2012

Sustainability Report Terna is a leading grid operator for energy transmission. The Company manages electricity transmission in Italy and guarantees its safety, quality and affordability over time. It ensures equal access conditions for all grid users. It develops market activities and new business opportunities with the experience and technical expertise acquired in managing complex systems. It creates value for shareholders with a strong commitment towards professional excellence and with a responsible approach towards the community, fully respecting the environment it operates in. 2012

Sustainability Report 2 2012 Sustainability Report Engineering and innovation Plant maintenance Connecting newplants Main griddevelopmentactivities currently underway Grid development Service continuityandquality Information security The securityoftheelectricitysystem Our approach Responsibility fortheelectricityservice Disputes andlitigation Society andlocalcommunities Media, opiniongroups,andthescientificcommunity National Institutionsandassociations AEEG -ElectricityandGasAuthority Grid usersandcompaniesintheelectricityindustry Suppliers Employees Shareholders, financialanalystsandlenders Stakeholder engagement Sustainability indexes Sustainability objectivesandresults Sustainability governance Medium-term prospects Terna’s concerns Sustainability Other activities Electricity transmission Corporate Governance Ownership structure The StrategicPlan The TernaGroup Presentation oftheCompany Terna profile Connection withtheGlobalCompact’s10Principles GRI ContentIndex Comparative analysisofsustainabilityperformance Boundary andindicators Structure oftheReport Materiality 14 Methodological note Methodological note Social responsibility Environmental responsibility Economic responsibility Responsibility fortheelectricityservice The mainsustainabilityresults The reportinanutshell The Reportinanutshell Letter toourstakeholders Contents 57 25 13 72 70 64 62 61 59 58 43 36 26 23 18 14 69 65 52 50 48 48 47 46 46 45 45 43 40 37 36 36 32 31 30 29 28 26 15 15 14 10 7 8 9 9 9 8 4 Independent report onthelimitedassuranceengagement oftheSustainabilityreport 2011 Report oftheExternalAuditors Glossary Acronyms Indicator Tables Community initiatives Participation inAssociations Safeguarding legalityandpreventingcorruption Human rights Our approach SOCIETY Industrial relations Occupational injuries The mainactivitiesin2012 Occupational healthandsafety Internal communication Diversity andequalopportunities Personnel developmentandmanagement Training Search andselection Changes andcompositionofpersonnel Our approach OUR PEOPLE Social responsibility Environmental Costs Waste 127 Resources 124 Resource useandwastemanagement The DevelopmentPlanandreductionoftheelectricsystem’sCO Initiatives toreduceemissions Other atmosphericemissions Other indirectCO Direct andindirectCO Energy consumption Energy efficiencyandclimatechange Lines andbirdlife Management ofimpactsonbiodiversity Lines inprotectedareas Biodiversity Reducing environmentalimpact Consultation 99 Lines andlocalcommunities Our approach Environmental responsibility Relations withcompaniesusingtheelectricityservice Relations withsuppliers Share performance Relations withshareholders Other economiceffects Value added Terna’s economicimpact Risk management Revenue structureandregulatoryframework Revenue andriskmanagement Our approach Economic responsibility 2 emissions 2 emissions 129 2 emissions 165 133 193 180 178 159 158 157 156 156 156 153 150 149 146 144 139 138 134 134 134 124 111 105 122 112 152 151 118 115 114 111 109 107 107 102 194 97 75 99 98 93 89 86 83 76 76 86 84 83 79 76

3 Contents 4 2012 Sustainability Report noteworthy: the presentation organised by the Authority for Electricity and Gas with the sector operators and the meetings have cleardirection.Amongthemanydiscussionsheldlast year,thoserelativetotheGridDevelopmentPlanaremost Listening to the opinionsof our stakeholders is a valuable and irreplaceable instrument in orderto ensure our activities in itsItalianactivitiesshow. foundation and objectives of our business approach, as Terna’s adhesion to the Global Compact and active participation of EthicsbyallGroupcompanies.Responsiblebehaviourandarelationshiptrustwiththestakeholdersareboth the optic housing.Sharedprinciplesandvalueswereupheldduringthereorganisation,includingbyadoptionofCode the nextfewyearsthroughconsolidatinganddevelopingserviceactivitiesinfieldsofengineering,O&M fibre entrepreneurial developmentofunregulatedactivities.OurStrategicPlansetsoutcompletionthebusinessmodel over focus onthestrategicobjective of supportingcorebusiness,aimingtocreatetangiblebenefitsfortheelectricsystemand The Groupreorganisationalsocontributedtothepositivetrendof2012.Itwasimplementedlastyearandenablesabetter safeguarding forfuturegenerations. always lower than the economic benefits generated forthe system, andwith constant attention tosustainabilityand sites openinItaly,andcontributetoreducingtheCO2emissionsofelectricsystem.Allthiswithrealisationcosts transmission infrastructuresinlinewiththerequirementsofproductionsystem,createemploymentover 150 respect forstakeholders,allowsustodaytoachieveseveralobjectivessimultaneously:providethecountrywithefficient also respectingtheenvironment.Thegriddevelopmentactivity,whichiscarriedoutwithasenseofresponsibility and commitment ofeveryoneinvolvedtoidentifylocalisationsolutionscompatiblewiththerequirementsterritorywhilst consecutive year,arecordlevel.Aresultwhichitwaspossibletoachievepartlythankstheconstant,profuse Investments madefrom2005totodayreached6.5billioneuro,andin2012exceeded1,200millioneuroforthesecond has apositiveimpactonthecountryduringperiodofpersistent andacuteeconomic,politicalsocialcrisis. period. Ourprideinthissuccessisstrengthenedbythefactthat,duetoroleTernaplayselectricsystem,it also the 2007-2009three-yearperiod,tobeattopofEuropeanelectricalutilitiesclassificationduring2007-2012 Return forthelastthreeyears.ThisawardallowsTerna,whichalreadyin2010hadearnedsamerecognition Institute, anawardwhichcrownedusthebestofEuropeancompaniesinsectortermsTotalShareholder recognition forus:Ternareceivedtheprestigious“InternationalUtilityAward2013”fromAmericanEdisonElectric excellent resultsfortheeighthconsecutiveyear.Themilestoneswereachedhavealsobeenasourceofconsiderable 2012 was also a year of significant achievements for Terna, confirming the Group’s capability to grow and produce Letter toourstakeholders stakeholders, allowsthewholeTernateamtoconfidently face future challenges. Our continuouscommitmenttoprocessimprovementand theabilityofcreatingvalueforshareholdersandall 2012 wasanotheryearofsuccesses,whichthestrategicobjectives oftheGroupprojectforwardintocomingyears. Annual FinancialReportandthisSustainabilityReport,implementing agradualalignmentprocess. expect this project to lead to improved stakeholder communications, an objective already partly achieved with the 2012 necessary to start coordinating content which last yearwasmainlyfocusedontheTernawebsite.Inthisrespect,we in 2011weparticipatedthePilotProgramofInternationalIntegratedReportingCouncil,adheringtocriteria social issues.Tobetterexpresstheseinteractions,toallowmorecompleteinformationbeofferedstakeholders, However, everycompanyhasitsparticularities,whetherinthebusinessmodelorhowitinteractswithenvironmental and a fewkeyindicators;asfarweareaware,thisdistinguishesour SustainabilityReportfromothersonanationallevel. interpretation ofTerna’sresults,thisyearweareonceagainpublishingcomparativeanalyseswithothercompanies for them tocomparetheperformanceofothercompanies,includingthoseoperatingincountries.Tofacilitate the guidelines, adoptinganychangestothem.Wethinkitisworthwhilepresentinformationstakeholdersthatallows also beseenintheconstantquestforimprovement.Withregardtoreportingstandards,wecontinueapply GRI with fullandtransparentinformationonTernaoperations.InadditiontothepublicationofReport,thisdecision can The SustainabilityReportwearepresentingisinresponsetothedecision,adoptedeightyearsago,providestakeholders presence inmanagerialpositions,andarenewalofskillswhichcontributes tomaintainingprofessionalexcellence. turnover involvestheinsertionofyoungemployees,includingagrowingcomponentfemaleworkers,withanincreasing dissemination ofthespecifictechnicalknowledgeTerna,fundamentalduringaphasegenerationalturnover. This training courses. The teaching positions are held by expert employees, guaranteeing continuous training oriented at the for maintenance),fullyrestructuredandequippedwiththelatesttechnologies,allowingbetterorganisationuse of Campus, ourcompanyuniversityestablishedinanelectricitystationatthegatesofRome(inabuildingoriginallyintended marginally andtemporarilysloweddownbytheaforementionedorganisationalchanges.In2012,weinaugurated new On theinternalfront,wetookcareasalwaysofreinforcementskillsthroughhighinvestmentintraining,only were alsoinvolvedinasurveythataimedtogatheropinionsandlearnaboutexpectationsofTernasolidarityinitiatives. positions ofthestakeholders,whichhelpustoidentifyareasforfurtherimprovement.Externalstakeholdersandemployees with theconsumerassociationsrequestedbyTernawereimportantopportunitiesforcomparingandunderstanding LUIGI ROTH Chairman FLAVIO CATTANEO CEO

5 Letter to our stakeholders

2012

The Report in a nutshell 8 2012 Sustainability Report activities (“Involvementofstakeholders”)andtwoboxeswith further information. Stakeholder engagement: the integrationprocess,thisSustainabilityReportand Annual Financial Reportcontain numerouspartsincommon. in July 2012 of a dedicated mini-site with an interactive index of contents that can be added to. As an additional step in improve integrationoffinancialandsustainabilityaspects in communicationstothestakeholders.Thisledcreation Integrated reporting: General aspects and recognitionsarereportedbelow. For aprecisecomparisonofobjectivesandresults,seethededicatedtableonpage of the2011SustainabilityReport). Ethics, participation in the Global Compact and the objectives specified in the2011Sustainability Report(Pages42-44 Progress wasrecordedin2012allareasofcorporateresponsibility,keepingwiththeprovisionsCode of The mainsustainabilityresults on page15. but alsoinrelationtoothercompanies.Forgreaterdetailonthereferencepanels,pleaseseeMethodologicalNote to evaluateTerna’sfiguresandperformancenotonlycomparedwhatwasachievedduringthetwoprecedingyears, year, comparisonswithothercompaniesforsignificantenvironmentalandsocialindicators.Theseallowsstakeholders Boxes with greaterdetails on the principal achievements of the year areincluded in the Reportand, for thethirdconsecutive The MethodologicalNoteprovidesusefultechnicalclarifications forinterpretingtheinformation. • Socialresponsibility • Environmentalresponsibility • Economicresponsibility • Responsibilityforelectricityservice • TernaProfile The Reportisdividedintofivemainchapters: the firstpart. Linking oftheGRIindicatorswith10principlesUnitedNationsGlobalCompactisshowninaspecialtable year, attheA+levelintermsofapplicationguidelines,highestcompletenessinformation. & ElectricUtilitiesSectorSupplement(EUSS)” The 2012 Sustainability Report prepared according to the G3.1 update of the Guidelines The reportinanutshell Further information • • • • • • • • • The comparisons Terna’s multi-stakeholdersurvey oncorporatesocialcommitment (page49) Public consultationontheDevelopment PlanpromotedbytheAEEG (page47) Pay differencesbygender:pages148-149 Employee training:pages143-144 Personnel turnover:pages136-137 Waste production:pages128 Water consumption:pages125-126 SF CO 6 2 leaks:pages120 emissions:pages113 afterjoiningtheIIRC Pilot Programme (see alsopage158),Ternainternallybeganaprojectto initiativestoinvolveallTernastakeholdersintensified.An entirechapterisdevotedtothese of the GRI (Global Reporting Initiative), places it, for the fourth consecutive oftheGRI(GlobalReportingInitiative),placesit,forfourthconsecutive 41. Themostimportantachievements “Sustainability Reporting Guidelines “Sustainability Reporting Guidelines vegetation atBussi,neartheGolediPopoli,inGranSasso National Park(seethebox onpage108). WWF: photovoltaic andaround8,000MWforwindenergy(seepage 122). Connection of plantsusingrenewable energy: 122). when theentirePlanhasbeenimplementedisestimatedto amounttoaround12.5milliontonsofCO2peryear(seepage the changeinproductionmix,andconnectionof renewable-energyplants,thereductioninsystememissions implementation oftheGridDevelopmentPlan.Considering thePlanasawholeanditseffectsintermsofgridefficiency, Grid Development Plan: of SF Emissions ofgreenhousegases: Environmental responsibility revenues andimplicitlygeneratingmultiplepositiveeffectsforusersoftheelectricitysystem(seepages77-78). and GasAuthority(AEEG)toincentivizetheimprovementofserviceledapositiveresult,byincreasingTerna’s AEEG incentivesandTerna’scostfortheelectricitysystem: line withthatofthepreviousfinancialyear(seepage29). Dividends toshareholders: employees ofitscontractorsandsubcontractorswasequaltothat ofmorethan1,907full-timeemployees. (1.6 billioneuroin2012),withconsequentcreationofemployment(pages83-85).Infact,theworkperformedby the economic impactcanalsobemeasuredbyitsinvestingactivities(1.2billioneuroin2012),andprocurementexpenditure Economic impact: Economic responsibility service, whichitmonitorsalongwiththeAEEG(pages62-64). Quality ofservice: the ElectricMarket)service,databasethatmonitorsdataon ElectricMarketalsoonbehalfoftheAEEG. Monitoring systems: generation distributedfromrenewalsourcesisparticularlysignificant. from FranceandthestartofaprojectforcongestionstabilitycontrolinSouthernAreawhereamount Among theobjectivesachieved,followingarenotable:simulationandperformanceoffirsttestforrestarting use renewablesources. improve systemsthatsafeguardthetransmissionservice,alsoinlightofexponentialgrowthgeneratingplants Security ofelectricitysystem: Responsibility forelectricityservice • • Further information • • • • Further information The Gaudìportal(page94) Revision ofenvironmentalandsocialoversightinthesupplychain (page 91) The “BE.S.T.P.A.T.H.S.”researchproject,co-financedbythe7 Line inspectionbyhelicopter(page70) Terna’s commitmenttoENTSO-Ein2012(page68) Smart TransmissionSolutions(page60) 6 decreased,endingupat0.59%thisyear(seepage118). during the year, Terna, WWF Italia Ricerca and Progetti and the Park Authority completed projects to restore the Companyreachedandexceededitsperformancetargetsforcontinuityqualityofelectricity in additiontotheeffectsimplicitserviceprovidedusersofelectricitysystem,Terna’s confirmation ofISO/IEC27001:2005certificationtheTIMM(IntegratedTextonMonitoring although indirect, the largest contribution to the fight against climate change comes from the Terna confirmeditsattentiontowardsshareholdersbymaintainingadividendpolicyin the SecurityPlanforelectricitysystemincluded63millioneuroininvestmentsto forthethirdconsecutiveyear,incidenceofleakscompared totheinstalledamount in 2012installedpowerreachedfiguresofaround17,000 MWfor allthebonus/penaltyplansintroducedbyElectricity th EUFrameworkProgram(page71)

9 The Report in a nutshell 10 2012 Sustainability Report 159). Donationswerestructuredandnotgiventorandomprojects. euro overalltocommunityprojects,including563,510ofdonationsand300,205ininvestments(page compared tothestandardorganizationofReport.Inparticular, thefollowingarepointed out.For: reading ofsectionsor,inafewcases,entirededicated chapters,allowsreaderstocreatealternativeapproaches determined severallayoutchoices,themostimportantof whichconcernstheboxesandcomparisons.Ineffect, Again thisyeartheinterestofTerna’sdifferentstakeholders forthepartsofReportthatregardthemmoredirectly Reading approachesforstakeholders • • • • • The objectivesfor2013(seepages40-41)areinkeepingwiththosepreviouslyestablished.followingnotable: Sustainability objectives Corporate giving: shows Terna’sconcernforcontinuingeducation. companies (pages 143-144). In 2012 there were 41 hours of training per employee, with 86% of personnel covered, which Training: Social responsibility Further information • • • • • • • Further information • • • • • • • • • • • • establishment ofacoherentactionplanandtherealization firstinitiativesestablishedintheplan. the definition,alsobasedonopinionsofstakeholders,astrategicapproachtoinitiativesincommunity, realization ofaKPImonitoringsystemforenergyefficiency,inaccordance withtheISO50001criteria; the website; implementation ofgreaterintegrationfinancialandsustainabilityinformationinboththeManagementReport on active participation in the Pilot Programme of theInternational Integrated ReportingCouncil,withstudyand realization ofinternalCSRtraininginitiativeswiththeinvolvement oftoplevelmanagers; social responsibilityinrelationtothesupplychain; continuation oftheactivitiescarriedoutin2012relativetorevisionethicssystemandenvironmental Society andlocalcommunities: pages50-51,98-103,156-157and159-163 Media, opiniongroups,andthe scientificcommunity:pages48,106and110 Institutions andassociations: pages48and158 Regulatory authoritiesandinstitutions, AEEG:pages47,76-78 Grid users,customers,andbusinesspartners:pages46,69 and93-94 Suppliers: pages46,84and89-92 Employees: pages45,80-81and134-154 Shareholders, financialanalystsandlenders:page45 86 The Terna04Prizebringstogethertheartsandlocalarea(page 163) At Christmas,Ternacreatesachainofsolidarity(page162) Terna takespartincreatingthefirstItaliantoolkitonemployeevolunteering (page161) Management ofgenerationalturnover(page137) Disposal ofequipmentcontainingPCBoils(page129) Energy efficiency(page121) More newinformationonbirdlifefromthenestsTerna’spylons (page110) Terna, WWFItaliaandtheParkAuthoritytogetherinGranSasso Park(page108) Sorgente -Rizziconiline:monitoringofmigratoryflowsbirdlife foroptimaldecommissioningplanning(page106) Magnetic andelectricfields:thelegallimits(page103) The integratedplanningprocess(pages101-102) this is confirmed as a strong point in promoting human resources, also seen through comparison with other according to the LBG (London Benchmarking Group) classification, in 2012 Terna allocated 1,223,987 11 The Report in a nutshell

2012

Methodological note 14 2012 Sustainability Report or nexttothetitleifentire sectionisconsideredrelevant. regarding theGRIindicatorsis signalledbytheappropriatemarkerinmarginoftext nexttotherelevantpassages in-depth analysis that Terna considersimportant to provide. In order tomake the Reporteasiertoread, information thematic sections, which integrate in a single text both the precise information required by the GRI Guidelines and the Each chapterbeginswithan explanationofthemanagerialapproachtospecific area.Thisisfollowedbyseveral peculiar toTerna. and social–typicalofsustainabilityreports,precededby thesectiononresponsibilityforelectricityservice,whichis Report continuestodividetopicsinfourmainsections,corresponding tothe The organizationoftheReportinchaptershasremained sameasinthepreviouseditions.AfterTerna’sprofile, Structure oftheReport • • • • • performance isidentifiedusingtheprincipleofmaterialitythrough aninternalprocesswhichincluded: In particular,theinformationtobeincludedallowstakeholdersmakeabalancedassessmentofGroup’s addresses allthestakeholdersidentifiedinCompany’sCode ofEthics. of eachthemandtheirrelevancetoTerna’sactivitiestheinterestsitsstakeholders.Ineffect,Reportideally The selectionoftheGRIindicatorstoincludetookplaceonbasisacarefulexaminationinformationalpurpose Materiality January 2009). management FinancialStatementsinthelightofinnovationsintroducedbyLegislativeDecree32/2007”,CNDCEC, of AuditorsandAccountants(CNDCEC)onsustainabilityinformationinobligatorycommunication(“Report the performance hasalsobeenincludedinthe2012AnnualReport,accordancewithguidelinesofNationalCouncil and intheFinancialReport.Furthermore,someofmostimportantinformationthisReportonTerna’ssustainability on-line withthe2011figures,andin2012discussionofcertainsubjectswasstandardizedSustainabilityReport integrated the InternationalIntegratedReportingCouncilinresponsetowidelyrecognizedneedproceeddirection of Lastly, itispointedoutthatsinceSeptember2011Ternahasparticipatedinthe“PilotProgramme”initiativepromotedby aforementioned guidelines. light oftheresultspresentedinGRIContentIndex, The 2012Reportincludes,comparedtolastyear,anewcoreindicator.A+applicationlevelisconfirmed.Infact,in occurred upto31March2013arealsodescribed. The periodconsidered is 2012:allthe data refers to theyearended 31 December2012; in additionsignificanteventsthat the performanceachievedbyGrouprelativetotheseaspects andthesustainabilityobjectives. The process of preparing the document included the identification of significant aspectstoreport and thepresentation of assurance reportpreparedbyPricewaterhouseCoopersisattached. years, theReportwasapprovedbyTernaBoardofDirectorsandsubjectedtospecificauditingprocedures.The established in2009bytheGRI–GlobalReportingInitiative,andG3.1GuidelinesupdateofMarch2011.Asrecent was preparedaccordingtotheSustainabilityReportingGuidelines&ElectricUtilitiesSectorSupplement(EUSS) The TernaGroup’sSustainabilityReportfortheyearendedDecember31,2012(hereinafter“2012Report”) Methodological note meetings withDirectorsandDepartmentManagerstoexplore significant aspectsandemerging problems. development ofbenchmarkinganalyses; comparison withtheperformanceofothercompaniesthrough thereportsofsustainabilityratingagenciesand verification oftheexpectationsstakeholdersthroughstakeholderengagementactivitiesdescribedinthisReport; and safetymanagementsystems); analysis ofinternalreportingonaspectssustainability(monitoringandimprovementplansfortheenvironmental communication (PressReleases)andinthepress; instruments (teambriefingdocuments,TernaNews,Intranet,communicationsfromTopManagement)andexternal analysis oftheGroup’sactivitiesandanydisputes,byreviewingcontentsreportedininternalcommunications reporting . Duringthisprocess,in2012theinteractiveversionof“IntegratedReportProject”waspublished we heldthathadachievedanA+levelofapplication triple bottomline –economic,environmental, ofthe • • • comparisons oftheindividualindicatorsinReport: Listed belowarethemaincriteriaadoptedforanalysis,asapremisereadingandinterpretationof the identification ofbenchmarks,andverificationthequantitydata actuallyavailableforthecomparison. difference bygenderandturnoverrate.Theselectionoftheindicatorsfollowedbothacriterioninternalinterestin the involve sevenindicatorsin2012,astheydid2011:waterconsumption,CO companies areincludedinthe2012SustainabilityReport,astheywereprecedingtwoyears.Thecomparisons its stakeholders, in addition to the actual company, certain comparisons between Terna’s results and those of other With the conviction that the comparison of the environmental, social and governance performance alsoconcerns Comparative analysisofsustainabilityperformance • In comparingthisReporttothe2011one,followingshouldbenoted: application oftheGuidelinesatLevelA,whicharenotapplicable toTerna. relative totherequirementsofReportingGuidelines.Thelistalsoincludescoreindicators,necessaryfor the All theGRIindicatorspublishedarelistedbelowinIndexofcontent,whichalsoincludesanylimitations In thecaseofestimatesusedtodetermineindicators,procedure followedisstated. The datawascalculatedpreciselyonthebasisofentriesinTerna’sgeneralaccountingandotherinformationsystems. environmental andsocialdata. ventures, subsidiariesorleasedbusinessesthatcouldsignificantlyinfluencetheboundarycomparabilityof control, thatistosayhasthepowerdeterminefinancialandoperationalpolicies.Therearenorelationswithjoint number ofoperations/activitieswhichtookplaceduringtheyear),overTernaS.p.A.exercises,directlyorindirectly, by size,thatistosay,numberofemployeesandpotential impact ontheenvironmentandsociety,thatistosay information includedintheSustainabilityReportincludesallcompanieswithasignificantimpactonsustainability(i.e. Financial Statementsfortheyearending31December2012.InaccordancewithGRIBoundaryProtocol, that istosaytheboundarywhichincludesTernaS.p.A.andcompanieswereconsolidatedinConsolidated Except asstatedotherwise,thedataandotherinformationin2012SustainabilityReportrefertoTernaGroup, Boundary andindicators with theappropriateexplanations. table showing allthechanges with respect to theadditional indicators providedinthe2011SustainabilityReport,along technical terms,specificallyregardingtheelectricityindustry.Atbeginningof“Indicatortables”sectionthereisa The Reportiscompletedbyseveraltableswithadditionalnumericalindicatorsandaglossaryexplainingthemeaningof starting fromcalculationsmadethatassumedparticulargridconfigurations. division ofoveralllossestheelectricitysystem(alsoincludingdistributiongrids)proportionallytovoltagelevels, taken outofthetransmissiongrid.Onotherhand,inpreviouspublicationsmeasurementswereresult a The figurepresentedinthisReportisbased-unlikepreviousyearsondirectmeasurementoftheenergyputand the changeinmethodofcalculationEU12indicatorrelativetogridlossescomparedenergytransported. contradictory to otherdatapublishedinthe sameReport,whileinsome casesitwaspossibletoreconstruct, based provided it was compatible with the instructions in the GRI protocols. In some cases, we excluded data which was favouring the definition towhich the greatest number ofuseful responsesof thethree panels overallcorresponded, - ofdifferentdefinitionsorunits ofmeasurementwhichthereforecannotbecompared. Ourselectionwasbasedon indicator intheSustainability Reportofcertaincompanies,butoftenalsoduetotheuse -bythesamplecompanies companies whichpublishinformation onsustainabilityperformance.Thisisfirstdue to thelackofavailability - sample comparedtothestartingpanel,asexplainedin following table; the GRIguidelines)orthroughotherdocumentation(HSE Report,financialreport,etc.).Thisledtoareductioninthe public necessaryforthecomparisonsonsitethrough SustainabilityReport(evenifitwasnotpreparedfollowing among thecompaniesinthesethreepanels,onestaken intoconsiderationwerethosewhichmakeinformation one withthetopinternationalperformers. comparison betweencompanieswiththesameoperational characteristics,acomparisonwithItaliancompaniesand Yearbook 2012).Thepurposeofthethreepanelsistoguarantee, alsorelativetothetypeofindicatorreviewed,a RobecoSAM - Sustainable Asset Management sustainability rating agency, in the publication RobecoSAM Sustainability 2012) and the second relative to Best International Performers (the 19 World Supersector Leaders identified by the industry ones,thefirstrelativetolargeItaliancompanies(the 40companiesoftheFTSE-MIBat17SeptemberJanuary (Transmission SystemOperator)andthemajorextra-Europeanonesbykilometresoflinesmanaged;twomulti- three panelsofcompanieswereidentified:anindustryone,composedtheEuropeantransmission shown inthegraphs; The Ternafigureswere notused inthe calculation of theRobecoSAM- SupersectorLeaderspanel average, butare the numberofusefulcasesfor comparisonofeachindicatorinthesethreesamplesis often lessthanthenumberof 2 emissions,SF 6 leaks,waste,training,pay 15 Methodological note 16 2012 Sustainability Report Companies withusefuldata(n) Companies withGRIreports (n) Companies considered (n) used byTernaforthecomparisonspublishedinthisreport. appendix the note“Comparingperformances of sustainability: the Ternaexperience”whichillustratesmethodology and availableontheirrespectivewebsites( study “Beyondthefinancial figure:companies andcollective well-being”,draftedbyCSRManagerNetworkandISTAT National StatisticalOffice(ISTAT),aswellsupportfromTerna,throughdirectparticipationinanalysisofthedata.The project conductedbytheCSRManagerNetwork,withscientificsupportfromAltis-CatholicUniversityofMilanand The subjectofcomparability,certainlyanissuethatiscentraltosustainabilityreporting,thearesearch aspects beingconsideredfortheindividualcompanies,butdoesnotfulfiltaskofmakingperformancecomparable. of the company. In these cases, the comparison provides information onthedifferentsignificanceof theenvironmental quantities inabsolutevalueandthereforeshowverydifferentlevelsdependingonthetypeofproductionactivitysize Some of the indicators considered (water consumption, waste produced, CO explained -oftheGRIprotocolsratherthanonparticularlyvirtuous corporate behaviours. are viewedfromadistance.Infact,itisprobablethatsignificantdeviationsdependondifferentapplicationcriteria-not doubts lingerregardingactualcomparabilitybetweencompanies,especiallywhenaverageandbetterperformances It mustbepointedoutthat,despitetheexclusionofdatawhichwasexplicitlynothomogeneous,innumerouscases • to haveachievedtheA+level. lines &ElectricUtilitySector Supplement” establishedin2009bytheGRI-GlobalReporting Initiativeisconsidered Based ontheinformationpresented intheGRIContentIndex,applicationof“Sustainability ReportingGuide Standard Disclosures when the2012Reportswerestillbeingprepared,likeTerna’s. the useofpublishedSustainabilityReportsentailsreferenceto2011datasincecomparisonswereprepared these aspectsareexplainedinthecommentstodataregarding theindividualindicatorsinReport; on otherdatapublished,anindicatorcoherentwiththedefinitionadopted,evenifnotpublished.Thedetailsrelativeto Application Level Indicators Performance Supplement & Sectors Indicators Performance Approach Management Profile

output output output and Environmental. Economic, Social each of: at leastonefrom Indicators, including 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: C www.csrmanagernetwork.it TSO Panel C+ Report Externally Assured 22 18 55 Product Responsibility. rights, Labor, Society, Environmental, Human from eachofEconomic, Indicators, atleastone of 20Performance Report onaminimum Indicator Category. Disclosure foreach Management Approach 4.5 -4.13,4.164.17 3.9, 3.13 1.2 listed forLevelCplus: Report onallcriteria FTSE-MIB Panel B and www.istat.it/it/archivio/85255 29 24 40 2 emissions) are expressed as physical B+

Report Externally Assured RobecoSAM Panel-SupersectorLeaders for itsomission. reasons b) explainingthe Indicators or reporting onthe Principle byeither:a) regard totheMateriality Indicator withdue plement. G3.1 andSectorSup Report oneachcore Indicator Category. Disclosure foreach Management Approach for LevelB. Same asrequirement A ), includesinthe - A+ - 19 18 Report Externally Assured 19 17 Methodological note 18 2012 Sustainability Report (1) Each performanceindicatorhasacoderegardingtheareaconcerned andthepagesofdocumentwhereitisfound. same reportingstandard. quickly andusethemtochecktheCompany’sperformancecompareitwiththoseofothercompaniesthat The GRI Content Index is a table of the contents of this Sustainability Report, which enables readers tofind indicators GRI ContentIndex 5. Informativereport onmanagementapproach commitmentsandstakeholderengagement 4. Governance, 3. ReportParameters 2. OrganizationalProfile 1. StrategyandAnalysis Page numbersrefer totheCorporateGovernanceReport whichispartofTerna’s2012Annual Report,availableat Appropriate labourpracticesandworkconditions Commitment to external initiatives Commitment toexternal Report scopeandboundary Stakeholder engagement Product responsibility GRI ContentIndex Environmental Report profile Human rights Governance Assurance Economic Society 4.11 4.10 4.09 4.08 4.07 4.06 4.05 4.04 4.17 4.16 4.15 4.14 4.13 4.12 4.03 2.10 2.09 2.08 2.07 2.06 2.05 2.04 2.03 2.02 2.01 1.02 1.01 4.02 4.01 3.18 3.12 3.11 3.10 3.09 3.08 3.07 3.06 3.05 3.04 3.03 3.02 3.01 www.terna.it 290-292; 302-305;312-318 Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note Methodological note 318-322 26-28; 31;32-35 37-38; 158-159 26-28; 84-85 321-324 297-300 324-325 312-318 331-333 309-310 14; 38-39 36; 40-41 (1) 334 156-157 158-159 ; 37-40 52-53 43-51 18-22 26-28 26-28 (1) Page 156 134 103 ; 30 4-5 58 98 76 43 44 43 26 29 26 26 26 (1) (1) (1) (1) (1) (1) (1)

List ofG3performanceindicatorspublished EN11 EN8 EN5 EN4 EN3 EN2 EN1 EC9 EC8 EC7 EC6 EC4 EC3 EC2 EC1 Code LA2 LA1 EN30 EN29 EN28 EN27 EN26 EN23 EN22 EN21 EN20 EN19 EN18 EN17 EN16 EN14 EN13 EN12 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 savedduetoconservationandefficiencyimprovements. Indirect energyconsumptionbyprimarysource. Direct energyconsumptionbyprimarysource. Percentage ofmaterialsusedthatare recycled inputmaterials. Materials usedbyweightorvolume. extent ofimpacts. Understanding anddescribingsignificantindirect economicimpacts,includingthe for publicbenefitthrough commercial, in-kind,orpro bonoengagement. Development andimpactofinfrastructure investmentsandservicesprovided primarily management hired from thelocalcommunity. Procedures for local hiring at significant locations of operation and proportion of senior locations ofoperation. Policy, practices,andproportion ofspendingonlocally-basedsuppliersatsignificant Significant financing received from thegovernment. Coverage oftheorganization’s definedbenefitplanobligations. due toclimatechange. Financial implicationsandotherrisksopportunitiesfortheorganization’s activities andpaymentstocapitalprovidersearnings, andtogovernments. employee compensation,donationsandothercommunityinvestments,retained Direct economicvaluegeneratedanddistributed,includingrevenues, operatingcosts, Indicator gender, andregion. Total numberand rateofemployeeandnewly-hired byagegroup, personnelturnover Total workforce byemploymenttype, contract,region and gender. Total environmental protection expenditures andinvestmentsbytype. workforce. materials usedfortheorganization’s operations,andtransportingmembersofthe Significant environmental impactsoftransportingproducts andothergoods noncompliance withenvironmental lawsandregulations. Monetary valueofsignificantfinesandtotalnumbernon-monetary sanctionsfor providedbyTernaThe service doesnotincludetheactivities mentionedinthisindicator. reclaimed bycategory. Percentage ofproducts soldand theirpackagingmaterialsthatare recycled or impact mitigation. Initiatives tomitigateenvironmental impactsofproducts andservices,extentof Total numberandvolumeofsignificantspills. Total weightofwastebytypeanddisposalmethod Water isnotpartoftheproduction cycleofTerna’s service. Total waterdischargebyqualityanddestination. Data collectionstartedin2012. NO Emissions ofozone-depletingsubstancesbyweight. Initiatives toreduce greenhouse gasemissionsandreductions achieved. Other relevant indirect greenhouse gasemissionsbyweight. Total direct andindirect greenhouse gasemissionsbyweight. x , SO x , andothersignificantairemissionsbytypeweight. Limitation andnotes Not applicable Not applicable Available asof2012 111-112 125 124-125; 129 84-85 99-101; 160 30; 146 84-85 84 80-81 79-80 83; 159-163 Page 134-137 134-137 129-130 112; 121-122 53; 98 99-101; 105-110 98 127 115 115 118-122 114-115 112 106; 109 108; 109 70; 105-110 107 125 120-121 111-112 19 Methodological note 20 2012 Sustainability Report HR1 LA15 LA14 LA13 LA12 LA10 LA9 LA8 LA7 LA6 LA5 LA4 LA3 Code SO6 SO5 SO4 SO3 SO2 SO1 HR11 HR10 HR9 HR7 HR6 HR5 HR4 HR3 HR2 related institutionsbycountry. Total valueoffinancial andin-kindcontributionstopoliticalparties,politicians, Public policypositionsandparticipation inpublicpolicydevelopmentandlobbying. Actions takeninresponse toincidentsofcorruption. procedures. Percentage ofemployees trainedinorganization’s anti-corruptionpoliciesand Percentage andtotalnumber ofbusinessunitsanalyzedforrisksrelated tocorruption. assessment anddevelopmentprograms. Percentage ofoperations with implementedlocalcommunityengagement,impact formal grievancemechanisms. Number of grievances related to human rights filed, addressed, and resolved through reviews and/orimpactassessments. Percentage andtotalnumber ofoperationsthathavebeensubjecttohumanrights taken. Total numberofincidentsviolationsinvolvingrightsindigenouspeopleandactions compulsory labour. or compulsorylabour, andmeasures takentocontributetheeliminationofforced or Operations andmainsuppliersidentifiedashavingsignificantriskforincidentsofforced labour, andmeasures takentocontributetheeliminationofchildlabour. Operations andmainsuppliersidentifiedashavingsignificantriskforincidentsofchild support theserights. association andcollectivebargainingmaybeatsignificantrisk,actionstakento Operations andmainsuppliersidentifiedinwhichtherighttoexercise freedom of Total numberofincidentsdiscriminationandactions taken. trained. human rightsthatare relevant tooperations,including thepercentage ofemployees Total hoursofemployeetrainingonpoliciesand procedures aspectsof concerning have undergonescreening onhumanrightsandactionstaken. Percentage ofsignificantsuppliersandcontractorsotherbusinesspartnersthat rights clausesorthathaveundergonehumanscreening. Percentage andtotalnumberofsignificantinvestmentagreements thatincludehuman Data collectionstartedin2011. toworkandretentionReturn ratesafterparental leave,bygender. Ratio ofbasicsalarymentowomenbyemployeecategory. diversity. according to gender, age group, minority group membership, and other indicators of bodiesandbreakdownComposition ofgovernance employeespercategory reviews bygender. Percentage ofemployeesreceiving regular performanceandcareer development Average hoursoftrainingperyearemployeebycategoryandgender. Health andsafetytopicscovered informalagreements withtradeunions. workforce members,theirfamilies,orcommunitymembersregarding seriousdiseases.. Education, training,counselling,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 bycollectivebargainingagreements. employees, bymajoroperations. Benefits provided tofull-timeemployeesthatare notprovided totemporaryorpart-time Indicator Limitation andnotes Available asof2011 146-147 134-137; 146-147 144 142 153 145 152-153 153 154 92; 153 145 Page 159 48 53; 157 157 157 50-51; 99-103;156 156-157 156-157 156-157 38; 156-157 38; 156-157 156-157 38; 153; 156-157 156; 157 89; 92 156-157 145

List ofG3performanceindicatorspublishedinthesupplement for theelectricutilitysector(EUSS) PR9 PR8 PR6 PR3 PR1 SO10 SO9 SO8 SO7 Code EU12 EU11 EU10 EU9 EU8 EU7 EU6 EU5 EU4 EU3 EU2 EU1 Code Transmission anddistribution efficiency(gridlosses)asapercentage oftotalenergy. Terna neitherpossesses nor managesthermoelectricpowerplants. regime. Average generationefficiencyofthermalplantsbyenergysource and by regulatory electricity system”paragraphs. section,inparticular“Ourapproach”and “Thesecurityofthe the ElectricityService” in particularthe“Processesandorganization”paragraph,“Responsibility for the electricitysystem,withnoimplicationsforenergygeneration.See“Terna’s Profile”, Terna’s responsibilityintermsof electricitydemandislimitedtothemanagementof by energysource andregulatory regime. Planned capacityagainstprojected electricitydemandoverthelongterm,broken down the decommissioningfield. Terna neitherpossessesnormanagesnuclearpowerplantsand doesnotoperatein Provisions fordecommissioning ofnuclearpowersites. and promoting sustainable development. Research anddevelopment activityaimedatproviding reliable andconvenientelectricity Demand-side managementprogramsarenotpartofTerna’s framework. regulatory and industrialprograms. Demand-side managementprograms includingresidential, commercial, institutional reliability. Management approach toensure shortandlong-term electricityavailabilityand Terna isnotsubjecttoemissionsreductionobligationsortradingschemes. Allocation ofCO regime. Length ofaboveandunderground transmissionanddistributionlinesbyregulatory Number ofresidential, industrialandcommercial customer accounts. Terna neitherpossessesnormanageselectricpowerplants. Net energyoutputbroken downbyprimaryenergysource andbyregulatory regime. Terna neitherpossessesnormanageselectricpowerplants. Installed capacity, broken downbyprimaryenergysource andbyregulatory regime. Indicator concerning theprovisionconcerning anduseofproducts andservices. Monetary value of significant fines for non-compliance with laws and regulations losses ofcustomerdata. Total numberofsubstantiated complaints regarding breaches of customerprivacyand providedbyTernaThe service doesnotincludetheactivitiesmentionedinthisindicator. communications, includingadvertising,promotion, andsponsorship. Programs foradherence tolaws,standards, andvoluntarycodesrelated tomarketing providedbyTernaThe service doesnotincludetheactivitiesmentionedinthisindicator. significant products andservicessubjecttosuchinformation requirements. Type ofproduct andserviceinformationrequired byprocedures andpercentage of “Electric andmagneticfields:thelimitsprovidedforbylaw”box). areconsideredwithregardtosociety(asreportedinthe security impactsoftheservice and Notapplicable.securitywithregardtobusinesspartners(customers).Safety TernaGiven thenatureofservice, isnotaffectedbyproblemsofproductsafety categories subjecttosuchprocedures. assessed forimprovement, andpercentage ofsignificantproducts andservices Life cyclestagesinwhichhealthandsafetyimpactsofproducts andservicesare or actualnegativeimpactsonlocalcommunities. Prevention andmitigationmeasures implementedinoperationswithsignificantpotential Operations withsignificantpotentialoractualnegativeimpactsonlocalcommunities. noncompliance withlawsandregulations. Monetary valueofsignificantfinesandtotalnumbernon-monetarysanctionsfor practices andtheiroutcomes. Total numberoflegalactionsforanticompetitivebehaviour, anti-trust,andmonopoly Indicator 2 emissionsallowancesbroken downbycarbontradingframework. Not applicable Not applicable Not applicable Limitation andnotes Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable Not applicable Limitation andnotes 61 50-51; 99-103 99-103; 156 53 53 Page 53 114 60; 71;72-73 59; 70 32-35; 28 93 Page

21 Methodological note 22 2012 Sustainability Report EU25 EU24 EU23 EU22 EU21 EU20 EU19 EU18 EU17 EU16 EU15 EU14 EU13 Code EU30 EU29 EU28 EU27 EU26 Profile -“Terna’s secondphotovoltaicproject” box,page36). Terna neitherpossessesnormanagespowerplantswithsignificantinstalled(see Average generationplantavailabilitybyenergysource 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 toaddressdisability relatedliteracy and cultural, low language, to barriers access toelectricityservice. Programs, toimprove includingthoseinpartnershipwithgovernment, ormaintain project, generationplantsortransmissionlines. Number ofpeoplephysicallyoreconomicallydisplaced,broken downbytypeof programs, andrecovery/restoration plans. Contingency planningmeasures, disaster/emergencymanagementplanandtraining Approach tomanagingtheimpactsofdisplacement. infrastructure development. Stakeholder participationinthedecisionmakingprocess related toenergyplanningand health andsafetytraining. Percentage ofcontractorandsubcontractoremployeesthathaveundergonerelevant operation &maintenanceactivities. Days workedbycontractorandsubcontractoremployeesinvolvedinconstruction, contractors andsubcontractors. Policies andrequirements regarding healthandsafetyofemployees job categoryandbyregion. Percentage ofemployeeseligibletoretire inthenext5and10yearsbroken downby Programs andprocesses toensure theavailabilityofaskilledworkforce. Biodiversity ofoffset habitatscompared tothebiodiversityofaffected areas. Indicator Limitation andnotes Not applicable. Not applicable. Not applicable. Not applicable. 32-35; 68-69 156 61 156 99-101 50-51; 91 137 91; 150-153 137-138 138-144 103; 108-109 Page 62 62 53 References: GRI-GlobalCompact,“Makingtheconnection”, May 2007. the IndexofGRIcontents. Terna’s implementationofthePrinciples.TofindpagesonwhichGRIindicatorsarediscussed,seetables Principles oftheGlobalCompact.Itaimsatfacilitatingfindinginformationrelevanttostakeholderswhowishassess The followingtableshowstheG3.1versionofGRIindicatorsthatapplytoTernaandtheirrelationeach10 Connection withtheGlobalCompact’s10Principles LABOR HUMAN RIGHTS AREA CORRUPTION ENVIRONMENT bribery. Businesses shouldworkagainstcorruptioninallitsforms,includingextortion and 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 abolitionofchildlabour. Principle 5 Businesses shouldupholdtheeliminationofallformsforced andcompulsorylabour. Principle 4 the righttocollectivebargaining. Businesses shouldupholdthefreedom ofassociationandtheeffective recognition of Principle 3 Businesses shouldmakesure thattheyare notcomplicitinhumanrightabuses. Principle 2 human rights. Businesses shouldsupportandrespect theprotectionproclaimed ofinternationally Principle 1 Global CompactPrinciple SO5. LA4, LA5,HR1,HR2,HR3,HR5, HR7, HR9,SO5. HR1, HR2,HR4,HR5,HR6 HR6, HR7,HR9,SO5,PR8. LA14, HR1,HR2,HR4,HR5, LA4, LA6,LA7,LA8,LA9,LA13 GRI Indicator SO2, SO3,SO4,SO5,SO6. EN26, EN30,SO5. EN2, EN5,EN18, EN26, EN28,EN29,EN30,SO5. EN17, EN18,EN19,EN22,EN23, EN11, EN12,EN13,EN14,EN16, EN1, EN2,EN3,EN4,EN5,EN8, EC2, EN18,EN26,EN30,SO5. HR2, HR4,SO5. EC7, LA2,LA13,LA14,HR1, HR1, HR2,HR6,SO5. HR1, HR2,HR7,SO5. 23 Methodological note

2012

Terna profile 26 2012 Sustainability Report • • • At December31,2012theTerna Groupincludes: The TernaGroup’sshareholdingstructureatDecember31,2012isasfollows: The TernaGroup • • • • The fundamentalelementsofTerna’smissionare: responsible forplanning,constructingandmaintainingthegrid. dispatching electricityalongthehigh-voltageandvery-high-voltagegridthroughoutwholeofItaly.Ternaisalso In Italy,TernaactsasTSOwithamonopolyundergovernmentconcession.Itisresponsiblefortransmittingand stations, and22linesinterconnectingwithforeigngrids(dataatDecember 31,2012). than 57,400kilometresofhigh-voltagelines(more63,400kmthree-phaseconductors),468transformation The Company’sheadquartersisinRomeandittheownerofItalianNationalTransmissionGrid(NTG),withmore of kilometreslinesmanaged. Terna isthelargestindependenttransmissionsystemoperator(TSO)inEuropeandsixthworldterms Presentation oftheCompany joint-venture ELMED ÉTUDESSarl(50%stake). CRNOGORSKI ELEKTROPRENOSNI SISTEM AD -“CGES” (Montenegrin company 22.0889% stake) and theTunisian the associatedcompanies CESI S.p.A.(42.406%stake),CORESOS.A.(Belgian company,22.485%stake); the Montenegrincompanycontrolled directly,witha100%stake, TernaCrnaGorad.o.o.; Terna plus S.r.l., TernaStorage S.r.l.,SunTergridS.p.A.and,throughthislastcompany, ReteSolareS.r.l; the Italian companies controlled directly with a 100% stake: Terna Rete Italia S.p.A., Terna Rete Italia S.r.l., approach tothecommunity,respectingenvironmentinwhichitoperates. to createvalueforitsshareholderswithastrongcommitmentprofessionalbestpracticesandresponsible management ofcomplexsystems; to developmarketactivitiesandnewbusinessopportunitieswiththeexperiencetechnicalskillsgainedin to ensureequalconditionsofaccessforallgridusers; to manageelectricitytransmissioninItaly,guaranteeingitssecurity, qualityandaffordabilityovertime; 100% TERNA RETEITALIA S.p.A. (*) Companiesmeasured using equitymethod Associates Joint control Subsidiaries –Non-core business Subsidiaries –Core business - Subsidiaries –Core business - 50% 22.0889% 22.485% 42.698% ELMED ÉTUDESSarl(*) CORESO S.A.(*) CESI S.p.A.(*) CGES (*) Foreign Operations Italy 100% TERNA RETEITALIA S.r.l. 100% 100% TERNA STORAGES.r.l. TERNA PLUSS.r.l. 100% 100% 100% SUNTERGRID S.p.A. RETE SOLARES.r.l. TERNA CG pages 101-113. For informationonrecentchangesintheregulatoryframework affectingtheCompany,see2012AnnualReport, international competition. and transported to Italy through an underwater interconnection. Production rights will be assigned by means ofan is developingElmed,anintegratedelectricityproductionproject inTunisia,usingconventionalandrenewablesources, ELMED ÉTUDES is a special purpose entity, owned jointly by Terna and by the Tunisian electrical company STEG, which Joint Ventures operators. new submarineelectricityinterconnectionandtheimplementation ofthepartnershipsbetweennationaltransmission 2007, andsanctionedbythesigningofastrategicpartnership agreementinNovember2010,fortheconstructionofa and ispartoftheintergovernmentalagreementsbetween ItalyandMontenegrowhichwereinitiatedonDecember19, increase reservedforTerna.Theagreementrepresentstheendpointofaprocessindustrialandnationalcooperation in January,2011,with22.09%ofthecapitalfollowingapprovalbyshareholders’meetingCGES CRNOGORSKI ELEKTROPRENOSNISISTEMAD(“CGES”)istheMontenegrinTSOofwhichTernabecameashareholder Group, Terna’sstakeinCORESOrepresentsanequityinterestassociate. Western Europe,identifyingpossiblecriticalissuesanddulyinformingtheTSOsconcernedinatimelymanner.For the Transmission, with 10%. CORESO prepares daily forecasts and analyses in real time of energy flowsin Central and and GreatBritain(National Grid), eachholding a stakeequaltoTerna’s,togetherwiththeGermanoperator,50Hertz with a22.485%stake.TheownershipstructureofthecompanyincludesoperatorsFrance(RTE),Belgium(Elia) CORESO isaBelgianservicecompanywithitsheadquartersinBrussels;TernabecameshareholderNovember2010 connected withtheproductiveprocessesofentireelectricity industry. consumers ofelectricity,andlocalnationalgovernmentsacompleterangeservicesaimedatsolvingproblems companies (generation,transmission,anddistribution),manufacturersofelectricalelectronicequipment,large electrical system consultation. It covers all the stages of the life cycle of the electrical systemand offers electricity CESI isanItaliancompanyandthemarketleaderintestingcertifyingelectro-mechanicalequipment,aswell as Associates Italy‑Montenegro interconnectioninfrastructure. sector intheBalkanssupportofinvestorsgeneration,ordertocontributeenhancementanduse the interconnection in Montenegro. The company also works to promote development opportunities in the transmission by Terna,isengagedinimplementingtheworkrelatingtoauthorization,constructionandmanagementofelectricity TERNA CRNAGORAd.o.o.,aMontenegrinlimitedliabilitycompanyincorporatedonJune22,2011andwhollycontrolled Other subsidiaries • • • itself. Plan, involvesdivisionintoaParentCompanyandtwoOperatingCompanieswhollycontrolledbythe Board ofDirectorsTernaS.p.A.November9,2011,andinlinewiththestrategiespresented2012Industrial Starting fromApril1,2012theTernaGroupadoptedanorganizationalstructurewhich,implementingdecisionsof Organisational structure assigned totherespectivesubsidiaries,incompliancewithParentCompany’sstrategicguidelines. that maybedeveloped,aswellachievingbetterefficiencyandeffectivenessoftheoperating/managementprocesses The Group’sneworganisationalstructureoutlinedaboveenablesabetterfocusonthecorebusinessandactivities It has developedaslimandflexibleoperatingstructure. Terna PlusS.r.l. Group’s humanresources(about90%). of saidAgreementandonthebasisguidelineslaiddowninDevelopmentPlan.Thiscompanyemploysmost NTG, managementandperformanceofworkondevelopingthegrid,connectedwithimplementationprovisions business unitrentalagreementtoperformallthecoreoperationalactivities,ordinaryandextraordinarymaintenanceof Terna Rete Italia S.p.A. responsibility fordefiningtheNTGDevelopmentPlan,andDefencePlan. issued byMinistryofProductionDecree20April2005),butalsomaintainsownershipthecapitalassets,and Terna S.p.A. , the parent company, not only holds the licence for the transmission and dispatching of electricity bracket , theparentcompany,notonlyholdslicencefortransmissionanddispatchingofelectricitybracket is the operating company devoted to work on the creation of non-core business projects. istheoperatingcompanydevotedtoworkoncreationofnon-corebusinessprojects. (a subsidiary established by Terna S.p.A. on 23 February, 2012) is delegated, through a four-year (a subsidiary established by Terna S.p.A. on 23 February, 2012) is delegated, through a four-year

27 Terna Profile 28 2012 Sustainability Report EU4 estimated thattheEBITDAmargin attheendofPlancouldexceed 80%. It isanticipatedthattheincrease inrevenuesandcontrolofcostswilltranslateintofurther growthofprofitability.Itis Eighth yearofgrowth Improvement ofmargins not includedinthePlanforecasts. the fieldofengineering,O&Mandopticalfibrehousing,to whichcouldbeaddedafurtherpotential900million,currently The Terna Group’s strategy focuses on consolidating a pipeline of approximately 400 millioneurodeveloping activities in Perfecting thebusinessmodel Non-Core Business stretches. latest-generation pylonssuchasthe“single-pole”tubulartowers andthe“Sprout”towerswillcover60%ofoverhead the totallengthof6“top”projects(morethan1,000km) willbemadewithsubmarineandundergroundcables,while sustainability, willleadtoa1milliontonnereductioninCO Italy andMontenegro.Futureinfrastructure,characterized by significanttechnologicalandenvironmentalinnovation interconnections withothercountries“Piossasco-Grand’Ile*”,betweenItalyandFrance,“Villanova-Tivat”, and Padua,thedoublingof“Sorgente-Rizziconi*”electricityconnectionbetweenSicilyCalabria,two new “Trino‑Lacchiarella” powerline,betweenLombardyandPiedmont;the380kV“Dolo-Camin”Venice works inprogresswecannote:the380kV“Foggia-Benevento”powerline,betweenPugliaandCampania;380 kV Once theyarecompleted,theseprojectswillenablethedecommissioningof850kmoldlines.Amongmain Overall 1,200kmofnewsustainableandtechnologicalgridisunderconstruction,togetherwith60stations. The Terna Group currently has more than 150construction sites open all over the country, fora value of3billioneuro. reducing inter-zonalcongestion,betweenmarketzonesorderivingfromtheuseofrenewablesystems. The Plan priorities aim at increasing the interconnection capacity of the electricity borders with other countries and at 7.9 billion euro. Looking tothemedium/long-term,2013NationalTransmissionGridDevelopmentPlanconfirmsinvestments of billion euro,approximately300millionwillbedestinedforthecreation ofaccumulationsystems. Authority) tosecureandmodernizetheelectricity grid, ofwhich83%willbedestinedforGriddevelopment.Ofthe4.1 In the next 5 years the Terna Group plans to invest 4.1 billion euro in activity regulated by the AEEG(Electricityand Gas Grid developmentisthepriority,alsointroducingnewtechnologies Core Business February 6,2013.Itcanbesummarizedinthefollowingpoints. The StrategicPlanfortheperiod2013-2017,afterapprovalbyCompany’sBoardofDirectors,waspresented on The StrategicPlan (1) Forthekmoflinesandthree-phaseconductorsbrokendownbyvoltage,see indicator tablesonpage168. DIMENSIONS OFTHETERNAGROUPASDECEMBER31,2012 Km oflines Km ofthree-phase conductors Total capitalizationinmillionsofeuro Turnover inmillionsofeuro Number ofemployees: Terna Gora Crna of which: Group (Italianperimeter) of whichunderwatercable of whichunderground (1) Terna Plus Terna ReteItalia Terna SpA (1) 2 emissionsreleasedintotheatmosphere.Inparticular,70% of 57,440 63,448 1,348 1,369 5,970 1,806 3,088 3,433 333 12 3 (2) (1) exercise votingrightsinappointing theBoardofDirectorsforastake ofmorethan5%inthesharecapital. 5%. Moreover,inordertosafeguardTerna’sindependence andimpartiality,nooperatorintheelectricityindustrymay has therighttoobjectacquisition–byinvestorsthat arenotunderpubliccontrol–ofequityinterestsexceeding liberalization process, theMinistryofEconomyandFinance,inagreementwith forEconomicDevelopment, of Associationsetcertainlimitsonshareholdingandvoting rights.Asinthecaseofothercompaniesinvolved Reflecting specificlawsonStateshareholdingsincompanies involvedinliberalizationprocesses,Terna’sArticles held bycorporateinvestors(the2010figureswere3.7% and 6.5%respectively). compared totheonerecordedinDecember2010.Atpresent, theyrepresent5.2%ofthefloat,and8.4%shares on theconsiderationofESG(Environmental,Social,Governance) aspects.Thisfigurerepresentsasignificantincrease (Socially Responsible Investors) - i.e. investors choosing to invest in Terna to apply a sustainability approach based At theendof2012,11.8%Terna’ssharecapitalwasheld by78sociallyresponsibleinvestors(SRI).Therewere66 SRI held byforeignInstitutionalInvestors,primarilyEuropeanand American. by Italianinvestors(CdP29.85%,RetailInvestors26.5%andInstitutional7.5%),withtheremaining36%being On the basis of the periodic surveys carried out by the Company, it is believed that 64% of Terna S.p.A. shares are held TERNA’S SHAREHOLDERBASE • • • ownership ofTernaS.p.A.isdividedasfollows: On the basis of the register of shareholders and other information available at the date of preparation of this report, the Terna S.p.A.amountedto€442,198,240,representedby2,009,992,000ordinaryshareswithaparvalueof€0.22each. As oftheBoardDirectors’meetingon15March2013,atwhichannualreportwasapproved,sharecapital Terna S.p.A.hasbeenlistedontheItalianStockExchangesince June 2004. Ownership structure Non-Core Businessmustbeadded(payoutof60%theresults). period, thebasicdividendfromCoreBusinessisexpectedtobe19eurocentspershare,whichcontributionof The 2013-2017PlanpresentsaTERNAS.p.A.dividend policy inlinewiththeoneannouncedlastyear:duringPlan Dividend policyconfirmed 60% inallyearsofthePlan,anditisexpectedthatNetDebtwill fallbelow4timesEBITDAbytheendofPlan. previous Plan(1billionvs1.6billion).Thecapitalstructureisconfirmedassolid:theNetDebttoRABratioremainsbelow In the2013-2017Planitisestimatedthatincreaseinborrowingwillbereducedby600millioncomparedwith Continual commitmenttostrengtheningcapitalratios Sound financialstructure Total 100% InstitutionalandRetailInvestors RomanoMinozzi CassaDepositiePrestiti S.p.A. (CdP) Institutional andRetailInvestors64.8% Romano Minozzi5.4% Cassa DepositiePrestitiS.p.A.(CdP) available, andcommunications from Consob). Shares helddirectly andindirectly Shareholders withastakeintheshare capitalofTerna S.p.A.abovethethresholds indicatedintheConsobdecision no.11971/99(basedontheinformation 1,2 (1) and(2) 1 1 29.85% 29.85% 64.8% 5.4% 64.8% 5.4% 29.85% 29 Terna Profile 30 2012 Sustainability Report EC7 published withtheTerna2012 AnnualReport. institutional website(www.terna.it) intheInvestorRelationssection,accessiblefrom the homepageaswellbeing Structure Report”,whichwas approvedbytheBoardofDirectorsonMarch31,2013and isavailableontheCompany’s Further informationonTerna’scorporategovernancecan befoundinthe“CorporateGovernanceandOwnership 2012. recommended theDirectorwhoisresigning).Thisappointment wasconfirmedbytheShareholders’MeetingofMay16, of FrancescoPensato(followingrecommendationbythemajority shareholderCassaDepositiePrestitiS.p.A.whichhad the majoritylist),BoardofDirectors,atmeeting July29,2011,deliberatedonthenominationbyco-optation Following theresignationofDirector,AndreaCamporese (electedbytheaforementionedShareholders’Meetingfrom from theminoritylistpreparedbyshareholderRomano Minozzi andcompaniescontrolled byhim). prepared byCassaDepositiePrestitiS.p.A.),FabioBuscarini, SalvatoreMachiandRomanoMinozzi(Directorselected 2011: LuigiRoth.FlavioCattaneo,PaoloDalPino,Matteo Del Fante,MichelePolo(Directorselectedfromthemajoritylist The following individuals are members of the Board of Directors, as deliberated by the Shareholders’ Assembly of May 13, The BoardofDirectorswillremaininofficeuntiltheapprovalfinancialstatementsrelativeto2013 year. nine members. According tothatdeliberatedbytheOrdinaryShareholders’MeetingofMay132011,BoardDirectorsconsists of Director Director Director Director Director Director Director Officer Chief Executive Chairperson Office BOARD OFDIRECTORSINOFFICEAT31.12.2012 and itssubsidiariesareinplace. Company andtheGroup,aswellensuringthatcontrolsnecessaryformonitoringperformanceof management. TheBoardofDirectorsisresponsibleforestablishingstrategicandorganizationalguidelinesthe The BoardofDirectors,whichiselectedbytheShareholders’Meeting,chargedwithtakingcarecorporate corporate efficiencyandintegrity,whichwillalsopositivelyinfluence theotherstakeholders”. while acknowledgingthat–asnotedbyCONSOB“goodCorporateGovernancecantriggeravirtuouscircleintermsof significance oftheGroup’sactivitiesandneedtoappropriatelyconsiderallinterestsinvolvedincarryingthemout, This corporategovernancemodelaimstocreatevalueforourshareholders,whilereflectingawarenessofthesocial regulations formulatedbytheCONSOB,andingeneralwithbest practicesfoundattheinternationallevel. Governance Code–whichcanbeconsultedonthewebsiteofBorsaItaliana,www.borsaitaliana.itwithrelevant The Company’sCorporate Governance systemistherefore in linewiththeprinciplescontainedCorporate anticipated bythetimelineforadjustmentscheduledtemporary regulations. implemented therevisionsofCorporateGovernancesystemtoobservecommitmentssetoutbyCodeas Assogestioni, BorsaItaliana,ConfindustriaaccordingtothelatestupdateinDecember2011and2012approved Code oflistedcompaniespublishedbytheCommitteeforCorporateGovernancesponsoredABI,ANIA,Assonime, provisions oftheItalianlegislationonsubjectlistedcompanies.TernahasadoptedCorporateGovernance Terna’s governancestructureisbasedonthetraditionalmodelofadministrationandcontrol,compliantwith Corporate Governance Francesco Pensato Matteo DelFante Romano Minozzi Salvatore Machì Flavio Cattaneo Fabio Buscarini Paolo DalPino Michele Polo Luigi Roth Members Executive • Non-executive • • • • • • • • Independent • • • • • • Internal ControlInternal Committee • • • • Compensation Committee • • • Transactions with Related Parties Committee on • • • that makesucharequest. Finally, byanalyzingthesituationofgrid,Ternaidentifies the consultation withlocalgovernmentsallthewaythroughto theauthorization forconstruction. Ministry for EconomicDevelopmentevery year forapproval. Terna thenfollowstheauthorizationprocess,fromadvance Works tobe constructed are detailed in the National Transmission GridDevelopmentPlan, whichispresentedtothe terms ofmeetingrequirements,secureoperations,reduced congestion, andimprovingservice qualityandcontinuity. critical aspectsofthegridandnewworksthatneed tobeconstructed The analysisofelectricityflowsonthegridanddevelopment ofprojectionsdemandenableTernato Grid developmentplanning degeneration andextensivepoweroutages,itmayintervene inan emergency, alsotoreduce thedemand. producers andremoteoperationcentres,inordertomodulate thesupplyandgridstructure.Toavoidriskof to productionplantorgridelementfailuresowingatrend indemandthatdiffersfromforecasts,withcommandsto the electricity system and carries out dispatching, intervening where differences are seen in the expected structure owing During the resources fordispatching,andchecksonpowertransitsalltransmission gridlines. determined by the outcome of the free power market (Electricity Exchangeandoff-Exchange contracts), acquisition of horizons, aforecastofthenationalelectricityrequirements,comparisontoseeifitisconsistentwithproduction plan Preparation for real-time operation includes of energy,produceddomesticallyandimported,consumption by endusers.Thisfunctioniscalleddispatching. In gridoperation,itis Operation The mainstagesofthetransmissionserviceareasfollows: infrastructures, anddevelopingthegrid(planningconstruction). In thisprocess,Ternaisengagedinmanagingtheelectricitysystembyoperatinghighvoltagegrid,maintaining The Italianelectricitysystemconsistsoffourcomponents:theproduction,transmission,distribution,andsaleelectricity. Terna’s mainbusinessisthetransmissionofelectricityinItaly. Electricity transmission real timecontrolstage essential toensureabalanceofdeliveriesandwithdrawalsatalltimes , theNationalControlCentre,coordinatingothercentresaroundcountry,monitors planning unavailability best waystoconnectplantsthegrid (ofthe grid and production plants) with different time PRIMAR Y ST AT IONS (HV/MV) SECONDAR Y ST inordertoensuresystemadequacy AT IONS (MV/L V) TRANSFORMERS , i.e.betweenthesupply foralloperators identify 31 Terna Profile 32

2012 Sustainability Report EU23 EU6 • • international growthintheMediterraneanbasinwillallowTerna to benefitfromcompetitiveadvantages: sector ofelectricity infrastructure, whichwashistorically concentrated innationalmarkets.Inthiscontext,thefocus on requirement for social and economic growth. New areas of the market are opening up to companies operating in the The developmentofinfrastructure(energy,water,transport andtheancillarystructures)onaregionalscaleisanessential for ItalyandEurope,butarequirement. The Mediterraneanasawholerepresentsnewemergingmarket of500millionconsumers,andisnotonlyanopportunity Development abroad Development Plan)andtocreate40MWpowerintensivebatteries (withinthecontextof theSafetyPlan). received approval to experiment with 35 MW energy intensive batteries (experimental implementation within the After carefulverification,bothwiththeElectricityandGas AuthorityandtheMinistryofEconomicDevelopment,Terna safety inmanagementofthenetwork. systems, withtechnicalcharacteristicsdifferentthanthoseoftheDevelopmentPlan,meetsrequirementsforgreater the productionofrenewablesources.Onotherhand,forSafetyPlan,proposaltointroduceaccumulation 2011 year and in the Safety Plan relative to 2012. In the first case, for moreefficient managementof the NTG to maximize In this regard, Terna provided for the development of accumulation systems in the Development Plan of the NTG for the • • solar andphotovoltaic)entailstwoprincipalproblems: emissions, theintegrationinelectricitysystemofalargequantityproductionfromrenewablesources(especially reduced, isstillhigherthanthatofmanyotherEuropeancountries.Comparedtothebenefitsintermsreduction CO This rapidgrowthisdueinparticulartotheincentivesystemoflastfewyearswhich,eventhoughitgraduallybeing small plantsmainlysuppliedbyrenewablesources. production plantswhichusetraditionalsourcessuchascoal,fueloilandgas,therearenowhundredsofsmall very The exponentialgrowthofwidespreadgenerationisprofoundlychangingthenationalelectricitysystem.Alongsidelarge Planning anddevelopmentofaccumulationsystems • • In 2012theseactivitiesconcerned: concession. is thosenotregulatedorsubjecttoregulationbytheElectricityandGasAuthority(AEEG),butactivitiesunder With aviewtocompletingtheactivitiesperformedonlicence,Ternaworksdevelopnon-corebusinessinitiatives,that Other activities employ most(slightlylessthan70%)oftheCompany’shumanresources. Terna carriesoutthe Maintenance innovative methods.Theconstructionofnewplantsisnormallyoutsourced. for thecomponentsandmaterialsthatwillbeusedinconstructingnewlinesorstations,includingadoptionof the requirementsofexternalresourcesandprojectbudgetsaswellworkingmethodstechnicalspecifications As farasplantconstructionisconcerned, required fromequipment,machinery,andcomponentsofstations and electricitylines. Terna establishestheengineeringstandardsofplants,inparticularconstructionstandards,andperformance Construction capacity fortransportonItaly’s northernelectricityfrontier(approximately 10,000MW). areas, andcanalsoformconnections toEuropeancountrieswithnooutletsontothe Mediterranean,giventhehigh Italy’s geographicalposition: itisalogisticalandorganisationalplatformincentralposition comparedtoemerging collaborations inthepast. historic andculturalsynergieswithmanycountrieson theSouthernshore,enhancedbysuccessfulindustrial response times. need forahigher(andflexible)levelofreservetobalancetherapidvariabilityinproductionlevels,withadequate excess productioncomparedtoconsumptionatthelocallevelunder specificoperatingconditions; the continuationofinitiativesabroadinareaBalkans andNorth-AfricanMediterranean. Plan presentedbyTernaatthebeginningof2012; the progressofinvestmentprojectsinaccumulationsystems(batteries),includedforfirsttimeStrategic maintenance ofitspowerlinesandstations Terna preparesprojectsfortheworksauthorized througheightTransmissionOperatingAreas,which . Inparticular,itestablishes 2

• • • This developmentstrategywill beachievedbyintegratingtheEuro-Mediterranean electricitygrid,inorderto: investments bysafeguardingtheirriskprofile. electricity with particular regard torenewable sources whichbringenvironmentalbenefitsandincrease thesecurityof In developingprojectsforconnectionwithNorthAfrican countries,Ternafavoursprojectstoproduceandtransport As mentioned,Ternadoesnotcurrentlyhaveanyinvestment activitiesinNorthAfrica,butonlydevelopmentactivities. North Africa grid tonewgeneratinginstallations,andelectricalinterconnections betweenMontenegroand itsneighbours. focused ontheplanning,constructionandmanagementof transmissioninfrastructuretoconnectthelocal contribute totheenhancementanduseofItaly-Montenegro interconnectioninfrastructure.Theseactivitiesare development opportunitiesinthetransmissionsector the Balkansinsupportofinvestorsgeneration,orderto Italian electricity market operators the opportunity to import from the region. Terna Crna Goraisalso workingtopromote infrastructure intheBalkanstates,ordertoconsolidate theelectricalexchangecorridorswithItaly,guaranteeing To completethenewunderwaterpowerlinewithMontenegro,Ternaintendstopromotedevelopmentofnetwork Montenegro theyaretheresponsibilityofTernaCrnaGora. The projectiscurrentlyintheimplementationphase:Italy,theseactivitiesarehandledbyTernaReteItalia,while in procedure usedtoawardservicesandsuppliesforgriddevelopment investmentsinItaly. relating to thesupplyandinstallation of theHVDCcablesand conversion stationshavebeen awarded accordingtothe The authorisation process has now been successfully complete on both sides, and the international tender contracts capital Ternaitselfholdsastake. the networkinfrastructureinMontenegrothroughastrategicpartnershipbetweenTernaandCGES,whoseshare ofMontenegroandthelocal transmissionoperatorCGEStoconstructtheItaly-Montenegrocableand the government Plans forthepowerlinearealsobasedonintergovernmentalconventionsandotheragreementsbetweenTerna, and Kotor(Montenegro),withatransportcapacityof1.000MW. Development Plan,willlinkItalytotheBalkansthrough415kmofcablebetween400kVhubsinVillanova(Pescara) In this context the new underwater electric power line between Italy and Montenegro, incorporated into the NTG East Europe,withsurplusenergyavailabilityovertheshort-medium term, atlowercoststhaninItaly. These factorsmakeMontenegrothebestcandidateforroleofelectricityexchangeplatformbetweenItalyandSouth hubs plannedfortheareainfuture(Bosnia-Herzegovina,Serbia,Albaniaand–viaSerbiaBulgariaRomania). national market thankstotheavailability of atransmission network ingoodconditionthatiswell-linkedtothegenerating Montenegro is the focus of Terna’s activities in the Balkans, asit is extremelywell-placed to meet the demands of the CO potential (inparticularhydro,windenergyandbiomass),whichcanhelptoensurecompliancewithECtargetsinterms of surplus atcompetitiveproductioncostsandthediversificationofsupplysources,thankstoitsunusedrenewableenergy The region currently has the most attractive nearby power market because of the forecast medium- and long-term power the region,particularlywithregardtorenewableresources. The BalkanregionistheareaofgreateststrategicinterestforTerna,consideringitsproximityandenergypotentialin The Balkanregion yet haveoperationalactivitiesthere. project intheBalkanarea.Currently,TernaonlyconductspreliminaryresearchNorthAfricanarea,anddoesnot The newunderwaterelectricpowerlinebetweenItalyandMontenegroisthemostsignificantelectricalinterconnection competition ontheItalianelectricitymarket,thusreducing prices. Italian electricitysystemandthediversificationofsourcesprocurementfromabroadwhichincreases through newinterconnectionswithneighbouringcountries,benefitsintermsoftheincreasedsecurity The expansionofactivitiesinstrategicareasisintendedtoincreasethecompany’scapacityforelectricitytransport, and developmentinthefieldofelectricpowerrenewableenergy sources. countries –withwhichtheItaliangovernmentiscurrentlyimplementingintergovernmentalagreementsforcooperation With regardtoitsinternationaldevelopmentactivities,TernahasfocusedonNorthAfrica,andsomeoftheBalkan • • Italy arolenotonlyinthepotentialoutletmarket,butalsoterms oftransporttotheEuropeanmarket. framework, separationbetweentransportandgeneration,certificationsystems,meteringsettlement),whichgives An institutional,regulatoryandindustrialbaseabletosupportdevelopmentsinthemarket(regulatorylegislative energy generationandtransport. Highly specialised know-how in relation to the design, production and managementofelectricityinfrastructure for exchanges alongtheSouth-south andSouth-northaxis. promote theconstructionof electrical infrastructureontheSouthernshore,neededto activateinternationalenergy them withtheoutletmarkets; exploit the availability of renewable energy sources located on the southern shore of the Mediterranean and connect optimise andprogressivelyshare primarygenerationresources(conventional andrenewable)existinginthearea; 2 reduction. Access to this market will enable diversification of supply sources at competitive production costs. reduction.Accesstothismarketwillenablediversificationofsupplysourcesatcompetitiveproductioncosts. 33 Terna Profile 34 2012 Sustainability Report to Europe. of electricityproduction,mainlyfromrenewableresources,inNorthAfricaandtheMiddleEast(MENA)exporting it Desertec: transmission ofrenewable-sourceelectricitybetweenMENAcountries, andtransportingittoEurope. Medgrid: The project willbecompletedbytheendofsummer2013. framework, harmonisedattheMediterraneanlevelthatwillencourageintegrationofregionalelectricalsystems. formulating proposals forthedevelopmentofrenewable-sourceelectricityexchanges,andondefiningaregulatory how. Terna’scontributionisfocusedonassessingtheproductionandtransmissionsystemsincountriesinvolved, The consortiumworkscloselywiththeinstitutionsinbeneficiarycountries,transferringknowledgeandknow- on thesouthernshoreofMediterranean,andintegration electricitysystemsonbothsides. in order todefinealegalandregulatoryframeworkthatwillencouragetheproductionofenergyfromrenewablesources The projectinvolvestechnicalservicesforninebeneficiarycountriesintheMENA(MiddleEast–NorthAfrica) area, MVV Decon(Germany)andwithENEA. the Mediterranean Solar Plan, which Terna is working on as part of a consortium with RTE (France), Sonelgaz (Algeria), Paving theWayforMediterraneanSolarPlan: The othercooperativeinitiativesinclude: institutional andregulatoryconditionsneededforitsrealisation.Theactivitieswillbecompletedbytheendof2013. the national transmission grid operator at the time and Sonelgaz, and the definition of the technical, financial, industrial, and implementapreviousfeasibilitystudyrelatingtotheunderwaterlinkbetweenAlgeriaItalycompletedin2004 by systems intheMaghrebandEuropegeneral,TernaSonelgazsignedanagreementMarch2011ordertoupdate Interconnection betweenItaly and Algeria: • • to beconfirmed.Theoriginalprojectprovidesfor: The projectisnotyetoperational,astheinstitutionalagreementsbetweengovernmentsofItalyandTunisiahave Elmed) andregulatorystudies(theframeworkneeded fortheproject’simplementation). has alreadycarriedoutthetechnicalstudies(ananalysisofTunisiannetworkinordertosupportimpactProject Ministry inmanagingthetenderprocedureforallocationofproductionrightsTunisia,andexporttoItaly.Elmed Études agreement tocarryouttheprojectandhavesetupamixedcompany(ElmedÉtudes)taskedwithassistingTunisian coverage fortheindustrialinitiative.TernaandTunisiannationalelectricitycompanySTEGhavesignedapartnership production ofelectricityinTunisiaanditsexporttoItalyunderanintergovernmentalagreementthatprovidesinstitutional Project Elmed: The interconnectionprojectscurrentlyunderdevelopmentare: • • This approachtranslatesintoaEuro-Mediterraneanmultilateralcooperation project,involving: (Terna -STEG)controlledbyTerna;thetransportcapacitywillbe 1,000 MW. an interconnectionbetweenItalyandTunisiaviaunderwaterlineconstructedmanagedbyamixedcompany Tunisian productionrights,tobeselectedthroughaninternational tender launchedbytheTunisiangovernment; of which400willbeallocatedtotheTunisianmarketand800exportedItalybycompanyawarded a mixofproductionfromrenewablesources(minimum100MW)andconventionalinTunisia1,200MW, participation incooperation,institutionalandindustrialinitiatives. interconnection withTunisiaandAlgeria; the constructionofanelectricalcorridorbetweenMaghrebandEurope,throughprojectsrelatingto this is a private French-law company involved in promoting a Euro-Mediterranean electricity grid for the thisGerman-led industrial initiative has the aim ofpromotingEurope-Mediterraneancooperationinthefield Thisisanintegratedproductionandtransmissionprojectbasedonmarketproceduresinvolvingthe with a view to connecting the electricity systems of Algeria and Italy, and the with a viewto connecting the electricity systems ofAlgeriaandItaly, and the thisisaEuropeanCommissionprojecttoimplementanddevelop supply ofcheapenergyandthediversificationprimarysources, whichwillhavebenefitsforthecountryasawhole. The newlink,which will guaranteeanincreased capacity for exchangewiththeFrenchfrontier,willalsoaugment the Fréjustunnel. will be190kmlong.HalfofthatlengthinItaly,anditusethemotorwayplatformnewservicelinkthrough highly ecological project the only one of its kind in the world. Authorised by the Italian authorities in March 2011, the line or integratedintotheinfrastructureofA32Fréjusmotorway.Thepresencelongtunnelsandviaductsmakes this linking thehubsatPiossasco(Turin)withGrand’Ile (France) viaaterrestrialcontinuouscurrentcable,eitherunderground On thenorthernfrontier,oneofkeydevelopment projects isthecontinuouscurrentinterconnectionwithFrance, The northernfrontier systems, afundamentalobjectiveofMed-TSO,andarealsoessentialtoactivateinvestmentsinthearea. Networks andrulesareessentialcomponentsinthecoordinateddevelopmentofMediterranean’selectricity promotion ofrenewableresourcesandtheharmonisationregulatory frameworks. regardtothedevelopmentandintegrationofnationalidentitysystemsfocusingon objectives, with particular willingness tosupportMed-TSOinordercreategreatersynergiesthemeetEuropean-Mediterraneanenergy a multilateral approach. Together with international financial institutions,the abovebodies have stated their Mediterranean electricityandgasregulators),isafundamentalpartofpromotingcoordinatedactionswith Parliamentary Assembly,ENTSO-E(theAssociationofEuropeanTSOs),MEDREG experience. Inthissense,cooperationwithinternationalinstitutions–theEuropeanCommission,Europe’s The toolsusedbyMed-TSOincludethestudiescarriedoutitsmembers,andtransferofknow‑how be presentedattheendof2013,MeetingEnergyMinistersfromEUandrestMediterranean. Interconnections which includesinternalreinforcements on thenetworksofcountriesinvolved.Theresultswill The firsttaskgiventoMed-TSObytheEuropeanCommissionisprepareMasterPlanforMediterranean to guidelinesreceivedfromtheGeneralAssemblyandExecutive Council. (Terna -Italy).TheSecretary-GeneralhasthetaskofdirectingAssociation’soperationalstructureaccording Chairman (Sonelgaz-Algeria),theVice-Chairmen(TEIAS–TurkeyandRTEFrance),Secretary-General Apart fromtheAssembly,organisationofMed-TSOincludesanExecutiveCouncilcomposed Mediterranean. Itincludes17TSOsfrom15countriesinthe to createaspecialformofcooperationbetweentheTSOswithaimintegratingelectricitysystemsin Med-TSO istheMediterraneanAssociationofElectricityOperators,formedon19April2012inRome,order Med-TSO: TernaforanintegratedEuro-Mediterraneanpowergrid EU23 EU6 35 Terna Profile 36 2012 Sustainability Report In relationtoelectro-magnetic fields,Terna’scommitmenttranslatesaboveallinto scrupulousobservanceofthe development ofelectricityproduction fromrenewablesources. Among the topical issues to which Terna pays close attention are electro-magnetic fields, climate change, and the The environment,climate,and renewableenergysources by thelocalInstitutions,andassociations representingcivilsociety ontheterritorialscale. projects. Withrespecttotheseobjectives,animportantroles areplayedbycommunicationandinvolvement,aswell described inthepresentreport.Ternahasbegunananalysis ofthemosteffectivewayspresentingitsdevelopment infrastructures bythecommunitiesinvolvedisanabsolutely primaryobjective,ascanalsobeseenfromthedisputes which arealreadybasedonprioridentificationofagreed solutions,increasingthedegreeofacceptanceelectricity The themeof of thegridandinterconnectionrelationswithothercountries. In themediumterm,creationofvalueforshareholdersand thequalityofelectricityservicearelinkedtodevelopment Local communities will combinewiththose-ever-primaryissuesofqualityand security oftheelectricityservice. significant generationalsuccessionwillkeeptheissueofcore competencemanagementaliveinthenextfewyears,which above allasregardstheaspectsofrelationswithcommunity andenvironmentalimpacts.Theneedtofaceupa Projected overamedium/long-termhorizon,thethemesofsustainabilityarepartTerna’sdevelopmentstrategies Medium-term prospects on service,economic,environmental,andsocialresponsibilityin thisReport. Further detailsonthesignificantelementsofsustainabilityforTernacanbefoundinfirstsectionsfourchapters work onlivelines. operating activitiesareassociatedwithparticularrisks,suchasworkatmanymetresabovegroundandmaintenance Another element,justasimportant,isattentionto are oftenrareoruniqueintheelectricityindustry,constitutesanimportantelementTerna’ssustainabilityapproach. The roleofhumanresourcesinTerna’sactivitiesisfundamental. humanitarian andculturalimportance,asaconcretesignofparticipation inthecivilgrowthofsociety. efficient andlesscostlyservice.Attentiontocommunitiesisalsoexpressedthroughthecreationofinitiativessocial, infrastructures thusgeneratingeconomicbenefitsforshareholdersandsociety,whichcanenjoyamoresecure, more and therichesoflandscapecultureterritoryaswellfacilitatingacceptancecreation new local communities Reducing the impact of the lines Terna’s activitiesproduceanimpactontheterritory,relatedabovealltovisibilityofelectricalinfrastructures. • • • itself thefollowingobjectives: Italian societyforitsservice and sellelectricity,theessentialroleitperformsinelectricitysystemmakesTerna Even thoughtheendusersofelectricityservicearenotdirectcustomersTerna,butrathercompaniesthatdistribute able tocreatevalueforthebusinessandstakeholdersthemselves. established initsCodeofEthics,istoconstructanddeveloprelationshipsbasedontrustwithstakeholders,whichare the localareaandattentiontoworkplacesafetystafftrainingareparticularlyimportant.Ingeneral,Terna’sintent,as main referencepointfortheapproachtosustainabilitymatters,which,inparticular,respectenvironmentand to ensurethatthegeneralpublichasreliable,efficientelectricityservice.Thecommitmentserviceisthereforealso to ensureelectricityforeveryone.Thegreatestsocialandeconomicimpactofthecompany’sbusinessliesinitsability Terna’s mainbusinessistheprovisionofaservicewhichindispensableforoperationentireelectricitysystemand Terna’s concerns Sustainability to observetheprinciplesofimpartialityandneutralityinorder ensure equaltreatmentforallgridusers. to ensureanefficientanddevelopingtransmissionsystem; to provideasecure,reliable,continuous,andcost-effectiveservice; acceptance bylocalcommunities isaruleofconductwhichcantriggervirtuouscircle:itmakespossibletopreservebiodiversity . ThusTernaacknowledgestheresponsibilitygiventoitbygovernmentlicence,setting is therefore another priority objective. For Terna isthereforeasignificantone:besidesrelationshipswith Institutions, workplace safety , especiallyrelevantduetothefactthatmany renewal ofdistinctivetechnicalskills respect for the environment and ethically responsibletoallof , which of theCompany’senvironmentalandsocialpolicy,aswell asthe consistencybetweenobjectives andresultsachieved. One ofthecommitmentsexpressedinCodeisproviding evidenceintheSustainabilityReportofimplementation • • • • • The Codeisdividedintofivesections,whichdescribe: stakeholders. for everyday decisions, helping to achieve the objective of establishing and consolidating a relationship of trustwiththe sustainability issuesrelevantforTerna,andindefininginternalpoliciesguidelines.Itcanbeusedasaconcrete guide reflection whichinvolvedtopmanagementandthefirstline,itishighestreferenceinidentifying the The CodeofEthicswasapproved by theBoardofDirectors of December21,2006.Theresultaprocessinternal The CodeofEthics Sustainability governance in thebox“Managementofgenerationalturnover”page137. response strategy,whichincludesknowledgetransferthroughtheFacultyCampusasakeyfeature,isoutlinedindetail The time horizonthanforeseen,followingthepensionreformintroducedbyItalianGovernmentinDecember 2011. involve Terna’spersonneloverthenextfewyears,althoughimpactoftransitionhasbeendistributedalonger The subject of professional training will remain of particular importance in relation to the generational turnoverwhichwill technical capabilitiesthatareafeatureoftheindustry Constant concernforhumanresources,firstofallwithregardto Human resources chain (seetheboxonpage91). the adequacyoftoolsandprocesseswillberequired.Thishasalreadybegun,forexample,withreferencetosupply that arenotalreadyoverseeninthecurrentcontextofsocialresponsibilityactivities.However,constantmonitoring of The developmentofforeignbusinessbasedoncurrentforecastsdoesnotleadustoexpecttheemergenceissues operating abroad. Focusing ontheareaofMediterraneanNorthAfricaandBalkanslimitspotentialcriticalissueswhichcanemerge Activities abroad envisaged initsStrategicPlanforthecomingyears. an integratedEuro-Mediterraneanelectricitygrid,(seepage32and60)thedevelopmentofaccumulationsystems Smart Gridinitiativespointinthisdirection,asdoestheparticipationandinternationalprojectstodevelop more efficientand to loweringCO indirect emissions the electricityindustryaresubject, as asignofitssensitivitytoenvironmentalissuesandinresponsethegrowingattentionwhichallcompanies with climatechangeforitsrevenues(seealsotheparagraphon“Riskmanagement”,pages79-81).Despitethis,both not obligedtoreduceemissionsorbeinvolvedinemissiontradingschemes,nordoesitseeparticularrisksassociated Climate change andgreenhouse gas emissions are oneofthemostsignificantproblemsatplanetarylevel.Ternais public opiniononthematter. any risksconnectedwithitswork.Inaddition,itwillcontinuetocontributeprovidingcorrectinformationregarding issue, Ternapays provisions ofItalianlaws,whichareamongthestrictestinworld.Consideringsensitivitypublicopinionon the rulesforimplementingCodeandpersonsresponsible. Terna’s commitmentstoensuringobservanceoftheCode; the mainguidelinesonconductingrelationswithstakeholders; interest, andsafeguardingcorporateassets; the conductrequired,specificallyfromemployees,withregard togeneralissuesofloyaltytheCompany,conflicts (good management,respect,fairness,andtransparency); general ethicalprinciples(legality,honesty,andresponsibility) andthoseparticularlysignificantforTerna’sbusiness 2 emissionsintotheatmosphereisdevelopmentofgrid,whichmakeselectricitysystemasawhole constant attentiontoadvancesinscientificresearchonelectro-magneticfields makes itpossibletofeedingrowingproductionfromrenewablesources , andwillmaintainitscommitmenttoseekinggreaterenergyefficiency.Terna’sgreatestcontribution Terna hasalreadydevelopedprogrammestocontrolandcontaindirect willcontinuetobeapriorityforTerna. safety , butalso training tocontinuallyupdatethe . Appliedresearchand inordertoassess 37 Terna Profile 38 2012 Sustainability Report HR7 HR6 HR5 (3) crimes. crimes, TernaS.p.A.revised itsOrganizationalandManagementModel,introducing Special PartL,concerningsuch following LegislativeDecree121/2011’s entryintoforce,whichextendedthescopeofapplication tocertainenvironmental In itscurrentformtheModelis dividedinto11parts,1generaland10special(A,B,C,D, E,F,G,H,I,L).Morespecifically, of additionalcrimestoDecree231. hassubsequentlyundergoneanumberofrevisionstoadapt ittotheprovisionsoflawandinclusion The Model as the expectations ofits stakeholders, in keeping with the provisionsofLegislative Decree No.231ofJune 8, 2001. transparency in the conduct ofthe Company’s business” and activities, so astosafeguard its positionand image, as well Terna’s adoptionofthe231OrganizationalandManagement Modelisthusaimedatensuring“conditionsoffairnessand • • corruption. Thepossibility,foracompany,tobeexonerated from liabilityisconditionalon specificactions,including: managers oremployeesintheCompany’sinterestto itsbenefit.Inparticular,thelawwasintendedtocombat (and inpracticecriminal)liabilityforcompanieswithrespect tocertaintypesofoffencescommittedbytheirdirectors, requirements of Legislative Decree No. 231 of June 8, 2001, which introduced into Italian Law a system of administrative In December 2002 Terna’s Board of Directors resolved to adopt an Organizationaland Management Model that met the 231 OrganizationalModel(pursuanttoLegislativeDecree231/2001) introducing, maintaining,andimprovinganenergymanagementsystemorientedtowardsefficiency. UNI CEIENISO50001:2011“EnergyManagementSystems”isastandardwhichlaysdowntherequirementsforcreating, Galbani andViaPalmianoinRome,PeroSanRoccoalPorto intheProvinceofMilan,andatPalermooffice. with the “Environmental Management System”. In this context energy analyses were carriedout at theofficesin:Via Management System”defined,withtheaimofaligningsystemtoUNICEIENISO50001standardinaccordance In addition,againin2012,the“InitialEnergyAnalysis”wasperformedand“EnergyConsumedforOwn Use ISO 9001QualitySystemandofTerna’sRiskManagement(seealsopage65the2010SustainabilityReport). System (ISMS)fortheaspectsofphysical,logicalandorganizationalsecurityisconsistentwithapproach the ISO 27001:2005isaninternational standard which provides the requisites for an InformationSecurityManagement Monitoraggio delMercatoElettrico-IntegratedRulesforElectricity MarketMonitoring)applications. In June2012TernaconfirmeditsISO/IEC27001:2005certification(obtainedin2011)oftheTIMM(TestoIntegrato peril confirmed annualrenewal. OHSAS 18001:2007certificationswiththeconsequentissueofnewcertificates.During2012certification bodies Terna receivedrenewalforthethreeyears2011-2013ofUNIENISO9001:2008–14001:2004 BS out bytheIMQcertificationbodyonQuality,EnvironmentandOccupationalHealthSafetyManagementSystems, of thecompanyTernaCrnaGora,forwhichprocesseswillbecertifiedduring2013.In2010,afterinspectionscarried both thosecarriedoutontheexistingplants,andtoplan,designconstructnewexcludingsolely expressed intheCodeofEthicsandcorporatepolicies. requirements testifiestothesearchforcontinualimprovement,whichguaranteesconsistencywithcommitments system, whichhasobtained sustainability, are coordinated and directed in theintegrated Quality, EnvironmentandOccupationalSafetymanagement The activitiesinthedelicatefieldsofenvironmentandoccupationalsafety,whicharecrucialtoTerna’svision The integratedQuality,EnvironmentandOccupationalSafety managementsystem management systems.Amongthese,wecannoteinparticularthefollowing. The principlesandcriteriaofconducttheCodeEthicshavebeentranslatedintocorporatepoliciescoherent Management policiesandsystems out of10,452worldwide “advanced” levelCommunicationonProgress(CoP),somethingonly383memberorganizationsoftheGlobalCompact in 2012,takingparttheWorkingGrouponsupplychainand,forsecondconsecutiveyear,producedan After becoming amember of theSteering Committee of theItaliannetwork(2011),Ternacontributed to itsactivities company’s corporateresponsibilityandsustainabilityinitiatives. prevention of corruption. These principles were already set forth in Terna’s Code of Ethics as a benchmark for the commitment toobservingthe10principlesofGlobalCompactonhumanrights,employment,environmentand When itjoinedtheGlobalCompact(2009),UnitedNations’multi-stakeholdernetwork,Ternafurthercementedits The GlobalCompact with autonomouspowersofinitiativeandcontrolregarding theapplication oftheModel. having entrustedthefunctioning,observance,andupdating oftheModeltoanInternalOversightCommitteeendowed keeping withLegislativeDecree231andcapableofpreventing crimes ofthekindcommitted; having adoptedandimplemented–beforethedeedwas committed–anorganizationalandmanagementmodelin Source: officialGlobalCompactwebsiteatSeptember 2012. 3 canstate. ISO 9001 , ISO 14001 and OHSAS 18001 The integratedsystemcovers100%ofTerna’sactivities certification.Compliancewiththesecertification , • • • • • With aviewtosustainability,thefollowingareofparticularsignificance: Internal organization also supportedbytheincentivesystemsbasedonpay. the linkbetweenBalancedScorecardandmanagers’variablepayschemes(MBOs),sustainabilityobjectives are the BSCsystemisparticularlysignificant,withaviewtosharingsustainableapproachTerna’sbusiness.Thanks to development quadrants–theannualobjectives of theStrategic Plan areorganized.Insertingsustainabilityobjectivesinto which –accordingtoeconomicandfinancial,organizationalprocess,strategiccustomer,innovation and panel ofindicatorswhichmakeitpossibletofollow,every quarter, theprogressstatusofoperatingobjectivesinto Monitoring andcontrolofcorporateactivitiesmakesuseaBalancedScorecard(BSC)system.Thisis The BalancedScorecardandincentiveschemes Investor Relationssection. Further informationonTerna’sOrganizationalModelisavailableat organization, andallGroupcompaniesweregivenanadhocOrganizational Model,tailoredtotheirspecificneeds. On thesecondpoint,asaresultofcorporaterestructuring,Terna’sModelwasrevisedtotakeintoaccount new Analyses arecurrentlyinprogressforupdatingthemodelfollowing approvalofLaw190/2012(“Anti-corruption”). residence”. individuals” was modified, introducing the crime of “Employment of citizens of third countries without permission for On thefirstpoint,afterimplementingcatalogueofpredicatecrimes,SpecialPartDgoverning“Crimesagainst adaptation bothtothelegislativechangesandstructuralmodifications. revised theOrganizationalModeltotakeaccountofnewcorporatestructure,ensuringamongotherthings,rapid During 2012theSecurityandServicesDepartmentcarriedoutanintensestudyoflegislationinindustry L I H G F E – D C – B – A The 11specialpartsoftheModelregardfollowing: – – – – – – – the presentationtoBoardof Directorsofsustainabilityobjectivesandresults,atthetimeitapproves theSustainabilityReport factors, andformulasformonitoring Terna’senvironmentalandsocialperformances; information system,whichcurrently collectsmorethan1,500indicatorslinkedwithtextual information,data,conversion the usesince2009ofSDM-Sustainability DataManager,dedicatedsoftwareforthemanagement ofthesustainability departments sharingtheresponsibility forimplementingsustainability projectsandmonitoringtheirimpacts; the establishmentin2009ofa SustainabilityandEnvironmentalSteeringCommittee,whose membersaretheheadsof regular sustainabilityassessments; intangible value,byanalyzingtheratingsofmainagencies (suchas:RobecoSAM,Vigeo;Eiris),whichprepare connected withsustainabilityconsiderations,whichentail potentialnegativefalloutforthecompany’sreputationand communication ofobjectivesandresultscorporatesocial responsibility.Theunitalsoconstantlymonitorstherisks sustainability objectivesfromanethical,social,environmental andsustainabilitygovernancepointofview,the which, in collaboration with all company management and with reference to bestpractices,helps define thecompany’s the presence of a Corporate Social Responsibility Unit, part of the External Relations and Communication Department, understanding, andassessingcontrollingcompliance risk; continual monitoringofprocesses,verifyingandmanaging crime reports,developingand implementingprotocolsof compromise them, through activity focused on preventing and managing corporate fraud. The activity translates into (tangible andintangibleresources,directindirectbenefits) aresafeguardedagainstillegaleventsthatcould have alreadybeendealt with and eliminated in advance. Fraud Management aims to guarantee that corporateassets focused onanalysingstillundeterminedcauses,giventhatknown,certainoratleasthighlyprobablecausesshould decisions ontheappropriatenessofpreventing,limiting,transferringoracceptingbusinessrisks.RiskManagement is causes thatcanlead to deviation from theplannedobjectives, and toquantifytheirconsequencessoassupport performance ofthecorporateactivities.Theriskmanagementmethodologymakesitpossibletoidentifysome safety. RiskManagementhasthetaskofassessingtypesandresultspossibledisturbancesnormal Fraud Managementandthesecurityofphysicalhumanresourcesassetscompany,aswellworkplace the presenceofaCorporateSecurityDepartmentwithresponsibility,amongothers,overseeingRiskManagement, environmental crime organized crime IT crimes,illegaldataprocessing,copyrightviolation manslaughter andgrievous/verygrievousbodilyharm recycling money market abuse crimes againstindividuals terrorism crimes corporate crimes inrelationswiththecivilserviceandjudiciary www.terna.it intheCorporateGovernanceAreaof . 39 Terna Profile 40 2012 Sustainability Report • • • • • The following objectivesshouldbenotedinparticular: The this SustainabilityReport. then continuedestablishingthepremisesforbettercoordinationofcontentsin2013officialpublications,including single framework,inkeepingwiththecriteriaproposedbyInternationalIntegratedReportingCouncil.Thisactivity information availabletobeassembledseparatelyintheAnnualFinancialReportandSustainabilitya was started in 2012 which led to the achievement of an online “Draft Integrated Report”. This first stepallowed the As regardsthe“IntegratedReporting”objective,whichisnotdiscussedinotherpartsofthisReport,aprocess detail, thevariousinitiativesandresultsachieved. 2012 objectivesstatedinthepreviousSustainabilityReport,referringtopagesofReportwhichshow,in greater In 2012allareasofresponsibilityshowedprogress.Thefollowingtablesummarisestheresultsobtainedrelativeto Sustainability objectivesandresults establishment ofacoherentactionplanandtherealization firstinitiativesprovidedforbytheplan. the definition,alsobasedonopinionsofstakeholders,astrategicapproachtocommunityinitiatives, management systemforenergyefficiency,inlinewiththeISO50001criteria; fine tuning–afterthedefinitionin2012ofinitialenergyanalysisPolicyandindicatorsformonitoring the by theIIRCinApril2013; of informationandtaking into account the newframework of IntegratedReportingwhichisexpectedto be published and on the website. This is also a continuation of the activities carried out in 2012, with further progress in integration implementation of greater integration of the financial and sustainability information both in the Management Report active participation in the Pilot Programme of theInternational Integrated ReportingCouncil,withstudyand the realizationofinternalCSRtraininginitiativeswithinvolvement oftoplevelmanagers; included inamulti-yearplanstartingwithinitialmilestonestobe achievedalreadyin2013; consists incontinuingtheworkcarriedout2012.Inparticular,improvementinitiativesidentified2012willbe the revisionof the ethics systems and the environmental and social responsibility in relationtothe supply chain,which objectives for2013 constitutefurtherstepsalongthesamepaths.Thetablebelowprovidesasummaryofthem. (1) • •• ••• Legend Social responsibility responsibility Environmental responsibility Economic electricity service Responsibility for general aspects Governance and Area ofresponsibility ••

• postponedorsuspended partlyachieved objectiveachieved to financialanalysts(seepage28) A resultachievedcorrespondstoperformanceinlinewiththeobjectivesapproved bytheBoardofDirectorsforStrategicPlanpresentedannually 2012 objectives leakage Revision ofactionplansonSF activities Development non-traditional Investment todevelopgrid Corporate profitability incentives Positive result on AEEG Security Planprogress indicator targets Achievement ofcontinuity Integrated ReportingCouncil Programme oftheInternational participation inthePilot Integrated Reporting: chain ofsupply prevention ofcorruption)inthe (environment, humanrights, supervision ofresponsibility Revision andupdateofthe companies oftheGroup and the231Modelbynew Adoption oftheCodeEthics non-profit organizations Initiatives inpartnershipwith volunteer workoftheemployees Definition ofrulesforthe organisational well-beingsurvey to theresults ofthe2011 of actionplansinresponse Definition andimplementation businesses environmental impactofnew Start analysisofthe ISO 50001 criteria efficiency inaccordance withthe management systemforenergy Implementation ofa 6

incentives (page77) Positive results on AEEG Security PlanProgress (page59) yet available(pages62-64) The finalcalculationbyAEEGnot (page 8 and14) 2012 milestonescompleted (page 91) initiatives ofimprovement identified The analyticalpartcompletedand Initiative completed 2012 results Activity achieved(page159) Activities stillinprogress Activity achieved(page45) Activity postponed (page 121) Activities completed Activities stillinprogress in batteries(page32) Approved investmentprogrammes Investment todevelopgrid Corporate profitability (1) (1) ••• ••• •• ••• •• ••• ••• •• ••• • ••• •• ••• ••• ••• •• • • • • Security Planprogress indicator targets Achievement ofcontinuity CSR trainingon Campaign ofinternal Integrated ReportingCouncil Programme oftheInternational participation inthePilot Integrated Reporting: achievement of2013milestones initiatives ofimprovement and and humanrights:planningof Supply chain,environment 2013 objectives volunteer workofthe Definition ofrulesforthe initiatives and realization ofcoherent first social commitmentoftheGroup Definition ofguidelinesforthe Renewal agreement withWWF ISO 50001 requirements. energy efficiencyinlinewiththe the managementsystemfor and theKPIformonitoring Preparation ofthePolicy leakage Revision ofactionplansonSF activities Development non-traditional Investment todevelopgrid Corporate profitability 6

41 Terna Profile

monitoring tools areusedwithdifferentfrequencies. Ethics andthespecificengagement tools,suchasmonitoringandcheckingexpectations andopinions.Thevarious For everystakeholdercategory, thefollowingtableshowsmostimportantcommitments expressedintheCodeof impact onthemandviceversa. significant categoriesofstakeholders intermsofthecontinuityrelationshipand the importanceofCompany’s In preparingitsCodeofEthics, Ternaidentified–throughtheactiveparticipationofits Top Management–theeightmost transparent policy. interests andananalysisoftheircompatibilitywiththose specifictotheCompany,inorderadoptaconsistentand The constructionofarelationshipbasedonmutualtrust withourstakeholdersbeginstheconsiderationoftheir Stakeholder engagement TERNA’S PRESENCEINSUSTAINABILITYINDEXES(ASOFDECEMBER31,2012) included intheGoldClassrequiresaratingsscorethatmustbewithin1%ofleadingcompanyindustry. “RobecoSAM Sustainability Yearbook 2013”GoldClasswhichthisyearnumbersjust67companiesworldwide.Tobe In January2013,Terna,theonlyItalianelectricitycompany,wasonceagain,forsecondyearrunning,includedin included inVigeo’snewrangeofESGindexes. During 2012Ternapresencewasconfirmedinallthemaininternationalstockexchangesustainabilityindexesandit from sociallyresponsibleinvestors. sustainability ratings, inclusion in the main international stock exchange sustainability indexes and the appreciation seen Terna’s commitmenttoimprovingitsESG(Environmental,Social,Governance)performanceispositivelyreflectedin Sustainability indexes ASPI Eurozone - - - - MSCI - - - ECPI - CSR - Ethical AXIA - Europe - Global FTSE4Good Index - - VIGEO - - - - - STOXX - - FTSE ECPI - Europe - World Dow JonesSustainability - - Excellence ESI Ethibel EUROPE ESG EMU ESG EAFE ESG WORLD ESG Ethical EMU Ethical Euro Ethical Global Vigeo EuropeVigeo 120 WordVigeo 120 Sustainability Index Leaders Global Governance Global SocialLeaders Global Environmental Leaders Global ESGLeadersIndex Italia SRILeaders Italia SRIBenchmark Sustainability (ESI)Europe

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2012 2011 2010 2010 2009 2009 2009 2007 2007 2006 2005 Year included agency benchmarking, andperformancemeasurement basedontheanalysesofECPI These indexeswere designedtobeusedbycustomersforinvestmentanalysis, capitalized companiesintheEurostoxx50 (Ethical),andEurostoxx60 (CSR). The Axiaindexesselectbestpracticesregarding sustainabilityamongthemosthighly on thebasisofanalysesEIRISagency The FTSEindexesincludethebestcompaniesintermsofsustainabilityperformance Index features 330 indicatorsand38sustainabilitycriteria. Vigeo’s newESGindexesare prepared onthebasisofamethodologywithmore than American, AsianandEuropean marketsandincludedintheSTOXX1800benchmark. VIGEO, theseindexesare based onagroup madeupofcompanieslistedintheNorth Presented in2012bythe social,environmental ratingagency andgovernance included inallthree. Leaders).TernaLeaders andGlobalGovernance istheonlyItalianutilitycompany least oneofthe3specializedindexes(GlobalEnvironmental Leaders,GlobalSocial To beincludedintheGlobalESGLeadersIndexitis necessary tobeincludedinat among the1,800present inthegeneralSTOXXGlobalindex. the Sustainalyticsratingagencyandselect300beststocksforESGperformance Launched in2011theseindexesare prepared onthebasisofassessments stock exchange. sustainability indexesthatincludeonlycompanieslistedonBorsaItaliana,theItalian Introduced in2010andbasedontheanalysesofECPIfirm,theseare theonly Europe Indexthetop600)according totherankings oftheRobecoSAMagency. among thosemosthighlycapitalized(fortheWorld Indexthetop2,500andfor The DJSindexesselectthecompanieswithbestsustainabilityperformance experts onthedifferent aspectsofsustainability. Inclusion issubjecttothepositiveopinionofEthibelForum,apanelindependent The indexesare developedonthebasisofratingsprovided agency. bytheVigeo selects the120leadersintermsofsustainabilityaccording ratingagency. totheVigeo Beginning withthe600mosthighlycapitalizedEuropean companies,theindex indexes belongingtothefamilieslisted. regarded references intheUnitedStates.TheTerna securityisincludedinnumerous non-financial performancesofcompaniesandstillconstituteonethemosthighly These indexescontinuetheKLDIndexes,whichwere amongthefirsttotrace 43 Terna Profile 44 2012 Sustainability Report affected byTerna’s work electricity service,localauthoritiesdirectly and environment, endusersofthe National communityandcountry, territory Society andlocalcommunities technical standards bodies,politicalparties opinion groups, nationalandinternational consumers’ associations,opinionmakers, associations, environmentalist associations, Media, universitiesandscientific community Media, opiniongroups,scientific economic interests, ETSO,UCTE provinces, associationsrepresenting forces, regions, provinces andautonomous national securityauthorityandpolice agencies,CivilProtection,government bodies, nationalInstitutionsand European Communityand international Institutions andassociations guarantee commission CONSOB, stockexchangeentities,strike policy-making powers,Antitrustbodies, bodiesorwith government other regulatory authorities intheindustry, AEEG -theElectricityandGasAuthority, AEEG Regulatory authoritiesandinstitutions, grid operators,businesspartners of theelectricitysystem,gridowners,other distributors, traders,interruptibles–users Private customers,gridusers–producers, partners Grid users,customers,andbusiness Suppliers organizations employee representatives, tradeunion Employees, directors, collaborators, Employees banks, creditors, ratingagencies Shareholders, financialanalysts,lenders, and lenders Shareholders, financialAnalysts Stakeholder Commitments • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • environmental andsocialpolicy. Provision ofevidencetheimplementation value. Support forinitiativeswithsocial,humanitarian,andcultural and localinterests. investment thatisrespectful oftheenvironment, landscape, Advance dialoguewithlocalinstitutionstocarryout Reduction ofenvironmental impactofcorporateactivities. Assessment of long-termeffects of the Company’s choices. service overtime. Ensuring security, quality, andcost-effectiveness ofthe associations representing stakeholders. Pursuit of areas of cooperation of reciprocal interest with the advantageofCompany. Exclusion ofexploitationandmanipulationinformationto Public anduniformdisseminationofinformation. Ensuring utmostclarityinrelations. collusive attitudes. in atransparent, scrupulousandconsistentway, avoiding Representation of the Company’s interests and positions task. Fair andcollaborativeapproach tofacilitatetheregulatory Meeting deadlines. Transparent, complete,reliable information. Confidentiality ofinformation regarding gridusers. No arbitrarydiscriminationamongcompanies. Efficient, qualityserviceaimingatconstantimprovement. Anti-Mafia andanti-recycling prevention withsuppliers environmental, andsocial certification. Supplier qualification,includingthrough quality, Transparent procurement processes. commitments. Transparency andfulfilmentofagreements andcontractual Opportunity tocompeteonthebasisofqualityandprice. Recognition ofindividualcapabilitiesandmerit. Investment inprofessional growth. Non-discrimination andequalopportunity. personal dignity. Safeguarding thephysicalintegrity of employeesand their Commitment toavoidinginsidertrading. and equalfashion. Attention toshareholders andinformingtheminatimely Adoption ofsystemstoforestall andcontrol risks. alignedwiththebestpractices. Corporate governance term. Creation of value for shareholders in the short and long objectives regarding servicesecurityandquality. Balanced managementoffinancial objectivesand box onTerna’s website. dedicated meetings.“OperatorConsultation” Consultation committee onNetworkCode, Procurement portal,direct meetings. the Trade Unions. Consultations, discussionsandnegotiationwith Focus groups onspecificsubjects. Survey onOrganisationalWellness. Sustainability rating. dedicated e-mail. Road shows,dedicatedmeetings,websiteand Instruments formonitoringandchecking grid. Regularsamplesurveysofthepopulation. Consultation process inplanningtheelectricity Collaboration andpartnershipinitiatives. of seminars,workshops,targetedsurveys. Report andtheDevelopmentPlan.Organization Presentation anddistribution oftheSustainability bodies. governing Direct participationontechnical committeesand Council. Ongoing relations with theAEEGoffices and Regular meetings. the signingofawrittenagreement. in Art.47ofItalianLawNo.428/90 concerningrentalofthebusinessunitbyTernaS.p.A. toTernaReteItalia S.p.A. –with trade unionsecretariatsonthe newcorporateframeworkoftheTernaGroup,whichended –aftertheproceduresetout As regards2012industrialrelations activitywascharacterised,inthefirsthalfofyear, bydiscussionswiththenational In thethreeyears2010-2012 advance and/orperiodicinformation. relations system”whichdefinesasystemofdivided intocontractnegotiation,discussions,consultationand The relationshipbetweenTernaandthetradeunionsat Companylevelisgovernedbythe“Protocolonindustrial Relations withTradeUnions involves everyonewhohashumanresourcesreportingtothem. In February2013,referringto2012activities, the bi-annualsurveyoneffectiveness oftrainingwaslaunched.This on page49). Terna’s socialcommitment(seealsothebox“Terna’smulti-stakeholder surveyonthecompany’ssocietalcommitments” At theendof2012asampleemployeeswasinvolvedinthree focusgroupsandtwodiscussionpanelsonthesubjectof the qualitystandardsforTerna’soffices. Document ManagementSystem,theTotalRewardStatementforexecutivesandmiddlemanagers,improvement of being carriedoutoralreadycompletedaretheinitiativeforinvolvementonCorporateLoyalty,revisionofcompany’s The ActionPlanwaspublished,asusual,onthecorporateIntranettoallowallpersonnelreadit.Amongactions Management andtheDepartments,inordertoensurethattheywere monitoredandperformedcorrectly. of timingandperformancesuchactivities.AlltheactionsidentifiedwerealsoincludedinBalanceScorecardfor Top For eachofthesefour,specificactionsinvolvingseveralcorporateDepartmentsandUnitswereidentified,withacalendar people, workspacesandtools,simplifyinginternalbureaucracy. which focusedinparticularonfourareas,consideredmostsensitivetoimprovements:centre-peripheryrelationships, The survey on organisational well-being in the company, carried out during 2011, resulted in an Action Plan for 2012 Employees Edmond deRothschildAM,BNPParibas,andGeneraliInvestmentsFrance. information: Carbon Disclosure Project, EIRIS, RobecoSAM, Sustainalytics and Vigeo; Etica Sgr, Goldman Sachs, Natixis, necessary toassessthecompany’sESGperformance.In2012followingorganizationsrequestedandobtained in collaborationwiththeInvestorRelationsUnit,analystsandfundmanagers,towhichitprovidesinformation The CorporateSocialResponsibilityUnitmaintainsongoingrelationshipswiththesustainabilityratingagencies and, documentation forshareholders’meetings. The requests concerned dividends and related advances, and thepolicy and related right to receive these, and corporate During 2012retailinvestorsmade21requestsforinformationviae-mail(comparedwith29in2011,and232010). connections onaverage,includinganalystswhofollowTerna’ssharesandpublishstudies. are publishedandwhensignificantextraordinarytransactionstakeplace.Liveparticipationintheseeventsexceeds fifty to thesitelistenconferencecallsorganizedbothwhenCompany’sresults(quarterly,half-yearly,andannual) documentation producedbytheCompanyalsobeingavailableinaninteractiveversion,webstreamingenablesvisitors Ethics, theOrganizational and ManagementModelpursuanttoLegislativeDecree231/2001).Inadditionthecomplete and regulationsofshareholders’meetings,informationdocumentsregardingcorporategovernance,theCode and documentsofinteresttomostshareholders(pressreleases,compositionthecorporatebodies,by‑laws statements, half-yearandquarterlyreports,sustainabilitypresentationstothefinancialcommunity),data, on theCompany’seconomicresultsandstrategicobjectives corporate website To furtherencouragedialoguewithinvestors,Ternahasdeveloped“InvestorRelations”,adedicatedsectionofits is For institutionalinvestors,thecontactnumbersare:(+39)06-8313.8106and06-8313.9041,e-mailaddress [email protected] Retail investorscancontacttheCompanybyphoneat(+39)06-8313.8136and06-8313.8359,e-mailat: Corporate Affairswithretailshareholders. and individualinvestors.Specifically,theInvestorRelationsUnitinteractswithmarketoperators,Departmentof Transparency and prompt availability of information characterize the relationship between Terna and its institutional Shareholders, financialanalystsandlenders [email protected] www.terna.it . . , bargainingwiththeindustry tradeunionsledtothe , whichoffersanyoneinterested the opportunitytobepromptlybroughtupdate . Thesectionprovidesfinancialinformation(financial signing of41writtenagreements . 45 Terna Profile 46 2012 Sustainability Report • • During 2012theCommitteewasinvolvedinconsultation processandexpresseditsopiniononthefollowingelements: Code. can facilitatetheresolutionofanydisputesbetweenusers of thegridderivingfromapplicationrulesNetwork for accesstothesame),proposeschangesincurrentregulations, andarbitrates,because,attherequestofparties,it the gridandinterconnections,ondefendingsecurity, ongeneralcriteriaforclassifyingsensitiveinformationand The Committeehasconsultativeduties(infact,itexpresses non-bindingopinionsongeneralcriteriafordevelopmentof for thethreeyears2012-2014. The membersoftheCommitteearerenewedeverythreeyears. During2012membershipoftheCommitteewasrenewed Development asobservers. wholesalers, andconsumers,withtheparticipationof ElectricityandGasAuthoritytheMinistryforEconomic companies, namely:distributors,producers(frombothconventional andrenewablesources),largeindustrialcustomers, the companiesinelectricityindustry. In fact,theCommitteeincludesrepresentatives ofthevariouscategories 2004 whichregulatestheunifiedownershipandmanagementofgrid.Itispermanentplaceforconsultation with The CommitteeisthetechnicalconsultationbodyestablishedinaccordancewithPrimeMinister’sDecreeofMay 11, Consultation Committee. regulation ofthetransmissionanddispatchingservicesperformedbyTerna,includingthroughactivitiesUsers’ As for some time now, in 2012 Terna continued to promote the engagement of the electricity companies affected by the Consultation Committee MyTerna andGaudiportals(seealsopage9394)theConsultationCommittee,describedbelow). Terna maintainsrelationswiththegridusersandoperatorsofelectricityserviceusingvariouschannels,including the Grid usersandcompaniesintheelectricityindustry and foreignsupplierfirms. scouting, benchmarking,andmonitoringtheperformanceofsuppliers,whichentailsconstantlymeetingwithbothItalian In ordertoexpanditsportfolioofsuppliers,Ternaconstantlyengagesin as industrymeetings,exposandconferences. contractors intorealtechnologicalpartners.Ternatakesanactivepartinkeyoccasionsformeetingwithsupplierssuch programme requiresanevengreatereffortforsuppliers,whoarecalledupontotransformthemselvesfromsimple industry Terna presentsanddiscussesitsmaininvestmentprojectswithelectromechanicalcompaniesintheenergy requirements, orpointsofattentionrelatedtotheethicalconductbefollowedinrelationswithTerna. organized with qualified companies or with Industrial Associations to inform them about news regarding any updates to the and improvetheCompany’sknowledgeofspecificproblemsgroupssuppliers.Tothatend,meetingsareperiodically The ProcurementandContractsDepartmentalsomaintainsdirectcontactswithsupplierstomanagecontractualrelations to beincludedintheSupplierRegister. through whichitispossibletolearnabouttenders,participateinonlineandgothequalificationprocess The usualpointofcontactforTernaanditssuppliersisthe Suppliers of trainingandtoimplementthePlansforTrainingaccess tofinancingonthepartofFondimpresa. consolidate anindustrialrelationsmodelofaparticipatorytype;alsothroughagreementonthepurposesandobjectives Finally, onNovember20,2012,animportantagreementwassignedwiththeNationalSecretariatsofTradeUnionsto Italia’s OperationsDepartment. Discussions alsobeganwiththeNationalSecretariatsoftradeunionsonneworganizationalmodelTernaRete was signedonFebruary18,2013. for theelectricityindustry,whichexpiredonDecember31,2012.TherenewedNationalCollectiveEmploymentContract During thesecondhalfof2012,negotiationswereheldforrenewalNationalCollectiveEmploymentContract the dispatching servicesmarketinorderto ensure remuneration thatbetter reflectcosts; 2010 andcontinuedin2011 which isaimedmainlyatpreciselyidentifyingtheservices renderedbytheoperatorson operators duringtheprevious consultations.Thedocumentsarepartofthereform the dispatchingrulesbegunin Authority ARG/elt211/2010and 180/2012/R/eel,andinordertoincorporateanumber ofobservationsformulatedby These areamendmentsprepared byTernaimplementingtheprovisionsofresolutions oftheElectricityandGas amendment tothedispatching rules(Chapters3,4and7oftheNetworkCodeannexes A.22,A.23,A.25andA.60). 2012 DevelopmentPlan; (mostlymembersofConfindustriaANIE),includingtherelatedprocurementplans.Theimportantaction “Procurement Portal” “procurement marketing” , thesectionofinstitutionalwebsite throughmarket which Ternaholdsthelicense. almost all Terna’s revenues with its orders, and defines the methods and conditions for carrying outthe business for Terna worksmainlyinaregulatedcontextandtheAEEGconstitutesmainstakeholder:throughitstariffsitdetermines AEEG -ElectricityandGasAuthority • • With referencetoEuropeanregulations,themaininformationconcerned: scenarios. Grid DevelopmentPlanwithparticularreferencetotheprogressofprojectsandonnewneedsdevelopment In thiscontexttheCommitteereceivedinformationandupdatesonimplementationstatusofNationalTransmission Terna providedconstantinformationtomembersoftheCommittee onitsactivitiesinprogressofinteresttooperators. In additionto the above themes, on which the Committee was formally called upon to express itsopinion,during2012 • • the wholesaleenergymarket,aimedatestablishingmonitoringof thecross-bordermarket. Regulation No.1227/2011EU(REMIT),thatistosaythenewlegislationonsubjectofintegrityandtransparency of Connection”, particular focusontheNetworkCodes“CapacityAllocationandCongestionManagementforElectricity”“Demand the initiativesinprogressEuropeancontextrelationtoprocessofdefiningNetworkCodeswitha The documentwasupdatedessentiallytoadjustitthefieldof application. A. 21-De-activationofoverheadlinesat380-220-150-132kVontheoccasionforestfiresordangeroussituations. the distributioncompaniesfromcasesinwhichinterventionof producersisnecessary,aftergivingnotice. grids in critical operating conditions, distinguishing cases in which generation plants can be disconnected directly by implementing thereductionofproductionfromdistributedgenerationplantsconnectedwithmedium-voltageelectricity voltage electricitygrids)intothenationalsystem.Thisdocumentdefines,inparticular,methodsof necessary integrationofdistributedgeneration(thatistosayproductionplantsconnectedwithmedium-andlow- of the National Electricity System (RIGEDI). The document is part of the measures adopted in order to ensure the Annex A.72totheNetworkCode-ProcedureforReductionofDistributedGenerationinemergencyconditions The approximately 250 observations received and the related responses were published on the Authority’s website. website. To facilitatetheconsultationprocess,aformforcollecting observationswasmadeavailableontheAuthority’s implementation oftheinterventionsincludedinPlan. consultation alsopublishedthemethodologybehindcost-benefitanalysesandresultsexpectedfrom needs andprioritiesprovidedforinthePlanhorizon,progressofprojectspreviousPlans.The the criteriaforpreparingtheirDevelopmentPlan,currentcriticalissuesingridoperation,development During twomeetingsattheAEEG,attendedbyallmainoperatorsandindustrialassociations,Ternaillustrated of theassessmenttoMinistryEconomicDevelopment(MED). Plan preparedbyTernatopublicconsultationforthefirsttime,makingresultsandsendingoutcome On thebasisofItalianLegislativeDecree93/11,in2012AEEGsubmittedTransmissionGridDevelopment the AEEG Public consultationontheDevelopment Plan promoted by 47 Terna Profile 48

2012 Sustainability Report SO5 rose intheoveralltable,reachingninthplace. from thirteenthtosixthoverall(secondbestimprover).Finally,asregardstheassessmentofcompany,in2012Terna businesses that haveimproved their relations with thepress over thelastyear,Ternahasclimbedsevenplaces,going up Terna isamongthebest-knowncompanies,achievingsixthplacein2011,andthirdenergyindustry.Among companies. and radiostations – onasampleof48companies to assessthequalityoftheirpressoffices,andfourthamongenergy economic andfinancialjournalists–representing37publications,includingdailies,weeklies,monthlies,pressagencies In the2012editionof Demoskopea’s “CityJournalists2012”survey Media, opiniongroups,andthescientificcommunity energy infrastructures. the EuropeanUnionwithaimofcontributingtoconsultationonproposedregulationsregarding package (e.g. European network codes). Discussions also began with the European Parliament and with the Council of institutions intheactivitiesofCommitteeMemberStatesonquestionsrelatingtoimplementationthirdenergy in theprocessofdraftingEuropeanlegislationreferenceforindustry,promotinginvolvementnational Terna also began an ongoing dialogue with national institutions, in particular with theMinistryofEconomic Development, on subjectsparticularlysignificantforthecompanyanddevelopment ofthenationalelectricitysystem. During 2012bilateralmeetingswiththePrimeMinister’sOfficeandinstitutionalworldalsointensified.These were • • • By wayofexamplewecannoteduring2012: of referenceforTerna’soperatingcontext. During 2012thecompanywasinvitedonseveraloccasionstotakepartinhearingsParliamentimportantquestions relating tolegislationgoverningtheindustry,authorizationprocedures andconsultationswithlocalcommunities. continual discussionswiththeRegionalandlocalauthorities,whicharecarriedoutbyTernaReteItalia,foractivities also intoattendanceathearings,meetings,conferencesandforumstopromotesharedinterests.Tothismustbeadded Assets and Heritage), with Parliament (House and Senate of the Republic), and with national associations, which translates institutions (Prime Minister’s Office, Ministry of Economic Development,Ministry of the Environment, Ministry forCultural The natureofTerna’sactivitiesimposestheneedforinvolvement,participationandconstantdialoguewithgovernmental National Institutionsandassociations up to2020. Energy Strategy,theGovernment’splanningdocumentofreferencesettingforthobjectivesandprioritiesforaction the hearingatSenateIndustryCommission(October9,2012)regardingfact-findinginvestigationonNational containing rulesonspecialpowersovercorporatestructures; the hearingatBudgetandFinanceCommissionsofHouseRepresentativesonItalianLawDecree21/2012 regulation; will beeligibleforauthorizationandregulationthenewcommunityco-financinginstrumentsprovidedinsaid and theEuropeanCommission,inproceduretodefineprojectsofcommoninterestforelectricityindustry,which Parliament andCouncilonguidelinesforenergyinfrastructures.Ternaisinvolved,togetherwiththenationalinstitutions the hearing at the Senate Industry Commission (March 21, 2012) regarding the proposed Regulation of the European “City Journalists” , TernacameinseventhoverallaDemoskopeasurveycarriedoutamong79 • • • between SicilyandCalabria).Overseeingmanagingthe agreement betweentheAssociations andTernaproduced: and onquestionsrelatedtoworkwithanimpactterritories withparticularfeatures(Sorgente-Rizziconi,energybridge were abletoexpresstheiropinionon:theDevelopmentPlan, newinvestments,infrastructuresandelectricitystorage, conduct ofitscorebusinessandtheactivitiesother Groupcompanies.Inthisway,theConsumers’Associations More specifically,Ternaworkedonguidingandmanaging consenttofacilitatetheagreed,participatedandtransparent common interest,relatingtothenationalelectricitytransmission grid,tobenefittheusers oftheelectricityservice. Difesa delCittadino,UNCandMovimentoConsumatori, aimed atagreeingonproposalsandactionssubjectsof Bolzano, Cittadinanza Attiva, Codacons, Codici, Confconsumatori, Federconsumatori,LegaConsumatori,Movimento ADICONSUM, ADOC,ADUSBEF,Altroconsumo,Assoconsum, Assoutenti,CasadelConsumatore,CentroConsumatori A greatboostcamefromthesigning,onApril16,2012,of aProtocolofUnderstandingwiththerepresentativesACU, Transmission Grid(NTG)DevelopmentPlanand,moregenerally, onsubjectsofcommoninterest. Activities to engage with consumers’ associations continued in 2012, facilitating direct discussions on the National Activity withConsumers’Associations participation inapproximately 30industryconferencesonenergy policies anddefendingconsumers. Plan, newinvestments,strategic infrastructuresforthecountry,accumulationsystems, cost/benefitanalyses; 14 seminars with Fondazione Consumo Sostenibile (the Sustainable Consumption Foundation) on the Development Robin TaxandtheSorgente-Rizziconiconnection; 6 publicpositionsonthe2011DevelopmentPlan,2012 Plan,accumulationsystems,regulatoryreview, The informationcollectedwillbediscussedatthehighestdecision-makinglevelandusedtoplanfutureinitiatives. • • • • • • The mainresultswere: units. on bytwodiscussionpanelsthatinvolvedatotalof20middlemanagersandexecutiveswithresponsibilityfor Finally, theresultsthatemergedfromquestionnairesandfocusgroupswereanalysedcommented middle managersattheRomeheadquarters,foratotalof40employees. – one withonlymanualworkers,theotherclerksandmiddlemanagers – andthethirdreservedforclerks Organization Department,threemeetingswereorganized,twoofwhichwithpersonnelfromaroundthecountry in anopendiscussionnotconditionedby On theinternalfrontfocusgroupmethodwaschoseninstead,asthisconsideredmostlikelytoresult Out of55questionnairessentout38werereturned,withareplyrate69.1%. and familiaritywithmanagementorCSRissues. was selectedonthebasisofthreecriteria:recognizedcompetenceintheirfield,knowledgeTerna’sbusiness The panelofexternalstakeholders,madeupacademicsandexpertsonsocialproblems,CSRcommunication, returned. or furthersuggestions,sometimesinvestigatedwithtelephonecallsoncethequestionnaireshadbeen Terna’s role.Thepresenceofopenfieldsintherepliesgaveintervieweesoptionaddingmoredetails impact; thesecondasurveyonsocialissuesconsideredgenerallysignificant,andtheirconsistencywith divided intotwolevelsofquestions:thefirstasurveyonwhatwehavedoneuptonow,understandreputational The studyinvolvedexternalstakeholdersandemployees.Fortheformer,weoptedtosendoutaquestionnaire, indications foraneffectiveandconsistentapproachtofutureinitiatives. The objectivewastoassessthedegreeofknowledgeaboutinitiativesalreadytakenand,aboveall,obtain stakeholders onitsinitiativesinthesocialfield. Between November 2012andJanuary 2013, Ternacarried out astudytofindtheopinionsofselected Terna’s multi-stakeholdersurveyoncorporatesocialcommitment a needtomaintainbalancebetweensocialandenvironmentalinitiatives. an invitationtoensuretheinvolvementofemployeesanddevelop partnershipswithnon-profitbodies; the country; a suggestion to takesuchinitiatives both at thecentral and thelocal level, inrelationtoTerna’sactivityaround issues: school,research,accesstoenergyinthepoorareasofworld,locallysignificantsocialproblems) a recommendationtoselectinitiativesinkeepingwiththeGroup’sidentityandbusiness(amongrelevant a desiretoincreasethiscommitment; a goodlevelofawarenessTernaascompanythatiscommittedinthesocialfield; a priori pointsofview.IncollaborationwiththeHumanResourcesand 49 Terna Profile 50

2012 Sustainability Report SO10 SO1 EU19 A summaryoftheactivitiescarriedoutin2012isshowntable below. The voluntarystageofpre-authorizationconsultationisfollowed by theauthorizationprocesssetoutlaw. • • • • activities, inparticularmeetingsto: The them, thusmakingitmoresustainableandacceptable development projectisrecognised.Inthisway hold discussionswithlocaladministrationsasearlypossible;rightfromthemomentinwhichneedforanewNTG To facilitateacceptanceofelectricityinfrastructuresbylocalcommunities,Terna,infact,considersitfundamentalto rearranging existingones. willingness tolistentheopinionsofstakeholdersandseekingasharedsolutionforlocatingnewinfrastructures involves sharingthedevelopmentneedsofNationalElectricityTransmissionGrid(NTG)withlocalinstitutions,a process ofpriorengagementwithlocalinstitutions(regionalandadministrations,ParkAuthorities,etc.).This Terna’s approachtolocalareas,whichisespeciallyimportantwhennewlinesmustbeconstructed,consistsofavoluntary Consultation withlocalgovernments Society andlocalcommunities define thefeasibilitybandofroutewithinpreferentialcorridorandformalizerelatedprotocolsunderstanding. apply thecriteriatolocalareaandidentifypreferentialcorridor inwhichtheworkistobeconstructed; agree onasystemofcriteriaforanalysingthelocalareaandselecting thealternativeswithleastimpact; Strategic EnvironmentalAssessment; define andformalizecollaborationforthesustainabledevelopmentofNTG,inkeepingwithpurposes voluntary pre-authorizationprocess , whichlastsonaveragefromonetothreeyears,providesforvariousspecific the conditionsarecreatedto“build”griddevelopmenttogetherwith . (*) Inthecaseofrearrangement/rationalization thisisnotonasinglelinebutsetof works,whichcannotbesummarisedinasinglemeasurement. MAIN COORDINATIONACTIVITIES Rationalization ofHVgridinUmbria(Umbria) "Chiaramonte Gulfi-Ciminna""powerline(Sicily) (Sardinia) "S.ta Teresa -Tempio -Buddusò""powerline Riccione –Riminilink power line("Avellino North-BNII"segment)" "Montecorvino -Avellino North-BeneventoII"" Puglia) "Deliceto -Bisaccia""powerline(Campaniaand Mineo/Vizzini 380/150kVStation Mineo/Vizzini Rearrangement oftheSorrentine Peninsulagrid Rationalization oftheMilangrid Rearrangement oftheFerraragrid 220 kVPartinico–Fulgatore powerline Santa Barbara–Tavarnuzze –Casellinapowerline Rationalization inMiddleValtellina Rationalization inValle D’Aosta line power 380 kVSorgente-SantaCaterinaVillarmosa Rationalization ofHVgridinthearea ofPotenza Rationalization inValle Sabbia(integration) Trans-Veneto powerline -VenetoSchio Station(Vicenza) "Fano (Pesaro Urbino)-Teramo" powerline Puglia) - Gissi(Chieti)"segment–Abruzzo,Moliseand (Pescara)"powerline("Foggia "Foggia -Villanova Work 380/220/132 kV 380/132 kV 380 kV 380/220/150 kV 380/220/132 kV 380 kV 220 kV 120 kV 380 kV 150 kV 132 kV 380 kV 380 kV 380/150 kV 380/220/150 kV 220/132 kV 380/220 kV 220 kV 380 kV 380 kV 380 kV Type about 95km Project beingdefined(*) 65 km about 35km Project beingdefined(*) Project beingdefined(*) Project beingdefined(*) Project beingdefined(*) about 60km 35 km Project beingdefined Project beingdefined(*) (*) (*) === Project beingdefined about 190km about 120km Length 9 Municipalities 1 Province 1 Region Coriano Municipalities ofRiccione,Rimini, 23 Municipalities 3 Provinces 1 Region 5 Municipalities 2 Provinces 2 Regions 11 Municipalities 1 Province 1 Region 15 Municipalities 2 Provinces 2 Regions Bodies involved 4 Municipalities 1 Province 1 Region 13 Municipalities 3 Provinces 1 Region 1 Region 1 Municipality 1 Municipality 1 Province 1 RegionProvince 2 Municipalities 1 Province 12-13 Municipalities 1 Province 4 Provinces 1 Region 11 Municipalities 2 Provinces 1 Region 1 MountainCommunity 2 Municipalities 1 Park 9 Municipalities 2 Provinces 1 Municipality 1 Municipality 1 Province 1 Region 1 Region 6 Provinces 22 Municipalities Number of meetings in 2012 10 10 12 14 32 8 4 1 2 6 4 3 8 5 7 5 1 2 4 3 6 51 Terna Profile 52 2012 Sustainability Report Authority withResolution No.155/2007. the poorserviceprovidedin Sicily onJune25and26,2007isstillformallypending.This inquirywaslaunchedbythe As wellasthetwofact-finding inquiriesdescribedabove,whicharecurrentlyinprogress, thefact-findinginquiryon performance ofenergymarkets. onthecorrect that thetechnicalconstraints have,bothonsecurelyoperatingtheSardinianelectricity system,and system inSardinia,aimedatidentifying the technicalcauses attherootofabovecriticalissuesandrepercussions With this measure, the Authority launched a further fact-finding inquiry on critical issues in managementof the electricity Fact-finding inquiryoncriticalissuesinmanagementofthe electricitysysteminSardinia Resolution ofOctober4,2012401/2012/R/eel possible speculativebehaviour. the other,atdefiningamoreefficientandeffectivemethod ofregulatingeffectiveimbalances;alsoinordertoprevent hand, at identifying any speculative behaviour on the part of dispatching users – and any consequent liability - and, on by usersofdispatchingwithdrawninSardinia,theAuthority launchedafact-findinginquiry.Itwasaimed,ontheone Following therepeatedoccurrence,duringyear2012, of certainbehaviourregardingsupplytotheelectricitymarket Urgent actiononrulesforelectricityimbalancesandlaunch ofafact-finding inquiryon energy markettrendsinSardinia Resolution ofAugust2,342/2012/R/eel During 2012theElectricityandGasAuthoritylaunchedtwofact-finding inquiriesofpotentialinteresttoTerna. Preliminary inquiriesoftheElectricityandGasAuthority • • • • during theprocesslocaloppositionmaypersist.Inthiscategory, during2012andinearlymonthsof2013,wecannote: The searchforagreedsolutionsentailsdifficultmediations andcanbedrawnout.Theresultsarenormallypositive,but service. provided thattheyarecompatiblewiththegeneralinterestsofsecurity,efficiencyandcost-effectivenesselectricity to examineandfindalternativesolutions,includingoneswhicharetechnicallymorecomplexthanthoseoriginallydefined, reactions attributabletotheNIMBY(NotInMyBackYard)syndrome.thesecases,Terna’sattitudeisoneofwillingness effort toactinagreementwiththelocalinstitutions.However,newinfrastructurecreationprojectsoftenprovokeadverse Terna considersrespectfortheenvironmentandterritoryanintegralpartofgridplanningactivitymakes Opposition totheconstructionofnewlines Disputes andlitigation their oppositiontotheroute. Farmers’ Union)andtheComunitàMontanadeiMontiAzzurri(MountainCommunityofAzureMountains)expressed of Macerataraisedobjections to therouteidentified. TheMarcheANCI(MunicipalitiesAssociation),Coldiretti(the the projectwereagreedon.Inlastfewmonthsof2012,andbeginning2013,MunicipalitiesProvince in theregionsinvolved(MarcheandAbruzzo).Theoptimalcorridorfeasibilitybandoffuturepowerlinefor The “Fano-Teramo”case: initiatives werebegunbyanumberofprivateindividualsandenvironmentalist associations. Mela presentedappealstocancelthesingleauthorizationissuedbyMinistryforEconomicDevelopment;similar safeguard theterritoryinvolved.During2010MunicipalitiesofVillafrancaTirrena,San Filippo delMelaandPace 100 meetings wereheldbyTernawiththeInstitutionsandlocalauthoritiesinvolvedtoidentifybestsolutions observance ofthelimitssetoutbylaw.Theconsultationanddialogueswithlocalcommunitiesbeganin2004:morethan overhead route,reconciling,inthebestpossibleway,needtoprotectenvironment,societyandhealth,full the MunicipalityofPacedelMela,togetherwith11othermunicipalitiesinMessinaarea,todefinition an studies whichled,inagreementwiththeSicilyRegion,ProvinceofMessina,MunicipalityVillafrancaand was despitethefactthatrouteoflineresultmorethan2yearstechnicalandenvironmental and tothepresenceofexisting380kV“Sorgente-Rizziconi”connectionpassingneartownsvillages.This opened, protestsbrokeoutintheMessinaarea(ValledelMela)relationbothtonewpowerlineunderconstruction The “Sorgente-Rizziconi”case: Friuli Rurale(CommitteeforRuralLifeinFriuli).Inthelastfewmonths of2012theoppositiondroppedoff. consent. Theargumentsaboutthepowerlineexplodedin2009andoppositionwasledbyComitatoperlaVitadel The “Redipuglia-UdineWest”case: have beenlodgedwiththeTAR(RegionalAppealsCourt).At end of2012theconstructionsiteswereopened. Territorio -EnvironmentandTerritoryCommittee),insupportofputtingthepowerlineunderground.Currently,appeals lodged anappealagainsttheMEDDecree.TheprojectwasalsostronglycontestedbyCAT(ComitatoAmbientee the MinistryofEnvironment(ME).TheMunicipality of Vigonovo,togetherwiththoseFossòandCamponogara, Padua andVenice)wasauthorizedinApril2011bytheMinistryforEconomicDevelopment(MED)agreementwith Rationalization betweenPaduaandVenice: workiscurrentlyintheconsultationstage.Starting2006,technicalforumsweresetup workiscurrentlyintheconstructionstage.In2011,whensites thelinewasauthorizedinDecember.InOctober2012Regionissuedits theDolo-Caminline(partofrationalizationprovinces

users. found inthedeterminationofelectricitysupplieswithdrawn fromtheNTGandnotcorrectlyattributedtodispatching provision ofelectricitytransmission,dispatchingandmeasurement services.Inparticularthedisputerelatedtoanomalies at theendofinquiryproceedingslaunchedwithResolution VIS171/09,forbreachingtheAEEG’sordersonsubjectof On the basis of AEEG Resolution VIS 16/11, during financial year2011, Terna SpA paid a fine –of 420,000euro – imposed observance oftheprovisionslaw. In the three-year period 2010-2012, no significant penalties were imposed regarding the environment or, more generally, • • In theperiod2010-2012: Penalties that thelikelihoodofadverseoutcomesisremote. Examination oftheabovelitigation,havingregardforinformationprovidedbyexternallegalconsultants,suggests of theiruse.Inanycase,unfavourableoutcomewouldnotjeopardiselineoperations. could, inadditiontotheawardofdamages,include,interalia,costsmodifyinglinesandtemporarysuspension In alimitednumberofcases,thepossibilityanadverseoutcomecannotbeentirelyruledout.Thepossibleconsequences contingencies”. unpredictable and,accordingly,havenotbeenconsideredwhendeterminingthe“Provisionsfordisputesandother and operationofcertaintransmissionlines.Thepossibleeffectsanyunfavourableoutcometothesecases are In addition,anumberofcasesrelatingtourbanplanningandenvironmentalissuesarependingregardingtheconstruction Other litigation such challengesmaybebornebytheAuthority. adopted bytheAuthorityaresometimessubjectofchallenges.Inappropriatecircumstances,economiccosts of transmission anddispatchingactivities,themeasurestakenbyParentCompanyTernawhenapplyingResolutions information providedbytheexternallegalcounselrepresentingCompanyincasesinvolved.Aslicensee for of adverse outcomes for Terna, since the matters generally regard pass-throughitems.Thispositionissupportedbythe first and/orsecondlevelcourts,togetherwiththeconsequentmeasuresadoptedbyTerna,itisfeltthattherelittlerisk case. Withinthescopeofthislitigation,althoughanumbercaseshaveseenAEEGResolutionsstruckdownin appealed against,butalsoallegethatTernaviolatedtherulesestablishedbysuchauthoritieshasCompanyjoined activities operated under the license. Only in those cases in which the plaintiffs not only claim defects in the measures Company hasbeeninvolvedinanumberofcases,mostappealingAEEG,MEDand/orTernameasuresrelatingto Given thatithasbeenthelicenseefortransmissionanddispatchingactivitiessinceNovember1,2005,Parent Litigation regardingconcessionaryactivities the appealsarestillpending,althoughadverserulingsconsidered unlikely. Only inafewcaseshaveadversejudgementsbeenissuedagainsttheParentCompany.Theseappealedand of casesincludeclaimsfordamagesharmtohealthcausedby electromagneticfields. legislation (ItalianLawNo.36ofFebruary22,2001andPrimeMinister’sDecreeJuly8,2003).Onlyaverysmallnumber change inoperationsofallegedly-harmful power lines,despite their beinginstalledinfullcompliancewiththeapplicable and thesubsidiaryTernaReteItaliaS.r.l.areinvolvedinvariousciviladministrativelawsuitsrequestingtransferor which could be derived from exposure to electrical and magnetic fields generatedbypowerlines.The ParentCompany Environmental litigation originates fromtheinstallation and operationofelectricityplantsprimarilyinvolvesdamages Environmental litigation ones, thatgaveTernaanobligationto“do/notdo”(e.g.,prohibitions) orconvicteditsemployeesforcrimes. monetary or non-monetary penalties were imposed for non-observance oflaws or regulations, including environmental unfair competition, anti-trust, ormonopolistic practices. Regardingthesematters,nodefinitiveadministrativeorjudicial, as ofDecember31,2012therewasnopending litigation nor hadanylegalproceedingsendedregardingcorruption, there werenodefinitivecriminalconvictionsorpleabargainingfor injuriestothirdpartiescausedbyTerna’sassets; EN28 EU25 SO8 SO7 SO4 PR9 53 Terna Profile

2012

Responsibility for electricity service 58 2012 Sustainability Report or servicesforendcustomers,suchasexplanatorycontentoflabels,marketing,andadvertising. Given thenatureofservice,Ternaisnotaffectedbyproblemsproductresponsibilitytypicalproducersgoods accessible tounentitledthirdparties. best practicesforprotectingsensitivedatainordertopreventsuchinformationfrombeingcommunicatedorbecoming concerned. For thisdata,andforthedatausedinmanaging economic relationshipswiththe grid users,Ternafollows with compilingthestatisticsofItalianelectricityindustry service users,particularlyelectricityproducers.Inaddition, The taskofoperatingtheelectricitysystementailsknowledgeconfidentialdataregardingtransmissionanddispatching overall economicbenefitstotheelectricitysystemoutweighcosts. ensure system efficiency and cost-effectiveness. Terna also selects development projects on the condition that the of EconomicDevelopmentandestablishesforththeconstructionnewpowerlineselectricitystationsneeded to The griddevelopmentobjectivesarepublishedintheDevelopmentPlan necessary toimprovevariousaspectsthataffectsystemsecurity. grid. Terna’s roleintheItalianelectricitysystementailsspecificobjectivesregardingsecurityanddevelopmentof the line withthetargetsset. among thesearethevarious service continuity measures. Terna’sperformanceinthelastfewyearshasalways been in established by the industry’s regulatory authority Our operatingobjectives development mustensureefficiencyandsecurityintheimmediate future,aswellforfollowinggenerations. The grid is Terna’s asset, but it is also essential infrastructure for the Italian nation. Its management, maintenance and This responsibility regards both everyday operation of the transmission grid and medium and long term considerations. of Italiansocietyfortheservice distribute andsellelectricity, Even thoughtheendusersofelectricity service arenotdirectcustomersofTerna,butrathercompaniesthat operation oftheentireelectricitysystemandtoensure foreveryone. National ElectricityTransmissionSystemOperator(TSO)toTerna.TheserviceprovidedbyTernaisindispensablefor interest performed,asinotherEuropeancountries,onthebasisofagovernmentconcessionwhichassignsrole Terna’s mainactivityistheprovisionofelectricitytransmissionanddispatchingservices.Theseareservicesgeneral Our approach The securityobjectivesarestatedintheSecurityPlanforelectricitysystem arethereforefirstofall the roleitperformsinelectricitysystemmakesTernaethicallyresponsibletoall . connected withobservingregulationsandmeetingspecifictargets (the AEEG,Electricity and Gas Authority). Particularly important Terna isentrustedbytheNationalStatisticalSystem , forwhichinformationiscollectedfromthecompanies , whichisapprovedeveryyearbytheMinistry , whichplanstheinvestments The nintheditionoftheSecurityPlanforyears2012-2015projectsinvestmentsapproximately242millioneuro. In 2012SecurityPlaninvestmentsamountedto63millioneuro. • • • • • • • The mainobjectivesachievedin2012were: major islandsbasedonelectrochemicalaccumulationsystems. provided forinthisPlanwhichcoverthecreationanduseofnon-conventionalsystemsfrequencyregulationon the To facilitatefullintegrationofthesesourcesandresolvecriticalsecurityissuesassociatedwiththem,newinitiativeswer e scenarios, characterizedbyimportantnewelements,includingincreasedproductiondistributedfromrenewablesources. The 2012Planalsoprovidesforprojectsaimedatmanagingthesystemunderexpectedmedium/long-termoperation and optimalmanagementofrenewableresources. control, regulationandprotection,restartingmonitoringoftheelectricitysystem,aswellanareadevotedto safe In fact,thecurrentstructureofSecurityPlanprovidesforeightsubjectareasrelatingtoactivitiesplanning, increasingly complex. planning period. In the various editions of the Plan the approach to the security of the electricity system has become of EconomicDevelopment. The Plan,whichin2012reacheditsninthedition,isdrawnupeveryyearwithafour-year The projectsaresetoutinthe reliability ofsupportingresources,andcoordinatingmanagementthesysteminterconnectedwithneighbouringTSOs. control, trainingoperators,developingnewmethodsinsupportoftheprocessplanningandincreasing preparing defenceplanstolimitmalfunctions,preventiveplanningofoperations,improvingthecapacityforreal-time For Terna,preventingandcontainingoperatingriskmeansmonitoringprotectingthephysicalintegrityofitsplants, consequences ofsucheventsasmuchpossible The objectiveistomaintaintheriskofserviceoutagewithinpre-establishedlimitsandmitigatenegative Terna performsthroughaseriesofactionsdeterminedbyscrupulous assessmentofoperatingrisks. Ensuring thesecurityofItalianelectricitysysteminterconnectedwithEuropeangridisasensitivetask,which The securityoftheelectricitysystem and Villanova). distributed generationfromrenewablesources(integrationofthenewPST-PhaseShiftingTransformersinFoggia implementation ofaprojectforcongestionandstabilitycontrolintheSouthernAreawhichisparticularlyaffectedby simulation andperformanceofthefirsttestonrestartingfromabroad (France); rapid frequencyregulationontheMajorIslands; launch ofanewinitiativefortheusenon-conventionalsystemsbasedonelectrochemicalaccumulationultra- implementation ofinstrumentsandoptimizationproceduresforcoordinated voltageregulation; introduction ofmechanismsfordefiningandprovidingmedium-term productioncapacity; on aseriesofHighVoltagelines,somewhicharecharacterized by highwindpowerproduction; testing ofmethodologiesforreal-timesecuritychecksonthebasisrealenvironmentalandoperatingconditions closer torealtime; development of toolstoforecastloadandgenerationfromrenewablesourcessupportdecisionsmadeever Security PlanfortheElectricitySystem iftheyoccur. , preparedbyTernaandapprovedtheMinistry EU6 59 Responsibility for the electricity service 60 2012 Sustainability Report EU8 • • • Also regardinginnovativesolutions,thefollowinginitiativesareplanned: the creationofnewnetworkinfrastructures(highvoltagelinesand stations). of existingassetuse),andbyimplementationtimescostswhicharetypicallylowerthanthosenecessaryfor These solutionsaregenerallycharacterizedbyreducedenvironmentalimpact(becausetheyenablemaximisation • • • • • • Among thesewecannote: directly connectedtotheNTG. infrastructure andthusfacilitatingintegrationofgrowingproductionfromrenewablesources,includingthosenot electricity system’sneedsforsecurity,reliabilityandefficiency,maximizingthetimelyflexibleuseofexisting In theDevelopmentPlan,Ternahasplannedactionscapable of ensuring,undervariousoperatingconditions,the with respecttoscenariosthatchangequicklyandunpredictably. One ofTerna’smainneedsistomakethetransmissiongriddynamic,i.e.capableevolvingrapidlyandeffectively Smart TransmissionSolutions operate withthetransmissiongrid. and modellingwhichwouldenableamoredetailedviewoftheload/generationondistributionsystemsthat Monitoring grids equipment toprovidemeasurementsdirectlyfortheanalysisand monitoring ofservicequality. Improvement oftheidentificationandcontrolgridwithdigitalsystems European Commission. Regions ofNorthernItaly.Theprojectisconditionalonthepossiblefinancingactivitiesenvisagedby systems requiredtointegratedistributedgenerationinanareastretchingfromtheSouthofFrance ItalianandFrenchTSOsDSOs(DistributionSystemOperators), andrelatestothedevelopmentof by the projectwaspresentedtoEuropeanCommission,incontextofConnectingEuropeFacility, Participation intheGREEN-MEproject initiatives basedonsmartlogicsaimedatimprovingtheprediction andcontrolofdistributedgeneration. improve theregulationofHighandVeryVoltagesystems; testing ofdiffusedaccumulationsystemstomaximizetheexploitationpowerfromrenewablesourcesand wind powerproductionstartingfromtheSouthandSicily; for applyingthemethodpurposesofprogressiveimplementationanddiffusiononcriticalrouteshigh temperature (DynamicThermalRating-DTR).Thetestingwillmakeitpossibletodefinetypesandstandards use ofhigh-capacityconductorstomaximizethetransportcapacityexistinglinesalsoonbasis consequent costreductionfortheDispatchingMarket; installation ofreactorsandcondensersforpropermanagementreactivepowerflowsonthegrid,with installation ofsynchronouscondenserstoimprovethestabilityand operating securityofthesystem; Very HighVoltagegrids; installation ofelectricalequipment(PST- : thegrowingimpactofrenewablesourcesalsoondistributiongridscallsfordatacollection (GridintegrationofRenewableEnergysourcesintheNorth - Mediterranean): Phase ShiftingTransformers ) forpowerflowcontrolontheHighand : exploitingthepotentialofdigital ( illicit usebyunauthorizedusersofpersonaldataentrusted toTerna,eitherviathespecificmailboxforsuchnotifications In thefieldofpersonaldata protection, asinprevious years,no complaintswerereceived regarding breachesofprivacy or • • • • Among themostsignificantinitiativesandprojectsin2012wecan note: monitoring. its mechanismsforICTsystemsecurity,focusinginparticularonfine-tuningtoolsandprocessescontrolling and partners andstakeholders,aboveallviatheInternet.Therefore,infaceofincreasedICTrisk,Ternastrengthened made all the more relevant by its business areas’ need to expand interconnections anddigital exchanges with external technical‑scientific bodies.Alsointermsofcriticalinfrastructure,Ternapaidgreatattentiontothisevolvingscenario, ICT networks and systems of companies and organizations, recorded in detail by many international institutional or The year2012sawafurtherstageofquantitativeandqualitativegrowthintherangecyber-threatsagainst the of implementation),andonspecificsecurityprocesses. international standards,builtaroundastructuredframeworkofpolicies(withrelatedroles,responsibilitiesandmethods make theapproachsystematic,TernahasadopteditsownInformationSecurityGovernancemodel,basedonmajor together withasignificantexpansionprogrammeoftechnicalandorganizationalprotectioninstruments.Inorder to from operatorsandotherpartners,Ternausesarisk-analysisprocesstodeterminethreatsinformationICTassets, To respondtoconstantlyevolvingsecurityneeds,andthelegalrequirementsonprocessingofpersonaldataobtained of operationalcontinuityandeffectiveprocessessolutionsfor cyber-security. systems insupportofoperationsontheelectricitysystem,TernaGrouphasforsometimemaintainedhighstandards Additionally, byvirtueofagrowingcommitmentto“Information&CommunicationTechnology”(ICT)infrastructureand • • unauthorized thirdpartiesorsubjecttoillegalbreaches.Anidentical approachisalsoadoptedfor: management actions,inordertoestablishprotectionstrategiescapableofensuringitdoesnotbecomeaccessible Considering itssignificantcommercialvalue,duringlifecyclethisinformationissubjecttoadequateclassificationand injection planspresentedtotheElectricityExchange. traders. Such information includes, for example, data on plant specifications, withthe relatedproduction capacityand its database,includingdataontheusersoftransmissionanddispatchingservices,inparticularelectricityproducers Due toitsroleintheelectricityindustry,Ternaholdsandconserveslargequantitiesofbusiness-sensitiveinformation Information security [email protected] and thechangesintroducedonsubjectbyParliament between theendof2011and the beginningof2012. the reviewofoversightPrivacyrules,toupdatethem inviewofboththeGroup’sneworganizationalframework the natureofmanycontrolsimplemented–forentiremanagement oftheGroup’sICTservicesandinfrastructures; practices valid at the international level, not only in the area of TIMM certification, but also more generally - owing to represents animportanttest,acknowledgementthatTerna continuestocorrectlyapplythesecurityprinciplesand Mercato Elettrico - Integrated Rules for Electricity Market Monitoring) achieved during 2011. A year on, this confirmation confirmation oftheISO/IEC27001:2005certification theTIMMservice(TestoIntegratoperilMonitoraggiodel procedures, withthecommonpurposeofminimizingimpacts ontheGroup’sresources; networks; thepositiveresultbeingbothareductioninadverseeventdetectiontimes,andimprovedrapidresponse allowing moreeffectivecontrolofthephysicalandlogicalsecurityelectricalplantssystemscomputer a furtherstageofextensionthereal-timemonitoringservicesprovidedbySecurityOperationsCenter(SOC), of suchrisksbyattackers.ThisfacilitatestheworkICTstructures responsiblefor“remediation”actions; detailed vulnerabilityelements,indicationsregardingtheassociatedrisk,thustakingaccountofreal“exploitability” Group’s ICTassets(workstations,serverfarms,networks,etc.)–isnowalsocapableofproviding,togetherwith systematic ICTvulnerabilityanalysisactivities.Theplatform–whichhasreachedahighdegreeof“coverage”the perfecting theadvancedcorporateplatformforvulnerabilitymanagement,whichmakesTernaautonomousinperforming no. 115/08 oftheAEEG). the datamadeavailabletoindustryAuthorityformonitoringElectricityMarket(asprovidedinResolution framework oftheNationalStatisticalSystem; the datacollectedfromindustrycompaniesforcompilingstatistics,ataskperformedbyTernawithin ) orviaanyotherreportingsurveychannel. EU21 PR8 61 Responsibility for the electricity service 62 2012 Sustainability Report EU29 EU28 Target 2010 RealASATarget 98.900 99.000 99.100 99.200 99.300 99.400 99.500 performance. Theperformanceachievedin2012exceededthetargetset. by voltagelevel),gridareas,or–asinthiscasetheentireNationalTransmissionGrid.Thehigherlevelofindicator,betterservice Average availabilityoftheelectricitygridcomponentsforuseinagivenperiod.Thisindexcanbeexpressedwithregardtospecificcategories(for example, Average SystemAvailability(ASA) AVAILABILITY INDICATOR provide importantinformationonthequalityofenergysupplies. since 2006,incollaborationwiththeendHVcustomersanddistributorcompanies.Thedevicesinstalledon grid In 2012thecampaigntomeasurevoltagequalitydataatTerna’splantscontinued,usingmonitoringgridinservice bonuses andpenaltiesplanforperformancewithrespecttopre-set targets(seetheparagraphonpage77). Since 2008continuityhasalsobeenanobjectiveencouragedbytheElectricityandGasAuthority(AEEG),meansofa NTG: theanalysisoflatterdoesnotshowsystematictrends. are bothexternalfactors,suchasweatherconditions,andevents(forexamplefaults)attributabletomanagementofthe index moveswithinaverysmallrangeinratiototheoverallservicemeasured.Inaddition,amongcausesofchange It shouldbenotedthatthechangeinindexesperiodconsidereddoesnotrevealsignificanttrends:facteach Code. “quality of service and conduct of Terna NTG plants”, defined by AEEG Resolution No. 250/04 and the Terna Network improvement objectives. In the following pages we present in particular the performance of the reference indexes forthe Terna hasalways monitored the quality of theservice provided usingdifferentindexes,andidentifiesannual targetsfor quality. the availabilityofelectricitywithoutagesbelowpre-establishedthresholdsandappropriatestandardstechnical of theelectricitysystem–generation,transmission,anddistributioncontributetofinalresult:ensuringsociety Continuity isthemostimportantparameterformeasuringperformanceofelectricityservice.Allsegments Service continuityandquality 99.027

99.050 2002 99.123

 2003

Target 2011 99.152 2004 99.262 2005

99.050 99.212 2006

 99.278 2007

Target 2012 99.151 2008 99.034

99.050 2009 99.225 99.050

 2010 Target2013 99.050 99.325 2011 99.050 99.317 2012 99.050 99.050 2013 Target 2010 SAIFI+MAIFI(number/period)Target 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 The performanceachievedin2012wasalittleworsethanthereferencetarget(from 2012 theindicatoralsoincludesTelatNTG). 3 minutes) interruptions,andthenumberofusersNationalTransmissionGrid.Thelowerlevelindicatorbetterserviceperformance. This interruptionfrequencyindexiscalculatedastheratiobetweennumberofcustomersinvolvedinshort(lessthan3minutes)andlong(more Short AverageInterruptionFrequencyIndex+Medium Index(SAIFI+MAIFI) CONTINUITY INDICATOR Target 2010 AIT(minutes/period)Target 0.20 0.40 0.60 0.80 1.00 1.20 indicator includesalsotheTelatNTG). the levelofindicatorbetterserviceperformance.Theperformanceachievedin2012wasthanreferencetarget(from period (ENS) and the average power absorbed by the electricity system in the period in question. The figure is rounded to the second decimal. The lower Average interruptiontimeoftheelectricitysystemsupply(NTG)inoneyear.Thisiscalculatedasratiobetweenenergynotsuppliedoveracertain Average InterruptionTime(AIT) SYSTEM CONTINUITYINDICATOR 0.21 0.62

0.22 1.00 2002 2002 0.22

0.91   2003 2003

Target 2011 Target 2011 0.22 0.94 2004 2004 0.68 0.18 2005 2005

0.22 1.00 0.21 0.56

  2006 2006

Target 2012 Target 2012 0.23 1.00 2007 2007 0.22 0.69 2008 2008

0.22 1.00 0.19 0.55 2009 2009

  0.14 0.89 Target2013 Target2013 0.22 1.00 2010 2010 0.14 0.22 1.00 0.49 2011 2011 0.22 1.00 0.22 1.00 0.23 2012 2012 0.57 0.22 1.00 2013 2013 63 Responsibility for the electricity service 64 2012 Sustainability Report • In particular: period. Thisyear,the2013Planismadeupofacoredocument withthreeappendicesofmoredetailedinformation. The in pastyears. development projects Every yearTernapreparesa implementation isthatthecollectiveeconomicbenefit thiswork generatesishigherthan itscost. work that Terna plans and carries out also has positive repercussions on society: in fact the assumption underlying its with theevolutionofproductioncapacityandconsumption, andtoincreaseitsefficiencysecurity.Thedevelopment To meettheseneeds,everyyearTernaprepares The combination of these elements changes the flows ofelectricity in the system, causingcongestion onthe existing grid. consumption ofelectricity.Bothsupplyanddemand electricitygrowatdifferentratesinareasofItaly. The transmission grid must gradually evolve and expand in accordance with developments in the generation and Grid development (1) Target 2009 process] ENS(MWh)[internal ENSR(MWh)[AEEGregulated] Target 0 200 400 600 800 1,000 1,200 1,400 1,600 The finalcalculation,bytheAEEG,ofENSRindicatorfor2012isnotyetavailable. the targetsetintermsofnewindex. majeure events or significant events connected userscausedbyeventsonotherconnectingnetworksthatarenotpartoftheNTGandashareenergysuppliedbecauseforce incentives andpenalties,which,amongotherthings,adoptedanewdefinitionoftheindex.Theindexalsoincludesenergynotsuppliedtodirectly Since 2008,withitsResolutionAEEG341/07,theAuthorityhasregulatedqualityofserviceprovidedbyTernathroughamechanismbasedon Regulated EnergyNotSupplied(RENS) the sharescausedbysignificantincidents This indicatorregardedtheenergynotsuppliedtousersdirectlyconnectedNTGasaresultofeventsthataffectedlatteranddidconsider Up until2007theEnergyNotSuppliedindicatorwasusedasaninternalprocessforpurposeofcontinuallyimprovingTerna’sperformance. Energy NotSupplied(ENS) SERVICE CONTINUITYINDICATOR

deriving fromimplementation oftheDevelopmentPlanitself; forecast scenariosandnewdevelopment needswhichemergedduring2012,theaction prioritiesandexpectedresults and criteriaintowhichthetransmission gridplanningprocessisdividedinthenational andEuropeancontext,the the which decreases astheenergynotsuppliedduringasinglesignificantincidentincreases. A “significant event” is taken to mean any interruption with net energy not suppliedexceeding 250 MWh.The share affecting the RENSindexis a percentage 2013 DevelopmentPlan 2013 DevelopmentPlan

367 1,425 MWh 2002 envisagedforthenext10yearsandstageofprogress statusofdevelopmentworksplanned 555 isconcernedwiththetransmissiongriddevelopmentinvestments fallingwithinthe2013‑2022 2003 (1) . The lower the level of the indicator the better the service performance. The performance achieved in 2011 exceeded constitutesthecentraldocument whichdescribestheframeworkofreference,targets Transmission GridDevelopmentPlan(DP)

 (1) .

576 Target 2010 2004 424 2005 grid developmentinvestmentprogrammes

1,397 MWh 358 2006 644

 2007

containingthe Target 2011 1,166 2008 800

2009 national transmissiongrid 1,369 MWh 1,425 , soastostayupdate 2010 1,238 1,397 1,210 1,369 2011 MAIN WORKSOFTHEDEVELOPMENTPLANAUTHORIZEDANDINAUTHORIZATIONPROCESS Main griddevelopmentactivitiescurrentlyunderway the newdevelopmentprojectsandon2013Planasawhole. Consultation Committee(seetheparagraphonStakeholderInvolvement),whichexpressedafavourableopinionboth For feedbackonstakeholders’mainexpectations,the2013PlanwasalsosubmittedforassessmenttoGridUsers’ January 29, 2013,andsubsequentlytothecompetentInstitutionsinvolved. for thepurposesofapprovaltoMinistryEconomicDevelopmentandElectricityGasAuthorityon Approved byTerna’sBoardofDirectorswitharesolutiononDecember19,2012,itwassentforopportuneassessment The 2013DevelopmentPlanisavailableonTerna’sinstitutionalwebsiteinthesectiondevotedto • • • Appendix 3 characterized thenationalelectricitysysteminrecentyears; Appendix 2 regulatory measuresintheindustry; Appendix 1 of themaindevelopmentprojects. - - - Italy-France Technical andeconomicassessments Main aspectsoftheelectricitysystemandmarkets Details of evolution of the legislative framework of reference Trino-Lacchiarella

Chiaramonte Gulfi-Ciminna

Montecorvino-Avellino Udine-Redipuglia providesfurtherinformationontheeconomicsustainabilityanalysis Dolo-Camin Colunga-Calenzano describesthemainphenomenaandtrendsthathave contains details of recentlegislative and Paternò-Pantano-Priolo Under construction/authorized Sorgente-Rizziconi Awaiting authorization Cavi MelilliPriolo Villanova-Gissi EHV gridReinforcements Cavi MelilliPriolo Gissi-Foggia North CalabriaReinfor Italy-Montenegro Feroleto-Maida Foggia-Benevento Deliceto-Bisaccia cements

Electricity System - . 65 Responsibility for the electricity service 66 2012 Sustainability Report (4) • • • The mainconstructionsitesopen in2012aresummarizedbelowtogetherwiththerelated projects: national transmissiongridwith ever-greaterattentiontoenvironmental andsecurityissues. connect newgeneratingplants(especiallythoseusingrenewable energysources),andincreasethereliabilityof The mostimportantworkstillinprogressbeingcarriedout during2012involvedactivitiestoreducenetworkcongestion, Main constructionsitesopen • • • • • • • In additionthemainprojectswithauthorization procedures beguninpreviousyearsandstillprogressarelistedbelow: • • • During 2012,Ternabegantheauthorizationproceduresforvariousimportantdevelopmentprojects,including: Main worksattheauthorizationstage • • • • • • During 2012,Ternaobtainedauthorizationforanumberofimportantdevelopmentworks,including: Main worksauthorized • • • • • • • • The mainworkscompletedduring2012werethefollowing: High andVeryVoltagelinesintooperation. In 2012,Ternaincreaseditstransformationcapacitybyabout10,500MVA Main workscompleted

installation of PST( rearrangement ofthe150kVgridinSorrentinePeninsula. interconnection oftheCampanianIslandstocontinentalgrid; connections at 150 kV in submarine cable “Capri - Torre Annunziata” and underground cable “Cuma – Patria” for 380 kV“Feroleto–Maida”Trans-Calabriapowerline; authorized inJanuary2013; as partoftheworkdoublingprimaryAdriaticbackbone,380kV“Villanova–Gissi”stretchpowerlinewas Musocco 220/132kVstationandrelatedconnectionstotheNTG,neededforExpo2015inMilan; Centre”, “Polytechnic-TurinSouth”,“Martinetto–Levanna”and“PianezzaPellerina”; in the context of rationalizing the Turin grid: 220 kV Polytechnic electricity station and 220 kV cable lines “Stura – Turin removed andnumerousminorprojectswerecarriedout. 380 kVand150electricitystationswerebuilt,numerouslimitationsoflongstretchesthegrid in relationtoplantsdesignedcollectanduseenergyproductionfromrenewablesourcestheSouth,important to theNTG; electricity station ofScilla, in Calabria, with thecommissioning of the 150 kVsectionandoftheHVcable connections kV as regardstheSorgente–Rizziconi380kVconnection,firststageofworkwascompletedin380 in undergroundcableconnectionsarebeinginstalled); construction ofthe380/150kVelectricitystationAlianoandassociatedconnectionstoH&VHVgrid(150 kV 380 kV line; construction of the 380/150 kVelectricity station of Castellaneta, inserted ininput-outputonthe “Matera – Taranto” expansion ofthe150kVsection380electricitystation BrindisiSud; and Feroleto; installation of 285 MVAr, 380 kVreactances at the 380 kV electricitystationsof Scandale, Aurelia, Montalto, Santa Sofia and electricitystationinSF the new220kVundergroundcablepowerlines“Pellerina–Levanna”,-TurinWest”,Martinetto” energy flowsontheH&VHVgridofCentre-South; (Lombardy) andVillafranca(Sicily); creation ofseveral150kVcable connectionsatthe380kVelectricitystationsofAliano (Basilicata),Lacchiarella 380 kVpowerline“Feroleto- Maida”,lengthapproximately13km; 380 kVpowerline“Foggia-Benevento II”,lengthapproximately 85 km; 380 kVpowerline“ChiaramonteGulfi-Ciminna”inSicily. 380 kVpowerline“Paternò-Pantano–Priolo”inSicily; line, toincreasetheexchangelimitsonCentre-South, South section; the “AvellinoNorth-Montecorvino”stretch;partof380 kV“Montecorvino–AvellinoNorthBeneventoII”power Rearrangement oftheNorthCalabriangrid; South; 380 kV “Deliceto - Bisaccia” power line to facilitate the energy production of plants using renewable sources in the 132 kV“Elba-Continent”powerline; 380 kV“Redipuglia-UdineOvest”powerline; electricity stationsofS.Teresa,NuraminisandSelegasforthemesh ofthe150kVgridinSardinia. connections at150kVtofeedinthewindpowerproductioneastofTroia380/150electricitystation; 380 kVpowerline“Foggia–LarinoGissi”,aspartofthedoublingprimaryAdriaticbackbone; Of whichabout7,200 MVA related to thePST- Phase Shifting Transformers 6 ofPellerina( Phase ShiftingTransformers Rat. 220kVcityofTurin ) inthe380kVelectricitystationsofFoggiaandVillanova,tooptimize - installed in the Villanova andFoggiaplants. -installedintheVillanova ); 4 ofpowerandputmorethan30kmnew

of thenewVHV/HV collectionstations. limitations and expansionsofportionsHV gridandlocalrearrangements oftenrelatedtoinsertionon theprimarygrid for new380/150kVcollection andtransformationelectricitystations,new150–132kV switchingstations,removalof The development projects on the 150kVtransmissiongridregardmanyItalian regions intheSouthandmainlyprovide SOURCE SYSTEMS MAIN ACTIONS ON THE380 The figurebelowshowsasummaryofthemaindevelopmentprojectsthatinvolveVeryHighVoltagegrid. enabled us to identify actions for both the primary 380–220 kV transmission grid,and on the 150–132 kV highvoltagegrid. The grid analyses carried out in order to facilitate the use and development of production from renewablesourceshave energy derivingfromtheproductionofrenewablesourcesystems. Terna insertedaspecificsectionintheNationalDevelopmentPlanwhichdefinesactionsnecessaryforfulluse of the Implementing Directive2009/28/ECandtheNationalActionPlan(NAP)preparedbyMinistryofEconomicDevelopment, Projects setoutintheDevelopmentPlanforuseofenergy producedbyrenewablesourcesystems www.terna.it/default/Home/SISTEMA_ELETTRICO/CantieriTernaPerItalia.aspx made ontheworksincludedinDevelopmentPlan.See: web platform,whichsinceMarch2011hasmadeitpossibletovisualizeup-to-dateonlineinformationontheprogress Following anapproachbasedontheutmosttransparencytowardsitsstakeholders,Companyhasdevelopedanew • • • • • • At thesametime,during2012workbeguninpreviousyearscontinuedonfollowingprojects: • • • and abayfortemporaryconnectionofthewindpowerproducer has beeninoperationsince20December. 380 kVelectricitystationsforconnectingrenewablesourcesystems:workhasbegunonthestationofErchie, is 70%complete,andontheSicilianside,workpowerlinebetweenVillafrancaSorgenteinprogress; the sub-horizontal gallery at Favazzina arecurrently being dug.Inaddition,workon the 380 kV overhead lineinCalabria of submarinecablesbetweenVillafrancaandFavazzinahasbeenlaid,includingthefirstopticalfibrecable;tunnel (Sicily) isnearingcompletion;thesiteof380kVelectricitystationVillafrancabeingprepared;firstline new 380kVsubmarinecableconnection“Sorgente-Rizziconi”:theworkatelectricitystationofSorgente in theprovinceofMilan,measuringmorethan100kmlength,workonwhichisatanadvancedstage; new 380 kV double three-phase power line joining the 380 kV stations of Trino, in the province of Vercelli, and Lacchiarella new HVDCconnectionItaly–Montenegro(“VillanovaLastva”) for energyexchangeswiththeBalkanregion; rearrangement ofthegridbetweenVeniceandPaduaincluding the 380kVpowerlines“Dolo-CaminFusina”; new HVDCcableconnection“Grand’Ile–Piossasco”toincreasethetransportcapacityonnorthernborderwithFrance; construction ofanew380/150kVelectricitystationinManfredonia (Puglia). installation ofa285MVAr380kVreactorattheTeramoelectricity station; section, andinstallationofanewATRtoconnectplants; expansion oftheexisting380kVelectricitystationsFoggia(Puglia)andScandale(Calabria)withafurther150 kV HVDC Sardinia-Corsica-Italy (SA. k V GRIDNECESSARY FOR FULLUSEOFENERGYDERIVING FROM THEPRODUCTION OF RENEWABLE CO.I. 3) Partinico-Fulgatore Development ofCalabria-Basilicata- 380 kVFoggia-Benevento Campania 380kVgrid 380 kVSicily Adriatic backbone Laino-Altomonte Doubling EHV/HV Collectionstations EHV gridReinforcements 380 kVDeliceto-Bisaccia 380 kVSorgente-Rizziconi Calabria Transv. 67 Responsibility for the electricity service 68

2012 Sustainability Report EU23 already updatingthecentralizedplatform. better andmorerapidlytotherequirementsofCommission’s Regulations,theEuropeangridoperatorsare guidelines onthesubjectoftransparency,preparedwithintense involvementoftheENTSO-E.Inordertorespond the publicationofprivilegeddataandinformation.During 2013, theEuropeanCommissionwilladoptcommunity The ENTSO-Econtributestoenergymarkettransparency, throughtheestablishmentofacentralizedplatformfor Transparency ofthemarkets must beapprovedbytheEuropeaninstitutionstothenbecome binding by2014. for ACER’sopinionin2012,whiletheremainingsixwillbeassessed byACERduring2013.Allthecodes,however, Two of thecodesonsubjectofconnection, and oneonthesubjectofmarket,werealreadybeensubmitted In ordertoachievethis2014objective,theENTSO-Eis already workingoncomposingnineNetworkCodes. completing theintegrationofnationalandregionalelectricity markets. account thepoliticalconclusionsofEuropeanCouncilFebruary4,2011,whichfixed2014astermfor provides forthecompositionoftwelveEuropeanNetworkCodeselectricityindustryandwhichtakesinto In 2011,theEuropeanCommission,ENTSO-EandACERestablishedathree-yearworkprogrammewhich supra-national and binding legislative acts which will prevail over the national codes as regards cross-border questions. TERNA’S commitmentinENTSO-E2012 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 (excluding AlbaniaandKosovo). the countriesofSouth-Eastern Europe countries,including belonging to34 TSOs Operators, whichrepresents41 European NetworkofTransmissionSystem Terna isamemberoftheENTSO-E, (ACER). Cooperation ofnationalEnergyRegulators Commission andtheAgencyfor out inclosecoordinationwiththeEuropean The activitiesoftheENTSO-Earecarried of all grid operators at the community level. been theofficialorganizationforcooperation ENTSO-E, whichisbasedinBrussels,has EU’s so-called“ThirdEnergyPackage”,the Since March3,2011,underthetermsof through theComitologyprocess,becoming be adoptedbytheEuropeanCommission with thereferencestakeholder,theywill finalized, includingaprocessofconsultation the electricitysystem:oncetheyhavebeen the market and to operation of users), to the grid(generators,distributorsandend Network Codesrefertoconnection with theACERguidelines.TheEuropean European Commissionandinconformity of theannualprioritiesdefinedby European Network Codes, on the basis The ENTSO-Ehasthetaskofpreparing European NetworkCodes • • the NTG. of thirdpartyconnection,whentherequestsreceivedbylatteralsodetermineneedforexpansiontowards for coordinatinginterconnectionbetweenthegridsofotheroperators,suchasdistributorsand/orwithobligation particular, TernaisresponsibleforconnectingtotheNationalTransmissionGridplantswithpowerofatleast10MW, and on thebasisofcriteriathatenablecontinuityandoperatingsecuritygridwhichnewplantistobeinserted. In Terna has an obligation to connect all potential users that request connection to the Grid, identifying connection solutions Connecting newplants Connectionrequest peryear[No.]Total validrequests [No.] (plants thatarenowoperating)andtheexpiryofcertaininitiatives. agencies incharge.The2012reductionislinkedbothtoplantsthathavecompletedtheirowngridconnectionprocess the validrequests,processedbyTernaovertime,forwhichauthorizationprocedureisstillunderwaywith on the regulatory front, today there is a contraction in the requests as incentives decrease. The cumulative curve lists procedure describedwasstarted.Thegraphrevealshow,againstaninitialacceleration,pushedbythestrongincentives The followinghistogramshowstheconnectionrequestsreceived by Ternastartingin2005,theyearwhich Terna’s responsibilitytodefineadetailedtechnicalsolutionwhich allowsthefinalphaseofprojecttostart. on theassessmentofimpactsplanttobeconnectedwillhavegrid.Afterauthorisation,itisonceagain - necessaryinordertoobtainauthorizationfromtheagencieschargewhichincludesaconnectionsolutionbased times andcosts.Terna’sactivitiesincludeinitialpreparationsendingoftheconnectionestimatetoapplicant current regulations govern manystages of theprocessprovidingaccesstogridinfrastructure,establishing Activities toprovideaccessthegridinfrastructureisregulatedbyElectricityandGasAuthority(AEEG).The the nextthreeyears. Plan, whichdefinesthepriorityR&DthemesEuropeantransmissionsystemoperatorsmustlaunchin to beclosedinorderachievethe20-20-20communityobjectivesset2009,anda2014-2016Implementation 2012, theENTSO-Epublished a Ten-Year 2013-2022 of EuropeanResearchandDevelopmentPlansregardingtheelectricitytransmissionindustry.Forthisreason,in Among the numerous mandates assigned to the ENTSO-E by the Third Energy Package, there is also publication “Energy Roadmap2050”,inordertocompletedecarbonisation of theEuropeanelectricitysystembythatdate. development of the“Electricity Highways” of 2050,inserted among theobjectivesofEuropean Commission forecasts onthestateofgridin2030.Thisvisionfor2030representsanintermediatestepmodular scenarios and adequacy of the European electricity system. In addition, this editionwill,for the firsttime, feature up ofsixregionalinvestmentplans,theDevelopmentPlanforEuropeangrid,andreportonforecast other TSOs,Ternaisalreadyworkingonthenexteditionwhichwillcomeoutin2014.ThenewPlanbemade The Planispublishedeverytwoyears:the2012editionwasinJuneoflastyear.Togetherwith those derivingfromauthorizationprocedures. In addition, the TYNDP identifies the need todevelop cross-border capacity and any possible obstacles, suchas investment plans,andtakingintoaccountthecommunityguidelinesregardingtrans-Europeanenergynetwork. The ENTSO-E prepares the Ten-Year European Network DevelopmentPlan(TYNDP),startingfrom the national Ten-Year EuropeanNetworkDevelopmentPlan 239 2005 250 482 393 2006 980 770 2007 2,116 1,142 2008 Roadmap 2,636 790 2009 , whichidentifiestechnologicalgapsneed 3,335 1,065 2010 3,485 2011 568 3,161 2012 288 69 Responsibility for the electricity service 70 2012 Sustainability Report EU6 EN12 replaced approximately3,100kmofenergyandguardwires. Special Maintenance: quality andcontinuity. Performed withthelineinoperation,suchworkincreasesplantavailabilityandcontributestoimprovementofservice Live-line working(LLW): During 2012,vegetationwascutalong15,300kmofelectriclines. in branchremovalaimedatkeepingtreesasafedistance.Herbicides areneverused. Vegetation control normally consists of cutting it down to the ground or – ifthereare particular environmental restrictions – interruption. of vegetationandpreventitfromgettingtooclosetoenergyconductorscausingpossibleshortcircuits line Controlling Vegetation: Intelligence it has madeuse of anspecialsystemtosupportlineandstationmaintenanceworkcalledMBI( integrated remote-managementsystem,onlinesensors,andtheresultsofplantmonitoringprocess.Since2005, Ordinary Maintenance: • • • Plant monitoringandinspection: The mainactionsperformedin2012withregardtoelectricitystations andlineswerethefollowing: superimposed onageo-referredmap. malfunctions, Terna’sworkersuseahand-helddevicethatincorporatesnavigationsystemshowsalltheplants To ensurethatplantscanbeidentifiedimmediatelyandreachedasquicklypossible,especiallyintheeventof Plant maintenanceisessentialforensuringservicequalityandcontinuity. Plant maintenance pinpoint thecoronaeffectoninsulatorsandconductors,alsoclimbing pylonswithLLW(live-lineworking)techniques. made around 19,800 instrumental checks, using thermal cameras to identify hot spots, and DayCor UV cameras to to anaverageofabout2inspectionsperyear; carried out inspectionswith visual checksonaround142,800kmoflines,10,000whichbyhelicopter,amounting performed about20,900periodicaltechnicalandsurveillancechecks onstationsatthedifferentvoltagelevels; a significantportion(approximatelyonethird)oftheNational Transmission Grid. In viewofthepositiveoutcometesting,from2013 newmonitoringmethodwillbecomeoperationalon on theground. In additionthismethodreducessurveytimesandmakes theprocessindependentofenvironmentalconditions Transmission SystemOperators. the registrationofresultsinstrumentsurveys,in linewiththebestpracticesofleadingEuropean with itsownpersonnelinhelicopters,ordertoimprovediagnostics, andtomakelinecontrolsobjective,through In 2012,Ternabegantestinganewmethodforvisualand instrumental monitoringofHighVoltageoverheadlines interfering withtheoverheadpowerlines,suchasbuildings,vegetation, androads. The technologyadoptedmadeitpossibletocreateadatabasefortheHVgrid,andsurveyelements creating a geo-referred platform oftheNational Transmission Grid thankstotheuseoflaserimagingbyhelicopter. Terna startedandcompletedtheLIDAR(LaserImagingDetectionRanging)project,withobjectiveof Line inspectionbyhelicopter ) whichenablesoptimisationofmaintenancework. during2012,Ternareconstructed62kmofoverheadlinesand8undergroundcables, Ternaidentifiestheworktobedoneonbasisofsignsdeteriorationsignalledby forcorrectoperationofthelines,continualmonitoringisnecessarytoassessgrowth Approximately3,400monitoringandmaintenancejobswereperformedonlivewires. Inadditiontothechecksprescribedbylaw,Terna: Maintenance andBusiness State-of-the-art Technologiesforre-PoweringACcorridors&multi-TerminalHVDCSystems Corsica andmainlandItaly).Ternahasalsosuggestedthename/acronymforentireproject: investigations ofthecomponentsandsystemsaimedatrestoringSACOIconnection(HVDCbetweenSardinia, has assumedtheroleofleadermaincategory(over30millioneurooutatotal75),relativetotechnological The generalco-ordinatoroftheproject,whichisstructuredinto5complementarycategories,SpanishTSO.Terna universities andresearchinstitutes(RSE,CERN,STRI,Columbusmanyothers). utilities (E-On,Iberdrola),manufacturers(ABB,Toshiba,Alstom,GeneralCable,Nexans,Silec,ECN,DeAngelis), of 40partnersamongwhichTSO(aswellTerna,RTE,REE,50Herts,Eia,Mavir,Stattnett,REN,EnergieNet), The researchprojectproposal,finallyapprovedbyECinApril2013,providesforaconsortium,chairedTerna, utilities, manufacturersandresearchinstitutes,aswellpublic and privateparties. This researchfurtherreinforcesthenetworksofcollaborationataEuropeanandinternationallevel,between and distributedrenewablegenerationintegratedhorizontal vertical management. evolution demandedofthetransmissiongridtocomplywithade-carbonisedelectricitysystemde-localised These topicshaveastrongsustainabilityconnotationsincetheycoincidewiththeguidingprinciplesof • • • This isresearchintothedevelopmentof: large-scale penetrationofrenewableproductionandtheintegration oftheEuropeanelectricitymarket. research projects, at the demonstration and prototype phases, onthetechnological challenges derivingfromthe operation solutionsfor(inter)connectingrenewableelectricityproduction Specifically, Ternatookpartinthe:“ out ofpublicexpenditure. and thenationaleconomyasubstantialportionofknow-howeconomicresourceswhichinanycasecome implications for a project already inthe Development Plan, but also an opportunity to bring back into the company just beneficialintermsofaccesstofinancing(whichcoversover50%thetotalbudget)andtechnological For Terna,qualifiedparticipationinthemostimportantandprestigiousinternationalresearchprojectsisnot has joinedtheWorkingGroupENTSO-ER&D,fromwhichEUtakesthemesfortendersitintendstolaunch. With aneyetoasynergisticstrategy,aimedatfocusingresearchonnational/Mediterraneantopicsofinterest,Terna for thememberstates. 20-20 targets - the goal of the next EU “Horizon 2020” Program” - and which will translate into recommendations The fundsareassignedbytendersforthebestprojectsthathaveresultswillhelptodefinestrategies20- The EuropeanUnionfinancesresearchthroughits7 EU FrameworkProgram The “BE.S.T.P.A.T.H.S.”researchprojectco-financedbythe7 manufacturers andrelativetechnologicalstandards. systems withmarkedinteroperabilityfeaturesbetweenthecomponentsandsub-systemsofdifferent voltage, extrudedinsulationcables,highperformanceconductors andinsulators; new technologies and components for HVDC direct-current: innovative VSC converters, D switches, very high of systemcosts,andwithahighrateintegrationtheincreasingproductionfromrenewablesources; smart electricitygridswithdemandingrequisitesintermsof“governance”andreliabilityconsequentreduction Large-scale demonstrationofinnovativetransmissionsystemintegrationand th FrameworkProgram,operativeforyears2007-2013. ”, themostrecenttenderforsustaining ). “BEST PATHS” ( Beyond Beyond th

EU8 71 Responsibility for the electricity service 72 2012 Sustainability Report EU8 EQUIPMENT DIAGNOSTICS Station Layouts ATR FencesandFoundations New testprotocolsforATcables New technologyforhighvoltagecables existing lines Upgrading thetransmissioncapacityof integration encumbrance and/orbetterenvironmental Designing towerswithlessvisual STRUCTURE ANDMATERIALOPTIMIZATION Aim Research oninnovationandthedevelopmentofnewengineeringsolutionsisorganizedintofourcategories. regards totheassociateCESI. in whichithasa42.698%equityinvestment.Inparticular,2012,theTernaGroupincurredcostsof15.6millioneuro collaboration with universities, RSE S.p.A. (Ricerca Sistema Energetico) andCESIS.p.A.,aspecialised service company and analysis of the performance of equipment and plants. Terna also uses the specialised support of manufacturers, plants andinturn,servicequality,Ternamainlyusesin-housetechnicianswhobasetheirworkonthecarefulmonitoring To introducenewtechnologicalandplantsolutions,instrumentsmethodsaimedatimprovingthereliabilityof Engineering andinnovation • • • Station layout-Updateandnewarrangement be usedtoselectthebestsolution. The purpose is to make a catalogue available to the company which can • • were engineered andunified. Some typesofstationenclosures (pre-fabricated, castinplace,grating) Design andUnificationofFencesFoundations suppliers. constancy ofthechemical-physicalcharacteristicsrequired ofallAT cable of Bolognaforcablesandtherelative insulatingmaterialsoastoverifythe A testprotocol iscurrently beingdefinedincollaborationwiththeUniversity Tests forcablesandcompounds half oftheyear. installation ofapilotonplantunderconstructionisplannedinthefirst The launchstageinvolvesworkonlaboratorytestingoftheprototype, and grids and, at the same time, an increase in their energy transport capacity. Medium Voltage). Itwillenableareduction in the environmental impactof from recycled rawmaterials(technologyalready well-establishedfor A leadingsupplierhasmadeaHighVoltage cableavailablemadeentirely Recyclable cables high mechanicalresistance and annealed aluminiumcladding. Conductors installed.Theseare characterisedbyasteelcarrierwithvery Qualification testswere completed andACSS-typeHigh Temperature Innovative, high-performanceconductors pylons tobeinstalledontheTrino-Lacchiarella 380kVline. Trials ofreal-scale prototypes wascompletedandproduction launchedfor International “PylonsoftheFuture”competition Projects andprogress madein2012 completion stage.Development for220and150kVvoltagewillfollow. area. Thedevelopmentoftheoptimized380kVsection isatthe New compactstationlayoutswere prepared withareduction ofsurface Switching andTransformation stations. New layoutswere finalizedforintegratedbuildingstobeusedinsmall reducing floorarea spaces. andoptimizingthesubdivisionofinternal The layoutsofControl andAuxiliaryServicebuildingswere updated, the degree stresses ofexternal towhichthefoundationissubject. the level of voltage the transformation, size of the machine and ATR Foundations.Thetypesstudiedwere differentiated onthebasisof perimeter. wind andonthebasisofneedorlackthereof ofanintruder-proof The typesstudiedwere differentiated onthebasisofseismicriskand Reduction ofseismicvulnerability SicurTrafo Project PLANT SAFETY Compact, rapidlyinstallablestations NEW EQUIPMENT Voltage cablesystems Monitoring ofpartialdischargesonHigh components Analysis andmonitoringofline Monitoring Station EquipmentandMachinery Aim Projects andprogress madein2012 supports inorder toimprove response toearthquakes. resistant devicestobeinsertedbetweenthefoundationsandequipment equipment mostatrisk.Thepurposeofthestudyistodefine earthquake- collaboration withtheUniversityofRomaTre, focusingparticularlyonthe A studyofthe seismic vulnerability of theplants is in progress in equipment Application ofearthquake-resistantdevicestothemost vulnerable capable ofpreventing fires inthemachineryeventofseriousfaults. Studies havealsobeguntodeterminetheapplicabilityforATRs ofasystem fragments ifthetransformerexplodes,increasing safetyintheplant. purpose ofthebarrieristoscreen bothflamesandtheimpactofflying uniform features sothatit can beusedalloverthecountry. Thefunctional barrier, atthe front, toenablethemachinebemoved.Theproject has completion. Theproject provides forthree fixedbarriersandonemobile power transformers(ATRs), onallfoursidesofthemachineisunder Development ofthefinalproject forasystemofbarriersusedtocontain Project forasystemofcontainmentbarrierstoprotectATRs stations hasbeenverifiedwithconstructorsandtrialsare underway. 380 kVmobilestationwasalsodesigned.Thepossibilityofbuildingsuch Given theadvantagesofthissolution,testedwithSCRI150kV, the SCRI installation cablesystems. such systemsandatdefiningthecriteriaforinstallationusetotestfirst collected isaimedatfinalising aspecifictechnique fortheacquisition of connection tothecomponentbetested.Examinationofdata was alsocarriedoutwithanewinstrumentwhichdoesnotneedany installed onanumberofcableconnections.Acomparativemeasurement Systems tomonitorpartialdischargeatjointsandterminalshavebeen PDM (PartialDischargeMonitoring) Installation isplannedduring2013. study permittingidentificationofthebestsiteshasbeenconcluded. study andmonitoringofsurfacecontaminationinsulators.Thefeasibility A project isplannedfordevelopmentofanExperimentalStationthe Insulator testlaboratory station. completed, (June2013)wewillhavethefirstcompletelymonitored Terna Once installationofthe132kVequipmentmonitoringsystemhasbeen installation. section.Thesewillbetrialledwithaviewtopotentialwidespread 132 kV and machinery. Installationiscurrently underwayofanothertypeonthe section, installingnewtypesofsensorspositionedonboard equipment kV In theLacchiarella station,workhasbeencompletedonthe380 New sensorsonequipmentandmachinery 73 Responsibility for the electricity service 74 2012 Sustainability Report 2012

Economic responsibility 76 2012 Sustainability Report • the transmissionratesmainly belongtothreecategories: the referencequantities(forecast)ofaforementionedallocation drivers.Thecostcomponentsconsideredtodetermine four-year regulatoryperiod.Thecontributingfactorsare,first, Terna’srecognizedcosts,includingmargins,andsecond, Annually, the AEEG determines unit sum of the rate components, on the basis of rules defined at the beginning of every available, numberofinjection/withdrawalpoints). and DispatchingUsers)inproportiontothespecificallocation driversestablishedbytheAEEG(quantityofenergy,power for transmission–paidtoTernabydifferentcategoriesofcompanies intheelectricityindustry(Distributors,SingleBuyer The Company’s regulated revenue is generated by different rate components – the most importantof which is the payment Regulated revenue housing ofTLCequipment,aswellotherconsultingactivities inthetransmissionfield. for HVsystemsownedbythird-parties,plantengineering, maintenance ofthefibreopticnetworkownedbythirdparties, consist mainlyinspecialisedservicesprovidedbytheTerna Grouptothirdpartyentities,suchasmaintenanceactivities to remunerationestablishedbytheElectricityandGasAuthority(AEEG)only5%isrelatedotheractivities,which In 2012,the Terna Group’s revenue amounted to 1806million euro Mostofthis(about 95%) comesfromactivitiessubject Revenue structureandregulatoryframework Revenue andriskmanagement devoted torelationshipswithshareholders,suppliersand operatorsoftheelectricindustry. specific stakeholders. The most significant of these relationships are described in the final sections of the chapter, reports themostimportantqualitativeandquantitativeinformationconnectedwithCompany’srelationship with The economic effects of Terna’s business do not end with its financial results. The “Terna’sEconomic Impacts” section measures implementedbytheCompanytopreventandcopewith therisksconnectedwithitsbusiness. - withparticularregardtotheeffectsofregulatoryframeworkandtheirrespectiverelativeweights,aswell the The paragraph“RevenueandRiskManagement”providesinformationonthedifferencesourcesofTerna’srevenues results ofthelastthreeyearsarereportedinthischapter,conjunction withthesubjectdiscussed. online at For adetailedpresentationoftheeconomicandfinancialresultsachievedbyGroup,seeAnnualReportsavailable being developed,inparticularregardstotheconstructionofinterconnection lines. the transmissionindustryhavefocusedonsouthernMediterraneanandBalkans,whereanumberofprojectsare Other opportunitiesforgrowthlieintheexpansionofactivitiesabroad.Thesearchnewinvestmentpossibilities • • • • revenue byenlargingitsmarketshareandpursuestheseobjectives mainly by: In Italy,Ternamanagesthetransmissionofelectricityasamonopolist.Therefore,itcannotincreaseitsbusinessor security oftheelectricitysystem. in the search for operating efficiency and opportunities for growth, while fulfilling service obligations, in particular the For Terna,serviceobjectivesareintegratedwiththoseofeconomicperformance.Thesynthesisthetwoaspectslies Our approach technologies to improve the security of the electric system). The RAB is remunerated by the AEEG at a rate of return included intheGridDevelopment Plan)andtheenhancementofmanagerialinstruments (forexample,ITsystemsor investment isforboththeconstruction of electricinfrastructure (linesandstations)torenovateordevelopthegrid(work number on the change in the gross-fixed-investment deflator and updated on the basis of Terna’s net investment. This Remuneration oftheRAB. seeking businessopportunitiesinindustriesotherthantransmission. developing non-traditionalactivitiesconnectedtothetransmission; seeking operatingefficiencyandoptimizingitscapitalstructure; electricity serviceforsocietyandprovidesasourceofcorporate income; promptly carryingouttheinvestmentsprovidedforinGridDevelopmentPlan,whichisalsousefulimproving www.terna.it intheInvestorRelationssection,especially2012AnnualFinancialReport.Inanycase,main ThevalueoftheRAB( Regulated AssetBase ) isrevaluedannuallyonthebasis oftheIstat • mechanisms wereprovidedfor: the benefitforusersofservicewillbeamultiple oftheincentivepaidtoTerna.Inparticular,in2012 technical andeconomicterms.Implicitintheincentivemechanisms istheassumptionthatifobjectivesareachieved, The AEEGhasintroducedaspecificbonusandpenalty schemeaimedatincentivizingserviceimprovement,inboth 2012 Incentiveschemes 1,261 millioneuroin2011)relativetotheprocurementofresources on theDSM. In 2012,Terna’spass-throughrevenues-andexpensestotalled 6,327millioneuro(5,026in2011),ofwhich1,529(about of contractsandbillingreceivablespayables. repercussions onitsrelationshipwithindustrycompanies regardtothecommercialandadministrativemanagement Even if it does not influence Terna’s profitability, pass-through revenue -also because ofitssize -has important for endusers. bonuses andpenaltiesbasedonthevolumeofresourcesprocured(seefollowingparagraph)inordertocontaincosts order tokeeptheelectricsystembalanced)AEEGestablishedanincentiveschemeforTernawhichestablishes components (thecomponentcoveringtheenergypurchaseandsaletransactionscarriedoutbyTernaonDSM in system costs,includingcoveringthenetexpensesincurredtoprocureresourcesonDSM.OnoneofUplift A significantpartofthepass-throughitemsisrepresentedbyso-called collects fromthewithdrawaldispatchingusersandpaystosubjects thatsupplytherighttointerruptload. dispatching usersandpaystotheproducerswhomakecapacityavailableonmarket,oramountsthatTerna Part oftheseitems,forexample,areamountssuchastheso-called that donotinfluencethenetincomeofTernaGroupinitsIncome Statement. covering thecostsfortransactionswhichrulesrequireazerobalance:theseareconsideredpass-throughitems In additiontoregulatedrevenuesandthosegeneratedbynon-regulatedactivities,otherTernarevenuecomesfrom Pass-through items and toconfirmthepre-existingmonomialratefor2013. and thedistributionnetworks.Certain implementation difficulties haveledtheAuthoritytopostponeadoptionofsame on twoallocationdrivers:energytransportedandpoweravailableattheconnectionpointsbetweentransmission grid The 199/11resolutionprovidedthatthetransmissionratewouldbecomebinomialstartingin2013.Inotherwords,based • • mechanism providesthattheAEEG: 2012 and2013,themechanismtopartiallyneutralizevolumeeffectintroducedwithResolutionARG/elt188/08. This transmission grid)madeforecastingthetrendinenergytransportedmoreuncertainandledAEEGtoconfirm,for distribution networks(which“locally”satisfiespartofthedemandandthereforereducesenergytransportedon business contractionthatbeganinthesecondhalfof2008togetherwithincreaseenergyinputonto electricity: in effect, because of the volume effect, it can turn out to be higher or lower than that foreseen. The sharp dynamic oftheallocation driver ofrecognized costs andinparticularoftheenergytransmitteddemandfor Once the unit amountsof the different rate components have been established,Terna’srevenuedepends on the actual • • difference betweentheactual valueandthetargetofindicator,netanexempted range(+/-5%ofthetarget with thefirsttwosub-indicators andthebonus/penaltyiscalculatedbymultiplying apre-establishedsumbythe portions ofthenationaltransmission grid.Temporarily,forthe2012-2015period,economic effectsareonlyassociated by referringtothreedifferent sub-indicators: ENSR-TERNA,ENSR-TELATandENSR-ALTRI, referredtothreedistinct applicable forthethree-yearperiod 2012-2015,linkedtotheENSR(relevantenergynot provided)indicatorsevaluated the qualityof transmission service. The AEEG has defined (Resolution 197/11)a framework of incentives and penalties, volume islargerthantheoneusedforrates. require Ternatoreturntheincreasedearningsregardingvolumeshareexceedinganexemptionof0.5%iffinal smaller thantheoneusedforrates; supplement Terna’sremunerationregardingthevolumeshareexceedinganexemptionof0.5%iffinal is annually byanefficiencyfactor(pricecapmechanism). annual operatingcosts,validfortheentireregulatoryperiod,revaluedannuallyonbasisofinflationandreduced do notconstituteinvestments.Thecomponentcoveringthesecosts,whichin2012cametoabout22%,isbasedon Operating costs. 2012 approximately29%ofthetotalrecognisedcosts. based onthechangeindeflatorofgrossfixedinvestment.Theshareamortisationremunerationrepresented recorded due to the effects of new investments, divestments, the termination of the useful life ofassets, and revaluation Depreciation andamortisation. recognized costs. are considered of particular strategic importance. In 2012, remuneration of the RAB constituted about 49% of Terna’s in 2012.Thisrateisincreased-foralimitednumberofyearscertaincategoriesdevelopmentinvestmentthat linked to the market rate, or 7.4% for investments carried out up to 2011 and 8.4% for investments carried out starting Operatingcostsaretypicallytheoflabourandprocurementgoodsservicesthat Provisionismadefortheannualadjustmentofdepreciationandamortization capacity payment uplift , aratecomponentwhichincludesvarious thatTernacollectsfromwithdrawal 77 Economic responsibility 78 2012 Sustainability Report (5) recognized costs(theconsiderationofotherminorratecomponents haveanegligibleeffect),netofpass-throughitems. that transmissioncostshaveaweightofabout3%ontheelectricbillanaverageuser.MosttheseareTerna’s shows theimpactofcostsresultingfromTerna’sactivity,basedonfigurespublishedbyAEEGitcanbeestimated service bythedistributioncompanies.Evenwithoutanofficialbreakdownofcostforenduserwhichdirectly In accordancewithcurrentregulations,muchofTerna’srecognizedcostsarebilledtoendcustomerstheelectricity The costoftransmissiononthefinaluser’sbill the NTG Acceleration ofinvestmenttodevelop procured ontheMDS Reduced volumeofresources Quality oftransmissionservice Objective INCENTIVE MECHANISMSACTIVATEDIN2012 2012 targetsandperformanceaswellthepossiblecorrections tothevolumesbookedfor2012. three-year period, as adjustment of the related fair value, taking into accountthe risks connectedtothedeterminationof characteristics, Ternarecorded23millioneuroinits2012FinancialStatements(165totalduringthe2010-2012 compared totheresultachievedin2012andconsiderationofthree-yearperiodincentivemechanismits Terna’s total regulated revenue. In the case of the incentive for reducing the volume of resources procured on the MDS, The bonusesearnedin2012forachievingtheobjectivesestablishedaspartofincentiveschemesareincluded • •

access totheadditional2%remunerationforCategoryI3investments. the investment acceleration mechanism (optional without other consequences until 2011) is a necessary condition for works go into operation behind schedule. Furthermore, Resolution ARG/elt199/11providesthatTerna’sparticipation in milestones agreedonwiththeAEEG.Startingin2012apenaltymechanismisalsoappliedeventthatdevelopment between marketareas,increasedtransportcapacitywithothercountries),conditionalontheachievementofaseries in progressondevelopmentprojectswiththemostaddedvalueforelectricsystem(eliminationofcongestion and modifiedbyResolutionsARG/elt199/1140/2013/R/eelprovidesfora2%additionalincentivethework acceleration of investment to develop the NTG.Thismechanism,originallyintroducedbyResolutionARG/elt87/10 The currentmechanismprovidesforadifferentiatedunitarycap eachyearanddoesnotprovideforabonus introduced in 2007 for a four-year period. It was modified byResolution ARG/elt213/09 and extendedthrough 2012. reduction ofthevolumeresourcesprocuredonDispatchingServicesMarket(DSM).Themechanismwas of theindicatorfor2012bywhichincentiveisvaluednotyet available; mechanism includestheapplication of diversifiedtargets, convergingin2015.Atpresent,thefinalcalculationbyAEEG value oftheindicator).Theinclusiongridportionacquiredin2009fromEnel(Telatgrid)withinincentive of annualconsumption); Terna processing ofAEEG data. Relation between the costs of transmission and cost of electricity for an average domestic consumer (family with 3 kW of committed power and 2,700 kWh Relation betweenthe costs of transmission and costofelectricity for anaverage domestic consumer(familywith 3kWofcommittedpowerand2,700 kWh Resolution 199/11 Resolution 213/09 Resolution 197/11 Resolution AEEG 2012-2015 2010-2012 2012-2015 Period applicable Bonus €14million Bonus €1million Being definedbyAEEG 2012 result cap ; • • • The fieldsinwhichrisksandopportunitiesareanticipatedforTerna’s businessarethefollowing: that itmightcauseingovernments,aswellthehabitsofconsumers. opportunities -potential,albeitremote,risksandconnectedwiththewarmingofEarthreactions Terna’s management recognizes the increasing importance of climate change and has identified - in addition to the which hasalreadyprovidedTernawithopportunitiestodevelop new businesslines. concerned. Onthecontrary,climatechangehasstimulatedalegislativeevolutioninfavourofrenewableenergysources, to beexcluded.ClimatechangedoesnotconstituteathreatforTernaasfaritsforeseeablebusinessprospectsare inclusion inemissiontradingschemes)withdirectconsequencesonTerna’sbusinessandfinancialperformanceare Therefore, governmentinterventionthroughtaxation(e.g.acarbontax)orregulation(emission-reductiontargets, generation ofelectricityandthusisnotsubjecttoanyobligationreduceemissionsoremissiontradingschemes. Terna is autility whose principal activity is the transmission of electricity.TheCompany is not involved in anyway in the Risks andopportunitiesconnectedwithclimatechange The coverageofseveralobligationsconnectedwithemployeebenefits isalsodescribed. • • coping withthem.Theaspectsconsideredare: The followingpagesdescribeotheraspectsofrisk,theirrelationshipwithTerna’sactivities,andtherelatedmeasuresfor description oftheproceduresforpreventingandmanagingsuch risk,seepages83-84ofthe2012AnnualReport. its financialrequirements,operatingrisksconnectedwithgridmalfunction,regulatoryandlitigationrisks.Fora is exposedtomarketandfinancialrisks(regardingtheinterestrate,inflation,liquiditycredit),connectedwith The analysis,preventionandmanagementofriskregardsthedifferentaspectscorporateactivities.Terna’sbusiness Risk management equal. TherulesadoptedsofarbytheAEEGforremunerationoftransmissionservicemakeitveryunlikely efficiency couldcausethegrowthindemandforelectricitytobelowerthanitiscurrently,allthingsremaining income elasticityofthedemandforenergy.Thetrendtowardsenergyconservationandefforttoimprove concern aboutclimatechangeortheincreaseinpriceofenergyrawmaterialscouldleadtoareduction public authoritiesandthemassmediatofocustheirattentionon Terna; temporary disconnectionofusersincertainareasthecountryandwhichconsequentlycauseattention water isscarceorthetemperatureextremelyhigh.Theprobabilityofcriticalsituationsincreaseswhichcanentail in Italyasthetransmissionsystemoperator,becomesmoredifficultwhenclimateisextreme,forexample The taskofkeepinginjectionsandwithdrawalselectricityonthetransmissiongridinbalance,whichTernaperforms risks connectedwiththeelectricitymarketandsystem. risks andopportunitiesconnectedwithclimatechange; be programmed. investments toresolvethegridcongestionproblemsandfor efficientandsafemanagementofproductionthatcannot the increaseinrequestsforconnectiontogrid renewable energyplantsandtheneedtoplancarryout the increaseinproductionofenergyfromrenewable sources posesvariouschallengesforTerna,connectedto Framework”); be allocatedbasedontheenergytransported (see, inthischapter,thesection“RevenueStructureandRegulatory at theconnectionpointsbetweentransmissiongridanddistributiongrids,whileonlyremainingpartwould transmission, todayentirelyallocatedbasedontheenergytransported,wouldbedivided based onthepoweravailable confirms this conviction: in accordance with what is proposed by the AEEG, about 95% of the recognized costs of scheduled for 2013 - Structure and Regulatory Framework”). The possibility of introducing a binomial rate - originally that thepossiblereductioninvolumecouldtranslateintoadecreaserevenueforTerna(seeparagraph“Revenue regarding thelong-term developmentofsolar plantsinAfricatosatisfy Europeanconsumption,which requiresthe plants). Terna’simagecanbe enhancedbythispositiverole.TheCompanycanalsodevelop businessopportunities the entireelectricsystem(reduction oflosses,improvement in theproductionmix,connectiontonewrenewable-energy Responsibility, investment todevelop them alsoentailssignificantconsequencesinterms ofemissionsreductionfor energy areasourceofrevenue forTerna.Furthermore,asexplainedindetail the chapteronEnvironmental Opportunities. regulation requirements. production, inparticularwindmakesdispatching activitymoredifficult,increasingpowerreserveand sources, canexposeTernatoreputational risks regardlessofhowproperlyitacts.Furthermore, theintermittenceof to realizethedevelopmentinvestmentsrequiredinorder to makefulluseoftheproductioncapacityfromrenewable now beenresolvedthroughtheuseofasingleauthorization process.Thissituation,alongwiththetimenecessary Sometimes there wasatime gap between the plant authorization andauthorizationoftheconnection work, whichhas some oftheserequestsledtothedevelopment,onceconnection wasobtainedfromTerna,ofanauthorizedproject. request connectiontothetransmissiongridfromTerna. In recentyears,therehavebeennumerousrequests.Only Critical aspects. Theinvestmentsinthetransmission gridmadenecessarybytheconnectiontoplantsusing renewable Thenewpowerplantsforproductionfromrenewablesources withpowergreaterthan10MWmust EC2 79 Economic responsibility 80 2012 Sustainability Report EC3 • • • • In particular: pension plans,theemployeesofItaliancompaniesreceive other defined-benefit payments. workers, andjuniorexecutives)mayenrolintheFopenpensionfund( and thedateexecutivefirstjoinedasupplementarypensionplan.Otheremployees(blue-collarworkers,white-collar for contributionsbyboththeexecutiveandCompany.Incases,amountvariesaccordingtohiringdate basis. Specifically,seniorexecutives mayenrolintheFondenelpensionfund(http://fondenel.previnet.it)whichprovides that beganinthe1990s.Ternaoffersitsemployeessupplementarydefined-contributionpensioncoverageonavoluntary public system,whichoriginallywasoneofthehighestinOECDcountries,hasbeenreducedbyaseriesreforms There are no defined-benefit corporate pension plans in the Terna Group.InItaly the pension coverage provided by the Coverage ofobligationsconnectedwithemployeebenefits • • • • • measures. ThestatusoftheNationalElectricSystemismonitored in numerousways,suchas: vulnerabilities – forexample,exogenouseventsorfailuretoobservetheGridCodeandadoptappropriatemitigation Its responsibilityformakingtheNationalElectricSystemworksecurelyrequiresTernatoidentifyrelatedthreats and to theISO27001standard(seesection“InformationSecurity”onpage61). and theindicatorsrequiredbyAEEG.During2011,CompanyobtainedcertificationofTIMMprocessaccording information. For this purpose, Terna created the TIMM data warehouse, withtheobjective of monitoringthe magnitudes Market, ResolutionNo.115/08ofAEEG),mustensureimpartiality,transparencyandsecurityinacquiringpresenting Monitoring Department (Integrated text on themonitoring of thewholesale electricity marketandtheDispatchingService Terna alsomonitorstheElectricityMarketdataonbehalfofAEEG.TheRiskManagementUnit,whichispartTerna’s pinpoint anydeviationsfrompre-establishedbenchmarks. the CompanytofollowoverallperformanceofElectricityMarketthroughseveralkeyindicatorsandpromptly these risks,adedicatedsystem,calledSIMM(SecurityIndexMarketMonitor)hasbeensetup.Thissystemenables the Companytoidentifythoseriskswithhighestprobabilityandgreatestimpact.Inorderconstantlymonitor Analysis oftheprocessesregardingTerna’sinteractionwithElectricityMarketandrelatedriskshasenabled terms (seethe“Pass-throughItems”and“IncentiveSchemes”sections). Market. This activity is critical for the security of the electricity service and also has significant repercussions in economic Terna procures theresources it needs to manage the National Electricity System securely throughtheDispatching Service Risks connectedwiththeelectricitymarketandsystem discount). Employees hiredbyJune30,1996aregrantedreducedrates onelectricityconsumedforhouseholduse(electricity Senior executivesareentitledtopost-employmentsupplementary healthcare(ASEM); junior executiveshiredbyJuly24,2001(IMA). executives hiredorappointedbyFebruary28,1999(allowance inlieuofnotice),andblue-white-collarworkers When theyterminatetheiremploymentreceivebenefits thatareowedallemployees(severanceindemnity),senior employment atacompany; During their working life, all employees receive a contractual “loyalty bonus” when they reach their 25 monitoring thedesignandconstructionofstationdefencesystems andautomationtechniques. obligations offutureproduction; monitor delaysincommissioningsuchplantsandatthesametimecheckapplicationofGridCode inspections of production plants under construction in cooperation with the Ministry of Economic Development to inspections ofinterruptiblesitesandchecksonconformancewith Terna’stechnicalrequirements; related documentation; checks on the performance of the plants connected to the grid throughthe process of self-certification andanalysis of monitoring ofthestatusNationalElectricSystem; electric stations,thensoldwithsignificantpositiveimpactonthe financialperformanceofthecompany. as alreadyoccurredin2010-2011withtheconstructionofphotovoltaicplantsonlandavailableinsideornearTerna regulation problems.TheseinvestmentsopenanewlineofbusinessforTernaindirectlyconnectedtoclimatechange, investments in batteries which can concretely foster the use of renewable sources, while simultaneously resolving grid parallel developmentofinfrastructuretointerconnectthetwocontinents.Ternahasalreadyplannedshorterterm http://www.fondopensionefopen.it) th and 35 . Inadditionto th year of Allowance inlieuandsimilarbenefits IMA Termination benefits employment Benefits owedatterminationof Total Loyalty bonus Benefits owedduringemployment Values inmillionsofeuro Rate ofincrease ofhealth-care costs Rate ofincrease oflabourcosts Discount rate Percentage values The followingtableshowsthemainassumptionsusedinactuarialestimateofliabilitiesforemployeebenefits. TOTAL Amortisation ofactuarialgains/losses Financial expense Current cost Values inmillionsofeuro The followingtablebreaksdownthecostsregardingliabilitiesforbenefitstoemployeesrecordedinIncomeStatement. expense (totalling6.8millioneuro)offsetbyperioduses6.6 euro. previous financialyearof0.2millioneuro,attributabletoallocationsfortheandrecordingperioddiscounting The item,equalto119.4millioneuroat31December2012(119.22011),showsanincreaseon the Total Total ASEM Electricity discount Post-employment benefits Total in thefollowingtable. The compositionandchangesoftheseveranceindemnityotherpersonnelfundsasDecember31,2012areshown Severance Indemnity -0.1 2.5 2.7 0.0 31.12.2011 119.2 30.9 73.6 41.8 10.9 64.4 2.7 6.5 3.8 3.8 and similarbenefits Allowance inlieu Appropriations -0.4 -0.4 0.0 0.0 0.6 0.2 1.9 0.6 0.0 0.0 0.2 0.0 1.1 1.1 IMA 0.6 0.0 0.4 0.2 Interest cost Loyalty 1.3 3.1 4.9 1.6 0.3 0.0 0.4 2.7 0.2 0.2 bonus 0.9 0.5 0.2 0.2 2.0% -4.0% Draw downs movements 3.00% 2.05% and other ASEM 2012 -0.5 0.0 0.3 0.2 -5.2 -6.6 -0.9 -0.5 -0.4 -0.3 -0.8 -4.1 -0.5 -0.5 Electricity discount 1.9 0.0 1.3 0.6 2.0% -4.0% 31.12.2012 3.00% 4.10% 119.4 43.1 10.7 32.4 71.7 63.0 -0.5 Total 2011 2.4 6.3 4.6 4.6 5.6 4.9 1.2 81 Economic responsibility

(2) (1) Total netglobalvalueadded E –RemunerationoftheCompany Allocations toreserves D. Remunerazionedelcapitaledirischio Dividends D –Remunerationofriskcapital Interest onbonds Interest onbankloans Short-term loanexpense B –RemunerationofGovernment Indirect taxes Direct taxes A –Remunerationofpersonnel Subordinate personnel,indirect remuneration Subordinate personnel,direct remuneration Non-subordinate personnel Values ineuro TERNA GROUP-VALUEADDEDSTATEMENT the negativeimpacton2012resultofso-calledRobinHood Tax. In 2012,theincidenceofallocationstoreservesrecordedattotalnetoverallvalueaddedcomesabout4%,despite February 2013. Company, whichhasbeenlinearovertimeandwasagainconfirmedinthenew2013-2017StrategicPlanapproved value addedwasallocatedtoremunerationofriskcapital,thankstheParentCompany’sdividendpolicy through DecreeLawNo.138of13August2011.Duringthethree-yearperiod,onaverage31.6%totalnetoverall by 8.9%,basicallyduetotheapplicationofadditionalIRES(so-calledRobinHoodTax)introducedstartingin2011 During thethree-yearperiod,incidenceofdirectandindirecttaxesontotalnetvalueongoingactivitiesincreased capital (onaverage13.8%),relativetothetotalnetaddedvalueof ongoingactivitieswasessentiallystable. During the2010-2012three-yearperiod,incidenceofremunerationemployees(onaverage22.9%)andborrowed operations andby9.5%,whentheaddedvalueofdiscontinuedrelativeto2010areincluded. In theperiod2010-2012,valueaddedgeneratedbyGroupincreased23.8%withregardtoitscontinuing Value added Terna’s economicimpact

destined forsale of whichnetoverallvalueaddeddiscontinuedoperations of whichnetglobalvalueaddedongoingactivities (261.3 millioneuro). the IFRS/IASInternationalAccountingStandards.Specifically,TernaGroup hasusedtheIFRS/IASInternationalAccountingStandardssince2005. The 2012dividendsregardtheadvancedistributedinNovember(140.7 millioneuro)andthebalanceproposedbyBoDof15March2013 The amountsrelativetothedistributionofValueAddedaretakenfrom theConsolidatedFinancialStatements,whichwerepreparedaccordingto (2) (1) Financial period2012 1,388,152,622 1,388,152,622 61,541,976.00 401,998,400 401,998,400 211,447,315 129,226,227 437,398,256 412,696,487 275,766,675 209,488,624 61,541,976 82,220,620 24,701,769 64,055,525 2,222,526 468 0 Financial period2011 1,186,035,046 1,298,738,855 17,906,390.00 112,703,809 422,098,320 422,098,320 182,201,999 393,415,250 387,281,919 283,116,896 217,416,887 17,906,390 89,522,207 92,634,544 63,742,596 6,133,331 1,957,413 45,248 Financial period2010 1,121,314,030 1,268,161,742 146,847,712 190,327,845 190,327,845 421,650,343 421,650,343 121,375,597 253,446,404 246,825,990 281,361,553 214,860,807 40,810,758 80,378,970 64,879,119 6,620,414 1,621,627 185,869 EC1 83 Economic responsibility 84 2012 Sustainability Report EC4 EC9 EC6 Another aspect to consider is the 1,561,023.47 euro(2,316,994.17in2011and3,652,564.862010). In 2012publiccontributionstotheplantaccount–recordeddirectlyreducevalueofplantsamounted to activities and28.5millioneurorefertonon-traditionalactivities. Compared totheoverallinvestmentsshownintablefor2012,1,206.7millioneurorefertraditional * INVESTMENTS -TERNAGROUP last fewyears. is thereforesignificantthatTerna’sinvestments(mostofwhicharetodevelopthegrid)haveconstantlyincreasedin Terna generatesonaverageamultipleofsavingsforgridusers,whichultimatelyhasbenefitstheendconsumer.It of reductionoverallsystemexpenseinordertomaximizethecost/benefitratio.Consequently,everyeuroinvestedby the technical and economic points of view by comparing the estimated cost of the work with the related benefits interms In accordance with the regulatory framework, all of Terna’s investment in the development ofthe grid is examined from the mostcompetitiveplants,withpositiveeffectsoncompetition inthegenerationsegmentandonendprices. of gridcongestionimprovestheexploitationgenerationresourcestocoverrequirementsandmakesitpossibleuse domestic production,tohaveadditionalpowerreserves,andenjoymorecompetitioninenergymarkets.The reduction between borderingcountriesmakesitpossibletoimportelectricpoweratpricesthataremorecompetitivethanthoseof The Company’sdevelopmentoftheelectricgridisparticularimportance thus contributestoItaly’seconomicgrowth. of all,theeconomicrepercussionselectricityservice Terna’s economic impact does not end with the production and distribution of value added. One must also consider, Other economiceffects concerned. industrial groups suchasABB,SiemensandPrysmian, which arepredominantworldwide in thespecificmarkets a significantshareofthesumspentonlocalpurchases actuallyregardsItalianbranchesofinternationallysignificant tenders. Italiancompaniesconstitutealargemajorityofthose thatapplyandqualify.Inanycase,itshouldbenoted Terna makesmostofitspurchasesfromcompaniesthat arequalifiedpursuanttoEUdirectivesorthroughEU-wide heavy andbulkysupplies. the electricsystem.Furthermore,supplierslocatednearby havemorecompetitivecostsregardingthetransportationof the basisoftheirlocationandisduetoneedforfastmaintenance workonplantstoensuretheutmostsecurityfor The predominanceofItaliansuppliersdoesnotconflict with theGroup’spolicy,whichexcludesselectingsupplierson growth. Most of thepurchasesweremade fromnationalsuppliers,althoughthepercentageofforeignsuppliersrecordednotable In 2012,the through by Through theconstructionandmaintenanceofpowerlines,in2012Ternaindirectlydeterminedemploymentworkers Centers (CR)and3Remote-Control(CT)whichhaveoffices alloverthecountry. and Cagliari which are responsible for 32 Line Operating Groups (GOL), 32 Station Operating Groups (GOS), 8 Distribution were uniformlydistributedthroughoutItalyatthe7otherlocaloperatingareasofTurin,Milan,Florence,Naples,Palermo (CNC) ofthetransmissiongridandRomeTransmissionOperatingArea(AOT).Theotheremployees(about2,500) had € million table alsoincludesthevaluesfornon-traditionalactivities. The valuespreviouslypublishedfor2011and2010-respectively1219.81161.7referredonlytocoreinvestmentsinongoingactivities,whilethis 3,433 employees contractors andsubcontractorstotallingtheequivalentof1,907full-timeemployees economic valueofTerna’sprocurement of which over 900 worked in Rome, at the corporate headquarters, the National Control Center 1,235.2 2012 creation of employment and procurementexpenses 1,229.2 2011* 1,162.7 2010* ofservices,suppliesandworkscametoabout1.6billioneuro. : Ternaensuresaserviceofgeneralinterestovertimeand 900.4 2009 764.9 2008 . Thedevelopmentofinterconnections . Asof31 December 2012, Terna 606.0 2007 . 345.5 2006 263.5 first 2005 the artisticandculturalfieldsaredescribedinsectionentitled “Communityinitiatives”onpage159. Other economicimpactsconnectedwiththeresourcesthatTernadedicatestosupportofcharitableinitiativesandin large internationalgroupswithheadquartersabroad. is mainlyattributabletotheactivitiesconnectedItaly-Montenegroconnectionwhichincludedparticipationof The quotaofpurchasesfromforeignsuppliersis36%thetotal.sizeableincreasecomparedtoprecedingyear Foreign Italian PURCHASES FROMITALIANANDFOREIGNSUPPLIERS(PERCENTAGESONTOTALPROCUREMENT) is showninthetable: The percentageofexpenseontotalpurchases(includingNon-TraditionalActivities)madeduringthe2010-2012period 2012 36 64 2011 91 9 2010 94 6 85 Economic responsibility 86 2012 Sustainability Report Volumes (mn) TREND OFTHETERNASECURITYANDFTSEMIBDJSTOXX600UTILITIESINDEXES (-2.2%) andtheindustry(-3.6%). Lastly, itmustbepointedoutthatduringthefirsttwomonthsof2013,stockgainedabout6%,betterthanmarket trades cametoabout7.5millionpieces. stands outwithatotalreturnforshareholdersof24.9%(morethandoublethattheFTSE-MIB+12.2%).Theaverage of with aperformancedoublethatoftheFTSE-MIB.AlsoatTSR(TotalShareholderReturn)level,Terna’s connected togeneration.Inthisscenario,theTernashares(+16.1%)out-performeditsprincipalpeersandindustry, At theindustrylevel,EuropeanDJUtilitiesindexclosedbasicallyeven(-0.7%)withlistedsharesout-performingthose 7.8%. of Madrid(-4.7%)whichwasaffectedbythebankingcrisis.Inthisframework,FTSE-MIBindexregisteredagain Even ifthemainEuropeanmarketswereinaveryvolatilesituation,theyclosedyearblack,withexception (+7.3%). could havenegativelyaffectedthegrowthofcountry,positivelyinfluencedannualperformanceDowJones In theUSA,signalsthatrecessionwasbeingcontainedandagreementreachedtoavoid“FiscalCliff”,which this climateofuncertainty. interventions aimedatreducingthespreadbetweensecuritiesofperipheralcountriesandGermanbundimproved budget restrictions.TheECB’sAugustdecisiononthepossibleimplementationofnon-conventionalmonetarypolicy consequences ontherealeconomyresultingfromrestrictivefiscalpoliciesenactedbygovernmentstocomplywith In 2012,thetrendinEuropeanexchangeswasaffected by theEurozonecrisisandfearsregardingnegative Share performance Relations withshareholders Source: Bloomberg.Dataasof28February 2013 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Dec. 11 Volumes Jan.12 Feb. 12 Terna Mar. 12 FTSE MIB Apr. 12 DJ STOXXUtilities May 12 June 12 July 12 Aug. 12 Sept. 12 Oct. 12 Nov. 12 Dec. 12 Jan. 13 Feb. 13 Price (€/ share 2.00 2.20 2.40 2.60 2.80 3.00 3.20 3.40 ) © WWF research and project archive 88 2012 Sustainability Report (2) (1) Dividend balance2012 Interim dividend2012 Dividend balance2011 Interim dividend2011 Dividend balance2010 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 DIVIDENDS DISTRIBUTEDBYTERNAS.P.A. average oftheItalianBlueChipswhich,duringperiod,lost18.6%. From thelistingatendof2012,TSRpershareholderreached200.6%,buckingtrendreturns +12.2%). In terms of TotalReturn of theshare,in2012 Terna out-performedtheItalianBlueChipsindex(Terna+24.9%vs.FTSE‑MIB reinvested inTernastockasoftheex-dividenddaterelated coupon. bought Ternasharesondatexandsoldtheny.Thiscalculationconsidersall the dividendspaidbyCompany dividends persharepaidinthesameperiod.ThecalculationofTSRshowsratereturnforaninvestorwho which iscalculatedbyaddingtheincreaseinpriceofsharesoveragivenperiodtimeandeffect The mostcompletemeasureofthevaluecreatedbyacompanyforitsshareholdersisTSR(TotalShareholderReturn), Total ShareholderReturn SubmittedforapprovaloftheShareholders’AssemblyMay14,2013 Ternahasadoptedapolicyprovidingforthepaymentofdividendstwiceyear. (2) (2) Year ofpayment (1) 2013 2012 2012 2011 2011 2010 2010 2009 2009 2008 2008 2007 2007 2006 2006 2005 2005 2004 Ex-dividend date 20 November 21 November 19 November 21 November 22 November 23 November 24 November 19 November 18 October 18 June 19 June 24 June 18 June 20 June 21 June 22 June 23 June 23 May 23 November 24 November 22 November 24 November 25 November 26 November 27 November 22 November 21 October 21 June 22 June 27 June 21 June 23 June 24 June 25 June 26 June 26 May Payment Dividend (euro) 0.0988 0.0592 0.130 0.070 0.130 0.080 0.130 0.080 0.120 0.070 0.095 0.056 0.087 0.053 0.080 0.050 0.070 0.045 Qualification Portal. suppliers, registereddirectly on thenew(operationalasofFebruary2012)ITapplication, whichislocatedontheTerna from Company departments, external sources, or news reported by the media. During 2012, the Company monitored 508 qualification isvalid.Thismonitoring includestheuseofITsystemstocontinuouslyscreen information,suchasreports The purposeofthemonitoring istoascertainwhethertherequisitesaremaintainedthroughout thethreeyearsinwhich and over60%haveorareacquiring ISO14001environmentalcertification. At present,ofallqualified suppliers,morethan50%haveorareacquiringcertification intheOHSAS18001safetyfield adopted regardingenvironmentalprotectionandoccupational health andsafety. particular significance.SuppliersareaskedforISOcertifications orinanycasetheexistenceofdocumentedprocedures The qualification requirements are correspondingly more severein segmentswhere environmentalandsocialaspectshave • • • Among otherthings,thequalificationrequirementsinclude: Terna’s policyasexpressedintheCompany’sCodeofEthics. organizational, and economic solidity, and their conformance with the ethical, social, and environmental requirements of The qualificationprocessenablesTernatoassesssupplierswithregardtheirobservanceofthelaw,technical, inclusion intheregisterofsuppliersforcompaniesthatbelongto theproductcategoriessubjecttoqualification. Scrupulous managementofethical,social,andenvironmentalaspectsinkeepingwithTerna’spoliciesisacondition for The qualificationprocessandmonitoringofsuppliers if necessaryimprovethesame(seebox“Therevisionofenvironmentalandsocialoversightinsupply chain”). at evaluatingtheadequacyofoversighttheseaspectsbyTernapurchasingandqualificationprocedures, and During 2012,ananalysisprojectofwaslaunchedregardingenvironmentalandsocialimpactsinthesupplychain,aimed qualification phaseandlater,throughconstantmonitoring. and social issues, are included in the Register. The existence of the requirements is verified byTernabothduringthe first only thosecompanieswhichareabletosatisfyaseriesofparticularlystrictrequirements,includesenvironmental transmission, telecommunicationsandInformationTechnology)Ternausesa In themostimportantareasforTerna’scorebusiness(supplies,contractworkandservicesregardingelectricity specific EuropeanCommunityDirectives. regarding awardproceduresgovernedbynationallegislation(LegislativeDecree163/2006)which,inturn,implements new RegulationfocusonensuringthatTernaanditsItaliansubsidiariesadopttheupdatesimplementedbylegislation activities underlicence,andcontractsnotinstrumentaltotheinstitutionalactivities.Theinnovationsintroducedin the to theinstitutionalactivities,thatissaycontractsforwork,suppliesandservicesrelativeperformanceof the Starting 1January2013,Ternaadoptedanew“RegulationforPurchases”whichgovernsboththecontractsinstrumental • • • • • For example,theserequisitesconcern: security required iscombined with checking supplier requirements relatedto transparency forparticipatingcompanies.Theobjectiveofpurchasingatthelowestcostlevelqualityand Procurement isnormallycarriedoutonthebasisofoutcome for humanrights,andorganizationalprofessionalsolidityarewelcomedtocompeteonqualitypriceasequals. in 2012). Suppliers that satisfy conditions of non-involvement in illegal activities, observance of safety standards, respect As statedinitsCodeofEthics,Ternaputstransparency and fairnessfirstinitsrelationswithsuppliers(1,951contracted Relations withsuppliers workers. the existenceofdocumentedproceduresadoptedforprotection oftheenvironmentandsafetyhealth the observanceoflawsregardingprotectionenvironment andoccupationalsafety; agreements applicableforthesamekindofwork; the applicationofconditionsregardingrulesandpaythatare notinferiortothoseprovidedforbythecollective‑bargaining contractors, underpenaltyofrescissionthecontract. the existence, in the case of tenders, of clauses guaranteeing the maximum protection ofthe personnel working for managerial andorganizationalsystem; with regard to tenders, the request for UNI ENI ISO 9001 quality certification as a guarantee of an efficient corporate implementing theProtocolofUnderstandingsignedwithFinance Police; subcontracts assigned,withthegoalofpreventingriskcriminalinfiltrationthroughitsrelationshipsuppliers, the existence of a clause that obliges the suppliers to communicate detailed information to Terna regarding all the honesty, transparency,andfairnesscommittingthemtoavoiding behavioursthatcouldlimitcompetition; a requesttosignspecific“IntegrityAgreement”obligingthesupplierbehaveinaccordancewithprinciplesof the existenceofclausesrelativetocompliancewithTernaCode ofEthicsandModel231; tenders thatensureequalopportunityandtheutmost supplier qualificationsystem ethical, social and environmental aspects throughwhich . HR2 89 Economic responsibility 90 2012 Sustainability Report Companies qualifiedforentryinsupplier register Qualification tender Without Non-European tenders European tenders Procedures adoptedforawarding contracts Number contractedsuppliers PROCUREMENT ANDSUPPLIERS legal andtechnicalexpertise. Committee to themonitoringofactual behaviour andtheinflictionofsanctionsisentrustedtoTerna’s cancellations fromtheRegisterwererecorded.Theentirecompanyqualificationprocess,initial analysis ofnon-compliance, temporarily removedfromtheRegister.Inmostseriouscases,cancellationisprovidedfor. In theeventtheirbehaviourisnolongerinkeepingwithqualificationrequirements,suppliersmaybewarnedor in categoriesandqualifiedcompanies,aswellmonitoringactivity carriedout. In linewiththeobjectivetocontinuouslyimprovequalifications,lastthree-yearperiodhasshownaconsistentincrease relative toQuality,SafetyandtheEnvironment,servingasasingle interfaceforCustomer-Company. within the contracting company, who is incharge of monitoring the improvementand proper applicationofactivities Manager hasbeenadded.Theintroductionoftheaforementionedprofessionalpermitsasingleindividualtobeidentified Terna specifications(seethenextsectiononWorkContracts),positionofQuality,SafetyandEnvironment(QSA) During 2012, relativeto the product categories of work contracts for whichtrainingof personnel is scheduled according to (3) (2) (1) Number ofmonitoring % qualifiedsuppliers Qualified categories

Number ofqualifiedsuppliersoutthetotalnumberwithordersinamountsgreaterthan500,000euro. For 2011,consideringalsotheassociatedqualifiedcompaniesinconsortiums,totalofsuitableRegisterwouldcometo372. This isthepercentageofamountsawarded,for2011-10figureexcludednontraditionalactivities. , whichconsistsofelevenmembers (3) 5 suppliersweretemporarily suspended, while (1) (2) top management andanexternalindependentChairmanwithproven 4 werewarned 1,951 2012 508 373 71 64 41 23 6 Company Qualification ; ontheotherhand,no 2,314 2011 353 749 51 14 35 43 41 2012 , followingan 2,316 2010 593 260 12 35 53 48 40 • • • • • concerning contractoremployees,suchas: With theobjectiveoffurtherreducingrisksregardingcontractwork,Ternarequiresadditionalspecificcertifications employed bycontractorsandsubcontractorsforalltheworkdone onconstructionsites. Italian lawrequiresTernatoperformananalyticalassessmentoftherisksregardinghealthandsafetyworkers particularly scrupulousapproach,aswellthestrictnessofregulations. stricter rulesregardingqualificationandmanagement,inparticularrelativetooccupationalsafety.ThisisdueTerna’s Considering the useof external labour on Terna’s construction sites(seepage84),workcontractsaresubjectto Contract work safety, apersoninchargeof managing emergenciesandhisorhersubstitute,anassigned doctor. the appointmentofaperson inchargeofHealth,Protection,andPrevention(“RSPP”), aheadofconstruction-site with thenamesofemployees registeredbythecompanies; by comparingtheinformation providedbytheschoolsauthorizedtotrainpersonnelfor workintheelectricityindustry which recordstheactualtrainingofpersonnelcompanies doingcontractworkonTerna’sconstructionsites verification oftheactualtrainingpersonnelthrough a webplatform–theQualifiedCompanyPersonnelproject – specialized intheelectricityindustry; designed – according to the content required by Terna – in cooperation with SINCERT-certified training schools hours vegetation, foremen, and safety heads), certification of specific training courses lasting between 24 and 32 for severalspecificroles(e.g.workersassignedtotheinstallation andmaintenanceofoverheadlinestocutting environmental aspectsduringplantconstruction”,whichis attached to eachcontract; the environmental-protectionmeasuresasestablishedin specificoperatingprocedurecalled“Managementofthe established intheConstruction-siteSafetyPlan(“PSC”)and theOperatingSafetyPlan(“POS”)preparedbyTerna,and ones) haveexaminedandbeenappropriatelyinstructed ontheuseofpersonalprotectiveequipment,risks on sitesfortheconstructionofoverheadelectricpower lines, certificationthat certification thattheyknowItalian,soastoensuretheiraccess to informationonconstruction-site safety; improvement planandtheprioritiesfor2013. qualification ofsuppliersandthroughmonitoringtenders.Theprojectwillcontinuewiththedefinitionan environmental andsocialoversightinthevariousfieldspotentiallyinvolved,throughtechnicalspecifications At the conclusion of the analytical phase of the project, certain lines of action were identified in order to improve • • The mainfieldsexploredwere: • • • The studystudiedthefollowingaspectsindepth: on sustainabilityandSRIinvestors. attention placedonthesupplychainby231Model,andingeneraltoincreasinginterestratingcompanies The project,whichfallsunderthesustainabilityobjectivesidentifiedasprioritiesfor2012,isaresponseto purpose ofidentifyingandproposingpossibleimprovements. Group suppliers and procurement, compared to the ESG (environmental, social,governance) dimensions, with the In 2012,Ternalaunchedaprojecttoverifythelevelofcoverageofferedbycurrentqualificationproceduresfor chain Revision oftheenvironmentalandsocialoversightinsupply • • During performancephase: • • During thetenderawardphase: in regardstotransparency,corruption,legality,andviolationofcivil andpoliticalrights. governance -relativetotheactualorpotentialuseofsupplierswithoperationslocatedincountriesmoreatrisk rights (i.e.tradeunionfreedom,childlabour,contributioncompliance) bythesupplier; social -relativemainlytothesubjectofhumanrights,withparticularreferenceoccupationalsafetyandlabour of Ternasincetheyrelatetotheutilizationandendusefullife disposal phases(internalimpact); product orthesupplyofservice (external impact), and onthosewhichcomeunderthecorporateperimeter environmental - relative to both the impacts that the supplier generates duringtherealizationphase of the a sanctionsystem. verification ofactualbehaviourduringtheperformancephase thecontract; objective requirements,consideredforpurposesoftechnicalevaluationthebids; and duringthetenderphase(competition); subjective requirements,decisiveintermsofthesupplier’sadmissibility,bothduringqualificationphase, all theworkers (mainlyblue-collar EU18 EU16 91 Economic responsibility 92 2012 Sustainability Report HR2 LA4 of thework,byassociatingprobablegreatercomplexitywith longerterm. “Occupational HealthandSafety”onpage150)werechecked.Theconstructionsiteschosenrelativetothelength In 2012,35constructionsitesbuildinglinesandstationsforthetransmissionofenergyentrustedtocontractors(seealso assistance ininterpretingthelawandcommunicatingduringsafety trainingforworkers. safety. Forcompaniesoperatingintheseareas,additiontotheactivitiesalreadydescribed,thereareprovisionsfor Monitoring hasenabledTernatoidentifytheareasthataremostexposedwithregardquestionofoccupational • • • • • also requires: To reducetoaminimumthe risk ofviolations of humanand labour rightstothedetrimentofcontractoremployees,Terna certification bythecompetentdoctorthatcontractor’semployees arefitfortheirjobs. a periodicalcopyofthepaymentsocial-securityandothercontributions; for theentiredurationofworkandinanamountappropriate for thekindofworkperformed; a copyofaninsurancepolicycoveringtortliability,personalinjuries,anddamagetoproperty,includingthecontractor’s, certification thatallsocialsecurityandothercontributionshave beendulypaid; a declarationthatthecollective-bargaininglabouragreementis applied toallemployees; Interruptible users COMPANIES RELATIONSHIP WITHTERNAOFCOMPANIESOPERATINGINTHEELECTRICITYINDUSTRYNUMBER of powerandtherelatednegativeeconomicitemamountedtoabout 0.6billioneuroonanannualbasis. insufficient. In2012therewere234assigneesoftheinterruptibilityandinstantloadreductionserviceforabout4,346 MW functioning oftheNationalElectricSystemsecureineventresourcesprocuredonmarketturnedoutto be In 2012,Ternaprocuredresourcesforthe utilization phase. an e-mailaddressthatcanbeusedforrequestsclarificationsandreportsofanyproblemsduringtheregistration and To meettheneedsofoperators,portalhomepage–accessibleat instrument whichallowsprocessestobetrackedandformonitoring ofprogressstatusforprocedures,usinge-tickets. of theprincipaldataforeveryoperator.Thesystemprovidesafrontofficeandbackcontrolledwith single requests for connection to the NTG, to the stipulation of withdrawal contracts, to management of contacts, to the display The portalrepresentsthemainaccesschannelforservicesdedicatedtooperators,frommanagementofdatabase for relationship withthecounterparts:MyTernaPortal. Most oftheinteractionswithelectricaloperatorsaremanagedthroughaplatformcreatedtooptimizecommercial the operator)whileamountrelativetowithdrawalcomesabout 0.1billioneuro(liabilityfortheoperator). value of theelectricity injected or withdrawn. As regards injection, the amount comes to about 0.2billioneuro (asset for imbalances, understood as the difference between the plans the users presented on the electricity markets and the actual Moreover, with the users of both injection and withdrawal dispatching users, Terna regulates the economic items regarding procurement, arepositiveandin2012amountedtoabout2.9billioneuro. System chargesrelativetowithdrawaldispatching,mainlycomposedoftheUpliftpaymentforMSDresources charges arenegativeandin2012amountedtoabout2.2billioneuro. The economicitemsregardingprocurementonthedispatchingservicemarket(“MSD”)andotherinjectionsidesystem parameters, suchasvoltageandfrequency,areatappropriatelevels. Electricity System the economicitemsregarding In particular,withregardtothedispatchingservice,Ternaregulatesusersofinjectionservice technically andcommerciallyintheGridCode. Relations betweenindustrycompaniesandTernaaremainlyregulatedbytheAuthoritiesdefined • • • • categories: Terna mainlydealswithcompaniesoperatingintheelectricity industry andbelongingtooneormoreofthefollowing Relations withcompaniesusingtheelectricityservice (1) ing the SingleBuyer) dispatchingusers (TradersWithdrawal andendcustomers, includ Injection dispatchingusers(Producers andTraders) Distributors directly connectedtotheNTG

owners ofproductionplantsandgridsegments interruptible customers dispatching users distribution companies in compliancewithregulatoryandtechnicalprovisions. Also includedareassigneesoftheinstant-withdrawal-reductionservice. (1) , thusmaintainingtheequilibriumbetweeninjectionsandwithdrawals,aswellensuringthatgrid , i.e.producers,endcustomers,orwholesalerswithwhichTernaregulatesthedispatchingservice; , withwhichTernaregulatestheenergytransmissionserviceonitsowngrid; , i.e.endcustomersofwithdrawalsthatgrantTernatherighttointerrupttheirload; procurement oftheresourcesnecessarytosafeguardsecurityNational interruptibility andinstantloadreductionservices - , towhichTernamustguaranteetherightconnection www.terna.it 2012 234 130 24 88 site–providesamanualforusers 2011 110 171 91 20 aimedatmaking 2010 154 109 86 19 EU3 93 Economic responsibility 94 2012 Sustainability Report (1) illustrating growthtrendsinthevariousenergyproductionsectors. implementation ofproperreportingthat,aswellprovidinginformationonthestatusdata,iscapable of theprocesswithTernaGroup’scompanysystemsthatusedataplantsandproductionunitsinoperation, The objectives set for2013,are:total alignment of masterdata with theDistributorsandGSE,completeintegration using theportaltoexplainGaudìregistrationanduserprocedures. the precedingyear,Ternaplannedthreemeetings-throughoutItalywithoperatorsandusersinterestedin of 36,121callsand20,137emailswerereceived.Duringthefirstfewmonths2013,inlinewithwhathappened free number and a special e-mail address were activated to manage operator requests and reports. In 2012, a total In totalthereareover500,000plantsregisteredinthesystem,ofwhichmorethan150,0002012alone.Atoll- of theplantsinoperation. of GSEcommercialtypesandintroductionthemostimportantfeaturesneededtomanageentirelifecycle following revisions: management and validation of the database also forpurposes of measurement, reclassification process, inaccordancewiththeprojectroadmapestablishedbyResolutionAEEG148of2011,underwent In 2012 there wasanevolution in the qualification process for theplantsmanaged through theGaudìplatform.The plant, therebyensuringacompleteandconstantlyupdateddatabase. for theirgridmangeractivities,whichinvolveonlyasmallnumberofoperators,regardlessthesizeandtype data for all production initiatives carried out and being carried out within Italy with the transmission system operator for allplantsandelectricityproductionunitstobereceivedarchived.Thegoaliscentralizetheregistration The system,whichwasestablishedbyspecialprovisionsoftheElectricityandGasAuthority,allowstechnicaldata production units. relative tothedatabaseofSignificantProductionUnits the integration of the three main database archives managed by Terna: CENSIMP for the surveyingof plants, RUP In 2011theGaudì(ManagementofSingleDatabasePlants)portalwasimplemented,createdthrough The GaudìPortal

Significant productionunits areproductionunitswithoverallpoweroftheassociatedgenerationgroupsnotlessthan10MVA. (1) andUPN6relativetothedatabaseofnon-significant © WWF researchand project archive 95 Economic responsibility

2012

Environmental responsibility 98 2012 Sustainability Report EN23 EN28 450 square metres) wereremoved toavoidpossibleenvironmentaldamage. transformer causedaleakof oil intothesurroundingland.Followingthisevent400cubic metresofearth(fromanarea In 2012,asin2011,therewere nosignificantleaksofpollutantliquids.In2010a fireintheCalenzano(Florence) and litigation”containfurther dataonlitigationandcomplaints receivedintheenvironmentalfield. non-compliance withenvironmental lawsorregulations.The“Tablesofindicators”section andtheparagraph“Disputes In the three years 2010-2012 no definitive administrative or judicial, monetary or non-monetary penalties were imposed for Compliance withthelaw Environmental Managementsystem. Monitoring ofenvironmentalindicatorsisentrustedtoapermanent groupofexpertsworkingwiththeframework which arecoordinatedbytheSustainabilityandEnvironment Steering Committee. In organizationalterms,environmentalmattersareoverseen byseveralDepartments,responsibleforspecificaspects, • • • • • • Among Terna’smaincommitmentstotheenvironment,followingshouldbenoted: interests thatTernaisobligedtoprotect. its environmentalimpactevenbeyondthelimitsimposedbylaw,wheneverthisdoesnotcompromiseothergeneral Terna hasestablishedanEnvironmentalPolicy effects onemissionreductionbytheNationalElectricitySystem. warming. ItshouldalsobenotedthattheinvestmentsincludedinGridDevelopmentPlancanhaveindirectpositive as controllingemissionsofthecorporatevehiclefleet–isthusresultgeneralsensitivitytoproblemglobal for emissions–whichtakestheformmainlyof Terna doesnotproduceelectricity,sotheemissionofgreenhousegasesisafeatureitsactivities.Ourconcern • • • • • The following 100% ofthetransmissiongrid(stations,lines)andbases(offices). in its As regardsexisting lines and theirmanagement, Terna’s attentiontotheenvironmental impact ofitsactivitiesis expressed planning stagesandtakethemintoaccountinanincreasinglydetailed manneruptotheconstructionstage. (Regions, Provinces,Municipalities,ParkAuthorities,etc.),inordertoconsiderenvironmentalneedsrightfromtheinitial constructionofnewlinesthepathchosenisthat For and consolidateanapproachwhichpaysgreatattentiontotheenvironmentneedsoflocalcommunities. characteristic featureofmanyindustrializedcountriesandcertainlytheItaliansituation–haveledTernatodevelop Growing environmental awareness andwidespread local oppositiontotheconstructionofnewinfrastructure–a interaction withthesurroundingnaturalandhumanenvironment. resources or emissionof pollutants, butrather the From anenvironmentalpointofview,themostsignificantimpactTerna’sactivitiesisnotsomuchusenatural the electricityitneedsinmostreliable,economical,andenvironmentally sustainableway. environment andlocal communities. Incarryingoutitsbusiness,itthereforeseeksappropriatesolutionstoensureItaly Terna recognisestheimportanceoffindingrightbalancebetweenenergyrequirementsandsafeguarding Our approach foster thereductionofgreenhousegases. with regard to climate change, the importance of the problem is recognised andthereis a commitment toactionsthat mitigation actions,includingprogramsagreeduponwithenvironmentalist associations; with regardtobiodiversity,thereisacommitmentlimitthe impactofthegrid,particularlyonbirdlife,andtocarryout studies, whilecontributingtothecorrectpresentationand understanding ofthephenomenon; with regardtomagneticfields,regulationsarestrictlycomplied withandattentionispaidtothedevelopmentofscientific by Terna; in relationswithsuppliers,theyarerequiredtograduallyadaptthestandardsofrespectforenvironmentadopted of thelawand,wheneverpossible,environmentalimpactisreduced; in construction, management, and maintenance of the grid, procedures are adopted in accordance with the provisions institutions andenvironmentalistassociations)agreementis soughtforsolutions; in planninggriddevelopmentinvestments,attentionispaidtotheneedsexpressedbystakeholders(inparticularlocal greenhouse gasemissions. the emissionofelectricandmagneticfields; special wasteanditsdisposal; the impactoflinesonbiodiversity,withparticularregardtobirdlife; the visualimpactofstationsandlines; ISO 14001-certified significant environmentalissues EnvironmentalManagementSystem.CertificationregardsallofTerna’sactivitiesandcovers controlling leakageofSF shouldbenotedinparticular: , whichexpressesitscommitmenttopracticeslimitandreduce physical presence of thelines and electricitystations voluntary priorconsultationwithterritorialInstitutions 6 , agaspresentinstationequipment,aswell , andtheir

Assessment (SEA), ofintegratingtheenvironment intotheplanning process. of amethod relating tostakeholdersinlocal communitiesbasedonthe purpose, inherentintheStrategic Environmental agreements betweenTernaand saidAdministrations.Basically,Terna’sapproachhasentailed thevoluntarydevelopment new installations agreeing uponthecriteriato characterise theterritory(theso-called“ERPACriteria”)and aimedat for prior discussionswith the Public Administrations at various levels (Regions,Provinces,Municipalities),based on projects Terna’s responsewasto addition toextendedtimeframesandinsomecases,projects that werebroughtcompletely toahalt. the residentsof areas affected,with the resultthat profound changestothe original prospects wereoftenrequired,in planning oftheinfrastructurewasalreadywell-defined.This approachledtostrongoppositionfromlocalInstitutionsand with localcommunitiesonlybegan,asdictatedbylaw,atthe startofthedevelopmentworkauthorizationstage,when Starting in 2002, Terna opened a new framework for the construction of infrastructure in Italy. Up to that point, discussions Consultation of theexistinggrid. in forceregardingtheinteractionbetweenpower lines andtheterritory,determine the need to makechangesportions transformation ofruralareasintourbansettlementsandtheadoptionnewlegalrules,modifyingparameterspreviously The needtointerveneonexistinglinesisusuallyduethefactthatmanywerebuiltsomedecadesago.gradual of thecountry’senvironmentalandculturalassets. dialogue andconsultationwithInstitutionstoseeksolutionsthatmakeitpossiblepreservetherichnesspotential construction moredifficult.Inresponsetotheseproblems,Ternahasvoluntarilyadoptedanapproachthatincludes of manypartsItalyandthevalueart,culturelandscapeothersmakeplanningmorecomplex and power linesisinsteadconcentratedinthelocalareaaffectedbyrouteofline.Inaddition,populationdensity development caterstosociety’sgeneralinterests,theenvironmentalimpactassociatedwithconstructionof new project seethemonitoringplatform“Terna’sConstructionSitesforItaly”availableonwebsite Plan, whicheveryyearfollowsacomplexauthorizationprocedure(fortheofeachspecific growth ofspecificareas,ortheentirecountry.TernaincludesnecessarynewconstructioninGridDevelopment and eliminatingoverload risks –andtoincrease energy productionandconsumption,whichaccompaniestheeconomic The constructionofnewlinesrespondstothetechnicalneedselectricitysystem–suchasremovingcongestion Lines andlocalcommunities Presidential DecreeNo.43/2012transposingRegulation(EC) 842/2006oncertainfluorinatedgreenhousegases). fire prevention and extinguisher systems containing fluorinated greenhouse gases, as set out in the legislation (Italian Finally, intheearlymonthsof2013employee training beganforthoseresponsibletheworkofinstallingandmaintaining and encouragingsupplierscontractorstoadoptenvironmentally-friendly rulesofconduct. particular referencetogasanddustemissions,contaminationofthesoilpollutionsurfacewatergroundwater, the productionofwasteaimingatincreasedrecoverymaterials,preventinganyformatmosphericpollutionwith the legislationonenvironmentalmatters,minimizinganynegativeeffectsofitsactivitiesenvironment,limiting particular, thevoluntarilyprepareddocumentrecognisesasessentialaspectsofcorporatebusiness:compliancewith grid -sitesfortheconstructionandmaintenanceofelectricitystationsoverheadorundergroundpowerlines.In guidelines forpropermanagementofenvironmentalaspectsintheareaworkonnationalhigh-voltageelectricity of environmentalsafetyinconstructionsitesforactivitiesonthenationalhigh-voltageelectricitygrid”,whichidentifies In 2012,togetherwiththeANIE(NationalFederationofElectricityCompanies),Ternaprepareddocument“Management overhead lines. In 2012,Terna,makinguseofthesupportaccreditedexternalbodies,completedmonitoringnoiseassociatedwith stations. pollution of the soil, subsoil, surface water or groundwater during normal performanceofactivities at Ternaelectric the 2011 census of the types of oil collection tanks installed in the Terna plants, is to prevent episodes of hydrocarbon operation ofOilCollectionTanks”wasalsodefined.Thepurposethedocument,whichdraftedtakingintoaccount During 2012, theoperating instruction “Management and minimizationofthe risk of hydrocarbon pollutioninthe ordinary – power linesandelectricitystations–included in itsDevelopmentPlan.Themethodologydevelopedprovides . Thesolutionsagreedupon with theLocalAdministrationsareconfirmedthroughsigning ofspecific voluntarily moveforwarddiscussionswithlocalcommunities totheplanningstageof www.terna.it optimal locationof ). Ifgrid SO10 EN26 EU19 SO1 SO9 EC8 99 Environmental responsibility 100 2012 Sustainability Report if therearenomoreenvironmentally-compatible alternatives. natural areas,withregardtowhich specificagreementsaremade,andareasthatto betakenintoconsiderationonly The Repulsioncriterionincludes areasthatmaybetakenintoconsiderationonlyintheabsence ofalternatives,protected are howeverbinding,through agreementsonthesubjectmadeinadvancebetweenTerna andtheauthoritiesinvolved. the lawasareasofabsoluteexclusion, suchasairportsandmilitaryzones,areasnot directlyexcludedbylaw,which Each classofERPAcriteriaincludesseveralcategories.Currently, theExclusioncriterionincludesareasrecognisedby • • • • Regional administrationsagreedonasystemofcriteriabased on four classes: that expressgreaterorlesserappropriatenessforhosting electricityinfrastructures.InthenationalSEA,Ternaand The territorytobestudied,withitslanduseclassifications and relatedprotections,ischaracterisedonthebasisofcriteria criteria the leastimpactconsistsofagreeingon As partofconsultationwithlocalinstitutions,onethemosteffectiveinstrumentsforselectingalternatives with Criteria ofterritorialcharacterisation maps, forthebenefitofpublicandinstitutionsinvolved. relating totheSEAofNationalElectricityTransmissionGridDevelopmentPlan,withparticularreferencerelated map portal(theso-called“SEAPortal”),whichhasbeenactivesince2011tofacilitateconsultationandsharingofdata ( More informationontheSEAisavailableinwebsitesectiondevoted tothe“ElectricityService” a growingnumberofRegions,18astoday,includingtheAutonomousProvinceTrento. to establishinaformalmannertheprogressofreciprocalcommitments.Since2002,Ternahasreachedagreementswith process ledtothesigning,withRegionsandlocalauthorities,ofProtocolsUnderstandingPlanningAgreements, The decisiontoadoptthefoundationsofSEAbuildaparticipative,transparent,documentedandviableplanning of relationswithlocalinstitutions. many yearslater(in2007withItalianLegislativeDecree152/2006)andmuchlessdetailedimplicationsatthelevel The SEA,atthetimesubjectofanECDirective(Directive2001/42/EC),wastobetransposedintoItalianlawonly 9. 8. 7. 6. 5. 4. 3. 2. 1. http://www.terna.it/default/home_en/electric_system/sea.aspx Attraction territory documentedbytheauthoritiesinvolved,whichtherefore require furtherterritorial analysis. Problematicity alternatives withlessenvironmentalcompatibility. Repulsion Exclusion Sardinia Campania Lazio Tuscany Liguria Piedmont Lombardy Valle d’Aosta Autonomous Province ofTrento Agreements signed . : areasinwhichallconstructionisexcluded. : areastofavourwheneverpossibleaftercheckingthearea’s carryingcapacity. : areas which wouldpreferably not beaffected by projects,unlessthereare no alternativesorif there areonly : areas in which passing is problematic for an objective reason, associated with specific aspects of the 2 4 9 5 ERPA (Exclusion,Repulsion,Problematicity,andAttraction)location 3 1 6 10 12 7 11 ) fromwhichyoucanalsogainaccess to thededicated 13 18 14 8 16 17 15 15. 14. 13. 12. 11. 10. 18. 17. 16. Apulia Molise Abruzzo Umbria Marche Emilia-Romagna Sicily Calabria Basilicata and compatiblewiththeorganisationofterritorythattheywill be affecting. locations –intermsof“corridors” – thataresustainablefortheNTGdevelopmentprojects,becausetheyinkeeping cultural, landscape,etc.),opportunelyredistributedwithinthedifferentERPAcriteriaclasses,soastoidentifypossible the informationrelatingtodifferenttypesoflandusementionedandbindingprotections(territorial,naturalistic, The useofGIS(GeographicInformationSystem)technology makes itpossibletoconsiderinanintegratedmannerall area’s carryingcapacity–ismoresustainablethaninnewareas thatdonothaveanylineinfrastructure. infrastructure, suchasinfrastructureandenergycorridors,inwhichthelocationofanewline–ifitiscompatiblewiththe The Attractioncriterioninsteadincludesareaswithgoodlandscapecompatibilityandthatalreadyhostline the criteriaandmethodsestablishedatnationallevel. leaving theappropriatedecision-makingautonomyatregional level,whichinanycaseproceedsaccordingto An essential aspect of the integrated planning process described above is coordination between the two levels, on themostviableandsustainablesolutionsforlocation oftheinfrastructurenecessaryforNTGdevelopment. voluntary consultationthatTernahascarriedoutsince2002 withregionalandlocalgovernmentstoseekagree The regionallevelconstitutestheconcreteof“dialogue withlocalinstitutions”,i.e.ofthepriorand Report (PR)whichcharacterizesthestageoforientingorscreening. and monitoring.ThesearelinkedtothePlan,Environmental ReportassociatedwithitandthePreliminary The nationallevelisorganised into the following different stages: orientation,formulation, consultation, approval, plan orprogrammecouldhaveontheenvironmentareidentified, described,andassessed. provides forthepreparationofanEnvironmentalReport(ER),inwhicheffectsthatimplementation Legislative Decree 152/2006 and later amendments and additions), which applies to theDevelopment Plan and The nationallevelisthe formal levelofapplication of the SEA procedure,asdefinedbycurrentlegislation(Italian reciprocal dialoguethroughconsultationactivities. “Integrated planning”isunderstoodtomeanthattheworkofplanningelectricitysystemincludesconstantand procedure requiredbycurrentlegislation(“nationallevel”). makes useofthepriorconsultationapproachdevelopedbyTerna(“regionallevel”),harmonizingitwith The schemeillustratestheintegratedplanningprocessthatTernahasimplementedoveryears.This COEXISTENCE ANDINTEGRATIONOFDIFFERENTDECISION-MAKINGLEVELS The integratedplanningprocess NATIONAL REGIONAL LEVEL LEVEL MONITORING REPORT SCREENING (RP) ORIENTATION/ MONITORING CONSULTATION OFSUSTAINABLEHYPOTHESESFORTHELOCATIONDPPROJECTS DECISIONE-MAKING FORMULATION (PDS, RA) MOTIVATED OPINION CONSULTATION ASSESSMENT SO1 101 Environmental responsibility 102 2012 Sustainability Report • • Rationalization workmainlyconsistsin: dismantling ofsomegridsegmentsandtheconstructionnewlines. Rationalization Work onthegrid which aredescribedbelow. To reducetheimpactofpowerlinesonlocalcommunitiesandenvironment,Ternacanimplementaseriessolutions, Reducing environmentalimpact stretches closetourbanareas. for examplebyusingtallersupports.Requalificationmay also involvemovingtherouteandatsametimedismantling Requalification projects territory. of anewline,generallyusingpre-existinginfrastructural corridors,avoidingtheoccupationofnewportions one whichthereforetakesupmorespace.However,reclassification hastheadvantage,comparedwithconstruction conductors andsupportsinplaceoftheexistingones.This actioncaninvolvereplacementoftheoldsupportwithalarger Reclassification five totentimesthecostofanoverheadline). in the construction stage – for example in terms of road traffic – and also much higher construction costs (normally from guarantee anadequatelysecureelectricitysystemandservice continuity.Inaddition,buriedcablesbringgreaterimpacts overhead powerlinesandrequireamuchlongertimetorepairintheeventoffault:forthisreasontheyoften,do not In reality,burialentailsvarioustechnicalandeconomicproblems:buriedlinesarelessreliableovertimecompared with reason,burialsareoftenrequested by thelocalinstitutionsasfirstoptionforconstructionofnewlines. For this Burial ofcables activity. of newpowerlines,isthemostsignificantcontributionbenefitingenvironmentthatderivesfromgriddevelopment terms ofthepresencepowerlines around thecountry. Dismantling stretchesofline,madepossiblebytheconstruction envisaged bytheDevelopmentPlan,therearemanymoredemolitionsthannewconstructions,withanetpositiveeffect in it possibletoreducethepresenceofelectricityinfrastructureinareasgradualurbanization.Ofallrationalizations space occupiedbypowerlines,duetoremovalofoldlines.Aboveall,neartownsandcities,rationalizationprojectsmake When rationalizationispossible,theconstructionofanewplantmayalsohaveeffectreducinggeographical • integrating newgridcomponents,forexamplestations,toavoid havingtoupgradesaturatedlines. an upgrade; eliminating partsofthegridwhoseusefulnessisnilornegligibleafterconstructionnewinfrastructuresconstituting of lower-voltagelines; replacing plantswithbetterones,suchas,forexample,introducingnew380kVconnectionstoreplacealargernumber agreed (“ using maps,onthebasisofspecificindicators definedtoassessanychangesthatmayoccurbetweentheplan Finally, withintheSEAPortal,itispossibletousewebmonitor sustainability indexes. social, technicalandeconomicdimensiononly,orasawhole,usingtheassessmentindicatorsaggregate The map portal also makes it possible to follow the organisation of the Plan on a regional basis, in the environmental, reference tothemaps,butalsodataon Through theSEAPortal(http://portalevas.terna.it) users canconsultnotonlytheEnvironmentalReport,with portal, specificallydevotedtotheSEAprocedureofNTGDevelopment Plan. To improvequalityandtransparencywithitsstakeholders,in2011Ternacreatedanewinteractivecorporate The SEAPortal ex ante iscomplexwork,whichinvolvesseveralgridcomponentsatthesametimeandoftenincludes providesforconversionofexistingpowerlinestoahigher voltage,throughtheconstructionofnew eliminatesorreducesthenegativeimpactonlandscapetypicalofstretchesoverheadlines. ”), theprojectauthorized(“ are aimed at reducing the population’s exposure to electromagnetic fields (see theboxbelow), in itinere SEA monitoring ”) andtheworkdone(“ ofimplementationthePlan. gradual implementationofthePlan ex post ”). , and excavatedearth(onthis subject seealsotheparagraph“Relations withsuppliers”onpage89). managing accidentalevents, minimizingatmosphericemissionsandnoise,vehicleuse, andcorrectlymanagingwaste standard andincludeaspects suchas:preventingcontaminationofgroundwaterand limitingdamagetovegetation, formulated inaccordancewiththeprovisionsofapplicable environmentallawsandtheprescriptionsofISO 14001 The prescriptionsonenvironmentalmattersthatareapplied intheworkcontractsawardedtoexternalfirmsare Contract work relevant regulationsinforce,suchasavoidingspillsandthe temporary storageofpolluting substances. Furthermore, particularcaremustbetakeninmanagingwaste producedontheconstructionsite,inaccordancewith avoiding high-impactactivitiesduringreproductiveperiods forsaid species. one. Thetimingoftheconstructionsitestagesmusttake account ofthevitalneedsspeciespotentiallyinvolved, and requalificationworksmustbeundertaken,torestore theareatoaconditionasclosepossibleitspreceding However, iftheareascontainnaturalorsemi-naturalhabitats, attheendofconstructionwork,environmentalregeneration and planningneeds, establishes that during plantconstruction”–toensureobservanceoftheenvironmentalpolicyadoptedbyCompany.Specifically, it To manageconstruction sites Terna has adopted an Operating Instruction – “Management of environmental aspects Construction-site management fences, requalifiesbuildingsandmakesuseofnaturalisticengineering techniques. into theenvironmentofstructures In thecaseofexistingplantsmitigationmeasuresareaimedat Mitigation construction ofnewelectricitystationssimilarconsiderationsapply. the alternativesavailable,alsomakinguseofdesignnewsupportsbyinternationally-famousarchitects.For the compatibility andchoosingsupportswhichintegratewellwiththeterritory Terna canreducetheimpactofpowerlinesonlandscape,identifying Measures adoptedintheplanningstage assess effectiveexposuretoelectricandmagneticfieldsgenerated byitsplants. event ofanyreportsandrequestsbyresponsiblebodiesadministrations,Ternaprovidesthedataneededto Terna carries out inspections of its lines to ensure compliance with the limits set out by current legislation. In the Rio Principles.Observanceofthelawinitsactivitiesimplicitlyentails Terna’sadoptionofthesameprinciple. of the show that Italian legislation has adopted the precautionary principleexpressedinArticle 15 (3 microteslas) The valuesofthethreeparameters,andinparticularvalueconcern(10microteslas)qualityobjective • • • (Prime Minister’s DecreeofJuly8,2003)arethefollowing: The mainreferencevaluesfortheemissionofelectricandmagneticfieldscurrentlyprovidedbylaw Electric andmagneticfields:thelegallimits operating conditions. forthevalueofmagneticinduction,understoodasmeanover24hoursundernormal 3 microteslas and magneticfieldsgeneratedbypowerlinesoperatingatafrequencyof50Hz,thequalityobjectiveisset vicinity ofelectriclinesandinstallationsalreadypresent,inordertograduallyminimizeexposure stay atleastfourhoursaday,andinplanningnewsettlementsareassuchastheaforementioned quality objectives:inplanningnewpowerlinesnearplaygrounds,homes,schools,andplaceswherepeople understood asthemedianvalueover24hoursundernormaloperatingconditions; where peoplestayforatleastfourhoursaday,thevalueofconcernmagneticinductionis10 microteslas, exposure tomagneticfieldsgeneratedatthegridfrequency(50Hz),playgrounds,homes,schools,andplaces values ofconcern: as aprecautionarymeasureofprotection from possiblelong-termeffectsconnectedwith as effectivevalues; electricity lines,thelimitis100microteslasformagneticinductionand5kV/melectricfield,understood exposure limits:incaseoftoelectricandmagneticfieldsatafrequency50Hzgeneratedby the constructionsiteareasandnewaccessroadsbepositioned in zoneswithlessvegetationalvalue whichmakethemup.Inparticular,Ternadevelopsmaskingsystemsforstation (agriculturalareas). reducing visualimpactand/orimprovingintegration . InthelastfewyearsTernahasexpanded routes inareaswithgoodlandscape , asfarcompatiblewithtechnical EU13 103 Environmental responsibility 104 2012 Sustainability Report of appropriatetechnology,suchasradar. study carried out on the Strait of Messina, the need emerged for more detailed monitoring with the aid measures. In the observations, alsousingnewexperimentalapproaches,tocorrectlyassesstheriskandidentifypossiblemitigation Mezzano –wetlandssubjecttomigratoryflowsthereseembemorerisksforbirdlifewhichrequiresupplementary High-Voltage electricitylinesismodestin4ofthe7areasmonitored.NearLakeMontepulcianoandarea of The LIPUstudy,whichwascompletedattheendof2011,showedthatriskbirdscollidingwithHigh-andExtra wires atthesametimewiththeirtwowings,typicaloflow-andmedium-voltage grids. Transmission Grid(NTG) scale, therealinteractions of birdlife with High-andExtraHigh-VoltagepowerlinesoftheNationalElectricity The projectwas interaction betweenHigh-Voltagelinesandbirds. In 2008TernasignedanagreementwiththeLIPU(theItalianpartnerofBirdlifeInternational)forascientificstudyon the parks. from EuropetoAfrica–thelocationofwetlandsaroundcountry,andpresenceprotectedareas,reserves and significant factorsinthissensearetheroutesofmigratorybirds–particularlyimportantItalywhichisa“bridge”countr y occurrence ofcollisionsdependsonthedensitybirdlifeandfrequencytransitsinflightnearlines. The if theycrosstheroute.ThepresenceofHigh-Voltagelinesisassociatedinsteadwithriskcollision.actual conductors typical of low- and medium-voltage lines, which can cause birds – above all large ones – to be electrocuted The riskofelectrocutionisnotaconcernforTerna’splants,becauseitpresentonlyinthesmallspacebetween the On theotherhand,presenceoflineshaspotentiallynegativeeffectsonbiodiversity,whichconcernbirdsinparticular. observe theterritoryandasnestingstructures. concentrated. Infact,birds,andinparticularbirdsofprey,oftenusepowerlinespylonsbothaspointsfromwhichto by ploughingactivities.Theyarealsothosearoundwhichbirdsofprey,thepredatorstheserodents, and thornbushesflourishinthemwildrodentstakerefugebecausetheirdensystemsarenotregularlydestroyed agriculture andsubtractedfromtheactivityofworkingtransformingland.Theseareareasinwhichwildherbs The bases of pylons, above all the largest ones, carrying High Voltage lines, are the only zones saved from intensive areas or large areas with cereal monocultures, pylons and their bases constitute “islands” of biodiversity concentration. be afactorinincreasing biodiversity Once thelinehasbeenbuilt,relationshipwithbiodiversityistwo-fold.Ononehand, requires particularattentionifitoccursneartoorinprotectedareas. erecting pylons, excavating the ground, removing residual materials. The work of constructing new lines and stations the constructionstageimpactonbiodiversityisassociatedwithsitework its impactonbiodiversitytakedifferentfeaturesduringconstructionofnewlinesandoperationexistinglines. Terna’s gridisspreadoutalloverthecountry.Theinteractionofwithsurroundingnaturalenvironmentand Biodiversity an importantopportunitytostudy,forthefirsttimeinasystematicwayandonlargenational . Theonlystudiesalreadyavailableinvolveddeathbyelectrocutionofbirdsthattouchtwo andtheprotection of certain species. Forexample,whenlinescrossvastopen : openingofpassagestoarriveand the routeoflinemay In EN12 EN26 105 Environmental responsibility 106

2012 Sustainability Report EN14 EN26 decommissioning. These positiveresultsarecurrentlybeingstudiedbytheplanning officestodefinethetechnicalaspectsoffuture which leadsustobelievethatthefuturelinewillnotinterfere with migration. Most crossingsarefarfromthefutureline,whilethosecloser areataheightofmorethan100metres, South‑East oralongtheIoniccoast,dependingonwinddirection. line is planned to pass is little involved in the birds’ migration, particular birds of prey, which cross further to the more easterlyPeloritanizonesandintheareaofAspromonte, showingthatthezoneinwhichnewpower The datarecordedconfirmedthelowmigratoryflowin theareaaffectedbyTernapowerlinebothin 10,130 birdswerecountedinSicilyand28,776Calabria. a dayatthetimeofspringmigrationbirds,from middle of Apriltothemiddle May2012. This secondmonitoringwasofatraditionaltype,i.e.withobservers ontheground,andwasconducted24 hours these areas,asprescribedbytheEnvironmentalCompatibility Decree fortheSorgente– Rizziconiline. 2000” areas,toobtainusefulindicationsforplanningthedecommissioningofoldlinescurrentlypresentin In 2012TernaagainmonitoredthepassageofbirdlifebetweenCalabriaandSicily,within“NatureNetwork birds intheareawhereSorgente–Rizziconilineisplannedto pass. Messina, anareaheavilycrossedbymigratoryroutes.Thestudymadeitpossibletoexcludesignificantrisksfor Last yearwepublishednewsoftheexperimentaluseradartomonitorpassagebirdlifenearStrait for optimalplanningofdecommissioning Sorgente -Rizziconiline:monitoringofmigratoryflowsbirdlife strategy intotheplanningofnewlinestobebuilt. provides for,amongotherthings,theincorporationofenvironmentalcriteriaconsistentwithWWF’sconservation This approachwasconfirmedintheprotocolofunderstandingsignedbyTernaandWWF(seeboxbelow) which Report containingregionaldetailsthataccompanytheGridDevelopment Plan. collected becomespartofthecriteriausedtodeterminefinalrouteandisavailableinpartsEnvironmental The biodiversity features ofareasthatcouldpotentiallyhostnewinfrastructurearecarefullystudied.Theinformation presence ofprotectedareas–constitutesanimportantfeatureinthesustainability-basedplanninggriddevelopment. The approachisprimarilypreventive.Therefore,likeotherenvironmentalvariables,biodiversity–andinparticular the the planningstageand,whenevernecessary,byadoptingappropriatemitigationandoffsettingmeasures. Terna manages its impacts on biodiversity with a series of integrated instruments that consider such impacts right from Management ofimpactsonbiodiversity marine areas). In all,netofoverlaps,protectedareascover22%Italy’sterritory(thisfiguredoesnottakeintoaccount kilometres. crossesprotectedareas (4,950 km) Community Importance,SPZs-SpecialProtectionZones),andeliminatingoverlaps, types ofprotectedareasdefinedbyvariousnationalandregionallaws,reserves,SCIs-Sites of nature, presentinthedatabase,usingmostaccreditedGIS(GeographicInformationSystem)tools.Considering all (lines) andprotectedorhigh-biodiversityareas With the support of the database, Terna has carried out an • • • • • • • • naturalistic andlandscapeaspects,amongwhichthefollowingare notable: level. Besidesthelocationofpowerlines,maininformationindatabaseregardsgeological,hydro-geological, administrations. Thedatacollectedhasbeenmadeuniformandenteredinastandardmappingsystematthenational by RegionsandMinistries.Thisdatawasacquiredthroughexchangeagreementswithnumerouspublicbodies main tool for identifying critical stretches of line is a very complete territorial database, populated with data provided plants havinganegativeimpactonbirdlife,theinteractionbetweenlinesandtheseareasisconstantlymonitored.The Considering the importance of that proximity to protected areas or areas ofnatural interest can have on the risk of Terna’s Lines inprotectedareas legislative restrictionsandadministrativeboundaries. landscape-risk map; Important BirdAreas Sites ofCommunityImportance(SCIs)andSpecialProtectionZones (SPZs); the officiallistofprotectedareas,riversideparks,natural reserves,terrestrialandmarinenationalparks national pollutedsites; climate data; degree ofseismicity; (IBAs); forstretchesofalengthrangingfromfewhundredmetrestoseveraltens , combiningthedataonelectricitygridwiththoseofaterritorial inventory ofpossibleinterferencesbetween its structures 9% ofTerna’selectricitygrid EN11 107 Environmental responsibility 108 EN13 2012 Sustainability Report EU13 EU13 • • • The main power line. the interference to insignificant levels, environmental compensation measures are adopted, i.e. actions on areas near the both intheconstructionstageofwork,andduringoperation. Ifthemitigationmeasuresarenotsufficienttoreduce and certainspeciesorhabitats.Toreducethisinterference to aminimum,environmentalmitigationmeasuresareadopted, Despite the precautions taken inthe planning stage, it is possible that interference may occurbetween individual works foreign totheenvironment; root. Theuseofnativespecies preventsthephenomenonoffloristicpollutionvia introduction ofspeciesthatare turfing, reforestation rainwater and,therefore,controlling thephenomenonofsoilerosion; environmental regeneration, environment menu. For furtherinformationseethe“Sustainability”sectionof theTernawebsiteunderBiodiversityitemof monitoring andcontrollingthemigratory,nestingwintering populations ofbirdsprey. The nextTerna-WWFItaliaprojectwillregardthePollino Park, inCalabriaandBasilicata,willbefocusedon and Padule-OrtiBottagone(Livorno),theSicilianoasisofTorre Salsa(Agrigento). Terna andWWFItalia.TheseprojectshaveinvolvedtheTuscanoasesofStagnidiFocognano(Florence) The project in Abruzzo follows a series of other initiatives, which all result from a multi-year agreementbetween for thesowingandsubsequentestablishmentofyoungplants,protectthemagainsterosion. of “biomats”toreconstituteandconsolidatethesubstrate.Theseencourageaccumulationearth,necessary To facilitatetheestablishmentofnewplants,naturalisticengineeringpracticeswereimplemented,suchasuse to obtainnativeseedswhichweresubsequentlysown. In August,ontheParkAuthority’sindication,inareaandimmediatesurroundings,theseplantswerecut selected onthebasisoftheirabilitytocolonizesoil. well as the accentuated erosion of such disturbed soils by rain water: for this reason, the plant species used were to themicro-climaticconditionsofareaandstressescausedbysurfacemovementdetritus,as The craggy environment in which the project took place is one of the most unfavourable for plant life owing both vegetation coverinareasaffectedbytheexcavationandpositioning ofeightelectricitytransmissionpylons. steep slopesatseriousriskofhydro-geologicaldegeneration,createdthebasisforaprojecttore-establish In particular,thepassageofnewBolognano-BussilinenearGolediPopoli,anareacharacterisedby Park, inAbruzzo. priority areascontinuedduring2012,resultinginavegetationregenerationprojecttheGranSassoNational The collaborationbetweenTernaandWWFItaliatocreateprojectsintheEco-RegionalConservation(ERC) Sasso Park TERNA, WWFITALIAandtheParkAuthoritytogetherinGran by sowing seeds belonging to native species together with natural fertilizers and adhesives that help them take mitigation , throughtheplantingofnative speciesoftreesandshrubsthatarepartlocalvegetation; and offsetting carrying out naturalistic engineering works, capable of regulating the surface flow of measuresentail: © WWFresearchandprojectarchive TERNA’S NESTINGBOXESANDMONITORINGBYSPECIESHOSTED to agriculturalpracticesandchoosethemostsuitablehabitats inwhichtoinstallnewnestingboxes. The analysisofmovementswillmakeitpossibletobetterunderstandtheenvironmentalneedsthisspeciesinrelation ecology. carried out,thankstonests placed onTerna’spylons.Thestudywasconcernedwithaspectsofgeneticsandbehavioural has significantly increased its presence in Italy, in particular in the Province of Viterbo where the research activities were During 2012 Terna assigned a new scientific research project to box below). Also inthe2012reproduction season, theboxesmounted on pylonsweremonitoredtocollectreproductiondata(see the Scops Owls andEuropeanRollers. the nestingboxeswecannoteKestrels,aspeciesofsmallfalconthathaveadaptedtolivinginhumanenvironments, ethological dataandrevealedapositiveeffectintermsofbiodiversity.Amongthemainspeciesthathaveoccupied monitoringoftheboxesbyagroupresearchershasenabledcollectionnumerousbiologicaland The constant italica Ornis In 2012Ternaagainsupportedthe“nestsonpylons”initiativeincollaborationwithornithologicalassociation DISSUADERS FORBIRDLIFEPRESENTONTHENTG the noisetheymakewhenstruckbywind, by frequentbirdcrossings,specialdevicesknownas“dissuaders” Terna’s High-Voltagelinesrepresentacollisionriskforbirdlife.Itisthisreasonthat, Lines andbirdlife lines andbirdlife,whicharedescribedinthefollowingsection. As farasexistinglinesareconcerned,Ternahastriedoutmitigationsystems,inparticularregardinginterferencebetween samples takensubsequentlyinordertopromptlyidentifytheappearance ofanysignsdeterioration. Environmental analysesareperformedbeforeconstructionandthedataobtainedthencomparedtothosefrom During theconstructionofinfrastructure,habitatsandspeciesflorafaunaconcernedaremonitored. in the“ElectricitySystem”sectionofTerna’swebsite. With regardtothespeciesoffloraandfaunapotentiallyinvolved,see2012EnvironmentalReport,whichispublished • -Red-footed Falcon TOTAL Total numberofdissuaders observe theanimals’behaviour remotely. the Ternawebsite.Thelinkvia thewebcamsalsomakesitpossible,amongotherthings, forresearcherstoscientifically of video cameras in artificial nests to follow the birds’ reproduction period on-line, on the website (**) (*) -European Roller/ScopsOwl -Kestrel In 2012Ternaalsocontinued itscollaborationwith -Peregrine Falcon over equivalentareas. offsetting Approximate valueswhichtakeintoaccounttheboxesoriginallyinstalledand their possiblewearovertime. Nesting boxesforEuropeanRollersarealsousednestingbyScopsOwls. , which over the years has enabled the installation of more than 500 boxes suitable for nestingbirds. , i.e.compensatingforthecuttingdownoftreesalongplannedlinesbyplantingsamespecies (**) make electricitylinesmoreeasilyperceivabletobirdsinflight Boxes installedin2012 Ornis italica forthe Ornis italica 360 214 108 37 1 (*) “ havebeeninstalled.These,duetotheirsizeand birdcam , focused on the European Roller, a bird which 11,146 ” project 2012 Young in2012 born in stretchesoflinecharacterised , whichinvolvestheinstallation 117 NA 9,116 www.birdcam.it 3 4 2011 Young ringedin2012 . and on 8,917 2010 71 25 42 = 4 EN13 EN14 109 Environmental responsibility 110 2012 Sustainability Report website attheaddress: The study«ProtégerlaBiodiversité :lesentreprisessont-ellesresponsables?»canbe downloaded fromTerna’s to therelevanceofitsinitiatives andeighthfortheresultsobtained. 71/100 (averagescore:34.5/100; energyindustryscore:27/100),Ternatookfourthplace overall;thirdinrelation only 25%ofthesehaveidentified themainimpactsonbiodiversityconnectedwiththeir business.Withascoreof The studyfoundthat74%of the companiesexaminedstatethattheyarecommittedto protecting biodiversitybut strategies basedonananalysisoftheconduct127European listedcompaniesdividedinto9sectors. European extra-financialanalysisagencywhich,inOctober 2012,publishedastudyonbiodiversityprotection Terna’s commitmenttoprotectingbiodiversitywasrecognised, attheinternationallevel,byVigeo,first exceptional snowfallsofFebruary2012inRome,gaveusreally extraordinary imagesof Aria andVento’snest. also because the few similar cases documented in the literature always tell of a cruel end for theyoung.The two the couplein2011,thatsupportedparentsmanaging thebrood.Thiswascompletelyunheard-ofbehaviour in thenest,presenceofathirdindividual,lateridentified bytheringnumberasayoungmaleproduced In fact,thisyear,Terna’swebcamrecorded,rightfromwhen theeggswerelaidandforalltimeyoung “La Sapienza” UniversityinRome. breeding in an urban environment, in a nesting box placed on the terrace of the Faculty of Economics of the New informationcamealsofromthecoupleofPeregrine Falcons,AriaandVentowhichforyearshavebeen the MarciglianaandDecimaMalafedereserves,nearRome. On theotherhand,numberofKestrelsremainedstable.Forthesebirds50nestswerereplacedinarea shift ofthespecies, seem tohavemovedtowardsRome,atabout20kmfromthe“historical”nestsnearViterbo.To support thisapparent The presenceofScopsOwlshasfallenprobablyowingtothedominanceEuropeanRollersinarea.The former carrier theyearaftertofindoutbird’smigratoryroutes. applying the GPS did not reveal anomalous behaviour or signs of suffering; the hope is to manage to recapture a GPS of backpack,weighingafew grams, capableof tracking thebird’sannualmovements.Observationin the daysafter of EuropeanRollersandKestrelsbypositioningasmallGPSrecorderonthebacknumberbirds.Thisissort More newinformationonbirdlifefromthenestsTerna’spylons Ornis italica http://www.terna.it/default/Home/sostenibilita2/sost_ambiente/sostAmb_biodiversita.aspx volunteersinstalled15newnestsforScopsOwlsnearS. Angelo Romano. of anti-predatorprotectiononthenests.Thisisa temperatures, whichthisspecieslikes,totheinstallation This highsuccessrateisdue,apartfromtheexceptional half wereringedbythe of 4.5chicks)tofledge.Oftheapproximately100 new chicks, 22 couples ofRollersmanagedtobringtheirbrood(anaverage increased byone,upfrom25to26nestsandasmany Compared with2011,occupationofthenestingboxes information onthebehaviourofspecies. and subsequent hatchings of newborn chicks, and new great satisfaction,intermsbothofoccupationnests Tuscania, MonteRomano,VetrallaandBleraprovided in nests placed on Terna’s pylons in Upper Lazio, between European Rollers,intheirthirdyearofmonitoredpresence “eggcams” placedinsidetheartificialnests. were abletofollowallthestagesviawebcamsand collaboration agreement between Terna and researchers andbirdwatcherswho,thankstothescientific The 2012 reproduction season reserved many surprises for experiment, aimed at carrying out a study on the movements experiment, aimedatcarryingoutastudyonthemovements The ringingstagecoincidedwithafurtherscientific was noted,confirmingthecolonialnatureofthisspecies. of birth”ayoungcoupleRollers,probablybornin2011, Again inthiszone,thankstotherings,return“pylon unambiguous signthatthebirdsrememberplaces. preyed uponthepreviousyearwerenotreoccupied,an wasnoted thatnests out inthereproductionperiod,it it inaccessibletobirdsofprey.Duringmonitoringcarried Plexiglas tubeappliedtothenestentryholewhichmade Ornis italica ornithologists. ornithologists. Ornis italica , (6) • • • In detail,in2012: of themissingmeasurementsenablesustopresentfigurescovering100%plantsandoffices 2012 isbasedonprecisemeasurementstakenfrommeterreadingsat91%ofstationsand70%offices;anestimate rising orfallingconsumption.Asregardsindirectconsumptionofelectricity(officesandstations),thepublishedvalue for with theconsequencethatchangesfromoneyeartoanothermayreflectprocurementcyclesratherthanatrend of The tablebelowshowTerna’sdirectandindirectconsumption.Insomecases(oilforheating),purchasesaremonitored, in officesandworkshops. Indirect consumptionofenergyinvolvestheelectricityusedtorunstationsandoperatingplants(87%total) and • • • The transmission of electricity only requires the direct consumption of energy for a few activities that support the service: Energy consumption • • The following arenotable: pages, a number of Terna’s activities lead to significant reductions in CO As wellasmonitoringandprogrammestocontaindirectindirectemissions,whichareillustratedinthenextfew system withafocusonenergyefficiency. standard, whichestablishestherequisitesforcreating,launching,maintainingandimprovinganenergymanagement project, in2012,an”InitialEnergyAnalysis”wascarriedout,withtheaimofaligningsystemtoUNI CEI EN ISO 50001 In particular,in2011the“EnergyConsumedforOwnUseManagementSystem”projectwaslaunched.Aspartofthis has chosentovoluntarilycommititselflimitingitsemissions. emission reductionobligationsundertheKyototargets,nortotradingschemesofanykind.Incase,Terna businesses ingeneral–arethosemostresponsibleforgreenhousegasemissions.Forthisreason,Ternaisnotsubjectto Terna’s businessiselectricitytransmissionandithasnoproductionactivities,whichintheindustry–forall Energy efficiencyandclimatechange

there wasa2%increaseinelectricityconsumptiondueto theincrease instations2012 (3%comparedwith2011). the newPerosite,whichisconnectedtoadistrictheating plant; the reducedconsumptionofnaturalgasmustalsobeseen inthelightofcompletetransferMilanofficesto consumption ofnaturalgasanddieselremainedinlinewith 2011,withaslightdrop(approximately2%).Inparticular, were almostcompletelyeliminated(seetheparagraphonpage121 in thissection); while therewasasharpdropinvehicles classified asEuro4orlowercategories.Inaddition,vehiclesrunningonpetrol vehicle fleet.Comparedwith2011,Euro5vehicles(betterperformingfromaconsumptionpointofview)increased, fuel (petrolanddiesel)consumptionfellby6%.Thereductioninwasmainlyduetomodernizationofthe oil andnaturalgasforheating,particularlyinoffices. equipment -islacking,specificallytoensurethattheelectricity system iscontrolledandnormalservicerestored; diesel foremergencygenerators,whichareusedonlyincaseswhereelectricity–thenormalenergysource maintenance oflinesandstations). fuel forthecompany’svehicles(usedlineinspections,repairs,andotheractivitiesmainlyconnectedwith with thesamelevelofservice(page78). the reductionofresourcesprocuredonDispatchingServicesMarket,whichalsoentailslowerdemandforproduction the investmentsprovidedforinDevelopmentPlan(page84); measurements. meter readings at79%ofstations.The2010 figure isthe result ofanestimatethatalsoincorporates corrective factorswhich emergedthankstothe2011 The changefrom anestimatedfigure toonebasedonmeasurement tookplacein2011.The2011 figure wasbasedon precise measurements taken from 2 emissions by the overall electricity system. 6 . EN4 EN3 111 Environmental responsibility 112 2012 Sustainability Report EN16 EN29 EN29 (1) Electricity Indirect emissions Total direct emissions Oil forheatingandgenerators Natural gasforheating Diesel forvehicles Petrol forvehicles R22 leaks SF Direct emissions TOTAL DIRECTANDINDIRECTEMISSIONSOFGREENHOUSEGASES-CO in thespecificparagraphonpage118. for leaks declined gradually and in 2012was 0.59%. Theprogrammes to limittheproportionof SF the percentage of leaks compared with the total gas present in the equipment. Overthe three years the percentage figure with equipmentcontainingSF technical reasons associated with thehigherinsulating performance ofthegasandtosmallersizestationsbuilt (+29%). Thisisatrend–commontomanytransmissionoperatorsdestinedcontinueinthenextfewyears for 90% oftotaldirectemissions.From2010to2012thequantity of SF SF • • • • Greenhouse-gas emissionsconnectedwithTerna’sactivitiesare causedby: Direct andindirectCO (3) (2) (1) Electricity forpowertostationsandoffices Indirect consumption Total direct consumption Diesel forgeneratorsandoilheating Natural gasforheating Diesel forvehicles Petrol forvehicles Direct consumption DIRECT ANDINDIRECTENERGYCONSUMPTIONBROKENDOWNBYPRIMARYSOURCE-GIGAJOULES

leaks causingconsumptionofR22coolantgas,usedinairconditioningsystems. leaks ofSF indirect consumptionofenergysources(electricityconsumption); for heating); direct consumptionofenergysources(petrolanddieselforvehicles,generators,oilheating,naturalgas 6 6 leaks leaksarethemaindirectsourceofgreenhouse-gasemissions the website gigajoules theparametersindicatedinGRI–GlobalReportingInitiativeG3protocols wereused. 2012. Thereferenceforthedivisionof theproductionmixis“MonthlyReportonElectricitySystem”with resultsforDecember2012,available Indirect consumptionofelectricity is convertedtaking intoaccounttheproportionofthermoelectricproductiontototalItalian electricityproductionfor on thewebsite The referenceforthedivisionofproductionmixis“MonthlyReportonElectricitySystem”withresultsDecember2012,available Only theconsumptionofoperatingvehiclesisconsidered. The directconsumptiondataintonnesandthousandsofm Direct consumptionisconvertedintoCO www.terna.it 6 (sulphurhexafluoride),agreenhousegasusedinstationequipmentforitshighinsulatingpower; www.terna.it (2) (2)

. 6 , comparedwithmoretraditionalsolutions.ForthisreasontheindicatorTernalooksatis 2 emissions 2 equivalentemissionsusingtheparametersindicatedbyGreenhouse Gas(GHG)ProtocolInitiative. (3) 3 areshownindetailtheindicatortables.Toconvertvolumesofprimaryresourcesinto 6 2 present in Terna’s plants increased by 104 tonnes presentinTerna’splantsincreasedby104 tonnes EQUIVALENTTONNES byTerna;inparticular2012theyaccountfor 638,050 98,277 11,058 77,570 70,008 70,007 62,791 9,241 5,741 2012 2012 408 818 518 110 28 (1) 103,993 627,480 11,289 75,731 57,406 71,463 64,922 9,468 7,504 5,605 (1) 2011 2011 836 531 520 6 leaksareillustrated 25 101,869 591,840 12,890 74,588 70,692 67,928 60,313 7,277 7,113 5,520 2010 2010 954 408 493 240

(1) For furtherinformationonhowthepanelsarecomposedandingeneralcomparisons withothercompanies,seetheMethodologicalnote,page15. Terna Standard deviation Min Max Average in thethreepanelsconsidered. makes agraphicrepresentationoflittlesignificance;thetableshowsminimum,averageandmaximumvalues too, Ternaconfirmsaquantityofemissionswellbelowaverage.Theextremevariabilitythecompanyfigures CO RobecoSAM Panel-SupersectorLeaders category withthelowestvalues. well belowaverageandwithtotalemissionsonlyjusthigherthanthoseofbanksinsurancecompanies,the 12.3 (UbiBanca);maximumvalue:123,832.0(Enel)TernaisoneofthebigItaliancompanieswithloweremissions, FTSE-MIB Panel transmission operatorswhoalsoownelectricitygenerationbusinesses. below the average, which isthehighest of theaverages of thethreepanels and influenced byvaluesregistered (ISA – Latin America); maximum value: 231,900 (Eskom - South Africa). In this comparison Terna comes out TSO Panel tons. in 2011, the year for which comparative figures are available, the emissions were 136.4 CO For 2012, the emission of greenhouse gases related to Terna’ activities was 140.0 CO TSO whichoperatesinLatinAmericaanddoesnotdealwithelectricity productionordistribution. operates in South Africa and includes electricity generation among its many activities while the lowest is for ISA, a For example,oftheTSOs,highestfigure,(inlinewithanalysis2010data)isforEskomwhich sustainability, inthevarioussectorsandcompanies. of greenhousegasemissions-andthereforethepracticalneedtocontainthemfrompointview which vary greatly in terms of magnitude from one case to another, at least provide an indication of the size present thecompanydataonCO In theabsenceofsignificantnormalisationfactorsvalidforallsectors,itwasdeemedinanycaseinterestto factors whicheliminatethedifferencesderivingfromvarying natureofbusinessandthesizecompany. and inlimitingclimatechangeemissions,whichshouldbeassessedovertimewithreferencetonormalisation The emissionsinabsolutetermsdonotreflectthevariouscompanies’performanceefficientuseofenergy the internationalsustainabilityleaders(RobecoSAM-Supersector Leaders)weretakenintoconsideration. Both thefiguresoftransmissioncompanies(TSOpanel),biggerlistedItalian(FTSE-MIB)and direct andindirectemissionsinCO Comparison ofTernawithothercompaniesasregardstheemissiongreenhousegaseswasdonebyusingtotal CO

In the case of the indicator of CO 100 ClimateChangereport2012”aspartoftheCarbonDisclosureProject, wasconsidered. 2 ; minimumvalue:10.1(TelenetMedia);maximum51,810.0(Repsol–OilandGas).Inthiscomparison 2 emissions:comparativedata : 17figuresavailable;averageCO : 23figuresavailable 2 emissions, for two of the companies on the FTSE MIB panel the figure published in thedocument “CDPItaly 2 emissionsinabsoluteterms-despitethelimitedcomparability.Suchfigures, 2 equivalentthousandsoftonnesasareference. (1) Greenhouse gasemissions -thousandsoftonnesCO ; averageemissionsofCO : 19figuresavailable;averageCO 231,900.0 2 62,294.2 26,121.9 emissions:26,121.9thousandtonnesCO TSO 3.5 2 : 9,472.7thousandtonnesCO 123,832.0 27,556.6 FTSE-MIB 9,472.7 12.3 136.4 2 emissions:5,997.2thousandtonnes 2 -2011 RobecoSAM -SupersectorLeaders 2 equivalent thousand tons; 2 2 ; minimumvalue:3.5 equivalent thousand 2 ; minimumvalue: 14,484.9 51,810.0 5,997.2 10.1 113 Environmental responsibility 114 2012 Sustainability Report EN17 EU12 In previouspublications the values presented were the result of a division ofthelosses of theelectricitysystem(also to 1,771,477tonnesfortheyear2012. Considering theproductionmixofItaliangenerationsystem theCO losses, andintermsoftheproportionlossestototalenergy consumed. than offsettheincreasedefficiencyderivingfromgriddevelopment. Thisappliesbothintermsoftheabsoluteamount cannot thereforebepredeterminedandisnotevenunderthe controlofthetransmissionoperator:otherfactorsmaymore connect newplants,thelocationofwhichisnotdecidedby Terna.Theoveralleffectonlossesofgriddevelopmentwork possible and also enables the growth of consumption. Moreover, grid development itself is in part dictated by the need to reduction oflosses.However,griddevelopmentenablesthe creationofproductionstructureswhichwerepreviouslynot With thesameproduction structures, grid development activities would determinegreaterefficiencyandtherefore a therefore entailsatrendtoreduceemissionsofmuchgreater amount thanthatofgrid losses. aim ofminimizinglosses.Itshouldalsobenotedthattheenergymarketimplicitlyfavoursmoreefficientproduction and context ofproductionstructuresdeterminedbytheenergymarket,andthereforecannotbeinfluencedTernawith the onset ofgridsecurityproblemsandpoorservice.Theseoperationsarecarriedout,accordingtoregulatedcriteria,in the Dispatching operationsarenecessarytoguaranteeaconstantbalancebetweendeliveriesandwithdrawalsavoid the development activities. completely underitscontrol.Toexplainthispointitisusefultodistinguishbetweendispatchingoperationsand grid It is,anyway,necessarytospecifythatTernacanonlycontributedeterminingtheamountoflosses,whichare not up tonow. for2010.Becauseofthis,itwasdecidedtonotcomparethe2012datawithhistoricalseries produced 8,663 GWh from what emerged from the data based on measurements presented in the table, resulting in 8,710 GWh for 2011 and to thejouleeffect,directlyproportionalcurrent,andlossesontransformers.Thesevaluesdifferedsignificantly configurations andconsideringlossesonlinesowingtothecoronaeffect,directlyproportionalvoltage, including distribution grids) proportionally to the voltage levels, startingfromcalculationsmade assuming particulargrid EHV andHVgrid GRID LOSSES effect ofmeasurementerrorsasrealtrendsarereduced. 2010-2012 fortheyear2012)asannualfigure:inthiswaymarginofuncertaintyandriskinterpreting the starting from2012,itwasdecidedtousethearithmeticmobilemeanoflosseswithathree-yearwindow(thethreeyears the years thanks to cross-checks and the gradual resolution of discrepancies with distributors’ data. For these reasons, margin of uncertainty on the correctness of the measurements of electricity taken out, which has been reduced over remotely read the measurements,whichhoweverremain responsibility ofthedistributorcompanies.Thisentailsa energy putintotheNTGisTerna’s,whilefortakenoutTernamay,onbasisofspecificagreements, not coincidewiththeboundariesoftransmissiongrid.Itmustbestressedthatresponsibilityformeasuring measurers), towhichcorrectivetechnicalcoefficientsarethenappliedincasesthepointofmeasurementdoes the firsttime-ondirectmeasurementofenergyputintoandtakenouttransmissiongrid(approximately7,500 losses forTernaarethoseassociatedwiththetransmissiongrid.Thefigurepresentedintablebelowisbased- Grid lossesaredefinedasthedifferencebetweenenergyinputbyproducersandimportsfinalconsumption;significant Grid losses2012 • • activities areconnectedwith: In additiontotheemissionscorrespondingconsumptionofelectricity,otherindirectcausedbyTerna’s Other indirectCO flights takenbyemployees. grid losses; 2 emissions % proportion withrespect toenergydemand 2 emissionsassociatedwithgridlossesamounted 1.4 4,485 GWh of vehiclesmileage.Thefigure showninthetablerepresents59%ofcorporateoperating vehicles. The figureiscalculatedonthe basisofthedataprovidedbycarmanufacturersinregistration documentsandestimates NO NITROGEN OXIDEEMISSIONS–KG consumption bycorporateoperatingvehicles. significant nitrogenoxide(NOx)emissions.In2012,however, webeganmonitoringNOxemissionsassociatedwith Nitrogen oxides COOLANT GASLEAKS-KG Unlike previousyears,thetablebelowshowsonlyquantityrelating toactualleaksandnolongerconsumption. of someconditioningsystemswhicharebeingreplaced. In 2012therewerenonewpurchasesofR22gas,butsomequantitygaswasdispersedfollowingthemalfunctioning effect. greenhouse effect. The other types of gaspresent have no effect onthe ozone, and only contribute to the greenhouse In fact-intheeventofdispersiononlyR22gashasharmfuleffectsbothonozonelayerandasregards the Council) thequantityofR22gasusedinequipmenthasbeendecliningconstantly. In accordancewiththeprovisionsofcurrentlegislation(RegulationECNo.1005/2009EuropeanParliament and (1) Other coolantgases R410A R407C R22 COOLANT GASES–AMOUNTSINKG The tablebelowshowsthemaintypesofgaspresentinTerna’sequipment. to thegreenhouseeffectorbecausetheyhaveboththesecharacteristics. Coolant gases Other emissionswithimpactsontheatmosphererelatingtocoolant gasesandnitrogenoxidesaredescribedbelow. Other atmosphericemissions Total Intercontinental International Kind offlight INDIRECT EMISSIONSOFCO Mediterranean hadledtoanincreaseinairmilesandemissionsassociated withinternationaltravel. year theyweredown3%comparedwith2011,theduringwhichintensificationofactivitiesinBalkansand Emissions correspondingtoflightstakenbyemployeesshowslightfluctuationsoverthethreeyears.Inparticularthis Flights byemployees Domestic R22 In2012thequantityof“Othercoolantgases”wasmadeup61%R134agas,and32%R422gas. x Some coolant gases have an effect on the environment because they damage the ozone layer or contribute TheactivitiesperformedbyTernadonotincludecombustion processesandthereforedonotentail (1) 2 FORFLIGHTSBYEMPLOYEES 5,012,667 1,365,577 3,171,164 475,926 2012 5,219,729 1,523,415 3,174,881 Miles 521,433 2011 5,140,397 1,128,909 3,065,573 945,914 2010 3,449 1,434 1,965 2012 2012 828 61 1,475 1,046 2012 329 99 CO 2 emissions(tonnes) 2,973 2,470 2,972 2011 2011 686 14 1,523 1,048 2011 109 367 4,920 1,477 1,010 1,647 4,716 2012 2010 2010 2010 133 195 271 210 494 EN20 EN19 115 Environmental responsibility

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2012 Sustainability Report EN18 towards figuresfluctuatingaround0.6%,consideringthat theaverageproportioninperiod2005-2009was0.7%. excluding the factors mentioned, it is expected that by the end of 2014 the proportion of leaks will converge and again start oftheinstallationcampaign,providedthatnewequipment isactuallyavailable.Onthebasisofthisestimate, in theyears2010-2012,couldleadtoareductionproportionofleaksestimableat0.1%overfivefrom the the installationofnewdeviceswithbetterseals(suchashighlyreliabletransformers),whichbeganin2009andcontinued Net ofexceptional breakdowns andofanyeffectderiving from theageingofequipmentinoperation,itisestimatedthat • • • • change, Ternaisstillstudyingthemattertoidentifyatarget.There areinfactseveralelementsofuncertainty: Although theproportionofSF precisely forthisreason,haveasignificantimpactintermsofemissions avoided. If leaksinabsolutetermsmayincreaseowingtothegreateruseofgas,areductionproportioncould, in orderto breakdowns and,sometimes,duringre-pressurisingoperations.SF Some ofthegaspresentinequipmentisdispersedintoatmosphereowingtodefectiveseals,onoccasion of doing abroad. these properties,TernaexpectstousemoreequipmentwithSF These enable theconstructionofelectricitystationsinsmallerspaces withreducedmaintenancerequirements.Thanks to used asameansofinsulationincertainelectrical devices suchasswitches,currenttransformersandarmouredplants. Thanks toitschemicalandphysicalproperties,whichmakeitanexcellentinsulator,SF Containment ofSF of view. the thirdcase,resultsarealready tangible butregard a lesssignificantsourceofemissionsfromquantitativepoint The firsttwocasesareinitiativeswhichcanhaveasignificantquantitativeeffect,butonlyinthemedium/longterm.In • • • • gas emissions: Terna focusesitsattentiononanumberofvoluntaryactionprogrammesaimedatreducingmainsourcesgreenhouse Initiatives toreduceemissions by theadversefactorsalreadymentioned,ofpotentiallygreaterimpact. so further reductions,whichhavegrowingmarginalcosts,canonlybelimitedandwithahighprobabilityofbeingoffset Terna alreadyhasalowproportionofSF leaks, ontheother,asequipmentalreadyinstalledgetsolder leaksmayincrease; while on the one hand the installation of equipment with better sealing performance tends to reduce the proportion of gas inlargestationequipment–mayconsiderablyalterthetrend; the occurrenceofbreakdownswithsignificantgasleaks–whichareincreasinglyprobablegivengrowinguse SF most probablyonlyapparent; intheyearswhichcontainmentactivitiesbegan(2009-2010)–worseningperformance was – precisely the growthofawarenessandattentiontosubjectisreflectedinanimprovementmeasuringleaks,entailing a programfortheenergyefficiency emissions perkm(g/km)basedonreplacingvehicleswithbetter performing equivalents; a programforreducingtheconsumptionperkmofcorporatevehiclefleet feasibility studiesforinitiativesonenergyconservation equipment andcomponents; promptly bymeansofon-linemonitoringsystemsandseekingtechnologicalsolutionswhichincreasethesealing a programmetolimittheproportionofSF keep SF 6 6 leaksundercontrol leakage 6 leakshasbeenidentifiedasasignificantindicatorofitsperformanceinrelationtoclimate ofbuildings(offices). , tolimitandifpossiblereduce 6 leakscomparedwithotherTSOs(seethespecificboxinthisparagraph), 6 leaks: Ternahaslaunchedseveralinitiatives,suchasidentifyingleaks inelectricitystations; 6 gasinsulation,asothertransmissionoperatorsarealso 6 is classified as a greenhouse gas: Terna operates isclassifiedasagreenhousegas:Terna operates the percentage , whichentailsareductionofCO withrespecttototalgasused. 6 (sulphurhexafluoride)gasis 6 2

• • The programmesandinitiativesinprogresssince2008formanagingSF the studywillenableustomorepreciselydefineatargetfigure fortheproportionofSF identify equipmentwithanomalousleaksandassessthefeasibilityofatargetedmaintenanceprogramme.Theresults of In 2012applicationoftheSF towards thetarget. As explained above,theinformationavailabledoesnotenableustointerprettheseresultswithcertaintyasaconvergence In 2012theproportionofleakswas0.59%,downcomparedwithtwopreviousyears(2011:0.60;2010:0.73%). (*) QuantityofSF SF • • • • We arestudyinginitiativestoassesssavingsopportunitiesinrelation tothemainsourcesofconsumption: Electricity isusedinelectricitystationstoenabletheequipment and remotecontrolofthesame. Energy conservationinstations • leaksexcludinganexceptionalevent(1.07%includingsuchevent). replace oldequipmentwiththenewtransformershasbeeninprogress since2010. new measurementtransformers are consideredanapplicationstandardandinstalledasnecessary; necessary forinsulationcomparedwithotherdevices.Afterthepositiveperformancetestresults,compactmodules compact multi-functional modules given bythetotalquantitiesofSF procedure involvesrecordingthegasusedanddispersedforeachstation(upto2007measurementofleakswas procedure formonitoringleaksandreducingdispersion auxiliary command,control,andprotectioncircuitsofallequipment andmachinery. conditioning andheatingsystemsoftechnicalrooms; external lighting; cooling powertransformers; SF6 INSTALLED (KG) 6 LEAKAGE 200,000 250,000 300,000 350,000 400,000 450,000 500,000 6 installed%LeakageimpactAverage impact2005-2009 2004 6 gasrefilladjustmentprocedurebegunin2010continuedsuccessfully.Theobjectiveisto 2005 6 purchasednetofnewinstallations); (TAs),sealed,andmorereliablewithmaximumleaksof0.1%peryear:theplanto (set of different devices) which enable a 30% reduction in the quantity of SF 2006 2007 2008 ofthegasinre-pressurisingstage:detection (*) 2009 6 gasaredescribedbelow: 2010 6 leaks. 2011 2012 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0.9 6

PROPORTION OF LEAKS (%) 119 Environmental responsibility 120 2012 Sustainability Report EN5 lower consumption)foratotalof93fewertonnesCO in additiontothatalreadyrecordedthetwoyears2010-2011 (relatingtoreplacingmonitorsanddesktopsforPCswith energy consumptionof80%andaconsequentreduction carbondioxideemissions.Thereductionachievedin2012is In 2012thereplacementofcomputersandprinterscontinued. Thenewmodelsenableconsiderablesavingsinaverage of computersandprinters. In offices the main sources of energy consumption are connected with lighting, heating and air-conditioning, and the use Reduction ofemissionsconnectedwithenergyconsumption inoffices For furtherinformationonhowthepaneliscomposedandingeneralcomparisonswithothercompanies,seeMethodologicalnote,page15. * Theincidenceoftheleakswascalculatedaspercentageouttotal gascontainedintheequipment. INCIDENCE OFSF6LEAKAGE in linewiththecalculationsoflastyear. 2011 also,onlythe11companiesconsideredinpreviousedition,averageincidencevaluewouldbe1.1%, The comparisonwithfiguresfor2011isbasedonalargernumberofcompanies(14instead11).Considering minimum value:0.1%;maximum3.1%;standarddeviation:0.8%.Ternacomesoutbetterthanaverage. TSO Panel confirming theresultsreportedinSustainabilityReport for thelasttwoyears. Compared totheothertransmissionoperatorsincidenceofSF6leaksforTernawasbetterthanaverage, are available,theincidencewas0.60%. In 2012,theaverageincidenceofSF the percentageofleakscomparedtototalgasusedasreference. The comparisonbetweenTernaandothertransmissionoperatorsrelativetoSF6leakswasconductedbytaking belonging totheTSOpanelwereconsidered. The use of SF SF IncidenceofSF 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 6 leaks:comparativedata REN : 14figuresavailable; averageincidence ofSF 6 6 gas is a specific feature of the transmission operators sector,only figures for the companies leakageTerna IncidenceofSF Fingrid Statnett * SVK 6 leaksforTernawas0.59%;in2011,theyearwhichcomparativefigures ISA 6 leakageAverage (0.85%) Germany Tennet 2 emittedinthethreeyears. Terna 6 Netherlands leaks:0.85%(adecreasefromthe2010values); Tennet Elia Energinet RTE REE National Grid UK National Grid US as 10,222,763kg,generated by 840vehiclesinTerna’soperatingfleet. From 2012to2016,thecreation andprotectionofthesewoodedareaswilloffsetthecarbon dioxideemissions,quantified vehicles andLifegate’sImpatto Zero(ZeroImpact)project. Achievement ofthisobjective isensuredbythecollaborationbetweenTerna,motor manufacturersthatsupplythe in Madagascar andinCostaRica. new vehiclespurchased,involvingthecreationandprotection ofnewgreenareasinRome,theMadonnettaPark, The replacementcampaignbegunattheendof2011envisages anoffsettingprojectfortheCO with Euro4orlowerengineswerereplaced1,010models withEuro5engines. consumption is attributable mainly to thereplacementofoldermodels in thevehiclefleet.1,020models The lower In 2012therewasareductioninfuelconsumptionand consequently CO often requiretheuseofall-terrainvehiclesbecausepylons canbe reachedonlybyunpaved paths. Terna uses operating vehicles daily to inspect lines and reach operating plants located throughout Italy. Such inspections (1) Total vehicles Euro 3(orlower) Euro 4 Euro 5 Hybrid TERNA VEHICLEFLEET scrupulous maintenance. mainactionstoreducetheimpactoftransportonenvironmentconsistinmodernisingvehiclefleetand The but usedoveravastarea.Thereisthereforenoproblemofimpactonspecificareas,rathergeneralpollutingeffect. The company’svehiclefleet–usedmainlytoinspectlinesandforfaultrepairworkisnotconcentratedinafewplaces, Reduction ofemissionsconnectedwithmobility

UNI CEI EN ISO 50001 standardandinaccordancewiththe“EnvironmentalManagementSystem”. The 2013objectiveistoprepareanEnergyConsumedforOwnUseManagementSystem,inlinewiththe issues found,andvariousopportunitiestoimproveenergyefficiency weresuggested. Following theanalyses,asapreliminarystep,hierarchyofactionswasidentifiedtoresolvemaincritical present whichconsumesenergy. checked onsite,byfillinginthespecificdatacollectionforms.Aninventorywasalsotakenofallequipment management ofthebuildings,andstateefficiencytechnologicalplantsbuildingshellwere focusing analysisonthemainelectricitysupplyandheatingsystemsofbuildings.Duringvisits,the energy The workinggroup,supported by external consultants, carried out thepreliminaryenergyauditofbuildings, • • • • buildings: Besides thegeneralinitialenergyanalysis,fourdetailedanalyseswerecarriedoutinrelationtofollowing consumption ofelectricitystationsandtheTerna Group’sofficebuildings. The firstobjectiveachieved in 2012wasthe initial energy analysis,which wascarriedoutconsideringboth gradually improved,enablingasurveyofelectricityconsumption forownuses. Electricity consumptionforownuseswasanalysedstartingin2008;accuracydatacollectionhastherefore the technicianresponsibleforconservationandrationaluse of energy–theEnergyManager. In 2011 the “Energy Consumed for Own Use Management System” project was launched. This is coordinated by Energy efficiency vehicles areconsidered. The tableshowsthevehiclesofTernafleetwhichinperiodquestion filledupatleastonceasrecordedonthefuelcard.Onlyoperating Operating AreaofficesinPalermo. San RoccoalPortoOperatingGroupofficesinLodi; National ControlCentreofficesinRome; Rome headquarters; (1) 2 emissionsfellby355equivalenttonnes. 1,341 1,148 2012 169 15 9 1,351 2011 219 985 138 9 2 emissionsofthe 1,389 1,009 2010 240 131 9 EN29 121 Environmental responsibility 122 2012 Sustainability Report Reduction ofgridlosses approximately 12.5milliontonnesayear. Overall, thereductionofCO • • • achievable uponcompletionofthePlanwillbethreekinds: terms of service security and the final cost of electricity, but also inreduced emissions by the electric system. The effects The constructionofnewlinesandstationsprovidedforbytheDevelopmentPlanwillproducepositiveeffectsnotonly in The DevelopmentPlanandreductionoftheelectricsystem’sCO safety andrespectfortheenvironment). lower emissionsandconsumption),greaterattentiontomaintenance(withbetterperformanceintermsofquality, The aimsoftheprojectareproperdistributioncorporate fleet aroundthecountry,routeoptimization(andtherefore booking, pickingupthekeysandreturningvehiclewillalsobe automated. the availability of thelatteranditineraries,kmstravelledmaintenancewillbemonitored.Thestages operating areas of Bari and Rome. Through the use of dedicated software and a hardware device to manage the vehicles, Finally, inJanuary2013the During 2012,Ternaconfirmedtheactionstakentoreduceimpact ofemployeemobilityontheenvironment. renewable sources (NPRSs)canbedivided essentially intotwocategories: such energyinto thegrid,whichisentitledto dispatchingpriority.Thelimitations onproductionusingnon-programmable renewable energysourcesby tryingtoovercomeanygridandoperatinglimitationsthat couldlimitinputintothegridof One ofTerna’smaintasksis toplantheupgradingofgridinorderencourage productionofelectricityfrom in 2012theinstalledpowerreached figuresofaround17,000MWforphotovoltaicand around 8,000MWforwindenergy. photovoltaic energyhaveincreased considerably,aboveallintheregionsofSouthand theItalianislands.Specifically, has beenafast-growingpotential sourceofenergyinthelastfewyears.Inparticular,generation plantsusingwindand sources whichareamongthe projectsinthe2013DevelopmentPlan.Theproductionof energyfromrenewablesources The maincontributiontothereductionofCO Connection ofplantsusingrenewableenergy quantifiable asareductioninCO yields. Thesamequantityoffinalconsumptionwouldthus becoveredwithasmallerquantityoffuel:thebenefitsare enable amoreefficientproductionmixthanthecurrentone, withalargerproportionofproductionbyplantshigher The workenvisagedintheDevelopmentPlan,togetherwith theexpansionofinterconnectionwithothercountries,would by obsoletestationsnecessaryforgridsecurity. generation units,thatistosayunitswhichpollutelessinterms ofCO zones”. Theexistenceoftheselimitsimposeanumber restrictionsonthepossibilityofproductionbymoreefficient One ofthemainpurposesdevelopingelectricitytransmission gridistoovercometransportlimitsbetween“electricity Improvement oftheproductionmixandinterconnectionwith other countries 500,000 and600,000tonneseveryyear. be statedthattheworkcanalsohaveaddedpositiveeffectofadecreaseinCO Assuming thatthereductionoftheselossesisequivalenttoainproductionfromcombustiblesources,it can a power value of 200 MW, corresponding to a reduction in grid energy losses estimated at around 1,200 GWh/year. With the completion of the work set out in the 2013 Development Plan, the decrease in losses at the peak could reach example whena380kVlinereplacesoneat150overthesameroute. being equal,itleadstoareductioningridlosses.Thesameresultisproducedbyupgradingstretchofthegrid, for Development workthatimprovesthegridmeshbringswithdrawalandconsumptionpointscloser:allotherconditions are moreonalowervoltageline. (of delivery intotheNTG),greaterlossesforsameconsumption.Inaddition,distance as muchpossible,thefurtherpointofconsumption(ofwithdrawalfromNTG)production Grid losses dependon, among other things, the distance the electricity travels on the transmissiongrid.Simplifying The offsettingwillcovermorethan33%oftheannualCO The areasinvolvedare14,000sqminRome,510,756Madagascarand2,019,848CostaRica. Terna’s operatingfleet. manufacturers) for each km travelled and from the estimated number of kilometres travelled annually by the vehicles in The emissionswereestimatedfromtheaveragecarbondioxidepervehicle(afigureprovidedby connection ofplantsusingrenewableenergy. improvement oftheproductionmixandinterconnectionwithother countries; reduction ofgridlosses; “Company CarSharing” 2 emissionswithinthetimehorizonof2013-2022Plancouldreachanamount 2 emissionsofupto6,200,000tonnesayear. 2 emissionscomesfromconnectingproductionplantsusing renewable projectwaslaunched,inanexperimentalformforinvolvingthe 2 emissionsofTerna’svehiclefleet. 2 emissions,andatthesametimemakesproduction 2 emissions,somewherebetween 2 emissions (7) Renewable Sources production from Non-Programmable dispatching generation,whichfavour the reduction ofoperating limitations in Grid upgradingindirectly functional to Category MAIN WORKSINTHEDEVELOPMENTPLANWITHEFFECTONINPUTSOFENERGYFROMRENEWABLESOURCES sources, thusobtainingareductionofCO The worksincludedbyTernainthe2013DevelopmentPlanwillreleaseabout4,700MWofpowerfromrenewable Electricity Service,andintheProfile). system security,smarttransmissionsolutionsandaccumulationsystemsinthesectiondevotedtoResponsibilityfor the constructionofnewpowerlineswhichwouldotherwisebenecessary(seealsoparagraphsdedicatedtoelectricity Besides thisworkNPRScollectionstationsontheExtraHighVoltagegridareplanned.Thesewillmakeitpossibletolimit and actionstolocallyexpandthesub-transmissiongridswhich the NPRSgenerationisdirectlyconnected. sections of the primary grid, which make it possible to indirectly reduce the limits on the operation of NPRS production, The development solutions planned in response to these critical issues therefore include both actions to strengthen • • increased byapproximately From the 2012 provisional figures itcan be seenthat in 2012 gross production usingwind and photovoltaicenergy During 2012thebenefitsintermsofreductionCO Reduction ofCO Non‑Programmable Renewable Sources. which Terna feedsproduction from EHV andHVgridsectionsinto Work toupgradeanddecongest Total Photovoltaic Wind Energy source production units.Theprovisionalfigureforpowerinstalledfrom renewablesourcesin2012ispresentedbelow.

plants usingnon-programmablerenewablesourcesareconnected. limits directlyattributabletoinsufficienttransmissioncapacityoftheportionsgrid(ingeneralHighVoltage)to which non‑programmable renewablesources; that requireverification ofthegeneration-load balancealsointheeventofasuddenlackproductioncapacityfrom limits duetoproblemsofoperatingtheelectricitysystemsecurely,associated,thatis,withdispatchingconstraints capacity. Considering aconversion coefficientof0.550tCO 2 emissionsin2012 12,000 GWh ; thisfigurecorrespondstoareductionofapproximately 2 Upgrading of380kV“Foggia-Benevento”powerline powerline 380 kV“Foggia-Villanova” New 380kV“Aliano-Montecorvino”powerline Sardinia andCorsica/continental Italy Upgrading ofinterconnection capacity between upgrading oftheEHVgridinSicily 380 kV“Sorgente-Scilla-Rizziconi”powerlineand Work Upgrading the transmission grid in southern Italy Upgrading thetransmissiongridinsouthern 2 /MWh andassuming thatthenewlyinstalledrenewable capacityreplaces anequivalent thermoelectric emissionsamountingtoabout5,900ktofCO 2 emissionsweremainlyduetotheinstallationofnew“zeroemission” 2 /year. Power from renewable sources (MW) 6,600 ofktCO power installed-MW ~17,000 2 7 ~8,000 25,000 . 1,000 1,100 500 700 900 500 123 Environmental responsibility 124 2012 Sustainability Report EN1 The productionofaservicedoesnotnormallyrequiresignificantmaterialinputs,andinthesamewayentail Resource useandwastemanagement Porcelain MAIN MATERIALSINSUPPLIES( Economic Responsibilityonpage91). equipment used(asregardstheenvironmentalcriteriainprocurementprocessseespecificboxsection on At the moment, no information is available on the use of recycled material on the part of suppliers ofthe materials and estimate wasmadeofthemainmaterial(forexample,copperaccountsfor60%weightanATRtransformer). material (forexample,insulatorsaremadeof100%glassorceramics,terminalboardsaluminium);inothercases an the singleelementsandfromproportionofmaterialscontained.Insomecasesaremadea supplies usedbyTerna.Theweightiscalculated starting fromthequantityused,averageortypicalweightof are combinedtobeusedinthetransmissionservice.Thetablebelowprovidesanoverviewofprincipalmaterials in As regardsmaterials, Resources management primarilyconcernsmaintenanceofelectricityinfrastructures. The useofmaterialsisrelatedinparticulartotheworkconstructingelectricityandICTinfrastructures.Terna’swaste equipment), andcontrolsystemsarethemaincomponents. of capitalassets:powerlines(pylons,wires,insulators),transformationstations(transformers,switches,otherstation However, the provision ofthetransmission service requires the constructionandmaintenanceofalargeendowment and thishasalreadybeendealtwithintheparagraph“Energyconsumption”. materials thatenterintoandexitfromtheproductioncycleofservice:mostsignificantconsumptionisenergy the treatmentofsignificantquantitieswaste.The caseoftheenergytransmissionserviceisnoexception,asregards for thepurposesofcreatingthistable.Inofficework, main consumableispaper. connection). Theanalysisofthemainmaterialsincablesis at theimplementationstageandwasthereforenotyetavailable lines in2012.Alargeproportionofthesuppliespurchasedrelated tocableconnections(inparticulartheItaly - Montenegro equipment (seepage the quantitiesofdielectricoil,whichhavefallenconstantly areinlinewiththetrendofpreferringinstallationSF The quantitiesshowninthetablerevealanoverallreduction materialspurchasedwiththeexceptionofcopper.Inparticular SF Dielectric oil Glass Steel Aluminium Copper Polymeric 6 118). Thegeneralizeddropintheconsumptionofmaterialsis associatedwithlessconstructionofnew Terna doesnotuserawmaterials,butelectricalequipment tonnes ) 6,163 4,069 3,861 2012 863 131 229 50 61 , wiresandotherelementsthat 23,875 2,078 9,588 2,569 2011 974 322 967 54 17,114 1,413 1,573 4,927 3,853 2010 350 663 23 6

Water withdrawal WATER CONSUMPTION- • • In particularthefigurefor2012,whichwashigherthanthoserecordedinpreviousyears,affectedby: grew inthethreeyearsconsidered,linewithincrease numberofstationsmanaged(+9%). uses, tocleanofficesandforcoolingsystems–comesfromconnectionsthewatermainciviluses.Consumption Water isnotusedintheelectricitytransmissionanddispatchingproductioncycle are managedinaccordancewithsustainabilitycriteriafromthepoint ofviewboththeenvironmentandhumanrights. certified by the FSC (Forest Stewardship Council All thepaperpurchasedsinceendof2009hasbeenmadewithTCFpulp three yearsrelatemainlytostockmanagementincertainterritorial areasin2011. Paper consumptionreferstothequantitypurchased.Atrendisthereforenotclearlyidentifiableandchangesin FSC paper PAPER CONSUMPTION stations scatteredaroundthewholecountry. managing lines and stations. In fact, every month the system records the meter readings of the more than 460 Terna compared with previous years. This was possible thanks to constant monitoring of the MBI information system used in an improvementindatacollectionwhichmadeitpossibletorecordexactconsumptionatagreaternumberofstations offices; much higherleakage (approximately 12%of total consumption shown inthetable)atLineOperatingGroup(LOG) to 50.5cubicmetresprocapita). 2011 (seepage125),theyear forwhichcomparativefiguresareavailable,(176,525.0total cubicmetres,equivalent For 2012,totalwaterconsumptionforTernawas219,311(63.9 cubicmetresprocapita),anincreasecomparedto sea water. comparisons made, the overall use of water was considered without distinction between fresh water and In the therefore ofitspracticalimportanceintermssustainability -inthevarioussectorsandcompanies. the efficientuseofresource,doatleastprovidean indication oftheimportanceusewater- and Such figures,whileunsuitableforbeinginterpretedas a reflectionofthevariouscompanies’performancein the numberofemployees,itwasdeemedinanycaseinterest topresentthemainfiguresonwaterconsumption. Despite theintrinsiclimitationsofcomparisonandin absenceofmoreeffectivenormalisationfactorsthan electricity, whilethelowestisforanAustralianandNewZealand Banking Group. figure isforESKOM,theSouthAfricanTSOwhichincludes amongitsactivitiestheproductionanddistributionof providing intangibleservices(suchasbanks)occupythe lowest positions.Thehighestprocapitaconsumption - generallyforcoolingtheplantsareattopof ranking forprocapitaconsumption;thosecompanies number of employees. The companies involved in electricity generation whichusewaterinthe production process of waterinproductionprocesses,aswellthedifferentsizescompanies,notnecessarilyreflectedby In allthepanelsfiguresshowsubstantialnon-comparability,inthatconsumptionreflectsvaryingimportance MIB) andoftheinternationalsustainabilityleaders(SM-Supersector Leaders)weretakenintoconsideration. The figuresofthetransmissioncompanies(TSOpanel),aswellbiggerlistedItalian(FTSE- consumption andincubicmetresperemployeeasreferencefigures. The comparisonofTernawithothercompaniesasregardstheusewaterwasconductedbytakingbothtotal Water consumption:comparativedata (tonnes) (CUBIC METRES) www.fsc.org ) – which guarantees that the forests providing the cellulose 219,311 2012 2012 52 –thatis,TotallyChlorineFreeand . Normallywaterused– for hygienic 176,525 2011 2011 70 184,979 2010 2010 83 EN8 EN2 125 Environmental responsibility 126 2012 Sustainability Report Terna Standard deviation Min Max Average the minimum,averageandmaximumvaluesstandarddeviationinthreepanelsconsidered. The extremevariabilityofthecompanyfiguresmakesagraphicrepresentationlittlesignificance;tableshows In termsofworldwidesustainabilitybestpractices,Ternaiswellbelow averageconsumption. • • RobecoSAM Panel-SupersectorLeaders: services. consumption isonlyslightlyabovetheaverageof8companiesonpanelprovidingbankingandinsurance In thiscasetoo,Terna’sconsumption(totalandprocapita)iswellbelowaverage.Specifically,capita • • FTSE-MIB Panel: businesses involvingelectricitygenerationorthetransportofnatural gas. affected bythefiguresforoperatorsnotactingexclusivelyintransmissionofelectricitybutwhoalsopossess Terna iswellbelowaverageforbothtotalconsumptionandprocapitaconsumption.Thewasstrongly • • TSO Panel: page 15. For furtherinformationonhowthepanelsarecomposedandingeneral on comparisonswithothercompanies,seetheMethodologicalnote, Wherever notdirectlyavailabletheprocapitaconsumptionfigurewasobtained by dividingtotalwaterconsumptionbythenumberofemployees. Banking Group);maximumvalue:124,569.5(Iberdola-Utilities). pro capitawaterconsumption-cubicmetres:average9,396.3;minimumvalue:9.8(AustralianandNewZealand New ZealandBankingGroup);maximumvalue:4,087,000.0(Iberdola-Utilities); total waterconsumption-thousandsofcubicmetres:average300,902.4;minimumvalue:133.7(Australianand maximum value32,837.7(Eni). pro capitawaterconsumption-cubicmetres:average1,704.5;minimumvalue:18.8(AssicurazioniGenerali); Mediolanum); maximumvalue2,583,870.0(Eni); total waterconsumption-thousandsofcubicmetres:average125,863.1;minimumvalue:37.5(Banca value: 7,527,706.9(ESKOM-SouthAfrica). pro capitawaterconsumption-cubicmetres:average796,743.9;minimumvalue:39.8(REE-Spain);maximum 1,808,338.8 to31,626,504.3fortotalconsumptionandfrom106,362.7796,743.9procapitaconsumption); Eskom werenotincludedinthecomparativedataandthisexplainssharpincreaseaveragefigure,from process, fromproductiontodistributiontheendcustomer.Lastyearrelativewaterconsumptionfiguresfor maximum value: 327,252,000.0 (ESKOM - South Africa). The South African TSO is involved in theentireenergy total waterconsumption-thousandsofcubicmetres:average31,626,504.3;minimumvalue:64.8(REE-Spain); 11 figuresavailable; 23 figuresavailable; 327,252,000.0 98,150,430.7 31,626,504.3 thousands of cubic metres 176.5 64.8 TSO 7,527,706.9 2,245,743.8 cubic metres/ 796,743.9 employee 17figuresavailable; 50.5 39.8 Water consumption:2011 2,583,870.0 thousands of cubic metres 125,863.1 537,256.3 176.5 37.5 FTSE-MIB employee 32,837.7 metres/ 1,707.7 6,807.9 cubic 18.8 50.5 RobecoSAM –SupersectorLeaders 4,087,000.0 thousands of cubic metres 300,902.4 985,382.5 133.7 176.5 cubic metres/ 124,569.5 employee 30,148.3 9,396.3 50.5 9.8 quantity andtypesseetheTables ofindicators). available. All these items together account forless than 70%ofthetotal destined fordisposal(forthedetailsof and rags containing oils and solvents) and insulating materialscontainingasbestosfor which nokindofrecyclingis Waste sentfordisposal • • • The main • • The main (2) (1) of whichnon-hazardous of whichhazardous Waste sentfordisposal of whichnon-hazardous of whichhazardous Recycled waste of whichnon-hazardous of whichhazardous Waste produced WASTE BYCATEGORY must notbeinterpretedasrepresentingatrend. equipment purchased some years ago. the steelpartsofpylons);however,insomecases,itisimpossibleortoocostlytoseparateparts,especiallyfor the materialswhichmakeupwaste.Somecaneasilybeseparatedandconsequentlyrecycled(forexample the recovery ofmaterialsisthefirstoptiontobeassessedandpursuedifpossible.However,actualrecyclingdependson As farasthepercentageofwasterecycledisconcerned,accordingtoEnvironmentalPolicyadoptedbyTerna, waste maythereforechange,evensignificantly,fromyeartoyear. These activitiesdependontechnicalconsiderationsregardingthesecurityandefficiencyofsystem.Thequantity Like theresourcesused,wasteisconnectedmainlywithmodernisationandmaintenanceofelectricityinfrastructure. therefore haveanenvironmentalimpact. Most ofTerna’swasteisrecoveredtobesentforproductionrecycling.Onlysomeresiduesarethedumpand Waste

rainwater areincluded,substanceswhichhardtorecycle. of which is recycled. This percentage falls to 89% when oily emulsions and dregs from collection tanks mixed with following theregularcheckscarriedoutfortransformermaintenance andwhicharehazardouswaste,around100% dielectric oils service ofelectricitytransformationandtransportationoperating during emergencies,100%of whichisrecycled; batteries hazardous substances,morethan95%ofwhichisrecycled, aftertreatmentbythirdparties; decommissioning of metal waste wood more than96%ofwhichisrecycled; decommissioning of metal waste year tothenext. the categoryearthandrocksfromexcavationsisnolongersignificant;amount ofslurrywas610tonnesfor2012and6752011. for earthandrocksfromexcavationsslurrywas1,541tonnesin2010.From2011,onlywasterelatingtoproducedexcludedbecause exceptional characteristicsassociatedwiththeconstructionofparticularcivilworksinstationsandwouldmakedataseriesnon-uniform.Thefigure categories ofearthandrocksfromexcavationsslurryproducedwasexcludedbecauseithas–aboveallinthecasesignificantquantities – Waste sentfordisposalmaydifferfromasimpledifferencebetweenwasteproducedandrecoveredowingtothetemporarystorageofone Includes onlyspecificwastefromtheproductionprocess,notthatproducedbyserviceactivities(urbanwaste).Upto2010wastebelonging derivingmainlyfromthepackagingofmaterialspurchased, about90%ofwhichisrecycled. hazardous specialwasteproduced non-hazardous specialwasteproduced (leadandnickel),whichintheeventofblackoutsenableemergency generatorstobeturnedonkeepthe (whichaccountsformorethan50%ofthetotalnon-hazardouswasteproduced),derivingfrom (which account for more than 20% of total hazardous waste) for the insulation of transformers replaced (which accounts for more than 70% of the total of hazardous waste produced) deriving from the (1) (1)

transformers, electricalequipmentandmachinery (tonnes) transformers, electricalequipmentandmachinery consistsmainlyofmaterialsused inthemaintenanceandcleaningofplants(mud,oilyemulsions, (2) For these reasons the annual changes in the percentage of waste recycled 81% ofwastewasrecoveredin2012 byTerna’soperatingactivitiesconsistsof: byTerna’soperatingactivitiesconsistsof: 2,910.7 3,297.4 6,208.1 1,080.4 1,950.6 3,064.9 5,015.5 (forexample,generators)nolongerused, 864.8 215.6 nolongerusedandcontaminatedby (83%in2011,89%2010). 2012 3,310.8 3,887.3 7,198.1 1,153.3 2,617.2 3,380.1 5,997.3 702.5 450.8 2011 2,502.6 3,013.3 5,515.9 2,063.3 2,849.5 4,912.8 435.0 191.5 626.4 2010 EN22 127 Environmental responsibility 128 2012 Sustainability Report

For further informationonhow thepanelsarecomposed andingeneral oncomparisons withothercompanies, seetheMethodological note,page 15. Wherever not directlyavailable theprocapitawaste productionfigurewas obtainedbydividing thetotalamount of wasteproducedbythenumber ofemployees. Terna Standard deviation Min Max Average the minimum,averageandmaximumvaluesstandard deviationinthethreepanelsconsidered. The extremevariabilityofthecompanyfiguresmakesagraphic representationoflittlesignificance;thetableshows waste. is stronglyinfluencedbytheextremevarietyofsectors considered,someofwhichproducelargequantities Compared to worldwide sustainability best practices, Terna is well below average for waste production. The figure • • RobecoSAM PanelSupersectorLeaders: those ofservicecompanies. Compared tothelistedcompaniesinFTSE-MIB,Ternacomesoutbelowaverage,withvaluescomparable • • FTSE-MIB Panel: also ownelectricitygenerationbusinesses. In thiscomparisonTernacomesoutbelowtheaverage,greatlyinfluencedbysometransmissionoperatorswho • • TSO Panel: capita). decrease from2011,theyearforwhichcomparative figures areavailable(7,198.1tonnestotaland2.1pro In 2012Ternaproducedatotalof6,208.1tonneswaste.Wasteproductionperemployeewas1.8tonnes, importance intermsofsustainabilitythevarioussectorsand companies. environmental impactdoatleastprovideanindicationoftheimportancewasteandthereforeitspractical Such figures,whileunsuitableforbeinginterpretedasareflectionofthevariouscompanies’performanceinlimiting the number of employees, it was deemed in any case of interest to presentthe main figures on waste production. Despite theintrinsiclimitationsofcomparisonandinabsencemoreeffectivenormalisationfactorsthan for Enel,whilethelowestisBancaIntesaSanpaolo(bothbelonging totheFTSE-MIBpanel). the sizeofcompanies,notnecessarilyreflectedbynumberemployees.Thehighestprocapitafigureis the typeofbusinessperformed,andthereforeingenerationwasteproductionprocesses,aswell The figures-bothabsoluteandprocapitashowsubstantialnon-comparability,inthattheyreflectdifferences and oftheinternationalsustainabilityleaders(SM-SupersectorLeaders) weretakenintoconsideration. The figuresofthetransmissioncompanies(TSOpanel),aswellbiggerlistedItalian(FTSE-MIB) and procapitaproductionincubicmetresasreferencepoints. The comparisonofTernawithothercompaniesasregardswastewasconductedbytakingbothtotalproduction Production ofwaste:comparativedata the mediasector);maximumvalue93.8(GPTGroup,Australian realestatecompany). Pro capitawasteproduction–tonnes:average14.8;minimum value0.1(Telenet,Belgiancompanyoperatingin manufacturing sector). in themediasector);maximumvalue1,495,500.0(UPM,Finnishcompanyoperatingforestryandpaper Total wasteproduction–tonnes:average273,607.0;minimumvalue106.0(Telenet,Belgiancompanyoperating value 154.4(ENEL). Pro capitawasteproduction–tonnes:average12.1;minimumvalue0.04(BancaIntesaSanpaolo);maximum 11,639,212.0 (ENEL). Total wasteproduction–tonnes:average691,932.9;minimumvalue676.2(Ansaldo);maximum 73.3 (NationalGrid–UK). Pro capitawasteproduction–tonnes:average12.3;minimumvalue0.1(ISALatinAmerica);maximum 1,700,000.0 (NationalGrid–UK). Total wasteproduction–tonnes:average222,711.8;minimumvalue41.9(ISALatinAmerica);maximum 13figuresavailable; 24figuresavailable; 1,880,000.0 523,264.1 222,711.8 t 7,198.1 41.9 TSO t/employee 18figuresavailable; 20.6 73.3 12.3 2.1 0.1 Production ofwaste-2011 11,639,212.0 2,375,283.4 691,932.9 7,198.1 t 676.2 FTSE-MIB t/employee 154.4 33.5 0.04 12.1 2.1 RobecoSAM –SupersectorLeaders 1,495,500.0 388,056.0 273,607.0 7,198.1 t 106.0 t/employee 27.3 93.8 14.8 2.1 0.1 Terna’s operatingandinvestment activitieswithenvironmentalsignificance initsmaincorporateprocesses. noise andelectromagneticfields) intheCompany’sISO14001-certifiedEnvironmental ManagementSystemtoidentify Secondly, theaforesaiddefinitionswereappliedtoenvironmental aspectsconsideredsignificant(forexample,station biodiversity andlandscape”. and of surface water and groundwater, the protection of clean air and climate, noise reduction, and the protection of operating activities.Thesecostsinclude,amongstothers, thedisposalandavoidanceofwaste,protectionsoil organisation oronitsbehalfbyothers,toprevent,reduce orrepairdamagetotheenvironmentwhichresultsfromits EC). Onthebasisofthisrecommendation“theterm’environmental expenditure’includesthecostofstepstakenbyan measurement anddisclosureofenvironmentalissuesinannual accountsandannualreports(Recommendation2001/453/ Statistical Institute),EurostatandtheGRIaswellon EuropeanCommission’srecommendationontherecognition, Environmental costs are first identified on the basis of available definitions, in particular those of the ISTAT (the National Recording methods and themethodologydescribedbelowbecameanoperating guideline fortheTernaGroup. by aggregatinginformationdeduciblefromthecompany’sgeneralandindustrialaccounting.In2012thesedefinitions and asoperatingexpenses. Environmental costs were shownseparatelyonthebasisofdefinitionspresentedbelow, Terna’s commitmenttotheenvironmentisreflectedincostsincurredforenvironmentalreasons,bothasinvestment Environmental costs (1) 50 ppm500ppm PCB concentration DISPOSAL OFEQUIPMENTCONTAININGOILSWITHPCBS law, owingtotheexcessivecostofreplacingtheminadvance. quantities in alargenumber of devices,whichwillbeuseduntiltheendtheirusefullives,aspermittedby 2012 therewerefurtherreductionsintheamountspresentTerna’sequipment.Residualoilissmall is animprovementoverthetargetandinpracticecompletesaccelerateddisposalprogramme.In2011 the planenvisagedareductioninquantitytolessthan20,000kgfor2010.Theresultobtained(11,766 kg), 500 ppm; foroilscontaminatedbyPCBswithconcentrations equaltoorlessthan500ppmandmore50 ppm the legaldeadlines.Alreadyandsince2009,therearenolongerdevicescontainingoilswithPCBsatmorethan In compliancewiththisrule,Ternaimplemented a disposalprogramme,settingitselfobjectivesinadvanceof and establishedthemethodstimesfordisposal. Community Law62/05introducedanobligationtodeclarethequantityofoilscontaminatedbyPCBspossessed, Italian Legislative Decree 209/99, theCEI 10-38 standard, the Ministryof Environment Guidelinesand showed thatPCBisextraordinarilybio-resistantandcanthushave dangerouseffectsonlivingorganisms. equipment, becausetheywereagoodalternativetoinflammablemineraloils.However,studiessubsequently Polychlorinated biphenyls (PCBs) were used all over the world as insulatorsin transformers and other electronic Disposal ofequipmentcontainingoilswithPCBs

evidence thatemergedafterpublication. The figure(8,266kg)publishedinthe2010SustainabilityReportwascorrectedwithshowntable(11,766)onthebasisof 3,810 2012 0 kg ofoil 7,616 2011 0 11,766 2010 0 (1) EN30 EN1 129 Environmental responsibility 130 2012 Sustainability Report expansion oftheactivitiesrecognised, extendedalsotograsscutting atstations,whichwasnotconsideredpreviously. include alloftheyear’senvironmental costs,butrepresentthemajorityofthem.The increasein2012wasduetoan not includedininvestments. Thesecostitems,whichcanbedetermineddirectlyfrom industrialaccounting,donot environmental activities:cutting trees,cuttinggrass,wastemanagementanddemolitions/dismantling forsmallamounts determination of the amounts corresponding only to demolition activities requires off-the-books analysis. Costs for regarding themostsignificant demolition(SantaBarbara-TavarnuzzeandChignoloPo -Maleo)wasreported,because Demolitions regulations intheenvironmentalfield(forexample,noise, visual landscapeaspects). Environmental activities investment costsforprojectswithsimilarfeatureswasconsidered. for birdlife,environmentalmonitoring,analysisofexcavated earthandrocks).Therefore,avalueof1%2010-2012 usually determined by obligations (for example, masking with trees, barriers against noise, installation of dissuaders large investmentprojects,itturnedoutthatatleast1%of thetotalexpensesofprojectregardenvironmentalitems, Environmental activities stage orintheprocessofbeingauthorizedbyrelevant administrations. Environmental impactstudies because ofthistheydifferfromwhatwaspublishedpreviously. The valuesrelativeto2011-2010wererecalculatedinaccordancewiththenewmethodofaccountingdescribedand so the method of accounting for the amount was changed and the figurerefersto the portion actually disbursedin the year. when thecommitmentwasmade,i.e.agreementsigned,regardlessoftimeoutlay/supply.In2012, special agreementsenteredintowithlocalinstitutions.Upto2011,theamountswererecordedasinvestmentsat time Environmental Offsets Total operatingcosts Costs forenvironmental activities Costs Total investments Demolitions Environmental activities–existing plants Environmental activities–new plants Environmental impactstudies Environmental offsets Investments ENVIRONMENTAL COSTS-INVESTMENTANDOPERATINGMILLIONSOFEURO shown areasubsetofthetotalenvironmentalcosts,asdefinedabove, actuallyincurred. In accordancewiththemethodadoptedandfootnotestotable,itshouldbenotedthatenvironmentalcosts An exception isthe“Environmentalactivities–existingplants”item, whichincludesthecostsofinternalpersonnel. These costs exclude expenses regarding internal resources and consideronlyexpensesforexternal purchases. for theenvironment. In thelightofabove,followingtableconstitutesbestpossiblerepresentationcostsincurredbyTerna Environmental costs system. Thislastconditionfulfilstheneedtominimizerecourse toestimatesbasedonoff-the-booksanalysis. costs andinvestmentclearlydistinguished), and c)directlyrecognizableonthebasisofexistingcorporateaccounting Other conditionswerethatthecostshadtobea)significant,b)consistentwithannualreportingofaccounts(operating • • introduced indeterminingthereportingboundary: Many ofTerna’sactivitiesdescribedinthisReportentailenvironmentalexpenses.However,severallimitationswere environment duringthestageofplanninganddesigningnewlines (detours,burials). exclusion ofadditionalcostsconnectedwiththeconsiderationrestrictionsorrequestsforsafeguarding of thesubjectivityaccountingonlyforenvironmentalcomponents; the use ofpylonswithfeaturesthatareinnovativealsofrom thepointofviewtheirenvironmentalintegration)because exclusion ofintegratedcosts,i.e.regardingactivitieswhosepurposeisnotexclusivelyenvironmental(forexample, : costsforthedefinitivedismantlingoflinesaspartrationalization projects.For2012,onlytheamount : theseareamountsforoffsettingtheworkssetoutinGridDevelopmentPlan,asdeterminedby – – new plants existing plants : theserelatetoplantsprovidedforintheGridDevelopment Planthatareintheconstruction : theamountshownisresultofanestimate.Onbasis ofananalysisseveral : expensesforupgradingexistingplantsinaccordancewith provisionsandnew 15.1 15.1 23.4 2012 2.4 9.6 6.0 1.3 4.1 10.3 10.3 23.8 14.2 2011 2.8 4.2 1.4 1.1 37.4 15.7 10.3 2010 9.7 9.7 5.8 4.0 1.5

2012

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2012 Sustainability Report LA13 LA2 LA1 (1) Between 30and50yearsold Less than30yearsold Women Over 50 Men Total terminations AVERAGE YEARSOFEMPLOYMENTFOREMPLOYEESLEAVING THECOMPANY who leftthecompanyin2012was32.8years. turnover rate,therefore,essentiallyreflectsresignationsowing toretirement.Theaveragelengthofserviceemployees The turnoverrateintermsofspontaneousresignationsis always verylow(0.3%;0.5%in2011;1.2%2010):thetotal Retirement isbyfarthemostcommonreasonforemployees leaving,andisconcentratedinthehighestagebands. the datapresentedinthischapter. of theMontenegrinsubsidiaryTernaCrnaGorad.o.o.Unlessexplicitlyindicated,theselastemployeesareexcludedfrom replaced. Attheendof2012,ItaliancompaniesGrouptotalled3,433employees,inadditionto3employees of few recruitments in comparison to greater leavings – meaning that employees leaving the Group were only partially In 2012theGroup’spersonnelfellinnumbercomparedwith2011,aftertwoyearsofgrowth.Thisreductionisareflection Changes andcompositionofpersonnel to thefollowingpages. As far as relations with employees and the unions are concerned, see the section on stakeholder engagement in addition corporate SafetyDepartment. management is also entrusted to the heads of other departments. Aspects regarding safety are the responsibility of the Policies regardingemployeesareestablishedbytheHumanResourceandOrganizationDepartment,whileresource • • • • • • Over time,theimportanceoftheseaspectshasledtoanapproach based on: particular risks,suchasworkatmanymetresabovegroundandmaintenanceonlivelines. as significant,isitsattention tooccupational safety,whichisimportantforitsoperatingactivitiesthatareassociatedwith of theseskillsisafundamentalelementTerna’smanagementapproachtohumanresources.Asecondelement,just out itsactivitiesaswellpossible,withhighlevelsofprofessionalismandoperatingefficiency.Attentiontoimproving Our peoplehavethetechnicalskills-distinctive,rareoruniqueinelectricityindustrywhichenableTernatocarry Our approach OUR PEOPLE

listening toemployeesthroughsurveysoftheiropinions. corporate life; a well-organized system of economic securityforemployeesandtheirfamilies; remuneration andwelfarepolicies investment intraining skills the designofManagementandDevelopment Systems aimedat concern forsafety employment. In thecaseofemployeeswhojoined Ternafollowingacquisitionsofbusinessunits,thelengthemployment takesintoaccounttheirprevious ; andthepreventionofinjuriestoensurephysicalintegrityemployees; , ensuringthegrowthofcompanyanditsemployees; industrial relations based on the involvement of Trade Unions aimedataligningindividualperformancewiththeCompany’sgoalsandproviding improving performanceanddevelopingindividual (1) 11.9 22.0 35.6 33.5 32.8 2012 2.3 in numerous aspects of 34.4 35.1 32.1 32.3 2011 3.5 6.7 34.1 37.2 31.2 31.6 2010 1.6 9.1 Senior executives Blue-collar workers White-collar workers Junior executives Total PERSONNEL COMPOSITIONBY CATEGORY employees oftheTernaGroupbyprofessionalcategory. To facilitatetheinterpretationofseveralindicatorsregarding personnelcomposition,thefollowingtablebreaksdown Average age Average ageofpersonnel(years) - over50 - between30and50yearsold - lessthan30yearsold By age - women - men By gender - women - men Employees leavingduringtheyear Employees recruited duringtheyear PERSONNEL CHANGES professional training. permanent positionafterhavingbeenpreviouslyemployedundertrialcontractsthatexpiredin2012,18monthsof The decreaseintemporaryworkers(from4.1%to1.5%)reflectsthestabilisationof114employeeswhomoveda These employeesareexcludedfromthedataonpersonnelshownintables. determined periodandareincludedintheGRIdefinitionof“totalworkforce”theircapacityas“supervisedworkers”. Terna. Althoughtheyarenotemployeesofthecompany,these31peoplewereemployedinTerna’sbusinessforapre- with 34in2011and282010)–thesewereemployeesofagenciesthatprovideatemporaryemploymentserviceto For thesakeofcompleteness,itshouldbenotedthatduring2012Ternamadeuse31temporaryworkers(compared - part-time - full-time By employmenttype - temporary - permanent By contracttype Total employees PERSONNEL COMPOSITION (1) Over 50 Between 30and50yearsold Less than30yearsold Women Men Total Turnover rateontermination(%) - over50 - between30and50yearsold - lessthan30yearsold Total employees

The turnoverratesreportthepercentageofterminationswithrespecttonumberemployeesasDecember31previousyear. (1) 1,482 1,487 3,041 3,401 3,383 3,433 3,433 1,925 3,433 45.7 2012 464 392 2012 502 947 2012 105 32 50 3.0 2.7 0.3 0.1 0.2 2.8 59 99 45 93 3 6 9 1,475 1,496 3,105 3,463 3,350 3,493 1,966 3,493 3,493 45.2 2011 522 388 143 2011 977 490 2011 136 139 151 176 30 3.9 0.4 0.1 0.4 4.0 4.4 60 13 12 2 1,017 1,890 3,468 1,502 1,494 3,095 3,468 3,438 3,361 3,468 45.6 2010 502 2010 2010 472 373 107 143 147 157 178 4.2 0.2 0.2 0.3 4.3 4.6 59 30 10 7 7 135 Social responsibility 136 2012 Sustainability Report

TSO TURNOVERRATE Personnel turnover:comparativedata Terna’s rateTurnover turnover rateAverage (4.9) Even comparedtothebestglobalsustainabilitypractices,Terna hasalowturnoverrate. 2.2%; maximumvalue:18.4%;standarddeviation:4.7%. RobecoSAM - Supersector Leaders panel: 18.5%; standarddeviation:4.9%.TernaisbetterthanaveragefortheFTSE-MIBpanelofcompanies. FTSE-MIB panel: other panels,influencedbyfourcompanieswitharateoflessthan 4%. standard deviation:1.9%.Inthiscomparison,Ternaisbetterthanaverage,withthelowestvaluecomparedto TSO panel: average forallthereferencepanels. comparison data was available. For 2012Ternahadaturnoverrateof3.0%,reductioncomparedtothe4.4%2011,yearforwhich Supersector Leaders). (FTSE-MIB) weretakenintoaccount,aswellthoseforinternationalleadersinsustainability(RobecoSAM- figures fortransmissioncompanies(TSOpanel)andthoseoflargelistedontheItalianstockexchange As thestaffturnoverrateisanindirectindicatorofinternalclimatethataffectseverydivisioncompany, comparing thenumberofemployeesleavingtoat31Decemberpreviousyear. The comparisonbetweenTernaandothercompanieswithregardtostaffturnoverwasusedaratecalculatedby FTSE-MIB TURNOVERRATE Terna’s rateTurnover turnover rateAverage (7.2) 10.00 10.00 12.00 14.00 16.00 18.00 20.00 2.00 4.00 6.00 8.00 0.00 0.00 2.00 4.00 6.00 8.00 12figuresavailable;averageturnoverrate:4.9%;minimumvalue:2.5%;maximum8.2%; Buzzi REE

MPS 23figuresavailable;averageturnoverrate:7.2%;minimumvalue:1.0%;maximum KEPCO Mediolanum

Banca Popolare di Milano Fingrid Ubi Banca Compared to other companies, Terna has a lower turnover rate than the Banco popolare ESKOM Telecom

Atlantia 14figures available; averageturnoverrate:10.5%;minimumvalue: REN Terna

Intesa Terna Prysmian

Snam rete gas ENBW A2A

Enel ISA ENI

Finmeccanica FGC Unicredit

Fiat industrial Stattnett

Generali

Lottomatica Landsnet

Fiat

Pirelli SSE

ST Microelectronics Full-time equivalent Days worked EMPLOYEES OFCONTRACTORSANDSUBCONTRACTORS types ofcontractsusedbycontractors. construction sites and from the amounts paid for contract work on smaller sites. No further information is available on the power lines.ThedaysworkedandtheFTEsareestimatedstartingfromaveragedailypresencesatlargest of theworkforcewithinthemandrelatetoallTerna’sworkcontracts,fromlargeconstructionsitescuttingtreesunder electricity linesandstations).Thisdatatakesintoaccountthetermofconstructioncontractsvariability use equivalent to1,907full-timeemployees Days workedin2012byemployeesengagedcontractorcompaniesforworkdoneonbehalfofTernawere419,543, of which: People whowillgaintheright toapensionunderthenewlegislation of which: People whohadgainedtherighttoapensionunder old legislationat31.12.2011 people canbebrokendownasfollows: retirees for Terna. A summary table of potential retirees in the period2012-2017 is shown below. The totalof 508 years ofcontributionrequisitesnecessarytogaintheright to apension,reducedthe“catchmentarea”ofpotential The newItalianlegislationregardingretirement(Art.24of ItalianLawNo.214/2011),whichraisedtheageand For moredetailsabouthowthepanelsareconstructed,andoncomparisonswith othercompanies,pleaserefertotheNotesonpage15. ROBECOSAM -SUPERSECTORLEADERSTURNOVERRATE The managementofgenerational turnover 10.00 12.00 14.00 16.00 18.00 20.00 Turnover rateAverage (10.5)Terna (4.4) 0.00 2.00 4.00 6.00 8.00 blue-collar workers senior executives,juniorexecutives andwhite-collarworkers blue-collar workers senior executives,juniorexecutivesandwhite-collarworkers

BMW

Swiss re

GS

Iberdrola (FTE -FullTimeEquivalent)

Repsol

Roche

Philips

Telenet workingalloverthecountry(mainlyconstructing

Itausa 419,543 1,907 2012 KLM

Siemens 456,807

2,076 UPM 2011

ANZ

434,044 Air France 165 228 393 115 27 88 1,973 2010 EU15 EU17 137 Social responsibility 138

2012 Sustainability Report EU14 and thechancefortheirstudents todoprojectworkin2012. Seven mastersdegrees,promoted byuniversities,businessschoolsorexcellencecentres, receivedafinancialcontribution faculties andmastersdegrees ofauniversity,oragreementswith single departments/faculties),wentupfrom27to30. In 2012,existingagreements withleadingItalianuniversitiesandbusinessschools(framework agreementsvalidforall and theoutsideworld. to supporttheprocessoffinding newresourcesandtocreateavirtuouscircleofcommunication betweentheCompany Terna isexpandingitsrelationswiththeworldofuniversities, post-graduatetraining,andinstitutionaltrainingingeneral, process In linewiththeCompany’spolicyoftransparencyandfairness initsrelationswithstakeholders,attheendof junior, middle/expert,senior),andthenumberofresources sought. websites. Themethodsandinstrumentsusedintheselection processdifferbasedonthejobprofile(recentgraduates, to searchforspecialprofilesthecompanyusesalternative channels,includingannouncementsinnewspapersoron The preferredchannelthroughwhichapplicantsarefound isthe which alsohandlesrelationswithschools,universitiesand employment agencies. The process of searching for and selecting personnel is managed by the Human Resources and Organization Department, Elementary/Middle school Vocational schooldiploma High schooldiploma University degree Percentage ofemployees PERSONNEL COMPOSITIONBYSCHOOLING average ageandanincreaseintheeducationalqualificationsof thecorporatepopulation. Over time,thegenerational turnover theCompanyisexperiencing,anditshiringpolicies,willlead to adecreaseinthe through dedicatedintroductorytrainingcourses. concluding theirstudies.Onceemployed,thenewrecruitsexpandknowledgeandnecessaryspecific skills students withdiplomasfromprofessionalsecondaryschools,mostanelectricalspecializationobtainedupon The personnelrecruitedfromtheexternallabourmarketaremainlyuniversitygraduates–inparticularengineers- and The search-and-selectionprocessaimstoensuretheCompanyexpertiseitneedsachieveitsobjectives. Search andselection out thesameactivitiesastodaymoreefficiently. It shouldfinallybeconsideredthattheentryofnew,morehighly-educatedresourceswillmakeitpossibletocarry • • are: Some timeagoTernabeganaseriesofinitiativestomanagegenerationalturnover.Amongthemostsignificant reliably predictretirementsoverthedecade. at balancingpensionfundmanagementoverthemedium/longterm.Consequently,presentitisnotpossibleto periodically applied to the age requirements set out for access to the different retirement options. This is aimed should be remembered that the new legislation established that a mechanism related to “life expectancy” is to be employment and thus gain a higher pension. As regards expected retirements in the ten years 2012-2021, it hand, formembersofthesecondgroup,weexpectmorerecoursetopossibilityoptingcontinuein first groupofemployees,forwhomthereformguaranteedapplicationpreviousrequisites.Onother It shouldbenotedthattheprobability of effectiveretirement in thefiveyearsconsideredisveryhighonlyfor adequate performanceofcriticalroles. professional orientationprojectsaimedatcreatingandtransmittingtechnicalmanagerialskillsenabling of trainingcoursestaughtbyin-housepersonnel; the transmissionofknowledgeandexperience,oftenspecificexclusivelytoTerna,byexpandingorganisation Ternaalwaysinformsallparticipatingapplicantsofthe results, whetherpositiveornegative. Working atTerna 15.2 15.9 46.8 22.2 2012 sectionofthecorporatewebsite 16.0 15.8 46.6 21.6 2011 selection 18.2 16.2 46.5 19.2 2010 ; • • • • Training initiativesarecategorizedbysubjectarea: makes itpossibletotrainup200employeessimultaneously. has astaffroomand8classrooms-including70-seatlecturetheatreequippedwiththebesttrainingtechnology and In June 2012 the new Campus headquarters was inaugurated; it will host the majority of training courses. The new campus that year(correspondencewithneeds,quality,contributiongiven tothedevelopmentofresources,etc.). 2010) asurveyiscarriedoutamongallmanagerstoverifythelevelofperceivedeffectivenesstraininginitiatives for to testsascertainthelearningachieved.Periodically(the2012assessmentisinprogress,followingonedone for Training activitiesaresubjecttosystematicassessmentofresults.Thetoolsusedrangefromappreciationquestionnaires supplement orreplaceclassroomlearning. shifts). E-learning is used in wide-spread campaigns for the transfer of specific knowledge and information and may processes ofintroductionintothecompanyorroleswithhighprofessionalcontent(e.g.workersonreal-timecontrol Terna’s trainingmodelprioritizesactivemethodologiesinclassroomanduseson-the-jobtosupport the arriving fromtheoutsideworld. generally, with external centres of excellence, ensure the spread of corporate know-how in combination with stimulation a senseofbelongingandintegrationwithinthecompany.Collaborationswithuniversities,businessschoolsand,more resources toserveasplannersandteachersintheinternalCampusFaculty,whilealsofacilitatingdevelopment of The transferofspecialistknow-howisensuredbyatrainingmodelbasedonthewillingnessmostexperthuman human capitalinlinewiththemissionandbusinessstrategy. increasing anddiversifyingskillsemployabilitycreatingvalueforthecompany–throughdevelopment of Training atTerna Training world ofwork. previous years.Finally the corporate profile waspublishedintwoofthemostwidely-readanddistributedguideson The companyparticipatedin13careerdays(142011,82010),confirmingaclearlyupwardtrendcomparedwiththe were subsequentlyadmittedtoselectionprocessesandrecruited. year, in2012,51youngpeopleweregiventhepossibilityofdirectcontactandtrainingworldwork.Somethem theses werehosted(38in2011,342010);addingthe14whocompletedexperiencewhichhadbegunprevious In thecontextofcooperativerelationshipsdefinedbyagreements,37interns,trainees,andstudentswritingtheir Universities/Masters, and1byaTechnicalInstitute;totalof450 visitorswerewelcomedtoourlocations. 11 technicalvisitswerealsoorganizedtoelectricitystationsorTerna’sofficesacrossItaly,10ofwhichfor approximately 100hoursofteaching). recognised entitiesandatcorporateuniversitiessponsoredbyindustrycompanies,foratotalof31courses(for In addition,duringtheyear,Terna’spersonneltaughtuniversitycourses,mastersdegreespromotedbynationally in homogenousprofessionalcategories(e.g.shiftworkers in thecontrolroom). initiatives belongingtothethreeprevioussubjectareas.They aredesignedfornewrecruitsandin-serviceemployees Courses Office Automation); Training, Education, works andpromotedevelopmentofthecorporateidentity; Context &BusinessModel , brief mid- and long-term training processes, devoted to specific targeted employees and made up of a mix of to develop of technical and professional skills and acquire transversal skills (for example foreign languages, formanagerialandpersonneldevelopment; continuouslyembracesallaspectsofprofessionallife.Itisaimedatcreatingvalueforpeopleby toincreaseknowledgeabouttheinternalandexternalbusiness contextinwhichTerna EU14 139 Social responsibility

142

2012 Sustainability Report LA10 Method ofprovision Training Context andBusinessModel Education Hours oftrainingbytypecourse teaching - hoursofinternal Total Hours provided %coverageofemployees Women Men By gender Blue-collarworkers White-collarworkers Juniorexecutives Seniorexecutives By category By employee Average traininghours PERSONNEL TRAINING activities waspresented forFondimpresafinancing. Launchedin December, itwillcontinueuntilNovember 2013. those organizedinthelastfew yearsaftersignificantlegislativechanges.Attheend oftheyearasignificantplan downowingtothelowernumber ofnewrecruitsandtotheabsencewidespreadcampaigns suchas 41,137 hours, with 119,359hoursprovided comparedwith125,151hoursprovidedin2011.Within this, theSafetysectionrecorded The Training context, which is central owing to the technical nature ofTerna’sbusiness,remained substantially stable Fondirigenti. until November2013.Twotraining planswhichwillbeimplementedstartinginJanuary 2013werealsopresentedto year asignificantplanofactivitieswaspresentedforFondimpresa financing.LaunchedinDecember,itwillcontinue on businessinnovationanddevelopmentlaunchedin2011 withFondirigentifinancingwascompleted.Attheendof On thesubjectofEducation(17,707hourswereprovided; a slightdropcomparedwith21,664in2011),thetrainingevent contents duetolegislativechanges. initiatives devotedtotheelectricitymarketand231Model werepostponedto2013,owingtheneedupdatetheir These were for activities for newrecruits and for completion of the Information Security training campaign. The usual As regardstheContext&BusinessModelsection,6,352hours wereprovided(comparedwithmorethan31,919in2011). which inclassrooms.Hoursperheadwere41. In brief,in2012,86%ofthestaffattendedatleastonecourse foratotalof143,418hourstrainingprovided;99% partial effect. devoted tothem.Lastly,theaforementionedtransferoftraining activitiesduringtheyeartonewCampusalsohada extraordinary commitmentsfromthemanagersanditwasheld advisabletopostpone2013anumberoftrainingproject and, subsequently,thelaunchofTernaReteItaliareorganizationprojectinsecondhalfyear,required an managers, isattributabletoeventsofanorganizationalnature.DuringthefirstquarterchangeinGroup’sstructure which contributedtothetemporarydropinhoursprovided,particularwithreferenceexecutivesandmiddle employees werealsoconcentratedattheendofyear,meaningthattheirtrainingwilloccurin2013.Asecondfactor indicators. Infact,duringtheyeartherewasa lower flow ofnewly-recruiteduniversityandhigh-schoolgraduates.New for newrecruits(downfrom49,282hoursin2011to14,744hours)affectedtheresult,whilealsoinfluencingseveral other focus ontraining,butasthereflectionofatransitionphase.Firstly,decreaseinhoursprovidedpartcourses The dropofapproximately35,000hoursprovidedwithrespectto2011shouldnotbeviewedasadecreaseinthecorporate (1) % ofon-linetraining % ofclassroom training

Percentage ofemployeeswhotookatleastonetrainingcourse. (1) 143,418 119,359 86,227 17,707 6,352 2012 86 25 44 55 39 25 12 41 99 1 132,190 178,734 125,151 31,919 21,664 2011 97 44 51 55 55 30 19 51 98 2 171,146 118,303 29,928 22,915 2010 n.a. 58 47 40 27 49 97 96 3 0 0 Training hours/employeeTerna Training hours/employeeFTSE-MIBAverage (30,8) TRAINING HOURS/FTSE-MIBEMPLOYEE TRAINING HOURS/TSOEMPLOYEE Terna isinthetoppositiontermsofquantitytrainingprovided peremployee. 3.9; maximum value: 158.0; standard deviation: 39.0. Even with regard to the global best practices in sustainability, RobecoSAM -SupersectorLeaderspanel: Terna is inthetoppositionforlargeItaliancompanies. sector), averagehourspercapita:30.8;minimumvalue:5.6;maximum51.0;standarddeviation:15.4. FTSE-MIB panel: standard deviation:21.8.Inthiscomparison,Ternaisabovetheaveragerate. TSO panel: Compared toothercompanies,Ternawasinfirstplaceforallthreereferencepanels. page 142 foranexplanation). In 2012,Ternadelivered41hoursoftrainingpercapita,areductioncomparedtothe51in2011(pleasesee Leaders). were takenintoaccount,aswellthoseforinternationalleadersinsustainability(RobecoSAM transmission companies(TSOpanel)andthoseoflargelistedontheItalianstockexchange(FTSE‑MIB) As thestaffturnoverrateisanaspectofsustainabilitythataffectseverydivisioncompany,figuresfor capita traininghoursasabasis. The comparisonbetweenTernaandothercompanieswithregardtotrainingwasmadebyusingtheannualper Training foremployees:comparativedata Training hours/employeeTerna Training hours/employeeTSOAverage (45) 10.00 20.00 30.00 40.00 50.00 60.00 100.00 120.00 0.00 20.00 40.00 60.00 80.00 0.00

Lottomatica Landsnet Atlantia 12 figures available; average hours per capita: 45.2;minimumvalue:15.6; maximumvalue:96.0;

Autogrill - Travel Retail & Duty-Free 26availablefigures(25companies,oneofwhich,Autogrill,hasdiversifiedbyindustrial

Intesa Scottish power

A2A

Autogrill - Food & beverage Slovenia Eles Finmeccanica

Ansaldo Elia FIAT industrial

FIAT 16figuresavailable;averagehourspercapita:42.0;minimumvalue: National grid Telecom

Unicredit REN Snam rete gas

Buzzi

Mediolanum RTE

Generali

Saipem Terna

ENI KEPCO ENEL

Banco Popolare

Ubi banca Fingrid

BPM

MPS ISA Supersector ‑ Supersector

Pirelli

STMicroelectronics REE

Terna 143 Social responsibility 144 2012 Sustainability Report LA12 encourage labourproductivity quality and productivity, Terna signed an agreement with the trade unions that regulates Recognizing theimportanceof widespreademployeeinvolvementintheimplementation ofprogramsandplansregarding the sustainabilitytargetsto variableremunerationsystemfor executives. sustainability objectives–isassessedeveryquarter.The Balanced ScorecardsystemislinkedtotheMBO,connecting use ofthe achieved, bothatthecorporateandindividual level. Themonitoringandcontrolof corporateactivitiesalsomakes which isreservedforthecorporateManagement,links amountofindividualbonusestothedegreethattargetsare Annual performance targets are the basis of other variable remuneration schemes. a “Fidelitybonus”hasbeencreated. plan, linkedtomulti-yearcorporatetargets,wasestablished. Forjuniorexecutiveswhoholdkeyrolesinthecompany, perform themostsignificantdutiesintermsofachievingstrategic results,a2011-2013“cash” Measurement ofperformanceisalsorelatedtopayment thevariablepartsofremuneration.Forseniorexecutiveswho and theprofessionalgrowthpathsaremorestrictlydetermined by clauses inthecollective employmentcontract. periodic discussionsbetweenmanagersandHRrepresentatives. Thisisalsobecausetherequisitesofpositionsheld For manualworkersandotheremployeesnotincluded in theGPSotherformsofassessmentareapplied,suchas communication inthemanager-employeerelationship. of malepersonnel).Thisnumberisdestinedtoincludenewpopulationtargetswiththeaimincreasingtransparency and In 2012therewere754employeesinvolved,approximately22%ofthecorporatetotal(38%femalepersonneland20% the shiftmanagersofreal-timenetwork)andsomewhite-collar workers. group of employees with managerial and professional responsibilities: all senior executives, all junior executives (excluding assessment cycle makes it possible to monitor and direct personal growth. Application of the GPS currently involves a tool accessibletoallpersonnelinvolved,whichguaranteestraceabilityovertime.Annualrepetitionoftheperformance put intopracticetoachievethosetargets.Targets,conduct,assessmentsandfeedbackarecollectedinasoftware includes two aspects: the first is the concrete achievement of pre-set targets, the second regards organized conduct The heartofthesystemis Terna’s systemfordevelopingandmanaginghumanresourcesisbasedonperformanceasanindicatortoorientgrowth. Personnel developmentandmanagement TRAINING HOURS/ROBECOSAM-SUPERSECTORLEADERSEMPLOYEE For moredetailsabouthowthepanelsareconstructed,andoncomparisonswith othercompanies,pleaserefertotheNotesonpage15. Training hourswerecalculatedonthebasisofotherpublisheddata.Thetransitionfrompercapitatrainingdaystwowasmadebyassuming eight hoursinaday. Training hours/employeeAverage (42)Terna (51) 160.00 100.00 120.00 140.00 20.00 40.00 60.00 80.00 0.00 Balanced Scorecard

Telenet

Swiss re

Global PerformanceSystem(GPS) UPM system,throughwhichtheachievementoftargetslinkedto theStrategicPlan–including (seealsothesectiononIndustrial Relations).

Alcatel

ANZ

Roche

BMW

Itausa , whichisbasedonadefinitionofperformancethat

Air France

Repsol MBO Iberdrola a corporate-result bonus to (Management By Objectives) GPT long-term incentive(LTI)

Lotte 0

KT cor.

GS ,

in 2010. who leftin2011revealsthat, in theabsenceofdismissals,nonethosewhoresigned andlefthadtakenparentalleave only availablefor2012onthe numberofemployeesinservice12monthsafterreturning. However,acheckonemployees one employee resigned in 2012. The processing of this information began withreference to 2011; information is therefore Of the 23employees who made use of the leave in 2011, 22 were still in service at the end of 2012 (96% of the total); - ofwhommen - ofwhomwomen Total NUMBER OFEMPLOYEESWHOMADEUSEPARENTALLEAVE The tablebelowshowsthenumberofemployeeswhomade useofparentalleaveforatleast29days. • • • • • electricity industryandofcompanyagreements.Themostimportantmeasuresare: Terna offersmorefavourableconditions,inapplicationbothoftheNationalCollectiveEmploymentContractfor the Italian lawregulatesthematterofmaternityandparentalleave,providingforageneralcoverage,withrespecttowhich Caring forchildrenandfamilymembers Families ofworkers Workers Beneficiaries dependent membersoftheirfamilies. FISDE payspartofthecostmedicaltreatmentforillnessesnotonlyitsemployeemembers,butalso the alcohol, cancer,cardiovascularillnesses,ophthalmological anddisabilities. information onmajorhealthrisks.Amongthetopicsofandpreventioncampaignshavebeen:smoking, Group). FISDEorganizespreventioncampaignsforitsmembersincludingpreventiveexaminationsandsessionsproviding enrolled inthe Furthermore, Terna’semployees(excludingseniorexecutiveswhohaveaccesstoadifferentfund)areautomatically all employees.Ternahasestablishedbetterconditionsforspecific categories. beginner contractsarealsoincluded.Insurancecoverageforoccupationalinjuriesisregulatedbylawandextendedto These benefitsareavailabletoallemployeesoncetheyhavefinishedtheirtrialperiod.Part-timeandthosewith • • • • • • • In particular,thefollowingbenefitsareprovidedtomostemployees: aspects ofemployment)issubstantiallybetterthantheItalianaverage. As at other large electricity companies, the treatment of employees at Terna(pay, working hours, holidaysand other • • The bonusinvolvesavariableelementofremunerationandconsists oftwoparts: extraordinary leaveof2yearsinthecaseseriousdisability ofchildren orothercloserelations. 3 daysamonth,or2hoursday,ofleavetocareforchildren orotherfamilymembers,paidinthecaseofseriousdisability; the ageof4; unpaid leave(paidonlyinthecaseofseriousdisability),without limitsonuse,inthecaseofillnesschildrenunder years, butisunpaid; of bothparents’leave.Ifnotusedinthefirstyearchild’slife,leavecanbealsolater,uptoage 8 and secondmonthofuse.Theleavemaybetakenalsobythefather,withinamaximumlimit10monthsforsum 6 further months of maternity leave paid at 30%. Terna raises this amount respectively to 45% and to 40% in the first 100% ofnormalpaycomparedwiththe80%providedforbylaw; 5 monthsofpaidleaveformaternity,tothemotheranddistributedbeforeafterbirth.Ternaguarantees cafeteria serviceormealcoupons. subsidized loansforpurchasingahome,aswellseriousfamilyproblems; more favourablematernity-leaveconditionsthanthoseprovided for bythelaw; recreational associations; insurance fornon-occupationalinjuries; supplementary pensions(voluntaryparticipation); supplementary healthcare; with theemployees’workandpaidtoblue-white-collarworkers. “incentives forproductivity/quality”-linkedtotheachievementofspecificqualityandproductivityobjectivesconnected exception ofseniorexecutives; “corporate profitability”-linkedtotheCompany’sgeneralperformanceandpaidmostemployeesgenerally,with supplementary health-carefundFISDE (SupplementaryHealth-careFundforEmployeesoftheEnel Information onandprevention ofrisks Yes No 2012 21 25 4 Treatment 2011 Yes Yes 18 23 5 LA15 LA8 LA3 145 Social responsibility 146

2012 Sustainability Report LA14 LA13 EC7 proportion ofemployeesfromprotectedcategoriesinnewrecruits. gradual riseintheproportionofprotectedcategoriesupto7%(generallegalobligation)bymeansincreasing the particular Italian Ministerial Decree of 21 March 1996 and Italian Ministerial Decree of 15 May 2000), which foresee a 131 people of policies inthisregard–showsthatTernaisdeeplyrootedthenationaleconomy.Withreferencetopresence Almost allemployeesareItalian(only9foreigncitizens).Thisfigure–intheabsenceofspecificcorporate executives. show limitedgapsforwhite-collarworkersandjuniorexecutives,moresignificant,butdecreasing,senior and promotions divided by gender (see the table below) are no different from those of men. The data on remuneration also systems adopteddonotcausedisadvantagesforwomen.Inparticular,thepercentageofwomeninmanagerialpositions The mainindicatorschosenbyTernatomonitortheequaltreatmentofmenandwomenshowthatmanagement agreement contributetofosteringtheemploymentofwomenatTerna (alsoseethetextonpage146inthissection). Several favourablekindsoftreatmentprescribedbythelawandprovidedforindustry’scollectiveemployment of womenalreadyemployedattheCompany,againexcludingblue-collar workers. During 2012, (senior executivesandjuniorexecutives)rosefrom16.8%to17.3%ofallmanagers. qualified, highest-responsibilitypositions:between2010and2012,thepercentageofwomeninmanagerialpositions operating autonomy)and The percentageoffemaleemployees market andthegreaterparticipationofwomeninlabourforce. occupations. However,thepresenceofwomenisincreasing,partlyasareflectiongeneraltrendlabour A large majority of employees are men, because of the traditional scarcity of the supply of female labour in more technical of Ethics. All formsofdiscrimination,beginningwiththeselectionandhiringprocess,areexplicitlyforbiddenbyGroup’sCode Terna adoptssystemsforselecting,developing,andpayingpersonnelthatrecognizerewardmeritperformance. Diversity andequalopportunities personnel belongingtoprotectedcategories (128in2011and1162010).ThisfigureislinewiththelegislativeprovisionsapplicabletoTerna(in 31.3% ofallnewlyhiredemployees has growncontinuallyto11.4%attheendof2012 atTernainItalywas9.0%theendof2005(theyearwhichgained –netofmanualworkers (forexamplethedisabled),figurefor31December2012was were female . Theincreasealsoregardedthemost , ahigherpercentagethanthat Annual change:women Employment growth % Outflows: women Outflows % Annual change:men executives Female seniorandjuniorexecutivesoutoftotal Outflows: men Female seniorexecutivesoutoftotal Women outoftotalnetblue-collarworkers Women outoftotal Women outoftotalemployees Percentage values EQUAL OPPORTUNITIESFORMENANDWOMEN Inflows: men Inflows: women Inflows Over 50yearsold Between 30and50yearsold Less than30yearsold Women Men Percentage values COMPOSITION OFTHEBOARDDIRECTORSTERNAS.P.A. Finally, thefollowingtableshowscompositionofTerna’s 9-memberBoardofDirectors,brokendownbygenderandage. (4) (3) (2) (1) White-collar workers Junior executives Senior executives Male seniorexecutivesoutoftotalmen(excludingblue-collarworkers) Female seniorexecutivesoutoftotalwomen Managerial positions% Salary gapwomen/men% White-collar workers Promotions tojuniorexecutive as%ofprevious grade:women Grade promotions Junior executives Senior executives Salary gapwomen/men Promotion tojuniorexecutive as%ofprevious category:men

the different typesofincentivesandthevaluebenefitsreceivedover theyear. grades andthetotalannualremunerationofmenforsamegrades. The totalremunerationincludes,besidesbasicpay,productionbonuses, The figurewasnotcalculatedforblue-collarworkers,becausethereareno women inthatcategory. executive werenotconsidered,becausethenumberwassignificanton anannual basis. workers inthepreviousyear,calculatedbygender.Promotionsfromblue-collar workertowhite-collarandfromjuniorexecutivesenior gender atDecember31,ofthepreviousyear. The figure,calculatedforthefirsttimein2011,isresult ofthepercentageratiobetween thetotalannualremunerationofwomenfordifferent The figureistheresultofratiobetweenannualbasicpaymenfor the differentgradesandannualbasicpayofwomenforsamegrades. The figureisobtainedfromtheratiobetweenpromotionstojuniorexecutive thatoccurredduringtheyearandemployeescategorizedaswhite-collar The outflows(inflows)forwomenandmenshowtheratioofemployeesdividedbygenderwholeft(joined)inyeartototalemployees (1) (2) (1) (3) (4) 17.3 15.3 15.8 11.4 89.9 97.5 76.6 94.0 94.5 79.2 (2.1) 2012 2012 100 1.0 1.6 2.6 3.2 1.1 2.3 2.4 3.7 1.4 67 33 0 0 17.1 16.7 15.4 11.1 90.2 96.9 75.5 93.9 93.7 79.6 2011 2011 100 0.3 4.0 3.2 7.2 4.5 4.8 2.6 2.4 0.6 0.4 67 33 0 0 16.8 17.0 15.2 10.8 93.9 92.6 78.0 2010 2010 100 n.a. n.a. n.a. 5.1 0.1 4.8 2.8 4.9 7.9 2.7 0.8 2.4 1.1 56 44 0 0 147 Social responsibility 148 2012 Sustainability Report (1) GENDER PAYGAP-FTSE-MIBJUNIOREXECUTIVES GENDER PAYGAP-FTSE-MIBSENIOREXECUTIVES definition ofthebasicsalaryappliedbyvariouscompanies. that couldderivefromthereferencetocontractualminimumsonly,indicatesapotentiallackofconformityin The casesofcomplete equality ofaverage pay, bygender, of seniorandjuniorexecutivesclericalworkers junior executives,13%clericalworkers. executives, 113.2% junior executives, 100.0% clerical workers; standard deviation: 11% senior executives, 12% value: 64%seniorexecutives,57%junior40%clericalworkers;maximum100% or area);averagesalarydifferential:84%seniorexecutives,90%junior88%clericalworkers;minimum FTSE-MIB panel and clericalworkers. Italian companiesontheFTSE-MIB,Ternaisaboveaverageintermsofgendersalarygapforjuniorexecutives and clericalworkerswasthesameasfor2012,whileseniorexecutivesit80%.Incomparisontoother junior executives and 94% for clerical workers. In 2011, the comparison year, the differential for junior executives The percentagedifferentialbetweenwomen’sandmen’ssalariesatTernawas79%forseniorexecutives,94% categories ofsenior,andjuniorexecutivesclericalstaffused byTernaandmostotherItaliancompanies. workers are categorised differently depending on the company and country, and this does not translate into the make acomparisonwiththeItaliancompaniesquotedonFTSE-MIBbecause,forthoseinothertwopanels, Although thesalarygapisanaspectofsustainabilitythataffectsallsectorscompany,itwasonlypossibleto the variouscategories. salary gap between men and women, the result of the ratio between women’s and men’s basic annual salary for The comparisonbetweenTernaandtheothercompaniesintermsofequalopportunitiesisbasedonpercentage Women/men remunerationgap:comparativedata 100 120 120 100

20 40 60 80 80 40 60 20 0 0 For thistableonly,19figureswereconsidered,asAnsaldodoesnotpublishthe valueofthepaydifferenceforseniorexecutivesinChina.

Gross AnnualSalary–Terna seniorexecutives Gross AnnualSalary–Seniorexecutives Gross AnnualSalary–Terna juniorexecutives

Ansaldo Cina Ansaldo Asia

Ansaldo Asia : 21figuresavailable (15companies, twoofwhichhave datadiversifiedaccordingtothecountry Ansaldo America

Unicredit Ansaldo Eur. Centr., Or. e Ansaldo Medio Or. America Intesa (Estero) MPS Banco popolare Banco popolare Enel Intesa (Italia) Unicredit Gross AnnualSalary–JuniorexecutivesAverage (90) UBI

Terna (1) Enel Fiat industrial Saipem MPS Lottomatica

Intesa (Italia) Terna

Ansaldo Eur. UBI Centr. Or. e Medio Or. Fiat industrial Saipem Average (84) Ansaldo Lottomatica Eur. Occ.

Eni A2A

A2A Ansaldo Eur. Occ.

Pirelli Pirelli

Atlantia Eni

Generali Generali

Intesa (Estero) Atlantia project, aimed at stoppingadolescentsfrom droppingoutofschool inthe citiesofMilan,NaplesandPalermo. CreativInTerna 2012wasagain associatedwithasocialpartnership,thistimethecharity Intervita’s“Frequenza200” and drawingsareusedtomake calendarsorotherobjectsdistributedtoemployees at Christmas.Likepasteditions, winning imagesarereproduced inposterformatandusedspacesatTerna’soffices; inaddition,everyyearthephotos colleagues. Infiveeditions, CreativInTerna hasaccumulatedalmost1,600works,made upofphotosanddrawings.The time, atthesuggestionof employeesthemselves,aprizewasintroducedtobeawarded throughanon-linevoteby Art Competition:theemployees andtheirchildrenputthemselvestothetestonsubject “Teamwork”.Forthefirst The newcorporateframeworklaunchedinApril2012provided thethemeforfiftheditionof“CreativInTerna” Fifth editionofthe“CreativinTerna”internalphotography and drawing competition accompanied bymanagers,tocolleagueswhohadreached this importantmilestone. Roth, theHumanResourcesandOrganizationManager theCEOofTernaReteItalia,topayhomage,sometimes a familymember,toeighteventsorganizedinTerna’sOperating Areas.AlltheeventswereattendedbyChairpersonLuigi The programme,whichincludeddatesinJuneandOctober, involvedapproximately900colleagues,invitedtogetherwith In 2012,threeyearsafterthefirstedition,celebrationsfor those with25and35yearsofserviceinthecompanyreturned. Company Loyalty:celebrationsfor25and35yearsofservice Managers wereprovidedwithmaterialstobeusedinthechange, withthemostimportantinformation. The launchofthenewGroupstructure(April)wasaccompaniedbyacommunicationprocessaimedatallpersonnel. Terna’s newcorporatestructure Competition. Amongtheinitiativesin2012,wecannote: projects, withtheannualWe:Meconvention,meetingsbetweenTopManagementandExecutives,CreativInTerna of tools–forexamplethecorporateIntranetandin-housepublication“TernaNews”eventsspecial integration, promotingteamwork,andimprovingprocesses.Internalcommunicationisorganizedintotwoareas: that Terna recognizes the fundamental role of internal communication in facilitating the exchange of information, creating Internal communication GENDER PAYGAP-FTSE-MIBWHITE-COLLAREMPLOYEES compared tothefiguresreferencedforpaydifference:thisinformation wasthereforenotprocessed. please refertopage147).Withreference2011,afarlowervolumeofdatawasobtainedforthesalarygap also publisheddatarelatingtothegenderpaydifference(foradefinitionofandTerna’svalues Finally, in2012,linewiththeG3.1versionofGRIprotocol,somecompaniesonFTSEMIBpanel For moredetailsabouthowthepanelsareconstructed,andoncomparisonswithothercompanies,pleaserefertoNotesonpage15. 120 100

80 40 60 20 0 Gross AnnualSalary–Terna employeesGross AnnualSalary–EmployeeAverage (88)

Ansaldo Cina

Ansaldo Asia

Ansaldo America

Enel

Intesa (Estero)

Ansaldo Eur. Occ.

Unicredit

Generali

A2A

Banco popolare

Saipem

UBI

Intesa (Italia)

MPS

Pirelli

Fiat industrial

Terna

Eni Ansaldo Eur. Centr. Or. e Medio Or. Lottomatica

Atlantia 149 Social responsibility 150

2012 Sustainability Report EU16 • • • • • • • • In thiscontext,Ternaemphasizesthefollowingpointsregarding occupational safety: tender competitions. at construction sites. The costs of eliminating or limiting the risks of interference are excluded from price competition in deriving from theinterference of workcontractors and subcontractors,foralloperationsthatmakeuptheworkprocess must concernthespecificrisksofeachactivity,riskwork-relatedstressand,aboveall,ananalysis risks is theobligationtocarryoutadetailedassessmentofrisksrelatingworkers’healthandsafety.This most stringentinEurope.Theobligations for companiesregardnumerousthemes:oneofthemostsignificantaspects subject ofsafety(ItalianLegislativeDecree81/2008“ConsolidatedActonOccupationalHealthandSafety”)isone the Terna’s commitmenttosafetyshouldbeseeninthecontextofexistinglegislativeprescriptions.TheItalianlawon the Occupational healthandsafety cafeteria, hasmorethan200booksinstock.Theinitiativewillbe rolledouttootheroffices. made availabletoeveryone,thusfacilitatingsustainablereading.BiblioTerna,abookshelflocatedinsidethecompany BiblioTerna (theTernalibrary)wasinauguratedattheheadquartersinVialeGalbani:employeescandonatebookstobe BiblioTerna (TernaLibrary) solidarity marathonssuchastheKomenRaceforCure. In 2012meetingsoftheTernaRunningTeamalsocontinued.TRTisacorporateamateurrunningteamthattakespartin again in2013. was askiingcompetitioninwhichmorethan60colleaguestookpart,togetherwithcompanion.SciInTernawillbeheld In February2012,throughaninitiativeofthePaduaTerritorialArea,firsteditionSciInTernawasorganized.This We TransmitEnergy:Ternaforsport thorough and ongoing information and training activities representatives, seeIndicatorLA6); issues, asdoelectedemployees’representatives,responsible forverifyingthatthelawsareapplied(workers’safety confirmation ofcertification alsocontribute toincreasingattentiontheobservanceofrulesconductandsafety I Prevention, andProtectionManagers(twiceayearforeach, intherespectivegeographicalareasofresponsibility). thorough supervision Risk ‑ DPRET); and Instructions careful riskmapping.Themanagementsystemconsistsof an organicanddetailedcollectionof of corporateactivities).Thesystem,whichisintegratedwiththatservicequalityandtheenvironment,basedon an construction sites.Theunitalsoperformsdirectinspectionsofwork placesandconstructionsites;; an by relevantentities); database oflegislation an promoting accidentpreventionforallemployees,includingcontractors; Safety ManagementSystem,specifiestheguidelinesofCodeEthics,forexamplewithanexplicitcommitment to Ethics. TheCompany’sOccupationalSafetyPolicy,whichisanintegralpartoftheintegratedQuality,Environmentand clear safety-policy guidelines: applied research involved; the injuryrateand the lost-day rate) in thesystem of indicators linked to thevariableremuneration of the Departments the insertionof work inacontrolledenvironment; to carryoutsafetytraining informative meetings.Certainequipmentpresentinthe any changes on thesubject of safety, through various channels includingthecorporateIntranetandorganizationof nternal complianceaudits Environmental Safety&Securityportal organizational unitresponsibleforsafety OHSAS 18001-certifiedmanagementsystem occupational safetyperformance targets , withincludegreaterdetailsforactivitiesthatentailelectrical risk(RulesforthePreventionofElectrical : a specific organizational unit of the Engineering Department experiments with safety materials and : correctandfullapplicationofproceduresisassured through inspectionsbytheSafety, regardingoccupationalsafety(nationalandregionalregulations,technicalstandardsissued arecarriedoutinalltheTransmissionOperatingAreas. The for climbing pylons (through the use of natural-size pylons in the gym) and for live-wire forclimbingpylons(through theuseofnatural-sizepylonsingym)and for the importance of protecting people from physical harm is affirmed in Terna’s Code of foundonthecorporateIntranetandcontaininganup-to-datecomplete centrallycoordinatedandwithlocalmanagersintheareaofficeson (certificationobtainedin2007,confirmed2010.Coverage:100% Viverone (BI)trainingCentre (in particular : all personnel are made aware of the key points and of an“occupationalsafetyindex” madeupof makesitpossible, external audits Operating Procedures in particular, setupfor In 2012theproject • • Furthermore: subject ofsafetyatconstructionsites. Of particularsignificanceamongthetraininginitiativescarried outduringtheyear,wastrainingcampaignon Blue-collar workers White-collar workers Junior executives Senior executives Total HOURS OFTRAININGONWORKERS’HEALTHANDSAFETY reduction inthenumberofnewrecruitsjoiningcompany. had determinedapeakoftraininghoursin2011,andontheother–asalreadyindicatedthissection-tooverall on onehandtothecompletionoftrainingcampaignDPRET(RulesforPreventionElectricalRisk),which In 2012morethan40,000hoursoftrainingweredevotedtohealthandsafety.Thedropcomparedwith2011was due Training andinformation • • In 2012thetechnicalforumslaunchedwithANIEwerealsoconcernedrevisingandupdating: construction sites. technical solutionstobeadopted,asseenbyallcompaniesintheindustry,regardingorganizationofsafety at confirmation of“goodpractice”onthepartINAIL,isasummaryexperiencesandissues,related and demolition of HV power lines under the terms of Italian Legislative Decree81/08”. The document,which is awaiting In particular in 2012 it completed the document “Organization of construction sites forthe work of building, maintenance had aWorkingGroupwiththepurposeofharmonizingandstandardizingsafetyrulesatelectricityconstructionsites. Additionally, forsomeyearsTernaandANIE(theNationalFederationofElectro-technicalElectronicCompanies)have for anynecessarycorrectivemeasuresandimprovementsinacomprehensivemanner. quality system.Thepurposeoftheseauditsistomonitorallactivitiesingeneralatthesites,makingitpossiblepro vide by aninter-departmentalworkinggroupwhichensuresknow-howonsafety,fraudmanagement,the231modeland the in the two previous years. The inspections, carried out with the assistance of a specialist external company, are attended In 2012,35inspectionswerecarriedoutatthemainconstructionsites,incontinuationofmorethan100 out Monitoring constructionsites The mainactivitiesin2012 the law. procedural elements capable of ensuring good management practices in addition to compliance with all provisions of with regardtosafetyandtheenvironmentmustfilloutadetailedquestionnaireregardingspecificorganizational adopted to protect the health and safety of workers. In particular, companies in categoriesconsidered most significant Finally, duringthesupplierqualificationprocess,Ternarequiresexistenceofdocumentedproceduresthathavebeen • workplace” a trainingsessionwasprovided onsafetyissueswhichinvolvedexternalprojectworkers andtemporarystaff. the refresheractivitiesprovided forinTU81/08,(e.g.firstaid,fire prevention)werecompleted; the gridfrom132kVto420kV. the completed; the document 32 hours),designedincooperationwithcertifiedtraininginstitutes. and squadforemen,safetymanagers)–Ternarequiresadditionalcertificationthattheyhavereceivedtraining(24- roles (e.g.,workersassignedtothemountingandmaintenanceoflines,cuttingvegetation,painting,construction-site construction site have been informedabout the risks and trained in the use of personal protective equipment.For several Contracts toconstructoverheadpowerlinesandelectricitystationsrequireadeclarationthatallpersonnelonthe concern forsafetyconditionswithregardto devices, testingtheirreliabilitythroughresistancetrialsinextreme conditions; list ofequipmentandmachinery wascompleted. “Methods ofClimbing,Accessing,Moving,andPositioningonworkatheight” “Analysis ofthecontextand identificationofstimulirequiredtoencouragesafeconduct inthe managedandrequiredinthequalificationstagenecessarytoperformworkon contractors thatperformworkonconstructionsitesbehalfofTerna. 22,937 16,292 41,137 1,908 2012 0 61,033 32,554 25,737 2,536 2011 206 , currentlybeing 24,885 20,265 49,222 3,897 2010 175 151 Social responsibility 152 2012 Sustainability Report LA7 Occupational DiseaseRate Absentee Rate Lost-Day Rate Injury Rate GRI-ILO DEFINITIONS OCCUPATIONAL INJURIES-TERNAEMPLOYEES female employees. three yearsconsideredcorporateliabilitywasdefinitivelyascertained.In2012therewerenoaccidentsinvolvingTerna’s No fataloccupationalinjuries,norcasesoforseriousaccidentsoccurred,eveninpreviousyears,forwhich the possible onsetofoccupationaldiseases.Terna’sdisease ratemustthereforebeconsideredalwayszero. of activitiescarriedoutbyTernadoesnotentailanyworkassociated–onthebasisofficiallegaltableswith the absentee rateconfirmsthefallingtrend.Nohoursofabsencewereascribabletooccupationaldiseasebecause type total numberofinjurieswasinlinewiththepreviousyears.Theinjuryrateshowslimitedfluctuationsovertime,while the As intheprevioustwoyears,2012therewerenofataloccupationalinjuriessufferedbyGroup’semployees. The Occupational injuries • • • • Finally, in2012: tool tosupportnotonlysafety,butalsotheenvironmentandservicequality. In viewoftheresultsobtained,objectiveistocontinuewithinitiativesinvolvingemployees,makingsucha and somesuggestionsforimprovement. The regionalofficesandtheunitsinvolvedreceivedareportcontaininganalysisofdatathatemergedfortheirarea meetings andpossibilitytoshareresultsarepositiveexperiences for employees. the contentofwork,revealedthatemployeesareawarecompany’sinvestmentinsafetyvalues.Thetraining, improve practices and processes in the field of safety. The analysis, which concerned both the working contextand The initiative,whichinvolved320colleagues,wasanopportunitytocollectideasandsuggestionsinorderfurther (2) (1) - ofwhichfatal - ofwhichserious Number ofinjuries

Decree 81/08. periodical preventivemedicalexaminationswerealsoperformedforatypicalworkers,assetoutbyItalianLegislative 25 internalauditswereperformed; managers performed157inspections,andthecompanydoctormade approximately 244visitstoworkplaces. in compliancewiththelaw,Safety,Prevention,andProtectionManagersTransmissionOperatingArea The Group’sOHSAS18001certificationwasconfirmed; Occupational DiseaseRate method, theabsenteeratecameoutat3.8in2012, multiplied by 200,000.Tofacilitate comparison withothersources,thisindicator was calculatedasapercentageof daysworked.Withthiscalculation Absentee Rate multiplication factorof1,000.Withthiscalculationmethod,thelost-dayrate came outat0.3in2012, are calendardays,countedstartingfromwhentheinjuryoccurred.Tofacilitate comparisonwithothersources,thisindicatorwascalculatedusinga Lost-Day Rate calculation method,theinjuryratecameoutat8.8in2012, also calculated using a multiplication factor of 1,000,000 instead of 200,000 (consequently obtaining an injury rate fivetimes that of the ILO).With this multiplied by200,000(correspondingto50workweeksx40hours100 employees). Tofacilitatecomparisonwithothersources,thisindicatorwas Injury Rate further breakdownthedatabyregion,becauseTernaonlyoperatesinItaly. with other sources, the following notes show the figures of the same indicators calculatedwithalternative formulae.Itwas not considered necessary to leave, andsuspensions. As requiredbytheGRIprotocols,definitionsadoptedarethoseprovided forbytheInternationalLabourOrganization(ILO).Tofacilitatecomparison The reasonsforabsenceconsidered do notincludematernityleave,marriagestudyleavefortrade unionactivities,othercasesofpaid . Thisisthenumberofinjurieswithatleastoneday’sabstentionfromwork dividedbythenumberofhoursworkedduringyearand (2) . Thisistheratiobetweendaysnotworkedowingtoinjuryandhours intheyear,multipliedby200,000.Daysnotworked . Thisisthenumberofdaysabsenceowingtoillness,strikesandinjuries outofthenumberdaysworkedinsameperiod, (1) . Thisisthetotalnumberofcasesoccupationaldiseasedividedbyhours workedintheyear,multipliedby200,000. 3.9 in2011,and2010 8.3 in2011,and8.72010 . . 7,632.1 63.0 1.77 2012 51 0.2 in2011,and0.32010 3 0 0 7,757.0 46.4 1.67 2011 49 0 0 1 . 7,796.5 65.0 1.74 2010 50 0 2 0 (8) Representatives canaskthe Companytocarryoutinspectionsandareconsulted about riskassessmentandthe the role oftheESRswasexpanded toincludeenvironmentalissues, sotheyarenowESERs. regulations regarding the health and safety of workers are applied. During the aforementioned renewal of the NCEC, their numbervariesaccording tothenumberofcompany’semployeesandoffices. Theirroleinvolvesseeingthat Safety Representatives (ESRs) to be elected byall the employees.TheESRsthusrepresent 100%oftheemployeesand Employee involvementinmattersofhealthandsafety employees –bilateralcorporatecommitteestoworkincooperation withtheindustrybody. environmental andsafetyissues.Provisionwasmadeforthe possibilityofestablishing–incompanieswithmorethan500 agreed on betweenthe parties. Inparticular, the body is tomake proposals,monitor,andcoordinatetrainingregarding and theenvironment”,withtaskofstrengtheningsafeguarding ofoccupationalsafetystartingfromsharedobjectives The 2010NCECprovidedfortheestablishmentofabilateral body–attheelectricityindustrylevelon“Health,safety Terna’s remainingpersonnel. are calledincompliancewithlegalandcontractualprovisions, therearenolimitationsonexercisingtherighttostrikefor performance duringthestrike,theyareobligedtobeon-call throughoutthedurationofsaidstrike.Providedthatstrikes As regards on-call personnel, the agreement in question establishes that, althoughtheyhavetheright to suspendnormal • • • exempted fromstrikes: As workersresponsiblefornationaltransmissiongridandoperatingactivitiesthefollowingshift are in essentialpublicservicesandapprovedbythewatchdogcommittee fortheaforementionedlaw. signed inFebruary2013,whichimplementsItalianLawNo.146ofJune12,1990regardingexercisingtherighttostrike in theeventofastrike Relations with Trade Unions in the industry also give rise to the renewed inFebruary2013. negotiates therenewalofcontractwithTradeUnions.ThecurrentNCECexpiredonDecember31,2012,and was pensions. Ternaparticipatesinestablishingtheindustry’srules,becauseitispartofemployerdelegation that professional grades,treatmentofshiftworkers,holidays,overtime,supplementaryhealthcare,and This industry-widecontractgovernsmanyaspectsofemployeepayandbenefits,suchasminimumforvarious industry All Terna’s employees level andtheCompanylevel. Industrial relations between Terna and the trade unions that represent itsemployeestakeplace at boththe electricity‑industry Industrial relations (1) - ofwhichserious Occupational injuriesofcontractors’employees GRI-ILO DEFINITIONS OCCUPATIONAL INJURIESOFCONTRACTORSANDSUBCONTRACTORS These accidentsoccurredduringtreecuttinganddemolitionactivities. As showninthetablebelow,2012,2fatalaccidentsoccurredamongemployeesofcontractorsandsubcontractors. Injury Rate - ofwhichfatal

workers intheSecurityOperationsCenter. and infrastructuresgoverningthedispatchingofelectricity nationwide; workers withthetaskofcarryingoutcontrol,coordinationandoperationcomputersystems,auxiliaryservices for verifyingproductionplansandacquiringtheresources necessaryforthedispatchingactivity; operators responsibleforreal-timecontrolofthenationalelectricitysystem,remotetransmissionplants, local collectivecontract. obtaining aninjuryratefivetimesthatoftheILO).Withthiscalculationmethod, injuryratecameoutat 200,000 (correspondingto50workweeksx40hours100employees). To facilitatecomparisonwithothersources,thisindicatorwasalsocalculatedusingamultiplicationfactorof1,000,000instead200,000(consequently This isthenumberofinjurieswithatleastoneday’sabstentionfromworkdividedbyhoursworkedduringyearandmultiplied The 3employeesof thesubsidiaryTerna Gora d.o.o.,operatinginMontenegro, Crna are covered byanindividualcontractwhich reflects theprovisions ofthe (NCEC,inItalianCCNL–theNationalCollectiveEmploymentContractforemployeeselectricityindustry). (1) 8 are covered by a , toensurecontinuityofservice.AtTerna,thisissueisgovernedbytheNationalUnionAgreement collective employment contract iscurrentlyregulatedbythelaw,whichprovidesforEmployee regulation of indispensabletasks adopted by the companies 0.63 2012 10 2 3 3.1 in2012,3.72011and4.22010 that must beperformed, 0.75 2011 13 4 0 in the electricity 0.85 2010 14 . 0 5 HR5 LA9 LA6 LA4 153 Social responsibility 154 2012 Sustainability Report LA5 In thiscase,workersmustbeinformedinwritingatleastthirtydays in advance. employees areinformedinadvanceonlyiftheorganizational change entailsthembeingtransferredtoadifferentoffice. observations andproposalstobeformulated.Atthisstage,advanceinformationremainsatthecollectivelevel.Individual must makeavailablethedocumentationnecessarytoensureacompleteoverviewoforganizationalproject,enabling discussions with the unions must be held, to be concluded within three months. In these discussions the Company In accordance with theunion agreements ineffect at Terna, in theeventofsignificantorganizationalchanges,preliminary agreements. the lawitself,workers’representativesmustbeinformedandconsultedatleasttwenty-fivedaysbeforeanybinding in the event of mergers, acquisitions or other significant changesin thecompany’sownershipstructureidentifiedby relations: itisregulatedbothbylegalprovisions,industry-widecontracts,andcompanyagreements.Accordingto law, The of ensuringmixedavailability(lines/stations).Finally,itwillenable rationalisationofinvestmentallocation. creating professionalgrowthanddevelopmentopportunitiesforthenewmulti-skillfigurescapable,amongotherthings, introduction ofmulti-functionalroleswhichwillcombineamanagementprofilewithtraditionaltechnicalskills,aswell as between theMaintenanceandDispatchingareasatregionallevel,optimizingGridmanagement.Itwillalsoenable the maintenance activitiesandofmanagementforoperatingprocesses,willincreasetheeffectivenessintegration Adopting theneworganizationalmodelwillmakeitpossibletostrengthenregionaloversightofoperatingandplant Engineering Units,andrationalizingthegeographicaldistribution oftheoperatingbases. Dispatching reportingtothecompetentRegionalDepartments,redefiningscopeofworkCentraland operating, planningandconstructionactivitiesatthelevelofRegionalDepartments,allocatingresponsibilitiesfor currently performed in the context of the “Lines” and “Stations”, and gradually introducing multi-skill figures, centralizing The projectprovidesforthecreationofthreenewRegionalDepartments,functionallyintegratingoperatingactivities organizational modelforTernaReteItalia’sOperationsDepartment. In thesecondhalfof2012,discussionsalsobeganwithNationalSecretariatstradeunionsonnew the signingofawrittenagreement. Art. 47ofItalianLawNo.428/90concerningrentalthebusinessunitbyTernaS.p.A.toReteItalia–with trade union secretariats on the new corporate framework of the Terna Group which ended – after the proceduresetout in As regards In thethreeyears2010-2012 levels, thusallowingtheprocessesofchangesignificantcorporate interesttobegoverned. the industrial relations system line with the figure for previous years; membership is concentrated in the largest unions. Management of the Terna’s advance and/orperiodicinformation. relations system The relationshipbetweenTernaandthetradeunions programs, aswelltherepercussionsofintroducingnewtechnologies. figures responsibleforhealthandsafetytoexaminetheappropriatenessofpersonalprotectiveequipmenttraining identification ofpreventivemeasures.Atleastonceayeartheyattendmeetingswiththeemployerandothercorporate involvement oftheTradeUnionsineventorganizationalchanges employee union membership rate in 2012 was 61.7% 2012 , industrialrelationsactivitywascharacterised,inthefirsthalfofyear,bydiscussionswithnational whichdefinesasystemofrelationsdividedintocontractnegotiation,discussions,consultationand hasenabled the partiestodevelop and consolidateaneffectivenetworkofrelationsatall , bargainingwiththeindustrytradeunionsledto at thecompanylevel , which is high compared to the industry average and in isgovernedbythe isoneofthecentralaspectsindustrial signing of41writtenagreements Protocol ontheindustrial Protocol on .

156 2012 Sustainability Report EU22 EU20 HR11 HR10 SO9 SO1 HR9 HR7 HR6 HR5 HR4 HR3 HR1 Compact (seetherelevantparagraph inthesection“Profile”on page38). commitment wasfurtherstrengthened inDecember2009,whentheBoardofDirectorsresolved toformallyjointheGlobal a referencepoint–aninsuperable limit–forallsituationsinwhichtheCompanymight operatearoundtheworld.This In 2006,Ternaadoptedtheprinciples oftheGlobalCompact,referringtotheminits Code ofEthics, CGES (see“TheTernaGroup” onpage26).ThiscompanyadoptedtheGroup’sCodeof EthicsinFebruary2012. purpose ofsupportingTerna’s activities,derivingfromitsequityinvestmentintheshare capitaloftheMontenegrinTSO Terna CrnaGora,incorporatedinJune2011(3employees withlocalcontractatDecember31,2012),alsohasthe Terna’s projectsabroad(intheBalkansandNorthAfrica)did notinvolveoperatingactivities.TheMontenegrincompany particular actionsontheseissuesthroughtheimplementation ofspecialmanagementpolicies.Inthewhole2012, for humanrights,freedomofassociation,andcollective bargaining, thusmakingitnon-criticalforacompanytotake The TernaGroupoperates in Italy,where the legal framework and thelevel of civil development amplyguaranteerespect Human rights transparent, meticulous,andconsistentmanner,whileavoidingcollusive behaviour. As setoutinitsCodeofEthics,Terna’srelations with institutionsandassociations,itrepresentsitsinterestsina development ofthecommunitiesinwhichitoperates. humanitarian, and cultural initiatives to be an integral part of its mission, as a concrete sign of participation in the civil In keepingwiththisfairandrespectfulapproach,Ternaconsiderstheidentificationimplementationofsocial, scrupulously withthelawsandregulationsthatconcernit. Considering itsroleastheproviderofaservicetosocietyandregulatorycontextinwhichitoperates,Ternacomplies When Ternaconstructsastation,whichoccupiesmuchmoreland,theCompanynormallypurchasesnecessaryland. procedure. land owners(7,463in2012;7,0922011;3,5862010);8%ofcasesitwasnecessarytouseacoerciveeasement the three-yearperiod 2010-2012 Ternaconstructed power lineswhichentailedobtainingeasementsfromabout18,141 The pursuitofaconsensualsolutiononlyfailsinminoritycases,whichcoercivemeasuresbecomenecessary. In disposal. occupied bythepylons,itbeingunderstoodthatiflinesaredismantled,landwillagainbeattheircomplete overhead conductors,layingundergroundcables).Inthesecases,ownersarenolongerbeabletousethelandphysically consent, payingone-offcompensationfortherightofwaylinethroughprivateproperty(mountingpylons,installing Act onExpropriations)touseanexpropriationprocedureobtainland,theCompanypreferssolutionsbasedmutual Even thoughTernaisauthorizedbythelaw(ItalianLawNo.1775of1933andPresidentialDecree327/2001Consolidated impact, ofnewlines. innovative solutions,forexample,single-polepylons,tendstodiminishthephysicalencumbrance,aswellvisual the use of from about 30 to about 250 square meters of land – usually agricultural land – for each pylon.Terna’suse of The constructionofnewpowerlinesdoesnotinvolvethephysicaldisplacementpeopleorentirecommunities,butonly activities. Inthischapter,otherpossibleimpactsonindividualsand societyarediscussed. the chapter“Environmentalresponsibility”,becausevisualandlandscapeimpactsaremostsignificantofsuch Terna’s approachtothelocalcommunitiesthathostconstructionofnewinfrastructureisdiscussedin-depthin directly affectedbyprojectsfordevelopingthetransmissiongrid – isanessentialstakeholder. inbothageneralsenseastherecipientofTerna’sservice,andlocalcommunitiesmore – understood Terna isaninfrastructurecompanythatstrategicfortheItalianeconomyandprovidesapublicutilityservice.Society Our approach SOCIETY thusestablishing As ofDecember31,2012,no litigationregardingcorruptionwaspending. • • • In 2012,asinthethreepreviousyears: the modelandorganizationalchangeswhichhaveoccurred. In fact,thetrainingcampaign is currentlybeingrevisedtotakeintoaccounttheregulatory updates,theadjustmentsto involved 21%ofthecorporatepopulationand27% senior executives,involvedonlyasmallnumberofcolleagues. During 2012,thecourseson231Model,aftertraining campaignwhichduringthe2009-2011three-yearperiod areas atriskforcrimesandthepotentialwithregard tothe activitiesperformed. established forthepreventionofcrimesatallcorporate levels,andtoinformtrainthepersonnelregarding The objectiveofthesecoursesistoensureawarenessand disseminationoftherulesbehaviourandprocedures Personnel training: • • • • Monitoring audit andrisk-assessmentreportsforcorporateprocessesdepartments atrisk. subsidiaries severaltimeswithregardtovariouskindsofrisks,includingthoseconcerningcorruption,andproduced During the2010-2012period,AuditUnitexaminedallcorporatedepartments(100%)andCompany’s account thechangesintroducedby“anti-corruption”Law,No. 190/2012. involvement ofalltheaffectedcompaniesanddepartmentsGroup,anupdatemodelwasbeguntotake into an integratedsystemforthepreventionofspecificrisks,includingcrimescorruption.InFebruary2013,with the a setofcontinuallyupdatedguidelines, procedures, training commitments, andcontrolmechanismswhichforms Risk Management Terna’s strategyinthisregardfocusesonthreemajorareas: honesty aretwoofthegeneralprinciplesonwhichCodeEthicsandconductCompany’sbusinessbased. For Terna,thepreventionofcorruptionisastrategicactivitywhichmesheswithInternalControlSystems.Legality and Safeguarding legalityandpreventingcorruption in othercountries. tracks changesinexternal references (e.g.international conventions), alsowithaneyetoTerna’spossiblefutureactivities health andsafety”,respectivelyonpages89150ofthisReport.Finally,theCorporateSocialResponsibilityUnit Services Departments play acrucial role; onthispointseetheparagraphs“Relationswithsuppliers”and“Occupational in contractedandsubcontractedworksperformedonTerna’sbehalf,theProcurementContractsSecurity that therulesarecorrectlyapplied.Asregardsguaranteesofrespectforhumanrightsandworkers’protection aspects regardinghumanrightsaredealtwithinTerna’sCodeofEthics–theAuditDepartmentisentrustedensuring rights asaprinciplebelongstotheHumanResourcesandOrganizationDepartment,while–consideringthatmany In viewoftheabove,andfactthattherearecurrentlynocriticalissues,managerialresponsibilityforhuman • preventing anddealingwithcrimes,carriedoutby: there werenoascertainedreports ofviolationtheCodeEthics with regardtocorruption. there werenodisciplinarypenalties forincidentsofcorruption; there werenocasesoflitigationregardingcorruption; work ontheNationalTransmissionGridinfrastructure. contractors andsubcontractorstotheinstitutionsresponsible,inorderpreventcriminalinfiltrationofconstruction in accordancewiththeProtocolsofUnderstandingsignedthem,sendingdata,information,andnewson for awardingcontractstopredeterminedsuppliers; ex ante with thirdparties; checking andassessingnewsubjectscounterpartieswiththeaimofcontainingrisksderivingfromtransactions • • continually monitoringtheeffectivenessofpreventionmeasures adopted; defining specificmonitoringandcontrolprocedurestomitigate risks; the phenomenacanbefacilitatedandpossiblecausesinorganizational andoperatingaspectsofprocesses; systematically analysingthepre-conditionscharacteristicofincidentsfraud,identifyingcriticalareasinwhich validation of requestsforawardingconsultancyservices,professionalappointments,ITservicesandprocedures : theSecurityDepartment’sFraudManagementUnitperformstasksregarding: : in2001Ternaadopteda231OrganizationalModel(amodelpursuanttoLegislativeDecree231/01), TernacontinuallyrunstrainingcoursesontheCodeofEthics andthe231OrganizationalModel. SO4 HR3 SO3 SO2 157 Social responsibility 158 2012 Sustainability Report meetings. Since then, it has taken an active part in the initiatives of the Foundation which in 2012, among other things, had meetings. Sincethen,ithastaken anactivepartintheinitiativesofFoundationwhich in2012,amongotherthings,had – fromaculturalandtechnical pointofview–thethemessustainabledevelopment throughresearch,seminarsand In 2011Ternabecameamember oftheFoundationforSustainableDevelopment.Itsactivities mainlyconsistofstudying Foundation forSustainable Development (See thebox“Ternatakespart inthecreationoffirstItaliantoolkitonemployeevolunteering” onpage.161). Volunteering: apracticalguide for collaboration between profit and non-profit activities”,presentedofficiallyinJanuary 2013 itself, CiesseviandSDABocconi.Workshopactivitiesended inNovember2012withthecreationoftoolkit“Employee Terna alsotookpartintheworkofWorkshoponemployee volunteering,organizedby,inadditiontotheFoundation of representativestheSodalitasFoundation(includingTerna), theItalianDonationInstitute,companiesandInstitutions. 123 non-profitorganizationstookpartinthe2012edition with 129projects,whichwereassessedbyCommitteesmadeup to creatingnewpartnerships. profit organizationsfinalizehigh-qualitysocialbusinessplans capableofattractingtheinterestcompanies,withaview During 2012Ternasupportedthesecondeditionof“Sodalitas SocialInnovation”,aprogrammedesignedtohelpnon- economic valueof30%GDP,and80voluntarymanagers ( non-profit worlds.Currently,theFoundationcancounton the contributionof97supportercompanies,whichgeneratean Association of the same name to spreading corporate sustainability and to promoting dialogue between the business and Terna isoneofthefoundersSodalitasFoundation which,since2008,hascontinuedthecommitmentof Sodalitas 2012, seetheparagraph“Initiativesincommunity”onpage159. corporate givingactivityoverthelastthreeyears,classifiedaccordingtoLBGmodel.Formoredetailson in precise measurementoftheeffects(outputs)itsinitiativesincommunity.The2012reportingdescribesTerna’s adapted themonitoringtoolssetoutbyLBGmethodologytoItaliancontextanditsspecificfeaturesfora more than 120companieswithaviewtomeasuringthecontributionsandimpactsofCorporateCommunityInvestment,Terna After joiningtheLBG-LondonBenchmarkingGroup,aBritishbenchmarkingorganizationwhichbringstogethermore LBG (theLondonBenchmarkingGroup)-CorporateCitizenship programme, whichhasbeenextendedtothewholeof2013( companies andorganizationswhichareleadersatthegloballevel(of7,besidesTerna,Italian)takepartin the in definingandtesting aframework for integrating financial, environmental,social andgovernance information.80 Since 2011 Ternahastaken part inthe Pilot Programme launched by theIIRC,internationalorganisationinvolved IIRC –TheInternationalIntegratedReportingCouncilPilotProgramme to sharingbestpractices.Inparticular,Ternaactivelysupportsthe followingorganizations: responsibility, workingactivelywiththemtospreadacultureofsustainability,andpromoteitsexperienceview Terna isalsoamemberofinternationalandnationalassociationsengagedwiththethemescorporatesocial citizens, togetherwithNGOsandAuthorities,intheprocessofnetworkdevelopment. the needforgreatertransparencyindecision-making processes oftheTSOsandgreaterinvolvementEuropean the extensionoffirstEuropeanGridDeclarationonTransparencyandPublicParticipation(EGD),whichexpresses During 2012,RGIproducedthefirstEuropeanGridReport,acollectionofbestpracticesonsubjectandsigned sources. operators andnon-governmentalorganizationsthatpromotesintegrationof100%theelectricityproducedbyrenewable Since November2011,TernahasbeenamemberoftheRenewablesGridInitiative(RGI),anassociationEuropeangrid activities atconstructionsitestorespectthelocalland. In November 2012, Ternasigned a Protocol of UnderstandingwiththeANIEtoreduce environmental impact of Telecommunications), whichbringtogetherelectricalengineers and otherindustrialspecialists. Électriques) andtheAEIT(ItalianFederationofElectro-technics,Electronics,Automation,InformationTechnology, whose purposeistokeeptheirmembersupdate,suchastheCIGRE(ConseilInternationaldesGrandsRéseaux the industry’stechnicalstandards.Ternaemployeeswithrolesoftenbelongtoprofessionalassociations Terna takesanactivepartintheCEI(ItalianElectro-technicalCommittee),abodyentrustedwithtasksregarding regulations andtechnicalstandards. work oftheassociationstowhichitbelongs,contributegeneralimprovementelectricityindustryandits In keepingwiththecommitmentstakenoninitsCodeofEthics,Ternacooperatesanddiscusseswith,supports Participation inAssociations data at22/01/2013–source: source: Sodalitas,January2013 www.theiirc.org ). ). giving. manner, thecostsandbenefitsofbeneficialinitiatives,enabling strategicplanningandrationalmanagementofcorporate beneficial activity)andisthereforeaffectedbyinterpretative aspects,buthastheadvantageofcomparing,inacoherent criteria (forexample,the“fairvalue”ofgoodsgivenorproportionasponsorshipwhichtranslatesintoaneffective classify andaccountforcorporategiving.Accountingcontributionssometimesrequiresrecoursetonon-accounting the ultimatebeneficiariesandcompany).TheLBGmodelconstitutesaconceptualreferenceframeworktodefine, inputs (cashandin-kinddonations,employeetime)outputs(benefitsactuallygeneratedbytheinitiativesfor both engaged in corporate giving that developed a standard of the same nameto classify community initiatives and therelated since 2011TernahasbeenamemberoftheLondonBenchmarkingGroup(LBG),aninternationalgroupcompanies IIn order to have accurate reporting on these matters at its disposal for internal monitoring and external comparison, In anycase,assetoutbyTerna’sCodeofEthics,contributionsarenevermadetopoliticalpartiesortheirrepresentatives. various initiatives,inparticularpaidhoursdestinedforvoluntary work. longer usefulintheproductioncycleandsupportprovidedformofworkingtimedevotedbyTerna’semployees to resources devotedtoorganizingitsowninitiativesforthebenefitofcommunity,donationcorporateassets no Terna’s corporategivingactivitiesconsistmainlyoffinancialsupporttobeneficialinitiatives.Inadditionthis,there are support forsocial,culturalandenvironmentalinitiatives. In 2012, in keeping with the desire to contribute to Italy’s civil growth beyond its infrastructural role, Terna confirmed its Community initiatives community. to spreadanentrepreneurialcultureintheircommunitythatcombinesprofitwiththecreationofwell-beingforsaid Association ofIndustrialistsandBusinesses),whichbringstogethermanagerscompaniesunitedbythedesire a non-profit association founded in 2001 and promoted by the Since 2010Ternahasbeenamemberof “Anima perilsocialeneivalorid’impresa” indicators, nationalstatisticsandinternationalprojectsformeasuring collectivewell-being. During 2012TernasupportedthejointCSRManagerNetwork-ISTATprojectaimedatcreatingalinkbetweenGRI levels. of publicinstitutions,associations,andnon-profitbodies,abletoparticipateindiscussionsatnationalinternational about bestpracticesinItalyandabroad,byhavinganorganizationattheirdisposalthatrepresentsthemtheworld The networkoffersmembersthepossibilityofcomparingtheirexperiences,identifyingelementsinnovation,learning sustainability and CorporateSocial Responsibility intheircapacityascorporatemanagers,consultantsandresearchers. Terna supportstheactivityofCSRManagerNetworkItalia,associationreferenceforprofessionalsengagedwith CSR ManagerNetworkItalia the taskofpreparingandorganizingGeneralAssemblyGreenEconomy(Rimini,November2012). “Anima perilsocialeneivalorid’impresa” Unione degli industriali e delle imprese di Roma , (“Soulforsocietyinbusinessvalues”), (Rome SO6 EC1 159 Social responsibility 160 2012 Sustainability Report EC8 • Health • Art andculture a samplegroup.Onthispointwecannote: Work to monitor the effects of corporate giving initiatives continued this year, through an LBG questionnaire sent out to Responsibility sectiononpages129-130). new linesandwasthereforeclassifiedamongenvironmentalexpenses(seethespecificparagraphinEnvironmental Support forenvironmentalcauseswasnotincludedinthistablebecausenormallyitisassociatedwiththeconstruction of and culture. increase infundsallocatedtocommunityinvestments.Initiativeswereconcentratedtheareasofyoutheducation, art Compared to2011therewasadropinthetotalvalueofcontributions,mainlydonations,whilesteady (*) - Other - Supportforemergencies - Socialwell-being - Artandculture - Environment - Economicdevelopment - Health - Educationandyouth Breakdown bypurpose - Commercial initiativesinthecommunity - Investmentinthecommunity - Donations Breakdown byinitiativetype - Working time - Inkind(free-of-charge transfersofcorporateproperty) - Incash Breakdown bycontributiontype Total overheadcosts) valueofcontributions(excludinginternal Values ineuro COMMUNITY INITIATIVES The followingtableshowsallcommunityinitiatives,classifiedaccordingtotheLBGmodel,carriedoutbyTernain2012. during thetransplantprocessandproducingeducational informative material. education and trainingoforgantransplant patients, bothwhile on thewaitinglistandaftersurgery,byassistingthem “Marina Minnaja”CharitableFoundation: audiences, duetothethemesittacklesandfreeofcharge admission. Space is anestablished thought-laboratory able to increase its success through ever-increasing appreciation and “Dark, lightanditscolours”thethirdeditionofTeresa PomodoroInternationalPrizeforInclusiveTheatre.The NO’HMA “Teresa Pomodoro” Theatre Space: personnel. with aconsequentimprovement inthepatients’qualityoflifeandacquisitionprofessional skillsonthepartof Compared withtheprevious yeartheLBGsurveyhighlightedconsolidationofchanges inbehaviourandattitudes excluded fromenjoymentofthetraditionaltheatrecircuits. The LBGsurveyhighlightedsignificantculturalenrichment foranaudienceof30,000peoplewhowouldotherwisebe beneficial contributionisaccountedfor). Commercial initiativesinthecommunity partnership withanNGO. Investment in the community Donations: occasional contributions,typicallyinresponsetorequestsforfundsfromcharitiesconsideredworthy. : expenses for initiatives coordinated/organized by the company as part of a medium/long-term programme, often in : marketinginitiativeswithbeneficialrepercussions(onlythepartofexpensewhichconstitutesa Ternasupportsthisthree-yearproject,whichbeganin 2011,forthe Terna supported the 2011-2012 theatre season, focused on the theme 1,095,888 1,223,987 469,300 360,272 300,205 563,510 492,590 18,600 38,687 21,800 81,979 46,120 94,190 35,000 22,720 2012 1,338,914 1,833,550 1,923,500 479,000 498,936 340,250 244,336 264,410 545,900 21,000 22,404 47,536 42,414 61,850 30,000 2011 1,436,743 1,558,825 171,575 636,457 114,283 808,085 415,733 751,644 32,240 35,086 81,297 87,535 34,547 66,250 5,000 2010 • Education andyouth football, volleyball,tabletennisandarcheryamongyoungathletes aged 6-16. Barbaiana SportsClub: and theconsequentimpact,intermsofimprovingpublicfacilities, onthecommunityofreference. The LBGquestionnairehighlightedtheusetowhichTerna’scontributionwasput(constructionofa100-seaterstand) that makeitpossibletoreport andmeasuretheimpactofemployee volunteering. Days. Finally,bothcompaniesandNPOswereinagreement ononepoint:theneedtopreparetoolsandmetrics to theorganization,skillvolunteeringandpro-bonovolunteering; bothindividualandinteamsCommunity The typesusedforemployeevolunteeringactivitiesaremainly temporarysecondmentofthecompany’semployees employee volunteering, and the critical issues to be overcome in order to improve the effectiveness of collaboration. edited byCergasBocconi,theGuideexaminesreasons thatleadcompaniesandnon-profitorganizationsto Alongside thecontentsofamethodologicalnature,in section“ComparingProfitandNon-profitactivities” experiences ofthe11companiesand17NPOsinvolved. and Communication.Thetoolkitanalyseseachofthese indetailandaccompaniesthedescriptionwith volunteering initiativepasses:Planning,Programming,Implementation, Assessment,andProjectManagement In particular,5stageswereidentifiedthroughwhichthe creationofaneffectiveandsuccessfulemployee in theWorkshop. volunteering programme,constructedstartingfromtheexperience inthefieldofcompanyandNPOparticipants working hours” participation ofitspersonnelinthelifelocalcommunityorsupportNon-ProfitOrganizations,during volunteering: Business intheCommunityandLBG-LondonBenchmarkingGroup)toarriveatanagreeddefinitionofemployee The workshopactivitiesbeganwithanexplorationofthemostadvancedinternationalexperiences(inparticular: HUMANA PeopletoPeople,Legambiente,SocietàdiSanVincenzo dePaoli,VISPEandtheWWF. Aiutare iBambini,FondazioneBancoAlimentare,EnaipLombardia,IvodeCarneri, Milano, AISM,Arché,CIAI,CoLomba,ComunitàNuova,CooperativaSocialeNoiGenitori,COOPI,Fondazione electrification ofKami(seethewebsite).TheperspectiveNon-ProfitOrganisationswasrepresentedbyABIO A total of 10 other companies, besides Terna, took an active part in contributing their best practices to the explain whatmakesitawinningtoolforimprovingtheinternalclimate andrelationswiththecommunity. volunteering Terna takespartincreatingthefirstItaliantoolkitonemployee “a projectinwhichthebusinessencourages,supportsororganizesactiveandconcrete . FromherethegroupmovedontooutlinetrueGuidelinesforcreatinganeffectiveemployee Terna supportedtheactivitiesofBarbaianaSportsClubwhichpromotesparticipationin be downloadedfromtheTernawebsite employee volunteeringprojects.Itcan organizations that intend to create destined for companies and non-profit businesses andnon-profitbodies” guide for collaboration between kit “EmployeeVolunteering:apractical volunteering finalizedthefirstItaliantool Bocconi, theworkshoponemployee Foundation, CiesseviandCergas Developed in2011bytheSodalitas levels ofemployeeinvolvementand subject to measure its impact, improve two years,workedtogetheronthe organizations (NPOs)which,foraround members ofSodalitasand17non-profit to the contributions of 11 business The documentwascreatedthanks at www.terna.it/sustainability/ . 161 Social responsibility 162 2012 Sustainability Report In 2012,duringtheChristmasholidays,anewsolidarityprojectwascreated;thisisdescribedinboxbelow. three packetsofGragnanopasta,thushelpingtosupporttheAssociation’s activities.Morethan8,000€wascollected. della Bontà”fundcollection:withaminimumofferof7€,employeeshadthechancetopurchaseshoppingbag In October,inRomeandallthemainofficesaroundcountry,Ternahosted Terna, asolidarity“square” through itsnetworkofwelfareorganisations,specificallytofamilies indifficultyPerugia. collecting inAssisiitemsdonatedhampers,distributingthemtopeopleneedtimeforChristmasDay, a Non-ProfitOrganizationwhichsince1989hasbeenconcernedwithcollectingsurplusfoodforredistribution, The “solidaritychain”finallycompleteditstaskonthemorningofDecember23,daywhichBancoAlimentare, because thelattercannot,forvariousreasons,meettheirchildren’s needs. This projectisanewgrouphome,readytowelcomechildrentemporarilyseparatedfromtheirfamiliesoforigin simultaneously supportingasecondAi.Biproject,locatedinLombardy. Terna chosetonotconfineitselfsimplydonatingthroughsolidaritypresentsanddoubleditscommitmentby withdrawal fromschoolandbullying,whichtheeconomiccrisis has contributedtoincreasing. Thanks totheworkofAiBivolunteers,thiscentreoffersaconcreteresponseproblemssuchasearly Centre inRome,anopenspacewhichassistschildrendifficulty,alsoincludingparentstheirrecoveryprocess. By choosingtheChristmashampersproposedbyAi.Bi,Ternasupported“PandiZucchero”FamilyServices profits ontothem. non‑profit organizations – including Ai.Bi. – preparing Christmas presents for them and passing a portion of the The hampersweremadebyAccademiaSanBiagio,acompanybasedinAssisiwhichsupportsnumberof a Non-GovernmentalOrganizationconcernedwithchildren’srights since1983-–proposesasasolidaritygift. The choicemadewastheChristmashampersthatAi.Bi–“AmicideiBambini”(FriendsofChildren)Association, management, organizationalsolidity,transparency,focusonthe themechosenandreportingability. The partnerwasselectedfollowingthecriteriawhichhaveorientedTernainthesechoicesforsometime:reliable generating agoodreturnforeveryone. returning totheconceptofChristmaspresents,whichbecamefirstringa“solidaritychain”,capable Continuing thatdonein2011,Ternaidentifiedminorsdifficultyasthenaturalbeneficiariesofproject, keeping withvaluessuchashospitalityandsolidaritywhichhavearecelebratedmostenthusiasticallyatChristmas. The endoftheyearholidayswere,alsoin2012,anoccasiontocreateaconcrete,inclusivesolidarityproject At ChristmasTernacreatesachainofsolidarity Lega delFilod’Oro forthe“Pasta by morethan20,000people. exhibition inthespaces oftheTempleHadrianinRomeduringChristmas periodandwerevisited The winnersoftheTerna04 Prize,togetherwiththefamousartists’projects,were put onshowatthefinal Villari, alandscapedesigner. They chosethe12winnersofcompetition inDecember2012. Pistoletto, aninternationallyfamousartist,OlgaSbiblova, directoroftheMAMMinMoscow,andAlessandro Kamel Mennour,aninternationalgalleryowner;Camilla Nesbitt,acollectorandTVproducer;Michelangelo included MarziaCorraini,apublisherandauthor;Antoine de Galbert,aFrenchcollector;AldaFendi, The JurywaschairedbyLuigiRothandFlavioCattaneo, Terna’sChairpersonandChiefExecutiveOfficer is atruemapofItaliancreativitywhichemphasizesthenetwork created bythePrize. the competition,recreateda“live”environmentwhichtook formonthebasisofentriestocompetition.It a newTerritoryforContemporaryArtdirectlyontheweb.The newwebsiteconcept,associatedwiththethemeof Important changesalsotookplaceonthesite connection, thisyearwithMoscow,tocompletetheof Italian culture inRussia. Nazionale di Santa Cecilia (National Academy of St Cecilia), Art GeneratesArt, besides the usual international talented young people under 23 (Young Galleries Prize), and the partnership with the musicians of the Accademia There werenumerousinnovationsinthefourthedition: openingofthecompetitiontoinstallations,aprizefor impact andwhicharemoreinharmonywiththelandscape. The initiativeisinlinewithTerna’scommitmenttodesigningnewsolutionsforsupportslowenvironmental Foggia andBenevento,animportanthigh-voltageartery,collectingelectricityproducedfromrenewablesources. The Terna04Prizebringstogethertheartsandland www.premioterna.it : a3Dartgalleryavailabletoeachartistcreate Territory for Art”isthesubjecton which the “In andOutofPlace. Without aNet.The and Heritage. Terna andtheMinistryforCulturalAssets year ProtocolofUnderstandingbetween contemporary artbyrenewingthethree- to promotingandenhancingItalian launch, Ternaalsoreneweditscommitment On theoccasionofcompetition’s the company:land. discussed asubjectofstrategicinterestfor involved morethan2,800participantswho worthy andofthehighestprofile.It by Italian initiatives considered particularly expresses supportforthegoalspursued a recognitionbywhichtheHeadofState Patronage of the President of the Republic, In 2012theTerna04PrizereceivedHigh construction inthesouthofItalybetween artistic worksonanelectricitylineunder artists, intheTerawattcategory,tocreate landscape. Infact,Ternainvitedfamous becomes acontemporaryelementofthe With the2012edition of thePrize, the pylon engine ofcreativity. place which hosts creativity and itself an relations with others. The land becomes a or exclusion,openingboundary,of dimension, sense of belonging, of inclusion and spaces,butalsoasanintrospective as arelationshipwithphysicalplaces of TerritoryandTerritorialityunderstood it isaninvitationtoreflectontheconcept artists are asked to express their creativity; 163 Social responsibility

2012

Indicator Tables 166 2012 Sustainability Report Kg H GWh/year €/Mln €/000 € % # Units ofmeasurement legend See also thetableofacronymsandglossaryafterindicators. To facilitatereadingtheindicators,followingtableshowsunitsofmeasurementinwhichtheyareexpressed. Data isusuallycalculatedasofDecember31andflowindicators regardtheentireyear. • • • • For eachindicatorthetablesshow: 5. Socialresponsibility 4. Environmental responsibility 3. Economicresponsibility 2. Responsibilityfortheelectricityservice 1. Terna’s profile Area according tothefollowingscheme: The indicatorsareorganizedinfiveareascorrespondingtothestructureofReport,dividedthematicsections Social Responsibility.Inseveralcases,dataalreadypresentedinthebodyofReportarealsoshownforcompleteness. Guidelines The followingtablesincludeindicatorsthatareadditionaltothoseprovidedforbytheG3.11“ INDICATOR TABLES Y Ton no. MWh MW Min Km if itissignificant,thepercentagechangebetween2011and2012. if itissignificant,theabsolutechangebetween2011and2012; the figuresfor2012,2011and2010; the unitofmeasurement; ”, whichTernabelievesitisimportant to publish in ordertodescribeitsperformancethefieldofCorporate Number andcompositionofemployees Environmental performance Customers –Regulatedmarket Suppliers Providers ofcapital Shareholders The grid Ethical Auditing Corporate Governance Section Years Tons Number Megawatt hours Megawatt Minutes Kilometres Kilograms Hours Gigawatt hoursperyear Million euros Thousand euros Euro Percentage Category Relations withlaborunions Safety Employee satisfactionanddevelopment Sustainability Reporting (3) (2) (1) - Underassessment - Provisions - Unfounded Outcome ofreports - Terna’s compliance/Other - Corruption/Corporateloyalty - Environment andSafety - Suppliermanagement - Employeemanagement - Areas ofreports received Total reports received Implementation oftheCodeEthics EthicalAuditing (1) Meetings ofCommitteeforTransactions withRelatedParties Meetings ofControl andRisk Meetings ofRemunerationCommittee Meetings ofBoD Women onBoD Directors designatedbyminorityshareholders Independent Directors onBoD Total membersBoD Board ofDirectors CorporateGovernance T

erna’s Profile the eventthatcausedreportreoccurs. and 1totheethicalcommittee;in2010,3reportsweresubmitted committeeand1toboththeauditdepartmentandethicalcommittee. during FY2012. the Code, without making any change to its members. The number of meetings specified therefore refers toall the work of the Committee carried out editions oftheGovernanceCode,tookonname“ControlandRisksCommittee”relatedcompetencesspecifiedbynewprovisions Committees inplace;consequently,the“InternalControlCommittee”,alreadyestablishedTernaaccordancewithprovisionsofprevious 2011 edition,duringthemeetingheldon19December2012,BoardofDirectorsresolvednecessaryadjustmentstocompetences Of the3reportsreceivedin2012,2weresubmittedtoauditdepartmentand1ethicalcommittee;2011,submitted The provisionmayconsistinapplyingasanctionand/orotheraction–such asreviewingprocedures,internalcontrols,etc.–aimedatavoidingthat Each reportorviolationmayregardmorethanonemanagementarea. In implementationoftheprovisionsnewGovernanceCodelistedcompanies,publishedbyCorporateCommittee,December (3) (1) (2) (1) Committee Unit Unit no. no. no. no. no. no. no. no. no. no.

2012 2012 0 1 2 1 1 1 3 1 6 4 7 0 3 6 9 2011 2011 10 4 4 5 0 3 6 9 0 0 3 1 1 1 1 3 2010 2010 0 1 3 2 1 2 1 1 4 1 4 4 9 0 3 4 9 Change Change 11-12 11-12 -3 -1 -3 -1 -1 -1 0 1 0 0 0 1 0 2 0 0 0 0 -100.0% -100.0% 11-12% 11-12% Change Change -33.3% -75.0% -20.0% -30.0% 50.0%

- - - - 167 Indicator tables 168 2012 Sustainability Report length oflines length of3-conductorcircuits Lower voltages(≤150kV) length oflines length of3-conductorcircuits 220 kV length oflines length of3-conductorcircuits 380 kV Power lines power transformed stations Total power transformed stations Lower voltages(≤150kV) power transformed stations 220 kV power transformed stations 380 kV Power stations Responsibility fortheelectricityservice SAIFI +MAIFI(SystemAverage InterruptionFrequency Index) ASA (Average SystemAvalibility) Service continuityindexes Technical quality Power supplied Grid efficiency Incidence DCconnections length oflines length of3-conductorcircuits Total ENSR (RegulatedEnergyNotSupplied) AIT (Average Interrumption Time) (4) (3) (2) (1) The grid

- lines - 3-conductorcircuits in 200,400and500kVdirect current in submarinecable in underground cable in 200,400and500kVdirect current in submarinecable in underground cable for 2012isnotyetavailable. individual significantincident).Service performanceimprovesthelowerindicatorlevelis.Thefinalcalculation, bytheAEEG,ofENSRindicator the energynotsuppliedamountstomore than250MWh.TheshareaffectingtheENSRindexisadecreasingpercentage ofenergynotsuppliedinthe share oftheenergynotsupplieddue toforcemajeureeventsorsignificantincidents(by“significantincident” is meantanyinterruptionduringwhich (ENS alue) andtheaveragepowerabsorbed byNTGintheperiodconsidered. due toDevelopmentWork. account: PlannedUnavailability,OccasionalUnavailabilitydue toMalfunctioning,UnavailabilitydueExternalEvents,and Sustainability Report,amountingto332,274,whichwascalculatedaccording tothe provisionaldatafor2011. The indexalsoincludesenergynotsupplied toUsersdirectlyconnected,dueeventsonotherconnectiongrids thatarenotpartoftheNTGanda Average interruptiontimeoftheNationalTransmissionGridinayear,calculated astheratiobetweenenergynotsuppliedinacertainperiod The indicatoristhetotalASA%(usedininternationalbenchmarks),calculated withregardtoindividualLocalAreasorfortheentirecountrytakinginto The 2011figurewasrecalculatedusingthefinaldataofsameyear, andthusisdifferentfromtheonereportedinpreviouseditionof (2) (3) (4) GWh/year MWh MVA MVA MVA MVA Unit min no. no. no. no. no. km km km km km km km km km km km km km km % % %

103,648 136,952 325,259 11,810 30,227 57,440 63,448 36,908 39,652 11,987 10,894 3,077 99.32 1,746 1,348 1,369 2,066 1,348 1,369 9,638 2012 0.57 0.23 150 468 164 154 3.0 3.3 NA

334,640 126,765 1,210.0 93,448 11,808 30,084 57,651 63,626 37,047 39,760 12,058 10,893 3,234 99.33 1,746 1,348 1,328 2,066 1,348 1,328 9,710 2011 0.14 0.49 147 454 154 153 3.0 3.3 (1)

125,571 330,455 1,238.0 11,759 30,114 92,498 57,638 63,578 37,040 39,730 12,089 10,860 2,960 99.23 1,746 1,348 1,249 2,066 1,348 1,249 9,737 2010 0.14 0.89 431 140 150 141 3.0 3.2

Change 10,200 10,187 -9,381 11-12 -0.01 -157 -211 -178 -139 -108 0.08 0.09 143 -72 -71 0.0 0.0 14 10 41 41 3 2 1 0 0 0 0 1

11-12% Change 64.3% 10.9% 16.3% -2.8% -0.4% -0.3% -0.4% -0.3% -0.7% -0.6% -4.9% 2.0% 0.0% 0.3% 0.3% 0.0% 0.0% 3.1% 0.0% 0.0% 3.1% 0.0% 0.0% 8.0% 3.1% 6.5% 0.5% 0,7%

Meetings/conference callswithfinancialanalysts(“sell-side”) Meetings/conference callswithinvestors(“buy-side”) (6) (5) (4) (3) (2) (1) ROACE Net income EBT EBIT EBITDA Revenues Economic performance Requests forinformationfrom RetailInvestors Meetings withinvestorsdedicatedtoortimeforCSRissues Communication withshareholders - sincethebeginningofyear - sincetheIPO Total Shareholder (TSR) Return DPS (Dividendpershare ) pershare)EPS (Earnings Shareholder return FTSE MIB FTSE ItaliaALLSHARE Terna instockindexes Dividend Yield Financial performanceofshares Share Performance % SRIoutoftotalshare capitalheldbyinstitutionalinvestors Socially ResponsibleInvestors(ISR) Enel SpA Other institutionalandretail investors Major institutionalinvestors Cassa DepositiePrestiti SpA Composition ofshareholdersbase Indicator Economic responsibility Shareholders

hand, theparentcompanyTernadataremainedaspublishedin2011Sustainability Report;thisiswhynochangesarespecifiedfrom2011to2012. information available,andcommunicationsfromConsob). For 2012,giventhecorporatechangesmadewithinTernaGroupduring year,dataisgivenfromtheTernaGroup;forFY2011and2010onother The figuretakesintoaccountrequestsreceivedviae-mail. The valuewascalculatedastheratiobetweendividendpaidforyear consideredandtheaveragereferencepriceinDecember. More detailsonsociallyresponsibleinvestorsaregivenpage29ofthe“Profile” chapterofthisReport. Investments madeonthebasisofethicalcriteria/ESG(EnvironmentalSocial Governance)inadditionaltotraditionalones). Shareholders with astakeinthesharecapitalofTernaS.p.A.above thresholds indicatedinthe Consobdecisionno.11971/99(basedonthe

(4) (6) (1) (2) (5) (3) €/million €/million €/million €/million €/million Unit no. no. no. no. % % % % % % % % % % % %

€ € 1,390 1,806 200.6 0.200 0.231 70.15 29.85 2012 6.73 24.9 16.1 0.00 0.00 464 876 969 283 214 2.1 1.8 8.4 11 21

5 1,122 1,554 140.6 0.210 0.219 65.75 29.85 -11.4 -17.6 2011 8.12 0.00 4.40 468 197 454 764 773 1.8 1.8 NA 10 28 3

1,069 1,505 171.8 0.210 0.306 53.60 11.44 29.86 2010 6.66 12.2 5.09 432 663 751 368 270 1.8 1.6 5.3 6.5 11 18

5 Change 11-12 -1.39 -4.40 -0.01 -185 36.4 59.9 0.01 33.7 0.00 4.40 0.00 0.4 0.0 17 -7 2

- / / / / / / -17.10% -100.0% 317.6% 191.7% 11-12% Change -25.0% -39.5% -4.80% 66.7% 42.6% 19.6% -0.6% 8.6% 5.5% 6.7% 0.0%

- - / / / / / / 169 Indicator tables 170 2012 Sustainability Report Debt toEquity Equity Financial debt Debt Work Procurement ofmaterialsandservices Number ofsupplierswithcontracts Number ofsuppliers Suppliers (1) FitchSeniorUnsecured Debt Short Term (Issuer) M/L Term (Issuer) Outlook (Issuer) Fitch (asofMay4,2006) Short Term M/L Term Outlook Moody (asofSept.2,2004) Short Term M/L Term Outlook S&P (asofSept.2,2004) Rating Remaining debtonEIBloans EIB loans Services Supplies Litigation withsuppliers Implemented monitoring Categories qualified Eligible companiesregistered Management instruments Proceedings concluded Proceedings initiated Proceedings pending Providers ofcapital

These refertothelatestassignedassessments. (1) €/million €/million €/million €/million €/million €/million Index Index Index Index Index Index Index Index Index Index Unit Unit no. no. no. no. no. no. no. %

Negative Negative Negative Prime-2 1,285.7 1,257.5 5,855 2,794 261.2 1,951 115.4 Baa1 2012 2012 210 508 373 A-2 41 22 F2 A- A- A-

2 0 Negative Negative Negative Prime-2 1,345.4 5,123 2,751 516.5 454.6 2,314 201.2 2011 2011 186 749 353 A-2 A3 41 24 F1 A- A A

0 2 Prime-1 1,080.1 Stable Stable Stable 4,977 2,773 772.8 404.9 2,316 151.1 2010 2010 180 593 260 A-1 A+ A+ A2 40 22 F1 A

0 6 Change Change -255.3 802.9 11-12 11-12 -59.7 -85.8 -363 -241 732 23 43 20 -2 -2

0 2 -100.0% 176.6% 11-12% 11-12% Change Change -15.7% -42.7% -49.4% -32.2% 12.6% 14.3% -4.4% -8.3% 1.6% 5.7%

- Proceedings concluded Proceedings initiated Proceedings pending Litigation withcustomers Users ofwithdrawaldispatching Users ofinjectiondispatching Distributors directly connectedtotheNationalTransmission Grid Interruptible customers Customer portfolio Customers -Regulatedmarket Unit no. no. no. no. no. no.

2012 130 234 14 88 24 0 0 2011 110 171 14 91 20 1 3 2010 109 154 12 86 19 0 4 Change 11-12 20 63 -1 -3 -3 0 4 -100.0% -100.0% 11-12% Change 18.2% 20.0% 36.8% -3.3% - 171 Indicator tables 172 2012 Sustainability Report (2) (1) Proceedings concluded Proceedings initiated Proceedings pending Environmental litigation Consumption ofelectricity Indirect consumption Methane gasforheating Gas oilforgeneratinggroups andheating Gas oilforvehicles Gasoline forvehicles Direct consumption Consumption - quantitydelivered forrecycling - quantityproduced Total hazardous specialwaste - quantitydelivered forrecycling - quantityproduced Other - quantitydelivered forrecycling - quantityproduced Waste derivingfrom asbestoscontainingmaterials - quantitydelivered forrecycling - quantityproduced Lead batteries - quantitydelivered forrecycling - quantityproduced Oils - quantitydelivered forrecycling - quantityproduced Machines, equipment,towers,cables,conductors 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 - incylinders - inoperatingequipment SF Emissions ofSF Percentage ofSF SF Environmental responsibility Environmental data

6 6 quantity quantityandemissions and rocks”category wasnotsignificantanylonger;thefigure forthe“Effluent”categorywas equal 610tonsin2012and6752011 amounted to1,541 tons in2010(16,0532009).For 2011,onlywastereferringtothe“Effluent” categorywereexcludedsincethe“Excavation earth therefore make the data series non-homogeneous, especially if the quantity is significant. The value of the “Excavation earth and rocks” and “Effluent” “Excavation earth and rocks” and “Effluent” categories is excluded, since – being linked to the construction ofworks in stations – it is exceptional and would Only wastefromtheproductionprocess isincluded,andthuswasteproducedbyserviceactivities(urbanwaste) isexcluded.Wastebelongingtothe During the twoyears2011-2012, petrol-powered vehiclesdropped bymorethan90%. 6 greenhouse gases 6 leakageoutoftotal (1) (2) Thousands of m GWh tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons tons Unit no. no. no. kg kg kg kg % %

3 427,175.9 466,652.1 39,476.3 1,451.0 1,559.5 6,208.1 2,754.0 1,790.2 3,064.9 3,297.4 2.277,1 2.404,0 1,950.6 2,910.7 1,092.1 252.0 177.2 237.0 255.2 118.7 118.7 661.2 744.5 292.0 207.7 2012 80.8 0.59 22.2 132 9.1 0.0 7.8 19 13

367,523.6 416,553.1 49,029.5 1,671.6 1,737.4 7,198.1 2,517.8 1,747.8 3,380.1 3,887.3 2,680.7 2,789.5 2,617.2 3,310.8 2011 354,3 174.3 242.8 260.5 167.5 234.8 125.9 125.9 563.6 736.6 902,3 294,9 333,9 83.3 0.60 10.0 138 0.5 27 12

325,852.6 362,174.2 36,321.6 1,614.5 1,682.5 5,515.9 2,645.3 1,721.4 2,849.5 3,013.3 2,194.9 2,226.6 2,063.3 2,502.6 2010 275,2 164.4 186.5 297.5 158.8 106.5 106.5 536.3 649.2 544,9 189,4 259,5 0.73 31.1 89.1 11.8 153 0.0 26 16

Change 59,652.3 50,099.1 -9,553.2 11-12 -102.3 -178.0 -990.0 -158.4 -589.9 -212.7 -385.4 -400.1 -220.7 -315.3 -403.6 -666.6 -126.2 236.2 189.8 -0.01 42.4 97.6 -5.8 -5.3 -0.5 -7.2 -7.2 -2.5 -2.2 -2.9 2.9 7.9 -8 -6 .

1 -100.0% 11-12% Change -29.6% -94.6% -15.2% -21.7% -90.6% -15.1% -13.8% -25.5% -12.1% -37.8% -28.9% -13.2% -10.2% -13.8% -19.5% 17.3% 21.0% 16.2% 12.0% -4.3% -2.4% -2.0% -9.3% -5.7% -5.7% -1.0% -3.0% -2.4% 8.3% 1.7% 2.4% 1.1% 9.4%

(2) (1) Overtime work Part-time employees Fixed-term contracts Flexible employmentcontractsandterms Average yearsatTerna Average age Age andyearsatTerna Elementary/middle schoolgraduates Vocational schoolgraduates 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 Number andcompositionofemployees Social responsibility Interns andapprenticesInterns during theyear Beginner andtrainingcontractsthatbecamepermanent

takes intoaccounttheirpreviousemployment. The figuresincludebeginnercontractsandfixed-termcontracts. In thecaseofemployeeswhobegantoworkatCompanyfollowingacquisitioncorporatedivisions,averagenumberyearsTerna (2) (1)

Unit no. no. no. no. no. no. % % % % % % % % % %

y y 3,433 2012 15.9 46.8 22.2 27.6 56.1 14.6 1.72 20.4 45.7 15.2 105 114 8.9 0.9 45 50 37

3,493 2011 15.8 46.6 21.6 28.0 56.3 14.0 1.72 20.0 45.2 16.0 151 176 143 8.2 0.9 38 54

3,468 2010 16.2 46.5 19.2 29.3 54.5 14.5 20.5 45.6 18.2 178 157 107 1.7 6.3 0.9 34 61

Change 11-12 -131 -0.4 -0.2 -0.8 -46 -60 -93 0.1 0.2 0.6 0.6 0.0 0.7 0.1 0.4 0.5 60 -1

111.1% 11-12% Change -65.0% -30.5% -74.4% -2.6% -5.1% -1.4% -0.4% -1.7% 8.9% 8.5% 1.8% 1.1% 0.3% 0.5% 2.6% 4.2% 0.1%

173 Indicator tables 174 2012 Sustainability Report (6) (5) (4) (3) (2) (1) Proceedings concluded Proceedings initiated Proceedings pending Litigation withemployees Absences peremployee Total spontaneousresignations Corporate climate Training coverage Training expenseperemployee Hours oftrainingperemployee Training Variable compensationas%offixedpay Executive employeeswithLongTerm Incentive(LTI) Executive employeeswithstockoptions Average costperemployee Compensation Employee satisfactionanddevelopment

This figureregardsthenumberofnon-contractualabsencesduringyear(illness,accident,leaveabsence,strike,unpaidabsence). % ofemployeeswhotookatleastonetrainingcourseduringtheyear. Training expensesdonotincludethecostofsessionsmissednorhoursinstructionprovideddirectlybyemployees. The figuresregardtheincentivespaidtoallemployees,includingexecutives.Fringebenefitsareexcluded. The figuresrelatingtomanagerswithstockoptionsreferasingleplanresolvedon21December2005andasoftodayconcluded. By employeeismeanteveryoftheCompany,includingexecutives. (5) (6) (1) (4) (2) (3) Unit no. no. no. no. no. no. % % € € h h 77,591 329.3 2012 58.7 86.3 41.2 10.0 16 12 46 10 1 0 79,432 289.6 2011 59.4 97.0 50.8 9.4 25 16 46 10 3 9 78,564 387.9 2010 59.1 96.0 49.0 9.4 32 41 47 14 12 7 Change -1,841 11-12 -10.8 39.7 -0.7 -9.7 0.6 -2 -9 -4 -9 0 0 -100.0% 11-12% Change -66.7% -36.0% -25.0% -11.1% -19.0% 13.7% -1.2% -2.3% 6.2% - - Union membershiprate Employee unionmembership Relations withlaborunions - fatal - serious Occupational injuriesofcontractoremployees Occupational injuriesofcontractoremployees Periodical healthinspections Lost DayRate Injury Rate (2) (1) - serious - fatal Occupational injuries Occupational injuries Safety

multiplication factorequalto1,000.Onthebasisofthiscalculationmethod,serious injuryrateisequalto calendar daysandarecountedfromthedayinjuryoccurred.Tofacilitatecomparisonwithothersources,thisindicatorwasalsocalculatedusinga this calculationmethod,theInjuryFrequencyRateisequalto multiplication factorequalto1,000,000andnot200,000(thusobtainingaFrequencyRate5timeshigherthattheILOFrequencyRate).Onbasisof (corresponding to50workweeksx40hours100employees).Tofacilitatecomparisonwithothersources,thisindicatorwasalsocalculatedusinga This istheratiobetweendaysnotworkedbecauseofinjuryandhoursduringyear,multipliedby200,000.Theare This isthenumberofinjurieswithatleastonedayabstentionfromworkdividedbyhoursworkedduringyear,multiplied200,000 (1) (2) 8.8 in 2012 Unit Unit no. no. no. no. no. no. no. % % % , 8.3 in 2011 2,490 2012 2012 61.7 63.0 and 1.8 10 51 2 3 3 0 8.7 in 2010 2,983 2011 2011 60.6 46.4 1.7 13 49 . 0 4 1 0 0.3 2,364 in 2010 2010 61.2 65.0 1.7 2012 14 50 0 5 2 0 , 0.2 in Change Change 11-12 11-12 2011 -493 16.7 1.2 0.1 -1 -3 2 2 0 2 and 0.3 in 200.0% 11-12% 11-12% Change Change -25.0% -23.1% -16.5% 36.0% 2010 1.9% 6.0% 4.1% . - - 175 Indicator tables

178 2012 Sustainability Report Acronyms EPSES EPS ENS EMS EMO EIA EHV EBIT DT DSM DPS DP DAEM CSR CONSOB CIGRE CESI CEI CdP BoD AU ASA AOT AIT AGCM AEEG ACEA GRI GIS GAAP ETSO ERPA Energy ManagementSystem Energy MarketOperator Environmental ImpactAssessment Extra HighVoltage Earnings BeforeInterestandTaxes Distance Training Dispatching ServiceMarket Dividend PerShare Development PlanoftheNationalTransmissionElectricityGrid Day AheadEnergyMarket Corporate SocialResponsibility (National CommissionforCompaniesandtheStockExchange) Commissione NazionaleperleSocietaelaBorsa Conseil InternationaldesGrandsReseauxElectriquesaHauteTension Centro ElettrotecnicoSperimentaleItaliano(ItalianElectrotechnical TestingCentre) Comitato ElettrotecnicoItaliano(ItalianElectrotechnicalCommittee) Cassa DepositiePrestiti Board ofDirectors Acquirente Unico(ItalianSingleBuyer) Average SystemAvailability Area OperativaTrasmissione(TransmissionOperationalArea) Average InterruptionTime Autorita GarantedellaConcorrenzaedelMercato(ItalianAntitrust Authority) Autorita perl'EnergiaElettricaeilGas(ItalianAuthorityforElectricity andGas) Azienda ComunaleEnergiaeAmbiente(MunicipalEnergyandEnvironment Company) Global ReportingInitiative Geographic InformationSystem Generally AcceptedAccountingPrinciples European TransmissionSystemOperators Exclusion, Repulsion,Problems,Attraction Emergency PlanfortheSecurityofElectricitySystem Earnings PerShare Energy NotSupplied 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 ProtectionArea Union fortheCoordinationof TransmissionofElectricity Total ShareholderReturn Transmission SystemOperator Trattamento diFineRapporto(StaffSeveranceIndemnity) Socially ResponsibleInvestment National StatisticalSystem South EuropeanTransmissionSystemOperators Strategic EnvironmentalAssessment Supervisory ControlAndDataAcquisition Standard &Poor's Returns onAverageCapitalEmployed Personal ProtectiveEquipment Polychlorinated terphenyls Polychlorinated biphenyls Organization forEconomicCooperationandDevelopment National TransmissionGrid National ControlCentre Not Available Ministry forProductiveActivities(nowtheEconomic Development -MED) Ministry fortheEnvironment,LandandSea Ministry ofEconomyandFinance Ministry forEconomicDevelopment Management ByObjectives Maintenance andBusinessIntelligence Italian NationalStatisticsInstitute Istituto SuperioreperlaProtezioneeRicercaAmbientale Initial PublicOffering International EnergyAgency Important BirdAreas High Voltage Gestore ServiziElettrici(ElectricServicesManagement) Gestore dellaRetediTrasmissioneNazionale(NationalTransmission GridOperator) 179 Acronyms 180 2012 Sustainability Report absence fromworkduringtheyear,andHisnumberofhoursworkedsameperiod. This iscalculatedusingthefollowingformula:N/H*1,000,000,whereNnumberofaccidentswithatleastoneday’s Accident frequencyindex extent - incasethecrimesareactuallycommitted. reducetheir to lawprovisions,thissystem(“231OrganizationalModel”)canalsoavoidsanctionsthecompany- or crimes. 231OrganizationalModelthusrepresentsanintegratedsystemtoavoidspecificrisks;whendefinedaccording guidelines, procedures,trainingcommitmentandcontrolmechanismsthataimatpreventingtheriskofcommittingsuch itself (e.g.publicmanagers’bribery,companyfrauds,crimesagainstprivateperson,marketabuse).Themodelisasetof in caseofspecificcrimescommittedbymanagers,employeesorpartnerstheinterestadvantagecompany 231 OrganizationalModeltakesisnamedafterLegislativeDecreeno.231,2001.ThisdecreeimposesaCompanyliability 231 OrganizationalModel Glossary An energysupplycontractbetween twomarketoperators. Bilateral contract standards forthedomesticelectricitymarketandliberalisation thereof. Legislative Decree no. 79 of March 16, 1999, which was issued to implement EC Directive no. 96/92/EC, regarding shared Bersani Decree bar systemofapowerstation. Group ofpowerplantsandaccessoryservinga lineoratransformerwhichconnecttheGridelementsto Bay necessary forbalancing. The marketprovidedandregulatedwithintheDispatching ServiceMarket(DSM)fortheprocurementofresources Balancing ServicesMarket(BSM) • • Where thesumincludesalloutagesthatoccurredinperiodand/or calendaryearandarea,where: The averagenumberofoutagespergriduserdirectlyconnected totheNTGisdefinedbyfollowingformula: Average numberofoutagespergriduser(N) operational consistencyassetforthinAttachment1oftheOperator/Owner StandardAgreement. The conditioninwhichagridelementmaybeusedfortransmissionactivitiesundertheconditionsprovided Availability ofagridelement Average realavailabilityofallelementstheNationalTransmission Gridduringtheperiod. ASA (AverageSystemAvailability) Average durationofinterruptionsupplytotheelectricalsystem during theyear. AIT (AverageInterruptionTime) the year,andHisnumberofhoursworkedduringsameperiod. This iscalculated using thefollowingformula:G/H*1,000,whereGisnumberofeffectivedaysunavailabilityduring Accident seriousnessindex i=1 n Utot Utot isthetotalnumberofusersdirectlyconnectedtoNTGduring thecalendaryear. Ui isthenumberofusersinvolvedinithconsideredoutage; Ui Corporate Governance for ancillaryservices The groupincludingtheNationalTransmissionGridanddirectlyconnectedusers’plants,associateddevices Controlled electricitysystem the entireelectricitysystem. A groupofcalculationsystems,datatransmissionlinesandapparatawhichenablesthesecureeconomiccontrol of Control System System). A groupofplantsusedforthecontrolandoperationNTGoraUser’selectricitysystem(differentfromProduction Control Center systems atplannedlevels,andtocontributetheregulationof interconnectionfrequency. Electricity systemabletoregulateitsownproductionbymaintainingexchangesofpowerwithotherinterconnected Control area Power stationwhichispartoftheNTG,whosesupplyplantconnected tooneormorepowerlines. Connection station connection station. Any power line that links the power distribution plant with the user’s plant, or the power distribution plant with the Connection line connection isgenerallythelengthoflinewhichforms itself. circuitry isolatingapparata.Connectionsareclassifiedbyvoltagelevelwithreferencetoratedvoltage.Thelengthofthe The group of gridelements forming the transmission line, and the bays at thebordersof the same, including the related Connection necessary forresolvingcongestion. The marketprovidedandregulatedwithintheDispatchingServiceMarket(DSM)forprocurementofresources Congestion ResolutionMarket(CRM) an officialdocument,signedbytheBoD,whichrequirescompliance ofallpersonnel. rights and duties and areas of responsibility that the business undertakes to respect in dealing with its stakeholders. It is It isoftencalled a “businesscharter”,asitrepresentsthefoundationofcompany’scultureandexplicitlysetsforth Code ofEthics importance. content is not to be read by unauthorised persons. This is a data and information treatment condition ofdirect commercial Data areconsideredconfidential if,whentransferredfromonetelecommunicationsand/or processingsystem,thedata Data privacy Businesses ordistributioncompanies, wholesalersandthefinalbuyers ofelectricalenergy. Customers responsibility ofbusinesses”). (European CommissionCommunication681/2011“Renewed strategyoftheEUfor2011-2014regardingsocial adverse effects. shareholders and their other stakeholders and the company in general and to identify, prevent and mitigate their possible with therelativecontacts,objectiveofdoingeverything possibletocreateasharedvaluebetweentheirowners/ questions, human rights and consumer concerns into their business operations and core strategy in close collaboration To fully meet their social responsibility, enterprises should have in place a processtointegrate social, environmental, ethical collective contractsbythesocialpartiesrepresentsanessential requirement inordertomeet this responsibility. It istheresponsibilityofcompaniesfortheirimpacton the society.Compliancewithapplicablelegislationand Corporate SocialResponsibility(CSR) other stakeholdersofthecompany. The form of governance of the company, meaning the system of relations between managers, directors, shareholders and 181 Glossary 182 2012 Sustainability Report ordinary shares. Dividend perShare:calculatedasthetotalamountofdividendsdistributedbyacompanydivideditsnumber of DPS (DividendperShare) immediate profitabilityofashare. Calculated astheratiooflastdividenddistributedbyacompanyandcurrentpriceitsshares.Itindicates the Dividend Yield the finalcustomers. The transportandtransformationofelectricalenergyonhigh-,medium-low-voltagedistributiongridsforsupply to Distribution Services Market(BM). it is requiredtobecomposedofseveralmarkets:CongestionResolutionMarket(CRM),Reserves(RM),Balancing The marketforthenegotiationofprocurementseveralresourcesrequireddispatchingservice.Ingeneral, Dispatching ServiceMarket(DSM) Transmission Grid,thegridsconnectedtosame,andancillary servicesoftheelectricitysystem. The activityaimedatissuingprovisionsforthecoordinateduseandoperationofproductionplants,National Dispatching plants, totheNTG. Connection ofallplantswithexistingcircuitcontinuityatleastinonepoint,withouttheinterpositionancillarypower Direct connectiontotheNTG interconnection capacity,oranincreaseinoperatingflexibilityof thegrid,orremovalofgridelements. Works ontheelectricitygridwhichleadtoadjustmentorupgradingoftransport,transformation,connectionand Development once suchastagehasalreadybegun,oremergencyconditionsarepresent. designed tomaintainorreturnanelectricitysystemanormalcondition,alsopassingthroughreinstatementstage, The controlactivities-automaticand/ormanualsetforthbyTernaandcarriedoutthroughsinglesystemsplants Defence plans (preliminary cumulativeprogrammes). of trading.Thismarketdealswiththeenergyunitswhichdefineproductionandwithdrawalplanforfollowingday The tradingofbidsforthepurchaseandsupplyelectricalenergyeachhournextoperatingdayfollowingthat Day AheadEnergyMarket(DAEM) Intended asthecombination of theEnergyMarketandDispatching ServiceMarket(DSM). Electricity markets meet thedemandatanymoment andthepriceofenergyatthatspecificmoment. The systemofwholesaleselling ofelectricity,whichdeterminespowergeneration systemsorplantswillbeusedto Electricity Exchange A groupofplants,linesandstationsfortransferringelectrical energy andsupplyingthe necessary ancillaryservices. Electricity Grid A company’sprofits(losses)beforetax. EBT (EarningsBeforeTaxes) term GOP(GrossOperatingProfit),whichmeasuresoperating profitsgrossofamortisationandallocationstoprovisions. Profit before taxes,financial income/charges, write-downs, amortisationandextraordinarycomponents. Itissimilarto the EBITDA (EarningsBeforeInterest,Taxes,Depreciation andAmortisation) financial income/chargesandextraordinarycomponents; it isalso calledoperatingprofit oroperatingincome. One ofthekeyprofitabilityindicatorsfortypicalcompanymanagement.Itmeasuresprofitsbefore taxes, EBIT (EarningsBeforeInterestandTaxes) • • • • all direct andindirectusersaffectedbythesameoutage,where: where thesumincludesalloutagesthatoccurredinperiodand/orcalendaryearandareaand,foreachofthese, Energy NotSuppliedduetooutages,definedbythefollowingformula: Energy NotSupplied(ENS) Intended asthecombinationofDayAheadEnergyMarket(DAEM) andtheRealTimeEnergyMarket(RTEM). Energy market and industrialusers,withdifferentlevelsofseverity. In caseofcriticalevents,EPSESsetsforththemethodsforselectivelysuspendingsupplyelectricitytodomestic Emergency PlanfortheSecurityofElectricitySystem(EPSES) outages oftheelectricitysystemitselforpartit. Group of automatic and manual procedures implemented during critical operating periods, in order to avoid or limit Emergency Plan as quicklypossibleand/orenable,inemergencyconditions,the local runningoftheplants. Group ofoperationsexecutedfollowinganomaliesorfaultsonplants,toensuretherecoveryefficiencysuchplants Emergency measures load portions,duetofaultsordisturbances. Operational situation of an electrical grid which results in exceeding operating limits of grid elements and/or outages of Emergency conditionofanelectricitysystem 100,000 kWh peryear. both inItalyandabroad.StartingfromMay1,2003,eligiblecustomersaredefinedasthoseconsumingmorethan The natural person or legal entity who is free to stipulate supply contracts with any producer,distributor or wholesaler, Eligible customer damaging and/orlethaleffectsonanorganismdependingthe intensityofthecurrentanddurationexposure. Phenomenon knownasanelectric“shock”,causedbycontactbetweenabodyandelectricalcurrent.Thiscanhave Electrocution technical characteristics,asspecified inAttachments1,2aand 2boftheOperator-OwnerStandardAgreement. Performed for the recovery and extension of the useful life of a plant, without modifying the functional consistency or Extraordinary maintenance Rated voltagewithavaluehigher than220kV. Extra highvoltage(EHV) the ethicalriskcontrolprocesses. task mustascertainandpromotecontinuousimprovement inethicswiththecompanythroughanalysisandevaluationof Consists inverifyingtheapplicationofandcompliancewith theCodeofEthics.Thecompanymanagementassignedthis Ethical Auditing the stocksegment. Term usedtoindicatetheshareholders’equityofacompany; inthecontextofassetmanagement,itisusedtorefer Equity Calculated astheratioofnetprofittonumberacompany’s outstandingordinary shares. EPS (EarningsPerShare) i=1 j= n power diagram. equal to15minutes;ifthelengthexceedsminutes,thisisestimatedbasedonforecastand/orhistoriccapacity Pi,j istheaverageconstantvalueof15minutesprecedingoutageifdurationinterruptionlessthan or Ti,j istheduration(inhours)ofoutageandinterruptedpower (MW) forthejthuseraffectedduringithoutage; m isthenumberofusersaffectedbyithoutage; n isthenumberofoutagesinperiodunderobservation; m 1 (P i, j * T i, j )

183 Glossary 184 2012 Sustainability Report necessary ancillaryservices, as wellthedecisionstoperform maintenance anddevelopmentworks. power grid.Saidactivitiesand proceduresincludethemanagementofelectricpowerflows, interconnectiondevicesand The activitiesandprocedures whichdeterminetheoperationsandforecast, underanyconditions,ofa Grid management of theGrid,aswellcomponentsmakingupsuchelements. Circuit infrastructureofthegrid,representedinasingleline diagramatasufficientlevelofdetailtoillustratetheelements Grid diagram • • • • • • the GridCodesetsforthtransparent,non-discriminatoryregulations for: maintenance oftheNationalTransmissionGrid,aswell dispatching andmeasurementofelectricity.More specifically, The documentthatgovernstheproceduresregardingactivitiesofconnection,management,planning,development and Grid Code(Codefortransmission,dispatching,developmentandsecurityofthegrid) environmental performance. Framework, inordertosupportcompanieswhichvoluntarilydecidepublishdataregardingtheireconomic,social and An independentinternationalassociationresponsiblefordevelopinganddistributingtheSustainabilityReporting GRI (GlobalReportingInitiative) Unit ofmeasurementequaltoonebillionWatts(1,000Megawatts). Gigawatt (GW) the availabilityofasuitablelevelpowerreserves. in compliancewithcriteriaoftransparencyandobjectivity,ordertopromotecompetitionbetweenproducers,ensuring Joint stockcompanycreatedin2000byGRTN,whichischargeoftheeconomicmanagementelectricitymarket Gestore MercatoElettrico(EnergyMarketOperator-GME) are identifiedbytheEIRIS,throughspecificquestionnaires. Financial Timesindexwhichgroupsthebestcompaniesmeetingspecificsustainabilityrequirements.These FTSE4Good object; suchasthecompanycanteen,lunchvouchers,carormobiletelephone. Compensation in kind, meaning benefits which do not consist in the payment of money, but the use of a service or an Fringe Benefit polarity tonegativepolarity.ItismeasuredinHertz(Hz). The numberofoscillationspersecond,inwhichthevaluealternatingcurrent,suchasvoltage,variesfrompositive Frequency energy toeligiblecustomers. Market where producers and wholesalers of electrical energy, both Italian and foreign, compete freely to provide electrical Free market The naturalpersonorlegalentitywhopurchaseselectricalenergy exclusivelyfortheirownuse. Final customer • • immediately takenoffline.Thefaultcanbe: The yieldingofanelectriccomponentoraconditiondangertopersonsthings,whichresultsingridelementbeing Fault security ofthenationalelectricitysystem. the settlementoffinancialchargesconnectedtovarious services; the supplyofservicesmeasurementandaggregation ofmeasurements; the performanceofdispatchingservices; development, management,andmaintenanceoftheGrid; access totheGridanditstechnicalregulation; permanent, inallothercases. breakers; transient, whenitiseliminatedthroughtheautomaticsequencesofimmediateopeningandreclosurecircuit one hour. (Terawatthour, 1,000,000,000 kWhs)measureelectricalenergy.Theyareequaltoapower of1kWs(andmultiples)over (kilowatthour) anditsmultiples MWh (Megawatthour,1,000 kWhs),GWh(Gigawatthour,1,000,000kWhs)andTWh kWh (kilowatt) unitofmeasurement ofpower(1kW=1,000J/sec),whichexpressestheamount ofenergyperunittime. kW (kilovolt=1,000 Volts)unitofmeasurementvoltage. kV Unit ofmeasurementthatexpressesthequantityelectricity equal to 1,000Wattsprovidedor requestedinonehour. Kilowatthour (kWh) the electricalenergyandgassectors. Independent authority created by Lawno.481of November 14,1995,which is charged with regulatingandcontrolling Italian AuthorityforElectricityandGas(AEEG) of shares”and“Newlisting”. Indicates an initial offer of shares of a company being listed. It is asynonymof“Public Offer forSale”,“Public subscription IPO (InitialPublicOffering) • • • less thanoneday.Aninterruptionwithoutnoticemaybeclassifiedas: All casesofinterruptionwhereusersarenotnotifiedinadvancethroughsuitablemeansandwithnotice of no Interruption withoutnotice users involvedofthedurationinterruption,usingsuitablemeansandwithadvancenoticenolessthanone day. Interruption generallyduetotheexecutionofplannedinterventionandmanoeuvresongrid,precededbynotice to Interruption Condition in whichthe voltage of theterminals delivering electrical energyfora user is lower than1% oftherated voltage. Interruption information. subsidiaries, performedbypersonshavingsignificantcompanydecision-makingpowers,andaccesstoprice-sensitive Governs transparencyobligationsinrelationtothemarket,foroperationsfinancialinstrumentsofacompany or its Internal Dealing Connection betweenelectricitygridsrequiredforthetransferof electricity. Interconnection ofelectricitygrids or distributiongridseventwogenerationplants. High-voltage powerlineinalternatingcurrent(AC)ordirect(DC)whichlinkstwodifferentelectricaltransmission Interconnection line at aminimumofonepoint,withtheinterpositionancillarypower plant,totheNTG. Connection ofallplantsrelevantintermstheoperationstransmissionanddispatching,withexistingcircuitcontinuity Indirect connectiontotheNTG Rated voltagegreaterthan35kVandlowerorequalto220kV. High voltage(HV) The naturalpersonorlegalentitywhosuppliesissuppliedby a transmissionordistributiongrid. Grid user The naturalpersonorlegalentitywhomanagesapowergrid,also withoutowningsaidgrid. Grid operator transient interruptionifithasadurationofnomorethanonesecond. short-term interruption,ifithasadurationofmorethanonesecond butnomorethanthreeminutes; long-term interruption,ifithasadurationofmorethanthreeminutes; with notice 185 Glossary 186 2012 Sustainability Report plan, orsubsequentlyagreed. Maintenance, notofanurgent nature,whichlastsmorethanorequalto5totaldays,scheduled intheannualunavailability Planned maintenance breakers, repairworksarerequired ongridelementsorplantcomponents. systems, irrespective of execution of the automatic rapid reclosure or slow reclosure (automatic ormanual) of the circuit Disturbance inwhich,followingtheautomaticopeningof thecircuitbreakersasaresultofoperationprotection Permanent disturbance consistency assetforthinAttachment1oftheOperator/Owner StandardAgreement. State inwhichagridelementmaybetemporarily used underconditionsdifferenttothose providedunderoperational Partial availabilityofagridelement Interruption. Outage Preparation ofplansandschedulesfortheoperation electricity system. Operations planning • • • • • decisions regardingtheoperationofGrid.Operationincludes: The methodicaluseofpowerplantsandaccessoriesaccordingtoprocedurescodifiedintheimplementation the Operation components, andtherequiredsecuritycriteriaaremet(criterionn-1). Situation in which the total load demand is satisfied, in stable regime there are no violations of operating limits of system Normal conditionofanelectricitysystem components, buttherequiredsecuritycriteriaarenotmet. Situation in which the total load demand is satisfied, in stable regime there are no violations of operating limits of system Normal alarmconditionofanelectricitysystem amendments andadditions. Electricity gridfornationaltransmissionassetforthbytheMinisterofIndustryDecreedatedJune25,1999andsubsequent National TransmissionGrid(NTG) services andinterconnectiondispatchingdeviceslocatedin theItalianterritory. The nationalelectricitysystemcomprisesthetotalofproductionplants,transmissionanddistributiongrids,auxiliary National electricitysystem All theactionsthroughwhichcurrentoperationalstatusofan electricitysystemisascertained. Monitoring Unit ofmeasurementequaltoonemillionwatts(1,000kilowatts). Megawatt (MW) Rated voltagegreaterthan1kVandlowerorequalto35kV. Medium voltage into accountanydecreaseinperformance. Operations andworksforthemaintenanceorrecoveryofefficiency,smoothoperationelectricityplants,taking Maintenance Diagram whichshowsthepowerdemandonanelectricitygridover time. Load curve plant inspections. the monitoringofstatusplants; operations forgoingofflineandthesecurityofplants; emergency assistancefollowingfaultoranomalies; the runningofplantsinordertocarryoutTerna’sordersandautonomousdeliveries; of thesupplytoclient. Group ofremotedatatransmission deviceswhichallowsforthemanagementofplantsand thecontrolandmeasurement Remote controlandtelemetry system • • The fulfilmentoftwoconditions: Reliability conditions arecarriedout. Situation inwhich,followingtotalorpartial load disconnection,theactionsrequired to returnthesystemnormal Reinstatement conditionofanelectricitysystem input andwithdrawaldefinedontheDayAheadEnergyMarket (DAEM). The siteoftradingbidsforthepurchaseandsupplyelectricalenergyinordertoadjustprogrammes Real TimeEnergyMarket(RTM) indicated bythesymbol“AAA”,“AA+”,reachingdownworstrating,“D”. positively ornegativelyinfluencingtheimageofcompanyandasignificantparttrading.Thehighestrating is are wannouncedatthetimeofissuingsecurity,butmaybesubsequentlymodified(upratingordownrating), thus ratingagencies.Themostwell-known,onthegloballevel,areMoody’sandStandard&Poor’s.Ratings .1 specialized toolsforforecastingand controlling theriskofinsolvencyinmodernsecuritiesmarkets.Ratingsarepublishedby § Letter symbolwhichexpressesthelevelofrisksecuritiesrepresentingaspecificdebt.Thisisonemostsignificant Rating Value ofthevoltageusedtodesignateoridentifysystem. Rated voltageofthesystem as wellLegislativeDecreeno.475ofDecember4,1992. such purpose.IPDsmustcomplywithDirective EEC 686/89andsubsequentmodifications,withtheEN345regulations, risks likelytothreatenhis/hersafetyorhealthintheworkplace,aswellanycomplementaccessorydesigned for Any equipmentdesignedtobewornorheldbytheworker,forpurposeofprotectinghim/heragainstonemore PPE (PersonalProtectiveEquipment) Generation ofelectricalenergy,inanyway. Production Continuity andregularityovertimeofthevoltagefrequencyvalues of theelectricalenergysupplied. Power supplyquality the electricalenergytolowestvoltageusablebyuser. the linesofagrid,fortransferringelectricalenergybetweengridswithdifferentlevelsvoltage,andtransforming The partofagridwhichisconcentratedandclosedinspecifiedsite,usedforswitchingelectricalenergyamong Power station conditions, followingthegoingofflineofelectricitysystemitself orpartofit. Group ofautomaticandmanualprocedureswhichenablereinstatementtheelectricitysystemtonormaloperational Power restartplan The activitiescoordinatedbyTernainordertorestoreanelectricity systemafterablack-out. Power recovery to satisfytheenergyrequirementswithrespectqualityandcontinuity ofservice. Definition oftheusageplans,foraspecificperiodtime,availablemeansproductionandtransmission,inorder Planning electricity system.Thus,thisaspect specificallyconsiderstransitioneffectswhichare not coveredbythefirstcriterion. security: capabilitytorespondsuddendisturbancessuch asshort-circuitsorforcedlossofcomponentsthe the electricitysystem; electrical energyattheconnectionpoints,takingintoaccount plannedandforcedgoingofflineofthecomponents availability: capabilitytorespond,staticallyandinevery moment, tothecustomers’globaldemandforpowerand 187 Glossary 188 2012 Sustainability Report guarantees theapplicationofasinglenationaltarifftothese customers. the supplyofelectricalenergyunderconditionscontinuity, securityandefficiencyoftheservice.TheSingleBuyer A stockcompanyestablishedin2000bytheNationalTransmission GridOperator(GRTN)toguaranteeCaptiveCustomers Single Buyer supplied. Quality of the technical/commercial services provided to users, and the quality of the electric parameters of the energy Service qualityofelectricitysupply rotating reservesandcoldreserves. on theoperationalstatusofgroupswhichcanmakereserveavailable,itbeclassifiedintotwocategories: due tobreakdowns)andunexpectedvariationsintheprogrammesofexchangewithforeigncountries.Generally,based variations inrequirements,errorstheforecastofunexpectedunavailabilitygeneration(forexample, Share ofpowerinthegenerationpoolwhichmustcoverimbalancebetweenproductionandload,duetorandom Secondary powerreserve • • • Occasional routinemaintenanceisdividedinto: • • • is definedas: to afallinperformance,withoutanymodificationofthenumberorfunctionplantsinvolved.Routinemaintenance Activity carriedoutonplantsorpartsofformaintenancerecoveryefficiencyandcorrectfunctioning,inrelation Routine maintenance Index ofreturnoninvestedcapital;itiscalculatedastheratioEBITandnetaveragecapitalemployedbyacompany. ROACE (ReturnsonAverageCapitalEmployed) and tertiaryreserves. The marketprovidedandregulatedwithintheDispatchingServiceMarket(DSM)forprocurementofsecondary Reserves Market(RM) and years. Demand for electricity to be satisfied by the national electricity system. Itshowsa variable trend throughout days,months Requirement black-out intheinterconnectionpointswithNationalTransmission Gridorwithotheroperators. devices (causedbothbyremotecommandsandinterventionsofprotectionorautomaticequipment),events registers, automaticallyandcontinuously,theeventsofopeningclosurecircuitbreakersothercommand The systemusedtoremotelymanageandsupervisethehigh-medium-voltagedistributiongrid.Thisalso energy) Remote controlequipment(withreferencetotheregistrationofinterruptionsindistributionelectrical policies). or workers’ rights, while the second type socially responsible companies are chosen for investment (i.e. those with CSR types ofcompanies(e.g.tobaccoproducers,armsmanufacturers etc.)orcountrieswhichdonotrespecthumanrights The choice of shares is guided by negative criteria (exclusion) or positive criteria (inclusion): the first type excludes specific Investments whichtakeintoaccountnotonlyeconomicperformance, butalsosocial,environmentalandethicalcriteria. SRI (SociallyResponsibleInvestment) on thefault,ifactivityfollowsuponexistenceofanomalies. existence ofafault; more thanoneweekfromthenotification oftheanomaly toTerna,inorderavoiddangerpersonsorthings,the non-deferrable iftheexecutionofactivity,basedonowner’sevaluationmustbeperformedimmediatelyandno Terna’s notifiedoftheanomaly; deferrable maintenance,iftheexecutionofactivitymaybedelayedbyatleastoneweekfrommomentthat occasional iftheactivityfollowsuponexistenceofanomalies. conditional orpredictiveiftheactivityfollowsverification monitoring ofplantfunctionality; periodic orcyclicaliftheactivityregardsregularlyscheduledinterventions independentofexternalcauses; payment date. date andsolditonanotherdate.Thiscalculationconsiders allpaiddividendsreinvestedinthesecurityatcoupon of period.ThecalculationTSRprovidestheannualrate of returnforaninvestorwhopurchasedasecurityoncertain following formula: (Share price at end of period - Share price at beginning of period + Dividends)/Share price at beginning This isthemostcompletemeasurementofvaluecreated byacompanyforitsshareholders.Itiscalculatedusingthe TSR (TotalShareholderReturn) 5 phase electricfieldusedonthegridinalternatingcurrent. Group ofthreeconductors (or groupsofconductors),eachpreparedforthetransfer oneofthephasesthree Triad and transformingstations. Infrastructures dedicatedtothetransmissionofelectricity, belongingtotheNTG,suchaslinesandswitchingstations Transmission plants to thedistributiongridsorusers. High- andextra-high-voltage power line,overheadorcable,usedforthetransferofelectricityfromproductionplants Transmission line • • • The activityoftransferringandtransformingelectricityonthegrid. Transmissionactivitiesinclude: Transmission activities purposes ofdeliverytocustomers,distributors,andrecipients self-producedenergy. Electricity transportandtransformationactivitiesalongtheinterconnectedhigh-extra-high-voltagegridfor the Transmission of voltage. Part ofagridcomposedgroupapparatausedfortransferringelectricalenergybetweengridswithdifferentlevels Transforming station Electrical deviceusedfortheconnectionandtransferofenergybetween gridsatdifferentvoltagelevels. Transformer in ordertoacquirethemeasurementdatafromdevices. Infrastructure composed ofaphysicalmeansandhardware/softwaredevicesrequiredbythePrimaryAcquisitionSystem Telecommunications system interface, forpresentingdatatooperatorsinthecontrolcentres. Computerized systemforcontrollingproductionandtransmission,withdataacquisitionfunctionsman-machine Supervisory ControlandDataAcquisitionSystem(SCADA) pulses inproportiontothepower. Energy meterinwhichthecurrentandvoltage,whenappliedtoanelectronicmeasurementelement,producefrequency Static powermeter indirectly affected,suchasthegeneralpublicbearinganinterest intheprotectionofenvironment. company’s activitiesineconomicterms-suchasshareholders,employees,customersandsuppliersbutalsowhenonly Everyone (individuals,groups,organizations,institutions)interestedinthecompany,especiallyifdirectlyaffectedby Stakeholder and CraftsdatedJune25,1999; functional to transmission activities pursuant to art. 3, paragraph 5, of the Decree of the Minister of Industry, Commerce the unifiedmanagementofGridandpartspowerstationsnotincludedinsaidgrid,butconnected annual authorizationofmaintenanceworks. the planningandidentificationofdevelopmentactivities; 189 Glossary 190 2012 Sustainability Report activities inthecountriesofEuropeanUnion. The natural or legal person which purchases electrical energy without carrying out production, transmission, or distribution Wholesale customer Unit ofmeasurementelectricpower. Watt Unit ofmeasurementvoltage. Volt Coordinated managementofallportionstheNTG. Unified Gridmanagement • • • • Occasional unavailabilitymaybe: • • Situation inwhichanelementoftheGridcannotbeusedbyoperatorfortransmissionactivities.Unavailabilitymaybe: Unavailability ofagridelement of publicauthorities. as: works or tests requested by operators/owners of bordering grids or other operators, natural disaster, or requirements due to external causes, if the result of the needs of third parties or events which cannot be attributed to the owner, such due tofault,iftheresultofexistenceafault; non-deferrable, ifitinvolvesoccasionalmaintenancewhichcannot bedeferred; deferrable, ifitinvolvesoccasionalmaintenancewhichcanbedeferred; than orequaltofivedays;itisnotincludedinthequarterlyplan butinthemonthlyplan. occasional, ifnotincludedintheannualplan,butquarterlyunavailabilityplanandhasadurationgreater than fivedays; planned, ifitisincludedintheannualunavailabilityplanorquarterlyplan,andhasadurationofless

2012

Report of the External Auditors 194 2012 Sustainability Report OF THE SUSTAINABILITY REPORT 201 REPORT SUSTAINABILITY THE OF ENGAGEMENT ASSURANCE LIMITED ON THE REPORT INDEPENDENT TERNA SPA 2 3 2 1 Terna S.p.A. S.p.A. Terna To the Shareholders of 20 REPORT SUSTAINABILITY INDEPENDENT REPORT ON THE LIMITED ON THE REPORT INDEPENDENT www.pwc.com/it Imp.MilanoN. 03230150967 Milano legale: Sede PricewaterhouseCoopers 40069 Via Tevere 18 18 Tevere Via 40069 0917829221 0917829221 Tel. 08136181 Verona 0115773299 b) c) a) follow: as summarized are Report the on performed procedures verification The procedures. sustainabilityanalysis report, reportin the in ofverification the other and sustainability personnelcompany’s re with primarily in interviews, consists report sustainability the of engagement assurance limited A Reportisassurance, of materialerrors. free areasonable than assurance,that rather the planned andIt per requireswork also is that our independence. professional including Accountants”), Professional for Ethics of (“Code principles Auditing and Assurance Standards Board.ISAE3000 requires the compliance ethical with issu (ISAE3000), Information” Financial Historical of Reviews or Audits than other Engagements - Assurance 3000 Engagements Assurance on Standard ”International by the established guidelines and principles with the in accordance conducted been has work Our Initiative Reporting – Global Guidelines Reporting work performed. the of basis the on report this of preparation the for responsible are We results. achieved the of objective Group the of definition the in detailed Terna S.p verification 201 December S the of engagement assurance limited the out carried have We 371 - 35 Via35 Francia21/C Tel. 0458263001 - Treviso Treviso -Padova Roma Roma • data included in the Report. Inparticular, have we carried out the followingprocedures : quantitative of management and recording generation, the underlying processes of analysis sustainability strategy the to topics and operation Group; of related o system management and governance of implementation and design of analysis December 201 December Reportwith those includedin theGroup consolidated financial statements as of 31 the in included data and information financial and economic the between comparison 20149 Via MonteRosa 91 02667201 Tel. Fax 0266720501 Cap. Soc. Euro 3.200.000,00 i.v. prepare the Report, as well as of the internal control processes and procedures procedures and processes control internal the of as well as Report, the prepare to use in systems reporting and accounting information, the of understanding general me .A Tel. 0516186211 00154 Largo Fochetti 28 Fochetti Largo 00154 31100 Viale Felissent 90 90 Felissent Viale 31100 paragraph " paragraph procedures summarized in paragraph 3 of the present document. The Directors of of Directors The document. present the of 3 paragraph in summarized procedures responsible for the preparation of the Report in accordance with “ with in accordance Report the of preparation the for responsible . are and discussions wit and discussions etings 35138 Via Vicenza Via 35138 4 Terna Group (hereafter the following “Group”) the Terna the of “Report”) the 2 (hereafter – Altri Uffici: Uffici: Altri 2; 2; -Firenze & Electric& Utilities Sector Supplement ” Advisory Methodological note sponsible for the preparation of the information included in the the in included information the of preparation the for sponsible Bari Bari Tel. 049873431 Fax 0498734399 - GRI 3.1 Guidelines updated inM updated Guidelines 3.1 GRI the with , and 50121 Viale Gramsci Viale 50121 15 Tel. 0552482811 70124 70124 Tel. 0422 12 12 Tel. 06570831Tel. Fax 0657083253 Sp Via Don Luigi Guanella 17 17 Guanella Luigi Don Via A s regarding the sustainability performance and the reporting reporting the and performance sustainability the regarding s 315711 315711 h management representatives of of representatives h management – Trieste Trieste " of the Report. The Directors are also respo also are Directors The Report. the of ASSURANCE ENGAGEMENT O ENGAGEMENT ASSURANCE formed withformed the aim of obtaininga limited 34125 Via Cesare Battisti 18 18 Battisti Cesare Via 34125 Palermo Palermo 6 Tel. 0805640311Tel. Fax 0805640349 - Torino Fax 0552482899 - (EUSS) 90141 Via MarcheseUgo 60 ustainability report as of 31 as of 31 ustainability report 22 101 Corso Corso , issued Tel. 0403480781Tel. Fax 040364737 Napoli Terna S.p. ed by the International International the by ed Palestro C.F. e P.IVA e Iscrizione al Reg. Reg. al eIscrizione -C.F. eP.IVA arch 2011 arch in 2009 by the GRI GRI the by 2009 in 58 58 dei Martiri Piazza 80121 10 - Bologna Tel. 0115773211 Fax Fax 0115773211 Tel. Sustainability F THEF A Tel. 0916256313 Fax Tel. 0916256313 to achieve a achieve to , that are f nsible for for nsible Zola Predosa Predosa Zola – 195 Report 196 2012 Sustainability Report convenience of international readers. This report has been translated from the original, was which issued in Italian, solely for the (Partner) BersaniPaolo by Signed Advisory PricewaterhouseCoopers 23 M 23 Turin, 4 Report in M updated Guidelines Supplement ReportingGuidelinesElectric & Utilities Sector “Sustainability with respects, material the Sustainability Reportthe Based on the procedures carried out, nothing cameour attention to that causes to believe us that e) d) engagement could have ide have could engagement became the of all assurancethat aware we significant that areasonable eventsand circumstances providesof assurance in levelout asaconsequence,itlower with accordance ISAE3000and, carried engagement assurance reasonable a than in scope isless engagement assurance limited A 2012. 24 May made ourassurancedated to statement Regarding the comparativedata relating to the SustainabilityReport 2011,reference should be f) g) verification of of verification afterwards aggregated and consolidated afterwards and aggregated on confirm the reliability and of information data collected throughmeetings, interviews and analysis, of the basis, documentation on asample supporting the Report,in order to document guidelines the with compliance the to as well as in it, to the completeness and reliability of theReport andthe of information data included and the Report the in included information qualitative of consistency internal and completeness the of analysis • obtaining a representation letter, signed by the legal representative of of representative legal by the signed letter, representation a obtaining report; ay . -site verifications and to confirm they were properly managed; managed; properly were they confirm to and verifications -site 201 information to the department responsible for drawing it up. it drawing for responsible department the to information supporting the collection, aggregation, processingtransmission and of data and on - ” site verifications at verifications site 3 (EUSS) . in comparison with the reporting guidelines referred to in paragraph 1 o 1 paragraph in to referred guidelines reporting the with comparison in processing of data and informationprocessing data generated of by theand audited localsite , issued arch 2011 that detailed are in paragraph "Methodologicalnote" of the as of 31 December 201 December 31 of as ntified. ntified. S.p.A. in 2009 by the GRI – GRI the by 2009 in Transmission Operational AreaTransmission ; the Terna the 2 of Global Reporting Initiative Reporting Global identified in paragraph 1 of the present present the of 1 paragraph in identified Group (AOT) is not in compliance, in all all in compliance, in not is ; - Milan Terna the GRI 3.1 3.1 GRI the , and . S.p.A. relating relating S.p.A. f this this f 2 di 2

Coordination and Development by Terna S.p.A.

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