ELPC

Core Strategic & Operational Results

• Completed the Copel Distribution tariff review, achieving a remuneration base of ~BRL 20 billion, more than double the 2021 base, positioning the company as larger, stronger and more resilient.
• Captured BRL 75 million in short-term market opportunities: BRL 52 million from hydro modulation and BRL 23 million from submarket activities, demonstrating the value of the company's Southern-based hydro portfolio.
• Total Q2 CapEx was BRL 957.2 million, with BRL 318 million allocated to start the Foz do Areia and Segredo expansion, following the successful LRC auction approval.
• Declared BRL 706 million in interest on equity, to be paid in September 2026, following BRL 1 to 1.35 billion in dividends paid in June 2026 for 2025 results.

El Niño Preparedness

• NOAA forecasts an 81% probability of strong/very strong El Niño from August 2026 through Q1 2027, with high rainfall forecast for Southern Brazil (Copel's core operating region) and high temperatures/demand growth in the Southeast/Midwest in Q4 2026.
• The company's portfolio is hedged against structural price declines, with flexible hydro operations positioned to capture value from short-term price spikes driven by peak demand, with a natural hedge for GSF volatility.
• Copel Distribution maintains a four-pillar permanent contingency plan: 1) Added over 100 new crews for a total of ~900 in-house/third-party crews; 2) Accelerated vegetation management with over 600 joint projects with local stakeholders to reduce grid contact risk; 3) Bolstered spare parts inventory for fast grid restoration; 4) Expanded 24/7 operations center monitoring teams.

Capital Structure Update

• Adjusted the optimal net debt/EBITDA leverage target from 2.8x to 2.9x, and extended the maximum convergence period to 48 months to accommodate the 5-year LRC expansion investment cycle, with flexibility to converge faster depending on cash flow.
• The minimum 75% payout dividend policy remains fully unchanged, ensuring predictable returns for shareholders, with flexibility for additional distributions if excess cash is available after meeting investment needs.

Commercial Portfolio Management

• Proactive energy sales for 2027-2028 reached 4x the volume of Q1 2026, at a 6% higher average price, as part of risk management ahead of expected El Niño volatility.
• Maintains a conservative credit profile, with a 0.01% delinquency rate in commercial energy operations. Holds 20% uncontracted hydropower for 2026 within safety limits, and over 40% uncontracted hydropower from 2028 onward to preserve flexibility for future market opportunities.

• No change to the core dividend policy: the minimum 75% payout ratio is maintained, with at least one additional dividend declaration scheduled by the end of 2026.
• The new leverage target of 2.9x net debt/EBITDA will be converged to over a maximum of 48 months, with flexibility to reach the target sooner if operating cash flow outperforms expectations. The company ended Q2 2026 at exactly the 2.9x target leverage.
• The Foz do Areia and Segredo expansion project, with total planned CapEx of ~BRL 5 billion, is on schedule to begin commercial operation at the end of 2030 as planned.
• Management maintains a capital allocation discipline that prioritizes high-return growth projects while balancing shareholder returns, with no changes to long-term return expectations.

Consolidated recurring EBITDA for Q2 2026 was BRL 1.6 billion, a 21% increase year-over-year (YoY), with Copel DisCo (Distribution) and Copel Generation and Transmission (Copel Jet) together accounting for nearly 100% of consolidated EBITDA. 1. Copel DisCo: Recurring EBITDA grew 34.5% YoY to BRL 765.6 million, driven by 7.2% growth in the built market, 1.3% 2025 tariff adjustment, and BRL 15 million in higher other operating revenue from infrastructure sharing. Recurring PMSO decreased 0.4% YoY to BRL 1.8 million. 50% of total Q2 CapEx (BRL 479 million) was allocated to this segment, focused on grid modernization and automation. 2. Copel Jet (Generation and Transmission): Recurring EBITDA rose 10.1% YoY to BRL 838 million (an increase of BRL 76.8 million YoY). Growth drivers included an BRL 85.1 million increase in bilateral/ACL contract revenue (from a 6.4% average price adjustment offsetting a 7.8% volume decline), a BRL 70.2 million increase in grid availability revenue, and a BRL 6.4 million reduction in energy purchase costs from favorable hydrology (average GSF of 99.6%). Recurring PMSO fell 13.7% YoY. Total CapEx for the segment was BRL 476.4 million, with BRL 318 million allocated to start expansion construction at the Foz do Areia and Segredo hydroelectric plants. 3. Other segments: Elejor generated BRL 29.1 million in EBITDA; Copel Comercialização generated BRL 21.4 million; the corporate holding recorded a BRL 46.2 million loss, a BRL 8.7 million YoY deterioration. Consolidated recurring net income was BRL 645.1 million, a 42.6% YoY increase.

• Macro economic deterioration could increase industry-wide delinquency rates, with an ongoing regulatory discussion at ANEEL around allowance for bad debt policies.
• Strong/very strong El Niño could cause extreme weather events that disrupt power supply, requiring extensive contingency and restoration activity.
• Short-term energy price fluctuations from El Niño-driven rainfall could create temporary margin volatility, though the company's hedged portfolio limits material balance sheet impact.
• Proposed early rebidding of existing hydroelectric generation concessions by the federal government creates policy uncertainty for existing generation assets.
• High competition in upcoming battery storage and transmission auctions is expected to push returns below the company's minimum return hurdles.

Q: What triggered the update to the leverage target and convergence timeline? Did this signal an upcoming change to the dividend payout policy, and what is Copel's outlook for delinquency and regulatory changes to bad debt allowances?

A: The leverage update was driven by the successful LRC auction win, which added a BRL 5 billion high-return investment cycle that will generate strong cash flow starting in 2030. The 48-month convergence period only provides flexibility to accommodate the investment cycle, and the minimum 75% dividend payout policy remains fully unchanged with no planned cuts. This flexibility actually supports stable dividends through the investment period. Copel maintains a very conservative credit profile with a 0.01% commercial delinquency rate and below 1% distribution delinquency in its concession area, outperforming national averages. Management will continue monitoring regulatory discussions and update the market as developments occur.

Q: What is Copel's current outlook for M&A opportunities, potential rebidding of existing hydro concessions, and the upcoming battery storage auction? Can PMSO costs continue declining in coming years?

A: There are no tangible M&A opportunities in the pipeline at this stage, and no assets currently available in the market that meet Copel's return requirements. If hydro concessions are put up for early rebidding, Copel advocates for open competitive bidding aligned with recent precedent in other infrastructure sectors, which would deliver more revenue to the federal government; Copel is well positioned to bid on attractive assets if the process moves forward. The upcoming battery auction has extremely high competition with expected returns below Copel's minimum hurdle, so the company will likely not participate. Three years of structural cost reduction have brought PMSO to optimal levels; going forward, management will focus on operational efficiency rather than explicit cost cuts, with new efficiency driven by process improvements and AI.

Q: Why does Copel advocate for competitive rebidding of hydro generation concessions, compared to the renewal model used for distribution concessions? Is there investment risk in the current concession environment?

A: Distribution concessions have different operating characteristics that make incremental renewal for incumbent operators logical, while generation concessions have different cost and transfer dynamics that favor open competitive processes. Open competitive bidding has delivered higher fiscal benefits to the federal government in other infrastructure sectors like highways, which aligns with the government's fiscal goals. The final decision rests with the federal granting authority, but Copel's position is transparent and aligned with precedent from other sectors. No material near-term investment risk is seen, as policy developments will follow established regulatory processes.