Sustainability Report Terna Is a Leading Grid Operator for Electricity Transmission in Italy and Guarantees Its Safety, Quality and Cost-Effectiveness Over Time

2011

Sustainability Report Terna is a leading grid operator for electricity transmission in Italy and guarantees its safety, quality and cost-effectiveness over time. It ensures equal access conditions to all grid users. It develops market activities and new business opportunities with the experience and technical competence acquired in the management of complex systems. It creates value for shareholders through a strong commitment to professional excellence and responsible attitude towards the community, while respecting the environment in which it operates.

Translation from the Italian original, which remains the definitive version. 2011

Sustainability Report 2 Sustainability Report 2011 Methodological note Methodological note The ConciseReport Contents epniiiyfrteeetiiysrie65 Grid Development Service continuityandquality Information security The securityoftheelectricitysystem Our approach Responsibility fortheelectricity service Stakeholder engagement Sustainability Presentation oftheCompany Terna’s Profile Letter toourstakeholders Engineering and innovation Plant maintenance Connecting new plants Grid Development Activitiesin2011 Media, opiniongroups andthescientificcommunity Suppliers Society andLocalCommunities Grid usersandcompaniesintheelectricityindustry Employees Shareholders, financialanalystsandproviders ofcapital Medium-term prospects Awards Sustainability Indexes Promotion ofCorporateSocialResponsibility Controversies andlitigation Sustainability results andobjectives Sustainability Governance Terna’s concerns Development Abroad Other activities Transmission activitiesandprocesses Corporate Governance Ownership Structure The StrategicPlan The Terna Group Connection withtheGlobalCompact’s10Principles GRI ContentIndex Comparative analysisofsustainabilityperformance Boundary andindicators Structure ofthereport Materiality Social responsibility Environmental responsibility Economic responsibility Responsibility fortheelectricityservice The mainsustainabilityresults The photographs The SustainabilityReport:contentsandnovelties The numbersof2011 The mostsignificantevents Terna The ConciseReport 15 27 16 74 72 70 67 66 52 39 28 84 81 80 74 59 58 56 55 54 54 51 50 50 48 45 42 39 39 36 34 33 31 31 30 28 25 20 17 17 16 16 11 11 10 10 7 4 9 9 9 9 8 8 8 Lines andlocalcommunities Our approach Environmental responsibility Revenues andriskmanagement Our approach Economic responsibility Report Indicator Tables Occupational healthandsafety communication Internal Diversity andequalopportunity Personnel developmentandmanagement Training Search andselection Changes inpersonnelcomposition Our approach OUR PEOPLE Social responsibility Costs fortheenvironment Resource useandwastemanagement Energy efficiency andclimatechange Biodiversity Glossary Acronyms The DevelopmentPlanandreduction oftheelectricitysystem’sCO Initiatives toreduce ownemissions Other atmosphericemissions Other indirect emissionsofCO Direct andindirect emissionsofCO Energy consumption Lines andbirdlife Management ofimpactsonbiodiversity Lines inprotected areas Reducing theenvironmental impact Consultation Relations withcompaniesusingtheelectricityservice Relations withsuppliers Share performance Relations withshareholders Other economiceffects Value added Terna’s economicimpact Risk management Revenue structure andregulatory framework needn eoto h iie suac naeeto h utiaiiyrpr 01212 177 Independent report onthelimitedassuranceengagementofSustainabilityreport 2011 Community initiatives Participation inAssociations Relations withinstitutions The safeguard oflegalityand theprevention ofcorruption Human rights Our approach SOCIETY Industrial relations Occupational injuries Main 2011activities Waste Resources 2 2 2 emissions 138 111 211 185 149 200 198 113 112 169 167 164 162 156 154 150 150 150 146 141 128 120 134 134 131 129 128 126 122 120 116 113 108 104 101 101 179 178 178 176 176 176 173 172 170 143 141 89 90 90 99 98 98 93 90

3 Contents 4 Sustainability Report 2011 Letter toourstakeholders of 4billioneuros fortheItalianelectricitysystem. associations: itisimportanttopointoutinthisrespect that,asof2005tothepresent, Terna’s activitiesgeneratedsaving the grid’sDevelopmentPlanwaspresented alsotoassociationsrepresenting production categoriesandtoconsumer signed aMemorandumofUnderstandingwithLegambienteforpromoting energy sustainability. Forthefirsttimein2011, three WWFOasesinTuscany andinSicily, thatwere completedandinauguratedduringthepastyear. InDecember, Terna with theWWFforsustainablydevelopingelectricitygridledtoimplementingmitigationandenhancementworks in with RegionalAuthoritiesandLocalBodiesforidentifyingshared solutionsfornewinfrastructure locations.Theagreement in collaborationagreements withleadingenvironmentalist associations.In2011,voluntarycoordination activitycontinued expressed inpresenting andapproving theDevelopmentPlan,incoordination and activitieswiththelocalgovernments Grid developmentalsorepresents themainarea ofTerna’s stakeholdersthatisparticularly interactionwithexternal electricity service,derivingfrom increased gridefficiency andeliminatingrestrictions torenewable energy production. contributingtoreducing and CO for contractorsandsub-contractorsinTerna’s buildingsites– effects ofdevelopingthetransmissiongridincludecreating employment–in2011,nearly3,500fulltimeemployeesworked the Sorgente-Rizziconi andMontecorvino-Beneventopowerlines–regard ItalyandtheIslands.Thepositive Southern we implementedandare currently implementing–asforexampletheSA.PE.I.submarinecableinauguratedin2011,and regarding thepotentialofeconomicsystem.We are therefore pleasedtounderlinehowsomeoftheprincipalprojects investments inelectricityinfrastructures improve theservice’squalityandsafety, withimportantconsequencesalso euros investedin2010.ThisishowTerna mostsignificantlyexpresses itsrole asausefulcompanyforthecountry: economic, environmental andsocialaspectsofouroperational activity, reached 1,229millioneuros, surpassing67 million In 2011,investmentsindevelopingtheelectricitytransmissiongrid,thatcontinuestorepresent theprincipalcrossroad of on sustainabilityandallstakeholders:eveninthisarea, ourcommitmenthasreceived growing recognition overtime. results ofourstablebusinessapproach basedonsolidityandversatilitythataimsatbuildinglastingresults alsobyfocusin to maintainthedistributionofdividendsatsamelevel2010.Theshareholder return wasonlyoneofthepositive accounts. We are therefore especiallypleasedtounderlineourcapabilityofcreating valuethathasallowedus,in2011, extraordinary taxpolicymeasures –suchasthe“RobinHoodTax” –thathavealsosignificantlyaffected theCompany’s turmoil bothnationallyandinternationally. Particularly, inthislast year, thedifficult Italiansituation hasledtoadopti For Terna, 2011wasanotheryearmarkedbygoodeconomicresults, theseventhconsecutiveoneatatimeofeconomic 2 emissions from the ng g s that thesewillbeusefultostakeholders,astheyare internally, tobetterunderstandourenvironmental andsocialperformanc according to7sustainabilityindicators:asfar asweknow, thisisadistinguishingcharacteristicofTerna’s Report.We hope electric andmagneticfieldslastbutnotleast,theinclusionintothisReportofcomparisonswithothercompanies Reporting Council;thisalsoimpliesonlinecommunicationonsustainabilityissuesenhancedbyadedicatedsection on Guidelines, focusingonintegratedreporting, confirmed byTerna’s participationinthePilotProgramme oftheIntegrated transparent information.Thisincludesconsideringthe new informationrequests oftheG3.1versionGRIReporting In presenting theSustainabilityReport,wefeelitisimportant toalsounderlineourcommitmenttowards completeand a reduction ofCO relations –particularlyforgriddevelopmentinvestmentsas improving environmental performancethatin2011registered satisfaction, willcontinuetobeanimportantfoundationofTerna’s sustainability;thiswillbejustasimportantstakehol per capita,2more compared to2010.Theattentiontowards ourpeople,thatwasalsoexpressed inasurveyonpeople continued tobehighalsoin2011:97%ofpersonnelwasinvolvedtrainingactivitiesthatoverallreached 51averagehours Developing businessrequires maintaininghighstandards ofprofessional capacity. Forthis purpose,traininginvestments implemented bytheParent Company, from theCodeofEthicstoModel231,startingin2012. management: ourobjectiveisthatallthecompaniesofGroup instruments adoptthesustainabilitygovernance that intendstopromote growth byfullyenhancingpeople.Theguidelineswillalsobeappliedtofocusingonresponsible guidelines oftheStrategicPlan,inAprilthisyearTerna adoptedanewGroup structure –illustratedwithinthisReport systems are animportantelementinbuildingasmartgrid where thetransmissiongridhasadecisiverole. Inlinewiththe witnessed therapidgrowth innumberofelectricityproduction plantsfrom non-programmable renewable sources. Storage particularly importantastheyare functionaltosafelymanaginganelectricitysystemthatinthepastfewyearshas Company’s growth andwillincreasingly focusondevelopingnewactivities.Amongthese,buildingstoragesystemsis In thenew2012-2016StrategicPlan,investmentsforbuildingpowerlineswillcontinuetoplayacentralrole forthe LUIGI ROTH Chairman 2 emissions andoftheamountSF 6 leakage, andassupportingculturalsolidarityactivities. FLAVIO CATTANEO CEO der e. e.

5 Letter to our stakeholders Terna’s sustainability approach “TERNA CARRIES OUT ITS ROLE AS ELECTRICITY TRANSMISSION OPERATOR, 365 DAYS A YEAR, 24 HOURS A DAY, WITH A SUSTAINABLE APPROACH THAT JOINS BUSINESS MANAGEMENT WITH RESPONSIBILITY TOWARDS STAKEHOLDERS.” 2011

The Concise Report 8 Sustainability Report 2011 The ConciseReport • • • • • • • • In particular, thefollowingevents are pointedout: emissions equalto209,000tonsayear(page36). Terna builtandthensoldinalittleoveroneyearproduction facilitythatwhen fullyoperatingwillallowsavingCO As partofitsnon-regulated activities,withtheclosinginOctober 2011ofthesecondphasephotovoltaicproject, Naples andstrengthening the150kWmainelectricitylines forwindpowerproduction inCampania,BasilicataandPuglia. the Sorgente-Rizziconi electricityline(seeboxpage119),continuingupgradingthemetropolitan areas ofMilan,Turin and electricity infrastructure completingthenewChignolo Po-Maleopowerline(seeboxpage86),openingthebuildingsitefor With regard togriddevelopment,thecompanymaintaineditscommitmentforacceleratinggrowth ofthecountry’s activities, alwaysbasedonsustainabilityobjectives. During 2011,Terna successfullyfocusedonitscore businessandonnewopportunitiesfordevelopingnon-traditional The mostsignificantevents by SociallyResponsibleInvestors(SRI). June 2004.Itsmajorshareholder isCassaDepositiePrestiti with29.85%(March 2012).11%oftheshare capitalisheld Terna, headedbyCEOFlavioCattaneo,andChairmanLuigiRothhasbeenlistedontheItalianStock Marketsince increasing investmentsforimplementingbatterystoragesystemsthetransmissiongridaswellothernewprojects. and sellingphotovoltaicplantswascompletedtheStrategicPlanpresented inMarch 2012,alsoincludedsignificantly The Companyisalsoinvolvedindevelopingnon-traditionalactivities:2011,thesecondphaseofproject forbuilding capacity tothebenefitofItalianelectricitysystem’ssafety. particularly inNorthAfricaandtheBalkancountries,forbuildingnewinterconnections andincreasing Italy’simport In additiontoproviding thetransmissionserviceinItaly, Terna hasdevelopmentprojects intheMediterraneanbasin, demand andsupplyinItalyaswelltheplanning,developmentmaintenanceofgrid. balancebetweenelectricity the 365daysayear,of electricitythroughout 24hoursaday– Italy, namely, safelymanaging– The CompanyisthemainownerofNationalTransmission Gridandisresponsible forthetransmissionanddispatching transmission operatorinEurope andthesixthlargest intheworldtermsofnumberkilometerslinesmanaged. With ahigh-voltageelectricitygridofmore than63,500kilometersacross Italy, Terna istheleadingindependent Terna occurred atthelandingpowerstationinBorgo Sabotino(LT), attendedbytheMinisterforEconomicDevelopment; official inaugurationtookplaceoftheSA.PE.I.,submarinecablethatconnectsSardinia withthemainland;this Authorities andthosereferring to theoperationalmanagementofelectricitysystems(seebox page38). was officially launched,withthepurposeofcreating aconnectionbetweentheregulatory dutiesthatapplytosector on April19,2012,atTerna’s headoffice, Med-TSO,theassociationofMediterraneantransmissionsystemoperators, development establishedinthe2012-2016StrategicPlan (see boxpage33); on April2,2012theTerna Group’s neworganizational structure wasapproved, aimedatsupportingthebusiness set newtariff rulesforTerna’s activities forthe2012-2015period(seeboxpage93); on December30,2011theElectricityandGasAuthorityconcluded theprocess forreviewing thetariff regulations and S.r.l., Terna’s entirely ownedcompanythrough SunTergrid, totheprivateequityfundTerra Firma,(seeboxpage 36); on October24,2011thesecondphaseofTerna’s photovoltaicproject wascompletedwiththesaleofNuovaReteSolare on October14,2011Terna wasincludedinthenewSTOXX 310,000 square metersoftheterritory(seeboxpage86); months withsinglepolepylonsthatinvolvedremoving 31kmofobsoleteelectricitylinesandconsequently “freeing” on July25,2011theEHVChignoloPo-Maleoelectricitylinewasinauguratedthatis24kmlongandbuiltinonly18 Cattaneo asCEOandLuigiRothTerna S.p.A.’sChairman; on May13,2011,Terna’s Board ofDirectors appointedtheCompany’snewBoard ofDirectors thatconfirmedFlavio on March 17,2011,duringthedaydedicatedtocelebration ofthe150 performance amongthe1,800present intheSTOXX ® Global index; ® indexes thatselectthe300bestcompaniesforsustainability th anniversary oftheUnificationItaly, the 2 For additionalinformationonthereference panels,seetheMethodologicalNoteonpage16. not onlywithrespect toactivitiescarriedoutintheprevious twoyears,butalsoinrelation toothercompanies. Comparisons represent anewelementinreporting, allowingstakeholderstoassessthedataandTerna’s performance significant environmental andsocialindicators. boxes ontheyear’sprincipalresults, thisReportexpanded thenumberofcomparisonswithothercompaniesregarding information, the2011Reportusedvariousinstrumentsforillustratingyear’sresults. Inadditiontotheusualdedicated In compliancewiththeobjectiveofclearly, completelyandtransparently providing thegreatest possibleamountof into thesection“IndicatorTables”. The MethodologicalNoteprovides usefultechnicalexplanations forinterpreting thedatathatisincludedintotextand and awards are listed. For atimelycomparisonbetween objectivesandresults, pleaserefer tothetableonpage44. Below, themainprogress Ethics, withtheadoptionof GlobalCompactandwiththeobjectivesstatedin2010 SustainabilityReport. During 2011,importantprogress wasmadeinallcorporateresponsibility areas inlinewiththeindicationsofCode The mainsustainability results sustainable businessapproach withimportanteffects forboththeenvironment andbiodiversity. implemented. Singlepolepylons,Fosterpylonsaswell as bird dissuadersandartificialnestsrepresent Terna’s firm Every chapteropenswithaphotographofoneTerna’s grid The photographs • • • • • The Reportisdividedinto5principalchapters: the GRIindicatorswith10principlesofUnitedNationsGlobalCompactisalsoprovided. The applicationoftheGRIguidelinesisA+level,highestintermscompletenessinformation.Atablelinking March 2011. Sector Supplement(EUSS) The 2011SustainabilityReportwasprepared according tothe“ The SustainabilityReport:contentsandnovelties • • • The Terna Group’s mostsignificantnumbers(asofDecember31,2011)were: non-regulated businessthatwillcontinuetoincrease inthenextthree years. For theseventhconsecutiveyear, 2011closedwithpositiveresults thankstoapreventive strategyonnon-traditionaland investments forsafetyandefficiency oftheelectricitysystemandgeneratingworkemployment. Despite thenegativeeconomicsituation,Terna confirmeditsindustrialstrength andfinancialsolidity, increasing The numbersof2011 Comparisons • • • • • • • Social responsibility. Environmental responsibility Economic responsibility The responsibility fortheelectricityservice Terna’s Profile 440 millioneuros ofnetprofit. 1,220 millioneuros ofinvestments; 1,636 millioneuros ofsales; Gender paygap:pages164-167 Employee training:pages156-159 pages152-153 Personnel turnover: Waste production: pages144-145 Water consumption:pages142-143 SF CO 6 2 leakage: pages135-136 emissions: pages130-134 ”, definedbythe2009GRI-GlobalReportingInitiativeandupdatedG3.1Guidelinesof elements andwithafocusononeofthemore recent projects Sustainability ReportingGuidelines&ElectricUtilities

9 The Concise Report 10 Sustainability Report 2011 costs affect approximately 3%oftheelectricity billofatypicaldomesticuser(seepage92). and implicitlygeneratingmultiple positiveresults fortheelectricitysystem’susers(see page92).Overall,transmission Electricity andGasAuthority (AEEG) forimproving theservicehaveledtopositiveresults increasing revenues forTerna AEEG incentivesandTerna’s costsfortheelectricitysystem: has nonethelessguaranteedits shareholders dividendsinlinewiththoseoftheprevious year (seepage101). Dividends forshareholders: time employees)andbyitsprocurement costsequalto1.2billioneuros in2011(pages98-99). employment (theworkperformedbytheemployeesofits contractorsandsubcontractorswasequaltoover2,076full- economic impactcanalsobemeasured bytheinvestmentactivities(1.2billioneuros in2011),bythecreation of Economic impact: Economic responsibility has focusedontheengineeringprocess ofthepylonsdesigned byArch. Duttonfrom theRosentalStudio(page84). electricity lineinTuscany, Terna’s attentiondevotedtoamore harmoniousplacementofitspylonsintotheenvironment Pylons anddesign: monitored byTerna andbytheAEEG(pages 72-73). Service quality: that monitorstheelectricitymarketdataalsoforAEEG,obtainedISO/IEC27001:2005certification(page70). Monitoring systems: plants. The2012-2016StrategicPlanestablishedimportantinvestmentsinenergy storagesystems(seeboxpage69). systems dedicatedtoprotecting thetransmissionservice,also inlightoftheexponentialgrowth ofrenewable production Security oftheelectricitysystem: Responsibility fortheelectricityservice The “Sustainability”sectionofthewebsite General aspects the grids:jointTerna-Greenpeace initiative”,page60). (see box“Anetworkofrelations withstakeholders”page59) and onissuesforpossiblescenarios(seebox“Thebattleof Stakeholder engagement: stakeholders (seepage48). projectlaunched aninternal foragreater integrationoffinancialandsustainabilityaspectsinitscommunicationto Integrated Reporting: the impactsofTerna’s initiativesinthecommunity(seeboxpage179). page 40)andwithprogress madeinapplyingthe“LBGmethodology-TheLondonBenchmarkingGroup” formonitoring participation inthemostsignificantinitiativessector, (seeboxon“Terna’s CommitmentintheUNGlobalCompact” Culture ofSustainability: the electricitycriticalitiesinthisregion andtothesolutionsproposed byTerna forovercoming them(seeboxpage58). problems. Atthebeginningof2012,websitewasfurtherexpandedwith“Trasversale inVeneto”, afocusdedicatedto the progress ofthemajorauthorizedelectricityinfrastructures, workinprogress orworkdelayedowingtobureaucratic was created toprovide communities,institutions,mediaandotherinterested stakeholdersalltheinformationregarding Transparency ingriddevelopment: communication (seeboxpage61). the first50companiesincludedinLundquistranking,mostsignificantrankingtermsofonlinesustainability navigation aswellgreater availabilityofcontents,alsomulti-mediaones.Thisactivityawarded Terna fifthplaceamong Other significantaspects • • • • • • • The INTEGRITproject (page86) In Lombardy thefirstsustainable“supergrid”:ChignoloPo-Maleo”(page86) A newmethodofworkingonhighvoltagepowerlineconductors: 3Disolatedplatform(page83) Line inspectionbyhelicopter:theLIDARproject (page 82) Providing connectionservice(page81) ENTSO-E: European NetworkofTransmission SystemOperators(pages79-80) Terna andsmartgrids(page68) the performancetargets were reached andsurpassedfortheelectricity service’scontinuityandquality, in additiontotheeffects implicitintheserviceprovided totheusersofelectricitysystem,Terna’s following theentranceintooperationofFosterpylonsalongCasellina-S.Barbara-Tavarnuzze in July2011,TIMM’sapplications(IntegratedText forMonitoringtheelectricitymarket),database Terna joinedthePilotProgramme IntegratedReportingCouncil–and oftheIIRC-International initiatives were intensifiedforinvolvingstakeholdersbothontheshort-mediumtermobjectives Terna’s supportinestablishingaculture ofsustainabilitywaspursuedthrough theactive while affected from thenegativeconsequences ofincreased taxes(RobinHoodTax), Terna the SecurityPlandeterminedinvestmentsfor96millioneuros forimproving the as ofMarch 2011,thewebsite“Terna’s BuildingSitesinItaly”hasbeenonline.It www.terna.it was expandedandreorganized toalloweasierandmore intuitive all thebonus-penaltyinitiatives introduced bythe injuries thatfurther improved thealready consolidated approach totheissue. rate forinjuriesconfirmedthe downward trend (page172).Many initiativeswere implementedforpreventing occupational Occupational safety: that underlinesTerna’s focusoncontinuoustraining. companies (pages158-159).In 2011,there were 51traininghoursperemployee,withacoverageof 97% ofpersonnel Training: retirement, islowcompared toothercompanies(seepage150). rate (0.5%):humanresources leavetheCompanymainly forretirement. Turnover ofpersonnelleaving,evenconsidering Turnover ofpersonnelleaving: Social responsibility CO suggested, fortwoareas outofseven,anadditionalstudyphasethatisscheduledtobeginin2012(page126). scientific research onthepossibleinteractionbetweenbirdlife andtheelectricitygrid;analysisofdatacollected LIPU: Bottagone (LI)andinStagnidiFocognano(FI)aswelltheSicilianOasisofTorre Salsa(AG)(seeboxpage122). WWF: category andconsumerassociations(page59). the worksincludedinGridDevelopmentPlan.Forfirsttime,Companypresented theDevelopmentPlanto Consultation: Environmental responsibility schemes, Terna hasimplementednumerous initiatives tolimitCO with thecollaborationofFondazioneUgoBordoni and onlinesinceJuly2011. test forone’sknowledgeare onlysomeofthecontentsincluded intheminiwebsiteonelectromagnetic fieldscreated An onlineminiwebsiteonelectromagnetic fields:information andgeneraldefinitions,frequently askedquestionsanda costs equaled10.3millioneuros (pages146-147). whose separatereporting hasbeenusedforthree years.Investmentsin2011,totaledover38.3millioneuros andoperating Environmental costs: approximately 11milliontonsofCO connection ofrenewable plants,thereduction ofthesystem’semissionsatendPlanperiodisestimatedtobe the GridDevelopmentPlan.ConsideringoverallPlananditsgridefficiency effects, changeinproduction mixand Grid DevelopmentPlan: reduction compared totheprevious year(page129). Other significantaspects • • • • • • • • • • • • • • • Other significantaspects 2 Disposal ofequipmentcontainingPCBoil(page146) Terna-Legambiente agreement forasustainableenergy culture (page140) Priority toenergy from renewable sources (pages139-140) The 2011reproductive seasoninthenestsonTerna’s pylons(page127) Criteria forlocationofdissuadersintheplanningphase:Trino-Lacchiarella powerline(page126) Recovery andrestoration ofbuildingsiteareas inVal d’OssolaSud(page125) Studies onelectricitylinesandbats(page125) Masking thepowerstationsinChignoloPoandMaleo(page124) A radarformigratorybirds (page120) The “Energy Bridge”betweenSicilyandCalabria:theSorgente-Rizziconi powerline(page119) Electric andmagneticfields:thelegallimit(page117) Integrated planningprocess (pages115-116) Master-data ofelectricityproduction plantsstarted(page109) Sustainability incriteriaforawarding tenders(page106) The newregulatory framework(page93) emissions: monitoring activitieswere completedasestablishedintheagreement withTerna ofDecember2008,forconducting during theyear, environmental restoration andmitigationmeasures were carriedintheWWFOasesPadule-Orti is reconfirmed asa strong pointinenhancinghumanresources, asindicatedbythecomparisonwithother in 2011,volunteerconsultationactivitiesincreased withregional authoritiesandlocalbodiesforauthorizing even thoughnotsubjecttotherestrictions imposedbytheKyotoProtocol orbyemissiontrading in 2011,aswasalsorecorded inthe previous twoyears,there were nofatalinjuriesandthe absentee Terna’s environmental commitmentismarkedbythecostsincurred forenvironmental reasons, even ifindirectly, the greatest contributiontocounterclimatechangeisbasedonimplementing personnel trends were characterized alsoin2011byaverylowspontaneousresignation 2 equivalent (page138). 2 emissions. In2011,direct emissionsregistered a4.4% 11 The Concise Report 12 Sustainability Report 2011 create approaches totheReportotherthanstandard beginning-to-endone.Inparticular, the followingispointedout: The reading ofthesections,orinafewcases,entire dedicatedchapterswiththeirrelated boxesallowsreaders to detailed thaninthepastandnoveltyrepresented bythebenchmarks. theboxes,whicharedetermined severallayoutchoices,themostimportantofwhichconcerns more numerous and Again thisyear, theinterest ofTerna’s different stakeholdersforthepartsofReportthatregard themmore directly actual implementationandprogress. (page 52),thecommitmentsundertakenbyCompanyforthemandmonitoringinstrumentsusedtocheck their In Terna’s Profile anentire chapterisdedicatedtostakeholderengagementwhichcontainsatablewiththeirmapping involved incriticalreadings followedbydiscussionwithTerna’s Corporate SocialResponsibilityunit. The 2011SustainabilityReportmaintainedthegenerallinesintroduced byseveralsuggestionsofstakeholdergroups Reading approaches forstakeholders • • • • 2012 objectives(seepage43fordetails)are inlinewithpasttrends. Inparticular, thefollowingisunderlined: Sustainability objectives euros tocommunityinitiativesofwhich1,338.914were donationsand244.336 investmentsinthecommunity(page179). Corporate giving: • Societyandlocalcommunities:pages56-58 • Media,opiniongroups andscientificcommunity:pages59-61 • Institutionsandassociations:page53 • Authoritiesandregulatory authorities,AEEG:page 53 • Gridusers,customersandbusinesspartners:page55 • Suppliers:pages58-59 • Employees:pages54-55 • Shareholders, financialanalystsandproviders ofcapital:page54 • • • • on humanrights. reviewing environmental andsocialcriteriainthesupplychainalsolightofRuggieReportUnitedNations the surveyconductedonpeoplesatisfaction; defining anactionplanwithfirminitiativestobeimplementedintheprincipalareas forimprovement thatemerged from Programme; continuing theproject foragreater integrationoffinancialandsustainabilityinformationasparttheIIRC’sPilot structure; reviewing ethicalandenvironmental andsocialresponsibility criteriainthesubsidiariesfollowingcompany’snew Other significantaspects With “Abetterfuture foreveryone”,Terna’s 2011Christmascreated solidarity(page181) The MemorandumofUnderstandingwiththeFire Department(page171) Transmitting energy alsowithsports(page168) Relations withschools,universities,centersofexcellence(page153) according totheLBGranking(theLondonBenchmarkingGroup), in2011,Terna allocated1,714,164

Chignolo Po-Maleo (PV-LO), 24 km of electricity line with 88 single pole pylons “WITH A BASE DIAMETER THAT RANGES FROM 1.5 TO 4 METERS, THESE NEW SUPPORTS HAVE A GROUND ENCUMBRANCE APPROXIMATELY 15 TIMES LOWER COMPARED TO THE TRUNCATED PYRAMID PYLONS WITH OBVIOUS ADVANTAGES IN TERMS OF REDUCED VISUAL IMPACT. ” 2011

Methodological note 16 Sustainability Report 2011 Methodological note Structure ofthe Report Materiality paragraphs (theindicatormarker isnexttothetitleifentire sectionisconsidered relevant). the informationregarding GRIindicators isindicatedbytherelated markerinthemargin ofthetextnextto therelevant Guidelines andthein-depthanalysis thatTerna considersimportanttoprovide. Inorder tomaketheReport easiertoread, followed byseveralthematic sections, whichintegrateinasingletextboththeprecise information required bytheGRI way aslastyear. Eachchapterbeginswithanexplanation of themanagementapproach tothespecificarea. Thisis In eachofthechaptersdedicated tothefourareas ofresponsibility, thedescriptionoftopicsisorganized inthesame service, whichispeculiartoTerna. environmental, andsocial–typicalofsustainabilityreports, preceded bythesectiononresponsibility fortheelectricity Report maintainsthedivisionoftopicsinfourmainsections, corresponding tothetriplebottomline–economic, The organization oftheReportinchaptershasremained the sameasintheprevious editions.AfterTerna’s profile, the • • • • • identified referring tothematerialityprinciple,through process aninternal basedon: In particular, theinformationincluded forallowingstakeholdersabalancedassessmentoftheGroup’s performancewas indeed addressed ideallytoallthestakeholdersidentifiedin the Company’sCodeofEthics. purpose ofeachthemandtheirrelevance withTerna’s activitiesandtheinterests ofitsstakeholders.TheReportis The selectionoftheGRIindicatorstobeincludedtookplaceonbasisacareful examinationoftheinformational January 2009). (“Report onmanagingFinancialStatementsbasedthenoveltiesintroduced byLegislativeDecree 32/2007”,CNDCEC, Tax ConsultantsandAccountingExperts)onthesustainabilityinformationprovision inmandatory corporatecommunication indications oftheConsiglioNazionaledeiDottoriCommercialisti edegliEspertiContabili–CNDCEC(NationalCouncilof sustainability performance,includedinthisReport,wasalsothe2011annualFinancialfollowing the made uniformintheSustainabilityReportandFinancialReport;moreover, principalinformationregarding Terna’s process, addressing variousthemes(forexample,Terna’s presentation andthatofresearch andinnovationactivities)was Programme” initiativepromoted IntegratedReportingCouncil.Asthebeginningofanintegrated bytheInternational Furthermore, tomeettheneedunderlined varioustimestocreate an above-mentioned guidelines. basis ofevidencepresented intheGRIContentIndex, the updatingofGRIGuidelinesincludedinG3.1Guidelines.TheapplicationisconfirmedatA+level.On Compared tolastyear, the2011Reportpresents variousnoveltiesregarding thereported core indicators,thatrespond to occurred byApril15,2012are alsodescribed. The periodconsidered is2011:allthedataregards theyearendedonDecember31,2011,whilesignificanteventsthat of theperformanceachievedbyGroup withreference totheseaspectsandsustainabilityobjectives. The process ofpreparing thedocumentincludedidentificationofsignificantaspectstoreport andthepresentation procedures. Theassurancereport, asofthisyeardraftedbyPricewaterhouseCoopers,isattached. As intheprevious years,theReportwasapproved byTerna’s Board ofDirectors andsubjectedtospecificauditing established in2009bytheGRI–GlobalReportingInitiativeandaccording totheG3.1GuidelinesupdateofMarch 2011. was prepared according totheSustainabilityReportingGuidelines&ElectricUtilitiesSectorSupplement(EUSS)”, The Terna Group’s SustainabilityReportfortheyearendedDecember31,2011(hereinafter “2011SustainabilityReport”) meeting Directors anddepartmentheadsforexaminingthemostsignificantaspectsemerging issues. benchmarking analyses; comparing performancesofothercompaniesthrough reports issuedbysustainabilityratingagenciesanddeveloping verifying stakeholderexpectationsthrough stakeholderengagementactivitiesdescribedinthisReport; management systems); reportinganalyzing internal onsustainabilityaspects(monitoringandimprovement plansforenvironmental andsafety communication tools(press releases) andinthepress review; tools (teambriefingdocuments,houseorgan Terna News,Intranet,topmanagementcommunication),inexternal analyzing theGroup’s activitiesandanycontroversies, communication byexaminingthecontentsincludedininternal we assessedhavingreached theA+levelofapplication integrated reporting , Terna joinedthe“Pilot of the Boundary andindicators water consumption,CO data. Onthebasisofthisbelief,comparisonisextended inthisReporttoalarger numberofindicators,sevenintotal: that are thusprovided withreference pointsforassessingthesustainability commitmentbycomparingthemostobjective comparing environmental, performancesisofinterest socialandgovernance bothtothecompanyitselfandstakeholders indicator withintheReport: Below theprincipalcriteriaare listed,thatwere adopted intheanalysisasabasisforinterpreting thecomparison oneach the different companiesinprocessing injuryandlostdayrates. being ofinterest, didnotleadtosignificantresults owingtothe uncertaintyregarding thecalculationmethodadoptedby of theamountdataactuallyavailableforcomparison. Inthisrespect, thecomparisononoccupationalinjuries, while The choiceofindicatorswasbasedoncriteriainterest withintheidentificationofbenchmarks,aswellonaverificatio • companies, regarding theper-capita numberoftraininghoursandSF For thefirsttime,2010SustainabilityReportincludedtwocomparisonsbetweenTerna’s results andthoseofother Comparative analysisofsustainabilityperformance • • Compared tothe2010Report,followingispointed out: at theAlevel,thatdonotapplytoTerna. the requirements oftheReportingGuidelines.Thelistalsoincludescore indicators,necessaryforapplyingtheGuidelines All theGRIindicatorspublishedare listedbelowintheGRIContent Index,whichalsoshowsanylimitationscompared to information systems;inthecaseofestimatesdeterminingindicators,modalityfollowedwasspecified. Data wascalculatedinanaccuratewayonthebasisoffindingsgeneralaccountingandTerna’s other boundary orcomparabilityofthedata. policies. There are norelations withjointventures, subsidiaries,orleasedbusinessesthatcouldsignificantlyinfluencethe S.p.A. exercises, directly orindirectly, control, i.e.thecompaniesinwhichTerna candeterminefinancialandoperating impact ontheenvironment orthecommunity, ornumberofactivities/actionscarriedoutduringtheyear)onwhichTerna have asignificantimpactonsustainability(forexample,according totheirsizeornumberofemployees;potential 2011. IncompliancewiththeGRIBoundaryProtocol, thedatainSustainabilityReportrefers toallthecompanies that Terna S.p.A.andthecompaniesthatwere consolidatedintheConsolidatedFinancialStatementsasofDecember31, Except asstatedotherwise,thedataandinformationin2011SustainabilityReportregard theboundary including the related explanation. included showingallthechangeswithrespect totheadditionalindicatorsprovided inthe2010SustainabilityReportwith technical termsspecificallyregarding theelectricityindustry. Atthebeginningof“Indicatortables”section,atableis The Reportiscompletedbyseveraltableswithadditionalnumericalindicatorsandaglossaryexplainingthemeaningof panel, butthefigures are highlightedinthegraphs; top performers.Terna’s datadoes notcontributetothecalculationofaverageinSAM –SupersectorLeaders among thecompanieshaving thesameoperationalcharacteristics, 2011). Thepurposeofthethree panelsistoguarantee,alsowithrespect tothetype ofindicatorexamined,acomparison by theSAM–SustainableAsset Managementsustainabilityratingagency, inthepublicationSAMSustainability Yearbook best performers(the19SupersectorglobalLeadersidentified 12, 2012)andthesecondone formedbytheinternational sector panels;thefirstoneoftheseformedbylarge Italiancompanies(the40intheFTSE-MIBasofJanuary System Operators)andbythemajornon-European companiesaccording tokilometersoflinesmanaged,andtwomulti- three panelsofcompanieswere identified:oneforthe sector, formedbyEuropean transmissioncompanies(Transmission take intoaccountthechangeinaccountingmethodadoptedbyTerna Group forgoodwilltaxation. the changedprospect ofvalueadded,withreference tosomeeconomiccomparativebalancesfor2010and2009 • • • the changed2009and2010datainEN4,16LA7indicators.Thischangedependsonfollowingreasons: to theR22refrigerant gasare changedcompared totheprevious publications; used fordeterminingrateswere updatedandreviewed alsofortheprevious years; determine thetotalofhoursworked.To guaranteedataconsistencyandcomparability, thefigures ofhoursworked for theinjuryrateandabsenteerate,in2011,processing criteriawere reviewed aswelltheitemsthat for CO for energy consumptionofstationsandthecorresponding indirect CO measures, were reviewed andlowered; the firsttimein2011highlightedanover-estimate ofconsumptionfortheprevious yearsthatinlinewith thenew IPCC (Intergovernmental PanelClimateChange).Consequently, thetonsofCO 2 emissions, itwasdecidedtorefer toemissionfactorspresent intheFourthAssessmentReportissuedby 2 emissions, SF 6 leakage, waste, training, gender pay gap and turnover rateofemployeesleaving. leakage, waste,training,genderpaygapandturnover 6 an Italiancomparisonandone withtheinternational leakage. Theinitiativewasbasedonthebeliefthat 2 emissions, theprecise figures registered for 2 relative totheSF 6 insulating gasand n 17 Methodological note 18 Sustainability Report 2011 Some oftheindicatorsconsidered (waterconsumption,waste produced, CO clarified –oftheGRIprotocols ratherthanfrom particularlyvirtuouscorporateconduct. performances andthebestones:itislikelythatsignificantdiscrepancies dependfrom different applicationcriteria–not regarding theactualcomparabilityamongcompanies,particularlywhenconsideringdistanceaverage It isnecessarytopointoutthatdespitetheexclusionofdataexplicitlynotuniform,inmanycasesdoubtsremain o fCmaiscniee 54 19 18 40 26 55 00156 -Rome 18 Viale EgidioGalbani,70 Terna S.p.A. RESPONSABILITÀ SOCIALED’IMPRESA DIREZIONE RELAZIONIESTERNEECOMUNICAZIONE [email protected], (Italy-06/8313.111)andaskfortheappropriate department,orsendaletterto: For comments,requests, andremarks onTerna’s performanceandhowitisaccountedforinthisReport,writeto No. ofcompanieswithGRIreporting No. ofCompaniesconsidered • • • Terna’s website: Further detailsoncompaniesexaminedandothermethodologicalaspectsare availableintheSustainabilitysectionof of thecomparisonspublishedinthisReport. Statistics Office (ISTAT) andsupportedbyTerna alsodirectly participatingindataanalysis,withtheadditionalcontribution upon theinitiativeofCSRManagerNetwork,byAltis–UniversitàCattolicadiMilano,incollaborationwithNational The issueofcomparabilityiscentraltosustainabilityreporting and represents theobjectofaresearch project conducted information capability. an objectiveforcontinuingandfurtheranalyzingcomparisonsmore generally, forimproving theSustainabilityReport’s development ofrelative indicatorsthatare appropriate foreachrecorded situation–startingfrom Terna’s data–represents performances comparable.Eventhepresentation ofdata peremployee(waterconsumption,waste)isunsatisfactory:the the environmental aspectsconsidered fortheindividualcompanies,butdoesnotaccomplishtaskofrendering and tothesizeofbusiness.Inthesecases,comparisonprovides informationregarding thedifferent relevance of quantities inabsolutevalueandtherefore record levelsthatare verydifferent withrespect tothetypeofproduction activit o fCmaiswt sfldt 2 719 27 24 No. ofCompanieswithusefuldata comment tothedataofeachindicatorincludedinReport. indicator withthedefinitionadopted,evenifnotpublished.Thedetailsregarding theseaspectsare explainedinthe the sameReport,whileinothercasesitwaspossibletoredefine, onthebasisofotherdatapublished,acoherent corresponds inallthree panels.Insomecases,weexcludeddatathatwascontradictorywithotherpublishedin for bytheGRIProtocols, ourchoicewastofavorthedefinitionwhichhighestnumberofusefulresponses different definitionsormeasuringunitswhichdonotallowfor a comparison.Compatiblywiththeindicationsprovided Sustainability Reportofvariouscompanies,butalsooftenontheadopting–partsamplecompanies of companiesthatpublishSustainabilityReports.Thisdependsaboveallontheunavailabilityindicatorin the numberofusefulcases,inthree samples,foracom compared totheinitialpanel,asillustratedinfollowingtable; guidelines) orthrough otherdocuments(HSEReports,financialreports, etc.).This hadledtoreducing thesample information thatisusefulforcomparisons,through theSustainabilityReport(alsoifitisnotdraftedfollowingGRI among thecompaniesincludedinthree panels,theonesconsidered were thosethatpublishintheirwebsite the 2011Reportswere beingdrafted,aswasthecasewithTerna’s. reference totheSustainabilityReportspublishedisbasedon2010datasincecomparisonswere prepared while (http://www.terna.it/default/Home/AZIENDA/sostenibilita2.aspx) S ae TEMBPnlSAM -SupersectorLeadersPanel FTSE-MIBPanel TSO Panel parison witheachindicator, isoftenlowerthanthenumber 2 emissions) are expressed asphysical ies (*) Sectorsupplement inthefinalversion.

achieved theA+level. & ElectricUtilitySectorSupplement”establishedin2009bytheGRI-GlobalReportingInitiativeisconsidered tohave Based ontheinformationpresented intheGRIConten Standard Disclosures Application Level Indicators Performance Supplement & Sectors Indicators Performance Approach Management Profile

output output output and Environmental. Economic, Social least onefrom eachof: Indicators, includingat of 10Performance Report onaminimum Not required. 4.1 -4.4,4.144.15 3.1 -3.8,3.103.12 2.1 -2.10 1.1 Report on: CC+BB+AA+

t Index,theapplicationof“SustainabilityReportingGuidelines Report Externally Assured 4.5 -4.13,4.164.17 3.9, 3.13 Product Responsibility. rights, Labor, Society, Environmental, Human from eachofEconomic, Indicators, atleastone of 20Performance Report onaminimum Indicator Category. Disclosure foreach Management Approach 1.2 listed forLevelCplus: Report onallcriteria

Report Externally Assured and SectorSupplement Report oneachcore G3.1 Indicator Category. Disclosure foreach Management Approach for LevelB. Same asrequirement for itsomission. b) explainingthereasons the Indicatorsor by either:a)reporting on to theMaterialityPrinciple Indicator withdueregard (*)

Report Externally Assured 19 Methodological note 20 Sustainability Report 2011 GRI ContentIndex 1 Page numbersrefer Reportwhich ispartofTerna’s to theCorporateGovernance 2011Annual Report,availableat (1) Each performanceindicatorhasacoderegarding thearea andthepagesofdocumentwhere concerned itisfound. same reporting standard. quickly andusethemtochecktheCompany’sperformancecompare itwiththoseofothercompaniesthatusethe The GRIContentIndexisatableofthecontentsthisSustainabilityReport,whichenablesreaders tofindindicators .Ifraierpr nmngmn prah 5. Informativereport onmanagementapproach commitmentsandstakeholderengagement 4. Governance, 3. ReportParameters 2. OrganizationalProfile 1. StrategyandAnalysis suac Assurance omtett xenliiitvs initiatives Commitmenttoexternal Poutrsosblt Product responsibility

41 4.17 4.16 4.15 4.14 Stakeholder engagement 4.13 4.12 4.11 41 4.10 4.09 4.08 4.07 4.06 4.05 4.04 4.03 4.02 4.01 10 1.02 1.01 31 3.18 3.12 31 3.11 3.10 3.09 3.08 3.07 3.06 3.05 3.04 3.03 3.02 3.01 21 2.10 2.09 2.08 2.07 2.06 2.05 2.04 2.03 2.02 2.01 Governance niomna Environmental Rpr rfl Reportprofile Hmnrgt Humanrights GICnetIdx GRIContentIndex eotsoeadbudr Reportscopeandboundary Aporaelbrpatcsadwr odtos Appropriate laborpracticesandwork conditions cnmc Economic oit Society

www.terna.it

282-284; 292-295;301-304

. Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note

28-29; 31;34-38 28-29; 99-100 39-40; 48-49 306-307 287-289 308-310 301-304 297-298 16; 41-42 39; 42-44 318 112-113 Page 45-48 52-61 20-24 50-51 28-29 28-29 297 315 (1) 176 176 150 178 117 ; 32 4-5 66 90 52 53 28 28 31 28 28 (1) (1) (1) (1) (1) (1) (1) (1) oeIndicator Code performanceindicatorspublished List ofG3 LA1 EN30 EN29 EN28 EN27 EN26 EN23 EN22 EN21 EN20 EN19 EN18 EN17 EN16 EN14 EN13 EN12 EN11 EN8 EN5 EN4 EN3 EN2 EN1 EC9 EC8 EC7 EC6 EC4 EC3 EC2 EC1 Strategies, current actions, andfuture plansformanagingimpactsonbiodiversity. Habitats protected orrestored. protected areas andareas ofhighbiodiversityvalueoutsideprotected areas. Description ofsignificantimpactsactivities,products, andservicesonbiodiversityin and areas ofhighbiodiversityvalueoutsideprotected areas. Location andsizeoflandowned,leased,managedin,oradjacentto,protected areas Total waterwithdrawalbysource. Energy savedduetoconservationandefficiency improvements. Indirect energy consumptionbyprimaryenergy source. Direct energy consumptionbyprimaryenergy source. Percentage ofmaterialsusedthatare recycled inputmaterials. Materials usedbyweightorvolume. of impacts. Understanding anddescribingsignificantindirect economicimpacts,includingthe extent for publicbenefitthrough commercial, in-kind,orpro bonoengagement. Development andimpactofinfrastructure investmentsandservicesprovided primarily management hired from thelocalcommunity. Procedures forlocalhiringatsignificantlocationsofoperationandproportion ofsenior locations ofoperation. Policy, practices,andproportion ofspendingonlocally-basedsuppliersatsignificant Significant financingreceived from thegovernment. Coverage oftheorganization’s definedbenefitplanobligations. due toclimatechange. Financial implicationsandotherrisksopportunitiesfortheorganization’s activities andpaymentstocapitalprovidersearnings, andtogovernments. employee compensation,donationsandothercommunityinvestments,retained Direct economicvaluegeneratedanddistributed,includingrevenues, operatingcosts, Total workforce byemploymenttype,contract, region andgender. Total environmental protection expenditures andinvestmentsbytype. used fortheorganization’s operations,andtransportingmembersoftheworkforce. Significant environmental impactsoftransportingproducts andothergoodsmaterials noncompliance withenvironmental lawsandregulations. Monetary valueofsignificantfinesandtotalnumbernon-monetary sanctions for providedbyTernaThe service does notincludetheactivitiesmentionedinthisindicator. by category. Percentage ofproducts soldandtheirpackagingmaterials thatare recycled orreclaimed impact mitigation. Initiatives tomitigateenvironmental impactsofproducts andservices,extentof Total numberandvolumeofsignificantspills. Total weightofwastebytypeand disposalmethod Water isnotpartoftheproductioncycleTerna’s service Total waterdischarge byqualityanddestination. significant NOx,andSOxemissions. Terna’s activitiesdonotincludecombustionprocesses,andthusgenerate NOx, SOx,andothersignificantairemissionsbytypeweight. Emissions ofozone-depletingsubstancesbyweight. Initiatives toreduce greenhouse gasemissionsandreductions achieved. Other relevant indirect greenhouse gasemissionsbyweight. Total direct andindirect greenhouse gasemissionsbyweight. iiainadntsPage Limitation andnotes Not applicable. Not applicable. Not applicable.

128-129 142 141-143; 146 99-100 180-181 113-115; 32; 164 100 31; 99 95-96 94-95 179-182 98-99; 150-153 146-147 137-138 128; 129, 48; 113 120-127 116-118; 113 143-144 134 134-138; 167 106; 131-134 129 125; 126-127 122-125 82; 120-127 120-122 142 137 128-129 21 Methodological note 22 Sustainability Report 2011 oeIndicator Code HR6 HR5 HR4 HR3 HR2 HR1 LA15 LA14 LA13 LA12 LA10 LA9 LA8 LA7 LA6 LA5 LA4 LA3 LA2 SO7 SO6 SO5 SO4 SO3 SO2 SO1 HR11 HR10 HR9 HR7 Actions takeninresponse toincidentsofcorruption. Percentage ofemployeestrainedinorganization’s anti-corruptionpoliciesandprocedures. Percentage andtotalnumberofbusinessunitsanalyzedforrisksrelated tocorruption. assessment anddevelopmentprograms. Percentage ofoperationswithimplementedlocalcommunity engagement,impact formal grievancemechanisms. Number ofgrievancesrelated tohumanrightsfiled,addressed, andresolved through reviews and/orimpactassessments. Percentage andtotalnumberofoperationsthathavebeensubjecttohumanrights Total numberofincidentsviolationsinvolvingrightsindigenouspeopleandactionstaken. compulsory labor. or compulsorylabor, andmeasures takentocontributetheeliminationofforced or Operations andmainsuppliersidentifiedashavingsignificantriskforincidentsofforced labor, andmeasures takentocontribute totheeliminationofchildlabor. Operations andmainsuppliersidentifiedashavingsignificantriskforincidentsofchild support theserights. association andcollectivebargaining maybeatsignificantrisk,andactions takento Operations andmainsuppliersidentifiedinwhichtherighttoexercise freedom of Total numberofincidentsdiscriminationandactionstaken. rights thatare relevant tooperations,includingthepercentage ofemployeestrained. Total hoursofemployeetrainingonpoliciesandprocedures aspectsofhuman concerning have undergone screening onhumanrightsand actionstaken. Percentage ofsignificantsuppliersandcontractorsotherbusinesspartnersthat rights clausesorthathaveundergone humanrightsscreening. Percentage andtotalnumberofsignificantinvestmentagreements thatincludehuman Data collectionstartedin2011. toworkandretentionReturn ratesafterparental leave,bygender. Ratio ofbasicsalarymentowomenbyemployeecategory. to gender, agegroup, minoritygroup membership,andotherindicatorsofdiversity. bodiesandbreakdownComposition ofgovernance ofemployees percategoryaccording reviews bygender. Percentage ofemployeesreceiving regular performanceandcareer development Average hoursoftrainingperyearemployeebycategoryandgender. Health andsafetytopicscovered informalagreements withtradeunions. workforce members,theirfamilies,orcommunitymembersregarding seriousdiseases. Education, training,counseling,prevention, andrisk-control programs inplacetoassist work-related fatalitiesbyregion andgender. Rates ofinjury, occupationaldiseases,lostdays,andabsenteeism,totalnumberof programs. and safetycommitteesthathelpmonitoradviseonoccupationalhealth Percentage oftotalworkforce represented informaljointmanagement-workerhealth it isspecifiedincollectiveagreements. Minimum noticeperiod(s)regarding significantoperationalchanges,includingwhether Percentage ofemployeescovered bycollectivebargaining agreements. employees, bymajoroperations. Benefits provided tofull-timeemployeesthatare notprovided totemporaryorpart-time gender, andregion. Total numberandrateofemployeenewly-hired byagegroup, personnelturnover practices andtheiroutcomes. Total numberoflegalactionsfor anticompetitivebehavior, anti-trust,andmonopoly related institutionsbycountry. Total valueoffinancial andin-kindcontributionstopoliticalparties,politicians, Public policypositionsandparticipation inpublicpolicydevelopmentandlobbying. iiainadntsPage Limitation andnotes Available asof2011. 150-153; 162 157 173 163 172-173 173 174 107; 173 162-163 150-153 48 179 178 48; 177 177 177 113-116; 176 56-59; 176 176 176 40; 176 40; 176 40; 173;176 176 176;177 104;107 176 163 164-165 164-165

oeIndicator Code List ofG3performanceindicatorspublishedinthesupplementforelectricutilitysector(EUSS) Indicator Code EU15 EU14 EU13 EU12 EU11 EU10 EU9 EU8 EU7 EU6 EU5 EU4 EU3 EU2 EU1 PR9 PR8 PR6 PR3 PR1 SO10 SO9 SO8 Number ofresidential, industrialandcommercial customeraccounts. Net energy outputbroken downbyprimaryenergy source andbyregulatory regime. Installed capacity, broken downbyprimaryenergy source andbyregulatory regime. theprovisionconcerning anduseofproducts andservices. Monetary valueofsignificantfinesfornon-compliancewithlawsandregulations losses ofcustomerdata. Total numberofsubstantiatedcomplaintsregarding breaches ofcustomerprivacyand providedbyTernaThe service doesnotincludetheactivitiesmentionedinthisindicator. communications, includingadvertising,promotion, andsponsorship. Programs foradherence tolaws,standards, andvoluntarycodesrelated tomarketing providedbyTernaThe service doesnotincludetheactivitiesmentionedinthisindicator. significant products andservicessubjecttosuchinformationrequirements. Type ofproduct andserviceinformationrequired byprocedures andpercentage of reported inthe“Electricandmagneticfields:limitsprovidedforbylaw”box). areconsideredwithregardtosociety(as Safety andsecurityimpactsoftheservice security withregardtobusinesspartners(customers). TernaGiven thenatureofservice, isnotaffectedbyproblemsofproductsafetyand categories subjecttosuchprocedures. assessed forimprovement, andpercentage ofsignificantproducts andservices Life cyclestagesinwhichhealthandsafetyimpactsofproducts andservices are or actualnegativeimpactsonlocalcommunities. Prevention andmitigationmeasures implementedinoperationswithsignificantpotential Operations withsignificantpotentialoractualnegativeimpactsonlocalcommunities. noncompliance withlawsandregulations. Monetary valueofsignificantfinesandtotalnumbernon-monetarysanctionsfor job categoryand by region. Percentage ofemployeeseligibletoretire in thenext5and10yearsbroken downby Programs andprocesses toensure theavailability ofaskilledworkforce. Biodiversity ofoffset habitatscompared tothebiodiversityofaffected areas. Transmission anddistribution efficiency (gridlosses) asapercentage oftotalenergy. Terna powerplants. neitherpossessesnormanagesthermoelectric Average generationefficiency ofthermalplantsbyenergy source andbyregulatory regime. electricity system”paragraphs. section, in particular“Ourapproach”and“Thesecurityofthe Electricity Service” particular the“Processesandorganization”paragraph,“Responsibility forthe electricity system,withnoimplicationsforenergygeneration.See“Terna’s Profile”,in Terna’s ofelectricity demandislimitedtothemanagementof interms responsibility by energy source andregulatory regime. Planned capacityagainstprojected electricitydemandoverthelongterm,broken down decommissioning field. Terna neitherpossessesnormanagesnuclearpowerplantsanddoesnotoperatein the Provisions fordecommissioningofnuclearpowersites. electricity andpromoting sustainabledevelopment. Research anddevelopmentactivityaimedatproviding reliable andconvenient not part ofTerna’sDemand-side managementprogramsare framework. regulatory industrial programs. Demand-side managementprograms includingresidential, commercial, institutionaland Management approach toensure shortandlong-termelectricityavailabilityreliability. Terna isnotsubjecttoemissionsreductionobligationsortradingschemes. Allocation ofCO Length ofaboveandunderground transmissionanddistributionlinesbyregulatory regime. 2 emissions allowancesbroken downbycarbontradingframework. iiainadntsPage Limitation andnotes Page Limitation andnotes Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. 153-154 154-159 118;124,125 131 139-140 68; 69;84-86; 81-82 36-39; 67; 29 108 36 36 48 70 56-57; 113 113-119; 176 48 23 Methodological note 24 Sustainability Report 2011 oeIndicator Code EU30 EU29 EU28 EU27 EU26 EU25 EU24 EU23 EU22 EU21 EU20 EU19 EU18 EU17 EU16 Profile –“Terna’s secondphotovoltaicproject”box, page36). Terna neitherpossessesnormanages powerplantswithsignificantinstalled(see Average generationplantavailabilitybyenergy source andbyregulatory regime. Average poweroutageduration (SAIDI). Power outagefrequency (SAIFI). Terna doesnothaverelationswithfinalcustomersoftheelectricalservice. disconnection. Number ofresidential disconnectionsfornon-payment,broken downbydurationof Terna doesnothaverelationswithfinalcustomersoftheelectricalservice. down byruralandurbanpopulation. Percentage ofpopulationnotservedinlicenseddistributionorserviceareas, broken judgments, settlementsandpendinglegalcasesofdiseases. Number ofinjuriesandfatalitiestothepublicinvolvingcompanyassets,includinglegal providedbyTernaThe service doesnotincludetheactivitiesmentionedinthisindicator. accessing andsafelyusingelectricitycustomersupportservices. Practices toaddress language,cultural,lowliteracyanddisabilityrelated barriersto access toelectricityservice. Programs, toimprove includingthoseinpartnershipwithgovernment, ormaintain generation plantsortransmissionlines. Number ofpeoplephysicallyoreconomicallydisplaced,broken downbytypeofproject, programs, andrecovery/restoration plans. Contingency planningmeasures, disaster/emergency managementplanandtraining Approach tomanagingtheimpactsofdisplacement. infrastructure development. Stakeholder participationinthedecisionmakingprocess related toenergy planningand health andsafetytraining. Percentage ofcontractorandsubcontractoremployeesthathaveundergone relevant operation &maintenanceactivities. Days workedbycontractorandsubcontractoremployeesinvolvedinconstruction, contractors andsubcontractors. Policies andrequirements regarding healthandsafety ofemployeesand iiainadntsPage Limitation andnotes Not applicable. Not applicable. Not applicable. Not applicable. 48 34-38; 79-80 176 70; 153-154 176 113-115 56-57; 107 153 107; 169-173 72-73 72-73 ra lblCmatPicpe GRIIndicator GlobalCompact Principle Area Connection withtheGlobalCompact’s10Principles Corruption Environment Labor Human rights References: GRI-GlobalCompact,“Makingtheconnection”,May2007. the IndexofGRIcontents. Terna’s implementationofthePrinciples.To findthepagesonwhichGRIindicatorsare discussed,seethetablesof Principles oftheGlobalCompact.Itaimsatfacilitatingfindinginformationrelevant tostakeholderswhowishassess The followingtableshowstheG3.1versionofGRIindicatorsthatapplytoTerna andtheirrelation toeachofthe10 Businesses shouldsupportandrespect theprotection proclaimed ofinternationally Principle 1 Businesses shouldworkagainstcorruptioninallitsforms,includingextortionandbribery. Principle 10 technologies. Businesses shouldencouragethedevelopmentanddiffusion ofenvironmentally friendly Principle 9 Businesses shouldundertakeinitiativestopromote greater environmental responsibility. Principle 8 Businesses shouldsupportaprecautionary approach toenvironmental challenges. Principle 7 and occupation. Businesses shouldupholdtheeliminationofdiscriminationwithrespect toemployment Principle 6 Businesses shouldupholdtheeffective abolitionofchildlabor. Principle 5 Businesses shouldupholdtheeliminationofallformsforced andcompulsorylabor. Principle 4 the righttocollectivebargaining. Businesses shouldupholdthefreedom ofassociationandtheeffective recognition of Principle 3 Businesses shouldmakesure thattheyare notcomplicitinhumanrightabuses. Principle 2 human rights. EC7, LA2,LA13,LA14,HR1,HR2, HR1, HR2,HR6,SO5. HR1, HR2,HR7,SO5. LA4, LA5,HR1,HR2,HR3,HR5,SO5. HR7, HR9,SO5. HR1, HR2,HR4,HR5,HR6 HR9, SO5,PR8. LA14, HR1,HR2,HR4,HR5,HR6,HR7, LA4, LA6,LA7,LA8,LA9,LA13 SO2, SO3,SO4,SO5,SO6. EN26, EN30,SO5 EN2, EN5,EN18, EN30, SO5. EN19, EN22,EN23,EN26,EN28,EN29, EN12, EN13,EN14,EN16,EN17,EN18, EN1, EN2,EN3,EN4,EN5,EN8,EN11, EC2, EN18,EN26,EN30,SO5. HR4, SO5. 25 Methodological note Live-line working “TERNA’S PEOPLE HAVE DISTINCTIVE, RARE AND UNIQUE TECHNICAL EXPERTISE IN THE ELECTRICITY SECTOR. IN 2011 THEY PERFORMED APPROXIMATELY 3,300 LIVE-LINE WORKS. ” 2011

Terna’s profile 28 Sustainability Report 2011 Presentation oftheCompany • • • As ofDecember31,2011theTerna Group included: The structure ofTerna’s equityinterests asofDecember31,2011wasfollows: The Terna Group • • • • The foundingelementsofTerna’s missionare: transfer eachofthethree phasesofthethree-phase electricfieldinalternating-current grids. The Company’snamecomesfrom thesetofthree conductorsorgroups –usedto ofconductors–inItalian,aterna construction, andmaintenanceofthegrid. electricity throughout thecountryonhighandextra-highvoltagegrid.Terna isalsoresponsible fortheplanning, In Italy, Terna transmissionsystemoperator, isthegovernment-licensed responsible fortransmittinganddispatching interconnecting withforeign grids(asofDecember31,2011). kilometers ofhigh-voltagelines(63,626kmthree-phase conductors),454transformingstationsand22lines The Company’sheadoffice isinRomeandittheownerofItalianNationalTransmission Grid(NTG),with57,651 of linesmanaged. Terna isthelargest independenttransmission systemoperator(TSO)inEurope andsixthintheworldtermsofkilometers 100% (*) Tunisian jointlycontrolled companyELMED ÉTUDESSarl(50%equitystake). CRNOGORSKI ELEKTROPRENOSNI SISTEMAD-“CGES”(aMontenegro company, 22.0889%equitystake)andthe the affiliated companies CESIS.p.A.(42.406%equitystake),CORESOS.A.(a Belgiancompany, 22.485%equitystake); the directly controlled, 100%-owned Montenegro company, Terna Gorad.o.o.; Crna Terna PlusS.r.l.; the directly controlled, 100%-ownedItaliansubsidiaries,SunTergrid S.p.A.,Terna ReteItalia S.r.l. (formerTELAT) and towards thecommunity, fullyrespecting theenvironment inwhichthecompanyoperates. creating valueforshareholders withastrong commitmenttoward professional excellenceandwithresponsible conduct managing complexsystems; developing marketactivitiesandnewbusinessopportunitieswiththeexpertisetechnicalknowhowacquired in ensuring equalaccessconditionsforallgridusers; managing electricitytransmissioninItalyguaranteeingsafety, qualityandcost-effectiveness overtime; TERNA RETEITALIA S.r.l. Companies valuedbytheequitymethod Affiliated companies Joint control Subsidiaries 100% TERNA CG 100% TERNA PLUSS.r.l. 100% 100% 50% 22.0889% 22.485% 42.406% ELMED ÉTUDESSarl(*) SUNTERGRID S.p.A. RETE SOLARES.r.l. CORESO S.A.(*) CESI S.p.A.(*) CGES (*) EU4 NUMBERS OFTHETERNAGROUPAS31.12.2011 of which underground of whichunderground (1) Forthekmoflinesandthree-phase conductorsbroken downbyvoltage,seetheindicatortablesonpage186. of whichsubmarinecable Km oflines Km ofthree-phase conductors Total capitalizationin million euros Turnover inmillioneuros Number ofemployees to the2011AnnualFinancialReport,pages95-103. For informationontherecent developmentoftheregulatory andlegislativeframeworkaffecting theCompany, pleaserefer bidprocedure.international renewable sources anditstransfertoItalythrough asubmarineconnection.Production rightswillbeawarded through an developing theElmedProject, whichprovides fortheproduction ofelectricityinTunisia from bothconventionaland ELMED ÉTUDESisaspecialpurposeentity, jointlyownedbyTerna andtheTunisian electricitycompanySTEG;STEGis Jointly controlled companies employees from Terna S.p.A.. implementing thepartnershipbetweennationaltransmissionoperators.AsofDecember31,2011CGEShadtwoseconded of astrategicpartnershipagreement inNovember2010 forbuildingthenewsubmarineelectricityinterconnection and of theinter-governmental agreements between ItalyandMontenegro thatbeganonDecember19,2007withthesigning for Terna. Theagreement represents thepointofarrivalanindustrialcooperationproject andforthecountry;itispart of 22.09%inJanuary2011,followingtheapproval, onthe partofCGES’MemberMeeting,acapitalincrease reserved CRNOGORSKI ELEKTROPRENOSNISISTEMAD(“CGES”)isMontenegro’s TSOinwhichTerna acquired anequityinterest constitutes anequityinvestmentinaffiliated companyfortheGroup. and Western Europe, identifyingpotentialproblems and promptly Terna’s informingtheTSOsconcerned. stakein CORESO TSO, 50HertzTransmission, with10%.CORESOdevelopsdailyforecasts andreal-time analysesofpower flowsinCentral (Elia), andGreat Britain(NationalGrid),eachwiththesamepercentage oftheshare capitalasTerna, aswellGermany’s equity interest of22.485%inNovember2010.Shareholders ofthecompanyincludeTSOsFrance(RTE), Belgium CORESO isaservicecompanyoperatingunderBelgianlaw, withitsheadoffice inBrussels,whichTerna acquired an with theproductive processes oftheentire electricityindustry. electricity, acompleterangeofservicesaimedatthesolutionproblems andlocalnationalgovernments connected (generation, transmission,anddistribution),manufacturers ofelectricalandelectronic equipment,large consumersof electricity systems.Itcoversallthestagesoflifecyclesystemandoffers companiestherein CESI istheleadingcompanyinmarketoftestingandcertifyingelectro-mechanical equipmentandconsultancyon Affiliated companies from Terna S.p.A.. of December31,2011,Terna Gorahadtwoemployeesworkingwithalocalcontractandonesecondedemployee Crna generation investorsinorder tocontributeenhancingandusingtheItaly-Montenegro interconnection infrastructure. As The companywillalsopromote developmentopportunitiesinthetransmissionsectorforBalkanarea insupportof out activitiesregarding authorization,implementationandmanagementoftheelectricityinterconnection inMontenegro. Terna Gorad.o.o.,aMontenegro Crna limitedcompanyestablishedonJune22,2011andentirely ownedbyTerna, carries and related research, consultingandassistanceactivities(seebox,page33). in Italyandabroad andinpartnershipwithotherparties,itw developing andmaintainingenergy storagesystems(includingbatteries), Terna Plus,Terna’s entirely controlled Italiancompany, wascreated forplanninganddesigning,implementing,managing, plants andequipmentfunctionalfortheiroperation(seebox,page33). managing, developing,operatingandmaintainingelectricitylines,gridstructures andrelated infrastructures aswell Terna ReteItalia(formerTELAT), Terna’s entirely ownedcompany, wascreated forplanninganddesigning,implementing, free from plants,nearthetransformingstationsrented bytheParent Company. Itentirely ownsReteSolare S.r.l.. SunTergrid, anItaliancompanyentirely ownedbyTerna, in2009beganbuildingphotovoltaicsolarplantsonterritories Subsidiaries (1)

(1)

ill manage,amongothers,gridequipmentandinfrastructures pumping and/orstockingsystems.Inthefuture, 1,636 1,328 5,199 3,493 1,348 57,651 63,626 29 Terna’s profile 30 Sustainability Report 2011 operational asofApril1,2012 (seeboxpage33). The distinctionbetweentraditionalactivitiesandnon-traditional activitiesisreflected ontheneworganizational structure, New organizationalstructure new developmentinvestments,withoutriskingthestability ofthecapitalstructure inthelongterm. To increase itsfinancialflexibility, Terna maypossiblyexamine thesaleofagroup ofassetstoreinvest theproceeds in Financial flexibility 10 yearmaturityfortheperiodNovember2012-October2013. review ofthe“RiskFree” componentindetermining theWACC, consideringtheannualaveragereturn oftheBTPswith investments thatfallintothedifferent categories.TheElectricityandGasAuthorityhasplannedfortheendof2013 a The newtariff systemforthe2012-2015periodhasrevised theremuneration levelofinvestmentsandalsothetype Revised tariff system from non-traditionalactivitieswillbeadded(60%payouton proceeds and/orgains). As of2012,abasedividendisexpectedfrom traditionalactivities equalto19euro centspershare, towhichthecontribution New dividendpolicy end of2011,remaining 4 times lower. than 55%inallthePlan’syearsandratiobetweennetfinancialdebtEBITDAwillimprove compared to4.2atthe Capital structure remains solid:duringthePlanperiod,ratiobetweennetfinancialdebtandRABwillcontinuetobelower billion euros to6.7billioneuros leadingtothesignificantreduction of1billioneuros compared totheprevious Plan. Efforts continueforimproving theequityratios.DuringPlanperiod,netfinancialdebtisexpectedtoincrease by1.6 Stronger financialstructure be higherthan80%,increasing withrespect to78%oftheoldPlan. 5% to7.5%,withasignificantimprovement intheoperating cashflow. TheEBITDAmargin attheendofperiodwill 2012-2016 Planperiod,compared totheprevious five-yearPlan.TheaverageannualEBITDAgrowth willincrease from Increased revenues andcostcontrol willresult inanincrease ofapproximately 19%oftheEBITDAaccruedduring Improved margins cities ofRome,Milan,Naples,Turin, PalermoandGenoaforanoverallinvestmentofapproximately 1billioneuros. euros andupgradingplanofthelarge ofinvestmentsandthemodernization metropolitan areas willcontinueinvolvingthe began in2011willcontinueforthe“Sorgente-Rizziconi” electricitybridgebetweenSicilyandCalabriaforover730million power linebetweenLombardy andPiedmont; the380kVDolo-CaminpowerlinebetweenVenice andPadua.Work that three strategicprojects: the380kVFoggia-BeneventopowerlinebetweenPugliaandCampania;Trino-Lacchiarella Terna willhaveover300buildingsitesopenthroughout Italyforavalueof2.9billioneuros andin2012workswillbeginfor established intheprevious Plan.Therefore, duringthePlanperiod,investmentsupto6billioneuros are expected. the totalexpenditure fornon-traditionalactivitiesisdoubled(upto1.9billioneuros) compared toonebillioneuros for projects forprivatecustomerswhere theexpectedreturns are higherthanthosefrom regulated activities.Inthisway, batteries, upto900millioneuros ofinvestmentsbothinItalyandabroad couldbeincludedamongnon-traditional activities By enhancingtheCompany’sstrong technicalandengineeringskills,inadditiontoonebillioneuros forimplementing priority alsointhenewPlan. MW, stillnotyetauthorized andsubjecttoobtainingadequateremuneration. Developingtheelectricitygridremains atop Up tonearly1billioneuros shouldalsobeaddedto4.1billioneuros, forimplementingenergy storagesystemsfor240 reaches 5.3billioneuros, exceedingthe5billioneuros oftheprevious Plan. will beusedforgriddevelopment.Consideringalsothe1.2billioneuros already investedin2011,theinvestment plan In thenext5years,4.1billioneuros oftheelectricitygrid,which82% willbeinvestedforthesafetyandmodernization The gridofthefuture foranewelectricitysystem Directors. Thefollowingpointsprovide theplan’ssummary. On March 20,2012,theStrategicPlanwaspresented forthe2012-2016period,approved bytheCompany’sBoard of The StrategicPlan subsidiaries are in place. and theGroup, aswellensuring thatthecontrols necessaryformonitoringtheperformance oftheCompanyandits meeting. TheBoard ofDirectors is responsible forestablishingstrategicandorganizational guidelinesfor theCompany out. Thetaskofmanagingthe CompanyisentrustedtotheBoard ofDirectors, whichisappointed bytheshareholders’ importance oftheGroup’s activities andoftheneedtoappropriately consideringalltheinterests involvedincarryingthem modelaimsatcreatingbest practices.Thiscorporate governance value forshareholders, whilebeingaware ofthesocial industry mayexercise votingrightsrepresenting more than 5%oftheshare capital. to safeguard Terna’s independenceandimpartiality, whentheBoard ofDirectors iselected, nocompanyintheelectricity oppose theacquisition–bypartiesnotunderpubliccontrol – ofmore than5%oftheshare capital.Furthermore, inorder process, theMinistryofEconomyandFinance,inagreement withtheMinistryforEconomicDevelopment,isentitledto Bylaws establishrestrictions onshareholding andvotingrights.Aswithothercompaniesinvolvedintheliberalization By referring tospecificprovisions Stateownershipincompaniesinvolvedliberalizationprocesses, concerning Terna’s As ofMarch 2012,11%oftheshare capitalwasheldbySociallyResponsibleInvestors–SRI. of agreements regarding itsshares. OnApril19,2007,CassaDepositiePrestiti S.p.A.establishedthatitwasinaposition No othershareholder ownsmore than2%ofTerna’s share capital,nordoestheCompanyknowofanyshareholder foreign institutionalinvestors,mainlyEuropean andAmerican. shareholders (CdP29.85%,Italianinstitutionalinvestors8%andretail investors27.8%)andfortheremaining 34.4%by On thebasisofperiodicalsurveyscarriedoutbyCompany, Terna S.p.A.’sshares are heldfor65.6%byItalian (available at Therefore, Code systemisinlinewiththeprinciplesincluded the Governance theCompany’scorporategovernance systeminordercorporate governance tofulfillthecommitmentsprovided forbytheCode. published byBorsaItalianainMarch 2006andin2007theCompanyapproved andimplementedadjustmentsinits provisions ofItalianlegislationregarding listedcompanies.Terna Codeoflistedcompanies adoptedtheGovernance Terna’s structure governance isbasedonthetraditionalaccountingandcontrol modeland isincompliancewiththe Corporate Governance • • • shareholders are dividedasfollows: On thebasisofaccountingrecords andofotherinformationcollectedastheabovementioneddate,Terna S.p.A.’s of 0.22euros each(March 29,2012). Terna S.p.A.’sshare capitalisequalto442,198,240euros andconsistsin2,009,992,000ordinary shares withaparvalue Terna S.p.A.hasbeenlistedintheItalianStockExchangesinceJune2004. Ownership Structure (1) Relevantshareholders are meanttobeshareholders whoown more than2%ofTerna S.p.A.’sshare capital,onthe basisofin Total 100% TERNA’S SHAREHOLDERBASE 10% heldbyotherrelevant shareholders 60.2% heldbyotherinstitutional+retail investors • • • Cassa DepositiePrestiti S.p.A.(CdP)29.85% notices received pursuant toCONSOB Resolutionno. 11971/99.

Otherrelevant shareholders de facto te ntttoa ealivsos60.2% CdP 29.85% Other institutional+retail investors Romano Minozziwith5.6% Assicurazioni Generaliwith2% BlackRock Inc.with2.4% control ofTerna S.p.A.. www.borsaitaliana.it (1) ), withtherelevant recommendations issuedbyCONSOB, andingeneralwithinternational 10.0% (1) among which: 60.2% formation available andof 10% 29.85% EC4 31 Terna’s profile 32 Sustainability Report 2011 EC7 BOARD OFDIRECTORSINOFFICEAS31/12/11 Office Members Executive Non Independent Internal Internal NonIndependent Control Remuneration Executive Committee Members Office approved bytheBoard ofDirectors onMarch 20,2011andavailableontheCompany’swebsite, Further informationonTerna’s Report”,whichwas canbefoundinthe“CorporateGovernance corporategovernance and uponindicationbyCassaDepositiePrestiti; hewill remain inoffice untilthenextshareholders’ meeting. for personalreasons. Ashisreplacement, Terna S.p.A.’sBoard ofDirectors appointedFrancescoPensatobycooptation On May30,2011,Director Andrea Camporese, nonindependentandexecutivemember, resigned from hispositions The Board ofDirectors inoffice asofDecember31,2011wasappointedonMay13,andconsists ninemembers. of thosedifferently establishedbylaw, bytheBylawsorreserved totheBoard ofDirectors. is alsoentrusted,according totheBoard’s Resolution,withallthepowersformanagingcompany, withtheexception Also incompliancewiththeBylaws,CEOhascompany’slegalrepresentation powerandcorporatesignature and Chief ExecutiveOfficer Board itself. meeting, summonsandchairstheBoard ofDirectors andverifiestheimplementationofResolutionspassedby In compliancewiththeBylaws,Chairmanhascompany’slegalrepresentation power, chairstheshareholders’ Chairman oftheBoard ofDirectors reaching corporategoals,excludingonlytheactionthatlawandBylawsreserves fortheshareholders’ meeting. extraordinary managementandinparticular, ithasthepowertotakeallactiondeemsnecessaryforimplementingand In compliancewiththeBylaws,Board isentrustedwiththebroadest powersforthecompany’sordinary and Board ofDirectors Investor Relationssection,accessiblefrom thehomepage. ietrMichele Polo RomanoMinozzi Salvatore Machì MatteoDelFante PaoloDalPino Director Director FabioBuscarini FrancescoPensato Director FlavioCattaneo LuigiRoth Director Director Director Director Director CEO Chairman xctv omte omte forRelatedParty Committee Committee executive www.terna.it Transactions , inthe maintenance through plantengineering andmanagementgriddevelopment. the electricitysystem,operatinggridandstrivingforutmostefficiency oftheinfrastructures andexcellenceinthei Terna’s businessregards thetransmissionofelectricityon the high-voltagegrid The Italianelectricitysystemconsistsoffourcomponents:theproduction, transmission,distribution,andsaleofelectricity Transmission activitiesandprocesses Terna’s neworganizational structure executives andthrough waterfallmodelpresentations toalltheGroup’s personnel. The newcorporateandorganizational structure waspresented onApril3,2012bytheTop managementtothe according tothelogicandguidelinesdefinedbyParent Company’sstaff structures. reporting tothecorresponding corporatestructures. TheCEOsofthesubsidiariesdeterminepriorityactivities to thelogicofhierarchic-functional dualreporting: hierarchic reporting totherespective CEOsandfunctional The twosubsidiariesoperatefullyrespecting thepoliciesand guidelines definedbytheParent Company, according as wellscoutingdevelopmentopportunitiesabroad (inparticular theBalkans). Terna Plus task ofimplementingtheprojects establishedbytheParent CompanyintheDevelopmentPlan. development oftheNationalElectricityTransmission Grid.TheCompany, withnearly3,000people,hasalsothe Terna ReteItalia and maybebasedonorientation,control, authorizationandexclusiveness. the Parent Companywillexercise control through group guidelinesthatwillbedefinedaccording todepartment concessions anddefinetheinvestmentplan.Whileallowingtwonewcompaniesindependentmanagement, Terna and Terna Plus,eachonewithitsownCEOandBoard ofDirectors. owner oftheconcessionandassets,intotwoentirely ownedoperationalcompanies:Terna ReteItalia electricity market.Inthenewstructure, theTerna Group isdividedinTerna S.p.A.,theParent Company, thatisthe on theexpertiseandknow-howacquired byTerna’s peopleinmanaginglarge worksandonitsknowledgeofthe is functionaltodevelopingtheopportunitiesofbusinessobjectivesoutlinedinStrategicPlanandfocuses Announced inFebruary2011duringtheanalystpresentation ofthe2011-2015StrategicPlan,reorganization As ofApril1,2012theTerna Group hasaneworganizational structure. has the task of establishing the company’s strategic policies, govern processes,has thetaskofestablishingcompany’sstrategicpolicies,govern guaranteecompliancewith is responsible fornon-traditionalactivities,particularlybattery storagesystemsandenergy efficiency is responsible forcarryingoutconcessionactivitiesandtheoperation,maintenance PRIMARY STATIONS (HV/MV) EODR TTOS(VL)TRANSFORMERS SECONDARY STATIONS (MV/LV) ; inparticular, theCompany manages r . 33 Terna’s profile The main stages of the transmission service are the following.

Operation Operation of the grid requires at all times a balance between injections and withdrawals, i.e. between the supply of domestic and imported power and the power consumed by end users. This function is called dispatching. Preparation for real-time operation includes unavailability planning (of the grid and of production plants) with different time horizons, forecasting the national electricity demand, verifying its compliance with the production plan determined as the outcome of the free electricity market (Electricity Exchange and off-Exchange contracts), acquiring resources for dispatching, and verifying power transits for all the lines of the transmission grid. In the real-time control phase, the National Control Center coordinates other centers throughout Italy, monitors the electricity system and performs the task of dispatching, taking action in case of deviations from the expected operation due to malfunctioning of production plants or grid segments or to a different demand trend compared to forecasts; instructions are thus given to producers and to Remote-control Centers to adjust the supply and the grid setup. In case of an emergency, the National Control Center may also take action to reduce the demand in order to avoid the risk of grid degeneration and extensive outages.

Grid development planning The analysis of electricity flows on the grid and the development of projections of demand enable Terna to identify the critical aspects of the grid and the new works that need to be constructed in order to ensure the system’s adequacy with respect to meeting the demand, the security of operation, congestion reduction, and the improvement of service quality and continuity. The new works to be constructed are included in the National Transmission Grid Development Plan, which is submitted for approval to the Ministry for Economic Development every year. Terna then follows the authorization process, from advance consultation with the local bodies to the authorization to construct the work. Lastly, by analyzing the situation of the grid, Terna identifies the best ways of connecting to the grid the plants of all the operators that so request.

Construction Terna establishes the engineering standards of the plants connected to the grid, in particular construction standards and the performances required for equipment, machinery and components of stations and power lines. As far as plant construction is concerned, Terna prepares projects for the works authorized. In particular, it establishes the requirements of external resources and the budget for the projects, as well as the work methods and the technical specifications of the components and materials that will be used in constructing the new lines or stations, including the adoption of innovative methods. The construction of new plants is generally outsourced.

Maintenance Terna carries out the maintenance of its power lines and stations through eight Transmission Operating Areas, which employ most of the Company’s human resources (slightly less than 70%).

Other Activities

As a complement to the activities carried out under concession, Terna also develops non-traditional activities, i.e. activities that are not regulated or that are subject to regulation by the Electricity and Gas Authority (AEEG) that differ from activities carried out under concession. In 2011, these activities regarded: • Continuing the photovoltaic project, with a second group of plants built by the subsidiary Nuova Rete Solare S.r.l., subsequently sold to the Terra Firma fund on October 24, 2011; • Starting investment projects in the field of energy storage systems (see “Responsibility for the electricity service”, box page 188); • Developing foreign activities in the Balkan areas and in the Mediterranean-North African area. 2011 Sustainability Report

Sustainability Report 2011 EU23 EU6 EU2 EU1 the local transmission operator CrnoGorski Elektroprenosnithe localtransmission operatorCrnoGorski Sistem AD(CGES)forbuildingthe cablebetweenItalyand In November2010andinJanuary 2011bindingagreements were signedbetweenTerna, Montenegro’s and government out according tothesamerules thatregulate (forexampleinthefieldofbids)griddevelopment investmentsinItaly. infrastructure ispart ofTerna’s NTG DevelopmentPlanapproved bytheMinistryforEconomic Developmentandiscarried between the400kVjunctions inVillanova (Pescara)andTivat(Montenegro), witha1,000MWtransfercapacity. The The costs compared toItaly. Europeanand theSouth-Eastern area, characterizedbyasignificant power surplusintheshort-andmediumtermatlower These characteristicsmakeitthebestcandidateforcarrying outtherole ofelectricityexchangeplatformbetweenItaly future production hubs plannedinthearea (Bosnia-Herzegovina,Serbia, Albaniaand–viaSerbiaBulgariaRomania). national marketneedsandtotheavailabilityofatransmission gridthatisingoodconditionsandwellconnectedwiththe Montenegro isthecountryofgreatest interest toTerna intheBalkansthankstoitsoptimalgeographicallocationfor complying withEUtargets forthereduction ofCO The opportunitiesfordevelopingproduction from renewable sources intheBalkanarea alsorepresent apossibilityfor diversifying supplysources atcompetitiveproduction costs. surplus thankstoitsunusedpotentialofhydroelectric power, windpowerandbiomasses.Accessingthismarketwillallow The region currently hasthemostattractivenearby power marketbasedontheexpectedmedium-andlong-term on theregion’s energy potential,particularlyregarding renewables. The Balkansrepresent forTerna themostinteresting strategicdevelopmentarea basedonthegeographical proximity and The Balkans as ofnow, preliminary studiesare onlybeingconducted. interconnection project forlinkingItalywiththeBalkanarea. Terna isnotcarryingoutoperationalactivitiesinNorthAfric The newsubmarinepowerlinebetweenItalyandMontenegro, underconstruction,isthemostsignificantelectricity competition ontheItalianelectricitymarketandofreduction ofelectricityprices. Italian electricitysystemand,more generally, ofthediversificationelectricitysupplysources from abroad, ofincreased new interconnections withneighboringcountries;this will allowobtainingbenefitsintermsofincreased safetyforthe The purposeofexpandingtheCompany’sactivitiesinstrategicareas istoincrease itsabilitytoimportelectricitythrough electricity sectoraswellforpromoting renewables. isimplementinginter-governmentalwith whichtheItaliangovernment cooperationanddevelopmentagreements inthe areas locatedaround theMediterranean With regard developmentactivities, toits international Development Abroad Terna’s secondphotovoltaicproject 74,000 tonsofCO Once thesystemisfullyoperating,photovoltaicproduction ofthissecondpartwillallowsavingapproximately services oftheplantsincompliancewithcontractsdefinedattimemulti-yearsaletransaction. On thebasisofagreement, Terna shallprovide NuovaReteSolare withmaintenance,surveillanceandmonitoring 2011 dividend. equity stakegeneratedtotalgross proceeds forapproximately 69millioneuros, partlyallocatedforintegratingthe The agreed consideration(socalledEnterpriseValue) forthetransactionwasequalto264millioneuros. Sellingthe and connected,butnotyetinproduction. At theclosing,NuovaReteSolare hadaphotovoltaicsystemwithtotalcapacityofapproximately 78.5MWpbuilt Terna ReteRinnovabileS.r.l., wasfinalizedinJuly2011withclosingattheendofOctober. The saleagreement ofNuovaReteSolare S.r.l. toTerra Firma,theprivateequity fundthathadalready boughtfrom Rete Solare S.r.l. –acompanyentirely ownedbythesubholdingSunTergrid. sold bytransferringReteRinnovabileS.r.l., finalizedinMarch 2011.Thesecondgroup ofplantswasbuiltbyNuova The firstgroup ofplants(approximately 145MWp)wasbuiltbetween2010andthefirstmonthsof2011 Since 2010,theyearfirstphotovoltaicproject began,Terna installedover220MWpofsolarpanels. small-sized photovoltaicproduction plants. Terna’s activityinthephotovoltaicfieldconsistedenhancingterritoriesadjacenttopowerstationsbybuilding project, willleadtoatotalofCO new submarinepowerlinebetween ItalyandMontenegro 2 emissions ayearwhichaddedtothesavingdeterminedduringfirstpartof 2 emissions savedayear, equivalent tothoseproduced by78,000vehicles. . Inparticular, development areas regard NorthAfricaandtheBalkancountries 2 emissions. Terna hasfocuseditsindustrialdevelopmentonthestrategic will linkItalytotheBalkanarea through 415kmofcable a and Sonelgazaimatinitiating in2012theauthorizationprocess fortheinterconnection. economic, industrial,institutional andregulatory conditionsforitsimplementation.According totheactivityplan,Terna interconnection between Algeria andItaly, completedin2004byformerGRTN withSonelgazand definingtechnical, Specifically, theagreement regards updating andimplementingaprevious feasibilitystudyforthe submarine The Project hasnotyetentered theoperationalphaseandincludes: Interconnection projects currently beingdevelopedare: This approach isbasedona • • • • • • • • This developmentstrategyisimplementedbyintegratingtheEuro-Mediterranean electricitygridfor: efficient developmentofexchanges,makeTerna areferent forconnectingNorthAfricangridsto Europe. A strategicgeographicalpositionandasolidinterconnection capacitywiththeEuropean gridscapableofsupportingthe strengthens investmentsafetybyimproving theriskprofile. and transfer, particularlyreferred torenewable sources whoseuseincludesadvantagesfortheenvironment and As partofinterconnection projects withNorthAfricancountries,Terna prefers integratedprojects forelectricityproduction concentrated onnationalmarkets. development: newmarketspacesopenforcompaniesoperatingintheelectricityinfrastructure sector, historically Infrastructures (energy, water, transportationandrelated activities)represent thebasisforarea’s socialandeconomic development activities. Terna doesnotcurrently haveanyinvestmentactivitiesinNorth Africabutisonlyconductingstudiesandpreliminary North Africa company KESHandtheAlbanianTSO(OST). following theprevious experienceswiththeTurkish TSO(TEIAS),theUkrainianMinistryofEnergy, theAlbaniandistribution June 2011markedthesuccessfulconclusionoftechnicalassistanceinfavorSerbregulatory authorityAERS in January2013. IPA, thecontract isfinancedbytheEuropean Commissionandhasatotaldurationof46months,expectedtoterminate regulatorythe electricitysystemandoninternational aspectsfortheelectricitymarket.InpartnershipwithScottish Terna isalsopresent inKosovo,withtechnicalassistanceactivitiesfavorofTSOKOSTT, focusedontheoperationof 400 kVTirana-ElbasanelectricitylineinAlbania,successfullytestedMarch 2011. opportunity toimportfrom theregion. Withinthiscontext,andinassociationwithSAEPowerLines,Terna hasbuiltthe order tostrengthen theelectricityexchangecorridorswithItalyandguaranteeItalian market operatorsthe To completebuildingthenewsubmarineconnections,Terna willdevelopgridinfrastructures intheBalkancountries being implementedbyTerna andbyMontenegro’s operatorCGES. approved byMontenegro’s onJuly28,2011andpublishedSeptember23,2011.Theproject government iscurrently issued bytheMinistryforEconomicDevelopment.InMontenegr The authorizationprocess fortheItaliansideendedonJuly28,2011withauthorizationbuildingandoperation infrastructures hasalsobeenscheduledtobecarriedoutbyCGES. place by2015onthepartofbothoperators.Alongwithsubmarineinterconnection, adevelopmentplanforgrid timeframe forimplementingtheinfrastructures. The Montenegro andforthestrategicpartnershipwithCGES.Theseagreements regulate modalities,coordination andthe electricity connectionbetween thetwocountries. more generally, between theMaghreb andEurope –Terna andSonelgazsignedanagreement (March 2011)forthe Italy-Algeria interconnection: as majorshareholder; thetransfercapacitywillbeof1,000MW. an Italy-Tunisia interconnection viasubmarinecable,builtandmanagedbyamixedcompany Terna-STEG, withTerna through bidlaunchedbytheTunisian aninternational government; the Tunisian marketand 800forexporttoItaly, bythepartythatwillbegrantedproduction rightsinTunisia, selected a production mixfrom renewables (min.100MW)andconventional sources inTunisia for1,200MW, 400ofwhichfor at grantingproduction rightsinTunisia andexportrightstoItaly. mixed company(ElmedÉtudes)responsible forproviding assistance totheTunisian Ministryformanagingthebidaimed national electricitycompanySTEGsignedapartnershipagreement forimplementingtheProject; theyalsoformeda guarantees institutionalcoveragetotheindustrialinitiative. Onthebasisofthisagreement, Terna andtheTunisian electricity inTunisia andexporting ittowards Italy, according toanItalian-Tunisian intergovernmental agreement that Elmed Project: cooperation, institutionalandindustrialinitiatives. participating ininternational building anelectricitycorridorMaghreb-Europe, withinterconnection projects withTunisia andAlgeria; energy exchangesalongtheSouth-SouthandSouth-Northaxes. promoting thebuildingofelectricityinfrastructures coast,necessaryforimplementinginternational alongthesouthern end markets; enhancing theavailabilityofrenewables coastoftheMediterraneanbyconnectingthemto locatedalong thesouthern an integratedproduction andtransmissionproject basedonmarketprocedures thatincludesproducing multi-lateral Euro-Mediterranean cooperationproject by: as partofaninterconnection betweentheAlgerianandItalianelectricitysystems–and, cable’s entranceintooperationisscheduledbyagreements totake o, theproject wasincludedinthedetailedzoningscheme 37 Terna’s profile 38

Sustainability Report 2011 EU23 EU6 harmonized throughout theMediterraneanarea forpromoting theintegrationofregional electricitysystems. on submittingproposals fordevelopingrenewable energy exchangesandondefiningaregulatory frameworkthatis how transfer. Terna’s contributionisfocusedonassessingproduction andtransmissionsystemsofthecountriesinvolved, The Consortiumcloselycoordinates itsactivitieswiththeauthoritiesofbeneficiarycountriesandcarriesoutknow- Mediterranean coastsandintegratingtheelectricitysystemsoftwocoasts. Africa), fordefiningalegalandregulatory frameworkpromoting energy production from renewable inthesouthern The project includestechnicalassistanceactivitiestoninebeneficiarycountriesfrom theMENAArea (MiddleEast–North and inthesecuritydiversificationofitssupplysources. service tunnel.ThebenefitsfortheItalianelectricitysystem consistinanincrease initsabilitytoimportlost-costpower 2011, thelinewillbe190kilometerslong–nearlyhalfof which inItaly–andwillusethehighwaynewFréjus environmental impact,thistechnologicalproject isunparalleledintheworld.AuthorizedbyItalianauthoritiesMarch integrated intheinfrastructure ofthe A32Fréjushighway. Withitslongtunnelsandviaductsextremely low France connectingPiossasco,(Turin) andGrand’Ile,(France)withadirect-current cablethat willbecompletelyburiedor frontierOn thenorthern themostimportantdevelopmentproject istheoneregarding the1000MWinterconnection with Frontier The Northern • • • Other cooperationinitiativesinclude: exchanging renewable energy amongthecountriesofMENAArea andtransferringittoEurope. Medgrid: (Germany) andwithENEA. the MediterraneanSolarPlanthatTerna iscarryingoutinassociationwithRTE (France),Sonelgaz(Algeria),MVVDecon Paving theWay fortheMediterraneanSolarPlan: project forproducing electricity, mainlyfrom renewables, inNorthAfricaandtheMiddleEast(MENAArea). Desertec: Med-TSO: Terna foraEuro-Mediterranean electricitygrid took placeinRomeatTerna’s headoffice onApril19,2012. Mediterranean TSOsexpressed theirinterest injoiningtheAssociation.TheformalestablishmentofAssociation Reg andoftheParliamentaryAssemblyMediterranean,duringwhichnearlytwothirds ofthe24coastal In November2011,thefirstorganizational meetingamongTSOswasheldinNaples,underthepatronage ofMed- (Association ofEuropean TSOs). Med-TSO holdstherole ofnaturalinterfaceforMed-Reg(Association ofMediterraneanRegulators)andEntso-E and thosefortheoperationalmanagementofelectricitysystems. TSOs andatguaranteeingthenecessaryconnectionbetweenregulatory duties(specifictoregulatory authorities) The initiative,currently beingfinalized,aimsatcreating afree andindependentarea amongtheMediterranean Tunisian electricitycompany(STEG),thecreation ofMed-TSO,theassociationMediterraneangridoperators. Within thiscontext,Terna haspromoted togetherwiththeAlgerianelectricitycompany(Sonelgaz)and infrastructural investments. supporting production activitiesandaframeworkofclear stableregulations forimplementinglong-term The Mediterranean’ssocialandeconomicdevelopmentrequires theavailabilityofelectricityinfrastructures is ajointventure byFrench governed law, aimedatcreating aEuro-Mediterranean electricitygridfor a Germanheadedindustrialinitiativewiththeobjectiveofpromoting aEuro-Mediterranean cooperation the European Commissionproject forimplementinganddeveloping Sustainability equally important element is concern for equally importantelementisconcern often rare oruniqueintheelectricityindustry, represents anessentialelementofTerna’s approach tosustainability. Anothe The role ofhumanresources inTerna’s activitiesiscrucial.The participation inthecivilgrowth ofsociety. communities isalsoexpressed through initiativeswithsocial,humanitarian,andculturalvalueasaconcrete signof a whole,whichtakesadvantagefrom amore secure, efficient for andlesscostlyservice.TheCompany’sconcern acceptance andconstructionofnewinfrastructures, thus generatingeconomicbenefitsforshareholders andsocietyas that cantriggeravirtuouscircle: itallowsbiodiversity, naturalandculturalheritagetobepreserved, whilefacilitatingt another majorobjective.TheCompanyconsiders The CodeofEthicsisavailable inTerna’s inthe“InvestorRelations” section. website,underCorporateGovernance, of theCompany’senvironmental andsocialpolicy, aswellofconsistencybetweenobjectivesandtheresults achieved. One ofthecommitmentsexpressed intheCodeistoprovide evidence,intheSustainability Report,oftheimplementation chapters onservice,economic,environmental, andsocial responsibility inthisReport. Further detailsonthesignificantaspectsforTerna regarding sustainabilityare includedinthefirstsectionsoffour tasks onenergized lines. activities are characterizedbyparticularrisks,suchasworking manymetersabovetheground andperformingmaintenance presence whichisrepresented bythelarge pylonsofelectricitylines.Therefore, the Terna’s activitiesintrinsicallyproduce aheavyimpactontheenvironment: electricityinfrastructures haveatangible,visibl • • • • • The Codeisdividedintofivesections,whichdescribe: and aligningthemwiththeobjectiveofcreating andconsolidatingarelationship withstakeholdersbasedontrust. significant forTerna policiesandguidelines.Itisaconcrete andestablishinginternal guideinmakingeverydaydecisions involved thetopandfirst-linemanagement,itishighest reference foridentifyingthesustainabilityissuesthatare The CodeofEthicswasapproved bytheBoard ofDirectors onDecember21,2006.Theresult reflection ofinternal that Code ofEthics Sustainability Governance • • • of theresponsibility concessionandtakesonitsobjectives,i.e.to: entrustedtoitbythegovernment makes theCompany customers, butratherofcompaniesthatdistributeandsellelectricity, theessentialrole itperformsintheelectricitysyst and forsupplyingeveryoneinItalywithelectricity. Althoughtheendusersofelectricityserviceare notTerna’s direct Terna’s core businessistheprovision ofaservicethatisindispensablefortheoperationentire electricitysystem based ontrustinorder tocreate valuefortheCompany, society, andtheenvironment. In general,asestablishedinitsCodeofEthics,Terna’s aimistoconstructanddeveloprelations withitsstakeholders for theenvironment andlocalcommunitiesare particularlyimportant,aswelloccupationalsafetyandpersonneltraining. commitment istherefore alsothemainreference oftheCompany’sapproach tosustainabilityissues,amongwhichrespect corporate businessisdeterminedbyitsabilitytoprovide societywithareliable andefficient electricityservice.Service Terna hasacrucialandfundamentalrole intheItalianelectricitysystem.Themajoreconomicandsocialimpactofits Terna’s concerns the rulesforimplementing Codeandthepersonsresponsible. Terna’s commitmentstoensuringcompliance withtheCode; the mainguidelinesonconductinrelations withstakeholders; of interest, andthesafeguard ofcorporateassets; the conductrequired, specificallyfrom employees,withregard tothegeneralissuesofloyaltyCompany, conflicts (good management,respect, andtransparency); fairness general ethicalprinciples(legality, honestyandresponsibility) andthoseparticularly significantforTerna’s business comply withimpartialityandneutralityprinciplesinorder toensure equaltreatment toallgridusers. keep thetransmissionsystemefficient anddevelopit; provide asecure, reliable, continuous,andcost-effective service; ethically responsible fortheservicetowards theentire country occupational safety respect fortheenvironment andlocalcommunities , whichisevengreater consideringthatmanyoperating renewal oftechnicalexpertise reduction oftheimpactlines . Terna therefore isveryconscious that isdistinctiveand a ruleofconduct em he is e r 39 Terna’s profile 40 Sustainability Report 2011 HR7 HR6 HR5 the GlobalCompactNetworkItaliaare describedbelow. During 2011,Terna joinedtheSteeringCommitteeofItalianNetwork.AdditionalinformationonTerna’s activitiesin the Company’sinitiativesregarding sustainabilityandcorporatesocialresponsibility. and theprevention ofcorruption.Theseprincipleswere already referred toinTerna’s CodeofEthicsasabenchmarkfor consolidated itscommitmenttocomplyingwiththeGlobalCompact’s10principlesonhumanrights,labor, theenvironment In becomingamemberoftheGlobalCompact(2009),multistakeholdernetworkUnitedNations,Terna further Global Compact Terna’s CommitmentintheUNGlobalCompact are publishedinthearea dedicated toTerna ontheGlobalCompact’s official websiteat rights, labor, environment, prevention ofcorruption andcreating avaluechain.Theresults ofthis self-assessment regarding andStakeholderinvolvement, UNobjectivesandpurposes,protection Strategies,Governance ofhuman CoP. Inorder toobtainthisresult, Terna submittedits2010SustainabilityReporttoan analysisbasedon24criteria out ofthe114participatinginnetworkwithan“advanced” level(thehighest,above“basic”and“active”)forits Compact mustsubmittotheheadoffice inNewYork. Asof2011,Terna hasbeenoneofthe10Italiancompanies, annual reporting ofitsactivitiesinsupportthe10principlesthatorganizations belongingtotheGlobal Terna’s commitmenttoGlobalCompactwasexpressed alsobyimproving CommunicationonProgress (CoP),the Sanpaolo, Italcementi,SnamReteGas,StudioLegaleCocchi, FondazioneSodalitas,Terna andUnicredit. Coca ColaHBCItalia,ConsorzioCBI,Edison,Eni,Fondaca, Fondazioneperlosvilupposostenibile,Intesa During 2011,Terna participatedinthe Working Group focusedontheenvironment andformedbyAcea,Altran, made possiblethankstotheprofit/non-profit Cooperation. partnership withtheNGOCOOPI-International event, thephotographicexhibitbyDanieleTamagni ontheelectrificationofAndesregion ofKami,inBolivia, Volunteering, Terna organized attheMinistryofForeign Affairs, theinstitutionalvenueofGlobalCompact’s During theannualmeetingofEuropean networks,thatcoincidedwiththeclosingofEuropean Year of and theprevention ofcorruption. inclusive andsustainableglobaleconomy, inlinewiththe10universalprinciplesonhumanrights,labor, environment world, non-profit organizations, universitiesandcivilsocietyformakingacontributiontoward implementingamore “Public-Private JointEfforts Towards Rio+20”isthesubjectthatwasdiscussedbyrepresentatives from thebusiness European networksthatwasheldinRomeOctober. The network’sactivitieshaveregistered asignificantincrease alsowithrespect totheannualmeetingof citizenship through the“GlobalPact” launchedin1999bytheUNGeneralSecretary atthetime,KofiAnnan. organization thatinlinewiththedirectives oftheheadoffice inNewYork, promotes theculture ofcorporate In 2011,Terna increased itscommitment intheGlobalCompactNetworkItalia,Italianmultistakeholder As ofNovember2011,Terna joinedtheSteeringCommittee oftheItaliannetwork. “Public-Private JointEfforts Towards Rio+20”:plenarysessionattheMinistryofForeign Affairs -Rome www.unglobalcompact.org . “Investor Relations”section. Further informationonTerna’s organizational Model isavailableat conducted adjustedaccording tocrime“atrisk”areas inwhicheachoneoperates. support theprovision ofinformation andtrainingonthesubject(seealsopage177). Anawareness campaignwasalso entitled “LegislativeDecree no.231ofJune8,2001–AModelforOrganizing andManagingtheProcedures” tofurther In March 2011,theCorporateSecurityDepartmentpublishedanddistributedtoallemployeesamanualforpersonnel L –environmental crimes I –organized crime H –computercrimes,unlawfuldataprocessing, copyrightviolation G –crimesofinvoluntarymanslaughterandgrievousbodily harm F –moneylaunderingcrimes E –marketabuse D –crimesagainstindividuals C –crimesofterrorism B –corporatecrimes A –crimestowards thePublicAdministration Specifically, the 11specialPartsoftheModelregard thefollowing: S.p.A. adapteditsOrganizational andManagementModelbyintroducing SpecialPartL,whichregards environmental crimes. Legislative Decree no.121/2011becameeffective, whichextendedtheapplicationfieldtocertainenvironmental crimes,Terna The Modelcurrently consistsof11parts,ageneral oneand10specialones(A,B,C,D,E,F, G,H,I,L).Inparticular, afte crimes inDecree 231. Model hassubsequentlyundergone anumberofrevisions toadaptitlawprovisions andfortheinclusionofadditional the expectationsofitsstakeholders,inkeepingwithprovisions ofLegislativeDecree no.231ofJune8,2001.The transparency inconductingtheCompany’sbusiness”andactivities soastosafeguard itspositionandimage,aswell Terna’s adoptionofthe231Organizational and andManagementModelisthusaimedatensuring“conditionsoffairness • • company tobeexemptedfrom liabilitydependsonspecificactions, including: the interest ortothebenefitofcompany. Inparticular, thelawwasintendedtofightcorruption.Thepossibilityfora de facto provisions ofLegislativeDecree no.231ofJune8,2001,whichintroduced intoItalianlawaregime ofadministrative (but In 2002,Terna’s Board ofDirectors resolved toadopttheOrganizational andManagementModeltocomplywiththe 231 OrganizationalModel(pursuanttoLegislativeDecree 231/2001) sustainability, are coordinated andguidedbyits The activitiesintheimportantareas oftheenvironment andoccupationalsafety, whichare crucialinTerna’s viewof Quality-Environment-Occupational Safetyintegratedmanagementsystem policies andmanagementsystems.Amongthese,thefollowingshouldbestressed: The principlesandcriteriaofconductexpressed bytheCodeofEthicshavebeentranslatedintoconsistentcorporate Management policiesandsystems 65 ofthe2010SustainabilityReport). System-ISMS) andisinlinewithTerna’s approach totheISO9001QualitySystemandRiskManagement(seealsopage Management System(inItalianSGSI)forphysical,logicalandorganizational safety(InformationSecurityManagement The ISO27001:2005standard rulethatdeterminestherequirements isaninternational fortheInformationSecurity this (seealsopage70). for MonitoringtheElectricityMarket),withreference totheOperationalUnitofRomeHeadoffice thatisincharge of On September14,2011Terna alsoobtainedtheISO/IEC27001:2005certificationforTIMMapplications(IntegratedText annual confirmation. year period2011-2013,withtheconsequentissuanceofnewcertificates.In2011,certificationbodiesissuedtheir UNI ENISO9001:2008-14001:2004andBSOHSAS18001:2007certificationswere renewed forthethree- performed bytheIMQcertificationbodyonQuality-Environment-Occupational Safetymanagementsystems,Terna’s infrastructures andthoseregarding theplanning,design,andconstructionofnewplants.In2010,followinginspections in theCompany’spolicies. ongoing search forimprovement, whichensures consistencywiththecommitmentsexpressed intheCodeofEthicsand Occupational SafetyIntegratedmanagementsystem.Compliancewithcertificationrequirements demonstratesTerna’s autonomous powersofinitiativeandcontrol regarding theapplicationofModel. having entrustedtheoperation,respect Vigilance andupdatingofthe Modeltoaninternal Bodyendowedwith with LegislativeDecree 231andappropriate forpreventing crimesastheonethatwascommitted; having adoptedandimplemented(before thecrimeiscommitted) anorganizational andmanagementmodelconsistent criminal) liabilityofcompaniesforseveralkindscrimescommittedbydirectors, executives,oremployeesin The integratedsystemcovers100%ofTerna’s activities ISO 9001,14001,andOHSAS18001 www.terna.it under Corporate Governance, inthe under CorporateGovernance, , boththosecarriedoutonexisting -certifed Quality-Environment- r 41 Terna’s profile 42 Sustainability Report 2011 opportunities. In managingcorporaterisks,Terna adoptsprocedures suitableforguaranteeingoperatingefficiency andmarketgrowth • • • • are highlightedcorresponding totheobjectivesdelineatedfor2011 andincludedintheprevious SustainabilityReport. 2011 registered importantprogress inallareas ofresponsibility. According totheorder listed inthetable,following Sustainability results andobjectives • • • • • Particularly importantfrom thepointofviewsustainabilityare: organization Internal the incentivesystemsbasedonpay. Balanced Scorecard andvariable-payschemesformanagers(MBO),thesustainabilityobjectivesare alsosupportedby approach tobusiness,isthe objectives oftheStrategicPlanare divided.Particularlysignificantfrom thepointofviewsharingTerna’s sustainable to theeconomic/financial,organizational/processes, strategic/customers,andinnovation/developmentareas –theannual indicators thatallowittofollowquarterlytheprogress madewithrespect totheoperatingobjectivesintowhich–according In monitoringandauditingcorporateactivities,theCompanyutilizesaBalancedScorecard (BSC)system,apanelof Balanced Scorecard andincentivesystems the expectationsofwebusersregarding sustainabilityinformation. Section rankedfifthamongthefirst50companieslistedin specialLundquistranking(seeboxpage61),representing videos andreferences tootherpagesofthewebsite. Theexpertsviewedthesechangesfavorably:Terna’s Sustainability subject structure withpageswhosecentral,more concisetextsare accompaniedontherightbylinks todocuments, organization ofcontents,expandingthereference documentsandaboveall,forproviding aneasierandmore dynamic of understandingandassessingmonitoringcompliancerisk. takes theformofconstantlymonitoringprocesses, checking reports ofillegalactivities,implementingmemorandums events thatcouldcompromise themwithactivitiesaimed atpreventing andmanagingcorporatefraud.Thisactivity safeguarding theCompany’sassets(materialandhumanresources, direct andindirect benefits)inthefaceofillegal should havealready beenaddressed andpreventively eliminated.TheFraudManagementunithastheobjectiveof on analyzingcausesthathavenotyetbeendetermined,assumingcertain,orhighlyprobable causes regarding thepossibilityofpreventing, limiting,transferringoracceptingcorporaterisks.RiskManagementisfocused that canleadtodeviatingfrom theestablishedgoalsandquantifyingtheirconsequencessoastosupportdecisions to theregular carryingoutofcorporateactivities.Themethodforriskmanagementallowsidentifyingvariouscauses occupational safety. RiskManagementhastheobjectiveofassessingtypesandoutcomespossibledisturbances Fraud Managementandthesafeguard oftheCompany’sphysical,human,andfinancialresources, aswell the presence ofaCorporateSecurityandSafetyDepartmententrustedwith,amongotherthings,RiskManagement, with positiveconsequenceson theCompany’srevenues andprofits. photovoltaic plantsthatwascarried outinonlyafewmonths(seebox“Terna’s secondphotovoltaicproject”, page36) Developing non-regulated activities wassuccessfullyconcludedinOctober2011withthe sale ofthesecondgroup of and RegulatoryFramework”). targets setbytheAEEGfor2011; greater revenues were consequently obtained(seetheparagraph“RevenueStructure The centralresponsibility forthe electricityservicewasconfirmedbytheexcellentresult obtained withrespect tothe The Sustainabilitysectionofthewebsite of thestakeholderopinions. The scheduledsurveyonthereputation waspostponedowingtotheneedofre-focusing thegroup ofmonitoringtools and results. the presentation totheBoard ofDirectors, upontheapproval oftheSustainabilityReport,sustainabilityobjectives formulas formonitoringTerna’s environmental andsocialperformances; system, whichcurrently includesmore than1,500indicatorslinkedtotextualinformation,data,conversionfactors,and the usesince2009ofSDM(SustainabilityDataManager)dedicatedsoftware formanagingthesustainabilityinformation departments thatshare theresponsibility ofimplementingsustainabilityprojects andmonitoringtheirimpacts; the creation in2009ofaSustainabilityandEnvironmental SteeringCommittee,whosemembersare theheadsof Asset Management;Vigeo, andEiris)whichperiodicallyprepare sustainabilityassessments; reputation andintangiblevaluethrough theanalysisofratingsleadingagencies(suchasSAM-Sustainable monitors therisksconnectedwithaspectsofsustainabilitythatentailpotentialnegativerepercussions ontheCompany’s andcommunicationof theobjectivesandresultsgovernance ofCorporateSocialResponsibility. Theunitalsoconstantly Company’s sustainabilityobjectivesregarding theethical,socialandenvironmental contextaswellsustainability – incooperationwithallthecorporatedepartmentsandreferring tothebestpractices–contributesestablishing the presence RelationsandCommunicationDepartment,which ofaCorporateSocialResponsibilityUnitin theExternal inclusion intheBSCsystemofsustainabilityobjectives www.terna.it was significantlymodifiedbasedontheneedforimproving . Thankstothelinkbetween results These objectivesinclude: Objectives for2012 • • • • • • • • • • • the corporatevehiclefleet(seepages137-138). publications; moreover, offsetting emissionswasacontractrequirement inthebidforpurchasing batchesforrenewing 135-136). for comparativedatadevelopingabenchmarkandsomeofthefirstresults are includedinthisReport(seepages percentage oftheleakageontotalgasinstalledregistered thelowestamountofpastyears.Research continues equipment withrecurring leakagehasbeenidentified,installinghigh-performanceequipmentcontinuedandthe the organizational satisfactionsurveyconductedin2011. defining anactionplanwithpracticalinitiativestobeimplementedintheprincipalareas forimprovement indicatedby continuing activitiesforplanningamanagementsystembasedonenergy efficiency, inlinewiththeISO50001criteria; the website; implementing agreater integrationoffinancialandsustainability in actively participatinginthePilotProgramme IntegratedReportingCouncil,bystudyingand oftheInternational • • • its strategicobjectives,particularly: revising ethical,environmental andsocialresponsibility supervisionwithrespect tothere-organization oftheGroup and signed intheprevious yearswiththeWWFandLipu (seepage140). the WWF, in2011,animportantcollaborationagreement wassignedwithLegambiente,alongtheonesalready Regulations foremployeevolunteeringare currently beingdeveloped.Inadditiontotheabove-mentionedinitiativeswith on thepartofnon-profit organizations (seepages179-180). that alsoledtodefiningregulations forfreely sellingcorporategoodsandforimproving requests managementofexternal 2011 registered intensiveactivityalsoregarding thetoolsforallocatingandcontrolling solidarityandcharityexpenses performance evaluationprocess, fundamentalfordevelopmentandmeritocracy-basedmanagement. as partofaproject forgraduallyincludingagrowing numberofprofessional areas (seepage162)withintheofficial Applying theGPSperformancemanagementsystemwasextendedtoincludemore employeeswithrespect to2010, were completedandofficially presented (seeboxpages122-123). All mitigationandimprovement measures regarding usabilityinthethree OasesidentifiedintheWWF-Terna agreement Reforestation wasincreasingly usedforoffsetting CO Guidelines willrepresent inputforadoptingenergy savingtechnologyandsolutionsinthefuture construction ofTerna’s offic Guidelines were definedforconstructingTerna’s office buildings according tothebestenergy efficiency practices.The In theenvironmental field,actionplansandtargets forcontrolling SF preventive analysisofenvironmental impactconnectedtobusinessexpansion(newoperatingactivities); revising, updatingand,ifnecessary, strengthening thissupervisionalongthesupplychain; adopting theCodeofEthicsand231ModelonpartnewcompaniesGroup; represent furtherstepsalongthedirections already taken:thefollowingtableprovides asummary. 2 emissions connectedtotheproduction ofvariousTerna formation bothintheReportonManagementand 6 leakage are stillbeingre-examined; evenif es. 43 Terna’s profile 44 Sustainability Report 2011 rao epniiiy21 betvs21 eut 2012objectives 2011results 2011objectives Area ofresponsibility (1) Theresult achievedcorresponds toaperformanceinlinewiththeobjectivesapproved bytheBoard ofDirectors for theStr • •• ••• Legenda Social responsibility responsibility Environmental responsibility Economic service the electricity Responsibility for general aspects and Governance •• • to financialanalysts(seepage30). Postponedorsuspended Partlyachieved Objectivesachieved WWF included intheagreement withthe Completing measures intheOases of CO Increasing offsetting for Terna’s buildings Defining anenergyefficiency plan within mid-June 2010 SustainabilityReportonline section Revising thewebsite’ssustainability reputation Conducting surveyonTerna’s non-profit organizations Partnership initiativeswith of corporateproperty of employeesandfordonations Defining rulesforvolunteering performance assessmentsystem Expanding theplanfor Revising actionplansonSF (photovoltaic energy) Developing non-regulated activities investments Implementing griddevelopment Corporate Profitability Positive result ofAEEGincentives Progress oftheSafetyPlan targets Respecting thecontinuityindicator 2 emissions 6 leakage presented (page122) Measures completedandofficially (page 124andpage127) Increase implemented Guidelines implemented Initiative inprogress online July5 2010 SustainabilityReport section created (page61) New website’ssustainability Initiative postponed assets completed(page90) Second group ofphotovoltaic investments Implementing griddevelopment Legambiente (page140) Agreement signedwith of corporateproperty (page179) Rules definedfordonations assessment (page162) Increasing thenumberofpersonnel Corporate Profitability (page 72) Positive result ofAEEGincentives (page 67) Progress oftheSafetyPlan indicators targets(page72-73) Respecting thecontinuity th (1) (1) ••• ••• ••• ••• ••• ••• •• ••• • ••• •• ••• ••• ••• ••• •• •• • • • analyses ofnewbusiness Initiating environmental impact with ISO50001criteria for energyefficiency incompliance Defining amanagementsystem Developing non-traditionalactivities investments Implementing griddevelopment Corporate Profitability (page 72) Positive result ofAEEGincentives (page 67) Progress oftheSafetyPlan indicators targets(page72-73) Respecting thecontinuity Reporting Council Integrated of theInternational in thePilotProgramme Integrated Reporting:participation of corruption)inthesupplychain human rights,prevention of responsibilities (environment, Revising andupdatingsupervision new Companies and Model231bytheGroup’s Adopting theCodeofEthics non-profit organizations Partnership initiativeswith volunteering Defining rulesforemployee satisfaction survey of the2011organizational plans inresponse totheresults Defining andimplementingaction on SF Revising actionplans 6 ategic Planpresented annually leakage • • • • • local oppositionmaycontinueduringtheprocess. During2011andinearly2012,thefollowingcaseswere reported: The pursuitofshared solutionsrequires difficult negotiationsandlengthytime.Theoutcomesare usuallypositive,however provided theyare compatiblewiththerequirements ofsecurity, efficiency, andcost-effectiveness oftheelectricityservice. solutions,evenonesthatarewillingness toseekalternative technicallymore complexthanthoseoriginallyplanned, entail adversereactions manifestingtheNIMBY(notinmybackyard) syndrome. Inthesecases,Terna’s stanceisoneof effort tocarryoutitsactivitiesinagreement withlocalauthorities.However, projects forconstructingnewinfrastructures Terna considersrespect fortheenvironment andlocalcommunitiestobeanintegralpartofgridplanningmakes every Opposition totheconstructionofnewlines Controversies andlitigation Court) inLazioagainsttheproject’s authorization. of thepowerline.TheMunicipality ofSanGiovanniTeatino officialized theappealat Tar (RegionalAdministrative its intentionofwantingtopromote aconsultingreferendum toheartheopinions ofthecommunityregarding thebuilding Pescara. InFebruaryofthisyear, the“Futuro eLibertàperl’Italia”councilgroup attheMunicipality ofPescaraannounced andthecommunitiesinvolved,modified routewith thelocalgovernments tomeettheneedsofMunicipality 2011 controversies arose inPescaraagainstthecable’sroute. Terna, inlinewithitspracticeofwillingnesstodialogue favorable stancewithaunanimousvotebytheLocalAuthorities PlanningConference (November2010),asofMarch research aspartoftheprogram forsupportingTrans-European Network(TEN)electricityinfrastructures. Following the entire Balkanarea andEurope through Italy, bytheEuropean Commissionthatalsoco-financedallthestudiesand Montenegro wasincludedin2008amongthepriorityinfrastructures (Corridor8)asastrategicconnectionbetweenthe “Italy-Montenegro”: Economic Development;asimilarinitiativewasundertaken bysomeprivatecitizensandenvironmental associations. Filippo delMelaandofPacefiledanappealfor canceling thesingleauthorizationissuedbyMinistryfor for identifyingthebestsolutionsprotecting theterritory. During2010,theMunicipalityofVillafranca Tirrena, ofSan beganin2004:over100meetingsweregovernments heldbetweenTerna, theauthoritiesandlocalbodiesinvolved social andhealthneeds,fullyrespecting thelimitsestablishedbylaw. Coordination anddialoguewiththe local the Messinaarea -todefininganoverheadroute that wouldmeetinthebestpossiblewayneedsofenvironmental, the MunicipalityofVillafranca andtheMunicipalityofPacedel Mela,togetherwithother11municipalitiesinvolvedof assessment andanalysesthathaveled-inagreement with Sicily’sRegionalAuthorities,Messina’sProvincial Authorities, near theurbancenterofPassoVela. Despitethepowerline’sroute isthefruit ofover2yearstechnical-environmental regarding thenewpowerlineunderconstructionandpresence oftheexisting380kV“Sorgente-Rizziconi” located Serro, beburiedorshifted.Similarrequests were madebycommunitiesfrom theMunicipalityofPacedelMela,both protest actions,requesting thatsomeofthepylonsoverheadsegment“Sorgente-Villafranca”, whichcrosses the MinistryforEconomicDevelopment,citizensinmunicipalityofSerro (hamletofVillafranca Tirrena) carriedout “Sorgente-Rizziconi”: Friuli toinformthepeopleincommunitiesaffected bythepowerlineproject. line. Thecontroversy wasalsodirected againsttheinformationandawareness risingcampaignthatTerna launchedin led bytheCommitteeforDefenseofRuralFriuli–toproject, requesting theconstructionofworkasaburied environmental compatibilitydecree wasissued.In2009,andthroughout 2010and2011there wasstrong opposition– “Redipuglia-Udine Ovest”: activate theprocedures ofthe“LeggeObiettivo”(alsoseededicatedbox,page58). with thebuildingofnewone.Terna willbegintheworkinauthorizationstage2012:submitting theproject will feasibility segmentforplacingthepowerline’sroute andthusallowingtoassociatethepossibleremoval ofoldlines meetings withthemunicipalitiestoconcuronawrittenagreement –after5yearsofdialoguefordeterminingthe on aresponsible approach, toinvolvethemunicipalitiesinpre-authorization phasesandsince2011hasintensified building large strategicinfrastructures inItalyforthe2002-2013ten-yearperiod.Terna hasvoluntarilychosen, based 443/2001, knownas“LeggeObiettivo”,thelegislativetoolthatestablishesprocedures offundingmodalitiesfor began in2001andiscurrently inprogress. Theproject is includedintheworksforimplementingprovisions ofLaw the 380kV(approximately 33km)powerline.The“Trasversale inVeneto” powerlineisthefruitofalengthyprocess that the Provinces ofTreviso andofVenice, thefirstisgenerallyinfavorofproject. TheCommitteesrequest totallyburying particular withanenvironmental associationintheMunicipalityofPaese.Amonglocalbodiesinvolved,particularly “Trasversale inVeneto”: project oftheburiedpowerline.Three petitionshavepresently beenfiledwiththeRegionalAdministrativeCourt(TAR). be buried.TheCat(CommitteefortheEnvironment andLocalCommunities)alsoprotested strongly infavorofthe to theproject byvariousMunicipalitiesthatrequested theirrespective thesegmentoflinethatconcerned territoriesto Fossò andCamponogarafiledapetitionagainsttheMiSE’sDecree. 2010,contrarily, wascharacterizedbyopposition with theMinistryofEnvironment (MATT). In2011,theMunicipalityofVigonovo, togetherwiththeMunicipalitiesof “Dolo-Camin”: the linewasauthorizedinApril2011byMinistryforEconomicDevelopment(MiSE)agreement the workwasauthorizedinJuly2011.Theelectricityinterconnection project betweenItalyand the workisunderconstruction.AfterauthorizationDecree wasissuedonJuly8,2010by the lineisincoordination stage.There are manyproblems withthelocalcommunities,in the linehasbeeninauthorizationstagesinceDecember2008.OnJuly26,2011, 45 Terna’s profile 46 Sustainability Report 2011 outcomes are considered unlikely. Parent Companywere issued,whichwere appealedand whose relative proceedings are stillpendingandnegative Regarding decisionsonthematter, itshouldbenotedthatonly infewlitigationcases,unfavorabledecisionsagainstthe to electromagnetic fieldswere veryfew. (Decree ofthePresidency oftheCouncil ofMinisters)July8,2003).Requestsfordamagescompensationhealthowing cause, evenifinstalledinfullcompliancewiththeexistinglaws onthematter(Lawno.36,February22,2001,andD.P.C.M. was madeformovingormodifyingtheoperationmodalities oftheelectricitylinesonbasisallegeddamagethey Company andthesubsidiaryTerna ReteItaliawere partiesinvariouscivilandadministrativeproceedings where arequest damages thatcouldderivefrom exposure toelectricalandmagneticfieldsgeneratedbythepowerlines.TheParent Litigation forenvironmental issuesisbasedontheinstallationandoperationofelectricityplantsmainlyregards Litigation regarding environmental issues continue inquiryprocedures withthegridoperators analyzing indetailvariousrandomsampleconnectionapplications. grid operators’activitywithrespect tothetermsofregulation. Nonetheless,theAuthoritydeemeditnecessaryto The outcomeoftheinquiry, includedintheReportattachedto Resolution,indicatedasubstantialcomplianceofthe against Terna. The fact-findinginvestigationclosedwithResolutionVIS99/11,withoutanyfurtherprovisions beingexpectedtobetaken responsibility. Also Terna, astheNationalTransmission Gridoperator, received therequests andprovided alltheinformationunderits to thevariousreference resolutions thatregulate theissue(281/05,89/07,99/08-ICA,TICAmodified).(See boxpage81). information regarding thegridconnectionserviceforproduction plantsandalsotodifferentiate thisinformationaccording During theinquiry, allthegridoperatorsandprincipalassociationsofelectricityproducers were requested toprovide criticalities incarryingoutconnectionprocedures invariousareas. productions plantsfrom renewables, alsofollowingreports from operatorsandcategoryassociationsindicatingpossible regarding gridconnectionsoftheelectricityproduction plants,particularlythelowandmediumvoltageconnectionsof With itsResolutionVIS42/11ofMarch 16,2011,the Authoritybeganafact-findinginquiryforfurtheranalyzingthesituation for theelectricityproduction plantsbythegridoperators Fact-finding investigationonsupplyingtheconnectionservicetogrid the sameintoaccountinquantifyingpenalty. in mitigatingthenegativeeffects oftheimproper behaviorofothercompaniesproviding theelectricityserviceandtook transmission anddispatchingservicesforwhichitisresponsible. TheAEEGalsoacknowledgedTerna’s proactive conduct imposition ofthepenalty, theAEEGcriticizedTerna’s conductforlackofdiligence inperformingseveralactivitiesofthe determination oftheelectricitylotswithdrawnfrom the gridandnotcorrectly assignedtodispatchingusers.Withthe inquiry followedtheconclusionsoffact-findinginvestigation,begunin2007,regarding anomaliesnotedinthe inquiry followedthefact-findinginvestigation(VIS171/09),begunin2009,regarding nonassignedenergy. Thepreliminary With itsResolutionVIS16/11ofFebruary7,2011,theAEEGimposeda420,000euros administrativefineonTerna. The Preliminary inquiryonunassignedpower and failures. Theinvestigationisstillpending. consumption, widespread fires thatentailedshuttingdownseverallinestoallowthembeextinguished,breakdowns, disconnections ofordinary users.Themeasure wasnecessaryowingtoaseriesofconcomitantfactors:very high system andprevent more criticalsituationsfrom arising;electricitydistributorsconsequentlycarriedoutplannedrotating with itsResolutionno.155/2007.OnJune26,2007Terna tookanti-blackoutmeasures toavoidlossofcontrol ofthe Fact-finding investigationontheoutagesthatoccurred inSicilyonJune25and26,2007,whichtheAuthorityinitiated Outages inSicilyJune2007 The followinginquiriesbytheAuthoritythatinvolvedalsoTerna, amongothers,shouldbenoted. Preliminary inquiriesoftheElectricityandGasAuthority • Polverigi, OsimoandSantaMariaNuovaexpressed oppositionagainstbuildingthepowerline. through itsterritory. EvenColdiretti, theComitatodiBelforteandMunicipalitiesofOstra,Senigallia,MonteSanVito, Municipality ofPesaro expressed itsopposition,through aspecificamendment,againsthavingthepowerlinepass still inprogress fordefiningandsharingafeasibilitysegmentthefuture powerline.InJanuaryofthisyear, the authorities involved(Marche andAbruzzo).Theoptimalcorridorfortheproject wasagreed uponandcoordination is “Fano-Teramo”: the workiscurrently beingcoordinated. Asof2006,technicalconsultingbeganwiththeregional

Litigation regarding concession activities The Parent Company, as the owner of the concession for transmission and dispatching activities as of November 1, 2005, was summoned in various proceedings largely for appeals to provisions issued by the AEEG and/or the MSE (Ministry for Economic Development) and/or by Terna itself and relative to such activities. Only in the cases where the appealers claim, in addition to irregularities in the provisions appealed, also Terna’s alleged violation of the rules established by the above- mentioned authorities, the Company started a legal action. As part of this litigation, although various proceedings ended in first and/or in second instance trials with the annulment of the AEEG Resolutions and of Terna’s consequent provisions, it is unlikely that there will be any negative outcomes for the Company, since these are considered normally as let through lots, as is also gathered by the information provided by the external attorneys that assist the Company in proceedings. Terna, the Parent Company, as the owner of the concession of the transmission and dispatching activities, in application of the Resolutions of the Authority, adopts deeds and provisions that can be appealed, even if the relative economic charges, in the presence of certain conditions, can be recognized by the sector’s Authority.

Other litigation Some proceedings are pending regarding the environment and city-planning in connection with the construction and operation of several transmission lines. A negative outcome in these cases could generate unpredictable effects and thus they are not included in the determination of the “Provision for litigation and sundry risks”. For a small number of proceedings we cannot presently absolutely exclude unfavorable outcomes, whose consequences – in addition to the payment of damages – could consist in, among other things, sustaining the expenses connected with modifying lines or the temporary unavailability of the lines themselves. In any case, negative outcomes would not compromise the operation of the lines. Taking into account also the opinion of the Company’s external lawyers, an examination of the abovementioned litigation leads to believing that negative outcomes are highly unlikely.

Penalties In the 2009-2011 three-year period: EU25 • there were no definitive criminal convictions or plea bargaining for injuries to third parties caused by Terna’s assets; • as of December 31, 2011 there was no pending litigation nor had any legal proceedings ended regarding corruption, SO4 unfair competition, anti-trust, or monopolistic practices. Also with regard to corruption, unfair competition, anti-trust, or SO7 monopolistic practices, no definitive administrative or judicial, monetary or non-monetary fines were recorded for noncompliance with laws or regulations, including environmental ones, that imposed on Terna an obligation to “do/not do” SO8 (e.g., prohibitions) or convicted its employees for crimes. EN28 In the three-year period 2009-2011 no significant penalties were recorded regarding the environment, or in general, compliance with law provisions. On the basis of Resolution VIS 16/11 by the AEEG, in 2011, Terna S.p.A. paid an administrative fine of 420,000 euros to PR9 settle the preliminary inquiry begun with Resolution VIS 171/09, for having violated AEEG’s provisions regarding electricity transmission, dispatching and metering services. The dispute particularly referred to anomalies noted in the determination of electricity lots withdrawn from the NTG and not correctly assigned to dispatching users.

Promotion of Corporate Social Responsibility

IIRC - The International Integrated Reporting Council – Pilot Programme Terna joined the bi-annual Pilot Programme created by the IIRC, the international organization involved in researching and experimenting a framework for integrating financial, environmental, social and governance information. 61 leading global companies are part of this program of which 4 are Italian, in addition to Terna.

Fondazione per lo Sviluppo Sostenibile (Sustainable Development Foundation) In 2011, Terna joined the Fondazione per lo Sviluppo Sostenibile, whose activity mainly consists in analyzing – from both a cultural and technical point of view – sustainable development themes through research, seminars and meetings. During 2011, Terna actively participated in the Fondazione’s initiatives.

LBG The London Benchmarking Group – Corporate Citizenship 2011 After having joined LBG – The London Benchmarking Group, the British organization which groups over 120 companies around the issue of measuring the contributions and impacts of Corporate Community Investment, Terna adapted the monitoring tools established by the LBG methods to the Italian context and to its specific aspects for a more timely measuring of the output of its initiatives in the community. For more information on 2011 activities see the paragraph “Community Initiatives”, page 179; the model is described in the box - page 179. Sustainability Report

48 participating inthe7 Also in2011,Terna supportedtheactivitiesofCentro Studi“Politeia”forresearch andeducationinpoliticsethics conference ondonatingresponsibly promoted bytheIstitutoItalianodellaDonazione(Rome,May2011). the partnershipbetweenTerna andCOOPI duringmanagementtrainingcoursesatSiemensandparticipationinthe performance” created bythemagazine“SviluppoeOrganizzazione” (Rome,March 2011),thetwoexperiencesregarding Europea Roma(Rome,January2011),thereport on sustainabilityindicatorsattheconference “Measuring organizational Terna’s events,includingteachinginDegree external Programs onCSR,promoted bytheKPMGcompany, attheUniversità The disseminationoftheculture ofsustainabilityandthepromotion ofitsownexperienceswere the objectiveofmany Other activities common investmentfunds,aco-buildingsessiononactive shareholding. Terna alsoorganized withEticaSgr, asavingmanagementcompanythatexclusivelypromotes sociallyresponsible corporate core business:integrationthatgivesvalue”. with theForumperlaFinanzaSostenibileandCSRManagerNetwork,focusedontheme“Sustainability and Terna supportedthesixtheditionofCSRForumpromoted by ABI-AssociazioneBancariaItaliana,incollaboration ABI’s VICSRForum(Rome,January20-21,2011) creates anawareness amongcompaniesandthepublicopiniononsocialresponsibility andsustainabilityissues. contribution madebyrepresentatives from theartandculturalworldstowards developinganethicalconscienceand una coscienzaetica”(AnimaPrize–Fordevelopinganethicalconscience”),theassociation’sinitiativethatenhances the In 2010Terna joined Anima perilsocialeneivaloridell’impresa projectsbetween GRIindicators,nationalstatisticsandinternational forassessingthecollectivewell-being. During 2011,Terna participatedinthejointCSRManagerNetwork-ISTAT project aimedatestablishingaconnection authorities, associationsandnon-profit organizations, l thatcanparticipateindiscussionsatthenationalandinternational about thebestpracticesinItalyandabroad, havingattheirdisposal anorganization thatrepresents themvis-a-vispublic The Networkoffers itsmembersthepossibilityofcomparingtheirexperiences,identifyingelementsinnovation,learning corporate socialresponsibility. the reference pointforprofessionals, consultants,anduniversityresearchers whoseworkregards sustainabilityand Through theprofessional contributionofitsownmanagers,Terna supportstheactivityof theCSRManagerNetworkItalia, CSR ManagerNetworkItalia by CiesseviandSDABocconi. Terna alsoparticipatesintheCorporateVolunteering Laboratorypromoted, inadditiontotheSodalitasFoundation,also for thearea “Youth andTerritory” andinthefinalJurythatselectedawarded thebest13projects. for Donation),companiesandauthorities.Terna projects participatedintheCommissionthatexaminedinternational Commissions formedbyrepresentatives from theSodalitasFoundation,IstitutoItalianodellaDonazione(ItalianInstitute 202 non-profit organizations participatedinthisfirstedition,presenting 231projects whoseevaluationwasassignedto plans capableofattractingtheinterest ofcompaniesforcreating newpartnerships. “Sodalitas SocialInnovation”,theprogram created foraidingnon-profit organizations indefiningqualitysocialbusiness Together withother22companiesbelongingtotheFoundation,in2011,Terna wasamongthepromoters ofthefirst and on80volunteermanagers. counts onthecontributionof82supportingcompanies,whichgenerateaneconomicvalueequalto25%Italy’sGDP, responsibility andthepromotion ofdialoguebetweenthebusinessandnon-profit world.TheFoundationpresently Foundation continuesthecommitmentundertakenbySodalitasAssociationfordisseminationofsocial Terna isoneofthecompaniesthat,in2008,created theFoundationforDevelopmentofEntrepreneurship. The Sodalitas In theyearof150 able tocombineprofit withthecreation ofwelfare forthecommunity. – whichgroups managersandcompanieswishingtodisseminate intheircommunityanewentrepreneurial culture thatis founded in2001andpromoted bytheUnionedegliindustriali edelleimprese diRoma–Romeassociationofenterprises Anima perilsocialeneivalorid’impresa th th CSR ForumheldinMay. anniversary oftheUnificationItaly, Terna hassupportedthe“Premio Anima–Perlacrescita di , (“Soulforsocietyinbusinessvalues”),anon-profit association evels. 49 Terna’s profile 50 Sustainability Report 2011 ne ericue Characteristicsoftheindexes Year included Index - Global Governance Leaders - GlobalGovernance - GlobalSocialLeaders - GlobalEnvironmental Leaders - GlobalESGLeadersIndex STOXX - ItaliaSRILeaders - ItaliaSRIBenchmark FTSE ECPI - Europe - World Dow JonesSustainability - Sustainability(ESI)Europe - Excellence Ethibel ASPI Eurozone - Europe Sustainability - GlobalSustainability MSCI - EthicalEMU - EthicalEuro - EthicalGlobal ECPI - CSR - Ethical AXIA - Europe - Global FTSE4Good aimed atguaranteeingtransparency onCO Disclosure Project, initiativesupportedin2011 by551investorsthatmanage71,000billiondollarsand theInternational For thesecondconsecutiveyear, Terna wasincludedinthe“CarbonDisclosure LeadershipIndex“draftedbytheCarbon Carbon Disclosure Project a score thatiswithin1%oftheSectorLeader’s. the worldforsustainabilityperformanceoutofatotal104 companiesinthesector. BelongingtotheGoldClassindicates for theDowJonesindexes.Onbasisofthisassessment, Terna ranksamongthefirstthree electricity companiesin conducted bySAM-SustainableAssetManagement,the sustainability ratingagencythatconductsalltheassessments Terna wasincludedintheGoldClassof“SAMSustainability Yearbook 2012”,basedonanadetailedanalysis SAM 2012GoldClass Awards by sociallyresponsible investors. increase sustainabilityindexes,andtobeingrecognize itssustainabilityratings,tobeingincludedinthemaininternational The ongoingimprovement ofitsESGperformances(Environmental, allowedTerna Social,Governance) toconstantly Sustainability Indexes in communicationregarding itscarbonfootprint.Foradditionalinformationseebox, page130. their release. In2011,Terna ranked–amongtheItaliancompaniessecond forutilitiesandabsolutethird fortransparency TERNA’S PRESENCEINSUSTAINABILITY INDEXES(ASOF31/12/2011) ® 2011 2010 2010 2009 2009 2009 2007 2007 2006 2005 2 emissions generatedbycompanies andonprograms implementedforlimiting and Global Governance Leaders).Ternaand GlobalGovernance istheonlyItalianutilityincluded inallthree. one ofthe3specializedindexes(GlobalEnvironmental Leaders,GlobalSocialLeaders To beincludedintheGlobalESGLeadersIndexitisnecessarytopresent inatleast the 1,800present intheSTOXXGlobalindex. rating agencySustainalyticsandselectthe300bestshares forESGperformanceamong Launched in2011,theseindexesare developedonthebasisofevaluationsmadeby listed onBorsaItaliana,theItalianstockexchange,basedanalysesofECPIfirm. Introduced in2010,theseare theonlysustainabilityindexesthatincludecompanies SAM agency-SustainableAssetManagement. for theEurope Indexthefirst600European companies)onthebasisofrankings with greater capitalization (fortheWorld Indexthefirst2,500companiesinworldand DJS indexesselectthecompanieswithbestsustainabilityperformancesamongthose experts inthedifferent aspectsofsustainability. Inclusion issubjecttothepositiveopinionofEthibelForum,apanelindependent These indexesare developedonthebasisofratingsprovided bytheVigeo agency. leaders intermsofsustainabilityaccording totheVigeo ratingagency. Among the600European companies withgreater capitalization,thisindexselectsthe120 references inthe United States. financial performancesofcompaniesandstillrepresent oneofthemosthighlyregarded These indexescontinuetheKLDIndexes,whichwere amongthefirsttotracenon- benchmarking, andperformanceassessmentbasedontheanalysesbyECPIagency. These indexeswere designedtobeusedbycustomersforinvestmentanalysis, greater capitalizationintheEurostoxx50 (Ethical)andEurostoxx60 (CSR). Axia indexesselectthebestpracticesregarding sustainabilityamongthecompanieswith basis oftheanalysesEIRISagency. FTSE indexesincludethebestcompaniesintermsofsustainabilityperformanceon d CO emissions companies toward thismatter, both asasignofitsawareness to environmental issuesandinresponse tothegrowing allelectricity attentionconcerning to theclimatechangeforitsowneconomicsituation.(see paragraph“Riskmanagement”,pages93-96).Nonetheless, to obligationsforreducing emissionsorboundbyemissiontradingregulations, nordoesitseeparticularrisksconnected Climate changeandgreenhouse gasemissionsrepresent oneofthemostsignificantglobalproblems. Terna isnotsubject on theissue. any risksconnectedwithitsactivities.Moreover, itwillcontinuetocontributetoward correctly informingthepublicopinion greater efficiency and Terna alsoidentifiesaseriesofactivitiesregarding energy efficiency (seeparagraphon the StrategicPlan).Terna is Terna dedicates Italian laws,amongthemoststringentonesinternationally With regard toelectromagnetic fields,Terna’s commitmentisdemonstratedaboveallbyscrupulouslycomplyingwiththe from renewables. Current issuesfocusedonbyTerna includeelectromagnetic fields, climatechangeanddevelopingelectricityproduction Environment, climateandrenewables • • the followingaspectsareAs farasthegridisconcerned, crucial: linked todevelopingthegridandinterconnection relations withother countries. In themediumandlongterm,creation ofvalueforshareholders andthequalityofelectricity serviceare Local communities the appropriateness ofinstrumentsandprocesses. already considered inthecurrent approach tosocialresponsibility activities, requiring, however, aconstantmonitoringof The developmentofforeign activitiesthatcanbepresently foreseen doesnotseemtoincludeanychallengesthatare not security oftheelectricityservice,whichare alwaystoppriorities. willkeeptheissueofcoregenerational turnover competencemanagementtopical,alongwiththoseofthequalityand mainly intheaspectsofrelations withlocalcommunitiesand environmental impact.Alsointhenextfewyears,amajor Projected ontoamedium-to-long-termhorizon,theissuesofsustainabilityintersectwithTerna’s developmentstrategies Medium-term prospects goods, servicesandequipmentcompanies.Inthe2011edition,72projects participatedin7themecategories. enhances sustainabilityinitiativesintheenvironmental, socialandculturalfieldscarriedoutbyItalianretail, consumer The award, promoted bythepublicationGDOWeek ofthe“IlSole24Ore” Group, hasnowreached itsnintheditionand World”, withtheelectrificationofKami,inBolivia. Terna wontheEthicAward 2011,inthecategoryreserved tosustainabledevelopmentprojects for“TheSouthofthe Ethic Award 2011 commitments andinitiatives(alsoseebox,page61). by thefirst50Italianlistedcompaniesforcommunicating,through theirwebsites,thecorporatesocialresponsibility The research conductedbyLundquist,theSwedishfinancialcommunicationcompany, analyzesthemodalitiesadopted Responsibility. In 2011,Terna rankedfifthintheresearch “CSROnlineAwards” onwebcommunicationregarding CorporateSocial IV CSROnlineAwards page 115). involvement ofassociationsrepresenting societyatthelocallevel,inadditiontoauthorities.(seededicatedbox, development projects. Withregard totheseobjectives,animportantrole isplayedbycommunicationandthe disputes describedinthepresent Report.Terna ispresently identifyingthemosteffective waystopresent its electricity infrastructures bythecommunitiesinvolvedisan extremely importantobjective,ascanalsobeseeninthe acceptance bylocalcommunities: the process tomakeitmore effective -withregard torelations withlocalauthorities-andmore efficient; over timebytheconsistencyofCompany’sconduct.In of shared solutionsthatrespect communitiesmayfacilitatetheissueofauthorizations,alsothankstotrustgenerated the NTG.Terna haschosenthepathofdialogueandearlydiscussionwithlocalauthoritiesbelievingthatidentification longer thanactuallybuildingtheline,withsignificantconsequencesofafinancialnature, aswellontheefficiency of acceleration ofauthorizationprocesses: 2 emissions intotheatmosphere is represented bygriddevelopment,thatallowsfortheelectricity system’soverall , andwillmaintainitscommitment forachievinggreater energy efficiency. Terna's majorcontributionforreducing constant attentiontothedevelopmentofscientificresearch onelectromagnetic fields allows acceptinganincreasing amountofproduction from renewables Terna hasalready defined control andlimitingprograms fordirect andindirect in additiontorelations withauthorities,increasing thelevelofacceptance in Italy, obtainingauthorizationfornewpowerlinesmaytakefourtimes . Consideringthesensibilityofpublicopiniononissue, next fewyears,therefore, itwillbeimportanttooptimize . InitsStrategicPlan, for assessing 51 Terna’s profile 52 Sustainability Report 2011 Stakeholder engagement instruments are usedwithdifferent timefrequencies. Ethics andthespecificengagementinstruments,suchasmonitoringcheckingexpectationsopinions.Thevarious For eachstakeholdercategory, thefollowingtableshowsmostimportantcommitmentsexpressed intheCodeof the Company’simpactonthemandviceversa. – eightmostsignificantcategoriesofstakeholdersintermsthecontinuityrelationship andoftheimportance In preparing itsCodeofEthics,Terna identified–through theactiveparticipationofitstopexecutivesandmanagement their compatibilitywiththoseoftheCompanyinorder toadopt aconsistentandtransparent conduct. Building arelationship basedonmutualtrustwithourstakeholders beginswithconsideringtheirinterests andanalyzing page153. “Management ofthegenerationalturnover”, element ofwhichistheexchangeknowledgethrough theCampusfaculty–isdescribedindetailsboxentitled following theretirement reform approved inDecember2011.Theresponse bytheItaliangovernment strategy–adistinctive Terna’s impactwasdistributedoveralonger periodoftimethanplanned, personnelinthecomingyearsevenifturnover The issueofprofessional updatingwillbeparticularlysignificantwithregard thatwillconcern tothegenerationalturnover technical expertisethatisdistinctiveofitssector forhumanresources,Constant concern firstofallwithregard to Human resources where itispresent, foradoptingadequateprevention andcontrol measures. Terna willintensifymonitoringenvironmental andsocialconditions–includingtheprevention ofcorruption–inthecountries by operatingabroad. Withthegradualshiftingfrom thecurrent preparatory phasetothatofimplementingtheprojects, Focusing ontheNorthAfricanMediterraneanarea andontheBalkanslimitspotentialcriticalitiesthatcouldemerge Activities abroad environmental impacts. (i.e., energy storagesystems),according toanapproach thatisconsistentwithitscommitmentforassessingandlimiting Lastly, Terna carefully considersdevelopingnon-traditionalactivitiesincludedinitsStrategicPlantheupcomingyears are partofthisdirection taken,whichare referenced toonpage38. initiativesandprojectsand participationininternational fordevelopinganintegratedEuro-Mediterranean electricitygrid development ofelectricityproduction from renewables. Appliedresearch andSmartGridinitiatives(seebox,page68) involved invariouswaystosupporting,withinthelimitsof , willcontinuetobeapriorityforTerna. the regulations onnon-discriminationamongoperators,the safety , butalsotot raining forongoingupdatingthe tkhlesCmimns Instrumentsformonitoringandchecking Commitments Stakeholders creditors, ratingagencies) providers ofcapital,banks, (Shareholders, financialanalysts, and providers ofcapital Shareholders, financialanalysts parties) standardization bodies,political technical international opinion groups, national and associations, opinionmakers, organizations, consumer associations, environmental (Media, universitiesandscientific scientific community Media, opiniongroups, economic interests, ETSO,UCTE) associations representing autonomous provinces, regions, provinces and Authority andPoliceforces, Protection, NationalSafety representatives,government Civil National authoritiesand bodies, (EU andInternational associations Authorities and Suppliers Representatives, LaborUnions) Collaborators, Employee (Employees, Directors, Employees Terna’s activities). local bodiesdirectly affected by end usersoftheelectricityservice, communities andtheenvironment, (National society;thecountry, local Society andlocalcommunities committee) stock exchangebodies,strike Antitrust Authority, CONSOB, with decision-makingpowers, bodies authorities, government Authority, othersectorregulatory (AEEG-Electricity andGas institutions -AEEG Regulatory authoritiesand partners) other gridoperators,business electricity system,gridowners, interruptible users–ofthe producers, distributors,traders, (Private customers,gridusers– and businesspartners customers Grid users, • Commitmenttoavoidinginsidertrading. • Attentiontoshareholders andinformingtheminatimely • Adoptionofsystemstoprevent andcontrol risks. alignedwiththebestpractices. • Corporategovernance • Creation ofvalueforshareholders intheshortandlongterm. • Balancedmanagementoffinancialobjectivesandthose Pursuitofcooperationareas ofmutualinterest with • Exclusionofexploitationandmanipulationinformationto • Publicandwidespread disseminationofinformation. • nuigums lrt nrltos Ensuringutmostclarityinrelations. • Representation oftheCompany’s interests andpositionsin • • Anti-mafiaandanti-moneylaunderingprevention with • Supplierqualification,alsothrough quality, environmental • Transparent procurement processes. • Transparency andfulfillmentofagreements andcontractual • Opportunitytocompeteonthebasisofqualityandprice. • Recognitionofindividualcapabilitiesandmerit. • Investmentinprofessional growth. • Nondiscriminationandequalopportunities. • Safeguard ofthephysicalintegrityemployeesandtheir • Fairandcollaborativeapproach tofacilitatetheregulatory task. • Meetingdeadlines. • Transparent, complete,reliable information. • Confidentialityofinformationregarding gridusers. • Noarbitrarydiscriminationamongoperators. • Efficient, qualityserviceaimingatconstantimprovement. Providing evidencefortheimplementationof environmental • Supportinginitiativeshavingasocial,humanitarian,and • Advancedialoguewithlocalauthoritiestocarryout • Reducing theenvironmental impactofcorporateactivities. • Assessingthelong-termeffects oftheCompany’schoices. • Ensuringsecurity, continuity, quality, andcost-effectiveness • equal fashion. regarding servicesecurityandquality. associations representing stakeholders. the advantageofCompany. collusive attitudes. a transparent, scrupulous,consistentway, avoiding suppliers. and socialcertification. commitments. personal dignity. and socialpolicy. cultural value. and localinterests. investment thatisrespectful oftheenvironment, landscape, of theserviceovertime. Collaboration andpartnershipinitiatives. workshops, targetedsurveys. and oftheDevelopmentPlan.Organizationseminars, Presentation anddisseminationoftheSustainabilityReport bodies. Direct participationintechnicalcommitteesandsteering Procurement portal,direct meetings. negotiations withtheLaborUnions. Focus group onspecifictopics.Consulting,exchangesand Survey onpeoplesatisfaction. Periodical meetings Section “OperatorConsulting”inTerna’s website. Consultation CommitteeonGridCode,dedicatedmeetings. surveys ofthepopulation. Coordination process inplanningtheelectricitygrid.Sample Sustainability Rating. Road shows,dedicatedmeetings,website,e-mails. 53 Terna’s profile 54 Sustainability Report 2011 resources. Thework paceisintenseinvolvinga highlevelofphysicalandmental energy. Thisismatched withthe expertise isconsidered asaresource tobeproud ofandasanelementinwhichtoinvestincreasing numberof a spiritofcollaborationandconfidence inthemanagement’scapabilities.Thecompany’s fullrangeofknow-howand company, attentivetoitsemployees’ safetyandcomfort.Peopleexperiencetheirworkinglife inadynamiccontextwithin results registered withthesamemethod usedbyothercompanies.Terna isperceived asanefficient andinnovative the results oftheprevious yearsowing tothedifferent methodused,were higherby10 points withrespect totheaverage The generalpicture ofemployeesatisfactionatTerna waspositive.Theaveragepointsbeing58/100,notcomparable to was 71%compared to70%in2009). the employeesalsoinprevious years(withoutworkers,forwhichin2009asamplingcriteriawasused,participation Confirming thevalidityofsurveymethods,participation ratewas63%,inlinewiththeinterest demonstrated by Management; Equity;Relationsamongcolleagues;Conflicts. The areas surveyedwere: Efficiency/Being OpentoInnovation;Work Organization; Comfort/OccupationalSafety; • • anonymity, companyduringthe2011May-Novemberperiodintwophases: wasconductedbyanexternal The initiativewasaddressed toallemployeespartofthelaborforce asofDecember31,2010.Theinvestigation,instrict and productive bypromoting andmaintaininganadequatelevelofemployeesatisfaction. to explore notonlythequalityofrelations andoftheworkingenvironment, butalsothecompany’scapabilitytobeeffective revise andimprove thesurveytools.Fornewsurvey, amethodwasadoptedthatrefers topeoplesatisfaction,allowing exchange thatbeganin2007andwastemporarilysuspended2010,afterthree editions,basedontheneedto In 2011,Terna onceagainconductedasurveyamongitsemployeesregarding peoplesatisfaction,reopening alistening 2011 SurveyonPeopleSatisfaction Employees Management, SustainalyticsandVigeo. information: CarbonDisclosure Project, ECPI,EIRIS,EticaSgr, GoldmanSachs,Natixis,SAM–SustainableAsset necessary toassesstheCompany’sESGperformance.In2011,followingorganizations requested andobtained with theInvestorRelationsDepartment,analystsand The CorporateSocialResponsibilityDepartmentmaintainsr for receiving documentsandanyquestionsregarding theShareholders’ Meetingand the itemsonagenda. session, theCompanyhasmadeavailabletoallentitledshareholders acertifiedemail(PostaElettronica Certificata–PEC) During Terna’s 2011annualShareholders’ Meetingandthroughout alltheperiodthatwasstrictlyfunctionaltoitsbeingin meetings. dividends, therelated policyandtherighttoreceive dividendpaymentsaswellthedocumentationforshareholders’ During 2011,retail investorsmade29e-mail requests (23in2010,292009).Therequests regarded dividendsandinterim fifty connections,includingtheanalystswhofollowTerna’s shares andpublishstudies. extraordinary transactionstakeplace.Liveparticipationinthese eventsthrough thetwochannelsexceedsonaverage calls organized bothwhentheCompany’sresults (quarterly, half-year, andannual)are publishedandwhensignificant by theCompanyalsoinaninteractiveversion,webstreaming alsoenablesvisitorstothesitefollowconference and ManagementModelpursuanttoLegislativeDecree 231/2001).Inadditiontothecompletedocumentationproduced regulations, documentsandotherinformationregarding theCodeofEthics,Organizational corporategovernance, interest tomostshareholders (press releases, compositionofthecorporatebodies,Bylawsandshareholders’ meeting and quarterlyreports, sustainabilityreports, presentations tothefinancialcommunity),data,andupdateddocumentsof economic results andstrategicobjectives [email protected] For institutionalinvestors,thephonenumbersare (+39)06-8313.8106and06-8313.9041thee-mailaddress is [email protected] Retail investorscancontacttheCompanybyphoneat(+39)06-8313.8136and06-8313.8359e-mailat: Department withretail investors. investors. Specifically, theInvestorRelationsDepartmentinterfaceswithmarketoperatorsandCorporateSecretary Information transparency andtimelinesscharacterizetherelationship betweenTerna anditsinstitutionalindividual Shareholders, financialanalystsandproviders ofcapital website, To furtherfacilitatedialoguewithitsinvestors,Terna activatedadedicatedInvestorRelationsSectiononitsinstitutional analyzing thedataofquestionnaires. 5 FocusGroups withemployeescharacterizedbybelongingtoprofessional groups andtodifferent offices, aimedat individual PC; an onlinequestionnaire forexecutives,managers,employees;ahard copyquestionnaire for technicians withoutan www.terna.it , whichoffers everyoneinterested . . . Thesectionprovides financialinformation(financialstatements,half-year the opportunitytobepromptly updatedontheCompany’s elations withsustainabilityratingagenciesand,incollaboration investment managersproviding themwiththeinformation • • • • During 2011,theCommitteewasinvolvedinconsultation process andinexpressing itsopiniononthefollowingissues: from theapplicationofGridCoderegulations. conciliatory dutiessince,uponrequest oftheparties,itmayfacilitatesettlementdisputesamonggridusersderiving classifying sensitiveinformationandtheiraccess);itproposes amendmentstotheexistingregulations andcarriesout on thegeneralcriteriaforgriddevelopment,interconnections, gridsafetyprotection andonthegeneralcriteriafor The Committee,whosemembersare renewed everythree years,hasanadvisoryrole (expressing non-bindingopinions with theparticipationofElectricityandGasAuthorityMinistryforEconomicDevelopmentasobservers. producers from bothconventionalandnonsources, majorindustrialcustomers,wholesalersandconsumers, operators: theCommitteeindeedincludesrepresentatives ofthedifferent operatorcategories,namely:distributors, which regulates theunifiedownershipandmanagement ofthegrid.Itispermanentplaceforconsultationelectricity The CommitteeisthetechnicalconsultationbodyestablishedincompliancewithPrimeMinister’sDecree ofMay11,2004, Consultation Committee. regulation ofthetransmissionanddispatchingservicesperformed byTerna, alsothrough theactivitiesofusers’ As inthelastfewyears,2011Terna continuedtopromote bythe theengagement oftheelectricityoperatorsconcerned Consultation Committee Grid usersandcompaniesintheelectricityindustry began withthenationallaborunionsecretariats regarding theproject fortheTerna Group’s neworganizational structure. participatory industrialrelations modelalsobysharingtraining objectivesandpurposes.Apreliminary exchangealso (managing buildingsitesafety, fire safetytraining,safedrivinginsnowandice),withthewillingnesstoconsolidatea The memorandumsignedonSeptember21,2011alsoimplementedspecificoccupationalsafetytrainingprojects by January1,2013–ofsingleamountsatthenationallevelforitemizedreimbursement costs. previous system,basedon20different regional agreements, providing forthegradualestablishment–tobecompleted period regarding performancerelated payandexpensereimbursement fortravel.Thelatteragreement replaced the Two principalagreements were signeddefiningthe neweconomic-regulatory frameworkforthe2011-2013three-year collective bargaining agreements orsecondlevelbargaining agreements. For 2011,industrialrelations activitywascharacterizedbynegotiationswiththenationallaborunionsecretariats regarding In the2009-2011three-year period,bargaining withtheindustrylaborunionsledtosigning44agreements. information (seethesectiononIndustrialRelations). a systemofrelations andarrangementsbasedonadvanceand/orperiodicalbargaining, discussion,consultation,and The Protocol relations ontheSystemofIndustrialRelationsthatgoverns withlaborunionsatthecorporatelevelestablishes Relations withlaborunions interdepartmental workinggroups todefineimprovement proposal. and enhancinghumanresources. Followingtheanalysisofsurvey’sresults, atthebeginningof2012Terna created system. Generally, expectationsare basedonthecompanymaintainingandstrengthening anexchangewithemployees among departmentsandtheheadoffice andbranchestheneedforimproving flexibilityoftheprocedure recognition ofmeritthrough improved evaluationtoolsandperformanceenhancement,amore intensivecommunication Within thispositivesituation,certainareas are underlinedrequiring improvement, amongwhichamore complete company’s activities. personal relations forged atwork,perceiving thatthecompany’sactivityisappreciated andsharingthe alsoexternally belonging andanoverallhighlevelofsatisfaction.Theprevailing feelingisbeingpartofateam,satisfiedwith willingness onthepartofpersonneltodedicatetheircommitmentcompanyalsobasedastrong feelingof the documentintegrating 2011 DevelopmentPlan,inorder toincludeaspecificsection regarding electricitystorage for Terna’s defencesystem; An additionaltechnicaldocument definescriteriaandoperationalconnectionmodalities oftheproduction plantsused connection requests ofthistype, requiring specifictechnicalrequirements inorder tosafelymanagethe electricitygrid. based onthedevelopmentof photovoltaictechnologyforproducing electricityandonthe growing numberofgrid technical regulation ofthesystem’s requirements fordistributedelectricitygeneration.Bothdocuments were drafted connecting andoperatingphotovoltaicplantsconnected totherelevant grid;aseconddocumentpertainstothe proposals fornewtechnicalattachmentstotheGridCode.Afirstdocumentregards theminimumrequirements for attachment totheGridCode(AttachmentA.24); article 15oftheResolutionno.111/06issuedbyElectricity andGasAuthority. Thisdocumentalsorepresents an the proposal fordividingtherelevant gridintozones pertainingtothe2012-2014three-year periodincompliance with service whosecontractstandard represents anattachmenttotheGridCode(AttachmentA.58); the agreement thatregulates therelations betweenTerna anddistributioncompaniesregarding themeteringaggregation 55 Terna’s profile systems aimed at facilitating the dispatching of production plants from non-programmable renewable sources, on the basis of the provisions of article 17, paragraph 3, of Legislative Decree no. 28 of March 3, 2011, “Implementing Directive 2009/28/EC for promoting the use of energy from renewables containing the amendment and subsequent repeal of Directives 2001/77/EC and 2003/30/EC”; • the amendments made to dispatching rules (chapters 4 and 7 of the Grid Code and Attachment A.25). In addition to the above-mentioned topics on which the Committee was officially called to express its opinion, also in 2011, Terna ensured that the members in the Committee received ongoing updates and information regarding its activities in progress that were of interest to the operators. In this context, the Committee received information and updates on the progress of the National Transmission Grid’s Development Plan with particular reference to work in progress in the building sites, the medium and long term forecasts of the national electricity demand and the required power supply, to initiatives underway for defining Grid Codes particularly focusing on the Network Code “Requirements for Generators”, and on the implementation of the Gaudì project (see box page 109). As part of facilitating the broadest participation in establishing the technical regulation for transmission and dispatching services, concomitantly with revising the company’s website, the homepage contains a specific box “Operator consulting” through which interested operators can dialogue with Terna regarding amendment proposals for modifying the regulations included in the Grid Code.

SO1 Society and Local Communities SO10 Consultation with Local Governments Terna’s approach to local communities comes into play especially when the Company builds new lines (see chapter on Environmental responsibility) and consists in the early engagement of local authorities (regional and local authorities, parks, etc.).This process includes sharing the development needs of the National Transmission Grid (NTG) with local authorities, listening to stakeholders’ opinions and the pursuit of an agreed solution for the location of the new infrastructures and the reorganization of the existing ones. To encourage the acceptance of electricity infrastructures on the part of the local communities, Terna believes it is fundamental to advance as much as possible the coordination phase with the Local Authorities as of the moment the need is determined for implementing new development projects for the NTG. In this way conditions are “built” together for developing the grid, allowing the projects to be more sustainable and acceptable. This approach can also help expediting authorization processes that for the Local Authorities become a way to recognize the advance work coordinated with Terna, rather than being the first opportunity for learning about the existence of projects involving one’s own territory planned by others, without any prior involvement. The dialogue between Terna and local authorities requires nearly 20 resources of the Institutional Affairs Department, who deal with institutional meetings and joint on-the-spot investigations with all the bodies concerned. This is an intense activity, since the process before and after the authorization of new projects is very complex. The voluntary pre-authorization process lasts on average from one to three years and includes various specific activities, particularly meetings, for: • defining and finalizing cooperation for sustainably developing the NTG as part of the Strategic Environmental Assessment; • defining a system of criteria for analyzing the local area and selecting the alternatives with the least impact; • applying the criteria to the local area and identifying the best corridor in which the work is to be built; • defining the feasibility range inside the corridor and finalizing the related memorandums of understanding; • defining and finalizing agreements on offsetting any remaining environmental impact. As established by the law, the authorization process is implemented through “conferenza dei servizi” (meetings of all authorities and players involved) and lasts on average from one to two years. EU19 The following table summarizes the level of participatory decision-making processes with the stakeholders concerned on energy planning and infrastructure development, as well as the results of their engagement. 2011 Sustainability Report

56 MAIN COORDINATION ACTIVITIES Project Type Length Number Authorities of (*) Intheeventofrestructuring/upgrading, thisdoesnotinvolveonlyoneline butaseriesofmeasures, thatcannot begroup Upgrading HVgridinUmbria(Umbria) Grid restructuring inLuccaarea (Tuscany) “Chiaramonte Gulfi-Ciminna”powerline(Sicily) Station inMulargia(Sardinia) “Selargius-Goni” powerline(Sardinia) “S.ta Teresa-Tempio-Buddusò” powerline(Sardinia) Riccione-Rimini ring Upgrading Reggio-EmiliaArea (Emilia-Romagna) Station northofBologna(Emilia-Romagna) (“Avellino Nord -BNII”segment) “Montecorvino-Avellino Nord-Benevento II”powerline “Deliceto-Bisaccia” powerline(CampaniaandPuglia) Interconnection oftheislandsinCampania(partwork) “Fano (PU)-Teramo” powerline segment -Abruzzo,MoliseandPuglia) (PE)”powerline “Foggia-Gissi (CH)” “Foggia-Villanova Grid restructuring inPenisolasorrentina Grid restructuring inFerrara 220 kVPartinico-Fulgatore powerline Upgrading Valle D’Aosta 380 kVSorgente-PonteCinqueArchi powerline Upgrading HVlineinPotenzaarea Upgrading Valle Sabbia(integration) Trasversale inVeneto powerline Station inSchio(VI)-(Veneto) 380 kV 220 kV 120 kV 132 kV 380 kVe 380 kV 150 kV 150 kV 150 kV 132 kV 132 kV 380 kV 380 kV 380 kV 150 kV 380 kV 380 kV 0 kV 380/220/15 380/220 kV 220 kV 380/132 kV 380 kV 0 kV 380/220/15 2 kV 380/220/13 Work tobedefined 44 kmofdismantlement 14 kmofcablelines 38 kmofoverheadlines 20 kmofdismantlement 25 kmofoverheadlines 65 km Nearly 35km 30 km Nearly 190km Nearly 120km Work tobedefined Work tobedefined Work tobedefined (*) (*) – Work tobedefined Work tobedefined – Nearly 30km Nearly 95km (*) (*) (*) (*) (*) 12-13 Municipalities involved incoordination) (as oftoday, 1Municipality Rimini, Coriano Municipalities ofRiccione, Municipality ofLucca underway withthe Coordination presently novdmeetingsin2011 involved 2Municipalities 22 3Municipalities 23 Municipalities 45 Municipalities 19 1Municipalities 11 Municipalities 12 Region 1 Provinces 6 Municipalities 7 Province 1 Municipalities 2 Provinces 3 Region 1 Municipalities 5 Provinces 2 Regions 2 Municipalities 3 Provinces 6 Regions 2 Provinces 3 Regions 3 Provinces 3 Municipality 1 Province 1 Provinces 2 Province 1 Provinces 4 Provinces 2 Mountain community 1 Municipality 1 1Park Municipalities 9 Provinces 2 Municipality 1 Provinces 2 Region 1 Municipalities 1 Province 1 Region 1 Province 1 Region 1 Municipalities 9 Province 1 Region 1 ed onlyintoonefigure. 10 10 50 25 16 11 15 35 46 71 3 1 3 8 6 2 3 2 7 4 6 5 6 57 Terna’s profile 58 Sustainability Report 2011 S O1 The usualplacewhere Terna anditssuppliersmeetisthe“ Suppliers with theelectro-mechanical companies intheelectricityindustry Terna presents anddiscussesitsmostimportant investmentprojects requirements connectedwiththeethical conductexpectedinrelations orconcerns withTerna. organizes meetingswiththequalifiedcompanies orindustryassociationstoinformthemofnewdevelopments regarding the Company’sknowledgeof thespecificproblems ofgroups ofsuppliers.Inthisregard theCompany periodically The Procurement Department alsomaintainsdirect contactswithsupplierstomanage contractualrelations andimprove for beingincludedinthesupplierregister. through abouttenders,participateinonlineandgothrough whichitispossibletolearn thequalificationprocess Trasversale inVeneto: completeonlineinformation and withgridlossesthatthenew, more efficient, electricitylinewilldrasticallyreduce. environment. Theoldelectricitylinesthatwillbereplaced bythenewTrasversale were builtwithobsoletetechnology The newelectricitylinewillallowreducing by12thousandtons/yearthequantityofCO from aneconomicre-evaluation thankstotheremoval ofthepylons. Over 1,800buildingslocatedwithina100meterreach from theelectricitylinesthatcouldberemoved, wouldbenefit buildings, builtnear(ifnotactuallyunder)thepowerlinescouldbenefitfrom theremoval oftheelectricitylines. also bepossibleto exceeding byfarlawrequirements whichare themoststringentonesinEurope forelectromagnetic fields.Itwill The electricityline,farawayfrom urbancenters,willbebuiltfully respecting thesafetydistancesfrom urbanareas between theexistingpowerstationinVenezia Nord andanewpowerstationtobebuiltinVolpago delMontello. The “Trasversale inVeneto” electricitylineincludesbuildingapproximately 34kmofanew380kVelectricityline The project’s environmental advantages to buildingthenewline,allarea involvedintheproject willsolvetheriskofoutages. as soonpossiblethepowerlinenamed“Trasversale inVeneto” –connectingthetwoexistingEHVlines.Thanks families andbusinesseslivingintheMarca Trevigiana andintheVenice area are exposedto,itisessentialtobuild sufficient forriskingblackoutsintheTreviso andVenice provinces. Inorder tosolve of extensiveindustry. AmalfunctionormaintenanceworkalongasegmentofthetwoexistingEHVlinesare also emerges from thedirect comparisonwithotherregions havingsimilarcharacteristicsowingtothepresence 1950) characterizedbyalowlevelofinterconnection and ofmeshing.Theregion’s inadequatetransmissiongrid only hastwomainEHVelectricitylinescrossing itfrom theNorthtoSouth,partofagridsystem(builtprior Veneto’s transmissiongridcurrently represents acriticalsegmentoftheentire Italianelectricitysystem:theregion highways”, i.e.,thesystemoftransmissionlinesthatmustbeefficient andsafe. it consumes:forthisreason itmustimporttheelectricity itneedsfrom neighboringregions, usingthe“energy The Veneto region ischaracterizedbyahighlevelofelectricityconsumption,butproduces lessthanhalfthequantity Reasons forimplementingtheproject At thebeginningof2011,withinsection“Terna’s buildingssitesinItaly”onitswebsite between theMunicipalitiesandTerna, priortotheauthorizationrequest forthenewline. Treviso) theneedforproject, itsprogress andadvantagesforeachterritoryintheeventanagreement isreached and tothoseinvolvedonlybypossibleremoval ofoldlines(PonzanoVeneto, andmodernization Poveglianoand Martellago, Scorzé,Zero Branco,QuintodiTreviso, Morgano, Paese,Istrana,Trevignano andVolpago delMontello) “Questions andAnswers”illustratestoallthecommunitiesinvolvedbypresence ofthepowerline(Venice, project anditsadvantages”(withdetailsforeachMunicipality)“TheAuthorizationProcess”, “Communication” and The detailedsection“Trasversale inVeneto” isdividedintofiveparts:“Reasonsforimplementingtheproject”, “The essential andurgent workforsolvingtheriskofblackoutsandguaranteeing stabilitytotheregional electricitysystem. by thenewelectricityline,easyandimmediateaccesstocomplete,transparent andtimelyinformationonthis This initiative,afirstofitskind,intendstoprovide allthecommunitiesofprovinces ofTreviso andVenice involved and ontheauthorizationprocess thatstartedatthebeginningof2012. advantages, withcharts,dataandoverheadphotographsoftheterritory, updatesonthecoordination inprogress published onlineafocusonthereasons forbuildingthenew“Trasversale inVeneto” electricityline,itsimpactsand remove 86kmofoldelectricitylines Procurement Portal currently includedinurbancenters:approximately 1,000 (many ofwhich are membersofConfindustria ANIE). – aswelltherelated procurement plans– ”, thesectionofinstitutionalwebsite the risksofblackouts www.terna.it 2 emissions inthe to which , Terna and foreign supplierfirms. scouting, benchmarking,andmonitoringtheperformanceofsuppliers,whichentailsconstantlymeetingwithbothItalian interest topics.Formore informationseetheboxbelow. National Transmission Grid’s(NTG)DevelopmentPlan.Withthisinitiative,Terna hascreated mutualexchangeoncommon For thefirsttime,Terna hasorganized aseriesof meetingswithcategoryassociationsforadirect dialogueregarding the Presenting theDevelopmentPlantocategoryassociations Media, opiniongroups andthescientific community In order toexpanditsportfolioofsuppliers,Terna permanentlyengagesin“ occasions formeetingitssuppliers,suchasindustrymeetings,expos,andconferences. which thecontractorwillbeinvolvedfrom theearlieststagesofplanning.Lastly, Terna activelyparticipatesinthemain themselves from simplecontractorsintoveritabletechnologicalpartners.Thenewchallengeisentrustingalltheworks,in The Company’slarge program ofworksrequires anevengreater effort bysuppliers,whichare calledontotransform A networkofrelations withstakeholders oversee itsproper applicationin thespecificterritories. renewables withthat fortherelative gridconnectionwork,determinedthewillingness ofvariousassociationsto Explaining theSingleAuthorization, theprocedure thatcombines theauthorizationprocess fornewplantsfrom willingness tosupportTerna’s requests submittedtothelocalauthoritiesbasedonproper coordination. complexities andofthelengthyauthorizationprocesses forthevariousprojects; manyassociationsexpressed their Knowledge oftheDevelopmentPlanandenergy needsdeterminingit,alsogeneratedunderstandingofthe disseminating theinformation. also thankstothematerialsprovided byTerna, becamepromoters withtheirrespective organizations for All themeetingswere characterizedbyapositiveacceptanceoftheinitiativeassociationsinvitedwhich, development activitiesandalsooftheDevelopmentPlan. The presentations heldinJune2011were attended bytheDirector ofOperationsItalia,headgridplanningand cost-effective andhighqualityelectricityservice. Associations representing thenationalcommunity, aprimarystakeholdertowhichTerna mustguarantee asafe, of theelectricityandenergy sectorsbelongingtoit.Particularlysignificantwasthemeetingwithconsumer the DevelopmentPlanwere heldalsowithrepresentatives ofConfindustriaandwiththeentrepreneurial Associations Società (Green Environment Association),WWFItaliaandResearch andProjects. Explanatorymeetings for Fare Ambiente,LIPU–LegaItalianaProtezione Uccelli(ItalianBird Protection Association), VAS -Verdi Ambiente Rights), Federconsumatori, ENPA -EnteNazionaleProtezione Animali(NationalAnimalProtection Association), ADOC, AssoconsumRoma,Assoutenti,Codacons,CODICI-Centro peridirittidelcittadino(CenterforCitizen’s Terna’s invitation,extendedtoalltheprincipalassociations,wasacceptedbyColdiretti, Confapi,Adiconsum, the conditiontofullyunderstandingPlan. This yearTerna wishedtoenhancethisphasebypromoting direct meetingswiththeassociationsplacingthemin for presenting anycomments. appropriate authoritiesforconsultationonthepartofinterested publicwhichthenhaveatimeframeof90days of timewithrespect toitsbecomingeffective, establishesthattheDevelopmentPlanbesubmittedto is submittedtotheStrategicEnvironmental Assessment (SEA).TheSEA,adoptedbyTerna since2002andahead The lawestablishesthattheDevelopmentPlan,priortobeingapproved bytheMinistryforEconomicDevelopment, report oftheworksincludedinPlansprevious years. document draftedeveryyearbytheCompanywithprojects scheduledforthenext10yearsandaprogress environmentalists. Theobjectofthemeetingswas presentation ofthegrid’sDevelopmentPlan,whichis management ofthree typesofassociationsrepresenting theinterests ofentrepreneurs, consumersand In thisrespect, 2011wasayearfilledwithnovelties:forthefirst timesystematicmeetingswere heldwiththetop reference stakeholders. According toTerna’s vision,asustainable approach tobusinessmustoccurthrough transparent relations withits procurement marketing ” through market S O1 59 Terna’s profile 60 Sustainability Report 2011 improvements, evensignificantones. Terna’s onlinecommunicationreceived importantrecognition intheprincipalanalysesofyear;allrankingsregistered KWD Webranking Italy, Europe andLunquistAssessments system aswellrenewables. Forfurtherinformationseebox,page140. country’s electricitygridandforpromoting thespread ofanenergy sustainability culture thatjoinsdevelopingtheelectrici At theendof2011,Terna signedaMemorandumofUnderstandingwithLegambienteforsustainably developingthe Agreement withLegambiente to theGermanresearch centerEnergyNautics. Formore informationseetheboxbelow. The startingpointofthedebatewas“TheBattleGrids”,research commissionedbyGreenpeace International sources andoftheEuropean 20-20-20objectives. associations, withtheenvironmentalist associationGreenpeace ongriddevelopmentinlightoftheincrease ofrenewable In July2011,Terna hostedatechnicalmeetingopentoauthorities,companiesoperatinginthesectorandconsumer Terna-Greenpeace exchangeonthegridsoffuture The BattleoftheGrids:jointTerna-Greenpeace initiative promoting anincreased production from renewables. Greenpeace andTerna onenergy production from renewables inEurope andontherole ofthetransmissiongridin The seminar’sjointorganization wasalsoanopportunityandtheresult ofaconstructiveexchangebetween formed byTerna’s techniciansandbyexpertsfrom theenergy sector. The research’s results were presented bytheCEOofEnergyNautics ThomasAckermann anddiscussedinapanel production process, from generationandtransmissiontodistribution. production andinthelarge gridinterconnection works,withsignificantimplications inallsegmentsoftheelectricity European electricitydemand:anattainableresult withdifferent combinations ofinvestmentsintheEuropean The research outlinesascenarioupto2050where production from renewables willcoveruptonearly100%ofthe totheGermanresearchInternational centerEnergyNautics. was thepresentation andadebateontheresearch “TheBattleoftheGrids”,commissionedbyGreenpeace seminar’s focus,towhichauthorities,companiesoperatinginthesectorandconsumerassociationswere invited, grid developmentinlightoftheincrease ofrenewable sources andoftheEuropean 20-20-20objectives.The Rome. Themeetingwasorganized byTerna togetherwiththeenvironmentalist associationGreenpeace todiscuss On July12,2011thetechnicaldebate“TheBattleofGrids”washeldinAuditoriumatTerna’s headoffice in ty The 2011editionoftheDemoskopeasurvey“ Demoskopea Survey“ timeliness inproviding information. an averageof-4%.Thefinancial press, lastly, judges Terna’s profile positivelyandappreciates itspress office forthe companies. Terna isthecompany thatimproved themostcompared to2010:risingby4percentage pointscompared to Terna rankedabsolutefifth,climbing eighteenpositionscompared totheprevious edition andthird amongenergy Another importantresult was achievedregarding withthecompany: inthisspecialranking the“familiarity”ofjournalists that rankedsixthintheoverall rankingandfourthamongtheenergy companies. of asample48companies forassessingthequalityofpress offices, thisyearalsorevealed excellentresults forTerna The reference stakeholdersreward Terna’s webcommunication Contents (58availablepoints)withequalpoints(46)FiatafterTelecom Italia(51.5),EnelandHera(47). areasGovernance (maximumobtainablepoints:6.5)with6,closelybehindTelecom ItaliaandFiat(6.5)in maximum of100pointsassigned.Inparticular, Terna wasindicatedamongthe“bestinclass”Ethics& questionnaire (312from 37countries)thatwasfollowedbyanassessmentof79criteriawhichcouldnotexceeda Awards, page50).Thisanalysisisalsobasedon the initialinvolvementofexpertsthatresponded tothe conducted bytheSwedishfinancialcommunicationcompanyLundquistincollaborationwithIlSole24Ore (see in thewebsite’s“Sustainability”sectionrankingfifthfourtheditionof“CSROnlineAwards“ research These tworewards forTerna’s onlinecorporatecommunicationwere addedtotheoneobtainedinOctober 2011 information collectedanddataanalyzedcommentsregarding theresults. engagement bycollectingfeedbackfrom professionals inthesector, draftingassessmentcriteriabasedon KDW Webranking’s research methodisbasedon3principalphases,thefirstofwhichincludesstakeholder place, climbing33positions)standingoutasthecompanythatimproved themostcompared totheprevious edition. three positions(from 13 (71.3 points,Italianaverage:36.8)thatallowedittoclimb Terna’s websitewasincludedintheTop 10thankstoascore assessing theircorporatewebcommunication. examined 101leadingItaliancompaniesforcapitalization H&H Webranking), thatreached itstentheditioninItaly, The KWDWebranking annualresearch (previously knownas important rankingsinthesector. online communicationthatreached thetopofmost 2011 registered ageneralimprovement inthecompany’s (European average:44.2)Terna entered intotheTop 20(19 capitalization (source: FTEurope 500),withits71.25points extended tothe500leadingEuropean companies for In theKWDWebranking Europe 500,i.e.,theanalysis that wasextendedtoEurope. the rankingmaintainedtheirpositioneveninanalysis significant whenconsideringthatthefirsttwocompaniesin in thelastyear. Terna’s websiteperformanceisevenmore “best improver” websites,i.e.,thosethatimproved themost TOP TEN2011-KWDWEBRANKING opn Points Company en 71.3 76 76 87 85.5 80.3 71.5 77.3 81.5 89 Terna Assicurazioni Generali Snam ReteGas Edison UniCredit Group Pirelli &C. Piaggio Group Hera Eni Telecom Italia City Giornalisti th to 10 th ) rankingfifthamongthe 2011” City Giornalisti ”, conducted with 80 economic and financial journalists out ”, conductedwith80economicandfinancialjournalists th TOP TEN2011-LUNDQUIST opn Points Company ac P 71 74 79 74.5 71.5 72 79 74.5 79.5 82 Banca MPS Intesa Sanpaolo Snam ReteGas Enel UniCredit Terna Hera Eni Fiat SpA Telecom Italia The reference stakeholdersreward Terna’s webcommunication. 61 Terna’s profile

The Safety Plan of the electricity system, “ 96 million euros invested in 2011 TERNA IS ETHICALLY RESPONSIBLE FOR PROVIDING ELECTRICITY TO THE ENTIRE COMMUNITY AND IS COMMITTED TO ENSURING A SERVICE BASED ON SAFETY, RELIABILITY, QUALITY, CONTINUITY AND COST-EFFECTIVENESS. ” 2011

Responsibility for the electricity service 66 Sustainability Report 2011 Our approach Our managerialobjectives efficiency andsecurityinthenearfuture, aswellforfuture generations. an essentialinfrastructure forthecountry, anditscurrent management,maintenance,anddevelopmentmustensure its The responsibility regards botheverydayoperationandthemediumlongterm.ThegridisTerna’s asset,butitisalso complywiththeprinciplesofimpartialityandneutralitytoensure thatallgridusersare treated equally. • keep thetransmissionsystemefficient anddevelopit; • provide aservicecharacterizedbysecurity, reliability, quality, continuity, andcost-effectiveness, constantlymaintaining • particular, inItaly, theCompanyundertakesto: Thus Terna strongly feelstheresponsibility concessionandtakesonitsobjectives.In entrustedtoitbythegovernment personnel. Italian societyfortheservice distribute andsellelectricity, Even thoughtheendusersofelectricityserviceare notdirect customersofTerna, butratherofcompaniesthat goods orservicesforendcustomers,suchastheexplanatorycontentoflabels,marketing,andadvertising. Given thenature oftheservice,Terna isnotaffected bytheproblems ofproduct responsibility typicalofproducers of system andthusforsupplyingelectricitytothepopulation. Electricity SystemOperator(TSO).Theserviceprovided byTerna isindispensablefortheoperationofentire electricity European countries,are whichassignsTerna carriedoutbasedonaconcessionbythegovernment, therole ofNational Terna’s core businessiselectricitytransmissionanddispatching.Theseare generalinterest servicesthat,asinother accessible orcommunicatedtothird partiesthatare notentitledtoit. follows thebestpracticesforprotecting confidentialdatainorder toprevent theinformationinitspossessionfrom being Forthesedataand thoseitprocessescompanies concerned. tomanageitseconomicrelations withgridusers,Terna with thetaskofcompilingstatisticsItalianelectricityindustry, services users,particularlyelectricityproducers. Furthermore, The taskasoperatoroftheelectricitysystementailsknowledgeconfidentialdatatransmissionanddispatching overall benefitsfortheelectricitysystemsare greater thantheircosts. efficiency andcost-effectiveness ofthesystem.Terna selectsdevelopmentprojects alsoaccording totheconditionthat for EconomicDevelopmentandsetsforththeconstructionofnewelectricitylinesstationsnecessarytoensure the The griddevelopmentobjectivesare publishedintheDevelopmentPlan that are necessarytoimprove variousaspectsaffecting thesecurityofelectricitysystem. The securityobjectivesare statedintheSecurityPlanforelectricitysystem Terna’s role intheItalianelectricitysystementailsspecificobjectivesregarding thesecurityanddevelopmentofgrid. always beeninlinewithorexceededthetargets set. important amongtheseare thedifferent measures forservicecontinuity. Terna’s performanceinthelastfewyearshas targets establishedbytheindustry’sregulatory authority a balancebetweenelectricitydemandandsupply; are therefore firstofall the role itperformsintheelectricitysystemmakesTerna ethicallyresponsible toallof ; thesenseofresponsibility forapublicserviceispartoftheworkculture oftheCompany’s connected tocomplyingwithregulations andmeetingthespecific Terna isentrustedbytheNationalStatisticsSystem (the AEEG,ElectricityandGasAuthority).Particularly , whichisapproved everyyearbytheMinistry for whichinformationiscollectedfrom the , inwhichtheinvestmentsare planned The securityoftheelectricitysystem The eightheditionofthe2011-2014 SecurityPlanprovides forinvestmentsof 206 millioneuros. In 2011,theinvestmentsassociatedwithSecurityPlan totaled96millioneuros. box, page69)andthedynamicmanagementofgridelements. management ofenergy storagesystemsforthemanagementofvariabilityinrenewable energy production (see be madetodistributorcompaniesforthecontrol ofthedistributedpowergenerationandactivedemand, of theSmartGridtype(seeboxpage68).Theinitiativesthat are currently understudyincludecoordination proposals to These newelementsindeedincrease thecomplexityofmanagingsystemandneedtoadoptnewcontrol systems presence ofelectricvehiclesandanactivedemandthatisincreasingly aware ofpriceindicationsfrom energy markets. that are characterizedbynewelementssuchasthesignificantdevelopmentofrenewable energy sources, thewidespread The 2011SecurityPlanalsohighlightstheneedtoidentify waystooperatetheelectricitysystemovermediumterm strengthening thetelecommunicationinfrastructure insupportoftheControl Systemanddefense systems. • launchingtestingactivitiesofthenewcontrol System; • correcting automatically congestionsoccurringinthemost criticalsegmentsofthegridalsoinsub-transmission • improving theforecasting ofwindpowerproduction andintroducing theforecast ofPVpowergenerationalsothe • improving theprocess ofandthetoolsforassessmentriskconditionsrelated tononmeetingthedemand(of • consolidatingoptimizationtoolsfortheprocurement ofdispatchingresources andtheverificationofcongestions(of • The followingare themainobjectivesachievedin2011: full integrationofrenewable energy plantsintotheinterconnected system. Plan, wasconfirmedduetotheirimportancewithregard tothesecurityofsystemandobjectiveensuring The presence ofasubjectarea dedicatedtorenewable sources, whichwasintroduced duringtheprevious editionofthe and distributorcompanies. focus onnewrequirements, suchasamore flexiblemanagementofthesystem,incoordination withneighboringTSOs protection, restoration andmonitoringoftheelectricitysystem,havebeenconfirmedpartlyreviewed inorder tobetter The initiativesthatwere presented inthepasteditionsofSecurityPlanregarding planning,control, regulation and electricity systemhasbecomeincreasingly complex. year timehorizon.Inthedifferent editionsofthePlansinceitwasintroduced in2003, theapproach tothesecurityof by theCompanyandapproved bytheMinistryforEconomic Development.ThePlanisdrawnupeveryyearwithathree Terna’s commitmenttocontinualimprovement isexpressed inthePlanforSecurityofElectricitySystemprepared reliability ofsupporttoolsandcoordinating themanagementofinterconnected systemwithneighboringTSOs. operation; italsomeansdevelopingnewmethodsforsupportingtheplanningandcontrol processes, improving the time control, andtrainingtheemployeesinvolvedalsothrough simulationinstrumentsthatreproduce modern thesystem preparing defenseplanstolimittheconsequencesofoutages, carryingoutpreventive operationplanning,improving real- For Terna, preventing andlimitingtheriskofoutagesmeansmonitoringprotecting thephysicalintegrityofitsplants, renewable sources intotheinterconnected systemandthedevelopmentofelectricitymarkets(seebox,page79). European electricitygrid,withtheobjectiveofmanagingservicesecurityandatsametimefavoringintegration groups TSOs,thatTerna GridCodesandtheten-yearDevelopmentPlanfor cooperatesforwritinginternational participates asatransmissionsystemoperator(TSO).ItisparticularlyintheENTSO-E,European Organization that are theresult organizations ofthecooperationthathastakenplaceforsometimewithininternational inwhichTerna criteria toadoptisthebestEuropean practicesinthefieldofmanaginginterconnected electricitysystems.Thesepractices development andconstructionofinfrastructures toplantmaintenanceandreal-time operation. Thebenchmarkforthe To keephighsecuritylevels,Terna mustmaintainanexcellentperformanceinallthephasesofitsactivities,from the possible thenegativeconsequences The objectiveistomaintaintheriskofserviceoutagewithinpre-established limitsandmitigateasmuch which Terna performsthrough aseriesofactionsbasedonscrupulousassessmentoperatingrisks. Ensuring thesecurityofItalianelectricitysystemwhichisinterconnected withtheEuropean gridisasensitivetask, grid towhichrenewable energy plantsare connected; distributed type; the the followingtypes: Advance Dispatching Optimal PowerFlow type); of malfunctioningintheeventthisoccurs. and Optimal ReactivePowerFlow ); EU6 67 Responsibility for the electricity service 68 Sustainability Report 2011 EU8 Terna andSmartGrids high growth rates,alsothankstotheEuropean strategyforlimitingCO The developmentofgenerationfrom renewable energy sources –whichisboundtocontinue inthenearfuture at • • • • 4 mainaspects: It isonthebasisoftheseobjectivesthatTerna hasconcentrateditsdevelopmentprioritiesregarding SmartGridson forms theentire system. power flowswithoutsuffering serviceoutagesandpermanentlyviolatingtheworkinglimitsofequipmentthat Furthermore, thesystemmustbeable tocopewithmalfunctionsandotherabnormalsituationsbyredistributing of innovativesolutionsforthesecurityandefficiency ofthedispatchingservice. production ofelectricityfrom renewable sources alsoaffects Transmission SystemOperators,requiring theintroduction Even thoughtransmissiongridsare already capableofmanagingvariableandmulti-directional flows,theincreased to theelectricitysystemmore flexibleforgridusers. Multifunctional smartgridscanregulate multi-directional powerflows,integraterenewable sources, andmakeaccess fostering thedisseminationofrenewable energy sources withoutloweringservicesecurity:theso-calledSmartGrids. The needtochangethisstructure renders itnecessarytodevelopnetworksandcontrol techniquescapableof the distributiongrids,where itisconsumedinawidespread way. grid thattransfershugequantitiesofpowerfrom large production centersconcentratedintheconnectionpointswith on pricevariation),conflictwiththetraditionalstructure oftheelectricitysystem,whichisbasedonatransmission located alongthedistributiongridsandprospects ofagreater role ofactivedemand(dailyconsumptionbased In particular, theunpredictable variabilityofwindandsunavailabilitytheincreasing production bysmallplants transmission anddistributionofelectricity. and excessivelyreductive limitsinfavorablemeteorological conditions. conditions, aimedatmaximizingtheuseoftransfercapacityoramore efficient griduse,asopposedtofixed Dynamic linerating based onreal timeprocessing ofmeteorological dataandoftheproduction from windandphotovoltaicplants. Advanced forecasting instruments can limittheconsequencesofamalfunctioningandeventriggerself-healingmechanisms. malfunctions. Thesesystemsrequire theconstructiononalarge scaleofimmediate-remedial-action schemesthat SPS -SpecialProtection Systems sources andthesystem’sefficiency andincreasing theregulation capability oftheelectricitysystem. of production injectionsfrom renewable sources andenergy storage,maximizingproduction from renewable Non conventionalstoragesystems , i.e.thedynamicdeterminationofcapacitylimitslinesaccording toenvironmental for obtainingamore accurateprediction ofproduction from renewable sources (see box,page69)through whichthe coordinated managementisensured , i.e.,technologicallyadvancedautomaticdevicesthatreact tolarge 2 emissions –posesnewchallengesforthe with Non-Programmable RenewableEnergy Sources Energy Storage,asolutiontothe problems associated With regard tothe need toresort tolessefficient electricityproduction withhighermarginal costs. impact onthecostsandsecurityofsystemwouldhelpreduce CO to lessefficient systemsduringpeakperiods(astrategycalled“peakshaving”).Thismethodwouldhaveapositive associated withthemanagementof“exhausted”electricitygridsduringoff peakperiodsandavoidhavingtoresort low) followedbyelectricityoutputinpeakhours(i.e.,duringperiodsofhighdemand)wouldreduce theproblems during excessivepowerproduction times.Furthermore, storingenergy duringoff peakhours(whenthedemandis The installationofenergy storagesystemsinareas withthelargest presence ofNPRS’wouldhelpreduce congestion security levels.There are infactmanyadvantagesstemmingfrom theuseofstoragesystems. of theNationalElectricitySystem,alongwithconstructionnewpowerlinesandstations,basedonsame technical response topromote thedevelopmentofelectricityproduction from NPRSandimprove theoverallefficiency storage systems– congestions butnottothesafemanagementofNationalElectricitySystem.Forthisreason, Terna hasidentified production from NPRS,giventhat–duetothelongimplementationtimetabletheycanprovide asolutiontothe Grid developmentactivitiesplannedbyTerna onlypartiallyaddress thecriticalissuesposed bytheincrease in require theavailabilityofgreater secondaryandtertiaryreserve margins inorder toallowforreal timeregulation. generation withdispatchingpriorities.Moreover, scantpredictability andhighintermittency, especiallyofwindpower, production units,basedonequalelectricitydemand,whichare excludedfrom themarketbypresence ofrenewable groups, incaseofdeviationfrom thedefaultparametersofgridfrequency) causedbyareduction ofregulating reduced availabilityofprimaryreserve (thatisthecapabilityofautomaticregulation, whichistypicalofthermoelectric of gridcongestions.Theresult is congestions onthehighvoltagesegmentsofgrid.Thepresence ofNPRSoftenincreases thenumberandextent requires limitingitsinjectionintothegrid–inparticularwithregard towindpowerproduction –tosolvelocal A highconcentrationofproduction distributedbytheNPRScompared totheamountoflocalpowerloadoften of thenationalelectricitysystem. Italyandontheislands especially inSouthern The sharpincrease inpowergenerationplantsfrom Non-Programmable RenewableEnergySources (NPRS), an electricitysystemwhere theNPRSplayanincreasing role. on theterritoryaccording tothespecificneedsofelectricitysystem,soasincrease thegridcapacitytomanage Overall, Terna's plansincludetheinstallationofamixbetweenbatteries andpumpingunitsthatare properly deployed elements playinginfavorofbatteries. numerous NPRSinjectionpoints,andthefactthattheyare notdependentonthesuitabilityofsite,are further that ofothertypesstoragesystems,thecapabilitywidespread locationonthegridalsoinvicinityof and canbeusedwithconsiderableflexibility. Averyshorttimetableforimplementation,especiallyifcompared to lasting severalhourseachcycle,buttheyare alsocharacterizedbyahighmodularity, thustheyare easytoinstall, Batteries notonlyallowforthestorageofadequateamounts ofelectricitywithareturn capacityofthestored power time batteries asthestoragesystemthatcanprovide thebestsolutiontocurrent problems inashortperiodof of professors from MassachusettsInstituteofTechnology performedananalysiswhichhasallowedthemtoidentify Considering bothtechnicalspecificationsandtheimplementationtimetable,Terna’s technicalexpertsandagroup primary frequency regulation where performanceishigherthanthatofconventionalpowerplants. as quicklygoesfrom fullabsorptiontoinjectionofelectricity intothegrid.Storagesystemscouldalsoguarantee twice thecapacityamountintermsofreserves, sinceitcanmodulate theabsorptionorinjectionintogridaswell storage systemstorapidlyinjectorwithdrawelectricityfrom the gridallowseveryMWinstalledtopotentiallygenerate Storage systemsmayalsobeusedtosatisfytheincreased needfor real-time regulation reserves. Thecapacityof . Pumpingunits,indeed,cannotbebuilteverywhere andrequire longerperiodsoftimetobeimplemented. security oftheelectricitysystem in particularelectrochemical storage(batteries)andhydroelectric pumping higher production costsforthenationalelectricitysystem , hasasignificantimpactonthemanagement,operationandcost , thewidespread presence ofproduction from NPRSimpliesa 2 emissions. which islinkedtothe – asaproper EU8 69 Responsibility for the electricity service 70

Sustainability Report 2011 EU21 PR8 Information security reporting ( privacy orimprudentusebyunauthorizedusersofpersonal dataentrustedtoTerna, neitherthrough thespecificemailfor Regarding personaldataprotection, asinprevious years,in2011nocomplaintswere recorded regarding violationsof extendingthereal timesecuritymonitoringserviceswith • establishingan • achieving,inJuly2011, • The mostsignificantinitiativesandprojects includethefollowing: increasing thewidespread awareness andtrustofpeopleinvolvedintheseissueswiththeframework’srulesmethods. training andcreating awareness withinthecompanyofsecurityinformationresources, withthetwofoldobjectiveof and monitoringsystemswere finalizedfor the securitylevel.Theyearwasalsocharacterizedbyanextensiveplanfor 2011 registered anincrease intheapplicationlevelofSecurityFrameworkwithinICTfieldandverification,control Planning Document,withrelative roles, responsibilities andexecutivemodalities. also protecting lawrequirements regarding handlingofpersonaldataprovided toTerna incompliancewiththeSecurity Governance Model Governance To guaranteesecuritytocorporateinformationandICTsystems,Terna adoptedanadvanced regarding theelectricitysystem,joininghighstandards ofoperatingcontinuitywithefficient cyber-security practices. Terna alsoincreasingly uses“Information&CommunicationTechnologies” (ICT)systemstosupportitscore activities datamadeavailablebytheindustryAuthorityformonitoringelectricitymarket(asestablishedResolutionno. the • datacollectedfrom the industrycompaniesforthepurposeofcompilingstatistics,ataskperformedby • undue violations.Thesamealsoappliesto: protection measures are inplaceforpreventing informationbeingaccessibletounauthorizedthird partiesorsubjectedto Considering itssignificantcommercial value,thisinformation regarding plants,withtherelated production capacityandinjectionplanspresented totheelectricityexchange. dispatching services,inparticularelectricityproducers andtraders.Suchinformationincludes,forexample,specificdata For itsrole intheelectricitysector, Terna hasinitsdatabasesconfidentialinformationoftheuserstransmissionan to monitorthesecuritystatusandprovide atimelyresponse to any anomalouseventsaffecting gridsandITassets. of facilitiesandcomputernetworks.Bystrengthening thiseventmanagementplatform,agreater capacityisensured Management) whichisactivewithintheSecurityOperations Center, i.e.thecontrol centerwhichmonitorsthesecurity testing andreporting; trend analysis.Inthe2012-2013two-yearperiod,theywill befurtherenhancedbytheadditionofnewfeatures, suchas detailed informationonthevulnerabilities,aswellcorrection ordeletionmethodsandhavetheabilitytoperform risks. Theplatformfunctions–applicabletothewholeICTassets(networks,workstations,servers,etc…)provide rendering systematicthetechnologicalassessmentandvulnerability analysisactivitiesthatcanexposeTerna tocyber- management systemsatTerna (Quality-Environment-Security); 27001 standard, byadoptingacontinuousimprovement approach, isconsistentwiththatofothercorporate generate cross-cutting benefitsforprotecting theentire Company'sinformationassets.Thestructure oftheISO/IEC verified bythecertifyingBody, indeed,donotonlyhavepositiveeffects onthefieldbeingcertified,butratherthey boundary, underlinesahighmanagement/organization standard. Manyofthecontrols provided bythestandard and the Companyanditsstakeholders.Thenewcertification,evenifitrefers toaspecificcorporatearea withareduced ICT market) application,anaccomplishmentthatmarksTerna's andimproves forsecuritygovernance trust between concern 115/08 oftheAEEG). Terna withintheframeworkofNationalStatisticsSystem; [email protected] advanced corporateplatformforvulnerabilitymanagement , based on the main international standards,, basedonthemaininternational where the the ISO/IEC27001:2005 ), northrough oranyotherreporting channel. certification oftheTIMM(IntegratedText forMonitoringtheelectricity new functionsintheSIEMsystem is classifiedandhandledassensitivedata framework of ICTinfrastructures, capableof and policies (Security InformationEvent Information Security are establishedfor and specific d

Sustainability Report 2011 EU29 EU28 Service continuityandquality rises. Theperformanceachievedin2011exceededthetarget set. (for example,byvoltagelevel),gridareas, or–asinthiscasetheentire NationalTransmission Grid.Serviceperformance This measures theaverageavailabilityofelectricitygridcomponentsforuseinagivenperiod.Thisindexcanbeexpresse ASA (Average SystemAvailability) AVAILABILITY INDICATOR Target 2010 The performanceachievedin2011exceededthetarget set. minutes) interruptionsandthenumberofusersNationalTransmission Grid.Alowerindicatorlevelindicatesbetterserv This interruptionfrequency indexiscalculatedastheratiobetweennumberofcustomersinvolvedinshort(less than3min Short Average Interruption Frequency Index+MediumAverage InterruptionFrequency Index(SAIFI+MAIFI) CONTINUITY INDICATOR Target 2010 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 98.900 99.000 99.100 99.200 99.300 99.400 99.500 (AEEG) through specificbonus/penaltyschemesbasedonperformancecompared topredetermined targets. (See Service continuityisagoalthatsince2008hasalsobeenthesubjectofincentivesbyElectricityandGasAuthority of theNTG:ananalysislattershowsnosystematictrends. variation, are factors,suchasweatherconditions,andevents(e.g.failures) bothexternal attributabletothemanagement index undergoes indeedminimalchangesinrelation tothewholeservicemeasured. Moreover, amongthecausesof It shouldbenotedthatthevariationofindexeswithingiventimeperioddoesnotindicatesignificanttrends: each as definedbyAEEGResolution250/04andTerna's GridCode. improvement. Thefollowingpagesshowbenchmarkingtrends of“servicequalityandpracticesTerna's NTGplants”, Terna hasalwaysmonitored servicequalitybymeansofvariousindexesandidentifiesspecifictargets asannualgoalsfor availability ofelectricitywithoutagesbelowpre-established thresholds andwithappropriate standards oftechnicalquality. the electricitysystem(generation,transmissionanddistribution)contributetofinalresult: toensure society the Continuity isthemostimportantparameterformeasuringperformanceofelectricityservice.Allsegments AF+AF nme/eid Target SAIFI+MAIFI (number/period) Target Real ASA(%) 99.027 0.21 2002 20032004200520062007 2008 200920102011 2002 200320042005200620072008200920102011 99.050% 0.22 99.123 .202 0.22 0.22 0.22 Target 2011 99.152 Target 2011 99.262 0.18 0.22 99.212 0.21 99.050% Target 2012 99.278 0.23 99.151 Target 2012 0.22 99.050 99.034 0.19 0.22 d withregard tospecificcategories improves astheindicatorlevel ice performance. utes) andlong(more than3 99.050% 99.225 99.050 0.14 0.22 99.320 99.050 0.14 0.22 2 “Significantincident” meansanyinterruption with net energy notsupplied exceeding250 MWh. Theshare that affects the ENS (2) 0 200 400 600 800 1,000 1,200 1,400 1,600 Target 2010 significant incidents the energy notsuppliedtousersdirectly connectedtotheNTGbecauseofevents thataffected thelatteranddidnotconsider processUntil 2007theENSindicatorwasusedasaninternal indicator forthepurposeofconstantlyimproving Terna’s performa Energy NotSupplied(ENS) SERVICE CONTINUITYINDICATOR Target 2010 better serviceperformance.Theperformanceachievedin2011exceededthetarget set. value) andtheaveragepowerabsorbedbysysteminperiodquestion.Thefigure isrounded totheseconddecimal.Al The averageinterruptiontimeoftheelectricitysystem(NTG)inoneyear. Itiscalculatedastheratiobetweenenergy not Average InterruptionTime(AIT) SYSTEM CONTINUITYINDICATOR on otherconnectinggridsthatare notpartoftheNTGandashare oftheenergy notsuppliedbecauseofforce majeure eventso penalties, which,amongotherthings,revised theENSindicator. Thenewindexalso includestheenergy notsuppliedtodirectl Since 2008,withAEEGResolution341/07,theAuthorityregulated thequalityofserviceprovided byTerna through amechani Regulated EnergyNotSupplied(RENS) indicator levelindicatesbetterserviceperformance.Theperformanceachieved in2011,basedonthenewindex,exceededta 0.20 0.40 0.60 0.80 1.00 1.20 distributor companies.Devicesinstalledonthegridprovide importantinformationonthequalityofelectricitysupplies. network thathasbeenoperatingsince2006.ThecampaignalsoincludedcooperationwithendHVcustomersand During 2011,theCompanycontinuedcampaigntomeasure thevoltagequalitydatainitsplantsthrough themonitoring ofOutagesperUsers(NOU)equaled0.179,lowerthanthetarget Number of0.209. • Regulated Energy NotSupplied(R-ENS)amountedto1,210MWh,lowerthanthetarget of1,369MWh; • set bytheAEEG: paragraph, page92).In2011,thetwoindexesforwhichincentiveswere provided haveperformed betterthanthetargets N Mh itra rcs] ES(W)[EGrgltd Target ENS(MWh)[AEEGregulated] process] ENS (MWh)[internal Target AIT (minutes/period) that decreases asthe energy not suppliedincreases duringasingle significantincident. (1) 0.62 367 . 2002 20032004200520062007 2008 200920102011 2002 200320042005200620072008200920102011 1,425 MWh 1.00 0.91 555 Target 2011 0.94 576 Target 2011 0.68 424 1.00 0.56 358 1,397 MWh Target 2012 644 1.00 0.69 1,166 Target 2012 1.00 1.00 0.55 1,425 800 y connecteduserscausedbyevents r bysignificantincidents suppliedinagivenperiod(ENS ower indicatorlevelindicates nce. Thisindicatorregarded sm basedonincentivesand the shares thatwere dueto rget set. R indexisapercentage 1,369 MWh 0.89 1,397 1,238 1.00 (2) 0.49 1,210 1,369 . Alower 1.00 73 Responsibility for the electricity service 74 Sustainability Report 2011 SUMMARY OFTHEMAINWORKSTHAT HAVE BEENCOMPLETEDORAUTHORIZEDTHAT ARESTILLBEINGIMPLEMENTED Grid Development Grid DevelopmentActivitiesin2011 The DevelopmentPlanisavailableonTerna's website been plannedfortheconnectionofthird partyplantstotheNTG. Furthermore, there isanattachmentnamed“Connections”whichcontainsthedetailsofdevelopmentworkthathas included intheprevious Plans. section describestheprogress madeontheworksandenvironmental assessmentsonthedevelopmentmeasures chapter containingtheenvironmental descriptionofareas affected bythenewmeasures setforthinthePlan.Thesecond aimed atfacilitatingtheachievementofnationaltargets withmaximumutilizationofinstalledcapacity;there isalsoanew grid infrastructures forthedevelopmentofrenewable energy sources andtonewwidespread energy storagedevices, detailed analysisofgridstatusandthenewdevelopmentrequirements thatemerged in2011;achapterisdedicatedto Like theprevious editions,the2012-2021DevelopmentPlanisorganized intwosections.Thefirstsectioncontainsa as provided forbytheEuropean Union’sDirective no.42of2001. Since 2008,Terna hasbeensubmittingitsDevelopmentPlantotheStrategicEnvironmental Assessment(SEA)procedure, following 10years is greater thanthecost. positive repercussions onsociety:theconditionfortheirconstructionisthatcollectiveeconomicbenefittheygenerate up withtheevolutionofpowerplantsandconsumption.TheworksthatTerna plansandimplementsalsohave For thisreason, Terna prepares changes electricityflowsandcancausecongestionontheexistinggrid. Electricity demandandsupplygrow atdifferent ratesinthedifferent areas ofItaly:thecombinationtheseelements production andconsumption. The transmissiongridmustbegraduallymodifiedandexpandedincompliancewiththedevelopmentsofelectricity projects andforthePlanasawhole. the GridUsers’ConsultationCommittee(see“Stakeholderengagement”section),bothfornewdevelopment the SEAprocedure. To verifythemainexpectationsofourstakeholders,Planwassubmittedforpriorassessmentto consultation stageoftheproposed 2012DevelopmentPlan and therelated Environmental Reportbegan,according to for EconomicDevelopmentandtotheElectricityGasAuthorityonJanuary31,2012,whileinMarch 2012the Approved byTerna’s Board ofDirectors onJanuary31,2012,the2012-2021Planwassentforapproval totheMinistry Interconnection npors Cmltd Authorized Completed In progress 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. RestructuringNaples CagliariSud-Rumianca RestructuringRome S.Barbara-Tavarnuzze-Casellina Strengthening Italy-France PST UpgradingTurin HVDC Italy-France 380 kVTrino-Lacchiarella powerline RestructuringCityofMilan 380 kVMelilli-Priolo cables Measures alongtheHVlineforRES Power StationAvellino N. , aswelltheprogress madeontheworksplannedinprevious years. Every yearTerna prepares aGridDevelopmentPlanwiththeworksscheduledfor 3 investment plansforgriddevelopment 4 5 2 8 1 16 13 6 www.terna.it 15 7 14 9 17 10 12 18 , intheElectricitySystemsection. 11 11 19 24 11 22 , inorder toincrease itsefficiency andtokeep 23 21 20 24. 23. 22. 21. 20. 19. 18. 17. 17. 380kVChignoloPo-Maleoandstations 16. 15. 14. 13. Sorgente-Rizziconi powerline Power stationAlianoandRaccordi Manfredonia, Belcastro Gravina, Erchie, Scandale,Cerignola, Spinazzola, Castellaneta,Montesano M., Power station380kVcollection: (Bisaccia,Troia, Deliceto) Power station380kVcollection: Power stationBrindisiPignicelle and installingPSTinS/EFoggia Foggia-Benevento IIpowerline 150 kVP.cannone-S.Severo powerline power stationS.MartinoinPensilis+ HVDC Italy-Montenegro interconnection Installing PSTinpowerstationVillanova VE andPD-Dolo-Caminpowerline Upgrading between Upgrading theMonfalconearea Upgrading AltaValtellina new 380kV “ChiaramonteGulfi-Ciminna” powerline. • restructuring initial ofPalermo’s metropolitan area; • upgrading theHVgridinmunicipality ofCastrovillari, functional forrestructuring theNord Calabriagrid; • new 380 kVpowerlinebetweenthestationinDelicetoand the 380kVpowerstationinBisacciaandnewd.t. • othermeasures ontheHVgrid forcollectingwindpowerproduction inCampaniaand Calabria; • significantmeasures linkedtothe 220kVupgradingofNaples; • new 150kVSorrento station,new 150kVmarinecableconnection“CPCastellammare-Sorrento-Capri” andnew220/150 • othermeasures linkedtotheupgradingofRome’smetropolitan area; • new 150kVswitchingstationinCelanoandrelated connectorstotheNTG; • new 380/132kVstationnorthofBolognaandrelated connectorstotheHVandEHVgridwithburialofexisting132kV • new 220kVPolpetstationinvolvedintheupgradinganddevelopmentofNTGMediavalledelPiave; • firstupgradingphaseoftheHVgridinprovince ofLodi; • new 220/132kVstationinAgnosine,aspartoftheupgradingVal Sabbia; • area new 380/132kVstationintheSoutheastern inBrescia andrelated works; • newpartofmeasures a linkedtothe220kVupgradingofMilan; • 220kVPonte-Verampio bypass(upgradingofHVgridinVal Formazza),inconcomitancewiththenew380kVTrino- • new 220kV“Torino Sud-Politecnico”buriedcablepowerlinelinkedtothe220kVupgradingofTurin; • During 2011Terna begantheauthorizationprocess foranumberofimportantdevelopmentworks,including: Main worksbeingauthorized 380kVburiedcableconnectorsbetweenthepowerstationsinPrioloGargallo andMelillirelated worksas • aPSTinthe380kVstationFoggia; installing • 380kV“Foggia-Benevento”powerlinebetweenPugliaandCampania; • aPSTatthe380kVstationinVillanova; installing • new “Italy-Montenegro” HVDCsubmarinecableinterconnection; • new 150kVswitchingstationinS.Salvoandrelated connectors; • new 380kV“Dolo-Camin”powerlineandrelated worksaspartoftheupgradingHVgridinVenice andPadova; • 220kVBaggio-Ric.OvestcablepowerlineaspartoftheupgradingelectricitygridinMilan; • new HVDC“Piemonte-Savoia”cableinterconnection andrelated works; • During 2011,Terna obtainedauthorizationforanumberofimportantdevelopment works,including: Main worksauthorized strengthening theHVgridinGallura. • anewreactor installing inthe380kVstationsScandaleandRossano; • 380kVstationinBrindisiPignicellewithfinishingandadaptingthe150section; • significantmeasures forstrengthening the150kVmainlinesforwindpowerproduction inCampania,BasilicataandPuglia; • new 150kVPS380/150Bisaccia connectors:150kV“Bisaccia-Calitri”powerline,functionalforconnecting • new 380/150kVstationinTroia, bypassconnectionforthe380kV“Foggia-BeneventoII”lineandconnectors, • new 380/150kVstationinDeliceto,bypassconnectionforthe380“Candela–Foggia”linesand150 • 220kVFrattamaggiore-Secondigliano buriedcablepowerline,aspartoftheupgradingelectricitygridinNaples; • 150kV“Portocannone-S.MartinoinPensilis”powerline; • new 220kVpowerstationinCardano, Trentino AltoAdige; • acondenserbatteryintheCislagoandCremona installing stations; • 220kVGadio-PortaVolta buriedcablepowerline,aspartoftheupgradingelectricitygridinMilan; • new 220kVstationinTorino Nord andrelative connections; • 220kVcablepowerlinesandoverheadincludedinthe132upgradingprovince ofTurin; • 220kVCamporosso stationandinstallationofaPSTonthe220kV“Camporosso-Trinitè Victor” power line; • During theyearfollowingworkswere alsocompleted: (see box86). line connectingChignolotoMaleowasalsocompleted,aspartofthe“380kVUpgradingPlaninProvince ofLodi” During 2011andinearly2012,additiontothetwo380kVChignoloPo-Maleopowerstations,newd.t extra-high voltagelinesentered intooperation. In 2011,anincrease inprocessing capacityofnearly1,500MVA wasreported andmore than70kmofnewhighand Main worksimplemented and Benevento; PS Troia-SE Rosetopowerline,functionalforconnecting renewable source plants beingbuiltinthearea betweenFoggia connectors ofthepowerstation inDelicetototheexisting150kV“Accadia-Vallesaccarda” lineandthenew150kVd.t. station inScafatiandconnectors,aspartoftherestructuring oftheHVvoltageinSorrentina peninsula; line segments; Lacchiarella powerline; powerline. part ofthenew380kV“Paternò-Pantano-Priolo” renewable source plantsbeingbuilt; functional forconnectingrenewable source plantsbeingbuilt; connectors: “AgipDeliceto-AscoliS.”powerline,functionalforconnectingrenewable source plantsbeingbuilt; 75 Responsibility for the electricity service

78 Sustainability Report 2011 problems overtheshorttomedium term. existing linesand theinstallationofenergy storagedevices onthe150kVgridsegments whichare more likelytoexperience and includetheconstructionof new380/150kVcollectingandtransformingstations, switchingstations,strengthening Development measures on the150kVtransmissiongridare takingplaceinseveral Italianregions, especiallyintheSouth, extra-high voltagegrid. on the150-132kVhighvoltagegrid.Theschematicdiagrambelowshowsmaindevelopmentmeasures affecting the sources hasidentifiedanumberofmeasures tobeimplementedontheprimary380-220kVtransmissiongridaswell The analysisofthepowergridaimedatpromoting the useanddevelopmentofelectricityproduced from renewable fully utilizeelectricityproduced byrenewable energy plants. Development, Terna hasaddedaspecialsectiontotheNationalDevelopmentPlanthatcontainsmeasures neededto By implementingDirective 2009/28/EC,theNational ActionPlan(NAP)drawnupbytheMinistryforEconomic Measures fortheuseofrenewable energysources asprovided intheDevelopmentPlan Available at: 2011 hasenableduserstoviewonlineupdatesontheprogress statusoftheworksindicatedinDevelopmentPlan. In keepingwithitsfullytransparent approach tostakeholders,Terna hasdevelopedanewwebplatformwhichasofMarch kV powerstationswhichwillbeusedforcollectingrenewable powerproduced Italy. incentralandsouthern Of significantimportanceare themanysitesthatTerna hasopenedduringtheyearforconstructionofnew380/150 areas, andwestern therebyand facilitatepowerexchangebetweeneastern achievingareduction intransmissionlosses. Also in2011,Terna startedworkonthenew380kV“Dolo-Camin”connectionwhichwillimprove thesecurityofpowerloads are beingbuiltinthearea. will regulate powerflowsontheextra-highvoltagegridandwillbefunctionalforconnectingrenewable powerplantswhich Terna hasalsoopenedsitesforinstallingaflowcontrolling device(PST)atthe380/150kVVillanova powerstation;this works forinstallingapowerflowcontrolling device(PST-PhaseShiftingTransformer) onthe“Foggia-BeneventoII” • measures forstrengthening the380kV“Foggia-BeneventoII”powerlinewhichwillhelpincrease theproduction from • constructionforthenew380kV“Trino-Lacchiarella” connectionwhichwillallowforgreater transfercapacitybetween • In 2011,uponreceipt oftheapprovals, Terna openedseveralsitesforimportantdevelopmentworks, includingthefollowing: Main buildingsitesopen MEASURES NEEDEDTOMAKEFULLUSEOFTHEELECTRICITYPRODUCEDBYRENEWABLE ENERGYPLANTS 13. 12. 11. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. Foggia andBenevento. limitation regarding Italy, thenewplantsinSouthern specificallytherenewable powerplantsthatare beingbuiltbetween line, tooptimizetheuseoftransmissionassetsandreduce theriskofcongestionandanysubsequentproduction reducing theprobability ofenergy notsupplied; renewable andthermalenergy sources, improve thereliability andqualityoftheelectricitytransmissionservice,thereby small generationcentersandpowerexchangebetweenthetworegions, improve thedispatchabilityofhigh-efficiency the riskofgridcongestion; Piedmont andLombardy, byimproving theflexibilityandoperationalsafetyofgridonterritory, thereby reducing Piedmont andtheloadarea ofMilanandgreater benefitfortheelectricitysystembetweensegmentsofNTGin 380/150 kVRotello 380/150 kVLarino(extension) Doubling theAdriaticmainline 380 kVSiciliaring Partinico-Fulgatore 380/150 kVFeroleto (extension) 380kV Laino-Altomontepowerline 380/150 kVM.sullaMarcellana 380kV Calabria-Basilicata-Campaniapowerline 380KV Deliceto-Bisacciapowerline 380kV Foggia-Beneventopowerline 80/150 Tuscania HVDC Sardegna-Corsica-Italia (SA.CO.I.3) www.terna.it/default/Home/SISTEMA_ELETTRICO/CantieriTernaPerItalia.aspx 1 2 9 11 10 12 5 3 13 6 4 26 14 27 15 25 8 7 16 24 20 23 19 17 22 18 21 27. 26. 25. 24. 23. 22. 21. 20. 19. 18. 17. 16. 15. 14. 380/150 kVMineo 380/150 kVSorgente2 380 kVSorgente-Rizziconi Trasversale Calabra 380/150 kVBelcastro 380/150 kVScandale(extension) 380/150 kVGalatina(extension) 380/150 kVAliano 380/150 kVCastellaneta . 380/150 kVP. delColle(extension) 380/150 kVBrindisiS.(extension) 380/150 kVSpinazzola 380/150 kVFoggia(extension) 380/150 kVS.Severo (extension) of Transmission SystemOperatorsforElectricity ENTSO-E: European Network Terna isworkingwithintheENTSO-E todefinetheten-year networkdevelopmentplan which willbepublishedat issues itsopinion onthismatter. Regulatory Authoritiestoverify thecomplianceofnationaldevelopmentplanswithEuropean plan.ACERalso Although itisnotbindingby itsnature atthenationallevel, theENTSO-EDevelopmentPlanenablesnational those duetoauthorizationprocedures. The planalsoidentifiesthedevelopment needsofcross border transmissioncapacityandany obstacles,suchas development oftrans-European energy networks. the European networkisbased onnationalinvestmentplansandtakesintoaccountCommunity guidelinesforthe well asnewscenariosandforecasts ontheadequacyofsupplyanddemandinEurope. Thedevelopmentplanof non-binding EU-wideten-yearnetworkdevelopmentplanthat includesintegratedmarketandnetworkmodelsas Pursuant toECRegulationno.714/2009,ENTSO-Ehasthe taskofadoptingeverytwoyearsandpublishinga Ten-year DevelopmentplanoftheEuropean Network instrumental inadoptingfuture European Commissionguidelinesontransparency. use ofacentralizedmanagementplatformforpublishing dataandsensitiveinformation.Theseactivitiesare Among itsactivities,ENTSO-Eisalsoresponsible forincreasing electricitymarket transparency, alsothrough the Market transparency the connectionofdistributorsandoperationelectricity systemandcross-border balancingwillbegin. Upon approval ofthiscode,themarketgridcodeswillfollow. Lastly, in2012,theadoptionprocess ofcodesfor most advancedlevelandwillbeapproved byENTSO-E bymid-2012,afteranextensiveconsultationprocess. The firstEuropean gridcodeswillbeadoptedin2012. Among them,thecodeongenerationconnectionisat (generators, distributorsandendusers),withregard tothemarketandoperationofelectricitysystem. Terna isworkingwithintheENTSO-EonestablishmentofEuropean gridcodesfornetworkconnection 4, 2011,whichset2014asthetarget datebywhichtheintegrationofelectricitymarketsshouldbecompleted. PT IE ES GB FR BE NL LU CH NO DK DE SE IT AT CZ SI HR BA PL SK HU ME FI RS LT EE LV MK GR RO BG conclusions oftheEuropean CouncilofFebruary the electricitysector, pursuant tothepolitical includes twelveEuropean gridcodeprojects in and ACERestablishedathree-year workplanthat In 2011,theEuropean Commission,ENTSO-E regarding cross-border issues. deeds thatwillprevail overthenationalones become supranationalandbindinglegislative grid codes,adoptedbytheCommission,will following consultingwithstakeholders.European with theframeworkguidelinesadoptedbyACER, established bytheEuropean Commissioninline codes, onthebasisofannualpriorities ENTSO-E hasthetaskofdraftingEuropean Grid European GridCodes Regulators (ACER). the AgencyforCooperationofEnergy coordination withtheEuropean Commissionand ENTSO-E's activitiesare conductedinclose cooperation bodyforallNetworkOperators. with itsheadoffice inBrussels,istheEU Third Energy Packagewasapplied,ENTSO-E, As ofMarch 3,2011,thedateonwhichEU and Kosovo). South-East European ones(excludingAlbania belonging to34European countriesincludingthe Electricity thatrepresents 41NetworkOperators Network ofTransmission SystemOperatorsfor Terna belongstotheENTSO-E,European EU23 79 Responsibility for the electricity service 80 Sustainability Report 2011 nearly 70dossiersregarding authorizedinitiatives,ofwhich64forrenewable-energy plants. • nearly 2,700requests withanaccepted estimate(notyetauthorized),ofwhichnearly2,400regarding renewable-energy • 2012. Amongthesethere were: which togetherwiththosereceived previously, raisedthetotaltoover3,400dossiersbeingprocessed atthebeginningof During 2011,Terna received more than550newconnectionrequests, ofwhich64% regarded renewable-energy plants, Current regulations manystagesoftheprocess govern ofaccessingthegrid,establishingtimeframes andcosts. Access togridinfrastructure isregulated bytheElectricityandGasAuthority(AEEG). also theNTG. interconnection amonggridsbelongingtootheroperators,ifthe requests theyreceive determinetheneedofstrengthening with thetaskofconnectingtoNationalTransmission Gridplantswith10MWofpowerormore, andofcoordinating the that allowcontinuityandsecurityinoperatingthegridwhere thenewplantwillbeconnected.Inparticular, Terna isentrust Terna isobligedtoconnecttheGridallpotentialusersthatsorequest andidentifyconnectionsolutionsbasedoncriteria Connecting newplants production plants; Connection request peryear respective workinggroups, withthecommitmentofover60employees. “System Operation”,Development”,“Market”and“Research &Development”Committeesandinthe established intheSystemDevelopmentCommitteeandparticipatesLegalRegulatoryGroup, inthe the issuesassignedbyGeneralAssembly. Terna alsosupervisestheactivitiesofvariousworkinggroups a bodylimitedtotheparticipationof10gridoperators,withcoordination tasksanddecision-makingpowerson Within ENTSO-E’scurrent structure, Governance Terna ispresent, forthesecondconsecutiveterm,inBoard, Roadmap 2050”objectivesoftheEuropean Commission. smart gridsordefiningamodulardevelopmentplanof“ElectricityHighways”by2050thatisinlinewiththe'“Energy of theelectricitytransmissionsector. Forexample,itcarriesoutactivitiesaimedatpromoting thedevelopmentof activities andmakesproposals totheEuropean CommissionandACERonseveralaspectsrelated totheregulation In additiontoperformingactivitiesandtasksunderthethird energy package,ENTSO-Ecarriesoutadvisory adequacy assessmentsoftheelectricitysystemduringsummerandwinterperiods. common toolsinordinary andemergency conditions,adoptionofEuropean research plansandsecurity According totheRegulation,ENTSO-Eensures coordination oftheEuropean Electricitynetworkoperationsthrough made overthenext10years. development investmentsamountingtonearly104billioneuros forthe34countriesbelongingtoENTSO-Ebe of thereport onforecast scenariosandadequacyoftheEuropean electricitysystem.Overall,theplanprovides for development planconsistsofsixregional investmentplans,ofthedevelopmentplanEuropean networkand the endofJune2012,followinganextensiveconsultationprocess startedinMarch 2011.The2012 Community 2005 2006 2007 200820092010 2011 239 250 393 482 [ o] Total validrequests No.] 980 770 [ No.] 1,142 2,116 2,636 790 1,065 3,335 3,485 568 ed OVERVIEW OFTHE INQUIRY RESULTS RELATED TOTHEAVERAGE RESPONSETIME Plant maintenance remote-management system, onlinesensors,andplant monitoring.Forthispurpose, since2005,ithasalsobeen using Ordinary maintenance: carriedout16,900instrumentalchecks oflines,usingthermalcamerastoidentifyhotpoints, DayCorUVcamerasto • 144,000km ofthree-phase inspected circuits withon-site checks,including4,500kmbyhelicopter, withnearly2 • performed21,900periodicaltechnicalandsurveillancechecksonstations atthedifferent voltagelevels; • Plant monitoringandinspection: The mainactivitiesperformedin2011withregard to powerstationsandlineswere thefollowing: superimposed onageo-referred map. as possible,Terna’s 13Months staff usesahandhelddeviceintegratedwith anavigationsystemthatshowsalltheplants Between 39 and59 To ensure thatplantscanbe immediatelyidentified,especiallyintheeventofmalfunctions,aswellreached asquickly Plant maintenanceisessentialforensuringservicequality and continuity. 90 Between 59and88 90 14 Months Between30and77 90 Between68and89 90 Bet 90 Integrated textofactiveconnectionsmodifiedAEEG Integrated textofactiveconnectionsAEEG Resolution 281/05-AEEG for ConnectionRequests Reference Resolution conventional sources. During 2011,Terna completedthemaingridworkstoconnect4renewable energy plantsand1production plantfrom the process transparent andtraceable,aswellmakingmore informationavailabletothecounterparty. In compliancewithAEEGresolutions, Terna hasalsocreated anITsystemtomanageconnection requests, whichmakes technique (LST). pinpoint thecorona effect oninsulators andconductors,alsoclimbingthesupportsusing the“worksonlivewires” inspections ayearonaverage; Provision ofserviceconnection upon receipt oftheproper authorization. Solution (STMD),adocumentthatisneededtocarryoutthefinalplanningofgridapparatusbyproducer (STMG), adocumentthatiscreated inresponse toaconnectionrequest, andofaMinimumDetailedTechnical received between2005and 2011.Theseactivitiesincludethepreparation ofaMinimumGeneralTechnical Solution resolutions adoptedbytheAuthorityonmatter–foractivitiescarriedoutTerna tofulfillconnectionrequests The tablebelowshowsthelevelofcompliancewithmaximumestimatedtime–setforthinvarious activities are substantiallyinlinewiththerequirements setforthintheRegulation. relation tothereference resolutions. Theinquiryresults containedinResolutionVIS99/11,showthatTerna's provide informationonthegridconnectionofelectricityproduction plantsandtodifferentiate thedataprovided in the nationalelectricitytransmissiongridoperator, aswellthemaincategoryassociations,were requested to regard togridconnectionsofelectricityproduction plantsbygridoperators,allincludingTerna, as Pursuant tothepreliminary inquiryestablishedbytheElectricityandGasAuthority(ResolutionVIS42/11),with Terna identifiestheworktobedone onthebasisofdeteriorationsignaledbyintegrated in additiontomandatorychecksestablishedbythelaw, Terna: sprrslto cul sprrslto cul Average time Actual Asperresolution Actual As perresolution oncinetmt SM dy)Building STMD(days) Connection estimate SM)(as theconnection (STMG) (days) en4 n 39 5- 15 90 ween 43and93 Response timebyTERNA EU6 81 Responsibility for the electricity service 82 Sustainability Report 2011 Special maintenance: quality andcontinuity. Performed withthelineinoperation,suchworkincreases systemavailabilityandcontributestotheimprovement ofservice Work onlivewires (LST): During 2011,vegetationwascutalong16,300kmofpowerlines. – inbranchremoval aimedatkeepingtrees atasafedistance.Herbicidesare neverused. Vegetation control normallyconsistsincuttingitdowntotheground or–ifthere are particularenvironmental restrictions interruption. in order toprevent thelatterfrom gettingtooclosetotheconductorsandconsequentriskofshortcircuits andline Controlling vegetation: the Companytooptimizeitsmaintenancework. an expertsystemtoassistlineandstationmaintenancecalledMBI(MaintenanceBusinessIntelligence),whichenables Line inspectionbyhelicopter:theLIDARproject and complywiththebestpractices ofthemainTransmission SystemOperatorsinEurope. define andtestanewmethod ofinspectionHVlinesusinghelicopterstooptimizeresources, express results the conductors,whichhadbeen previously possibleonlywithtargeted surveys.Since2012 thegoalhasbeento electricity lines.Inparticular, ontheentire HVgrid,itwaspossible tomeasure thedistanceofeachelementfrom thoroughly surveythe positionofthemainelements,suchasbuildings,vegetation, androads, interferingwith The lasertechnologymadeitpossiblenotonlytocreate anup-to-datedatabasefortheHVgrid,butalsoto the linesquicklyandindetailbyinstallingrequired deviceson ahelicopter. quickly. Therefore, the Companydecidedtousethelasertechnology, developedbythemilitary, to “photograph” information, whileforitslineswithinadequateorobsolete mapping, ithadtodevelopaproject toobtainthedata approximate distances,andthelimited-safetyareas. Foritslatest-generation powerlines,Terna already hadthis such as,forexample,thegeographicalcoordinates andheightsofpylons,thespatialpositionconductors, lines, toprovide municipalities,regions, andotherinstitutions entrustedwiththeinspectionsaseriesofdata for calculatingtheareas oflimitedsafetyalongpowerlinesandobligesTerna, astheownerandoperatorofpower The project wasimplementedtorespond totheMinisterialDecree ofMay29,2008,whichestablishesthecriteria by helicopter. objective ofcreating ageo-referred platformoftheNationalTransmission Gridthankstotheuseoflaserimaging In thesecondhalfof2009,Terna startedtheLIDAR(LaserImagingDetectionandRanging)project, withthe during 2011Terna reconstructed 54kmofoverheadlinesand19buriedcablelines. the proper operationoflinesalsorequires ongoingmonitoringtoassessthegrowth ofvegetation maintenance workonlivewires wasperformednearly3,300times. EN12 the three-dimensional isolatedplatform A newmethodofworkingonhighvoltagepowerlineconductors: repaired orreplaced. malfunction, replacement of spacersandresolution ofhotspots,foratotal70components thatwere either available forotherareas. Thistype ofworkhasalready beencarriedoutatallvoltagelevels for repairs incaseof continuity. Thevehiclehasbeeninusesince early2011;itislocatedattheterritorialarea ofMilanbutitis also power lineisinoperation,thereby increasing theavailabilityofsystemsandimproving service qualityand ground: theuseofatruckequippedwithaninsulatingbucketforaccessingworkplaceonline,while now wasonlypossiblebyclimbingapylonandwalking directly totheconductorsorbyloweringthem In 2011,anewmethodologywasimplementedtofacilitate workonoverheadpowerlineconductors,whichupto 83 Responsibility for the electricity service 84 Sustainability Report 2011 EU8 Engineering andinnovation EQUIPMENT DIAGNOSTICS STRUCTURE ANDMATERIAL OPTIMIZATION Research oninnovationandthedevelopmentofnewengineeringsolutionsisorganized infourcategories. specialist services,inwhichitholdsa42.4%equityinterest. cooperation withuniversities,ofRSES.p.A.(Ricerca SistemaEnergetico), andofCESIS.p.A.,acompanyproviding analyzing theoperationofequipmentandplants.Terna alsomakesuseofthespecialistassistancebuilders, reliability andthusservicequality, Terna engineers,whobasetheirworkoncareful mainlyusesinternal monitoringand To introduce newtechnologicalandplant-engineeringsolutions,instrumentsmethodsaimedatimproving plant Aim nlssadmntrn fln opnnsInsulatorTest Laboratory Newsensorsonequipmentandmachinery Analysis andmonitoringoflinecomponents ofabnormalities Early warning P-Laser New technologyforhighvoltagecables Innovative,high-performanceconductors Upgrading thetransmissioncapacityofexistinglines and/or betterenvironmental integration Designing towerswithlessvisualencumbrance Projects andprogress madein2011 enabled theidentificationof mostappropriate sites. At present, the feasibilitystudyhasbeenconcluded,which experimental stationforthestudyandmonitoringofinsulators. A project iscurrently being plannedfordevelopingan of theirpotentiallywidespread installation. kV section.Theywillbecloselyobservedforaperiodinview completed. Anotherkindiscurrently beinginstalled onthe132 the equipmentandmachineryof380kVsectionwas In theLacchiarella station,installation ofthenewsensorson at thesametime,ariseincapacitytotransferenergy. ensure areduction intheenvironmental impactofgridsand, recyclable rawmaterials,iscurrently beingexperimented.Itwill already beenconsolidatedonMV),completelyproduced with The newgenerationHVcable(usingtechnologythathas of aninnovativeconductorthatlimitsoverloadbywetsnow. The studyandexperimentalinstallationhavebeencompleted carbon fiberconductoronamountainstretch. An experimentalinstallationhasalsobeendevelopedwitha experiments are underwayonasegmentofhigh-altitudeline. A secondtypeusescarbonfibercables.Fortheseconductors, support andaluminumcladding. A firsttypeoftheseconductorshasahighlyresistant steel temperature conductorsofatypeotherthanINVAR-ZTAL. Feasibility studieshavebegunfortheinstallationofhigh- sensitive places. are usefulforsolvingproblems connectedwithdistancefrom featuring ahightemperature limitandreduced elongation,which Experience consolidatedoftheINVAR-ZTAL conductors, of theDutton-Rosentalwinningpylon. Executive designingbegunofsingleanddoublecircuit prototypes “PylonsoftheFuture” competition International (See boxonpage86) 380 kVlines. Designing completedofspecialhigh-performancetowersfor High-performance tubularsingle-poletowers PLANT SAFETY NEW EQUIPMENT EQUIPMENT DIAGNOSTICS Aim Compact, rapidlyinstallablestations Reduced spaceandtimeofpowerstationconstruction rnfre aey Newpower-transformer project Transformer Safety DTS(DistributedTemperature Sensing) Temperature monitoringonhighvoltagecables Projects andprogress madein2011 possibility ofdevelopingit. currently beingmadewithconstructorstoassess the 380-kV mobilestationhasalsobeendesigned.Contactis Sardinia andSicily).Giventheadvantagesofthissolution,a of otherstationshascontinued(intheregions ofLazio,Apulia, operation onDecember21,2010.Asof2011,theinstallation to connectaphotovoltaicplantinAprilia;itentered intoregular The SCRI(Compact,rapidlyinstallablestations)wasfirstused Everything hasbeenfactory-tested. 150 kVlinesthrough connectionswithconnectorcables. The mobilestationwasconceivedtobequicklyinstalledon means oftransportation transported tothesiteofusewithoutneedforspecial and built.Itisentirely mountedonthree trucksthatcanbe “Disaster Recovery”,a150-kVmobilestationwasdesigned To ensure thatservicewillbequicklyrestored intheeventof compactness andmore rapidconstructiontime. this innovativeequipmentisroutine inplants requiring greater occupied bystationconstruction.Bynowtheinstallationof functions withinasinglecontainer, thusreducing thespace This newequipmentwasintroduced, whichperformsseveral Integrated compactstationequipment(MCI) majority oftheprevious trialsdatebacktoseveralyearsago. “Short-circuit trials”willberepeated onalltypes,sincethe trial” carriedoutforeachtypeoftransformer. windings andcases,whichwillbetestedwiththe“short-circuit In addition,aseriesofmeasures willbetaken toreinforce which toleratestress better. their safety. Inparticular, polymericinsulatorswill beinstalled, series ofimprovements wasintroduced aimedatincreasing Owing toseriousmalfunctioninginpowertransformers,a this technologyisbeingdefined. their reliability. Thetechnicalspecificationforthepurchase of monitoring systemsavailableonthemarketwithananalysisof capacity tothefullest,astudyhasbegunontemperature On cableconnections,inorder tomonitorandexploittransfer 85 Responsibility for the electricity service 86 Sustainability Report 2011 EU8 “Chignolo Po-Maleo” The firstsustainable“supergrid”inLombardy: The INTEGRITproject hub forcentralEurope. alone represents 20%oftheentire nationaldemandandisthemostimportantindustrialpoleinItalyacrucial invested. Itwillcreate greater efficiency fortheelectricitysysteminoneofcountry’smostcriticalareas that region andwillallowtheelectricitysystemtosaveover25million euros ayearcompared to250millioneuros The “ChignoloPo-Maleo”powerline,approved inNovember 2009,isofstrategicimportancefortheLombardy recycling (alengthofmore than7timesthedistancebetweenPaviaandLodi). recovered andre-entered intotheproduction cycle,246kmofpowerconductors recovered fordisposaland square metersoflandfreed from thepowerline,910cubicmetersofconcrete removed, 1,000tonsofsteel Campania andtheIslandofElba. (Italy-France) andforthenew HVAC submarinecablefor future submarineconnectionswith theislandsof The solutionsdevelopedduring theproject maybeusedforthefuture cableconnectionlinkingPiedmonttoSavoy The project ispartiallyfunded bytheCCSE(ElectricityEqualisationFund)andwillrun forthree years. number ofspecializedcompanies willtakepartinthisproject. synergy withroad andhighwayinfrastructures. InadditiontoTerna, theUniversitiesof Padua andTurin anda launched in2011,isaimedatstudyingandidentifyingtechnical solutionsusefulindevelopingcablingprojects in The INTEGRITproject (integrationofpowertransmissioncablesintolarge road andhighwayinfrastructures), for atotalof31kmoldpowerlines;310,000 are alsoparticularlyimportant:91pylonsremoved completed –involvingtheremoval oftheold line The environmental dataofthefirstphase–already truncated-pyramid pylons. volume by15timescompared totraditional four meters,andreduce theoccupiedground have abasediameterbetweenoneandhalf 51 metershigh,weighbetween20and70tons, sustainable technology;theystandbetween24and pylons represent forTerna abreakthrough in impervious andmountainousterrains.Single-pole also beusedonnon-linearroutes andon line: theyare uniqueintheworld,sincetheycan special type,mountedforthefirsttimeeveronthis work, ofwhich11are ofahighperformance, pylons, outofatotal136pylonsmakingupthe tubular pylons.Terna hasinstalled88ofthese built usinglowenvironmental impact“single-pole” power lineinItalywithabouttwothirds ofthetrack “Chignolo Po-Maleo”isinfactthemostecological More record-breaking results forthispowerline:the become operational6monthsaheadofschedule. after only18months-thisenergy infrastructure has of theconstructionsites,workswere completed Terna inrecord-breaking time-sincetheopening between theprovinces ofPaviaandLodi.Builtby operation, anenergy highwaythatrunsfor24km “Chignolo Po-Maleo”powerlineentered into In theearlymonthsof2012,extra-highvoltage

Coil of the SA.PE.I (Sardinia-Italian mainland) submarine cable “WITH 750 MILLION EUROS, THE SA.PE.I. WAS THE LARGEST INVESTMENT EVER MADE IN ITALY FOR A SINGLE ELECTRICITY INFRASTRUCTURE. BUILDING THE CABLE INVOLVED 177 COMPANIES FOR OVER 200,000 WORKING DAYS AND ALLOWED SAVING 70 MILLION EURO A YEAR FOR THE ELECTRICITY SYSTEM. ” 2011

Economic responsibility 90 Sustainability Report 2011 Our approach Revenues andriskmanagement • concern forthecompaniesinelectricity industry, concern bothinapplyingthenon-discriminationprincipleandbeyond • selectionof suppliersconductedaccording the tocompliancecriteriawithqualificationrequirements, including • pursuitoftransparency the andcommunicative clarityinrelations withshareholders; • of itsCodeEthics.Inparticular, thefollowingshouldbenoted: illustrate Terna’s commitmenttodevelopinginitiativesandmanagementinstrumentsthatare consistentwiththeprovisions stakeholders. Themostsignificantoftheserelationships are describedinthefinalsectionsofchapter, whichalso the mostimportantqualitativeandquantitativeinformationconnectedwithCompany’srelationship withspecific The economiceffects ofTerna’s businessdonotendwithitsfinancialresults. “Terna’s economicimpacts”sectionincludes implemented bytheCompanytoprevent andcopewiththerisks connectedwithitsbusiness. particular regard totheeffects oftheregulatory framework–andtheir respective relative weights,aswellthemeasures The “Revenuesandriskmanagement”sectionprovides informationonthedifferent sources ofTerna’s revenues –with out are presented in“Terna’s economicimpacts”section. share anddividendperformancesare reported inthe“Relationswithshareholders” section,whiletheinvestments carried main results ofthelastthree yearsare reported inthischapterconjunctionwiththesubjectdiscussed:forexample, grid ownedbythird parties, housingTLCequipment,andotherconsultancyactivities inthetransmissionfield. companies, suchasHVplantmaintenancebelongingtoother owners,plantengineering,maintenanceofthefiberoptics regards otheractivities,whichconsistmainlyoftheprovision ofspecializedservicesbytheTerna Group toother derived from activitiessubjecttoremuneration asestablished bytheElectricityandGasAuthority(AEEG)only6% In 2011,theTerna Group’s revenues from continuingactivitiesamountedto1,636millioneuros. Mostofthis(nearly94%) Revenue structure andregulatory framework online at For adetailedpresentation oftheeconomicandfinancialresults achievedbytheGroup, seetheAnnualReportsavailable regarding inparticulartheconstructionofinterconnection linesare beingdeveloped. Mediterraneanareatransmission industryhasfocusedontheSouthern andtheBalkans,where anumberofprojects Other opportunitiesforgrowth lieintheexpansionofactivitiesabroad. Thesearch fornewinvestmentpossibilitiesinthe seekingbusinessopportunitiesinindustriesotherthantransmission,suchastheproject forexploitingitsassetsby • developingnon-traditionalactivitieslinkedtotransmission,suchasstorage(seededicatedbox-page69); • seekingoperatingefficiency andoptimizingitscapitalstructure; • promptly carryingouttheinvestmentsprovided forbytheGridDevelopmentPlan,whichare atthesametimeusefulfor • by enlarging itsmarketshare andpursuestheseobjectivesmainlyby: In Italy, Terna managesthetransmissionofelectricityasamonopolist.Therefore, itcannotincrease itsbusinessorrevenues of theelectricitysystem. the search foroperatingefficiency andopportunitiesforgrowth, whilefulfillingserviceobligations,inparticularthesecur For Terna serviceobjectivesare integratedwiththoseofeconomicperformance.Thesynthesisthetwoaspectsliesin obligations establishedbytheregulatory Authority. respecting regulations regarding theenvironment andoccupationalsafety; project” page36)andothernon-traditionalventures specifiedinthe2012-2016StrategicPlan. constructing photovoltaicplantsonlandadjacenttoitspowerstations(seetheboxentitled“Terna’s secondphotovoltaic improving theelectricityserviceforsocietyandasource ofcorporateincome; www.terna.it in the“InvestorRelations”section,especially2011AnnualFinancialReport.Inanycase, ity administrative managementof contractsandreceivable andpayablebilling. size –hasimportantrepercussions onitsrelation withtheindustrycompaniesregard tothe commercial and the user’sbill.Evenifitdoesnot influenceTerna’s profitability, pass-through revenue –amongotherthings, alsoowingto the MDS,whichfor2011amounted tonearly1,261millioneuros (nearly1,153million euros in2010).Theupliftisincluded important pass-through itemistheso-calleduplift,apaymentcoveringnetexpensesincurred toprocure resources on Valued bytheapplicationofspecifictariff payments,theseitemsare regulated byTerna withtheindustrycompanies. An In 2011,theTerna Group’s pass-through revenues andexpensestotaled5,026millioneuros (4,831millioneuros in2010). other ownersofsegmentsthatare partoftheNationalTransmission Grid. Group’s IncomeStatement.Theseitemsalsoincludetheremuneration thatTerna receives from distributorsandpaysto balance ofthesetransactionsbezero forTerna: theyare pass-through itemsthatdonotinfluencethenetincomein the Terna for buyingandsellingenergy inparticularontheMarketforDispatchingServices(MDS).Rulesrequire thatthe economic To keeptheelectricitysysteminabalancedcondition,Parent CompanyTerna hastoregulate it.Thisinvolvestransactions Pass-through items the needforneutralizationmechanismofvolumeeffect. be allocatedaccording totransferred energy; thisshouldguaranteeagreater stabilityofthetariff revenue andwilleliminat power intheinterconnection pointsbetweenthetransmission gr recognized transmissioncosts,currently allocatedonthebasisoftransmittedenergy, willbedividedbasedonavailable As of2013,thetransmissiontariff willbecomebinomial,i.e.basedontwoallocationdrivers:approximately 95%ofthe require Terna toreturn theincreased regarding earnings thevolumeshare exceedingthemaximum limitof0.5%ifthe • Terna’s supplement remuneration regarding thevolumeshare exceedingthemaximumlimitof0.5%iffinalvolume • with itsResolutionARG/Elt188/08.Thismechanismprovides fortheAEEGto: uncertain andledtheAEEGtoconfirmonlyfor2012mechanismofpartialneutralizationvolumeeffect introduced consequently reduces theenergy transmittedalongthetransmissiongrid)madetrend oftransmittedenergy more of 2008togetherwiththeincreased energy injectedintodistributiongrids(that“locally”meetspartofthedemandand volume effect, theycanbehigherorlowerthanexpected.Thesharpbusinesscontractionthatbeganinthesecondhalf actual trends oftheallocationdriversrecognized costs,particularly, oftransferred energy: ineffect, becauseofthe Once theunitamountsofdifferent tariff componentshavebeenestablished,Terna’s revenues willdependonthe • • • components considered fordeterminingthetransmissiontariffs mainlybelongtothree categories: to Terna, andontheother, thereference quantities (forecast) oftheabove-mentionedallocationdrivers.Thecost every four-year regulatory period.Thecontributingfactorsare, ontheonehand,costsincludingmargins thatare recognized The AEEGannuallydeterminestheunitsumoftariff componentsonthebasisofrulesestablishedatbeginning number ofinjection/withdrawalpoints). and DispatchingUsers),basedonspecificallocationdriversestablishedbytheAEEG(energy quantity, availablepower, paid toTerna bydifferent categoriesofcompaniesintheelectricityindustry(Distributors, Acquirente Unico(thesinglebuye Regulated revenues are generatedbydifferent tariff components–the mostimportantofwhichisthetransmissionfee– Regulated revenues final volumeislarger thantheoneusedfortariffs. is smallerthantheoneusedfortariffs; Terna andendusersintermsoftariff reduction. periods, theefficiency increase achievedexceedingthepre-established efficiency factorwasequallydividedbetween subject toapricecapmechanism,i.e.reduced yearly byanefficiency factor. Attheendofprevious regulatory covering thesecosts,whichin2011amountedtonearly26%,isrevalued annuallyonthebasisofinflationanditis the costsoflaborandprocurement ofgoodsandservicesthatdonotrepresent aninvestment.Thecomponent Operating costs. the totalrecognized costs. deflator ofgross fixedinvestment.Theshare ofamortizationremuneration represented in2011approximately 27%of investments, divestments,theterminationofusefullifeassets,andrevaluation basedonthechangein Amortization. In 2011,remuneration oftheRABrepresented nearly47%ofTerna’s recognized costs. number ofyearsforcategoriesdevelopmentinvestmentthatare considered tobeofparticularstrategicimportance. market one,whichwasestablishedat6.9%upto2011,and8.4%asof2012.Thisrateisincreased foralimited improving thesecurityofelectricitysystem).TheRABisremunerated bytheAEEGatarateofreturn linkedtothe the grid(workincludedinGridDevelopmentPlan)orofadifferent nature (i.e.,ITsystemsortechnologiesaimedat These investmentsare forboththeconstructionofelectricityinfrastructures (linesandstations)torenovate ordevelop number onthechangeingross-fixed-investment deflatorandupdatedonthebasisofTerna’s netinvestments. Remuneration oftheRAB. Provision ismadefortheannualadjustmentofamortizationrecorded becauseoftheeffect ofnew These are thecostsregarding theactivitiesoftransmission,dispatching,andmetering:ingeneral, The valueoftheRAB(RegulatedAssetBase)isannuallyrevalued onthebasisofIstat id andthedistributiongrids,whileremaining partwill its r) e 91 Economic responsibility 92 Sustainability Report 2011 3 Ratio betweenCTREandthegross electricity priceforatypicaldomestic user(afamilywith3kWofpowerand2,700 kWhof (3) betv er eid eat-ou ag 2011result Penalty-bonusrange Period Year Objective INCENTIVE MECHANISMSACTIVATED IN2011 Reduced volumes of resources 2009 2010-2012 - Bonus 16.7 millioneuros Bonus 5millioneuros Penalty 2.5millioneuros Penaltymaximum - 2008-2011 2010-2012 (Resolution 351/07) 2007 2009 Reduced volumesofresources of demand Improved forecast Acceleration of investment 2010 2010-2011 - Bonus 12.9million euros Bonus - Bonus7.7millioneuros 2010-2011 that transmissioncostsweighapproximately 3%ontheelectricitybillofatypicaldomesticuser asatrial,from indicates theimpactofcostsderivingfrom Terna’s activities,onthebasisofdatapublishedbyAEEG,itcanbeestimated service bythedistributorcompanies.Whileanofficial cost breakdown islackingfortheenddomesticuserthatdirectly 3.0millioneuros Bonus (Resolution87/10) On thebasisofcurrent regulations, mostofTerna’s recognized costs(margins) isbilled totheendusersofelectrici The costoftransmissiononthefinaluser’sbill Penaltymaximum 1.5millioneuros (Resolution213/09) 2008-2011 2010 to developtheNTG Acceleration ofinvestment procured ontheMDS (Resolution351/07) 2007 (Resolution341/07) of windproduction Improved forecast transmission service those connectedwiththeperformanceofelectricitymarket. (compared to77millioneuros in2010)astherelated fairvalueadjustment,takingintoaccounttheregulatory risksand of theincentivemechanismanditscharacteristics,recorded 66millioneuros revenues inits2011FinancialStatement Terna inviewoftheresult attainedin2010 amountingtonearly160millioneuros andconsideringthethree-year duration Terna’s totalregulated revenue. Inthecaseofincentiveforreducing thevolumeofresources procured ontheMDS forachievingtheobjectives establishedaspartoftheincentiveschemesin2011areThe bonusesearned includedin accelerationofinvestmenttodeveloptheNTG.Thismechanismwasintroduced byResolutionARG/elt87/10andprovides • reduction ofthevolumeresources procured ontheMDS.Themechanism,originallyintroduced in2007forafour- • improvement offorecasts regarding energy demandandwindpowerproduction (applicableforthe2008-2011period); • qualityofthetransmissionservice.Forperiod2008-2011,AEEG’sResolution341/07establishedaframework the • mechanisms were provided for: benefit fortheusersofservicewillbeamultipleincentivepaidtoTerna. Inparticular, in2011,incentivebased technical andeconomicterms.Implicitintheincentiveschemesisassumptionthatifobjectivesare achieved,the The AEEGhasintroduced specificbonusandpenaltyschemesaimedatincentivizingserviceimprovement, bothin 2011 IncentiveSchemes through items. main partofTerna’s recognized costs(considering otherminortariff componentswouldhavenorelevance), netofthelet- 2008-2011 2007 Quality of on bonusesandpenaltiesintheeventdevelopmentworksgointooperationaheadoforbehindschedule. achievement ofaseriesmilestonesagreed onwiththe AEEG.Beginningin2012,theapplicationofamechanismbased system (eliminationofcongestion,increased transfer capacitywithothercountries),whichisconditionalonthe for a3%additionalincentivetheworkinprogress ondevelopmentprojects withthemostvalueaddedforelectricity provides foradifferentiated unitaryincentiveforeachyearoftheperiodwithoutabonuscap; year duration,wasmodifiedbyResolutionARG/elt213/09andextendedtothewhole2012.Thecurrent mechanism economic effects ofthemechanismregulating service qualitywere generatedin2010; value inthecaseofENSRand+/-5%NDU).Thebenchmarklevelswere determinedin2008andthefirst difference betweentheactualvalueandtarget valueoftheindicatornetanexemptedrange(+/-10%target bonus/penalty iscalculatedbymultiplyingapre-established sum(15,000euros perMWhinthecaseofENSR) bythe outages peruser),measured respectively nationwideandatthelevelofeachTransmission OperatingArea (AOT).The of incentivesandpenaltieslinkedtotwoindicators:theENSR(relevant energy notsupplied)andtheNDU(numberof AEEG dataprocessed byTerna. nrdcdapplicable introduced 2012 definitively 5 millioneuros Bonus maximum 3 millioneuros Bonus maximum (3) . Thesecostsare the annualconsumption); ty Risk management The coverageofseveralobligations connectedwithemployeebenefitsisalsodescribed. risks connectedwiththeelectricity marketandtheelectricitysystem. • risks andopportunitiesconnected withclimatechange; • with them.Theaspectsconsidered are: The followingpagesdescribe other aspectsofrisk,theirrelation withTerna’s activitiesand therelated measures forcoping a descriptionoftheprocedures forpreventing andmanagingsuchrisks,seethe2011Annual Report,pages81-82. financial requirements, operatingrisksconnectedwithmalfun exposed tomarketandfinancialrisks(regarding theinterest rate,inflation,liquidity, andcredit), risksconnectedwith The analysis,prevention, andmanagementofriskregard thedifferent aspects ofcorporateactivities.Terna’s businessis Incentive mechanisms Operating costs Investments The newregulatory framework (MDS) willremain activethroughout allof 2012,asalastyearofvalidityplanthatwaspreviously introduced. The incentivemechanismlinkedtoreducing thevolumesofresources suppliedontheMarketforDispatchingServices for accessinga2%extra-remuneration forcategoryI3 investments. accelerating investments(optionalwithnootherconsequencesuntil2011)hasbecomethenecessarycondition date ofentranceintooperationtheworks.Moreover, Terna’s participationintheincentivemechanismfor application in2010-11.Inparticular, asof2012thereward/penalty mechanismbecameoperational linkedtothe The incentivemechanismforacceleratingdevelopmentincentiveswasre-established followingitsexperimental power andwere notrenewed. The bonus/penaltymechanismsare connectedtotheaccuracy ofthedemandandproduction forecast from wind supplied energy indicator. the incentiveremuneration willbelinkedtoobjectives ofservicecontinuitymeasured onlybythereference non- The previous bonus/penaltymechanismlinkedtothequality ofthesuppliedservicewassimplified.As2012, reduced from 1.1%to0.6%fordispatching. obtained duringthesecondandthird regulatory periodandheldbyTerna forapplyingtheprofit sharing,andis from 2.3%to3.0%annuallyfortransmission,allowthe systemtograduallyreabsorb theextra-efficiency shares The reduction objective–through thepricecapsystem–ofoperatingcostsrecognized inreal termsincreases regulatory period. made, whileasof2012,theywillnolongerreflect theapplication ofthepricecapmechanismduringsecond As inthepast,recognized amortizationswillbedetermined eachyearonthebasisofinvestmentsactually congestions within marketareassolving internal andfrom 2%to1.5%forotherdevelopmentworks. aimed atsolvingcongestionswithinmarketareas (categoryI3investments),from 3%to1.5%forworksaimedat reduced; inparticular, theydecrease from 3%to2%forinterconnections withforeign countriesandforworks tariffs, whiletheadditionalremuneration incentivesrecognized for12yearsdevelopmentinvestmentsare of thenetinvestedcapitaltobeusedforcompensatingdelayinvestmentsfindbeingreflected inthe of thetrend ofthemarketrates.Onlyfornewinvestments,aremuneration componentisintroduced equalto1% recognizedReturns toTerna increase from 6.9%to7.4%ofthenetinvestedcapital,essentiallyasaconsequence a consequentadjustmentofselectioncriteriaforTerna’s investments.Belowthemainnoveltiesare listed: transfer anddispatchingservice–ofincentivesrecognized forvariousinvestmentcategories;thiswillleadto in Italy. Thereview determinedare-establishing ofthevarioustariff components–suchastheremuneration ofthe the Group’s revenues foritscontinuingcore activitiesdependonthetransmissionanddispatchingservicetariffs applied toTerna’s activitiesforthe2012-2015period.Theseare veryimportantdecisionsforTerna: over90%of the review process ofthetariff regulation thatoccurseveryfouryearsandestablishednewtariff regulations At theendofDecember2011,resolutions no.199/11and204/11oftheElectricityGasAuthority, concluded ctioning ofthegrid,regulatory risksandlitigationrisks.For 93 Economic responsibility 94 Sustainability Report 2011 EC2 Electricity production from renewable energy sources represents variouschallengesforTerna, linkedtoincreased grid • aboutclimatechangeortheincrease concern inthepriceofenergy rawmaterialscouldleadtoareduction ofenergy • taskofkeepingelectricityinjectionsandwithdrawalsonthetransmissiongridinbalance,whichTerna the performsin • Potential risksandopportunitiesforTerna’s businessregard thefollowingaspects: and inthehabitsofconsumers. opportunities –potential,albeitremote, riskslinkedtoglobalwarmingandthereactions thatit mightcauseingovernments Terna’s managementrecognizes theincreasing importanceofclimatechangeandhasidentified–inadditionto offered Terna newbusinessopportunities. contrary, climatechangehasledtoafavorabledevelopmentoflegislationforrenewable energy sources, whichhasalready Climate changedoesnotrepresent athreat forTerna asfaritsforeseeable businessprospects are Onthe concerned. in emission-tradingschemes)withdirect consequencesonTerna’s businessandfinancialperformanceare tobeexcluded. Therefore, taxationmeasures government (e.g.,carbontax)orregulatory measures (emission-reduction targets, inclusion and thusisnotsubjecttoanyobligationreduce emissionsortoanyemissiontradingscheme. distributors, towhosenetworksendusersare connected.TheCompanyisnotinvolvedinanywayelectricitygeneration, Terna isautilitywhosemainbusinesselectricitytransmissionof,i.e.thetransferservicefrom producers to Risks andopportunitiesconnectedwithclimatechange of gridregulation. ForTerna, theseinvestments opennewbusinessopportunitiesindirectly connectedwith climate energy storagesystems(pumping,batteries) thatcanstrongly favortheuseofrenewables while alsosolvingproblems development ofinfrastructures to interconnect thetwocontinents.Inshortterm,Terna hasplanned investmentsin the long-termdevelopment of solarplantsinAfricatosatisfyEuropean consumption, whichrequires theparallel Terna’s imagecanbeenhancedbythis positiverole. TheCompanycanalsodevelopbusinessopportunities regarding system (reduction oflosses,improvement oftheproduction mix,andconnectionofnewrenewable-energy plants). investments todevelopthegridalsoentailsignificantconsequences intermsofemissionreduction intheentire electricity a source ofrevenues forTerna. Furthermore, asexplainedindetailthe chapter ontheEnvironmental responsibility, Opportunities. particularly windpower–makesdispatchingactivitymore difficult, increasing theneedforreserves. can exposeTerna toreputational risksindependentlyfrom itsproper conduct.Moreover, intermittentproduction – necessary forimplementingdevelopmentinvestmentsrequired forfullyutilizingtheproduction capacityfrom renewables, has nowbeensolvedbytheuseofasingleauthorization process. Thissituation,togetherwithlengthytimeframes Sometimes there hasbeenatimegapbetweentheplantauthorizationandofconnectionwork, which from Terna, onlysomeoftheseproposals havebeendevelopedintoprojects andinitiatedtheauthorizationprocess. i.e. more thantwicethepowerconsumedinItalyattimesofpeakdemand.Afterconnection solutionwasobtained Terna hasissuedconnectionsolutionsforplantsthat–iftheywere allconstructed–couldproduce upto130,000MW, to connectthemthetransmissiongrid.There havebeennumerous requests inthelastfewyears.Uptopresent, Critical aspects. congestions problems andforefficiently andsafelymanagingnon-programmable production. connection requests forrenewable energy plantsandtotheneed toplanandimplementinvestmentsforsolvinggrid and RegulatoryFramework”theboxpage93). remaining partwillbeallocatedaccording totransferred energy (inthischapter, seetheparagraph“RevenueStructure basis ofavailablepowerintheinterconnection pointsbetween thetransmissiongridanddistributiongrids,while 95% oftherecognized transmissioncosts,currently allocatedonthebasisoftransferred energy, willbedividedonthe volume effect. Asof2013,thetransmissiontariff willbecomebinomial,basedontwoallocationdrivers:approximately also orientedtoward stabilizingthefinancialrevenues thatwilleliminatetheneedforaneutralizationmechanismof annual ratesonlyby+/-0.5%.Withtheregulatory review attheendof2011,AEEGidentifiedadifferent mechanism, to arevenue-cap one,inwhichrevenues are set switched from aprice-capsystem,inwhichrevenues alsodependonthevolumeofelectricitytransmittedNTG, the levelofrevenues recognized, subsequentlyconfirmedfor2012,wecansaythatthetransmissionindustryhasactually volume effect fortheremaining partoftheregulatory period(2009-2011).Withthe activationofthismechanismensuring economiccrisis,theAEEGintroducedconsumption duetotheinternational amechanismthatpartiallyneutralizesthe that areduction involumescouldleadtoareduction inTerna’s revenues. In2008,duringaperiodofdecreasing electricity the rulesadoptedsofarbysectorAuthorityforremuneration ofthetransmissionserviceexcludepossibility effort toimprove energy efficiency couldcausethegrowth ofelectricitydemandto be lowerthanitiscurrently. However, demand flexibilityastheGDPincreases. Basedonother conditionsbeingequal,thetrend toenergy savingandthe its reputation asareliable company; reputation. Ontheotherhand,goodmanagementofcritical situationsconstitutesanopportunityforTerna toconsolidate mass mediatofocustheirattentiononTerna. Suchsituationsdonotthreaten corporateaccounts,butratherTerna’s entail thetemporarydisconnectionofusersinvariousItalianareas andconsequentlycausepublicauthoritiesthe is scarce orthetemperature isextremely highorlow. Thepossibleoccurrence ofcriticalsituationsincreases, whichcan Italy asthetransmissionsystemoperator, becomesmore difficult whentheclimateisextreme, forexamplewhenwater Investments inthetransmissiongridmadenecessaryby connectionofrenewable-energy plantsare New powerplantsrunningonrenewable energy withmore than10MWofpowermustrequest Terna ex ante and canvarywithrespect totherevenues usedtoestablishthe • the composition andchangesoftheTFRotherpersonnel fundsasofDecember31,2011are the asfollows: • hired employees byJune30,1996are granted reduced ratesontheelectricityconsumedforhousehold use(electricity • seniorexecutivesare entitledtopost-employmentsupplementaryhealthcare (ASEM). • whentheyterminatetheiremploymentreceive benefitsthatare owedallemployees(severancepay–TFR),senior • • The increase The intheproduction ofenergy from renewable sources –forwhichincentivesare oftenprovided byspecific • • during theirworkinglife,allemployees receive during acontractual“loyaltybonus”when theyreach their25 • employees ofItaliancompaniesreceive otherdefinedbenefitpayments,specifically: junior executives)mayenroll intheFopenpensionfund(http://www.fondopensionefopen.it). Inadditiontothepensionplans, executive firstjoinedasupplementarypensionplan.Theother employees(blue-collarworkers,white-collarand both theexecutiveandCompany. Inbothcases,theamount variesaccording tothedateofhiringand senior executivesmayenroll intheFondenelpensionfund(http://fondenel.previnet.it), whichprovides forcontributions by the 1990’s.Terna offers itsemployeesdefined-contributionsupplementarypensioncoverageonavoluntarybasis.Specifically, system, whichoriginallywasoneofthehighestinOECDcountries,hasbeenreduced byaseriesofreforms thatbeganin There are nodefinedbenefitcorporatepensionplansintheTerna Group. InItaly, thepensioncoverageprovided bythepublic Coverage ofobligationsconnectedwithemployeebenefits monitoring thedesignandconstructionofstationdefensesystemsautomationtechniques. • ofproduction inspections plantsunderconstructionincooperationwiththeMinistryforEconomicDevelopmentto • oftheinterruptiblesitesandchecksoncompliancewithtechnicalrequirements inspections required byTerna; • ontheperformanceofplantsconnectedtogridthrough checks theself-certificationprocess andtheanalysis • monitoring thestatusofnationalelectricitysystem; • measures. Thestatusofthenationalelectricitysystem is monitored invariousways,suchas: events orfailurevulnerabilities (forexample,external torespect theGridCode)andtoadoptappropriate mitigation Its responsibility formakingthenationalelectricitysystemwork securely requires Terna toidentifytherelated threats and ISO 27001standard (seethe“Informationsecurity” section-page70). and indicatorsrequired bytheAEEG.During2011,certificationforTIMMprocess hasbeenobtainedaccording tothe information. ForthispurposeTerna created theTIMMdatawarehouse, withtheobjectiveofmonitoringmagnitudes services”, AEEGResolutionno.115/08),mustensure impartiality, transparency, andsecurityinacquiringpresenting Monitoring Division(“Integratedtextonthemonitoringofwholesaleelectricitymarketandfordispatching Terna monitorstheelectricitymarketdataalsoonbehalfofAEEG.TheRiskManagementUnit, whichispartofTerna’s deviations from pre-established benchmarks. to followtheoverallperformanceofelectricitymarketthrough severalkeyindicatorsandtopromptly pinpoint any (Security IndexMarketMonitor)hasalsobeensetuptoconstantlymonitorsuchrisks.ThissystemenablestheCompany the Companytoidentifyriskswithhighestprobability andthegreatest impact.Adedicatedsystem,calledSIMM The analysisoftheprocesses regarding theinteractionofTerna withtheelectricitymarketandrelated riskshasenabled terms (seethe“Pass-through items”and“Incentiveschemes”sections). Services. Thisactivityiscriticalforthesecurityofelectricityserviceandalsohassignificantrepercussions inecono Terna procures theresources itneedstosafelymanagethenationalelectricitysystemthrough theMarketforDispatching Risks connectedwiththeelectricitymarketandsystem discount). junior executiveshired byJuly24,2001(IMA-additionalspecialallowances). executives hired orappointedbyFebruary28,1999(allowanceinlieuofnotice),andblue-white-collar workersand employment atacompany. bonus of3millioneuros forTerna (themaximumobtainable)thankstotheimprovement of forecasts. 3 millioneuros, maximumpenalty:1.5millioneuros). Ineachyearofthethree-year periodtheschemehasgenerateda Terna bonusesorpenaltiesonthebasisofCompany’sabilitytocorrectly forecast windproduction (maximumbonus: problems fortheregulation ofthesystem.Anincentiveschemehasbeeninplaceforperiod2008-2011that assigns its unpredictable variabilityderivingfrom changesintheatmosphericconditions,windproduction entailsparticular law provisions –requires Terna toprepare technicalinstrumentsthatare appropriate forthenewscenario.Becauseof stations, latersoldwithsignificantpositiveimpactsonthecompany’sfinancialperformance; change, asoccurred in2010-2011withthebuildingofphotovoltaicplantsonlandavailableinsideornearTerna’s power Code andtheobligationsoffuture production; monitor delaysintheentranceintooperationofsuchplantsandatsametimecheckingapplicationGrid of therelated documentation; th and 35 th year of mic EC3 95 Economic responsibility 96 Sustainability Report 2011 Million euros Million euros Percentage values oa . . . 063.8 -0.6 3.8 -0.6 0.2 0.0 0.2 0.0 4.2 4.2 Total Loyalty bonus Benefits owedduringemployment oa 2. . . 88119.2 41.8 10.9 -8.8 -1.0 -0.5 73.6 4.5 30.9 1.5 6.5 -7.2 1.2 0.2 -0.5 0.8 0.0 -1.0 64.4 122.3 2.8 1.3 40.5 -5.9 11.2 0.4 2.7 0.8 0.4 0.4 -0.3 2.4 77.6 29.3 0.0 6.7 0.0 67.9 0.0 3.0 Total Total ASEM Electricity discount Post-employment benefits Total Allowance inlieuandsimilarbenefits IMA bonus Severance pay Benefits owedatterminationofemployment aeo nraeo elhcr ot30 3.0% 5.0 2.0%-4.0% 3.0% 2.0%-4.0% 2.1 1.6 4.5 -0.1 0.8 1.3 -1.1 0.2 0.2 0.2 0.0 0.8 0.2 -0.3 0.2 -0.5 0.3 -0.2 0.4 2.3 0.1 0.0 0.1 Rate ofincrease ofhealth-care cost -0.4 Rate ofincrease oflabor cost 0.0 Discount rate 2.4 -0.1 The followingtableshowsthemainassumptionsusedinactuarialestimateofliabilitiesforemployeebenefits. Total Disbursements andtransfers Financial expenses Current cost The followingtablebreaks downthecostsregarding liabilitiesforbenefitstoemployeesrecorded intheIncomeStatement. (a totalof5.7millioneuros). euros), whichwere partiallyoffset bytheappropriations andtherecording ofthetime-discountingexpenseperiod recorded a3.1million euros decrease withrespect totheprevious year, attributabletotheyear’sdrawdowns(8.8million Amounting to119.2millioneuros asofDecember 31,2011(122.3millioneuros asofDecember31,2010),theitem F loac nle M oat SMEetiiyTotal Electricity ASEM Loyalty IMA Allowanceinlieu TFR n iia eeisbnsdiscount bonus and similarbenefits 11.00PoiinInterest Drawdowns and Provision 31.12.2010 otothermovements cost .%4.1% 4.1% 2011 31.12.2011 2010

98 Sustainability Report 2011 EC1 TERNA GROUP–VALUE ADDEDSTATEMENT Terna’s economicimpact Value added the extraordinary saletransactionoftheBraziliancompanies thatcharacterizedthe2009results. adopted bytheParent Company, asestablishedinthe2010-2014StrategicPlan,thatwasdefinedtakingintoaccount considering thestrongly negativeimpactonthe2011results oftheso-calledRobinHoodTax andthedividendpolicy During thethree-year period,theallocationstoreserves decreased (from approximately 29%toapproximately 1%), As aproportion ofthetotalnetvalueadded,remuneration ofriskcapitalhasincreased asopposedto2009(+4.6%). would haveremained substantiallyunvaried(approximately +1%). registering highertaxesby153.8millioneuros, theincidenceofdirect andindirect taxesonthetotalnetvalueadded, to thetotalnetvalueadded(+13.8%compared tothe2009data).Withoutconsideringthisphenomenon,thatled August 13,2011(namedtheRobinHoodTax), determinedanincreased taxincidence,onaverageequalto25%,compared With reference todirect andindirect taxes,the“secondcorrective measure”, approved withLegislativeDecree no.138of average 25%)andborrowed capital(onaverage14%)wasessentiallystable. During the2009-2011three-year period,theincidenceontotalnetvalueaddedofremuneration ofemployees(on Group Terna Participaçõesthatwasfinalizedsameyear. with 2009wasinfluencedbythesignificantpositiveimpactderivingfrom theextraordinary saletransactionoftheBrazilian Also consideringthevalueaddedofdiscontinuedoperations,2010-2011variationis2.4%,whilecomparison operations. In the2009-2011period,valueaddedgeneratedbyGroup increased by25%withregard toitscontinuing niettxs61331660445,579,516 177,969,448 6,620,414 246,825,990 6,133,331 2,063,354 387,281,919 249,769,138 1,621,627 64,796,883 281,361,553 182,908,901 1,366,087,406 949,111,287 257,711,993 54,832,235 1,957,413 283,116,896 64,879,119 5,060,529 86,900,793 1,268,161,742 214,860,807 91,961,322 1,121,314,030 315,602,303 45,118,232 1,298,738,855 63,742,596 83,607,472 23,762,692 217,416,887 26,422,832 3,620,822 1,186,035,046 1,261,655,515 107,370,164 135,829,303 416,976,119 345,381,259 50,822,429 31,236,973 326,332,709 65,652,605 1,482,034,565 12,824,885 1,256,594,986 2,009,949 157,561,339 146,847,712 391,985,314 13,893,976 Indirect taxes 38,433,650 1,582,238,734 Direct taxes 1,458,271,873 211,003,906 10,367,402 156,814,420 112,703,809 A. Remunerationofpersonnel 12,050,835 6,577,183 Subordinate personnel:indirect remuneration 1,516,586,129 Subordinate personnel:direct remuneration 33,699,422 222,880,658 Non-subordinate personnel 1,467,598,892 Total net globalvalueadded 12,536,915 43,379,376 Value addedofdiscontinuedoperationsheldforsale 219,995,342 1,681,152,531 Net globalvalueadded 1,390,191,399 Depreciation tangibleassets 56,077,819 Amortization intangibleassets 1,736,581,471 1,346,812,023 1,589,180,046 Gross netstandard value added 77,407,493 12. Accessorybalance 44,323,144 1,533,102,227 - Accessorycosts 1,635,601,463 - Accessoryrevenue Standard gross valueadded 1,591,278,319 91,972,485 Total intermediatecost ofproduction 11. Otherexpense 9. Provisions forrisks 8. Leasingandrental expense 100,980,008 7. Services 6. Rawmaterials B. Costsofproduction Total production revenue 5. Non-standard production revenue (selfconstructedassets) Standard production revenue 4. Otherrevenue andproceed 1. Revenuefrom salesandservices A. Production value Values ineuro (1) iaca eid2011 Financial period iaca eid21 Financialperiod2009 Financial period2010 INVESTMENTS -TERNAGROUP 2011dividendsregard The theinterimdividenddistributedinNovember2011(160.8millioneuros) andthebalanceproposed b (2) sumsregarding The thecreation anddistributionofvalueaddedare takenfrom theConsolidatedFinancialStatements,which (1) TERNA GROUP–VALUE ADDEDSTATEMENT ilo uo 1298 ,6.0 0. 749 66 4. 263. 345.5 606 764.9 900.4 1,161.70 1,219.80 Million euros Terna had 3,493employees,ofwhich960inRomeatthecompany's headoffice, theNationalControl Center(CNC) ofthe Another aspecttoconsideris the 2,316,994.17 euros (3,652,564.86euros in2010and5,843,139.832009). In 2011,publiccontributions totheplantaccount–recorded directly toreduce thevalueof plants –amountedto areas theupgradingoftransmission gridcanbedecisiveforsocialandeconomicdevelopment. areas inwhichtheelectricity transmissionsystemislessefficient intermsofreliability andcontinuity, alsobecauseinsu investments, theCompanyalsopaysutmostattentionto theneedforserviceimprovement Italyandother inSouthern As decreed intheMinistryforEconomicDevelopment’sDirective ofJanuary21,2000,indeterminingpossibledevelopment continuing activities;itdoesnotincludeinvestmentsinnon-traditional activities,whichamountedto9.4millioneuros. As for2010,alsointhe2011financialperiodnumber in thetableregards onlytheTerna Group’s core investmentin last fewyears. It istherefore significantthatTerna’s investments(mostofwhichforgriddevelopment)haveconstantlyincreased inthe by Terna generatesonaverageamultipleofsavingsfortheusersgrid,asreflected ultimatelyontheendconsumer. the reduction oftheoverallsystemexpenseinorder tomaximizethecost/benefitratio.Consequently, everyeuro invested technical andeconomicpointsofviewbycomparingtheestimatedcostworkwithrelated benefitsintermsof In compliancewiththeregulatory framework,allofTerna’s investmentsingriddevelopmentare examinedfrom the most competitiveplants,withpositiveeffects oncompetitioninthegenerationsegmentandendprices. congestion improves theexploitationofgenerationresources forcoveringrequirements andmakesitpossibletousethe production, tohaveanadditionalpowerreserve andtobemore competitiveinenergy markets.Thereduction ofgrid bordering countriesmakesitpossibletoimportelectricity atpricesthatare more competitivethanthoseofdomestic The Company’sgriddevelopmentactivityisofparticularimportance. thus contributestoItaly’seconomicgrowth. all, theeconomicrepercussions oftheelectricityservice: Terna’s economicimpactdoesnotendwiththecreation anddistribution ofvalueadded.Onemustalsoconsider, Other economiceffects loain orsre 79630103785404,612,377 1,366,087,406 57,855,170 14,975 190,327,845 404,612,377 89,763,459 1,268,161,742 380,523,323 40,810,758 190,327,845 17,906,390 185,869 1,298,738,855 80,378,970 421,650,343 147,633,604 89,522,207 17,906,390 183,548,964 92,634,544 422,098,320 45,248 121,375,597 253,446,404 182,201,999 393,415,250 Total netglobalvalueadded E. RemunerationoftheCompany Allocations toreserves D. Remunerationofriskcapital Dividends C. Remunerationofborrowed capital Interest onbonds Interest onbankloans Short-term loanexpense B. Remunerationofgovernment Values ineuro on March 20,2012(261.3millioneuros). Group’s results andthetotalnetvalueadded. Income Statementrecords thecostsandrevenues regarding dispatchingasconstructioncostsandrevenues, withoutanyeffect on It shouldbenotedthatreferring to2009balances,inaccordance withIFRIC12–“ServiceConcessionArrangements”,asfrom Ja (respectively for+1.6millioneuros andfor-14.2millioneuros) withaconsequentvariationoftherelative allocationstore adopted bytheTerna Group forgoodwilltaxation.Particularlywiththisrestatement, current taxes(direct taxes)were modifie It shouldalsobenotedthatvariouscomparativeeconomicbalancesfor2010and2009were modifiedconsideringthechangedacco It shouldbenotedthatthe“Total NetGlobal Value Added”refers tothevalueaddedgeneratedfrom continuingactivities. accountingstandards,with theIFRS/IASinternational Specifically, theTerna Group accounting hasusedIFRS/IASinternational (2) 2011 creation ofemployment andtheexpenseforprocurement (1) 0020 0820 062005 2006 2007 2008 2009 2010 iaca eid2011 Financial period Terna ensures overtimeaserviceofgeneralinterest and 2,9,2 2,5,4 380,523,323 421,650,343 422,098,320 The developmentofinterconnections between iaca eid21 Financialperiod2009 Financial period2010 . AsofDecember31,2011 serves fortherespective years, were prepared incompliance y theBoard ofDirectors standards since2005. d for2010and2009 nuary 1,2010,the , respectively, the unting model first of ch 5 EC4 EC9 99 Economic responsibility 100 Sustainability Report 2011 EC6 PURCHASES FROMLOCALANDFOREIGNSUPPLIERS(PERCENTAGE OFTOTAL PROCUREMENT) oeg upir 1 99 6 94 9 91 Foreign suppliers Local suppliers the artisticandculturalfields,are describedinthesection entitled“Communityinitiatives”,page179. Other economicimpactsconnectedwiththeresources thatTerna dedicatestothesupportofcharitableinitiativesandin equipment andHVcablesbynewAsianoperators. (6%). Thisincrease ismainlyowedtotheassignmentsmade through European tendersforthesupplyofarmored station The share ofexpenditures withforeign suppliersisequalto9%ofthetotal,increasing compared totheprevious year activities): The followingtablebreaks downTerna’s totalprocurement expenditure intheperiod2009-2011(includingnon-traditional groups suchasABB,SiemensandPrysmian,whichare predominant worldwideinthespecificmarketsconcerned. significant share ofthesumspentonlocalpurchases actuallyregards significantindustri Italianbranchesofinternationally tenders. Italiancompaniesconstitutealarge majorityofthosethatapply andqualify. However, itshouldbenotedthata Terna S.p.A.makesmostofitspurchases from companiesthatare qualifiedpursuanttoEUdirectives orthrough EU-wide heavy andbulkysupplies. electricity system.Furthermore, supplierslocatednearbyensure greater competitivecostsregarding thetransportationof basis oftheirlocation,andisduetotheneedforfastmaintenanceworkonplantsensure theutmostsecurityof The predominance ofItaliansuppliersdoesnotconflictwiththeGroup’s policy, whichexcludesselectingsuppliersonthe euros. Mostofthesewere purchased from Italiansuppliers,althoughtheshare offoreign suppliersisgrowing. In 2011,the by Through theconstructionandmaintenanceofpowerlines,in2011,Terna indirectly determinedtheemploymentoflabor Centers (CR),and3Remote-Control Centers,whichhaveoffices throughout thecountry. Cagliari –underwhich32LineOperatingGroups (GOL)and32StationOperatingGroups (GOS) work–8Distribution distributed throughout Italyatthe7otherlocaloperatingareas ofTurin, Milan,Padua,Florence, Naples,Palermo, and transmission gridandRome’sTransmission OperatingArea (AOT).Theotheremployees(nearly2,500)were uniformly 1 Data regarding Purchase percentages madewiththeAssociazioniTemporanee diImprese (ATI) (Temporary BusinessAssociations) (1) contractors andsubcontractorstotalingtheequivalentof2,076full-timeemployees was reclassified amongItalianandforeign suppliersaccording tothenationalityofpurchasing agent. economic valueofTerna’s procurement of services,supplies,andworkswasequaltonearly1.2billion 2011 (1) . 002009 2010 , previously published, al Relations withshareholders the European reference sector(DJStoxxUtilities+2%). In thefirstquarterof2012,Terna recorded ariseof16%,definitelyout-performingboththemarket(FTSE-MIB+6%)and performance ofFTSE-MIBequalto45.9%. From itslisting(June23,2004)totheendof2011,Terna’s shares hadanappreciation of53.2%,compared tothe negative equivalent toapproximately 10millionshares traded,decreasing withrespect tolastyear. better thanthatoftheItalianBlueChips(Terna -17.6%vsFTSE-MIB-25.2%).Theshare’s averagedailyvolumewas the electricitytransmissionsector),defensivenature ofTerna’s shares allowedregistering aperformancethatwas In thiscontextanddespitethenegativeimpactofincreased taxesinAugust2011(extendingtheRobinHoodTax to investors andincreasing thevolatilityofexchanges. andcontributedtocreatingcalled forneweconomicstimulusplansonthepartofgovernments furtherinstabilityamong characterized byaweakeconomicrecovery andbyhighunemploymentrates.Thelastingcrisisofthesovereign debt In 2011,theEuropean stockmarketsrecorded strong negativetrends owingtotheworseningofeconomicsituation, Share performance TERNA’S SHAREPERFORMANCEANDFTSEMIBDJSTOXX600UTILITIESINDEX Volumes (millions) Source: Bloomberg. DataasofMarch, 302012 100 10 20 30 40 50 60 70 80 90 oue Tra TEMBDJSTOXX600Utilities FTSEMIB Terna Volumes 0 a.1 e.1 a.1 Apr. Mar. 11 Feb.11 Jan. 11 1May11 11 June 11 uy1 Aug.11 July 11 Sept. 11 c.1 o.1 e.1 a.1 e.1 Mar. 12 Feb.12 Jan.12 Dec.11 Nov. 11 Oct. 11 1.60 1.80 2.00 2.20 2.40 2.60 2.80 3.00 3.20 3.40 3.60 3.80 Price 101 Economic responsibility

DIVIDENDS DISTRIBUTEDBYTERNAS.P.A. iiedblne21 01Jn 0 ue2 0.13 0.12 0.08 June23 0.0988 0.07 0.095 June24 0.087 June25 November25 June20 0.0592 0.080 June26 0.056 November26 June21 November22 0.070 June21 0.053 November27 2011 June22 2010 November23 June22 0.050 November22 2010 June23 0.045 2009 November24 May26 November23 2009 June18 November19 2008 November24 2008 June19 October21 2007 November20 May23 2007 November21 2006 October18 2006 2005 2005 Dividend balance2010 2004 Interim dividend2010 Dividend balance2009 Interim dividend2009 Dividend balance2008 Interim dividend2008 Dividend balance2007 Interim dividend2007 Dividend balance2006 Interim dividend2006 Dividend balance2005 Interim dividend2005 Dividend balance2004 Interim dividend2004 nei iied21 01Nvme 1 oebr2 0.08 November24 November21 2011 Interim dividend2011 to over11%. in theshareholder register (compared to32in2005)andtheirweighttheshare capitalhasincreased from 2%in2005 Socially responsible institutionalinvestorshavebecomeincreasingly significant.95suchinstitutionsare indeedpresent with NorthAmericanonesbeingthemostnumerous (over18%ofthetotal). time horizonandnearly115,000individualinvestors.Foreign institutionalinvestorsare locatedin39different countries, shareholder baseovertheyears.Thisshareholder basenowincludesmore than470fundswithamedium-longinvestment Terna’s foritsshareholders concern hasenabledtheCompanytocreate diversified asolid,enduring,andinternationally Terna’s foritsshareholders concern Blue Chipsthatintheperiodlost27.4%. Since listingtotheendof2011,TSRreached 140.6%,innetcounter-trend compared totheaveragereturn ofItalian MIB -22%). In termsoftotalshareholder return, in2011,Terna over-performed theindexofItalianBlueChips(Terna -11.4%vs.FTSE- paid bytheCompanyasofex-dividenddaterelated coupon. who boughtTerna’s shares onacertaindateandsoldthemanotherdate.Thiscalculationconsidersallthedividends dividends pershare paidinthesameperiod.ThecalculationofTSRthusshowsannualratereturn foraninvestor which iscalculatedbyaddingtheincrease inthepriceofshares, inagivenperiodoftime,andtheeffect ofthe The mostcompletemeasure ofthevaluecreated byacompanyforitsshareholders istheTSR(Total Shareholder Return), Total Shareholder Return Total 100% o hc tes11.3% 6.7% 4.8% 11.5% 27.8% 29.85% ofwhichOthers ofwhichEurope (excl.UK) 8% ofwhichUsa/Canada ofwhichUK ofwhichInstitutionalInvestors ofwhichRetail ofwhichCdP TERNA’S SHAREHOLDERBASEACCORDINGTOGEOGRAPHICAL AREA (1) Terna hasadoptedapolicyproviding forthepaymentofdividendstwiceayear. Foreign institutionalinvestors Italian shareholders (1) Year Ex-dividend date Payment Dividend (euro) Dividend Payment Ex-dividenddate Year 65.6% 34.4% 103 Economic responsibility 104 Sustainability Report 2011 HR2 Relations withsuppliers for inclusionintheregister ofsuppliersforcompaniesthatbelong totheproduct categoriessubjecttoqualification. Scrupulous managementoftheethical,social,andenvironmental aspectsincompliancewithTerna’s policiesisacondition tenders heldbyTerna fortheirrespective product categories. supplier qualificationsystem transmission, telecommunicationsandInformationTechnology. Onlycompaniesconsidered suitableonthebasisof The mostimportantareas forTerna’s core businessare supplies,contractworkandservicesregarding electricity “Sustainability incriteriaforawarding tenders”page106). During 2011,thefocusonsustainabilitywasexpressed alsoinattributing technicalpointsforawarding tenders(seebox in theterminationofcontract. now includeclausestoensure theutmostprotection ofthepersonnelusedbycontractors,andfailure todosowillresult criterion inselectingitscontractors.Aspartoftherevision ofthecontractualdocumentationcarriedoutin2010,contracts substantiated procedures adoptedfortheprotection oftheenvironment andofthe health andsafetyofworkersasa certification asaguaranteeofanefficient corporatemanagementandorganizational system.Terna alsorequires With regard totenders,oneofthecriteriaprovided forintheselectionofsuppliersisUNIENISO9001quality National Transmission Grid(NTG),implementingtheMemorandumofUnderstandingsignedwithFinancePolice. infiltration through contractors,hires, supplies,orotherkindsofservicesfortheconstructioninfrastructures ofth the Companywithdetailedinformationregarding allitssub-contr Furthermore, asof2010,Terna introduced initsprocurement contractsaspecificclausethatobligessupplierstoprovide the principlesofhonesty, transparency, andcommittingthemtoavoidingconductthatcouldlimitcompetition. andfairness Since 2008Terna hasrequired supplierstosignaspecific“IntegrityAgreement” obligingthemtobasetheirconduct of Ethicsandits231Organizational Model(seealsopage41). In general,allprocurement contractsincludeclausesregarding thesupplier’scommitmenttocomplywithTerna’s Code social, andenvironmental aspects of qualityandsecurityrequired isalwaysintegratedwithalsocheckingtherequirements ofsupplierswithregard to and theutmosttransparency totheparticipatingcompanies.Theobjectiveofpurchasing atthelowestcostfor thelevel price asequals.Procurement isnormallycarriedoutonthebasisofoutcome standards, respect forhumanrightsandorganizational andprofessional solidity, are welcomedtocompeteonqualityand contracted in2011).Suppliersthatsatisfyconditionsofnon-involvementillegalactivities,compliancewithsafety As statedinitsCodeofEthics,Terna considersasprioritiestransparency initsrelations andfairness withsuppliers(2,314 are includedintheregister ofqualifiedcompaniesandare allowedtotakepartinthe . acts, withtheobjectiveofpreventing theriskofcriminal tenders that ensure equalopportunity ethical, e PROCUREMENT ANDSUPPLIERS 3 Onlyorders withamountsofover 500,000euros. (3) of theTop Chairmanwithrecognized Managementandanindependentexternal legalandtechnicalexpertise. 2 Consideringalso the qualifiedcompaniesthatare associated inconsortiums,2011thetotalcompaniesqualifiedforentry (2) isthepercentage This onamountsawarded excludingnon-traditionalactivities. (1) 749 No. ofmonitoring % purchases from qualifiedsuppliers 41 Supplier categoriessubjecttoqualification Companies qualifiedforentryinsupplierregister Qualification Procedures adoptedforawarding contracts No. ofsuppliersundercontract2,314 infliction ofsanctions–isentrustedtoTerna’s The entire companyqualificationprocess –from theinitialqualificationtomonitoringofactualconductand noncompliance, in2011,2supplierswere temporarilysuspendedwhilenonewere cancelledfrom thesupplierregister. suspended from thesupplierregister. Inthemostseriouscases,cancellationisprovided for. Followingananalysisoftheir In theeventtheirconductisnotincompliancewithqualificationrequirements, ortemporarily suppliersmaybewarned sectors andqualifiedbusinesses,aswellofthemonitoringconducted. In linewiththeobjectiveofcontinuouslyimproving qualification, thelastthree yearsmarkedaconsistentincrease ofthe special hazardous andnon-hazardous wastesproduced byTerna. and includedinthesupplierregister. Thisactivityregards collecting,transporting, storing,recovering anddisposingof named “ During 2011,incompliancewiththelawsonwastetrackingsystem–SISTRIanewmerchandise sectorwascreated Operating Areas. During2011,theCompanymonitored 749supplierperformances. performances monthly, enablingTerna topromptly takeactionanddisseminatetheinformationrecorded amongits by theengineerswholocallysuperviseconstructionsitesofqualifiedcompaniesare usedtoanalyzethelatter’s ones,ornewsreportedCompany’s departments,external bythemedia.Inparticular, thevendorratinginfosheetswritten Such monitoringincludestheuseofITsystemstocontinuouslyscreen informationsuchas,forexample,reports bythe the qualificationisvalid. The purposeofthemonitoringistoascertainwhetherrequirements are maintainedthroughout thethree yearsinwhich existenceofsubstantiatedprocedures, the adoptedfortheprotection oftheenvironment andofthesafetyhealth • applicationoflawsregarding the environmental protection andoccupationalsafety; • applicationofconditionsregarding the rulesandwagesthatare notlowerthanthoseprovided forbythecollective- • Among otherthings,thequalificationrequirements include: policy asexpressed intheCompany’sCodeofEthics. organizational, andeconomicsolidity, andtheirrespect fortheethical,social,andenvironmental requirements ofTerna’s The qualificationprocess enablesTerna toassesssupplierswithregard totheircompliancewiththelaw, theirtechnical, The qualificationprocess andthemonitoringofsuppliers ihu edr 1 14 tender Without 35 Non-European tenders 51 European tenders of workers. bargaining agreements applicableforthesamekindofwork; equal 372. Waste management ” thatdefinesthetechnical-qualityrequirements thatbusinessesmusthavetobequalified (3) 4 839 48 43 (2) Company QualificationCommittee (1) 5 6 180 260 353

2011 , whichconsistsofelevenmembers

215 12 9 263 593 5 58 53 3 27 35 2362,308 2,316 4 36 40 inthesupplierregister would 002009 2010 105 Economic responsibility 106

Sustainability Report 2011 EN18 Sustainability incriteriaforawarding tenders system allowsoptimizingthe use ofwaterwithoutwaste. guarantee theconstantmitigation effect duringtheyearandreduce maintenanceactivity. Theplannedirrigation typical vegetationbelonging tothelocalecosystemthatfavored theuseofevergreen shrubsandplantsto Even thechoiceof“greenery”, thatisthesecondnaturalelementonwhich project isinspired, included architectural choices,butwere alsoaimedatreducing buildingsitetimeframesas well asmaintenance. aspects. Specialattentionwasdevotedtoselectingmaterials anddetailsproposed, thatnotonlymetspecific the “completenessandanalyticalaspectsoflandscape impactanalysis”,inadditiontoaestheticandfunctional The project’s predominant requirements that were rewarded, were “theproject’s reduced landscapeimpact”and station inCapriwasofparticularinterest andallthemostprestigious architectural firmswere invitedtoparticipate. installing itsworksintheecosystem.Withinthiscontext, tenderforthearchitectural planningofthenewpower In areas havingaparticularlandscapevalue,Terna specificallyfocusesontheenvironmental impactandon Tender forarchitectural planninganddesigningofthenewpowerstationinCapri Certification, etc. documentation envelopethefollowingdocuments:ISO Certifications,FSCCertification,EcologicPanel points willbeawarded onthebasis,amongothers,ofdemonstrated“Ecosustainability”,includingintechnical Awarding isbasedonthemostcompetitive offer. thetenderforsupplyingfurniture andfurnishings Thetechnical andfurnishings Supplying furniture ecosustainable Awarding thetenderforsupplyingtickets andmealplansincludedamongtheaspectsrewarded implementing Ticket Tender -Mealplan 137 ofthechapterEnvironmental responsibility). neutralization ofthepollutionproduced from thetotalofvehicles (g/Km) regarding included thebestvehicleperformancebasedoneco-sustainability. Theaspectsrewarded includedcriteria As partofthetenderforpurchasing theoperationalvehiclefleet,criteriaforawarding thetechnicalpointsalso Vehicle FleetTender . Thecompaniesawarded thetenderwere alsorequested toprovide a Antipollution Approval Projects . (EURO 4/EURO5), Consumption –C(liters/100Km) included inthetender(seealsopage forestation certificatefortotal and Emissions –E(CO 2 probably more complex. The constructionsiteswere chosen with regard tothedurationofwork,consideringthatworklastslongeris transmission (seealso“Occupationalhealthandsafety”,page169). In 2011,Terna monitored 100sitesentrusted tocontractorsfortheconstructionoflinesandstationselectricity in interpreting thelawandincommunicatingduring safetytrainingforworkers. For companiesoperatingintheseareas, inadditiontotheactivities already described,there are provisions forassistance Monitoring hasenabledTerna toidentifytheareas thatare mostexposedwithregard totheissueofoccupationalsafety. certificationbythecompetentdoctorthatcontractor’semployeesare fitfortheirjobs. • periodicalcopyofthepaymentsocial-securityandothercontributions; a • copyofaninsurancepolicycoveringthird a partyliability, personalinjuries,anddamagetoproperty, includingthe • certificationthatallsocial-securityandothercontributionshavebeendulypaid; • declarationthatthecollective-bargaining a laboragreement isappliedtoallemployees; • Terna alsorequires: To reduce asmuchpossibletheriskofviolationshumanandlaborrightstodetriment contractoremployees appointmentofapersonincharge the ofHealth,Protection, andPrevention (“RSPP”),aheadofconstruction-sitesafety, • verificationoftheactualtrainingpersonnelthrough awebplatform–theQualifiedCompanyPersonnelproject – • forseveralspecificroles (e.g.workersassignedtotheinstallationandmaintenanceofoverheadlinescutting • sites,fortheconstructionofoverheadelectricitylines,certificationthatallworkers(mainlyblue-collarones)hav on • certificationthattheyknowItalian,soastoensure theiraccesstoinformationonconstructionsitesafety; • contractoremployees,suchas: concerning With theobjectiveoffurtherreducing therisksregarding contractwork,Terna requires additionalspecificcertifications measures toadoptisexcludedfrom thepricecompetitionforcontractaward. expert.Itshouldbeemphasizedthattheconsequentassessmentofcostsafety performed byanexternal employed bycontractorsandsubcontractorsforalltheworkdoneonconstructionsite.Thisriskanalysismustbe Italian lawrequires Terna toperformananalyticalassessmentoftherisksregarding thehealthandsafetyofworkers well astothestrictnessofregulations. rules regarding qualificationandsubsequentmanagement.ThisisduetoTerna’s particularlyscrupulousapproach, as laboronTerna’sConsidering theuseofexternal constructionsites(seepage118),contractworkissubjecttostricter Contract work contractor’s, fortheentire durationoftheworkand inanamountappropriate forthekindofworkperformed; a personincharge ofmanagingemergencies andhisorhersubstitute,anassigneddoctor. with thenamesofemployeesregistered bythecompanies; by comparingtheinformationprovided bytheschools authorized totrainpersonnelforworkintheelectricityindustry which records theactualtrainingofpersonnelcompaniesdoingcontractworkonTerna’s constructionsites specialized intheelectricityindustry; designed –according tothecontentrequired byTerna –incooperationwithSINCERT-certified trainingschools vegetation, foremen, andsafetyheads),certificationofspecifictrainingcourseslastingbetween2432hours environmental aspectsduringplantconstruction”,whichisattachedtoeachcontract; environmental protection measures asestablishedinthespecificoperatingprocedure called“Managementofthe in theConstructionSiteSafetyPlan(“PSC”)andOperating(“POS”)prepared byTerna, andthe examined andhavebeenappropriately instructedontheuseofpersonalprotective equipment,therisksestablished e EU18 EU16 HR2 LA4 107 Economic responsibility 108 Sustainability Report 2011 EU3 Relations withcompaniesusingtheelectricityservice RELATION WITHTERNAOFCOMPANIES OPERATING INTHEELECTRICITYINDUSTRY- NUMBEROFCOMPANIES Withdrawal dispatchingusers Withdrawal 91 Injection dispatchingusers(Producers andtraders) 20 Distributors directly connectedtotheNTG Taesadedcsoes nldn h igeByr 10 19 109 110 (Traders andendcustomers,includingtheSingleBuyer) Interruptible users (1) Beginningin2011thesealsoincludetheassigneesofinstant-withdrawal-reduction service. 4,362 MWofpower, and therelated negativeeconomicitemamountedtonearly650millioneuros onanannualbasis. insufficient. There were nearly170assigneesoftheinterruptibilityandinstant-load-reduction servicesin2011,withnearly operation ofthenationalelectricitysystemsecure intheeventresources procured outtobe onthemarketturned In 2011,Terna procured resources for progress ofpaperworktobemonitored, followingane-ticketinglogic. It includesafront office andabackoffice controlled withasingleinstrumentthatenablesprocesses tobetracedandthe stipulated fordispatching,themanagementofcontactsandviewingoperator’smaindata. is suppliedthrough thedatamanagedby Gaudìsystem(seefollowingbox)–connectionrequests totheNTG,contracts of accessforalltheservicesdedicatedtoelectricitycompanies,suchasmasterdatamanagement–sothatportal The mostimportantinteractionswithelectricitycompaniesare managedthrough MyTerna portal,whichisthesolechannel and in2011amountedtonearly2.4billioneuros. The economicitemsregarding imbalancesforwithdrawalusers,includingtheinvoicingofsystemcharges, are positive electricity injectedorwithdrawn. understood asthedifference betweentheplansuserspresented ontheelectricitymarketsandactualvalueof With theusersofbothinjectionandwithdrawaldispatching,Terna regulates theeconomicitemsregarding imbalances, are negativeandin2011amountedtonearly1.2 billion euros. The economicitemsregarding procurement onthedispatching servicemarket(“MSD”)andimbalancesforinjectionusers parameters, suchasvoltageandfrequency, are attheirappropriate levels. electricity system economic itemsregarding the In particular, withregard tothedispatching service,Terna regulates withtheusersofinjectiondispatchingservice technically andcommercially intheGridCode. Relations betweentheindustrycompaniesandTerna are mainlyregulated bytheindustryAuthoritiesandare defined • • • • categories: Terna mainlydealswithcompaniesoperatingintheelectricityindustryandbelongingtooneormore ofthefollowing Companies service alongitsgrid. distributor companiesandownersofproduction plants interruptible customers dispatching users technical provisions; owners ofgridsegments (1) 11 14 154 171 , thusmaintainingabalancebetweeninjectionsandwithdrawals,aswellensuringthatgrid , i.e.producers, endcustomers,orwholesalerswithwhichTerna regulates thedispatchingservice; , i.e.endcustomersofwithdrawalsthatgrantTerna therighttointerrupttheirload; , towhichTerna mustguaranteetherighttoconnectionincompliancewithregulatory and procurement oftheresources necessarytosafeguard thesecurityofnational the interruptibilityandinstant-load-reduction services , withwhichTerna regulates theelectricitytransmission 2011 1 19 19 8 77 86 002009 2010 aimed atmakingthe 134 106 Master dataofelectricityproduction plantsstarted 1 Significant production unitsare theproduction unitswithatotalproduction poweroftheassociatedgenerationgroups not (1) plants tothesystemservices. of activities,tothemasterdatavalidationprocess inorder tocreate transparent accessoftheelectricityproduction The variousbodiesthatoperateintheelectricitysystemwillbecalledtocontribute,eachoneaccording toitsfield the grid. to theproduction plantssystem:from theplant’s“physical”connectionuptoinjectionofenergy produced into aimed atimplementingacontrol dashboard capableofmonitoringthesequenceactivitiesinvolvingaccess With subsequentreleases scheduledduring2012,thesystem willbefurtherupdatedwithnewfunctionsprincipally Units Terna: CENSIMPforconductingacensusoftheplants,RUPrelative tothemasterdataofSignificantProduction Effective asofJanuary2011,Gaudìwascreated byintegrating three principalmasterdataarchives managedby with theobjectiveofavoidingduplicationinformationreports required fortheoperators. This centralizedplatformalsoorganizes theinformationflowsamong thevariousbodiesthatoperateinsector purposes, Terna fordispatchingactivitiespurposes,etc.). establish contactwiththeplant(i.e.,Terna orthedistributorsforconnectionpurposes,GSEanyincentive identifying theplantbyallbodiesthatoperateinelectricitysystemandthat,eachoneforitsownpurposes, of information.Inparticular, theGaudìsystemattributesacodetoeachproduction plantthatallowsuniquely and inprogress across thenationalterritory, independentlyofplantsize andtype,ensuringtheconstantupdate centralize withinthetransmissionsystemoperatormasterdataofallproduction initiativesimplemented transmitting allmasterandtechnicaldataoftheplantselectricityproduction units.Thepurposeisto The system,whosecreation wasplannedbyspecificprovisions issuedbytheElectricityandGasAuthority, allows In 2011,Terna wasinvolvedininitiatingandimplementingtheGaudìsystem(plantmasterdatamanagement). (1) and UPN6relative tothemasterdataofnon-relevant Production Units. lower than10MVA. 109 Economic responsibility Installing a dissuader for birds in flight “ALONG 171 KM OF 40 LINES CHARACTERIZED BY THE FREQUENT TRANSIT OF BIRDS, TERNA INSTALLED OVER 9,000 SPECIAL “DISSUADERS” WHICH, WITH THEIR ENCUMBRANCE AND THE NOISE MADE WHEN THEY ARE BLOWN BY THE WIND, MAKE THE LINES EASIER TO PERCEIVE BY THE BIRDS IN FLIGHT. ” 2011

Environmental responsibility 112 Sustainability Report 2011 lines aswellin-depthscientific examinationoftheinteractionsbetweenelectricitylines andbiodiversity. will allowguidelines–inaddition tomitigationinstruments–beestablishedfortheenvironmental integrationofelectric for emissions–whichtakestheformmainlyof Terna doesnotproduce electricity, therefore theemissionofgreenhouse gasesisnotafeature ofitsactivities.Ourconcern • emissionsofgreenhouse gases. • theemissionofelectricandmagneticfields; • specialwasteanditsdisposal; • theimpactoflinesonbiodiversity, withparticularregard tobirdlife; • thevisualimpactofstationsandlines; The following activities andcovers100%ofthetransmissiongrid(stationslines)offices. is embodiedinitsEnvironmental ManagementSystem, which is Terna’sAs farastheexistinglinesandtheirmanagementisconcerned, fortheenvironmental concern impactofitsactivities continuity, safety, andefficiency oftheelectricityservice. issues matchesTerna’s interest ininvestingthedevelopmentofgridandbroader interest ofsocietyinthe institutions, whichare alsoempowered toauthorizenewinfrastructures. Inthisway, theconsiderationofenvironmental relationship (e.g.,therelevant basedontrustwiththenationalgovernment ministriesandregulatory authorities) andlocal Respect fortheenvironment andlocalcommunitiesrepresents thecredentials withwhichTerna intendstoestablisha construction stage. environmental needsfrom theearlieststagesofplanningandtakerelated detailsincreasingly intoaccountuptothe consultation withlocalinstitutions to theenvironment andtheneedsoflocalcommunities.Thewayithaschosenforconstructionnewlinesis feature ofmanyindustrializedcountriesandcertainlyItaly–haveledTerna todevelopanapproach thatisveryattentive Increasing environmental awareness andwidespread localoppositiontotheconstructionofnewinfrastructure –atypical stations the useofnaturalresources ortheemissionofpollutingsubstancesasin electricity grid.Therefore, from theenvironmental pointofview, themost obviousimpactofthisactivityisnotsomuchin Terna’s businessconsistsinproviding theserviceoftransmittingelectricity, whichisperformedthrough thehighvoltage reliable, cost-effective, andenvironmentally-sustainable way. and localcommunitiesseeksinitsactivityappropriate solutionstoensure Italytheelectricityitneedsin themost Terna acknowledgestheimportanceofarightbalancebetweenenergy requirements andthesafeguard oftheenvironment Our approach SF As farasimprovement programs are Terna concerned, continuesitscommitmenttoreducing emissions through limiting with regard toclimatechange, recognition oftheimportanceproblem andcommitment to actionsthatfosterthe • with regard tobiodiversity, commitmenttolimittheimpactofgrid,particularlyonbirdlife, andcarryoutmitigation • with regard tomagneticfields,strictcompliancewithregulations andattentiondevotedtothedevelopmentofscientific • relations in withsuppliers,requiring themtograduallyadapt tothestandards ofrespect fortheenvironment adopted • theconstruction,management,andmaintenance ofthegrid,adoptingprocedures in incompliancewithlawprovisions • theplanningofinvestmenttodevelopgrid,payingattention totheneedsexpressed in bystakeholders(especially • Among Terna’s maincommitmentsfortheenvironment, thefollowingshouldbenoted: to thegridforindustrycompanies. electricity systemefficient, adaptingthesystemtocountry’sproduction andconsumptionneeds,equalaccess other generalinterests thatTerna isobligedtoensure: thesafetyandcontinuityofelectricityservice,keeping environmental impactevenbeyondthelimitsimposedbylaw wheneverthisdoesnotcompromise thedefenseof Terna hasestablishedanEnvironmental Policy indirect effects onemissionreduction bythenationalelectricitysystem. climate change.Itshouldtherefore benotedthattheinvestmentincludedinGridDevelopmentPlancanhavepositive well ascontrolling theemissionsofcorporatevehiclefleet –isthustheresult ofageneralsensitivitytotheproblem o reduction ofgreenhouse gases. actions, includingprograms agreed onwithenvironmentalist associations; studies, whilecontributingtothecorrect presentation andunderstandingofthephenomenon; by Terna; and, wheneverpossible,reducing theenvironmental impact; local institutionsandenvironmentalist associations)andseekingagreement onsolutions; 6 leakage andenergy efficiency, whilethecontinuationofcooperativeprojects withleading environmentalist associations and intheirinteractionwiththesurrounding naturalandanthropic environment. significant environmental issues (Regions, Provinces, Municipalities,parkboards, etc.)inorder toconsider controlling leakageofSF should benotedinparticular: , whichexpresses itscommitmenttopracticeslimitandreduce its ISO 14001 6 , agasthatispresent instationequipment,as certified. Thecertificationregards allofTerna’s physical presence ofelectricitylinesand ity f process, when theplanningofinfrastructure was already attheexecution stage.Environmental considerations were that hadbeenfolloweduntil then, discussionwithlocalinstitutionsstartedonlyatthe beginningoftheauthorization Since 2002,Terna created a completely newscenarioregarding theconstruction ofinfrastructures inItaly. Inthepractice to updateportionsoftheexistinggrid. previously ineffect withregard totheinteractionbetweenelectricitylinesandsurrounding territory, determinetheneed years ago.Thegradualurbanizationofruralareas andtheadoptionofnewregulations thatchangetheparameters The necessityofworkingontheexistinglinesisusuallyconnected withthefactthatmanylineswere constructed tensof potential ofthecountry’senvironmental andculturalheritagetobepreserved. approach basedondialogueandconsultationwithlocalinstitutionstoseeksolutionsthatallowthetreasures and complexity ofplanningandthedifficulty inimplementingthe projects. Inresponse totheseproblems, Terna adoptedan population densityofmanypartsItalyandtheartistic, cultural,andlandscapevalueofmanyothersincreases the connected withtheconstructionofnewpowerlinesfocuses ontheterritorycrossed bythelineroute. Furthermore, the box, page115).Thedevelopmentofthegridaimsatgeneral interests ofsociety, however, theenvironmental impact Grid DevelopmentPlan,whicheveryyearfollowsacomplex authorizationprocess (seethe“Integrated-planningProcess” the economicgrowth ofItalyorspecificareas ofthecountry. Terna includesthenecessarynewbuildingactivityinits congestion andtheriskofoverload,aswellincreased production andconsumptionofelectricitythataccompanies The constructionofnewlinesmeetsthetechnicalrequirements oftheelectricitysystem,suchaselimination Lines andlocalcommunities the Environmental Managementsystem. Monitoring oftheenvironmental indicatorsisentrustedtoapermanentgroup ofexpertsworkingwithintheframework of RelationsandCommunication.TheCorporateSocialResponsibilityUnitactsasthesecretaryand External oftheCommittee. of theintegratedQuality-Environment-Safety managementsystem),InstitutionalAffairs, Organization andHumanResources, propose tothetopmanagement.Theparticipatingdepartmentsare: OperationsItaly, CorporateSecurity(whichisincharge an Environment andSustainabilitySteeringCommitteetocoordinate activitiesandestablishprioritiesobjectivesto In organizational terms,environmental responsibility isdividedamongseveralcorporatedepartments,whichparticipatein Consultation at worksites. and theanalysisofreference regulations inorder toallowthestandardization ofpracticesandthemanagementactivities proper managementofenvironmental inparticular, safetyatworksites.Thecomparisonconcerns, wastemanagement group wasestablishedbasedontheneedtocompare andshare experiences,problems andtherelevant proposals for on environmental mattersconnectedspecificallytothe construction, maintenanceanddemolitionofpowerlines;thework Finally, in2011,Terna, togetherwithANIE(NationalFederation ofElectricityCompanies)startedupatechnicalworkgroup the limitsallowablebylawandmunicipalregulations. resolved (e.g.byreplacing oldequipment,byerecting anti-noisebarriers)sothatthelevelofnoisecanbebrought within produced byitstransformingstations.Thecriticalitiesuncovered havebeendealtwithandare intheprocess ofbeing In the2010-2011two-yearperiod,withsupportofaccredited bodies,Terna external completedasurveyonnoise of oilcollectiontanksinusewasformed. Following monitoring,aworkgroup charged withproviding Guidelinesfor theproper maintenanceofthedifferent types was completedin2011. In order toavoidtheriskofpotentialspills,anassessmenttypesoilcollectiontanksinstalledatTerna’s plants area of450square meters)were promptly removed mechanicallytoavoidpossibleenvironmental damage. (Florence province) causedoiltospillonthesurrounding land.Followingthisevent,400cubicmetersofearth(from an In 2011,asin2009,nosignificantspillsofpollutingliquidswere recorded. In2010afire inatransformerCalenzano reported inthesectiondedicatedtoindicatortablesand“Disputeslitigation”section. non-compliance withlawsorregulations regarding theenvironment. Furtherinformationonenvironmental litigationis In thethree-year period2009-2011there were nofinaladministrativeorjudicialpenalties,pecuniarynon-pecuniary, for Compliance withlawsandregulations EN26 EU19 SO10 EN23 EN30 EN28 EC8 S01 S09 113 Environmental responsibility 114 Sustainability Report 2011 • • • cooperation amongtheparties,andiscurrently organized intodifferent levelsofdiscussion,analysis,andassessment: Over theyears,modelbasedonSEAhasundergone significantchanges,according toacomplexandfruitful of theSEAmethodwith18Regions,includingAutonomousProvince ofTrento. formally establishtheprogress ofthemutualcommitments.Since2002,Terna hassignedagreements ontheapplication the gradualsigningofmemorandumsunderstandingandplanningagreements withregional to andlocalgovernments oftheregionsgovernments andtheautonomousprovinces participated.Thegroup’s workhasbeensupplementedby the Environment, theMinistryofCulturalHeritageandActivities,forEconomicDevelopment, by Terna withanationalworkgroup (the“SEA”NegotiatingGroup) formallyestablishedin2005,whichtheMinistry of to constructatransparent, documented,repeatable, andparticipatoryplanningprocess wasagreed onanddeveloped less compleximplicationsasfarrelations withlocalinstitutionsare ThechoiceoffollowingtheSEAmethod concerned. was tobeadoptedbyItalianlawonlymanyyearslater–in2007,withLegislativeDecree 152/2006–andwithconsiderably (SEA) ofenvironment integrationintheplanningprocess. AtthattimethesubjectofECDirective 2001/42/EC,theSEA the voluntarydevelopmentofamethodrelating tolocalstakeholdersbasedontheStrategicEnvironmental Assessment of specificagreements betweenTerna Ultimately, andtheabove-mentionedgovernments. Terna’s approach hasentailed Terna decidedtocarryout plan were required andtheworksuffered delays.Insomecases,itwasevenimpossibletofindafeasiblesolution. opposition bythelocalinstitutionsinvolvedandrelated population,withtheresult thatoftenchangesintheoriginal introduced atthatstagethrough theEnvironmental ImpactAssessment(EIA)procedure. Thisapproach ledtostrong and theRegionsagreed onasystem ofcriteriabasedonfourclasses: criteria thatexpress itsgreater orlessersuitabilitytohostthedifferent kinds ofwork.Working withintheSEAgroup, Tern The area inquestion,withitssoil useclassificationsanditsrelative protection restrictions, ischaracterized according to least impactconsistsinagreeing onthe As partofconsultationwithlocal institutions,oneofthemosteffective withthe instrumentsforselecting thealternatives and aimedatfindingthe institutions atdifferent levels(regions, provinces, andmunicipalities),basedonshared criteriaforcharacterizingtheterr and sustainabilityoftheplannedworks.Themethodusedpr theterritoryreducesthat concern oppositionduringtheauthorizationphaseforinfrastructures, andfacilitatesacceptanc construction ofnewlinesandstations–includedinitsDevelopmentPlan.Participationlocalinstitutionsdefiningwork Criteria ofterritorialcharacterization 9. 8. 7. 6. 5. 4. 3. 2. 1. the project’s route canbedeveloped. as feasibilityrangesfortheroute (1:10.000scale),i.e.segmentsoflanduptoseveralhundreds ofmetersinsidewhich at theexecutionlevel are stripsoflanduptoseveralkilometersthatare suitable forhostingtheplannedwork(1:50.000scale); at thestructurallevel to theproblems identified–are presented (1:250.000scale); at thestrategiclevel Agreements signed Sardinia Campania Lazio Tuscany Liguria Piedmont Lombardy Valle d’Aosta Autonomous Province ofTrento , thereasons fordevelopingtheNationalTransmission Grid–i.e.,thenewworktoplaninresponse , possible alternative locationsfortheproject, possiblealternative infrastructure are identifiedinsidethechosencorridor optimal locationforthenewplants , theprocess shared withtheterritoryoffindingpossiblelocations forthecorridorsbegins.These the discussionwithlocalinstitutionsbefore thestrategicplanningstageofwork ERPA locationcriteria (Exclusion,Repulsion,Problems, andAttraction) 2 4 9 5 3 1 10 6 12 ovides for early consultation with local governments and other and ovides forearlyconsultationwithlocalgovernments 7 11 . Thesolutionsreached inthiswayare ratifiedbythesigning 13 18 14 8 16 17 15 18. 17. 16. 15. 14. 13. 12. 11. 10. Sicily Calabria Basilicata Apulia Molise Abruzzo Umbria Marche Emilia-Romagna – the . itory a e s the layoutofterritorythattheywillaffect. possibilities –intermsof“corridors”sustainablefordevelopmentworkstheNTGandconsistentcompatible with integrally, andcanbesuitablyredistributed withinthedifferent ERPA criteriaclassesinorder toidentifylocalized different typesofsoiluseandprotection restrictions (territorial,naturalistic,cultural,landscape,etc.)canbeconsidere By usingGIS(GeographicInformationSystem)technology, theabove-mentioned alllayersofinformationconcerning capacity –ismore sustainablethaninnewareas thatdonothaveanylineinfrastructure. such asinfrastructure andenergy corridors,inwhichthelocationofanewline–ifitiscompatiblewitharea’s load The Attractioncriterionincludesareas withgoodlandscapecompatibilityandareas thatalready hostlineinfrastructure, if there are thatare noalternatives more environmentally compatible. natural areas, withregard towhichspecificagreements are made,andareas thatare tobetakenintoconsiderationonly The Repulsioncriterionincludesareas protected thatmaybetakenintoconsiderationonlyintheabsenceofalternatives; but whichare restricted byspecificagreements beforehand betweenTerna andthebodiesinvolved. recognizes astobeexcludedabsolutely, suchasairportsandmilitaryzones,areas thelawdoesnotdirectly exclude, Every classoftheERPA criteria includesseveralcategories.Currently, theExclusioncriterionincludesareas thelaw • • • • Attraction: that therefore require furtherterritorialanalysis. Problems: even lessenvironmentally compatible,andinanycasecompliancewiththeprescriptive frameworkagreed on. Repulsion: Exclusion: COEXISTENCE ANDINTEGRATION OFDIFFERENTDECISION-MAKINGLEVELS The integratedplanningprocess and thePreliminary Report (PR),whichdefinestheorientationorscreening stage. formulation, consultation,approval, andmonitoringoftheDevelopmentPlan,related Environmental Report described, andassessed.The different stagesintowhichthenationallevelisorganized are those of orientation, in whichtheeffects thattheimplementation oftheplanorprogram couldhaveontheenvironment are identified, similar), whichappliestothe Development Planandprovides forthepreparation ofanEnvironmental Report(ER) The nationallevelistheformalofSEAprocedure asestablishedbylaw(LegislativeDecree 152/2006and dialogue withlocalinstitutionsintheplanningitself. NTG developmentplanning,sinceitconcretely incorporatestheenvironmental considerationsthatarisefrom its with theactivitiesofconsultation.Terna believes thatinthiswayitcancontributetoensuringthesustainabilityof “Integrated planning”meansthattheactivitiesofplanning electricitysystemare engagedinaconstantdialogue harmonized itwiththeprocedure required bytheregulations inforce (“nationallevel”). This process promotes theconsultationapproach developedovertheyearsbyTerna (“regional level”),whichhas The diagramshowstheintegratedplanningprocess Terna developedinagreement withthenational“SEAGroup”. NATIONAL REGIONAL LEVEL LEVEL areas inwhichthelandscapeisproblematic foranobjectivereason documentedbythebodiesinvolvedand areas inwhichanykindofconstructionisexcluded. areas tofavorwheneverpossibleaftercheckingthearea’s loadcapacity. areas where itispreferable nottoconstruct,unlessthere orthere isnoalternative are onlyonesthatare ORIENTATION MONITORING SCREENING CONSULTATION -SUSTAINABLE LOCATION SOLUTIONS FOR THEDEVELOPMENTPLANWORKS DECISION-MAKING FORMULATION CONSULTATION ASSESSMENT d SO1 115 Environmental responsibility 116

Sustainability Report 2011 EN26 solutions, whichare describedbelow. To reduce theimpactofelectricitylinesonlocalcommunitiesandenvironment, Terna canimplementaseriesof include changing thecorridor, whileatthesametimedismantling stretches nearclusters ofpopulation. on “Electricandmagneticfields: thelegallimits”),byforexample,usinghigherpylons. Enhancementworkmayalso Enhancement work avoiding theoccupationofnew portionsofland. construction ofanewline,upgrading hastheadvantageofgenerallyusingalready existing infrastructure corridors,thus occupy more space,asoccurswhen,forexample,a130kVlineis upgradedto220kV. However, withrespect tothe lines andtowerstoreplace theexisting ones.Thisworkmayentailthereplacement oftheold towerswithlarger onesthat Reclassification that are higherthanthoseofoverheadlines(normallyfivetotentimes). cables implyagreater impactintheconstructionsitestage,i.e.termsofroad systems,andentailconstructioncosts often donotadequatelyensure thesecurityofelectricitysystemandservicecontinuity. Furthermore, underground less reliable overtimethanoverheadlinesandtakemuchlongertorepair incaseofmalfunction.Forthisreason they construction ofnewlines.Underground cablesactuallyhaveanumber oftechnicalandeconomicdrawbacks.Theyare stretches oflines.Forthisreason, localinstitutionsoftenrequest underground cablesastheirfirstoptionforthe Laying cablesunderground by thedevelopmentofgrid. possible bytheconstructionofnewlinesrepresents themostsignificant contributioninfavoroftheenvironment entailed terms offreeing thelocalcommunitiesfrom thepresence ofelectricitylines.Thedemolitionstretches oflinemade provided forbytheDevelopmentPlan,infrastructure demolitiongreatly exceedsconstruction,withanetpositive effect in connected withthepresence ofinfrastructures inareas thatare beinggraduallyurbanized.Overall,inthe upgradingwork lines, becauseoftheremoval oftheoldlines.Especially inthevicinityofcities,upgradingrepresents asolutiontoproble When upgradingispossible,theconstructionofanewplantmayleadtoreduction ofthespaceoccupiedbyelectricity newgridcomponents,forexamplestations,toavoidhavingupgradesaturatedlines. integrating • eliminatingpartsofthegridthatare useless,followingtheconstruction ofnewinfrastructures representing anupgrade; • replacing plantswithmore advancedones,suchas,forexample,introducing new380kVconnectionstoreplace alarger • Upgrading workconsistsmainlyin: of somegridsegmentsandtheconstructionnewlines. Upgrading Measures onthegrid Reducing theenvironmental impact number oflower-voltage lines; occur betweenthecoordinated action,theauthorizedproject andtheactiontaken. implementation ofthePlan,onbasisspecificindicatorsdefinedforevaluatingvariations,ifany, thatcan From theSEAportalitispossibletomonitorviaweb, also from acartographicpointofview, theprogressive sustainability indexes. environmental, social,technicalandeconomicaspect,orinitswhole,utilizingevaluationindicatorsconcise Through thecartographicportal,moreover, onecanfollowthestructure ofthePlanonaregional basis,inthesole reference theSEAmonitoringofimplementationPlan. tomapping,butalsodataconcerning Through theSEAPortal( dedicated totheSEAprocedure oftheNTGDevelopmentPlan. To improve qualityandtransparency withitsstakeholders,in2011Terna created anewinteractivecorporateportal The SEAportal “SEA Group”). level, whichproceeds inanycaseaccording tothecriteriaandmethodsestablishedbynationallevel( above isthecoordination betweenthetwolevels,leavingappropriate decision-makingautonomytotheregional Plan (DP)orintherelated Environmental Report.Anessentialaspectoftheintegratedplanningprocess described Whenever agreements are reached withregional theyare andlocalgovernments recorded intheDevelopment most viableandsustainablesolutionsforthelocationofinfrastructure necessaryforthedevelopmentofNTG. consultation thatTerna hascarriedoutsince2002withregional toseekandagree andlocalgovernments onthe The regional levelrepresents theconcrete levelofthe“dialoguewithlocalinstitutions”,i.e.precautionary is complexwork,whichinvolvesseveralgridcomponentsatthesametimeandoftenincludesdismantling includes theupgradingofexistingelectricitylinestoahigher voltagethrough theconstructionofnew aims atreducing theexposure ofthelocalpopulationtomagneticfields(Seeinthis regard thebox http://portalevas.terna.it eliminates orreduces thenegativeimpactonlandscapethatistypicalofoverhead ) itispossibletoconsultnotonlytheEnvironmental Report,with ms The onlinethematicmini-siteonelectromagnetic fields(EMF) Electric andmagneticfields:thelegallimits more in-depth,withlinkstothesitesofWorld HealthOrganization and otherinstitutionsofreference, including • orfalse,aquiztotestone’sknowledge; true • electricitygridsandelectromagnetism, withdefinitions,graphicsandpictures whichclarifythecharacteristics • 10ThingstoKnow, aseriesofanswerstofrequently asked • electromagnetic fields,withgeneralinformation; • The sitehas5sections: and straightforward languageonelectromagnetic fields. The result isasitethatcombinesscientificaccuracywithdirect to create adedicatedsite. and expertiseonthesubject,companycreated aworkgroup of highculture andresearch inItalythatboaststhebestexperience in collaborationwithFondazioneUgoBordoni (FUB),the institute evaluate thetypeandqualityofinformationgiven.Subsequently, Terna benchmarksthesitesofothergridoperatorsinorder to information onasubjectthatoftenraisesunjustifiedalarmism. fields (EMF),whichprovides accurateandeasytounderstand expanded toincludeamini-sitededicatedelectromagnetic The “Sustainability”sectionofthewebsite Rio Principles.CompliancewiththelawinitsactivitiesimplicitlyentailsTerna’s adoptionofthesameprinciple. (3 microteslas) showthatItalianlegislationhasadoptedtheprecautionary principleexpressed byarticle15ofthe The valuesofthethree (10microteslas) parameters,andinparticularthevalue ofconcern andthequalityobjective objectives:inplanningnewelectricitylinesnearchildren’s quality playareas, homes,schools,andplaceswhere • asaprecautionary valuesofconcern: measure ofprotection from possiblelong-termeffects connected with • exposure limits:incaseofexposure toelectricandmagneticfieldsatafrequency of50Hzgeneratedby • (Minister’s Decree ofJuly8,2003)are thefollowing: The mainreference valuesfortheemissionofelectricandmagneticfieldscurrently provided forbythelaw the Bordoni Foundation. of theelectricandmagneticfieldsgeneratedbypowerlines; may haveonhealth,thelegislationinforce, andwhathappensintheproximity ofapowerline; theeffectsquestions aboutEMFs,inparticularconcerning they conditions ofoperation. at 3microteslas forthevalueofmagneticinduction,understoodasmeanover24hoursinnormal and magneticfieldsgeneratedbyelectricitylinesoperatingatafrequency of50Hz,thequalityobjectiveisset vicinity ofelectricitylinesandinstallationsalready present, inorder tograduallyminimizeexposure toelectric people stayatleastfourhoursadayandinplanningnewsettlementsareas suchastheaforesaid inthe microteslas, understoodastheaverageover24hoursinnormaloperatingconditions; and placeswhere peoplestayforatleastfourhoursaday, formagneticinductionis10 thevalueofconcern exposure tomagneticfieldsgeneratedatthegridfrequency (50Hz),inchildren’s playareas, homes,schools, as effective values; electricity lines,thelimitis100microteslas formagneticinductionand5kV/mtheelectricfield,understood www.terna.it has been 117 Environmental responsibility 118

Sustainability Report 2011 EU13 and excavatedland(alsoseetheparagraph“Relationswithsuppliers”,page104onsubject). management ofaccidents,minimizationairemissionsandnoise,vehicleuse,thecorrect managementofwaste aspects suchas:preventive measures againstcontaminationofgroundwater, thelimitation ofdamagetovegetation,the according totheprovisions oftheapplicableenvironmental lawsandprescriptions oftheISO:14001standard andinclude The obligationsregarding theenvironment thatapplytocontractworkentrustedothercompanieswere established minimizing environmental impactalongthesupplychain. The OperatingInstructions“Managementofenvironmental aspectsduringplantconstruction”provide instructionsfor the relevant regulations inforce, suchasavoidingspillsandthetemporarystorageofpollutingsubstances. Furthermore, particularcare mustbetakeninmanagingthewasteproduced ontheconstructionsiteincompliancewith with thegreatest impactduringtheperiodswhenspecies reproduce. construction musttakeintoaccountthevitalneedsofspeciesthatare potentiallyaffected andavoidtheactivities be environmentally restored toaconditionthatisasclosepossibletheprevious one.Schedulingthestagesof However, iftheareas regard naturalorsemi-naturalhabitats,aftertheworkhasbeencompleted, thearea must concerned vegetative value Company. Itprovides inparticularfor environmental aspectsduringplantconstruction”–toensure compliancewiththeenvironmental policyadoptedbythe For themanagementofconstructionsites,Terna hasequippeditselfwithOperatingInstructions–“Managementof These solutionsalsorepresent thebasisfordevelopingcriteriadesignofnewplants. naturalistic engineeringtechniques.(Forfurtherexamples,seethe“Managementofimpactsonbiodiversity”section.) the surrounding area With regard toexistingplants,mitigationmeasures aimat impact. Insomecases,Terna planstoplantmaskingtrees. Similar considerationsholdfortheconstructionofpowerstations.Stationshaveamuchgreater, albeitmore limited, famousarchitects atitsdisposal,amongotherthingsbyhavinginternationally designnewtowers. the alternatives compatibility andchoosingtowersthatblendinwellwiththeenvironment Terna canreduce theimpactofitselectricitylinesonlandscapebyidentifying Contract work Construction-site management Mitigation Measures adoptedintheplanningstage (agricultural areas) wheneverthisiscompatiblewiththetechnicalrequirements oftheplan. . Inparticular, Terna devisesmaskingsystemsforstationfences,upgradesthebuildings,anduses the constructionsiteandnewserviceroads tobelocatedinareas oflesser reducing theirvisibilityand/orimprove theirintegrationin . Inthelastfewyears,Terna hasincreased routes inareas withgoodlandscape the Sorgente-Rizziconi powerline The “Energy Bridge”betweenSicilyandCalabria: the constructionsitesthrough periodicinspectionsonthestatusof water, vegetationand fauna. as nottooccupynon-infrastructured areas. Furthermore, attentive environmental monitoringwillbecarriedouton “Antennamare-Curcuraci”, withanoverheadline;theexistingenergy corridor(ontheSicilianside)willbeused,so (Peloritana mainline),inthe province ofMessina,and,inparticular, theSiteofCommunityImportance, Moreover, inorder tosafeguard theterritory, care wastakenbyTerna toavoidcrossing the“DorsalePeloritana” constructed bylayingcablesinasinglephaseandreaching over370metersindepththeTyrrhenian Sea. The submarinepartofthework,onotherhand,which runs38kilometersundertheStraitofMessina,willbe sqm versus150–thetubularsupportsare totraditionalpylons. avalidalternative encumbrance ontheground, whichis25timeslowerthanthatofthetraditionaltruncatedpyramidpylons–5/6 built usingatotalof45newsupports.Duetotheircompactness, whichreduces visualimpactandhasaminimal a 20-kilometerlongoverheadconnectionfrom thestationinVillafranca tothestationinSorgente willbeentirely mechanical characteristicsthatmakethemparticularlysuitable forinstallationininaccessibleareas. Forexample, Scilla, useshugesinglepolepylons-hightechinnovative tubularsupportsbuilt,forthefirsttimeinEurope, with The overheadpartofthenewconnection,characterized by lineswitharecord singlespanof1.3kilometersin (87 inSicilyand85Calabria),significantlyreducing theimpactofelectricityinfrastructures ontheterritoryinvolved. The “Sorgente-Rizziconi” connectionwillallowtheremoval ofmore than170kilometersofobsoleteoverheadlines Environmental benefits electricity serviceintheentire area. The workwillalsoreduce theriskofblackoutsinSicilyand will increase thesafety, efficiency andqualityofthe Italy, thereby increasing competitionwhichwillresult inadecrease inenergy prices. Calabria, willallowforagreater useofenergy flowproduced bymore efficient production plantsinthesouthof in lesscompetition.Theconstructionofthepowerline,whichwillimprove theconnectionbetweenSicilyand difference isduetoanenergy generationcapabilityontheislandthatislessefficient thantherest ofItaly, resulting the annulmentofpricedifferential ofenergy inSicily, whichiscurrently 40%higherthantherest ofItaly. The The workwillallowforanoverallsavingscompaniesandfamiliesofnearly800millioneuros ayear, thanksto Safety andeconomicbenefits will bedemolished. and 170kilometersofexistingoverheadlines Reggio Calabria,67kilometerswillbeburied will bebuiltintheprovinces ofMessinaand environment: while 82kilometersofnewlines numerous benefits,alsointerms ofthe of Italy. Oncefinished,theworkwillyield is obsoleteandpoorlyconnectedwiththerest and safetyoftheSicilianelectricitygrid,which cable. Thepowerlinewillimprove thequality 38 kilometersofwhichconsistasubmarine 105kilometerlongconnection, a connection – currentthe world’slongest380kValternating The workwilljoinSicilyandCalabriathrough will becompletedbytheendof2013. Rizziconi (ReggioCalabria)station,andwhich Sorgente (Messina)powerstationandthe Bridge”, whichisbeingbuiltbetweenthe for thenew380kVpowerline,“Energy presented theproject andtheworksunderway Prestigiacomo, MinisterofEnvironment, Cattaneo, CEO,inthepresence ofStefania In June2011,LuigiRoth,Chairman,andFlavio 119 Environmental responsibility 120

Sustainability Report 2011 EN26 EN12 EN26 EN11 presence ofprotected areas, reserves andparks. which are especiallyimportantinItaly, abridgebetweenEurope andAfrica–thelocationofwetlandsinarea, andthe the frequency withwhichbirds flyinthevicinity. Theimportantfactorsinthisregard are theroutes ofmigratorybird – voltage linescanentailtheriskofcollision.Theactualoccurrence ofcollisionsdependsonthedensitybirdlife and low- andmedium-voltagelines,whichcanelectrocute birds –especiallylarge ones –thatcross theirroute. However, high- electrocution Terna’s shouldnotconcern lines,sinceitisconnectedwiththenarrow spacebetweenthetypicalwires of On theotherhand,lineshavepotentiallynegativeeffects onbiodiversity, thatregard birds inparticular. Theriskof lines andtheirtowersasbothpostsforobservingthesurrounding area andstructures fornesting. with concentrationsofpredators oftherodents, i.e.birds ofprey. Birds, especiallyrapaciousones,commonlyuseelectricity which wildrodents findshelter, sincetheirdensystemsare notperiodicallydestroyed byplowing.Theyare alsoplaces agriculture, withitslandtransformationanduse.Theseare placeswhere spontaneousgrassesandbramblesflourishin Tower bases–especiallythelarger onesthatsupporthigh-voltagelines–are theonlyzonesspared from intensive areas orextensiveareas ofgrainmonoculture, thetowersandtheirbasesrepresent “islands”ofconcentratedbiodiversity. can beafactorofgrowth forbiodiversity Once thelinehasbeenconstructed,itatwo-foldrelationship withbiodiversity. Ontheonehand, if ittakesplaceinthevicinityoforinsideprotected areas. of theearth,andremoval ofleft-overmaterials.Theconstructionnewlinesandstationsrequires specialattention is connectedwiththeactivitiesonworksite: construction ofnewlinesandtheoperationexistingones. with thesurrounding naturalenvironment anditsimpactonbiodiversitytakedifferent characteristicsduringthe Terna’s plantsare disseminatedthroughout Italyinagridthatextendsfornearly57,000kilometers.The grid’srelation Biodiversity purpose ofapplyingtheSEA to theNTGDevelopmentPlan. database withdatafrom ministries andtheRegions.Thesedatawere acquired through data-exchangeprotocols forthe the extensionofgridalloverItaly, themaininstrumentforidentifyingcriticalstretches oflineis acompleteterr negative impactbyTerna’s plantsonbirdlife, theinteractionbetweenlinesandsuchareas isconstantlymonitored. Given Considering theimportanceofproximity ofprotected areas orinanycaseofnaturalinterest areas fortheriskofa Lines inprotected areas A radarformigratorybirds production (windandsolar)ofover700MWfrom the islandtothemainland. Italy,Sicily andinallofsouthern toconnectthe Siciliangrid,whichwillmakeitpossibletoexportrenewable benefits fortheelectricitysystem;itwill,infact,allowmore windfarms,whichare experiencingrapidgrowth in The newlinewillplayaprincipalrole indevelopingthe “green” energy sector, andwillbringaboutsignificant that thelinesinvolvedsignificantrisksformigratorybirds. the trans-Saharanbirdlife byclearlyidentifyingtheirflightpathways andaltitudes.Thismadeitpossibletoavoid transit. Theexperimentscientificallymeasured thepotentialimpact oftheprojected lineonthemigratoryarea of The radarsystempunctuallyregistered thenumberofcrossings, thealtitudeandflightdirection ofthebirds in around Scilla.Observationswere carriedoutfortwoweeksduringthemigrationinspring2010. migratory birds whoarriveinSicilyfrom Africaandthentravelontothepeninsulathrough thestraitinarea the future route oftheline.ThisparticularattentionisjustifiedbyimportanceStraitMessinafor Strait ofMessina,forthefirsttimeinItaly, Terna hasexperimentedwithusingradartomonitorbirdlife passingby For theconstructionofSorgente-Rizziconi line,whoseroute includesanoverheadpartintheproximity ofthe and protection forseveralspecies.Forexample,whenlinescross large open the openingofpassagewaysinorder tobuildthetowers,excavation During theconstructionstage,impactonbiodiversity the route oftheline itorial

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Sustainability Report 2011 EN13 strategy intheplanningofnewlines. which provides for, amongotherthings,theincorporationofenvironmental criteriaconsistentwiththeWWF’sconservation This approach wasconfirmedinthememorandumofunderstanding signedbyTerna andtheWWF(seeboxbelow), accompany theGridDevelopmentPlan. criteria determiningthefinalroute andisavailable inthepartsofEnvironmental Reportcontainingregional detailsthat areas thatcouldpotentiallyhostnewinfrastructure are carefully studied.Theinformationcollectedbecomespartof the represents animportantinputinthesustainability-basedplanningofgriddevelopment.Thebiodiversityfeatures ofthe infrastructure. Likeotherenvironmental variables,biodiversity–andinparticularthepresence ofprotected areas –therefor environment byseekingsolutions agreed onwithlocalgovernments The approach isprimarilypreventive. Beginningintheplanningstage,Terna considers the planningstageand,whenevernecessary, theadoptionofappropriate mitigationandcompensationmeasures. Terna managesitsimpactsonbiodiversitywithaseriesofintegratedinstrumentsthatconsidersuchrightfrom In all,netofoverlaps,protected areas cover22.3%ofItaly’sterritory. km) Sites ofCommunityImportance,SPZ–SpecialProtection Zones)andeliminatingoverlaps, kinds ofprotected areas establishedbydifferent laws(nationalandregional parks,nationalandregional reserves, SCIs– Geographic InformationSystem and protected areas orareas withhighbiodiversity With thesupportofdatabase,Terna hasmadean legislativerestrictions andadministrativeboundaries. • landscape-riskmap; • Bird Important Areas (IBA); • Sites ofCommunityImportance(SCIs)eSpecialProtection Zones(SPZ); • official the listofprotected areas, fluvialparks,naturalreserves, terrestrial and marinenationalparks; • pollutedsites; • climatedata; • degree ofseismicity; • naturalistic, andlandscapeaspects,including: the locationofelectricitylines,maininformationincludedindatabaseregards geological,hydro-geological, The datacollectedwere harmonizedandincludedinastandard cartographicsystematthenationallevel.Inaddition to Management ofimpactsonbiodiversity WWF OasisinPadule-OrtiBottagone (LI). Completion ofTerna’s works in three WWFOases crosses protected areas forstretches thatrangefrom afewhundred meterstoseveraltensofkilometers. - instruments)relative toelectricitygridswithdataregarding theland.Consideringall inventory ofpossibleinterference betweenitsstructures (lines) , bycross-referencing data(through theuseofcuttingedgeGIS- hectares andisonly10 kilometers from the In were(Livorno) completed. Orti-Bottagone, inthemunicipality ofPiombino Focognano, ontheFlorentine plain,andPadule works intheTuscan OasesofStagnidi not tointerfere withthenestingseason, suspension ofactivitiesattheworksitesoas In spring2011,followingtheoccasional and media. implemented andpresented tolocalinstitutions WWF Research andPlanning,were WWF Italiaandprepared incollaborationwith by thestrategicpartnershipbetweenTerna and restoration andmitigationprojects envisaged Started in2010,thefirstthree environmental Focognano regarding thelocation ofitselectricity , alakeOasisthatspans 35 9.3% ofTerna’s grid(5,385 the needtopreserve the e areas neartheelectricitylines. reduce theinterference tolevelsof littlesignificance,environmental compensationmeasures are adopted, i.e.actionsin mitigation are adoptedduringbothits constructionanditsoperation.Intheeventsuchmeasures are notsufficient to component andseveralspecies orhabitats.To reduce suchinterference toaminimum,measures ofenvironmental In spiteofthemeasures adoptedintheplanningstage,there maybeinterference betweenagiveninfrastructure of theoldlineroutes. Theenvironmental restoration workswillbeginoncetheremoval activityhastakenplace. with thesubsequentremoval ofstretches oflines,whichisaninteresting opportunityforenvironmental requalification the PollinoNationalParkinCalabria.Inbothcases,upgrading oftheNationalTransmission Gridwilltakeplace, environmental requalification projects intheGranSassoNationalParkandMontidellaLagaAbruzzo,aswell Once thisfirstplanhasbeencompleted,theagreement betweentheWWFandTerna envisagesrestoration and institutions andlocalmediaataneventhostedbytheProvince ofAgrigento. In November, theworksundertakeninSicilianOasisofTorre Salsawere presented tothecitizens, protect itfrom fires, poaching,litteringorstrayingoff-trail, whichare the mainthreat factorsforthisdelicateecosystem physical andtechnologicalinfrastructures (fences,railingsand asystemofclosedcircuit cameras)thatwillhelpto Terna wantedtocontributebettermanagement,surveillanceandmonitoringofthearea bystrengthening the so thateveryonecandiscoverandenjoytheincredible variety oflifethattheOasishosts. structure inwoodandcotton,fullyremovable, andboards aswellapathwaywithbenches,informativelecterns the imposingrocky seacliffs alongthecoast.Anopen-airgreen room wascreated, protected byatensioned through oneofthemostimportantmigration routes onthepeninsula,aswellperegrine falconwhonestson hundreds ofegrets, herons, spoonbills,theEuropean honeybuzzard, andcraneswhointhespringfallpass scientific research activities.Theresult isanoutfittedoverlookfacingtheseafrom whichonecanadmire the The mainobjectiveoftheproject wastoincrease theuseofOasisintermsnature tourismanddidactic chosen becauseitistypicallyrepresentative ofItalianterritory. In thefall,worksonthird WWFOasis,theSicilian Torre Salsa(Agrigento),were concludedandit,too,was maps oftheOasis)whichwere prepared forvisitorstotheStagnidiFocognanoandOrti-BottagoneOases. Oasis. ThemeetinginPiombinowasalsoanopportunitytopresent videoandhardcopy materials(brochures and organized byWWFItaliainthePalazzoAppianiPiombino,whichwasfollowedaguidedtourofOrtiBottagone Terna’s initiativesinthesetwoTuscan oaseswere presented tothecitizens,institutionsandlocalmediaatanevent without disturbingtheflamingos,blackwingedstilts,tealsandcormorantsstoppinginmarsh. a specialpathwayonpiles,shieldedbywallwithslitsforenjoyingwalksonlyfewcentimetersfrom thewater despite theprovincial road thatcutsacross theOasisandnewpathsforexploringbeautiesofarea, including Terna alsobuiltinOrti-Bottagoneawatchingpost,watchtower, anunderpassthatguaranteesvisitingcontinuity enjoyment ofoasesandnature reserves. Beautiful Oasis”attheendof2011byEBNItalia,ItalianBird Watching Organization forthepromotion and nest there intheupcomingseasons.Asaresult ofthisstructure, OrtiBottagonewasawarded theprizeof“Most intended for(martins,swallowsandswifts)havealready gone insideandsurveyedthespecialstructure, andmay Italian sparrows and4couplesofstarlingsnested andallthespeciesarrivingfrom Africathatthe“houses”are martins, sparrows, swallowsandswifts.Onlyafewmonthsaftertheinstallationofcondominium,5couples nests ofdifferent shapesandsizeshavebeenplaced andwhichwelcomes,apartfrom visitorsandbirdwatchers, in twobytheprovincial road, thefirstever“condo”forbirds inItalywasbuilt.Itisaspecialwatchtowerwhere 154 of thespeciespresent. Inthisarea, whichincludessixdifferent habitatsofcommunityinterest, andwhichisdivided potential ofthearea togetherwiththestrengthening ofinfrastructures forthemanagement,fruitionandmonitoring With respect tothe for monitoring. artificial nestsonsomepylons,completewithwebcams,inorder toencouragereproduction ofKestrels andallow collisions, whilethehissingofwindalsomakesthemeffective atnight.InFocognano,Terna hasalsosetup These are specialcolored visiblespiral-shapeddeviceswrappedaround guard- wires whosepurposeistoavoid 108 “anti-collisionspires” wascarriedoutbyspecializedtechniciansthankstoaspectacularhelicoptermaneuver. Terna hasconstructedactualroad signsforbirds thatcoverover1000metersofelectricityline.Theinstallation such astheblackwingedstilt,red heron, thelittleegret Inorder andthelittlebittern. tominimizesuchrisk, voltage cablesare noteasilyseenandposeapotentialdangertobirds inflightwhousethisOasisasastop-over, and twoattheedgeofarea, hasorientedtheworksindirection ofmitigationimpactonbirdlife. High historic centerofFlorence, thepresence oftwoHVelectricitylineswithsupportsplaceddirectly inthepond, Padule Orti-Bottagone Oasis, theWWF-Terna goalsare tosignificantlyincrease thenaturalistic . 123 Environmental responsibility 124 EN13 EN13 Sustainability Report 2011 EU13 EU13 • • The main and theenvironment. transmission infrastructure, Terna could makeasignificantcontributiontothemonitoringandmanagementofbiodiversity andpark agencies. Inthisway,with localgovernments inadditiontoexpandingtherangeofpotentialusesits of specificsensorsonpylonswouldenabletheimplementationprograms forenvironmental datacollectionagreed on Terna isalsoinvestigatingthepossibilityofusinglinesNTGtosupportenvironmental monitoring. Theinstallation between linesandbirdlife, whichare describedinthefollowingsection. As farasexistinglinesare Terna concerned, hastriedoutsystemsofmitigationregarding inparticulartheinterference the appearanceofanysignsdeterioration. construction; thedataobtainedare thencompared tothosefrom samplestakensubsequentlyinorder topromptly identify their effectiveness and,ifnecessary, tomakecorrections. Specifically, environmental analysesare performedbefore is tochecktheactualappropriateness ofthemitigationandcompensationmeasures adoptedinorder toconstantlyassess During theconstructionofinfrastructures, are thehabitatsandspeciesofflorafaunaconcerned monitored. This “Electricity System”sectionofTerna’s website. With regard tothespeciesoffloraandfaunapotentiallyinvolved,see2011Environmental Report,publishedinthe • • reforestation outflow ofmeteoricwaterandthuscontrol thephenomenonofsoilerosion; environmental restoration equivalent places. compensation extraneous totheenvironment; root. Theuseofnativespeciesprevents thephenomenonoffloristicpollutionviaintroduction ofspeciesthatare turfing Masking thepowerstationsinChignoloPoandMaleo performed. For thenextthree yearstheplantswillbeinspectedtoensure theyhaverooted, andgeneralmaintenancewillbe November 2011. Works commencedSeptember 2011,uponthedefinitiveclosure ofthecivilworksite,andwere terminatedin native trees andshrubswere transplanted,suchas,forexample,fouroaktrees attheChignoloPostation. seeding, withthetwo-foldobjectiveofconsolidatinglandandmaskingelectricityinfrastructure. Inaddition, theperimeter areaThe worksconcerned ofthepowerstation(nearly30sqm)andincludedplantinghydro infrastructures through theuseofnaturalengineeringtechniques. Following theconstructionofpowerstationsinChignoloPoandMaleo,workwasundertakentomask by sowingseedsbelongingtonativespeciestogetherwithnaturalfertilizersandadhesivesthathelpthemtake mitigation , through theplantingofnativespeciestrees andshrubsbelongingtothevegetationofarea; , i.e.offsetting thecuttingdownoftrees alongtheplannedlines byplantingtrees ofthesamespeciesin and compensation consisting intheconstructionofnaturalisticengineeringworkstoregulate thesurface measures involve: Recovery andrestoration ofbuildingsiteareas inVal D’OssolaSud Studies onelectricitylinesandbats adult heightof5/6meters,so asnottointerfere withthelinecables. The choiceofplantingshrubs wasdeterminedalsobythedesire tohaveatypeoftree that reaches amaximum and pruningofvolunteerplantsandexoticinvasivearound inspection theareas affected bytheforestation. • forestation the oftheareas through theplantingofdense,tallshrubberythathave afastgrowth rate; • The works,whichwere carriedoutbetweenMarch andApril2011,provided for: mitigation andenvironmental compensationoftheareas affected bytheworks. Within theupgradingofelectricitygridinVal d’OssolaSud,workshavebeenundertakenforthe restoration, whocollaboratewithTernaornithologists (seeboxpage125). wall ofthenestinghouseforbirds ofprey isbeingusedbybats asadaytimeshelter, firstdiscovered in2011by Of specialinterest ishowthepylonsare used,inparticularhow the spacebetweenpillarsofpylonand an analysisofflightinrelation tothepresence ofdifferent supports. distribution, theecologyofspecies,potentialimpactand Italian bats,afilehasbeenprepared thatsummarizesthe future Environmental ImpactStudies.Foreachspeciesof adjustment totailor-fit exactneeds,canbeincludedinto undertaken hasbeenproposed. Suchactions, after containing possiblemitigatingactionsthatcanbe migration. Withrespect tothelossofhabitat,acatalogue possibility ofcollisions,orinterference withhunting,flightor obstacles forthem.Infact,theexaminationexcluded HVandEHVelectricity linesdonotpose concerned, regard. Th not beendevelopedyetinEurope andnodataexistinthis An in-depthexaminationshowedthatthesubjectmatterhas went intodepthonthebiologyandethologyofspecies. professionalsinternational andexpertsinthesector, thestudy Through bibliographicresearch andconsultationwith providing thebiologyof technicalchartsconcerning • goingintodepthonthesubject byconsultingwith • theliterature analyzing onanational, European and • describingwhataspectsofbatecologycouldbeaffected • Terna hasstartedresearch withthegoalof: mitigating measures couldbetaken. effects electricitylinesmighthaveonbats,andwhat At present, however, there are nostudiesthatdiscussthe of theBat. European Year Year oftheBatand2012as International Protection ofBats(EUROBATS) celebrated2011asthe Migratory SpeciesandtheEuropean Agreement forthe Interest inbatsisontherise.TheUNEPConvention and EHVlines. species potentiallyaffected bytheconstructionofnewHV expertsinthefield; international potential problems connectedthereto; thesubjectandother levelconcerning international high voltage(EHV)lines; by possibleinteractionwithhighvoltage(HV)andextra e studyconcludedthatasfarbatsare EN13 EN14 EU13 125 Environmental responsibility 126

Sustainability Report 2011 EN14 EN14 Ornis italica In 2011,Terna continueditssupport tothe“ due totheheightandprotection theyoffer from predators. indicated thatelectricitylines functionasobservationpointsforpredatory birds onthehunt, whoperch onthesupports Worthy ofparticularmention istheplacementofnestboxesforpredatory birds atopthe pylons.Numerous studieshave For sometimeTerna usesofelectricity linestobenefitbiodiversity. hasbeeninvolvedinexperimenting withalternative the needofamore detailedmonitoringwiththeaidofappropriate technology, suchastheuseofradar. assessment andidentificationofpossiblemitigationmeasures. ThestudyconductedontheStraitofMessinastressed risks seemtoexistforbirds, suggestingadditionalobservationsalsowithnewexperimentalapproaches, foracorrect risk Near thelakeinMontepulcianoandMezzanoarea –whichare wetareas subjecttomigratoryflows–increased LIPU’s studyhighlightedthatcollisionriskforbirds withHVandEHVelectricitylinesislowin4outof 7areas monitored. time, whichistypicaloflow-andmedium-voltageslines. only studiesavailableregarded thephenomenonofelectrocution ofbirds whosewingstouchtwowires atthesame the actualinteractionsofbirdlife withthehigh-andextra-high-voltagelinesofNationalTransmission Grid(NTG).The The project represented animportantopportunitytosystematicallystudyforthefirsttime,andonalarge nationalscale, the interactionbetweenhigh-voltagelinesandbirds In 2008, by thebirds inflight. which, withtheirencumbranceandthenoisemadewhentheyare blownbythewind,makelineseasiertoperceive characterized bythefrequent presence ofbirds intransit,theCompanyhasinstalledspecialdevicescalled“dissuaders”, lines, Terna’s high-voltagelinescanbedangerous particularlyfortheriskofcollision.Thisiswhyonstretches ofline Lines havepotentiallynegativeeffects onbirdlife. Whiletherisk ofelectrocution characterizeslow-andmedium-voltage o flnscnend4 3 30 146 8,845 159 37 8,917 171 40 9,116 Total No.ofdissuaders Km oflinesconcerned No. oflinesconcerned Lines andbirdlife DISSUADERS FORTHEBIRDLIFEPRESENTONNTG the Trino-Lacchiarella powerline Criteria forlocationofdissuadersintheplanningphase: recommended bytheDepartmentofAnimalBiologyUniversity ofPavia. center distanceofnotlessthan25meters.Thisisbasedonthemostcautiousindicationsforbirdlife of theplannedsupportswasverified,takingintoaccountinstallationspiralsonguard wire witha Once thesegmentwasidentified,andneedtoplacedissuadersonlyonguard wires wasassessed,thestructure pose athreat. three circuits, (i.e.there willbethree cablesforeachphase),are easilyseen andrecognized bybirds, anddonot analysis alsoindicatedthatonlytheguard wires neededtobemademore visible,whereas theconductors,having identified thesegmentsofpowerlinethatshouldbemademore visiblewiththeinstallationofspirals.An With theaidofscientificcontributionAnimalBiologyDepartmentUniversityPavia,Terna feasibility ofplacingdissuadersinorder tomitigatethepotential impactofthepowerlineonbirdlife. the RegionofPiedmontandMinistryforCulturalHeritageActivities,Terna investigatedthetechnical In compliancewiththerequests oftheTechnical CommissionfortheEnvironmental ImpactAssessmentEIA-SEA, being crossed, asthemore harmonicshapeofasinglepoleminimizesthevisualimpactfuture line. environmental impactsupports.Thissolutionwasdecided ontakingintoconsiderationthecontextoflandscape In 2011,workbeganontheconstructionof380kVTrino- Lacchiarella line.70%ofthelinewillbebuiltwithlow Terna signedanagreement withtheLIPU , which,through theyears,has resulted intheinstallationof nearly500boxessuitable for bird nesting.The nests onpylons (the ItalianpartnerofBirdlife International) . ” initiative in collaboration with the ornithological association ” initiativeincollaborationwith theornithological 2011 for ascientificstudyof 002009 2010 website. Thewebcamconnectionalsoallowsfortheremote scientificobservationofanimalbehaviorbyresearchers. artificial nestssothatthereproductive periodofthebirds couldbefollowedonlineat In 2011,Terna continueditscollaborationwith following box). Also inthe2011reproductive season,theboxesonpylonswere monitored tocollectdataonreproduction (seethe kestrel, aspeciesofsmallfalconsthathaveadaptedtolivinginmanmadeareas, owl,andtheEuropean thehorned roller. and hasshownapositiveeffect intermsofbiodiversity. Amongthemainspeciesthathave occupied theboxesis constant monitoringoftheboxesbyagroup ofresearchers hasallowedforthecollectionofbiologicalandethologicaldata, The 2011reproductive seasoninthenestsonTerna’s pylons an eggbeinglaidwasuploadedbyAmericanbirdwatcher. cracking open.Thesenoveltiesbroadened thevastaudienceofenthusiasts:firstpostingonYouTube showing the streaming. An“eggcam”wastested,whichallowedforclose-upshotsoftheeggbeinglaidand,subsequently, The adoptionofnewtechnologyfortheaudioandvisual transmission inHDhasfurtherimproved thequalityof and uptothemomentchicksspread theirwingstoflyaway. with round-the-clock viewingofallphasesreproduction, from thelayingofeggtoitshatching enthusiasts – In somecases,thenestboxisoutfittedwithawebcamthat provides thescientificcommunity24/7–aswell majority ofwhichwere ringed.Nomonitoringofthereproduction ofkestrels tookplacein2011. owlshasalsoincreased.the numberofhorned Inall,98European rollers owlswere the and12horned born, to 2010,thepresence ofpairsEuropean rollers hasalmostdoubled(there were 15in2010,and252011) In Lazio,nearly60nestboxesintendedforEuropean rollers owlshavebeenmonitored. andhorned Withrespect of agreater future colonization. the rareness ofthespeciesinthisarea, theoccupationofnestsisanimportantsuccess,perhapsbeginning Two nestslocatedintheFerraraarea hostedpairsofEuropean rollers, from which8chicksflewaway:considering Noctule) indaytimerest inaverytightspacebetweennest wallandthepylonsupport(seepicture page125). occupied insteadbykestrels. Completelyunexpected,onthe otherhand,wasthepresence ofbats(theLesser Also nestsintheMazzanoarea, intheprovince ofFerrara,whichwere installedforthecuckoofalcons,were occupied bykestrels. Inthesamearea there wasnoevidenceofEuropean rollers owlsinthenests. orhorned new nestswhichwere created tofosterthereproduction ofthismedium/small-sizedmigratory falconwere, instead, Ornis italica with theBirdcam Project, whichentailedinstallingcamerasin more permanentlyinthearea. Theother couple andtheirchickswillreturn tosettle nests lendshopethatin2012thisfirst The nature ofcolonialfalconstoreuse old of whichwere ringedtwoweeks afterbirth. falcons wasspottedwiththree chicks,all the firsttime,anestwithpairofcuckoo monitored and99chickswere ringed.For In theParmaarea, 31kestrel nestswere Romagna. in Lazio,Tuscany, UmbriaandEmilia- over 500nestsplacedonthegrid'spylons who, in2011,inspectednearly10%ofthe carried outby The monitoringofartificialnestswas nests onTerna’s highvoltagepylons. their reproductive seasonsintheartificial species ofbirds thathavechosentospend owlsandEuropeanhorned rollers are the Kestrels, cuckoofalcons,peregrine falcons, www.birdcam.it Ornis italica , aswellonTerna’s 's ornithologists, 127 Environmental responsibility 128 EN3-4 Sustainability Report 2011 EN29 An increase intheconsumptionofelectricitywasregistered, duetoanincrease (+5%)inthenumberofstations2011. consumptionofmethanegasforheatinghasincreased duetomore severe climatesinsomeareas. Theincrease inthe • consumptionoffuel(gasandgasoil)hasincreased by3%asaconsequence ofanincrease inthegridperimeterand • In detail,in2011: differ, therefore, from thosepublishedintheprevious twoyears). consistent withthenewmeasurements. (Values publishedforenergy consumedandforthecorresponding CO of pastyearsindicatedanoverestimation ofconsumptionfor previous years,whichwere, therefore, revised downwards A comparisonbetweentheconsumptionregistered andtheestimateddataobtainedbyusingsamecalculatingmethod and isbasedonexactmeasurements from meterreadings of79%thepowerstations. on measurements begun.Thepublishedvalueis theresult ofanestimateallowingtocover100%plantsandoffices, the indirect consumptionofelectricity(offices andstations),in2011thechangeoverfrom estimateddatatobased one yeartoanothercanreflect procurement cyclesratherthanreductions orincreases inconsumption;withrespect to improved. Insomecases(gasoilforheating)monitoringregards purchases, withtheconsequencethatchanges from The followingtablesshowTerna’s direct andindirect consumption.Thedatabaseforenergy consumption isstillbeing than 86%ofthetotal)andinoffices andworkshops. The indirect consumptionofenergy isrepresented bytheelectricityusedtorunstationsandoperatingsystems(more gasoilandmethaneforheating,particularlyinoffices. • gasoilforemergency generatingsets,whichare usedonlyincaseswhere electricity–thenormalenergy source for • fortheCompany’s vehicles(usedforlineinspections,repairs, fuel andotheractivitiesmainlyconnectedwiththe • The transmissionofelectricityrequires thedirect consumptionofenergy onlyforafewactivitiesthatsupporttheservice: pages, someoftheactivitiesTerna undertakesaccountforsignificantreductions ofCO In additiontomonitoringandprograms forcontainingitsowndirect andindirect emissions,illustratedinthefollowing trading schemesofanykind.Terna decidedanyhowtobeingcommittedlimititsemissionsonavoluntarybasis. this reason, Terna isnotsubjecttoobligationsreduce emissionsaccording totheKyotoobjectives,noremission are amongthemostresponsible forgreenhouse-gas emissionsintheelectricityindustryandbusinessesgeneral.For Terna’s businessisthetransmissionofelectricityandCompanydoesnotcarryoutanyproduction activities,which Energy efficiency andclimatechange • the constructionofphotovoltaicplantscompletedin2011(page36). the • management improvement forthesafeoperationofgrid(page135)andareduction intheresources suppliedtothe • provided investments forintheDevelopmentPlan(page138); • system asawhole.Inparticular: DOWN BYPRIMARY SOURCE-GIGAJOULES DIRECT ANDINDIRECTENERGYCONSUMPTIONBROKEN oa ietcnupin1393118998,933 654,053 101,869 693,709 103,993 731.473 Total direct andindirect consumption Electricity forstationsandoffices Indirect consumption Total direct consumption Gasoline forvehicles Direct consumption ehn o etn 9487276,144 7,277 13,279 9,468 12,890 11,289 Gas oilforgeneratingsetsandheating Methane forheating Gas oilforvehicles Energy consumption 2 Onlytheconsumptionofoperatingvehiclesisconsidered andnotthatofmanagerialvehicles.The2011data isaresult ofe (2) (1) The dataregarding The direct consumptioninthousandsoftonsandm (1) 3 Throughout 2011,surveyingandin-depth investigationonelectricitytosupply stationsandoffices were carriedout.Inlig (3) consumption (representing 87%ofthevalueshownontableunderentry “Gasoilforgeneratingsetsandheating”). consumption ofmethaneinthree yearsshouldbeviewedin relation tothesimultaneousreduction ofheatinggas managed assets,resulting incompanyvehicleshavingtocover increased distances; equipment –islacking,inorder toensure thecontrol andrestoration ofthenormaloperation oftheelectricitysystem; maintenance oflinesandstations); dispatching servicesmarket,whichresult infewerproduction requests giventhesameservice(page92); first halfandanestimate–basedonvariations registered betweenthe2 in theGlobalReportingInitiative’sGRI-G3 protocols were usedto convert thequantitiesofresources intogigajoules. it waspossibletoinclude more exact dataintothetablenotonlyfor2011, butalsowithrespect towhatwaspreviously publi (2) (2) (3) (1) nd half of2010andthefirst2011 – forthesecondhalf. 3 are reported indetailtheindicatortables. Theparametersspecified 2.8 9,4 555,120 591,840 627.480 5717,8 72,528 74,588 75,731 ,0 ,1 6,981 7,113 7,504 2011 2 emissions from theelectricity ht oftheresults ofsaidactivity, 002009 2010 xact measurements forthe shed for2010-2009. 2 emissions Leakage ofSF • leaksconnectedtoR22refrigerant gas,usedinairconditioners. SF quantity ofgascontainedintheequipment.Containmentprograms ofincidenceSF traditional solutions.Forthisreason, theindicatorthatTerna considersisthepercentage ofleakagecompared tothetotal • leaksofSF • indirect consumptionofenergy sources (electricityconsumption); • direct consumptionofenergy sources (gasolineandgasoilforvehicles,generatingsetsheating Greenhouse-gas emissionsconnectedwithTerna’s activitiesare causedby: energy implementing policies. • theevaluationofenergy including consumptionintocorporateprocesses; • forecasting expectedconsumptionandcomparingitwithactualconsumption; • identifyingdifferent usesforenergy, underscoringareas ofcriticalityandtheelementsthatprimarilyinfluence • Initial Energy Analysis,thegroup’s activitieswillallowforfine-tuningtheenergy consumptiondatabase andwillbeaimedat In 2011,Terna created workgroup, aninternal coordinated bytheenergy manager, fortherationaluseofenergy. Through the the gasandreduced encumbranceofstationsconstructed withequipmentcontainingSF is boundtocontinueinthenearfuture becauseoftechnicalreasons connectedwiththehigherinsulatingperformanceof paragraph provided onpage135. TONS OFCO TOTAL DIRECTANDINDIRECTEMISSIONSOFGREENHOUSEGASES Total direct andindirect emissions Total direct emissions SF Direct emissions ehn o etn 3 0 344 483 5,368 408 983 5,520 493 531 954 5,605 520 836 Electricity Indirect emissions Gas oilforgeneratingsetsandheating Methane forheating Gas oilforvehicles Gasoline forvehicles R22 leakage Direct andindirect emissionsofCO 2 From thisyear, withrespect todirect emissionsitwasdecidedtoreport theamountofleakageassociatedwithcons (2) (1) The conversionofdirect The consumptionintoemissionsofCO (1) 3 Throughout 2011,surveyingand in-depthinvestigationonelectricityconsumptiontosupplystationsandoffices were carried (3) methane forheating); consumption; 6 6 about avariationoftonsSF previously includedinthetext).Thedatawasalso2010-2009.Asofthisyear, IPCCAR4conversionfactors haveb available onlineat electricity in2011.Thereference forthebreakdown oftheproduction mixisthe“Monthlyreport ontheelectricitysystem”fo Initiative. Forindirect consumptionofelectricity, theconversionismadetakingintoaccountweightofthermoelectricpr led toavariationintotaldirect andindirect emissionswithrespect tothosepreviously published. has beenmodified. of saidactivity, alsodatafrom 2009-2010wasreviewed downward, which were foundtobeover-estimated. Consequently, alsothe leakage present inTerna’s plantsincreased by77tons(+23%).Thistrend iscommontomanytransmissioncompaniesand (3) (2) (2) 2 6 EQUIVALENT (sulfur hexafluoride),agreenhouse gasusedinstationequipmentforitshighinsulatingpower; 6 is themaindirect source ofTerna’s greenhouse-gas emissions. www.terna.it (2) 6 (1) and R22equivalentwithrespect towhathadbeenpreviously published.Thetwoabove-mentionedvariationsconsequently . (2) 2 equivalent ismadeusingtheparametersspecifiedbyGreenhouse GasProtocol (GHG) 2 3,8 3,2 143,111 138,620 136,385 1437,9 66,306 76,805 70,692 67,928 71,463 68,522 64,922 60,313 57,406 2011 5201,104 240 25 From 2009to2011,thequantityof 6 leakage are illustratedinthe 6 002009 2010 with respect tomore r December2011,whichis out.Inlightoftheresults een used,whichbrought oduction intotalItalian umption ofR22(value totalemissionsdata : EN29 EN16 129 Environmental responsibility 130 Sustainability Report 2011 For additionalinformationonpanelstructure andgenerallyoncomparisons withothercompanies,refer totheMethodologicalNo Terna tnadDv 37963,5. 35,703.4 34.2 146,274.0 0.815.1 30,159.0 13,647.8 230,300.0116,645.0 63,799.6 25,938.910,802.5 Standard Dev. Min Max Average CO eeteesb fitrs ept h iie oprblt topresent companydataonCO despitethelimitedcomparability– nevertheless beofinterest – In theabsenceofnormalizationfactorsthatare significantandvalidforallsectors,itwasdecidedthatwould factors thateliminatethedifferences stemmingfrom thedifferent type ofactivitiesandthesizecompany. the containmentofclimatealteringemissions,whichshouldbeevaluatedovertimeandwithreference tonormalization The datainabsolutevalueare notrepresentative theefficient ofcompanyperformanceconcerning useofenergy and MIB) aswellfrom leadersinsustainability(SAM-SupersectorLeaders)were international examined. Both thedatafrom transmissioncompanies(TSOpanel)andthedatafrom large Italianlistedcompanies(FTSE- average andhighestfigures ofthethree panels. The great variabilityofcompanydatarenders agraphicillustrationoflittleimportance;thetableshowslowest, TSO Panel: by highquantitiesofCO average. Thehighstandard deviationpointstogreat variabilityamongsectors,someofwhichare characterized comparison withtheglobalbestpracticesofsustainability, Terna confirmedaquantity ofemissionswellbelowthe lowest figure: 34.2(Itaúsa -FinancialServices);highestfigure: 146,274.0(Stockland-RealEstate).Alsoin the totalofdirect andindirect emissionsinthousandsoftonsCO Comparison betweenTerna andothercompaniesonthesubjectofgreenhouse gasemissionstakesasareference in 2010,forwhichcomparisondataisavailable,emissionstotaled138.6thousandsoftonsCO In 2011,greenhouse gasemissionslinkedtoTerna’s activitiestotaled136.4thousandsoftonsCO that operatesinBoliviaandworksonlythefieldofelectricitytransmission. its activities,countsalsothegenerationofelectricity, whereas thelowestdatarefers toTDE,asmall-sizedTSO For example,withintheTSOs,highestdatarefers toEskom,whichoperatesinSouthAfricaandwhich,among terms ofsustainability–indifferent sectorsandindifferent companies. therefore ofthematerialitytheirreduction in least anindicationontherelevance ofgreenhouse gasemissions– absolute values.Saiddata,whichaccording tothecasetakesonverydifferent orders ofmagnitude,provides at SAM -SupersectorLeadersPanel: registered thelowest values. well belowtheaverageandwithtotalemissionsjustabovethoseofbanksinsurancecompanieswhich Banca); highestfigure: 116,645.0(Enel).Terna rankedamongthemajorItaliancompanieswithfewestemissions, FTSE-MIB Panel: have electricitygenerationactivities.Thelowestfigure refers tothesmallestoperatoroutofallthoseconsidered. is thehighestamongaveragesofthree panelsandis influencedbyfourtransmissionoperatorsthatalso Bolivia); highestfigure: 230,300 (Eskom-SouthAfrica).Inthiscomparison,Terna rankedbelowtheaverage,which 2 emissions: comparativedata 16 availabledata;averageCO 18 availabledata;averageCO 2 (for example,companiesfrom theOil&Gassector). 18 availabledata;averageCO 2 emissions: 25,938.9thousandtonsCO 2 emissions: 10,802.5thousandtonsCO S TEMBSAM -SUPERSECTORLEADERS FTSE-MIB TSO Greenhouse gasemissions–thousandsoftonsCO 2 equivalent. 2 emissions: 13,647.8thousandtonsCO 138.6 2 ; lowestfigure: 0.8(TDE- 2 ; lowestfigure: 15.1(Ubi 2 2 - 2010 2 equivalent. emissions in 2 te, page16. equivalent; 2 ; breakdown. Thereduction willalsohaveanimpact on gridlosses. 50% ofthetransformersinstalledare inthisworkingconditiontoguaranteeareserve thatisready intheeventofa lead toanaveragelossreduction of28%withrespect tothecurrent values,whichisnon-negligible,giventhefactthat 11% withrespect tothecurrent values.Asfarasnoloadenergy lossesare theadoptionofB0classwill concerned, construction andacquisitionofAkclasstransformers,thehighest performing,withanaveragereduction ofloadlosses of with theElectricityandGasAuthority’sresolution ARG/elt348/07.Theobjectiveofthenewspecifications is the losses ofelectricity”.Theadoptionthenewspecifications isinlinewithTerna’s environmental andenergy policyand Terna isdevelopingnewspecificationsfortheacquisitionanduseofmedium-voltage/low-voltage transformerswith“low fortheHVgrid,1,899,530tons/year. • fortheEHVgrid,1,671,570tons/year; • The CO a percentage ofthetotalenergy consumed. efficiency ensuingfrom thedevelopmentofgrid,intermsbothabsolutequantitylossesandas predetermined andnotevenunderthecontrol ofthegridoperator. Otherfactorscansignificantlyoffset theincrease in new plants,whoselocationisnotdeterminedbyTerna. Theoveralleffect ofgriddevelopmentonlossesistherefore not and alsoenablesconsumptiontoincrease. Furthermore, griddevelopmentitselfispartlydictatedbytheneedtoconnect reduction oflosses.However, thedevelopmentofgridleadstoproduction set-upsthatwere notpreviously possible With equalproduction set-ups,theactivitiesofgriddevelopment woulddeterminegreater efficiency andtherefore a productions andthusentailsatrend ofemissionreduction thatismuchgreater thanthatofgridlosses. minimizing losses.Ontheotherhand,itshouldbenotedthatenergy marketimplicitlyfavorsthemore efficient production set-upsdeterminedbytheenergy marketandtherefore cannotbeconditionedbyTerna withtheobjectiveof grid securityandpoorservice.Theseactivitiestakeplace,according toregulated criteria,withintheframeworkof Dispatching isnecessarytoensure theconstant balancebetweeninjectionsandwithdrawalstoavoidproblems of its control. To explainthis,itisusefultodistinguishbetweendispatchingactivitiesandfordevelopingthegrid It shouldbenotedthatTerna canonlycontributetodeterminingtheextentoflosses,whichare notcompletelyunder effect, directly proportional tothecurrent, aswelllossesinthetransformers. considering thelossesonlinesbecauseofcorona effect, directly proportional tothevoltageandbecauseofjoule proportion tothevoltagelevels,beginningwithcalculationsperformedassumingparticulargridconfigurationsand of anestimate,whichbreaks downthetotallossesofelectricitysystem(includingdistributionnetworks)in The lossesthatare significantforTerna are thoseassociatedwiththetransmissiongrid.Bothmeasurements are theresult Grid lossesare definedasthedifference betweentheenergy injectedbyproducers andimportsendconsumption. • employeeflying. • gridlosses; In additiontotheemissionscorresponding totheconsumptionofelectricity, otherindirect emissionscausedbyTerna’s GRID LOSSES Grid losses Other indirect emissionsofCO 1 For2011,datawascalculatedon“temporaryoperationalofthe2011nationalelectricitysystem”;2010refers, (1) 4,63 1.44 1.39 1.39 HV grid 4,077 1.27 1.23 1.23 EHV grid activities are connectedwith: data and,therefore, differs from whatwaspreviously published. 2 emissions associatedwithgridlossesin2011were asfollows: ihrsett nrydmn GWh % withrespect toenergydemand 2 2011 (1) 002009 2010 2011 4684,612 4,608 3 ,5 4,067 4,055 instead,todefinitiveavailable 002009 2010 . EN17 EU12 131 Environmental responsibility

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Sustainability Report 2011 EN18 EN19 • a program a forreducing theconsumptionper kmofthecorporatevehiclefleet • • the ozonelayer(ECRegulationn.1005/2009ofEuropean ParliamentandtheCouncil). eliminating thegasinlinewithrestrictions introduced bythe European regulations ontheuseofsubstancesthatreduce The 2011figure showsasubstantialdecrease inR22consumptionwithrespect to2010-2009, reflecting theprogram for 40% ofthetotal,donotreflect actualatmosphericemissions witheffects ontheenvironment. initially inthecontrolled emptyingoftheabove-mentionedequipment. Theseconsumptionquantities,whichcanrepresent Actually, consumptionincludesthequantityofnewgasinjectedinequipmentduring maintenance work,whichconsists atmosphere. For theR22gas,reading alsoincludesconsumptionand implies anoverestimate ofthegasactuallyreleased intothe effect. Theothertypesofgasespresent donothaveanyeffect on ozone,butonlyapotentialgreenhouse effect. Among thegasescontainedinTerna’s equipment,onlyR22hasharmfuleffects onboththeozonelayerandgreenhouse all corporateheadquartersandlocaloperatingareas. temperature constant.In2010,themonitoring oftherefrigerating gasescontainedinTerna’s equipmentwasextendedto non-stop forthesecurityofelectricityserviceandrequires alarger number ofcoolingsystemstomaintainthe refrigerating gasescontainedinitsequipment.Theextension of therecording boundaryincludedequipmentthatoperates because theyentailbothoftheseeffects. Inthe2009-2011period,Terna graduallyextendeditsmonitoringofthe Several refrigerating gasesaffect theenvironment sincetheydamagetheozonelayer, duetotheirgreenhouse effect, or Balkans andtheMediterraneanarea (seeProfile page36). emissions related travelshaverisen(+36%),becauseoftheincrease tointernational intheCompany’sactivities The emissionscorresponding toemployeeflyingrecorded aslightincrease withrespect to2010(+3%),mostlymilesand • its mainsources ofsuchemissions: With regard tothereduction ofgreenhouse-gas emissions,Terna concentratesonseveralvoluntary programs concerning (1) Thequantityof“Otherrefrigerating gases”for2011regards by80%theRr134agas,whichispresent intheheadoffice inR REFRIGERATING GASES–CONSUMPTIONKG REFRIGERATING GASES–QUANTITIESKG oa ,1,2 ,4,9 ,5,9 ,2 ,7 1,578 306 260 1,477 1,013 195 271 1,523 1,010 109 6,353,891 367 1,048 5,140,397 5,219,729 1,618,459 1,223,462 3,511,970 945,914 1,128,909 3,065,573 521,433 1,523,415 3,174,881 Total Intercontinental International Domestic Kind offlight Employee flying Initiatives toreduce ownemissions R22 Other refrigerating gases R410A R407C R22 Other atmosphericemissions INDIRECT EMISSIONSOFCO feasibility studiesforinitiatives onenergyconservation the air-tightness oftheequipment andofcomponents; early detectionofleakagethrough on-linemonitoringsystemsandthesearch for technologicalsolutionstoincrease emissions perkm(g/km); a program forcontaining theincidenceofSF (1) 2 FOR EMPLOYEEFLYING 2011 6 leakage: Miles 002009 2010 Terna hasimplementedanumber ofinitiatives,suchasthe in powerstations; ,7 9 334 817 4,380 494 1,647 4,716 2,973 2,470 2,972 2011 2011 8 1 6 210 686 3211,017 221 23 , whichentailsareduction ofCO 2011 CO 2 emissions (tons) ome. 002009 2010 2009 2010 002009 2010 2 Programs andinitiativesfor SF Although thewayinwhichSF reduction intheincidenceofleakagewouldhaveasignificantimpacttermsemissionsavoided. objective. In2011,theapplication oftheregistration procedure ofSF up tothispoint,from theinformationavailableitisnotpossibletointerpret theresults asaconvergence towards the In 2011,theincidenceofleakagewas0.60%,downfrom theprevious twoyears(2010:0.73%;2009:0.89%).Asillustrated was 0.7%. leakage mayconverge onvaluesvaryingaround 0.6%,consideringthattheaverageincidenceforperiod2005-2009 equipment. Basedonthisestimate,andalwaysnetofthefactorsmentioned,itisexpectedthatby2014incidence of year periodstartingfrom thestartofinstallationcampaign, withoutprejudice totheeffective availabilityofthenew continued in2010and2011,maybringaboutanestimatedreduction of0.1%intheincidenceleakageoverfive installation ofnewdeviceswithgreater withstanding (such asincreased reliability transformers),begunin2009and Net ofexceptionalbreakdowns, andpossibleeffects ofobsolescenceequipmentinoperation,itisestimatedthatthe SF results willenabletheCompany toestablishamore precise target valuefortheincidenceofSF identifying equipmentwithanomalous leakageandassessthefeasibilityofaprogram oftargeted maintenance.Thestudy Thanks toitsphysicalandchemicalproperties, whichmakeitanexcellentinsulator, SF quantitative pointofview. results ofthethird program are already tangible,butregard asource ofemissionsthatislesssignificantfrom the The firsttwocasesare initiativesthatcanhaveasignificantquantitativeeffect, butonlyinthemedium-to-longterm.The • Terna already registers lowvaluesofSF • if,ontheonehand,installationofequipmentwithbetterwithstandingperformancetendstoreduce theincidence • • the occurrence the ofbreakdowns resulting inthesignificantleakageofgas–probability ofwhichincreases giventhe • riseinawareness a andattentiontothesubjectisreflected inimproved measurements ofleakage,resulting in–forthe • change, identifyingatarget isstillbeingexaminedcarefully. Infact,there are severalelementsofuncertainty: and sometimesalsoduringpressure restoration. SF Part ofthegaspresent ininfrastructure isdispersedintheairbecauseofdefectivetightnessgaskets,during failure • used. Ifthequantityofdispersedgascouldbelarger, becauseoftheincreased useofequipmentinsulatedwithSF foreseen thatequipmentwithSF latter allowbuildingpowerstationsinsmallerareas andwithlessmaintenanceneeds.Becauseoftheseproperties, itis an insulatorinsomekindsofelectricalequipment,suchasswitches,current transformersandarmored systems. The SF Reduction ofSF (*) Lossesnetofanexceptionalevent(1.07%included). INSTALLED SF (KG) counterbalanced byadversefactors,already mentioned,ofpotentially greater impact. therefore, furtherreductions, whichhavegrowing marginal costs,canonlybecontained,withahighprobability ofbeing a program dedicatedtotheenergyefficiency of leakage,ontheother, theobsolescenceofequipment already installedcouldcauseanincrease inleakage; growing useofSF performance; years inwhichthecontainmentactivitieswere started(2009-2010)–whatapparently seemstobedeteriorating the leakagewas provided bytheoverallquantities ofSF for reading requires theregistration ofthe gasusedanddispersedforeverysinglestation(upto2007, measurement of procedure formonitoringleakageandreduction ofdispersion 6 6 Quantity ofSF 6 200,000 250,000 300,000 350,000 400,000 450,000 LEAKAGE leakage undercontrol tocontainand,ifpossible,reduce itsincidencewithrespect tothetotalquantityofgas 6 ntle ekg mat %Average impact 2005-2009 %Leakageimpact installed 6 leakage 6 042005 20062007 2008 2004 gas intheequipmentoflarge stations–canconsiderablyalterthetrend; 6 6 leakage washandledasanindicatorofitsownperformancewithreference toclimate gas managementexistingsince 2008are reported below: 6 will beincreasingly used,asitisbyothertransmissioncompaniesabroad. 6 leakage incomparisontootherTSOs(seethededicatedboxthisparagraph), of thebuildings(corporateoffices). 6 is classifiedasagreenhouse gas.Terna therefore intendstokeep 6 acquired, net ofnewplants); of thegasduringpressure restoration: theprocedure (*) 6 gas topupshassuccessfully continued aimingat 2009 20102011 6 (sulfur hexachloride)isusedas 6 leakage. 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0.9 6 , a

% LEAKAGE s 135 Environmental responsibility 136 Sustainability Report 2011 • • have reached amore advancedstage. The measurement oftheeffects oftheinitiativesdescribedwillbepossibleonlyinmediumterm,whenprojects installationonstationbuildingsofphotovoltaicpanelsthatatleastcovertheconsumptioncomputers the • natural orautomaticcirculation systemsthatoptimizethefunctioningofcoolingpumpsandfansin transformers; • opportunities tosaveissoughtforthrough: Although theenergy consumedisonlythequantitythatstrictlynecessarytoensure theoperation,research of • auxiliarycommand,control, andprotection circuits ofallequipmentandmachinery. • air-conditioning andheatingsystemsintechnicallocations; lighting; • external • coolingpowertransformers; The mainsources ofconsumptionare: Electricity isusedinpowerstationstoenabletheequipmentanditsremote control tofunction. • Energy savinginstations plan forreplacing oldequipmentwithnewtransformersisunderway. new highlyreliable (TA) measurement transformerssealed of insulatorleakage; anomalously allowstheCompanytodotargeted workontheequipment,thus alsoavoidingplantdowntimebecause The earlydetectionbytheremote-maintenance centeroftheequipmentwhere thepressure ofthegasisfalling installation oftheLacchiarella powerstation,assessmentofresults forapossiblewidespread applicationisunderway. detection systemswithremote transmissionofleakagethegasinequipment: applicative standard andwillbeinstalledasnecessary; necessary forinsulationwithrespect tootherequipment.Afterthepositivetrialresults, theequipmentisconsidered an manage theplants. multi-function compactmodules INCIDENCE OFSF 0.00 0.50 1.00 1.50 2.00 2.50 For additionalinformation onpanelstructure andgenerally oncomparisonswithothercompanies, refer totheMethodologicalNo (*) Theincidenceof leakagewascalculatedasapercentage oflossonthetotalgasinstalledin theequipment. SF In 2011,theaverageincidenceofSF were takenintoconsideration. When compared toothergridoperators,Terna indicatesanincidenceofSF available, theincidencepercentage was0.7%. TSO Panel: confirming theresults reported inlastyear’sSustainabilityReport. significant changesinincidencewere recorded, whichincreases ordecreases by1-2 decimals. By comparingdatawiththosebelongingto2009,whichwere publishedlastyear, for7outof8availabledata,no 2.3%; standard deviation:0.7%.Terna rankswellbelowtheaverageforincidenceofleakage. The comparisonbetweenTerna SF andotheroperatorsconcerning Since theuseofSF point theincidence,i.e.percentage ofleakagewithrespect tothetotalgasused. Incidence ofSF 6 leakage: comparativedata Statnett 11 itemsofdataavailable;averageincidenceSF (*) 6 ekg en IncidenceofSF leakage -Terna 6 LEAKAGE 6 ISA gas isuniquetogridoperators,onlythedataofcompaniesbelongingTSOpanel Germany Tennet (*) (set ofdifferent kindsofequipment)withareduction ofatleast30%theSF 6 leakage forTerna was0.6%;in2010,theyearforwhichcomparisondatais en laEnerginet Elia Terna 6 ekg Average (1.1%) leakage , withmaximumleakageof0.1%ayear:since2010,the 6 (*) leakage: 1.1%;lowestfigure: 0.3%;highestfigure: Netherlands Tennet 6 leakage ismadebytakingasthereference (*) E RTE REE 6 leakage lowerthanaverage, after havingcompletedthe (*) Grid UK National te, page16. (*) Grid US National (*) 6 quantified asmore than10,222,763kg–generatedbyTerna’s 840operating fleetvehicles,willbeoffset. Thanks tothecreation andpreservation ofthesewoodedareas, inthenextfouryearscarbon-dioxide emissions– Impact project. Reaching thisobjectiveisensured through thecollaborationbetweenTerna, thevehiclesuppliersandLifeGate’sZero in Rome,Parco dellaMadonnetta,MadagascarandCostaRica. of vehiclesusedforbusinesstransportation,acompensation planthrough thecreation andprotection ofnewgreen areas the project are committedtoreducing theCO Since July2008,theCompanyhasparticipatedinQuattroruote’s “10X10”project. Sofar, 35 companies participatingin often require theuseof4WDvehicles,sincepylons can onlybereached through unpavedtrails. Terna usesoperatingvehiclesdailytoinspectlinesandreach operatingplantslocatedthroughout Italy. Suchinspections coursesonoff-road vehiclesregarding safetyandemissionreduction. • fortheuseofpublictransportationthrough: incentives • introduction oftheuseequipmentforvideoconferences whichcanbeconnectedwiththeequipmentofsuppliers, • monitoring ofemployeetravel; • optimizationofitsoffices localizationinlarge towns(already carriedoutforRomeandMilanplannedFlorence); • consisting of: During 2011,Terna hasconfirmedtheactionsundertakentoreduce theimpactofemployeemobilityonenvironment (devoting attentiontotheenvironmental impact)andcarryingoutscrupulousmaintenance. renewing thefleetevery48months,carefully indicatingtechnicalspecificationsduringthepurchasing ofthevehicles pollution effect. Themostimportantmeasure for reducing theimpactoftransportationonenvironment consistsin locations, butisusedoverawidespread area. Therefore, there isnoproblem ofimpactonspecificareas, butageneral The Company’svehiclefleet–whichisusedmainlyforinspectingandrepairing lines–isnotconcentratedinonlyafew models (onlydesktop).Thenewdesktopallowforanaveragesavingofenergy consumptionequalto80%. In 2011,theCompanymeasured thereduction ofconsumptionobtainedbythereplacement of156personalcomputers of computersandprinters. In offices themainsources ofenergy consumptionare connectedwithlighting,heating andair-conditioning, andtheuse energy managementsystem(seepage134inthischapteronsubject). gas emissions.For2012,aninformationcampaignandrelative disseminationisscheduled,alsoforactivitieslinkedtothe planning/upgrading ofbuildings.Theaimthedocumentistosaveenergy overtime, thereby reducing direct greenhouse a commonstandard forconstructingbuildingswiththelowestenergy impact,andprovide integratedcriteriaforthe Since 2011,“CriteriaforEnergy Efficiency inTerna’s Buildings”guidelineshavebeenoperational.Theseestablish The replacement campaign,whichinvolvesnearly80%ofthefleet’svehicles,envisages,withrespect toCO lead toimproving thefleet’sefficiency, withareduction inconsumptionandemissions. The changeinthevehicleclasses–compared towhatisprovided forinthetable–andrenewal ofthevehicles will should becompletedin2012(seebox“Sustainabilityawarding tenders”,page106ofthisReport). In November2011,acampaignwaslaunchedtoreplace theremaining Euro class3and Euro class4vehicles,which consumption andefficiency ofitscorporatefleet. forreducingconcern theimpactcaused byemissionsderivingfrom itscorporatemobility, andultimatelythefuel TERNA VEHICLEFLEET Reduction ofemissionsconnectedwithmobility Reduction ofemissionsconnectedwithenergyconsumptioninoffices uo3(rlwr 1 23346 1,467 1,388 273 1,351 219 tableshowsthevehiclesinTerna’s The fleetbyDecember31,thatduringtheperiodinquestionrefueled atleastonceasr (1) Total vehicles Euro 3(orlower) Euro 4 Euro 5 Hybrid 2.creation ofservicesconnectingtwooffices inRomeandoneMilanwiththeclosestpublictransportationjunctions 2.creation termsforemployeesinpurchasing annualpasses(agreements havebeensignedwiththepublictransportation 1.easy partners, andotherTerna’s offices; Only operatingvehiclesare considered excludingmanagerialvehicles. at nocharge toemployees; companies ofRomeandMilan,with167employeesin63Milanhavingpurchased passesinthisway); (1) 2 emissions oftheirvehiclefleets.Injoiningtheproject, Terna confirmedits 2011 3 779 1,033 97 1,009 985 138 9 9 ecorded inthefueldocuments. 002009 2010 2 emissions EN29 EN5 137 Environmental responsibility 138 Sustainability Report 2011 tons ofCO systems oftotalcapacityamountingtonearly240MW, thusobtainingareduction ofemissionsamountingtonearly6,000,000 renewable energy sources, towhomthebeneficialeffects shouldbeaddedrelated totheinstallationofwidespread storage In thisregard, theworksincludedbyTerna inthe2012 DevelopmentPlanwillrelease nearly4,700MWofpower from injection intothegridofsuchenergy, whichisentitledtodispatchingpriority. electricity from renewable energy sources bytryingtoovercome anygridandoperatinglimitationsthatcouldconditionthe new installedcapacity. OneofTerna’s maintasksistoplanthe upgradingoftheNTGinorder toencourageproduction of During 2011,newwindandphotovoltaicplantshavegone into service,withnearly8,990MWand815respectively of Italyandintheislands. especially insouthern renewable sources hasgrown rapidlyinthelastfewyears.Inparticular, NPRSgeneratingplantshaveconsiderablyincreased, renewable sources (NPRS)which are considered inthe2012DevelopmentPlanworks.Theproduction ofenergy from benefits canbequantifiedasareduction ofCO plants withhigheryields.Thesamequantityofendconsum will render aproduction mixpossiblethatismore efficient thanthecurrent one,withalarger share ofproduction from Together withtheupgradingofinterconnection withothercountries,theworkprovided forbythe2012DevelopmentPlan inefficient powerplantsnecessaryforthesecurityofgrid. the above-mentionedworkwillleadtoareduction inCO Assuming thatthereduction ofsuchlossesisequivalenttoa reduction inproduction from fossilfuels,itisestimatedthat 200 MWofpower, whichcorresponds toareduction ofenergy lossesinthegridquantifiableasnearly1,200GWhayear. When alltheworkincludedin2012DevelopmentPlanhasbeencompleted,decrease inpeaklossescouldreach a 150kVlinewith380kVoneonthesameroute. of consumptionclosertooneanother. Theycanalsobereduced byupgradingagridsegment,forexamplereplacing Therefore, lossescanbereduced byworkthatimproves themeshofgrid,i.e.bringspointsinjectionandthose greater onlower-voltage lines. injection intotheNTGofelectricityproduced, thegreater thelosses.Furthermore, holdinglengthconstant,lossesare equal consumptionthefartherpointofwithdrawal(i.e.,consumption)electricityfrom theNTGisfrom thepointof Grid lossesdependmainly, butnotonly, onthelength the electricitytravelsontransmissiongrid.To simplify: with tons ayear. Overall, thereduction ofemissionswithinthetimeframe2012-2021Plancouldreach thevalueofnearly 11million • connectionofplantsusingrenewable energy sources. • improvement oftheproduction mixandinterconnection withothercountries; • reduction ofgridlosses; Achievable uponcompletionofthePlan,effects willbeofthree kinds: not onlyintermsofservicesecurityandtheendcostelectricity, butalsoofreduced emissionsbytheelectricitysystem. The constructionofthenewlinesandstationsprovided forbythe2012DevelopmentPlanwillproduce positiveeffects Reforestation willcompensateover42%oftheTerna fleet’sannualCO The areas involvedcover14,000sqminRome,510,756Madagascarand2,019,848CostaRica. driven andontheestimatednumberofkilometerscovered eachyearbyTerna’s fleet. Emissions were estimatedontheaveragecarbondioxidepervehicle(from datasuppliedbythemanufacturer) perkilometer (1) The estimatewas madeassumingequal conditions. Achangeinconsumption orthelocation ofproduction The plants couldlead to (1) The maincontributiontothereduction ofCO more efficient –i.e.lesspollutingintermsofCO “electricity zones”.Theselimitsimposeseveralrestrictions on thepossibilityofproduction bygenerationunitsthatare One ofthemainobjectivestransmissiongriddevelopmentistoovercome thelimitsofelectricitytransferamong Connection ofplantsusingrenewable energysources Improvement oftheproduction mixandinterconnection withothercountries Reduction ofgridlosses The DevelopmentPlanandreduction oftheelectricitysystem’sCO 2 . 2 emissions isduetotheconnectionofplantsproducing from nonprogrammable 2 2 emissions ofupto4,800,000tonsayear. emissions –andatthesametimerender production from obsoleteand 2 emissions rangingfrom 500,000to600,000 tonsayear ption willbepossiblewithasmallerquantityoffuel,andthe 2 emissions. 2 emissions different results. (1) . aeoyWrsPowerfrom renewable sources Works Category MAIN WORKSOFTHEDEVELOPMENTPLANWITHEFFECTONENERGYEMISSIONSFROMRENEWABLE SOURCES programmable renewable sources production isinjectedfrom non and HVgridsectionsintowhich Work toupgradeanddecongestEHV renewable sources production from nonprogrammable in dispatchinggeneration,whichfavors for thereduction ofoperatinglimitations Grid upgradingindirectly functional 4 Provisional 2011dataasof February2012. (4) Priority toenergy from renewable sources distribution grid. greater widespread presence ofsuchsystems,whichare outsideofTerna’s control, giventheirconnectiontothe introduced, withadditionaldifficulties withrespect towhatwasalready developedforwindresources, duetoa As aresult ofthegrowth ofphotovoltaicfacilities,in2011,instruments forforecasting solarproduction were meteorological forecasts andconsequentadvantagesintermsof theaccuracyofwindforecasts. forecast duringthedayofreference, withevidentadvantagesintermsofreducing uncertaintyconcerning The process ofwindforecasts wasalsomodifiedcalculating,in additiontotheforecasts uptothepriorday, are- the “Revenuestructure andregulatory framework”sectionpage90). recorded intheprevious year–reaching forthethird yeartheimprovement objectivesasdefinedbyAEEG(see enabled theCompanytoreduce errors inforecasts oftheinjectionfrom windplantsin2011to11%–against18% The investmentmadebyTerna toimprove windforecasts through expertsystemshas theuseofself-learning terms ofbothcost-effectiveness andsecurity. reserve margins tobemadeavailableinsubstitutionofrenewable energy (ifnotavailable),withadvantagesin An accurateforecast oftheinjectionenergy from renewable sources enablesbetterdimensioningofoperating Improving real-time forecasts with respect toprevious years,by18.8TWh(6.5%ofelectricitydemandinItaly) In 2011,theinjectionintogridofenergy from plantspowered from renewable sources hasincreased sharply technicalregulation. • adjustingdefensesystems; • optimizingtheallocationofmaintenanceandadjustmentoperatingprocedures; • improving real-time forecasts; • sources, Terna hasinvestedintechnology andworkmethodsfor: In order toadjustmanagementoftheelectricitysystem to increased production from nonprogrammable renewable system, whichisaconsequenceoftheintermittenceprimarysource anditsunpredictability. a reduction ofgreenhouse gases,however, ithasrepercussions onthecomplexityofmanagingelectricity The increase intheproduction from renewable sources satisfiesenvironmental sustainabilityrequirements, entailing capacity attheendof2011nearly12,500MW). of 2011nearly6,200MW)andtoanincrease ofinstalled solarpower(+260%year-on-year, foraninstalled This increase isduetothegrowth ofinstalledwindpower(+13%year-on-year, foraninstalledcapacityattheend Upgrading of380-kV“Foggia-Benevento”line line 380-kV “Foggia-Villanova” New 380-kV“Aliano-Montecorvino”line and Corsica/continentalItaly Upgrading ofinterconnection capacitybetweenSardinia and upgradingoftheEHVgridinSicily 380-kV “Sorgente-Scilla-Rizziconi”line Upgrading the transmission grid in southern Italy Upgrading thetransmissiongridinsouthern (4) . (MW) 1,100 1,000 500 700 900 500 EU8 139 Environmental responsibility 140 Sustainability Report 2011 CEO FlavioCattaneo (right). Legambiente’s President Vittorio CogliatiDezza (left)andTerna’s for asustainableenergy culture Terna-Legambiente agreement Adjusting defensesystems distribution gridstosafeguard theservicecontinuityofreciprocal users. in concertwithdistributioncompanies,duetotheneedforgreater coordination inmanagingthetransmissionand With reference todistributedsolargenerationconnecteddistributiongrids,technicalregulation hasbeenstarted of managementmethodssothattheycanbefullyintegratedintotheelectricalsystem. In thisconnection,Terna hasupdatedtheGridCodetoincludetechnicaldescriptionsofsolarplantsandadefinition In 2011,greater growth insolarinstallationshasmadeiturgent todevelopapplicabletechnicalregulations. Technical regulation plants indefensesystems. accidents connectedtoahigheramountofrenewable generation,alsothrough inclusionofrenewable sources The defensesystemsoftheislandshavebeenrevised toinclude corrective automaticcontrols intheeventof production regarding themaintenanceofgridelements(63%reduction oflimitationhours). Thanks tosuchinstrumentsandworkmethods,Terna hasmanagedtolimitconsiderablythelimitationsofwind limitations towindproduction basedonmore certaininformation. coordinated withoperatorsthatwere ownersoftheplants,inorder tobeabledefineonshortnoticepossible Operational procedures forreal-time dispatchingbyrenewable source plantsunderwentfurtherrevision, also periodsofunavailabilityare brief allocatedaccording toshort-termforecasts ofwindproduction (forexample, • longperiodsofunavailability, includingthoseregarding griddevelopmentsinpreparation oftheupgrading • methods foroptimallyallocatingmaintenance,whichincludethefollowingcriteria: Therefore, inorder tomaximizeproduction from renewable sources, Terna equippeditselfwithinstrumentsand connected toTerna’s subtransmissiongrid. capacity and,thus,oftheproduction oftherenewable sources inparticularwindpowerplants plantsconcerned, The unavailabilityofgridelementsbecausemaintenanceworkcanresult inalimitationofthegrid’stransfer Optimizing theallocationofmaintenanceandadjustmentoperatingprocedures allocation 24-48-hoursinadvanceonthebasisofforecast ofwindinspecificareas ofItaly). identified through appropriate medium-termsystemsforforecasting; main lineswithahighlevelofinstalledwindpower, are allocatedinperiodswithlowwindiness,whichare transportation, startingfrom reducing CO activities foranenvironmentally sustainableenergy knowledge ontheenergy worldandtoinitiatejoint both committedtopromoting anddisseminating of renewable sources. Terna andLegambienteare the developmentofelectricitysystemwiththat disseminating anenergy sustainableculture joining to promote alltheinitiativesnecessaryfor Memorandum ofUnderstandingwithLegambiente On December12,2011Terna signeda collaboration agreement. further enrichedwithanewandsignificant associations onthemesofcommoninterest was The comparisonwiththeenvironmentalist 2013, includessharingan operational planfor The Memorandum,thatisvalid untiltheendof atmosphere. common interest, particularly regarding theneed exchanging informationandopinions onthemesof 2 in the of thenew380kVconnectinglinesincludedinDevelopment Plan. The increase intheuseofrawmaterials,particularaluminumandsteel,isduetoprogress madeonthe construction (with regard toenvironmental criteriausedinprocurement, seetheboxinchapter onEconomicResponsibility). Information isnotcurrently availableontheuseofrecycled materials bythesupplierofmaterialsandequipmentused estimate wasmadeofthemainrawmaterial(forexample,copperaccountsfor60%weightanATR transformer). single rawmaterial(forexample,insulatorsare 100%glass or ceramic,terminals100%aluminum),whileinothersan typical weightofthesingleelements,andshare ofrawmaterials contained.Insomecasestheelementsconsistofa non-renewable rawmaterialsusedbyTerna. Theweightiscalculatedonthe basisofthequantityused,averageor elements, whichare combinedtobeutilizedinproviding thetransmissionservice.Thefollowingtableshowsmain PREDOMINANT RAW MATERIALS INSUPPLIES–TONS As farasmaterialsare concerned, management mostlyrelates toelectricalinfrastructures maintenance. Terna’s useofmaterialsregards preponderantly theconstructionofelectricandITinfrastructure. Terna’s waste equipment), andcontrol systemsare themaincomponents. capital goods:powerlines(towers,wires, insulators), transformingstations(transformers,switches,otherstation However, theprovision ofthetransmissionservicerequires theconstructionandmaintenanceofalarge endowmentof already beendiscussedinthe“Energy consumption”section. leave theproduction energy cycleoftheserviceare themostsignificantconsumptionconcerns andhas concerned, significant quantitiesofwaste.Theelectricitytransmissionserviceis The production ofaservicedoesnotnormallyrequire significantmaterialsandsimilarlydoesnotentailtreatment of Resource useandwastemanagement ilcrcol94143781 244 2,224 1,413 4,927 350 974 9,588 322 SF Dielectric oil Glass Steel Aluminum Copper Polymeric Porcelain Resources 6 planned forpromoting production. the companywillprovide onaquarterlybasis,updatedandadditionalinformationregarding developmentprojects grid oftherenewable energy plants.Thisactionisnecessaryforsupportingthegrowth oftheinstallationsforwhich the artanddevelopmentscenariosofrenewable sources sectoralsoinrelation totheconnectionTerna’s impact. Withrespect to“green” energy, theMemorandumincludesspecificanalysesandstudiesonstateof sharing anytypeofmitigationandcompensationactionforreducing toaminimumthevisualandenvironmental of thenationalterritory. ThelocationchoicesfortheelectricityworkswillalsoinvolveTerna andLegambiente together withLegambientethehypothesesoflocatingnewelectricitylinesthatwillcross through sensitiveareas and environmental integrationoftheworksincludedin2012and2013DevelopmentPlanwillanalyze To promote aproper approach onthefirsttheme,Terna willarrangefortechnicalanalysesmeasuringterritorial for developingtheNationalTransmission Grid(NTG)andtherenewable energy sources. Terna doesnotuserawmaterials,butelectricalequipment no exception.Asfarasthematerialsthatenterand 3851,1 6,496 17,114 23,875 ,7 ,2 1,191 2,628 1,523 3,853 2,078 2,569 2011 6 6 494 663 967 42 21 23 54 002009 2010 , wires, andother EN1 141 Environmental responsibility 142 Sustainability Report 2011 EN8 EN2 (1) Thedataare recorded from themetersandbillsofsuppliersforentire recording boundary. WATER CONSUMPTIONCUBICMETERS (1) Coverageofpaperconsumptionwasnotcompletein2009,thedatatable(53tons)refers to81%ofemployeesclassifi PAPER CONSUMPTION-TONS As ofthisyear, quantitiesofdielectricoilandSF – certifiedbytheFSC(Forest Stewardship Council– All thepaperpurchased sincetheendof2009hasbeenmadewithFSCpulp office andstaff activitiesare concentrated. perimeter, whichwasincreased in2010withtheinclusionofheadoffice inRomewhere thecompany’sday-to-day refers tomanagementof2010stocksduring2011.The2010-2009difference isconnected,instead,tothedatagathering Paper consumptionrefers tothequantitiespurchased, therefore thevariationbetween2011andprevious yearprimarily In office work,themainconsumableispaper. in transformersTerna’s 454stations. to solveanyproblems whichmayarise. will allowforquickaction themonthlyregistration once ofconsumptionforallstationsbecomesroutine – and stations– consumption, losses,etc.)theinclusionofwatermeterreadin belonging toTerna thatare scattered across Italy. Withtheobjectiveofbeingabletotimelyreport anyanomalies(high It shouldbeemphasizedthatthewatersupplyregards notonlythemainheadoffices, butalsotheover400stations carried outinthevicinityofpipe. of twopipesinlocaloffices, whichinonecasewasconnectedwithiceontheplumbingandotherwork Terna’s stations(+19%).The2010data,highercompared totheoneregistered thisyear, wasduemainlytotheleakage increased inthethree-year periodunderconsideration,beingaffected bytheeffects oftheincrease inthenumberof – forpersonalhygiene,cleaningoffices, andair-conditioning systems –comesfrom aqueductsforciviluses.Consumption Water isnotpartoftheproduction cycleofthetransmissionanddispatching are managedinaccordance withsustainabilitycriteriafrom thepointofviewbothenvironment andhumanrights. Water withdrawal FSC paper Water consumption:comparativedata meters inall,and53.3cubic percapita. respectively; in2010, theyearforwhichcomparisondataisavailable,waterconsumption was184,978.7cubic For 2011,thetotalandpercapita amountofTerna’s waterconsumptionwas176,525.0and50.5cubicmeters, materiality ofthesubjectinterms ofsustainability–inthedifferent sectorsandinthedifferent companies. efficient useoftheresource, provide atleastanindicationofthe relevance ofwaterusage–therefore ofthe consumption. Saiddata,infact,thoughitcouldnotbeinterpreted assignificantofcompanyperformanceinthe number ofemployees,itwasdecidedthatwouldnevertheless beofinterest topresent themaindataonwater Despite theintrinsiclimitationspresent inthecomparison,andlackingmore efficient normalizationfactorsforthe the percapitaconsumptionranking;companiesthatprovide intangibleservices(suchasbanks)ranklowest. Air France.Companiesdealingwithelectricitygenerationthat usewaterintheproduction cyclerankinthetopof Xstrata, acompanyintheUnitedKingdomthatworks fieldofresource extraction,whereas thelowest was necessarily reflected bythenumberofemployees.Thehighestpercapitadataamongthree panelsconcerns the different importanceoftheusewaterinproduction processes, aswellthesizeofcompany, not In allthepanels,dataindicatesubstantialnon-comparability amongcompanies,inthatconsumptionreflects leadersofsustainability(SAM–SupersectorLeaders)havebeenexamined. MIB) andinternational Both thedataofindividualtransmissioncompanies(theTSO panel)andthatoflarge Italianlistedcompanies(FTSE- both totalconsumptionandpercapitaincubic meters. The comparisonbetweenTerna andothercompaniesonthesubjectofwaterusageismadebytakingasreference (1) 6 gas foundinsupplieswere includedinthetable.Bothusedasinsulators www.fsc.org gs intotheMBIinformationsystemusedinmanaginglines ), whichguaranteesthattheforests providing thecellulose 7,2 8,7 158,942 184,979 176,525 – thatis,withoutanychlorinewhatsoever 2011 2011 08 53 83 70 of electricity. Normallythewaterused ed asmanagersandworkers. 002009 2010 002009 2010 (1) (1) Some materialscanbeeasily separatedandsortedthenrecycled (i.e.,iron partsofpylons, forexample).Insome first optiontoevaluateandpossibly choose.Actualrecycling, however, depends on thematerialsthatcomposewaste. With respect tothepercentage of recycled waste,according toTerna’s Environmental Policy, recovery of materialsisthe waste mayalsochangeconsistently from yeartoyear. Such activitiesdependontechnical considerationsonmattersofsystemsafetyandefficiency, therefore thequantityof Similar totheresources beingutilized, alsowasteresults mostlyfrom andmaintenanceofinfrastructures. modernization environmental impact. Much ofTerna’s wasteisrecycled forproduction. Onlyasmallpartisdelivered todumpsandtherefore entailsan Waste i . 031. 296. 9.0 65.0 12.9 17.4 559,410.3 7,267,342.7 1,877,642.9 280,236,000.0 72,324,715.5 18,800,828.8 10.3 4,729.7 1,046.1 478.8 1.5 328,700.0 74,882.6 24,878.6 878,742.7 255,706.3 16,443,032.7 106,362.7 4,721,590.1 1,808,338.8 Standard Dev. Min Max Average en 8. 331505. 8. 53.3 185.0 53.3 185.0 53.3 185.0 For additionalinformationonpanelstructure andgenerallyoncomparisons withothercompanies,refer totheMethodological No Per capitaconsumption,ifnotdirectly available,wasobtainedbydividingthetotalconsumption ofwaterbythenumberemp Terna lowest, averageandhighestfigures andthestandard deviationinthethree panelsconcerned. The great variabilityofcompanydatarenders agraphicillustrationoflittleimportance;thetableindicates water, suchascompanies whichhandleresource extraction. standard deviationindicatesagreat varietyofsectorsconsidered, someofwhichconsumedlarge quantitiesof In comparisontoglobalbestpracticesofsustainability, Terna rankswellbelowthe consumption average.Thehigh percapitawaterconsumption–cubicmeters:average559,410.3;lowestfigure: 9.0(air France-Travel &Leisure); • totalwaterconsumption –thousandsofcubicmeters:average18,800,828.8;lowestfigure: 65.0(Enagas- • SAM -SupersectorLeaderspanel: consumption rankedslightlyabovetheaverageof10companiesinpanelthathandleservices(39.5average). Also inthiscase,Terna’s consumption(totalandpercapita)rankedbelowtheaverage.Inparticular, Terna’s percapita percapitaconsumptionofwater–cubicmeters:average478.8;lowestfigure 12.9(BancaMediolanum);highest • totalconsumptionofwater–thousandscubicmeters:average24,878.6(Stmicroelectronics); lowestfigure: • FTSE-MIB panel: electricity, butalsoelectricitygeneration(4companies)orthetransportationofnaturalgas(3companies). strongly influencedbythedataofoperatorsthathandlenotonlyelectricitytransmissionanddispatching In thiscomparison,Terna rankswellbelowtheaveragebothfortotalandpercapitaconsumption.Theis capitawaterconsumption–cubicmeters:average106,362.7,lowestfigure: per 10.3(ISA-LatinAmerica); • totalwaterconsumption–thousandsofcubicmeters:average1,808,338.8,lowestfigure: 1.5(Resedur-Peru); • TSO panel: highest figure: 7,267,342.7 (Xstrata-BasicResources). Utilities); highestfigure: 280,236,000.0 (Xstrata-BasicResources); figure 4,729.7(Enel). 17.4; highestfigure 328,700.0(Enel); highest figure: 878,742.7(AEP-USA). highest figure 16,443,032.7(AEP-USA); 12 availabledata(10companies,oneofwhichhaddifferent datapercountry); Thousands cubic 24 availabledata(23companies,oneofwhich,Ansaldo,hasdifferent datapersector); The wasterecycled amountsto83% meters S TEMBSAM -SUPERSECTORLEADERS FTSE-MIB TSO Cubic meter/ employee 5 availabledata; Thousands cubic meters Water consumption-2010 of thetotal(89%in2010,83%2009). Cubic meter/ employee Thousands cubic meters loyees. te, page16. Cubic meter/ employee EN22 143 Environmental responsibility 144 Sustainability Report 2011 WASTE BYCATEGORY years before. cases, ontheotherhand,itisnotpossible,ortooexpensive,toseparateparts,inparticularforequipmentpurcha the quantitiesandkinds,seeIndicatorTables). recycling isprovided. Alltheseitemstogetherweighnearly70%ofthetotaldelivered todumps(forfurtherdetailsregarding emulsions, andragscontainingoilssolvents)insulatingmaterialsasbestosforwhichnokind of Waste delivered todumps • • • The mainhazardous specialwaste • • aadu 5. 9. 630.9 191.5 450.8 hazardous • The main o aadu 0. 3. 412.3 435.0 3,322.0 2,534.4 702.5 5,856.3 2,849.5 3,995.7 2,063.3 3,057.5 4,912.8 3,380.1 3,013.3 7,053.3 2,617.2 2,502.6 5,997.3 3,887.3 5,515.9 3,310.8 7,198,1 Onlywastestemmingfrom theproduction process isincluded.Waste produced byservice activities(urbanwaste)isexcluded (1) non hazardous Waste delivered todumps non hazardous hazardous Recycled waste non hazardous hazardous Waste produced 2 Thevalues regarding wastedelivered todumpsmaydiffer from thesimpledifference betweenwasteproduced andwasterecycl (2) recyclable oilspresent inthecollectiontanksmixedwithrainwater, substanceswhichare verydifficult torecycle. which represent hazardous wasteandofwhichnearly95%isrecycled. Thisdecreases to77%includingthenon- dielectric oils the serviceofelectricitytransformationandtransferoperatingduringemergencies, 100%ofwhichisrecycled; batteries contaminated byhazardous substances,ofwhich–after treatment byothercompanies–more than95%isrecycled; metal wood than 95%ofwhichisrecycled; glass andceramic and outoforder machinery metal been excluded,becausethe“excavatedearthandrocks” categoryisnotrelevant anymore; thefigures forsewage amountedto675 excavated earthandrocks andforthesewageamountedto1,541tonsin2010(16,0532009).Foryear2011onlyprodu exceptional aspectconnectedwiththeconstructionofparticularworkinstationsandwouldmakedataseriesnon-homogeneou was wastebelongingtothe“excavatedearthandrocks” and“sewage”categories,because–especiallyinthecaseofsignificant temporary storageofwastestraddlingtwoyears. , mainlyfrom thepackagingofmaterialspurchased, more than90%ofwhichisrecycled. (nearly 50%ofthetotalnonhazardous wasteproduced) from discarded (nearly 70%oftotalhazardous waste)from discarded non-hazardous specialwaste (lead andnickel),which,intheeventofblackouts,enableemergency ontokeep generatingunitstobeturned For thesereasons, itisdifficult tosee acleartrend oftheannualvariationsrecycled waste. for insulatingtransformersreplaced aftertheperiodical checksperformedfortransformermaintenance, (1) from discarded insulators(materialsusedtoinsulateconductorcablesfrom supporttowers),more - TONS (2) consists mainlyofmaterialsusedinthemaintenanceandcleaningplants(mud,oily (for example,generatingsets),more than 93%ofwhichisrecycled; produced byTerna’s operatingactivitiesconsistsof: produced byTerna’s operatingactivitiesconsistsof: transformers, electricalequipment,andmachinery ,5. 2. 1,043.1 626.4 1,153.3 2011 transformers, electricalequipment, 002009 2010 . Until2012,alsoexcluded quantities–ithasan s. Thefigures forthe tonsin2011. ed becauseofthe ced sewagehave sed tnadDv 0,5. 2,3. 244793 7218 8,3,9. 7,324,008.4 46.6 282,437,299.5 1,814.0 42.8 37,251.8 1,040.9 0.948.1 2,444,709.3 21,330.1 146,616.8 18,099.4 1,839,267.1 70,860,928.1 1,700,000.0 62,756.1 11,482,000.0 763,684.9 503,450.5 1,130,000,000.0 29,304,219.3 266,747.3 12,346.1 Standard Dev. Min Max Average en 5,515.9 1,590.5 5,515.91,590.5 1,590.0 For additionalinformation onpanelstructure andgenerally oncomparisonswithothercompanies, refer totheMethodological No Per capitaproduction, ifnotbedirectly available,wasobtained bydividingthetotalofwasteproduced bythenumberofempl Terna Waste Production: comparativedata lowest, averageandhighestfigures andthestandard deviation in thethree panelsconcerned. The great variabilityofcompanydatarenders agraphic illustrationoflittleimportance;thetableindicates as companiesthatdealwithresource extraction. influenced bythehighvarietyofsectorsconsidered, someofwhichproduce large quantitiesofwaste,such In comparisontoglobalbestpracticesinsustainability, Terna rankedwellbelowtheaverage,whichwasstrongly percapitawasteproduction –kg:average1,839,267.1; lowestfigure 46.6(Westpack Banking-Banks);highest • totalwasteproduction –tons:average70,860,928.1;lowestfigure 1,814(Westpack Banking-Banks);highest • SAM -SupersectorLeaderspanel: of companiesthatworkintheservicefields,suchasbanksandinsurancecompanies. With respect tocompanieslistedintheFTSE-MIB,Terna ranksbelowaverage, withfigures comparabletothose percapitawasteproduction –kg:average18,099.4;lowest figure 42.8(BancaIntesaSanpaolo);highestfigure • totalwasteproduction –tons:average763,684.9;lowestfigure 1,040.9(Ansaldo);highestfigure 11,482,000.0(Enel); • FTSE-MIB panel: carry outinthefieldofelectricitygenerationactivities. In thiscomparison,Terna ranksbelowanaveragestrongly influencedbyfourtransmissionoperatorsthatalso waste production percapita–kg:average12,346.1;lowestfigure 48.1(Resedur-Perù); highestfigure 62,756.1 • totalwasteproduction –tons:average266,747.3; lowestfigure 0.9(Resedur-Perù); highestfigure 1,700,000.0 • TSO panel: which comparativedataisavailable,production was 5,515.9tonsinalland1,590.5kgpercapita. In 2011,Terna produced atotalof7,198.1tonswaste.Production peremployeewas2,060.7kg;in2010,for of sustainability–inthedifferent sectorsandinthedifferent companies. impact, provide atleastanindicationoftherelevance ofwaste–therefore ofthematerialitysubjectinterms Said data,infact,thoughitcannotbeinterpreted assignificantofcompanyperformanceinlimitingenvironmental employees, itwasdecidedthatwouldneverthelessbeofinterest topresent themaindataonwasteproduction. Despite theintrinsiclimitationspresent inthecomparison,andlackingmore efficient normalizationfactorsfor (FTSE-MIB panel). Kingdom thatworksinthefieldofresource extraction,whereas thebankIntesaSanpaolo thelowestconcerned data amongthethree Xstrata(SAM-SupersectorLeaderspanel),acompanyintheUnited panelsconcerns well asinthesizeofcompany, notnecessarilyreflected bythenumberofemployees.Thehighestpercapita differences inthetypeofactivitycarriedout,generation ofwasteasaresult oftheproduction process, as The datainvalue–bothabsoluteandperemployeeindicatesubstantialnon-comparabilitythattheyreflect MIB) aswellfrom leadersinsustainability(SAM-SupersectorLeaders)were international examined. Both thedatafrom transmissioncompanies(TSOpanel)andthedatafrom large Italianlistedcompanies(FTSE- production intonsandproduction inkilogramsperemployee. The comparisonbetweenTerna andothercompaniesonthesubjectofwasteismadebyreferring tobothtotal figure 29,304,219.3(Xstrata-BasicResources). figure 1,130,000,000.0 (Xstrata-BasicResources); 146,616.8 (Enel). (National Grid-UK). (National Grid-UK); 14 availabledata(12companies,oneofwhichhasdifferent dataforeachcountry); 22 availabledata; gepoe gepoe kg/employee t kg/employee t kg/employee t S TEMBSAM -SUPERSECTORLEADERS FTSE-MIB TSO 16 availabledata; Waste production -2010 oyees. te, page16 145 Environmental responsibility 146

Sustainability Report 2011 EN30 EN1 Costs fortheenvironment exclusionofintegratedcosts,i.e.regarding activitieswhosepurposeisnotexclusivelyenvironmental (for example,the • introduced indetermining the recording boundary: Many ofTerna’s activitiesdescribedin thisReportentailenvironmental expenses.However, severallimitationswere environmental significance. Management Systemtoidentifyinthemaincorporate processes, Terna’s operatingandinvestmentactivitieswith (for example,thenoiseofstations,electromagnetic fields)intheCompany’sISO-14001-certifiedEnvironmental In thesecondplace,above-mentioneddefinitionswere appliedtotheenvironmental aspectsconsidered significant from pollution,thereduction ofacousticpollution,andthedefense ofbiodiversityandthelandscape”. at preventing itsformation,theprotection ofthesoilandsurface andgroundwater, theprotection oftheairandclimate by itsoperatingactivities.Thecostsinquestioninclude,among otherthings,thedisposalofwasteandmeasures aimed by acompany, directly orindirectly through third parties,toprevent, reduce, orrecover damagetotheenvironment caused 2001/453/EC). According tothisrecommendation, “the term‘environmental expense’includesthecostofmeasures taken regarding therecording anddisclosure ofenvironmental information inannualaccountsandreports (Recommendation (National StatisticalInstitute),Eurostat, andtheGRI,as wellasontherecommendation oftheEuropean Commission The identificationofenvironmental costsisbasedinthefirstplace on theavailabledefinitions,inparticularthoseofIsta Recording methods referred tobelow, byaggregating informationprovided bytheCompany’sgeneralandindustrialaccounting. current expenses.Theseparaterepresentation ofitsenvironmental costshasbeendevelopedaccording tothedefinitions Terna’s commitmenttotheenvironment is showninthecostsitincursforenvironmental reasons, asbothinvestmentand the subjectivityofrecording onlythe environmental components; use oftowerswithfeatures that are innovativealsofrom thepointofviewtheirenvironmental integration) becauseof DISPOSAL OFEQUIPMENTCONTAINING PCBOIL C 0 p 000 0 131,852 0 11,766 7,616 (1) Thedata(8,266kg)publishedinthe2010SustainabilityReportwascorrected toreflect thedatalistedintable(11,7 50 ppm500ppm PCB concentration Disposal ofequipmentcontainingPCBoil used uptotheendofitslifecycle,asallowedbylaw, duetotheexcessiveburden ofearlyreplacement. Terna equipmentwasregistered. Residualoilispresent insmallquantitiesmuchoftheequipment,whichwillbe went beyondthetarget andineffect endsthedisposalprogram. In2011,afurtherdecrease ofquantitiesfoundin provided forareduction ofthequantitytolessthan20,000kgbyend2010.Theresult obtained(11,766kg) ppm ofPCB.ForoilcontaminatedbyPCBwithconcentrations500orlessandmore than50ppm,theplan before thedeadlinesprescribed bylaw. Since2009,there hasbeennoequipmentcontainingoilwithmore than500 In compliancewiththisprovision, Terna implementedadisposalprogram, settingobjectivesforcompletingthework and deadlinesforitsdisposal. introduced theobligationtodeclare thequantityofoilcontaminatedbyPCBpossessedandestablishedprocedures Legislative Decree 209/99,CEIregulation 10-38,theMinistryofEnvironment’s guidelines,andEClaw62/05 showed thatPCBisextraordinarily bio-resistant andcanthushavedangerous effects onlivingorganisms. toinflammablemineraloils.However,equipment, becausetheyconstitutedagoodalternative subsequentstudies Polychlorinated biphenyls(PCBs)were usedallovertheworldasinsulatorsintransformersandotherelectronic which emerged followingpublication. 2011 Kg ofoil 2010 (1) 66) followingevidence 2009 t COSTS FORTHEENVIRONMENT–INVESTMENTSANDOPERATING COSTS-MILLIONEUROS (3) The amountshownistheresult The ofanestimate.Onthebasisanalysisseverallarge investmentprojects, o itturned (3) 2 Studies ofenvironmental impactregarding plantsincludedintheGridDevelopmentPlanthatare attheconstructionstageor (2) (1) These are These thesumsforoffsetting theworksprovided forbytheGridDevelopmentPlan,asdeterminedspecialagreements e (1) The costsshowninthetableregard Terna S.p.A.. shown constituteasubsetofthetotalenvironmental costs,asdefinedabove,actuallyincurred. In compliancewiththemethodadoptedandfootnotestotable,itshouldbenotedthatenvironmental costs “Environmental personnel,isanexception. activities–existingplants”item,whichincludesthecostsofinternal These costsexcludeexpensesregarding resources internal purchases. andconsideronlyexpensesforexternal The environment. In thelightofforegoing, thefollowingtableconstitutesbestrepresentation ofthecostsincurred byTerna forthe Costs fortheenvironment last conditionregards theneedtominimizerecourse toestimatesbasedonoff-the-books analysis. costs andinvestmentsclearlydistinguished),c)directly recordable bytheexistingcorporateaccountingsystem.The Other conditionswere thatthecostswere a)significant,b)consistentwiththeannualreporting ofaccounts(operating exclusionoftheadditionalcostsconnectedwithconsiderationrestrictions orrequests forthesafeguard ofthe • (6) Cutting plants,cuttinggrass,andwastemanagement Cutting (6) Costsforthedefinitivedismantling oflinesaspartUpgradingprojects. For2011onlytheamountregarding themostsig (5) Expenses forupgradingexistingplantsinaccordance withprescriptions andnewregulations intheenvironmental field(for (4) Demolitions Environmental impactstudies Environmental activities–existingplants Environmental activities–newplants oa prtn ot 03979.0 42.6 9.7 51.2 10.3 38.3 Total operatingcosts Costs forenvironmental activities Costs Total Investment Environmental offset Investments environment duringthestageofplanninganddesigningnewlines(detours,burials). authorized bytherelevant governments. phase, i.e.manyprojects havingpassedthecoordination andtheauthorizationphases. how longittakestoobtaintheauthorizationandconstructworks.Thereduction inthefigure compared toprevious yearsh institutions. Theyare recorded asinvestmentatthetimecommitmentismade,i.e.whenagreement issigned,whilethe preponderant partofthem. the onlyonessofardetermineddirectly bytheindustrialaccounting–donotexhaustyear’stotalenvironmental costs,bu off-the-books analysis. Barbara-Tavarnuzze andChignoloPo-Maleo)is reported, because thedeterminationofsumscorresponding onlytodemolitiona landscape aspects). projects withsimilarfeatures wasconsidered. of dissuadersforbirdlife, environmental monitoring,analysisofexcavatedearthandrocks). Therefore, avalueof1%2009- expenses oftheproject regard environmental items,usuallydeterminedbyobligations(forexample,maskingwith trees, barrier (5) (1) (2) (6) (3) (4) removal activitiesoflimitedamountsthatare notincludedininves 562. 28.9 24.1 15.6 03979.0 9.7 7.8 10.3 15.7 14.2 2011 . . 0.4 1.5 1.4 . . 2.7 2.8 5.8 4.0 2.8 4.2 ut thatatleast1%ofthetotal 002009 2010 tments. Thesecostitems– s againstnoise,installation ighlights theactualactivity 2011 investmentcostsfor nificant demolition(Santa intheprocess ofbeing example, noise,visual cash flowdependson ntered intowithlocal t theyconstitutethe ctivities requires an 147 Environmental responsibility 20 of Terna’s people bicycling under the electricity lines “A SPORTS METAPHOR OF THE ELECTRICITY GRID THAT JOINS ITALY, “BICIINTERNA” CELEBRATED THE 150 YEARS OF THE UNIFICATION OF ITALY BY CROSSING THE COUNTRY, FROM THE ADRIATIC COAST TO THE TYRRHENIAN ONE FOR TRANSMITTING ENERGY THROUGH SPORTS. ” 2011

Social responsibility 150

Sustainability Report 2011 LA13 LA2 LA1 Our approach OUR PEOPLE AVERAGE YEARSOFEMPLOYMENTEMPLOYEESLEAVING THECOMPANY Changes inpersonnelcomposition oeta 0yasod3. 4134.1 1.0 8.6 34.1 32.3 1.6 9.1 35.1 31.6 3.5 6.7 32.3 More than50yearsold Between 30and50yearsold Less than30yearsold Women Men Total terminations to thefollowingpages. As farasrelations withemployeesandtheunionsare seethesectiononstakeholderengagementinaddition concerned, Aspects regarding safetyare theresponsibility oftheCorporateSafetyDepartment. management isentrusted,inadditiontotheabove-mentionedDepartment,alsoheadsofotherdepartments. Policies regarding employeesare establishedbytheHumanResource andOrganization Department,whileresource listeningtoemployeesthrough surveysof theiropinions. • well-organized a systemof • andwelfare compensation policies • investment intraining • professional integration. beginner contracts,whichare generallytransformedintopermanentonesatthe end oftheperiodtrainingand For theGroup, theincrease inthenumberoffixed-termemployees(from 3.1% to4.1%)reflects theuseof18-month of “totalworkforce” as“supervised workers”.Theseworkersare notincludedinthe personneldatashowninthetables. these 34peoplewere involvedinTerna’s activitiesforapre-determined periodoftimeand fallundertheGRI’sdefinition 2009), whowere employeesofagenciesthatsupplylabortoTerna. Althoughtheywere not employeesoftheCompany, For thesakeofcompleteness,itshouldbenotedthatduring 2011Terna had34temporaryworkers(28in2010and33 reflects retirements. TheaveragenumberofyearsworkedattheCompanybyemployeeswhoquitin2011was32.3. rateduetospontaneousresignations rateessentially The turnover continuestobeverylow(0.5%);theoverallturnover Retirement isbyfarthemostimportantcauseofemployee terminations,whichare concentratedamongtheoldestworkers. plans regarding efficiency, markingadecrease withrespect tothe2008level(3,524employeesinItaly). In 2011theGroup’s personnelrecorded aslightincrease over2010.Thethree-year trend isinlinewiththeCompany’s designofmanagementanddevelopmentsystemsaimedat the • forsafety concern • Over time,theimportanceoftheseaspectshasledtoanapproach basedon: risks, suchastasksperformedatheightsofmanymetersabovetheground andmaintenanceworkonlivelines. foroccupationalsafety,important isanotherelement:concern whichisrequired byoperatingactivitiesfeaturingparticular renewing thesecapabilitiesconstitutesanessentialelementofTerna’s managerialapproach tohumanresources. Equally competence andoperatingefficiency, andtoimplementtheCompany’sstrategy andachieveitsobjectives.Diligencein regarding electricitythatenablesTerna tocarryoutitsactivitiesaswellpossible,withahighlevelofprofessional Human resources playacrucialrole inTerna’s activities.Itispeoplewhohavethepeculiar, rare, oruniquetechnicalexpert (1) In thecaseofemployeeshired In byTerna followingacquisitionsofdivisions,thelengthemploymenttakesintoaccount the (1) of corporatelife; economic securityforemployeesandtheirfamilies; capabilities ; and theprevention ofinjuriestoensure thephysicalintegrityofemployees; to enabletheCompanyanditsemployeesgrow; industrial relations basedontheinvolvementoflaborunions aimed ataligningindividualperformanceswiththeCompany’sgoalsandproviding improving performanceanddevelopingindividual (1) 443. 25.5 33.0 37.2 31.2 34.4 32.1 2011 002009 2010 ir previous employment. in numerous aspects ise PERSONNEL COMPOSITIONBYCATEGORY PERSONNEL COMPOSITION PERSONNEL CHANGES Average biographical age 45.2 45.2 Average biographical age Average personnelage(years) 1,475 - more than50yearsold 1,496 - between30and50yearsold 522 - lessthan30yearsold By age 388 - women 3,10 - men By gender - parttime 3,4 - fulltime By employmenttype 143 - fixed-term 3,350 - permanent By contracttype 3,493 Total employees Turnover ratesreport thepercentage ofterminationswithrespect tothenumberofemployeesasDecember, 31oftheprevi (1) 3.9 More than50yearsold 0.4 Between 30and50yearsold 0.1 Less than30yearsold 0.4 Women Men Total Turnover rateterminations(%) 136 - more than50yearsold 13 - between30and50yearsold 2 - lessthan30yearsold 12 - women 1 - men 151 Employees leavingduringtheyear 176 Employees hired duringtheyear 3,493 Total employees eireeuie 05 65 488 1,020 1,874 1,017 502 59 1,890 977 490 60 1,966 Blue-collar workers White-collar workers Junior executives Senior executives Total employees ofTerna S.p.A.byprofessional categoryasofDecember31,2011. To facilitatetheinterpretation ofseveralindicatorsregarding personnelcomposition,thefollowingtablebreaks downthe (1)

,9 ,6 3,447 3,468 3,493 2011 44 463.8 4.6 4.4 2011 2011 . . 3.5 4.3 4.0 0 030 30 30 122 147 39 3 3483,417 3,438 63

,9 3,092 3,095 5

0 73 107 030.3 0.3 12 10 33355 373

,6 3,374 3,361 1 7 7 393 472 020.0 0.2

. 3.6 4.2 3483,447 3,468 3,447 3,468 4 125 143 ,0 1,501 1,502 5646.4 45.6

020.2 0.2 8 7 1857 178 1441,553 1,494 5 134 157 ous year. 002009 2010 002009 2010 002009 2010

151 Social responsibility 152 Sustainability Report 2011 10.00 12.00 14.00 16.00 18.00 10.00 12.00 14.00 FTSE-MIB TURNOVERRATE TSO TURNOVERRATE Personnel turnover: comparativedata Personnel turnover: employees leavingthecompany. Even inthecomparisonwithglobalsustainabilitybestpractices,Terna registered ratefor alowturnover figure: 20.0%; standard deviation:5.7%. according tosectororcountryofactivityconsidered); rate:8.5%;lowestfigure: averageturnover 1.0%; highest SAM -SupersectorLeadersPanel: Terna rankedmuchbelowtheaverageof21companiesFTSE-MIBthatpublisheddata. and abroad); rate:9.2%;lowestfigure: averageturnover 1.6%;highestfigure: 15.4%;standard deviation:4.5%. FTSE-MIB Panel: companies thatregistered aratebelow4%. Terna rankedbelowtheaverage,withlowestfigure withrespect totheother panels,influencedbythree rate:5.9%;lowestfigure:turnover 1.7%;highestfigure: 12.8%;standard deviation:3.2%.Inthiscomparison, TSO panel: bestpractices. FTSE-MIB panelandinthatoftheinternational respect toallthereference panels.Inparticular, itregistered figures thatwere amongthelowestin In thecomparisonwithothercompanies,Terna registered ratelowerthantheaveragewith aturnover rate wasequalto4.5%. In 2011,Terna registered rateequalto 4.4%;in2010,theyearofavailablereference aturnover data,theturnover (FTSE-MIB) andfrom sustainabilityleaders(SAM-SupersectorLeaders). theinternational data wasexaminedbothfrom onlytransmissioncompanies(TSOpanel),from theleadingItalianlistedcompanies rateisanindirectSince thepersonnelturnover indicatorofthecorporateclimatethatgenerallyregards allsectors, rate calculatedofemployeesleavingasDecember31theprevious year. The comparisonbetweenTerna andothercompaniesregarding wasconductedbasedonthe personnelturnover 0.00 2.00 4.00 6.00 8.00 0.00 2.00 4.00 6.00 8.00 en’ unvrrt Troe ae Average (9.2) Turnover rate Terna’s rate turnover Average (5.9) Turnover rate Terna’s rate turnover

(*) Banca MPS RTE Landsnet REE 13 availabledata(12companiesofwhichonepresent withdifferent dataaccording tocountry);average Banco Popolare(*)

A2A Italia 22 availabledata(21companies,oneofwhichpresent with different dataforactivitiesinItaly

Terna

Banca Popolare

di Milano (*)

UBI Banca NWSKStatnett SVK ENBW

Atlantia

(*) 15 availabledata(13companiesofwhichtwopresent withdifferent data

Eni (*)

Intesa Sanpaolo(*)

Enel (*)

UniCredit en D RE ISA TDE(REE) Terna

Telecom

Italia (*)

Fiat Mondo(*)

Buzzi Unicem

Lottomatica(*) (*)

Generali (*) Assicurazioni REN

Ansaldo STS(*) quebec A2A Estero Hydro-

Banca (*) Mediolanum SSE Prysmian

STMicroelectronics Scottish Power Pirelli (*) EMPLOYEES OFCONTRACTORSANDSUBCONTRACTORS ulTm qiaet2061931,530 336,600 1,973 434,044 456,807 2,076 Equivalent Full Time Days worked FTE employees( Working daysin 2011foremployeeshired bycontractorsforworkcarriedoutTerna totaled456,807,equalto2,076 Terna hasoffices alloverItaly–amongotherthings,becauseofthenecessityprompt maintenanceworkonitsentire grid. ones. Noadditionalinformationisavailableregarding thetypesofcontractsappliedbycontractors. and dailynumberofworkersonthelargest constructionsitesandoftheamountspaidforcontractworkonsmaller cutting ofvegetationunderoverheadlines.ThedaysworkedandFTEemployeesare estimatedonthebasisofaverage the useofpersonneltherein, andregard allofTerna’s contractwork,from theconstructionsitesoflarge-scale worktothe assigning worktocontractors.Thisdatatakesintoaccountthedurationofcontractwork,aswellvariability of national territory. Theincrease recorded duringthethree-year periodreflects thegrowth ofinvestingactivitiesthatinclude POTENTIAL NUMBEROFEMPLOYEESLEAVING INTHE2012-2016FIVE-YEARPERIOD eireeuie,jno xctvs ht olrwres125 People thatwillaccrue,for various reasons, Blue collarworkers Senior executives,juniorwhitecollarworkers (based ontheoldlaws)asof31.12.2011 People thataccruedtherighttoretirement eireeuie,jno xctvs ht olrwres 92 Blue collarworkers Senior executives,junior whitecollarworkers the righttoretirement forthe2012-2016period SAM -SUPERSECTORLEADERSTURNOVERRATE For additionalinformationonpanelstructure andgenerallyoncomparisonswithothercompanies,refer totheMethodologicalNo (*) Turnover rateswere calculatedusingavailabledata. The management of generational turnover The managementofgenerationalturnover on thebasisofdataavailableinCompany’sinformation services. period. Thetablebelowsummarizesthepotentialnumberof employeesleavinginthe2012-2016five-yearperiod, the potential“group” ofemployeesleaving,thatlastyearwere estimatedtobeequal728inthe2011-2015 age andseniorityrequirements necessaryforaccruingtheright toretirement, significantlyreduced, alsoforTerna, The newrecently approved Italianlegislationregarding retirement (Art.24ofLawno.214/2011),thatraisedthe 10.00 15.00 20.00 25.00 0.00 5.00 unvrrt vrg 85 Terna (4.6) Average (8.5) Turnover rate

Air France Full Time Equivalent

BMW

Hyunday

Enagás ) (mainlyworkersassignedtobuildingelectricitylinesandpowerstations)across the

LotteMart

Samsung- Korea

Lotte Dep. store

Itaúsa

Repsol

Roche

Swiss Re 2011

DSM

Stockland

Samsung- Overseas 002009 2010

Xstrata te, page16. 40 49 EU21 EU15 EU17 153 Social responsibility 154

Sustainability Report 2011 EU14 Search andselection PERSONNEL COMPOSITIONBYSCHOOLING of testsaimed at ascertainingwhethercandidates possessthebasicmotivational andbehavioralrequirements) andone To selectrecent university andsecondary-schoolgraduates,theCompany generallyusestheassessmentcenter(aseries to theprofile (recent graduates, junior, middle/expert, senior)andtothenumberofresources sought for. announcements, andonlinesites. Themethodsandinstrumentsusedinthe database: listsprovided byschools anduniversities,jobmeetings,career days,employment agencies,newspaper When particularprofiles are sought fororare hard tofind,theCompanyuseschannels thatare tothewebsite alternative ( different areas. Forviewersofthesectionwhowouldlikefurther information,adedicatede-mailaddress isavailable To guidecandidates,there are descriptionsoftheprofiles andprofessional qualifications soughtforintheCompany’s has beenenhancedwithinformationonTerna’s policiesregarding themanagementanddevelopmentofhumanresources. Company’s website The mostimportantchannelforfindingcandidatesisthe which alsohandlesrelations withschools,universities,employmentagencies,etc. The process ofsearching forandselectingpersonnel ismanagedbytheHumanResource andOrganization Department, age andanincrease intheeducationofcorporatepopulation. theCompanyisexperiencinganditshiringpoliciesentail adecreaseOver time,thegenerationalturnover intheaverage impact analysts,technicaldesigners,etc.)orinbusiness-supportareas (mainlywithaneconomicbackground). project andprogram managers,constructionsiteexpertsinauthorizationprocesses, expertenvironmental Company alsohires resources withexperienceregarding specificprofessional roles ofthecore business(forexample, their workinglifeandacquire thespecificknowledgeandcapabilities needed.To alesserandverytargeted extent,the operating employees.Theyreceive thebasictrainingrequired through post-hiringprocesses thatcontinuethroughout mostly inthefieldofelectricity. Theseare youngpeople,whoare assignedroles asprofessionals, aswelltechnicaland electrical engineers(andtoalesserextentonesinotherfields)andtechnicianswithdiplomasfrom vocationalschools, The peoplehired from labormarketare theexternal mainlyrecent universityandsecondary-schoolgraduates,inparticular The search-and-selection process aimsatensuringtheCompanyexpertiseitneedstoachieveitsobjectives. lmnaymdl col1. 8219.4 45.6 17.0 18.2 46.5 16.2 16.0 46.6 15.8 Elementary/middle school Vocational school diploma High schooldiploma Degree Percentage ofemployeesoutthetotalas31.12.2011 [email protected] carry outthesameactivitiesastodaymore efficiently. It shouldalsobeconsidered thattheentryofnewresources havingahighereducationwillmakeitpossibleto professional orientationprojects aimedatcreating andtransferringtechnicalmanagerialexpertisefor • know-howandexpertise,oftenspecificonlytoTerna, transferring bystrengthening theorganization oftraining • For sometime,Terna hasimplementedvariousinitiativesformanagingthegenerationalturnover, themainonesbeing: not possibletomakeanaccurateforecast ofthepeopleexpectedtoleaveovertenyearperiod. expectancy”, aimedatbalancingmediumandlongtermsocialsecuritymanagement.Consequently, itiscurrently for accessingthedifferent retirement modalities,amechanismisperiodicallyappliedthatconnectedtothe“life for the2012-2021period,newlegislationestablishedthat,alongwithbiographicalrequirements established opting tocontinueworkingandconsequentlyaccrueabetterretirement plan.Regarding aforecast forretirements requirements. Forthosebelongingtothesecondgroup, instead,agreater useisexpectedofthepossibilityfor high onlyforthefirstgroup ofemployees,forwhichthereform includestheapplicationofprevious It isnecessarytonotethattheactualprobability forleavingworkduringthefive-yearunderconsiderationisvery adequately coveringcriticalroles. instructors; courses heldbyinternal ). , where applicantscanentertheirCVsandautomaticallyreceive ane-mailofconfirmation.Thesection Lavorare inTerna selection process 161. 18.0 19.2 21.6 2011 (“Working atTerna”) sectionofthe are differentiated according 002009 2010 process Terna alwaysinformsalltheparticipatingcandidatesofresults, whetherpositiveornegative. In linewiththeCompany’spolicyoftransparency initsrelations andfairness withstakeholders,attheendofselection personnel andtheHeadsofdepartmentstowhichresources willbeassigned. of candidateswhowillthenbeinvitedforatechnical/professional interview. ThefinalinterviewiscarriedoutbyHR candidates totallymatchtheprofile wanted.ThefirstinterviewisalwayshandledbyHRspecialiststoidentifyashortlist For theselectionofseniorresources theCompanyusesasequenceofinterviewsthataimatestablishingwhether investigation inamethodologicalframeworkforwhichtheHumanResources andOrganization Departmentisresponsible. participateintheselectionprocess,concerned togetherwithHRspecialists,andhandlethetechnical/professional and thefirsttechnical/professional intervieware oftencarriedout or more interviewsaimedatassessingtheirtechnicalandprofessional knowledgeandcapabilities.Theassessment center Relations withschools,universitiesandcentersofexcellence The and ourexpertsinuniversityorsecondary-schoolcourses,aswellguidedtoursofplants. project work,scholarshipsandtheexchangeofknow-how, withuniversitylecturers participatinginourcourses The numerous kindsofcooperation provide forpossibilitiesregarding traineeships, dissertations,internships, Company andtheoutsideworld. general tosupporttheprocess offindingnewresources andcreate avirtuouscircle ofexchangebetweenthe Terna isexpandingitsrelations withtheworldofuniversities,post-graduatetraining,andinstitutionaltrainingin last fewyears,withconsequentproblems infindingresources especiallyinRome. forallthecompaniesconcerned, engaged inpromoting andenhancingtheElectricalEngineeringcourse,whoseenrollment hasdecreased inthe by organizing 5seminars,aswellguidedtoursofitsplants,inwhich41studentsparticipated.Terna isalso companies thatoperateinRome.Terna participatedactivelyintheteachingofElectricalEngineeringcourse of UnderstandingbetweentheEngineeringFacultyUniversityRome“LaSapienza”andseverallarge Activities continuedthatare partoftheFiGi(Engineering SchoolandLarge Enterprises)Project, theMemorandum Milan (MayandDecember),Padua(JuneOctober),Bari(October)Pisa(November). following cities:Bologna(FebruaryandOctober),Rome(March andMay),Turin (March andMay),Naples(April), The Companyparticipatedin14career days(8 in2010)collaborationwiththeprincipaluniversities were subsequentlyadmittedtotheselectionprocess andhired. trainees,andstudentswritingtheses(34in2010,122009).Someofthese The Companyhosted38interns, universities inthesectorforatotalof12projects; sixvisitstoplants were alsoaddedforatotalofover170visitors. Smart GridsPolitecnicodiBari),master’sprograms promoted byleadingnationalassociationsorcorporate During theyear, Terna’s expertswere alsoinstructorsforadvanceduniversitytrainingcourses(includingCorso have received economiccontributionin2011andthathad thepossibilityofhavingstudentscarryoutproject work. There were atotalofsixmaster’sprograms, promoted byuniversities,businessschoolsorcentersofexcellence,that departments/faculties), 2were added and3othersare beingfinalized. agreements withallfacultiesandmaster’sprograms ofagivenuniversityoragreements withindividual In 2011,tothe25agreements already existingwiththemainItalianuniversitiesandbusinessschools(framework in whichtheCompanyparticipates. these initiatives,alistoftheagreements already ineffect withuniversities,andthejobmeetingscareer days Lavorare inTerna section ofthecorporatewebsiteprovides informationonthe procedures forimplementing at thesametime.Expertsfrom thedepartmentsorunits 155 Social responsibility 156

Sustainability Report 2011 EU14 Training • • • • Training initiativesare categorizedbysubjectarea: specialevents. • localTransmission Operating Area courses(tosatisfyneedsnotcovered bythecentrallyorganized ones); • specificcoursesassigneduponrequest orexternal toindividualsorsmallgroups; internal • centrallyplannedcourses/pathways/campaignsfortargeted beneficiaries; • Training provided byCampusincludes: of 2010,havebeendelayed;theyare expectedtobeavailable bytheendof2012. courses, inparticularthoseorganized bytheTerna Faculty. Works ontheCampuspremises, whichhavebegunattheend support fordisseminatinginformationontrainingpossibilitiesandmakingavailablethedocumentationaccompanying the In 2011,theCampusportal–whichisaccessiblefrom the corporateintranetsinceendof2009–hasbeenmain all theinitiativesimplementedduringyear. they perceive (howwellthecoursessatisfyneeds,theirquality andcontributiontoresource development)withrespect to two years(lastedition:2010)asurveyiscarriedoutamongallheadsofresources toascertainthelevelofeffectiveness model. Theinstrumentsusedattheendofcoursesrangefrom ratingquestionnaires toachievementtests.Atleastevery Systematic evaluationoftrainingresults enablestheCompany tocollectusefulfeedbackandcontinuallyimprove its information andcanalsohaveanintegrative/replacement functiontoclassroom learning. isusedforcampaignsaimedattransferringspecificknowledgeand business gameandtheuseofsimulators.E-Learning in linewithobjectivesandcontents,itadoptsinnovativemethodssuchasoutdoortraining,thedevelopmentcenter, the In choicesimplemented,Terna’s trainingmodelpromotes activem corporate know-howwiththatcomingfrom world. theexternal business schoolsandmore centersofexcellence,guaranteesthenecessarycontamination ingeneralwithexternal Campus, whilealsopromoting asenseofbelongingandintegrationwithintheCompany. Collaborationwithuniversities, based ontheavailabilityofmostexpertresources foractingasproject managersandinstructorswiththeFaculty Maintaining, sharingandtransferringTerna’s specializedanduniqueknow-howisensured byatrainingmodelthatis by makingtheircontributionmore motivatedandqualified. aimed atcreating valueforbothindividuals–byincreasing anddiversifyingexpertise( It constitutesajointindividualandcorporateinvestmentcontinuouslyenclosinganemployee’sentire professional life, strategy, andobjectives. At Terna, trainingisstrategicallyimportantfordevelopinghumancapitalinkeepingwiththeCompany’smission, for whichtheTraining Pathwayaimsataligningcapabilities,updating, training,orupgrading. recently hired resources andonesalready inservice.Inthelattercase,theybelongtohomogeneous professional families, consisting inamixofinitiativesbelongingtothethree previous subjectareas. Theproposals are addressed toboth Pathway Office Automation); Training of thevaluesandsensibilitiesonwhichTerna’s organizational culture isbased; Education Responsibility”). TheFacultyCampusisoftendirectly incharge oftheactivities; programs issues(i.e.CodeofEthics,231Model–seepage159thechapter“Social oncorporategovernances promoting CorporateIdentity. Itincludes,forexample,the“CompanyPresentation” coursesfornewhires andthetraining Context &BusinessModel for developingtechnicalandprofessional expertiseandacquiringcross-cutting skills(e.g.foreign languages, , whichare short-medium-andlong-termtrainingprocesses dedicated tospecifictarget individualsand for managerialandpersonaldevelopment.Thistrainingincreases role capabilitiesandfosterstheacquisition for learning about the internal and external businesscontextinwhichTerna andexternal abouttheinternal for learning operatesand ethods inclassroom trainingandonthejobtraining;if employability ) –andtheCompany PERSONNEL TRAINING number oftraininghoursperemployeewas51(+4%compared to2010). hours oftrainingprovided (nearly4%more thanin2010),98%ofwhichwere inaclassroom and2%online.Theaverage 2 Percentage ofemployeesthatattendedatleastonetrainingcourse. (2) In short, where knowledgeandexpertiseregarding Terna’s specificandtypicalknow-howneededtobedeveloped. predominant, particularlyfortrainingactivitiesbelongingtothe sectionsContext&BusinessModelandTraining, especially Rete underlined bythepayoff of andaimedatcreatingsupport ofgenerationalturnover theCampusin2008– In 2011,corporatetraininginvestmentsincreased by4% compared to2010.Thesharingknowledgeoperation,alsoin Data according togender, calculatedforthefirsttimein2011,wasdifferently(1) from thatbycategory, consideri foln riig231 99 3 144,296 97 11,558 118,303 2 22,915 164,416 8,562 125,151 98 n.a. 21,664 171,146 29,928 178,734 n.a. 31,919 47 132,190 49 51 % ofonlinetraining % ofclassroom training Training method Training Context andBusinessModel Education Hours oftrainingbycoursetype instruction Hours ofinternal Total Training hours By gender By category By employee Average numberoftraininghours December 31andnottheaveragenumberofemployees. lecla okr 55 53 43 45 25 58 40 47 27 55 30 55 19 Blue-collar workers White-collar workers Junior executives Senior executives oe 4na n.a. n.a. 44 % ofemployeescovered Women Men isnowfullyoperational.ThecontributionoftheFacultyCampus,atcentraland/orlocallevels,wassignificantly – in 2011,97%ofTerna’s employeestookatleast onecourse (1) (2) (+1% compared to2010),withmore than178,000 2011 1na n.a. n.a. 51 79 91 96 97 ng personnelworkingasof 002009 2010 Esperienze in LA10 157 Social responsibility 158 Sustainability Report 2011 100.00 120.00 TRAINING HOURS/FTSE-MIBEMPLOYEE TRAINING HOURS/TSOEMPLOYEE Training foremployees:comparativedata time), afigure thatwasstrongly influencedbycharacteristicsthatdonotallowthecasebeingsuitableforcomparison. registered 264.5numberoftraininghoursperemployee(corresponding tooveronemonthandahalfofworking higher than80traininghourspercapita;Hyundai(Construction&Materialssector)wasexcludedfrom thepanelthat the firstplacesfornumberoftraininghoursperemployee.Thethree companiesregistered figures thatwere standard deviation:28.5.Eveninthecomparisonwith globalsustainabilitybestpractices,Terna rankedamong data according toemployeecategory);averagepercapita hours:37.7;lowestfigure: 8.1;highestfigure: 103.0; SAM -SupersectorLeadersPanel: published thedata. places amongtheleadingItaliancompanies,wellaboveaverageof24companiesFTSE-MIBthat deviation: 14.9.Confirmingtheresults includedinlast year’s SustainabilityReport,Terna rankedamongthefirst FTSE-MIB Panel: training hourspercapita. comparison, Terna rankedbelowtheaverage,strongly influencedbythree companiesthatregistered over80 country); averagepercapitahours:61.1;lowestfigure: 19.4;highestfigure: 99.0;standard deviation:24.8.Inthis TSO Panel: bestpractices. panels, includingtheoneforinternational In thecomparisonwithothercompanies,Terna rankedamongthefirstplacesintwoofthree reference per employeetotaled49. In 2011,Terna’s traininghourstotaled51percapita;in2010,theyearofavailablereference data,traininghours sustainabilityleaders(SAM-SupersectorLeaders). companies (FTSE-MIB)andtheinternational data wasexaminedbothfrom onlytransmissioncompanies(TSOpanel)andfrom theleadinglistedItalian allsectors, training hourspercapita.Sinceemployeeisasustainabilityaspectthatgenerallyconcerns The comparisonbetweenTerna andothercompaniesregarding trainingwasconductedbased ontheannual 10.00 20.00 30.00 40.00 50.00 60.00 20.00 40.00 60.00 80.00 0.00 0.00 riighusepoe en Tann or/mlye Average (32.7) Training hours/employee Training hours/employeeTerna riighusepoe en Tann or/mlye Average (61.1) Training hours/employee Training hours/employeeTerna

Lottomatica(*) REN (*) 12 availabledata(10companies,oneofwhich,REE,present withdifferent dataaccording tothe A2A ScottishPower

Atlantia 24 availabledata;averagepercapitahours:32.7;lowestfigure: 5.1;highestfigure: 50.4;standard

Autogrill (*)

Buzzi RTE Unicem(*) (*) Finmeccanica

(*) Ansaldo sts Kepco ISA TDE(REE) Fingrid Eskom ELIA Terna 17 availabledata(15companies,oneofwhich,BMW, present withdifferent

Snam Rete Gas

Telecom Italia

UniCredit

Enel

Eni (*)

Intesa Sanpaolo(*) Banca Mediolanum(*)

Fiat (*)

Saipem(*)

UBI Banca(*)

Generali Assicurazioni Banca Popolare di Milano(* )

Banca MPS

STMicroelectronics

Terna Redesur Banco (REE) Popolare

Pirelli (*) REE included: a representatives, twovisitstooutstandingcompaniesininnovation).Completionisscheduled2012.Additionalinitiatives for aselectionofmiddlemanagersthatwasfundedbyFondirigenti(three expertsandexternal meetingswithinternational focus wasbusinessinnovationanddevelopment.Forthispurpose,atrainingeventorganized forallexecutivesand With regard toEducation(over21,000hoursoftraining),inconnectionwiththecompany’sstrategicobjectives,year’s classroom andonlineonInformationSecurityfor over3,800hoursoftrainingthatwillbecompletedin2012. with theconsolidatedtraininginitiativesforelectricitymarket,awidespread trainingcampaignimplementedinthe With regard tothesectionContext&BusinessModel(over31,000hoursoftraining)itisnecessaryunderline,along pools (SessionforRoles,Session forI&CT, SessionforTerna’s businessmodel)totaledover 1,500hoursoftraining. introducing anewsystem ofcontrol andenergy operation.ThenewPathwayformanagement assistantsandsecretarial decrease compared to2010wasdue tothepostponementowingtechnicalreasons ofpart theactivitiesrelating to Dispatching andEnergy Operationchaininvolvednearly66resources andtotaled nearly7,000hoursoftraining.The With regard tothePathwaysdedicatedemployeesinservice, thePathwayforshiftworkersofRealTimeunit diplomas (professionals, white-collarworkers,technicians,blue-collarworkers),totalingover49,000training hours. process thatthecompanyisexperiencing–regarded alltypesofpersonnelwithuniversitydegrees andhighschool Pathways fornewlyhired employees(hired asof2007-2008) –highlyimportantforfacilitatingthegenerationalturnover employees inservicethattotaled33%ofthetraininghours (28% newlyhired employees,5%resources already employed). Lastly, commitment continuedin2011formedium-longtermPathwaysbothnewlyhired employeesaswellfor computer communicationchannels(intranet). of thiscorporategroup ofemployees,toonlinepresence detection systemsandmore generally, toaccessingcorporate collar workersforusingPCworkstationsinITislandsacross theterritory;initiativeintendedsupportingshift, even 171 ofchapter“SocialResponsibility”).In2011,awidespread trainingcampaignwasalsoimplementedinvolvingall blue- preventing electricityrisksandimplementingtheupdatinginitiativesincompliancewithnewregulations (seepage by +24%compared totheprevious year(over61,000oftraininghours)mainlyduetoawidespread trainingcampaignon training hourswere held,increasing by6%compared to2010.Withinthissector, theSafetysectionincreased significantly With regard toTraining, whichisofprimaryimportanceowingtothenature ofTerna’s technicalbusiness,over125,000 management and/orinrelation todevelopmentresponsibilities ofcollaborators. action areas (organizational conductexpectedinperformance)andindividualsidentifiedonthebasisofPerformance In brief,duringthe2009-2011three-year period,theEducationoffer graduallyreached theobjectiveofcoveringboth blue-collar workers. training offer thatduring2011wasfurtherdevelopedcompared totheprevious planandextendedtowhite-collar and active conduct”addressed toaselectionofprofessional white-collarworkers.Thenewinitiativesalsoincludedabroad white-collar workers;aninitiativefocusedonproblem solving fordevelopingorganizational conduct,“innovationandpro- 100.00 120.00 For additionalinformationonpanelstructure andgenerallyoncomparisonswithothercompanies,refer totheMethodologicalNo Training hourswere calculated usingotherpublisheddata.Thecalculationofpercapitatrainingdayscompared topercapit (*) TRAINING HOURS/SAM-SUPERSECTORLEADERSEMPLOYEE 20.00 40.00 60.00 80.00 0.00 based on8hours/day. riighusepoe Aeae(77 Terna (49.0) Average (37.7) Training hours/employee Laboratory onInnovation Laboratory BMW tariff employess

Westpac Banking New Zeland

BMW masters employees

Itausa

BMW

proposed, inadifferent version,toaselectionofprofessional juniorexecutivesand non-tariff employees

Post NL N.V. Westpac Banking - Australia, UK, USA

Roche

DSM

Air France

Repsol

Xstrata

Enagas

Stockland

Samsung

KT corp. a hourswasmade

te, page16. Lotte Mart 159 Social responsibility

162

Sustainability Report 2011 LA12 LA3 Personnel developmentandmanagement cafeteriaserviceormealcoupons. • loansforpurchasing subsidized ahome, aswellforseriousfamily needs; • more conditionsthanthoseprovided favorablematernity-leave for bythelaw; • recreational associations; • fornon-occupational injuries; insurance • pensions(voluntary participation); supplementary • health care; supplementary • In particular, thefollowingbenefitsare provided formostemployees: aspects ofemployment)are substantiallybetterthantheItalianaverage. As inotherlarge electricitycompanies,theconditionsofTerna’s employees(wages,workinghours,annual leaveandother “incentives forproductivity/quality” linkedtotheachievement ofspecificqualityandproductivity objectivesconnected • “corporate profitability” linkedtotheCompany’sgeneralperformance andpaidtomostemployeesgenerally, withthe • The bonusisavariableelementofcompensationandconsists oftwoparts: to incentivizelaborproductivity regarding qualityandproductivity, Terna signedanagreement a withtheLaborUnionsgoverning Recognizing theimportanceofextensiveinvolvement ofemployeesintheimplementationprograms andplans sustainability objectivestothemanagerialvariableremuneration system. sustainability objectives–linkedtotheStrategicPlan.TheBalancedScorecard systemislinkedtoMBOs,byreferring based ontheBalancedScorecard systemwhichevaluates,onaquarterlybasis,thetrend ofobjectives–including extent towhichbothcorporateandindividualobjectivesare achieved. Monitoringandcontrolling corporateactivitiesare MBO (ManagementbyObjectives), Other variable-compensationschemesare basedonannual performanceobjectives. managers whoholdkeypositions,whichislinkedtocorporateobjectives. The samepurposealsoappliestothe2011-2013cash achievement ofitsstrategicobjectives. an importantinstrumentforensuringtheloyaltyofseniorexecutiveswhoholdmostpositions the expire in2010,butlaterextendedto2013);amongother things,theadoptionofthisPlanhasprovided theCompanywith Terna hashada Performance measurement isalsoconnected withthepaymentofvariablepartscompensation.Inparticularin2011, economic andmanagerialobjectives,includingthemainenvironmental andsocialperformanceobjectives. system basedonthe The measurement ofperformance isalsoentrustedtootherinstruments.Terna hashadforsometimeastrategiccontrol and thepathsofprofessional growth are more strictlydeterminedbythecollectivelaboragreement. used, suchasperiodicalinterviewswithmanagersandHRrepresentatives, partlybecausetherequirements oftheirjobs continue. Forblue-collarworkersandotheremployeesnotincludedintheGPS,lessstructured formsofassessmentare communication betweenmanagersandemployees.Therefore, in2012theprocess ofgraduallyextendingthesystemwill number willgraduallyriseasnewpersonneltargets are includedwiththegoalofincreasing transparency and nearly 22%ofthetotalcorporatepopulation–were involved(38%offemalepersonneland20%malepersonnel).This A totalof651employeeswere involvedinthefirstassessmentcycle,whichstarted2009.In2011,763employees– of theshiftsthatcontrol thegridinreal time),andsomewhite-collarworkers. employees withmanagerialandprofessional responsibilities: allseniorexecutives,juniorexecutives(excepttheforemen the growth ofindividualstobemonitored andguided.TheapplicationoftheGPScurrently involvesasegmentof activate measures fordevelopment,suchastraining.Therepetition ofperformanceassessmentinannualcyclesallows feedback, whichisessentialforguidingconduct,highlightingstrong pointsandareas thatneedtobeimproved, and over time.Performedbythepersondirectly responsible andvalidatedbythelatter’smanager, theevaluationprovides for and expectedperformance;thesamesystemrecords theresults oftheassessmentsandensures thattheyare available them. AspeciallydevelopedITsystemaccessibleindividuallybytheemployeescontainsobjectivestobereached achievement ofthepre-established objectives,whilethesecondregards theorganizational actionscarriedouttoachieve The GlobalPerformanceSystemisbasedonadefinitionofperformancethathastwoaspects:thefirstactual (GPS), results, feedback,anddevelopmenttrainingactions.Theheartofthesystemis The essentialelementsofthemodelare thedefinitionofobjectivesandconductthatisexpected,assessment Terna’s systemfordevelopingandmanaginghumanresources isbasedonperformanceasanindicator forguidinggrowth. with theemployees’workandpaidtoblue-white-collar workers. exception ofseniorexecutives; which entered intooperationin2009accompaniedbyatrainingcampaignaddressed toallthepersonnelconcerned. Stock OptionPlan Balanced Scorecard (see alsothesectiononIndustrialRelations). for itstopmanagement,whichwasresolved uponinDecember 2005(scheduledto reserved forcorporateManagement,linksthesumsof individualbonusestothe method, through whichitmonitorsthe progress madeinattainingstrategic Long-term Incentive(LTI) Plan Global PerformanceSystem for thetopmanagementand corporate-result bonus among theemployeeswhoresigned hadtakenfamilyleavetimein2010. Nonetheless, averificationconductedonemployeesleaving in2011indicatedthatwithnodismissalsoccurred, noone service after12monthsfollowingtheirreturn isunavailable. of employeesthatresumed service(asrequested byindicatorLA15oftheGRIprotocol) andthatcontinuedtoremain in processing startedwithreference to2011;therefore, forthisfirstyearof datacollection,informationregarding thenumber The tablebelowincludesthenumberofemployeesthattookfamilyleavetimeforatleast29daysin2011.Thisinformation extraordinary leavetimefor2yearsincaseofseriousdisabilityachild orcloserelative. • 3 daysamonth,or2hoursday, ofleavetimeforchildorfamilycare, paidincaseofseriousdisability; • non-remunerated leavetime(paidonlyincasesofseriousdisabilities)withoutanylimitsforbeingtaken,thecase • leavewitha30%remuneration. 6 monthsofadditionalmaternity Terna integrates45%and40%respectively forthe • leave, recognized 5 monthsofpaidmaternity tothemotheranddistributedbefore andaftergivingbirth.Terna guarantees • Bargaining Contract)forthesectoraswellcorporateagreements. Themostimportantmeasures include: conditions are evenmore favorable,applyingboththeCCNL(ContrattoCollettivoNazionalediLavoro -Collective The Italianlawregulates leaveandfamilyestablishingageneralcoveragecompared maternity towhichTerna’s Child andfamilycare enrolled inthe Furthermore, Terna’s employees(excludingseniorexecutivesthatcanbenefitfrom adifferent fund)are automatically employees. Terna provides betterconditionsforspecificcategories. those withbeginnercontracts.Insurancecoverageforoccupationalinjuriesisregulated bylawandappliestoall The benefitsare availabletoallemployeesoncetheyhavefinishedtheirtrialperiod,includingpart-timeand members ofthelatter’sfamilies. The FISDEpartlypaysforthemedicaltreatment ofdiseasenotonlyforitsemployeemembers,butalsothedependent disabilities. • ophthalmologicaldisease; • cardiovascular disease; • tumors; • alcohol; • smoking; • prevention campaigns: providing informationonthemainhealthrisks.Thefollowinghavebeensomeoftopicsand Group). TheFISDEorganizes prevention campaignsforitsmembersthatincludepreventive examinationsandsessions Families ofworkers Workers - men - women Total NUMBER OFEMPLOYEESTHAT TOOKFAMILY LEAVE TIME Beneficiaries a child’sillnesswithintheageof3; up totheageof8,butwillnotbepaid; the totalleaveofbothparents. Ifnottakenduringthechild’s first years,theleavetimecanalsobetakensubsequently, first andsecondmonthofleavetime.Leavetimecanalsobetakenbythefather, withinamaximumof10monthsfor 100% integrationoftheremuneration compared to80%establishedbythelaw; supplementary healthcare fundFISDE (Supplementary Health-care FundforEmployeesoftheEnel nomto n rvnino ik Treatment Information andprevention ofrisks e yes yes oyes no 2011 18 23 5 LA15 LA8 163 Social responsibility 164

Sustainability Report 2011 LA14 LA13 EC7 COMPOSITION OFTHEBOARDDIRECTORSTERNAS.P.A. Diversity andequalopportunity Finally, thefollowingtableshowscompositionofTerna’s Board ofDirectors, broken downbygender andage. to 7%(agenerallegalobligation)through thehiring ofalarger percentage ofthemoutthetotalnumbernewhires. of March 21,1996andMay15,2000),whichprovide foragradualincrease inthequotaofprotected-category employees 2010 and114in2009).Thisnumberislinewiththeregulations applyingtoTerna (inparticular, theMinisterialDecrees belonging toprotected categories corporate policiesinthisregard, howrooted Terna isintheItalianeconomy. Withregard tothepresence of Almost allemployeesare Italiancitizens,withonlythree having companies tofostertheprofessional developmentofwomen, aswellnetworkingopportunities. in enterprises.Inpractice,thewomenthesecompaniesputtheirknowledgeatdisposalofassociated creating synergy anddevelopingtheprofessional competence ofwomentoachievegreater opportunitiesforrepresentation started byseveralwomenmanagersfrom anumberofimportant Italianandmultinationalcompanieswiththeobjectiveof Demonstrating itsconcrete forpromoting concern thecontributionofwomen, collar workersandjuniorexecutivesthatare more significant,butdecreasing, forseniorexecutives. not different from thosebelongingtomen.Alsodataonremuneration conditionsindicatelimiteddifferences amongwhite- The percentage ofwomeninmanagerialpositionsandthecategory progress dividedbygender(seefollowingtable)are levels ofwomenleavingwithrespect tomenandthelevels ofwomenenteringthatare muchhigherthanthemalelevels. not generatediscriminatingconditionsagainstwomen.Themajortrend offemaleemploymentistheresult ofthelower The principalindicatorsforequalopportunitybetweenmenandwomenrecorded thatTerna’s managementsystemsdo contribute tofosteringtheemploymentofwomenatTerna, (seetextpage163inthischapter). forexample,maternity-leave Several favorablekindsofconditionsestablishedbythelawandprovided forbytheindustry’scollectivelaboragreement that ofthewomenalready employedattheCompany, againexcludingblue-collarworkers. During 2011, of womeninmanagerialpositions(seniorandjuniorexecutives)rose from 15.7%in2009to17.1% in2011. 11.1% in2011 Amounting to9%in2005, and thegreater participationofwomeninthelaborforce. occupations. However, thepresence ofwomenisincreasing, partlyasareflection ofthegeneraltrend ofthelabormarket A large majorityofemployeesare men,becauseofthetraditionalscarcity ofthesupplyfemalelaborinmore technical of Ethics. All formsofdiscrimination,beginningwiththeselectionandhiringprocess, are explicitlyforbiddenbytheGroup’s Code Terna adoptssystemsforselecting,developing,andpayingpersonnelthatrecognize andreward meritandperformance. vr5 er l 75 56 0 44 56 0 44 67 0 33 - over50yearsold - between30and50yearsold - lessthan30yearsold Women Men Percentage values 18.2% ofallnewlyhired employees . Theincrease alsoregarded thepositionswithhighestqualificationsandresponsibilities: thepercentage the percentage ofwomenemployeesatTerna inItalyincreased from 10.3%in2009to (for example,invalids),thefigure asofDecember31,2011was – netofblue-collarworkers foreign citizenship.Thisfigure shows,withoutanyspecific in 2009Terna joined“Valore D” were women 2011 0 0 100 100 100 000 , apercentage higherthan 002009 2010 128 people , aninitiative personnel (116 in EQUAL OPPORTUNITY FORMENANDWOMEN (4) The figure, The calculatedforthefirsttime2011,isresult ofthepercentage ratiobetweentheannualtotalremunerat (4) figure The istheresult oftheratiobetweenannualbasepaymenfordifferent categoriesandtheannualbasepa (3) figure The istheresult oftheratiobetweenpromotions tojuniorexecutivethatoccurred duringtheyearandemplo (2) 1 Outflows(inflows)forwomenandmenreport employeesaccording togenderwholeft(entered) inthebusinesscompared tothe (1) uireeuie 69na n.a. n.a. n.a. n.a. n.a. 91.6 93.5 n.a. 78.8 96.9 90.2 92.6 93.9 75.5 78.0 1.6 93.7 93.9 79.6 2.2 3.9 4.9 3.3 7.9 1.2 2.8 4.8 4.8 -2.3 1.5 2.8 7.2 -1.1 1.1 2.7 4.5 0.1 2.7 0.8 10.3 3.2 White-collar workers 5.1 Junior executives 0.6 Senior executives 2.6 Women/men paydifference 10.8 0.3 2.4 0.4 White-collar workers 4.0 Junior executives Senior executives 14.6 Women/men basicretribution difference 11.1 2.4 15.4 Promotions tojuniorcategoryas%ofprevious category:men Promotions tojuniorcategoryas%ofprevious category:women 15.2 Category promotions Men executivesoutoftotalmenemployees(excludingblue-collarworkers) 17.0 Female executivesoutoftotalfemaleemployees Employees inmanagerialpositions 15.4 Inflows: men Inflows: women 16.7 Inflows Outflows: men Outflows: women Outflows Annual change:men Annual change:women Employment growth Female seniorandjuniorexecutivesas%oftotal Female seniorexecutivesas%oftotal Women/total netofblue-collarworkers Women/total Women as%ofemployees Percentage values production bonuses,thedifferent typesofincentivesandthevaluebenefitsreceived during theyear. different categoriesandtheannualtotalremuneration formenthesamecategories.Thetotalremuneration includes,inadd categories. Thefigure wasnotcalculatedfor blue-collar workers,becausethere are nowomeninthatcategory. senior executivewere notconsidered, becausethenumberwasnotsignificantonan annualbasis. collar workersintheprevious year, calculatedbycategory(men/women).Promotions from blue-collarworkertowhite-collarwor according togenderasofDecember31theprevious year. (1) (1) (2) (4) (3) 711. 15.7 16.8 17.1 2011 ion forwomenaccording to 002009 2010 yees categorizedaswhite y ofwomenforthesame ition tothebasepay, the ker andfrom junior to employees’total 165 Social responsibility 166 Sustainability Report 2011 100 120 100 120 GENDER PAY GAP-FTSE-MIBSENIOREXECUTIVES GENDER PAY GAP-FTSE-MIBJUNIOREXECUTIVES Gender paygap:comparativedata a possiblediscrepancy inthedefinitionofbaseremuneration adoptedbythedifferent companies. junior executivesandemployeesthatcouldderivefrom thereference toonlyminimumcontractwages,indicates that ofmalecolleagues).Inparticular, thecaseoftotalequalaverageremuneration forgenderofseniorexecutives, are equaltoorslightlyhigherthan100%(averageremuneration offemaleseniorexecutivesequalorhigherthan while thegenderpaygapforseniorexecutivesisbelowaverage,alsoinfluencedbytwocompanieswhosedata In thiscomparison,Terna rankedaboveaverageforthecontractcategoriesofjuniorexecutivesandemployees, 17% juniorexecutives,12%employees. 103% seniorexecutives,106%junioremployees.Standard deviation:10%seniorexecutives, 88% employees;lowestfigure: 68%seniorexecutives,33%junior57%employees;highestfigure: country where itsactivityiscarriedout);genderpaygapaverage:86%seniorexecutives,87%junior FTSE-MIB Panel: gap forjuniorexecutivesandemployees. Compared totheotherItaliancompaniesofFTSE-MIB,Terna ranksaboveaverageforthegenderpay executives and93%94%forjunioremployees,respectively. employees; in2010,theyearofavailablecomparativedata,gendergapwasequalto78%forsenior In 2011,Terna’s genderpaygapwasequalto80%forseniorexecutives,94%juniorexecutivesand that are alsothesameinmanyotherItaliancompanies. and cannotbeappliedtothecategories(seniorexecutives,junioremployees)considered byTerna, two panels,theworkerswere dividedintodifferent contractcategoriesaccording tothecompanyandcountry consider inthecomparisononlyItaliancompaniesofFTSE-MIBsince,forfrom theother Even thoughthegenderpaygapisasustainabilityaspectthatgenerallyregards allsectors,itwaspossibleto categories –andmen’sannualbaseremuneration forthesamecategories. gender paygap,theresult oftherelation betweenwomen’sannualbaseremuneration -according todifferent A comparisonbetweenTerna andothercompaniesregarding equalopportunitieswasconductedbasedonthe 20 40 60 80 20 40 60 80 0 0 Female Remuneration/Male Remuneration-JuniorExecutives Female Remuneration/Male Remuneration-Terna’s JuniorExecutives Female Remuneration/MaleRemuneration-SeniorExecutives Female Remuneration/MaleRemuneration-Terna’s SeniorExecutives

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Sanm Ansaldo Europa Rete Gas centrale e orientale(*) Internal communication Internal The 150 Fourth editionofthe“CreativInTerna” photography anddrawingcompetition internal participation intheZero ImpactProject. its newheadoffice inRome,Terna hadalready identified thearea oftheParco dell’Anienefacingtheoffices aspartofits the Alzaia(towpath)delNaviglioGrande,withplanting of50shrubsaspartthearea’s redevelopment project. For were neutralizedbycreating newgreen areas locatedalso atTerna’s offices. InMilan,thegreen project islocatedalong publications. Moreover, thedrawingsofwinners were usedformakinganoriginal bookmark inthethree colorsofthe jury chosethewinners,whose workswere used forcorporatematerials(the2012calendar)andreproduced inprestigious young generations.Consisting ofTerna’s Chairman,LuigiRoth,andpersonalities oftheworldphotographyandart, the integrationofforeign students. Anexampleoftransmittingthevalueintegrationand acceptancestartingfrom the Fondazione Albero dellaVita Onlus.Theproject isimplementedinItalianelementary, middle andhighschoolstopromote past editions,CreativInTerna 2011wasalso linkedtoasocialpartnershipidentifiedintheproject “Pianeta Nuovo”ofthe took photographsofsituationsandpeoplethatresonated withpridetobepassedonasprecious experiences.Asforthe of transmittingideasandvaluesthrough thegenerations.Withtheme“Italianstories:150years ofenergy”, ourartists in theZero ImpactProject. Asof2011,CO implement, followingtheopeningofitsnewoffices on theterritory, offsetting measures derivingfrom itsownparticipation The Milanoffice waschosenasapioneerforpathdefined togetherwithLifeGatethrough whichTerna decidedto program thefirstdayofentrance. of arrivalapaththatbeganoverthree monthsbefore withadhoccommunication,toolsandacustomizedwelcome Therefore, entranceintothenewoffices ofPero inFebruary, inthearea ofthenewFieradiMilano,represented thepoint Lombardy toasinglenewonewasaccompaniedbycarefully communicationproject. plannedinternal As withthemovetonewheadoffice inRome2009,thetransferof140peoplefrom theCompany’sthree offices in Inauguration ofthenewoffice and“Zero Impact”Project inMilan the initiativescarriedoutin2011. between theTop ManagementandSeniorExecutives,the“CreativInTerna” Competition.The followingare someof the houseorgan instruments –thecorporateintranet,disseminationbasedonwaterfallmethodofteam-briefinginformation, and promoting teamwork,andspeedingupprocesses. communicationisdividedintotwoareas. Internal Onecomprisesthe Terna recognizes theessentialrole communicationinfosteringtheexchangeofinformation,creating ofinternal integration, For additionalinformationonpanelstructure andgenerallyoncomparisonswithothercompanies,refer totheMethodologicalNo 16datawere considered sinceAnsaldodoesnotpublishthegenderpaygap forseniorexecutivesreferred toChina. (1) Thegenderpay gapwascalculatedusingavailabledata. (*) 100 120 GENDER PAY GAP-FTSE-MIBWHITE-COLLAREMPLOYEES 20 40 60 80 0 Female Remuneration/MaleRemuneration-whitecollarworkers Female Remuneration/MaleRemuneration-Terna’s whitecollarworkers th anniversary oftheUnificationItalyhasprovided anopportunityforcreating imagesthatrepresent ourcapability

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Ansaldo Europa centrale e orientale(*) EN18 167 Social responsibility 168 Sustainability Report 2011 unique tributetotheartofenergy transmissionthrough ourpeople. onthelightinthisroom.the vastandcomplexsystemthatallowsturning Thisworkisdedicatedtoeachoneofthem”.A to illuminatethespacesofTriennale. Together, withtheirqualitiesanddifferent backgrounds, theystandtowitness made outoflarge sheetscontainingthephrase“Thepersonsportrayed are someofthemanywhoseworkallowselectricity exhibit dedicatedtoalltheproject’s works.The10photographstakenformedawallinstallationaccompaniedbycube of 50colleagues,photographedindifferent groups withinthevenueofTriennale diMilanothatinJunehosted the technical departmentsforbetterunderstandingthe“energy’s Theimplementationphaseincludedthepresence journey”. Garutti’s group workedonelectricity:duringtheresearch phasehewasassistedbythecolleaguesfrom thecompany’s installations regarding different formsofenergy. scientific pointofviewtheworldenergy: architects, scientistsandartistswere invitedtocollaborateincreating becomes form”,promoted bytheLondonSchoolofArchitecture, whoseobjectivewastoexplore from anartisticand Garutti, formerprofessor attheAccademiadiBrera, participatedintheresearch project “BeyondEntropy: whenEnergy electricity. category, 50employeesparticipatedwiththeirphysicalpresence inaspecialinstallationdedicatedtotheworldof Alberto Garutti’sproposal, winnerofthesecondeditionTerna PrizeforContemporaryArtthefamousartists The employeeshadtheunrepeatable opportunityofbeingthemainplayersanartworkuniqueinitskind.UponProfessor Terna’s employeesare theprotagonists ofanartwork of thecreativity ofourpeople. In foureditions,CreativInTerna totaledover1,200worksincludingphotographsanddrawingscreating alarge virtualgallery Italian flagdistributedtogetherwiththeCalendarand2012Organizer. Andalo (TN):group photographoftheSciinTerna skiers. We transmitenergy alsothrough sports For the150 to grow innumbers,thecompanyhaspromoted newopportunitiesfor“transmittingenergy” through sports. formed fouryearsago,thatbringsitsenergy tonon-competitivemarathonsforsocialpurposesandthatcontinues and teamspirit.Basedontheproject thatbeganwiththeTerna RunningTeam, ateamofamateurrunnerswas Terna, whosemissionisenergy transmission,haschosensportsasachannelforpromoting identity, integration Sports havealwaysbeenconnectedwithenergy, perseverance,determination andteam-building.Forthisreason in Terna’s mission“transmittingenergy” inallwe do. by promoting theparticipationof colleagueswithdifferent professional backgrounds thatshare common grounds between headoffice andterritory. A programmed choicethataimsatjoiningpeoplealsoduringthe planningphase The eventwasasuccessforparticipation andteamspiritforanewinitiativecreated onceagain from acollaboration named SciInTerna. 60colleaguescompetedinMarch inAndalo(Trento), inanexcitinggiantslalomskicompetition. The BiciInTerna initiativeideallycontinuedin2012withanewsports initiativethistimededicatedtoskiingand covered byabroad photographicreporting inthecompany’shouseorgan “Terna News”. the companyIntranetandlocalpress publishedarticlescoveringthebicycletour. wasalso Theirjourney sites aswellthoselinkedtoitselectrificationinourcountry lastJune.Theeventwasfollowedstepbyon colleagues, wearingTerna’s colorsandfollowedbyasupportteam alsoformedbyemployees,reached historical coast totheTyrrhenian onealongtheelectricitylines,thatconnectenergy across Italy. Ateamformedby20 th anniversary oftheUnificationItaly, BiciInTerna wascreated, afourdaybicycle tourfrom theAdriatic Occupational healthandsafety intense supervisoryactivity: • •an • the inclusionof the • and ongoing intensive • •an •an safetypolicyguidelines: clear • In thissituation,Terna’s emphasizesthefollowingpointsregarding occupationalsafety: for eliminatingormitigatingtherisksofinterference are excludedfrom thepricecompetitionforaward ofcontracts. by contractorsandsubcontractorsforalltheactivitiesthatmakeupworkprocess oftheconstructionsite.Thecosts of thesingleactivities,stress-related risksbutespeciallythosederivingfrom theinterference oftheworkscarriedout analytic assessmentofrisksregarding thehealthandsafetyofworkers.Thisassessmentmustregard thespecificrisks including thoseentrustedtocontractorsandsubcontractors.Oneofthemostimportantobligationsisperforman the chainofresponsibility beginningwiththeemployer, protection procedures anddevices,training,monitoringofactivities, is amongthemoststringentinEurope. Theobligationsforcompaniesregard manyaspects:riskanalysis,identificationof Decree 81/2008(“ConsolidatedActregarding thesafeguard ofoccupationalhealthandsafety”),Italianlegislationonsafety Terna’s commitmenttosafetyshouldbeseeninthecontextofcurrent regulations. Revisedin2008byLegislative variable compensation of the departments concerned –Corporate Safety,variable compensationofthe departmentsconcerned HumanResources andOrganization, and RSPP (twoayearintheirrespective Territorial Areas) and checks performedbythesupervisoryauthorities; towers andoff-the-ground compliance aidonHVelectricitylines”,whichhasalsobecomethebenchmarkforexternal for AidOccupationalInjuries,torecognize theCompan soundness oftheinstructionsprovided. Alsoin2010,Terna requested andobtainedfrom INAIL,theNationalInstitute institute undertheMinistryofEducation,whichissueditspositiveopinioninSeptember, thusconfirmingthecomplete assessment bytheINRiM(NationalInstituteofMetrologicaledition oftheDPRETforexternal Research), ascientific – DPRET).TheDPRETisanessentialdocumentforTerna andtherefore in2010Terna voluntarilysubmittedthenew Equipment), withgreater detailfortheactivitiesthatentail electricalrisk(InstructionsforthePrevention ofElectricalR corporate intranet–onalltheactivitiesregarding safety(safetytraining,workmethods,useofPersonalProtective methodical anddetailedcollectionof risky eventsforeachrole andactivityperformedbyTerna’s employees.Themanagementsystemconsistsina Protection andexaminedbythecompetentdoctor, showstheseriousnessandprobability ofoccurrence ofspecific risk mapping.TheRiskAssessmentDocument,prepared bytheemployerandHeadofSafety, Prevention, and of theCompany’sactivities).Thesystemisintegratedwithquality-and-environment oneandisbasedonscrupulous AOT heads,haveunlimitedauthorizationforexpensesregarding occupationalsafety; carries outdirect inspectionsonworkplacesandbuildingsites. Asprovided forbythelaw, employers,includingthe the localoffices (Area managers,headsofSafety, Prevention, andProtection) andonconstructionsites;thisunitalso training towers)andtoperform liveworkinacontrolled environment; Training Center example, off-the-ground work,theuseofPersonalProtective Equipment). Inparticular, equipment atthe The coursescoverall regarding safetythrough variouschannels,includingthecorporateintranet andtheorganization ofinformativemeetings. LA6 indicator); employees entrustedwithcheckingtheapplicationofregulations (ontheWorkers’ SafetyRepresentatives, seethe increase diligenceregarding safetyissuesandcompliancewithconductrules,asdotheelectedrepresentatives ofthe as welltheconstantsupervisionofemployers.The of regulations andtheprocedures forapplyingthem,aswellafileofthecontrol programs andtherelated results; bodies). Through theportalitisalsopossibletoaccessanonline serviceproviding adviceregarding theinterpretation legislation promoting theprevention ofinjuriesforallemployees,includingthosecontractors; Management System,specifiestheguidelinesofCodeEthics.ThePolicyalsoexpresses itscommitmentto Company’s OccupationalSafetyPolicy, whichisanintegralpartof the integratedquality-environment-safety that policies,procedures, technologies,andknowledgecontributetotheawareness andprevention ofrisks.The Ethics, whichidentifiestheessentialprinciplesthateveryone,atdifferent organizational levels,mustcomplywithso OHSAS 18001-certifiedmanagementsystem organizational unitresponsible forsafety environment safety&securityportal regarding occupationalsafety(nationalandregional regulations, technicalstandards issuedbycompetent , inTurin, enablestheCompanyto performance objectivesregarding occupationalsafety safety issues information andtraining the correct andcompleteapplicationoftheprocedures issubjecttoinspectionsbythe the importanceofprotecting peoplefrom physicalharmisstatedinTerna’s Codeof , from changesinregulations tothe OperatingInstructionsforallriskyactivities(for Operating Procedures andInstructions on thecorporateintranetcontaininganupdatedandcomplete , withthecorporateSafetyDepartmentincharge nationallyandheadsin : allemployeesare informedaboutthemainideasandinnovations (certification obtainedin2007andconfirmed2010,covering100% train external checks external internal compliancechecks internal workers tosafelyclimbtowers (through theuseoffull-size y’s “goodpractice”fortheOperatingInstruction“Climbing required fortheconfirmationofcertification in thesystemofindicatorsto whichthe – whichare alsoavailablethrough the on alltheLocalOperatingAreas, Viverone file of isk EU16 169 Social responsibility 170 Sustainability Report 2011 • concern forsafetyconditionswithregard concern tothe • research: applied • promote efficiency. objective istouniformprovisions forguaranteeingfullunderstandingonthepartofallthoseworkinginsector to sites forelectricityworks.Inparticular, theGroup’s activitiesregarded theGuidelinesfor“Working at heights”.Terna’s harmonizing andstandardizing provisions ofthevariousdifferent territorialbodiesassignedtoassesssafetyinconstruction National FederationofElectrotechnical andElectronic Companies)formedaWorking Group with the purposeof Moreover, already attheendof2010,Terna andANIE(FederazioneNazionaleImprese Elettrotecniche edElettroniche - foresee anycorrective measures andimprovements tobeimplementedbasedonsynergy. conducted bytheteamin2011-tobecarriedoutalso2012–isa360°monitoringofcontractedactivitiesallowing to group isformedbyexpertsinsafety, 231Model,FraudmanagementandQualitysystem.Thepurposeoftheassessments In 2011,aninterdepartmental workinggroup wasalsoformedtoinitiateaseriesofassessmentsinconstructionsites;the the different monitoringwere presented asexamples. In additiontofurtheranalyzingissuesrelated toapplyingTerna’s guidelines,duringtheevent best practicesfoundin Department. 80colleaguesparticipatedwithdifferent responsibilities andactivitieslinkedtosafetyinconstructionsites. construction sites”promoted bytheCorporateSecurity DepartmentwiththecollaborationofHumanResources carried outwiththemainpersonsincharge forthiswork,atrainingeventwasorganized for“Safetymanagementin with theofficial andmostsignificantsafetyrequirements. InDecember, inorder toshare theresults of themonitoring company.support ofaspecializedexternal Thisactivity, thatbeganin2009,hasthepurposeofensuringfullcompliance During thepastyear, nearly 100constructionsitesmonitoringwasconductedonthemainwith Construction-sites monitoring Main 2011activities elements andaspectscapableofensuringgoodmanagementpracticesinadditiontocompliancewithalllawprovisions. regard tosafetyandtheenvironment mustfilloutadetailedquestionnaire regarding specificorganizational andprocedural for protecting thehealthandsafetyofworkers.Inparticular, companiesincategoriesconsidered mostsignificantwith Finally, duringthesupplierqualificationprocess, Terna requires thatcandidatecompanieshavedocumentedprocedures the fieldofelectricityandSINCERT-certified. received between24and32hoursoftrainingfortheirroles, designedincooperationwithtraininginstitutesspecialized in painting, construction-siteandsquadforemen, andsafetyheads–Terna requires additionalcertificationthattheyhave For severalroles –forexample,workersassignedtothemountingandmaintenanceoflines,cuttingvegetation, devices, testingtheirreliability through resistance trialsinextreme conditions; single OperatingAreas; through an“occupational-safetyindex”consistingoftheinjuryrateandlostdayrate,measured atthelevelof Terna’s Plant Maintenance–islinked,inparticulartheobjectiveofimproving thesafetylevel,whichaimsatreducing injuries and theOperatingSecurityPlan(POS)prepared bythecompanies. in theuseofpersonalprotection equipmentandtherisksestablishedinConstruction-siteSafetyPlan(PSC) among otherthings,adeclarationthatallthepersonnelonconstructionsitehasbeeninformedaboutandtrained Suppliers” inchapter“EconomicResponsibility”)contractworktoconstructoverheadlinesandpowerstationsrequire, The protective measures introduced orstrengthened byLegislativeDecree 81/08(seetheparagraph“Relationswith a specificorganizational unitoftheEngineeringDepartmentexperiments withsafetymaterialsand contractors that performworkonconstructionsitesbehalfofTerna. HOURS OFTRAININGONWORKERS’HEALTH ANDSAFETY 2011 withover30,000traininghoursforjuniorexecutives, white-collarworkersandseniorexecutives. of Terna) informationcampaignwasparticularly importantthatbeganattheendof2010andcontinuedthroughout DPRET (DisposizioniperlaPrevenzione delRischioElettricodiTerna –InstructionsforthePrevention ofElectricalRisks In 2011,over60,000traininghourswere dedicatedtohealthandsafety(increasing byover20%compared to2010).The Training andinformation one containingequipmentcertifiedbytheFire Departmentandnecessaryforextinguishingthefire. Lastly, 350“first aid”boxeswere distributedinthepowerstations across thenationalterritorytouseincaseoffire, each up to5yearswithoutanymaintenancerequirements. Powder fire extinguisherswere replaced withdisposableextinguishers/suppressants weighingonly6kgeachandlasting Another importantinvestmentforfire emergencies regarded theequipmentofcompany’soperationalfleetvehicles. possibilityofmaintaininggoodvisibilitythankstothereduced the quantityofsmokeproduced. • manageabilityofanautonomousunitallowsittobeconnectedanytypeon-sitehydrant; the • fastgasandvaporcooling:thedecrease intemperature withthefoamcontainedinequipmentisof10.3degrees C • through variousspecificcharacteristics: “OneSeven”fire prevention technology, atypeofequipmentthatguaranteesusersafetyandfastaction its headoffice – in initially With theaimofobtainingmaximumspeedandeffectiveness ofactionincasefire, Terna isequippedwith– Emergency systemsincaseoffire eireeuie 0 7 232 2,781 24,743 18,781 24,885 175 3,897 20,265 32,554 2,536 206 25,737 Blue-collar workers White-collar workers Junior executives Senior executives Total per secondwhilewithwateritisonlyof1.5degrees; The MemorandumofUnderstandingwiththeFire Department will bedefinedbetweentheHeadofFire DepartmentandTerna through specificprovisions tobeimplemented. Lastly, theagreement establishesthatactivitiesnecessaryforreaching theobjectivesincludedinMemorandum guidelinesaimedataddressing drafting electricitylineproblems interferingwithactivitiessubjecttofire prevention • increasing physicalprotection levelsofpower • specificallytrainingtheFire Departmentpersonnel • a seriesofactivitiesaimedat: The Memorandumhastheobjectiveofdeveloping Department andaprivatecompany. of itskindinItalyamongtheNationalFire National ElectricityGrid.Thisisthefirstagreement Understanding forincreasing theprotection ofthe Chairman LuigiRothsignedaMemorandumof Public AidandCivilDefence,Eng.AlfioPini The HeadoftheNationalFire Department,of control. system oftheequipmentinTerna’s powerstationsconsidered beingmostvulnerable; limiting environmental damages.Forthispurpose,the Memorandum alsoincludesimplementingasimulation procedures aimedatextinguishingfires and personnel andidentifyingsystems stations, through specifictrainingof Terna’s drafting coordinated operatingprocedures; contact withoverheadelectricitylinesandfor called totakeactionforaidingpeoplenearorin Chairman LuigiRoth. The HeadoftheNationalFire DepartmentAlfioPini(left)andTerna’s 1034,2 46,537 49,222 61,033 2011 002009 2010 171 Social responsibility 172 Sustainability Report 2011 LA7 GRI-ILO DEFINITIONS OCCUPATIONAL INJURIES,TERNAEMPLOYEES (2) In2011,processing criteriawere revised andtheitemsdeterminingtotal ofhoursworked.Inorder toguaranteecohere (3) Thereasons forabsence considered leave, marriageleave,studyleave for unionactivities, donotincludematernity Asrequired bytheGRIprotocols, thedefinitionsadoptedare LabourOrganization thoseoftheInternational (ILO).To faci (1) responsible. In2011,noinjuriesoccurred toTerna femaleworkers. years –forwhichinthethree-year periodconsidered itwasdefinitivelyestablishedthatthecompanyinanyway No fataloccupationalinjurieswere recorded norcasesoffatalorseriousinjuries–evenonesthatoccurred inprevious disease rateatTerna shouldalwaysbeconsidered zero. work performedatTerna isnotassociatedwiththepossibleonsetofprofessional diseases.Therefore, theoccupational There were nohoursofabsenceattributabletooccupationaldisease,since–according totheofficial list–thekindof with 2010.Theinjuryrateshowslimitedfluctuationsovertime,whiletheabsenteeconfirmeddownward trend. As inthetwoprevious years,alsoin2011there were nofataloccupationalinjuries.Thetotalnumberofinjurieswasinline Occupational injuries periodicalpreventive medicalexaminationswere alsoperformedforatypicalworkers,asprovided forbyLegislative • auditswere fourteeninternal performed; • compliancewiththelaw, in theRSPPandAOTheadsperformed133inspectionscompetentdoctorcarried • Company’sOHSAS18001certificationwasconfirmed; the • Also in2011: will besuggestedthatare usefulforfurtheranalyzingeacharea thatparticipatedintheinterview. will bedistributednotonlyamongthecorporatemanagement,butalsoatamore widespread level,aspectsand themes are encouragedbyemployees.Inorder toadequatelyrespond totheneedsthatemerged ontheterritory, in2012,results investment inthevaluesofsafety analysis regarded boththecontextandnature oftheworkandshowedthat doubled withmore than320employeesinterviewedandcoveringallthegeographicalareas inwhichTerna operates.The at work.Inthelightofresults achievedbytheproject intheprevious years,in2011,thesurveysamplehasbeen Terna’s commitment,theinitiativerepresented anopportunityforgatheringideasandincentivesleadingtosaferbehavior its employees’opinionsandsensationsregarding safety. Inadditiontosurveyingtheemployees’degree ofawareness of fostering safeoccupationalbehavior” In 2011,theCompanyalsocontinued importanttrainingcampaignwasplannedonsafetyinconstructionsitesfor2012. an • campaignwaslaunchedagainsttherisksofalcoholanddrugs.Addressed internal an toallemployees,theinitiative • updating activitiesestablishedbytheTU81/08(i.e.,firstaid,fire prevention) were initiatedandcompleted; • Moreover: ubro nuis4 036 0 50 0 49 0 - serious Number ofinjuries Occupational DiseasesRate nuyRt .717 1.24 40.9 1.74 65.0 1.67 46.4 - fatal Absentee Rate Lost DayRate Injury Rate Decree 81/08. out nearly228visitstoworkplaces; included thewidespread distributionoftheguide“Occupationalsafetyagainstalcoholanddrugabuse”; 200,000. The doing thecalculation,absenteerate was by 200,000.To facilitate comparisonwithothersources, thisindicatorwasalsocalculatedasapercentage ofthedaysworked. The 0.2 in2009 was alsocalculatedusingamultiplication factorof1,000.According tothiswayofdoingthecalculation, thelostdayrate 200,000. Daysnotworkedare calendardaysandare countedfrom whentheinjuryoccurred. To facilitatecomparisonwithothers The lostdayrateistheratiobetweennumberofdaysnotworkedbecause ofinjuryandthenumberhoursworkedduringth latter calculation,theinjuryratewas calculated usingamultiplicationfactorof1,000,000instead200,000(consequently obtaininganinjuryratefivetimesthat by 200,000(corresponding to50workingweeksx40hours100employees).To facilitatecomparisonwithothersources, thisin rates; forthisreason, datapublishedinthetableare different withrespect tothedatapublishedinprevious years. the figures ofhoursworkedwere updatedand revised thatwere also usedintheprevious years (2010and2009)forcalculating The further break downthefigures attheregional level,becauseTerna operatesonlyinItaly. sources, thefollowingnotesprovide thevaluesofsameindicatorscalculatedaccording formulas.Itwasnot toalternative suspensions. injury rate absentee rate occupational diseaserate . is thenumberofinjurieswithatleastoneday’sabstentionfrom workdividedbythenumberofhoursworkedduringyearan (2) is thenumberofdaysabsencebecause ofillness,injury, orstrikeoutofthenumberdaysworkedinsameperiodmult (1) (2) is thetotalnumberofcasesoccupational diseasedividedbythenumberofhoursworkedinyear, multipliedby 8.3 in2011,8.72010, . Training, meetings,andthepossibilityofsharingresults are considered positiveand 3.9 in2011,2010,4.12009 project. Startedin2009,thisproject about aimsatenablingtheCompanytolearn “Analysis ofthecontextandidentificationincentivescapable and 6.2 in2009. . ,5. ,9. 8,219.4 7,796.5 7,757.0 employees are aware oftheCompany’s 2011 120 000 othercasesofpaid leave,and was 0.2in2011,0.32010, nce andcomparison ofdata, oftheILO).According tothe litate comparisonwithother 002009 2010 considered necessaryto According tothiswayof ources, thisindicator injury andabsentee e yearmultipliedby dicator wasalso d multiplied iplied Industrial relations GRI-ILO DEFINITIONS OCCUPATIONAL INJURIESOFCONTRACTORSANDSUBCONTRACTORSEMPLOYEES The relation withtheindustryLaborUnionsalsogivesriseto the 2010 andexpires onDecember31,2012. that negotiatestherenewal ofthecontract withLaborUnions.Thethree-year CCNLineffect wassignedonMarch 5, supplementary pensions.Terna participatesinestablishingtheindustry’srules,sinceitispartofemployerdelegation professional categories,thetermsandconditionsofshift workers,annualleave,overtime,supplementaryhealthcare, and manyaspectsof employeepayandbenefits,suchas,forexample,theminimumdifferentcontract governs industry All ofTerna S.p.A.’semployeesare covered bya industry levelandtheCompanylevel. The industrialrelations betweenTerna andthelaborunionsthat represent itsemployeestakeplaceatboththeelectricity and 2010there were nofatalinjuriesamongtheemployeesofcontractorsandsubcontractors. been dulypresented intheprevious editionsoftheSustainabilityReport).AsincaseTerna’s employees,in2011 monitoring alltheconstructionsitesandrecording allkindsofinjuries(insteadonlyfatalandseriousones,whichhad In 2010,Terna procedures consolidateditsinternal forreporting injuriesofemployeescontractorsandsubcontractors, regulations regarding thehealthand safety ofworkersare applied.Duringtheaforesaid renewal oftheCCNL,role of their numbervariesaccording to thenumberofcompany’semployeesandoffices. Their role involvesseeingthat Safety Representatives (RLS)to beappointedbyalltheemployees.TheRLSthusrepresent 100% oftheemployeesand Employee involvementinmatters ofhealthandsafety more than 500employees–bilateralcorporatecommitteestowork incooperationwiththeindustryBody. regarding environmental andsafetyissues. Provision wasmadeforthepossibilityofestablishing – incompanieswith on bytheparties.Inparticular, theBodyhastaskofpresenting proposals, monitoring,andcoordinating training Environment”, withthetaskofenhancingsafeguard ofoccupationalsafety, beginningwithcommonobjectives agreed The renewal oftheCCNLprovided fortheestablishmentofabilateral,industry-levelBodyon“Health,Safety, andthe regarding strikeprocedures forpersonneloncall. the principleofservicecontinuity subsequent definitionofthenewregulations regarding therigh It shouldbenoted,however, thatwhentheCCNLwasrenewed onMarch 5,2010,guidelineswere establishedforthe called incompliancewithlawprovisions, there are nolimitationsonTerna employees’toexercise theirrighttostrike. their normalworkduringastrike,theyare obligedtobeoncallthroughout thedurationofsaidstrike.Aslongasstrikesar As farasemployeesoncallare theagreement concerned, inquestionprovides that,althoughtheyhavetherighttosuspend Remote-control Centers. of theNationalControl Center, theGridServicesandProduction-Plan Services,theDistributionCenters,andPlant of theproduction andtransmissionsystem.Withregard tosuchprovisions, atTerna shiftworkers thisexemption concerns indispensable forsupplyingtheserviceandentrustedwithshort-termplanning,aswelloperationmaintenance Among otherthings,theagreement provides inanycasefortheexemptionfrom strikesofthepersonnelthatis strike inessentialpublicservicesandapproved bytheGuarantee AuthorityonStrikesfortheaforesaid law. Agreement ofNovember12,1991,whichimplements Lawno.146ofJune12,1990,regarding theexercise oftherightto performed intheeventofastriketoensure service continuity. AtTerna, bytheNationalUnion thisissueisgoverned cuainlijre 31 n.a. 14 13 isthenumberofinjurieswithatleastoneday’sabstentionfrom This workdividedbythenumberofhours workedduringthe (1) Injury Rate - fatal - serious Occupational injuries obtaining aninjuryratefivetimesthatoftheILO).According tothelattercalculation,injuryratewas To facilitatecomparisonwithothersources, thisindicatorwasalsocalculatedusingamultiplicationfactorof1,000,000inst 200,000 (corresponding to50workweeksx40hours100employees). (in Italian,theCCNL-NationalCollectiveLaborContractforemployeesinelectricityindustry).This (1) in theeventofastrike collective laborcontract is currently regulated bythelaw, whichprovides forEmployee and introduce onanexperimentalbasisinnovativeelements t tostrikeintheelectricityindustry. Theseguidelinesconfir regulation oftheindispensabletasks adopted bythecompaniesin .508 n.a. 0.85 0.75 2011 3.7 in2011and4.22010 001 451 ead of200,000(consequently 002009 2010 yearandmultipliedby . the electricity that mustbe m e LA9 LA6 HR5 LA4 173 Social responsibility 174 Sustainability Report 2011 LA5 system ofindustrialrelations. Managementofthe which determinestheabsenceoffragmentationinunionrepresentation andconstitutestheconditionforahigh-profile average, butrepresented aslightdecrease compared toprevious years.Membershipisconcentratedinthelargest unions, The a structured systemofrelations basedonadvanceand/orperiodicalnegotiation,discussion,consultation,and information. In thiscase,workersmustbeinformedinwritingatleastthirty daysinadvance. Individual employeesare informedinadvanceonlyiftheorganizational changeentailstheirtransfertoadifferent office. order toexpress commentsandproposals. Atthisstage,thepreliminary informationremains atthecollectivelevel. all thedocumentationnecessaryforunionrepresentatives toobtainacompleteviewoftheorganizational project in discussions withtheunionsmustbeheld,toconcludedwithinthree months.TheCompanyisrequired tomakeavailable In compliancewiththeunionagreements ineffect atTerna, intheeventofsignificantorganizational changespreliminary agreements. law itself,theworkers’representatives mustbeinformedandconsultednolessthantwenty-fivedayspriortobinding the law, incaseofmergers, acquisitionsorothersignificantchangesincorporateownershipstructure identifiedbythe relations: bothlawprovisions, sectorcontractandcorporateagreements contributetoregulating thismodel.Pursuantto Labor Organizationinvolvementincaseoforganizationalmodels Group’s newcorporatestructure. Lastly, apreliminary discussionwiththenationalLaborUnionSecretariats wasinitiatedregarding theproject oftheTerna intention ofconsolidatingamodelindustrialrelations based onparticipationalsobysharingtraininggoalsandobjectives occupational safety(Safetymanagementinconstructionsites,Fire prevention Moreover, withtheagreement signedonSeptember21,2011,specifictrainingprojects were implementedregarding singleamountsatthenationallevelforindividualreimbursement items. by January1,2013– agreement allowedsupersedingthepre-existing systembasedon20different regional agreements, graduallyestablishing– three-year period,regarding Production BonusesandExpenseReimbursementforbusinesstravel,respectively. Thelatter Two principalagreements were signedfordefiningtheneweconomic –regulatory reference frameworkforthe2011-2013 corporate contractsorsecondtiercontracts. 2011, industrialrelations activitieswere characterizedbybargaining withthenationalSecretariats ofLaborUnionsregarding In the2009-2011three-year period corporate interest tobegoverned. develop andconsolidateaneffective networkofrelations atall levels,thusallowingtheprocesses ofchangesignificant Union relations attheCompanylevelare bythe governed Labor Unionsinthemainaspectsofcorporatelife,provided thatthedistinctionofroles andresponsibilities ismaintained. Terna andLaborUnionsattheCompanylevel The aforesaid corporateagreement ofMarch 2009isonlyoneofthenumerous elementsofthe of thesameyear. for thenewRLSallofTerna’s localunits.ThenewRLSfortheCompany’soffices inRomewere appointedinOctober In March 2009,Terna andtheCompanyUnionssignedanapplicationagreement, whileinJune 2009electionswere held training programs, aswelltherepercussions ofnewtechnologies. corporate figures responsible forhealthandsafetytoexaminetheappropriateness ofpersonalprotective equipmentand the identificationofpreventive measures. Atleastonceayeartheyparticipateinmeetingswiththeemployerandother Representatives mayrequest theCompanytocarryoutinspectionsandtheyare consultedaboutriskassessmentand the RLSwasexpandedtoincludeenvironmental issues,sotheyare nowRLSA. employee unionmembershiprate , bargaining withtheindustrylaborunionsledto at Terna S.p.A. Protocol onthesystemofindustrialrelations . Industrialrelations intheCompanyare basedontheinvolvementof Protocol onthesystemofindustrialrelations in 2011was60.6% represents oneofthecentralaspectsindustrial training,Safedrivingonsnowandice)withthe whichishighcompared totheindustry , signing of44agreements has enabledthepartiesto relationship between , whichestablishes . In .

176 HR11 HR10 Sustainability Report 2011 EU22 EU20 HR9 HR7 HR6 HR5 HR4 HR3 HR1 SO9 SO1 Our approach SOCIETY Human rights Company activitiesinothercountries inthefuture. referencestracks changesinexternal agreements), (forexample international with aneyeto,amongotherthings,possible and Safety”,respectively on page104and169ofthisReport.TheCorporateSocial ResponsibilityDepartment,finally, the CorporateSecurityDepartment; forthispurposeseeparagraphs“RelationswithSuppliers” and“OccupationalHealth subcontractor workscarriedout onbehalfofTerna, afundamentalrole isplayedbytheProcurement Departmentandby correctly applied.Regarding guaranteeingrespect forhumanrightsandworkers’protection incontractorand human rightsare dealtwithinTerna’s CodeofEthics–theAuditDepartmentisentrustedwithensuring thattherulesare within thesphere oftheHumanResource andOrganization Department,and–consideringthatmanyaspectsregarding In compliancewiththeaboveandcurrent lackofcriticalities,themanagingresponsibility forhumanrightsisinprincipl Global Compact(seethededicatedboxinchapter“Profile”, page40). This commitmentwasfurtherstrengthened inDecember2009,whentheBoard ofDirectors resolved toformallyjointhe establishing abenchmark–aninsuperablelimitforallthe situ Since 2006,Terna hasadoptedandincorporatedinitsCodeofEthicstheprinciplesGlobal Compact page 28).ThisCompanyadoptedtheGroup’s CodeofEthicsinFebruary2012. provides supporttoTerna’s activitiesderivingfrom its equityshare intheMontenegrinTSOCGES(see“TheTerna Group”, company Terna Gora,establishedinJune2011(2employees withlocalcontractsasofDecember31,2011), Csrna Terna’s projects abroad (Balkanarea andNorthAfrica)didnotimplyanyoperationalactivities.EventheMontenegrin particular attentiontotheseissues,withtheimplementationofspecialmanagementpolicies.Throughout allof2011, for humanrights,freedom ofassociation,andcollective bargaining, thusmakingitsuperfluousfortheCompanytodedicate The Terna Group operatesinItaly, where thelegalframeworkandlevelofcivildevelopmentamplyguaranteerespect in atransparent, meticulous,andconsistentmanner, whileavoidingcollusivebehavior. As provided forbyitsCodeofEthics,inrelations withpublicauthoritiesandassociations,Terna represents itsinterest development ofthecommunitiesinwhichitoperates. humanitarian, andculturalinitiativestobeanintegralpartofitsmission,asaconcrete signofparticipationinthecivil In consistencywiththisfairandrespectful approach, Terna considerstheidentificationandimplementationofsocial, scrupulously withthelawsandregulations it. thatconcern Considering itsrole astheprovider ofaservicetosocietyandtheregulatory contextinwhichitoperates,Terna complies When Terna constructsastation,whichoccupiesmuchmore land,theCompanynormallypurchases thenecessaryland. it wasnecessarytouseacoercive easementprocedure. easements from approximately 14,412landowners(7,092in2011,3,5862010and3,7342009).In16%ofthecases measures. Inthe2009-2011three-year period,Terna constructednearly515kmofpowerlines,whichentailedobtaining The pursuitofaconsensualsolutionfailsonlyinminoritycases.Whenthathappens,itisnecessarytousecoercive the pylons,itbeingunderstoodthatineventlinesare dismantled, thelandwillagainbeathiscompletedisposal. conductors, layingunderground cables).Inthiscase,theownerwillnolongerbeabletouselandphysicallyoccupiedby paying aone-off compensationfortheline’srightofwaythrough privateproperty (mountingpylons,installingoverhead expropriations) touseanexpropriation procedure toobtaintheland,Companyprefers solutionsbasedonmutualconsent, Even thoughTerna isauthorizedbythelaw(Lawno.1775of1933andPresidential Decree 327/2001–ConsolidatedActon as, forexample,single-polepylons,tendstoreduce thephysicalencumbrance,aswellvisualimpact,ofnewlines. only theuseoffrom nearly30to250square metersoflandforeverypylon.Terna’s use of innovativesolutions,such The constructionofnewelectricitylinesdoesnotinvolvethephysicaldisplacementpeopleorentire communities,but activity. Inthischapter, contrarily, otherpossibleimpactson individuals andonsocietyare discussed. chapter “Environmental responsibility”, becausethevisualandlandscapeimpactsare themostsignificantonesofsuch Terna’s approach tothelocalcommunitiesthathostconstructionofnewinfrastructure isdiscussedindepththe affected byprojects fordevelopingthetransmissiongrid–isan essentialstakeholder. understood inbothageneralsenseastherecipient ofTerna’s serviceandalocalsenseasthecommunitiesmore directly Terna isaninfrastructure companythatisstrategicfortheItalianeconomyandprovides apublicutilityservice.Society – ations inwhichtheCompanymightoperateworld. , thus e s Indicator COURSES ON231MODEL The safeguard oflegalityandtheprevention ofcorruption As ofDecember31,2011no litigation regarding corruptionwaspending. there were noascertainedreports ofviolationtheCodeEthics withregard tocorruption. • there were nodisciplinarypenalties forincidentsofcorruption; • there were nocasesoflitigation regarding corruption; • In 2011,asinthethree previous years: During theyear, aworkinggroup wasformedfordefininganewonlinecourseandclassroom activities. Following the2009/2010campaign,during2011trainingon the231Modelregarded onlyspecificupdatingrequirements. Model inthe2009-2011three-year period. activities regarding thesubject.Thefollowingtableshowsdataonemployeeswhoattendedcourses231 no. 231ofJune8,2001-Organizational modelandprocedure management”tofurthersupportinformationandtraining In March 2011,theSecurityDepartmentpublishedanddistributed toallemployeesamanualentitled“LegislativeDecree discussionofethicalissues. all employeesduringtheestablishmentofanEthicsCommitteeaimedatfacilitatinginternal also increased through adisseminationcampaignaddressed tothefirstreporting linesand,usingthewaterfallmethod, and thepotentialcrimeswithregard totheactivitiesperformed.In2009,awareness regarding theCodeofEthicswas procedures establishedfortheprevention ofcrimesandtoinformtrainpersonnelregarding theareas atriskofcrimes these coursesistoensure, atallthecorporatelevels, awareness andthedisseminationofrulesbehavior Personnel training: compliancewiththeMemorandumsofUnderstandingsignedthem,sendingtoPublicAuthorities incharge in • preliminary validationoftherequests forassigningconsulting,professional assignments,ITservicesandassignment • andassessingnewpartiescounterpartieswiththeaimoflimitingrisksstemmingfrom checking transactions • • the prevention the andmanagementofcrimes,carriedoutthrough: • Monitoring: audit andrisk-assessmentreports foratriskcorporateprocesses anddepartments. subsidiaries severaltimeswithregard tothedifferent corruption,andproduced kindsofrisks,includingthoseconcerning During the2009-2011period,AuditDepartmentexaminedallcorporatedepartments(100%)andCompany’s including thecrimesofcorruption. training commitments,andcontrol mechanismswhichformsanintegratedsystemfortheprevention ofspecificrisks, Risk management: Terna’s strategyinthisregard focusesonthree majorareas: honesty are twoofthegeneralprinciplesonwhichCodeEthicsandconductingCompany’sactivitiesare based. At Terna, theprevention control ofcorruptionisastrategicactivitywhichmesheswiththeinternal systems.Legalityand u fttl283. 30.6 30.8 18.5 30.9 30.7 12 1,041 44.1 2.8 2.5 1,053 1,047 26 20.0 1,073 85 12 97 - othercategories - seniorexecutives Out oftotal % Coverage - othercategories - seniorexecutives Number ofparticipants Participants inthecourse work ontheinfrastructures oftheNationalTransmission Grid(NTG). data, information,anddetailsoncontractorssubcontractorsinorder toprevent criminalinfiltrationofconstruction procedures topre-determined contractors; with third parties; • • • constant monitoringoftheeffectiveness ofprevention systemsadopted; defining specificmonitoringandcontrol procedures forreducing risks; the phenomenacanbefavored andpossiblecausesinorganizational andoperatingaspectsofprocesses; the systematicanalysisofpreconditions characteristicofincidentsfraud,identifyingthecriticalareas inwhich the SecurityDepartment’sFraudManagementUnitperformstasksregarding: since 2001Terna hasadoptedthe231Organizational Model, anupdatedsetofguidelines,procedures, Terna constantlyorganizes trainingcoursesontheCodeofEthicsand231Model.Theobjective 2011 002009 2010 SO4 HR3 SO3 SO2 177 Social responsibility 178 Sustainability Report 2011 SO5 Relations withinstitutions Participation inAssociations Telecommunications), whichgroup electricalengineersandother industrialspecialists. Électriques whose purposeistokeeptheir membersupdated,suchas,forexample,CIGRE( regarding theindustry’stechnicalstandards. Terna employeeswithtechnicalroles oftenbelongtoprofessional associations Terna alsoactivelyparticipatesinthe CEI(ItalianElectrotechnical Committee),anorganization entrustedwith tasks information andstatisticaldata toimprove knowledgeofmarketsinterest. members toprovide, uponTerna’s request, technicaladviceaboutforeign marketsandtofacilitatetheexchangeof of commoninterest withregard totheirrespective growth. objectivesofinternational ANIEundertakestoencourageits common initiativesaimedatinstitutionalandfinancialpartners andtheoperatorsofelectricitygridsforeign countrie Electrotechnical andElectronic Companies),whichisamem companies. InApril2008,Terna alsosignedaMemorandum ofUnderstandingwithANIE(theNationalFederation Terna continuestobeamemberofConfindustria,themostimportantassociation representing theinterests ofItalian and technicalstandards. of theassociationstowhichitbelongscontributegeneral improvement oftheelectricityindustryanditsregulation In consistencywithcommitmentsexpressed intheCodeofEthics,Terna cooperates,discusses,andsupportsthework systems allowingtosafelyexploitgreen energy fortheelectricitysystem. intermittent sources aswellthepossiblesolutions,such developingnewtechnologyandinstallingenergy storage occasions, criticalitiesfortheelectricitysystem’ssafetywere underlinedowingtotheincreased energy produced from for theCompany, suchastheinvestmentsincludedinDevelopmentPlanforelectricitygrid.Even onthese During theyear, Terna’s topmanagementmetwiththeinstitutionalworldtodiscussissuesthatare particularlyimportant OnOctober18,Terna washeard bytheSenate’s IndustrialCommissionduringthepreliminary surveyontheNational • OnApril27,Terna washeard attheEnvironmental Commissionofthe Chamber ofDeputiesduringthepreliminary survey • OnJanuary19,Terna wasinvitedbytheSenate’sIndustrialCommissiontotakepartinhearingforexamining • During 2011,onseveraloccasions,thecompanywasheard bytheParliament. to beginningwork. archaeological surveysafterwhichtheSuperintendentsandarchaeological authoritiescanrequest furtheranalysesprior and Activities(MIBAC)aMemorandumthatestablishestheobligation,duringplanningphase,ofpreliminary protection ofarchaeological andculturalheritage,onApril28,2011,Terna stipulatedwiththe Ministry forCulturalHeritage To combinetheneedforexpeditingauthorizingandimplementingelectricityinfrastructures withtheneedformaximum institutions andstakeholders.Inaddition,theCompanyconstantlymonitorsbothnationallocallegislativeactivity. and thepublicatlarge, whichalsoleadstheCompanytoparticipate in hearings,meetings,conferences, andforumswith national andlocallevelwithcommunities,aswelltolistentherequests andneedsexpressed by institutions The nature ofTerna’s atboththe businessmakesitnecessaryfortoengageinacontinualdialoguewiththegovernment system’s safety. increase thequantityofrenewable energy absorbedbytheelectricity gridandatthesametimeimprove theelectricity Terna integratedthe2011DevelopmentPlanincludingbuildingofenergy storagesystemscapableofsignificantly next tenyears.To safelymanagetheenergy produced byintermittentsources, inimplementing LegislativeDecree 28/11, the growth ofrenewables whoseinstalledpowerhastripledintwoyearsandisexpectedtocontinueincrease inthe Energy Strategy. Onthisoccasion,theCompanyillustrateditsprojects foradaptingthe gridtotheneedsderivingfrom for exploitingasbestpossibletheenergy produced from theplantssuppliedbyrenewables. contrasting anytypeofspeculation.ThesurveyhighlightedTerna’s commitmentinbuildingnewpowerlines and stations the growth oftherenewable sectorandunderlinedtheimportanceofproperly applyingtheexistingprovisions for on “Environmental policiesregarding energy production from renewables”. Onthisoccasionitprovided variousdataon advantages forbothconsumersandtheenvironment. for theplantandconnectionworkssothatenergy produced canbeinjectedintothegridwithconsequent the hearing,Terna underlinedtheneedformore rigorously complyingwiththe rulesthatestablishasingleAuthorization Legislative Decree 28/11implementingDirective 2009/28/CEforpromoting theuseofenergy from renewables. During ) andAEIT(ItalianFederation ofElectrotechnics, Electronics, Automation,Information Technology, and ber ofConfindustria.Thethree-year agreement provides for Conseil International desGrandsRéseaux Conseil International s s Community initiatives During 2011Terna defineditsmonitoringsystemsasdescribedinthededicatedboxthatfollows. of corporategiving. coherent relation amongcostsandbenefitsofcharityinitiatives,allowingforstrategicplanningarationalmanagement actual charityactivity)andistherefore influencedbyinterpretational aspects,however, ithasthequalityofcreating a accounting criteria(forexample,thefairvalueofproperty transferred ortheamountofasponsorshipthatbecomesan for defining,classifyingandaccountingcorporatecharitableinitiatives. by theinitiatives,bothforrecipients andforthecompany).TheLBGmodelrepresents aconceptualreference framework the communityandrelated input(donationsincash,kind,employeetime)andoutput(benefitsactuallygenerated charity initiativesthatalsodevelopedtheclassificationandmeasuringstandard, bythesamename,ofinitiativesin 2011 Terna joinedtheLondonBenchmarkingGroup group (LBG),aninternational ofcompaniesactivewithregard to For preparing comparison,in accuratereporting usesandforexternal onthesethemes,aimedatmonitoringforinternal established inTerna’s CodeofEthics. It shouldbestressed thatcontributionsare nevergrantedinfavorofpoliticalpartiesortheirrepresentatives, as different initiatives,particularlyremunerated hoursforvolunteeringactivities. useful intheproduction cycleandthesupportprovided intheformofworktimededicatedbyTerna’s employeesto dedicated toorganizing initiativesinfavorofthecommunity, thefree-of-charge transferofcorporateproperty nolonger Terna’s corporategivingactivitiesmainlyconsistinfinancialsupporttocharityinitiatives.To thesetheresources are adde 2011 Terna confirmeditssupportinfavorofsocial,culturalandenvironmental initiatives. In harmonywiththewillingnesstocontributetoward thecountry’scivilgrowth evenbeyonditsowninfrastructural role, in The LBGmodelforstrategicallymanagingcorporategiving method. for thefree-of-charge transferofcorporateproperty” whichregulates oneofthethree inputsmeasured bytheLBG In paralleltothisactivity, newOperationalInstructionswere drafted andpublishedfor“Managementofrequests joined it:Terna andTelecom Italia. In Italy, despite the LBGmethodisreferred toinmanysustainabilityreports, onlytwo companieshaveofficially initiative itself. the verybeginningeachindividualinitiativealsoforsupporting theeffectiveness andefficiency assessmentofthe This monitoringsetwasappliedforafirstdatacollectionat theendof2011andas2012itaccompaniesfrom on theCompany. the allocationofdonationsandsponsorshipsinitiative’s visibilityandafinalchartforassessingtheeffects The toolsdefinedbyTerna includedraftingaproject-chart, fillinginaquestionnaire forcollectinginformationon Italian contextandTerna’s peculiarities. For thisreason, during2011,monitoringtoolswere defined,consistentwiththeLBGmodelandadaptedto of charitableinitiatives,i.e.theimpactsonbeneficiaryorganization, theendbeneficiariesandcompany. Not havingthenecessarydataavailableforthisfirstmodelapplication,itwasnotpossibletomeasure theoutputs Environment, Artandculture, Socialwelfare, Supportforemergencies andOther). initiatives inthecommunity)andtheirobjectives(Educationyouth,Health,Economicdevelopment, (cash, inkind,oremployeetime),thetypesofinitiatives(donations,investmentscommunitycommercial the communityduringyear, according totheLBGModel,highlightingthree possiblecontributionmodalities For thefirsttime,2010SustainabilityReport(pages161-162)classifiedinitiativesimplementedbyTerna in Corporate CommunityInvestmentsforwhichanaccuratemeasuringmethodhasbeendefined. operational coordination ofCorporateCitizenship,joinsover 120companiesonthethemeofimpacts In 2011Terna joinedtheLBG–TheLondonBenchmarkingGroup, aBritishorganization that,togetherwiththe Accountingcontributionsoftenrequires usingother d SO6 EC1 179 Social responsibility 180 Sustainability Report 2011 EC8 COMMUNITY INITIATIVES • Popica Onlus, “StradAlternativa” Project: Onlus,“StradAlternativa” Popica • Province ofRavennafortheTuzla Orphanage: • Social welfare Teatro Spazio NO’HMA“Teresa Pomodoro”: • Art andculture effects ofcorporategivingthatallowedafirstevaluationtheeffects onthecommunity. Amongthesethefollowingare list Nearly 40%oftheorganizations thatreceived adonationin2011returned toTerna theLBGquestionnaire ontheexternal environmental expenses(seethededicatedparagraph in thechapterEnvironmental responsibility, pages146-147). not includedintothistablesinceitisusuallylinkedtobuildingnewelectricitylinesandwastherefore reported as training through collaborationprograms withUniversitiesandMaster’sprograms. Supportingenvironmental causeswas the area ofmajorconcentrationCompany’sinitiatives.Significant activitieswere alsocarriedoutin2011foryouth Despite aoneyearpauseoftheTerna Prizeforcontemporaryart,artisticandculturalinitiativesare confirmedasbeing carried outbyTerna in2011: The followingtableshowstheaggregate communityinitiatives,classifiedforthefirsttimeaccording totheLBGmodel, upr oeegnis 1805,000 61,850 171,575 479,000 114,283 636,457 244,336 340,250 34,547 (*) - Other 42,414 - Supporttoemergencies - Socialwelfare - Artandculture - Environment - EconomicDevelopment 1,558,825 - Health - Educationandyouth Composition bypurpose 1,923,500 - Commercial initiativesinthecommunity - Investmentsinthecommunity - Donations Composition bytypeofinitiative - Employeetime - Inkind(free-of-charge transferofcorporateproperty) - Inmoney Composition bytypeofcontribution Total overheadcosts) valueofcontributions(excludinginternal Values ineuro 30%, thischangehadonlybegun orwasinprogress forbeingconsolidated. professional enrichmentthatdetermined more generallyasignificantimprovement in thequalityoflife.Foranadditional The LBGsurveyunderlined that in25%ofcases,animportantbehavioralchange occurred andacultural approximately 120children andyouthlivinginextreme povertyconditionsalong theroads ofSatuMare inRomania. for the130children livingintheorphanage. Upon completion,LBGregistered animmediatebenefitinterms ofgreater personalhygieneandimproved qualityoflife photovoltaic panelsforsupplyinghotwatertominorsliving intheTuzla orphanage(Bosnia-Herzegovina). have otherwisebeenexcludedfrom usingtheregular theatercircuits. The LBGsurveyregistered animportantculturalenrichment forapublicofapproximately 24,000people thatwould cultural scenario. addressed andthe-free-of charge use,theSpazioNO’HMArepresents anelementofvalueinthecurrent contemporary PrizeforTheater ofInclusion.Forthethemes “Man andthesenseofthings”secondedition International charitable contribution). Commercial initiativesinthecommunity: partnership withNGOs. Investments inthecommunity: Donations: episodic contributions,typicallyinresponse torequests forfundsfrom charitableorganizations deemeddeserving. expenses forcoordinated/organized initiativesbytheCompanyaccording toamedium-longtermplan,oftenin marketing initiativeswithcharitableconsequences(onlythepartofexpenseiscalculatedrepresenting a Terna participatedinthissocialinclusionandhealthproject addressed to Terna supportedthe 2010-2011 theaterseasonfocusedonthetheme Terna supportedbuildinganelectricityproduction plantfrom ,3,1 808,085 1,338,914 1,436,743 1,833,550 6,1 415,733 751,644 264,410 545,900 81,297 498,936 00066,250 32,240 30,000 35,086 21,000 22,404 87,535 47,536 2011 2010 ed: In 2011,duringtheChristmasholidays,anewsolidarityproject wasimplementeddescribedinthefollowingbox. UgoBordoni: Fondazione • Education andyouth OnlusMarinaMinnaja: Fondazione • Health research studies. know-how onthemesofUrbanEnergy Network,referred toSmartGridsandCitiesproduce twooriginal Bicocca, Universitàdell’AquilaanddiBergamo. wasabletoincrease Thefoundation, inturn, itsprofessional with theUniversitiesofRome“LaSapienza”,Tor Vergata andRomaTre, PolitecnicodiMilano,UniversitàMilano favor ofscientificresearch through co-fundingofscholarships,grantsandresearch contractsforactivitiesconcurred The LBGsurveyregistered, astheoutputofTerna’s contribution,abroadened offer ofthefoundation’snewservicesin progress andtechnologicinnovation. network publicservices,radioandTVaudio-visualmulti-mediaservicesingeneralforpromoting scientific conducts research, scientificandappliedstudiesinelectronic communication,informationtechnology, electronics, phase, thatfocusedontrainingvolunteers. The LBGsurvey, conductedafewmonthsaftertheproject began,registered benefitsfortheorganization inthisfirst production ofeducationalandinformativematerials. patients onawaitinglistandafterorgan transplantbyproviding assistanceduringthetransplantprocess andthe Christmas byTerna creates solidarity With “Abetterfuture forall”2011 contribute withadonationrather thansendingChristmasgifts. To completetheinitiative,Terna wasalsothepromoter ofthree projects withitssuppliersrequesting themto proceeding withhumanexperimenting onpatientsaffected byALS. Vescovi succeededinobtainingMarch 2011the authorizationfrom theIstitutoSuperiore dellaSanitàfor transplants are findingeffective treatment against thesediseases.Theexperimentingprotocol defined byProf. Prof. AngeloVescovi, ScientificDirector oftheCasaSollievodellaSofferenza whosestudiesoncerebral stemcell as theALS,multiplesclerosis, Alzheimer’sdiseaseistheprimaryobjectiveofproject “Adottaunacellula”by toward expandinghumanknowledgeforincreasing thequality of all:defeatingneurodegenerative diseasessuch A betterfuture alsopassesthrough the supportprovided toscientificresearch andtoitsconstantcommitment represents theobjectiveoffosterhomes,asolutionthatisnot yetwidespread butthatfocusesonchildren. and protection andpromoting ahealthygrowth anddevelopmentofachild’ssocialindividualidentity, child thatistemporarilyawayfrom hisfamilyoforiginthrough thesupportoffosterparents providing love,safety Milan foundedbyAi.Bi.-AssociazioneAmicideibambini. Creating aserene andconstructiveenvironment fora Minors livingindifficult familysituationsare theobjectofTerna’s secondsolidarityproject: afosterhomenear environmental protection andconservationofitshistory andculture. the Focedell’Arrone which,togetherwiththenearbyOasidi Macchiagrande,are alsoaprecious exampleof containing animalandplantspecieslivinginthisparticularhabitatrepresent themostsignificantcharacteristicsof Sea characterizedbyagrowing urbanization.Thecoastalforest withitssandydunesandMediterraneanMaquis humid forest oftheFocedell’Arrone alongLazio’scoastalarea, asmallpocketofbiodiversityalongtheTyrrhenian YearDuring theInternational ofForests, theinitiativeundertakenbyWWFItaliapromotes, theprotection ofthe selected forallhavingtheobjectiveofguaranteeingabetterfuture. These projects, promoted byorganizations thatsuccessfullypassed transparency andreliability criteria,were its Christmascards anditswebsite Giovanni RotondoandoftheAssociazione“Neurothon Onlus”thatTerna hassupportedandpromoted alsothrough Italia, AssociazioneAi.Bi.–Amicideibambiniand“Adottaunacellula”oftheCasaSollievodellaSofferenza inSan excellence inmedical-scientificresearch onhopelessdiseasesare respectively theobjectsofprojects ofWWF Preserving aforest, providing abetterfuture tochildren with adifficult present situationandsupportingItalian all” thatsupportedthree projects aimedatthewelfare offuture generationsandofhealth. The 2011Christmasholidayswere forTerna theoccasionforlaunchingsolidarityinitiative“Abetterfuture for Terna supportstheactivitiesofFondazioneUgoBordoni, thehighculturalinstitutethat Terna supportsthisthree-year project thatbeganin2011foreducatingandtraining www.terna.it . 181 Social responsibility 182 Sustainability Report 2011 •IV Environment • • •V Symposium 2011CigréInternational • Economic development Sponsorships, dividedaccording toareas, included: Year ofRussianlanguageandculture inItalyandofItalianlanguageculture inRussia: • Art andCulture Engineering attheUniversity“AlmaMaudiorum”inBologna,regarding integratingcomplexgrids. and microgrids” (Bologna,September13-15).Terna initiativehostedbytheDepartmentof supportedthisinternational XLIX from March 11toJuly3,2011. in Venice andMilan):Terna supportedtheexhibithostedinMilanbyMuseoDiocesanoofAmbrosian Dioceses, “Gli occhidiCaravaggio.GliannidellaformazionetraVenezia eMilano” fororganizinggovernments eventsinRome,Milan,MoscowandSt.Petersburg. initiatives organized bytheItalianCulturalInstituteinMoscowpromoted bythejointCommitteeestablishedtwo promoted bytheVeneto Confindustria. institutional worldsaswellofassociations. promotes anexchangebetweenthepublicandrepresentatives ofthescientific,cultural,artisticandeconomic sustainable approach basedonconsultationwithlocalcommunities. agreement oftheinhabitantsandincompliancewithrelevant regulations. Terna supportstheprizetofostera to thebodiesthatpromote aculture ofsustainablygettingthingsdoneontheirterritory, byconstructingworkswiththe th th the Pimby-PleaseinMyBackyard Prize: Energy Festival th Campiello Prize: (Florence, June23-25).Terna supportedthisnationalevententirely dedicatedtoenergy that Terna supportedthe2011editionofCampielloLiterature Prize,whichisorganized and dedicated to“Theelectricpowersystemofthefuture –Integratingsupergrids conceived bytheassociationsamename,thisisanaward given (The eyesofCaravaggio.Thetrainingyears Terna supportedcultural

Foster pylon, Casellina-S. Barbara-Tavarnuzze (FI) electricity line “TERNA CONSIDERS THE PYLON NOT ONLY AS A NECESSARY GRID INFRASTRUCTURAL TECHNICAL ELEMENT, BUT ALSO AS A STRUCTURE TO BE INTEGRATED INTO THE LANDSCAPE THROUGH INNOVATIVE DESIGN SOLUTIONS. ” 2011

Indicator tables 186 Sustainability Report 2011 Units ofmeasurement legend Y Ton no. MWh MW Min Km Kg H GWh/year € € € % # also thetableofacronyms andtheglossaryafterindicators. To facilitatereading theindicators,followingtableshowsunitsofmeasurement inwhichtheyare expressed. See Data isusuallycalculatedasofDecember31andflowindicatorsregard theentire year. • ifitissignificant,thepercentage changebetween2010 and2011. • ifitissignificant,theabsolutechangebetween2010and2011; • thefigures for2011,2010and2009; • theunitofmeasurement; For eachindicatorthetablesshow: theindicatortablesregarding in economicresponsibility, the2010figure for“NetIncome”hasbeenrecalculated. • theindicatortablesregarding in responsibility fortheelectricityservice,2010figures forpowersuppliedandtechnica • With respect tothetablespublishedin2010Sustainability Report,thefollowingchangesshouldbenoted: according tothefollowingscheme: The indicatorsare organized infiveareas corresponding tothestructure oftheReport,dividedinthematicsections completeness. Social Responsibility. Inseveralcases,dataalready presented inthebodyofReportare alsoshownfor Guidelines”, whichTerna believesitisimportanttopublishinorder todescribeitsperformanceinthefieldofCorporate The followingtablesincludeindicatorsthatare additionaltothoseprovided forbytheG3.1“SustainabilityReporting Area 5. Socialresponsibility 4. Environmental responsibility 3. Economicresponsibility 2. Responsibilityfortheelectricityservice 1. Terna’s profile /Mln /000 quality indicatorshavebeenrecalculated; Years Tons Number Megawatt hours Megawatt Minutes Kilometers Kilograms Hours Gigawatt hoursperyear Million euros Thousand euros Euro Percentage Category Section Relations withlaborunions Safety Employee satisfactionanddevelopment Number andcompositionofemployees Environmental performance Customers –Regulatedmarket Suppliers Providers ofcapital Shareholders The grid Ethical Auditing Corporate Governance l Areas ofreports received Outcome ofreports Total reports received Implementation oftheCodeEthics Terna’s Profile etnso o o 1 no. no. no. no. no. with RelatedParties no. Meetings ofCommitteeforTransactions ControlMeetings ofInternal Committee Meetings ofRemunerationCommittee Meetings ofBoD WomenDirectors designatedbyminorityshareholders Independent Directors onBoD Total membersBoD Board ofDirectors on BoD no.0000- 1 Of the3reports received in2011,2were submittedtotheauditdepartmentand1ethicalcommittee;in2010,3were (1) CommitteeforTransactions The withRelatedPartieswasestablishedaspartoftheapproval oftheTransactions withRelated (1) 4 Theprovision mayconsistinapplyingasanctionand/oroth (4) The2010datadiffers from previously publisheddatasinceforonereport theassessmentprocess wascompletedin2011and (3) Eachreport orviolationmayregard more thanonemanagementarea. (2) Corporate Governance Ethical Auditing te ------1 - 0 - - - - 2 3 0 1 3 0 2 1 1 1 1 1 1 1 - Underassessment - Provisions - Unfounded - Other - Corruption/Corporateloyalty - Environment andSafety - Suppliermanagement - Employeemanagement event thatcausedthereport reoccurs. for byCONSOBwithitsResolutiondatedMarch 12,2010. being confirmed. committee and1bothtotheethicalauditdepartment;in2009,onlyreport wassubmittedtotheauditde (4) (3) (1) (1) (2) Unit Unit o - - no. no.341 -- o 300.0% 3 - 1 4 no. er action–suchasreviewing procedures, interalcontrols, e 2011 2011 1 --010 4470-5431 0991 3330-6442 9990- 0020 Change 2009 2010 Change 2009 2010 tc. –aimedatavoidingthatthe PartiesProcedure provided submitted totheethical resulted intheviolation partment. 01 10-11% 10-11 10-11% 10-11 -- 25.0% 11.1% 50.0% 187 Indicator tables 188 Sustainability Report 2011 egho ie m5,5 7685,9 30.0% 13 0.0% 56,691 -0.3% 7 0.1% -27 57,638 0.3% 0.1% 48 36,653 -0.3% 33 57,651 9,725 30 -31 37,040 62,503 0.4% km 9,737 10,313 39,208 37,047 12,083 63,578 49 10,860 9,710 39,730 km 12,089 63,626 11,212 10,893 km 39,760 12,058 km 11,759 km km Incidence DCconnections km 11,808 length oflines km length of3-conductorcircuits Total length oflines length of3-conductorcircuits Lower voltages(<150kV) length oflines length of3-wire circuits 220 kV length oflines length of3-conductorcircuits 380 kV AIT (Average InterruptionTime) no. SAIFI +MAIFI(SystemAverage InterruptionFrequency Index) oe rnfre V 004 014 025 3 -0.1% -30 1.0% 454431383 23 5.3% 950 154140100 14 30,265 no. 10.0% 3 153150147 88,284 30,114 2.0% no. 1,194 1.0% 126,765125,571121,501 6 147141136 92,498 4.3% 30,084 no. 274 3,2342,9602,953 MVA 9.3% 93,448 no. MVA MVA MVA Unit Power lines power stations Total power transformed stations Lower voltages(<150kV) power transformed transformed stations 220 kV power transformed stations 380 kV Power station Indicator Responsibility fortheelectricityservice oe upidGhya 3,7 330,455 332,274 GWh/year ENSR (RegulatedEnergy NotSupplied) ASA (Average SystemAvailability) Service continuityindexes Technical quality Power supplied Grid efficiency 4 Energy notsuppliedduetointerruptionsontheNTGduringperiod.Since 2008,withAEEGResolution341/07,theAuthorit (4) Average interruptiontimeoftheNationalTransmission Gridinayear, calculated astheratiobetweenenergy notsuppli (3) benchmarks),calculatedwithregard indicatoristhetotalASA% (usedininternational The toindividualLocalAreas orfor (2) (1) The 2010 figure The wasrecalculated usingthefinaldataofsameyear, andthusisdifferent from theonereported inthep (1) The grid ie . . . 0.0% 0 0.0% 2.2 0 - 3.0 - 6.3% 0 2.5 - 79 6.3% 0 3.0 914 - 3.2 0 79 1,043 914 % 0 1,348 3.3 1,240 1,043 1,249 1,348 1,348 1,560 1,746 1,249 % 1,328 1,348 km 2,066 1,746 1,328 km km 2,066 km km km - lines - 3-conductorcircuits in 200,400and500kVdirect current in underwatercable in underground cable in 200,400and500kVdirect current in submarinecable in underground cable supplied intheindividualsignificantincident. The2010figure hasbeenrecalculated andistherefore different from theprev during whichtheenergy notsuppliedamountstomore than250 MWh.Theshare affecting the ENSRindexisadecreasing percentag the NTGandashare oftheenergy notsuppliedduetoforce majeure eventsorsignificantincidents.By“significant incident” for theindex.Thenewindexalsoincludes energy notsuppliedtoUsersdirectly connected,duetoeventsonotherconnectiong previously publishedone. value) andtheaveragepowerabsorbed byNTGintheperiodconsidered. The2010figure has beenrecalculated andistherefore d due toDevelopmentWork. account: PlannedUnavailability, OccasionalUnavailability, UnavailabilityduetoMalfunctioning, UnavailabilityduetoExterna Report, amountingto326,165,whichwascalculatedaccording totheprovisional datafor2010. (3) (2) (4) W ,1.01280 0.0-8-2.30% -28 800.00 1,238.00 1,210.00 MWh Unit i .908 .5-. -44.90% -0.4 0.55 0.89 0.49 min 93 92 90 .90.10% 0.09 99.03 99.23 99.32 % 2011 .401 .900.00% 0 0.19 0.14 0.14 0020 Change 2009 2010 (1) 1,0 ,1 0.6% 1,819 317,602 revious editionoftheSustainability iously publishedone. y adoptedadifferent definition theentire countrytakinginto ed inacertainperiod(ENS l Events,andUnavailability is meantanyinterruption rids thatare notpartof 01 10-11% 10-11 ifferent from the e ofenergy not Net income EBT EBIT EBITDA TEMB%181816001.7% 0.0 10.5% 1.6 0.2 1.8 1.4 1.8 1.6 % 1.8 % FTSE MIB FTSE ItaliaALLSHARE Terna in stockindexes OC 001. 14-. -9.1% -1.0 11.4 11.0 -40.0% 10.0 -2 % 3 5 -27.0% -73 100 3 -2.1% 342 338 -2.0 n° -430.0% ROACE -22.9 270 -100.0% 368 -20.2% 67.0 -5.09 -21.8% -8.0 28.5 Revenues 197 -3.1 468 5.12 97.0 Economic performance -61.5% 40.6 5.3 Request forinformationfrom RetailInvestors 14.6 -7.04 n° to orwithtimeforCSRissues 0.0% 5.09 n° Meetings withinvestorsdedicated 95.0 Meetings/conference callswithfinancialanalysts(“sell-side”) 39.7 IMeetings/conference calls withinvestors(“buy-side”) -0.01 -17.6 9.01 14.3 22.7% Communication withshareholders 0.00 n° 12.15 29.99 31.7 % 11.44 11.2 Total (TSR) Shareholder Return DPS (Dividendpershare) % 55.88 pershare)EPS (Earnings 29.86 % 4.40 Shareholder return % 53.60 29.85 Unit % Dividend Yield 65.75 Financial performanceofshares % Share Performance ISR weightininstitutionalfunds % Terna’s shares heldbyISRfunds ISR funds Socially ResponsibleInvestors(ISR) Enel S.p.A. Major institutionalinvestors Cassa DepositiePrestiti S.p.A. Other institutionalandretail investors Composition ofshareholders base Indicator Economic responsibility 4 Some economiccomparative balancesfor2010and2009were modifiedbasedonthechangeinaccountingmethodadoptedbyt (4) figure The takesintoaccount requests received viae-mail. (3) valuewascalculatedastheratiobetweendividendpaidforyearconsidered The andtheaveragereference priceinD (2) madeonthebasisofethicalcriteria/ESG(Environmental Investments inadditional totraditionalones. SocialGovernance) (1) Shareholders ic h P 4. 7. 4. 3. -18.1% -31.1 -194.1% 142.3 -23.6 171.8 37.2 140.6 12.2 % -11.4 % - sincethebeginningofyear - sincetheIPO for goodwillexemptions.Thisledtomodifyingthefigure previously publishedforthenetincome. (4) (2) (1) (3) € € € € € mlin74062855311215.3% 101.2 505.3 662.8 764.0 /million mlin7287056442. 3.0% 22.3 654.4 750.5 772.8 /million mlin111610939385. 4.9% 52.3 933.8 1,069.3 1,121.6 /million mlin1539155113474. 3.2% 48.8 1,324.7 1,505.1 1,553.9 /million mlin4364217002. 5.0% 21.5 790.0 432.1 453.6 /million . . . . 21.9% 1.5 6.6 6.7 8.1 % °2 82 055.6% 10 29 18 28 n° € € 2011 .102 .900 0.0% -28.4% 0.00 -0.09 0.19 0.39 0.21 0.31 0.21 0.22 0020 Change 2009 2010 ecember. 01 10-11% 10-11 he Terna Group 27.2% 189 Indicator tables 190 Sustainability Report 2011 ett qiy%162195194673.7% 6.7 149.4 179.5 186.2 % Debt toEquity Services Equity Work / em(sur IdxA A F1 A2 A+ A F1 A+ Stable A-1 A2 Prime-1 A+ Stable Prime-1 F1 A A+ A-1 A3 A Prime-2 Negative Stable A- A-2 Index Index Index Index Index Index NegativeStable Index Index Index FitchSeniorUnsecured Debt Short Term (Issuer) M/L Term (Issuer) Outlook (Issuer) Negative Fitch (asofMay4,2006) Short Term M/L Term Outlook Index Unit Moody’s (asofSept.2,2004) Short Term M/L Term Outlook S&P (asofSept.2,2004) Rating Stable Remaining debtonEIBloans EIB loans Stable Financial debt Debt Indicator rceig ocue o - -66.7% 9.1% 0 -4 2 2.5% 0 0 1 26.3% 16 156 35.8% 0 6 36 22 93 263 0 2 40 180 24 593 no. no. 41 260 no. 749 -0.1% -2 353 no. no. 2,308 no. Proceedings concluded 2,316 Proceedings initiated Proceedings pending Litigation withsuppliers 2,314 Implemented monitoring Categories qualified Eligible companiesregistered no. Management instruments Supplies Procurement ofmaterialsandservices Number ofsupplierswithcontracts Number ofsuppliers (2) These refer These tothelatestassignedassessments. (2) Differently from previous publications,datarefer totheTerna Group andnotonlytoTerna S.p.A.. (1) Suppliers Providers ofcapital (1) (2) € € € € € € mlin2121112095. 33.2% 50.2 210.9 151.1 201.2 /million mlin271027322557-22-0.8% -22.2 2,515.7 2,773.2 2,751.0 /million mlin565728232-5. -33.2% -256.3 253.2 772.8 516.5 /million mlin1354100176925324.6% 265.3 2.9% 766.9 146.1 1,080.1 3,758.2 1,345.4 4,977.0 /million 5,123.1 /million mlin4464494134. 12.3% 49.7 461.3 404.9 454.6 /million Unit 2011 2011 0020 Change 2009 2010 0020 Change 2009 2010 01 10-11% 10-11 01 10-11% 10-11 rceig ocue o - -25.0% 1 16.7% -1 2 0 1 8 5.8% 0.9% 5 5.3% 0 4 1 12 1 77 1 3 106 14 19 86 109 no. no. no. 19 91 110 20 no. no. no. Proceedings concluded Proceedings initiated Proceedings pending Litigation withcustomers Users ofwithdrawaldispatching Users ofinjectiondispatching Users ofthedispatchingservice to theNationalTransmission Grid Distributors directly connected Users ofthetransmissionservice Customer portfolio Customers -Regulatedmarket Unit 2011 0020 Change 2009 2010 01 10-11% 10-11 191 Indicator tables 192 Sustainability Report 2011 Emissions ofSF uniydlvrdfrrccigtn - - 29.0% 654.7% 203.7 874.0 -15.7% - 0.5 18.6% -1.9 61.9 3,995.7 530.7 18.2% 69.2 - 19.4 37.5 13.5% 3,013.3 3,322.0 18.2% 31.1 87.5 0.0 5.1% 19.4 185.3 3,887.3 2,849.5 11.8 - 25.3% 234.8 27.4 933.2 185.3 tons 3,380.1 106.5 562.9 0.5 22.1% 10.0 32.3% 544.4 tons 65.6% 649.2 tons - 106.5 2,746.1 485.8 125.9 808.2 28.7% 357.4 26.8% tons tons 55.7% 536.3 -6.5% 736.6 2,226.6 2,554.8 79.1 125.9 3,057.5 553.9 tons 28.7% 564.0 105.5 tons 3.3% -5.8 563.6 2,789.5 2,194.9 74.4 2,502.6 tons 2,534.4 242.6 tons 233.4 54.9 544.9 - quantitydelivered forrecycling 3.5% 83.0 - quantityproduced 30.5% tons 2,680.7 3,310.8 2,063.3 tons Total hazardous specialwaste 204.1 275.2 - quantitydelivered forrecycling 57.1 189.4 1,682.2 2,250.9 - quantityproduced 902.3 tons Other tons 2,617.2 89.1 - quantitydelivered forrecycling 259.5 7,053.3 - quantityproduced 354.3 1,682.5 2,096.8 294.9 Waste derivingfrom asbestoscontainingmaterials tons tons - quantitydelivered forrecycling - quantityproduced 5,515.9 83.3 333.9 1,737.4 1,614.5 Lead batteries tons tons - quantitydelivered forrecycling - quantityproduced 7,198.1 Oils tons 1,671.6 % tons - quantitydelivered forrecycling - quantityproduced Machines, equipment,towers,cables,conductors tons tons Hazardous specialwaste - quantitydelivered forrecycling - quantityproduced Total non-hazardous specialwaste - quantitydelivered forrecycling - quantityproduced Other - quantitydelivered forrecycling - quantityproduced Packing - quantitydelivered forrecycling - quantityproduced Machines, equipment,towers,cables,conductors Non-hazardous specialwaste Waste recycled Waste produced Waste management SF Percentage ofSF SF Environmental responsibility rceig ocue n.2 62 - -25.0% 0 -9.2% -4 -14 28 11 163 6.0% 26 16 5.5% 9.9 1.5% 153 8.7 26.4 26 12 154.2 139 -12.4% 155.8 1,673.9 164.4 -37.0 no. no. no. 1,721.4 158.8 306.5 174.3 1,747.8 167.5 297.5 GWh tons tons 260.5 ofm Thousands Proceedings concluded Proceedings initiated Proceedings pending tons Environmental litigation Consumption ofelectricity Methane gasforheating Gas oilforgeneratinggroups andheating Gas oilforvehicles Gasoline forvehicles Direct consumption Consumption Indirect consumption 2 During 2011,asurveyandassessmentactivity wascarriedoutonelectricityconsumption ofstationsandoffices. Based ont (2) 1 Onlywastefrom theproduction process isincluded,andthuswasteproduced byserviceactivities(urbanwaste)isexcluded. (1) Environmental data nclnesk 9093,2 3671,0 35.0% 12,708 33,687 12.8% 41,671 36,322 305,781 49,029 325,853 kg 367,524 kg - incylinders - inoperatingequipment 6 6 was possibletoinclude inthetablemore precise datanotonlyfor2011but alsocompared tothefigures previously published “Excavation earthand rocks” categorywasnotsignificant anylonger;thefigure forthe“Effluent” category wasequal675tons “Effluent” amountedto1,541tonsin2010(16,053 in2009).For2011,onlywastereferring tothe “Effluent” category were would therefore make thedataseriesnon-homogeneous,especiallyifquantityissignificant. Thevalueofthe“Excavatione “Excavation earthandrocks” and“Effluent” categoriesisexcluded, since–beinglinkedtotheconstructionofworksinstatio uniyk 1,5 6,7 3,6 43915.0% 54,379 339,468 362,174 416,553 kg quantity quantity andemissions 6 6 rehuegssk ,1 ,4 ,0 17-4.8% -127 3,005 2,645 2,518 kg greenhouse gases ekg u fttl%06 .308 01 -17.2% -0.13 0.89 0.73 0.60 % leakage outoftotal (1) (2) Unit 3 4. 8. 5. 6230.1% 56.2 157.5 186.5 242.8 2011 0020 Change 2009 2010 he results ofthisactivity, it ns –itisexceptionaland in2011. for 2010-2009. Waste belongingtothe 01 10-11% 10-11 arth androcks” and excludedsincethe attm mlye . . . . -1.3% 11.8% 0.0 4 0.9 12 -11.5% -7 0.9 34 120 0.9 38 61 % no. 54 no. Part-time employees andapprentices Interns that becamepermanentduringtheyear Beginner andtrainingcontracts vriewr . . .21930.2% 1.9 6.12 -0.7% 6.3 -0.3 46.4 8.2 0.2% 12.7% -2.3% 0.1 45.6 2.4 -4.6% 0.0% % 3.3% -11.9% -0.4 -3.1% -1.4 -2.2 0.0 1.8 -0.5 45.6 45.2 18.0 17.0 29.6 19.4 1.9 14.2 -1.1% 54.4 46.5 y 19.2 16.2 -2 29.3 0.7% 18.2 14.5 1.7 54.5 46.6 21.6 15.8 25 57 28.0 16.0 14.0 Overtime work 56.3 % 1.7 % % 3,447 % 178 % % % Fixed-term contracts % 3,468 Flexible employmentcontractsandterms 176 Average yearsatTerna Average age 3,493 Age andyearsatTerna Elementary/middle schoolgraduates no. Vocational schoolgraduates no. High schoolgraduates University graduates Education Blue-collar workers White-collar workers Junior executives Senior executives Professional status Composition Outflow duringtheyear Inflow duringtheyear Number ofemployees Number Social responsibility (2) Thefigures includebeginnercontractsandfixed-termcontracts. thecaseofemployeeswhobegantoworkatCompanyfollowingacquisitioncorporatedivisions,averagenumb In (1) Number andcompositionofpersonnel takes intoaccounttheirprevious employment. (2) (1) Unit o 4 0 33 33.6% 36 73 107 143 no. o 5 5 3 6-3.8% -6 134 157 151 no. 002. 15-. -2.5% -0.5 21.5 20.5 20.0 y 2011 0020 Change 2009 2010 01 10-11% 10-11 er ofyearsatTerna 193 Indicator tables 194 Sustainability Report 2011 xctv mlye ihLn emIcnie(T)n.4 74 1-2.1% -1 47 47 46 no. Variable compensationas%offixedpay Executive employeeswithLongTerm Incentive(LTI) rceig ntae o 4-57.1% -16.7% -4 -21.9% -2 -7 3 17 37 7 12 -61.0% 32 3.7% -25.0 2 3 10 25 26.0 47 no. no. 41.0 no. 49 16.0 51 no. Proceedings concluded Proceedings initiated h Proceedings pending Litigation withemployees Absences peremployee Total spontaneousresignations Corporate climate Training expenseperemployee Hours oftrainingperemployee Training Average costperemployee Compensation Training coverage Executive employeeswithstockoptions 6 Thisfigure regards thenumberofnon-contractualabsencesduringyear(illness,accident,leaveabsence,strike, un (6) %ofemployeeswhotookatleastonetrainingcourseduringtheyear. (5) Training expensesdonotincludethecostofsessionsmissednorhoursinstructionprovided directly byemployees. (4) Thefigures regard theincentivespaidtoallemployees,includingexecutives.Fringebenefitsare excluded. (3) There isonlyoneStockOptionPlan,whichwasresolved onDecember21,2005andwillendin2013. (2) By employeeismeanteveryoftheCompany, includingexecutives. (1) Employee satisfactionanddevelopment (5) (6) (1) (4) (2) (3) Unit o 41 5-35.7% -5 14 14 9 no. 79 1101.0% 1.0 0.0% 91 0.0 96 9.0 97 9.4 % 9.4 % € € 005. 24091.5% 0.9 62.4 59.1 60.0 h 9427,6 563881.1% 868 75,643 78,564 79,432 8. 8. 8. 9. -25.3% -98.3 389.4 387.9 289.6 2011 0020 Change 2009 2010 paid absence). 01 10-11% 10-11 eidclhat npcin o ,8 ,6 ,8 1 26.2% 619 2,088 2,364 2,983 no. Periodical healthinspections Lost DayRate no ebrhprt 066. 50 06-1.0% -0.6 65.08 - 61.2 0 -20.0% 60.6 -1 1 - % 1 -50.0% 0 -1 0 5 0 0 -2.0% -7.1% 0 -1 -1 4 Union membershiprate 0 2 Employee unionmembership no. 36 n.a. no. 0 1 50 14 no. no. 49 13 no. no. - fatal - serious Occupational injures ofcontractoremployees Occupational injures ofcontractoremployees Injury Rate - serious - fatal Occupational injuries Occupational injuries (1) This isthenumberofinjurieswithatleastonedayabstentionfrom This workdividedbythenumberofhoursworkedduringth (1) (2) This istheratiobetweendaysnotworkedbecauseofinjuryandhoursduringyear, This multipliedby200,000. (2) (3) In 2011,processing In criteriawere reviewed aswelltheitemsthatdeterminetotalofhoursworked.To guaranteedata (3) Relations withlaborunions Safety this calculationmethod,theInjuryFrequency Rateisequalto multiplication factorequalto1,000,000andnot200,000(thusobtainingaFrequency Rate5timeshigherthattheILOFrequency (corresponding to50workweeksx40hours100employees).To facilitatecomparisonwithothersources, thisindicatorwasal rates; forthisreason, datapublishedinthetableare different from datapublishedintheprevious years. the figures ofhoursworkedusedfordeterminingrateswere updatedandreviewed alsofortheprevious years(2010 e2009)and multiplication factorequalto1,000.Onthebasisofthiscalculationmethod,seriousinjuryrateis calendar daysandare countedfrom thedayinjuryoccurred. To facilitatecomparisonwithothersources, thisindicatorwas (1) (3) (2) (3) Unit Unit 8.3 .717 .4-. -3.9% -28.7% -0.1 -18.7 1.24 40.94 65.03 1.74 46.35 1.67 % % in 2011 , 8.7 2011 2011 in 2010 and 6.2 in 0020 Change 2009 2010 0020 Change 2009 2010 2009 . 0.2 in 2011 consistency andcomparability, , 0.3 e year, multipliedby200,000 Thedaysnotworkedare in alsocalculatedusinga 2010 used fordraftinginjury Rate).Onthebasisof so calculatedusinga 01 10-11% 10-11 01 10-11% 10-11 and 0.2 in 2009 . 195 Indicator tables

198 Sustainability Report 2011 CONSOB CIGRE CESI CEI CdP BoD AU ASA AOT AIT AGCM AEEG ACEA Acronyms GRI GIS GAAP ETSO ERPA EPSES EPS ENS EMS EMO EIA EHV EBIT DT DSM DPS DP DAEM CSR (NationalCommissionforCompanies andtheStockExchange) Development PlanoftheNationalTransmission ElectricityGrid Day AheadEnergy Market Corporate SocialResponsibility Commissione NazionaleperleSocietàelaBorsa desGrandsRéseaux ElectriquesàHauteTensionConseil International Centro Elettrotecnico SperimentaleItaliano(ItalianElectrotechnical Testing Centre) Comitato Elettrotecnico Italiano(ItalianElectrotechnical Committee) Cassa DepositiePrestiti Board ofDirectors Acquirente Unico(ItalianSingleBuyer) Average SystemAvailability Area OperativaTerritoriale (Transmission OperationalArea) Average InterruptionTime Autorità GarantedellaConcorrenza edelMercato (ItalianAntitrustAuthority) Autorità perl’Energia ElettricaeilGas(ItalianAuthorityforElectricity and Gas) Azienda ComunaleEnergia eAmbiente(MunicipalEnergy andEnvironment Company) Global ReportingInitiative Geographic InformationSystem Generally AcceptedAccounting Principles European Transmission System Operators Exclusion, Repulsion,Problems, Attraction Emergency PlanfortheSecurityofElectricitySystem PerShareEarnings Energy NotSupplied Energy Management System Energy Market Operator Environmental ImpactAssessment Extra HighVoltage BeforeEarnings Interest andTaxes Distance Training Dispatching ServiceMarket Dividend PerShare ZPS UCTE TSR TSO TFR SRI SISTAN SETSO SEA SCADA S&P ROACE PPE PCT PCB OECD NTG NCC N.A. MPA MELS MEF MED MBO MBI ISTAT ISPRA IPO IEA IBA HV GSE GRTN Special Protection Area Union fortheCoordination ofTransmission ofElectricity Total Shareholder Return Transmission SystemOperator Trattamento diFineRapporto(Staff SeveranceIndemnity) Socially ResponsibleInvestment National StatisticalSystem South European Transmission SystemOperators Strategic Environmental Assessment Supervisory Control AndDataAcquisition Standard &Poor’s onAverageReturns Capital Employed Personal Protective Equipment Polychlorinated terphenyls Polychlorinated biphenyls Organization forEconomicCooperationandDevelopment National Transmission Grid National Control Centre Not Available Ministry forProductive Activities(nowtheMinistryforEconomic Development-MED) Ministry fortheEnvironment, LandandSea Ministry ofEconomyandFinance Ministry forEconomicDevelopment Management ByObjectives Maintenance andBusinessIntelligence Italian NationalStatisticsInstitute Istituto Superiore perlaProtezione elaRicerca Ambientale Initial PublicOffering EnergyInternational Agency Important Bird Areas High Voltage Gestore ServiziElettrici(ElectricServicesManagement) Gestore dellaRetediTrasmissione Nazionale(NationalTransmission GridOperator) 199 Acronyms 200 Sustainability Report 2011 Glossary an official document,signed bytheBoD,whichrequires thecomplianceofall personnel. rights anddutiesareas ofresponsibility thatthebusinessundertakestorespect indealing withitsstakeholders.Itis It isoftencalleda“businesscharter”, asitrepresents thefoundationofcompany’sculture andexplicitlysetsforththe Code ofEthics An energy supplycontractbetweentwomarketoperators. Bilateral contract standards forthedomesticelectricitymarketandliberalisationthereof. Legislative Decree no.79ofMarch 16,1999, whichwasissuedtoimplementECDirective no.96/92/EC,regarding shared Bersani Decree bar systemofapowerstation. Group ofpowerplantsandaccessoryservingalineortransformerwhichconnecttheGridelements tothe Bay necessary forbalancing. The marketprovided andregulated withintheDispatchingService Market(DSM)fortheprocurement oftheresources Balancing ServicesMarket(BSM) • • Where thesumincludesalloutagesthat occurred intheperiodand/orcalendaryearandarea, andwhere: The averagenumberofoutagespergriduserdirectly connected totheNTGisdefinedbyfollowingformula: Average numberofoutagespergriduser(N) operational consistencyassetforthinAttachment1oftheOperator/OwnerStandard Agreement. The conditioninwhichagridelementmaybeusedfortransmissionactivitiesundertheconditionsprovided under Availability ofagridelement Average real availabilityofallelementstheNationalTransmission Gridduringtheperiod. ASA (Average SystemAvailability) Average durationofinterruptionsupplytotheelectrical systemduringtheyear. AIT (Average InterruptionTime) the year, andHisthenumber ofhoursworkedduringthesameperiod. This iscalculatedusingthefollowingformula:G/H*1,000,where Gisthenumberofeffective daysofunavailabilityduring Accident seriousnessindex absence from workduringtheyear, andHisthenumberofhoursworkedduringsameperiod. This iscalculatedusingthefollowingformula:N/H*1,000,000,where Nisthenumberofaccidentswithatleastoneday’s Accident frequency index extent –incasethecrimesare actuallycommitted. to lawprovisions, thissystem(“231Organizational Model”)canalsoavoidsanctionstothecompany–orreduce their crimes. 231Organizational Modelthusrepresents anintegratedsystemtoavoidspecificrisks;whendefinedaccording guidelines, procedures, trainingcommitmentandcontrol mech itself (e.g.publicmanagersbribery, companyfrauds,crimesagainstprivateperson,marketabuse).Themodelisasetof in caseofspecificcrimescommittedbymanagers,employeesorpartnerstheinterest oradvantageofthecompany 231 Organizational ModeltakesisnamedafterLegislativeDecree no.231,2001.Thisdecree imposesacompanyliability 231 OrganizationalModel i=1 n Utot isthetotalnumberofusersdirectly connectedtotheNTG duringthecalendaryear. Ui isthenumberofusersinvolvedinithconsidered outage; Utot Ui anisms thataimatpreventing theriskofcommittingsuch interconnection capacity, oranincrease inoperating flexibilityofthegrid,orremoval ofgridelements. Works ontheelectricitygridwhichleadtoadjustment orupgradingofthetransport,transformation,connection and Development once suchastagehasalready begun, oremergency conditionsare already present. designed tomaintainorreturn anelectricitysystemtoanormalcondition,alsopassing through areinstatement stage, The control activities–automaticand/ormanualsetforthbyTerna andcarriedoutthrough singlesystemsand/orplants Defence plans (preliminary cumulativeprogrammes). of trading.Thismarketdealswiththeenergy unitswhichdefinetheproduction andwithdrawalplanforthefollowingday The tradingofbidsforthepurchase andsupplyofelectricalenergy foreachhourofthenextoperatingdayfollowingthat Day AheadEnergyMarket(DAEM) importance. content isnottoberead byunauthorisedpersons.Thisisadataandinformationtreatment conditionofdirect commercial Data are considered confidentialif,whentransferred from onetelecommunications and/orprocessing system,thedata Data privacy Businesses ordistributioncompanies,wholesalersandthefinalbuyersofelectricalenergy. Customers European Commission,July18,2001). beyond, toinvestinhumancapital,theenvironment and inotherrelations withpartiesinvolved”(Green Bookofthe parties involved.Beingsociallyresponsible meansnotonlycompletely fulfillingapplicablelegalobligations,butgoing intheircommercial“The integration,bythefirms,ofsocialandecologicalconcerns operationsandtheirrelations with Corporate SocialResponsibility(CSR) other stakeholdersofthecompany. ofthe company,The formofgovernance meaningthesystemofrelations betweenmanagers,directors, shareholders and Corporate Governance for ancillaryservices. The group includingtheNationalTransmission Gridanddirectly connectedusers’plants,includingtheassociateddevices Controlled electricitysystem the entire electricitysystem. A group ofcalculationsystems,datatransmissionlinesandapparata whichenablesthesecure andeconomiccontrol of Control System System). A group ofplantsusedforthecontrol andoperationoftheNTGoraUser’selectricitysystem(different from aProduction Control Center systems atplannedlevels,andtocontributetheregulation oftheinterconnection frequency. Electricity systemabletoregulate itsownproduction bymaintainingexchangesofpowerwithotherinterconnected Control area Power stationwhichispartoftheNTG,whosesupplyplantconnectedtooneormore powerlines. Connection station connection station. Any powerlinethatlinksthedistributionplantwithuser’splant,or Connection line connection isgenerallythelengthoflinewhichformsitself. circuitry isolatingapparata.Connectionsare classifiedbyvoltagelevelwithreference toratedvoltage.Thelengthofthe The group ofgridelementsformingthetransmissionline,andbaysatborders ofthesame,includingrelated Connection necessary forresolving congestion. The marketprovided andregulated withintheDispatchingServiceMarket(DSM)forprocurement oftheresources Congestion ResolutionMarket(CRM) 201 Glossary 202 Sustainability Report 2011 as quicklypossibleand/or enable,inemergency conditions,thelocalrunningofplants. Group ofoperationsexecutedfollowing anomaliesorfaultsonplan Emergency measures load portions,duetofaultsordisturbances. Operational situationofanelectricalgridwhichresults inexceedingoperatinglimitsofgridelementsand/oroutages of Emergency conditionofanelectricitysystem kWh peryear. both inItalyandabroad. Startingfrom May 1,2003,eligiblecustomersare definedasthose consumingmore than100,000 The naturalpersonorlegalentitywhoisfree tostipulatesupplycontractswithanyproducer, distributororwholesaler, Eligible customer damaging and/orlethaleffects onanorganism dependingontheintensityofcurrent andthedurationofexposure. Phenomenon knownasanelectric“shock”,causedbycontact betweenabodyandelectricalcurrent. This canhave Electrocution Intended asthecombinationofEnergy MarketandtheDispatchingService(DSM). Electricity markets meet thedemandatanymoment,anddeterminespriceofenergy atthatspecificmoment. The systemofwholesalesellingelectricity, whichdeterminespower generationsystemsorplantswillbeusedto Electricity Exchange A group ofplants,linesandstationsfortransferringelectrical energy andsupplyingthenecessaryancillaryservices. Electricity Grid A company’sprofits (losses)before tax. Before Taxes)EBT (Earnings term GOP(Gross OperatingProfit), whichmeasures operatingprofits gross ofamortisationandallocationstoprovisions. Profit before taxes,financialincome/charges, write-downs, amortisationandextraordinary components.Itissimilartothe Before Interest,EBITDA (Earnings Taxes, Depreciation andAmortisation) income/charges andextraordinary components;itisalsocalledoperatingprofit oroperatingincome. One ofthekeyprofitability indicatorsfortypicalcompanymanagement. Itmeasures companyprofits before taxes,financial Before InterestEBIT (Earnings andTaxes) ordinary shares. Dividend perShare: calculatedasthetotalamount ofdividendsdistributedbyacompanydivideditstotalnumber DPS (DividendperShare) immediate profitability ofashare. Calculated astheratiooflastdividenddistributedbyacompanyandcurrent priceofitsshares. Itindicatesthe Dividend Yield the finalcustomers. The transportandtransformationofelectricalenergy onhigh-,medium- andlow-voltagedistributiongridsforsupplyto Distribution Services Market(BM). is required tobecomposedofseveralmarkets:CongestionResolutionMarket(CRM),Reserves(RM),Balancing The marketforthenegotiationofprocurement ofseveralresources required forthedispatchingservice.Ingeneral,it Dispatching ServiceMarket(DSM) Transmission Grid,thegridsconnectedtosame,andancillaryservicesofelectricitysystem. The activityaimedatissuingprovisions forthecoordinated useandoperationofproduction plants,theNational Dispatching plants, totheNTG. Connection ofallplantswithexistingcircuit continuityatleastinonepoint,withouttheinterpositionofancillarypower Direct connectiontotheNTG ts, toensure therecovery ofefficiency ofsuchplants polarity tonegativepolarity. Itismeasured inHertz (Hz). current,The numberofoscillationsper second,inwhichthevalueofalternating suchasvoltage,variesfrom positive Frequency energy toeligible customers. Market where producers andwholesalersofelectrical energy, bothItalianand foreign, competefreely toprovide electrical Free market The naturalpersonorlegalentitywhopurchases electricalenergy exclusivelyfortheirownuse. Final customer • • immediately takenoffline. Thefaultcanbe: The yieldingofanelectriccomponentoraconditiondanger toper Fault technical characteristics,asspecifiedinAttachments1,2aand2boftheOperator-Owner Standard Agreement. Performed fortherecovery andextensionoftheuseful lifeofaplant,withoutmodifyingthefunctionalconsistencyor Extraordinary maintenance Rated voltagewithavaluehigherthan220kV. Extra highvoltage(EHV) the ethicalriskcontrol processes. task mustascertainandpromote continuousimprovement inethicswiththecompanythrough analysisandevaluationof Consists inverifyingtheapplicationofandcompliancewithCodeEthics.Thecompanymanagementassigned this Ethical Auditing the stocksegment. Term usedtoindicatetheshareholders’ equityofacompany;inthecontextassetmanagement, itisusedtorefer to Equity Calculated astheratioofnetprofit tothenumberofacompany’s outstandingordinary shares. PerShare) EPS (Earnings • • • • direct andindirect usersaffected bythesameoutage,where: where thesumincludesalloutagesthatoccurred intheperiodand/orcalendaryearandarea and,foreachofthese,all Energy NotSuppliedduetooutages,definedbythefollowingformula: Energy NotSupplied(ENS) Intended asthecombinationofDayAheadEnergy Market(DAEM) andtheRealTimeEnergy Market(RTEM). Energy market and industrialusers,withdifferent levelsofseverity. In caseofcriticalevents,EPSESsetsforththemethodsforselectivelysuspendingsupplyelectricitytodomestic Emergency PlanfortheSecurityofElectricitySystem(EPSES) of theelectricitysystemitselforpartit. Group ofautomaticandmanualprocedures implementedduringcriticaloperatingperiods,inorder toavoidorlimitoutages Emergency Plan i=1 j=1 n m permanent, inallothercases. breakers; transient, whenitiseliminatedthrough theautomaticsequencesofimmediateopening andreclosure ofthecircuit power diagram. or equalto15minutes;ifthelengthexceedsminutes,thisisestimatedbasedonforecast and/orhistoriccapacity Pi,j istheaverageconstantvalueof15minutespreceding theoutageifdurationofinterruptionislessthan Ti,j istheduration(inhours)ofoutageandinterruptedpower(MW)forjthuseraffected duringtheithoutage; m isthenumberofusersaffected bytheithoutage; n isthenumberofoutagesinperiodunderobservation; (P i, j * T i, j ) sons orthings,whichresults inagridelementbeing 203 Glossary 204 Sustainability Report 2011 information (“significant persons”). subsidiaries, performedbypersons havingsignificantcompanydecision-makingpowers, andaccesstoprice-sensitive transparencyGoverns obligationsinrelation tothemarket, foroperationsinfinancialinstrumentsofacompanyor its Dealing Internal Connection betweenelectricity gridsrequired forthetransferofelectricity. Interconnection ofelectricitygrids or distributiongridseventwogenerationplants. currentHigh-voltage powerlineinalternating (AC)ordirect current (DC)whichlinkstwodifferent electrical transmission Interconnection line at aminimumofonepoint,withtheinterpositionancillary powerplant,totheNTG. Connection ofallplantsrelevant intermsoftheoperationstransmissionanddispatching,withexistingcircuit continuity Indirect connectiontotheNTG Rated voltagegreater than35kVandlowerorequalto220kV. High voltage(HV) The naturalpersonorlegalentitywhosuppliesissupplied byatransmissionordistributiongrid. Grid user The naturalpersonorlegalentitywhomanagesapowergrid,alsowithoutowningsaidgrid. Grid operator necessary ancillaryservices,aswellthedecisionstoperformmaintenanceanddevelopmentworks. power grid.Saidactivitiesandprocedures includethemanagementofelectricpowerflows,interconnection devicesand The activitiesandprocedures whichdeterminetheoperationsandforecast, underanyconditions,ofa Grid management of theGrid,aswellcomponentsmakingupsuchelements. Circuit infrastructure ofthegrid,represented inasinglelinediagramatsufficient levelofdetailtoillustratetheelem Grid diagram • • • • • • specifically, theGridCodesetsforthtransparent, non-discriminatoryregulations for: and maintenanceoftheNationalTransmission Grid,aswelldispatchingandmeasurement ofelectricity. More the proceduresThe documentthatgoverns regarding theactivitiesofconnection,management,planning,development Grid Code(Codefortransmission,dispatching,developmentandsecurityofthegrid) environmental performance. Framework, inorder tosupportcompanieswhichvoluntarilydecidepublishdataregarding theireconomic,socialand associationresponsibleAn independentinternational fordevelopinganddistributingtheSustainabilityReporting GRI (GlobalReportingInitiative) Unit ofmeasurement equaltoonebillionWatts (1,000Megawatts). Gigawatt (GW) the availabilityofasuitablelevelpowerreserves. in compliancewithcriteriaoftransparency andobjectivity, inorder topromote competitionbetweenproducers, ensuring Joint stockcompanycreated in2000byGRTN, whichisincharge oftheeconomicmanagementelectricitymarket Gestore Mercato Elettrico(EnergyMarketOperator-GME) are identifiedbytheEIRIS,through specificquestionnaires. Financial Timesindexwhichgroups thebestcompaniesmeetingspecificsustainabilityrequirements. Thesecompanies FTSE4Good object; suchasthecompanycanteen,lunchvouchers,carormobiletelephone. Compensation inkind,meaningbenefitswhichdonotconsistthepaymentofmoney, buttheuseofaserviceoran Fringe Benefit security ofthenationalelectricitysystem. the settlementoffinancialcharges connectedtothevariousservices; the supplyofservicesmeasurement andtheaggregation ofmeasurements; the performanceofdispatchingservices; development, management,andmaintenanceoftheGrid; access totheGridanditstechnicalregulation; ents components, and therequired security criteriaare met(criterion n-1). Situation inwhichthetotalload demandissatisfied,instableregime there are noviolationsofoperatinglimitssystem Normal conditionofanelectricity system components, buttherequired security criteriaare notmet. Situation inwhichthetotalload demandissatisfied,instableregime there are noviolationsofoperatinglimitssystem Normal alarmconditionofan electricitysystem amendments andadditions. Electricity gridfornationaltransmissionassetforthbytheMinister ofIndustryDecree datedJune25,1999and subsequent National Transmission Grid(NTG) services andinterconnection anddispatchingdeviceslocatedintheItalianterritory. The nationalelectricitysystemcomprisesthetotalofproduction plants,transmissionanddistributiongrids,auxiliary National electricitysystem All theactionsthrough whichthecurrent operationalstatusofanelectricitysystemisascertained. Monitoring Unit ofmeasurement equaltoonemillionwatts(1,000kilowatts). Megawatt (MW) Rated voltagegreater than1kVandloweror equalto35kV. Medium voltage into accountanydecrease inperformance. Operations andworksforthemaintenanceorrecovery of efficiency, andsmoothoperationoftheelectricityplants, taking Maintenance Diagram whichshowsthepowerdemandonanelectricitygridovertime. Load curve one hour. (Terawatthour, 1,000,000,000kWhs)measure electricalenergy. Theyare equaltoapowerof1kWs(andmultiples)over (kilowatthour) anditsmultiplesMWh(Megawatthour, 1,000kWhs),GWh(Gigawatthour, 1,000,000kWhs)andTWh kWh (kilowatt) unitofmeasurement ofpower(1kW=1,000J/sec),whichexpresses theamountofenergy perunitoftime. kW (kilovolt=1,000 Volts) unitofmeasurement ofvoltage. kV Unit ofmeasurement thatexpresses thequantityofelectricityequalto1,000Watts provided orrequested inonehour. Kilowatthour (kWh) the electricalenergy andgassectors. Independent authoritycreated byLawno.481ofNovember14,1995,whichischarged withregulating andcontrolling Italian AuthorityforElectricityandGas(AEEG) of shares” and“Newlisting”. Indicates aninitialoffer ofshares ofacompanybeinglisted.It is asynonymof“PublicOffer forSale”,“Publicsubscriptio IPO (InitialPublicOffering) • • • less thanoneday. Aninterruptionwithoutnoticemaybeclassifiedas: All casesofinterruptionwhere usersare notnotifiedinadvancethrough suitablemeansandwithadvancenoticeofno Interruption withoutnotice. users involvedofthedurationinterruption,usingsuitablemeansandwithadvancenoticenolessthanoneday. Interruption generallyduetotheexecutionofplannedinterventionandmanoeuvres onthegrid,preceded bynoticeto Interruption withnotice Condition inwhichthevoltageofterminalsdeliveringelectricalenergy forauserislowerthan1%oftheratedvoltage. Interruption transient interruptionifithasadurationofnomore thanonesecond. short-term interruption,ifithasadurationofmore thanonesecondbutnomore thanthree minutes; long-term interruption,ifithasadurationofmore thanthree minutes; n 205 Glossary 206 Sustainability Report 2011 symbol “AAA”, “AA+”,reaching down theworstrating,indicated by“D”. or negativelyinfluencing theimageofcompany andasignificantpart of trading.Thehighestrating isindicatedbythe announced atthetimeofissuing thesecurity, butmaybesubsequentlymodified(upratingordownrating), thuspositively specialized ratingagencies.The mostwell-known,onthegloballevel,are Moody’sandStandard &Poor’s.Ratingsare tools forforecasting andcontrolling securitiesmarkets.Ratingsare theriskofinsolvencyinmodern publishedby Letter symbolwhichexpresses thelevelofrisksecuritiesrepresenting aspecific debt.Thisisoneofthemostsignificant Rating Value ofthevoltageusedtodesignateoridentifysystem. Rated voltageofthesystem well asLegislativeDecree no.475ofDecember4,1992. purpose. IPDsmustcomplywithDirective EEC686/89andsubsequentmodifications,withtheEN345regulations, as likely tothreaten his/hersafetyorhealthintheworkplace,aswellanycomplementaccessorydesignedforsuch orheldbytheworker,Any equipmentdesignedtobeworn forthepurposeofprotecting him/heragainstoneormore risks PPE (PersonalProtective Equipment) Generation ofelectricalenergy, inanyway. Production Continuity andregularity overtimeofthevoltageandfrequency valuesoftheelectricalenergy supplied. Power supplyquality electrical energy tothelowestvoltageusablebyuser. lines ofagrid,fortransferringtheelectricalenergy betweengridswithdifferent levelsofvoltage,andfortransformingth The partofagridwhichisconcentratedandclosedinspecifiedsite,usedforswitchingelectricalenergy amongthe Power station conditions, followingthegoingoffline oftheelectricitysystemitselforpartit. Group ofautomaticandmanualprocedures whichenablereinstatement oftheelectricitysystemtonormaloperational Power restart plan The activitiescoordinated byTerna inorder torestore anelectricitysystemafterablack-out. Power recovery to satisfytheenergy requirements withrespect toqualityandcontinuityofservice. Definition oftheusageplans,foraspecificperiodtime,availablemeansproduction andtransmission,inorder Planning plan, orsubsequentlyagreed. Maintenance, notofanurgent nature, whichlastsmore thanorequalto5totaldays,scheduledintheannualunavailability Planned maintenance breakers, repair worksare required ongrid elementsorplantcomponents. systems, irrespective ofexecutiontheautomaticrapidreclosure orslowreclosure (automaticormanual)ofthecircuit Disturbance inwhich,followingtheautomaticopeningofcircuit breakers asaresult ofoperationtheprotection Permanent disturbance consistency assetforthinAttachment1oftheOperator/OwnerStandard Agreement. State inwhichagridelementmaybetemporarilyusedunderconditionsdifferent tothoseprovided underoperational Partial availabilityofagridelement Interruption. Outage Preparation ofplansandschedulesfortheoperationelectricitysystem. Operations planning • • • • • decisions regarding theoperationofGrid.Operationincludes: The methodicaluseofpowerplantsandaccessoriesaccording toprocedures codifiedintheimplementationof Operation plant inspections. the monitoringofstatusplants; operations forgoingoffline andforthesecurityofplants; emergency assistancefollowingfaultoranomalies; the runningofplantsinorder tocarryoutTerna’s orders andautonomousdeliveries; e Occasional routine maintenanceisdividedinto: supplied. Quality ofthetechnical/commercial servicesprovided tousers,andthequalityofelectric parametersoftheenergy Service qualityofelectricity supply rotating reserves andcoldreserves. on theoperationalstatusofgroups whichcanmakethereserve available,itcanbeclassifiedintotwocategories: due tobreakdowns) andunexpectedvariationsintheprogrammes ofexchangewithforeign countries.Generally, based variations inrequirements, errors intheforecast ofrequirements, unexpectedunavailabilityofgeneration(forexample, Share ofpowerinthegenerationpoolwhichmustcoverimbalancebetweenproduction andload,duetorandom Secondary powerreserve • • • • • • is definedas: to afallinperformance,withoutanymodificationofthenumberorfunctionplantsinvolved.Routinemaintenance Activity carriedoutonplantsorpartsofformaintenancerecovery ofefficiency andcorrect functioning,inrelatio Routine maintenance Index ofreturn oninvestedcapital;itiscalculated astheratioofEBITandnetaveragecapitalemployedbyacompany. onAverageROACE (Returns CapitalEmployed) and tertiaryreserves. The marketprovided andregulated withintheDispatchingServiceMarket(DSM)forprocurement ofthesecondary Reserves Market(RM) and years. Demand forelectricitytobesatisfiedbythenationalsystem.Itshowsavariabletrend throughout days,months Requirement in theinterconnection pointswiththeNationalTransmission Gridorwithotheroperators. (caused bothbyremote commandsandinterventionsofprotection orbyautomaticequipment),andeventsofblack-out registers, automaticallyandcontinuously, theeventsof openingandclosure ofcircuit breakers andothercommanddevices The systemusedtoremotely manageandsupervise thehigh-andmedium-voltagedistributiongrid.Thissystemalso Remote control equipment(withreference totheregistration oftheinterruptionsindistributionelectricalenergy) of thesupplytoclient. Group ofremote datatransmissiondeviceswhichallowsforthemanagementofplantsandcontrol andmeasurement Remote control andtelemetrysystem • • The fulfilmentoftwoconditions: Reliability conditions are carriedout. Situation inwhich,followingtotalorpartialloaddisconnection,theactionsrequired toreturn thesystemtonormal Reinstatement conditionofanelectricitysystem input andwithdrawaldefinedontheDayAheadEnergy Market (DAEM). The siteoftradingbidsforthepurchase andsupplyofelectricalenergy inorder toadjusttheprogrammes ofenergy Real TimeEnergyMarket(RTM) on thefault,ifactivityfollowsuponexistenceofanomalies. existence ofafault; more thanoneweekfrom thenotificationofanomalytoTerna, inorder toavoiddangerpersonsorthings,the non-deferrable iftheexecutionofactivity, basedontheowner’sevaluationmustbeperformedimmediatelyandno Terna’s notifiedoftheanomaly; deferrable maintenance,iftheexecutionofactivitymay bedelayedbyatleastoneweekfrom themoment that occasional iftheactivityfollowsuponexistenceofanomalies. conditional orpredictive iftheactivityfollowsverification or monitoringofplantfunctionality; periodic orcyclicaliftheactivityregards regularly causes; scheduledinterventionsindependentofexternal electricity system.Thus,thisaspectspecificallyconsiderstransitioneffects whichare notcovered bythefirstcriterion. security: capabilitytorespond tosuddendisturbancessuchasshort-circuits orforced lossofcomponentsthe the electricitysystem; electrical energy attheconnectionpoints,takingintoaccountplanned andforced goingoffline ofthecomponents availability: capabilitytorespond, staticallyandineverymoment,tothecustomers’globaldemandforpower n 207 Glossary 208 Sustainability Report 2011 payment date. date andsolditonanotherdate. Thiscalculationconsidersallpaiddividendsreinvested inthesecurityatcoupon of period.ThecalculationTSR provides theannualrateofreturn foraninvestorwhopurchased asecurity onacertain following formula:(Share priceatendofperiod-Share priceatbeginningofperiod+Dividends)/Share priceatbeginning This isthemostcompletemeasurement ofvaluecreated byacompanyforits shareholders. Itiscalculatedusingthe TSR (Total Shareholder Return) current.phase electricfieldusedonthegridinalternating Group ofthree conductors(orgroups ofconductors),eachprepared forthetransferofonephasesthree Triad transforming stations. Infrastructures dedicatedtothetransmissionofelectricity, belongingto theNTG,suchaslinesandswitchingstations Transmission plants to thedistributiongridsorusers. High- andextra-high-voltagepowerline,overheadorcable, usedforthetransferofelectricityfrom theproduction plants Transmission line • • • The activityoftransferringandtransformingelectricityonthegrid.Transmission activitiesinclude: Transmission activities purposes ofdeliverytocustomers,distributors,andrecipients ofself-produced energy. Electricity transportandtransformationactivitiesalongtheinterconnected high-andextra-high-voltagegridforthe Transmission of voltage. Part ofagridcomposedgroup ofapparatausedfortransferring electricalenergy betweengridswithdifferent levels Transforming station Electrical deviceusedfortheconnectionandtransferofenergy betweengridsatdifferent voltagelevels. Transformer in order toacquire themeasurement datafrom themeasurement devices. Infrastructure composedofaphysicalmeansand hardware/software devicesrequired bythePrimaryAcquisitionSystem Telecommunications system interface, forpresenting datatooperatorsinthecontrol centers. Computerized systemforcontrolling production andtransmission,withdataacquisitionfunctionsman-machine Supervisory Control andDataAcquisitionSystem(SCADA) pulses inproportion tothepower. Energy meterinwhichthecurrent andvoltage,whenappliedtoanelectronic measurement element, produce frequency Static powermeter only indirectly affected, suchasthegeneralpublicbearingan interest intheprotection oftheenvironment. company’s activitiesineconomicterms–suchasshareholders, employees,customersandsuppliers–butalsowhen Everyone (individuals,groups, organizations, institutions)interested inthecompany, especiallyifdirectly affected by Stakeholder rights, whilethesecondtypesociallyresponsible companiesare chosenforinvestment(i.e.thosewithCSRpolicies). of companies(e.g.tobaccoproducers, armsmanufacturers etc.)orcountrieswhichdonotrespect humanrightsorworkers’ choice ofshares isguidedbynegativecriteria(exclusion)orpositive(inclusion):thefirsttypeexcludesspecific Investments whichtakeintoaccountnotonlyeconomicperformance,butalsosocial,environmental andethicalcriteria.The SRI (SociallyResponsibleInvestment) guarantees theapplicationofasinglenationaltariff tothesecustomers. the supplyofelectricalenergy underconditionsofcontinuity, securityandefficiency oftheservice.TheSingleBuyer A stockcompanyestablishedin2000bytheNationalTransmission GridOperator(GRTN) toguaranteeCaptiveCustomers Single Buyer annual authorizationofmaintenanceworks. the planningandidentificationofdevelopmentactivities; and CraftsdatedJune25,1999; functional totransmissionactivitiespursuantart.3,paragraph5,oftheDecree oftheMinisterIndustry, Commerce the unifiedmanagementofGridandpartspowerstationsnotincludedinsaidgrid,butconnected types Occasional unavailabilitymaybe: activities inthecountriesofEuropean Union. The naturalorlegalpersonwhichpurchases electricalenergy withoutcarryingoutproduction, transmission,ordistribution Wholesale customer Unit ofmeasurement ofelectricpower. Watt Unit ofmeasurement ofvoltage. Volt Coordinated managementofallportionstheNTG. Unified Gridmanagement • • • • • • Situation inwhichanelementoftheGridcannotbeusedbyoperatorfortransmissionactivities.Unavailabilitymaybe: Unavailability ofagridelement of publicauthorities. as: worksortestsrequested byoperators/ownersofbordering gridsorotheroperators,naturaldisaster, orrequirements causes,iftheresultdue toexternal oftheneedsthird partiesoreventswhichcannotbeattributedtotheowner, such due tofault,iftheresult oftheexistenceafault; non-deferrable, ifitinvolvesoccasionalmaintenancewhichcannotbedeferred; deferrable, ifitinvolvesoccasionalmaintenancewhichcanbedeferred; than orequaltofivedays;itisnotincludedinthequarterlyplanbutmonthlyplan. occasional, ifnotincludedintheannualplan,butquarterlyunavailabilityplanandhasadurationgreater than fivedays; planned, ifitisincludedintheannualunavailabilityplanorquarterlyplan,andhasadurationofles s 209 Glossary Terna’s commitment towards stakeholders “THE AWARENESS OF HAVING A SOCIAL RESPONSIBILITY TOWARDS THE COMMUNITY IS AN INTEGRAL PART OF THE CULTURAL KNOWLEDGE OF TERNA’S PEOPLE AND IS DEMONSTRATED THROUGH A STRONG COMMITMENT TO WORK FULLY RESPECTING THE ENVIRONMENT, IN HARMONY WITH THE LOCAL COMMUNITIES AND THE AUTHORITIES. ” 2011

Report 212 Sustainability Report 2011 Report

213 214 Sustainability Report 2011

Coordination and Development by Terna S.p.A.

External Relations and Communication Department

Editorial Design Interno Otto, Rome

Editing Trans-Edit Group S.r.l., Milano

Published in June 2012 ROME WE WORK FOR A GRID

INTERNO OTTO THAT’S LIGHT FOR THE ENVIRONMENT

WORKING FOR SUSTAINABLE DEVELOPMENT ALSO MEANS TRANSMITTING ENERGY RESPONSIBLY. THIS IS TERNA’S JOB. www.terna.it

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