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Hydrocarbons
 
Actions of the Electric Power and Gas Authority (AEEG)
In 2005, new developments in the area of rates included the definition by the AEEG, for the second regulatory period (October 1, 2005 to September 30, 2009), of the method to determine the rates that should be charged for transmission services (Resolutions No. 166/05, No. 179/05, No. 204/05, No. 234/05 and No. 297/05) and the utilization of regasification terminals (Resolutions No. 178/05 and No. 197/05). The AEEG also began a series of consultations regarding storage services rates (Resolution No. 78/05).
In the area of distribution, Resolution No. 171/05 defined the computation method used for individual rates during the second regulatory period (October 1, 2004 to September 30, 2008), based on the certified financial statements of the distributors. Resolution No. 122/05, which deals with the computation method for standard distribution rates, is still being contested, based on allegations that the AEEG did not fully comply with the order issued by the Administrative Judge in connection with Resolution No. 170/04.
With regard to the issue of the rates charged to end users in the so-called market for former captive customers, the Regional Administrative Court of Lombardy, in a decision handed down at the end of June, ruled that Resolution No. 248/04 was invalid and upheld an appeal filed by numerous operators, including Edison Spa and its Edison Per Voi subsidiary. The contested resolution changed the method used to update the rate computation component that is based on raw materials as of January 1, 2005 after the thermal year was already in progress. In September 2005, the AEEG filed an appeal with the Council of State challenging Decision No. 3478, by which the Regional Administrative Court of Lombardy annulled Resolution No. 248/04 in response to an appeal filed by Hera Trading Srl (Resolution No. 184/05), and concurrently sought from the government and parliament clarification about the regulatory powers of the AEEG. The Council of State has since stayed the appellate court decision and at the end of the year, while waiting for the final outcome of a decision on the merits, the AEEG issued a resolution (Resolution No. 298/05) by which it "provisionally" updated the raw material quota of gas rates for the first quarter of 2006 in accordance with Resolution No. 248/05. In mid-January 2006, the AEEG filed an appeal with the Council of State asking it to immediately suspend the effectiveness of a decision by which the Regional Administrative Court of Lombardy, responding to an action filed by Edison Per Voi Spa, annulled Resolution No. 248/04. In the meantime, Edison Per Voi and other distributors petitioned the Regional Administrative Court of Lombardy asking it to declare Resolution No. 298/05 invalid. On January 3, 2006, the Court granted the motion to stay Resolution No. 298/05, but the AEEG has already indicated that it plans to appeal this decision to the Council of State.
 
With regard to the issue of access to infrastructural facilities in general and storage facilities in particular, the AEEG provided guidelines for drafting Storage Codes that industry operators will be required to produce through a process that is open to the input of all interested parties (users, transmission and distribution companies, end users), who will be represented by Consultation Committees (Resolutions No. 119/05 and No. 167/05).
On the issue of access to distribution facilities, a work group that comprises representatives of the AEEG and associations of distributors and users are in the process of finalizing a standardized network code (in accordance with the guidelines of Resolution No. 138/04 and Determination No. 170/04), with the objective of having an operational code in place by October 1, 2006. Certain provisions of this code, including specifically those concerning the procedure for allocating natural gas to users of transmission facilities at the point where transmission networks connect to distribution systems (so-called city gates) (Resolution No. 249/05), will go into effect in February 2006.
Lastly, on August 18, 2005, the AEEG submitted proposals to the Italian parliament and government that pertained, in particular, to the outsourcing of the management of underground storage facilities. These proposals are designed to expand these facilities, foster competition and increase national energy security.

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Government Actions
The most significant actions taken by the Ministry of Production Activities in 2005 are reviewed below:
  • Communication of March 15, 2005, in which the Technical Committee for Emergencies and Monitoring of the Natural Gas System set March 18 as the date when the emergency weather period would end, in accordance with the provisions of the Decree of June 25, 2004 entitled "Emergency Weather Procedure for the Natural Gas System."
  • Communication of March 15, 2005, which, with regard to the definition of strategic reserves, confirmed for the 2005-2006 thermal year the volume set forth in Article 3, Section 6, of the Ministerial Decree of May 9, 2001, at 5.1 billion standard cubic meters.
  • Communication of July 11, 2005, concerning the capacity for continuous transmission of natural gas at the points of entry and egress of the national network of gas pipelines for the period from October 1, 2005 to September 30, 2015.
  • Decree of October 18, 2005, establishing the criteria for the classification of gas pipelines included in regional transmission networks and the criteria for connection of end users to the networks.
  • Decree of December 12, 2005, approving an update to the Emergency Weather Procedure for the Natural Gas System. This Decree sets forth a new procedure for handling weather-related emergencies that could affect the natural gas system during winter.
 
Another government measure worthy of mention is Decree Law No. 273/05 ("Thousand Extensions" Decree) of December 12, 2005, which extended to December 31, 2007 the expiration of existing natural gas distribution licenses. These licenses can be extended further (to December 31, 2009) if the conditions set forth in the Letta Decree can be met. A further extension of one year can be granted by the local municipal government when such action is "demonstrably" in the public's interest (Article 23). This decree is currently being converted into law.