Notice to the Market – Annual Tariff Adjustment of Celesc Distribuição S.A

Annual Rate Readjustment – Celesc Distribuição S.A.

CENTRAIS ELÉTRICAS DE SANTA CATARINA (CELESC) (B3: CLSC3, CLSC4; OTC: CEDWY), a public company, listed in Level 2 of Corporate Governance, in compliance with CVM Instruction 358/2002 and article 157 of Act 6,404/76, hereby informs the shareholders and the market in general that the National Electricity Agency (ANEEL), within the scope of the Public Board of Directors Meeting held on August 13, 2018, authorized the readjustment of the rates to be practiced by its wholly-owned subsidiary Celesc Distribuição S.A. as of August 22, 2018. In calculating the adjustment, as established in the concession agreement, ANEEL considers the variation of costs associated with the provision of the service, and takes into account the acquisition and transmission of electricity, as well as the sector charges.

The average rate effect to be perceived by consumers, in the order of 13.86%, has the participation of 4.77% of sector charges, -1.42% of transmission costs, 5.08% with energy expenses, 0.06% of unrecoverable revenues, 0.37% from distributor costs, 7.48% from the financial components of the current process, and -2.48% related to the withdrawal of financial components from the previous ordinary process.

In the composition of the Net Revenue for the 2018-2019 period, Portion A (non-manageable costs with charges, transmission and energy) participates with 81.4%. Portion B (manageable costs) represents 18.6%, defined in the amount of R$ 1,506,197,069.50.

Subsidiary Celesc Distribuição S.A. serves a total of approximately 3 million consumer units, in 258 municipalities in Santa Catarina, and 01 municipality located in the state of Paraná.