Annual Report - EDP

: financial report :these impacts, EBITDA decreased 1% year-onyear(-EUR 11 million) due to a combined impactfrom 8% decrease of regulated revenues inelectricity distribution in Spain due to regulatorychanges unveiled in March 2012; higher impactfrom insurance compensations in electricitydistribution in Portugal in 2011 due to bad weather(-EUR 8 million) and higher income related to theapplication of IFRIC18 in electricity distributionin Spain in 2011 (-EUR 9 million even consideringthe event explained above), which compensatedthe rise in Portugal distribution grid regulatedrevenues following an increase in rate of returnfrom 8.56% in 2011 to 10.05% in 2012.Regulatory receivables in Iberia increased byEUR 977 million, from EUR 1,644 million inDecember 2011 to EUR 2,621 million in December2012, driven by an increase of EUR 1,067 millionin Portugal and a decrease by EUR 89 millionin Spain. Regulatory receivables in Iberia includestariff adjustment in electricity and gas in Portugaland Spain and revisibility component associatedto CMEC.EBITDA from electricity distribution and lastresort supply activities in Portugal were flat in2012. Excluding a EUR 21 million intra-group realestate gain in second quarter of 2011 (no impactat consolidated level), EBITDA increased by 3%(+EUR 21 million). The increase in EBITDA wassupported mainly by higher regulated rate ofreturn on assets and lower sensitivity to changesin consumption.In 2012, electricity distributed was 4% loweryear-on-year driven by the residential, SME andpublic lighting segments, following the reducingof households’ disposable income and increasein taxation over electricity consumption (VAT upfrom 6% to 23% from October 2011 onwards) .The 0.7% decline in the number of supply pointshad an immaterial impact at gross profit level.Distribution grid regulated revenues increasedby 8% to EUR 1,260 million in 2012, essentiallyon the back of: (1) a EUR 44 million positiveimpact due to an increase of return on RAB (from8.56% in 2011 to 10.05% for 2012). The finalasset remuneration was set in 10.05% indexed toaverage Portuguese Republic 5Y CDS betweenOctober 2011 and September 2012 (1,000.5 bp)and (2) a EUR 9 million negative impact fromvolumes distributed below regulator forecast(47.6TWh for 2012).Last resort supplier regulated revenuesdecreased by 13% to EUR 93 million following theswitching of clients to liberalized suppliers, in linewith the calendar of increasing liberalization ofthe Portuguese electricity supply market. Volumeof electricity supplied by our last resort supplierfell 20% year-on-year to 19.8TWh and as a resultmarket share in electricity supply dropped from53% in 2011 to 44% in 2012.EBITDA from our electricity distribution activityin Spain decreased 28% (-EUR 52 million)year-on-year to EUR 130 million in 2012 mainlyreflecting: i) the inclusion of EUR 27 million gainrelated to the sale of transmission assets to REEin 1Q11; ii) higher impact from the application ofIFRIC18 in 2011 (-EUR 9 million) including theimpact of EUR 15m other operating income inthird quarter 2012 consequence of the applicationof IFRIC18 associated to the start-up of substationin Gijón (Asturias) and iii) negative impact fromRDL 13/2012 which implied a 8% decrease ofregulated revenues in 2012 (-EUR 13 million).Excluding the impact of sale of transmissionassets and application of IFRIC18 associatedto the start-up of a new substation, EBITDAdecrease 25% year-on-year (-EUR 39 million).154Electricity distributed by HC Distribución,essentially in the region of Asturias, decreasedby 5% year-on-year due to lower demand fromindustrial segment.EBITDA from gas regulated networks in Spainwent up 2% year-on-year (+EUR 3 million) to EUR215 million in 2012, due mostly to a 3% increaseof regulated revenues (+EUR 7 million).Regulated revenues rose 3% year-on-year backedby a 1% increase in the number of supply pointsand the 2% increase of our network’s extension.The 15% increase of volume of gas distributedthrough the distribution network to 55.8 GWh wasmostly driven to the connection to our network ofnew Repsol refinery in Cartagena (Murcia region).In July 2012, EDP has reached an agreement withEnagás (90%) and Ente Vasco de la Energía (10%),the public entity controlled by the governmentof Spain’s Basque Country region, for the saleof the gas transmission assets in Spain (2011EBITDA: EUR 23,7 million and 2012 EBITDA: EUR26.7 million). The completion of the transactionoccurred in February 2013 with an agreedtransaction price that represents an enterprisevalue of EUR 258 million (EUR 245 million paidby Enagás for 90% of the shares and the entireintra-group debt).In July 2012, ERSE recognised that EDP has theright to receive EUR 13.5 million (capital plusinterests) in 3 annual installments until 2015/2016related with the economic and financial balance ofconcession agreement. This way, EDP accountedin third quarter 2012 one revenues amountingto EUR 13 million. EBITDA from gas regulatedactivities in Portugal increased 9% year-on-year(+EUR 5 million) to EUR 62 million in 2012 onthe back of revenues explained above and EUR11.6 million tariff deviations from previous yearsaccounted in second quarter of 2011 based ona decree-law published in Portugal, which allowtariff deviations to be accounted on the same wayas electricity. Excluding these impacts, EBITDAincreased by 8% year-on-year (EUR +4 million).Gas volumes distributed in Portugal went up 3%year-on-year supported by the 7% year-on-yearincrease in the number of supply points, justifiedby a systematic effort of client connection onexisting grids in the region operated by EDP.In June 2012, ERSE set the gas tariffs for theregulatory period from July 2012 to June 2013,defining a 9% return on assets resulting on annualregulated revenues of EUR 63 million.EDP Renováveis owns and operates EDP Groupwind and solar power assets and developsprojects for new renewable capacity. The twomain markets in which EDP Renováveis operatesare Spain (36% of EDP Renováveis’s EBITDAin 2012) and USA (33%). Other markets includePortugal (12%), France, Poland, Romania, Belgiumand Brazil (the latter 5 representing 19% of EDPRenováveis’s EBITDA in 2012).EDP Renováveis’ EBITDA rose 17% year-on--year (+EUR 137 million) to EUR 938 million in2012. Installed capacity rose 6% year-on-year(+440MW) to 7.6GW by December 2012. Notethat in 2012 EDP Renováveis entered the solarPV technology by commissioning 39MWin Romania and completed its first wind farmin Italy (40MW). Average load factor was stableat 29% and average selling prices went up 10%year-on-year to €63/MWh, with all of the regionswhere EDP Renováveis operates showing positivecontributions (in local currency: Europe +7%;United States of America +3% and Brazil +3%).The major contributors to this EBITDA were: (1)European markets ex-Iberia (+EUR 78 millionyear-on-year), following 113MW of new capacityA World Full Of Energy