ENIC - Enel Chile: Dry Season Forces Gas Purchases At High Prices

• An exceptionally dry season has twisted ENIC's arm in having to buy LNG at these highly elevated prices, with CCGT generation having to cover the hydropower pullback.
• New PPA sales offset some of the PPA margin effects we'd seen so far this year from indexation against commodity prices hurting ENIC margins.
• To the extent that these weather effects are probably temporary, ENIC is due, from these exceptionally weak fundamentals, for a turnaround.
• However, political risks in connection with the droughts remain, where water rights reform could affect ENIC's hydropower assets in the future.

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