Contingent liabilities and assets

Litigation on rates

Enel is the target of a series of suits filed by a number of companies that consume large amounts of electricity and who have challenged, in full or in part, the legitimacy of the measures with which first the Interministerial Price Committee (CIP) and then the Authority for Electricity and Gas determined changes in electricity rates in the past. To date, the courts have generally rejected the complaints lodged and an examination of the rulings would indicate that the chance of unfavorable judgments is remote.

Out-of-court disputes and litigation connected with the blackout of September 28, 2003

In the wake of the blackout that occurred on September 28, 2003, numerous claims were submitted for automatic indemnities for losses. These claims gave rise to substantial litigation before justices of the peace, mainly in the regions of Calabria, Campania and Basilicata, with a total of some 150,000 proceedings. Charges in respect of such indemnities could be recovered in part under existing insurance policies. About two thirds of the initial rulings by these judges found in favor of the plaintiffs, while appellate courts have nearly all found in favor of Enel Distribuzione, based upon both the lack of proof of the loss claimed and the recognition that the company was not involved in causing the event. The few adverse rulings against Enel Distribuzione have been appealed to the Court of Cassation, which has consistently ruled in favor of Enel, confirming the position established in orders 17282, 17283 and 17284 of July 23, 2009, which in finding for the appellant found no liability on the part of Enel Distribuzione.

In May 2008, Enel served its insurance company a summons to ascertain its right to reimbursement of amounts paid in settlement of unfavorable rulings.

Inquiries by the Milan Public Prosecutor’s Office and the State Audit Court

In February 2003, the Milan Public Prosecutor’s Office initiated a criminal investigation of former top managers of Enelpower and other individuals for alleged offences to the detriment of Enelpower and payments made by contractors to receive certain contracts. On April 29, 2009, a number of the accused, including the former CEO and another executive of Enelpower and the former CEO of Enel Produzione were committed for trial before the Court of Milan. On January 16, 2008, a preliminary hearing was held, following which the magistrate responsible for preliminary inquiries granted the request of Enel SpA, Enelpower SpA and Enel Produzione SpA to be recognized as injured parties. On April 27, 2009, the investigating magistrate announced a plea bargain for a number of the defendants, while the former directors and the executive of Enelpower were committed for trial. The trial proceedings began on February 12, 2010, and are still under way. The next hearing is scheduled for April 13, 2010.

Implementing the resolutions of the boards of Enel, Enelpower and Enel Produzione, legal and out-of-court action was taken against the suppliers involved, which led to settlements in favor of Enelpower with Siemens, Alstom and the agent Emirates Holdings.

At the same time, on the basis of the information that emerged during the criminal proceedings, the State Audit Court sued the former CEO and a former executive of Enelpower, in addition to the former chairman of Enel Produzione, citing them for possible administrative liability in relation to losses caused to the state. Enel, Enelpower and Enel Produzione deposited an instrument in support of the request of the Regional Public Prosecutor. In ruling no. 114106 of February 22, 2006, the State Audit Court, finding that the former directors and managers cited in the suit were liable, awarded Enelpower damages of about €14 million. The ruling was appealed by the State Audit Court – Lombardy Section and the former directors and managers. On December 3, 2008, the Central Jurisdictional Appeals Section of the Rome State Audit Court issued ruling no. 532/2008, which, in confirming the trial court ruling, also found in favor of Enelpower and against the former Enelpower and Enel Produzione directors and managers for losses caused to the state, ordering them to make restitution in the amount of about €22 million. The ruling also confirmed the seizure of assets of the appellants ordered by the Regional Public Prosecutor and sentenced them to pay court costs for both proceedings. In February 2009 the ruling was appealed by the former chairman of Enel Produzione to the Court of Cassation, which on December 19, 2009, upheld the jurisdiction of the State Court of Accounts for the non-economic damage to the Ministry for the Economy and Finance caused by the defendants and quashed without remand the appeal ruling of the State Court of Accounts on grounds of lack of jurisdiction of the Court of Accounts for damages concerning companies. Consequently, Enel SpA, Enelpower SpA and Enel Produzione SpA took action to recover damages before the competent ordinary court.

In addition, in parallel with the above proceeding, Enelpower and Enel Produzione initiated a revocatory action against the claimants in respect of the former Enel Produzione CEO and the former Enelpower CEO and executive, obtaining a court ruling of the invalidity in their regard of a number of asset disposals. Finally, following the enforcement proceedings undertaken against the former directors and managers, more than €300,000 have been recovered.