Companhia Paranaense de Energia (ELPC) Q2 2026 Earnings Report, Transcript and Summary

[Interpreted] Good morning, ladies and gentlemen. Welcome to the Comphania Paranaense de Energia Copel video conference call to discuss the results of the second quarter of 2026. This video conference call is being recorded, and the replay 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 emphasize that any forward-looking statements made during this conference call regarding Copel's business outlook, projections and operational and financial targets are based on beliefs and assumptions of the management and on information currently available. Such forward-looking statements involve risks, uncertainties and assumptions because they refer to future events and therefore may differ materially from actual results. Presenting this video conference call are Mr. Daniel Slaviero, CEO of Copel; and Mr. Felipe Ramella, CFO, as well as the general managers of the subsidiaries who will be available for the question-and-answer session. I would now like to turn the floor over to the CEO of the company, Daniel Flavio, who will begin the presentation. Mr. Slaviero, you may proceed.

[Interpreted] Good morning, ladies and gentlemen. Thank you all for joining our conference call. We have delivered another quarter of strong operating results, and this reflects our discipline in executing the company's strategic plan. The main highlight of the period is without a doubt, the completion of the tariff review of Copel Distribution. This effort was led by our Vice President of Regulatory Affairs, Andre Gomes, and received the support and direct involvement of virtually the entire company. It was a flawless process conducted on strictly technical grounds and recognized the efficiency of Copel Distribution's investments during this last tariff cycle. We achieved a remuneration base of close to BRL 20 billion, a significant increase. In fact, more than double the 2021 base. This result underscores one of the key characteristics of this management team, i.e., excellence in delivering on the commitments made to the market. In this cycle that is just starting, we will maintain the same discipline in capital allocation and our constant pursuit of efficiency. However, following this tariff review, we are now facing a company of a different scale, one that is stronger and more resilient, whose primary objective is to provide better service to its customers and ensure energy quality and assurance for the state of Parana. Speaking a bit more about the quarter's results, another very positive factor was energy sales made during the period, which allowed us to capture approximately BRL 75 million in market opportunities, BRL 52 million from hydro modulation and BRL 23 million from submarkets. This reinforces the premium position of our Southern Southern-based hydroelectric assets. This performance, combined with the 7.2% growth in Copel DisCo built market directly contributed to boosting our second quarter results. As a result of this efficient operational performance, EBITDA reached BRL 1.6 billion, close to 21% increase compared to the same period last year. Recurring net income reached BRL 645 million, representing a 42.6% increase. This performance reflects the robustness of our business model, the strength of being an integrated company as well as our discipline in cost management and capital allocation. This to us is a reference, a mission, a purpose. Something that is very strong about this management team, discipline in capital allocation and value creation for our shareholders and all our stakeholders. In terms of CapEx, we invested BRL 957 million, almost BRL 1 billion in the quarter, of which BRL 318 million allocated to the start of construction at Foz do Areia and Segredo. We maintained a sound capital structure, ending the period with a leverage ratio of 2.9x net debt over EBITDA, perfectly aligned with our new optimal capital structure parameters. Finally, regarding shareholder remuneration, we declared BRL 706 million in interest on equity to be paid in September 2026. In addition to the BRL 1 to BRL 1.35 billion in dividends paid in June corresponding to the statement already disclosed at the end of 2025. Now I'd like to speak a little about El Nino and its impact on the sector. So we would like to share how we are preparing for this climate phenomenon. First and foremost, I would like to note that NOAA, this renowned institute has confirmed an 81% probability of strong or very strong intensity of El Nino from August through the first quarter of 2027. Our approach focuses on the preventive management of the asymmetric regional impact of this climate phenomenon. In the South, where we concentrate our main operations, high rainfall is forecast, especially between August and November with heavy rains in the Southern and Paranapanema basins. In the Southeast and Midwest, high temperatures are expected, particularly in Q4, driving up the system load. These dynamics dictate our commercial and operational strategy. As indicated by the curve, higher rainfall tends to cause a cyclical decline in short-term prices. However, in our view, this fluctuation is temporary and will have no impact on our balance sheet without changing the expectation of higher prices in the long run. And this change will not impact our short-term contracting because our balance sheet is protected and locked at attractive prices. On the other hand, the increase in load caused by heat waves will trigger hikes in hourly prices in the short-term market due to the sudden demand for power. With our reservoirs full in the south and high operational flexibility, we will be ready to capture the short-term price spikes, converting volatility into operational margin for Copel. In summary, Copel's portfolio is protected against structural price declines and is fully positioned to extract value from our hydroelectric capacity during times of peak in the system. Not to mention our assumption, we're never short. We always have a natural hedge for GSF. And so that we have the possibility of supplementing the short-term market. And to close, talking about Copel distribution, our top priority is to ensure the safety of the population and the continuity of power supply and to respond quickly and in a coordinated manner to extreme weather events, we maintain a permanent contingency plan structured around four pillars. Operational reinforcement. We hired more than 100 new crews. We have practically 900 crews, both in-house and third party to provide full service in our concession area. Vegetation management, we brought forward our annual planning and carried out more than 600 joint efforts with local governments in the agricultural sector to a contact from vegetation with the grid, focusing on high-risk areas. Infrastructure, we bolstered our inventory to quickly restore the grid. And we reinforced our inventories to repair the network with agility. And at the operations center, we expanded our team of new operators to ensure uninterrupted monitoring and a 24/7 operation. Our priority during these extreme weather events is to quickly replenish the grid in our priority is to reestablish power to our customers. And to conclude this topic, I would like to announce the arrival of a new executive on the general management of Copel, Mr. Dennis Mulica, who's sitting next to me with extensive experience in the electric power sector, he join us to further improve the service we provide to our customers. So he was already in our -- part of our staff, and he is taking over the position previously held by Marco Antonio Villela, whom we thank for his important contributions and the results he achieved for the company. We also thank Executive Karine Torres for all her dedication and hard work in the operations and maintenance division. As we move towards my final part, -- you will recall that we've always stated that our transformation process occurs in waves. In the third wave will be marked by asset expansion with strict discipline in capital allocation. The LRC auction results are further proof of this management's team excellence in delivering results. We will expand our two largest power plants with a CapEx of around BRL 5 billion and a highly attractive return. In the second quarter, as you all know, ANEEL approved the results of the bidding process, BRL 318 million to start the construction work. The construction work is starting so that we can have mobilization and follow the schedule and follow Copel's tradition, which is always to deliver a little more than what we promised. And we have adjusted our leverage benchmark from 2.8x to 2.9x net debt over EBITDA ratio and extended the convergence period to the midpoint of the range to up to 48 months and Felipe will address more about this. We believe this time frame is better suited to the characteristics of the infrastructure sector, particularly in the energy sector and something very relevant. It is important to note that our dividend policy remains strictly unchanged. We have maintained the guidelines of a minimum payout ratio of 75% and at least two annual payments, ensuring predictability and consistency for our shareholders. In other words, we will make at least one more dividend declaration by the end of 2026. And our current capital structure balances three pillars of our strategic plan with the flawless execution of our investment plan, combined with solid financial discipline and a commitment to generous returns for our investors. Before turning the floor over to Felipe Gut, I'd like to reiterate an important invitation. Our Copel Day confirmed for November 19 live from the NYSE in New York. We look forward to seeing all of you there, whether in person, if you can be there or via the online broadcast. It will be an excellent opportunity for us to discuss our long-term strategy, growth opportunities, capital allocation and our value creation agenda. Now I will turn it over to Felipe to present the financials for the quarter. Thank you.

[Interpreted] Thank you, Daniel. Good morning, everyone. I'd like to begin by reiterating the point Daniel mentioned regarding the update to our optimal capital structure. The review of these parameters takes place annually as we've widely discussed when we disclosed the optimal structure and was also driven by the success of the LRCAP 2026. The financial modeling of a robust investment plan and the cash flow from the LRCAP, which is expected to begin as planned at the end of 2030, combined with a more challenging economic environment required us to test our capital structure under multiple scenarios and stress tests. The new leverage target of 2.9x reflects this rigorous planning, ensuring the flexibility needed to capture opportunities while maintaining financial discipline and a focus on shareholder returns. The convergence timeline for the target up to four years. And here, I emphasize the up to four years gives us a more flexible period to converge, providing us greater room to maneuver. In this regard, our minimum payout policy of 75%, which already stands out as one of the most competitive in the industry remains unchanged. However, the flexibility provided by the new leverage ranges naturally allows us to evaluate on a case-by-case basis and as balance sheet conditions permit the best use of any excess cash, including potential additional distributions. Detailing our Q2 '26 results, I'll start with consolidated recurring EBITDA, BRL 1.6 billion in Q2, 21% up compared to Q2 '25. I would like to highlight the simplicity of our business model, Copel DisCo and Copel Generation and Transmission together accounted for BRL 1.603 million, representing nearly 100% of the consolidated EBITDA for the quarter. This reinforces the consistency of our results, which stem directly from our regulated assets and cogeneration operations. In terms of performance by business segment, the EBITDA of DisCo grew 34.5%, reaching BRL 765.6 million, driven by a 7.2% expansion in the build market and the ongoing effects of the [indiscernible] 1.3% adjustment to Portion B related to RDA 2025. EBITDA of the Jet rose 10.1%, reaching BRL 838 million, benefiting from the adjustment to transmission ARPs and the increase in the average price changed under the ACL. In the other units, Elejor generated BRL 29.1 million. Copel Comercialização totaled BRL 21.4 million and the holding recorded a loss of BRL 46.2 million, a deterioration of BRL 8.7 million compared to last year. Breaking down the results by business segment, I'll start with Jet. Looking at the generation and transmission in detail on Slide 10, Copel Jet reported recurring EBITDA like I said, BRL 838 million, up 10.1% or an additional BRL 76.8 million compared to Q2 '25. This performance was driven by three factors: first, an increase of BRL 85.1 million in revenue from bilateral contracts and ACL quotas resulting from an average 6.4% adjustment in sales price, offsetting the planned 7.8% decline in billed volume. Second point, the BRL 70.2 million increase in revenue from grid availability, reflecting the full consolidation of Mata Santa Genebra and the inflation adjusted increase in transmission APR. Third point, a reduction of BRL 6.4 million in purchased energy costs, thanks to favorable hydrological conditions that generated an average GSF of 99.6%. On the management side, the segment's recurring PMSO fell by 13.7% down 6.3%. On the downside, we saw lower revenue, a decrease of BRL 35.2 million due to the reduced impact of modulation and the impact of curtailment determined by ONS, which rose from 15.7% to 23.7% during the quarter, resulting in an impact of BRL 34.8 million negative. Talking about Copel DIS, we reported a 34.5% increase in recurring EBITDA, reaching BRL 765.6 million. The main factors were 7.2% growth in the build grid market, driven by strong economic activity and higher temperatures at the start of the quarter and the average 1.3% tariff adjustment for Parcela be approved in June '25. We also saw an increase of BRL 15 million in other operating revenues, primarily from infrastructure sharing. On the expense side, the distributors recurring PMSO decreased by 0.4% or BRL 1.8 million, confirming that the focus on cost management and operational optimization continues to generate consistent results. Turning to our energy trading strategy. We remain focused on capturing the best market opportunities while maintaining flexibility and creating value. from our long-term energy availability. As the main highlight of the quarter, we made progress in energy sales from the 2027, 2028 period, representing a volume 4x greater than that achieved in Q1 '26 with a 6% Higher P-MIX, reflecting our commercial discipline and our ability to take advantage of favorable market conditions to maximize the monetization of available energy. It is worth noting that most of these negotiations were focused on 2027 as part of a proactive portfolio management strategy, anticipating potential impacts from price volatility associated with the weather conditions forecast for next year, including possible effects of El Nino. Another key point is maintaining a conservative risk profile. Our operations are conducted with low credit risk, supported by a robust credit granting and monitoring policy and specific indicators aimed at mitigating commercial risks in energy sales. As a result, we -- of course, you can see we recorded a delinquency rate of just 0.01%, underscoring the quality and strength of our portfolio. During the quarter, we also capitalized on opportunities arising from favorable market conditions, generating BRL 75 million in revenue from hydrological modulation and submarket activities, demonstrating our ability to extract additional value from active portfolio management. To conclude this topic, we present our energy balance sheet, which remains anchored in two pillars: protection against short-term exposures and energy availability to create long-term value. We maintain 20% hydropower availability to 2026 a level consistent with our safety limits given the GSF expectations for the year. In addition, we maintain an uncontracted hydropower portfolio of over 40% starting in 2028, ensuring commercial flexibility to take advantage of future opportunities in scenarios of price volatility and hydrological risk. Moving on to PMSO. PMSO totaled BRL 701.9 million, and the main positive impact came from the other line item, which saw a decrease of BRL 35.1 million due primarily to lower losses from asset decommissioning at the distribution company and a reduction in collection costs. This reduction offset onetime pressures on other fronts. We saw an increase of BRL 10.3 million in third-party services at Copel Disto focused on network maintenance and upholding our quality indicators, DC and FAC. We also recorded a BRL 5.4 million increase in materials at Jet for the maintenance of wind power assets. Personnel, social security and benefits category, there was an increase of BRL 12.9 million, resulting mainly from the 5.1% wage adjustment under the collective bargaining agreement. This impact was partially offset by productivity gains and improvements in our administrative processes. In a nutshell, we demonstrated balanced cost management, investing in service quality and asset maintenance while maintaining strict control of operating expenses. On Slide 14, we see recurring net income that totaled BRL 645.1 million, up 42.6% compared to Q2 '25. This performance was driven by operational improvements with BRL 277.6 million increase in EBITDA and by a BRL 219.8 million reduction in tax payments resulting from the tax benefit obtained from the -- when we declared interest on equity in the quarter. These positive effects offset the BRL 45 million increase in depreciation and amortization expenses in line with the expansion of our in-service asset base at a Disto and BRL 251.4 million decrease in recurring net financial income impacted by interest expenses resulting from the company's higher average debt balance. CapEx expenditures totaled BRL 957.2 million for the quarter. Of this total, 50% was invested in Copel DisCo around BRL 479 million, primarily directed toward grid modernization and system automation to maintain our main focus, preserving our quality indicators, DEC and FEC. At JE, investment totaled BRL 476.4 million, notably BRL 318 million allocated to begin funding the capacity expansion of Foz do Areia and Segredo hydroelectric plants in according with the LRCAP. To conclude my presentation, Slide 16 shows our debt profile. We ended June with adjusted net debt of BRL 19.6 billion and the leverage ratio of 2.9x exactly at the target set by the new optimal capital structure consolidated now in July. Our debt is primarily indexed to CDI, 65.7% and the remaining 31% indexed to IPCA. So, we have a percentage in CJLP. The average nominal cost of debt fell to 12.92% per year, equivalent to 91.33% of the CDI, representing a decrease of two basis points from the 13.54% recorded in June of last year. So, this comes in the right direction of increasing the duration of the debt and improving its cost. And talking about duration, we maintain a comfortable duration of 5.2 years, which provides us with full liquidity and financial security to support our investments and expansion projects. With that, let us start the Q&A session.

[Interpreted] [Operator Instructions] Our first question is from Ms. Maria Carolina Carneiro with Safra.

[Interpreted] Actually, I have two questions. My first is -- I know you mentioned in the beginning of the call, the slight change flexibilization so that you can have more time to comply with the leverage range that you mentioned. The dividend payout policy derives from that. But perhaps you could comment on what actually triggered that change. We had some noise in the market soon after the announcement. Some investors were concerned that this would mean a reduction in dividend payout or a scenario looking forward. So, could you elaborate on that? Have you changed your thoughts about the dividend payout policy? Or is there anything related to the scenario, anything that you think could trigger some changes, if that makes sense. And two, we have seen a macroeconomic environment that is deteriorating. Some companies are worried about delinquency. I think that in the energy sector, this thing is always present. And there is a public hearing open in the regulatory calendar with some possible changes and discussions, which are relevant. And I think that allowance for bad debt is in the agenda. So, what can you talk about this thing? Can we expect a reanalysis by the regulator or the placement of electronic meters in the future, if this will be explored by the regulator? Anything that can help us understand -- what could be the delinquency outlook given the current scenario and how the regulator is seeing this topic?

[Interpreted] Excellent, Carol. Thank you for the question. It's an excellent opportunity that you're raising this optimal structure point. There was a small repercussion and some doubts regarding the main goal of this. And actually, the factory in -- Filipe is going to give us more detail. Well, it's -- the target is that we will provide guarantees that our plan, our vision and our capital allocation strategy and shareholder remuneration strategy all remain unchanged. First, the generating factor is that annually, we're going to review it. But the main generating factor this year was the win of LRCAP, the auction that brought us a good capital allocation with excellent return and an expectation of relevant cash flow, particularly starting 2030 when the works will be completed. So, when we do this update, we bring it to an optimal structure of 30 basis points more or less. And the big change was the term increasing from 24 to 48 months so that we can accommodate this investment cycle. In our view, the maintenance of our commitment with the dividend policy with a minimum payout not only remains, but this change to 48 months actually gives us more room for us to converge at the end of the cycle and to continue to have a bold remuneration for our shareholders. So, in a way, this is kind of strange, this slight repercussion. We saw on the day that we disclosed this was unexpected because the new structure will give us a guarantee security and room for the company so that in periods of greater investment cycles, we can operate at the upper band. And then we would have a quick deleveraging, a quick cash generation. And to close -- because I think that this is an important topic. With this policy and with this kind of predictability and minimum dividend payout, what we aim is that our investors will not face hiccups of having too many ups and downs. Our goal is always to have some kind of stability and predictability, always ensuring that our priority is good capital allocation, balancing this with a remuneration that in our view is adequate because we're talking about a mature company with assets and high cash generation. And the beauty of our business case is that we can balance both. And we have cycles where one is going to be focusing one way or another but always having a leverage target of 2.9. I give you more detail, but I invite my officers to complement because you were leading this work, which provides us with a great level of transparency and the level of predictability that we like.

[Interpreted] I can add. We thank you, Carol, for the question. Well, you see our interpretation is exactly different from possibly the interpretation in the market that created some noise regarding our dividend payout policy or even regarding the expansion of the band. Well, this expansion of the band combines two great moves, a natural deleveraging of the company that came from a tariff review and investing BRL 5 billion for LRCAP with a lot of value creation post 2030 once the investments are made in Foz do Areia and Segro. So, these four years of investments were considered in our calculation when we redefined the convergence term. It's not that we increased from 24 to 48 months. It's up to 48 months, which includes 24, 36, 12 months, depending on how we manage convergence of the leverage of the company. That we envision some periods where the company may work with a higher band of leverage because we will need to be making a lot of investments that will create a lot of value. When we review that range of that band, that gives us more room in the balance sheet to execute some optionalities. And of course, one of the optionalities -- one of the option is payment of dividends. So, I stress minimum dividend payout of 75%. No change regarding that with a band, which is slightly more flexible considering leverage and the convergence time frame. All of this gives us more room to execute the options, the optionalities than in the previous version. And I think that with that, we kind of cleared the doubts. In other words, none updating the policy could generate some kind of pressure. By updating it with the band and the new band and target, we continue to pursue a strategy of creating value and capital allocation. Your second question, Carol, was regarding allowance for bad debt. This is a sectoral structural discussion. We've been following up close. For the record, I'd like to say that we see severe delinquency or liquidity problems in several trading companies and several players in the market, but Copel has 0.01% delinquency rate. This is in our trading company with Rodolfo and [indiscernible] team. This shows a discipline for 2.5 years, almost three years, we did a broad review of our credit processes, and we kind of expected some kind of instability, and we always wanted to keep the company in a more conservative position. And I think that our measures have been shown to be very healthy for the company. As regards to general bad debt, and the macro discussion involving ANEEL, the regulator. Fortunately, we are in a concession area with very low levels of delinquency below 1%. But of course, we are paying attention. We had a relevant tariff review here recently, and we will be monitoring how the impacts will be. But I believe that Copel, given the general condition, either because of our concession area or because of the characteristics of the people of Paraná, our population always wants to keep their bills paid. We at Copel have had much lower rates than the average national rate. And I see that the regulator is very much concerned about delinquency and these discussions will progress. Over the coming months, we will be monitoring this, and we'll be keeping the market up to date. But I'd like to stress Copel enjoys a more privileged position in that regard.

[Interpreted] [Operator Instructions] Next question from Mr. Guilherme Bosso with Goldman Sachs.

[indiscernible] On the results. I have two questions. First, about capital allocation. I'd like to understand how the company is thinking about possible M&A opportunities. Is there any conversation ongoing with players that come eventually to the market? And in parallel to that, how are you thinking capital allocation in hydropower plants that can be in a bidding process and also about the auction of batteries. My second question is about costs. We saw the MSO really well. Should we continue to see reductions in the coming years? Or do you think that the company is operating at adequate levels for the next few years?

[Interpreted] Thank you, Guilherme, for the question. You have two questions. So, they have several angles. So let me try to be objective and address them. Capital allocation and possible M&As. At this point, we don't have anything tangible either in the pipeline or in any advanced stage of studies. We are having a cut from the company. Well, we have not seen any asset in the market that is worth our deep attention. Of course, Dog and the whole team, they are always paying attention to possible opportunities. But today, in the practical terms, we haven't got anything concrete in our pipeline. That's number one. And regarding this discussion of hydropower plants, possible bidding powers that can be brought forward by a new administration in an attempt to improve the fiscal situation of the federal government. We understand that these discussions are legitimate, but our position, and we will defend that in a clear and transparent way is that if this is discussed bringing the bidding processes forward that this should be done in a competitive way because this will help generate more resources transfer of rights and more funds for the general -- for the federal government. We've seen this happening very clearly by a guidance of the Court of Accounts. Look at what happened in the highway sector with [indiscernible] all of the assets that went through renegotiation. All of that was opened to a competitive market. So, this is a guideline from the TCU, the Court of Accounts. We think it is unlikely that any different interpretation will happen for the energy sector. And we have opportunities of -- we have to have an opportunity for other players to show interest and to bid. If these discussions about rebidding or bringing forward the bidding process of hydropower plants, this will be at the top of our agenda in terms of capital allocation, growth and what we talked about reversible plants, the LRCAP auction it's a reserved auction. It's proof of that we have more than two kick in cash and other projects prepared for new capacity auction. And Copel already has advanced studies for reversible plants. Practically, we have practically four gigs considering semi-open and open projects for that we consider this to be a great avenue for growth. It's a big theory for our capital allocation. And going to the end and Felipe will speak about the MSO. About the batteries auction that will take place on December 2 and 4. We understand that in the storage auction, reversible and batteries, they have complementary characteristics. They each have a profile. We have a contribution to the system. We don't see a competitive advantage in the batteries auction given the low entry barrier. The amount of projects submitted shows that competition will be aggressive. 70%, 80% of these projects are just paper -- projects on paper, but still, we are going to have a lot of competition. And this indicates that the returns for that auction will be below our minimum expectations. Therefore, the probability of Copel not participating is really high. This is not a final decision by the management, but it all points to the fact that we will not take part in the batteries auction because the return expectations will be below our minimum rate. In our view, the returns will be below the returns of transmission auctions, which already have high competition. In the next auction in November, we don't see any lot which is very strategically attractive for us or that could lead to good capital allocation for us, either in transmission or in the batteries auction. Felipe, PMSO, what can the market expect looking forward?

[Interpreted] I think that in terms of PMSO, we are obviously following our target of reducing costs. Of course, there are pressures, both in terms of quality and also related to the El Nino phenomenon because that will influence the level of reduction this year. In Copel Day last year, we said that starting this year, we would change the concept. We will be speaking a lot more about efficiency rather than cost reduction. So Guilherme, we are getting to that level of having an optimal level of PMSO. And then we will start having a debate on efficiency. And there, we should have other KPIs, other metrics to measure that. It would be free cash flow and return on investment, as we mentioned. And, [indiscernible], if you have anything to comment, please feel free.

[indiscernible] Particularly regarding generation and transmission. I think that Felipe put this really well. This chapter of structural cost reductions. This is a chapter closed after three years of intense work on that. This efficiency agenda is a permanent one. So, controlling costs have zero-based budget, always seeking efficiencies, particularly with this wave of artificial intelligence that can generate opportunities. But now we're thinking a lot more on how we can extract value. And Copel will always be a benchmark for efficiency. So how can we reconciliate this, and all of the extraordinary results of our remuneration base. coupled with something that is dear to our heart, providing good quality service to our customers. We are in the concession area. In the state that grew 7.2% with a booming economy, a diversified economy and which has in agribusiness, a strong driver. practically 1/3 of the Paraná state GDP comes from agribusiness. So, this is a segment that is growing a lot. We even launched Copel Agro. These are all measures for us to provide the best service because we understand that the company that provides service well above the regulatory requirements, always maintaining discipline in capital allocation. We have a capital advantage, also for our expansion projects and our growth projects in distribution. So, I just wanted to mention this because we combine a permanent efficiency agenda with excellent service to our customers. This is a key priority for us. It's one of the values and part of Copel's strategic vision.

[Interpreted] [Operator Instructions] Next question from Bruno Amorim.

[indiscernible] I'd like to go back to a prior point you mentioned the base case for rebidding generation assets. In railroads, we saw some renewals. We are seeing some concessions moving to rebidding. In highways, we also had rebidding, as you mentioned. In electricity distribution, we saw a number of renewals. Could you elaborate on this trade-off for generation? In your view, where would generation be in the spectrum of different concession models? And why would it be advantageous to rebid? What would be the pros the cons of rebidding. Is there any risk of investment in the current phase of the concessions? So if you could share with us your views of how and why it makes more sense to rebid the assets, that would be very much appreciated.

[Interpreted] Well, clearly, this is an excellent question. And Kopel's opinion is very much aligned with what happens in the other sectors of the economy. Every concession has its own characteristics, a generation concession, if you change the operator the burden of costs will be very different than in distribution. Well, is the characteristics of the concession. That's why in the distribution process, we see this process of renewal of the current operators as being very natural. Historically, when we think about concessions of electric power, given the characteristic of the grant of the concession, when you have competitive processes, this brings more benefit to the federal government, to the granting authority and to the fiscal situation. So, this is, at the end of the day, a decision by the granting authority together with the control bodies, they will find the best way to proceed. But we have an interest, and we believe that an open competitive process open to any operator that provides the minimum conditions, financial capacity and technical know-how. Well, this tends to bring more benefits for the granting authority and the federal government. So, this is very clear and transparent in our mind. And it aims to bring better results for the granting authority. But again, this is not a decision up to us. It's -- it's up to the granting authority. And we've seen this happen several times in the past, several assets that were coming to the end of the concession. They had either a new bidding process in the end or an anticipated bidding process with capacity in other segments. And we saw that this brings more benefits for the granting authority. And that's the difference between generation and distribution, and that's why we advocate this thesis. Now of course, the final decision is in the hands of the granting authority.

[indiscernible]The Q&A session has ended. I would now like to turn the floor to Mr. Slaviero for his final statements.

[indiscernible] Very well. We have delivered another quarter that only reinforces our reputation as a company that has excellent operation of its assets and absolute capital allocation discipline. As we enter this new cycle of good investments, good capital allocations as was the case of LRCAP auction, our ultimate goal is to continue to create value for our shareholders, employees and particularly for our customers and for society as a whole. We are very proud of posting another quarter with predictable earnings, solid growth and like I said, good capital allocation. If we compare with a Swiss watch that always delivers what it promises, we are also delivering on our promises, paying attention to opportunities and pursuing opportunities. We think that this summarizes one of our main assets, which is the ability to deliver to the promises we make to the market, for our shareholders, to our clients and to society as a whole. Again, I would like to thank you very much for participating in our earnings conference call and myself and all of the executives and all Copelans of Copel will continue to work to face the challenges and deliver the best results for this beautiful company, which is Copel. Thank you very much.

[indiscernible] Copel's earnings conference call has come to an end. Thank you very much for participating, and we wish you all a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]