Antonella Bianchessi's questions to Red Electrica Corporacion SA/ADR (RDEIY) leadership • Q2 2022
Question
Antonella Bianchessi from Citigroup Inc. asked about the achievable returns on CapEx, the company's view on its cost of capital, and whether the investment plan could become value destructive in a rising rate environment, including the flexibility of the CapEx plan.
Answer
CEO Roberto García Merino explained that the regulatory framework and long-term supply contracts protect investments from inflation. CFO Emilio Cerezo stated the cost of capital for the Spanish transmission business is 5.58% (pre-tax), with higher rates for non-regulated businesses. He affirmed that the company ensures project IRRs exceed the cost of capital, and this is monitored continuously to ensure all investments create value, even in the current environment.