Significant events in 2011

Termination of the joint venture agreement between ACEA and GDF Suez Energia Italia

The joint venture agreement signed between ACEA and GDF Suez Energia Italia (GSEI) in 2002 was terminated on 31 March 2011.

The Framework Agreement, signed on 16 December 2010 between ACEA and GSEI, envisaged the execution of a series of operations to be implemented in a single context.

In particular at the Date of Execution (i) ACEA purchased from GSEI an interest representing 40.59% of the share capital of Acea Energia Holding S.p.A.; (ii) following the non-proportional demerger of GDF SUEZ Produzione S.p.A. (formerly AceaElectrabel Produzione S.p.A.), the assets and activities that are functional to manage the hydroelectric plants and thermoelectric plants of Tor di Valle and Montermartini were allocated to the company established at the same time, Acea Produzione S.p.A., whose share capital is entirely held by Acea Energia Holding S.p.A.; (iii) ACEA transferred to GSEI an interest representing 30% of the share capital of GDF SUEZ Holding di Partecipazioni S.p.A. (formerly Eblacea S.p.A.), in turn holder of 50% of the share capital of Tirreno Power S.p.A.; and (iv) Acea Energia Holding S.p.A. transferred to GSEI an interest representing 84.17% of the share capital of GDF SUEZ Energy Management S.p.A. (formerly AceaElectrabel Trading S.p.A.).

Regarding the value of the interest sold and purchased, please note that:

  1. for the purchase of 40.59% of the share capital of Acea Energia Holding, ACEA paid GSEI 123.9 million euros,
  2. for the sale of 30% of the share capital of Eblacea, ACEA collected from GSEI a fee of 108.2 million euros;
  3. for the sale of 84.17% of the share capital of AET, Acea Energia Holding collected from GSEI a fee of 33.7 million euros.

Additional transactions were as follows:

  1. ACEA transferred to GSEI the loans and receivables due from Roselectra, Voghera and AET against a fee, equal to the value of the principal and interest accrued until the Date of Execution, of 49.2 million euros;
  2. ACEA transferred to GSEI the receivables for the dividends resolved by Eblacea for 1.8 million euros;
  3. ACEA purchased from GSEI the financial receivables due to the latter from AEP against a fee, equal to the value of the principal and interest accrued until the Date of Execution, of 25.1 million euros.

As part of the dissolution of the JV, the Framework Agreement envisages a series of additional understandings. In particular:

  1. aside from the necessary authorisations of the competent public entities within the limits these authorisations are necessary pursuant to applicable regulations, ACEA granted GSEI a right of first offer on the hydroelectric plants of Castel Madama, Cecchina, M. del Rosario, Mandela, Orte, Salisano, Sant’Angelo in the event of sale within 3 years from the Date of Execution. On the Date of Execution GSEI paid ACEA 5.0 million euros as the fee for the transfer of the above mentioned right of first offer,
  2. GSEI will have the right to participate in the project being studied only with regard to the CHP unit of the Tor di Valle plant, as amended, and any other repowering project regarding the Tor di Valle plant, with the sole exception of district heating-related activities, if the project is started within two years from the Date of Execution,
  3. Aside from the necessary authorisations of the competent public entities within the limits these authorisations are necessary pursuant to applicable regulations, ACEA granted GSEI a right of first offer on the investment owned by ACEA through Acea Energia Holding in Acea Energia, in the event of sale within 3 years from the Date of Execution. On the Date of Execution GSEI paid ACEA 2.5 million euros as the fee for the transfer of the above mentioned right of first offer,
  4. GSEI granted ACEA an irrevocable and unconditional option, to be exercised by 30 September 2011, to subscribe a five-year electricity supply agreement for 5TWh per year.

The sale of Eblacea and Tirreno Power as well as that of the AceaElectrabel Produzione group, and the acquisition of 40.59% of the Acea Energia Holding Group, are subject to adjustment in compliance with the Framework Agreement.

Activities related to calculating that adjustment are still ongoing, since the parties are currently analysing the different respective items.

This transaction, that exceeds the thresholds of relevance set out by the Company with regard to Related party transactions, was approved by the Board of Directors during the meeting held on 25 November 2010, having obtained the favourable opinion of the Committee for related party transactions beforehand.

The sale of Eblacea and Tirreno Power as well as that of the AceaElectrabel Produzione group, and the acquisition of 40.59% of the Acea Energia Holding Group, are subject to adjustment in compliance with the Framework Agreement signed between ACEA and GSEI. The minimum amount of those adjustments has almost no impact from a financial perspective, while the economic effects amount to approximately 7 million euros in relation to the differential of the Eblacea/Tirreno Power sale price.

Given the parties did not reach an agreement on the different positions, ACEA presented an appeal to the Court of Milan for the appointment of an arbitrator pursuant to the Framework Agreement; said arbitrator was appointed in January and the appointment formalities are currently being carried out ACEA and GSEI.

Relations with Roma Capitale: Public lighting service

On 15 March 2011 ACEA and Roma Capitale agreed an adjustment to the Public Lighting Service Contract.

The key points of the renegotiations are:

  • extension of the contract until 2027, making it consistent with the concession, therefore extending the remaining term from 4 years and 5 months to 17 years;
  • the revision of the contractual parameters, bringing them into line with the CONSIP specifications of the “Servizio Luce 2” tender;
  • the certainty of the entity to be able to directly carry out activities related to network expansion which, in line with the previous version of the contract, were subject to tender for Roma Capitale;
  • the recognition, on maturity of the contract, whether natural or not, of the non-amortised value of the investments made by Acea (no provision was made for said recognition in the previous version);
  • the sterilisation of the so-called “risk-price” of electricity to power the public lighting plant; in 2011, the clause allowed the recovery of around 3 million euros which, with the previous version of the contract, would have had a negative impact for the same amount on the operating result;
  • the provision of an indemnity in favour of Acea in the event of the early termination of the contract by Roma Capitale, calculated on the basis of margins discounted for the years until maturity (or 31 December 2027).

In light of the new contractual structure and organisational changes made in the Group, the operating model for the public lighting service in the municipality of Rome is currently being redesigned and the tender contract in place with the Parent Company is being adjusted.

Piano della Luce (Lighting Plan)

In the period under observation, towards the end of last year, activities were launched by the Rome Municipal Administration and ACEA top management relating to the so-called Lighting Plan for Roma Capitale.

On 3 August 2010, Municipal resolution no. 252 defined and officially approved the purposes and implementation timing of the Plan, which should affect streets, areas and locations in the municipality of Rome (previously registered) which are partially or totally lacking lighting, or that have lighting systems that should be improved, in order to guarantee mobility and safety to residents. Approximately 3,600 public lighting facilities, distributed along a network of over 1,400 km were identified, including roughly 52,000 lighting points according to a tentative estimate. In addition, in implementation of the Directives regarding energy savings and environmental pollution, the Plan makes provision, where possible, for favouring the use of LED technology, given that said decision - please see the text of the Resolution: “owing to its improved lighting efficiency, its chromatic performance and the longer duration over time of LED equipment, allows for decreasing both energy consumption together with the emission of CO2 into the atmosphere, and system management and maintenance costs". Between 23 August 2011 and 31 December 2011, the Plant Development Organisational Unit implemented systems on 133 streets pertaining to the 5th, 13th and 20th sub-municipalities of the municipality of Rome, carrying out excavation works extending more than 61km, part of which performed using non-invasive technology known as “microtunneling” (which allows a smaller excavation section, reduced extension sites with discernible advantages in terms of the road network and reduction in disruption caused to citizens).

The total number of lamps installed came to 3,137, 876 of which with LED technology, the remainder with SAP (high pressure sodium) technology, with power of between 100 and 250 W.

With the exception of a section of Via Ara delle Rose (which envisaged the completion of a pre-existing section with steel posts), fibreglass supports were used, a material which ensures better resistance to corrosion than traditional steel posts.

During the execution of the works, audits were conducted to verify the level of site safety. Only slight non-conformities were recorded, which were quickly resolved.

As at December 2011, no “near misses” were recorded at any of the sites managed.

Aside from the works realised, a further 360 lighting points were planned, which cannot be completed at present due to technical reasons unrelated to the structure, such as, for example, authorisations not granted by third party entities (Arsial) or works that, as a result of the geological surveys, can only be performed after obtaining express authorisation from Roma Capitale as regards coverage of the necessary higher expenses.

Advance on 2011 dividend

As at 29 November 2011, ACEA SpA’s Board of Directors resolved the distribution of an advance on the ordinary 2011 dividend of 0.28 per share.

This decision regarding the advance on the 2011 dividend was taken on the basis of the accounting situation of the Acea Group as at 30 September 2011 in light of the business outlook for the year in progress.

On 29 November 2011, Independent Auditors Reconta Ernst & Young issued a judgment as set forth by article 2433 of the Italian Civil Code.

Robin Hood Tax

On 14 September 2011, Decree Law no. 138 of 13 August 2011, the so-called “manovra correttiva bis” (corrective financial measure) was converted to law, which makes provision, inter alia, for the amendment to the regulation of the IRES surcharge (so-called “Robin Hood Tax”).

The law extended the IRES surcharge of 6.5%, in addition to the sectors already hit by the tax, to other operators in the electricity transmission, dispatching and transportation sectors and to entities operating in the production of electricity from renewable sources (regardless of the type of resources used). Said provision also introduced a 4% increase in the surcharge rate for the three-year 2011-2013 period (from 6.5% to 10.5%).

In the event the parameters set forth by said law are exceeded, the surcharge in question will therefore apply to ACEA Distribuzione and ARSE plus Acea Produzione, Acea Energia and ARIA.

Said amendment, calculated on the potential perimeter, involves a higher annual expense for the ACEA Group, estimated in current tax terms at around 13 million euros for the three-year 2011-2013 period.

Medium/long–term incentive plans

By means of a resolution adopted on 16 September 2010, the Remuneration Committee approved the second cycle (2010–2012) of the Long-Term Incentive Plan set up in 2007.

The structure of the plan and premium calculation methods remains unchanged, while the perimeter of beneficiaries of the plan was redefined following the organisational changes which occurred at the start of the first cycle.

This long-term incentive plan is aimed at the ACEA Group’s top management and executives; the Plan’s goals are as follows:

  1. providing incentives for management to achieve economic and financial targets at the Group level for the benefit of shareholders, thereby bringing management’s objectives into line with those of the Group’s shareholders; and
  2. boosting management loyalty.

The Plan envisages a cash payment to be calculated as a percentage of the Gross Annual Remuneration (GAR) of beneficiaries (the CEO and ACEA S.p.A.’s senior executives) and based on the achievement of pre-established economic and financial targets. The amount of benefits will be (i) based on the GAR at 31 December of each year of the relevant cycle; (ii) cumulative over the three years of each cycle; and (iii) eventually paid only at the end of the third year of each cycle.

Receipt of the benefits is dependent on the achievement of performance targets to be established each year by the Remuneration Committee, and is subject to beneficiaries meeting certain conditions.

In particular, the first cycle envisages payment of a bonus for each indicator based on achievement of the performance target set.

The indicators are:

  • Gross Operating Profit,
  • ROIC,
  • the creation of shareholder value, evaluated via a comparison of Acea’s performance with a basket of utilities stocks.

With reference to the first cycle, in 2010 the Remuneration Committee established that the objectives were not met.

Authority's supervisory and control department controls

VIS 44/11

On 17 and 18 May 2011, AEEG's Markets Department and Supervisory and Control Department, with the support of the Special Market Protection Unit of the Italian Financial Police, conducted the inspection preannounced by resolution VIS 44/11 "Approval of the inspection programme towards two grid operators concerning the provision of the electricity grid connection service for production plants" and the special notice of 10 May 2011, delivered to ACEA Distribuzione.

In the case in question, the various ACEA Distribuzione offices involved in the active connection application management process cooperated to reply to requests for information and data contained in the checklist prepared by AEEG and, therefore, to collect and organise documentation regarding:

  • 5 cases regarding punctual claims;
  • 52 cases sampled by the inspection office (out of a total of approximately 4,000);
  • 5 cases sampled by the inspection office (out of a total of 275) amongst those compensated or not compensated, even if requested by the applicant.

A copy of the aforementioned documentation was provided to the inspection office, which obtained it for its subsequent analyses.

By means of letter dated 2 August 2011, AEEG informed Acea Distribuzione of the outcomes of the inspection, stating that the analysis of the documents collected showed the essentially correct application of the provisions subject to inspection.

In VIS 99/11, on closing of the enquiry launched by means of AEEG resolution VIS 42/11 of 16 March 2011 on the provision of the grid connection service for electricity production plants by the grid operators, AEEG communicated, with Vis 44/11, that “the inspection at Acea concluded successfully, with no significant anomalies identified”.

VIS 60/11

With resolution VIS 60/11 of 26 May 2011, submitted to ACEA Distribuzione on 22 June 2011, AEEG launched a proceeding against the company for the investigation of violations related to recording electricity distribution service outages.

This proceeding was generated by reports made by some customers to AEEG and to the Consumer Protection Office related to outages without advance warning in the supply of electricity for condominium use, which occurred on 22 August 2009. As a result of the requests for information submitted by the Consumer Protection Office, ACEA Distribuzione submitted documentation many times regarding the recording of outages relative to the users in question, as well as detailed news on the status of the plants involved and the technical reasons for the outage.

The Consumer Protection Office transmitted this information to the applicable AEEG offices, which recognised sufficient grounds for the opening of the case being discussed. The company intends to prepare a defence document on the occurrence, to be provided to the same AEEG Offices. The proceeding is still in progress.

VIS 24/10

VIS 24/10 of 19 April 2010 replaced VIS 72/09 of 17 July 2009 as regards the disputes over the completeness and promptness of transmissions of metering data to suppliers, and on the adequacy of the IT media used for said purpose, representing an additional cause for non-compliance owing to the alleged delay in the time treatment of users with potential available power of higher than 55 kW.

On 21 June 2010, a defensive brief was sent to the Authority’s Legal Department, which originated from the argument already presented in previous briefs as regards the points of overlapping with VIS 72/09 and, as regards the additional exception, justified the delay in the time treatment of users with potential available power of higher than 55 kW with the irrepressibility of the technical times required for manufacturing of the appropriate meter.

By means of resolution VIS 91/11 of 6 October 2011, the Authority’s Legal Department essentially rejected, all defensive arguments expressed in the brief and imposed a financial penalty on the company of 243,000 euros (two hundred and forty-three thousand), and set forth the provision to comply with the time treatment for all users with potential available power of higher than 55 kW, within 120 days from the date of notification of said resolution.

The company paid the fine and, on the prescribed expiry of 8 February 2012, provided evidence to the Authority’s Legal Department of compliance, within the required terms, of the actual application of the time treatment of entitled users, notwithstanding some residual cases, with objective difficulties of access, for which additional attempts have been planned, whose positive outcome will be subject to the proper communication to the aforementioned Department.

VIS 59/11

On 23 June 2011, the AEEG Supervisory and Control Department served ACEA Distribuzione resolution VIS 59/11 of 19 May 2011 "Approval of the inspection programme regarding electricity distribution companies in relation to service continuity data submitted to the AEEG (Italian Authority for Electricity and Gas) in 2011". The summons establishes the company's de facto involvement in the inspection referred to.

On the 12th and 13th of July 2011, an AEEG inspection office, supported by the Italian Financial Police, carried out the aforementioned inspection at ACEA Distribuzione regarding the timely recording of data relating to continuity of the electricity service. The inspections were performed in accordance with the aforementioned resolution AEEG VIS 59/11 and after AEEG’s formal notification to ACEA Distribuzione by registered letter no. 0018066 of 5 July 2011. The inspection concluded positively (in this regard, see also Resolution ARG/elt 170/11 of 24 November 2011, which shows the definitive results approved by AEEG), with no penalties for the company, and confirmed the correctness and accuracy of the processes for the treatment and recording of continuity data currently in place.

Ohsas Certification 18001:2007

The process of certification of Acea Distribuzione S.p.A. in line with Ohsas 18001:2007 standards (Safety Management System), commenced in August 2009, was completed on 14/05/2010.

In fact, following several on-site documentary and system application inspections, certification body Lloyd’s Register issued the Certificate of Approval which certifies that Acea Distribuzione S.p.A. is compliant with the Ohsas 18001:2007 standard.

This certificate was delivered to the Chairman of Acea Distribuzione S.p.A. by the CEO of Lloyd’s Register on 9 July 2010.

As part of the process of retaining the Safety Management System Certification, implemented according to the Ohsas 18001:2007 standard, certification body Lloyd’s Register Quality Assurance carried out 3 days of inspections (1st supervisory inspection) in December 2010, in order to verify the SMS implementation, execution and improvement status. The final outcome of these inspections was positive.  

As part of the process of retaining the Safety Management System Certification, implemented according to the Ohsas 18001:2007 standard, certification body Lloyd’s Register Quality Assurance carried out 3 days of inspections (2nd supervisory inspection) in December 2011, in order to verify the SMS implementation, execution and improvement status.

The final outcome of these inspections was positive. The next supervisory inspection (third) is set for May 2012.

New excavation and COSAP (occupation of public space) regulation

Roman Administration, after declaring order 266/2010 on road works to have been cancelled, issued a new order identical to the previous one: no. 374/2011 (it is expected to remain in force until 31/12/2012, since DPCM - Decree of the President of the Council of Ministers - 04/12/2011 extended the emergency traffic plan to Rome until said date). It should be noted that the Roman Administration updated, by means of resolution 30/07/2010, COSAP (increase of 35%) tariffs, effective retroactively from 1 January 2010.

Technological innovation projects

Smart Network Management System

In June of 2010, Acea Distribuzione S.p.A. sent the Ministry of Economic Development the application for access to financial subsidies involving the technological innovation fund, according to the procedures set out by law, with reference to a project entitled “Smart Network Management System: technological development in the management of the electricity distribution network”. The preliminary and setup phases were launched in July 2010. The aforementioned project, for a total of roughly 12.7 million euros (around 11.0 million of which subsidisable), with a duration of three years, is divided into various sub-projects aimed at enhancing and further developing the initiatives already implemented by Acea Distribuzione S.p.A. to improve the continuity of the electricity service and to increase the operating efficiency in line with the general and special provisions established by the sector Authority.

In December of 2010, the Ministry of Economic Development formalised its authorisation for going ahead with the procedure set forth by Ministerial Decree of 14 December 2009. In the first half of 2011, the operating activities of the various sub-projects and the systematic monitoring thereof were launched.

In May 2011, the Ministry requested that ACEA Distribuzione communicate the technical and banking references for the imminent initiation of the negotiation phase, which occurred in the last quarter of the year. An in-depth meeting was then held with the scientific commission of the Ministry, after which Acea Distribuzione presented a report to better highlight the content and the innovative nature of the initiative and to acknowledge certain guidelines suggested by said Ministry.

Smart Grid pilot project

On 9 November 2010, Acea Distribuzione S.p.A. sent the Italian Authority for Electricity and Gas an application for incentive treatment relative to resolution ARG/elt no. 39/10, with reference to the Smart Grid pilot project, which will be developed in 2011 and 2012.

The aforementioned project, for a total of roughly 4.9 million euros, is divided into various sub-projects aimed at developing innovative solutions as regards the management of improvements to service continuity and, at the same time, development of new criteria for the management of the distribution network, overseeing changes to said network and in line with the guidelines and general provisions established by the Authority.

By means of resolution ARG/elt 12/11, published on 8 February 2011, the Authority admitted the project presented by Acea Distribuzione to incentive treatment. The development of the project is proceeding as set forth in the timetable.

New tariff cycle 2012 / 2015

By means of Resolution ARG/elt 6/11 of 31 January 2011, the Italian Authority for Electricity and Gas started up the procedure for creating measures related to the tariffs for the provision of electricity transmission, distribution and metering services and the economic conditions for delivery of the connection services, for the regulatory period 2012 -2015. As part of this proceeding, it published consulting documents:

DCO 5/11: Final guidelines in relation to the hypothesis of increasing the power that can be taken for the domestic electricity users;

DCO 13/11: Tariff adjustment of power and reactive energy withdrawals and inputs in the supply points and interconnection points between networks;

DCO 29/11: Criteria for the definition of tariffs for the provision of electricity transmission, distribution and metering services for the 2012-2015 period - general framework of the proceeding and criteria for calculating the costs recognised;

DCO 34/11: Criteria for the definition of tariffs for the provision of electricity transmission, distribution and metering services for the 2012-2015 period - criteria and mechanisms for incentivising structural investments;

DCO 42/11: Criteria for the definition of tariffs for the provision of electricity transmission, distribution and metering services for the 2012-2015 period - criteria for the allocation of costs, tariffs, revenue restrictions and equalisation;

DCO 45/11: Criteria for the definition of tariffs for the provision of electricity transmission, distribution and metering services for the 2012-2015 period - final guidelines.

The main changes in the final document are:

  • Replacement of the current mechanism, which makes provision for an average national tariff supplemented by general and company-specific equalisation, with a tariff per company, established to take account of specific company characteristics, in the following ways:
    • recognition of invested capital of the company with a parametric criterion for medium and low voltage capital in 2007 and recognition of effective capital for high voltage and, starting from 2008, the accurate recognition of increases in company capital;
    • recognition of company operating costs on the basis of an adjustment coefficient of the average national costs established using AEEG parameters, in relation to 2010 variables of scale of the company;
    • maintenance of the metering equalisation and repeal of equalisation of business costs, envisaging the coverage of average national costs differentiated between companies that set up a separate selling company with respect to those still integrated;
    • confirmation of the rules up updating of invested capital, envisaging an increase in the WACC of the 3rd regulatory period from 7% to 7.6% for capital invested as at 31 December 2011 and to 8.6% for subsequent capital increases. The increase of 1% is fixed to take into consideration the 2-year delay in the tariff recognition of capital increases (so-called regulatory lag);
    • confirmation of the rules of updating operating costs through efficiency recovery mechanisms (x-factor) fixed at 2.8% for distribution activities and 7.1% for metering activities;
    • confirmation and extension of higher return investment categories (incentivised investments);
    • identification of a metering component to cover the residual non-amortised amount of electromechanical meters replaced with electronic meters pursuant to resolution no. 292/06, and possibility to request an advance of said revenues for the entire regulatory period.

The reference tariffs per company will be published by 31 March of each year of the regulatory period and before 30 April for 2012.

Relations with AATO 5

On 1 June 2011, by means of note no. AT/1461, AATO notified the company of the request for enforcement of the bank surety of 2,843 thousand euros through which the Area Authority (represented by the Chairman and the Director of STO - Technical Secretariat) sent Unicredit a request for enforcement of the bank surety - equal to 2,843 thousand euros - given by the company, pursuant to art. 31 of the Management Agreement, to guarantee the proper fulfilment of its obligations.

In particular, the request for enforcement of the surety sent by the Area Authority would be justified by the company’s failure to pay the concession fee.

In this regard, it is believed that the provision adopted by the Area Authority is definitely unjust and illegitimate - in consideration of the fact that the non-payment of the concession fee, far from being attributable to liability on the part of the company, is, instead, a direct result of the Area Authority’s inactivity and non-fulfilment of obligations regarding the determination of tariffs.

In response to the aforementioned request, the company submitted an appeal to the Court of Rome in accordance with art. 700 of the c.p.c (Code of Criminal Procedure), so that it ascertained the non-existence of the right of the Area Authority to enforce the surety policy. The aforementioned appeal was rejected by the honourable court, therefore, on 8 September 2011 Acea Ato5 S.p.A filed a complaint against the rejection order.

At the same time, by means of note no. 30762 of 16 September 2011, the company notified AATO5 of the payment of 10,700 thousand euros as per the legal settlement deed of 27 February 2007.

The aforementioned complaint was rejected by the Court of Rome by means of order no. 18950 of 21 November 2011. At the same time as the appeal, pursuant to art. 700 c.p.c. the company also filed an additional appeal to the Regional Administrative Court of Lazio for the cancellation of the provision for enforcement of the surety policy.

The Administrative Court Judge, by means of order no. 6352/2011, arranged for transmission of the trial bundle to the President of the Regional Administrative Court of Lazio, so that he identified the competent section of the Regional Administrative Court of Lazio, and did not recognise the existence of the conditions for the adoption of precautionary measures.

On 1 December 2011, a hearing was held, set following the transfer of the case to the Regional Administrative Court of Lazio - Latina Section. Following the aforementioned hearing, the Administrative Court Judge, with order no. 497/2011, rejected the request for precautionary protection, ruling the appeal to be inadmissible due to a lack of jurisdiction.

As a result, by means of note dated 14/12/2011, Unicredit issued a communication to the effect it had paid AATO the enforced sum of 2,843 thousand euros, also requesting that the amounts pledged in favour of said surety be returned.

Given the illegitimate grounds, shown in the court acts, for enforcement of the surety set out by the President of AATO and the risk of future repeated, groundless and arbitrary enforcements, the company decided not to proceed, while awaiting the definitive decisions of the Commissioner for deeds, with re-establishing the underlying guarantee.

This should also be viewed in light of in-depth judicial-legal evaluations which showed that the failure and/or delay in respect of reconstitution of the aforementioned guarantee is the equivalent of the mere non-fulfilment of a contractual obligation on the part of the Integrated Water Service Operator and that for said specific case of non-fulfilment, the contractual tools in place between the parties did not make provision for any penalty; nor was said circumstance included in the causes of the express termination of the Management Agreement.

With reference to the criminal proceedings opened against some ACEA executives, it should be noted that, on 11 May 2011, the judge for preliminary investigations at the Court of Frosinone, announced and published the operative part of the judgment, with which it declared that “there is no need to give a decision” against ACEA senior management with the ruling “because the act did not take place”

The reasons for the ruling were made known on 8 September.

In recognising the non-existence of the offence relating to the three accused managers, important aspects were highlighted which shed light on the propriety of the company’s operations.

  • Abuse of office
    • Right to recognition of higher costs not adequately included in the Area Plan confirmed
    • Proper accounting and amount of costs confirmed as ascertained by the Judicial Police
    • Inappropriateness of the definition of the retroactivity of the tariff highlighted
  • Fraud
    • Non-attributability of operating inefficiencies to the Operator ascertained
    • Incorrect drafting of the original Area Plan confirmed
  • Fraud in public supplies
    • Contradictoriness of the disputes against the company which undermines the grounds for the accusation ascertained: on one hand, the offence of fraud is contested as a result of having earned an unlawful profit from the investments made; on the other, the offence of fraud is contested as the Operator would have failed to carry out the investments which he was obliged to make and indicated in the Area Plan.

Revamping of Waste Treatment Plant

In June 2010, SAO S.p.A. presented an Environmental Impact Assessment request to the Umbria Region, coordinated with the Integrated Environmental Authorisation, for the project of revamping of the waste treatment plant and expansion of the non-hazardous waste dump located in the district of Pian del Vantaggio 35/a, Orvieto.

During the authorisation procedure, the Direzione Regionale per i Beni Architettonici e Paesaggistici dell'Umbria (Umbria Superintendency for Environmental and Architectural Assets) launched proceedings for the direct protection of the areas affected by expansion of the waste dump, pursuant to Legislative Decree no. 42/2004.

In June 2011, the company obtained the environmental compatibility order for the project from the Environmental Impact Assessment service, with the exclusion of phase 2 of the waste dump expansion (in the area of the so-called third ravine). Due to the decisions of the Environmental Impact Assessment service, the Province of Terni asked the company to re-adjust the Economic-Financial Plan for the project, with the removal of the phase 2 expansion of the waste dump.

On 4 August 2011, the Direzione Regionale per i Beni Architettonici e Paesaggistici dell’Umbria notified the company of the Binding Decree, issued in accordance with art. 13 of Legislative Decree no. 42/2004, under which the area allocated for the phase 2 expansion of the waste dump (so-called third ravine) was subject to direct protection, as it is “of special historical, monumental and ethnoantropological importance”.

On 11 August 2011, the Province of Terni issued the company with the Integrated Environmental Authorisation for the project for the REVAMPING OF THE WASTE TREATMENT PLANT AND EXPANSION OF THE NON-HAZARDOUS WASTE DUMP, presented by the company, with the exclusion of the phase 2 expansion of the waste dump (commonly known as the third ravine).

Waste dump expansion works, contracted following a public tenders process conducted via the functions of Parent Company ACEA S.p.A., are expected to be completed by April 2012, except in the case of unforeseen events or adverse weather conditions.

The public tenders process is in progress, conducted through the functions of Parent Company ACEA S.p.A., targeted at assigning the works relating to the revamping of the waste treatment plant.

In September 2011, the company challenged, by means of hierarchical appeal, before the Ministero per i Beni e le Attività Culturali (Ministry of Cultural Heritage and Activities), the binding provision, and with an appeal before the Regional Administrative Court, the ruling of environmental compatibility (Environmental Impact Assessment), as regards the part in which said ruling was limited to the revamping of the plant and raising of the waste dump, excluding the so-called third ravine.

In August 2011, ATI 4 asked SAO and ASM Terni to review the Economic-Financial Plan of the respective projects on the basis of different waste flows and a different plant setup. The company prepared the review of the Economic-Financial Plan and of the project requested by ATI 4 with the support of the competent Parent Company structures and re-issued said documentation to ATI 4. Checks and in-depth examination of said documentation by ATI 4 are still in progress.

In 2011, the company successfully passed an audit regarding confirmation of environmental certification UNI EN ISO 14001:2004 and safety certification OHSAS 18001:2007. In addition, in September 2011, the company obtained the registration of EMAS certification for all activities from the Ecolabel – Ecoaudit Committee, EMAS Italia section.

On 20 December 2011, the Ministero per i Beni e le Attività Culturali upheld the above-mentioned hierarchical appeal filed by SAO, cancelling the protection provision relating to the third ravine.