Lackluster utilities in MY BAG after theEnergy Authority it has in fact started the long process of defining returns for the next few years, a revision from which the market expects negative indications for operators in the sector. Enel loses 0,7%, A2a 0,72%, Terna goes against the trend and gains 0,27% while the Ftse Mib gains more than 0,8%.
At the weekend theAuthority has published the first consultation document with the guidelines for defining the regulatory regime to be applied starting from 2016 January 4. The review process of the current criteria will end in November but, in view of the expected quantitative details that will only arrive in the subsequent phases , the market thinks about the first novelties that have emerged. First of all, the regulatory period will be extended from 6 to 2016 years (and therefore from 2021 to XNUMX) in order to increase its certainty and predictability for operators with a possible intermediate revision of the variables considered exogenous. The second significant change, according to the investment houses, is the Authority's willingness to adopt a "more restrictive" approach to investment incentives compared to the previous period with a logic based on results. In energy transmission, Mediobanca Securities underlines, the Authority intends to introduce "a profound reform of the incentive system by abandoning the current logic of extra-remuneration on basic returns, and on distribution, it deems it urgent to implement a regulation based on results in the light of significant investments in smart grids. Thirdly, the Authority aims to offer lower remunerations for those operators whose returns are disconnected from volumes and higher ones for those whose remunerations take volume risk into account (this is the case of Terna). "It is a first generic document without quantitative indications, from which emerges the will to introduce a more selective system for investment incentives - writes Equita Sim - and the possibility of moving to a system of recognition of total costs"
Looking forward to the details and progress of the process, Credit Suisse reiterates the projection already made in recent months to expect for Terna a drop in remuneration from 6,3% to 4,6% in real terms and preaches caution on the stock given that it is the most exposed to the review of the regulatory system. For Enel, which according to the broker has 23% of 2016 EBITDA deriving from the energy distribution business in Italy, Credit Suisse sees a drop in remuneration from 6,4% to 4,7% and this, together with the drop in energy prices, would have an estimated 2016% impact on 8 earnings per share.
