Morning, ladies and gentlemen, and welcome to the 9 month 2022 results presentation, which will be hosted by our CEO, Jose Bogas and the CFO, Luca Basa. Following the presentation, we will have the usual Q and A session open to those connected on the call and on the web. We kindly ask you to limit your questions the financial and operational performance of the company during the period and to wait until the 23rd November for the update of the strategic plan. Thank you. And now let me hand over to Jose Boggas.
Okay. Thank you, Mar, and good morning, everybody. Let's start with some key consideration for the period. First, the persistent volatility in the gas market and high electricity prices Let both the European Union and the Spanish government to unveil new set of emergency measures In order to mitigate the consequences of the energy crisis while discussing bolder proposal for the medium term, The deterioration of the macro context has shown no sign of recovery during the last quarter. The growing concerns on the main economies performance and inflation, exceeding all records in the Eurozone Trigger a new run of corrective measures from central banks, including significant interest rate hikes.
The sound performance of our liberalized business is clear evidence of our management integrated strategy resiliency To overcome market headwinds, like for like EBITDA excluding sale of Endesa XWAY to Enel increased by 11%, While net ordinary income increased by 1%. And finally, an extraordinary shareholder meeting has been called on November 17 To approve a set of preventive operational and financial measure within the usual related party transaction practice with our parent company. Its adoption will provide the company with greater operational and financial flexibility in the event of extraordinary energy market volatility Ocarina gain in the near future. On the next slide, we will further elaborate On the dynamic of the market context, 9 months cumulative mainland demand decreased by 1.4% Compared to the previous year showing a further leveling off in the negative trends seen during the year. In Endesa's mainland distribution area, figures were slightly better as demand increased 0.5%, That is minus 0.8 percent adjusted, relying on the service segment solid performance, Offset by reduction in residential, minus 1.3% and industrial, minus 4% segments, The latter being affected by the economy slowdown mainly in the metallurgical and paper sector.
The European energy crisis also affected by the geopolitical tensions resulted in a challenging market context With record high prices during December, the European Reference, the TF index reached the historical high of Around €316 per megawatt hour on August 26, while the Spanish referendum Midgas or PBV Surpassed €230 per megawatt hour, additionally showing a relevant decoupling since June. Against this background, Iberian average pool price reached €186 per megawatt hour in the period, Up 137 percent year on year and also affected by the cap on gas for electricity prices, Limiting the implicit gas cost at €40 per an hour at hour since mid June. So far, 2022 has been the most expensive year in the Spanish electricity market. In the absence of a similar gas cap as the Iberian Except June, most European Energy Market recorded average price around €300 per minute hour, Third context on Slide number 5. While there is no doubt that 2022 is being characterized by record high gas prices, In particular, the Q3 has seen an extreme and unprecedented rise.
For instance, mid gas PVB, which is the reference for the Iberia market short and average by more than 180% quarter on quarter To €138 per megawatt hour. This price level compares with the €90 to €100 euros per megawatt hour range since during the first half of the year. When it comes to the TTF, which currently is the Leading European Gas Benchmark, declining gas export from Russia and the buying spree to top up winter reserves Mean an average price of €200 per megawatt hour in the Q3, which compare with the €50 per megawatt hour recorded in the same quarter of the last year. With these commodity prices increases, Quarterly average forward price also reached record high in all the markets, except in the Iberian market where the price cap In force since June 15th has allowed to keep pool prices under control compared to other European countries. Although considering the thermal compensation, last quarter prices also represented an all time record in Iberia.
Power pool prices forward references for the last quarter point to similar levels, while natural gas Futures linked to TTF and Midgas are trading around €75,000,000 €70 per megawatt hour respectively, close To level not seen since mid June and less than a third of their summer peak. Moreover, unusual warm weather, High flows of LNG and strong storage build have eased some pressure. On the gas market in the last 2 months, European storage is almost 94% full and Germany has reached 90 8%. On Slide 6, we can see a summary of the regulatory initiative Unveiled during the last quarter and aim at containing electricity prices and mitigating its social impact. At the European level, As a complement to the different packages approved to date, a new set of emergency measures to control energy prices was Approved last September and will be applicable from December 1 this year to December 31, 2023.
Among others, those include a reduction in electricity consumption, the introduction of a cap Of €180 per megawatt hour for the marginal technologies and a solidarity contribution tax for oil and gas companies. Moreover, the European Union reached a consensus to work on a gas purchase platform and alternative reference in gas market And a solidarity scheme to allocate gas between member states. Finally, an overall energy market reform debate carries on. In Spain, since August, the government has approved through 3 different royal degree law several cost reduction measures for the most Vulnerable customer such as implementing energy saving and efficiency measures, reducing energy dependence on natural gas while Promoting electrification and deployment of renewable energies, lowering value added tax back From 21% to 5% on supplies of natural gas and increased protection for the most vulnerable Energy consumers, particularly on natural gas. On the non mainland proposed fuel auction, We welcome the recommendation of the CMC report we consider inadequate to use the BEREM formula And advocates market references such as Midgas.
Concerning regulated tariff, a new draft For public consultation has been put forward, we'd consider longer term market price references for the energy cost indexation. Lastly, the tax proposal on energy companies and banks required as a social contribution Has started the allegation process in parliament. While the final outcome is still unclear, we reiterate our disagreement with the Proposed taxation. The task will not be levied on extraordinary results since it will be applied On consolidated tax revenues, clearly affected by the context of high prices as well as the associated energy costs And most expressly excluding regulated businesses, oddly, this tax goes Against the spirit of the current European Union proposal, it must be highlighted that last year, our tax contribution represented more than €3,000,000,000 which places us as the 5 largest taxpayer in the country. Now we turn to the evolution of the generation operating parameters on Slide 7.
Over the last 12 months, we have continued to make progress in our decarbonization commitment, Bringing into operation more than 700 megawatts of renewables. Mainland renewable capacity is 10% higher than in 9 months 2021, while CO2 free sources now constitute 70% of our installed capacity on the mainland. Over this 9 months of 2022, we connected 156 megawatt of new wind and solar capacity to the grid. In addition, on October 21, a new solar plant was commissioned in Sevilla With an installed capacity of 50 megawatt. All in all, 100% of this year target additional capacity, 1 gigawatt It's on track.
We expect it to be operational in the 4th quarter with no foreseen delays. As for the renewable pipeline, the 65% of the 4 gigawatt of new addition targeted for 2022 to 2024 Are already addressed, while the rest is ensured with a gross pipeline of more than 80 gigawatt, the mature portion Of which covers more than 6 times, that is 35% of 4 gigawatt, the residual target of new capacity. Total mainland output reached 39.9 terawatt hours, plus 16% higher than previous year. Year to date output figure consolidates the lower hydro availability suffered mainly in the 1st semester. In that context, the increase in wind and solar production due to the entry of new capacity to weather with the recovery of the Thermal production, mainly CCTTs, more than offset the drop of hydro production.
And finally, let me highlight The fact that Endesa was provisionally awarded the Andorra Fair Transition Tender obtaining The right to connect 953 megawatt and the option to step up to a total of 1200 megawatt. This project reinforce the company commitment to future project in areas affected by plan closer, Creating value in the local communities. In Power Retail, we continue increasing the liberalized Customer base, deep learning on our successful commercial strategy and we are now on Slide 8. The implementation of attractive offers in the current price contest has resulted in a remarkable increase in our liberalized Customer base during the last 12 months, adding around 1,200,000 new clients. Customer acquisition runs well above what was in our plans and boost sales in the deliveries market up 4% versus previous year.
Sales to liberalized residential customer have more than offset the decrease in sales to B2B Customers, looking at in the SAGs, both eHOME contract and charging points associated with Electric mobility are increasing significantly by 30% 43%, respectively. On Slide 9, the good evolution of our free power sales came together with a sound performance Of the free power margin that reached €38 per megawatt hour, 35% above Previous year, despite the complex and challenging market and prices scenario resulting from Unitary revenue that rose to €161 per megawatt hour associated to an increase of index sales And higher pool price context and increasing variable costs driven by lower Bassa. Volume at high prices and fuel cost increases. Free power margin amounted to around €2,200,000,000 Well above the previous year and the main drivers being the following: the renewable of fixed price contract at the price of 65 market in our bilateral contract, which is below the limit set in the regulation. This will provide stability to our customer, guaranteeing steady bills in the coming month with prices well below the spot price.
Better margins in thermal generation due to a higher CCT production in a context of higher Thermal output to compensate the low hydro production. Regarding forward sales, 100% of our 2022 price driven output, 90% for 2023 46% in 2024 has already been hit €65 per megawatt hour base load price set in the bilateral contract between our generation and supply Bassa. Focusing on the gas business, we are on Slide 10. Total gas sales remain quite flat, increasing by around 1% to 75.4 terawatt hour with very strong sales To our CCTs offsetting the lower conventional demand. Gas unitary margin, including wholesale, Retail and CCGT's activity recovered from €0.9 per megawatt hour in the 1st 9 months of 2021 To €3.7 per megawatt hour in 9 months 2022, driven by the wholesale business with a significant improvement in the 3rd quarter, this result reflects an overall context improvement compared to the previous year, clearly affected by the pandemic Backdrop by the American contract optionality and the opportunities associated to high gas demand for CCGTs.
To the contrary, retail business margin is slightly decreased, mainly driven by lower than expected gas demand. Volume hedge for 2022 is around 100%, considering the expected sales to CDTs in the 4th quarter. In the medium term, 60% and 29% of our sourcing contracts are already hedged For 2023 2024, respectively, our gas heads are usually close 2 or 3 years in advance and we usually leave some Henry Hub volumes ahead to exploit their full flexibility. Moving to operative achievement on networks, and I'm now on Slide 11. Distributed energy stood At 102 terawatt hour, up by 3%.
Our effort to improve quality and efficiency resulted in a drop in losses That improved 0.2 percentage point while time of interruption improved by around 9%. These good efficiency figures have been achieved despite the extreme weather conditions such as the Regular high temperatures during the summer or the cyclone hermine and unprecedented meteorological phenomenon in the Canary Islands that affected the electricity grid. And now I will hand over to Luca, who will detail the financial results.
Thank you, Pepe, and good morning to everybody. On the financial highlights, I'm now on Slide 13. Reported EBITDA increased by 19%. EBITDA like for like increased by 11%, excluding the capital gain obtained from this Exway transaction. Net ordinary income was up by 1% year on year amounting to close to $1,500,000,000 not considering the net effect of the Endesa X Way transaction.
Reported fund from operation figure, which amounted to €600,000,000 Turn positive versus first half twenty twenty two. This figure was strongly affected by the increase in the regular working capital during the period Of close to €1,200,000,000 Once stripped out of this impact both years, FFO would have reached €1,800,000,000 more than doubling the adjusted FFO in 9 months 2021. Moving to the detailed analysis of the period on Slide 14, we invested approximately €1,500,000,000 in the period, 20% more than the previous year, Mostly allocated to the 2 main strategic pillars, networks and renewables. EBITDA like for like reached EUR 3,472,000,000 plus 11% versus 9 month 2021. Generation and supply showed an improvement of 38%.
Distribution EBITDA declined by 21 percent to €1,132,000,000 While Generation Business benefited from the bilateral contract, Customer business was impacted by the net increase of commercial sourcing cost. Moving now into a deeper analysis on Slide 15 on Generation and Supply Despite the strong volatility, our liberalized business portfolio strategy has successfully overcome the headwind. EBITDA like for like reached €2,340,000,000 plus 38% versus last year, including the following effects: Net effect of non recurrence of minus €84,000,000 The free power margin has performed better than expected showing an increase in absolute In terms of €724,000,000 mainly thanks to the generation margin increase, mainly to the new price reference And higher thermal output with lower volumes where the lower hydro is partially offset By the improvement in volumes of the rest of renewables and nuclear and either minor effects. The supply margin was likewise affected By the net increase in sourcing cost, higher ancillary and shape cost and customer mix effect. Finally, a positive effect on the short position for €142,000,000 The positive contribution of Endesa X And other effects for plus €27,000,000 which includes an improvement in the gas business and others €460,000,000 Including $209,000,000 in gas, thanks to the optionality of our contracts in a much better scenario versus the previous year, Partially offset by either minor negative impacts for about €50,000,000 a deterioration of non mainland margin that decreased by €133,000,000 resulting from the worsening of the fuel cost recognition due to the gas price Given that the current regulation does not yet allow the recovery of the actual cost incurred.
Fixed cost increased by €45,000,000 mainly due to the inflationary context and higher activity. Moving to Slide 16, Distribution EBITDA dropped by 21% to EUR 1,132,000,000 mainly affected by Lower gross margin impacted by the update of the regulatory remuneration for mainly 20 17 to 2019 in accordance with the ministerial order issued in August by around €180,000,000 Minus €29,000,000 of the previous year's settlements booked in the first half and a marginal decrease of gross margin mainly due to the impact Of the 2 previous effects on the current year. Fixed cost increased by €56,000,000 mainly due to the increase in the repairs And maintenance costs, the update to the workforce restructuring provision and the recognition of recent sanctioning proceeding. We do not expect further non recurrent effects for the last quarter of the year. Few more details on the evolution of fixed costs.
We are now on Slide 17. Total fixed costs reached 1,000,000,000 EUR 510,000,000 8 percent higher than last year. Thanks to our digitalized asset base and platforms, we have continued to deliver efficiency across all businesses The softened the impact of the increasing inflation effect and rising in our share cost in the growing businesses. On the P and L evolution from EBITDA to net ordinary income, and I'm now on Slide 18, Net ordinary income came at EUR 1,469,000,000, up 1% year on year on the back Of the dynamics commented at EBITDA level. D and A is up €145,000,000 year on year With higher amortization for €83,000,000 based on investment increase as well as activated customer acquisition cost And higher bad debt accrual for EUR 62,000,000 associated with the increase in billings volumes in the period, Representing 0.4% of the revenues, slightly lower versus the historical trend.
Overdue debt over 180 days Sees a reduction of about 20% compared to 9 months 2021. Net financial charges increased mainly as a result of the net Act of late interest payments for minus €65,000,000 and the net exchange differences due to the evolution of the euroU. S. Dollar rate During 9 months 2022, a higher debt financing cost due to the increase of the average gross debt despite the lower cost of debt, Mainly as a consequence of the increase in cash collaterals required in organized markets. This was more than Saved by the update of the workforce reduction plans provision.
Raises in taxes, mainly due to the higher results And the increase in the effective tax rate to 25.6% due to non deductible tax provision. Minorities increased by €36,000,000 in line with the trend shown in June, mostly due to better results Of some wind farms with minorities participation. Moving to the cash flow on Slide 19. Funds from operation evolution in the 9 months came in at €600,000,000 positive improving for about €800,000,000 versus the first half of 2022. Net working capital was equal to minus €2,200,000,000 strongly affected by the €1,200,000,000 Of regulatory working capital increase during the 9 months of 2022, most of it in the mainland business due to the regulatory settlements at historical fuel cost far below the current market.
Excluding this impact, FFO would have reached around €1,800,000,000 Apart from this effect, net working capital amounts to minus €1,100,000,000 almost all of it expected to be temporary And corresponds to minus €1,100,000,000 due to the gas cap mechanism pending to cash in from customers, Minus €100,000,000 higher monetary stock on gas required by the government to face the energy crisis and plus €200,000,000 net Energy system charge impacted by the government measures both in 2021 2022. The increase of net balance of receivables and payable accounts Associated with external energy market environment is offset by different actions implemented to improve working capital such as cash collection, Commercial factoring and others. We expect the above effects impacting working capital to normalize over the year, Assuming a stabilization and harmonization of the energy context and no further regulatory measures. I will now move on debt evolution on Slide 20. Net debt amounts to 11 €100,000,000 2,300,000,000 higher than the full year 2021.
This increase is clearly affected by €1,600,000,000 Cash based CapEx, €1,500,000,000 of the total dividend corresponding to 2021 results, All of the above was partially offset by the €600,000,000 of positive FFO generated during the year. Regular working capital, as previously commented, It was close to €2,000,000,000 with a €1,200,000,000 higher respect of full year 2021, Mainly due to the increase in the pending compensation of Milan, which we are expecting to cash in at least €400,000,000 by year end. Our leverage measured as net debt to EBITDA ratio was 2.3x and the cost of debt is still very competitive at 1.1% level. Gross debt has notably increased as a result of the material rise of financial guarantees, Commonly known as margin collateral requirements required for the commodity financial hedging contracts, which spiked in the 3rd quarter Due to extremely volatile context, as Pepe mentioned before. Let me specify that these commodity financial hedging contracts are used to hedge Our margins for our native portfolio in both power and gas are absolutely not speculative.
Collateral requirements are temporary. In fact, at the end of October, the figure has dropped, reaching €8,600,000,000 due to the gradual decline in commodity prices Bassa. After the Q3 peak. Moreover, we expect these volumes to notably reduce as derivative mature Starting at year end with an expectation of €8,000,000,000 and a rate of about €400,000,000 Per month in the 2022 3 year, assuming the current forward price. Regarding the estimate of net debt by year end, We know further regulatory intervention and stabilization of the market scenario.
We expect that to be in the range of €10,000,000,000 to €10,500,000,000 Slightly above CME expectation, mainly due to the expected increase in regulatory working capital as commented before. Moving to liquidity and I'm on Slide 921. At the end of September, liquidity amount to €4,400,000,000 This figure consider unconditional credit lines amounting to €5,800,000,000 out of which €3,800,000,000 are available. The adjustment in liquidity is a consequence of Strong increase in collateral in 3Q in the Q3, which is affecting all energy operators across Europe and the sector liquidity needs, Together with the slower than expected recovery of operational cash flows and the payment of the final dividend in July. The increase in margin has been financed mainly with short term instruments.
Once deducted the funding of energy markets cash collaterals, the resulting ratio of fixed Great gross debt is 62%, adequate to address the current path of rate normalization in the euro area. Pending the European Energy Market Stabilization, we are actively managing the current situation to a number of financial initiatives, Strengthening the liquidity position and providing a necessary pickup in case of a new extreme volatility spikes. We have already put in place facilities Amounting to €4,500,000,000 debt once considered results in a coverage of 11 months of debt maturities and in particular, €3,000,000,000 In a 12 month credit line with Emirates Financial International, pending EGM approval the next November 17, €1,300,000,000 renegotiation of loan extension from March 2022 to July 2024 with the relationship with banks already executed And €250,000,000 new sustainability linked European Investment Bank loan for €50,000,000 signed yesterday. Finally, we are working on additional measures that we provide a material increase in the liquidity position in the short term reaching levels that we find sufficiently comfortable. Let me now hand over to Pepe for his final remarks.
Thank you, Luca. And to close this presentation on Slide 22, I would like to share some final remarks on the main achievement of the period. First of all, The resiliency of our long proven integrated business model has allowed us to successfully overcome One of the most challenging context in recent years, both in terms of market volatility and regulatory intervention. We continue to attract new customer, liberating on a successful commercial strategy based on a range of products And services providing stability to their energy bills. In renewables, we continue to deliver on capacity addition and are On track to deliver the full year target.
We remain you that on the 17th November, an extraordinary general shareholders meeting will be held to approve a set of Operation to reinforce our position on international gas market as well as to strengthen our liquidity, providing a solid backup In case of new extreme volatile spikes. To wrap up, Despite the many headwinds encountered during the period, the sound result reached in 9 months Support the achievement of the net ordinary income target set for the year, even considering Prudently, the proposal of taxing utilities for about €400,000,000 And ladies and gentlemen, this concludes our 9 month 2022 result presentation. Thank you very much For your attention, and we are ready to take some questions.
Okay. Thank you, Pepe. We'll start now with the Q and A Session, I'm open to take all the questions you may have.
Thank Luca Bassa. Mrs. Mar Martinez, Head of Investor Relations, please go ahead.
Okay. The first question comes from Alberto Gandolfi from Goldman Sachs. Please, Alberto, go ahead. No. Probably Alberto has some technical issues.
We can move to the next analyst, that is Javier Garrido from JPMorgan.
Guidance, did I understand correctly that you are including up To a potential impact of up to €400,000,000 from the Spanish energy tax that would be included In your reiteration of the ordinary net income for 2022? That's the first question. 2nd question, You can quantify or at least give some approximate figures about how much of the €724,000,000 increase In the gross margin in the 1st 9 months in the free markets is due to the repricing of contracts and how much is due to higher profits From CCGTs. And then the third question is, I've noticed the Continuation and acceleration in the increase in index sales in your portfolio, is this increase Sustainable and is it a strategic decision to reduce the economic exposure to a short energy position in the future? Thank you.
Okay. Thank you, Javier. Let me say, you are absolutely right. We have prudently, as I have said, include this taxation of €400,000,000 in the net ordinary income. That means That we will maintain our net ordinary guidance, net income ordinary guidance even with this Taxation.
With regard to the last question in the sense of the index Sales, well, let me say that this is not a strategy to increase or decrease our In the sales, it's a consequence of the market and the dynamic of this market. There are many customer, many clients that they will prefer in the future just to be indexed Because they are expecting, I mean, a reduction in the prices, we try to advocate them in the sense To give them the best alternative for their supply. Well, from time to time, we have different strategies, one of them trying to give clues just To fix prices or to continue in the indexation, but it depend on the kind of Client and the way in which they would like to go
ahead. And on your second question, Javier, regarding the impacts on the EUR 724,000,000 of increase in our liberalized margin, as Far as the generation part, basically, we have obviously the positive effect of the bilateral contracts, which impact €440,000,000 in generation and in particular when it comes to the CCGTs here obviously for the increasing volume we have a positive effect of about Then on the supply side, you have the negative effect on generation still €440,000,000 Regarding the Barradera contract and the net effect there of €60,000,000 assuming that obviously the pricing for The full 9 months he's giving us in the region of €350,000,000
Okay. I think that we have now Alberto Gandolfi from Goldman Sachs. Please, Alberto, go ahead.
Marc, thank you, and good morning. I also have three questions, please. The first one is continuing on margins in the liberalized business. If I observe your Slide 15, it looks like the non mainland will normalize at some stage when If you will somehow settle. And what I'm trying to understand is how much of these benefits from gas contracts, CCGT spreads are going to also repeat in 2023.
And can you tell us maybe how much Of this €2,300,000,000 EBITDA in the generation and supply is function of the gas contract and or export To France that when the NUCs restart may no longer be there. I'm trying to understand the sustainability of this profitability, which admitted is extremely strong, Into next year, because if you keep that plus the normalization in mainland, it would be really strong numbers. I'm just trying to figure out that. The second question is on interest expenses. You've been really good at keeping costs at 1.1%.
I wonder how sustainable is that considering half of your debt is variable and considering that we are seeing refinancing rates being Something like 3, 3.50 basis points higher than what you're paying right now. How much of a headwind is this going to be on the accounts Going forward. Last question, I'm not going to ask about CapEx and the revenue tax because I think that's going to be assumed in addressed in the next couple of But maybe the last question. I'm a bit surprised that you're booking 0.4% bad debt, which is less than average. I would have expected with bills going up, You would be booking a higher percentage.
I know the absolute amount is going up anyway because your revenues are growing. But I what's the rationale For booking a lower ratio of bad debt in a moment where energy bills are going up, doubling basically? Thank you so much.
Okay, Alberto. I will hand over to Luca to answer, but Let me say something with regard to the fuel cost for the island or the remuneration of the island. I agree absolutely with you that it's something that it would be resolved in the future. Let me say that fuel remuneration in Regulated fuel regulation must be based on the pass through rule that we used to have Always in this regulated business and it is clear that the current, I would say, customs fuel cost It's not working now. Having said that, the CMC on its report, Last report of the September published a report On the proposed fuel remuneration in the island and the CMC recommends using indexes that reflect market Quotation in a better way, explicitly mentioning the mid gas.
Therefore, We are currently waiting for a new draft in exterior order aligned to the Centimeters and C recommendations. Luca?
Sure. Just adding on this first question, obviously, the gas business has had a very good performance in this period, and we This to be sustained towards year end, but for 2023, let me not comment until we get to our Capital Markets Day in about 2 weeks. Then when it comes to interest expense, I can give you basically The evolution towards year end, so we currently have 1.1 percent cost of debt. We are expecting to reach 1.5 percent at the end of the year, and that is based on assumption of the fixed rate component just over 2% at around 2.3% And the variable rate component at 90 basis points in terms of cost of funding. And obviously, in the future years, and again, we will comment on the CMD, We will have an increase in interest expense as all other operators are basically experiencing given the normalization of interest rates across Europe.
And then the third question was on the rationale on the Percentage of debt, we always had a percentage that was ranging between 0.3% and 0.5%. So 0.4% is more or less in line With the past, we have an increase in basically buildings volumes of about 60% in these last months, which is a huge number. And the usage of these percentages in the average of our past basically periods. Therefore, this is also based on expected evolution for the futures because obviously not all the increase in building will We come down as per that given what we are experiencing currently in basically payments by our customers. Therefore, we deem appropriate using the 0.4 percentage point given the higher increase in building that we've seen basically this year.
Many thanks, Alberto. Next questions come from Antonella Bienquesi from Citi.
Yes. So very quick question on your CapEx. You reported EUR 1,600,000,000. Your plan is The 2.6 for the current year, are you on track on that? Or you think some of the CapEx will flow Into the next few years.
Also, I noticed that the demand is coming down a lot And therefore, how this can change the position of Endesa going forward, particularly on its ambition on the renewable
Okay, Antonella. Well, Luca will explain Deeper, but we are on track on our CapEx. We don't see any change in the future. We feel comfortable with what we are doing and we will reach this CapEx. With regard to the second question, If demand is going down, it's going just to reduce our position, long term position in generation.
Well, it is clear if demand is reduced, our long term position will be reduced also. But we feel comfortable in the way in which our as I have said, strategy It's working and we feel comfortable continuing with this strategy. Luca? Just confirming again the CapEx expectation for
the full year at 2.6%. And regarding demand The decrease in our development in renewables, I confirm the 1 gigawatt of additions expected for this year. We are already over in around 250. The rest of the capacity will come online in these last 2 months of the year as we experienced also in the previous 2 years, while for basically Moving forward, again, let's wait for the CMD in a couple of weeks.
Thank you. We will move to the following This announcement comes from Jorge Guimaraes from JB Capital.
Good morning. I have two questions. The first one is, if you can go back to the liberalized margin. In Q3, And L3 margin close to €50 megawatt hour. So if you can help us to understand how did you achieve such High margin in all sustainability going forward.
And the second one, it's not directly related The results, but I can't help but ask it. Do you have any opinion about the news late last Tweak in Spanish press about the inclusion or not of CPI just to come to the Slovak exemption. Thank you very much.
Okay, Jorgs, and thank you for the question. Well, again Luca will explain better, but We think that it is not easy as to obtain these kind of margins and it's the consequence of a very good job Trying just to, 1st of all, to give a very good price to our customer base in the infra marginal A cap that we have of 67, you know, where price is 65. And then managing All the rest of the cost, the ancillary cost, the shape of the customer, etcetera, etcetera, it's not easy. But I think we are doing a very, very, very, very good job. With regard to the second question, First of all, that is in relation with what we call the responsible Declaration that we have that we do yes to the CMNC, Taking into account our infra marginal generation and the fixed prices to our customer.
I should say that I think that there is no any problem Or at least material problem with respect to our declaration. As I have said, this we have done some kind of repricing of contracts to levels consistent, As I said, with the €67 per megawatt hour blowback and I think that this repricing will be We'll have a sustainable positive impact and we are not going to be penalized because of any clawback.
And just on the liberalized margin again, I mean, basically the effect and the The sustainability of this result in the months is based on the fact that we are re pricing our generation at the level of €65,000,000 starting from previous years where we were ranging in the €45,000,000 to €50,000,000 area. Again, respecting also the regulation of the €67,000,000 Bassa. And euro clawback imposed by the regulator. Therefore, I think it's part of the evolution, our generation And supply margins together, as I commented before, with the impact of the bilateral contract for €440,000,000 positive in generation And negative in supply and obviously the improvement when it comes to thermal output given the higher volumes in generation.
We have now Manuel Paloma from Exane BNP.
Hello, good morning. Thanks for taking my questions. I will stick to 2. One is just a confirmation to make sure that the up EUR 2,400,000,000 Impact is in net profit and not in EBITDA. So that will be the first one.
Second one is whether you could please explain The rationale why you have materially increased the number of clients in the liberalized market, 21%, if I'm not wrong, while volumes have gone only up by 4%, is this the trend that you will expect going forward? Thank you very much.
Okay. Thank you, Manuel. Well, first of all, You are right. You are right. It is clear that this increase in the net ordinary Results will be supported by an increase in the EBITDA that Luca will explain later.
The second thing the second question is with regard to okay, Luca.
I'll take it Pepe. So the first one is up to €400,000,000 of, let's say, prudently tax provision on the new Proposed taxation is at the net income level, so confirmed. On the second question, 4% Volumes versus 20% increase in clients, first of all, volumes are affected by demand. You've Seeing the evolution of demand, I think we commented by sectors, but basically you have an increase in demand only on Services, while both residential and in particular industrial are down in terms of demand given the high prices scenario. The evolution of demand obviously will depend also on the macroeconomic evolution and basically GDP evolution for next year.
You know that GDP evolution for this year and for next year have been lower several times during Bassa. The last month. But basically, volumes are affected by macro and sectors evolution, While customers notwithstanding the increase or the inversion in trend that we experienced in the last 9 months, Obviously, the flows is slowing because also customers' acquisition in the realized market in the Q3 is much lower than what we Bassa. In the first two quarters. So I expect the customer basically trend to slow again in the future quarters, While volumes will depend on demand on each of the sector and industrial, I think, will be impacted in the next few quarters in that respect by the energy context.
Okay. Next question is coming from Javier Suarez from Mediobanca.
Hi, good morning and thank you for the presentation. Three follow-up questions also on my side. The first one is on the Working capital. So the question for you is when and how are you expecting the recovery of this working capital? Which would be the amount of working capital that we should see by the year?
And how confident you see on the Positive evolution and reduction in this regulatory working capital. A related question is on the level of cash collaterals that you are expected by the year end An implication that this may have on your capital going forward. 3rd question is on the guidance. The company has Affirm this morning the net ordinary net income for 2022. Can you please elaborate on latest guidance for EBITDA And then payout policy and therefore, increase the dividend deal in 2022.
And the final question is Bassa. What is your Lea? If you can update us on your contribution to the ongoing debate on how the European Union should face the structural reform of the European electricity Through both a short term and then medium term method. Thank you.
Okay, Javier. I will try just To give you some color on the last question, the debate in the European Union around these Changes. Well, in my opinion, it is absolutely clear that we have realized that with a stream Unpredictable volatile context like the one that we are suffering now, the marginal system pricing that We have, I would say, doesn't work quarterly in the sense that the combined cycles are Seeing very high prices that it has no sense for the inframarginal technologies. Another question is what should be this price for the infraumal technologies. As you could see in Spain, the regulator had decided yes to cap with €60 €7 per megawatt hour.
And in Europe, this figure is €180 per megawatt hour. Well, In any case, what I think is that it should be different between The signal price and the remuneration price for this for the different technologies. I think if we Go back to a normal situation, again, there is no any problem on this marginal price Has been working during a long period of time and during the last years and I think That very, very efficiently because it allocate the resources in the right way. We have obtained Lot of cost reduction in the sense of the European Union cost of energy. But as I have said, we should think how to change this.
In any case, if you think in the future in the mix in which we are only we will have only renewables, Then the marginal cost will be 0 or close to 0, and it has no sense. So these remuneration systems should change in the future, Yes, because of this extreme context or yes, because we are going just to have marginal technologies With marginal cost close to 0 and you should pay in any case the capital cost or the fixed Of course. So we are really open to this chain. And while it's not easy, But it is normal and rationalable just to think about a new remuneration system for the future.
Thanks, Pepe. On the first questions regarding working capital reabsorption, As I said, regarding working capital, we expected to basically lower it the stock that we are registering of €2,000,000,000 At the 9 months by €400,000,000 by year end and hopefully something more if it comes. When it comes to the, Let me say the order evolution working capital, which has a negative effect of about €1,000,000,000 in 9 months, we are expected to recover almost all of it Because obviously, the impact of €1,100,000,000 of the cap on gas will be reabsorbed Quite substantially towards the Q4, given the evolution in price and the fact that in certain Recent days, the cap on gas do not apply. Therefore, we don't have we don't we'll not have an impact on demand. As you might recall, these measures Basically, it's set the loan generation on a weekly basis in the system and then it's transfer or financed through bills to Bassa.
So we have basically a delay in terms of timing of when the settlement goes into the bill and when actually we are Particularly getting the money basically from the final customers. On cash collateral, expectation for year end given the current Prices is €8,000,000,000 gross for year end 2022. And as I said, for 2023, we are expecting A decrease of about €400,000,000 per month. And then in terms of, let me say, EBITDA Evolution in the Q4, we are expecting basically an EBITDA evolution similar of what we had in the 3rd quarter, Driven by obviously the absence, as I mentioned, of negative one off in distribution that we already recorded in this Q3. The recovery of no mainland generation, but slightly below the guidance, so in and around €400,000,000 in terms of margins.
Stable free power margin also for the Q4, which has been quite strong as discussed before for the Q3 And some worsening on the gas sold sale mark to markets for about €300,000,000 So that's basically what we are Guiding for in terms of EBITDA evolution for the Q4 and we gave formally guidance on net of basically the provisions Bassa. For the expected proposal as that is the base for
dividend payment. Okay. Thank you. We have now Fernando Garcia from RBC. Please, Fernando, go ahead.
Good morning, and thank you for Taking my questions. I have 2. So first one is on the if you can expand the explanation On the €180,000,000 in the distribution update, I think this is related to an inventory. So my question here is, if you think this inventory in the case of Endesa was directly? And the second one is related a follow-up Question on the previous question of Javier Suarez.
On the guidance of net debt To €10,500,000,000 So I assume here that you are including €1,000,000,000 recovery For the gas the cap of gas and then EUR 400,000,000 as well Regulatory working capital, I am correct here. Thank you.
Thank you, Fernando. Let me try to answer the first one, the one regarding to the distribution Remuneration. First of all, I should say that it is a negative impact not only for Endesa, but for all the sector. This figure comes from the inventory that is the asset and also For the operational maintenance concept, well, we don't agree with this It's a resolution because of many things and we have appealed Arwin, our main We have or we will intend just to explain because I think there are some mistakes in this regulation, not only for Endesa, for all the sector. But the main impact, negative impact is not in the value of the asset, but In the recognition of the operational maintenance.
Thank you, Pepe. On the second Question, the assumption of net debt at year end at €10,000,000,000 to €10,500,000,000 is based on FFO generation of €2,000,000,000 and Work record the working capital at €1,700,000,000 So it's a recovery of €400,000,000 recorded working capital and let's say ordinary working capital recovery of about €1,000,000,000 which It's obviously the Cap on Gas plus other recoveries.
Okay. Next question comes from Rob Pulleyn from Morgan Stanley.
Hi, good morning. Thank you. At this stage, I'll limit it to one question given that lots of others have already been answered. And can I just revisit for clarification this renewables capacity for delivery in 4Q? You've said it twice That you aim to still hit your 1 gig target.
But could I ask the status of those projects? Are all the components that You're just awaiting installation and commissioning? Or are there any pending delays in delivery, especially in solar? And as a follow-up very quickly on a previous question, as you referred to cost of financing, would you be willing to say where you expect Your leading edge borrowing costs to go for those refinancings due in 2023 2024? Thank you very much.
Okay. Thank you for the question. With regard to the first one and the renewable delivery, as usual, We used to deliver at the end of the year. So as we have said, if you take into account the last 12 months, we have put In operation, 700 megawatts. And in this year, taking into What we did in October, we are or we have now A little bit more than 200 megawatts, but we don't expect any material delay.
We will reach or we feel comfortable just to reach our target of 1 gigawatt at the end of the year.
And let me add Pepe that this was the same performance in terms of capacity additions that we had They're both for 2021 2020. Therefore, lots of the capacity coming basically online In the last 2 months, so construction is almost basically finished for the major of the projects that we have. As far as cost of financing, Rob, I can comment for the evolution up until this year end and then for 2023 and 2024 refinancing, but you need to wait a couple of weeks. Clearly, you can expect an increase given the interest rates basically normalization that we are seeing in Europe.
Next question comes from Jorge Alonso from Societe Generale.
Hi, good morning. Couple of questions, please. You have hedged 90% of the energy for 2023. I'm just wanting to know what hydro output if you are Assuming a full normalization or which is your assumption for 2023 just in order to be sure that you're not going over hedging Again, the second one is related to the gas procurement costs. If you expect that your Procurement cost for gas next year would increase materially or would stay more or less at the same level that you have seen this year.
And the last one is about the distribution business. If you can give us some more color about the underlying performance of the business, not considering the one off. If it is recovering Or is it still a little bit weak and what are the reasons for that? Thank you very much.
Okay, Jorge. Let me say that we always consider an average year in hydro, but in this case, I think what we have considered is It's a little bit lower than the average for the rest of the year. With regard To the second question, the gas cost procurement, while it is clear that these costs are More or less aligned with some indexes like Brent, Henry Hub or Even the indexes of mid gas, etcetera. So it would depend on the evolution Of these indexes, nevertheless, well, what we see is that if these indexes increase And the reference that we have increased, our aim is just to try to maintain the margins that we have today. With regard to the distribution, we don't expect
any more
Negative news in terms of the regulation. So we think that the evolution in the future Should be or will be, if you take into account what could happen in this year 2022 without these negative regulation impact is It's similar to other years. But Luca, could you? Yes. When it comes to the last one on distribution, As we said, we have allocated this
amount that has been requested. Therefore, if Far allegation goes through, we might have some recovery of that amount. Now I cannot comment on the amount specifically, but clearly this is Basically, something that we are trying to recover. When it comes to the second one on the gas procurement cost, There's been and there will be, as always, as you know, some repricing in contracts. But let me say that it's The repricing is solely in the money vis a vis the current market scenario.
Clearly, I cannot comment on the level at which we are basically striking Re pricing with our sourcing counterparts.
And now I think Antonella Biancheesi from Citi is back with Some additional questions. Please, Antonella, go ahead.
Yes. A very quick one. I noticed that in your CapEx, You have materially increased the CapEx related to the customer base. Is this capitalization of losses of New customer or its marketing cost, what is this? And which is going to be the evolution over the next few years?
AES Antonella, we increased obviously activation for customer acquisition, Which is basically the component that then also has an effect in D and A as I commented before. The impact on D and A for these next months is only €24,000,000 The evolution will depends on how much customer we'll continue to attract given our strategy. Now As I said, we will comment evolution for 2023 and onwards in a couple of weeks. For this year, we do not expect Bassa. Further acquisition cost that will affect basically D and As.
In terms of cost of acquisition of We are ranging in the €65,000,000 to €75,000,000 per customers in terms of the cost at which we are current customers currently.
Okay. This was the last question of the call, and all the questions received by email has been addressed in the conference call. So thank you very much for participating. As always, higher team is available to help you in case you have further questions. And that's all.
See you next 23rd November in our C and D. Have a nice day. Thank you.