ASMAE, Andersen Consulting and CEPEL Bring e-Commerce Trading to Brazil's Deregulated Electricity Market.

Business Editors

SAO PAULO, Brazil--(BUSINESS WIRE)--April 27, 2000

Internet-based Trading Will Enhance the Competition and

Accessibility of the Country's Energy Market

In a major step toward deregulation of Brazil's electric industry, ASMAE announced today that it will partner with Andersen Consulting, the world's leading management and technology consulting firm, and CEPEL, the Brazilian Electric Energy Research Center, to create an Internet-based system to introduce competitive electric trading to Brazil - one of the 10 largest electric systems in the world.

ASMAE, the Brazilian Wholesale Electric Energy Market Administrator, said that CEPEL and Andersen Consulting will develop and implement the technology, market systems, procedures, and capabilities necessary to allow electronic trading. ASMAE expects the e-Commerce-enabled system to enhance the accessibility of the market and provide a market-based price for electricity.

The project team expects to have the core system in place by the third quarter, 2000. This includes work to integrate the system with the Brazilian Independent System Operator, ONS (Operador Nacional do Sistema Eletrico), which is responsible for operation, coordination and control of electric power generation and transmission facilities in the Brazilian interconnected power system.

"Enabling electronic trading is crucial in allowing competition to occur in Brazil's electricity market," said Mitsumori Sodeyama, President of ASMAE (Administradora de Servicos do Mercado Atacadista de Energia Eletrica). "Working with Andersen Consulting and CEPEL, we expect to do this very quickly."

Core components of the trading system in Brazil will include the Andersen Consulting Energy eXchange(TM) solution and the Pricing System developed by CEPEL. The Energy eXchange(TM) is a secure Internet-based system that supports the buying and selling of electricity in a competitive market. Energy eXchange(TM) already has been implemented in the northeastern U.S. energy market, and is currently being deployed in the Alberta, Canada market. The pricing software of CEPEL provides the current tools for the energy optimization of the complete Brazilian hydrothermal generation power system.

"The new trading system will be developed using e-Commerce component-based solutions to facilitate business changes as the market evolves," said Larry Winter, partner in Andersen Consulting's Global Utilities Practice.

The trading system will be designed to enable ASMAE to receive energy bids, contracts and meter reads from participating organizations and settle the market. Additional functions provided to the market include maintenance of participant information, governance, penalty calculations, pre-billing, and publishing of pricing and trading information through a web portal.

"We'll use our deep knowledge of the Brazilian Power Sector and expertise in the development of pricing models for hydrothermal systems, to help support a flexible, competitive marketplace in Brazil," said Xisto Vieira Filho, CEPEL's General Director.

The Brazilian electricity market has annual consumer sales exceeding $15 billion. It consists of approximately 60,000 MW of generation (94% hydroelectric) and more than 63,000 km (39,000 miles) of transmission lines. The Brazilian electric grid is interconnected to Argentina and Paraguay.

ASMAE is the new entity created in February, 1999 to manage the wholesale energy market (MAE) in Brazil. MAE was established under federal law 9,648, which set out the steps to deregulate Brazil's electricity sector. Issues addressed by the law are: disintegration of power utilities, introduction of competitive trading, guarantee of open access to the grid, and the reduction of the State's role as an entrepreneur. According to Sodeyama, ASMAE, as market developer, completed the market rules process in a record one-and-a-half years by defining and obtaining agreement on the rules by all stakeholders instead of the having the rules imposed by a government entity.

CEPEL is the Brazilian Electric Energy Research Center, located at Rio de Janeiro and founded by ELETROBRAS and its main subsidiaries in 1974. It is deeply involved in R&D work for the electric sector both in Brazil and abroad. CEPEL activities include high voltage tests (the largest laboratory in Southern Hemisphere), certification, energy saving and power quality work, and development of a wide range of software products for system planning and operation, financial issues and the energy market. CEPEL software for system planning and operation is utilized by the Brazilian ISO and most of the major Brazilian electric companies, for both off-line studies and on-line system control in Energy Management Systems. Visit CEPEL'S home page at http://www.cepel.br.

Andersen Consulting is a $8.9 billion global management and technology consulting organization whose mission is to help its clients create their future. The firm works with clients from a wide range of industries to bring about far-reaching change by aligning their people, processes and technology with their strategy. Andersen Consulting has more than 65,000 people in 48 countries. Its home page address is http://www.ac.com.