Companhia Energetica de Minas Gerais CEMIG : 4Q23 Financial Statements

CONTENTS
REPORT OF MANAGEMENT FOR 2023	2
MESSAGE FROM MANAGEMENT	2
ABOUT CEMIG GERAÇÃO E TRANSMISSÃO	3
CONSOLIDATED FINANCIAL RESULTS	12
PROPOSAL FOR ALLOCATION OF NET INCOME	22
OPERATION INVESTIMENTS	22
SUSTAINABILITY - ESG PERFORMANCE	24
SOCIAL STATEMENT	45
CEMIG GERAÇÃO E TRANSMISSÃO IN NUMBERS	47
FINANCIAL STATEMENTS	49
STATEMENTS OF FINANCIAL POSITION	49
STATEMENTS OF INCOME	51
STATEMENTS OF COMPREHENSIVE INCOME	52
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY	53
STATEMENTS OF CASH FLOWS	54
STATEMENTS OF ADDED VALUE	56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	57
1.	OPERATING CONTEXT	57
2.	CONCESSION AND AUTHORIZATIONS	60
3.	BASIS OF PREPARATION	63
4.	PRINCIPLES OF CONSOLIDATION	68
5.	OPERATING SEGMENTS	71
6.	CASH AND CASH EQUIVALENTS	73
7.	MARKETABLE SECURITIES	74
8.	CUSTOMERS, TRADERS AND POWER TRANSPORT CONCESSION HOLDERS	75
9.	RECOVERABLE TAXES	77
10.	INCOME AND SOCIAL CONTRIBUTION TAXES	78
11.	ESCROW DEPOSITS	83
12.	CONCESSION FINANCIAL ASSETS	83
13.	CONCESSION CONTRACT ASSETS	87
14.	INVESTMENTS	92
15.	PROPERTY, PLANT AND EQUIPMENT	106
16.	INTANGIBLE ASSETS	109
17.	LEASING	113
18.	SUPPLIERS	116
19.	TAXES PAYABLE	116
20.	LOANS AND DEBENTURES	117
21.	REGULATORY CHARGES	120
22.	POST-EMPLOYMENT OBLIGATIONS	121
23.	PROVISIONS	128
24.	EQUITY AND REMUNERATION TO SHAREHOLDERS	134
25.	NET REVENUE	137
26.	COSTS AND EXPENSES	141
27.	FINANCE INCOME AND EXPENSES	145
28.	RELATED PARTY TRANSACTIONS	146
29.	FINANCIAL INSTRUMENTS AND RISK MANAGEMENT	150
30.	ASSETS CLASSIFIED AS HELD FOR SALE	163
31.	CONTRACTUAL OBLIGATIONS AND COMMITMENTS	165
32.	PARLIAMENTARY COMMITTEE OF INQUIRY ('CPI')	165
33.	SUBSEQUENT EVENTS	165
OPINION OF THE AUDIT BOARD	171
DIRECTORS' STATEMENT OF REVIEW OF THE FINANCIAL STATEMENTS	172
DIRECTORS' STATEMENT OF REVIEW OF THE REPORT BY THE EXTERNAL AUDITORS ON THE FINANCIAL STATEMENTS 173
REPORT OF THE AUDIT COMMITTEE	174
CAPITAL BUDGET	177

REPORT OF MANAGEMENT FOR 2023

Dear Shareholders,

Cemig Geração e Transmissão ('Cemig GT' or 'the Company') submits for your consideration the Report of Management, the Financial Statements, the Opinion of the Audit Board, the report of the Audit Committee and the Report of the Company's external auditors on the business year ended December 31, 2023, together with the statements of the executive officers who have reviewed the financial statements and the related report of the external auditors.

MESSAGE FROM MANAGEMENT

At our annual meeting with investors in March 2023, we highlighted our goals of accelerating the process of transformation of Cemig GT, creating value for shareholders and society. We believe these goals will be achieved only through sustainable management, seeking always to maximize results and with a focus on the client.

Our results in 2023 are evidence of our making the correct decisions in executing our strategy. We report net income of R$2.4 billion for 2023, an increase of 15.25% in relation to 2022, with Ebitda of R$3.4 billion, a significant increase of 13.43%.

We continue to implement the strategy of reducing our foreign exchange exposure, with the repurchase in 2023 of more than US$375 million of our 2017/2018 Eurobond issue, reducing our foreign exchange exposure to US$381 million. Our leverage, as measured by Adjusted net debt/Adjusted Ebitda, was 0.51 at the end of the year, which gives us room for leverage to support the significant program of investments that we have planned for the coming years, while at the same time maintaining appropriate and attractive remuneration for our shareholders.

We have two Solar Photovoltaic Plants (UFVs) - Boa Esperança and Jusante - approximately 90% completed, and expected to start operation at the end of first half 2024. For estimated investment of R$850 million, these will add 188 MWp to our generation portfolio.

Once again our operational expenses were completely covered by the tariffs in our transmission businesses, with Ebitda in both businesses higher than the required regulatory level. We expect this to be repeated in 2024.

We are the largest trader in the Brazilian electricity sector for the clients of the Free Market, with a history of significant profitability and success in our strategies for managing the balance of power received and placed. But even considering this success story, 2023 was a year which we can especially commemorate. We achieved Adjusted Ebitda of R$3.4 billion on Cemig GT, which was the result of an appropriate strategy in Trading, anticipating market movements, in a context of favorable weather conditions.

We are well positioned to operate in Brazilian electricity trading market in the coming years, even with in spite of a challenging scenario, with prices lower due to a current imbalance in the market, and a significant excess of supply.

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

The Cemig, our Parent Company, is recognized by the society for the sustainability of its operations: 100% of the energy comes from renewable sources - this is reflected in its inclusion in the main international and Brazilian sustainability indices, being the only energy company outside Europe included in the Dow Jones Sustainability World Index, and indeed it have been in that index for 24 consecutive years.

All the results we have been reporting in recent years make us optimistic for the future, and convince us that we are on the right track: that the strategy we have adopted of focusing on investments in the state of Minas Gerais, in businesses in which we have control of operations, with discipline in allocation of capital and operational efficiency, has proved to be right, with benefits for society and creation of value for our shareholders.

We thank our employees, shareholders and other stakeholders for the sum of their efforts to ensure that Cemig continues to play a protagonist role in the Brazilian power industry.

ABOUT CEMIG GERAÇÃO E TRANSMISSÃO

Cemig GT began its activities in January 2005, as a result of the spin-off of the activities of Companhia Energética de Minas Gerais ("Cemig"). Since Cemig GT was created it has always shown its vocation for energy generation through hydroelectric plants. Building very large projects, and overcoming immense challenges, it became a landmark in the history of major power plants by reason of its engineering and the scale of the power plants that it built.

Our mission, vision and values

Ethical Principles and Code of Conduct

The Cemig Code of Conduct

On April 18, 2022 the Board of Directors of Cemig approved the new Cemig Code of Conduct (http://ri.cemig.com.br), which was reviewed and revised with participation by employees of all the areas of the Company. It is based on the pillars of Cemig's identity and policies: respect for life, integrity, generation of value, commitment, innovation, sustainability, social responsibility, and alignment with the Company's cultural identity. It constitutes a pact which aims to incorporate common values, objectives and behavior, developing a culture of integrity. The Code is to be complied with by all the people to whom it is addressed: managers, members of the

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

Board of Directors, members of committees under the bylaws, employees, interns and outsourced parties who have any established relationship with the Company's stakeholders.

The Ethics Committee

The Ethics Committee is responsible, among other attributions, for coordinating action in relation to management (interpretation, publicizing, application and updating) of the Statement of Cemig Code of Conduct, including assessment of and decision on any possible non- compliances.

The Commission is made up of 8 members including Superintendents and Managers, appointed by the Executive Board. It may be contacted through our Ethics Channel - the anonymous reporting channel on the corporate Intranet, or by email, internal or external letter or by an exclusive phone line - these means of communication are widely publicized internally to all staff. These channels enable both reports of adverse activity and also consultations. Reports may result in opening of proceedings to assess any non-compliances with Cemig's Statement of "Cemig Code of Conduct".

OUR BUSINESS

Area of operation

The Company operates in several regions of Brazil, with the greatest concentration in the Southeast.

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

Generation

Underlining our commitment to being a sustainable company, all of our generation facilities are entirely sourced from clean and renewable energy - hydroelectric, wind and solar.

Composition of the energy matrix

Hydroelectric

Wind

Solar

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

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Installed capacity

Including its subsidiaries and jointly controlled entities, on December 31, 2023, Cemig had 68 plants in operation (57 hydroeletric, 9 wind and 2 solar), with installed capacity of 5,189.96 MW, as follows:

Generating plant

Theodomiro Carneiro Santiago

Nova Ponte

Irapé

Três Marias

Salto Grande

Queimado

Rosal

Sá Carvalho

Itutinga

Camargos

Belo Monte

Aimorés

Amador Aguiar I

Amador Aguiar II

Funil

Igarapava

Eólicas

Outras

Total

Installed capacity

(MW) (1)

1,192

510

399

396

102

86.6

55

78

52

46

1,313

148.5

94.3

82.6

81

49.7

175.5

328.8

5,190

(1) It is presented considering Cemig's share in the project.

Transmission

The Company operates and maintains 40 substations and 5,060 km of transmission lines, operating at 230kV, 345kV and 500 kV, as part of Brazil's National Grid system. It also has assets that it operates and maintains as an access point, in eleven substations of other transmission agents.

In 2023, Cemig GT has transmission assets in 10 other companies, with whom it has operation and maintenance contracts, in 14 substations (of which tow are not substations of Cemig GT), and 95 km of transmission lines.

Trading

Cemig (the Parent Company) is a leader in serving the free market in Brazil, having expanded its area of operation to other states, consolidating its position with the addition of new costumers in the states where it already operates, especially Minas Gerais, São Paulo, and Rio Grande do Sul. Currently, Cemig has customers in 25 States and Federal District.

Maintaining the Parent company's corporate strategy of serving the market with the purpose of delivering energy to its customers, in the third quarter of 2021, the process of segregating the trading business began, following its partial transfer from Cemig GT to Cemig.

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

Cemig Free Energy

Focusing on new markets, Cemig is innovating with the launch of 'Cemig Free Energy', an innovative e-commerce system that offers medium-voltage customers the possibility of making simulations of details and costs of supply, contracting renewable energy and resulting in discounts on the customer's energy bill.

This new platform will revolutionize the sector - it has been planned to make the entire process of electricity consumption simple and rapid, enabling energy to be contracted through a 100% digital system. It will serve customers from all regions of the country who want to migrate to the Free Market - an environment in which Cemig is already a leader and established as a benchmark in the sector.

THE MACROECONOMIC ENVIRONMENT

The year 2023 began with an expectation of low growth and annual inflation above 5% (the Brazilian Central Bank's Focus Report indicated growth of around 0.8%, and inflation of around 5.3%). The outlook was that the changes in taxation would affect administered prices, especially fuels, keeping inflation high in spite of the negative effects of an increase in interest rates on economic activity. However, there were benign surprises on both fronts: According to the Central Bank's most recent Focus Report, economic growth was stronger (2.9%), and inflation was lower (4.5%).

One of the factors contributing to the better than expected performance was the normalization of production chains, and the fall in commodity prices, both in turn contributing to deflation both globally and in Brazil.

Domestically, a record harvest - much higher than initially expected - contributed to higher GDP, both directly (with about 1.2 p.p.) and indirectly (through the multiplier effects of the income generated in the sector).

The better agricultural supply also helped reduce prices domestically, especially of food. In 2023, the IPCA index posted deflation, of 0.58%, in the Foods and Beverages price group. In spite of the re-imposition of taxes on fuels, and the high inflation in administered prices (9.12%), inflation in the full year was 4.62%, within the target range (the upper limit was 4.75%).

The process of slowing inflation in the year, with signs of decompression in core prices, enabled the Monetary Policy Committee to start cutting the Selic rate - which was 13.75% at the start of the year, and closed the year at 11.75%.

There was another significant factor at the end of the year: promulgation of a tax reform. Its main

components are: implementation of a broad and non-cumulative system for the taxation base; standardization of the legislation; simplification of the system, providing some reduction in distortions of allocation, and increasing the productivity of the country's economy. In the wake of the reforms approved in 2023, S&P upgraded its risk classification for Brazilian debt, which helped to consolidate the movement of appreciation of the exchange rate in the final days of the year.

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

REGULATORY ENVIRONMENT

Generation

In 2023, Brazil's hydrological situation was close to the historical average, with Affluent Natural Energy (ANE) measured as 102% of the long-term average (MLT) in the Brazilian National Grid as a whole. Within this overall figure, the great highlight was a very high ANE in the Southern Region (171% of the long-term average), due to formation of the El Niño phenomenon; while conversely, the effect of El Niño in Brazil's Northeast Region was negative, with ANE measured as 63% of the long-term average.

In this scenario, and with the need for measures to preserve and maintain levels of storage, the Electricity Sector Monitoring Committee (CMSE) worked with the National System Operator (ONS) to coordinate operation of the system with the thermal generation plants at their minimum operating levels throughout the year. As a result, the level of storage in the system was close to historic maximum levels for most of the year, reaching 88% at the end of April, and 60% of overall capacity at the end of December.

With good hydrology, high storage and large structural oversupply, the spot price (PLD) for the Southeast and Center-West in 2023 averaged R$72.17/MWh in 2023, compared to R$58.99/MWh in 2022. For 8 months of the year the PLD remained at its floor value (R$69.04/MWh), but had a peak at R$84.40 in November, due to the need for dispatching of thermoelectric plants to meet high single peaks of demand during heatwaves. The better hydrological situation in 2023 led to the average of the Generation Scaling Factor (GSF) being higher in 2023, at 0.90, compared to 0.86 in 2022.

Review of physical guarantee levels

Ministerial Order 709/GM/MME of November 30, 2022 revised the physical guarantee levels of the hydroelectric plants that are subject to centralized dispatch in the National Grid, as from January 1, 2023.

These included 10 Cemig plants. The changes did not have a material effect, as shown below:

Plant

Theodomiro Carneiro Santiago Nova Ponte

Três Marias

Irapé

Salto Grande

Queimado (Consortium) Sá Carvalho

Rosal

Itutinga

Camargos

Total

Entitie

Cemig Geração e Transmissão

Cemig Geração e Transmissão

Cemig Geração e Transmissão

Cemig Geração e Transmissão

Cemig Geração e Transmissão

Cemig Geração e Transmissão

Sá Carvalho

Rosal Energia

Cemig Geração Itutinga Cemig Geração Camargos

Previous physical

guarantee

(MW average) (1)

499.70

270.10

239.00

207.90

75.00

67.90

56.10

29.10

28.00

21.00

1,493.80

Revised physical

guarantee

(MW average) (1)

474.80

256.60

227.10

197.90

73.80

64.60

54.40

27.70

26.60

21.60

1,425.10

Change, %

(4.98)

(5.00)

(4.98)

(4.81)

(1.60)

(4.86)

(3.03)

(4.81)

(5.00)

2.86

(4.60)

1. These figures are for 100% of each plant, not taking into account the Company's equity interest, where applicable.

Transmission

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

The Company's revenue from transmission comprises the sum of the revenues of all its transmission assets. Thus, the concession contracts set values for initial Annual Permitted Revenues (RAP) for these assets, as the basic revenue financing the concession holder's operation.

This being a regulated market, Cemig GT's revenue from its transmission assets is set by Aneel, and updated, in three ways: by (i) the Periodic Tariff Review, any (ii) Extraordinary Tariff Review, and the (iii) Annual Tariff Adjustment. Brazil adopts the revenue-cap model for regulation of transmission - setting a ceiling for the revenue to be earned from transmission during the period. Cemig GT works with the regulator for recognition of its costs in the processes of reviews, price adjustments, and ratification of Annual Permitted Revenues (RAPs) for new assets.

A Periodic Tariff Review of the RAP was scheduled for 2023, but postponed by the regulator to 2024, through Aneel Dispatch 402/2023. Thus in 2023 there was the normal annual adjustment of transmission revenue. This process aims to (i) adjust the approved RAP by the adjustment index specified in each concession contract; (ii) add a component of new RAP for improvements that have started commercial operation in the tariff cycle in question (July of the previous year through June of the year of the adjustment); and (iii) calculate the Adjustment Amount, which is a financial component referring to the adjustments in RAP of the prior cycles.

The result of the Annual Adjustment of the RAP for 2023-2024, of July 1, 2023, was published by Aneel Ratifying Resolution (ReH) 3,216/2023. The adjustment to the RAP of Cemig GT (Concession Contract 006/1997) was 31%. This comprised: the effect of the reprofiling of the Financial Component of the RAP, the Annual Cost of the Assets within the National Grid, updating of the previously ratified revenue by the IPCA inflation index, and recognition of new components added for strengthening or improvement of the grid.

The values of the RAP of Cemig GT - Itajubá (concession contract 079/2000) and of Companhia de Transmissão Centroeste de Minas Gerais - Centroeste (concession contract 004/2005) were adjusted upward by -4.44% for the 2023-2024 cycle (from the previous cycle), reflecting inflation as measured by the IGPM index in the period.

In December 2023, Aneel judged the requests for reconsideration to ReH 3,216/2023, resulting in the publication of Dispatch 4,675/2023, which recognized adjustments in the RAP and in the Adjustment Amounts that had been previously ratified, notably for the revenues of the contract 006/1997. The financial effects of these adjustments will be perceived in 2024-2025, when these RAPs and Adjustment Amounts are received.

RAP for 2023-2024 cycle

Through ReH 3,216/2023, Aneel established the RAPs for the 2023-2024 cycle, in effect from July 1, 2023.

Concession contract - 006/97

Concession contract - 079/00

Concession contract - 004/05

	Readjustment index				RAP 2022-2023 cycle
				R$MM
	IPCA	825.6
	IGPM				45.0
	IGPM	31.5
					902.1

RAP 2023-2024 cycle

R$MM

1,084.6

43

30.1

1,157.7

Var %

31.37%

-4.44%

-4.44%

28.33%

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.

The increase was mainly due to the effect of the re-profiling of the financial component of Cemig GT's existing assets (RBSE) - 006/1997, whose value for the 2023-24 cycle was 120% higher than that of the 2022-23 cycle, in addition to the entry of new works and correction of revenue by the index in the concession contract.

The total, including the effect of the adjustment in the amount of R$24 million, revenue of the transmission companies for the 2023-24 cycle - the aggregate for the contracts of Cemig GT, Itajubá and Centroeste - was R$1,134 million, a total increase of 28.33% over the previous cycle.

In December 2023, Aneel judged the requests for reconsideration of ReH n. 3,216/2023, resulting in the publication of new Annual Permitted Revenues and Adjustment Installments for the 2023- 2024 cycle, by means of Order n. 4,675/2023.

According to the aforementioned Order, the RAPs of Cemig GT's transmission assets in operation now amount to R$1,179 million, an increase of R$12 million in relation to that approved by ReH no. 3,216/2023. The main adjustment occurred in the RAP of contract 006/1997, which increased by R$12 million, while contract 006/2011 had a negative adjustment of -R$0.04 million due to Aneel's self-certification regarding the result of the 2021 review. The adjustment installments were also rectified to -R$10.4 million, resulting in a gain of R$14 million compared to that approved by ReH n. 3,216/2023. The main adjustment in this component was the rectification of retroactive revenues associated with new works. The financial effects of the increase in the RAP and adjustment installments will only be seen in 2024, when these revenues are actually received.

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Av. Barbacena, 1200 - Santo Agostinho - 30190-131 Belo Horizonte, MG - Brazil - Fax [phone] - Tel.: [phone]

This text is a translation, provided for information only. The original text in Portuguese is the legally valid version.