edp – energias de portugal, sa edp finance bv €12500000000 - CMVM

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EDP’s Aboño thermal plant in Spain and a neighbouring steel plant have a large-volume supply contract for blast furnace gas with relatively favourable terms compared to current market prices, which significantly reduces EDP’s generation costs at that plant. Nevertheless, the volume of blast furnace gas available for EDP to purchase depends on the steel plant’s production levels, which can change significantly. Any gas shortage for the Aboño plant is replaced by coal purchases, and therefore changes in coal spot or forward prices could have a material adverse effect on EDP’s business, financial condition, prospects or results of operations. EDP’s profitability may be affected by significant changes in energy demand in each of the countries where it operates. EDP’s profitability from the distribution of electricity and natural gas in Portugal is less dependent on consumption levels, but is rather dependent on fixed parameters set by ERSE for the regulatory period for electricity and on specific return levels defined for the applicable 40-year concession period for gas (starting 1 January 2008). Profitability of power plants subject to PPAs and the CMEC system are also not materially affected by changes in demand during the life of the CMEC system. However, significant changes in demand for electricity and natural gas in the markets where EDP operates may have an impact on the profitability of EDP’s other business activities, such as supply activities. EDP’s investment decisions take into consideration the company’s expectations regarding the evolution of demand for electricity and natural gas, which may be significantly affected by the economic conditions of the countries in which EDP sells and distributes electricity and natural gas, but also by a number of other factors including regulation, tariff levels, environmental and climate conditions and competition. Significant changes in any of these variables may affect levels of per capita energy consumption, which could vary substantially from the company’s expectations, and could have a material adverse effect on EDP’s business, financial condition, prospects or results of operations. EDP’s electricity generation plants in operation and under development may be subject to increasing competition in their respective markets or regions. In the Iberian Peninsula, electricity generation is subject to licensing by the competent authorities, which is carried out in a competitive environment. Consequently, new electricity generation power plants may be licensed to EDP’s competitors in the markets where it operates, affecting the profitability of its liberalised market power plants in operation, under construction or under development. Furthermore, EDP may be unsuccessful in obtaining licences for the construction or operation of new power plants, and it could therefore be unable to increase or maintain its generation capacity or market share. EDP’s electricity generation capacity in the Iberian Peninsula has grown significantly in recent years, particularly through the construction of a new CCGT and new wind power plants. In addition, there are still a significant number of already licensed CCGT and wind power projects that are currently under construction or under development in the region. The decline in electricity and gas demand in 2010 in the Iberian Peninsula, together with the increase of installed capacity described above, may lead to a situation of overcapacity in Spain, and to a lesser extent in Portugal, for an indeterminate period of time. The improvement of electricity interconnections with markets or regions with excess capacity or lower energy prices than those in the markets or regions in which EDP operates power plants may also affect the profitability of EDP’s plants. The electricity transmission grid operators in Portugal and Spain, REN – Rede Eléctrica Nacional, S.A. (“REN Rede Eléctrica”, a subsidiary of REN – Redes Energéticas Nacionais, S.G.P.S., S.A. (“REN”)) and Red Eléctrica de España, S.A. (“REE”), respectively, have been investing significantly in the improvement of transmission grid capacity in both countries and in the interconnection grid between the two countries. REE and the French electricity grid operator have also been planning to expand the electricity interconnection grid between Spain and France. Although the profitability of EDP’s electricity generation capacity currently under the CMEC system in Portugal or under a special regime (including some wind, minihydro, cogeneration and biomass power) in the Iberian Peninsula is not exposed to the electricity pool price risk, in the long run, the end of the CMEC system combined with improved electricity interconnections could increase competition for EDP’s power plants and could have a material adverse effect on EDP’s business, financial condition, prospects or results of operations. With respect to the development of wind power generation, EDP primarily faces competition in bidding for or acquiring available sites (particularly sites with favourable wind resources and existing or potential interconnection infrastructure), in bidding for or acquiring grid interconnection rights, and in setting prices for energy produced. In certain European countries, interconnection rights to electricity transmission and distribution grids, which are critical for the development of wind farms, may be granted through tender 18
processes. Although EDP has generally been able to obtain a number of interconnection rights through tender processes in the past, there is no certainty that it will be able to obtain such rights in the future, particularly in light of an increasingly competitive environment. Failure to obtain these rights may cause delays to or prevent the development of EDP’s projects. In addition, not all of EDP’s existing or future interconnection rights will be sufficient to allow EDP to deliver electricity to a particular market or buyer. Wind farms can be negatively affected by transmission congestion when there is insufficient available transmission capacity, which could result in lower prices for wind farms selling power into a locally priced market, such as certain U.S. markets. Competition in the renewable energy sector could therefore have a material adverse effect on EDP’s business, financial condition, prospects or results of operations. The selling price and gross profit per unit of energy sold by EDP may decline significantly due to a deterioration of market conditions. A decline in gross profit per unit of electricity or natural gas sold may result from a number of different factors, including an adverse imbalance between supply and demand in the electricity and natural gas markets in which EDP operates or in other related energy markets, the performance of international and or regional energy prices such as oil, natural gas, coal, CO2 allowances and green certificates, below-average rainfall or wind speed levels in the markets in which EDP operates, higher cost of power plant construction or a change in the technological mix of installed generation capacity. The gross profit per MWh of energy sold in liberalised energy markets can also be affected by administrative decisions imposed by legislative and regulatory authorities in the countries in which EDP operates. The volatility of EDP’s gross profit per unit of electricity and natural gas sold can be particularly significant in its activities in the liberalised electricity and natural gas markets of the Iberian Peninsula, which are fully exposed to market risk. If the difference between the electricity price in the market and the marginal generation cost (which depends primarily on fuel and CO2 costs) available at its thermal plants is too low, EDP’s thermal plants may not generate electricity or electricity generation may be limited, which could have a material adverse effect on EDP’s business, financial condition, prospects and results of operation. Payments for electricity sold by certain of EDP’s wind farms depend, at least in part, on market prices for electricity. In Spain, part of EDP’s wind power revenues per MWh have a fixed component that is adjusted for inflation, while another part is linked to the Spanish pool price, with a cap and floor system. In the United States, EDP sells its wind power output mainly through long-term PPAs, which defines the sale price of electricity for the duration of the contract. Nevertheless, where a PPA is not executed due to market conditions or as part of a commercial strategy, EDP sells its electricity output in wholesale markets, in which it is fully exposed to market risk volatility. In jurisdictions where combinations of regulated incentives, such as green certificates, and market pricing are used, the regulated incentive component may not compensate for fluctuations in the market price component, and thus total remuneration may be volatile. A decline in market prices for energy below levels expected by EDP could have a material adverse effect on EDP’s business, financial condition, prospects or results of operations. In Brazil, the electricity generated by EDP’s power plants is substantially sold through PPAs, while EDP’s electricity distribution business, in accordance with certain regulatory rules, has the ability to pass its electricity procurement costs through to customers. Nevertheless, payments for electricity sold by EDP’s electricity generation, distribution and supply activities in Brazil can be affected by significant changes in electricity market prices, particularly those due to extremely dry periods, large fluctuations in electricity demand and modifications of EDP’s electricity distribution concession areas. Prices for new PPAs both for electricity generation plants under development or in operation are set through public tenders and can change significantly due to changes in competitive pressures and/or the regulatory environment. EDP currently uses and may in the future continue to use various financial and commodity hedging instruments relating to electricity, carbon emissions, fuel (coal and natural gas) and foreign exchange, as well as bilateral PPAs and long-term fuel supply agreements, in order to mitigate market risks. However, EDP may not be successful in using hedging instruments or long-term agreements, or it may not effectively anticipate and hedge against such risks, which could have a material adverse effect on its business, financial condition, prospects or results of operations. 19
Page 1 and 2: PROSPECTUS EDP - ENERGIAS DE PORTUG
Page 3 and 4: This Prospectus comprises a base pr
Page 5 and 6: TABLE OF CONTENTS Summary of the Pr
Page 7 and 8: Registrar: Deutsche Bank Luxembourg
Page 9 and 10: estrictions and any requirements of
Page 11 and 12: Rating: Instruments issued under th
Page 13 and 14: RISK FACTORS Each of the Issuers be
Page 15 and 16: on integrated pollution prevention
Page 17: years. Variations in wind condition
Page 21 and 22: energy projects until 2009. There c
Page 23 and 24: liquidation of EDP’s customers or
Page 25 and 26: increase EDP’s cost of financing
Page 27 and 28: The Government commits to go even f
Page 29 and 30: (v) be able to evaluate (either alo
Page 31 and 32: Inverse Floating Rate Instruments.
Page 33 and 34: Change of law. Save, with respect t
Page 35 and 36: DOCUMENTS INCORPORATED BY REFERENCE
Page 37 and 38: these Final Terms and the Prospectu
Page 39 and 40: 7. [(i) Issue Date: [ ] (ii) Intere
Page 41 and 42: (vi) Screen Rate Determination: - R
Page 43 and 44: (iii) Provisions applicable where c
Page 45 and 46: 26. Additional Financial Centre(s)
Page 47 and 48: PART B - OTHER INFORMATION 1. LISTI
Page 49 and 50: 5. YIELD (Fixed Rate Instruments on
Page 51 and 52: [Details of the minimum and/or maxi
Page 53 and 54: 1. Issuer: [EDP - Energias de Portu
Page 55 and 56: (i) Rate[(s)] of Interest: [ ] per
Page 57 and 58: (iv) Day Count Fraction in relation
Page 59 and 60: 23. Final Redemption Amount of each
Page 61 and 62: (ii) Date of Subscription Agreement
Page 63 and 64: 3. INTERESTS OF NATURAL AND LEGAL P
Page 65 and 66: 8. OPERATIONAL INFORMATION (i) ISIN
Page 67 and 68: Copies of the Trust Deed, the Agenc
Page 69 and 70:
Coupons appertaining thereto other
Page 71 and 72:
(B) in the case of Fixed Rate Instr
Page 73 and 74:
Paying Agent were acting as Calcula
Page 75 and 76:
(vi) if "30E/360" or "Eurobond Basi
Page 77 and 78:
Paying Agent outside the United Sta
Page 79 and 80:
7. Redemption and Purchase 7.1 Rede
Page 81 and 82:
(ii) five days after the date on wh
Page 83 and 84:
B.V. is the Issuer), EDP or any Mat
Page 85 and 86:
in such place as may be required by
Page 87 and 88:
unless indemnified to its satisfact
Page 89 and 90:
PROVISIONS RELATING TO THE INSTRUME
Page 91 and 92:
(D) Amendment to Conditions deliver
Page 93 and 94:
General BOOK ENTRY INSTRUMENTS HELD
Page 95 and 96:
USE OF PROCEEDS The net proceeds fr
Page 97 and 98:
5. EDP warrants and agrees that its
Page 99 and 100:
1. OVERVIEW EDP GROUP EDP - Energia
Page 101 and 102:
target two years in advance, as the
Page 103 and 104:
generation in Europe, the United St
Page 105 and 106:
In 2008, EDP increased its biomass
Page 107 and 108:
usiness unit). The Energy Services
Page 109 and 110:
EDP Renováveis has a comprehensive
Page 111 and 112:
EDP’s energy business in Brazil G
Page 113 and 114:
change in market structure, increas
Page 115 and 116:
Managing Emissions For the first pe
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Directive 2009/72/EC focuses on com
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farms that were already in operatio
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and include, among others, restrict
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esort supplier), which had been com
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Natural Gas Supply Under the Natura
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· The Tariff Regulation The Tariff
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in 2003 applicable to all economic
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Royal Decree-Law no. 661/2007, esta
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The Spanish gas market has develope
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costs of power supply, transmission
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imposition of civil penalties of up
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Even though it is EDP's understandi
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Nuno Maria Pestana de Almeida Alves
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Coordinator of Contacto@ICEP, an in
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managing positions in a number of P
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The current specialised committees
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The committee currently consists of
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FINANCIAL STATEMENTS OF THE EDP GRO
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Consolidated Statement of Financial
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EDP FINANCE B.V. INCORPORATION, DUR
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TAXATION The following is a general
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The annual positive difference betw
Page 161 and 162:
the relevant date for payment of an
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CERTIFICATE FOR EXEMPTION FROM PORT
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The undersigned beneficiary: STATEM
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STATEMENT FOR EXEMPTION FROM PORTUG
Page 169 and 170:
EU Savings Directive Portugal has i
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Generally, gift and inheritance tax
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epresented and agreed, and each fur
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elation thereto, in any country or
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the Paying Agents for the time bein
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REGISTERED OFFICE OF EDP FINANCE B.
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181
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edp – energias de portugal, sa edp finance bv €12500000000 - CMVM

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