ACEA S.p.A. (ACE) Earnings Call Transcript & Summary

Good afternoon, everyone. Elvira Angrisani, Head of Investor Relations in ACEA. Thank you for joining in. And for well-known reasons, we're holding a virtual event. Anyhow, it's a great pleasure to welcome you at the presentation of ACEA's business plan for 2020-2024. The business plan is in basic continuity with the past, but it also includes very interesting new elements that will be outlined by our CEO, Mr. Giuseppe Gola. We'll also have a Q&A session with the participation of our CEO and also our colleagues, Mr. Giovanni Papaleo, Chief Financial Officer of the Group (sic) [ Chief Operating Officer of the Group ]; Mr. Fabio Paris, Chief Financial Officer; and Mr. Valerio Marra, Chief Commercial Officer. Our Chair, Mrs. Michaela Castelli will start our proceedings. Please, you have the floor, Mrs. Chair.

Thank you, and good morning to you all. Welcome. We are here in a virtual event. Once again, for sure this is a situation that feels a bit disconcerting because we organized this event some time ago, but we are once again facing something that is extraordinary. However, this is an important day. This is a day that brings you, brings the community and our shareholders and stakeholders, the result of months of work. And once again, even in a difficult time, we have been at the forefront. Today, we are presenting a story that -- an outline that will be about our future. So our message is sent to you, around this table to those who are connected virtually and especially to all ACEA's employees for what they have been doing this year. Our company has worked. We have continued providing services in -- and operational excellence that has been recognized tirelessly, reorganizing the work on a daily basis and protecting the health of colleagues. This is a source of great proud. And also this is a way for us to start again. And the message we want to convey today with this presentation is that ACEA is here. We have a very strong industrial vocation that we continue to have our customers, our stakeholders and our shareholders at our heart. And that's why I would like to thank the Board that has supported us during this very tough time. So I hope that this discussion of 1.5 hours will be very fruitful. But before that, I will show you a short video clip that we showed after the reopening, after the lockdown. But I really hope that this could be an opportunity for us to keep on hoping. We are doing this. Thank you very much. The video, now. [Presentation]

Thank you. And now I will just invite here our CEO, Mr. Giuseppe Gola. Thank you all.

Thank you, Michaela. Good morning to you all, and welcome to our presentation of ACEA's Business Plan 2020-2024. As anticipated, over the past few months, this business plan from a strategic perspective is a continuity with our previous business plans. But there are some important evolutions, which we are going to describe in details during our presentation. But before starting, I'd like to mention a specific aspect that we will focus on starting from now. That is the topic of sustainability. ACEA is a structurally sustainable company. However, starting from now, we will measure everything we do in terms of sustainability: all our investment, what we do and the impacts on the main sustainability indicators. Then we will see the details that we have developed in our business plan. Today's presentation, first, we'll have a short snapshot of what ACEA is today. But apart from that, today's presentation, we'll have a part about our strategy and our targets, and then we will have a Q&A session, and we will answer your questions. What's ACEA today? Today, ACEA is a multi-utility leader in the national landscape. We closed with EUR 1.42 billion EBITDA, the main shareholders is Roma Capitale. It's the main multi-utility in Italy. We serve many customers in Central Italy, then we are the second operator of power distribution after Enel with 1.6 million points of delivery. It is one of the main operators when it comes to selling the commodity with more than 6.5 terawatt hours of power sold. It's the fourth national operator when it comes to waste processing with more than 1.3 million tonnes of waste processed. We are growing in the area of generation with more than 357 gigawatts of installed capacity, and we are working -- we just entered the gas distribution and at present will manage about 100,000 DPR in Abruzzo. Well, before looking at our strategic pillars and our targets, let's recap very briefly what the megatrends are at the moment, that is the backdrop in which we operate. First of all, sustainability and circular economy. Utilities play a central role in sustainability and circular economy with particular reference to ACEA, a central role in protecting water resources and recycling and converting waste. Second megatrend, energy transition, we are in a situation in which there is a strong push towards decarbonization. We are expecting a phasing out of coal-based production and a strong push when it comes to renewable energy sources, also a strong push to electrification. So use of electricity for our usual consumptions and also for the development of new services, for instance, electric mobility and everything is consistent with the new Green Deal, European Green Deal. When it comes to customer service, there is a change, a shift of paradigm. The customer moves from being a customer or buying a commodity to a customer who's also buying value-added services. So the position of the customer becomes increasingly important. So all this is done within digitalization process inside and outside the company. And this is a major fact and, therefore, the operators and utility companies have to develop this, focusing on innovation. Last but not least, we have to consider that in some of our businesses, we are facing very fragmented markets. Of course, I'm talking of the water business or waste processing business or gas distribution. So this fragmentation, we see it as an opportunity because we expect that, for a number of reasons that we'll be discussing together, this fragmentation can lead to a consolidation in which multi-utility companies can play a very important role. Now before -- okay. Let's now take a look at our strategic pillars. If you remember, in our previous business plan, we had an acronym. And today, we keep the same acronym, G-R-I-D-S. This is because we want to give some continuity, but there is an evolution. In fact, not all the letters of this acronym have the same meaning they have before. Let's start from G, growth. So growth, G, remains a mantra for us as it was in our previous business plan. It is fundamental for us to grow and to develop our company. Just to give an example so that we will see the details, I have a couple of indicators that gives us an idea how this -- extent to which this business plan is focused on growth. The expected EBITDA is up with an average CAGR of 6.7%. Of course, this is driven by the growth of regulated businesses, which lead to an increase of our RAB for 2024 of about EUR 6 billion. Now let's move to one of our novelties. In the past, R stand for reshape -- stood for reshape, sorry. We have done a lot of reshaping. So now R stands for renewables. So the development of investment in renewable energy. This is very important. Once again, we have very important targets. Our targets in terms of installed photovoltaic capacity is of about 747 megawatts for 2024. We also believe that photovoltaic power is an important -- or will become an important retail product. That's why we have a target of installation of about 1,000 photovoltaic plants at a residential level by 2024. I was -- stood for innovation. Innovation is important. We want to keep on investing in innovation. Within our investment plan, we have identified about EUR 600 million in the five-year periods devoted to innovation. Just to give an example, something new in our business plan, we expect to spend a lot on electric mobility. We have a target of installing more than 2,200 charging stations for electric mobility by 2024. D stood -- stands for delivery. This is another of our mantras. We like to have targets, challenging targets, but we also like to hit our targets and, perhaps, to overperform. And this is what we have been doing over the past few years, and this is what we'll try to do in the next years. Just to give you an example, over the past 3 years, our EBITDA was -- we outperformed our targets over the past 3 years, higher than 5%. In terms of 5% -- in terms of delivery, we also developed a great capability in terms of investment. So we have an important investment plan, but also we proved that we will be able to deliver. Our goal is to make about EUR 4.7 billion investment in over 5 years. S has changed, has evolved. In the past, S stood for smart. Today, we want to remain smart, but we think that S is crucial for sustainability. In fact, as I said during my introduction, we attach a particular importance to sustainability. But starting from now, we will also measure what we do in terms of sustainability. Just to give you an example, we have 2 major goals. We will work for the -- for reducing water leaks, water losses. So over the plan period, considering our -- all our companies, we want to reduce by 11 percentage points the water losses. Also, just in terms of -- just as an example, we also want to develop an idea we have that -- of Smart Comp composters. So these composters for processing the organic fraction where it is produced. And we have a target of installing more than 150 Smart Comps by 2024. Right. We have seen our strategic pillars. Now let's move on to our economic and financial goals, targets for our business plan. First of all, EBITDA. And we saw we have -- we expect growing EBITDA with a CAGR of plus 6.7%. We closed with EUR 1.042 billion in 2019, and we have a target of EUR 1,442 million for 2024 with an intermediate target for 2022 of EUR 1,270 million. So in line with the previous plan. This is a very challenging target because if you remember, in the previous business plan, we expected a major growth in our EBITDA in the commercial area, driven by the end of the regulated market expected for 2020. But that end didn't take place, so the regulated market will end in 2022. Of course, that resulted in a delay in our commercial activity with an impact on our EBITDA and expected impact on 2020 of about EUR 60 million as a result of that in our business plan. Thanks to the growth in other areas, we were able to offset this EUR 60 million, which were not achievable because the regulated market did not end. This is implemented through a major development of regulated businesses that is through an important development of our investment plan. Industrial investment in our target, we have EUR 4.3 billion, out of which EUR 3.5 billion devoted to regulated businesses, up compared to the previous plan of EUR 4.8 billion. So the implementation of this investment plan will bring to -- an important growth in the RAB. So 5.9%, 3.2% when it comes to water and 2.7% electricity grid. If we make a comparison to the old plan, we have an increase of more than EUR 0.5 billion. As regards our target of net profit, we closed 2019 with a net profit of EUR 284 million. Our target is to grow with the CAGR of 6.2% and to reach a target of EUR 382 million by 2024. Of course, the intermediate goal is lower than the old plan because of what I have just described. That is the replacement -- the performance of the EBITDA changed because of the situation with the regulated businesses. So the EBITDA from regulated business is capital intensive. And as a result of that, there is a much higher depreciation rate. So this leads to poor performance in terms of net income. We will achieve all this by a -- with a balanced management of our financial position. In 2019, our NFP was EUR 3.063 billion. Our objective is EUR 4.007 billion, so with an increase by EUR 200 million. So by having an NFP/EBITDA ratio of 3x. It is interesting to note, and we will measure this indicator, that this ratio remains unchanged between 0.7x, 0.8x in the 5-year plan period. If we compare this indicator with the indicators of the main competitors, and of course, I'm referring to [ TERNA S.p.A ], we see that ACEA is very similar. It's more similar to the largest competitors. The indicator is about is 0.6x, 0.7x. And the other multi-utilities in Northern Italy have an indicator which is more than 1.6x. This indicates that ACEA is an operator that is much more regulated than the other operators. And this is extremely important because it enables us to be much more resilient to market viabilities. We have noticed this, this year, in the way we managed operations during the pandemic. We've seen that ACEA has had a very limited impact on its accounts. And in particular, it was limited to some financial effects in the commercial area that we have recovered from an economic point of view. However, we could manage things in a transparent way, although we have continued to work, as Michaela said, and to provide service to all our communities, all our customers. So this is a key element. It's extremely important when we interpret our business plan. Let's now have a look at the details, how we plan to grow EBITDA in our plan. We can see that -- you can see on the slide key financials in '22, EUR 1,270 million, with a growth that -- for EUR 148 million is organic growth, EUR 42 million is associated to M&A operations that we plan to roll out and EUR 38 million now and EUR 43 million in the next stage is associated to an important work in terms of efficiency. Between '22 and '24, we have EUR 118 million from organic growth and just EUR 15 million in terms of M&A. What are the main drivers in terms of efficiency, in terms of EBITDA growth through efficiency? So EUR 80 million every year in the planned period. We can split efficiency into 3 main areas. Generational replacement is very important because we want to replace our senior staff leaving the company with younger staff. And this has an important impact in economic terms. And in 5 years, this is more or less EUR 30 million every year, but this will also have an impact in terms of changes in the -- in our business in terms of new energies put in place in our -- in ACEA. And then we will also work in the water sector. Efficiencies in that sector will come from a new approach to large management. In the 5 year of the plan, we want to carry out projects that will make it possible to treat internally, in our treatment plants, the sludge and reduce, at the same time, the weight and volume of the sludge where it is produced, so in the purification plant, so that they will have a minor impact in the environment by reducing the quantity of sludge that needs to be transported. We are also working in the water sector to reduce maintenance cost. In particular, by developing smart systems and, in particular, a water management system that will make it possible to carry out predictive maintenance. And so to -- this will improve our grids. All this will have an impact on the quality of service, but also on the costs that we have to incur. In the terms of electricity distribution, with EUR 30 million in this sector, and we have a mix of investments here, we will invest in terms of great resilience. And as we know, these investments are extremely important. And our regulator associates about 20% more of return on investment as against return on investment in traditional investments. So we would focus on that type of investments in order to improve cost efficiency, but also to improve the quality of service and the maintenance of the grid. We will also invest in reducing losses in -- with an aim. The aim, of course, is to improve sustainability and also our balance sheet. We are also improving the efficiency of our measurement services. We will also install 2G meters. So if we now have a look at our investment plans, EUR 4.3 billion CapEx are -- can be split down as follows: EUR 2.2 billion in the water sector; EUR 1.3 billion in electric grids; EUR 200 million in environment; EUR 200 million in commercial and trading, and then we have other investments in power generation and in our IT systems. In our plans, we want to spend EUR 4 million in M&A. And as anticipated, out of EUR 4.3 billion CapEx, EUR 3.5 billion are for the regulated business. So more than 80%, 81% of our investments will be -- will contribute to the RAB growth. As already anticipated, we attach great importance to innovation. So we have EUR 600 million that are -- can be characterized as innovation investment, in particular, EUR 170 million for the water sector; EUR 277 million for grids; EUR 55 million commercial and trading; and EUR 115 million in IT sector. Here, we see some of the selected initiatives that we want to carry out, more than 500,000 smart meters installed and development as anticipated of a Water Management System to optimize grid's performance. As far as energy infrastructure is concerned, 1.3 million 2G smart meters installed. We started a couple of months ago, a great investment on digitalization of the grid and the creation of a new control center. As far as commercial and trading is concerned, we will push on the acquisition of customers through digital channels. So in our plan, we have -- we anticipate more than 100,000 customers through digital channels; then 2,200 EV charging stations already installed; 150 Smart Composters by 2024. We are also developing a new platform that serves all our business areas. And we want also to develop a corporate data lake to have a more modern asset -- a data-driven asset management. As already anticipated, we are extremely focused on sustainability. We have more than EUR 2 billion in our investment plan related to specific sustainability targets with highest relevance and priority to the group. As I was saying, ACEA is a sustainable business. It's a sustainable company. And in fact, we have our sustainability rating. With a -- in terms of carbon disclosure project, we have A minus. So we are in a leading position. We are one of the most sustainable companies. And as far as standard ethics is concerned, we have EE minus with positive outlook. So we expect a further improvement of this rating in the next 12, 18 months. As far as sustainability plan is concerned, we have EUR 2.1 billion of investment related to sustainability targets over the plan, so an increase by EUR 400 million versus previous business plan. And the main initiatives, as anticipated, are water loss reduction. We want to invest more than EUR 263 million for water losses, then improvement of the efficiency of our purification systems, EUR 127 million. Then the installation of smart meters for water and electricity investment plan is EUR 234 million. Resiliency and efficiency of electric grids with about EUR 500 million. Then circular economy treatment of waste of EUR 445 million in the direct investments and acquisitions through M&A operations. Then EUR 29 million for e-mobility infrastructure. And then we want to increase green energy generation and, in particular, photovoltaic. So we want to measure what we do in terms of sustainability. We want to measure the effects on the most important indicators of sustainability. So we have involved a certifying agency. We have also -- we're working with a university, and we have asked them to measure the effect of the ACEA business plan on the main macro indicators in Italy and, in particular, in terms of GDP and job creation. Well, this external certifying body has measured an impact in terms of increase of GDP due to the ACEA plan of about EUR 6 billion with an increase in employment, in job creation, direct and indirect because everything we do creates job on the territory, so more than 21,000 new jobs in the plan period. In terms of the main objectives, as I have already anticipated, reduction by 11 percentage points of water losses. And if we want to read it in terms of water that is not wasted, we are talking about more than 440 million cubic meters in 5 years, then rationalized interventions, in terms of the smart meters installed and charging stations installed for the management of the water service. Then circular economies are -- wastes are treated with circular economy. In 2019, we had 1.3 million tonnes of waste treated. Well, this plan -- in this plan, we have a very important objective. We want to grow in terms of treated waste. We want to reach 1.9 million tons by 2024. And then we want to develop green energy, so energy produced through photovoltaic plants. So we will reduce more than 140 kilotons per year of CO2. Let's now have a look at the financial structure. The financial structure of ACEA is extremely sound and solid. And this is testified by the rating of Fitch and Moody's and, in particular, Fitch trading is BBB+ with a stable outlook, so 2 notches above the treasury -- of the Italian treasury. And with Moody's, we have Baa2 with outlook stable, so 1 notch above the Italian treasury. So the current debt at June 30, 2020 has an average duration of 5.8. Average cost, 1.8% fixed rate. And then we also have EUR 600 million of committed credit lines that may be -- can be used as the need arises. In terms of net financial position, we have closed 2019 with an NFP of EUR 3.2 billion. So our target is EUR 4.3 billion. The NFP/EBITDA is about 3x. And NFP/RAB is stable in the 5 years of the plan. All this is achieved -- so the sound financial position can be achieved with good management of working capital. So in the 5 years of the plan, we want -- we plan to absorb the -- about EUR 400 million every year. And this absorption is due to regulatory effects so the investment made in the regulated business are then included in the next year or next 2 years. So the growth of regulated business is absorbed over the working capital. In 2020 -- I was talking about 2021 because in 2020, as you have already seen, we have a slight increase in working -- in absorption of working capital due to the COVID effect, and we can confirm that the target that we have had of greater absorption of working capital of EUR 50 million is confirmed. So at September 30, we are in line with the target. So the COVID effect in terms of working capital has been managed with minimal impact so far. In terms of debt management, we have about EUR 1.4 million of debt -- of maturing debt over the plan. And so we have a financial requirements need of about EUR 2.6 billion. Let's now talk about dividends. As you know, this year, in 2020, considering 2019 results has distributed EUR 0.78 per share, so there is an 11% growth versus the previous year and EUR 0.03 more than we had anticipated in the plan that -- the business plan that we presented about 18 months ago. So the minimum dividend was EUR 0.75 at that time. So we have to say that we maintain a dividend policy that is stable, so our dividends are growing over the plan period. So the commitment to be paid in 2021 is EUR 0.80 per action. But the dividend that we have distributed this year implies a further improvement. So it means that the dividend that will be distributed about EUR 870 billion versus the EUR 800 million that we had anticipated in the previous plan. Well, before moving on to the details of our industrial areas, a very short introduction about the new organization of the group that we have implemented -- we implemented a couple of months ago. Our new organization is based on important centralization of the main regulated businesses, the environment and engineering in an operation directorate, centralizing all operational activities. Then we have a commercial directory division. We have the traditional commercial activities plus value-added services and innovative services. And then we have a third box for the management of our foreign controlled companies. Now let's look the different businesses. Let's start from the water business. As regards to water business, as main national operator, we are developing what we call a smart water company. That is a company that is devoted to managing the service with quality and efficiency and with great attention to sustainability that is preserving the water resource. So within this framework, of course, we are ready to grasp possible opportunities that might arise for growth in this business through participating in tenders for new concessions in areas in which we are not present at the moment. When it comes to the main projects we have in the water business, we have mentioned some of them already. The installation of smart water meters, more than 500,000 smart meters; the reduction of water losses; the rationalization of water processing plants; the maximization of our performance through Water Management System; and also, we want to double the Peschiera and Marcio aqueducts. In particular, this project is fundamental, we discussed this in the past, in order to provide a secure supply for the City of Rome because these aqueducts at present provide more than 2/3 of the water we distribute in the City of Rome. So we are a very advanced state when it comes to the authorizations, the permitting procedures. And in particular, we are having all the interactions to insert this project in a broader project for the recovery fund. So we expect the development of the Peschiera aqueduct, which is a work that goes beyond our business plan period. About EUR 600 million investment will be implemented, 60% with investments made directly by ACEA. And therefore, with the return on this investment within the tariffs. And then 40% with the support of the recovery fund. If we look at the main financial indicators for the water business, we have an EBITDA in 2019 of EUR 505 million. We have a growth objective of EUR 704 million for 2024. That is almost 7% growth in the 5 years of the plan. Of course, through an important investment plan with total investment in the period of about 2,207 million -- EUR 2.207 billion and EUR 170 million for the Peschiera, Marcio aqueducts. For the RAB, we want to increase the RAB of consolidated companies of EUR 3.2 billion, plus nonconsolidated companies EUR 1.24 billion, a total amount of EUR 4.4 billion. Now let's talk about the energy grids. The role of ACEA in the City of Rome will be important or fundamental for energy transition. The development of all projects enabling greater electrification and also the development of new services, first and foremost, electric mobility. In order to make the power grid or in order to have a high number of charging stations on our grid, we need our grid to be enhanced, stronger and smarter because we need to have distributed intelligence. So we need -- we expect to invest on resilience to improve the quality of the grid and to reduce the faulty rates. So more than EUR 145 million for resilience; more -- EUR 155 million for investment for the continuity of service; and through a smart meter installation, control center, EUR 1.3 million. Of course, in order to do that, the 2G smart meters will be fundamental in the distribution of the intelligence of the network. Now if we look at the financials of our distribution, we closed 2019 with EUR 348 million. We have a goal of EUR 402 million for 2024 plus 3%. Of course, this is a more mature business. And therefore, the investment plans aim at maintain the business sustainability and have some growth. At any rate, the expected investment plan is EUR 1.3 billion, EUR 2.4 billion for distribution and EUR 300 million for measuring. Now let's talk about the environment. As regards to the environment, ACEA wants to play an increasing role in the area of waste treatment and processing. So we think we can do it in consolidating an extremely fragmented market, in particular, when it comes to Central Italy. And we close -- we want to close the waste cycle. We want to become an operator that can provide a waste processing service in a one-stop shop logic. In order to do that, we need to be stronger at all levels. In 2019, we had the capacity of waste treatment of 1.3 million tonnes. We want to grow by 0.5 million tonnes in the business plan period, both unsorted refuse waste and the organic fraction. When it comes to Waste-to-Material, we want to increase in a view with circular economy, plastic and water, in particular. And in addition, we want to grow the processing of special waste with a special attention to possible synergies when it comes to sludge processing. There, again, we have 0.5 million tonnes as a target. In order to do that, we can acquire existing plants, and we expect more than 15 M&A operations in the 5 years period. Now let's take a look at the financials in the environment area. We closed 2019 with a EUR 52 million as EBITDA. Our growth target is important because we expect to reach EUR 127 million EBITDA with a CAGR of almost 20% in the 5 years of the business plan. As we see for 2022, we should reach EUR 88 million better than the expected plan, which was already a very challenging business plan. Of course, the growth will be due both to an organic growth, but also through acquisitions that we'll make. In fact, if we look at investment plan, we have an overall plan of EUR 445 million, out of which EUR 240 million of investment -- industrial investment and more than EUR 200 million of acquisitions for M&A operations. So as I said, the target of volumes -- treated volumes goes up from 1.3 million to 2.9 million tonnes. Now a few words on the engineering area. ACEA is an important engineering area, basically, which has been devoted to internal services so far and, up until now, for design activity. Now we are working for its development. First of all, we want to create a so-called building-oriented company. We want to be able to create a turnkey plant. To do that, we have made an acquisition in 2020. The acquisition of SIMAM, which will take a growth in our EBITDA because of its external business, but it also has given us an important contribution in terms of know-how and experience in order to become an operator focused on EPC activity, so with construction activities with an EPC view. So we want to make more than EUR 440 million of plants internally by 2024. And this can give us an important contribution also in terms of efficiency of investment that we do internally because if this investment is made by our internal company, we can realize 20% more of plants and activities. So we are more efficient for the same investment amount. This is very important. So in order to complete this work, we want to create a commercial division because we think we can be able to develop a business outside. For the time being, we don't have specific targets for this business, but we are working along these lines. Now let's take a look at the key financials for the engineering and services. We are talking of smaller figures, of course. We closed with an EBITDA of 2019 of EUR 13 million. We expect to have EUR 22 million by 2024, mainly as a result of the acquisition of SIMAM. In particular, an important and interesting indicator, by 2024, we intend to grow the revenues from EPC work for FTE -- by -- for FTE from EUR 250,000 to EUR 400,000 approximately. Now let's take a look at the commercial world everywhere. In the commercial sector, we will focus on our core business and also on the development of new services. In particular, when it comes to the traditional business, in this business plan, we want to focus on our core territories in Italy, so not only in the City of Rome, with a specific focus on the center and south of Italy, capitalizing on what we expect to be the phasing out of the regulated business, also through the digital offerings. So an important development of digital channels. The main indicators for our plan are growth of 240,000 customers expected by the end of the business plan period; the possibility to do cross-selling on our entire customer base, when there is the end of the regulated business; and also boost of our dual fuel penetration, the possibility to sell gas to our power customers; and also the development of the digital channel. As regards value-added services, we are focusing on this. And great interest has been attached to some particular areas. First of all, the development of e-mobility, starting from installation of the charging stations and the management of the customer. So we want to install more than 2,200 charging stations by 2024. Also, we want to work a lot on energy efficiency, also you -- making the most of tax incentives. We have a target of more than 100 condominiums by 2024. Also, we want to develop the Smart Comp. We want to install more than 150 smart composters by 2024, and installation of residential photovoltaic and solar thermal plant, about 1,000 of them installed by 2024. Commercial and trading key financial. We closed 2019 with EUR 69 million, but we have a challenging target for 2022, EUR 90 million, of course, compared to a new plan, a target of EUR 154 million linked to the end of the regulated market in 2020. And then an additional growth in the period 2022, 2024 with target of EUR 123 million by 2024. As regards to the investment needed for this target, we have an investment plan of EUR 245 million, about EUR 100 million for acquisition of customers; about EUR 65 million for developing systems and in particular, the new CRM system; and about EUR 52 million for the development of smart services, with particular reference to the installation of recharging stations. So overall, we have a target of customers, starting from our current situation -- we have a target once we close the regulated business to reach 1.6 million customers, broken down as you can see on the slide. Now let's move on to the generation business. In the generation business, we want to accelerate our business compared to our old business plan. We have been there for 18 months, so we have acquired photovoltaic plants. Now we have realized that we have the opportunity to speed up, to accelerate the acquisition of existing plants and the development of new plants. So we'd like to take the opportunity of this energy transition and decarbonization processes. We also want to be ready to grasp all the possible opportunities that might arise from possible incentives that we believe are needed to hit the total targets, domestic targets for energy from renewable sources. So we want to implement M&A operations. The development of greenfield is 569 megawatts for a total that can be implemented. Considering that this is a capital-intensive business, we also expect to involve financial partners. And to do that, in 2022, we expect that fund -- investment funds, for the most part, might join to share the management of this business, so one or a number of financial partners. And we might transfer them, 51% of the company managing these photovoltaic plants. So we would reduce our financial exposure, but at the same time, we would be able to expand this business, and we would keep on managing the business from an industrial perspective in an autonomous way. If we take a look at the financials from the generation area, we see that we start from EUR 44 million in 2019 as EBITDA. And in 2022, we have the effect of the consolidation, the growth due to M&A and new plants. So we have EUR 52 million, reaching EUR 62 million in 2024. Of course, after the deconsolidation, our financial commitment will account for 49% of the equity needed for the development itself. As regards to installed power, 750 megawatts installed in 2024, plus 230 megawatts of hydroelectric and thermoelectric production. A short update on our overseas companies. In this business area, we don't expect a development activity. So in the period of the plan, we expect to make the most of the companies we have controlling interest in. The EBITDA is expected to remain the same. From 2019 to 2024, there is a growth due to the consolidation of one company, Azul Lima, that we made in 2020. Well, before closing, I'd like to talk about our basket -- strategic basket in continuity with previous business plans. As a utility company, our business plan is extremely solid, sound, and from our perspective, it is completely feasible, which does not mean that we haven't grasped some opportunities already because, in fact, there are many opportunities that we might not able to assess for the time being, but that we -- are part of our work. One of them is the topic of consolidation of the water asset. As you know, our nonconsolidated companies, such as the Gori company and the Acquedotto del Fiora, we are working to consolidate these shareholdings. We are working with the current -- with the municipalities, the controlling companies in order to change governance tools and to give a contribution also when it comes to the financing of these companies. We've made these 2 transactions. We are working now in Umbria and in the rest of Tuscany. Also, during the business plan period, new opportunities might crop up, perhaps connected to tenders for new water concession scenarios in which we are not present at the moment, and we would participate in these standards and that might give us more opportunities for growth. Please, this might lead us to an additional growth of EBITDA, EUR 400 million for the NFP, whereas EUR 100 million in terms of EBITDA in 2024. Gas portfolio. We believe that gas distribution is a good opportunity for us. This is part of our DNA. So we entered this business through 2 acquisitions in Abruzzo. We want to continue developing this business, but the tendering system for new concessions is frozen at the moment. So we are not able to estimate when these standards will take place and when new opportunities will arise to participate in these standards and also to acquire small companies, local companies, that cannot participate in the tender because I don't have the financial capacity. In terms of opportunity, we have made a conservative estimate. And the opportunity of EBITDA growth in gas distribution is about EUR 20 million in 2024 with an impact of EUR 130 million in 2024. And then waste management, waste treatment. We have developed a plan where we have designed small M&A transactions. Based on the experience of the past 2 years, we are aware that we can put in place this plan. However, there may be important opportunities through transactions involving larger operators than the ones we are working with currently. Because we think that this business needs consolidation, so we think that opportunities may arise in terms of acquisition of large operators or even merger with larger operators. And we estimate that this may lead to an EBITDA increase of EUR 50 million with an impact on the net financial position of EUR 400 million. Then last but not least, recovery, the so-called recovery fund. We think that ACEA may play a very important role in sustaining the government in the use of those funds to realize large infrastructures in the water sector and especially in Central and Southern Italy. This works with the current regulatory framework. And so with the current drop cannot be realized because in the areas where they have to be put in place, there isn't a client base that can absorb such a huge investment. So we think that these works must be realized with the financial support of the recovery fund. And ACEA may play a very important role in this process, both in terms of identifying targets, both in the planning stage, realization of the work and then managing those works. We cannot, of course, anticipate the impact on the financials of ACEA, but we are working very actively to reach this objective. All this leads to what we call full potential EBITDA. So our target is EUR 1,440,000,000. So we think that thanks to the upside that may come from strategic opportunities, we have an EBITDA target of EUR 1.6 million -- so EUR 1 billion, sorry. So this is our full potential EBITDA. Before closing my presentation, I would like to sum up the most important points that I have touched upon. So significant growth of EBITDA, 6.7%, with a 2024 target of EUR 1.4 billion. Group net profit growing to -- with a target of EUR 380 million in 2024. CapEx, consisting of EUR 4.3 billion of organic CapEx and EUR 0.4 billion of M&As, which leads to RAB growing to EUR 5.9 billion in 2024 -- balanced NFP/EBITDA ratio over the plan, reaching 3x in 2024 and stable NFP/RAB ratio of 0.7x in 2024 -- so dividend will be EUR 0.80 per share in 2021 with EUR 860 million of dividends to be distributed throughout the plan with a growing dividend policy throughout the plan. I have finished my presentation. And with my colleagues, we are available to answer all your questions. Thank you for your attention.

Good afternoon. So now we can open the Q&A session. The first question comes from Javier Suarez, Mediobanca.

I have 3 or 4 questions. The first concerns the slide with the financial targets. We are talking of EUR 1 billion -- net income has been reduced. So what we have seen is an increasing CapEx intensity for this growth. So there has been a bigger -- a greater boost in infrastructure. So the question is, has there been an increase in depreciation and amortization, which seems clear. Can you give us some details on your assumptions with the provisioning, everything that has to do with the worsening of the scenario? So the -- does the company need to have more provisions given the situation that we are experiencing? In 2022, can you give us details of how you achieve the deconsolidation of 49% in the [ foldable ] type company? So what acquisitions are you -- what solutions are you finding? And so what is the net income contribution in 2020, '24? The second question has to do with the supply business. In practice, there has been a very sharp cut in the objective because of the failed liberalization of the market, which was expected in 2020 and has been postponed. But if this does not happen in 2022, what is the impact that this may have on your objectives? So EUR 123 million EBITDA for 2024. So what is the impact of the failed liberalization? So what can be the worst-case scenario if there is no market liberalization? I was attracted by the fact that your assumption is stability in the electric sector. Can you explain the reason why -- what could be the evolution in terms of contribution of -- to EBITDA of the electric business? So do you expect to have the same customers? And the third and last question has to do with dividend. In the slides on dividend, and we see that the bars are growing 0.70. So each column seems to be bigger. If I some EUR 860 million, divided by 5 years of plan, I only have EUR 0.81 per share, which is slightly more than 0.8% of the target -- of the 2020 target. Which of the 2 interpretation is right? EUR 0.80 should grow every year or EUR 860 divided by 5 divided by shares. So should EUR 0.80 be a good guidance? So if you could give us some inputs on that, it could be very useful.

So a lot of questions. Okay. I try to give an answer also with the contribution of my colleagues. From the point of view of the 2022 target, we have -- I have referred to the old plan and the new plan in terms of net income. So we are deducting about EUR 63 million EBITDA from the commercial area with an impact on amortization that is very limited. And we are replacing them with revenue coming from regulated business. And so we are talking about capital-intensive business. So we have a growth in amortization, which explains this difference. If we compare the plans, there has -- there is a growth in amortization and also a growth in minorities due to the fact that in the current plan versus the old plan, we have also -- we also have the consolidation of the Fiora Aqueduct, which may -- which accounts for a growth of EUR 60 million every year. It does not have an impact on the net income because you also have to consider the minorities. So you also have to consider that it is net of taxes. I don't know whether I have given you a comprehensive answer to your question.

I was interested to know if the assumption has been changed in terms of provisions.

No. Provisions have remained stable in the 2 plans. We do have a very marginal, very small differences. The great -- the big difference is in terms of depreciation and minorities. And the net income contribution of photovoltaic in 2022, '24. So Fabio Paris, you have the floor.

Good afternoon. As far as the deconsolidation of photovoltaic is concerned, we can say that we have made simulations starting from 2022. As mentioned in the presentation, the effect on deconsolidation in terms of EBITDA will be EUR 38 million for 2022 and EUR 72 million for 2024. In reality, the assumption that we are considering at this level is that we keep a minority stake that is a minority, but important. So the -- our stake will be about 49%. And the effect on net result, considering 100%. So if we calculate the ratio between the 2 shareholdings, could be -- amounts to EUR 7 million for 2022 and twice as much, so EUR 14 million in for 2024.

Javier, to give you details of how we consider the operation should be, in our plan, we have calculated a deconsolidation in a very conservative way. Our assumption is just to sell the equity, sell the majority of the equity. And so deconsolidate the debt component without hype -- without assuming -- 0 capital gain and no possibility in terms of operative synergies that may have an economic impact on the industrial management of photovoltaic assets, which is a very realistic assumption that we will work on. So in terms of deconsolidation, this is the -- we may have possible upsides that we have not considered yet.

And the sensitivity analysis on -- so what will happen if the electric market is not liberalized in the near future.

Yes. Sensitivity analysis has been carried out. So if liberalization of the market is postponed, well, in our plan, we have imagined that customers in protected on -- projected market in 2022 will shift to the free market. Well, this will have an impact of about EUR 8 million on EBITDA in 2022 and EUR 7 million in 2024 in terms of EBITDA. Then you mentioned customer dynamics. We have imagined a scenario if the liberalization takes place. Well, the level of competition will increase, thanks to liberalization. So the electric market -- so the number of parts on the electric market will grow slightly between 2022 and 2024. According to the dynamics of a free market, which will grow. And we also expect a reduction of the protected markets or former protected market starting from 2022. In terms of margins, given this high competition, we had an [ agent ] in our plan, unlike the previous plan, of falling margin in the 5-year period because we imagine that there will be growing competition. So competition on prices. And consequently, this will have an impact on the margin and the margin will fall.

Okay. So now the question on dividends. From the -- in terms of dividends, we have not changed our dividend policy, as I have already said in my presentation. We expect growing dividends over the 5-year period of the business plan. And the total of distributed dividends in this hypothesis is more than EUR 860 million in the 5-year plan with progressive growth of dividends. The first dividend is $0.78 in 2020. EUR 860 million, to be more precise, are the dividends in 2022, 2024. So these are calculated based on the dividend paid in 2020 spring and until the dividend that we will pay 2024, progressive growth. The important message is that the real commitment is on minimum dividend for next year, which is a higher dividend if compared to the previous plan based on the 2020 results. We have growing dividends in the next few years. And so in our policy, this is -- this has to be considered as a floor starting point where we can work. So in terms of dividends, in terms of other results, of course, we hope to overperform. And clearly, dividend is something that interest shareholders and not business. So we do not have any extreme positions in terms of our dividend policy. Our dividend policy is in absolute continuity with the previous plan.

Thank you. Stefano Gamberini from Equita.

I have a question on water. We have EUR 200 million EBITDA growth in the next 4 years. Can you help us understand how visible is this CapEx program? Have you already obtained all the authorizations because the speaker mentioned Peschiera. When will we have a visibility? When will we know if the project starts? Also thanks to the recovery fund financing because I fear that they may be a postponement in terms of investments. And the second question in the water sector in terms of tariff growth that needs to be accepted and approved by local authorities. Do you have the backing of local authorities for this increase? So you mentioned tenders, what tenders are you -- were you referring to? And then I have a question on waste management. Here, we have a growing EBITDA, EUR 90 million in 2020 with EUR 200 million investment. So if -- for me, this is something new. What are the plans that you are referring to? Which plans should give us this EUR 40 billion EBITDA increase. You said that there are several projects in terms of grids. I see that there is an important contribution, EUR 30 million and EUR 400 million M&As. What M&As are you referring to? So the following question is when you mentioned mergers with other operators, what are you thinking of? Can you give us -- can you go a little bit more in depth? And then a question on debt, debt reduction from the operations in renewables, EUR 150 million. Is this a debt reduction in your plan? Or do we need to calculate also the cash from the sale of equity because EUR 150 million reduction of -- debt reduction. So what do you deconsolidate in this sector, a sector which should be the most important one in terms of opportunities of growth?

Right. I think we have questions on our investment plan and the activity we are doing, the consolidation and all the other tenders. We have [ Nino ] Papaleo, who is our top expert.

As regards the authorization -- investment authorization, the ones in the business plan are all authorized. So we can't see any difficulties. Whereas as regards to the Peschiera and Marcio aqueducts, the project has been approved by the higher council of public works, and we are waiting for the appointment of a commissioner because that would be one of the works with the commissioner. And after that, we'll be able to start a number of activities for participating in the tender, and we will start with the evictions. As regards to the topic of tariffs, so far, we don't have criticalities when it comes to tariff approval by local authorities. We are at an advanced phase in Tuscany and in Umbria. In the Lazio region of Rome, we'll have the conference of mayors, who is expected to approve the tariff on the 4th of November. And in the region of Campania, we are discussing with the [ Campanian ] water body on some technicalities. Then we will start the permitting process with them. As regards the tenders, we are interested in all the tender procedures that will be organized in -- soon. Most of them should be in the region Emilia-Romagna. We're particularly interested and we are basically just two competitors for the tender in [ Rimini ]. Whereas when it comes to the tender in Regione Emilia, we are still at an initial stage. We have prequalified, and we are following the regular process. Then any other tender in the water business, we will participate. We'll consider participating.

Okay. I'll try and explain our waste plan. Of course, to make our waste plan solid is what we have been doing over the past 2 years. This 2020-2024 plan, of course, is about what will happen from 2020 onwards. But in 2020, we closed some M&A operations. In fact, at the end of 2020, our ability of waste process from 1.3 million moved to 1.7 million tonnes. We have already announced the acquisition of Ferrocart, Cavallari and Multigreen, and we are actively working on some other operations. Hopefully, we'll be able to announce them to inform you about them. Also, we are at an advanced stage considering other acquisitions of existing plants and also considering acquiring authorizations. So of course, those are part of projects that we consider as greenfield, but they are not greenfield projects that we are starting from a project, but from the acquisition of an existing authorization. Of course, today, we cannot give you details and the names of these companies. But on some of these projects, we are at an advanced stage. So we think that the business plan is feasible if we continue with the same rate or the same pace of the past 2 years. As regards to the big deal, well, that's just a possibility. We know there are large operators, mostly in the north. And in a market that is about to consolidate, they suffer the competitive pressure of multi-utility companies in the north of the country. They might be interested in merging with us to create synergies and to share production capabilities. We will work on them, but I don't have details. It's not I don't want to disclose details, it's just we don't have them for the time being. As regards to question on deconsolidation. What we have here, EUR 150 million, that's the sum of the 2 things. So what we -- the proceeds from selling the majority equity and impact on the financial net position in terms of deconsolidated debt. Why do we do this operation? We want -- if we compare this business plan with our previous business plan, with this deconsolidation assumption, the financial commitment for developing photovoltaic energy is of about EUR 200 million, EUR 250 million. But in the previous business plan with EUR 220 million of financial commitment, we could implement 150 megawatts: 50 megawatts of secondary, which we have already implemented; and 100 megawatts of development of new plants. Now we have thought we want to grow in this business because we believe we can give an important contribution, especially in industrial terms, also capitalizing on the production of newly developed plants. Because in terms of energy, we are short. We acquire energy. So if we have the greater production in-house, it will be able for us to create greater synergies. But if we want to create an important development plan, 750 megawatts, doing that alone, we would unbalance our financial position. So it's always the same approach. We want to be very careful. We want to keep a balanced net financial position. That's why this operation that we have in mind and that is feasible in partnership with some fund managers, and there is a great interest on the part of fund managers to enter in investment of this type with certain returns. So I think we can play an important industrial role, and we can exploit synergies that have not been enhanced. So important upsides.

Can you say something on this? Your portfolio today, your pipeline, the last time you talked of 400 megawatts. So now 500 are visible?

For the time being, we can confirm we have a pipeline of more than 400 megawatts. On the one side, they're visible, but we're also working to be a bit more selective and to create more values. So in particular, in terms of developing greenfield plants, we are concentrating on plants that are installed on industrial location areas for which we can participate in auctions for capacity. And this is proving that this is very real. We have already done it. And a few weeks ago, we were assigned the auction for the area on which we are implementing a portable type plant near Rome. So we were awarded the value of the auction. So that plant will be implemented and it will produce power at a defined price. If I remember correctly, EUR 78 per megawatt. So we are focusing on a part of that pipeline to try and maximize its value. Because on industrial areas, we can participate in auctions about capacity. Whereas on agricultural areas, it's just a merchant approach and the current energy prices make it more difficult for us to push on development. At any rate, we want to be part of this business because Italy, as a country, needs to do more on renewable resources. So we think there will be a moment in which being part of the system will be very important because at that point, there will be some form of incentives. And at that time, we want to be there. We're ready to take it.

Thank you very much. Now let's give the floor to Enrico Bartoli, MainFirst.

I have some questions myself. First, I'd like to go back to photovoltaic energy. I was wondering, these additional megawatts in your assumptions in terms of profitability, what do you expect? And the CEO talked of the possibility to have incentives. I would like to know which your assumptions are in terms of price and unit revenue for new plants. And then just to understand the evolution of EBITDA up to 2022 for photovoltaic energy. Do we have to expect the growth of the contribution of photovoltaic energy in 2021 and then a step down in 2022 as a result of consolidation? Does it make sense? Second question on the electric distribution. In your presentation, you said that this is a mature business, and therefore, the growth rate is lower compared to water, for instance. I'm wondering how do you see the potential of investing beyond the business plan period because [ Marcio ] said about the need to invest in distribution networks to adapt them to the new procurement approach, electro mobility, generation that will become more and more distributed. So perhaps in the second part of this decade, RAB in this business might be higher than we see in the business plan period. Then I'm wondering on the debt cost, what are your assumptions on the basis of your net profit target, considering that you have EUR 2 billion -- EUR 2.6 billion of refunding during the business period? And there is a very favorable market. And then going back to the first question of Javier. Can you say something on the performance of our bottom line? Can you tell us something on what do you expect for 2022 and 2024?

Okay. I'll start with photovoltaic energy. The assumption you made on the fact that we will see photovoltaic energy going up, up to 2021 and then being impacted by the consolidation, that's correct. That's why -- that's how we made our model. That's how we are working. You also asked about incentives. These are just assumptions, of course, but there is a target of reaching installed power from renewable energy, more than the double of the currently installed by 2030. But this is not done with the present incentive and remuneration scheme. So if this country intends to fail these targets, it will have to find a way to favor these developments in terms of permitting, in terms of less red tape for authorizations and also in terms of an incentive scheme that can favor this development. Just to give you an example, if on all photovoltaic plants, the incentives that are currently applied to industrial areas, that would be an incredible boost. So we believe this might be the case, but we also think that there might be other and stronger incentive systems in the next years. I'm not ruling out that the recovery fund could be used. Individual projects might be submitted. But perhaps a part of recovery fund should be allocated, not to an individual operator, but as a whole, to promote development of renewable energy. If that's the case, starting from next year, we might have the new incentive system. For distribution, I give the floor to Papaleo.

Yes. What we say after the plan period on power is, in fact, an increase in investment. And we have 2 major projects in this sense. The cabling or our secondary cabins with fibers. So it will be possible to have more data for managing the grid. And on the other side, we are basically renewing our control center in order to manage the load of the grid in a traditional way, but also to be able to efficiently manage the distributed generation, also as a result of increased production from renewable energy sources. So after 2024, we expect a major development of investment in electric grids.

There was a question on the cost of debt and also the trend of D&A. As regards the NFP cost, we made very simple assumptions because we don't like to guess markets. At present markets would make it possible to refinance a [indiscernible] with very short cost. We issued a bond at the end of this year, a 9-year bond with a coupon of 0.5%. So considering the current market situation, we might issue bonds with a similar cost. But since we don't like to guess market trends, in a very conservative way, in our business plan, we have included all the refinancing operations have an average cost of 2%. As regards the D&A, I will give you some indications. The sum of depreciations and provisions amounted to 50 -- EUR 520 million. We expect this number to go up to EUR 600 million in 2022.

We have a last question, Emanuele Oggioni, Banca Akros.

Well, actually, my questions have already been answered. What is not very clear is the strategy and the deconsolidation on renewable energy. In the past, you said you wanted to be selective in terms of projects to have a higher RAB target than 7% or 8%, considering that some political actions are expected, not only in Italy, but also at European level to incentive investment and favor participation in auctions with guaranteed prices for 20 years, so perhaps this figure will go up. So I think it'd be strategic to keep these projects if they are part of your pipeline. And then the last point, I didn't quite get generation. You talked of EUR 170 million M&A, which are then offset by the sale. So there will be a neutral effect. So if you keep this amount, there would be an increase, but you would have an asset, which has a very interesting IRR strategically that would be very interesting for investors. And as you said, ACEA is short in terms of power generation, in particular, green power generation.

Yes. I tried to give an answer to your questions. Well, the question on IRR was posed before. Well, this is important because we are still working on the acquisition and development of new plants. And our objective is 6.7%, 7%. And this is very important because it has to do with what I said before. If I -- I'm looking for a financial partner to share the investment from a financial point of view, I want partners that have a lower expected returns. And so this gives me the opportunity to have an upside that we have not considered in the current plan. So there is a possible upside that comes from these considerations. As I was saying, we are very selective. We are, let's say, considering several options. What you see on the slide may be misleading because it is true that the M&A activities that we have put on the slide only concern the period that goes from the 2020, '21 and part of 2022. So the time in which we consolidate. So we put investments in M&A activities. All -- everything we do after that period is not considered as an investment made by ACEA. So the EUR 170 million you see on M&A are only related to the initial part of the project, but not the -- but just that. By way of example, I can say that we have made a simulation of a scenario without deconsolidation for the [ diarization ] based on the high assumptions of the plan of all the development without deconsolidation. Well, the impact on the net financial position at the end of the period would be more than EUR 600 million. This demonstrates that in order to grow in this way, in this moment, given the size of ACEA and given also the importance of having a financial balance to manage all the other business areas in a sound way, well, the -- the deconsolidation of operation is necessary. But on the one hand -- but on the other, there is nothing that would go against the strategic viewpoint because those plants will be still managed by ACEA. We are not looking for an industrial partner that can manage the plants. We are not going to sell our plans to somebody else. We are looking for the financial partners that makes it possible for us to manage the business in the best possible way from a financial point of view. If in the future or even before the consolidation of operation, if the economics of the -- business economics should change in a structural way because we have a new incentive plan similar to the plan that we had before, we may review this position. This hypothesis -- this assumption was made on the current market situation.

If there are no other questions -- no, we do have a question. MainFirst, Enrico Bartoli.

Yes. Sorry, I have a couple of very quick questions. One concerns the development of investments during the planned period. Can we consider EUR 150 million every year as a flat trend? Or do you expect a different trend in your investments? And then you've mentioned the possibility to consolidate the water companies in Tuscany that are considered net equity. Do you -- are there any discussions going on in order to have -- to achieve a similar agreement as you had with other operators?

Well, question on investments. I expect a stable investment plan. It's not flat, but it's quite stable, EUR 850 million on average. Well, they are distributed evenly throughout the year. As far as consolidation is concerned, we are working on some of -- on companies we have stakes in, in Umbria, in particular, but I cannot anticipate anything before we have completed the whole transaction. But let's say that we are in an advanced stage with some of those companies.

Thank you. Now we have a floor to Roberto Ranieri, Intesa Sanpaolo.

Thank you for your presentation, very effective. I want to ask 2 quick questions. The first one is of regulatory nature. We have said that the regulated market will end in 2022. Some operators are talking about possible delays in the launch of complete liberalization. I would like to understand what you think about it. Do you think that on the 1st of January 2022, we will have a free market? Is it a certain deadline? And then a second quick question on the issue of energy market and retail activities, which is also associated with the liberalization of the market. I think that your assumptions are quite solid and conservative relating to margins and customer base growth. So the question is, you are developing a lot the production of electricity from renewables and photovoltaic. So I expect to have -- to see margins that can be transferred between units. And so you -- this can also support the retail margins. So the question is, what are your scenarios in terms of margins? Well, I'm not -- I don't want to know margins, but what do you expect the wholesale prices of energy will be? And the other question is, if -- should you transfer the power generation margin -- so have you assumed a transfer of power generation margin to the retail operations?

Well, Valerio, you have the floor. Both in terms of end of the protected market and margin assumptions. But I would like to give a very short answer to start to begin with. We have adopted a very conservative approach. And in our business plan assumptions, we haven't hypothesized any synergies between energy produced in ACEA and our retail network. So this is a possible potential upside that we may assess in the future. We should consider that today, all the photovoltaic plants that are already working already are already subsidized. And so there is no question of defining the energy price.

As far as the first question is concerned, liberalization of the market. Well, of course, this scenario is changing. Today, some changes and amendments are being discussed and there is an ongoing discussion on postponement of the liberalization of the market. So we have a very dynamic situation. We think that liberalization is an opportunity not only in terms of the commodity market, but it is also a good opportunity to profit from the -- to benefit from the energy transition. So customers will be very active, more active than before. And so they can be active only if the market is free. So clearly, as I said before, this is a scenario that is about to change. I have already spoken about the impact of postponement, but we have to consider that even if liberalization is postponed, so after the business plan, we will have an important impact in terms of EBITDA in trading and in the commercial and trading part. As I said before, we have imagined -- we have -- we expect that liberalization will take place 1st January 2022. And so we have anticipated a positive impact on competition. So the possible impact on margins, both in terms of free market customers and protected market customers. So in our business plan, we have imagined a decrease in customers of free markets in terms of margin. So there will be a decline by -- a 15% decline. And we also have expected an increase in former regulated market customers moving to the free market. So this does not offset the margin, but it doubles the margin. We haven't included a scenario in which what we produce -- our green energy is then sold. So it's transferred to the retail part. So this element, this item has not been included in the plan. So energy price scenario. Well, we -- of course, this scenario is evolving, is changing. We should also consider the -- what is happening in terms of the COVID pandemic. So things are changing. We expect for 2020 to EUR 60.

Thank you. So the last question by Davide Candela, Intesa Sanpaolo.

A final question on the regulatory side and the second regulatory period and WACC. So if energy transition is boosted by legislation, what do you expect do the impact on WACC to be?

Well, [ Nino ] Papaleo, you are best suited to reply this question.

On WACC, we assume stability in the -- for the near future. However, of course, we are ready to benefit from opportunities in case of a reduction.

Thank you. If there are no other questions, so not even from those who are listening to us abroad, we can close here our session. We would like to thank the participants, the colleagues. I would like to thank all the attendees. I would like to thank the management team in the company and also 9,000 staff, ACEA staff. They have all contributed in their roles to draft this business plan. They are working every day to achieve our goals and objectives, and they will still be working to achieve the objectives in future years. So thank you very much.