It is with great pride that we observe that, throughout its history, Companhia Paranaense de Energia - COPEL has been recognized and respected within the Brazilian power sector for its daring, innovative, and efficient spirit. The dynamic approach to challenges contributes to the pursuit of solutions to technical, operational, and economic issues that allow the Company to reach its goals and to achieve a promising outlook for corporate growth.

Given its social stature, COPEL believes its growth is tied to its ethical, responsible, and enterprising conduct. Thus, management has implemented a Corporate Citizenship and Sustainability Policy, which shall guide all the decisions and actions by the Company in the pursuit of internal sustainability, respect for all stakeholders, and wide promotion of diversity and ethics in the conduct of business. This Policy is supplemental to the Company’s Code of Ethical Conduct, and both include the principles of the Global Compact.

This Report has been prepared in accordance with the 2002 GRI Guidelines. It represents a balanced and reasonable presentation of our organization's economic, environmental, and social performance and features the most noteworthy facts of 2005, as well as the main improvements and accomplishments the Company has achieved in the areas of corporate governance, ethics, transparency, and social responsibility during the period.

COPEL, which has been remarkably engaged in upholding sustainability principles and practices, is a member of the United Nations’ Global Compact, an initiative which comprises over two thousand companies throughout the world, and stands among its most important promoters worldwide, with a distinguished record in all activities.

The Company was one of the few Brazilian institutions invited to participate in the Global Compact’s Summit Meeting in Shanghai, China, at the end of 2005, an opportunity COPEL has taken to formally reinforce its commitment to the ten principles of the Compact. COPEL’s practices under the principles which protect and ensure the dignity of work, managerial transparency, proper financial conduct, and protection of the environment have been continuously improved and consolidated, pillars as they are of the Company's profile.

Such commitment has been also recognized by the São Paulo Stock Exchange - Bovespa, which has included COPEL in the portfolio which comprises 28 companies picked to make up the Corporate Sustainability Index – CSI. Such index has been developed in cooperation with the International Finance Corporation - IFC, and is similar to the Dow Jones Sustainability Indexes published by the New York Stock Exchange - NYSE.

Internationally, COPEL has been chosen to represent South America in the workgroup of the Global Reporting Initiative – GRI, which is charged with setting guidelines for the preparation of Sustainability Reports in the electric power sector. Also noteworthy are the actions taken by the Company to adapt and adjust its control mechanisms and procedures to the regulations of the Sarbanes-Oxley Act and the measures taken to consolidate good Corporate Governance practices.
Having already formally implemented its Disclosure Policy for Material Acts and Facts, in 2005 COPEL created an Audit Committee, which has taken office, composed of three independent members of the Board of Directors. Channels for the participation of other agents -- employees, shareholders, customers, and other stakeholders -- in the management of the Company have been gradually made available.

It is important to underscore the fact that the recording of R$ 502.4 million in net income is the result of the joint effort of COPEL’s directors, officers, managers, and employees towards the main purpose of the Company: to promote the sustainable development of Paraná and to become one of the most representative power utilities, earning profits with social responsibility and respect for its customers, investors, and other stakeholders.

Accordingly, a final solution for the pending issues involving the power and gas supply agreements for the Araucária Thermal Power Plant is about to made official. This will result in a significant improvement in COPEL’s corporate risk levels, thereby reflecting positively on future performance.

I invite you to read this report, which features the performance of the Company in 2005 in detail.

Curitiba, 27 March 2006.

Rubens Ghilardi
Chief Executive Officer

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