Good morning. Thank you very much for waiting, and we would like to welcome everyone to the CPFL Energia 3Q1 'nineteen Earnings Conference Call. Today with us, we have Mr. Gustave Vitell, CEO of CPFL Energir and Mr. Pan, CFO and Investor Relations Officer as well as other officers of the company.
The presentation will be available for download at the company's website, cpfl.com.brinvestorrelations. We would like to inform you that all participants will be in listen only mode during the conference during the company presentation. Afterwards, there will be a question and answer session when further instructions will be given. It's important to mention that this call is being recorded. Before proceeding, we would like to 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 beliefs and assumptions of PFO Energia's management and 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, they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may also affect the future results of CPSL Energia and may cause results to differ materially from those expressed in such forward looking statements. Now we would like to turn the conference over to Mr.
Gustav Estrella. Mr. Estrella, you may proceed. Good morning, everybody. I thank you very much for your presence in the Q3 of 'nineteen conference call.
Let's go to Slide number 3 of the presentation with the highlights for the Q3. And the first two ones refer to Aviso. The EBITDA reached BRL 1,618,000,000, a growth of 4.5 percent our net income, BRL748,000,000, growing by 19.4%. And later on, we will see that from the view we have not seen a recovery of the consumption of energy, but the results are good. And EBITDA and net income lines, our net debt was BRL 16,800,000,000 with a leverage of 2.68x on net debt to EBITDA ratio.
Here, already considering the acquisition of the CPFL Renovibre shares that occurred in the first half, 99.94 percent already consolidated under the CPFL Group. One important highlight has to do with the investments. We invested in the quarter BRL616,000,000, a growth of 17% vis a vis 2018. And we continue delivering the investment of BRL 2,200,000,000 during the full year of 2019. On this track, very good news, have to do with the tariff review of Sleep and Cell.
Pilotingca, we will be talking about percentage later on, but the final effect is a negative adjustment of 7.8% for our customers, an increase in 6.2% in parcel B and the transfer of the loan of CCR. And this causes this important drop in the tariff, and this is very important for our customers. As I said before, we have already finished the transfer of shares of CPF and Novavares, BRL 4,100,000,000 being paid and the value per share, BRL 16.825, the process has already been concluded. So we have Renovaris almost 100 percent integrated into the CPFL group. And with that, our installed capacity for generation is 4 point 3 gigawatts already considering the new participation of CPFL, Genovares.
We also had an important recognition on GEA ISM, the Sustainability Index as the most sustainable company in the area of energy, highlighted the CFL, Veta Hospitals program. By means of which, the program with energy efficiency program, we will have BRL 150,000,000 being invested over the next 3 years in order to have solar energy installed in our area. So this recognition from the exam is very important. We also have another highlight having to do with the community with the projects of the CPFL Institute. Now let's go to Slide number 4 in which we give you more details about the tariff revision of CPFL Piratinga.
ROB, BRL 3,800,000,000 net regulatory asset base, BRL 2.48 7, Parcel B, corresponding to BRL 9,000,000 to BRL 9,000,000 and demagroto EBITDA, BRL 460,000,000. On the chart, you can see on the lower part of our slide a growth, visavisafox cycle of tariff review, growing by 34%, BRL 117,000,000 in growth visavis our regulatory EBITDA of the 4th quarter, BRL 460,000,000 in the comparison with the 4th cycle restated or updated considering the effects of the write offs and depreciations and the monetary restatement, we see an even higher growth, 47% growth. Vis a vis the basis for the 4th cycle, of course, with a better expectation of regulatory EBITDA and an expectation of growth in our results for the next few years. And getting into more details, as I said before, the positive effect of the growth of Pasi will be 6.17%. The main effect here is the increase in our investments made in BRR.
We see that we have an incremental growth of BRL 69,000,000,000 and also an increase in the average rate of depreciation. In the reduction of the parcel A, the main highlight is the end of loans of CCE, a reduction of BRL 300,000,000 practically in our parcel A, which brings about a major reduction in our tariffs for our end customers. Now let's go to Slide number 5 in which we see our sales performance. As I said, it's a challenging quarter with no clear signs of a recovery in consumption in our concession area. Here, we see a reduction of load in our concession area, 0.3%.
And sales in the concession area, 1.8% drop. And when you have the difference between these two ratios, it is because you have a recovery in the market at the end of the quarter that still does not affect our sales, but it does affect our load. What we have been seeing now going to the Q4, maybe in October, we see a recovery in consumption already met. We already get a little bit of this effect at the end of the Q3, and it has an impact on sales that we will be seeing in the Q4 of 'nineteen. When we look at the consumption classes, industrial is a highlight with a drop of 4%.
And what we did here on this table on the right side is to break down this drop in order to see from where it comes. And we see that there is a calendar effect that is not a real effect of market and migration of some clients that today are connected directly to the base grid. So there is no direct relationship with the consumption of energy and also GDE with 0.1. And if you isolate all the effects, you see the macroeconomic effect, that is to say, the performance of the industrial classes with a drop of 2.4%, lower than the 4%, but still a very negative effect on industrial consumption once again. Talking about a more recent consumption expectation, we see some signs already, very timid signs of recovery in consumption in the Q4.
It's a little bit better than the 3rd, but still a performance along the same lines of 2018. On Slide 6, delinquency and energy losses regarding delinquency. We see an improvement in delinquency comparing to the Q2 of 2019. Basically, the trend that we identified here over this year, 2019, after an important increase at the end of last year. So we see that in the Q1 of 2019, our ADA was BRL 68,000,000, they're going down to BRL 64,000,000 and going down now to BRL 61,000,000.
This is a positive trend in delinquency, but still much higher than the Q3 of 2018. And with a very intensive action of decrease in delinquency on the lower left part, you see our collection actions with a growth of 10.8% in the volume of cuts, Pafanen's 89,000 cuts. On an annual base, we intend to have BRL 2,200,000 in cuts in our concession area of disconnections. In terms of losses, we closed the quarter with 9.31%, slightly higher than June 'nineteen. And here, we also see a calendar effect in terms of billings, and this affects our calculation of losses the way this is done.
And our expectation is of a real growth of losses, and this is a calendar adjustment that should be offset in the Q4 of 'nineteen. Slide number 7. We see our hydrological scenario with an important drop in the level of reservoirs in our national interconnected system with an expectation for November to close at 21.4, one of the lowest levels in our historical series. And this also brings about a bigger reliance during the period that starts now with an expectation of recomposition of these levels in the next few months. It should continue to affect our PLD or spot price because it has been consistently superior to the 2018 levels.
And this is an expectation that it continues to be under pressure over the next few months. Slide number 8 now, Renewable Generation. We have the 3 sources and the CPFL Renovares with our performance effectively flat performance in biomass, growing by 8 gigawatts hour of energy generation, a growth of 35 gigawatt hour in our SHVPs in the South region and also in Minas and Sao Paulo. But the main effect comes from our wind mills, a drop of 169 gigawatts hour, especially due to the reduction in generation or wind. And you can see on the chart a drop of 10 percentage points on an annual comparison 3Q 'eighteen and 3Q 'nineteen.
Here, we also see a certain recovery as of October but still lower than the levels of the P50. Now I would like to give the floor to Pen, our CFO, and he will be talking about the results of the group in the Q3. Good morning, everyone. Now let's go to Slide number 9. The EBITDA in this quarter was BRL 1,600,000,000 with an increase of 4.5%.
In the Distribution segment, we had an increase of 17.8%. And the main effects were BRL 187,000,000 of market effect, mainly due to the increases in the tariffs that we had during the last readjustments and by the load in our concession area. We also had a gain of BRL 42,000,000 because of the REV report of CPFL Piratinga. On the other hand, the financial asset of the concession had a drop of BRL 78,000,000 due to the lower IPCA this year. And lastly, an increase of 23,000,000 bals in PMSO, highlighting the expenses with asset write offs and also linked to our CapEx of BRL 17,000,000 and also our expenses with pension funds, BRL 6,000,000.
And in the Trading Services and Others segments, we saw a drop of 24.8%. And this happened because of CPFL Brazil that had a lower margin in 2019 due to the lower energy prices. On the next slide, we have the Conventional Generation segment, which had an EBITDA 0.5 percent higher. And the main effects were the transfer of inflation to the contract amounting to BRL 32,000,000 the lower volume of hydro and thermal energy, representing BRL 17,000,000 and a nontypical effect that happened in 2018, which was a tax benefit, amounted to BRL 11,000,000. And at CPSL Renovavas, it got dropped by 10% due to a lower generation of wind energy, BRL 34,000,000 and asset write off and an increase in expenses by BRL 6,000,000.
And on the other hand, seasonality of contract generated a gain of BRL 45,000,000 due to a higher allocation of energy during this period. And I would like to remind you that this should be offset during the next quarter. On Slide 11, we show you the net income performance, which was BRL 748,000,000 in this quarter with an increase of 19.4 percent visavis2018. Besides the BRL 70,000,000 variation in the EBITDA, the main effects were in the financial result. It was an improvement of BRL 147,000,000, which is due to the additional revenue that we have with the funds coming from the IPO and the CPFL cash that reached BRL 56,000,000 and the reduction in interest rates and also in the net debt with the benefit of BRL 53,000,000.
The mark to market effect, BRL 32,000,000 depreciation with a variation of BRL 30,000,000, and there was an increase in taxes due to the better results, BRL 65,000,000. On the next slide, we show the results year to date. Up to September, the EBITDA had an increase of 8.6 percent, BRL 370,000,000 and net income going up by 26.5 percent representing BRL 396,000,000. In the EBITDA, I would like to highlight distribution that was favored by the tariff reviews that occurred in 2018. And in the other segments, we see that the weak performance of wind in the CPFL Renovibase units was offset by the good result obtained in the other ones Now going to our net income, besides the positive effect of the EBITDA, we also had an improvement in the financial result of BRL 268,000,000 due to the lower indebtedness and the lower cost of debt.
Added to the financial revenue from the IPO funds. Now let's go to the next slide about the company's indebtedness in which we show in the first chart the evolution of the net debt EBITDA indicator. Thus, net debt amounted to BRL 16 point 9,000,000,000 and EBITDA in the last 12 months reached BRL 6,300,000,000. Net debt EBITDA ratio was 2.68x. And this increase is due to a higher participation in CPFL renovavirus during this last period.
And on the lower part of the slide, you can see the evolution of the nominal cost and the real cost of debt. The nominal cost reflects a change in the debt profile as from the end of 2018. And the real cost is also affected by the IPCA, which was 2.89% in the Q3 of 'nineteen. And I would like to highlight the fact that 64% of the debt is pegged to the CDI. On Slide number 14, we have our CapEx figures.
In this quarter, we made an investment amounting to BRL616,000,000 with an increase of over 17% on a year on year comparison. And per segment, we had in distribution a total invested of BRL 515,000,000. For the expansion and improvement in the system. And the year to date amount was BRL 1.4 1,000,000,000. For generation and transmission, we had BRL 45,000,000 for Renovaldes, BRL 8,000,000 for transmission and BRL 2,000,000 for conventional generation.
For the transmission segment, I would like to highlight the beginning of the Maracanau, Suwon and Su2 projects, which were acquired during the 2018 auctions. And for the Services segment, BRL 10,000,000 were invested. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. It will be in Portuguese.
We're interpreting into English. Our first question comes from Thiago Silva with Santander. I have two questions. First, you mentioned in the beginning of the presentation a resumption in consumption volume in October. Given the temperature effect, could you give us more color in terms of how much is coming in your concession area?
How much is coming from volume? I mean, if this is a shy resumption? Or do you think it will come with more momentum? And considering the industrial segment as well. My second question has to do with growth.
We know that we have the C3E distribution company to be sold and other distribution companies in the market. Are you considering those? And also, I'd like to know about transmission auctions, the next auction that will be held in December. Are you considering any lots that would make sense to you? Thank you very much.
Thank you, Thiago. Okay. Regarding your first question, resumption of volume and consumption. Indeed, we saw in October and in November signs of consumption recovery. Basically, in the residential segment because of the temperature.
In October, average temperature was above the historical series. And so that drove consumption in the residential and commercial segments. Sorry for the interruption. In the Industrial segment, we saw that in the 3rd quarter, we have a 2.4% reduction in consumption. This is microeconomics.
And what we see is that from October onwards, there is a certain resumption and remaining flat compared to 2018. So there is some improvement in the 3rd quarter. So there is a certain resumption of growth. Our expectation for the year is that we should end consumption on average 1.5% above the level of 2018 and a lot more concentrated on low voltage segment than on the industry. So this would be kind of the break down.
I think the temperature has an important effect. We don't see a lot of signs of resumption of consumption by the industrial segment. Your second question has to do with growth. I guess that we have some good opportunities here, Keeping in mind the short- to mid term, perhaps in the foreseeable future, we have the transmission auction in following our strategy. We want to operate in niches.
So there are some lots that fit our strategy. So we have an expectation of, yes, bidding in this auction in December for some lots that fit our strategies. Looking more into the mid to long term, as you mentioned, there are some important expectations of assets in the distribution area. And again, it has to fit our strategy by region, by location. So I think it makes sense to look at these assets that are possibly put in the market.
You mentioned C3E and some others, and we will be looking into those for sure at the right time. But given our size and the relevance of CPFL in the market, we are definitely a consolidation player in the distribution segment. And regarding generation, with the completion of CPFL Renovave's shares acquisition, we are now an investment player in new generation projects. Again, we are keeping this market in our radar. And just going back to my second question.
There was an acquisition of Sempra assets in Chile. Did you get involved in that acquisition in terms of did you help? And could you speak about that? No, we didn't play a part there. Our strategy is very much geared to the Brazilian market, where we have a great competitive edge given our footprint in the market.
And like I said, given that we have a number of new potential assets that we could invest in, so our expectation is that we will keep our focus on the Brazilian market. More international, but they do it, not us. Our next question comes from Gustavo Mihele with Itau BBA. Good morning, Estrella and Pen. Thank you for the presentation.
I'd like to ask a question about CPL Renovitis. Perhaps it is the subsidiary that drew our attention the most in the results. But any broader view, I would like to help you discuss the triggers for results of CPFL Renovavis for the next 2 quarters. Anything regarding lower costs that we could expect because of the integration to CPFL Energia after the follow on? Anything we could expect in terms of a faster start up of projects that are being built?
And there's another question of a more regulatory in nature. Have you conducted any study regarding the impact of implementation of our prices in your renewable sources because we have talked with some wind players, and they have different views regarding this point. Some expect to benefit from the implementation of this factor. Others expect a more negative impact. Depending on the profile of wind that they have in their portfolio, have you conducted any studies about that?
Could you give us any number related to that? These are my questions. Thank you. Well, Gustavo, thank you for the question. This is Fernando speaking about CPFL, Renov Aves.
To try to address your first question in terms of results, as you mentioned, we are, at the moment, integrating CPFL Renovavas and CPFL Energia processes. We're adopting the best practices. As we mentioned, we have an expectation of capturing synergies in PMSO as well as tax gains considering an accumulated loss of about BRL 2,500,000 at CPFL Renovales. There is also an expectation of reducing our cost of debt at CPFL Renovales that we can observe and we can actually see some of this impact in the recent months. Regarding the results, it is important to say that wind has been below expected along the year of 2019.
But as you know, wind projection is done for a 20 year horizon, the 50. So when they get our older arms that have been in operation for more than 10 years, such as is the case of Ceara, we have a generation very close to 100%. So it is normal to have a natural resource performing a little below expectation in the next year. In the following year, you can have a recovery in the following years. Speaking about spot price by hour, we are considering this topic at the company.
It really depends on where the farm is located. A good deal of our farms are located in Rio Grande do Norte and Ceara states. Over there, winds tend to be stronger during the day. During the afternoon, it tends to be very windy in these regions. And that tends to generate a positive effect in terms of spot price per hour.
Other regions of Brazil have a different wind performance, but our farms are located particularly in locations where it tends to be more windy during the day. Our next question comes from Luisa Traus with Hello, good morning. I have two questions. Number 1, in the distribution segment, particularly regarding regulatory EBITDA of the companies, I would like to know how are the companies performing regarding the regulatory EBITDA, and particularly at Zira Tlinga? This increase is expected as of the 5th cycle will be captured in the coming months.
And my second question is regarding the DISCOs. Do they have any losses regarding over contracting? And what are the measures taken regarding the migration of customers regarding energy contracting in the long term? Okay. This is Luiz Enriqui from Distribution.
Regarding regulatory EBITDA, it is in keeping with the real one. Given the regulatory threshold, there are no great distortions here. It is very much in line. And regarding Piratinga, we start to see the effect in the next month and in the coming years. So this effect will start being start to be seen gradually in the next month, October, November and subsequently.
Regarding over contracting, we don't have any problems. All of those customers that migrated to the pre market, this is considered as voluntary. We are following it. We are using all of the mechanisms for exchange, for sale. In other words, we are managing over contracting really well.
This has not been an issue for us, and we've been managing it very well over the years. Regarding possible discussions about the past, well, we are discussing this with NAL according to the regulatory rules and according to what is established in the regulation. So it's all under control. Let me just add to this regarding overcontrasting, yes, in some companies. One example is Suratininga.
We have a relevant surplus, but here basically given a quote, allocation and the migration of customers to the free market, which is actually involuntary, this is not a thing that worries us. All of the surplus that we have is an involuntary surplus that has no impact whatsoever on our results. So So when you talk about the regulatory EBITDA, you think it is performing you think it's over performing? Or is it compatible with the regulatory EBITDA of the other companies, Ballista, RGE? We're performing and keeping with the regulatory EBITDA, but just a little bit.
And regarding the regulatory WACC in Q3, was it penalized in any way? No. When we defined a write off 809, it would be valid until the end of this year, 2019. So all tariff reviews of our group that happened in 2018 or Pura Tlinga now in 2019, We remain with a WACC of 809, and this will continue until the end of the cycle for 4 years of Pura Tinga and 5 years in the case of all of the other companies, POLISTA and RGE. And for the next cycle, have you defined anything?
Is this being discussed? There is an open public hearing that will be held today, and this topic will be discussed that we are following this up close, but there is no definition regarding the new WACC. Excellent. Thank you very much. This concludes the question and answer session.
I would like to turn the floor back to Mr. Gustavo Estrella to proceed with his closing statements. Please go ahead, sir. Very well. Again, I would like to thank all of you for joining us in this earnings conference call and for your questions.
I just want to stress some important points about our company. We completed the process of acquisition of CPFLO and Ombawi's shares. And as we said in the share issuance process of the company in June, this is a consolidation process in the CPSO group of giving some important benefits to the group. Some of them are already being filled. We are finalizing the integration process of the of both teams, CPFL, Renovates and Energia.
So we are going to have a cost benefit, particularly as of 2020. We have an important expectation of reducing our funding cost that we have a program of debt exchange at Genovave with an expectation of reducing the cost of our debt and also in the integration and merger process between CPFL, Veracao and Renovave. The benefits will be captured along 2020. So this is a process that has been kicked off. The expectation is that the process will be ended by the end of 2020.
And the expectation is that it will bring good results for the group. For 2020, we expect the economy to rally. The reforms are being taking place. The pension reform was approved. We see even if it's in its infancy signs of consumption resumption for the industry.
And the expectation for next year is that we're going to have the economy rebounding more strongly, and this will have a reflex on power consumption. And it could be fact on our commercial losses and delinquency rates. In terms of opportunities, I think the group is looking at new investments. We are going to have the December transmission auction, and we will take part. We are monitoring and we are paying attention to opportunities in the renewable generation segment, particularly now with the integration of CPFL, Renovave and also in distribution.
If there is an interesting asset in the market, we'll look into it. So this is the outlook for 2019, and we have a more positive expectation regarding 2020. Again, I would like to thank all of you for your participation, and have a good day. That concludes CPFL Energia conference call for today. Thank you very much for your participation, and have a good day.