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Electricity area

Legislative/Regulatory Framework

  • REGULATION OF THE MARKET FOR DESPATCHING SERVICES (MDS)
    The Authority for Electrical Energy and Gas (AEEG) established special methods for remunerating the electricity despatching activity with its resolution no. 348/2007. Moreover, with its resolution no. 351/2007 it defined bonus and penalty mechanisms to create incentives for Terna in carrying out this function. Said mechanisms will become operative starting in 2008.
  • START-UP OF A FORWARD ELECTRICITY ACCOUNT (FEA) PLATFORM OF THE ELECTRICITY MARKET OPERATOR (EMO)
    With its resolution no. 111/2006, the Authority for Electrical Energy and Gas (AEEG) set out a new procedure for recording forward electricity purchase and sale contracts. As tools for negotiating future energy, this resolution also provides for the creation of a forward electricity accounts (FEA) plan and a system of guarantees. The Electricity Market Operator consequently started up an FEA platform, an electricity accounts platform (EAP) on which Hera Trading Srl has been given permission to operate.
  • AUCTIONS FOR FORWARD PROCUREMENT OF RESOURCES FOR THE MARKET FOR DESPATCHING SERVICES (MDS)
    After the Authority for Electrical Energy and Gas (AEEG) passed resolution no. 130/2007, Terna started auctions for the forward procurement of resources for the despatching service (active power reserve and reactive reserve products). The examination procedure was implemented for services rendered starting in October and running until 31 December 2007 following extensions for clarifying several technical procedures. Hera Trading Srl, through Set (Teverola), was awarded 50 MWh of active power reserve for the months of November and December.
  • CIP6 ENERGY PRICES APPLIED BY THE ELECTRICAL SERVICES OPERATOR (ESO)
    With resolution no. 82/2007, following a consulting process, the Authority for Electrical Energy and Gas (AEEG) set out the methods for updating the price of energy from CIP6 plants sold by the Electrical Services Operator (ESO) to market operators.
    The resolution confirmed correlation between the national standard price and Cip 6 price trend as it is already provided for in the Ministry for Economical Development decree of 14 December 2006, and it established that as far as the Cip 6 price is concerned, the update is made based on the trend of the quarterly average of the national standard price. Resolution no. 331/2007 confirmed said methods also for 2008.
  • EMISSION TRADING
    On 11 December 2007 the national committee for managing and implementing European Parliament directive 2003/87/EC issued the new draft of a national allocation plan applicable to the 2008-2012 period. At the same time it defined the methods for adapting to the decisions of the European Commission. According to the new scheme, the total quantity assigned is equivalent to 201.57 million tons/year, of which 86.58 to the thermo-electric sector and 15.65 to an undifferentiated reserve for the new plants falling within the period. This new scheme, which follows the same assignment criteria included in the first draft presented in 2006, does not foresee assignments for a consideration, and keeps to the limits set by the European Commission regarding use of flexible mechanisms.
    As far as the Sparanise and Teverola plants are concerned, they are to be considered as among the new ones being added.
  • COMPLETION OF THE OPENING OF THE ELECTRICITY MARKET
    Liberalisation of the electricity market in Europe was completed on 1 July 2007 in implementation of European Union directive 54 of 2003. As a consequence, as of that date domestic customers in Italy as well can choose their supplier based on market criteria.
    The reform of 1 July 2007 also establishes that the old tariff system be overcome, switching to an electricity service development system for the end customer that sums up free and administered prices. While the market freely determines the price of subtended energy, the non-competing services (energy transport, distribution and measurement) and the general system charges are still subject to rates set by the Authority for Electrical Energy and Gas (AEEG).
    A sales service of greater consumer protection has however been guaranteed for those customers that in any case do not choose a vendor on the free market. It ensures that the supply is made at fair prices and adequate commercial quality (for domestic customers and small companies receiving low voltage (LV)).
    New unit payments that replace the previous components are applied to the electricity the customer withdraws.
    Consistent with this reform, the free market sale contracts with indexing at the old tariff have been actually renegotiated or associated with the trend of the new parameters starting from last July.
  • SOLE PURCHASER AUCTIONS
    In order to procure the energy necessary for serving its customers (greater consumer protection), during 2007 the Sole Purchaser called three auctions for bilateral physical contracts regarding the years 2008-2010.
    Hera Trading Srl took part in some of these auctions, and was given the award for the supply of 20 MWh base load in 2008.

 

Significant Events

  • CONSOLIDATION OF THE ELECTRICITY TRADING ACTIVITY
    The electricity trading and environmental certificates activity was definitely consolidated in 2007.
    In the meantime, the exposure to risk control and correct representation of the business in the financial statements applying the IAS principles (Fair Value and Mark Two Market (M2M)) procedures started running smoothly.
  • ACTIVATION OF THE ASSET MANAGEMENT STRUCTURE
    Together with the commercial start-up of the Teverola and Sparanise plants, a new business unit (asset management) was formed in the electricity segment by internalising new resources in charge of managing the logistics/despatching of energy produced by the plants and the management/optimisation of the power purchase agreement (PPA) contracts regarding the plants.
  • PPA FINALISATION AT THE TEVEROLA POWER PLANT
    Drafting of the contract for the supply of electricity produced by the Teverola power station concerning Hera (PPA) was completed in April. It went into force with the commercial operation of the plant the following month, May, at the end of the start-up stage.
  • ATEL CONTRACT MANAGEMENT
    The (PC)/lambda sensor product (price of sale to customers of the non-eligible market) was renegotiated in the name of and on behalf of Hera Comm Srl in July.
    In December also the 70 MWh base load product and the former PC/lambda product transformed into another 70 MWh base load were renegotiated, adding the possibility for Hera Trading Srl to cover the cost component regarding the green energy certification via production of the necessary certificates. The signed addendum 5 shall be valid for the years 2008 and 2009.
  • NEGOTIATION OF AN ADDENDUM TO THE SPARANISE PPA
    Addendum 1 to the PPA was negotiated with EGL in 2007, aimed at simplifying and supplementing/clarifying its operational procedures. In light of the difficulties of coming to an agreement on the operational procedures of the envisaged gas option, at the same time it was agreed to overcome it with EGL paying a consideration and Hera Trading Srl's recovering the possibility of supplying its own quota of gas.
  • PARTICIPATION IN THE ENEL VIRTUAL POWER PLAN (VPP) PROCEDURE
    At the end of December Enel set up a procedure for assigning virtual capacity in the southern area in connection with a specific request of the Italian Antitrust Authority (AGCM) aimed at limiting Enel's dominant position. Hera Trading Srl took part in this procedure, being awarded 10 MWh of base load capacity and 15 MWh of peak capacity.