Responsibility and transparency in the markets

RELATIONS WITH THE AUTHORITY FOR ELECTRICITY AND GAS

Regulating Snam’s activity

Nationally, the determination of fees, access rules and service quality standards in the gas transportation, distribution, storage and regasification sectors is established by the Authority for Electricity and Gas (AEEG), operational since 1997. As part of the sector’s liberalisation, the regulation of infrastructure activities is the right tool for allowing access to services by all players present in free-market activity under non-discriminatory conditions.

In this context, the relations that Snam maintains with the AEEG play a fundamental role. The clarity, stability and transparency of the regulatory framework for determining revenue and tariffs are in fact a key factor for the economic sustainability of the Company, and are also relevant for network users, affected by costs associated with infrastructure use, and for financial investors, in relation to the foreseeability of returns on their investments.

Over the years, Snam has established constructive dialogue and proactive cooperation with the Authority by continually maintaining an advisory role and providing the necessary support to changes in the regulatory framework for the natural gas sector. Since 2009, this relationship has become even more constructive thanks to the acquisition of Italgas and Stogit, which has enabled Snam to become a partner capable of providing complete and effective answers regarding energy market trends and integration.

Effective as of 1 December 2011, the Authority has entrusted Snam Rete Gas, as a major transportation company, with the important role of Balancing Manager in regulating transportation, dispatching and storage services. This role calls for Snam Rete Gas to acquire the necessary storage resources, based on criteria of economic worthiness, to guarantee safe and efficient gas movement from input points to withdrawal points, ensuring continual network equilibrium.

Determining revenue and tariffs

Among regulated activities, the process of defining tariff criteria, which is generally carried out every four years, is particularly relevant.

The revenue from all activities is determined so as to ensure coverage of operating costs, depreciation and amortisation, and a fair return on net invested capital, which ranges in general from 6 to 8 per cent. Incentives are also provided, differentiated according to the type of investments made during the course of each regulatory period. Every year, based on its own revenue recorded, each Snam company formulates a tariff proposal, which is submitted to the Authority for approval.

Enlarge image

Relations with the Authority for Electricity and Gas

Relations with the AEEG are expressed through different commitments and activities. These activities are assigned to the competent functions and positions defined by specific corporate procedures.

The group companies – either directly or through trade associations – respond to the public consultations that the Authority holds on different activities in the sector, which are preliminary to defining new regulations or revising current regulations. The companies also participate in gathering data and in surveys conducted during the year for purposes of evaluating the status of the sector or of the individual services, and they periodically send the data requested in compliance with reporting obligations.

Lastly, the collaboration of group companies with the Authority also includes participating in technical round tables instituted by the regulator, where they have an opportunity to express their own contribution toward changes in the regulatory framework.