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Trading and Procurement Policy

As far as gas is concerned, the first six months of 2009 were dedicated, on the one hand, to balancing the contract portfolio and optimizing the short-term position and on the other hand to finalizing new contracts for the 2009-2010 heating season.

Shipping activities conducted by Hera Trading experienced the normal impact of winter weather, essentially in line with the forecasts made at the beginning of the heating season while assembling the trading portfolio.

The necessary periodical adjustments were made through purchase or sale settlements at the Virtual Point of Exchange, at conditions in line with or more favourable than the provisions of the budget.

What required focused and unexpected management attention was a drastic reduction in gas consumption in the thermoelectric sector, toward which Hera Trading was especially exposed on the sales side. This problem was resolved positively from the first warning signs, by sending most of the winter gas originally reserved for thermoelectric sector to the civil market (with ENI taking over a portion intended for REMI of Bologna).

During May, Hera acted before most other operators to remove the risk of expected action by the AEEG on the updating procedures for the Wholesale Marketing Component (CCI), by finalizing gas purchases intended for REMI under conditions that made the expected AEEG action irrelevant to Hera Comm. The delivery was been divided between two major national operators. At the same time, base load supplies were also finalized.

Concerning the Transitgas import contracts with VNG expiring next 30 September, technical and economic renewals terms were agreed in March, for 80 million m per year. At the same time, technical and economic terms were agreed to for providing Baumgarten with 120 million m per year using available capacity at Hera Trading.

As regards electricity, the first six months of 2009 were characterized by the management/optimization of Hera Comm's purchase portfolio through transactions carried out on the Stock Exchange and on bilateral and settlement platforms, by the optimization activities on the Day Ahead market of the Teverola and Sparanise plants, and on the Dispatching Service Market of the Teverola plant, achieving results significantly better than the provisions of the budget.

Very satisfactory were also the origination and trading activities in energy and environmental certificates, used not only for the brokerage activities in the short term, but also to reduce the exposure of Hera Comm.

As a result of participation in tenders at the end of 2008 and in 2009, Hera Trading remains one of the Sole Purchaser suppliers for the non-eligible market.

As regards management of the commodity and exchange risk, operations during the first half of 2009 were particularly intense and effective. They have now been consolidated in both the gas and electricity sectors through a concentrated risk portfolio, which provides for destructing formulas and for netting of positions and hedging of volumes. Hera Trading activated this instrument at the beginning of 2007 to manage hedging activities; today it is proving essential for dynamically and adequately operating on the wholesale and retail markets.


 
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