Disputes and litigation

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Opposition to the construction of new lines

Terna considers respect for the environment and for the territory an integral part of grid planning activity and makes an effort to act in agreement with the local institutions. However, new infrastructure creation projects often provoke adverse reactions attributable to the NIMBY (Not In My Backyard) syndrome. In these cases, Terna's attitude is one of willingness to examine and find alternative solutions, including ones which are technically more complex than those originally defined, provided that they are compatible with the general interests of security, efficiency and cost-effectiveness of the electricity service.

The search for agreed solutions entails difficult mediations and can be drawn out. The results are normally positive, but during the process local opposition may persist. In this category, during 2012 and in early months of 2013, we can note:

  • Rationalization between Padua and Venice: the Dolo - Camin line (part of the rationalization of the provinces of Padua and Venice) was authorized in April 2011 by the Ministry for Economic Development (MED) in agreement with the Ministry of the Environment (ME). The Municipality of Vigonovo, together with those of Fossò and Camponogara, lodged an appeal against the MED Decree. The project was also strongly contested by the CAT (Comitato Ambiente e Territorio - Environment and Territory Committee), in support of putting the power line underground. Currently, appeals have been lodged with the TAR (Regional Appeals Court). At the end of 2012 the construction sites were opened.
  • The “Redipuglia - Udine West” case: the line was authorized in December. In October 2012 the Region issued its consent. The arguments about the power line exploded in 2009 and opposition was led by the Comitato per la Vita del Friuli Rurale (Committee for Rural Life in Friuli). In the last few months of 2012 the opposition dropped off.
  • The “Sorgente - Rizziconi” case: work is currently in the construction stage. In 2011, when the construction sites opened, protests broke out in the Messina area (Valle del Mela) in relation both to the new power line under construction and to the presence of the existing 380 kV “Sorgente - Rizziconi” connection passing near towns and villages. This was despite the fact that the route of the line was the result of more than 2 years of technical and environmental studies which led, in agreement with the Sicily Region, the Province of Messina, the Municipality of Villafranca and the Municipality of Pace del Mela, together with 11 other municipalities in the Messina area, to the definition of an overhead route, reconciling, in the best possible way, the need to protect the environment, society and health, in full observance of the limits set out by law. The consultation and dialogues with local communities began in 2004: more than 100 meetings were held by Terna with the Institutions and the local authorities involved to identify the best solutions to safeguard the territory involved. During 2010 the Municipalities of Villafranca Tirrena, San Filippo del Mela and Pace del Mela presented appeals to cancel the single authorization issued by the Ministry for Economic Development; similar initiatives were begun by a number of private individuals and environmentalist associations.
  • The “Fano - Teramo” case: work is currently in the consultation stage. Starting in 2006, technical forums were set up in the regions involved (Marche and Abruzzo). The optimal corridor and the feasibility band of the future power line for the project were agreed on. In the last few months of 2012, and the beginning of 2013, the Municipalities of the Province of Macerata raised objections to the route identified. The Marche ANCI (Municipalities Association), Coldiretti (the Farmers' Union) and the Comunità Montana dei Monti Azzurri (Mountain Community of the Azure Mountains) expressed their opposition to the route.

Preliminary inquiries of the Electricity and Gas Authority  

During 2012 the Electricity and Gas Authority launched two fact-finding inquiries of potential interest to Terna.

Resolution of August 2, 342/2012/R/eel – Urgent action on rules for electricity imbalances and launch of a fact-finding inquiry on energy market trends in Sardinia
Following the repeated occurrence, during the year 2012, of certain behaviour regarding supply to the electricity market by users of dispatching withdrawn in Sardinia, the Authority launched a fact-finding inquiry. It was aimed, on the one hand, at identifying any speculative behaviour on the part of dispatching users – and any consequent liability - and, on the other, at defining a more efficient and effective method of regulating effective imbalances; also in order to prevent possible speculative behaviour.

Resolution of October 4, 2012 401/2012/R/eel – Fact-finding inquiry on critical issues in management of the electricity system in Sardinia 
With this measure, the Authority launched a further fact-finding inquiry on critical issues in management of the electricity system in Sardinia, aimed at identifying the technical causes at the root of the above critical issues and the repercussions that the technical constraints have, both on securely operating the Sardinian electricity system, and on the correct performance of energy markets.

As well as the two fact-finding inquiries described above, which are currently in progress, the fact-finding inquiry on the poor service provided in Sicily on June 25 and 26, 2007 is still formally pending. This inquiry was launched by the Authority with Resolution No. 155/2007.

Environmental litigation  

Environmental litigation originates from the installation and operation of electricity plants and primarily involves damages which could be derived from exposure to electrical and magnetic fields generated by power lines. The Parent Company and the subsidiary Terna Rete Italia S.r.l. are involved in various civil and administrative lawsuits requesting the transfer or change in operations of allegedly-harmful power lines, despite their being installed in full compliance with the applicable legislation (Italian Law No. 36 of February 22, 2001 and Prime Minister's Decree July 8, 2003). Only a very small number of cases include claims for damages for harm to health caused by electromagnetic fields.

Only in a few cases have adverse judgements been issued against the Parent Company. These have been appealed and the appeals are still pending, although adverse rulings are considered unlikely.

Litigation regarding concessionary activities  

Given that it has been the licensee for transmission and dispatching activities since November 1, 2005, the Parent Company has been involved in a number of cases, most appealing AEEG, MED and/or Terna measures relating to activities operated under the license. Only in those cases in which the plaintiffs not only claim defects in the measures appealed against, but also allege that Terna violated the rules established by such authorities has the Company joined the case. Within the scope of this litigation, although a number of cases have seen the AEEG Resolutions struck down in the first and/or second level courts, together with the consequent measures adopted by Terna, it is felt that there is little risk of adverse outcomes for Terna, since the matters generally regard pass-through items. This position is supported by the information provided by the external legal counsel representing the Company in the cases involved. As the licensee for transmission and dispatching activities, the measures taken by the Parent Company Terna when applying the Resolutions adopted by the Authority are sometimes the subject of challenges. In appropriate circumstances, the economic costs of such challenges may be borne by the Authority.

Other litigation  

In addition, a number of cases relating to urban planning and environmental issues are pending regarding the construction and operation of certain transmission lines. The possible effects of any unfavourable outcome to these cases are unpredictable and, accordingly, have not been considered when determining the “Provisions for disputes and other contingencies”.

In a limited number of cases, the possibility of an adverse outcome cannot be entirely ruled out. The possible consequences could, in addition to the award of damages, include, inter alia, the costs of modifying lines and the temporary suspension of their use. In any case, any unfavourable outcome would not jeopardise line operations.

Examination of the above litigation, having regard for the information provided by the external legal consultants, suggests that the likelihood of adverse outcomes is remote.

Penalties

 

In the period 2010-2012:

  • there were no definitive criminal convictions or plea bargaining for injuries to third parties caused by Terna's assets;
  • as of December 31, 2012 there was no pending litigation nor had any legal proceedings ended regarding corruption, unfair competition, anti-trust, or monopolistic practices. Regarding these matters, no definitive administrative or judicial, monetary or non-monetary penalties were imposed for non-observance of laws or regulations, including environmental ones, that gave Terna an obligation to “do/not do” (e.g., prohibitions) or convicted its employees for crimes.

In the three-year period 2010-2012, no significant penalties were imposed regarding the environment or, more generally, observance of the provisions of the law.

On the basis of AEEG Resolution VIS 16/11, during financial year 2011, Terna SpA paid a fine – of 420,000 euro – imposed at the end of inquiry proceedings launched with Resolution VIS 171/09, for breaching the AEEG's orders on the subject of provision of electricity transmission, dispatching and measurement services. In particular the dispute related to anomalies found in the determination of electricity supplies withdrawn from the NTG and not correctly attributed to the dispatching users.