BRAZILIAN ELECTRIC POWER CO | CIK:0001439124 |

 

NOTE 7 — ACCOUNTS RECEIVABLE, NET

 

 

(a) Electricity Trading - PROINFA

 

Electricity trading transactions within the Incentives for Alternative Electricity Sources Program (PROINFA) generated a positive net balance of R$ 353,933 in the 2017 fiscal year (a positive net balance of R$ 693,094 December 31, 2016), such balance which did not affect the fiscal year net profit and loss of the Company, as this amount is included under the Reimbursement Obligations heading. In the retail consumers balance an amount of R$ 532,812 from PROINFA is recorded for the Company (R$ 431,471 December 31, 2016).

 

(b) Debt rollover

 

Debt rollover credits relate to a credit assignment agreement between the Federal Government and the subsidiaries Furnas and Eletrosul, pursuant to the Public Sector Finance Correction Program (Law No. 8,727 of November 5, 1993). The Federal Government assumed, refinanced, and rescheduled debt in 240 accounts that had fallen due since April 1994. If a balance remains unpaid at the end of a 20-year period, as the Federal Government delivers only the resources received from the states, which in turn are restricted by law in commitment levels of revenues, the installment will be extended for another 120 months.

 

Based on art. 14 of the Complementary Law no. 156 of 2016, there were negotiations relating to such credits, which resulted in discharge of the debt by the National Treasury, in the amount of R$ 1,388,762, on the 1st of August, 2017. On December 31, 2017, the company’s net profit and loss was impacted by the amount of R$ 64,890, which is related to interest and monetary correction originated by this discharge of debit.

 

(c) Allowance for doubtful accounts (ADA)

 

The Company establishes and maintains provisions, based on an analysis of the amounts included in expired receivables and the history of losses, the total amount of which is considered by the Management to be sufficient to cover any losses in the realization of these assets.

 

The balance of the ADA is as follows:

 

 

(c.1) In 2015, a provision for uncertain credits on the third installment of a renegotiation of debts with the CEA (installment due in January, 2015) was formed. The amount has been adjusted on a monthly basis and as of December 31, 2017 totaled R$ 233,861 (R$ 267,217 as of December 31, 2016).

 

(c.2) The subsidiary Furnas has a provision established in 2007 totaling R$ 293,560 (R$ 293,560 as of December 31, 2016). This provision represents historic amounts relating to the trading of energy within the defunct Energy Wholesale Market (MAE) for the period from September 2000 to September 2002, settlement of which is suspended due to injunctions granted in suits filed by electricity distribution concessionaires against the ANEEL and the MAE (now the CCEE).

 

Changes in the ADA for customer electricity accounts in the consolidated statement are as follows:

 

 

The establishing and reversal of the ADA were recorded in period profits and losses as Operating Provisions (Note 41). The amounts recorded as ADA are recorded as definitive losses when there is no longer any expectation of recovery of the funds.