Companhia Paranaense de Energia (ELPC) 2025 Q3 法說會逐字稿

Recording in.

Progress.

More.

Than a concept, we believe.

That our culture is a.

Competitive differential for capel.

All these.

Elements of culture.

As well as strategic planning.

Will be presented to the market in our capel.

Day.

By.

The way, before I give the floor to Felipe, who will detail the financials of the quarter.

I would like to reinforce the invitation for you to sign up to our Cel Day.

Which will be held next Wednesday, November 19th, directly from Rio de Janeiro, the wonderful city.

With an online broadcast starting at.

9:30 a.m. It's going to be a big event.

Thank you very much.

Danielle.

Thank you, Danielle. Good morning, everyone.

I'll start highlighting the consistency of our results, Copel's discipline and capital allocation, and the operating efficiency of our business, which is proven by the robust numbers we posted.

In the quarter, even in a more challenging business environment. In the quarter, our recurring bidder consolidated grew 7.8% over Q324.

Reflecting the health of our operation and the efficacy of the measures. For adopted for efficiency. COPEG was responsible for 53% of this result.

And.

Desco.

For 49%.

I will give you more color on Copel generation and transmission in a minute.

Recurring editor.

Of Copel.

Geno.

Grew 11% over.

Q324, driven by a combination of factors better performance of assets, integration of new enterprises or endeavors, and consolidation of strategic asset results. In the.

Transmission.

Company.

The highlight was the increase of 119.4 million.

Brels.

Inhabited with the consolidation of Mata de.

Santo Genebra.

And the average increase of 2.2% in RAP of the transmission companies in the generation segment, we were able to mitigate the impacts through a smart trading strategy, optimization of the portfolio, capture of the positive effects of hydroic modulation despite an adverse event with GSF of 64.9% and.

Curtailment of. 34.4%. The result was positive, especially given the 23% million increase in short-term market sales, 21% up in volume sold, increment to 10 million burels in bilateral contracts, 7 million coming from revenues of regulated contracts. I highlight the startup supply of genaida in the consolidation of the MA HPP.

These results were partially offset by greater curtailment which generated a negative effect. TOP39 million more in the generation deviation in the quarter. Now moving to capel discom, the distribution.

Presented a recurring.

Habitter 7.2% up in this quarter.

This result.

Is the result of a 1.7% growth in the build gride market with an average adjustment of 6.8% at TUSD.

Occurring.

In.

June in RTA in the efficient management of costs highlight going to 16% reduction in personnel. Year on year now moving to trading. Kapo com a recurring.

Posted a drop of 7.3% million in the margin, mainly due to the effect of legacy contracts.

Of electricity from.

Starting from intermittent sources as well as a 39.1% increase in DPMSO expenses, a reflex of the advancement.

Of the process of restructuring the, trading company. On the other hand, sales volume for 2026. To 2030.

Grew 96.2% in relation to.

Q225, adding an amount.

Sold of.

431 megawatts.

Which shows the potential of expansion of.

The business.

So ending the analysis of that I highlight the.

Advances obtained in.

Operating efficiency in.

Q3.

PMSO expenses.

The recurring one total 718.7 million, of.

4.1% reduction over.

The same.

Period.

Last.

Year.

This.

Is a reflection of the discipline and cost management, which is a priority.

Across the company. Main highlight was an 18.4% reduction in personnel and administrative expenses driven by structuring.

Measures such as the voluntary severance program which contributed to adjusting.

The headcount. We also saw a.

Reduction of 8.5% in costs with plans and health plans reinforcing the positive impact of rationalizing. Actions. In addition, we reduced the 3.6% of expenses with materials while thirdparty services posted a 4.7% increase reflecting the hiring of specialized services for maintenance and operation.

The others line were 10%.

Basically related to the write-off of the activation of assets, especially in the scope, given.

The high level of investment in the period. We.

Reduced cost to preserving safety of.

The.

Operation.

And quality of services provided. Which.

Reinforce, reinforces our.

Commitment to operating efficiency and excellence.

In.

Q325.

Copel presented a recurring net income of.

374.8.

Million.

Down.

36.5% over the same.

Period last year, which is the.

Result of a 7.8%.

EBITDA.

Increase offset.

By an increasing negative financial results driven by a robust investment cycle funded by the company.

Within. The parameters of an optimal capital structure.

In addition, in the comparative period, we had in cash 4 billion barrels which were used to pay the granting.

Bonus for the renewal of generation assets for another 30 years. Another highlight.

Is the CDI.

Increase year on year, which negatively impacted the cost of debt.

Income tax and social contribution was higher than past year as a result of interest on equity that we executed in 24 and. Has now been executed in 25.

In other variation.

I highlight the impact of reduction of equity income of Mata Santo Genebra that started being 100% consolidated. Now talking about investments in the quarter on the slide.

We can say we can see consolidated CapEx totaling 981.4 million.

Bureaus, maintaining.

The planned rhythm.

Rhythm and aligned to the company's plan. To date, investments total 2.6 billion with a focus on assets that broaden the remuneration base, modernize the infrastructure, and ensure quality of service.

Most of the resources were directed to.

The.

Segments of distribution.

And generation, highlight going to projects that strengthen the reliability of the energy system, increase installed capacity, and promote operating efficiency gains. We continue with the disciplined capital.

Location prioritizing projects with attractive a return and aligned with the.

Long-term strategy of the company.

Coming to the end, they speak about.

The capital structure.

Netted.

Over EBITDA ratio was 3 times in the quarter within the range established in our study of optimal.

Capital.

Structure.

But.

If we consider the sale of Mashigusu HPB completed in October, this ratio would have been 2.8 times.

Reinforcing.

Our financial discipline.

Net debt totaled.

16.6.

Billion.

With a diverse, diversified makeup among financial institutions and market instruments, the ventures and securities. This diversification is strategic, reduces risk.

And improves the forecast of predictability of the financial flow. Important to mention that the company has a AAA rating reflecting the solidity. Of our balance sheet and the dimensions of our manifest of capital allocation. As for the CDI equivalent cost of debt, we had a debt costing 98.46% of the CDI to 88.7%.

Showing our efficiency in funding and managing our debt.

We.

Continue to.

Attention to market dynamics and we remain committed to maintaining a healthy capital structure that.

Would allow.

Cape.

To continue to invest with safety, competitiveness.

And a focus on value creation for our shareholders. With this.

I come to the end of.

The.

Presentation and.

We can now start the Q&A session.

Thank you.

We will now begin the Q&A session. If you want to ask a question.

Please click on the raise hand button or type your question in the Q&A icon at the bottom of your screen. If your question is answered, you may remove yourself from the queue, clicking on lower hand. Our first question comes from Guilleheme Bossu.

With Goldman Sachs.

Hello, good morning, Daniel, Felipe, and the whole team.

Thank you for the opportunity to ask a question. I have two actually.

The first, I believe, has been partly addressed in the presentations about the migration to Novo Mercado. I just want to clarify.

I'd like to confirm if the expectation of completion remains at the end of December.

Or. Can you tell us when when this is expected to happen and in that regard, what is the company thinking about dividend payout?

Are you expecting an announcement for this year after you complete the migration process or can we expect something before? That's the first.

Question. Secondly, I'd.

Like you to elaborate on the cost efficiency agenda in this quarter. So again, manageable costs dropping year on year. So I would like to understand if for next year, the company still sees room to reduce costs and if so, the extent of these.

Cuts.

Good morning.

Guillerme.

Well, I'll answer part of your question and then.

Felipe will.

Speak about efficiency.

Gains.

It is exactly as you underst.

And as we said, our idea.

Is.

On Monday the 17th, if we get.

Approval by.

The preferred.

Shareholders.

Our expectation is that.

We will.

Complete the operation. The migration by year end. It will be towards the end of the year.

Because we, if we have approval on the 17th, we have 30 days of recess.

As.

Determined.

By.

Law and then the operational.

.

Timeline, the.

Notary public could be 3 and our expectation.

Is to end.

To complete the migration.

Still this.

Year, but more to. Was the last week of December, but still in 2025.

And.

Then we have.

A commitment regardless of the.

Regardless but linked to the migration which is our base scenario.

We expect to announce dividends payment for the first event of the year as set forth in.

Our policy with a minimum of two events, so it will be the 1st year.

Consolidating the result.

Of the first half and according to our financial analysis.

Of the company.

So we're quite.

Excited and we're working hard.

The process to obtain the waiver.

With several debentures being very pulverized was very hard work led by Felipe and the whole team.

By.

The.

Way, I'd like to publicly thank them for the efficiency.

We had the support of many financial institutions which helped us access these huge amount of shareholders.

So this is moving on, moving.

Forward smoothly, and.

It's.

All conditioned to.

Next Monday.

Thank you, Daniel.

Gillian as regards the process of cost reduction. We continue in an attempt to.

More.

Efficiencies.

Please remember.

That our goal is compared to 2023 annualized until 2026. So there is an effort to reduce costs in.

2026 with an important.

Move concentrated.

In some.

Business units as did the.

Scope.

But also with other moves which are more geared by supply. The Shared Services Center.

So there are a number of initiatives and the value creation.

Levers.

That.

Are.

Actionable, expected in 2026. We'll give you more on that at Coel Day.

And just to add to that, Guillerme and everyone.

We are completing.

This phase of structuring efficiencies and operating.

Excellence.

In cost reduction, as Phillipe mentioned.

During compel Day, we'll give you more detail.

Of the 10 promises that we took on at.

The follow-on time and Bon Novo Mercado, we need 3. So we.

Have also the tariff review in.

Mid next.

Year.

And the.

Completion of this phase of structuring efficiency.

Gains. And then we'll speak a lot about.

This.

At Coelde. Then we'll turn the page. You've heard me tell you over.

And.

Over that no.

Company creates value sustainably in the long-term, just cutting costs.

And selling.

Assets.

We have to finalize the cycle.

Throughout 2026.

And then turn the page, change the chapter, and focus on efficiencies, profitability indicators.

And Phillipe will have a session dedicated to this in his presentation on.

November 19th, Capelte. Okay, perfect.

Thank you.

Next.

Question from Raoul Cavendish.

With XP.

Mr. Cavendish, go ahead.

Good morning.

Thank you for the call.

My question has.

To.

Do with the.

Geno GNT generation transmission.

What we saw this quarter was.

A.

Portfolio.

Strategy that was very well performed by the.

Company. We can see this at a much lower cost of energy purchase. So my question is.

In terms of the strategy of the.

Trading.

Company.

Taking.

One.

Step back.

To understand. The.

Process to build this portfolio hedge strategy for the year.

And what is the trade cosing for next year in terms of price, market, and strategy to.

Continue to maximize the value of the gen portfolio. The excellent.

Question.

We have worked.

To develop an internal expertise with Rodolph and the whole team to add this competitive edge, this.

Market intelligence.

And this trading.

Strategy.

So Rodolfo.

Perhaps you can share with R and the investors our macro strategy.

Remembering that our competitors also, join our calls.

And then.

Broy, you can add whatever you want. So Rodolfo, excellent. Good morning, Raul.

So let's divide this into two.

Let's speak about the hedge strategy for this year and then.

I'll speak about.

The market currently in the mid 2024, we had some windows of good opportunities of low prices. Before materializing the need of power.

With the increasing price in.

September, we had.

Good windows to.

Purchase energy, and that's when we.

We purchased most of the energy and.

Coupled with that, we had a lot of swaps.

We know the need for electricity in Q3 and we have some excess at the.

So I took advantage of this moment to have this kind of swap using these more competitive competitive prices in Q3, and that's why we were successful in our strategy vis a vis the.

The spot market. Now speaking about the market currently, the market is at very high levels.

We understand that there's still a lot of room to increase.

And what matters is.

With a lot of liquidity.

We.

Have.

High.

Demand.

In the market. We are weighing.

Speed.

Of.

Sale. You could see that we had good sales.

But quite contained compared to the amount we have available. So overall.

I believe these are the two main insights regarding our strategy for short-term Q3 and mid and long-term thinking about future electricity prices.

Britto, any comment? Yes, good morning, everyone.

Well, Raoul.

I think Rodolfo spoke well about.

The strategies. The.

Strategies are executed by the trade code.

But it's all.

Discussed with.

Coel generation and transmission led by Daniel and we execute the strategy.

We.

Posted good results this year.

Given the opportunities mentioned by Rodol for the.

Price window for energy purchases. And.

During this period.

We had a strong result regarding modulation of the hydropower plants, which accounted for quite a lot of our. Results.

So this is a solid articulated strategy executed by the trade code based on the analysis of Kopelchenko. And just two final comments, Raul, and everyone. Bertol mentioned.

An important point about.

The benefit of hydromodulation.

And the role it has.

Played.

And how it has been better priced here.

In this.

Environment.

Given the rule, it.

Has to sustain the hydroelectric system. In addition, AP 304, the MP 304.

That is.

To.

Be.

Approved to bring some positive elements in our view, in terms of ancillary operational services.

And coupled with all.

That.

Is the fact.

That the bulk of our.

Portfolio, especially our hydro.

Plants are in the south region, and we See an appreciation.

Of price. I guess that this reinforces.

The unique.

Characteristic.

Of.

Coppel's.

Portfolio. In broader terms, what have we seen? And this is our strategic approach. Firstly.

We see pricing structures that are much better than 2 or 3.

Years.

Ago.

But still below the price potential that we envision.

Particularly if we consider marginal costs of expansion. For 2028, 20,209, and.

2030 and beyond.

So we'll see, and you will see that we have some room here regarding prices. So what is our strategy? Oh, we don't want to put all eggs in one.

Single basket. So, strategically, we sell.

Some small blogs along A 2, A.

3, so that we can ensure an average.

Price.

But clearly with the price volatility we have seen.

In hourly.

Prices and also with.

The need that the system has.

For power, and we are going to talk a lot about that at Coel Day.

So we will need to.

Work with.

More.

Uncontracted energy.

A 1, A.

2.

So that we can capture these better energy prices.

Greater than 250 to BRL180. Which is what we have.

Seen.

Also the fact.

That the Cel has 64% distress.

64% of its.

EBITDA.

Linked to the grid distribution and transmission grids.

This.

Gives us comfort in our balance sheet to be able to execute these strategies quite easily and trying to capture better price opportunities.

But, it is clear, if I may ca. The two quick questions.

The.

First is in terms of looking forward and turning the page to in terms of cost.

Cuts and.

Efficiency gains in the.

Strategic vision, in addition to the auction of capacity reserves and.

Now including batteries.

I would like to understand how does the company see.

The opportunity in batteries? Does it make strategic sense for the company or given the structure.

This is a kind of a capital business that will not add so much value to the portfolio.

And.

In terms of prices.

If I may ask another question.

We.

Have.

Seen.

Some small context elements.

That have pushed prices down.

Nothing.

Transformational.

But.

Kind of a.

Weaker.

Load given the climate.

In the.

End.

Of Q3, beginning of Q4, slightly better rainfall.

In your view, do these elements.

Would entail, would.

Would this entail a downside for 2026, or have you priced this?

Thank you.

All excellent points. So let's start with the end, Rodolfo, or perhaps you could give us more color on the second part of the question.

Then.

I will answer the first question.

And Felipe can help me. Well, excellent.

I think that you raised the main variables that can.

Impact price, but.

We see this happening in a one-off basis. There is one month with more rain. Perhaps the.

Trend is.

That.

The.

Prices.

Will.

Be higher.

Why do I say this?

You forget.

How.

The system is being operated this.

Year compared to last year, with the same scenario of.

Storage and rainfall, the prices are different.

We're talking about a.

Floor versus 300 reals in.

March, so I can't have a specific month when it rains a lot and I don't have the need for.

Thermal dispatch, and.

The.

Prices.

Can be lower.

And that's when we. Take the opportunity to hedge the operation as I mentioned, but in the midterm, the need for thermal dispatch is abundant.

So I think it's, it is almost impossible to have a scenario where it will rain a lot throughout the year to.

The point that we can only serve the system with hydro, and that's why we.

Believe that prices will be higher in the mid to long-term. Very well put. And Raoul, looking forward.

I think it is important to highlight that the efficiency agenda remains. It.

Is permanent.

Costs, it's like nails. You trim them, they grow back. You trim them, they.

Grow back.

But the centerpiece is that previously we had structuring inefficiencies either.

Due.

To.

The hiring process, materials.

The bidding process, everything we know about. I just want to make this. Clear.

The centerpiece of our agenda will lose some momentum and this other agenda focused on efficiency.

Good, correct, disciplined capital allocation will.

Gain more.

Relevance.

To that end.

E Air cap in our review is a strategic point number 2 products in 2030.

2031.

The.

5.5.

Gigawatts.

Recorded for both auctions.

Two.

Gig, capel.

Projects for duarea and.

Segredo.

We've been repeating this, but you know this auction was expected to happen, has been postponed, and now it has been set.

For March also because there are a very important needs from the system. Against it, we'll arrive with two very competitive projects. We'll analyze size.

Product.

Size.

Cap price.

There's some elements that are not yet very clear, but.

We.

Are.

Going.

To be very disciplined. Although we do like the project, although the projects are competitive with all necessary licenses.

Ready, it is at the moment of.

The auction that theory will meet practice.

Having said that, As for batteries, well, you're looking into that.

We have a due diligence.

For that, but I think that this entails an assessment of.

The level of competitiveness that we can have that we can add.

To these auctions.

Considering.

That.

Most of it is linked to the. The battery acquisition.

Cost.

If you have easier.

Access to the inputs.

They might be more competitive.

But we.

Believe a lot in the elements of power and need.

This can be supplied in different ways. Hydro reversible.

Hydroelectric power plants that.

Exist around the world.

China with almost 90.

Gig, Japan and. Others, this can be a path forward and we will address this in the future based on this work front.

Where we have know-how, knowledge, engineering expertise of decades, which is the management, operation, and construction of hydroelectric power plants and also Raul and everyone.

To end. I think that will speak a lot about this. We have to.

Work.

Towards a scenario where prices will reflect the operation. There's an effort by ONS to move to this kind of model.

And.

We will need to discuss greater.

Progress so that the.

Price signals will be correctly aligned with the.

Affective costs of generation or else we're going to see what has been happening in Brazil over and over the explosion of cost subsidies and so on and so forth. But.

Anyway.

This is a different discussion, and we can talk about this later at.

Coelde.

We'll speak more about this and mainly they know regarding attributes of.

The hydro source. This needs to be valued. Perfect. Clear.

Thank you very much.

Next question from Joao Pimentel with City. Mr. Pimentel, go ahead.

Good morning everyone.

Thank you for the opportunity.

I would like to build on Raul's question and on something that you, Slaviro, always talks about.

Hello, can you hear me?

I thought my connection had crashed, and you normally say that the company cannot create value over time just paying dividends that eventually you'll need to look at opportunities for growth and so on and so forth. I'm not talking about allo cap and the batteries auction. This is kind of mapped already. So beyond that, I'd like to understand what are you looking at beyond that. Are you considering any other segments in addition to the ones you operate in? Or in the segments where you operate, do you see any opportunities in terms of inorganic growth?

We see a number of players of renewable sources facing difficulties given curtailment. They don't have such an integrated portfolio as Skel. So I'd like to understand, how do you see this dichotomy between, I'm going to grow, I'm just going to pay dividends. Oh, I'm going to.

Grow and I want to transform Coppel in a much bigger company.

Than it is today. So I'd like to hear your take on growth.

Thank you.

Gos John, good morning. Well, you have an excellent point.

Actually.

And just to clarify.

What I normally say is it has always been, it will continue to be given my own belief and the partner's.

Belief that the company does not.

Create.

Value.

In the long run, just cutting costs and selling assets.

Paying.

Dividends is a good and interesting option for us and one that we intend to materialize either paying dividends or through a share buyback program. We have a minimum payout in our policy of 75%.

As.

A consequence of an optimal capital structure.

As is.

With the current base of 2.8%. In addition to being the boldest in the sector.

It is a big competitive edge for us.

And we see an appreciation of compressing our return rate.

You.

Know.

This better than a lot of people. You know this dynamic.

Of how things.

Work.

But.

I think that our.

Case and Felipe.

Has been saying.

This, is that we can balance both.

We can be a good company, paying good dividends because we have mature assets, a solid cash generation, a.

Lot of depreciation, so.

We are.

We are not just fixed on a net income, although it is.

A fundamental.

Reference.

For any.

Dividend payout.

Policy.

But we.

Look.

At.

The whole context of the company being a cash cow and the context of.

Good opportunities.

Good opportunities in our view, do not appear every year.

So we have to be.

Prepared.

With a well behaved.

Disciplined capital structure so that as opportunities arise.

We.

Can make structural moves and.

To address another point of your question, which was excellent, by the way, we're actively, whether we.

Are actively looking at an asset.

I can share this with you, we're.

Not.

Also.

Because we.

Are.

Still in this phase of digital transformations of looking internally, and.

Next.

Week we we.

Will very much focus on Celdey because it is our big event we're preparing for it.

And we're going to announce the.

CapEx plan of the distribution.

Company.

For the next cycle and also for the generation company. So.

We still have.

A lot of.

Room.

To invest organically.

Which is low risk.

With super attractive returns.

In addition to the regulatory works that Desco and Janko have, these bring efficiency gains with the smart to created with the operation with cost reductions. We had an event last week you.

Will follow.

That.

We had.

An event, a tornado, a climate event.

We are having extreme climate events and this has.

Required a new model of operation. Vella.

Is also going to give you more detail on this at.

Coppel Dane.

And this has to do with our cap planning, with our, it has to do with our operations, number of crews, and so on and so forth, and this is strategic view.

And I think that Copel in that episode and in others has shown to be a benchmark in the sector.

Thank you.

Next question from Giuliano Ajai with with.

What city?

.

Just a correction. I'm with UBS.

Okay.

Daniel, the whole team, thank you very much. I have two questions, and Daniel, we, we're.

Getting to the end of the year, and that's the moment when we start looking at.

2026. And next year, we have a super important event for the company, which will be the process of tariff.

Review.

And this is going to.

Be the first. A tariff review process.

With the company having been privatized.

So, what do you expect.

From next year's tariff.

Review process? What is the company doing differently? My.

Second question.

Has to.

Do with MP 1,304.

This MP I.

Think brings two.

Points that.

Can.

Kind of change the long-term horizon. Of the company. The first is.

That.

There is a compulsory.

Contracting of.

Energy.

Could this.

Reduce the size.

Of LR cap of next.

Year?

And what.

Would the company do with its current projects? And.

Secondly, I'd like to understand from you.

Is there.

A possibility.

Of renewal of hydroelectric.

Power plants?

And if your base case.

Continues.

To be a rebidding.

Process or given.

That there is a possibility of renewal.

Could this put inorganic growth in jeopardy.

With a more.

Possibility of these.

Hydroelectric power plant assets?

Excellent points.

Very.

Important.

Structuring questions of.

Let me.

TRY to address them. First, tariff review.

I think that this is a milestone. It's going to be a historical.

Tariff review.

Willella is dealing with this firsthand, but we have our regulatory VP, the whole team.

Accounting. We are all working together.

We hold weekly.

Meetings.

I myself lead a working.

Group following this on a monthly basis, given the importance.

It has.

And this expertise.

And the.

Freedom that a private company has, of course it makes us look at all opportunities, but this is a regulated sector and Copel has a track record of good tariff reviews.

In the last two.

Cycles.

The denial that Copel had was zero. I think we had a.

Good track record.

But of course there is always room for.

Improvement.

I.

See and how.

We can optimize.

Things.

And Ajai, you.

You have your reports and you have talked with us, you have approached us on.

This before, and I think you know that we have the right.

Conditions to.

Exceed.

The consensus of the market, which is around.

18.

Billion or. Slightly above 18 billion, and.

This is our commitment. Vilala, would you like to comment on this and then I can speak about the 1,304. Yes, we have a working group with several.

Departments involved with full attention on the tariff.

Review event, which goes beyond the investment plan. We are looking at the regulatory standards.

Of.

DC and back indicators. We.

Are looking.

At.

Losses, recovery of unrecoverable revenues.

And we're very attentive.

And also.

To complete the main works of the investment plan by.

December because we know that whatever goes.

Or stretches.

To the next year will only remunerated in the next cycle. So we meet on a weekly basis.

We follow all the works and all of the process of the tariff review and ahaji and.

All of.

The people on the call, the market consensus is close.

To 18 billion as I mentioned. Given the relevance in our track record of fulfilling.

Our promises.

It is.

Very important for us to be able to achieve this number.

Or perhaps exceed it a little. Having said that, tariff review is at the.

Top of our agenda. This will change the game for.

Coopel, Disco, and Coopel.

NP.

1,304. Well, we could have an earnings call. Just to talk.

About that.

But I'll go straight to the points that you raised. This.

Compulsory.

Contracting.

Of course, it tends.

To affect the dynamics of the LR LR cappa, but in our view it will not be that structuring. Also.

Because.

The.

Thermal power plants in the electoralbrais law.

Fortunately they were left out.

Must have run the risk of.

Analysis of a veto. That's a big risk.

I don't know how many gigs it will be. 5 or 8 gigs is inflexible in the.

Sector.

From the technical standpoint.

It does not make any sense.

And.

This would be the most deleterious effect in our.

View. Fortunately, the Congress had common sense and didn't take forward this point. And the second point is that we're very confident in.

The hydrich.

Products because They're.

Unprecedented.

We recognize how bold M&A was and everyone involved with the auction.

They made an effort to include two hydrate products.

Because.

They are national technology.

Renewable, and.

With a.

Totally national.

Industry.

This.

Will be the.

Cheapest product compared with any other thermal product.

With all due respect, but the hydroelectric plants.

Have the conditions to offer an end.

Price to consumers that will be lower.

Always lower.

So there will.

Be some.

Impact. But.

In.

It is not.

Going to be that relevant, and we believe that the characteristics of the hydro products tend.

To perform.

Better.

As regards the renewal of the.

HPPs.

I think that a lot.

Of expectations were created, but.

What the text of.

The MP.

Says is basically what was part of the legal framework with the exception of the quotas.

And when the NP 1,304 talks about the possibility of.

Renewable.

And concession that will be in the hands of the granting power.

This.

This.

Was the base scenario, one of A bidding.

Process we.

At Cape do not envision a.

Scenario without a competitive.

Process.

Given what.

Is happening in other sectors, what's happening in highways, Fren Diaz Highway and all the other highways, they.

All go through a bidding process, even the auction of GSF by C.

60%.

So this competitive.

Process shows the appetite.

That the operators have. They have an inherent advantage, of course. They know it better than anyone else, but that other competitors can bring.

In our base scenario, the law didn't change anything. Actually, it brought a benefit which is not. Allowing the renewals to be by quotas, but in our view.

I don't.

Think it's very likely. I think it's highly unlikely that there.

Will not be competitive processes given what's happening in other infrastructure segments in the country either by the granting power or.

By a resolution of the.

Federal Court of Accounts.

Super clear, thank you very much.

Next question from Juan Pedro Ejeru with Santanderra.

Good morning.

Firstly, congratulations on the results and thank you for the opportunity to ask a question. I have two quick.

Questions.

First.

Still on MP 1,304.

I'd.

Like to understand the company's view, what were the.

Most relevant points that were left.

Out in the text and.

That should be discussed in the short to medium term.

If you need a quick resolution.

Of the issue and another quick question about the possibility of.

Extraordinary dividends with.

The possibility of taxation.

Of dividends, what do you think about that?

Hello Juan Pedro.

All right.

Let me TRY to slice your question. Let's start with the.

Dividends. Felipe.

You've been studying.

This.

Could you.

Give us more.

Color on what we're thinking and. That is to address this and then I will answer about the 1,304.

We cannot disregard.

The phase in which we are a migration to.

Novo.

Americado and the current dividend.

Payout policy and the taxation environment.

The taxation on dividends on in 2026 still to be approved.

By the.

President.

We have.

Come to a definition.

Yet this is most likely happening.

In the coming weeks. We are studying the several scenarios.

And the possible impacts using our shareholder base here also supported by our external advisors and by our tax department.

But of course.

We will position the company with a. Find framework and strategy.

In light of.

The current shareholder.

Base.

Excellent.

And Felipe, you're leading this process.

In the coming weeks, as you put it yourself, we will be announcing what we intend to do.

But.

Obviously there is a new factor when you.

Have a 10% taxation.

For.

Individuals, for foreign.

Investors, even if there's some exceptions to sovereign funds.

Others, there is a new factor there that requires, as Felipe mentioned, some diligence with the company. We have to look into this and we have to do the best considering the company's balance sheet that we have a.

A profit reserves which is.

Reasonably high and also considering that in our trajectory we are focused on attracting new investors, so we have to find the optimal point, but sweet spot.

And I'm sure that Felipe and the whole.

Team will bring you something quite balanced.

Until.

The end of the year, so that's a first.

And secondly, this needs to be finalized whether this conflicts with the corporate law.

If this is going to be paid in 2027, 20,208, 209,299, which is not so likely, or whether this is going to be paid only within the 12 months. So there are some elements that need to be more clear, right, Filipe, so that we in all.

Publicly traded.

Companies.

Can position themselves.

But after Novomerido, that will be the top, a top priority in our agenda. And as for the MP 1,304, absolutely the topic that was left out, that should not have been left.

Out.

And.

That shows how this, the.

Pressure is important is the GD.

The DG.

Distributed generation.

In the apportionment, and the curtailment in.

Terms of having a contribution of 2015 bureaus or whatever.

So I think that the reality will impose itself if this is not addressed, and it will be because the reality is physical.

Britol.

Knows this is.

Already causing.

Terrible problems for the system.

This needs.

To be addressed.

Because.

This has.

Become big, it doesn't.

Make.

Sense for the segment.

To carry the level of subsidies that exist today. So I think that.

Juan Pedro, this is the more pressing matter to be.

Addressed in this.

Initiative by NAO in terms of.

Tariffs, white flags. That's, that could be a mitigating path.

And I think that this.

Will help remove the perverse incentive.

Of the.

Subsidies in the.

Electric.

System. Brett.

What could improve is the separation of, we have several initiatives.

LRI cap contracting capacity in the form of a voltage.

We should have the separation of and energy as expected in in PO 414 that was being discussed at Congress and it was not addressed.

And now we have to.

Wait for the.

Approval of MP 1,304 and wait for the regulation and see.

What.

Will happen in terms of modernizing the electricity, the electric sector. Well, super clear, thank you very much.

Last question from Victor da Cunha with Itaipi.

Mr. Daunha, please go ahead.

Good morning.

I'm sorry to go back to this theme still on NP 1,304.

If you.

If you could tell us what they.

Included in terms of curtailment and also the definition that should come in the next 3 weeks, 21 days regarding What is.

Renewable versus versus oversupply, renewable oversupply, if this can have a significant impact and what will be considered.

Curtailment.

That.

Could be.

Reimbursable looking forward.

Depending on the definition by the Ministry of Mines and.

Energy, MME and whether the totality of curtailment. And it could be reimbursable.

Could.

You give.

Us more.

Color on that specific point?

That would be much appreciated.

Thank you.

Hello, Victor.

I think that.

That is an excellent.

Point. We're monitoring this, not just in the press, but the discussions of several sectors about that.

I think that we have to look at the glass as being half full. A half full glass means that it is possible it is consolidated.

That.

The electric.

Part and reliability is of value of the pure renewables, the wind.

Plants, and the.

Solar.

Power plants. They will have that right.

Because.

This happened independent of thumb.

The big problem, as you mentioned, is the energy.

Piece.

In my.

View, the.

When we have the.

Original text and the amendment of the text, in my view, that's a sign that one of the two will be vetoed. And I think.

That this is a legitimate discussion on both.

Ends.

Of the generation companies trying to.

Address this, but saying that this Will not have an.

Impact for the for the consumer in terms of charges.

Or not reducing tariffs. This is undeniable. There will be an.

Impact.

This is a.

Structural decision. This is about.

What the government.

Wants what the Ministry of Mines and Energy and the.

Federal government to.

Understand.

If.

This is a risk of the entrepreneur, which is one thesis.

Or if this.

Could be reimbursed.

If they.

Choose.

If they choose.

This path, saying that this will not have an impact on consumers, well.

This is not.

Sustainable.

But we're monitoring this.

Closely because, of.

Course, curtailment.

Is something that needs to be addressed in the.

Future.

Because.

It is indeed a topic that has.

Made this.

Segment of wind and solar power.

Infeasible.

Specifically.

I think that we are going to be seeing what's going to happen next, and we'll see what the government, how the government will interpret the policy and.

Understanding.

How to reconcile these two arguments which are legitimate for both sides.

Thank you very much.

Thank you.

The Q&A session is closed.

I would like now.

To give the floor to Mr. Daniels Laviero for his.

Final statements.

Well.

I.

Can only.

Thank all Capellians for.

Another quarter.

Of solid, stable.

Results.

They show how Capella is a predictable company that has been performing.

Well in delivery, delivering consistent results quarter after.

Quarter. I think that this is the first element. Secondly.

I'd like to thank all of you for joining us. Your.

That were very relevant. The sector is going through a transformational moment.

And the regulatory and legal framework will.

Undoubtedly have many impacts.

In the coming months and.

And over 2026, some regulations.

Will be necessary, but I think that.

We are moving forward with some structural.

Changes. We have some positives, some not so good things.

But.

We are moving forward. And I.

Always stress.

The.

Price signaling.

If we have adequate price signaling, that's the best way.

Whenever the government chooses.

Certain segments or categories, I think that this causes future long-term.

Deleterious effects and we've seen this not just in the energy sector, but in several sectors. Once you give players benefits. To remove them, it is very hard to remove them. And I'd like to close with the elements here.

On this t-shirt. It's about the culture, the cultural transformation.

That.

We.

Are living.

At Copel.

As I mentioned on the.

19th, we will share with you these elements.

About our culture, our ambition.

A bold.

Ambition.

One.

That aims relevant value generation, value creation.

For the company myself, all of my partners, and all Copellians.

Are enthusiastic and very engaged with this new moment of COP, a moment that we're building.

Together. We're building together a company that is and will.

Continue to.

Be a big benchmark in the Brazilian energy sector.

Thank you very much.

Have a good.

Day.

Coel's video conference call is closed.

Thank you very much and have a good day.