ESPÍRITO SANTO CENTRAIS ELÉTRICAS S.A.  -  ESCELSA

ARTICLES OF INCORPORATION

Chapter I Name, Registered Office and Object

Article 1. ESPÍRITO SANTO CENTRAIS ELÉTRICAS S.A. - ESCELSA is a publicly held company governed by these Articles of Incorporation and by the applicable legal provisions.

Article 2. The Company has its registered office and jurisdiction in the city of Vitória, State of Espírito Santo.

Sole Paragraph - Upon resolution of the Board of Officers, the Company may open and/or close branches, agencies, offices and representative offices and any other facilities in any part of the national territory or abroad for carrying out Company's business activities.

Article 3. The Company shall exist for an undetermined period of time.

Article 4. The Company has the following objects:

a) to carry out studies, projects, constructions and operation of production plants and lines for the transmission and distribution of electric power, as well entering into business instruments on account of those activities, and may have interest in other companies so as to accomplish its corporate objects;

b) to develop activities relating to the rendering of electric power services such as: multiple use of posts, through the assignment to other users, upon payment; data transmission through its facilities, in due compliance with the applicable legislation; rendering of technical services regarding the operation, maintenance and planning of electric installation for third parties; services aimed at the optimization of energy process and electric installation for consumers; assignment, upon payment, of easement access to lines and exploitable land areas of plants and reservoirs with the purpose of improving the efficiency related to the use and offer of electric power.

c) to integrate groups of study, consortia, groups of people or any other forms of association with the purpose of conducting researches of the interest of the electric power sector, the training of technical personnel and the rendering of technical, operational and administrative support services to public electric power distribution service concessionaires.

CHAPTER II
Capital Stock and Shares

Article 5. The Company's capital stock is three hundred and seventy six million, twenty four thousand, six hundred and twenty nine reais and seventy four cents (R$ 376,024,629.74), fully subscribed and paid up, represented by five million, eight hundred and seventy six thousand and twelve (5,876,012)) non-par value nominative shares of common stock.

Paragraph One - Each share of common stock will be entitled to one (1) vote in the General Meetings of the Company.

Paragraph Two - The ownership of shares will be evidenced by entering the shareholder's name in the "Register of Nominative Shares". Any stock transfer will be carried out upon the signature of the pertinent term on the "Transfer of Nominative Shares Register". The Company shall issue stock certificates upon request by any shareholder. Stock certificates shall be signed by two (2) Directors or by one (1) Director jointly with an attorney-in-fact with special powers.

CHAPTER III
General Meetings

Article 6. The General Meeting shall meet ordinarily within the four (4) months after the end of each fiscal period and extraordinarily whenever required by the Company's corporate needs.

Sole Paragraph - The General Meeting will be presided over by the Chairman of the Board of Directors or, in his absence, by the Vice-Chairman of the Board of Directors, or in absence of both, by a person appointed by the majority of those in attendance. It will be incumbent upon the president of the Meeting to assign one of the persons present to act as secretary.

Article 7. Resolutions by the General Meeting shall be taken by the shareholder and drawn up in the pertinent Minutes book.

CHAPTER IV
Management

General Provisions

Article 8. The Company shall be managed by a Board of Directors and by a Board of Officers whose powers shall be granted by the applicable law in accordance with these Articles of Incorporation.

Article 9. The term of office of the members of the Board of Directors and the Board of Offices will be three (3) annual periods, re-election being allowed. For the purposes of this Article, an annual period is considered as the one between two (2) Ordinary General Meetings. The members of the Board of Directors and those of the Board of Officers shall remain in office until the election and inauguration of their successors.

Article 10. The aggregate remuneration of the members of Board of Directors and the members of the Board of Officers shall be established annually by the General Meeting. It will be incumbent upon the Board of Directors to apportion that amount among the respective members of such Boards.

Article 11. The members of the Board of Directors and those of the Board of Offices shall take office through the execution of an instrument of investiture drawn up in the "Book of Minutes of Board of Directors and Board of Officers Meetings" and shall be subject to any and all requirements, impediments, duties, obligations and responsibilities provided for in Articles 145 to 158 of Law No 6,404/76, as amended ("Corporation Law").

The Board of Directors

Article 12. The Board of Directors shall consist of a minimum of five (5) and a maximum of seven (7) directors, one of them being the Chairman and the other the Vice-Chairman. The members of the Board shall be elected by the General Meeting and may be removed from their offices at any time by decision of the General Meeting.

Paragraph One - Prior to the election the General Meeting shall set forth the number of members of the Company's Board of Directors for each period.

Paragraph Two - Company's employees and retired employees, the employees and retired employees of ESCELSOS and ESCELSOS will be ensured to elect jointly one (1) member of the Board of Directors, provided that such employees and retired employees continuously hold shares in EDP Energias do Brasil S.A., such shares granted to them on account of the conversion of the Company into a wholly-owned subsidiary of EDP Energias Brasil S.A., as provided for in the Minutes of the General Meeting of the Company and of EDP Energias do Brasil S.A., both dated April 29, 2005, in due compliance with the obligation set forth in paragraph V, item 4.4 - Special Obligations of Purchasers, in Public Notice No PND-01/95.

Paragraph Three - In the event that the employees and the retired employees referred to in Paragraph Two above did not elect the member of the Board of Directors as ensured to them, then it will be resolved if the office will remain vacated or if a member will be elected to fill the vacancy together with the other members elected as provided for by the applicable corporate law.

Article 13. The Board of Directors will meet ordinarily once a year and extraordinarily whenever necessary.

Article 14. The meetings of the Board of Directors may be called by its Chairman or by the Vice-Chairman or jointly by any two (2) members by at least 5 (five) day's prior written notice indicating the agenda to be discussed.

Sole Paragraph - Regardless of the formalities provided for in this Article 14, a meeting to which all Board Members are present or represented as set forth for in Paragraph Two of Article 15 will be deemed regular.

Article 15. The meetings of the Board of Directors will be installed only when the majority of the members in office are present.

Paragraph One - The meeting of the Board of Directors will be presided over by the Chairman of the Board of Directors who will appoint a person to act as secretary. In the event of impediment or temporary absence of the Chairman of the Board of Directors, the meetings of the Board will be presided over by the Vice-Chairman of the Board of Directors, or, in his absence, by a member of the Board chosen by the majority of the votes of the other Board members. It will be incumbent upon the president of the meeting to appoint the secretary.

Paragraph Two - In the case of impediment or temporary absence of any director, such director may appoint an alternate director to serve during his absence or impediment, and, in case of temporary absence, the alternate director shall vote in the meetings of the Board in his own name or in the name of the director he is representing. Such appointment shall be expressly accepted by the alternate director and informed to the Chairman of the Board of Directors. Alternatively, in case of a temporary absence, the director may, based on the agenda to be discussed, cast his vote in written form via letter or fax delivered to the Chairman of the Board of Directors, our further, by e-mail clearly identifying the sender thereof and acknowledgement of receipt by the Chairman of the Board.

Paragraph Three - In the case of a vacancy in any office of the Board of Directors, the remaining directors shall appoint a person to fill the vacancy and such person shall remain in office until the first General Meeting to be held after the event.

Article 16. The resolutions of the Board of Directors shall be taken by the unanimous affirmative vote of the majority of the directors in office, such the votes to be calculated as provided for in Article 15, Paragraph 2; the Chairman of the Board of Directors shall have the casting vote in the case of a tie.

Article 17. The meetings of the Board of Directors may be held by telephone conference, videoconference or any other similar method of communication, and presence of the persons participating in such meetings shall be considered as personal presence in such meeting. In this case, the directors shall give their votes by means of letter, fax or e-mail clearly identifying the sender.

Paragraph One- At the end of the meeting, the resolutions of the Board of Directors shall be recorded in minutes that shall be signed by all directors present in person in the meeting and further on drawn up in the Book of Minutes of Board of Directors Meetings. The votes cast by Directors that have remotely participated in the Board meeting or that have given their opinions as provided for in Article 15, paragraph 2 in fine shall be equally included in the Book of Minutes of Board of Directors Meetings, and a copy of the letter, fax, or e-mail, as the case may be, containing the Director's vote, shall be attached to the Book soon after the minutes have been drawn up.

Paragraph Two - The minutes of a meeting of the Company's Board of Directors containing any resolution intended to have any effects before third parties shall be published and filed at the Register of Trade.

Article 18. It is incumbent upon the Board of Directors:

a) to establish the general business policy of the Company;

b) to elect and remove members of the Company's Board of Officers, establishing their attributions, always in due compliance with the applicable provisions of these Articles of Incorporation;

c) to control the Board of Officers' management, examine, at any time, the books and papers of the Company, request information on agreements executed or about to be executed, and do any other acts required to the accomplishment of its functions;

d) to call the General Meeting whenever required by law or deemed convenient;

e) to give its opinion on the management report and accounts and on the financial statements of the fiscal period that shall be submitted to the Ordinary General Meeting;

f) to establish the limits within which the Board of Officers is authorized to acquire, dispose of or create burdens on the Company's personal and real property, including equity interest and the contracting of goods and services, borrowing and financing, granting of guarantees to third parties and other obligations by the Company;

g) to resolve on any business between the Company, on one side, and the direct or indirect shareholders thereof on the other side;

h) to appoint and dismiss the independent auditors;

i) to resolve on matters submitted by the Board of Officers;

j) to present to the General Meeting proposals for capital increase and amendments to the Articles of Incorporation;

k) to resolve on the issuance of debentures, the form of subscription or placement, the type of debentures to be issued, the conditions for the payment of interest, profit sharing and reimbursement premium on debentures, if any, and the maturity, amortization and redemption time and conditions regarding such debentures;

l) to approve the annual business plans and budgets and the pluri-annual, operational and investment plans of the Company;

m) to authorize the issuance of commercial papers for public distribution in Brazil or abroad, and provide for the terms and conditions of the issuance;

n) to submit to the General Meeting the allocation of the remaining balance of profits for each fiscal period;

o) to declare interim dividends as well as interest on own capital under the Corporation Law and other applicable legislation;

p) to provide for the orderliness of its work and establish the rules for its operation, in due compliance with the provisions of these Articles of Incorporation.

The Board of Officers

Article 19. The Board of Officers shall be formed by up to five (5) members. Such officers may consist of one (1) CEO, one (1) Executive Director, one (1) Technical Director, one (1) Commercial Director and one (1) Administrative-Financial Director and Director for Relationship with Investors, all resident in the country, elected and dismissible by the Board of Directors. Any number of offices may be held by the same person.

Article 20. It is incumbent upon the Board of Officers to manage the Company's corporate business in general, and, for the purposes thereof, to do any and all acts necessary or adequate, other than those the competence of which is granted to the General Meeting or to the Board of Directors as provided for by law or by these Articles.

Paragraph One - The Officers may perform any operations and do any and all administrative acts necessary to achieve the objective of their respective offices, as well as to resolve on the use of funds, compromise, waive, assign rights, confess indebtedness, enter into agreements and commitments, assume obligations, enter into contracts, issue, endorse, discount, withdraw and guarantee bonds in general, establish, activate and close accounts in credit banks as well as, in compliance with the legal and statutory restrictions, acquire, dispose of and create liens on personal and real property, pledge, give avals and guarantees.

Paragraph Two - It is incumbent upon the Director President: (i) to perform and to provide for the performance of the resolutions taken by General Meetings and the Board of Directors; (ii) to coordinate the activities of the other Officers, always in compliance with the specific attributions set forth in these Articles; (iii) to define the powers of the other members of the Board of Officers in the areas not specified in these Articles according to decision of the Board of Directors; (iv) to coordinate and promote the Company's policy of institutional representation regarding its relationship with the market, the press and governmental authorities; (v) to submit the Company's financial statements and the Management's Report to the Board of Directors; (vi) to issue and approve internal instructions and regulations that he deems necessary; (vii) to define the Company's human resources policies and guidelines regarding the hiring and dismissal of employees, professional development, remuneration and incentives; (viii) to coordinate the Company's legal activities; and (ix) to conduct studies on tariff review and adjustment and procedures for the compliance with regulations.

Paragraph Three - It is incumbent upon the Executive Director: (i) to promote the implementation and execution of the Company's Business Plan; (ii) to coordinate the activities relating to communication, image, advertising and marketing of the Company; (iii) to manage the supply of technological support to users, the planning of purchases, the management of warehouses and the operating management of suppliers; (iv) to promote the administrative management of human resources based on the policies and guidelines established by the Director President; (v) to manage commercial services, the optimization of commercial losses and the relationship with the Consumers' Council; and (vi) to manage the execution of works and the maintenance of networks, lines, substations and telecontrol systems, control and protection.

Paragraph Four - It is incumbent upon the Technical Director (i) to define the policies relating to technical support to consumers and those relating to planning, operation, maintenance and modernization of the energy systems, investments, implementation and standardization of measurement, automation, control, telecontrol and protection systems.; (ii) to define the projects relating to Transmission Substations and Lines; and (iii) to coordinate the programming and operation of energy systems and the quality control of products, services and the operation of the Company's facilities.

Paragraph Five - It is incumbent upon the Commercial Director: (i) to define market policies and those relating to service to big clients, commercial and services systems and commercial losses; (ii) to define the energy-related project and, in general, the purchase and sale of energy, the accounting for and settlement of energy; (iii) to define the marketing planning and commercial stabilization; and (iv) to manage the Call Center and the Energy Efficiency Program.

Paragraph Six- It is incumbent upon the Administrative-Financial Director and Director for Relationship with Investors: (i) to define the Company's policies relating to purchase, infrastructure, information technology, economic, financial and tax planning; (ii) to prepare the Company's budget, the Investment Plan and the Business Plan; (iii) to manage the Company's Accounting and Treasury services, including borrowing, funding and the use thereof and the preparation of the cash flow; and (iv) coordinate and manage the human resources-related procedures set forth by the Director President and the relationship with the capital markets.

Article 21. The Board of Officers shall meet at least once a month or whenever called by the Director President, or extraordinarily, whenever necessary according to the Company's corporate business. The meeting will be installed only with the presence of the majority of the members thereof.

Paragraph One - In the case of impediment or temporary absence of any Officer, such officer may appoint an alternate officer to serve during his absence or impediment, and, in such event the alternate officer shall vote in the meetings of the Board in his own name or in the name of the officer he is representing. Such appointment shall be made upon written notice to the Director President; such notice shall clearly contain the name of the appointed Officer and the powers granted to him, and shall be attached to the minutes of the respective meeting. Alternatively, in case of a temporary absence, the Officer may, based on the agenda to be discussed, cast his vote in written form via letter, fax or e-mail delivered to the Director President.

Paragraph Two - In the event of a vacancy in the Board of Officers, the other Officers shall be responsible for appointing a substitute among them, who will temporarily take over the duties of the substituted officer up until the first meeting of the Board of Directors to be held with the purpose of permanently filling the vacant office. The alternate then elected by the Board of Directors shall remain in office up to the end of the office of the Board of Officers.

Paragraph Three - The meetings of the Board of Officers may be held by telephone conference, videoconference or any other similar method of communication, and the presence of the persons participating in such meetings shall be considered as their personal presence in such meeting. In this case, the officers that have remotely participated in the meeting shall cast their votes by letter, fax, or e-mail distinctly identifying the sender thereof.

Paragraph Four - At the end of the meeting, the resolutions of the Board of Officers shall be recorded in minutes that shall be signed by all officers present in person in the meeting and further on drawn up in the Book of Minutes of Board of Officers Meetings. The votes cast by Officers that have remotely participated in the Board meeting or that have given their opinions as provided for in Article 21, paragraph 1 in fine shall be equally included in the Book of Minutes of Board of Officers Meetings, and a copy of the letter, fax, or e-mail, as the case may be, containing the Officer's vote, shall be attached to the Book soon after the minutes have been drawn up.

Article 22. The resolutions of the Board of Officers shall be taken by the unanimous vote of the majority of the officers present in the each meeting and that have cast their votes as provided for in Article 21, Paragraph One; the Director President shall have the casting vote in the case of a tie.

Article 23. The Company shall be bound whenever it is represented:

I - jointly by two (2) officers;

II - by one (1) Officer jointly with one (1) duly constituted attorney-in-fact with special powers,

III - jointly by two (2) duly constituted attorneys-in-fact with special powers;

IV - by one (1) Officer or one (1) duly constituted attorney-in-fact, to do the following acts:

a) represent the Company before any federal, state and municipal authorities and class entities;

b) endorse checks to be deposited into the Company's bank accounts; and

c) represent the Company before unions or the Labor Court as regards issues relating to employees' hiring, suspension or dismissal, and collective bargaining

Sole Paragraph - Powers of attorney in the name of the Company shall always be granted by two (2) Officers jointly, shall specify the powers granted and, with the exception of those granted for judicial purposes, shall be granted for a limited period of at most one (1) year.

CHAPTER V
The Audit Committee

Article 24. The Company shall have an Audit Committee, which shall operate in a provisional capacity, shall be made of three (3) effective members and equal number of deputies, either shareholders or not, elected by the General Meeting that resolved on the installation thereof. Remuneration of members of the Audit Committee shall be set forth by the General Meeting that elected them, in accordance with the applicable law. As regards its operation, the Audit Committee shall have the duties and powers as provided for by law. The Audit Committee will operate up to the first Ordinary General Meeting held after the installation thereof.

CHAPTER VI
Fiscal Year, Financial Statements, Profit Distribution,
Reserves and Dividends

Article 25. The fiscal year shall end on December 31 of each year. The Company's financial statements shall comply with the federal legislation on electric power, the corporation law and these Articles.

Paragraph One - The following rule shall be complied with in regard to results:

I - from the results of the fiscal year, after deduction of accrued losses and allowance for income tax, shall be deducted the amounts allotted to profit-sharing plans.

II - upon calculation of the net profit corresponding for the fiscal year, five per cent (5%) shall be deducted therefrom for the constitution of the statutory reserve, to the extent that such reserve does not exceed twenty per cent (20%) of the capital stock;

III - mandatory dividends in the amount of twenty five per cent (25%) of the net profit shall be distributed to shareholders, adjusted as provided for by law;

IV - interest on investments in on-going work made the Company with own capital may be accounted for as reserve.

V - other reserves may be formed, as provided for by the law.

Paragraph Two - The dividends referred to in item III, paragraph one of this article shall not be mandatory in any fiscal period in which the management informs the general meeting that such dividends are not compatible with the Company's financial standing. The Audit Committee will give its opinion on such information.

Paragraph Three - Any non-distributed profits under the terms of paragraph two shall be accounted for as special reserve. If they are not used to cover losses in any subsequent fiscal period, such profits shall be distributed as soon as permitted according to the Company's financial standing.

CAPÍTULO VII
Liquidation

Article 26. The Company shall go into liquidation whenever required by law; the General Meeting being competent to determine the manner of liquidation and to appoint the liquidator and the Audit Committee which shall officiate during the period of liquidation.

CHAPTER VIII
General Provisions

Article 27. With the purpose of ensuring to Brazilians or to companies organized under the Brazilian laws, the head office and management of which are located in the country, as well as to guaranteeing the obligation of the controlling shareholders to provide for the due compliance with the legal rules and regulations and with the contractual provisions relating to the public services, the corporate bodies shall abide by the following rules:

I - Any amendments to any provisions in these Articles shall be submitted to previous approval by the Agência Nacional de Energia Elétrica - ANEEL (the Brazilian Electric Power Agency). Any amendments in theses Articles and any resolutions taken by Ordinary or Special Meetings with the purpose of excluding or restricting the controlling power of the Company by Brazilians or by companies organized under the Brazilian laws, the head office and management of which are located in Brazil, and any amendments relating to any alteration in the Company's corporate object shall be expressly prohibited.

II - Any transfers, assignments, disposals of and liens of any type or for any purpose whatsoever, directly or indirectly, at no cost or upon payment, of voting shares and/or subscription rights, or bonus, in whole or in part, distributed on account of profit or reserve capitalization of the Company shall be submitted to the previous and express approval by the Agência Nacional de Energia Elétrica - ANEEL.

III - The transfer of the ownership of voting shares, or the shareholders' agreement the purpose of which is to exclude or restrict the controlling power of the Company by Brazilians or by a company organized under the Brazilian laws, the head office and management of which are located Brazil, shall not be registered on the Company's books or on stock certificates.

IV - No transfers of the ownership of voting shares that are part of the Company's controlling block may be registered on the Company's Register of Shares unless the new shareholder executes, jointly with the instrument of transference, a statement representing that he commits himself to comply with any and all terms and conditions set forth in the Concession Agreement. The statement shall be issued in two counterparts, one of which to be filed at the Company's head office and the other one to be forwarded to the Agência Nacional de Energia Elétrica - ANEEL.

V - The following note will be recorded on the margin of the Register of shares owned by the controlling shareholders: "These shares shall not be pledged, assigned or transferred for any purpose whatsoever, unless upon previous and express authorization by the Agência Nacional de Energia Elétrica - ANEEL"

Article 28 - The Management's Report shall include a special chapter on any activities and investments relating to the rendering of the services provided.

Articles of Association approved by the Special General Meeting held on 04/29/2005 and amended by the Special General Meeting held on 06/10/2005.