Italian Electricity and Gas Authority

The Italian Electricity and Gas Authority is an independent body set up in 1995 to regulate and control the electricity and gas sectors. Its principal task is to promote competition, efficiency and quality of service in these sectors, by acting as a point of reference for all the companies operating in the energy market.

To regulate the business of Snam Rete Gas, the Authority’s principal role is to define the criteria (via specific provisions, i.e. “Resolutions”) by which the revenues of the regulated activity of transmission are to be calculated along with the tariffs, the principles for access and for providing services, and the standards of quality.

Over the years, Snam Rete Gas has fostered a constructive relationship of effective cooperation with the Authority, continually maintaining a proactive role and providing many elements to support the evolution of the legislative framework in the natural gas sector. In particular, Snam Rete Gas has always made a significant contribution to the consultation processes for drawing up the Resolutions on the transmission activity, supporting the Authority in its every request for information, including by means of roundtable discussions and special-purpose technical meetings.

Through its constant relationship with the Authority, Snam Rete Gas combines the strict application of the standards established by the Regulator with the achievement of the company’s objectives. This means moderating the needs of the shareholders, who want an attractive and sustainable return, with those of the Authority and of the Clients, who want price reductions and quality of service.

In this context, particular importance is assumed by the Authority’s process of deciding tariff criteria for the subsequent regulation period, which takes place every four years. At the end of 2009, at the conclusion of this process, the Authority issued the Resolution setting out criteria and rules for the third regulation period, confirming a regulatory framework that is transparent, clear and stable for the 2010-2013 four-year period. This is an essential prerequisite to allow the company to maintain a low risk profile and maximise the creation of value for its shareholders. The characteristics of the new regulatory framework, in continuity with those of previous periods, are essential to enabling the company to achieve sustainable growth over time, confirmation of the constructive and cooperative relationship that Snam Rete Gas has succeeded in establishing with the Authority over the years. There are similar systems of standards that oversee the activities of distribution, regasification and storage (this last item is nearing the end of its term and will be renewed in 2010).

Another essential fulcrum in the relationship between the companies of the Group and the Regulator is the Codes, i.e. the contractual documents that define, according to the principles and resolutions drawn up by the Authority, the conditions for accessing and providing the services and which regulate the relationship between each company and its customers. In the process of drawing up and updating the Codes, which also involves all of the interested parties through specially-appointed Committees, constant work is done, in ongoing dialogue with the Authority, to draw up conditions for the offered services that respond as far as possible to the needs of the market and to its future evolutionary changes.

Following the process of acquisition of Italgas and Stogit by Snam Rete Gas, the relationship with the Authority will be further strengthened and still imbued with a spirit of effective cooperation. But this is not all. The corporate reorganisation will make this relationship even more dynamic, since it no longer involves four separate companies (each of which will maintain operational responsibility for its obligations) but instead a single, all-encompassing body which, with its size and repository of inter-sectorial knowledge, will be capable of providing responses that are complete, effective and in line with the problems that the integration of the energy markets will pose in the coming years.