NOTES TO THE BALANCE SHEET
Assets
Non-current Assets
1. Property, Plant and Equipment
Property, plant and equipment, which comprise the Group's production assets, totaled 8,637 million euros, or 40 million euros less than at December 31, 2004. A breakdown is provided below:
(in millions of euros) Land and Plant and Manufact. Other Constr. in Total
  buildings machinery and distrib. assets progress and  
      equipment   advances  
Balance at 12/31/04 (A) 928 6,298 16 20 1,415 8,677
Changes in 2005:            
- Additions 9 210 6 2 371 598
- Disposals (-) (5) (6) - - - (11)
- Depreciation (-) (41) (468) (2) (4) - (515)
- Writedowns (-) (2) (83) - - - (85)
- Change in scope of consolidation (2) (10) - (4) (21) (37)
- Currency translation differences - - - (1) - (1)
- Other changes (2) 250 1 (1) (237) 11
Total changes (B) (43) (107) 5 (8) 113 (40)
Balance at 12/31/05 (A+B) 885 6,191 21 12 1,528 8,637
Breakdown:            
- Historical cost 971 7,249 25 20 1,528 9,793
- Revaluations - - - - - 0
- Writedowns (-) (5) (149) (2) - - (156)
- Accumulated depreciation (-) (81) (909) (2) (8) - (1,000)
Net carrying amount 885 6,191 21 12 1,528 8,637
The total value of the assets, virtually all of which are located in Italy, includes construction in progress and advances totaling 1,528 million euros for thermoelectric power plants that are in the final stages of construction, such as those that are being built in Torviscosa (UD), Altomonte (CS) and Simeri Crichi (CZ). The Candela (FG) power plant was commissioned in August 2005.
Additions, which totaled 598 million euros, are mainly the result of the following capital expenditures:
  • The investments of the electric power operations, which totaled 511 million euros, were primarily used for the construction of new thermoelectric power plants in Torviscosa (UD) (128 million euros), Simeri Crichi (CZ) (109 million euros), Altomonte (CS) (53 million euros) and Candela (266 million euros), which has recently started operations. In addition, Edipower invested 93 million euros (Edison's pro rata share) for the repowering of the Piacenza and Turbigo (MI) power plants.
  • The hydrocarbons operations invested 73 million euros. Investments in Italy included 13 million euros to expand the Collalto gas storage facility, 9 million euros to complete the Naiade platform in the Adriatic and 7 million euros to develop the Candela gas field. Investments outside Italy focused on the Rosetta concession in Egypt (9 million euros) and concessions held in Algeria (6 million euros) and Croatia (6 million euros). Costs totaling 7 million euros that were incurred in connection with successful hydrocarbon exploration programs were capitalized and added to property, plant and equipment as "Plant and machinery."
Depreciation of property, plant and equipment included 459 million euros for the electric power operations (428 million euros in 2004), 50 million euros for the hydrocarbons operations (53 million euros in 2004) and 6 million euros for other operations.
As explained later in these notes, the results of an impairment test required the carrying value of certain facilities held by the electric power operations to be written down by 81 million euros. In addition, other facilities, equipment and land were written down by 4 million euros.
The negative change in the scope of consolidation, which amounted to 37 million euros, reflects the deconsolidation of Edison LNG (21 million euros) and the disposals of Flandres Energie Sa (10 million euros) and the Tecnimont Group (6 million euros).
The net carrying amount of property, plant and equipment included assets pertaining to 56 concessions held by the natural gas distribution operations and assets transferable at no cost with an aggregate value of 704 million euros (736 million euros at December 31, 2004). All of the assets transferable at no cost are held by the Group's hydroelectric operations, which hold 70 concessions. The decrease reflects primarily the depreciation taken in 2005.
Assets transferable at no cost Historical Accum. deprec. Net value Net value
(in millions of euros) cost and writedowns at 12/31/05 at 12/31/04
Buildings and other assets 11 (1) 10 11
Plant and machinery 826 (132) 694 725
Total 837 (133) 704 736
Property, plant and equipment includes assets acquired under finance leases totaling 171 million euros (228 million euros at December 31, 2004), which are recognized in accordance with the IAS 17 (revised) method. A facility held under a finance lease by Termica Boffalora was purchased outright in 2005. The balance outstanding on finance leases, which is shown under "Long-term borrowings and other financial liabilities," amounts to 42 million euros.
Assets acquired under finance leases Historical Accum. deprec. Net value Net value
(in millions of euros) cost and writedowns at 12/31/05 at 12/31/04
Land and buildings 10 (1) 9 14
Plant and machinery 180 (18) 162 214
Total 190 (19) 171 228
The value of these assets does not include capitalized financial expense.
Law No. 266 of December 23, 2005 (2006 Budget Bill) contained a provision that provided an automatic ten-year extension of concessions for large-scale diversion of public water for hydroelectric power plants, provided the concession holder can demonstrate the effectiveness of significant investments made in plant modernization to improve a facility's energy efficiency and environmental performance. Such evidence must be provided during the six months that precede the expiration of the concession and is subject to verification by local government entities. Since the test of objective certainty cannot yet be met at this point, the useful lives of the Group's electric power assets affected by these provisions were not changed.