Elia Group Loading up the municipal shareholders for RAB growth

A detailed report in “De Tijd” newspaper mentions plans from the federal (FPIM) and regional (PMV) investment vehicles to strengthen respectively the Publi-T capital and some Flemish municipal shareholders. These capital injections aim to prepare for necessary capital increases over the next 4 years. The transmission grid needs investments of 7.2bn (BE) and 8.7bn (GE) to prepare for the energy transition to fight climate change. We believe that the municipal shareholders are not able to follow the 1.5-2bn estimated capital increases over the next 4 years, without extra capital support. A complex capital increase where shareholdings are split between the BE and GE activities is avoided. It seems that the Belgian state is prepared to also finance the German expansion, while the Netherlands is actually completing the sale of its Tennet GE stake (soon to be completed). Note that the GE returns are currently higher than the Belgian regulated returns and GE has also proposed a new remuneration proposition. The German government is expected to confirm the ROE formula for Onshore before the Elia CMD on 8/12, a consultation on the Offshore remuneration will also be launched before the end of the year. This news is clearly positive as it make the RAB expansion plans more likely. The timing of the federal/regional capital increases is estimated over the next 9 months.