Water

Operating figures, equity and financial results for the period

Operating data U.M. 31/12/2021 31/12/2020 Change % change
Water Volumes Mm3 532 530 2 0.4%
Electrical Energy Consumed GWh 726 691 35 5.1%
Sludge disposed of KTon 209 169 40 23.7%
Gas Delivered m3 83,453,608 57,354,910 26,098,698 45.5%
Gas No. of active Users No. 93,926 62,058 31,868 51.35%
Network Completed Km 844 835 9 1.1%
White certificates No. 4,220 4,066 154 3.79%

 

Equity and financial results
(€ million)
31/12/2021 31/12/2020 Change % change
Revenues 1,237.9 1,208.4 29.5 2.4%
Costs 582.6 594.0 (11.4) (1.9%)
EBITDA 655.3 614.4 40.9 6.7%
Operating profit/(loss) (EBIT) 307.7 309.9 (2.2) (0.7%)
Average workforce 3,475 3,292 183 5.5%
Capex 522.0 476.0 46.0 9.6%
Net Financial Position 1,681.4 1,483.7 197.6 13.3%

 

EBITDA
(€ million)
31/12/2021 31/12/2020 Change % change
EBITDA - Water Segment 655.3 614.4 40.9 6.7%
EBITDA - Group 1,256.1 1,155.5 100.6 8.7%
Percentage weight 52.2% 53.2% (1.0 p.p.)  

 

Year review

The EBITDA for the area at 31 December 2021 was € 655.3 million, an increase of € 40.9 million compared with 31 December 2020 (+6.7 %).
The increase is mainly attributable to Acea Ato2 (+€ 26.6 million) as a result of the higher value of ERC Capex valued on the basis of the MTI-3 with reference to the investments that came into operation in 2019 and FoNI, offset by the lower value of Capex, Opex and adjustments. The improvement in margins is due to cost efficiency (-€ 11 million), the increased capitalisation (+€ 8 million) the reduction in sludge disposal costs, due to the overcoming of the crisis in the management of sludge produced by the treatment plants within the region (-€ 7.2 million); Acea Ato5 (+€ 7.0 million) and AdF (+€ 2.3 million) both contributed to the increase in margins due to cost efficiency. The change in the scope of consolidation due to new consolidations is provided by SII (+€ 11.6 million) and Adistribuzionegas (+€ 3.1 million).
Finally, the contribution to EBITDA of water companies valued at equity, amounting to € 16.7 million, decreased by € 10.8 million due to the effect of decreases recorded by Publiacqua (-€ 5.9 million) and by the Gruppo Acque (-€ 3.2 million), mainly attributable to the increased amortisation and depreciation, also in consideration of the approach of the expiry of the concession.
The contribution to EBITDA of the companies valued at shareholders’ equity is detailed below:

(€ MILLION) 2021 2020 CHANGE CHANGE %
Publiacqua 4.7 10.6 (5.9) (55.3%)
Gruppo Acque 9.4 12.6 (3.2) (25.1%)
Umbra Acque 1.6 2.2 (0.6) (28.9%)
Nuove Acque e Intesa Aretina 0.7 0.8 (0.0) (2.8%)
Geal 0.2 0.8 (0.6) (69.1%)
SII 0.0 0.6 (0.6) (100.0%)
Total 16.7 27.6 (10.8) (39.3%)

The quantification of revenues for the period deriving from the integrated water service is valued in line with the new MTI-3 method.
The item includes the estimate of the tariff adjustments relating to the so-called carry-over items for the period that will be invoiced as from 2021. The following two tables in the section summarise on the one hand the status of the procedures for approving tariff proposals and on the other hand revenues from SII, broken down by company and component, as well as the considerations underlying the determination of revenues for the period.

The operating result was affected by the growth in amortisation and depreciation (+€ 34.9 million), mainly due to the consolidation of SII (+€ 8.5 million) and Adistribuzionegas (+€ 3.0 million) and the remainder to the higher amortisation and depreciation recorded by Acea Ato2, also due to the entry into operation of the new plants (+€ 19.6 million).

The average number of staff at 31 December 2021 was 3,475 people, an increase compared to the figure at 31 December 2020 of 183 people mainly attributable to Acea Ato2 (+71) and GORI (+78).

Investments in the Segment amounted to € 522.0 million, an increase of € 46.1 million, due to the higher investments made by Acea Ato2 (€ 32.9 million) and GORI (€ 6.0 million), while the consolidation of SII contributes € 8.3 million and Adistribuzionegas € 2.5 million. This change was offset by lower investments recorded by Acea Ato5 (-€ 6.3 million). The investments refer mainly to extraordinary maintenance work, reconstruction, modernisation and expansion of plants and networks, the reclamation and expansion of water and sewer pipes of the various Municipalities and work on purification and transport plants (ducts and feeders).

The Segment’s net financial position at 31 December 2021 stood at € 1,681.4 million, a deterioration of € 197.6 million compared with 31 December 2020, mainly attributable to Acea Ato2 for the investments for the period and for the operating cash flow dynamics.

Lazio - Campania area

Acea Ato2 

The Integrated Water Service in OTA 2 Central Lazio - Rome started on 1 January 2003. The management of the OTA Municipalities took place gradually and the Municipalities currently managed are 80 compared to 113 of the entire OTA. Nonetheless, compared to the previous year, it should be noted that on 14 July 2021 with Regional Council Resolution no. 10, which followed Regional Executive Resolution no. 752 of 3 November 2020 on the same subject, Optimal Territorial Area no. 2, Central Lazio-Rome, was modified including in it the Municipality of Campagnano di Roma, which previously belonged to OTA no. 1 North Lazio-Viterbo. In this way the total number of Municipalities of OTA 2 went up from 112 to the current 113. Further, the drinking water service of the Municipality of Arsoli was acquired from 1 December 2021, while the acquisition of the sewerage service will be carried out subject to the condition precedent laid down in the same Report. The following table shows the overall situation in the territory managed, which has not changed compared to the previous year.

Acquisition situation No. of
Municipalities
Municipalities that declared they do not wish to be part o the Integrated Water Service (*) 7
Municipalities with Protected Entity 2
Municipalities fully acquired into the Integrated Wate Service 80
Municipalities partially acquired, for which Acea Ato provides one or more services: 17
Municipalities to be acquired 7
(*) Municipalities with less than 1,000 inhabitants which had the right to express their
will in accordance with paragraph 5 of Legislative Decree 152/06.

The Company provides the full range of drinking water distribution services (collection, abstraction, retail and wholesale distribution).
Water is drawn from springs on the basis of long-term concessions.
Water sources supply drinking water to approximately 3,900,000 residents in Rome and Fiumicino and in more than 61 Municipalities in the Lazio region, via five aqueducts and a system of pressurised pipes.
Three further sources of supply provide non-drinking water used in the sprinkler system of Rome.

In 2021, Acea Ato2, in order to safeguard the sources of supply and implement an increasingly sustainable management of water resources, refined the study of the availability, in quantitative terms, of potential groundwater resources and the possible impacts related to the withdrawal of water resources through the monitoring of several variables and the implementation of appropriate interpretative 74 models. In addition, the campaign to reduce physical and commercial losses and improve network efficiency continued.
In particular, in 2021: 

  • the districting of a further 3,049 km of the water network was completed. The districting of the networks, namely the delimitation of the distribution districts (or measurement districts), has the purpose of making the network operation more efficient, controlling in detail the level of the losses in the individual districts and guiding the instrumental research activities for their reduction. Overall, as of 31 December 2021, there are approximately 10,700 miles of districted water mains that are continuously and remotely monitored with 2,222 sensors installed in the field;
  •  the search for hidden leaks was carried out through a punctual and systematic analysis of the networks according to the anomalies emerging from the monitoring of the water districts implemented; 
  • more than 100 pressure regulation devices have been installed, capable of implementing an active management of pressures and reducing the frequency of occurrence of breakdowns in distribution networks; 
  • implementation of remote monitoring of meters installed at supply sources continued, with the aim of optimising the quality of process measurement and the timeliness of measurement acquisition for the purpose of preparing a correct water balance;
  •  in several rural areas, devices have been installed to regulate flow rates at individual water meters, so as to limit consumption in the event of improper use of the water supply; 
  • actions aimed at ensuring the administrative regularisation of cases of unlawful withdrawals, supplies not reactivated, contracts not correctly transferred from previous managements, etc., continued, including with the use of new strategies; 
  • the census and georeferencing of managed networks continued, with a further 450 km of managed network acquired on the geographical system.

As at 31 December 2021, Acea Ato2 manages a total of approximately 7,011 km of sewerage network, 675 sewerage pumping stations — of which 180 in the Roma Capitale area — and a total of 160 waste treatment plants — 33 of which in the Roma Capitale area — for a total quantity of treated water equal to 591 Mmc (data referring to managed treatment plants only at 31 December 2021).

The company manages the waste treatment system and pumping stations that serve the network and sewage trunk lines.
As of 31 December 2021, the six main treatment plants had treated a volume of water equal to about 16.37 Mmc in line with the volume treated during 2020 (16.20 Mmc).
In 2021, the programme of real-time monitoring of the flow rates treated by the plants continued, which to date have reached a total of 591 Mmc out of 160 managed plants.
With regard to the production of solid and liquid matter, once the critical situations dictated by the sludge emergency and the Covid have been overcome, there are no critical situations and the overall downward trend in production is confirmed, mainly due to the reduction in sludge following the construction of drying plants and the optimisation of anaerobic digestion processes in the main plants, as well as the construction of ozonolysis installations.
With regard to analytical certificates for sludge and waste, in 2021 there was a slight decrease in the number of analyses carried out by Acea Elabori (external certified laboratory) compared to the average for the same period in previous years, also as a result of the lack of parallel special sampling by ARPA due to the Covid-19 emergency. It should also be noted that the number of determinations reported on most analytical certificates has increased (more extensive types analysed).
Lastly, it should be noted that the shareholders’ meeting of 20 December 2021 resolved to increase the share capital in divisible form by payment from € 362,834,320.00 to € 362,834,340.00, through the issue of 2 shares with a nominal value of € 10.00 to be reserved for the municipalities of Fonte Nuova and Campagnano di Roma, with the exclusion of option rights, pursuant to paragraph 5 of art.2441 of the Italian Civil Code and to set 31 December 2022 as the deadline for the subscription and execution of the approved increase.

 

Acea Ato5 

Acea Ato5 provides integrated water services on the basis of a thirty- year agreement signed on 27 June 2003 by the company and the Frosinone Provincial Authority (representing the Authority for the OTA comprising 86 Municipalities). In return for being awarded the concession, Acea Ato5 pays a fee to all the municipalities based on the date the related services are effectively acquired.
The management of the integrated water service in the OTA 5 region – Southern Lazio – Frosinone involves a total of 86 Municipalities (the management of the Municipality of Paliano still remains to be acquired, while the Municipalities of Conca Casale and Rocca d’Evandro are “outside the scope”) for a total population of about 489,000 inhabitants, a population served of 455,164 inhabitants, with a service coverage equal to approximately 93% of the territory.
The number of users is 201,878.
The drinking water system comprises supply, abstraction and distribution plants and networks that use 7 main sources from which an equal number of aqueduct systems originate.
The sewerage and treatment system comprised a network of sewers and collectors connected to waste water treatment terminals.
There are 229 sewerage pumping stations managed by the Company and 127 treatment plants, including the “inaccessible” plants and those outside the OTA (Rocca d’Evandro and Conca Casale).
In 2021, the digitisation of the networks of the managed area continued, with the inclusion of data in the GIS - Geographic Information System. According to the 2019-2022 plan for significant activities, as at 31 December 2021 the size of the water network is 6,027 total km (1,207 km supply +4,820 km distribution).

With regard to the acquisition of the plants relating to the management in the Municipality of Paliano, in November 2018 the Council of State finally decided on the appeal filed by the Municipality of Paliano against the decision of the Regional Administrative Court no. 6/2018 — which upheld the appeal filed by the Company against the Municipality of Paliano, in order to obtain the annulment of the measure by which the Municipality opposed its refusal to transfer the service — with decision no. 6635/2018 rejected the appeal filed by the Municipality of Paliano and consequently upheld the decision handed down by the Regional Administrative Court of Latina, reaffirming that the safeguard regime granted to AMEA was “limited to a period of three years from the date of signing of the Management Agreement between OTAA 5 and Acea Ato5; this deadline therefore expired in 2006, so that, after that date, AMEA’s management was to be considered without title”.
Since Acea Ato5 has so far failed to initiate compliance proceedings with a view to verifying the voluntary compliance of the Municipality, which is suitable for preventing the possible appointment of an acting commissioner as has already happened in similar cases, a series of meetings have taken place at the Operational Technical Secretariat of OTAA 5 Lazio Meridionale - Frosinone aimed at seeking an amicable settlement of the dispute and at initiating the preparatory activities for the transfer to Acea Ato5 of the management of the IWS in the Municipality of Paliano. In this perspective, the Parties — with minutes of 26 November 2018 and 29 November 2018 — performed the update of the previous survey of networks and existing plants in the Municipality of Paliano, necessary for the management of the IWS.
To date, the parties are sharing the IWS handover report, which should also result in the waiver of pending litigation between them.
The Parties subsequently held other meetings in order to define not only the technical scope but also the administrative and commercial scope in order to finalise the transfer of the Management of the Water Service of the Municipality of Paliano to Acea Ato5. However, the Municipality has not provided all the requested information.
Acea Ato5 informed the OTS of this situation on 3 December 2020, and, in the meantime, on 15 December 2020 the Lazio Region also requested clarifications from the Municipality of Paliano and the Area Authority regarding the non-completion of the operations to transfer the Integrated Water Service to Acea Ato5, warning that in the event of failure to comply with this obligation, procedures would be initiated for the application of substitute powers pursuant to art. 172, paragraph 4 of Italian Legislative Decree no. 152/2006, as amended. The Municipality of Paliano requested an extension to the deadline of thirty days assigned by the Lazio Region. We are therefore awaiting the initiative of the Municipality of Paliano and the Area Authority required to finalise the transfer of the IWS of the Municipality of Paliano.
With regard to the Municipality of Atina, whose management of the IWS has been transferred to Acea Ato5 as of 19 April 2018, it should be noted that Municipal Council Resolution no. 14 of 17 April 2019, by which the Municipality resolved to “establish the sub/optimal territorial area called Atina Territorial Area 1, with reference to optimal territorial area no. 5, for the continuity of the autonomous and direct management of the water service pursuant to art. 147, paragraph 2-bis of Italian Legislative Decree no. 152/2006, declaring the Integrated Water Service a ‘local public service without economic importance”.
OTAA 5 appealed the above resolution before the Lazio Regional Administrative Court - Latina Section — also serving the Company and the Lazio Region.
As far as Acea Ato5 is concerned, while the legal action taken by the AGB is suitable to protect the interests of the Company, it has deemed it appropriate to file suit.
On 1 June 2021 with Note no. 2241/2021 the Lazio region also expressed itself on the subject, repeating the unacceptability of the Municipality’s request for recognition of the Atina 1 Sub Area within the Optimal Territorial Area 5 Frosinone, because this would be contrary to the current national and regional legislation (Italian Legislative Decree No. 152 of 3 April 2006, and Regional Law no. 6 of 22 January 1996). The Municipality therefore continues to have the obligation to award in free concession of use to the operator of the integrated water service the water infrastructures it owns, as provided for in art. 153 paragraph 1 of Italian Legislative Decree 152/2006.

With reference to significant events during the period and the complex state of litigation, it should be noted:

Appeal to the Lazio – Latina Regional Administrative Court (docket no. 308/2021 section I) for the annulment of Resolution no. 1 of 10 March 2021
Acea Ato5 presented an appeal to the Lazio Regional Administrative Court, Latina section, for the annulment, following adoption of adequate precautionary measures, of Resolution no. 1 of 10 March 2021 (published on 18 March 2021) with which the Mayors’ Conference of Ato5 containing the 2020-2023 Tariff Decisions pursuant to ARERA Resolution no. 580/2019/R/idr “Approval of the Water Tariff Method for the third regulatory period MTI-3”, as amended, approved the proposed tariff of the IWS (integrated water service) for the 2020-2023 regulatory period, in the part where it does not include the grounded requests of the Operator Acea Ato5 regarding the recognition of greater costs for the adjustment to the quality standards of the service (OpexQC), the recognition of greater costs for unpaid amounts (COmor), as well as the part where it refers to the recognition of adjustments due to the operator (RcTOTa) in subsequent regulatory periods and at the end of the concession (on the Residual Value – RV at end of concession).

At the hearing on 26 May 2021, the Regional Administrative Court, recognising that the matter was highly complex and required further analysis, set the trial for 15 December 2021. On 21 December 2021, the Lazio Regional Administrative Court - Latina Section with Sentence no. 691/2021 deemed the appeal inadmissible. The Company appealed to the Council of State with a hearing set for 10 March 2022, at the end of which the Board rejected the precautionary petition.

Injunction order for payment of € 10,700,000 and counterclaim by OTAA 5 for concession fees
On 28 February 2017, sentence no. 304/2017 of the Court of Frosinone was published, related to civil judgement RG 1598/2012, pending between Acea Ato5 and the Optimal Territorial Area Authority no.5.
Indeed we recall that Acea Ato5 SpA had acted, in 2012, with the proposition of a monitory action intended for the recovery of its credit (for the amount of € 10,700,000.00) arising from the Settlement Agreement signed with the Area Authority on 27 February 2007, in implementation of the resolution of the Mayors’ Conference no. 4 of 27 February 2007 relating to recognition of higher operating costs incurred in the three-year period of 2003-2005 in the start-up phase of the Concession.
The Area Authority had opposed the injunction, disputing the existence of the credit and the validity of the Transaction on the presumption that the same had been replaced by the annulment by own determination of Resolution no. 4/2007 (made as a result of subsequent Resolution of the Mayors’ Conference no. 5/2009).
Furthermore, the same Area Authority had disputed the legitimacy of the Transaction, since, in its words, the same had been adopted in violation of the regulations in force pro-tempore and specifically the Normalised Method as per Italian Ministerial Decree 1.08.1996.
Finally, the Area Authority — in formulating an objection to the injunction order, for the substantial reasons mentioned above — had also filed a counter-claim intended to obtain the payment from the Company of the concession fees related to the 2006-2011 period and quantified as € 28,699,699.48.

In this context, the Court of Frosinone, with sentence no. 304/2017: 

  • rejected the grounds for opposition formulated by the Area Authority, highlighting, on the one hand, that the annulment, by own determination, of Resolution 4/2007 (as a result of subsequent Resolution no. 5/2009) had no effect on the underlying private relationship, and therefore on the validity of the Settlement Agreement of 27.02.2007; on the other hand, that the Transaction did not violate the Normalised Method since the so-called “price cap” principle is only valid for any tariff increases.
    However, it did annul the injunction order on the assump tion of the nullity of the Resolution of the Mayors’ Conference no. 4/2007 and of the Settlement Agreement adopted by the Area Authority in violation of the public regulations requiring the identification of the financial coverage of the act itself; 
  • rejected the requests made by the defending counsel of Acea Ato5 alternatively (in the event that the Settlement Agreement had been declared invalid), intended for the recognition of the credit by the Area Authority; 
  • referred the case for pre-trial examination as regards the counter- claim formulated by the Area Authority, which, it is useful to note, in its closing briefs nevertheless recognised the successful payment, by the Operator, of a large part of its debt, describing the existence of a residual credit of approximately € 7,000,000.00. At the hearing on 17 November 2017, the following documents were filed on behalf of Acea Ato5: copy of the transfer of 31 July 2017 for € 2 million; copy of the transfer of 4 October 2017 for € 2,244,089.20 and the Acea Memo dated 16 November 2017. With reference to the latter memo, the following were highlighted:
    • a. the commitment of Acea Ato5 to pay € 1,370,000 by December 2017;
    • b. the dispute of any other indebtedness regarding concession fees.

In response to production of the above documents, the counterparty – initially convinced to recognise the sums of the transfers of 31 July 2017 and 4 October 2017 as contributing to the sums due by Acea Ato5 for the Concession Fee — acknowledged the production of the documents, declaring the requirement, including due to the content of the Memo dated 16 November 2017, to “refer” to OTAA 5. In light of the above, the Judge, having acknowledged the counterparty request, postponed the hearing to 27 February 2018.
During the aforesaid hearing, documents were submitted attesting to the latest payments by Acea Ato5 in favour of OTAA 5.

Consequently, the Company — through its lawyers — described that:

a. in response to the commitment to pay € 1,370,000 by December 2017 — Acea Ato5 paid:

  • € 1,287,589 on 5 January 2018, directly to OTAA 5; 
  • € 85,261.93 on 22 November 2017 to the Consorzio Valle del Liri (as part of the larger payment of € 178,481.68 in execution of the settlement agreement of which said Area Authority is part, in which, under art.2.1, it was acknowledged that the payment of € 178,481.68 would count towards the 2010-2011-2012-2013-2016 fees); for a total of € 1,372,850.93;

b. with these latest payments, Acea Ato5 has fully paid the entire concession fee related to the 2006-2012 period: the above is also expressed by Executive Resolution of the OTS no. 88 of 08.11.2017. In particular, express recognition is given of the fact that “in response to established and/or subsequent payments of the concession fee by the Operator, it has to date paid up to the year 2012”.

At the outcome of the aforementioned hearing, the new Judge who took charge of the case, having noted the discrepancies that emerged in the respective accounts of Acea Ato5 and OTAA 5, granted a postponement to 4 May 2018, inviting the parties to clarify the reasons for such discrepancies and specifying that if they could not the court would appoint an expert to do so. At this hearing there was a further postponement until 21 September 2018.

At this meeting, in light of the Conciliation Panel established on 11 September 2018 with OTAA 5 — pursuant to art. 36 of the Management Agreement to which the question concerning the determination of concession fees was also referred, among others — the Parties asked the judge for a postponement, the hearing being scheduled for 15 February 2019, then postponed to 17 September 2019. At this hearing there was a postponement until 20 December 2019. The proceedings were first postponed to 17 March 2020, then automatically postponed to 11 September 2020 and then to 15 December 2020. The case was further postponed to 12 February 2021, then again to 26 March 2021. At the hearing on 27 April 2021, the Judge reserved judgement on the technical expert and, on 30 April 2021, set the date to appoint the expert for 11 May 2021 and, subsequently, the launch of the expert appraisals for 26 May 2021. The technical expert’s report was to be submitted by 10 November 2021 and the technical expert’s examination was set for the hearing on 30 November 2021. At the subsequent hearing of 15 December 2021, the Company formalised a settlement proposal, in order to settle the dispute amicably. This proposal will be evaluated by the Mayors’ Conference of OTAA 5. The Judge set the hearing for 12 April 2022 for the definition of the conclusions.

In connection with these proceedings, the appeal — RG 6227/2017 — must be considered against judgement no. 304/2017 of the Court of Frosinone that revoked the court order of € 10,700,000, initially issued by said Court.
The first hearing was automatically postponed to 11 May 2018. On this occasion the Court, having heard the respective positions of the parties, postponed the case to 20 November 2020 for the oral discussion and the ruling of the sentence pursuant to art. 281 sexies of the code of civil procedure. The proceedings were postponed to 30 June 2021. At the hearing on 30 June 2021, the Court of Appeals adjourned the hearing ex officio to 6 July 2022.

The Company did not consider cancelling the receivable or setting aside any risk provisions for two reasons:

  • the issue in question, which relates to the recognition of the amount owed by the Operator (of € 10,700,00.00) in connection with the 2007 settlement, the subject of sentence no. 304/2017 of the Court of Frosinone, appealed by Acea Ato5 to the Court of Appeal of Rome (RG no. 6227/2017), was referred to the Conciliation Board for further investigation, including legal matters;
  • the legal assessments made by the lawyers illustrate, on the one hand, the validity of the appeal and, on the other hand, the fact that the nullity of the transaction does not in itself determine the non-existence of the receivable.

The validity of the appeal and of the decision not to cancel the receivable were further confirmed by the conclusions of the Conciliation Board, established by the Area Authority and the Operator, in accordance with the provisions of art. 36 of the Management Agreement, in order to reach a settlement of the various disputes pending between the parties.

In the Conciliation Proposal sent to the parties on 26 November 2019, previously approved by the Board of Directors of the Company on 19 December 2019 and currently being examined by the Mayors’ Conference of OTAA 5, the Conciliation Board has in fact, among other things:

  • ascertained the existence of significant differences between the concession fees approved in the various tariff arrangements and the amounts to be paid to the Municipalities. In the opinion of the Board, the actual existence of such differences leads one to believe that Resolution no. 4/2007 of the Area Authority was based on credible elements, also found afterwards, where it identified the “savings on the concession fees to be paid to the Municipalities” (which could constitute the financial funding to pay a loan stipulated by the Area Authority) as the financial coverage for the payment to the Operator of the sums envisaged in the settlement. This conclusion, highlighting the plausibility of the sources of coverage identified by the Area Authority to finance the settlement, confirms the validity of the appeal filed by the Company against sentence no. 304/2017, by which the Court of Frosinone declared the nullity of Resolution no. 4/2007 of the Area Authority and of the settlement agreement precisely because of the alleged failure to identify the related financial coverage in violation of the disclosure regulations, since the reference to “unspecified savings on the concession fees to be paid to Municipalities” was not considered adequate and sufficient; 
  • considered that there are valid and grounded reasons to grant the Operator’s request for recognition of higher operating costs incurred in the three-year period 2003-2005 to the reduced extent agreed to by the parties in the settlement, thus confirming the existence of the corresponding receivable in the Company’s financial statements.

At the hearing on 30 June 2021, the Court of Appeals adjourned the hearing ex officio to 6 July 2022.

Updating of the concession fee
With resolution no. 1 of 26 March 2018, Conference of Mayors ordered that the payment of the instalments of loans taken out by Municipalities, from the second half of 2013 until the end of the Concession, shall be disbursed directly by the Operator. Consequently, with the tariff update ordered on 1 August 2018, by immediately implementing the provisions made by ARERA contained in the sanctioning measure DSAI/42/2018/idr, with regard, among other things, to the fees relating to unmanaged Municipalities, the mortgage component of the Concession Fee was adjusted in 2019 by adding the amount of the same specified in the annex to aforesaid resolution no. 1 of 26 March 2018. No adjustment of the mortgage component was implemented for the years 2013-2017, as Resolution no. 1 of 26 March 2018 did not imply any change to the amount of the mortgage component approved in the various tariff provisions.
In addition, any recalculation of loan costs (MTp) must be approved by the Conference of Mayors and must be included in the Economic and Financial Plan (EFP) of the next tariff update in view of the fact that, even at the time of approval of the tariff update 2018-2019, approved by the Conference of Mayors on 1 August 2018, nothing was established regarding the fees for the above years.

For the reasons set out below, the Company did not consider that the obligation to pay this difference to the Area Authority had failed, and therefore it did not reduce the provisions in its financial statements for concession fees:

  • the aforementioned Resolution of the Conference of Mayors has made no provision for the difference; 
  • in compliance with the regulations in force, the quantification of the concession fees is the exclusive responsibility of the Area Authority and therefore any recognition of the difference (with consequent extinction of the relative obligation) can only take place following the revision of the tariffs for the years 2013-2017 and the relative Economic and Financial Plan (EFP) by the Area Authority; 
  • when reviewing the tariffs for the two-year period 2018-2019 and the related EFP, the Area Authority implemented the reduction in concession fees only as from 2018 (with a substantial reduction of about € 1,658 thousand in 2018), leaving those for the 2013-2017 years unchanged; 
  • for the 2013 financial year, the AGB had issued invoices to the Company for the difference between the concession fee resulting from the relevant tariff and the charges for the loans that the Operator had paid to the municipalities based on the aforementioned Resolution; 
  • the exact quantification of the concession fees for the aforementioned years and the assessment of their reallocation and treatment for tariff purposes was an open issue for both parties, so much so that it was referred to the Conciliation Board established between OTAA 5 and the Operator, in accordance with the provisions of art. 36 of the Agreement.

It should also be noted that since it is a so-called “pass-through cost” in the tariff definition, i.e. charged as a tariff without any economic return for the Operator (a sort of collection on behalf of third parties), its effect is substantially neutral in the Operator’s financial statements: it is recorded as revenue and at the same time and in equal measure as a cost. For this reason, even if the Company mistakenly did not fulfil its obligation to pay the difference and recognised out-of-period income as an adjustment to the amount due for the concession fee, it would have had to recognise out-of-period income of the same amount following a reduction in the adjustments for the years 2013-2017, with clear economic effects that are insignificant from both a statutory and fiscal point of view.
It should be noted that on 27 November 2019 the aforementioned Conciliation Board submitted to the Company and to the Area Authority a specific Conciliation Proposal, with an attached deed still to be signed. In these documents, the Conciliation Board has, among other things, put forward a proposal to reduce the tariff adjustments claimed by the Operator by the difference of € 12,798 thousand between the concession fees approved in the various tariff arrangements for the years 2013-2017 and the amounts to be paid directly to the municipalities on the basis of Resolution no. 1 of 26 March 2018. This proposal for allocation to offset existing receivables confirms the Operator’s indebtedness of this difference, corroborating the Company’s decision not to release the related liabilities in its financial statements.

Conciliation Board with OTAA 5 and subsequent discussions with the AGB
With regard to relations with OTAA 5, the Company has tried to reach a settlement of the various disputes pending against the Area Authority, convinced of the need to put an end to a very long season of clear conflict between the Granting Body and the Licensee Company, culminating with the resolution passed by the Conference of Mayors of OTA 5 aimed at the termination of the Management Agreement that forced the Company to appeal to the Latina Regional Administrative Court that annulled the above resolution.
In this context, in recent years and especially during 2018 an enormous effort has been made — including organisational efforts — to reconstruct the relations between the Company, the Area Authority and the individual Municipal Administrations of Ato 5.
Similarly, the possibility of establishing a Conciliation Board with the Area Authority has therefore become concrete, with the aim of settling the main issues still in dispute by the parties.
In this regard, on 11 September 2018 OTAA 5 and the Company signed report no.1 in which the parties expressed their mutual willingness to open a Conciliation Board on the various disputes pending between them.
Also in the same minutes, the Parties shared the rules of operation of the Conciliation Board and the criteria for the appointment of that Board and, in particular, each party appointed its own member.
The Chairperson of the Conciliation Board was selected by the Prefect of Frosinone, at the joint request of the parties, and was jointly appointed on 16 May 2019. The Board officially took office on 27 May 2019, thus starting the 120-day period within which it had to arrive at a proposal for an amicable settlement of the issues submitted for its assessment. On 17 September 2019, the Conciliation Board announced that it had completed the preliminary work on all the items assigned to the roundtable. However, it noted that due to the number and complexity of the issues under examination, a considerable amount of work was required to prepare a document presenting a comprehensive and reasoned conciliation proposal. It therefore requested and obtained from the parties an extension of 30 days from 24 September 2019.
Following a detailed and in-depth investigation, the Conciliation Board prepared a draft of the Conciliation Proposal, presented to the parties’ legal counsel at the meeting held on 11 November 2019.
At that meeting, the Parties invited the Board to draw up a draft of the Conciliation that would take into account the report illustrated in that meeting, as well as the proposals made by the Operator, to be submitted for examination and approval to the relevant Bodies.
On 27 November 2019, the Conciliation Board submitted the final Conciliation Proposal to the Parties together with the draft of the Conciliation Deed, which each party will be free to accept or reject, i.e. to accept it in full or even only in part. As a matter of fact, the aim and underlying criterion of the assessments of the Board include the formulation of a unified conciliation proposal, capable of creating balance between the respective positions and interests of the parties, minimising the negative impacts on users and on the service tariff and which will allow for the establishment of a more pleasant atmosphere in relations between the Operator, the Area Authority and the users of OTAA 5, overcoming the previous period characterised by conflict, which also caused serious detriment to the Operator in its relations with users.

Specifically, with reference to the individual mutual claims referred for its assessment, the solutions proposed by the Conciliation Board in the aforesaid Conciliation Proposal are as follows: 

  • judgement pending with the Court of Frosinone, docket number 1598/2012, relating to the 2006-2011 licence fees - the Board of Arbitrators would propose recognition of the debt owed by the Manager for the requested amount of € 1,750,000 (it should be noted that this amount is to be understood as an additional recognition with respect to the amount indicated in the settlement proposal made in the context of the aforementioned pending proceedings - see the description in the preceding paragraph “Injunction order for € 10,700,000 and counterclaim OTAA 5 concession fees”); 
  • quantification of the concession fee relative to the period 2012- 2017, and the linked destination of any economies for a total of € 12,798,930.00 - the Board proposes, also taking into account the regulatory guidelines provided by ARERA, that these are taken out of the tariff adjustments in favour of the Operator; 
  • recognition of the amount owed by the Operator (€ 10,700,00.00) — the Board proposes recognition of this credit in favour of the Operator; 
  • compensation of damages suffered by Acea Ato5 against delayed delivery of services by the Municipalities of Cassino, Atina and Paliano — the Board holds the Operator’s claim to be founded but, in consideration of the difficulty in quantifying the damage suffered and with an eye to amicable settlement, proposes that the Operator renounces this claim with regard to the Area Authority; 
  • compensation of damages for the lack of handover of the ASI and Cosilam plants, assessed in the amount of € 2,855,000.00 — the Board holds that the requirements to dispute a deed which is now final are not met; nonetheless, the Operator will renounce the claim against recognition of the credit for € 10,700,000.00; 
  • recognition of penalties totalling € 10,900,000.00 applied by AATO 5 against the Operator and annulled by the Latina Regional Administrative Court by judgement no. 638/2017; Although the Operator has substantially renounced the application of the said penalties related to the period 2014-2015, the Board proposes partial acceptance of the Area Authority’s claim for a total amount of € 4,500,000. In relation to this point, the Conciliation Proposal provides for an irrevocable commitment to make investments, in the territory of the Ato 5, of an amount corresponding to the quantification made by the Conciliation Board, with no tariff recognition and therefore at the total expense of the Operator; 
  • recognition of interest on the delayed payment of concession fees on the part of Acea Ato5, assessed in the amount of € 650,000.00 — the Board proposes recognition of this claim;
  • request for an Operator repayment plan in relation to the Area Authority for debt positions relating to the concession fee for 2013/2018 which, at 30 June 2019, amount to around € 10,167,000.00 — the Board proposes offsetting this debt by the recognition of a credit of € 10,700,000.00; 
  • discounting of the Adjustments 2006/2011, and for 2014, 2015, 2016 and 2017, assessed in the amount of € 1,040,000.00 — the Board proposes recognition of this credit in favour of the Operator; 
  • non-invoicing of adjustments 2006/2011, due to the adjustment of 2012 volumes, assessed in the amount of € 1,155,000 — the Board proposes recognition of this claim in favour of the Operator.

The “Conciliation Proposal” and the draft “Conciliation Deed” were approved by the Company’s BoD at a meeting held on 19 December 2019. On 4 February 2020, the Company informed the OTS of AATO 5, with note no. 53150/20, that on 19 December 2019 the BoD approved the Conciliation Proposal formulated by the Conciliation Board and the draft of the Conciliation Deed between AATO 5 and Acea Ato5 and that, moreover, the Chairperson was given a mandate to sign the Conciliation Deed, confirming in particular the commitment to carry out interventions for a total amount of € 4,500,000 without any tariff recognition, in conciliation and for the reasons set out above.
However, in light of the conduct throughout the conciliation process, and in particular during the final meeting held on 11 November 2019 in which the Conciliation Board explained the Conciliation Proposal to the legal representatives of the parties and as the Company’s Board of Directors had already approved the related Conciliation Deed on 19 December 2019 and then communicated this decision to OTAA 5 on 4 February 2020, the Company believed that as at 31 December 2019 an implicit obligation had already arisen for the commitments envisaged in the Conciliation Deed, and in particular for the aforementioned commitment to carry out interventions in the territory without any tariff recognition, having already created a valid expectation in the OTAA 5 Area Authority and in the municipalities of the territory that the Company intends to honour these commitments and bear the related charges. Based on the information available, considering the approval of the Conciliation Deed by the Conference of Mayors to be probable and consequently also considering the related implied obligation to be likely, at the end of 2019 the Company decided to allocate a provision for risks for € 4,500,000.
To date, the Conference of Mayors has not yet been scheduled for final approval of the two documents. Specifically, it should be noted that the Mayors’ Conference on 28 October 2021 resolved that the approval of the Conciliation Deed could only be considered upon the outcome of, at least, the preliminary phase of the Criminal Proceeding 2031/2016 pending before the Court of Frosinone.
Subsequently, on 26 January 2022, the OTS of OTAA 5 sent the Company a letter ordering it to set up an interest-bearing escrow account within 15 days at the latest, into which the sum of € 12.8 relating to the aforementioned savings on concession fees for the period 2012-2017, as quantified in the joint report of 29 April 2019 attached to the work of the conciliation roundtable, which — according to the OTS — was allegedly invoiced by the Manager, would be transferred. The Company acknowledged this letter on 10 February 2022, pointing out, among other things, that the Conciliation Board itself in its report, with specific reference to the savings on the 2012-2017 licence fees, had clarified that “these sums can only be considered virtually and abstractly (and not also in actual financial terms) as being available to the Manager” and that they would indeed represent a suitable financial source to cover the debt of € 10,7 million owed to the Manager or, alternatively, — as proposed in the draft conciliation agreement — to reduce the total amount of the tariff adjustments still due to the Manager, which far exceed the amount in question.
However, the Company is willing to set up a round table to discuss the matter further and find the most suitable solution to reconcile their mutual interests. As of the date of this report, no response to this note has been received from the OTS of the AGB.

In view of the foregoing and pending the examination of the Conciliation Proposal by the Conference of Mayors of OTAA 5, the Company considers the draft Conciliation approved by the Board of Directors of Acea Ato5 at the meeting of 19 December 2019, as a still valid reference in relation to the overall composition of the issues submitted by the parties to the Conciliation Board and, therefore, considers that the same continues to represent — to the extent of the net amount of € 4.5 million to be paid to the AGB under it — an implicit obligation that can be enforced against it.
Therefore, the provision for risks originally recorded in the financial statements as at 31 December 2019 is deemed to be reconfirmed when preparing the Company’s 2021 financial statements.

As further confirmation of the continuing validity of the Conciliation Proposal between the parties, it should be noted that on 1 February 2022, the AGB requested the payment of the invoices for concessionary charges issued with reference to the years 2019- 2022 and not those issued with reference to the years 2012-2018, which were the subject of the Conciliation Board meeting.
The Company responded to this reminder with three separate letters sent on 3 February 2022, 17 February 2022 and — most recently — on 2 March 2022, in which, respectively, it disputed the amounts of some of the invoices requested by the AGB (the amounts of which do not match those of the invoices in its possession), it put forward a proposal for a payment by instalment plan and reiterated, however, that this instalment proposal is not an alternative to the Conciliation Board, nor does it change its content in any way, but only concerns the settlement of the portion of debts referring to the 2019-2021 period.

Criminal proceeding no. 3910/18
With regard to criminal proceeding no. 3910/18 RNGR of the Public Prosecutor in the Court of Frosinone, on 2 January 2019 a preventive seizure decree was issued on 18 December 2018 by the Judge for Preliminary Investigations at the Court of Frosinone as part of criminal proceedings no. 3910/18 RNGR, pending for the alleged violation of art. 4 of Italian Legislative Decree 74/2000 (inaccurate declaration). Pursuant to the aforementioned provision, the preventive seizure of financial resources in the accounts held in the name of Acea Ato5 up to a value of € 3,600,554.51 was ordered. On 11 January 2019, a request for a review was filed, whose discussion hearing was scheduled for 1 February 2019 before the Court of Frosinone, as a unified bench. At the outcome of the aforementioned hearing in the Council Chamber, the Court of Frosinone upheld the proposed re-examination request and, as a result, cancelled the preventive seizure decree, ordering the restitution to the person entitled thereto. Based on the aforementioned restitution order, the Company sent a formal request to the Single Justice Fund for the restitution of the sums released. To date, the restitution procedure has been resolved with the release of the sums by the Single Justice Fund. This case was combined with criminal proceeding no. 2031/16 RNGR.
At the same time, however, a court summons had been sent to a former Executive of the Company. At the hearing set for the discussion of the preliminary matters and for the opening statement of the proceedings itself, it will be recorded that the facts of the count of indictment are the same as those for which criminal proceeding RGNR 2031/2016 is pending.
The first evidentiary hearing was held on 19 October 2021. Adjourned to 16 November 2021, for dissolution of the reservation on the exception proposed by the defendant’s lawyer concerning the territorial jurisdiction of the Court of Frosinone. Preliminary issue rejected and adjourned to 19 April 2022 for examination of witnesses by the Public Prosecutor. For other details concerning relations with the Area Authority, please refer to the previous paragraph “Conciliation Board with OTAA 5 and subsequent discussions with the AGB”.


ARERA sanctioning measure concerning IWS tariff regulation
With determination no. DSAI/42/2018/idr of 21 May 2018, ARERA started a sanctioning procedure regarding the tariff regulation of the integrated water service, the result of the audit carried out by the ARERA in collaboration with the Special Energy Unit and the water system of the Guardia di Finanza from 20 to 24 November 2017 at the Company’s offices.
On 4 July 2019, ARERA published Resolution 253/2019/S/idr of 25 June 2019 imposing administrative fines on Acea Ato5, pursuant to art. 2, paragraph 20, letter c) of Italian Law 481/95, for a total amount of € 955,000.00 for violations alleged in Determination DSAI/42/2018/idr.
On 3 October 2019 the Company filed an appeal with the Lombardy Regional Administrative Court against the aforesaid measure to have it thrown out, and to have the amount of the fine reviewed.
Moreover, following the submission of the appeal, the Company sent a specific request to the Authority asking for details of the timing of the approval procedures for the 2016-2019 tariffs, as well as the 2018-2019 update.
Regarding the appeal in question, there is no information as of today regarding the setting of the hearing. In any case, also because of the penalty payment reminder sent by ARERA on 16 October 2019, the Company paid the entire penalty imposed on it.

AGCM sanctioning measure - Proceeding PS9918
On 5 July 2018, in implementation of the Resolution adopted by the Italian Antitrust Authority on 27 June 2018, an audit took place at the registered office of the Company following the initiation of the proceeding pursuant to art. 27, paragraph 3 of Italian Legislative Decree no. 206 of 2005, as well as pursuant to art. 6 of the “Regulation on preliminary investigations concerning misleading and comparative advertising, unfair commercial practices, violations of consumer rights in contracts and unfair terms” (hereinafter Regulation). The proceedings were opened in response to reports made to the Authority by the Consumer Associations CO.DI.CI. and Federconsumatori Frosinone regarding alleged incorrect and aggressive behaviour towards consumers and small businesses by Acea Ato5 in the period January 2015- June 2018.
On 10 January 2019 a hearing was held at the AGCM — in response to a formal request formulated at the same time as the requests for information referred to in the provision of objective extension of the proceeding. During the aforementioned hearing, the Company highlighted the constant attention it had shown its consumers, implementing for this purpose a series of measures and improvements in the procedures concerning the management of the activities disputed by the Authority. Reaffirming what has already been fully explained in the feedback sent to the Authority, the Company provided further information and documentation regarding the activities implemented (collaboration with the OTUC, opening of the consumer counter, activities aimed at solving historical arrears) in a perspective of constant attention to consumer issues.
On 20 February 2019, the AGCM, with regard to the PS/9918 proceeding, announced that it had extended the deadline for the conclusion of the proceeding to 23 May 2019.
On 28 February 2019 the AGCM announced that it had extended the deadline for the conclusion of the preliminary phase of procedure PS/9918 — set at 20 March 2019 — with the simultaneous clarification of the high charges against the Company. In particular, the Authority abandoned some of the initial disputes, confirming instead that it had detected some critical issues concerning: (i) initiation of collection procedures pending complaint for the period prior to the corporate procedure of 2018; (ii) consumption limitations, for the period prior to the change made in January 2019 to the procedure implemented by the Company with regard to the limitation period; (iii) management of hidden water losses. On 20 March 2019 the Company filed a defence brief and supporting documentation.
On 4 July 2019, the Authority notified the Company of the sanctioning measure with a pecuniary administrative sanction totalling € 1.0 million was imposed. The Company made a specific addition to the financial statements. On 3 October 2019 the Company filed an appeal with the Lazio Regional Administrative Court — registered under docket no. RG 12290/2019 section I — against the aforesaid sanctioning measure, requesting its cancellation with precautionary suspension. In the Chamber of Council of 6 November 2019 to discuss the request for precautionary suspension, the Regional Administrative Court of Lazio issued Order no. 7223 with which it rejected the application for precautionary suspension.
The decision of the Regional Administrative Court does not address the individual grounds of the appeal, which will only be ruled on at the hearing, yet to be scheduled. In particular, according to the administrative judge “with regard to the extent of the financial penalty imposed and the feared consequences on the business activity, it does not appear to be extremely serious and urgent as per art. 119, paragraph 4 of the Italian Criminal Code for the granting of the requested precautionary protection, also taking into account the fact that the claimant company is in any case entitled to file a request for payment in instalments”.
In view of the aforesaid decision, since the Company has the power to do so, on 3 December 2019 the Company submitted to the Authority a request for payment in instalments, which the Authority accepted on 21 January 2020.
On 26 February 2020, a request for information was received from the Italian Competition Authority pursuant to art. 3, paragraph 2 of the “Regulation on preliminary investigations concerning misleading and comparative advertising, unfair trade practices, violation of consumer rights in contracts, violation of the prohibition of discrimination and unfair terms” regarding the effectiveness of the measures put in place by Acea Ato5 following sanction no. 27798 of 5 June 2019, adopted at the outcome of the PS9918 preliminary investigation procedure.

In particular, with reference to the July-December 2019 and January- February 2020 periods, the Authority requested specific information about:
a. the number of claims received, distinguishing and specifying the reason for each individual claim;
b. number of claims accepted and number of claims rejected;
c. number of payment reminders and disconnection notices sent to the users;
d. number of executive procedures begun to collect overdue amounts;
e. number of water service disconnections carried out, indicating the reasons and the procedures followed.

On 17 March 2020, the Company responded to the aforementioned request, highlighting the improved pro-consumer management of the relationship with users.

In particular, the evidence submitted confirmed that: 

  • no requirements had been imposed by the Authority with regard to the verification referred to in Sanction Order no. 27798 of 5 June 2019. In fact, the Company had already improved its performance of the activities in question during the audit;
  • the Company had for some time already implemented or modified its procedures — in compliance with current sector legislation — in order to best meet the changing needs of consumers, also to take into account the regulatory measures recently adopted by ARERA.

In light of these considerations and taking into account the data available to date, no relevant findings emerged with regard to the requests made by the Authority. At present, there are no updates nor have additional requests been received from the Authority.

Criminal proceeding no. 2031/2016
With regard to criminal proceeding no. 2031/2016 concerning the financial years 2015, 2016 and 2017, on 4 January 2019 the current Chairperson of the Company was served with an invitation to appear in person subject to investigation and information of guarantee for alleged offences attributable to false financial statements and false corporate communications. This measure also affected the Chairpersons of the Company and the representatives of the control bodies in office in those financial years.
The preliminary hearing was held on 26 October 2021, adjourned to 15 November 2021, in order to assess the admission of civil parties and then adjourned to 13 December 2021 for the same obligations and then to 10 January 2022, in order to dissolve the reservation on the admission of civil parties. The Preliminary Hearing Judge, having withdrawn the reservation, issued an order whereby, with the exception of the associations “Free Monte” and “Codici Onlus”, all the parties allegedly harmed by the facts of the crime against the defendants were admitted. Finally, at the instigation of several civil parties, the citation of Acea Ato5 and Ato 5 Lazio Meridionale Frosinone as civilly liable was authorised.
Ordered to be postponed until 18 February 2022. During the course of the hearing, Acea Ato5 was presented as the party liable under civil law, and the judge adjourned the hearing until 14 March 2022 to allow the Public Prosecutor and the civil parties to respond to the territorial jurisdiction issue put forward by the defendants’ defense.
At the hearing of 14 March 2022, the judge of the preliminary hearing rejected the question of territorial jurisdiction and adjourned the hearing to 28 March 2022 for the continuation.

Civil judgment RG 4164/2013 (Opposition to the injunction of the Municipality of Fiuggi)
With Injunction no. 1131/13, no. RG 1966/2013, issued by the Court of Frosinone on 25 July 2013, the Municipality of Fiuggi was ordered to pay to Acea Ato5 the sum of € 185,685.00 for outstanding invoices relating to the supply of water to users attributable to the Municipality.
The Municipality of Fiuggi served a writ of summons opposing said injunction, requesting the revocation of the same and, by way of counterclaim, the condemnation of Acea to pay the Municipality of Fiuggi the sum of € 752,505.86 by way of loan instalments accrued and unpaid from 2009 to 1 August 2013, as well as subsequent accruals and maturities, plus interest until payment in full, and to order Acea Ato5 to reimburse the Municipality of Fiuggi all the expenses that, due to the lack of timely intervention by the obligated water operator, were incurred by the Municipality.
The Municipal Administration also requested that Acea Ato5 be sentenced to pay compensation to the Municipality of Fiuggi for the pecuniary and non-pecuniary damages suffered and to be suffered, leaving the quantification to a designated expert. A designated expert was therefore ordered to verify and quantify the claims of the parties.
Pending the proceedings, the parties entered into negotiations with a view to verifying the possibility of settling the dispute amicably.
At present, the proposals put forward by the counterparty are not deemed acceptable, therefore, whilst not ruling out the possibility of reaching an agreement, it was deemed appropriate to reconsider the continuation of the proceedings.
Following the filing of the expert’s report, which was contested in every aspect by the Company, an additional investigation was carried out and the related activities were scheduled. The case is pending before the Court of Frosinone no. 4164/2013.
At the hearing of 2 March 2021, the designated expert was examined and the Judge, lifting the reservation, adjourned the case for the definition of conclusions to the hearing of 11 March 2022.
The dispute was settled by conciliatory agreement on 30 December 2021; the judgement will remain suspended in order to verify the fulfilment of the commitments undertaken. The Company has made the provision in the financial statements consistent with the settlement agreement reached on a prudent basis so as to ensure coverage of any costs arising from the agreement.

See also the additional information contained in the paragraph “Information on services under concession” and with reference to the proceedings Italian Legislative Decree no. 231/2001 in the paragraph of this “Report on Major Risks and Uncertainties”. Moreover, with reference to additional complex cases related to legal controversies, filed or being filed, between Acea Ato5 and the Environmental Authority, see the “Update on primary legal controversies” paragraph of this document.

Notice of assessment for 2013 and subsequent years and tax audits
On 3 January 2019 notice was served by the Revenue Agency – Dir. Prov. of Frosinone — Audit Office of a notice of assessment for IRAP for the year 2013. The Company has lodged an appeal. On 3 July 2019, a hearing was held at the Frosinone Regional Tax Commission.
On 23 October 2019 sentence no. 475/1/2019 was filed by the Provincial Tax Commission of Frosinone rejecting the appeal filed by the Company against the administrative fine imposed by the Revenue Agency for violations ascertained by the Guardia di Finanza for 2013.
It is the intention of the Company to challenge the aforementioned judgement and to lodge an appeal before the Regional Tax Commission.
The deadline for this action is six months from the date of filing of the judgement, therefore 23 April 2020. This deadline was extended to 11 May 2020 due to the health emergency. The appeal has been presented and at present we are waiting for the hearing to be scheduled.
During 2019, the Guardia di Finanza also continued its audit of income taxes for the years 2014 to 2018.
On 31 December 2019 the parent company Acea SpA and the subsidiary Acea Ato5 were served by the Revenue Agency — Dir. Prov. of Frosinone — Audit Office — of two notices of assessment for IRES for 2013 and 2014.

These notices of assessment are a consequence of the findings of the tax assessment reports drawn up on 25 October 2018 (mentioned above) and on 30 October 2019, in which the auditors of the Guardia di Finanza found: 

  • for the tax year 2013:
    • undue decrease in income of € 10,703,757;
    • positive income components not recorded and not declared for € 829,552;
    • negative income elements unduly deducted for € 1,559,616.


With this report on findings (PVC), the second and third points are resolved, given that the critical points noted in the report and initially ascribed to the tax year 2013 had an impact on subsequent years: 

  • for the tax year 2014:
    • positive undeclared income components of € 18,800,000.

The Company appealed these fines with the Provincial Tax Commission of Frosinone on 28 February 2020 in compliance with the 82 deadline of 60 days from the date of notification of the aforementioned notices of assessment, jointly and severally with the parent company Acea, with regard to the assessments of the IRES tax for 2013. The meeting for discussion originally set for 18 November 2020 was postponed to 19 January 2021. Supported by the opinion of its tax advisors, the Company believes that there is a risk of losing the case in the “remote” tax proceedings. On completion of the proceeding of 13 April 2021, the Provincial Tax Commission of Frosinone informed the company that it had accepted the IRAP 2014 and IRES 2014 appeals, ordering the Revenues Agency to pay for the legal expenses. An appeal was lodged by the unsuccessful party against the aforesaid judgement.

On 23, 29 and 30 December 2021, Acea SpA and the Company were served by the Revenue Agency — Dir. Prov. of Frosinone — Audit Office — two notices of assessment for IRES for 2016 and IRAP for 2015 and 2016. These notices of assessment are also a consequence of the findings of the Tax Assessment Reports drawn up on 30 October 2019, in which the auditors of the Guardia di Finanza found: 

  • for IRES and IRAP purposes for 2016:
    • an unrecognised non-recurring gain arising from the higher GRC recognised by ARERA for € 3,337,920.00; and
    • an undue decrease in non-deductible negative income components for € 1,559,616.88; 
  • for IRES and IRAP purposes for 2015:
    • an undeductible contingent liability recorded in the 2015 financial statements and related to the non-management of the municipalities of Atina, Cassino Centro and Paliano for the years 2012, 2013 and 2014 for € 4,235,918.00;
    • the recognition in 2017 of non-recurring gains and adjustments for lower depreciation and amortisation, which amounted to € 1,389,265.00 in 2015.

The Company appealed the verification notice with the Provincial Tax Commission of Frosinone within the deadline of 60 days from the date of notification of the aforementioned notices of assessment, jointly and severally with the parent company Acea SpA.
Supported by the opinion of its tax advisors, the Company believes that there is a risk of losing the case in the “remote” tax proceedings.

AGCM feedback on purification and charge of sewerage and purification fees
On 13 March 2020, a request was received from the AGCM for information pursuant to art. 3, paragraph 2 of the “Regulation on preliminary investigations concerning misleading and comparative advertising, unfair commercial practices, violation of consumer rights in contracts, violation of the prohibition of discrimination and unfair terms”, with specific reference to the application of the tariff for purification services in the territory of the municipality of Vicalvi and the other municipalities managed by Acea Ato5.
This request stemmed from the clarification note sent by the Municipality of Vicalvi at the beginning of 2020 and recalled by the same Authority in which it was asked to justify this attribution in view of the fact that only Imhoff tanks are used in the municipal territory and there are no purification plants.

Specifically, the Authority asked to know: 

  • details of the municipalities in which no purification service is offered; 
  • the number of users residing there who are charged for the purification service; 
  • any initiatives taken for the activation of new and/or additional treatment plants, specifying the date of their entry into operation.

In this regard, having to deal with the exceptional operational difficulties related to the extraordinary emergency situation created following the spread of Covid-19, which inevitably affected the timing of the collection of the requested information and the preparation of the subsequent response — whose deadline was set at 2 April 2020 — it was considered appropriate to request an extension of the deadline to 30 April 2020.
On 30 April 2020 the Company responded to the request for information received from the Antitrust Authority regarding the application of the tariff for purification services in the territory of the Municipality of Vicalvi and the other municipalities managed by Acea Ato5, with note no. 0141201/20.
In particular, with regard to users residing in the municipalities not currently served by purification who are charged for the aforementioned service, equal to 387 users (out of approximately 17,028), the Company replied to the Authority that it would promptly return this charge and exempt the aforementioned users from the purification portion of the tariff. The return has been arranged automatically and regardless of any petition or request by users, and even in the absence of any report about the lack of a purification system available to the users, in accordance with the provisions of the ruling of the Constitutional Court no. 335/2008.
Subsequently, the Company acknowledged the numerous initiatives currently under way to ensure the operation of treatment plants located in the municipalities not yet served, also on the basis of specific commitments made with Optimal Territorial Area Authority no. 5 and included in the Works Programme (WP).
Finally, with specific reference to the position of the Municipality of Vicalvi, the Company has provided the necessary clarification regarding the charge made to users residing in the aforementioned municipality of the tariff relating to the purification service, specifying that this charge is legitimate due to the presence in the municipal territory of Imhoff tanks, delivered to the Company at the time of the transfer of the IWS, which are in fact, both at an operational and regulatory level, purification plants, so much so that the costs of managing them have been recognised and approved by OTAA 5 in the 2016-2019 tariff preparation.
The above demonstrates that, unlike what was stated by the Municipality of Vicalvi, the provision of a charge in the tariff for the costs of managing Imhoff tanks — through the tariff item relating to the purification service applied to users whose discharges flow into such system — is entirely lawful, and as recognised by the Operational Technical Secretariat of OTAA 5 it is consistent not only with the tariff method approved by ARERA with resolution no. 580/2019/ idr, but also and above all with the principles affirmed by the Constitutional Court with judgement no. 335 of 2008, according to which the tariff, as a contractual consideration, must “express the industrial cost of the water service represented [...] by the integration of collection, supply, distribution, collection and purification services”. At present, there are no updates nor have additional requests been received from the Authority.
With reference to progress of the procedure for approving the water tariffs for OTAA 5, at present water tariffs for the 2012-2015 period have been approved by ARERA (Resolution 51/2016/R/idr of 11 February 2016).
In fact, recall that the water tariffs are established by the governing bodies for the area, or by other competent entities identified in regional law, and then sent to ARERA for approval. In the case of inaction by governing bodies for the area, the Operator may take the initiative.

Regulatory period 2016-2019 
With Resolution 664/2015/R/idr of 28 December 2015, ARERA approved the Tariff Method for the second regulatory period “MTI-2”, defining the rules for calculating costs included in tariff recognition, as well as identifying the reference macroeconomic parameters and those associated with the division of risk in regulation of the water sector. After publication of MTI-2, the Company continued to provide the Area Authority with information and clarifications useful for preparation of the 2016-2019 tariff. Despite the sending of these documents, the Area Authority did not prepare any tariff proposals for the 2016-2019 period. Therefore, seeing the inaction of the Area Authority, on 30 May 2016 the Company sent to the OTAA 5, via certified email, cc’ing ARERA, the tariff request pursuant to art. 7, para. 7.5 of Resolution 664/2015. With a note ref. no. 19984/P of 13 July 2016, ARERA convened the Area Governing Body and the Operator for a meeting on 19 July 2016.
After this meeting, and based on the tariff preparation carried out by the OTAA 5 OTS, the Conference of Mayors was convened for 29 July 2016. This Conference also did not lead to any tariff decision.
Responding to the tariff request made by the Operator on 30 May 2016, ARERA sent OTAA 5, on 16 November 2016, a formal warning to take action, within 30 days, to make the tariff decisions for which it was responsible for the second regulatory period 2016-2019, noting that, after this deadline the Operator’s request would be understood to have been accepted and would be sent to the Authority for evaluation in the subsequent 90 days. After the warning from ARERA, on 13 December 2016 OTAA 5 approved the tariff proposal.
At present, definitive approval by ARERA is awaited.

Two-year update 2018-2019 
With Resolution 918/2017/R/idr of 27 December 2018, ARERA created regulations for the two-year update to tariffs for the integrated water service.
Implementing this regulatory framework, on 1 August 2018 the Conference of Mayors of OTAA 5 formalised approval of the tariff multiplier for the years 2018 and 2019 in the maximum amount established under the Tariff Method, 8%, through Resolution no. 7, without prejudice to the study done by ARERA for the change in the theta which determines tariff changes exceeding the limit established in MTI-2. Additionally, with Resolution 8 of 1 August 2018, the Conference of Mayors approved, pursuant to art. 3, para. 1, of Resolution ARERA of 28 September 2017, 665/2017/R/idr, the new tariff structure (TICSI).
As described in detail below, note that on 21 May 2018, with Resolution DSAI/42/2018/IDE of 21 May 2018, ARERA began a sanctioning procedure relative to the Company, which ended with the application of a fine, in relation to a series of findings relative to tariff adjustment for the integrated water service for the years 2012-2017 (hence also regarding tariffs also approved by the Authority itself, 2012-2015).
In any case, at the time of the 2018-2019 tariff update approved by the OTAA 5 Conference of Mayors on 1 August 2018, the appropriate adjustments were made based on that indicated by the Regulatory Authority in the context of the aforementioned sanctioning procedure.
At present, approval by ARERA is awaited.
It should nonetheless be specified that art. 15, para. b) of Resolution ARERA 918/2017/R/idr of 27 December 2017 establishes that Operators are required to apply, after preparation of the twoyear update by the Area Governing Bodies, and until approval by the Authority, the tariff update prepared by the Governing Bodies, in compliance with the price limit pursuant to par. 3.2 of Resolution 664/2015/R/idr.
Additionally, during October 2019, the Company sent a specific request to the Authority asking for details of the timing of the approval procedures for the 2016-2019 tariffs, as well as the 2018- 2019 update.

To that end, below is that clarified by ARERA in its Communication of 5 February 2020, which states: “With reference to the two-year update proposals for the tariff structure for 2018-2019, sent to the Area Governing Bodies pursuant to Resolutions 917/2017/R/idr and 918/2017/R/idr, but not yet involved in specific approvals by the Authority, it is clarified that: 

  • the Authority will complete the investigations intended to ascertain the consistency of the relevant technical and tariff data, in the context of the verifications on the specific regulatory structures proposed for the third regulatory period (2020-2023), in observance of the MTI-3 water tariff method, pursuant to Resolution 580/2019/R/idr; 
  • for the two-year period 2018-2019 the tariff determinations adopted by the competent entities remain valid, which will be assessed by the Authority as part of the quantification of the adjustment components referred to in art. 27 of MTI-3 when approving the new regulatory framework.”

Regulatory period 2020-2023 
With Resolution 580/2019/R/idr of 27 December 2019, ARERA approved the Tariff Method for the third regulatory period “MTI-3”, defining the rules for calculating costs included in tariff recognition, as well as identifying the reference macroeconomic parameters and those associated with the division of risk in regulation of the water sector. After publication of MTI-3, the Company provided the Area Authority with data, information and clarifications useful for preparation of the 2020-2023 tariff. Despite the sending of these documents, the Area Authority did not prepare the tariff proposals for the 2020-2023 period by the deadline set in the regulations in effect (31 July 2020). Therefore, seeing the inaction of the Area Authority, on 15 December 2020 the Company sent to the OTAA 5 and to ARERA, via certified email, the tariff request pursuant to art. 5, para. 5.5 of Resolution 580/2019.
On 10 March 2021, the OTAA Conference of Mayors approved the proposed tariff for 2020-2023, with resolution 1/2021.
This is in contrast with the tariff adjustment request, prepared by the Operator pursuant to art. 5, para. 5.5 of resolution ARERA 580/2019/R/idr, containing the regulatory framework for the 2020-2023 third regulatory period and showing significant differences for the 2020-2023 period, with reference to operating costs and the tariff multiplier.
With reference to operating costs note that the lack of recognition by OTAA 5 of the operating costs suffered by the Operator, documented in the requests presented during the preparatory work for the tariff structure, definitively formalised by the Operator in the tariff update request sent on 15 December 2020, was not adequately justified and technically represented in the Technical Report issued by OTAA 5 and accompanying its tariff proposal. Hence at present the Operator is not aware of the reasons these costs were excluded from the tariff recognition approved by OTAA 5 on 10 March 2021.

Relative to the tariff multiplier note that the Tariff Structure approved by OTAA 5 established a tariff multiplier with the following problems:

  • it does not indicate specific invoicing schedules to recover previous adjustments equal to € 101 million, as resulting from OTAA resolution no. 6 of 13 December 2016 and no. 7 of 1 August 2018; 
  • the amount of the adjustments included by OTAA 5 in the aforesaid structure (approximately € 51 million represented in Rctot and approximately € 50 million in the Residual Value component is not integrated into the formula that determines the tariff multiplier for the respective years (2023-2024); the residual portion up to € 101 million was represented in the Residual Value, preventing in practice immediate invoicing; 
  • the reduction of operating costs (of € 3,315 thousand for both the years 2018-2019) made on years for which Acea Ato5 has already incurred the related expense (costs in the 2018 and 2019 financial statements), entails a financial loss of the same amount, as the tariff change that has to be applied — for the respective years — is less than that applied starting from 1 January 2020 (in accordance with the provisions of art. 7.2 letter a of ARERA resolution 580/2019/R/idr).
  • it does not provide for adequate coverage of the operating costs incurred by the Operator; 
  • it does not apply a congruous indemnity rate for existing receivables.

As is known, following the tariff scenario approved by AGB Resolution of the Conference of Mayors of the OTAA5 no. 1 of 10 March 2021 and referred to in ARERA Resolution no 580/2019/R/idr of 27 December 2019, the Company has put in place two separate actions: 

  • An appeal against this resolution is before the Latina Regional Administrative Court (docket no. 308/2021 section 1); 
  • Submission of the request for economic-financial rebalancing (in accordance with the provisions of arts. 9 and 10 of the Standard Agreement approved by the Regulatory Authority for Energy, Networks and Environment by resolution 656/2015/R/ idr).

With reference to the first initiative, the Regional Administrative Court rejected the appeal on the grounds of lack of jurisdiction. The Company appealed the sentence before the Council of State.
With reference to the request for rebalancing, containing an illustration of the causes and the extent of the economic and financial imbalance in the management of the IWS of Ato 5 and the proposal of the rebalancing measures assumed, including the request for access to the financial equalisation measures, the OTAA 5 Operational Technical Secretariat responsible for transmitting the request to ARERA began the necessary checks, making use of qualified external consultants. As of the date of preparation of this report, there are no elements that can be used to predict the outcome of the request.
It should also be noted that as a result of the approval of the 2020- 2023 tariff provisions, the directors of Acea Ato5 acknowledged the presence of significant uncertainties about the subsidiary as a going concern, such as, in particular, the greater use of reverse factoring, the favourable outcome of the Technical Panel with the Area Authority intended to define the mutual items and the approval of the appeal against Resolution no. 1/2021 of the Mayors’ Conference.

In view of the financial imbalance that has arisen, Acea SpA is studying measures to secure the subsidiary. In the meantime, the directors of the subsidiary initiated a series of actions aimed at improving the financial position of the company including the following: 

  • the rescheduling of past debts through the signing of repayment plans with both third parties and intra-group counterparties that envisage payments over periods longer than 12 months; 
  • the rescheduling of debts arising in 2021 through the systematic use of reverse factoring with positive effects on working capital;
  • the rationalisation of management costs also through the revision of the Service Agreement with the Parent Company; 
  • labour cost efficiency due to the containment of planned increases and management factors (holiday disposal plans and policies for monitoring and validating overtime performance); 
  • the lodging of an appeal against Resolution no. 1 of 10 March 2021 of the Conference of Mayors of OTA 5; 
  • the application for economic-financial rebalancing as provided for in the regulation.

With the actions taken, the Company has succeeded in managing the financial situation highlighted in the 2020 Financial Statements, partially mitigating the financial imbalance.

GORI 
The Company manages the Integrated Water Service for the “Sarnese-Vesuvian” District Area of the Campania Region (which comprises 59 Municipalities of the Province of Naples and 17 Municipalities of the Province of Salerno), for a total of 76 Municipalities (however, the Municipalities of Calvanico and Roccapiemonte in the Province of Salerno are managing their water services, not having yet ensured the start of IWS management by the company). The award of the aforesaid IWS management lasting thirty years and starting from 1 October 2002 (and expiring in 2032) was finalised with the signing of a specific agreement with the granting authority Sarnese Vesuvian Area Authority (now replaced by the Campania Water Authority as per Law 15/2015 of the Campania Region) on 30 September 2002.
Established pursuant to regional law 15/2015, the Sarnese-Vesuvian District of the Campania Region covers an area of approximately 900 square kilometres with a population of approximately 1.47 million inhabitants.
A total of 5,141 km of water network is currently managed, consisting of 869 km of primary abstraction network and 4,272 km of distribution network, and a 2,625 km drainage system.
GORI currently manages 13 water sources, 116 wells, 206 tanks, 123 water pumping stations, 191 wastewater pumping stations and 11 waste treatment plants.

Operating Agreement between Campania Region, the Campania Water Authority and GORI 
On 8 November 2018, an Operating Agreement was entered into between the Campania Region, the Campania Water Authority and GORI (“Operating Agreement”) aimed at the complete implementation of the Integrated Water Service in the Sarnese-Vesuvian District area within a framework of economic-financial equilibrium of the management for its entire residual duration and the pursuit of the following related objectives: (i) GORI’s assumption of the service’s management and, by way of concession and in accordance with the provisions of the current Management Agreement of the OTA IWS, of the “Regional Works” (i.e. several major infrastructures of the IWS falling within the territory of the Sarnese-Vesuvian District area, managed for a long period by the Campania Region and transferred by the latter to the operator GORI in the period between 2019 and 2021; hereinafter referred to as the “Regional Works”) and their consequent efficiency improvement, including the redeployment and efficient employment of the relevant personnel engaged in the IWS (furthermore, the transfer of the treatment plant of the Sorrento Peninsula district is also expected by 31 January 2022); (ii) approval by the Campania Region of plans for the payment in instalments of the debt accrued by the Company for the wholesale supplies (of water and of sewerage and treatment services) provided from 2013 onwards, and the concurrent resolution of the complex legal dispute that has arisen with respect to the payment for the regional “wholesale water” supplies and the regional “wastewater collection and purification” services; (iii) the creation of conditions to facilitate GORI’s access to the credit market; (iv) the commitment of the parties to the extent of their remit to restore/ maintain the economic-financial equilibrium of the OTA IWS if the need should arise.
As a result, the Operating Agreement enabled the Company to enter into a long-term loan agreement with a pool of banks on 18 July 2019 with an availability period of 4 years, a ten-year term and a final maturity for repayment on 31 December 2029.
However, the Covid-19 health emergency has inevitably entailed, as is well known, significant socio-economic criticalities, for which the national government, the Campania Regional Council and also ARERA have adopted and are adopting a series of measures in order to mitigate the effects, above all — as far as it is of interest here — to provide greater protection to the users of the IWS (suspension of credit collection activities and suspension/interruption of service for defaulting users, as well as deferment of payments).
As a result of this situation, the Campania Region and GORI - also in order to ensure a socially sustainable tariff in this historical period and, at the same time, maintain the level of planned investments and, more generally, ensure the economic and financial balance of the management of the IWS of the Sarnese-Vesuvian District area - have determined to reschedule the payments of the sums due by GORI to the Region as debt for past wholesale supplies, reaching on 20 November 2020 the stipulation of an Additional Act to the Operating Agreement, with which the payment of the instalments due in the period from December 2020 to December 2021, amounting to approximately € 34.4 million, is postponed to 2028.
Similarly, as part of the preparation of the 2020÷2023 Regulatory Framework approved by the Campania Water Authority by means of Executive Committee Resolution no. 35 of 12 August 2021, the deferment of the instalments provided for in the repayment plans established by the Operating Agreement for the years 2022, 2023 and 2024 (and amounting in total to approximately € 34.4 million) to the years 2030, 2031 and 2032 is planned.

2020-2023 Regulatory Framework 
On 12 August 2021, the Executive Committee of the Authority definitively approved the 2020-2023 Regulatory Framework for the operator GORI SpA with Resolution no. 35; also on 12 August 2021, the offices of the CWA then sent the regulatory framework to ARERA via the IT procedure. Under this CWA-approved regulatory framework, a Theta of 1 is provided for the years 2020, 2021 and 2023 and a Theta increase of 2.4 is provided for the year 2022.
In the resolution in question, the CWA also decided to postpone any further and final determination regarding possible corrective measures on the regulatory frameworks referring to previous periods not considered in the approved proposal, in order to wait for the measures that ARERA will have to take in execution of the provisions established by the ruling of the Council of State, Sixth Section, no. 5309/2021 of 13 July 2021; more specifically, the Council of State ordered ARERA to renew the preliminary investigation underlying the tariff determinations approved by the same ARERA with Resolution no. 104/2016/R/idr concerning the “approval for the purposes of establishing the value of adjustments in the context of the tariff method for the second regulatory period MTI-2, tariff provisions regarding the Sarnese-Vesuvian optimal territorial area, for the 2012-2015 period”, without prejudice to the fact that “renewal of the enquiry has no constrained content; it could end obviously in confirmation of the tariff decision cancelled herein only for insufficient enquiry”.

Therefore, with Resolution no. 373/2021/R/idr of 7 September 2021 and the subsequent Resolution no. 18/2022/R/idr of 18 January 2022, ARERA started the procedure for the renewal of the aforementioned enquiry, at the end of which it must adopt the final measure by 15 March 2022, due to the extension of the term intervened with the aforementioned Resolution no. 18/2022/R/idr.
Furthermore, at the moment, as part of the aforementioned enquiry procedure initiated by ARERA, the Campania Water Authority (“CWA”) — at the specific request of the Authority and in response to the requirements of Council of State Sentence no. 5309/2021 — has ascertained the validity of the Area Plan, approved in 2000 and regularly updated in 2007, and has ascertained that the managing entity GORI has effectively implemented the Area Plan until the end of 2011 in accordance with the provisions of sector legislation. Consequently, on the basis of the EIC’s findings to date, one could justifiably exclude — at least in theory — any reduction in the tariff increases established by ARERA’s Resolution 104/2016/R/idr.

Revenue as at 31 December 2021, amounting to a total of € 208.4 million, was determined on the basis of the regulatory framework approved by the Campania Water Authority with Resolution 35/2021, in compliance with ARERA Resolution 580/2019/R/idr, highlighting that, in order to achieve financial balance in management of the Sarnese Vesuviano District Area in compliance with the tariff increase constraint and remaining within the maximum limit for annual changes, a remodulation of the GRC was determined, through regulatory postponement of the portion of costs exceeding the maximum limit to subsequent years, according to the provisions of the Regulatory Framework of reference.
Verification of parameters to identify the regulatory quadrant and the presence of OPnew relative to systematic changes in operator activities in the “presence of the supply of a new service (e.g. purification or sewers for an operator whose management was previously limited to aqueduct services or, in other cases, in the presence of expansion with an upstream supply chain), pursuant to art. 18.2, 18.3, letter c) and 18.4 of Annex A to resolution ARERA 580/2019/R/idr, determined placement in the VI regulatory quadrant.
Nonetheless, as already noted, in order to guarantee the social sustainability of the tariff, while respecting economic/financial balance in managing the IWS, Campania Water Authority resolved on a tariff increase lower than the maximum limit allowed under the regulatory method MTI-3.
It should also be noted that, for the calculation of the GRC at 31 December 2021, the constraint component relating to the Opsocial supplementary water bonus has been set equal to zero because, although it has been recognised within the regulatory framework approved by the CWA, ia specific deliberative act is actually missing, considering that “the disbursement of the supplementary water bonus is subject to any determinations that will be made, in this regard, by the Campania Water Board to maintain the facility provided in the 2018-2019 two-year period, identifying at the same time the number of beneficiaries entitled to the supplementary water bonus and the related access procedures”.
The purely regulatory component COΔfanghi was instead considered.
The OpexQC and OpexQT components were calculated in the amount of what was requested in the related cost recognition requests, within the limit of what was recognised in 2019.
Also in this case, given that ARERA did not approve the requests submitted for recognition of additional costs as an OPnew component for the new scope, the OPnew included in the calculation were quantified in the same manner as in previous years, and therefore based on the principle of full cost recovery, the costs effectively suffered for systems transferred at 31 December 2021 are covered, as demonstrated in the accounting documents.
At 31 December 2021, the works transferred to the Operator are: Waterworks at Mercato Palazzo with transfer in October 2016, waterworks at Boscotrecase and Cercola with transfer in March 2018, waterworks in the Nolana area with transfer in September 2018, waterworks at Campitelli and Boccia a Mauro to complete the Vesuvius area with transfer in December 2018, the Angri Wells Field with transfer in February 2019, the Nolana Area treatment plant with transfer in March 2019, the completion of the Sarnese Area with transfer in April 2019, the Medio Sarno 2 treatment plant with transfer in July 2019, the transfers relating to the Medio Sarno 3 treatment plant and the Sorrentine Peninsula water area in December 2019, the transfer of the Foce Sarno treatment plant in December 2020, and finally the transfer of the Alto Sarno treatment plant in January 2021.
External operating costs Opexend were defined based on what is established in art. 17.1 of Annex A to resolution ARERA 580/2019/R/idr when measures were introduced to incentivise efficient behaviour by operators; to that end, calculation of the per capita level of operating costs incurred by GORI in 2016 placed GORI in class B1 of the regulatory matrix pursuant to art. 17.1 of resolution ARERA 580/2019/R/idr, while calculation of estimated operating costs, using the statistical model found in art. 17.2 of Annex A to resolution ARERA, transformed into per capita terms, placed the operator in Cluster A of the regulatory matrix. Therefore, GORI is placed in quadrant 4 of the regulatory matrix, which therefore leads to Opexend of € 74.6 million.
The GRC was also updated pursuant to art. 27.1 of Annex A of ARERA resolution no. 580/2019/R/idr which envisages that, for the purposes of determining the GRC for the 2020-2023 regulatory period, some cost items (electricity cost, balance of payments and penalties, Authority contribution, cost of wholesale supplies, activity costs connected to the IWS due to systemic changes in the conditions of the service or to the occurrence of exceptional events) are subject to a final assessment, as adjustment components (Rc), relative to the year (a-2).
With regard to the calculation of the Constraint for the costs for wholesale water services by the Campania Region at 31 December 2021, the tariff approved by the CWA by resolution no. 7 of 26 June 2021 was considered. This determines the 2020-2023 regulatory scheme for the proposed wholesale water tariff for the “Campania Region” operator and is equal to 0.192941 €/m3, with the application, both for the year 2020 and for the year 2021, of a theta equal to 1.
The pertinent cost at 31 December 2021 on the COws relating to regional water supplies, according to the principle of full cost recovery, was approximately € 4.1 million, entered for the same amount in GRC and in the related costs.
As regards the COws of the collection and purification service, here again they were calculated starting from the quantification of the recognised costs which, to determine the relevant costs at 31 December 2021, according to the full cost recovery principle, amounted to approximately € 7.4 million. Reference was made to the tariff for wastewater collection and purification services, equal to 0.310422 €/m3, (as a result of application of the ARERA 338/2015/R/idr resolution to the regional tariffs for wholesale services, recognised by the Parties within the minutes of the meeting of 4 March 2016 between the Campania Region, the Area Authority and GORI), applying it to volumes treated by the regional plants.
Furthermore, in the determination of the GRC for the year ended 31 December 2021, the regulatory effects on the year 2020 deriving from the application of the regulatory framework approved by the CWA, with effect on the GRC for financial year 2020, were also taken into account, with the allocation to the “exceptional events” component for a total value of € 0.5 million.
It should be noted that the increase in costs incurred on Regional Works transferred by virtue of the completion of the transfer schedule, and taken into account in the relevant GRC as OPnew, was offset by lower costs incurred on electricity supplies and water purchases from the Campania Region; for this reason, despite the non-application of tariff increases since, as previously represented, the regulatory framework approved by the Campania Water Authority provides, for the year 2021, the application of a theta=1 tariff multiplier, the tariff revenue allowed for the recovery of tariff adjustments equal to € 4.9 million. In addition, it should be noted that, upon completion of the billing cycle with respect to the 2019 reference year, there was a residual accrual to be issued, amounting to € 8.4 million, which was allocated as an increase in tariff adjustments to be recovered.
Therefore, the tariff adjustments, as of 31 December 2021, amount to € 146.8 million.

A case pending before the Council of State concerning an appeal brought by the Municipalities of Angri (SA), Casalnuovo di Napoli (NA), Roccapiemonte (SA), Roccarainola (NA) and Scisciano (NA), for amendment of the sentence of the Regional Administrative Court of Lombardy, Milan office no. 1619/2018 of 29 June 2018, which rejected the appeal for the annulment of the ARERA resolution 104/2016/R/idr of 10 March 2016 approving the 2012-2015 Regulatory Framework of the Sarnese-Vesuvian District 
The Council of State, accepting partially the appeal of the aforesaid Municipalities, with the recent judgement no. 5309 of 13 July 2021, revised the judgement of the Lombardy RAC Milan office no. 1619/2018, on the premise that ARERA had not carried out a correct enquiry regarding “the quantification of the tariffs”, because it had not assessed whether the Area Plan had been effectively implemented after 2009 and, that is, after the proceeding to revise it had been launched; it therefore argued, for the purposes of the aforesaid “quantification of the tariffs”, on the verification of effective implementation of the Area Plan “… taking into account the need to verify the congruity of the costs with respect to the planned objectives also “in relation to the investments planned” (art. 149 Italian Legislative Decree 152/06) … which implies the need for an enquiry … on the status of implementation of the [area] plan as a condition for assessing concretely the operating costs and a possible concrete assessment of the situation determined in order to identify the adequate tariffs…». The Council of State then concluded providing for a temporary reduction of 30% of the tariff increase provided for in resolution no. 104/2016/R/idr “while awaiting renewal of the enquiry proceeding” of ARERA in preparation for the assumption of new decisions (also confirming the decisions made with ARERA resolution 104/2026/R/idr) regarding “quantification of the tariffs” — “as in any case the amount of the earlier consolidated tariffs is not in question and as a preponderant weight has to be attributed in any case to the approval of the plan≫ — without affecting the fact that “renewal of the enquiry has no constrained content; it could end obviously in confirmation of the tariff decision cancelled herein only for insufficient enquiry but on the basis of new elements, that is the precise verification of the implementation of the plan and of the presumable justified future modulation of the works planned or on the basis of a more specific different motivation or, on the contrary, if the Authority so decides, it could end in confirmation wholly or in part of the jurisdictional cancellation order (which has only a preliminary conformative effect while awaiting renewal of the technical assessments). This reduction is ordered, until the new decision of the Authority, which must intervene promptly and expressly and concretely motivate on the effects deriving, for the purposes of covering the costs, from any remaining non-implementation of the plan, unless final adjustments are ordered after the renewal (if the reduction in the increase cancelled herein were to be calculated in an amount of less than thirty percent)”.
In this regard, it is specified that since the Campania Water Authority (i.e., the competent government authority) has not adopted the tariff structure for the 2020-2023 four-year period, ARERA gave notice to the Campania Water Authority on 2 July 2021 to “comply pursuant to paragraph 5.6 of resolution 580/2019/R/idr and art. 3, paragraph 1(f) of the Prime Ministerial Decree of 20 July 2012” and, therefore, to proceed, within 30 days from receipt of said memo, with the decisions and submissions within its remit with reference to the years 2020-2023, “noting that, after this deadline the operator’s request would be understood to have been accepted by the competent authority as the tariff structure, as a result of the provisions of art. 20 of Law no. 241/1990, and would be sent to the Authority for evaluation and approval in the subsequent 90 days.”.
Following ruling no. 5309/2021 of the Council of State, ARERA gave another notice to the Campania Water Authority (which had communicated that it had “deferred the approval of the 2020-2023 regulatory scheme, as prepared by the offices, in order to verify the impact of the Ruling [of the Council of State] on the Regulatory scheme in question and pending the acquisition of specific clarifications [...]” from the Authority regarding the effects of said ruling) and the Operator – each within the scope of its own remit and “[...] pending the said renewal [of the supplementary investigation ordered from it by the Administrative Judge] [...]” — to proceed with adopting the 2020-2023 tariff structure “[...] while guaranteeing the economic and financial balance of the management [...]” and taking account “[...] (also for the purposes of verification of compliance with the price limit set by the regulation in force pro-tempore) of the effects of what was established by the aforementioned ruling [...]”, thus in terms of “price limits” of invoicing users. Therefore, ARERA — with Resolution 373/2021/R/idr of 7 September 2021 — has already initiated the procedure for compliance with Ruling no. 5309/2021 of the Council of State, with the primary and express purpose of”... renewal of the preliminary enquiry — limited to the profiles referred to in the grounds [of Ruling no. 5309/2021] — underlying the tariff determinations referred to in Resolution 104/2016/R/idr”. More specifically, according to the provisions of the cited Resolution 373/2021/R/idr, the procedure in question must be concluded by ARERA”... by 31 December 2021”, a deadline subsequently extended to 15 March 2022 by ARERA Resolution 18/2022/R/idr of 18 January 2022. Furthermore, at the moment, as part of the aforementioned enquiry procedure initiated by ARERA, the Campania Water Authority — at the specific request of the Authority — has ascertained the validity of the Area Plan, approved in 2000 and regularly updated in 2007, and has ascertained that the managing entity GORI has effectively implemented the Area Plan until the end of 2011 in accordance with the provisions of sector legislation.
Consequently, on the basis of what has been ascertained by the CWA, it is already possible — at least logically — to exclude any curtailment to the tariff increases established by ARERA Resolution no. 104/2016/R/idr, given that the same Authority will also have to adopt the determinations required by the Council of State as a result of the aforementioned CWA verifications. Furthermore, within the scope of the investigations carried out, it emerges that no immediate restitution should be made, given that any reduction of 30% (if confirmed) would in any case be absorbed by the tariff adjustments accrued by the Operator GORI and still open, as confirmed by the resolution of the Executive Committee of the CWA no. 35 of 12 August 2021. At this stage, it is therefore appropriate to await the measures that the Authority will adopt by the deadline (15.03.2022) in execution of Ruling no. 5309/2021 of the Council of State.
In conclusion, the Company must wait for the decisions to be taken by ARERA, so — on the basis of the above considerations and the opinion of the legal consultants consulted for this purpose, as it stands there are no economic impacts deriving from this sentence including in light of the fact that it will nevertheless be necessary to wait for any new ARERA resolutions.

Cases pending before the Regional Administrative Court of Campania, Naples office, initiated with an appeal filed by the Municipalities of Nocera Inferiore (SA), Roccapiemonte (SA), Roccarainola (NA), Casalnuovo di Napoli (NA), Scisciano (NA) and Lettere (NA), for the annulment of the resolutions of the Extraordinary Commissioner of the Sarnese-Vesuvian Area Authority no. 19/2016 of 08/08/2016 (with which the preparation of the 2016-2019 Regulatory Framework of the Sarnese-Vesuvian District area of the Campania Region was approved pursuant to ARERA Resolution 664/2015/R/idr and subsequent amendments and additions) and no. 39/2018 of 17/07/2018 (with which the update of said Regulatory Framework was approved) 
The Municipalities in question have appealed before the RAC of Campania, Naples office, the Resolution of the Extraordinary Commissioner of the Sarnese-Vesuvian Area Authority no. 19/2016 of 8 August 2016 with which the 2016-2019 Regulatory Framework was set out and the resolution of the same Extraordinary Commissioner no. 39/2018 of 17 July 2018 with which the aforesaid Regulatory Framework was updated. Both cases concerning resolution 19/2016 (RG 5192/16) and Resolution no. 39/2018 (RG 4698/18), were suspended awaiting the results of the case pending at the Council of State brought by the Municipalities of Angri (SA), Roccapiemonte (SA), Roccarainola (NA), Casalnuovo di Napoli (NA) and Scisciano (NA), for the revision of the judgement of the Lombardy RAC, Milan office, no. 1619 of 29 June 2018 which confirmed the legitimacy 88 of ARERA Resolution 104/2016/R/idr approving the 2012-2015 Regulatory Framework of the Sarnese-Vesuvian District area. In this regard, following the aforementioned Ruling no. 5309 of the Council of State of 13 July 2021, the Regional Administrative Court — deeming that there is a prejudicial relationship between the contested acts and the outcome of the appeal proceedings — ordered that the proceedings continue by submitting a new request to set a hearing once the aforementioned Ruling no. 5309/2021 of the Council of State has become final.

Case pending before the Council of State regarding appeal brought by GORI for the reform of the rulings of the Regional Administrative Court of Campania, Naples office, Nos 4846/2015, 4848/2015, 4849/2015 and 4850/2015 relating to the recognition of prior year items prior to 2012 for tariff adjustments approved by the granting authority, the Sarnese- Vesuvian Area Authority (the predecessor of the Campania Water Authority) 
The Company charged user accounts the 2014 tariff component, referred to as “Recovery of items prior to 2012”, in accordance with the provisions of the Resolution of the Extraordinary Commissioner of the Sarnese-Vesuvian Area Authority no. 43 of 30 June 2014, as amended by Resolution no. 46 of 3 July 2014 (tariff provision in turn adopted pursuant to art. 31 of Annex A of AEEGSI Resolution no. 643/2013/R/idr. and on the basis of the resolution of the Assembly of Mayors of the Sarnese-Vesuvian Area Authority no. 5 of 27 October 2012). Various parties, including Municipalities, associations and user accounts proposed legal action to formally request the annulment, with precautionary suspension, of the resolutions in question, while in a civil context annulment was requested of the invoices containing the adjustment amount. Specifically, it is noted that 7 appeals were filed with the Regional Administrative Court of Campania, in Naples and 4 extraordinary appeals with the Head of State. Furthermore, the Federconsumatori Campania association challenged Resolution no. 14 of 29 June 2015 of the Extraordinary Commissioner of the Sarnese-Vesuvian Area Authority, and the Municipality of Angri and 11 other Municipalities of OTA 3 challenged the Resolution of the Commissioner no. 15 of 30 June 2015 with additional grounds. Section 1 of the Regional Administrative Court of Campania - Naples, on 15/ October 2015, issued sentences nos 4846/2015, 4848/2015, 4849/2015 and 4850/2015, accepting the appeals presented by the Federconsumatori Campania association and by the Municipalities of Angri, Naples and Nocera Inferiore, declared annulment of commissioner Resolutions no. 43 of 30 June 2014 and no. 46 of 03 July 2014 regarding the determination and approval of tariff adjustments for the period 2003-2011 and the collection methods. Specifically, the Regional Administrative Court maintained that these resolutions were adopted in complete absence of validity, given that the Extraordinary Commissioner, from 21 July 2013 (and, therefore, six months after his appointment on 21/01/2013), would have no longer been in office and, therefore, would no longer held powers from this date.
The Regional Administrative Court did not therefore comment on the legitimacy or lack thereof of the tariff adjustments, limiting itself to identifying the lack of power of the Commissioner and consequent annulment of the provisions established after 21/07/2015, on the basis of an interpretation of the regulations which was not shared by the Area Authority and GORI. In any case, with the new regional law no. 15 of 2 December 2015, any doubt regarding interpretation was eliminated, considering that art. 21, paragraph 9 clarified, also for the purposes of correct interpretation of the regulations indicated in the Regional Administrative Court judgement, that: “the powers of the Commissioners appointed for the liquidation of the abolished Area Authorities and for performance of the functions described in Italian Legislative Decree 152/2006, in compliance with the content of art. 1, paragraph 137 of regional law no. 5 of 6 May 2013 (Provisions for the preparation of the 2013 annual financial statements and 2013-2015 statements of the Campania Region – 2013 regional financial law) cease to apply after six months from the date of entry into force of this law”. Furthermore, paragraph 9-bis of art. 21 established that “When this law is first implemented, the acts adopted by the Commissioners appointed for the liquidation of the abolished Area Authorities in tariff matters and tariff adjustments in implementation of AEEGSI resolution no. 643/2013 and for which appeals before administrative courts are pending, are ineffective until the definitive decisions adopted by the Campania Water Authority to be constituted, having consulted the competent District Council”: in other words, having ascertained as a result of paragraph 9 of art. 21 the powers of the Extraordinary Commissioner of the Sarnese Vesuvian Area Authority to have legitimately adopted the measures regarding tariff adjustments, it has nevertheless been provided that for said tariff adjustments the Campania Water Authority, as the new granting/ regulatory authority and assignee of the Extraordinary Commissioner, must make new and definitive decisions. And in fact, as far as we know, the Campania Water Authority has completed its preliminary enquiry (among other things in the sense of recognising that the previous items for tariff adjustments prior to 2012 have been correctly determined) on the basis of which its competent bodies will have to take the required measures. Consequently, due to the latter circumstance and the fact that it is also necessary to wait for the ARERA measures at the outcome of the procedure initiated with the aforementioned Resolution 373/2021/R/idr, the Council of State postponed the public hearing on the merits to 16 June 2022.

Refer to the entire contents of the paragraph “Service Concession Report” also for information on the financial effects deriving from the conclusion of the recognition of equalisation measures.

Gesesa 
The Company operates in OTA 1 Calore Irpino which promotes and develops the initiative for the Management of the Integrated Water Service in Municipalities in the Province of Avellino and Benevento.
Currently, the Authority — governed by the Extraordinary Commissioner referred to in DGR no. 813/2012 and merged into the regional EIC at the end of 2018 — has not yet assigned the management of the Integrated Water Service (aqueduct, sewerage and treatment) to a single operator. Gesesa manages the Integrated Water Service in 22 Municipalities in the province of Benevento for a total resident population of 120,922 inhabitants spread over an area of about 710 square kilometres with a water infrastructure of about 1,547 km, a sewerage network of 553 km and about 332 plants managed. The total number of user accounts amounts to 57,247, for which 2021 consumption has been estimated at about 7.8 million cubic metres of water.
The sewerage service is provided to approximately 80% of users while the purification service reaches about 40% of users.
One of the company’s objectives was to consolidate, expand and increase the efficiency in particular of the sewerage and treatment service. For these reasons, the investments also focused on the improvement and adaptation of the sewerage systems and the restructuring of the treatment plants and the preliminary design of those not yet present in the territory.
Please note that in May 2020, following a decision of the Public Prosecutor at the Court of Benevento, 12 purification plants of the company were placed under seizure with the appointment of a judicial administrator to manage them. Criminal proceeding 5548/16 RGNR, which involves various Gesesa executives and employees and is currently in the preliminary investigation stage, involves management of the purification system in the Benevento area and a possible connection with pollution of bodies of water in that same area.
Based on that claimed, the accused are alleged to have, in particular, committed fraud in public services, pursuant to art. 356 of the Criminal Code and the crime of environmental pollution, pursuant to art. 452-bis of the Criminal code which, in the Public Minister’s opinion, is a direct consequence of the negligent management of the purification plants.
In the context of its powers, the Judicial Administrator carried out a detailed audit in order to examine the plants and identify solutions and actions to improve the purification results of the same.
The Company indicated its willingness to suffer the costs for the activities indicated in the final report for this audit and, with a provision of 25 January 2021, the examining judge for the Court of Benevento gave the go ahead to execution of these activities,already begun by the Judicial Administrator.
After discussions between the Company and the Judicial Administration the decision was arrived at, for reasons of transparency and efficiency, but above all to ensure that the convergent purpose of making the plants as efficient as possible will be fulfilled in a short time, to entrust the procedures necessary for performing the actions described in the report to the Judicial Administrator, using for this purpose the rules and principles on the subject of mandates with representation. The aforesaid decision was transformed into a Draft Agreement; on 2 March 2021 approval was given by the Examining Judge.
On 17 March 2021 the agreement was signed with the Judicial Administrator to launch the works concretely with reference to the 12 plants still under seizure. During the meeting, held on 4 November 2021, of the Technical Advisory Committee, set up to manage the activities envisaged by the agreement, with the Judicial Administrator, the time schedule of the necessary interventions was redetermined with an increase of approximately 15% in the cost of the works that brought the maximum estimate to approximately € 800 thousand. Participants in the meeting also took note of the slowdown in the execution of the works, largely due to delays in the supply of materials encountered due to the Covid emergency, and recalculated the end date of the redevelopment works by extending it to 31 March 2022. With regard to the 231 proceedings against the company, it should be pointed out that, on 11 November 2021, the Examining Judge, at the request of the C.T. and the Public Prosecutor, ordered the seizure of money, directly traceable to the profit of the crime at the company’s disposal and the seizure, with the aim of confiscation, of fungible assets, property and anything else of patrimonial value at the Company’s disposal, up to a value of over € 78,000,000, with the appointment of a Judicial Administrator. Gesesa immediately appealed against this measure to the Judicial Review Court. The application for review was fully granted by the Court on 21 December 2021 and, consequently, the preventive seizure decree was cancelled, resulting in the release of the assets and their subsequent return to the Company.
The main consequence of this event was a sharp increase in attention on the part of the lending banks and, in the immediate term, the suspension of the signing of a significant line of credit (approximately € 1,500,000) and the non-renewal of the line of advances on water bill collections maturing on 20 December 2021. In order to meet this commitment, the Company requested a loan from the shareholder, Acea Molise, which was disbursed in early January 2022.
It is hoped that the release of the seizure will enable the company to resume discussions with the two banks regarding the two financial transactions.
With regard to any risks concerning the final outcome of the proceedings 231, the Directors, also on the basis of the opinion of the appointed lawyers, according to whom it is currently not possible to formulate forecasts concerning the duration, outcome and potential risk for the Company deriving from the completion of the legal process, believe that, at the stage of the proceedings, it is not possible to make a forecast of the liabilities that could arise for the Company as a result of the development of the further stages of the aforementioned proceedings. In any case, the Company is carrying out all possible collaboration activities with the Judicial Authorities.
With regard to the biennial update of the 2018-2019 tariffs, the Company prepared the final accounts referring to the 2016 and 2017 years and the Works Programme for the preparation of the tariff revision proposal with the definition of the GRCs and the Theta for the years 2018-2019, revising the investment planning for the years 2018-2019, also incorporating the results of the inspection audit of 16-20 October 2017 contained in the ARERA Determination no. DSAI/26/2018/idr, dated 10 April 2018, having as its object the initiation of a proceeding for the adoption of sanctioning and prescriptive measures regarding the tariff regulation of the Integrated Water Service. With regard to the sanctioning proceedings under DSAI/26/2018/idr, in October 2021 the Authority sent a request for information on the activities put in place in relation to the reimbursements to be made to users and the other findings of the proceedings.
In the feedback, the Company reported on the status of the reimbursements made, expecting to conclude the task within 6 months.
For other points, it is highlighted that in the biennial tariff update proposal for 2016/2019, pursuant to resolution 918/2017, the Company implemented the results of the ARERA audit contained in determination DSAI/26/2018/idr, making the necessary changes to the previous tariff structure for 2016-2017. This proposal is under approval by the CWA.
Following this correspondence, in January 2022, ARERA received the results of the preliminary investigation, in which the Authority pointed out that some points of the assessment had been archived and highlighted that the completion of the prescribed reimbursement activities would be considered favourably when closing the proceedings. In this regard, in February, the Company completed its reimbursement to all users and sent a memorandum of reply to the Authority, highlighting this and reiterating that, for the other points covered by the proceedings, it is still waiting for the approval of the two-yearly MTI2 update.
On the basis of these considerations, given that all the points of the sanctioning procedure have been acknowledged, the Company has not deemed it necessary to make any provision for risks.
The 2018-2019 tariff proposal is awaiting approval by the CWA, which in any case, following examination of the documentation produced, has deemed it consistent with the regulatory framework approved by ARERA.
Following the Deliberation of 27 December 2019 580/2019/R/idr, the data collection activity for the preparation of the tariff proposal for the period covered by the resolution (2020-2023) was initiated 90 in agreement with the CWA and data validation was carried out in July 2020. In 2020, the tariff proposal for the 2020/2023 period was being analysed and evaluated by the CWA, with which there were continuous relations for the final definition of the economic/ financial data and the Action Plan. In view of the CWA’s inaction in defining and sending the two tariff proposals to ARERA for approval, at the end of 2020 and on 29 December 2020 exactly, the Company requested ARERA to exercise substitute powers to approve the 2018-19 (MTI-2) and 2020-2023 (MTI-3) update tariff proposals and on 5 January 2021, following the opening of the portal by the Authority, all related documentation was sent to ARERA electronically.
As a result of the above, revenues were updated and recorded in 2021 on the basis of the new Guaranteed Revenue Constraint (“GRC”) envisaged for 2021 in the calculation tool under the new MTI-3 method for the 2020/2023 period, currently awaiting approval by ARERA.

Acea Molise 
Acea Molise Srl manages the Integrated Water Service in the following multi-regional and multi-area contexts: 

  • Molise Region: direct management of the Integrated Water Service in the municipality of Termoli (single OTA);
  • Lazio Region: the services covered are as follows:
    • direct management of the Integrated Water Service of the Municipality of Campagnano di Roma (OTA 2 Lazio);
    • operation of the purification plant in the Municipality of Valmontone (OTA 2 Lazio).

The Termoli and Campagnano concessions expired at the end of 2021 and were extended by the authorities to 30 June 2022 for the Termoli municipality and to 31 December 2022 for the Campagnano municipality, for the time necessary to activate the procedures for takeover and handover to the new Manager.
The Service Contract with the Municipality of Valmontone expires in April 2022.
Since 1993, the company has managed the water service in the Municipality of Termoli and, since 1999, also the urban waste water purification service, by virtue of the relevant agreements no. 170 of 30 June 1993 and no. 778 of 18 January 1999.
At the request of the Manager, Acea Molise, in 2019, the said Conventions were revised by the Municipality of Termoli, with the aim of standardising the management of the entire water sector in the city in a single document, and of adapting the contractual regulatory framework to the changes in the sector over time, in particular, to the standard convention approved by ARERA with Resolution No. 656/2015/R/idr of 23 December 2015.
On 17 December 2019, the Municipality of Termoli, with Council Resolution No. 299, approved the new revised Management Agreement according to the scheme of the ARERA standard Agreement.
Finally, in June 2021, the senior management of Acea Molise Srl favourably considered the opportunity to prepare and submit to the Municipality of Termoli (CB), as promoter, a “Finance Project for the implementation of measures to protect the territory and water and to improve the integrated water service in the Municipality of Termoli”. The Company’s administrative and technical departments then prepared the Finance Project, and it was officially submitted to the Termoli Municipality on 1 October 2021. Subsequently, on 9 December 2021, by means of Council Resolution no. 276, the Municipality of Termoli positively assessed the submitted Private Finance Project, declaring it to be of public interest. Under the conditions described, the Integrated Water Service carried out by Acea Molise, which expires on 31 December 2021, will be technically extended for the time necessary to carry out the relevant tender. For the purpose of business continuity, it is recalled that in the event that more economically advantageous tenders are submitted during the tender, Acea Molise, as promoter of the Project, has the right of pre-emption.

Tuscany - Umbria Area

Acque 
The management agreement, which came into force on 1 January 2002 with a 20-year duration (expiry is now in 2031), was signed on 21 December 2001. In accordance with said agreement, the Operator took over the exclusive integrated water service of Ato 2, comprising all public water collection, abstraction and distribution services for civil use, sewage systems and the treatment of wastewater.
The Area includes 57 Municipalities. In return for award of the concession, Acque pays a fee to all the Municipalities, including accumulated liabilities incurred under previous concessions awarded.
With Resolution no. 6/2018 of 22 June 2018 concerning the “Update of the tariff structure 2018-2019”, the Executive Council of the Tuscan Water Authority modified, with the same tariff multipliers, the composition of the 2016 and 2017 tariffs approved by AIT Resolution no. 32/2017 of 5 October 2017 providing for a remodulation of the recovery of tariff adjustments for approximately € 9.7 million in the period 2022-2023.
With the same Resolution the Executive Council of the Tuscan Water Authority approved the 2018-2019 tariff proposal, the update of the works programme, the updating of the economic and financial plan and the extension of the duration of the concession of service from the previous deadline of 31 December 2026 to the new deadline of 31 December 2031. On 9 October 2018 with Resolution no. 502/2018/R/idr ARERA approved the tariff proposal.
The new Tariff plan with the end of the concession on 31 December 2031, compared to the previous plan with the end of the concession on 31 December 2026, contains the forecast of greater investments in service infrastructure and more contained tariff increases.
Finally, it is noted that on 24 January 2019, with the submission of the required documentation, with the termination of the previous loan and the related hedging contracts and with the stipulation of the new interest rate hedging contracts, the suspensive conditions were met and, therefore, the new loan agreement became effective. The new loan was established with a pool of banks and envisages two lines of credit: (i) Term Line of € 200.0 million disbursed in a single use and with final single maturity of 29 December 2023 and, (ii) RCF Line equal to € 25.0 million payable in one or more uses within the period of use and final maturity on 29 December 2023. This line must be used exclusively to meet the financial needs of the Company for its ordinary business.
At the same time the new loan agreements were entered into, 6 new interest rate hedging contracts were entered into. The new contracts envisage the Company’s semi-annual payment of a fixed rate to the counterparties starting from 24 January 2019 and in correspondence with a payment by the counterparties to Acque of a variable rate. The amount for tariff revenues entered in the 2021 financial statements represent the GRC value recognised to the operator.
On 18 December 2020, the Executive Council of the Tuscan Water Authority, with Resolution no. 7, approved the tariff proposal for the years 2020-2023 (according to ARERA Resolution 580/2019/R/idr of 27 December 2019) to be submitted for ARERA approval. On 28 September 2021 with Resolution no. 404/2021/R/idr, ARERA approved this proposal. The Contractual and Technical Quality Macro-indicator targets for the year 2020 and 2021 and the Tariff Multiplier Values for the years 2020-2023 were also approved. The maximum amount of the residual portion of the adjustment components, as per art. 27 of Annex A of Resolution 580/2019/R/idr, provided for in the tariff after 2023, totalling € 2,895,690, was also indicated.
As is known, with Resolution 639/2021, ARERA recalculated the WACC for the years 2022 and 2023. For the same level of investment, this will result in a decrease in the Financial and Tax Charges recognised and this decrease is partially offset by the revaluation of the RAB due to the deflator.
In relation to the recognition referred to in art. 29-bis Annex A “Other regulations for adjustments in compliance with the rulings of the Council of State concerning the tariff calculation rules relating to the years 2012 and 2013 as well as to the period from 21 July to 31 December 2011”, for Acque they will have effect in relation to point “d” concerning the recalculation of the remuneration of capital and point 27-bis2, relating to recognition of the financial burden Kd on adjustments with expected positive effects.
Furthermore, in relation to the average defined cost for electricity, Acque appears to have purchased at an average cost below the defined threshold, thus being entitled to full recognition of the adjustment.
Finally, it should be noted that as of 1 January 2022, the Company will take over from Acque Toscane in the management of the water service in the municipalities of Montecatini and Ponte Buggianese.

Publiacqua 
The management agreement, which came into force on 1 January 2002 with a twenty-year duration, was signed on 20 December 2001. In accordance with said agreement, the Operator took over the exclusive integrated water service of OTA 3, comprising all public water collection, abstraction and distribution services for civil use, sewage systems and the treatment of wastewater. The Area includes 49 Municipalities, of which 6 managed via agreements inherited from the previous operator, Fiorentinagas. In return for awarding the concession, the Operator pays a fee to all the Municipalities, including accumulated liabilities incurred prior to the awarding of the related contracts.
With regard to the new tariff structure, with Resolution no. 29/2016 of 5 October 2016 the AIT approved the tariffs for the second 2016-2019 regulatory period (MTI-2) pursuant to the ARERA Resolution no. 664/2015. With resolution 687/2017R/ idr ARERA approved the tariffs proposed by the Tuscany Water Authority on 12 October 2017. Following the approval of the new tariff structure envisaged by the ARERA Resolution no. 665/2017/R/idr (TICSI), Publiacqua has billed according to the new structure since August. Finally, with Resolution no. 24 of 7 December 2018 the AGB approved the 2018-2019 tariffs and at the same time approved extension of the Company’s concession until 2024. The Company then began a market survey with the main financial institutions, aimed at verifying the availability and economic conditions to proceed with the disbursement of a medium/long-term bank loan aimed in part at extinguishing existing financial exposures and in part at supporting the investments provided for in the new approved Works Programme. On 18 June 2019 the banks were invited to submit a binding offer on the basis of a term sheet. Following the offers received, on 31 July 2019 the Company signed the new loan for € 140.0 million divided among 5 lending banks. The Base Line must be used for the full repayment of the existing Loan stipulated on 30 March 2016 with BNL and Banca Intesa for the payment of the ancillary costs of the new Loan and for the requirements related to the realisation of the investments envisaged in the EFP, while the Investment Line will be used to fully cover the requirements for further investments envisaged in the EFP. Among the conditions precedent to the disbursement of the loan, the lending banks have requested ARERA’s approval of the new Tariff Plan, including the extension of the concession. On 6 February 2020, ARERA sent a communication on the tariff provisions for the Integrated Water Service for the two-year period 2018-2019 confirming the validity of the tariff determinations adopted (and consequently the approval of Publiacqua’s 2018-2024 Economic and Financial Plan), for which the suspensive condition could be exceeded after the end of the year.
It is noted that on 26 June 2020, the AIT approved the tariffs for the third regulatory period (2020-2023) and promptly sent the tariff proposal to ARERA. Substantially, the regulatory Economic and Financial Plan (EFP) highlights a tariff trend, and consequently a Guaranteed Revenue Constraint (GRC), that is constant over time, with application only of annual inflation. On 16 February 2021, with Resolution no. 59/2021/R/idr, ARERA approved the specific regulatory framework containing the tariff provisions for 2020- 2023 pursuant to Authority Decision of 27 December 2019, 580/2019/R/idr and related Annex A, containing “2020-2023 Water Tariff Method MTI-3”.
On 31 March 2021, following ARERA resolution 59/2021, the agreement which approved the extension of the concession to 31 December 2024 was signed with the AIT.

With reference to the relations with the Tuscan Water Authority, it is noted that: 

  • with resolution of the Board of Directors no. 20/2021, the Single Supply Regulation for the integrated water service was approved, which will come into force as of 1 July 2022. The drafting of the Addendum, technical attachments, and ancillary services pricing, which will complete the Single Regulation documentation, remains in process and should be completed by the first half of 2022; 
  • with Meeting Resolution no. 25/2021, the regional regulation on how to utilise the number of family members of direct and indirect residential users for tariff purposes has been approved. This regulation governs the procedures for updating the data of the family members for the correct application of the tariff linked to per capita consumption for resident domestic users.

Acquedotto del Fiora 
Based on the agreement signed on 28 December 2001, the operator (AdF) is to supply integrated water services on an exclusive basis in OTA 6, consisting of public services covering the collection, abstraction and distribution of water for civil use, sewerage and waste water treatment. The term of the Management Agreement is 25 years from 1 January 2002 and in 2020 was extended until 2031.
With regard to the update of the tariffs for the period 2018-2019, on 27 July 2018, based on the actual data collected referring to the years 2016 and 2017 and the Investment Plan, the AIT approved the tariff revision proposal, setting the GRC and the Theta of the years 2018-2019 and also redesigning the entire tariff profile until the end of the IWS concession (Deliberation of the Executive Council of the AIT no. 17/2018 of 27 July 2018). Following further analysis of the greater needs for AdF investments related to technical quality, with Resolution no. 10/2019 of 1 July 2019 the Executive Council of the Tuscan Water Authority produced and submitted to ARERA a new tariff proposal with re-modulation of the 2031 deadline, which the Authority finally approved with Resolution no. 465/2019/R/idr of 12 November 2019, confirming the levels of the original 2018-2019 proposed theta. On 27 November 2020, based on the actual data collected referring to the years 2018 and 2019 and the Investment Plan, the Tuscan Area Governing Body (AIT) approved the tariff revision proposal with the MTI-3 scheme, setting the GRC and the Theta of the years 2020-2023 and also redesigning the entire tariff profile until the end of the IWS concession (Deliberation of the Executive Council of the AIT no. 6/2020 of 27 November 2020). This tariff proposal was then sent to the Tuscan AGM by ARERA and approved by ARERA on 2 March 2021. Total revenues of the period, including adjustments to pass-through items, amounted to € 111.8 million and a share of FoNI equal to € 11.1 million.

Umbra Acque 
On 26 November 2007, Acea was definitively awarded the contract in the context of the tender procedure launched by the Area Authority for OTA 1 Perugia for selection of the private minority industrial partner of Umbra Acque SpA (expiry of the concession on 31 December 2027). The entry into the capital of the company (with 40% of the shares) took place with effect from 1 January 2008. The company performed its activities in all 38 Municipalities constituting OTAs 1 and 2.
The tariff applied to users for the year 2019 is the rate applied to users was determined by Resolution No. 489 2018/R/idr of 27 September 2018 with which ARERA approved the updating of tariff arrangements for the two-year period 2018-2019, previously proposed by the Assembly of Mayors of the AURI with Resolution no. 9 of 27 July 2018. Finally, we inform you that on 29 December 2018 the request to extend the duration of the assignment to 31 December 2031 pursuant to art. 5.2 and 5.3 of the Convention and Resolution 656/2015/R/idr was formally sent to AURI and ARERA.
It should also be noted that the determination of the new tariff plan for the 2020-2023 regulatory period (MTI-3), approved by ARERA with Resolution 36/2021/R/idr on 2 February 2021, includes the outcome of the request to extend the duration of the contract from 4 March 2028 to 31 December 2031 and the acquisition of the new structured loan linked to a bankable regulatory EFP could be significantly reflected in the company’s operations, and therefore in the pursuit of the Company’s institutional objectives. It should also be noted that following Resolution no. 639/2021/R/idr, ARERA established the criteria for the two-yearly update (2022- 2023) of tariff calculations. In the coming months, the Company will therefore be called upon to participate with AURI in the calculation of tariffs and the related plan of operations for the next two years.
As of 31 December 2021, the rate applied to users was determined on the basis of Water Tariff Method 3 (MTI-3) under Resolution no. 36/2021/R/idr of 2 February 2021 with which ARERA approved the preparation of the 2020-2023 tariff update previously approved by the Assembly of Mayors of the AURI with Resolution no. 10 of 30 October 2020, which provide for 2021 an applicable theta of 1.105 and an increase of 4.44% compared to 2020. The average tariff €/mc was € 2.85 at 31 December 2021. The number of users served was approximately 234 thousand, substantially unchanged compared to the previous year. In terms of volumes, as of 31 December 2021, approximately 28.2 million cubic metres of water had been invoiced (measured and estimated), up from the previous year (+2.2%). The Assembly of Mayors of the AURI, with Resolution no. 10 of 30 October 2020, approved the proposed MTI-3 tariff for the four-year period 2020-2023 (Tariff Plan or TP), the relative regulatory Economic and Financial Plan (regulatory EFP) and associated Works Programme (WP), providing approval with the same Resolution for extension of the concession to 31 December 2031.

Geal 
The Company manages the Integrated Water Service in the Municipality of Lucca in accordance with the Management Agreements with the local authority expiring on 31 December 2025, updated during 2013 to take into account the memorandum of understanding signed with the AIT on 29 November 2011 and in 2016 pursuant to ARERA Resolution no. 656/2015. With regard to tariffs, it should be noted that ARERA approved the plan for the four-year period 2016-2019 with Resolution no. 726 of 26 October 2017 and approved the related update with Resolution no. 387 of 12 July 2018, also incorporating the request made by GEAL for the recognition of the OpexQT component for € 180,000/year. Regarding the four-year period 2020-2023, on the basis of the rules established by ARERA Resolution no. 580 of 27 December 2019, GEAL provided all documentation required for preparation of the new plan in the initial months of 2020, in line with the deadlines set by the AIT. On the basis of this data and the verifications carried out jointly by the Company and ARERA, the tariff provisions for the years 2020-2023 was prepared, and subsequently approved with AIT Resolution no. 4 of 28 September 2020. The dynamics of tariff increases planned for the four-year period 2020-2023 are the same as those approved by ARERA in 2018, even though the new rules of the MIT-3 have imposed new limits on operators. We can note that with ARERA resolution no. 265 of 22 June 2021, the tariff structure for 2020-2023 was approved. In particular, this resolution confirmed the increases envisaged by AIT resolution no. 4 of 28 September 2020, equal to 6.2% for each of the 4 years.
Since the ARERA resolution of 22 June 2021 confirmed the content of the previous AIT act, there was continuity in the calculation of the tariff for the entire year. It should be noted that there are eight types of use, including that relating to domestic use, differentiated between residents, non-residents and condominiums, and that the variable portion of the domestic tariff for residents is defined on the basis of the actual number of members of the household of each user.

Servizio Idrico Integrato Terni Scpa 
The Optimal Territorial Area Authority no. 2 Umbria (OTA Umbria no. 2), awarded to SII ScpA from 1 January 2002, the date on which the Convention was signed, for the duration of thirty years, the management of the Integrated Water Service (water supply, sewerage and treatment, hereinafter IWS) in the 32 municipalities of the Province of Terni (today Sub-area no.4 of the Umbria AURI). The Terni Area covers an area of 1,953 square kilometres, 93% of which is hills and 7% mountains. With the exception of the industrial areas of Terni and Narni, the land is prevalently used for forest and agriculture. The resident population served amounts to approximately 220,000 inhabitants. There are about 121 thousand users served and the quantity of water supplied during 2021 is 12.8 million cubic meters.
As mentioned, on 16 November 2020 the Extraordinary Shareholders’ Meeting, approving the revision of the by-laws that provided for a change in the industrial governance, enhanced the role of planning, monitoring and control of the public shareholders, and at the same time made effective an corporate reorganisation operation through the sale of 15% of the shares by the shareholder ASM Terni SpA to the shareholder Umbriadue Scarl. The changes also enabled full consolidation of SII in the Acea Group financial statements. On 10 March 2021, AURI approved the new version of the Service Charter, updated pursuant to ARERA Resolutions no. 655/2015 (Contractual Quality), no. 218/2016 (Regulation of the Measurement Service), no. 917/2017 (Technical Quality), no. 311/2019/R/idr (REMSI) and no. 547/2019/R/idr (Short Prescription).
Finally, on 22 June 2021, the AURI approved the regulation for the application of the supplementary water bonus. During the second half of the year, the Company made the necessary IT developments and will apply them retroactively from the first billing cycle of 2022. In September, the company submitted a request to AURI to reschedule its investments in order to intercept the deviations that had occurred up until then between the planning and the realised results. After various discussions and the realignment of the amount of investments for extraordinary maintenance to average values identified by AURI through a benchmark analysis, with Assembly resolution No. 20 of 21 December 2021, the AGB approved the remodulation of investments. Lastly, it should be noted that in May the Company submitted a waiver request to the financing banks with a change in the financial parameters established in the loan agreement signed on 16 November 2020. The Institutions approved the Company’s proposal and its updated EFP, which, compared to the originally funded EFP, incorporated the new tariff schedule from MTI-3. As a consequence, the Company pulled the remaining part of the loan of € 5 million. With the closure of the disbursement in July in accordance with contractual provisions, the Company signed two derivative contracts to hedge interest rate risk for the equivalent of € 16.65 million.

Progress of the procedure for approving the tariffs The following table shows the updated situation of the procedure for approving IWS tariff provisions for Group companies relating to the 2016-2019 regulatory period, the 2018-2019 two-year tariff update, and 2020-2023 regulatory period.

Company Approval status
(up to MTI-2 "2016-2019")
Two-year update status
(2018-2019)
Approval status MTI-3
(2020-2023)
Acea Ato 2

On 27 July 2016, the AGB approved the tariff inclusive of the bonus as per art. 32.1, subsection a) of Resolution 664/2015/R/idr. The ARERA then approved them in Resolution 674/2016/R/ idr, with some changes compared to the AGB’s proposal; quality bonus confirmed.

 

The Conference of Mayors approved the tariff update on 15 October 2018. On 13 November 2018, ARERA approved the 2018-2019 tariff update with Resolution 572/2018/R/idr. On 10 December 2018, the Conference of Mayors adopted the provisions of the ARERA Resolution.

 

 

 

On 27 November 2020, the AGB approved the tariff for the 2020-2023 regulatory period with Resolution no. 6/2020.
ARERA approved the 2020-2023 tariffs on 12 May 2021 with resolution 197/2021/R/idr.

 

 

Acea Ato 5

Tariff proposal submitted by the Operator on 30 May 2016, with request for recognition of the OpexQC. ARERA warned the AGB on 16 November 2016 and the EGA approved the tariff proposal on 13 December 2016, rejecting, among others, the request for recognition of the OpexQC. Approval by ARERA is awaited.

 

The Conference of Mayors
approved the
2018-2019 tariff update on
1 August 2018.
ARERA has not yet given
its approval.

On 14 December 2020, the Operator submitted a tariff updated request pursuant to art. 5, paragraph 5.5 of ARERA Resolution 580/2019/R/idr MTI-3 of 27 December 2019.

On 10 March 2021, the OTAA Conference of Mayors approved the proposed tariff for 2020-2023, with resolution 1/2021. The Manager appealed against this resolution to the Regional Administrative Court, which rejected the appeal. The Company appealed to the Council of State and submitted an application for economic and financial rebalancing.

 

GORI

On 1 September 2016, the Extraordinary Commissioner of the AGB approved the tariff with OpexQC as of 2017. Approval by ARERA is awaited.

 

On 17 July 2018 the Extraordinary Commissioner of the AGB approved the 2018-2019 tariff update. ARERA has not yet given its approval.

 

On 18 December 2020, the Operator submitted a tariff updated request pursuant to art. 5, paragraph 5.5 of ARERA Resolution 580/2019/R/idr MTI-3 of 27 December 2019.

ARERA warned the EIC on 2 July 2021, and with a resolution of 12 August 2021 it approved the 2020-2023 tariff proposal.

 

Acque

On 5 October 2017, the AIT approved the tariff with recognition of the OpexQC.

Approved by ARERA on 9 October 2018 (as part of the approval of the 2018-2019 update).

 

On 22 June 2018 the AIT Executive Council approved the 2018-2019 tariff update and, at the same time, the request to extend the duration of the 5-year contract, that is until 31 December 2031. With Resolution 502 of 9 October 2018, ARERA approved the 2018-2019 tariff update.

 

On 18 December 2020 the Executive Council of the AIT approved the 2020- 2023 tariff provisions with Resolution no.7.
ARERA approval arrived with resolution 404/2021/R/idr of 28 September 2021.

 

.
Publiacqua

On 5 October 2016, the AIT approved the tariff with recognition of the bonus as per art. 32.1, subsection a) of Resolution 664/2015/R/idr. On 12 October 2017, with resolution 687/2017/R/idr ARERA approved the specific regulatory frameworks for the 2016-2019 period proposed by the AIT.

 

 

On 7 December 2018 the AIT approved the 2018-2019 tariffs with the extension of the 3-year concession. ARERA approved the 2020-2023 tariff provisions and the 2018- 2019 two-year update with Resolution 59/2021 of 16 February 2021.

 

On 26 June 2020 the Executive Council of the AIT approved the 2020-2023 tariff provisions with Resolution no.3.

ARERA approved the 2020-2023 tariff provisions with Resolution 59/2021 of 16 February 2021.

 

 

.
Acquedotto del Fiora

On 5 October 2016, the AIT approved the tariff with recognition of the OpexQC.

On 12 October 2017, with resolution 687/2017/R/idr, ARERA approved the specific regulatory frameworks for the 2016-2019 period proposed by the AIT.

 

The AIT Board of Directors approved the 2018-2019 tariff update in the session of 27 July 2018. Pending approval by ARERA, the AIT Board of Directors also approved the application to extend the concession to 31 December 2031, submitted by the Company in April 2019 and approved by the AIT Executive Council on 1 July 2019. The updated tariff proposal was then presented to extend it to 2031, which in any case confirmed the tariff increase (theta) and the Guaranteed Revenue Constraint (GRC) for the years 2018 and 2019, already approved by the AIT with its Resolution of July 2018.

ARERA approved the two-yearly update (with a small correction of the recognised OpexQC) and the extension of the concession with Resolution no. 465 of 12 November 2019.

 

On 26 November 2020 the Executive Council of the AIT approved the 2020- 2023 tariff provisions with Resolution no. 6.

ARERA provided approval with resolution 84/2021/R/idr of 2 March 2021.

 

Geal

On 22 July 2016, the AIT approved the tariff with recognition of the OpexQC.

On 26 October 2017, with resolution 726/2017/R/idr ARERA approved the specific regulatory frameworks for the 2016-2019 period proposed by the AIT.

 

On 12 July 2018 ARERA approved the
2018-2019 tariff update proposed by AIT.

On 28 September 2020 the Executive Council of the AIT approved the 2020- 2023 tariff provisions with Resolution no. 4, updated with Resolution nos. 13 and 14 of 30 December 2020.

ARERA provided approval with resolution 265/2021/R/idr of 22 June 2021.

 

.  
Acea Molise

Following Resolution no. 664/2015/R/idr, both for the Municipality of Campagnano di Roma (RM) and the Municipality of Termoli (CB), Municipalities where Crea Gestioni offers the IWS, neither the Granting Body nor the Area Authority of reference submitted a tariff proposal for the regulatory period 2016-2019, so the Company independently submitted tariff proposals.

Currently approval by the ARERA is still pending.

 

The Company has submitted the data to the competent parties/AGB in order to update the 2018-2019 tariff.

For the management of the IWS in the Municipality of Campagnano di Roma (RM), given the inaction of the designated parties the Company filed an application with ARERA in early January 2019 for a tariff adjustment in 2018-2019, also revising the 2016-2019 proposal. ARERA has not yet pronounced or issued a warning to the AGB and/or to the competent parties.

For the management of the IWS in the Municipality of Termoli (CB), with a Resolution dated 17 December 2019 the Municipal Council of Termoli approved the alignment of the pre-existing Agreement to the Agreement template, extending its expiry to 31 December 2021, and confirmed the tariff increase (theta) and the Guaranteed Revenue Constraint (GRC) for 2018 and 2019, also revising the 2016-2019 proposal. ARERA has not yet given its approval.

 

The Municipality of Termoli approved the tariff provisions for 2020-2023 on 4 February 2021. These were sent by the EGAM on 4 March 2021.

For the Municipality of Campagnano, the Operator sent the tariff provisions to ARERA on 30 March 2021 in accordance with the provisions under art. 5.5 of Resolution 580/2019/R/idr.

 

Gesesa

On 29 March 2017 with Resolution no.8 of the Extraordinary Commissioner the OTAA1 approved the tariff provisions for the years 2016-2019. Currently approval by the ARERA is still pending.

 

The Company submitted the documentation relating to the 2018-2019 tariff review to the Area Authority and the preliminary investigation by the technical offices of the competent AGB (EIC-Campania Water Authority) was completed at the end of February 2020. The final approval of the EIC Executive Committee has not yet been given.

 

On 29 December 2020, the Operator submitted a tariff updated request pursuant to art. 5, paragraph 5.5 of ARERA Resolution 580/2019/R/idr MTI-3 of 27 December 2019.

The CWA convened the Executive Committee for this coming 22 July (minutes on closure of the activities of checking the minutes of 31/7/20) following the notice from ARERA received on 2 July 2021.

 

Nuove Acque On 22 June 2018, the AIT Executive
Council approved the rates .
On 16 October 2018 with Resolution 520
ARERA approved the 2018-2019 tariff
update proposed by the AIT.

On 27 November 2020 the Executive Council of the AIT approved the 2020- 2023 tariff provisions with Resolution no.5.

ARERA provided approval with resolution 220/2021/R/idr of 25 May 2021.

 

Umbra Acque

On 30 June 2016, the AGB approved the tariff with recognition of the OpexQC. The ARERA then approved them in Resolution 764/2016/R/idr dated 15 December 2016.

 

In its session of 27 July 2018, the AURI Assembly approved the 2018-2019 tariff update. The ARERA approved the 2018- 2019 tariffs with Resolution no. 489 of 27 September 2018 .

 

AURI approved the 2020-2023 tariff provisions with Resolution no. 10 of 30 October 2020.

ARERA approved the same with Resolution 36/2021 of 2 February 2021.

 

SII Terni S.c.a.p.a.

On 29 April 2016, with Resolution no.

20, AURI approved the tariff multiplier for the 2016-2019 four-year period and with determination no. 57 it approved the adjustment for previous items.

ARERA approved the 2016-2019 tariff provisions with resolution 290/2016 of 31 May 2016.

 

With resolution of the Board of Directors of AURI no. 64 of 28-12-2018, approval was given to the 2018-2019 two-year update.

ARERA approved the biennial adjustment 2018-2019 with its resolution of 20 September 2018 464/2018.

 

AURI approved the 2020-2023 tariff structure with the resolution by the Assembly of Mayors 12 of 30 October 2020.

ARERA provided approval with resolution 553/2020 of 15 December 2020.

 

For more details on the matter, see the paragraph “Service Concession Report”.

REVENUE FROM THE INTEGRATED WATER SERVICE 
The table below indicates for each Company in the Water Segment the amount of revenue in 2021 valued on the basis of the new MTI– 3 Tariff Method. The data also include the adjustments of passing items and the FoNI component.

Company Revenue from the IWS
(pro quota values in € million)
FoNI
(pro quota values in € million)
Acea Ato 2 677.6 FNI = 56.1 AMMFoNI = 13.4
Acea Ato 5 80.8 FNI = 3.9 AMMFoNI = 5.2
GORI 209.4 AMMFoNI = 4.4
Acque 71.2 -
Publiacqua 97.3 FNI = 2.7 AMMFoNI = 10.4
AdF 111.8 AMMFoNI = 11.1
Gesesa 12.9 AMMFoNI = 0.2
Geal 8.6 AMMFoNI = 1.1
Acea Molise 5.4 -
SII 38.0 AMMFoNI = 1.1
Umbra Acque 30.7 AMMFoNI = 1.2

 

 

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