Main factors of the pricing framework

The criteria for determining of the tariffs for the regulated natural gas transportation activities, regasification of LNG, distribution and storage of natural gas are established by the Electricity and Gas Authority. Following are the main pricing factors for each of the regulated activities of Snam Rete Gas S.p.A, based on the regulatory framework in force as at 31 December 20103.

End of regulatory period
  • 31 December 2013
  • 30 September 2012
  • End of second regulatory period:
    31 December 2010
  • End of third regulatory period:
    31 December 2014
  • 31 December 2012
Calculation of regulatory asset base (RAB)
  • Revalued historical cost
  • Revalued historical cost
  • Revalued historical cost Starting 1 January 2011
  • Revalued historical cost
  • Deduction of recognised clean-up costs
  • Revalued historical cost
  • Parametric method for centralised assets
Return on regulatory asset base (pre-tax WACC)
  • 6.4% (transportation)
  • 6.9% (metering)
  • 7.6%
  • 7.1% Starting 1 January 2011
  • 6.7%
  • 7.6% (distribution)
  • 8% (metering)
New investment incentives
  • 1% for 5 years (on investments in safety)
  • 2% for 7-10 years (on investments for development of capacity)
  • 3% for 10-15 years (on investments for development of input capacity)
  • 2% for 8 years (on upgrading of existing terminals of less than 30%)
  • 3% for 16 years (on upgrading of existing terminals of more than 30%)
  • 4% for 8 years (on upgrading of existing capacity)
  • 4% for 16 years (on development of new storage fields)
  • 2% for 8 years (on replacement of cast-iron pipes and renovation of odorization systems)
Efficiency factor (X FACTOR)
  • 2.1% of operating costs
  • 0.5% of operating costs
  • 2% of operating costs
  • 1.5% of amortisation and depreciation Starting 1 January 2011
  • 0.6% of operating costs
  • 3.2% of distribution operating costs
  • 3.6% su of metering operating costs

In the paragraphs below, the main performance indicators are presented for each business segment4 in which the Group operates. As indicated in the previous chapters, following Eni’s acquisition of Italgas and Stogit which was concluded on 30 June 2009, the results for 2009 include the effects of the consolidation of the newly acquired companies from the third quarter of the year. In order to fully assess the operating performance of the respective activities, the results of the natural gas distribution and storage business segments are analysed in comparison to those for the whole of 2009.

(3) To ensure that complete information is provided for the natural gas storage business segment, the main pricing factors applicable as of 1 January 2011 which are effective from the third regulatory period (1 January 2011-31 December 2014) are also indicated. The information on the regulatory framework is provided, for each business segment, under the paragraph titled “Regulation - Natural gas transportation”, “Regulation - Liquefied Natural Gas regasification”, “Regulation - Natural gas storage”, “Regulation - Natural gas distribution” which contains the main resolutions of the Electricity and Gas Authority in regard to the determination of the tariffs applied in 2009 and 2010.
(4) The business segments (transportation of natural gas, regasification of LNG, distribution and storage of natural gas) as presented in the internal reports, were identified by their management and refer to the main activities carried out by Snam Rete Gas S.p.A, GNL Italia S.p.A, Stogit S.p.A, Italgas S.p.A and its subsidiaries, respectively.