Enel Chile - Earnings Call - Q1 2025
April 30, 2025
Transcript
Operator (participant)
Good afternoon, ladies and gentlemen, and welcome to Enel Chile's first quarter 2025 results conference call. My name is Victor, and I'll be your operator for today. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again.
Please be advised that today's conference is being recorded. During this conference call, we may make statements that constitute forward-looking statements within the meaning of the PriVADe Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only on our current expectations, are not guarantees of future performance, and involve risks and uncertainties.
Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting its first quarter 2025 results, the presentation accompanying this conference call, and Enel Chile's annual report on Form 20-F included under risk factors. You may access our first quarter 2025 results press release and presentation on our website, www.enel.cl, and our 20-F on the SEC's website, www.sec.gov.
Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their dates. Enel Chile undertakes no obligation to update these forward-looking statements or to disclose any development as a result of which these forward-looking statements become inaccurate, except as required by law. I will now turn the presentation over to Mrs. Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed.
Isabela Klemes (Head of Investor Relations)
Buenas tardes, good afternoon, and welcome to Enel Chile's first quarter results presentation. We greatly appreciate you taking time to join us today. My name is Isabela Klemes, I'm the Head of Investor Relations. Joining me today are our CEO, Giuseppe Turchiarelli, and CFO, Simone Conticelli. Our presentation and related financial information are available on our website, www.enel.cl, in the Investors section, as well as through our Investors app. In addition, a replay of the call will soon be available.
At the end of this presentation, there will be an opportunity to ask questions via phone or web questions through the scaling question. Media participants are connected in listening mode. Giuseppe will kick off the presentation by covering key highlights of the period. He will also delve into our portfolio management actions and provide updates on the regulatory context. Following that, Simone will offer an overview of our business economic and financial performance. Thank you for your attention. Giuseppe will now take over the call.
Giuseppe Turchiarelli (CEO)
Thank you, Isabela. Good afternoon, and thanks for joining us. Let's start the presentation with our main highlights of the period. Regarding our portfolio management, the Los Cóndores Hydropower Plant successfully achieved its commercial operation date in February, recording approximately 100 gigawatt-hours of production in the first quarter, demonstrating its solid performance.
In response to the climate events of May and August 2024, which severely impacted our distribution concession area, we have launched a Resilience Plan aimed at strengthening our grid infrastructure against the already proven increase in climate risk. Despite the increasingly frequent extreme climate events, as of today, we don't foresee any imminent changes in the regulatory framework.
Turning to the country and regulatory context, I would like to highlight that the VAD 2020-2024 decree was finally published in April. I will also share updates on the progress of the VAD 2024-2028 process.
Furthermore, we expect to receive updates next quarter on the regulation of BESS ancillary services, as well as the public consultation to update the National Electric System Operation Regulation. Finally, regarding business profitability, I'm pleased to report that we have had an exceptional start to the year. With our books now US-denominated, we achieved strong EBITDA and net income levels, further reinforcing confidence in our strategic plan.
To conclude this slide regarding shareholder remuneration, the AGM held on Monday this week approved the final and eventual dividend, amounting to approximately CLP 3.34 trillion per share, bringing the total to CLP 4.24 trillion per share for the 2024 fiscal year. Now, let's review some updates regarding our generation sourcing, as outlined on the next slide.
I would like to highlight that we have started 2025 with a solid and diversified portfolio, comprising a total net installed capacity of 8.9 gigawatts, 28% of our capacity coming from renewable energy sources and battery energy storage systems. In the first quarter of 2025, we received authorization from the National Electricity Coordinator to begin commercial operation of the Los Cóndores Hydropower Plant, which has a capacity of 153 megawatts. With the inclusion of Los Cóndores, we have secured approximately 2.1 gigawatts of capacity since January 2023, covering solar, wind, hydro, and storage technology.
Net electricity generation totaled 5.6 terawatt-hours as of March 2025, reflecting an 8% decrease compared to the production in 2024. This decline was primarily driven by lower hydro and renewable generation due to higher contribution from snowmelt in 2024, the maintenance of two of our solar plants, and network restrictions caused by the transmission line limitation following the blackout.
However, this was partially offset by higher contribution from wind plants, notably La Cabaña and Renaico II. In the first quarter, our energy sales totaled 7.7 terawatt-hours, marking a 9% reduction compared to the previous year. This decrease stemmed from lower sales to regulated customers following the expiration of regulated contracts. Despite the challenging conditions caused by the blackout on February 25, transmission line restrictions and lower water availability compared to 2024, we successfully fulfilled our commitment to our clients.
This quarter, we reduced our purchases from third parties by 0.2 terawatt-hours and decreased post-market purchases by 0.1 terawatt-hours. Now, I would like to take a moment to discuss the energy regulatory framework and share important upcoming updates. In the coming months, we anticipate significant announcements regarding changes and updates to the regulatory framework.
In this slide, we have a brief summary of the key topics currently under discussion. As you may recall, during the last call, we reviewed the key aspects of the government's proposed law to increase electricity subsidies. At present, these subsidies benefit approximately 1.8 million families, and the new proposal aims to expand support to nearly 4.7 million families, focusing on Chile's 40% most vulnerable households.
On January 25, the Chamber of Deputies approved the government's proposed tax with certain modifications. The proposal remains under discussion in Congress, and the second legislative review in the Senate is expected to be finalized during Q2. We are also expecting a regulatory update in the second quarter of 2025 regarding the remuneration of ancillary services for the grid. These storage systems play a critical role in mitigating renewable energy curtailment while enhancing the security and flexibility of the electric system.
To promote investment in this technology, it is essential to establish clear rules governing the participation and remuneration of BESS in the energy, capacity, and ancillary services market. In April 2025, the Minister of Energy initiated a public consultation on proposed amendments to the regulation for the coordination and operation of the National Electric System. Main proposed changes include inclusion of small distribution generation units, the so-called PMGD, in the allocation process for zero variable cost generation. That means the PMGD will be part of the curtailment.
The termination of opportunity costs for BESS to ensure efficient dispatch. The system operator will establish BESS charging schedules and introduce prorating rules for situations where multiple BESS units are operational. Potential exclusion of insurance policies as valid guarantees. Implementation of automatic dispatch for all power plants. The public consultation will be available until May 8. The processing of the publication of the new regulation is expected to begin in the second quarter of 2025.
Let's now move to the right side of the slide to review the distribution regulatory cycle. In relation to the 2020-2024 VAD process, in April 2024, the Office of Controller General of the Republic approved and published the decree. An important step to enabling the recovery of the outstanding balances from the tariff cycle.
Following this approval, the Superintendency of Electricity and Fuel is expected to issue a resolution in the coming months to determine the process and timeline for settling the pending debts in favor of the distribution company. Regarding the process for the VAD 2024-2028, according to the estimated timeline, the consultant final report shall be delivered and officially published in the next quarter.
By the last quarter of this year, we anticipate the regulator may publish the final technical report for this cycle. Finally, we reiterate our expectation that this new process will result in an improved remuneration, reflecting the newly approved Valor Nuevo de Reemplazo (VNR) and all the economic and technical assumptions as of December 2022, included in the report. We remain confident that this element will be upheld throughout the various stages of this process. I will now hand over to Simone, who will guide us through the economic and financial results.
Simone Conticelli (CFO)
Many thanks, Giuseppe, and good afternoon, everyone. I will begin my presentation with an overview of the key results for the period. Let me remind you that since January 1st this year, Enel Chile changed the functional currency from pesos chilenos to U.S. dollars. For comparative purposes, in today's presentation, the first quarter 2024 figures are converted using the average exchange rate of the period.
That said, let's now review a brief summary of the first quarter 2025 solid economic and financial performance. As you can see in the slide, the quarter's EBITDA and net income show a significant improvement compared to the previous year figures, despite the negative impact of reduced PPA expiration.
This is mainly explained by the sourcing mix optimization driven by higher G&A availability and improved commercial sourcing, and the increase in gross margin, mainly due to the provision related to the beginning of VAD 2024-2028. The FFO reached $109 million, almost in line with the first quarter of 2024. We will go into more details later in the presentation. Now, on the next slide, let's review the progress on CapEx.
In the first quarter of 2025, our total CapEx reached $68 million with a focus on grid and power plant grid performance. In detail, 39%, amounting to $26 million, was allocated to grid. 32%, for a total of $22 million, went to thermal projects. 29%, amounting to $20 million, went to renewable and storage. Regarding grids, the focus is on the Resilience Plan to strengthen grid infrastructure. Referring to thermal, we focused on the fleet maintenance.
Concerning renewable, we focused on activities to finalize PMGD programs, improve hydro capabilities performance, and maintain and improve the reliability of our fleet. Asset management CapEx reached $35 million, representing 52% of our total CapEx. Most of this amount, $22 million, was allocated to thermal projects, specifically for the maintenance activities of the Atacama and San Isidro CCGT power plants.
Development CapEx reached $21 million, mainly due to the finalization of the 2024 investment program of PMGD. The main development investment for 2025, aimed at building storage systems, will be concentrated in the second half of the year, in line with the expected improvement in regulation. Let's now move on to the next slide, where we have the details of the first quarter EBITDA breakdown. In the first quarter of 2025, our EBITDA reached $365 million, marking a $72 million increase compared to the same period of 2024.
This growth is primarily due to the following factors. Starting from generation business, we recorded a $49 million decrease in PPA sales. This decrease is mainly explained by the termination of some high-priced regulated contracts that impacted on volume and average price of the regulated portfolio. This was partially offset by the positive effects related to new contracts in the free market and the offset of 2024 negative impact from exchange rate hedges thanks to the change of functional currency.
Regarding sourcing, we recorded an increase of $66 million due to positive performance in our industrial sourcing. This is mainly explained by commodity hedges, reduction in transmission costs, and lower regasification costs versus last year. We recorded an increase of $31 million in commercial sourcing, mainly due to energy settlement from previous periods and the execution of a guarantee related to a PPA termination.
This factor more than offset the negative impact of higher spot market prices caused by the lower water availability and the transmission line restrictions following the February blackout. Going to grids, we recorded a $28 million positive impact, mainly due to the provision reflecting the higher VNR expected for the regulatory regeneration period 2024-2028. Finally, we recorded a negative $4 million impact, mainly due to the increase in the generation offers related to the newly developed capacity.
Now, let's move on to the next slide, where we will review the net income evolution. Our first quarter 2025 net income reached $175 million, with an increase of 11% compared to the last year figure. This growth is mainly due to the previously illustrated EBITDA improvement. Let me drive you through the additional effects for the period.
Referring to depreciation, amortization and impairment and debt, we recorded a higher cost of $15 million, mainly resulting from higher depreciation in energy and power due to the newly added renewable capacity and higher debt accruals in grids, mainly driven by an increase in the average invoice amount due to higher tariffs. Regarding financial results, we recorded a $26 million negative valuation versus last year, mainly explained by higher fixed interest and positive exchange rate differences in the first quarter 2024.
Finally, we recorded a $15 million increase in income taxes, essentially due to better results. Now, let's move on to the FFO analysis on the next slide. Let's analyze the FFO composition for the first quarter 2025 and the main effects compared to 2024. In the first quarter 2025, FFO reached $109 million, showing a slight decrease of $5 million compared to 2024. This is due to the following factors. First, the EBITDA of the quarter reached $365 million, reflecting a positive valuation of $72 million compared to the same period of 2024, as previously explained.
Second, there is an increase in the working capital of $188 million as a consequence of the lower payable related to development CapEx and seasonality on energy payments. Compared to the previous year figure, the impact of debt working capital on FFO was negative by $68 million, mainly due to the negative effect of energy payment scheduling and the increase in energy distribution receivable due to an increase in the tariffs.
These effects were partially offset by negative impact of the PEC mechanism in 2024 net working capital. Third, income taxes have a negative impact on FFO by $38 million, mainly due to tax payments related to the generation business. Comparing income taxes paid in the first quarter 2025 versus the first quarter 2024, we observe a negative impact of $12 million. The difference is mainly due to higher tax payments in the generation business, driven by higher income and higher tax rates.
Finally, financial expenses had a negative impact of $30 million, mainly due to the debt-related costs. Compared to the same period last year, our financial expenses are slightly lower thanks to a lower average debt in the period. Now, let's review our liquidity and leverage position. During the first quarter 2025, our gross debt had a slight increase of 2%, reaching $4.0 billion. This increase was related to a new credit line with Corporación Andina de Fomento, disbursed during January, mainly to cover working capital needs for the first quarter.
As we mentioned before, on the 3rd of April, we received around $260 million from the PEC 3 factoring. These funds support our liquidity position to meet our short-term financial needs, mainly related to dividends and tax expenses. The average term of our debt maturity is around six years, and the fixed rate is around 88% by the end of March 2025, in line with 2024 figures.
The average cost of our debt continues to be very competitive at 4.9%, thanks to a good mix between long and short-term, in line with our continuous effort to optimize the financial costs. Regarding liquidity, we are in a comfortable position to support our capital needs for the upcoming months and cope with the next year maturities. Finally, as of March 2025, the available committed credit lines amount to $640 million and the cash equivalent to $462 million. Thanks, everybody, for your attention. Now, I will pass the floor to Giuseppe for the closing remarks.
Giuseppe Turchiarelli (CEO)
Thank you, Simone. To conclude, I would like to share the following closing remarks. Despite a challenging environment, our resilient and diversified business model continues to deliver solid results. These achievements underscore our strategic vision, adaptability, and commitment to our goals.
Looking ahead to 2025, we remain committed in advocating for comprehensive distribution reform and the modernization of the regulatory framework to significantly strengthen asset-related resilience. By promoting these changes, we aim to build more robust and adaptable grids capable of meeting future challenges and uncertainties. A modernized regulatory framework will foster an environment that supports innoVADion, efficiency, and economic competitiveness to the country.
As demonstrated in today's presentation, the first quarter began with solid economic and financial performance, fully aligned with the targets and strategic pillars outlined during our last Investor Days. We remain confident in our ability to achieve these objectives, and we'll ensure we keep you informed about our progress and accomplishments. Now, let me hand over to Isabella for the Q&A section.
Isabela Klemes (Head of Investor Relations)
Thank you, Giuseppe. Now, let's move on to the Q&A session. We will be taking questions via phone and chat through the webcast. The Q&A session is now open. Operator, please proceed.
Operator (participant)
Thank you. To ask a question, you need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from line of Martín Arancet from Balanz. The line is open.
Martín Arancet (CFA of Equity and Credit Research)
Hi. Thank you for the presentation and for taking my questions. I have three questions, and I would like to run them one by one, if that's okay. First, regarding distribution, I was wondering if you could give us some additional color on the resilience program for that segment. Also, during the Investor Day, you mentioned that you were thinking about investing all of the EBITDA of the distribution business back into the grid. So just to know if this new resilience program is related to that.
Isabela Klemes (Head of Investor Relations)
Thank you, Martín.
Giuseppe Turchiarelli (CEO)
Okay. So we started already since the end of last year to put in place a very strong resilience program in order to face these extreme climate events that are occurring always more frequently, at least in comparison with the previous year.
In several actions, especially for what concerns the quality of the grids and also on the digitalization of our network. All these CapEx have been already included in the presentation made last year in our Capital Investor Day. So basically, we are just increasing our CapEx in comparison to the previous year, again, in order to face the new situation in which the extreme events are always more frequent. Basically, quality of the grids, digitalization through the telecontrol, and also several other actions covering the day-to-day operation maintenance of the grid.
Isabela Klemes (Head of Investor Relations)
Thank you, Martín.
Martín Arancet (CFA of Equity and Credit Research)
Okay. Thank you. Regarding my second question, CapEx during the first quarter, I think it was a little bit low. But if I understood correctly, you plan to be more intense in terms of CapEx during the second half of the year, mostly in batteries. Could we assume that the $800 million guidance on CapEx for this year is still in place?
Isabela Klemes (Head of Investor Relations)
Simone?
Simone Conticelli (CFO)
Hello. Martín, thanks for the question. You arrived at the beginning of the year. We have a little bit lower level of CapEx. What we are doing now, we are in such a way finalizing the PMGD program that we started last year. The main part of the CapEx for the year will be in the second half. In this moment, we will start some of the bigger projects that we planned and talked about this kind of investment during the last presentation.
Martín Arancet (CFA of Equity and Credit Research)
Okay. Up to now, you maintain the CapEx guidance?
Simone Conticelli (CFO)
Yes, for sure.
Martín Arancet (CFA of Equity and Credit Research)
Okay. Thank you. My final question then, I was wondering what effect or how much do you think it will affect your results, the new regulatory changes, and you have several fronts there. First, the BESS ancillary services. I don't know how much do you expect from that in terms of dollars per megawatt hour. Also, with the new subsidy, I guess you will have a bit of additional CO2 taxes. This new battery operational performance, I don't know if that affects also your expected results.
Isabela Klemes (Head of Investor Relations)
Giuseppe?
Giuseppe Turchiarelli (CEO)
Yeah. Talking about the regulatory related benefits for BESS, it's still early to talk about BESS because we don't know basically which are the idea of the regulator. We assume we are going to have some benefits because the idea is to improve the regulatory rules in order to facilitate and to stimulate the ancillary services coming from the battery.
But as of today, it's too early to discuss and to have an idea about the impact on our battery project. You have also to consider that most part of our revenue income is coming from the capacity and the energy shifting. We believe that the ancillary services is going to be a good complement for the remuneration of the battery, but we don't know yet how much and how will be the improvement in terms of profitability for this project.
For what concerns the new possible law about the subsidies, basically, two most important measures are the usage of VAD coming from the increase of the tariff that, of course, is neutral for our company, for everybody. For what concerns the CO2, I would say that as of today, or at least according to the production that we had in 2023 with the impact in 2024, we used to pay around $15 million in terms of CO2 taxes.
We could have an additional $15 million if the CO2 is going to be doubled, so move from five CO2 emissions. But we don't know yet how it's going to be the result because the law and the proposal of the law is still in the Senate.
Isabela Klemes (Head of Investor Relations)
Thank you, Giuseppe. Do you have any more questions, or that was the three, Martín?
Martín Arancet (CFA of Equity and Credit Research)
That was the three. Thank you very much.
Isabela Klemes (Head of Investor Relations)
Thank you very much. Operator, do we have more questions coming from the line? Otherwise, I'll go for the chat.
Operator (participant)
I'm not showing any further questions on the line.
Isabela Klemes (Head of Investor Relations)
Okay. I will go through the chat. The first question that we have comes from Beatrice Giannola from Mediobanca. She has several questions. I'll go one by one. I think it's easy to go through. Okay. The first question is, how do you expect hydrology to evolve in the rest of the year? You target 10.7 terawatt hours for 2025. Is this number still valid?
Giuseppe Turchiarelli (CEO)
Yes, it is. It's still valid. You have to consider that the hydrological year just started right now at the end of April, at the beginning of May. We need to wait at least end of June, end of July in order to have a better view of the hydrology impact. As of today, the 10.7 terawatt hours for 2025 are still valid.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you, Giuseppe. The second question is for you, Simone. It's coming from the PEC. The question is related to the factoring of the PEC III. Can you remind us how much you are expecting to receive and when?
Simone Conticelli (CFO)
Okay. Thank you, Isabela, for the question. Let me before say that it's very important to stress that starting from the end of 2024, the tariffs are in a line of higher than the cost of energy. We will not increment in the future the credit for them. Starting from the position at the end of 2024, we have a credit around $500 million. We plan to recover all these credits through the 2025, 2026, and 2027. The recovery will not go all through factoring. But in any case, for example, PEC I, the recovery will come from the tariff.
In any case, this year, we have already cashed in from the factoring process around $260 million for the PEC III mechanism. We plan to recover a larger part of the remaining in the next two years. But also in this year, we can, given the next EMC decrease, cash in through other means.
Isabela Klemes (Head of Investor Relations)
Thank you, Simone. Let me go to the other question from Beatrice. Regarding the new regulatory framework from distribution, which are the latest updates on the consultation report?
Giuseppe Turchiarelli (CEO)
The consultant is expected to deliver the final report in the coming weeks when it's going to be officially published. Following to that, the CNE has three months to issue its first technical report with the proposed remuneration for the distribution company. That should occur in the second semester of 2025, basically.
Isabela Klemes (Head of Investor Relations)
The last question here from her is, do you feel comfortable with the current 2025 guidance?
Giuseppe Turchiarelli (CEO)
Yes, it is. According to our projection, the guidance is going to be respected.
Isabela Klemes (Head of Investor Relations)
Thank you, Giuseppe. Now moving on the questions on the chat. We have a question from Andrew McCarthy from Larraín Vial, also on distribution. Andrew is asking, what should be the economic impact for the distribution business and Enel Distribution Chile of receiving the outstanding debt owning from the delay in the publication of the 2020-2024 VAD decree?
Giuseppe Turchiarelli (CEO)
Let me clarify. I mean, we are not going to have any economic impact, but only cash impact because the tariff from 2020-2024 has been already provisioned. We have already made the provision. No economic impact. On the other side, we are going to recover the cash according to the information that the SEC should deliver in the following weeks.
So basically, the SEC should give us and to all the distribution company details on how the outstanding debt will be included in the next tariff. So we are assuming to receive around $50 million in the following 18, 24 months.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you, Giuseppe. Still on the distribution side, also from Andrew McCarthy. So he's asking, what is the economic impact of the resilience program designed to strengthen grid infrastructure in the distribution segment? Does this impact CapEx or EBITDA targets announced in the last strategic plan for the 2025-2027 period?
Giuseppe Turchiarelli (CEO)
Yeah. As I said before, all these CapEx has been already included in the last industrial plan 2025-2027. To understand how much will be the impact in the EBITDA is really difficult to estimate right now. I believe that in the next industrial plan, we can have a little bit better view about that.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you. So also on distribution, just a follow-up question coming from Beatrice on the grid EBITDA, and in relation to slide 9, when we show the EBITDA slide, compared to 2025-2024, you are already factoring in the impact coming from the new regulatory framework. Is that correct? Can you please clarify, Simone? Beatrice is asking about the variance between the EBITDA of the distribution segment. So she's asking if you are already including the new VAD related to the cycle 2024-2028.
Simone Conticelli (CFO)
Okay. Thanks. Yes, considering that this year, the process for determining the new VAD for the next period, 2024-2028, is growing faster than what happened in the last period, we have already a good estimation of what could be the increase in the VAD remuneration. We can provision this amount.
Isabela Klemes (Head of Investor Relations)
Thank you, Simone. Continue on the questions here. Now we have a question coming from Rodrigo Mora from Moneda. Rodrigo has seven questions, so I'll go one by one. Okay? Rodrigo says, "Thank you for the presentation. My question is related to the gas supply from Argentina and LNG cargoes. I would like to know whether NL Chile has signed Argentina gas contracts with take-or-pay clauses, and also will maintain the LNG cargoes to use in Mejillones LNG terminal for GasAtacama." He's mentioned about the Shell LNG contract.
Giuseppe Turchiarelli (CEO)
Yes. Our current Argentina gas contract portfolio for 2025 includes take-or-pay clauses, which at the moment we have easily met. So we do not expect take-or-pay-related issues for the rest of the year.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you. Another follow-up question from Rodrigo. Now this question is coming related to distribution. Rodrigo is asking, in relation to Enel Distribution, could you give us some color about the EBITDA for 2024, sorry, 2025, whether this good first quarter was incorporated at the projections for the EBITDA guidance for the company, Simone?
Simone Conticelli (CFO)
Thanks, Rodrigo. Let me comment that according to our last strategic plan for 2025-2027, the cumulative EBITDA for Enel Distribution will range between $0.4-$0.5 billion. We can confirm this range.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you. Now the last question of Rodrigo. Please, I have a question in relation to the potential sale of solar plants in association with the PPA contracts of EGP Chile. He's mentioned about news that was in the press. I would like to know whether this process is going on. Thank you very much.
Giuseppe Turchiarelli (CEO)
Okay. As you know, we are constantly looking for opportunities in the market to maximize the value of our footprint, including rotating certain assets to unlock value for the shareholders. Having said that, for the time being, we don't have any news on that.
Isabela Klemes (Head of Investor Relations)
Thank you, Giuseppe. Moving on, we have questions from Rubén Alvarado from BICE. Rubén also has three questions. I'll go one by one. Okay? The first one is regarding the insurance recovery that was included on the distribution business. He's asking about what this insurance is related to, if we can clarify about it, and if we are expecting any other recoveries. I'll go for the questions there.
The second one is about the regulated contracts that were expired by the end of 2024 in the generation segment. He's asking about which are these contracts that were expired. The last question is, why do you see around -9% year-over-year decrease in Enel Chile's renewable generation? Why is this? Why renewable generation actually was up around 7%? Starting with the insurance, Simone.
Simone Conticelli (CFO)
The issues that we provisioned in the first quarter is related to the agreement on GNL voluntary payment with the terminal. We have an insurance in NL Chile that covers, in general, this kind of event. Starting from the beginning of the year, we start analyzing if there is a clear correspondence between the perimeter of the insurance and the event. Let me say that insurance has a comprehensive third-party policy, and also it covers power supply payment.
Based on this analysis, the analysis was very early stage at the end of the year. In this moment, we did not provision anything. But then in this moment, even if we have not closed the final analysis, the progress is much better. Given this progress, given also our experience for similar events in the past, we provision the recovery of part of the cost that we have to pay related to this agreement with the terminal.
Isabela Klemes (Head of Investor Relations)
Thank you. Giuseppe, the second question was about the generation. Sorry, about the PPA that was expired, and the third about the generation.
Giuseppe Turchiarelli (CEO)
For what concerns the PPA, the regulated one that has expired at the end of 2024 was related to the tender process of 2008 and 2013, which were indexed to the commodity and had a price higher than $100 per megawatt hour. For what concerns the question about the renewable generation, the reduction is basically associated to the maintenance in two of our solar power plants, Guanchoi and Sol de Lila, and hydrogeneration reduction that was covered by other type of generation is called NCRE.
Isabela Klemes (Head of Investor Relations)
Thank you. The last question that I have here is coming from Constanza González from Quest. Thanks for the presentation. She's asking if we have more available gas from Argentina and if we are expecting to sell more gas trading as in the second quarter.
Giuseppe Turchiarelli (CEO)
Well, we have already sold one cargo in February for the second quarter 2025, taking profits from high gas level prices in February. Of course, the details of the transaction are confidential right now. For the rest of the year, we are always looking for new opportunities. We maintain our guidance for the year that is to trade around $50 million and $60 million.
Isabela Klemes (Head of Investor Relations)
Okay. Thank you, Giuseppe. We do not have any more questions here from the chat. Also from the line, considering this, I would like to thank you all for having the call with us today. Let me remind you that the investor relations team remains available to address any questions you may have. Thank you for your attention, and we look forward to seeing you soon again. Thank you very much.
Operator (participant)
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.