COMGAS

The change in accounting standards made the comparison with past periods more difficult. The reason is the end of the regulatory asset/liabity account. The earnings presentation, fortunately (on page 12) shows the evolution of this account since december 2008.

This way I can see that the first quarter results were affected by a reduction of 32M in the regulatory account. This account followed a downward trend from dec/08 to dez/10, but since the 1Q11 the trend turned upside. So, now Comgas will pay back the acccumulated balance in the regulatory account, now showing a 198M liability.

This will be negative to the cashflow (and earnings) in the following periods.

The upside is the price setting policy change made by Petrobras, reducing the raise in prices to the distributing companies.

In the ITR footnotes I found that the "margin of contribution" of the industrial market suffered a lot in the first quarter, but the residencial market showed progress. That confirms that the focus in the residencial market was the right decision (greater margins).

The evolution of the regulatory account also explains the differences in 2010 x 2009 results. In 2009 the regulatory asset (off-balance sheet) suffered a decrease of 499M, while the same account suffered a decrease of "only" 260M. That inflated 2009 and 2010 earnings, while the 1Q11 inaugurated the reversion of the trend.