Enel Chile SA

SGO:ENELCHILE

Earnings Call Transcript

[Operator]

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. [Operator Instructions] 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 Private 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 on 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 would now like to turn the presentation over to Mrs. Isabelle Klemes, Head of Investor Relations of Enel Chile. Please proceed.

[Isabela Klemes, executive]

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 Isabella 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. [Operator Instructions] 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, executive]

Thank you, Isabella. 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 hour of production in the first quarter, demonstrating its solid performance. In response to the climate event of May and August 2024, which severely impacted our distribution concession area, we have launched a resilient plan aimed at strengthening our grid infrastructure against the already proved increase in climate risk. Despite the always more 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 update next quarter on the regulation of BESS ancillary services as well as the public consultation to update the National Electric System operational regulation. Finally, regarding business profitability, I'm pleased to report that we have had an exceptional start to the year. With our books now U.S. denominated, we achieved strong EBITDA and net income level, 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 per share, bringing the total to CLP 4.24 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, 78% of our capacity coming from renewable energy sources and battery energy storage system. 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 hour 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 snow melt in 2024, the maintenance at 2 of our solar plants and network restriction 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 hour, marking a 9% reduction compared to the previous year. This decrease stems from lower sales to regulated customers following the expiration of regulated contracts. Despite the challenging condition caused by the blackout on February 23, transmission line restriction 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 hour and decreased spot market purchases by 0.1 terawatt hour.



Now I would like to take a moment to discuss the energy regulatory framework and share important upcoming update. In the coming months, we anticipate significant announcement 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 the electricity subsidy. At the present, the 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 household.



In January '25, the Chamber of Deputy approved the government 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 2025 regarding the remuneration of ancillary services for BESS. The storage system 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 ancillary services market.



In April 2025, the Ministry of Energy initiated a public consultation on proposed amendment to the regulation for the coordination and operation of the national electric system. Main proposed changes include inclusion of small distribution generation unit, the so-called [indiscernible] in the allocation process for 0 variable cost generation. This means the [indiscernible] will be part of the group sales. Determination of opportunity cost for BESS to ensure efficient dispatch. The system operator will establish BESS charging schedule and introduce a tab rating for a situation where multiple BESS units are operational, potential exclusion of insurance policy 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 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 Fuel is expected to issue a resolution in the coming months to determine the process and time line for settling the pending debt in favor of the distribution company.



Regarding the process of the VAD 2024-2028, according to the estimated time line, 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 stage of this process.



I will now hand over to Simone, who will guide us through the economic and financial results.

[Simone Conticelli, executive]

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 the 1st of January this year, Enel Chile changed the functional currency from pesos Chile to U.S. dollar. For comparative purpose in today's presentation, the first quarter 2024 figures are converted using the average exchange rate of the figures.



That said, let's now review a quick summary of the first quarter 2025 economic and financial performance. As you can see in the slide, the quarter EBITDA and net income show a significant improvement compared to the previous year figures despite the negative impact of regulatory PPI circulation. It is mainly explained by the systemic optimization, driven by higher G&A availability and improved commercial sourcing and the increased margin mainly due to the provision related at the beginning VAD 2024-2028. The FFO reached $109 million, inline with the first quarter of 2024, we'll go into more details later in the presentation.



And now on the next side let's review the progress on CapEx. In the first quarter of 2025, our total CapEx reached $68 million with the 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 grid, the focus is on the receiving plan to strengthen grid infrastructure. Referring to thermal, we focused on the fleet market. Concerning renewable, we focused on activities to finalize the MGD program, to improve hydropower activities performance, and maintain and improve the availability 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, particularly for the maintenance activities of the Atacama and [ San Isidro ] city grid power plants.



Development CapEx reached $21 millio, 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. Most of this amount, 22 million dollars, was allocated to thermal projects, particularly for the maintenance activities of the Atacama and San Isidro city grid power plants. Development CAPEX reached 21 million dollars, mainly due to the finalization of the 2024 investment program of MGD. 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 of 2025. In the first quarter of 2025, our EBITDA reached 365 million dollars, marking a 72 million dollar 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 EBITDA sales. This decrease is mainly explained by the termination of some high-priced regulated funds, 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 the 2024 negative impact on exchange rate hedges thanks to the change of functional currency.

Regarding sourcing, we recorded an increase of $56 million due to positive performance in our industrial sourcing. This is mainly explained by commodity hedges, reduction in commission costs and lower regastification costs versus last year. Then, we recorded an increase of $31 million in commercial sourcing, mainly due to energy settlements from industrials and the execution of a guarantee related to a bi-decay determination. These factors more than offset the negative impact of higher spot market prices caused by the lower water availability and the transmission-wise restriction following the February blackout.



Moving to grid, we recorded a $28 million positive impact mainly due to the provisional reflections. The higher VNR expected for the regulatory remuneration period 2024-2028. Finally, we recorded a negative $4 million impact mainly due to the increase in the generation OpEx related to the newly developed capacity.



And 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's figure. This growth is mainly due to the previously distributed [indiscernible] produced. Let me drive you through the additional aspects of the figures. Referring to depreciation, amortization, impairment and bad debt, we recorded a higher cost of $15 million, mainly resulting from higher depreciation in energy power due to the newly added renewable capacity and higher bad debt accruals in grd, mainly driven by an increase in the average invoice amount due to higher tariffs.



Regarding financial results, we recorded a $26 million negative variation versus last year, mainly explained by higher tax interest and positive exchange rate in currency in the first quarter 2024. Finally, we recorded a $50 million increase in income taxes, essentially due to better business.



And 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 aspects 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 variation 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 [indiscernible] related to developing 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 negative effects of energy payment scheduling and increases in energy distribution receivables due to an increase in the tariffs. These effects were partially offset by negative impacts of tax mechanisms in 2024 net working capital.



Third, income taxes had 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 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.



And 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 corporation [ Alvina de Comesto ] disbursed during January mainly to cover working capital needs of the first quarter. As we mentioned before, on the 3rd of April we received around $260 million from the tax-free platform. These funds support our liquidity position to meet our short-term financial needs mainly related to dividends and tax returns.



The average term of our debt-to-maturity is around 6 years and the fixed rate of 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 sources. Regarding liquidity, we are in a comfortable position to support our capital needs for the upcoming year and cope with the next year's maturity. Finally, as of March 2025, the available committed credit lines amounted to $640 million and the cash equivalents to $460 million.



So thanks, everybody, for your attention. And now I will pass the floor to Giuseppe for the closing remarks.

[Giuseppe Turchiarelli, executive]

Thank you, Simone. To conclude, I would like to share the following closing remarks. Despite a challenging environment, our resilient and diversified business model continued to deliver solid results. This achievement 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 resilience. By promoting these changes, we aim to build more robust and adaptable grid capable of meeting future challenges and uncertainties. A modernized regulatory framework will foster an environment that supports innovation, 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 target and strategic pillars outlined during our last Investor Day. We remain confident in our ability to achieve these objectives and will ensure we keep you informed about our progress and accomplishments.



Now let me hand over to Isabella for the Q&A section.

[Isabela Klemes, executive]

Thank you, Giuseppe. Now let's move on 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]

[Operator Instructions] Our first question will come from the line of Martin Baran from Balanz.

[Martin Arancet, analyst]

I have 3 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. And 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, executive]

Thank you, Martin.

[Giuseppe Turchiarelli, executive]

Okay. So we started already since the end of last year to put in place a very strong resilience program in order to face the extreme climate events that are occurring always more frequent at least in comparison with the previous year in several actions, especially for what concern the quality of the grid and also on the digitalization of our network. All this CapEx has 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 present. So basically, quality of the grid, digitalization through the control and also several other actions covering the day-to-day operation maintenance of the activity.

[Martin Arancet, analyst]

Yes. 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 -- well, be more intense in terms of CapEx during the second half of the year, mostly in batteries. So could we assume that the $800 million guidance on CapEx for this year is still in place?

[Simone Conticelli, executive]

Martin, thanks for the question. So you are right at the beginning of the year, we have little bit lower level of CapEx and what we 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 is the -- in the second half. In this moment, we will start some of the bigger projects that we won and we talk about it kind of investment during the last one month.

[Martin Arancet, analyst]

Okay. So you maintain the CapEx guidance.

[Simone Conticelli, executive]

Yes, for sure.

[Martin Arancet, analyst]

Okay. Okay. And 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 best ancillary services. I don't know if -- how much do you expect that -- from that in terms of dollars per megawatt hour. And also with the new subsidy, I guess you will have a bit of additional CO2 taxes and this new ancillary -- sorry, this new battery operational performance, I don't know if that affects also your expected results.

[Isabela Klemes, executive]

Giuseppe?

[Giuseppe Turchiarelli, executive]

Yes. So talking about the regulatory related ancillary service 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 benefit 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. So 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 from this project. For what concern the new possible law about the subsidies, basically 2 most important measures are the usage of VAT coming from the increase of the tariff that, of course, is neutral for our company, for everybody.



And for what concern 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. So we could have an additional $15 million if the CO2 is going to be double. So move from $5 CO2 emission. 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 Senate.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe. Do you have any more questions or that was the 3 Martin?

[Martin Arancet, analyst]

That was the three. Thank you very much.

[Isabela Klemes, executive]

So operator, do we have more questions coming from the line? Otherwise, I go for the chat.

[Operator]

I'm not showing any further questions on the line.

[Isabela Klemes, executive]

Okay. So I will go through the chat. So the first question that we have comes from Beatrice Gianola from Mediobanca. So she has several questions. I go one by one. I think it's easy to go through, okay? So the first question is, how do you expect hydrology to evolve in the rest of the year? You target 10.7 terawatt hour for 2025. Is still this number valid?

[Giuseppe Turchiarelli, executive]

Yes, it is. It's still valid. We have to consider that the hydrological year that started right now at the end of April and becoming at the beginning of May. So we need to wait at least end of June, end of July in order to have a better view of the hydrology impact. So as of today, the 10.7 terawatt hour for 2025 are still valid.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe. So the second question is for you, Simone, coming from the chat. So the question is relating to the factoring of the fact 3. Can you remind us how much you are expecting to receive and when?

[Simone Conticelli, executive]

Thank you, Beatrice, 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 line or higher than the cost of energy. And so we will not implement in the future the credit spot price. So starting from the position at the end of 2024, we have a credit around $500 million and we plan to recover all these credits through 2025, 2026 and 2027.



The recovery will not go all through factoring, but in any case, of course for example PEC-1, the recovery will come from the time. In any case, this year we have already cashed in from the factoring process around $260 million for the PEC-2-3 mechanism and we plan to recover a larger part of the remaining in the next two year. But also in this year we can, given the next EMP decrease, cash in $200 million.

[Isabela Klemes, executive]

Okay. Thank you, Simone. So let me go to the other question from Beatrice. So regarding the new regulatory framework from distribution, which are the latest updates on the consultation report?

[Giuseppe Turchiarelli, executive]

Okay. The consultant is expected to deliver the final report in the coming when it's going to be officially published. Following to that, the CNE has 3 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, executive]

Okay. So the last question here from her is, do you feel comfortable with the current 2025 guidance?

[Giuseppe Turchiarelli, executive]

Yes, it is. Yes. According to our projections, the guidance is going to be expected.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe. So now moving on the questions on the chat. So now we have a question from Andrew McCarthy from LarrainVial. Also on distribution. So Andrew is asking what should be the economic impact for the distribution business and our distribution Chile of receiving the outstanding debt only from the delay in the publication of the 2020-2024 VAT decrease.

[Giuseppe Turchiarelli, executive]

Well, 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 published. We have already made the provision. So no economic impact. On the other side, we are going to recover the cash according to the information that the tax should deliver in the following weeks.



So basically, the sector should give us to all the distribution company details on how the outstanding debt will be included in the next tariffs. So we are assuming to receive around -- sorry, $50 million in the following 18, 24 months.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe -- still on the distribution side, also from Andrew McCathy. So he's asking what is the economic impact of the resilient program -- 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 2025-2027 period?

[Giuseppe Turchiarelli, executive]

Yes. As I said before, I mean, all this CapEx has been already included in the last industrial plan 2025-2027. To understand how much will be the impact on 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, executive]

Okay. So also on distribution, just a follow-up question coming from Beatrice on the grid's EBITDA. And in relation to Slide 9, when we show the EBITDA slide, not compare 2025 to 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 we are already including the new VAT related to the cycle 2024-2028.

[Simone Conticelli, executive]

Yes. Considering that this year the process for determining the new VAT for the 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 VAT remuneration. And so we can position this amount.

[Isabela Klemes, executive]

Okay. Thank you, Simone. So continue on the questions here. So now we have a question coming from Rodrigo Mora from Moneda. Rodrigo have 7 questions. So I'll go one by one, okay? So Rodrigo say, my question is relating to the gas supply from Argentina and LNG cargoes. I would like to know whether Enel Chile has signed Argentinian gas contracts with take-or-pay clauses. And now we maintain the LNG cargoes to use in [indiscernible] LNG terminal for GasAtacama. He has mentioned about the Shell LNG contract.

[Giuseppe Turchiarelli, executive]

Yes, our current Argentinian 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 issue for the rest of the year.

[Isabela Klemes, executive]

Okay. 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, executive]

Thank you, Rodrigo. Let me comment that according to our last H plan for 2025-2027, the cumulative EBITDA for LNG distribution will range between $0.4 billion to $0.5 billion and so we can confirm this range.

[Isabela Klemes, executive]

Okay. Thank you. Now the last question of Rodrigo, please. I have a question in relation to the potential sale of solar plant association with the PPA contracts of EGP Chile. He mentioned about news that was in the press. I would like to know whether this process is going on.

[Giuseppe Turchiarelli, executive]

Okay. Well, we are -- as you know, we are constantly looking for opportunity 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, executive]

Thank you, Giuseppe. So moving on, we have question from Ruben Alvarado from BIS. Ruben also have 3 questions. So I go one by one, okay? So the first one is it's regarding the insurance recovery that was included on the distribution business. So he's asking about what is this insurance related to, if we can clarify about it. And if we are expecting any other recoveries? And then I'll go for the questions there.



And then the second one is about the regulated contracts that was expired by the end of 2024 in the generation segment. He's asking about which are these contracts that was expired? And also the last question is, why do you see around minus 9% year-over-year decrease in Enel Chile's renewable generation, while system-wide renewable generation actually was up around 7%. So starting with the insurance, Simone?

[Simone Conticelli, executive]

S o, the insurance that we provision on the first quarter is related to the agreement on [inaduible] voluntary payment with the payment. So we have an insurance in Enel Chile that cover, in general, this kind of event. And so 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 as a comprehensive third party policy and also cover power supply spending.



Based on this analysis, the analysis was very early stage at the end of the year. So, in this moment, we did not position anything. But then in this moment, even if we have not closed the final analysis, the progress is much better. And so, given this process, given also our experience for similar events in the past, we position the recovery of part of the cost that we have to pay related to payment.

[Isabela Klemes, executive]

Okay. So Giuseppe, the second question was about the generation -- sorry, about the PPA that was expired and the third about the generation.

[Giuseppe Turchiarelli, executive]

Yes. So for what's concerned, the PPA, the regulated one that has expired at the end of 2024 was related to the tender process of '28 and 2013, which were indexed to the commodity and had a price higher than $100 per megawatt hour. For what concern the question about the renewable generation, the reduction is basically associated to the maintenance in two of our solar power plants, Guangzhou and [ Solvina ]. In hydro generation reduction that was covered by other type of generation, as coal and [indiscernible].

[Isabela Klemes, executive]

So the last question that I have here is coming from Constanta Gonzalez 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 gas in the second quarter?

[Giuseppe Turchiarelli, executive]

Well, we have already sold one cargo in February for the second quarter of 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, executive]

Okay. Thank you, Giuseppe. So we do not have any more questions from the -- here from the chat, so 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 remain 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]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.