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    EDP   PTEDP0AM0009

EDP - ENERGIAS DE PORTUGAL, S.A.

(EDP)
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Tackling soaring energy bills, Spain to cap gas price, utilities' profits

09/14/2021 | 12:08pm EDT

(Adds market impact, company reimbursement, Italy)

* Govt to redirect 2.6 billion euros from companies

* Gas price growth capped at 4.4% in Q3

* Endesa, Iberdrola to take 1 billion euro hit

MADRID, Sept 14 (Reuters) - Spain's cabinet passed emergency measures on Tuesday to reduce sky-high energy bills by redirecting billions of euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

In the first such broad response in Europe, where wholesale prices have doubled in a year, Spain plans to limit the profits that hydropower and other renewable power generators can make from surging electricity prices.

The government expects to channel some 2.6 billion euros ($3.1 billion) from companies to consumers in the next six months.

Energy Minister Teresa Ribera told a news conference the measure would remain in place until the end of March, when natural gas prices are expected to stabilise after consumption falls from winter peaks.

Analysts at RBC capital markets estimated leading utilities Iberdrola and Endesa would take revenue hits of about 1 billion euros from the measure. Endesa shares fell 5.1% by the closing bell.

The impact on Naturgy and EDP would be about 200 million and 65 million euros respectively, RBC said.

In parallel, Spain will use an extra 900 million euros it expects to raise by auctioning carbon emission permits this year to reduce bills, citing high market prices as the reason for the additional funds.

With voracious demand for natural gas accounting for much of the recent increase in European power prices that have stoked inflation, Spain will limit regulated price increases for the fuel at 4.4% in the third quarter, compared with forecasts for a 28% hike.

Ribera said the measures under the "shock plan" would slash the average consumer's monthly bill by 22% until year-end.

Though companies will have to shoulder the higher costs while the measures remain in place, they will be reimbursed through higher tariffs later, meaning the overall cost to them will be neutral, the ministry said.

Still, Spain's nuclear power association said the new measures would make nuclear plants financially unviable and provoke a total shutdown of the industry.

The left-wing coalition government has been under pressure from the opposition and civil society organisations to reduce electricity bills as spot prices, which make up around a third of consumer power bills, have broken records for weeks.

Prime Minister Pedro Sanchez announced on Monday that a special electricity tax would drop to 0.5% from 5.1% until the end of the year, while a reduced VAT rate and the suspension of a 7% generation tax would be extended until January.

Altogether, the measures will reduce government revenues by around 1.4 billion euros in 2021.

Italy is also looking at energy sector reform to combat an expected 40% increase in retail power prices in the next quarter, Reuters reported on Tuesday.

($1 = 0.8472 euros)

(Reporting by Nathan Allen and Belén Carreño Additional reporting by Jesús Aguado Editing by Philippa Fletcher, David Goodman and Lisa Shumaker)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
EDP - ENERGIAS DE PORTUGAL, S.A. 2.54% 4.894 Real-time Quote.-5.08%
ENDESA, S.A. 0.21% 19.04 Delayed Quote.-14.81%
IBERDROLA, S.A. 1.95% 9.834 Delayed Quote.-15.95%
NATURGY ENERGY GROUP, S.A. -0.31% 22.37 Delayed Quote.17.99%
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Analyst Recommendations on EDP - ENERGIAS DE PORTUGAL, S.A.
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Financials
Sales 2021 12 891 M 15 035 M 15 035 M
Net income 2021 839 M 979 M 979 M
Net Debt 2021 12 398 M 14 460 M 14 460 M
P/E ratio 2021 22,8x
Yield 2021 3,94%
Capitalization 19 315 M 22 491 M 22 528 M
EV / Sales 2021 2,46x
EV / Sales 2022 2,36x
Nbr of Employees 12 124
Free-Float 69,1%
Chart EDP - ENERGIAS DE PORTUGAL, S.A.
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EDP - Energias de Portugal, S.A. Technical Analysis Chart | EDP | PTEDP0AM0009 | MarketScreener
Technical analysis trends EDP - ENERGIAS DE PORTUGAL, S.A.
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 23
Last Close Price 4,89 €
Average target price 5,74 €
Spread / Average Target 17,3%
EPS Revisions
Managers and Directors
Miguel Stilwell de Andrade Chief Executive Officer, CFO & Executive Director
Luís Filipe Marques Amado Chairman-Supervisory Board
Rita Sousa Head-Compliance
Maria Celeste Ferreira Lopes Cardona Member-Supervisory Board
Fernando Maria Masaveu Herrero Member-Supervisory Board
Sector and Competitors
1st jan.Capi. (M$)
EDP - ENERGIAS DE PORTUGAL, S.A.-5.08%22 491
NEXTERA ENERGY8.78%160 923
ENEL S.P.A.-14.44%83 728
DUKE ENERGY CORPORATION10.45%77 803
IBERDROLA, S.A.-15.95%69 312
SOUTHERN COMPANY3.71%66 674