Equatorial Energia S/Adr

Good afternoon and thanks for waiting. Welcome to the conference call of Equatorial Energy SA regarding the earnings of the third quarter 2021. Today with us we have Augusto Miranda, CEO, Leonardo Lucas, CFO, Tina Amado, Regulation and New Businesses Director, Tatiana Vazquez, IR Superintendent, Luciane Domingues, New Businesses Superintendent, and Rafael Brasiliense, Trading Superintendent. We would like to inform you that this event is being recorded and that all participants will be in listen-only mode during the company's presentation. We'll then start the Q&A session when further instructions will be provided. Should any of you need assistance during the conference call, please reach the operator by pressing star zero. This event is also being simultaneously webcast on the company's website, www.equatorialenergia.com.br. In there, you also find the company's presentation available, and you will be able to control the slides. The replay of this event will be available soon after its closing. We would like to remind you that webcast participants can post their questions for Equatorial Energy on the webcast, and they are going to be answered after the end of this conference call by our IR team. Before moving on, we would like to let you know that in statements made during this conference call, relatives to Equatorial's business outlook, projections, operating and financial goals, are based on the beliefs and assumptions of the company's management and rely on information currently available to Equatorial Energy SA. Forward-looking statements are not a guarantee of performance. They involve risk, uncertainties, and assumptions since they refer to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general conditions industry conditions and other operating factors may affect the future results of Equatorial Energia SA and lead to results that will materially differ from those in these statements. We will now turn the floor to Mr. Augusto Miranda that will start the presentation. Please, Mr. Miranda, you may go on. Thank you. Good afternoon, everyone, and thanks for attending today's call. It is with great pleasure that we present the company's results for 2Q21. The third quarter was a very special period for Group Equatorial. After all, over the last few months, we have taken important steps towards feeding our value generation strategies. We moved on in the consolidation of distribution assets with the beginning of the management at CED in July. And in September, we opened a new front for the group in the sanitation sector with acquisition of the sanitation concession in the state of Ampan. But we didn't stop there. Recently, at the end of October, we announced the signing of the contract for the acquisition of EcoEnergy, an operation that consolidates the group's recent trajectory of entering the renewable sector. All these moves were made based on our strong characteristic of financial discipline in capital allocation and commitment to value creation for our shareholders. In this sense, I would like to point out that we remain paying attention to new opportunities, now expanding our focus to new sectors of activities such as renewables and sanitation. Now we are going to move on to slide number three. So moving on to slide number three, I start with the highlights of the period and our economic financial results. We start with our financial economic highlights. We ended the quarter with the companies recurring consolidated a bit reaching approximately 1.5 billion reals, up 23.8% compared to 3Q20. The significant result occurs despite the beginning of the consolidation of CEED, which at first stage still contributes negatively to the company's consolidated EBITDA. The EBITDA growth reflects the economic recovery in our concession areas, with consequent expansion in consumption in addition to the tariff gains resulting from the tariff revision and readjustment processes that took place. Leo will bring details of our evolution later on. Regarding CapEx, we invested more than $816 million in the quarter, mainly in the distribution sector, always focused on the strengthening and expansion of our network. The volume of investments executed was 41% higher than that at the same period last year, when more restrictive measures were in place due to the pandemic. The consolidation of new assets, CED, and the increase in the volume of investments did not change our consolidated leverage. We ended the quarter with a 2.1 times that a bit of ratio. the same level measured in 3Q20. The maintenance of our deleveraging of the last quarters is a consequence of the better performance of our distributors and mainly due to the start of operation of the transmission assets. It's worth mentioning that this quarter we raised more than 2.5 billion reals in CED as part of the management of liabilities promoted under the turnaround process. Liu will also bring you more details on that. We continue to have a robust consolidated cash position of 9.7 billion rails, which allows us to choose the best moments to access the market and allow us to be competitive for possible new opportunities to generate value. In relation to the performance of our distributors, I would like to highlight the growth of the consolidated volume of energy sales of 3.3%. above the growth of the injected energy in the period of 3.2%. The highlight is the volume expansion in the states of Piauí, plus 12%, and Maranhão, plus 5.5%. This number consolidates CED in the third quarter 20 for comparability purposes, but contributed negatively with a retraction of 3.3% due to billing adjustments. Another important highlight is the performance of losses, especially Equatorial PEWI, which in this quarter started to operate below the regulatory level, only three years after the acquisition of the company. In general, all of our assets improved to their losses performance, except for CEED. The operational performance of our assets will also be talked about, approached by Leo in the next slides. Additionally, another example of how we continue to advance in the turnarounds in POE and Alagoas was the constitution of deferred tax assets in these companies, referring to tax losses and a negative basis of CSLL in the combined amount of approximately 1.1 billion reals. I would also like to highlight the approval of the annual tariff review of Equatorial Maranhão, which took place at the end of August with an average effect for clients of 2.79%. The company's net compensation base was approved at 4.366 billion. Finally, I would like to point out that this quarter we began managing CED and its consolidation in our results. Since we took over in early July, We have been working hard on the turnaround process, and in a few months, we have made important advances in some of the main fronts of value generation. We completed the POS process with record adhesion of 46% of the workforce, which allow us to make great advances in the company's operation efficiency. Before moving on, I would like to highlight the achievements in our value creation agenda. The milestones achieved were not restricted for the quarter, since important achievements were made in recent months. First, in September, we opened a new avenue of growth for the group by winning the sanitation concession in the state of Amapá. The entry in the segment is of great importance, as we'll have the opportunity to operate an energy distribution and sanitation asset in the same state. besides the perspective of new capital allocation opportunities in the segment. Additionally, we continue advancing in our strategy to expand our operations and present in the generation and trading segment. In the previous quarter, we had already announced the acquisition of Innova, a distributed generation company. Now, in October this year, we completed the acquisition of 100% of the shares of our trading company, Sala Energias. an important step towards designing a trading strategy integrated with all businesses. More recently, we announced the signing of an agreement to acquire EcoEnergy, one of the largest players in renewable generation with about 1.2 gigawatts installed capacity. We made an acquisition of a company with scale that is a benchmark of operation in sector with a two-digit return on equity and options that are material in relation to Equatorial's market value. With this acquisition, we transformed the Equatorial group into an integrated energy player, while at the same time, integrating another growth vertical and positioning the group competitively for the changes in the energy sector. In this sense, I would like to take this opportunity to explain the next slide a little more details about the characteristics and rationale of this acquisition. On slide four, it's important noting that Eco has a current portfolio of assets that already have trading contracts. However, when the energy in the current portfolio is decontracted, and as we implement the pipeline Our strategy is to sell these energy contracts with shorter term and greater liquidity, and thus we can achieve high margins on trading. Historically, the difference in energy prices between short and long-term contracts, according to DC data, varies between 40 to 60 Brazilian reals per megawatt hour. Today, many companies do not adopt this strategy because they need to offer a long-term contract as support for the funding required for the asset. In our case, we intend to make this long-term contract at the project level with our trading company. I strategy that only large groups with a robust balance sheet and integrated options are able to adopt. Secondly, the supply of new I-50 incentivized energy projects will cease to exist after 2025, which means that this product in the future tends to be costlier, leading to an increase in the incentivized energy premium. The wire discount has even more value when we talk about a scenario of market opening for customers who pay a higher wire usage, such as medium voltage. We see value in re-leveraging Ecoenergia, which can operate with debt measured by net debt EBITDA ratio at levels between 3 and 3.5 times. Additionally, we intend to fund the relevant part of the acquisition, which we cannot give further details because we are in a silent period. The acquisition also has several upsides that can generate even more value for the group, such as the opening of the low-voltage market, self-production, direct access to consumers, and the strengths of the Enquartorial Energia brand, as well as synergy with other group businesses. We made the move with a good return, and these upsides in certain scenarios can become transformational in terms of value generation. And the following slides. will bring you some information about ECO and the scenarios that we visualize for the future. On slide five, we again present the pipeline characteristics by adding the capacity factor information for each project. It's important to highlight a few points. The first is that of the pipeline project, four of the five farms will have the wire discount. The second is that the estimated capex is in line with the current market with more pressure on the exchange rates and commodities. And lastly, as we evaluated the number of greenfield projects prior to this acquisition, we can safely say that the best projects are only accessed by generation platforms as the big players in the segment usually have a right of first diffusion on new projects with market developers. Moving on to the next slide, slide six. We bring the information that the generation scenario is influenced by two parameters. The first is the availability of the source, wind in this case, and the second, the availability of machines. P90 is a conservative metric of generation probability. It's used by the MME only for greenfield projects to calculate the physical guarantee and by Brazilian debt creditors and rating agencies to draw risk scenarios and calculate coverage raters for leveraging greenfield projects. However, we are talking about farms already operational. In the decision-making regarding the generation probability scenario, we cannot ignore, one, the operational maturity of these farms, the triple certification of generation carried out by qualified advisors, and the predominant of Vesta turbines for the wind farms, as well as the contract protection for generation below the curve of some farms, resulting in a historical availability of the machines of 97% above that of other players. All farms were re-certified in 2019, incorporating the most recent generation history and the scenario outlined by the seller for 2022 is 10% higher than the current physical guarantee shown in the chart. This data, including operating asset, as well as equal 8, 9, 10, that should start operations in January 22. It's important that in the scenario, we were more conservative in the generation scenario. Going to slide number seven. Here we emphasize again that another crucial point for value generation is the strategy for trading decontracted energy. which is based on contracts with duration of up to four years with consumers considered middle market, which have a higher average ticket than the PPAs with long terms of 10 to 15 years with players considered large corporate. The strategy of longer PPAs is practicing the market to guarantee project funding. we will not have this condition because we'll give guarantees for the purchase of energy for the pipeline and the operational SPEs already have their funding equated and this energy will be decontracted, started in 2029. If we look at the scenario of historical crisis of conventional energy, we see that for contracts between one and four years, the price historically was above 100 feet BRL per megawatt hour. Up to the price of conventional energy, we have to add the premium of incentivized energy as shown in the slide. The average real price by November 21 of incentivized energy with 50% discount in TUST is 238 BRL according to that extracted from the seed. This data already includes the cost of conventional energy plus the premium of incentivized energy. In the last five years, the only period in which the 53-week moving average price of iFit, which was below the average of the entire historical series, was during the most critical period of the pandemic, when there was a great deal of uncertainty about demand. But the best way to estimate the final price of incentivized energy is not the past, because the market is changing. The supply for this source of energy will stagnate and many consumers are migrating to the free market. And at each stage of market opening, the higher the cost of wire to consumers, making this product even more appealing. According to data from CCEE, the consumption of centralized energy I-50 by final consumers in the ICL was 3.9 gigawatts average in August 2020. CCEE shows that there are already five gigawatts average of new consumers that are potentially free but have not yet migrated. Additionally, according to estimates by Time as Energy, there are more than four gigawatts average of consumption of high voltage clients with demand lower than 500 kilowatts that from 2025 could migrate on to the free market and the low voltage consumption. is 24 gigawatts average, already excluding the categories that have subsidies. In summary, there is evidence that reinforces our belief in the increase of the premium for incentivized energy over time. And the privilege of maximizing generational value in this scenario is for those that have the portfolio with this energy to exploit the opening of the market, hold the strength of the brand, and have the ability to explore retail market. Now I'm going to turn to Leo that will comment on the company's operational, economic, financial performance. Leo, you have the floor. Thanks, Augusto. Good afternoon, everyone. I hope you are all doing very well. Now we are going to talk about market evolution, starting on slide number nine. The volume of injected energy continues to expand consistently, growing 3.2% in the quarter and increasing in all our concessions, especially in PoE and Maranhão. benefited by the higher economic activity resulting from the end of restrictions and the weather component. It's worth noting that this variation considers CED in 3Q20 for things of comparisons, for purpose of comparison. The number of clients benefiting from the social tariff awful continues to grow as a result of the company's re-registration initiatives. More than 270,000 clients were added in our concessions, including CED distribution, with the main advances occurring mainly in the states of Pará and Maranhão. In the last 12 months, the number of customers that benefit from our products increased by approximately 11.4%. On the next slide, we are going to give details on the billed amounts. Moving on forward here on slide 10, we bring you a look focus on distributed energy. The volume of energy continues to grow in our concessions, and it's important to note that the volume of distributed energy has grown even above the injected energy in consolidated terms. In the quarter-on-quarter comparison, Energy consumption grew 5.3% if we consider only our oldest concessions, with emphasis on the strong growth in PoE, the result of initiatives to fight losses, and the end of restrictive measures, which were enforced in the third quarter 20. Including CEE distribution, the variation is 3.3% in the consolidated numbers. That's because the new assets in our portfolio contribute negatively in the period, due to billing adjustments. If we disregard this effect, CEA distribution would have presented growth of 2.2%. As in previous quarters, the recovery of the economic activity and the end of restrictions started to drive growth in the other classes in a homogeneous way. Previous highly concentrated in the residential class, with all consumption classes now presenting growth. The highlight is the commercial class, which grew 9.8% in the quarter-on-quarter comparison. The maintenance of the growth of distributed energy at levels above injected energy is also very positive, as it indicates a reduction in the level of losses, as we are going to see later on. Going to slide number 11. Here we present the performance regarding collection and default rates of our distribution companies, including the performance of our most recent asset. In comparison, the strong recovery presented 3Q20, partially due to the emergency aid in place at the time, meant that the collection levels presented this quarter were lower than that of the same period last year. However, the improved scenario in the context of the pandemic and the initiatives and programs to fostered revenue collection launched by the company, have ensured a level of revenue collection close to recurring levels, especially in Equatorial Alagoas and POE, which continue to perform close or above 100%. It's worth remembering that the company has adopted a series of actions to encourage and facilitate the payment of invoices by our consumers. We highlight campaigns with awards and facilitation tools, such as negotiations through the website and a virtual assistant, among other initiatives implemented and presented in previous release. As a reflection of these efforts, we ended the quarter with a consolidated collection rate of 98.5%. This indicator is mathematically affected by the significant growth in billing in 3Q21, especially in POE and Maranhão. The level of consolidated provisioning for bed credit consolidated was 1.3% of gross revenue, the latter benefiting in part from the reversal of more conservative provisions, the largest made in previous periods are now adjusted. Finally, it's worth noting that until September 30, the suspension of energy supply to low-income clients established by ENIL remained in effect. Move on to the next slide. On slide 12, we saw total losses in the distributors. With the exception of our newest concession, CEE, with the exception of our new concession, CEE distribution, this quarter, all of our concessions recorded a reduction in their 12-month loss levels, a significant and consistent result. The highlight this quarter is Equatorial POE, which in less than three years from the beginning of its operation by the group reached the regulatory level and now performs below the limits set by ANEL, 20.5%. It's worth noting that for the 10th consecutive quarter, it's impossible to observe a decrease in the percentage of losses in POE and for the eighth consecutive quarter in Alagoas. In Pará, The reduction for the third consecutive quarter reflects the success of the implemented fight actions, such as the expansion of the Centralized Monetary System, the SMC, which has been taken to other concessionaires. As for CEE distribution, the increase in the indicator is negatively impacted by the adjustment related to the billing processes. which ultimately reduces the volume built in the period with an impact on the level of losses. Here, we have a great opportunity to generate value with the reduction of the gap to the regulatory level. Moving on to the next slide. On slide 13, we see quality indicators. Here, the highlight particularly is the result in Rio Grande do Sul. In just one quarter, CEED already showed a reduction of 1.1 hour when compared to the immediately preceding quarter, 2Q21. This result is a consequence of the maturity of our processes and of the initiatives implemented as part of the turnaround process. In general, the challenges faced with respect to two CED in the quarter impacted the indicator of the group's other distributors. In Maranhão, it's important to note that the indicator in the last 12 months continues to be impacted by the atypical events recorded in the first half, especially related to suppliers, in addition to the sharp increase in events related to network interference in remote and rural areas of the state. On slide 14, we are taking a look at SAIF. Naturally, The challenge of grid outages mentioned on the previous slide is also captured by SAIF, which measured the frequency of outages, and here we evidence this behavior. However, I would like to highlight on the slide that once again, for the seventh consecutive quarter, we have our fourth distributor below the regulatory limit. of the current portfolio, only CED, our newest company, currently operates outside the limit. It's worth noting, however, that despite the short time, CED has already shown an evolution of the indicator, showing a reduction of 3% when comparing the periods. Now we are going to talk about the economic financial performance. On slide 15, we showed the evolution of manageable expenses, the adjusted PMSO, and its variation per asset. It's important to remember that in the third quarter last year, we identified some savings due to pandemic restrictions. Although the adjusted number reported at the time did not include these amounts, we have identified them just for comparison. Additionally, I note that in the first quarter this year, we implemented another stage of our organizational restructuring with the strengthening of our regional structures aiming at improving results. The comparative impact of this redesign remains. As we can see, Maranhão registered a 6% reduction in the comparison between periods, adjusted for the savings recorded in 3Q20. Disregarding the effect, Maranhão presented P&SO in line. In Pará, the increase is mainly due to higher personnel expenses identified in previous quarter due to the organization of redesign and acquisition of the eighth hour worked, and also to higher spending on outsourced services, particularly the identification of collection and loss-fighting fronts. In Piauí, The increase is mainly due to higher expenses for the intensification of the customer collection strategy and expenses with the return of the face-to-face service at the branches and also attorney fees on success. In Alagoas, the variation of 5% was below the inflation year-to-date for the period. And if we adjust the 3Q20 by the savings from the pandemic, there was a reduction of 7.9%. in the adjusted PMSO. In Rio Grande do Sul, CEED showed a reduction in its adjusted PMSO mainly due to the positive effect of lower expense sharing compared to 3Q20 and lower expenses with maintenance and disconnection connection teams. In addition, It's important to note that in this quarter, there was an accounting recognition in the amount of 108 million BRLs in part of the effect of the provision for bad credit, whose closing occurred in October 21, with 48% of the CED staff joining. Finally, in transmission, the increase due to the entry and operation of our assets, whose expenses until last year were activated, are now being recorded in the results. Additionally, in the information P&SO consumer ratio, I highlighted that the performance of Piauí and Alagoas, despite still having opportunities, operate in line with our more mature assets and illustrates the size of potential that we have in Rio Grande do Sul. On the next slide, slide 16. We have the adjusted EBITDA for the third quarter 21, which reached 1.45 billion BRLs, an increase of 23.8% compared to that of 3Q20. Excluding from the adjusted EBITDA, the non-cash effects of the financial asset adjustment and IFRS 15 transmission, as well as new asset CEDs, The growth this quarter is 51.4%, or 462 million BRLs, going from 898 million through Q20 to 1.36 billion this quarter. The significant growth is mainly due to the strong performance of the distribution segment, driven by tariff and volume gains, in addition into the start of operational, of commercial operations in the transmission assets. Now, on the next slide, we are going to give you a breakdown of EBITDA per asset. On slide 18, we can see the adjusted EBITDA for non-recurring effects, excluding CED. The highlight here is the significant growth in the adjusted EBITDA recorded by all our distributors. which together contribute with an increase of 486 million in 3Q21. This result is due to the strong performance of our assets, and here I draw your attention to the performance in Pará and Piauí, a reflection of the significant increase in YRB tariff and market growth, also benefited by the better performance in the fight against losses. If we just considered CED, the adjusted EBITDA increased 32.7% in comparison between quarters. This quarter, CED reported a negative adjusted EBITDA of 105 median, reflecting the still early stage of the turnaround process. In transmission, the variation captures the CAPEX slowdown, which leads to a reduction in contract asset revenue due to IFRS 15. In the graph below, we show the contribution per asset in the adjusted EBITDA, disregarding the effects of the financial asset update and IFRS 15, where we can observe the evolution of the transmission EBITDA due to the entering commercial operation of part of the assets, the remainder assets than all of them are operational now. Let's go to slide 19. As shown in the slide, we invested 816 million in this quarter. 41 higher than the previous quarter, as a consequence of the end of the restrictions that were in place in 2020, which consequently had a negative impact on the volume of investments made that period. The main highlight is the increasing investments in the distribution segment, especially in the states of Pará and Maranhão. Focus on strengthening and expanding our network, in addition to the consolidation of CED, which contributed with an additional 60 million BRLs this quarter. The total investments allocated to the segment amounted to 783 million BRL, a significant increase of 502%. The investments in the transmission segment were reduced by the conclusion of projects, all of them with an active RAP. In total, since the first quarter of 2017, more than 5.2 billion BRLs were invested in transmission projects. Let's go to the next slide, slide 20, which showed that the leverage level measured by the net debt-to-bid-dub ratio remains stable compared to previous quarters at 2.1 times. Even after consolidating CEG in our results, and adding 1.4 billion BRLs in net debt and negative EBITDA. Net debt total 11.4 billion BRLs in 3Q21, an increase of 9.7% versus the position in June. This variation is fully offset by the significant increase in EBITDA, a consequence of the performance of our assets as shown above. This quarter, we continue to show a very robust cash position, ending the period with 9.7 billion BRLs, enough to pay more than three years of debt maturities, whose average term at the end of the second quarter was approximately five years. The balance of available cash combined with the lengthening of our profile of obligations results in a short-term debt coverage of more than two times. In this quarter, it's important to note that we advanced in the restructuring process of CED liabilities. We raised $2.5 billion in the distributor, with highlight to the company's first debenture issue in the amount of $1.5 million and $500 million in promissory notes. On a consolidated basis, the operations raised at CED have an average term of 3.5 years and an average all-in cost of CDE plus 1.6 a year. And were used for the settlement of the shorter and or more expensive obligations, such as the liability with the TIPO of approximately 400 million at a cost of 1% a month in dollars and the low one with the IDB. Now I'm going to turn back to Augusto for his final considerations. Thank you, Leo. I would like to close by highlighting our recent achievements and perspectives. Among the highlights of the period, as we commented through the presentation, perhaps the main one is the acquisition of Ecoenergia, an already consolidated platform for renewable generation. The group's strategic planning has already been complicating a long-term vision for the segment, as registered with the recent acquisitions of Enova, of distributed generation, and the shares of Solar Energy, the group's trading company. With this acquisition, we have repositioned the company in a relevant way, starting to act as an integrated player a fundamental step to face the challenges of the electric sector in a future of market opening and energy transition. Still this quarter, we opened a new avenue for growth for the group with the accomplishment of the sanitation concession in the state of Amapá. This is a very important move because it represents our entry in a segment that provides a promising avenue for growth, considering the current infrastructure deficits that we have in the sector today. Currently, about 100 million people do not have access to sanitation. 40 million do not have water supply in their homes. We will pay attention to investment opportunities in this sector. We also had the tariff review process in Maranhão with satisfactory results for the company, especially for its capacity to capture in an adequate way the investments made in the concession over the life cycle and the tariff readjustment in Paraná, capturing the full IGPN in Parcel B. As main perspectives for the year in distribution, we'll have the tariff review process of CED and also the beginning of CEA management in Amapá, both processes that should take place at the end of November. Finally, we remain committed to generating value for our investors and continue to evaluate possible opportunities to strengthen our portfolio. especially in the recently business fronts. Now I will turn to the operator to start the Q&A session. Thank you very much. Thank you. Now we'll start the Q&A session. If you have a question, please press start one on your phone. If at any point your question is answered, please press start two to remove the question from the queue. Questions will be answered as they are taken. Please remove your phone off the hook when you are asking the question. This way, we can offer optimum sound quality. Please wait while we are posting the questions. Our first question comes from Carolina Carneiro from Credit Suisse. Good afternoon, everyone, and thanks for the call. I have two questions. First is about C3E. you talked on the release and you talked about the release, the provision for bad debt that had an impact. So if you could give a bit more color of what we could expect for the fourth quarter, both for the results of the provision of bad debt and the strategy that you are taking for CEED, So, but we have an idea of a more recurring cost performance in this asset. And the second question, if you could talk about the new business of renewables in the call of Ecoenergy, you talked about price curves, but I would like to understand given that you are exploring the segment, what is in your mindset in terms of trading of energy for this business segment and its prices? Because lots of people talk about prices between 170, 180 reais per megawatt hours. But we know that depending on sales strategy, if it's more focused on short-term retail contracts, prices can be higher. You said that you're not going to give any guidance, but I would like to understand your rationale on the price dynamics and contracts for the segment. Thank you. Hi, Carolina. Thanks for your question. Well, I have Léo here, Tim, and Rafael, Luciane. So we have the whole team to be answering your questions. And I think that we can address your first question. how we see our provisions, and then Rafael could add to the answer. Hi, this is Liu speaking. So I'm going to start with the provision. We estimate the cost of provision, a payback of nine months, which is equivalent to savings of 15 million a month. The level of cost of this company is higher than any other that we have joined. On the other hand, the concession area has appeals and it's not that complex. So it's quite reasonable to expect that this cost for consumers in CEE distribution to converge to the levels in which we operate And in the longer term, due to its complexity, perhaps it's also possible to go past this level. As for energy prices, I would like to ask Rafael Brasiliense, our trading superintendent, to talk about your question. Thank you, Leo, and thanks, Carolina, for your question. It's interesting because we can go back to the slide that we developed for this presentation, slide seven, that brings exactly this rationale of commercial model that was used by the team of Ecoenergies. Basically, we used a model of a profile of contracts, of shorter-term contracts, three to four years, vis-à-vis what the market has been doing, which is contracts from 10 to 15 years. Generally, the market works with 10 to 15-year contracts because of the funding that we mentioned in the presentation. But we have a platform that is already operational. with funded projects. And in addition, we have a pipeline to be built and contracted where we have a platform for trading inside the Equatorial Group that can be used for us to conduct our models. And with that, we can capture market prices that are more appealing. And that is what we show on slide number seven. when we analyze energy prices and the curve that is provided by Decidi, which is a risk appraisal company for the energy market. And in their models, the way they capture information in the market, they have a landscape of nine years of data. And we can see that contracts with lower duration than four years have prices 40 to 6 reals higher, reals per megawatt, than long-term contracts. And in addition, when we seek, you know, the sale of energy, given that the whole eco portfolio is incentivized energy, we're talking about energy price plus the wire discount. And the wire discount that is going to be granted for those consumers that are migrating now, retail, smaller consumers, the cost of wire for those consumers is much higher. So the cost of opportunity for these consumers is much more appealing. So we believe that we can capture this premium. And as we can see on slide 17, I'm sorry, on slide 7, there is... Also, a model in which average prices of the last five years, for example, captured by deceit, show a historical price of incentivized energy for four years of contracts of R$238. I think it's very important to realize that we were conservative in our model in prices, but we do believe in the valuation of incentivized energy. Okay? Great. Thank you very much. Our next question comes from the web, from Antonio Junqueira, Citibank. I'd like to hear from you your prospects for the completion of revision of CE. How confident are you that Our AP approved is close to that required. Thank you very much. So I'm sorry, we have a bit of a technical problem. Junqueira, we still do not have the base formally posted. It should be in a while. We expect the meeting to take place next Tuesday. But given what we observed in the inspection process and how it occurred, we are not expecting significant variation compared to the number that was posted in the public consultation. Okay? Thank you. As a reminder, if you have a question, just press star 1. To withdraw your question from the list, press star 2. Please wait while we collect new questions. Once again, to ask a question, press star 1. To withdraw your question from the queue, press star 2. Please wait while we collect new questions. We are now closing the Q&A session. I'd like to turn the call back to Mr. Augusto Miranda for his final remarks. Please, Mr. Miranda, just a minute, please. Just a minute. I'll be with you in a sec. Well, finally. Okay, I'm ready now. I'm sorry, I had a small problem here. But in closing, I would like to reinforce our commitment to generating value for our investors, which we seek to deliver through the operational excellence of our assets and a financial management focus on the efficiency of capital allocations. These are the principles and values that have guided our movements towards growth. Also, I'd like to remind you that our Investors Relations team is available to support you with any questions you may have after the call. Again, thank you all for being part of our call and have a good afternoon. The conference call of Equatorial Energy SA is now closed. We thank you very much for attending and wish you a good afternoon.