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(1)Financial Statements of ACEA S.p.A. Consolidated Financial Statements of the ACEA Group. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 2 0 0 9.

(2) WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663.

(3) Financial Statements of ACEA S.p.A. 2009 Consolidated Financial Statements of the ACEA Group. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 2 0 0 9.

(4) Agenzia pubblicitaria: Publicis. Fotografo: Luciano Viti. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. WWW.CENTENARIO.ACEA.IT.

(5) ACEA. IL TUO MONDO AL CENTRO DEL NOSTRO.. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Dal 1909 Acea e Roma fanno parte di un’unica storia fatta di innovazione e rispetto per il territorio..

(6) 2009. Financial Statements of ACEA S.p.A. 2009 Consolidated Financial Statements of the ACEA Group. Acea SpA Registered office Piazzale Ostiense 2 – 00154 Rome Share capital 1,098,898,884 euros, fully paid-up Tax code, VAT number and Rome Companies’ Register no. 05394801004 Registered in Rome at REA no. 882486. Planning and Finance Editorial coordination External Relations and Communication Graphic design, editing and copyediting Message Photographs Acea archives Fabio Anghelone Printed by Officine Europee Printed in April 2010. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Prepared by.

(7) Contents Operations’ Report 12. Corporate bodies. 14. Significant events after the balance sheet date. 90. Bonds. 90. 15. Relationships between ACEA and Gaz de France - Suez. 90. Chairman’s statement. 16. Piano della Luce (Lighting Plan). 90. ACEA Group financial highlights as at 31 December 2009. 91. 19. New regulations for excavation works ACEA Ato 2 : Redundancy. 91. Group operating review. 22. Shareholdings of Directors and Statutory Auditors. Network Industrial Area. 22. Energy Industrial Area. 48. Water Industrial Area. 56. Environment and Energy Industrial Area 64 Economic and financial review. 71. Results of operations. 71. Financial position and cash flow. 76. Other information ACEA S.p.A. share price performance. Risks and uncertainties. 91. Regulatory risk. 92. Legislative risk. 97. Strategic risk. 98. Operational risk. 100. Litigation risk. 101. Operating and financial outlook. 107. Shareholder resolutions. 108. 86 86. Medium/long-term incentive plans 89 Safeguarding activities. 89. Contents. 7. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. The ACEA Group.

(8) Financial Statements of ACEA S.p.A. 112. 195. 1. Analysis of net debt. 196. 112. 2. Statement of movements in investments. 198. Balance sheet - Assets. 113. Balance sheet - Liabilities. 114. 3. List of significant investments in subsidiaries, associates and other companies. 200. Cash flow statement. 115. Statement of changes in shareholders’ equity. 116. 5. Non-recurring material transactions pursuant to CONSOB Resolution 15519 of 27 July 2006 210. Form and structure of the financial statements for the year ended 31 December 2009 118. 6. Positions or transactions deriving from unusual and/or exceptional transactions 211. Statement of comprehensive income. Notes to the financial statement. 8. Annexes to the notes. contents. 4. Related party transactions pursuant to CONSOB Resolution 15519 of 27 July 2006 204. 7. Segment information (IAS 14). 212. Notes to the income statement. 132. Notes to the balance sheet. 142. Related party transactions. 173. Report of the Board of Statutory Auditors. 215. Update on major disputes and litigation. 176. Independent auditors’ report. 252. Additional disclosures on financial instruments and risk management policies. 186. Commitments and contingencies. 190. Attestation of the separated financial statements pursuant to art. 154 of Legislative Decree 58/98. 254. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Income statement.

(9) Consolidated Financial Statements 258. Statement of consolidated comprehensive income. 259. Consolidated balance sheet Assets. 260. Consolidated balance sheet Liabilities. 261. Consolidated cash flow statement 262 Statement of changes in consolidated shareholders’ equity 263 Notes to the financial statements Basis of preparation. 264. Accounting standards and policies. 265. Accounting standards, revisions, interpretations and improvements applied from 1 January 2009 275 Accounting standards, amendments and interpretations applicable after the end of year and not adopted in advance by the Group. 278. Consolidation policies and procedures. 280. Basis of consolidation. 282. Financial highlights of companies accounted for under proportionate consolidation 284 Segment information. 286. Notes to the consolidated income statement. 296. Notes to the consolidated balance sheet - Assets. 316. Notes to the consolidated balance sheet - Liabilities. 341. Service concession arrangements. 356. Related party transactions. 372. Update on major disputes and litigation. 376. Additional disclosures on financial instruments and risk management policies. 388. Commitments and contingencies. 403. Annexes. 409. 1. List of consolidated companies 410 2. Reconciliation of shareholders’ equity and net profit for the year ended 31 December 2009 in the consolidated and separate financial statements 412 3. Remuneration of Directors, Statutory Auditors and Key Managers. 413. 4. Information provided pursuant to CONSOB Ruling 6064293. 414. List of significant investments at 31 december 2009 (art. 120, Paragraph 4, legislative decree 58/98). 422. Independent auditors’ report. 433. Attestation of the consolidated financial statements pursuant to art. 154 of Legislative Decree 58/98. 435. Corporate governance report - 29 March 2010. 437. contents. 9. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Consolidated income statement.

(10) WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663.

(11) WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Operations’ Report.

(12) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. The ACEA Group The share capital of ACEA S.p.A. as at 31 December 2009 breaks down as follows:. 4%. 8%. 10% Municipality of Rome Market Suez. 27%. 51%. Pictet Funds Caltagirone. 12. Operations’ Report. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. The above chart only shows equity investments of more than 2%, as confirmed by CONSOB data..

(13) As at the same date, the Group structure comprises the following principal companies:. Acea Holding. Energy. Water. 100% Acea Reti e Servizi Energetici 50% Acea Distribuzione 51% Ecogena. 96%. Acea Ato 2. 94%. Acea Ato 5 Frosinone. 50%. 100% Crea Gestioni. Acea Distribuzione. 100% Acea8cento 59%. 30%. Acea Electrabel 50% AE Produzione 84% AE Trading 100% AE Elettricità. 85%. Ombrone 40% Acquedotto del Fiora. 69%. Acque Blu Arno Basso 45% Acque. 96%. Sarnese 37% Gori. Eblacea 50% Tirreno Power. 100% LaboratoRI 100% Tad Energia Ambiente Acque Blu. Operations’ Report. 13. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 55%.

(14) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. Corporate bodies Board of Directors Chairman Giancarlo Cremonesi Chief Executive Officer Marco Staderini 1 Directors Paolo Bassi Marco Maria Bianconi Massimo Caputi Jean Louis Chaussade Pierre Clavel 2 Luigi Pelaggi 2 Andrea Peruzy 2 . Board of Statutory Auditors Chairman Maurizio Lauri. Alternate Auditors Claudio Bianchi Claudio Valerio. Independent Auditors Reconta Ernst & Young SpA. Executive Responsible for Financial Reporting Giovanni Barberis. 14. Operations’ Report. 1 Appointed by the Shareholders’ Meeting on 29 April 2009. 2 Appointed by the Shareholders’ Meeting on 15 September 2009.. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Standing Auditors Roberto Pertile Francesco Lopomo.

(15) Shareholdings of Directors and Statutory Auditors at 31.12.2009. Company invested in Shares held at Shares purchased Shares sold Shares held at 31.12.2008 31.12.2009 Directors Acea SpA. –. –. –. –. 2) Marco Staderini (*) Acea SpA. –. –. –. –. 3) Paolo Giorgio Bassi. Acea SpA. –. –. –. –. 4) Marco Maria Bianconi Acea SpA. –. –. –. –. 5) Pierre Clavel (**) Acea SpA. –. –. –. –. 6) Jean Louis Chaussade. Acea SpA. –. –. –. –. 7) Luigi Pelaggi (***) Acea SpA. –. –. –. –. 8) Andrea Peruzy (***) Acea SpA. –. –. –. –. 9) Massimo Caputi Acea SpA. –. –. –. –. Statutory Auditors. . 13) Maurizio Lauri Acea SpA. –. –. –. –. 14) Francesco Lo Pomo Acea SpA. –. –. –. –. 15) Roberto Pertile Acea SpA. –. –. –. –. 16) Claudio Valerio Acea SpA. 500. –. –. 500. 17) Claudio Bianchi Acea SpA. –. –. –. –. (*) Director elected on 27 March 2009 (**) Director elected on 15 September 2009 (***) Directors elected on 8 May 2009. Operations’ Report. 15. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 1) Giancarlo Cremonesi.

(16) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. Chairman’s statement In the complex recession dynamic which characterises the current western economic phase, 2009 can be considered the financial year in which the financial crisis manifested its painful effects on the real economy. The strong downturn in the international, and as a consequence the domestic, economy, which in 2009 caused a reduction of about 5% in the GDP, strongly influenced the country’s productive system, specifically leading to a drop in global demand for goods and services, as well as a strong reduction in energy consumption. This phenomenon, which for Acea was not as acute as for other companies working in more industrialised areas, accompanied by a chain of extraordinary and hopefully not repeatable factors, is reflected in the Group’s results, which we present here. External factors linked to the economic system’s performance and its internal consequences, due to a prolonged settling phase within the Gas de France partnership, made operations related to the energy market the main element of manifest suffering, which stands out among the businesses that the Group manages. On the other hand, the commitment in other sectors very different from energy and not strictly related to economic dynamics makes our Group absolutely stable. Indeed, Acea is able to claim and consolidate national leadership in the Water segment and successfully works in the Environmental sector, with a steadily increasing number of waste-to-energy plants for producing renewable energy.. The deeper roots of this crisis, and at the same time the most serious consequences, are found in the dramatic drop in trust which by now affects all markets as well as always expanding sectors of civil society. The road to rebuild trust inevitably passes through value creation and serious governance. Acea is affronting this circumstance with absolute determination, and wanted to make every effort possible to not cause any damage, but instead to increase its extraordinary value, which is at once industrial, economic and social for the region. The creation of trust calls for prudence. So, the 2009 financial year closes with important provisions to face any possible future risk. These are risks related to previous years which must not inhibit in any way the Company’s effectiveness and development in such a delicate and strategic moment.. 16. Operations’ Report. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Above all, however, the 110 million euro payment to the Inland Revenue for a sanction imposed upon Acea S.p.A. by the European Commission for the matter of government assistance related to the so-called tax moratorium weighs upon the company and represents an almost overpowering influence. Without this, in fact, your Company would have been affected almost only by the general negative effects of the economic crisis, which in 2009 impacted the entire productive system..

(17) For all regulated activities, Acea is lively and vital and looks to 2010 with reasonable optimism, with the goal of consolidating current operations and taking advantage of every occasion for profiting from the opportunities that a further opening of the markets, expected following recent legal amendments regarding local public services, can offer. The creation of trust especially calls for courage. So, in 2009 investments increased over the previous year by more than 100 million euro, despite the macro-economic context and despite the aforementioned “tax moratorium” sanction which, as indicated, subtracted 110 million euro from the Group’s economy and liquidity. And investments will also continue at the same pace in 2010, with a plan of about 500 million distributed as follows: 40% to the Water area, in order to allow for expected tariff developments and consolidating national leadership; 20% to electricity distribution, to guarantee continuous improvement in service quality and continuity; 25% to the Environment and Energy area, in order to develop the capacity of waste-to-energy, wastewater disposal, and treatment of biomasses and hazardous waste. Furthermore, 15% of the amounts set forth in investment plans shall significantly contribute to environmental sustainability by investing in the renewable energies, wind power, photovoltaic and cogeneration sectors. The new regulations introduced by Law Decree 135 of 2009, the so-called Ronchi decree, should also be mentioned. In fact, this marks a fundamental step in protecting, in terms of continuity and duration, the management of integrated water services granted to Group Companies, which the previous incomplete regulatory structure left, in the best of cases, in the limbo of interpretative uncertainty.. It was also uncertain whether assignments granted to the so-called mixed public-private companies would be maintained for managing the same water service, in which Acea operates as a private shareholder in the Regions of Tuscany, Umbria and Campania. The new regulation overcomes that situation, setting forth the termination of assignments to Acea and the Group water Companies only at their natural conclusion, indicated in service agreements. As regards direct assignments to Acea S.p.A., this is conditioned by the progressive reduction of the Municipality of Rome’s shareholding to no more than 40% of the share capital by 30 June 2013, decreasing by a further 10% by 31 December 2015. This reduction shall be performed by the majority shareholder, according to legal indications, or through public procedures or through private placement at qualified investors and industrial operators.. Operations’ Report. 17. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Indeed, art. 23-bis of Law Decree 112 of 2008, recently amended by the “Ronchi decree”, set forth that the concessions regarding integrated water service issued with procedures different from public procedures should cease at the date of 31 December 2010 and, without an implementing regulation of this norm, it was uncertain if the protection would continue for companies listed on the stock market, set forth by paragraph 15-bis of article 113 of the Consolidated Law of Local Governments no. 267 of 2000..

(18) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. The alternative option indicated by the law would consist of Acea forgoing its most important contracts in terms of their contribution to EBITDA, such as above all the integrated water service in ATO 2 Central Lazio, to undergo a competitive tender for a new contract. This all appears so full of risks that it cannot be taken into consideration in any way. Also, the Municipality of Rome has already adopted the first policy deeds in preparation for the implementing the legal dictates, since in its 11 February 2010 session, the municipal Board approved a motion proposed by the majority with which it commits the Mayor and the Council: • “to enact all operations necessary to outline a path for disposing of the Acea SpA shares, in excess as per legal limits, which guarantee the Municipality of Rome control over the company and, in particular, the water service, considering the public nature of the water asset, the supply of which is ensured as a universal service accessible to all; • to act in compliance and according to the methods and timescales set forth by legislation in force and, in any case, in line with the opportunities offered by the market, taking into account the advantages for the company, for the shareholder the Municipality of Rome and for the citizen-end user; • to implement all initiatives necessary to ensure compliance with procedural transparency obligations set forth by provisions in force, notifying the Board of these and acquiring its consent”. This does not influence the Group’s operations: opportunities which may arise during the year shall not be left unconsidered, to extend the share either in new territorial areas for water service, or in new sectors such as, above all, gas distribution in the Municipality of Rome, where it is able to start up the competitive tender for the new concession of service.. Therefore, dear shareholders, vision, objectives and outlooks are not lacking for an immediate new recovery of the profitability which characterised your investment in the Company, which also this year, despite the deep and widespread economic crisis, would have been able to present a positive net profit of 26.4 million euro had the so-called “tax moratorium” hatchet not dropped, which, to our regret, caused a negative balance of 52.5 million euro. We trust in the seriousness and quality of the choices made, with the certainty that in the coming years Acea will distribute important dividends that will be very attractive to everyone who wants to invest in its share capital and its undertakings.. . 18. Operations’ Report. Chairman of the Board of Directors. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Ambitious projects pursued with prudence. Rather than distribute dividends, in such a delicate moment we have decided to strengthen the reserves and promote investments to re-launch absolute values on the market and conquer the opportunity for strategic alliances..

(19) Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. ACEA Group financial highlights as at 31 December 2009 31.12.2009. 31.12.2008. % change. 2,954.3. 3,144.0. - 6.0%. (2,392.6). (2,517.9). - 5.0%. 2.2. (2.6). - 185.5%. 563.9. 623.5. - 9.5%. 185.9. 385.0. - 51.7%. Net profit/(loss) attributable to the Group. (52.5). 186.3. - 128.2%. Net invested capital. 3,463.9. 3,077.8. + 12.6%. Net debt. (2,177.0). (1,633.3). + 33.3%. Consolidated Shareholders’ Equity. (1,286.9). (1,444.5). - 10.9%. Consolidated revenue Consolidated operating costs Profit (loss) from commodity risk management EBITDA EBIT. Amounts are shown in millions of euros. 2009 ordinary activities posted a gross operating profit of 563.9 million euros, down 59.5 million euros (-9.6%) compared to 2008 (623.5 million euros). It is underlined that the 2008 gross operating profit was positively influenced by extraordinary items totalling 26.1 million euros, of which: - 16.3 million euros concerning the adjustment for ACEA Ato2 of the carrying amount of liabilities recognised against income deriving from connection fees; - 9.8 million euros concerning the effect of the reduction in the liability for charges linked to tariff subsidies granted to employees. Net of the amount of 26.1 million euros concerning the above-mentioned extraordinary items, the decrease in the gross operating profit was equal to 33.5 million euros. More specifically, the gross operating profit of the JV decreased by 24.6 million euros (-24.7%, from 99.6 million euros in 2008 to 74.9 million euros in 2009).. The further decrease in the gross operating profit (equal to 8.8 million euros) mainly results from top-management early retirement incentives (6.7 million euros). The other ACEA industrial areas confirmed the positive results achieved in 2008, despite the major difficulties suffered in a demanding year, such as 2009. These difficulties mainly relate to: - external reasons: deterioration of the macroeconomic scenario (see the loss posted by the GDP), with a consequent decrease in all economic sectors which led, among other things, to the fall in the demand for goods, services and energy consumption; - internal reasons: top-management early retirement in March 2009 and the difficult negotiation with the shareholder Gas de France Suez, which had a strong impact on the development strategies of the Company. The following chart shows the contribution to the gross operating profit coming from ACEA’s industrial areas.. Operations’ Report. 19. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. THE ACEA GROUP.

(20) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. 300 250. 245.8. 246.5. 16.3*. Million euros. 200. 251.5. 241.8. 150. 258.1. 99.6. 100. 74.9. 50. 30.2. 30.6. 0 Networks. Energy. Environment and Energy. Water 2008. 2009. The net operating profit totalled 185.9 million euros, down 199.1 million euros (-51.7%) compared to 2008 (385.0 million euros). The net operating profit was influenced by both the decrease in the gross operating profit and the increase of 139.7 million euros due to amortisation/depreciation, impairment charges and provisions required by the unpredictable effects resulting from previous years’ management (from 238.4 million euros in 2008 to 378.1 million euros in 2009). More specifically, the following amounts have been taken into account: - 21.6 million euros for higher amortisation/ depreciation (230.6 million euros compared to 208.9 million euros in 2008), also resulting from the increase in investments carried out in 2009, equal to 518 million euros (+100 million euros compared to 2008). Most of these investments had been postponed from 2008 and were necessary in order to comply with tariff increases; - 15.9 million euros for higher impairment of receivables (38.8 million euros in 2009 compared to 22.9 million euros in 2008); more specifi-. 20. Operations’ Report. cally: AceaElectrabel Elettricità +5.7 million euros; ATO2 +6.5 million euros; ATO5 +0.9 million euros; Gori +0.6 million euros; - 102.1 million euros for higher provisions (108.7 million euros compared to 6.6 million euros in 2008), of which 75.9 million euros required in order to correctly evaluate unexpected risks resulting from previous financial years: • 36.0 million euros concerning the official report of the Italian Inland Revenue dated 17 February 2009 for the 2005 and 2006 tax years. According to this report, the tax-avoidance character – pursuant to Article 37-bis of Presidential Decree 600/73 – of the 2004 reorganisation transaction was disputed, according to which the Parent Company transferred 50% of the ACEA Distribuzione’s share packet to Acea RSE; • 25.0 million euros for any possible impact on the credit obligations of Acea ATO5, resulting from the allocation of the contingent liability from the legitimacy issue of ACEA Ato5 tariffs due to the cancellation of the 2007 tariff review resolution approved by means of resolution no. 5 of 21 December 2009 by the Mayors’ Conference of the Area. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. * Adjustment for Acea ATO2 of the carrying amount of liabilities recognised against income deriving from connection fees..

(21) • • •. The profit/(loss) before tax totalled 100.9 million euros, down 194.7 million euros (-65.9%) compared to 2008 (295.6 million euros). Taxation totalled 147.8 million euros, mainly due to the payment of 110 million euros for the “tax deferment”. Consequently, given that the gross operating profit amounted to 563.9 million euros, and especially following extraordinary taxation (110 million euros for the “tax deferment”) and tax provisions (36.0 million euros for the 2005-2006 tax transparency regime), the Group net profit/(loss) for the period is negative for 52.5 million euros.. -. To sum up, 2009 results were affected by: the negative performance of the energy market (-24.6 million euros); huge outlays for the “tax deferment” (110 million euros); the provision for the 2005-2006 tax assessment (36 million euros); further operations that required the provision of an additional amount of 39.9 million euros.. The net debt as at 31 December 2009 totalled approximately 2,177 million euros (2,108 million euros as at 30 September 2009; 1,633 million euros as at 31 December 2008). The change compared to 31 December 2008 was due, among other things, to: - the change in the basis of consolidation (9 million euros for Nuova Acque); - the outlay for the so-called “tax deferment” (110 million euros); - the increasing borrowing requirements linked to investments (+100 million euros); - the payment of 2008 dividends (140 million euros).. Operations’ Report. 21. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. •. Authority 5. This resolution was appealed before the Regional Administrative Court of Latina; 3.9 million euros concerning uncertainties of interpretation on the specific equalisation booked in 2008; 4.0 million euros for tender and supply risks concerning previous years and for the transaction with the Municipality of Fiumicino; 3.9 million euros for higher legal risks related to previous years’ transactions; 3.1 million euros for contribution issues, litigations, etc...

(22) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. GROUP OPERATING REVIEW. financial highlights. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. GROUP OPERATING REVIEW Network Industrial Area The electricity demand in Italy during 2009 decreased by 6.7% compared to the same period last year. Domestic production met 86.0% of Italy’s requirements (66.3% from thermoelectric plants, 16.1% from hydroelectric sources and 3.6% was generated from geothermal and other renewable energy sources) whilst the remaining 14.0% was covered by imports1. In this context, net domestic production decreased by 9.4%, while the balance of imports increased by 11.0%. Except for thermoelectric and geothermal production, all sources of domestic production reported an increase compared to the. Source: Terna – December 2009, monthly report on the electricity system.. Demand for electricity in Italy as at 31 December 2009 . 1.1.2009 31.12.2009. 1.1.2008 31.12.2008. 2009-2008 % change. . GWh. GWh. %. Gross production of which: CIP 6 production . 289,164 44,011. 319,130 48,372. -9.4 -9.0. Hydroelectric. 51,743. 47,227. +9.6. Thermoelectric. 225,987. 261,328. -13.5. Geothermal. 5,347. 5,520. -3.1. Wind power. 6,087. 5,055. +20.4. 11,034. 12,065. -8.5. 278,130. 307,065. -9.4. Import. 46,570. 43,433. +7.2. Export. 2,121. 3,399. -37.6. 44,449. 40,034. +11.0. 5,727. 7,618. -24.8. 316,852. 339,481. -6.7. Consumption for ancillary services Net production. Balance of imports Consumption for pumping systems DEMAND FOR ELECTRICITY*. . * Demand for electricity = net production + balance of imports – consumption for pumping systems. 22. Operations’ Report. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 1. same period last year. The wind power segment registered a particularly significant rise (+20.4%). In 2009, peak demand on the Italian electricity network was equal to 51,873 MW (-5.7% compared to the 2008 peak) and was recorded at noon on 17 July. It is noted that, during 2009, monthly peak values have always been lower than those recorded in the same period last year, with more significant reductions in the first months of the year..

(23) Electricity transmission. By analysing the reference temperature trend during 2009, it is noted that in the first two months of the year, weather conditions were harsher compared to the previous year (with average deviations of -1.29°C in January and -0.93°C in February). Afterwards, temperatures were progressively higher in March (+0.24°C), April (+0.65°C) and May (+1.33°C), whilst those recorded in June were similar to those of the previous year. In the remaining six months of 2009, the reference temperature trend was opposite to that recorded in the same period last year. While in July, August and September, the reference temperature was ever increasing (with variations of +0.59°C, +1.12°C and +2.91°C, respectively), in October the average variance was -1.70°C. Temperatures increased again in the last months, with a +1.06°C variation in December.. The influence of weather conditions on the electricity demand was significant in the JanuaryApril period (with a maximum variance of -3.20% in April), thus increasing consumption with harsh temperatures and decreasing it with mild temperatures. The changes recorded in February, March and April were further influenced by the calendar, in particular February (-1.96%) that was negatively influenced by the fact that there was a working day less than in 2008 (leap year), while March and April were affected by the different dates of Easter holidays in 2008 and 2009. May and August – which were characterised by higher temperatures – registered an increase in the demand for electricity (with an average variation of +1.80% and +3.36%, respectively). In June and July – whose reference temperature was mostly in line with the temperature recorded last year – there was a decrease in consumption (-2.97% and -1.10%, respectively) that was not linked to climate or calendar reasons. Finally, the trend of weather conditions in October and December (harsher in October and milder in December) recorded during 2009 balanced the different distribution of holidays, thus leading to a +1.85% and -1.45% variation in electricity demand. The following graph shows the 2009 trend of the monthly average difference in the reference temperature between 2009 and 2008. The graph also shows the 2009 reference temperature.. Operations’ Report. 23. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. During 2009, the overall amount of electricity injected into ACEA Distribuzione’s network (from the national transmission grid, generating plants that are directly linked to ACEA Distribuzione’s network and from ENEL Distribuzione’s interconnected network) decreased by 0.25% compared to the same period last year (data provided at the end of FY 2008). Peak demand on Acea Distribuzione’s network during 2009 amounted to 2,257 MW, which was recorded at 1.00 pm on 17 July 2009. This is down approximately 110 MW, or -4.64%, on the peak of 2,367 MW recorded in the same period last year, at 1.00 pm on 2 July 2008..

(24) THE ACEA GROUP. Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. 2009 Ref. T. Ref. T. variation (’09 vs ‘08) 30.00. 5.00 4.00 3.00. 20.00. 2.00 15.00 1.00 10.00. 2009 Ref. T.. Ref. T. variation (’09 vs ‘08). 25.00. 0.00. 5.00. -1.00. 0.00. -2.00 January 7.73 -1.29. February 7.74 -0.93. March -11.32 0.24. April 15.00 0.65. May 20.05 1.33. June 22.11 -0.36. The following table shows the monthly percentage variations of electricity injected into ACEA Distribuzione’s network, which were calculated on the basis of the volumes recorded in 2008 and 2009, as registered by the related measurement system. July 25.39 0.59. August 26.47 1.12. September 23.20 2.91. October 15.68 -1.70. November 12.57 0.16. December 9.36 1.06. (raw series) and as resulting from the calculations made in order to counterbalance the effects of the said weather conditions and the different calendar days (purified series):. Monthly percentage variations – raw series, purified series Jan. Feb.. Mar.. Apr.. May. Jun.. Jul.. Aug. Sep.. Oct.. Nov. Dec.. Total. Raw materials. 0.46%. -1.96%. -0.21%. -3.20%. 1.80%. -2.97%. -1.10%. 3.36%. 0.28%. 1.85%. 0.26%. -1.45% -0.25%. Purified materials. 0.96%. 0.71%. -2.00%. -3.07%. -1.04%. -1.55%. -3.17%. 0.43%. -1.29%. -0.55%. -0.37%. -3.61% -1.23%. The following table shows the monthly sequence of electricity injected into ACEA Distribuzione’s network during 2009, together with the same series for 2008: Electricity injected into Acea’s network [Gwh] 2009 vs. 2008. Jan. Feb.. Mar.. Apr.. May. Jun.. Aug. Sep.. Oct.. Nov. Dec.. Total. 2009. 1,051.71. 950.64. 975.65. 880.85. 968.78. 992.92 1,137.95. 1,029.66 1,012.70 984.41. 971.67 1,025.92. 11,982.86. 2008. 1,046.94. 969.67. 977.69. 909.95. 951.63 1,023.30 1,150.55. 996.21 1,009.90 966.51. 969.12 1,040.99. 12,012.46. These electricity amounts were intended to cover the needs of the utilities supplied by the abovementioned network, i.e. the customers of the free and protected markets and of the market subject to additional safeguards, as well as the so-called underlying distributors, which are represented by the 24. Jul.. Operations’ Report. electricity company of the Municipality of Saracinesco. There are also sales and injections of energy between the ACEA Distribuzione’s network and ENEL Distribuzione’s networks at some LV, MV and HV interconnection points.. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 2009 vs. 2008.

(25) With regard to FY 2009 and as compared to 2008, the following table illustrates the above-mentioned aspects, with further specification of the contribution given by Acquirente Unico S.p.A. and by the import supply: Market subject to additional safeguards Free market. Underlying distributors. Total. AU source Other sources GWh. GWh. GWh. GWh. GWh. 2009. 4.485,52. 432,38. 7.062,25. 2,71. 11.982,86. 2008. 4.877,77. 433,49. 6.698,83. 2,39. 12.012,48. With regard to import supply, as from 1 January 2002 ACEA Distribuzione signed an agreement with the Vatican City State (that was renewed on 6 July 2006) in force from 1 January 2007 to 31 December 2011, for the optimised management of imported electricity assigned to it (established by Terna, in accordance with the indications provided by the Italian Authority for Electricity and Gas, based on the Decree issued by the Ministry for Pro-. ductive Activities that sets out the assignment of transmission capacity shares to the interconnection with foreign countries for the Vatican City State and the Republic of San Marino). In this context, the Company undertook to provide technical services linked to the management of underlying utilities to the above-mentioned State, as well as to rationalise and improve any related electricity network and plant.. On 24 December 2007 the Electricity and Gas Authority issued Resolution no. 333/07 regarding the third regulatory period from 2008 until 2011. Resolution no. 333/07 introduces and governs four different types of regulation, amending the two pre-existing ones and supplementing the current legislation, as follows: 1. regulation of prolonged or extended outages; 2. individual standards regarding the number of outages for MV customers; 3. regulation of the total duration of long outages without advance warning; 4. regulation of the average number of long and short outages. On 27 April 2009, the Authority issued the reference document DCO 9/09 “Electricity distribution service continuity – Urgent review of some provisions concerning the regulation of the number of outages without advance warning and the 20082011 trend levels”. Following the end of the consultation process,. the Authority issued Resolution ARG/elt no. 76/09 that implements the observations received from the entities concerned, by amending Annex A of Resolution no. 333/07 of 19 December 2007, with the postponement of the relevant deadlines for the termination of the procedure pursuant to paragraph 22.4, Annex A for 2008 and the deadlines pursuant to point 2 of Authority Resolution no. ARG/elt 168/08 of 25 November 2008. The main changes can be summarised as follows: • change in the selection rule of exceptional long outages starting in “periods of perturbed conditions”, with the introduction of a threshold for the number of outages that is necessary in order to identify the “periods of perturbed conditions” (upper limit), by making a distinction between low voltage and medium voltage; • exclusion of all long outages without advance warning which start in periods of perturbed conditions, with regard to the number of outages, similarly to the provisions in force for Operations’ Report. 25. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Service quality.

(26) THE ACEA GROUP. Corporate bodies. •. •. •. •. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. short and temporary outages; extension of the above-mentioned provisions to the duration of outages, excluding all long outages starting in periods of perturbed conditions; postponement of the deadlines set out in point 2 of Resolution ARG/elt 168/08 for the delivery of continuity data and the calculation of starting and trend levels for distribution companies, pursuant to paragraph 30.1 of the Integrated Code, which opted for three-year levels of continuity indicators, instead of two-year levels; postponement of the deadlines and obligations provided for with regard to service continuity, which are relevant for the procedure concerning service continuity for 2008; exclusion of outages due to thefts from electricity distribution plants, from Title 7 of the Integrated Code.. Consequently, the following has been resolved: • a new deadline for the delivery of service continuity data (31 July 2009) for 2006 and 2007, pursuant to paragraph 21.4 of the Integrated Code;. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. • the recalculation of starting and trend levels for the 2008-2011 regulatory period, that will be adopted by 31 October 2009; • to defer the relevant deadlines for the termination of the procedure set out in paragraph 22.4 of the Integrated Code, limited to 2009; • to set out that, for the purpose of termination of the procedure set out in paragraph 22.4 of the Integrated Code – limited to 2008 and having taken into account the provisions contained in this regulation – the distribution companies that have already: – requested to the Electricity sector equalisation fund the amount set out in paragraph 34.7, could correct this amount by 31 July 2009; – paid to the Fund the amount set out in paragraph 50.1, can adjust this amount by 31 July 2009. Finally, it is specified that the significant changes detailed above led to a postponement of the approval of bonuses/penalties for 2008, since the operators had to recalculate the 2008 continuity data.. 2009 represents the second year of application of the tariff structure defined by the Italian Authority for Electricity and Gas (the Authority) in the “Integrated Code of the directives […] regarding the transmission, distribution and metering of electricity for the 2008-2011 regulatory period”, contained in Annex A of Resolution no. 348/07. The previous tariff structure (for the 2004-2007 regulatory period) provided for contemporaneous introduction of two equalisation mechanisms, one “general” and the other “company-specific” (which were confirmed in the current regulatory period), designed to recognise the specific conditions under which Italy’s various distribution companies operate. 26. Operations’ Report. The mechanisms are partly based on the analyses of parametric/effective costs (general equalisation mechanism: mandatory) and partly on company-specific analyses carried out by the Authority (company-specific equalisation: optional). The general equalisation mechanism is the result of the restriction created by the single national tariff, which envisages the need to define tariff parameters based on the average nature of end users and the geographical area served. In reality, the costs effectively incurred by individual companies in order to provide the service are influenced by the specific characteristics of the customers served and by external factors beyond the company’s control.. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Third tariff cycle.

(27) The equalisation for incentive investments on distribution networks aims at ensuring higher return (to distribution companies) on the capital invested for the realisation of specific projects capable of developing the generation amounts distributed and improving voltage quality on the same networks. Upon annual update of distribution tariffs and starting from 2010, the Authority aims at identifying the portion of tariff components to cover these investments, so that the higher return is exclusively granted to those companies that have actually carried out them. Resolution ARG/elt 30/08 sets out the methods to establish the equalisation of revenues from LV measurement service. This mechanism aims at en-. suring that the return of the investments in meters and electronic measurement collection systems, and the depreciation charges of electromechanical meters that have been disposed of in advance due to their replacement with electronic meters, are granted to those distribution companies that have actually carried out them. Moreover, the equalisation introduces a penalising mechanism that should be applied to those distribution companies that do not comply with the obligations set out in Resolution no. 292/06 concerning the installation of LV electronic meters. According to the same Resolution, the Authority launches the new equalisation of trade costs incurred by distribution companies for LV customers, in order to ensure their economic-financial position. Two mechanisms are set out for both distribution companies that set up a separate company for the delivery of sale service subject to additional safeguards, and those companies that jointly provide electricity distribution and sale services. Resolution ARG/elt 18/08 – that amended the “Integrated Code of the Authority’s directives regarding electricity sale services subject to additional safeguards to final customers, pursuant to Law Decree no. 73/07 (Retail Service Code)”, approved by Resolution no. 156/07 – sets out the equalisation mechanisms of costs for electricity supply incurred by each primary utility provider, in order to serve the final customers included in this service. The load profiling regulation sets out that the electricity for the market subject to additional safeguards is calculated on a residual basis and also includes the electricity corresponding to own distribution and transmission consumption and the difference between actual and standard network losses of distribution companies (the loss differential). Therefore, as part of this resolution, the Authority set out the calculation methods of the equalisation amounts concerning the electricity purchase cost charged to distribution companies and absorbed by own transmission and distribution uses, and the economic valuation of the difference between “actual losses” and “standard losses”. Operations’ Report. 27. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. Therefore, the protection of companies’ economic efficiency and profitability requires the adoption of compensatory measures to cover the higher costs incurred with respect to the tariffs. The general equalisation mechanisms of costs and revenues from distribution and metering for the 2008-2011 period – also as a consequence of the innovations introduced by Resolutions ARG/ elt 18/08 and 30/08 – are broken down as follows: • equalisation of revenues for the distribution service; • equalisation of revenues due to the higher return of incentive investments on the distribution networks; • equalisation of direct distribution costs on HV networks; • equalisation of HV/MV direct transformation costs; • equalisation of direct distribution costs on MV and LV networks; • equalisation of revenues for the supply of electricity to domestic customers; • equalisation of revenues for the LV measurement service; • equalisation of the trade costs incurred by distribution companies for LV customers; • equalisation of the purchase of electricity supplied for own transmission and distribution; • equalisation of the value of the difference between actual and standard losses..

(28) Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. The company-specific equalisation mechanism takes account of the difference between the specific costs incurred by a company and the national average, where this difference is not covered by the general mechanism. To this end, specific assessments are provided at the request of each individual company, with the aim of identifying external factors beyond the company’s control that give rise to costs that are higher than those reflected in the tariffs, and that are not compensated for by the general equalisation mechanism. Based on Resolution ARG/elt 30/08, the Authority: • updated the procedure to calculate the company-specific correction factor for the regulatory period 2008-2011, in view of realigning the amount of company-specific equalisation of each business with the actual level of own investments; • calculated the actual costs that can be acknowledged to distribution companies taking part in the company-specific equalisation, by using methods that are consistent with those adopted in order to calculate tariffs for the 2008-2011 regulatory period; • supported combination of distribution companies, by granting to these companies an amount of company-specific equalisation equal to the amount set out for each individual company; • reserved the possibility to take part in the company-specific equalisation exclusively to those companies admitted to equalisation in the 2004-2007 regulatory period; • updated, with regard to 2008, the actual costs that can be acknowledged to distribution companies taking part in the company-specific equalisation, based on individual assessments carried out by the Tariff Division, in compliance with the criteria adopted in order to calculate tariffs for the 2008-2011 regulatory period; • decided that the Electricity sector equalisation fund shall pay the amounts for the companyspecific equalisation for 2009, 2010 and 2011 based on company-specific correction factors – that were updated according to the methods 28. Operations’ Report. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. set out in the provision under review – and on permitted equalised revenues. Other significant innovations introduced in the third regulatory period are detailed below: • identification of a mandatory tariff for the distribution service, as set out by the Authority and applied by each individual distribution company to current and potential counterparts. This system replaces the previous system of basic and special tariff options for the distribution service, that were proposed by distribution companies; • differentiation of measurement service costs into specific fees to cover the costs related to the installation and maintenance of meters, collection of measurements, as well as their validation and registration; • identification of a dynamic mechanism to correct the revenues for covering the distribution service marketing costs, with the objective of offsetting an imbalance with the corresponding eligible costs, deriving from the changes in the volumes of service supplied; • spin-off (from revenues from distribution activities) of the amounts resulting from the application of fees for reactive energy withdrawal, now posted to “Statement of charges resulting from measures and activities aimed at promoting energy efficiency in the final use of electricity”. The new regulation also changed the update criterion for tariff components, since: • the portion of transmission and distribution tariffs that covers operating costs is updated by applying the price-cap mechanism; • the portion that covers the costs related to return on invested capital is updated by means of the gross fixed investment deflator, the change in the volumes of service supplied, the recognition of investments and the rate of change linked to the higher return granted to investments (subject to incentives) on distribution networks; • the portion that covers amortisation/depreciation is updated by means of the gross fixed. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. THE ACEA GROUP.

(29) investment deflator, the change in the volumes of service supplied and the rate of change linked to the decrease in the gross invested capital. With regard to connection fees and fixed charges, in the document “Economic conditions for delivery of the connection service”, attached to Resolution no. 348/07 as Annex B, the Authority has: • established the procedural and economic conditions for delivery, to final customers, of the service connecting consumers to LV electricity networks with the obligation of connecting third parties; • defined additional economic conditions with respect to those established in Resolution no. 281/05;. • determined the procedural and economic conditions for delivery of the network connection service to distribution companies with the obligation of connecting third parties; • established the procedural and economic conditions for delivery of specific services (the transfer of equipment requested by users, transfers, replacements, disconnections, etc.).. Regulatory framework • increase of the internal functional and operating efficiency of the Authority. 28 January 2009 – By means of Resolution VIS 6/09, the Authority approved three inspections of electricity distribution companies with regard to electricity tariffs, which aim at assessing the correct implementation: • of the Authority’s directives regarding the transmission, distribution, metering and sale of electricity, as governed by the 2004-2007 Integrated Code and by other related provisions, with regard to the period from 1 February 2004 to 31 December 2007; • of the Authority’s directives regarding the transmission, distribution and metering services governed by the Transport Code and other related provisions, with regard to the period after 31 December 2007; • of the rules concerning the application of connection fees and fixed charges or, subsequent to 31 December 2001, of the financial conditions for the supply of the connection service, as governed by the Connection Code and other related provisions. Operations’ Report. 29. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. 8 January 2009 – By means of Resolution GOP 1/09, the Authority adopted the three-year strategic plan 2009-2011. The general objectives set out in the document may be summarised as follows: • promotion and development of competitive markets, also through the harmonisation of the electricity and gas markets, limitation of the powers of major operators and support of an adequate offer; • support and promotion of efficiency and economic character of infrastructure services; • safeguard of energy service customers through the complete opening of markets (demand) and the development of service quality and safety levels; • promotion of the rational use of energy and environmental protection, by contributing to the choices related to sustainable development; • to ensure and implement the regulatory rules and to monitor the adequate implementation of the rules towards regulated entities; • increased relationships with the stakeholders and development of the relations with institutional entities by improving the tools aimed at consulting operators and consumers;.

(30) Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. 16 February 2009 – By means of Resolution ARG/elt 17/09, the Authority provided for specific information campaigns in order to promote the upgrading of MV user systems, as well as for the amendment and implementation of Part I - Annex A of Resolution no. 333/07 (Integrated Code to regulate the quality of electricity distribution, sales and measurement service). The technical upgrade of the electrical system and the submission of the related adequacy statement will enable MV customers to receive automatic compensation in case of a high number of long outages (longer than 3 minutes) during the year (starting from 1 July 2009, also in case of exceptionally long outages compared to defined standards). Moreover, it will avoid the payment of the “specific tariff payment” tariff component. This initiative adds to the regulatory instruments that have been already adopted with regard to electricity distributors, that recently allowed to achieve a reduction of 70% in the average duration of outages and of 43% in the frequency of long outages. 16 February 2009 – By means of Resolution ARG/elt 19/09, the Authority approved amendments and integrations to Resolution ARG/elt 117/08 concerning guidelines governing the implementation of the cost compensation regime for households, pursuant to Article 3, paragraph 9-bis of Law Decree no. 185 dated 29 November 2008, that was amended and converted into Law no. 2 of 28 January 2009. With this provision, the Authority aims at: • implementing the innovations introduced by Law Decree no. 185/08; • improving to 4.5 kW the power draw limit if the withdrawal point which is subject to cost compensation for the supply of electricity, is characterised by more than 4 household members; • preparing a proper statement form – in replacement of the affidavit – concerning the identification of dependent children; • modifying the centralised IT system set out in Article 8, Annex A of Resolution ARG/elt 117/08, in order to allow the management of requests concerning households, pursuant to 30. Operations’ Report. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. Article 3, paragraph 9-bis of Law Decree no. 185/08; • extending the deadline set out in paragraphs 4.1 and 4.2 of Resolution ARG/elt 117/08 for the compensation request, as well as the deadline set out in paragraph 4.8 of the same Resolution, in order to take into account the time necessary to modify the IT system. 2 March 2009 – By means of Resolution VIS 16/09, the Authority approved the inspection and control programme for electricity distribution service operators, with regard to the correct implementation of the scheduled system for withdrawal points and the availability to transmission users (pursuant to Authority Resolution no. 156/07 – Retail Service Code) of the data for unscheduled withdrawal points. The programme sets out controls for six electricity distribution service operators. 4 March 2009 – By means of Resolution VIS 17/09, the Authority closed the investigation started according to Resolution no. 39/05 concerning access to the aggregation service of electricity measurements for dispatching. The Authority did not deem it necessary to provide a final report, taking into account that: • the consultation process allowed to carry out a wide debate on the problems related to the aggregation of measurements among all sector operators; • the information acquired on the problems related to the management of master data of injection and withdrawal points, led to some related measures, which have been adopted and explained by means of Resolutions no. 183/06, ARG/ elt 162/08 and ARG/elt 174/08; • the problems concerning the aggregation of injection and withdrawal scheduled data and this being available to dispatching users, were targeted by the investigation launched by means of Resolution no. 177/07. 9 March 2009 – By means of Resolution ARG/ elt 27/09, the Authority issued urgent provisions concerning the identification of partition coeffi-. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. THE ACEA GROUP.

(31) 27 March 2009 – By means of Resolution ARG/elt 34/09, the Authority issued urgent provisions in order to identify the balance sheet items concerning the dispatching service for electricity withdrawn and injected in 2007 and 2008. More specifically, it deems necessary: • that, also for 2007, the issue of adjustment invoices is subordinated to the assessment of compliance between electricity subject to transmission and electricity for dispatchment; moreover, in order to progressively increase coherency between the data concerning electricity subject to transmission fees and that of electricity subject to dispatching service fees, it is deemed necessary to reduce to 4% the tolerance threshold above which the adjustment is not invoiced; • to set out a simplified method for the allocation of the balance sheet items related to the update of the “loss differential” following late 1. adjustments1, that is compatible with the new regulation concerning the allocation of procurement costs of the loss differential in distribution networks, that was introduced by the Retail Service Code; • to set out that – coherently with the provisions contained in the Retail Service Code concerning the equalisation of procurement costs of the “loss differential” in distribution networks – the payments due to the implementation of the above-mentioned simplified method are charged to the Statement for the equalisation of electricity purchase and dispatching costs for the service subject to additional safeguards, as set out in Article 70 of the Transport Code. 30 March 2009 – By means of Resolution ARG/elt 36/09, the Authority updated the tariff components for the coverage of general charges and further components of the electricity sector for the quarter April to June 2009. 30 March 2009 – By means of Resolution ARG/elt 37/09, the Authority updated the table containing the annual expense estimated for electricity domestic final customers for the quarter April to June 2009. The annual reference expense – as calculated according to pre-established consumption and power levels – has been obtained by applying the economic conditions of the service subject to additional safeguards. 22 April 2009 – By means of Resolution ARG/ elt 48/09, the Authority introduced amendments and integrations to the provisions set out in Resolution no. 348/07 concerning fees for the withdrawal of reactive energy at interconnection points between networks. Moreover, it has launched a process in order to set out specific provisions concerning technical and economic regulations of reactive energy transports. Articles 8 and 15 of the Transport Code introduced the compulsory application of fees for withdrawals with a limited power factor, at withdrawal points within the availability. The late adjustment is the adjustment of an electricity metering data concerning 2007 that is not already subject to adjustment invoicing.. Operations’ Report. 31. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. cients of the withdrawal of unscheduled points. Pursuant to Article 11, paragraph 11.6 of the Load Profiling Code, the distribution company calculates the partition coefficients for all withdrawal points located in their area by 10 May of each year. In order to identify the partition coefficients, the Authority deems it necessary that the underlying distribution companies notify – by 26 April of each year – to the reference distribution companies the total amount of energy withdrawn (in the previous year) from the new scheduled withdrawal points. In this way, the reference distribution companies can notify to the underlying companies – by 5 May of each year – the total amount of energy withdrawn in the reference period from all unscheduled withdrawal points. Moreover, this rule provides for the alignment of the reference period for the calculation of partition coefficients with the calendar year, thus replacing the previous rule (that set out the period from 1 February to 31 January) resulting from the division into two-month periods set out in the first load profiling system..

(32) Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. of final customers and at interconnection points between distribution networks and between the latter networks and Terna, respectively. Interested operators raised doubts about the interpretation of the regulations and, more specifically, about the payments due to the Fund of the amounts resulting from the application of fees for the withdrawals of reactive energy at interconnection points between distribution networks and the national transmission grid. To this end, and based on the amendments, the Authority intends to: • set out the possibility – in case the (HV) distribution network is directly linked to the national transmission grid and the reactive energy measurements are interdependent at interconnection points between them (provided that they are characterised by the installation of a meter measuring the reactive energy exchanged) – to consider these points as a single aggregated point, subject to the same provisions as each non-interdependent point; • define the features that are necessary and sufficient in order to identify the said network configurations; • launch a procedure aimed at setting out provisions for the review of the technical-economic regulations of reactive energy transports on transmission and distribution grids. 24 April 2009 – By means of Resolution VIS 35/09, the Authority closed the investigation launched by means of Resolution VIS 68/08 concerning any possible problem in the implementation of the rules on the electricity market safeguard service. The investigation was launched following the great number of reports received from some operators, business combinations and final customers that complained about malfunctions in the first operating period (1 May – 31 December 2008) from some distribution companies, some default providers in charge for that period and companies that, pursuant to Article 1, paragraph 4 of Law no. 125/07, had to carry out the service until the identification of default providers (temporary providers). The investigation is closed with the acquisition of a document – annexed to the. 32. Operations’ Report. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. resolution and that forms an integral part thereof – which contains a summary of the results. 27 April 2009 – By means of Resolution ARG/ elt 49/09, the Authority amended Resolution ARG/elt 117/08 concerning the application methods of the compensation regime for the electricity supply costs incurred by low-income domestic customers. Moreover, it extended the deadline set out in Article 4 of the said Resolution. With this directive, the Authority intends to: • ensure equal treatment in the access to compensation methods for low-income domestic customers, by extending the deadline set out in paragraphs 4.1, 4.2 and 4.8 of Resolution ARG/elt 117/08; • specify the provisions set out in Article 4 of Resolution ARG/elt 117/08 concerning the retroactive application of compensation to customers with physical limitations pursuant to paragraph 2.2, letter b) of Annex A of Resolution ARG/elt 117/08. 27 April 2009 – The Authority issued the reference document no. 8/09 (expiry date: 5 June 2009) concerning the “Tariff regulation of temporary connections to MV and LV electricity distribution networks”. With this document, the Authority wants to launch the amendment of the Connection Code, by submitting some review hypotheses - that should be subject to a qualitative assessment before publication of the final provision - concerning temporary connection regulations (the Authority announced the launch of a specific data collection). 27 April 2009 – The Authority issued the reference document no. 9/09 (expiry date: 29 May 2009) focused on the urgent review of some provisions contained in the regulation of the number of outages without advance warning and of the 2008-2011 trend levels. The current regulation sets out that some outages are excluded from the incentive regulation concerning number and duration. These are identified by applying a statistical method that identifies the so-called “periods. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. THE ACEA GROUP.

(33) 18 May 2009 – By means of Resolution ARG/ elt 59/09, the Authority launched a process concerning communication standards between electricity distributor and suppliers. The adoption by electricity distributors and suppliers of different channels and methods for data transmission and reception led to strong system inefficiencies – as repeatedly underlined by the operators – thus requiring a communication standard regulation also for the electricity sector, similar to that of the natural gas sector. With the launch of this process, the Authority deems it necessary to duly take into account the state of the art of the information systems prepared by the operators, as well as the specific sector features. 26 May 2009 – With the following Decision, the Authority intends to organise the assessment activities for the first six months of implementation of the guidelines provided to distribution companies on the master data flow of electricity withdrawal points (ARG/elt 162/08). In order to ensure a proper and complete transfer of the information necessary to carry out the activities of withdrawal dispatching users, the Authority – by means of Resolution ARG/elt 162/08 – issued some guidelines for distribution companies on minimum contents, names and communication methods of the master data flow. Moreover, it set out that the distribution companies:. • shall adapt their procedures and information systems within 180 days from the date of the said regulation; • during the first submission of the master data flow, shall notify each dispatching user (through a single electronic document) of the correspondence between the traditional identification code that was previously used and the new code. The Authority launched a programme to assess the implementation by distribution companies of directives ARG/elt 162/08, based on the mandate given pursuant to the said directive. 19 June 2009 – By means of Resolution ARG/ elt 76/09, the Authority amended Annex A of Resolution no. 333/07 (Integrated Code to regulate the quality of electricity distribution, sales and measurement service), by postponing the relevant deadlines for the termination of the procedure set out in paragraph 22.4 of Annex A for 2008, as well as the deadlines set out in point 2 of Resolution ARG/elt 168/08. With the Integrated Code to regulate the quality of electricity distribution, sales and measurement service, the Authority introduced the incentive regulation of the number of long and short outages without advance warning, that was added to the incentive regulation on the duration of long outages without advance warning (in force since 2000). In order to ascribe outages to reasons of force majeure in case of particularly harsh and long events, a statistical method has been introduced in order to identify the Periods of Perturbed Conditions (hereinafter referred to as PPC). This method replaced the one in force for the 2004-2007 regulatory period. By means of Resolution ARG/elt 168/08, the Authority established the 2008-2011 starting and trend levels for those distribution companies that, as at 31 December 2006, served more than 5,000 LV customers and that had at least one area subject to regulation of outage duration in the 2004-2007 regulatory period. Taking into account that some distribution companies underlined an ineffective implementation of the statistical method concerning the number of long outages without ad-. Operations’ Report. 33. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. of perturbed conditions”, in which the “exceptional outages” that should be automatically ascribed to cases of force majeure are identified. However, this method showed some application problems with regard to the identification as “cases of force majeure” of the long outages (longer than three minutes) occurred in the periods of perturbed conditions. For this reason, the Authority deems it necessary to amend the method, in order to preserve its original objective and avoid any potential negative impact on final customers. Since the method has already been applied in order to identify trend levels, its review implies the need to redefine the trend levels for the number of outages for the 2008-2011 period..

(34) Corporate bodies. CHAIRMAN’S STATEMENT. financial highlights. GROUP OPERATING REVIEW. vance warning due to reasons of force majeure, in addition to a significant increase in thefts from electricity distribution plants that, if repeated in the future, may cause prolonged outages and, consequently, significant outlays for the Provision allocated for exceptional events, the Authority considers (as already stated in the reference document no. 9/9): • to postpone the deadlines and obligations provided for with regard to service continuity, which are relevant for the procedure concerning service continuity for 2008; • to postpone the deadlines set out in point 2 of Resolution ARG/elt 168/08 for the delivery of continuity data and the calculation of starting and trend levels for distribution companies, pursuant to paragraph 30.1 of the Integrated Code, which opted for three-year levels of continuity indicators, instead of two-year levels; • to exclude the outages due to thefts from electricity distribution plants, from Title 7 of the Integrated Code to regulate the quality of electricity distribution, sales and measurement service; • to ensure simplicity of the regulatory framework, by setting out similar mechanisms for the exclusion of the reasons of force majeure with regard to duration and number of outages without advance warning; • not to change the tariff impact of the incentive regulation of duration and number of outages; • to confirm the recalculation of starting and trend levels for the 2008-2011 regulatory period, in order to ensure coherence with the regulatory provisions and reject the requests made by distribution companies to maintain the levels that had already been established by means of Resolution ARG/elt 168/08; • to assess the adoption of new comparative publication forms of service continuity indicators of distribution companies; • for each distribution company, to monitor – in addition to the annual number of PPC – the value of minimum thresholds of the number of outages for the identification of PPC.. 34. Operations’ Report. Financial review. OTHER INFORMATION. EVENTS AFTER 31.12.2009. RISKS AND UNCERTAINTIES. OUTLOOK. 30 June 2009 – By means of Resolution ARG/ com 80/09, the Authority updated the tariff components for the coverage of general charges and further components of the electricity sector for the quarter July to September 2009. 30 June 2009 – By means of Resolution ARG/ elt 81/09, the Authority updated the table containing the annual expense estimated for electricity domestic final customers for the quarter July to September 2009. The annual reference expense – as calculated according to pre-established consumption and power levels – has been obtained by applying the economic conditions of the service subject to additional safeguards. 2 July 2009 – By means of Resolution ARG/ elt 87/09, the Authority set out provisions concerning the advance payment of the companyspecific equalisation amount for 2008, 2009, 2010 and 2011, pursuant to Resolution no. 348/07. The Authority sets out the following: • as advance payment and subject to equalisation, the Fund pays to those distribution companies for which the Authority established the company-specific correction factor for 2004, the amounts related to the company-specific equalisation for 2008, 2009, 2010 and 2011; • the amounts due as advance payment for 2008 are paid by 31 July 2009 and are equal to 80% of the company-specific equalisation amounts recognised for 2006; • the amounts due as advance payment for 2009, 2010 and 2011 are paid by 30 June of the year following that to which the advance refers, and are equal to 80% of the most recent companyspecific equalisation amounts that will be recognised upon payment; • with regard to the distribution companies for which the company-specific correction factor for 2004 will be established by means of a resolution following this one, the Fund pays any advance due within 90 days from the establishment of the related company-specific correction factors.. WorldReginfo - 1a8ea87f-896f-42dd-920d-4f9e81c34663. THE ACEA GROUP.