Net income amounted to Ch$2,661.05 million as of September 30. The tariff restriction imposed due to the pandemic had an impact, despite the fact that the energy dispatch grew 7%. Also, in parallel, the increase in costs due to a growing inflation and the devaluation. The distributor market was key and the generator was once again making losses. New subsidy removal?
By Alfredo Flury
The Provincial Energy Company of Córdoba (EPEC) closed the third quarter of 2022 with net profits of 2,661.05 million pesos, 35 percent lower than the 4,108 million pesos recorded in the same period of the previous year, always at constant values.
The data, which is reflected in the company's financial statements as of September 30 and to which Comercio y Justicia had access, show a significant deterioration of the company's accounts, which, however, still maintain a positive result.
Divided by area, the Distributor Market showed a net profit of 6,575.04 million pesos, the Generator Market a loss of 1,109.57 million pesos and the Telecommunications Market a profit of 254.04 million pesos. These figures, after subtracting the 3,058.4 million pesos of the income tax payment, resulted in a final result of 2,661.05 million pesos.
According to the document published upon request, "it is observed that the income from sales was lower than in the same period 2021 as a result of the tariff policy that the state-owned company has carried out in 2022".
Specifically and after the pandemic, EPEC slowed down the presentation of the requests for the increase of the Distribution Added Value (VAD) before the Regulatory Entity of Public Services (Ersep) as a result of the quarterly cost increase.
In fact, last year there were only two increases and this year, for the time being, the increase corresponding to the higher costs of the fourth quarter of 2022 will not be applied.
However, the reduction in real terms of tariffs was partially offset by the increase in consumption that accumulated in 2022, up to September 30, a growth of seven percent. This increase in consumption increased even more in the last two months of the year as a result of the high temperatures.
In addition, operating costs remained constant in real terms compared to the same period of the previous year, including marketing and administration costs (mainly salaries).
The company admits in the report a "worsening of the result" which, in addition to the consequences of a limited tariff policy, includes a negative impact due to the variation of the exchange rate and the high inflation registered.
At the same time, the updating of the actuarial calculations for the 2022 accessions to the Voluntary Early Retirement Plan (PAV) generated a negative impact of 5,240 million pesos in the Other Income and Expenses item.
As regards overall figures, the company's gross income as of September 30 was 23,177.75 million pesos, 25 percent lower than a year ago, always at real values.
Meanwhile, the operating result, which compares the gross result minus commercialization and administration expenses, was 9,012.6 million pesos, 43 percent lower than in 2021.
In relation to the cost of energy purchases, it increased by 11 percent in real terms compared to the same period last year (from 40,041 million to 44,568 million pesos) as a result of the latest increases in the cost of energy and higher consumption in 2022.
Regarding the equity situation, the company finished amortizing the US$100 million bond issued in 2017 and thus had no outstanding financial debt as of September 30, 2022.
The situation of the Financial Statements audited by one of the four major auditing firms worldwide (Big four), in this case by Deloitte, places it in a position to access the international credit market, provided that a new window opens, and thus be able to finance investments that today are paid with specific funds anchored to the tariff (Fodep). If the result is in these terms, the company could even analyze a tariff reduction or moderate future increases.
Otherwise, the evolution of the company's main ratios was positive: the reduction of the debt ratio continues and solvency, liquidity and working capital improved.
Finally, with respect to the debt with Compañía Administradora del Mercado Mayorista Eléctrico (Cammesa), the debt assumed in 2020 in the months of pandemic - not due - is maintained and the current monthly transactions are paid regularly. As of the date of the Financial Statements, the agreement foreseen in Article 87 of the 2021 Budget, which included a refinancing of liabilities, had not been signed. The discussion on this point has been going on for almost three years and there have been numerous regulatory changes.
The total debt with Cammesa amounted to 18,809.2 million pesos, of which 4,549.5 million were overdue, 7,869.5 million were not overdue and 6,390 million corresponded to interest.
Tariffs and subsidies
Regarding tariffs and the State's contributions to cover part of the generation costs, the situation is still uncertain.
On EPEC's side, the policy of applying increases for the Distribution Added Value (VAD) was relegated to the back burner as a result of a political decision of Governor Juan Schiaretti's administration.
In this context, the rest of the increases in EPEC's bill are related to the seasonal increase in the wholesale energy price applied by the Nation and, at the same time, the removal of subsidies to residential and commercial sectors, always based on the value of energy as an input.
In this line, the Nation has already ordered two of the three tranches of the withdrawal of energy subsidies. The first one in October of 20 percent, the second one in November of 40 percent and the remaining one was to be applied this month and complete the 100 percent removal, always to N1 users, that is, those with the highest purchasing power and those who did not register in the Register of Access to Energy Subsidies (RASE).
But this last step is not yet confirmed to be applied. "A resolution from Energy is still pending", clarified to Comercio y Justicia the sources consulted.
In an election year, many speculate that this last measure will not be applied. However, there are other versions that say that not only will it be applied but that there will also be a partial removal of subsidies for N3 users, that is, middle-income users who until now only had to bear a withdrawal of subsidies when they consumed more than 400 kilowatts per month.
Any decision will be made in the next few hours and should be in force as from next February.