2008-2011: new regulatory period for electricity
distribution, metering and commercial activities



January 14, 2008
Enel SpA
                                                                Investor Relations


The new regulatory framework...
Enel SpA
                                                                     Investor Relations

Clear and stable regulat...
Enel SpA
                                                                     Investor Relations



New challenges and opp...
Enel SpA
                                                                                                                 ...
Enel SpA
                                                             Investor Relations

Commercial activities regulation...
Enel SpA
                                                                      Investor Relations

     2008 estimated tar...
Enel SpA
                                                                                                     Investor Rel...
Enel SpA
                                                      Investor Relations

Closing remarks



     Clear and stabl...
Enel SpA
                                                                                                  Investor Relati...
Enel SpA
                                                                           Investor Relations



Contact us

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2008 2011 New Regulatory Period For Electricity Distribution, Metering And Commercial Activities January 14 2008

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2008 2011 New Regulatory Period For Electricity Distribution, Metering And Commercial Activities January 14 2008

  1. 1. 2008-2011: new regulatory period for electricity distribution, metering and commercial activities January 14, 2008
  2. 2. Enel SpA Investor Relations The new regulatory framework Resolution Resolution Distribution and metering tariffs for 2008-2011 348/07 348/07 Recognized revenues for commercial activities Resolution Resolution related to “protected customers” 349/07 349/07 Resolution Resolution Quality of service regulation for 2008-2011 333/07 333/07 Clear and stable regulatory scenario New challenges and opportunities 2
  3. 3. Enel SpA Investor Relations Clear and stable regulatory scenario Reduction of 2008 tariffs fully balanced by volume Impact on revenues increase Impact on revenues Slight revenue increase for 2009-2011 Profit sharing effects balanced by other regulatory Profit sharing Profit sharing items: increase in depreciation thanks to new investments, old meters treatment and digital meters useful life reduction 2008 vs. 2007 volume increase increase of commercial activities price Reduction for the period 2008-2011 X-factor X-factor New mechanism based on achieved efficiencies 3
  4. 4. Enel SpA Investor Relations New challenges and opportunities Higher tariff for commercial activities to promote Liberalisation Liberalisation liberalisation Higher value of customers on the free market New regulation to enhance continuity of service, Quality of service Quality of service including reduction of number of interruptions Innovative actions to be implemented to confirm the good track-record in outperforming standards 2% extra-return for minimum 8 years on specific Investment Investment investments, with regard to quality and efficiency: incentives incentives new sub-stations in specific areas (e.g. Southern Italy) new technologies (low losses transformers and smart grids) 4
  5. 5. Enel SpA Investor Relations The new regulatory framework: key metrics 2008-2011 2004-2007 ~ 22 bn€ ~ 20 bn€ RAB 11 RAB 7.0% for distribution 6.8% for distribution 7.2 % for metering 7.0 % 3 8.4 % for metering 7.0 % 3, 4 WACC 22 WACC 7.0 % for commercial activities 8.4 % for commercial activities 2.2%5 X-Factor X-Factor 1.4% on a like for like basis 3.5% 1. Starting RAB for distribution, metering and commercial activities 2. Real pre-tax 3. Weighted WACC = WACCd*RABd+ WACCm*RABm+WACCc*RABc 4. Plus 2% extra return on specific investments (for minimum 8 years) 5. Applied only to opex and equal to weighted average of 1.9% (Distribution) and 5.0% (Metering) 5
  6. 6. Enel SpA Investor Relations Commercial activities regulation Compensation Mechanism introduced by the Regulator to Compensation mechanism compensate 2008 unbalances between revenues mechanism and costs in excess of 5% Reduced impact of larger customers switching to the free market thanks to €/customer indexation Revenues evolution of tariff Revenues evolution New mechanism to be set by the Regulator to guarantee fixed costs coverage in presence of significant switching of customers to the free market 6
  7. 7. Enel SpA Investor Relations 2008 estimated tariff revenues €mn 1 Depreciation 4,850 4,860 Distribution and Metering 0.24 Commercial activities 4,180 4,340 0.44 Opex 0.32 510 680 2007 2008 Return on RAB Source Enel 1. Including volume effect 7
  8. 8. Enel SpA Investor Relations Estimated RAB evolution €bn +2 +0.5 -0.5 ~ 22 ~ 20 Net 2004 Deflator Other 2008 investments impact 1 adjustment 2 2004-2006 Source Enel 1. From IIQ03 to IQ07 2. Mainly disposals, change in pension fund, change in provisions 8
  9. 9. Enel SpA Investor Relations Closing remarks Clear and stable framework Investment in digital meters acknowledged General framework in line with Enel commercial strategy on the free market No effects on 2008 figures Positive impacts on 2009-2011 figures 9
  10. 10. Enel SpA Investor Relations Disclaimer THESE SLIDES HAVE BEEN PREPARED BY THE COMPANY SOLELY FOR THE USE DURING THIS CONFERENCE CALL THE INFORMATION CONTAINED HEREIN HAS NOT BEEN INDEPENDENTLY VERIFIED. NONE OF THE COMPANY OR REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER IN NEGLIGENCE OR OTHERWISE FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THESE SLIDES OR THEIR CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THESE SLIDES OR ANY MATERIAL DISCUSSED DURING THE ABOVE CONFERENCE CALL. THIS DOCUMENT IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED DURING THE ABOVE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND THEREFORE YOU SHOULD NOT PLACE UNDUE RELIANCE ON THEM. FORWARD LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES. WE CAUTION YOU THAT A NUMBER OF IMPORTANT FACTORS COULD CAUSE ACTUAL RESUTLS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN ENEL’S CORE ENERGY BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT AND FUTURE CAPITAL EXPENDITURE. 10
  11. 11. Enel SpA Investor Relations Contact us Investor Relations Team (investor.relations@enel.it) Luca Torchia (Head of IR) +39 06 83053437 Massimiliano Bevignani (Stock analysis and IR reporting) +39 06 83057023 Donatella Izzo (Buy-side) +39 06 83057449 Fausto Sblandi (Sell-side) +39 06 83052226 Visit our website at: www.enel.it (Investor Relations) 11

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