Cashflow

on a regular basis to reflect any changes in market conditions and the activities of ELIA TRANSMISSION BELGIUM. The financial impact of these risks is limited, as Elia Transmission Belgium operates under the Belgian regulatory framework.

As part of the ELIA TRANSMISSION BELGIUM’s efforts to mitigate the funding risk, ELIA TRANSMISSION BELGIUM aims to diversify its financing sources in debt instruments and balances the maturity of it’s funding to the long-term lifetime of its assets. The refinancing risk is managed through developing strong relationships with a group of financial institutions, through maintaining a robust and prudent financial position over time and through diversification of funding sources. The short-term liquidity risk is managed on a daily basis with funding needs being fully covered through the availability of credit lines (sustainability linked credit lines for ELIA TRANSMISSION BELGIUM) and the Commercial Paper Program.

Further information

In Belgium, the funding costs linked to the financing of the regulated activities are qualified as “Non controllable elements” and potential deviations from budgeted figures can be passed on in a subsequent regulatory tariff period (or in the same period in the event of an exceptional change in charges). The regulated tariffs are set pursuant to forecasts of the interest rate.

2.3.2 Cashflow

The fluctuation in interest rates of the ELIA TRANSMISSION BELGIUM’s debt mentioned in the previous section can also have an impact on the actual financial charges by causing a time differential (positive or negative) between the financial costs effectively incurred by ELIA TRANSMISSION BELGIUM and the forecast financial costs. This could cause transitory effects on the cash position of ELIA TRANSMISSION BELGIUM.

Deviations between actual and budgeted volumes of electricity transmitted and between effectively incurred and budgeted costs/revenues may have a negative short-term effect on the cash position of ELIA TRANSMISSION BELGIUM. Covid-19 measures were leading in 2020 to a drop in electricity consumption. This downturn in electricity consumption had a substantial impact on the actual cash income to finance the different mechanism to support the development of renewable energy and public service obligations. However, thanks to the current tariff structure, the impact on our core business cash incomes was more limited. In function of the evolution of the economic activities, a wider negative mid-term impact may be expected. Further information on the impact of support mechanisms is provided hereunder. The existing legal rules foresee that TSO public service obligations’ costs are covered by tariffs (& tariff evolutions) which are approved by the regulators on a regular basis.

In the framework of their respective competences, national and regional governments have taken measures to support the further development of renewable energy by introducing different support mechanisms. ELIA TRANSMISSION BELGIUM is entitled to several of these public service obligations mechanisms. This may have an indirect impact on ELIA TRANSMISSION BELGIUM’s cashflow: deviations from the number of sales of green certificates at a guaranteed minimum price or deviations from the expected volumes of infeed of renewable energy and lower end user consumption could generate short-term & mid-term significant cash expenses.

Responses

The short-term liquidity risk is managed on a daily basis with the funding needs being fully covered through the availability of credit lines and a commercial paper program.