Engie Brasil Energia S.A. (EGIE3) Earnings Call Transcript & Summary

Good morning to all of you. Ladies and gentlemen, I am Rafael Bosio, Investor Relations Manager for Engie Brasil. It's a pleasure to be with you remotely and in-person at the company headquarter to present the [indiscernible] of Investor Day. We have some important announcements before we move on the presentations. We do have simultaneous translation into English and sign translation. Inside ENGIE is being recorded, and the replay will be available in Portugal -- in Portuguese and English at our site engie.com.br.ri. [Operator Instructions] We have 3 emergency exits, 1 to your left and 2 behind the stage should we need to exit the facilities. If we have an emergency, there will be an intermittent alarm. Please come out through the [indiscernible] Avenue and remain in a safe place as will be pointed out by our firefighters. The forward-looking statements made during this event referring to the company's business prospects should detail with as forecasts depend on the situation of the company, the performance of the electrical sector as well as other variables. They are, therefore, subject to change. We have a very busy agenda, and we hope that you will all participate. Please do not hesitate in raising your hand when we have an open debate at the end of each panel. To begin the day, let's recall what happened in 2022. And to speak about the future outlook, I would like to invite Eduardo Sattamini to take the floor.

Good morning, everybody. Thank you, Rafael. It is an enormous pleasure to have you here with us once again in the 17th edition of Inside ENGIE. Now the focus of this meeting is to maintain our investors, more than 270,000 that we have, some of which are present here today and those that are connected remotely, to level out the knowledge that we have on the company, discussing the market outlook and options for growth for the company. The year 2022 represent a significant change. We had a change in the hydrological regime that was quite favorable. Because of this, the price scenario underwent changes. And this pose an additional challenge when it comes to managing the portfolio, making forecasts and adopting activities to navigate through this new scenario. We have account significantly with the help of our controlling company and the diversification of our portfolio. We began with the sale of Assu, and we will become the largest company of renewable generation in the country. We have 100% of our renewable capacity. This enables us to obtain our goal and, of course, the deliver on our strategy. Now in the decarbonization strategy, we have most of it of generation power, but we have significant investments to recompose it with renewable generation. Since [ 216 ] and 2022, we have a very sound financial position in the company, a sound operational position. And we've invested more than BRL 20 billion in this transition. We maintain our growth objectives and went from a level in [ 216 ] of BRL 1 billion of investments per year to approximately BRL 4 billion of investment. We continue to grow soundly, and this is our characteristic as a company that pays out dividends, but always with an eye on growth. During this period, we have also entered transmission. We have 2,800 kilometers of substations in transmission. We became part of the gas pipeline. [ Tag ] today, you will be able to hear about this. We have the Director here with us. And of course, we will speak about issues referring to generation and transmission. The company, of course, poses some challenges. The opening of the market does beat challenge. There's a new resolution to open up the high potential market beginning in 2024. We have been getting [indiscernible] for quite some time, and our preparation for the market opening allows us to be ready to enter [indiscernible] will be referring to this. And perhaps this is our main challenge throughout 2023, the preparation for the opening of the market. We have a growth strategy, a strategy for the development of business, implementation of 2 very large projects that we have. The construction will begin in 2023, and all of this will be presented today. To begin with the event, to speak about market regulation, I would like to invite Marcos Keller and Gabriel Mann to speak about the commercialization or trading market. Very well, Keller, you have a presentation or just a conversation to begin speaking about the market prices and regulation.

Well, good morning to everybody. Let's speak about the hydrological scenario, what has happened since last year. We're in a period of transition. All of you are aware of what happened in 2021. There was drought and hydrology in all of our years. We were discussing the condition of supply. In September of that year, the prices had reached a ceiling, and then an enormous drop in the spot market. And of course, this points to the volatility of that market. In the summer of 2021, 2022, we had an excellent summer, something that was unexpected. It turned around a long-term trend. We had excess rainfall, and it led to an increase of 80 percentage points. And our reservoirs have not placed that since 2011, very positive summer. And the position of our reservoirs led to the spot prices at the floor of 2022 closing below BRL 60. If we compare this with in 2021, we were at BRL 280. You can see the variation. Well, looking towards 2023, what is it that we observed? A normal summer with good volumes, reasonable rainfall, nothing that will pose a concern for the summer. Well, we're going into another summer, but the condition of our reservoirs is quite different. Presently, we have more than 50% of storage. What will happen? What we expect something very similar to 2022, extremely low prices in [indiscernible] operating below BRL 90. The recovery of our reservoirs, and in this situation, a load growing somewhat less than expected. And we will have a year 2023 very similar to that of 2022. Well, it's very important to have your energy contracted, then. Yes, we spoke about 2021, '22. What about the midterm? We do follow up on all of this supply coming in because of the renewable energy, the new law bringing about new subsidies. Of course, there will be a subcontracting that will last for some years at [indiscernible] spot price, a good supply in the short and midterm and will lead to future energy prices that will be much lower vis-a-vis the past. We need to learn how to operate in this market with volatility. The good news in this context of low prices, the price of 2024 was of BRL 190. It has dropped more than BRL 60 at present. So the prices have truly dropped. Now the positive side, the upside [indiscernible] is that we were able to anticipate the drop of price at the beginning of [indiscernible]. We sold a very good level of energy for '23, '24, '25. [Indiscernible] will refer to this. So to have a good contracting strategy with the necessary anticipation, and I remind you that spot prices are impacted by the economic situation. And at present, we're in a very good position. But of course, we have integrated our sales. We have hedged against the prices throughout this year, and we have achieved very good levels of contracting. We're fully contracted for 2023 after our hedges. Hedges continue to be important. Well, when you look at the results presentation for 2022, we still have 12% of uncontracted energy. And energy is not available for sale. It's our hydrological hedge. In [ 2019 ], we began with this. And at the end of last year, when we defined the strategy for 2022, the hydrology was different. We could have a very impact in GSF. That continues to be below 1, but it could have been worse, and we needed to preserve our assets. To belong in a situation where you have an impact on GSF with high prices means leaving energy to fill up in the spot market. Now this has had a significant impact on our results. When GSF were 100% contracting, well, this considering that energy reserve that will allow for unexpected hydrological context. 100% contracted for 2023, well contracted for '24 and going forward with an adequate strategy. Now Sattamini mentioned, there's clearly that this entire process was asymmetric. To shorten this market means to buy it very steep prices. And so everybody sells what they have in terms of production guaranteed stable revenues when there is an adverse hydrological situation. Well, to speak about regulation, there are 2 aspects that I would like to underscore. Hydrology is [indiscernible] in Brazil. In poor summers, the change -- the prices change. Now in any market, this is important. But in Brazil, it is ever more important. There is volatility. The prices will not always be at the floor or at the ceiling. They tend to change very rapidly. And should you not be well prepared with an adequate hedge with the right contract, you will suffer the consequences, hydrology leads. We do have a structural excess supply, but this is simply a window for us. The system -- the market will absorb this energy surplus, will undergo contracting. But it will be necessary to expand. One cannot because of the subsidies because of the market. And then we will have a convergence of prices because of the cost of expansion, and we have seen that part of the supply. [indiscernible] will be frustrated. We have good projects that have appeared as the good opportunity. So there will be a market re-settling, a re-accommodation in that [indiscernible]. And in the long term, of course, nothing will be different vis-a-vis the cost of our expansion. Now we have suffered the consequences of the international scenario, as you're well aware of. Now from the regulatory viewpoint, we are taking action. Those subsidies that bring about a surplus access, we want to make sure they are not permanent or that they do not decrease. You spoke about subsidies, and this is a constant feud. That is our position of fighting against subsidies. There are several economic group trying to take power of the market reserve or to transfer costs to others because of their competitivity. This is the main point. Some of those subsidies have already been addressed. Now the law in Brazil is [indiscernible] based on long-term discussions between the agents. It can undergo modifications. The regulations of the treaty has already been altered. The terms have been extended. So we are -- reached in this type of lobby, which is something we would like to [indiscernible] a market regulation where sources have competition and I think [indiscernible]. And what we had looking for is to rationalize the subsidies. We would mention some [indiscernible]. Well, that makes sense and will continue to make sense, but there has to be a limit for that [indiscernible] a deadline, a very soft transition. And presently, there is a discussion. And yesterday, there was an approval at the House of Representatives for lengthening of those subsidies. The Minister taking office in 2023 has announced that these subsidies will be further extended. This also includes small hydroelectric power plants. Yes, this is the problem, isn't it? When someone tries to extend the benefit, not the benefit comes on top of that. And for distributed generation, there is not only the subsidy, but also a market reserve. We'll talk about the low-voltage market and its opening, but it's already open for a certain set of generators. The minister said today that the market is open for the rich. Yes, it's open for the rich because those are the ones that can have a contract or have distributed generation. But it's not open for everybody in the low-voltage market. [ Mauricio ] is going to talk a little bit about the market, but there has also been a change in the 8 gigabytes of Eletrobras, of [indiscernible] of small power plants. So yesterday, some advantages were given to small power plants, small hydro plants. And if this is ratified in Senate, this would change the market for distribution generators. And also, there is a provision in law for a transition towards the end of subsidies for renewables. And we have subsidies for the wires, for the transmission. There was a deadline for authorization, 4 years to implement it. And there is a movement towards lengthening this subsidy. It makes no sense to do it. We are going with the investments that we are making. They will be made without wind and solar. That's where we [indiscernible]. Brazil is going to continue to expand renewables regardless of the subsidies. This is an issue, have to do with cost and for us to have the correct prices without favoring a segment to the decrement of another. This subsidy should not be extended. And then the third subsidy that has an impact in the market is the subsidy for self-production. And self-production has an advantage that from our point of view, it's not appropriate, because [indiscernible] relative to investment. We don't think it's appropriate. This allocate costs to other segments, especially consumers who are not served by self-production. And obviously, speaking from our point of view as generators, this distorts market prices, something that we see from the point of view of regulation. And I'm talking about the electricity sector. It's the compulsory contracting of 8 gigawatts from Petrobras, and there is no flexibility there from our generation. Does it make sense? It complements system that we have, which is based on hydro and wind. But from our point of view, as long as -- 2 things happening. It has according to be -- according to the market. It cannot be reserve energy. We don't want to have an overcapacity. And then it has to be flexible thermal. Why? So that it can be complementary to wind and hydro. There shouldn't be a permanent cost for thermal, and this has to do with 414, the issue of bringing forward the renewal of the concessions. That is a proposal, which is good. It seems that the new government -- the incoming government has the intent to maintain that. It helps on the fiscal front. But to us and for generators, everything will depend on the conditions. To base conditions for the short, medium term are very different from the conditions that happened due to the capitalization of Eletrobras. This has to be changed. Also another issue is the funding. Since the option will be exercised by the generators who are entitled to it if the conditions are good, there will be a run towards obtaining funding. So there has to be good funding conditions for this to be successful. And the 414, also allows the opening of low-voltage market. This year, we saw the opening of the market for high voltage, and the 414 will open the low-voltage market, which is open, of course, for the rich, for those who can have this distributed generation. There might be another element, Keller, which we could discuss. And the valuing of attributes of hydro to pay the system allows the entry of wind and solar because the hydro component is very strong. So today, this, the conditions for these alternative sources to grow are given [indiscernible], but they have been penalized. There is no compensation for hydro flexibility and ability to store. The 414 bill addresses this, gives us a way for value the hydropower plants. It's not the only way to do it. There might be infra legal ways to resolve that. But the fact, together with the opening of the market, is something that most of us agree on at all levels, in all conversations. There is a convergence in terms of how important and fair it is to value the hydropower plants because it provides flexibility to the system. However, it's the details -- all of the details, how can we define the amount? How can we make that competition happen and so on and so forth. This will be very important within the 414 bill. The valuation systems should be very well defined. As regards the extension of the concession, we also have to price the future concessions. The main item, which is going to move forward this next year, is the opening of the market. [indiscernible] to all. As regards to the market opening, we worked very hard for that, Keller and the regulatory team. And we got this very good news at the end of the year. The opening of the high-voltage market allows another [indiscernible] to enter the market. We had 75,000 consumers who could migrate but didn't for different reasons, some of them because they had distributed generation. And the other factor was the highest price in the 3 markets. And this, in turn, reduced the migration. If we look at the migration of free markets on CCEE this year, this is 20% lower than what we saw last year, and that is because of the effect of those who decided to migrate in 2021, and that had an impact in 2022. What we expect is that because the prices are now lower, the difference between the captive market and the free market in terms of tariffs will allow this migration of 166,000 customers will be able to migrate as of 2024 and some [ early ] as well. I would like to highlight another point. The executive order, which opened the market, and the market opening on its own does not resolve the problem. It's not 100% efficient or sufficient. It is possible to migrate to high voltage, but, and I stress that, there are 2 important barriers that have to be overcome in the migration process. For example, the metering. Each has its own requirements, and this has an impact in terms of the final cost, in terms of adapting the metering and the measurement. And we see that oftentimes in the commercial department, the migration becomes as impossible because the customer would have to spend a lot in terms of adapting the metering. And this would wipe off any gains. And then also regulations in retails -- in the retail traders. This 166,000 have to migrate on the retail trader because it's a small loss. And the retail trader can represent clients, customers, and the CCEE pay for all the charges and everything. As regards to low-voltage market, we were expecting it to be enacted by an executive order, but there was an agreement with the incoming government. And the incoming government now is going to make the decision. We hope this will happen. The signals we get are good. So probably next year, we will see the opening of the market for low voltage. But as Sattamini and Keller has said, this has to be competitive relative to distributed generation. A positive element would be to maintain the benefit of the discount of the wire for low voltage as well. This is a discussion that is taking place, and we believe it would be important to maintain this discount because this allows the competition with the distributed generators, which have this benefit. And we should discuss this further. We are against subsidies, but how can we make this point? There shouldn't be subsidies for anybody. But my point is why with a 5-megawatt solar plant sold -- be able to sold to the low voltage using subsidies and then on 801 shouldn't? So we think that should be a level playing field. So instead of making a big plant for 50, the generators would make 5 small plants for 10. So this de-optimizes the market. The good news is that we are ready -- we got ready for this new market. As Sattamini said, we got ready for that. We have been preparing, and we have been talking to you about our plan, the go-to-market plan, as you know. And we are now hitting the streets with everything that we have. I'm going to give you some more color about this project. The first one, first update is the product pillar. This new market, market for small customers, new customers to this market. So we designed our products with simplicity minds. We had in our portfolio a product for that market, which we call the adherence product [indiscernible], but that was not focused for retail. [indiscernible] was under our traditional trading arm, but this is a product for smaller consumers, flexibility, standard flexibility process. And we removed some of the components of customized products. We standardized the product. And specifically for our retail trading arm, we created economies at family of products, which include renewable energy and the customer migrates under our retail trading arm with all the support. So making it simple, streamlining the process [indiscernible] needs. It's assembly of products because we include 3 price structures. In one of them, we have a discount relative to the price that consumers have in the captive market. This is one product, which is called performance, then control. For those customers who don't want to migrate with a discount, they want a defined price. So we do have this product called control. And then a third product, the customers do migrate on retail [indiscernible], but we pass on the costs of charges. If the client wants us to bear the charge costs, we can pass on the charges to the clients. Some clients do want that. So this has been our focus to listen to the market, to listen to what customers' needs, to look at what our competitors are doing. That's what we do in the commercial area. And the competitor also looks at us. Yes, yes. It goes both ways. There's no longer a blue ocean there. So we have to adapt our product portfolio to meet customer needs. The second pillar, and we worked very much on the project, the sales channels. Here, we began to implement a new indirect sales channel. So in addition to our own team, we work with business partners. It's a very well structured program, and we train these partners so that they can build sustainable business with us. Today, we have 15 partners all over Brazil. This is important for the following reason. This market is a retail market. It is scattered around. It's -- those customers don't need -- don't know the market. They need someone close to them to explain to them how the market works. If I had to do it in our own sales force, our transaction costs would just shoot up. So we have a partner program. We have the structure to compensate those partners based on the deals that they make and the variable revenue for them as well. And this helps us to maintain reasonable transaction costs and gives also the ability to reach out to retail customers. We also have to discover those customers. For distributors, they have the information about where the customers are, but we are generators. So we have to use digital platforms, data analytics to identify these customers, generate the leads and then pass it on to the partner. So this is all work that we have been doing. And then the second sales channel is energy place. We are going to show you a short video about energy place. And energy place plays 2 roles. It's our e-commerce, our digital sales channel, but also a relationship channel. There is an e-commerce environment. Customers can buy short-term products. That's where we had the most engagement. It's to close the month, as we say. But we can also -- the customers can also acquire long-term products and [indiscernible], our renewable product -- renewable energy product. Our market is not used to digital platforms. We have been trying to engage customers in using the platform. That's why the short-term product is extremely important. Customers go to the platform. They see that the process is simple, and then they start using the platform. These short-term deals are deals that if we didn't have the platform, we wouldn't be able to do them. The transaction costs would be too high for the kind of amount involved. The platform allows us to have access to those customers at a reduced transaction price, and this allows us to build long-term relationships with these customers. We started in 2017 to discuss transaction costs. Go-to-market has been around for a long time. We have been preparing for the opening of the market. And if we compare it to what's happening in the World Cup, we have been training, playing some friendly games. And now we are ready to enter the field and beat our competitors. And the other environment within this platform is supply -- the customer portal, our relationship channel with our retail customers and large customers as well. And in the portal clients find all the information about the contracts, billing. So customers may, through the portal, give us the information they need to give us, including energy seasonality. This year, Sattamini, 97% customers have given us the [indiscernible] on the portal. It is a very important tool for us to digitize our internal processes and optimize costs. The other 3% is probably late, isn't it? It's much easier to [indiscernible] it on the portal than to send an e-mail. And that used to be a manual process. We had to key in information in our systems, the client as well. So we have [indiscernible] the seasonality issue. And the third pillar is the digitization per se. Throughout the last few years, we have revisited our internal processes for managing portfolios, for sales. We tried to simplify the processes and then digitize optimized processes. And this involves the whole of the customers' journey, presales, sales and post sales. In presales, for example, the use of platforms, data analytics. This was all used to generate leads and to capture the leads. So selling team can work on the leads. And then in terms of sales, all the proposals are digitized, are linked to our energy balance. So when a salesperson close the deal, this deducts the energy from our balance. And the contract is automatically generated as well. So the whole selling process was digitized. And in terms of post sales, and you have the customer portal. Therefore, I consider we're quite ready for this market opening. We have gotten prepared, and we hope to harvest the results at the beginning of the coming year because the migration for 2024 will begin in the coming year. Now the last point that I would like to refer to you refers to sales. We would like to update you regarding our sales in 2022. I believe we had a slide for this. Well, initially, underscore a point that has already been mentioned. As part of our strategy, we set up a sale more than we would normally do because we do have that oversupply of energy impacting the prices and we've been digging to accelerate our sales. Here, you have a slide for our third quarter, and you can observe we'll have a significant incremental increase in sales. Now we focus on that window of oversupply that we will have between 2022 and 2027. We're anticipating this and attempting to maintain the average price sales for the company. Now this has been very important principal new projects. We will speak about this. We do have a broad partnership to create new projects with a free market, and our sales have aided and abetted us, and this helping us with contracting until 2025. Of course, this includes the projects that will be incoming. Now to draw your attention to something in this slide, we have 35%, which is the participation of free energy customers in the net operational revenues, and all of these are very well contracted. The other 65% refers to revenue coming from the regulated energy market with the contracts we have with [indiscernible], the transmission contracts, of course, and contracts that come from our share in TAG. 65% of our revenues are contract for long term and the rest are contracted in midterm contracts for the free market, and this is the cause of our [indiscernible] and we may have lower prices during a year, generating contracts with lower prices in the midterm. But we're always trading energy, and our average price gives us stability. It will take some time for average price to drop. Of course, all of this dependent on supply. And when you have an oversupply, it will take some time for this average price to increase. Another important point I would like to highlight is the increase in the number of customers. Because of 2021, the increase in our reserves took away some of the energy for sales. We had a minor drop in number of customers as you can observe, but we have already recovered this fully. And the outlook for the fourth quarter is to increase this even further. We have 1,000 customers or approximately, half of which are in the corporate segment above 1 megawatt, below 1 mega for the [indiscernible]. And of course, the volume of customers below 1 mega continue to represent a small volume compared to the corporate segment. We did have continuity throughout this year of the search of our green products, and we would like to remind you that the reduction in emissions in Brazil continues to be [indiscernible]. Now withstanding this, the government is discussing the regulation of the emissions market in Brazil, taking forecasts for every company or segment. And this, of course, will bring about the opportunity to be able to increase the value of these products more appropriately. And finally, I would like to think about the social products [indiscernible]. This year, in truth, they represent the opportunity of creating a link with our customers and the work that we carry out in social products surrounding our operations. I won't go more in depth in this. I will give the floor to Luciana, who are -- is our People Process and Sustainability Manager. I would like to call Luciana to speak about our practices and to explain what we mean by social product. We spoke about our green products, our normal commercial activities. But we also achieve a link with our customers through our social projects. Luciana?

Well, a good day to everybody. It is a pleasure to be here with you to speak about our ESG practices, not only social products, but ESG or inclusively in the last 20 years of our activities in NT Brazil, we have built a very strong portfolio of environmental products. And we did this based on 3 principles. The first principle that we use is a principle of proximity, closeness. What does this mean at all of our plants and all of our locations. We attempt to work closely with the communities surrounding us to understand the demand and [indiscernible] to better understand the environment and this information when we look at our nonfinancial goals and guidelines, we attempt to set for social environmental initiatives that will be more relevant in that community. This is a great importance for us. It is carried out by our, the field, our social and environmental managers and others who do this day after day. Periodically, we do have a structured process of holding a dialogue with our stakeholders. So proximity is the first principle. The second principle that contributes to the success of our social and environmental projects is a balance between local actions and our corporate actions. I will give you an example. We have a very important corporate project, women in our neighborhood to increase the revenues of women. This was launched in 2020. This income generation price implemented [indiscernible] Brazil, but we do have other income generation processes, as we have in Assu, a [ quality ] creation of these in a very specific region of Rio Grande do Norte, where we make the most of these specific species of bees and have developed a project for to breed bees and to offer revenues based on the sale of honey and honey sub projects. So the general project is generation of income. And based on the same theme, we connect this to the local realities. We have women of our neighborhood, other educational projects and very interesting projects. That is the same approach that we have with the customers to fully understand the needs of our communities and act upon the -- that is really interesting to create a link and strengthen the link of the communities. And the third principle that is a driver for our social and environmental projects is the sustainability of our initiatives. Whenever we set up an initiative, our concern is to maintain the initiative through time. We have centers for culture and sustainability built with incentivized resources. We identify the region where this would be necessary. We already have 6 active culture and sustainability centers throughout Brazil. We're not only concerned with the creation of the center, but maintaining it through time. We work with training in the region, interconnected with the concepts. We become aware of the needs of the site to maintain this throughout the life cycle of this center, enabling the center to offer schooling for young people and adults, complementary activities for elderly people. We're thinking of music, dance, singing classes, inclusion projects, which are very important. And we are able to work with other partners and investors initiative. When we bring together these 3 drivers, we're able to have success in all of these projects in more than 20 years of our social product portfolio and Sattamini challenges me significantly in this skill. We look at the portfolio and see how we can work with customers and partners so that they can also make investments in the social and environmental projects. Also, gain from the benefits and expand the region of these projects. And in 2021, we began a program called partnerships for [ the good ]. It was a consolidated projects, their results have been fully acknowledged in the market. We do work with social projects, and we offer them to customers and partners so that they can join us in this journey. We have been very successful. Well, the [indiscernible] do not belong to us. They belong to the community, to the project. It means uniting efforts to generate good ever more. And this came up from that idea that we all really have that cost of working with the ethical part, offering resources. Personally, when I [indiscernible] income tax, I do make donations to some institutions, those institutions that we support as a company. We know that these are very serious institutions. And this is a concept we would like to convey to our partners who do not have a structure focusing on this issue of how to use your resources. It ends up being a win-win situation for the institution that has benefited for those of us who created the project in the past. And for those who are investing in the project and we're concerned about how to package the social projects and make them available for everybody. There is no border here, there is no difference. So when it comes to competitors, we work with our customers, we work with our partners, any type of partnership to do good is valid. And I can say that we worked with a 1-year event for the Partnerships of [ Good ]. We had several customers and partners here at the headquarters. And in practice, we were able to observe how powerful these partnerships can become. At the same table, we had 2 companies from different sectors who did not know each other. They had never converged. And when exchanging information, they realized that one of the companies had a problem and the other company had a solution to that problem. Now this was possible because these 2 companies had invested with us in different projects of this partnership and through this exchange, they were able to resolve additional problems. We leveraged this exchange, and we spread the benefit of this project. We invested in a program brought about mainly for income tax, where we [indiscernible] personal income tax to some institutions. For example, the [indiscernible] Hospital in Parana with several sectors under construction and the company Porto Belo is offering the flooring for this which is very important. We have Porto [indiscernible], also a partner in another culture and sustainability. It is a wholesaler. We have a project in Umburanas that focuses more on health issues. And we're looking for manufacturers of glasses in a very destitute region. We have some projects in Umburanas and we carried out a program to diagnose vision, and we donated glasses to all of the [indiscernible] schools. This represents 400 people that were benefited through this activity. Of course, we paid the cost price, but we did offer medical attention and much more. And in this partnership for the good, we have social projects formatted as a product. And companies can invest in this, but we can also work with tailor-made partnerships which was a case of this one. Now this project came about in the wake of a project to create literacy among young people. We wanted to work with the development of local labor and enhance the standard of living. We, therefore, created a group of young adults and youngsters who did not know how to read, and we began working with this project for good vision. We thought of how to escalate this to another level, and this is when we created these projects. This project is something that makes us very proud. Yesterday at dinner, I was speaking to somebody who was sitting in the back. And I was explaining how gratifying it is to contribute to this greater good of society. And this is what this partnership is about [indiscernible] good that we create in several locations. Quite satisfied with the results obtained. We [indiscernible] environmental projects where we highlighted the 3 principles [indiscernible] to the project from Umburanas that arose from another project we had, and this is what is important in our social and environmental projects. We seek to have continuity in operation and maintenance. Whenever we think about an initiative, we think about extending the lifespan of this initiative that we expanded, and to think about these projects, I think we should speak about diversity of [ inclusion ]. We spoke about the women of our neighborhood and income generation project for women. This is one of the external centers when we speak about this. But we do have internal actions also geared to diversity and inclusion that we would like to share with you. ENGIE world wide and ENGIE in Brazil has the goal of reaching full parity when it comes to management positions until 2030 when this goal came about and when we keep in mind diversity, not only of gender, but diversity to enhance the wealth we have of ideas and different mindsets in the company. We set up an in-house diversity journey that thinks about women's career throughout their work. It's not something limited where we look for women. we're truly concerned with their training. And this begins with awakening the interest of young girls and careers. We have a program of visit. We're always careful to include a women in this program. Visiting the schools to show to the girls who are interested in working in a plan that, yes, they can become part of this world. And we also have identified that our main program -- problem in terms of diversity could be found in our operational areas when we attempt to find women to work with us, we detected prejudice on the part of the women themselves saying that, that was work for men, how to change this reality. And one of the ways to do this was through this program. We ensure that our technicians, our engineers and others would be present when we visited school groups, we visit groups at school very frequently, and this has begun to change the view of the community when it comes to working at a wind or solar plant. So we began by debunking the myth that working in a mill or in a power plant was a men's job. And then we moved forward. We are now trying -- we now want to attract and train people who can then take on operational positions. We also have a program where our associates visit schools to talk about what it's like to work in a technical position, how you can train. So we are working on employer branding. We also have a program of stipends for technical positions. We have 10 of them now in different states of the country for girls, for young women who are studying technical subjects. We also have pre-technical course, exclusive for in [indiscernible] 45 women in a pretechnical group in Rio Grande do Norte, where we are building the Santo Agostinho project. We trained 31 women at the pre-technical level. So there is a program for 2023 as well for pre-technical and technical courses. In 2022, we ran a program which was something we developed with HR, operations, maintenance and implementation. And this is a program for affirmative positions for training female engineers. We had more than 2,800 applications for the program. We selected the candidates in June and in September, we took on 3 female engineers who are now working in different areas in the company. And as to finish as regards to diversity, we don't focus only on gender diversity. we have a recent program for people with disabilities. This is a program we are very proud of. These are not only positions, but we also provide training. When you look at people with disabilities, there is no opportunity for them to be trained. So we work on these 2 fronts. We offer the position, the opportunity, but we also offer a training program for people with disabilities. We went to technical schools, to universities. We own the people who fit the characteristics and we offer them training. So they work with us for 15 months in the areas of expertise and they receive proper training. So we want these people [indiscernible] and also open new positions that they can contribute to train people with disabilities. I could talk a lot about that, but I'm going to turn the floor over back to you. I am now going to turn the floor back to Rafael for the Q&A session at this time.

Thank you, Sattamini. [Operator Instructions] You have the floor, Andre.

This is Andre from Santander. And my question has to do with the discussion about the opening of the market. We also have this question about the additional costs relating to the opening. The customer acquisition cost is higher. You have partners throughout the country. So how much would that cost translates into megawatt hour? What about the incremental revenue from this small clients? Does this cover the cost and just about? Or does it generate a margin that is at all the traditional margin?

Yes, it does. Otherwise, it wouldn't make any sense for us to penetrate that market. What we cannot do is to use the same structure that we have to serve small clients. We have the [indiscernible] that we used to compensate the partner, but that is an appropriate cost for that segment of customers. This caused priced to the price point of the retail customer and additionally, the retail customers have to generate an additional margin, a higher margin. We do that effort, but we also add more value to the company. The culture of the company follows some indicators, the cost of acquiring new clients and the cost of maintaining customers and the net margin over our base price, our -- the price of our price list. And this allows us to understand whether we are selling at a margin, whether we are being efficient. These questions came up in the beginning of the project when we began to deal with [indiscernible] and so on. There was a small hotel. And I remember there was a big discussion about the contract. I was taking a long time. They were paying lawyers. And I said you're spending on lawyers more than we were making on the margin. So we have been aware of the cost of acquiring customers and maintaining customers. And that cost has to be in line with the margin that the customer brings to us. Our price is a composition of different items. Marcos Keller tells me at what price I should be selling [indiscernible]. And then on top of that, I need to add the cost of acquiring and maintaining the clients, the cost of attributes, which is something that we started to price 2 or 3 years ago and that is the cost of the flexibility that we're giving to the customer, given the profile of consumption requires flexibility. For 3 years now, we have been pricing that and that is added on top of our base price. So we have been working to capture the value and to price our energy accordingly. The back office required to make that strategy feasible is something that we have built throughout the years. We are very good at controlling prices, inventory, sales prices. We also have a Chinese wall. I'm the bad cop, so I tell Gabriel, how much you should charge, what the prices should be and we include costs per channel, margins. We also price, and we would want to do that. We price the risk according to the price per time. They have technology for that with data analytics. So there's a lot of back-office work, a lot of organization that enables us to do that. And it generates a surplus for us in terms of revenue. We have large clients, which account for a large volume and the margin is smaller. And then we have smaller volumes at growing margins or the small clients. So now we want to grow our volume within those small clients at higher margins. You said something important. We have this governance, this control. And this has been evolving. This is the digitized back office that we have. Operations are now fast because we have automated controls and governance. I just wanted to add something. Just to add to my previous question. How do we connect this whole discussion and the oversupply. With the oversupply, it is more difficult to pass on the cost and the structure. So now during the oversupply to allow the price to be implemented. So I'll take that first. We are talking about a migration of captive market to the free market. So this is the first step. Many, many years ago, we did that when the free market was opened about 3,000 watts. And this for us is kind of replay. These customers now today, they pay the distribution tariff, which is high, and it grows with all the additional costs. In a scenario where there is oversupply and low market prices from the point of view of the customer, the economic rationale for the client is very strong for the clients make the move. Some who could move to the free market didn't do it. Why? Because 2, 3 years ago, the free market prices were extremely high. But today, there is a different situation. But this first step of the migration, as Gabriel said, means for those clients, they have no knowledge of the market. So we have to be the first ones to approach the client and to show what the advantages are. The competition is lower at this first move because this is a market. This is a customer who is being served by the distributor. We are in the free market. 3, 5 years down the line, the competition is going to be a lot fierce there, and then there is going to be an effect of oversupply. This happens more in trading with the current free market [ consumer ] and less so with the smaller consumers who are now making the migration. Oversupply, low prices, this will define a low price on the base. The price curve at [indiscernible] for Gabriel will be impacted by the oversupply. So he will say the price in 2023 is x, 2024 is y and so on. So he will design the price of the minimum sales prices for Gabriel. Then on top of this base prices, you add the attributes. So for example, flexibility, seasonality, if it's the case for retailers, the charges, the cost of default, all of that is added on top of the base curve and also the margin for that client. So [indiscernible] defines the base price and Gabriel defines sales price based on the attributes to meet customer needs. What he gets on top of that is the sales margin. And this is the KPI for his team.

Next question.

This is Victor from JPMorgan. I would like to tag along Andre's question. Sattamini, you talked about now about the credit assessment and defaulting. How do you assess credit. How do you assess the customers' capacity for payment? And then more generally, you talk about the separation between ballast and energy. We have the market share of energy today, but the market share for ballast is a bit different. And with the opening of the market, CADE may be more relevant because ballast will be more important. So how do you see this potential operation of CADE in the balanced market. Let's talk about credit assessment, either you or Malta. Malta is here. Can I turn the floor over to Malta, please? .

For this client, smaller customers, we do credit analysis, a basic one. We are not able to do a very accurate analysis. Many of them have no ratings that we can assess. So we have a history of defaulting of customers of small customers. The level of default is very low. We can also disconnect them, and this reduces our risk significantly. So this is the context for us to work We define a component of additional price that is best on to the customer. The basic assessment, as [ Malta ] said, we use assessment platforms and so on. It's called basic because we buy it from third parties. For small customers, it's not worth while to do our own information. I mean they don't have audited balance sheet and so on. It's a small industry. It's for larger customers. We have our own intelligence, our own methodology, which has been approved by the whole group to do that assessment. We use, for example, the [indiscernible] platform for a pre-assessment. So we have a threshold for credit using the [indiscernible] platform, and we have to digitize that process as well. It has to be fast as the volume of clients increase. And then once the customer reaches a threshold, there is a component in my pricing structure that covers any risk of defaulting. But I tell you, it is really small. We have very good mechanisms to prevent defaulting. It's close to 0 Yes, very close to 0. Defaulting happens, but in time, they might be late paying their bills, but then they settle the accounts with interest and monetary updating.

Victor, right, I'll try to address the second part of your question. What is the concept of the energy balance according to Bill [ 414 ]. Energy is something that we produce and sell and ballast would be a way for the government for the planner to ensure that the infrastructure is there, is operational. One is -- one thing is the road and something else is the traffic. And when they separate that, they can have clearer drivers about the type of infrastructure that they need more hydro, more thermal. So they pay in a different way for the ballast. In the past, they would auction -- the government would auction and have like 50% thermal and so on and so forth. So the government controls the energy infrastructure through the auctions. Now the auctions are less important because the market is open. So what does the government to if they need thermal, for example, they need to think about ballast. I don't see -- maybe I didn't understand your question. What would be the concern for the antitrust authority. The thing is the government plans to have an appropriate mix according to clear criteria about the infrastructure that they need, for example. They might say, we want to have flex thermal, so there will be pay more for thermal -- flexible thermals, but they would pay in terms of a fixed revenue per quarter. I don't know if I understood your question. I don't see why the CADE would be concerned about ballast. They would be concerned about energy because there's going to be competition in there. So we are a major player, but Eletrobras, for example, is a private company today. I'm not saying this, but if there is any concern should be in terms of energy, if there is any influence on the market price. Well, we used to be the largest private player with 6%. Now the largest private player has 20%, I believe. I'm not sure which is the Eletrobras share. And of course, this ends up being quite representative how is the antitrust agency going to look upon what Eletrobras does. Now we need to perhaps create more awareness to see if this will constitute a problem or not.

We will go on to the last question of this block. We're running short on time. Marcelo?

Marcelo Sa from Itau Bank. A question based on your assumptions, analysts have a difficult time at forecasting and what is the GSF for the future. [ Having ] specific hydrology the GSF will be 0.35, which happened in 2022. Now if we look forward, you could mitigate that process of a physical guarantee, which is under discussion. But during the privatization of Eletrobras. We worked on this more significantly, and we're going to have a structural generation scaling factor. Now the transition government has already pointed to the fact that they don't want to work with this type of contracting. This will be positive for the GSF. And can you forecast the GSF and does it make sense? And the anticipated renewal of plants, what is it that you would have to pay? If I remember, it was [ 0.005 ] for the long term. And apparently, this seems to be somewhat unattached to reality.

Marcelo, it's very good that you ask me and not a person nextdoor. I'm not going to give you a figure in this case. It's very close to what has happened this year. Unfortunately, this year, we saw a change in rainfall. We were able to recover our storage, and we're using electrical generation more. Why don't we do this as an operator because it's not possible as part of the market conditions we have created through time. You have a load and GSF, We'll, basically depend -- of course, always on hydrology, but another thing is the growth of your load. We have a market that is growing. Well, it is growing. The economy has resumed. But in a market, what is left for the operators is another factor. You have growth and demand and at the base, the load is already being reduced. Despite this, the market is able to grow, but it grows less than it should. If I have a group of thermal plants and are at the base and if they're inflexible, we have no action on management if we also have a growth in wind power, what there's electrical energy, and this is what is happening this year. There is no room for more thermal electric management. What will happen in the long term, you spoke about what are the effects the physical warranty. And of course, we will have to make adjustments in the real GSF. For many years, we have understood that this is not our role that this is something that depends on hydrology. Now if the Eletrobras thermal plants [indiscernible] flexible process, everything will become exacerbated, but we will have a growth in load. It's a trade-off of what will happen after the generation distribution, vis-à-vis the inflexible thermal plants. You spoke about the renewal of concessions that could improve the situation, but I do have my doubts for those who lose their commercial capacity. Well, this would have to be allocated a price as of now. Those who have a better commercial capacity now. And then in the period, we could attempt to renew the concession. This is a game that we're going to have to enter in and perhaps this will be aided and [ bidded ] by the renewal of concessions. Whenever the prices are adequate, future GSF and other conditions are different for the medium term. And if there is an adherence, we'll have to work with this adherence except at the figures for the [ real course ] and then we will have to have a convergence in GSF. And it will depend on the interest of changing your [indiscernible] for a future EBITDA and those that are benefiting from the current situation to work with intense lobbying. Heavy lobbying to maintain that critical period of 49% to 56% in 70 years. Obviously, the climate has changed, the underlying condition, the use of water has undergone change and we do not change. And it is worse than what we saw in the critical period, but that is what we're faced with. We'll discuss this at another time.

Very well, we'll go on to our next topic, Sattamini. .

Thank you very much, Gabriel. Congratulations for your presentation and we're now going to give the floor to Guilherme Ferrari, no, I'm sorry, we're going to give the floor to [ TAG ], watch the video that will refer to the [ TAG ] operations, present the main challenges. I was about to skip you...

Well, good morning to all of you here. Those who are also following us online. It is a pleasure to be with you to share with you the TAG vision, the strides that we have made the market opening and to share with you our viewpoint on the sector growth. The TAG Network referred to 4,500 kilometers in Brazil, 3,700 kilometers in the postal region beginning in Rio de Janeiro, going to the ocean, and we have 800 kilometers in the Amazon region, connecting [indiscernible]. What can we highlight here. The presentation will be available to you. And of course, I invite Sattamini to reinforce any point during my presentation. If we look at the TAG coastal region network, we cross to almost 200 municipalities. We're -- we have 14 gas entry points and compression stations. It's like the heart in the human body. It pumps the blood, and it moves the entire transport system. Now I invite you to look at the coastal network, 3,700 kilometers as if this were a virtual elevator. When you enter a building, you enter the elevator and you see in the chart, 10 people, 80 kilos. You'll think that the capacity of the elevators of 800 kilos. But the capacity refers more to the journey. The elevator will make vis-a-vis the capacity in this virtual journey from ground floor to the tenth floor, we can carry 800 kilos. It will depend on how many passengers enter or leave the elevator. And TAG has several connection points, which enables us to have multiple market connections important for what we are doing. We have made investments in the [indiscernible] expand capacity to deliver more gas or receive more gas from the market, helps us to create a more dynamic market. It's important for everybody to be connected to this network to [indiscernible] use of this network. Of course, there is no market if we don't have the unity of all parties. And what is important is the connection of all of the source of the gas supply to the transportation system, making gas available to the country. It can be connected from north to south or through an integrated network. For those who do not know this asset, this is a concession that has begun an option that extends. However, this is a regulated asset, the regulation of the asset is reviewed periodically after the legacy contracts, but it's no end. In the previous slide, it was a concession with a line to end, and now we have an authorization with an indeterminate period at the end of the contracts. What was foreseen is that this would become a concession. I would like to underscore the robust operation taking place behind the scenes. This is invisible for the market, but throughout 3 years, we took over the Transpetro activities. We have a control center in Rio de Janeiro where we monitor the 4,700 meters. We have 100,000 points of a monitored reading. So there is this robust activity and 6 operating bases throughout the transportation network to ensure availability of service. We're also based on a concept that this complexity will remain in the -- in backstage. We have a modern center of commercial dispatch that is ready to service the needs of the new market. It operates with agents. And through the exchange of information with agents, we work with the planning in the booth. We also have a backup at the control center in another location of Rio de Janeiro to guarantee full security of our operations. It's different from the electrical sector where we have the IMS working on this operation. We also have the international experience of our shareholder that operates transportation systems in other countries. And the TAG acquisition does ensure that we are able to fully operate these assets. We are a new company acquired in 2019. And throughout these 3 years, we already have 44% of women in our workforce, 38% are in leadership positions. And of course, this is a reason of pride. We have several social activities throughout our pipelines, working with the communities, listening to them, understanding and responding positively to these communities. And what I would like to highlight is the Urucu-Manaus aspect. We have a region with significant reserves and we work with a number of CO2 emissions avoided per year because we took investment decisions to work with the insertion of natural gas in that region. This is our natural gas balance in Brazil between supply and demand. And this ends with the imports of gas from Bolivia and liquid natural gas. On the part of supply and demand, we can see the synergy that we presented formerly. It was said that hydrology is king. And you see the difference between 2021 and 2022. There was a significant reduction in the gas balance because of the need for thermoelectrical dispatch. What I would like to highlight is the importance of investments in infrastructure geared to reducing the country's vulnerability. If we look at the volume of liquid natural gas imported in 2021 to close our energy balance, if in 2022, we were forced to import the same volumes at spot prices, the delta that would be transferred to the market in general would represent $21 billion in traditional gas. This based on spot prices. If we were more holistic, if we based ourselves on the maximum prices used at the beginning of the year, this would have represented $12 billion. This shows us how important investments are in infrastructure to reduce the dependence that we have on having sufficient gas for the country. In the mid chart, you can see the upstream producers in the country up to 2021. Petrobras was the only one trading this and were making feasible an opening to include more players. Now to reinforce this message, we have studies of the EPE, the planning agency, that underscores the relevance of gas in Brazil, but it's important for this gas to be available and what will make the difference are investments in infrastructure. We have a role, a logistic role of making the right investments to make feasible the sale of our national reserves. Here, you have a market edition. We have a link to our [indiscernible] a common supply through which we offer our services. And in the mix, the entry of several agents. We are moving from a mono-customer market to having a series of economic groups that work in this transportation network. Now if you look at these 3 circles. In the first circle to the right, it is registering in our nonbinding platform. It's like getting a passport. In the middle, general green nonbinding, getting a Visa, for example. And the decision to travel to contract capacity will be found in the middle. We have signed more than 50 transportation contracts, 37 of which are active with 10 different economic groups. And I would like to share this with TAG group who worked on this very competently and very professionally. We cannot offer access if agents are not interested in this and, here, we were very professional throughout the year, the entry of new agents at the end of 2021. And in 2022, we have weekly windows to contract even more capacity, enabling new agents to enter throughout the year. We have contracted 10% of additional capacity through the year. And here, you see the total revenues of TAG, where 12% emanate from this new market, and that coastal network, where we open the market with multiple players, represents 17% of our revenues. This revenue is actually an added revenue, which takes the place of the revenue that came from Petrobras. The capacity before was contracted fully from Petrobras and now you can work with other clients and make the market work. Yes. We are talking about revenue base and new TAG revenues are related to new investment. And obviously, revenues associated with costs linked to the opening of the market. And this is happening. As you're taking new entrants, they need an infrastructure to enter or exit. You make investments and you get additional revenue. That's exactly right. If we look at the market, the gas market, and think in terms of integration, the foundations of competitiveness can be simplified. First, the logistics that is to offer access to transport and distribution, regulated sectors, and we work with affordability. The larger the number of users and volume in the network, the more the tariff goes down. Then the competition molecule, we have to favor an encounter between those parties and allow the competition -- the molecule competition to happen. And then we have to focus on improving. So for the integrated system, all the sources of supply have to be connected to the grid -- to the national grid. Very recently, I had meetings in Sao Paulo at FIESP, the industrialists federation. And I asked, "You are in the Northeast, but are you here as well?" And I said, "Well, there is a lot of gas coming from the Northeast to serve the industry in the Southeast." So you don't need to know where the electricity is coming from. It's the same for gas. Gas is fungible. So we have to be able to compete and have all the suppliers connected. This is our ambition. We want to strengthen our national hub, and we want to make the right investments to allow molecule competition. We want to debottleneck the grid when the market wants to do something that our grid does not allow. This is a signal for new investments. That's when we open a champagne. So we listen to the market. This is extremely important. About storage, we support initiatives to improve storage throughout the grid. And we also mustn't forget that we need to develop demand and connect new supply forms to the grid. We are an infrastructure business. So the connection is ready for biomethane and for renewable gases. Biomethane is really important because it can be transported on our gas pipes. This is our investment plan for the next 5 years, and we focus on expanding the market and also on ensuring the safety and integrity of assets. We are going to invest 70% of BRL 3.3 billion in the North and Northeast of the country. And half of this is going to be to expand the market. The other half is going to reinforce the safety and integrity of the assets.

This investment is going to be part of the asset base, right?

Yes, that is correct. We have these types of investments, and we classify them under 3 different types. First, access connection. So we connect exit points for the distribution system. One of the main examples is the interconnection of 25 kilometers to connect the LNG terminal in Sergipe to the TAG transportation system and consequently to the national system. So again, Sergipe is now connected, and it allows those who are buying from a different player to have more options. Instead of paying 10, Sergipe can offer 9.50, and there is more competition there. So this makes the market more dynamic. We are separating investments in to connection, and this has to do with long-term contracts. And this is different from the contracting of the capacity into the system. Also, we are extracting compression in Itajuipe in Bahia, and this allows a greater exchange between Southeast and Northeast. And this, again, strengthens competition. We are also trying to expand the network and this strengthens the Northeast system through Gasfor III, and this would allow the gas to reach regions where there is a constraint. And these are, again, robust investments, but there is a trade-off between CapEx and OpEx. BRL 1 billion invested in pipes is the same as 3 years of lease of ship on the coast, for example. Here, you see how we see the achievements in our journey. We had the free -- the first free consumer, the Unigel fertilizer factories, which were reactivated under a lease with Petrobras, and this is our journey. Our vision is based on promoting access to the existing infrastructure. So the more users we have, the more affordable the tariffs are. We also encourage new investments and we also hold a sustainable model in view of the regulator and the agent. We have been offering capacity for 2023. This is available from our side. And we also have short-term products for like monthly or quarterly contracts. And to conclude, I would like to highlight what we have been doing. We have been promoting access and connection of new players. We have been ensuring the availability and reliability of the network. We focus also on cybernetic security because we know that attacks are going to happen at some point. This is now part of life. Also role of gas in emission reduction. We also want to reinforce the role of natural gas on energy transition and prepare the infrastructure for green gases. I think it's very important for us to take advantage of this window of opportunity that the country has to monetize our reserves. We also have to think in terms of expediting the infra legal agenda. There was a decree in 2021, but we need all the infra legal regulations. We had to look at the network infrastructure in national terms, [indiscernible] about the engineering projects that we would want to see in our home. We should build the right pipelines that coordinate investment plans. In the case of Sergipe, we contacted the local distributor. We showed them our business plan and where in the grid there was a potential for future demand. So we left a flange there for the market and also prevent the formation of bypasses, which reduce the value of the chain and maintains the infrastructure costs. The allocation of costs change, but it's not -- the costs are not reduced. We don't want islands which produce competition. We also want fast track at the regulatory level. We want the harmonization between the electrical and gas sectors. We need all the intelligence, where we should have thermals and what the characteristics of that -- those thermals should be. And as regards TAG infrastructure, we think if this infrastructure is built, it should be connected to the integrated grid. And this would give gains for users in terms of diluting costs and improving the safety and security of supply. And then we have to stimulate natural gas demand. We have fertilizers, steel works, mining. All of this has to be coordinated. In Espírito Santo, steel works have converted part of that plant, so we are increasing the delivery of natural gas in Espírito Santo, whilst reducing emissions. And we also want to harmonize good practices between federal and state levels. Unlike other countries, we have 2 regulatory agencies, one for oil and gas and one for electricity. And in terms of oil and gas, we have 27 agencies in addition to the federal agencies. There has to be a cooperation between transportation and distribution so that we can think about the network infrastructure in engineering terms.

Ovidio, you touched upon something which is really important. The creation of the market, the opportunities, especially in industry. The crisis in Europe, the war in Ukraine have given us a big opportunity. We import fertilizers and fertilizers are based on methane. So it's important for us to develop these industrial opportunities, thus expanding the market. The connection of all the agents will make us more flexible. This would allow us to go after flexible thermal plants because we have a market and a volume. This is the kind of integration we're looking for.

Yes. And it's also important to say but without talking about new thermals, we have to think in terms of the current generation like oil and diesel fired plants. We have talked about Europe and the crisis. And if we think about the Brazilian infrastructure, I mean it's cheaper to learn from the others, and we see the key role played by infrastructure in Europe today. In France, we own 32,000 pipelines for gas transport and 25,000 for distribution. So we were able to divert the gas. TAG transport grid also allows us to send gas up to the North or to the South. And this makes the supply safer and it gives us the alternative to access different suppliers.

Okay. I'll turn the floor over to Rafael to coordinate the Q&A session.

We have a question from Mr. Nagano.

This is Rafael from Crédit Suisse. As regards biomethane, what is the progress relative to preparing the infrastructure and connecting new clients? And I mean, here, producers of biomethane. And what would be the profile of these major suppliers in this new segment?

I'm going to answer your question from 2 points of view. The technical challenge is not big. Biomethane is defined according to the national regulatory agency for petroleum. It is within the range of the technical specification for our pipeline. We are mapping the project. We are serving the customers who want to access our network, but we are also thinking in terms of regardless of where the biomethane is connected, either in transport or distribution, that biomethane can be sold nationwide. This is an advantage for the market as a whole and for the producer as well. We need some regulatory advancement, such as the ones we saw in Europe, to allow biomethane to be available at a national hub, although this injection may be dispersed. We have mapped out some projects throughout our grid. I cannot give you any names. We don't have secrets, but the agents do. So we serve everybody with transparency, and we are studying the cases of these potential connections. I believe in this market in Brazil, and I believe in the strengthening and growth of natural gas.

Can you tell us about your expectations relative to the volumes of biomethane in the network?

Biogas says that the potential is greater than the current demand, and that is 120 million of cubic meters per day. And this is because of the characteristics of agribusiness instead of cattle in Brazil. Most of this potential is concentrated now in the West of the state of Sao Paulo, but there are other opportunities along our network. In 5 or 6 years, we could have 6 million to 7 million cubic meters in our network.

Marcelo from Itaú. My question has to do with the TAG regulatory model. I mean I don't know enough. You're talking about BRL 3.5 billion in investments in the next few years. You gave us the breakdown of revenue, 12% coming from your clients, but the total revenue is the same until the contract ends with Petrobras. When you make those investments, are these investments -- do these investments require pre-authorization? Or do you make the investment and this then is added on to the base? And what is the WOC for the next few years?

The second point you asked had to do with the -- with when these investments are added to the base and if you need regulatory authorization. Yes, we need pre-authorization from the part of the regulatory agency. They assess the need for the investment and then they inspect the execution of the project and the fulfillment of all the requirements. And the investment is added to the base once it starts its commercial operation, the COD date. So it's not linked with the end of the contract. For example, we have incremental tariffs. Some agents have contracted these tariffs and Petrobras might ask for an additional investment at a certain point. So we do the studies, the costs, and we say, okay. So we get the authorization for that investment in the study. And then if the investment goes ahead, it becomes part of the tariff. Otherwise, we get the reimbursement. So the concept is we have to [indiscernible] once they are preapproved by the regulator. And then we allocate those investments on our base at COD. Sergipe, it's a connection contract, an access connection contract. So any interested agent can request a study for the connection and that doesn't have to do with the contracting of capacity in the grid. In the case of Sergipe, there is a bilateral contract and that investment is allocated in the long term for them. It's a dedicated connection. And then the agent contract capacity in the system. [indiscernible] is 7.25% real actual terms. The international benchmark leaves us -- allows us to remunerate the unamortized parcel and the [ UOC ] has to be different for greenfield investments.

So from the BRL 3.3 billion, there will be a remuneration as of the COD for those investments?

Yes, be it in the base or if part of that is allocated to a bilateral connection contract, and it's the regulator who assesses that and authorizes us to do the contract. The modality is guaranteed, the general terms, but the investment in the connection has to be submitted to the regulator.

Now that connection, for example, that you're referring to, it is the owner [ of sales and ] that will be paying for the connection because this will be a dedicated pipeline, it will not be included in the general base. And you will have a normal regulated contract to be able to use that network.

Exactly. And the regulator does not allow for exclusivity. If somebody wishes to have access to that piece of the network, they will have to share the prices. There is no right of exclusivity, only a right of preference.

Andre from Santander Bank. I would like to add something to the question. And think of the long term, this long-term contract will never become a base that is used by everybody and will obviously remain as an isolated contract?

Yes. In principle, yes. Under some circumstances, it could be integrated into the base after a series of cycles. The regulator, of course, will survey which is the objective of that investment for the system as a whole. We refer to the case of Sergipe. Simply the fact that it exists already benefits those users that will not necessarily purchase the gas from them. Another example that could come about refers to an emergency thermal dispatch. What we had, a stop down of a [ pre-sold stop ] if this has to become part of a systemic base. Now the greatest cost of the market will be the scarcity of gas. And the second problem will be to have an infrastructure and not put it to proper use. Once you acknowledge these characteristics, the positive externalities of a project for the system as a whole, this allows room for the regulator to transfer part of this to the base to amortize this and share the cost between all of the users.

Now in that case, therefore, the idea is that future connections will be based on that parameter. But will the remuneration be the same? The same remuneration that you have at the base?

Initially, this is what would happen. The regulator will use our remuneration equivalent to the WOC that is being approved. Are there any further questions? Very well, I think we have ended the Q&A session. We will now have a 15- to 20-minute pause, and we will return with our last panel to speak about new businesses and implementation. Thank you. [Break]

Hello, everybody. We're back for our last third block. We're going to speak about new projects under implementation. Before giving the floor to Sattamini and others, I would like to ask you to please respond to our satisfaction form. This, of course, is very important to be able to enhance what we do with you. So we will request your help.

Thank you, Rafael. We're going to begin the block to speak about our development with Mr. Ferrari. We're going to speak about the implementation of our projects with Marcio [indiscernible], and we're going to speak about the performance of our assets. Guilherme?

Good morning to all of you. It's a pleasure to be with you once again and perhaps we should recap what happened in the last years. As Sattamini mentioned at the beginning, ENGIE is no longer an energy company, it is an energy infrastructure company. Since 2017, we have undergone some strides enabling the company to become financially robust with a greater capacity to invest, and this is what we're going to speak about. In the last few years, we had sound investments in transmission in Gralha Azul and Novo Estado, as Gabriel and Keller mentioned. Positive point was our marketplace. Our first projects were resolved with the Mercado Popular and Santo Agostinho. And this shows our ability to sell our perception of a change of strategy. In the past, everything was focused on the regulated market. It tended to disappear. The captive consumers went on to the free market. And as Gabriel mentioned, all of this was based digitally to access new customers. And of course, we need products for these new clients. These 2 new investments are proof of this act, we want to continue to do more. An important point, we always underscore and that points to our investment and deliver capacity. First of all, is our financial discipline. We are not a company that simply grows for the sake of growing. We add value for our shareholders. And this financial stringency is one of the pillars of our growth. Another important pillar is the integration among all areas in the company. Gabriel mentioned that mandatorily, we do have to work with all of the areas to fulfill the demand of different areas to create a product or a project jointly. And this continuous integration and implementation have become 2 areas in the company that do participate in the development process since the start. This allows us to have lessons learned, enhanced processes to deliver processes in time and as part of the CapEx that has been approved. Once again, these are the company's fundaments enabling us to have credit in the eyes of our controller and to continue to grow in the Brazilian market.

Very briefly, an important point, that decision to begin the conversation based on the risk profile of the portfolio, how projects fit into our solar and wind projects. I was part of the assessment of the portfolio as a whole, always with an eye on the profitability. You also refer to the participation of the entire company in the [indiscernible] under your lead. Now the operation will receive the [indiscernible] after it has been built, after implementation. And there are several details in the phase of development that will enable us to cooperate in a more efficient way.

2022, as Sattamini mentioned, was a year where we went from BRL 1 billion investments a year, we have gone to a new level of BRL 4 billion investment. And this year and the coming years, these investments will amount to BRL 10 billion. We began with the acquisition of the projects, Aracatu (sic) [ Paracatu ] and Floresta, this year. They come from the regulated market. They are solar projects. Everybody thinks solar projects are of easy implementation, that the risks are low. If the engineering is not good, if the structuring for operation and maintenance are not good, these projects do not deliver what was promised. The acquisition of Aracatu (sic) [ Paracatu ] and Floresta initially sought out operational excellency and we have been able to include these projects for the future. Perhaps you could speak more about the acquisition of Floresta from the operating viewpoint.

In Aracatu (sic) [ Paracatu ] and Floresta, we had a 30 mega plant formerly. We learned a great deal from that. Well, as mentioned, solar energy is not simply plug and play. There is nothing overly complex. Sometimes we have thousands of panels, thousands of components that end up requiring maintenance and it's only an issue of logistics. And the possibility of identifying where a problem lies is important. We have done this at a small scale of 30-megawatts. With the entry into operation of Aracatu (sic) [ Paracatu ] and Floresta, we have expanded this work to 200 megawatts. And we are applying what we have learned. We have obtained some gains, and this is preparing us for an ever larger challenge that is also of 200 megawatts in an area of 2,000 hectares, 20 square kilometers, 5 kilometers on each side. Now being able to find where a problem is means we will require a GPS not to get lost. Responsible for the operation, and I look upon this positively, we have been able to enhance scale and we're better prepared for this challenge. I have created several management tools for efficiency for the diagnosis of solar assets. We did this with the wind assets, but we have best experience in that. In the solar field, we have had significant evolution in the diagnostic and operational tools. Well, these are tools where we create systems that automatically can identify the source of a problem, the source of losses, and we're able to send the field teams to redress the problem. And I think that this is the intelligence underlying the process, the number of similar situations and the possibility of identifying and redressing problems as fast as possible, eliminating losses is what creates value and brings results.

Well, Floresta, Paracatu was an important framework for us. And at a meeting with investors last year, we were about to announce the acquisition of the Assuruá project. At that time, we were under negotiations, which were concluded throughout the year. We have already informed you on the investment for 840 megas. It's not the largest, but one of the largest ever implemented in Brazil in a single shot. And a project of this dimension poses many challenges. A point that Marcio will refer to is the problems in the supply chain in terms of the wind equipment, we see that companies are withdrawing from Brazil. And if you analyze the financial results of the aerogenerator manufacturers, the results are certainly not robust. It is due to the constant change of platforms. There is a technological advance to enhance production and costs, but this ends up posing risks in the supply chain. This constant change in the number of wind mills and generators brings about several risks and it is difficult for these manufacturers to have proper performance. We should all keep this in mind. And when we select our suppliers, we're extremely careful. In our wind projects, the civil and electromechanical package tends to be very important. We have been through COVID, war volatility and this poses an additional risk to project implementation and excessive cost during the project implementation. Now Keller also referred to this outlook for an oversupply of energy. We see an increase of CapEx, something that was already taking place, additional risk additional to the implementation. And we constantly receive projects that will probably not ever be implemented. Every week, we receive opportunities for the acquisition of projects with a specified cost. People who will take risks will sign the contract, but it's very probable that these projects will never be implemented. And this creates that outlook of an oversupply that could not become materialized. We are, however, very attentive to new opportunities. You have already heard this spoiler, and we had already announced this previously at our last Board meeting, the authorization to implement the Assu Sol project, a large project with 893 megawatts. We're at the final stages of negotiation. We have already signed contracts for transmission. This is certainly not a plug and play. It's a negotiation with suppliers. We have come to an agreement on the project, and we're concluding a negotiation with suppliers we're negotiating. And in solar projects, there tend to be a few suppliers to carry out component integration, especially for the magnitude of the project and we have to include this, take this into consideration with the implementation team to have a smooth implementation. We will be communicating which will be our suppliers in January and February of 2023. This is a project that will come into commercial operation in July of 2024 and 2025. We're speaking about 840 megas that will come in different stages. This is a significant achievement for this year. We will reach 1.6 giga of approved projects with 400 megawatts. We have sped up the process. We, of course, have that issue of the subsidy, which will enable us to access the market opening. All of this was mentioned in the first panel. A relevant point with our success in the transmission auction for expansion of one of our projects. We have Gerais Estado and Novo Estado when we have auctions for expansion when they are close to our region. We detect a synergy and the project an additional gain of competitiveness, and we're preparing for this auction, which will be held at the end of the year. We believe this is a positive opportunity with analyzing the lots and we will participate on the 15th in this auction. All of this is based on our financial discipline. We go up to where our financial return allows us. We don't go beyond. And of course, the market has had a different view, with some players being highly aggressive. We observed that our strategy is no longer working because some players are taking away our edge, and we're going to see what to do with these agents. We need to bring back appropriate profitability for our projects. And in this context, we believe we can capture opportunities. This is something we saw frequently in the transition market, where returns tended to be very low in periods of added core returns. Well, there was a risk of implementation -- or the risk of implementation of a large line is ridden with problems -- engineering problems, environmental problems, access to communities. Marcio can refer to that. This cyclic feature will enable us to enter a new cycle, with, perhaps, a more rational behavior of some of the agents we have identified as being outliers, a very important point. I will then give the floor to Marcio to speak about growth. The coming year in transmission, there is that outlook that we will have several lots being bid, large lots. And of course, this is a reason of concern for us. We're quite active in terms of associations because of the quality of labor. We're afraid of being left without labor because of the huge level of investments in the coming year. And of course, this will bring risks during implementation, not only delays, but problems in health and security, a critical point for the transmission system. And just to end my topic relative to growth, we are still as regards to renewables, looking into the possibilities in the market. There are some M&A processes going on in the market, and we monitor those processes and we look at the auctions. And as I said, and Sattamini reinforced, we always focus on financial discipline. We want to grow, while adding value to the company from a financial, strategic and commercial point of view. That's our focus. We have to add value to the results that we have been delivering which are very sound. And of course, another important point is to have a pipeline, a sound pipeline so that we continue to grow. As Keller said, we see, in the midterm, '25, '26, an oversupply of energy. But at a certain point, the market will resume its growth. And we need good competitive projects, and this is what we always wanted to have at ENGIE Brasil. We have a very robust pipeline. We can have associated projects with solar and wind within Campo Largo, Sto. Agostinho, and in the future, we will be able to do it in Assuruá. This is what we believe in. So this is a prospect for growth. There is an oversupply of projects in the market, and we can look for the best opportunities. This will allow us to have significant clusters in terms of size. And this, in turn, allows us to have synergies in terms of implementation, development, and we can have more competitive energy prices to offer to the customers. We are now going to hear Marcio, who's going to speak about implementation.

It's a pleasure to be here with you again and talk about the implementation of our projects. The most important for us is health and safety. This is our license to operate. It's a precondition for any activity at ENGIE. We cannot allow any activity to go ahead that may put a human life at risk. In 2022, we had a very good year in our projects, and we were running 3 major projects being implemented, and there was no serious accident, no fatality. And this attest to our actions, which we're able to improve health and safety standards. And looking ahead, we have many projects in the generation arena. We haven't had any accidents -- severe accidents in this last few years, but we will continue to work to change the mindset in the transmission area, which always presents concerns to us. We will be coordinating a committee for quality management within Abraceel. And we want to establish standards, best practices, change the way the transmission sector works so that we can implement products in the future without risks in the health and safety area. We are also working with Abraceel to avoid the concentration of auctions. When there is a large auction, thousands of transmission lines being auctioned, this puts a stress on the production chain, on the availability of qualified labor, skilled labor to implement this project. So it would be good for the sector to not have that bigger concentration of auctions. So in terms of 2022, we have completed a very relevant project called Gralha Azul, our first transmission project, 1,000 kilometers of transmission lines, 10 substations and we have energized this project in May 2022. We are receiving 94% of the permitted annual revenue. And we have a small substation, which should receive energy in March 2023, and that's the regulatory term provided for -- in the concession contract. We depend on the distributor to bring the lines into the substation. But from a point of view of implementation, the project has been completed, and the results are great. In terms of transmission also, we have developed in other states. We have a project for 1,800 kilometers of transmission lines. We have brought energy to the South and East sides of this project. We are receiving 49% of the revenue of this project, and we are now finalizing the implementation of the North track. 100% of the civil works have been completed. We have a few kilometers of cables to be launched. This should happen by the end of this year. And in January, we are going to commission the project, and then turn the key between the end of January, the beginning of February. All the integrations with the national system operator, with substations, such as [ Sengo ] have been carried out. And we are in the final mile, we just need to do the commissioning to complete this project. The third major project that we implemented this year is still underway, and that is Santo Agostinho. This is a wind farm, 434 megawatts. 100% of the civil works have been completed. The electromechanical BOP, substations, transmission lines, need of voltage, everything has been completed and we are now mounting, assembling the aerogenerators. We had some difficulties with the supply chain, which has to do with the pandemic. So there was an impact on the supply chain and this is a domino effect, which we are mitigating against. But the first aerogenerators should start its commercial operation in Q1 2023, and the project should be completed by the end of 2023. We don't envisage any major problems. These are the 3 major projects that we carried out last year. The company has the capacity to implement projects. The implementation team is able to do it. But the most important for us is that implementation starts with development -- business development, implementing an operation work together in the company, and this allows us to develop and implement projects in a successful manner. And the result of this, of course, is seen in the operational results. So my client is here, and he will be able to tell you about the results that we have seen in Gralha Azul and also in our renewable projects. In the transmission projects, and if we look back the latest wind farms, they have been producing a very good operational performance in terms of availability. Umburanas and Campo Largo are running according to plan. And there's an operator, I'm very happy with them. This also reflects a greater maturity in the sector, good development, good implementation, and we reaped the fruits in the operational phase. As regards to the transmission lines, that's a new niche for us within the company. It's a new activity. This first year or the end of 2021, but the first full year was 2022, the results have been excellent. The availability of the transmission line is, on average, 99.97% in Gralha and Novo Estado. Both of them are very close to that figure. 99.97%, yes, that is 0.03% downtime. I'll talk about this later. Just to give you an idea, the benchmark is 99.85%. We would be happy with that. We are 99.97% in terms of availability. In terms of PV, if the loss of revenue is 1% because of an availability of assets, our loss of revenue is 0.023, so 2.3% of the expected. So again, this reflects a good development and implementation process, the quality of our suppliers, the companies that we associate with. And I am very grateful to all of you, makes my job a lot easier. Jose had set up this team and, during the construction period, he defined processes, he onboarded the team, he designed the operation of the lines and now we have reaped the fruit. Jose is doing a wonderful job with the operations team. I believe this integration, the operations team come in before 6 months ahead of the energization of the projects. Operations are trained before we commission, and there is a quality in the test and the energization. So the projects are 100% integrated into the operation center. No project is onboarded, so to speak, manually. It has to be integrated into the operations sector. This integration we're talking about is something that we have been looking for, for over 10 years. I went through the areas of development and implementation, and as a company, we have decided that we needed more integration. So again, just to repeat what has been said, development, implementation and operations work together. We give input. We give suggestions. And small things that are done in the development and implementation phases give us good gains in terms of operations. This is one of our strong points. We all feel partner in the same enterprise. I saw you developing something badly that will be implemented badly, and we operated with less than optimal results. We all feel like we are partners. We are committed to the results, and this allows us to ensure superior performance. And just to talk a little bit about the challenges in the future for implementation. We have Assuruá, and the scale of Assuruá is really interesting. When we began to implement wind farms in 2012, it was 100 mega, then Campo Largo I and II; Umburanas 300, 350 megawatts with 2.5, 2.7 machines; and now in Santo Agostinho, 434 megawatts, 6.2 machines; and in Assuruá, it's going to be 800 mega. So this reflects the maturity of the company, something that has been built throughout the years, and that allows us to build such a big project. And also we have been looking for partners, and we know them already. So this gives us predictability when executing such large projects. We are going to use Vestas machines. The ones that we have used in Campo Largo I and II. The supply chain is very consolidated, and the operational performance is excellent. So we don't envisage any major variation. And in terms of Assu Sol, that's a large project, we're talking about millions of panels, millions of inverters. The order of magnitude is huge. It's going to be very interesting. It seems to be easy to put together a solar project, but the scale is just [indiscernible]. We are working with the implementation team, development team, in the licensing phase, in the contract phase and the tax specification. So implementation has already started in the projects that are being developed, and operations has already been brought in early on. I think we could open now for questions and answers.

I'm from JPMorgan. In terms of CapEx, it's a recurring question. You don't have to give me a number, but what is the trend in terms of CapEx? And the difficulty with -- in the supply chain, does it mean there is a scarcity of products, a shortage of products, or higher prices or both? And your relationship with ENGIE France, does it help you in terms of getting more product for smaller prices? How does it work?

We had more -- lots of problems during the pandemic in terms of the solar panels. There was a shortage of raw materials. There were logistic problems. Containers are in the port. This does not exist anymore. The price of the solar panel is now going back to pre-pandemic levels. So we don't see problems in terms of the solar panel. There are suppliers. As you know, there is a discussion about Chinese suppliers. There are many issues that are raised. So this is something that we are concerned about. Some countries don't buy Chinese panels, but they are the most competitive, to be honest. The major problem today has to do with the supply chain of the aerogenerator. The change in platforms brings an additional risk. The suppliers are now stabilizing at a certain level to prevent problems. And as regards to CapEx, it's difficult to say how much it will be. And the price of commodities have gone up, not only for the equipment, but also labor costs have gone up a lot before. Prices were 15%, 20% below today's prices. And as I said before, solar projects -- in solar projects, we tend to see -- well, it's plug and play. We tend to minimize the project, the problems. But that's not the case, thousands of parts, in our case, 2 million solar panels, 2,200 containers arriving. So imagine the logistics challenges. It's an industrial process. If you don't design it very well and implement it really well, you're going to have problems. Before companies had no idea of what kind of problems they would be facing, they tended to minimize the problems. But today, we know what it's like. The price of commodities, however, is extremely high. And when you look at the financial results of the aerogenerator manufacturers, the margins are very low. So there will have to be an accommodation in terms of prices. I wouldn't envisage a reduction in CapEx in the next few years. And as regard to the group, with the new organization, we have global business units. We have been interacting with all the groups in the headquarters in terms of renewables, and this has broad benefit in terms of designing plants, sourcing equipment, choosing suppliers and also our cloud when we negotiate global contracts. So yes, this has been a differential for us in view of this new organization. So in terms of solar projects, today, we have global agreements and we are able to have some benefits in view of the volumes. We also have benefits in terms of the prices, and this is a competitive advantage for us, especially in terms of aerogenerators. We also have the same discussions within the organization. In Brazil -- Brazil is one of the major destinations of investments for the group. And when we have difficulties with the aerogenerator suppliers, the group uses its cloud for us to get the best out of the negotiation with our suppliers.

I'd like to understand the sales strategy of the energy of this wind farm for more than 800 megawatts. Are you going to sell PPAs and develop as you sell? Or are you going to build the park -- the farm and then sell? So looking at the current markets with low spot prices, how do you make it feasible? And what would be a cost or a price that would pay the bill?

I think the cost is in the region of BRL 200. Is that right? We are developing these 2 projects. As a portfolio, we have a large portfolio, these 2 projects. And I think 6% to our commercial capacity, and Keller is going to give you a little bit more information about the strategy. Basically, what we do is to use the synergy of our portfolio when we identify risks and potential synergies. We have advantages as well. Of course, when you have solar generation within a portfolio that is based on hydro and wind, you have a complementarity. So we think in terms of risks and benefits when we are costing the project. But as regards to the commercial side, we use a portfolio approach. We have a portfolio. We know how the portfolio is going to grow, and we sell that to the freight market. We don't sell straight from the portfolio. We have no contract that includes a direct sale from the portfolio. We sell to the freight market to retail, and we sell as we need. And we protect -- we hedge against the risk for the portfolio as a whole. There is a hydrology risk we had against that, and this is a hedging in the portfolio. There is synergy. There is complementarity between solar and hydro, wind generation complements hydro. So this helps us in terms of the year, and solar helps us in terms of the day. So at the end of the day, we have a more robust portfolio. We price that and we sell it in advance. It's a portfolio-based strategy.

The window in terms of price?

Well, there is a price window of lower prices, 25, 26, 27, we are sold. And when we need to sell, the project is a curve. If the market pays in the beginning -- in the beginning of the year, it's a lower price. The project will only be implemented if economics fits a curve of the project. Yes. Okay. But these projects have been authorized for implementation. They are not going to be phased according to the selling price. They're going to be implemented. So if there is an oversupply during the period, which is what we expect, that might not materialize, but that's not the scenario we work with. In the first few years, the price is going to be lower than the average price of feasibility, but this will tend to convert to the marginal cost of expansion. Additionally, these projects will have a benefit of the wire. And once the new projects come on stream without the wire benefit, the savings of the wire is captured. This is part of the economic rationale. So we decided to put in the portfolio of these 2 plants. Are you going to build more? Probably not. We have estimated what the energy volume is that has to do with our risk mandate, how much we can commit or how much exposure we can have in our portfolio. This has to do with what we said in the first panel, in terms of diversification of revenue, long-term contracts in the regulated environment. This allows us to have a different firepower, different risk appetites. Yes, we are one of the few players that have guaranteed revenue and sales volume. 65% of our revenue comes from the regulated environment. And this ensures cash flow that allows us to invest in the sense that it's not secure from a commercial point of view, but the prospects of return are really good, as the market evolved and converges to the marginal cost of expansion and the capture of the value of the wire. I think that's what you wanted to know. Is it?

This is Andre from Santander. I wanted to ask a question. Put the microphone on your team, so I can ask just a question to understand a little bit more about the dividends. The strong CapEx in the next 2 or 3 years, what is going to happen to the dividends? Are the dividends going to go back to minimum dividends or are you going to pay more dividends?

We are going to pay out 100%. Of course, mind you, when we are accelerating investments, we can go down to 55%, which is our minimum commitment. But from now to the next few years, there's no need to reduce. On a permanent basis, we might have to have 55%. And then we look at the macro scenario and we decided to pay out 100% because we didn't see the need to retain that. We are going to continue to pay the maximum payout. We can do that according to our balance sheet. The debt profile is comfortable. We can maintain AAA, we can go up to 3.5 net debt over EBITDA, and we are much lower than that. So we have a lot of space, a lot of room and leeway.

I'm Arthur from Bank of America. Can I ask you a little bit more about the supply chain for renewables and for transmission? In terms of renewables, Ferrari has said that suppliers -- example for solar panels, Chinese solar panels, what about wind supply -- wind farm suppliers, not only Chinese, but veg, for example? In terms of price, you said 15%, 20% above what it was. What it's during in the pandemic, pre-pandemic? And when you compare wind and solar, have you seen a downward trend relative to solar supplies, for example? And in terms of transmission, given the estimate for investments in 2023, do you see the supplier chain having the capacity to meet the requirements of the authorities in terms of investments?

So in terms of wind farms and aerogenerators, WEG, we have been monitoring them. The group also wants to have suppliers that have a good track record. We know about the quality of WEG, but we have to monitor that. Some Chinese suppliers, such as Goldwind, they have announced that they were going to set up a plant in Ceará to open in 2025. China has a good production capacity for equipment, but the problem is in terms of services within the country, local services. But if they have a plant here, then that might improve the situation. For us who invest in renewables, we feel the need that the suppliers are strong and can compete amongst themselves because this is the guarantee that our projects can go ahead, that they are feasible. So we watch that space very closely. And in terms of the cost, we were talking about the cost of labor. If we compare the CapEx of solar and wind, it is a lot higher than in the pre-pandemic period. But also in terms of the companies that do the assemblage, especially in solar plants, sometimes they minimize the risk and many had problems during the implementation, were unable to complete the project, and they had to review the prices and give more realistic prices. In terms of transmission, let me just say in something relating to WEG. They are a big supplier of equipment, a company from Santa Catarina. We are very proud of their performance. We have a research and development program with them. It's been going on for 6 years. We started with their 2.1 machine or 2.2 machine, 2.3 actually megawatts. Today, we have a research and development for a machine for 4.3 megawatts, 4.2 megawatts, and we are monitoring that space. We have a commercial interest. Under our research and development program with them, we are entitled to royalties because we funded the development of those machines. So as Guilherme said, we are waiting for WEG to demonstrate their production capacity, the performance of the machines, and we expect that they could be able to qualify as a supplier, but they have to demonstrate that. It's part of our policies in terms of hiring equipment suppliers is to have a track record. In terms of transmission, there is a concern relative to the auction in June next year because of the volume of lots of batches, and we have been working with Abraceel to do a project of R&D to map out the market, understand what the production capacity is for -- and also the contractors. And if they have the capacity to execute so many projects at the same time, we have been working with partners, companies that have provided services to us. And this allows us to have greater predictability in terms of labor and also a partnership with equipment suppliers. And these can give us greater stability in terms of supplies. Our financial position may fit slightly easier for us. Everybody wants to work for us, although our safety standards are higher than the market average. But suppliers want to work with us because there is predictability. They know that the project is going to go ahead, that we are going to have money to do the implementation. And what we can do to prepare is to develop these partnerships so that we can be competitive in the auction. And then with the study of the R&D, we can go to the government, speak to the regulators to demonstrate these concerns and how we can address these problems. When we heard about the size of the auction that is about to come about, we had a conversation with the suppliers for metal structures and towers and our concern, of course, increased. When we spoke to the builders, they're quite unprepared for the volumes of contracting that we would have. And so we do look at this very closely. If we're going to create a war and everything will be postponed. Well, this is certainly not the intention of the government. The government wants to have a long-standing industry so that it can service everybody appropriately. Otherwise, the projects will not be able to come into operation and the demand will be frustrated.

This is Daniel from Safra Bank. Now to continue speaking about vendors or suppliers. What is happening with the hedged contract in the investments for transmission contracts? Now should you be awarded in the coming auctions? And which is the cost of funding considering the present day macroeconomic context?

Well, the hedging you're speaking about is a currency hedging. Well, when we enter an auction, we have already clearly defined the vendors, the exposure to currency. And if we win the bid, we close the hedging, we signed a contract for the supply of aerogenerators for Assuruá, we created a task force in the company, and we signed 214 hedge contracts -- 224 contracts, which means we don't have revenues in foreign currency. And we're under the obligation of covering our exposure to these hedging contracts. Regarding the cost of funding for the 800-megawatt contracts that are closed initially of the cost of funding, we have a local property that we closed at market rate. The NDS National Development Bank, and this is how we are able to structure the projects to consolidate the rates between the decision of making the investment and contracting funding, we could have variations. And all of this will be included in that risk premium that we include when we survey the economic usability. Speaking about the auctions for June of the coming year, we will have extremely high voltage lines. I don't know if the company is thinking of participating or is this out of your scope. These are investments of BRL 18 billion. This is a discussion of the technology to be used. Evidently, this is an extremely large project. You also have to create a partnership with the technology supplier. Nobody can enter in this type of supply alone, and it will be necessary to create technical partnerships and partnerships to enhance the investment capacity. Initially, we're going to be looking at this lot. It has been scheduled for October of 2023. And this will drive the attention, not only of ENGIE, but of other players in the sector as well. How many billions are we speaking about? BRL 18 billion. A significant amount. This is the annual investment. It will all depend on the discounts from these suppliers. We're coming to the end of the panel. We have a last question that has come in from the chat from Antonio Reso. The question is the fact that one market player has a share of about 25% with a great deal of free energy, and we know who he is referring to. Aren't you afraid of the prices establishment throughout the curve during the next 4 years? Keller?

Well, the response is not simple here. How to put this short term? In the short term, the market driver is the spot price or high will lead to plus 1, plus 2, plus 3. And this means a strong dependence on spot prices. In the meantime, up to 3 years, there is a great deal of market liquidity. The traders have a very good volume. I don't know which the turnaround is. So even a player of that size, yes, could set forth prices, put forth frequent auctions. But in my opinion, this will not have a strong impact on price. In the longer run, it's an issue of the market liquidity. If they're uncontracted in '26, '27, if they want to sell large volumes in the market, very well. Now that player will have to have sales force to resort the free market. There is no market where you can exchange energy, and you have to have a compatible commercial strength to do this. What happens in that case, the logic for the purchase of energy for industrial and commercial clients in the market is to buy 1 or 2 years ahead before, even though they try to sell this in the market. In 2026 and '27, there will be liquidity in the market. They're only going -- customers will only seek this product at the end of 2024. Perhaps I got a different viewpoint. The energy that will be uncontracted, was contracted for somebody. This will represent a need for coverage. What we need to be concerned with is an excess supply vis a vis demand and aggregate excess of topline. Our greatest concern is that upon contracting that energy from the distributors, the government should not come with new auctions or energy, and that this player will, once again, compete with the risk for that market. And for this reason, we have paired with the government the need to end with that discrimination of existing energy and new energy auctions or it should be energy auctions. We have an oversupply, and this oversupply needs to be consumed by existing demand. Otherwise, there will be a market distortion.

Very well. Thank you for the debate. We have come to the end of our panel. I would like to invite all of our managers that come up to the floor, and I will invite Sattamini to make this final remarks.

This has been a very good morning. I hope that, for all of you, this has been interactive, that you were able to clarify your doubts. Of course, we're still at your disposal with our directors and the IR team, and we're waiting for 2023 with a large number of challenges, but good success. Have a good end of the year and a brilliant 2023 to all of you.