Companhia Paranaense de Energia (COPEL)

Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia Coppel's video conference call to discuss third quarter 2025 earnings results. This video conference is being recorded and the replay can be accessed on the company's website, ri.coppel.com. The presentation is also available for download. Please be advised that all participants will be in listen-only mode during the company's presentation, and then we will start the Q&A session when further instructions to participate will be provided. Before proceeding, I would like to stress that forward-looking statements are based on the beliefs and assumptions of Coppel's management and on information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore should be treated as forecasts dependent on the macroeconomic environment, the country's economic situation, the performance and regulation of the energy sector, in addition to other variables, Such forward-looking statements are therefore subject to change. This video conference will be presented by Mr. Daniel Slaviero, CEO of Coppel, and Mr. Felipe Guterres, CFO, as well as officers of these subsidiaries. They will be available during the question and answer session. I would now like to give the floor to the CEO of Coppel, who will begin the presentation. Please proceed, Mr. Slaviero.

Good morning, everyone.

I'd like to thank you all for joining us in this video conference call. I'd like to start highlighting the healthy operating and financial performance of the company in this third quarter. We posted recurring EBITDA of 1.3 billion BRLs, up almost 8% over the same period last year, and a recurring net income of 375 million BRLs. These numbers show how solid and consistent Cobel's results are. Another point that deserves a highlight is the strong investment made in the period, 981 million in capex in the third quarter alone, totaling 2.6 billion in the nine months of 2025. This level of investment reflects our commitment with quality of service, expansion and modernizing our asset base and ensures that we are preparing for a historical tariff review in the distribution company in 2026. In line with our commitment to continuously optimize our portfolio, this month we completed the divestment of four photovoltaic solar plants doubling 22 megawatts peak and distributed generation in a deal evaluated at 78 million euros. This follows our commitment to simplify our portfolio. Additionally, With the completion of the Baishui-Gua Su HPP divestment in the start of October, our leverage ratio is at 2.8 times net debt over EBITDA ratio, well on target of our optimal capital structure. This fact reinforces two things. Firstly, our excellence in executing the commitment that we set forth with the market. And secondly, this Baixa Iguaçu would deal with its characteristics It represents the essence of this new phase of Copel, a company that is agile, attentive to opportunities, and focused on creating value. On the operational side, we recorded the sales of almost 5 GWh, and the build market of the disco grew 1.7%. Still, comparing with a very high base recorded in Q3 2024, These indicators reinforce the resilience of our business, the abundance of our concession area and the trust of our customers. On the side of generation, it is important to put things into context. The results obtained by the Genco were recorded in a very challenging scenario. In this quarter, we had a GSF of approximately 65% and a curtailment of almost 35%. Fortunately, these assets subject to curtailment are very small in the structure base of Coppel. On the positive side, we had an increase of PLD, pot market, of close to 50% compared to Q324, totaling about 250 BRLs per MWh. The intelligence of our strategy and trading structure, led by Rodolfo, and risk mitigation coupled with the positive effect of optimizing our portfolio in special, the modulation of the hydrate source made all the difference. To end the slide, in this period, for the first time, we had the consolidation of the results of Mata de Santa Genebra, the transmission company, and the Mauara HPV, ensuring a more robust and efficient portfolio, which can This reinforces our differential, the fact that we are an integrated company with a solid presence in all four segments where we operate. I take this moment to give you an update on the process to migrate to Novo Mercado. The structure of the deal is already known to all of you, but I would like to record the steps that have been completed. On August 22nd, we had the approval of the common shareholders in the special general meeting, and we got waivers of the venture holders and all of the necessary issuances, and we have handled the unification of preferred shares, Class B to Class A. Lastly, we had the approval conditioned by B3 to migrate to Novo Murtado. And now, next Monday, November 17th, at 11 a.m., We will have the special general meeting and the agenda is to ratify the conversion of preferred shares into common shares in a rate of 1 to 1, plus a new class C preferred share redeemable. I would like to invite all preferred shareholders to take part in this special meeting and to give us their vote. This is a decisive step for us to consolidate a simpler, more transparent shareholder structure and one which is more aligned with the best practices of the market. In parallel, unification of shares into one single class will bring more liquidity to our security and to our share, which is a relevant factor to attract new investors. Should this measure be approved, we will be prepared to complete the whole process by year-end, which will open up a path to distribute part of the dividends referring to the first event of the exercise, as set forth in our dividend payout policy. This will be a historical moment in our journey to create value at Coppel. we launched to our employees the new elements of the Coppel culture, a reason of existing ambition and our values. This T-shirt that myself and my partners are wearing today is part of this event and part of the internal communication process. This year, we revisited the company's strategic planning and thus built a vision for Coppel 2035. We cannot think about strategy if it's not coupled with culture and vice versa. A strong culture is a central pillar to sustain a long-term vision and a very bold one, I should say. More than a concert, we believe that our culture is a competitive differential for Cabral. All these elements of culture, as well as strategic planning, will be presented to the market in our Cabral 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 Coppel 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. Thank you, Daniel. Good morning, everyone. I'll start highlighting the consistency of our results, Coppell's discipline in capital allocation, and the operating efficiency of our business, which is proven by the robust numbers reposted in the quarter, even in a more challenging business environment. In the quarter, our recurring EBITDA quality grew 7.8% over Q3 2014. reflecting the health of our operation and the efficacy of the measures adopted for efficiency. Copelgen was responsible for 53% of this result, and Visco for 49%. I'll give you more color on Copel generation and transmission in a minute. Recurring EBITDA of Copelgenco 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 BRLs in EBITDA 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 impacts through a smart trading strategy, optimization of the portfolio, capture of the positive effects of hydric 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, incremented 10 million BRLs in bilateral contracts, 7 million coming from revenues of regulated contracts. I highlight the set of suppliers, Jean Daida, and the consolidation of the MOA HPP. These results were partially offset by greater curtailment, which generated a negative effect of 39 million more in the generation deviation in the quarter. Now moving to Cabral-Descon. The distribution presented a recurring EBITDA 7.2% up in this quarter. This result is the result of a 1.7% growth in the build-grade market with an average adjustment of 6.8% at TUSD occurring in June in RTA and the efficient management of costs highlight going to 16% reduction in personnel year-on-year. Now moving to trading. couple, recurring, posted a drop of 7.3% million in the margin, mainly due to the effect of legacy contracts of electricity, starting from intermittent sources, as well as a 39.1% decrease in the PMS of 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 it, I highlight the advances obtained in operating efficiency in Q3. PMSO expenses, recurring months, totaled 718.7 million, a 4.1% reduction over the same period last year. This is a reflection of the discipline in 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 patient plans and health plans, reinforcing the positive impact of rationalization actions. In addition, we reduced the 3.6% drug expenses with materials, while third-party services posted a 4.7% increase, reflecting the hiring of specialized services for maintenance and operation. The other spline, for 10%, basically related to the write-off of the activation of assets, especially in this scope, given the high level of investments in the period. We reduced costs to preserving safety of the operation and quality of services provided, which reinforces our commitment to operating efficiency and excellence. In Q325, Coppell presented a recurring net income of $374 billion. 0.8 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 beer belts, which we 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 have now been executed in 25. In others variations, I highlight the impact of reduction of equity income of Market Center Geneva that started being 100% consolidated. Now, talking about investments in the quarter. On the slide, we can see consolidated capex totaling 981.4 million euros, maintaining the planned rhythm and aligned to the company's plan. Year-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 was directed to the segments of distribution and generation, highlights going to projects that strengthen the reliability of the energy system, increase installed capacity, and promote operating efficiency gains. We continue with a disciplined capital allocation, prioritizing projects with attractive a return and aligned with the long-term strategy of the company. Coming to the end, I speak about the capital structure. Net debt over EBITDA ratio was three times in the quarter within the range established in our study of optimal capital structure. But if we consider The sale of Mashiwa's Zul HPP completed in October. This ratio would have been 2.8 times, reinforcing our financial discipline. MedTech totaled $16.6 billion. They 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 triple A 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 pay attention to market dynamics, and we remain committed to maintaining a healthy capital structure that would allow Coppel to continue to invest with safety, competitiveness, and a focus on value creation for 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 the lower hand. Our first question comes from Guilherme Bosu 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, because I believe it's been partly addressed in the presentations about the migration to Novo Mercado. I just want to clarify. Like to confirm if the expectation of completion remains at the end of December or can you tell us when this is expected to happen? And in that regard, what is the company thinking about dividend trade-out? 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. We saw, 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, Guilherme. Well, I'll answer part of your question and then Felipe will speak about efficiency gains. It is exactly as you understand. And as we said, our idea is

On Monday the 17th, if we get approval by the appropriate 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 if we have approval on the 17th, we have 30 days of recess as determined by law. Then the operational timeline The Norte Republic, D3, and our expectation is to end, to complete the migration still this year, but more towards the last week of December, but still in 2025. And then we have a commitment, regardless of the link to the migration, which is our base scenario, we expect to announce dividends, dividends payment for the first event of the year set forth in our policy, with a minimum of two events. So it will be the first 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 whole 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. Guilherme, as regards the process of cost reduction, we continue in an attempt to capture more efficiencies. Please remember that our goal is compared to 2023, annualized until 2026. So there is an average. to reduce costs in 2026 with an important move concentrated in some business units, as data scope, but also with other moves, which are more geared by supply, the Shared Services Center. So there are a number of initiatives and value creation levers that are actionable, expected in 2026. We'll give you more on that at COPEL Day. And just to answer that, Guilherme and everyone, we are completing this phase of structuring efficiencies and operating our course in cost reduction. As Filipe mentioned, during COPEL Day, we'll give you more detail of the 10 promises that we took on at the follow-on time. And for Novo Mercado, we need three promises. 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 Coppel Day. 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 Filipe will have a session dedicated to this in his presentation on November the 19th, Capel Day. 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 Genco, GMT, 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 coasing for next year in terms of price, market and strategy to continue to maximize the value of the GEN portfolio?

Well, excellent question. We have worked.

to develop an internal expertise with Rodolfo and the whole team to add this competitive edge, this market intelligence and this trading strategy. So, Rodolfo, perhaps you can share with Raul and the investors our macro strategy, remembering that our competitors also Join our calls and then you can add whatever you want. 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 purchased most of the energy. And coupled with that, we had a lot of swaps. We know the need for electricity in Q3 and have some excess at the end. So what's the advantage of this moment to have this kind of swap? using these more competitive prices in Q3. And that's why we were successful in our strategy vis-à-vis 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 our 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. Brito, any comment?

Yes.

Good morning, everyone. Raul, I think Rodolfo spoke well about the strategies. The strategies are executed by the Trade Co., But it's all discussed with Cobel generation and transmission, led by Daniel. And we execute the strategy. We posted good results this year, given the opportunities mentioned by Rodolfo, 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 Co. based on the analysis of Koppel-Jenko. And just two final comments, Raoul and everyone. Bertolt mentioned an important point about the benefit of hydro modulation and the role it has played

and how it has been better priced here in this environment.

Given the role it has to sustain the hydroelectric system in addition in P304, this MP304 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's the bulk of our portfolio, especially our hydro plants are in the south region and we see an appreciation of price. I guess 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 two or three years ago, but still below the price potential that we envision. particularly if we consider marginal cost of expansion for 2028, 2029, 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? We don't want to put all eggs in one single basket. So, strategically, we sell some small blocks along A+, 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 Coppel Day. Also, we will need to work with more uncontracted energy, A plus 1, A plus 2, so that we can capture these better energy prices, greater than 250 to 180 BRL, which is what we have seen. Also, the fact that Coppel has... 64% of stress, 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 in trying to capture better price opportunities. Okay, it is clear. If I may ask another two quick questions. that does this in terms of looking forward and turning the page 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 these entail a downside for 2026, or have you priced this?

Thank you.

All excellent points. So let's start with you, and Rodolfo, perhaps you could give us more colour on the second part of the question, then I will answer the first question, and Filipe can help me. Oh, 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 we see this? If, again, 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 R$300 in March. So I can 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 mid-term, the need for thermal dispatch is abundant. So I think 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 Raul, looking forward, I think it is important to highlight that the efficiency agenda remains. It is permanent. Costs, you know, 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. Are they 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,

El Air Cap in our review is a strategic point number two products in 2030-2031. Of the 5.5 gigawatts recorded for both auctions, a couple of projects for Suareia and Figueiredo. 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 very important needs from the system. So I guess that We'll arrive at two very competitive projects. We'll analyze size, product size, capital price. There are some elements that are not yet very clear, but we are going to be very disciplined. Although we do like the project, although the project is all 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, we're looking into that. We have a few diligence for that. But I think that this entails an assessment of the level of competitiveness that we can have, that we can add. considering that most of it is linked to 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. Reversible hydroelectric power plants that exist around the world, China with almost 90K, 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 we'll 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 of signals will be correctly aligned with the effective 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 COPEL Day, we'll speak more about this. And mainly then regarding attributes of the hydro source. This needs to be evaluated. Perfect. Clea, thank you very much. Next question from João Pimentel with Citi. Mr. Pimentel, go ahead.

Good morning, everyone.

Thank you for the opportunity.

I would like to build on Raul's question.

You know, something that you, Silveiro, always talks about.

Hello, can you hear me?

My thoughts on my connection have crashed. And you normally say that a company cannot create value over time just in dividends that eventually you'll need to work in opportunities for growth and so on and so forth. We're not talking about alloy cab and the batteries auction. This is kind of mapped already. So beyond that, 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're seeing a number of players of renewable sources facing difficulties given curtailment. They don't have such an integrated portfolio as Coppel. So let's understand, how do you see this dichotomy between I'm going to grow, I'm just going to pay dividends, or 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.

Good morning. Well, you have an excellent point, actually. And just to clarify, what I normally say is, it has always been and 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-by-back 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, 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 Filippi 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 not just fixed on net income, although it is a fundamental reference for any dividend payout policy. But we look at the whole context of it. The company being a cash cow in 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, whether we are actively looking at an effort. I can share this with you. We are not. Also because we are still in the phase of digital transformations, of looking internally. And next week, Well, we're very much focused on Coppel Day 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 walks that Desco and Genco have, these bring efficiency gains with the smart you create with the operation, with cost reductions. I had an event last week.

You will follow that.

We had invented a tornado, a climate event. We are having extreme climate events and this has required a new model of operation. Vilela is also going to give you more detail on this at COPEL Day. And this has to do with our CAPEX planning, 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 GoPro, in that episode and in others, has shown to be a benchmark in the sector.

Obrigado, pessoal.

Thank you. Next question from Juliano with Citi.

Just a correction.

I'm with UBS.

Okay.

Daniel, the whole team, thank you very much. I have two questions. Daniel, 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 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 MP1304. This MP, I think, brings two points that can kind of change the long-term horizon of the company. The first is that is compulsory contracting of energy. Could this reduce the size of our cap of next year? And what could the company do with its current projects? And secondly, if I can 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's a possibility of renewal, could this put inorganic growth in jeopardy with the more possibility of these hydroelectric power plant assets?

Excellent points.

Very important structuring questions, Sergei. Let me try to address them. First, there is review. I think that this is a milestone.

It's going to be a historical tariff review.

Vilela 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 Coppel has a track record of good tariff reviews. In the last two cycles, the denial that Coppel had was zero. And we had a good track record. But of course, there is always room for improvement. AIC and how we can optimize things. And, Ajay, you have your reports, and you have talked with us, 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. Vilana, would you like to comment on this? And then I can speak about the 1003-04. Yes, we have a working group with several departments involved with full attention on the tariff review event. It goes beyond the investment plan. We are looking at the regulatory standards of DEC and BEC 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, we'll only remunerate it in the next cycle. So we meet on a weekly basis. We follow all the works and all of the process of the territory review. 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 or level it. Having said that, tariff review is at the top of our agenda. This will change the game for Coppel, Disco and Coppel. LB1304. 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 LRK. But in our view, it will not be that structuring. Also, because the thermal power plants in the Eletrobras law, fortunately, they were left out. We still run the risk of analysis of a veto. That's a big risk. I don't know how many gigs it will be, five or eight gigs, influxable 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 hydric products because they're unprecedented. We recognize how bold M&E 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 it is not going to be that relevant, and we believe that the characteristics of the hydro products tend to perform better. As regards to renewal of the HPPs, I think that a lot of expectations were created, but what the text of the NP says is basically what was part of the legal framework, with the exception of the quotas. And when the NP 13.0 talks about the possibility of renewable and concession that will be in the hands of the granting power, this was the base scenario, one of bidding process. We at Cabral did not envision a scenario without a competitive process. Given what is happening in other sectors, what's happening in highways, Frenon Dias Highway and all the other highways, they all go through a bidding process. Given the auction of GSF by CCE, 60% margin. 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 drink. 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 resolution of the Federal Court of Accounts. Super clear. Thank you very much. Next question from João Pedro Herrero with Santander.

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 MP1304, I'm learning to understand, in 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, João Pedro. All right, let me try to slice your question.

Let's start with the dividends. Filipe, you've been studying this. Could you give us more color on what we're thinking and studies to address this? And then I will answer about the 1304. We cannot disregard the phase in which we are, migration to Novo Mercado and the current dividend payout policy. And... the taxation environment, the taxation on dividends in 2026 still to be approved by the president. We haven't 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 defined framework and strategy in light of the current shareholder base. Excellent. And, Filipe, 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. All individuals or foreign investors, even if there are some accessions to sovereign funds and others, there is a new factor there that requires, as Philippe 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. There we have a profit reserve 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, that sweet spot. And I'm sure that Filipe 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, 2028, 2029, 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, Philippe, so that we in all publicly traded companies can position themselves. But after Novo Mercado, that will be the top priority in our agenda. And as for the MP1304, absolutely, the topic that was left out, that should not have been left out, and that shows how the pressure is important, is the GD, the DG, distributed generation. in the apportionment, in the curtailment, in terms of having a contribution of 20, 15 bureaus or whatever. So, you think that the reality will impose itself if this is not addressed, and it will be, because the reality is physical. Bertolt 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 this segment to carry the level of subsidies that exist today. So I think that, João Pedro, this is the more pressing matter to be addressed. in this initiative by NAL in terms of tariffs, white flags. That could be a mitigating path.

And I think that this will help remove the perverse incentive of the subsidies in the electric system.

That's all.

What could improve is the separation. We have several initiatives, ELR, CAP, contracting capacity in the form of a voltage. We should have the separation of ballast and energy as expected 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 1304 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 Itaú BPA. Mr. da Cunha, please go ahead.

Good morning.

I'm sorry to go back to this thing still on MP1304. If you could tell us what they included in terms of curtailment and also the definition that should come in the next three weeks, 21 days, regarding what is renewable versus oversupply, renewable oversupply, if this can happen. 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 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 are monitoring this, not just in the press, but the discussions of several sectors about that. I think that we have to look at the glasses being half full. A half full glass means that it is possible, it is consolidated. The electric part and reliability is a value of the fuel renewables, the wind plants and the solar power plants. They will have that right because this happened independent of them. The big problem, as you mentioned, is the energy piece. In my view, 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 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 central government understand. If this is a risk of the entrepreneur, which is one thesis, or if this could be reimbursed. If they choose this path, think 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.

Obrigado.

Thank you very much. Thank you. The Q&A session is closed. I would like now to give the floor to Mr. Daniel Slaviero for his final statements. Well, I can only thank all Coppelians for another quarter of solid, stable results. They show how Coppel is a predictable company that has been performing well and 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 questions, they 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 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 Coppel. As I mentioned on the 19th, we will share with you these elements about our culture, our ambition, our bold ambition, one that aims relevant value generation, value creation for the company. Myself, all of my partners and all companions are enthusiastic I'm very engaged with this new moment of Coppel, a moment that we are 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. Coppel's video conference call is closed. Thank you very much and have a good day.