Portugal's proposal on grid returns for EDP still lags behind European peers

Portugal's energy market regulator ERSE announced on Thursday that it would increase the returns on the grid assets of EDP, the country's biggest utility. However, the proposed return is still below what EDP's counterparts in other European countries enjoy.

The crippling blackout which hit Spain and Portugal in April has reignited the debate on investments and remuneration of power networks, as well as their integration with renewable energy sources and to meet higher demand for power, such data centers.

ERSE suggested that the rate of return on these assets during the regulatory period of 2026-2029 should range between 5.5-8.5%, with a pre-tax return of 6.33% starting in 2026. This is an increase from the current 5.5%.

This is still below the 6.46% that the Spanish regulator has proposed and far from the 7.5% offered by other European countries.

ERSE stated that the preliminary return was calculated based upon the evolution of Portugal’s 10-year bonds yields. It also took into consideration "the anticipated strong increase in investment in grid infrastructure".

EDP? EDP?

BNP Exane analysts, who expected at least 6,7%, called the preliminary return "a little disappointing" and said it was not competitive with other countries, such as Italy, UK, or Germany.

EDP? EDP?possesses the largest Portuguese distribution network serving over six million domestic and industry customers.

After consulting with consumers and businesses, ERSE must confirm or modify the return rate by December 15.

(source: Reuters)