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Investing.com -- Energias de Portugal S.A. (EDP) will see an increase in its regulated electricity distribution revenues in Portugal next year, although the weighted average cost of capital (WACC) set by the national regulator remains below some expectations.
The Portuguese Electricity Regulator, ERSE, has proposed a 1% increase in regulated electricity tariffs for 2026 in the normal low voltage segment, setting the grid assets tariff at €97.1 per megawatt-hour.
The regulated gross profit for electricity distribution by E-Redes is projected at €1.22 billion, up €93 million from 2025. Electricity transport for REN is expected to rise by about €11 million.
ERSE will maintain the WACC for 2026-2029, adjustable annually based on 10-year Portuguese government bond yields, with a floor of 5.50% and a cap of 8.50%.
Based on current yields, the pre-tax WACC stands at 6.33%. Adjustments for operational expenses and capital expenditures will follow a formula of the GDP deflator minus 0.50%, down from the previous 0.75%.
The last-resort electricity supply gross profit is set at €47 million for 2026. The tariff deficit is expected to decline to €1.08 billion from €1.59 billion in 2025.
ERSE will issue its final determination on 2026 tariffs and electricity network remuneration for the 2026-2029 period on December 15.
Earlier this week, ERSE launched a consultation on a new regulation aimed at enhancing Totex-based incentives for network activities.
The proposal encourages digitalization and flexible solutions over conventional investments.
The increase in EDP’s electricity distribution gross profit reflects higher returns, a larger regulatory asset base, adjustments for allowed OPEX, and updates to the inflation less efficiency factor.
Investments in new electricity networks from 2026 will not be subject to the extraordinary tax that previously reduced the base return by approximately 25%.