CESP Companhia Energetica de São Paulo : Dados Econômico-Financeiros

CONSOLIDATED AND PARENT COMPANY FINANCIAL STATEMENTS

AT DECEMBER 31, 2021

AND INDEPENDENT AUDITOR'S REPORT

(A free translation of the original in Portuguese)

CONTENTS

PARENT COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

Management report ................................................................................................................................................. 2

Statement of income .............................................................................................................................................. 12

Statement of comprehensive income ................................................................................................................... 13

Statement of cash flows ......................................................................................................................................... 14

Balance sheet ........................................................................................................................................................ 15

Statement of changes in equity ............................................................................................................................. 17

Statement of value added ...................................................................................................................................... 18

Notes to the consolidated and parent company financial statements

1. General information ........................................................................................................................................... 19

2. Presentation of the parent company and consolidated financial statements and summary of significant

accounting policies ............................................................................................................................................ 23

3. Changes in accounting practices and disclosures ............................................................................................ 24

4. Revenue ............................................................................................................................................................ 24

5. Costs and expenses .......................................................................................................................................... 27

6. Financial result ................................................................................................................................................... 29

7. Cash and cash equivalents ............................................................................................................................... 29

8. Accounts receivable ........................................................................................................................................... 30

9. Other assets ...................................................................................................................................................... 31

• 10. Collateral and court deposits ..................................................................................................................... 31

• 11. Deferred income and social contribution taxes .......................................................................................... 32

• 12. Assets subject to indemnity ....................................................................................................................... 35

• 13. Investments ................................................................................................................................................ 37

• 14. Fixed assets ............................................................................................................................................... 39

• 15. Intangible ................................................................................................................................................... 41

• 16. Suppliers .................................................................................................................................................... 44

• 17. Debentures ................................................................................................................................................ 44

• 18. Sectorial charges ....................................................................................................................................... 46

• 19. UBP - Use of public assets ........................................................................................................................ 46

• 20. Social and environmental obligations ........................................................................................................ 47

• 21. Energy future contracts .............................................................................................................................. 47

• 22. Post-employment benefits ......................................................................................................................... 48

• 23. Allowance for litigation ............................................................................................................................... 53

• 24. Other liabilities ........................................................................................................................................... 55

• 25. Related party transaction ........................................................................................................................... 56

• 26. Equity ......................................................................................................................................................... 59

• 27. Financial instruments and risk management ............................................................................................. 63

• 28. Business risks ............................................................................................................................................ 71

• 29. Insurance (not audited) .............................................................................................................................. 72

• 30. Long-term commitments ............................................................................................................................ 72

• 31. Segment information .................................................................................................................................. 72

• 32. Subsequent event ...................................................................................................................................... 72

MESSAGE FROM MANAGEMENT

The year 2021 was highly challenging due to the water crisis yet was marked by many achievements by CESP. We advanced on a series of essential projects to ensure the sustainable future for the business that the Company start to contribute from now on, with the creation of the new company, Auren Energia S.A.

In 2021 we move forward on the management of our energy balance, on our long-term commercial strategy, we continued to show gains in efficiency for the business and we made significant progress in our ESG agenda.

The water crisis had a significant impact on our financial performance in 2021. Like all hydroelectric power generators of SIN, CESP was penalized by the decline in the national hydro production due to the worsening GSF. Nevertheless, we were successful in our commercial strategy, which, in addition to other fronts, involved the advance acquisition of energy on competitive terms to ensure our energy balance for 2021 and 2022.

Although the crisis brought a scenario of more challenging on the energy purchase side, CESP seized the opportunities on the sales side, especially energy sales starting from 2024. During the year, we proceeded with our go-to-market strategy of expanding and diversifying the client base to reduce costs and maximize results.

Another major highlight in 2021 was the management of contingent liabilities. We remain focused on resolving, through court decisions and negotiations, the portfolio of lawsuits in order to reduce risk. We ended 2021 with a reduction of R$1.8 billion, after inflation adjustment, in total contingent liabilities in relation to December 2020, underscoring our portfolio dismantling strategy. The reduction mentioned resulted in a decrease of 24% or R$419 million in 2021, of the contingent liabilities with probable chance of loss, which is the share of the contingent liability that is fully provisioned.

On the operating front, we continued our efforts to increasingly improve the management of our assets despite all the difficulties caused by the water crisis. Also, during the year, the Paraibuna and Porto Primavera HPPs joined the GSF renegotiation, resulting in the recognition of R$782 million as reimbursement and extension of concession period of the power plants by 15 months and 7 years, respectively.

An important fact in 2021 was the approval by PREVIC of the VIVEST pension plan migration process. The migration is in progress and should be concluded in the first half of this year, representing another important initiative in our plan to mitigate Company's actuarial risk.

Our efforts on ESG presented an enormous development. We continued the implementation of CESP's Sustainability Platform based on the Sustainable Development Goals (ODS) and the materiality matrix. Our focus is on proactive environmental and climate actions, human development specially in the communities that we operate and inclusive growth. As a result, MSCI Inc., the leading ESG risk rating agency, raised our socio-environmental rating from "BBB" to "A" (on a scale of CCC to AAA), the second upgrade of CESP's rating in less than two years.

While all these fronts were progressing, the Company received from its controlling shareholders a proposal for corporate restructuring to create one of Brazil's largest publicly held electricity companies, which is one more milestone in our transformation process. The proposal was analyzed by an Independent Committee and our Board of Directors defined and approved the exchange ratio in January 2022. The Shareholders Meeting held on February 15, 2022, approved the proposal.

As such, after meeting all applicable legal terms and conditions precedent for the operation, CESP shares were incorporated on March 25, 2022, and now the Company is a wholly owned subsidiary of Auren Energia S.A.

It is rewarding to look back and see what we achieved since the privatization of the Company in 2018. With this sense of accomplishment, we are entering a new phase, ready to continue working and pursuing opportunities that increasingly create more value for our shareholders. We thank all those who accompanied us in this journey and invite you to embark on a new chapter of this successful journey in Brazil's electricity sector.

Mario Bertoncini

Chief Financial and InvestorMarcelo de Jesus Chief Financial Officer

Relations Officer

COMPANY PROFILE

CESP is a power generation company created in 1966 by the São Paulo State Government from the merger of 11 electricity companies based in the state.

On October 19, 2018, the auction of CESP shares was won by Consórcio São Paulo Energia, formed by VTRM Energia Participações S.A. ("VTRM") and SF Ninety Two Participações Societárias S.A. ("SF 92"), a joint venture between Votorantim Energia and Canada Pension Plan Investment Board ("CPP Investments"). On November 11, 2018, after executing the Share Purchase and Sale Agreement with the São Paulo State Government, CESP became a company controlled by the private sector.

GENERATION COMPLEX

CESP holds the concession of two hydroelectric plants through concession agreements (Porto Primavera HPP - independent power generation and Paraibuna HPP), with a total of 16 generation units, capacity of 1.627 MW and physical guarantee of 935 MW average.

The plants are located in the watersheds of the Paraná River in the western region of São Paulo state and the Paraíba do Sul River in the eastern region of São Paulo.

At a meeting held on June 28, 2019, the Board of Directors of CESP decided against renewing its concession for the Jaguari HPP, which represented less than 2% of its total assured energy. After the concession period of the asset expired in May 2020, CESP operated the plant on a temporary basis until December 31, 2020, when it transferred the same to the new operator designated by the Ministry of Mines & Energy, pursuant to MME Ordinance 409/2020.

CORPORATE GOVERNANCE

At CESP, the aim of corporate governance is to help create value for shareholders and stakeholders of the Company, following the principles of transparency, equity, accountability and corporate responsibility, while enhancing the management and governance structure to strengthen the Company's pillars and ensure the perpetuity of its business.

Therefore, the Company strongly believes that the adoption of corporate governance best practices contributes to the success and prosperity of its business.

In this regard, CESP complies with a series of rules that govern its relations with its shareholders and the financial market, such as Level 1 Corporate Governance Listing Segment Regulations of B3 - Brasil, Bolsa, Balcão S.A. and all the rules of the Securities and Exchange Commission of Brazil (CVM). In addition, CESP seeks to continuously incorporate new corporate governance practices and guidelines, including superior to those required by B3's Level 1 Listing Segment.

CESP is also committed to the recommendations of the Brazilian Corporate Governance Code issued by the Brazilian Corporate Governance Institute (IBGC), an important instrument for managers and investors to monitor the corporate governance practices adopted by Brazilian companies.

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