Incentive schemes

The AEEG has introduced specific bonus and penalty schemes aimed at incentivizing service improvement, in both technical and economic terms. Implicit in the incentive mechanisms is the assumption that if the objectives are achieved, the benefit for the users of the service will be a multiple of the incentive paid to Ternaⁱ. In particular, in 2010 incentived-based mechanisms were provided for:

• the quality of the transmission service
• improvement of forecasts regarding energy requirements and wind  (applicable for the period 2008-2011) 
• reduction of the volume of resources procured on the DSM;   
• acceleration of investment to develop the NTG.

The bonuses earned for achieving in 2010 the objectives established as part of the incentive schemes are included in Terna’s total regulated revenue. In the case of the incentive for reducing the volume of resources procured on the MDS, Terna further improved its performance during 2010, reducing the volume of energy procured by about 41% compared to the 2009 volume. This result led to the payment of a bonus of about 160 million euro (40 million euro in 2009). Considering the three-year duration of the incentive mechanism and its characteristics, Terna recorded 77 million euro in its 2010 Financial Statements as the related fair value, taking into account the regulatory risks and those connected with the performance of the Electricity Market.   

INCENTIVE MECHANISMS ACTIVATED IN 2010