Costs for the environment

Terna’s commitment to the environment is shown in the costs it incurs for environmental reasons, as both investment and current expenses. Its environmental costs were presented separately for the first time with regard to 2009 and then again in 2010, according to the definitions referred to below, by aggregating information provided by the Company’s general and industrial accounting.     
 
The costs shown in the table regard Terna S.p.A.; the boundary does not include the investment in the photovoltaic project made by SunTergrid. These costs exclude expenses regarding internal resources and consider only expenses for external purchases. The “Environmental activities – existing plants” item, which includes the costs of internal personnel, is an exception.    

In accordance with the method adopted and the footnotes to the table, it should be noted that the environmental costs shown constitute a subset of the total environmental costs, as defined above, actually incurred.

COSTS FOR THE ENVIRONMENT - INVESTMENT AND OPERATING COSTS 
Millions of euro

  2010 2009
Investiment    
Environmental offsets (1) 24.1 28.9
Environmental impact studies (2) 1.5 0.4
Environmental activities – new plants (3) 4.0 2.8
Environmental activities – existing plants (4) 15.7 7.8
Demolitions (5) 5.8 2.7
Total investment 51.2 42.6
Costs     
Costs for environmental activities(6) 9.7 9.0
Total operating costs
9.7 9.0

(1) These are the sums for offsetting the works provided for by the Grid Developmentii Plan, as determined by special agreements entered into with local institutions. They are recorded as investment at the time when the commitment is made, i.e. when the agreement is signed, when the cash flow depends on how long it takes get obtain the authorization and construct the works.    

(2) Studies of environmental impact regarding plants included in the Grid Development Plan that at the construction stage or in the process of being authorized by the relevant governments.  

(3) The amount shown is the result of an estimate. On the basis of an analysis of several large investment projects, it turned out that at least 1% of the total expenses of the project regard environmental items, usually determined by obligations (for example, masking with trees, barriers against noise, installation of dissuaders for birdlife, environmental monitoring, analysis of excavated earth and rocks). Therefore, a value of 1% of investment costs 2010/2009 for projects with similar features was considered.  

(4) Expenses for upgrading existing plants in accordance with prescriptions and new regulations in the environmental field (for example, noise, visual landscape aspects). The approximately 50% increase in this cost item over 2009 is mainly due to asset mapping.

(5) Costs for the definitive dismantling of lines as part of rationalization projects. For 2010 only the amount regarding the most significant demolition (Val d’Ossola Sud e Casellina-Tavernuzze-Santa Barbara) is reported, because the determination of the sums corresponding only to demolition activities requires an off-the-books analysis.

(6) Cutting plants, cutting grass, and waste management. These cost items – the only ones so far determined directly by the industrial accounting – do not exhaust the year’s total environmental costs, but they constitute the preponderant part of them.