Energy Co Of Parana Q3 FY2025 Earnings Call

Good evening, ladies and gentlemen. Welcome to Companhia Paranaense de Energia COPEL'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.copel.com. The presentation is also available for download. 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 COPEL's management and on information currently available to the company. These statements may involve risks and uncertainties related to future events and should be treated as forecasts subject to 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 COPEL, and Mr. Felipe Gutterres, CFO, along with officers of the subsidiaries. They will be available during the question-and-answer session. I would now like to give the floor to the CEO of COPEL, who will begin the presentation. Please proceed, Mr. Slaviero.

Good morning, everyone. I would 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 BRL 1.3 billion, up almost 8% over the same period last year and a recurring net income of BRL 375 million. These numbers show how solid and consistent COPEL's results are. Another point that deserves to be highlighted is the strong investment made in the period, BRL 981 million in CapEx in the third quarter alone, totaling BRL 2.6 billion in the 9 months of 2025. This level of investment reflects our commitment to 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 4 photovoltaic solar plants totaling 22 megawatts peak in distributed generation in a deal valued at BRL 78 million. This follows our commitment to simplify our portfolio. Additionally, with the completion of the Mashigua Sue HPP divestment at the start of October, our leverage ratio is at 2.8x net debt over EBITDA ratio, well on target of our optimal capital structure. This fact reinforces two things. Firstly, our excellence in executing the commitments that we set forth with the market. And secondly, this deal, with its characteristics, 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 sales of almost 5 gigawatts, and the build market of DISCO grew 1.7%, still comparing it 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 our team 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 of COPEL. On the positive side, we had an increase of PLD spot market prices of close to 50% compared to Q3 2024, totaling about BRL 250 per megawatt-hour. The intelligence of our strategy and trading structures, led by Rodolfo, and risk mitigation, coupled with the positive effect of optimizing our portfolio and especially the modulation of the hybrid source made all the difference. To end this period, for the first time, we had a consolidation of the results of Mata de Santa Genebra, the transmission company, ensuring a more robust and efficient portfolio, which contributed to better results. 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 22, we had the approval of the common shareholders in the special general meeting, and we got waivers from debenture holders in all of the necessary issuances. 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 Mercado. Next Monday, November 17, at 11:00 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 1:1, plus a new Class B 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, the unification of shares into one single class will bring more liquidity to our securities, 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 COPEL. Last Friday, we launched to our employees the new elements of the COPEL culture. The reason for existing ambition and our values. The 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 COPEL 2035. We cannot think about strategy if it is 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. We believe that our culture is a competitive differential for COPEL. All these elements of culture as well as strategic planning will be presented to the market on our COPEL 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 for our COPEL Day, which will be held next Wednesday, November 19, directly from Rio de Janeiro, 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 by highlighting the consistency of our results, COPEL's discipline in 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 EBITDA consolidated grew 7.8% over Q3 2024, reflecting the health of our operation and the efficacy of the measures adopted for efficiency. COPEL Generation was responsible for 53% of this result. I will give you more details on COPEL Generation and Transmission shortly. Recurring EBITDA of COPEL Genco grew 11% over Q3 2024, driven by a combination of factors: better performance of assets, integration of new endeavors, and consolidation of strategic asset results. In the transmission company, the highlight was the increase of BRL 119.4 million in EBITDA with the consolidation of Mata de Santa Genebra and the average increase of 2.2% in RAP of the transmission companies. In the Generation segment, we were able to mitigate the impact through a smart trading strategy, and optimization of the portfolio captured the positive effects of hydro modulation, despite an adverse event with GSF of 64.9% and curtailment of 34.4%. The result was positive, especially given the BRL 23 million increase in short-term market sales, a 21% rise in volumes sold, and an incremental BRL 10 million in bilateral contracts, with BRL 7 million coming from revenues of regulated contracts. I highlight the startup supply of Jandaira and the consolidation of the Mashigua Sue HPP. These results were partially offset by greater curtailment, which generated a negative effect of BRL 39 million more in the generation deviation in the quarter. Now moving to COPEL Distribution, it presented a recurring EBITDA 7.2% up in this quarter. This result is due to a 1.7% growth in the build grid market with an average adjustment of 6.8% at TUSD occurring in June in RTA, alongside the efficient management of costs, highlighted by a 16% reduction in personnel year-on-year. Now, moving to trading, COPEL Trading posted a drop of BRL 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% increase in PMSO expenses, reflecting the advancement of the restructuring process of the trading company. On the other hand, sales volume for 2026 to 2030 grew 96.2% in relation to Q2 2025, adding an amount sold of 431 megawatts, which shows the potential for business expansion. So, to end the analysis, I highlight the advances obtained in operating efficiency in Q3. PMSO expenses totaled BRL 718.7 million, a 4.1% reduction over the same period last year. This reflects the discipline in cost management, which is a priority across the company. The main highlight was the 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 pension plans and health plans, reinforcing the positive impact of rationalization actions. Furthermore, we reduced material costs by 3.6%, while third-party services posted a 4.7% increase, reflecting the hiring of specialized services for maintenance and operation. The others line, primarily reflects the write-off of activated assets, especially in DISCO, given the high level of investment in the period. We reduced the cost of preserving safety of the operation and quality of services provided, which reinforces our commitment to operating efficiency and excellence. In Q3 2025, COPEL presented a recurring net income of BRL 374.8 million, down 36.5% over the same period last year, as a result of a 7.8% EBITDA increase, offset by increasing negative financial results driven by a robust investment cycle funded by the company within the parameters of an optimal capital structure. Additionally, in the comparative period, we had BRL 4 billion in cash, 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 contributions were higher than the previous year as a result of interest on equity that we executed in 2024 and have now been executed in 2025. In the other variation, I highlight the impact of reduction of equity income of Mata de Santa Genebra that started being 100% consolidated. Now, talking about investments in this quarter, on the slide, we can see consolidated CapEx totaling BRL 981.4 million, maintaining the planned rhythm and aligned to the company's plan. Year-to-date, investments totaled BRL 2.6 billion, focusing 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, focusing on projects that strengthen the reliability of the energy system, increase installed capacity, and promote operational efficiency gains. We continue with disciplined capital allocation, prioritizing projects with attractive returns and those aligned with the long-term strategy of the company. Regarding the capital structure, the net debt over EBITDA ratio was 3x in the quarter, within the established range in our study of optimal capital structure. However, considering the sale of Mashigua Sue HPP completed in October, this ratio would have been 2.8x, reinforcing our financial discipline. Net debt totaled BRL 16.6 billion with a diversified makeup among financial institutions and market insurance debentures and securities. This diversification is strategic, it reduces risks and improves the forecast of predictability of the financial flow. It is important to mention that the company has a AAA rating, reflecting the solidity of our balance sheet and the robustness of our capital allocation manifesto. As for the CDI equivalent cost of debt, we had a debt costing 98.46% of the CDI, dropping 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 allows COPEL to continue to invest safely, competitively, and with a focus on value creation for our shareholders. With this, I conclude the presentation, and we can now start the Q&A session.

Our first question comes from Guilherme Bosso with Goldman Sachs.

I have two questions. First, has the expectation for the completion of the migration to Novo Mercado remained at the end of December? When is this expected to happen? Also, what is the company's stance on dividend payouts? Are you anticipating an announcement for this year following the completion of the migration process, or can we expect something sooner? That’s my first question. Secondly, I would like you to elaborate on the cost efficiency agenda. This quarter, we again saw manageable costs decrease year-on-year. Does the company believe there is still room to reduce costs next year, and if so, by what extent?

I will address part of your question, and then Felipe will discuss efficiency gains. As we mentioned, our plan is to complete the migration by the end of the year if we receive approval from the preferred shareholders on Monday, the 17th. With that approval, there is a 30-day recess mandated by law, which means the migration will likely occur in late December 2025. Regardless of the migration process, we expect to announce dividend payments early in the year, in line with our policy of at least two events. This will be our first year consolidating results from the first half based on our financial assessment of the company, and we are excited and working diligently. The effort to obtain waivers from various debenture holders has been challenging, led by Felipe and the team, and I want to publicly acknowledge their efficiency. We have received support from numerous financial institutions, which has facilitated our access to a substantial number of shareholders. This process is progressing smoothly and is contingent upon next Monday. Regarding cost reduction, we are actively pursuing efficiencies with a goal of reducing costs by 2026, taking into account our 2023 annualized figures. Significant cost reduction initiatives are being focused on specific business units and supply services. There are various actionable initiatives that we expect to unfold by 2026, and we will share more details at COPEL Day. We are in the final phase of structuring efficiencies and operational excellence for cost reduction. Felipe will provide more information on the commitments we made during the Novo Mercado follow-on, of which we need three. We also have a tariff review scheduled for the middle of next year, and after completing this phase of efficiency gains, we will shift our focus towards profitability indicators. Felipe's presentation on November 19, during COPEL Day, will have a dedicated session addressing this topic.

Next question from Raul Cavendish with XP. Mr. Cavendish, go ahead.

My question has to do with the Genco, GMT generation and 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. 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 hedging strategy for the year. And what is the outlook 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 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, keeping in mind that our competitors also join our calls. And then that's why you can add whatever you want. So Rodolfo?

Excellent. 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 mid-2024, we had some windows of good opportunities of low prices. Before materializing the need for power with the increasing price in September, we had good windows to purchase energy, and that's when we purchased most of the energy. Coupled with that, we had a lot of swaps. We know the need for electricity in Q3 and had some excess at the end. So we took 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-a-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. What matters is that there is a lot of liquidity. We have high demand in the market. We are weighing our speed of sale. You could see that we have good sales, but they were quite contained compared to the amount we have available. Overall, I believe these are the two main insights regarding our strategy for the short term, Q3, and mid- and long-term thinking about future electricity prices.

Yes. Good morning, everyone. I believe Rodolfo articulated the strategies effectively. The strategies are implemented by TradeCo, but are thoroughly discussed with COPEL Generation and Transmission, led by Daniel, as we carry out the plan. This year, we achieved strong results thanks to the opportunities for energy purchase prices that Rodolfo mentioned. We had significant success with the modulation of hydropower plants, which contributed significantly to our results. I would like to add some final remarks. Brittol highlighted an important aspect regarding the benefits of hydro modulation and its better pricing in the current environment, emphasizing its role in supporting the hydroelectric system. Additionally, the AMP304 and SMP304, pending approval, are expected to bring positive elements concerning ancillary operational services. It's also worth noting that most of our portfolio, particularly our hydro plants, is located in the South region, where we are observing an increase in prices. This further underscores the unique characteristics of COPEL's portfolio.

Perfect. If I may ask another two quick questions. In terms of looking forward and turning the page in terms of cost cuts and efficiency gains, 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, is this a kind of business that will not add much value to the portfolio? And in terms of prices, if I may ask another question, we have seen some small complex 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 create downside for 2026? Or have you priced this?

All excellent points. So let's start with the end. Rodolfo, perhaps you could give us more color on the second part of the question, and 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. We see this happening on a one-off basis. There is one month with more rain perhaps. The trend is that the prices will be higher. Why do we say this? If again, we compare how the system is being operated this year to last year, with the same scenario of storage and rainfall, the prices are different. We're talking about a floor versus BRL 300 in March. So I can't have a specific month where it rains a lot, and I don't have the need for thermal dispatch, and the prices can be lower. 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 where we can only serve the system with hydro. That's why we believe that prices will be higher in the mid- to long-term.

Very well put. Looking forward, it's important to emphasize that our efficiency agenda is ongoing and permanent. Costs tend to rise again after being trimmed. Previously, we faced structural inefficiencies related to hiring, materials, and bidding practices, issues we are familiar with. I want to clarify that while the main focus of our agenda may lose some momentum, our efforts on efficiency and disciplined capital allocation will become more critical. In our view, the strategic potential leading to products by 2030 or 2031 is significant. For both auctions, COPEL projects, Foz do Areia, and Segredo recorded 5.5 gigawatts. We've reiterated that this auction was anticipated but has been postponed, now scheduled for March due to crucial system needs. It will feature highly competitive projects, and we will evaluate size, product dimensions, and capital pricing. While some factors remain unclear, we will maintain discipline. We appreciate the projects and understand they are competitive with all necessary licenses in place, but the auction will test our theoretical expectations against practical outcomes. Regarding batteries, we are examining that area and conducting due diligence. This includes assessing our competitive edge, particularly related to battery acquisition costs, as easier access to materials may yield greater competitiveness. We strongly believe in the potential for power supply being met through various means. Reversible hydroelectric plants, similar to those in other countries like China and Japan, could be part of our future plans. We will consider this based on our extensive expertise in managing and constructing hydroelectric power plants. Lastly, we will focus on ensuring that prices accurately reflect operational costs. There's a push from ONS towards this model, and we need to further discussions to align price signals with the true cost of generation, or we will face ongoing challenges with costs and subsidies.

I would like to build on Raul's question and also say that COPEL always talks about opportunities for growth. And the batteries auction is kind of mapped already. So beyond that, I'd like to understand what you are 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 for inorganic growth? We see a number of players in renewable sources facing difficulties due to curtailment. They don't have such an integrated portfolio with COPEL. So I'd like to understand how you see this dichotomy between growing, simply paying dividends, or growing and wanting to transform COPEL into a much larger company than it is today. So I'd like to hear your take on growth.

You have an excellent point, actually. Just to clarify, what I normally say is it has always been and will continue to be, given my belief and the partners’ belief, that the company does not create value in the long run just by 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 provides us with a competitive edge.

We see an appreciation in compressing our return rate. You know this better than many people. You know this dynamic of how things work. But in our case, Felipe has been saying that we can balance both. We can be a good company, paying good dividends because we have mature assets, a strong cash generation, and a lot of depreciation. We are not just focused on net income, although it is a fundamental reference for any dividend payout policy. But we look at the overall context of the company being a cash cow while seizing good opportunities. Good opportunities, in our view, do not appear every year. So we must be prepared with a well-disciplined capital structure so that, as opportunities arise, we can make structural moves. To address another excellent point of your question, we are not actively looking at specific assets. I can confirm this with you. We are still in the phase of digital transformation, looking internally. Next week we're focused on COPEL Day because that is our big event. We are preparing for it and will announce the CapEx plan of the distribution company for the next cycle and also for the generation company. There remains a lot of room to invest organically, which comes with low risk and super attractive returns. In addition to the regulatory paths available for Distribution and Generation, these provide efficiency gains with cost reductions. We had an event last week where you followed the tornado of climate events. We are also facing extreme climate events, and this requires a new operational model. The details will be provided during COPEL Day.

Okay. I have two questions. Daniel, we're reaching the end of the year, and that is when we start looking at 2026. Next year, we have a super important event for the company, which will be the process of tariff review. This will be the first tariff review process with the company having been privatized. What do you expect from next year's tariff review process? What is the company doing differently? My second question relates to the potential impacts of new contracting of energy. This could reduce the size of the market for your current projects, and what could the company do with its current operations? Additionally, under the possibility of renewal of hydroelectric power plants, if your base case continues to be a public bidding process, could this limit your possibilities for inorganic growth?

Thank you for your insightful questions. Let me address them. Firstly, regarding the tariff review, I see this as a significant event; it will be a pivotal tariff review. Our regulatory VP and the entire team are actively involved, and we hold weekly meetings to ensure thorough monitoring. I lead a dedicated working group focused on this matter, which is critical given its importance and the flexibility afforded to private companies. While this allows us to explore various opportunities, we must remember we operate in a regulated sector. COPEL has a proven history of successful tariff reviews. The setbacks we've experienced in the last two cycles indicate we're on the right path, but there's always potential for improvement. You're likely aware of our position and have previously discussed this with us. We are confident we can surpass the market consensus, which is around EUR 18 billion or slightly more, and we are committed to achieving this goal.

Yes, we have a working group with several departments involved, focusing on the tariff review event, which goes beyond the investment plan. We are looking at the regulatory standards, indicators, recovery of unrecoverable revenues, and the completion of major works in the investment plan by December because we know that whatever stretches to the next year will only remunerate in the next cycle. We follow all the works and the tariff review process, and the market consensus is close to EUR 18 billion, as mentioned. Given our track record of fulfilling our promises, it is significant for us to achieve or exceed that number.

Regarding the renewable energy contracting, the compulsory contracting dynamics can affect the LR cap, but it will not be that structuring for us. Fortunately, the thermal plants in the Eletrobras law were left out of running the risk analysis. I do not know how many gigawatts it will be, maybe 5 or 8 gigawatts, but technically in the sector it does not make any sense. Fortunately, the Congress had the good sense to exclude this point. Furthermore, we have high expectations for the hydro products because they are unprecedented. M&E was working on this, and we recognize that there are expectations in the contracting. These will be the cheapest product compared to any thermal product. They always offer a lower price to consumers. There will be some impact, but we don't foresee it being significant, and we believe that the characteristics of the hydro products will tend to perform better. As for the renewal of the HPPs, expectations have been created. What the text mentions is part of the legal framework, with some exceptions. When dealing with the concept of renewable and concession, we believe in the significance of the bidding process. We do not envision a scenario without a competitive process. Given what is happening in other sectors, what's happening in highways, renowned highways, and all the other highways are going through bidding processes. Our view is that we are accountable to maintain a competitive process.

Congratulations on the results. I have two quick questions. First, still on MP1304. 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? My other question is about the possibility of extraordinary dividends with the potential taxation of dividends. What do you think about that?

Alright, let me break down your question. Let's begin with the dividends. Felipe, you've been researching this, could you provide us with more insights on our thoughts and studies regarding this? After that, I will address MP1304.

We cannot disregard the phase we are in migration to Novo Mercado and the current dividend payout policy. The taxation environment on dividends in 2026 is still to be approved by the President. We have yet to define this, but it is likely to happen in the coming weeks. We are studying various scenarios and possible impacts with our shareholder base, supported by our external advisers and tax department. Of course, we will position the company with a defined framework and strategy based on the current shareholder base.

Excellent. Felipe, you're leading this process, and, as you put it yourself, we will announce what we intend to do by the end of the year. There is a new element with a 10% taxation on individuals for foreign investors. Even if there are exemptions for sovereign funds and others, this new fact requires some diligence at the company level. We have a healthy profit reserve, which is reasonably substantial, and we are focused on attracting new investors. We have to find the optimal balance. We need to finalize the discussions around corporate law regarding payments in 2027, 2028, or 2029, which is unlikely or whether this will be settled within 12 months. There are elements that need clarity before we can position ourselves. After Novo Mercado, that will be a top priority on our agenda. As for MP1304, I believe the main point left out that should have been discussed is the aspect of distributed generation and the apportionment and curtailment, which should involve contributions of EUR 20, EUR 15 or whatever. The reality of the market will impose itself if this is not addressed since it is causing problems for the system. This must be tackled now as it has grown significantly. It doesn't make sense for this segment to bear the level of subsidies that exist today. Thus, I believe there are pressing matters to be considered; we should have further discussions concerning elements such as capacity contracting in terms of voltage. We should see progress and improvements to modernize the electricity distribution.

Could you tell us what is included in terms of curtailment and also the definition expected in the next three weeks, regarding what is renewable versus oversupply? If this can have a significant impact and what will count as curtailment that could be reimbursable going forward, depending on the definition by the Ministry of Mines and Energy? Will total curtailment be reimbursable?

Victor, I think this is an excellent topic. We are closely monitoring this, not just in the press but also in discussions across various sectors. I think looking at the glass as being half-full is essential. A half-full glass implies that it is feasible. It’s consolidated that the electric part and reliability offer value from pure renewables, particularly wind and solar plants. They will have the right because this happened independent of our actions. The problem remains, as you highlighted, regarding energy. In my view, when we have the original tax and the amendment of the tax, I think that’s a signal that one of the two will be eliminated. I think both arguments are valid from all ends, particularly the generation companies arguing that this will not affect the consumer through charges or decline in tariffs. This is undeniable as there will be an impact. This represents a structural decision and likely lays on the government's wants and the Ministry of Mines and Energy understanding. This is largely about the entrepreneur's risk, which is one thesis or if they choose to reimburse that cost. We are continuously monitoring the direction of the discussions and what's going to be established by the government’s policy to strike a balance between these arguments.

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 COPELLIONS for another quarter of solid, stable results. They show how COPEL is a predictable company that has been performing well and delivering consistent results quarter after quarter. I think this is the first element. Secondly, I'd like to thank all of you for joining us and for your relevant questions. The sector is experiencing a transformational moment, and the regulatory and legal framework will undoubtedly have many impacts in the coming months and throughout 2026. Some regulations will be necessary; however, we are making structural progress. We face both positive and challenging outcomes, but we continue to move forward. I always emphasize the importance of price signaling. Adequate price signaling remains the best method. Whenever the government makes a choice for certain segments or categories, this can lead to long-term detrimental consequences. We’ve seen effects not just in the energy sector but across various sectors. Once benefits are granted, their removal becomes very challenging. Finally, I would like to close by emphasizing the cultural transformation that we are experiencing at COPEL. As I mentioned on the 19th, we will share these elements about our culture, our ambition, and our bold goals that generate relevant value for our company. Myself, all of my partners, and all COPELLIONS are enthusiastic and deeply engaged in this new chapter for COPEL, a chapter that we are collaboratively building. We are building together a company that is and continues to be a big benchmark in the Brazilian energy sector. Thank you very much. Have a good day.

COPEL's video conference call is closed. Thank you very much, and have a good day.