To protect the value of its shareholders’
investments, Enel has developed instruments for identifying, preventing and managing the risks connected with events that can damage its resources and critical processes, strategic
information and knowledge, operating continuity,
the quality of the service it provides its customers, and its corporate image. In addition, the Company has established a specific procedure for preventing and handling critical and dangerous events, which classifies them by type, the appropriate behavior, and the related responsibility for taking documents and information to outsiders, with
special reference to sensitive information that could influence the price of Enel shares on the stock market, as well as additional regulations that govern the proceedings of shareholders’ meetings.
A recent addition to these instruments is the
Dealing Code, a code of behavior for the management, processing and communication to the market of information regarding transactions involving financial instruments issued by Enel carried out by persons who have significant decision-making powers within the Company as well as access to sensitive information.
Instruments for the management and prevention of risks
48
Board of Directors
Member of
Number Internal Member of of other Audit Compensation Office Member Independent positions*** Committee Committee
Chairman Piero Gnudi ● 4 ●
Chief Executive Officer
General Manager Paolo Scaroni* 3
Director Mauro Miccio ● 1 ●
Director Franco Morganti** ● 1 ●
Director Fernando Napolitano ● 2 ●
Director Francesco Taranto** ● 4 ●
Director Gianfranco Tosi ● - ●
* Member with executive powers.
** Member designated by slates of minority shareholders.
*** Number of directorships or memberships on the boards of statutory auditors held by the person concerned in other companies listed on regulated stock exchanges (including foreign ones) and in banks, finance or insurance companies or significantly large companies.
Quorum required for the presentation of slates for the election of the Board of Directors: 1% of the share capital.
Number of meetings held in 2003
Board of Directors 19 Internal Audit Committee 13 Compensation Committee 19
34 > 35 Economic responsibility SUSTAINABILITY REPORT 2003
measures. Enel protects its businesses of generating electricity and selling electricity and gas (hereinafter called “commodities”) from changes in fuel prices and the euro/dollar exchange rate. The objective of Enel’s commodity-risk management is to stabilize the margins of the
businesses of generation and commodity selling by reducing or eliminating the risks connected with the volatility of commodity prices by using financial hedge instruments (derivatives), without which Enel’s economic results would be subject to potential instability.
Blackouts and
planned interruptions
During the night of September 28, 2003 the sudden collapse of international interconnections isolated the Italian electricity network and determined a blackout throughout the country except for Sardinia. In so far as they were concerned, the companies of the Enel Group restored the network and started up the plants again extremely quickly considering the seriousness and extent of the event.
The electricity service was restored in a few hours in much of the center and north of Italy and by the end the same day service had been restored throughout the country.
In order to help customers understand what was happening, detailed information was provided both through the press and on the www.enel.it
website regarding the regions and cities affected by the event.
Previously, on June 26, 2003, the simultaneous occurrence of anomalous weather conditions and the consequent leap in electricity demand made it necessary to resort to a plan of scheduled interruptions. Thus all distributors operating in Italy, including Enel Distribuzione, were ordered by the Operator of the National Transmission Network (GRTN) to put into effect the procedure of rotating preventive interruptions of end users in order to adjust electricity demand to the supply. Enel has in any case promoted initiatives to increase the security of the national network and has planned investment to improve the security of its own network.
With a guide-line issued on July 31, 2003 the Ministry of Productive Activities formally initiated the process for putting the Electricity Exchange in operation as from January 1, 2004. The objective of the Electricity Exchange is ensure that the demand and supply of electricity are in equilibrium and all producers, eligible customers and the Single Buyer will have access to it to freely choose their electricity supplier.
The system consists of a market:
> for electricity, managed by the Market Manager, which includes the “day-before market”, where by a certain time, every day, all producers inform the Manager of how much electricity each one is willing to supply the next day and at what price. At the same time, the GRTN tells the Market Manager how much demand is expected
for the following day. At this point the Market Manager compares these two data and establishes the price at which the demand forecast for the next day can be satisfied by the planned supply. If there are offers to supply electricity at prices exceeding the equilibrium threshold, such offers will not be considered;
> for adjustment, where each producer can revise his offers in order to optimize his business. When these first two phases are over, the Market Manager presents the production plan for the next day, with the related curve and prices;
> for the dispatching service, managed by the GRTN, which acts as a reserve to insure the national electricity system against contingencies.
36 > 37 Economic responsibility SUSTAINABILITY REPORT 2003
Enel’s net debt at the end of 2003 amounts to 24,174 million euros. The Company’s objective is to maintain its actual rating in the future.
Enel has an official rating established by the leading specialized rating agencies and intends to maintain a very high one, at least in the “strong A” bracket. That should continue to allow to it be able to access the financial market for significant amounts and at extremely competitive conditions. Enel mainy continuous relations with Standard & Poor’s and Moody’s.
There are currently 6 bonds listed and issued to the public in circulation, amounting to a total of 6,250 million euros, the details of which are shown in the table. Also outstanding are other bond loans issued in the form of
private placements by Enel SpA, in the amount of 735 million euros and by Enel I.H. BV in the amount of 838 million euros, bonds issued to the public by Camuzzi Finance SA in the anount of 200 million euros and other unlisted bonds issued by Enel SpA totaling 2,408 million euros.