Good morning, ladies and gentlemen. We would like to welcome everyone to CPFL Energia first quarter 2020 earnings results conference call. Today we have with us the executive, Mr. Gustavo Estrella, CEO of CPFL Energia, Mr. Pan, CFO of CPFL Energia, and other officers of the company. Due to the COVID-19 pandemic, all officers are connected from their homes. Thus, we apologize in advance if there is any disconnection. Moreover, we will reinforce work to reestablish communication as soon as possible. The presentation will be available for download in this website, www.cpfl.com.br/ir. We inform that all participants will be only able to listen to the conference call during the company's presentation. After the presentation, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this conference, please press star zero for an operator.
It is important to mention that this teleconference is being recorded. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of CPFL Energia management, and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of CPFL Energia and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference over to Mr. Gustavo Estrella. Mr. Gustavo, you may proceed.
Good morning. We would like to thank you for the presence, and we hope everybody is healthy. Now we have a different format of our results earnings conference call about the first quarter of 2020. Let's go to slide number three with some highlights of the quarter. A reduction in our concession area in the load of 0.2%. Still with a little effect of the pandemic on the result, but our load already reports this as of March. A reduction in consumption of energy. Our EBITDA was BRL 1,696 million, with a growth of 10.8% vis-à-vis 2019. Net income with a growth of 58.5%, reaching BRL 904 million. Our net debt has a reduction reaching BRL 15.1 billion with a leverage of 2.21 times net debt EBITDA ratio. I would like to remind you that we keep our leverage very comfortable for the group.
Investments reaching BRL 516 million with a growth of 15.9%. 90% of these investments going to distribution. We had a tariff adjustment approved by ANEEL for CPFL Paulista in April of 6.05% for consumers and 6.92% in our Parcel B. The first one was postponed to July 1st. This reflects the transfer of the IGP-M. This is a new event in this quarter. We had the postponement of the application of our adjustment for 90 days. The application of the tariff adjustment was postponed because of the pandemic. We have good news about the delisting tender offer of CPFL Renováveis registered with CVM on April 27, and the auction will occur on June 10. We started to participate in this entry of CPFL Energia shares in the Ibovespa, the B3 as of May 20.
We will be participating in the Ibovespa of the São Paulo Exchange. The CPFL Energia won the Equity Deal of The Year 2020 Americas granted by The Banker because of its 2019 re-IPO 3.7 billion BRL. Another important event was the recognition by ANEEL of CPFL Santa Cruz as being recognized as the best distributor in the country for the Global Continuity Performance, or DGC. Because of the levels of DEC or SAIDI of the company. On the next slide, page number four, we give you more details about our sales performance. As we said, our load in the concession area went down by 0.2%, with a positive growth of 4.3% in free clients and captively -3.2%. Because of the pandemic, we see a drop of sales in the concession area of 1.6%. We will see afterwards details.
In residential and commercial, this drop of 2.9% and 2%, very much impacted by the temperature. The temperature was very high at the beginning of the year. We have an effect in the comparison with 2019, the drop in the market, mainly driven by temperature reasons. In the industrial area, a drop of 1.4 with a non-recurring effect of the migration of two clients of high voltage for direct connection. Net of this effect of migration, this has no effect whatsoever, practically, on our result for this market. 0.2 drop in industrial. When we break down, we see some segments with a positive variation. Here, a 2%, pulp 2%, chemical 3.2. Wood products with a drop of 4.16%, vehicle 3.8, and metallurgic 3.2. Consolidated, it is flat net of the migration of these clients that I referred to.
On page number five, we see our delinquency and energy losses. Delinquency reaching 0.77 with 57.9. There is no impact of the pandemic yet on the results. Comparing on a year-on-year basis, we see an important drop of 15% vis-à-vis last year. This drop is driven by our program of power cuts. We can see 30% vis-à-vis 2019. It is one of the tools that we have in order to control delinquency. You can see that we had a drop in our ADA in this period. Vis-à-vis the previous quarter, there is an increase. This increase is influenced by non-recurrent effects in the fourth quarter of last year, and basically some renegotiations that we talked about during our previous call. Net of the effect of the renegotiations, we would have practically stability vis-à-vis these quarters.
Talking about losses on the same slide, we see a calendar effect, and because of that, we see a change in the percentages of losses in the last 12 months when you adjust for the calendar from March 2020 compared to March 2019. We see practically stability vis-à-vis the percentage of losses. This is a figure that we track very closely, going from 884 in March 2019, going to 898 in March 2020, adjusted by the calendar. You can see that the losses are practically stable vis-à-vis the last 12 months. On the next slide, on page six, we see the performance of our generation. We see a major drop in our spot price, even more so in the second quarter of 2020.
In generation, we have the seasonality effect, this affect our GSF, secondary energy, going to 102%, and this effect tends to be offset over the year. In the case of SHPPs, you can see a reduction in flow of almost nine percent. This is a very positive result regarding the flow in Minas Gerais growing compared to 2019 of 240%, then the South region, with a drop of six percent in the period. In wind energy, two effects. The first one that causes a drop of 16% in our generation, we see a lower performance of winds in Ceará, combined or partially offset with the availability in the three regions, Ceará, Rio Grande do Norte, and Rio Grande do Sul. With the Suzlon machines, where we see an important highlight in the performance of the equipment in the last 12 months.
Slide seven, I give the floor to Pan, our CFO, to continue the presentation.
Thank you, Gustavo. Good morning, everyone. Turning to slide seven, this quarter, EBITDA amounted to BRL 1.7 billion, increasing by 10.8%. The distribution segment posted an increase of 16%. The greatest gain came from market and tariffs, totaling BRL 135 million, mostly due to an increase in tariffs related to adjustments in 2019, and also Piratininga's review, in addition to the 0.7% increase in the concession area load with adjustments. Another important effect was our financial asset of the concession, which increased BRL 74 million, owing to an IPCA of 1.62% in the first quarter of 2020. Compared to 0.9% in 2019. Last year, we also posted BRL 34 million from PIS/Cofins over Santa Cruz ICMS. The sum of PMSO and ADA increased BRL 9 million, and other effects on EBITDA with a negative impact of BRL 9 million.
In trading services and others, the strongest impact was on trading, owing to a drop in margin of BRL 30 million. The services segment and the holding company decreased by BRL 7 million and BRL 4 million respectively. The next slide shows conventional generation, in which EBITDA was 6.3% higher, favored by pass-through of inflation in contracts, BRL 24 million. The effects of Epasa's overhaul last year, BRL 11 million, and the lower thermal generation this year, negative with BRL 15 million, were virtually offset. As for CPFL Renováveis, EBITDA increased 16.1% due to gain of PPA seasonalization in SHPPs of BRL 54 million. Biomass gains with seasonalization of contracts and higher generation in plants, BRL 15 million. Gains with inflation effects on energy contracts, BRL 12 million. These effects were offset in part by lower revenues with GSF in SHPPs due to the fact that it is secondary energy, negative BRL 29 million.
Lower wind farms generation, negative BRL 25 million. Slide nine shows the performance of our net income, which amounted to BRL 904 million in the quarter, increasing 58.5% vis-à-vis the first quarter of 2019. In addition to the variation of BRL 165 million in EBITDA, there were gains in the financial result that total BRL 341 million. Depreciation varied BRL 22 million, and taxes increased by BRL 150 million. It's important to highlight that we had an important effect in the financial result related to mark-to-market, MTM, which totaled to BRL 160 million, owing to the large volume of funding, nearly BRL 3 billion at an average cost of CDI plus 0.8% in a four-year timeframe, while the market already began to feel the crisis of COVID-19.
Please note that the gain in mark-to-market will be returned in the future as the scenario of risk spread comes back to normal, and as we get closer to the maturity date of these debts. However, this result reflects the cost avoided in this moment of crisis, since our conservative, prudent profile, which anticipated cash management to 2020. In addition, the decrease in CDI and the lower net indebtedness generated gains of BRL 67 million. The next slide shows the company's net debt over EBITDA ratio. On the first chart, net debt totaled BRL 15.1 billion and EBITDA in the last 12 months amounted to BRL 6.8 billion. The leverage measured by net debt over EBITDA was 2.21 times. On the next chart, we see the cost of debt in recent years, both in real and nominal terms.
The decrease in the first quarter of 2020 is mostly due to a reduction in the interest rate, Selic rate. As for the composition of the gross debt, we can see that 67% is pegged to CDI. This position became stronger with the new funding in the first quarter of 2020. CPFL has BRL 2.9 billion in new funding with an average tenor of four years and all-in cost of CDI plus 0.8%. In addition, in April, we signed a contract with BNDES in the amount of BRL 3.5 billion, a 20-year tenor, and the first disbursement is expected to happen in the first half of the year, accounting for approximately one-third of the operation. At the end of the first quarter of 2020, our cash amounted to BRL 5.6 billion, with a coverage index 1.78 times short-term amortizations. The average amortization term is 3.15 years. Slide 11 shows our CapEx.
This quarter, we invested 516 million BRL, an increase of 16% year-over-year. A breakdown by segment shows in distribution, total investment of 454 million BRL allocated to expansion, upgrade, and maintenance of the electrical system. For generation and transmission, BRL 30 million to Renováveis, keeping projects Gameleira and Serrote in progress. For transmission, 8 million BRL earmarked to projects Maracanaú, Sul I and Sul II, and BRL 1 million for conventional generation. Lastly, for the service segment, we allocated BRL 24 million. Thank you very much. Now I give the floor back to Mr. Estrella. Thank you.
Thank you, Pan. Moving now to slide number 10. Let me tell you more about our efforts vis-à-vis COVID-19 and how we are getting the company ready to face the pandemic.
I think we were very prompt to mobilize the company in mid-March, allowing ourselves to be ready and check the progress of the pandemic and the impact on our business. From the very beginning, we started a crisis committee. We have daily meetings to discuss the main topics, analyze the main indicators, identifying any changes in routes if necessary. All the major executives take part in these meetings. We make decisions to be ready for the crisis. Another important point, we've been firmly guided by the experience from other areas. Two good measures were made, and we anticipated ourselves owing to State Grid experience, like buying masks, alcohol gel, and some prompt measures that we anticipated based on State Grid's experience. It helped us a lot to have under control the speed of infection at CPFL. Here we show some pillars.
The most important one is a very strong focus on safety and health of our employees. A number of measures like cancellation of events and travel, monitoring the health status of employees with daily reports, identifying signs of fever or symptoms, distribution of masks, alcohol gel, so we can actually protect all our employees and do the best we can in our current practices in the company. We have a daily safety dialogue before our teams go to the field. We have conversations about safety, everything related to COVID. In parallel, considering the honesty behind our activities, we are all aware of the importance of continuing our activities, not only at CPFL, but the society at large. That's a critical topic for us, and we've been having a daily follow-up by the executives of the company. We have home office now.
That's a topic being discussed for a long time at the company. Within 2 weeks, we had 80% of our employees, more than 4,000 people, working from home all at once. We didn't know exactly how the dynamics would be at first, the impact on our work, our system, communication. The good surprise is that everything is running very smoothly. Another important point is that we have our call center units concentrated, and the volume of people also working in the same site. We began to decentralize these workstations, and recently, not only decentralizing but also using home office regardless of the call center independently. More than one-third of our call center is working remote from home and also working very well. Another challenge, in addition to the disconnections, we also had some closing of our agencies. That's a challenge of digitalization.
We can actually educate our customers so they use our digital channels. This is already happening. Today, we have 90% of service via digital channels. This is also very positive. Just as we did with call center, we do the same with our operation base and substations, preventing everybody to be on-site. We're working on smaller groups, so should we have any infection, which fortunately never happened, maybe we can have a more proper isolation by working with smaller teams. Now on the next slide, we show a sequence of our measures for the crisis. Very much concern, and we have a contingency plan to assure operation continuity. This crisis brings a lot of uncertainty, and it's hard to predict the crisis and how it can evolve and affect the society and our business.
We have this idea of working on a contingency plan to assure and preserve the continuity of our business. A very strong effort on our IT and information security systems. We largely and increasingly depend more and more on our IT area. That's a core topic for us today, and we're constantly monitoring our teams. Physical segregation of operation is another item applying both for distribution and generation. Everybody connected, but with remote operations, including commercial ones, in order to prevent physical contact. Also mapping and recycling professionals for backup for emergency situations. Fortunately, we didn't have any infection case yet. The financial aspect is also very important now, particularly when it comes to liquidity. This is also part of CPFL's strategy to anticipate items, preserve liquidity, and like Pan.
Well, Pan showed our cash position, which is very robust, making us very comfortable to move forward in the next months and overcome the crisis. I also mentioned the digital channels and a lot of enhancements and improvement in our customer relation channels, improving our website, our web, IVRs, use of chatbots, and providing free internet for anyone who uses our app. The idea is to encourage the use of digital channel. These are many changes that will apply not only to this moment of crisis, but also in the post-crisis time, so we can expedite our service to our customers and also a better quality of service perception. Also, an important increase in the number of accounts per month, 3 million in a universe of 9 million, but a significant increase also affected by the beginning of the crisis. New payment options.
Now we have a high rate of physical payment term. This is for the industry, the electrical system in general, but we are also encouraging new payment option, digital options. Now last month, we started to offer a credit card option. Basically the teams also showing the delivery collection. Now we have 97 teams in this implementation of collection by using POS machines for that purpose. When we have this crisis with a lot of uncertainty, what we do is to have daily meetings to check the moves and try to position CPFL in all its areas, so we can always make the best decisions. Always focusing on health, safety, and the continuity of our operations, maintaining our financial liquidity.
Unfortunately, we know it will still happen for the next weeks, so we still have to be working from home remotely so we can face the crisis and also assure our safety. That's what we had. Once again, we thank you all for being with us, and we'll be here to take questions during the Q&A. Thank you.
Ladies and gentlemen, we will start our Q&A session. The session will be in Portuguese and simultaneous translation into English. In order to ask a question, please press star one. In order to remove your question from the queue, please press star two. Our first question comes from Thiago Silva from Santander. Thank you for the question. Congratulations for the results. I have two questions. The first one has to do with losses. I understand that the calendar was unfavorable in the concession area. I would like to understand, and maybe you could give us some color about it. How are you positioning yourselves as you are close to the target of the regulator? How are you positioning yourself? This is a very sensitive situation.
That is to say, when you exceed the regulatory level, are you sensitive to that because of the situation of the COVID-19 pandemic? The second question, we are all expecting a presidential degree, but based on your talks with the regulator and your communication with them, and also based on the measures that have already been taken or mentioned in terms of liquidity, is there any problem for CPFL, or is there any situation that should draw our attention, not only regarding CPFL, but the whole sector when we see measures beyond the ones that are regulatory measures?
Thank you for the question. This has been exhaustively discussed with the regulators and now with the companies in the sector. There is a positive side to these talks. The idea is to preserve liquidity, not for the company alone, but for the whole sector. We believe there will be an increase in costs.
The interpreter apologizes because it's very difficult to understand what Mr. Gustavo Estrella is saying. We apologize.
There is one function regarding preservation, the liquidity of the distribution companies, but also you have to think about the transfer of tariff adjustments. These are the two main objectives. Your question is very timely because we need a very quick answer regarding this liquidity issue, and the reality among the companies is rather different, among the companies in the sector. Of course, the needs of the whole sector have to be met. We have already had some talks with the regulators and the ministry. The theme of equilibrium is very important. We have been seeing the market performance regarding delinquency already giving an impact or having an impact on April already.
It's very difficult to foresee, but anything, the scenario that we foresee is not positive in this regard. This is an extraordinary situation. It is a one-off situation in a pandemic, such as the one that we are living today, together with the theme of delinquency. Our main tool is the cut of the energy. This is the reality that we're living today, and the perspective is for an increase in delinquency. This would bring a relief in terms of cash and for consumers as well. About the losses, would you like to say something?
Good morning, Thiago. This is Luís Henrique. With relation to the losses, we are working very hard on inspections. We have already had 188,000 inspections in April, and these inspections are giving results mainly on groups A and B, the ones where you have the biggest losses.
All the companies in the sector have been operating with losses higher than the limit of the regulator. This has to do with the regulation that was established way back then. With this effect on this crisis, this pandemic situation, we have not stopped inspections. We are doing this very carefully, protecting our employees and our clients, as Gustavo said, but we continue to carry out our inspections. The calendar effect ended up hindering this. In April, we already have a change in the situation because of the calendar effect that led us to have this small increase. The losses are very well under control. During the pandemic, we are evaluating very well all these issues, and we are monitoring consistently and with the telemeasuring in RGE. Then we can cover all the A group, and then we have more assertive inspections.
Working very strongly regarding the quality of the inspections so that we may keep losses under control. Some, our distribution companies are getting to the regulatory level. They're getting close to this level, and our trend is to work so that everybody may go to the regulatory level. This is our plan for the next few months and years as well.
Just to add to what you said. Is ANEEL sensitive in terms of mitigating the impact during the pandemic, mitigating some situations of losses? Do you see any goodwill on the part of ANEEL?
As we said, the first impact was that, and we have been discussing this with ANEEL and the losses as they are stable. We have already opened a discussion with ANEEL, and we have already submitted this concern to ANEEL, not only our company, but all the companies in the sector.
Some period you have no cut and then all of a sudden you have a lot of cut, and depending on the economic situation of the population at the moment, there could be an increase in losses. We are preparing our plan, and we are studying our plan in order to tackle this. So far, what we have seen up to now is that we see no oscillations. We have things very well under control, and the figures are surprisingly good as far as we are concerned. We are talking with ANEEL because in case of a big distortion, ANEEL should recognize this exceptionally.
Thank you very much.
Marcelo Sá, Itaú.
Thank you for the call. I have two questions. The first one has to do with the decree that everybody is expecting with a package of adjustments and leaving open the economic side.
I would like to know if the idea is to have something very clear, that is to say, guaranteeing some financial measures. In this decree, do you think it will be enough for distributors to recognize a CVA to avoid an immediate impact on the next few quarters? The second question has to do with the limitation for three months of cuts of delinquent clients. Do you think this could be further extended?
As I said before, the decree is very much focused on the financial side, it is basically a measure to anticipate cash or bring forward cash. This discussion regarding equilibrium is under the responsibility of ANEEL and not the ministry itself. We expect a decree in this direction. Our expectation is that in the decree, we might have something included regarding this over-contracting.
This will be addressed in further talks with us. Yes, Gustavo, I think this is it. As you mentioned yourself, in the talks that we have been carrying with the regulator, that could be some more clear mention of over-contracting. This should be studied very carefully in terms of the assets. About your second question, we have no information whatsoever regarding the extension of the three-month period. The crisis or the pandemic, the way it is happening here in Brazil, more specifically in the state of São Paulo, we believe that this could be extended a little bit further. If we get into a more critical situation, we believe this will be a possibility. Again, this crisis is such a new scenario, so unprecedented for everybody, that measures taken will probably have to be reviewed for all the sectors. Thank you very much.
As a reminder, if you want to ask questions, please press star one. This concludes the Q&A session. I would like to give the floor back to Mr. Gustavo Estrella for the final remarks. Okay. Once again, thank you all for joining us today. My final remarks are that these are tough times that we're all going through. It relates to our professional activities, but also our personal lives. With a lot of uncertainties in this scenario for the coming months. Our word of order is to keep focused and discipline, and also being united as a company, focusing on what I said, health and safety, maintenance of operations, and the liquidity of our company. In parallel to that, we're opening discussion fronts, particularly in the regulatory framework involving loans, discussion of the financial economic balance, so we can have robustness in our industry after the crisis.
To some extent, what we've been doing is to have internal conversations about the world after the crisis, after the pandemic. We also will be focusing on digitization and undoubtedly considering new ways to interact with our customers. Considering good opportunities and also considering our working relations, which will also be different. It's only natural to use video conferencing now. Working from home office is no longer a taboo. We see that in many companies, home office is efficient, and it can be very positive, too. The idea is to consider to imagine what our business and company will be after the pandemic, and also remembering that during crisis, we also have opportunities. If we consider the soundness, not only of CPFL, but our shareholder, we have to keep an eye open on many opportunities that the future may bring. Once again, thank you very much.
We are all here for you for further discussion and questions. Have a good day. Thank you. This concludes CPFL conference call. Thank you for joining us today. Have a good day.