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Reference Scenario

Financial year 2010Financial year 2009Change %
Price of Brent Dated $/bbl79.4761.51+29.2
Exchange rate $/EUR1.331.39-4.77
Price of Brent Dated $/bbl59.7544.25+35.0

As regards the energy commodities, the price of Brent crude oil (ARA Spot Average), which has a significant impact on the unit cost of liquid and gas fuel on the domestic market, recorded average values higher than those recorded in 2009, from 61.51 dollars per barrel, to 79.47 dollars per barrel, with a peak of 91.36 dollars per barrel in November 2010 (Source: Quotidiano Energia / World Crude Table).

The causes of this increase are essentially the global economic recovery following the serious financial crisis of 2009. This recovery in the making is led by the increase in consumption throughout all sectors of the economy and particularly the energy segments by countries in the Far East.

Crude Oil price

In 2010, the average price of electricity in the Stock Exchange was Euro 64.1 per megawatt per hour, an increase of 0.3% compared to Euro 63.8 per megawatt per hour in the same period of 2009. The difference was most marked in the initial months of the year due to the significant decrease in commodity prices last year. In July, due to the concurrent peak in consumption and decrease in the EUR/USD exchange rate, there was an abrupt price increase which was then maintained in the months that followed due to the accompanying increase in the price of fuel.

The relatively low increase in the demand for electricity in 2010 totalling +1.8% compared to last year and the addition of further industrial capacity in a sector already operating at overcapacity, resulted in an additional decrease in the spark spread.

The slight spark spread recorded is actually rendering the situation of even modern plants more critical.


In regard to natural gas, prices in the Central-Northern European market were Euro 17 per megawatt per hour, up by 42/44% and concentrated in the middle of the year, as opposed to the typical decreasing seasonal trend and, in the month of December, a strong rally realigned continental prices at the Italian virtual exchange point (VEP). During this rally, the more moderate recovery led the prices to reach Euro 23.34 per megawatt per hour (+26.8) compared to 2009, reflecting the increases that took place in the summer season particularly.

The Italian market, which in 2009 envisaged a supply excess due to the coming into operation of new infrastructures during 2010 (GNL of Rovigo, 2nd step of Trans Austria Gasleitung TAG, and of Trans Tunisian Pipeline Company - TTPC) had to tackle a severe reduction in industrial and thermoelectric consumption, despite the 6.6% recovery in consumption compared to last year and nevertheless discounted the effects of significant overcapacity and the impact of SPOT supplies.

The major European and Italian operators, bound by long-term agreements with producers, were subjected to Take or Pay penalties for the second year and are now renegotiating their contract terms as regards both flexibility and price.

Within this context, the average value of the energy rate (QE) in 2010 (calculated referring to the Italian Authority for Electricity and Natural Gas, AEEG, resolutions no. 134/06, 192/08, 64/09 and 89/10 was Euro 0.2372 per cubic meter, compared to an average value of Euro 0.2497 per cubic meter in 2009 and an expected value of Euro 0.2770 per cubic meter for 2011, assuming that Resolution 89/10 will be confirmed. As can be inferred from these data, the oil price increase recorded during the last quarter of 2010 will mainly affect gas prices during 2011. This is naturally due to the effect of the delays associated with the formulas for updating gas prices.

Natural Gas price