Morning, ladies and gentlemen, welcome to the audio conference call of Equatorial Energia. Thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions to participate will be given at that time. If you should require assistance during the call, please press the star key followed by 0. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Eduardo Haiama, CFO. Please go ahead, sir.
Good morning, everyone. First of all, I'd like to thank you all for joining us in our first quarter conference call. As per our agenda for today, I'll start the conference call describing the highlight of this quarter, I'll comment on operating financial results, give an update on the development of the transmission projects, finally, we'll open the Q&A session. Moving on to slide three, as for the highlights for the quarter. In the first quarter, Equatorial's consolidated EBITDA reached BRL 600 million. This figure was impacted by the consolidation of Cepisa, which already posted a positive result, also the adoption of IFRS 15 for the transmission assets were first disclosed in impact on the next slide. In April, we were able to secure long-term funding for SPEs 4 and 6 with BNDES in a 24-year financing.
With this, we have already contracted about 90% of overall long-term funding for this project. It should soon reach 100%. Also, in April, Eletrobras did not exercise its option to have a stake at Cepisa. Therefore, we ended with 94.5% of Cepisa's total shares. In the originally acquired DISCOs, the operational restructuring has already started. At Cepisa, we posted a positive BRL 35 million recurring EBITDA in this quarter, mainly due to the reduction of more than 40% in manageable costs compared to third quarter and fourth quarter of . At Alagoas, restructuring is also in full motion through the conclusion of the voluntary layoff program, also hiring of third parties in line with our best practice. As per our sold volumes, Cemar and Cepisa returned to growth, posting 1.6% and 1.1% increase respectively.
On the other hand, despite the positive growth of required energy, Celpa posted another negative variation of 4.2%, mainly due to the more interactive strategy regarding losses and collection. Moving on to slide five. Unit sales grew by 1.6% at Cemar across all segments. This increase is mainly due to 2.1% growth in the number of consumers in the quarter, mostly residential, the return to growth from industrial segments fueled by the foods, beverages, and chemical products. I'd also like to highlight that in this quarter compared to fourth quarter, we have added 25,000 clients classified as low-income consumers, granting them access to subsidized tariffs. On slide six. Celpa's billed energy fell by 4.2% in the quarter, explained by the unfavorable weather conditions, the increase in losses through the more interactive information regarding losses and collection strategy.
As for from fourth quarter, like I said, we have adopted this more interactive approach regarding loss and collection that impacted volumes. In terms of volumes, the highlight here is the positive growth in the industrial segment, boosted by the foods, metallurgy, and non-metallic minerals industries. I'd also like to highlight that the required energy grew by 0.8% in the quarter. On slide seven, Cepisa billed energy grew by 1.1%, due to the increase in the number of consumers in the quarter and the average consumption. Cepisa, we have already been able to add 36,000 new consumers as low income, mainly due to campaigns done by the company in order to have their enrollment in the program granting them accounts to the tariffs. Moving on to slide eight. Cemar's total losses ended quarter 17.3%, a 0.1 percentage point. We continue to be below regulatory targets.
In terms of non-technical losses over low voltage markets, it grew by 8.1% in the period, still below the regulatory targets. Again, in this quarter, both quality indicators that impact continued to be reasonably below regulatory targets, having dropped to 13 hours and 6.6 times respectively. Moving on to slide nine. Celpa's energy losses ended quarter 29.2%, a 0.9 percentage point increase in the quarter. Celpa, like I said before, losses, they were impacted by the new loss combat and collection strategy that I have mentioned. It's also important to remember that according to ANEEL, Celpa is the most complex concessionaire in Brazil. Cemar, for example, is considered the fourth most complex under the same ranking. Quality indicators continue to be below regulatory targets for both DEC and FEC. Moving on to slide 10. In the second quarter report, you can see the figures.
Total losses reaches 28.2%, a slight increase from fourth quarter 2018. Company's debt increased 27.9%, basically due to a correction in the measurement we made after our arrival. This change should continue to impact the indicator since it's calculated as a 12-month moving average, moving window. Moving on to slide 12. We show management expense. Cemar posted a 5% growth year-on-year, slight above inflation for the same period. While Celpa posted a slight decrease in terms of management expense, amounting to BRL 122 million. As for Cepisa, we are able to reduce the recurring OpEx by more than 40% compared to third quarter, fourth quarter of last year. It's important to highlight that the second quarter since we took control of the company.
The main cause for this drop was the voluntary layoff program that was concluded in the first quarter of this year, coupled with the restructuring of third-party service in line with our best practice. Moving on to slide 13. The good cost control shown in the previous slide reflects in EBITDA growth we report in the discos. Cemar posts an EBITDA growth of 20%, amounting to BRL 200 million, basically due to volume growth and Parcela B growth. As for Celpa, the 27% EBITDA growth is based on Parcela B growth, the cost control, and also the reduction in delinquency. For Cepisa, in this quarter, we've posted very high cost control. We have already posted the first positive EBITDA of BRL 35 million. Going to slide 14. We show the consolidated EBITDA per Equatorial. Equatorial posted BRL 604 million adjusted EBITDA.
This figure is considering the results being consolidated under Equatorial for transmission, the new acquisitions. If we exclude by these new assets, Cepisa, transmission, Intesa, leaving only Cemar and Celpa and holding company, the EBITDA would have reached BRL 403 million or a 28% growth year-on-year. It is worth highlighting that Alagoas results should only start to be consolidated under Equatorial in terms of results from the second quarter on, despite the fact that we have already consolidated its balance sheet in the first quarter. Moving on to slide 15. We present the debt amortization schedule and leverage for the company. Equatorial's leverage, considering the full consolidation of its assets, reached 3.8 times net debt to EBITDA, already including Cepisa and Alagoas, which contributed almost BRL 2.9 billion of additional net debt with close to zero EBITDA.
It is worth highlighting that this leverage calculation is different from the one we have in our covenant for Equatorial. In the covenant for Equatorial, we consider the 12 months of the results from the new assets acquired by the group in the period. In terms of cash position, we ended with BRL 5 billion of cash position, which enough to cover more than two years of debt maturity. We believe we have a very comfortable debt structure, to accommodate Cepisa and Alagoas cash needs, as well as the future CapEx for the transmission projects, considering that we have secured in the past few quarters most of our long-term debt needs for these investments. Moving on to slide 16. We show the main CapEx made by Equatorial.
As can be seen in the investment in transmission have picked up in the recent quarters and reached BRL 600 million in the first quarter, following the start of the construction of all SPEs. Since the beginning of the development of this transmission project, we have already spent about BRL 1.6 billion. Moving on slide 18, talking about transmission. As can be seen, we have already obtained the environmental license for all of the projects except for a very small part of SPE 7. We have already started construction for all the lines. I would like to highlight the evolution of the construction of all SPEs, especially in SPE 8. That is the second-longest in our portfolio and the last one acquired in 2017 auction, which has already reached 56% progress. Moving on to slide 20.
As we start to have bigger CapEx installments for the start of the construction of the lines, it is important to highlight the long-term funding already secured. As I have said, in April, we signed with BNDES financing for SPEs 4 and 6, amounting to BRL 1.2 billion, with a 24-year maturity. The only pending funding as of now is the additional funding for SPEs 5, 7, 8, which represents merely 10% of the total funding needed for the transmission line. Now we have already secured 90% of the BNDES loan we mentioned, 90% of all the long-term funding for the lines. It is important that all these efforts secure not only liquidity, but also good returns, as this long-term financing is indexed to IPCA inflation, which is the same index of our revenues. I believe now we can start the Q&A session. Thank you.
Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press the star key followed by the one key on your touch-tone phone now. If at any time you would like to remove yourself from the questioning queue, please press star two. Our first question comes from Carolina Carneiro with Credit Suisse.
Hi. Hello, everyone. Thank you for the call. I have two questions. First, starting with the news that you gave in the press release of the results regarding the dismissal program in Cepisa and Ceal, your expectation of roughly reducing labor force in around 30%. If you can comment and give us a little bit more detail here. Does it goes in line with your initial expectations or it's different? How does it compare with previous layoff programs that you had in the units you acquired back on the date after the privatization? Celpa and Cemar. Second question in regard to the tariff revision, extraordinary tariff revision process for Cepisa. Do you have any updates in regarding to the process of evaluation of the initial asset base and the request of such a tariff revision process for ANEEL? Do we have any updates on that process?
Thank you, Carolina. Regarding the turnaround specifically for Cepisa and Ceal, I can say that so far it's in line what we expected, maybe a little bit advanced for the first quarter, second quarter of the turnaround. That's why we highlighted, right, the reduction we were already able to do in terms of manageable costs at Cepisa, right? Of course, part of it is through the layoff, but also part of it is related to the way we hire the third-party service, that allow us to have the best practice in terms of efficiency. What I can say is like, what we expected to deliver by the time we acquired those assets last year. So far I cannot say that we are off track. Actually the opposite, we are really on track of delivering what we expected.
In terms of Cepisa's tariff review, it's too early to say. Today we just had some meetings regarding how should be the methodology to reassess the asset base, right? Remember that we have requested a full appraisal for the asset base. What I can say in terms of a feeling and what we have found so far is our diagnosis that we made before the acquisition. It's like there are too many assets that we were able to spot, physical assets, that for some reason they were not considering the RAP in the previous tariff reviews. That does give us confidence that we should be able to include some of this in the next tariff review.
To say by how much and exactly which assets we're going to be able or not to include, I believe first we need to conclude all the assessments, right, in order to really have something firmer, let's say, to say. It's too early in the process to provide any kind of guidance regarding this.
Okay. That's perfect. No problem. Just if you can remind us, what's the deadline for this process of appraisal? It's end of May?
No, it's June. Remember, our tariff review is in December, so six months prior to the tariff review, we need to conclude all the investments to be included in the RAP. They are framed specifically, probably the date which we're going to have to deliver is going to be August.
Okay, that's perfect. Thank you.
Thank you.
Our next question comes from Marcelo Sá, UBS.
Hi, guys. Thank you for the call. I actually have two questions regarding Celpa's Tariff Reset. Last week, the regulator disclosed a technical note with the preliminary figures for Celpa's Tariff Reset. There are two points that were not really clear to me. I would like you guys to comment if possible. First is on the energy losses. The regulator is proposing an increase of close to 100 basis points in losses, but I thought that the increase would be higher, so I'd like to understand if there is room for further improvement. Also, in the calculation of the T component of the X factor, there is something that I didn't really understand, is that the regulator is assuming that Celpa's current OpEx is around BRL 150 million, which is completely different than the actual cost of the company.
That should be more in line with the BRL 600 million. This is important because this is part of the calculation of the T component of the X factor. I want to understand if you think that this calculation could be eventually wrong of the T component. Thank you.
Marcelo, just exactly the second question, what key components? Because I couldn't understand.
Yes, because in the T component that was proposed, it's minus 1.18%. When you do this calculation, you can also compare the target of the OpEx with the actual cost of the company. When there is a difference of above 20%, you need to share part of this difference with the consumer. Because the reference that ANEEL is using, instead of being the BRL 600 million, that's actually the actual cost structure of Celpa, it's using BRL 856 million, then this ratio is much lower than the 20%, which means that you don't need to share anything to the consumer. This is something that was a little bit weird to me.
Okay. Well, again, this question is easy to answer. In our simulation, we continue to remain within the 120% band, range. We don't see a change to this scenario, in a sense. Regarding the losses, the technical one, we believe there are room to improve. Up to now, the way each calculates much more complicated than it was, let's say, two tariff reviews ago. We have to run lots of simulation of them, very heavy ones. We believe there are room to improve. As for the past recommendation, like calculation that we run, we remain so far within the 120% range. Yeah.
Okay, you think that it wouldn't be necessary to have this adjustment in the T component because you are below this 120%. That's what you're saying, right?
Yes.
Okay. What I understood is that you would have to compare the BRL 600 million with the BRL 720 million or BRL 730 million that would be the target of OpEx. If you have more than 120%, you would have to share that. That's the comparison, right?
Yeah, you're right. It's basically like you get the actual cost of 2016, 2017, adjusted to the tariff review date, right? You compare that number, what should be the benchmark, for you.
With the range.
They have to follow the lower range of the benchmark, right? That's going to be the closest one.
Yeah. In this case, yes, because we are running low, right?
Yes.
If you're within the 120%, you don't share anything else. That's doing. You're right.
Okay. Got it. Thanks.
Thank you.
Ladies and gentlemen, as a reminder, if you'd like to close a question, please press star one. This concludes today's question and answer session. I would like to invite Mr. Haiama to proceed with his closing statements. Please go ahead, sir.
To sum up, we would like to reinforce our commitment delivering a differentiated approach to our shareholders through exceptional financial operating results. We'd also like to highlight our adheres to the highest level of transparent corporate governance. I reassure that both me and our investors relations team are available should you have any further questions. Thank you all again for taking part in our first quarter conference call, and have a good day.
That does conclude Equatorial's audio conference call for today. Thank you very much for your participation. Have a good day, and thank you for using Chorus Call.