main goal.

We are AES Eletropaulo

We are the company that distributes the largest amount of energy in the country, driving the routine of the city of São Paulo and 23 other municipalities. We are part of the lives of approximately 20 million people. There are over 1,500 consumer units per square kilometer – the highest density among all Brazilian distributors.

Every day of the year, we work to guarantee our customers’ satisfaction with the services we provide. Therefore, we invest in innovation, network improvement, improving our processes, and agility of our service channels.

We are part of one of the leading energy industry groups in the country. In addition to AES Eletropaulo, AES Brazil is composed of AES Uruguaiana and AES Tietê (generation), and AES Ergos (services).

In the last year, organizational changes were implemented aiming to promote growth through solutions in energy, innovation, and new technologies.

To ensure the dissemination of values and ethics in relationships with all stakeholders, we have in place AES Brasil’s Ethics and Compliance Program, composed of three pillars: Education and training; Contractual compliance; and AES Helpline.

Globally, we are part of the AES Corporation, a group of businesses operating in 17 countries in the Americas, Europe, and Asia, listed at the New York Stock Exchange and with a wide portfolio in energy distribution and generation from thermal or renewable sources, and energy storage.

Learn more about AES worldwide.

Our strategy

In order to advance towards AES Brasil’s vision and be recognized by our customers and shareholders as the preferred partner for safe, innovative, reliable and affordable energy solutions, we operate in accordance with the Sustainable Strategic Planning, which describes long-term objectives and how they will be achieved.

These objectives were approved by our leadership in 2016, when we developed the planning cycle from 2017 to 2021, considering the changes and trends in the energy sector, as well as the risks and opportunities of creating value in the segments in which we operate. New goals and targets were established for AES Eletropaulo (learn more in the PDF).

Vision

To be recognized by our customers and shareholders as the preferred partner for safe, innovative, reliable and affordable energy solutions.

Mission

To promote the well being and development by providing secure, sustainable and reliable energy solutions.

Strategic drivers

• Promote innovation
• Assure operational efficiency
• Amplify optionality
• Reduce risk

Value Creation Model

Our value creation model seeks to demonstrate to all stakeholders how we transform inputs and create value in different types of capital (financial, human, intellectual, social & relationship, manufactured, and natural).

Innovation and research

The AES Innovation platform, structured in 2016, permeates the companies in the Group, driving strategy, investments, and processes within five drivers.

Under this platform, the Aceleração de Projetos (Project Acceleration) initiative seeks to develop products, services or new business models in partnership with startups and other companies under the topics Internet of Things, Energy Storage, Energy Efficiency, Distributed Generation, and Electric Vehicles. The initiative received 233 registrations and selected eight finalists by the end of 2016.

In 2017, after holding meetings and workshops with the selected finalists, the two projects will be defined and will go through the process of acceleration and the implementation of the solutions presented.

One of the main advantages of this initiative is that it is financed by R&D (Research and Development) resources, according to regulations, promoting innovation for the sector as a whole, based on the regulatory process defined by ANEEL. AES Brasil will participate as project co-developer, and not in the companies’ equity.

Internet of Things

Energy Storage

Distributed Generation

Energy Efficiency

Electric Vehicles

Smart Grid Project advances in AES Eletropaulo

The main AES Eletropaulo project under development is the Smart Grid project, considered the largest smart grid initiative in Brazil. Launched in 2013, this project should be fully available and functional for approximately 62,000 customers in Barueri by 2019. The city was chosen because it best represents the customer profile diversity (residential, commercial, and industrial) in our service territory.

For customers, the smart grid will offer benefits and innovations. Among these benefits is the possibility of monitoring energy consumption daily and thus adopt new habits and behaviors for using energy more efficiently.

For our operations, gains are directly associated with the increase in efficiency and quality of our services. Through intelligent meters and advanced automation, we will be able to promptly identify failures

and interruptions in supply and take corrective action more quickly – including the possibility of acting remotely – more precisely communicating to customers the time needed to restore power.

The structure of the distribution network has already been finalized, with the installation of power outage detectors, automatic circuit reclosers, among other technologies. We also advanced with INMETRO’s (National Institute of Metrology, Quality and Technology) approval of an intelligent meter capable of communicating with our operation center by means of radiofrequency or through the network itself. Our objective for 2017 is to begin installing smart meters and installing the new systems, as well as implementing the new portal about the project on the Internet and in a demo showroom.

Watch the video and learn more about the Smart Grid project

Focus on customers and innovation

Ensuring customer satisfaction is one of the long-term goals of AES Brasil’s Sustainable Strategic Planning. The main initiative toward continually improving customer relations is JAATJeito AES de Atender (The AES Way to Serve).

Within JAAT, one of our main innovations was the identification of five Customer Journeys, the most common situations that generate contact with AES Eletropaulo, in order to track all interaction and assess customer satisfaction with assistance and services.

The Customer Journeys

Communication due to power outage

Billing inquiries

Request for services

Request for compensation for damages to electrical equipment (PID)

Questions about standards and technical regulations

Achievements in 2016

• Smartphone app

Free tool that allows our customer to request services, such as issuing a second copy of a bill and requesting a consumption history.

• On Site Billing

Project that ensures delivery of the printed electric bill to customers at the time the meter is read. In the 24 municipalities we serve, bills are issued directly by the readers and delivered to the residents, reducing the risk of loss and non-payment due to failure to receive the bill.

• AES Eletropaulo – Economizado Bem, o Prêmio Vem

Events held in the communities with the purpose of gaining the loyalty of low-income regularized clients. On these occasions, we carried out debt negotiations, replaced inefficient appliances with new models, changed light bulbs, and performed other services.

Addressing losses

We promote actions to increase the efficiency and quality of our operations, ensure customer safety, and optimize the use of our energy distribution assets.

• 385 thousand

inspections carried out

• 91 thousand

irregular connections identified

• 80 thousand

disconnections recovered

• 46 thousand

connections regularized

Operational efficiency

Our Quality Recovery Plan, initiated in 2015 and expanded in 2016, has the following objectives:

• To reduce the number of disconnections from the distribution network.
• To reduce the number of customers affected by power outages.
• To reduce the duration of power outages.
• To reduce the number of accidents.
• To reduce the number of customer complaints regarding services.

To reduce interruptions in power supply, our investments are focused on improving infrastructure, increasing automation, and improving operations and maintenance processes. We advanced with the modernization process of our assets using compact

network technology (spacer cable), minimizing outage caused by contact with branches of trees.

In 2016, for example, we installed 1,147 automatic circuit reclosers that enable the correction of transient failures – caused when tree branches momentarily touch the wiring. In addition, when automatic reconnection is not possible, these devices communicate with our Operations Center (COS/COD), located in the city of Barueri, and allow for remote maneuvers to re-establish supply to customers who are not in the affected area.

Around 2,000 self-healing systems will be installed, which will automatically reconfigure the distribution circuits and reduce the number of customers without power – by 2016 we already had 1,315.

Achievements in 2016

220

new emergency teams

1,147

automatic reclosers installed (in addition to 1,069 already in operation)

90

fault detectors

1,315

self-healing
systems installed

160 km

of network built

130 km

of network replaced with spacer cable technology

465 thousand

trees prunned, totaling approximately 711,000 since the beginning of the Quality Recovery Plan

323

vehicles added to our fleet

3,324 km

of network under maintenance

6

new operating bases; three of which will be completed in 2017

9

bases renovated

Safety first

The safety of our employees, services providers, and the community is our priority when we develop our activities. In our Sustainable Strategic Planning, we set performance goals regarding this topic that are monitored periodically by the Board of Officers.

In order to raise awareness among our customers and avoid accidents in the electricity grid, we invest in educational campaigns through the main communication channels and hold lectures in local communities, schools, associations, and companies.

Safety blitzes also contribute to the awareness of the population. They are carried out with a special van that simulates the consequences of undue contact with cables in the electrical network, through a simulated electrical shock. Last year, 18 thousand people were impacted by this action.

Our work with education and community awareness actions will be intensified this year. Campaigns on communication channels, such as radio spots and spots in movies on television, will increase almost 150% compared with 2016. We will also place ads at bus stops located near low-income communities.

Our stakeholders

In AES Brasil's business growth and development strategy, managing stakeholder relations is fundamental to understanding their needs and developing strategies to enhance shared value through our activities and operations. In order to structure this process and define the best mechanisms of engagement, our stakeholders were grouped in a matrix.

In 2016, AES Brasil was one of the companies that participated in discussions with the GVCes (Center for Sustainability Studies of the Getulio Vargas Foundation) for the design of a tool to assess social and environmental risks and criticality in the supply chain. Our contribution is based on the matrix used in the Sustainable Partnerships program as a tool to evaluate and develop suppliers.

Achievements in 2016


Employees

In 2016, AES Eletropaulo was included for the first time as one of the 150 Best Companies to Work For, developed by Você S/A magazine.

We invested BRL 4 million in training and qualifying programs.


Suppliers

The Sustainable Partnerships program guides the selection and development actions of our partners.

Partner contracts that are highly critical and complex, such as service providers for network maintenance and operation, are managed through the IDF (Supplier Performance Index).


Communities

The AES Institute, created in 2016, increases the reach of our operations and the positive impacts we have caused via our projects.

The AES Institute is responsible for managing AES Brasil’s volunteer social action in three pillars: Citizenship training, Innovation for social development, and Conscious entrepreneurship.

• 359 thousand training hours for employees
• 287 suppliers of AES Eletropaulo assessed
• BRL 72.7 million invested in social projects