Electricite de France SA

PAR:EDF

Earnings Call Transcript 2019-Q3

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the EDF Third Quarter 2019 Sales and Highlights Conference Call. [Operator Instructions] I must advise you the conference is being recorded today, Thursday the 14th of November 2019. I'd now like to hand the conference over to your speaker today, Mr. Girre. Please go ahead.

[Xavier Girre]

Thank you. Good morning, everybody. I'm very pleased, once again, to welcome you to this conference call. I will walk you through our 9-month sales, starting with the main highlights for the period, and I will close my presentation with our financial outlook. As usual, I will leave as much time as possible for the Q&A session, and this call is expected to end at 9:15 Paris Time. Let me start with the key figures on Slide 3. Group revenue for the first 9 months of 2019 amounted to EUR 50.9 billion, up organically by 2.9% compared to the first 9 months of 2018. This growth is mainly driven by, first, French generation and supply in the context of favorable market prices; second, the development of the group's energy services activities; third, the good performance of EDF Trading and gas business; and fourth, a strong performance from our activities in Belgium and Brazil. Before looking at the sales numbers in more detail, let me comment on some of the recent highlights of the group, starting with the continued development of our renewable activities. First, EDF Renewables launched construction of 2.4-gigawatt capacity in the first 9 months, reaching a record level of 4.7-gigawatt gross capacity under construction at the end of September 2019, which is double of 2018. If we focus on wind, the construction of the Saint-Nazaire project, the first offshore wind farm in France with a total power of 480 megawatts, had been launched. In Germany, EDF Renewables had acquired a pipeline of 300 megawatt of wind projects under development. As for solar, 2 plants have been commissioned in Egypt with a total installed capacity of 130 megawatts and a 25-year power purchase agreement. Regarding hydraulics, EDF inaugurated the hydro plant of La Coche in October after 5 years of work. The pumped-storage hydro facility to total capacity has been increased by 20% to reach 240 megawatts, thanks to EUR 150 million investment. Let's now focus on our storage and electric mobility plans. EDF announced the acquisition, 10 days ago, of Pivot Power, a British start-up specialized in battery storage and infrastructure for electric vehicle charging. It has a portfolio of 40 projects, which represent a potential capacity of 2 gigawatts. The first 2 storage projects are expected to be commissioned in 2020. This move will allow EDF to become a leader in battery storage in the U.K. In the United States, EDF Renewables has acquired PowerFlex Systems, a California-based pioneer in managed electric vehicle charging technology. Last, Nissan and EDF have signed a cooperation agreement covering the United Kingdom, France, Belgium and Italy, focusing mainly on developing vehicle-to-grid smart charging solutions. If we are now moving to Slide 5, I will first comment 3 important and positive regulatory developments. First, the framework of the ARENH mechanism will remain unchanged for 2020 both for the volume ceiling and the price. This has been confirmed by the government notwithstanding the flexibility that was recently introduced in the law. Second, the fourth period for the energy saving certificates shall be extended by 1 year until the end of 2021, providing some welcome flexibility. And third, the European Commission has approved, in October, the U.K. capacity mechanism, followed by its reinstatement by the British government. As you know, this is important news for the group as we highlighted this reinstatement as an underlying assumption for the 2019 EBITDA guidance. About client solutions and energy services, we have now, at end September, 460,000 customers in France in our market offers for electricity, which is more than a doubling compared to end 2018, and more than 1.5 million gas residential customers. The numbers highlight the successful diversification of our supply businesses in France. As for Dalkia, it keeps on developing its commercial activities with the renewal or signing of new contracts like energy network at La Grande Motte in the South of France or energy facilities with the Conseil Régional of Nouvelle Aquitaine.If we move now to Page 6. French nuclear output came to 288.2 terawatt hours over the first 9 months of 2019, down 1.8 terawatt hours compared to the first 9 months of 2018 and reflecting lower availability of the nuclear fleet and, to a lesser extent, modulations. The assumption has been updated this morning. Taking into account the most recent updates on the schedule on outages, in particular, extensions of scheduled outages for Flamanville 2 and Paluel 4 and the unplanned shutdown for Flamanville 1, an assumption around, though, not higher than 390 terawatt hours was consistent. However, following the earthquake that took place in November 11, the Cruas station had been shut down. On the basis of the expected base of return to service for each reactor published on [indiscernible] this morning, our assumption of French nuclear generation for 2019 has been updated to a range 384 to 388 terawatt hours. This will have no significant impact on our guidance. I will come back about that. In the U.K., extended outages at Hunterston B and Dungeness B contributed to a 9.1 terawatt hours drop in the fleet nuclear output to reach 36.8 terawatt hours over the first 9 months of 2019. Regarding now our new nuclear projects, unit 2 of Taishan entered into commercial operation in September. This is, of course, a major achievement. And it is worth noting that the experience acquired for the commissioning of the first reactor end of 2018 allowed to reduce by 3 months the period between the fuel loading and the plant's entry into commercial operation. Both reactors are now functioning nominally and deliver satisfactory performance. The unit 1 has notably produced more than 10 terawatt hours since its commissioning in December 2018. As for Hinkley Point C, you are aware of the recent update that was made after the project review, with the project completion cost now expected between GBP 21.5 billion to GBP 22.5 billion in 2015 pounds.For Flamanville 3, the new calendar following the adoption, at the end of December, of the penetration-wide network scenario -- rework scenario is leading to a fuel loading planned at the end of 2022. The estimated construction costs have been revised accordingly to EUR 12.4 billion in 2015 euros. The second phase of hot functional tests has meanwhile started in September. Last, we recently signed with government to protocol on the closure of Fessenheim, which will take place next year, and the associated financial compensation for EDF with an initial fixed amount of EUR 400 million. As indicated earlier, group sales came to EUR 50.9 billion, a 2.9% organic growth compared to the EUR 49.3 billion sales for the first 9 months of 2018. Please note that it is an exploration and production activity. It is presented as discontinued operations starting 1st of January 2019, while published figures for 2018 have been restated accordingly. Let me you take you through each segment in more detail, starting with generation and supply in France. I already commented nuclear generation at the end of September. At the end of October, cumulative nuclear output was of 317.3 terawatt hours, a decrease by 1.3% compared to last year. Concerning French hydro output, on Slide 9, French hydro output fell markedly to 27.5 terawatt hours, down 10.5 terawatt hours versus 2018. As you can see on the right-hand side, generation was affected by 10 hydro conditions versus normal when 2018 was the highest level of output in 15 years. Production level has indeed been below average conditions for 8 months out of 9 since the beginning of the year, and the 12-months production at the end of September 2019 is the fourth level -- fourth lowest level since 1961. October, to the contrary, has been much higher than normal, as indicated by the dotted line on the graph; and at a significantly higher level than October of last year, cumulative production at the end of October was of 30 terawatt hours. Let's now have a look at the upstream/downstream electricity balance. The left-hand side of the chart illustrates the decrease in hydro and nuclear output I just presented to you. On the right-hand side, the decline in net sales to the wholesale market is a consequence of the overall decrease in generation, while the increase in volumes supplied in the ARENH essentially reflects the erosion of market shares and the associated drop-off in sales to end customers. Sales in French generation and supply grew by 5.7% in organic terms to EUR 20.1 billion. Regulated sales tariffs carried a EUR 126 million positive impact with the 2019 tariff increase, on the one hand; and on the other hand, the end, on August 1, 2018, of the catch-up period related to the 2012 to 2013 tariff increase. It is worth reminding that the 2019 tariff increase should have been implemented from the start of the year and that this delay will trigger a catch-up to be defined by the CRE. The most significant element is the favorable market conditions with higher energy and capacity prices translating into a EUR 588 million positive impact. ARENH sales and sales in wholesale markets were down by EUR 73 million for 2 main reasons: first, the decrease in hydro and nuclear generation; and second, the decrease in the sales to end customers was not compensated in value by the increase in ARENH sales. On the other hand, the capacity certificates sold on wholesale markets had a positive effect compared to 2018 as its market reference price raised from EUR 9.3 per kilowatt hour in 2018 to EUR 17.4 per kilowatt hour in 2019. This increase in the price of energy saving -- the increase in the price of energy saving certificates translated into a EUR 155 million positive impact on sales but with no impact on the margin. The resale of purchase obligations mainly benefited from positive price effects estimated at EUR 47 million but with no impact on the EBITDA because of the corresponding compensation mechanism. Finally, sales benefited from other favorable developments for EUR 126 million. Slide 12, regulated activities in France. Sales in French regulated activities were down 1.2% in organic terms to EUR 11.4 billion. The first element is derived from climate effects, which led to a decrease in distributed volumes by 2 terawatt hours for an estimated negative impact of EUR 82 million compared to the first 9 months in 2018. Despite an increase in TURPE tariffs, the evolution of tariffs was negative by EUR 91 million mainly because of distribution tariff optimization by suppliers. Thanks to new tariff [indiscernible] and more precise consumption information provided by Linky smart meters, end customers may now benefit from more customized-to-need offers. As a consequence, energy sales are reduced accordingly. These negatives were partly offset by positive elements for EUR 39 million, in particular, with growth in grid connections. Moving to EDF Renewables on Slide 13, where sales were up 1.4% organically to EUR 1.2 billion. Electricity generation was the main driver for this growth. Although output decreased by 0.6 terawatt hours as a consequence of the asset disposals or sell-down made end of 2018 and early 2019, this was more than offset by a favorable price impact linked to a portfolio effect. Gross capacities installed during the first 9 months of 2019 amounted to 1 gigawatt, mainly in solar, while overall net installed capacity remained stable compared to end of 2018 at 8.2 gigawatts. Looking at renewable activity across the group, first 9 months sales came to EUR 2.9 billion, down 15% year-on-year in organic terms as a direct consequence, of course, of the decline in French hydro output by 27.6%, 2019 being an exceptionally drier year, whereas 2018 was, on the contrary, quite favorable. Dalkia sales were up 4.6% organically to EUR 2.9 billion. This improvement mainly reflects the development of services sales, mainly France, and the positive fuel price and indices effects. Overall, sales by energy services activities across the group were up 5%. Beyond the performance of Dalkia, this reflects the strong growth of Imtech in the U.K. and the development of services in Belgium. Framatome sales reached EUR 2.3 billion, up 1.2% in organic terms. In contributive terms to EDF Group consolidated sales, sales were down by 4.7% in organic terms. Growth is mainly coming from the installed base service activities, in particular, in Canada. The large projects activity is ramping up along with HPC, which is taking over from Taishan following the commissioning of its 2 EPRs. Additionally, Framatome had some important strategic and commercial developments in October and November: first, the signing of an important instrumentation and control, I&C, contract with Rosatom for the nuclear plants of Hanhikivi-1 in Finland and of PAKS2 in Hungary; second, the closing of the acquisition of FoxGuard Solutions, a U.S. company specialized in cybersecurity and industrial computing; and third, the signing with CNNC Group of a letter of intent concerning the supply of components for manufacturing fuel assembly reloads. Looking now at the U.K. EDF Energy sales came to EUR 6.4 billion, down 1.2% in organic terms. The first reason is a decrease in nuclear generation to 36.8 terawatt hours, down 9.1 terawatt hours compared to 2018 because of the extended outages at Hunterston B and Dungeness B. Another element is the missing capacity revenue following the suspension of the mechanism in November 2018. It has recently been reinstated by the U.K. government following the positive decision taken by the European Commission last month. We therefore expect the full impact to be recorded in our P&L by the end of 2019, whereas the corresponding cash effects will more likely be recovered in the beginning of 2020. The downstream market has also been penalized by the cap on the standard viable tariffs effective since the beginning of the year. Despite a continued very competitive environment, EDF Energy's customer business is showing good resilience. The residential customer portfolio is stabilizing when the B2B sales volumes have slightly increased. In Italy, sales were down 3.6% organically to EUR 5.7 billion. Let me first remind you that Edison exploration and production activity has been booked as discontinued operations and therefore does not contribute to sales both in 2019 and in 2018 restated numbers. The sales of gas were down by EUR 525 million. This is a consequence of the decrease in gas prices across all markets and of the decrease in volumes sold on wholesale markets. These effects were partially compensated by an increase in volumes sold to industrial customers. The sales of electricity were up by EUR 305 million, thanks to higher volumes sold to both B2B and B2C segments along with positive price effects.On Slide 18, Other international. Sales in this segment came to EUR 1.9 billion, up 15.1% in organic terms. In Belgium, revenue increased by EUR 83 million in organic terms, reflecting, in particular, an increase in electricity and gas prices in all segments. It was partially offset by a decrease in B2C volumes due to a mild climate. In addition, renewable and service activities continued to develop. Net wind capacity increased to 503-megawatts or plus 14.3% compared to the end of December 2018. In Brazil, the contractual price revision of EDF Norte Fluminense electricity sales at the end of 2018 and the effect of changes in the ICMS tax drove an organic sales increase by EUR 144 million, the latter having no impact on EBITDA. Looking now at Slide 19, with the sales from the Other activities segment. Sales were up 8.9%, reaching EUR 2.2 billion. EDF Trading's revenue grew by 6.7% organically in 2019 compared to 2018, which was already a very good year. EDFT's teams were able to take advantage of favorable volatility and price conditions in Europe for electricity and gas. LNG and LPG activities also contributed to this performance. Gas business sales grew by more than [ EUR 290 million ] in organic terms on a favorable context for the LNG business and better utilization of the group's regasification capacities. Moving to our financial guidance on Slide 20. We confirm all our objectives set for 2019 and our ambitions for 2020. First, I'm very confident with 2019 EBITDA guidance, which is expected between EUR 16 billion and EUR 16.7 billion. Second, we will also reach our EUR 1.1 billion target of OpEx reduction compared to the 2015 level. Third, cash flow, excluding HPC and Linky, is expected above EUR 600 million. This is assuming that the disposal of Edison's E&P activities is closed before the end of the year, which is not yet fully secured given some delays in required administrative authorizations. Going now to 2019 and 2020 ambitions. Total net investments, excluding group acquisitions and disposals, will amount to appropriately EUR 15 billion in 2019. Following the announcements 1 month ago by Flamanville 3, the projected total net investments for 2020 is now estimated around EUR 15.5 billion. Group disposals are expected within a range of EUR 2 billion to EUR 3 billion over the period of 2019 to 2020. The net financial debt-to-EBITDA ratio will be less than or equal to 2.7 over that period. The dividend payout rate will be within a range of 45% to 50%. The option to receive the payment of the dividend in new shares will be offered to all shareholders. And note that the French government has undertaken to opt for the scrip payment for dividends due for years 2019 and 2020. This ends my presentation of end of September 2019 sales and highlights, and I now open the floor to questions.

[Operator]

Operator Instructions] Your first question comes from the line of Aymeric Parodi of UBS.

[Aymeric Parodi, Equity Research Analyst]

Three question on my side, please. The first one is on guidance. You kept the target on French nuclear output for this year but you maintained the guidance on EBITDA. Is this because the nuclear downside is within the range you already had? Or is this because you see other business offsetting nuclear? I'm thinking about hydro or service in Q4. The second one is on the restructuring scenario. If you could provide us with some update that would be great. And the last one is on your hedge price. Can you provide some indication on your forward hedge price for next year?

[Xavier Girre]

Thank you for your questions. As regards to your last point, we do not communicate about our forward hedge price. As regards the guidance, I'd like to help you through our guidance. On the -- in July, I already confirmed our 2019 EBITDA guidance, and I already highlighted that positives were compensating negative elements. So I remind you some positive elements that occurred since the beginning of this year: higher achieved prices for capacity auctions and [ in France ], postponement of the scheduled outage of Tihange 1 in Belgium, improved assumption regarding capacity renewals in the U.K. and softer conditions in the energy savings certificates. We have now updated our nuclear output hypothesis, and this is a reduction between 7 to 11 terawatt hours. And we have also communicated since July about some additional postponements of the target date for return to service of 3 reactors in the U.K., Hunterston R3 and both reactors of our Dungeness B plant. On the positive side, however, we were able to execute our purchase and sales operations on wholesale markets at better pricing conditions than initially expected. Regulated activities performed better than anticipated, in particular, generation in Ireland but also [ energies ] with healthy growth in grid connections. Third positive point, EDF Renewables anticipates significant capital gains before the end of the year in the context of plant sell-down operations. And fourth, as I already highlighted, better hydro conditions in October allowed both to produce and refill the lakes. So this is why, as a whole, I am very confident about our 2019 EBITDA guidance and our guidance, as a whole. As regards our restructuring, it has already been indicated that a delay is expected concerning the deregulation, which is, as you know, the key point of this restructuring. And as a consequence, the report that has been asked on the structure of the group will not be delivered by the end of this year but in 2020 when deregulation will be set.

[Operator]

Your next question comes from the line of Emmanuel Turpin, Societe Generale.

[Emmanuel Philippe Turpin, Equity Analyst]

A couple of detailed questions for a start. Could you update us on the likely timing of the booking of the catch-up for the tariff increase of this summer? Have you made progress with the discussion with the court? Have they given you an indication of timing for this? And number two, could you explain to us what you mentioned on Slide 12 with regards to the distribution business in France? And you were mentioning a negative impact on revenues coming from, so to speak, optimization -- tariff optimizations by -- that are linked to the usage of Linky. Would you mind explaining this in a couple of words, confirming that this shortfall in revenues flows through to the EBITDA or not? And the last point of detail would be about trading. You had a superb first half of the year, very strong. Although you don't communicate on revenues at the H1 stage, it looks like, on Q3, your revenue and probably your EBITDA were weaker than last year. I wanted to get a confirmation of that. And lastly, stepping back, one of the reasons why the time lines for the report on the group restructuring was delayed was a slow start of the discussions with the EU. As we are now in mid-November, could you update us about what sort of discussions have taken place and whether there is a time line for further discussions?

[Xavier Girre]

Thank you. Thank you for these questions. As regards the catch-up about the tariff increase, as I highlighted, I mean, this catch-up is due. But as regards the time line, there has been no specific information provided until now. Secondly, as regards to trading, the performance remains very, very, very strong for this year. Of course, we will see at the end of the year. As we all know, trading is quite volatile. But Q3 remains quite strong, although a bit less strong than during the first half of the year. But it remains very strong, and it will contribute to the guidance. As regards the -- as regards the time line concerning the regulation and the restructuring of the group, I mean, I have already said that it has been slightly postponed. Nothing more to say today. And as regards the distribution, and you know that Linky opens new options for suppliers to propose to their customers to optimize the cost of distribution. And this is what we see happening during this year.

[Operator]

Your next question comes from the line of Arthur Sitbon of Morgan Stanley.

[Arthur Sitbon, Equity Analyst]

I have 3. The first one is, basically, there were some articles on the -- in the press on the ability or not to keep using the vessels on 30 of your nuclear reactors for another 10 years. I would like to know if it would be possible to -- that you help us understand the situation on that point. My second question is on the -- regarding the compensation for the early closure of Fessenheim. I was wondering if that will have an impact on the P&L, or not? And my third question is, I was wondering if you could give us an indication of what's the true cost of running your current nuclear fleet, the cost per megawatt hour, including the cost of [indiscernible], basically on all costs included. Because I think, in the past, a cost of EUR 32 per megawatt hour was mentioned, but I'm not sure it's taking everything into account.

[Xavier Girre]

Thank you for these questions. As regards the cost of our nuclear reactors, the EUR 32 to EUR 33 per megawatt hour that was communicated some years ago, you're right, where it, I mean, is a comparison between the lag duration in 40 years and 50 years. But you're right, it does not take into consideration the all costs of operations. And you know that we do not communicate specifically about that, but this is not at this level of EUR 32 to EUR 33. It's higher than the current ARENH cost price, which is EUR 42 per megawatt hour. I will not be more specific about that. Secondly, as regards Fessenheim indemnity, so the cash will be received between 2020 and '24. And the impact on the P&L will be also registered in the accounts from 2020 on this period. And I haven't understood your first question about press articles. If you could, please, be more specific?

[Arthur Sitbon, Equity Analyst]

Yes. Basically, it was -- I think it was in [Foreign Language] regarding the -- basically, the ability to keep running -- keep using the reactor vessels on several of your nuclear reactors. And it was saying that there were potential -- potentially more demonstration of safety that would be needed on these reactors.

[Xavier Girre]

As regards the nuclear fleet, I mean, everything has been communicated. I remind you that the only point that was communicated concerns to the point on the [ sell more ] treatment that was communicated on the 10th of September. And we have -- we were able, on the 25th of October, to confirm that the ASN had approved our conclusion that those equipments are safe and that no unplanned outage is required to carry the necessary additional verifications. So I mean, there is nothing more to add about that. And the nuclear plants are running accordingly.

[Operator]

Your next question comes from the line of Vincent Ayral of JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

So quite a few key questions already asked here. So I will come on 1 or 2 as a follow-up. First one, the ASN say that these levels are [ safe to operate ]. Will we see any work being done on these through a [ sell more ] treatment later on? Should we include any potential impact on availabilities over the years to come? So I would say that's number one. Second follow-up question. You hinted at a capital gain on plant [ farm ] down. [ ESB ] said to be, basically, nearing a deal for basically you're getting a stake in the Scottish farm from the EDF. Where are we on this? And what type of order of magnitude of capital gain would we expect on this point? And finally, I'm sorry, but I know you do not provide much insight on these things, but the European Commission already made 1 or 2 comments regarding the project of reregulation. One of them was that they would potentially be, I would say, positive incline towards a structure which would allow a full access to the nuclear to everyone -- to a regulated nuclear to everyone. Have there been any other public comments which we should be aware of? Knowing that you obviously cannot comment on what's not public here, but anything -- any color you can add would be more than appreciated.

[Xavier Girre]

Thank you. As regards to the thermal [indiscernible] [Foreign Language]. So as we communicated on October 25, we also highlighted the fact that the required controls would be done during the planned outages, so we do not expect specific impact on generation. And as you know, and [ Ramit ] will also communicate -- will indicate our hypothesis of generation for 2020, it's written that the same order of magnitude is expected compared with our early assumption for 2019, so meaning around [ 395 TWh, 390 TWh ], I mean, in this order of magnitude. As regards [ DBA ] for EDF Renewables, of course, I will not communicate more precisely about that. But I already said that we expect quite some specific and good announcement to be made before the end of this year. And as regards the European Commission comments on draft regulation, also nothing more to comment. I mean, work is currently going on. Until the -- the delay does not mean more than a delay. And the principles that we have been already communicating upon are maintained. I mean, the goal is to protect both the end consumers and us, as investors, in order to give visibility to both of us and to give sort of a clear framework in order to enable EDF to finance the energy transition. Nothing more to communicate today.

[Operator]

Operator Instructions] Your next question comes from the line of Olivier Van Doosselaere.

[Olivier Pascal Michel Van Doosselaere, Analyst of Utilities]

Yes. I've got 3 questions or 3 sets of questions. The first one is coming back on nuclear availability both in France and the U.K. So for France, I was wondering if you could confirm that actually, at this stage, you haven't seen any anomaly at the Cruas plant following the earthquake and that the expected delay actually in restart versus what you have initially said this week isn't linked to maybe any potential anomaly that would have been found in the meantime.And second one, also still on French nuclear. The question was asked before, but I don't know if you saw it but [Foreign Language] yesterday spoke about some concerns on the vessels of your 900-megawatt fleet. I don't think it was related to the issues of Framatome . What the article was saying is that, apparently, at the ASN, there may exist some doubts that actually the vessels would be robust enough to actually be able to operate for an incremental 10 years. So this is a topic, I think, as part of the whole [Foreign Language] question. And so I wonder if you could give us any comfort, actually, on your confidence that there shouldn't be any issue in terms of approving the lifetime extensions for the vessels, specifically.And then, if you could just give us also an update on the expected restarts at Dungeness and Hunterston, and where we stand on that site in the U.K.Sorry, another question would be on Edison. There's been a capacity auction appeared in Italy. I was wondering if you could give us any indication on what you expect in terms of financial impact for Edison.And if I may, a last quick question. I know you also have spoken about that already as well on the reforms. I guess my question would just be, from a procedural point of view, discussions are ongoing with Brussels, but the indication is that the [indiscernible] project might probably not be implemented before you would get a green light on a reregulation from Brussels. The indication is that, that is expected next year. I just wonder, in terms of procedure, how that's worked and what kind of procedure is being followed. If we look, for example, that it took more than 2 years for the feed-in tariff of Hinkley Point to be approved, I sort of wonder how the French nuclear reregulation could be validated in just a matter of months. I wonder what the difference here is in terms of the procedure followed. Sorry, that's a lot of questions.

[Xavier Girre]

Thank you very much. So as regards [indiscernible] I mean, it's a pure administrative delay. Of course, the -- it's important to get the authorization to restart and to make the reactors restart. But to the best of my knowledge, no anomaly at all has been identified. But to the best of my knowledge, for the rest, of course, some natural delays to restart these reactors. Secondly, as regards Hunterston and Dungeness. As you know, both reactors in Hunterston have been offline since March for the R3 and October for the R4 2018. As natural, graphite [ cracks ] detected in the core were more significant than model predictions. Hunterston R4 did return to service on the 20th of August only for an initial period of 4 months, after which there will be another graphite inspection. And Hunterston R3 is still offline. Regarding Dungeness, the forecasted return to service dates have been extended, end of August, by, respectively, 7 and 8 weeks. Compared with assumptions, we had, end of July, when we confirmed our 2019 EBITDA guidance, this new [indiscernible] represents a 2-terawatt hours loss in output, but as I already highlighted, with no impact on our guidance. As regards Edison capacity -- the capacity mechanism that has been set in Italy will obviously have a positive impact on Edison. And -- but this will affect positively Edison in '22 and '23, not in 2019. And this is all that I'd like to comment as regards the regulation. I have nothing more to tell today.

[Operator]

Thank you. There are no more questions on the line, sir. There are no more questions coming through on the line, sir. Please continue.

[Xavier Girre]

Do you have any other questions? Otherwise, we can close.

[Unknown Executive]

Nothing on the web either.

[Xavier Girre]

I'm told there is no question on the web either.

[Operator]

No questions coming through on the line, sir.

[Xavier Girre]

Okay. So in this case, no questions on the line, no questions on the web. We can close the meeting. I thank each of you for your presence, for your questions, and have a nice day. Bye-bye.

[Operator]

Thank you. That does conclude our conference for today. Thank you all for participating. You may all disconnect.