Iberdrola, S.A. (IBE.MC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. First of all, thank you very much for joining us today. It is with great pleasure that we welcome you to the presentation of our 2025 Capital Markets Day, in which we are pleased to update for you the outlook for the period 2024 to 2028. Also, we would like to thank [indiscernible] for sharing with us this excellent facility. The agenda of the day has been already shared with all of you. First of all, we are going to start with the intervention of our top management that is here in the room. Our Executive Chairman, Mr. Ignacio Galan; our CEO, Mr. Pedro Azagra; and finally, the CFO, Mr. Pepe Sainz. Then they will present the mentioned strategic outlook for the next year, followed by the Q&A session. We expect that this block of presentation and Q&A will end by noon, followed by the lunch break. After it, we will be pleased to share with you a couple of interesting presentations related to the network businesses in both in the U.K. and the U.S. given by the management of these countries. We'd also to remind you that the whole event can be followed online as well through our web page, www.berdrola.com. And finally, you will receive a poll at the end of the event in order to give you your feedback. Hoping that you will find the day with us informative and productive. Now without further ado, I will hand over to our Executive Chairman, Mr. Ignacio Galan. Thank you very much again. Please, Mr. Galan.

So good morning, everyone, and thank you much for attending this Capital Market Day. It's really a pleasure to meet you once again here in London to share with you the long-term vision for the electricity sector, our strategic pillars and business model, our outlook through 2028 and some general expectation to the beginning of the next decade. As you will see today, we are presenting a transformational plan that position Iberdrola once again ahead of the changing landscape in the energy industry. After more than 2 decades, although growth in 2024, global electricity demand rose by 4%, and we expect this trend to continue in the next decade with a total increase of 50% through 2035, thanks to the technological progress and new consumption patterns across all sectors, confirming the message I have been communicating to you over the last years, electrification is a step-out. In transport, electricity vehicles already accounted by 25% of [ solar ] sales in 2025, and will reach 50% by 2030 as new models with higher range and lower cost become available. Electricity consumption will also increase in the industrial sector due to the economic growth, policies that are promoting industrial activity, new technologies, especially the low temperature processes, demand from data centers, which is expected to double already by 2030 due to the exponential growth of digitalization and artificial intelligence and the coverage of latent demand that cannot be supplied today due to lack of sufficient electricity infrastructure. Finally, consumption buildings will increase, thanks to the adoption of heat pumps for cooling and heating and more electricity appliance. Of course, this increase in demand will require additional electricity infrastructure, but there are several other factors that will also imply the need for investment in generation networks and storage. And most of them will affect, in particular, to mature economies like the replacement of aging equipment installed in the 1950s or '60s, to redesign of network system that were built decades ago for cities that have been completely transformed of the need to digitalize and introduce artificial intelligence to improve quality of service and resiliency. On top of this, investment needs will also increase due to the policy related to energy autonomy increasing the use of local resources, competitiveness and affordability, energy security and efficiency and development of new tech industries that are intensive in power consumption and require very high reliability. As a result, investment in electricity sector are expected to double in developing economies over the next 10 years. Boosted by networks investment, they will be multiplied by 3x with renewables increasing by more than 50% and storage investment in hydropower storage or batteries also expanding to preserve the stability of the system. Policymakers are fully aware of the urgency of this massive investment as we -- as the opportunities they bring. And this is leading to a new regulation to attract the recurrent capital in countries where we operate. In the U.K., electrification has become one of the country's key growth drivers are reflected in the plan for change published by the government, which contemplates 95% share of clean electricity by 2030. Of the new regulatory framework for transmission and distribution, RIIO-T3 and ED3 with investment multiplied by 3x on average, even 5x in this case in transmission. In United States, the Inflation Reduction Act bipartisan Infrastructure Framework recognized the need for additional network investment to support demand and industrial growth in line with new resiliency plan at the federal and state levels. The European Union is also progressing in the implementation of the key measures, including the Clean Industrial deal and the REPowerEU plan with a special focus on increasing network investment with the publication of the guidance of the anticipatory investment in networks and the upcoming European grid package that will be announced by year-end. While in Brazil, the government recently approved the National Energy Transmission Policy (sic) [ National Energy Transition Policy ] to reduce emission by 69% by 2035. And the first distribution concession renewables had already been signed, including Neoenergia's subsidiary in Pernambuco with the rest progressing as expected. Finally, the Australian government has continued its clean electrification agenda with the recent approval of even more ambitious emissions reduction target already by 2035 and Powering Australia plan that sets a target of 82% renewable electricity by 2030. The plan we have presented today will allow us to anticipate this unprecedent investment. Transforming, I think you are going to listen very many times the word transformation -- transforming our profile toward a more regulated company with networks as the key growth driver as a selective approach to renewable investment, more than projects already under construction, increasing our focus on A-rated countries like the U.S. and U.K. that combine huge investment requirement with attractive predictable regulatory frameworks, delivering predictable and profitable growth in results and dividend over the long term and reinforcing our financial strength, thanks to the cash flow generation and asset rotation of partnerships. This will be possible, thanks to the huge increase in infrastructure requirement, making networks a high-growth business, especially in mature countries like U.S. and U.K., they are promoting a stable framework at least until the beginning of next decade based in massive investment, clear regulation and attractive returns, offering a unique combination of growth and predictability in geographical areas with a strong legal and regulatory certainty. We are more than ready to make this opportunity, thanks to our proven skills on track record of execution, our operating excellence and our procurement strategy based on securing supply chains well in advance. In renewables, 75% of our net capacity -- new capacity through 2028 is already under construction. And we will maintain a selective approach to new investment, focusing on profitable projects with long-term PPAs or CfD to secure margins. All in all, 85% of our expected production will be covered with PPAs or CfD in our retail customer base. In addition, in a context of higher volatility due to increasing renewable penetration in electricity system, our storage portfolio of 120 gigawatt hours in operation in our pipeline of new projects of panel storage and batteries will allow us to obtain additional margins. Finally, 90% of renewables investment will be made in new rate countries with the supply chains fully secured. We will finance this unprecedent expansion, preserving our strong balance sheet and our commitment to BBB+ rating, thanks to increasing cash flow generation from new investment, asset rotation and partnership, the recent capital increase, a comfortable liquidity position and our ongoing access to debt markets. In the next 4 years, gross investment reached EUR 58 billion, including close of EUR 2 billion associated with the recent agreement with Previ or Neoenergia. Of this, EUR 8 billion will be contributed by our Tier 1 partners, 2/3 of this amount already secured, resulting EUR 50 billion of net investment with 2/3 in networks and 1/3 in renewables and customers. By geographical areas, the United Kingdom and United States will consolidate their position as key investment destination, increasing their combined share by 20 points to reach 65% of total investment through the period. 15% investment will be allocated in Iberia, 8% in other EU countries in Australia and the remaining 12% to Brazil, including this Previ transaction, which is a perfect example of our strong relation with our partners. As soon as Previ expressed its intention to sell its 30.29% stake in Neoenergia, we started conversation and closed a transaction that is fully aligned with the plan we are presenting today. Increasing our presence in networks, which contributed more than 90% of Neoenergia result with an asset base of more than 700,000 kilometers of distribution line and 8,000 kilometer transmission lines, serving a population of 40 million people in a country with a strong track record of stable and attractive regulatory frameworks and consistent dialogue between the government and the industry, as demonstrated by the official signature yesterday of Pernambuco concession renewal. Including this transaction, our total network investment will reach EUR 37 billion in 2028, with more than 70% in the U.S. and the U.K. 2/3 of this amount will be invested in distribution and transmission, increasing our total regulated asset base by more than EUR 20 billion to reach EUR 70 billion by 2028. This means that in just 8 years, we will be more than doubling our regulated network assets, thanks to the increase in investment in the U.S. and EUR 21 billion -- to EUR 21 billion. And especially in U.K., where our asset base will triple to reach EUR 25 billion as much as the whole group regulated assets just 10 years ago. I try to remember the numbers we had already when I joined the company. I thought it was something between EUR 4 billion and EUR 5 billion RAB. Now we are reaching EUR 70 billion and in 2030 will be EUR 90 billion. So I think that gives you an idea how we've been moving in this direction across these 2 decades in the group. As a result, in 2028, U.K., U.S. will represent 65% of our total network asset base. So I think our growth is going to come by U.S. and U.K. massively in this business. Focusing on distribution, our EUR 25 billion of investment will be primarily located as well in United Kingdom, 80% covered by the current RIIO-ED2 framework and the United States, mainly in New York, where negotiation of the new rate case progress at good pace, and we have positive precedent for other utilities across the state, reaching total combined investment of EUR 15 billion in these 2 countries, 60% of the total after an increase of more than 40% compared with the last 4 years. Investment will also grow in Spain and Brazil, up to 14% to EUR 4 billion across even including distributor-related [indiscernible] transaction. As a result, our total distribution regulated asset base will grow by EUR 22 billion in just 4 years to reach EUR 50 billion, doubling the asset base in this area in only 8 years. Transmission investment. Transmission was already a business which was integrated into network, but I think it's important to give visibility. Transmission investment will rise by more than 90% compared to the last 4 years to EUR 12 billion, fully transforming the profile of this business to become one of the most relevant growth drivers of the group level. From 2020 to 2024, we already doubled our regulated transmission asset, reaching EUR 11 billion, a similar figure of combined asset base of Spain and Portugal and [indiscernible] together. And in the next 4 years, we are doubling once again to reach EUR 20 billion. This massive growth is fully secured in the U.S. where we will invest EUR 3 billion based on the rate case and a specific investment project approved by the regulators in New York, Connecticut in Maine. In the U.K., with EUR 8 billion in investment base in RIIO-T3 -- in RIIO-T2 and RIIO-T3 framework. And this -- and 3 large transmission projects already approved by the Ofgem, Western Link and Eastern Green Link 1 and they will reinforce the resiliency of the U.K. system, reducing curtailments and transporting renewable electricity from Scotland to the demand centers of England and Wales. As a result, U.S. and U.K. will combine contribute to 80% of our EUR 20 billion of transmission asset base by 2028. Gross investment in power generation customers will reach EUR 21 billion with 75% in project under construction. EUR 8 billion will be allocated to our offshore wind farms like East Anglia TWO in the United Kingdom or Windanker in Germany, all under construction, EUR 5 billion to onshore wind in different projects across our geographic areas, EUR 2 billion to solar PV, mainly in Spain, Italy and Australia, another EUR 2 billion to storage, including almost EUR 1 billion in batteries in Australia as well other battery projects in Europe and storage in Iberia. Of this total, EUR 7 billion will be contributed by our Tier 1 partners, mainly in our offshore wind project. As you know, 75% of this amount is done, thanks to the partnership closed in East Anglia THREE with Masdar, Windanker, with Kansai, and we have an additional 15% well advanced. This increase in investment will also drive a significant improvement in our results. By 2028, EBITDA will reach EUR 18 billion, up EUR 3 billion from 2024, also increasing our geographical diversification. Together, the U.K. and the U.S. will make 50% of the total EBITDA up to 15 points in just 4 years, with Iberia representing 30%, Brazil 13% and the remaining 7% coming from Australia and other European countries after doubling the operating result through the period. The investment plan will be fully materialized our structural shift toward regulated network business, that will contribute 55% to the total operating result by 2028, 20 points more than the historical average. Thanks to an increase of EUR 3 billion through the period to reach between EUR 9.5 billion and EUR 10 billion by 2028, driven by investment in the new rate case that have been settled already in advanced state of negotiation with an expected return of 9.5% in average and full consolidation of our Electricity North West from 2025. Renewable power and customer EBITDA will remain at around EUR 8.5 billion as the impact of asset rotation will be offset by new investment mainly in offshore and onshore wind and storage. In projects that are already under construction, and we have PPAs or CfD secured across the geographical areas. This growth in networks and renewable with revenue secured by PPAs or CfD will increase the share of regulated and long-term contracted EBITDA from 60% in the last 4 years to 75% once the project included in the plan are fully contributing to results between 2028 and 2030, limiting our exposure to energy prices just to 25% of the total EBITDA. In addition, following our usual approach, this plan is based on conservative assumption in terms of energy demand and prices, as Pedro will explain shortly, giving upside potential to our estimate in case of demand growth accelerate. This strong operating growth, together with our prudential financial management will drive an increase of EUR 2 billion in adjusted net profit to EUR 7.6 billion by 2028 with a high single-digit growth across the period, beating the plan we presented to you 1.5 years ago. As in 2025, we will exceed by far the EUR 5.8 billion we estimate by 2026. And we expect additional growth in 2026, 2027, 2028, thanks of this new investment, regulatory frameworks and efficiency measures. Following the model based on conservative forecast and a successful execution that has allowed us to consistently exceed the expectation over the last 25 years. In terms of shareholder remuneration, we will maintain our policy to increase dividend in line with results with a payout between 65% and 75% of earnings per share, a floor of EUR 64 (sic) [ EUR 0.64 ] per share. In addition, we will continue our flexible program, including share buybacks to maintain the number of shares stable at 6,575 million shares, combining an increased remuneration with full flexibility for our shareholders. In preserving our financial position at comfortable level with the current BBB+ rating, thanks to increasing cash flow generation up to EUR 52 billion in the period based on predictable network business with the rate case closed or in advanced negotiation. And renewable projects already operating under construction, we secured revenues, thanks to PPAs or CfDs. This, along with our EUR 5 billion of capital increase recently executed, EUR 3 billion of asset rotation and partnership, 75% already completed, our liquidity of EUR 20 billion and our access to financial market in active condition. That will secure the full financing of this plan with no need for additional equity rises. Following our traditional approach, we have designed this plan to combine rising results and shareholder remuneration with a strong increase of our social dividend. Making at least 15,000 new hires by 2028 and EUR 65 billion of purchases to 1,000 suppliers to sustain more than -- who sustain more than 0.5 million jobs, contributing with more than EUR 40 billion in taxes through the 2028, investing at least EUR 1.6 billion in research and development to consolidate our leading position in the utility industry worldwide and reinforcing our full commitment to corporate governance, we continue to receive several international recognition. While we will continue reducing our carbon footprint to become carbon neutral by 2030. To conclude, let me highlight our expected outlook until the beginning of the next decade. Based on the certainty provided by our long-term regulatory framework, we expected to continue investing on average at least of EUR 15 billion per annum, of which more than EUR 10 billion will be directed to networks, 2/3 in distribution and the rest in transmission, mostly in large projects already identified, reaching a total regulated asset base of more than EUR 90 billion, 80% above our 2024 levels. In addition, we expect to invest around EUR 5 billion per annum in new renewables in our current market with route-to-market secured through PPAs or CfDs. This additional investment will allow us to continue improving our results at least mid- to high single-digit average growth over the next year to 2031, reinforcing our financial strength and maintaining our increased dividends. On top of this, and in line with energy perspective, I shared with you at the beginning of the presentation, the increasing demand and the acceleration of electrification expected in all our markets will certainly bring upside potential to this outlook. But once again, we have preferred to follow our usual prudent approach to given the low visibility on the long-term evolution of external factors such as interest rate or exchange rates. In any case, you can be sure that the 46,000 women and men working in Iberdrola will be fully focused from today to the execution of the plan with ambition to beat once again the target fix. Thank you very much. And now Pedro will give you more detail of our business provide investment plan. Thank you.

Okay. Thank you, Chairman, and good morning, everybody. And starting with your last comments, I can guarantee that everybody in the company is going to work very hard to get this plan done as we have done for 25 years. I think as the Chairman has introduced in over the next 4 years, we will be investing around EUR 58 billion with 85% of that investment basically allocated to countries with AAA, AA and A-rating. These countries have a strong expansion potential and provide material opportunities for further growth beyond '28. This translates into EUR 14.5 billion per year and almost EUR 1 billion more per year than in the previous plan. Notably, almost 2/3 of our investments, EUR 36 billion of the EUR 58 billion will be concentrated in the U.K. and the U.S., consolidating our position in stable high potential markets. The plan places a strong focus in transforming network, which will receive 65% of the total investment, EUR 37 billion out of the EUR 58 billion. Of that amount, EUR 23 billion, 60% of the EUR 37 billion will be allocated to expanding our asset base. The remaining EUR 21 billion, representing 35% of the total investment will be directed towards power and customer solutions. Of that, EUR 16 billion, close to 80% will be focused on capacity growth through a highly opportunistic approach as most of the capacity additions are already under construction. Of the EUR 37 billion that we will invest in network over the next 4 years, including the Neoenergia-Previ transaction in Brazil, more than 70%, EUR 25 billion will be allocated to the United Kingdom and the United States, followed by Brazil with 18%, EUR 7 billion, while Spain will receive the small remaining 12%, only EUR 4 billion. Iberdrola has a proven track record of delivering larger scale network projects across all geographical areas, and we are now significantly scaling up as our investment of EUR 37 billion in the period represent a 50% increase compared to the previous 4 years with EUR 25 billion. This translates into more than EUR 9 billion per year, supported by well-defined, stable and predictable regulatory frameworks, which offer attractive returns with an expected weighted average nominal return on equity of 9.5% between '26 and '31. In terms of regulated asset base driven by increased investment in networks, this concept is projected to grow by more than 40% between '24 and '28, reaching EUR 70 billion, up from EUR 49 billion in '24 and EUR 31 billion in 2020, material increase. Of the total EUR 70 billion, EUR 46 billion or 65% will be concentrated in the U.S. and the U.K., which will further grow beyond '28, while Spain share is expected to decline from 15% -- to 15% from 30% in 2020. This is one of the reasons why, as you can see now some of the dynamics in Spain, other companies which mainly businesses in Spain, when we have issues, it is a problem, diversification for 25 years us to be in a much more comfortable position. Distribution will remain the core of our asset base, accounting for over 70% of the EUR 70 billion, reaching EUR 50 billion by '28. At the same time, we expect to nearly double the regulated asset base of transmission over the next 4 years, reaching EUR 20 billion, thanks to the significant investment needs in the U.K. and in the U.S. We expect this growth dynamic to remain very significantly well beyond '28. Our outlook for networks is supported by stable and well-known regulatory frameworks, and we have a track record that proves that. 1/3 of the EUR 37 billion will be dedicated to transmission, totaling EUR 12 billion, again, with a strong focus on the U.K. and in the U.S. The remaining 2/3, EUR 25 billion, including the Neoenergia-Previ transaction will be invested in distribution all across the regions. 90% of planned investments in distributions through '27 and 80% through '28 are already secured, under approval or advanced regulatory frameworks, many of which, among others, will include inflation protection mechanisms. These frameworks provide a strong visibility and attractive returns. Starting with the U.K., we operate in Scotland, England and Wales through our 3 distribution licenses, ScottishPower Distribution, ScottishPower Manweb and the recently integrated ScottishPower, now Electricity North West. Over the next 4 years, we plan to invest EUR 6 billion under the RIIO-ED2 regulatory framework that ends in March 28, while we are preparing for the next one. In the U.S., AVANGRID will direct approximately EUR 9 billion of state-regulated investments throughout its utilities in the Northeast, New York, Maine, Massachusetts and Connecticut. Notably, the company recently filed a multi-year -- 5-year plan in New York and then also a long-term plan in Maine, extending those periods from the year already approved and the 2-year, both in New York and Maine. Based on the comparison with other rate case recently approved, I think a 3-year case is probably the minimum we should achieve in those conversations. I think, depending on the outcome, it's important to highlight that our utilities in New York and Maine with regulated asset base of EUR 11 billion. Keep in mind that's more or less the amount of rate base right now in Spain and EUR 2 billion, respectively, together represent approximately 80% of AVANGRID total EUR 15 billion regulated asset base just in distribution. In total, we're investing nearly EUR 15 billion in the U.K. and the U.S. from '25 to '28 with 85% of this investment secured under finalized or close to be finalized regulatory frameworks through '28. We also remain committed to Brazil, where we will invest around EUR 5 billion through our 5 distribution licenses. The Brazilian regulator has approved, as the Chairman mentioned, the renewal until 2060 of the concession for Neoenergia Pernambuco, a distributor that serves 4 million customers. Neoenergia, Coelba, Cosern and Elektro are expected to concession in the coming months. In Brazil, we're confident in the regulatory environment as periodic tariff review is scheduled for Pernambuco, Coelba and Concern beyond '28, while Elektro will be dealt with in '27 and '26. In Spain, the regulatory framework from '26 to '31 is currently under review with final approval expected by the end of the year. We have planned investments of EUR 4 billion with an estimated return on equity of approximately 8%. However, this investment could vary plus/minus EUR 1 billion depending on the final conditions approved. As we mentioned before, in a global environment of competition for investment, Spain reach certainly behind if the necessary regulatory measures for the development of networks are not taken. But in our case, it's a very small part of the business compared to some of the other players in Spain, which is the majority. I think it's important that our regulated base is well diversified. You will see this afternoon with our teams in the U.S. and in the U.K., you will have the opportunity to take a deeper dive into our network business in both countries. It will be, I think, quite entertaining and also to learn about those 2 businesses. In transmission, we plan to invest around EUR 12 billion. Out of this, roughly EUR 8 billion will be allocated to the U.K. under the coming RIIO-T3 regulatory framework, which is due to be approved in December. We anticipate that the final conditions may improve compared to the assumptions reflected in the plan. The RIIO-T3 framework includes major transmission projects such as Eastern Green Link 1 and 4 as well as Western Link 2, as Nicolas, Keith and the team will explain this afternoon. In the U.S., we're investing approximately EUR 3 billion in regulated transmission assets. This includes EUR 1 billion allocated to CMP transmission and nearly EUR 700 million to UI Transmission, both in Maine and Connecticut, both under FERC jurisdiction. In New York, under the CLCPA, now powering New York environmental protection legislation, our planned investment amounts to EUR 1 billion already approved. An additional EUR 1 billion is allocated to contracted transmission projects, such as the NECEC project in the U.S., a project will be commissioned before the year-end as well as some of the transmission projects we are developing and finishing right now in Brazil. All of them under construction and nearing completion. Something important is affordability. The investments outlined will play a key role in strengthening the electricity system and improving cost efficiency. By enabling the integration of additional demand, they contribute to a lower cost per megawatt hour as the costs, which are mostly fixed -- upgrading aging infrastructure and improving grid automation with AI and digital solutions are essential to creating a smarter, more resilient networks. We are shifting from recurring O&M costs to long investments, which are more sustainable. New investments are more cost effective. This afternoon, you will be explained how in the U.K., for example, an estimated approximately EUR 6 billion per year of shifting constraint costs can be avoided in the decade. This transition also supports the adoption of more energy efficiency solutions across transportation, buildings and industry. New demand drivers such as data centers and AI are changing the traditional usage patterns, with steady 24/7 electricity needs make electrification the only viable path forward. This creates a positive cycle in which improved infrastructure supports demand growth, reduces system costs and enhances efficiency, ultimately reinforcing long-term affordability. Now turning to power and customers. We are taking a very conservative approach. In addition to the significant investment needs driven by aging infrastructure, new electricity uses such as data center transportation and industrial electrification are not the main drivers of demand growth. On the demand side, we expect an increase in electricity consumption across our distribution areas, plus more than 2% in the U.K., around 2.3% in Brazil and more than 2% in Spain are slightly below national system forecasts. Retail customer demand is projected to remain stable. Regarding pricing, our assumptions are aligned with forward market levels, which represent a normalization in price levels around EUR 60 to EUR 65 per megawatt hour in Spain and approximately GBP 75 in the U.K. Looking at the main drivers in the power business by country. In the U.K., we are progressing with the construction of East of Angla THREE and East of Angla TWO with expected COD in '26 and '28. Additionally, our offshore pipeline provides potential opportunity for future growth, only on a very opportunistic basis. In the U.S., we are only considering the commissioning of projects under construction. Vineyard Wind 1 construction is on track with more than 50% of the turbines already in operation and will be fully commissioned in the upcoming months. In Brazil, we are considering no capacity additions in the short term. In Spain, we're assuming the nuclear phaseout is scheduled in line with the current protocol preparing for the closure of Almaraz 1 in November 27 and Almaraz 2 in October 28. In other regions, our priority includes Australia, where we are focusing on new storage capacity, Germany with the completion of the Windanker offshore wind project. And Italy, where we are expanding and increasing our solar photovoltaic capacity. These assumptions, along with a highly opportunistic investment approach, guide our EUR 21 billion investment plan in power and customers. Within this plan, all projects have already been identified with 75% of them already under construction. Of this EUR 21 billion, approximately EUR 8 billion is allocated to the completion of offshore wind projects that are already under construction. Onshore wind projects follow with EUR 5 billion in planned investments. Additionally, EUR 2 billion are also for storage, including battery systems and pumped hydro facilities. This investment will deliver 9.5 gigas of new capacity in the 4-year period. 75%, as I said, already under construction. At the same time, 75% of the new capacity will be sold either under regulatory schemes such as contracts for differences or under long-term power purchase agreements with Tier 1. Iberdrola's current installed capacity stands at 56,800 megawatts, which is expected to increase by 4,000 megawatts, reaching nearly 61,000 megawatts with out of them 90% emissions-free by '28. Where we will be adding close to 9.5 gigawatt of net growth is largely offset by the sale of assets in Mexico, asset rotation and the close of the 2 nuclear facilities in Spain that we just mentioned. Going into detail, in offshore wind, we currently have 4 projects under construction, totaling 3.5 gigawatts. We expect to complete the commissioning of Vineyard Wind 1 by the end of the year, while Windanker and East of Anglia THREE will be expected to be commissioned in '26 and East of Anglia TWO will be commissioned in '28. Our participation in future offshore auctions will continue to be limited to regulated frameworks that offer adequate returns with risk minimized through secure supply chains and route to market. In onshore wind, we plan to install 1.9 giga of new capacity, 90% of which is already under construction. This includes repowering projects in the U.S., in Spain and the U.K., such as the 50-megawatt repowering of Molar del Molinar in Spain and 98 megawatts of Leaning Juniper in the U.S. as well as some landmark initiatives like the hybridization of our Tamega hydro project in Portugal with a 274-megawatt onshore wind farm. The plan includes the installation of 2.2 gigas of solar power photovoltaic capacity. 70% of which is already under construction, including hybrid projects incorporating battery storage, such as the Broadsound in Australia. We will also add 2 gigas of battery over the period with 0.5 gigas under construction like the aforementioned Broadsound in Australia and 100 megawatts in Spain benefiting from public subsidies. The remaining 1.5 gigas will be mainly allocated in Australia and Spain. This will be executed with a highly opportunistic approach, supported by regulatory frameworks and customer contracts. Furthermore, we have several investments in the period allocated to pumped hydro storage projects to be commissioned after '28 with a pipeline of 3 gigas of pumped hydro storage in Iberia in the [ Duerroajoseil ] and [ Huelva Rivers ] that will provide future storage capacity beyond '28. The increasing penetration of renewables is creating both the need and the opportunity to invest in storage technologies with potential across daily and seasonal arbitrage. Both technologies are essential to the system. However, long-duration energy storage offers superior performance compared to batteries. Pumped hydro is nearly 6x more effective than 2 hours battery storage systems in terms of security of supply. It does not suffer from degradation, longer asset life span and is 3x more effective than 2 hours batteries in supporting decarbonization and the integration of renewables. As a result, we have a pipeline of more than 3 gigas of pumped hydro storage projects in existing dams in Iberia, where the margins are 10x higher than 6 years ago, and where the load factor is expected to further increase in the coming years. On the other hand, batteries could also offer some advantages such as faster response to balancing market, lower development time and smaller space requirements. Our plan also relies on the commissioning of 2 gigawatts of batteries with a special focus on Australia. Moving into our route-to-market strategy. Access to multiple channels is one of our key competitive advantages. It enables us to maximize asset profitability while limiting exposure to market volatility. New capacity additions expected over the next 4 years will contribute between 15 and 20 terawatt hours to our current production available for sales, which stands at 105 terawatt hour, bringing it between 120 and 125 terawatt hours by 2028. Our production is sold through a diversified mix with 21% sold to retail customers, 59% to industrial customers under power purchase agreements or other arrangements and 20% under regulated contracts such as CfDs and feed-in tariffs. This approach ensures a stable and predictable revenue across all regions. In fact, 90% of our revenue for '26 and 75% for '28 is already secured, reflecting our strong contractual coverage and strategic positioning. In our customer business, we plan to invest EUR 2.5 billion between '25 and '28, mainly to continue with a profitable business to preserve our market share and to secure long-term contracted revenues across all regions. In the retail segment, we serve more than 11 million customers in Spain and the U.K. with an average of 3 contracts per customer. The majority are in Iberia, 80%; and the U.K., 20%. While we expect no growth in this period in line with our conservative assumptions, our focus will be on cost to serve optimization, excellence and digitalization to enhance value and efficiency. In the industrial and commercial segment, strategic partnerships have enabled us to secure over 250 terawatt hours in contracted volumes through 2030. This reflects the strength of our commercial relationships and the trust placed in our energy solutions. We're also leading the way in the data center energy solutions, already supplying over 11 terawatt hours annually to top-tier customers in the U.S., 7 terawatt hours to Amazon, Google, Microsoft, Meta, et cetera; and the U.K., 1 terawatt hours to Amazon. And in Europe, 3 teras to Amazon, Microsoft, Telefónica, Vodafone, et cetera. In Iberia, where demand from data centers is expected to exceed 10 teras by 2030, one of our flagship initiatives is a joint venture with Echelon featuring a major flagship project in South Madrid. This is an example of a single project data center creating an additional demand of 1 terawatt hour. 11 projects will represent approximately 5% of Spain's current electricity demand. We have 7 more projects in Spain with secured land and green connections, positioning us to meet demand with agility and stability. Let's focus on efficiencies as we always do for the past 25 years. We're aiming to achieve EUR 400 million in operating efficiencies over the gross margin ratio of 25.8% in '22 to bring that to 25.4% in '24 and then to expect to bring it now below 25% by '28. This improvement will be driven by several initiatives across our core areas. In networks, we're increasing automization and resilience through technologies like ADMS, which enables real-time load balancing and outage response. Moreover, we are deploying AI-powered customer applications to reduce call certain volumes. In generation, repowering opportunities and hybrid solutions allow us to maximize the value of existing assets. For our customer business, we are enhancing our understanding of consumption patterns to deliver tailored and efficient solutions. We're also improving retail cost to serve and deploying a new scalable cloud-based technology platform powered by AI for our Iberian retail operations designed to meet the challenges of an increasing competitive market. Our O&M processes benefit from the standardization of equipment and procedures. These processes are in continuous improvement with new tools for predictive maintenance based on data analytics and AI optimizing asset availability. For instance, the use of robotics and drones for lines and substations inspections is significantly reducing the need for manual site visits. Together, these initiatives reflect our commitment to leverage digitalization, automation and data centers to drive sustainable value creation. I think in the workshops today, you will see many examples of them. Moving to supply chain. Another key enabler of this plan is our robust supply chain strategy. Several months ago, we delivered a webinar containing all the details of our supply chain strategy. However, today, we will provide a brief overview. 80% of our strategic equipment needs through '28 are already secured, ensuring availability, schedule reliability and price stability across our operations. This proactive approach allows us to minimize exposure to commodity price fluctuations, inflation and foreign exchange risks. A key difference is our commitment to local manufacturing, especially in networks with 95% of purchases being local. This not only supports regional economies, but also protects us from tariff impacts and supply chain disruptions. By leveraging global volume and standardization, we are achieving competitive pricing through economies of scale. For our big businesses and main businesses in networks, 95% of strategic equipment, HVDC components, GIC, high-voltage circuit breakers, cables and distribution transformers are already secured, thanks to a combination of centralized and local procurement strategies. In power, for projects currently under construction, 100% of strategic equipment is already secured. In summary, our supply chain strategy is built on foresight, scalability and localization, becoming a cornerstone of our operational efficiency. In the afternoon, you will have further details and insights. Let's go now to the regions to our geographies. Let's start as the Chairman pointed out, as you have seen throughout the presentation, we are operating in the right countries. These countries are where we have personnel with the right skills, where governments have shown a strong commitment and where we personally oversee operations to ensure successful execution of our investment plan. Let's go one by one. The United Kingdom, we intend to plan to invest in our plan around EUR 20 billion between '25 and '28, with EUR 14 billion allocated to our network business. This investment will result in an increase of over EUR 9.5 billion, which is 70% growth in our regulated asset base rising from EUR 15 billion to reach EUR 24.5 billion by '28. Of the EUR 14 billion, approximately EUR 8 billion will go to transmission and EUR 6 billion to distribution. In power and customers, EUR 6 billion will support the construction of offshore projects, both East Anglia THREE and TWO as well as 300 megawatts of onshore under construction. The current installed capacity of 3,000 megawatts will increase by 2,000 megawatts, approximately 70%, reaching 5,000 by '28. On the retail side, we remain focused on promoting electrification through smart solutions and strengthening customer loyalty. In the U.S., our investment plan totaled EUR 16 billion over the period with EUR 12 billion directed to networks, 7%. This investment will result in an increase of over EUR 7 billion, which is 60% growth in our regulated asset base, rising from EUR 14 billion in '24 to EUR 21 billion by '28. In transmission, alongside regulated projects, we are completing, as I mentioned before, NECEC project. In power, we are focused on commissioning Vineyard Wind 1, repowering onshore projects and building new ones, all benefiting from the existing and the previous tax credit mechanisms. The current installed capacity of 10,500 megawatts will increase by 1,500, reaching 12,000 megawatts installed capacity by '28. In Brazil, we plan to invest EUR 5 billion in organic growth with another EUR 2 billion in the acquisition of the previous stake in Neoenergia. 90% of this investment will result in an increase over EUR 2 billion, 20% in our regulated asset base, rising from EUR 11 billion to EUR 13 billion by '28. This will support the growing demand for electrification across jurisdictions. In Spain, the plan includes EUR 9 billion investments between '25 and '28, with EUR 4 billion directed to networks. This investment will result in an increase over EUR 2.5 billion, 30% growth in our regulated asset base, rising from EUR 9 billion to EUR 11.5 billion by '28. As explained before, this is contingent to our -- to the regulatory framework that we should ensure sufficient returns and increases the investment limit and guarantee OpEx recovery. Our geographical diversification minimizes whatever the outcome may be. In power and customers, investment reached EUR 5 billion with 60% in generation. The current installed capacity in Spain stands at 31,800 megawatts and will increase by 500 megawatts, reaching 32,500 megawatts. We'll be adding around 2,000 megawatts, of which 600 will be batteries. However, the net growth in renewals is offset by the closure of Almaraz. In retail, investments will be focused on maintaining market share in a more competitive environment and supporting electrification through EV solutions and industrial decarbonization. Australia and other European countries is what we call our Iberdrola EnergÃa Internacional. We plan to invest EUR 5 billion, mainly in Australia, Germany and Italy. This includes more than 2,800 megawatts, featuring the completion of the 315-megawatt Windanker offshore project in Germany, 1,200 megawatts of storage project in Australia and 600 megawatts of solar PV in Italy. These investments will increase the current installed capacity of 4,300 megawatts to over 7 gigas by the end of '28, representing a 60% growth over the period. Moving to the evolution of the business in terms of EBITDA. In summary, our investment plan is not only ambitious, but also transformative. By '28, we expect to reach an EBITDA of EUR 18 billion, an increase of EUR 3 billion compared to '24, driven primarily by growth in our network business. This segment will represent 55% of the total EBITDA, 40% up from '24, clearly reflecting our strategic pivot towards regulated income and long-term value creation. In terms of country, geographically, the shift equally significantly. The U.S. and the U.K. will jointly contribute 50% of our EBITDA by '28 compared to 37% in '24. These figures underscore our commitment to focusing on high-growth, high-return markets. To conclude, this EUR 58 billion plan reflects a disciplined approach to capital allocation, focused on stable, high-return markets and supported by strong regulatory visibility. Thank you very much to all of you, and we're confident that the team will deliver to the Chairman and all of you of this plan. Thank you.

Okay. Following the agenda, we are going to have now a coffee break just here. It's a question of 15 to 20 minutes. Thank you. [Break]

Following with the set of presentation, it's a pleasure to give the floor to Mr. Pepe Sainz.

Hello. Good morning to everybody. Before I start, I have a special announcement for analysts and investors because my IR team is very worried because apparently, our EBITDA is slightly below the numbers that you have. And they have asked me to explain to you a couple of reasons of why this is the case. I hear that you were kind of expecting around EUR 19 billion, and we are giving you EUR 18 billion. Actually, it's a little bit higher than EUR 18 billion. It's closer to EUR 18.5 billion than to EUR 18 billion. But in addition to that, they have asked me to tell you, first, we are not including, obviously, Mexico, which is EUR 600 million because we are going to sell it. We are deconsolidating also East of Anglia THREE, which was adding EUR 300 million to EBITDA. And also, as we explained due to the capital allowance, our revenues in the U.K. are lower, so it's another EUR 300 million. So if you add these 3 things, then we would be above the EUR 19 billion. But in addition to that, and this is something that I have been thinking during these 10 minutes is, first, we have EUR 500 million less of EBITDA due to the devaluation of the dollar and the real, which actually is much lower at the net profit level because, as you know, part of the -- of our cost is in -- interest cost is in these currencies. And second, taking into account that we have been acquiring the minorities of AVANGRID, and we are buying the stake of Previ, which adds to our net profit, but not to our EBITDA. So all in all, if you add all that things, probably would be an EBITDA of around EUR 20 billion, which is not bad. Okay. So given this announcement, let me start the presentation. And after the Chairman and the CEO convincing presentations, it is clear that Iberdrola has a unique business and financial model that combines predictability and profitable growth with a strong financial profile and a dividend policy that grows in line with our earnings. Our business model that is based on regulated and long-term contracted business, the networks are key investment decision, while we continue to invest in renewables through a selective approach, securing long-term cash flows to CfDs, PPAs and our retail position. We focus on A-rated countries, which generate over 90% of our operating profit. And it is supported by our centralized financial model that I will detail in this presentation with a strong commitment to the BBB+/Baa1 rating has provided in the last years, a total shareholder return of 350% over the last 10 years, outperforming the market and peers with a higher net profit growth with lower volatility. Despite this, Iberdrola trades at a lower P/E ratio than other industry leaders and indexes, making us an attractive investment opportunity in an industry that, as the Chairman has explained, will provide substantial growth in the future. As I have mentioned, and as you can see in the slide, Iberdrola has provided shareholders with a total return of 359% in the last 10 years, beating the global indexes such as the S&P 500 and the MSCI World Index and almost tripling the utilities index. We have also outperformed other defensive sectors of luxury, health care and staples that have higher multiples than us despite this worse performance and a more uncertain growth path than Iberdrola as we are very well positioned in a global context in an industry of raising demand for electricity and grid infrastructure that offers an attractive future growth for an extended period of time. Iberdrola not only offers growth at an attractive multiple, but also more certain and predictable. As shown in the slide, Iberdrola net profit growth from 2019 to 2025 has clearly outperformed our major European integrated peers during a period of global uncertainty with the COVID, with the Ukraine-Russia conflict, with new trade tariffs, with supply chain problems and with less appetite for renewables. And we've passed all these different volatile period with very little volatility in our case. Our net profit standard aviation is close to 0, offering an attractive risk return combination compared to others. Our 9% net profit cumulative annual growth over the last 10 years has also consistently outperformed global indexes. And our shareholder remuneration has been fully aligned with our net profit and earnings per share growth, providing strong visibility and consistency. Let me review quickly the '24-'26 plan, which we are already overdelivering. Our first half '25 adjusted net profit grew 7%, excluding one-offs, fully in line with our mid- to high single-digit target, but coming from a higher '24 close that allow us to predict a higher net profit for '26 that was forecasted in our Capital Markets Day below what we are going to provide. In terms of financial strength, our FFO over net debt ratio increased to 24%, comfortably aligned with the BBB+/Baa1 rating that agency requires that agencies requires. Regarding asset rotation, our EUR 12.2 billion target has being exceeded in terms of volume, timing and profitability, supporting the group's strategic orientation towards networks as they -- as this partnership and asset rotation has made possible the acquisition of BMW, the AVANGRID minorities and the -- previous stake in Brazil. And on the sustainability side, the most critical metric for contributing to the energy transition, emissions intensity reduction, it has improved by 21% from 83 to 65 grams of CO2 per kilowatt hour produced, even before the last thermal divestment, which will further reduce emissions to close to 0. Regarding our '25-'28 plan, first, let me point out that it is mostly funded. We have taken the necessary steps to finance this ambition investment plan. We have successfully executed our EUR 5 billion capital increase, which takes away any need for additional equity at least until the end of the decade, and this is a special announcement for bankers. We are not going to issue more equity at least until the end of the decade. Our asset rotation and partnership activity has been extraordinary. 75% of our current target for the '25, '28 period is already completed and up to 90% is advanced at an attractive P/E multiples. Iberdrola will continue to fund the investment needs through stable and predictable cash flow generation and its diversified sources of debt financing. During this period, we will need to fund approximately EUR 83 billion. CapEx will represent 72% of our total needs, including EUR 2 billion for BMW debt. EUR 58 billion will be the group investments, including EUR 5 billion of work in process. Shareholder remuneration and minority interest will account for around 24% or EUR 20 billion and the remaining 4% will be working capital or around EUR 3.3 billion, of which EUR 1.4 billion is related to 1 offshore wind farm, [ Aalto ] that will be recovered in '29. So half of this working capital will be recovered in 2029. As shown in the slide, 63% of our funding needs will be covered by our funds from operations, which will grow by EUR 2.3 billion in the period. reaching EUR 14.1 billion in '28. Asset rotation and partnerships will contribute around 16%, of which 90%, as I have mentioned, is already completed or in advanced stages. The remaining 6% comes from the already executed capital increase. As a result, our financial solvency will be strong, given the limited increase in financial debt as it will be only 15% of our total sources. As I was mentioning, we have developed an extraordinary partnership model capable of attracting Tier 1 investors, allowing us to raise equity at an attractive fee multiples, making these transactions in general, accretive for the company. Our current plan sets a EUR 13.2 billion target for the '25-'28 period, EUR 7.6 billion from partnerships, 58%; EUR 5.6 billion from asset rotation, 42%. As shown in the slide, 90% of this target is either completed or in advanced stages, assuming the successful closing of the latest Mexican transaction. As I mentioned previously, this has allowed -- to increase its exposure to the network business. The key macro hypothesis of the plan are aligned with the market forecasts. Compared to our previous plan, we estimate a slightly higher inflation mitigated in the Eurozone by the euro appreciation and lower energy prices. A higher interest rate environment, which compared to the forecast we had in our previous plan will reduce the net profit by EUR 186 million as short-term rates will be higher, except in the Eurozone and long terms will be higher driven by debt sustainability concerns and European reindustrialization. GDP growth is expected to be slightly lower due to the trade tensions, geopolitical risks and macroeconomic uncertainty. On the foreign exchange side, a worse scenario compared to our previous plan has led to EUR 160 million reduction in '28. And as I mentioned, another EUR 500 million reduction in the EBITDA, EUR 160 million in net profit. The U.S. dollar is depreciated from EUR 1.09 to EUR 1.18. The British pound is slightly appreciated due to the persistent inflation and favorable rate differential and the Brazil real, the real is depreciated due to the concerns over higher fiscal deficit from EUR 5.63 to EUR 6.45. You can find the detailed macro hypothesis set and its comparison to the previous CMD plan in the annex. When it comes to value creation, our plan prioritize, as the Chairman has pointed out, regulated and long-term contracted business in A-rated countries with favorable regulatory environments. This strategic focus ensures attractive and predictable returns across the group. In our networks business, investments are aligned with well-established regulatory frameworks securing an average return on equity of 9.5%, nominal post tax, which is consistent with an average IRR of over 8% and an EBITDA over CapEx ratio of 10% or above. In power, renewables and customers, our selective investment approach with CfDs, PPAs and retail positions covering around 85% of the expected production allow us to achieve an IRR range of 7% to 12% and a spread to WACC of more than 200 basis points, depending on the cost of equity assigned to the investments of the risk defers depending on the technologies and markets. As a result, we expect the group CapEx will generate a spread to WACC over 200 basis points on average with a low risk profile. Iberdrola, as I mentioned, we'll maintain a solid credit ratios throughout the '25-'28 plan, reinforcing its commitment to the current credit rating. The evolution of our financial ratios reflects the progressive transformation of our business model. Iberdrola is transitioning towards regulated networks by '28. 55% of our EBITDA will come from regulated activities. If we include long-term contracted business, this year increases even further, bringing us closer to the profile of regulated company that, as you know, rating agencies demand lower ratios. Our estimated ratios for '28 are leverage increasing moderately from 45.4% to 47% in '28, FFO over net debt of around 22% and retained cash flow over net debt close to 19%. Although our internal ratio calculations differ from those used by rating agencies, these levels are comfortably within the threshold required by them to maintain our current rating as our business profile continues to improve due to our increasing exposure to A-rated countries and the growing weight of regulated and long-term contracted business. The evolution of Iberdrola net debt and its interest rate and currency structure reflects its commitment to maintaining a prudent financial profile. From EUR 52 billion in '24, net debt is expected to reach around EUR 55 billion in '26, an increase of only EUR 3 billion over 2 years, despite higher investment. And this is thanks to the fact that we had made the capital increase and the asset rotation and partnerships that have been made up front. From '26 to '28, net debt will reach around EUR 64 billion because we will -- basically, the plan has been funded in advance. Our debt structure will remain prudent with 73% of the total debt at fixed rates covering more than 68% of the fixed EBITDA. In the U.S., we will have around 88% of our debt fixed aligned with the regulatory frameworks. The majority of renewable assets also are under fixed price schemes such as PPAs. In the euro area or in the euro, around 72% of the debt is fixed, reflecting the higher share of liberalized business in EBITDA. Within the British pound, our income is balanced across fixed, floating and inflation index components. So we have around 58% of our debt fixed. And in Brazil, our debt is inflation index as it is our EBITDA. Regarding the currency structure, we follow a natural hedging policy financing the group in the same currency as our FFO. For the first time, the euro-denominated debt falls below 40%. The remaining 60% is in other currencies with the pound and the dollar having a higher share. We will reduce our Brazilian exposure by 4 percentage points in '28 as we finished our transmission investments. Our cost of net debt is expected to decline throughout the plan, reaching 4.4% by '28, down from 4.8% in '24. Excluding Brazil, the cost would be around 3.6% compared to 3.7% in '24. The average debt balance in Brazilian real will decrease from 13% in '24 to 9% in '28. This, together with the devaluation of the real and the dollar versus the euro, the Europe contributes to overall improvement in the group's cost of debt. Nevertheless, we are facing higher interest rates compared to the Capital Markets Day of '24, where the '26 net financial cost expected was 4.4% below the 4.8% in this plan. The higher rates are expected to reduce '28 estimated net profit by approximately EUR 186 million compared to our expectations in the last Capital Markets Day. Regarding hybrids, Iberdrola remains confident and committed to its current hybrid portfolio, which will be maintained at EUR 8.25 billion throughout the plan. Our hybrid strategy continues to support our credit ratings. During this plan, our focus will be on refinancing the outstanding hybrid stock. We expect investor demand for our hybrids to remain strong, driving lower spreads. We will maintain moderate financial needs as I was mentioning throughout the plan, around EUR 32 billion, EUR 20 billion will be refinancing maturities, along with EUR 12 billion of additional debt. Around EUR 6 billion of new needs are already signed, making even more comfortable or maturity profile as you can see. Our financial needs will be covered according to our centralized financial model, financing from the holding up to 72% of the total, except for regulated companies in the U.S. and Brazil, U.S. will take around 20% around Brazil, 8%. By product, we will cover our needs mainly through the bond market. One thing that I have to mention is that we will try to do as much as we can in the U.S. market, which is a market, the largest market in bonds that we have not tapped in the last year. So there is a huge possibility of issuing in this market, and we haven't tapped it because up to now has been more expensive than the euro market. The rest mainly will be covered through multilaterals, export agencies and development bank loans that have more and more possibility of having loans from them because they are increasing their financing targets. And this is a very interesting market because it's not subject to the capital market volatility, provides financing at very competitive prices. Bank loans will be only around 10%, a low level that allow us to maintain non-use capacity for other products like credit lines, derivatives, letters of credits, et cetera. Our liquidity position will comply with rating agency requirements for what they call a strong or adequate. We will end '28 at around 22 months coverage with EUR 24 billion of liquidity. All the new credit lines will be based on KPIs, fully aligned with the sustainable targets of the company. Our expected average life of debt will be above 6 years as we prioritize the regulatory cycles versus the asset useful life. But still, we found ourselves with a longer duration than the regulatory cycles. Also, the 6 average -- 6 years average life of debt optimizes the risk cost perspective. Our FX strategy hedges our most important solvency ratio to protect this financial solvency and the rating of the group from the FX fluctuations as we have seen, for example, this year. So our aim is to minimize the FFO or net debt ratio volatility, adjusting the amount of debt in the different currencies to the funds generated in the equivalent currency. In addition, annually, we hedged a net profit exposure to protect the P&L from currency depreciation. FX risk management has consistently in the case of Iberdrola delivered good results. In addition, in this plan, as I have commented, we face a worse context compared to the CMD of 2024 with more depreciated currencies, especially the dollar and the Brazilian real that will reduce around EUR 160 million from our net profit. It will reduce around EUR 500 million for our EBITDA, but take into account that, as I have mentioned, because we finance ourselves in dollars in Brazilian and in pounds, the FFOs. Obviously, the valuation of the currencies protects us a little bit. So for example, we lose EUR 500 million in the EBITDA, but we gained EUR 200 million in our financial expenses due to the valuation of the currency. So actually, the impact in the net profit is less EUR 160 million, something that you have to take into account for your EBITDA calculations, please. We expect adjusted net profit to grow every year throughout the plan. By '28, it will have increased by EUR 2 billion, reaching the previously mentioned EUR 7.6 billion equivalent to a high single-digit cumulative annual growth over '24 to '28. Net profit figures are adjusted to the capital allowances that will be around EUR 300 million in '28. In order to exclude the deferred taxes accounted for in the regulated electricity results in the United Kingdom that artificially depresses net profit and EBITDA. With the aim of more currently reflecting these numbers, the net profit and EBITDA numbers and better aligning the results presentation with other U.K. companies. As you know, National Grid and SSE already do this capital allowance adjustment. You will find a more detailed explanation in the annex and our Investor Relations team that has already brief analysts on this technicality remains available for any further clarification. As shown in the slide, we expect adjusted net profit to grow every year from '24 onwards, and we expect to exceed the previous CMD for '25 and '26 that as we were -- as we had, the expectation there was between EUR 5.6 billion and EUR 5.8 billion for '26. So we will be clearly above these numbers for '26. Adjusted net profit is expected to grow at a high single-digit rate from EUR 5.6 billion to EUR 7.6 billion. Let me show where is these numbers coming. There is EUR 2 billion increase in the plan, which is driven by the network contribution of EUR 2.1 billion. Renewable power, mainly through capacity additions will contribute around EUR 400 million. This positive evolution in both businesses more than compensated the EUR 500 million decrease in customers, mainly related to the normalization of margins in Spain and the U.K. as well as I was mentioning before, our sale of our Mexican assets. However, the Mexican sale is part of our asset rotation strategy and is more than compensated with the contribution from new investments especially at the net profit level, where I mentioned the ENW acquisition, the PREVI, stake in Neoenergia and the Avangrid minorities. We also expect around EUR 200 million in financial savings linked mainly to a capital increase. This is a very important slide for all of you because here, we show the sensibility of our results to the different fluctuations in currencies, in interest rates and in remuneration of networks. As you can see in the slide, basically, the risks and opportunities because I have to say there are also opportunities here, our macroeconomic, basically, primary foreign exchange and interest rate. And as you can see also, the business-specific risk have a limited impact in our net profit. The key point from here is to show that the volatility of net profit remains low, thanks to the strength and resilience of our business model. You have also the same impacts at the EBITDA level in the earnings. I want to highlight as the Chairman has done that if electricity demand grows, as we expect, for example, in the U.S., impact on prices will happen and will give Iberdrola an opportunity to improve results. So an impact on demand will not only have the impact in the demand, but also the effect in the prices. Finally, and as the Chairman has stated, Iberdrola deploys a sustainable business model with tangible impact on people and the economy. This is an integral strategy structured around 5 fundamental pillars. Boosting electricity as a clean, autonomous, local, stable, safe and competitive source of energy, the strengthening of human and social capital, ensuring a sustainable value chain, the protection of nature and efficient use of resources and an ethical and transparent governance. These pillars guide our specific targets. We are confirming and evolving when regard our existing targets, incorporating new regulatory requirements and market demands, as you can see in the annex. Iberdrola maintains most of its KPIs in key areas such as specific emissions, smart grids, electrification, biodiversity and resource efficiency, while we are raising ambition for others illustrated in the evolution of smart grids and accessibility for consumers. Specifically in finance, 90% of our total organic investments will be aligned with the EU taxonomy and therefore, will provide a large pipeline to be financed under green principles. Sustainability will be more linked to credit lines and commercial papers. During the plan, over EUR 35 billion of new financial instruments will be green or sustainability labeled, of which over EUR 30 billion will be green. And as a consequence, we are forecasting that we'll have more than 80% of green sustainable label financial instruments by the end of the plan. I would also like to highlight that Iberdrola is considered best-in-class in green financing, both on the ICMA's Green Bond Principles and the EU Green Bond Standards, maximizing our access to the green bond market. In fact, we were the first company to issue an EU green bond aligned with ICMA principles. So thank you very much for your attention. And now the Chairman will close this presentation.

Thank you, Pepe. Today, we are presenting this plan to transform another -- again, I could use the growth transformation to transform Iberdrola profile into more regulated group with even stronger focus in high-growth attractive markets, we can say we are becoming a growth Anglo-Saxon company in a defensive sector. So growth, Anglo-Saxon, defensive altogether. So I think that is our plan. Thanks to the increased -- increasing network investment that will reach 70% of the total and a selective approach to renewable based on projects already under construction with revenue secured through PPAs or CfDs. As usual, we will increase the share of EBITDA that does not depend on energy prices to 75%. With higher predictability, thanks to the portfolio of transmission and distribution business with regulatory framework secured or advance up to 2031, delivering average high single-digit growth in net profit through 2028, we plan fully based on organic growth in our current A-rated countries with 2/3 of our total investment in United Kingdom and United States. And rising returns, thanks to an average return on equity of 9.5% in network investment and our strict profitability criteria in renewables. Reserving our strong commitment to BBB+ rating with no need of additional capital and increasing shareholder remuneration in line with results. To conclude, let's summarize this plan in a few figures. Investment of EUR 58 billion, in which 2/3 are in United States and United Kingdom, to increase our net profit by EUR 2 billion in just 4 years, up to EUR 7.6 billion by 2028, with dividends increasing in line with results, including a flow of EUR 0.64 per share, and reinforcing our commitment to financial strength. In other words, with this plan, we are preserving the foundation of the model and the vision we started 25 years ago. And at the same time, we are anticipating the coming deep changes in the energy industry. Maintaining our usual prudent approach with conservative macro assumption, as Pepe has already explained, and clear upside potential if electrification and demand growth forecast materialize, driving energy prices above our base case and increasing the need of infrastructure investment. So thank you very much for your attention, and now we are ready to answer your questions. Thank you.

Okay, thank you Chairman. Well, now we open the floor for questions. First, we will take all the questions from the room. Please raise your hand, and we'll bring a microphone to you. Please be passion. I'll try to be fair with the wait list. After that, we move on to the questions submitted via webcast, so we can also hear from those joining us remotely. Let's begin. Fernando Lafuente.

I have 3 questions, please. The first one, it's a general question regarding the shift to networks. My question is why changing to networks now why that is now the moment to invest heavily on networks. Then the second one is on the timing for the rate cases in the U.S. and the U.K., those remaining. When do you expect these rate cases to be approved? And finally, it's on the strategy in offshore. Once you finish your projects currently under construction, what should be the strategy for the company? Do you expect to continue building more projects or it's basically what it is?

So thank you very much. I think it's a good question. The first one, why this one? So I think we are a company what we give later surprises. This year, we celebrated our 125th anniversary of the company with the last 25, I've been -- the company was leading the company. And I think I've been repeating in 25 years, the same words, renewables, networks and storage. I don't know how many times you listen to me these 3 words. Renewables, networks and storage. For years, I've been already -- we comment before, I was criticized because we decided to close our coal power plant, our oil power plant, and we start investing in renewables because we were convinced that is needed. But I think -- now I think after 25 years, I think nobody doubt that renewables is already energy solution. We can provide energy security, can provide energy self-sufficient, can provide competitiveness of the country. And I think everybody is already in this direction. But I think during these 25 years, we have already built 60,000 megawatts of renewables. So we are leaders on that one by far. So the second thing we said at that time is the networks, the renewables are already by natural is distributed power. I think it's not as concentrated as the traditional power plant, which are already large power plant, which are sending the electricity to large consumer centers. So the renewables are much distributed. I think the average power plant is not 1,000 megawatts that it was already the traditional ones, either called nuclear others. So a small one, in some cases, 20, 30, 50. We are one of the largest with 300, but I think that is very exceptional. We then require already some kind of grid to take this electricity into the concession centers. But as well, during this period, I think the uses of electricity has already changed a lot. So I think if we've been burning and heating our homes for millennials, burning things. So with engineers on time we do something which is very useful. And I think we invented many years ago, the heat pumping system, which I think you can heat and refrigerator homes using electricity instead of burning anything. So what that requires, I think that one, same thing with transport, same thing with quite a lot of industries can use, if we can use electricity for as raw material for making another thing, green hydrogen is one of the cases. An other uses right now is a computing in data center, digital appliances, et cetera, et cetera, in our homes, our home is full of equipment electric. But I think they need already the grid were designed 100 years ago, most of the equipment would exist in most countries are already made in the time when I was already in the university, which I think was not presented yesterday. So which I think, they need to be refurbished, needs to be rebuilt, needs to be repowered and need to be digitalized for already providing the services with today that people require. If you add to that one, the demand of those users, as Pedro was mentioned, is increasing. We see that now exist very high Latin demand. We cannot be covered because restriction of the grids in the countries. And I think that was our vision that is going to happen, and it is happening. So I think -- it was -- we had the business renewables. It happened. Nobody is criticizing myself because of the investment we have already done in renewables. We've been very much criticized when we make all our international expansion base in networks, countries. I think we bought the ScottishPower network. We bought [indiscernible] network. We bought Brazil networks. We bought recently ENW Electricity North West and we acquired 100% of our Avangrid network and we acquired 100%, almost 80% of our Neoenergia networks as well. And this one, I think some countries has already wake up properly. And I think we are present in those countries. They wake -- they go up first, which is U.K. in United -- for different reasons. In the case of U.K., because the demand is booming, and they are tremendous Pedro mentioned as well, huge amount of money, which is already paying the citizens because of the curtailments. We have not -- we have produced electricity in some part of the country, cannot be transported under part of the country. But as well, there are already a political decision to reduce the external dependency, that why means they need already electrified uses to avoid imports of fossil fuel. So I think these 2 things are making the regulator is fully aligned with the policy of the government for making already that acceleration. So I think if we compare our situation in Britain 5 years ago, Keith, you can really correct me if I'm not fully correct on that one. So we've been already discussing for almost 2 years for the CapEx we would like to put in transmission. So we present -- correct them in the numbers, I try to be my memory. We were asking something like GBP 1.5 billion barrels. In this -- because that increased the rates of the consumers, we're discussing GBP 1 per month is peanuts. So they said not only EUR 1.2 billion. The reality in this period, we are going to make over EUR 2 billion is correct the number, so my memory is still working. So -- but -- and what is now changing? Now the position is the absolute oppose. Yesterday, we had a meeting with the Chairman of [indiscernible] They are pushing us to accelerate the construction. Why you can't do more and to make the heel more faster? Because the demand like in demand they would like to be recover because they would like to reduce the rate of the consumer because of these curtailments, which can be avoided and because that can generate a tremendous wealth of the country with the political drive. This huge investment is conducting the country growth with the investment we are putting all the sector with the industry, with the volumes of that one without using funds from the national budget. So all this new infrastructures, which is not dependent on national budget for covering demand, which is lighten there. [indiscernible] So I think that is one. What is in United States? The state United States in the state where we are present, the situation is different. So the design of the grid and the design and the situation of the grid is really, really old fashioned. I don't like to use another word. I think is not precisely what the country the United States needs. And that is why the America has already made this -- how you call, bipartisan, infrastructures. So just to answer ladies and gentlemen. I mean I'm answering that in investing level, the same thing, pushing us to make that. So in such a way that almost 60% of the CapEx, we are already agreed in conversations with the regulator is for changing the existing grid to make a grid more according with the needs of today. But at the same time, I think the accounts of the 60% when this is going to be design is nothing to see with today. I think there are towns at that time where the people where the people were even bar or the real or the industry [ go into ] places and now it's not any longer industries, their homes or their garden is changing that one in such a long period of time. So we need to make already the agreed for adapting to the today's needs of the ground. And the third one is to introduce teams which today still is costing a lot of money, which is due of the storm because the blackout there is costing millions to the consumers. So because the cost and instead of CapEx. And I think we are transforming that one another one in such a way that in the medium term, that is good for the consumer. So our vision was power, renewables, networks, now is aware about that one. And the timing is fixed by the country. So the timing in the country is saying now it's time, they're pushing to have to do that, et cetera, et cetera. Related to offshore. I think we continue that one. I think we are already in this moment, 3 projects in construction, 1 in America, 1 in Germany, 2 in Britain [indiscernible] 2 in Britain. And I think which is already those one is finished its own in 2026, 2025, American one, 2026, the British and the German, in 2028, another British. But now is another option here. So I think probably we will participate on the [indiscernible] which I gave another project there. We have another pipeline in other countries. I think we will see. I think there are not more opportunities. There are opportunities, always based in secure prices, CfD or similar and with proper return -- always with a prudent approach of them. So we have pipeline, and we will be ready to make that one if there are already the terms and conditions for already for gaining those one in a profitable manner. But I think this is not that one. Nothing is new. We have 25 years of vision, networks -- sorry, renewables, networks and the storage -- sorry, storage, I mentioned as well. In storage as well, we've been already transforming our dams in Spain where we have more dam in reversible. We continue making that one. Pedro mentioned a couple of them. We continue them, but the biggest one is done. We doubled the size of Cortes-La Muela and we invest already in the Tâmega River, which is pure pumping storage facility, which is the only big one has been built in Europe in the last 20 years. So -- but I think -- and we are already, as we mentioned, in storage in Australia. In Europe, this is profitable, we will make as well. But I think certain, we have a tremendous advantage with our pumping story facilities, which we have advanced, and we have already, the only thing we have to change is the turbines. I think the rest is already absolutely used with little investment, we can already obtain a very good result during a very long period of time, which is crucial. It is not the question for 1 hour, 2 hour, 2 hours. We can already for example for 20, 30 hours when we go to store electricity and 20, 30 hours, we can already generate electricity, not the battery, which is already [indiscernible]

Okay. I think in terms of the regulatory filings, rate cases, et cetera, in the U.K., I think 2 different things. Transmission, as you know, first draft of RIO T3 is already on the table. It will be finalized by the end of the year and goes into 31 from April '26 into '31. So we are done. In terms of distribution, the current ED2, it goes into basically March '28. So I think we just have the pending for ED3, will be 2/3 of the year, and we will be filing that next year. So I think also probably taking care. In terms of the U.S., we filed in New York. We have asked for 5 years. They gave a 3-year rate case to National Grid right now. I think in our opinion, that's consistent with our previous 3-year rate case that we got 3 years ago. I think the implementation agreement will probably be in the second quarter of next year. So -- and it will go beyond '28. So from that point of view, it will be done. I think remember, we're not now, as we were 3 years ago in a 10% inflation environment and things like that. We are daily, weekly with the public commission. We got the securitization bill, dynamics both in Maine and New York are very, very good in terms of relationship. Maine, the same thing. In third quarter next year, we have the rate case, which we will be at least for 2 years, probably even more. So I think if you see all of that, very comfortable. Well, most of the things have been taken care.

Okay. Alberto, Javier afterwards Peter Bisztyga. Alberto?

Thank you so much, Alberto Gandolfi, Goldman Sachs. Three as well. I wanted to start on power demand, if you don't mind, and it's a 2-parts question. The first part is, do you think Europe is ready to cope with 2%, 3% increases in demand because we have not been building back up, networks are 40 years old, many players are cutting renewable CapEx. So are we going to see a crunch point in Europe at some stage and when? And the second point on the power demand. There was a slide earlier. I think Pedro was in your section, if I'm not mistaken, where you're basically saying that network investments reflect growing power demand. But you don't seem to put through power demand in retail. You don't seem to have higher profits from flexible generation. And you don't seem to put through higher PPA prices in your renewables. So I guess we have the sensitivities at the back. But my question is, if you were to put through 2%, 3% increase in demand throughout the entire business of Iberdrola, entire value chain in electricity, what would the EUR 7.6 billion net income become? And sorry, first, that was just the first. Sorry, second question on renewables. We are starting to hear from some players in the United States that we went from a very tough situation in January, February, March to actually a very constructive situation right now with less competition, clients very willing to sign PPA double-digit IRRs. Do you have room -- well, first, do you agree with this? And secondly, do you have room in your business plan to accelerate the bit renewable investments in the U.S. if the situation were to continue? Last question, much quicker. On the 2031 growth rates, if you keep EUR 15 billion -- more than EUR 15 billion investments per annum, where do you see the growth rates in the bottom line at that point, still mid- to high, high single digit, mid-single digits, any indication you can give over and above what we've seen in the slides? Thank you for your patience.

Okay. So I think if -- we see in most countries, I think they needs the demand -- Latin demand is huge, cannot be covered now. I think we saw the another day in Spain is our network is saturated at 90%. So if not our networks of all the colleagues. So I think they are almost 60,000 megawatts of demand of new users of electricity, we cannot be covered. Let's say the good is, I make always some correction of that one. Let's make then half of it is speculative. So even if you speculate the 30,000 megawatts of new needs is huge. Nevertheless, with today situation, our demand is growing. So even with this constraint, the demand is growing. And I think I can tell you the number of people which are sending me letters just to try to accelerate the connection to facilitate whatever is huge. So all in data centers. Data center is huge. But in data center, we are making the first one, we are making close to migrating [indiscernible] And only that one is consuming 1 terawatt hour. It's not 1 terawatt hour, one center. What they -- is representing 2% or 1.5% of the total demand of Spain. So one, I think we make as much as is today demanding that is huge. But I think same with electric vehicles. Electric vehicles, Spain is the number of new cars, electric cars is 5%, 8% of the total. But I think Portugal, is 25%. And other countries is 50%. And why? Because we have not enough -- we have charges we [ knock on Nexion ] because still there are already this lag. I think I'm optimistic about the demand is going to boom. I'm optimistic about those numbers. But nevertheless, I said, and I insist on that one. I think I don't know how many plans we have already made. Always, we have already made more than what we planned always. We're always very prudent, very conservative approach. So Pepe makes some sensibilities. He makes some comment on that one. If the demand increases more than we are expecting, in that case, the prices have the trend to increase that one. We are seeing in the United States. The prices in this moment in the United States is booming. Why? Because demand is booming and there are not enough power for covering that one and automatic prices increases. So how much it should be? I think sure you have better analysis than myself on that one. But certainly, we will insist all our analysis is based in conservative approach. I think it should be the first time if we are not exceeding the plans we made. I think Pepe mentioned, 2026 -- in 2025, we are going to make more than we are expecting in the half of 2026. In '26, we will exceed by far 2025. So I think that is how we are working because the plan is not a plan. The plan is the beginning of continue working for achieving more things. So we are not already fixing this target. We are fixing this target as orientation, but we have to do more. Renewable U.S.A. room. Well, I think we have to be realistic. I think we have pipeline. we can name more, but realistic '28 is tomorrow, and I think to make already a wind farm in the state of Europe, it's taking longer. I think since the moment you start having the permits, construction, et cetera, you are already suddenly passing '28, saying that if they are projects in United States or whatever, which are already good profitability with good returns. I think, of course, we are going to look at those one. I said our strategy is not to close our eyes toward opportunities of making business. If there are opportunities, we will find out, don't worry. David will find out how to make some rotation and Pepe will find out some money for that. Don't worry about that one. I think we will make good business, we will make. But I think realistically, that's why we are showing you what are the projects which is in construction. So to give you the numbers that we are not dreaming, same thing we cannot be made. Its things which are in construction. 75% of those are already going to be built and generating cash flows before 2028. Another 25%, you are already pilot, we can be already putting part of them in operation part, but I think it's there on that one. Even more than that, we will see, of course. There are not already limitation, not in the stage that we will contract. In our good business, we are ready to make those ones, and we will find other resources somewhere else, don't worry. We're not making any [indiscernible]

Javier Garrido here and then after Peter Bisztyga.

Javier Garrido, JPMorgan. I just have 2 questions. First would be the Chairman. You have mentioned the word transformation a few times in your presentation. What about transformation via M&A? What are your thoughts about -- particularly, if I may, a specific opportunity in German networks, I mean it ticks a lot of the Iberdrola boxes, developed markets, transmission, what would you think about such a move? And then second question would be, as stated to your willingness to take on opportunities and your vision about demand growth, what is your view about building CCGTs? There was a time when Iberdrola built a lot. You have a big fleet in Spain. But outside of Spain, there might be big opportunities in different markets. What's your view? And is that view driven by environmental drivers, more driven by economic drivers. How do you see it?

So the first one, transmission in Germany. We know that one very well, but we are going to participate in that one. Our M&A is fully already done. I think we would like to come to this CMD with our -- all our financial resources secured and all our, let's say, potential M&As already done. So I think no M&A is any one idea on this plan, certainly in the German, we are going to. So clear as crystal clear. No way, we already in this one. The second one related to CCGTs. I think our approach is very clear. So I think energy policy is made by countries, by government. We are not making that one. I think it's the country decide what to do. There are countries would like to make nuclear power plant like France. There are countries would like to make offshore like Britain or like Germany. And now in the United States, they have been looking for renewable and they are saying that they would like to -- not against the renewal, they would like to base -- to use the base load in gas. I think in the previous term of Mr. Trump was looking for coal. So -- and I think it's the same question somebody asked to me, we are going to make things with coal mine. If we combine the coal power plant. It's not. That's why I think no -- we are not opposed to any kind of technologies. It depends on the country. But I think being realistic, 2028 is tomorrow. And tomorrow is those ones you have in hand. I think if you start now thinking what to make CCGT in countries with a policy as to us to make this one cannot be probably in operation before 2031, probably '32, first because they are not turbines, they are not [indiscernible], they are not connected. So that's why our plan is 3 years is tomorrow. And I think tomorrow, we are renewables, those one we have in construction, 70% construction and another one ready to build in [ Mediadran ]. Networks with a great case, which is a sign of very advanced negotiation of that one. We have visibility and some pumping storage, what we are in this moment already just in construction doing or starting -- that's it. So 2020 is tomorrow. The maturity of our project takes 5, 10, 15 years. So I think you have nothing in hand, we cannot show these numbers. So this number is based on something we have in hand, not in possibilities, those on, not M&A, not renewables more than those one we have here in hand, no more whatever. So just based on that one. So -- but I think I see on that energy policy made by countries. So in the countries -- we are in a country saying that -- now they are saying, we need you for investing more in networks. So we are investing in networks because they like to invest in networks. So that's the point.

Then Gonzalo and after Rob...

It's Peter Bisztyga from Bank of America here. So 3 questions, if I may. First of all, could you talk about the supply chain for networks, particularly vis-a-vis your significant transmission investment in the U.K. How confident are you that you can deliver the projects along the time line that you've set out for actually both 2028 and 2030. So that's my first question. Secondly, in the U.S., your current allowed or achieved ROEs are quite a bit below your allowed ROEs, particularly in Maine. There's also quite a lot of focus on the upward pressure on energy bills in the U.S. at the moment. Do you see any risk that regulators will push back on your rate case requests and that you may fail to achieve the returns that you're targeting in that region? And then my last question, maybe a short answer, maybe a long one, but could new nuclear ever be part of your strategy?

So supply chain, so I think Pedro has already mentioned that 95% of our supply chains for networks is already local production in this country, so which I think -- and second is, I think in the case of U.K., a few years ago, we launched just an auction quite bit for contracting already for securing this -- the transmission and distribution equipment, which we feel is going to be needed. So if you don't remember that, it was already EUR 5 billion [indiscernible] French people for already securing that one. Now we have already slots for the most critical items. In certain of those slots, even is funded by -- because we pay some amount of money by the regulator, by [ ODM ]. So I think we would like to secure our cable by 2028. Cable is already an advanced payment, which is regulated payment we have already got for putting that in operation. And the rest of the equipment is already just agreed in terms for securing all those ones. I think the most critical item was, if I don't remember that, we are already cable, one of them and converters. In both cases, both things are fully, fully secured. I think there are another one we had in the past in other countries. We are [ problem ] with transformers, which I think now that is fully secured. We are already moving transformer with -- moving transformer from Brazil to United States, and moving transformers in to Europe another one, but now it's fully, fully secured all those ones. So I think we are not seeing risk on the supply chain at all because we made this thing in advance. We secured already the slots for having already this production ready in the time we require and we pay for it. So which in the case of Britain even is already paid to us by the regulator. Return on equity [indiscernible], Pedro?

I think in the utilities, you mentioned CMP. Remember, it's at the end of the year when you have the full year. So that's why during the year, you may be up or down a little bit, but we are on target to achieve the ROE in CMP as well. The only utility that we do not have right now the ROE is Connecticut because it's under litigation. So if we were to be successful in litigation, we will be -- it will be the third year in a row to achieve all the ROEs that we have. You mentioned the pushback by people. I think to have a securitization bill just for us in New York this year with full approval in the Senate and the House in Albany, I think it's outstanding to have $300 million recovered. So that shows the relationship that we have. All the [ storms ] recovery in Maine, you will have this afternoon, the team here will explain it. It's not stopped in the last 18 months in both states. So from that point of view, I think the pushback 3 years ago, inflation 10%, and we managed to get the rate cases 3 years ago. We don't have that pressure right now. Remember, the part of the consumption by an average family in New York or Massachusetts on Maine, the electricity bill is actually one of the smallest compared to gas fuel for the car, with telecom expenditure, with rentals, with actually retailers expenditure, et cetera. So I think we have good arguments.

So I would like to use this opportunity for mentioning that Pedro has already done an extremely good job in the U.S. last year. So I think as a result in 2025, we are achieving a lower return on equity for almost all our rate cases. I think this afternoon, again -- they can confirm today. We have a better rate case negotiation. I think the relation with regulators is extremely, extremely positive. I think you are doing a very, very good job on that one. We have almost no penalties, so which I think that was an important thing. But nevertheless, I think that this afternoon, we will have the detail. But as well, as Pedro mentioned, I think we had problems of cash collection. We are improving a lot on this term as well. So I think that is a reality. I think our business in the United States is becoming a very solid, consistent, predictable and attractive area of the group. And that's why we are already just beating very much in our plan to continue making so. I think they are a very strong team, which is making that one. And I think Jose Antonio and [indiscernible] is going to follow the trend of Pedros and with the team that has been created for continuing that one. Related to nuclear, so I think if I already related to CCGT is that in best case, the first one cannot be built before 2031, 2032. We talk about nuclear power plant, probably no one will be built before the '40s. I think it's the kinds of design, predesign, security, approval, et cetera, it takes dozens of years before you get this approval. So what is realistic? I think, for our side. So realistic also is that for our side for whatever is what the world is doing, is extending life of the existing fleet. So that is the realistic approach for keeping already the benefiting of the positive effect of the nuclear power plant in terms of competitiveness, in terms of environment, in terms of energy security, in terms of the law. I think recently European Commission, the President is already just considering nuclear as green. So it's not any longer treated as a special one. And I think all countries is already just increasing the life, which I think with little extra cost can already continue generating and producing in a safe -- in a competitive manner. So I think I used to say the engineer as an engineer, I can say the nuclear power plant has already demonstrated from the last 60 years, then they are safe, then they are -- they can provide a good service and they are a very good alternative for keeping the lights on as very alternative -- to other alternative that it was already called in the past.

Gonzalo in the back, Emanuel and after there is more question here. Sorry, after Gonzalo is the...

Gonzalo Sánchez-Bordona from UBS. I have 3 questions on my own. First one is related with the Spanish situation. I mean, obviously, Spain is becoming less and less relevant for the overall business. But I would imagine with a number of things going on in terms of regulatory developments or potential regulatory developments. I was wondering whether there's any upside to the numbers you've presented today on 28 specifically, if things go better based on what you've been publicly been saying on the regulatory review for distribution specifically? And whether do you expect any sort of advancements in terms of batteries, storage, hydro, potentially any projects coming on stream by '28, if that's even possible? So the first question, basically upside based on regulatory decisions in Spain. Second question is on the situation of Vineyard Wind in the U.S. We've seen a lot of turmoil around several offshore projects in the U.S., which obviously are not this one. I just wanted to clarify whether you expect any issues? Are you seeing any issues? Is the current situation stable on that project? And then the third one is, I guess, for Pepe, it's been made clear. You're not incorporating any sort of M&A or not expecting any M&A in this plan. But looking at the FFO net debt of 22% that you're targeting, it looks like there is a little bit of space there. So just wondering what is your like minimum threshold of comfort in terms of balance sheet and debt and whether that means there's room for potential opportunities if they appear at some point?

So thank you very much, Gonzalo. So I mentioned that energy policy is made by government. And government and the regulator has been already current or consistent with the energy policy of the country. I think that is the case of U.K., which I mentioned to you, so -- which I think the regulator is following the energy policy of the government. And I think in the case of Spain, I think the government is as well pushing -- making or trying to make in the related to networks, a policy which incentivate more investment in networks. So I think that's why I expect that the regulator taking note what is the energy policy of the country would consider the government, the networks is crucial for the future growth in the country. But nevertheless, in our case, it's very clear. So as you mentioned, Spain is the fourth in terms of our RAB. So we have another alternative. I think if we make more or less investment, it's not affecting at all because if we are not making such an investment in Spain because the conditions are not very attractive, there are plenty of planes where we can put the money there with better returns. So in other words, nevertheless, we are planning in the country in Spain, investing EUR 9 billion in the next 4 years, so in the next few years, which I think -- I saw yesterday, Iberdrola is the industrial company which is investing more in the country, in all sectors. So we are investing almost EUR 3 billion per annum. There are not many -- there are no one company in Spain, which is making that one. Same then we are the company -- industrial company, we are paying more taxes in the country. So I think it's 2 banks and ourselves, but industrial is the largest. The largest investor in the country in all sectors and the largest industrial company paying taxes. So I think that -- I think Spain is important for us, but it's very important for the country. And we would like to help the country as much as we can. But I think we have to be realistic. And I think if the policies -- if the decision of the regulator is not aligned with the policy of the government, I think they have to solve the differences in and therefore all these differences. The regulator is fully aligned with the energy policy of the country. And that's why it's already pushing us to make more things in an attractive manner.

Yes. I mean...

Let me -- I not already made this comment. So you can already -- as far as I know, Jose Antonio, I can tell you that today, 50% of the turbines are exporting energy in wind. So we are cashing money for those one. In a moment, with Massachusetts is desperately needed power. The prices are like that. And I think we are helping to the state to help to keep the liaison in a very competitive manner. So we have all the permits on that one and the construction continues already been in a normal manner, and we have not had at all any problem. And nevertheless, you have any comment on that one, Pedro, you can already complete that.

Probably the only comment is, as you expect from the Chairman and some of us is we're working with all the administrations all the time. Chairman and I were in Houston with Secretary Burgum and Secretary Wright. We were 2 weeks ago in Milan with them again. We have announced EUR 9 billion investments since the new administration was there. We've been helping New York in some of the conversations with the same. We have gas pipelines in New York. So if we are party to those negotiations. And I think this is a fully litigated project. There is not even one appeal pending on anything. So that's why -- and it's very cheap, this energy. So that's why right now, what we need to do is to continue working with the new administration.

We have some space, but obviously not for a big M&A, but taking into account that we always want to have opportunities there, for example, as we were commenting before, for example, we are not including the possibility of doing more offshore in the U.K. or we are not including here more renewables in the U.S. when people have asked about prices and demand. So we always like to have a little bit of margin because obviously, opportunities can happen and also margin is good for case things for whatever interest rates, the currency, whatever. It's always good to have some margin in the ratios.

[indiscernible]

Rob Pulleyn from Morgan Stanley. Just following up on that comment, Pepe, on the U.S. What would you like to see to invest incrementally in repowering the U.S. onshore wind fleet, something you've talked about in the past? And then secondly, Pepe, just 2 questions this time. Thanks for the clarity earlier on the EBITDA guidance. That was super helpful. If I can just dig into that a bit more. So the 2028 renewables and liberalized EBITDA implies EUR 8.1 billion. That's obviously down from 2024, includes the Mexico disposal, about 9.5 gigawatts of new capacity, very rough calculation. It seems to imply about a 20% decline in your customers' EBITDA over the period, which seems pretty conservative. Could we just understand the profile of what's in the assumptions for that guide, if we've got it correct?

Pepe, before you make this answer, I think I would like to tell you that in the case of repowering, I think we have repowered, if I had my memory, it doesn't fail, something like 150, 300 megawatts already -- which is already in operation. And I think now we have in construction another 400, 500 megawatts, which is in the list and Pedro has already put that there, which are in the construction repower as well. But as well, we have already making repowering in Spain. We are making repowering in U.K. And I think we have a strong pipeline for continue making in the future, but that is economic thing. I think it has sense we make. If it's not sense, we are not making. So -- and we have already -- in those ones, we are repowering. I think what the expectation is a good return, over 200, 100 basis points. I think certain is already an advantage because we have a lot of things we have not to repeat, and I think that's good.

You're exactly correct in your number in clients, we have a 20% fall in the EBITDA, as you say. I think the Chairman has said or Pedro that we are assuming that, for example, we don't increase even despite the fact that on the macro numbers, we are assuming that there is a demand increase. We assume that in case of our client business, we are flat during the whole period. Obviously, that is a relatively conservative assumption. And the other element, obviously, we come from prices that were higher in previous year. We have a relatively long-term policy. And obviously, as we renew some of the consumer prices, obviously, as prices normalize, we have less margin coming from that. And these are the 2 elements that drive this 20% decline in the consumer EBITDA.

But as well as in Mexico, which is not...

No, Mexico -- you had already...

500 million.

Manuel Palomo?

I will stick to 3 questions as well. The first thing is about the Spanish investments. Because if I'm not wrong, compared to the day of the capital increase, it looks like you've changed a bit your mind regarding the evolution of the RAB in Spain. I think that at that point, you were pointing to pretty flattish RAB. However, today, you're looking at a significant growth in the coming 3 years. And I was wondering why the change in mind or whether you can anticipate anything else about how the regulation will look like in the future? That's the first one. Second one is on demand. And again, in Spain, you seems to be quite well constructive on the Spanish demand that I guess will be largely reliant on artificial intelligence, data centers and so on. But at the same time, you are assuming the pre-agreed shutdown of the nuclear. And I wonder to what extent it could be coherent or whether that shutdown of nuclear could maybe [ escalate ] some of the newcomers asking for electricity demand. And lastly, I wanted to ask about -- a bit about numbers because I was looking at my model and historically, the EBITDA to net profit ratio was around 33%, give or take. But for the year 2028, it looks like that ratio will increase consistently -- well, a lot up to above, I think, 40%. So I was wondering whether you could share with us if other than maybe some decrease in minorities, you're assuming a much lower tax rate or -- well, if you could give us some light, that would be great.

Well, I think the first point related to investment in networks in Spain. I think you have to be aware that still we are keeping the cap. So we cannot invest as much as we like. I think they improve a bit, but I think they have already put a lot of restriction. We have to be approved investment by investment. They will supervise all those ones. They are not already in an open door to make what we like. I think we will make what the regulator allow us to make. So it's the first thing. So I think -- even though I think we are already putting a number, we consider which is the minimum needed. But still that number is not already approved. So I think they have to approve case by case and supervise all those -- things which is not in another country. In other country, we have a broad analysis globally. And with that, go ahead. They are already putting more restrictive thing on this one. So that's why I think with this one, the RAB is growing. You are -- the RAB is moving in 2 directions for one side is reducing the depreciation and increasing with the investment. If investment is not much higher than the depreciation, the RAB is not growing. So I think that's the point. If we are depreciating for $500 million or $600 million. So if we are not making more this investment of that one, the RAB will maintain flat. So I think that's the way. So in terms of the nuclear, -- so well, first, the demand is growing in Spain. I think the demand in Spain is growing all Europe. But the main reason why it is growing more is because this limitation of the grid. I think as I mentioned, there are 60,000 megawatts waiting to be connected. Even half of this one are already speculative, still 30,000 which represent a lot of new demands on that one. Nuclear, I mentioned already, they are closing nuclear, I think the first power plant is going to be closed by end of 2027. It's going to affect 2028. I think we are -- [ Almarab ] we have 50% of that one. That's why the effect is 500 megawatts in a fleet of 30,000 megawatts. So you can see it's relevant for our total power on that one. So only with those power plant we have now in construction, I think it's more than covering those net. So -- and another one related to the EBITDA net profit ratio, Pepe?

Yes. Well, clearly, as we were mentioned, as we are increasing our stake in Avangrid and in, obviously, the minorities are falling. I'm making the numbers, and I don't see such a large difference as you were saying. But in any case, we can -- I can review it with you. But clearly, our minorities from '25 to '20 they are going to be half of what we...

And then James Brand, no, after Ahmed, please, sorry.

Ahmed Farman from Jefferies. A few questions from my side. Firstly, on the 9.5% return on equity, could you give us a little bit more granularity on that number? I'm just trying to understand sort of the scope for upside, downside to that. Does that include outperformance? If not, then -- and anything you can say about the regional makeup of that number? What's the sort of the number behind for U.S. or U.K. or some of your key markets? My second question is on electricity sort of demand sensitivity. Sort of the sensitivity, it sounds like from what you were talking about earlier, is fairly conservative and does not include the potential margin effect if this was certain scenario to come through. Could you talk a little bit about actually the volume that might be uncontracted within the portfolio and the business plan that can benefit from upside in electricity demand. To help us just understand the upside potential to your 2028 net income guidance? And then finally, you've given us a very clear guidance on net income and outlined very clearly the underlying drivers. I just wondered if you could help us a little bit about with the profile of EPS as well, particularly starting from 2024 as a starting point, when could we expect the dilution effect from the equity raise to be offset?

Okay. Pedro, can you already clarify the related to return on equity?

Yes. I think this is a weighted number. And I think you see one of the slides in the U.K., we're assuming 8.7% as the number for those calculations, we wait because of the weight of each of these jurisdictions. I think in the U.S., it's 9.5%. That's a very homogeneous number all across the jurisdictions. Remember, FERC regulated, it goes up above 10%. You can be around 10.5%. So that's the number for the transmission part, which is FERC regulated. And in Brazil, we're using 16.4%. I think in Spain, as I said, approximately 8% -- 7.8%, that's the number we're using for those calculations. And no upside, no earnings sharing or anything like that above.

Sensibility to demand and upside potential in EPS analysis, Pedro?

Well, I don't know if -- we have a number, which is quite good on increase in demand of 1% per annum from what I have and the impact on prices. And this could have relatively impact on the net profit, which is quite nice. But I don't know if the Chairman will allow me to tell the number.

EPS?

And well, in EPS, it will be similar because obviously, we are assuming the same number of shares during the whole period. So it will have a similar impact. I understand the increase in demand. How the EPS grows during -- well, it goes a little bit less than the net profit because obviously, we have a little bit more numbers of shares. We are going from 6,140 to 6,550. If you divide by the 7.6, this more or less gives you [indiscernible].

[indiscernible] a very simple manner. Why we grow at high single digit in EPS at high single digit in both cases.

You can find the number of shares considered in the flight of the dividend explained by the Chairman. James Brand, Deutsche Bank.

It's James Brand from Deutsche Bank. A couple of big picture questions. First is on renewables. Obviously, you've stated your enthusiasm for networks, but you're also obviously investing quite a lot in renewables as well, but you have a clear preference for networks. In the renewable space, we're still seeing very aggressive targets from governments. And it seems like there's less capital going into that space in a way given that some utilities are pulling back, some big oil are pulling back. I guess the question is like why are we not seeing a significant improvement in the competitive environment in renewables that would make you be as enthusiastic about renewables as you would be for networks given those drivers? And then the second question is on demand. You've kind of talked about this potential of kind of 2%, maybe 3% per annum demand. But we -- in Europe, at least still haven't really seen any demand growth in a lot of countries. We've seen a little bit over the last year, but it's been pretty muted and demand is still often 7% below where it was pre-energy crisis. So how confident are you -- long-term, I think everyone believes in high demand. But if we look at, say, the next 5 years through to 2030, how confident are you that we're actually going to really start to see this demand growth come through?

So I would like to come back to the first question. I think we are not becoming enthusiastic about networks against renewables. I think we are consistent what we have already our vision of 25 years. So I think we are already investing a lot of money in renewable. We have 60,000 megawatts in construction or in production and there are 9,000 megawatts in construction. So I think we are going to invest EUR 20 billion in this plan in renewables. Well, in those what we have today, let's say, in construction, we are not already dreaming to say that we are going to make things that we cannot already still even the permit from making so. I think we are EUR 20 billion. I don't know how many people is putting EUR 20 billion in the next 3 years in renewable. Give me the list of my colleagues to see how many is putting EUR 20 billion, first thing. But the second thing is that we have the opportunity which to participate in a very, very good manner in the new era of the electrification. And the new era of electrification is not only passing for renewables that we did, it's passing for networks -- and I think we have the fortune that we have already a present and a footprint in countries with are already waking up about transforming the country to come to the new electrification. That's why -- that is the sense of our transformation. Then we have the chance that our vision of 25 years now is not only is in renewables, where we own 60,000 megawatts, and we have already another -- we are putting another EUR 20 billion for the next 3 years already in renewable, but as well benefiting of this extremely huge demand of new infrastructure of transmission and distribution with very good return with stability, with predictability in countries with very demonstrated and very good rule of law, and that is what we are making. So we have the chance and the opportunity of benefiting of this new era of electrification with same thing we were benefiting of our investment in renewables in the last 20 years. Now the opportunity benefiting of our investment in networks because we have this opportunity. Those ones which are not in Britain cannot invest in Britain in networks, those ones which are not in New York cannot invest in New York. So I think as simple as that, I think we make -- we are first movers in networks. Same thing that we are first movers in renewable when nobody believes the renewables is going to become already such energy solution. So I think that is the point. I think we've been ahead of rest of the people. We have the vision, we have the execution, and we continue with our vision and making the execution. EUR 20 billion renewables, I don't know how many people put in EUR 20 billion and almost EUR 37 billion in networks because we have the opportunity, because we are in those countries. There not very many people are there. So it's very, very restricted. So it's not something that the transmission in U.K. are 3, what we can benefit of this transmission, which distribution in New York. So I think there are 2, but we are there. That's it. It's no more, which I'm not allowed to me, okay?

Jorge is saying [ good day ] today and for us. And we will welcome [ Pablo Cuadrado ] that is around whether no JB capital.

So 3 questions related with Spain. The first one is if you can clarify the remuneration scenario that you have in the guidance, namely in terms of financial rate of return and OpEx lines evolution. The second is related with the evolution of supply margins, if we can assume that in Spain over the long run, they will stabilize above where they were before COVID. And the third one is if we could see some upside on the storage. You have a very good advantage in storage in Spain. If you could invest more if the occasion arises, if you could develop new assets of storage -- of pumping -- hydro pumping in Spain?

So I think the first one is related to networks in Spain -- remuneration. Yes. So I think we are already putting something what we consider that is already something which is minimum that one. As you see even though the numbers we are putting are far below those of another country we have present. So that's why the -- our expectation is that has to increase. But nevertheless, that is a work has to be filed by those. We have not another alternative. So I think it's not -- we have another alternative. We have to invest in networks. If the conditions are not the good ones, we can go another countries. Our colleagues there have to fight for improving that one, and we will benefit of the work they need to do if they would like to improve their results. So related to supply margins, I think if I understood well, it's true. We have already had some extraordinary margin after the COVID. So we are -- I think you mentioned the word normalizing. So we are coming to normal times, one which has a logic, which I think if I understood well, it's true. We have already had an extraordinary margin after the COVID. So we are -- I think you mentioned the word normalizing. So we are coming to normal terms of this one, which has a logic, which I think is the prices which are similar to those one which are in the rest of Europe, so which I think especially Portugal and France, we are similar level. Storage, of course, we have -- Pedro mentioned, we have another pipeline, but as well it's 3 years, it's tomorrow. So to make the storage, even it's changing the turbines, it takes longer than that one. I think even if we would like to make probably it will start somewhere else, but it will not be operative in this framework period. So I think we continue and their plans. I think you mentioned 3,000 megawatts of another alternative for making that one, but I think realistically, it's impossible to be made. So you have to take into consideration that I'm already an engineer. Sorry, the numbers are already -- the numbers have to be something behind. And we cannot put numbers if I, as an engineer see the realistic cannot be built. And I think here the things that are realistic, we feel can be built, not numbers which can be written and afterwards, we don't know how to be built. I think when I sit down with my engineers, I would like to show numbers that realistically we can already afford.

Okay. More questions from the room? Okay. Thank you. All the questions from the web has been already answered. We are around 25 minutes ahead of schedule. So as we say -- as we say in Spain [Foreign Language], so good things if brief are twice as good. So Mr. Galan...

Thank you very much. I think it has been a very, very constructive session. So I'm more than delighted to have the opportunity of replying all your questions, always as intelligent as normally you make. But I think be sure that all the questions you make force ourselves to reflect. And I think this target you are fixing and this question you are fixing about what is the potential upside on that one, we are going to work on that one because certainly, as I mentioned in the beginning, the plans are the plans to be fulfilled, but not only -- has to be already over fulfilled. And I think your question helped to us to make so. So thank you very much, and now we can already enjoy with some drinks, and we can already share your thoughts personally. And this afternoon, you will have the session with those ones which are already making this company transformation and this company transformation in business with more networks and more -- in countries to become more a class action and the new era of electrification with transforming Iberdrola in this growth company in the [indiscernible] sector. So I think I would like that you make as much question that you make to us today because I'm sure that they will have already a better answer than we have already for you. So thank you very much, and now we join all of us for the drink. Thank you. [Break]

Good afternoon, everyone. I hope you're enjoying the day. We now move to a topic that sits at the core of Iberdrola's long-term strategy, our investments in networks. In these sessions, we're going to take a closer look at how we're building resilient modern infrastructure in our 2 key markets, the United States and the United Kingdom. We're going to start with the United States. And for that, we're joined here by these senior leaders, Jose Antonio Miranda, the CEO of AVANGRID; Kim Harriman, Deputy CEO of AVANGRID; Joe Parrington, President and CEO of AVANGRID Networks; and Justin Lagasse, the CFO of AVANGRID. This presentation will be followed by its own Q&A session. So please feel free to ask questions. I'll introduce that session afterwards. And that's it from my side. I'll hand it to Jose Antonio. The floor is yours.

Good afternoon, everyone. Thank you for staying with us after the lunch. That shows a lot of commitments, so that's going to make it worth it. As you have heard in the previous presentations, the investment related to our regulated business in the U.S. is an instrumental part of Iberdrola's plan. So we will dedicate now this time with you to take a deep dive on the topic. I'm sure all of you know that Iberdrola owns 100% of AVANGRID, which operates 8 electric and natural gas utilities in the Northeast, serving a population of more than 10 million people, mainly in the New York state and the state of Maine and also in a smaller footprint in the state of Connecticut and Massachusetts. Our regulated business is a combination of transmission, subtransmission and distribution assets, which are remunerated through different mechanisms. Some assets are regulated at the federal level by FERC and some others at the state level in the so-called rate cases. AVANGRID was created in 2015 through a consolidation of different acquisitions to shape what we are now proud to tout as a first-class performing utility company. Especially during the last 3 years, thanks to the team under the leadership of Pedro, we have seen a leapfrog improvement in different areas. We were able to settle and agree stable multiyear rate cases successfully in both New York for 3 years and in Maine for 2 years. And based on a sound project execution, we were able to achieve the returns on equity allowed in all the rate cases with the exception of Connecticut, which is under litigation. We endured and succeeded in continuing the project known as New England Clean Energy Connect, NECEC. It's a 1,200-megawatt high-voltage DC system, a transmission infrastructure that is delivering hydropower from Canada to New England, mainly to Massachusetts. We are happy to share that this transformative project is now in its last month of commissioning phase. We consistently deliver our financial targets year after year. As an example, we enjoy an adjusted net income of more than $900 million in 2024, out of it, $769 million in networks. And last but not least, as a result of all above, we greatly improved our cash flow generation and our credit metrics. And what is more important, we did so while improving our quality of service, meaning improving the frequency and the duration of the service interruptions to our customers who are always the center of our attention. As you can see from the charts, we have transformed operations with measurable results. The average duration of interruptions have improved nearly 20% since 2021. And overall customer service metrics in the compliance has improved from 75% in 2021 to 90% currently. This continued operational excellence is instrumental for delivering on our goals as it mitigates regulatory penalties, protects earnings and consolidates the reliability of our financial targets. But the most important message for you today is not about what we have achieved in the past, but about what we plan for the future. And for that, we need to understand the current environment that we are living in. The harsh reality is that the infrastructure in the U.S. is really old, in urgent need to be replaced. The volume of assets requiring upgrade or replacing is staggering. Transmission has become a critical bottleneck across the entire country and the need for the expansion of the grid is uncontested on both sides of the aisle and supported through a clear bipartisan agreement. Reinforcing the grid is not a nice-to-have luxury, it's a must-have if we want to keep the lights on. This is even more crucial in light of new electricity dynamics in the demand, and it's well known that the demand of electricity is shifting in U.S. and specifically in the Northeast from a past of declining electricity use to a searching need of electricity due to electrification of many activities as transportation, building, reshoring of manufacturing and the exponential growth of data centers. At the same time, in the last years, we have experienced more severe weather-related events than ever in recent history, underscoring the need of a resilient and modern infrastructure to serve properly to our customers. In summary, there is a clear consensus that AVANGRID'S activity and focus is now even more needed and important than ever before. The grid is facing 3 undeniable challenges: aging infrastructure, limited capacity to support demand growth and increasing severity of weather events. That is why we are committing $13.6 billion in transmission, subtransmission and distribution investments between '25 and '28. 65% are directed to replacing obsolete assets and modernizing the grid topology. 20% is focused on expanding capacity to support electrification and economic growth. And finally, 50% targeted to resilience and hardening against the storms. This balanced allocation allow us to fix today's issues while preparing the grid for tomorrow and delivering reliability to our customers. Importantly, a significant share of this spend is already secured. And in fact, $5 billion of the '25-'28 investment plan is already authorized, while the remainder, as we have seen, are investments addressing critical maintenance and modernization works that cannot be deferred any longer. We have a clear focus not only in distributing energy to our customers, but also in enhancing the transmission and subtransmission systems that allow such energy delivery. This results in over $22 billion in planned investments through 2030, with transmission and distribution equally important in the plan. And now my colleagues, Kim and Joe will explain in some more detail why we are confident in a successful outcome of our recently filed rate cases and why we have all the means to execute them spotlessly during the next years.

Thank you, Jose Antonio. The regulated investment opportunity for our company is tremendous. And as you have heard from both the Chairman, Pedro and Jose Antonio, the need is real through the rest of this decade. Our investments are recovered through federal and state mechanisms that provide predictable and stable frameworks. Moreover, a significant amount of that investment we have proposed, as you've heard, has already been supported or approved by federal and state directives. Because getting to the specifics -- before getting to the specifics of our investments, as you see on the slide here, it's important to understand the regulatory structure in the U.S. As a regulated business, through the filing of rate cases and other mechanisms, we are able to recover the costs and a reasonable return associated with serving our customers under the laws, rules and regulations of each state we operate in. We file rate cases to update our rates to reflect current and forecasted cost to serve and earn a reasonable return on our investments. And in fact, in New York and in Maine, we have recently filed 5-year rate plans for consideration. A little bit about the process of a rate case. Each case starts with the filing of thousands of pages of testimony and exhibits. They detail the cost to serve our customers, including CapEx and OpEx plus depreciation and a reasonable return. Stakeholders intervene in these cases, and they ask questions, sometimes thousands of questions. They file testimony where they provide their own input to the regulator on what should be permitted. And in response, we provide testimony detailing why we believe the investments are necessary. After the cases have all completed the filing of testimony, the case can go to litigation before an administrative law judge, which would entail cross-examinations and briefs. But often, the case goes to what we call settlement. And this is where the stakeholders and the regulatory staff and state agencies come together to discuss a path forward for resolution. Successful settlements, every one that I've ever seen always includes an agreement among the stakeholders. So stakeholder management is key and critical, and I believe at AVANGRID, we excel. With respect to the intervention process, and they do this on a voluntary basis, we work with each stakeholder to identify their needs and their wants, and that has recently included the unions who have become vocal advocates for our filings speaking from a firsthand account of what it takes to run the electric system and advocating the importance of positive regulatory outcomes to support the workforce and economic development. Now make no mistake, our interaction with all of these parties is constant and not limited to the filing of a rate case. We hold thousands of meetings with them during the course of a year. I mean thousands, I mean thousands from state agencies to the regulators at both the state and the federal level to key customers, environmental organizations and other groups. And we want to educate them about the condition of the current grid and the challenges it faces in keeping the lights on while we meet state policy mandates and our customer demands. These meetings, in addition to rate case-focused meetings, ensure stakeholders understand the why of our rate case before we file, which increases the likelihood of settlement. Our New York and Maine teams have put the legwork into providing the best foundation possible for successful rate case outcomes, which, as we know, is foundationally built on the investments needed to maintain grid resiliency, reliability, meet the electrification and the other demand growth for the future. Okay. Now I'm going to get into this slide, which is our distribution investment forecast. For 2025 through 2028, we forecast USD 6.3 billion of investments for our electric distribution system. These investments include -- included in our current rate plan in New York as well as the recently filed rate cases for New York and Maine for a multiyear period. They represent significant investment in growing our capacity to serve our customer needs, replacing aging infrastructure and hardening the system. In New York, we have seen positive regulatory outcomes, which includes the current 3-year rate plan we're in, which provided for an over 50% increase in rates. We have successfully achieved language certifying cost recovery, and we have an unprecedented passage of a law called securitization and swift regulatory approval that when taken together, the regulatory language certifying recovery of cost and the securitization of the storm costs represent nearly $1 billion in value for the company. New York's distribution investments comprise 60% of the USD 6.3 billion in planned investments and are focused on recovering state-mandated policy costs, including infrastructure investments to support deployment of broadband and electrification of buildings and transit. Our rate case filings come on the heels of rate decisions from the state regulator, including a recent decision issued for National Grid U.S., who achieved a 3-year settlement at a 9.5% ROE. Our rate filing also focuses on the capacity expansion of our distribution and subtransmission systems to meet growing customer demand, some of which is notationally approved under current state policy requirements. And as you've heard from the Chairman and Pedro and Jose Antonio, the electric grid in the U.S. is expanding. And in New York, we are no different. I'm going to give you a data point that I think really exemplifies growing demand. We have portions of our system that have received a 135% increase in customer connection requests between 2022 and 2024, with the size of those customer load requests increasing 93%. This is an important data point because the state law that requires all buildings to move to electric doesn't take effect until 2026. So we're not even seeing yet the uptick in electric demand from that act alone. It's already happening by inertia. We anticipate second quarter 2026 negotiated resolution of the New York rate case for a multiyear period, which at a minimum will cover the 3-year investment period. In Maine, we have seen great success as well, achieving a 2-year settlement in our current rate plan, which was the first multiyear settlement in many years. We've seen swift approval of our sale of Maine Natural Gas and timely recovery of USD 446 million in storm costs. As Jose Antonio mentioned, increasing storms, aging infrastructure and growing customer demands are driving our investment plan in general and in particular, in Maine, which represents about 22% of our $6.3 billion investment plan. State regulators in Maine have provided guidance for our electric rate case through 2 dockets, a storm resiliency and an integrated planning docket. Those dockets examine how to strengthen the grid and what the utility of the future needs to be in order to meet customer demand and electrification of buildings and transit. The rate case filing made earlier this month for Maine takes direction from these 2 dockets and provides resulting capital investment plans to meet the demands of the regulator and the expectations of our customers. The case is focused on investments that harden electric grid, minimize disruptions of power and grow internal crews for responding to storms. And these steps will help minimize storm costs in the long run for our customers. In addition, we're proposing a significant growth in distribution investments to support growing demand for electricity consumption, a trend we see for years to come. For Maine, we anticipate a negotiated resolution for a multiyear rate plan in third quarter of 2026, which should cover at a minimum a 2-year period, if not more. Lastly, in Connecticut, it's our smallest part of our investment plan at only 16%. And we are happy that there is change on the horizon with the recent announcement of the resignation of the Chair of the state regulator, a development we hope will result in the lessening of the current hostile regulatory environment and more credit supportive decisions. Regardless, we remain vigilant in our capital investment program, keeping investments at the pace of depreciation to minimize exposure and to remain disciplined. We are focused on ensuring rate recovery of all investments in operation for our customers and minimizing any lag in the recovery of those investments. Lastly, our gas companies in Connecticut, CNG and SEG received rate decisions in December of 2024, and we expect our electric company, UI, will receive a rate determination in the fourth quarter of 2025. But again, keeping our investment plan consistent in the electric case with levels equaling depreciation. Now let's turn to transmission. AVANGRID has a clear path to invest USD 7.3 billion during the 2025 to 2028 period and we will continue this pace of investment through 2030, reaching nearly USD 12 billion. 50% of our New York investments for transmission are currently underway and provided for in the existing rate plan. In our filed rate case, we are continuing these investments and looking to reinvest in the foundation of a transmission system. 18% of our New York-focused transmission investments are comprised of 2 items. The first is what we call Powering New York. This is the investment plan that is directed by the state climate law. And it contains transmission investments that, in fact, the state regulator have already told us we need to do in orders issued by the state regulator in February and September of 2021. In addition, we have secured approval for the cost recovery mechanism in July of 2024 for the second part of Powering New York, which comes at the federal regulatory level. Included in our New York rate filings that we provided, the only thing we're asking for is for the cost recovery of the projects I just mentioned under the 2 directives issued in 2021. So this is not a question of do we need the projects? It's a question of they're going to confirm our costs and they will include it in rate recovery. We also belong to a joint venture in New York with other New York utilities to focus on competitive transmission projects. And we were recently awarded a contract by the New York Electric Grid operator for construction of a transmission line to build out grid capacity. That line goes from the northern shore of Long Island into Westchester. And the joint venture is always looking for more work to do in the years to come. Lastly, Maine represents 22% and Connecticut represents 10% of our 2025 to 2028 transmission investments. These investments will focus on rebuilding aging infrastructure under what we call the asset condition program at the federal level and expanding transmission capacity to meet growing customer needs. Cost recovery for these programs are done by the federal regulator, where regulatory structure is highly predictable and provides a swift process annually, and that includes a robust return on equity. Transmission investments are unique in New England. They favor and they are spread across multiple utilities in multiple states. And it reflects that when you make a transmission investment in the New England region, generally, that investment is done for the benefit of the whole region. So instead of just our main ratepayers paying for the transmission investment, it actually gets spreads across all the New England states and all the electric customers in those states. Now it is my pleasure to turn the presentation over to Joe Parrington, our network CEO, who will provide a little more detail around the basis of our rate case investment proposal and how we intend to deliver on our plans.

Thank you, Kim. At AVANGRID, as Pedro and Jose Antonio and Kim have mentioned, not only our geography is different, our regulatory environments are different, but our systems are much different. To further illustrate this, in Connecticut, our customers experienced first quartile reliability, while in New York and in Maine, our customers are experiencing fourth quartile performance. The capital cost invested per customer in Connecticut is amongst the highest in New England, well compared to Maine and New York, which are among the lowest. Therefore, our investment strategy focuses on New York and Maine, where the system needs are the greatest. We have completed a comprehensive system assessment of our electric transmission and distribution systems, this effort, coupled with our maintenance and inspection programs, which are using AI technology, including drones for structure inspections, provides a holistic view that allows us to prioritize our grid investments. This slide illustrates a snapshot of some of the planned system improvements. In New York, we serve 1.3 million electric customers and our service territory covers 21,000 square miles from Western New York, where we can receive over 100 inches of snow annually to Eastern New York, where we can feel the impacts of coastal storms. The New York system consists of 60,000 miles of mostly uninsulated obsolete and undersized conductor in a noncontiguous service territory. The foundational background elements are age and the need of upgrades. For example, the New York system has 725,000 poles that are greater than 50 years old. That's 53% of our infrastructure. Additionally, severe weather in our New York service territory resulted in approximately $775 million of storm costs in the last 3 years. In Maine, the system is not much different. The most heavily forested state in the U.S., our service territory is 11,000 square miles. Approximately 60% of the 680,000 customers live within 20 miles of the coast, where our system is battered by coastal storms. From 2022 to 2024, storm costs averaged $180 million annually, which is almost equivalent to our distribution capital system investments. Our main system consists of 25% of poles and over 50% of substations operating beyond life expectancy, along with 90% of our 25,000 miles of conductor uninsulated against tree contacts and undersized to meet load growth. Meeting the expectations as electrification accelerates means our systems need foundational investments to meet the forecasted demands, smarter through technology, thousands of reclosers, stronger through construction materials, tens of thousands of steel poles versus wood poles we use and more resilient with hundreds of miles of installed insulated wire with redundant sources and enhanced vegetation management programs. The unplanned repairs that we are performing are far more costly than supporting a robust capital investment portfolio that addresses aged assets, relieves capacity constraints and modernizes our grid to improve reliability while reducing storm costs. Our regulators recognize that the model of underinvesting is not sustainable. Our relationships with suppliers and service providers are execution enablers. Our supply chain team is recognized as one of the strongest in the U.S. and in our industry. They are focused every day on ensuring we have the materials needed while negotiating the best prices for services. We are fortunate to be part of the Iberdrola family. The power of global company ensures that we have options for materials that other U.S. companies do not have. However, in the U.S. alone, we are partnering with over 7,000 suppliers across 50 states, including $4.3 billion of investments in 2024. The value of multiyear rate plans and transmission investment portfolios allow predictability for our supply chain team. They can then capitalize on securing materials at the enterprise level versus individual operating companies. This results in lower costs and improved supply chain readiness. The dedicated purchasing professionals establish early supplier engagement sessions to secure cost and schedule certainty. This is most important for multiyear projects with specialty equipment like the New England Clean Energy Connect project and the Powering New York effort. Relationships in our industry matter. Having strong construction partners at a national scale with regional expertise provides us options. This, coupled with our forecast in materials, securing long lead time equipment while preserving capital flexibility are foundational to our success in executing projects where other companies fail. Circling back to the benefit of being an Iberdrola company, I'd like to illustrate one example that the Chairman mentioned earlier in his comments. Recently in the U.S., when the industry struggled with distribution pad transformer availability, we were able to swap manufacturing slots with Brazil to overcome the production cycle slowdowns in the U.S. This allowed us to meet customer commitments again when other utilities could not. Our organization stands ready to deliver. Understanding the reality of investment needed in the grid over the next decade requires focusing on operational and project discipline. We need a clear accountability throughout all levels of our networks organization. That shift started with Pedro Azagra. Over the last few years, we have migrated to a jurisdictional model, providing each operating company the necessary structure to simplify execution. Building internal expertise is the cornerstone of these changes. To that point, we are in-sourcing key functions historically performed externally. This includes purpose-driven teams like project execution and dedicated planning and scheduling teams to drive efficiency and schedule adherence. Projects being on time and on budget are the capstone of our efforts. Simplifying our construction standards and materials provides the groundwork for repeatable quality across our projects. Establishing uniform processes, including certification of both ISO 14001 and 45001 service guidelines for completion of our capital investment plans. We are demonstrating our ability to execute. The execution of the New England Clean Energy Connect project will start generating electricity into the New England market, as Jose Antonio mentioned, 6 months ahead of schedule. Energy costs are top of mind for our regulators and our customers. They are also top of mind for us. We have to demonstrate value of service to our customers for the price they pay. Our nonstop focus on how the system is performing through daily reviews of the previous 24-hour operating periods have established a culture of operational excellence. Every day, we are working on the system, making it smarter, stronger and more resilient. The system upgrades that we are implementing are targeted at improving reliability and reducing unplanned expenses associated with outages while improving customer satisfaction. Examples of this are numerous, implementing a ground-to-sky vegetation management program versus our normal maintenance programs. Utilizing materials like steel poles versus wood poles to better withstand the weather extremes we are experiencing, installing insulated wire versus bare conductor, implementing an automation program targeted at reducing the number of customers impacted by each outage, using AI to help determine the best investments, negotiating flexibility in work schedules with our workforce to reduce overtime expenses. The results speak for themselves. In the last 4 years, we continue to see significant improvement in reliability metrics. Over this period, safety has improved by 10% and SAIDI 19%. These foundational actions provided opportunities to change how we communicate with our customers. Real-time updates to our customers who now receive outage alerts within 15 minutes of a sustained outage, additional communication on the progress of restoration, including when restored. These results have been significant. Our Net Promoter Scores for customers who experience an outage have improved by 17 points, which equates to 950% in the last 4 years. Furthermore, our customers' experience has been enhanced through a variety of easy-to-use tools. For example, our customers now receive usage alert messages to inform them of current usage and any usage patterns that change so that they can identify anomalies prior to receiving a bill. Our Energy Manager solution allows customers to quickly review what time periods the usage peaked. In today's virtual world, we're adapting how we -- how our customers want to communicate with us. Using AI on the front end with live agents on the back end provides our team the critical tools needed to quickly respond to customer questions. Our efforts have resulted in a 15% improvement in our customer service metrics in the last 4 years. Bottom line, we are poised for success moving forward. Thanks for your attention, and I'll turn it back over to Jose Antonio.

Thank you, Kim and Joe, for providing this granularity and color to our investment plan and our execution. As a summary, this plan will result in a growth of our rate base. You can see an increase of more than $8 billion since 2024 compared with 2028. And we have to remind that in 2020, it was only $10.7 billion. So we are reaching or projecting to reach by 2031, $32 billion. That means a double-digit compound average annual growth above 11%. On Networks EBITDA, it is forecasted to grow double digit on average per year in the same period. This plan is based on delivering solid, stable, predictable long-term value through the incarnation of our strategy based on the following pillars: first, top line certainty provided by multiyear rate cases, reflecting on the need of electricity as a result of the aged infrastructure and the consumption growth. Second, stable, predictable returns provided by FERC-regulated transmission asset growth needed to solve grid bottlenecks and to maintain and replace the old infrastructure. Third, improving the customer experience by providing a resilient grid, strong preparedness and moderate equipment, resulting in Avangrid as a flexible and affordable energy provider. And finally, world-class execution. Avangrid is uniquely positioned because we have the knowledge, we have the people, we have the means, we have the purchasing power, and we have the financial strength to execute and deliver our transmission and distribution investments for the years to come. Thank you all for your attention to our presentation. And now we open the floor for question and answers.

Thank you to our speakers for such insightful presentations. And now we'll open the floor for questions. First, we'll take all the questions from room. [Operator Instructions] And then after that, we'll move on to those that are connecting via webcast so that all those remotely connected can also join. So let's start, Javier Garrido. No, it's not working. Wait a second. They're working...

Can you hear me now?

Yes.

Javier Garrido from JPMorgan. And particularly, thank you for a lot of detail on the drivers of the bigger investment plan. What I was missing was a similar level of capillarity on your returns. So if you could elaborate a little bit on where you see you can get to that 9.5% allowed ROE where you think it's going to be more challenging, thinking particularly in the distribution business because transmission FERC regulated is totally different space, but it would be interesting to see why you think you can close the gap with the allowed ROE on a sustainable basis compared to what has happened in the past. That would be the first question. Second question would be on what is your views, your judgment on the regulatory noises that we hear every now and then. I mean, sitting on this side of the pond, it's difficult to have an accurate view on how realistic and headlines that we hear every now and then from state senators here or some regulators there about the need to tighten the allowed ROEs in a context where power prices are increasing, where affordability is coming to the fore. So what is your take on such comments?

Thank you, Javier. Well, first of all, about our returns, we have achieved our allowed ROEs in the past -- actually in the last years, and we see that we are also in a good path to achieving in the future. And as you said, very well said, FERC has normally a higher return, okay? And then in the States, you have compared with FERC a lower return, but always in this mix that finally is giving us the 9.5% that we are projecting. About the regulatory noises, well, maybe here, the best thing is to be factual. And just very recently, National Grid got approved its rate case in New York, which is our main jurisdiction, right, by far. And the approval was for 3 years at 9.5%, similar level of the returns that we are envisioning. So we think that we are in the range of what we have seen in New York, but also we see it recently in Florida and in other parts of the country. And maybe, Ken, you can give some more color to it.

So I think that the best way to sum that up is the Chair of the New York Commission recently during the deliberations, not only on National Grid, but on Central Hudson, which had outcomes similar to each other, said very bluntly, you can't get electricity for free. And then there was a discussion among the sitting 7 commissioners talking about the laws that are passed in the state that demand the investments that they're having to approve. So I think there's 2 things. One is the facts are we have to invest in the system because the law, the regulations and the orders require it. Two, the commission acknowledges that and the decisions that they've rendered. And three, we are working round the clock to talk to every legislator. When I said thousands, sometimes I feel like I've actually participated directly in thousands. But we have teams that are located in New York in every region of the state, over 15 of them, and they deploy at the local level and the state level. And the other thing we're doing is we're bringing them to see the investments. We have had multiple tours of substation work, new conductoring, and we explain to them how their money is basically at work, and then we tie it to the projects we proposed in the current filed case. So it's education, it's recognition of results of actions from state legislators and regulatory bodies, and we have a very positive regulatory environment in New York. And I don't think Maine is any different from this. As I talked about, there was a grid resiliency plan and an integrated grid plan proceeding where they brought all the stakeholders in and they said, this is what we expect the system to do, storm response and how are you going to integrate electrification of buildings in transit. They set the rules of the road. Our rate case filing responded to that signal and put in investments. Question is, how much investment, what's the pace of it and when does it happen? But our assumptions are conservative, and there is plenty of capital demand between all of our network states.

Any other question? Oh well, everything is very clear.

It's Andrew Moulder from Credit Suisse. I'm probably going to be cheeky because I'm not asking a question about networks, but I am asking one about the U.S., and I figure you guys are well placed to answer. I really just want to know what the mood is in New York and in the U.S. towards offshore wind? I mean we hear Trump and all his pronouncements and everything else in Ørsted. But I also hear that you haven't actually written down the value of your lease areas connected with, I think, some of your offshore projects. So I guess that means you do actually expect offshore wind to come back sometime in the future. So could you perhaps just sort of summarize what the view is that you have of U.S. offshore wind?

Yes, happy to talk about power a little bit. Well, first of all, as was commented by Pedro and by the Chairman this morning, our Vineyard Wind 1, which is the offshore wind farm that we are building as we speak, now is more than 50% operational. It's delivering energy. And I think we are in a good trend to continue finishing in the next months to come. And then as you are saying, correctly saying, we have other leases in United States. We have to maybe remind that we didn't acquire the leases through very expensive auctions that others did in your bite, et cetera. In our case, we bought the leases at a very, let's going to say, affordable price compared with what you could see later on in these auctions that I mentioned before in New York, right? And yes, you're right. I mean, I think these leases, they are there for the future. And there is a long runway for them to be exploit because they are unaffordable to maintain. And therefore, we have to see in the future if there is any change and there is any possibility to move forward. The only thing that we can say is that we will be always very prudent. We will move forward only when we see that this is creating value to the society, to the shareholders. And also that in New England, there is no many other options. If you want to really have the power that you need for the future, probably offshore has to be part of the equation. As any other source of energy, we are really very much resonating on all of the above, thinking that every electron that you can produce in the country will be absolutely needed. So let's say, let's see what happens in the future.

Gonzalo Sánchez-Bordona from UBS. I have one question, it's a little bit of a follow-up. Most of the bigger part of these plans are based on rate cases that have not been finished or completed yet. So I'm assuming you probably -- I guess this is the question. Are you taking a conservative view on the investments there and particularly in the context of inflation. Obviously, it's slowing down a little bit, but there continues to be a situation there. So I guess the bigger question is, how conservative are you on those assumptions, and whether you see room for having more investments? And same sort of approach also for the returns, I mean, you seem very confident that returns are improving. But obviously, this has been an issue in the past for Avangrid in terms of the achieved versus the allowed ROE. I understand the energy dynamics and the energy demand evolution, obviously, is quite different now than it has been historically. But any color -- I mean, you provided already a little bit of color, but I was wondering whether we're looking at a conservative plan and things could get better from here or you are pretty sure that this is basically what it is.

Yes, Gonzalo. Well, the intent is to have a prudent plan always on the table. That's the intent. Actually, we saw that $5 billion are already authorized, okay? And you have also to remember that an important part also of the investments, they are FERC related, not only the rate cases are incorporated into the port, into the numbers, right? And we are expecting to close, as we said in the morning, the rate case of Maine somehow in the third quarter of next year. And then the duration, we are filing for 5 years. But even if finally, it were 3 or 2, still, we will be covering the '28 period that we are discussing today here. In the case of New York, we are expecting to have a solution for the rate case in around Q2 2026. And again, the same thing, we're filing for 5 years. But even if we had 3 years as we have now today, we will be covering the whole '28 period. Yes, there are more opportunities, but we are not putting them on the table because we want to be prudent with our numbers. And something that is really staggering and for you, for the people that has been visiting U.S. recently, the reality is the infrastructure is very old. We have, as Joe mentioned, we have really a very high percentage of our assets, but they are 40, 50, 60 years old. And here in Europe, sometimes we complain about 30-, 40-year old in U.S., we say, well, not that old. So yes, that's the case that we are facing. So we think that the numbers, they are prudent, yes.

Ahmed, over there.

Ahmed from Jefferies. Can you just remind us what is the overall allowed ROE today? And what is the achieved ROE expectation for 2025? And then talk a little bit about the path to this 9.5% because it seems like sort of a lot of the rate cases in distribution business are going to be in 2026. So is this really 9.5% a number for '27, '28? And then, let's say, you don't really see a huge improvement into '26 and then there is a step improvement. I'm just trying to understand what's the starting point and the profile.

And again, I want to say that you -- in order to make the compound, you have to do an average between FERC and the rate cases. And the FERC system is quite different to the rate cases because it's just based on prudent investment that is reviewed every year. That's it. So Justin, maybe you can give a bit more color on it.

Sure. So to answer your question, if we look at our current composite ROE as it sits today in our distribution rate cases, it's around 9.2% across our jurisdictions. And as Jose Antonio said, for transmission, it ranges from 10.6% up to 11.7%. So when you take the composite of both the distribution and transmission ROEs, you're effectively just below 9.5%. As we consider what is the evolution of the ROEs in the forward periods and how do you consider that, recall that the main rate case was agreed 2 years ago, the New York rate case 2.5 years ago. And if we understand what happened with interest rates, interest rates have gone up. That's why you have seen more favorable, let's say, ROE outcomes in New York. So as we look into the evolution of when to expect, whether it's in '26, '27, '28 for this ROE, we're almost already at the 9.5% ROE because of the transmission investments. In addition to that, we're investing more heavily, as you've seen in the plan, into transmission. So that's also going to help with the weighting of the ROE. So therefore, it drives higher ROE on a composite or consolidated basis. In addition to that, we would expect higher ROEs out of the outcomes, which again will be for the second half of '26.

Well, apparently, now everything is very clear. So thank you very much to our presenters. Now we move on to the U.K. Thank you. Okay. Moving on to the U.K. We have here today our panel of experts composed by Keith Anderson, Scottish Power's CEO; Nicola Connelly, Scottish Power's Energy Networks CEO; Guy Jefferson, Scottish Power Energy Networks Transmission Managing Director; and Stephanie Prosa, Scottish Power Electricity Northwest CEO. As before, you will have the chance to make questions after the speeches. And now I'll just hand it over to Keith. Keith, the floor is yours.

a Thank you, and welcome. Thank you for staying. It's been a marathon. We're doing well. I think Pedro set us the challenge earlier that we were to be entertaining. I can guarantee informative whether we keep to entertaining, we will see, who knows. Look, just a quick overview first of what we're talking about in terms of the U.K. and the network business. So historically, when the company was set up, we owned Scottish Power Transmission, which is the transmission business in Central Southern Scotland. And the distribution business in Central Southern Scotland as well. We celebrated the 30-year anniversary of acquiring Manweb and bringing that distribution into the company back in 1995. And that was just after the market had opened up in the U.K. and deregulated. And then last year, obviously, we announced the intention to acquire Electricity Northwest, and we completed that transaction and all the regulatory hurdles this year. So that now gives us the 3 DNOs and the 1 transmission business, which is fantastic for the future of the company. Obviously, you see the geographic synergy. It's very obvious. We've linked the 3 DNOs down that West Coast of the country, and that brings with it lots of benefits for us. One of the biggest things it does for us it allows us to distribute electricity into some of the biggest cities across the U.K. So we're now the distribution company for Edinburgh, Glasgow, Manchester, Liverpool, Warrington, Blackpool, Preston. So we're a huge part of the U.K. and of the DNO network. We have a RAV of knocking on the door of 13 billion, over 170 kilometers of cable, and that makes us the second largest DNO in the country. The acquisition of Electricity North West and bringing that in to Scottish Power, the timing of that couldn't be better. We're part of the way through ED2, but we're lining up for the next big increase in investment in distribution at ED3, and we're now perfectly placed to take advantage of that. So let's look at this from a U.K. perspective, what's going on in the U.K. I think it's fair to say in the last 12, 18 months, the political and regulatory discourse in the U.K. has shifted and changed. It all used to be about decarbonization and decarbonization is still important. But the risk course has shifted now to being as much about security, reliability, demand growth and more critically probably is U.K. economic growth and the linkage of that economic growth to electrification and the need for better infrastructure. Our American colleagues joked about the age of assets. We think 35 to 40 years is quite old. But it is a system that we've lived off for a number of years. And maybe just anecdotally for a second, earlier this year, we dismantled Scotland's oldest transmission line. It was 100 years old. And while on the one hand, I could very proudly tell you that's because Scottish engineers are the best in the world, and we build assets that last. The truth is, as a country, we've lived off infrastructure our grandfathers build. And what we need to do now is invest in infrastructure for the future of the country. And that's the mission we're on as a country and as an investor in this country. We're investing now in the future generations. We're investing in infrastructure for our grandchildren. We're investing in infrastructure that will be fit for purpose for the 2040s, 2050s, 2060s and beyond. That's what's driving the big uplift in investment, and that's also what's driving the conversation around speed. We need as a country to do this faster and faster to capture the growth opportunity and the economic opportunity. If you look at it from a demand perspective, you see the same thing. All demand scenarios that you look at in the U.K. will tell you the same thing. Electricity demand is going to increase. There can be some debate about when that big increase happens. Is it 2030, '31, '32? But the demand rises all the way out through the 30s. And the important thing is this is just not a short-term increase. That demand keeps growing through the 30s and out to the 40s as well. And you see that demand being driven by all sorts of things in the system, but it is sustained growth, and that's the growth that delivers value for us. As I said, the U.K., probably the U.K. and bits of Europe had been more focused originally on decarbonization, whereas other economies such as China and other parts of the world were probably more focused on electrification first. And the U.K. is now switching. It's not that decarbonization is not important, but the U.K. knows that electrification is what will drive economic growth in this country. Unless we keep electrifying and improve the infrastructure in the U.K., we will not generate economic growth. And that's what delivers, again, that big opportunity for us. In terms of economics, this is also part of the driver. You heard earlier, the U.K. system is jampacked and that's driving constraint costs higher and higher. Constraint costs right now are running at about GBP 2 billion per annum that consumers pick up. If we do nothing to the system, the projections are that probably in a few years, they'll hit GBP 8 billion of constraint costs because of the increase in demand and the increase in need to connect to the system. So we need to manage that. This investment will get rid of those constraints in the system. It will deliver a better system, a more secure system and a more reliable system. And that flexibility and security is part of that transition and part of the goal and part of the opportunity. We need to be able to drive economic growth, the length and breadth of the U.K. We need to have a system that is more secure and a system that allows us to shift power in a much more efficient and faster way. And you can see on the right-hand side of that slide, the amounts of power that we need to shift around this country to maintain the system, to keep the system stable and to allow that economic growth. So again, that security, the speed, the flexibility, all equals increased investment, increased growth. So why should you be confident about this? I know you'll all believe me, and you should be confident in me, but you don't need to just listen to me. This is a story that is backed by all the critical organizations in the U.K. You have the system operator, the independent system operator driving the Clean Power 2030 plan. To deliver that plan, these investments must take place. The U.K. cannot deliver clean power without this massive wave of investment in the transmission system. You have Ofgem at the heart of this. They've already delivered the draft determination for T3, and that determination allows all of these investments to go ahead. Ofgem wants this investment to happen. They believe it's the right thing for the system, the right thing for the future of the country, the right thing for consumers. We have a government 10-year infrastructure plan sitting behind all of this. That infrastructure plan is inherently linked to electrification and to the investment in all of this infrastructure and we are working really, really closely with the government to drive this forward and to build that relationship. In fact, in the last 2 weeks alone, the Chairman and I have met the Prime Minister, the Chancellor. We've met the Secretary of State for Business, the Secretary of State for Energy. We've met the First Minister, we've met the Chair of Ofgem and we've met the Chief Executive of Ofgem. This is an ongoing day-by-day conversation about how we deliver this and how this benefits the whole of the country. And again, all of it is about economic growth, energy security, decarbonization. And it's not just about doing that now, it's about doing it for the next 20 to 30 years. So for Scottish Power, for Iberdrola, what's the size of the price? What does this deliver? As you heard earlier, what it means is in the U.K., 70% of our investment coming forward is going to be in our networks business. That is driving the bulk of our investment. In the period from '25 to '28, that's knocking on the door of GBP 12 billion of investment going into that network system. If you look at what does that mean year-by-year, historically, we've been delivering about GBP 1 billion a year of investment into transmission and distribution. That grows from now to GBP 3 billion a year. It's all about that big step-up in investment, grabbing that opportunity, and it's about speed and speed of delivery. This is in effect our commitment back to the government. The government are saying they want the infrastructure. The regulator is putting in place the regulatory settlement to allow us to make the investment and our commitment is bringing forward the money, delivering the projects, delivering the investment, seizing the opportunity and giving the U.K. economic growth. I'm going to hand over to Nicola now, and Nicola is going to take you through some of the detail of exactly what is that we're doing, what we're delivering and how we do that over the next few years. Thank you.

Thanks, Keith, and good afternoon, everybody. So in the next few slides, I'm hopefully going to give you a bit more insight into the Networks business in the U.K. and a bit more detail on what we are spending the money on and why we are confident that we can deliver our plan. We've heard from every speaker today about the growth in electricity demand as society increases the reliance on electricity. This societal decarbonization will drive unprecedented growth over the next 2 decades. Across our distribution network, demand is forecast to double as we accommodate over 10 million electric vehicles and heat pumps powered by over 5x current levels of renewable generation. During ED2, we've been laying the foundations to accommodate this growth. We'll be spending GBP 6.8 billion from 2025 to 2028, the vast majority of it during ED2, bringing our total 5-year expenditure in ED2 to GBP 7.4 billion. Some examples of what we are spending that on, we are deploying a low-voltage network strategy to proactively upgrade the network so that customers can safely connect the electric vehicles and heat pumps when they want to connect them. And this includes upgrading electricity supply into over 50,000 homes, increasing to over 500,000 homes in the longer term. We're accelerating over 5 gigawatts of renewable generation connections and facilitating a pipeline of over 20 gigawatts through innovation, to maximize the use of existing capacity and infrastructure to install new capacity, using advanced data analytics and rolling out wide-scale enhanced network monitoring to increase network visibility to ensure that we can make capacity available when our customers need it. We're in the process of developing our RIIO-ED3 business plan for the period 2028 to 2033 to be submitted to the regulator next year. ED3 will continue to build on the foundations laid in ED2 with a forecast totex growth of between 30% to 50%. This will include increased investment to meet capacity requirements, strategic investment to provide capacity in areas which provide regional economic benefits, enhancing network resilience, reliability and customer service and investing in our people and supply chain to increase our delivery capacity. This sustained growth is forecast to continue over the next 2 decades, taking us into ED4 and beyond as networks provide reliable capacity to meet the country's decarbonization needs. In transmission, in line with the rest of the sector, we will see investment levels increase substantially from T2 with the needs case for the vast majority of it already confirmed. In the period 2025 to 2028, we have almost GBP 7 billion of investment planned to replace and reinforce existing infrastructure and build new infrastructure across our transmission network. This investment will bring a range of benefits to the country and the consumer, reducing the country's reliance on energy imports and lowering wholesale costs by stimulating greater competition in energy markets with 66 gigawatts of connections critical to the government's CP 2030 targets. In transmission, we are in the process of recruiting 1,400 roles. That's 1.5x more than in T2 at a time when the renewable sector is downsizing. And across GB, this investment provides 11,000 long-term boost to jobs, GBP 2 billion long-term sustained stimulus to GDP and annual savings on customer bills from the avoidance of around up to GBP 8 billion per annum of constraint costs. The T3 draft determination was issued by Ofgem in early July of this year, and our detailed response to that can be found on our website. We welcome the positive movement in the T3 package from the sector-specific methodology, and we were encouraged by the positive feedback on our best-in-class engineering justification papers. However, when the final determination is published later this year, we hope that it will detail a package that can deliver the 9% to 10% nominal returns that we believe are required for high-performing networks. The scale of change in transmission from T2 to T3 is unprecedented, and we think that there are levers that Ofgem have at their disposal to get us there overall. During RIIO-T3 and beyond, we're investing in a number of strategically significant projects. The largest of these are the HVDC projects, which transport large amounts of electricity in both directions from one end of the U.K. to the other via subsea cables. Eastern Green Link 1, EGL1 is a new HVDC link between the Torness area in East Lothian in Scotland and Hawthorn Pit in the Northeast of England. It has the capacity of 2 gigawatts, which is enough electricity to power 2 million homes. The route length is over 180 kilometers, the majority of offshore, and it connects our new Branxton 400 kV substation. This is a joint project with National Grid. [indiscernible] agreed with Ofgem, contracts are in place and construction started earlier this year. Eastern Green Link 4 is a second HVDC link this time between Westfield in 5th in Scotland and Whirlpool in Norfolk in England. Similarly, it has a capacity of 2 gigawatts and its cable length is over 640 kilometers, of which over 100 kilometers is onshore. We will rebuild the existing Westfield 275 kV substation to 400 kV to connect EGL4 as part of a coordinated development with the [indiscernible] onshore project also connecting storage developments. And Western Link 2 is a highly innovative 2-gigawatt multi-terminal HVDC link, which will also integrate an offshore wind farm. We'll build our converter station in [indiscernible] with an onshore cable to a new switching station in Southwest Scotland, and the switching station will connect the developer's cable to the offshore wind farm and Scottish Power transmission cable to North Wales. We also have a number of onshore projects, reinforcing the network and increasing the capacity across the border between Scotland and England and facilitating the connection of onshore wind. These projects will add over 500 kilometers of new 400 kV overhead lines. We continue to drive tangible value for customers through our strong operational performance and continuous improvement. A key area of focus is the reliability and resilience of our network. This is amongst our customers' top priorities, and our focus on this can be demonstrated through the downward trend in the customer minutes loss metric over recent years. Throughout ED2, we've been deploying new technologies, control systems and over 4,500 network controllable points to enable increased automatic reconfiguration of the network during faults. This reduces the number of customers impacted by network faults and the duration of any interruptions. Our focus on working with customers to enable their connections is demonstrated through our customer satisfaction scores at both transmission and distribution. This is against a backdrop of around 500% increase in connections activities over the past few years and supporting our customers through a period of change as the industry reforms the connection queue. We consistently exceeded a stretching target, which measures how satisfied our customers are with the full connections process from pre-application to completion. We've maintained and improved this despite a massive increase in the numbers of connections and a queue of over 800 gigawatts, which is 4x that required for 2030 and double the 2050 requirements. The NESOs connections reform process to prioritize first ready, first needed, first connected developments has been challenging for developers. So it's a real credit to our teams that the scores remain high and have, in fact, improved. This excellence in network resilience, customer service and innovation has been recognized by the industry in a number of awards. The Chairman and Keith talked earlier about the political and regulatory support for the scale of investment in networks in the coming years and specifically the Clean Power 2030 plan. Often, the focus is on transmission because of the scale and complexity of the large transmission projects, but it's distribution investments that will deliver the real electrification of our customers' lives. Investment in distribution will enable customer decarbonization, and it requires innovation to maximize the availability of existing capacity alongside the delivery of infrastructure to provide new capacity and safe -- maintain a safe, secure and reliable network. Some examples include, as part of our low-voltage network strategy to proactively upgrade the network, we've already delivered over 12,000 domestic service upgrades to customer homes, along with the upgrade of the wider network in the same areas to ensure that they are future-proofed. We've deployed over 10,000 LV monitors to provide real-time data enabling smart solutions like network automation. These complement our data and analytics activities using smart meter data and digitalizing our network planning tools to understand when, where and how we need to intervene in the network to accommodate long-term growth. We've accelerated over 5 gigawatts of connections activities through the use of network automation and load management schemes. We successfully pioneered and trialed the technology to monitor fault levels in real time, and this enables us to safely facilitate more renewable generation. And we've deployed advanced voltage control techniques at over 260 locations to provide class services to support the NESO with wider network balancing activities. These are the investments that will unlock the benefits of electrification and automation for communities, for businesses and for our customers. The scale of investment in our business is unprecedented. It's a once-in-a-generation opportunity, and we have the supply chain and the resource plans to make sure that we can deliver. We've reorganized our transmission business to bring a clear focus on T3 delivery and transformation plans are well progressed with the changes to be complete before the start of T3. We've carried out a strategic review of the skills and resources required to deliver ED3, T3 and beyond, focusing on recruitment, retention and upskilling our workforce to address any skill shortages. We're investing in our people, creating opportunities and supporting career development. I welcomed around 150 new apprentices into our team earlier this month, the biggest intake we've ever had with a similar number set to join our graduate program. 12% of our workforce are trainees well above the industry average of between 3% and 8% and a growing number of them are women with our highest intake of women in our training programs to date. Many of these trainees will work in and around their own community. We believe not just in investing in infrastructure, but also in people and in places. We're investing significantly in developing talent to meet our future requirements, for example, partnering with key universities to further develop and upskill existing staff on engineering, data and tech skills and collaborating with the industry and our supply chain to ensure resource agility and resilience. There's never been a more exciting time to be part of our industry for our existing workforce, but particularly for new apprentices and graduates. The growth opportunities in networks across multiple disciplines and the range of future careers open to our staff as part of the Scottish Power and Iberdrola Group makes us an employer of choice. This significant step-up investment also means we need to approach our supply chain differently. Our long-term strategic agreements secure capacity from 19 suppliers, giving them visibility of the forward order book to support their investment and long-term planning. These range from smaller local suppliers like [indiscernible] to larger global companies like Siemens Energy. The agreements contain flexible delivery models that allow us to contract specific works, for example, civils or electrical works or larger EPC works where we put together multiple scopes, which can include equipment. This allows us to make choices dependent on the project size and risk and seek to realize synergies where possible. Strategic equipment lead times have at least doubled in the last 5 years with some key items such as 132 kV cable, reflecting an increase of 4x the lead time. Our focus is managing risk via long-term partnerships, securing manufacturing slots and seeking to expand our supply base, for example, in the area of power transformers, where we've diversified and expanded our supply base and approved some suppliers in South Korea. We've placed over GBP 5 billion of supply chain contracts as part of our joint ventures with National Grid to develop the Eastern Green Link 1 and Eastern Green Link 4 projects. For EGL1, we've placed the cable and converter station contracts. And for EGL4, we placed the converter station contract and are currently at the preferred bidder stage for the cable contract. And we're contracting early on the EGL4 project due to the worldwide constraints in capacity to ensure that we've positioned resources to meet the program. We're also currently utilizing the advanced procurement mechanism, which allows us to secure supplier capacity earlier with regulatory certainty. This mechanism is essential to growing the long-term capacity of the supply chain and will help derisk delivery for RIIO-ED3 and beyond. The portfolio-based fund, which isn't tied to individual projects, increases flexibility in our supply chain engagements. This will allow us to have access to up to 20% of the estimated contract value to secure equipment and related services, and it will allow us to facilitate a larger and extended order book with the supply chain into the 2030s by securing further ahead of specific project needs. To manage our higher volume, lower-cost distribution requirements, we've secured local supply chain via long-term service and work frameworks. Our contracts allow these specialist contractors to seek to grow in the local communities in which they are deployed. All of our agreements contain flexible extension options, allowing us to reaccess the competitive markets where it's appropriate. And in line with transmission equipment, distribution equipment has also suffered at least a doubling of lead times in the last 5 years. Again, our focus is managing risk via long-term agreements, securing manufacturing slots and expanding our supply base, for example, in the area of distribution transformers, where we've worked to diversify our supply base and currently have 6 suppliers contracted across continents. We work closely with our contractors, building relationships and establishing ways of working to make sure that our teams work together to deliver, and we will continue to work with them as we build our EDC plan. Hopefully, this has filled in more of the detail to complement this morning's and the presentations earlier this afternoon. But I'll now hand back to Keith for some concluding remarks. Thank you.

Okay. Thank you. Thanks, Nicola. Hopefully, what you've taken away from Nicola's session is the reality of this, okay? These are real projects being delivered with a real supply chain we're securing with real innovation to bring efficiency to the future of the grid, and it's being delivered by real people that we're recruiting and training. So what does all of this mean for the future of us, for the future of the company, for investors for the country? I truly believe this is the ultimate and win-wins, okay? For the company, this gives us the growth. It gives us an investment opportunity. We get to recruit and employ and train more people and create careers for life, and we deliver value for customers and for the country. For investors, you get to come along in that journey, you get that investment, you get the double-digit EBITDA growth, you get the RAV growth and we get the returns. And for the country, we get the infrastructure this country needs it deserves and it wants for economic growth, for job creation and for wealth creation for the coming decades. If you look at the RAV bar chart there, you see that back in 2020, we had a RAV of GBP 7 billion. By '24, we virtually doubled it to GBP 13 billion. By '28, it will grow to GBP 20 billion. And when you get out to 2031, we'll hit GBP 30 billion in terms of RAV. So from 2020 in that 10-year period, we will have quadrupled the value of this business. And that's a fantastic opportunity. If you take that RAV and look at it most people in the U.K. would probably value a networks business at 1.4, 1.5x RAV. That's a GBP 40 billion to GBP 45 billion company we will have grown in that period. I get you in the FTSE top 20. This is a huge opportunity for us. It's an opportunity that's real. It's an opportunity that will create growth and it's an opportunity that will create value. So conclusion, I have one conclusion you can have 5, okay? Number one, the U.K. needs us to do this. Unless we and the other transmission companies deliver this investment, the U.K. cannot continue to grow its economy and it cannot add value. Number two, this is real. You just look at the real T3 draft determination. The government want this, the regulator want this and they're putting in place the mechanisms to allow us to deliver this. Number three, stability. The real mechanism we are familiar with, we're confident about. We understand it. We know it works. We know it delivers the returns and it will deliver that double-digit CAGR in EBITDA and RAV by 2028. Number four, this is for the long term. This is not a one-hit short-term wonder. This growth and this investment opportunity carries on through 2030, all the way through the '30s to 2040. This is a long-term growth opportunity for us. Number five is having confidence. confidence in the fact we've got the right people, we've got the engineering quality. We've got the engineering and design capability. We've got the supply chain, and we've got a track record of delivery. Thank you.

Thank you, Nicola, for your speeches. They were very interesting. So now we open the floor for your questions. But there, I have one question. Sorry, I can see you very well.

It's Dominic Nash from Barclays. Three questions from me, please. Firstly, on RIIO-T3. In the draft, I think you've got 5.65% real return. Can you just tell us whether you think that was good enough? And earlier today, I think we were giving guidance on your blended sort of 9.5% achieved regulatory ROE, the 8.5% was going to be expected from the U.K. Could you just give some color as to whether that doesn't seem like very much outperformance versus the 5.65%. Can you give some color on that? The second question I've got is when you're in the room with all your energy ministers and Ed Miliband all the rest of it. And I noticed that you have 3 priorities, energy security, economic growth and decarbonization. Can you let us know what impact on builds do you think all this spend is going to have? And are you worried that the U.K. consumer will be able to take that? And then finally, could you just give us some color on data centers and what conversations you're having with data centers connecting to your networks and sort of scale of that, please?

Sure. Thank you. So look, on T3 and the 5.65%, obviously, you inflate that up. So if you do that at 2%, that's up to 7.65%, 7.7%, okay? Ofgem right now are seeing in the T3 draft, they believe there are 200 basis points of incentives for us to go after. And that's one of the main conversations now with Ofgem between now and the final determination. One is about the base cost of equity and pushing that. But secondly, it's then about making sure there's greater clarity on the deliverability and achievement of the incentives and the incentive mechanisms. And there's still quite a lot of work to do there with Ofgem. The good thing is the 3 transmission companies were very, very strongly aligned. We're all in asking for exactly the same thing. We're in asking for exactly the same clarity. In fact, when we met the Chair of Ofgem yesterday, he quoted back to us almost virtually what we were saying to them from a conversation we've had with National Grid. So it's a big strong message. What I would say is the draft determination is good. If you go back to T2, when we're sitting with the draft determination, I think the expression we used with the regulator was they haven't just missed the target. They actually missed the wall, the target was stuck on. For T3, the draft, we're all in the same ballpark. We're there. We're close. It's about getting more clarity on the incentives. It's about getting more certainty about how you achieve those incentives and it's a bit of a conversation around cost of equity. So we are confident we'll get a bit more movement, but we're headed in the right direction with them. On conversations with energy ministers and secretary of states, et cetera, around security and decarbonization, look, the conversations are all very positive. But clearly, politically, all politicians, ministers are looking at costs, cost to consumers. They're looking at inflation, they're looking at the economy as well. I think Ofgem had stated when they looked at T3 and the network investment that it could be -- it could add about GBP 54, GBP 55 to an average bill. That's about 17p a day, okay? Now 17p a day doesn't sound like much, but GBP 54, GBP 55, that's the kind of number that starts to bother people. All right. If we do what we're saying we're going to do, which is we get rid of the constraints on the system, that puts GBP 55 back into the consumers' pocket because it reduces the cost of running the system. We create the jobs, we create the value, we create the manufacturing in the back of this. We directly are employing another 1,400 people. Our supply chain are employing somewhere between 10,000 and 12,000 people. And again, it's those jobs that create that. The apprenticeship scheme. Nicola talked about, we're bringing more apprentices in. When you go around communities, people might want to have conversations about bills and they have conversations about community benefit. But if you tell people the children are going to get a job and they're going to get trained in a career for a life, that's a huge value to people as well. And that's what we're going to do and what we're going to deliver right across the country. We're going to get people into work. We're going to get youngsters straight out of school, earning an income, getting a training and getting a career for life, delivering this future system and the future network, which is brilliant. On data centers, there are lots of conversations just now. You would have heard on the back of the state visit of the U.S. President, a huge wave or promise of wave of investment from AI companies, data center companies wanting to invest in the U.K. And that's one of the great things for us that is driving the political conversation. It's driving the economic growth conversation, which is this country needs this infrastructure we're going to build. Otherwise, that investment cannot happen. And again, that's a huge part and a huge boost of what we are doing is we will allow the U.K. economy to grow by delivering this investment. There are also specific conversations going on with the government about data centers and specific areas and specific zones, and we're involved in those conversations as well. Do you want to add anything?

No, nothing specific to add. I mean I think on that affordability point, the way that we can get those down in the long term, part of the answer is invest in networks. And thankfully, government regulation is lined up in that. And it's about making sure that consumers understand the impact. So the headlines in terms of the cost, you can make that GBP 50-odd. But when you look at that long-term benefit by investing in networks, we can potentially help move the country towards security of supply as well and decouple us away from that reliance on fossil fuels in Europe and therefore, have less price volatility. So for the long term, then absolutely the right thing is to continue to invest in networks.

Javier Garrido, here.

I have 2 questions. One is specific on RIIO-T3. One of your peers is not particularly happy with the capitalization ratio in the determinations. What is your views about that specific topic? And the second question would be, Keith, you have mentioned about further clarity needed on incentives, but I guess that's also on the flip side on penalties. And I was wondering what sort of risk would you see at this stage of not getting enough clarity and that jeopardizing some of your investment projects because we are talking in some cases of very long term, very complex pieces of infrastructure that historically have seen delays and could see delays. How big a risk you would see of not getting enough clarity and not feeling comfortable with delivering some of those complex pieces of infra?

Okay. Fine. So on -- on our competitor -- I won't talk about our competitors directly and where they are. But obviously, we -- each company has its own challenges. We're in a very fortunate position being part of the Iberdrola Group. And as Pepe made it very, very clear, we have the money secured. We know we can make these investments and deliver these projects. The capitalization rates for us are fine as a company, but each company has a different situation and a different challenge to tackle in terms of the size and scale of their investment compared to the funding availability and the capitalization rates. In terms of incentives and penalties, the great thing about the mechanism, the real mechanism is it has built into incentives, and that was always part of it. It was about outputs and delivering outputs. When I say we're looking just for some further clarity on them, it's really just the detail of how some of the incentives work. So for instance, we would like a little bit more of an incentive and a bit more clarity around the connections incentive because what we're saying to Ofgem is if the government are saying we want this, we want it done, we want it done on time, then you should be incentivizing us to hit connection dates and make that clearer. The incentives just around some of the innovation programs aren't particularly clear in terms of exactly how they get triggered and how they work. We are confident that will get sorted out by the time we get to final determination because these also have to be referenced to in the license and the license conditions we end up getting. So they will have to give that clarity and give us all of that information. On the penalty side, yes, we always knew, particularly when they brought in the accelerated strategic transmission incentive for the assay projects, there would be an upside and a downside. And we need to deliver on time, everything that's within our control. Again, there are safeguards built into that in terms of those delivery dates. If it's because of planning issues out with our control, then we get exempt from the penalty mechanism and we get relief, okay? So we think the balance of that risk reward is acceptable to us. I said we just want a little bit more clarity. In terms of potential delays, what we've always said, we said to the previous government and we said to this government, if you fix the planning system, you get stuff through planning, I originally said to them I would double our investment, but we're trailing our investment, okay? They need to deliver on that, and that's part of the work we're doing with them. They've made changes to the planning system. We're seeing further changes coming through. There's lots of engagement going on with local communities. But as a country, if the U.K. wants its economy to grow, it needs to have to learn how to build infrastructure.

James Brand from Deutsche Bank.

James Brand from Deutsche Bank. I had 3 questions actually, and thank you for the present. The first is, I think, unforecastable, but I'm going to ask you for a forecast, but the grid service costs such as redispatch that you kind of said some people think they could have gone up from 2 to 8 if there was no transmission infrastructure. Where do you think they will go? And obviously, a key determinant of that will be the next auctions for offshore. But some people are saying we need 15 gigawatts of offshore like in the next auction to hit the 2030 target, which I kind of personally doubt we'll procure that much. But are we adding this transmission infrastructure to deal with the renewables that were already there and we're going to need another wave to deal with the new wave of renewables. Just some thoughts on that would be super interesting because I don't see many forecasts out there. The second question is on the distribution CapEx. You mentioned that would take a step up at the next regulatory review. Could you give us any detail on where you think that might be going? And then thirdly, obviously building a lot of cables in the U.K. that go underwater to support future energy demand. but there's obviously been a few incidences of cables being cut. So I was wondering whether you could just share some thoughts on how you or other parties such as the government think about the security risks of building so many subsea cables.

Thank you. Thanks for the questions. In terms of future constraint costs, so I'm going to start throwing acronyms all over the place in a minute, apologies. Right. So quite a while ago, there was a piece of work done called HND, the Holistic Network Design, which was driven through the system operator working with the transmission companies. And then there was a second one beautifully called HND2, Holistic Network Design 2. Those design processes took account of the future generation needs and the future build-out and they've also been ratified by the Clean Power 2030 plan. So the current plans for investment in the transmission system, and this is also why we're doing the HVDC subsea cable lights, take account of the renewables that have to be built as well as what's currently on the system, okay? The only real -- I suppose the only real additional thing that's coming into play now is on top of Clean Power 2030 is the conversation about data centers and AI technology because the holistic network design and Clean Power 2030 to an extent, we're more focused on generation and how it satisfy demand and where we need to shift the power. But what we also need to do is take account of where are the data centers going to go and where are they going to suck power off the system and make sure the grid is also strong enough for them. There's also a huge piece of work going on just now around queue management. So the system operator has now put in place a new process for looking at what sits in that grid queue because the grid queue is also jammed. That's going to free up to allow more critically important generation projects to come through the system faster and push some of the other projects back up the system. It's kind of quite well documented that there are hundreds of gigawatts of battery projects sitting in the grid queue that are highly unlikely ever to be built. And so they will accelerate other projects on top of those and start shifting the queue around to make sure we get the right stuff built in the right place at the right time. And that all feeds into that Clean Power 2030 plan as well. Delivering that plan will avoid the EUR 8 billion of constraint costs. I'm not going to tell you it gets it to but we'll see, but it will significantly change the constraint management system across the whole of the U.K. And that's particularly around those subsea cables. They allow us to shift huge amounts of power north, south, south, north, and that's where a lot of the constraints currently come on the system. In terms of ED 3 and the shift to ED 3, I think we'll probably have hidden the way in some of the slides somewhere. But the likelihood is we think right now, you're likely to see a 40% to 50% uplift in CapEx when you move from ED 2 to ED 3. And that's the big opportunity for us. It's a brilliant opportunity as we have the same opportunity now with ENW. In terms of cables, yes, look, there's a huge amount of infrastructure under our seabed as a country. Not just electricity cables, gas pipes, telecoms, everything. And there is a lot of planning discussion and control with the U.K. government around the security of all of those cables given the criticality for infrastructure. Because we are classified as a C&I business, a critical national infrastructure business, we get direct conversations with the security services and with all of those critical teams in the government about how this gets managed, how it gets controlled, how it gets planned and how it gets protected. You would have seen -- I can't know earlier on this year, the Navy chasing a couple of Russian ships away from the U.K. coastline. It's a constant ongoing conversation.

Just pick up a bit on the distribution investment. So Keith right up to 50% step-up from ED 2 into ED 3. A lot of that is driven by the change in how we use electricity. And the Chairman touched on it a bit this morning. If you think about when the distribution network was built, predominantly people use electricity to light their homes. They had a coal fire, they didn't really have much electricity demand. If you look at the requirements for electricity now and particularly when you add electric vehicles and heat pumps into the mix, then our infrastructure needs to be upgraded. And quite often in many of the streets, I think I mentioned [indiscernible] program. So this is where the cables that go into people's houses, you need to almost separate them so that you can make sure they've got enough capacity in each home. And there's a program right across the U.K. that we are working on to do that. So a lot of that step-up in investment is to support that electrification of people's homes and businesses. And so that's really what's driving a lot of that big increase.

Ahmed from Jefferies.

Ahmed from Jefferies. A few questions from my side. Obviously, the regulation is structured in 5-year sort of time periods. But I wonder if you can just talk about the longevity of the CapEx cycle in transmission, U.K. transmission. Is this sort of the T3 is where the bulk of the work is done in terms of undersea cables, offshore gets connected and then it sort of tails off? Or are there already markers because of the health of the network, et cetera, that you see that actually this is a much longer duration cycle even if regulation is just structured in 5 years' terms? My second question is just on data centers. Is that a bigger lever for transmission network CapEx or distribution networks? So where does the sort of the incremental investment when we think about the RAV growth and associate that with data center comes in? And then finally, for T3 final determinations, is there sort of any sort of big point of discussion from your side on base cost allowances and where you need to see significant improvement? Or is that not a big point of discussion from your perspective?

Thank you. So I'm going to pass some of this to Nicola and Guy. I'll just give you a quick high-level response. Yes, it's CapEx life cycles do not fit beautifully with real 5-year life cycles, okay? So they work in different ways. So projects come in and out of a real period, some of them will have started before the period, go through it, some of them will start in the period and go out the other end of it, okay? And Guy can talk a bit about the CapEx life cycles and some of the big projects we're doing because particularly, again, some of the big HVDC projects have got a long duration CapEx investment. On data centers, just briefly, it kind of depends on the size of the data center, I suppose, quite simplistically. Some of them are below 50 megawatts. They're in the distribution system. A lot of them -- a lot of companies are talking about hyper data center, big huge big data centers. and you tend to find them wanting to focus in and around the Southeast of England where they're up 200, 300, 400, 500 megawatt, they'll be transmission connected, okay? Some of them looking for their own power sources. So there's all sorts of complex conversations around them in terms of how they fit in the system, where they fit on the system and how much power they need to draw down from the system. On a final determination, I'll hand that one to Nicola in terms of what's in the base and what else we're looking for. But Guy, maybe you want to talk about CapEx cycles.

Yes. I'm Guy Jefferson. So yes, we are moving into a long-duration cycle. Our transmission assets, in particular, can take up to 10 to 15 years from initiation to actual completion. I think Keith alluded to the HVDC link. That's a great example. Obviously, we're due to delivery EGL1 on the East Coast in 2029. EGL4, which we're currently out contracting for and just secured the major contracts for is not due to be delivered until 2034. And then Western Link 2, which was briefly touched on by Nicola, that is in development at the moment, and we're putting a lot of work into that exciting project, which is not due to deliver to late 2030s. So we are planning way ahead of the traditional 5-year cycle. And to be honest, the 5-year cycle is moving towards an end in some ways because in the past, 80% of our baseline expenditure was agreed in that 5-year cycle. In this case, for T3, it will be 20% and 80% will be uncertainty mechanisms, but many of which you've heard about today already as the et cetera. And our CP2030 projects, for example, have been outside that 5-year period as well. So we see growth in transmission for the foreseeable future well into the 2030s and beyond to facilitate the net zero targets that we have.

Just picking up on the final determination and the base CapEx. The draft determination as it currently stands, over 90%. I think it's close to 94% of our baseline CapEx already been agreed as part of that draft determination. And in fact, Ofgem commented on the quality of our engineering justification paper. So I think that's a pretty good response to the quality of the plan that's gone in. And in fact, we did well in terms of the reward for that in the draft determination. So from that perspective, we're fairly confident as we head towards final determination around the base CapEx. There's a couple of areas that we are still in negotiation with Ofgem. And as Keith said, the conversations have been constructive and in line with the rest of the industry. So we have -- we are hopeful that we can move things along, particularly on the incentives where we just need a bit more clarity because we need to see a way that we can earn that 150 to 200 basis points from incentives. And at the moment, we just need to see a bit more detail in that rather than what's in the draft determination. But the discussions have been positive, and we're hopeful that we'll get there as part of the federal determination.

Back here, back of the room.

Richard Alderman, BTIG. Just following on from those comments about the final determination. I would be intrigued in your conversations yesterday with the Ofgem CEO, whether he paid any lip service to any request you might have for a higher return base return. And specifically, whether he admitted they would have to take notice of whatever the CMA might say in the next few weeks on the water review. Clearly, last week, I think there was a well-informed leak suggesting that the 5 water companies that are appealing might get something like a 30 basis point uplift in their base returns. So is that providing you with any ammunition for that debate?

Yes. So there are always some good competitors I think the final decision on the CMA for the water has been pushed back a week or 10 days. I think it was originally an expectation of it coming out this week. And there's always been a kind of comparator between what does the water sector and the electricity sector gets an uplift beyond that. We will see where that ends up, and we'll keep that into the conversation. There's also a comparator always done between gas and electricity, particularly around the gearing level where we're at 55%, gas is at 60 and should they be equalized as well. So the regulator is fully aware of those conversations, those dynamics and the possibilities of where we push that. But right now, our focus is not having to rely on those things, but it's more about the justification of making sure the regulator understands this significant uplift in CapEx and investment, the significance of the delivery time scales, then that's what should be pushing the returns a little bit higher, and that's what should be pushing clarity around the incentive mechanisms because we should be getting incentivized to go faster and faster, do more and do it better.

Okay. No more questions? Maybe one last one. No. Okay. Thank you very much for your presentations and your participation in this Capital Markets Day. Thank you to all the participants here who have joined us for the day. Bear in mind that if you have any further questions, your Investor Relations team, the Investor Relations team is always at your disposal. So do not hesitate to ask. Thanks, and good afternoon.