Endesa Affected by Spanish Energy Sector Overhaul in Q1

Spain’s new regulatory measures claimed new victims on Wednesday, when Madrid-based Endesa reported a year-on-year 9.6% decline in EBITDA to 1,499 million euros.

‘The regulatory and fiscal measures introduced in Spain since 2012 had a cumulative negative impact of 1,719 million euros of which 390 million euros correspond to the 1Q 2014 EBITDA,’ reads a note released by the company.

Endesa reported a good operating performance in Latin America and a 4.6% increase in net income in Spain and Portugal. However, the bottom line was affected by the sharp depreciation in the Latin American currencies. As said, the other reason has been the new regulatory framework.

‘The new regulatory and fiscal measures introduced after the first quarter of 2013 affected EBITDA for 390 million euros in the first quarter of 2014, of which 117 million euros correspond to measures approved in 2013 that did not affect the first quarter of that year. These 390 million euros are added to the negative impact of 1,329 million euros Endesa registered following the Spanish government's implementation of a set of measures introduced since 2012.’

Recent reports suggested the country is considering increased support for underused gas-fired power plants to avoid closures. Last December, Spanish government also passed a law to streamline shale gas permitting.

Last July, Mariano Rajoy’s government announced it would introduce measures to reduce the gap between regulated power prices and generation costs. It promoted price rises (3.2% in electricity bills for consumers) and cost savings measures, such as a cut in the fees charged by companies distributing and transporting electricity. The government also scrapped subsidies to renewable power producers.