30 JUNE 2010

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(1)GROUP. GROUP. INTERIM CONDENSED CONSOLIDATED FINANCIAL. 30 JUNE 2010. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. STATEMENTS.

(2) GROUP. R CONTENTS Operations’ Report The ACEA Group. 4. Corporate bodies. 5. ACEA Group financial highlights at 30 June 2010. 6. Group operating review. 7. Economic and financial review. 88. Other information and significant events after the balance sheet date. 106. Risks and uncertainties. 113. Operating and Financial Outlook. 139. Explanatory Notes to the financial statements Consolidated Income Statement and Balance Sheet. 142. Consolidated Cash Flow Statement. 147. Statement of Changes in Consolidated Shareholders’ Equity. 149. Basis of Presentation and Consolidation. 152. applied as from 1 January 2010. 155. Consolidation policies and procedures. 163. Basis of Consolidation. 167. Financial Highlights of Companies accounted for under Proportionate Consolidation. 169. Segment Information. 171. Notes to the Consolidated Income Statement. 180. Notes to the Consolidated Balance Sheet. 210. Service Concession Arrangements. 267. Related Party Transactions. 292. Update on major disputes and litigation. 297. Commitments and contingencies. 308. Annexes. 314. Condensed Interim Consolidated Financial Statements 2010. 2. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. Accounting standards, amendments, interpretations, improvements.

(3) GROUP. R. Condensed Interim Consolidated Financial Statements 2010. 3. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. Report on operations.

(4) GROUP. R The ACEA Group The share capital of ACEA S.p.A. at 30 June 2010 breaks down as follows:. 13% 10%. 51% 26%. Municipality of Rome. Market. Suez. Caltagirone. * The above chart only shows equity investments of more than 2%, as confirmed by CONSOB data.. Condensed Interim Consolidated Financial Statements 2010. 4. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. As at the same date, the Group structure comprises the following principal companies:.

(5) GROUP. R Corporate bodies Board of Directors 1 Giancarlo Cremonesi Marco Staderini Paolo Bassi Francesco Caltagirone Jean Louis Chaussade Aldo Chiarini Paolo Di Benedetto Luigi Pelaggi Andrea Peruzy. Chairman Chief Executive Officer Director Director Director Director Director Director Director. Board of Statutory Auditors Enrico Laghi Corrado Gatti Alberto Romano Gianluca Marini Leonardo Quagliata. Chairman Standing Auditor Standing Auditor Alternate Auditor Alternate Auditor. Independent Auditors. Executive Responsible for Financial Reporting Giovanni Barberis. 1. Appointed by the Shareholders’ Meeting on 29 April 2010. Condensed Interim Consolidated Financial Statements 2010. 5. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. Reconta Ernst & Young S.p.A..

(6) GROUP. R ACEA Group financial highlights at 30 June 2010. € millions. Value of production (M€) EBITDA (M€) Ebitda Margin. December 2009 Final (Restated). June 2009 Final. 2,984. June 2010 Final. Delta June-10 vs. June-09. 1,485. 1,703. 218. 564. 269. 321. 52. 18.9%. 18.1%. 18.9%. 0.7%. (Restated). EBIT (M€). 186. 135. 168. 33. Ebit Margin. 6.2%. 9.1%. 9.9%. 0.7%. Net profit (loss) for the period (M€). -47. 58. 86. 28. 6,687. 6,667. 6,686. 19. Investments (M€). 518. 186. 197. 11. Cash Flow (M€). -317. -178. 2. 180. December 2009 Final (Restated). June 2009 Final. June 2010 Final. Delta June-10 vs. June-09. Staff. (Restated). Invested Capital (M€). 3,432. 3,352. 3,567. 135. Equity (M€). 1,287. 1,374. 1,354. 67. Net Debt (M€). 2,146. 1,978. 2,212. 66. 5.4% -3.7% 6.2% 86.9% 1.7 3.8. 4.0% 4.2% 9.1% 44.3% 1.4 3.3. 4.7% 6.4% 9.9% 47.7% 1.6 3.6. ROI ROE ROS Turnover D/E D/EBITDA. Condensed Interim Consolidated Financial Statements 2010. 6. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. (Average as a % of consolidation).

(7) GROUP. R Group operating review NETWORK INDUSTRIAL AREA The electricity demand in Italy in the first half year of 2010 was 158,479 GWh, up 1.8% compared to the same period of the previous year. This demand was met for 85.5% through internal production sources and the remaining part through net imports. The thermoelectric contribution to the total production is 65.4%, the percentage of hydroelectric contribution is 15.7% and that of geothermal and wind/PV sources is 4.4%. In the first half of 2010, peak demand on the Italian electricity network was equal to 52,164 MW, as recorded at 6 p.m. on 26 January 2010. It was higher than around 1,944 MW (+3.87%) compared to the peak recorded in the first half of 2009, equal to 50,220 MW, as. Demand for electricity in Italy. Increase / (Decrease) %. % Impact. over the period 1 January – 30 June 2010. 2010/2009. of productions. [GWh]. [%]. [%]. (a) Net Production. 138,159. 2.6. 18,699. -12.9. Hydroelectric. 24,934. -13.6. 15.7%. Thermoelectric. 106,197. 6.0. 65.4%. Geothermal. 2,517. 2.4. Wind power and PV. 4,511. 42.0. (b) Consumption for pumping systems. 2,595. -11.9. Domestic production. 135,564. 2.9. 85.5%. Balance of imports. 22,915. -4.1. 14.5%. DEMAND FOR ELECTRICITY. 158,479. 1.8. 100.00%. (of which Cip 6 production – estimate). (c) = (a) - (b). 4.4%. (*) The % of the hydroelectric and thermoelectric components were calculated net of auxiliary services and consumption for pumping systems. Condensed Interim Financial Statements 2010. 7. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. recorded at 6 p.m. on 13 January 2009..

(8) GROUP. R. Electricity transmission. During the first half of 2010, 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 0.15% compared to energy supplied in the same period of the previous year (data provided at the end of half year of 2009). Peak demand on the Acea Distribuzione network during the January-June 2010 period was 2,064 MW and was recorded at 6 p.m. on 26 January 20102. This value was lower than around 124 MW (-6.11%), compared to the maxium power recorded in the same period of the previous year, that stood at 2,188 MW , as recorded on 19 June 2009, at 1 p.m. (figure of effective maximum power recorded in the 2009 JanuaryJune period). By analysing the reference temperature trend (TDR) over the first half of 2010, it is noted that weather conditions were harsher compared to the previous year (with maximum differences of -2.87°C in May and -0.97°C in April). The influence of weather conditions on the electricity demand was significant in the months of March, April and May (with a maximum variance of +0.31%, 2.14% and -4.79%, respectively), thus increasing consumption with harsh temperatures and decreasing it with mild temperatures. February and June saw temperatures and calendar in line with the previous year, although slightly higher consumption (with deviations of +0.31% and +0.60%, respectively). was lower (-0.77%). The following graph shows the first half trend of the monthly average difference in the reference temperature trend between 2010 and 2009. The graph also shows the 2010 reference temperature trend.. 2. Preliminary figure as, at the reporting date, it is being processed for final consolidation.. Condensed Interim Financial Statements 2010. 8. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. In January, temperatures and calendar were in line with the previous year, but consumption.

(9) GROUP. R Delta TDR (TDR '10 vs TDR '09). TDR 2010. 5,00. 25. Delta TDR (TDR '10 vs TDR '09). 4,00 20. 3,00 2,00. 15 TDR. 1,00 0,00. 10. -1,00 -2,00. 5. -3,00 -4,00. Gennaio. Febbraio. Marzo. Aprile. Maggio. Giugno (*). Delta TDR (TDR '10 vs TDR '09). -0,27. 0,75. -0,77. -0,97. -2,87. -0,49. TDR 2010. 7,46. 8,22. 10,55. 14,03. 17,17. 22,55. 0. (*) Temperature data related to June have been estimated based on period forecasts available at the drafting date of these notes. Key: January/February/March/April/May/June. 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 the corresponding periods of 2009 and 2010, as registered by the related measurement system (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):. Total -0.15% 0.82%. The following table shows the monthly sequence of electricity injected into ACEA Distribuzione’s network during the first half of 2010, together with the same series for 2009:. ENERGY INJECTED INTO ACEA NETWORK [GWH] January. February. March. April. May. June. Total. 2010. 1,043.61. 953.59. 996.55. 893.25. 920.65. 1,009.49. 5,817.14. 2009. 1,051,70. 950.64. 975.65. 877.27. 966.92. 1,003.44. 5,825.61. Condensed Interim Financial Statements 2010. 9. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. MONTHLY PERCENTAGE VARIATIONS – “RAW” SERIES, “PURIFIED” SERIES January February March April May June "RAW” SERIES -0.77% 0.31% 2.14% 1.82% -4.79% 0.60% "PURIFIED" SERIES -0.12% 1.26% 1.54% 1.12% 0.35% 0.82%. 2010 Vs. 2009.

(10) GROUP. R 3. These electricity amounts were intended to cover the needs of the utilities supplied by the above-mentioned 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 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. With regard to the first half of 2010 and as compared to the same period of 2009, 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 sefeguards. Free market. Underlying distributors. Total. AU Source GWh. Other Sources GWh. GWh. GWh. GWh. 2010. 2,057.49. 214.36. 3543.93. 1.36. 5,817.14. 2009. 2,295.39. 214.36. 3314.49. 1.37. 5,825.61. 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 Italian Authority for Electricity and Gas, based on the Decree issued by the Ministry for Productive 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.. Condensed Interim Financial Statements 2010. 10. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. assigned to it (established by Terna, in accordance with the indications provided by the.

(11) GROUP. R Service quality. 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 2008-2011 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 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. Condensed Interim Financial Statements 2010. 11. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. •.

(12) GROUP. R 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;. • the recalculation of starting and trend levels for the 2008-2011 regulatory period, that will be adopted by 31 October 2009; • deferral of 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: o requested to the Electricity sector equalisation fund the amount set out in o 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, by reason of the fact that operators had to recalculate the 2008 continuity data. This occurred only on 22 March 2010 by resolution AEG/elt 34/10 entitled “Definition of continuity recovery amounts of electricity distribution services for 2008”.. Condensed Interim Financial Statements 2010. 12. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. paragraph 34.7, could correct this amount by 31 July 2009;.

(13) GROUP. R The reporting activity for 2009 was instead completed within the terms set out by the Regulator (within 31 March 2010). To date, we are waiting for the final validation by the latter. Third tariff cycle The year 2010 represents the third year of application of the tariff structure defined by the Electricity and Gas Authority (the Authority) in the “Transmission, Distribution and Metering Code for the regulatory period 2008-2011”, contained in Annex A of Resolution 348/2007. It is recalled that the previous tariff structure (for the regulatory period 2004-2007) provided for contemporaneous introduction of two equalisation mechanisms, one “general” and the other “company-specific”, designed to recognise the specific conditions under which Italy’s various distribution companies operate. These mechanisms are partly based on parametric/actual costs analyses (general equalisation: 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 actually incurred by individual companies in order to provide the service are influenced by the specific characteristics of the customers served and by It is therefore necessary to safeguard the economic efficiency and profitability of companies via adoption of compensatory measures to cover the higher costs incurred with respect to the tariffs. The general equalisation mechanisms for the costs and revenues deriving from distribution and metering for the years 2008-2011, which take account of the innovations introduced by Resolutions ARG/elt 18/08 and 30/08, are as follows: equalisation of distribution service revenues; equalisation of revenues deriving from increased returns designed to provide incentives for investments in distribution networks; equalisation of direct distribution costs on HV networks;. Condensed Interim Financial Statements 2010. 13. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. external factors beyond the company’s control..

(14) GROUP. R equalisation of direct HV/MV transformation costs; equalisation of direct distribution costs on MV and LV networks; equalisation of revenues from the supply of electricity to residential customers; equalisation of revenues from the LV metering service; equalisation of the marketing costs incurred by distribution companies in respect of LV customers; equalisation of the cost of purchasing electricity used internally for transmission and distribution; and, equalisation of the difference between actual and standard losses. The equalisation mechanism designed to provide incentives for investments in distribution networks aims to offer distribution companies an increased return on invested capital. This measure aims to promote specific projects capable of developing distributed generation and improving voltage quality on the networks. When carrying out its annual review of distribution tariffs from 2010, the Authority has reserved the right to allocate a portion of the tariff components to cover these investments. This aims to ensure that the increased returns are only granted to companies who have actually carried out such investments. Resolution ARG/elt 30/08 established the method for calculating the equalisation of revenues deriving from the LV metering service. The mechanism aims at guaranteeing that returns on investments in meters and electronic meter reading systems, and the right to granted to distribution companies who have actually carried out such investments. The equalisation mechanism also introduces penalties for distribution companies who do not comply with the obligation to install LV electronic meters set out in Resolution 292/2006. In the same resolution the Authority launched the new equalisation mechanism to cover the cost of marketing distribution services to LV customers, with a view to protecting the financial position of distribution companies. Two regimes are to be applied to distribution companies that have established a separate company to supply services subject to additional safeguards, and to those who have combined distribution services with the sale of electricity.. Condensed Interim Financial Statements 2010. 14. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. depreciate obsolete electro-mechanical meters to be replaced by electronic meters, are.

(15) GROUP. R Resolution ARG/elt 18/08 amended the “Integrated Text of the Electricity and Gas Authority’s provisions governing the sale of electricity to end users requiring additional safeguards and protection (the “Retail Service Code”), in accordance with Legislative Decree 73/07”, approved with Resolution 156/07. This new resolution has established equalisation mechanisms for the cost of procuring electricity incurred by each provider of services to end users subject to additional safeguards. The regulation governing load profiling requires electricity for customers subject to additional safeguards to be quantified on a residual basis, and to thus also include electricity consumed by retailers themselves in the distribution and transmission and the difference between the actual losses and standard network losses of distribution companies (Delta losses). In context of this resolution, therefore, the Authority has established the method of calculating amounts for equalisation relating to the procurement of electricity used in transmission and distribution, and to the value of the difference between “actual losses” and “standard losses” to be afforded to each distribution company. Moreover, according to the information reported by the main distribution operator concerning the unexpected and significant decrease in connection services due to the severe economic downturn for the 2010 – 2011 period, the Authority, by Resolution ARG/elt 203/09, provides for an optional equalisation mechanism to guarantee revenues from lump-sum connection fees, which can be adopted by each distribution company on specific request to the Authority by the final deadline of 31 March 2010. Acea. 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, the Authority is required to carry out an assessment 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. By means of Resolution ARG/elt 30/08 the Authority has provided for:. Condensed Interim Financial Statements 2010. 15. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. Distribuzione SpA filed in an adhesion application to the equalisation mechanism..

(16) GROUP. R updating the company-specific adjustment factor (Csa), for the regulatory period 2008-2011, with a view to bringing the amount for company-specific equalisation for each individual company into line with its actual investment; setting a value on the permitted actual costs incurred by distribution companies included in company-specific equalisation, using methods in line with those adopted in the determination of tariffs for the regulatory period 2008-2011; supporting combinations of distribution companies, awarding companies involved in business consortiums an amount for company-specific equalisation equal to the sum of the amounts recognised for the individual companies; restricting participation in company-specific equalisation to companies qualifying for the equalisation regime in the regulatory period 2004-2007; updating, for 2008, the actual costs allocated to distribution companies that take part in company-specific equalisation, based on investigations of individual companies, to be conducted by the Authority’s Tariff Department, in accordance with the criteria adopted tariffs for the period 2008-2011; providing that the Electricity Industry Equalisation Fund shall have the funds to pay amounts for company-specific equalisation for the years 2009, 2010 and 2011 based on updated company-specific correction factors in accordance with this resolution and permitted revenues subject to equalisation. With Resolution ARG/elt 87/09, the Authority set out provisions concerning the advance Authority, in fact, sets out that the electricity sector equalisation fund be provided by distribution companies, for which the Authority set out the Csa factor for 2004. These are amounts in the form of prepayment, with the exception of equalisation, relating to specific equalisation for the years 2008, 2009, 2010 and 2011. The amounts paid for 2008 should be calculated based on 80% of the company-specific equalisation amount assessed for 2006 and shall be paid to beneficiaries by 31 July 2009. For the years 2009, 2010 and 2011, these amounts will be calculated based on the la test company-specific equalisation amounts that will be assessed upon payment. The payment to companies will be made on 30 June of the year following that to which the prepayment refers.. Condensed Interim Financial Statements 2010. 16. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. payment of the company-specific equalisation amount for 2008, 2009, 2010 and 2011. The.

(17) GROUP. R Further innovations introduced in the third regulatory period regard: determining a mandatory tariff for distribution services, to be set by the Authority and applied by each distribution company to its current and future counterparts. This arrangement thus replaces the system based on basic and special tariff options, as adopted for distribution services during the second regulatory period, proposed by the various distribution companies; distinguishing between metering service costs with appropriate specific fees to cover costs associated with installing and maintaining meters, taking meter readings and confirming and recording readings; defining of a dynamic mechanism for adjusting permitted revenues to cover the cost of marketing the distribution service, with the aim of compensating for the existing imbalance between permitted costs and revenues deriving from movements in the volume of services provided; separating the amounts resulting from application of fees for reactive energy withdrawal, now allocated to the “Cost of measures and initiatives designed to promote energy efficiency among end users of electricity” account, from distribution revenues. The new regulations have also changed the method of updating tariff components, to the extent that: the portion of transmission and distribution tariffs covering operating expenses is the part intended to provide a return on invested capital, will be updated on the basis of the gross fixed investment deflator, movements in the volume of services provided and the level of permitted investments, and the rate of variation linked to increased returns designed to provide incentives for investments in distribution networks; the part intended to cover depreciation has been updated, using the gross fixed investment deflator, movements in the volume of services provided and the rate of variation linked to the reduction in gross invested capital.. Condensed Interim Financial Statements 2010. 17. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. updated via a price-cap mechanism;.

(18) GROUP. R With regard to connection fees and fixed charges, in the document “Economic conditions for delivery of the connection services”, attached to Resolution 348/2007 as Annex B, the Authority has: established the procedural and economic terms for delivery, of the service connecting consumers to LV grids to end customers, with an obligation to connect third parties; defined additional economic terms with regard to those established in Resolution 281/2005; determined the procedural and economic terms for delivery of network connection services to distribution companies, with an obligation of connecting third parties; established the procedural and economic terms for the provision of specific services (the transfer of equipment requested by users, contract transfers, transfers of supply, disconnections, etc…). Regulatory Framework 8 January 2010 – By means of Resolution GOP 1/10, the Electricity and Gas Authority (hereinafter: the Authority), adopted a three year strategic plan for 2010-2012. The main goals to be achieved by these regulations are as follows: •. promoting and developing competitive markets, including by harmonising the. •. supporting and promoting efficiency and good value in the infrastructure services;. •. protection of customers with respect to energy services by means of the full openness of markets, and developing the levels of service quality and safety;. •. promotion of the idea to use energy in a reasonable manner and environmental protection;. •. supervision of the proper application of the rules with respect to the regulated parties;. •. strengthening the consultation instruments with operators and consumers;. •. increasing operating effectiveness and internal operations within the Authority.. Condensed Interim Financial Statements 2010. 18. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. electricity and gas markets, restricting the power of dominant players;.

(19) GROUP. R 8 January 2010 – By means of resolution ARG/elt 1/10, the Authority established that distribution companies would have to notify the sellers of the separate values of the A, MCT and UC components for each supply point, separating them from the electricity transport costs on the distribution networks. This obligation, running from 1 July 2010, is justified by the following: •. most sellers have not fulfilled the obligation, as per Resolution ARG/elt 167/08, to provide the Authority with the data on the average monthly electricity prices on the final market, with the procurement costs, network costs and measurement costs, general system charges and taxes separated out, by 45 days from the end of each quarter;. •. by Resolution ARG/elt 202/09, sellers must indicate the following in the invoices sent to their end customers: o separation out of individual price components making up the payments invoiced if the end customer so requests; o detailed information, on at least an annual basis, of the components owed to cover the costs incurred in the general interest, and the general charges incurred by the system.. 2 February 2010 – By means of Resolution ARG/elt 8/10, the Authority requested a notice to be included as an Annex to the bills issued to domestic customer who have electronic meters, commissioned and reprogrammed on a time-period basis. This notice, 2010) of PED fees, which will vary in accordance with the time period, must contain the following: •. for the second last billing period (from 1 March 2010), information (Annex A) containing information on application of the two-hourly PED prices;. •. at the last billing period (from 1 May 2010), an information sheet (Annex B) which, along with the information already provided in Annex A, will note the option of accepting offers with two-hourly prices upon request or accepting offers with temporary two-hourly prices, having higher gradualness in the differential between the F1 slot and the F23 slot, in accordance with parameters that will be defined after the consultation process started up by the consultation document no. 36/09.. Condensed Interim Financial Statements 2010. 19. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. regarding the most recent two billing periods prior to application (which will start on 1 July.

(20) GROUP. R. 3 February 2010 – By means of Resolution ARG/elt 10/10, the Authority implemented procedures to define the standards regarding the communication flows between electrical energy distributors and sellers with respect to the metering data regarding the timed and non-timed supply points. This procedure completes the process that, following the consultation document no. 14/07, that led to formalisation, in accordance with resolution ARG/elt 162/08, of the flows of supply point customer information. As regards how to determine the communication standards in question, the Authority announced the commissioning of a working group that will include the interested parties, and the issue of subsequent consultation documents. 4 February 2010 – By means of Resolution ARG/elt 13/10, the Authority introduced provisions regarding the standardisation of the contents and operation of the communication flows between electrical energy distributors and sellers for the commercial quality services governed by Annex A to resolution no. 333/07 (hereinafter: TIQE Integrated Code to regulate the quality of electricity distribution, sales and measurement service): •. making technical data that can be acquired by reading a meter unit available (M01);. •. making other technical data available (M02);. •. disconnection of the supply upon request of the end customer (D01);. •. reconnection-restoration of supply following suspension for non-payment (R01).. the standardisation of communication flows was established, confirming, in accordance with the consultation document (DCO) no. 35/09 proposals, its extension to all the LV and MV customers, even though at the consultation stage, comments were made to the effect that the range of application should be limited to the free market and the market subject to additional safeguards. Regarding the introduction of the advanced instruments (AtoA type and/or portal), resolution ARG/elt 13/10 provided for the following time-frames: •. supply of an advanced instrument starting from 1 October 2010 for the distribution companies with more than 100,000 customers at 31 December 2009;. Condensed Interim Financial Statements 2010. 20. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. Specifically, by this resolution, the reference market where the provisions apply regarding.

(21) GROUP. R •. use of PEC files with attached files in Excel format or equivalent (not owned) or CSV starting from 1 March 2010 for the distribution companies with less than 100,000 customers at 31 December 2009.. Compliance with the aforesaid time-frames may be waived in the event of early input subject to agreement between the parties, of an advanced instrument, in order to favour an increase in the efficiency of the information flows in any case. In addition, the aspects governed by this provision include the provision regarding the definition of mass requests, for which processing can be carried out within one business day from reception, establishing that mass requests are those that number more than 20. This is in line with the provisions of DCO 35/09, but was objected to by certain operators, who, wanted to fix the value as 2 when they were consulted. Finally, resolution ARG/elt 13/10 refers to the definition of provisions regarding the following to subsequent provisions: •. minimum obligatory sequence of the messages;. •. minimum contents of each information exchange;. •. inadmissibility reasons for the requests governed by the TIQE.. 11 February 2010 – By means of Resolution no. 4/10, the Authority approved the Annual Operating Plan for 2010, which includes the operating objectives originating from the strategic objectives indicated in resolution GOP 1/10 (Three Year Strategic Plan 20102012). The Operating Plan provides specific facts on the resolutions and documents for Along with the Operating Plan, the Authority added the calendar of readings and information flows falling on regular dates attached to the resolution in question. 19 February 2010 – By means of Resolution VIS 8/10, the Authority ordered the operators to fulfil the obligations to gather the economic and asset data of the separate annual accounts pursuant to resolution no. 11/07 (unbundling) for 2007 and 2008, providing for the staggered opening of access to the computerised communication system in accordance with the following time-frames: •. the parties that, while having already implemented the computerised input of separate accounting data system, have still not completed transmission of this data. Condensed Interim Financial Statements 2010. 21. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. consultation that are planned to be issued every four months..

(22) GROUP. R as of 1 February 2010 (including the parties from the Acea S.p.A. group), must do so by and no later than the final deadline of 19 March 2010; •. the parties who must send the separate accounting data, or their assignees, who, as at 1 February 2010, still have not started input of this data, must input that data and send it starting from 29 March 2010 and by the final deadline of 7 May 2010.. 25 February 2010 – By means of Resolution ARG/com 25/10, the Authority modified resolution ARG/elt 117/08, regarding provisions on the supply of the electricity bonus. In fact paragraphs 7.2, 7.3 and 7.4 of Annex A of the resolution ARG/elt 117/08 were abolished, regarding payments for situations of insufficiency of the invoice amounts with respect to the payments made. This modification incorporated the findings made by different electricity sellers, including through notification by the FederUtility association, regarding: •. the operational difficulties, and the high finance costs that would result from a changed billing system;. •. the progressive decrease in the number of insufficiency situations following completion of the allocation of the retroactive bonus quotas.. In addition, resolution ARG/com 25/10: •. noted that the Authority will issue a provision in the future to define the procedures to validate the electricity bonus requests, with identification of standardised means of checking the admissibility requirements for the electricity. •. modified resolution ARG/elt 185/09, regarding subsidies for the people affected by the seismic events in the province of L’Aquila, noting the provisions pursuant to paragraph 13.1, in the sense of the specification of the compulsoriness of the payment of the bonus allocation;. •. corrected the errors in table 8 of the resolution ARG/com 211/09.. 25 February 2010 – By means of Resolution VIS 12/10, the Authority authorised the 3 inspection visits to the electrical energy distribution companies regarding tariff regulation, to be carried out by 31 December 2010. The inspections will involve: •. the correct tariffs for the services;. Condensed Interim Financial Statements 2010. 22. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. bonus;.

(23) GROUP. R •. application of the tariff components related to overheads in general;. •. management of the files and allocation of the electricity bonus;. •. statements on the ways to check the general restrictions and equalisation measures;. •. consistency of the aforesaid statements with the energy budget.. 8 March 2010 – With document for consultation DCO 2/10, the Authority presented its final guidelines on the checks to carry out on the distribution companies, in order to assess the existence of the conditions necessary to obtain the Ic incentive, provided under paragraph 12.1 of resolution no. 292/06, in the event of achieving the objective of installing and starting up electronic meters for a number of LV supply points with available power lower or equal to 55 kW equal to 85% of the total. Previously resolution ARG/elt 190/09 dealt with the matter, regulating: •. the means to carry out the controls at the offices of the Authority;. •. the option, for distribution companies that apply by 31 March 2010, to postpone the due date for checking achievement of the 85% objective to 31 December 2010, against obtaining an incentive reduced to 2/3 of the total.. DCO 2/10 confirmed the controls in place noted in the previous consultation document DCO 22/09, entailing the assessment: •. the commissioning of the electronic meters installed on the LV supply points;. •. implementation of updates of the changes in numbers of the LV end-users on a. •. registration of all the LV customers actually disconnected as disconnections;. •. registration of the disconnected LV customers equipped with these electronic meters using electronic meters.. Therefore DCO 2/10 provided the specifications on the check-list of controls that will be carried out at the offices of the distributors, giving information: •. on the documentation to provide before actually carrying out the controls;. •. the means to check compliance.. The date by which comments and suggestions should be sent to the Authority was scheduled for 09 April 2010.. Condensed Interim Financial Statements 2010. 23. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. continuous basis;.

(24) GROUP. R 19 March 2010 – By means of Resolution ARG/elt 32/10, the Authority postponed the expiry date for the valuation of the relief service provided by the distributors to 1 July 2010, in accordance with paragraph 10.2 of resolution ARG/elt 341/07, with reference to the power failures that are not significant accidents and the regard HHV/MV or HV/MV transformation plants connected directly to the National Transmission Grid (hereinafter: RTN). In addition, ARG/elt 32/10 resolution provided for implementation of a procedure for the definition of the way to manage the aforesaid financial items for the service provided for continuous service, and the top limit amount for incentives and penalties for transmission service continuity. 22 March 2010 – By means of Resolution ARG/elt 34/10, the Authority determined the total incentives and penalties for 2008 for the continuity of the electrical energy distribution service, in accordance with the continuity level trends established by the Authority for the different territorial areas. In addition, the Equalisation Fund for the Electricity Sector (hereinafter: Fund) was charged to pay the aforesaid incentives, in accordance with the yield available supplied by the UC6 tariff component. As regards Acea Distribuzione S.p.A., incentives of 7,191,664 euros were allocated. 25 March 2010 – By means of Resolution ARG/elt 39/1 treatment pursuant to paragraph 11.4 letter d) of Annex A of resolution no. 348/07 (hereinafter: TIT - Transport Code), with respect to automation, protection and control of active MV networks. The provision identifies the purpose of the incentive in the presentation of the pilot projects, to be presented by 30 September 2010, regarding the promotion and development of smart grid technology. This indication differs from what had previously been provided by the TIT, to the extent that: •. it narrows the previous concept of investments, also including also the investments already in place, replacing it with the pilot projects;. Condensed Interim Financial Statements 2010. 24. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. 0, the Authority presented the procedure and criteria for attribution of the incentive.

(25) GROUP. R •. it expands the smart grid concept, including all technological innovations on the distribution networks that can benefit: o the distributed generation; o the active participation by the customers; o the rational use of the energy; o the support of electrical mobility; o the improvement of the quality of the service.. The ARG/elt 39/10 resolution identifies the following as the requirements for admissibility to the incentive treatment: •. the definition of the project as the concrete demonstration in the field of MV distribution networks in operation;. •. the presence of energy flux reversals on the network, from inactive to active, at least 1% of the annual operating time, with reference to an active MV network, or alternatively, to a portion of the active MV network;. •. provision for a control/regulation system of the voltage on the network and a system that can ensure automatic recording of the significant technical signals;. •. the use of non-owned communication protocols.. In order to value the aforesaid pilot projects, the ARG/elt 39/10 resolution therefore provided, in accordance with paragraph 11.7 of the TIT, for the appointment of an expert commission to attribute the incentives in accordance with the ratio between the expected. 25 March 2010 – By means of Resolution ARG/elt 40/10, the Authority determined the 2008 amount of revenue equalisation for the low voltage metering service, pursuant to article 40 of the TIT, and the quantification of the RPMm penalty, in relation to the degree of discharge of the electronic meter installation obligations pursuant to paragraph 8.1 of resolution no. 296/06. Acea Distribuzione S.p.A. was assigned a payment to the benefit of the Cassa of 10,589,215.59 euros, to which RPMm penalties of -2,783.04 euros should be added. In addition, the ARG/elt 40/10 resolution: •. changed the TIT:. Condensed Interim Financial Statements 2010. 25. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. benefits and the expected costs..

(26) GROUP. R o with the change in the expiry date for sending the general equalisation data to the Authority and/or the Fund (Cassa). These data are no longer scheduled for 31 July, but 30 days from availability of the relative forms or the data gathering computer system; o with the introduction of administrative indemnities, charged to the distribution companies and to be applied if the equalisation data sent are changed after the equalisation amount has already been notified by the Authority or the Fund to distributors; •. this resolution introduced, to Annex A of the ARG/elt 40/10 resolution, the criteria for the official determination of the equalisation amount of revenues for the low voltage metering service, for that which concerns: o calculation of the gross financial increases and value of the accumulated depreciation amounts pursuant to paragraph 40.1 of the TIT, equal to 0 (zero) in the event of no communication; o the number of electromechanical meters installed at the low voltage supply points, distinguishing them in accordance with whether they have complied with the obligation to communicate to the Fund or not; o the volume of service supplied, or the number of supply points powered by low voltage, and the electrical energy levels supplied, equal to the data communicated to the Fund, or if this communication has not been made, from the most recent data communicated to the Authority or to other o the value of the penalties for failure to comply with the electronic meter installation levels required, officially making the number of electronic meters installed to 0 (zero).. 25 March 2010 – By means of Resolution ARG/elt 41/10, the Authority, with which it updated the economic terms of the sales service subject to additional safeguards, with reference to the second quarter of 2010 (April – June), also changed the equalisation of the cost of purchasing electricity used internally for transmission and distribution pursuant to paragraph 13quater of Annex A to resolution no. 156/07 (hereinafter: TIV - Retail Service Code), with addition of the acknowledgement to the distributors that procure an amount. Condensed Interim Financial Statements 2010. 26. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. administrations;.

(27) GROUP. R of costs equal to those which would have been incurred for the purchase of electrical energy from the operators subject to additional safeguards. 26 March 2010 – By means of Resolution ARG/com 44/10, the Authority updated the tariff components for the cover of the general charges and further charges for the electricity and gas sectors (A, UC and MCT tariff components) with reference to the 2nd quarter of 2010 (April-June), specifically establishing: •. the reduction of the A2 tariff component in accordance with the estimates for the charges from nuclear power expected for 2010;. •. the increase in the A3 tariff component, in light of the increasing charges for the PV energy plant incentives;. •. the reduction of the A4 tariff component, due to the elimination of certain special tariff structures in accordance with Law no. 99/2009.. In addition, by resolution ARG/com 44/10 a material error in the TIT was corrected, in the part regarding payments for the transmission service (art. 16). 29 March 2010 – By means of Resolution no. 2/10, the Authority established the instructions regarding communication standards between electricity sellers and distributors •. making technical data that can be acquired by reading a meter unit available (M01);. •. making other technical data available (M02);. •. disconnection of the supply upon request of the end customer (D01);. •. reconnection-restoration of supply following suspension for non-payment (R01).. With respect to the M01 flow, the Authority considered the opinions of certain operators, to exclude its applicability to LV and MV end customers with availability of power higher than 55 kW and with time treatment. Therefore, by resolution no. 2/10 the Authority confirmed what had been proposed during the consultation stage, as regards: •. the communication flow sequence that provides for: o sending the request to the distributor; o verification of the admissibility of the request by the distributor and if negative, the distributor will have to send the inadmissibility message, giving. Condensed Interim Financial Statements 2010. 27. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. with reference to the following commercial quality supplies, regulated by the TIQE:.

(28) GROUP. R the reasons, the same day as the request arrives if single, or by the following business day in the event of mass requests. If there is a request that does not pass the admissibility check, the distributor will cancel it, while the vendor will send a new request if necessary; o the distributor will send the result of the requested execution of the service. •. the communication flow fields, in which the introduction of the “despatching contract code” is noted as an optional field;. •. the reasons for inadmissibility, adding, with respect to DCO 35/09, further reasons “POD matched to a different customer than the one noted in the request” and “disconnection outside working hours not applicable as it is not a temporary LV connection”.. In addition, Resolution no. 2/10 governed: •. standardisation of the objective of the PEC and the type of files attached to this;. •. the admissibility check time-frames, establishing a delay of no more than one day for requests higher or equal to 20 (known as mass requests), and in real time for requests of less than 20.. 7 April 2010 – By means of Resolution VIS 20/10, the Authority postponed the term for the completion of the enquiry on the application of the regulation regarding the electricity bonus to 30 June 2010. This regulation was implemented by Resolution VIS 141/09.. of end-user internal grids, in line with provisions set out by Art. 33 of Law 99/09, while setting out, in particular: •. a first list of end-user internal grids consistent with provisions set out by Art. 33, paragraph 1, of Law no. 99/09, i.e.: o an existing grid, or a grid in which, at the same date, the development works have been started or all authorisations, as per regulations in force, have been obtained; o connection of industrial end consumers, or connection of industrial end consumers and electrical energy production units essential for the industrial production process, provided that they are included in local areas. Condensed Interim Financial Statements 2010. 28. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. 12 April 2010 – By means of Resolution ARG/elt 52/10, the Authority defined some lists.

(29) GROUP. R composed of no more than three adjoining municipalities, or no more than three adjoining provinces. This only in the event the production units is powered by renewable sources; o no obligation of third-party connection, provided that each subject included in the same network has the right to connect, as an alternative, to the grid with compulsory connection by third-parties; o connection through one or more connection points to a grid with compulsory connection by third-parties, having a nominal voltage not lower than 120 kV; o presence of a subject in charge, acting as sole manager of the same grid, with the possibility that this subject differs from the owners of the consumption or production units, but is not the owner of electricity transmission and despatching or distribution concessions. •. a second list of grids characterised by a compulsory connection of third parties. In this case, they are infrastructures to which, based on the previous rules, subjects other than distribution companies were connected;. •. a third list includes grids for which the following is to be provided for: o check of connection data of the first end consumer; o check of terms set out by Art. 2 of the Legislative Decree no. 115/08 on end-user efficient systems.. •. a fourth list of grids is composed of grids that are deemed not eligible to be set out by Art. 33, paragraph 1, of Law 99/09, but for which special assessments are under way.. 19 April 2010 – By means of Resolution ARG/elt 56/10, the Authority set out some amendments to Annex A (TIT) and B (TIC) to Resolution no. 348/07, in order to: •. facilitating the connection for the supply of heat pumps for household heating;. •. facilitating the dissemination of private recharge infrastructures for electric vehicles.. The above-mentioned targets are functional to: •. the achievement of savings objectives of primary energy;. •. the increase in the use of renewable energy;. Condensed Interim Financial Statements 2010. 29. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. included in the list of end-user internal grids as they are not compliant with terms.

(30) GROUP. R •. the limitation of CO2 emissions.. Therefore, this resolution provides for the overcoming of: •. the limit set out by paragraph 5.2 of TIC, thus allowing to request a second electrical energy input points for the separate powering of heat pumps with respect to the primary supply for households, also with an available power higher than 3.3 kW;. •. obstacles in the installation of private recharge infrastructures for electric vehicles, through: o the application of paragraph 5.2bis of TIC, which makes an exception to the solely term of the input point for infrastructures destined to private powering of electric vehicles; o the explicit extension to the above-mentioned infrastructures as well as of the possible inclusion amongst applications connected, or pertinent to households for domestic contracts as per paragraph 2.2, letter a), item ii) of TIT.. 19 April 2010 – By means of Resolution VIS 24/10, the Authority set out the supplement of the proceeding started with resolution VIS 72/09 with respect to the company Acea Distribuzione S.p.A. related to the breach in the discipline on the availability for sellers to know data on input points not on a time-period basis, as per paragraph 18.3 of TIV. This proceeding follow the outcome of inspections provided for by resolution VIS 16/09, inspections highlighted the following: •. the 20-day term from the recording or the metering attempt was not fulfilled for the sending of data to sellers, as per paragraph 18.3 of TIV, Table 2;. •. information as per Table 2 is incomplete, and especially the following is not reported: o incremental values of active energy supplied by time period (line 3 of Table 2); o quantity of differential active electricity, by time period, recorded from the last metering (line 4); o incremental values of totally supplied reactive energy (line 5);. Condensed Interim Financial Statements 2010. 30. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. performed on 4 and 5 June 2009 in compliance with resolution VIS 16/09. These.

(31) GROUP. R o quantity of differential active electricity, by time period, recorded from the last metering (line 6); o quantity of differential reactive electricity, by time period, for the supply points with available power higher than 16.5 kW (line 7). Moreover, inspections also assessed the application, for supply points with available power higher than 55 kW, of time period treatment instead of hourly treatment, in breach of provision set out by Art. 4 of Annex A to resolution ARG/elt 278/07 (hereinafter: TILP), whose entrance in force, after subsequent postponements, was lastly fixed by resolution ARG/elt 135/09 to 1 April 2009. The assessment of this harmful conduct has therefore determined the start-up of the proceeding under evaluation and the matching of this proceeding with the one started by resolution VIS 72/09. 19 April 2010 – With consultation document DCO 7/10, the Authority submitted the following proposals to amend rules on incentives for transmission services, which were provided for with resolution no. 341/07: •. the valuation of mitigation services rendered by distribution companies for service continuity, with the provision of a two-fold hypothesis of decreasing mitigation according to the duration of power failure, thus indicating either: o the application of the entire reduction compared to the total amount acknowledged immediately after the first four hours of power failure; or o the application of a unit value adjusted according to time periods (e.g.: 8-. •. the application of the compulsory issue of monitoring indicators of availability and non-availability of grid elements. It is proposed that these elements disclose the annual time percentage in which the grid element is in a temporary radial set-up, compared to the period of time in which the grid element is integral part of the HV grid.. 20 April 2010 – By means of Resolution ARG/elt 57/10, the Authority introduced amendments to rules on unbundling, according to resolutions of the Council of State taken on 16 December 2008, which highlighted the partial illegality of provisions on functional unbundling.. Condensed Interim Financial Statements 2010. 31. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. hour time periods)..

(32) GROUP. R In view of the removal of some restrictions on functional unbundling currently provided for in Annex A to resolution no. 11/07 (hereinafter: TIU), the resolution approved before the consulting proceeding started by DCO 32/09 has therefore provided the following amendments: •. a time limit is fixed on 31 December 2014 for provisions on functional unbundling and related action of independent operators;. •. the title of independent operator is extended to leading operators as well;. •. the netting of paragraph 12.2 of TIU, regarding the definition by the Authority of the binding guidelines, while acknowledging that this provision is excessive compared to provisions set forth by the EU regulations. Resolution ARG/com 132/08 is therefore cancelled. This resolution included the above-mentioned guidelines, and set out that independent operators had to draw up and send the binding guidelines to the Authority;. •. the possibility of having one single databank of distributors and sellers included in a vertically integrated company, provided that: o data related to distributors are logically separated from data related to sellers; o the ownership and responsibility of managing and maintaining the databank is granted to distributors; o companies selling on a market subject to additional safeguards are legally separated from companies selling on a free market; the possibility of rendering a joint distribution service of natural gas and/or electricity, with the distribution of various types of gas through networks or the management of other network infrastructures for the rendering of public services, provided that distribution and metering is maintained detached from selling;. •. the cancellation of metering activities from activities subject to functional unbundling, so as the latter, according to provisions set out by the Authority, is charged to distribution companies for which outsourcing restrictions in data processing and relevant information are still effective;. •. the possible creation of the “combined system operator”, within a vertically integrated operator, dealing with both electricity transmission and distribution services.. Condensed Interim Financial Statements 2010. 32. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. •.

(33) GROUP. R Moreover, resolution ARG/com 57/10 modified some provisions on administration and accounting separation, while introducing simplified preparation ways of separate annual financial statements for operators of small energy sources and self-producers. 22 April 2010 - By means of Resolution GOP 19/10, the Authority defined the contribution for the year 2010 on the activity of the Authority, and confirmed, for each operator in the electricity and gas sector, the contribution rate applied in the past years, equal to 0.3 per thousand of revenues recorded in the financial statements approved for the previous year (2009). In addition, the GOP 19/10 resolution: •. confirms that the only payment way of the 2010 contribution is through bank transfer made on special current account of the Authority by 31 July 2010;. •. indicates the date of 15 September 2010 as the term to send data regarding contribution. These data shall be sent through the IT system developed following resolution GOP 35/08.. 27 April 2010 – By means of Resolution ARG/elt 59/10, the Authority defined the transitory amendments to the tariff structures regarding very high voltage end-users, i.e. voltage higher than 220 kV, for years 2008, 2009 and 2010, in compliance with decisions taken by TAR with sentence no. 6269/2009, in which the appeal filed in by the user Acciaieria Arvedi S.p.A. was accepted, as well in compliance with decisions of the Council provided that: •. the cancellation of the component for the distribution service 3(disAT);. •. the application for the transmission service of a component TRASprov.. To offset the lower revenue resulting from the above-mentioned transitory regulation, the following is provided: •. the offset by the Equalisation Fund through general equalisation mechanisms provided for by TIT;. •. the offset for 2008 within the equalisation for 2009.. Condensed Interim Financial Statements 2010. 33. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. of State regarding appeals against the above-mentioned TAR sentence. The resolution.

(34) GROUP. R 29 April 2010 – With consultation document DCO 10/10, the Authority submitted proposals aimed at defining a monitoring ruling of retail sale, regarding the standardisation of detection ways and fields of data and information to be collected in view of creating a centralised system of profits describing end-customers and managed by the Single Buyer based on data loaded by operators. In particular, the DCO 10/10 specifies indicators on the following: •. structure, calculated in relation to market shares held by operators;. •. representing the so-called market power of operators, i.e. market results;. •. taking account of the customer satisfaction degree, i.e. customer satisfaction indicators.. The proceeding indicated in the DCO 10/10 foresees a substantial redefinition of some communication flows, which are already connected with sellers and distributors, while defining, however, solutions which would not multiply information required to operators. The main novelty is therefore the significant increased disclosure frequency of data required, which, in most cases, would be on a quarterly basis, with highlights on each month of the reference period. As regards distributors, indicators proposed for monitoring regard the following: •. structure data as “the number of supply/delivery points, market volumes and number of customers, other concentration indexes”;. •. data on average consumption for supply points and switching data. As for switching, information concerns “switching rate, return switching rate, switching availability indicator of switching measurements";. •. data on the number of claims and information enquiries.. As regards the method adopted, the Authority specified how, after a first consulting phase, before the DCO 10/10, a survey will follow, including an empirical analysis aimed at checking the feasibility of flows being defined. A second consulting phase will then follow. 6 May 2010 – With consulting document DCO 12/10, the Authority submitted a number of alternative proposals aimed at eliminating any possibility for sellers to communicate estimated consumption data in invoices of end-users in markets subject to additional safeguards and with remote controlled electronic meters. The above-mentioned. Condensed Interim Financial Statements 2010. 34. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. rate for sellers in a market subject to additional safeguards, incomplete switching,.

(35) GROUP. R provision is aimed at modifying the current provisions of paragraph 18.4 of TIV according to which the seller is still able to include a portion of estimated consumptions in invoices, usually related to the period included between the actual reading day and the issue date of invoicing (so-called billing queue). The regulatory target set out by the Authority is justified by requests filed in by consumer associations which, in view of the near introduction of compulsory two-hourly prices, asked that the possibility of including data deviating from effective consumption in invoices be averted; this in order to avoid any element which might be misleading for endcustomers. While evaluating the inclusion in invoices only of the effective consumption for endcustomers in markets subject to additional safeguards and with remote controlled electronic meters, the Authority assessed that this would result in the loss of an instrument able to mitigate the credit risk and ensure stable cash flows. This modification would also have an impact on: •. indebtedness;. •. higher finance costs to be recognised.. Three scenarios are therefore defined with DCO 12/10. They are alternatives able to “internalise” the consequent sale costs of the seller. Two of these solutions provide for an increase in the distributor’s commitment as follows: •. a more structured service of metering data availability, especially if the following is envisaged: o sellers will be indemnified by distribution companies if expected schedule is not fulfilled.. •. distributors have less time for data transmission, to date 20 days from reading of measurement data.. A third regulatory solution foresees, instead, that an additional indebtedness borne by sellers be covered by end-customers through a one-off payment. 6 May 2010 – By means of Resolution ARG/elt 66/10, the Authority provided that enduser internal grids also include grids with an obligation to connect third parties, as per the. Condensed Interim Financial Statements 2010. 35. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. o the distributor is obliged to issue the timetable of metering data available;.

(36) GROUP. R second list attached to resolution ARG/elt/ 52/10, so as to include again grids indicated in the first list. Moreover, resolution ARG/elt 66/10 modified the lists so as to: •. include subjects to whom the Authority required further information;. •. include the company ILTE S.p.A., whose request reached the Authority after the deadline for applications;. •. correct the material error related to the fact that Table 1 of resolution ARG/elt 52/10 does not include an industrial site with end-user internal grid in availability of Herambiente S.r.l.. 7 May 2010 – By means of Resolution ARG/elt 67/10, the Authority modified attachment B to resolution 348/07 (TIC) with reference to tariff regulations of LV and HV temporary connections. This resolution, which follows the consulting proceeding started by DCO 8/09, modified the determination criteria of fees for development, therefore defining: •. lump-sum amounts in the event of connections with a power level up to 30 kW, up to 20 meter distance between the place for which the connection is required and existing permanent distribution plants and the lack of a MV/LV transformation cabin, with the application of percentage discounts for multiple requests;. •. amounts calculated according to the relative expense criterion, based on the cost of materials, labour force and general costs, for the remaining cases of temporary LV. Based on distinction made by Art. 2, paragraph 2 of resolution ARG/elt/ 67/10 between grid plants for temporary connection of the transitory type and of the permanent type, the possibility was however provided that development costs of temporary connection of the permanent type be charged to a subject other that the one requiring the activation, e.g. the Municipality, while envisaging the application of fees related to ordinary permanent connections. As regards connections to the particular use, resolution ARG/elt/ 67/10 has however introduced a transitory period in which fixed fees for suspension and restoration of supply due to non-payment and a fixed amount to cover administration costs will be applied to these types of connection .. Condensed Interim Financial Statements 2010. 36. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. connections and all temporary MV connections..

(37) GROUP. R In addition, resolution ARG/elt 67/10: •. modified the maximum duration of temporary connections, reducing this term to one year, extendable to another year, except work sites, for which a term of 3 years maximum, extendable to other 3 years, is provided.. •. extended the metering ways of consumption also to temporary connections, as well as power restrictions applied to all end-users, with the following installation of meter;. •. introduced an equalisation mechanism for 2010 and 2011 to re-balance modifications of revenues deriving from the application of the new fees.. 18 May 2010 – By means of Resolution ARG/elt 73/10, the Authority determined the percentage variations for years 2009 and 2010 of the value of tariff components of Csa ΔTARCIR n and ΔTARAMM n 19 May 2010 - By means of Resolution ARG/ com 74/10, the Authority modified and supplemented the modules for the admission request to the equalisation regime as per resolutions ARG/elt 117/08 and ARG/gas 88/09, while providing, in particular: •. the standardisation of the application modules for the admission to the electricity bonus and the gas bonus, with special reference to the section dedicated to the permission to the processing of personal data, while indicating all subjects involved in the management and supply of equalisation to whom such data, supplied in the. •. the postponement, to a subsequent provision, of the supplementary application related to the electricity bonus in case of customers with physical limitations, while awaiting that the subjects owning the specific data receive the authorisation to process the data by the Authority for the protection of personal data, pursuant to Art. 26 of the Legislative Decree no. 196/03.. 19 May 2010 – By means of Resolution VIS 31/10, the Authority approved 12 inspections to distribution companies on continuity of service, to be performed in the period ranging from the coming into effect of this order and 31 October 2010, in order to assess the correct application of:. Condensed Interim Financial Statements 2010. 37. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. application for the equalisation itself, might be communicated..

(38) GROUP. R •. the obligation to record outages with or without advance warning, either long or short outages;. •. the calculation of service continuity indicators reported to the Authority in 2009, also with regard to the provisions set out in Articles 25, 26, 27, 28 and 29 of Title 4 of the Annex A to resolution 333/07 (hereinafter: TIQE - Integrated Code to regulate the quality of electricity distribution, sales and measurement service).. 21 May 2010 – With document DCO 14/10, the Authority submitted some proposals on the implementation of an Integrated Information System for the electricity and gas sectors (hereinafter: IIS) for the management of description profiles of end customers and, in general, of relations amongst operators in the energy markets. In this document for consultation, the Authority outlined two models of IIS: •. IIS in charge of data transfer;. •. IIS in charge of data transfer, as well as updating and related database.. The Authority underlines that the introduction of an IIS would allow to achieve a series of objectives, above all related to the increase of retail market competition, through the overcoming of some critical aspects connected with the management of relations amongst operators in the energy market, especially as regards switching processes. In the Authority’s opinion, in fact, these processes would be characterised by a number of situations in which •. the non fulfilment of data notification and communication terms;. •. the non availability and incompleteness of identification data of supply points and end customers.. In DCO 14/10, it is stated that the implementation of an IIS would help to reduce management costs of processes to the benefit above all of sellers, in the hypothesis of a centralised management model. 25 May 2010 – With document DCO 15/10, the Authority proposed some amendments to the regulations on active concessions as per Annex A to resolution ARG/elt 99/08 (hereinafter: TICA), according to the following targets: •. cancellation of speculative conducts connected with the occupation of transportation capacity on the grid;. Condensed Interim Financial Statements 2010. 38. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. an anomalous conduct was observed, including, but not limited to:.

(39) GROUP. R •. streamlining of access to grids by production plants.. To achieve the above-mentioned objectives, the Authority expressed, as alternative proposals: •. either the overcoming of the possibility to make a reservation of the grid capacity by those requiring the connection, upon acceptance of the cost estimate, while connecting, instead, the efficacy of the grid to the authorisation for the construction to the plant;. •. or the provision of an open season, equal to three solar months, in which connection applications are to be submitted, so that the grid operator is in a position to jointly analyse them. This proposal would involve only concessions in HV/HHV, or MV connections.. To support the hypothesis of booking the grid capacity after obtaining the concession, a proposal was submitted for the payment of a supplementary guarantee by the applicant, in the form of a guarantee deposit or a bank guarantee. Moreover, the DCO 15/10 submits the following proposals: •. the introduction of an information portal for the management of connection applications that will allow applicants to load data relating to the progress of the application;. •. the issue of “maps” indicating the saturation levels of the grid, with reference to HV and HV/MV transformation cabins, as well as grid development plans;. •. the definition of coordination ways for grid operators, while providing indemnity. •. the introduction of a control panel, within the Terna project called GAUDI’ which, starting from 1 January 2011, will allow to monitor the inter-realisation phases of plants until their coming into operation.. 31 May 2010 – By means of Resolution ARG/elt 82/10, the Authority corrected material errors included in resolutions ARG/elt 40/10 and ARG/elt 67/10, while rectifying: •. some errors in Table 1 in resolution ARG/elt 40/10 regarding the amounts of metering equalisation;. •. a misprint in the description of the equalisation mechanism description in resolution ARG/elt 67/10.. Condensed Interim Financial Statements 2010. 39. WorldReginfo - 035fd079-c974-49ef-9839-175e2d585818. forms in case commitments are not fulfilled;.