Environmental costs

Terna's commitment to the environment is reflected in the costs incurred for environmental reasons, both as investment and as operating expenses. Environmental costs were shown separately on the basis of the definitions presented below, by aggregating information deducible from the company's general and industrial accounting. In 2012 these definitions and the methodology described below became an operating guideline for the Terna Group. 

Recording methods

Environmental costs are first identified on the basis of available definitions, in particular those of the ISTAT (the National Statistical Institute), Eurostat and the GRI as well as on the European Commission's recommendationon the recognition, measurement and disclosure of environmental issues in annual accounts and annual reports (Recommendation 2001/453/EC). On the basis of this recommendation “the term ’environmental expenditure’includes the cost of steps taken by an organisation or on its behalf by others, to prevent, reduce or repair damage to the environment which results from its operating activities. These costs include, amongst others, the disposal and avoidance of waste, the protection of soil and of surface water and groundwater, the protection of clean air and climate, noise reduction, and the protection of biodiversity and landscape”.

Secondly, the aforesaid definitions were applied to the environmental aspects considered significant (for example, station noise and electromagnetic fields) in the Company’s ISO 14001-certified Environmental Management System to identify Terna’s operating and investment activities with environmental significance in its main corporate processes.

Many of Terna’s activities described in this Report entail environmental expenses. However, several limitations were introduced in determining the reporting boundary:

  • exclusion of integrated costs, i.e. regarding activities whose purpose is not exclusively environmental (for example, the use of pylons with features that are innovative also from the point of view of their environmental integration) because of the subjectivity of accounting only for the environmental components;
  • exclusion of additional costs connected with the consideration of restrictions or requests for safeguarding of the environment during the stage of planning and designing new lines (detours, burials).

Other conditions were that the costs had to be a) significant, b) consistent with the annual reporting of accounts (operating costs and investment clearly distinguished), and c) directly recognizable on the basis of the existing corporate accounting system. This last condition fulfils the need to minimize recourse to estimates based on off-the-books analysis. 

Environmental costs

In the light of the above, the following table constitutes the best possible representation of the costs incurred by Terna for the environment.

These costs exclude expenses regarding internal resources and consider only expenses for external purchases. An exception is the “Environmental activities – existing plants” item, which includes the costs of internal personnel.

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

ENVIRONMENTAL COSTS - INVESTMENT AND OPERATING COSTS - Millions of euro


2012 2011 2010
Investments


Environmental offsets4.11.110.3
Environmental impact studies 1.3 1.4 1.5
Environmental activities – new plants 6 4.2 4
Environmental activities – existing plants 9.6 14.2 15.7
Demolitions 2.4 2.8 5.8
Total investments 23.4 23.8 37.4
Costs      
Costs for environmental activities 15.1 10.3 9.7
Total operating costs 15.1 10.3 9.7

Environmental Offsets: these are amounts for offsetting the works set out in the Grid Development Plan, as determined by special agreements entered into with local institutions. Up to 2011, the amounts were recorded as investments at the time when the commitment was made, i.e. when the agreement was signed, regardless of the time of outlay/supply. In 2012, the method of accounting for the amount was changed and the figure refers to the portion actually disbursed in the year. The values relative to 2011-2010 were recalculated in accordance with the new method of accounting described, and so differ from what was published previously.

Environmental impact studies: these relate to plants provided for in the Grid Development Plan that are in the construction stage or in the process of being authorized by the relevant administrations.

Environmental activitiesnew plants: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 2010-2012 investment costs for projects with similar features was considered.

Environmental activitiesexisting plants:expenses for upgrading existing plants in accordance with provisions and new regulations in the environmental field (for example, noise, visual landscape aspects).

Demolitions: costs for the definitive dismantling of lines as part of rationalization projects. For 2012, only the amount regarding the most significant demolition (Santa Barbara - Tavarnuzze and Chignolo Po - Maleo) was reported, because determination of the amounts corresponding only to demolition activities requires off-the-books analysis. Costs for environmental activities: cutting trees, cutting grass, waste management and demolitions/dismantling for small amounts not included in investments. These cost items, which can be determined directly from industrial accounting, do not include all of the year’s environmental costs, but represent the majority of them. The increase in 2012 was due to an expansion of the activities recognised, extended also to grass cutting at stations, which was not considered previously.