Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to Energisa's conference call to discuss the third quarter of 2018 results. We would like to inform that during the company's presentation, all participants will only be able to listen to the call. We will then begin the Q&A session when further instructions will be given. In case you need any assistance during the conference, please request the operator's help by pressing star 0. We also would like to inform that the conference call in Portuguese will be presented by the company's management, and for the English conference, there will be simultaneous translation. This event is also being broadcast simultaneously on the internet via webcast, which can be accessed on the company's IR website, ri.energisa.com.br, and MZiQ platform, together with the respective presentation.
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 the forward-looking statements. Such statements speak only as of the day they are made, and the company is under no obligation to update them in light of the new information or future developments. I will now turn the conference over to Mr. Maurício Botelho. Please, Mr. Maurício Botelho, you may proceed. Thank you. Good afternoon, everyone, and thank you for taking part in our third quarter 2018 conference call. Here with me, I have Ricardo Botelho, the chairman of the group, Alexandre Nogueira, VP for regulation, Cláudio Brandão, director for corporate finance, and my investor relations team. I'd like to show you some slides, and then after that, we will have some time for Q&A.
In slide three, I am going to skip the operating highlights because we will talk about that a little later. I will go straight to the financial highlights. Our adjusted EBITDA was BRL 764.1 million, which is an increase of 47.5%, and the net income was BRL 259.4 million, which is 93.4% above the third quarter of 2017. With regard to indebtedness, the net debt to adjusted EBITDA ratio concluded at 2.9 times. I'd like to point out a few important events that happened after the end of the quarter. The first one is the conclusion of Ceron's acquisition process on the 30th of October. We held a general shareholders meeting after the control was passed to Energisa, which led to an increase in regulatory capital requirements of at least BRL 254 million, which may go up to BRL 282 million.
With regard to Eletroacre, due to approximately 3% minority shareholders, we have the preemptive right of shareholders, and that applies to the prior adjustment of capital to be realized by Eletrobras. The expectation is that we will take over control on the 5th of December, and we should be subscribing to approximately BRL 238 million. I'd just like to point out that Eletrobras' previous capitalizations and the capital increases that are being made by Energisa will lead to a profound and very positive restructuring, financial restructuring of these companies. Additionally, we will be using our experience in asset turnaround to make sure these concessions achieve excellent level that Energisa is used to in very few years. The second event was the capital increase that was announced yesterday. We have kept our financial discipline that has always guided Energisa's business.
The board has approved a private equity increase, which could go up to BRL 579 million. In other words, 5% of the current share base. The price issuance will be BRL 33.50 per unit, which is a small discount on the average of the quotes of the last few days. The controlling shareholder has stated that they will keep up with this equity increase proportionately within the subscription period, which starts on the 14th of November 2018 and ends on the 13th of December 2018. At the same time as this capitalization, we also started to negotiate the covenant indicators by summoning a bondholders meeting. We are still within the covenant limitations, and we have made this request in advance because of an assumption of the liabilities of the acquired distribution companies, Ceron and Eletroacre, which will increase our debt indicators at the end of the year.
As you all know, we have a very successful history in financial and operating transformation of distribution companies. We know that this increase is temporary and totally manageable. We'll move on to slide number four, which is the increase of energy consumption per distribution company and consolidated. Energisa grew by 2.5%, whereas the country grew by 0.8%. As you can see in the chart below, the increase in consumption in Brazil was 1.1%, and Energisa's was 2.8%. Both in the quarter and over nine months, we have maintained a 9.7 difference. In the third quarter, I'd like to point out Energisa Bauru-Marília's increase, which was 9.7%. However, the biggest contribution came from Energisa Sudeste, which was 6.5%.
Energisa Tocantins also had a determining factor in terms of the increase in residential consumption, which was 4.5% due to the high temperatures in the region, and the increase in the industrial sector, which was 17.2% in the quarter. The consumption at Energisa Sergipe also showed a positive reaction due to high temperatures in the region, reporting a 4.5% increase in the residential sector and 8.5% in the business segment. That was helped due to the reclassification of clients that came from the industrial segment. In terms of Energisa Mato Grosso, Mato Grosso do Sul, we have had more modest increases, 0.9% and 0.5% respectively, and that is mainly due to the residential and commercial sectors, because temperatures have been cooler this year when compared to last year. Last year was extraordinarily hot in the region, and we also had a smaller billing in the region.
The Midwest had a drop of 5.7% in September when compared to September last year. If we can move to slide five, please. We're going to talk about electric losses in the group. On the chart on the left-hand side, we see that the total losses were 11.60% of the required energy, which is a drop of 0.26 percentage points in relation to June 2018. When we look at total losses, we see that they have remained stable when compared to September last year. I would say that the highlights of this quarter were Mato Grosso do Sul and Tocantins, which reached 12.35% and 12.62% respectively, which have been the lowest values since the acquisition in 2014. Energisa Mato Grosso presented a drop of 0.28 percentage points when compared to June. Although losses are still above the regulatory limit, we are moving towards adequate levels.
Energisa Paraíba presented a slight increase of 0.24 percentage points when compared to June 2018, due to seasonal factors and adjustments made to electric parameters in the calculation for technical losses, given the fact that new wind power plants have come into the concession. We should go back to regulatory limits in the next quarters. In slide number six, I'd like to talk about delinquency, which is calculated by the percentage relationship between the provision for doubtful accounts and billed consumption. It's remained practically constant over the last few quarters, with a slight drop of 0.04 percentage points. If we don't consider the non-recurring items, the delinquency indicator would be 0.74% for the third quarter, presenting a 0.04 percentage point increase in relation to the same period last year.
I'd like to highlight that this is the seventh consecutive quarter that we see a consolidated delinquency rate below 1%, even after the non-recurring adjustments made. Despite the crisis the country is going through, we have been able to keep delinquency under control. Let's move on to slide number seven. Many of our concessions continue to break their own historical records when it comes to quality indicators. All distribution companies in the group have remained below the FEC, the outage frequency rate. With regards to outage duration, the DEC, Mato Grosso presented 22.99 hours falling back below the regulatory limits, which is 23.09 hours, and reaching the lowest value since the acquisition of the distribution company, Mato Grosso, by the Energisa Group, with a reduction of another two hours when we compare 2018 to 2017.
Out of the nine distribution companies in the group, Tocantins is slightly above the regulatory DEC, but moving towards going back to the regulatory limits. I just want to point out that ANEEL has established that the effects of the systemic blackout that happened in March 2018 should be recorded this September. If it weren't for that, which is an event that is completely outside our control, we would have stayed within the regulatory limits. We are appealing this decision by ANEEL because it has also affected indicators in Paraíba, Borborema, and Sergipe. Slide number eight. A few financial highlights. In the consolidated PMSO, we see a 14.3% increase.
This increase in personnel can be explained partly by labor compensations, especially in Mato Grosso and Sergipe, which have a corresponding entry in the reversal of provisions line of the distribution companies, and there were also regular salary readjustments, and there was an increase in the teams in the region of Mato Grosso. There are a couple of items that are extraordinary and have had an impact on results. A provision for success fees, as well as deposits in court accounting for BRL 20.8 million. If we don't consider the BRL 17.1 million success fees plus these BRL 20.8 million that come from these deposits in courts, then the increase in the PMSO for the quarter would have been 6.4%, just slightly above the inflation rate for the period. In slide number nine, there's a chart explaining the progression of the consolidated EBITDA for the first quarter.
The adjusted EBITDA went up by 47.5%. If we do not consider the late payment surcharges, there was an increase of 49.4%. I'd like to look at some non-recurring events, which are in the chart on the right. In the first item, we see that the compensation costs have had a drop of 35.8%. Then we have the effect of the VNR, which as of 2016 was considered as other revenues, which had a positive impact on the EBITDA in this quarter. Lastly, we had the effect of the success fee provision of BRL 17.1 million. If we do not consider the non-recurring effects, our EBITDA has grown by 47% this quarter when compared to the third quarter 2018. This increase happened mainly due to BRL 319.5 million improvement in part B of the distribution companies that have had their tariffs readjusted and revised.
Pointing out Mato Grosso with BRL 142.2 million, EPB with BRL 50 million, Sul Sudeste with BRL 29.8 million, Tocantins with BRL 20.4 million, Sergipe with BRL 19.7 million, and Mato Grosso do Sul with BRL 40.1 million. In the next slide, we see the net income, which has increased by 93.4%. After the non-recurring events adjustment, we see an increase of 98.8%. In this quarter, we had some financial expense increases due to the interest of the networks to be acquired that were readjusted according to the IGPM, especially in Mato Grosso. Even though we reduced the balance to be included by approximately BRL 96 million since September last year. The next slide is indebtedness. Our net debt at the end of the third quarter was BRL 8.7 million, while the net debt to adjusted EBITDA ratio dropped from three times to 2.9 times.
In the chart on the left-hand side below, we see the progression of the cost of debt and the bank debt that was issued by index. Currently, 81% of our debt is indexed to the CDI, and we are benefiting from the drop in interest rates. In this quarter, there were two major debt events. The first one was the issuance of debentures at the distribution companies, adding up to BRL 1.1 billion at a cost of 103.7% of the CDI, with maturity in 2025. These funds will be used in our investment program for 2018-2019. Also, Moody's, Fitch, and S&P have reaffirmed Energisa's ratings after the acquisitions of Eletroacre and Ceron. And the last two agencies have raised the ratings in the domestic scale to AAA. In the next slide, I'd like to talk about our investments.
We concluded the nine months with BRL 1 billion 276 million, with a reduction of 17.4%, mainly due to the conclusion of the tariff review cycle. In terms of transmission, we have made investments of approximately BRL 63 million this year, given the conclusion of our environmental studies at Energisa Goiás Transmissora and Energisa Pará Transmissora. I'd just like to update you on these projects that were obtained in the auction that took place in April 2017. The constructions of Energisa Goiás Transmissora and Pará Transmissora one started in September and October 2018. Goiás obtained its installation license on the 12th of September, only one year after the concession agreement was signed, and only 15 days after the prior license was issued. Energisa Pará Transmissora one also obtained the license on the 1st of October in the process that happened at the same time as the issuing of the prior license.
We had estimated that we would have obtained these licenses within 24 months, we were able to do it in only 13. In terms of land and negotiations with landowners that have been affected by transmission lines are coming to an end, the suits of public utility are still ongoing, constructions have obtained the go-ahead. In terms of Energisa Pará Transmissora two, which is the lot that was obtained at the auction in June 2018, the concession agreement was signed in September 2018. We have started doing the topographical studies and also the construction. The environmental studies have been filed with ANEEL and ONS, with at least a little bit more than 30 days after the concession agreement was signed. It also fell within the tax benefit of REIDI at the start of this year.
These three plots add up to have a RAP of about BRL 120 million and a CapEx of roughly BRL 890 million. Moving on to slide 13. We have a comparison between the regulatory EBITDA and the actual reported EBITDA for the past 12 months without non-recurring effects. In the consolidated EBITDA, we are above the regulatory EBITDA, which is about 35%, with a highlight of the companies that were acquired by the Rede Group, which are currently at 28% above the regulatory limits, which were 24% in December 2017. I'd like to conclude my presentation, we are now open for questions. Thank you. We will now start our Q&A session. If you have any questions, please dial star one. If at any point your question has been answered, you may remove your question from the queue by pressing hashtag two.
Please remove your telephone from the hook when you ask the questions so we can have the best sound quality. Mr. Marcelo Sá from UBS would like to ask a question. Hello. Thanks for the call. I have two questions. I'd like to understand the follow-on. Are you just trying to lower the debt, or do you want to pay BNDES' debenture? I want to understand if there is a risk of a new follow-on to be announced, perhaps next year, assuming that you don't acquire any more companies. If only the companies you have, do you think you won't need to raise any more funds looking forward? Thank you. Thank you, Marcelo. This is just so that we can become better adjusted to our leverage levels. The closest bet, as you said, is the BNDES put option, which will be in January.
As for the procedure follow-on next year, if nothing is done, I believe there will be one. We are renegotiating the covenants according to the levels, we believe in 2020 we should go back to zero. Okay, great. The next question is: I think there was an event that you took part. I think it was said that you had an expectation, a positive expectation to recognize past investments made by Ceron and Eletroacre. I think they had been recorded incorrectly. Could you talk a little bit about that, please, explain what that is all about? Yes. Let me just correct something. This was announced during the second quarter conference call. We have positive expectations concerning these assets. Obviously, we are looking into it. We have many immobilized assets, especially at Ceron, about BRL 500 million to be recognized.
We have positive expectations when it comes to that. Okay. In terms of terms, the appraisal for Eletroacre, do you have a deadline to announce that, to disclose that? What is the date we can expect? Well, for Ceron, it was BRL 625 million for 100% of the company. We will not be disclosing the other one. You are not going to disclose the appraisal, only the total amount? Yes. What about Eletroacre? Do you have that figure? Not yet. Okay. Thank you. Ms. Carolina Carneiro from Credit Suisse would like to ask a question. Good afternoon, everyone. Thanks for the call. My question is about the regulatory levels. ANEEL was discussing through a public consultation the regulations for the whole segment through a public consultation.
Do you know when ANEEL may disclose it, if it is going to be this year or next year, the results of this public consultation, which is the methodology for the new calculations? Do you think we are going to have any news about these changes to the methodology that is used? We know that that is not going to have an effect on the distribution companies you have acquired, because this will only go into force in 2020. It is only just so we can keep up what is happening in regulatory terms. Thank you. Well, Caro, I am going to turn it over to Alexandre Nogueira. He can answer your question, okay? Just one second. Thank you. Good afternoon, Caro. Actually, the transmission generation and distribution debate has just started. They are still going through public consultation, and I think according to the regulatory calendar, it should be concluded next year. Okay.
We will not have any announcements this year, you do not think? Well, we are not expecting to have it this year. The technical teams are looking into the contributions that were made during the year of the public consultation, okay? Okay, thanks. May I ask a second question? You have concluded the Ceron process, and now you are going to start consolidating the Eletroacre assets. The request for tariff review of these two companies will have to be made this year. Could you talk a little bit about how the process with ANEEL is going to work? What is the deadline for ANEEL to give you an answer in terms of extraordinary tariff review once you have made the request for both companies? Well, the process says that the request had to be made at least 1 year in advance.
We believe that between the 10th and the 20th of December, we should have the tariff events both for Ceron and Eletroacre. Thank you. Our next question is by Mr. Michel Mute from Bradesco. Good afternoon. I would like to understand why the net debt has increased in the period. I am going to turn it over to Claudio Brandão so he can answer your question, okay? Okay, thanks. Good afternoon. There have been a few relevant events that have affected our debt when compared to September last year, like the minority share in Mato Grosso. The accounting of the derivatives to do with convertible debentures, especially for BNDES, about BRL 250 million. The rest has to do with investments made by Energisa over the past 12 months. They are the events that account for the biggest figures there.
BRL 600 million of reais, where Energisa is funding its consumers in terms of what's not reflected in the tariff. That's a sector cost energy that gets purchased. Thank you. Mr. Christian from Platina Investimentos would like to ask a question. Good afternoon, everyone. Thank you for the call. I have a question about something that was mentioned before. The put option of BNDES and Energisa Paranapanema, that's due in January. Have they given you any signs if they're going to realize that put option? These amounts are quite similar, that you have raised. Will you be using those funds to pay for that put option by the BNDES? Thank you. No. We don't think they will be realizing that put option. They haven't given us any signals to believe that.
What's coming in will help us with our cash flow and our capital structure for the company as a whole. Okay. Thank you. Mr. Marcelo from UBS would like to ask a question. If I may, I'd like to ask another question. What is your prospect for volume growth next year? Do you have any estimates? Can you compare what you expect for the Northeast and the Midwest? The Midwest didn't do as well when compared to the Northeast. Do you think the Midwest will go back to growing again? Thank you. Well, about growth, if you look at our history, Energisa has been growing at an average of, the past 15 years, 4.8% a year. Always above Brazil's growth on average. Both for the quarter and the past 9 months, we were 1.7 percentage points above the national average. I believe that trend will continue.
You asked about the Midwest. I think the Midwest will go back to normal. There was a huge difference in temperature this quarter when compared to the same quarter last year. Last year was a very hot year, so obviously that affected the residential and commercial segments. Both the rural segments and the industrial segments, Mato Grosso do Sul and Tocantins, are growing considerably well. Yes, we have very good prospects for the next few years based on the growth we're seeing now. Okay, great. Thank you. If you'd like to ask a question, please press star one. Thank you. I would now like to turn the floor over to Mr. Ricardo for his final remarks. Please, Mr. Ricardo, you may proceed. Good afternoon. Over the next few months, our objective is to integrate the group's new companies.
In addition to the required capital in 2019, we will also realize approximately BRL 700 million in investment in both concessions. Out of that, BRL 435 million will be our own capital. These investments will focus on improving the quality of energy supply in the region, as well as the services provided to the population in both states. We have a few priorities, which are fighting losses, expanding the distribution system to regions which are not serviced, expanding and modernizing systems, building new substations and lines, qualifying teams, and improving our logistics in the region, as well as our customer care channels. Our objective is to implement technologies and services that will improve our customer relations and our relationships with our customers, just as we have done at other distribution companies that are part of the group. During these transformation times, we use our ability to develop and to retain talent.
Ceron, which we have already acquired, the responsible team is involved in the transformation, and we already have it. As CEO of CERON, we have André Theobald. He has 26 years in the electric sector, and until recently, he was the CEO of distribution companies in Paraíba. During his management, these companies in Paraíba were recognized regionally and nationally and won awards for best distribution companies in Brazil and in the Northeast by Abradee. With André, as Technical Director at CERON, we have elected Fabrício Medeiros, who is an electrical engineer. He has 14 years experience in the sector, and more recently was a manager fighting losses and operations manager also in Paraíba. For Institutional Relations Director, we have elected Luiz Marcelo Reis de Carvalho, who used to be the CEO at CERON.
He's a highly experienced engineer, has 25 years of experience in the sector, and a great deal of knowledge of the company and the state of Rondônia. He will be supporting our relationship with society government, state government, and city government. We should announce the next few directors that will take their positions at Eletroacre in the next few months. We have many challenges, but we will use our experience to deliver high-quality energy to these new consumers. We'll have many positive changes, and we are convinced that soon our customers in Acre and Rondônia will see the difference of having an efficient private operator who's concerned with delivering high-quality services, with the well-being of their employees, and the development of the state. That is our commitment.
We will continue to work to make Energisa a genuinely Brazilian company that will become ever stronger, and would like to be able to count on the involvement of all our stakeholders, and that includes you, our shareholders, to do that. Have a great afternoon and a great weekend. Thank you. This concludes Energisa's conference call. You may now disconnect and have a good day.