Iberdrola, S.A.

Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2026 first quarter results presentation.

As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key developments during the period.

The presentation and the Q&A will be delivered by the top executive team joining us today. Mr.

Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr.

Pepe Sainz, CFO. After the presentation, we'll move onto the Q&A session.

I would like to remind you that we will only be taking questions submitted through our website. Please send your question exclusively via www.iberdrola.com.

Finally, we expect that today's event to last no more than 60 minutes. Should any question remain unanswered, the IR team will, as always, remain fully at your disposal.

We hope that this presentation will be useful and informative for all of you. Now without further ado, I would like to hand the floor over to Mr.

Ignacio Galan. Thank you once again.

Please, Mr. Galan.

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

In the first quarter 2026, adjusted net profit increased by 11% to EUR 1,865 million. Adjusted EBITDA reached EUR 4.1 billion, up to 2.4%, mainly driven by 9% increase in networks more than offsetting the lower contribution of Power & Customers due to nonrecurring impacts in Iberia in the first quarter 2026.

And in this previous year in U.S., which were partially compensated by strong production in U.K. and Continental Europe.

Investment reached EUR 2.7 billion in the quarter for a total of EUR 14.5 billion in the last 12 months, fully in line with our strategic priorities. More than half in our Q1 investment were allocated in U.K.

and U.S. and 15% to networks, increasing our regulated asset base to EUR 53 billion.

We also invested more than EUR 1 billion in new renewable capacity. As you know, last week, we announced the closing of the Mexico transaction, which completes our asset rotation target for 2028, reinforcing our financial profile and securing additional funds to invest in regulated networks business in the U.K.

and the U.S. And Brazil, where we have also acquired the shares of Neoenergia we do not control.

This transaction will follow other recent deals also related to networks, like the purchase of our grid minorities or the integration and electricity networks in the U.K. That will simplify our structure and have positive impact on the profit from year 1, increasing our pressure to a country with high growth prospects and strong regulatory outlook like Brazil.

Driven by additional cash flow generation up to 7% and the positive impact of the Mexico transaction, our pro forma net debt reached EUR 50.3 billion reinforcing credit metrics in line with our BBB+ rating. In terms of efficiency, our recurring operating expenses rose just 1% up to March, excluding the incremental effect on electricity networks in the U.K.

In the coming quarters, we expect to benefit from the use of capital gains from national rotation like with previous year. On top of this, we are implementing a full review of our processes to integrate artificial intelligence solution across our activities and corporate areas with more than 300 initiatives already identified that will drive further efficiency and new business opportunity in the next years.

All in all, the results reflect the benefit of our business model based on regulated business in every countries and that provide stability and sustained growth in all these scenarios. Even in the current energy crisis, probably in the 6 of the 7 linked to fossil fuels since I started my career, we don't expect in Iberdrola any significant financial impact from this scenario.

Given our minimal exposure to commodities, our zero exposure to supply affected by the strength of our move with 93% also of our state purchase fully secured. Our geographical footprint based in every countries and our structural protection against potential macroeconomic shocks.

As you know, most of our remuneration progress are linked to inflation. We have foreign exchange risks fully covered by our [ 2026 ] profit estimate, 75% of our debt is fixed rate, and our current liquidity stands at EUR 21.4 billion, enough to cover 23 months of financial needs.

The resiliency against crisis will be reinforced in the coming years, thanks to our focus on regulated electricity networks, mainly in the U.S. and the U.K., and our generation technology is not linked to fossil fuel volatility.

100% of our production is already sold for '26, 80% for '27, 75% for '28. As a result, by the end of the decade, 75% of our EBITDA will come from regulated networks and long-term contracted generation.

But a part of increasing our own resiliency, our performance in the last quarter shows that Iberdrola business model is also improving energy security autonomy and competitiveness in each of the countries where we operate. Given these benefits, more and more governments are putting electrification at the center of their energy and industrial policies.

In the last week, the European Commission, the European Council had published different communication documents and statements with a clear message and the accelerated electrification with indigenous sources, including nuclear, is the most effective way to promote Europe strategic autonomy and competitiveness. In other countries like the U.K.

are following the same strategy. We can listen to many European policymakers reaffirming this approach last week at Wind Europe annual event held in Madrid.

Moving on to business highlights. Over the first quarter, networks have continued to deliver predictable and sustainable growth.

In the U.K., the RIIO-T3 final determination was increased after initial investment to EUR 14 billion up to 2031, improving rates of return accelerating cash recovered. The U.S.

NECEC results reflect additional contribution of new interconnection line between Canada and Massachusetts was commissioned in the last days of 2025 as well as the impact of rate increases in Connecticut to New York. In Brazil, the renewal of distribution concession for additional 30 years as published in the Union Official Bulletin.

And the 4 machines ceremony is expected in the next few days. This will provide us visibility up to 2060 with no upfront cost and with relevant regulatory improvement, like recognition investment on an annual basis.

Operating performance was also positive in Power & Customers in the context of increasing demand in all our countries, mainly U.S. and Brazil.

In Iberia, hydro reserves continue at record levels, and the U.K. wind production is 40% higher than in the same period of 2025.

Finally, offshore wind production has increased significantly in our international business due to the completion of Baltic Eagle in Germany and higher availability across the fleet in Germany and France. As mentioned, adjusted EBITDA reached EUR 4.1 billion, driven by positive network operating performance in all geographies, higher rates, an 8% increase in regulated asset base to the strong investment in U.K., especially in transmission.

In Power & Customers, the evolution of EBITDA reflects negative nonrecurring impact mainly regulatory and ancillary costs in Iberia, as a result of the reinforced operation applied by Red Electrica de Espana to include more synchronous generation. As you know, system operator is responsible for keeping the lights on, and since the black out, he has changed the operation of the system, now called reinforce operation, but in reality is more a regular operation system.

In my opinion, as an electric engineer, as I mentioned to you several times, it was a lack of proper planning and the [ delayed ] execution on the day of the blackout. As we had in the system around -- as we had in the system around 4x the power needed when it happened that was not used.

The comparison against the first quarter 2025 is also reflected by -- in the business by nonrecurring positive results registered last year in the U.S., they will normalize over the coming months. These effects were partially offset by higher production, particularly in offshore wind, we reached a 42% increase in output.

By geographies, the U.K. and the U.S.

accounted for almost 50% of the EBITDA and 8 countries contribute 84% to operating results once we had the European countries and Australia. Investment reached EUR 2,705 million in the first quarter for total EUR 14.5 billion in the last 12 months, more directed to networks.

Focusing on the first quarter, more than EUR 900 million were allocated to the U.K., reflecting an increase in transmission investment that will accelerate a bit more on the RIIO-T3 framework. Investment in the U.S.

reached EUR 550 million, mainly in distribution. However, the comparison with last year is affected by the completion of different renewable projects in the interconnection line between Massachusetts and Canada.

Investment in Continental Europe and Australia reached EUR 400 million, mainly related to the wind -- off-shore wind farm in Germany, a new offshore and battery -- on-shore and battery storage in different states of Australia. Investment reached EUR 309 million in Brazil with an increase of 30% in distribution and more than EUR 500 million in Iberia.

Thanks to the EUR 1.5 billion invested in networks up to March, our regulatory debt base reached EUR 53 billion, up 8% year-on-year. 1/3 of the total investment were located to transmission driving a 29% increase in regulated asset base up to EUR 14 billion in this concept transmission.

Distribution investment also exceed EUR 1 billion up to 16%, mainly driven by a strong increase in around 30% in the U.K. and Brazil.

By geographies 46% of investments were made in U.K., 26% U.S., 20% in Brazil, slightly then, 10% in Spain. In Power, we invested EUR 1,070 million mainly in wind.

Almost half of this investment around EUR 500 million were located in onshore wind across Australia and the U.S., U.K. and Iberia followed by offshore wind with EUR 100 million.

Solar PV investment reached EUR 162 million, spread across Iberia, other EU countries in Australia as well as the U.S. And we invested EUR 115 million in storage, mainly in Australia and EU.

This has allowed us to increase our capacity by 3,300 megawatts over the last 12 months, including 2 new gigawatts of wind, 1 gigawatts out of solar and more than 300 megawatts out of storage. Regarding financial strength, the 7% increase registered in FFO on the positive impact of asset rotation partnership, mainly due to Mexico transaction that had led to us to pro forma net debt of EUR 50.3 billion, even after an increase in organic investment and acquisition of Neoenergia minorities.

As a result, our FFO and adjusted net debt ratio has reached almost 25%, comfortably with a range a bit of BBB+ rating. On top of that, liquidity stands at EUR 21.4 billion, enough to cover 23 months of financial needs.

Finally, in the last month, we have accelerated the implementation of artificial intelligence initiatives. With an internal team fully dedicated to end transformation of our processes taking advantage of our own talent and resources as well of our understanding of our asset portfolio.

In just a few months, this team has launched more than 300 AI projects, 70% fully developed in house to increase revenues and maximize operational efficiency across our business and corporate area. Mainly based on generative AI, but also on advanced machine learning and robotics.

We will inform you about the financial impact of these initiatives as soon they begin to materialize. But for the moment, I can tell you that our initial findings show a considerable value potential.

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

Thank you very much, Chairman. Good morning to everybody.

As the Chairman has mentioned, this first quarter results confirm the strength of our business model. The first quarter EBITDA was 2.4% up to EUR 4 billion, while adjusted net profit grew 11% to EUR 1,865 million.

Since last year, the dollar has depreciated 11.4% against the euro, the pound 4.2% and the real 1%. As a consequence, FX has reduced our profit and loss figures.

If you exclude FX, growth would have reached 6% at the EBITDA level and 17% at the net profit level. ENW is fully consolidated all the quarter versus last year where it was only 1 month.

For clarity and comparability, we have applied a limited number of well-defined adjustments aligned with IFRS and our guidance definitions, thereby keeping differences between reported and adjusted results to a minimum. Mexico contribution is excluded at the EBITDA level in both reported and adjusted results following the IFRS 5 recommendations.

Mexico is classified as discontinued operations in both cases. In the reported accounts, Mexico is presented directly under the discontinued operations line.

And in the adjusted accounts for visibility purposes, Mexico is recognized under the equity line. In addition, there is a negative adjustment accounted in this quarter related to the year '24 divestment of our thermal assets in Mexico, which is excluded from the adjusted '26 results.

Second, as usual, U.K. capital allowances are adjusted at net profit level in both years.

And finally, U.S. past recognition is excluded from the adjusted net profit in '25 in line with the definition applied in our '25 guidance.

You can find all this explained in more detail in the Annex, specifically in Slides -- sorry, 36 and 37. Regarding our gross margin, a 0.3% decrease in adjusted revenues, combined with a 0.5% increase in procurements resulted in a 1% adjusted gross margin decrease, excluding the FX impact at this level, which is EUR 267 million, adjusted gross margin would have grown by 3%.

In the first quarter, net operating expenses decreased by 6% year-on-year and by 0.7%, excluding the FX impact. First quarter net personnel expenses fell 0.8%.

External services were down 2% and operating income grew 24%. On a recurring basis, and excluding the FX impact, net operating expenses would have grown by 8.1%, mainly due to the ENW contribution.

Analyzing the results of the different businesses and starting by Networks, its adjusted EBITDA grew 9% to EUR 2,048 million, driven by the strong performance in the U.K. and in the U.S.

Excluding here also EUR 94 million on FX impact, adjusted EBITDA grew 14%. In the U.S., IFRS-adjusted EBITDA increased 22%, reaching $612 million due to higher rates in distribution, Avangrid contribution from transmission, including the positive contribution from NECEC line following the 16th of January COD.

In the U.K., EBITDA was up 32% to GBP 447 million, with higher contribution from ENW versus last year as consolidation started in March of '25 and also an increasing contribution from our transmission business, thanks to the higher RAV. In Brazil, EBITDA fell 0.7% to BRL 3.6 billion, with higher revenues due to yearly rate reviews offset by lower inflation and lower demand growth versus last year.

In Spain, EBITDA increased 6.2% to EUR 426 million, driven by the 6.58% new regulated return and also with a EUR 15 million net impact, positive net impact from adjustments due to past year's remunerations. Q1 '26 Power & Customer business EBITDA was EUR 2 billion, 3% lower than last year.

During the quarter, Iberdrola produced 33,000 -- sorry, 33,000 gigawatt hours of electricity with 86% sourced locally and being emission-free, which is a reference of the EU targets regarding power production. In Iberia, EBITDA was EUR 1,002 million, 3.2% down, affected by ancillary costs, regulated gas rate and lower prices despite higher electricity sales.

As of today, Iberdrola has record hydro reserves as mentioned by the Chairman, which will help the performance of the group in the second half of the year. In the U.S., EBITDA decreased 32% to $196 million, with lower contribution from wind, thermal assets and a negative timing effect that will normalize during the year and despite better prices.

In the U.K., EBITDA increased 16% to GBP 493 million, thanks to higher wind resource, both in onshore and offshore, more than compensating lower prices and better contribution from the Supply division driven by better margins. In the rest of the world, EBITDA decreased 7.6% to EUR 212 million despite the 37% higher offshore production due to lower contribution from our onshore wind assets affected also by the sale of some geographies like Hungary and France and a negative impact from higher ancillary costs in Portugal.

In Brazil, EBITDA increased to BRL 500 million. Depreciation and amortizations and provisions grew 9% to EUR 1,476 million, driven by a higher asset base and a normalization of provisions versus exceptional recoveries in Q1 of '25.

Adjusted EBITDA decreased 1% and reached EUR 2,591 million. Excluding EUR 80 million of negative FX impact, it grew 2%.

Net financial results improved slightly to EUR 497 million due to a EUR 4 billion lower average debt and helped by the currency depreciation despite EUR 56 million worse derivative results. Regarding debt structure, fixed debt, excluding amounts to 77% at March end, 12 percentage points above our fixed EBITDA reducing a risk of negative impact due to a possible interest rate increase as a consequence of the Iran conflict.

New debt increased EUR 1.7 million -- sorry, net debt increased by EUR 1.7 million versus full year '25 to EUR 51.9 billion, mainly due to the currency appreciation, CapEx and dividend payment in the quarter, partially offset by the FFO generation, including the net EUR 1.6 billion collected from the Mexico sale to COGS and payment linked to Brazilian minorities acquisition both executed in April, debt would have been EUR 50.3 billion, in line with year-end levels. So better debt levels compared to Q1 '25 and 7% higher adjusted FFO that reaches 12%, excluding FX, delivered solid credit ratios for our BBB+ Baa1 rating.

These metrics clearly support our rating and underlines the group capacity to grow while having a strong balance sheet. Our adjusted net debt to EBITDA was 3.4x below 3.7x in Q1 '25.

The adjusted FFO adjusted net debt reached 24%, well over the 21.2% in Q1 '25. And our adjusted leverage ratio was 44%, 3 percentage points better than the 47% in Q1 '25.

On a pro forma basis, ratios improved even more, as you can see in the slide. Q1 '26 adjusted net profit grew by 11% to EUR 1,865 million compared to the EUR 1,674 million adjusted net profit in Q1 '25, excluding the EUR 99 million FX impact, adjusted net profit would have grown by 17%.

Neoenergia minority shareholders acquisition although it does not contribute to higher EBITDA reduces the dilution at the net profit level. And in this quarter, adds EUR 57 million to the net profit.

In addition, it simplifies Iberdrola financial structure and increases the weight of networks in our net profit. The slide presents the reconciliation between reported and adjusted net profit.

This is shown in more detail, as I mentioned before, in the annex. As well, we are showing in the annex, the calendar for the final dividend.

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

Thank you, Pepe. To conclude this first quarter results, confirm the resilience of Iberdrola business model and the current context of geographical uncertainty and reinforce our positive prospect for 2026.

The coming quarters, network will continue to be our main growth driver, thanks to an ongoing increase in our regulated [indiscernible] distribution and transmission as well as the impact on new regulatory framework like RIIO-T3 in the U.K. or the annual target adjustment in Brazil, where we will also benefit of higher contribution from Neoenergia at the full acquisition of minorities.

As mentioned, this transaction will simplify our structure in the country, accelerate our strategy focusing networks in line with acquisition of a grid minorities or the integration of electricity in the [indiscernible], in the U.K. last year.

In Power & Customer, we will add 2.7 gigawatts before year-end on top of the 1 gigawatt commission in the first quarter. And our hydro resales continued record levels driven by strong hydro factors in January and February and the positive performance of pump storage.

We also continue improving operational efficiency across our businesses. And in terms of financial profile, our current debt levels and the ongoing cash flow generation will allow us to increase investment in presale strong credit ratios.

This positive operating and financial outlook is leading us to upgrade our guidance for 2026 to expect the growth of more than 8% in adjusted net profit, excluding capital gains from the asset rotation, we have as always done, they will apply for future efficiencies. And we expect to continue accelerating growth to the 2020 and beyond benefiting from increasing electricity demand outlook across energy users and geographies driven by technology process and new energy policies.

As government tried to capture all the positive impact of electrification in terms of strategic autonomy and division and competitiveness. In this context, over the last month, we have continued securing new investment opportunities in all our key countries.

United States, the consensus or the need of generation network infrastructure is becoming unanimous given the strong increase in demand. According to Standard & Poor, Annual U.S.

CapEx will grow by 11% per annum from '25 to '28. For Avangrid, this mean additional investment in transmission and distribution and generation.

Including repowering and life extension of part of our current fleet of 11,000 megawatts. In the U.K., after the increase in transmission investment already confirmed by RIIO-T3, we also expect significant growth in distribution in the next regulatory period starting in 2028.

The government confirmed support to offshore wind with a year 8 auction expected later this year. As you know, ScottishPower, East Anglia ONE, it's already bid, is ready to bid.

It has its supply chain totally secure. We also see increasing opportunities in Continental Europe offshore wind, for instance, in France and onshore technologies.

As well as the Iberia retail business where we keep leading leadership in customer numbers and quality. In Brazil, the renewal of distribution concession for 30 years and with improved conditions, we will bring more visibility in the context of increasing investment needs.

Finally, in Australia, we are already designing our first transmission project in West Victoria, and we are working in new opportunities in this business for the coming years. As well as in additional growth in onshore wind, solar PV and batteries.

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

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

Thank you.

The following financial professionals have raised the following questions: Philippe Ourpatian, ODDO, Pedro Alves, CaixaBank; Pablo Cuadrado, JB Capital Markets; Meike Becker, HSBC; Manuel Palomo, BNP Paribas, Peter Bisztyga, Bank of America; Rob Pulleyn, Morgan Stanley; James Brand, Deutsche Bank; Jorge Alonso, Bernstein Societe Generale; Fernando Garcia, RBC; Javier Suarez, Mediobanca; and finally, Skye Landon, Rothschild. The first question is, could you outline the key drivers of Iberdrola's Q1 2026 net profit and explain the main factors behind the year-on-year growth?

Thank you very much. And already, as I explained, in Networks, we expect a strong performance in the U.K.

and U.S. due to the consolidation of electricity in the West from March 2025, higher rates and contribution from NECEC interconnection between Canada and Massachusetts and also a higher RAB in all countries because of the investment we have been doing.

In Power, business affected by nonrecurring impacts, the cost of ancillary service in Iberia in 2026 and some timing effects in the U.S. that was affected this year.

And as well in positive, we have the higher production. The low EBITDA, a good evolution of our financial expenses.

Positive impact of the 100% equity share in Neoenergia that we have already mentioned before. And that makes our net profit grows by 11% even with a negative impact of almost EUR 100 million to the FX.

So without this one, the net profit that Pepe mentioned was 70% increase on adjusted terms.

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

So almost on the same line that I was commenting for 2026. We expect to continue the strong performance during the rest of the year in networks growing the regulatory asset base in all countries, a new distribution framework with better rates, RIIO-T3 from April, new interconnection between Canada and Massachusetts, better tariff in Brazil that has been already adjusted in the last few days, additional contribution for Neoenergia for the 100% ownership.

And in power, we have installed 1 gigawatt in the last 3 months, and we expect to make another 2.7 gigawatts additional before the year-end. We expect to continue to have the strong renewable output after last year, very bad very low production, especially in the U.K.

Our hydro reserves are in record levels, which -- and apart from that one, we have the very good performance and a good spread of our pumping storage facilities, which I think only in the first quarter, we have already produced 1.6 terawatt hours, so which I think is an important percentage of our total electricity generated with hydro. We have lowered net debt and better ratios.

The interest rates mainly are fixed or hedged. We are not expecting significant volatility to the political -- geopolitical dynamics, as I mentioned before because our regulated transmission and distribution networks business.

And because our power, 86% of our production is not linked to fossil fuels, 100% of 2026 is already sold. So that's why we are improving our guidance to an expected growth for more than 8% in adjusted net debt, excluding capital gains, we as -- which always we use for future efficiencies.

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

Yes. Well, in this quarter, our taxes were -- have been affected by a reversal of a provision, thanks to that we have won a court case and also impacted by the fact that the countries with higher tax rates have been lower contribution to our profits.

We are expecting that our tax rate will go towards around 20% along the fiscal year. So it will increase to reach these levels of around 20% at the end of the year.

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

As I mentioned, we don't expect significant in the short term because 85% of our assets are in countries not exposed to the conflict. Our growth is focused on regulated networks, which is 2/3 of our investment is coming to this segment.

And the U.S. and U.K.

represents 65% of our total investment. 75% of the EBITDA will come from regulated long-term contract activities by -- in 2028, 2030.

85% of the production as well in 2020 already secured through CFDs, PPAs, et cetera. And the supply chains are not affected by strength of remote dynamics because we are focusing local supplies with no exposure to the area.

The fact today, 93% of our strategic agreement for investment is already secured. We have a minimum exposure to commodities.

We have not already long-term contract of gas. So I think that is not affecting to ourselves and the negative trend of Corteva.

I think it's -- for me, as I mentioned, the current context prove, again, the electrification is the best route to energy security, strategic autonomy and competitiveness. I think energy security is national security.

And electricity is repeating now all European leaders is the solution. It's not a threat, it's not a problem.

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

Pepe? Pedro?

Yes.

Yes. Thank you, Chairman.

I think we're approaching now almost 400 projects of initiatives in AI and more than 70% are generative AI and more than 10% of those are robotics. These projects cover all corporate functions, all businesses and all geographies.

They are linked to efficiency, but also very important to new business opportunities. Very important, this is a process transformation.

More than 70% are in-house made. I think we will see positive impacts as the Chairman says, and we will be updating in the upcoming quarters.

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

So as we informed to you, the transaction was closed on Friday. That means we received the money on Friday.

The figures were in line with -- we announced last summer when we signed this agreement. We are calculating the capital gains in detail.

But of course, it's going to be several hundreds of millions of euros. And as usual, we will use this money, this capital gain to achieve efficiencies in the future.

And that will not impact our guidance, as I mentioned before. So now you allow me, I will pass to Spanish.

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

And as I said previously on previous occasions that is, one of the main reasons behind this operation is our priority. Our priority is focused on investing in electrical grids, in -- which is an activity that is in the hands of the National Electricity Commission.

So we can't really do anything in that particular area. But I would like to say, however, that we are deeply satisfied because we are leaving top-level electrical infrastructures.

And I know that now and in the future, all the Mexican citizens will benefit. And as I also pointed out to the Mexican authorities, we want to invest more.

We want to invest more money in Mexico in the future, when the circumstances allow us to do so once we have completed our investment cycle.

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

Pepe?

Yes. Well, since we bought the minority stake from PREVI.

It made all the sense for us to complete the 100% of the capital. Obviously, the consequences of that is that it will improve our results basically through lower minorities.

It will also help to simplify our financial structure and operations. We are now more and more exposed to the network business at the net profit level as we did also the acquisition of the 100% of Avangrid in the U.S.

and the integration of ENW in the United Kingdom. .

So clearly, our focus on -- and this proves our focus on networks. In addition to that, Brazil is a core geography for us with very good prospects with very regulatory situation and where we are investing heavily, and we plan to continue to invest.

I don't know Chairman, if you want to complete this with your...

Yes. Well, thank you, Pepe.

I think I was 2 weeks ago in Barcelona with President Lula, he was visiting Spain and I have already a very good meeting with himself, reaffirming our commitment with the country. We are the largest investor in the country last year, more than BRL 30 billion running by the purchase of minorities that Pepe mentioned.

And he invited me for the concession renewable signature, ceremony on the -- I think it's 6th of next week, on the 6th of May. And I will be there in Brasilia with himself already signing this one, which I will already participate in.

As I mentioned as well to the President Lula, our expectation is to increase heavily our investment in all our territories distribution, but mainly in the area of the West part of Bahia, where it is a huge demand that has not been covered because of lack of infrastructure. So -- but I think in general, our commitment with the country remains.

And I think next week, I'll be present there in Brasilia with the President Lula for signing the ceremonial signature of the renewable concessions.

Next, could you comment on the current U.K. offshore wind environment, including Iberdrola's intention for the upcoming AR8 auction and your perspective on the new seabed lease auction process.

So I think U.K. has a clear electrification strategy.

I think it's -- electrification is, I think the word I use energy security and national security is a word we not invented for myself was already invented by the British Prime Minister. I think that provides long-term energy autonomy that provide competitiveness.

And I think is clear is one of the key instrument to achieve this goal and to increase the investment in offshore is crucial for them. I think that is the reason why the government has recently bought forward the AR8 to this year.

So it was planned for the future. I think for this project, we have already a project for this auction.

We have a project of East Anglia ONE North, 900 megawatts, which is ready to participate, which we have all the supply chain secured. But I think we will follow, as always, our profitability criteria.

Regarding the seabed lease it has been recently announced, I think, for us is still too soon. We will review the details when they will be available.

In any case, I would like to inform you that we have in this moment, more than 5,000 megawatt of offshore seabed rights 2,000 in Scotland, another 3,000 floating. So I think we have plenty of seabed rights for continuing our expansion in this field in the U.K.

in the future.

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

Pedro?

As you would expect in '26, we have already committed 100% of our available production. In [ '27 ] it's already 80% plus.

And in '28, we are in line with the capital markets guidance. I think in general, the prices we expect in line with the plan estimates that we gave to you before.

As the Chairman said before, we will benefit from additional capacity and from increasing pump storage margins.

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

I think we have always said as engineer has been confirmed by all reports and investigation, and all the audios has been published, not only on the day of the blackout, but also in the previous date and weeks. So I think that's clear what is this one.

This blackout was as a result of inadequate planning, management and operation of the electricity system and that lead to insufficient synchronous unit program despite the power was available. So I think if everything had been done properly by Red Electrica.

I think we can't ask Red Electrica why it has changed the operating model, adding more synchronous capacity now. So if all the thing was correct this day, why they changed the operational system.

So now we are paying billions of euros of additional costs, citizen and companies so in our accounts just because they changed the operational system, putting more synchronous capacity, much more synchronous capacity because the power was available. We have already a power -- installed power in the country which is 3x or 4x or 5x more than the power needed on a day-to-day basis.

So I think it's not a question of lack of power. So that's why I think it's something we -- for me is important.

We should distinguish between transmission network ownership, which is a business activity and the system operation, which is not a profit business, it's a public responsibility. And that is why in other countries, both activities are fully separated.

System operator is taking -- have to take care of keeping the lights on. Network activities are already as a business, which is to maximize the profit.

When you miss those things, it could conduct already situation, which can already make problems at those what we have already faced. In any case, Gerardo, you would like to add anything?

Yes. Thank you, Chairman.

Just to say that the CNMC in his report about the blackout has stated that on the day of the blackout, the system had enough regulatory, normative and technical tools to avoid the blackout -- in place to avoid the blackout. So I think that is very important because it's the only official report because CNMC together with the industry is the only institution competent to -- in relation to the blackout.

So regarding the proceedings initiated by the CNMC. Therefore, the CNMC has also stated that none of them -- none of these proceedings are related to the events that led to the blackout.

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

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

So I would say that our position is very strong.

As I mentioned, I think following the blackout Red Electrica has doubled the use of combined cycle plants, nuclear for voltage control and what they call reinforced operation. This reinforced operation now is not becoming reinforced, it's becoming regular.

This seems, I think if that is regular, should be recognized as regulated cost as it is already in other countries, not affecting to the certain citizens and affecting to the companies, to the operators of the training companies.

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

Pedro?

The underlying business in retail is doing very well in Spain. We continue to be the market leader, both in numbers and quality of these customers.

We have much lower churn rate than our competitors, especially for new entrants with a very strong customer retention. There is a good evolution of our customer portfolio, including the second brand, Niba.

So we are very comfortable now on that position as well. But we continue to add products and services as well.

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

I think as you have repeated several times, nuclear is necessary, is safe, is efficient and contribute to lower prices due to the security of the system. In fact, now the European countries with no nuclear have structural higher prices.

That is the case of Germany and Italy, which is even EUR 40 per megawatt hour more than France or Spain. I think a certain analyst is already fixing this number.

Pricewaterhouse in some of its report is talking about EUR 47. But the reality today is EUR 40, which I think they are not far from what this -- we are predicting this consulting company.

Also, the European Commission led by the President, Ursula von der Leyen, is urging member state to avoid premature retirement of existing nuclear assets, even he mentioned about it was a mistake -- European mistake of closing and not investing in nuclear. They can provide because they provide firm low carbon and low-cost electricity.

I think in other words, she is talking about European critical infrastructure. So nuclear is, more than national, becoming European critical infrastructure.

I think that was confirmed again in the last week in the AccelerateEU communication. And that's why I think we have already asked the extension Almaraz to 2030.

That is -- the process is ongoing. I think the Nuclear Security Council, Spanish Security Council and others did.

And I think soon there will be good product information. In any case, all the nuclear need to have already sufficient and sustainable remuneration regime as some other countries did.

So I think it secured -- we have either to secure price at attractive level or either to reduce taxation, whatever need to make already to give viability of that one. I think in the case of taxes, in the case of Spain, certain community -- autonomous communities, Valencia and Extremadura has already reduced or they are ready to reduce the local taxation, so which I think that is in the mind of the people.

And nothing is -- my personal vision is that nuclear facilities in Spain and other countries will be extended for longer term. I think it's -- in the case of Europe are essential infrastructure to secure electricity supply.

So I think it's as European Commission is suggesting, it's becoming critical for keeping the lights on in the European competitiveness just to -- as a key tool for minimize the external dependency to increase the competition, reduce volatility and not to be already depending on volatilities with external factors are those ones we are suffering those days with the problems of the automotive strike.

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

Pedro?

Practical terms, the wind farm is completed. We finished the construction of all the positions.

The levels of availability, we expect to be in line with other offshore wind farms in operation. Very important is many of the positions have been exporting power for many months.

Also, the financing is advanced, both tax equity, tax credits, but also the debt financing. So we are moving forward very well with the asset.

So I think from the -- If I'm not wrong, from the 24th of April is in commercial operation.

COD was declared.

I think that is in commercial operation now.

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

Pedro?

As the Chairman highlighted, we have passed 11,000 megawatts in the U.S. What we see is a strong demand increasing in the U.S.

More power is needed. That's clear.

Avangrid is complete and continues to invest. We added almost 1,300 megawatts of capacity.

We have 700 megawatts under construction. We have identified 3,000 megawatts of additional potential capacity, more than 1,000 of those very advanced status.

And of course, life extension of power in the short term are a clear path. Therefore, clear interest of some of our existing customers for new PPAs.

By the way, we're increasing also for the first time, our new battery storage. We just approved a project in Oregon.

So we are starting now in that field.

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

Pedro?

This is a matter that affects all the transmission operators in New England. As you know, there is another case in MISO, which we expect the court ruling soon.

And therefore, since it's a similar procedure, we will see what happens there. It's important that they allowed no payment to be done for the next 12 months, and there is no impact.

But in any case, I think you have to be aware that this is something which is coming from 2011. I think something 14 years ago is revising decision they took 14 years ago to say that probably they -- how they pay in this 14 years was not already whatever.

So I think to talk about retroactive actions with 14 years. So we are quite confident that the courts will already take into consideration the comments which are making all the people affected, which all across the United States.

I think in [ 14 ] years has not revised the terms of the decision they took. And [ 14 ] years later, they are looking then what they have already paid considered is not already that will have to be paid.

So it's something which is difficult to be understood by engineers like myself. I don't know if lawyers will understand this thing better than we engineers.

Next is how do you assess the current affordability debate in both in the U.S. and in Europe?

And what measures do you believe would be the most effective in reducing electricity bills for customers?

So as you know, the tariff, the electricity tariff has 3 main concepts. One is the electricity cost, which is power and networks.

Power, it depends on each country, what is the mix of power generation. In networks, it depends how efficient are already this network.

I can say that in general, European networks are more efficient than those which are on other side of the Atlantic. Second parameter is taxes.

So I think taxes in the case of Europe is 4x higher than those which are in the United States or in China. So -- and the last one is the industrial and energy policy cost.

I think it's a lot of things included in the tariffs, but we are already -- the consumers are paying or the company we are paying. We have to see already with this energy policies in each country.

So as I mentioned, in terms of taxation, I think this represent in most cases in Europe, more than 40% of the bill, 40% of the bill to over 10% in the state. So -- and I think so that way.

I think the fastest way of that one is reducing taxation to reducing bill. That is being recommended by European authorities.

So -- which we have to be that one. If we would like to electrify, we cannot penalize.

We have to incentivize, not penalize. I think -- and I think the big threat that we are -- to affordability in the case of that one is to continue relying in fossil fuels.

I think in my professional life, I mentioned before, I have already had 6 or 7 different energy crisis. And all these energy crises, the solution is not to penalize electricity.

It's to incentivize electrification. Now that is already on the communication of European Union as the key driver for that one.

So that is what they are saying, more electrification, more indigenous sources, renewables and nuclear base of the European energy mix. More distribution and transmission grid, more interconnection between countries and more access to consumers to electricity.

I think they are already a demand which cannot be supply because of lack of infrastructure of electricity. People is willing to electrify more their uses.

But the lack in demand, we cannot be supply because of lack of infrastructure because in some countries, we've been suffering -- still we are suffering certain caps of investment. So they are limiting the investment we have to make or reducing even the operational costs as they did in Spain, which I think if we increase -- if the demand is increasing infrastructure is not duly maintained because there are not enough budget, money recognized, I think that is not easy to be electrified that one.

And certainly, lower taxes in the electricity bills, which will not be discrimination with gas. I think in some countries in Europe, so gas taxes is 4x less than electricity.

So I think we have to be clear. We will depend on fuel or who would like to electrify.

We would like power, we would like fossil. And that is we have to be correct.

I mentioned in the case of U.K., it's energy crisis and they revise the taxation of electricity. So we have to be the deposit.

So even it's not affecting ourselves this one. So the next thing is -- I think something which is clear.

Those countries, we have more penetration of renewables and nuclear have already lower structural prices. Italy and Germany has higher prices than France and Spain because they are less renewables, no nuclear, probably Spain or France, but we have more nuclear and more renewables are another one.

And I think that is a clear situation.

Next is totally linked with the answers you currently or recently given. What is your perspective on the proposed reform to the European electricity market?

And how do you think policymakers should address the current price environment?

So I think I repeat again. I think the measure proposed in this crisis show a clear change compared with 2022.

Governments in Europe agree the electrification is the solution. So electricity is not a problem, but it's the solution.

So all the measures should be directed against not electricity, against fuel -- fossil fuels. I think ETS, in my opinion, is a key tool to promote Europe energy independence.

It has already proven it works well. It send the right signals and it has flexibility mechanism.

So they have to be used the funds already obtained by the carbon emission for electrifying, not for using for making another usage in the national budget. So that's why, for me, the structural solution, and that is what is proposed in the European Commission, it's a little electrification with more renewables bake with more grid and with more storage and more interconnections.

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

Pepe?

Yes. The -- we are expecting to end the year with a level of debt of around EUR 55 billion.

And basically driven by the strong investments that we are doing, we are -- as the Chairman has said another year in record of investment and obviously, dividend is also increasing the debt despite the FFO generation. But as we have mentioned, the asset rotation that we've is almost finished.

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

So to be in a BBB+ ratio.

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

So as you know, our main business in United States is networks. It's more than 80% of our business related to networks.

Network is already regulated by states. And I think we have a huge, let's say, prospect of investment in these states because of the needs of that one.

Also, I think we see clearly is an increase in power demand, but this power demand as well is needed in networks for already for taking this electricity in the home, in the industries what they're required for attending this large demand. But I think you know, as Pedro has mentioned, we have already -- we are focused in solar, in onshore wind, and in batteries.

We have a huge pipeline, and we have huge opportunities in repowering or extending life of the existing 11,000 megawatts in the [ mine ] operation, and we will concentrate on that one. Concentrating networks, first priority.

And second, with our present pipeline and with our present portfolio of power in operation to increase our production using the existing assets or making already new assets with the pipeline we have enhanced in this moment.

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

I think we -- traditionally, we are not making comments based on rumor or even uncertainties, but about our competitors. So we have not details about that one, and we will have details, we will analyze what is exactly they are doing.

But I think for the time being, the only thing is comments, but we have not already any certainty about all those things.

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

So as you -- as I mentioned several times, we have already -- our main customer worldwide are those which are already precisely working and using already data centers. We are already PPAs per annum more than 12,000 -- 12 terawatt hours -- 12,000 terawatt hours a year.

And what we try is to facilitate the expansion of these data centers to them is our customers who would like to use our capabilities, our knowledge and our skills for helping them to make that one. Saying that, I think it's the fact I think in the last few months, we have already signed more than additional 800 gigawatt hours of new PPAs for this data center use.

And that is certainly is going to be an important driver of growth demand. So -- but I think what we are insist facilitating.

We have some projects in Spain that we are already working on it. But I think the idea is to facilitate those ones for our customers.

I think we have already knowledge of the permit. We have land, we have connection.

We have power, and that is what we are putting at the service of the customers. But that is not already -- we are not making already any special business area on that one.

It's something which is helping to that one. Our business is to sell to them as much electricity as they need in the best condition as possible for the longer period of time as possible.

And for that, I think we are doing our best for helping them to build the infrastructures they need for making already these data centers.

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

So I think we are seeing more opportunities across other countries, as I already mentioned in my presentation. I think the electrification is -- the acceleration of electrification is a reality.

We are seeing rational demand for several users, a part of artificial intelligent another one as well. I think in the case of U.S., we have additional demand of investment in new infrastructures in all the states.

So I think regulators is asking for this investment. .

Also, we are just making more investment in power. I think as we have already had 1,300 new megawatts in U.S.

in the last 12 months. We have 700 in construction.

And as Pedro mentioned, we have 11,000 megawatts of capacity in which we have identified 3,000 or 4,000 for life extension of repower in the short term. So -- and also, we are increasing -- we have seen increased interest in our large customers for expanding and extending the PPAs, we are not pressing for making new ones.

Also, we are seeing opportunities in battery storage. We have announced the first one in Oregon, but will follow another one in the near future.

In the U.K., I think we have already the RIIO-T3. The final determination is better than expected.

It's higher TOTEX, it's up to EUR 40 billion. I think it's a slightly increase in the rate of return is faster, that is important, cash recovery.

And I think also, as I mentioned as well, the new offshore wind auction AR8 this year, which we have already just 1 project, which is ready with all the supply chains already agreed and close. And in Continental Europe, additional onshore and offshore project.

I think this -- France announcing the new auctions for offshore, which I think in the terms we look -- could be attractive. We will analyze more in detail.

And in Brazil, as I mentioned as well, once we sign this concession extension renewables for more than 30 years, I think new additional investment will be needed I think also we have already positive things. All the investments are recognized on an annual basis, which will add already as much investment we are making in a year.

The following year will be recognized in our rate base and be paid. In Australia, the things are moving.

I think we have already a project in this moment in the design of transmission. And we have another one in the portfolio.

We're making as well something in the future. We are putting additional investment in generation in battery storage.

I think we are adding almost 100 megawatts in the last 12 months. And also in battery storage, we are already now a project with large batteries, batteries up to 8 hours, which I think that is already just is going to be the record in the battery in our more than 600-megawatt portfolio, that is going to be the largest one.

So I think those are the main things. I think it's -- one thing is important is our pumping storage facilities, what we continue as well expanding.

So in this moment, as you know, we have already in the short-term capacities, when I say short term, 20 hours or 24 hours is something like 40,000 megawatt hours capacity. And we have already another probably 100,000 megawatt hours of longer periods of time.

I think those ones we are pumping to certain, too large dams that we use across the year. I think we avoided the water flows to the sea, and we are keeping these waters in our dams.

And we are already almost every year putting 2 or 3 new pumping storage facilities in the country. I think in the last few months, we have already just put someone else in the Taco River and another one in the Tamega River.

So we'll continue -- in the Tamega River, we are expanding as well. So we continue making that one because we consider pumping facilities is the most efficient manner.

But in batteries as well, we are already investing. So we have already as I mentioned probably in this moment, 2,000 or 3,000 megawatt hours capacity, but I think we will expect to have to more than double that one in the next 2 or 3 years, and those given a good opportunity because the spreads are good.

And I think as much renewable we're introducing as more storage will be needed. And same thing then as much demand is increasing as much grid is needed, and that is what we are concentrating.

Okay. So now I hand the floor over to Mr.

Galan to close this event.

So thank you very much once again for taking part of this conference call. If there are any doubts, our Investor Relations led by Ignacio will be available for any additional information you may require.

Just to finish, you know our Annual General Meeting will be held in Bilbao, on the 29th, and we invite all of you to join us either in presence, or yes in -- through the delegation or even connected by the web. So thank you, and see you soon.

Thank you.