Processes and organisation

Terna’s organisation chart as of December 31, 2009

TERNA’S ORGANISATION CHART AS OF DECEMBER 31, 2009

The Italian electricity system consists of four components: the production, transmission, distribution, and sale of electric power.

Terna’s activities regard the transmission of electricity on the high-voltage grid. Specifically, the Company is responsible for the management of the electricity system through operation of the grid, as well as the utmost efficiency of the infrastructure and the excellence of its maintenance through engineering, management of the plants, and development of the grid.

These core activities are carried out by the Operations Italy Department, with the contribution of the non-operating departments. The main stages of the production process of the transmission service are as follows:

Phases of process

Operation

Operation of the grid requires a constant balance between injections and withdrawals, i.e. between the supply of domestically produced energy and imported energy and the demand of end users.

Preparation for real-time operation includes planning unavailability (of the grid and production plants) with different time horizons, a forecast of the national electricity requirements, a comparison to see if it is consistent with the production program determined as the outcome of the free energy market (Electricity Exchange and off-Exchange contracts), the acquisition of resources for dispatching, and a check of the power transitions for all the lines of the transmission grid.

In the real-time control stage, the National Control Centre coordinates other centres throughout Italy, monitors the electricity system, and performs the task of dispatching, intervening if there are deviations from the estimated balance – because of the malfunctioning of production plants or grid segments or requirements that diverge from those forecast – by instructing producers and the Remote Control Centres so as to modulate the supply and the situation on the grid. It may also act to reduce demand in order to avoid the risk of the grid degenerating, with extensive disconnections.

Grid development planning

The analysis of electricity flows on the grid and projections of demand enable Terna to identify the critical aspects of the grid and the work that has to be done in order to ensure the system’s ability to satisfy requirements, operating safety, congestion reduction, and the improvement of service quality and continuity.

The new works to be carried out are included in the National Transmissioni Grid Developmenti Plan, which is presented every year for approval to the Ministry for Economic Development. Terna then follows its authorisation process, from prior consultation with local governments all the way to the authorisation to carry out the work.

Finally, by analysing the situation of the grid, Terna identifies the best ways to satisfy all the companies that request the connection of their plants to the transmission grid.

Construction

Terna establishes the engineering standards of the plants connected to the grid, in particular the construction standards and the performance required of equipment, machinery, and the components of stations and lines.

As far as plant construction is concerned, Terna prepares plans for the works authorised. Specifically, it establishes the requirements of external resources and the budget for the projects, as well as the work methods and technical specifications of the components and materials to be used in constructing the new lines and stations, including the adoption of innovative methods.

The construction of new plants is normally outsourced.

Maintenancei

Terna’s carries out the maintenance of its power lines and stations through eight Transmission Operating Areas, in which most of the Company’s human resources – only slightly less than 70% – are employed. These employees are also involved in work for unregulated customers.

Other activities

Terna’s business relations with other parties in the industry – regarding both energy transport from producers to distributors and trading on the Electricity Exchange – entail economic transactions whose settlement is handled by Terna.

The Corporate Security Department is entrusted with establishing policies regarding the analysis, management, and control of corporate risks, the protection of the Company’s material, human, and asset resources, and the occupational safety and health of its employees. The Department also handles relations with the judiciary and the police and assists the other corporate departments that may have critical problems.