Good morning. Thank you for standing by. Welcome to CPFL Energia's First Quarter 2018 Earnings Conference Call. Today with us, we have Mr. Andre Dorff, CEO of CPFL Energia Mr.
Gustavo Estrella, CFO and IRO and other officers of the company. The presentation will be available for download in the company's website at www.cpfl.com.brir. We inform that all participants will be in listen only mode during the company's presentation. After the presentation, there will be a question and answer session and further instructions will be given. It is important to mention that this conference call 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 no 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. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of CPFL and Energia and could cause results to differ materially from those expressed in such forward looking statements.
Now I'll turn the conference call over to Mr. Andre Dorff. Mr. Dorff, you may proceed. Good morning, everyone.
Welcome to another conference call. Today, we'll be addressing the earnings of the Q1 of this year 2018. As usual, we have a brief presentation to deliver, showing a couple of numbers and highlights of the quarter, and then we'll be here for the Q and A. So let us begin on Slide number 3, highlights. In the Q1 of the year, there was an increase in load measured in our concession area of 3.7%.
Here, we highlight the industrial segment the industrial class. Later on, we're going to show a breakdown by segment or class. We also posted growth of 15% in our net operating revenue and 14% in EBITDA. It's another great highlight when it comes to our operating performance. The net debt of the company closed the quarter at BRL 15,600,000,000, a leverage of 3.31x net debt over EBITDA over the last 12 months.
We also had significant funding, BRL 2,800,000,000 this quarter, at very competitive costs. Still in the Q1, we had a big amount of investments totaling BRL 426 1,000,000 in several business of the company, and here, we highlight energy distribution. We also had a conclusion of CPFL Paulista tariff review in April after we closed the quarter with an average effect of 16.9% to be noticed by consumers. We also have the conclusion of RGE Sul's tariff review, an average effect of 22 point 47% to be noticed by consumers. Other relevant issues, I think you're following up the development of the electric segment in Brazil.
GSF is doing the agenda for several consecutive quarters being discussed by all companies, agencies and regulatory agencies and more specifically focusing now on Eletrobras, the possible sale of distribution and also due to privatization. We also have a bill and the reform of the regulatory framework in the industry or remodernization of the electrical system in Brazil and finally, distribution segment consolidation with a possible change in control of some companies. On Slide 4, we address our EBITDA in the Q1. On the left at the top, we show our breakdown of our EBITDA of almost BRL 1,400,000,000 in the first quarter. Distribution segment accounting for 58% of EBITDA generated this quarter.
Conventional Generation and Renewable, 41% and 1 charts show an evolution of our EBITDA by segment. At the top, on the right, we can see significant growth in distribution EBITDA, pretty much affected positively affected by revenue and cost effects, so a growth of almost 27% year over year. Conventional generation posted growth of 10%, pretty much related to the recognition of reimbursement from previous GSF periods. Also a drop in EBITDA for renewable generation, TPFL, Genovave of 3.7% related to the slow speed of wind this quarter. For the 2nd year in a row, winds are below the expected curve when compared to the historical average.
So we are convinced this is an outlier, which happened this year last year. For commercialization services and others, we had a more significant drop, 44%, not in absolute terms, but percentage wise, more related to lower margins in commercialization. On the next slide, Slide number 5, we show the highlights of the distribution segment. Like I said, we had an increase in load in our concession areas amounting to 3.7%, also an increase in sales at 2.9%. Here, we have a match between sale and verified load, which explains the difference.
And like I said, another highlight is growth in the Industrial segment of 5.8%, 5.6 percent at Paulista and 7.8 percent in Piratinga. So these are heavily industrialized areas, which is a proxy of growth and activity in our concession areas. So that's a very positive highlight of the 1st 3 months of the year. As to losses, there was a slight progress. In the Q1 of last year, we had 9.23.
We improved until the last quarter of last year to 9.01 and now 8.87 in the Q1 of the year. At the top on the right, we show the performance of our sales. Now we highlight customers in the free market growing by nearly 3%. The pie chart at the bottom shows a breakdown of our market, a breakdown by consumption segment. Residential, for instance, 35% industrial, 35% percent commercial, 17% and rural local administration and others with 18%.
When you compare our growth in our regions, when you compare to the market at large, we also realize that in this quarter, there was higher growth compared to the other categories. So if you compare 0.7% in Brazil. The same goes for a comparison between our distribution companies in the Southeast, 0.7% in the market and 3.3% growth at CPFL. In the south of the country, our growth of the country is 0.2% compared to 2% growth at CPFL, which is also much higher. And the most interesting chart of the slide, which is at the bottom on the right, it is a sales breakdown by consumption segment.
Our highlight is the industrial segment and other classes of consumption growing by 3.6%, heavily affected positively affected by rural in the South. Rainfall was lower in the south, therefore, higher need of irrigation in agriculture in the south of Brazil with a positive impact on the rural segment at Argyiso. Now on Slide 6, a recurring topic during crisis is delinquency. There's still some sign of improvement in delinquency index at the company. At the top, we have our ADA evolution as a percentage of gross revenue at 0.41.
By the way, we changed our calculation methodology. In the past, we used as a base Enel accounting manual, and now we are using IFRS. So if we were to post based on Enel, it would be 0.43, which is very close to IFRS, 0.41. So we no longer have the peak of 0.90 percent of our gross revenue in the Q2 of 2016. There is no change in our efforts to fight fraud and delinquency.
We still have a high volume of spending in these initiatives. An example is our collection actions, as we can see at the bottom on the right. This chart shows that in the Q1 alone, in 2018, we had 417,000 disconnections due to fraud or lack of payment. On the left, we also show the number of overdue bills as a percentage of revenue. So this is over 90 days, a slight recovery to 0.97 percent of gross revenue.
On Slide number 7, on Page 7, we show some highlights related to energy generation. The first highlight is a negative highlight related to wind generation. Like I said before, wind generation is below our forecast at 32% related to slower wind. We also show the performance of the spot price for PLD showing high volatility. We tend to talk about volatility of the spot price, and this chart shows us the broad variation over BRL 500, almost BRL100 in a short time frame.
On the right hand side, we show our installed capacity, a slight progress of 0.8% due to new start ups at CPFL Renovateis. At the bottom, we can see the NIPS reservoir level, not so concerned compared to previous years. There was some improvement this quarter compared to previous quarters, however, below historical averages. We closed April, as we can see on the left, at 46% of our average capacity in the reservoirs, so above more critical years and therefore, without any risk of supply for the current year 2018. So now I'll give the floor to is going to talk about the financial results.
So turning to the results of the Q1. I think this is a quarter with positive results. And remember that we now are already following up the results with the integration of RGE. So since the beginning of last year. So now we have just one comparison base.
There is a growth in the net revenue of 15.1 percent, EBITDA of 14.3% and net income of 80.7% growth. Considering the group's business, we have a highlight in the Distribution segment with a total variation positive of BRL 167,000,000 vis a vis 2017. The main effect here, as Andre has mentioned, is the recovery of the energy consumption. We already have growth again, a relevant growth in our concession areas. And obviously, this provides an important effect in our results.
And in addition to that, we have the effects of the tariff reviews. The tariff reviews, not the ones for 2018, but the ones for 2017, that will affect the comparison of the Q1 of 2018. Also, we have the concession financial assets with a positive effect of BRL 16,000,000 and a special highlight in the OpEx line with PMSO lower in BRL 62,000,000. And first, I should highlight legal and judicial expenses, BRL 29,000,000 and our allowance for doubtful accounts that we as we have shown with a drop and a positive result of BRL 21,000,000. Now turning to conventional generation.
We had a positive total variation of BRL 29,000,000. The main effect here is the GSF variation. We have a seasonality issue related to GSF. But here, especially regarding a change in the accounting criteria of GSF on the posting criteria of the GSF, where we now start posting that by the competence system with a positive effect in this quarter because it partially offset itself over 2018. But in this Q1, it has a positive effect of BRL 21,000,000.
In commercialization, basically here, we have a margin loss. And when we compare that to 2017, with an effect of BRL 32,000,000 in commercialization. For renewable, we have a total variation of BRL 9,000,000. Here. We have positive and negative effects.
The main negative effect here is the performance of our wind farms, especially here because of lower wind speeds when we compare that to 2017. And here, this effect is of BRL 36,000,000 in our results. Partially offsetting this effect, we have the stake of the short term auctions, MCSD, the surplus and deficit compensation mechanism with a positive effect of BRL 12,000,000 in our results. In addition to that, we also had the start up of the Deschorada complex with an EBITDA increase of BRL 11,000,000. Now turning to our net income.
We had a positive variation in our financial results of BRL 129,000,000. The main effect here is the drop in the interest rate, bringing us a reduction of BRL 158,000,000 in our financial expenses. And we have there lower interest rates, BRL149 1,000,000 and also a drop in our leverage, including assets and liabilities that are regulatory, which also impacts our financial results with a positive variation there at BRL15 1,000,000. Now turning to Slide 9. We have a snapshot of our indebtedness.
You can see that in this quarter, we have a leverage of 3.31x net debt over EBITDA, a slight increase visavisendoflast year. And the main variation here is that in spite of the EBITDA's improvement from 2017 to 2018, here we have the variation of our net debt, especially explained by the variations of assets and liability regulatory assets and liabilities. And these assets are now integrated in the tariff review of the companies. And now we start to double digit of 2018. About cost, still in a downward trend, we have an nominal cost of 7.6%, significantly lower when compared to prior quarters.
And that breakdown, we see that we are largely exposed to CDI. This year, we have made a swap for fixed rates, taking advantage of this lower interest rates. So we are already very limited in terms of exposure to the TDI. And more now, we are under the prefixed rate. So with that lower interest rates, we are we have that kind of plan for 2018.
Turning to Slide 10. We have our debt profile and liquidity of the company. So we ended the quarter with a cash of a little bit over BRL 3,000,000,000. And when we've seen the charge, this is we see that this is enough to pay all our maturities in 2018. And this is influenced by the funding we had in the beginning of January, funding of BRL 2,800,000,000.
Therefore, we are expanding our debt and refinancing the company in the long term. What we are doing today, as usual in the group, is to work in the refinancing for 2019. That's what we are working on right now, and we expect that in the next few months, we already start working on maturities of 2019 then. Now turning to Slide 11. We have a snapshot of the conclusion of the tariff review process of our 2 distributors, CPFLY Polyza and Rejecil With positive results, and we have here at Paulista the net regulatory asset base of BRL 5,200,000,000, and we were able to maintain the regulatory walk at 8.09%.
And we see here the performance of the regulatory EBITDA in the 3rd cycle. It was BRL 662,000,000. And for this cycle now, BRL 1,033,000,000, there is an increase of 56%. Obviously, we start to see that, to see the impact starting in April. That's when we had the tariff review process.
In a similar analysis at Regera Su, we have an additional challenge considering the company has been acquired at the end of 2016. And so the challenge was in the process of developing that base pre tariff review that is just 1 year 2017. So here, we post almost BRL 2,400,000,000 in terms of the net regulatory asset base. And here in the performance and the regulatory EBITDA, this was even higher, starting at BRL 232,000,000 up to BRL 4.30 5,000,000, an increase of 82% consists of the 3rd cycle. Once again, we start noticing the differences starting May of 2018.
So we now end our presentation, and we turn the call back to the operator to start the Q and A session.
The first question is from Bruno Varela, Solana Capital. Hello, Streladorf. I have 3 questions to ask. Firstly, I would like to have a better understanding of the dynamic of losses at RGE Sul. There was a drop of 60 basis points for nontechnical losses but also 75 bps increase in technical ones.
I'd like to understand if things are related. And what about this increase in technical losses, very strong from 1 quarter to the next? The second question, well, there was a strong impact of BRL770 1,000,000 in the supplier account and cash flow, consolidated cash flow. That's another point we would like to understand. What is behind the strong impact?
And lastly, could you tell us more about consumption at DISCOs in the second quarter with the closing of April? Thank you. Thank you for your questions, Bruno. Good morning. Luis Enhiki is in charge of regulated operations, and he's going to answer the 3rd question about DISCO's consumption after we close the quarter, April May.
Hello, Bruno. How are you? In terms of consumption, April was slightly above our expectations, mostly due to temperatures. In all our distribution companies, consumption was slightly higher than what we had in our previous budget. So we still have this trend, like Gustavo said, of an upturn.
It is very mild now, but it is an upturn in consumption, particularly in the industry, as we said before. As to residential, this is also related to temperature. It does have an influence. We had high temperatures from April onwards visavishistorical average for this month. As to losses, could you repeat the question?
I think you wanted to know about the technical aspects, right? Actually, you had an increase in technical items, but a strong drop in nontechnical items. Is there a relationship between both due to this inverse move? And what is the reason? If there were isolated events, what would lead to this increase in technical losses?
Ever since we acquired the company, we've been calculating again and reassessing every piece of information, not only losses, but also other technical information. And this variation, by the way, in the measurement process at the border, we are working again all the calculations about technical losses. So the technical losses, if we consider low seasonality because it does have an impact on losses, we are doing all the calculations again. And the global one is not so heavily affected, but we are trying to have a better balance between what is actually technical and nontechnical. So within Anel's rules, because we also had some changes there.
Today, for instance, high voltage by distribution, no longer for load flow. So there are many new procedures being adopted so we can come to a more adequate and correct number in this breakdown between technical and nontechnical. Before we give the floor to Gustavo to answer the second question, just a general comment on consumption, Bruno. It was a more vigorous growth in the Q4 of last year. General consumption in viscose, our concession area, we still had very strong growth in the Q1, but it is not so vigorous in April May.
So it's still growing but more moderately compared to previous periods. Apparently, it is something we see in many segments of the economy, which had a very vibrant growth in the Q1 but are failing to keep up the same trend over April May. Okay. So Bruno, let us talk about variation of suppliers. This is basically cash management.
That's something we do particularly at the end of every year, postponing payments of some suppliers. Cash restriction, for instance, at a company, that's when we work on this kind of operation, and we did it last year. So I postpone the maturity after an agreement with the supplier. I postpone the payment, and usually, it happens over the Q1 of the following year. So basically, this is what happened.
This is not a regular move of the supplier's account, but this is a postponement of maturity for some suppliers and then we concentrate payment in the Q1. And I closed the previous year with a high balance for suppliers, and this balance is adjusted over the 1st months of the following year. So this explains this move. Great. Thank you very much, gentlemen.
So we now end our Q and A session. I will turn the floor back to Mr. Andres Dorf for his final remarks. Thank you very much.
I would like to say that we are still working on optimizations and efficiency gains, focusing on short term results. And at the same time, we are evaluating and investing in opportunities, business models, digitization that will create value in the long term. Once again, thank you all for your participation in this call and for trusting us over this period of time. The conference call of CPFL Energia is ended. Thank you for your participation, and have a nice day.