Other economic effects

in

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Terna's economic impact does not end with the production and distribution of value added. One must also consider, first of all, the economic repercussions of the electricity service: Terna ensures a service of general interest over time and thus contributes to Italy's economic growth.

The Company's development of the electric grid is of particular importance. The development of interconnections between bordering countries makes it possible to import electric power at prices that are more competitive than those of domestic production, to have additional power reserves, and to enjoy more competition in energy markets. The reduction of grid congestion improves the exploitation of generation resources to cover requirements and makes it possible to use the most competitive plants, with positive effects on competition in the generation segment and on end prices.

In accordance with the regulatory framework, all of Terna's investment in the development of the grid is examined from the technical and economic points of view by comparing the estimated cost of the work with the related benefits in terms of reduction of overall system expense in order to maximize the cost/benefit ratio. Consequently, every euro invested by Terna generates on average a multiple of savings for grid users, which ultimately has benefits for  the end consumer. It is therefore significant that Terna's investments (most of which are to develop the grid) have constantly increased in the last few years. 

 

INVESTMENTS - TERNA GROUP

2012 2011* 2010* 2009 2008 2007 2006 2005
€ million 1,235.2 1,229.2 1,162.7 900.4 764.9 606.0 345.5 263.5
*The values previously published for 2011 and 2010 - respectively 1219.8 and 1161.7 - referred only to core investments in ongoing activities, while this table also includes the values for non-traditional activities.

Compared to the overall investments shown in the table for 2012, 1,206.7 million euro refer to the investments in traditional activities and 28.5 million euro refer to non-traditional activities.

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In 2012 public contributions to the plant account – recorded directly to reduce the value of the plants – amounted to 1,561,023.47 euro (2,316,994.17 euro in 2011 and 3,652,564.86 euro in 2010).

Another aspect to consider is the creation of employment and procurement expenses. As of 31 December 2012, Terna had 3,433 employees of which over 900 worked in Rome, at the corporate headquarters, the National Control Center (CNC) of the transmission grid and the Rome Transmission Operating Area (AOT). The other employees (about 2,500) were uniformly distributed throughout Italy at the 7 other local operating areas of Turin, Milan, Florence, Naples, Palermo and Cagliari – which are responsible for 32 Line Operating Groups (GOL), 32 Station Operating Groups (GOS), 8 Distribution Centers (CR) and 3 Remote-Control Centers (CT) which have offices all over the country.

Through the construction and maintenance of power lines, in 2012 Terna indirectly determined the employment of workers through contractors and subcontractors totalling the equivalent of 1,907 full-time employees.

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In 2012, the economic value of Terna's procurement of services, supplies and works came to about 1.6 billion euro. Most of the purchases were made from national suppliers, although the percentage of foreign suppliers recorded notable growth.

The predominance of Italian suppliers does not conflict with the Group’s policy, which excludes selecting suppliers on the basis of their location and is due to the need for fast maintenance work on plants to ensure the utmost security for the electric system. Furthermore, suppliers located nearby have more competitive costs regarding the transportation of heavy and bulky supplies.

Terna makes most of its purchases from companies that are qualified pursuant to EU directives or through EU-wide tenders. Italian companies constitute a large majority of those that apply and qualify. In any case, it should be noted that a significant share of the sum spent on local purchases actually regards Italian branches of internationally significant industrial groups such as ABB, Siemens and Prysmian, which are predominant worldwide in the specific markets concerned.

The percentage of expense on total purchases (including Non-Traditional Activities) made during the 2010-2012 period is shown in the table:

 

PURCHASES FROM ITALIAN AND FOREIGN SUPPLIERS (PERCENTAGES ON TOTAL PROCUREMENT)

2012 2011 2010
Italian 64 91 94
Foreign 36 9 6

The quota of purchases from foreign suppliers is 36% of the total. The sizeable increase compared to the preceding year is mainly attributable to the activities connected to the Italy-Montenegro connection which included the participation of large international groups with headquarters abroad.

Other economic impacts connected with the resources that Terna dedicates to the support of charitable initiatives and in the artistic and cultural fields are described in the section entitled “Community initiatives”