The energy decree does not convince the market, down sector stocks such as Enel and A2a

(Il Sole 24 Ore Radiocor) - Sales on energy stocks and in particular on the utilities sector in the wake of the new decree that the Italia government is drafting to mitigate electricity prices for both businesses and consumers appliances. Among the worst stocks on Piazza Affari's main list are Enel and A2a . The draft decree, as Intermonte points out, is generating a lot of criticism from producers and part of energy-intensive consumers, particularly on the passage related to the elimination of CO2 costs.

On Friday, a meeting was held between A2A, Edison, the president of the Lombardy region, Attilio Fontana, and the heads of Federacciai and Confindustria Lombardia to find a solution shared by the various players on the issue of the renewal of hydroelectric concessions through a regulatory proposal that envisages, as part of the so-called 'fourth way', the sale of 15% of hydroelectric production at a subsidised price to energy-intensive companies in the regions where the plants are located.

The bill decree is expected to be discussed at the next Council of Ministers on Wednesday. "We continue to believe that potential interventions on the functioning of the electricity market are very complex to implement and must necessarily be discussed also at the European level, possibly as part of a more organic reconsideration of CO2 costs on all industrial sectors," the brokers explain. A hypothetical reduction of gas and CO2 costs in the price formation mechanism on the electricity market "would lead to a reduction of the Pun (Single National Price), with a negative impact on renewable generators".

Among the companies mentioned in the report are not only Enel and A2A, but also Erg and Iren, which, however, do not seem to be affected at the moment. To assess the potential impact of a reduction in electricity prices resulting from a change in the price formation mechanism in Italia or from a change in the Ets system at European level, Akros' experts carried out two simulations: "a reduction in the electricity price of 10 euros/MWh and a reduction in the electricity price of 27 euros/MWh. Both the Italia government and the European Union seem determined to reduce electricity prices'. According to analysts, 'companies with exposure to hydro, wind and solar generation could be penalised by lower wholesale energy prices, with potential negative effects on revenues and margins'.

Returning to Enel to highlight Banca Akros' Buy rating in the wake of rumours reported by Bloomberg that the Brazilian federal government expects the Agencia Nacional de Energia Eletrica to recommend the revocation of Enel's electricity distribution concession in Sao Paulo. Enel Distribuzione Sao Paulo represents around 50 per cent of Enel's distribution customers in Brazil; in 2024, the Brazilian electricity distribution business recorded ordinary ebitda of EUR 1.3 billion. Enel's concession contract expires in 2028. "Visibility on this dispute remains limited," analysts comment. "However, an early termination of the concession (before the 2028 expiry date) could likely trigger legal litigation regarding possible compensation in favour of Enel."