code of ethics and

business conduct

CPFL Energia

direcionadores da ação empresarial na cpfl energia

This Code of Ethics and Business Conduct is the result of a long and

detailed process of refl ection. The Code has been instrumental in

building up solid experience and awareness of the ethical principles

that CPFL wishes to enshrine in its business and the ethical

commitments the Group wants to publicly assume.

For this to be put into practice, it is not enough for CPFL to merely

formalize this commitment. The Code will only become eff ective if all

and each one of our employees and other stakeholders legitimize this

commitment in their day-to-day ethical practices.

1. Introduction ........................................................................................................................................................06

2. Guidelines for Business Activities at CPFL Energia ....................................................................................08

2.1. Vision ......................................................................................................................................................09

2.2. Mission ...................................................................................................................................................09

2.3. Principles ...............................................................................................................................................09

2.4. Management Policies .........................................................................................................................10

2.4.1. Policy of Quality .....................................................................................................................10

2.4.2. Environmental Policy ............................................................................................................10

2.4.3. Human Resources Policy ......................................................................................................10

2.4.4. Health, Safety and Quality of Life Policy ..........................................................................10

2.4.5. Policy for Enhancing Diversity ............................................................................................10

2.4.6. Sustainability and Corporate Responsibility Policy .......................................................10

2.5. CPFL Energia’s Institutional Commitments ...................................................................................11

2.5.1. Principles of the United Nations Organization Global Pact ........................................11

2.5.2. United Nations Organization Millennium Development Goals .................................11

2.5.3. Business Pact for Integrity and against Corruption sponsored by the United

Nations Organization, Ethos Institute and the Organization for Economic

Co-operation and Development - OCDE .........................................................................11

2.5.4. Abrinq Foundation’s Commitment to the Rights of Children and

Adolescents .............................................................................................................................11

3. Ethical Principles ................................................................................................................................................12

4. Business Conduct Guidelines .........................................................................................................................16

4.1. Responsibility of Offi cers for Compliance with CPFL Energia’s Principles and

Guidelines of the Code of Ethics and Business Conduct ............................................................18

4.2. Focus on Responsibility......................................................................................................................18

4.3. Corporate Governance .......................................................................................................................18

4.3.1. Commitment to the Creation of Value .............................................................................19

4.3.2. Commitment to Excellence .................................................................................................19

4.3.3. Commitment to Disclosure of Information .....................................................................19

4.3.4. Security of Information ......................................................................................................19

4.3.5. Confl icts of Interest ...............................................................................................................19

4.3.5.1. Relations of a Commercial Nature ....................................................................20

4.3.5.2. Professional Work outside CPFL ........................................................................20

4.3.5.3. Parental Relations among Company Professionals ............................... 20

code of ethics and

business conduct

CPFL Energia

4.3.5.4. Customer Relations ....................................................................................... 21

4.3.5.5. Transactions with Related Parties .............................................................. 21

4.3.5.6. Securities Trading by CPFL Professionals ................................................. 21

4.4. Use of Resources Owned by the Company ........................................................................... 22

4.5. Use of Electronic Media ............................................................................................................. 22

4.6. Intellectual Property and Copy Rights ................................................................................... 22

4.7. Relationship with the Public Sector and Political Activities ........................................... 22

4.8. Corruption and Favors ................................................................................................................ 23

4.9. Publicity, Campaigns and Concession of Sponsorship ...................................................... 23

4.10. Prejudice, Discrimination and Harassment ........................................................................... 23

4.11. Health, Safety and Quality of Life ............................................................................................ 24

4.12. Professional Development and Advancement .................................................................... 24

4.13. Enhancement of Diversity and Social Inclusion................................................................... 24

4.14. Right to Freedom of Association and Collective Bargaining ............................................ 25

4.15. Gifts and Presents........................................................................................................................ 25

4.16. Use of Alcohol and Narcotics .................................................................................................... 25

4.17. Respect for Privacy and Confi dentiality ................................................................................. 26

4.18. Energy and Sustainability ......................................................................................................... 26

4.19. Community Participation and Support for Volunteer Action ......................................... 26

4.20. Ethics Management and Development System .................................................................. 27

4.21. Dissemination of the Principles and Guidelines of CPFL Energia’s Code of

Ethics and Business Conduct .................................................................................................. 27

4.22. Inspection and Controls of the Account Ledgers and Registers ...................................... 27

4.23. Government Inspection and Control...................................................................................... 27

5. Access Channels for Criticism, Suggestions, Whistle Blowing and Complaints ........................ 28

5.1. Channel for Ethical Conduct – Infringements of the Code of Ethics .............................. 30

5.2. Channel for Whistle Blowing with respect to Fraud of an Accounting and Fiscal

Nature ............................................................................................................................................ 30

5.3. “Talk to the CEO” Channel ......................................................................................................... 31

6. Attachments .............................................................................................................................................. 32

6.1. CPFL Energia’s Institutional Commitments ........................................................................... 34

6.2. Term of Commitment

1 introduction

CPFL Energia’s Code of Ethics and Business Conduct covers the essential

elements that must be present in the relations of Group companies with

their diff erent constituencies – shareholders, customers, employees,

suppliers, service providers, competitors, governments, community and

society.

The Code is composed of Ethical Principles and Guidelines for Conduct. It is

above all, a compendium of values, a series of key guidelines, a benchmark

for moral and ethical conduct orientating the actions and decisions of all

employees irrespective of hierarchical level.

The adhesion to, and compliance with the Principles and Guidelines

established in CPFL Energia’s Code of Ethics and Business Conduct are

essential conditions for operations at the group companies.

Based on their responsibilities to the community in which the companies

operate and in relation to society as a whole, CPFL Energia also has a

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direcionadores da ação empresarial na cpfl energia

commitment to extend the Code of Ethics and Business Conduct to its chain

of relationships. The objective is to make its position in this area explicit and

thus contribute to the building of relationships based on trust, integrity and

respect, including the public domain.

Periodically, CPFL Energia also undertakes to revise the Code of Ethics and

Business Conduct based on input from its constituent public as part of an

ongoing process of evolution and legitimization.

Non-compliance with CPFL Energia’s Code of Ethics and Business Conduct

will subject off enders to the penalties pursuant to internal company rules

and Brazilian law, and can lead to the eventual rescission of the labor

contract.

code of ethics and

business conduct

CPFL Energia

07

2 guidelines for business activities at cpfl energia

code of ethics and

business conduct

CPFL Energia

08

2.1. Vision

Energy is essential to

the well-being of people and

development of society. We believe that

producing and using energy in a sustainable way is

paramount for the future of humanity.

2.2. Mission

To promote sustainable energy solutions with excellence and

competitiveness, working in harmony with the community.

2.3. Principles

• Value Creation

• Exceeding Expectations

• Confi dence and Respect

• Commitment

• Sustainability

• Security and Quality of Life

• Entrepreneurship

• Austerity

09

2.4. Management Policies

2.4.1. Policy of Quality

To promote the permanent satisfaction of our customers, shareholders, employees and

partners through continual improvement in the quality of products and services.

2.4.2. Environmental Policy

Supply society with services in the energy area, observing total respect for the environment,

complying with the environmental legislation, taking preventive measures against pollution

and promoting the continual improvement in the environmental performance of our

activities.

2.4.3. Human Resources Policy

Attract, care for and develop employees, providing them with the conditions for their personal

and professional realization in a healthy environment, characterized by well being, respect for

corporate values, ethical and transparent relations and opportunities for acquiring material

social knowledge, in so doing, supporting the perception of the CPFL Group as an excellent

place to work.

2.4.4. Health, Safety and Quality of Life Policy

To continually pursue the well being of employees, preventing healthy and safe working

conditions in accordance with the current occupational safety and medical legislation,

identifying, preventing, controlling and mitigating risks which could result in incidents and/

or accidents involving material or the labor force, pursuing the continual improvement in all

the work processes and promoting quality of life.

2.4.5. Policy for Enhancing Diversity

Enhance, promote and administer diversity, over and above mere compliance with the Law,

placing CPFL in a position to successfully meet the challenge of respecting, welcoming and

enhancing diff erences, focusing on ethics and sustainability.

2.4.6. Sustainability and Corporate Responsibility Policy

Permanently take into account the responsibility and sustainability in the process of managing

the businesses, through the administration of the impacts of Group company actions in the

economic, social and environmental fi elds in line with the legitimate interests of society.

10

2.5. CPFL Energia’s Institutional Commitments

2.5.1. Principles of the United Nations Organization Global Pact.

2.5.2. United Nations Organization Millennium Development Goals.

2.5.3. Business Pact for Integrity and against Corruption, sponsored by the United Nations

Organization, the Ethos Institute and the Organization for Economic Co-operation and

Development – OCDE.

2.5.4. Abrinq Foundation’s Commitment to the Rights of Children and Adolescents.

code of ethics and

business conduct

CPFL Energia

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code of ethics and

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CPFL Energia

3 ethical principles

12

13

3.1. The CPFL Group companies’ relationship with their diff erent stakeholders is based

on honesty and integrity. This means that all company decisions must always be

supported by an ethical evaluation. The practices should be compatible with the

Values of the company. This helps build relations that are lasting and based on trust.

3.2. At the CPFL Group, all business processes must be guided by transparency while the

veracity of the information supplied by partners must always be established. In this

way only can the credibility required for developing company business be achieved.

3.3. It is mandatory at the CPFL Group that in all relationships – internal or external -

people should be treated with dignity and respect. This is the way that the company

should be seen: as a company where people feel they are respected.

3.4. At the CPFL Group, there is an ongoing concern with the impact of all Group actions

and decisions on stakeholders. Risks involved in the businesses of the Group are

permanently managed, always seeking to bear in mind that the companies’ future

depends on the decisions that are being taken today.

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code of ethics and

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CPFL Energia

3.5. The CPFL Group has a major concern with the future of the planet. Given that the

Group uses scarce and fi nite resources, there is an awareness that the existence

of its companies depends on the quality of the environment. CPFL is committed

to environmental preservation and the realization of a permanent and rigorous

evaluation of the consequences of all its programs and enterprises on the quality of

life of future generations.

3.6. Since it operates in a sector which is strategic to the development of the country, CPFL

seeks to align its business strategy with the nationwide agenda for development in

such a way as to contribute to the growth of the country, to the economic and social

development of the communities in which it operates and for the well being of the

population.

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code of ethics and

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CPFL Energia

4 business conduct guidelines

16

The purpose of the Guidelines of Business

Conduct is to establish the processes

for decision-making at the CPFL Group

companies. The guidelines are also designed

to guide the attitudes and behavior of

CPFL’s Offi cers, Managers and Employees

(hereinafter denominated Professionals) in

the relationship with stakeholders.

Under these conditions, the following

guidelines represent rules that must be

adhered to by all professionals in the CPFL

Group, irrespective of hierarchy.

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4.1. Responsibility of the Offi cers for Compliance with CPFL Energia’s Principles and Guidelines of the Code of Ethics and Business Conduct

At the CPFL Group, it is essential that all professionals respect and comply with the Principles

and Guidelines established in this Code of Ethics and Business Conduct.

In turn, those professionals in a position of leadership are responsible for ensuring that

the Principles and Guidelines set out in this Code serve as a permanent guide for decisions

taken in their respective areas of business.

Professionals must also show in their attitudes and behavior that they are committed

to the values of CPFL, creating an environment that fosters compliance with the principles

in this Code. It is the professionals’ responsibility to disseminate the content of this Code

among their work teams.

4.2. Focus on Responsibility In the CPFL Group, the requirement of complying with the prevailing norms runs

complementary to the stimulating of responsibility among employees who have

discretionary powers not to follow orders which might place their integrity or that of

third parties at risk, or which might prejudice the company, its image and assets or the

environment.

No one has the right to require a CPFL professional to practice illegal acts or to infringe

the values, principles and guidelines herein enshrined.

All CPFL’s professionals have the right to obtain clarifi cations and express their concern

as to improper behavior in the work place, when this is considered contrary to guidance

contained in this Code.

4.3. Corporate Governance In view of the importance of transparency and integrity in building relations of trust with

stakeholders, the CPFL Group always discloses correct information on its operations,

regularly renders accounts of its actions and assures the equilibrium and the equitability of

its decisions with the objective of respecting the rights of its shareholders.

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code of ethics and

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CPFL Energia

4.3.1. Commitment to the Creation of Value

CPFL permanently pursues the increase in effi ciency, productivity and competitiveness,

continually managing the risks associated to the businesses with the purpose of adding

value, providing fair remuneration and compatible with the capital invested by its

shareholders.

4.3.2. Commitment to Excellence

CPFL seeks excellence in all activities. The prevailing belief in Group companies is that

everything has the potential for improvement. CPFL wishes its processes, products and

services to be recognized as benchmarks in the business sector. CPFL seeks superior quality

in all that it does.

4.3.3. Commitment to Disclosure of Information

At the CPFL Group, there is a commitment to publicly disclose information in a correct,

consistent, accurate, truthful and complete manner, as well as to inform the Group’s

systematic control procedures.

4.3.4. Security of Information

Internal information is considered a CPFL Group asset. For this reason, the company

maintains its Information Security Policy, which classifi es information as public, for

internal use, and confi dential, with the purpose of guaranteeing the correct use and

adequate protection of the companies’ database. The use, sharing and disclosure of private

information on group companies with respect to market, processes, programs, technologies,

business tendencies and company results must adhere to the appropriate levels of authority,

set out in the established Policy. Non-authorized use of any information generated by group

companies will constitute a serious misdemeanor.

4.3.5. Confl icts of Interest

It is the duty of all Group company professionals to act with integrity in the performance of

their duties, avoiding confl icts of interest, whether real or apparent, in their personal and

professional relationships.

In this context, the establishment of relations and the conclusion of business

transactions with their constituent public are based on transparency, on respect for ethical

19

principles and on compliance with the best market practice.

4.3.5.1. Relations of a Commercial Nature

The CPFL Group maintains norms that defi ne procedures for commercial negotiations. These

must always be based on the impartial selection of suppliers and the use of strictly technical

and commercial decision-making criteria in purchase and sale processes.

The relations of the CPFL Group companies with their raw material suppliers or service

providers must contemplate the legitimate interests of the parties concerned, under

no circumstances being countenanced unwarranted advantages obtained through the

manipulation of information, intimidation, coercion, threats, duress or artifi cial creation

of situations of dependence of the other party to the transaction, practices of unfair

competition or situations characterized as Confl icts of Interest with the businesses of the

CPFL Group.

To ensure integrity, exemption and transparency in its transactions, as a general rule,

CPFL prohibits the participation of its professionals in decision-making processes with

respect to the purchase and sale of products, services or energy, with companies that have,

as their partners or members of management, persons with whom CPFL’s professionals have

natural or civil family ties, no matter what the extent of the relationship.

Professionals who work in the companies must also act with care when transacting

business of a private nature with suppliers, or other parties, with whom, due to their

functions, they perform transactions in the name of group companies.

The CPFL Group prohibits the contracting of suppliers that do not comply with the

prevailing labor legislation, that supply unsafe products or services, do not provide training

and safety equipment to their employees, or use child labor.

4.3.5.2. Professional Work outside CPFL

At the CPFL Group, the exercising of outside work activities by its professionals will only be

acceptable in the event that there is no incompatibility with working hours, professional

performance is not prejudiced, and there is no confl ict with CPFL’s businesses and interests.

4.3.5.3. Parental Relations among Company Professionals

The CPFL group allows professionals to work where there is a parental relationship, the

hiring of such personnel always being preceded by a process of selection and specialized

evaluation to ensure equitability, exemption and transparency in the process of recruiting

professionals for working in the companies.

However, no professional in the CPFL Group companies may report to a relative (direct

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code of ethics and

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CPFL Energia

ascendants or descendants, brother, uncle, cousin, nephew or partner), even if indirectly.

In the case of the board directors, chief executive offi cer, vice-presidents and statutory

directors, the hiring of family members as professionals by Group companies is forbidden,

irrespective of the degree of kinship.

CPFL maintains a human resource policy that disciplines in detail the family relationship

among professionals that work in Group companies.

4.3.5.4. Customer Relations

The Companies maintain specifi c channels in fi rst and second instances for the receipt of

complaints as to the quality and the conformity of the products and services provided.

Reimbursement for eventual damages caused by the rendering of services is performed

in accordance with the legislation and the prevailing regulations, and is based exclusively on

technical criteria.

The sale of energy products and services on a private basis to customers of Group

companies is forbidden.

Relations of kinship or friendship among CPFL’s professionals and its customers may in

no way create privileged situations or diff erentiated treatment on the part of the company.

4.3.5.5. Transactions with Related Parties

At CPFL, all transactions with Related Parties are performed with the same transparency as

other transactions conducted for Group companies, always strictly adhering to technical and

commercial criteria according to best market practice.

4.3.5.6. Securities Trading by CPFL Professionals

The CPFL Group maintains a Securities Trading Policy, which governs the trading of equities

and other securities by related persons and their families, prepared in accordance with

the legislation and prevailing regulatory norms as well as best market practice. This policy

governs the responsibility of all professionals that work in Group companies with respect to

the confi dentiality of material information still not disclosed by CPFL to the market. For this

reason, information that may infl uence the value or behavior of the equities in the market

is considered confi dential and its disclosure must comply with the procedures established

by the capital markets regulatory and supervisory bodies, and may not be used directly

by management and professionals, or be released to third parties. In this context, advice,

purchase and sale of Group companies’ shares on the basis of insider information, not in the

public domain, is absolutely forbidden.

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4.4. Use of Resources Owned by the Company The CPFL Group is the owner of all types of assets – power plants, transmission lines,

networks, installations, vehicles, real estate, equipment, trade names and a rich collection of

knowledge, information, systems, processes, technologies and innovations, developed by

its companies. All professionals have the duty to protect and preserve the company’s assets

against inappropriate or improper use, treating such assets with diligence and care.

4.5. Use of Electronic Media The CPFL Group also maintains specifi c policy and norms on the use of electronic mail,

e-mail, the Internet, the intranet and other electronic sources of information.

The internal or external disclosure of any messages containing information extraneous

to corporate activities, among others, related to the spreading of practical jokes, rumors,

pornography, commerce or propaganda, including of a party-political nature, is forbidden.

4.6. Intellectual Property and Copy Right The CPFL Group respects copy rights and intellectual property rights of third parties on

various materials used in the course of its work and does not permit the use or dissemination

of unauthorized copies, or those obtained illegally, from any materials, systems and software

produced by third parties.

4.7. Relationship with the Public Sector and Political Activities The relationship of the CPFL Group companies with government personnel or public

authorities is always based on transparency in such a way as to ensure the development

of integral, contributory and sustainable relations with the constituted authorities of the

executive and legislative branches and the judiciary.

In this context, the CPFL Group companies participate in discussions on public policies

related to their business activities as well as other themes of material interest to society.

On the other hand, the CPFL Group companies maintain a position of neutrality and

exemption with respect to candidates, political tendencies and political parties. The

professionals that work in Group companies, when participating in party political activities,

do so in a strictly personal capacity outside working hours and place of work.

For this reason, the CPFL Group does not allow the use of resources, programs and

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CPFL Energia

services or the association of its trade names with activities of a party-political nature.

4.8. Corruption and Favors The CPFL group repudiates any form of corruption, favors, extortion and bribery at all

levels. As a signatory to the Business Pact for Integrity and against Corruption, the Group

undertakes to integrally adhere to the Pact’s guidelines.

4.9. Publicity, Campaigns and Concession of Sponsorship The CPFL Group undertakes to comply with its Sponsorship and Donations Policy, not

approving campaigns, publicity insertions and the concession of sponsorships for events

that encourage the consumption of alcoholic beverages, tobacco and narcotics, that shows

children and adolescents in a prejudicial light, provokes embarrassment, humiliation,

exclusion or exposes the vulnerability of individuals and groups, provokes ill-treatment to

animals, or that may trigger or induce environmental damage.

4.10. Prejudice, Discrimination and Harassment The CPFL Group repudiates all and any form of prejudice, discrimination and harassment.

The Group commits to investigate and confront iniquitous behavior, humiliation, exposure

to ridicule, intimidation, hostility and duress, as a consequence of color, race, gender,

ethnic origin, language, age, economic status, nationality, birth place, physical, mental or

psychiatric condition, family relationship, religion, sexual tendency, ideology or political

position.

Similarly, the Group undertakes to prevent privileges being associated with specifi c

categories due to their diff erences.

23

4.11. Health, Safety and Quality of Life CPFL Group is aware that its companies’ performance is unequivocally associated to the

health, safety and quality of life of its professionals. This in turn requires an organizational

culture and a management system focused on enhancing life. Group companies undertake

to provide safe working conditions and promote educational initiatives that broaden the

perception and sensibility of all professionals to these themes.

Thus, all professionals at CPFL are responsible for knowing the internal safety rules, how to use

protective equipment and are able to demonstrate a permanent attitude of accident prevention.

None of CPFL’s professionals may infringe the occupational safety norms.

No task at CPFL must be performed without the appropriate safety conditions being

present.

It is the duty of each one of CPFL’s professionals to communicate unsafe conditions,

disrespect for the safety rules, or situations that might place human lives at risk.

The CPFL Group companies hold regular guidance campaigns for increasing the

awareness of the customers and population on the safe use of electric energy.

4.12. Professional Development and Advancement Professional growth at the CPFL Group must always be related to each professional’s contribution

and commitment to meeting the objectives of the organization. Professional development at

CPFL is based upon individual merit. Criteria involving favoritism or discrimination of people are

not used. Performance, potential and competence are the sole criteria used in performance and

compensation evaluation systems. CPFL’s companies focus particularly on employee potential

through the systematic use of professional development programs and the application of

compensation systems in accordance with market practice.

4.13. Enhancement of Diversity and Social Inclusion The CPFL Group enhances diversity and social inclusion. In this context, the Group

respects differences and undertakes to adapt its work processes, working

environment and equipment to ensure equality of conditions and accessibility at all

its installations.

Group companies undertake to implement and maintain a personnel management

system, which incorporates this position in the policies of selection, hiring,

development, promotion, compensation and termination of employment.

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4.14. Right to Freedom of Association and Collective Bargaining The CPFL Group recognizes the importance of the permanent pursuit of harmonizing

the interests of its companies and those of its employees. Group companies support

the right to freedom of association and collective bargaining, recognizing the

legitimacy of the labor unions and the internal employee representation system

through the Employee Representative Council – CRE.

4.15. Gifts and Presents CPFL Energia Group’s professionals must categorically refuse presents or favors that do

not adhere to the company’s values, principles and best commercial relationship practices

prevailing in the country. As a yardstick, only promotional gifts and presents with no

commercial value or which may be publicly acknowledged without causing embarrassment

to the company and to the professional, may be accepted.

4.16. Use of Alcohol and Narcotics At CPFL, to work under the infl uence of narcotics or alcohol is considered willful misconduct,

since the companies consider that the consumption of narcotics or the abuse of alcoholic

beverages adversely aff ects the health as well as the performance of the professional,

exposing him/her to risks, impairing the working environment and aff ecting the

organization’s image.

To support its professionals that suff er from alcohol or narcotics addiction, the Group

companies run regular prevention programs. Professionals that use or show dependence

on alcohol or narcotics, chemical substances or controlled drugs without due medical

supervision, are asked whether they are prepared to undergo specialized treatment and

monitoring.

In addition, CPFL alerts its professionals that the use of, carrying or dealing in narcotics

lays them open to the penalties under the prevailing legislation, including the possibility of

rescission of the labor contract.

25

4.17. Respect for Privacy and Confidentiality The CPFL Group respects the personal life and the privacy of its professionals and the

confi dential nature of their personal information.

The relationships of authority in the CPFL Group may not restrict the right of freedom of

speech and the right to privacy and may not be used for obtaining professional information

that has no direct connection with the performance of the Group companies’ professionals.

4.18. Energy and Sustainability CPFL recognizes the importance of natural resources for the development of its activities

and regularly promotes initiatives for environmental preservation, incentives for energy

conservation and education on the rational use of energy.

4.19. Community Participation and Support for Volunteer Action The CPFL Group, as an agent for development and a component part of the social fabric

of the communities where it operates, participates in and fosters a proactive role for its

professionals in the community life of the cities in which they work. The Group does this by

stimulating employee participation in social and cultural projects and/or in activities that

promote citizenship, the eradication of poverty and the reduction of social inequalities.

4.20. Ethics Management and Development System The CPFL Group considers the management of this Code of Ethics and Business Conduct as

the responsibility of all its Offi cers, Managers and Employees. For this reason, it undertakes

to maintain an Ethics Management and Development System, supported by the Ethics and

Business Conduct Committee.

The Committee has the function of promoting the legitimization, respect, compliance

and improvement of the Code, clarifying doubts, arbitrating disputes, analyzing suggestions,

complaints and whistle blowing.

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code of ethics and

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CPFL Energia

4.21. Dissemination of the Principles and Guidelines of CPFL Energia’s Code of Ethics and Business Conduct

CPFL Group’s companies are committed to disseminating the Ethical Principles and Guidelines

of Business Conduct established in this Code. They thus promote the regular disclosure of

information and hold seminars, courses and train their professionals to correctly apply the

Principles and Guidelines laid down herein. The companies are also committed to disclosing

and disseminating the Code of Ethics to their strategic stakeholders.

Access channels are also available to internal and external constituencies as a means of

communicating criticisms, suggestions, whistle blowing and complaints of an ethical,

accounting and fi nancial nature.

Group companies provide guidance to their professionals on the prompt delivery of

documents and evidence that help investigations related to infringements of the Principles

and Guidelines of this Code and the repudiation of any action that contributes to preventing,

hampering or obstructing the verifi cation of eventual violations of this Code.

4.22. Inspection and Controls of the Account Ledgers and Registers CPFL Group companies are committed to registering their Reports and Balance Sheets

in a correct, consistent, accurate, truthful and complete manner, suffi ciently detailed

and contextualized to assure the inherent transparency of the specifi c situation under

consideration. The committee is also committed to making its accounts available to the

auditors and the respective public organs.

4.23. Government Inspection and Control The CPFL Group shall answer for and contribute to any supervisory initiative and verifi cation

of practices on the part of Government authorities.

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5 access channels for criticism, suggestions, whistle blowing and complaints

28

The provision of access channels is a specifi c

commitment of the CPFL Energia Group for

ensuring the eff ective compliance with this Code

of Ethics and Business Conduct. These channels

are a component part of the Ethics Management

and Development System.

29

The CPFL Group repudiates the practice of spurious, conspiratorial or vindictive whistle

blowing. The results of whistle blowing are enhanced when the professional has

information on the facts or situations that can harm the company, its employees or other

Group stakeholders.

When a case of whistle blowing arises, anonymity and full investigation are assured

under the Ethics Management and Development System pursuant to items 5.1 and 5.2

below.

The CPFL Group does not tolerate retaliation or punishment of professionals of the

companies or any persons that report criticisms, suggestions, allegations or complaints.

CPFL will not countenance sanctions against professionals, who in performing their duty

communicate a concern through the appropriate channels herein defi ned:

5.1. Channel for Ethical Conduct – Infringements of the Code of Ethics

The purpose of this channel is to receive internal and external notifi cation of themes covered

by CPFL Energia’s Code of Ethics and Business Conduct, the employee being assured total

secrecy and confi dentiality. CPFL Group’s Ethics and Business Conduct Committee examine

notifi cations.

Means of access for communicating infringements of the Code of Ethics and Business

Conduct:

• Telephonic access via 0800 77 02050

• Electronic access via e-mail: etica@cpfl .com.br

• Caixa Postal no 1408 e CEP 13088-900, for sending correspondence to the Ombudsman.

5.2. Channel for Whistle Blowing with respect to Fraud of an Accounting and Fiscal Nature

This channel’s objective is to receive, with secrecy and confi dentiality totally guaranteed,

notifi cations, including those of an anonymous nature with respect to fi nancial and

accounting information disclosed by the CPFL Group. The Fiscal Council is responsible for

examining these notifi cations.

Means of access for communicating accounting and fi scal fraud:

• Telephonic access via 0800 77 38422

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code of ethics and

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CPFL Energia

5.3. “Talk to the CEO” Channel This channel is to receive notifi cations from the Group companies, and addressed to CPFL’s

CEO. The notifi cations are received and answered directly by the CEO himself.

Means of access:

• Access directly to the work area on the intranet – “Talk to the CEO”.

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code of ethics and

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CPFL Energia

6 attachments

32

CPFL Energia recognizes that the adhesion to

the Global Pact, the Millennium Development

Goals, the Business Pact for Integrity

and against Corruption and to ABRINQ,

consolidates its position as a company

committed to sustainability and corporate

responsibility adopting organizational conduct

and management practices aligned to

all these commitments.

33

6.1. CPFL Energia’s Institutional Commitments In December 2003, CPFL Energia signed up to the United Nations Organization’s Global

Pact, instituted in 1999. As from June 2004, CPFL Energia began to adopt initiatives

under the Millennium Development Goals proposed by UNO in 2000.

CPFL recognizes the Global Pact and the Millennium Development Goals as initiatives

that are aligned to the legitimate interests of society.

6.1.1. Principles of the United Nations Organization’s Global Pact (adopted by CPFL Energia)

Human Rights

Principle 1: Businesses should support and respect the protection of

internationally proclaimed human rights;

Principle 2: Businesses should make sure that they are not complicit in human

rights abuses and violations.

Labor Standards

Principle 3: Businesses should uphold the freedom of association and

the eff ective recognition of the right to collective bargaining;

Principle 4: The elimination of all forms of forced and compulsory labor;

Principle 5: The eff ective eradication of child labor;

Principle 6: The elimination of discrimination in respect of employment and

occupation.

Environment

Principle 7: Businesses should support a precautionary approach to

environmental challenges;

Principle 8: Undertake initiatives to promote greater environmental

responsibility;

Principle 9: Encourage the development and diff usion of environmentally

friendly technologies.

Anti-Corruption

Principle 10: Businesses should work against all forms of corruption including

extortion and bribery.

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code of ethics and

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CPFL Energia

6.1.2. United Nations Organization Millennium Goals (adopted by CPFL Energia)

1. Eradicate hunger and poverty

2. Achieve a universal quality, primary education

3. Promote gender equality and empower women

4. Reduce infant mortality

5. Improve maternal health

6. Combat HIV/AIDS, malaria and other diseases

7. Quality of life and respect for the environment

8. The entire world working for development

6.1.3. Business Pact for Integrity and against Corruption

The Pact was instituted by the United Nations Organization, the Ethos Institute and by the

Organization for Economic Co-operation and Development - OCDE, in June 2006. CPFL

Energia adhered to the Pact in June 2006.

Under this Pact, the CPFL Group has committed to the following undertakings:

• Enhance actions necessary to allow personnel in corporate structures to know the laws to

which they are subject;

• Enhance the prohibition of any person or organization, that operates in the name of the

Signatories, off ering bribes to a public offi cial;

• Enhance the prohibition on any person or organization making a contribution to electoral

35

campaigns for obtaining advantage;

• Enhance the prohibition of any person or organization, that acts in the name of the

Signatories, using any immoral or anti-ethical means in the relationships with public

offi cials;

• Disclose the Principles in this Pact to other economic entities;

• Cooperate with Government entities in investigating suspicions of irregularities,

infringements of the law or ethical principles.

6.1.4. Abrinq Foundation’s Commitment to the Rights of Children and the Adolescent

In 1995, the Abrinq Foundation for the Rights of Children and the Adolescent launched

the Company Friend of the Child Program for encouraging companies to take action in the

prevention and eradication of child labor. In 2001, when the Program had already signed up

more than a thousand companies, Abrinq instituted ten Principles to be taken on board by

companies committed to protecting the child and the adolescent.

CPFL became a member of Abrinq in 2002:

1. Say no to child labor by not employing children of less than 16, except as

apprentices and only from the age of 14;

2. Respect the young worker, not employing children of less than 18 in nocturnal,

dangerous and unhealthy activities;

3. Alert their suppliers, through a contractual clause or other instruments, that

proven allegations of child labor can result in the termination of the commercial

relationship;

4. Provide daycare or daycare allowance for employees’ children;

5. Ensure that the employees register their children of less than 18 in a primary

education course and make every eff ort to see that all attend classes;

6. Encourage and help all pregnant employees to undergo pre-natal examinations

and provide guidance to all female employees on the importance of doing so;

7. Encourage the habit of breast feeding, providing facilities for employees to be

able to breast feed their children at least up to 6 months of age;

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code of ethics and

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CPFL Energia

8. Instruct their employees to register the birth of their children;

9. Make social investments in the child and the adolescent compatible with the

company’s size as established by the Abrinq Foundation;

10. Contribute to the Rights of the Child and the Adolescent Fund, with the

equivalent of 1% of income tax payable, according to the estimate of the

company’s taxable profi t for the fi nancial year.

37

The Board of Executive Offi cers and the Board of

Directors have approved the Code of Ethics and

Business Conduct, which becomes eff ective as from

the date of its publication.

December 2006.

Diretoria de Comunicação EmpresarialRodovia Campinas Mogi-Mirim, km 2,5

CEP13088.900 Campinas-SPcpfl @cpfl .com.br www.cpfl .com.br

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