Companhia Paranaense de Energia - COPEL ($CPLE3)

Good morning, ladies and gentlemen, and welcome to Companhia Paranaense de Energia, COPEL's video conference to discuss the earnings for the first quarter of 2026. This video conference is being recorded and will be available on the company's website, ri.copel.com. The presentation is also available for download. [Operator Instructions] Before proceeding, I would like to note that the forward-looking statements made during this conference call related to Copel's business perspectives, projections and operational and financial targets are based on the beliefs and assumptions of Copel's management and on information currently available. These statements may involve risks, uncertainties and assumptions as they relate to future events and therefore, may differ materially from actual results. This video conference is presented by Mr. Daniel Slaviero, CEO of Copel; Felipe Gutterres, CFO of Copel as well as directors of the subsidiaries who will be available for the Q&A session. I would now like to turn the floor to Copel's CEO, Daniel Slaviero, who will begin the presentation. Please, Daniel, you may proceed.

Good morning, everyone. I thank you for attending our video conference. I would like to start with the quarter's highlights when we delivered robust results even facing an operational and market scenario that was extremely challenging. In generation, we faced an adverse environment with GSF of 92% and curtailment of almost 21%, a significant worsening compared to the first quarter of last year. This context reflected into an average PLD of approximately BRL 360, more than twice as much as the same period of '25. In this context, we were still able to transform the scenario into an opportunity with relevant gains in hydraulic modulation of approximately BRL 70 million and in the submarket management with accumulated gain of approximately BRL 70 million. These results reflect a commercial strategy that is efficient and translates into consistent financial performance in the quarter. Copel reinforces its excellence and consistent robust work in this quarter with results above expectations. And as a consequence, recurring EBITDA reached BRL 1.8 billion, an increase of almost 17% and recurring net income of virtually BRL 640 million, 10.7% above the first quarter of '25. As for capital structure, we closed the month of March with leverage of 2.8x net debt to EBITDA, preserving a healthy financial position compatible with our optimum capital structure. Before moving on, another very important topic present in our discussions is tariff review. The work plan is on schedule, executing all of this process expected to conclude on June 2026 in about 60 days. What's new in this quarter was the release by the regulatory agency in the level of the public consultation carried out at the beginning of April, the value of our Copel's updated RAB, which is higher than what we had been releasing to the market, but it's still pending the final approval by ANEEL. I again would like to reinforce the technical hard work done by our team over the past few years, which will certainly positively reflect on the next tariff cycle. I would also like to point in this quarter, one of the main targets we had is to always be continuously improving customer experience. And here, I have relevant news commented by distribution, Villela and all of Copel DisCo, which was the launch of Copel Agro a relationship front entirely dedicated to one of the most dynamic sectors of the Paraná economy, which is agribusiness. We've structured exclusive teams to serve these customers 24/7 customer service, operation center, team dispatching and follow-up. This closeness to farmers, to producers allow us to understand more and more precisely the needs of each activity, in particular, in the protein sector and to be able to respond promptly to these demands, providing better service to our customers. Finally, as for shareholder payments, we announced in April the IOC declaration in the amount of BRL 706 million that will be paid in September '26. And to this amount, we had the values disclosed in December last year, which will be paid in June of this year. And now we must mention the successful LRCAP auction where we, in August, the inorganic growth phase, that third wave that we've always been talking about in earnings conference calls or on recent Copel days, which was a significant victory of adding 2.1 gigawatts of capacity to our portfolio to the national electrical system with the expansion of the power plants of Foz do Areia and Segredo. The result of the hydropower in the capacity auction reinforces the relevance of this source in delivering what the system needs the most, reliability, power and high availability. While we fulfill a strategic agenda of our strategic 2035 plan, this is growth based on discipline focused on our core businesses with outstanding returns for the company and our shareholders. At the bottom of the slide, you can see the time line of all the works year-by-year. We've already started moving in the work site, implementing there and the distribution team can bring you more details so that we can fully execute the business plan. As the works develop, we provide more details to the market. Here, we also had excellent news, very pleasing news this week. That was a very special recognition that Copel received once we started to join the Dow Jones Best-in-Class Index in the global segment. Featuring amongst the companies with the best ESG practices. This is one of the main international references for corporate sustainability. Being part of this index means to be among approximately 10% of leading companies in their segments on according to a very strict assessment run by S&P Global. More than a steel, this recognition reinforces that sustainability is integrated to our strategic decisions and the way in which we run our business in the day-to-day of Copel. And it strengthens the perception of our company in the international market, further expanding our attractiveness to investors and confirms the soundness of our governance. To conclude my part of the opening remarks and turn the floor to Felipe to discuss the quarter's results. We've been monitoring wide discussion in this sector regarding market security and liquidity, and we have some clarifications of our view and our position. First is that price formation in the electrical sector is central to the good operation of the market because it connects the physical operations of the system to the economic decisions made by the agents. For the signal to be efficient, it is crucial that there is adherence between the models and the actual operation. In this context, the mechanisms of risk aversion like CVaR have a crucial role. They allow us to advance situations where they need to be scarcity, guaranteeing a more balanced operational trajectory, especially in an environment with more hydrological uncertainty. We must look at the actual example of the South submarket this year. Even facing a very adverse hydrology scenario, the operator maintained reservoirs close to the minimum operating level, slightly below 30%. And this was done following the dispatch recommended by the models with the current parameters that pointed the need for appropriate thermal dispatching. And if it had not been signaled with this risk aversion patterns, we would be in the South in a much more severe hydrological scenario. And this is just another piece of evidence to show how the current perimeter of 15 to 40 is well calibrated and shall not be changed in our view. Another recurring criticism is related to price volatility, especially intraday. It's important to note that the our price went into effect only in 2021, precisely to give the proper signaling of price as there is excess or lack of energy and power throughout the day, again, getting closer and closer to the challenges of the actual operation of the system to the effective actual costs of the operation. And this reality occurs in all developed markets in the world and the price range that we have in Brazil between the minimum and the highest PLD price is one of the smallest compared to other markets. It's actually quite common in other countries to see negative prices throughout the day because that reflects the reality of the operation where you have areas with a surplus of energy and other times where there's scarcity, especially at the end of the afternoon. And finally, my last comment about this market liquidity and the problems that some trading companies are facing, which can be clearly noted is that -- considering the financial volumes involved, it is very clear that some companies have operated beyond their economic capacity, and they are struggling to honor their commitments. In this scenario, it's only natural that sellers and even buyers of energy are more restrictive in terms of credit to those companies. With that, I turn the floor to Felipe Gutterres, our CFO, to detail the earnings of the quarter. And later, we will open the Q&A session.

Thank you, Daniel. Good morning, everyone. Turning now to the financial results. Recurring EBITDA for the company reached approximately BRL 1.8 billion, up 16.7% compared to the first quarter of '25. This is a significant result reflecting the soundness of our operational strategy and our commercial strategy even in a quarter marked by a higher hydrological volatility. This performance came relevantly in the GenCo, Which was the main driver of growth in EBITDA exceeding 30.7%. The highlight here is the positive result of modulation and the difference of price in submarkets in addition to gains in the free market with growth in volume and higher price. Copel DisCo also contributed significantly with EBITDA above 10% compared to the first quarter of '25, sustained by the grid market result growth and the variation of costs being under control. Moving on to the GenCo results. Generation and transmission EBITDA was driven mostly by the result of modulation totaling BRL 267 million more than the reported in the first quarter of '25 due to the increase of average PLD in the southern submarket. The increase of BRL 99.2 million in revenue on bilateral contracts resulted from a combination of higher volume and price of sale. Volume grew 11.7% and price 4.7% and a greater revenue with the availability with the results of BRL 93.3 million with the consolidation of Mata de Santa Genebra in the results of June '25. In the pressures, we had a higher cost of purchased energy -- energy purchased for resale due to higher PLD and GSF of 92% in addition to the wind generation deviation and the higher impact of curtailment that totaled 20.7% in the first quarter of '26 compared to 8.8% in the first quarter of '25. Even with this scenario, the message here is execution, active commercial management and capturing of opportunities with cost control, including the decrease of PMSO in the segment. In distribution, recurring EBITDA was 10% above the first quarter of '25, reinforcing operational results. I'd like to stress here the growth of 2.1% in the build grid market, reflecting the greater economic activity in concession area and the growth of customer base in the period and the annual tariff adjustment in June '25 with an average effect of 1.3% in the B Parcel that we also captured in the comparative period. The trading strategy is now on the next slide. We continue to evolve consistently supported in 3 well-defined pillars: optimization of portfolio, the offer of flexibility and modulation to end customers as well as continuous and disciplined activity in risk mitigation. In the quarter, the active management of the portfolio enabled the capturing of relevant opportunities with the activity on submarkets contributing to about BRL 70 million in addition to positive effects in the our curves that added another BRL 70 million to results approximately. These effects reflect decisions made based on technical criteria, disciplined reading of the market and adherence to the established risk limits. Another relevant factor was hydrology risk. We closed the period with GSF of 92% and curtailment -- wind curtailment levels much higher than what we observed in the same period of last year, reinforcing the importance of a structured active and consistent commercial strategy, especially in more challenging scenarios in operational view as we are experiencing. In energy balance, we have a gradual balanced expansion of the availability of the portfolio, starting at 16% in 2026 and reaching 53% in the horizon from 2029 to 2030, which is in line with the strategy of capturing attractive prices in different scenarios to sustain the results. As for the hydrology risk exposure we maintain a comfortable long position in hydro, 19% in 2026. Complementing our commercial performance, I highlight our strict credit management, maintaining sound governance in the selection of counterparts, which guarantees an extremely resilient portfolio with very low levels of delinquency, which allows us to operate safely in ASL, guaranteeing that profitability captured in trading converts effectively into cash generation. We continue maintaining flexibility, discipline and sophistication in portfolio management with hedging operations and customized solutions to clients, consolidating trading as an important driver of results. Now on PMSO, on cost management, we see a positive evolution in discipline of costs over the quarter. The variation posted reflects distinct movements in the main lines. We had a BRL 10.3 million increase in the others line due mostly to the lease of equipment and software focused on operational efficiency and growth of BRL 2.9 million in materials for GenCo. On the other side -- on the other hand, this was offset partially by relevant reductions in manageable lines with a drop of BRL 26.3 million in third-party services. If we isolate [ PDV ] [ ILP ] in expenses with personnel increased BRL 7.6 million, 4.2% in this quarter as we keep up with the salary adjustment of 5.01% defined in the collective bargaining agreement. In practice, discounting the inflation, the cost would be stable compared to last year. When we talk about PMSO management, we reinforce our continued commitment to cost efficiency. This effort and discipline is in context of business that are significantly different from previous years, the increase of standards of service requiring adaptations and implying additional costs. Within the rationale of efficiency and customer focus, I highlight initiatives that are relevant like Copel Agro, as Daniel mentioned, where we created a dedicated structure to enhance our relationship model with agribusiness and increase the level of customer experience. Our focus in cost effects efficiency this year will be on optimizing the base of suppliers, dimensioning of our workforce, developing long-term contracts and the reduction of commercial costs and sale of nonstrategic real estate. In net income, we posted a result of 10.7% above last year due to the very robust operational results, partially offset by higher financial expenses, leverage results of a company that operated in a more structured optimized capital structure actually than the first quarter of '25. On CapEx, in the quarter, we invested BRL 581 million, 75% of which were invested in the distribution company and the remainder balance on generation and transmission. The priority of these investments, this CapEx targeted towards operational pillars, service quality and sustainability of long-term performance. Finally, getting into indebtedness, Giving you more color on leverage, we remain in a comfortable position in line to the optimum capital structure, closing the period with 2.8x net debt to EBITDA, which is precisely in line with the optimum point of the capital structure. Our debt is 63% linked to the CDI, 34% to IPCA and 3% to the long-term interest rates. We closed the month of March with nominal cost of debt of 13.05% a year, equivalent to 89% of the CDI, a result of our active management of liabilities that seek a balance between duration, cost and profile of indexing. This concludes the presentation. We will move on to the Q&A session. Thank you.

[Operator Instructions] Our first question Ricardo Bello from Safra.

The question in writing. I have 2. First, I would like to ask for more details about the ADA, which led to this increase in the quarter. Apparently, there has been little energy sale in this quarter in particular. So what's the environment of negotiations and the expectation of PLD with the closing of the public hearing on the CVaR and the ONS, CCEE that they open, do you believe this is already impacting the price curve or should impact it significantly?

So starting with Felipe on ADA and then Rodolfo can add to -- about the expectations of changes in the curve based on the discussion. So please, Felipe.

So the increase of ADA in the quarter is due to a move of a customer, in particular, with a poll sharing service and they went bankrupt. Of course, that has an impact with our ADA. That was the most relevant one-off effect. Rodolfo?

So Ricardo, to answer your question, focusing specifically on risk aversion, we understand that irrespective of what the final conclusion is this is already priced, and it's important that in interactions we've been having with the operator, we're seeking this match between actual operation and effective cost is on everybody's radar. So we're working to be between 35% and 40%. The main point, and we understand here is that irrespective of the parameter in this range, you can be a little bit higher or less, but the reality will impose itself. So there's no scenario where these prices will go down artificially. And this reflects in the long term. Even with this oscillation of views, we won't see an effect in the long term. And that's already a hope for your next question about our strategy. We maintain our pace in line with what we did last quarter. Capturing some other price hikes, but without accelerating, but also without slowing down.

And just to add, Ricardo and everyone, Ricardo mentioned in this parameter, the risk of [ CVaR ] should develop throughout the month of May to be enforced by January '27. So the first comment here, adding to what I said in the opening remarks is that this has already been changed at the beginning of '26, making another change different from the current parameters in our view, changing that annually, that's already a factor of instability that brings in security. And the second reason we already declared even with this parameter, the current parameter -- if it weren't for that, the southern submarket is already below 30% and signals and dispatching there, especially from thermal were very important, not only to maintain the reservoirs and the security of the system, but to avoid the price increase through tariffs or to fees to customers. In our view, ONS and the government itself will conclude this debate in the coming weeks. But for the security of the system and the data here is very clear in our view, it should be -- they should -- the stability should maintain that so that we can monitor this in a longer period, monitor those results.

Our next question, from Bruno Amorim from GS.

My question is about capital allocation now that the LRCAP auction happened. Can you talk about on Copel's view, how relevant the opportunities may be in terms of batteries, reversible plants in distribution and the potential M&As that may happen in the coming years or maybe months in the industry, if you can mention whether there's a preference for a specific geography and the assets, if there's more synergies, if there's any region that you may like to avoid or if there's any front of capital allocation that you understand is relevant. And if you can discuss, that would be very helpful for us to understand where the company is headed in coming years in terms of capital allocation.

This question, without a doubt, is one of the most strategic ones in the company. In addition to having an operation with excellence in our day-to-day trading operation, our excellence and our operational excellence, the great discipline in capital allocation is an inherent part of our value generation strategy. And I believe we have, be it in investments, organic investments, both in distribution and generation and transmission. And now with the LRCAP auction, the company has been showing a very consistent track record in terms of capital allocation discipline. As for potential future opportunities, the company's position is to always be mindful and studying and analyzing, be it batteries that I think without a doubt, it's a big discussion coming up, and we have some views and where we may add competitive edge in this segment. So this is something that is being studied and assessed here in the company. And you mentioned other opportunities that are in distribution, generation, transmission and trading of electricity. The company will always be mindful of that. Specifically about distribution. Today, we don't have any opportunity put forward in the market. So we can't say anything unless there is an actual fact. But if potentially this comes to happen, it's only natural that the company analyzes it in depth. And the closer to our region it is in the South, Southeast, Midwest, of course, there's always some type of synergy and knowledge of those regions. But considering it's in Brazil in these 4 segments of electricity, these are opportunities that will always be in our radar. But again, today, there is nothing solid in this pipeline about any opportunities, including because our agenda now for the implementation of LRCAP and digital transformation, improvements and efficiency gains is a permanent ongoing agenda. It's something that continues to bring a lot of flow to Copel. So to conclude, another quarter with sound results that are predictable show a very -- a characteristic that's very clear at Copel. Copel is a company that works like clockwork, consistent, predictable quarter-by-quarter, delivering the results that we promised to the market our investors, our customers and society.

Excellent, Daniel. Is there anything you can talk about, about the reversible plants?

Reversible plants, excellent. I think for us -- and please, if anyone has anything to add, but it is one of the main next avenues of growth. We talked about this at the call. We already have studies in a lot of depth, even considering our knowledge of this sector, of this segment, either for the expansion of new capacity auctions that may come up in coming years like Caxias and maybe possibly other plants or a pipeline that is very relevant for our geography or our experience or the proximity to our main assets for reversible plants. [ Rogerio ] if you have anything to add?

That's it, Daniel.

So Bruno, for us here, and there's a very significant advantage for batteries. First that one does not rule out the other. They don't exclude the other, but reversible plants have a much greater durability. So room for it to contribute to the system availability, operation we've been seeing here in other places around the world. For example, in China, they already have more than 90 gigawatts of reversible plants. So I think this is unavoidable growth for hydro power operators and the electrical system.

Next question, Giuliano from UBS.

I have 2 questions. One is simple, maybe the answer might be a little bit more complex. We're talking about the results of this first quarter with 2 interesting gains, the gain in modulation and the submarket gain. What do you think could be a gain, especially in modulation that is more recurring? We see the result of around BRL 70 billion. Do you think the BRL 70 billion in modulation is going to be recurring from that or up? And my first question. And the second is a little bit about CapEx versus dividend. So how -- when do you think you'd be reaching a peak of leverage? And during this leverage peak, what could be an expected payout?

Thank you for the question. So first, we do not disclose a guidance or don't provide a guidance about our expectation of future results. But of course, hydro tends to gain in value and the benefits of modulation tend to expand in our view. Of course, it will all depend on the PLD, the stock price at each quarter, each year, and you know that well, and that's very susceptible not only to this, but the effluences as well. So that's very dynamic. But hydro modulation and the role it plays in the system of security, reliability, this is going to be more and more valued. And in our view, this dimension is only the beginning of a next level, next journey always depending on those circumstances of affluence of PLD. But conceptually, we've been seeing that the hydropower plants have been playing the role of holding or carrying the power of the system at peak hours. Rodolfo, any comments, anything to add? And then we can talk a little bit more about dividends and CapEx for the market.

Excellent. No, I think I agree. This is very clear. Quarter-by-quarter, we see the cost of modulation going up quarter-by-quarter, and the expectation is for that to continue the more we see this insertion of ramp-up and all the role that the hydraulic power has been playing for the system. And to add Giuliano and everyone, for this quarter, I think it was yet another example of a commercial strategy, a portfolio strategy that is smart, strategic that has the #1 assumption of uncontracted power that you see GSF of 92% in the quarter and the same period last year was above 1. So those variations will be increasingly more dynamic. And the moment of curtailment was 8%, close to 9%, but it got to 21%, which also shows the scenario is increasingly more challenging. But the fact that we have uncontracted energy and a balance -- and as I said, a great reason for us to be more cautious in granting credit shows that the company is being able to go through these turbulences in the market comfortably.

Felipe, so this is a very important question since we add to the announced CapEx last year, 5-year CapEx of [ BRL 17.8 billion ] and BRL 5 billion as LRCAP precisely for the same 5-year period between 2026 and 2030. And obviously, by doing that, the company's leverage also increases to the maximum level of our optimum range for longer.

So obviously, when doing all this analysis, we need to take into account that starting in 2030, we already have very robust cash generation already contracted, the delivery of capacity at the auction itself delivered to the system. And by doing that, and you see that annually, we always say that running the optimum structure, there's always a debate of the time to convergence we could allow considering this new aspect and this analysis, but all that reinforces that our policy of a minimum payout of 75%, that's the boldest in the sector.

Adding to that, right, Felipe, there are 2 very clear things here. First, our intention is to maintain the minimum payout of 75% policy unchanged. As Felipe said, it is the highest -- the biggest one in the sector. But the fact that we operate at a higher level, maybe for a longer period in this construction phase is completely normal and natural. And as Felipe mentioned, there will be very robust deleveraging once Foz do Areia and Segredo get into operations. So we are very comfortable with the scenario we are experiencing today without any other inorganic opportunity that may come up. Again, we don't have anything in our radar, but we maintain our structure, both for payout and a healthy capital structure in the current conditions. And the last -- the next investments will be organic, either organic or LRCAP-related investments will have strengthened and will strengthen the company's results in the coming years.

Next question, Fillipe Andrade Itaú, BBA.

Could you please comment on Copel's view of the impact of El Nino and the company's energy balance in the second half of the Year, how the modulation gains and the exposure to the detachment of prices in the south may behave. Does the company foresee maintaining an uncontracted position still relevant in the medium term to capture these gains in modulation?

Fillipe, that's an excellent point, very pertinent to your remarks, especially with the perspective of El Nino to reinforce that we maintain a long uncontracted balance, not only for the current year, A+0, but A+1, A+2, trying to make the most of one opportunity or another in the period. This is an assumption of our trading strategy, precisely because we're seeing an environment with a lot more volatility, a lot more challenge for the actual operation of the system. That would be an initial point. Rodolfo, if you can add and what we expect of El Nino impact and modulation, price curve that could be shared with the market?

Excellent. So Fillipe, first point really -- we already have a strong indication that there will be action of El Nino in the second half. What's uncertain is how intense it's going to be and where it's going to have an actual impact. It does trend to have features in the South, and we're seeing the prices in the second half reflecting that. An important point, and that's where the active portfolio management strategy is, is that during previous windows of price increases, we made -- we captured prices higher than what they are today. And the first assumption is the base never being short. That's always going to be met. And there's no point having taken a long position to the minimum in a base scenario. But if there's an extreme scenario, it's a possibility. So always trying to wait is how to value that number saving in the short scenarios, but capturing market spikes. So we see a lot of probability of a strong El Nino in the second half, which can impact hydrology, especially in the South. And in Paraná, we tend to have higher temperatures in the Southeast that can offset that a little bit. But in this scenario, the prices may slow down, especially in the third quarter. Obviously, there's an advance of rainy periods, you may have the end of this period also brought forward. So a scenario where the prices start to increase again in December and beginning of next year. And that incorporates our strategy. Now getting into modulation, I think it's very important to emphasize that they run in parallel. Irrespective of the contracting strategy, we are not letting go of the benefits of hydro modulation. We already have the consumption profile of our customers as a flat profile, never selling out this benefit. So even if we have a scenario of 80%, 75% of contracted, the benefits of modulation will be all in the physical guarantee. That's our assumption. As I mentioned in the previous question, we have the expectation of attribute this more and more. So the trend is to maintain that in the Copel's portfolio. And to add, Fillipe and everyone, if the El Nino intensity is above expectation and it has an impact in price variation that's too significant for the second half or going forward in the price perspective, I would say that it may even open opportunities for us to buy more energy. Increasing exposures maybe or closing some quarterly gaps that may come up considering the GSF curve. So that only reinforces that potential one-off price adjustments resulting from El Nino may actually be opportunities for the company to purchase some other lots of energy if that does come to happen.

Next question, [indiscernible] investor.

Congratulations on the results. I have 2 questions. First, according to the release, PMSO -- total PMSO still pressures EBITDA margin. Considering the history of the post-privatization efficiency programs, does Copel still see room to reduce the workforce or the current focus to optimize manageable costs changed with digitalization and operational processes? And second question, Copel closed the first half -- first quarter of 2026 with leverage of 2.8x net debt to EBITDA remaining within the target of 2.7 to 3.2. Considering that there's a payout of 75% when leverage is at this interval, how do you assess the balance between this level of payout and the need to invest in new auctions of reserve capacity?

Excellent. Thank you, [indiscernible] for your question. About PMSO, then Felipe can answer it. Your question is very much in line with the question Ajeje asked recently about structure. And I think we gave a lot of the guidelines that we do not intend to change and the payout is 75%, not 65%. So our view is that our balance, our structure is very comfortable considering our commitments in the next 3 to 5 years. In addition to the organic investment plan of BRL 18 billion between generation, transmission and distribution and this additional BRL 5 billion for the LRCAP.

That said, as for [indiscernible] the efficiency gain agenda is permanent. Though a specific vision or reduction of personnel structurally as we did in past years, we believe this is behind us. This has already been concluded. We now get into the normal course that has a turnover in the company but without any structuring moves. Quite the opposite, actually. We have here some studies that show areas or segments or parts of our service provision that could be more efficient in terms of cost and quality of service mostly if there is no some pharmacies, especially on, for example, electricians, first service, there's a discussion that Vilella has been running with all of us at Copel, which has been looking very interesting and attractive considering other experiences that we see in the country. But Felipe already mentioned, and we will look at a balance of the 3 years of our structure at our Copel Day, and we have an agenda of real estate that may be sold because they don't have they're not -- they're being underutilized even. So these are permanent agendas. So you have great transformation, including AI, technology. Copel has a metering base of 2 million intelligent meters, smart meters that are bringing improvements in the quality of service or the assessments we have here distribution, improvements in predictive maintenances. So that's permanent efforts the company makes in seeking efficiency, but that phase of structuring changes, as we said in the last Copel Day, that phase is already behind us. So it's now about how we move forward within our current base and how we grow, generating more efficiency and better customer experience in service provision. In addition, the focus of cost efficiency is ongoing, continues. Our objective this year is to develop suppliers, reduce unit costs, as I said, reducing commercial costs and selling real estate that are not strategic, that are underused. Next question, Andre Sampaio from Santander.

I'd like to hear the company's opinion about the timing of regulatory changes in distribution losses, ADD, PD factor, pricing. Do you think it's viable to conclude all these discussions by year-end?

Andre, I think that the best person to answer and has already been giving statements is ANEEL, obviously, the agency. And what they've been saying publicly and in some meetings with investors is that structural regulation changes will come starting in 2027. So they have some enhancements. There are some very short-term needs, but the major definitions, the regulatory definitions in the transformation agenda will come in 2027. Noting that this week, it is expected to have the signing of the distribution contracts on Friday. Fortunately, Copel is not in this list because our contract has already been renewed until 2045. With these new contracts, they will have a wide range of subjects to discuss in the regulation of the decree, the review of the annual investment base that what we are getting from -- or hearing from ANEEL, and we don't have any additional information is that those discussions will begin in the technical level within the agency in the second half of the year, but they will be put forth to public debate starting in 2027. So I don't know if [Guilhlla]. If you have anything to add to these points Andre asked about?

No, we've been monitoring this closely, and that's the time line that Daniel mentioned.

Our next question, Pedro Oliveira from [ Visa Asset ].

Congratulations on the results. About the public hearing and the signage related to the quality of service and distribution in Paraná, could you talk about how the company assesses this discussion and whether or not you see any impact in the tariff agenda for 2026?

Pedro, I think [ Villela ] attended, and it was an excellent opportunity to put this into context and explain everything Copel has been doing, [Villela ], please.

Pedro, thank you for the question. I think, first of all, to reinforce to everyone that Copel in 2025 fulfilled all of the regulatory indicators, fact deck and the plan of the results of the electrical sets, and we had a very challenging year in terms of climate. It was the worst year in our 71 years of history. On average, Copel lost last year 1 tower a year. Last year, we lost 21. So it has been challenging, but we are very close to our customers. So at the beginning of the year, we listened to our clients through the federations. We visited all of the cities -- and that's where Copel Agro was born even as [indiscernible] was mentioned. In Paraná today, the state of Paraná is a reference in the production of animal protein. We are the first state in poultry, second in fish, third in pork. So we listened to the society and constructed a specific plan to serve those customers that are very special to all of us here at Copel.

And adding, Pedro, to that, we are very confident. We recognize there's always room for improvement, and that's only natural in a company as big and as Copel with such a broad concession area in a segment has been making a revolution. You can look at the 10 largest cooperatives in Brazil, 7 are headquartered in the state of Paraná, and they are a very relevant base of our economy, and we've been doing extraordinary work. And this proximity to the class organizations and the different segments has been allowing Copel to continue to evolve. And I have no doubt that we will continue in this process of evolution, continuous improvement. Even though we are at good levels, Curitiba today is the best capital city in terms of regulatory indices for cities with more than 1 million inhabitants. And we also know that Copel and the state here is among the top 3 best in Brazil, but that's always motive for us to continue to evolve.

I would like to highlight that in this new legal entity as a corporation, we have a lot of fees in some ways, either to contract workforce, specialized teams, electricians, technicians and other professionals, things that in the previous environment were only possible through bidding processes. So for more than 10 years, we didn't make any moves in that sense. But there's also a lot of gain in scale, being able to negotiate with suppliers and slots of factories, pluri-annual plans. In the past, in the previous configuration, to give you an example, we would take around 4 years to be able to build a large substation. And the last one, especially the more than 15 substations we delivered in 2025 took on average between 16 to 24 months. So all of that is exceptional change and a huge opportunity for us to continue providing excellent service to our customers.

As there are no further questions, the question-and-answer session is concluded. I will turn the floor to Daniel for his closing remarks.

I would like to thank my colleagues here, Copellans at the Director C-suite and all of Copel, as we mentioned during the presentation. This was a quarter with sound, consistent, predictable results with very relevant work done by our entire team to the benefit of valuing the company and our shareholders, our customers and society. I see that Copel this quarter reinforces its reputation of consistent deliveries, always mindful of the opportunities for improvement and continuous progress regarding this new expansion phase. And as has already been widely mentioned, LRCAP, I believe, is a shift in paradigm for the national electrical system to have a hydro product offering power. And for Copel, which was able to prepare, get structured, do the work and the results came, and we are very pleased with the results of the auction, and we continue to work myself, all of the directors, all of Copellans continue to work to -- continue to advance in our value generation agenda. And I conclude here reinforcing an invitation for our Copel Day on May 19 -- I'm sorry, I apologize, November 19 in the second half of the year, it's always after the third quarter earnings in this year. Specifically, we will hold -- we've held it in Curitiba and São Paulo. The last one was in Rio de Janeiro with a pre-attendance from our investors. And now we will hold it in New York. waiting for confirmation, but with online transmission, obviously, for those who are not able to attend in person, Copel today has more than 340,000 shareholders. So technology is here to make things easier and support us. But this decision to go to the main financial center in the world is not only that Copel has shares traded in New York for more than 27 years, but it's also in line with our strategy to advance and attract more and more foreign investors, long-term investors that similarly to us have this view of generation and believe in Brazil and the electricity sector for its stability and its predictability of results, but also have the view in the long term. So I would like to reinforce this invitation to all of our investors to attend in person or online on November 19, our 2026 Copel Day. Thank you all very much.

Copel's video conference is over. Thank you all. Have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]