Iberdrola Aktie

Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2026 first half results presentation. As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key developments during the period.

The presentation -- Q&A part will be delivered by the top executive [indiscernible] as today. Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO.

After the presentation, we'll move on to the Q&A session. I would like to remind you that we will only be taking questions submitted through our website. Please send your question exclusively via www.iberdola.com. Finally, we expect that today's event to last no more than 60 minutes. Should any question remain unanswered, the IR team will as always remain fully at joins. We hope that this presentation will be useful and informative for all of you, now without further ado, I would like to hand the floor over to Mr. Ignacio Galan.

Thank you once again. Please, Mr. Galan.

Thank you very much, Ignacio. Good morning, everyone, and thank you very much for joining today's conference call. In the first half 2026, reported net profit increased by 22% and reaching [ EUR 3,336 million ] and adjusted net profit up 8% to $3,565 million, reflecting strong operating performance up to -- adjusted EBITDA rose by 7% to more than EUR 8 billion driven by [ networks ] up 13% due to tariff increases and higher asset buys in all geographies. Adjusted EBIT in powering customer increased 1% due to higher production and margin, especially in the second quarter and the condition of [ pump storage ], which already accounts 35% in our total hydro generation.

Investment rose by 24% to more than EUR 7 billion, with 72% located to U.K., the U.S. and Brazil, including the acquisition of Neoenergia minorities. Networks accounted for 2/3 of the total investment, driving 11% increase in our regulated asset base to EUR 55 billion. In Power & Customers, up to June, we have commissioned 1,600 additional megawatts. And we are accelerating the addition of new capacity due to increasing demand across our geographies, especially in U.S. This is also driving governments and regulators to approve new framework to guarantee the availability and sufficient power and the reliability of transmission and distribution networks.

In Europe, in the last week, the commission has published decreased package to increase network investment as well as several injective reduced taxation on electricity in a new electrification plan with very ambitious targets to double electrification rates. The U.K. also continued showing full commitment to electrification with increasing braceability, on the need of additional investment in transmission and distribution supported by attractive remuneration schemes.

Finally, in Brazil, the renewal of distribution concession for 30 more years was signed reaffirming the country's attractive regulatory outlook for the coming years, supporting our recent acquisition of Neoenergia minorities for EUR 1.1 billion, as mentioned. In this context, our increase in investment during the first half, we have also continued preserving our financial strength with an FFO to adjusted net debt ratio of 22.4% and liability of more than EUR 21 billion.

As you know, yesterday, we announce the acquisition of Caruna network, the largest electricity distribution in Finland with an enterprise value of $5 billion. Under the agreement, [indiscernible] will acquire 80% of Caruna for EUR 2 billion which EUR 1 billion will be paid in 30 months. The remaining 20 % stake will continue in hands through Nordic investment and pension funds. Caruna operates to distribution areas with major activities around Helsinki the main condiment area in Finland and [ joints ]. In total, Caruna has 89,000 kilometers of line, almost 70% underground.

The transaction that we expect to close in the first quarter 2027 perfectly fits our strategic focus on regulated networks. With the recent investment of our remaining Mexican power plant, we will be changing thermal generation for a fully regulated company within an asset base of EUR 2.5 billion. That served to more than 20% of the electricity [ storage ] in Finland, a country with AA+ rating in Eurozone. With a stable regulation and a strong demand growth prospect, given the ambitious electrification target saved by the government to reinforce any security sufficiency.

As a result, Finland system operators estimate demand growth between 22% and 45% up to 2030. Which will require a strong increase in generation. For instance, the system operator [indiscernible] estimate the wind capacity will multiply by more than 3x in the next 10 years, reaching 30-year by 2035. To secure the network investment required to support this growth, Finland has set a stable and predictable regulatory framework for electricity solution till 2031. With attractive condition, including an average return on equity around 8%, 100 basis points, to give you an example, above Spain.

The transaction will also have a positive impact in our results and growth prospects. It will be accretive from the day 1, and we expect a sustained loan chain growth of around 7% per annum in the net income, thanks to additional investment up to between EUR 200 million and EUR 300 million per annum. With further upside due to electrification, the expansion of the centers and the possibility of the low 400-kilowatt transmission lines opened by the Finnish regulator earlier this year.

Finally, given its size, its regulated profile with supportive framework and its cash flow generation, there is not enough headroom for this transaction in our current credit ratios. All in all, this deal is an excellent opportunity to accelerate the execution of our strategy by increasing our expansion to regulated networks in a country with a high rating, attractive regulation and [indiscernible] growth prospect.

Coming to the numbers of the presentation. Adjusted EBITDA increased by 7% to EUR 8,050 million, supported by a stronger performance in the second quarter compared to the first quarter. Network adjusted EBITDA reached EUR 4.2 billion in the first half, up 13% compared to net customers registered in the first quarter. In Power & Customers registered an adjusted EBITDA of $3,800 million, up 1% year-on-year, driven by positive dynamics in the second quarter. By geography, in the U.K., EBITDA rose by 14%, supported by the higher contribution of transmission following the beginning of RIIO-T3 as well as a strong increase in production up to 27%, thanks to the onshore and offshore wind. In the U.S., excluding the one-off impact of Networks past cost recognition in 2025, EBIT increased by 6% thanks to a higher rate in New York and Connecticut and the contribution of the NECEC interconnection line between Massachusetts and Canada.

In Brazil, EBITDA grew by 90%, driven by tariff increases in distribution and the new transmission line in operation as well as the good performance of Power & Customers. In Spain, EBITDA is up by 2%, thanks to a strong hydro output, mainly from pumped storage, which has allowed us to increase production and maintain our reservoirs close to record level of 73% of the total capacity, equivalent to 8,300 gigawatt hours of energy stored.

Finally, the bid in another European countries and Australia was affected by the impact of ancillary service costs in Portugal and the sale of our onshore activities in Hungary and France, despite and overall trade increase in production, mainly in offshore in Germany and France. All in all, 83% of our EBITDA comes from [indiscernible] countries.

Regarding FX evolution, the depreciation of the dollar and the pound against the euro has a negative impact of EUR 106 million as of June on our operating results. This means that including this effect -- excluding this effect, the increase in EBITDA will have reached 9%. Investment in the first 6 months were up 25% to EUR 7 billion, with 72% in the U.K., the U.S. and Brazil. 30% of the total investment we have made in U.K., mainly interest mission and distribution networks. 70% in the U.S. with increasing investment in distribution and offshore renewables offsetting the completion of NECEC and [indiscernible] project. And 25% in Brazil, including the acquisition of Neoenergia minorities. Spain represented 14% of the total investment in Australia and other EU countries remaining 13%.

By businesses, Network continue to be our main investment destination, accounting for nearly 2/3 of the total. To reach EUR 4.4 billion, up to 42% year-on-year, mainly driven by U.K., which represent 1/3 of the total network investment after 43% increase driven by transmission. The U.S. account by 22% of the total as ongoing investment in distribution partially offset impact on NECEC project 1 is completed. The contribution of Brazil reached 40%, including EUR 1.1 billion due to the acquisition of Neoenergia minorities as mentioned. And this represents 7% of the total investment.

As a result, our Regulatory Asset Base rose by 11% year-on-year to EUR 55 billion, thanks to the double-digit increase registered in the U.K., U.S. and especially Brazil were rose by 18%. Transmission was once again the key growth driver. With RAB up 30% in just 1 year. By RIIO-T3 in the U.K. NECEC in the U.S. and the completion of the large transmission lots in Brazil. Distribution RAB increased by 6% to EUR 40 billion well spread among geographies.

Investment in renewables reached EUR 2,234 million with 70% allocated in wind increased $700 million in offshore, mainly in East Anglia 2 and 3, in the U.K., Windanker in Germany and Vineyard Wind 1 in the U.S. are more than EUR 900 million on onshore wind, mainly in the other European countries in Australia. We also invested around EUR 330 million in solar PV and [ EUR 300 million ] in the storage and others.

All in all, up to June, we have put in service 1,600 megawatts. And we expect to accelerate additions of capacity from the second half of the year, supported by the demand growth and the strong appetite for PPAs. As a result, by the year-end, we will install 2.1 gigawatts more than 50% East Anglia THREE offshore wind farm in the U.K. We have another 2.2 gigawatts already under construction, 2/3 in U.S. and U.K. Plus 3 gigawatts more ready for final investment decision in the coming months, [indiscernible] been in the United States, mainly corresponding to repowering and life extension. In order 4 gigawatts in advanced development that could be ready by the end of the decade.

This means the capacity addition by 2030 can reach up to 15.5 gigawatt significant fleet versus 9.5 gigawatts between 28, included in our plan. This increase internal investment in solving reinforced by governments and regulators who are taking additional measures to secure the viability of power and the reliability of network infrastructure to obtain all the benefit of electrification in terms of any security [indiscernible] competitiveness.

European Union, only the last few weeks, the commission has published an ambitious grid package to increase network investment through faster permitting additional incentives. In electrification action plan, which sets specifically vision target of 43% by 2040, doubling current levels in just 50 years which could also mean multiplying total demand by 2 in the period. The plan announced measured incentivized heat pumps, electric vehicles and charging infrastructure. And proposed elimination of subsidies to fossil fuels and a strong reduction of taxation and electricity in line with several commission recommendation [indiscernible] published in the United Kingdom.

RIIO-T3 continues progressing as schedules with our [indiscernible] decision already published. And the independent system operator has issued an updated plan beyond 2030, showing the network investment will continue to increase strongly in the next decade. In Brazil, following the renewal concession for 30 more years, Neonergia doubled this investment plan in distribution in the next 5 years [indiscernible] represent EUR 9 billion. Mainly in Bahia, where a few weeks ago, I could see personally a huge increase in power demand, driven by the electrification of the western part of the state and digitalization of recruiter and other sectors.

In the U.S., new rate case progress as expected. For example, in New Year, where the regulator recently put $2.2 billion investment for this year and confirm the new tariffs we expect to close by year-end will have retroactive effects in May. And in Australia, we continue to sell to see full support electrification from federal state authorities are reflected new auctions in generation, storage and transmission.

In terms of financial profile, our FFO net debt ratio reached 22.4%, and net EBITDA is fully consent with our BBB+ rating and our liquidity stands at EUR 21.5 billion covering 20 [ motor ] financial needs. As you know, our last AGM approved a dividend per share corresponding to 2025 result of EUR 0.685, equivalent a total dividend payment of EUR 4.5 billion, 2% more than previous year. According to Monday, we will pay EUR 0.47 per share as supplementary dividend.

The average both received AEM was 97.9%, an with a quarter on 73.6%. Let me thank you all, our shareholders once again for their participation and support.

Now you, Pepe, explain the result in more detail. Thank you.

Thank you very much, Chairman. Good morning to everybody. The first half reported net profit grew 22% to EUR 4,336 million, and the adjusted net profit grew 8% to EUR 3,565 million, supported by a 7% increase in adjusted EBITDA to EUR 8 billion. Since last year, the dollar has depreciated 6.8% against the euro, the pound 3.1%, while the real appreciated 4.6%. As a consequence, FX has had a negative impact on the P&L. Excluding it, as the Chairman has commented, adjusted EBITDA growth would have reached 9% and adjusted net profit growth, 14%.

The adjustments to the reported P&L, which are limited and aligned with our guide and definitions as the following: First, regarding Mexico, in according with IFRS 5, Mexico is classified as discontinued operations. Therefore, its contribution is excluded from the EBITDA in both reported and adjusted results. At the net profit level, Mexico is presented under discontinued operations in the reported accounts, while in the adjusted figures, it is reflected on the equity line. As a consequence, in the second quarter, we have excluded the positive capital gain of EUR 950 million from the sale of the remaining business to Cox, which is the main driver of the difference with the reported and adjusted net profit. Second, as usual, U.K. capital allowances are adjusted at net profit level in '25 and '26.

Finally, U.S. pass cost recognition in '25 is excluded from the adjusted net profit of that year, EUR 530 million gross, EUR 389 million net in line with the definition applied in our 25 guidance. You can find all these effects explained in more detail in the Annex on Slide 32, 33 and 34.

Adjusted revenues increased 4.2% and after adjusting the recovery of U.S. pass cost in the first half of '25. Procurements rose by 4.8%. This resulted in a 4% increase in adjusted gross margin, improving the 1% decrease reported in March. Excluding the negative FX impact, EUR 220 million, adjusted gross margin would have grown 6%.

First half net operating expenses are 1% lower year-on-year and 1% higher, excluding the FX impact of EUR 71 million. ENW is included for the whole first semester versus last year that was accounted from March onwards. Net personnel expenses increased 7.7% in as the second quarter of '25 included some positive nonrecurring impacts. External services grew 2.6% and other operating income improved by 40%.

Analyzing the network business, its adjusted EBITDA grew 13% to EUR 4,213 million driven by a strong performance in all geographies due to higher asset base, especially in the U.S., the U.K. and Brazil. Excluding also EUR 53 million FX impact, adjusted EBITDA would have grown 14%. These investments in networks are making electricity available for household and industries, which is critical for the future of the economy and the energy independence.

In the U.S., IFRS adjusted EBITDA increased 19% to $1.2 billion. Excluding the $550 million [indiscernible] recognition booked in the first half of '25 included in the -- in the reported figures. Underlying performance benefited from higher rates in distribution and a stronger contribution from transmission, including NECEC following January COD. In the U.K., EBITDA increased 24% to GBP 924 million with increasing contribution from transmission driven by the new RIIO T3 framework in place from April '26 onwards, higher contribution from ENW versus last year's consolidation started in March '25, while in '26 is consolidated for the whole first half.

In Brazil, EBITDA was 7.1% to BRL 7.2 billion, improving from the 0.7% decline reported in March, driven by higher revenues in distribution due to better tariffs and demand, together with a higher contribution from transmission. In Spain, EBITDA increased 7% to EUR 154 million driven by the new regulatory framework and adjustments from past years. First half '26 Power & Customer business EBITDA reached EUR 3.8 billion and grew 1%, improving 3% fall at March, thanks to the Spain and the U.S.

During the semester, Iberdrola produced 61 terawatt hours of electricity with a 92% sourced locally and fully emission-free, advancing in the energy sales efficiency while strengthening the availability and the reliability of supply. This demonstrates the importance of combining local generation and robust networks to provide a secure, resilient and competitive energy system needed by the new economy.

In Iberia, EBITDA was EUR 1.9 billion and grew 1.5%, improving the 3.2% fall in March. With higher electricity sales and margins in Q2 more than compensating the lower prices, higher ancillary costs and the negative contribution of the regulated gas rate. As of June 30, Iberdrola had 8.3 terawatt hours hydro reserves. Pumping represented 35% of hydro production and should continue to help the results in the second half of the year. In the U.K., EBITDA increased 11.9% in to GBP 774 million, thanks to higher wind resources both on onshore and offshore more than compensating lower prices. The supply division had a positive contribution despite the smart meter sales.

In the U.S., EBITDA increased 3.5%, reversing the decline reported in March to $2 -- to $525 million with higher contribution from wind and solar assets with stronger prices and output more than offsetting the negative timing effect versus '25.

In the rest of the world, EBITDA decreased 18% to EUR 337 million, affected by the sale of Hungary and France, lower power prices and higher ancillary services costs in Portugal. In Brazil, EBITDA increased to BRL 661 million with higher contribution from the client business, partially offset by lower renewable contribution. Depreciation and amortization and provisions grew 2%, reaching to EUR 2,824 million. The evolution was mainly driven by the larger asset base and provisions. Adjusted EBIT grew 10%, improving from a 1% decline at March, reaching EUR 526 million.

Excluding the EUR 52 million [indiscernible] impact growth would have been -- would have reached 12%. Net financial results increased by EUR 508 million to minus EUR 1.1 billion, mainly driven by the negative derivative impacts, especially in the second quarter, reflecting the Q2 '25 East of Anglia THREE positive one-off of EUR 282 million, and FX hedges linked to exchange rates as they were positive in 25% and negative this year.

All of this is despite a EUR 28 billion lower average debt. Debt costs increased 44 basis points, mainly reflecting higher interest rates and higher percentage of debt in Brazilian reals, which is linked to inflation. Compensated at the EBITDA level as revenues in new and inflation adjusted. Excluding the real, debt cost fell 3 basis points to 3.5%. And Net debt increased EUR 3.8 billion versus full year '25 to EUR 54 billion, mainly reflecting higher replacement and currency appreciation. The evolution also reflects a strong effort in CapEx, including the EUR 1.1 billion acquisition of Neoenergia minority shareholders in Q2, partly observed by FFO generation and asset rotation proceeds.

Iberdrola maintains a strong and resilient credit metrics, fully supportive of our BBB+ Baa1 rating. This financial strength allows the group to continue investing while preserving balance sheet flexibility. Our adjusted net debt to EBITDA remained at 3.5x. The adjusted FFO versus adjusted net debt reached 22.4%, and our adjusted leverage ratio was 45.3%, improving at 46.8% in the first half of '25. First half '26 adjusted net profit grew by 8% to EUR 3,565 million compared to the EUR 3,308 billion in adjusted net profit in the first half of 25%. Excluding the EUR 1,290 million FX impact, adjusted net profit would have grown by 14%, while reported net profit grew 22%. The difference versus adjusted net profit is mainly explained by the EUR 1 billion capital gain from the Mexico transaction recognized in Q2, partially offset by capital allowances in the U.K. Neoenergia minority shareholder purchases had added EUR 164 million to the net profit.

And now the Chairman will conclude the presentation. Thank you.

Thank you, Pepe. To conclude, the strong performance for the first half and a very good prospect for the next 6 months to reinforce our positive outlook for the year. As of June, all our businesses has a positive evolution, especially in the second quarter, with net gross EBITDA growing 13%, thanks to a higher regulated asset base and tariff increase and power and customer EBITDA is already up year-on-year since to 3.5 gigawatts added in the last 12 months, higher production and the contribution from pump storage. I state this strong trend will continue over the second half of the year, driven by a further increase in our regulated base in networks made in transmission. The positive impact of new regulatory network like RIIO-T3 in the U.K. and the full contribution of the Neoenergia our net profit level after the acquisition of minorities.

In Power & customers, we expect to have 2.1 new gigawatts before year-end and had reserves are still close to record levels. On top of that, 100% of our expected energy is already sold, and we continue to main our margin through pump storage. We will also benefit from an additional operating efficiencies and ongoing improvement in business processes due to artificial intelligence as well as for a more favorable evolution of foreign exchange. All in all, this allows us to comfortably reaffirm our guidance of growth above 8% in adjusted net profit in 2026. And if the positive trends of the second quarter continued in the coming months, we could give you some good news after summer.

And as we have shown today, we are already working to continue exceeding our logo for coming years. Phase 2 the acceleration of organic investment in networks in the U.S., the U.K. or Brazil and empower, mainly in the U.S., additional efficiency gains and process improvement like linked to artificial intelligence. As well as the integration of Caruna yesterday, we reinforced our network profile in AA+ rate country in the Eurozone with attractive regulation, strong growth prospects.

The transaction follows the same rationale that we have already applied in the last 25 years as longterm industrial investors and we have always demonstrated our capacity to materialize our value creation expectations.

Now we will be more than happy to answer your questions you may have. Thank you.

The following financial professionals have raised the following questions. First, Dominic Nash, Barclays; Philippe Ourpatian, ODDO; Rob Pulleyn, Morgan Stanley; Skye Landon, Rothschild; Peter Bisztyga, Bank of America; Jenny Ping, Citigroup; Alberto Gandolfi, Goldman Sachs; Fernando Garcia, Royal Bank of Canada; Jorge Alonso, Berstein Societe General; Ahmed Farman and Arturo Murua from Jefferies; James Brand from Deutsche Bank; and finally, Javier Garrido, JPMorgan.

The first one is, could you walk us through the main drivers behind net profit growth in the first half of 2026? And how much of that performance is sustainable for the rest of the year.

So I've seen this -- the first one is business drivers. Networks has a higher RAB in all countries. We have a strong performance in the U.K., in the U.S. and Brazil. In the U.K., we have higher contribution from electric in the U.S. consolidated in March 2025, increasing contribution from transmission RIIO-T3 in April and the U.S. higher rates contribution of NECEC interconnection between Canada Massachusetts for January. And in Brazil, increasing revenues in distribution to the better tariff and a higher contribution from transmission after finalizing all lots in the rent revision of rates as well.

Power higher production in the U.K., U.S. and European countries. And we expect this trend to continue the rest of the year. In Iberia, we have a strong hydro production, especially in Pumped Storage. Already, as Pepe mentioned, represent close to 35% of our total production with an improvement in margins. Positive impact of the 100% acquisition of Neoenergia. So that makes adjusted net profit 8% or 14% excluding FX impact. And as was mentioned, is if the trend continues, perhaps after the summer, we can give even better news for you.

Second question, what gives you confidence in a [indiscernible] in 2026 profit guidance? And what are the key operational drivers for the second half?

I think it's seen I mentioned, I think we expect positive dynamics in second quarter that will continue the rest of the year. In other words, the regulators base continue increasing new frameworks with better rates and relative for net bill tariff on countries, additional contribution for Energia full year. In Power, we have installed 1.6 gigawatt hour a during the first half of the year. We put an additional 1.1 gigawatt in operation before the year-end, 100% of the energy sold hydro resales at the record levels, as Pepe mentioned, 8.3 gigawatt hours improving margins to the part the volatility of the price held to us. Improving FX, we expect improving FX dynamics at the negative impact recorded in the first half, and additional operating efficiencies was mentioned.

So that's why I continue repeating that we are comfortable reaffirming our guidance for more than 1% growth in net profit. And I think in this positive terms of the second quarter continues in the coming months we could give you some good news after the summer.

Next question, despite that we are receiving some questions about the announced acquisition of Caruna that were mostly answered yesterday during the call, However, could you please comment generally on the strategic rationale, why enter in Finland right now implied multiples? And what gives you confidence that the transaction will create value for Iberdrola.

So this transaction follows the same rationale on the acquisition of other network companies like Scottish Power Energy, U.S. or electron we are a long-term industrial investor. We have not already speculative investors. We see opportunities, then probably another one has not seen as we have demonstrated and these opportunities we are seeing, we are able to materialize. Just already happened in cases like in U.K., you see the good result of U.S. or Brazil. Additionally, we are financing this transaction with the funds and the capital gains obtained from the sale of our thermal generation in Mexico.

We are moving -- we are changing money from one country to another one a country in power generation for set power generation into the clean network operation regulated. The transaction as well will be accretive since the day 1, which I think is not normal in this type of transaction. And the company expects net profit to increase by 7% per annum given the predictable regulatory work and the investment plan up to 2031.

Overall, I think that is a relatively small transaction compared with our organic investment I think you know we are investing in the range of EUR 14 billion, EUR 15 billion per annum. So I think that represents less than EUR 5 billion, so which I think is relatively small compared with the rest.

We have another additional question regarding the treatment of the shareholders' loan in the deal of Caruna that is [indiscernible].

Pepe, you reply that one?

Yes. Well, I think it's quite simple. So Caruna has net income. And after the net income that we are expecting to be around EUR 150 million in '27. After that net income, it pays a shareholder loan. And now with the acquisition that we do, especially of the 80% that shareholder loan will disappear. So it will be a net income. We will have the 80% of the net income. So I mean, after the shareholder loan, what you are seeing is a net income, but we are looking to the net income, which is corresponds to the equity that we are putting there, and that is what justifies the 16x that we are paying.

Next, can you provide an update on your artificial intelligence initiatives and quantify the expected impact over the time?

I finish that is...

Artificial intelligence...

Yes. Okay. I think we are progressing in the implementation of the initiatives we already presented you as well as on others. There are around 300 projects in this moment in production -- the final development stage. We have another 150 project progressing we are training now a ton of people, probably more than 4,000. And we expect that the value of all this initiative will be measured in the hundreds of millions. And I will -- you will see that one in the next month. So I think that is going on.

Next, where do you see the main [indiscernible] opportunities versus your current business plan?

Yes, let me -- so you asked for the [indiscernible]. Yes. We are already -- we are already better than our plan in terms of investment and results. Just to give you a few examples, in the U.K., RIIO-T3, final determination -- it was better than planned and expected. With Hydrotec is GBP 2.1 billion with a better return and faster cash flow recovery. In the U.S., the higher demand is driving additional investment in infrastructure, for instance, we are already in this moment in transmission with the project of power in New York. With a project which includes EUR 4.2 billion CapEx. In generation, in the United States, repowerings, life extension, new asset includes -- our plan includes around 2,000 new megawatts in 2025 to '28, but we have already installed 100 -- 1,400. We have another 100 in construction or we will be installing 2028. That means that is 30% more above the award plan in the U.S. In top of that, we have another close to 1,800 megawatts project, which be installed by 2030, in which we are signing PPAs with higher prices and longer duration.

And finally in Brazil, the fact that the renewal of concessions, we have already committed to make investment of BRL 50 billion, which is around EUR 9 billion, which is mainly doubling the investment we make in the last 5 years with very attractive returns. In any case, I think we are working in our review our long-term plan, and we will share you the information in the next Capital Market Day that will take place in the year as well.

Next is regarding the new U.K. government and its implication for ever dollars U.K. operation and investment plans.

Well, Andy Burnham is not new for us. As you know, we know him from his time as major of Great Manchester. We were -- have the distribution service where we have the distribution service area, and we have already worked very well with his team. So I think the key priorities announced by Andy Burnham are absolutely aligned with our plans. The fact yesterday, the government already announced the elimination of VAT and electricity nothing which I think that is what we -- the European Union is saying is that is we've been claiming for years. So we would like to electrify. We have already make the things in a manner more attractive.

So we need already availability, reliability, but affordability, the key thing for affordability is precisely cash reduction of electricity. So that is what they are doing. So we are aligned very much with our plan. And I think we know well his team. And I think we have already worked very well from our position as a distributor in the Manchester area where he was already the major in the last few years.

Next question is regarding Brazil and our announcement about new investment plans and what returns do we expect for those new investments, assuming the extension of the concessions?

So as you know, we are the largest electricity distribution in Brazil and the leading investor in the [indiscernible] sector. I mentioned before, I was a month ago, in the western part of Bahia with the Ministry of Energy, by President of the government with the Minister of Agriculture and others for announcing precisely, this extension of the concessions of different places. And I think the minister was already very positive and the trends and the ambition of the country to electrify areas with now they are not enough electrify. So -- and that other areas certain is this booming area of Bahia, same than others, but I think this was in the western part of a year. And I think the trend of our -- of this CapEx will continue, the electric will very attractive with ROEs on the high 2 digits. And very positive regulatory framework, very stable, very predictable with rules that we know very well from the more than 20 years we have present in the country.

Next, the latest news about the Spanish blackout.

So we have not changed our positions in the day 1. So as I mentioned at any time, an electric engineer, and I can tell you the blackout was the result of inadequate planning, management and operation of the electricity system by Red Electrica was not adequate one. With a lack of synchronous unit program despite the fact that they were available. I think I can understand the blackout, if they are not power available. If they are 4x more power available than that what is needed -- it's difficult to be understood. The only reason is the system operator has not either planned properly or has not managed pop during the day.

Our position is -- I think that is the position that has been taken by all report investigation audios, et cetera, et cetera. And the fact is I think that is very clear after the blackout. Red Electrica has decided to modify his system operation to program more influence units.

So I think that's very clear. So what I was saying from the day 1 now is being applied. -- there not a team as well with the CNMC, the regulator has published a report last May, pointed that exists a conflict between the role of transmission network operator which is a listed company, and that may estimate in prescient of prioritized investment with a higher expected return and the role of the system operator, which must ensure the minimization of the valuable resources focusing to greater supply. I think that is not my work, that is the CNMC, the regulator is already talking about this conflict between transmission owner and system operator, which are 2 different things.

The role as the fact is separating in order your decision where we have already presence like United States, U.K. or Brazil. And I'm sure then probably that had not been together, probably what we are talking about, who will be in a different situation.

Next is regarding more color on our renewable portfolio in the U.S., especially regarding repowering, life extension and possible new PPAs.

So as I mentioned, we are investing in U.S. more than initially planned, driven by increasing demand and the good condition of the PPA market. As I mentioned, we have more than -- as per you can already reply the details on that one. More than 100 megawatts in construction. But you can...

Yes, I think we have more than 800 megawatts right now under construction, and we expect more than 2,200 megawatts that could be operating by the end of 2030. This means more than doubled our plans in the U.S. mandated projects are related to life extension or repowering, which has practical economics and reduce complexity during construction, permitting, et cetera.

I think we're building a strong portfolio beyond 2030 that will be explained later. And some competitors is talking about increased capacity in the U.S. in our case, I can assure, and I think that's the work we're doing that all our projects are real. With supply chain secured, including turbines or solar panels. So we do not need to buy projects from third parties.

Next is regarding the new U.S. cases in -- the rate cases in the U.S. if we can provide some update on the timing of these processes.

So I would like to say that we are in usual negotiation processes. They will probably continue until the year end or beginning of this year. So I mentioned already, for instance, New York, we already agreed with the regulator, the level of investment and the new tariffs will be retracted to May, as we had already done in the past. And we will continue to negotiate the rest of the term. So I think that is the normal way how we work. I think we work, we negotiate and whatever things we agree it really attractive from the date with another rate case part.

Next is our view on batteries included in our strategy? How do you compare those opportunities with your existing pumping hydro portfolio?

The pumping. So we started 25 years ago investing massively in the storage. As you now remember 2001 when we presented our first business plan. I was saying that we plan to make at that time a few thousand megawatts of -- 4,000, I don't remember, but of renewable, I think mostly in wind. And we said that the renewables are intermittent. So it's needed storing the excess of electricity when they are not enough demand and for providing this electricity when that is needed.

So that makes ourselves to transform most of our hydroelectric power plants in reversible. So the fact today, we have 4,400 megawatts of hydro pumping storage with the capacity between 20 and 100 hours each of those, which makes a total capacity storage on the range of 120,000 megawatt hour, so which is a huge capacity. Also, I think we are investing batteries. As you know, I think I'm coming from the sector of a spent 70 years of my professional life, designing, manufacturing and selling batches worldwide. So we're not lithium batteries. We have nickel come in, we have lead acid batteries. But I think I'm familiar with batteries because it was part of -- is part of my background. So we are investing in batteries especially in market, but we have no possibilities of making hydro pumping. So in countries also, we have attractive regulatory frameworks.

For instance, in Australia, we have already 220 megawatts, which is 640-megawatt hours installed, another 270 megawatts, which is 150-megawatt hours under construction, we have some mature project as well for another one with 100 megawatts of capacity.

In U.K., we have as well in installed battery with 250 megawatts, which has a capacity of 200-megawatt hours and we have quite long development pipeline -- developing pipeline and U.S., we installed the first battery storage project at this moment in Oregon. -- with 80-megawatt hours, and we expect to start a test as well soon. In Spain, we are the leader. So we have and 120 megawatt installed with 420 batteries and 245 megawatts under construction. So I think we are in countries. But I think we compare all these numbers, which is a few hundreds of megawatt hour come with the capacity we have for ready hydropumping is peanuts. So I think 120,000 megawatt hours is equivalent of 60,000 megawatts of normal batteries of 2 hours capacity of 30,000 out of hour capacity is a huge capacity, and that is what we are already the reason why now in this moment, almost 35%, 40%, Pepe mentioned, of our hydro production is coming from these pumping stories.

But that is the consequence of a decision we took 25 years ago when we started already this -- the new times of the company.

Next is regarding to the net debt expectation for the end of the year.

The net debt is probably going to be around EUR 56 billion. Basically, it's slightly higher than we had in the plan. but driven by the appreciation of the currencies from the beginning of '25 that although the currency is the dollar, especially the dollar and the real are lower than -- the average are lower than last year, they are higher than the beginning of this year. So that will -- is having already an impact in the debt, as you can see in the presentation. But on the other side, it would be good news for the FFO generation for 2027. So this is more or less around EUR 56 billion where we are expecting to close the year.

Next is the performance of the retail business in Spain, particularly in terms of customer retention, competition and regulated cost impacts during this year.

Pepe?

I think we remain the market leader in terms of energy supply, but also in terms of the customer portfolio, much lower rate than any of our competitors, especially new entrants, which basically means a strong customer retention. I think we have a evolution of our portfolio, the customer portfolio, including [ niba ], our second brand. I think we continue to add products. Let's not forget what the Chairman mentioned in his presentation, which is that we've been impacted both in Spain and Portugal by the additional cost of the so-called reinforced system operations by Red Electrica in addition to other impacts due to regulated gas tariffs in Spain.

And the last one is how do you balance the need for great investments with affordability concerns in the U.S. and in Europe.

So I don't know if I mentioned before, we not is. The key is today in most countries for regulators and government are availability and reliability of electricity. So availability is to have spicing power and infrastructure. So I think you see in the United States, we are hit demand, people lock in our door for extending life of the existing asset of investing in new ones with long-term PPAs, even longer than before, so with higher prices. Availability, I think most of the equipment we today are installed I think they need 24/7 service. So that means we need agreed, more robust, more resilient and a better quality of service. I think that is the 2 drivers. That will require this massive investment mainly networks as you recognized by several governments, as seen recently by your permission, they're special direct related to networks.

So which I think is, the unit is absolutely new because traditionally make elective about clean energy of our renewable, et cetera. especially made for the need of networks in all countries for achieving this availability of energy reliability. To reduce electricity price for consumers, the easiest and fastest way is to reduce taxes and charges that they are incurred energy, electricity specially. That is go European Commission is recommending. And that is the first measure taken by the British government. So I think the taxes, which are in most countries, supported by electricity, especially in Europe, a huge probably close to 50% of the energy bill is related with taxes and charges, which is much higher than the fossil fuels in the countries where we are fully dependent on the imports.

So we are penalizing local production for subsidizing or penalizing less that 1 with imports. So it's absolutely needed to revise the taxation of electricity, if we would like to electrify the economy, we would like to have the availability of our which is needed in most countries, the reliability of the grid for making it more robust, more resilient and with better quality of sales to provide 24/7 service to the citizen in the best condition.

That is what the European Commission is dictating that is what the government is doing, the first decision they took, reduced taxes for electricity for electrifying the country.

And with this last question, I now hand again the floor over to Mr. Galan to close the event.

So thank you very much for talking part of this conference call. As always, our Investor Relations team will be available for any rational questions. If we have not already the opportunity of meeting I said before, I wish you extremely good summer, good holidays.

And I hope that after summer, we can give even better news for you. Thank you very much, and relax a bit. Thank you.

Good afternoon, everyone, and thank you for joining us today. I'm Isabel Sanchez, Deputy Head of Investor Relations. The purpose of this call is to provide further details on Iberdrola's announced acquisition of the electricity distribution company in Finland, Caruna, and to walk you through the strategic rationale, key financial considerations and expected contribution of the transaction.

We are joined today by Mr. David Mesonero, Deputy CFO and Global Head of Corporate Development, who will take you through the presentation shared with you in advance. If you have not yet accessed it, the presentation is also available on our -- on the link you have received through the [indiscernible].

We appreciate that this is a busy period in the reporting season, so we have designed today's session to be focused and [indiscernible] with a total duration of approximately 30 to 40 minutes. After the presentation, we will open the line for a live Q&A session. [Operator Instructions] As always, if you have further questions after the call, please feel free to contact the Investor Relations team at [email protected].

And now without further ado, I will hand over to David Mesonero. David, over to you.

Thank you, Isabel. Good afternoon, everyone, and thank you for joining us today. It is a pleasure to be with you today to present what we believe is another important milestone in Iberdrola's long-term strategy.

Before we begin, I would also like to thank many of you for the message and congratulations we have received following its signing, victory and funding. Although we are a multinational company, it was certainly a very special moment for our country considering our culture.

Back to the presentation at Iberdrola, we don't wait for the future to happen. We anticipate and we build it. Our history has shown that we have demonstrated a consistent ability to anticipate the cultural changes, remain ahead of global trends and all the challenges facing the energy sector into tangible [indiscernible] sustainability goals.

Today we are taking another [indiscernible] step by entering a new geography and establishing a leading position in electric distribution in Finland. This decision is not opportunity. It is an actual result of our [indiscernible] capital allocation framework. Over many years, Iberdrola has followed a very clear investment approach. We invest in [indiscernible] network in countries with strong credit quality, predictable [indiscernible] regulation [indiscernible] growth and sustainable value creation potential for our stakeholders.

Following [indiscernible] of our thermal generation business in Mexico, we are now recycling [indiscernible] into one of Europe's highest quality regulated [indiscernible] platform. We are [indiscernible] deploying capital from [indiscernible] noncore business into a growing euro-denominated and [indiscernible] asset in a [indiscernible] A+-rated country, 3 notches above Spain, 1 notch above the U.K. and on par with the United States.

This is precisely the type of capital allocation Iberdrola has consistently delivered, improving the quality through stability and resilience of our earnings while preserving our financial strength.

With that, [indiscernible] lead you through the presentation. Please turn to Slide 2. The main message on today's presentation is [indiscernible] Caruna is an excellent strategic fit for Iberdrola that will further strengthen our position as one of the world's leading [indiscernible] operators and increasing our exposure to stable, predictable and long-duration [indiscernible].

Network already represents the largest contributor to Iberdrola's value, and we continue to [indiscernible] that they offer one of the most attractive combinations of earnings visibility, investment opportunity and [indiscernible] growth with [indiscernible].

Caruna is the largest and [indiscernible] companies in Finland, with more than 20% of [indiscernible]. The company also benefits from [indiscernible] providing additional long-term visibility and [indiscernible] a fully regulated business and [indiscernible] regulatory framework with visibility until 2031. Based on the current regulation [indiscernible] and our business plan, Caruna is expected to generate [indiscernible] result on equity of approximately 8% with additional incentives. This is an attractive [indiscernible] regulated business in a AA+ rated country, supported by stable cash flow and a significant long-term investment program.

Finland is also an important of the investment case. This is one of Europe's more stable, innovative and highly digitized economies. With a strong execution on our framework, clean and competitive [indiscernible] generation and a significant potential for further electrification.

Electricity demand is expected to grow materially. [indiscernible] integration, data centers [indiscernible] value chain and other energy-intensive activities. Electricity demand from [indiscernible] Finland is expected to grow by around 4x by 2030, increasing by 1.6 terawatt-hours in 2024 to approximately 5 to 6 terawatt-hours by 2030. This creates a clear requirement for continued investment in [indiscernible] network. Caruna is well positioned at the center of Finland's digital economy investment and energy development.

We expect Caruna's net income to grow [indiscernible] by approximately 7% CAGR [indiscernible] by increasing capital [indiscernible] program between 200 and 300 [indiscernible] annually. From a financial perspective, this transaction is also very attractive. We are acquiring an 80% stake in Caruna for an equity consideration of approximately EUR 2 billion. Around EUR 1 billion or approximately half of the consideration will be disbursed by 30 months following the close. [indiscernible] payment materially is reviewed [indiscernible] improve the [indiscernible] economics of the transaction and [indiscernible].

The transaction value is 100% of Caruna at [indiscernible] value of approximately EUR 5 billion, including EUR 2.47 billion of net debt as of December '25. The implied [indiscernible] multiple is approximately [ 16x ] expected 2027 [indiscernible]. We underscore acquiring a high-quality [indiscernible] platform with [indiscernible] having growth and attractive P/E multiple below Iberdrola [indiscernible]. The transaction is expected to be EPS-accretive on the [ first ] year, around 1%, without considering possible synergy [indiscernible].

The value proposition is fully supported by the quality [indiscernible] and growth of the standalone business. Any additional benefit from Iberdrola experience, scale, operating or financial capabilities would therefore represent potential upside rather than a [indiscernible] of value creation.

Coming now to Slide 3. Caruna is the largest distribution company in Finland, serving a population of around 1.5 million, 25% of the country [indiscernible] in a market that remains highly fragmented, with 77 distribution network operators. That position of strength [indiscernible] in network through the addition of 100% regulated business generating a single cash flow in euros in a AA+ rated country. This also provides Iberdrola with a new platform in a market undergoing a rapid electrification process.

Finland benefits from an abundant clean energy electricity, a [indiscernible] power prices, making an attractive location for anything [indiscernible] investment. [indiscernible] operator expects electricity demand to increase by between 22% and 45% by 2030. [indiscernible] demand growth will require substantial [indiscernible] and substantial electricity [indiscernible] with distribution companies playing a central role in connecting new demand, integrating [indiscernible] generation and maintaining [indiscernible] availability of supply.

Caruna is [indiscernible] well positioned to capture these opportunities [indiscernible] footprint and technical capability.

The regulatory framework is stable, predictable and [indiscernible] until 2031 [indiscernible] recovery of [indiscernible] investment and provides the necessary framework to respond to growing electricity demand [indiscernible] where investment capability has been constrained by regulatory [indiscernible] framework enables [indiscernible] investment to be incorporated into the regulated [indiscernible].

This alignment between regulation, demand growth and investment [indiscernible] for the transaction. In simple terms, Finland provides us a combination of stability, a strong credit quality and electricity demand growth.

Turning now to Slide 4. Caruna is much more than Finland's largest electricity [indiscernible]. This is a fantastic company and one of Europe's highest quality regulated network platform. The company serves approximately 740,000 [indiscernible] around 1.5 million population, and operates close to 89,000 kilometers of electricity line.

Around 67% of this network has already been underground. Underground means increased network resilience with these weather related interruptions, improved [indiscernible] of supply and lower operating and maintenance requirements over the life of the asset. This is particularly relevant in Finland. Caruna has therefore already completed a significant investment program to reinforce the resilience and quality of its network.

At the same time, the [indiscernible] of growth is now emerging. These investments are supported by distribution licenses granted [indiscernible]. By 2027, Caruna is expected to have a regulatory [indiscernible] above EUR 2.5 billion, EBITDA of around EUR 369 million, a net income of approximately EUR 148 million. 2027 will be the first year in which Caruna is fully consolidated in our financial statements.

We expect net income to grow in the next decade by around 7% CAGR, supported by the increase in [indiscernible] expenditure program and by the continued growth of Finland's [indiscernible] and the United States, Iberdrola has consistently demonstrated its ability to invest in [indiscernible] and improve operational performance and customer service. We think Finland represents another excellent opportunity to [indiscernible] those capital.

It is also important to emphasize that Caruna is already a highly efficient organization [indiscernible] operating model and only 247 employees. Our approach will therefore be to preserve the strength of the business and support its next phase of investment and growth.

Now turning to Slide 5. Following the completion, Iberdrola will own 80% of Caruna. The remaining [indiscernible] will continue to be held by 2 highly respected long-term [indiscernible] institutional investors: AMF and [ Ehlo ]. AMF if one of Sweden's largest [indiscernible] business, while [ Ehlo ] is one of Finland's leading investment [indiscernible] company. We are delighted to partner with those shareholders whose investment [indiscernible] is closely aligned with ours [indiscernible] and focus on [indiscernible] investment also demonstrates a confidence in Caruna's long-term prospects [indiscernible] is therefore not only our acquiring [indiscernible]. It is also about establishing a long-term presence in Finland and [indiscernible] to a leading [indiscernible] investor.

Our integration philosophy will be equally important. Caruna is already a highly efficient [indiscernible] business with a [indiscernible] identity and a capable management team. Our objective is to preserve those strengths while [indiscernible] Iberdrola's expertise in such areas as digital asset management, predictive maintenance, engineering, procurement, [indiscernible] along the network line.

Finally, turning to Slide 6. [indiscernible] the relevant regulatory application by [indiscernible]. The approval process is expected to be completed by December, with closing anticipated within the first quarter of 2027, subject to the receipt of the required regulatory clearance, one in Finland and in the European Union.

We have already begun [indiscernible]. Given Iberdrola's [indiscernible] experience in [indiscernible] across multiple jurisdictions, we are confident that the transition will be smooth. Our priorities will be clear: continuity and quality of service. [indiscernible] of the local management [indiscernible] engagement with employees, regulators, customers and all other stakeholders, and preservation of Caruna's [indiscernible] identity.

This will remain a locally managed [indiscernible] business supported by Iberdrola's global network capabilities, investment experience and financial strength.

Let me now conclude with 3 key messages. First, Caruna is [indiscernible] asset Iberdrola looks for. If combined, [indiscernible] AA+-rated [indiscernible] and highly visible long-term investment requirements. This is expected to deliver during the next decade a regulated return on equity of around 8%, a net income growth of around 7% CAGR, supported by an increasing capital expenditure program of between EUR 200 million and EUR 300 million annually. These are attractive returns and work process for a fully regulated business with a framework of very stable cash flow.

Second, this acquisition demonstrates once again Iberdrola's disciplined approach to capital allocation. We are expecting the profit from divestiture of our thermal generation [indiscernible] in Mexico into a high-end quality regulated [indiscernible]. We are moving from a mature and noncore business into [indiscernible] network, which remains at the center of our strategy and of the global electrification program. The transaction is expected to be EPS accretive on the third year.

And third, this transaction [indiscernible] the overall quality of Iberdrola. It increases the contribution of regulated network to our portfolio, which now represents more than 50% of our EBITDA. It improves earnings and cash flow [indiscernible]. It strengthens the resilience and geographical diversification of our business model. And it provides Iberdrola with a leading platform in a country where electricity demand and [indiscernible] investments are expected to grow significantly over the coming years.

Caruna is not simply a high-quality asset. It is a long-term growth platform in one of the [indiscernible] strongest and most stable economies. We believe this transaction represents another important step in our strategy. At Iberdrola, we don't wait for decisions to happen. We invest in, we [indiscernible] and we create value from it. Thank you very much for your attention.

Thank you very much for the detailed overview, David. We will now move to the Q&A section. Operator, please, may we take the first question?

[Operator Instructions] The first question comes from Jenny Ping from Citigroup.

I've got 3, please. Firstly, can you just tell us actually, given you've got the visibility until 2031, what is the RAB growth in country -- or what is the RAB growth or what is the RAB in the country, firstly, one? That would be my first question. Secondly, looking at the net debt to RAB of this asset, we're talking close to 100% leverage. Is there any plan to inject equity into the business to reduce leverage at some stage? And then the third question I had was really around the EUR 1 billion deferred payment. Is that contingent on performance or on something else in 30 months' time? Or is it payable regardless?

First, regarding the visibility of the RAB for 2031 and why we are confident. So it is based on Finnish regulator. The Finnish regulator has approved the framework for the next 3 years until 2031. So there is no any question about the regulation. So we have full visibility until that year.

What we expect is by 2031, the RAB will be around EUR 3 billion, okay? So it is including the CapEx that we are going to deploy in the next few years minus the amortization of the [indiscernible] of the CapEx that we need to do.

Regarding the second question, if it is necessary to finance the growth of this company, if we need to put more equities. In our assumptions, we are not assuming any other equity injection. Please do consider that this is a very stable regulatory framework that obviously we -- the company has a very efficient financing strategy. But on top of that, as we have done, for example, we've seen value Iberdrola can provide additional [indiscernible] if it is necessary.

And third, regarding the deferred payment of EUR 1 billion, there is not any contingency. So it is not -- there is not any kind of earn-out or things like that. It just a deferred payment of 50% of the equity value for the 80% of the acquisition. Obviously, between the acquisition process, we find any legal topic that we can -- that we are not happy with that. This will be a potential discussion with the sellers. But we don't anticipate any major issue as we have done a very, very detailed due diligence. And of course, there is [indiscernible] that is somehow [indiscernible] the business.

Let's move on to the next question, please.

Our next question comes from Gonzalo Sanchez-Bordona from UBS.

Thank you very much for the presentation and the opportunity for the questions. Three, if I may as well. First one is related with sources of potential [indiscernible] you mentioned in the presentation. I was wondering whether in the RAB growth [indiscernible] you've just outlined, whether you are [indiscernible]? I think you mentioned incentives, you mentioned demand growth. Is that something that can materialize into additional RAB growth or some additional incentive growth during the current [indiscernible] through 2031, and apologies because I know nothing about the Finland regulation. So that's question number one.

Question number two is related with how you calculate the 17x P/E -- sorry, 16x P/E for 2027. If you could provide some details on that because I had different numbers. I don't know if I'm missing something there.

And then the other question is related to how the [indiscernible] work in terms of returns on top of the 8% [indiscernible]. Is it possible to achieve higher returns [indiscernible] period or if you are referring to this potential of [indiscernible]?

Gonzalo, if you don't mind, I will make question number one and question number three because I think they are correlated. So regarding if we are considering any upside, the answer is no. We are trying to be very, very conservative in our assumptions. So there is not any kind of upside that we are seeing today [indiscernible]. The performance of this company has been huge. We have seen years with an our outperformance of 180, 190, but we are not considering that outperformance. In here, we are considering a small outperformance because obviously it's the largest distribution company in Finland, and it's a very, very -- it's a very big market in terms of the number of the distribution companies [indiscernible] 77. So when you do the benchmark, obviously the largest usually get the best KPIs.

Additionally, we are not considering any efficiency from Iberdrola. As you can imagine, only procurement or all-in corporate efficiency we could achieve [indiscernible]. This is not a deal based on corporate efficiency, obviously, we will apply any operational efficiency that we can, especially procurement is a clear example.

And then let me explain how it's working. So regarding the CapEx efficiencies, 85% of the CapEx efficiency is captured by the company. Only 15% needs to be referred to the regulator. As regarding OpEx, 100% of the efficiency is captured by the company up to 20% over a [indiscernible], okay? So it's quite good regulation compared with others where we have presence that usually we need to [indiscernible].

Regarding [indiscernible] question, it's very simple. We are assuming, as I was saying, close to 100 [indiscernible] so we get 16x P/E. We have seen EUR 150 million already in 2027, and this is just to divide by the equity value that we are seeing for the 100%, okay? So it's vast. So we can, of course, provide you the details, but it is very, very, very [indiscernible].

Our next question comes from Rob Pulleyn from Morgan Stanley.

Three questions, if I may. Firstly, just to revisit an earlier question. So the implied gearing given the net debt and the RAB numbers provided, is like 97%. I mean is the other activities of that net debt? And is the [indiscernible] network sort of [indiscernible] nominal gearing of 40-60? That's question one.

Question two, I think you've given an interesting overview of how attractive Finland is and the electrification growth and everything else. May I ask why Iberdrola looking at this -- looking at it now? Is there an intent of our seller or other reasons that we should be aware of?

And thirdly, again, notwithstanding the respective merit this particular deal, historically, Iberdrola was very focused on it is 4 core geographies. And of course, we've seen deals within those geographies over the last few years. Should we understand that this foray into the Nordic, A, is a potential future core market? Is this opportunistic in the sense that this is [indiscernible] asset in your eyes? And/or does this imply that there is no [indiscernible] inorganic that you couldn't do in the existing core geographies? I'm sorry, long question that one, but [indiscernible].

Rob, so regarding the first question, I think that you probably [indiscernible] because of a low time that we gave you. But the implied gearing is 50%, okay? So the net debt is around EUR 2.40-something billion. So just make your math [indiscernible] we can give you all the details. But it's 50%, it's quite similar [indiscernible] where we are active.

Regarding the second question, it was a long one, but I tend to think that your question about why Finland and it is why we are now looking for a new dealership. I think that, obviously, at Ibedrola, we were very clear in our last Capital Markets Day, what we are looking for is great [indiscernible] country with network and especially a very attractive [indiscernible] clear framework. And I think Finland ticks all the boxes. It's a AA+ rating, so it's 3 notches over Spain, it's 1 notch over the U.K. and it's on par with the U.S.

Second is fully, fully regulated. So there is no any additional business than this business, that is including rural and urban cities in Finland. And I think it's a very, very attractive regulation for a company like ours with an 8% ROE, with a 10-year bond deal, much more competitive than all the geographies where we are active.

And finally, regarding additional [indiscernible], I think is the third question. Obviously, if we do these deals, usually what we want is to become delivered. With this acquisition, we are acquiring [indiscernible] we're covering 1.5 million population of inland. It's a very fragmented business with 77 DSOs. So I assume that in the next few years, we will see a potential consolidation in the country.

Regarding the other countries, what we have seen is that the Nordics are going to be one of the major benefits of the data center development. Electrification is at the core of their strategy [indiscernible] is at the core of their strategy. And of course, please bear in mind that they need resilience and energy independence. So I think the networks are going to be an important role or are going to play an important role within the strategy of these countries, especially Finland.

The next question comes from [ Dominic Matt ] from Barclays.

Yes. I've also got 2 questions [indiscernible] shorter. Looking at the Caruna Group financial statement on their website, I just wanted to get some sort of clarity on that. That one, 2025, EBITDA coming at [ EUR 344 million ] [indiscernible] in 2027, so 7% in 2 years [indiscernible] up EUR 25 million. But the question I've got here is that the net income in 2025 is EUR 75 million and you're guiding again EUR 148 million, i.e., doubling in the next 2 years. The question I've got is, is that net income number correct on [indiscernible] statement? And how do you get such [indiscernible] to net income or [indiscernible] back up in EBIT?

Second question, quick one. You've got [indiscernible] rights from the remaining 20%, when is the deadline for them to get tagged or dragged or [indiscernible]? And [indiscernible] a quick one, could you remind me again, because I'm not as familiar with Finnish regulation. The 8%, that's a -- is a nominal regulation rather than a real regulation? And is that a 40% equity?

Okay. So [indiscernible] for your 3 questions. Let me start with the first and the second. And [indiscernible] if you could [indiscernible] the third one because I didn't hear you well. So regarding net income, if you look at the financial statement, you are right, [indiscernible] in 2025, but you need to add a [indiscernible] loan that we are considering equity. So what we are doing is once we are acquiring a company, what we are doing is [indiscernible]. Instead of doing capital increases with this company or the shareholders have decided, is to do a kind of a stockholder loan that we are concentrating like equity, okay? So we need to [indiscernible] around EUR 65 million more to a 75, okay? So more or less, it will go the 2025 number in the range of EUR 135 million, EUR 140 million just for comparison purposes, okay? [indiscernible] we are guiding to EUR 148 million. Again, we will alter the [indiscernible] agreement. We will include equity [indiscernible] and that's why it will appear like the net income is coming before the -- sorry, after the stockholder agreement, it's going to be at the level of close to EUR 150 million.

The second is I assume [indiscernible] it was becoming parallel of the other 2 companies. So first, let me remark that our partnership strategy is very clear. We want to have local partners and strong partners [indiscernible] together with us in the key -- during the key assets or companies that we have. We have an example with [indiscernible] in Brazil, we have the example of [indiscernible] we have the example of [indiscernible] close to 2 gigawatts of our platform. So we are very happy having AMF and Ehlo. But it will -- for whatever reason, they are deciding to exit and they [indiscernible] on standalone, we are also happy acquiring 100%. It's a fantastic company and we will be super happy acquiring 100% of the [indiscernible] the 20% that is on their hand.

The right [indiscernible] at the time of the closing. So we are expecting that the closing is around the end of the year. So we will know what is the final decision by that date. In any case, I am [indiscernible] 2 funds, and they have expressed several times that they don't want to sell, and they want to remain. We also somehow reinforce our equity story in the market.

And I didn't your final question. I'll make you repeat it.

Yes. [indiscernible] the 8% return on regulated equity, can you just remind me, is that real or nominal? Is it inflation adjusted every year? And is that a 40% equity?

Yes. It's nominal. We have 46% equity.

The next question comes from Javier Garrido from JPM.

I just have one follow-up question on what you just said about the shareholder loan conversion. Is that when you are saying the price we are paying for 80% stake, does this include the shareholder loan or it's going to be transferred on top of the price that you say you are going for 80% stake?

Javier, so the 148% of -- we are guiding for 2027 is for 100% of the company. So 80%, we will need to adjust the net income [indiscernible]. And yes, if you included the loan [indiscernible] 100%.

Next question, please. I'm afraid this might be the last one.

Our last question comes from Jorge Alonso from Bernstein.

A couple of questions. One is a follow-up on Javier's question, is -- so the EUR 2 billion that you are paying effectively, that includes the shareholder loan conversion or that will come on top of the EUR 2 billion that you mentioned is paying for the 80%?

And the second one is as a consequence of this acquisition, I mean, can we think that Iberdrola would be accelerating disposals or [indiscernible] keep the balance sheet in [indiscernible]?

Jorge, regarding your first question is, yes, the question is very simple. Yes. So in the EUR 2 billion of equity, including EUR 1 billion of deferred payment will be including shareholder loans, so you don't need to make any adjustment for this calculation. In any case, this is -- there are 3 questions related to that. We will give you more retail. But there is nothing to be worried about. It's just we are considering [indiscernible] equity and we are just [indiscernible] everything on the shareholder loan as equity.

And second, regarding disposals, as you know, we presented in the last Capital Markets Day a very aggressive strategy of acquisitions and partnerships. We are very close to finish the initial guidance that we did [indiscernible] a few months ago. And obviously, still, we have around EUR 2 billion to be divested in the next few months also in this current [indiscernible]. So we don't expect additional disposal, but the normal one that we were planning, so we think that we have enough room for that. Obviously, as always, if there is an opportunity to dispose or to sell an asset at a very good price as we have done in the recent years, obviously, we are open. But in the case, what we are trying to defer our balance sheet and we are still committed [indiscernible] rating. Please consider that we do have the [indiscernible] with this 100% regulated in a AA rated country, what we are seeing is that the level of regulated business is now above 50% of our net income. So in that sense, somehow we are improving [indiscernible] headroom that we have for additional investment.

Okay. Well, that was our last question. Thank you very much, David, for sharing these details with us today. And thanks to all the audience for joining the call and for your interest. If you have any additional questions, please do not hesitate to contact the Investor Relations team. And with that, we will close the call.

Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2026 first quarter results presentation. As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key developments during the period. The presentation and the Q&A will be delivered by the top executive team joining us today. Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO. After the presentation, we'll move onto the Q&A session.

I would like to remind you that we will only be taking questions submitted through our website. Please send your question exclusively via www.iberdola.com. Finally, we expect that today's event to last no more than 60 minutes. Should any question remain unanswered, the IR team will, as always, remain fully at your disposal. We hope that this presentation will be useful and informative for all of you.

Now without further ado, I would like to hand the floor over to Mr. Ignacio Galan. Thank you once again. Please, Mr. Galan.

Thank you, Ignacio. Good morning, everyone, and thank you very much for joining today's conference call. In the first quarter 2026, adjusted net profit increased by 11% and to EUR 1,865 million. Adjusted EBITDA reached EUR 4.1 billion, up to 2.4%, mainly driven by 9% increase in networks more than offsetting the lower contribution of Power & Customers due to nonrecurring impacts in Iberia in the first quarter 2026. And in this previous year in U.S., which were partially compensated by strong production in U.K. and Continental Europe. .

Investment reached EUR 2.7 billion in the quarter for a total of EUR 14.5 billion in the last 12 months, fully in line with our strategic priorities. More than half in our Q1 investment were located in U.K. and U.S. and 15% to net worth increasing our regulators reached to EUR 53 billion. We also invested more than EUR 1 billion in new renewable capacity. As you know, last week, we announced the closing of the Mexico transaction, which completes our asset rotation target for 2028, reinforcing our financial profile and securing additional funds to invest in regulated networks business in the U.K. and the U.S. And Brazil, where we have also acquired the shares of Neoenergia do not control. This transaction will follow other recent deals also related to networks, like the purchase of our grid minorities of the integration and electricity networks in the U.K. That will simplify our structure and a positive impact on the profit from year 1, increasing our pressure to a country with high growth prospects and strong regulatory outlook in Brazil.

Driven by additional cash flow generation up to 7% and the positive impact of the Mexico transaction, our pro forma net debt reached EUR 50.3 billion in forcing credit metrics in line with our BBB+ rating. In terms of efficiency, our recurring operating expenses rose just 1% up to March, excluding the incremental effect on electricity networks in the U.K. In the coming quarters, we expect to benefit from the use of capital gains from national rotation like with previous year.

On top of this, we are implementing a full review of our processes to integrate artificial intelligence solution across our activities and corporate areas with more than 300 initiatives already identified that will drive that will drive funding efficiency and new business opportunity in the next years. All in all, the results reflect the benefit of our business model based on regulated business in every countries and that provide stability and sustained growth in all these scenarios. Even in the current energy crisis, probably in the 6 of the 7 linked to fossil fuels since I started my career, we don't expect in Iberdrola any significant financial impact from this scenario. Given our minimal exposure commodities, our zero exposure to supply affected by the strength of our move with 93% also of our state purchase fully secured.

Our geographical footprint based in countries and our structural protection against potential macroeconomic shocks. As you know, most of our remuneration for regulation are linked to inflation. We have foreign exchange risks fully covered by our in this profit estimate, 75% of our debt is fixed rate, and our current liquidity stands at EUR 21.4 billion, enough to cover 23 months of financial needs. The resiliency against crisis will be reinforced in the coming years, think of our focus on regulated electricity networks, mainly in the U.S. and the U.K., and our generation technology is not linked to fossil fuel volatility. 100% of our production is already sold for '26, 80% for '27, 75% for '28.

As a result, by the end of the decade, 75% of our EBITDA will come from regulated networks and long-term contracted generation. But a part of increasing our own resiliency, our performance in the last quarter shows that Iberdrola business model is also improving energy security autonomy and competitiveness in each of the countries where we operate. Given these benefits, more and more governments are putting electrification at the center of their energy industrial policies. In the last week, the European Commission the Council had published different communication documents and statements with a clear message and the accelerated electrification with sources, including nuclear, is the most effective way to promote Europe strategic autonomy and competitiveness.

In other countries like the U.K. are following the same strategy. We can listen to many European policymakers reaffirming this approach last week at Wind Europe annual event Healthy Madrid.

Moving on to business highlights. Over the first quarter, network has continued to deliver predictable and sustainable growth. In the U.K., the RIIO-T3 final determination will increase our determination investment to EUR 14 billion up to 2031, the improving rates of return accelerating cash recovered. The U.S. Avangrid results reflect additional contribution of new interconnection line between Canada and Massachusetts was commissioned in the last days of 2025 as well as the impact of rate increases in Connecticut to New York. In Brazil, the renewal of distribution concession for additional 30 years as published in the Union Official Bulletin. And the 4 machines ceremony is expected in the next few days. This will provide us visibility up to 2060 with no upfront cost and with relevant regulatory improvement, less recognition investment on an annual basis.

Operating performance was also positive in Power & Customers in the context of increasing demand in all our countries, mainly U.S. and Brazil. In Iberia, hydro reserves continue at record levels, and the U.K. wind production is 40% higher than in the same period of 2025. Finally, offshore wind production has increased significantly in our international business due to the completion of Baltic Eagle in Germany and higher availability across the fleet in Germany and France.

As mentioned, adjusted EBITDA reached EUR 4.1 billion, driven by positive network operating performance in all geographies, higher rates, an 8% increase in regulated asset base to the strong investment in U.K., especially in transmission. In Power & Customers, the evolution of EBITDA reflects negative nonrecurring impact mainly regulatory and ancillary costs in Iberia, as a result of the reinforced operation applied by ReteletigalEspana to include more synchronous generation. As you know, system operator is responsible for keeping the lights on, and since the black out, he has changed the operation of the system, now called reinforce operation, but in reality is more a regular operation system.

In my opinion, as an electric engineer, as I mentioned to you several times, it was a lack of proper planning and the new execution on the day of the blackout. As we had in the system around -- as we had in the system around 4x the power needed when it happened that was not used. The comparison against the first quarter 2025 has also reflected by -- in the business by nonrecurring positive results registered last year in the U.S., they will normalize over the coming months. These effects were partially offset by higher production, particularly in offshore wind, we reached a 42% increase in output.

By geographies, the U.K. and the U.S. accounted for almost 50% of the EBITDA and 8 countries contribute 84% to operating results once we had the European countries and Australia.

Investment reached EUR 2,705 million in the first quarter for total EUR 14.5 billion in the last 12 months, more directed to networks. Focusing on the first quarter, more than EUR 900 million were allocated to the U.K., reflecting an increase in transmission investment that will accelerate a bit more on the RIIO-T3 framework. Investment in the U.S. reached EUR 550 million, mainly in distribution. However, the company last year is affected by the completion of different renewable projects in the interconnection line between Massachusetts and Canada. Investment in Continental Europe and Australia reached EUR 400 million, mainly related to the wind in Germany, a new offshore and battery storage in different states of Australia. Investment reached EUR 309 million in Brazil with an increase of 30% in distribution and more than EUR 500 million in Iberia.

Thanks to the EUR 1.5 billion invested in networks up to March, our regulatory debt base reached EUR 53 billion, up 8% year-on-year. 1/3 of the total investment were located to transmission driving a 29% increase in regulated asset base up to EUR 14 billion in this concept transmission. Distribution investment also exceed EUR 1 billion up to 16%, mainly driven by a strong increase in around 30% in the U.K. and Brazil. By geographies 46% of investments were made in U.K., 26% U.S., 20% in Brazil, slightly 10% in Spain.

In Power, we invested EUR 1,070 million mainly in wind. Almost half of this investment around EUR 100 million were located in onshore wind across Australia and the U.S., U.K. and Iberia followed by offshore wind with EUR 100 million solar PV investment reached EUR 162 million, spread across Iberia, new countries in Australia as well as the U.S. And we invested EUR 115 million in storage, mainly in Australia and EU. This has allowed us to increase our capacity by 3,300 megawatts over the last 12 months, including 2 gigawatts of wind, 1 gigawatts out of solar and more than 300 megawatts of storage.

Regarding financial strength, the 7% increase registered in FFO and the positive impact of asset rotation partnership, mainly due to Mexico transaction that had led to us to pro forma net debt of EUR 50.3 billion, even after an increase in organic investment and acquisition of Neoenergia minorities. As a result, our FFO and adjusted net debt ratio has reached almost 25%, comfortably with a range a bit of BBB+ rating. On top of that, liquidity stands at EUR 21.4 billion, enough to cover 23 months of financial needs.

Finally, in the last month, we have accelerated the implementation of artificial intelligence initiatives. With an internal team fully dedicated to end transformation of our processes taking advantage of our own talent and resources as well of our understanding of our asset portfolio. In just a few months, this team has launched more than 300 AI projects, 70% fully developed in house to increase revenues and maximize operational efficiency across our business and corporate area. Mainly based on generative AI, but also on advanced machine learning and robotics. We inform you about the financial impact of these initiatives as soon they begin to materialize. But for the moment, I can tell you that our initial findings show a considerable value potential.

I will now hand over to our CFO, which will present the group financial result in more detail. Pepe?

Thank you very much, Chairman. Good morning to everybody. As the Chairman has mentioned, this first quarter results confirm the strength of our business model. The first quarter EBITDA was 2.4% up to EUR 4 billion, while adjusted net profit grew 11% to EUR 1,865 million. Since last year, the dollar has depreciated 11.4% against the euro, the pound 4.2% and the real 1%. As a consequence, FX has reduced our profit and loss figures. If you exclude FX, growth would have reached 6% at the EBITDA level and 17% at the net profit level. E&W is fully consolidated all the quarter versus last year where it was only 1 month. .

For clarity and comparability, we have applied a limited number of well-defined adjustments aligned with IFRS and our guidance definitions, thereby keeping differences between reported and adjusted results to a minimum. Mexico contribution is excluded at the EBITDA level in both reported and adjusted results following the IFRS 5 recommendations. Mexico is classified as discontinued operations in both cases. In the reported accounts, Mexico is presented directly under the discontinued operations line. And in the adjusted accounts for visibility purposes, Mexico is recognized under the equity line. In addition, there is a negative adjustment accounted in this quarter related to the year '24 divestment of our thermal assets in Mexico, which is excluded from the adjusted '26 results.

Second, as usual, U.K. capital allowances are adjusted at net profit level in both years. And finally, U.S. past recognition is excluded from the adjusted net profit in '25 in line with the definition applied in our '25 guidance. You can find all this explained in more detail in the Annex, specifically in Slides -- sorry, 36 and 37.

Regarding our gross margin, a 0.3% decrease in adjusted revenues, combined with a 0.5% increase in procurements resulted in a 1% adjusted gross margin decrease, excluding the FX impact at this level, which is EUR 267 million, adjusted gross margin would have grown by 3%. In the first quarter, net operating expenses decreased by 6% year-on-year and by 0.7%, excluding the FX impact. First quarter net personnel expenses fell 0.8%. External services were down 2% and operating income grew 24%.

On a recurring basis, and excluding the FX impact, net operating expenses would have grown by 8.1%, mainly due to the ENW contribution. Analyzing the results of the different businesses and starting by Networks, its adjusted EBITDA grew 9% to EUR 2,048 million, driven by the strong performance in the U.K. and in the U.S. Excluding here also EUR 94 million on FX impact, adjusted EBITDA grew 14%. In the U.S., IFRS-adjusted EBITDA increased 22%, reaching $612 million due to higher rates in distribution, Avangrid contribution from transmission, including the positive contribution NECEC line following the 16th of January COD.

In the U.K., EBITDA was up 32% to GBP 447 million, with higher contribution from ENW versus last year as consolidation started in March of '25 and also an increasing contribution from our transmission business, thanks to the higher RAB. In Brazil, EBITDA fell 0.7% to BRL 3.6 billion, with higher revenues due to yearly rate reviews offset by lower inflation and lower demand growth versus last year. In Spain, EBITDA increased 6.2% to EUR 426 million, driven by the 658% new regulated return and also with a EUR 15 million net impact, positive net impact from adjustments due to past year's remunerations.

Q1 '26 Power & Customer business EBITDA was EUR 2 billion, 3% lower than last year. During the quarter, Iberdola produced 33,000 -- sorry, 33,000 gigawatt hours of electricity with 86% sourced locally and being emission-free, which is a reference of the EU targets regarding power production. In Iberia, EBITDA was EUR 1,002 million, 3.2% down, affected by ancillary costs, regulated gas rate and lower prices despite higher electricity sales. As of today, Iberdola has record hydro reserves as mentioned by the Chairman, which will help the performance of the group in the second half of the year. In the U.S., EBITDA decreased 32% to $196 million, with lower contribution from wind, thermal assets and a negative timing effect that will normalize during the year and despite better prices. In the U.K., EBITDA increased 16% to GBP 493 million, thanks to higher wind resource, both in onshore and offshore, more than compensating lower prices and better contribution from the Supply division driven by better margins.

In the rest of the world, EBITDA decreased 7.6% to EUR 212 million despite the 37% higher offshore production due to lower contribution from our onshore wind assets affected also by the sale of some geographies like Hungary and France and a negative impact from higher ancillary costs in Portugal. In Brazil, EBITDA increased to BRL 500 million. Depreciation and amortizations and provisions grew 9% to EUR 1,476 million, driven by a higher asset base and a normalization of provisions versus exceptional recoveries in Q1 of '25. Adjusted EBITDA decreased 1% and reached EUR 2,591 million. Excluding EUR 80 million of negative FX impact, it grew 2%.

Net financial results improved slightly to EUR 497 million due to a EUR 4 billion lower average debt and helped by the currency depreciation despite EUR 56 million worse derivative results. Regarding debt structure, fixed debt, excluding amounts to 77% at March end, 12 percentage points above our fixed EBITDA reducing a risk of negative impact due to a possible interest rate increase as a consequence of the Iran conflict. New debt increased EUR 1.7 million -- sorry, net debt increased by EUR 1.7 million versus full year '25 to EUR 51.9 billion, mainly due to the currency appreciation, CapEx and dividend payment in the quarter, partially offset by the FFO generation, including the net EUR 1.6 billion collected from the Mexico sale to COGS and payment linked to Brazilian minorities acquisition both executed in April, debt would have been EUR 50.3 billion in line with year-end levels. So better debt levels compared to Q1 '25 and 7% higher adjusted FFO that reaches 12%, excluding FX, delivered solid credit ratios for our BBB+ Baa1 rating. These metrics clearly support our rating and underlines the group capacity to grow while having a strong balance sheet.

Our adjusted net debt to EBITDA was 3.4x below 3.7x in Q1 25%. The adjusted FFO adjusted net debt reached 24%, well over the 21.2% in Q1 '25. And our adjusted leverage ratio was 44%, 3 percentage points better than the 47% in Q1 '25. On a pro forma basis, ratios improved even more, as you can see in the slide.

Q1 adjusted net profit grew by 11% to EUR 1,865 million compared to the EUR 1,674 million adjusted net profit in Q1 '25, excluding the EUR 99 million FX impact, adjusted net profit would have grown by 17%. Neoenergia minority shareholders acquisition although it does not contribute to higher EBITDA reduces the dilution at the net profit level. And in this quarter, adds EUR 57 million to the net profit. In addition, it simplifies Iberdrola financial structure and increases the weight of networks in our net profit. The slide presents the reconciliation between reported and adjusted net profit. This is shown in more detail, as I mentioned before, in the annex. As well, we are showing in the annex, the calendar for the final dividend.

Thank you very much. And now the Chairman will conclude the presentation. .

Thank you, Pepe. To conclude this first quarter results, confirm the resilience of Iberdrola business model and the current context of geographical uncertainty and reinforce our positive prospect for 2026. The coming quarters, network will continue to be our main growth driver, thanks to an ongoing increase in our regulated distribution and transmission as well as the impact on new regulatory framework like RIIO-T3 in the U.K. or the annual target adjustment in Brazil, where we will also benefit of higher contribution from Neoenergia at the full acquisition of minorities. As mentioned, this transaction will simplify our structure in the country, accelerate our strategy focusing networks in line with acquisition of a grid minorities or the integration of U.S. in the U.K. last year. .

In Power & Customer, we will add 2.7 gigawatts before year-end on top of the 1 gigawatt commission in the first quarter. And our hydro resales continued record levels driven by strong hydro factors in January and February and the positive performance of pump storage. We also continue improving operational across our businesses. And in terms of financial profile, our current debt levels and the ongoing cash flow generation will allow us to increase investment in presale strong credit ratios. This positive operating and financial outlook is leading us to upgrade our guidance for 2026 to expect the growth of more than 8% in adjusted net profit, excluding capital gains from the asset rotation, we have always done, will apply for future efficiencies. And we expect to continue accelerating growth to the 2020 and beyond benefiting from increasing electricity demand outlook across energy users and geographies driven by technology process and new energy policies.

As government tried to capture all the positive impact of electrification in terms of strategic autonomy and division and competitiveness. In this context, over the last month, we have continued securing new investment opportunities in all our key countries. United States, the consensus or the need of generation network infrastructure is becoming unanimous given the strong increase in demand.

According to Standard & Poors Annual U.S. CapEx will grow by 11% per annum from '25 to '28. For Avangrid, this mean additional investment in transmission and distribution and generation. Including repowering and life extension of part of our current fleet of 11,000 megawatts. In the U.K., after the increase in transmission investment already confirmed by T3, we also expect significant growth in distribution in the next regulatory period starting in 2028. The government confirmed support to offshore wind with a year 8 auction expected later this year. As you know, Scottish Power is project. It's already bid, is ready to bid. It has its supply chain totally secure.

We also see increasing opportunities in Continental Europe offshore wind, for instance, in France and onshore technologies. As well as the Iberia retail business where we keep leading leadership in customer numbers and quality. In Brazil, the renewal of distribution concession for 30 years and with improved conditions, we will bring more visibility in the context of increasing investment needs. Finally, in Australia, we are already designing our first transmission project in West Victoria, and we are working in new opportunities in this business for the coming years. As well as in additional growth in onshore wind, solar PV and batteries.

Artificial intelligence is also generating new opportunities on electricity demand growth and huge potential to optimize business processes, our increasing additional revenue efficiency across our electricity value chains. All in all, you can be sure we will continue delivering strong, sustainable, predictable and resilient growth and in result and dividends as we have done in the last decades.

Thank you very much for your attention. We are now ready to answer your questions. Thank you.

The following financial professionals have raised the following questions: Philippe Ourpatian, ODDO, Pedro Alves, CaixaBank; Pablo Cuadrado, JB Capital Markets; Meike Becker, HSBC; Manuel Palomo, BNP Paribas, Peter Bisztyga, Bank of America; Rob Pulleyn, Morgan Stanley; James Brand, Deutsche Bank; Jorge Alonso, Bernstein Socite Generale; Fernando Garcia, RBC; Javier Suarez, Mediobanca; and finally, Skye Landon, Rothschild.

The first question is, could you outline the key drivers of Iberdrola's Q1 2026 net profit and explain the main factors behind the year-on-year growth?

Thank you very much. And already, as I explained, in networks, we expect a strong performance in the U.K. and U.S. due to the consolidation of electricity in the West from March 2025, higher rates and contribution from NECEC interconnection between Cara and Massachusetts and also a higher ramp in all countries because of the investment has been doing.

In power, business affected by nonrecurring impacts, the cost of service in Iberia in 2026 and some timing effects in the U.S. was affected this year. And as well in positive, we have the higher production. Below EBITDA, a good evolution of our financial expenses. Positive impact of the 100% acquisition Neoenergia that we have already mentioned before. And that makes our net profit grows by 11%. even with a negative impact of almost EUR 100 million to the FX. So without this one, the net profit that Pepe mentioned was 70% increase on adjusted terms.

Next is, could you elaborate on the new 2026 net profit guidance and summarize the main operating and financial drivers you expect to support delivery over the remaining of the year -- remainder of the year?

So almost on the same line that I was commenting for 2026. We expect to continue the strong performance during the rest of the year in networks growing the regulatory asset base in all countries, new distribution framework with better rates, GT3 from April, new interconnection between Canada and Massachusetts, better tariff in Brazil that has been already adjusted in the last few days, additional contribution for Energia for the 100% ownership. And in power, we have installed 1 gigawatt in the last 3 months, and we expect to make another 2.7 additional before the year-end. we expect to continue to have the strong renewable output after last year, very bad very low production, especially in the U.K. Our hydro reserves are in record levels, which -- and a part of that one, we have the very good performance and a good spread of our pumping storage facilities, which I think only in the first quarter, we have already produced 1.6 terawatt hours, so which I think is an important percentage of our total electricity generated with hydro. We have lowered and better ratios the interest rates mainly are fixed or hedged. We are not expecting significant volatility to the political geopolitical dynamics, as I mentioned before. because our regulated transmission distribute than Networks business. And because our power, 86% of our production is not linked to fossil files, 100% of 2026 is already solved. So that's why we are improving our guidance to an expected growth for more than 8% in adjusted net debt, excluding capital gains, which always we use for future efficiencies.

Next is related to the fiscal tax rate at the end of the year, what is the expectation we have?

Yes. Well, in this quarter, our taxes were -- have been affected by a reversal of a provision, thanks to that we have won award a court case and also impacted by the fact that the countries with higher tax rates have been lower contribution to our profits. We are expecting that our tax rate will go towards around 20% along the fiscal year. So it will increase to reach these levels of around 20% at the end of the year.

Next is related to one slide that has been explained already, but it's related to the impact of the Iran crisis in our operations, supply chains and financial evolution.

As I mentioned, we don't expect significant in the short term because 85% of our assets are in a countries not exposed to the conflict. Our growth is focused on regulated networks, which is 2/3 of our investment is coming to this segment. And the U.S. and U.K. represents 65% of our total investment. 75% of the EBITDA will come from regulated long-term contract activities by -- in 2028, 2030. 85% of the production as well in 2020 already secured through CFDs, PPAs, et cetera. And the supply chains are not affected by strength of dynamics because we are focusing local supplies were not purchase to the area. The fact today, 93% of our strategic agreement for investment is already secured.

We have a minimal exposure to commodities. We have not already long-term contract of gas. So I think that is not affecting to ourselves and the negative. I think it's, for me, as I mentioned, the current context prove again, the electrification is the best route to energy security, strategic economy and competitiveness. I think energy security is national security and electricity as is repeating, now all the European leaders is the solution. It's not a threat. It's not a problem.

Next question is related to asset. Is asking more details on the artificial intelligence initiative of Iberdrola.

Pepe? Pedro? Yes.

Thank you, Chairman. I think we're approaching now almost 400 projects of initiatives in AI and more than 70% are generative AI and more than 10% of those are robotics. These projects cover all corporate functions, all businesses and all geographies. They are linked to efficiency but also very important to new business opportunities. Very important, this is a process transformation. More than 70% are in-house made. I think we will see positive impacts as the Chairman said, and we will be updating in the upcoming quarters.

Next question is related to the recent closing of the Mexico deal to, including timing, expected capital gains and intended use of proceeds.

So as we informed to you, the transaction was closed on Friday. That means we received the money on Friday. The figures were in line with -- we announced last summer when we signed this agreement. We are calculating the capital gains in detail. But of course, it's going to be several hundreds of millions of euros. And as usual, we will use this money, this capital gain to achieve efficiencies in the future. And that will not impact our guidance, as I mentioned before. So now you allow me, I will pass to Spanish [Foreign Language]

So that I can thank the workers of the Iberdrola Mexico for their work over the last 25 years, and we have assisted them in the development of the country, and we have supplied them with safe and competitive power for their citizens and their industry. And also I'd like to thank the respective governments and the institutions and our customers and suppliers, too, who, over the years, have supported us and have collaborated with us throughout all of this time to be able to provide this service.

And as I said previously on previous occasions, that is one of the main reasons behind this operation is our priority. Our priority is focused on investing in electrical grids, in -- which is an activity that is in the hands of the National Electricity Commission. So we can't really do anything in that particular area. But I would like to say, however, that we are deeply satisfied because we are leaving top-level electrical infrastructures. And I know that now and in the future, all the Mexican citizens will benefit. And as I also pointed out to the Mexican authorities, we want to invest more. We want to invest more money in Mexico in the future, when the circumstances allow us to do so once we have completed our investment cycle.

Next is, could you update us on the rationale and process of acquiring the remaining minority interest in Neoenergia and expected implication for Iberdrola results and financial structure?

Pepe?

Yes. Well, since we bought the minority stake from, it made all the sense for us to complete the 100% of the capital. Obviously, the consequences of that is that it will improve our results basically through lower minorities. It will also help to simplify our financial structure and operations. We are now more and more exposed to the network business at the net profit level as we did also the acquisition of the 100% of Avangrid in the U.S. and the integration of ENW in the United Kingdom. So clearly, our focus on -- and this proves our focus on networks. In addition to that, Brazil is a core geography for us with very good prospects with very regulatory situation and where we are investing heavily, and we plan to continue to invest. I don't know Chairman, if you want to complete this with your...

Yes. Well, -- thank you, Pepe. I think I was 2 weeks ago in Barcelona with President Lula, he was visiting Spain and I have already very good meeting with himself, reaffirming our commitment with the country. We are the largest investor in the country last year, more than BRL 30 billion running by the purchase of minorities that Pepe mentioned. And he invited me for the concession renewable signature, ceremony on the -- I think it's sixth of next week on the sixth of May. And I will be there in Brasilia with himself already signing this one, which I will already participate in.

As I mentioned as well to the President Lula, our expectation is to increase heavily our investment in all our territories distribution, but mainly in the area of the west part of Bahia, where it is a huge demand that has not been covered because of lack of infrastructure. So -- but I think in general, our commitment with the country reminds and I think next week, I'll be present there in Brasilia with the President Lula for signing the ceremonial signature of the renewable concessions.

Next, could you comment on the current U.K. offshore wind environment, including Iberdrola's intention for the upcoming AR 8 auction and your perspective on the new seabed lease auction process.

So I think U.K. has a clear electrification strategy. I think electrification is I think the work with us energy security, national security is a word we not invented for myself was already invented by the British Prime Minister. I think that provides long-term energy autonomy that provide competitiveness. And I think is clear is one of the key instrument to achieve his goal and to increase the investment in offshore is crucial for them. I think that is the reason why the government has recently bought forward the year 8 to this year. So it was planned for the future is done.

I think for this project, we have already a project for this auction. We have a project of -- is Anglian North, 900 megawatts, which is ready to participate, which we have all the supply chain secure. But I think we will follow, as always, our profitability criteria.

Regarding the sea base lease has been recently announced, I think, for us is still too soon. We will review the details when they will be available. In any case, I would like to inform you that we have in this moment, more than 5,000 megawatt of offshore seabed rights 2,000 in Scotland, another 3,000 floating. So I think we have plenty of seabed rights for continuing our expansion in this field in the U.K. in the future.

Next is related to the hedging position and expectation for prices and volumes sold in Spain and the U.K. in the period 2026, 2028?

Pedro?

As you would expect in '26, we have already committed 100% of our available production in '27, it's already 80% plus. And in '28, we are in line with the capital markets guidance. I think in general, the prices we expect in line with the planned estimates that we gave to you before. As the Chairman said before, we will benefit from additional capacity and from increasing pump storage margins.

Next is the audience is asking about the blackouts in Spain, the past year blackout, including key findings to date, Iberdola position related proceedings, customer claims and any view on the evolution of ancillary service costs in the future.

I think we have always said, as has been confirmed by all report and investigation, and all the audio has been public, not only on the day of the blackout, but also in the previous day, weeks. So I think that's clear what is this one. This blackout that as a result of inadequate planning, management and operational electricity system and the lead to ensuing synchronous unit program despite the power was available. So I think if everything has been done properly by Red El ctrica. I think we can't ask Red El ctrica why it has changed the operating model, adding more synchronous capacity now. So if all the thing was correct this day, why they changed the operational system. .

So now we are paying billions of euros of additional costs, citizen and companies so in our accounts just because they changed the operational system, putting more synchronous capacity, much more synchronous capacity because the power was available. We have already a power, installed power in the country which is 3 or 4 or 5x more than the power needed on a day-to-day basis. So I think it's not a question of lack power.

So that's why I think it's something we -- for me is important we should distinguish between transmission, network ownership, which is a business activity and the system operation, which is not a profit business, it's a public responsibility and that is why in other countries, both activities are fully separated. System operator is taking -- have to take care of keeping the lights on. Network activities are already as a business, which is to maximize the profit. When you miss those things, it could conduct already situation, which can already make problems at those what we have already faced. In any case, Gerardo, you would like to add anything?

Yes. Thank you, Chairman. Just to say that the CNMC in his report about the blackout has stated that on the day of the blackout, the system had enough regulatory, normative and technical tools to avoid blackout, in place to avoid the blackout. So I think that is very important because it's the only official report because CNMC industry is the only institution competent to -- in relation to the blackout. So regarding the proceedings initiated by the CNMC, therefore, the CNMC has also stated that none of them -- none of these proceedings are related to the events that led to the blackout.

Regardless of that, I think that we have a very strong defense, very strong position to defend these cases because we have always acted according to law and with full transparency to the system operator and the regulator. But as far as we know, the only very serious proceeding directly related with the blackout, according to those reports, the audios the investigation, et cetera, is that is open to Red Electrica Espana.

And regarding the cost of claims, finally, we haven't received the reality is that we haven't received many claims compared to the size of our customer portfolio. And of course, we have insurance policies. So I would say that our position is very strong.

As I mentioned, I think following the blackout Red Electrica has doubled the use of combined cycle plants, nuclear for voltage control, what they call reinforce operation. This reinforced operation now is not becoming reinforce, it's becoming regular. This seems, I think if that is regular, should be recognized as regulated cost as is already in other countries, not affecting to the certain citizens and affecting to the companies, to the operators of the training companies.

Next is how would you describe the current performance and outlook of your retail business in Spain, given the increased competition.

Pedro?

The underlying business in retail is doing very well in Spain. We continue to be the market leader, both in numbers and quality of these customers. We have much lower churn rate than our competitors, especially for new entrants with a very strong customer retention. There is a good evolution of our customer portfolio, including the second brand, Niva. So we are very comfortable now on that position as well. But we continue to add products and services as well.

Question 12 is what is the Iberdrola's current view on the role of nuclear generation in Spain? And could you update us on the status of Almaraz extension process?

I think as you have repeated several times, nuclear is necessary, is safe, is efficient and contribute to lower prices due to the security of the system. In fact, now the European countries with nonnuclear have structural higher prices. That is the case of Germany and Italy, which is even EUR 40 per megawatt hour more than France or Spain. I think a certain analyst is already fixing this number, Pricewaterhouse. And so his report is talking about 47. But the reality today is 40, which I think they are not far from what this we are predicting this consulting company.

Also, the European Commission led by the President of is urging member state to avoid premature retirement of existing nuclear assets, even he mentioned about it was a mistake -- European mistake of closing and not investing in nuclear. They can provide because they provide firm low carbon and low-cost electricity. I think in other words, is talking about European critical infrastructure. So nuclear is more than national is becoming European critical infrastructure. I think that was confirmed again in the last week in the Accelerate communication. And that's why I think we have already asked the extension Almaraz to 2030. That is -- the process is ongoing.

I think the Nuclear Security Council, Spanish soon they will be with product information. In any case, all the nuclear need to have real a sustainable remuneration regime, some other countries did. So I think it secured -- we have either to secure price at attractive level or either to reduce taxation whatever thing to make already to give availity of that one.

I think in the case of taxes, in the case of Spain, certain community -- autonomous communities, has already renewed, so they are ready to reduce the local taxation, so which I think that is in the mind of the people. And nothing is -- my personal vision is that nuclear facilities in Spain and other countries will be extended for longer term. I think it's in the case of Europe are essential infrastructure to secure electricity supply. So I think it's as European Commission is suggesting, it's becoming critical for keeping the lives on and the European competitiveness just to -- as a key tool for minimize the external dependency to increase the competition, reduce volatility and not to be already depending on volatilities with external factors are those ones we are suffering those days with the progress of the trial.

Next is, could you provide an update on the construction status and operational ramp-up of Vineyard Wind 1 offshore power plant?

Pedro?

Practical terms, the wind farm is completed. We finished the construction of all the positions. The levels of availability, we expect to be in line with other offer wind farms in operation. Very important, this -- many of the positions have been exporting power for many months. Also, the financing is advanced, both tax equity, tax credits, but also the debt financing. So we are moving forward very well with the asset. .

So I think from the -- I know from the 24th of April is in commercial operations. .

COD was declared.

I think that is in commercial operation now.

Next, could you outline Iberdrola's growth opportunities in the U.S. Power business, given the increase in electricity demand?

Pedro?

As the Chairman highlighted, we have passed 11,000 megawatts in the U.S. What we see is a strong demand increasing in the U.S. More power is needed. That's clear. AVR is and continues to invest. We added almost 1,300 megawatts of capacity. We have 700 megawatts under construction, we have identified 3,000 megawatts of additional potential capacity, more than 1,000 of those very advanced status. And of course, life extension or power in the short term are a clear path. Therefore, clear interest of some of our existing customers for new PPAs. By the way, we're increasing also for the first time, a new battery storage, we just approved a project in Oregon. So we are starting now in that field.

Next is, could you explain the recent FERC decision to reduce allowed ROE for New England transmission owners and what the expected implication for Iberdrola?

Pedro? .

This is a matter that affects all the transmission operators in New England. As you know, there is another case in, which we expect the rolling soon. And therefore, since it's a similar procedure, we will see what happens there. it's important that they allowed no payment to be done for the next 12 months. And there is no impact.

But in any case, I think you have to be aware that is something which is coming from 2011. I think something 14 years ago is revising, decision they took 14 years ago to say that probably the -- how they pay in this 14 year was not already whatever. So I think to talk about retractive actions with 14 years. So we are quite confident that the courts will already take into consideration the comments which are making all the people affected with all across the United States. I think in 14 years, has not revised the terms of the vision they took. And 14 years later, they are looking, then what therefore they pay considered is not already that will have to be paid. So it's something which -- it's difficult to be understood by engineers like myself. I don't know layer will understand, it's still better than we engineers.

Next is how do you assess the current affordability debate in both in the U.S. and in Europe? And what measures do you believe would be the most effective in reducing electricity bills for customers?

So as you know, the tariff, the electricity tariff has 3 main concepts. One is the electricity cost, which is power and networks, power, it depends of its country, what is the mix of power generation -- in networks, it depends how efficient are already this network. I can say that in general, European networks are more efficient than those which are another side of the Atlantic. Second, parameter is taxes. So I think taxes in the case of Europe is 4x higher than those which are in the United States or in China. So -- and the last one is the industrial and energy policy cost.

I think there's a lot of things included the tariffs, but we are already -- the consumers are paying or the company we are paying. We have to see already with this energy policies in each country. So as I mentioned, in terms of taxation, I think this is represented in most cases in Europe, more than 40% of the bill, 40% of the bill, 10% in the state. So -- and I think so that way, I think the fastest way of that 1 is reducing taxation to reducing bill. That is being recommended by European authorities. So is -- which we have to be -- on that one. If we would like to electrify, we cannot penalize. We have to incentivize, not penalize I think it's -- and I think the big threat that we have affordability in the case of that one is to continue relying in fossil fuels. I think in my professional life, I mentioned before, I have already had 6 or 7 different energy crisis. In all these energy crisis, the solution is not to penalize electricity, is to incentivize electrification.

Now that is already on the communication Union as the key driver for that one. So that is what they are saying, more electrification, more indigent resources, renewables and nuclear base of the European energy mix. More distribution and transmission grid, more interconnection between countries and more access to consumers to electricity. I think they are already a demand which cannot be supply because of lack of infrastructure of electricity. People is willing to electrify more the uses. But the lack in demand cannot be supply because of lack of infrastructure. Because in some countries, we've been suffering -- still we are suffering certain cuts of investment. So they are limiting the investment we have to make or reducing even the operational costs as they did in Spain, which I think if we increase -- if the demand is increasing in infrastructure is not duly maintained because there are not enough budget money recognized, I think that it's not easy to be electrified that one.

And certainly, lower taxes in the electricity bills, which will not be discrimination with gas. I think in some countries in Europe. So gas taxes is 4x less the electricity. So I think we have to be clear. We would like to depend on feel who would like to electrify. Who would like power, who like fossil. And that is we have to be correct. I mentioned in the case of U.K. This energy crisis, -- and they revised the taxation of electricity. So we have to beat the deposit. So even it's not affecting ourself this well. So -- and is I think something which is clear, those countries, we have more penetration.

Our renewables and nuclear have already lower structural prices. Italy and Germany has higher prices than France, in Spain because they are less renewables, nonnuclear, Spain or France, we do we have more nuclear and more renewables than other one. And I think that is -- it's a clear situation.

Next is totally linked with the answers you recently given. What is your perspective on the proposed reform to the European electricity market? And how do you think policymakers should address the current price environment?

So I think I repeat again. I think the measure proposed in this crisis show a clear change compared with 2022. Governments in Europe agree the electrification is the solution. So electricity is not a problem, but it's the solution. So all the measures should be directed against not electricity, against fossil fuels. I think ETS, in my opinion, is a key tool to promote Europe energy independence. It has already proven it works well. It send the right signals and it has flexibility mechanism. So they have to be used the funds already obtained by the carbon emission for electrifying not for using for making another usage in the national budget. So that's why, for me, the structural solution, and that is what is proposed in the European Commission, it's a little electrification with more renewables bake with more grid and with more storage and more interconnections.

Next is, could you comment on your net debt expectation for 2026, including the main drivers versus year-end 2025?

Pepe?

Yes. The -- we are expecting to end the year with a level of debt of around EUR 55 billion. And basically driven by the strong investments that we are doing, we are -- as the Chairman has said another year in record of investment and obviously, dividend is also increasing the debt despite the FFO generation. But as we have mentioned, the expectation that we've is almost finished.

The other element that is affecting us a little bit is the FX impact, especially of the real, which is slightly higher than what we had expected. In any case, the EUR 55 billion is absolutely in line with the CMD and the plan that we have and Capital Market Day ratios expected. So to be in a BBB+ ratio.

Next is Iberdrola considering developing gas-fired power plant in the U.S. and how would this fit within the current growth priorities?

So as you know, our main business in United States is networks. It's more than 80% of our business related to networks. Network is already regulated by states. And I think we have a huge let's say, prospect of investment in these states because of the needs of that one. Also, I think we see clearly is an increase in power demand, but this power demand as well is needed in networks for already for taking this electricity in the home in the industries, what they're required for attending this demand. But I think you know, as Pedro has mentioned, we have already -- we are focused in solar, in onshore wind, and in batteries.

We have a huge pipeline, and we have huge opportunities in repowering or extending life of the existing 11,000 megawatts in the operation, and we will concentrate on that one. Concentrating networks, first priority. And second, with our present pipeline and with our present portfolio of power in operation to increase our production using the existing assets or making already new assets with the pipeline we have enhanced in this moment.

Next, if you comment on recent market speculation regarding offshore wind agreements involving other developers and whether Iberdrola's approach to offshore contracting in the U.S. is changing?

I think we -- traditionally, we are not making comments based on rumor or even uncertainties, but about our competitors. So we have not details about that one, and we will have details, we will analyze what is exactly they are doing. But I think for the time being, the only thing is comments, but we have not already any certainty about all those things.

Next is, can you provide an update on how is the data center industry evolving in Spain and in other markets? How is the pipeline of projects in terms of liability and connection requests progressing?

So as you -- as I mentioned several times, we have already -- our main customer worldwide are those which are already precisely working and using already data centers. We are already PPAs per annum more than 120 terawatt hours to 3,000 gigawatt hours a year. And what we try is to facilitate the expansion of these data centers to then is our customers who would like to use our capabilities our knowledge and our skills for helping them to make that one. Saying that, I think is the fact that in the last few months, we have already signed more than additional kilowatt hours of new PPAs for this data center use. And that is certainly is going to be an important driver of growth demand. So -- but I think what we are insist facilitating.

We have some projects in Spain, and we are already working on it. But I think the idea is to facilitate those ones for our customers. I think we have already knowledge of the permit. We have land, we have connection. We have power, and that is what we are putting at the service of the customers. But that is not already -- we are not making already a special business area on that one. It's something which is helping to business is to sell to them as much electricity as they need in the best condition as possible for the longer period of time as possible. And for that, I think we are doing our best for helping them to build the infrastructure they need for making already these data centers.

Next and last question is what potential opportunities do you see versus your current plan, 2026, 2028 by geography and business, upside opportunities.

So I think we are seeing more opportunities across other countries, as I already mentioned in my presentation. I think the electrification is the electrification is a reality. We are seeing rational demand for several users, a part of artificial intelligent another one as well. I think in the case of U.S., we have additional demand of investment in infrastructures in all the states. So I think regulators is asking for this investment. Also, we are just making more investment in power. I think as we have already had 1,300 new megawatts in U.S. in the last 12 months. We have 700 construction -- and as Pedro mentioned, we have 11,000 megawatts of capacity in which we have identified 3,000 or 4,000 for life extension of repower in the short term. So -- and also, we are increasing -- we have seen increased interest in our large customers for expanding and extending the PPAs, we are not pressing for making new ones. .

Also, we are seeing opportunities in battery storage. We have announced the first one in Oregon, but will follow another one in the near future. In the U.K., I think we have already -- the final determination is better than expected. It's higher TOTEX, it's up to EUR 4 billion. I think it's a slightly increase in the rate of return. Is faster, that is important, cash recovery. And I think also, as I mentioned as well, the new offshore wind auction year this year, which we have already just one project, which is ready with all the supply chains already agreed and close.

And in Continental Europe, additional onshore and offshore project. I think France announcing the new auctions for offshore, which I think in the terms we look -- could be attractive. We will analyze more in detail. And in Brazil, as I mentioned as well, once we sign this concession extension renewables for more than 30 years, I think new additional investment will be needed I think also we have already positive things. All the investments are recognized on an annual basis, which we had already as much investment we are making in a year. The following year will be recognized in our railways and.

In Australia, the things are moving. I think we have already a project in this moment in the design of transmission. And we have another one in the portfolio. We're making as well something in the future. We are putting additional investment in generation in battery storage. I think we are adding almost 100 megawatts in the last 12 months. And also in battery storage, we are already now project with large batteries, batteries up to 8 hours, which I think that is already just is going to be the record in the battery in our more than 600-megawatt portfolio, that is going to be the largest one. So I think those are the main things. I think it's -- one thing is important is our pumping storage facilities, what we continue as well expanding. So in this moment, as you know, we have already in the short-term capacities, when I say short term, 20 hours or 24 hours is something like 40,000 megawatt hours capacity. And we have already another probably 100,000 megawatt hours of longer periods of time. I think those ones we are pumping to certain, too large dams that we use across the year.

I think we avoided the water flows to the sea, and we are keeping these waters in our dams. And we are already almost every year putting 2 or 3 new pumping storage facilities in the country. I think in the last few months, we have already just put someone else in the Taco River and another one in the Tamega River. So we continue -- in the Tamega River, we are expanding as well. So we continue making that one because we consider pumping facilities is the most efficient manner. But in batteries as well, we are already investing. So we have already as I mentioned probably in this moment, 2,000 or 3,000 megawatt hours capacity, but I think we will expect to have to more than double that one in the next 2 or 3 years, and those given a good opportunity because the spreads are good. And I think as much renewable we introducing as more storage will be needed. And same thing and as much demand is increasing as much grid is needed, and that is what we are concentrating

Okay. So now I hand the floor over to Mr. Galan to close this event.

So thank you very much once again for taking part of this conference call. If there are any doubts, our Investor Relations lead by Ignacio will be available for any additional information you may require. Just to finish, you know our Annual General Meeting will be held in Bilbao, on the 29th, and we invite all of you to join us either in presence, or yes in through the delegation or even connected by the web. So thank you, and see you soon. Thank you.

Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2025 fiscal year results presentation. As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key developments during the period.

The presentation and the Q&A part will be delivered by the top executive team joining us today: Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO. After the presentation, we'll move on to the Q&A session. I would like to remind you that we will only be taking questions submitted through our website. Please send your questions exclusively via www.iberdrola.com.

Finally, we expect today's event to last no more than 60 minutes. Should any questions remain unanswered, the IR team will, as always, remain fully at your disposal. We hope that this presentation will be useful and informative for all of you. And now without further ado, I would like to hand the floor over to Mr. Ignacio Galan. Thank you once again. Please, Mr. Galan.

Thank you, Ignacio. Good morning, everyone, and thank you very much for joining this conference call. In 2025, reported net profit reached EUR 6,285 million, up by 12%, even excluding EUR 464 million noncash charges to adjust the value of our renewable pipeline in different countries. Excluding those charges, net profit will reach EUR 6,749 million.

Adjusted net profit, which, as you know, exclude the impact of capital gains increased by 10.3% to EUR 6,231 million above our guidance. Adjusted EBITDA rose EUR 15,684 million, up 3%, with 21% increase in networks, reflecting our high regulated asset base in improving framework in our core geographies, partially offset by nonrecurring impact of ancillary service costs in our power business due to the reinforced system operation in Iberia as well as lower prices. Total investment reached EUR 14.460 billion with 2/3 allocated to transmission and distribution networks, driving 12% growth in our regulated asset base in just 1 year to almost EUR 51 billion.

In Power & Customers, we added 2.7 new gigawatts in operation, and we have 4.7 gigawatts more under construction that will start producing next quarters. This strong expansion was combined with a further improvement in efficiency, thanks to an increase of only 1% in our current recurring net operating expenses, well below gross margin. And financial strength with net debt down EUR 1.5 billion, driven by an 8.2% increase in our operating cash flow, up to EUR 12.811 billion. This positive impacts of our asset rotation and partnerships plan and the capital increase last year, improving our FFO and adjusted net debt ratio to 25.5%, comfortably in the range of BBB+ rating. Finally, yesterday, the Board decided to propose to the General Meeting a total dividend of EUR 0.68 per share.

As you can see, 2025 has been a transformational year for Iberdrola, thanks to the implementation of our strategy. In the last 12 months, we have a remarkable progress in all the pillars of the plan we presented a year ago. Reinforcing our focus in networks infrastructure with transmission as new growth vector in the U.K., where we have secured EUR 14 billion of TOTEX for the next 5 years under RIIO-T3, including [ submarine ] interconnection like Eastern Green Link 1. In the U.S., after the commissioning the NECEC interconnection between Massachusetts and Canada and now also in Australia, where we were recently awarded EUR 1.2 billion line in the state of Victoria as we expect it to complete by 2030.

On top of that, we have also continued increasing our distribution investment and progressing in the definition of new frameworks for the coming years in all our countries, mainly in Brazil, where the regulator has already approved the renewal of our distribution concession for 30 years, more providing us visibility up to 2060.

In addition to organic investment in the asset rotation transaction completed in 2025, have also confirmed our strategic focus on networks, mainly due to the acquisition of Electricity North West now fully integrated and the purchase of Avangrid and Neoenergia minorities.

This record activity is also expanding our contribution to social development and job creation across our geographies, with 4,500 new hires in 2025 and a total workforce of 45,400. EUR 13.2 billion of purchase to thousands of companies that support 0.5 million jobs across our supply chains, and tax contribution of EUR 10.4 billion, and EUR 425 million allocated to research and development, reaffirming our position as leading private utility worldwide in innovation.

Thanks to our performance in 2025, we are facing 2026 at the beginning of new growth phase. But before that, and given that we are from Bilbao, let me share with you the few figures that show our transformation over the last 25 years. Since 2001, we have multiplied our total asset base by 8x to EUR 161 billion, driven by the expansion of regulated networks asset base to EUR 51 billion, 10x more than 2001. Our generation capacity from 16 to almost 60 gigawatts today. And our storage capacity was multiplied over 3x, thanks to the investment made in existing hydro turbines to make them reversible, new pump storage facility, like Tamega, and battery project across the world. On top of that, our international expansion has fully transformed Iberdrola from utility based in Spain with just 1% of our activity in other markets in 2000 to a global utility with 65% of our business in the U.K., U.S., Germany, France, Brazil and Australia.

As a result, we are reaching our 125th anniversary, consolidated as the largest utility in Europe and 1 of the 2 largest worldwide with a market cap above EUR 135 billion, 12x more than 2001, even after paying EUR 47 billion in dividends across the last 25 years. And you can be sure that the key pillars of this growth story were our vision, our strategic [ coherence ], our ability to anticipate the structural shift in the sector across our access to financial resources and supply chains and our track record of execution. Are also all of them, the best guarantee to sustain growth in the coming years. We are demonstrating we are a company that always we fulfill our promises, even we overfulfill our promises. We overdeliver what we promised. It's a bit different with others, with they are promising, they are not delivering as much as they are promising traditionally.

Moving to 2025 result, adjusted EBITDA reached EUR 15 million -- EUR 15.684 billion with 2/3 coming from international business. The United Kingdom contributed with EUR 3,306 million and U.S. EUR 2,662 million; Brazil, close to EUR 3 billion; and the EBITDA from other European countries and Australia reached EUR 791 million; with Iberia contributing the remaining EUR 6 billion. As a result, 81% of our group EBITDA is already coming from A-rate countries. By businesses, Networks adjusted EBITDA grew by 21%, thanks to higher regulated asset base in all countries, new tariffs in the U.S. and Brazil and the consolidation of Electricity North West, while renewable power and customer EBITDA fell by 10% as a result of lower market prices and the impact of the so-called reinforced operation implemented by Red Electrica in Spain, partially offset by the addition of 2.7 gigawatts of new installed capacity worldwide.

Total investment reached EUR 14,460 million due to the acceleration of organic growth and the acquisition of Neoenergia minorities in Brazil. By countries, investment increased by 34% in the U.K., driven by 47% rise in networks due to the new transmission project and the ongoing investment of Scottish distribution Manweb and Electricity North West. U.K. investment in power also increased by 21%, mainly in East Anglia THREE offshore wind farm. In the U.S., investment increased by 2% as the growth in transmission and distribution more than offset the slightly lower investment in power after the completion of projects under construction. Combined, U.S. and U.K. contributed 60% of total investment, with 70% allocated to Iberia, 14% up to Brazil and 9% to other countries, mainly Australia, where investment more than doubled year-on-year, offsetting the decrease in Germany and France as offshore projects are put in service.

By businesses, Networks reached EUR 9 billion, almost 2/3 of the total, with 13% growth in organic investment, mainly in U.K. and Spain. And the U.S. and Brazil, where the increase in distribution has more than offset the completion of transmission project. Our regulated asset base increased by 3% to EUR 51 billion with transmission already represented today 25% of our total network assets. And this pattern will continue in the next years, reflecting the progress made in our regulatory frameworks and the construction of new projects.

In the United Kingdom, Ofgem published its Final Determination for RIIO-T3 with almost EUR 14 billion of TOTEX for Scottish Power Transmission up to 2031. This will imply multiplying by 4 the investment made in the previous 5 years, securing long-term growth and fully transforming the profile of Scottish Power.

In the United States, Avangrid benefiting from higher rates and the rising contribution to result of new transmission project that will accelerate 2026, thanks to the commissioning of our interconnection line between Canada and Massachusetts, adding EUR 125 million per annum to group EBITDA.

In Spain, the new remuneration methodology for the period '26 to '31 has already been published. While in Brazil, the regulator has approved the renewal of our distribution concession for 30 years up to 2060, and Neoenergia has completed this transmission project with a total contribution of EUR 250 million to EBITDA per year.

Finally, Iberdrola Australia was awarded as a transmission line in the state of Victoria with an investment of EUR 1.2 billion up to 2030. They will increase significantly our footprint and result in the country, and we continue developing a pipeline of additional transmission projects in another different states.

In Power & Customer, we invested EUR 5,260 million, well spread across the U.K. and the U.S., Iberia and other countries. By technologies, we invested EUR 1.7 billion in onshore wind, EUR 1.4 billion in offshore wind, EUR 1 billion in solar and EUR 1 billion in storage and retail. We have already put in service 2,710 megawatts of onshore and offshore wind, solar PV and storage. And we have 4,679 megawatts under construction as well a pipeline of more than 9,000 megawatts ready for 2028, more than enough, of course, to secure all the new capacity expected in our plan.

Regarding routes to the market, we have also sold all our production for 2026 with an attractive mix of regulated contracts with an average duration of 14 years. Retail customers and long-term PPAs, which already represent 2/3 of our total energy sales and will continue increasing, thanks to the ongoing signature of new contracts. As a result, we have been recently recognized as the leading seller of PPAs in Europe and 1 of the 3 largest worldwide.

Operating cash flow was up by 8.2% to EUR 12,811 million, reflecting the strong performance of Networks and the stable contribution from Power. This rise in cash generation up to EUR 1 billion in just 1 year, together with asset rotation and partnership and the capital increase of last summer has allowed us to reduce our adjusted net debt by EUR 1.5 billion to EUR 50.2 billion even after the consolidation of Electricity North West and the acquisition of minorities in the U.S. and Brazil, improving even more our ratios with FFO to adjusted net debt reaching 25.5% and adjusted net debt to EBITDA down to 3x.

Following the strong operational and financial performance, yesterday, the Board decided to propose to the General Shareholders Meeting a total dividend of EUR 0.68 per share, adding EUR 0.427 to EUR 0.253 already paid 3 weeks ago as interim dividend. These figures represent a year-on-year growth of 6.3% in dividend per share and 12% in total dividend payments, up to EUR 4.5 billion, taking into account the impact of a capital increase.

I will now hand it over to our CFO, who will present the group financial results in further detail. Thank you.

Thank you, Chairman, and good morning to everybody. '25 adjusted net profit reached EUR 6,231 million, representing a 10.3% increase compared to the EUR 5,651 million in '24 adjusted net profit. Reported net profit was 12% up to EUR 6,285 million. 2025 net profit would have reached EUR 6.7 billion if capital gains had not been more than applied to adjustments in our Power division and as the Chairman has said, mainly in renewables.

As the main perimeter change, I have to say, ENW has been fully consolidated since March. Another thing to note for you is that the Mexico P&L and debt is included here for illustrative purposes because in our reported accounts, it is classified as an asset held for sale due to the expected closing of the transaction very soon. FX evolution has had a minor effect on results, thanks to our FX hedging policy, with the dollar 4%, the pound 1.1% and the real 7.6%, all of them depreciated against the euro.

Our EUR 6,231 million adjusted net profit is beating our adjusted -- our guidance and is close to the EUR 6,285 million reported net profit. In this slide, you can see the details of the adjustments from '25 reported net profit to adjusted net profit. The EUR 379 million exclusion of U.K. Smart Meters capital gain in Q3 is more than compensated with the EUR 464 million in adjustments in our Power division, which are write-offs in our renewable pipeline. And the network cost recognition one-off in the U.S., a noncash item, which is taken out from our adjusted net profit, is also partially compensated with the inclusion of the cap allowance in the U.K. as it is a cash income.

Adjusted revenues rose 0.6%, driven by the Network business, while procurements fell 0.7%, driving up adjusted gross margin by 1.8% to EUR 24.3 billion. And here, we are excluding the cost recognition in the U.S. Networks. Excluding capital gains from asset rotation accounted at the operating income and one-off efficiencies, '25 net operating expenses improved 4.1%, affected by lower storm costs that also diminished gross margin. Adjusted net personnel expenses rose 1.9% due to a higher number of employees, as the Chairman has commented. Adjusted external services declined by 5.2%, mainly due to the EUR 350 million lower storm cost and adjusted other operating income increased by 10% compared to '24 due to the indemnities of past year costs, partially offset by the EUR 121 million negative impact of the East Anglia sale that -- it is compensated at the financial results. Excluding mentioned storm-related impacts and other adjustments, net operating expenses on a recurring terms grew 1%.

Analyzing the results of the different businesses and starting by Networks, its adjusted EBITDA grew 21% to EUR 7,794 million, mainly driven by the strong performance of the U.K. and the U.S. and a significant last quarter improvement in Spain. Transmission EBITDA is up 28% to EUR 1.1 billion and distribution EBITDA 19% to EUR 6.7 billion. In the U.S., the EBITDA reached $2,491 million, 73% more with higher rates in distribution and better contribution from transmission and positively impact since Q1 by the decision from the New York regulator that allows to register a regulatory asset under IFRS regarding past costs of $551 million. Taking out this effect, EBITDA is still up a remarkable 35% on an adjusted basis to $1,940 million.

In the U.K., EBITDA increased 28.7% to GBP 1,595 million, including 10 months positive ENW contribution and the growing contribution from transmission.

In Brazil, EBITDA was up 13.8% to BRL 13,837 million, thanks to higher revenues in distribution due to demand inflation and increase in rate reviews over a higher asset base. Transmission contributed positively with BRL 1.6 billion EBITDA, 56% up or BRL 583 million more than in '24 as all the lines have been completed.

In Spain, EBITDA grew by 31% to BRL 2,015 million. The result was positively impacted by the recognition in Q4 of incentives related to '24 and '25. The remuneration increase for the '24, '25 period, 6.58% and from the positive effects in Q4 '24 of a negative one-off in efficiency costs.

'25 Power EBITDA reached EUR 7.9 billion versus EUR 8.8 billion in '24, both excluding capital gains from asset rotation, which are EUR 1.3 billion lower in '25 as higher production due to 270 million -- 2,700 megawatts additional installed capacity did not compensate lower volumes and prices. Emission-free generation reached 85%.

In Iberia, EBITDA was EUR 3,921 million, 16.8% down with higher production more than offset by lower margin and sales, explaining part of the year-on-year variation and higher ancillary services costs, lower court rulings and higher levies despite the termination of the 1.2% revenue tax explaining the remaining decrease. Hydro reserves have reached an all-time record of more than 9 terawatt hours as of today.

In the U.S., EBITDA grew 0.9%, reaching $1,069 million, supported by higher prices and new solar capacity. This growth came despite the fact that '24 was positively impacted by the Arctic Blast storm one-off and by the sale of Kitty Hawkin the fourth quarter of last year.

In the U.K., EBITDA grew 0.4% to GBP 1,536 million, considering the GBP 324 million capital gain from the U.S. -- from the U.K. Smart Meters divestments in Q3. But adjusted EBITDA, taking out this capital gain, was down 20.8% to GBP 1,212 million, with lower prices and lower volumes in renewables and lower EBITDA from the supply business, driven by lower volumes. Net operating expenses included GBP 108 million negative one-off impact linked to the East Anglia THREE sale, which is more than compensated at the net financial results.

In the rest of the world, EBITDA grew 10.4% to EUR 796 million due to the higher contribution from offshore wind farms, St. Brieuc in France and Baltic Eagle in Germany, but with lower contribution from supply business in Portugal, due to a EUR 30 million negative impact of the ancillary services costs as a consequence of the blackout.

In Brazil, EBITDA fell 2.7% to BRL 1,283 million as a consequence of lower production and lower margins, but with a positive impact of BRL 297 million linked to the negative adjustment recorded in Q4 '24 following the classification of Baixo Iguaçu as held for sale.

Finally, in Mexico, EBITDA reached USD 632 million, decreasing 71%, with lower reported contribution due to the assets sold on February 26 last year and the higher contribution from the retained business, tanks -- sorry, the sold in February 25 last year and with higher contribution from the retained business, thanks to higher availability and demand. As mentioned at the beginning, the performance of the EBITDA from Mexico is for illustrative purposes, as on the official account is classified as held for sale, so the results are on the discontinued operation paragraphs before the net profit line.

Adjusted depreciation and amortization and provisions with EUR 524 million of adjustments in '25 and EUR 1,500 million in '24, mainly in the Power business, increased by 3% to EUR 5,793 million, driven by a higher asset base despite lower bad debt provisions. Adjusted EBIT reached EUR 9.9 billion and grew 3.1% in line with adjusted EBITDA.

Net financial costs increased by EUR 288 million due to minus EUR 1,863 million, mainly driven by EUR 263 million higher debt-related costs, due to EUR 6.2 billion higher average net debt, with an impact of EUR 357 million, while interest-related costs and FX improved by EUR 94 million due to FX depreciation, especially of the real and the dollar. Derivatives had a positive contribution of EUR 164 million, mainly due to the East Anglia THREE derivative contribution, while the rest had a negative impact, mainly due to the Mexico hedges compensated at the net profit level in the tax line, lower capitalized interest and other items.

Cost of debt improved 6 basis points to 4.75%, mainly thanks to lower short-term interest rates, especially in the euro, despite higher interest rates in Brazil. Excluding the real, cost of debt improved 15 basis points to 3.55%.

'25 net debt, as the Chairman has said, is EUR 1.5 billion lower than the EUR 51.7 billion reported in the '24 year-end, reaching EUR 50.2 billion. This positive evolution was driven by the EUR 12.8 billion FFO generation, plus the EUR 4.6 billion as a result of asset rotation and East Anglia THREE debt deconsolidation and the EUR 5 billion capital increase, more than covering the EUR 12.6 billion CapEx plus the EUR 1.9 billion of Neoenergia PREVI acquisition and the EUR 4.6 billion dividend as well as a EUR 2.2 billion ENW net debt consolidation. As a consequence, our credit ratios are strong for our BBB/Baa1 rating. Our adjusted net debt-to-EBITDA was 3.02x. The FFO adjusted net debt reached 25.5%, and our adjusted leverage ratio was 43.8%, 1.6 percentage points lower than at the end of '24.

Regarding our financing strategy, we delivered a year of unprecedented execution awarded by the IFR magazine as the best issuer in the world in '25. In addition to the capital increase, Iberdrola signed EUR 16.7 billion of new financing under highly competitive conditions in different markets. We placed EUR 4.9 billion in bonds, achieving several milestones. Our first green senior under the EU Green Bond standards and ICMA standards, a nondilutive green convertible with the high savings versus a senior structure ever in Iberdrola. Our lowest coupon among all hybrids issued in the euro market in '25 and the tightest spreads and Neoenergia and NYSEG.

In structured finance, we secured EUR 4.5 billion, driven by the East Anglia THREE project financed by 23 banks and the Danish Export Credit Agency. We also reinforced our liquidity position with EUR 3.8 billion in credit lines, including EUR 2.5 billion sustainable syndicated facility for the holding and Avangrid, which has now become a benchmark in terms of pricing.

In multilateral and development financing, we added EUR 2.5 billion, including green funding from the EIB, supporting next-generation investment and the first green loan granted by the National Wealth Fund to a European company to finance projects in the U.K.

'25 adjusted net profit grew 10% to EUR 6,231 million, while reported net profit rose 12% to EUR 6,285 million. Let me stress again that the net profit would have had exceeded EUR 6.7 billion if '25 capital gains had not been more than applied to adjustments in our Power division.

Now the Chairman will conclude the presentation. Thank you very much.

Thank you, Pepe. To conclude, 2025 was again a year with a strong operational and financial performance. But above all, last year confirmed the transformational impact of our strategic plan based in network infrastructure as a key driver. In 2025, our RAB increased by 12% with attractive returns and visibility, thanks to our presence in countries like United States and U.K. And we expect to continue growing in the coming years, both in distribution due to integration of Electricity North West in the U.K. and increasing investment needs in all geographies and in transmission, mainly in U.K. and U.S. and Australia.

In Power & Customers, our selective approach focusing our core markets and our balanced mix of technologies allow us to install 2.7 new gigawatts in 2025 with 4.7 gigawatt more under construction and 9 gigawatts of projects ready for 2028. In addition, 100% of our energy is already sold for 2026, mainly through long-term PPAs and regulated contracts. And we have continued expanding our unique portfolio of storage, which include hydro pumped facilities in operation capable of delivering up to 10,200 gigawatts per annum and a pipeline of battery and hydro pumped storage projects up to 7,500 gigawatts hour per annum.

In 2025, we have also confirmed our commitment to financial strength with a reduction of EUR 1.5 billion in net debt to EUR 50.2 billion, following an 8% increase in cash flow generation up to EUR 12.8 billion, the execution of our asset rotation and partnership plan and the capital increase of last year. Driven by the expected continuation of these positive trends in 2026 and the impact of new investment today, we are setting an adjusted profit guidance of more than EUR 6.6 billion in 2026. We will mean adding EUR 1 billion to our net profit in just 2 years, and we will put Iberdrola in the best position to exceed our guidance of EUR 7.6 billion for 2028.

But the growth potential of our business model goes far beyond 2028, given the unprecedented investment opportunities created by electrification. In the last years, electricity consumption has been growing faster than infrastructure, accumulating a huge latent demand that today is waiting to be connected. Most countries are responding to this situation by increasing network investment and accelerating planning processes. But consumption is expected to continue increasing strongly in the coming years in heating and cooling, as more heat pumps are installed, transport, as the penetration of electric vehicles continues to accelerate in industry, especially in low temperature processes, creating the need for more installed power and storage facilities.

Generation technologies will be chosen by each country according to 3 main criteria: self-sufficiency, competitiveness and sustainability. Of course, this new production will also require a substantial upgrade in transmission and distribution networks. On top of this, data and artificial intelligence have emerged as the last year as a new demand vector with a very large potential, mainly from technology companies, which are already Iberdrola's largest customers in our key markets, the U.S., U.K. and Continental Europe. This already requires significant upgrades of generation and very especially transmission and distribution assets.

And this virtuous circle of additional power demand and infrastructure is just starting. Today, electricity is only 20% of the global energy demand, and this percentage is expected to grow strongly, boosted by new technological solution and the need for strategic autonomy and competitiveness. In Europe, for example, the commission expect that the share of electricity in total energy consumption will double in the next 10 years and triple by 2050, reaching 60%. And we are in the best position to reaffirm our current global leadership in electricity infrastructure, which has become a new high-growth sector, thanks to the electrification, as we anticipated 25 years ago.

Since then, we have been implementing a consistent strategy based in expansion of networks, selective investment in Power and access to customers through all route to market, including the most sophisticated instrument like multi-country PPAs. The EUR 170 billion invested in the last 25 years have allowed us to multiply our asset base by 8x and expand our geographical footprint to several countries, mainly in the U.S. and the U.K. to become the largest integrated utility in Europe and 1 or 2 largest worldwide by market capitalization, always preserving our commitment to BBB+ rating, thanks to our financial discipline and our ongoing access to market and liquidity.

Our size, diversification and solidity are the best guarantees to secure access to supply chains, technology and the best talent and skills and to maintain our track record of shareholder return more than 1,800% over the last 25 years and sustained growth in results.

Thank you very much for your attention. We can now begin the Q&A session. Thank you.

Thank you, Mr. Galan. The following financial professionals have raised the following questions. First, Rob Pulleyn, Morgan Stanley; Gonzalo Sánchez-Bordona, UBS; Ahmed Farman, Jefferies; Arturo Murua, Jefferies; Pedro Alves, CaixaBank; Pablo Cuadrado, JB Capital Markets; Fernando Garcia, RBC; James Brand, Deutsche Bank; Jorge Alonso, Bernstein Societe Generale; Philippe Ourpatian, ODDO BHF; Dominic Nash, Barclays, Meike Becker, HSBC; Peter Bisztyga, Bank of America; Pierre Ramondenc, AlphaValue; and finally, Skye Landon, Rothschild.

The first question is, can you expand on the main elements driving the increase in net profit?

Net profit, '26 will be another year of growth. I think there are several reasons -- sorry. Sorry, it was off. I said '26 will be another year of clearly growth. The first one is due to the consolidation of Electricity North West and Neoenergia. As you know, we are already in Neoenergia, we expect in the next few weeks, we will have the control, the 100% of the company. The positive acquisition, the minorities is what I mentioned. New distribution frameworks, what we are now -- like the case of U.K., which is the T3 -- RIIO-T3 from April. New interconnections between Canada and Massachusetts, which I mentioned it was EUR 125 million EBITDA contribution per annum. The Brazil, the finalization of transmission project, which can add, as I mentioned before, EUR 250 million additional EBITDA as well the contribution of the 2.7 megawatts -- 2,700 megawatts installed power in 2025. And the partial contribution of this 4.7 gigawatts, which is now under construction and will be completed during the year.

The other one important point, I think we are beating this year the record of hydro reserve in the history of the group. So I can say in this moment, all our dams are 100% almost full. So I think we are on the 95%, which is the reserve margin we have to keep already just for security reason. So that is already provided, more than 9,000 gigawatts of store energy, which will be used in due time. And that can be completed with our capacity of pumping storage, which I mentioned, is another potential, almost 10,000 gigawatt hours per annum, then we can as well potentially produce with it.

Financial expenses, as I mentioned -- it was mentioned by Pepe Sainz, is fully under control. It's a lower debt and our interest rates are mainly fixed or hedged. So that's why I think we are confident that to reach more than EUR 6.6 billion net profit this year. That represent practically, I think when we present last year, our plan, it was a plan to increase by EUR 2 billion in 3 years. So I think between '24 and '28. So I think with that one, we can already secure then half of the time, this EUR 1 billion has already been already increased already. And that's why I think we are comfortable that another EUR 1 billion from '27, '28 as well can be easily be achieved.

Traditionally, always, as I mentioned before, we are over delivering our promises, which I think you see that when we made that one is we are normally comfortable then we can already achieve these numbers.

And related to net debt, I don't know, Pepe, you would like to say something. We are very, very happy with our cash flow generation, which continue increasing. And -- but I think you mention, Pepe, with more detail.

Well, in the net debt, we are expecting to end '26 somewhere between EUR 54 billion and EUR 55 billion, which is below what we had in our plan. And this is basically because we have, as you know, finished this year with lower debt than what we had expected. So lower EUR 1.5 billion at EUR 50.2 billion, this means that we are going to increase a little bit the debt amount as we continue to invest, but below what we had in our plan and that we had in our Capital Markets Day. So as the Chairman has said, the debt under control and the financial expenses also.

Next question is related to the nonrecurring impacts that are affecting the 2025 EBITDA and net profit.

So Pepe, [Foreign Language].

Yes. Well, as you know, well, this year, we had a capital gain mainly by the -- due to the sale of the Smart Meters in the U.K. This is something that we have adjusted. We have taken away another EUR 460 million to more than compensate this EUR 379 million. This EUR 464 million is in the below the EBITDA. But -- so we are stripping EUR 379 million of the EBITDA this year versus EUR 1,700 million last year, mainly due to the Mexican capital gain. This is what makes the fact that in reported terms, the EBITDA is below last year, but not in recurring terms. So these are the 2 main impacts at the EBITDA level.

And at the net profit, so below the EBITDA level, mainly in the EBIT, in the depreciation and amortization in the provision side. This year, we have provisioned EUR 460 million, mainly to some adjustments in the value of our pipeline, mainly in renewables across different geographies, okay, compared to last year, which the adjustment was basically in the onshore, in the U.S., as you recall. This year, it's been in -- basically in -- across different geographies. And last year also in the provision line, we adjusted around EUR 1,500 million in the provision line in '24 to compensate this capital gains that we had in the EBITDA level. So we stripped this provision from the EBIT side.

So to conclude, last year, we stripped EUR 379 million at the EBITDA -- this year, EUR 379 million at the EBITDA level. '24, EUR 1,700 million at the EBITDA level. And this year, we have taken away around EUR 460 million at the EBIT level. And we have also taken away last year also through efficiencies and adjustments, another EUR 1,500 million. And in addition to that, we have 2 other elements, which is basically the fact that this year, we have included the a cap allowance, which compensates what we are taking away, which is the New York recognition of the past costs, okay? So that is basically the main adjustments in our numbers.

Next question is related to the recent regulatory development in both in Spain and the U.K. and how this compared with the assumption included in our strategic plan.

So I think, as I have mentioned, in the case of Spain, we have to manage our business according with the signal that has been given. So signals is that they are already just reducing the money in operation and maintenance. So we have to adapt our operation and maintenance to the new circumstances. They are already just limited the CapEx that they are giving some guidelines where to invest and how much to invest. So we have to adapt to the circumstances. But I think I would like to say that in the case of Spain, it's less than 20% of our RAB. So I think we will adapt to the circumstances in such a way that we will not be affecting our P&L, adapting our expenses, adapting our CapEx to the framework has been defined.

But I think our Networks business is depending much more of other countries. I think in the case of U.K., as I mentioned, only the growth that we are expecting in transmission is absolutely huge. Only in transmission, the regulator has already recognized the need of accelerating our transmission lines, multiplying by 4x the CapEx towards the previous 5 years with a clear, stable, predictable and attractive framework. So I think RIIO-T3 is clearly a transformational things for Scottish Power. So the RAB of transmission in 2030 will be equal, even highly higher than the RAB of distribution. So together, we are going to reach more than EUR 30 billion RAB compared with EUR 9 billion we have in Spain. So I think just to give you the image what that represents. And as well, the return on equity. If return on equity including incentive, higher than 9%.

Similar situation we are facing in other countries like United States, which as well there are pressure for increasing the investment and the situation in Brazil with ANEEL also is already just renewing the license for the next 30 years with a commitment of investing a huge amount of money in the country for electrifying the sectors, which are still in the country, are not electrified. So I think those are the main things.

So I think our business, transmission and distribution business, is a growth vector, which is transmission, either in U.K. in United States, which I think in the case of Britain is going to transform completely, the size of the company, from a company EUR 15 billion RAB to EUR 30 billion RAB. And in the case of United States, a similar thing as well as Brazil.

In Spain, so the situation, we have to follow the signals of regulator. But in any case, our -- the size of our business in Spain is less than 20% of our total, so which I think is not important, what -- it represented for that one. But we will adapt completely -- our deliveries, what has been already been given. The signals given is clear, less investment in operation and maintenance, CapEx already addressed to certain areas and not to another areas. I think we have to follow this instruction. That's it.

Next question is regarding the regulatory framework and negotiation in New York, both -- Maine and how this aligned with the assumption included in our strategic plan.

Pedro, would you reply?

Okay. I think we are always suggesting Chairman on these rate cases to the circumstances. Last year, we focused on recovering storm costs in New York, EUR 800 million and more than EUR 300 million of storm costs as well in Maine. That was the focus. I think this year, because of circumstances, we believe it's the right thing to do, interim rates and 1-year rate case in Maine. The interim rates will be applied in July, and then we will request for a 1-year rate case. After that, we'll go into a multiyear rate case. And in the case of New York, we still have the current rate plan, which will be in the mid of the year, and we're already working in a 1-year rate case. And after that, we will file also a multiyear rate case.

Next is, could you provide an update on the status of Vineyard Wind 1 project and its recent progress?

So I think it's -- I would summarize in 2 words. For me, as engineer, the farm is already completed. In this moment, we have more than 60 turbines of the 62, which are fully installed. I think there are more than 55, I think, in operation exporting electricity. So I think these numbers means the level of availability is similar for other offshore wind farm we have in operation. So for me, that is completed.

Nevertheless, Pedro, you would like to add any detail. But for me, the sentence, that is fully completed. That's it.

Yes. I think you're totally right, Chairman. I think we have 60 of 62 rotors installed. That's 97%. Probably in the next days, we will install the 2 remaining ones. And I think from an operation point of view, 52 of the 62, that's almost 85% of them, are right now allowed for operation.

Next is, how is your customer base evolving in Spain, particularly in terms of channel level, customer retention and portfolio quality?

Pedro?

Okay. I think it's important to know that we are the market leader. We are the leader in energy supply. We are the leader in number of customers and also the leader in churn rate. So it's normal that we have some rotation in those customers. I think we continue to be successfully measuring -- taking actions to retain our best customers. And right now, we feel that even that margin per customer is right now growing from an energy point of view.

So I would like to insist in one more word. I think we are lead in number of customers and -- but the level of loyalty of our customer is huge. We have the record. We are the best in churn rates in the country as well. So I think it's normal, when you are already the largest number of customers, then you lose someone else. But important is the level of loyalty of the existing one.

So the percentage of rotation, customer rotation in our case is much lower than the rest, especially those newcomers. The newcomers is the rate case -- the churn rates are absolutely huge, so -- which I think as well is normal in other countries. When you go as a country initially, I think the number of -- you win customer, but you lose customers. The important thing is the loyalty of our customer is huge. I think that I would like to mention this message.

Next, could you provide an update on your view regarding the role of nuclear generation in Spain and the status of the Almaraz extension process?

So I don't know how many times I repeat it as engineer, what is my vision. So our -- the nuclear power plant are necessary, are safe, are efficient and contributed to lower prices in all countries. So I think that is a reality. In the case of Spain, we have -- we suffer a huge taxation, which I think has reached almost EUR 30 or EUR 35 per megawatt hour, which is 3x, 4x more than other neighbor countries. But the power plant itself, I insist, are necessary, safe and efficient, and they are already generating lower prices.

I think that is like that today, some of the nuclear power plant are being called to operate under restriction because they are cheaper than gas plant. So I think that is the reality we are facing today. In fact, today, European countries with no nuclear have structurally higher prices, Italy and Germany around EUR 20 more than France or Spain. So I think that is the big debate in Europe. So those countries what we have already keeping our nuclear power plant, and we have already invested in another renewable technologies, we have lower prices than those who have not already, either not built or either has already closed, the nuclear power plant, and they are fully dependent on the import of fossil fuels, which I think that makes that the cost is automatically higher.

So that's why, for this reason, we have already asked the extension of Almaraz, and we will as the extension of others in the future, I imagine. And I think this process is ongoing. So I think it's Nuclear Security Council is analyzing. So -- but I think I'm not seeing that -- we have already delivered all the paper requested. And I think the fact is this power plant, most power plants, similar to that one, are already extension life up to 60, even 80 years, which I think will have not much sense. And here, we will not already use this asset, which, I insist, are necessary, safe, efficient and contribute to lower prices.

Next is related to the status of the Neoenergia minorities acquisition deal.

Sorry?

Sovereign Energy, the process of deal.

Well, I think that the process is going on. I think it's a question of weeks. So I think we have not any -- all they are progressing well, by step by step. And I think I feel Pepe in April will be closed later. So I think it's going according to schedule.

Next is, how will recur U.S. network investment affect customer affordability? And are European regulators becoming more focused on this issue as well, especially Italy with the new measure adopted?

So as I mentioned in my presentation, today, we have a significant latent demand unattended due to lack of infrastructure. So I think that is a fact in all countries. The fact European Commission has already made directive recommending higher investment in networks, in infrastructures. So -- and I think this lack of infrastructure of transmission and distribution is causing losses in curtailments, and that is generating extra cost to many countries. So that's why higher investment in network will allow to solve those curtailments.

I think in the case of U.K., if I don't remember that the curtailments amount something like GBP 5 billion per annum just because there are certain electricity, in some part of the country, cannot be exported, in another part of the country and this part of the country have to use more expensive sources of energy toward another one, are already not being able to be exported. So this more investment solve this problem of curtailments. That can incorporate an additional demand. We now is latent, we cannot be supplied. And they will dilute it. This extra demand will dilute the cost and the impact of this infrastructure cost, resulting, again, the lower cost per kilowatt hour. So that is better surplus.

If we are not making the infrastructure, we have to pay higher cost of electricity that -- if we have this infrastructure, we can benefit, we can enjoy a lower cost of electricity, and we will consume more electricity, we will dilute the cost of this extra infrastructure. So the British regulator has understood very well, and that's why they are already introducing incentives for accelerating the construction of new infrastructures precisely for diminishing the curtailments that the British are paying at present.

And in generation, I think my position in your chart also clearly, each country have to look for how to use their own indigenous energy to become more autonomous, to have -- to become -- to use more autonomy in their energy, to avoid problems that we've been experiencing in the past, to the import of certain energies from other countries. I think we've been suffering the problems of shortage of gas 2 years ago because the lack of supply from Russia. So now -- but in any case, this cost of gas imported with liquefied always will be more -- will be less competitive than those who have the gas door-to-door to the power plant. So that's why each country have to look what is the alternative.

In the case of Europe, the European Commission is clearly defining what they would like. They would like more autonomous energy base in renewables, onshore, offshore, solar, more nuclear, extension of the existing one or potentially new one, which is the case of France. France just published their policy. They are relying in more nuclear and more offshore. And I think Britain is already same thing as well. And that is the point, is the point is networks for supplying the demand which today cannot be supplied. These networks can really diminish the cost per kilowatt hour because they will dilute it, with more demand diluted, the cost of the new infrastructure. And the power will be depending on the countries and depending on the source in each country. If the country has one type of sources of energy that the energy will have to be used with the basis of competitiveness, sustainability and self-sufficiency in the country.

Next is, could you update on your U.S. renewable pipeline? Is repowering still an opportunity in the U.S.?

It is. But, Pedro, you can already explain in more detail.

I think in the U.S., we have 11,000 megawatts in operation. And we are right now building around in construction 600 megawatts, out of which 445 are repowering. I think because of the customer demand to continue to increase, we are also looking into extension of life between 15 and 20 years with very moderate investments and attractive business cases. I think on top of this, we have more than 4,000 megawatts of pipeline. We don't have any new projects in the projections we gave in the Capital Markets Day because we prefer to actually do things and there will be an upside every time we decide to do new projects.

Next is something related to the previous question, but could you provide your view on the recent regulatory intervention in Italy power market? And do you foresee similar measures in Spain?

So Italy, as I mentioned before, I was explaining clearly, they have higher prices than other European countries due to their past energy policy decisions that they already make -- they increase their dependence of gas imports. I think that is clear. Same then Germany, is facing higher prices in Europe, there, due of decision -- political decision taken in the past of that one. I think this case is very different for other countries that we have renewable and nuclear driving structural lower cost. That is the case of France, that is the case of Spain.

I think in line with the conclusion reached in the European Commission 3 years ago and related to the market design, we continue thinking the long-term contracting, mainly in PPAs, are the solution to avoid volatile and high power prices for European consumers. So I think the fact those countries who have already more long-term contract are those countries are part of the mix of power generation. Other countries, we have already more stable and predictable prices.

So I think Europe needs to become more and more energy independent. So we cannot rely in sources which are not already in our hands. So that's why any market intervention will not help to attract the necessary investment to attend this growing electricity demand. So we have to be very careful with all these measures. We have to be very careful with the taxation. We have to be very careful in the fact that taxation, European Commission is recommending as well reduction, a substantial reduction in taxes to electricity for increasing competitiveness because that is the best way to increase the competitiveness of European. If we compare the taxes of Europe with the Americans with the Chinese -- or the Chinese, in some cases, it's 5x more, the European toward the Americans or the Chinese.

So I think it's not a question of looking for more reforms. It's a question of looking what is the problem. The problem in Europe is taxation, and energy policies has not been in some countries making the right direction. If we are keeping already the nuclear power plant, if we increase our investment already in autonomous energies, which in the case of Europe, certain is renewable onshore, offshore solar, hydro, we make more storage. So certain, we can be already as competitive as others. And that is what they are making in countries like China, which are investing heavily already in autonomous energies, mainly renewable hydroelectric and nuclear as well for keeping already a much competitive mix of power generation.

Next is, could you update on your activity with data center clients, particularly regarding PPAs and expected demand growth?

So I think PPAs with technology company is not new for us. I think we have PPAs with the largest users of data centers. We have already in this moment, more than 150 gigawatt hour of new PPAs signed. And only last year, we signed 1 terawatt hour more, and we have already 12 terawatt hours per annum, already the energy supply to these companies. I think I insist on that one many times. I think there are people who have been dreaming to become data centers builders.

We are already data center facilitators. So we try to facilitate the installation of data centers because data center is a large consumer of electricity and our business is to sell electricity. That's why we are doing our best for helping those who would like to install new data centers through providing land or providing connection or providing these PPAs, whatever. So I think it's -- data centers is not only a question of power, it's a question as well of connection. It's a question of networks. More networks are needed as much power is needed. But I think if I have to, say, prioritize, networks is the first bottleneck in this moment more than power itself in some of the countries where we are present actually.

Last question is related to the guidance given to the 2028 and is, please, can you elaborate why 2028 guidance has moved from around EUR 7.6 billion to higher than EUR 7.6 billion?

So I think we have increased our net profit EUR 1 billion in the last 2 years. And we expect to at least to increase another EUR 1 billion more in the next 2 years. Investment and asset rotation is ahead of schedule. So I think the RAB is up by 12%. We have more than 7,000 megawatts, new megawatts in construction -- in operation in this moment. We have 9,000 megawatts in pipeline ready for 2028. We are seeing the acceleration of electrification. I was insisting and insist again and again, we need investment opportunities in transmission and distribution. Clearly, that is a clear example in T3 in U.K. We have for the incentive for acceleration. We have increased our return on equity by 100 basis points if we go ahead of schedule. So I think it's incentive for being faster. On top of this, we have already better expectation for 2030 and beyond with new opportunities in transmission in countries like Australia.

So I think all in all, we are keeping our plan and delivering focus in networks, being selective in renewables and in Power, as Pedro mentioned, in the United States, there are opportunities that we are making, but we can make more, the demand. There are other countries, but we are possibilities in making more things. But we don't like to make dreams. As you remember, we put name by name, power plant by power plant how -- which one we are going to build per annum. So it's not saying, "We are going to make 9,000." No. "We are going to make this 9,000 in this country, in this period, in this thing."

So we have already -- in the case of United States that Pedro mentioned, we have -- for repowering, we are 11,000 megawatts already in operation, with more than half can be repowered. But we will -- but in the moment we have one by one, which one we are going to be repower, we will let you know. But I think we are working with that one case by case because the time is -- it moves faster. Nevertheless, I think we have already our financial strength. We are committed with it. We took all the necessary steps for keeping already our financial solidity. And I think it's -- and that's why we feel we have a unique value proposition in the sector.

So I mentioned in my speech something that we are from Bilbao. So I think it's -- although the people from Bilbao, we have the reputation of being a little exaggerated sometimes, in our case, after 125 history and 25 years of myself leading the group, we have already taken, I feel, the best of the country of us. The ambition to achieve better and higher results and the pride of, also typical from Bilbao, of overdelivering. And that is our track record.

Our track record is an ambitious plan and overdelivering result. This is a result of the plan '22 to '25, what we just finished with our plan, and that is going to be, again, our plan for 2028. Compared with others, who has not proven this ambition and has not proven this delivery.

Well, after this Bilbao answer, I will now hand the floor over to Mr. Galan again to close this event.

So thank you very much to all of you for participating in this conference call. And I think if there are any questions, our Investor Relations will be available for any additional information you may require.

Thank you, and thank you very much. See you soon. Thank you.

Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2025 9 months results presentation.

As usual, we will follow the traditional format given in our events. We are going to begin with an overview of the results and the main developments during the period. Everything given by the top executive team that is today with us: Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO.

Following this, we'll move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. So, please ask your question only through our web page, www.iberdrola.com.

Finally, we expect that our event will not last more than 60 minutes. If any questions remain unanswered, we at IR team are, as always, fully at your disposal. Hoping that this presentation will be useful and informative for all of you.

Now without further ado, I would like to give the floor to Mr. Ignacio Galan. Thank you very much, again. Please, Mr. Galan.

Good morning, everyone, and thank you very much for joining today's conference call.

In the first 9 months 2025, our reported net profit reached EUR 5,307 million, leading up a 17% increase in adjusted net profit, including capital gain from asset rotation -- excluding capital gain from asset rotation. This growth was driven by robust operating performance with reported EBITDA reaching EUR 12,438 million, mainly in our Networks business, where EBITDA rose by 26%. Thanks to a higher rate base driven by investment and improvement regulatory frameworks.

EBITDA from Renewables & Customers was impacted by lower market price and higher ancillary service costs in Iberia due to changes in the digital operation after the blackout, which we are gradually passing through, partially offset by the contribution from additional renewable capacity.

Investment reached a new record of EUR 9 billion in just 9 months, reflecting the execution of our plan. Networks investment increased by 12% for a total regulated asset base of close to EUR 50 billion. And we have added 2,000 megawatts of new capacity in the last 12 months.

Driven by additional investment, operating cash flow increased by 10% to EUR 9,752 million, which combines with EUR 8 billion of new asset rotation and partnership and the capital increase of last July has allowed us to reduce the consolidated net debt by EUR 3.2 billion to EUR 48.5 billion, substantially improving our ratios in line with our BBB+ rating.

The strong operating performance and the ongoing improvement in our financial position have led us to increase interim shareholder remuneration by 8.2% to EUR 0.25 per share.

Reported EBITDA reached EUR 12,438 million, driven by a strong performance of our networks business, up 26% in the first 9 months, supported by higher regulated asset base in all countries, especially in the United Kingdom and Brazil and positive rate adjustment mainly in the United States and Brazil as well.

As mentioned, EBITDA in Renewable Power & Customers was affected by the one-off impact in the change of system operation applied by Red Electrica in recent months as more synchronous generation has been introduced, which is impacting our retail business in the short term until these costs are passed through.

In addition, we saw lower market price and a lower contribution from Mexico after the last year transaction. All these impacts were partially offset by additional renewable capacity. Networks once again -- that is once again a main contributor of our EBITDA, driven by the continued growth in our U.S. and U.K., which increased their combined share by 12 points, reaching 43% of the total EBITDA, reflecting the 13% increase in investment made in both countries, which together represents 60% of the group total as of September.

As a result, total investment reached a new record of EUR 9 billion, up 4% year-on-year. By business and area, 60% of investment were allocated to Networks, where we invested EUR 4,904 million with a 12% increase year-on-year.

Networks investment increased by 45% in United Kingdom to EUR 1,524 million, driven by the integration of ENW and 18% increase in investment in the Scottish Power Transmission and Distribution. Investment in United States reached EUR 1,739 million, in line with the last year as the 9% increase in distribution was offset by decrease in transmission investment due to the gradual completion of NECEC. Additionally, we invested EUR 1,215 million in Brazil, up 14% and EUR 426 million in distribution in Spain, 60% more than last year.

As a result, our regulated asset base grew by 12% on year-on-year to EUR 49.3 billion. Investment in Renewables reached EUR 3,442 million, well diversified across geographies and technologies. 60% was allocated in United Kingdom and United States, with U.K. investment increasing by more than 45%, mainly linked to our offshore wind farms currently under construction.

East Anglia THREE with 1,400 megawatts of capacity and East Anglia TWO with 900 megawatts. Our Offshore wind farms under construction in other countries are also making good progress with more than 50% of Vineyard Wind 1, 806 megawatts already in operation in the United States and the 315 of the Windanker wind farm in the Great Baltic -- in the German Baltic Sea advancing as scheduled.

Investment in Onshore Renewables reached EUR 1,904 million with 62% in onshore wind. And we invested more than EUR 300 million in storage, including both pumped hydro in Iberia and batteries mainly in Australia.

Moving to Network business performance. Regulatory framework continued to evolve positively across key geographies. In United Kingdom, the RIIO-ED3 methodology for distribution was published, representing a first step in a process that will lead to a new framework by April 2028. And in transmission, the RIIO-T3 Draft Determination was released, as you know, and we have expected final determination by -- before the year-end.

In United States, current rate cases have resulted in a 10% average increase in tariff in New York and Maine, compared to last year. And Avangrid is already in the process of new rate cases in both the states they agree effective from May 2026.

As mentioned, NECEC, our interconnection project between Canada and Massachusetts is on track to reach full commercial operation before year-end. And we are already working on projects that will continue delivering growth in transmission, mainly the Powering New York will result in EUR 1,650 million of planned investment in the coming years.

In Brazil, following the annual update in Neoenergia Brasilia, rate has increased an average of 8% compared with last year. And the renewal of distribution concessions continued to progress. The concession Neoenergia Pernambuco was already signed, and we expect the other distribution companies to follow in the coming months.

In Transmission, Neoenergia is on track to complete the last four lots under construction by December 2025, increasing annual remuneration in this business by BRL 600 million to more than BRL 2 billion per annum.

Finally, in Spain, the process of the review of the remuneration methodology and the rate of return continue.

Moving to Renewables. In the last 12 months, we have installed over 2,000 megawatts with significant progress in offshore wind. In United Kingdom, production of our Offshore wind farms in operation, West of Duddon Sands and East Anglia ONE exceed 2,400 gigawatt hours in the first 9 months of 2025. And we continue progressing the construction of East Anglia THREE with 20 monopiles already installed. In East Anglia TWO, where preliminary works are underway after having signed all major procurement contracts. On top of this, our East Anglia ONE North project with 900 megawatts was qualified for the upcoming AR7 auction scheduled by mid-November.

In the United States, the construction of Vineyard Wind 1 is now above 50% completion with 32 turbines fully installed and more than 200 gigawatt hours produced.

Finally, in France, St. Brieuc project produced 1,150 gigawatt hours during this period. And the output of our offshore wind farm in operation in German Baltic Sea reached 1,594 gigawatt hours as well.

As mentioned, in Germany, we have another project under construction, Windanker, which is moving ahead as planned for commercial operation in 2026.

Over the last 12 months, we have also installed 1,350 megawatts of Onshore technologies well spread across our geographies, 1/3 United States and U.K., including 200 megawatts of repowering project. Around 1/3 in Spain and the remaining 1/3 in another European countries and Australia.

Finally, in Storage, we continue progressing with our pumped hydro project under construction in Iberia, including Torrejón Valdecañas with 15 gigawatt hours capacity. And in Australia, the Smithfield battery project is already in operation. The Broadsound project is progressing as planned for the total of 490 megawatt hours of storage capacity.

All in all, we have currently close to 5,500 megawatts under construction, of which more than half correspond to Offshore wind project and 25% to Onshore wind. And we are very well positioned to capture additional growth if demand accelerates due to the electrification, thanks to a strong pipeline of 4.5 gigawatts of advanced projects ready to start construction by 2028, including Repowering project mainly in United States.

Through September, we have also continued improving our financial strength. Thanks to a 10% increase in our operating cash flow to EUR 9,752 million, driven by higher cash generation in Networks and the execution as well of our asset rotation and partnership plan.

Since January, we have signed transactions worth EUR 8 billion with a positive impact of EUR 4.5 billion in our net debt as of September. On asset rotation, as you know, we have already received close to EUR 1.1 billion from the sale of our Smart Meters business in United Kingdom. We have signed other transactions like the sale of our Renewable business in Hungary, which will allow us to collect EUR 128 million before the year-end. Finally, the regulatory approval required for the sale of our Mexican business continue on track.

Regarding Partnership, we have added 708 megawatts to our joint venture with Norges Bank for Renewables in Iberia, reaching 900 megawatts in operation, fully on track to reach 2,300 by 2027 with a total co-investment of EUR 2.4 billion. Our partnership with Kansai in the Windanker Offshore wind farm in Germany will represent a total co-investment of EUR 1.3 billion. And our partnership with Masdar for Offshore wind in the U.K. and Germany, which will result in co-investment of EUR 6.8 billion is also progressing well.

With the construction of East Anglia THREE moving forward in line with our plan as explained and in Baltic Eagle in Germany already energized. Increasing cash generation and the execution of our asset rotation and partnership plan, together with the capital increase executed last July has led to a reduction of EUR 3.2 billion in adjusted net debt year-to-date to EUR 48.5 billion, driving even better stronger financial ratios fully aligned with our BBB+ credit rating.

FFO to adjusted net debt increased by 330 basis points to 26.2% and net debt is already less than 3x EBITDA. We also maintained a strong liquidity position of EUR 23 billion, sufficient to cover 25 months of financial needs.

Thanks to our strong business performance and improving financial strength, the Board has approved an 8.2% increase in interim dividend of EUR 0.25 per share will be paid at the beginning of this year. As always, a supplementary dividend will be proposed for approval at the Annual Shareholders' Meeting paid in July.

I will now hand it over to our CFO, who will present the group financial result in further detail. Thank you.

Thank you, Chairman. Good morning to everybody. Our adjusted net income for the first 9 months of the year, excluding the sale of the U.K. Smart Meters accounted for in this quarter, which is the capital gain is EUR 381 million gross and the same number net as we don't have a tax impact here and including the cap allowance in 2025, which is EUR 191 million, reached EUR 5,116 million, representing a 16.6% increase compared to the adjusted net income for the first 9 months of '24, excluding the divestment of the thermal generation assets, which impacted the net profit was EUR 1,165 million net and including the U.K. cap allowance for '24, which is EUR 81 million, as you can see in the slide.

Excluding also the recognition of costs in the U.S. for EUR 389 million as it is a non-cash item, the first 9 months of '25 growth is 8%, reaching EUR 4,727 million. The main perimeter change, as you know, is that ENW has been fully consolidated since March. The FX evolution has had a minor effect on results. Thanks of our hedging policy with the dollar 2.5% lower and the real 10% lower.

Reported net profit for the first 9 months of '25 reached EUR 5,307 million, decreasing by 3% year-on-year, affected by the asset rotation that I have just mentioned that has been EUR 784 million less in '25 than in '24.

Revenues increased by 2.3%, driven by the Network business. Procurements rose 2.6% and gross margin grew 2%, reaching EUR 18.4 billion. Excluding the capital gains from the asset rotation, as I mentioned previously, which is referring to the Smart Meter divestment and the thermal generation assets, 9 months net operating expenses improved 7%, affected by lower storm costs that also lowers the gross margin.

Net personnel expenses rose 0.4% due to higher number of employees. External services declined 6.1%, mainly due to the EUR 330 million lower storm costs. Other operating income increased by 21% compared to the adjusted 9 months of '24 due to the indemnities of past year costs, the ENW consolidation, partially offset by EUR 121 million negative impact of the East of Anglia THREE sale, EUR 4 million more than in the first half results due to a negative impact accounted in Q3.

As you will see later, this impact is more than offset at the financial expenses level. Excluding the mentioned storm-related impacts and other adjustments, net operating expenses improved by 0.8%.

Analyzing the results of the different businesses and starting by Networks, its EBITDA grew 26% to EUR 6,128 million, mainly driven by the strong performance of the U.K. and the U.S. linked to higher asset base and past cost recognition.

In the U.S., EBITDA reached $2,046 million, 88% more with a 10% average higher rates in Distribution and a better contribution from Transmission, and positively affected in the first quarter by the decision of the New York regulator that allowed to register a regulatory asset under IFRS regarding past costs, which have already been accrued and recorded under U.S. GAAP, aligning both standards.

It is worth highlighting, as the Chairman has mentioned, that NECEC finally is expected to start contributing from November of this year.

In the U.K., EBITDA increased 22.5%, reaching GBP 1,129 million, including 7 months positive ENW contribution of GBP 253 million with a growing -- with growing results for transmissions driven by a higher RAV.

In Brazil, EBITDA was up 12.6% to BRL 10,000 million. Thanks to the higher revenues in Distribution linked to higher inflation and an average 8% increase in rate reviews over a higher asset base. In addition, Transmission contributed positively with BRL 1.3 billion gross margin as construction progresses. And as the Chairman has said, it is expected to finalize all the construction of transmission lines this quarter and will contribute BRL 2 billion in '26, already fully completed.

In Spain, EBITDA increased by 9.3%, reaching EUR 1,340 million, positively affected by the CNMC draft retribution rate of 6.46% versus the previous 5.58% and by positive adjustments to past year's remuneration.

In this first 9 months, Energy Production and Customer business, EBITDA reached EUR 5.9 billion versus the EUR 6.7 billion in last year, excluding capital gains from asset rotation. The business reached c. 86% emission-free generation.

In Iberia, EBITDA was EUR 3,052 million, 17.5% down with higher production more than compensated by lower margin and sales, explaining 30% of the year-on-year variation and higher ancillary services, higher levies and positive court rulings in '24 despite 1.2% revenue tax termination explained the remaining 70% of the decrease. Hydro reserves remain above the 10-year average.

In the U.S., EBITDA remained flat reaching $813 million, supported by improved wind and solar performance, despite the fact that '24 was positively impacted by an Arctic Blast storm one-off of $34 million.

In the U.K., EBITDA grew 5.3% to GBP 1,136 million, driven by the GBP 324 million capital gain from the U.K. Smart Meters divestment in this quarter. Excluding them, the business decreased 24.8% with lower wind resource and prices and weaker supply business, also driven by lower prices and volumes. Net operating expenses, including GBP 103 million negative one-off impact linked to the East of Anglia THREE sale more than compensated at the net financial result, as I have mentioned.

In the Rest of the World, EBITDA grew 31.5% to EUR 588 million, with 61% higher offshore production due to higher contribution from wind farms, St. Brieuc in France and Baltic Eagle in Germany. With lower supply results due to the EUR 30 million negative impact in Portugal due to the ancillary services cost as in Spain as a consequence of the blackout.

In Brazil, EBITDA fell 23.6% to BRL 947 million with lower renewable and thermal production compared to last year.

Finally, in Mexico, EBITDA reached $467 million, decreasing 78.5% with lower reported contribution compared to last year that included the thermal asset capital gain.

Depreciation and amortization and provisions were up 2% to EUR 4,272 million, driven by higher asset base despite the full year '24 adjustments impact and lower bad debt provisions, mainly in Spain. EBIT reached EUR 8.2 billion and grew 6%, excluding capital gains.

Net financial results worsened EUR 93 million to EUR 1,445 million, driven by EUR 208 million higher debt-related costs due to EUR 7 billion higher average net debt -- average net debt in the first 9 months of the year, while interest rate related costs and FX improved by EUR 85 million due to the FX depreciation, especially of the real.

And derivatives had a positive contribution of EUR 234 million due to the East of Anglia THREE derivatives, as I mentioned, compensate the lower net operating expenses. While the rest has had a negative impact mainly due to the Mexico hedges, mainly linked to the positive impact of the Mexico transaction last year compensated at the net profit level in the tax line.

Cost of the debt improved 12 basis points, mainly thanks to lower short-term interest rates in euros and British pounds and to the depreciation, especially of the real, despite higher interest rates in Brazil.

At the end of September, net debt is EUR 3.2 billion lower than the EUR 51.7 billion reported in '24 year-end, reaching EUR 48.5 billion. This positive evolution was driven by EUR 9.8 billion FFO generation, plus EUR 4.5 billion asset rotation and debt consolidation and the EUR 5 billion capital increase, more than covering the EUR 9 billion CapEx and the EUR 4.1 billion dividend as well as EUR 2.2 billion ENW net debt consolidation.

As a consequence, our credit ratios are at very strong level in the BBB+ band. Our adjusted net debt-to-EBITDA is below 3x. The FFO adjusted net debt reached 26.2% and our adjusted leverage ratio is 43.3%, 2 percentage points lower than at the end of '24.

9 months '25 adjusted net profit grew 17% to EUR 5,116 million, taking away also U.S. cost recognition, which is a non-cash item, as I commented, the growth is 8%.

And now the Chairman will conclude the presentation. Thank you.

Thank you, Pepe. The result reflect the foundation of the plan presented a few weeks ago, a transformational plan based on a specific project capable of delivering double-digit growth in profit in the first 9 months of the year. Thanks to the rise in Networks investment up to 12% through September with attractive regulatory framework that are driving increases in tariff of 10% in the U.S. and 8% in Brazil as well as the expansion of our generation capacity of 2,000 megawatts just in the last 12 months with 5,500 more under construction and 8,500 of additional pipeline ready to cover any potential acceleration of demand growth.

The implementation of our plan also reinforced our strong financial position, fully compatible with our BBB+ rating, supported by 10% increase in operating cash flow in our asset rotation and partnership plan and is also delivering a growth shareholder return with an interim dividend up 8.2% to EUR 0.25 per share. Driving by this consistent trend of improvement result and financial performance, today, we are improving our guidance for 2025 to a double-digit growth in adjusted net profit, reaching EUR 6.6 billion or more than EUR 6.2 billion even excluded EUR 389 million of Networks cost recognition in United States.

This net profit guidance is already EUR 1 billion above the net profit target set for 2026 in our previous plan. Proving once again that our strategy, focus on Networks in the right countries with attractive remuneration frameworks and selective growth in renewables is allowing us to grow and beat our estimate constantly. You can be sure that we will continue working towards that objective.

Thank you very much for your attention. Now we can begin with the Q&A session. Thank you.

The following financial professionals have asked the following question to us. Philippe Ourpatian, ODDO; Fernando Lafuente, Alantra; Meike Becker, HSBC; Manuel Palomo, BNP Paribas; Pedro Alves, CaixaBank; Gonzalo Sánchez-Bordona, UBS; Robert Pulleyn, Morgan Stanley; Fernando Garcia, Royal Bank of Canada; Peter Bisztyga, Bank of America; Pablo Cuadrado, JB Capital Markets; Jorge Alonso, Bernstein Societe Generale; Javier Suarez, Mediobanca; Dominic Nash, Barclays; Javier Garrido, JPMorgan; and finally, James Brand, Deutsche Bank.

The first one is, can you provide more details on the main factors driving the expected double-digit growth in net profit for 2025 and clarify how the exclusion of capital gains from asset rotations and the inclusion of cap allowances in the U.K. impact this guidance?

So as I mentioned, we expect double-digit growth on adjusted net profit to more than EUR 6.2 billion, even excluding past cost recognition in New York, which is EUR 389 million. And look together close to EUR 6.6 billion. Pepe, but I don't know if you would like to clarify in more detail.

Yes. Well, thank you, Chairman. Well, as I commented, these numbers exclude specifically the capital gains from -- basically in Mexico with an impact of EUR 1,165 million and the Smart Meters in the U.K. with EUR 381 million, both at the net profit level, okay? And it includes as we presented in the Capital Markets Day, the cap allowances in the U.K., as you can see in the slide, EUR 190 million for '25 and EUR 81 million in '24. Obviously, for the end of the year, that will add a little bit more, okay?

Okay. Second question, can you please provide guidance for net debt at 12 months 2025?

Yes. We're expecting the net debt by the year-end to be around EUR 51 billion. This is excluding the potential collection of the Mexico divestment. We are not including that in this guidance. But we are including the acquisition of the previous sale of the Neo stake in this EUR 51 billion guidance. This will be even with all these things below the '24 close of over EUR 51 billion at the end of '24.

Next is regarding the use of capital gains. How will the capital gains from recent asset transaction be used in the future?

So capital gain, as you know, from asset transaction will be applied as always to future efficiencies, just to improve the future results.

Next is regarding the battery storage, our view of this success -- of this upcoming business for the sector?

Well, I think now we talk about batteries. We will start talking about storage 25 years ago. I think as you remember, my first presentation, we were talking about renewables. We are talking about networks and we are talking about storage. I think we've been making renewable, we are making networks and we have been making storage. So, I think, what we've been doing in storage during the 25 years is we've been upgrading our hydroelectric facilities, making our -- most of our turbine reversible to become all those one bidirectional, making already pumping storage plant.

We have in this moment a capacity of 120,000 megawatt hours of capacity. I think, it's a huge capacity already in storage. But also, we are investing in batteries, especially where we don't have hydro facilities in our -- or we are not project. I think, the main places is Australia. I think, they have attractive spread of support mechanism. And I think, we have in this moment, there are more than 550 megawatts under construction. But as well, we have another country. I think, we have 200 megawatts in construction in Spain and the U.K. And we have already more than 1,000 megawatts of projects in our pipeline that will be built up depending on the capacity payment of grants that can be provided.

Next question is regarding the data center. What is the company's strategy regarding the growing demand from data centers? And what recent agreements have been signed with technological companies to supply energy?

So as you know, data centers will be an important driver of demand growth. And I think -- and that is not new for us. We have already, for many years, we've been signing PPAs with tech companies. In this moment, we have more than 12 terawatt hours a year so far of contracts of PPAs already signed with technical companies, mainly in United States. But I think, because we consider that, that is an important area of demand growth is why we are facilitating the expansion of data centers in those countries, we have already, means for helping the technical companies to invest and to expand.

I think, in this particular moment, we have an agreement in Spain with Echelon. And the first project, which is going to make a demand -- energy demand more than 1 terawatt hour a year is already ongoing. And we have another four projects progressing. So, we are active on those one, because we consider that, that is a driver for increase of the electricity demand, and that's why it is -- we would like to help these companies to do the necessary for making that happen.

Next one is regarding the market situation of the United States. Given the recent increase in demand from data centers and industry and the rising energy prices in certain U.S. states, is the company considering increasing its renewable ambition or pipeline?

And the second question regarding to this is, how will these market trends impact your PPA strategy and asset development plans?

So, I think you will respond, Pedro, but I think just to give you -- it's true that in this moment, United States, the prices are rising. And our expectation is that prices will rise even more. I think, it's the fact that new CCGTs are built. This new CCGT is built, is going to make then the prices will increase, because there are already new power plant have to be already amortized toward those one which are already fully amortized. And I think, those one is pushing the prices up independent of the cost of the gas.

But I think it's -- and that is a good opportunity for us. I think, it's a good opportunity, because we have almost 40%, 30% of our fleet is in merchant. And I think, the contract we have already with long-term PPA signed is already, let's say, ending during a certain period. And I think that makes the renovation of this contract probably that is going to increase the prices, we are already making that.

All-in-all, that is certainly a great opportunity of increase of value of our assets -- renewable asset in United States. And that is why United States is there a tremendous, let's say, demand of buying existing renewable asset in operation. So, which I think, Pedro, you can already complete this comment. You agree.

Okay. Thank you, Chairman. I think, the example -- a couple of examples, Texas and Oregon, where the prices are already rising, and we operate already 3,400 megawatts in those states. In the short term, this benefits our merchant assets. And then, it will be translated as the Chairman said, to the PPAs.

And for example, in those states, we have more than 4,000 megawatts of potential pipeline to come. In the U.S., overall, we have 10,000 megawatts right now in operation, 30% of that is merchant and 70% is PPAs. The average PPA life is 10.7 years. I think, there is an opportunity for life extension and repowering. Around 360 megawatts under construction in the U.S., 432 globally and more than 800 megawatts of additional pipeline, 1,500 globally. So, I think this is good signs of what we can do right now to benefit from the demand increase.

Next is related to Spain. Can you provide an update on the blackout investigation and the causes that triggered the event?

I think, during the last weeks, has already had a lot of public reports, a lot of investigation even in the Senate and the different conference. And I think, this public report said clearly that this was a result of lack of synchronous energy to provide inertia in the system. So, they say also, as more renewable enter into the system, supply becomes also variable. And I think that require more synchronous energy.

So, the fact now the system operator has changed the operation and is operating with more synchronous energy. So, I think what is saying in the public report and the public information is precisely what now is the system operator is already just doing. Certainly, that has an effect that is increasing the cost of ancillary services, which in our case, that we have most of our sales are under multi-annual contracts is affecting to our results, because we have not passed this extraordinary extra cost for our customers on all those ones, we have a multiyear contract. As Pepe mentioned, that in our case, is close to EUR 180 million affecting our accounts up to September.

Next is related to Spain as well. What is needed to extend the operation of Almaraz Nuclear Plant? Is the 50% reduction in the Extremadura tax sufficient to ensure its continued operations?

Well, I was -- you were listening to me for many long time, then the nuclear power plant are safe and are needed. So, I think they are needed more than ever in this moment for avoiding potential blackouts or potential problems in the service. Also, this power plant that you are talking about, they have national international license. So, which I think they allow them to operate at least up to 2030 without being forced to ask for any additional national, international license of operation. But there's something very, very important. It's a social -- national social demand in the country to maintain and operating. I think every week, there are demonstration, there are people writing of different tendencies, different ideas, different political parties and the civil society are asking to maintain and operating.

So for two reasons, because of this social responsibility and because the need of this power for keeping the lights on in the country and providing a safe, cheap service is why we three, the owners of the power plant, we have asked the government the continuity of the Almaraz power plant. So, that means in this moment, only depend on the decision of the central government, the continuity of those power plant. There are not any another limitation.

Technically, they are allowed to cooperate. Socially is demand, economically is the best solution. And in terms of the operation of the system is needed for keeping already the service operative. So, I think the energy policy made by the government. The government have to take the decision, and they will explain the consequences, whatever decision they will take about.

Another trendy topic in Spain. Can you provide an update on the latest developments regarding the regulatory framework for networks in Spain? And how would the remuneration rate below 7% affect your investment plans?

You're talking about Networks.

Networks in Spain.

Yes. I think that -- you know Networks in Spain for us is quite small compared with the Networks we have in other countries. I think, it's the fourth in terms, as you saw in our presentation, is the fourth of all our RAV in the different countries. The first one, largest RAV is in the state. The second largest RAV is in U.K. The third largest RAV is in Brazil and the fourth is Spain. So, I think it's small compared with the rest.

But saying that, I think as far as I know, they are still that is in process. There are no new news. I think, which I already heard is they are already make a public consult about the terms which have been proposed, but we have no more details on that one.

I think, something which is clear is either the government, central government, either the different government of the region are asking for the need of more, more investment in Networks. So, I think if that is not the proper framework, I doubt in this extraordinary investment, which is needed. So, it's going to be made as faster as it will require.

Next, how are the increasing cost of ancillary services being managed? And to what extent are these costs being passed through to the customer as contracts are renewed?

Pedro?

I think as of September, yes, we have a negative impact because of our multiyear contracts. But of course, these costs are being passed through as contracts are renewed. We expect by '26, 70% of this already through customers and almost 90% by '27.

Next is regarding the U.K. What is the company's perspective on the current regulatory environment in the U.K., particularly regarding the RIIO-T3 framework?

I think, we have a very fluent dialogue with the regulator. I think recently, I met personally the Chairman, the Chair of Ofgem. I think, they are aware about the need of sufficient profitability remuneration and financial ability for already to make -- to attract the investment needed. I think, it's certain they make already a draft determination, which is the base of our rate case plan. I think, our business plan is already just based in this draft determination. But I think, I'm sure that the sensibility of the Ofgem is such that, I hope that there is a potential improvement during the negotiation, which -- to make certain upside, but we will know the final determination by December.

So, I think now we are in the process of that one. But I think we are very open dialogue with the regulator, I think ourselves and another two players on this one. And I think they are -- my feeling is that they are already very sensible about the need of making already some adjustment to facilitate to make the huge investment which are needed.

Next is, can you provide details and expectation on your strategy for the AR 7 auction in the U.K.?

So as you know, we have already East Anglia ONE North ready to participate that one. So, I think we have a competitive project. We have all the security, all the supply chain secured. We -- but I think, we are very disciplined in terms of profitability criteria. I think yesterday, I heard the budget -- the final budget has been published, which I think only EUR 900 million allocated to offshore. But I think the flexibility to the Secretary of Energy to increase this amount depending on the numbers of bidders.

I think, this number, remind like it is in my feeling, my opinion, is not sufficient to achieve the country objective in terms of power, in terms of decarbonization. I think there are no other changes in this year 7. They increase the life of the CFDs from 15 to 20 years. And I think they already make already a reference price, which is 11% higher than the previous one. So, which I think that will sense. But I think the budget, in my opinion, is absolutely insufficient.

And I think, if the Secretary of Energy has already the power to modify the numbers after the auction. If that is not modified, my feeling is it should be difficult to achieve the targets where they are already thinking in terms of power, new power and in terms of decarbonization when they are already looking. But new power, in my opinion, they will not really achieve the numbers they were thinking about.

Next, what is the current status of the Mexico operation? And when do you expect regulatory approvals to be finalized?

I think in Mexico, you mentioned.

Yes, the deal in Mexico, the pending deal in Mexico.

Well, I think the agreement is signed. As far as I know, the buyer has already secured the financing, almost secured. And I think, now we are depending on the approvals of the different authorities. But as far as I know, the things are ongoing. I think, this week, our Mesonero, which is our M&A guy, I think, is in Mexico. And I think he will take fresh news already next week. So, but I think we are not already, let's say, we have not any negative input about that one, and I think they are going already according with schedule.

Two last questions. The first one is probably for Pepe. Effective tax rate is below historical average. Should we expect this effective tax rate to be kept at similar level at the year-end?

Well, I think that we will have tax -- an effective tax rate at the year-end to be around 20%. Let me explain that this is below basically for several reasons. First of all, because -- right now, the contribution of countries with a lower tax rate is higher than in previous years. So the U.K. and the U.S. versus Mexico and Brazil. An impact that it is reducing the tax rate this year is, as I mentioned, the U.K. Smart Meters capital gain in the first 9 months is at the gross and net. So, there is no tax impact here.

Last year, the thermal capital gain was affected by the Mexican corporate tax rate. And finally, as I mentioned, last year, we had a negative impact in the taxes due to hedges that we had in and had a positive impact in our financial expenses. And this year is the opposite. We are having a negative impact in the -- due to the last year transaction, a negative impact in our financial expenses due to the Mexican FX hedges that is compensated at the net -- at the tax level.

So, all-in-all, that is the explanation why this year, in the first 9 months, the tax rate is below 20%. And the expectation is that by the end of the year, the tax rate will be around this 20%, as I mentioned.

And last question is related to Spain and the contribution of the hydro production in terawatt hour in 2025, which is our expectation related to the average traditional average year.

So, just looking here at the numbers. I think, up to today, I think, our production of hydroelectric is around 18 terawatt hours, which I think is an increase of around 3% to 4% over previous year. Approximately 2/3 is traditional conventional and 1/3 is pumping storage. So, I see pumping storage is taking the important role on this one.

And I think, now the reserves is on the range of 6 terawatt hours. And I think that, now it's again, it starting raining, which I think heavily, so which I think in a few days, we hope level of reserves will increase. I think that is -- I think in terms of the year, I think it's important, but it's 3% more, but that is not the key of our result. As you know, our result is coming from other sources.

Even in Spain, the result is not going -- is not as good as last year, because of the prices and the ancillary service, et cetera. But I think it's a good news in terms that our results are high and probably with these rains, which are now coming and expected, I think the result can be already maintained, which should be a good thing for next year as well, contribution to the next year profit or next year results. So, I think that's good.

But I think, the news is it's 3%, 3% to 4% more than previous year. Pumping is 1/3, 2/3 is traditional and the results are in a good shape, very high. But I think that is already, there are room for increasing those one if the rainfall is continuing as the range as the expectation we have in this moment, with that give already certain possible, let's say, extra result for 2026.

We have received as well a final question regarding the guidance for 2026, but probably this is something that we will be delivering next February. So, we anticipate something on the Capital Markets Day, but I mean, for those that has asked this question in February will be the deadline.

So, just to finish this event, please let me now the floor to Mr. Galan to conclude the presentation.

So, thank you very much, as always, for your very clever, intelligent and very good questions. And thank you very much for participating in part of this conference. And if there are any new questions that you consider, I think our Investor Relations will be ready, as always, to give you additional information you may require. Thank you very much, and see you soon. Thank you.

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.

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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.