Enel Chile NYSE: ENIC executives pointed to stronger first-quarter operating performance, progress on battery storage development, and ongoing regulatory proceedings during the company’s first-quarter 2026 earnings presentation. Management also highlighted a new gas optimization agreement and discussed several non-recurring items that affected reported results.
Battery storage buildout and gas supply actions
CEO Gianluca Palumbo said hydrological conditions were favorable during the quarter, which he said “helped us reduce portfolio risk and supported a stable operating performance across the business.”
Palumbo also said the company, through EGP Chile, started construction of three battery energy storage system (BESS) projects in northern Chile. He said the projects will add “around 0.5 GW of additional capacity” and are intended to strengthen portfolio flexibility and support the commercial strategy.
On fuel supply, Palumbo said Enel Generación Chile signed a new LNG supply agreement with Shell. He described the agreement as a way to “better valorize surplus gas volumes already available” and to optimize LNG and Argentine gas supply for the company’s generation business, aligning it with increasing battery deployment.
Management also discussed sourcing agreements with Argentina. Palumbo said Enel Chile signed longer-tenure contracts with Argentine gas suppliers that secure firm volumes at more competitive prices and provide stable supply until April 2027. Separately, CFO Simone Conticelli said the Shell agreement was aimed at rebalancing the company’s gas contract portfolio, noting Enel Chile can manage gas volumes that are “higher [than] our needs, even stressing the needs of our power plant during a dry year.”
Regulatory and tariff updates in distribution
On the distribution side, Palumbo said tariff resettlements related to the VAD 2020–2024 process were postponed until July 2026. He added that the regulator was working on alternatives to fund the payment “with the objective of avoiding any impact on regulated customers’ tariffs.”
During the Q&A, Palumbo said the VAD 2024–2028 process remains based on a reference model company with a regulated real post-tax WACC of 6%, and that Enel Chile sees “room for improvement in the CNE proposal.” He said the company is participating in the observation and discrepancy process through the distribution association, with the final technical report expected by June 2026 and the tariff decree expected in early 2027.
Regarding the postponed VAD 2020–2024 settlement, Palumbo said the recovery mechanism was defined by the SEC in February 2026, but collection was postponed by three months. He said the company’s planning assumption is collection starting in July 2026, while the Ministry of Energy is evaluating alternative mechanisms, including potential debt factoring. Earlier in the presentation, Palumbo said Enel Distribución Chile expects to receive around $65 million, while the distribution sector total is approximately $900 million.
First-quarter results: EBITDA up, net income down
Conticelli reported first-quarter 2026 EBITDA of $423 million, up 16% from the same period last year. Net income was $162 million, down 7% year over year. Conticelli attributed the net income decline mainly to higher depreciation following the commissioning of new renewable plants and lower capitalization of interest. Funds from operations (FFO) were $122 million, up 12% from the prior-year period.
In discussing the EBITDA bridge, Conticelli said the $58 million year-over-year increase was “mainly driven by a better integrated margin performance.” He cited lower natural gas costs that reduced variable generation costs and spot energy purchase costs, as well as improved results from optimization of gas sourcing, which he said helped “extract value from our gas contracts portfolio.” He said those positives were partially offset by termination of certain high-priced regulated contracts and provisions related to energy and transmission charge adjustments booked in 2025.
In grids, Conticelli said EBITDA decreased 18%, driven mainly by the positive impact of a provision in 2025 and higher O&M expenses tied to anticipation of 2026 winter plant activities, partially offset by higher complementary distribution activities related to new customer connections.
Capital investment, cash flow, and balance sheet
Conticelli said first-quarter investments totaled $111 million, primarily supporting BESS development, generation fleet value, and distribution network reinforcement. He detailed the allocation as:
- Renewables and storage: 41% ($46 million)
- Thermal projects: 31% ($34 million)
- Grids investments: 20% ($31 million)
He also broke spending down by type: $58 million in asset management CapEx, $40 million in development CapEx (with batteries representing 75% of development), and $13 million in customer CapEx.
On cash flow, Conticelli said first-quarter FFO of $122 million reflected EBITDA of $423 million, a $161 million increase in net working capital “mainly due to seasonality of energy payments and gas optimization agreement” (with payment registered in April), financial expenses of $93 million (including settlement of hedging derivatives), and income tax payments of $48 million.
Gross debt stood at $3.9 billion as of March 2026, broadly flat versus December 2025. Conticelli said the slight increase reflected seasonal cash and working capital needs funded through a $50 million drawdown on a CAF credit line, partially offset by a $9 million reduction in IFRS 16 lease liabilities. He reported average debt maturity of 5.4 years, 85% fixed-rate debt, and an average cost of debt of 4.9%.
Liquidity included committed credit lines of $640 million and cash and equivalents of $454 million as of March 2026. In the Q&A, Conticelli said the business has strong seasonality and that the company plans to refinance future needs with long-term financing “under negotiation.”
Q&A: one-offs, BESS returns, losses, and capital increase
Asked about non-recurring items in the quarter and recurring EBITDA, Conticelli said there was more than one non-recurrent effect. He described the Shell agreement’s impact as positive but said it was partially offset by “some problem with the transmission line that impacted in our efficiency.” He also referenced adjustments coming from the prior year, including a 2023 adjustment related to ancillary services that had an impact of “-$30 million.” Conticelli said that normalizing these items would imply quarterly results “around $360 million-$370 million.”
On BESS profitability, Conticelli said Enel Chile pursues storage projects to improve portfolio balancing and enable energy shifting. He added that as standalone projects, the company advances BESS only when returns are “at least 300 basis points above our WACC,” and said Enel performs stress tests against more challenging market scenarios.
On timing for the three BESS projects, Palumbo said Enel Chile focused in 2025 on engineering, permitting, and preparation, began construction in 2026, and expects COD in the third and fourth quarters of 2027. He also referenced additional BESS investments planned for 2027 and 2028 as presented at the company’s Capital Markets Day.
Addressing distribution energy losses, Palumbo said losses increased mainly due to tariff adjustments and changes in customer behavior that raised non-technical losses such as debt. He also cited lower-than-expected demand and a more competitive market environment. Palumbo said Enel Chile’s loss levels remain below regional averages and outlined a plan to reverse the trend, including better analytics for inspections, expanded micro and macro metering, increased field controls, and enhanced coordination with authorities on illegal connections. He said the company targets losses of around 5.7% by 2028.
Finally, on a CLP 360 billion capital increase at Enel Distribución Chile, Palumbo said it is intended to strengthen the subsidiary’s financial position and is expected to be supported by controlling shareholders. He said it would be covered through group-level financial resources and characterized it as supporting long-term sustainability through improved financial structure, lower financial costs, and the ability to execute investment plans under the regulatory framework, rather than a short-term recovery investment.
About Enel Chile NYSE: ENIC
Enel Chile SA, traded as ENIC on the NYSE, is one of Chile's leading integrated electric utilities, with core businesses spanning electricity generation, transmission and distribution. The company serves a diverse customer base that includes residential, commercial and industrial users, striving to deliver reliable power across both urban and rural regions.
In its generation segment, Enel Chile operates a balanced portfolio of assets, including hydroelectric plants, thermal power stations and an expanding suite of renewable energy facilities such as wind and solar farms.
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