Other economic effects

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Terna’s economic impact does not end with the production and distribution of value added. The economic repercussions of the electricity system must also be taken into account. Terna’s business ensures over time a service of general interest, which contributes to Italy’s economic growth.

Of particular significance is the development of the electricity grid. The interconnection of the grids of two neighbouring countries makes it possible to import electricity at prices that are more competitive than those of domestic production and to have an additional reserve of power, as well as ensuring more competition in energy markets. The reduction of grid congestion improves the exploitation of generation resources to satisfy requirements and makes it possible to use more competitive plants, with positive impacts on competition in the generation segment and final prices.

In accordance with the regulatory framework, all of Terna’s capital expenditure on grid development can be assessed from the technical and economic point of view by comparing the estimated costs with the related benefits in terms of the reduction of the total system costs in order to maximise the benefit/cost ratio. Consequently, every euro of investment made by Terna generates on average a multiple of significant savings for grid users, which in the last analysis are reflected on the end consumer. Therefore, it is significant that Terna’s capital expenditure – most of which is dedicated to grid development – has recorded a constant increase in the last few years.

INVESTMENT - ITALY

 20092008200720062005
In Millions of euros900.4764.9606.0345.5263.5

Sede  TernaAs decreed by the Ministry for Economic Development’s Directive of January 21, 2000, in its determination of possible capital expenditure the Company also gives the utmost consideration to the need to improve its service in southern Italy and the other areas where the electricity transport system is less efficient with regard to its continuity and reliability and thus an enhancement of the transmission grid there could be decisive for economic and social development.

Another aspect to consider is the creation of jobs and procurement expense. As of December 31, 2009, Terna had 3,447 employees, of whom 800 worked in Rome, at the main office, the National Control Centre (NCC), and the Rome Territorial Centre (AOT). The rest of the employees (approximately 2,700) were distributed uniformly throughout Italy in the seven other AOTs of Turin, Milan, Padua, Florence, Naples, Palermo, and Cagliari – under which 32 line operating groups (GOL) and 32 station operating groups (GOS) work – 8 Distributioni Centres (CR), and 3 Remote Control Centres (CT), which have their own offices throughout Italy.



For the construction and maintenance of its power lines, in 2009 Terna led indirectly to its contractor and sub-contractor firms employing a total of 1,530 full-time workers for a year.

In 2009, the economic value of the procurement of services, supplies, and contract work amounted to €925 million. Much of this procurement was from Italian suppliers. This is not in conflict with the policies of the Group, which forbid the selection of suppliers on the basis of their location, but rather reflects the requirements of local procurement for maintenance work.

Terna S.p.A. makes most of its purchases from qualified firms pursuant to EU directives or through specific calls for tenders, which are also addressed to EU countries. The companies that qualify and bid are predominantly Italian. It should be noted, however, that a significant share of the sum for local purchases actually regards companies with offices in Italy, but belonging to internationally important industrial groups, such as ABB, Siemens, Prysmian, and Areva, which are dominant at the world level in the specific markets concerned.

The percentages of total procurement expense in the period 2007-2009 are shown in the following table:


PERCENTAGES OF TOTAL PROCUREMENT FROM LOCAL AND FOREIGN SUPPLIERS (1)

 200920082007
Local suppliers
82.0%80.0%96.0%
Foreign suppliers
1.0%1.0%1.0%
Other suppliers (1)17.0%19.0%3.0%

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

Purchasing mainly from local suppliers was also a common practice at the subsidiary Terna Participações (89% in 2008 and 98% in 2007).