Good morning, ladies and gentlemen. Welcome to Companhia Paranaense de Energia-Copel's Video Conference to Discuss the Earnings for the Third Quarter of 2024. This video conference is being recorded and will be available on the company's website, ri.copel.com. The presentation is also available for download. [Operator Instructions]. Before proceeding, I would like to note that the forward-looking statements are based on the beliefs and assumptions of Copel's management and on the information currently available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors, analysts and journalists should consider that events related to the macroeconomic environment, industry and other factors could lead results to differ materially from those expressed in such forward-looking statements. This video conference will be presented by Mr. Daniel Slaviero, CEO of Copel; Mr. Felipe Gutterres, CFO; as well as directors of the subsidiaries who will be available for the Q&A session. I would now like to turn the floor to Copel's CEO, who will start the presentation. Please, Daniel, you may proceed.

Hello. Good morning. I thank you all for participating in our video conference. I'd like to greet my colleagues, the directors of Copel who are here. In addition to another quarter with sound operating results, I'm happy to share with you, relevant deliveries that occurred during this third quarter. And year-to-date, Copel, our adjusted EBITDA exceeded BRL1.2 billion. Reported net income also broke the same barrier of BRL1.2 billion, driven by the results of our business, but also positively impacted by some extraordinary events which together reached approximately BRL645 million. The first is the closing of the divestment at Compagas and UEGA with a recognition of BRL170 million in the period. Both divestitures are in line with our matrix decarbonization strategy and our focus on the electrical electricity core. Second, the conclusion of the sale of Copel G&T's real estate in the amount of BRL286 million, adding approximately BRL175 million to the net income. Those properties were comprised of several plots of land scattered throughout the state of Parana, including residential villages at the plants, which did not contribute to energy generation and cost nearly BRL5 million annually in maintenance costs. So, these two moves represent yet another example of the flawless execution of our strategic plan that we presented to our investors in our follow-on in mid-2023. I'd also like to highlight that in line with our practices and our dividend policy, we declared dividends of BRL485 million to be paid on November 29, equivalent to 50% of the payout considering the results of the first half of this year. Another hallmark of our management is the consistency in deliveries. This quarter, in addition to completing the exit of 1,258 employees on August 14, we made this move by ensuring the quality of service to our customers. This was…

Good morning, everyone. I'd like to start by reinforcing a fundamental point of our thesis. We are an integrated company with diversified portfolio and long-term concessions. In this sense, I highlight that in the coming weeks, we should sign the new concession contracts for our three largest hydroelectric plants, which correspond to 64% of Copel's installed capacity. And subsequently, we will pay the grant bonus in the updated amount of about BRL4 billion. This is an important milestone for Copel because it further strengthens our position and ensures the continuity of our operations in a sustainable way. Our concessions are a fundamental pillar in this process with long-term contracts that guarantee the stability and continuity of our operations. Now moving to the analysis of the quarter. This is a challenging quarter at Copel G&T and COM, affected by the curtailment effect on wind assets and the decoupling of energy prices between submarkets. At times like this, our integrated company strategy and our diversified portfolio showed their strength, and we're able to reduce risks and ensure good results even in an adverse scenario. This quarter, we delivered a robust adjusted EBITDA of BRL1.2 billion with 52% from Copel G&T and Copel Com and 48% coming from Copel Distribution. Adjusted EBITDA was 10.9% lower than the BRL1.4 billion in the third quarter of '23, mainly due to the reduction in the average energy price at Copel Jet portfolio to BRL176.31 compared to BRL204 last year as a result of the termination of a contract in the regulated market that occurred in September '23 that had an average price of BRL253-megawatt hour. There's also a drop in the results of wind farms, mainly impacting by the generation deviation with an effect of BRL67 million, mainly caused by the 23% curtailment in the period.…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question is from [Indiscernible] by Reynaldo Francisco.

Congratulations on the earnings. With the divestments, Copel will come strongly in the '25, '26 season in transmission auctions. Is there a possibility for Copel to invest in the free market?

Hello, Reynaldo, good morning. We don't have any expected investments in transmission auctions, at least not for 2025. We participated on the last auction this year because it was here right next to our operations with a lot of synergies. But otherwise, it's not in our focus or priorities for 2025 or 2026.

Why?

Because we see some opportunities that we consider organic, even in the capacity auction here and on the last cycle, of investments at Copel Distribution in 2025. Yesterday, we also announced CapEx for 2025 of BRL3.29 billion that the market may perceive as another commitment that is robust for investments in the improvement of our network, reduction of costs and improving customer service. Copel G&T at the same time also has expressive values above BRL200 million for improvements. As for investments in the trading areas, I think Rodolfo is running ahead and restructuring the team. So initially, we don't see any opportunities that may make sense to us. We are restructuring and improving and expanding our structure, our sales capacity, our strength. With clients in the market, and we believe we can do this organically. Also, because we have the most important asset for that, 2.4 gig of physical guarantee of average megawatts to sell in Copel G&T. Of course, it's something that's very opportune comes up, if it makes sense to us. But we understand that we have here an organic opportunity with the structuring our trading company, attracting new employees and strengthening our teams. And the earnings in the quarter in terms of sale already expresses some of our vision and efficiency that Rodolfo has been implementing with his arrival as well as the new wave of professionals on Copel's team.

Next question from Bruno Amorin from Goldman Sachs. Bruno, your microphone is enabled.

Good morning. Thank you for this opportunity. Even with the payment of the grant bonus with the renewal of the concessions, your leverage will remain at a level that seems very comfortable. It's 1.5 times today, maybe 2.2 times after the payment of the grant bonus. So, the question is whether you understand this as the right level or if there's room to leverage the company increasing the dividend payout. You just talked a little bit about the capital allocation strategy. So, it seems that the company will be very disciplined, focusing on the current portfolio. So just to understand the trade-off of maybe having a deleverage balance to make the most of opportunity vis-a-vis the possibility of the payout of more dividends from now on. Thank you.

Bruno, excellent point, especially considering the market scenario with the level of discounts and prices, how Copel is going to be positioned. So, we'll break it down into two parts, okay, talking a little bit about the current policy that already expects this level of leverage that you mentioned in this range from 1.5 to 2.7 with a minimum payout of 50% and extraordinary events as the sales and the sale of real estate, for example, we treated that in an extraordinary manner, and that's what we intend to submit to the Board at the right time. As for the optimum capital structure, Felipe is running this work, so I'll ask him to give you more details. Will give you a better view of times and movements at Copel Day. You'll see more. But Felipe, if you can share.

What we see and noting that both ordinary and extraordinary payouts such as the case that I mentioned, they will be addressed according to the materialized sales of assets and additional opportunities, they in depend of an optimal structure discussion. And we have this, but already executing and seeking the optimum structure considering the opportunity for the ordinary and extraordinary dividend payout. I think it's important to say that the company is not going to operate in a suboptimum point. This is very important to know. And another important point is that, of course, we're acting with a capital structure that is still a legacy. And we have to think and reflect on it, and this reflection will follow a few parameters. One, to look at the optimum asset portfolio, the modeling of all of the cash-generating business units, the transversal variables that have to be considered in the modeling so that with that, and especially with the price of energy, we'll define the minimum strategic cash that the company has to maintain. And then based on that, the optimum capital structure that gives us room to optimize the structure, either through dividend payout, of course, and other capital allocations.

In addition, just a comment, Bruno. As Felipe said, the structure and our policy gives us flexibility already even for us to analyze IOC. During the year, there have already been payments in this format. And as usual, we always reassess. So, by the end of the year, we'll reassess whether there's room and opportunities to optimize using the IOC tool. So, all of that moves along so that with the closing of the year, already with that increase of BRL2.2 billion of the net income of the last nine months that would already correspond to 50% plus the extraordinary that I mentioned, we'll be getting close or moving towards Copel's path as a mature company with assets and excellent cash generation can use this dividend payout as a way of correcting leverage. So just noting, remember that on Copel's history, this has already been done in the first cycle here in the cycle of '19 to '24, we had a very low leverage below 1x. And we said that the profit sharing was part of the strategy with the sale of Copel Telecom at other levels, other value dimension. But that's something that over time, it's something we've done, and we've been using that very well. And we know that at this time, when the market is at a discount, this is one of the best possibilities of capital allocation for those resources that come from the company's operations.

Next question in writing from Lilyanna Yang, HSBC.

Good morning, could you please comment on the strategy for energy trading of energy that has not yet been contracted and the uncertainty of the hydrology impact in the short-term prices. Thank you.

Rodolfo, I'll give you this question to make some of the comments and Bertol, if you want to talk as well about GSF or hydrology. So please, Rodolfo, share our strategy and how we've executed and making the most of the opportunities in terms of price volatility.

Good morning. So okay. First, this recent price drop was expected. We had already simulated it. And therefore, our strategy was to accelerate sales in '25, '26 forward a little bit this quarter in October before the wet season. So how can I say it? For 2025, our revenue is completely locked. And this price drop is good because it's an interesting time for us to run some operations to reduce risks, both in market risks and GSF. For 2026 onwards, considering the new structure of the system, we'll have increasing volatility, as Daniel said. So even with the rain, we still don't see a relevant recovery of the reservoirs. And we understand that at the end of it, there will be good opportunities for us to lock energy for the sales in 2026, noting that it's an amount that responds to about 10% of our physical guarantees. And the same thing from 2027 onwards. So, the idea was also to have the windows with a high price and low price. So, we have to be fine-tuned commercially to make the most of the windows. If the price goes down, it's a good moment for us to reduce risk and lock the portfolio and run opportunities for results. If the price goes up, we lock the revenue always at the credit limit with good liquidity with the commercial stance adapted to the market reality. But all GSF.

Good morning. So, GSF is always a concern for energy traders, especially for generators in the hydroelectric plants. The wet season now with the rains is more favorable, but it came in late, right, Rodolfo? The level of reservoirs in the system and the storage index is lower than the same period of last year. So Copel with a very well-articulated strategy has been leaving the hedge for this GSF exposure. And we expect here in the way we put it, that it's very predictable compared to the expectation of GSF for next year in the short to medium term. So, this strategy is articulated and very efficient, represented by the great success that we've seen in trading this third quarter of '24.

Our next question, [Indiscernible].

Could you please comment about the company's expectation for the curtailment levels for the fourth quarter of '24 and the beginning of '25, considering the changes in the methodology and the investment and the entry of transmission lines in the Northeast.

That's an excellent point. The curtailment is something that's been very sensitive for the entire sector. But first, I'd like to put it into context. What is the size of these impacts in the Copel environment? First, I know you keep track. And I think one of Copel's biggest strengths is being an integrated company where you have the distribution company with about 50% of our earnings in the quarter coming from distribution with an excellent performance from Vilas and the team. Then generation and transmission, we have a share of more than BRL1 billion per year on the RAP that are immune. And when you go into the generation portfolio, we have 81% of our generation from a hydro source that gives stability to the system. And this will, in our view, have characteristics to be valued and priced in the best way possible in coming years. So, in this context, 19% in an area that responds to less than 20% of the company, we've been seeing complex situations. You can see that at Copel, curtailment represented about more than 20%. So, we have a very critical period for -- and has been very restricted, and there was a delay in some important lines and the flow of more than 2 gigs. And with the entry and it's already normalized, so the energy available now at this point is smaller. But it's an inherent issue that has to have the regulatory, technical and even indemnity aspects for the different generators. We're talking about a reality of developments in Rio Grande do Norte and Ceara that are the most affected regions had very relevant impact. Even for Copel, one of the parks had a very significant process. So, what we see looking forward for '25 onwards is that this is a new reality that will remain for the curtailment tends to be an effect that's here to stay. And what we think is that there will be maybe lower levels, not so significant, not so expressive. We also expect that the treatment of this by ONS is more balanced. We had an improvement already decentralizing and reducing it for all the operators in the Northeast region, especially. But this is a reality that needs to be addressed in structural terms by ANEEL and the Ministry and ONS, and we intend to have an active discussion even with the relatively small impact. Nobody likes to leave money on the table, especially money that was not expected in the operation reality, at least until mid-last year. Bertol, please go ahead.

The effect of this curtailment hasn't affected the entire renewable generation results, especially in Rio Grande do Norte and Ceara. As you said, Daniel, the third quarter was the worst quarter for the restriction of generation, we saw smaller values last year, smaller figures in the first quarter as well, but this third quarter expanded restriction of generation due to the limitations of transmission and generation and local generation in the Northeast. But with the entry of three transmission lines on October 16, has allowed us to expand the energy transfer in this exchange between thee Southeast and Northeast regions and the Northeast and North. So that's already improved. Almost 1.6 giga to the Southeast and almost 2 gigs to the north. And there's also the expected entry of an SQV network in the state of Bahia that will also expand this energy exchange that gives us a better expectation to reduce curtailment, especially regulatory and operation actions in the system that are required to the system reclassification, and we expect ENA to be sensitive to reclassify these losses based on the regulatory instrument.

Next question, Mr. Daniel Travitzky from Safra. Please go ahead.

Good morning, thank you for the opportunity. I'd like you to please talk a little bit more about the cost dynamic. We've seen a reduction in the personnel line in line with the voluntary severance program that you talked about. But we see an increase, especially in the third-party line when we look on the year-on-year comparison. I'd like to understand a little bit more how you see this dynamic and what we can expect looking at 2025 onwards. Thank you.

So, we had a reduction, as you mentioned. And during the presentation, we saw a significant reduction due to the severance program, and we only not full it because we're still seeing it with an impact in the salary. But looking and zooming into the distribution, we have an effect on, basically related to the quality of service and Vilela can talk about it. And we also had write-offs of equipment that have affected in more than BRL20 million on the PMSO line that is related not necessarily to OpEx, but to our investment plan at the distribution company that will obviously -- that will have a counterpart at the basis in terms of remuneration.

Good morning, everyone. Reinforcing what Felipe said, we had a quarter due to the atypical storms, we reinforced our operating teams to maintain the quality of supply to our clients, and that was the main reason for the increase in the service line. And adding to that, Daniel, we're going to give you more color and more detail on all of this and how we see the projection of cost and PMSO at our Copel Day, so that for the '25 and '26 cycle. Remembering that last year, we already have that commitment to reduce by 17% with the LTM PMSO for 2023. And we are here very much in line. We are on track at this execution, as Felipe already mentioned. And we're starting to f partially this quarter, but we'll see this more clearly in the fourth quarter and especially in 2025. And on Copel Day, we'll show you the lines overall permeating the entire company with a very relevant reduction path, those BRL5 million in maintenance cost because of the real estate, selling the real estate. So, with the distribution company, there's another characteristic that not only with the climate events, but with the reinforcement and maintenance and preventive efforts as we've seen in different distributors around the country. And we also have to consider that this is the last tariff cycle -- and there must be some points of attention where we're going to have the 2025, 2026 cycle, hoping not only to reach the targets that we talked about on Copel Day 2023, but also bolder goals in that line. It's not an end on itself, cutting costs, but reviewing and removing inefficiencies from the period of the company being state, but also gaining competitiveness, moving hand-in-hand with the best reference companies. In the first quarter, we already have it in different areas, different segments and operation, maintenance of wind generation is already a reference. And we're also seeking for a general line for the company as a whole.

Excellent. Thank you.

Next question, Marcelo Sa, Itau BBA. Please, Mr. Marcelo, your microphone’s been enabled.

Good morning. Thank you for the call. I have a question about the capacity reserve auction. If you can give us more information, the invitation to bid should have been released already. We expected it to have happened this year, but now definitely only next year. And of course, there's also on the last weeks, a relevant change in the hydrology scenario. I'd like to understand whether you think there may be any implication for the amount of capacity to be contracted. I understand, I think no, but I'd like to understand your view, what you understand in the capacity for this contracted energy. And finally, if you can talk about the volume that you sold in energy, especially from '26 to '28, an idea of price range, BRL160, BRL150, considering the quarter was positive for trading.

Marcelo, for the capacity auction, the system has an urgent need, and we believe and we continue to believe that this ordinance with the invitation to be with the conditions, the lines are coming in at any time. I find it hard to believe that this will be delayed. They must do this by November. They must publish this invitation by November. And then as you said, it's going to be for the first quarter of next year, probably the end of the first quarter by the month of March. We don't have any information about the size of this, the segmentation of the products. But the expectation is that there will be a reasonable volume of hydropower plants, and we believe it will be, we expect it to be the biggest possible because they complement a lot in terms of the need for the safety of the system. So, this is urgent for 2027, '28 and also the end of '26. In our view, this is something that should take days or maybe weeks for this to be released. And as we said, we are getting ready, and we're quite advanced in order to be able to participate very competitively.

Now for the volumes, if you can give us a range or just highlights with some amplitude, not a lot, but not that little either. But for the strategy and confidentiality of this information. But anyway.

Okay. So, in major terms, we can consider not in '25 that's above the market price, but we shortened our strategy to BRL10 to BRL15 above price today. So, it's BRL26 above BRL260, BRL27 on 2050. So, it's a macro number, 25 above BRL275. So, it's around that range. Respecting the credit limit, we have to be careful with the market oscillation that comes in. There's a lot of good proposals coming up, but they're not necessarily robust. So, we have to be very cautious considering the market situation, being able to lock that and maintain the quality of the portfolio.

Excellent, Thank you.

Our next question Guilherme Lima, Santander. Guilherme, you may go ahead.

Good morning. Thank you for the question. You mentioned on the release the impact of approximately BRL30 million resulting from the differences on our generation curve and the contracts and consumption, the price difference here between the submarkets. If you can talk a little bit more about how you see this risk from now on, how it could impact the company and how you're positioning yourselves?

Great, Guilherme. I think you put it very well. Rodolfo, that would be in a trading topic that's very present in the market.

Volatility is the new normal. It's already been mentioned, talking about the sale and now a little bit about prices. That's what you said as the minimum Marcelo and everyone.

With this new reality, taking the most of the opportunities. Now about submarket and modulation, if you can give some color.

I think we've had the most critical period was September, completely different from the rest of the year and everything that we've seen for October and November. So, starting with that from September, it was an atypical situation. October has already normalized. It ends in November. I believe it will be close to zero in December. But looking at Copel's portfolio, -- we have a very small percentage of contracts that bring us this type of exposure, either modulation of the sun power generation, solar generation or -- but we've been managing this risk in different ways. The first is intrinsic to our business. The mix of sources that we have in our portfolio really helps us with that. When solar power is with a small result, we have the benefit of hydro plants or wind farms. That's the first point. Still, we've been adopting some commercial strategy to further mitigate this. First, we had an intense analysis of which customers have the proper consumption that help us mitigate this type of problem. We're working heavily in the clients to improve the portfolio in terms of energy provision and supply as well, reducing that. And as I said on the previous question, when the prices drop during those windows, there's an opportunity for some financial hedges for that type of product. Submarkets or modulation. And we take this moment to lock these positions. The 25%, if we take submarket, it's almost 50% equated and 26% as well. So overall, that's the balance that we work on. As we are not selling, we make the most to lock and position ourselves for this risk. In this amount, Guilherme, half basically was submarkets and half was about modulation. And when you only have one or two months atypical, we need to look at it as a net product. And on off on a month or a quarter, we need to look at the risk calculation to see the value that should be or would be worth considering on the annual hedging. So, we're getting to an optimum portfolio so that this exposure is the lower possible. Of course, with this consumption client, but also finding purchasing hedges when the market is at a good scenario, paying too much for that. Well, sometimes it's worth running a risk 10, 11 months in the year and having 1 month or another with a slightly higher impact.

Great. Thank you.

Our next question, Antonio Junqueira, BTG Pactual. Antonio, your microphone is enabled.

Good morning. It's great to see the company in the past months being reinforced with a lot of heavyweight people to help Daniel, you and your team on the day-to-day. So, the last announcements have been very good. And I'd like to ask a question about this specifically. Just about a month ago, you brought Diogo in. He's highly respected with a very interesting career, and he was brought in to run strategy and new business. And naturally, it made me very happy, made a lot of people very happy, of course, because he's highly qualified in his career and his intellect. And there's also a question. I mean, someone so capable to run new business. So, I'd like to hear from you. What you think, of course, about him in the company and new businesses as well. I don't know if the company is thinking about things outside of the box, maybe that we haven't identified. So first, really, congratulations. It's a very great hire. But I'd like to understand a little bit more of how you see the strategy for new business by bringing him in.

Well, thank you, Antonio. So first, Diogo very similar to you, actually, he's coming back to his origins. He's coming home. I mean, he has been through Copel not as an employee, but working at the beginning of the first tariff reviews and you're also having a great new challenge here at your new home. And Diogo lived in Curitiba for a long time. He graduated here, and then he followed his brilliant career, as you mentioned. So, people already knew him and he knew us. So, what brought him here, first of all, is a long-term vision and a belief. I mean, he was doing very well as well as the other executives that we brought in. They were all very well positioned in their previous places of work, but it's a real belief in Copel's case and the possibility for growth. But it's a belief in a growth potential in the long term. So, what's his mandate? First, he has a chair now he's a VP that is very much stronger than it was in the past because we included strategy, new business, M&As, IT innovation and digital transformation. So, it's a seat that is very adequate to his level, to his experience. So here this year, this month, since his arrival and at least for the coming year, there's a lot of processes and internal visions for digital transformation and then running this digitalization shock that we're running to provide support to the exits of so many people, the restructuring of the organization. So, the work being done from the door in is very relevant, and we'll give you more details during our Copel Day. And we also have a strategic discussion point, the strategic objectives for the long term, the year of 2030 or even further.…

Excellent. Thank you.

At this time, we close the question-and-answer session, and I will turn the floor to Daniel for his closing remarks.

Once again, I'd like to thank you all for attending our conference call. The number of attendees and questions show us how the market is very interested in Copel's case. And since this quarter here with my colleagues and the Board of Directors and the C-suite and all of the workers at Copel, we concluded another quarter of deliveries with a consistent execution of our strategic plan of what's already contracted and of other opportunities that may arise for the company, be it in terms of reorganization, structuring, efficiency gains, organic growth, and at the right time in the future, other opportunities that may come up for the company. I would like to conclude by really showing and reinforcing that we are going through this unique moment with the arrival of this new C-level that we talked about, all of the deliveries that we've already mentioned, but mostly our commitment of all of us at the Board, the C-suite, the people with a long-term vision, and we are convinced that Copel will be the major reference of the electrical industry in coming years. Thank you all very much. Have a great day.

Copel's conference call is now closed. We thank you all for your presence. Have a great day.