Related-Party Transaction

Notice about Related-Party Transaction

Companhia Paranaense de Energia - Copel, a company that generates, transmits, distributes and sells power, with shares listed on the NYSE (ELPVY, ELP), the B3 (CPLE3, CPLE5, CPLE6) and the LATIBEX (XCOP), pursuant to CVM Instruction 480/2002, of December 7, 2009, hereby informs its shareholders and the market in general of the following related-party transaction, entered into on October 11, 2017:

Name of Related Parties

Usina Elétrica a Gás de Araucária Ltda. - UEG Araucária e Petróleo Brasileiro S.A - Petrobras.

Relationship with the Company

UEG Araucária is a private-law legal entity, incorporated as a limited-liability company, owned by Copel, which holds 20% of the capital stock; Copel Geração e Transmissão, which holds 60% of the capital stock; and Petrobras, which holds 20% of the capital stock.

Transaction Date

October 11, 2017.

Purpose of the Agreement

Purchase and sale of natural gas on an uninterruptible basis for the generation of thermal energy.

Main Terms and Conditions

Effective period: October 11 to November 30, 2017. Maximum daily volume of up to 2,190,000 Nm³/day.

Information about the participation of the counterparty, its partners or management in the Company's decision-making process about the transaction or negotiation of the transaction as representatives of the Company, describing such participation

The counterparty did not participate in the Company's decision-making process.

Detailed justification of why the issuer's management considers that the transaction is conducted on an arm's length basis or envisages appropriate compensatory payment:

Araucária TPP (a plant owned and operated by UEG Araucária) does not have Energy Commercialization Agreements related to the sale of generated energy, operating as a Merchant. This means that it is called upon to generate energy by the National System Operator (ONS) when the Marginal Cost of Operation (CMO) exceeds the Unit Variable Cost (CVU) of the plant.

Araucária TPP's operation is, therefore, determined

Related-Party Transaction

by the merit order of its costs or request by the ONS.

In light of this, the Company's management considers that the transaction was conducted on an arm's length basis and envisages appropriate compensatory payment.

The Company thus believes that the agreement resulted in the reduction of Araucária TPP's variable costs, placing it at a level below the Marginal Cost of Operation of the electrical sector, enabling its possible operation. In addition, the exclusion of the take or pay clause does not impose risk on UEG Araucária if the National Interconnected System (SIN) conditions are not appropriate for the dispatch of Araucária TPP.

Curitiba, October 23, 2017.

Adriano Rudek de Moura

Chief Financial and Investor Relations Officer

For further information, please contact the Investor Relations team: ri@copel.com or (41) 3222-2027

COPEL - Companhia Paranaense de Energia published this content on 23 October 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 23 October 2017 22:32:02 UTC.

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