Government and regulatory bodies

Relationship with governance agencies

Every year, on Chesf’s anniversary, we hold an event that brings together authorities from Eletrobras, other companies and the Ministry of Mines and Energy. Eventually, our president or officers are invited to participate in actions at the Municipal Chamber, State Assembly or National Congress, such as lectures on water resources, the Sobradinho plant, among other topics. We also promote inauguration events, such as the Floating Solar Power Plant of Sobradinho, in 2019, which was attended by the President of the Republic and Ministers of State.

Legal and regulatory compliance management

Regulatory management at Chesf consists of integrating the regulatory processes with the various areas of the Company, promoting articulation with the regulatory agencies, especially Aneel, and strengthening the regulatory culture internally, in accordance with the guidelines of our Board of Executive Officers. It also involves the application of the Integrated Asset Management principles, focusing on maximizing the value of assets and minimizing losses, considering the rules defined for the electricity sector.

One year after the creation of the Superintendence of Regulation, linked to the Operations Board, which now has a structure of three departments, expanding its competencies in Asset Management, Transmission Contract Management and Regulatory Aspects, the results achieved ratify the need to invest in these processes in a more integrated manner and aligned with Chesf’s strategic objectives. The strengthening of the Regulation structure brought solid and significant results for the Company, among which are worth highlighting in 2019:

the reduction of fines to the lowest annual historical amount ever received by Chesf: R$ 690 thousand;
an increase of more than R$ 12 million in the generation revenue of Chesf’s shareholder plants, resulting from the Company’s claim for the change in the Unavailability Adjustment calculation, as explained in Aneel’s Technical Note;
an increase in the number of transmission contracts resulting from the large number of authorizations for new accesses to the National Interconnected System (SIN);
the coordination, by the Asset Management area, of the Transmission Tariff Review process for the largest Chesf concession contract (Basic Network), which involves an Annual Allowed Revenue (RAP) of the order of R$ 187 million, over 1,400 revenue items and 5,000 associated physical assets. Such work, started in 2019 and still in progress, aims to prepare the Company for the inspection stage by Aneel;

survey and prioritization of regulatory requirements and best practices in Asset Management for implementation at ProERP/SAP, in order to allow greater integration and integrity in the information on the life cycle of assets; and
the study and preparation of the adjustments that must be made to meet existing and upcoming regulatory frameworks, participating in Working Groups with Eletrobras companies.

In 2020, we will face the challenge of adapting our remote assistance systems, in accordance with Aneel’s Normative Resolution 864/2019 and several Network Procedures Submodules, along with the requirements regulated by the General Law of Personal Data Protection (No. 13,709/2018). Important changes are also expected in the coming years as a consequence of the new regulatory framework being proposed by the Ministry of Mines and Energy from the unfolding of Public Consultation 33.

Environmental and socio-economic compliance management

There is the regulatory management related to environmental and socioeconomic compliance of our enterprises and facilities. In this sense, our main objective is to avoid negative impacts, but when this is not possible, mitigating measures are established, which occurs during the licensing process.

We conduct diagnostic studies and evaluation of the potential impacts at the time of implementation of the undertakings, which are followed up until the energization phase, considering all relevant aspects, in order to minimize the risks of delays and penalties imposed by environmental agencies or those involved in the licensing process. The assessments are consolidated monthly in the form of reports and action plans, and the results are presented to the Engineering Department at monitoring meetings. For units in operation, the environmental area monitors the environmental and socioeconomic regularity of the generation and transmission units and issues periodic reports on the licensing status.

We rely on the Environmental Licensing System (Sislic), a computerized tool that allows you to register and share information and documents related to legal compliance. Our performance in this sense is guided by the Environmental Policy and the Social Responsibility Policy of Eletrobras companies.

It is worth noting that Chesf’s investment in structuring social projects has as its main objective to enhance the positive impacts on the communities in which the projects are implemented, also with the purpose of maintaining legal compliance. Regarding the awareness initiatives, the main ones were the May 18 Campaign – Sexual Violence Against Children and Adolescents (Lecture by Giovani Santoro – Pedophilia on the Internet); and the 16 days Campaign of Activism for ending violence against women. Complaints are received and dealt with by the Ombudsman channel or the Citizen Information Service (SIC).

Additionally, we have an environmental channel for exclusive demands. We highlight that in 2019, we participated in Working Groups with Eletrobras companies to analyze changes in current legislation. The Environmental Policy was also updated, including the review of its objectives, principles, and guidelines, and was ratified by our Board of Executive Officers. Also, this year, we began reviewing and improving Sislic.

Business ethics and integrity

Main documents guiding ethics and integrity at Chesf:

Code of Ethical Conduct and Integrity;
Anti-corruption policy of Eletrobras companies;
Conflict of Interest Management Policy of Eletrobras companies; and
Regulation of the Eletrobras Companies Integrity Program (represents a tactical unfolding of the strategic guidelines of the Anticorruption and Conflict of Interest Management Policies).

We have adopted the Eletrobras Companies Integrity Program, also called the “Eletrobras Five Dimensions Program”, whose objective is to prevent, detect and remedy situations of fraud and corruption. The following infographic shows the composition of the Program.

We execute controls related to the Sox Certification (Sarbanes-Oxley Act), which are tested annually by internal and external audits. It is worth mentioning that, in the 2019 cycle, there were no reports of deficiencies related to the Integrity Program. We can also mention the integrity audits carried out by control agencies, such as the Office of the Comptroller General of Brazil, in a process carried out in 2019, 88% of the recommendations recorded by the agency in previous work in 2016 were considered to have been complied with and the rest is covered by action plans. Additionally, the following indicators are monitored quarterly:

employees trained in anti-corruption policies and procedures;
supplier due diligence;
critical suppliers trained in fighting corruption; and
business partners trained in fighting corruption.

Also, in 2019, we consolidated the process of evaluating the integrity of third parties, which involves:

supplier evaluation with automation of the due diligence form application, improvement of the background check tool and improvements in integrity reports;
evaluation of sponsorships, donations, agreements and social actions;
evaluation of governance members (board directors and members) with the improvement of the background check tool and with a broader scope of the opinion issued by the integrity area; and
integrity assessment in disinvestment processes.

For further information about this theme consult about reporting and integrity management channels at Corporate governance and ethics > Business ethics and integrity.