Following what RAE President Athanasios Dagoumas said during yesterday’s press conference regarding RAE’s forthcoming decision to set the WACC, IPTO states in a statement that it finds that mistakes have been made in setting the critical parameters for WACC calculation.
“Mistakes that”, as it is emphasized, “we are sure are not intentional”, and gives clarifications.
The announcement of IPTO states in detail:
“In the current conditions of increased energy costs, a key parameter in the decisions taken by the Operator is the respect of the Greek consumer and the utilization of the resources spent on the Electricity Transmission System. IPTO is working intensively to reduce the cost of electricity, as well as This is exactly what investments are aimed at, through the reduction of Utilities and the further penetration of RES, which is why we have full respect for RAE as a defender of consumer and the role of RAE in achieving this goal is crucial.
However, RAE’s decision to set the low levels reported by IPTO WACC not only does not protect the consumer, but on the contrary significantly complicates the Administrator’s effort to achieve the strategic objectives agreed jointly with RAE and the State. .
At yesterday’s press conference, the president of RAE made public the parameters that determined the height of the WACC (slide 74 of the relevant presentation). So we see that mistakes have been made in defining the critical parameters for the calculation of the WACC, mistakes that we are sure are not intentional. The following assumptions have been used in the WACC mathematical formula:
Current yield of a 10-year German bond (rf): The yield of 0.5% is used, while the real yield on 24.06.2022 was 1.44%, while already in June it has exceeded 1.7% and it is certain that it will increase even more in the context of interest rate increases.
Systemic beta risk factor (beta): The rate of 0.80 is used (given in the respective decision of HEDNO), while the real rate today is 0.926 based on the methodology set by RAE itself (the co-variation of IPTO Holdings share with the ATHEX General Index is calculated ).
Borrower costs of the Administrator for the four years: A rate of 2.8% is used while the real average lending rate in commercial banks is 5%. The big difference is that RAE set the borrowing costs for the next four years taking into account exclusively the borrowing costs of the company for the year 2021, not taking into account the increase in interest rates that has already taken place for floating rate loans, but nor comparable companies as the methodology itself stipulates. The new market conditions oblige IPTO to enter into agreements for the conversion of the floating interest rate into a fixed one with an additional financing cost of 2.3% for the existing loans, as shown by corresponding official offers from Greek banks. The additional financial cost is expected to exceed 2.6%, in view of the increase in interest rates by the ECB, bringing the average lending rate to commercial banks to 5%. The new loans with the European Investment Bank, according to written information we have, are expected to amount to at least 3.8%, including the guarantee of the Greek State. At the same time, the cost of borrowing similar companies amounts to 4.1%.
We appeal to the Regulatory Authority to take into account the new data on borrowing costs and to correct the errors in the parameters in the calculation of the WACC. IPTO has already sent a request for a review of the WACC, accompanied by the necessary documentation, including correspondence with banks proving the current cost of borrowing, hoping for a new decision that will allow the Administrator to perform his institutional duties smoothly.
Finally, regarding the utilization of European co-financing resources, from the year of its establishment until today, the Administrator has already raised 292.8 million euros from NSRF resources and we expect to receive an additional 13 million euros, while from the Recovery Fund we have already raised 91.9 million euros and there is another 73 million euros left. In fact, the interconnection of the Fourth Phase of the Cyclades was one of the first projects approved for funding by the TAA. At the same time, we are in the process of completing the request for financing the electricity interconnection Crete-Attica by the NSRF with 497.9 million euros, while, in cooperation with the Ministry of Energy, we are already launching the integration of the electricity interconnection of Dodecanese and NE Aegean Carbonation Fund.
Therefore, any statements attributed to the President of RAE based on press reports that IPTO does not want to be funded by the NSRF in order not to reduce its Regulated Asset Base and, consequently, the guaranteed income, we are sure to be a serious result. .
We reiterate that the sole concern of the Administrator is the operation, development and maintenance of the Transmission System in such a way as to maximize social well-being. We are sure that RAE starts from the same starting point and together we will work for the implementation of the investments that RAE itself has approved in IPTO’s Ten Years Investment Plan, while we will receive the necessary support and encouragement from the Regulator to contribute with the forces. in the implementation of the ESEK and we will participate in the strategic investments in the Eastern Mediterranean “.
The announcement on the Stock Exchange
IPTO HOLDINGS SA (hereinafter the “Company”) informs the investing public that according to a press conference given by the President of the Energy Regulatory Authority on 27.06.2022, among other things, it stated that the weighted average return on capital (W) Allowed Revenue of IPTO SA for the regulatory period 2022-2025 will be of the order of 6.1%.
In the light of this development, the related company IPTO SA considers that the size of the price is much lower than the proposal submitted in October 2021, but assures its shareholders that it remains fully committed to the implementation of its investment program and will take the necessary steps. actions for the formation of a rational and balanced regulatory framework that will ensure the public interest and at the same time will restore the smooth implementation of its program.
* Dagoumas (RAE): Data in the Competition Commission for a dominant position in electricity
Source: Capital
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