Subsequent Events

Resolutions published by the AEEG for the new tariffs in regulatory period 2012-2015

On 2 January 2012, the Authority for Electricity and Gas (AEEG) published Resolutions nos. 199/11, 204/11 and 197/11 thereby establishing, for the new regulatory period 2012-2015, the remuneration for the supply of electricity transmission, distribution, measurement and dispatching services and the regulation of the quality of the transmission service. The new features introduced by AEEG resolution 199/11 include taking the weighted average cost of capital (WACC) from the previous 6.9% to 7.4% and establishing a review by November 2013, to apply from the second two-year period of the regulatory period (2014-2015). There will also be a new incentive category (category I4) for an extra remuneration of accumulation systems amounting to 2% for a period of 12 years subsequent to the coming into force of the investments. As from 2012, the AEEG has recognised a further 1% on the WACC, aimed at compensating for the effect of the “regulatory lag”, i.e. the delay with which the tariff remunerates investments made. Resolution 204/11 updates for 2012 the price for the electricity dispatching service, amounting to €0.0526 c/kWh.

Resolution 197/11 on the regulation of the quality of service confirms the framework of the previous regulatory period, based on a premium/penalty mechanism. Quality of service will only be monitored by the Energy not supplied index. With this mechanism, the potential maximum impact is estimated for the Terna Group as ranging between a negative €12/€30 million per year.


Terna alone in the Gold Class of the Sam Sustainability Yearbook 2012

On 30 January 2012 Terna, the only Italian electrical company and amongst the world’s best, joined the Gold Class of the Sam - Sustainability Yearbook 2012, the yearbook of the international ratings agency that screens companies, assessing the possibility of their accessing, remaining in or being excluded from the prestigious Dow Jones indexes. If we compare this result with those of previous years (Silver Class in 2011, Bronze Class in 2010), we can see that Terna is reinforcing, indeed improving its position in a global top position, coming before some of the best international operators.


5-year bond issue for €1.25 billion

On 13 February 2012 Terna launched a bond issue on the market in euros, at a fixed rate, with expiry in 5 years, for a total of €1.25 billion under the scope of its Euro Medium Term Notes (EMTN) programme. This has been assigned an A- Credit Watch Negative rating for Standard and Poor’s, A3 Outlook Negative for Moody’s and A for Fitch.

The bond expires on 17 February 2017, has an annual coupon of 4.125% and issue price of 99.809%. The security has thus been priced with a spread of 257 basis points as compared with the mid swap. The securities, which will pay one coupon per year, will be listed on the Luxembourg Stock Exchange.

The operation is intended for institutional investors and is placed by a pool of banks comprising BNP Paribas, Credit Suisse, Deutsche Bank, J.P. Morgan, Mediobanca, MPS Capital Services, Natixis and Unicredit Bank AG as joint-lead managers and joint-bookrunners; it closed successfully that same day, and was 4.5 times oversubscribed compared to the offer, 80% of which came from abroad. The bond is intended to finance the grid development investments envisaged in the Company’s business plan.


Renewed Supervisory Body 231/2001

On 31 January 2012, Terna’s Board of Directors appointed the members of the Supervisory Body pursuant to Italian Legislative Decree no. 231/2001 which had expired in financial year 2011. Prof. Bruno Assumma was confirmed Chairman, while Mr. Ernesto Calaprice, Mr. Massimo di Noia, Mr. Alberto Bianchi and Ms. Filomena Passeggio were appointed members. The Board also resolved that Mr. Fulvio De Luca will act as secretary of the Supervisory Body together with the audit function.


Terna Cnra Gora share capital increase

On 10 February 2012, Terna subscribed a share capital increase of the subsidiary Terna Cnra Gora for €5 million, in order to provide the company with the resources necessary to develop the business.


Terna rating

On 30 January 2012 Fitch Ratings revised the rating for the senior unsecured debt of Terna S.p.A. from A+ to A following the downgrading of the Italian Republic from A+ to A- with negative outlook. At the same time, Fitch confirmed both the long-term rating of the issuer at A with negative outlook and the short-term rating at F1.

On 8 March 2012 S&P confirmed the long and short-term rating of Terna S.p.A. as A- and A-2 respectively, and the senior unsecured debt rating at A-. In line with the Agency method for government related entities, these levels had been assigned to the Company on 20 January 2012, following the downgrading from A to BBB+ of the Italian Republic. At the same time, the Agency removed the “CreditWatch” status with negative implications, the long-term rating of the Company and the rating of the senior unsecured debt, a status assigned by the agency in December 2011. The outlook is negative.