Enel Chile's Q3 2025 Earnings Call: Contradictions Emerge on Energy Loss Management, Hydro Production, and PEC Recovery Timeline

Guidance:

• Company confirmed its 2025 guidance remains unchanged.
• Hydrology guidance unchanged: 2025 hydro production target ~10.7 TWh.
• Near-term expectation of material regulatory updates (VAD 2024-28, preliminary tariff reports) and two regulated energy auctions in Q4 2025; final reports expected in 2026.
• Liquidity strengthened by PEC receivable recoveries (~$261M) to support development plan and BESS/renewables investments.

Business Commentary:

* Financial Stability and Regulatory Impact: - Enel Chile maintained a stable EBITDA compared to the previous year despite significantly lower hydrology, which was driven by the recovery of $261 million in receivables through the PEC mechanism. - The company's strong financial position was supported by regulatory developments, including the recovery of outstanding debts and the receipt of the consultant's report for the VAD 2024-2028 cycle.

• Gas Strategy and Thermal Generation:
• Enel Chile's gas trading contributed positively with a $74 million margin increase during the first 9 months of 2025, driven by expanded trading activity.

• The company's thermal generation fleet performed well, offsetting lower hydrological conditions and contributing to operational stability, with a significant increase in thermal production.

• Distribution Grid Resilience:

• The implementation of a comprehensive winter plan resulted in the deployment of 376 emergency crews and the trimming of 115,000 trees, enhancing grid resilience and reducing service interruptions.

• These actions were crucial in maintaining service continuity, particularly during challenging climate conditions, which led to improved performance in the distribution network.

• Generational Capacity and Costs:

• The company's net production decreased by 9% during the first 9 months of 2025 compared to the same period in 2024, primarily due to lower hydro and renewable energy production.
• The decline was partially offset by higher contributions from the efficient combined cycle gas turbine (CCGT), reflecting strategic investments in maintaining the fleet's efficiency and operational flexibility.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management confirmed guidance despite a drier year, highlighted stable 9M EBITDA and FFO improvement to $615M (+$248M), cited PEC receivable recovery (~$261M) and available liquidity (committed lines $640M + cash $373M) as reasons for resilience and continued investment.

Q&A:

• Question from Rodrigo Mora (Moneda): what is the amount that Enel Chile must return to customers due to the miscalculation of the CNE included in the first half 2026 PNP report?
  Response: Estimated impact of $40–45M will be accrued (mainly in financial items); only ~2% of the change was passed to customers; repayment process unclear but expected in H1 2026.

• Question from Rodrigo Mora (Moneda): what is the amount on to Enel's distribution Chile in connection to the VAD 2000, 2025, please?
  Response: Expected entitlement of roughly $50–55M related to the 2020–2024 remuneration period; repayment likely to start mid‑2026 (could be earlier).

• Question from Rodrigo Mora (Moneda): could you please explain about your strategy regarding LNG and Argentina gas firm or interruptible? For the year 2026, how many ships do you plan to buy?
  Response: Continue relying on long‑term LNG contract (~32 TBtu/year) and negotiating Argentine gas firm contracts for 2026; negotiations ongoing and no vessel/volume commitments disclosed.

• Question from Rodrigo Mora (Moneda): Regarding CapEx for generation, could you please give us an update for 2025?
  Response: 2025 generation (AGP + generation) capex ~ $150–160M with at least $50M for BESS; some BESS development experienced delays so spend shifted to later quarters/CODs.

• Question from Rodrigo Mora (Moneda): On distribution, could you outline the measures being taken to address the increasing energy losses?
  Response: Losses are >6%; actions include intensified loss‑recovery operations, flexible customer payment plans, smarter localization tools to pinpoint losses, and engagement with regulator for supportive rule changes.

• Question from Javier Suarez (Mediobanca): Is the company Enel Chile confirm its latest guidance?
  Response: Yes — company confirmed its latest 2025 guidance, citing portfolio flexibility (gas contracts, efficient CCGTs, hydro reservoirs) to offset dry hydrology.

• Question from Javier Suarez (Mediobanca): Could you explain the dynamics of FFO during the 9 months of this year? And your expectation by the year-end?
  Response: FFO was strong at $615M (+$248M), boosted by PEC recoveries (~$285M factoring / referenced ~$261M); expect seasonally stronger FFO in Q4 as EBITDA typically rises and NWC is managed more efficiently.

• Question from Fernan Gonzalez (BTG Pactual): I saw that BESS Las Salinas, 200 megawatts and BESS Acebache, 58 megawatts were declared under construction at the CNE. So these projects involve additional solar capacity or just the energy storage. There are still an additional 200 megawatts of BESS capacity to meet your announcement plan. Will this be added to exist in solar PV in the North?
  Response: Projects are hybrid — BESS co‑located with existing solar plants in the North (not adding new solar capacity); co‑location reduces permitting/costs and improves economics versus standalone BESS.

• Question from Thomas Peruchi (Balanced Capital): If I'm not mistaken, you had a target of -- for 2025 of $500 million for expansion projects, mainly relating to batteries to storage. How has that changed by now, given that you are expecting a resolution on ancillary services before moving forward? And was the resolution in line with your expectations? Do you think we will be enough to unlock high investment in storage?
  Response: Plan targets ~600MW new capacity including ~450MW BESS; some CODs delayed to 2026–2027; August regulation allowing BESS in ancillary services improves project economics (modest revenue uplift, management cited ~$5–7M per installed BESS per year for existing units).

• Question from Edward Palma (Itaú Asset): Do you have any news for unregulated PPA contracts?
  Response: No updates on unregulated PPA contracts at this time.

Contradiction Point 1

Energy Loss Management

It pertains to the company's strategy and effectiveness in managing energy losses in its distribution business, which directly impacts financial performance and operational efficiency.

What measures are being taken to address rising energy losses? - Rodrigo Mora (Moneda)

2025Q3: We are addressing increasing energy losses with recovery actions and flexible payment plans. There's a focus on localizing loss origins and working with regulators for changes in the sector. - Simone Conticelli(CFO)

What caused the higher energy losses in the distribution business? - Florencia Mallorca (Metri)

2025Q2: Energy losses increased due to higher electricity prices leading to more thefts and changes in customer habits. Easier payment plans and better detection tools are being implemented. - Gianluca Palumbo(CEO)

Contradiction Point 2

Hydro Production and Guidance

It involves the company's assessment of hydro production and its impact on financial guidance, which affects investor expectations and operational planning.

Is Enel Chile confirming its latest guidance? - Javier Suarez (Mediobanca)

2025Q3: We are expecting the second half to be slightly better than the second half last year. The rain has come in July, as expected. - Simone Conticelli(CFO)

How will hydro volumes trend in H2? Is full-year guidance still on track? - Bertucci Giannola (Mediobanca)

2025Q2: Hydro production was high in the first half due to favorable conditions. July started dry, but rains are expected to come soon. Current hydrology guidance for the year is maintained at 10.7 TWh. - Simone Conticerne(CFO)

Contradiction Point 3

Financial and Operational Challenges

It highlights the company's approach to managing financial and operational challenges, which affects its ability to meet financial targets and maintain investor confidence.

Is Enel Chile confirming its latest guidance? - Javier Suarez (Mediobanca)

2025Q3: Despite hydrological challenges, we maintain guidance. We leveraged flexible gas contracts and CCGTs to manage, confirming earlier targets. - Simone Conticelli(CFO)

Are you considering revising full-year guidance because of energy market challenges? - Bertucci Giannola (Mediobanca)

2025Q2: The company is well balanced and has reacted to external pressures, maintaining alignment with expectations. Guidance is confirmed for EBITDA, net income, and payout. - Simone Conticerne(CFO)

Contradiction Point 4

PEC Recovery Timeline

It involves the timeline for recovering a significant amount of money through the PEC mechanism, which impacts the company's cash flow and financial projections.

What is the amount Enel Chile must return to customers due to a CNE error in the first half 2026 PNP report? - Rodrigo Mora (Moneda)

2025Q3: The recovery of PEC is linked to the exchange rate, with a factoring process expected to recover $550 million to $650 million. - Simone Conticelli(CFO)

How much do you expect to collect from receivables this year? - Maria Florencia Mayorga Torres (MetLife)

2024Q2: We expect to monetize between $450 million and $600 million from receivables through factoring in the second half of 2024. - Giuseppe Turchiarelli(CEO)

Contradiction Point 5

Financial Guidance and Performance

It involves changes in financial forecasts and guidance, which are critical for investor expectations and operational planning.

Is Enel Chile confirming its latest guidance? - Javier Suarez (Mediobanca)

2025Q3: Yes, despite hydrological challenges, we maintain guidance. We leveraged flexible gas contracts and CCGTs to manage, confirming earlier targets. - Simone Conticelli(CFO)

Given current water and snow levels, is it possible to generate approximately 10 terawatt hours of hybrid generation this year? - Murilo Riccini (Santander)

2022Q2: Fabrizio Barderi: We are optimistic that we can achieve hydro production close to 10 terawatt hours this year. - Fabrizio Barderi