The National Commission on Markets and Competition has published an economic-financial analysis of the energy sector’s transport activity which Red Eléctrica carried out during the period 2013-2016. In this report, it has recommended downwards revision to the financial remuneration rate for electricity transport for the next regulatory period beginning 1 January 2020. This is with the aim of adapting it to the cost of both the operator’s own and external resources, which have trended down during the current regulatory period. Whatsmore, it requests there is no change made to either the value or the useful life of assets prior to 1998.
REE’s current financial remuneration rate is 6.5%, which corresponds to the yield on the 10-year bond (at the time when the previous regulation was established) with a differential of 200 basis points. These comments come as no surprise to the sector. The government has expressed its intention of cutting the sector’s regulated revenues on many occasions ahead of the upcoming regulatory periods, with the aim of making tariffs cheaper for users.
This is one of the reasons why Bankinter’s experts are not recommending the electricity market in their new investment strategy.
The CNMV’s comments had a negative impact on the sector , particularly in the case of those companies which derive a greater percentage of revenues from regulated returns: Red Eléctrica, Enagás, Endesa.
The research house’s pick stock in the sector is Iberdrola, as its geographical diversification means it is less dependent on regulation in its home market.