Not only Enel. Because Sanchez in Spain makes energy groups cry a little
What happened on the Madrid stock exchange (and not only) to energy companies (such as Endesa controlled by Enel) after the announcement by the Sanchez government on energy bills
The Madrid Stock Exchange is the black jersey among the European lists (-1.1%), penalized by sales on utilities that are discounting the decision of the Spanish government to draw on the profits of energy companies, judged excessive and motivated by the price rush, to procure resources to be used to contain energy costs for citizens and businesses. "
There are energy companies that are currently making extraordinary profits and I don't think it is considered that these profits come from the performance of prices in international markets, ”Prime Minister Pedro Sanchez said Monday night on public television RTVE, Bloomberg reported.
The Spanish government aims to recover € 2.3 billion until March 2022 by limiting the profits of energy companies, including nuclear and hydroelectric companies.
Endesa sells 4.8%, its parent company Enel 4.7% to Milan and Iberdrola 4%, occupying the last positions among the European utilities. The sector, which discounts the fear of interventions on company profits, is very negative (-2.1% the European Stoxx index).
Enel shares today lost up to 4.9% on the Milan stock exchange, reaching € 7.2 and reporting the worst performance among all the companies collected in the FTSE MIB index.
THE ROLE OF SPAIN
The drop is linked to the announcement by the head of the Spanish government Pedro Sánchez regarding the imposition of a maximum limit on natural gas prices and the reduction of the electricity tax. These are measures designed to contain the social impact of the increase in electricity bills in the last quarter of the year (an increase that also affects Italy , as explained by the Minister of Ecological Transition Roberto Cingolani).
THE PLAN OF SÁNCHEZ
Sánchez said it is unacceptable for energy companies to profit from the high market prices of natural gas and electricity. He said his government will carry out a redirection of resources from businesses to consumers.
According to the Minister of Labor, Yolanda Díaz, “the public good comes before the profit-and-loss calculations of large companies”.
IMPACT FOR ENDESA (ENEL)
The Spanish government's measures will therefore affect the electricity companies active in the country. The largest is Endesa, based in Madrid and is part of the Enel Group, which controls it with a participation of 70.1 percent.
According to the worst case scenario elaborated by the Equita investment bank, the Sánchez plan will have an impact on Endesa of approximately one billion euros in terms of credit as regards lower profits compared to the upside of current energy prices. In the best case scenario , the most favorable one, the economic impact will instead be limited to 100-200 million dollars.
Equita gives a negative opinion on the measures of the Spanish government, considering them to be pejorative of the regulatory framework.
FORECASTS ON THE ITALIAN GOVERNMENT
As things currently stand, Equita excludes that the Italian government can intervene on the electricity market in the same way as Spain, damaging the operators in the sector.
Mario Draghi's executive could proceed to limit the impact of the increase in energy tariffs on consumers in another way: by reducing system charges on the bill and moving some items on general taxation.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/enel-spagna/ on Wed, 15 Sep 2021 12:54:42 +0000.