**Exhibit 1**

**COMPANHIA ENERGÉTICA DEMINAS GERAIS  —  CEMIG**

## **BYLAWS**

TheseBylaws are a consolidation of those approved by the Stockholders’ Meeting thatestablished the company, on May 22, 1952 — the minutes of which were filedwith the Minas Gerais Commercial Board on May 27, 1952, under No. 57386,and by all subsequent Meetings of Stockholders held to alter the Bylaws, up tothe most recent Extraordinary General Meeting of Stockholders begun on December 30,2005, resumed on January 5, 2006 and completed on January 12, 2006,the minutes of which were filed with the Minas Gerais Commercial Board on February 02,2006, under No 3500606

 

 

**CHAPTER I**

**Name, constitution, objects, head office and duration**

**Clause1:**                                        Companhia Energética de Minas Gerais — Cemig,constituted on 22 May 1952 as a corporation with mixed private and publicsector stockholdings, is governed by these Bylaws and by the applicablelegislation, and its objects are: to build, operate and carry out commercialtransactions with systems of generation, transmission, distribution and sale ofelectricity, and related services; to operate in the various fields of energy,from whatever source, with a view to economic and commercial operation; toprovide consultancy services within its field of operation to companies in andoutside Brazil; and to carry out activities directly or indirectly related toits objects.

§1               Theactivities referred to in this clause may be carried out directly by Cemig orthrough companies in which it is a majority or minority stockholder, upondecision by the Board of Directors, in accordance with State Laws 828 of 14 December 1951,8655 of 18 September 1984 and 15290 of 4 August 2004.

**Clause 2:****                                          **The company shall have its head office andmanagement in Belo Horizonte, capital city of the state of Minas Gerais,Brazil, and may open offices, representations and any other establishments inor outside Brazil on authorization by the Executive Board.

**Clause 3:**                                           The company shall have indeterminateduration.

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**CHAPTER II**

**Capital and shares**

**Clause4:**                                           The company’s capital isR$ 1,621,538,190.25 (one billion, six hundred and twenty one million, fivehundred and thirty eight thousand, one hundred and ninety Reais and twenty fivecentavos), represented by:

a)         70,874,167,923 (seventy billion, eighthundred and seventy four million, one hundred and sixty seven thousand, ninehundred and twenty three) nominal common shares, each with par value of R$0.01;and

b)        91,279,651,102 (ninety one billion, twohundred and seventy nine million, six hundred and fifty one thousand, onehundred and two) nominal preferred shares, each with par value of R$0.01.

§ 1                   The right to vote shall be reservedexclusively for the common shares, and each common share shall have the rightto one vote in decisions of the General Meeting of Stockholders.

**Clause 5:**                                        The preferred shares shall have right ofpreference in the event of reimbursement of shares and shall have the right toa minimum annual dividend of the greater of the following amounts:

a)         10% (ten percent) of their par value; or

b)        3% (three percent) of the value ofstockholders’ equity corresponding to the shares.

**Clause 6:****                           **The common shares and the preferred sharesshall have equal rights to distribution of bonuses.

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§ 1                   Capitalization of monetary adjustment to thevalue of the registered capital shall require a decision by the General Meetingof Stockholders, but shall be obligatory when the limit specified in Section 297of Law 6404 of 15 December 1976 has been reached.

**Clause7:**                                       In the business years in which the companydoes not obtain sufficient profit to pay dividends to its stockholders, theState of Minas Gerais shall guarantee to the shares issued by the company up to5 August 2004 and held by individual persons a minimum dividend of 6% (sixpercent) per year, in accordance with Clause 9 of State Law 828 of 14 December 1951,and State Law 15290 of 4 August 2004.

**Clause8:**                                        The State of Minas Gerais shall at all timesobligatorily be the owner of the majority of the shares carrying the right tovote, and the capital subscribed by it shall be paid in in accordance with thelegislation from time to time in force. The capital subscribed by otherparties, whether individuals or legal entities, shall be paid in as specifiedby the General Meeting of Stockholders which decides on the subject.

§ 1                   The Executive Board may, in order to obey adecision by a General Meeting of Stockholders, suspend the services of transferand registry of shares, subject to the legislation from time to time in force.

§ 2                   The stockholders shall have the right ofpreference in subscription of increases of capital and in the issue of thecompany’s securities, in accordance with the applicable legislation. Thereshall, however, be no right of preference when the increase in the registered capitalis paid with funds arising from tax incentive systems, subject to the terms ofthe sole paragraph of Section 172 of Law 6404 of 15 December 1976.

# **CHAPTER III**

**The General Meeting of Stockholders**

**Clause 9:**                                        The General Meeting of Stockholders shall beheld, ordinarily, within the first 4 (four) months of the year, for thepurposes specified by law, and extraordinarily whenever necessary, and shall becalled with minimum advance notice of 15 (fifteen) days, and the 

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terms of these Bylaws and the relevantlegislation shall be obeyed in its convocation, opening and decisions.

§ 1                   The stockholder may be represented in GeneralMeetings of Stockholders in the manner specified in Section 126 of Law6404, as amended, by showing at the time of the meeting, or by previouslydepositing at the company’s head office, proof of ownership of the shares,issued by the depositary financial institution, accompanied by the proxy’sidentity document and a power of attorney with special powers.

**Clause 10:****                                **The ordinary or extraordinary General Meetingof Stockholders shall be chaired by a stockholder elected by the GeneralMeeting from among those present, who shall choose one or more secretaries.

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### **CHAPTER IV**

 

**Management of the company**

**Clause 11:****                                **Management of the company shall be exercisedby a Board of Directors and an Executive Board.

§ 1                      The structure and composition of the Board ofDirectors and the Executive Board of the company shall be identical in thesubsidiaries Cemig Distribuição S.A and Cemig Geração e Transmissão S.A., withthe following exceptions: only the subsidiary Cemig Distribuição S.A shall havea Chief Energy Distribution and Sales Officer and the respective Department,and only the subsidiary Cemig Geração e Transmissão S.A. shall have a ChiefEnergy Generation and Transmission Officer and the respective Department.

§ 2 — The Board of Directorsand the Executive Board, in the management of the company, the wholly-ownedsubsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., andthe subsidiaries, affiliates or consortia in which they have direct or indirectholdings, shall obey the provisions of the company’s Long-Term Strategic Plan,especially the dividend policy therein contained, as approved by the Board ofDirectors.

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§ 3                     The Long-Term Strategic Plan shall containthe long-term strategic planning and fundamentals, and the targets, objectivesand results to be pursued and attained by the company and its dividend policy,and shall obey the commitments and requirements specified in § 5 below.

§ 4                     The Long-Term Strategic Plan shall be revisedannually by the Executive Board and approved by the Board of Directors andshall be reflected in all the plans, forecasts, activities, strategies, capitalexpenditure and expenses of the company and its subsidiaries and affiliates,and the consortia in which it directly or indirectly participates, includingthe company’s Multi-year Strategic Implementation Plan and the Annual Budget,which shall be approved by the Board of Directors.

§ 5 — In the administrationof the company and the exercise of the right to vote in subsidiaries,affiliated companies and consortia, the Board of Directors and the ExecutiveBoard shall faithfully obey and comply with the following targets:

a)                          to keep the company’s consolidatedindebtedness equal to or less than 2 (two) times the company’s Ebitda (earningsbefore interest, taxes, depreciation and amortization);

b)                         to keep the consolidated ratio Net debt /(Net debt + Stockholders’ equity) equal to or less than 40% (forty per cent);

c)                          to limit the consolidated balance of fundsrecognized in Current assets, for the purposes of Clause 30 of these Bylaws orotherwise, to the equivalent of a maximum of 5% (five per cent) of the company’sEbitda (Earnings before interest, taxes, depreciation and amortization)

d)                           to limit the consolidated amount of fundsdestined to capital expenditure and the acquisition of any assets, in eachbusiness year, to the equivalent of a maximum of 40% (forty per cent) of thecompany’s Ebitda (Earnings before interest, taxes, depreciation andamortization);

e)                          to invest only in distribution, generationand transmission projects which offer real minimum internal rates of returnequal to or more than those specified in the company’s Long-Term StrategicPlan, subject to the legal obligations; and

f)                            to maintain the expenses of the subsidiaryCemig Distribuição S.A. and of any subsidiary which operates in distribution ofelectricity at amounts not greater than the amounts recognized in the tariffadjustments and reviews; and

g)                           to maintain the revenues of the subsidiaryCemig Distribuição S.A. and those  of anysubsidiary which operates in distribution at the amounts recognized in thetariff adjustments and reviews.

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§ 6 — The targetsestablished in § 5 above shall be determined on a consolidated basis, takinginto account the company and its permanent investments in the wholly-ownedsubsidiaries Cemig Distribuição S.A. and Cemig Geração e Transmissão S.A., andsubsidiaries, affiliated companies and consortia.

§ 7 — The targetsestablished in sub-clauses “a”, “b”, “c” and “d” of § 5 above may be exceededfor reasons related to temporarily prevailing conditions, upon justification bygrounds and prior specific approval by the Board of Directors, up to thefollowing limits:

a)                          the company’s consolidated debt to be lessthan or equal to 2.5 (two point five) times the company’s Ebitda (Earningsbefore interest, taxes, depreciation and amortization);

b)                         the consolidated ratio of Net debt / (Netdebt + Stockholders’ equity) to be limited to 50% (fifty per cent);

c)                            the consolidated balance of the fundsrecognized in Current assets, for the purposes of Clause 30 of these Bylaws orotherwise, to be the equivalent of a maximum of 10% (ten per cent) of thecompany’s Ebitda (Earnings before interest, taxes, depreciation andamortization); and

d)                           the consolidated amount of the fundsallocated to capital expenditure and to the acquisition of any assets, only inthe business years of 2006 and 2007, shall be limited to maximum values of 65%(sixty-five per cent) and 55% (fifty-five per cent), respectively, of thecompany’s Ebitda (Earnings before interest, taxes, depreciation andamortization).

**Section I**

**The Board of Directors**

**Clause 12:****                                **The company’s Board of Directors shall bemade up of 14 (fourteen) members and an equal number of substitute members. Oneof the members shall be its Chairman and another its Vice-Chairman, all beingsubject to election and dismissal at any time by the General Meeting ofStockholders, for a period of office of 3 (three) years, and able to bereelected.

§1                     The substitute members shall substitute therespective members of the Board if the latter are absent or impeded fromexercising their functions and, in the event of a vacancy, shall do so until anew member is elected.

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§ 2                     The global or individual amount of theremuneration of the Board of Directors shall be fixed by the General Meeting ofStockholders which elects that Board, in accordance with the legislation fromtime to time in force.

§ 3                     The minority holders of common shares, andthe holders of preferred shares, each have the right to elect 1 (one) member ofthe Board of Directors, in a separate vote, according to law.

§ 4                   The Boards of Directors of the subsidiariesCemig Distribuição S.A. and Cemig Geração e Transmissão S.A. shall,obligatorily, be composed of the members or substitute members elected to theBoard of Directors of the company.

**Clause13:****                                **In the event of a vacancy on the Board ofDirectors, the first General Meeting of Stockholders shall elect a new member,for the period of office which was remaining to the previous member.

§ 1                     In this event, if the previous Board memberwas elected by a minority, the new member shall be elected by the sameminority.

**Clause 14:****                                **The Board of Directors shall meet,ordinarily, every 2 (two) months and, extraordinarily, on convocation by itsChairman, or its Vice-Chairman, or one-third of its members, or when requestedby the Executive Board, and decisions taken shall be valid when the majority ofits members are present.

§ 1                     The meetings of the Board of Directors shallbe called by its Chairman or its Vice-Chairman, by written advice sent with 5(five) days’ notice, containing the agenda to be discussed. Meetings of theBoard of Directors called on the basis of urgency may be called by its Chairmanwithout being subject to the above-mentioned period provided the other membersof the Board are unequivocally aware of the convocation.

§ 2                     Decisions of the Board of Directors shall betaken by the majority of the votes of the board members present, and in theevent of equality of votes the Chairman shall have the casting vote.

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**Clause 15:****                                **The Chairman of the Board of Directors hasthe competency to grant leave to the Board’s members, and the other members ofthe Board have the competency to grant leave to the Chairman.

**Clause 16:****                                **The Chairman and Vice-Chairman of the Boardof Directors shall be chosen by their peers, at the first meeting of the Boardof Directors that takes place after the election of its members, and theVice-Chairman shall take the place of the Chairman when the Chairman is absentor impeded from exercising his functions.

**Clause 17:**                                 The Board of Directors shall have thefollowing attributions:

a)                            to fix the general orientation of the company’sbusiness;

b)                         to elect or dismiss the Executive Officers ofthe company, subject to these Bylaws;

c)                          to decide, prior to the company entering intothem, on contracts between the company and any of its stockholders, orcompanies which are sole or joint controlling stockholders of any of itsstockholders;

d)                         to decide, upon proposal by the ExecutiveBoard, on disposal or placement of a charge on any of the company’s property,plant or equipment, and on the giving by the company of any guarantee to anythird parties of which the individual value is greater than or equal toR$ 5,000,000.00 (five million Reais);

e)                          to decide, upon proposal put forward by theExecutive Board, on loans, financings, acts or other legal transactions to be enteredinto by the company the amount of which is equal to or more thanR$ 5,000,000.00 (five million Reais), subject to sub-clause “g” of  § 4 of Clause 21 below;

f)                            to call the General Meeting of Stockholders;

g)                         to monitor and inspect the management by theExecutive Board: the Board of Directors may, at any time, examine the books andpapers of the company, and request information on contracts agreed or in theprocess of being agreed, and on any other administrative facts or actions whichit deems to be of interest to it;

h)                         to give a prior opinion on the report ofmanagement and the accounts of the Executive Board of the company;

i)                             to choose, annually, and to dismiss, thecompany’s auditors, from among companies with international reputation authorizedby the Securities Commission (CVM) to audit listed companies;

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j)                             to authorize, upon a proposal by theExecutive Board, the start of administrative proceedings for competitive bids,and proceedings for dispensation from and non-requirement of bids, and thecorresponding contracts, in amounts greater than or equal toR$ 5,000,000.00 (five million Reais);

l)                             to authorize, upon a proposal by theExecutive Officers, the initiation of legal actions and administrativeproceedings, and making of Court and extrajudicial settlements, when the amountis greater than or equal to R$ 5,000,000.00 (five million Reais);

m)                       to authorize the issue of securities, in thedomestic or external markets, for the raising of funds, in the form ofdebentures, promissory notes, medium-term notes and other instruments.

n)                         to approve the company’s Long-Term StrategicPlan and revisions of it, the Multi-year Strategic Implementation Plan andrevisions of it, and the Annual Budget.

§ 1                   The Board of Directors, by specific resolutions,may delegate the power to authorize agreement of contracts for sales ofelectricity or for provision of distribution or transmission services to theExecutive Board, in accordance with the legislation.

 

### **Section II**

**The Executive Board**

 

**Clause 18:****                                **The Executive Board shall be made up of 7(seven) Executive Officers, who may be stockholders, elected by the Board ofDirectors, namely: the Chief Executive Officer, the Executive Vice-Chairman,the Chief Energy Distribution and Sales Officer, the Chief Financial andInvestor Relations Officer, the Chief Energy Generation and TransmissionOfficer, the Chief Corporate Management Officer, and the Chief Planning,Projects and Construction Officer.

§ 1                     The period of office of the ExecutiveOfficers shall be 3 (three) years, and re-election is permitted. The ExecutiveOfficers shall remain in their posts until their duly elected successors takeoffice.

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§ 2                     The global or individual amount of theremuneration of the Executive Board, including benefits of any type, shall befixed by the General Meeting of Stockholders, in accordance with thelegislation currently in effect.

§ 3                     The Executive Officers shall exercise theirpositions as full-time occupations in the regime of exclusive dedication to theservice of the company. They may at the same time hold and exercisenon-remunerated positions in the management of the company’s wholly-ownedsubsidiaries, other subsidiaries or affiliated companies, at the option of theBoard of Directors. They shall, however, obligatorily exercise thecorresponding positions in the subsidiaries Cemig Distribuição S.A. and CemigGeração e Transmissão S.A.

§ 4                     Executive Officers who are not employeesshall have the right to an annual period of not more than 30 (thirty) days’remunerated leave, which shall be granted by the Board of Directors. This leavemay not be accumulated into the subsequent year, and its remuneration shall beaugmented by one-third of the monthly remuneration currently in effect. Paymentfor a period of leave not taken is not permitted.

**Clause 19:****                                **In the event of absence, leave, impediment,resignation or vacancy of the post of the Chief Executive Officer, this postshall be exercised by the Executive Vice-Chairman, for whatever period theabsence, leave or impediment may last, and, in the event of vacancy orresignation, until the post is filled by the Board of Directors.

§ 1                     If there is vacancy, resignation, leave ortemporary impediment of any of the other members of the Executive Board, ameeting of the Executive Board may by a majority vote attribute the exercise ofthe respective functions to another Executive Officer, until the post is filledby the Board of Directors, or for as long as the period of leave or impediment,as the case may be, continues.

§ 2                     A Chief Executive Officer or a member of theExecutive Board elected in the way described in this clause shall hold theposition for the time which remains of the period of office of the ExecutiveOfficer who is substituted.

**Clause 20:****                                **The Executive Board shall meet, ordinarily,at least 2 (two) times per month and, extraordinarily, whenever called by theChief Executive Officer or by 2 (two) Executive Officers with prior notice ofat least 2 (two) days, but this notice shall not be necessary if all theExecutive Officers are present. Unless stated to the contrary in the Bylaws,the decisions of the Executive Board shall be taken by a vote of the majorityof its members,

 

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and in the event of a tie the Chief Executive Officer shall have acasting vote and the Board of Directors must be advised that the casting votehas been used.

**Clause 21:****                                   **The Executive Board is responsible for thecurrent management of the company’s business, subject to the Long-TermStrategic Plan, the Multi-year Strategic Implementation Plan and the AnnualBudget, prepared and approved in accordance with these Bylaws.

§ 1                     The company’s Multi-year StrategicImplementation Plan shall reflect the company’s Long-Term Strategic Plan andcontain the plans and projections for a period of 5 (five) financial years, andmust be updated at least once a year, and shall deal in detail with thefollowing subjects, among others:

a)                          the company’s activities and strategies,including any project for construction or expansion of generation, transmissionor distribution;

b)                         the new investments and businessopportunities, including those of the company’s subsidiaries and affiliatedcompanies;

c)                          the amounts to be invested or in any otherway contributed from the company’s own funds or funds of third parties;

d)                         the rates of return and profits to beobtained or generated by the company.

§ 2                     Thecompany’s Annual Budget shall reflect the company’s Multi-year StrategicImplementation Plan and, consequently, the Long-Term Strategic Plan and mustgive details of operational revenue and expenses, costs and capitalexpenditure, cash flow, the amount to be allocated to the payment of dividends,investments of cash from the company’s own funds or funds of third parties, andany other data that the Executive Board considers to be necessary.

§ 3                     The company’s Multi-year StrategicImplementation Plan and the Annual Budget shall be prepared and updated annually,by the end of each business year, to be in effect in the following businessyear. Both shall be prepared in coordination with the Chief Finance andInvestor Relations Officer and submitted to examination by the Executive Board,and, subsequently, for approval by the Board of Directors.

§ 4                     The following decisions shall require a voteby a formal meeting of the Executive Board:

a)                            approval of the plan of organization of thecompany and issuance of the corresponding rules and any changes to them;

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c)                            approval of the company’s Multi-yearStrategic Implementation Plan, and revisions of it, including timetables,amount and allocation of the capital expenditure specified in it and itssubmission to the Board of Directors;

c)                          approval of the Annual Budget and itssubmission to the Board of Directors, and any capital or other expenditure ofless than R$ 5,000,000.00 (five million Reais) not specified in the AnnualBudget as approved;

d)                         approval of disposal of, or placement of acharge on, any of the company’s property, plant or equipment, or of provisionby the company of guarantees to third parties, in amounts lower thanR$ 5,000,000.00 (five million Reais);

e)                          approval of contracts, loans, financings andother legal transactions to be entered into by the company the amounts of whichindividually or jointly are lower than R$ 5,000,000.00 (five millionReais);

f)                            approval, upon proposal by the Chief Financeand Investor Relations Officer, of the casting of votes in the companies orconsortia in which the company directly or indirectly has an interest, or whichit directly or indirectly controls, including the wholly-owned subsidiaries,when they relate to matters covered by the Annual Budget or the Multi-yearStrategic Implementation Plan, or of the Long-Term Strategic Plan, or which mayaffect its implementation or the dividend policy specified in it, and all suchvotes shall at all times obey the provisions of these Bylaws;

g)                         approval of all wholesale energy purchase andsale contracts — of which the Board of Directors must be informed at its firstmeeting subsequent to such approval;

h)                         authorization to initiate administrativetender proceedings and proceedings for exemption from and non-requirement fortenders, and the corresponding contracts, in amounts greater than or equal toR$ 1,000,000.00 (one million Reais) and less than R$ 5,000,000.00(five million Reais);

i)                             authorization to file legal actions andadministrative proceedings, and to enter into Court and extra-judicialsettlements, for amounts less than R$ 5,000,000.00 (five million Reais);

j)                             authorization of provisions in the company’saccounts, of any value, on proposal from the Chief Finance and InvestorRelations Officer.

§ 5                     Actions necessary for the regular functioningof the company, agreement of contracts and other legal transactions shall betaken by the Chief Executive Officer, jointly with one Executive Officer, orwith a person holding a valid power of attorney.

§ 6                     Powers of attorney must be granted by theChief Executive Officer, jointly with one Executive Officer, except for thepower described in sub-clause “c” of Sub-

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item I of Clause 22, forwhich only the signature of the Chief Executive Officer is required.

§ 7                     The Executive Board may, annually, delegateto one or more Executive Officers the competency to carry out the actionsdescribed in § 4 of this clause, by resolution unanimously approved by itsmembers.

**Clause 22:****                                **Subject to the provisions of the previousclauses, the following are the functions and powers attributed to the membersof the Executive Board:

****I —      To the Chief Executive Officer:****

a)                            to oversee and direct the work of thecompany;

b)                         to execute the strategic actions of thecompany defined in the company’s Multi-year Strategic Implementation Plan;

c)                          to represent the company in the Courts, activelyand passively;

d)                         to sign, jointly with one of the ExecutiveOfficers, documents which bind the company;

e)                          to present the annual report of the company’sbusiness to the Board of Directors and to the Ordinary General Meeting ofStockholders;

f)                            to hire and dismiss the company’s personnel;

g)                         to manage and direct the activities ofInternal Audits and Institutional Relationships, and legal, communication andrepresentation activities, and the function of the company’s Ombudsman.

II—     To the Executive Vice-Chairman:

a)              to substitute the Chief Executive Officer ifhe is absent, on leave, impeded from exercising his functions, or has resignedor his post is vacant;

b)             to set the policies and guidelines for theenvironment, technological development, alternative energy sources, technicalstandards and improvement of product service and quality;

c)              to co-ordinate the company’s strategy foroperations in relation to the environment, technology and strategic technologymanagement;

d)             to co-ordinate the corporate programs forpromotion and improvement of quality;

e)              to promote implementation of programs for thecompany’s technological development;

f)                tomonitor the management of plans for compliance with the guidelines for theenvironment, technology and improvement of quality.

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III —    To the Chief Distribution and Sales Officer:

a)                          to make continuous efforts on behalf of thequality of supply of energy to consumers that are directly linked to thecompany’s sub-transmission and distribution systems;

b)                         to prepare the planning of the company’shigh- and medium-voltage distribution system;

c)                          to plan and build distribution lines andnetworks;

d)                           to operate and maintain the company’selectricity sub-transmission and distribution system, and the associated systemsof supervision and long-distance control;

e)                            to formulate and implement the marketing planrelated to the activities of distribution and sales;

f)                            to carry out actions and programs withconsumers for improved use of electricity;

g)                         to prepare the forecasts for the market inwhich this Chief Officer’s Department operates;

h)                         to maintain commercial relationships with,and make sales of electricity and services to, captive consumers;

i)                             to carry out environmental programs andactions within the scope of this Chief Officer’s Department.

IV —    To the Chief Finance andInvestor Relations Officer:

a)                          to make available the financial resourcesnecessary for the operation and expansion of the company, in accordance withthe Annual Budget, conducting the processes of contracting of loans andfinancings, and related services;

b)                         to co-ordinate thepreparation and consolidation of the company’s Multi-year StrategicImplementation Plan and Annual Budget;

c)                          to carry out the accounting of, and tocontrol, the company’s economic-financial transactions;

d)                         to determine the cost of the service and toestablish an insurance policy, as laid out in the company’s Multi-yearStrategic Implementation Plan;

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e)                          to prepare the short-, medium- and long-termfinancial programming in detail, as specified in the company’s Multi-yearStrategic Implementation Plan and Annual Budget;

f)                            to control the company’s registered capital,decide policy for its shares and suggest dividend policy;

g)                         to carry out research, studies and analysisof the Brazilian energy market for the purposes of taking action in theElectricity Sale Chamber (CCEE);

h)                         to plan and carry out electricity purchaseand sale transactions in the wholesale market and with free consumers, and theassociated risk management operations;

i)                             to carry out activities of purchase, sale andaccounting of electricity in the Electricity Sale Chamber (CCEE);

j)                             to represent the company in relations withthe Electricity Sale Chamber (CCEE);

l)                         to establish prices for purchase and sale of electricity;

m)                       to co-ordinate the preparation andnegotiation of the company’s electricity tariffs;

n)                         to analyze proposals and co-ordinate thedevelopment of the company’s new business outside the spheres of generation,transmission, distribution and sale, jointly with other areas involved;

o)                         to support the Departments of the otherExecutive Officers in the development of the company’s new business ingeneration, transmission, sub-transmission and distribution;

p)                         to evaluate and monitor the company’sholdings in other companies;

q)                         to be responsible forthe provision of information to the investing public, to the SecuritiesCommission (CVM) and to the Brazilian and international stock exchanges orover-the-counter markets, and the corresponding regulation and inspectionentities, and to keep the company’s registrations with these institutionsupdated.

V —     To the Chief Energy Generation andTransmission Officer:

a)                          to make continuous efforts on behalf of thequality of supply of electricity to consumers that are directly linked to thetransmission system;

b)                         to prepare the planning of the operation andmaintenance of generation and transmission;

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c)                          to operate and maintain the systems ofgeneration and transmission and the associated systems of supervision andlong-distance control;

d)                         to carry out environmental programs andactions within the scope of this Chief Officer’s Department;

e)                          to develop and conduct thehydro-meteorological activities that are of interest to the company;

f)                            to manage the transactions arising from theinter-linking of the company’s electricity system with those of othercompanies;

g)                         to represent the company in relations withthe National Electricity System Operator;

h)                         to manage the company’s central laboratoriesand workshops;

i)                           to ensure theavailability of the generation and transmission facilities and equipment.

VI —    To the Chief CorporateManagement Officer:

a)                          to ensure the provision of appropriatepersonnel to the company;

b)                         to decide the company’s human resourcespolicy and to orient and promote its application;

c)                          to orient and conduct activities related toorganizational studies and their documentation;

d)                         to decide, conduct and supervise the company’stelecommunications and information technology policy;

e)                          to plan, put in place and maintain thecompany’s telecommunications and information technology systems;

f)                            to decide policies and rules on supportservices such as transport, administrative communication, security guards, andprovision of adequate quality in the workplace for the company’s personnel;

g)                         to provide the company with infrastructureand administrative support resources and services;

h)                         to manage the process of contracting of worksand services and of  acquisition anddisposal of materials and real estate property;

i)                             to effect quality control of the materialacquired and of the qualification of contracted service providers;

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j)                             to administer and control the stock ofmaterial, the separation and recovery of used material, and to carry out salesof excess and unusable material, and scrap;

l)                             to carry out environmental programs andactions within the scope of this Chief Officer’s Department;

m)                       to authorize initiation of administrativetender proceedings proceedings for exemption from and non-requirement fortenders, and the corresponding contracts, in amounts up to R$ 1,000,000.00(one million Reais).

VII —  To the Chief Planning,Projects and Construction Officer:

a)                          to prepare the planning of expansion of the generation,transmission and sub-transmission systems;

b)                         to consolidate the planning of the company’selectricity system;

c)                          to consolidate the company’s program ofinvestments in generation, transmission, sub-transmission and distribution;

d)                         to represent the company in relations withthe Electricity System Expansion Planning Co-ordination Committee;

e)                          to conduct negotiations for the developmentof generation and transmission undertakings;

f)                            to promote the planning, construction andassembly of generation, transmission, sub-transmission and co-generationfacilities;

g)                         to promote the planning and construction ofbuildings;

h)                         to conduct evaluation studies and actions forobtaining of environmental licensing;

i)                             to conduct environmental programs and actionswithin the scope of this Chief Officer’s Department.

**CHAPTER V**

# **The Audit Board**

 

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**Clause 23:****                                **The company’s Audit Board shall functionpermanently and shall be made up of between 3 (three) and 5 (five) members andtheir respective substitute members, who shall be elected annually, on theoccasion of the Annual General Meeting, and may be re-elected.

§ 1                     The Audit Board shall elect its Chairman fromamong its members, and the Chairman shall call and chair the meetings.

**Clause 24:****                                **In the event of resignation of the position,death or impediment, a member of the Audit Board shall be replaced by hisrespective substitute, until the new member is elected, and such member shallbe chosen by the same party that appointed the substitute.

**Clause 25:****                                **The responsibilities and powers of the AuditBoard are those that are set by the Corporate Law.

**Clause 26:**                                 The remuneration of the members of the AuditBoard shall be fixed by the General Meeting of Stockholders which elects it, inaccordance with the legislation that is in force.

**CHAPTER VI**

**The business year**

**Clause 27:**                                The business year shall coincide with thecalendar year, closing on 31 December of each year, when the financialstatements shall be prepared, in accordance with the relevant legislation.Financial statements may be prepared for periods of six months or shorterperiods.

**Clause 28**:                                   Before any profit share, any retained lossesand the provision for income tax shall be deducted from the result for thebusiness year.

§ 1                     The net profit ascertained in each businessyear shall be allocated as follows:

a)                         5%(five percent) for the legal reserve, up to the limit specified by law;

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b)                         50% (fifty percent) distributed as obligatorydividends to the stockholders of the company, subject to the other terms ofthese Bylaws and the applicable legislation; and

c)                          The balance, after the retention specified ina capital expenditure and/or investment budget prepared by the company’smanagement, in obedience to the company’s Long-Term Strategic Plan and thedividend policy contained therein and duly approved, shall be applied in theconstitution of a profit reserve for the purpose of distribution ofextraordinary dividends, in accordance with Clause 30 of these Bylaws, up tothe maximum limit specified by Clause 199 of the Corporate Law.

**Clause29:**                                The dividends shall be distributed in thefollowing order:

a)                        The annual minimum dividend guaranteed to the preferred shares;

b)                         The dividend for the common shares, up to apercentage equal to that guaranteed to the preferred shares.

§ 1                     Once the dividends specified in sub-clauses “a”and “b” of the head paragraph of this clause have been distributed, thepreferred shares shall have equality of rights with the common shares in anydistribution of additional dividends.

§ 2                     The Board of Directors may declare interimdividends, in the form of interest on equity, to be paid from retainedearnings, profit reserves or profits ascertained in six-monthly or interimfinancial statements.

§ 3                     The amounts paid or credited as interest onequity, in accordance with the relevant legislation, shall be imputed to theamounts of the obligatory dividend or of the dividend payable under the Bylawsto the preferred shares, being for all purposes of law a part of the amount ofthe dividends distributed by the company.

**Clause 30:**                                Without prejudice to the obligatory dividend,every two years, starting from the business year of 2005, or more frequently ifthe company’s availability of cash so permits, the company shall use the profitreserve specified in sub-clause “c” of Clause 28 of these

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Bylaws for the distribution of extraordinarydividends, up to the limit of cash available, as determined by the Board ofDirectors, in obedience to the company’s Long-Term Strategic Plan and theDividend Policy contained therein.

§ 1                     It shall be the function of the Board ofDirectors of the company to approve the Long-Term Strategic Plan, and anyrevisions thereof.

§ 2                     The company’s Long-Term Strategic Plan shallcontain the long-term strategic planning, and the fundamental factors, targets,objectives and results, to be pursued and achieved by the company, and itsdividend policy, and on these shall be based the plans, projections,activities, strategies, and capital and other expenditures to be incorporatedin the company’s Multi-year Strategic Implementation Plan, and in its AnnualBudget.

**Clause 31: ****                             **The obligatory or extraordinary dividendsdeclared shall be paid in 2 (two) equal installments, the first by 30 June andthe second by 30 December of each year, and the Executive Board shalldecide the location and processes of payment, subject to these periods.

§ 1                     Dividends not claimed within a period of 3(three) years from the date on which they are placed at the disposal of thestockholder shall revert to the benefit of the company.

**CHAPTER VII**

# **Responsibilities of the management officers**

**Clause 32:****                                **The management officers are responsible tothe company and third parties for the actions which they take in the exerciseof their functions, as specified by the law and by these Bylaws.

**Clause 33:****                                **The company guarantees defense, when legallypossible, of members of the Board of Directors, the Audit Board and theExecutive Board in Court and/or administrative proceedings brought against themas individuals by third parties, during or after their periods of office, foractions related to the exercise of their specific functions and which do notviolate legal provisions or the provisions of these Bylaws.

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§ 1                     The guarantee given in the head paragraph ofthis Clause extends to employees who legally carry out actions by delegationfrom the company’s management officers.

§ 2                     Any member of the Board of Directors or theAudit Board, or any Executive Officer or employee against whom a Court judgmentsubject to no further appeal is given must reimburse the company all the costs,expenses and losses caused to it.

 

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