With regard to control and monitoring operations relating to regulated activities, the Autoritą per l'Elettricitą e il Gas (AEEG) is legally entitled to conduct enquiries and investigations, and to initiate hearings, should operators be considered responsible for breaches of the terms and rules established by resolutions relating to this sector. When remedial action regarding the breach is in the power of defaulting regulated operators, this authority may issue cautions or official requests for compliance. Defaulting operators must provide explanations for their conduct.
Investigations are underway, with requests for information in the form of questionnaires drawn up by the authority. These enquiries regard the relations between distributors and sellers of natural gas and developments within the electricity and gas markets (the required information is collected separately with regard to the companies engaged in production, transport and storage, and sale and distribution activities). Two formal hearings in this regard are pending, concerning alleged non-compliance with mandatory safety standards and service quality standards at the Ferrara plant (Hera, resolution of 27 July 2005, no. 156) and alleged improper use of stored gas (Hera Trading, resolution of 23 February 2006, no. 37).
A formal hearing has terminated regarding alleged non-compliance with the mandatory standards applying to controls of the gas distribution grid at the Berra plant (Ferrara) (resolution of 27 July 2005, no. 155). The outcome was positive and the procedure was discontinued by the authority on receipt of the pertaining information. Hera Comm has received a caution/official request for compliance with regulations after it failed to send end customers mandatory information on installing procedures for gas installations (resolution of 2 March 2006, no. 42). Hera Comm must comply by 30 June 2006.
A previous caution/official request for compliance (resolution of 19 July 2005, no. 152), concerning mandatory safety standards and service quality in four plants managed by Hera SpA, led to adoption of measures such as determined full compliance with regulations (31/12/2005).
Hera has set aside 1.8 million euro as a result of previous litigation with the national social security institute, INPS, concerning claims for payment of contributions (litigation regards involuntary unemployment, social security benefits and sick-leave for blue-collar workers).
According to the terms of art.27 of law 62/2005, establishing the procedure for recovery of State aid declared illegitimate by European Commission Decision 2003/193, Hera has submitted the income tax returns relative to the tax periods pertaining to the measures for exemption. Local government bodies have agreed to indemnify Hera for any costs, loss or damage to the company arising out of mandatory regulations revoking tax benefits.