Combating fraud and energy theft An integrated field

Combating fraud and energy theft: An integrated field force and management approach Nirlei Aparecida Ferreira Newton Augusto Magalhães dos Santos

AES Eletropaulo in Numbers

Operational Structure Cajamar Pirapora do Bom Jesus Santana do Parnaiba Barueri Itapevi VGR JAN Anhembi Osasco Oeste Embu TSE Cotia Itapecerica da Serra São Lourenço da Serra Juquitiba Leste CAB Embu-Guacu Centro SC S Santo Mauá André São Paulo Sul DIA Grande ABC Ribeirão Pires RGS São Bernardo do Campo OESTE SÃO PAULO SUL ANHEMBI CENTRO LESTE GRANDE ABC

Electric System 14 ETT’s 102 delivery points USINAS CTEEP Transmission over 230. 000 V. 6 Fraud Dispatch Center Substransmission Lines 138. 000 V or 88. 000 V COS System Operation Center RESIDENTIAL 140 ETD’s 106 ETC’S 5. 000 CONNECTIONS 185. 000 DISTRIBUTION TRANSFORMS ETC – INDUSTRY IN HV 1. 000 POLE DISTRIBUTION SECUNDARY 127/220 4 Public Ilumination Dispatch Center 530. 000 LIGHT BULBS (SP) 281. 000 LIGHT BULBS (ABC E OESTE) ETD DISTRIBUTION PRIMARY CIRCUITS 13. 800 V 1700 PRIMARY CIRCUITS 18. 700 KM GRID COD Distribution Operation Center COMMERCIAL / INDUSTRIAL -MT 10. 000 CUSTOMERS

Eletropaulo Operation Center CEAC Customer Attendance Center COS System Operation Center Area: 13. 139 m 2 Employees: 335 COD Distribution Operation Center

Total Losses Energy: 2182 GWh (5, 6%) Cost: R$ 195 MM CH 60874 JGL 2 VMA 11 EP 2193 OS CEL SCON E VA ET 80249 SD IN AV. L ORIA NIA DA GL RUA COLÔ ET 96582 RUA TUB ARA NA Energy: 1730 GWh (4, 4%) Cost: R$ 600 MM Energy: 1233 GWh (3, 2%) Cost: R$ 430 MM

Energy Loss Evolution (%) Eletropaulo Total Losses 13, 3% 14% 8% 6% 4% 2% 12, 3% 11, 3% 12% 10% 13, 2% 8, 7% 4, 2% 9, 1% 5, 8% 7, 7% 7, 60% 3, 2% 3, 6% 5, 5% 5, 6% 1999 2000 2001 2002 2003 2004 3, 2% 0% Technical Losses Illegal Connec Fraud / Theft Non Technical Losses

Energy Loss Evolution (%) Total Losses - LTM 13, 5% 13, 09% 12, 84% 13, 0% 12, 48% 12, 67% 12, 77% 12, 50% 12, 41% 12, 54% 12, 34% 12, 26% 12, 23% 12, 0% 11, 5% 11, 0% 10, 5% c 04 De v 04 No 4 t-0 Oc 04 p. Se 04 g. Au 4 l-0 Ju 04 n. Ju -0 4 ay M r 04 Ap -0 4 ar M b 04 Fe n 04 Ja De c 03 10, 0%

Loss Reduction Program - 2004 MAIN ACTIONS

Loss Reduction Program Main Initiatives 2004 • • Theft and Fraud of Electric Energy; Illegal Connections and Minimum Fee; Register Errors; Reactive Energy Collection. MWh Recovered setembro 842. 758 2004 Total Recovered Energy Recovered 2005 • 320 Crews at Fraud Combat • 500000 inspections

Loss Reduction Program – Campaigns

Loss Reduction Program – Other Actions DENUNCIATION HOT LINE Agreement with the Denunciation Hot Line, a phone service by which denunciation on electric energy theft and fraud can, anonimously, be made. CALL CENTER Negotiation of Fraud via Call Center, which is one more channel for contact with irregular status customers, and it facilitates the assessment and discussion of debts.

Loss Reduction Program – Other Actions LOSSES PER SUBSTATION Geographic identification of areas with greater potential loss recovery, via control of the energy measured in the Distribution Substations (SEs) secondary and comparison with the amount of billed energy to the respective customers. INVESTIGATION Investigation of detected frauds in order to identify and arrest the infractors, restraining future actions of the kind.

Loss Reduction Program – Other Actions PARTNERSHIPS Develop partnerships and agreements with the Public Power and other concessionaires aiming the search for synergies and internal controls improvement.

“Atende CI’ - Loss Reduction Program ATENDE CI • The Atende CI system allows a corporate management of field inspections, enabling a higher control of the steps of detection, action and collection of the irregularity, increasing the company Losses Program efficiency. • The integrated management of crews turn the process of fraud combat more efficient once it standardizes the criteria, the methodologies for irregularities identification and the entire detection history record.

Integration of Systems Mainframe Binary Dataware House Database Grade GPM Meters SAP INSP Fraud Management / Anomalies = SGFA Inspections Database ATENDE System §History of inspections §Reason of cancel inspection §Criiterium §Consumption §Attendance §Etc ATENDE Irregular Comsumption New Module ATENDE Access Calculus Center History Rate TOI’s / TCD’s Schedule Negociations Oracle Billing Collection Anomalies Oracle

Operation Flexibility Audits through cross-inspections Any Unit is able to audit areas already inspected with no fraud detected, by just changing the radio frequency. ANHEMBI LESTE CENTRO OESTE SÃO PAULO SUL GRANDE ABC

Operation Flexibility Reallocation of the Inspections from the Unit that is below Target to help neighbor Units Unit exhausted the management level ANHEMBI Reallocation carried out through Atende System Central LESTE CENTRO OESTE SÃO PAULO SUL GRANDE ABC

Operation Flexibility The system allows areas unification on the weekends and night shift (smaller inspections flow). It is a 24 -hour / seven-day operation. ANHEMBI ANHEMBI LESTE CENTRO CENTRO OESTE SÃO PAULO SUL GRANDE GRANDE ABC ABC

Insp. DW System - Generation of Suggestions for Inspections

Fraud Management Terminal “on line” Counters

Productivity per Electrician, Unit

Productivity per Crew, Unit

Localization Spans, Repair per Record

Management Fraud Terminal – Graph Picture

Indexes - Fraud Inspection Attendance Time – TAI TIME INTERVAL BETWEEN THE START OF DISPLACEMENT AND THE END OF INSPECTION. Displacement Time – TD TIME INTERVAL BETWEEN THE MOMENT OF AUTHORIZATION FOR DISPLACEMENT OF THE INSPECTION CREW THROUGH THE MOMENT OF ARRIVAL AT THE INSPECTION SITE. Inspection Time – TI TIME INTERVAL BETWEEN THE ARRIVAL OF CREW AT THE SITE AND END OF INSPECTION. Time “Non Aggregated” – TNA TIME INTERVAL BETWEEN THE END OF INSPECTION AND START OF OTHER INSPECTION AND THE TIME OF THE BEGINNING OF THE JOURNEY UP TO THE FIRST DISPLACEMENT AND THE END HOUR OF THE LAST INSPECTION OF THE JOURNEY. TNA First Inspection TAI = Time of Attendance TD HID = Displacement Beginning Hour Second Inspection TAI = Time of Attendance TI HL HF Localization End Hour TD HID = Displacement Beginning Hour TI HL HF Localization End Hour