Corporate, operational and organisational separation of gas transporters and dispatchers that are part of groups of vertically integrated

Directive 2003/55/EC of 26 June 2003 revised the rules for separation and transparency of accounts and imposed the corporate, operational and organisational separation of transportation, storage, LNG and gas distribution operators that are part of groups of vertically integrated undertakings.

The Electricity and Gas Authority introduced specific operational unbundling obligations in Italy with its consolidated text attached to resolution no. 11/07 of 18 January 2007 and subsequent amendments, in order to enact the European directive’s guidelines.

The operational unbundling set out in the consolidated text entailed the allocation of independent decisionmaking and organisational powers to each of the natural gas transportation, dispatch, regasification, storage and distribution businesses, separating them in an administrative sense from the other gas businesses. Accordingly, the unbundled activities are managed by an “independent operator”, a function set up within the company that performs these activities (the “unbundled company”).

The members of the independent operator function (i.e. all the unbundled company’s directors) were to be independent from the interests of the vertically integrated undertaking (i.e. employees of the unbundled company or independent third parties).

Resolution no. 253/07 of 4 October 2007 introduced article 11.5 of the consolidated text whereby it was possible that not all the directors of the unbundled company were part of the independent operator, as long as:

  • the unbundled company’s bylaws include the purpose of encouraging competition, efficiency and sufficient quality when providing a service;
  • the directors of the unbundled company who do not meet the independence requirements set out by the Authority in its resolutions do not have operational or decision-making powers for sales transactions;
  • a specific organisational structure (CEO or executive committee) exists as part of the unbundled company’s independent operator, which expresses binding opinions for all the board of directors’ decisions about management and organisational aspects of the unbundled operating business and about approving the business plan.

On 27 June 2008, after receiving a formal communication from the ultimate parent Eni S.p.A, the board of directors at Snam Rete Gas S.p.A resolved to create an independent operator function as per article 11 of the consolidated text attached to the Electricity and Gas Authority’s resolution no. 11/07 with the favourable opinion of the board of statutory auditors and pursuant to article 2497-ter of the Italian Civil Code. This is a monocratic position held by the CEO with an organisational structure as set out in article 11.5.c) of the consolidated text.

This resolution was based on the evaluation that it would not substantially change the company’s corporate governance structure, considering also its position as a listed company, the many interests that such status entails and the legislation with which it has to comply. In their extraordinary meeting held on 31 July 2008, the shareholders approved the following changes to the company’s bylaws in order to comply with resolution nos. 11/07 and 253/07 of the Electricity and Gas Authority and set up an independent operator within the company:

  • Article 2 - inclusion in its company purpose of encouraging competition, efficiency and sufficient quality when providing a service, as required by article 2.2.1 of resolution no. 11/07of the Electricity and Gas Authority;
  • Article 19 - the board of directors may set up committees, pursuant to article 2381 of the Italian Civil Code, determining the number of the members and powers thereof; also in order to propose bylaw clauses that allow for different future assessments of the independent operator’s activities and structure.

The Authority published resolution no. ARG/COM/132/08 on 26 September 2008. This contained “Guidelines for the preparation of a compliance programme as per Appendix A of resolution no. 11/07 on unbundling” (the ”Guidelines”). On the basis of said Guidelines, the independent operator has to plan and update its operational unbundling programme in accordance with the established preparation and implementation timeframe, varying from six months to a year from the date of publication, depending on the adjustments required to ensure compliance. According to the resolutions of the Authority, among the essential duties of the independent operator is preparing annual and long-term business plans for the infrastructures it manages.

On 27 March 2009, the Snam Rete Gas S.p.A board of directors agreed to include the operations general manager in the independent operator function, giving the latter the powers necessary to implement the Guidelines published by the Authority with resolution no. 132/08. This measure was, however, cancelled following appeals from many operators in the sector.

The independent operator is also a monocratic body at the company’s subsidiaries and associates.

In GNL Italia S.p.A, this position has been given to the chairman and CEO, whilst in Italgas S.p.A and Stogit S.p.A the position is held by the CEO.

There were developments in EU regulations on electricity and gas in 2009, involving the European Council adopting the so-called “Third Energy Package”. This is a set of rules comprising two directives and three regulations which are currently being translated into national legislation in Italy.