Centrais Eletricas Brasileiras : Market Announcement - 09.14.18 - Compulsory Loan

MARKET ANNOUNCEMENT

CENTRAIS ELÉTRICAS BRASILEIRAS S/A

CNPJ: 00.001.180/0001-26 | NIRE: 533.0000085-9

OPEN COMPANY

Centrais Elétricas Brasileiras S/A ("Company" or "Eletrobras") (B3: ELET3, ELET5 & ELET6; NYSE: EBR & EBR.B; LATIBEX: XELT.O & XELT.B) hereby clarifies the following to its shareholders and the market in relation to the news published in the newspaper Valor Econômico today about the commencement of the judgment of the Motion for Reconsideration of the Review in Special Appeal (Embargo de Divergência em Agravo em Recurso Especial) number 790288/PR, by the Superior Court:

• 1. Firstly, it should be clarified that the judgment was not concluded yet but only initiated with the vote of the rapporteur Justice, accordingly, the appeal of the opposing party may be rejected at the end, which is the reason we cannot make any prediction of the value;

• 2. The opposing party claims that the interest rates of 6% (six percent) should apply to the credits arising from the judicial decisions regarding the compulsory loans resulting from the differences in inflation (expurgos inflacionários) since the 143rd Extraordinary General Meeting, held on June 30, 2005, which ratified the conversion of credits resulting from the compulsory loans;

• 3. Eletrobras disagrees with this understanding, since:

  • (i) The principal amount and interest of the compulsory loans were paid by Eletrobras, under the terms of the compulsory loan legislation, in particular Decree-Law 1512, of December 28, 1976;

  • (ii) Considering that these credits have been paid as per the applicable legislation, the debts under discussion (if any) should be considered judicial debts rather than taxes;

  • (iii) For judicial debts, the applicable rule is that "on the amount calculated, there should be applied the typical charges of judicial debt (monetary adjustment from the maturity date - item 6.1 and 6.2 and default interest from service of process - item 6.3)." (Resp. 1003955/RS);

  • (iv) Therefore, in case of a judicial debt, the SELIC - Special Settlement and Custody System (SELIC - Sistema Especial de Liquidação e de Custodia) rate should be applied, especially considering that Eletrobras may choose to pay in cash and not necessarily in shares of the Company. (Resp.1003955/RS);

  • (v) This follows the ruling of Justice Herman Benjamim from 2009, as set out below (Resp. 1003955/RS):

"(...)This index cannot be brought back against the law. After the redemption, if there has been a lower payment, there is no remuneration on the Loan, but rather a default by the Tax Authorities, with the application of default interest (Selic or any other that the Judiciary considers appropriate), exclusively.

The accumulation of the two interest rates - Selic (for default interest) plus 6% (remuneration) - leads to a

monetaryadjustmentthat,intheveryrecentpast,exceeded an absurd 20% per year.

In addition, if article 406 of the Civil Code is applicable to the situation, the limitation contained in article 591 the Civil Code should also be applied (emphasis added):

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'Art 591. When a loan is entered into for economic purposes, interest is presumed, which, under penalty of reduction, cannot exceed the rate referred to in article 406, permitting the annual capitalization.

In fact, if private borrowers do not submit to interest rates higher than those established in article 406 of the Civil Code (Selic), why should the Public Administration be subject to them when it contracts a Compulsory Loan?

I understand that interest rates of 6% per annum are only due until redemption (conversion into shares). After service of process, the Public Administration is in default and only the default interest provided by law is due: articles Nos 1,062 and 1,063 of the Civil Code, until Law 10,406/2002 entered into effect which provided in article 406 that the rate in place at the time should apply to the late payment of taxes due to the National Treasury (Selic). "

In view of the foregoing, the Company will keep the market informed of the judgment in question.

Rio de Janeiro, September 14, 2018.

Armando Casado de Araujo

CFO and Investor Relations Officer

Internet:www.eletrobras.com/elb/ri E-mail:[e-mail] Address: Av. Presidente Vargas, 409 - 9º andar. 20071-003, Centro. Rio de Janeiro - RJ Phone Number: (21) 2514-6333 / 4627

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