Companhia Paranaense de Energia - COPEL (CPLE3) Earnings Call Transcript

Good morning, everyone. I'm very happy to welcome you here in our headquarters in Curitiba. And I thank you all who are watching online. This is the first Investor Day since COPEL became a corporation. And we're very excited to share with you all the developments that happened in the company. Today is November 22. Exactly 1 year ago, we had our COPEL Day in Sao Paulo, and so much has happened in this last 12 months. We have historical responsibility to place COPEL at the next level for Copel for the State of Parana and for Brazil. And as a private company, COPEL is entering a new level of performance management delivery of results and value generation. So let's start by sharing today's agenda. We'll have a talk by the Chairman of the Board Marcel, then I'll talk about value generation. Moura and Ana Letícia talk about people. Cassio, investments and innovation, then a short break. And we will hear the general managers of our subsidiaries, Moacir for perspectives and Maximiliano. Then the Q&A and then the online transmission is ended. But those who are present will have a roundtable launch and continue discussions individually. So after the announcements let's start. So I'll invite Marcel Malczewski to talk about the Board's view. Good morning, Marcel.

Good morning, everyone. Thank you on behalf of the Board of Directors for attending. We have analysts, investors, the officers of the company, our Board members, fellow broad members and the -- so many important people present here for our COPEL Day of 2023. We thank you all who are attending online as well. We have a full audience. It's always good to have a full audience. We're very happy today with your presence in this COPEL Day because this is a different year in the history of the company. Maybe except for the foundation of the company, the most important year for COPEL because this is the year in which COPEL became a corporation without defined controlling shareholder, an appointed one. So the responsibility, that we at the Board of Directors have increases considerably. Of course, we have been working on that since I became Chairman of the Board; and Daniel, the CEO. But we've been working to develop the company for its independence. But now the game changed because we have to be even more responsible and naturally pay more attention to the shareholders, market analysts. So it's a different game now, as you know so well. So this transformation process in a true corporation was done in a record time because when the bill of law was sent to the -- come to Congress until this picture was taken less than 9 months past. Of course, previously, we had a long planning time and we executed this plan with the government of the state 9 months before this picture was taken. So we have Ratinho Júnior, the Governor of the State and I would like to say to -- as to all of you, a process like this does not take place without the leadership and the leading role played by the State Governor who represented the controlling shareholder of the company up until then. So he was key in this process, and we must recognize that because transforming a company that's government-owned into a private company, it's not an easy task, but we were able to do that with hard work, but with the leadership of the State Governor. The challenges we have now are big, but the opportunities are also large. The role of the Board of Directors changes, we will have to pay more attention to market analysts, investors. And as any other company I come from the technology area from the private sector. I have worked in public companies, and I know that listed companies. And I know that we have to pay attention to shareholders, analysts, and listening to shareholders more than before as well as investors. We have major opportunities ahead of us, opportunities to gain efficiency, Moura, as Moura will tell you. We have growth avenues but we'll focus on capital allocation and internal adjustments that we have to make in order to become more productive and efficient immediately after the privatization of the company. We do have other challenges as well. We're going through a period, both globally and in Brazil of radical changes in technology, energy transition, new technologies, storage, transmission, new ways to generate energy, digital transformation. I always say that it's important to accelerate the digital transformation process and innovation because we need that to achieve our goals. And Copel has all the conditions to become a leading player in the energy industry in Brazil. Now talking about this transformation process into a corporation, I would like to remind you that the follow-on that took place in August was the largest offering of utility company in Brazil, the second largest in volume in 2023 and the third largest offering in the electricity industry worldwide. So it was quite significant. To wrap up, I'd like to say that the Board of Directors of COPEL is working very hard. I say that the Board of Directors and the Board -- the Chairman and the Board must be like a soccer team. At the end of the game, nobody remembers who was the umpire. The umpire gave us some red cards, yellow cards, but nobody saw the umpire working so well because he did such a good job. That's the role of the Chairman and the role of the Board. But we'll keeping track of what's going on and helping the Board of officers to do their job. And so finally, I would like to say that today is an important day not only because it's a COPEL Day, it's COPEL Day, but it's because it's the birthday of our dear CEO. It's his birthday today. He's turning 43. He's embarrassed, that's impossible to make you embarrassed. So have a great event. We have many Board members present, all the people watching online. And I hope you all have a great COPEL Day, will be very productive and full of information. Thank you again for attending.

Marcel, it's always great to hear you and see your energy and having the Board supporting us, they're so competent and experienced professionals, under your excellent leadership you are a major entrepreneur in our state in Brazil. Okay, let's start with -- by playing a video with the main achievements of the company in these last 5 years. One of the largest integrated energy groups in Brazil, present in 10 states, recognized in Brazil and abroad. Welcome. We are COPEL, now a corporation, more agile, and competitive, consolidating a governance path that has been adopted since 2019, cutting costs, gaining efficiency, low indebtedness, and robust investments. review of our portfolio, total focus on energy. Right from the start, the new model ensures the renewal for -- of concessions of Foz do Areia, Salto Caxias and Segredo for another 30 years. Together, they account for 62% of the entire generation of the company. In the last 5 years, the generation increased to 7 gigawatts, thanks to new developments, and we have new SHPs Colina and the wind complexes of Cutia, Bento Miguel, Vilas, Aventura, Santa Rosa and Mundo Novo, Jandaíra. Today COPEL has 1.18 gigawatts of wind power being the second largest generator in Rio Grande do Norte, the benchmark for wind farms in Brazil and has 10,000 kilometers of high-voltage transmission lines that help to provide energy to Brazil. COPEL is growing also in the free energy market, which covers 38% of Brazilian consumption and will grow even further. As of 2024 with access of small and medium consumers and later on of residential customers. That's why COPEL is accelerating its digitization process and ensures easy access for customers, whatever the demand for energy is. Since 2019, COPEL has increased the customers to 5,000 -- 5000 new customers and is investing to grow even further in its concession area, the State of Parana, the fourth largest GDP of Brazil and a growing population Parana has a diversified economy and growing largely among its most advanced worldwide. It's agribusiness, feeds, state-of-the-art industry, growing exports with a large and diversified industrial park, the state is the second automotive center of Brazil, and it's also an important logistics center given its privileged geographic positioning. All of that makes Parana state a larger and larger energy market with major advantages for Copel. In face of such high demand, Copel is renewing its assets with the largest modernization program for rural areas with the automation of 3-phase networks to replace the mono phase one to ensure the energy that the rural areas need. And it's implementing the most ambitious automation project, total monitoring and information at the speed of light, it's a total revolution in customer management. At the same time, the system is more reliable. This is the innovation that's part of COPEL's DNA, and it's reflected in every field it operates. In the innovation COPEL Volt program, in the venture capital for startups, in the new front for research and development, COPEL has become public and was the first company to join the New York Stock Exchange in 1997 and has been in Europe at the Madrid Stock Exchange since 2002. In addition to updating its dividend policy, it created a people committee to value its greatest asset people, with a strong governance and rigid compliance rules, they are crucial for the company to remain safe for more investors and customers. Organized in 1954, COPEL is a benchmark in sustainability. Since the beginning, it has done what people are now calling ESG. It has a major social and environmental inventory and invests in human rights and the code of conduct to prevent ethical problems, and it values its people, a company of clean energy that's firmly aligned with 0 carbon goal by 2030. Now a true corporation, COPEL start its 70th birthday or anniversary with a permanent commitment to innovation, customer as a priority and income management ready to grow and ready for the future. COPEL, pure energy. All this video is translated into these chart here, this graph. In 2018, COVID, our value generation and this period. The offering took place in the best moment for valuation of the company. This is only the new benchmark for value generation, BRL 8.25 and up. All our history of the results delivered, give us credibility and reputation for what we'll do in the future. And a large part of it will be presented to you today. Here at COPEL, we have this major responsibility to be this new reference for creating value, starting with the follow-on. We are always seeking to be agile, more efficient, more dynamic to face the challenges of the industry that you may know they're not small. And the opening of the market, we're going to talk about that. But also it's complex to operate. We see that with intermittent sources of energy, MMGD, wind and solar energy. The system became more complex. The O&S is having difficulties in dealing with that as well as the hydro power plants that play an important role. We are in the contest of excessive energy and [ Danilo Force ] saying that will be a bill of laws with 4 articles only. The problem is with how many articles this bill will be passed, especially by extending subsidies that are not necessary and pose a burden to consumers. Regardless of the scenario, COPEL will be ready to face all the strategic challenges of the industry and grow. The essence of our vision of the future and strategy remain the same: focus on electricity an integrated and synergistic action with the generation, distribution and commercialization business, focus on the customer experience and mainly people as a competitive differentiation. Here, I must talk about the quality, technical quality of our orange blood people, those who work for us with this transition of all the extreme climate effects flooding, tornados, cyclones, COPEL is always giving the right answer. This is what makes it so important in the Brazilian scenario. We understand that efficient performance of our assets and our discipline are the levers to generate value in this new moment of the company. Our success has been and has always -- will always be in the impeccable execution of our business plan. Some important news is that since last week, COPEL has been a part of MSCI, which is a global index providing more visibility to international investors and more liquidity to our shares. As for value generation agenda, this is where our pillars like efficient allocation, structure, balanced structure of capital in addition to operational efficiency and people management. Our executives will provide more information about each of the pillars and all the related initiatives in the next panels. However, these are the main priorities of the cycle '24 '26, all efforts, attention, KPIs, variable compensations will be connected to this list of actions. Shall we start with the role of the holding? And we talk about number 2 and so on and so forth and we are going to follow the agenda as we said in the beginning. And this is something that we've been discussing since the roadshow, which is the revision of the role of the holding. We have a very strong vision of the holding. We understand that the holding has to be lean, strategic and that can provide support to our businesses. This is the role of the holding. We have a very strong position in relation to integrity, compliance, this is nonnegotiable. These are characteristics that are part of COPEL's culture. And without losing sight of the accountability, business unit directors and the teams, especially the General Manager is the final person responsible for the operating result, the EBIT in other words. And this is our vision, being lean, providing support to the businesses because wealth is created and destroyed in the businesses. And some other idea that came up from this review of all the businesses is that we found improvement opportunities when we incorporate COPEL of the trading unit inside the holding. And we are going to provide more details about the benefits of this likely incorporation, I would say. Now talking about the organizational chart. This is based on benchmarks in the sector. And we would like to thank all those who contributed to this result. We saw different opportunities. First is the unification of the legal and the compliance into a single officer with a role of strengthening the mapping of the risks, expand internal controls and enhance the governance. All this with the support and direct involvement of the legal department forming the legal compliance department, creating synergy, strengthening all our values. Something that was very evident was the regulation. So we are unifying all the efforts of the company from the regulatory area into a single area connected to the CEO, so that we can have more business opportunities, better results and take a leading role in the sector. And we have a very extended agenda in this front. I would like to draw your attention to a single one, as I mentioned in the beginning, the new operational conditions in the system have been showing that the hydro power plants have a very important role to ensure the sustainability and security of the business. And as we see, they have not been compensated and perceived according to its attribute. So -- and this is a very important strategic agenda. I, myself, all the executive directors are going to be involved in this initiative. And the last thing I would like to mention and we have some bylaws that have been approved, we have a people committee that has just been created that is connected to the innovation and also sustainable development committee as agencies to support the Board. We have the 2 coordinators here, Marco and Luiz together with Marcel and Fausto. Thank you very much for attending this event. This committee together with the Board, together with the Executive Board, they're going to be together. And we are going to provide support, the compensation with long-term incentives connected to generation of value. So the reference of A-25 is easy because any amount for the long term is going to be distributed as from the value distribution starting from A-25. So the work is going to have a kickoff and we'll provide more details on Friday, and we are going to present the results in the shareholders' meeting. In April, so this is my last slide. And I would like to say that all ESG assumptions are incorporating permeate all the strategic actions of the company. And because we became a cooperation now we will have more speed to accelerate the decarbonation plan of the headquarters, and we are going to accelerate our process to reach our net 0 objective. As for the social area, we adopted the SDG 4 because we understand we can contribute to this and the first action was the inclusion of the program Aluno Student Energy involving the Universities of Parana to provide scholarships and internship courses in order to provide confidence and competence to the new engineers and the grantees have already received their grants last week. I would like to reinforce our intention to go to the Novo Mercado path. We have been talking to the main shareholders in order to build this opportunity. But we have no question that we being at the highest level of the B3 and have this class of shares will be very beneficial to the company. And to end my part of the presentation, I can assure you that we have a unique case, COPEL brand or assets, our history of nearly 70 years, but especially the people who work for us, allow us to expand this successful case as a private company through corporation. I hope you have a very good event. I would like to invite Adriano Moura to talk about our efficiency and value. Our first panel.

Good morning, everyone. I would like to thank everyone for attending this symbolic event at the headquarters of COPEL. Those who managed to be here in person. I would like to say that it's an honor to have you all here. Many of you are coming to Curitiba for the first time ever. So it's a great honor to have you here. The main objective that we have today is to talk about the execution plan, not only what we're going to do, but what we have done. Today, there was a material fact that it was disclosed about a very important action that is included in one of the pillars that I'm going to talk about, which is related to operational efficiency. So we want you to go home sure that this plan is going to be performed by this management team. I'm going to talk about 2 topics, capital structure, and the optimization of PMSO. I'm also going to talk a little bit about how to optimize the PMSO. This is the first phase of the first project that we're going to be delivering after becoming a corporation. We are also going to talk about how we are going to talk about efficiency at the corporate level and also in terms of tax. We have to be sure that value generation and efficiency have been part of our agenda for a long time now. And the numbers speak for themselves. So we reach the new EBITDA level at COPEL which -- and we have a historic which is consistent with the CAGR of 13%. When we go to leverage, we see that our challenge is still very big. We are at this level of 1.3x 1 year ago, and we have been evolving. We made a plan to releverage our company and that happened 3 years ago, and we said that we needed to reach a situation of a better capital structure, and we delivered on our promise. We'd like to remind you that it has to do with the primary allocation that we are provisioning in order to pay the grants. It's a little bit lower than we understand to be the ideal capital structure, but this is going to be the ideal agenda for the future. We are going to tell you what's going to be the best combination between good investments and good dividends. I would like to remind you that this journey had those 2 components. We managed to make good investments. We increased the distribution base at 70%. We have been investing a lot in the distribution for the next cycle. We made 2 important acquisitions that diversified our generation portfolio with investments in wind generation assets, decreasing the GSF risk. And we also made a very important payment of BRL 7 billion in the past years. And the new policy that was approved in 2021 provides the room for this flexibility. So if we see the payouts, they are all above 50%. And we want to continue like this. We want to optimize the capital structure, always balancing those factors, the 2 factors. PMSO optimization. As I said, this was 1 -- this was the first major project that has been delivered, and the result has been disclosed today. As I mentioned, this is a work that demanded three months of work, we managed to complete in a record time with a sense of urgency because we needed to include the numbers in our target for 2024 and including the vision of 2025 and 2026. So we are disclosing those numbers for the first time ever to the market, and we are mentioning all the executives that are going to be part of the plan. This is going to be approved by the Board in the beginning of December, and they were divided into the 4 pillars. We also counted on the services of a specialized company that provided all the benchmark of the sectors so that we could have all the information per agreement per activity and understand the opportunities that we have. It was at the level of contract with a lot of granularity. So we understood that this was viable. So aggressive, but feasible. This is our plan. We made this first plan, and we have already mapped what would be the roadmap for the second phase. So the project is not over yet. We managed to do a record time activity. very important work, but we still have a lot to do, especially in terms of culture. We have to consider the adjustments to the culture, and we also have to consider the individual control of the budget. So there are some improvements that have already been mapped out that are going to be implemented next year. And of course, we want to find new opportunities. I would say that we have already cut down, we have mowed the grass at very low level. And the main project that we had as a result of this work was the PDV. It shows the evolution in the past few years, 30%, September, we closed with PDV contemplated 1,237 people. So we had a 25% reduction. We said that it's a reduction of more than 50% if we consider the history of the company. And the purpose was to define an operational and financial limit that could cover as many people as possible without putting the operation to risk, quality and services. We could not fail to continue providing the best services. So how can we ensure that this reduction is not going to adversely affect the operation. So we are going to do all the changes and began to focus on the financial area. The question is, does this financial limit makes sense? Yes, it does. We made some calculations, we considered different scenarios and we found the best combination. So we have a saving of BRL 430 million, and we are going to reposition that may be from BRL 100 million and BRL 120 million. These are preliminary numbers. We are still going to make some adjustments, but this is what we have in mind. A very important point here is that between P&S, it will be at the most BRL 120 million. So there's a governance considering us that is going to be approved by a committee and Marcel is also going to assess this. And I will talk more about this and the recomposition of IP is not even going to be discussed at the management level. It's going to be submitted to the committee so that we can be limited to this range that Marcel presenting of BRL 120 million. Yes. So if we consider the BRL 428 million minus BRL 120 million, and that would come to about 20%, a little bit more for a payback of 2 years. We understand that this was the best scenario in terms of PDV. Now moving ahead, and I would also like Daniel to help me to discuss this slide. This is a summary of what we did in the first phase of the project, where we come from and where we are getting. So for the next years, we want to reduce PMSO to BRL 460 million to BRL 480 million. This project started with the LTM of June. And this was the number that I just presented to you. We discussed a lot. We did a preliminary analysis or better analysis that where we prioritized that would be possible to do within 3 months. So we saw what we could do, the KPIs, the actions. So everything has been mapped out, and this has been included in the budget. So it's a 3-year budget and part of it is not going to be included as benefit in 2024. Many things are going to take place in 2024, but will not come into the results. So we see the amounts, okay. As you can see here, a very important point for our meeting today. With this movement we have already exceeded the lower base as we committed to the market in the road show. So we expect to stay in the lower limit from 16% to 17%, considering the PMSO Global within 3 years. So it is the commitment that we have to deliver the results and especially when we decided to derisk the company. Copel is a company with a low risk. This is another example of the efforts that we have been making and the results. As Marcel said, all the initiatives are done in the 3-year period and in different phases, considering the digital transformation of our business, we are going to find new opportunities, lower gross but we are going to continue looking for opportunities to be ever closer to the upper limit that we mentioned in the road show. Another important component in addition to PMSO is the contingency management. I'll invite Eduardo Barbosa, our Compliance and Legal Officer to talk about this opportunity now. Eduardo, please come forward.

Thank you. Good morning, everyone. Thank you for this opportunity to talk to you. I'm very proud and happy to talk about what we have done regarding our contingencies. And showing the 3 areas in which we are focused on to do that and the opportunities that are created because of that. The first and the most important one is the settlement policy that we have that will be more stronger, would be stronger because now we divided our contingencies in 3 blocks and in major blocks. The main litigation lawsuits are the one of them. We have a set of lawsuits of large value that we could work with strategy, and we have a group of repetitive lawsuits that accounts for around 70% of our number of lawsuits in absolute figures. And based on a settlement committee with identification of opportunities and guidelines, we are disseminating the settlement policy throughout the company, which will generate a lot of cash because that COPEL used to be a state-owned company and now has been privatized. And just in this item there's a lot of scale with elasticity and flexibility and a lot of speed can be placed on our settlements. The second area relates to innovation. We purchased software that will provide more security and safety regarding our information, allowing us to be more assertive in prioritizing our actions in court, I can give you some examples. For example, we'll have an online mediation platform that we already use that been authorized by the Superior Court of Justice, not only for judicial settlements, but also before going to court. For the next quarters, you noticed more results using that tool. I would like to recognize the team because in terms of provisions, we have a high amount of assertiveness. So our figures are reliable. And we use prediction tools and will be even more assertive and deliver better results. But that alone will not do the job because our lawsuits increased and-- but the legal department since the privatization will no longer be an operator of the portfolio of lawsuits, but a manager of that, we will be able to outsource a lot of our lawsuits and will give us lots of opportunity to deliver results in the short term. But if we do not prevent new lawsuits the amount of lawsuits we have will continue to increase. That's why we have a prelitigation report, working closely with the business areas to identify threats, as Daniel mentioned in the climate change, for example, but providing opportunities to create regulatory as well as legal thesis trying to reduce the number of lawsuits as well as provisions but also to deliver results and revenue for the company. I would like to mention one single opportunity to be very modest here that's been mapped, structured and in progress. It's been identified by the consulting firm that is working with our team. And we separated within the mass lawsuits, the repetitive ones that accounts for a large amount of our lawsuits just by separating consumer, labor, civil lawsuits, we were able out of total stock of 1.9 million in the baseline of September 2023, we were by prioritizing the lawsuits, we identified BRL 779 million in lawsuits. And based on information technology and our history, we identified opportunities that amount from BRL 50 million to BRL 70 million of results just for the next quarters. We have several other projects we're working on, but since I don't have much time, I thank you for this opportunity, and I will remain available at the Q&A for further questions.

Okay. Thank you for your work and for your presentation. So considering the BRL460 million, BRL 480 million, we're talking about a firm commitment of this management to deliver 0.5 billion -- 0.5 million in results. We'll continue to search for results and our goal is to reach the most we can in the next 2 years, especially as of next year. So another important point is tax and corporate efficiency. We let the consulting firm free to assess the opportunities independently. The good news is that there weren't so many opportunities. So -- which only highlights the good work we've done recently. Although we have a large structure, 60 companies, we assess some opportunities for the future. But the main one for the future is the incorporation of, within the holding company to integrate the 2, maybe next -- first quarter of next year, we have a better view of that. There is a tax benefit and the interest and equity something nobody knows what will happen. And depending on what comes out, we'll have a savings of more than BRL 20 million. So using our short time, Daniel, this is the summary of efficiency gains planned. This will continue in our agenda and our goals, and I hope you have a great event. Thank you.

Great. Congratulations. I'll be a bit repetitive in order, right? But 90 days is something we always say, we try to be assertive, dynamic. And this shows how agile we are. The companies are made of people. It's not only substations, transmission lines, power plants, assets, but mainly people, and I invite Ana Letícia Feller, our Human Resources Officer to talk about people.

Good morning, everyone, present in this auditorium as well as those attending online. I would like to start my presentation saying that I am very happy, today is a day of joy, and because it is the first meeting we have after COPEL became a cooperation. And also because we're going to talk about people, people who are in the core of major transformations. Here at COPEL, this is no different. As Daniel mentioned, there are several actions already in progress in people management. And I'll show you how these actions are being included in our people management practices and what we have done in 2023 and what we plan to do for 2024. Our transformation journey starts with a very important topic that is our new way to be COPEL. Dealing with the organizational culture is essential to have success in executing our strategy, especially in a transformation moment as the one we're going through. Being aware that this is an important topic, the Board of Directors and board of officers have met to discuss the elements of our culture and discuss our behaviors, identifying which ones we should keep and encourage and which ones -- which behaviors we should acquire and the ones that we should leave behind us. Out of this work, 5 areas came up. The first one is integrated business as it was previously said, we'll continue to explore all the benefits of being an integrated company seeking operational excellence at all times. Working with excellence and efficiency is the only way to boost even more our results. We'll be even more demanding in that area. And COPEL will always look for efficiency in its opportunities and activities. The second area is communication. Our internal communication must be fluid and in real time so that all employees can be aware of the paths that Copel is following, continuing that we have the 3 element that's important, which is people, focused on the customer, at times of change in our industry and that market are being opened, customers become even more important. And we'll be very strict in the focus on quality of services and the satisfaction of our customers, focusing on a full experience that they expect so they can be pleased with the good support and services provided by the company. Then comes the regulatory protagonism. Our strategic presence in this sector, exploring regulatory boundaries and playing a leading role with regulatory authorities. And in the center of everything is people. People is a differentiation point for us. Such a huge transformation as we are going through cannot be executed if people are not part of it. This is why we're focusing on building high-performance teams that are recognized and that are engaged and aligned with these new organizational culture, the new way of to be Copel. How can we ensure that our people strategy of people who are recognized and engaged in this movement takes place? First, we have structured our work in 4 main areas. The first one talks about organizational design, which means that in our dismissal plan, we'll dismiss employees, ensuring the quality of our services, quality, efficiency and productivity. In compensation, we must ensure that the compensation of executives, leaders and associates is aligned with the values of Copel. The third element is development. Its main goal is to improve current skills and acquire those needed to face challenges imposed by changes in the industry. An organizational culture, that's the fourth element that is the essential for this major transformation. Now looking into each of these blocks or areas, let's talk about our dismissal plan. As Moura mentioned, we had 14 -- 11,437 people enrolled for this. And the idea is to make sure that knowledge stays in the company. We have identified critical jobs at Copel, which 356 were identified among them, 68 of these positions are occupied by people who have enrolled for the voluntary dismissal program and have successors defined for these people, and we have already started the knowledge transfer plans. As already said by Moura in the presentation about efficiency, we did rightsizing of processes. And this allowed us to learn what's the minimum amount of us -- employees we have to have to ensure quality execution of our activities. And already in execution is our digital acceleration point. This is very important to bring benefits, agility and productivity and efficiency gain for the company, making it easier for the teams to perform their activities. In the compensation area, our plan foresees the strategic compensation of our executives and senior leaders. Today, this compensation has a fixed amount and a variable short-term amount. We have to implement long-term incentives linked to value generation. As Daniel said, based on the share value at the time in which we became a corporation. The kickoff is set for next Friday with a renowned international consulting company, and the goal is to boost the alignment of interest, increased competitiveness and retain our talents. Also under compensation will continue to improve meritocracy practices, review -- reviewing the career plan and compensation of our employees. This will allow opportunities for growth, creating career paths. With that, our employees will have a clear view of the paths they could take in the company to develop their careers and seek the best option for growth in the company. We have 2 mobilities. We have 2 major goals, which is a transformation of careers. We are now redesigning the leadership profile mapping the skills for each leadership job we have. This is the first step that will support the second phase of our work, which is the assessment of our leaders. Based on the result of these 2 phases, we will create individual development plans that will be accompanied by people area with important tools to address any needs that are identified in the plan. Now going to the end of my presentation. It's important to give you a clear idea of how all these checks are being carried -- tests are being carried out in the time line. You can see that in the second half of 2023, we -- in the first half, we have mapped critical positions as well as completing our dismissal plan. In November, we started the knowledge transfer plans that are expected to end in August of [ '20 years ] because that's the date we have set to have all the employees who want to leave the company already have left. And -- we need to have a rightsizing to know exactly the number of people we need to continue to perform activities well. And in December, we started a digital acceleration plan to give efficiency to our processes. Speaking of compensation, as of Friday, we'll start the review process for the -- building the long-term incentive program that will be completed in February that will go through all the internal governance to be approved in April. And then in September, we'll have the assessment of development plans. We see that -- we can see the mapping, all of the chronology. Well, our vision has a holistic assumption. You have to look at the top management, the Executive Board, the Board of Directors, the main leaders, but you also have to consider all the structure considering the careers, the employees, the base. And this is the second comment. And there's something else that is important to mention. This work is going to reach its stop in April 2024. So you see you have to agree with me. This is one of the major benefits of having been transformed into a corporation, mobility, transfers of careers because some employees were stuck because they had some rules. And we have Fausto who is a Board member and he has post-graduation course, but he was stuck in a position because of the previous structure. But this powerful tool are long-term incentives that would connect and retain the talent, retain the good professionals and value them. We are going to have a special shareholder meeting in December that will only have this recovered -- will only recover partially the inflation and recompose the short-term compensation of the executives. And in April 2022, this has been approved without this amount because of the elections and everything and all the scenario of the situation. And this special shareholder meeting is there to be recomposed all the past. And we've -- talk about the last pillar, which is related to development. We are going to talk about the necessary competencies for the functions, and then we're going to have work of assessment and the construction of the development plans. All of this is based in our new way of being, Copel's new way of being -- we can see that the agenda is very intense. We have lots of actions that have the potential to generate value. And this is only happens because our team is very committed to this moment, this new moment of Copel. This transmission, we're proposing and everything that's been going on. I'm sure that I'm going to finish my presentation saying that I'm absolutely sure that we are on the right track. We are building the best company in the sector to work for -- with our best talent. Thank you.

Congratulations Ana, and you've been with us for more than 20 years, and we can feel your enthusiasm, your willingness. Yes she started when she was so young. That's why. Very important part. We're going to invite Cassio Santana da Silva to talk about value generation and capital allocation.

I'm going to repeat. It's a great honor to be here. to be part of the agenda. And we are also on the agenda of compliance. There are many people who were in the roadshow and you trusted in our proposal to generate value and to evolve with Copel. Welcome to our headquarters. It's an honor to participate in such an important moment of our company. We are going to talk about efficient capital allocation and Basically, I'm going to start the topic and Moacir Bertol also going to add to what he have to say, especially when we talk about CapEx, when we talk about the renewal of the concessions, this was one of the drivers that we had to transform our company into a corporation so that we could improve the generation of the company. We are also going to discuss reinforcement and improvement. And in addition to improving the operational capacity of the company, it also brings return rates, which are very interesting as well. And there are also some other agenda, which are very important, and we have developed along the past 5 years, especially when we refer to decarbonization of the company, the capacity auction, that is a great opportunity that has to be under a regulatory agenda and we understand the activities to the sector. And the agenda that I would say that is [ vibrating ] at the company, which is the innovation agenda with a corporate and venture capital fund and with expansion and continuity of our open innovation, our Copel world. It's not by chance that this slide is presented now. So our capital allocation is prioritized like this, as we mentioned in the road show. We are looking at distribution efforts and we already have the organic distribution considering the distributor of Parana. And why do I say that? I say that because we have the combination of 3 sectors: first, rate, which is one of the lowest rates that we have in Brazil considering the distributing companies across Brazil. Second, is a depreciated basis that would vary from 35% to 40%. And the third will be the growth, the economic growth of the state. We are the fourth largest economy in the country. It has a Chinese growth rate that -- the Chinese growth rate of 10 years ago, not the present growth. And it's based on a tripod, which is very favorable so that we can continue making the investment in the distributing company with a very well-controlled risk level. Transmissions and distributions are related to networks. So we understand that the business -- these businesses need scale, and they are better when they have sales. So the new business areas continue monitoring growth opportunities, inorganic growth. Of course, there is very cautious evaluation of synergies and what would help us add value in the short, medium and long terms. And these are not opportunities that you would find easily anywhere. So it shows that we continue monitoring opportunities for inorganic growth. As for generation, without a doubt, we are making the highest investment in the short term for the renewal of the concessions. I'm going to talk about the size of the investment. And then later on, we will talk about the capacity. So we are going to invest in the innovation for another 30 years of our 3 main assets that make up 60% of our generation capacity. And not only that, there's an opportunity that is approaching us which is the opportunity of reserve capacity auction, where hydropower plants will be able to take part in. So this is agenda that is taking up a lot of our time in terms of assessment. In terms of our transmission, we understand that there was an auction which was very specific. And we understood that this was not an opportunity that we should take because it doesn't make sense to us for the auction in 2023. But we have focused on the synergistic lots for 2024. There are some studies being made, and I believe in the next weeks, we are likely to define which is going to be a roll, whether or not we are going to take part in the auction 2024. When we look at the headquarters, we can see a relationship with the distribution and transmission businesses, which have similar roles when they protect the portfolio. They do not have regulatory compensation. And the performance of those activities involve risk, which is not controlled, especially when we talk about distribution. So the role of those assets are similar. In terms of risk, they may be a bit different. And if we want to prioritize the business of transmission or distribution, we can consider. Especially, we can understand that we should really invest in distribution. And to complete the integration of the company, this trading business has also been retaining a lot of attention when we allocate the company -- allocated capital for the company. So we are very attentive to this marketing breakthrough which is going to bring new consumers with the characteristics of being retailers, Bertol will also talk about this evolution. We already have a customer portfolio with this characteristic at this time. But we want to be very proactive. We want to take the initiative in this sector. And also new services, which are connected to this idea of one-stop shop. So the client, the new client coming from the free market. When he wants the new solution, we would like to offer the service. So we see that some opportunities that were taken by other competitors, micro-insurance, nonregulated service. So these are all initiatives that are in the final phase of being implemented in our area. So we would like to have some news in the short term in the segment. Now providing a little bit more details about our reserve capacity auction. You can see this photograph, it shows the reality of Foz do Areia. It's a plant that has 4 machines in operation. And it was conceived, it was built with 2 slots to be expanded. So the civil construction work is already ready. So we want to make this feasible in an auction and install 2 more machines. So we believe that for this capacity auction of 2024, we have a very competitive asset that can expand 872 megawatts in the plant. And also in Segredo, Bertol will provide more information about this. Can we talk about what are the adjustments that we had to make because we are not going to start from start -- scratch so that we can take the opportunities in future auctions. In the decarbonization agenda, we have a very competitive process underway for WEG. WEG is a thermal power plant in a partnership with Copel and Petrobras, we hold a bit more than 81% in this asset. And the next step is binding proposal that is going to be presented in December. And we expect this asset -- this project will be signed in March 2024. And we can say that the auction has been very competitive. So the -- this is going to add a lot of value. Should this asset be sold by Copel. So we are very enthusiastic. We are working hard. So that considering the schedule, we'll be able to redo the signing and the sale of this asset. Still talking about decarbonization, we have the opportunity to sell Compagas. Copel holds 51% of Compagas. And considering this decarbonization at ESG agenda, we also have a competitive process underway. The next phase of this process are the nonbinding proposals that are going to be in December '23 within some weeks now and expected signing is for March 2024. And without doubt, we are discussing the best asset for those who want to expand the share in the distribution of gas in Brazil or for those who want to break into this market. We are talking about the modern, the agreement, compensation format, which is also modern based on the plan conceived by the government of the state. So we have no doubt that this is a process that is going to accelerate our business in a very competitive manner. So we think -- we believe that on -- in March '24, this is going to be completed. And I'm also going to talk about this open innovation program. I would say that the first action of Copel Corporation was this one. It was the creation of a fund one quota holder, which is Copel Ventures and is looking for early-stage start-ups. It's BRL 150 million fund, looking for strategic and financial opportunities. And the investment parameter would be from BRL 2 million to BRL 10 million per round. So the business is very broad. What does it have to do with -- anything that has to do with energy? Renewable Energy, Energy as a Service, especially also new ways of trading energy, asset management, smart grids, smart cities, mobility, internal processes, innovative processes. These are all covered by the thesis. And Copel Volt which is the major driver of this process impelled us to have more than 500 start-ups integrated with us. So we've filled this funnel, which is our innovation pipeline. So as of August 13, when we had the first action of Copel creating Copel Ventures, we started work and at the beginning of the funnel, we have already included 58 start-ups. As it's natural in the start-up world, the mortality is real. So the message is that we have business in due diligence process. So in the future, we are likely to announce the first investment in Copel Ventures. And this is a dynamic funnel. So we engaged Vox Capital. That's a team very ready to assess the moment of 13 when to enter, when to leave the founders, the investment thesis for the start-ups. And we're quite pleased with this work we're doing with them. And we're happy with the Copel Volt. That's a continuous program now will challenge the start-up ecosystem according to the needs of our business areas. So the retail sale, electric mobility, high green hydrogen are becoming horizon 2 business. We see some companies monetizing this business, batteries, energy efficiency, and asset management. And to -- since we see lots of people here that were present at roadshow, I have included this slide that we used in our roadshow because here, we tell the path of the last 5 years of the company, delivering consistent and coherent results in terms of what we expect for the future of the company. So I would like to say that this team has brought the company so far has planned the company, and we will deliver what we planned here. Congratulations. The second main message -- the first main message that we'd like to close this block with is with this list that was presented at the road show. It's first to show consistence consistency and coherence in execution, as Cassio mentioned. But the second stage is that although we focus a lot on efficiency and cost reduction, no company can be sustained in the long run just by cutting costs. This is the first phase of this cycle. Our agenda is much more encompassing than that. It has a lot to do with people, but mainly how we're going to grow, where we're going to invest. I'd say that helps everybody that works. And if we keep with the -- One good thing about having 1 or 2 years with low energy prices is the fact that we are well positioned. We'll have the 2026 new remuneration basis. and the recovery of the energy prices, which is only a matter of time. So this only reaffirms our enthusiasm in our confidence. Imagine Copel 2024, '25, '26 in this path with this level of efficiency with these assets and the opportunities that we'll have in the future. It will be indeed the major benchmark in the industry. Thank you for your presentation. Okay. Now let's have a short break, a 15-minute break, and we'll be back at 11:20, for those who will be online. So 20 after 11, we'll be back. Thank you. [Break]

Okay. We're back on our Copel Day. Our subsidiaries, our main business distribution, commercialization and generation. And before starting the specific panels, I have said that the ESG and principles and sustainability agenda, it's been relevant for Copel since the beginning of the company in 1954. But in the last 20 years, the company has put a lot of effort into that. And congratulations on the team, and I would like to play a video on our sustainability and ESG actions. [Presentation]

Copel presents a history of sustainability, good environmental practices social and in governance, Copel has a long-term commitment. It's prepared its first report on environmental and social impact. It was the first company to adhere to the Global Compact of the United Nations, one of the founders of the GHG protocol, the first in electromobility. And with the economy in line with the low carbon economy has been awarded several awards moved by sun, water and wind, one of the leaders in clean energy worldwide. Now a corporation Copel will be even more agile, efficient, competitive, ready for the next challenges. 17 times present in the sustainability Index of B3. In 2022, it adopted a new SDG education and created energy student with a full scholarship for talented students in electric engineering for the 5 years of the program. It is opening a project on reducing the energy bills of hospitals in Paraná. As of 2024, the same will be applied to state public schools. Taking into account the development index of the schools and of the municipalities and the program, 7 golden rules prepare the electricians to serve customers and that are trained to prevent accidents. We aligned third-party companies to the principles of Copel. At the same time, the reinforces associations that respect human rights. Copel is a leader in impact compensation and offsetting with subsistence projects, and it provides free energy for families in need. It's been done what we now call ESG. Copel believes that benefits for shareholders can only be given when everybody is part of the agenda, respect, innovation and results management. This is the energy that moves us. Excellent balance between all stakeholders. This is a mantra for us. Okay. Let's start the second part of our Copel Day, inviting Moacir Bertol to talk about GeT.

Good morning, ladies and gentlemen. First, I would like to congratulate the President, the CEO of Copel and the President of the Board of Directors, the President of ANEEL and all the Board members and the President of the Fiscal Committee. I would like to also say hello to all of you who are present here at this audience, such a qualified audience, and all officers that preceded me and showed the quality of the actions that Copel has taken regarding its assets. To start, I would like to talk about a bit about my professional career and how proud I am here to represent Copel Generation and Transmission, and also I feel responsible for this challenge and responsibility we have in leading Copel to attain the results that we aim to achieve. I've, in the last 9 years, I have worked at the Ministry of Mines and Energy, preparing the guidelines for public policies for the energy plan of the entire country at the secretariate of energy planning of the Ministry of Mines and Energy. I had the opportunity to meet many of you there to discuss about the sector to look at opportunities and prospects for the Brazil energy, always providing balance between supply and demand with all energy services. I learned a lot with the experience. I faced many challenges and had many opportunities to develop such activities. In 2019, I came to join Copel. I worked here for 4 years as a state-owned company. We had growing results, but they were limited because we were a state-owned company. Now as a private company, I am highly motivated, but I am aware of the responsibility we have to deliver on all the assumptions that we define for Copel, especially for Copel Generation and Transmission. So Copel Generation and Transmission is an integrated company that generates and transmits electric energy. In Generation, it is present in 4 states of the Federation, 6.9 giga of installed capacity among power plant -- hydropower plants, wind and we have 76 plants that generate energy produced in these plants. In 2022, we had generated an EBITDA of BRL 2.14 billion, with 3,157 average megawatts of assured energy. There is an important attribute that's regarding the energy matrix of Copel that 96% is renewable energy. And we are moving on, as Cassio said, in the divestment -- or the paths to have an energy metric that totally decarbonized 100% renewable. It's a unique condition in an energy industry to have a fully renewable matrix. I make reference to the renewal of concessions with all the expectations for Copel. In Transmission, we operate in 8 states with 9,600 kilometers in transmission lines, and we have an annual permitted revenue of BRL 1.56 billion. This generates BRL 1.08 billion per year in EBITDA. These are figures that you know and you know our capacity to operate these assets. Given this impeccable process of transforming the company to a corporation, Copel Geração e Transmissão has reaffirmed this role as a relevant player in the energy industry, especially because it maintains in its portfolio, the 3 main plants for another 30 years, the 3 large hydroelectric plants. I'll start by talking about the renewal of concessions of hydropower plants Foz do Areia, Segredo and Caxias. Together, they add up to 4,176 installed capacity. 1,673 megawatts average of physical guarantee. We -- Copel has complied with all requisites to have this concession for another 30 years. The granting authority has awarded us, and we have negotiated with the granting authorities and the National Electric Energy Agency the execution of this concession agreement of the 3 plants for the -- for another 30 years, for next year at the very favorable terms and the payment of the granting bonus. According to the relevant law, the payment 20 days after the execution of the agreement. So this is the schedule we'll follow, and we'll keep to that, providing the best conditions for the company. We are also working to classify these 3 plants as priority plants to be able to issue debentures to pay the granting bonus for these 3 plants. We're also working -- watching it tentatively the bill 365 of 2022 and we take this opportunity to say that we are not pleased with the fact that this bill is in the process of being discussed at the -- but we -- in Congress, but we hope that it's not -- it doesn't pass because there is an interference of the regulatory, the legislative in -- the legislative power in the agency. This brings insecurity in legal terms if this bill passes. But as I said, we do not expect this bill of law to pass. With regards to our generation assets, two of these major plants that have been renewed for the capacity auction, we expect to install two more generators totaling 682 megawatts and 900 megawatts in Segredo. It's important to highlight that with the vision of our engineers and officers in the project -- in the design of the plant, they already included its growth, its expansion with another two generators. The return on investment that was not there, but now by power to operate the system and sustain this undispatched energy that are the renewable intermittent plants, this is essential for the industry. And the company that provides that instantaneously at the moment of need are the hydroelectric power plants. So these two generators that will be installed, most likely in the next year's auction, will provide great value for the company. We're waiting for the guidelines of the Ministry of Energy for this auction. So the new powerhouse that will double the installed capacity, we are placing it in a location where the costs are lower, that will provide us a better return, and will be available for the next power auctions. And this is our vision regarding the capacity auction with the power of the power plants. Now I would like to talk about the restructuring of Copel Generation and Transmission. Recently, we have created the superintendence of renewable energy focused on Rio Grande do Norte state, where is the main cluster of wind farms that's where our wind farms are located. And we are also focusing on the expansion of the company and the 2030 vision that the company plans to increase its installed capacity for the wind -- for the electricity. We have created wind farms, wind managers. We -- there are 5 manufacturers that are suppliers of wind turbines. We already noticed a very good situation with increase in availability of these turbines and the greater conversion into energy with the increase in the power and installed capacity. We are also restructuring the supply processes adapting to the private environment, which allows us more agility to make our purchases at the right time at established prices. Now I would like to about our operational efficiency. Now we have to train our operators in the new system. It's an integrated operation involving transmission and generation in the same console. Those operator will operate our generation and transmission assets. We are increasing the qualification of maintainer of our assets that will do the local operation and maintenance especially in increasing the tele-assistance requirements for all asset in generation and transmission. We have dedicated the assets to the tele-assistance of the major plants that have concessions renewed. We have our structure of drone fleet to be able to predict the assets participating their effects for substations, transmission lines and reservoirs in the permanent conservation areas. Also in our restriction of operation we have identified opportunities to align small IGPs lower than 10 megawatts for them that have a low scale and high OEM cost. So they will be -- these professionals will be reused in large plants based on the dismissal plan. This was a clear decision always with a technical preservation of all our employees. I would like to talk about decarbonization. On October 30, Copel was present in the Ministry of Mines and Energy, and we filed a document so that [indiscernible] should be returned, which is Charcoal thermal power plant to use the assets that were not amortized. So the moment Copel made the decision -- so Copel no longer has any participation in generating electricity with a charcoal resource. In our 24 budget, we have no costs related to the operation of that plant. We think we're going to be successful because the legal basis for the rebate of this concession are very solid. So we expect to receive this compensation. We cannot see this one so much because it's 20 mega. So -- but it was our obligation to return those reimbursement, and these are the assets in the range of BRL 130 million, so this is a discussion that we're still going to have with granting powers. So this is the order of magnitude. And we have strategic operations when we use those assets since we are making all those transition. So we have Sao Jorge and Figueira assets. And we can see the investments that have already been made and the divestments are according to the schedule. And it's very attractive for us to acquire those assets. And it's very important to mention that. We would like to mention the divesting of some properties. We're going to sell those properties. We are in the process of selling those assets. And all the documents are nearly ready for us to start the [ divestimation ] process. And we have a property where the previous [indiscernible] used to operate, and we are going to bring a new asset. So it's a noble area. And this is a place where we can make investments in the segment of transmission. And all the areas, the villages, the residential areas of all those major areas of where we used to have assets, we are going to sell those properties, and we can see the size of those areas. Faxinal do Céu has an area of 4.5 million square meters and all the other areas are very sizable. According to our assessment, according to the documents, it will be about -- okay, by the way, we're still making the evaluation. When we reach a precise number, we are going to share this information because we do not want to create any expectations. So these are properties that offer an upside that would not add any value for the service of electric generation. It's important to mention that there is expectation to reduce costs, an increase of cash. So we started in 2018. So we started analyzing this KPI, and this provides direction to our actions to understand whether or not we're reaching the our strategic goals. So this is connected to cash generation. So we started with 31.4%. Based on our adjusted EBITDA and cash generation. And we ended at 19.4% of our costs when we consider the adjusted EBITDA and costs. So we can see there has been a significant drop in the operating costs, together with the increase of our revenues. Here, I would like to talk about our investments, and this is something that has already been communicated to the market. We have a budget for investment of BRL 265.1 million. And we are going to be investing in improvement and reinforcement, and BRL 34 million in the hydroelectric power plants so that we can provide better service and also offer higher availability. And also, the investments related to transmission include reinforcements and improvements. And this is where the rate is attractive at a rate of 2 digits. And there's also an RAP, which has been established by the regulator and the return rate has reached 2 digits. And it's a very important way to discuss that all those implementation and these products are reinforces and improvements have lower terms than those that have been authorized by the agency. This is a result of the organization and the structure and the PMO of Copel Geração e Transmissão because all or projects are managed under a PMI methodology. I would like to say that the PMO of Copel GeT for this year is ranking above the 3 best PMOs in Brazil. So this is an event coordinated by the global PMO. So we expect to be very successful in this event. And for the next 10 years, we have an estimated investment in reinforcement, improvement. In 2023, we were authorized to invest BRL 200 million. It's very significant growth with return rate, which is very good and a very good management of the CapEx in order to provide expected profitability. So the expectation is to conduct this for 10 years. So we are going to update you every year, but you can understand the space that we have and you're going to see that this is much -- is more attractive than a new line. In relation to transmission, BRL 1.5 million in the next 10 years, and we have also made good investments in the maintenance and qualification and also in the improvement of the performance of our hydropower plants. We completed the investment in 2022 in Figueira power plant and GPS is going to start in 2024. And we're also going to modernize Segredo of 2025. These are the investments planned to be made so that we can maintain the performance and quality of our transmission assets. I would like to thank you for the attention and for the attendance.

Berto, I think you provided a very broad view of GeT. But since you're accumulating the free market activities of Copel, let us go straight to the 3 markets that you can provide a perspective of the energy balance. And then I'm going to talk about the future vision of what we expect for 2024. And then we can move on to Copel distribution which is a topic that interests everyone who is attending this event. So provide a view of the energy balance.

I'm not going to introduce myself because I'm just going to continue saying. It's an honor for me to present together with Daniel, Copel Mercado Livre after talking about Generation and Transmission. The responsibility of trading all the energy of Copel Group and also the free consumers for present and future is Copel Mercado Livre. The responsibility is -- has the purpose of trading or the energy produced by the transmission and generating units, trying to make the best profit all the megawatt hour, which is generated by Copel Generation and Transmission. It also makes a very integrated management of all the portfolio of energy of Copel Generation and Transmission. And it also operates in the prevention and treatment of hydrological risk of GSF. Here, I would like to talk about the energy portfolio of Copel -- of Copel Group as a whole. We can see clearly that for 2024 and 2025, Copel is well contracted considering its energy portfolio. Our contracting level reached 81% for 2024 and 76% for 2025. The Pmix, the price mix of '24 is BRL 184 (sic) [ BRL 181 ] and in '25 BRL 171, megawatt hour. We have maintained the strategy, the successful strategy of leaving 15% of our portfolio for the GSF risk. After 2026 onwards, Copel still has a lot of energy to be traded because of Foz do Areia, fiscal guarantee. And we had contract up to 2024. So we have to consider all the fiscal guarantee of that plant because the scenario have not been defined. So we couldn't do business before that definition. So now we know that we have a great opportunity for selling energy as of 2026. So all our strategy of selling energy and trading energy is very focused and looking at the future prices and scenarios so that we can better monetize the energy, which is available in our portfolio. Here, in the energy market, we know that the short-term market is extremely challenging because of the favorable hydrology that we have seen in the last 2 wet seasons, much higher than the average, and that would lead to reservoir at levels higher than history years. Distributed energy has a lot of energy and a very strong expansion of renewable energy. So as a result, we see an oversupply of energy. So we understand that up to 2025, prices are not going to be affected as of 2026 onwards, the scenario of medium and long term. Considering the increase in the climate change and also a higher integration of intermediate sources, both solar and wind energy, and also considering the need to provide for the deficit of power for the plants whose CDO is different from 0. All this taken into consideration would lead to important results. And the plants need to provide an immediate answer to supply for the demand. So all those attributes have to be recognized by the regulator and also by the granting authorities according to the law to provide for the obligation for reserve of capacity. And we also expect that the medium- and long-term scenarios as a result of this need for more power would lead to higher demand of energy. And as a result, we are likely to have a direction that we have seen that is connected to the increasing prices. So we're going to have a decontracted energy level at a reasonable amount, which is favorable for us. So we have a lot of discussion, a lot of perspectives. So it's important to have this at this level and at this price. So the challenge is to have energy available when prices go up. But the prices should not be kept or provision for -- to be sold in the spot price in the short term. In 2021, we were the second largest generator of the company. So we have transformed all this auto -- to migrate all this competence to the retail market with the market breakthrough. So this is a challenge faced by the sector and it's a major challenge. And as I said, we have to take all the confidence that we have acquired to the -- that we acquired in the retail sector to the wholesale market. The people talk about digitalization, but people -- those clients still want a contact. They still want to have a better service, and we have to mature the way we provide service to this segment.

Berto, you are the General Director of Generation Transmission. And in the last year, you also include the trading of energy into your competencies in order to manage all those activities together with the team. And all those areas considering generation, transmission, distribution and trading have been unified under a single leadership. And you have an integrated view of the portfolio, energy, energy from third parties, the energy that we purchased, submarket, wind energy, submarket, as I said, different sources. So we understand you're managing and you're leading all those different products and you also provide the hedging, and we see this as a competitive edge. And we also see that the governance has been enhanced together with the committees and we also have a tactical -- weekly technical meetings. And something that I would also like to mention is that we did a very deep review in our credit risk policy. It's a very sensitive topic in the trading market. So sometimes you see problems in this area. So the focus of the sales to the final clients and still talking about the volumes that we have seen. It was sold to 100% to the clients. And we also see the characteristic of a tag along. And now we are limited to 3, so that -- so as to avoid the level of uncertainties. And the challenge that we have for the future is to understand how the market is going to open. And for 2024, we're going to bring a new market General Director to contribute to our operations and bring in his vision and help us not only in trading energy but also bringing innovation, new businesses consider the market KPIs, which is a new reality for the sector. And we understand that this is going to be very beneficial to our sector. So we can offer better competitors and we can help the client and also help the generating companies that will have more space for the energy generation. And this is going to be very fundamental for the operation of Copel and the quality of sales. So we make available our generation distribution assets. We produce energy, but we have to have a qualified trading so that we can provide the right profitability. So this is a fundamental agenda for 2024 and to end this block of trading, you don't come from 10,000 clients in the low-voltage million clients without a deep process of digital transformation. We have a strategic partner operating with us, Google. It's the only one we are mentioning because it's the one that helps us to better migrate to the cloud. So we have called the artificial intelligence, so robotic intelligence of robotic models. All this is already ready and operating. Now we need to look at the transition related to the customers' journey. So there's room for growth. And in Paraná, Copel has a brand, which is very strong, and this is a competitive edge that we have.

I would also like to highlight this item here, the competence that Copel has regarding the new wave, the comp models to have a better predictability of prices and also a robotic daily update with the databases looking for ONS and CC data to check the balanced conditions in the supply of power to the system as well as daily changes in prices.

Thank you, Berto. We have 3 items when we're communicating with -- we are tackling these customers. We have 3 videos. Now small- and medium-sized company like mine and yours that spend more than BRL 7,000 in their energy bill can negotiate with Copel free market and save up to 35%. And I don't waste time to reduce costs have already migrated. Go for it, enter their website now and start saving.

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