Other economic effects

Other economic effects

Terna’s economic impact does not end with the creation and distribution of value added. One must also consider, first of all, the economic repercussions of the electricity service. Terna ensures over time a service of general interest and thus contributes to Italy’s economic growth.
 
The Company’s development of the electric grid is of particular importance. The development of interconnections between bordering countries makes it possible to import electric power at prices that are more competitive than those of domestic production, to have an additional power reserve, and to enjoy more competition in energy markets. The reduction of grid congestion improves the exploitation of generation resources for covering requirements and makes it possible to use the most competitive plants, with positive effects on competition in the generation segment and on end prices.    
In accordance with the regulatory framework, all of Terna’s investment in the development of the grid is examined from the technical and economic points of view by comparing the estimated cost of the work with the related benefits in terms of the reduction of the overall system expense in order to maximize the cost/benefit ratio. Consequently, every euro invested by Terna generates on average a multiple of savings for the users of the grid, as reflected ultimately on the end consumer. It is therefore significant that Terna’s investment – most of which is to develop the grid – has constantly increased in the last few years.  

INVESTMENT - ITALY

  2010 2009 2008 2007 2006 2005
Millions of euro 1,161.7 900.4 764.9 606.0 345.5 263.5

In 2010 the number in the table regards only the Terna Group’s core investment and does not include investment in photovoltaic energy, which amounted to 354 million euro.   
As decreed in the Ministry of Economic Development’s Directive of January 21, 2000, in determining possible investment in development the Company also pays the utmost attention to the need for improvement of the service in Southern Italy and other areas in which the electricity transmission system is less efficient in terms of reliability and continuity, among other things because in such areas the upgrading of the transmission grid can be decisive for social and economic development.   
In 2010 public contributions to the plant account – recorded directly to reduce the value of the plants – amounted to 3,652,564.86 euro (5,843,139.83 euro in 2009)

Another aspect to consider is the creation of employment and the expense for procurement. As of December 31, 2010 Terna had 3,468 employees, of whom 930 worked in Rome at the corporate headquarters, the national grid control center (CNC), and the Rome transmission operating area (AOT). The other employees (about 2,500) were uniformly distributed throughout Italy at the 7 other local operating areas.     
Through the construction and maintenance of power lines, in 2010 Terna indirectly determined the employment of labor by contractors and subcontractors totaling the equivalent of 1,973 full-time employees.
In 2010 the economic value of Terna’s procurement of services, supplies, and works exceeded 1.3 billion euro. Most of these were purchased from Italian suppliers, although the share of foreign suppliers is growing.
Terna S.p.A. makes most of its purchases from companies that are qualified pursuant to EU directives or through EU-wide tenders. Italian companies constitute a large majority of those that apply and qualify. In any case, it should be noted that a significant share of the sum spent on local purchases actually regards Italian branches of internationally significant industrial groups such as ABB, Siemens, and Prysmian, which are predominant worldwide in the specific markets concerned.

The following table breaks down Terna’s total procurement expenditure in the period 2008-2010.

PURCHASES FROM LOCAL AND FOREIGN SUPPLIERS AS PERCENTAGE OF TOTAL PROCUREMENT(1)

  2010 2009 2008
Local suppliers
78% 82% 80%
Foreign suppliers 3% 1% 1%
Other suppliers (1) 18% 17% 19%

(1) Temporary associations of companies consisting of Italian and foreign suppliers.

Excluding purchases regarding non-traditional business activities the share of local suppliers (72%) is lower and those of foreign ones (4%) and temporary of companies consisting of Italian and foreign suppliers (24%) are higher.  

Other economic impacts connected with the resources that Terna dedicates to the support of charitable initiatives and in the artistic and cultural fields are described in the page “Initiatives in communities” .