By Brazil Stock Guide – ISA Energia Brasil (B3: TRPL4) will not participate in the 2025 Electric Power Transmission Auction No. 4, held by the regulator ANEEL at the B3 exchange in São Paulo, opting instead to focus on executing its current project portfolio and maintaining its commitment to distribute 75% of regulatory net income as interest on equity (JCP) — a tax-efficient profit-sharing mechanism widely used by Brazilian companies. According to CEO Rui Chammas, the decision underscores ISA’s disciplined capital allocation and focus on profitable, predictable growth within Brazil’s transmission sector.
The auction, held on October 31, 2025, covers seven lots of projects in 12 states, totaling 1,081 kilometers of transmission lines and 2,000 MVA of substation capacity, with expected investments of R$ 5.5 billion and a maximum Annual Permitted Revenue (RAP) of R$ 937 million.
Battery regulation and modernization policy
Addressing questions on Provisional Measure 1304, which sets guidelines for incorporating battery-based energy storage systems into Brazil’s regulatory framework, executive Cláudio Domingorena said the company “agrees with the approach that positions storage as a key piece in modernizing the country’s power matrix.” He noted that ISA is actively involved in sector associations and continues to evaluate potential opportunities, though it is still too early to quantify financial impacts. Storage is considered strategic for transmission operators as Brazil’s grid adapts to the growing share of intermittent renewable generation, such as solar and wind.
Non-recurring revenue and regulatory timing
Domingorena also commented on the non-recurring revenue linked to the Centro substation, which was unilaterally removed from ISA’s concession in 2022. After two years of negotiations with authorities, the company secured retroactive remuneration of around R$ 40 million, valid through 2042.
CFO Silvia Wada detailed how ISA manages the timing mismatch between capital expenditures (CAPEX) and the regulatory recognition of revenue — a common challenge in Brazil’s concession model, where cash returns often lag project execution.
Roughly 40% of reinforcement and improvement projects begin generating RAP once energized, while the remainder will be incorporated only in the next periodic tariff review (RTP) in 2028. The current pipeline totals R$ 1 billion in RAP, with R$ 450 million expected to come online by mid-2026, helping to balance leverage.
Payout policy and taxation outlook
On shareholder distributions, Wada said ISA plans to increase the frequency of JCP payments, though without a fixed calendar, and confirmed a new payout in the second half of 2025. Regarding the proposed Bill 108725, which introduces dividend taxation starting in 2026, the CFO stated that ISA has no plans to change its payout structure, since its JCP base remains sufficient to uphold the practice of paying out at least 75% of regulatory net profit.
Technology and grid innovation
Chammas also highlighted ongoing digitalization and automation investments across the transmission network, noting that ISA was the first company in Brazil to implement digital substations (such as Lorena, SP) and energy-storage and flow-control systems. In the coming days, the company will commission Brazil’s first SSSC (Static Synchronous Series Compensator) between Ribeirão Preto and Porto Ferreira (SP) — a technology that redirects electron flow in real time, improving grid balance and reducing technical losses. “The energy transition opens both an opportunity and a responsibility for the company,” Chammas said, framing ISA as a proactive agent in modernizing Brazil’s transmission system.
Safety and governance discipline
Chammas also addressed the fatal accident involving a third-party worker at one of ISA’s construction sites, calling the incident “deeply regrettable” and emphasizing that “safety is a core value of the company.”
In closing, the CEO reiterated ISA’s three strategic pillars: profitable growth, tight leverage control — currently 3.44× EBITDA, with a waiver under negotiation with BNDES — and consistent shareholder returns.
He said the company’s choice to sit out the 2025 auction reflects its intent to deliver current projects efficiently while preserving its AAA credit rating in Brazil’s capital markets.