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Conference Call 2Q16 with Simultaneous Translation

Data: 08/17/2016

Portuguese 11h00 (Brasília Time) 10h00 (New York Time) Tel.: +55 11 2188-0155 Code: CESP Replay: +55 11 2188-0400 Password: CESP

Translation to English 11h00 (Brasília Time) 10h00 (New York Time) EUA: (1 646) 843 6054 Other countries: (1 866) 890 2584 Code: CESP Replay: +55 11 2188-0400 Password: CESP

IR contacts: Tel.: +55 11 5613-3626 Fax: +55 11 5613-3657 ricesp@cesp.com.br www.cesp.com.br

2Q16 Results

Net Operating Revenue of R$ 467.9 million;

Service Income of R$ 103.8 million;

Ajusted EBITDA of R$ 255.2 million, Margin 54.5%;

Net Income of R$ 101.4 million;

2Q16 2Q15 Chg% 1S16 1S15 Chg%

Net Operating Revenue 467,946 748,069 -37.4% 948,657 1,527,705 -37.9%

Operating Expenses (364,129) (395,967) -8.0% (719,331) (780,721) -7.9%

Service Result 103,817 352,102 -70.5% 229,326 746,984 -69.3%

EBITDA 164,436 501,730 -67.2% 358,497 1,036,964 -65.4%

Adjusted EBITDA 255,218 565,120 -54.8% 550,245 1,140,523 -51.8%

Adjusted EBITDA Margin 54.5% 75.5% -21.0 p.p. 58.0% 74.7% -16.7 p.p.

Financial Result 74,331 51,827 43.4% 143,964 (155,250) -

Net Income 101,363 264,975 -61.7% 199,277 369,130 -46.0%

Financial and Operating Highlights (R$ thousand)

São Paulo, August 12, 2016: CESP - Companhia Energética de São Paulo (BM&FBOVESPA: CESP3, CESP5 & CESP6) releases its financial results for the second quarter of 2016 (2Q16). The statements were produced according to the International Financial Reporting Standards (IFRS) and accounting practices adopted in Brazil, compared to the same period in 2015, except as otherwise indicated in this publication.

2Q16

2 2

GENERATOR COMPLEX

CESP – Companhia Energética de São Paulo holds the concession for three hydroelectric plants, operating under the price regime, with 18 generating units and a total installed capacity of 1,654.6 MW and 1,081.0 av.MW physical guarantee.

The plants are located in the hydrographic basins of the Paraná River in the west of the state São Paulo and the Paraíba do Sul River in the east of the state and comprising the following generator facilities:

During the second quarter of last year CESP was still operating the hydroelectric HPP's Ilha Solteira and Jupiá included in the Concession Agreement until the 7th of July 2015. From that date ceased to operate them at market price system and started to operate them temporarily by the regime of quotas, a regime that was paid for the operation and maintenance costs, to the assumption of the winner of the auction organized by the Public Authority for choosing a new dealer, which took effect from 1st of July 2016. Previously CESP had already ceased to operate the HPP Três Irmãos, whose concession was transferred to the new dealer in 2014.

Três Irmãos Plant

CESP has filed a lawsuit including a request for temporary relief against the Federal Government in the Federal Law Courts in Brasília, claiming indemnification for investments made and not yet amortized following the reversal of the property and installations of the Três Irmãos HPP.

The most recent decisions in this case were: on September 9, 2015, the judge in the case allowed the preparation of an engineering report requested by CESP in its claim to receive an indemnity for investments effected and not fully amortized at the plant. The relative technical assistants have already been appointed by the parties involved. On February 29, 2016, a decision was ruled in favor of the inclusion of the state of São Paulo as an interested party to the litigation pursuant to Article 5, Sole Paragraph to Law 9.469/97.

Payment with respect to the uncontested amount (R$ 1.7 billion) has still not commenced, pending a conclusive decision on the part of the courts.

Ilha Solteira and Jupiá Plants

The concession agreements of CESP’s two largest hydroelectric plants, Ilha Solteira and Jupiá expired on July 7, 2015. Together, these plants represented 75% of the Company’s installed capacity. Since the Company decided not to adhere to the conditions for renewal of the concessions under PM 579, as from July 08, 2015, the entire physical guarantee of these plants was allocated to the regime of quotas. Until June 30, 2016, the date scheduled for the new concessionaire to take over the running of the plants, CESP was responsible for plant operations and maintenance. During this period, CESP was remunerated at a tariff set by ANEEL. As from July 1, 2016, a new concessionaire has begun operating both plants.

On October 9, 2015, CESP filed an indemnification lawsuit against the Federal Government, requiring it to pay the Company an amount covering the reversal of goods and installations for operating Ilha Solteira and Jupiá concessions on the basis of a restatement of the historical cost of these assets of R$

Power

Plants

Date of

Conclusion

Generating

Units

Installed

Capacity

(MW)

Physical

Guarantee

(Average MW)

End of

Concessions

Porto Primavera 1999 14 1,540.0 1,017.0 13/07/2028

Paraibuna 1978 2 87.0 50.0 09/03/2021

Jaguari 1972 2 27.6 14.0 20/05/2020

Total 18 1,654.6 1,081.0

3 3

1,561 million. The Company believes that it has the right to receive the amount in question based on the restated amount and will continue to pursue this litigation through the courts. In accordance with the Brazilian Accounting Pronouncement Committee’s CPC 25, which covers Provisions, Contingent Liabilities and Contingent Assets and in the light of ANEEL Resolution 596/2013, in the fourth quarter 2015, the Company established a provision for the two plants (Contingent Asset) in the amount of R$ 580.8 million with adjustments to be made to book value through to the conclusion of the lawsuit.

ELECTRIC ENERGY PRODUCTION

In the second quarter 2016, CESP’s Electric Energy Production was 2,291.7 GWh, 15.2% higher than 2Q15. Operating under a quota system up to June 30, 2016, the Ilha Solteira and Jupiá plants produced 10,240.9 GWh in the first half of 2016.

Guaranteed Power Output = 1,081.0 aMW X 24 hours X 91 days = 2,360.9 GWh/2Q16

Guaranteed Power Output = 1,081.0 aMW X 24 hours X 182 days = 4,721.8 GWh/1S16

COMMERCIALIZATION CESP’s clients are: (i) the country’s electric energy distributors, which purchase energy at auctions in the regulated market based on long-term agreements; and (ii) the trading companies and free consumers that acquire energy through public offerings via short-, medium-, and long-term bilateral agreements. ?

CESP sells net physically guaranteed energy under the following arrangements: Free Contracting Market – ACL: through short-, medium- and long-term Power Purchasing Agreements with volumes, conditions and prices negotiated with trading companies and free consumers. Regulated Contracting Market – ACR: through power purchasing auctions organized by ANEEL and held through the intermediation of the CCEE to supply the distributors.

Electric Energy Trading Chamber - CCEE: where the differences between the produced, net physical guarantee and contracted energy are booked and settled in part to meet requirements under the Energy Reallocation Mechanism at regulated tariffs which cover the variable costs of energy generation only and partly as surplus and secondary energy at Prices for the Settlement of Differences - PLD as determined by the CCEE.

Power

Plants2Q16 2Q15 1S16 1S15

Porto Primavera 2,259.9 1,949.3 4,654.4 4,255.8

Paraibuna 28.7 38.2 58.5 69.7

Jaguari 3.1 2.2 5.7 6.7

Total 2,291.7 1,989.7 4,718.6 4,332.2

Ilha Solteira 3,064 2,339 6,349 5,176

Jupiá 1,830 1,618 3,892 3,578

Total 4,893.7 3,956.9 10,240.9 8,754.2

Production GWh

4 4

REVENUES

In the second quarter of 2016 compared to the same period of 2015, CESP had a significant reduction in revenues due to the end of the concession of plants Solteira and Jupiá on 7 July 2015. From that date the Company did not count on the energy of these plants by price system and now has the transitory income as operator, from the sale of energy to the regulated market by quota system relating to these plants until June 30, 2016, during the so-called "assisted operation", and the new concessionaire assumed these plants on July 1, 2016.

In the second quarter 2016, Revenue from Energy Sales fell 34.1% compared to the same period in 2015, totaling R$ 586.5 million, compared with R$ 890.1 million in 2Q15. First half revenues were R$ 1,190.5 million, a year-on-year decrease of 34.7%.

REVENUE BREAKDOWN

In 2Q16, the Free Contracting Market (ACL) accounted for the larger part of revenue, sales being conducted at the average price of R$ 169.70/MWh (+8.0% in relation to 2Q15). The average price in the Regulated Contracting Environment (ACR) was R$ 192.73/MWh.

2Q16 2Q15 Chg. 2Q16 2Q15 Chg.Free Market - ACL 1,509,427 3,473,556 -56.5% 256,151 545,556 -53.0%

Regulated Market - ACR 709,009 1,394,412 -49.2% 136,648 231,145 -40.9%

Spot Market - PLD - 272,373 - - 101,444 -

Regime of Quotas - - - 187,579 - -

Settlement of Prior Periods - - - 4,738 - -

Spot Market - MRE 155,850 600,323 -74.0% 1,443 11,980 -88.0%

Energy of Pontency 792 - - 5 - -

Total 2,375,078 5,740,664 -58.6% 586,564 890,125 -34.1%

Energy Sales BreakdownMWh R$ thousand

1S16 1S15 Chg. 1S16 1S15 Chg.Free Market - ACL 3,009,113 7,442,662 -59.6% 518,324 1,195,029 -56.6%

Regulated Market - ACR 1,489,141 2,918,430 -49.0% 282,659 478,489 -40.9%

Spot Market - PLD - 335,668 - - 125,314 -

Regime of Quotas - - - 366,994 - -

Settlement of Prior Periods - - - 17,331 2,184 693.5%

Spot Market - MRE 466,918 2,066,980 -77.4% 5,215 22,256 -76.6%

Energy of Pontency 792 - - 5 - -

Total 4,965,964 12,763,740 -61.1% 1,190,528 1,823,272 -34.7%

R$ thousandEnergy Sales Breakdown

MWh

5 5

Free Contracting Market – ACL

The share of sales to the Free Contracting Market in second quarter 2016 was 43.7%, corresponding to R$ 256.2 million.

Energy volume delivered to the ACL was 1,509.4 GWh in 2Q16. The average price in this market was R$ 169.70, an increase of 8% compared with 2Q15. Energy volume for the first half year was 3,009.1 GWh.

Regulated Contracting Market – ACR

The share of sales to the Regulated Contracting Market in 2Q16 was 23.3%, totaling R$ 136.6 million.

Energy volume delivered to the ACR totaled 709.0 GWh in the first quarter 2016. In 2Q16, there was a year-on-year increase in ACR sales of 16.3%.

Spot Market

In 2Q16, revenue accruing from CCEE business, considering the MRE – Energy Reallocation Mechanism only, was R$ 1.4 million.

Sales volume through the CCEE was 155.8 GWh.

Revenue generated under the quota regime from the Ilha Solteira and Jupiá plants was R$ 187.5 million in 2Q16. CESP agreed to the renegotiation of the hydrological risk as proposed in Law 13.203/2015 (PM 688/2015) for part of its energy sales in the regulated market. Against the payment of a risk premium, the Company is protected from hydrological risks until 2028, the end of the current concession agreement for Porto Primavera HPP. Renegotiation of hydrological risk had a positive knock-on effect reducing purchase costs of electric energy through the CCEE in 2015 from R$ 155 million to R$ 52 million. For the current quarter under review, the hydrological risk premium was R$ 6.0 million.

DEDUCTIONS FROM OPERATING REVENUE

Deductions from Operating Revenue accounted for 20.3% of the Gross Operating Revenue in 2Q16 equivalent to R$ 119.1 million. In 2Q15, this item represented 16.1% amounting to R$ 143.4 million.

Deductions from Operating Revenues - R$ '000 2Q16 2Q15 Chg. 1S16 1S15 Chg.

Global Reserve for Reversion Quota - RGR (11,449) (21,181) -45.9% (22,899) (42,363) -45.9%

Research and Development (4,675) (7,475) -37.5% (9,477) (15,213) -37.7%

Services tax - ISS (28) (48) -41.7% (57) (239) -76.2%

COFINS tax on Operating Revenues (44,327) (62,584) -29.2% (89,427) (131,908) -32.2%

PIS tax on Operating Revenues (9,624) (13,221) -27.2% (19,415) (28,636) -32.2%

Compensations for Use of Water Resources (45,276) (34,223) 32.3% (94,262) (75,313) 25.2%

Inspection fee of electricity services - TFSEE (3,738) (4,624) -19.2% (7,476) (9,248) -19.2%

Total (119,117) (143,356) -16.9% (243,013) (302,920) -19.8%

% Gross Revenues -20.3% -16.1% -4.2 p.p. -20.4% -16.5% -3.8 p.p.

6 6

OPERATING EXPENSES

Having operated the plants Ilha Solteira and Jupiá on the quota regime until 30 June 2016, CESP incurred all expenses associated with this operation, including Personnel, Materials, Third Party Services, Miscellaneous, Taxes, Transmission System Use and Compensation for Hydrological Resources Use.

Thus, in 2Q16 the Operating Expenses amounted to R$ 364.1 million, 8% less than the same period in 2015 and representing 77.8% of Net Revenue.

Key factors in the reduction of expenses were: (i) - 8.5% in Personnel; (ii) - 23.5% Outsourced Services; and (iii) - 52.4% in Depreciation expenses with the maturing of the Ilha Solteira and Jupiá concession agreements. Conversely, energy purchases and sector charges increased 55.4% due to: (i) + 12.5% in charges for the transmission system use under increased tariffs and (ii) effects of GSF in CCEE accounting, generating power purchase. Operating Provisions increased 23.3% due principally to monetary restatement of the balance for Legal Contingencies and lower reversals of these provisions.

EBITDA

Adjusted EBITDA totaled R$ 255 million in 2Q16, 54.8% lower than 2Q15. The Adjusted EBITDA margin in the period was 54.5%, a reduction from the 75.5% recorded in 2Q15.

Operating Expenses - R$ thousand 2Q16 2Q15 Chg. 1S16 1S15 Chg.

Personnel (43,975) (48,083) -8.5% (88,420) (87,658) 0.9%

Social Security Entity - CPC 33 (1,946) (2,192) -11.2% (3,893) (4,383) -11.2%

Materials (2,406) (2,677) -10.1% (3,591) (6,163) -41.7%

Outsourced Services (21,136) (27,639) -23.5% (38,953) (46,728) -16.6%

Purchased Energy and Regulatory Charges (145,793) (93,813) 55.4% (267,799) (231,759) 15.6%

COFINS/PIS credits on services charges 9,316 7,810 19.3% 19,582 16,437 19.1%

Depreciation (73,527) (154,544) -52.4% (147,049) (312,680) -53.0%

ONS/ CCEE Charges (832) (727) 14.4% (1,597) (1,524) 4.8%

Provision for Estimated Credit Losses (1,492) (3,127) -52.3% (5,519) (3,847) 43.5%

Operating Provision (79,253) (64,279) 23.3% (175,044) (91,383) 91.5%

Other Expenses (3,085) (6,696) -53.9% (7,048) (11,033) -36.1%

Total (364,129) (395,967) -8.0% (719,331) (780,721) -7.9%

% Gross Revenue -77.8% -52.9% -24.9 p.p. -75.8% -51.1% -24.7 p.p.

2Q16 2Q15 1S16 1S15

255

565 550

1,141

54.5%

75.5%58.0%

74.7%

Adjusted EBITDA - R$ million

-54.8%

-51.8%

7 7

FINANCIAL RESULT

In 2Q16, Financial Income totaled R$ 26.9 million, 46.4% less than the R$ 50.2 million reported in 2Q15, a reflection of a reduced cash position for investments.

Total Financial Expenses in 2Q16, including Debt Service Charges and Other Financial Expenses were R$ 17.4 million, 11.3% less than in the same period in 2015.

Net Monetary Variation, reflecting inflation indexes, reported a negative R$ 7.1 million in 2Q16, a decrease of 48.5% compared to 2Q15.

Net Foreign Currency Variation was a positive R$ 71.9 million, reflecting the 9.8% devaluation of the US Dollar in the quarter.

The Financial Result was a positive R$ 74.3 million in 2Q16 against R$ 51.8 million in 1Q15.

EBIT / EBITDA - R$ mil 2Q16 2Q15 Chg% 1S16 1S15 Chg%

Net Income 101,363 264,975 -62% 199,277 369,130 -46%

Tax and Social Contribution (Net) 63,551 133,711 -52% 155,483 199,248 -22%

Financial Result (74,331) (51,827) 43% (143,964) 155,250 -

EBIT 90,583 346,859 -73.9% 210,796 723,628 -70.9%

Depreciation 73,853 154,871 -52.3% 147,701 313,336 -52.9%

EBITDA 164,436 501,730 -67.2% 358,497 1,036,964 -65.4%

Provision for Legal Risks 90,782 63,390 43% 191,748 103,559 85%

Ajusted EBITDA 255,218 565,120 -54.8% 550,245 1,140,523 -51.8%

Adjusted EBITDA Margin 54.5% 75.5% -21.0 p.p. 58.0% 74.7% -16.7 p.p.

Breakdown of Financial Results - R$ thousand 2Q16 2Q15 Chg. 2Q16 2Q15 Chg.

REVENUES 26,928 50,206 -46.4% 57,171 98,685 -42.1%

Revenues from Investments 21,366 47,399 -54.9% 40,206 93,439 -57.0%

FIDC - update 1,811 2,700 -32.9% 4,303 4,832 -10.9%

Update of Credit and Receivables - - - - - -

Update of Accounts Receivable 4,913 55 - 15,265 124 -

Outras 151 52 190.4% 185 290 -36.2%

(-) PIS/COFINS on financial income (1,313) - - (2,788) - -

EXPENSES

DEBT CHARGES (13,641) (15,499) -12.0% (29,661) (34,190) -13.2%

Foreign Currency (12,330) (12,951) -4.8% (26,802) (24,913) 7.6%

Local Currency (1,311) (2,548) -48.5% (2,859) (9,277) -69.2%

OTHER (3,800) (4,163) -8.7% (7,791) (67,993) -88.5%

Income tax on financial operations (5) (26) -80.8% (26) (59) -55.9%

Income tax on remittances abroad (620) (738) -16.0% (1,087) (49,642) -97.8%

Update on purchase of foreign currency - - - - (10,280) -

Financial Operation Expenses - FIDC (81) (139) -41.7% (174) (291) -40.2%

Updating R&D - projects (2,911) (2,535) 14.8% (5,751) (4,864) 18.2%

Other charges (183) (725) -74.8% (753) (2,857) -73.6%

TOTAL FINANCIAL EXPENSES (17,441) (19,662) -11.3% (37,452) (102,183) -63.3%

GROSS INCOME 9,487 30,544 -68.9% 19,719 (3,498) -

MONETARY AND EXCHANGE VARATIONS, NET 64,844 21,283 204.7% 124,245 (151,752) -

Local Currency (7,078) (13,750) -48.5% (15,654) (35,523) -55.9%

Foreign Currency 71,922 35,033 105.3% 139,899 (116,229) -

FINANCIAL RESULT 74,331 51,827 43.4% 143,964 (155,250) -

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NET RESULT

In 2Q16, Pre-Tax Earnings were R$ 164.9 million and Income Tax and Social Contribution overheads were R$ 63.6 million. Consequently, Net Income reported R$.101.4 million, 61.7% less than the same period 2015.

INDEXES

The following table lists the principal indexes affecting CESP’s results.

FINANCIAL DEBT

Financial Debt on June 30, 2016 was R$ 1,229 million, 26.9% less than December 31, 2015.

Taking into consideration cash and cash equivalents of R$ 602 million and the FIDC Subordinated Quotas of R$ 79 million, Net Debt at the end of June 2016 was R$ 548 million, 47.4% less than on December 31, 2015.

Foreign currency debt was US$ 197 million on June 30, 2016, including charges up to that date (US$ 220.9 million on December 31, 2015).

Financial and Economic Indexes 2Q16 2Q15 Chg. 1S16 1S15 Chg.

Average Price Contract - R$ per MWh 177.06 170.83 3.6% 178.07 168.17 5.9%

Operating Margin 22.2% 47.1% -24.9 p.p. 24.2% 48.9% -24.7 p.p.

Variation Real x Dolar -9.8% -3.3% -6.5 p.p. -17.8% 16.8% -34.6 p.p.

IGP-M (General Market Price Index) 2.9% 2.3% 0.6 p.p. 5.9% 4.3% 1.6 p.p.

IPC-A (Extended Consumer Price Index) 1.8% 2.3% -0.5 p.p. 4.4% 6.2% -1.8 p.p.

Current Ratio 1.24 1.04 19.0%

* Considers only the sales in contracts (ACR+ACL) and Spot Market

06/30/2016 12/31/2015

Company Debt - R$ million

Local Currency Foreign Currency

-26.9%

1,229

1,683

48.6%48.7%

51.4%

51.3%(US$ 197 million)

(US$ 220,9 million)

9 9

CAPITAL MARKETS

CESP6 – Class B Preferred, CESP’s most traded equities, represent 64.4% of the Company’s total capital stock and recorded a negative variation of 11.2% in the first half of 2016. In the same period, CESP5 – Class A Preferred equities, which represent 2.3% of the capital stock, rose 30.8% and CESP3 – Common equities, accounting for 33.3% of the total capital stock, saw a decline of 2.2%.

In 1H16, IBOVESPA rallied 18.9% and the IEE - Electric Energy Stock Index recorded a 24.1% appreciation.

The following table shows CESP’s closing prices and market value for the last trading day of December 2015 and June 2016 as well as the total number of points of the IBOVESPA and IEE stock indexes on the same dates.

Financial Debt Position in 12/31/2015

(R$ thousand) Charges Current Long Term Total Total Chg.

Foreign Currency 1,904 170,963 458,726 631,593 862,495 -26.8%

Financial Institutions - - - - - -

BNDES 1,822 170,963 457,581 630,366 860,878 -26.8%

Medium Term Notes - - - - - -

Other 82 - 1,145 1,227 1,617 -24.1%

Local Currency 5 5,152 12,480 17,637 20,214 -12.7%

Financial Institutions - - - - - -

Medium Term Notes - - - - - -

ELETROBRÁS 5 5,152 12,480 17,637 20,214 -12.7%

Other Debts 1,855 464,768 113,685 580,308 800,157 -27.5%

Account Payables - - - - - -

FIDC 1,855 191,925 - 193,780 309,322 -37.4%

Social Security Entity (*) - 272,843 113,685 386,528 490,835 -21.3%

Total of Financial Debt (1) 3,764 640,883 584,891 1,229,538 1,682,866 -26.9%

Resources (2) - 601,786 79,697 681,483 640,116 6.5%

Cash and Cash Equivalents FIDC Subordinated Quotas - 601,786 79,697 681,483 640,116 6.5%

NET DEBT (1) - (2) 3,764 39,097 505,194 548,055 1,042,750 -47.4%

03/31/2016

(*) Note: Debt Agreements with CESP Foundation, net of R$ 386.5 million for the CPC setting 33 have zero balance in non-current liabilities on 06.30.2016

Share / IndexClosing

June 2016

Closing

December 2015 Chg. %

Number

of Shares

(thousand)

Market Value

(R$ thousand)

June 2016

CESP3 - ON 9.98 10.20 -2.2% 109,168 1,089,494

CESP5 - PNA 17.00 13.00 30.8% 7,399 125,785

CESP6 - PNB 11.90 13.40 -11.2% 210,936 2,510,136

327,503 3,725,415

IBOV 51,526 43,349 18.9%

IEE 30,786 24,803 24.1%

TOTAL CESP

10 10

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CESP6 - PNB (Share price on 06/30/2016 R$ 11.90)

CESP6 Volume CESP6 IBOV IEE

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Income Statement - R$ thousand 2Q16 2Q15 Chg% 2Q16 2Q15 Chg%

OPERATING INCOME 587,063 891,425 -34.1% 1,191,670 1,830,625 -34.9%

Energy Supply 135,960 254,516 -46.6% 279,553 513,720 -45.6%

Power Supply - Contracts 120,191 291,040 -58.7% 238,771 681,309 -65.0%

Auctions Power Supply 136,648 231,145 -40.9% 282,659 478,489 -40.9%

Power Supply - Potency 5 - - 5 - -

Short-Term Energy 6,181 113,424 -94.6% 22,546 149,754 -84.9%

Energy Supply - System of quotas 187,579 - - 366,994 - -

Other income 499 1,300 -61.6% 1,142 7,353 -84.5%

DEDUCTIONS FROM OPERATING REVENUES (119,117) (143,356) -16.9% (243,013) (302,920) -19.8%

Quota for the reversal of global reserves - RGR (11,449) (21,181) -45.9% (22,899) (42,363) -45.9%

Research and Development (4,675) (7,475) -37.5% (9,477) (15,213) -37.7%

Taxes without Services - ISS (28) (48) -41.7% (57) (239) -76.2%

COFINS without operating revenues (44,327) (62,584) -29.2% (89,427) (131,908) -32.2%

PIS without operating income (9,624) (13,221) -27.2% (19,415) (28,636) -32.2%

Financial compensation for use of water resources (45,276) (34,223) 32.3% (94,262) (75,313) 25.2%

Inspection fee of electricity services - TFSEE (3,738) (4,624) -19.2% (7,476) (9,248) -19.2%

NET OPERATING REVENUE 467,946 748,069 -37.4% 948,657 1,527,705 -37.9%

OPERATIONAL EXPENSES (364,129) (395,967) -8.0% (719,331) (780,721) -7.9%

Personnel (43,975) (48,083) -8.5% (88,420) (87,658) 0.9%

Social Security Entity - CPC 33 (1,946) (2,192) -11.2% (3,893) (4,383) -11.2%

Materials (2,406) (2,677) -10.1% (3,591) (6,163) -41.7%

Outsourced services (21,136) (27,639) -23.5% (38,953) (46,728) -16.6%

Purchased Energy and Regulatory Charges (145,793) (93,813) 55.4% (267,799) (231,759) 15.6%

COFINS/PIS credits on services charges 9,316 7,810 19.3% 19,582 16,437 19.1%

Depreciation (73,527) (154,544) -52.4% (147,049) (312,680) -53.0%

ONS/ CCEE Charges (832) (727) 14.4% (1,597) (1,524) 4.8%

Provision for Estimated Credit Loss (1,492) (3,127) -52.3% (5,519) (3,847) 43.5%

Operating Provisions (79,253) (64,279) 23.3% (175,044) (91,383) 91.5%

Other expenses (3,085) (6,696) -53.9% (7,048) (11,033) -36.1%

RESULT OF SERVICE 103,817 352,102 -70.5% 229,326 746,984 -69.3%

Other (expenses) income (13,234) (5,243) 152.4% (18,530) (23,356) -20.7%

INCOME FROM OPERATIONS BEFORE FINANCIAL RESULT 90,583 346,859 -73.9% 210,796 723,628 -70.9%

INCOME (EXPENSES ) FINANCIAL - - 0.0% - - 0.0%

Revenues 26,928 50,206 -46.4% 57,171 98,685 -42.1%

Debt Charges - Foreign Currency (12,330) (12,951) -4.8% (26,802) (24,913) 7.6%

Debt Charges - Local Currency (1,311) (2,548) -48.5% (2,859) (9,277) -69.2%

Others (3,800) (4,163) -8.7% (7,791) (67,993) -88.5%

Net Monetary Variation (7,078) (13,750) -48.5% (15,654) (35,523) -55.9%

Net Exchange Variation 71,922 35,033 105.3% 139,899 (116,229) -

FINANCIAL RESULT 74,331 51,827 43.4% 143,964 (155,250) -

INCOME BEFORE TAXES 164,914 398,686 -58.6% 354,760 568,378 -37.6%

Income tax - current (24,369) (74,328) -67.2% (56,866) (146,699) -61.2%

social contribution - Current (9,362) (27,817) -66.3% (21,650) (54,587) -60.3%

Income tax and social contribution taxes (29,820) (31,566) -5.5% (76,967) 2,038 -

Total Income Tax and Social Contribution (63,551) (133,711) -52.5% (155,483) (199,248) -22.0%

NET INCOME 101,363 264,975 -61.7% 199,277 369,130 -46.0%

NET INCOME per share 0.31 0.81 -61.7% 0.61 1.13 -46.0%

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ACTIVE 06/30/2016 12/31/2015

CURRENT 954,398 994,148

Cash and cash equivalents 601,786 548,553

Receivables 251,278 339,567

Taxes and contributions for offset 3,288 4,236

Other credits 78,458 76,626

Prepaid expenses 19,588 25,166

- -

NON-CURRENT 10,751,124 10,992,615

Pledges and Restricted Deposits 762,445 788,857

Deferred Taxes and Social Contribution 792,464 869,431

Warehouse 26,375 28,467

Other Receivables 2,490 3,204

Prepaid Expenses 45,064 52,575

Intangible Assets 40,494 40,544

Assets available for reversal 6,337,256 6,337,256

Provision asset available for reversal (4,387,826) (4,387,826)

Immobilized 7,132,362 7,260,107

TOTAL ASSETS 11,705,522 11,986,763

LIABILITIES AND SHAREHOLDERS 'EQUITY 06/30/2016 12/31/2015

CURRENT 771,122 998,224

Suppliers 7,720 13,925

Loans and financing 178,024 206,736

FIDC 193,780 237,618

Taxes and Social Contributions 38,519 56,586

Regulatory charges 318,127 393,642

Dividends and interest on capital 1,240 42,463

Dividends and interest on capital 1,240 42,463

Estimated liabilities and payroll 21,055 31,242

Other obligations 12,657 16,012

NON-CURRENT 3,561,710 3,677,647

Loans and financing 471,206 675,973

FIDC - 71,704

Industry charges 20,658 20,658

Provision for Contingencies 2,950,615 2,790,081

Environmental obligations 103,750 103,750

Other obligations 15,481 15,481

NET WORTH 7,372,690 7,310,892

Capital Stock 5,975,433 5,975,433

Capital reserve 1,929,098 1,929,098

Adjustment to net assets (1,030,336) (1,044,780)

Other comprehensive income (315,121) (177,642)

Income reserve 628,783 628,783

Accumulated Income 184,833 -

TOTAL LIABILITIES AND SHAREHOLDERS 'EQUITY 11,705,522 11,986,763

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LEGAL DISCLAIMER The statements contained in this document relating to the business outlook, estimates of operating and financial results and growth prospects of CESP are merely projections, and as such based exclusively on Management’s expectations regarding the future of the business. These forward‐looking statements depend substantially on changes in market conditions, the performance of the Brazilian economy, the industry and international markets, and therefore are subject to change without prior notice. ANNEX I – Electricity Sector Glossary

ACL ‐ Free Contracting Market – The segment of the market in which energy is purchased and sold through freely negotiated bilateral contracts, among generators, sellers and free consumers in accordance with specific selling rules and procedures. Distribution agents (distributors) are not permitted to purchase energy in this environment.

ACR ‐ Regulated Contracting Market ‐ The segment of the market in which energy is purchased and sold among generators and distributors, preceded by auctions except in cases envisaged by the Law, in accordance with specific selling rules and procedures.

Agent ‐ Agent of the Electric Energy Trading Board (CCEE) – Concessionaires, authorized companies or permit holders of energy services and facilities, sellers and free consumers, members of the CCEE and subject to the obligations and rights in the Trading Agreement, Rules and Procedures.

ANEEL – Brazilian Electricity Regulatory Agency – Regulatory body of the Brazilian energy industry. A special regime governmental agency, linked to the Ministry of Mines and Energy ‐ MME, created by Law 9,427, of December 26, 1996. The Agency has the following responsibilities: regulating and monitoring the generation, transmission, distribution and commercialization of energy, responding to complaints of agents and consumers with fairness to the benefit of society; mediating conflicts of interest between energy sector agents and between energy sector agents and consumers; granting, permitting and authorizing energy facilities and services; ensuring fair tariffs; doing everything to ensure the best possible service quality; requiring investments; encouraging competition among operators; and ensuring service universalization.

Assured Energy ‐ See Physical Guarantee.

Basic Network – Transmission facilities of the National Interconnected System ‐ SIN, owned by public service transmission concessionaires with voltage equal to or higher than 230 kV, established pursuant to criteria set forth by Regulatory Resolution 67, of June 8, 2004.

Bilateral Contract ‐ A legal document that formalizes the purchase and sale of electric energy among CCEE agents in the Free Contracting Market in order to establish prices, deadlines and supply volumes in specific time intervals.

Captive Consumers ‐ Consumers that are only allowed to purchase energy from the distributor to whose network it is connected.

CAR ‐ Risk Aversion Curve – Mechanism that establishes the minimum water storage level in reservoirs of hydroelectric power plants needed to produce energy with a safe interconnected system. CAR was introduced in January 2002 by Resolution 109, which established criteria and rules for the energy operation policy and thermal generation dispatch executed by the ONS, as well as pricing in the energy market.

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CCE ‐ Energy Purchase Agreement – Contract with regulated tariff that establishes the general terms and conditions regulating the sale of energy among current generators and distributors with a market lower than 500 GWh/year, to serve its market.

CCEAR ‐ Energy Trading Agreement in the Regulated Market – A contracted between each generator and all distributors that participate in the auction for the sale of energy from existing or future projects.

17 CCEE ‐ Electric Energy Trading Chamber ‐ Private non‐profit legal entity that operates under the authorization of the Granting Authority, regulated and monitored by the ANEEL, to facilitate energy purchase and sale transactions between CCEE agents, restricted to the National Interconnected System(SIN). It is in the CCEE that all agents account for their energy rights and book energy transactions on a monthly basis.

CCVEE – Energy Purchase and Sale Agreement – Also called Bilateral Contract. It is an agreement that formalizes the sale of energy (volume, prices, conditions, etc) resulting from the free negotiation among generators, sellers, free consumers and importers in the Free Contracting Market.

CNPE - National Energy Policy Council ‐ CNPE is a committee created in August 1997 that advises the President of Brazil on the development of national energy policy. The CNPE was created to optimize the use of Brazil’s energy resources and to guarantee national energy supply.

Concession Contract ‐ Legal document signed between the Granting Power and the concessionaire formalizing the concession, which must have the essential clauses relating to the objective, area and period, as well as the main conditions for the provision of the public service.

CVM - Brazilian Securities Commission

Distributors – Agent holding the federal concession to provide energy distribution public services under the terms of applicable legislation, serving captive consumers in its concession area.

EBIT and EBITDA ‐ Defined by the rules established by the CVM Instruction No. 527/2012.

Adjusted EBITDA ‐ EBITDA is defined by CESP as Net Income (or Loss) plus Financial Results, Depreciation, Impairment, Operational Provisions, Other Net (Expenses) Revenue, Employees’ Pension Plan ‐ CPC 33/IAS 19, Income Tax and Social Contribution.

Electric Sector General Agreement ‐ Agreement signed between generators and distributors defining the rules for compensation for the financial losses due to energy rationing in 2001/2002. The agreement, signed in December 2001, envisaged a loan provided by the Brazilian Development Bank (BNDES) to companies and the extraordinary tariff adjustment for consumers, except low‐income consumers, to recoup losses.

Energy Auctions – Bidding process for the purchase of electric energy, governed by their invitations to bid and related documents, where distributors may buy energy to serve their market.

Energy from Existing Projects – Energy produced by projects that were already operating by December 31, 1999, also called Old Energy.

Energy from New Projects ‐ Electric energy from new plants, new projects in the bidding process and projects granted or authorized until March 16, 2004, which began commercial operations as of January 1, 2000 and whose energy was not contracted until March 16, 2004. It is also called New Energy.

Energy Provision ‐ Sale of energy to large consumers.

Energy Supply – Sale of energy to distributors and sellers who resell it to their clients.

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FIDC ‐ Credit Rights Investment fund, as established by the rules of the Brazilian Securities and Exchange Commission (CVM). Receivables securitization.

18 Free Market ‐ See ACL.

Generator – A company that produces energy.

GSF (Generation Scaling Factor, MRE Factor) - is an Adjustment Factor on Assured Generated Energy that consider a reduction of assured energy of the MRE units when the total energy generated is less than the total assured energy. GSF = Hydraulic Generation in SIN / Total Generation in SIN. Then a GSF <100% indicates that the MRE plants generated less than their physical security.

Installed Capacity (Installed Power Capacity) – Maximum amount of electricity that may be delivered by a generating unit, a hydroelectric power plant or a generating park.

Installed Power Capacity – See Installed Capacity.

MCSD – Mechanism for Compensating Surpluses and Deficits – Reallocation process between Distribution Agents who participate in the Electric Energy Trading Board – CCEE, of surpluses and deficits in sums of energy contracted in the Regulated Contracting Market ‐ ACR. Through this process, distributors can transfer up to 3% of those sums they maintain under purchase agreement with generators to other distributors per year.

MME ‐ Ministry of Mines and Energy – The MME is the Brazilian government’s primary authority the power industry. Its main duties are drafting guidelines for the granting of concessions and issuing directives governing the bidding process for concessions that relate to public services and public assets.

MRE ‐ Energy Reallocation Mechanism – A mechanism for sharing the water source risks associated to the electric energy optimization of the National Interconnected System (SIN) relating to the centralized dispatch of the electric energy generation units. This means that eventual generation shortages by a plant under the ONS may be covered by another plant in the system, with a view to optimize the system. These compensations are remunerated by the Optimization Energy Tariff ‐ TEO. MW- Megawatt – Measurement unit of mechanical or electrical energy, thermal flow and energetic radiation flow, equivalent to one million watts.

MW average - Megawatt average – Measurement unit related to energy in MegaWatt-hour (MWh) divided by number of hours of the period. MWh - Megawatt-hour – Measurement unit equivalent to one megawatt of power supplied or demanded for one hour or a million Watts-hour.

ONS ‐ National Electrical System Operator ‐ An agent instituted by Law 9,648, of 1998, based on the text contained in Law 10,848, of 2004, which is responsible for coordinating and controlling the generation and transmission of electric energy in the National Interconnected System (SIN).

Physical Guarantee – the amount of energy that an agent is authorized to trade under contracts, as energy supply, measured in average megawatts (average MW). It is established by ANEEL as the average amount of energy that a plant can generate and trade, on a sustainable basis, 365 days per year, with a 5% risk factor (this replaces the concept of assured energy).

19 PLD – Spot price – The price disclosed by CCEE, calculated a maximum of one week in advance based on the Marginal Cost of Operations, limited by minimum and maximum prices, in effect for each calculation period and each submarket, based on which the energy sold in the spot market is priced.

Quotas – See quota system.

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Quota system – The mechanism used for proration of physically guaranteed energy and power from the Hydroelectric Plants, renewed in accordance with Law 12.783 (MP 579) and allocated to the National Interconnected System electric energy distribution concessionaires, as per specific ANEEL regulation, aiming to tariff moderateness

Regulated Market ‐ See ACR.

RGR – Global Reversal Reserve – a charge paid on a monthly basis (quota) by energy companies with the purpose of providing funds for the reversal and/or nationalization of energy public services. There is also the legal reserve to finance the expansion and improvement of these services, as well as alternative energy sources for inventory and feasibility studies to use new hydraulic potentials, and to develop and implement programs and projects focused on preventing waste and promoting the efficient use of energy. The annual charge to be collected is equivalent to 2.5% of the fixed assets related to the provision of energy services, limited to 3.0% of its annual revenue.

RTE – Extraordinary Tariff Recomposition – Temporary tariff increase authorized for distributors of regions where energy was rationed in 2001 and 2002, in compliance with Law 10,438, of 2002. Part of the proceeds from this compensation was transferred to generators as a refund for the energy purchased.

Seller – A company that operates in the intermediation of energy purchase and sale transactions.

SIN – National Interconnected System – Electrically interconnected installations, comprising plants and transmission facilities, responsible for providing electric energy to all regions of the country, covering 97% of the Brazilian consumption.

Spot Market ‐ Segment of the Electric Energy Trading Board (CCEE) where the differences among the electric energy amounts contracted and recorded by CCEE agents and the amounts actually generated or consumed and attributed to the respective agents are traded.

Spot Market Power – The energy accounted for by the CCEE resulting from differences between production or consumption and the contracted amount. Positive or negative differences are settled in the spot market and calculated at the PLD (spot price).

TAC – Conduct Adjustment Agreement – A legal instrument entered into between those responsible for certain actions or measures (CESP, in this case) and the federal, state or municipal Prosecution Office to defend the public or collective interest. It generally refers to environment preservation, mitigation or recovery initiatives through the establishment of technical obligations and conditions.

HPP – Hydroelectric Power Plant.