For the Brazilian Electric System Operator, 2009 was a year of significant results obtained with both the improvement of its participation in the agents grid and its relationship with the institutions involved in the management of the Brazilian electric system, as in the evolution of its technical and corporate processes, and in the execution of its core attributions, to manage the transmission, plan the operation and exercise it in a centralized manner, seeking to ensure security at minimum cost.

Externally, ONS has actively participated in establishing the Bylaws of the Very Large Power Grid Operators Association - VLPGO. Its proper juridical formation creates the bases for the development of joint works, sharing the costs amongst participating members, and defines a policy of exchanging information and knowledge amongst them. The stability of its operation turns the VLPGO into a privileged forum for the exchange of experiences in the management of large electric systems, which will bring great benefits to its members.

ONS also increased, in 2009, its work in the CIER with its participation in the CIER Project 15, which discusses the possible energy transactions amongst the Andean Region, Central America and South Cone. Moreover, at the meeting of the CIER Central Committee, held in November 2009 in Madrid, the General Director of ONS was conducted for the post of First Vice-President of the CIER for the period 2009/11.

On a national level, the Operator has enhanced its relationship with its 235 Associate Agents, with sector associations, with ANEEL and other regulatory agencies that relate to the sector as ANA and ANP, with EPE and CCEE, and the Ministry of Mines and Energy. At this point, it is necessary to note that the collaboration and integrated performance with all these organizations was an important factor for the positive results presented in this report. Another topic that should be given special attention to, in 2009, was the expansion of the range of institutions which participated in the elaboration of ONS strategic planning which, in the cycle from 2010 to 2014, relied on the collaboration of Associate Agents and their associations, sector authorities, regulatory agencies and strategic partners in universities, research centers and advisors.

It is also worth mentioning that, in 2009, two operational agreements of major importance to ONS were signed, with EPE and ANA, establishing new guidelines for the relationship and exchange of technical information.

Regarding the evolution of technical and corporative processes of the Operator, some topics that deserve mention, in 2009, are:

• Permanent Approval of Grid Procedures, through the Normative Resolution No. 372/09 of 08.05.2009, for the first time since they were created, which required an extensive review of these documents, motivated by the results of Public Hearings conducted by ANEEL.
• The development of methodology for calculation of energy safety indicators, which is based on references such as the Target Level, Minimum Safety Level, Risk Aversion Curve and Critical Operation Curve, which together represent an instrument of empowerment and greater robustness of the recommendations of the annual energy planning, as well as for the decision making by CMSE regarding the guarantee of energy supply in the BIPS. We will continue working so that its rules and subsequent deployment happen throughout 2010.
• Continuity in the process of improvement of energy management planning models aiming at reducing the volatility of the marginal operation cost and, consequently, the price for the settlement of the differences in the energy market.
• Further analysis of the reduction in the number of the BIPS submarkets in order to reduce the exposure risks of the price difference between submarkets, which has been an inhibiting factor to the offer expansion in the free contracting environment.
• Improvement of the energy hydrological operation planning and programming studies, with consideration of rainfall-runoff co-relation models for the calculation of inflow forecasts to the plants and reservoirs.
• Deployment of the Special Protection and Control System which controls the shutdown of generating units at Tucurui Powerplant after shutdown of three or more units of Itaipu 60 Hz by the Emergency Control Scheme associated with the AC Link 765 kV. This particularly innovative system, in which the shutdown signal travels 3500 km, allows increasing the energy interchange to Southeast region by 700 MWmed, ensuring the integrity of the BIPS and avoiding more serious consequences to the grid’s safety.
• The conclusion of international public bidding, the detailed definition of the scope and the signing of the contract with Siemens-Cepel Consortium for the design and implementation of ONS Energy Management Grid - REGER, which had already started its activities in 2009.
• The interconnection to the BIPS of isolated systems in the states of Acre and Rondonia and the continuity of studies for the interconnection of Tucurui-Manaus System;
• The efforts made increase internal integration, through important initiatives in human resources management developed last year, as the Recognition Program and Recognize + award, the active participation of employees in the evolution of the Position and Compensation Management Plan, as well as the Career Trajectories.

The continuity of energy supply was maintained, with the Southeast / Midwest region supplying a significant part of the requirements of the South during the first semester of 2009, with the need, in most critical times, to dispatch additional thermal generation. In the second semester of the year, the improvement of hydrological conditions allowed all regions to reach storage levels, in the end of the period, much higher than those recorded in 2008.

The operation of the power grid was conducted in accordance with the supply continuity, reliability and quality criteria established in the Grid Procedures. The safety in the electric service achieved in 2009 can be translated by the BIPS robustness indicator: 96.8% of the disturbances, the load cuts were recorded below 100 MW. These indicators remained in the same levels of previous years, even taking into account the growth of the transmission grid.

We faced, on November 10th, an occurrence of large scale, with the shutdown of 40% of the total energy load of the BIPS and an average recovery time of 222 minutes in the most affected areas. Although it was an unusual triple contingency, with very low probability of occurrence, the special protection systems worked correctly and the islanding schemes prevented the spread of the problem. The North and Northeast regions had shutdowns of 7% of the load due to the performance of the Regional Load Alleviation Schemes, while in the South, almost its whole load was preserved. The analysis of the event indicated some actions to improve the BIPS safety, which are already being implemented.

Regarding the transmission administration, ONS could add more efficiency and effectiveness to the processes of access, expansion propositions and reinforcements, contract management and monthly assessment of services and charges studies.

In parallel with these measures, there was the continuity to the actions for the permanent updating of technological resources and infrastructure. In particular, further studies of the best solutions to the occupation, by ONS, of more appropriate and standardized facilities in Rio de Janeiro, Florianopolis and Recife.

Moreover, we sought to always create opportunities to improve technical training and human development of ONS staff, promoting knowledge management and technological development, with full awareness that people are, ultimately, responsible for compliance, with increasingly success, with the institutional functions of the organization. To them we give special thanks, on behalf of ONS Board of Directors.

Hermes J. Chipp
ONS General Director