ENVIRONMENTAL

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Environmental risk management is on the radar of the Company, which has invested in initiatives to protect and recover the environment, mainly of the São Francisco River

WATER

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Almost all energy generated by Chesf comes from hydroelectric plants, and management of water resources follows the Eletrobras Policy, supported by Law 9,433/97. In the hydroelectric generation process, there is no degradation of this resource, since turbine water returns to the body of water without changing its characteristics. However, the Company evaluates and monitors the water quality of the reservoirs under its responsibility, in accordance with legal parameters.

An important action is related to protecting aquatic biodiversity, where Chesf develops the Aquatic Ecosystems Monitoring Program, in the municipalities of Sobradinho (BA), Itaparica (PE/BA), Paulo Afonso Complex (BA), and Xingó (AL/SE). Additionally, in compliance with the environmental conditions established by IBAMA, Chesf carries out programs during the reduced river flow, such as: Water Quality Monitoring, Monitoring of Saltwater Intrusion (mass of salt water that forms at the mouth of the river), and Rescue of Ictiofauna. Stocking with fish of native species in the São Francisco reservoirs, as well as in the Lower São Francisco region, carried out by the Paulo Afonso fishery.

The Company also monitors the rational use of this resource in its facilities and operations, generating monthly information by regional management, which considers local particularities and establishes preliminary goals in areas where meters already exist. A project is still under analysis to gradually increase the number of own meters in the facilities, especially to combat waste and, with this, to promote the reduction of consumption, effluent generation, and business costs. During the year, 112,920 m3 from the public supply network were used and another 82,427 m3 from underground collection.

Regarding disposal of effluents from operational and administrative areas, the Company has its own treatment plants in the projects, or, for units that do not have a treatment plant, domestic effluent is disposed of in the public sewage network. > 103-2, 103-3, 303-1, 303-2, 303-3, 306-1, 306-5 >

Main water resources management initiatives

Chesf actively participates in discussion forums on the subject of water resources. Some of the main groups are: the National Council of Water Resources (CNRH), the São Francisco River Basin Committee, the Contas River Basin Committee, the Water Resources Council of the State of Alagoas (CERH-AL), the Water Resources Group of ABRAGE (Brazilian Association of Energy Generating Companies), and GTRH of the Eletrobras Companies. Many of the topics discussed in these forums subsidize the definition of actions and procedures for managing water resources, such as:

> Specific procedures to control flooding through the issue of inflow volume forecasts to reservoirs and allocation of holding volume in the reservoirs during the wet season.

> Communication procedures for local communities on river and reservoir conditions during critical events.

> Monitoring, in real time, the information on levels upstream (reservoirs) and downstream of the projects operated by Chesf.

> Georeferenced survey of areas subject to flooding for various levels and flows.

>Compliance with the operating guidelines for the reservoirs that form the National Interconnected System (SIN).

> Survey and monitoring of flow restrictions and levels in the river basins where there are projects in operation by the Company.

CHESF AND THE SÃO FRANCISCO RIVER BASIN

The year of 2017 was another period in which Chesf’s power generation was influenced by the low rainfall volume in the São Francisco river basin. The crisis, which had already been occurring since 2013, reached its worst point this year, when the main reservoir in the Northeast region, Sobradinho, reached the lowest flow volume at 550 m3 per second (normal volume 1,300 m3). This stimulated the search to diversify the energy matrix by increasing thermal and wind generation, and receiving exchange from other regions of the SIN, which, consequently, reduced dependence on the São Francisco River.

Today, the volume of the Sobradinho reservoir is in the recovery phase. The Company intensified its relationship with nongovernmental entities, communities, water supply companies, and the Government of the four states involved (Pernambuco, Sergipe, Bahia, and Alagoas) to monitor and reduce water withdrawal from the São Francisco River. The partnership evaluated the possibilities of each party involved in re-adjusting its activities and impacts in order to gradually contribute to the recovery of the volume of the river.

Understand how Chesf operates in the São Francisco River basin:

RESULTS OF THE SOCIAL ACTION PLAN (PAS)

Among the initiatives that aim to mitigate the environmental impacts of Chesf’s projects, we highlight the Social Environmental Action Plan (PAS). The Plan has been developed since 2008, in compliance with the environmental requirements of the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA), for the renewal of the License to Operate (LO nº 509/2006) of the Paulo Afonso Hydroelectric Complex and renewal of the License to Operate (LO nº 147/2001) of the Hydroelectric Plant - HPP Xingó.

The PAS is a shared environmental management process, with pillars in communication, education and environmental health, in permanent and continuous action idealized by Chesf and constructed in a participatory manner, from the experience with the communities of seven municipalities of the area of influence of the Hydroelectric Complex of Paulo Afonso and Xingó.

In 2017, actions were carried out in four categories, involving over 3,700 people, adults and children, in educational activities in the areas of solid waste, preservation of natural resources, afforestation, and others. The participative social and environmental diagnosis, which also marks the beginning of the construction process of the Xingó PAS this year, involved social players from riverside communities identified within the range of four to six kilometers.

In 2017, more than 3,700 people participated in educational activities at Paulo Afonso and Xingó Complex

CLIMATE CHANGE

Global climate change and possible changes in environmental legislation are seen as threats to Chesf’s activities, while at the same time an opportunity to expand its generation from renewable sources. Thus, the Company specifies its strategies regarding climate change in its Declaration of Commitment, which guides practices and planning for the future.

All work is motivated by the Eletrobras Holding, which has developed studies since 2015 on risks and opportunities on this topic in order to assess the impact on the business. The Climate Strategy Working Group (WG3) was created in the Environment Committee, with representatives from all Eletrobras companies, in order to discuss adapting to climate change as a result of the decrease in water availability for generation of electricity and the greater number of more severe weather events that have been affecting the country’s energy sector.

In this sense, Chesf has been investing in diversifying the energy matrix, with generation by wind source, and developing projects for solar photovoltaic generation, guaranteeing energy security when there is a low water level in reservoirs at hydroelectric plants that are part of the National Interconnected System. In addition, regarding risks, Chesf seeks to anticipate potential risks by applying preventive measures, such as recording its Greenhouse Gas (GHG) emissions since 2003, through energy efficiency programs and reduced consumption of fossil fuels by the land fleet.

The Company also develops Clean Development Mechanism (CDM) projects to generate carbon credits, in accordance with the Kyoto Protocol, and recognizes the opportunities arising from voluntary agreements with the emergence of alternative markets for developing projects and marketing carbon credits, when not eligible under the United Nations Framework Convention on Climate Change (UNFCCC) standards. > 103-2, 201-2 >