Renta 4 | The National Commission on Markets and Competition (CNMC) has presented a proposal for a new methodology to calculate the Financial Remuneration Rate for electricity transmission activities. Although the proposed 6.58% for the 2026-2031 period is an improvement on the previous rate of 5.58%, it is below the 7-8% requested by companies. Although it is in line with our estimate (6.55%), Redeia’s ability to improve profitability through operational and financial efficiency will be limited, given the restriction on the return on work in progress. Although the approval process is not yet complete (reports from the Council of State and the Ministry are still pending), the CNMC has the final say, so we believe that there is very little room for improvement.
The risk from the blackout lies in the rating and claims. The consequences of the April blackout for Redeia are uncertain and are analysed from three perspectives: 1) credit risk: S&P has placed the outlook on negative credit watch due to the potential implications of the blackout, based on its view of the regulator, pending hypothetical compensation for the sale of Hispasat. 2) Legal risk: maximum penalty of €60 million, although the greatest risk lies in potential consumer claims. 3) Operational risk: CNMC implemented PO 74 to relax voltage control. The definition of responsibilities depends on the reports from the CNMC and European experts, expected in the first quarter of 2026.
Conclusion: We reduce the target price to €17.50/share and raise our recommendation to Hold (previously €18.40 and underweight). Despite the upside potential offered by our target price, the significant uncertainty surrounding possible claims for the blackout forces us to be cautious.
This risk factor, whose financial consequences have not yet been quantified, limits the attractiveness of the investment in the short term and justifies our decision to raise our recommendation to Hold rather than Overweight for the time being.
