Companhia Energética de Minas Gerais (NYSE:CIG) Q2 2023 Earnings Call Transcript

And this energy when it migrates to DG, it is growing. The state of Minas Gerais is bringing in opportunities for growth and development. And we see this in transported energy because you see that it grew 3.3% and a cap despite of the drop of 1.7%. We draw your attention to the residential growth here, 6.4%. The number for residential consumers increased and the average consumption also increased. And this is important information showing that the strategy of investing distribution — strategy that does bring return to the company in addition to better services provided to clients in our concession. About regulatory limits, we are committed to meet the regulatory limits. The losses are important. We were able to be under the regulatory limits in 2021, and we ended the quarter at 10.78% and the limit is 11.16% (ph).

So we are very well positioned. So our limits for the end of the year is going to be 10.8%, and we will be and within the regulatory limits. Thanks to the initiatives that have already carried out in the past six months, and we’ll continue working on them. We have already made 210,000 inspections. We replaced 312,000 absolute meters. Also, we replaced meters by smart meters and the Energia Legal program is already working with low-income families to have their legal energy actions. Now in Cemig D, this proves how our digital channels are improving our collection. It’s very important to have the new system, the PIS, which is the instant payment system that already represents 14.03% of all collections and are ARFA, which measures the receivables collection index.

In 2022, we are very close to 100%. And in this half of the year, we went over 100%. That is because we are able to collect a debt of [indiscernible] in Minas Gerais and we brought BRL12 million to the company in that action. Another important metric here is that we are committed, and we are still delivering and we’ll continue to deliver our regulatory OpEx that we have no tariffs. So the OpEx for six months, we have BRL2 billion as the regulatory OpEx. And our performance or realized was BRL1.9 billion. And the regulatory EBITDA, we are above that. So we are committed to meeting the regulatory limits and with efficiency, and that’s what we are doing. And we see greater opportunities to improve even more with the post-retirement as we have shared with you.

And now turning to Cemig’s GT results. This slide is a little bit different. We also had non-recurring effects, and I talked about them, which was the disposal of assets. Also the write-off of financial assets, the reversal of Santo Antonio provision and the FX exposure affecting our profits. But when I remove these effects and — also important information here, we are transferring the trading activity from Cemig’s GT to the holding company, this process has not been concluded. And when I go back to the EBITDA that has already been migrated that is under Cemig-H, if I bring it back to the fact, we had a small drop of 2.2%, affected by inflation, which also affects the transfer of rights bonus. But if I bring back the effect of the profit regarding trading activity, I had an increase of 14.3%, influenced by the dollar.

This is the FX effect on Cemig’s GT financial results. Important highlights for Cemig’s GT that we have already shared. And it’s important to stress our permitted transmission revenue did not affect the results in this quarter, but we did have an increase of 23.5% for the next cycle, affected by the inflation in the period also strengthening and improvement of the network with the addition of permitted transmission revenue. And also the reprofile of the Cemig’s GT National Grid contribution and the amount that we will be receiving is higher than the prior years. And I would like also to highlight something else. We have already shared that, but this is just hint on the development of these projects. Here, the [indiscernible] projects, we have already invested year BRL360 million.