Enel Americas S.A. · BCS:ENELAM
Enel Americas — Investor Day (June 2017)
33 slides from Enel Americas's investor day presentation, June 2017
Slide 1: Brazilian Regulatory Framework
Brazilian Regulatory Framework Analyst Update Meeting June 2017
Slide 2: Agenda
Agenda 1 The Brazilian Electricity Sector | Sectorial Context 2 Distribution | Sectorial Context 3 Regulatory vs. Real | Current situation 4 Enel Rio | New Concession Agreement 5 Power Purchase | Overcontracting of energy 6 Generation | Sectorial Context 7 Enel Cachoeira 8 Enel Generation Fortaleza
Slide 3: The Brazilian Electricity Sector
The Brazilian Electricity Sector
Slide 4: The Brazilian Electricity Sector | Sectorial Context
The Brazilian Electricity Sector | Sectorial Context Key data of 2016 Generation Transmission Distribution Installed capacity Transmission Customers GW Millions km Millions +35% +50% 150 +65% 135 81 60 82 100 2007 2016 2007 2016 2007 2016 Installed capacity by technology % Distributors HPP 64 64.5%
Slide 5: Sector Governance
The Brazilian Electricity Sector | Sectorial Context Governance Others Agencies Advises the Presidency and CNPE Monitors the Safety and develops policies for the National Council for Energy Policy Efficiency of Energy sector. Supply CMSE MME ANEEL Electricity Sector Ministry of Mines and Brazilian E
Slide 6: Distribution
ene Distribution
Slide 7: Dx competition in 2016
Sectorial Context | Dx Market Dx competition in 2016 Main Players Distribution: Market share (Revenue) Distribution: Market share (Customers) STATE GRID 13.9% NEOENERGIA 13.4% ENEL 9.9% STATE GRID 11.3% AES 9.8% ENEL 11.0% CEMIG 8.6% CEMIG 10.2% 1/ 2/ NEOENERGIA 8.5% AES 8.6% LIGHT 7.3% ENERGISA 8.1
Slide 8: Dx Tariff Structure
Sectorial Context | Dx Tariff Structure The tariff is divided into two parts, Components A and B The Brazilian model is Price-Cap, costs divided between manageable and non-manageable by the Dx Public auctions: lowest price (bilateral negotiations between Dx and GX are not allowed) Power Purchase
Slide 9: The Tariff review process
Sectorial Context | The Tariff review process The Revision and Tariff readjustments Concession Agreement for the Ensure the economic and financial balance of the distribution of electricity. Tariff Revision concession. Performed every 4/5 years. Terms of Service Term of Concession: 30 years
Slide 10: The Tariff review process
Sectorial Context | The Tariff review process The Tariff review process CVA 12 quotas indexed to Pass-through to Tariff (In Readjustments Variations costs in SELIC interest rate and Revisions) COMPONENT A COMPONENT A Imbalances between costs are transferred to the Tariffs in the next Readjustmen
Slide 11: The 4th Cycle of Tariff Revision
Sectorial Context | The 4° Cycle of Tariff Revision Main changes in the methodology of Review for Dx 1° Cycle 2° Cycle 3° Cycle 4° Cycle WACC Real Before Taxes 17,06% 15,05% 11,36% 12,26% WACC Real After Taxes 11,26% 9,95% 7,50% 8,09% Benchmarking Benchmarking Reference Company Reference Company (Co
Slide 12: The 4th Cycle of Tariff Revision
Sectorial Context | The 4° Cycle of Tariff Revision Main changes in the methodology of Review for Dx 1° Cycle 2° Cycle 3° Cycle 4° Cycle Benchmarking based on Benchmarking based on Benchmarking based on social and economic social and economic social and economic Complexity Complexity Complexity Bad
Slide 13: Regulatory vs. Real
Regulatory vs. Real Current situation
Slide 14: Regulatory vs. Real: Current situation 2016
Regulatory vs. Real Current situation - 2016 OPEX Bad Debt Regulatory R$ per consumers % revenue Current Key issues 1.5% 289 224 0.7% Enel Rio: The great challenges Enel Rio remain the non-technical losses and the adequacy of the quality indicators the company's service to the regulatory standards
Slide 15: Regulatory vs. Real: Current situation
Regulatory vs. Real Current situation Non Technical Losses DEC FEC % over the low voltage market Hours Frequency Regulatory Current 24.4% 22.3 17.0% 12.5 Enel Rio 9.2 11.2 8.6% 12.1 8.8 Enel Ceará 5.1% 8.2 5.0 6.9% 18.9 29.6 12.8 3.9% 14.9 CELG 01/06/2017 15
Slide 16: Enel Distribuição Rio: New contract
Enel Distribuição Rio New contract
Slide 17: Enel Rio New Contract: Key changes
Enel Distribuição Rio | New contract Key changes New limits of non-technical losses % over low tension market Enel Río Tariff Review anticipation for 2018 (Previous was 2019) 24.40% The values of 2019 - 2023 will be defined based on the Aneel methodology revision Regulatory non-technical losses
Slide 18: New contractual Commitments
Enel Distribuição Rio | New contract New contractual Commitments DECi Limits FECi Limits Hours frequency Adequacy of quality indicators: 22.06 Definition of a path to adapt the DECi / 12.02 FECi indicators to regulatory limits from 21.08 11.6 17.91 10.22 2018 to 2022 14.01 8.53 10.71 7.1 6.73 9.86
Slide 19: Power Purchase: Overcontracting of energy
Power Purchase Overcontracting of energy
Slide 20: Brazil Distribution Overview
Brazil Distribution Overview Contracted capacity Current situation Total Dx energy contracting situation in Brazil % surplus over energy required Brazilian Dx are over contracted due to the Brazilian economic crisis and the 8.0% market reduction in the years 2015-16 7.2% 6.2% Part of the problem
Slide 21: Enel Distribution Overview
Enel Distribution Overview Contracted capacity Total Dx energy contracting situation in Brazil % surplus over energy required Initial Current Limit Action Plan 10.5% 8.0% 8.4% 8.2% Enel Rio 3.6% Reduction of contracts with the 1.1% 1.5% 1.3% Enel plants 2018 2019 2020 2021 Participation in the m
Slide 22: Regulatory Generation
ene Regulatory Generation
Slide 23: Gx competition in 2016
Sectorial Context | Gx Market Gx competition in 2016 Generation: Market share (Installed Capacity) Generation : Market share (Energy generated) Companies fleet breakdown ELETROBRAS 28.0% ELETROBRAS 31.7% ENEL 77% 33% CEMIG 5.6% PETROBRAS 7.6% ELETROBRAS 87% 6% 2% THREE GORGES 5.1% ENGIE 4.7% ENGIE 6
Slide 24: Energy commercialization
Sector context | Energy commercialization Decree 5.163/2004 defines Regulated market and Free market REGULATED MARKET FREE MARKET* Sellers Generators Traders Self-producers Offer MWh for the lowest price The offer is free Regulated Distributors Consumer Free Consumers Buyers Long-term contracts, res
Slide 25: Regulated Auction
Sector Context | Regulated Auction Promoted by MME to guarantee energy supply Existing energy New Energy Delivery started in the same year (A) or up to the 5th year (A-5) Delivery started in 3rd year (A-3) or up to 7th year (A-7) Supply between 1-15 years (contracting CCEAR) Supply between 1
Slide 26: Operation and formation of the Spot Price
Operation and formation of the “Spot Price” Centralized Dispatch (ONS): “Should I use water now or in the future?” The ONS dilemma Optimization process (variables in account) Basin Configuration “Should I dispatch Hydro today?” Hydrology (flows). Yes No Storage of reservoirs. Transmission capa
Slide 27: Economic Dispatch illustration
Economic Dispatch illustration On a weekly basis, the ONS optimizes the use of resources Hourly dispatch centralized in Southeast (responsible for 60% of national supply) The plants that operate at the Base do not participate in the optimization process: wind, solar, nuclear and the inflexible par
Slide 28: MRE
MRE Mechanism of energy allocation between hydroelectric What has motivated the creation of the MRE? Centralized dispatch Mitigation of individual risk Several plants in cascade Case Energy SURPLUS (GSF>1): Case Energy DEFICIT (GSF<1): Generation Hydro > Physical guarantee Hydro: Generation Hydro <
Slide 29: Enel Cachoeira
ene Enel Cachoeira
Slide 30: Historic individual generation Enel Cachoeira
Historic individual generation Enel Cachoeira 1 104% 2 1 Until 2012, GSF> 1 - so that in 101% 96% addition to recomposing the 91% 87% Reduction GF 85% individual generation of Cachoeira Physical Warranty en 2018 (-5%) up to its Physical Guarantee, there (GF) were leftovers (secondary energy) 394 415
Slide 31: Enel Generation Fortaleza
ene Enel Generation Fortaleza
Slide 32: Contracts via Thermoelectric Priority Program
Contracts via Thermoelectric Priority Program Energy contract with Enel Distribuição Ceará (Coelce) Thermoelectric Priority Program (PPT) Program created in 2000 (Decree 3371/00) for the implementation of thermal power plants, under funding incentives and gas supply guarantee for 20 years, in order
Slide 33: End
End Cl