Company

The great game of "utilities" - the companies, almost always public companies that manage essential services such as the distribution of energy or water - would seem to change some dynamics of the web world: if you don't count on millions of your users, you don't exist. But that's not the case: some excellent experiences prove contrary. Not to the point of saying "small is beautiful" but certainly "small is possible". By growing up.

This is the case of NED, a gas distribution company controlled by the municipalities of Rho (in the majority) together with those of Garbagnate and Settimo Milanese. With 63,000 clients in its territory, the company intends to grow and is an authoritative candidate for a leading game in the next public tender campaign.

But let's go in order, starting from the right moment of "start": "When the unbundling obligation (i.e. the distinction between production and sale of gas, ndr) was triggered, the sales company continued to be called" Nuovenergie "while we changed our name to ‘NED reti distribuzione gas’ (gas distribution networks), continuing to deal with distribution” - Orsini says - “We are 100% publicly owned but this certainly does not prevent us from being efficient”. According to the manager, a strong reason for economic interest in a company such as the one he manages “lies precisely in the fact that it is public and that it is a utility.I believe that companies like ours, small to medium in size but highly efficient, represent a great unspoken value for the sector. They should all be developed with the aim of proceeding to subsequent aggregations, especially in areas densely populated by companies such as Lombardy or Veneto ... ".

There is a successful model in this sense, and it is Ascopiave, the public company (controlled by 90 municipalities) which from Pieve di Soligo came, through successive aggregations and then a strategic agreement with Hera, to serve over 770,000 users. “And it is no coincidence that we have signed a partnership agreement with Ascopiave in view of the next tenders in our territory” underlines Orsini.

"To do our job well and, at the same time, invest in this kind of innovations - Orsini summarizes - we obviously have an obligation to be much more efficient than a larger company: otherwise, we would not stand up. The efficiency that is achieved in these companies is achieved above all by making the best use of human capital. Consider that we employ staff, in relation to the users served, in a significantly reduced number compared to the standard levels generally indicated by the Authority as a goal”. And it is mainly technical personnel, whose expertise is linked to the deep identity of our company, while we outsource even important non-core services such as those of staff (contracts, legal, etc.) keeping within the technical and operational roles: "To better understand, if it is a question of putting our hands on a counter, it’s always us who move. And this model works!”.

Future challenges

NED has strong strategic ambitions: "We manage our pipelines to reach 63,000 users and invoice around 11 million euros, so according to the ranking of the energy authority, Arera, we are a medium-sized company", says the manager. This activity is governed by the so-called "Letta decree", which twenty-one years ago initiated the liberalization of the sector by introducing the criterion of periodic tenders for the assignment of the service, with the connected, complex mechanism of compensation for outgoing operators. “The current concessions will remain ours until 2023 by virtue of the tenders we won at the time, in the previous round of assignments”, underlines Orsini. However, he proudly adds a key detail: "The distribution of gas, according to the current system which is conceptually very advanced, has two objectives: the first is immediate and it is to constantly modernize and, together, digitize the networks, and not limit itself to developing them. The second objective will be to use the networks also for the transport and distribution of other gases to come.First of all, hydrogen. Thus, playing an active and crucial role in the energy transition that has just begun. And we intend to commit ourselves a lot in this sense, with dynamic and innovative management, certainly not oriented towards mere savings”.

Hydrogen? Can such a radical technological revolution really be prepared even by a company with a turnover of 11 million? “Absolutely yes - replies Orsini - we can and must contribute. And as soon as possible we will apply to start tests also on our gas pipelines. And it is precisely in our area that the use of hydrogen mixed with natural gas for industrial applications has recently been experimented. A very important Snam project - in the field of gas transport, not distribution - to understand until what extent hydrogen can be mixed with methane and therefore be transported and used for industrial end uses ". And this despite the fact that hydrogen currently has costs that are not competitive with competing resources: but in the near future, costs will certainly drop and the use of that gas will increase.

Parternship

It is in this framework, and looking forward to the upcoming tenders for the management of the service in our Atems, that the agreement between NED and illimity starts. “With the bank founded by Corrado Passera - says Orsini - we have opened three credit lines: one goes to refinance the existing debt; another is the investment plan that we have drawn up to complete the activities from today until the end of the concessions; and lastly a revolving line to meet the obligations deriving from our participation, as an obliged subject, in the market for energy efficiency certificates". Every year, the concessionary companies of the distribution service are required to acquire energy efficiency certificates that will be refunded at the end of the year: this involves an important use of capital that usually small-medium companies do not have: "Also in this sense the agreement with illimity is very specific for us and for our business ”, explains Orsini:“ And with them we have designed a model that in my opinion will be easily replicable for future new concessions on an Atem basis. In fact, there are 177 areas in Italy, with concessions that will last 12 years for a total value of investments that many estimate in excess of 20 billion euros.

“Also because we have searched and found, along our path, a bank that has understood, trusted and supported us”, explains Mauro Orsini, general manager of NED and also of the sister company, but independent, Net, which deals with district heating.

“This bank is illimity - explains the manager - With illimity we have built a good deal. An innovative and very specific agreement for the sector: we have found an effective solution to finance the last few years of the concessions we currently hold, with a precise model designed for us. The bank understood our business well and supported our needs. Now we can play our game for development to the full”.

"We are gearing up to compete well, with all possible ambitions also thanks to the agreement with AP Reti gas of the Ascopiave group. We NED, together with the company Aemme Linea Distribuzione of Legnano, Magenta and Abbiategrasso, and precisely Ascopiave, will participate in the Atem Milano 2 and Milano 3 tenders. Together we will participate in the tenders to be competitive and win, and it is clear that we will supply ourselves with financial resources also on the market. The model of collaboration started with illimity is very important in this sense, not only for us because it will also allow smaller operators to compete in Atem races. If the banks do not understand the underlying processes, not only the small and medium operators but also some of the medium-large ones risk disappearing”.

If, on the other hand, the lenders enter into the merits of the dynamics of this market, as it is regulated today, they would discover, for example, that the guarantee on the redemption value of the networks that the incoming operators as winners of the tenders must pay to the outgoing operators, is a strong and reliable guarantee".

And so, NED is starting the challenge on September 30th, when the first tender will begin, with the necessary expressions of interest. "We will have the very important experience of the over 10 million euros of financing obtained from illimity and the awareness of having a pilot experience - concludes Orsini - an aggregate initiative, centred on a new culture of public service, and above all supported by the quality of human capital".

Keys to success:
1.
Tailor-made solution built on customer needs
2.
Ease of communication between company and bank
3.
Knowledge of the dynamics and regulatory aspects of the reference sector