Elia Group CREG shines a light on ETB tariffs for 2024-27
On 14/11/23, the CREG (Belgian regulator) updated its tariff proposal for 2024-27. Although 10% below the Elia proposition, we now get more clarity on the uplift to the ROE for the Belgian activities. Each year, the 10yr Belgian bond rate (OLO) will replace the earlier fixed 1.68% in the CAPM formula for the ROE calculation. The CREG explains that in order to get investments moving it needed to adapt to the new financial market reality. On the other hand it also took into account “interests of the network users”. The German regulator should also reveal the offshore ROE treatment before the Elia CMD on 8/12. We do not expect a new CEO to be revealed by then, nor do we see that as a problem. Elia operates as a holding with 2 main entities that each have a CEO that run the operational activities. We also welcome the recent initiatives from the Belgian federal and regional governments to strengthen the capital of Public-T. We adjust our EPS upwards after the CREG decision, but on the other hand we reduce our target price to EUR 124 from 132. We expect more dilution from future capital increases (self-fulfilling).Elia System Operator develops, operates and maintains very-high-voltage (380 kV, 220 kV and 150 kV) and high-voltage (70 kV, 36 kV and 30 kV) networks, providing its customers with consultancy and engineering services. Whether in Belgium, Germany or elsewhere in Europe or the U.S., Co. ensures that electricity flows reliably from energy producers to distributors and large corporate customers. Co.'s main activities include transmission operator, system operator and market facilitator, developing and maintaining grid infrastructure, connecting electrical installations to grids, providing transparent access to grids, while taking initiatives to improve electricity market operations.
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