Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Energisa conference call to discuss the third quarter of 2019. The audio for this conference is being broadcast simultaneously through the internet at ir.energisa.com.br, or you can also download the PowerPoint pack. We would like to inform you that during the company's presentation, all participants will be on listen-only mode. We'll begin the question-and-answer session when further instructions will be given. If you need any assistance during the conference, please request the operator's help by pressing star zero. We would also like to inform that the conference call is in Portuguese and will be presented by the company's management, and the English version will be broadcast by simultaneous translation.
This conference call contains forward-looking statements that are subject to known and unknown risks, and uncertainties that could cause the company's actual results to differ materially from those in our forward-looking statements. Such statements speak only as of the date they are made, and the company is under no obligation to update them in the light of new information or future developments, and they depend on circumstances that may or may not occur. Conditions and other operational factors may also affect the future results of the company, and of course, may materially differ in the forward-looking statements. I will now turn the conference over to Mr. Maurício Botelho, who will begin. Sir, you have the floor. Very much. Thank you all for attending our conference call for the results for the third quarter.
With me here, we have Ricardo Botelho, who is President of the Energisa Group, Jose Ari de Souza e Filho, who is Vice President for Distribution, Fernando Maia, Regulation Director, Claudia Gondim, Finance and Corporate Director, and also our IR team, Deborah Muniz and Bruna Alvarenga. I will be showing a sequence of slides, and then we'll open for questions and answers. I would like to remind you that just as in the previous quarters, the figures in the operational parts of the presentation are included. The information of the companies which have been recently acquired in Energisa Rondônia and Energisa Acre, controlled by Energisa since 2018. For the financing part, we have pro rata values, which do not consider the acquisition of these companies and only attach the regulated distributors.
On slide three, we have adjusted EBITDA, BRL 980 million for the quarter, BRL 2.8 million in the nine months to 2019, an increase by 28.2% and 26.5%, respectively, compared to 2017. Concerning net income, it's BRL 4 million for the quarter and BRL 174 million for the nine months of the period. It's worth noting that the Energisa Rondônia and Energisa Acre companies have contributed negatively for the quarter, and therefore were down by 65.6%. If we do not consider these companies, the pro forma net income totals BRL 204 million, which corresponds to BRL 710 million in the nine-month period of the year, a decrease by 5.3% and an increase by 30.6%.
I would also like to highlight other important events that happened after the closing of the quarter. The first one, which calls our attention, is the extension of the concession at Pocinhos, Energisa Pocinhos, for 2020. It was increased with the Ministry of Mines and Energy, and we'll be signing this agreement in December. Another highlight is that in October, we had a favorable decision for the tariff review for Energisa Rondônia and for Energisa Acre. Fifteen days later, on October 30, we appealed administratively at the regulators agency, asking for the regulator to give their opinion and ask to maintain the same conditions. This has been postponed to February 21. Therefore, we are asking to keep our assets for June 2019, keeping Energisa Acre, and also asking for the IRT, which is the annual adjustment, not to be applied until we close this.
On slide four, we have the development for the power market. We are distributors. The sales of electricity have grown by 4.4%. In Brazil, there has been a drop by 0.2%. In the first nine months of the year, this growth was 4.2% against 1% for Brazil. The dynamic of our action within Energisa still presents a positive differential concerning the average for the country. Growth for the third quarter is due to the performance of the household consumer class, which advanced by 8.2% for the quarter, and commercial 6.3% in the period. This has been influenced by the high temperatures in our regions. The calendar factor also affected it positively. I would also like to highlight Energisa Mato Grosso, with a growth by 8.4% in the quarter. Household also grew by 14% and commercial by 8.6%.
Energisa Mato Grosso do Sul obtained the second-best performance, which was 6.8%, also influenced by the household and commercial segments. We have experienced the highest temperature in 30 years in the state, and this influenced, obviously, the increase of the segment for household and commercial. Energisa Rondônia also performed well, growing by 6.8%. Acre also had a significant development in the quarter, 8.7% in households. Actually, 8.7 on average, and households by 9.5% and commercial 15.1%. Moving on to slide five, you can see our efforts register low-income clients. Between September 2018 and 2019, we increased our client list by 151,000 clients, low-income segments, with a highlight for Energisa Rondônia and Acre. In June of 2019, we also added 90,000 clients to the low-income bracket. On slide six, to your left, we have the history of losses.
The indicator was 13.6%, considering all the companies in the group, which accounts for 0.56 percentage points above the target for the regulator. If we do not consider Energisa Rondônia or Energisa Acre, the total power losses represent 11.6%, which means 0.15% below the target. The highlight for the quarter is Energisa Mato Grosso, which reached the best performance of the group when compared to June 2019 and September 2018. It was the first time that this concession reached the regulators' target since its acquisition in 2014. We still have many challenges in this particular company, and we are working hard to keep this indicator within the target. Energisa Paraíba is temporarily above the regulated target, which is explained by the raise in non-technical losses, which is being dealt with through an additional plan of fighting theft.
We have been intensifying our security and sealing actions, and this has been implemented in 2018 and has been intensified in 2019. This can be explained by the worst of the socioeconomic indicators in the region. Energisa Acre is below the regulators' target, whereas Rondônia is 6% above the regulatory limit. We have proposed a wide scope of measures to deal with the situation by increasing team, inspection teams, focusing on sealing, and focusing on areas of land invasion. On slide seven, we have quality indicators. Except from Rondônia, all distributors within the group are below the regulators' limit for quality, which is good. Many of the concessions are continuously improving their own figures. They're beating their records historically.
We have, for Energisa Paraíba and Energisa Tocantins, in the average outage frequency and outage frequency, average outage duration is also better, not considering Energisa Rondônia, Energisa Acre, Energisa Tocantins presented a better performance of the group with a reduction of 4.3% in the average outage duration and 2.6% in the outage frequency ratio. Energisa occupied the second place in this ranking, improved 0.85 hours in the average outage duration and 2.05 times in the outage frequency ratio. Energisa Rondônia and Energisa Acre continue to be the targets of our plans of investment and maintenance after their acquisition at the end of last year. We are speaking of training teamsautomatizing networks and taking measures to clean and tree pruning in order to improve these two concessions. Moving on to slide eight, we have financial information.
In this case, we do not consider the results for Energisa Rondônia or Energisa Acre, but we're doing a PMSO pro forma. There was a reduction by 4% in the quarter. In the nine months of the year, the amount is in line with the same period of last year. If we do not consider non-recurring events in the third quarter of 2018, such as labor compensations in Sergipe and also the payment of lawyer C in Energisa Mato Grosso and PMSO for the third quarter of 2019 would have grown by 2% compared to the third quarter of 2018. It is still below the inflation of the period. A significant part of the adjustment and increase in staff is explained by wage readjustment and increase in the number of employees, especially at the holding company, because it has now increased its scope of activities with the shared service center.
On the other hand, in line with human resources, we've had a drop in labor compensation, especially in Energisa Mato Grosso do Sul and Energisa Sergipe. The reduction in services was impacted basically due to lower costs in consulting and in Mato Grosso do Sul, as I said, we are now migrating the systems. On the following slide, which is slide nine, we have a brief analysis of PMSO for Energisa Rondônia and Acre for the quarter and for the last nine months, excluding non-recurring events which affect obviously and pollute, so to speak, the results. For both companies, these events are non-recurring and basically refer to layoffs such as the incentive retirement program and voluntary layoff programs, and as well, labor compensations, which affect the line of personnel.
In the line of services, these events are related to the consulting that we have hired and for the process of extraordinary tariff review for legal consulting. According to the charts, in the case of Rondônia, there is BRL 110 million in non-recurring expenses in nine months and Energisa, BRL 23 million of non-recurring events for the same period. On slide nine, we have a chart for the consolidated EBITDA pro forma. The adjusted EBITDA, not considering Rondônia and Acre, totaled BRL 1.02 billion for the third quarter and BRL 2.89 billion in the year. An increase by 33% and 31% respectively. I would like to highlight that taking away the non-recurring events that we have detailed in this presentation, EBITDA for the quarter would have grown 24%, influenced by the increase of BRL 136 million in Parcela B for the distributors.
The same indicator for nine months improved 37%, with an impact of Parcela B totaling BRL 616 million. Going on to slide 11, where we have the net income for the quarter, consolidated figures with a reduction of a decrease of 5%. Within the non-recurring events that we mentioned above, I would also like to highlight the subscription bonus attached to the seventh issuance of debentures with an impact of BRL 172 million. I would like to highlight that this had no effect for the cash of the company. Excluding these extraordinary events, net income for the third quarter would have been BRL 369 million, that is 33% above the third quarter of 2018. In a year, the net consolidated income pro forma totaled BRL 710 million, which is an increase by 31% compared to the first months of 2018.
Taking away what we mentioned, there is an attachment to this presentation where you can see the amount for the seventh emission, and it's BRL 484 million, and net income for the first nine months would be BRL 1.04 billion, 105% above venture recorded for the same period of 2018. If we look at companies' indebtedness, we have BRL 12.9 million consolidated debt. In this amount, we include the total of BRL 907 million, which refers to the bonus of subscription of the ventures, which has also included the BRL 610 million associated to this bonus. Assuming that this bonus, which would mean a reduction by 0.3 times in the net debt indicator per EBITDA. This covenants indicator was stable at 2.8 times.
This highlighting, as mentioned in the first quarter, this amount takes into account accounting for BRL 1.2 billion, resulting from the combination of businesses referring to the acquisition of Energisa Rondônia and Energisa Acre, which was written in the fourth quarter of 2018. Without considering this amount, this indicator would be at 3.7 times, which is the level within the renegotiated limit for this year, which are between 4.5 to 5 times. The following slide, we have company investments for the quarter totaling BRL 817 million, the first nine months totaling BRL 2.17 billion, and in this transmission segment, we invested approximately BRL 118 million in the quarter and BRL 237 million for the year. On the follow-up information on transmissions, to update you on the projects on the auctions, Energisa Goiás and Energisa Pará. We started in September and October. In Goiás, we had a physical advance at 91% and 66% in Pará.
This increases the possibility of anticipating the entry to begin operations or the date, bringing forward the date of operations. In terms of land, the negotiation with owners have been affected by the lines and the transmissions listed above are almost concluded, and we hope to close this in 2024. In Energisa Paragominas, which is the amount to be bought in the auction in 2018, the works began in June 2019, and the physical advance of this part is 20%. In Energisa Pará, which is Transmissora, which was acquired in December 2018, the basic project was submitted in July 2019, and part of the studies to request for the preliminary license have already been submitted at the environmental regulator also in July. We have started negotiating with the landowners affected by the project.
Together, these four add to an RAP of approximately BRL 189 million, with a CapEx estimated at BRL 1.6 billion. This is what I had to say. I would like you to feel free to make any questions you may have. Yes. We will now continue and open up for questions and answers.
If you have any questions, please press star one. If your answer has been given, please remove yourself from the line by pressing star number. Any questions? The first question will now be published. Please remove your phone from the line, from the hook, while you make your question. Please hold until we collect the questions. Our first question comes from Carolina Tader, analyst from Credit Suisse. Carolina, please.
Good afternoon. Thank you for the call. I have two questions. The first one concerning your cost performance.
You have given some detail on slide and on the release some points that have affected the quarter. In the release, you mentioned a reversion of a provision that would or has affected specifically this quarter. Could you please elaborate on this? What specific provision was this, and what was the amount, if you have this information? The second is the RTP reconsideration request in Rondônia and Acre. Do you have an update for this for the first calendar? When should we expect an answer from the regulator concerning the reconsideration request? Also, what are your expectations concerning this request?
In terms of your first question, I would like to remind you that we had, in the case of Mato Grosso, in 2018, around BRL 17.7 million, and basically, they are related to tax lawsuits, and therefore, they impact 2018 and 2019.
When we also had an issue with IT, when we completed the migration of the system, last year we had costs in Mato Grosso do Sul. This year we don't. We have around BRL 200 million impacted the quarter.
Okay.
Concerning the expectations of the provisions, we sanitized, as we call it, the active homeowner, and we have a re-analysis that we did for these provisions. Basically, if you have a certain level of compensation, for example, let's say equipment. This equipment cost on average. We compare the practices in this region with another region, and we adopt the practices that we find. We can't really say there is a specific one single item. There are several items involved. Every kind of provisions could be related to the lawsuits, labor lawsuits, tax. Concerning the tariff review, I'll give the floor to Fernando Maia.
Good afternoon, Carolina. Concerning the reconsideration request, we did file it on time. This request has been forwarded to Sandoval, who will be giving the opinion on it. They have had a very busy month, but we have talked to the advisors and the superintendents on the reconsideration request. What we have seen at the level of the superintendency is that they understand our argument, and therefore, our expectation is that we have a positive outlook on this. To mention the date of December, and due to the need of analysis and validation of the basis, this process is probably going to be carried out in February, but it will keep the date. To reinforce that we have already submitted the RGV for equity, and now we're working on homeowners.
Even this brief that they missed and the appeal that they required, we show that it's not necessary, but we have already met and filed it anyway, and therefore, this reinforces our positive outlook on the facts.
Thank you very much.
We also filed another request they asked for, which is the consolidation of the accounting information with the expert opinion on it. This has also been filed. Thank you very much.
Our next question comes from André Sampaio from Banco Santander. Sir, you may proceed.
Good afternoon. I also have two questions. One of them concerning the Regulator Act. Could you comment on how this has been developing? The second question is on the renewal of the Pocinhos concession. Do you have any update on this? I'll give the floor to Fernando Maia, who can give you more details.
I understand that you are asking about the public hearing, right? Of the new regulation that will be valid as of January 2020. Is that it? Is that what you want to know? Yes, it's 2020, but in practice, it will only operate in April. The proposal was below what we expected, that there is a lot of room for improvement, especially in terms of the differentiation with the distribution business. The entire group, all the companies, we are organizing everything to take this information to the regulator, and we have a positive expectation in terms of reversing this amount. There is an ongoing discussion on the frequency. The regulator's proposition is to have a WACC, which is shorter. We had already submitted a possibility of seizing WACC, especially to enable this better vision of an annual WACC.
We will be reinforcing this proposal, this request, and therefore, we think this is likely to be applied and will be therefore giving more stability in terms of remunerating the capital. That's the issue which is still open, the WACC issue. Concerning Tocantins? Yes, please. Concerning extending Tocantins concession, we have already dealt with the Ministry of Mines and Energy to draft the agreement. It will be very similar to a previous agreement we had signed when other companies also had their concessions extended. The Mining and Energy Ministry has issued a legal opinion and a decision which is favorable to this extension. All we have to do now is wait for the execution of the agreement, which may occur in December. This is something that is already solved. Thank you very much.
I would like to remind you, if you have any questions, please press star one.
Thank you. I would like to give the floor back to Mr. Ricardo for his final words. Mr. Mauricio or Ricardo.
Good afternoon. Thank you all. Our third quarter conference call was very fruitful. Thank you for your questions. I thank you also for listening to our achievements. We are fully committed to the quality of our services, focusing on the satisfaction of our clients and consumers. Our entire company aims at improving its assets, and we are proud to say that in this quarter, 10 out of the 11 distributors have quality service indicators below the regulators' average, with a particular highlight to Energisa Tocantins, which has had its best historical figures and development within the companies. We also like to highlight that the losses are at a reduced pace, and we will be consistently working to improve it.
The important acquisitions for 2018, ATI and Rondônia , are now part of Energisa and are using the logo and the trademark and the colors of Energisa. We are completely focused on the turnaround of our distributors, and we are sure that all the challenges make us want to work even harder to attain success in this important company. As Maurício said, we are optimistic in terms of our projects starting to operate because of our pace of building. We are also looking at auctions in December, especially batches which have synergy with our concessions and distributions, and offer attractive return in terms of value generation for our services. We would like to thank you all again, and we wish you a very good afternoon.