E.on Se (EOAN.DE) Q3 2026 Earnings Call Transcript

Iris Eveleigh: Hello, everyone, and welcome to our 9 months 2026 results call. Thank you for taking the time to join us. Today, as always, I'm here with our CFO, Nadia Jakobi, who will give an update on our financial performance. As with every occasion, we will leave enough room at the end for your questions. With that, over to you, Nadia.

Nadia Jakobi: Thank you, Iris, and a warm welcome to all of you from my side as well. For our 9 months reporting, I have the following 5 key messages for you today. First, we achieved an adjusted EBITDA of EUR 7.1 billion and an adjusted net income of EUR 2.2 billion. That represents a broadly stable adjusted EBITDA and a 4% year-on-year increase in adjusted net income, fully in line with our expectations. Based on the midpoint of our full year guidance, that means that we have achieved roughly 75% of our guided adjusted EBITDA and 79% of adjusted net income at group level. Second, our sustainable growth continues to be underpinned by investment-driven earnings growth and strong operational delivery. Our robust investment execution continues. This demonstrates that our growth trajectory remains firmly on track and provides a strong foundation for long-term earnings and value creation. Third, our business model remains robust. Higher oil and gas prices, together with a push for greater energy sovereignty and reduced dependence on fossil fuels are accelerating electrification. In particular, higher fossil fuel prices are further incentivizing the adoption of EVs and heat pumps. These developments create further need for grid infrastructure investments. Fourth, while we continue to invest at scale, we maintain a solid balance sheet that supports both growth and capacity to execute. Our economic net debt shows the normal business development with strong operational cash flow, offset by continued investments. It is temporarily affected by a noncash effective accounting-driven effect, which will largely unwind during 2027. Adjusting for this, economic net debt stands at EUR 46.1 billion at the end of Q3. And finally, we fully confirm our short and midterm guidance, including our dividend policy. Our adjusted EBITDA for the group came in at EUR 7.1 billion, broadly in line with last year. Looking at our segments. Our Energy Networks business delivered stable earnings year-over-year as expected. Continued organic growth in our regulated asset base supported earnings in all countries. In Germany, the positive RAB contribution was offset by costs for further growth and the nonstructural effect from the deconsolidation of NEW AG. In our European markets, RAB driven growth was also continued, but was partially offset by the structural effect of the sale of our Czech gas network business. Besides, we continue to benefit from positive FX effects, especially in Hungary and Sweden. Turning to our Energy Infrastructure Solutions business. Adjusted EBITDA grew 15% year-over-year. We had new projects going into operation for commercial and industrial customers in several countries. Additionally, we continue to benefit from the pass-through of higher sourcing costs, which were offset by lower hedge power prices in our U.K. biomass business. In Energy Retail, the performance developed in line with our expectations. Underlying operations in Germany remained stable with operational improvements to foster future growth and customer experience. However, year-on-year earnings were impacted by the deconsolidation of NEW AG at the end of Q3 last year. In the U.K., the performance of our B2B business has continued to normalize. In our B2B business, we have seen positive effects from higher average margins on fixed price contracts compared to prior year. The negative quarterly development in the U.K. mainly reflects the recognition of costs related to the Warm Home Discount, which were previously solely reported in Q4. But this is just a phasing effect and will unwind by the end of this year, so neutral from a full year perspective. Our adjusted net income came in at EUR 2.2 billion, showing the expected normalization. Financing expenses increased over the first 9 months as absolute net debt levels are rising with our continued investments and higher refinancing costs versus the maturing low coupon bonds. We expect the rising interest effect to continue during the fourth quarter of 2026 and beyond. Overall, we remain well on track to achieve our full year adjusted net income guidance for 2026. Let us now move on to our economic net debt development. The execution of our investment program remains strong. Our group CapEx fill rate stands now at around 60%, which is in line with our typical 9 months level. We remain on track to deliver our full year investment guidance of around EUR 8.7 billion. This amount does not include the OVO transaction, which was successfully closed in early October. This acquisition makes us a top 3 player in the U.K. market head-to-head with Octopus and British Gas. Our economic net debt development was supported by strong operational cash flow as expected. However, we saw a temporary noncash effective E&D impact from different accounting treatment of energy procurement transactions to manage our liquidity and counterparty risk for our retail business. These effects will largely unwind over the course of 2027. Excluding this impact, we see a decrease of our economic net debt from EUR 46.5 billion at the end of the second quarter to EUR 46.1 billion at the end of the third quarter, in line with our usual seasonal cash flow pattern. Our debt factor target of below or equal 5x remains unchanged, and we are fully on track for our expected cash conversion rate of 100%. In summary, our robust leverage level continues to support our current investment program and the potential future upgrade provided that regulatory conditions are attractive. Before I finish today's speech, I would like to touch upon the most recent regulatory developments of importance for our business. Let me start with the last week's announcement by BNetzA's regarding the regulatory WACC for gas networks in Germany. We very much welcome BNetzA's decision to respond to changing market -- capital market conditions, particularly the higher interest rate environment by postponing the WACC determination to 2027. This shows that the regulator is receptive to well-founded economic feedback from the industry. As a result, all WACC parameters will be updated next year, incorporating capital market data from 2026. Importantly, this will replace a low interest year with a higher interest year in the historical reference period, which will have a positive impact on regulatory returns. We believe this is a step in the right direction. Ultimately, however, it is essential that all parameters for the cost of capital will translate into market reflective regulatory returns, which adequately compensate us for our cost of capital. We still believe that a dynamic adjustment mechanism in the cost of debt method for existing assets, which is market standards and other regulatory regimes is the right and fair methodology for the network operators as well as for the customers. According to the publication of the BNetzA, it can be anticipated that the WACC determination for power networks will also be postponed by 1 year to 2028 under comparable conditions. We welcome this development. Replacing a low with a higher interest rate year, combined with a higher rating of recent years, in line with the industry's investment profile will lead to higher and more market adequate regulatory returns for power networks. We remain confident that the regulator will consider internationally competitive parameters for power WACC determination. Also, the political backdrop supports accelerated grid investments and further electrification as recent European and German energy policy and legislative proposals demonstrate. This brings me to the newly published network development plan 2026 for distribution grid operators. Also, the new NDP 26 confirms the fundamental need for further grid investments. It shows continued long-term growth for E.ON's DSOs from increasing PV and wind expansion, ongoing further electrification of industry, heating and mobility as well as data centers and large batteries as new increasing drivers. It confirms our long-term growth path and sends a positive signal for continued long-term investment. Finally, the Swedish regulator published the preliminary RP5 model for electricity. With that, the official consultation process started and now together with the industry, we will use the referral process for feedback. The presented model includes an unsatisfactory WACC methodology. However, the WACC is not the only key regulatory parameter. Ultimately, the overall framework is important for the level of allowed revenues. The final framework is only expected by end of October next year. In the past regulatory period, we have successfully challenged the regulatory decision in front of the court. We remain confident that the final framework will support the substantial investment needs for continued electrification in Sweden. Let me conclude today's presentation with the following messages. Our strong 9-month results show that our operational performance and investment ramp-up remain fully on track. We continue to see the midpoint of our group guidance range as the best estimate for our full year results for both EBITDA and adjusted net income. With that, we fully confirm our full year 2026 guidance and 2030 outlook, including our dividend policy. Our balance sheet remains strong. We will continue to focus on attractive value creation by organic growth opportunities while rewarding our shareholders with a growing dividend. And with that, back to you, Iris, for the Q&A.

Iris Eveleigh: Thank you, Nadia. And with that, we will start our Q&A session. And the first question comes from Alberto from Goldman.

Alberto Gandolfi: I hope you can hear me. I had some technical difficulties. So I'll stick to 2 real questions. The first one is, I wanted to ask you if you think that these changes or, let's say, modifications in the time line by the regulator are sufficient for you to take a judgment call and take a decision on investments. I'm not asking you if you are going to increase CapEx or not next year, but is this sufficient for you to take a decision in February? And if not, what's missing? The second question, I wanted to ask you, please, Nadia, on the network development plan. Because it's done by company, we have seen some aggregate data by the regulator talking about, I think, around EUR 240 billion to 2045. I wanted to ask you, a, if this number you think is correct; and b, if not, what you think is the right number? And does this imply an upgrade to the theoretical CapEx you ought to be spending in Germany?

Nadia Jakobi: Yes. Thank you, Alberto. So when it comes to the CapEx, we always said we stand ready to accelerate our investments if we see attractive value creation potential. And what we also always said is that our decision on when to raise further CapEx is past dependent on how the regulatory framework develops on the way to full visibility in 2028. And last 12 months have been sort of difficult in some areas. As you know, difficult start in the regulatory framework consultation end of last year and the publication of the draft gas WACC was, as we highlighted, also disappointing. So now we very much welcome the decision of BNetzA to respond to changing capital market conditions and postpone the gas WACC determination to 2027. And what we also very much like is that there's a public announcement that there will be a similar approach for the power WACC determination in black and white. So now what still needs to be ensured that all relevant parameters, including the beta ultimately translate into regulatory returns that adequately compensate us for our cost of capital. So -- but what we now see that we have a gradual and also positive increase in visibility of regulatory parameters that we could now gain from the last announcement, and that could mean that we also gradually increase our CapEx envelope. So that was the one for the first question. And then the second question. I think I don't know whether we have the number that you highlighted was what the number was?

Alberto Gandolfi: There was a EUR 240 billion [Indiscernible].

Nadia Jakobi: EUR 240 billion. So I don't -- maybe the EUR 240 billion, that's for us. I don't exactly know how that breaks down to all the different DSOs in overall Germany. Maybe I can just highlight a few things what was relevant from the differences in 26 to NDP 24 that we see in what we saw in NDP 24 in our area. So we see roughly approximately a 20% increase of CapEx requirements over the whole period. But of course, we have already highlighted that we see approximately an investment need at the back end of the plan of approximately EUR 1.5 billion to EUR 2 billion per year at the back end of the plan. We would still think that up until 2030, this EUR 1.5 billion to EUR 2 billion more in potential increase is backed up by this new NDP 26, even though if you look at the pure numbers, the NDP would even include sort of a bit -- maybe a bit even higher than EUR 2 billion. But of course, we have got permitting constraints. It's a blue sky scenario. And the permitting will not change that fast. And as you know, 2030 is already around the corner. But what was is in actual fact now a positive extra investment when you look at the whole period until 2040, for example, that we have now new things to connect like the data center boom wasn't fully considered in 2024 NDP and also some of the batteries, the battery development wasn't yet foreseen. So even though that is not directly linking to a higher actual investment up until 2030, it's still shows a protracted growth in the 2030s than that was what we have seen before.

Iris Eveleigh: Nadia. With that, we move on to Pavan from JPMorgan.

Pavan Mahbubani: I'll also stick to 2, please. Firstly, Nadia, continuing on the questions on RP5. Could we maybe just have a refresh on the other topics of interest relating to the framework. So in the past, we've talked about OpEx benchmarking, redispatch costs. So can you give us a reminder of where we are on those topics and when we should expect updates to the parameters that sit outside of the WACC? That's my first question. And then secondly, going to Sweden, the early view of the return was clearly a lot lower than what you were getting in this regulatory period and implies downgrades if -- I appreciate it's early stages, but if the regulator sticks to its view that this return or a return similar is the right one, can you talk about what recourse you have to higher returns in Sweden?

Nadia Jakobi: So thank you. So outside of the WACC, there hasn't been any relevant news flow as could be anticipated. When you look at our IR material, the plan for looking into power cost and benchmarking and will only be happening in 2028. At this point in time, we are just looking at the gas cost allowance, but also on the gas cost side, topics around benchmarking efficiencies will only come over the course of 2027. So -- and also on OpEx adjustment factor is also, of course, only relevant on the power side. And this is based on the benchmarking results. So also that will then also come and materialize in 2028. So no news on that as actually anticipated. Then on Swedish regulation, yes, you have very well summarized it. So we came from a strong regulatory period 4, and we would have had assumed some adjustment. What was now published is clearly disappointing and absolutely not satisfactory. Of course, the WACC is not the only relevant part of the regulatory system, but also some other regulatory parameters, but it is, of course, an important one. Clearly, to say, this is only beginning of the consultation period. We will now use the whole industry to come back to the regulator within the 3 weeks referral process that we now have. And then we will continue with bilateral dialogue together with the other industry participants. And then we expect then the final determination by the regulator in October next year. So clearly, Swedish system works a bit differently. So we have certainly -- in the former regulatory period, we always challenge the regulatory decisions in front of the court, and we had very successful outcomes. And then also the Swedish regulatory system also allows for some certain early collection if you're anticipating a positive legal court case. So having said that, we remain confident that the regulator recognizes that with the current proposal, that is not possible to attract capital for continued electrification. And -- but then we would also have a second step, what we've been seeing in the past to go via putting the topic in front of court and get a successful outcome there.

Iris Eveleigh: We can move on to the next question from Harry from Exane.

Harry Wyburd: So 2, please. So first one is a follow-up to Alberto's one. And I noted down that you said we could gradually see an increase in the CapEx envelope. So just focusing on a single word gradually, I'm just trying to understand how to characterize that. Is that saying that we could see some upgrades in February 2027 and then some more upgrades in February 2028 and so on moving towards potentially an envelope that could be even bigger than the plus 1.5 to 2 given that you mentioned earlier that the NDP could actually imply a higher figure than the 1.5 to 2 upgrades that you've been talking about before. So would that be a sensible way to assume how things might turn out? And then secondly, on a totally different topic, in the retail business, Agentic AI switching came back on the radar a month or 2 ago with news in the U.S. Now I presume you're not seeing any impact in Europe because these apps have not been approved under data section regulation, et cetera, in Europe. But what is the E.ON action plan, if there is one, if these apps do become available, what are your initial thoughts on how they could impact your business? And in particular, what are the kind of risk rewards? Because I presume if you get a more price-sensitive market, it could actually have an advantage to businesses like yours, which have a very strong procurement function. So just interested if there's any brainstorming that's been done at E.ON about what impacts AI switching could have on retail.

Nadia Jakobi: Thank you, Harry. So regarding the first question. So if we were to decide that we gradually increase our investment, we would usually inform you about that as part of our full year reporting because that's after we finalize our midterm planning. Just to come back to the number that you have just highlighted. So what we said earlier that we would be able to increase the investment envelope by 1.5 to 2 billion per year at the back end of the year -- at the back end of the plan. So the back end of the plan is for us now something like 2029 and 2030 with some potential to also ramp up earlier. So this is the order of magnitude that we are talking about when we are looking also the potential that comes out of the NDP with some deductions for the blue sky scenario that the NDP is and some restrictions that we face on the permitting side. And yes, and as we said, as visibility increases and as we can actually narrow down where the actual return will lie, we can also give then more and more clarity around the CapEx commitments. And then the second fully unrelated topic. Of course, we are following all the topics around agentic AI very closely. I think in retail, in our retail businesses that we have, we have got price comparison websites already provide right now, very high transparency and very, very simple switching. I think what we have been seeing before, there were also things like automatic switching, I think, I guess, in the U.K. that happened. I don't believe it's something as fundamental as energy supply is to people and to people's homes to just have automatic switching. I also wouldn't foresee that with new AI developments like these. We actually see, as you know, 7 out of 10 customers remain with E.ON for more than 3 years, which demonstrates that our clear brand value of being a stable and creditworthy and reliable customer, provider that also doesn't increase prices at a whim, but also looks forward to -- looks after the customer by having a sort of a good portfolio management, as you highlighted. So we have got the good procurement practices. We have the balance sheet to also provide for these good procurement practices, and that is being valued by the customers. And of course, this is not the only topic that counts for our customers, but also good customer service being approachable. So answer is, yes, we take that seriously. Second, we have seen similar topics via this very -- via the price comparison website, and we respond to these kind of agents like these in a similar way by providing a good product offering for our customers.

Iris Eveleigh: With that, we come to the next question from Ahmed from Jefferies.

Ahmed Farman: Just 2 quick questions from my side. Your comment on the EUR 1.5 billion to EUR 2 billion potential upside towards '29, '30 or the back end of the plan is very clear. And I note your sort of points about permitting and all the restrictions. But I wonder whether you could talk a little bit a little bit more longer term. When you look at the NAV, is the potential for incremental CapEx much higher than this 1.5 to 2, assuming you get sort of the regulation incentives as you want them to be meeting with your investment criteria because potentially more longer term, you can sort of -- there's more flexibility in the business to work around permitting as well as some of maybe the supply chain constraints. So that's my -- anything directionally you can talk a little bit about that would be helpful. My second question is just on U.K. retail. So OVO transaction obviously closed or has now closed. I was just wondering if there is anything incremental on the impact from that business on the group's financial outlook since you sort of last guided us given it's closed, we are a little bit further into the process. Just sort of check in on that with you.

Nadia Jakobi: So maybe we start. We will start with the last question. So overall, when it comes to financials, we've been now 4 weeks into the business. And we can just -- we stick to what we have been saying earlier. We will have this low triple-digit million euro EBITDA impact and high double-digit million euro net income impact in 2030 and all the topics that I said, that hasn't changed. I think we also highlighted that there might be a low negative impact in 2026. So nothing of that has changed. But as you are asking for it, so we are very happy with the progress that we could actually close the OVO transaction. We are now 4 weeks in. We immediately established business continuity. We exchanged the management right away with experienced AR management who also have been instrumental to our U.K. transformation in the last years. We've directly set up now our post-merger integration transformation office. We -- all the things that have no direct relationship to platform decision, we work now to realize synergies from now on, i.e., bad debt practices i.e., aligning commercial guardrails between E.ON next and OVO. So we are very happy with how the last couple of weeks went in the start of our multiyear admittedly Ovo integration. So then next topic, yes, when we look at our NDP 2026, we see, first of all, that there is now a longer time period of growth and that there is actually some further potential step-up compared to the level that we are seeing for 2030 that is more to the tune of -- yes, I wouldn't now want to quantify it to the last digit, but there might be some other increase of some shy of 20%, where we could also potentially increase compared to the numbers that we've been highlighting in this EUR 1.5 billion to EUR 2 billion. But of course, that is all very, very clearly linked to having an attractive regime because this, of course, is something which also needs to be financed. And for that, we need an attractive regulatory regime to actually finance the additional build-out that is now being seen in the NDP 26.

Iris Eveleigh: So with that, we move on to Wanda and your questions.

Wierzbicka Serwinowska: Hopefully, you can hear me. Wierzbicka Serwinowska, UBS. Two questions for me. The first one is on Sweden. It has been an easy country for you. If I look historically, you got something like 130 bps upgrade following the court case. In the current RP, you didn't get anything. So what is the plan B? Because can you scale down basically CapEx in Sweden if the outcome is not good for you? And can you also remind us how much money have you undercollected in Sweden? Because from what I remember, it was a few hundred million euros that you still need to recover? And then on the second question is on Germany. If we look at WACC, of course, there's a good development in the risk rate and cost of debt -- I mean, for CapEx and the existing assets. But at the same time, you need to refinance, right, some of the existing debt in RP5. So what -- and I would assume this is one of the pushback. Is there anything else in your -- that you see in the updated WACC that you'll be very happy to basically push back on your own industry that you still disagree with?

Nadia Jakobi: So look, on the Swedish regulatory system, you know that it is a real system, not a nominal system. And you cannot just purely look in -- when we look at now RP4 and before, when you now only look at the pure real WACC, this is not showing the full picture because you would also need to look at what amount the asset base has been -- with what kind of factor the asset base has been revalued to come to the regulated asset base because in a real system, you would always then multiply the asset base with the inflation assumption. I think you would need to look at them in combination. So we remain confident that through the challenge in court, we receive an adequate return in the end as we have actually always shown in the past. So when we look -- and you've been asking now for the collection of carryover from the past, we have been collecting a mid-triple-digit million euro amount in the -- so we have a mid-triple-digit amount that still needs to be collected in the next years. And we are confident because it is also nothing that is legally ensured that we are able to collect that from previous regulatory periods. Now that I have been so involved in the Swedish topic. Yes. So I think on the refinancing in RP5, I think we have been highlighting that in all the different calls in the last quarters. From our perspective, and we will still argue for that, it is correct to have a dynamic adjustment mechanism for existing assets, and it is a fair solution not only for us, but also for the customers because none of the 2 need to carry the risk. And we also see that as something which is very clearly best practice also in other regulatory regimes. With now the postponement of the determination, both for gas, but specifically for power, we see that moving into a good direction, but there is still a gap to a fair pass-through. I guess does that answer your question?

Wierzbicka Serwinowska: There is still one on the CapEx card in Sweden. I mean what is the required level.

Nadia Jakobi: We would only consider -- I think we have got very -- of course, we don't know whether this proposal will keep standing as it is. No, it's another 10 months to go until the final determination comes. I think we have got very good arguments to challenge the current proposal, which is on the table because that is clearly is not reflective of economic reality. That's why we are confident like we have demonstrated in the past that, that can be legally challenged. And that's why we don't foresee anything like CapEx cuts at this point in time. Yes.

Wierzbicka Serwinowska: Would you consider it?

Nadia Jakobi: In the end, we are absolutely determined to spend money where we create value, and that applies to all our countries and everything what we do.

Iris Eveleigh: With that, we move on to the next question from James Brand from Deutsche Bank.

James Brand: Great to hear that you feel like you're getting more visibility on the regulatory framework in Germany. I have 2 questions. The first is on -- another one on Sweden. But please correct me if I'm wrong, but everyone seems to be focusing on the WACC proposal, but there also seems to be a change, again, correct me if I'm wrong, from moving away from replacement cost to just inflating the RAB with inflation, which is quite a big change. And I was wondering whether you thought that was something that you might be able to argue against or whether it's something that you might be able to challenge in court. I'm not quite sure how the overall legal framework around the regulation set up that, that might be something that might be legally challengible. But do you think that, that's something that you might have a chance to argue against either through the review process or legally? That's first question. And then the second one is you mentioned this kind of EUR 1.5 billion to EUR 2 billion increase at the end of the plan, which is kind of what you talked about in the past. But then we also have this initiative to try and double the pace of grid connections, which you sound quite positive about the broader German and EU legislative backdrop around that. So I guess my question is kind of does that not kind of increase if everything was to go double the pace on the connection side, would that not increase that EUR 1 billion or EUR 2 billion more at the end of the plan?

Nadia Jakobi: So when we look at our -- the Swedish proposal, the current proposal on WACC calculations is in line with our expectations. So I don't -- and the methodology that has been used was a favorable methodology. So I cannot go now into the details about replacement via inflation. We can just say from our perspective, the way the WACC is being calculated and inflated is, for us, a fair methodology. Then the second point regarding faster connection and doubling the connections. And clearly, everything what we see from the political arena is pointing towards more electrification, faster electrification, faster connection when you look at what Ursula von der Leyen said in mid of September in a State of the Union, like everybody is pointing to that. And then you look at today's like gas and oil prices, it is actually very much the right thing to electrify energy sovereignty for us in Europe is high on the agenda, and it is all clearly a business case to electrify both when it comes to transport, i.e., EVs, but also when it comes to heating, heat pump and of course, very much so for the industry. Our point is not that we haven't had enough connection requests before, I think we have been highlighting over the past couple of quarterly calls, there is a huge amount of connection requests. For us, it is more the point, okay, can we -- with this EUR 1.5 billion to EUR 2 billion, we think is something that is possible to accomplish also being limited when it comes to permitting, particularly on the 110 kV side, we are still way behind of what we would find appropriate. There is, of course, this distribution package that is currently being discussed where we get -- where the intention is that the permitting should be increased like the increases that we have been seeing for TSOs, but that is not yet in place. So -- but even if that -- to get a new 110 kV corridor in place is nothing which is then going to materialize a permit for that within just a few months that will still take more years. So -- and we would also say EUR 1.5 billion to EUR 2 billion from where we are now. We are now at approximately EUR 5.3 billion when it comes to power RAB investment, that is already quite a sizable step-up.

Iris Eveleigh: And the next question comes from Louis from ODDO.

Louis Boujard: Maybe so 2 questions as well on my side. Coming back, sorry for that, again, a little bit on the Sweden aspect on the Swedish aspect first. You have said that the preliminary ERP is a bit short of expectation and does not necessarily reflect your investment need. Is your main concern is related to the WACC, but also to other elements into the framework? And if yes, could you provide a little bit more granularity on what kind of elements materially affect the investment return in what has been proposed at the moment? And still into this topic, how much capital which is currently invested could eventually be redirected towards alternative investments if in the end, the framework that is provided to you from Sweden is not supported enough -- my second question would be related to the extension CapEx topic as well. And the question would be maybe this way. I understand that indeed, you have the sales room based on what is needed in terms of assets and development, et cetera. You just mentioned in your previous answer that you have potentially some bottleneck related to the connection right, et cetera, into the permitting. But maybe could you provide as well what would be your sensitivity to the other regulatory environment being eventually the efficiency benchmarking or the future OpEx adjustment? Is it something that needs to be taken into consideration for your potential capital extension? Or is it something that you can disregard at this point in time because you have already enough visibility to go to this extended CapEx envelope?

Nadia Jakobi: Okay. So in Sweden, other elements that are relevant for the regulatory regime are what we have already touched upon earlier, the WACC calculation and the WACC inflation, how connections are being treated and how the work in progress is being treated. Currently, when we look at what has been proposed, it is the WACC that is the major topic from the other topics, we don't see something as material as the WACC, it is mainly the WACC. So when it comes to redirection of CapEx, it's too early to assess. And we would only do it if we believe that the final result, which also then could come via court is not satisfactory. And therefore, as we have been successful in the past, and we think that our legal arguments against this very low WACC are good, I don't see that at this point. So second question, and that's why I don't think about now redirection of CapEx. The second point is, if I got your question correctly, is the other topics that are not part of the WACC not also important for our CapEx envelope. And the answer is, of course, clearly yes because we've always said it is the full regulatory framework. And if you then draw a line below the full regulatory framework, it is what is then actually determining how much we are able to spend value accretively. That's why topics around redispatch cost, topics about efficiency benchmarking, OpEx adjustment factor, which is clear positive, but needs to now be made more tangible for us is clearly relevant topics. Where we would assume that we are successful with that because we have been one of the most or the most efficient operator in the past. And we clearly see that the way we are on, we would assume that we be able to continue that. And I think all the topics around redispatch that it is not meaningful to include that in the efficiency benchmarking because that's not out of -- in control of the DSOs is something which I wouldn't now want to repeat there still same applies what we said in the last couple of quarters.

Iris Eveleigh: Thank you, Nadia. And with that, we come to the next question from Peter from Bank of America. Peter.

Peter Bisztyga: So sorry to kind of labor this point on the German regulation, but just so that I properly understand what the messaging is now. Are you basically indicating that this increase or this extra year that you're going to get of higher rates in the WACC calculation that is already giving you enough visibility that you could sort of slightly increase CapEx when you report full year results in March? Or do you still need visibility on the beta to get to that point? And if so, when do you actually expect to get visibility on that beta? And then just to follow on from that, and I presume what you're sort of suggesting as well is that even if you have that visibility on the beta, you're not going to be able to go the full way on CapEx because you still need visibility on redispatch benchmarking, et cetera. So if you could just sort of clarify kind of the time line and milestones for me, please, because I was getting a bit lost. And then just a quick one on a completely different topic. You guys issued a press release a few weeks ago saying that you're looking at future options to use your nuclear sites for data centers. So I was just wondering if you could elaborate at all about what that could look like and how early are you in discussions? And what sort of interest levels you're getting?

Nadia Jakobi: So what very clearly, this announcement of BNetzA only came in last week, as something that we very positively saw and actually very much welcome. And what I said earlier, I can just repeat that, if we were to gradually increase our investments from this positive news flow, we will inform you about that as usual as part of our full year reporting, which we now finalize after our midterm planning. The point is we have been seeing that the beta, as you have just highlighted, is something which there was a very broad range provided, and we would need to be able to narrow that down. What we very much welcomed as some of you saw in the gas -- the draft WACC proposal for gas that was Paragraph 102, which very clearly stated that for areas where we see higher investment needs, there will be the inclination to get to the high end of the provided range. And that is something which we will clearly need to be firmed up to then actually be able to narrow down where the potential outcomes of the overall back calculation could be. So that was this part, and I mean.

Peter Bisztyga: Sorry, Nadia, just on that one, when do you think you could get that clarity on the beta?

Nadia Jakobi: There is, of course, the topic that there will be the draft consultation for gas providers in Q2 and then the final one in late summer. But of course, there would be opportunity to publicly communicate something on that on the way up until then as we have been now seeing in this current announcement that we got from, which wasn't necessarily linked to any official timetable.

Iris Eveleigh: Second was on the...

Nadia Jakobi: The use of data centers for Nuclear sites. That's actually very exciting because we have been world-class in nuclear production, and now we are in world-class in nuclear demolition in the velocity that we do that. And therefore, of course, the sites will hopefully become available soon. But maybe then looking at Nvidia, this is a very first step. It's an initial review of whether former nuclear plant sites could be a suitable location for data center development. In principle, such concepts may offer potential benefits for all parties involved. These former power plants can provide attractive industrial locations. And of course, depending on the site, you can use the existing infrastructure, particularly the large grid connection. We can use that to support future developments. We will assess that on a case-by-case basis. But it is -- we are more prudent when it comes to this power plant topic, and we rather sort of look to -- when we have something concrete in our hands before we would oversell on that topic already now.

Iris Eveleigh: We move on to the questions from Piotr from Citi.

Piotr Dzieciolowski: So I have 2 questions, please. So first one, there was an article in Handels talking that the municipality utilities in Germany, they have a shortfall of EUR 40 billion to EUR 50 billion equity to finance the CapEx needs. So I just wanted to ask if you have a view how this can play out? And what is the regulator approach looking at this situation because it's not about E.ON. You are a big part of the market, but there's all other companies that may struggle. So how do you think this situation can be resolved and where do they get money from? And the second question I wanted to ask you, when you plan your 2030 guidance, do you see any upside coming from the reviews of your assets or regulatory reviews on the assets in Eastern Europe. So we spend a lot of time on Sweden. You got a negative -- or let's say, the proposal is not as positive, but then you can go in Poland, Czech, Romania and so on. Do you see any upside that the higher rates will be reviewed into a higher WACC and give you a bit of extra EBITDA?

Nadia Jakobi: I think maybe we start off with the last one. So when it comes to Eastern Europe, as we've been highlighting in the past, we see some very attractive regulatory regimes there. We have seen some bonus WACC incentivizing extra investments, both in Czech Republic, in Poland. A lot of things where you would say, okay, that is something which could be a good thing to also apply in Germany and Sweden. I think from where we stand at the attractiveness in the Eastern European schemes, I wouldn't see now that there is -- that I would see that there should be something different compared to what we have announced in our last communication where we brought forward the 2030 plan. I would still see that very much in line. Yes, when it comes to -- we have been seeing when it comes to the Handelsblatt article, we've been seeing this financial challenges in Stadtwerke in the past. This shows actually that they also need adequate returns because they also need the adequate returns to attract capital. The German government plans to implement a fund to finance energy transition projects for smaller municipalities. But clearly, our view would be that to keep a level playing field that this needs to be then applicable to all market participants, so also for ourselves. Yes, I would say here, the main point is seeing all the investment needs, the best medicine for that would be to achieve adequate returns via the regulatory framework.

Piotr Dzieciolowski: Can I please follow up and ask you if there is a case for some consolidation. So like we've seen on the TSO level in Germany that in order to get the financing companies were actually accepting a low premium to RAB. And given you can create the synergies on top, you could be interested in some situations where the seller is really pushed and forced to accept close to RAB valuation and then you could create synergies and better value creation than just organically spending. I know historically, you've been talking that you are focusing on organic, but is this a possibility that it play out this way as well?

Nadia Jakobi: Look, our focus is pursuing organic growth. We spent EUR 1 for additional rep, why would we want to -- why would we not invest in organic growth, but rather in inorganic growth. And the consolidation, as mentioned in the past, we do not see that as a big lever because of our organic growth and also because of the size that we already have in German distribution. But of course, we are not ruling it out, but we wouldn't be the ones to sort of proactively pursue that. But if we are sort of come to rescue of some of the struggling Stadtwerke and be asked to help out, that would be more something that we would envisage to do. But that is nothing that should be now from the overall capital allocation be big on your agenda.

Iris Eveleigh: With that, we move on to Rob from Morgan Stanley.

Robert Pulleyn: Just one question, given the amount of ground you very kindly covered already. And that is just around the allowed return in Germany. I think everyone agrees that the delay if the look-back periods change should lead to a higher allowed WACC, which is great. May we ask, could that be -- should we consider that a net positive? Or could it be traded off with lower outperformance when the regulatory package is all said and done?

Nadia Jakobi: Yes. So from our perspective, there shouldn't be any link between that now because this postponement is actually a reflection of the market movements that we have now seen, particularly in the last couple of months with bond yields rising significantly globally. So I wouldn't now see -- I think this move of determination to 1 year later is very clearly within the existing framework or the current framework proposal that the determination that the regulator has set up. So I wouldn't see any conjunction between the 2. What was the second one?

Iris Eveleigh: And then we come to the very last question from Bartek from Bernstein.

Bartlomiej Kubicki: I would like to move away from networks and actually focus a little bit on retail and a couple of components of this issue, I would like to discuss regarding higher power prices, whether you are already seeing an increase in bad debt and whether this could be a headwind to you throughout the winter? And consequently, also, how do you see the behavior of your competition in this higher power price and gas price environment? And if you can also comment on this, regarding this bad debt topic on the U.K. government consultation paper on bad debt. We called it, I think, bad debt circuit breaker, whether you think it could actually help to sort out the bad debt issue in the U.K. or not? So that's number one. Number two, just very quickly, in your comments, you said that Energy Infrastructure Solutions have been impacted by lower hedging prices in the U.K. Maybe you can give us a bit of sensitivity what the impact could be should you have higher power prices? Or what is the sensitivity to, let's say, GBP 10 per megawatt hour power price on the E.ON's EBITDA?

Nadia Jakobi: So looking at bad debt. So our bad debt, when we compare Q3 2026 to last 9 months in 2025, that's broadly consistent. At present, we have not observed any material deviations in payment behavior across the countries where we operate. Of course, you need to bear in mind that, of course, some of the -- due to the time lag, both from the price cap calculation in the U.K., but also from the way the industry is procuring in Germany, some of these price increases will actually also only to the full extent, be visible for the customers then next year. Of course, clearly, we are not fully immune to rising prices if the share of wallet, especially for the vulnerable customers is then increasing. Still, I would just reiterate what we have been saying earlier on the U.K., we think that our way of dealing with the bad debt topic is industry-leading. When we look at the U.K. budget, we think this energy debt circuit breaker, as you call it, is directionally very welcome. But as for us now too early to provide any direct impact. So this package is aiming to reduce the level of energy debt built up in the system. I think what we have been doing in our U.K. -- we call that customer health, what we do with our smart pay-as-you-go concept for our U.K. customers when we look at how we actually make sure that the advanced payments in -- for the U.K. customers are always on the right level. I think that is for us, the most topic is for us what we can have in our own hands. So then the next question was regarding the hedged power prices. Clearly, that is a very, very small part of our business. We have some U.K. biomass plants from -- which have been operating for a long while. And those -- the prices as we don't want to carry commodity prices, we have been hedging that price levels at times when the forward curve was lower. And now this benefit, we have been hedging past. That is more something where we have elevated price levels in years earlier because we have been hedging at the time when we had 2023, '24, we had very high prices. Now that is rolling up and come to more normalized levels, but it is a very small and minor part of our business.

Iris Eveleigh: Thank you, Nadia. Thank you, everyone, for participating and the high interest and your questions. If there's anything you would like to discuss with IR later, we're happy to take your calls. With that, we will close the call. Thank you very much, and have a good remaining day. Bye-bye.

Nadia Jakobi: Thank you. Bye-bye.