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Ignacio Cuenca Arambarri: Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2025 9 months results presentation. As usual, we will follow the traditional format given in our events. We are going to begin with an overview of the results and the main developments during the period. Everything given by the top executive team that is today with us: Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO. Following this, we'll move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. So, please ask your question only through our web page, www.iberdrola.com. Finally, we expect that our event will not last more than 60 minutes. If any questions remain unanswered, we at IR team are, as always, fully at your disposal. Hoping that this presentation will be useful and informative for all of you. Now without further ado, I would like to give the floor to Mr. Ignacio Galan. Thank you very much, again. Please, Mr. Galan.
Jose Sanchez Galán: Good morning, everyone, and thank you very much for joining today's conference call. In the first 9 months 2025, our reported net profit reached EUR 5,307 million, leading up a 17% increase in adjusted net profit, including capital gain from asset rotation -- excluding capital gain from asset rotation. This growth was driven by robust operating performance with reported EBITDA reaching EUR 12,438 million, mainly in our Networks business, where EBITDA rose by 26%. Thanks to a higher rate base driven by investment and improvement regulatory frameworks. EBITDA from Renewables & Customers was impacted by lower market price and higher ancillary service costs in Iberia due to changes in the digital operation after the blackout, which we are gradually passing through, partially offset by the contribution from additional renewable capacity. Investment reached a new record of EUR 9 billion in just 9 months, reflecting the execution of our plan. Networks investment increased by 12% for a total regulated asset base of close to EUR 50 billion. And we have added 2,000 megawatts of new capacity in the last 12 months. Driven by additional investment, operating cash flow increased by 10% to EUR 9,752 million, which combines with EUR 8 billion of new asset rotation and partnership and the capital increase of last July has allowed us to reduce the consolidated net debt by EUR 3.2 billion to EUR 48.5 billion, substantially improving our ratios in line with our BBB+ rating. The strong operating performance and the ongoing improvement in our financial position have led us to increase interim shareholder remuneration by 8.2% to EUR 0.25 per share. Reported EBITDA reached EUR 12,438 million, driven by a strong performance of our networks business, up 26% in the first 9 months, supported by higher regulated asset base in all countries, especially in the United Kingdom and Brazil and positive rate adjustment mainly in the United States and Brazil as well. As mentioned, EBITDA in Renewable Power & Customers was affected by the one-off impact in the change of system operation applied by Red Electrica in recent months as more synchronous generation has been introduced, which is impacting our retail business in the short term until these costs are passed through. In addition, we saw lower market price and a lower contribution from Mexico after the last year transaction. All these impacts were partially offset by additional renewable capacity. Networks once again -- that is once again a main contributor of our EBITDA, driven by the continued growth in our U.S. and U.K., which increased their combined share by 12 points, reaching 43% of the total EBITDA, reflecting the 13% increase in investment made in both countries, which together represents 60% of the group total as of September. As a result, total investment reached a new record of EUR 9 billion, up 4% year-on-year. By business and area, 60% of investment were allocated to Networks, where we invested EUR 4,904 million with a 12% increase year-on-year. Networks investment increased by 45% in United Kingdom to EUR 1,524 million, driven by the integration of ENW and 18% increase in investment in the Scottish Power Transmission and Distribution. Investment in United States reached EUR 1,739 million, in line with the last year as the 9% increase in distribution was offset by decrease in transmission investment due to the gradual completion of NECEC. Additionally, we invested EUR 1,215 million in Brazil, up 14% and EUR 426 million in distribution in Spain, 60% more than last year. As a result, our regulated asset base grew by 12% on year-on-year to EUR 49.3 billion. Investment in Renewables reached EUR 3,442 million, well diversified across geographies and technologies. 60% was allocated in United Kingdom and United States, with U.K. investment increasing by more than 45%, mainly linked to our offshore wind farms currently under construction. East Anglia THREE with 1,400 megawatts of capacity and East Anglia TWO with 900 megawatts. Our Offshore wind farms under construction in other countries are also making good progress with more than 50% of Vineyard Wind 1, 806 megawatts already in operation in the United States and the 315 of the Windanker wind farm in the Great Baltic -- in the German Baltic Sea advancing as scheduled. Investment in Onshore Renewables reached EUR 1,904 million with 62% in onshore wind. And we invested more than EUR 300 million in storage, including both pumped hydro in Iberia and batteries mainly in Australia. Moving to Network business performance. Regulatory framework continued to evolve positively across key geographies. In United Kingdom, the RIIO-ED3 methodology for distribution was published, representing a first step in a process that will lead to a new framework by April 2028. And in transmission, the RIIO-T3 Draft Determination was released, as you know, and we have expected final determination by -- before the year-end. In United States, current rate cases have resulted in a 10% average increase in tariff in New York and Maine, compared to last year. And Avangrid is already in the process of new rate cases in both the states they agree effective from May 2026. As mentioned, NECEC, our interconnection project between Canada and Massachusetts is on track to reach full commercial operation before year-end. And we are already working on projects that will continue delivering growth in transmission, mainly the Powering New York will result in EUR 1,650 million of planned investment in the coming years. In Brazil, following the annual update in Neoenergia Brasilia, rate has increased an average of 8% compared with last year. And the renewal of distribution concessions continued to progress. The concession Neoenergia Pernambuco was already signed, and we expect the other distribution companies to follow in the coming months. In Transmission, Neoenergia is on track to complete the last four lots under construction by December 2025, increasing annual remuneration in this business by BRL 600 million to more than BRL 2 billion per annum. Finally, in Spain, the process of the review of the remuneration methodology and the rate of return continue. Moving to Renewables. In the last 12 months, we have installed over 2,000 megawatts with significant progress in offshore wind. In United Kingdom, production of our Offshore wind farms in operation, West of Duddon Sands and East Anglia ONE exceed 2,400 gigawatt hours in the first 9 months of 2025. And we continue progressing the construction of East Anglia THREE with 20 monopiles already installed. In East Anglia TWO, where preliminary works are underway after having signed all major procurement contracts. On top of this, our East Anglia ONE North project with 900 megawatts was qualified for the upcoming AR7 auction scheduled by mid-November. In the United States, the construction of Vineyard Wind 1 is now above 50% completion with 32 turbines fully installed and more than 200 gigawatt hours produced. Finally, in France, St. Brieuc project produced 1,150 gigawatt hours during this period. And the output of our offshore wind farm in operation in German Baltic Sea reached 1,594 gigawatt hours as well. As mentioned, in Germany, we have another project under construction, Windanker, which is moving ahead as planned for commercial operation in 2026. Over the last 12 months, we have also installed 1,350 megawatts of Onshore technologies well spread across our geographies, 1/3 United States and U.K., including 200 megawatts of repowering project. Around 1/3 in Spain and the remaining 1/3 in another European countries and Australia. Finally, in Storage, we continue progressing with our pumped hydro project under construction in Iberia, including Torrejón Valdecañas with 15 gigawatt hours capacity. And in Australia, the Smithfield battery project is already in operation. The Broadsound project is progressing as planned for the total of 490 megawatt hours of storage capacity. All in all, we have currently close to 5,500 megawatts under construction, of which more than half correspond to Offshore wind project and 25% to Onshore wind. And we are very well positioned to capture additional growth if demand accelerates due to the electrification, thanks to a strong pipeline of 4.5 gigawatts of advanced projects ready to start construction by 2028, including Repowering project mainly in United States. Through September, we have also continued improving our financial strength. Thanks to a 10% increase in our operating cash flow to EUR 9,752 million, driven by higher cash generation in Networks and the execution as well of our asset rotation and partnership plan. Since January, we have signed transactions worth EUR 8 billion with a positive impact of EUR 4.5 billion in our net debt as of September. On asset rotation, as you know, we have already received close to EUR 1.1 billion from the sale of our Smart Meters business in United Kingdom. We have signed other transactions like the sale of our Renewable business in Hungary, which will allow us to collect EUR 128 million before the year-end. Finally, the regulatory approval required for the sale of our Mexican business continue on track. Regarding Partnership, we have added 708 megawatts to our joint venture with Norges Bank for Renewables in Iberia, reaching 900 megawatts in operation, fully on track to reach 2,300 by 2027 with a total co-investment of EUR 2.4 billion. Our partnership with Kansai in the Windanker Offshore wind farm in Germany will represent a total co-investment of EUR 1.3 billion. And our partnership with Masdar for Offshore wind in the U.K. and Germany, which will result in co-investment of EUR 6.8 billion is also progressing well. With the construction of East Anglia THREE moving forward in line with our plan as explained and in Baltic Eagle in Germany already energized. Increasing cash generation and the execution of our asset rotation and partnership plan, together with the capital increase executed last July has led to a reduction of EUR 3.2 billion in adjusted net debt year-to-date to EUR 48.5 billion, driving even better stronger financial ratios fully aligned with our BBB+ credit rating. FFO to adjusted net debt increased by 330 basis points to 26.2% and net debt is already less than 3x EBITDA. We also maintained a strong liquidity position of EUR 23 billion, sufficient to cover 25 months of financial needs. Thanks to our strong business performance and improving financial strength, the Board has approved an 8.2% increase in interim dividend of EUR 0.25 per share will be paid at the beginning of this year. As always, a supplementary dividend will be proposed for approval at the Annual Shareholders' Meeting paid in July. I will now hand it over to our CFO, who will present the group financial result in further detail. Thank you.
Jose Armada: Thank you, Chairman. Good morning to everybody. Our adjusted net income for the first 9 months of the year, excluding the sale of the U.K. Smart Meters accounted for in this quarter, which is the capital gain is EUR 381 million gross and the same number net as we don't have a tax impact here and including the cap allowance in 2025, which is EUR 191 million, reached EUR 5,116 million, representing a 16.6% increase compared to the adjusted net income for the first 9 months of '24, excluding the divestment of the thermal generation assets, which impacted the net profit was EUR 1,165 million net and including the U.K. cap allowance for '24, which is EUR 81 million, as you can see in the slide. Excluding also the recognition of costs in the U.S. for EUR 389 million as it is a non-cash item, the first 9 months of '25 growth is 8%, reaching EUR 4,727 million. The main perimeter change, as you know, is that ENW has been fully consolidated since March. The FX evolution has had a minor effect on results. Thanks of our hedging policy with the dollar 2.5% lower and the real 10% lower. Reported net profit for the first 9 months of '25 reached EUR 5,307 million, decreasing by 3% year-on-year, affected by the asset rotation that I have just mentioned that has been EUR 784 million less in '25 than in '24. Revenues increased by 2.3%, driven by the Network business. Procurements rose 2.6% and gross margin grew 2%, reaching EUR 18.4 billion. Excluding the capital gains from the asset rotation, as I mentioned previously, which is referring to the Smart Meter divestment and the thermal generation assets, 9 months net operating expenses improved 7%, affected by lower storm costs that also lowers the gross margin. Net personnel expenses rose 0.4% due to higher number of employees. External services declined 6.1%, mainly due to the EUR 330 million lower storm costs. Other operating income increased by 21% compared to the adjusted 9 months of '24 due to the indemnities of past year costs, the ENW consolidation, partially offset by EUR 121 million negative impact of the East of Anglia THREE sale, EUR 4 million more than in the first half results due to a negative impact accounted in Q3. As you will see later, this impact is more than offset at the financial expenses level. Excluding the mentioned storm-related impacts and other adjustments, net operating expenses improved by 0.8%. Analyzing the results of the different businesses and starting by Networks, its EBITDA grew 26% to EUR 6,128 million, mainly driven by the strong performance of the U.K. and the U.S. linked to higher asset base and past cost recognition. In the U.S., EBITDA reached $2,046 million, 88% more with a 10% average higher rates in Distribution and a better contribution from Transmission, and positively affected in the first quarter by the decision of the New York regulator that allowed to register a regulatory asset under IFRS regarding past costs, which have already been accrued and recorded under U.S. GAAP, aligning both standards. It is worth highlighting, as the Chairman has mentioned, that NECEC finally is expected to start contributing from November of this year. In the U.K., EBITDA increased 22.5%, reaching GBP 1,129 million, including 7 months positive ENW contribution of GBP 253 million with a growing -- with growing results for transmissions driven by a higher RAV. In Brazil, EBITDA was up 12.6% to BRL 10,000 million. Thanks to the higher revenues in Distribution linked to higher inflation and an average 8% increase in rate reviews over a higher asset base. In addition, Transmission contributed positively with BRL 1.3 billion gross margin as construction progresses. And as the Chairman has said, it is expected to finalize all the construction of transmission lines this quarter and will contribute BRL 2 billion in '26, already fully completed. In Spain, EBITDA increased by 9.3%, reaching EUR 1,340 million, positively affected by the CNMC draft retribution rate of 6.46% versus the previous 5.58% and by positive adjustments to past year's remuneration. In this first 9 months, Energy Production and Customer business, EBITDA reached EUR 5.9 billion versus the EUR 6.7 billion in last year, excluding capital gains from asset rotation. The business reached c. 86% emission-free generation. In Iberia, EBITDA was EUR 3,052 million, 17.5% down with higher production more than compensated by lower margin and sales, explaining 30% of the year-on-year variation and higher ancillary services, higher levies and positive court rulings in '24 despite 1.2% revenue tax termination explained the remaining 70% of the decrease. Hydro reserves remain above the 10-year average. In the U.S., EBITDA remained flat reaching $813 million, supported by improved wind and solar performance, despite the fact that '24 was positively impacted by an Arctic Blast storm one-off of $34 million. In the U.K., EBITDA grew 5.3% to GBP 1,136 million, driven by the GBP 324 million capital gain from the U.K. Smart Meters divestment in this quarter. Excluding them, the business decreased 24.8% with lower wind resource and prices and weaker supply business, also driven by lower prices and volumes. Net operating expenses, including GBP 103 million negative one-off impact linked to the East of Anglia THREE sale more than compensated at the net financial result, as I have mentioned. In the Rest of the World, EBITDA grew 31.5% to EUR 588 million, with 61% higher offshore production due to higher contribution from wind farms, St. Brieuc in France and Baltic Eagle in Germany. With lower supply results due to the EUR 30 million negative impact in Portugal due to the ancillary services cost as in Spain as a consequence of the blackout. In Brazil, EBITDA fell 23.6% to BRL 947 million with lower renewable and thermal production compared to last year. Finally, in Mexico, EBITDA reached $467 million, decreasing 78.5% with lower reported contribution compared to last year that included the thermal asset capital gain. Depreciation and amortization and provisions were up 2% to EUR 4,272 million, driven by higher asset base despite the full year '24 adjustments impact and lower bad debt provisions, mainly in Spain. EBIT reached EUR 8.2 billion and grew 6%, excluding capital gains. Net financial results worsened EUR 93 million to EUR 1,445 million, driven by EUR 208 million higher debt-related costs due to EUR 7 billion higher average net debt -- average net debt in the first 9 months of the year, while interest rate related costs and FX improved by EUR 85 million due to the FX depreciation, especially of the real. And derivatives had a positive contribution of EUR 234 million due to the East of Anglia THREE derivatives, as I mentioned, compensate the lower net operating expenses. While the rest has had a negative impact mainly due to the Mexico hedges, mainly linked to the positive impact of the Mexico transaction last year compensated at the net profit level in the tax line. Cost of the debt improved 12 basis points, mainly thanks to lower short-term interest rates in euros and British pounds and to the depreciation, especially of the real, despite higher interest rates in Brazil. At the end of September, net debt is EUR 3.2 billion lower than the EUR 51.7 billion reported in '24 year-end, reaching EUR 48.5 billion. This positive evolution was driven by EUR 9.8 billion FFO generation, plus EUR 4.5 billion asset rotation and debt consolidation and the EUR 5 billion capital increase, more than covering the EUR 9 billion CapEx and the EUR 4.1 billion dividend as well as EUR 2.2 billion ENW net debt consolidation. As a consequence, our credit ratios are at very strong level in the BBB+ band. Our adjusted net debt-to-EBITDA is below 3x. The FFO adjusted net debt reached 26.2% and our adjusted leverage ratio is 43.3%, 2 percentage points lower than at the end of '24. 9 months '25 adjusted net profit grew 17% to EUR 5,116 million, taking away also U.S. cost recognition, which is a non-cash item, as I commented, the growth is 8%. And now the Chairman will conclude the presentation. Thank you.
Jose Sanchez Galán: Thank you, Pepe. The result reflect the foundation of the plan presented a few weeks ago, a transformational plan based on a specific project capable of delivering double-digit growth in profit in the first 9 months of the year. Thanks to the rise in Networks investment up to 12% through September with attractive regulatory framework that are driving increases in tariff of 10% in the U.S. and 8% in Brazil as well as the expansion of our generation capacity of 2,000 megawatts just in the last 12 months with 5,500 more under construction and 8,500 of additional pipeline ready to cover any potential acceleration of demand growth. The implementation of our plan also reinforced our strong financial position, fully compatible with our BBB+ rating, supported by 10% increase in operating cash flow in our asset rotation and partnership plan and is also delivering a growth shareholder return with an interim dividend up 8.2% to EUR 0.25 per share. Driving by this consistent trend of improvement result and financial performance, today, we are improving our guidance for 2025 to a double-digit growth in adjusted net profit, reaching EUR 6.6 billion or more than EUR 6.2 billion even excluded EUR 389 million of Networks cost recognition in United States. This net profit guidance is already EUR 1 billion above the net profit target set for 2026 in our previous plan. Proving once again that our strategy, focus on Networks in the right countries with attractive remuneration frameworks and selective growth in renewables is allowing us to grow and beat our estimate constantly. You can be sure that we will continue working towards that objective. Thank you very much for your attention. Now we can begin with the Q&A session. Thank you.
Ignacio Cuenca Arambarri: The following financial professionals have asked the following question to us. Philippe Ourpatian, ODDO; Fernando Lafuente, Alantra; Meike Becker, HSBC; Manuel Palomo, BNP Paribas; Pedro Alves, CaixaBank; Gonzalo Sánchez-Bordona, UBS; Robert Pulleyn, Morgan Stanley; Fernando Garcia, Royal Bank of Canada; Peter Bisztyga, Bank of America; Pablo Cuadrado, JB Capital Markets; Jorge Alonso, Bernstein Societe Generale; Javier Suarez, Mediobanca; Dominic Nash, Barclays; Javier Garrido, JPMorgan; and finally, James Brand, Deutsche Bank. The first one is, can you provide more details on the main factors driving the expected double-digit growth in net profit for 2025 and clarify how the exclusion of capital gains from asset rotations and the inclusion of cap allowances in the U.K. impact this guidance?
Jose Sanchez Galán: So as I mentioned, we expect double-digit growth on adjusted net profit to more than EUR 6.2 billion, even excluding past cost recognition in New York, which is EUR 389 million. And look together close to EUR 6.6 billion. Pepe, but I don't know if you would like to clarify in more detail.
Jose Armada: Yes. Well, thank you, Chairman. Well, as I commented, these numbers exclude specifically the capital gains from -- basically in Mexico with an impact of EUR 1,165 million and the Smart Meters in the U.K. with EUR 381 million, both at the net profit level, okay? And it includes as we presented in the Capital Markets Day, the cap allowances in the U.K., as you can see in the slide, EUR 190 million for '25 and EUR 81 million in '24. Obviously, for the end of the year, that will add a little bit more, okay?
Ignacio Cuenca Arambarri: Okay. Second question, can you please provide guidance for net debt at 12 months 2025?
Jose Armada: Yes. We're expecting the net debt by the year-end to be around EUR 51 billion. This is excluding the potential collection of the Mexico divestment. We are not including that in this guidance. But we are including the acquisition of the previous sale of the Neo stake in this EUR 51 billion guidance. This will be even with all these things below the '24 close of over EUR 51 billion at the end of '24.
Ignacio Cuenca Arambarri: Next is regarding the use of capital gains. How will the capital gains from recent asset transaction be used in the future?
Jose Sanchez Galán: So capital gain, as you know, from asset transaction will be applied as always to future efficiencies, just to improve the future results.
Ignacio Cuenca Arambarri: Next is regarding the battery storage, our view of this success -- of this upcoming business for the sector?
Jose Sanchez Galán: Well, I think now we talk about batteries. We will start talking about storage 25 years ago. I think as you remember, my first presentation, we were talking about renewables. We are talking about networks and we are talking about storage. I think we've been making renewable, we are making networks and we have been making storage. So, I think, what we've been doing in storage during the 25 years is we've been upgrading our hydroelectric facilities, making our -- most of our turbine reversible to become all those one bidirectional, making already pumping storage plant. We have in this moment a capacity of 120,000 megawatt hours of capacity. I think, it's a huge capacity already in storage. But also, we are investing in batteries, especially where we don't have hydro facilities in our -- or we are not project. I think, the main places is Australia. I think, they have attractive spread of support mechanism. And I think, we have in this moment, there are more than 550 megawatts under construction. But as well, we have another country. I think, we have 200 megawatts in construction in Spain and the U.K. And we have already more than 1,000 megawatts of projects in our pipeline that will be built up depending on the capacity payment of grants that can be provided.
Ignacio Cuenca Arambarri: Next question is regarding the data center. What is the company's strategy regarding the growing demand from data centers? And what recent agreements have been signed with technological companies to supply energy?
Jose Sanchez Galán: So as you know, data centers will be an important driver of demand growth. And I think -- and that is not new for us. We have already, for many years, we've been signing PPAs with tech companies. In this moment, we have more than 12 terawatt hours a year so far of contracts of PPAs already signed with technical companies, mainly in United States. But I think, because we consider that, that is an important area of demand growth is why we are facilitating the expansion of data centers in those countries, we have already, means for helping the technical companies to invest and to expand. I think, in this particular moment, we have an agreement in Spain with Echelon. And the first project, which is going to make a demand -- energy demand more than 1 terawatt hour a year is already ongoing. And we have another four projects progressing. So, we are active on those one, because we consider that, that is a driver for increase of the electricity demand, and that's why it is -- we would like to help these companies to do the necessary for making that happen.
Ignacio Cuenca Arambarri: Next one is regarding the market situation of the United States. Given the recent increase in demand from data centers and industry and the rising energy prices in certain U.S. states, is the company considering increasing its renewable ambition or pipeline? And the second question regarding to this is, how will these market trends impact your PPA strategy and asset development plans?
Jose Sanchez Galán: So, I think you will respond, Pedro, but I think just to give you -- it's true that in this moment, United States, the prices are rising. And our expectation is that prices will rise even more. I think, it's the fact that new CCGTs are built. This new CCGT is built, is going to make then the prices will increase, because there are already new power plant have to be already amortized toward those one which are already fully amortized. And I think, those one is pushing the prices up independent of the cost of the gas. But I think it's -- and that is a good opportunity for us. I think, it's a good opportunity, because we have almost 40%, 30% of our fleet is in merchant. And I think, the contract we have already with long-term PPA signed is already, let's say, ending during a certain period. And I think that makes the renovation of this contract probably that is going to increase the prices, we are already making that. All-in-all, that is certainly a great opportunity of increase of value of our assets -- renewable asset in United States. And that is why United States is there a tremendous, let's say, demand of buying existing renewable asset in operation. So, which I think, Pedro, you can already complete this comment. You agree.
Pedro Blazquez: Okay. Thank you, Chairman. I think, the example -- a couple of examples, Texas and Oregon, where the prices are already rising, and we operate already 3,400 megawatts in those states. In the short term, this benefits our merchant assets. And then, it will be translated as the Chairman said, to the PPAs. And for example, in those states, we have more than 4,000 megawatts of potential pipeline to come. In the U.S., overall, we have 10,000 megawatts right now in operation, 30% of that is merchant and 70% is PPAs. The average PPA life is 10.7 years. I think, there is an opportunity for life extension and repowering. Around 360 megawatts under construction in the U.S., 432 globally and more than 800 megawatts of additional pipeline, 1,500 globally. So, I think this is good signs of what we can do right now to benefit from the demand increase.
Ignacio Cuenca Arambarri: Next is related to Spain. Can you provide an update on the blackout investigation and the causes that triggered the event?
Jose Sanchez Galán: I think, during the last weeks, has already had a lot of public reports, a lot of investigation even in the Senate and the different conference. And I think, this public report said clearly that this was a result of lack of synchronous energy to provide inertia in the system. So, they say also, as more renewable enter into the system, supply becomes also variable. And I think that require more synchronous energy. So, the fact now the system operator has changed the operation and is operating with more synchronous energy. So, I think what is saying in the public report and the public information is precisely what now is the system operator is already just doing. Certainly, that has an effect that is increasing the cost of ancillary services, which in our case, that we have most of our sales are under multi-annual contracts is affecting to our results, because we have not passed this extraordinary extra cost for our customers on all those ones, we have a multiyear contract. As Pepe mentioned, that in our case, is close to EUR 180 million affecting our accounts up to September.
Ignacio Cuenca Arambarri: Next is related to Spain as well. What is needed to extend the operation of Almaraz Nuclear Plant? Is the 50% reduction in the Extremadura tax sufficient to ensure its continued operations?
Jose Sanchez Galán: Well, I was -- you were listening to me for many long time, then the nuclear power plant are safe and are needed. So, I think they are needed more than ever in this moment for avoiding potential blackouts or potential problems in the service. Also, this power plant that you are talking about, they have national international license. So, which I think they allow them to operate at least up to 2030 without being forced to ask for any additional national, international license of operation. But there's something very, very important. It's a social -- national social demand in the country to maintain and operating. I think every week, there are demonstration, there are people writing of different tendencies, different ideas, different political parties and the civil society are asking to maintain and operating. So for two reasons, because of this social responsibility and because the need of this power for keeping the lights on in the country and providing a safe, cheap service is why we three, the owners of the power plant, we have asked the government the continuity of the Almaraz power plant. So, that means in this moment, only depend on the decision of the central government, the continuity of those power plant. There are not any another limitation. Technically, they are allowed to cooperate. Socially is demand, economically is the best solution. And in terms of the operation of the system is needed for keeping already the service operative. So, I think the energy policy made by the government. The government have to take the decision, and they will explain the consequences, whatever decision they will take about.
Ignacio Cuenca Arambarri: Another trendy topic in Spain. Can you provide an update on the latest developments regarding the regulatory framework for networks in Spain? And how would the remuneration rate below 7% affect your investment plans?
Jose Sanchez Galán: You're talking about Networks.
Ignacio Cuenca Arambarri: Networks in Spain.
Jose Sanchez Galán: Yes. I think that -- you know Networks in Spain for us is quite small compared with the Networks we have in other countries. I think, it's the fourth in terms, as you saw in our presentation, is the fourth of all our RAV in the different countries. The first one, largest RAV is in the state. The second largest RAV is in U.K. The third largest RAV is in Brazil and the fourth is Spain. So, I think it's small compared with the rest. But saying that, I think as far as I know, they are still that is in process. There are no new news. I think, which I already heard is they are already make a public consult about the terms which have been proposed, but we have no more details on that one. I think, something which is clear is either the government, central government, either the different government of the region are asking for the need of more, more investment in Networks. So, I think if that is not the proper framework, I doubt in this extraordinary investment, which is needed. So, it's going to be made as faster as it will require.
Ignacio Cuenca Arambarri: Next, how are the increasing cost of ancillary services being managed? And to what extent are these costs being passed through to the customer as contracts are renewed?
Jose Sanchez Galán: Pedro?
Pedro Blazquez: I think as of September, yes, we have a negative impact because of our multiyear contracts. But of course, these costs are being passed through as contracts are renewed. We expect by '26, 70% of this already through customers and almost 90% by '27.
Ignacio Cuenca Arambarri: Next is regarding the U.K. What is the company's perspective on the current regulatory environment in the U.K., particularly regarding the RIIO-T3 framework?
Jose Sanchez Galán: I think, we have a very fluent dialogue with the regulator. I think recently, I met personally the Chairman, the Chair of Ofgem. I think, they are aware about the need of sufficient profitability remuneration and financial ability for already to make -- to attract the investment needed. I think, it's certain they make already a draft determination, which is the base of our rate case plan. I think, our business plan is already just based in this draft determination. But I think, I'm sure that the sensibility of the Ofgem is such that, I hope that there is a potential improvement during the negotiation, which -- to make certain upside, but we will know the final determination by December. So, I think now we are in the process of that one. But I think we are very open dialogue with the regulator, I think ourselves and another two players on this one. And I think they are -- my feeling is that they are already very sensible about the need of making already some adjustment to facilitate to make the huge investment which are needed.
Ignacio Cuenca Arambarri: Next is, can you provide details and expectation on your strategy for the AR 7 auction in the U.K.?
Jose Sanchez Galán: So as you know, we have already East Anglia ONE North ready to participate that one. So, I think we have a competitive project. We have all the security, all the supply chain secured. We -- but I think, we are very disciplined in terms of profitability criteria. I think yesterday, I heard the budget -- the final budget has been published, which I think only EUR 900 million allocated to offshore. But I think the flexibility to the Secretary of Energy to increase this amount depending on the numbers of bidders. I think, this number, remind like it is in my feeling, my opinion, is not sufficient to achieve the country objective in terms of power, in terms of decarbonization. I think there are no other changes in this year 7. They increase the life of the CFDs from 15 to 20 years. And I think they already make already a reference price, which is 11% higher than the previous one. So, which I think that will sense. But I think the budget, in my opinion, is absolutely insufficient. And I think, if the Secretary of Energy has already the power to modify the numbers after the auction. If that is not modified, my feeling is it should be difficult to achieve the targets where they are already thinking in terms of power, new power and in terms of decarbonization when they are already looking. But new power, in my opinion, they will not really achieve the numbers they were thinking about.
Ignacio Cuenca Arambarri: Next, what is the current status of the Mexico operation? And when do you expect regulatory approvals to be finalized?
Jose Sanchez Galán: I think in Mexico, you mentioned.
Ignacio Cuenca Arambarri: Yes, the deal in Mexico, the pending deal in Mexico.
Jose Sanchez Galán: Well, I think the agreement is signed. As far as I know, the buyer has already secured the financing, almost secured. And I think, now we are depending on the approvals of the different authorities. But as far as I know, the things are ongoing. I think, this week, our Mesonero, which is our M&A guy, I think, is in Mexico. And I think he will take fresh news already next week. So, but I think we are not already, let's say, we have not any negative input about that one, and I think they are going already according with schedule.
Ignacio Cuenca Arambarri: Two last questions. The first one is probably for Pepe. Effective tax rate is below historical average. Should we expect this effective tax rate to be kept at similar level at the year-end?
Jose Armada: Well, I think that we will have tax -- an effective tax rate at the year-end to be around 20%. Let me explain that this is below basically for several reasons. First of all, because -- right now, the contribution of countries with a lower tax rate is higher than in previous years. So the U.K. and the U.S. versus Mexico and Brazil. An impact that it is reducing the tax rate this year is, as I mentioned, the U.K. Smart Meters capital gain in the first 9 months is at the gross and net. So, there is no tax impact here. Last year, the thermal capital gain was affected by the Mexican corporate tax rate. And finally, as I mentioned, last year, we had a negative impact in the taxes due to hedges that we had in and had a positive impact in our financial expenses. And this year is the opposite. We are having a negative impact in the -- due to the last year transaction, a negative impact in our financial expenses due to the Mexican FX hedges that is compensated at the net -- at the tax level. So, all-in-all, that is the explanation why this year, in the first 9 months, the tax rate is below 20%. And the expectation is that by the end of the year, the tax rate will be around this 20%, as I mentioned.
Ignacio Cuenca Arambarri: And last question is related to Spain and the contribution of the hydro production in terawatt hour in 2025, which is our expectation related to the average traditional average year.
Jose Sanchez Galán: So, just looking here at the numbers. I think, up to today, I think, our production of hydroelectric is around 18 terawatt hours, which I think is an increase of around 3% to 4% over previous year. Approximately 2/3 is traditional conventional and 1/3 is pumping storage. So, I see pumping storage is taking the important role on this one. And I think, now the reserves is on the range of 6 terawatt hours. And I think that, now it's again, it starting raining, which I think heavily, so which I think in a few days, we hope level of reserves will increase. I think that is -- I think in terms of the year, I think it's important, but it's 3% more, but that is not the key of our result. As you know, our result is coming from other sources. Even in Spain, the result is not going -- is not as good as last year, because of the prices and the ancillary service, et cetera. But I think it's a good news in terms that our results are high and probably with these rains, which are now coming and expected, I think the result can be already maintained, which should be a good thing for next year as well, contribution to the next year profit or next year results. So, I think that's good. But I think, the news is it's 3%, 3% to 4% more than previous year. Pumping is 1/3, 2/3 is traditional and the results are in a good shape, very high. But I think that is already, there are room for increasing those one if the rainfall is continuing as the range as the expectation we have in this moment, with that give already certain possible, let's say, extra result for 2026.
Ignacio Cuenca Arambarri: We have received as well a final question regarding the guidance for 2026, but probably this is something that we will be delivering next February. So, we anticipate something on the Capital Markets Day, but I mean, for those that has asked this question in February will be the deadline. So, just to finish this event, please let me now the floor to Mr. Galan to conclude the presentation.
Jose Sanchez Galán: So, thank you very much, as always, for your very clever, intelligent and very good questions. And thank you very much for participating in part of this conference. And if there are any new questions that you consider, I think our Investor Relations will be ready, as always, to give you additional information you may require. Thank you very much, and see you soon. Thank you.