Good evening, ladies and gentlemen. A warm welcome to the 2021 Results Presentation, which will be hosted by our CEO, Jose Bogas; and the CFO, Luca Passa. Following the presentation, we will have the usual Q&A session open to those connected on the call and on the web. Thank you. And now let me hand over to Jose Bogas.

Thank you, Mar, and many thanks for being able to join us today. Most instantly, the instability in the gas market worldwide and to a lesser extent, the rising CO2 permit costs have saved the challenging context in which we operated during 2021. Record high pool prices have been the norm across all European countries. In this context, thanks to the implementation of several managerial actions as well as positive nonrecurring items, we have managed to achieve an EBITDA of €4.3 billion, 7% above the target and around 12% above the previous year. More than ever, we are convinced that a strong and determined commitment to decarbonize our energy mix remains the key to revert back to a more normalized price environment. We have increased our renewable capacity by 0.6 gigawatts and boosted our pipeline to above 75 gigawatts. We reached a net ordinary income of €1.9 billion, 12% above the committed target, which allow us to increase our shareholder value with €1.44 dividend per share. The proposal is 11% higher than our business plan target. Moving now to Slide #3. Before going more deeply into the details and performance of the period, let me comment on the delivery of the strategic plans. Related to our financial target, as commented, we exceeded our business plan target, both at EBITDA and net income level. Moreover, last year, we successfully deployed €2.2 billion CapEx, which represents a notable acceleration of our investment base, 33% more than the previous year and 5% higher than the scheduled target. This investment effort is aligned to our strategy and hence highly concentrated in renewables and networks accounting for more than 70% of the total. We increased the renewable capacity by 8%, reaching 8.4 gigawatts now representing around 50% of mainland capacity. Let me highlight the good evolution of the Power free clients figure, which hold a recovery of plus 3% versus previous year, reaching 5.9 million customers. In the last 3 months, we were able to capture more than 250,000 free customers, thanks to a very focused commercial strategy in extremely competitive context. Net investment in network allowed us to maintain our regulated asset base flat. In line with the new requirements of the European Union taxonomy to provide a common framework to identify environmentally sustainable activities, we report for the first time and ahead of the reporting obligation for 2022, the percentage of revenues, OpEx, EBITDA and CapEx aligned with the criteria of a substantial contribution to climate change mitigation for the year 2021. Our 75% of CapEx and 64% of EBITDA are in line with the European Union taxonomy criteria taking into account nuclear and gas are not eligible for the time being. In addition, on Slide #4, as advanced in our CMD presentation, we have endorsed a full decarbonization target by 2040, a decade earlier than our original commitment. Finally, tied to our goal of leading the energy transition, we remain committed to a gas transition that leaves no one behind by applying the third value creation model.Endesa remains actively engaged to foster gender diversity on its Board of Directors. And as we surpassed the target set for 2021 of 30%, we raised the commitment to 40% for 2022. Regarding human right in 2021, our policy first endorsed back in 2013 has been updated. Regarding work for gender diversity, we have strong improvement in all the main indicators. In 2021, 37% of new hires were women versus 32% in 2020. And the participation of women in selection processes was 53% higher than the 50% target set for this year.With health and safety as fundamental pillars of the company, we have maintained remote working scheme for those employees who are able to as a preventive measure against the different variants of COVID-19. Endesa has continued its presence for the 21st consecutive year in the Dow Jones with an overall score at high levels, and we have improved our rating with MSCI at AAA. In addition, we have raised our ranking [Audio Gap] responsible investment policy and are active in nonfinancial activities account for an aggregate of 52% of the free float. Moving to Slide #5. We can see how 2021 was characterized by intensive regulatory activity with several measures to contain electricity bills. The ministry through different royal decrees approved temporary reduction fiscal measures such as suspension of the 7% generation tax, a reduction of the special tax on electricity from 5.1% to 0.5%, and a VAT cut, increased wholesale bonus discount up to 60% to 70% depending on the customer cluster. And with the same objective, a 96% reduction of system charges was adopted for 2021 from the 1st of June. And for 2022, a reduction of 31% was passed based on charges existing in June 2021 and 5.4% imposed. In relation to the allocation of the European funds, the last month of December, a royal decree was approved to regulate the granting of direct subsides to distribution companies for investment in the network digitalization and infrastructure for electric vehicle charging. During the last quarter of the year, the Supreme Court ruled that auction must be called to determine fuel costs on the island, so that the remuneration set is sufficient to cover the actual cost in court. Also, during this month of February, the Spanish Supreme Cup ruled the annulation of the social bonus mechanism in force since 2017, considering it is military, although the potential refunds are still clear as the ruling refers to only the portion of base on to customer will be recovered. In addition, some regulatory proposal such as the CO2 levy is expected to be approved with modification to the initial version in the second half of the year. Likewise, the national farm for the sustainability of the electricity sector, which will greatly help to correct the current imbalances of the energy as activity sector could be approved. Concerning the decarbonization trend of our generation mix as detailed on Slide 6, last December, Endesa disconnected from the grid the imported coal plant of Litoral with a capacity of 1.2 gigawatts. Moreover, formal approval of the closure request for our last competitive mainland coal plant As Pontes is pending. It will remain operational as long as we do not receive administrative closure confirmation, which is now expected by June this year. This doesn't mean in any way a step backwards in the decision to close all our coal plants. This delay in plant closure has slightly affected our interim emission reduction targets for 2021, although the target set for 2024 remain fully achievable. In any case, coal contribution only represents a mere 1% of the total revenues. All these [indiscernible] also include several proposals for significant investment in new renewable energy facilities and potentially linked hydrogen project in the surrounding areas. More precisely, Endesa has developed a comprehensive plan to replace the Andorra coal plant with 10 different renewable facilities for a total of 1,495 megawatt and a powerful socioeconomic program to be deployed in the neighboring areas. By way, Endesa has presented a just transition project obtaining first position in the preliminary public tender to recover the Portuguese coal fired power station of Pego inactive since in last November into a solar PV storage and green hydrogen power generation plant. Advancing on to Slide #7. Now we turn to the evolution of the operating parameters for the period where thanks to our continued effort in decarbonization, mainland renewable capacity now represents around 50% of the total capacity, well on track to reach the 63% target set out in our business plan. Furthermore, 2 to 3 sources constitute 69% of our installed capacity on the peninsula. During 2021, Endesa was able to add 626 new megawatts of capacity aligned to this year's target. Total mainland output reached 46.4 terawatt hour aligned to the previous year. The year-on-year increase in wind and solar capacity as well as the higher CCGT production makes up for the drop in hydro output and a slightly lower nuclear output of the period. As a consequence of the coal phase-out, thermal generation represents just 17% of the total mainland production, mostly from CCGTs. Emission-free production remained at 82% of the mainland total output. On Page #8, let's have a look at the evolution of our pipeline at 77 gigawatt underlining our constant effort to fit the renewable project portfolio. Out of this growth figure, around 10% has TSO-awarded connection points and 2 gigawatts are in execution with solar technology representing the majority of this project. We are working to add 1 gigawatt of additional capacity by 2022, with around 30% of this capacity already under construction. Along the year, we will also start the construction of part of the plants that should be operative by mid-2023, with no material impact expected from inflation as we contract on a 2- to 3-year basis and procure at broad level. Based on our policy of developing storage going with the deployment of renewable capacity, we aim at gradually incorporating them into newly installed renewable capacity once regulation guarantees the competitiveness of these facilities. When it comes to customer, and in particular, retail and Endesa X on Slide #9, total power sales remained largely flat. The B2B sales increase was able to partially offset a 6% drop in B2C and regulated segment. Total power customers decreased by 2%, all of them in the regulated market, above 350,000 customers. As a consequence of the high pool price swings during the year, which has directly impacted the regulated tariff. On the other hand, the liberalized market customer portfolio increased by 3%.Regarding the free market and despite the intense competition, we were able to reverse the loss in the liberalized segment growing by 200,000 customers in 2021. Digitization continues steadily forward, 60% growth in the number of digital contracts to 6.6 million and 32% increase in the number of e-billing contract, reaching 5.8 million of e-bills. Regarding electric mobility, we continue to deliver on our deployment plan of charging points, reaching a total of 9,500, that is a 34% increase. And in the case of the e-bus charging points, a total of 35 that is 3x more than the previous year. Concerning our energy management on Slide #10, Electricity sales in the liberalized business decreased by 1% versus the previous year. The unitary integrated margin decreased by 4% to €32.3 per megawatt hour due to lower OTC references versus 2020 and a higher variable cost, both in fuel and in higher energy purchase costs. The unitary revenue rose to €83.8 per megawatt hour or more than €18 per megawatt hour versus 2020, associated to a higher 1/3 of index sales in a record high pool price context. The evolution of the integrated margin around €130 million below the previous year was affected by the unfavorable market situation being the main factor behind this margin decrease, the lower generation margin mainly due to weaker OTC references, the new carbon tax in force in the 1st of July of 2020 and lower thermal margin, partially offset by the suspension of the 7% tax in the second half, also lower supply margin compared to the previous year as a consequence of higher pool prices and ancillary services cost, offset by the absence of the COVID impact experienced the year before. Therefore, supply unitary margin resulted in a slightly lower figure versus the year before. Almost and lastly, almost neutral net effect of our position. Regarding forward sales, 97% of our 2022 price-driven output and 55% for the year 2023 has been closed at a reasonable base load reference prices of €54 and €58 per megawatt hour, respectively. In that sense, we have moved to a base load reference price, which can be directly comparable to a wholesale price for the generation assets. In networks, and I am now on Slide #11, Endesa's distributed energy increased by 2%. The investment effort resulted in the RAB remaining stable at a level of €11.7 billion. The number of interaction remained flat versus the previous year, while the minutes of interaction increased to 61 impacted by extraordinary weather conditions. Without these exceptional effects, TIEPI would have increased by just around 3%, mainly due to selective program power shutdown linked to the deployment of the investment plan. Likewise, losses remained flat at 7.1%. After measures at 350 quality projects and emergency generators put in place, we're able to partially mitigate these effects and ensure service to our grid customers. And now let me hand over to Luca Passa, who will detail the financial results.

Thank you, Pepe, and good evening, ladies and gentlemen. I'm on Slide 13 to start, I would like to comment on how the evolution of the market context over the period has been crucial factor in defining the sector results. Throughout 2021, demand [indiscernible] showed signs of recovery from the economic effects of the pandemic, indeed, accumulated mainland power demand in the period increased by 2.4%, both in adjusted and nominal terms, although it is still below the pre-COVID levels. Likewise, in Endesa concession area, gross demand has increased by 1.5% or 1.7% when adjusted by calendar and temperatures effect. These figures are supported by the solid recovery in the services segment. Gas stocks at historical low levels, coupled with the market unbalances and tensions in some of the gas exporting countries, and to a lower extent, also the high CO2 prices have driven up electricity prices. In 2021, average food price in Spain more than tripled versus previous year level, reaching on average €112 megawatt hour. These transitioning factors have been extrapolated to most European countries, where the gas is also the marginal technology, hence, similar electricity prices increase were noticeable. On the financial highlights of the period, I'm on Slide #14, reported EBITDA stood at €4.278 billion, increasing by 12% versus last year. On a like-for-like basis, once netted from the last year, personnel provision effect, the EBITDA would have increased by around 6%. Net income was raised by 3% year-on-year, reaching €1.435 billion, minus 11% at net ordinary income level. Funds from operation reached €2.621 billion, 11% down versus last year. The sector results have been achieved despite the complex market context previously commented that was mitigated through several managerial actions as well as positive nonrecurrent items. Moving to the detailed analysis of the period, and I'm now on Slide 15. In 2021, gross CapEx amounted to €2.2 billion, 33% higher than last year, with more than 70% allocated to networks and renewables, which confirms our growth focus. EBITDA reached €4.278 billion, plus 6% versus 2020 on a like-for-like terms. Within EBITDA, commercial generation EBITDA decreased to €877 million, minus 15%. Renewables EBITDA, including [indiscernible] assets increased by €400 million up to €841 million. Customers EBITDA reached €595 million, increasing by 8%. Finally, distribution EBITDA declined by 3% at €1.965 billion. This EBITDA includes nonrecurring items amounting to €486 million from the CO2 sentence of [ 26 ] for €186 million, and the hydro canon refund corresponding to the 2013, 2020 period for about €300 million. Excluding these one-offs, EBITDA would have amounted to €3.792 billion or minus 6%, clearly affected by the negative market context in 2021 that we have been able to compensate after a successful managerial action to be described in the following slide for each of the businesses. Moving to a different analysis on Slide 16 on conventional generation business. Gross margin amounted to €1.496 billion, minus 15% versus last year, mainly impacted by a reduction in power margin by minus €240 million, mainly affected by weaker OTC references in nuclear and almost neutral net effect of the short position, higher carbon tax and social bonus and other some other effects. Non-mainland generation margin was slightly reduced by €16 million, mainly explained by lower regulated remuneration parameters. On top of that, wholesale gas was negatively affected by €165 million as a result of the extraordinary volatility and record highs in the commodity price scenario. All of these partially offset by the recording of the positive nonrecurring impact of €160 million from the 26 CO2 court ruling, which is the amount affecting nuclear and thermal generation. EBITDA reached €877 million, minus 15% decrease versus last year. Fixed costs and others improved by €108 million, mainly in mainland generation, basically due to the exceptionally high sanctioning proceeding booked in 2020, lower collectivity and the COVID Fund booked in 2020.Moving to the next slide. Renewable margins amount to €1.007 billion, 60% higher than the previous year, mainly driven by plus €326 million from nonrecurrent effects booked this year, €300 million from the refund of the hydro canon for 2013, 2020 and €26 million corresponding to the CO2 sentence and other margin improvements, some of them related to the absence of the 7% generation tax in the hydrocarbon for this year. EBITDA reached €841 million, 91% increase, supported by the same margin increase and an improvement in fixed costs and others composed of an increase in OpEx, driven by higher activity that more than offset by the capital gain for one small plant disposal. Moving now to Slide #18 on the customer business. Gross margin expanded by 7%, mainly explained by €81 million plus from gas retail due to the more efficient sourcing, lower power supply margins compared to the previous year, mainly as a consequence of higher pool price and materially higher ancillary service costs, offset by the absence of the COVID impact of last year. As a result, unitary supply margin decreased slightly below around €10 megawatt hour and plus €8 million from Endesa X. EBITDA reached €595 million, 8% increase, slightly higher fixed cost than others due to higher activity. Moving now to networks, and I'm on Slide #19. Distribution margin dropped by 5%, mainly due to the application of the new remuneration parameters and lower previous year regularizations. Like-for-like EBITDA decreased by 3% to €1.965 billion as the comparable fixed cost and others improved by €47 million, mainly due to lower maintenance costs, no recurrent impacts booked in 2020 and slightly higher capitalized cost. Net CapEx is in line with year amortization, thus keeping the regulated asset base flat versus the previous year. On Slide 20, a quick follow-up on our efficiency program. Total fixed costs reached €1.835 billion, minus 7% versus 2020 on a like-for-like basis. Efficiency and others more than offset the negative effect on inflation and perimeter and growth effects on cost. This growth effect was moderate due to the fact that the projects came into operations by the end of the year. This has been possible mainly thanks to the several efficiency plans, crystallizing on a reduction of the average headcount by 4.6% in 2021 versus last year to a low historical record. The new capacity put in operation led to a decrease in every fixed cost reaching about €23,000 megawatt in 2021 from about €25,000 megawatt in 2020.In supply, we observed a slight decrease by minus 1% in cost to serve during the period. Lastly, in distribution, unitary costs decreased by 5% to €40 end user starting to show the results of the investment effort that we are making in smart grids. On the general evolution from EBITDA to net ordinary income on Slide #21. G&A has increased by 22%, explained by €340 million of higher impairment booked on non-mainland assets that we comment on the following slide, higher amortization, mainly renewables and distribution due to the investment effort carried out, the positive effect from the adjustment to provisions and impairment related to coal plants recorded last year and by €50 million higher bad debt, mainly as a consequence of the worsening of the payment performance by small suppliers in distribution. Net financial results were positively impacted by the financial revenues from interest for late payments in the CO2 clawback -- the CO2 sentence and the 2013, 2020 hydro canon. The effective tax rate resulted in 24.3%, mainly as a result of the limitation on the exemption of dividends and capital gains since the 1st of January 2021, and the materialization of tax credits and reduction charged to income. All in all, net ordinary income decreased by 11% over the period. Moving to Slide 22. The impairment book in non-mainland business corresponds to the estimation of the recoverable value of the non-mainland assets as of December 31, 2021, resulted in a gross impairment loss of €652 million. The reason triggering this value update are, among other aspects, the expected situation of the commodity markets, fuel and CO2 emission rights and the cost expected to be recovered for these items over their lifespan under the planned regulation as well as the changes foreseen in the future generation structure and their effects on thermal generation. This impairment is not considered in the calculation of net ordinary income as described on Slide 42. So it has no impact on the termination of the shareholders' remuneration. Moving to the cash flow on Slide #23. Funds from operation decreased by 11% year-on-year, reaching €2.621 billion due to the following effects

higher EBITDA after provision paid and net provision release of around €140 million. Working capital and others worsened mainly due to the worsening of net balance for €506 million of receivables and payrolls accounts, mainly as a consequence of the higher energy and commodity prices within which a regulatory impact for reduction of access charges for about €400 million, the collection delays related to the recently enforced royal decree on access tolls and charges for about €200 million, the CO2 sentence still pending to be [indiscernible] and partially offset by further action to reduce working capital. All of these effects have been partially offset by a lower noncash provision for about €136 million and the positive evolution of derivatives mark-to-market and [indiscernible] for about plus €40 million. Higher income tax paid of €117 million, mainly due to the lower corporate tax refund versus previous year and the higher tax down payments of current year. CapEx, raising by 24% versus 2020, led the free cash flow to €474 million. Anyway, we expect to recover the remaining negative impact generated by the royal decree 17 and 23 of 2021 in the first half of 2022 and a neutral to positive working capital evolution along 2022, assuming no further regulatory intervention. Let's take a look at net debt on Slide 24. Net debt amount to €8.8 billion, around €2 billion higher than full year 2020. This increase is clearly affected by the payment of €2.1 billion of dividends, which is €600 million higher than the previous year, €400 million of additional cash CapEx and €300 million deterioration of funds from operations. This €8.8 billion net debt figure deducts the financial guarantees required for the commodity and energy derivatives contracting as we have modified its definition due to the operative and price evolution in the commodity and energy derivatives market, which has been materially positive in 2021. Once the deducted or consider this effect, the improvement in debt compared to the CMD, most conservative expectation is mainly due to a better-than-expected impact from market regulatory scenario, some nonrecurring items and further optimization measures. The regulatory working capital decreased by €80 million to €795 million. Our leverage, measured as net debt-to-EBITDA ratio, slightly increased to 2.1x. The cost of debt reached extraordinary levels, maintaining its reduction path to 1.5%, still marking a historical minimum. When it comes to the details of our sustainable finance activity, on Slide 25, during 2021, we have consolidated our leading position in sustainable finance with a record of €15.4 billion in sustainable-linked transaction. The most remarkable milestones are linking 100% of our credit and guarantee lines to sustainability, execution on the first sustainability-linked EIB loan in Spain for about €150 million. The execution of the largest ecoloan to date linked to sustainability KPI for €300 million. Additionally, in 2021, we have included new SDG KPI bound to a reduction of scope on greenhouse gas emission in some of our sustainability-linked transaction. As a result, sustainable finance sources now represent 60% of Endesa gross debt, in line with our 2024 target. And now let me hand over to Pepe for his final remarks.

Okay. Thank you, Luca. Our achievement renders significant value creation for our shareholders. Considering 80% payout of net ordinary income in 2021, the Board of Director will propose subject to general shareholders' meeting approval, a total gross DPS payment of €1.47 per share against 2021 results. After an interim dividend of €0.5 per share paid in January, the final dividend of €0.937 per share is expected to be paid in July 2022. This dividend is significantly above our DPS guidance, something around 11% increase. As go through this presentation, and I am on Slide #27, we can be proud of succeeding once again in beating the target we set for 2021, taking into account the challenging market condition marked by record high commodity and electricity prices. This achievement for yet another year of the target set for 2021 demonstrates Endesa's free commitment to our vision for 2030 and to delivering sustainable value over the long term. As a conclusion, let me mention the main achievement of the year. First, the continuous and timely delivery once again beating our financial target. Our customers' strategy allow us to attract new free market customers benefiting from energy and a wide range of valuable services at competitive prices. Because an improvement in our ESG indicators is rewarded with the recognition and the inclusion in the most prestigious indexes, while we continue to increase our pipeline of renewable projects, including the acceleration of our renewable capacity target by 2030. In such a context, the outstanding dividend yield for 2021 is the strongest evidence of sound value creation to our shareholders. In the beginning of 2022, we are still facing a high price scenario. We are aware of the difficulties that many customers are facing due to this context. So we continue to be open to jointly work with administration in order to find the most efficient solutions.Finally, having a solid track record of delivering income here, Endesa is well positioned to successfully manage the challenges ahead, in particular, to attain the target set for 2022, which I remind you, are €4.1 billion at EBITDA level and €1.8 billion for net income. And ladies and gentlemen, this concludes our full-year 2021 result presentation. Thank you very much for your attention, and we are ready to take some questions.

Okay. Thank you, Pepe. Thank you, Luca Thank you, Luca. We are now ready to answer all the questions you may have.

[Operator Instructions]

Okay. The first question comes from Alberto Gandolfi from Goldman Sachs.

Mar, thank you. You may regret allowing me to ask questions. The first one is a bit long, but I promise -- I'm trying to be as clear as I can, but jokes aside, thank you for allowing me to ask questions. I'll keep it to 3.The first question is on 2022 targets, particularly the €4.1 billion EBITDA. I mean it looks yesterday, you hosted your CMD, but so much has changed. The world has really changed a lot in terms of interest rates and inflation. Power prices are even stronger, hydro levels have not started the best way spark spreads seem to be doing really well and supply margins as well have changed a little bit. So I was wondering if you don't mind elaborate a little bit on the key drivers, power prices and hydro levels and spreads and margins and see if we should still expect comfortably the €4.1 billion. So in other words, have this margin -- have these drivers moved in the right direction? Is it a tailwind or a headwind? And if you can maybe clarify if in the €4.1 billion, you include any recovery of regulatory items? Or is it really to be considered a clinking figure? The second question is about the supply portfolio. I suspect we should expect a meaningful improvement in margins in 2022. And I was wondering if you can tell us a little bit what we should expect in terms of repricing of the portfolio and margin evolution? And the last question, I think, Luca, you explained it, but if you don't mind, I thought in Q4 there's something like €800 million improvement in working capital. So if we can have some granularity on that, does it reverse in '22? Or anything that may disrupt in the debt forecast for '22? That would be highly appreciated. And thank you so much again for your patience.

Okay. Alberto, thank you very much for your question. Let me try to give you some ideas about the first question and the second question. And then Luca will implement a little bit more, and we'll answer the last one. With regard of the 2022 target, and as you have said, you are absolutely right. Many things has changed. But we think that we will be able, in this moment just to achieve our commitment on EBITDA and net income just because we think that we have sufficient levers just to manage this situation. It is true that what we have seen is a different international scenario, I'm referring to the gas context that we are living some months ago, what we thought is that this increase in the gas prices will finish or more or less, we will see the decline on these prices, [indiscernible] this year because we are taking into account only the, let's say, technical or business conditions around this issue. But on top of that, what we are living now is the situation of prices between Ukraine and Russia. And then, yes, because of the geopolitical unbalance, let's say, that also, we are thinking that this situation could last longer than the one that we have forecasted. Nevertheless, as I have said, I think that we have enough drivers just to use this. In terms of the regulatory items, Luca could explain you better than me, but you know that we are expecting the solution of the social bond. The Supreme Court has said that we should recover the quantities paid since the year 2017, if I am right. But we need just to wait for the final resolution, and we will see what happens. In terms of the supply portfolio and the repricing, trying to answer your second question, I would say that you know perfectly that we are selling our energy in advance 1 or 2 years. That means that we have been selling the electricity at something around €44 to €48 per megawatt hour. We have established a reasonable price for our price-driven output. And this price is something around 60 to 65. So the repricing that we will see in the future would be in this level for this repricing that will allow us just to fulfill and not to be negatively impacted by the clawback of gas, but trying to adequate our remuneration to the full cost of our nuclear and hydro out. And now, Luca, do you want to add anything more and to answer to the last question?

Sure. Just going back to the first question, Alberto confirms that the 4.1 is clean. So not assuming we see any position or guiding for 2022. And in terms to give you some reach besides what explained now, Alberto, basically, we expect an increase in terms of our adjusted for deposit nonrecurring of 2021, an increase of about €300 million from the adjusted figures for 2021 to 2022, which is basically €100 million more or less EBITDA in renewables. And this is driven mainly by some price effect or do you expect a better base load reference for the year vis-a-vis 2021 as well as about €100 million in volume effect. And obviously, we need to recover €70 million negative of basically the 7% generation tax which we have not paid for two quarters in 2021 as well as what we have not paid for the [Indiscernible] 2021. Then it's another €130 million in terms of EBITDA contribution from retail and in this [NSX], the majority of is retail, where we see basically an increase in terms of margin of about €130 million, mainly driven by price rather than volume. And within price, we expect, let me say, an improvement in ancillary services, which has been a huge drag for our 2021.Also here, rides, we will have a negative impact from Q1 of about €50 million in gas, which has been very positive in 2021 and a contribution positive for €20 million in NSX. Then going to conventional generation, the improvement that we expect is €40 million in terms of EBITDA, which is driven basically by a considerable improvement in nuclear for €130 million at gross margin level. This is mainly price effect. There's also some volume effect because you know that we had basically stoppage of our plants for the last part of last year, which was a planned stop age, hence, basically, we expect higher volumes in nuclear for this year. And again, the effect of the suspension of 1% national tax also for nuclear. We expect to improve by €70 million our gas wholesale for 2022, which has been very negative for 2021. And obviously, we will have to recover the positive effect of the share position, which has been just shy of €200 million for 2021. And then finally, distribution. The increase is expected to be about €40 million, which is a combination of slightly higher margin and slightly higher fixed cost. So that's the bridge between 2021 and 2022. Then going to the third question around the improvements that we had in working capital vis-a-vis basically, our estimations at the CMD that is driven by the fact that the regulatory, let me say, negative effect has been lower than expected in the region of €400 million. And then that on the collateral side, we have been a net receiver of collateral for more than what we expected, there has been obviously a driver positive to our net debt figure [Indiscernible].

Thank you, Alberto. The next question comes from Harry Wyburd from Bank of America, Merrill Lynch.

Hi, good evening everyone. Thanks for taking my questions. So first one, just a follow-up to Alberto's question. Just very narrowly focusing on hydro volumes in the first quarter of '22. So you gave us the bridge for the full year, great detailed bridge. Would it be fair to say, given you're happy with your guidance of 2022 at the moment that you are probably at the very start of this year, sort of probably ahead of where you want it to be. And then hydro volumes have obviously been very core, and that has put you back into line, I guess, with your guidance. So is that right? And maybe could you give us a rough guide as to what the negative impact you expect just from the weak hydro volumes that you've already had so far this year? The second one is on the hydro cannon. Obviously, you had another big impact in Q4. Are you expecting anything for 2022 on hydro cannon -- and then finally, just on the impairments of nonmain land. I don't know if you mentioned it before, if you did I didn't catch it. Is there going to be an ongoing positive depreciation effect from that impairment you let us know how much that will be? Thank you.

Okay. Thank you, Harry. Let me say that it is very early just to really know what is going to happen with the hydro in this year 2022. Let me tell you that Spain is different in hydro. I have seen a lot of different situations being 1 month dry -- a year dry and then suddenly wet in that chain a lot. In any case, what we are thinking about this is if I'm right, our hydro output is something around 6 terawatt hour per year. And we are thinking that we could lose 1% to 1.5% more or less. But again, let me underline that channel in the hydro in Spain. With the hydro canon, what we think is that the government is thinking about to elaborate a new order or low order in which they are going just to implement this hydro cannon as it is considered in our business plan. Well, Luc, you could ask to add anything and then to the impairment in the [island].

Sure. The assumption on question number two is that, again, we're going to have the hydro cannon starting from this year. And that's where [Indiscernible] the government is working to mitigation of the law. And that was already budgeted for. It was in the business plan for the whole three years from 2022 to 2024. For the last question, sir, the decrease in D&A expected from this impairment is between €30 million and €40 million. And then going back to the first question, just to give you a reference, 1 terawatt hours of less hydro if this materializes, we go again, it's a big question mark throughout the year could affect us between €40 million and €50 million terms of gross margin. And obviously, we edge, let me say, [hydrolicity] leaving also margin at the end of the year in order not to incur in shorter oil production.

Many thanks, Harry -- the next question comes from Enrico Bartoli from Stephens.

Thanks for taking my questions. First one is related to Slide 10, when you highlight that you reached around €32 per megawatt hour of integrated margin in the full year. Actually, this is significantly higher than €28 you indicated in nine months. I wonder if you can give us some details on the strong improvement in the integrated margin you had in the fourth quarter? And if this includes also the impact of the nonrecurring items that you highlighted at EBITDA level. Second question is related to your expectation on the future [Clabec] during the CMD, you indicated that you expect a similar application to the gas [to back]. So the exclusion of the fixed price contracts, if you can update on the situation on the city of [Clabec] and what you assume the full year guidance. And the last one is related to net debt. As you highlighted, it was better than what you indicated in November. If you can elaborate a bit on what went better and particularly on the evolution of the €900 million impact of working capital, what can we expect for 2022? And if you can provide a guidance for net debt at the end of this year?

Okay. Let me answer to the second question. As you know, the Royal Decree-Law 23 of the year 2021 clarified that the gas levy will not apply to energy covered by fixed price forward contracts. Our energy has been sold. -- through bilateral fixed price contracts, one or two years in advance. And this -- the price not internalize any gas price increase. We understand, as I have said before, that a regional price reference may be similar to the full cost of our nuclear and hydro output, which in the current scenario ranges between €60 to €65 per megawatt hour. For 2022, we have already sold, as we have said, 97% of our price-driven production at an average base-load reference price of €54 per megawatt hour, taking into account that we have been selling the majority of the energy of 2022 during the years 2020 and 2021. And we assume that we will keep on managing our customer base, maintaining sufficient volumes fall at fixed prices regardless of the wholesale electricity market price to avoid any regulatory impact -- negative impact from the gas levy.

Yes. And thank you [for that]. And going back on the integrated margin in the fourth quarter, yes, it was higher than expectation. We managed to strike integrated margin just for the last quarter around 45%, which was slightly higher than what we expected. That was on the back of a positive contribution of the short position, which I think I commented, in the end, was more or less in line with last year, so a contribution of almost €200 million, €180 million for this year. And that's obviously on the back of the evolution also on the commodities in the last part of the year as well as obviously the exemption for the 10% generation tax and the hydro cannon for 2021. But there are no positive nonrecurring items when it comes to integrated margin for 2021. Then going back to the third question, on net debt evolution vis-a-vis expectation, as commented in a question earlier, basically, the over performance vis-a-vis the estimates that we gave the November C&D were driven by lower regulatory negative effect from real decrease, 17 and 23 that in the end amounted to €400 million for basically lower system costs in the last quarter as well as by positive netting of collateral, it posters collateral on derivatives position affecting obviously the short position that I mentioned before for higher than what we expected in the last year. Therefore, we ended up with, let me say, a better net debt than what we expected. Now when it comes to the evolution of this year, we expect to have, let me say, a neutral to positive working capital throughout 2022 on the back of recovering, obviously, these regulatory items as well as stabilization of prices, where we won't have, let me say, the same increase in power price that we saw last year, we should recover higher basically payments from customers and lower payments to the system as we had as an impact last year. And the expectation of the debt by 2022 at the moment, I give you a range between 9.2% and 9.5% and it is assuming no further regulatory intervention. This estimate is based on about €700 million of regulatory working capital, an FFO, which will be well above €3 billion for the full year and basically cash CapEx, which will be in the region of €2.3 billion for the full year.

Okay. We move now to the next analyst. That is Jorge Guimaraes from JB Capital. Please, go ahead.

Two questions and a follow-up, if I may. The first one is on the hydro hedging. One of your competitors, EDP was saying that they were reducing the amount of energy edge on a structural basis to reflect the new market situation. And my question was, if you could consider to do the same, to take advantage of high spot prices. The second one is on non-mainland. If you expect this write-off, do you have any impact on the financial remuneration or on the hub as you might want to call it of the asset? And the final one is a follow-up on your explanation on hydro. You have said that you by now expect to lose 1 to 1.5 terawatts versus your average production. So my question would be if you can elaborate on how much hydro production have you hedged this year? The question is to assess the risk of you need to go to the market and buy electricity if the drought proceeds.

Well, let me -- thank you for the question. And let me say, first of all, regarding hydro Well, yes, in case because as I have said, it could depend on many things and the hydro in Spain is something that has a volatile arm. What I've seen is that we wait just to see how the year advances. In any case, if we lost 1 or 1.5 terawatt hour, we will go to the market just to buy this energy. But in any case, we will see because we could use other output coming from our generation plants. Regarding the situation as EDP has said that in this market context, they have decided to reduce the total amount of hydro that they are considering. Well, this question is something that you should ask them because what we know is what we reviewed and what we know is the risks that we are facing now that could be something between 1% to 1.5%, but our average output -- year output is around 6 terawatt hour, and we maintain this figure. And then, Luca, if you want.

Yes. Just on basically no main and effect or it doesn't have any effect. Actually, basically, the impairment is triggered by lower remuneration of the cost reimbursed through this regulation on our basically asset base. Therefore, there basically for us, is continuing asking a change in the remuneration of the cost of generation because that is affecting negatively this regulated generation in the islands. And then just one clarification regarding hydro is the budgeted hydro for this year was 6.5 -- so that's the starting point for us. And obviously, from there, if you have some differences as we evened out between 1 and 1.5 million according to the current situation, 1 terawatt hour is between €40 million and €50 million on gross margin. And when it comes to the hedging of the hydro, we never hedged basically either in full throughout the year. We always leave 1 to 1.5 basically unhedged up until the last month in order not to incur in acquisition in the full market if this generation doesn't come. Therefore, the hedging strategy provides already for shorter higher generation if this materialize.

Thank you [Indiscernible]. Next question comes from Manuel Palomo from Exane BNP.

Hello, good afternoon. Thanks for taking my questions. I'll stick to two or three. First one is on renewables. You plan to have 77 gigawatt of gross pipeline. However, whenever I read the press, you are always in all polls to acquire new pipeline. So my question is whether with all the huge growth pipeline you plan to have, whether it is needed, whether we could expect some M&A in renewables on your side? My second question is on -- well, it's a follow-up actually. You mentioned something about the social bonus recovery that I didn't get -- but I understand that you should be thinking about recovering something in terms of social bonus this year. I wonder whether you could clarify or quantify the amount and whether that amount is included in the €4.1 billion EBITDA guidance. And the last one is a bit on regulation. If I'm not wrong, the cash flow back should finish at end of March. I wonder whether you have any view on whether it could get extended. And also whether you could share some light on where we are on the carbon [Indiscernible]?

Okay, Manuel, let me answer to your third question. If the gas -- the gas global is going to be extended, I don't know, nobody knows that if you ask me about if they are going to extend this, I would say, yes, yes. And yes, because we are living in these turbulent days. I think that the government spend should put another measure and spend the ones that we have today. So in my opinion, they would extend this royal decree based on the gas [Indiscernible].

And then going back to your first question, Manuel, yes, we have an upper pipeline. Therefore, to your question, are we interested in M&A for pipeline here? It depends on many things. I think we demonstrated also in the past that we basically consider acquisition of pipeline, if it obviously fits not only our basically portfolio of existing pipeline but basically covers some maturities that probably are less strong in our own developed pipeline and obviously, emits financial criteria. Now given an amount which we're starting on at the moment, let me say that we are not involved in any activity or acquisition of pipeline when it comes to renewables. Then regarding the social bonus, basically, nothing is included in the €4.1 billion target of EBITDA that we have for 2022. The paper was referencing to a sentence that was issued to another of our competitor to some of our competitors regarding the 2017 social bonus scheme that has been declared discriminatory. Therefore, now obviously, it's a center to someone else. We will see when we get our centers because we got to recover ourselves, and we will see what is the recovery amount because at the moment, what is public, it's unclear given that there is uncertainty around the proof of how much of these social modus costs have been passed to the final customers. So this is something ongoing. To be honest, nothing is in our target. We will see when it comes along our sentence and if we can recover something or not.

Thank you, Manuel. We have now Javier Garrido from JPMorgan.

Yes, good evening, and thanks for taking my questions. The first one is if you can let us know what is the base-load price achieved in 2021 comparable with 54 hedge, compensative on, and 58 for '23? The second question is if you can comment on your expectations for the evolution of the share generation position. You look have explained the positive impact in 2021 of €180 million. Do you still have commodity hedges for 2022? And what is your expectation for the net cost of generation position, if any? And third question would be on a recent piece of news on developer [Prodiel], which is reported by address to be in financial travel and discussing with clients, including Endesa and increase in the price to be charged on the solar facilities that they are living. Given that Endesa has agreed to the last years to buy 2 gigawatts of projects from [Prodiel], could this trigger any risk in your targets for renewable capacity additions? Thank you.

Okay, Javier. Let me say that, of course, we have closed the year 2021 with a base load price reference of something around 50%. Again, you should take into account that we sell in advance one or two years, and that is what we saw as full-price the year for, this is lower than the expected 54 on 58 for the year 2022 and 2023. Luca, could you answer.

Sure. When it comes to basically the second question, the short position and we're hedging this year. First of all, let me say that differently from 2021, we're entering the year with a neutral position. It was slightly, slightly shorter, so it's really minimal. And currently, we don't have any relevant commodity hedges to this position. So it's very different from what we achieved or what we actually acted on in 2021. When it comes to [Prodiel], the third question, let me say that we're taking with the negotiations of the agreement that have been, for us, at least positive [closet] and a very limited impact on our dealing with this developer, I can also add that basically of what we bought in terms of pipeline of projects in 2019 and 2021 from them, three projects have already been built, and we have no counterparty risk whatsoever with them. On top of that, let me just add that the only negotiation is ongoing is for a very small project for an amount to be negotiated in the region of €10 million. And then the rest, obviously, our acquisition of vehicles that we have already done. And the ones which are not done are pending permit basically in environmental permits. So the situation for us is really immaterial.

Thank you, Javier. Next question comes from Jorge Alonso from Societe Generale.

Thank you for taking my questions. There's a couple of questions left. Regarding the first, the non-Milan generation in 2022, if you expect a recovery or a further deterioration in the EBITDA coming from the energy prices situation? And the second question is regarding the PPAs. You have signed [resolute] PPAs with some industrial customers. You can give us some color about the levels of these PPAs if the prior levels are much higher than what you expected and the length of the contracts are as well extending -- and if that is the case as well on the retail segment, as you have had a quite impressive increase in liberalized customers in the fourth quarter. If that means that the customers are willing to accept a longer duration in the contracts or higher prices just in order to avoid the volatility of the spot prices. Thank you.

Okay. Jorge, thank you for your question. Let me say that, first of all, what we are trying to do is just to extend the duration of the contract of our customers. In this situation, as I have said before, we are selling our price-driven output, at reasonable prices based on our full cost of these facilities. I am trying to give a good signal to our customers and that I am ready to reduce the pain that they are suffering from these very high prices due to the cost of gas just to spend in some years. On the other hand, it's something very similar to the PPAs. On the other hand, you should take into account that if you look the price forward, as far as you go from the year 2022 as lower the price for price that you see. So if you are able just to sign a contract for a five year is better than two years and it would be better for 10 years, let's say that. But we will find the real point in which we could sell to the customer, the electricity. In any case, it is clear for us that we want to extend this contract in the benefit, of course, mainly in the benefit of our customers.

And then when it comes to the first question regarding non mainland evolution for 2022, yes, we have a decrease of about €50 million in gross margin driven by the reduction in mesh-related that we foresee. But the question mark is in the remuneration of the lateral cost of generation there where you know that we currently are incurring in basically a cost, i.e., they are remunerating us less than actually what is the market cost in order to source both oil and gas to the islands and has been basically the spring criminal that is issued the needs of basically having auctions when it comes to basically gas refueling for this generation. Now the question market is whether these auctions will start in the second half of this year or not. But definitely, there is a reduction in EBITDA in the islands to our already budget.

Thank you, Joe. The next question comes from Gonzalo Sanchez from UBS. Please go ahead.

Hi, good afternoon. A couple of questions on my side. One is a clarification on this impairment on the islands. So if I understood correctly, is there a chance that you can have the regulation recognizing those costs and eventually recover some or all of the costs that you've booked. Just wanted to understand if that's a possibility or not? And then the second question is more like strategic. I'd like to hear [if you] think whether the Spanish government could potentially delay the shutdown of the coal plants as a result of the ongoing energy crisis and whether you think there is a possibility. And if you could, in that scenario, basically keep operations ongoing on the coal plants or if, for some reason, like workforce or contracts or anything that's impossible from your side? Thank you.

Thank you, Gonzalo, for your question. Let me answer the second one, the government could consider a delay in the shutdown of in this case of [Indiscernible], I don't think so. We have a clear view for the future just because we don't have just now any security supply problem that could have other members state, but not Spain. So it has no sense to maintain these coal power plants. And as we have said, we are waiting for the formal process authorization. And we expect this formal process authorization by June of this year. So we will close this power plant and the government or the regulator or the system operator, no one will say that it's needed just to maintain a sponsor.

And then for the first question, whether there is a chance of the regulation changing in the Island this year. I can just basically refer to what I said before. There's been basically Supreme Court ruling that auctions must be called to remind the forward cost on the islands. So the remuneration set is sufficient to cover the actual cost incurred. The question is when these auctions will be basically dealt with -- we expect that it's going to be second half of this year. So hopefully, we will have some, let me say, positive new in that sense in the second part of this year.

Okay. The last question comes from Javier Suarez from Mediobanca.

[Indiscernible], sorry for the very late question. Two questions remain. One is on the recovery fund. The question is if Endesa does see any meaningful impact from the recurring fund 2020 and '22. And the second question is on the recovery of the [new] amounts related to the hydro canon because this is probably going to be more time costly than what people tend to believe. So what is your best estimate on the period of time that is going to be needed to recover that amount of money and which is the amount that should be recovered already in 2022. Many thanks.

Okay. Thank you, Javier, for your question. Well, what we see -- we need just to go ahead with the next generation funds. In any case, it has been approved, if I'm right, something around €500 million for the distribution. On top of that, the utilities, the distributors should put another €500 million for the year. Again, if I'm right, 2021, '22 and '23 thing. So that is the first thing that we will see in the future. And this is just for investment in the digitalization of the infrastructure. Again, we are expecting and for sure, we will see some results during the year 2022. With regard to renewables, hydro storage [Indiscernible] and also for the electric vehicle. So in any case, well, it is clear that in Spain, we need these next-generation funds. We have to accelerate the recovery of the economy. I'm sure that the government will do their best just to implement these funds as soon as possible -- and the hydro cannon, if you answer.

Yes sure. Let me just start on this point that the amount set for 2022 on the distribution next generation of €148 million for the system. So we have a share of the system, and we will let to derate CapEx this year. So the impact that you could see to the is, let me say, limited. When it comes to the hydro cannon, we recover everything up until basically 2020. We haven't paid the hydro cannon for 2021 because it's still under the old basically legislation. So from 2021 onwards, we are already accounting as we have to pay the hydro cannon because the government is actually promoting a change in the law that will make the law basically viable. Therefore, from 2022 and onwards, we expect to pay hydro cannon every year as we did in the past and not to recover it because the amendments they are doing to the law are in a way in which basically this law will be permanent and not recoverable.

Okay. Now we will answer a couple of questions received by e-mail. Both of them comes from [Indiscernible] -- and see about our expectation for the next year integrated margin. And if we can comment on the competitive environment in the supply segment in Spain. Thank you.

Okay, do you want to answer? Sure. When it comes to the competitive environment in supply, I think we have shown in the last part of 2021, the ability to actually be a net acquirer of [Indiscernible] customers. And actually a full year has been in the region of just shy of 200,000 customers, of which, let me say, a positive contribution has been [Indiscernible] last two quarters. The first quarter started very well and that especially, we will continue this trend throughout the first part of this year. And I do not expect, let me say, competition given the current best scenario as well as the difficult some smaller supplies are encountering to be more competitive, what we see in the last -- in the second half or basically last year. So it should be in terms of competition, a good environment from us to increase our basically liberalized portion in terms of customer. When it comes to integrated margin for 2022, we are expecting to reach something just shy of 34 megawatt hour in terms of integrate marginal assumption of liberalized sales of about 74 terawatt towers and integrated revenue of about 87 terawatt hours and variable cost in the region of 53.3 megawatt hour, sorry.

Okay. Thank you. This was the last question of our call. And so thank you for attending this conference call. And just to remind you that IR team is available to help you in case you have any other questions. Thank you very much.