The Chairman Of REE Resigns Because Of Disagreements With The Government  

The president of REE resigns because of disagreements with the governmentRed Eléctrica has a pending review of its strategic plan to meet the new challenges of the group

Bankinter | According to articles in the press, the decision of Jordi Sevilla, chairman of REE (Red Eléctrica de España) responds to his growing disagreements with Teresa Ribera, one of four vice presidents of the Government and Minister for Ecological Transition.

The Government, through SEPI, holds a 20% stake in Red Eléctrica de España (REE). According to these sources, the disagreements focus on two issues. Firstly, Teresa Ribera prefers Red Eléctrica to focus on the electricity system in Spain and looks with suspicion at the purchase of Hispasat (satellite business) or the geographical diversification of the group (recent acquisition of Argo in Brazil).

Secondly, REE started a war with the CNMC (National Market and Competition Commission) over significant cuts in regulated income (-18% in the 2020-25 period) and the threat of an Employment Regulation File (ERE) in REE to defend the interests of all its shareholders.

Red Eléctrica Eléctrica has established a very specific protocol in case of a sudden change in the chairman’s position. Temporarily, its independent director Carmen Gómez de Barreda will assume the presidency and its CEO Roberto Garcia all executive functions. There are no deadlines to appoint a new chairman. José Domínguez Abascal is being considered as a successor.

Bankinter analysis team opinion: Red Eléctrica has a pending review of its strategic plan to meet the new challenges of the group. On the one hand, it has to face a process of historical reconversion of the energy market that involves the massive integration of renewables into the network, the disconnection and scrapping of coal and nuclear power plants and the integration of charging stations for electric cars. For this transformation to be possible, REE has to adapt its entire network.  On the other hand, it has to successfully diversify its business strategies and markets, with the integration of Hispasat and Argo. On top of that, all these strategic objectives have to be achieved while the company faces a cut in regulated revenues in the period 2020-25. The change in chairman will to some extent delay the review of Red Eléctrica’s Strategic Plan.