24 August 2015 Audition before the 10th standing committee of the italian chamber of deputies "fact finding survey on the italian national energy strategy and key energy-related issues" speech by Bruno Lescoeur, CEO of Edison Honourable Ms President, Honourable Members of Parliament, I would like to begin by expressing my gratitude for your kind invitation to Edison. This has come at a defining moment for our company, as we are celebrating 130 years of activity, and it highlights the pivotal role Edison has played in the development of the country. In providing illumination for the La Scala première of 1883 we were the first to bring electricity to Italy. Soon after that, we built the first hydroelectric power plants in this country. In the 1950s we pioneered hydrocarbon exploration and production, and in the 1990s we invested in a huge programme which led to the creation of cutting-edge facilities in Italy. Joining the EDF Group has been one of the things that have made us a leading name in gas supply and hydrocarbon development, both in Italy and in the broader Mediterranean area. The success of thousands of extraordinary talents, who have gone down in the history of Italy, is an integral part of Edison's history. Let me just mention, here in this building, Mr Giuseppe Colombo, founder of Edison and mastermind behind the Polytechnic University of Milan, who went on to be a Minister in several Cabinets, and to preside over this Chamber. And let me briefly cite Mr Giacinto Motta, a historic figure in the institutional and industrial life of this country, and Mr Ferruccio Parri, former head of Edison's Economics who went on to be the first Prime Minister of post-World War II Italy and to be appointed senator-for-life. Therefore I would like to thank you once again for letting us take part in this series of auditions on the National Energy Strategy. This strategy is the most solid, consistent framework for Edison's strategic goals and investments, all of which are fully aligned to the fundamental priorities of it. Let me begin by describing the difficult situation in which we are currently working. The industry is increasingly less capable of attracting new industrial investments. It does not contribute to growth and competitiveness, due to the constant price increase brought about by the subsidies, the regulations, and the tax burden. The current policies have led to no effective achievements in sustainability. This is not only to be ascribed to the international crisis, but also to the distortions created by the massive subsidies given to mature -and mostly non-European- technologies, which have left less and less space in the market for modern, efficient, and sustainable gas-fuelled facilities. As a result, the latter are now at a standstill or shutting down altogether. Parallel to that, our international partners are focussing on competitiveness, environmental sustainability, and technological innovation. Thanks to the effective contribution of the National Energy Strategy and other elements, Italy must help Europe to work on its most valuable skills, and its true points of strength. I will mention two of those: The fight against climate change must remain the distinctive feature of the upcoming European framework. The goal of cutting CO2 emissions must be set in stone, challenging, and a driver of the long-term investments in energy, which in turn will result in concrete and significant changes in the price department. The support for renewables must shift towards the research and development of new technologies, along with the penetration of energy efficiency. The mistakes and the distortions of these past few years, which were brought about by a multitude of inconsistent objectives, must not be allowed to happen again; The necessary complement to the sustainability policies is the availability of gas supply that is safe and in line with market values. Stable, positive, and long-term relations with the historic suppliers must be revived, particularly with the Russian Federation, as they need to invest towards Europe in new productions and in new routes. Edison is active in this respect, thanks to its projects and to the role it plays as the international gas platform of the EDF Group, which is one of the partners in the development of the South Stream project. Moreover, relations with new suppliers must be encouraged, starting from the Eastern Mediterranean, an area where considerable hydrocarbon reserves have recently been discovered, which Europe can now take advantage of. A great example of this is Israel, where Edison is the first European operator working in the hydrocarbon exploration and production. This is the context where Edison sees the future development of the Italian market. Now I would like to move on and give you an overview of the main challenges we currently face, and then I will leave the floor to Mr Potì, who will give you more detailed information on some of the proposals. The first challenge lies in the gas market, which is still the number one element of a safe and sustainable energy system for Italy. We can see no alternative to stable relations like the long-term contracts. However, they must be more and more in line with the market's current needs and actual conditions. I am proud to say that Edison was the first company in Europe to pave the way to the renegotiation of long-term contracts, back in 2010. It was a complex, yet necessary process to make sure the future of the contracts would be in line with the conditions and expectations of the Italian market; The second challenge, also gas-related, has to do with the future. Edison has been promoting key infrastructure project such as the Regasification facility in Rovigo, which is now fully operational. The European Union identified our GALSI projects in Algeria, IGB to connect Greece and Bulgaria, ITGI between Turkey, Greece, and Italy, as Projects of Common Interest, which has the highest priority level at European level for this kind of infrastructures. After the Shah Deniz consortium chose Italy as a destination for the Azerbaijani gas through the TAP, Edison is convinced that its projects can be a key option for the new Italian supply sources, and that they can contribute to the opening of the Southern Corridor, thanks to their maturity, their competitiveness, and to the approval provided by all institutions involved, including the local-level ones; Having competitive gas supplies is a necessary, yet not sufficient condition for the creation of a truly efficient and competitive electricity market in Italy. Today, our thermoelectric power plants are suffering due to the subsidised, unpredictable energy that is introduced into the market with priority. Many power plants are currently on standby, and the worst performing ones are being closed down. At the same time, these facilities are increasingly necessary to provide the system with flexible services, which have acquired crucial importance with the development of renewable, unpredictable energy sources. We therefore hope that better integration of renewables into the market and the introduction of the capacity market will lead to a swift and effective solution; The synergy of these interventions could create a balanced and efficient system in Italy, but competition would still remain incomplete if this didn't work out on the final market. Both consumers and operators need actual competition, innovation in services and sales models, and a proper economic protection for those consumers who really need it; The last challenge we are seeing in the Italian energy market lies in enhancing Italy's own domestic resources, besides the so-called white coal, i.e. the hydroelectric power plants that are so precious for this country and one of Edison's proudest achievements. In order to combat the increasing energy dependency, Italy now has the chance to relaunch important investments in hydrocarbon exploration and production. These investments can produce a substantial improvement in the Italian trade balance. The National Energy Strategy estimates €15 billion in new investments, and the creation of 25,000 jobs between today and 2020. This is also an entrepreneurial challenge for Edison in Italy, with a three-year investment plan worth a total of one billion euros, which I am proud to confirm. We are more than ready to pull our weight, if the authorizations come in due time. Moreover, I would like to underline that Italy has a good environmental protection framework, thanks to its effective regulation and the presence of expert authorities. This is definitely a challenge we can win. Honourable Members of Parliament, I would like to thank you all once again for having me and for letting me talk about Edison's role in the Italian industrial and civil history, and to remind you that we are absolutely open to any exchange of ideas with you in the future. I will now give the floor to Mr Roberto Potì, from whom you will hear a succint overview of our proposal for the further development of the National Energy Strategy.