Competition calls for lowering the profitability of electricity distributors

The CNMC (National Commission for Markets and Competition) 'considers necessary' face the next regulatory period starting in 2020, to revise downwards the rate of financial remuneration for electricity distribution "using a methodology that fits the cost of equity and foreign distributors, which have evolved downwards during the current regulatory period 'resources. The current frame establishes a financial compensation rate of 6.503%, applying on the net asset value in service on 31 December 2014, measured at replacement cost. However, competition observed an increase in profitability, "because their ROI (return on investment) goes from 6.57% in 2013 to 8.16% in 2016. The financial performance is also increased during the period passing ROE of 8.84% in 2013 to 12.32% in 2016, placing all distributors above 10%. " This is the conclusion contained in the report of the CNMC headed by José María Marín on the main distribution companies in the electricity sector (Endesa, Iberdrola, Union Fenosa, Hidrocantábrico and Viesgo). For the distribution of more than 100,000 customers, corresponding only to the five companies analyzed in this report, the amount paid in 2016 to 4,734 million euros, representing an increase of 2.8% compared to the final remuneration 2015, which amounted to 4602.5 million. The total remuneration for electricity distributors, including less than 100,000 customers in 2016 amounted to 5,195 million euros. Of this amount, 39% corresponded to Endesa, Iberdrola 32%, 14% Union Fenosa, Hidrocantábrico 4% and 3% to Viesgo. It represents 30% of the costs This activity represents approximately 30% of the costs of the electrical system regulated included in the electricity bill. CNMC The report compares the evolution of the financial position and performance for each company between 2013 and 2016 and analyzes its economic and financial situation in terms of investment, profitability and leverage. The net result of these companies grew from 1,320 million euros in 2013-1530 million in 2014 and 1,870 million in 2015. In 2016 was 1,794 million. It is noteworthy that during the reporting period the total assets of these companies remains at approximately 34,000 million euros. In addition, annual investments in tangible values ​​remain above 1,000 million euros over the period, reaching 1,160 million euros in 2016. The net turnover has increased from 5,214 million euros in 2013 to 5,471 million euros in 2016 driven mainly by the increase in revenues from regulated electricity distribution. On the other hand, it points out that these companies have reduced their staff by 9% from 9877 to 8990 employees. Similarly, there has been a significant decrease in operating expenses during the period 2013-2016, from 1348 to 1,139,000 euros.


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