Edison: revenues up to 7,593 million euros (+16.8%); lower ebitda (-17.6%) and net profit (-11.8%). the board approves the early termination of CIP 6 contracts

Results penalized by gas importation and sales contracts. Further growth in sales to end customers (+11.6%) and for natural gas (+11.3%).

Milan, October 26, 2010 – Edison’s Board of Directors met today to review the Quarterly Report on Operations at September 30, 2010.

Operating Performance of the Group at September 30, 2010

In the third quarter of 2010, demand for electric power was up modestly (+0.8%) compared with the same period last year, due to decreases of 2.7% in August and 2% in September. In the first nine months of 2010, electric power demand increased by 1.7% compared with the same period in 2009.

Italian demand for natural gas also showed limited growth in the third quarter of 2010, rising by just 0.8% compared with the same period last year. However, demand data for the first nine months of the year show a more robust increase (+7.8%) compared with the same period in 2009, with favorable weather conditions.

When the comparison is made with 2008 data, the slowdown in the demand in the first nine months of 2010 is even wider. -5.3% for electric power and -5% for natural gas (-8.9% net of weather conditions).

The negative impact of slumping demand was magnified by highly turbulent conditions in the natural gas market, caused by the huge quantities of spot gas that were being offered on the most important European markets (English, Dutch and German hubs) at prices drastically lower than those of conventional long-term contracts to supply natural gas (benchmarked to crude oil prices). Also in Italy this development caused a strong decrease in market prices, which fell below the cost of gas imported under long-term contracts. To address this situation, all industry operators, Edison included, began the process of renegotiating the terms of these contracts.

In the electric power sector, margins of Power Exchange transactions were also down in the first nine months 2010. Specifically, the combined impact of low natural gas prices and strong competitive pressure, caused by new capacity coming on stream, produced a severe reduction of the average price of electric power traded on the Power Exchange (64.10 euros per MWh, down from 66.20 euros per MWh in the first nine months of 2009).

In this highly challenging environment, Edison ended the first nine months of 2010 with positive sales results (revenues up 16.8% to 7,593 million euros) and EBITDA of 930 million euros (-17.6%). Net profit decreased to 179 million euros (-11.8%) reflecting unfavorable trends in natural gas merchant activities, as explained above. The results reported by the Group’s other business were substantially in line with those of the previous year.

More specifically, the electric power operations reported positive results, as an increase in unit sales (+18%) driven by growth in sales to end customers and an expansion of the trading activity basically replaced Power Exchange sales thus reducing the resulting exposure to the low margins entailed by those trades. In the hydrocarbons sector, the impact of the inability to generate margins from the importation and sale of natural gas completely offset the effect of the positive results produced the commercial activities (natural gas sales volumes up 31.6%). The strong industrial performance by the hydrocarbon exploration and production activities  both in Italy and abroad (oil production up 34.6% and gas production up 9.4%) has mitigated the reduction of results.