Operating review

ARIA

ARIA directly manages the assets of subsidiaries Terni En.A., E.A.L.L., Enercombustibili and Ergo En.A., incorporated during 2011. The Company has electricity vending relations with ACEA Energia, the market operator, to which it transfers volumes of energy produced by the two new lines of the San Vittore plant over and above that withdrawn by the national grid operator (GSE) under the CIP 6/92 regime.

 

Terni waste-to-energy plant (UL1)

The Terni waste-to-energy plant produces electricity from renewable sources, specifically in a pulper paper mill waste-to-energy plant.

The regular operation of various sections of the plant, and the turbo generator in particular, made it possible for the testers to start testing the revamped plant. The final test certificates, a summary of the various interventions carried out, will be issued during the course of 2015. Furthermore, contracts for the conferment of pulper waste guaranteed 2014 plant fuel requirements.

With reference to the national grid operator's inspections carried out by RSE starting in December 2013, the joint control of the method used to determine the biodegradable fraction of the waste subject to incentives was completed, and the company has applied for the issue and collection of the corresponding green certificates.

In October 2014 a new authorisation application was filed to obtain an expansion of non-hazardous waste categories (C.E.R. codes) for the recovery of energy at the Terni waste-to-energy plant. This initiative does not entail plant alterations, and is aimed at obtaining new types of non-hazardous waste that may potentially be conferred by producers in the Umbria Region and neighbouring areas, in compliance with the EU “proximity” principle for waste collection in respect of production sites.

With regard to the integration of C.E.R. codes, the Company has filed a coordinated request for an Environmental Impact Assessment and update of the Integrated Environmental Authorisation with the Umbria Region. The application takes into account the provisions of art. 35 of LD 133/2014 (“Unlock Italy”), with special reference to the functioning of the thermal load saturation plant. The procedure is already under way, with the Umbria Region having notified the company of the “Admissibility of the filed application”, and the EIA procedure is ongoing with the Provincial Authority of Terni, as the competent body in this sphere.

 

Paliano RDF production plant (UL2)

The Paliano RDF production plant possesses a single authorisation for the production of RDF, expiring on 30 June 2018.

As already mentioned, in June 2013 part of the plant was partly destroyed by a major fire, and the facility was subsequently seized by the judicial authorities for evidentiary purposes until November 2014. The fire was considered to be a case of arson perpetrated by third parties.

Following the release of the plant seizure, the company began preliminary checks to start removing the debris left by the fire and restore the site to put the plant back into service and implement a plan of action for the complete replacement and reconstruction of the RDF production plant.

The Company thus appointed a major firm in the industry to perform the required technical inspections and prepared the characterization and safety plan of the areas, the waste management plan and the demolition plan, all of which were submitted to the Provincial Authority of Frosinone for approval. The whole procedure will be carried out in consultation with the relevant Bodies and Authorities, and with the technicians appointed by the insurance companies already involved in relation to the various risks associated with and resulting from the event. The technical checks performed to verify the state of the site and structures after the fire have been completed, and work has started on the site to rebuild the plant. It is believed that in the first half of 2015 the planning process for the reconstruction of the RDF production plant will be completed. A tender call has been completed for demolition works.

The insurance settlement will be calculated on the basis of the cost of reconstructing the new plant which, on the basis of contractual clauses, will be reduced by 20% as the fire is considered to be a case of arson perpetrated by third parties. Lastly, accepting the requests submitted by the company, the insurance company granted an advance compensation of 2 million euros for damage suffered.

 

San Vittore waste-to-energy plant, Lazio (UL3)

The San Vittore waste-to-energy plant in Lazio produces electricity from renewable sources, particularly RDF. In the reporting period, lines 2 and 3 of the plant guaranteed regular service, both in terms of the electricity produced and in terms of RDF used for energy recovery.

With reference to the preliminary phase of the process for renewing the Integrated Environmental Authorization, the company completed the submission of technical documentation, and is awaiting the conclusion of the administrative procedure and issue of the new Integrated Environmental Authorization which, based on recent regulatory changes in the sector, will have a duration of 16 years.

With reference to the provisioning of RDF used in the waste-to-energy process, the Company drew up an adequate number of contracts to guarantee supply for the continuous operation of the two Lines. New contracts for 2015 are being drawn up to saturate currently authorised annual quantities for Lines 2 and 3.

With reference to reconstruction work on Line 1, the procedure for choosing the enterprise that will perform revamping operations was completed, and the relative contract was drawn up.

The intervention sites will presumably be selected and consigned in the first quarter of 2015. Scheduled works will end during the course of 2016.

With regard to the provisions of art. 35 of LD 133/2014 (“Unlock  Italy”), it is further noted that the Company has also sent to the Lazio Region, as competent authority, the request to update the AIA authorisation for the plant, with the use of the two Energy Recovery lines currently working, at the maximum thermal load.

SAO

The company owns the waste dump located in the municipality of Orvieto and manages municipal and special waste.

The Company collaborated with Umbria ATI4 to revise and update the Economic-Financial Plan for the management of the group of Orvieto plants. This Plan was approved by ATI4 in Resolutions Nos. 2 and 3 on 21/01/2014; said resolutions also contain the new tariffs and various biomass transfer components in force from 1 January 2014.

In March 2014 the company notified the competent local authorities that, in accordance with the authorisations issued, it had called a public tender for the Orvieto waste treatment plant revamping contract and, as a consequence, in observance of the area plans and the above authorisations, waste transfer to this plant would stop, as indeed it stopped, on 30 April 2014. The company also stated that, from 1 May 2014 non-separated solid urban waste would be treated in an alternative way for subsequent placement in landfill, as authorised by the Terni Provincial Authority. On 6 June 2014, the Province of Terni authorized the alternative treatment and subsequent placement in landfill as long as there is no dedicated plant available in the Umbria ATI4 area.

On 19 June 2014, the company informed the relevant authorities that it would begin construction of the frontal capping for the reclamation of layer No. 8 of the Orvieto landfill; work was completed on 27 November 2014.

In August 2014 the company filed an Integrated Environmental Authorization application to make substantial changes to the Orvieto plants, with a project for the “Morphological adaptation of the site and optimization of volumes and summit capping” of the open landfill (2nd gully). In particular, this project involves the implementation of another berm, the remodelling of berm 10, the optimisation of the summit capping and use of a new landfill management system. The main goals and effects of the project are as follows: the extension of landfill volumes, proposing an alternative cultivation system to optimise the running of currently managed areas (2nd gulley), an increase in the net capacity of the landfill in quantitative terms of waste that can be conferred on site, extension of the useful life of the landfill guaranteeing continuity of the essential public service for the municipal waste processed, coverage of the area planning and the possibility of handling inter-ATI mutual support as required by current Regional Legislation and the Area Plan, control of the tariff for the disposal of waste in the landfill for the benefit of the Municipalities using the same, and savings in natural resources to use as technical materials.

The authorisation procedure includes a phase for Assessing Environmental Impact by the Umbria Regional Authority, and the substantial modification of the current Integrated Environmental Authorization by the Terni Provincial Authority.

The Umbria Regional Authority declared the application feasible from an administrative point of view, while the Terni Provincial Authority has already held the first preliminary services conference, where the processes and assessment procedures of the documentation presented were verified.

AQUASER Group

Aquaser

Aquaser operates in the area of ancillary services associated with the integrated water cycle, recovering and disposing of sludge from biological treatment and waste produced from water treatment, treating effluent and liquid waste and providing the services connected thereto.

It currently transports and recovers treatment sludge for most of the water companies in the ACEA Group. The location of the plants is also extremely important from a strategic viewpoint, with two in Lazio, which process the sludge transferred under the contract with ACEA Ato2 and ACEA Ato5, and one in Tuscany near Grosseto, which processes the sludge transferred under the contracts with companies operating in Tuscany and Umbria, resulting in a reduction of transportation costs.

The sludge is recovered through delivery to composting plants, mostly third party, and by spreading sludge on farmland according to largely third party authorisation.

In the reporting period the company continued to consolidate its position on the market.

It is noted that as part of the broader project to reorganise the structure of the ACEA Group, designed, among other things, to simplify and optimise the organisational and operational structure and rectify relative credit positions, the General Meeting of Shareholders of 30 December 2014 resolved to sell to parent company ACEA all of the equity investments held in Solemme and SAMACE. Furthermore, the project for the merger of SAMACE with Solemme was filed, and will come into force for accounting and tax purposes as from 1 January 2015.

The aim of the above operation is to form a single company for the management of organic waste, modifying company functions involved in the process so as to restore to Aquaser its original role as sludge management intermediary, leaving all the organic waste management activity with the company that will be in charge of plant engineering.

 

KYKLOS

Kyklos operates in the waste treatment sector, producing and marketing mixed compost conditioners. In particular, it operates in the locality of Campoverde in Aprilia on the basis of a Single Authorisation for special non-hazardous waste treatment and recycling plants granted by the Province of Latina, having a maximum capacity of 66,000 tonnes/year.

On 8 June 2010, the authorisation procedure was started for the upgrading of the current plant and increase in its capacity to up to 120,000 tonnes/year through the construction of a biogas plant with recovery of electricity and heat energy.

It is noted that on 28 March 2013 the Provincial Authorities of Latina granted a single authorisation for a substantial variation in the waste treatment and recycling plant and for the production of energy. The authorised intervention, which will bring compostable waste treatment capacity up to 120,000 t/year, is to ensure that organic waste recycling requirements are met, in particular considering the current waste emergency at a regional level, avoiding dumping, and consolidating the primary role of Kyklos in the territory of reference.

As a result of the appeal for the repeal of the above authorisation, further to its suspension, filed by the Municipality of Nettuno, and of the appeal filed by Kyklos for the cancellation of some parts of the same authorisation, on 25 February 2014 the Company presented a request for suspension of the term for the start of work (within twelve months of issue) until the Latina Regional Administrative Court passes sentence on the above. The request was approved by the Latina Provincial Authority in April 2014.

An accident occurred on 28 July 2014 in the company's composting plant. Two people working for one of the external contractors collecting and transporting the leachate produced in the plant died.

Leachate is a liquid, non-hazardous waste, obtained from the treatment of non-hazardous waste in the plant, it is collected on a daily basis in operations performed in the open air, pumped into tankers, to be disposed of in suitable, authorized plants.

On 30 July 2014 the Deputy Public Prosecutor's Office of the Latina Law Court ordered “the urgent preventive seizure of the Kyklos composting plant, authorizing from this moment only activities for processing material already on site in accordance with the provisions of the Local Health Authority, the supervisory authority for the authorised activity”, appointing the plant’s Technical Manager as guardian.

The competent Judicial Authority duly initiated proceedings, with an enquiry that is ongoing. Those under investigation are the owners of the haulage firm and of the company providing services for the transportation and disposal of leachate, and the company’s legal representative at the time of the accident and the technical manager.

Even the technical and administrative staff of Kyklos S.r.l. have demonstrated the correctness of their actions in relation to all licensing and legal obligations, they have provided their utmost cooperation to the ongoing activities of the competent Authorities, complying with everything ordered thereby.

In light of the above, it is hoped that once activities have been completed to retrieve and dispose of materials still present in the plant, and further measures deemed necessary by the cited Authorities have been adopted, it will be possible to remove the precautionary seizure and restore conditions for the normal functioning of the plant, which performs work of public interest, recycling the organic fraction from separated waste collection of numerous municipalities, mainly in the Lazio Region.

It is also important to mention that, since the composting plant opened it has been continuously inspected, without any of the inspections reporting critical elements concerning ordinary plant management.

As the plant is under seizure, it is impossible for Kyklos to produce revenue, while the Company is obliged to pay the costs of its commitments.  The continuing seizure has resulted in a greater liquidity need that the company has asked its shareholders to meet. ACEA has provided Kyklos with the financial resources needed to pay wages (as well as social security contributions and withholding taxes) and debts incurred for the disposal of leachate, and given the necessary support for the recouping of unpaid debts. All actions will naturally be carried out to ensure the resumption of business activities during the course of 2015.

 

SOLEMME

Solemme operates in the waste recycling sector, composting organic waste, in particular sludge from civil waste water treatment and producing mixed compost conditioners. The composting plant is part of the Grosseto Provincial Authorities' Waste management plan.

Solemme's market of reference is sewer sludge produced in Tuscany, in particular within the scope of ATO6 Ombrone, for the Province of Grosseto and Siena, and the treatment of waste from separate collection.

The current capacity of the plant is insufficient to guarantee recycling the amount currently produced, and an increase in production is expected considering the increase in sewer waste treatment.

The difficulties in developing an integrated WTE solution for this sludge led to the start of the decision-making procedure to upgrade the existing plant.

The composting plant has been the subject of discussion with the municipality of Monterotondo Marittimo for some time, concerning its development and industrial typology.

The Municipal Authority filed an appeal with the Regional Administrative Court against the authorisation issued by the Grosseto Provincial Authorities concerning the proposal for the new biogas and composting plant presented by Solemme with a capacity of 70,000 T/year.

This authorisation for plant development requires the approval of the Monterotondo Marittimo Municipal Authority for the implementing plan presented by the company, which the Municipal Administration refuses to give after passing a town council resolution on 26 March 2013. The parties involved met in February 2014 to attempt to clarify all the technical aspects and find a solution to obtain the authorisations which are still required.

On 11 April 2014 the Grosseto Provincial Authority extended the plant operating authorisation until 14 April 2015. A meeting was held in June with the new administration to overcome the pending litigation and approve the preparatory implementing plan prior to construction of the new plant, which should be approved this year.

The Municipality of Monterotondo Marittimo approved, with Resolution no. 36 of 25 November 2014, the Implementing Plan, which is about to be published (on 28 February 2015), as preparation for the decision that will make it possible, upon granting of the building permit, to start work on the construction of the new plant.

The Company and Municipality of Monterotondo Marittimo are about to enter into an agreement for:

  • the finalisation of a procedure to approve the Implementing Plan by 31 December 2014 (now completed), and all authorisations needed for the construction and running of the new plant;
  • the waiving of claims on the part of the Company and the Municipality of Monterotondo Marittimo in pending disputes, before (i) the T.A.R. for the Company, against the municipal decision not to approve the Implementing Plan, and (ii) the Council of State for the Municipality, against the validity of the Environmental Impact Assessment;
  • the improvement (jointly with ENEL) of the road leading to the plant once the plant has been built and is in operation;
  • after the entry into service and generation of revenues, mitigation initiatives and actions to prevent, reduce and eradicate environmental impacts generated by the plant;
  • the payment of forms of environmental compensation to the Municipality for waste coming from outside the ATO.

 

SAMACE

The Company was taken over completely by Aquaser on 5 July 2013.

It operates in the waste recycling sector, producing and selling compost conditioners. The Company operates in Sabaudia with a Single Authorisation for the treatment and recycling of special non-hazardous waste granted by the Province of Latina. On 22 May 2014 the Company filed an application to increase capacity up to 60,000 tonnes/year of compostable waste, with the construction of a new aerobic composting section, so as to attain an overall capacity of 90,000 tonnes of treatable waste. With Decision no. G17953 of 12 December 2014 the Lazio Region decided to submit the project to an EIA procedure.

 

ISA

Isa operates in the logistics and transportation sector, and is deemed to be of strategic importance in achieving market consolidation objectives. In fact, the Company was bought to strengthen group organisation and provide group services in a more independent way, not only transportation but also services relating to other activities associated with and complementary to the farmland spreading of sludge, maintenance of drying beds and automatic discharge services, which have led to a significant increase in business activities. In particular, the fields of sludge dewatering and liquid waste transportation were significantly developed with a view to improving the service offered, and to keeping down recycling and/or disposal and transport costs, basically due to the distance of treatment plants from sludge production sites.

It is noted that the company currently has its own fleet for haulage activities.