EDP believes that the Government and energy market regulators in Portugal will increase incentives for electrical distribution, as they recognized that the returns were not sufficient for companies.
“We were not growing in Portugal because there was no great need, but also because the returns were not sufficient. I think the government and regulators recognized that they need to encourage greater returns in distribution, and we have prospects for this in the next two years”, said EDP CEO Miguel Stilwell de Andrade this Thursday.
“This has already been approved by the regulator. Therefore, we have very good visibility of this in Spain too”, he said.
The person in charge, who was speaking at the presentation of the group’s strategic plan between 2026 and 2028, in London, said that, as a result, “we are seeing an increase in investment in Portugal, low volatility and high profitability”.
“But essentially there is a limit to the investment that has been increased and we can take advantage of that to a certain extent.
But, on the other hand, in Spain, there is a slightly greater increase”, he said.
In Portugal, the CEO of EDP said that he believes that the calculation of returns for companies “will increase further”. “We are defending it. We believe that there are methodological problems with the calculation, which still allows us to expect a greater return.
We will know this on December 15th. But, in any case, we believe that this will be the case”, he highlighted.
“It is important to highlight that there are increases to these returns in terms of incentives, in the order of 100 to 200 basis points, whether for exceeding the target, for efficiency, for the quality of service or for improving losses. There are additional increases in terms of returns on distribution, both in Portugal and in Spain”, highlighted Miguel Stilwell de Andrade.
Another point that the EDP CEO recalled is that returns are indexed to bonds, which means that “there is a certain reduction in risk”. “This is specific to Portugal compared to Spain,” he said. Therefore, if interest rates rise, returns will also rise.