PRESS RELEASE

ELECTRIC MARKET: ANTITRUST AUTHORITY ACCEPTS AND ENFORCES THE COMMITMENTS OF THE MAIN ENERGY COMPANIES ACTIVE IN THE SICILY MACRO AREA.

THEY WILL LEAD TO THE REDUCTION OF THE PRICE RANGE COMPARED WITH OTHER AREAS OF THE COUNTRY ON THE WHOLESALE MARKET

The actions presented by Enel and Enel Produzione as part of the investigation for abuse of dominant position, set a sale price cap for the wholesale market until the end of 2013. Edipower and its partners - A2A Trading, Edison Trading, Iride Mercato, Alpiq Energia Italia -  against whom a proceeding for alleged agreements restricting competition was launched, undertake to entrust solely to Edipower management of procurement activities and preparation of offers for the San Filippo del Mela (ME) plant and to bind these offers to the value of the variable costs.
The range between the Sicilian price recorded on the energy wholesale market and the price in mainland Italy areas should be reduced as a result of the commitments made binding by the Antitrust Authority and presented as part of two separate investigations by Enel and Enel Produzione (EP), and by Edipower, together with its “toller” companies (A2A Trading, Edison Trading, Iride Mercato, Alpiq Energia Italia, which, pursuant to the tolling agreement, supply fuel to Edipower and receive in exchange an amount of energy equal to the shares held in Edipower itself).
The two investigations were launched in January last year, on the basis of a report by the Italian Regulatory Authority for Electricity and Gas, which drew attention to an anomalous trend in prices on the wholesale electricity market in the Sicily macro zone, a market characterised by rising demand and lack of supply, to be solved only in 2013 when the 1000 MW power line between Sicily and mainland Italy enters service, and where significant market power is held by both Enel Produzione and Edipower.
In particular, the conduct of which EP and ENEL are accused consists in offering their power plants according to procedures aimed to keep the Sicilian area price at high levels during peak hours, causing an increase in the cost of electricity bought by all Italian customers: the wholesale National Single Purchase Price for Electricity (PUN) is calculated, in fact, from the weighted average of the sale prices of electricity in the different areas into which the country is divided. Furthermore, contracts stipulated outside the Stock Market base their parameters on the PUN. In order to have the charges of the Antitrust overturned, the Enel group has committed itself to set  a bid cap of €190/MWh for 2011. This cap, appropriately indexed to Brent oil prices, will also apply in 2012 and 2013.
Edipower and its toller companies, on the other hand, were alleged to have made an agreement designed to coordinate their supply strategies in order to exploit the vital role of the San Filippo del Mela (ME) plant during peak hours, so as to keep prices high on the Day-Ahead Market (MGP) and on the Dispatching Services Market (MSD). The toller companies committed themselves to entrust solely to Edipower fuel procurement activities and the preparation of electricity offers on the  Day-Ahead Market (MGP) and on the Dispatching Services Market (MSD) for the San Filippo del Mela plant, thus eliminating any risk that the tollers themselves could engage in anti-competitive behaviour in their commercial conduct as part of the performance of the Tolling Agreement.
Furthermore, Edipower has committed itself to complying - for the production plants of San Filippo del Mela identified as essential by Terna - with the “ordinary” regime which places constraints on offers formulated on the relevant markets for admissible cost recovery. Specifically, offers shall be formulated based on a price of zero during the hours in which Terna deems the San Filippo del Mela power plant to be essential to grid security in the Sicilian system, and for a price equal to variable costs during all other hours. In addition, such procedures for formulating offers appear appropriate for limiting the exercising of market power by the more efficient EP (combined-cycle) power plants and, therefore, producing a positive joint effect of the two commitments regarding Sicilian prices.

Rome, January 10th 2011