By Brazil Stock Guide – CPFL Energia (CPFE3) expects a stronger expansion cycle in 2026 after overhauling the way it bids for new transmission assets, a shift that helped the company secure the most important lot in Brazil’s latest auction. CEO Gustavo Estrella said the new modeling approach marks a turning point as the utility prepares for a heavier calendar of transmission and storage auctions next year.
Estrella told analysts the company rebuilt its internal bidding framework after narrowly missing two auctions. The redesign, he said, sharpened CPFL’s pricing discipline and improved its reading of project risks. That shift supported the win of Lot 3, a R$81 million RAP asset in Rio Grande do Sul that fits directly into the company’s existing footprint.
The CEO stressed that this is not a one-off result but the beginning of a more competitive phase. “We are revisiting assumptions and the way we build financial modeling so we could increase our competitiveness in these auctions,” he said, adding that the company “hit the bar” in the last two bids and was now equipped to win an asset of strategic relevance.
Analysts press for clarity on growth
The Q&A opened with Daniel Travitzky, Banco Safra, who asked whether CPFL intends to adopt a more aggressive stance in 2026. Estrella responded that the company is not changing its discipline but is entering the new cycle more prepared. The CEO said upcoming storage and battery auctions could expand the company’s role in the energy transition, though final rules remain under discussion. “Storage auctions are coming; we still do not know the business model or how assets will be remunerated, but with clear rules we position ourselves as potential investors,” he said.
Guilherme Bosso, Goldman Sachs, followed with questions on PMSO and the impact of wind curtailment. His questions brought Carlos Victor Pereira Sicard Cyrino, CPFL’s Investor Relations Officer, into the foreground. Cyrino explained that PMSO rose due to wage adjustments and the high investment pace of the quarter. “In the quarter we had a salary adjustment slightly above inflation and a quarter with much higher investment, which brings this effect,” he said.
On curtailment, he acknowledged a heavy hit but said better wind conditions in Ceará—where CPFL holds higher-priced Proinfa contracts—softened the blow. “We had a 70-million impact, but wind in Ceará was better, and there we have Proinfa with higher prices. The price-wind mix brought a positive result,” he said.
Leverage and capital allocation
Estrella was also asked whether leverage, currently at 2.2× EBITDA, could restrict CPFL’s growth. The CEO dismissed the concern without hesitation. “I do not see leverage as a restriction for new investments; the discipline on shareholder remuneration is non-negotiable,” he said.
He highlighted improved funding access after Fitch upgraded CPFL’s rating above Brazil’s sovereign grade, which should lower the cost of future bond issuances. He mentioned that the company recently raised R$3 billion via State Grid at CDI minus 0.37%, pushing average debt maturity toward nine years.
Scale, geography and execution drive competitiveness
Estrella said scale will be a decisive advantage as auctions grow in size. Integrated assets in southern Brazil improve operating leverage, reduce maintenance costs and could accelerate the delivery timeline. “The more scale, the more expertise and the more information we have from these auctions and projects, the more competitive we can be — without giving up our financial discipline,” he said. By linking Lot 3 to existing assets, CPFL expects to extract operational synergies and potentially bring projects online earlier than required.
Regulatory clarity reshapes 2026
Looking ahead, Estrella said 2026 should bring more stability as the renewal of distribution concessions advances and the government pushes MP 1304 as a possible fix for wind curtailment. Those developments reduce volatility, he said, giving the company a clearer runway for investment decisions. The CEO told analysts CPFL expects to enter next year “with more stability and long-term visibility,” creating a more supportive backdrop for capex and new auctions.
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