Spain, Italy Energy Demand Won't Return to Pre-Crisis Level Before 2017-Enel

By Liam Moloney

ROME--The unprecedented economic slump hitting Europe means that electricity and natural gas demand in Enel SpA's (ENEL.MI) key markets in Italy and Spain isn't expected to return to pre-crisis levels before 2017, the company's chief executive said Tuesday.

"The crisis that has hit Europe is an unprecedented phenomenon," with a pickup in activity still far off, said Fulvio Conti at Enel's shareholders' meeting in Rome to approve 2012 results, where he confirmed the company's targets.

The economy of the 17 countries that use the euro shrank for five consecutive quarters up to the end of 2012, matching in length--but not severity--the recession that followed the collapse of U.S. investment bank Lehman Brothers in 2008. Official figures on the bloc's output in the first quarter of 2013, due to be published in mid-May, are widely expected to show another three months of contraction, putting the euro zone in its longest recession since its creation in 1999. Tuesday, the euro zone's unemployment rate rose to a fresh high in March. A recession is typically defined as two consecutive quarters of falling output.

Mr. Conti rounded on the Italian government's tax on the energy sector, which Rome hopes to use to raise public funds, saying the so-called Robin Hood tax is equivalent to a reduction of about 200 million euros ($260 million) in net profit a year from 2014.

He also criticized the administration in Madrid for similar policies.

"The Spanish government continues to consider the power sector as a source from which to fund the state budget," said Mr. Conti, referring to its second-biggest market, where Enel controls Endesa SA (ELE.MC).

Mr. Conti confirmed Enel's target of reducing net debt to EUR37 billion at the of 2014 from EUR42.9 billion in December, and earnings before interest, taxes, depreciation and amortization of about EUR16 billion this year and in 2015.

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