WORK WITH US |  General Archive |  Suppliers |  Contacts 
it-ITen-GB

Terna’s economic impacts

 

Our economic performance and their impact such as: benefits resulting from investments, the impact on electricity bills deriving from the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) incentive mechanisms, and the creation and distribution of added value

The electricity transmission service provided by Terna allows connecting production plants to the distribution grids and constantly maintaining the balance between production and consumption. 

It is therefore an essential service for guaranteeing to all citizens and to the production system the necessary electricity demand, through appropriate investments, both now and in the near future.  

According to the government concession, Terna is responsible for guaranteeing this service safely, continuously and at the lowest cost. Terna’s economic impacts can be identified as follows:

  • Economic return of Terna’s investments

    Terna’s investments aimed at improving the transmission service create an economic benefit for the community
    In 2017 Terna’s investments are equal to € 1,033.9 million, of which € 838.0 million are related to investments in Regulated Activities, i.e. remunerated by the ARERA, € 120.0 million in Investment incentives, € 63.1 million in Non-regulated assets and € 12.8 in Capitalised financial expenses.

    The most important investment are the ones allocated for grid development (NTG’s development plan), that are implemented only upon the condition that economic returns for the community (typically, lower electricity cost deriving from a more efficient production mix or from the capacity of importing less costly electricity) exceed the implementing costs.

    Other investments are aimed at the electricity service’s greater safety, for example, by developing automatic grid protection systems in cases of malfunctions for reducing the risk of outages (Electricity system’s safety plan). Both Plans are approved annually by the appropriate authorities.

  • Procurement and creation of employment

    In 2017, total expenditure on the procurement of services, supplies and works amounted to over €656* million, spread across 1,978 suppliers contracted during the year.

    Procurement activity indirectly creates employment: with regard to building sites alone, in 2017 Terna created employment of contactors and sub-contractors for a total of 4,028 full time employees. The Terna Group excluding Tamini had a workforce of 3,508 employees.

    Purchases from local and foreign suppliers (percentage of total procurement)

    2017

    2016

    2015

    Local suppliers 96 95 79
    Foreign Suppliers 4 5 21

    *The figure refers to the amount ordered during the year. This means the sum of the amounts allocated for all contracts (works, supplies and services) signed during the year.

  • The ARERA’s incentive mechanisms

    The current regulatory framework includes bonus and penalty incentive schemes aimed at encouraging service improvement, both in terms of technical reliability and cost. As is implicit in incentive mechanisms, upon reaching objectives, the benefit to service users will be a multiple of the incentive paid. 
    The bonuses/penalties connected to achievement of the objectives established in the incentive schemes are included in the total regulated revenue.
    €/m 2017

    RENS bonuses/(penalties)

    7.4

    Revenue

    7.4

    Mitigation and sharing mechanisms
    Contributions to the Fund for Exceptional Events
    Compensation mechanisms for HV users
    Contingent assets

    10.6
    2.4
    0.6
    (3.1)

    Costs

    10.5
    Total (3.1)
  • Tax law compliance

    Terna’s responsible approach to fiscal issues and to tax strategy is depending on its business model. Terna is first of all the Italian Transmission System Operator, that runs its activities within the National boundaries under Government concession, where regulated business is predominant. In such a framework, a strict compliance with fiscal norms is part of Terna’s commitment, in line with principles of the Code of Ethics, of the Administrative liability (231 Model) publicly available.

    Income taxes paid by the group in 2017 amounted to € 343.8 million; of which € 337.1 million referring to the Parent company Terna SpA. Regarding, instead, general and local taxes paid abroad by the Group in 2017, we note the following:

    - Terna: with reference to the activities relating to the Italy-Greece interconnector , income taxes totalling €2,183,516 were paid in Greece.

    - Terna Crna Gora carried out capital expenditure in Montenegro in 2017, amounting to €55,143,258, regarding design, supply and works, in line with the provisions of the procurement contracts relating to implementation of the project. The laying and protection of the pole 1 submarine cable was completed in 2017, as was installation of the sea electrodes in Montenegrin waters. 90% of the terrestrial cables have been laid and the structural works on the substation’s main pole 1 and pole 2 buildings have been completed. In terms of operating results for 2017, the company did not register any revenue and reported a loss of €610,760. Consequently, no income taxes were payable to the government of Montenegro. With regard to other taxes and charges, in 2017 the company paid property taxes totalling €29,778 (of which €26,201 was paid to the Municipality of Kotor relating to plots of land it owns, and the remainder to the Municipality of Podgorica in relation to the building used as the company's headquarters).

    - Tamini Group: €4,613 was paid, primarily including taxes on services and withholding taxes.

    - Terna Chile: the Group's Chilean subsidiary paid income tax amounting to 338,449,394 Chilean pesos, value added tax of 67,504,094 Chilean pesos, and municipal taxes of 3,819,146 Chilean pesos.

    - Brazil: as part of Terna Plus Srl's acquisition of the two Brazilian companies, Aletheia Consultoria e Assessoria Empresarial Ltda and Egecon Consultoria e Assessoria Empresarial Ltda, and the subsequent capital increases relating to them, financial transaction tax of €290,810 was paid in Brazil.

    All datas are available for download here:

  • Production and distribution of added value

    The added value is a measure of the revenues produced over a period of time. If this is referred to an entire country, the added value coincides with the GDP. In the case of a company, this is obtained by subtracting from the value of the production the expenses incurred for procuring intermediate goods and services for carrying out production. The result is revenues that correspond to what was allocated for remunerating employees (labor cost), shareholders (dividends distributed), financiers (interests on credit capital), the company itself (reserve allocations) and the Public Administration (taxes). 

    TERNA GROUP – VALUE ADDED STATEMENT (1)


     Units

    Financial year 2017

    Financial year 2016

    Financial year 2015

    A – Remuneration of employees

     euro

    322,058,429

    327,152,165

    303,071,673

    B – Payments to the government

     euro

    301,533,096

    320,643,092

    309,537,047

    C – Payments to credit providers

     euro

    97,746,883

    105,508,004

    179,544,713

    D – Payments to providers of risk capital (2)

     euro

    442,198,240

    414,058,352

    401,998,400

    E – Retained by the Company

     euro

    252,011,601

    213,870,808

    193,314,279

    TOTAL NET VALUE ADDED

     euro

    1,415,548,249

    1,381,232,421

    1,387,466,112


    (1) The amounts relative to the creation and distribution of the value added are taken from the Consolidated Financial Statements, which were prepared according to the international accounting standards IFRS/IAS. Specifically, the Terna Group has used the IFRS/IAS international accounting standards since 2005.

    (2) Payments to providers of risk capital in 2017 regard the interim dividend paid in November 2017 (€149.3 million) and the final dividend proposed to shareholders by the Board of Directors at the General Meeting held on 22 March 2018 (€292.9 million).