First 9 months 2021 consolidated results

Results Presentation

9M2021

11th November 2021

AGENDA

1.

2.

3.

Overview of the period

Business performance

Closing remarks

9M21 RESULTS

2

1. Overview of the period

9M21 RESULTS

3

1. Overview of the period

KEY MESSAGES

9M2021

EBITDA amounted to €343.4M, a reduction of 2.6% (-€9.1M)YoY explained by (1) a lower RAB remuneration (-€6.6M), driven by a decrease in RAB (with an impact of -€4.4M) and in RoR (-€2.2M); (2) a lower OPEX contribution (-€3.4M), partially offset by a higher incentive for economic efficiency of investments (+€1.4M) and amortizations recovery (+€0.9M).

International performance had a negative delta of €0.9M, despite a better EBITDA from Transemel (+€0.3M).

Net Profit stood at €68.4M, due to (1) a solid contribution from Financial results (increase of €5.5M to -€31.1M), a consequence of the decrease of the cost of debt (from 1.9% to 1.6%); and (2) a lower energy levy ( €1.1M).

Capex increased by €38.0M vs 9M20 to €141.7M, while transfers to RAB reached €80.5M, an increase of €58.6M, driven by the electricity transmission business (+€56.4M). Steadily the transfers that had to be delayed due to the pandemic are getting on target.

Renewable energy sources (RES) reached 60.6% of total supply (approx. +4.7 p.p. than in 9M20). Consumption of electricity and the distribution of natural gas increased.

High levels of service quality were maintained during the first nine months of 2021. The level of energy transmission losses stood at 2.0% for 9M2021, in line with the figure for the previous year while the combined availability rate of gas transmission reached 99.9%.

9M21 RESULTS		4

1. Overview of the period

SECTOR OVERVIEW

The Energy Transition is at the center of the Portuguese Government agenda

New regulatory

period for the

electricity sector

Tariffs Regulation for the electricity sector

Network

Development

Plans reports

• On the 15th of October, ERSE announced the proposal of Tariffs and Prices for Electricity in 2022. The regulator defined the Rate of Return applicable to the next regulatory period 2022-2025 with a base rate of 4%, considering 0.224% for the Portuguese 10Y Treasury bonds. An indexation mechanism is kept as before, a variation of 2.5% of the 10YTB leads to a variation of 1% in the RoR. The floor is 3.7% and the ceiling is 7%. The efficiency factor for both TEE and GGS activities are set to 1.5% for the years 2023 to 2025. ERSE has also decided to keep 0.75% premium over all the assets built before the 31st of December 2021 that are entitled to this under the reference cost mechanism.
• The detailed parameter proposal has been submitted to the tariff council and the final parameters will be known on the 15th of December.
• ERSE approved and published the reformulation of the Tariffs Regulation for the electricity sector where it approved a new set of rules relating to tariffs and allowed revenues between 2022 and 2025.
• Tariff changes include the elimination of the tariff applied to producers for the injection of energy into the public network, the tariff treatment to be given to autonomous storage facilities, and other.
• With regard to the regulatory regime, new provisions are set to reinforce the monitoring of the financial performance of regulated companies and the scrutiny in the assessment of reported costs, and a new regulatory model is defined, a revenue cap methodology applied to the controllable TOTEX of electricity transmission and electricity distribution activities in HV and MV.
• In August, ERSE has published PDIRT and PDIRG assessment reports following the public consultation, recommending investment restrictions to both electricity and gas. The assessment reflects ERSE's particular views on the development of the energy sector which conflict with the government policy and present sector response
• REN is carefully evaluating the full assessment reports to understand the real extent of ERSE's recommendations related to particular investment projects, in order to incorporate in the final version of PDIRT and PDIRG the projects to be approved, and send it to the Government for decision

European 

Commission new

legislative package

European Commission presented the legislative package 'Fit-for-55': delivering the EU's 2030 climate target on the way to climate neutrality - the package consists of a set of interlinked legislative proposals that address the common goal of ensuring a fair, competitive and green transition by 2030 and beyond.

9M21 RESULTS		5