It''s been a month since we published our initiation on the Italian regulated names and took a more positive view on regulated utilities in general in our 2024 outlook (upgrading Elia to Outperform and including both Elia and E.On in our top picks for the year). After the significant drop in power prices in the last few weeks, most investors we have spoken to agree that regulated names have gained attractiveness. We summarise the main debates, focusing on the Italian regulateds and Elia. Electricity vs natural gas networks - don''t fight against the tide The electricity vs gas debate is clearly top of investors'' minds and despite more expensive valuations, electricity network pureplays like Terna clearly resonate with a broader investor audience given their easy fit with ESG and sustainability strategies. Investors are cautious over visibility on gas investment in the second half of the decade and there is muted excitement over hydrogen or biogases; most investors treat these as a free option rather than an explicit catalyst. Supportive regulation needed to keep investment flows Investors are weighing up whether Terna and Snam will benefit from the new Totex regulation (ROSS base), which came into force on 1 Jan 2024. Snam guided at its CMD that the new regulation will be neutral on EBITDA during the regulatory period. Output-based incentives regulation has not been completely defined yet; investors believe that a generous regime is needed to attract investments. Biggest worries: peak earnings and a rising cost of debt Investors widely agree that 2024 will be a good year in terms of earnings as regulatory rates have been updated following the peak of interest rates. Some clients expect a slowdown in rates in the second half of the year, which they fear might trigger downward revisions of regulatory returns and lower earnings in coming years. In addition, companies are guiding for higher cost of debt. Investors worry that even if companies invest...