LOTS OF IDEAS, BUT NOT VERY CONCRETE OR ONGOING. IN TIME WE WILL FIND SOME SOLUTIONS…
In recent times, unfortunately, also in light of recent sad international events, there have been various interventions by the legislator in the energy field, which for the time being have resulted in determining an increase of investors’ mistrust in the renewable sector. The latest measure seems to want to restore investors’ confidence, but there is a long way to go.
The measure which first upset the plans of those involved in the production of electricity from renewable source plants was art. 16 of Law Decree no. 4 of 27 January 2022 (the so-called DL Sostegni ter). Without wanting to provide an in-depth analysis of the content of art. 16, but rather only just a brief outline, from 1 February to 31 December 2022, the legislator had provided for the application of a two-way compensation mechanism. The mechanism was calculated on the price of energy produced by photovoltaic plants benefiting from fixed tariffs, deriving from the so-called energy account, and on the electricity produced by hydroelectric, geothermal and wind power plants that do not benefit from incentive mechanisms, all of which have a capacity of over 20 kW: the producer would have had to pay back the difference between the market price and an average reference revenue determined by the legislator.
Art. 16 had been the subject of severe criticism not only from the world of renewable energy producers, but also from ARERA (the Energy, Networks and Environment Regulatory Authority) itself, which in its memorandum of February 18, 2022 (60/2022/I/COM) had pointed out certain critical aspects of art. 16 (e.g. the fact that the profitability of renewable source plants has wide margins of variability during the plant’s useful life and that this variability impacts differently on incentivized and non-incentivized plants, or the fact that the rule affects only some possible beneficiaries of the “extra profits” but not all).
Later on, probably in response to the criticisms received, but perhaps more likely due to the difficulties in application, the legislator intervened with art. 5 of Law Decree no. 13 of February 2022 (the so-called Fraud Prevention Decree), which came into force on February 26, 2022. In particular, paragraph 8 of art. 5, on the one hand provides for the repeal of art. 16 of Law Decree no. 4/2022, thus preventing the concrete application of the same, and on the other hand introduces new rules aimed at capturing the so-called “extra profits” that would have accrued or would accrue in the period between February 1, 2022 and December 31, 2022, and only in favor of those plants with a power greater than 20 kW but this time limited
– to photovoltaic sources, provided that they benefit from a fixed premium deriving from the Energy Account not dependent on market prices;
– to solar, hydroelectric, geothermal and wind power, provided they do not have access to incentive mechanisms, which came into operation prior to January 1, 2010.
Also in this case the so-called extra profit would be determined through the application of a two-way compensation mechanism on the price of energy, understood as being the difference between the prices identified by the legislator based on zonal prices (therefore based on a fixed number) and the market price calculated according to parameters indicated by the legislator. Moreover, this mechanism is not applicable if there are supply contracts (PPA) having certain characteristics.
The extra income determined in this way will be paid into a special fund set up at the Cassa per i Servizi Energetici ed Ambientali and used to reduce the requirement needed to cover general charges relating to the electricity system.
Similar objections to those raised against art. 16 of Decree no. 4/2022 may be raised against art. 5 (to which the retroactivity of the regulation is certainly added). In our opinion, the most perverse effect of the legislation is, however, the climate of mistrust that sneaks in among investors in renewable energies; a mistrust that could undermine Italy’s ability to achieve the ambitious (but now necessary) objectives it has set itself.
Finally and in the opposite direction, almost as if to restore that climate of trust and confidence in the legislator and in the will to direct energy policy choices in favour of renewables, Law Decree 17/2022, almost as if to avert any criticism, is entitled “Urgent measures for the containment of electricity and natural gas costs, for the development of renewable energy and for the relaunch of industrial policies”. Law Decree 17/2022 contains, in fact, regulations on several subjects and, for the aspects relating to energy and without describing the specifics of the individual provisions, seems to be a more balanced measure, less governed by the need to find resources to cut electricity costs. It also appears to be wide-ranging and more oriented to pursuing the road of administrative simplification for plants from renewable sources (art. 9 et seq.). Undoubtedly a positive note is the allocation of a tax credit for companies in southern Italy that invest in energy efficiency, which then becomes a credit that can be accumulated with other benefits.
COURT OF ACCOUNTS AND DERIVATIVE CONTRACTS: CONTRA FACTUM NON VALET ARGUMENTUM.
The case concerns two interest rate swap contracts entered into by two banks with the Basilicata Region in June 2006 to hedge the risk of a rise in interest rates on a 20-year floating-rate loan, assisted by State contributions, taken out by the Region in December 2000 for the reconstruction works in connection with the 1998 Lagonegrese earthquake.
The banks involved in the proceedings obtained an important victory in the proceedings before the Italian Court of Accounts, judicial division of the Basilicata Region, judgement no. 2 of January 20, 2022.
The prosecution case was based on the fact that the banks, advisors and counterparties of the derivative contracts, replaced the Region and interfered in the organizational apparatus of the public entity establishing a service relationship (which is given by the actual inclusion of the banks in the apparatus of the Public Administration), a legal prerequisite for the jurisdiction of the Court of Accounts. According to the Public Prosecutor, the derivative transaction, deemed irrational and uneconomic, created a damage to the Region’s treasury between 48.7 and 42.5 million euros (corresponding to the negative flows the Region paid pursuant to the derivative contracts), while the officials and directors of the Region were liable for 2.4 million euros (corresponding to the implicit costs of the transaction).
In this case, however, the prosecutor was not able to prove the existence of the service relationship of the banks. The Court held that there was no replacement by the banks in the management and/or decision-making process of the Region, nor any form of “abdication” by the public body from its public functions, as confirmed by a number of concrete factual circumstances such as, among others, the existence of proposals relating to other transactions made by the banks and never implemented by the Region, the proposal to unwind the same derivative transaction at issue, which was rejected by the Region.
The Court reiterated that the breach of contractual or pre-contractual private law obligations, as alleged by the prosecutor in this case, falls outside the jurisdiction of the Court of Accounts (as already affirmed by the Supreme Court, Joint Divisions, no. 2157/2021). Therefore, on this basis, the Court declared the lack of jurisdiction over the banks in relation to the derivative transaction.
Furthermore, the Court ruled out the liability of the Region’s officials and administrators, ascertaining that the transaction was rational and cost-effective for the Region at inception. The rationality of the transaction emerged, in particular, by considering the hedging function of the contracts in question, which – in essence – allowed the Region to replace a variable-rate loan with a fixed-rate loan and to maintain an appropriate planning in the regional budget. Moreover, the capital swap embedded in the transaction allowed the Region to obtain a modest amount of extra financing which was necessary to complete the post-earthquake works already planned by the Region.
Finally, the Court pointed out that the negative differentials the Region paid pursuant to the derivative contracts did not arise from the irrationality and/or the uneconomic nature of the transaction, as claimed by the Prosecutor, but they were indeed caused by the significant decrease in interest rates initially determined by the global economic crisis of 2008 and subsequently prolonged by the institutions’ unprecedented monetary policies.
In essence, the Court of Accounts has the merit of having issued a clear crystal ruling which, while outlining the boundaries of the Court of Accounts’ jurisdiction over derivatives entered into by public entities, lucidly analyses a complex derivative transaction and firmly rejects the typical (and not only legal) ambiguities of these kind of transactions.
m.divincenzo@macchi-gangemi.com
INSURANCE AND SELF-INSURANCE OBLIGATIONS IN THE LIGHT OF THE GELLI BIANCO LAW; AT LAST, THE REGULATION OF THE MINISTRY OF ECONOMIC DEVELOPMENT IS IN THE FINAL STAGE.
The Ministry of Economic Development’s (MISE) failure to issue the regulation provided by the Gelli Bianco Law has so far left a large part of such law unimplemented, at least for the so-called “similar measures” which, under particular conditions, allows the undertaking of direct risk (so-called “self-insurance”) by healthcare providers. The subject is relevant because a number of healthcare providers have already converted to self-insurance also in consideration of the substantial increase in insurance premium over the years for the coverage of the civil liability towards third parties and service providers.
As is known, article 10, paragraph 6, of Law no. 24 of March 8, 2017, which came into force on April 1, 2017 (the so-called Gelli Bianco Law), provided that a subsequent MISE regulation – to be issued in agreement with the Ministry of Health, the Ministry for Economy, and with prior agreement from the State-Regions Conference, the autonomous provinces, after having consulted IVASS (the Insurance Italian regulator), ANIA (the Italian Association of Insurers), and a number of national associations of the health industry – (the “Regulation”) would determine:
– the minimum requisites of insurance policies for public and private healthcare and social-health providers and for healthcare professionals, providing for the identification of risk categories to which different ceilings shall correspond;
– the minimum guarantee requirements and the general conditions for the operation of other “similar measures” including direct risk assumption, as well as the rules for the transfer of risk – in the event of a contractual takeover by an insurer – and the provision, in the financial statements, for a risk fund and a fund made up of the accrual reserve for compensation relating to reported claims.
On February 9, 2022, the State-Regions Conference reached an agreement on the draft decree containing the aforementioned Regulation, which is expected to be shortly issued by MISE, once the Council of State’s opinion has been received.
While postponing a specific and complete analysis of the Regulation until the same is issued (with the final text), we can begin to outline what public and private healthcare providers can expect in terms of the so-called “similar measures”, in relation to which the Regulation provides, inter alia, the following:
a) that healthcare providers may as an alternative to executing insurance contracts, opt for the so-called “similar measures” for the purposes of coverage of contractual civil liability towards third parties and service providers, as well as for coverage of extra-contractual liability towards third parties of the professional (in cases where the damaged party takes action directly against the professional);
b) that the decision to operate through a direct risk assumption must result from a specific resolution approved by the administrative body of healthcare providers that highlights, inter alia, “the methods of operation and the underlying reasons”;
c) that the healthcare facility (and, on its behalf, the individual management center where the risk management is centralized) shall set up:
- (i) a specific fund to cover risks that are identified at the end of the financial year, and which may lead to claims against the health providers, setting aside the amount of such fund in accordance with the type and quantity of services provided and the size of the health providers in order for it to be sufficient to meet – on an ongoing basis – the expected cost for the ongoing risks at the end of the financial year;
- (ii) a fund accrual for the compensation of claims, which includes the total amount of the sums required to meet the claims made during the year or during previous years which relate to claims reported and not yet paid, and related settlement expenses;
d) the adequacy of the provisions must be certified by a legal auditor or the Board of Statutory Auditors;
e) limited to the sums due as compensation for damages as a result of a final decision or an out-of-court settlement, that they are not subject to forced execution (provided that the facility’s administrative body has passed a resolution to this effect and has notified the institution responsible for the treasury);
f) that the relations between the insurer and the health providers, in case a portion of the risk is conducted under self-insurance retention or deductible, are referred to specific management protocols (the minimum content of which is established by the Regulation) to be stipulated between the parties and included in the policy;
g) the healthcare structure, whether it operates in complete or partial self-retention of the risk or with insurance coverage, must manage the claim also by availing itself of a special claims assessment committee, to be set up internally or in outsource after having identified the role and functions “with a specific internal policy”;
h) that having set up the risk fund and the claims reserve fund, the assessment processes used by the health provider, shall be applied on an ongoing basis, also taking into account the emergence of new risks arising from the offer of new healthcare services or from the change in those already provided, and the adequacy and effectiveness of the risk assessment processes must be acknowledged in an annual report;
i) that the healthcare structure must set up an internal claims assessment unit in order to assess, from a medical-legal, as well as clinical and legal point of view, the relevance and grounds of the claims brought against the healthcare providers, with the task of supporting the healthcare providers in determining the accrual to be set up in the financial statements by providing for various mandatory minimum competences, either internal or external to the health providers itself;
j) that the healthcare structure shall, on an annual basis, identify the main health liability risks to which it is exposed, and the actions necessary to reduce them; assess, manage and monitor the risks from a current and prospective perspective.
Healthcare providers will need to amend and update their organizational and financial measures in compliance with the “similar measures” provisions within 24 months of the Regulation coming into force, and the transition phase will not be easy.
RENEWABLE ENERGY COMMUNITIES AND REGIONAL LAWS: WHERE DO WE STAND?
THE REGIONAL REGULATORY FRAMEWORK AFTER THE ENTRY INTO FORCE OF LEGISLATIVE DECREE NO. 199 OF 8 NOVEMBER 2021.
The Legislative Decree No. 199/2021 defines the “renewable energy community” (hereinafter also “REC“) as an autonomous legal entity, composed by subjects which work together to meet their energy needs, whose power of control is in the hands of individuals, SMEs, territorial entities and local authorities including municipal administrations, research and training bodies, religious bodies, third sector and environmental protection bodies, as well as local administrations indicated by ISTAT.
The purpose of such entities is to provide, through the production, consumption and sale of electricity from renewable sources, environmental, economic and social benefits at community level to its associates or members or to the local areas in which the community operates and not to make any financial instruments.
The model is based on the principle of virtual self-consumption and therefore it uses the electricity distribution network, without a direct physical connection between the plant and the consumer unit.
Industrial districts, rural areas, agricultural areas, portions of municipal land, and parking areas could, for example, constitute the perimeter of an energy community.
These communities must operate in accordance with certain conditions:
– the consumer who is a member of a community may own renewable energy production facilities directly connected to the end use facilities, which are owned or managed by a third party, but for the purposes of shared energy only the renewable energy produced by the facilities which are at the disposal and under the control of the community;
– the self-produced energy of the community shall be used primarily for instantaneous self-consumption at the location of production or for sharing with community members. The surplus energy can be sold through agreements directly or by way of aggregation.
The requirements and characteristics that a REC must fulfil are governed by national provisions (The Legislative Decree No. 199/2021) and the forthcoming ministerial decrees that will have to be adopted. But also at the regional level, regional legislation has already been adopted to promote and establish energy communities at a local level.
To date, seven regions have adopted their own regulations: Piedmont (Regional Law no. 12 of 3 August 2018, and Regional Council Resolution no. 18-85208 of 8 March 2019), Apulia (Regional Law no. 45 of 9 August 2019, Regional Council Resolution no. 74 of 9 July 2020, and Regional Council Resolution no. 1346 of 7 August 2020), Campania (Regional Law no. 38 of 29 December 2020), Liguria (Regional Law no. 13 of 6 July 2020), Calabria (Regional Law no. 25 of 10 November 2020), Marche (Regional Law no. 10 of 11 June 2021) and Lombardy (Regional Law no.103 of 15 February 2022).
In general terms, the Regional Laws adopted so far provide:
(i) that municipalities which intend to set up an energy community must adopt a specific memorandum of understanding, drawn up on the basis of criteria to be further specified in a future regional provision;
(ii) that the annual share of the energy produced and allocated for self-consumption by members to maintain their status as producers and members of the community, should be not less than a certain percentage which may be set at a different level by each Region;
(iii) some programme-related obligations of the community (such as the preparation of an energy balance and a strategy documents).
In this regard, the above-mentioned Piedmont and Apulia Regional Council Resolution have established that the results expected from the implementation of the strategic document, which is prepared with the aim of identifying actions for the reduction of energy consumption from non-renewable sources and the efficiency of energy consumption must be approved by municipality belonging to the Energy Community and, after, subject to evaluation by the Region.
The Region, with the assistance of its Digital Energy Infrastructure Development Department, may approve or not the strategic document and provide funding for CERs from European, national and regional funds.
In the event that discrepancies regarding the strategic document actions consistency, the Regional Environmental Energy Program (PEAR), the measures adopted by the Regions and the objectives stated in the document itself are found, REC will be precluded from access to funding provided by the Region (including government and European funds) in the energy and environmental field.
If within the maximum period of two years from the date of the measure, the REC continues to fail to comply with the objectives it has set itself within the strategic document, it will no longer have access to the financing provided by the Region.
It should be noted that, considering the nature of an autonomous legal entity of the REC, the sanction does not apply to members of the Community itself, which may still participate individually in initiatives of financial support.
(iv) A financial support for the Renewable Energy Communities establishment;
(v) the institution of a technical table between the Region and REC to monitor and support the reduction of energy consumption.
A different approach has been adopted by the Lombardy Region, whose Regional Law provides for: (i) the identification of a Regional System entity called the Lombardy Regional Energy Community (LREC) that provides technical assistance for the promotion and development of RECs through a program subject to constant monitoring and updating and (ii) the promotion by the Region of autonomous forms of RECs aggregation and representation.
Moreover, in defining the priories for the RECs diffusion, the Lombardy Regional Law provides, among others, the involvement of the third sector and cooperatives forms, the promotion and establishment of cooperatives energy communities, in order to enhance the mutual exchange between RECs and their energy-consuming members.
In line with the aim of collecting information relating to the exercise of REC and to ensure a more effective management of the same communities, the Lombardy Region also proposes to implement a regional monitoring system, whose results will be presented annually to the Regional Council through a special report.
The REC can be attractive initiatives for different types of energy operation:
– for consumers (with not very high consumption), REC can be a good model of sustainable production and consumption from an environmental, social and economic point of view.
– for energy operators (not just producers/consumers) can enable the provision of “ancillary” services (e.g. related to electric mobility, energy efficiency, REC management).
The next step to give a concrete implementation to the initiatives is the adoption of the national discipline relating both to incentive tariffs for electricity production and to public funds and contributions provided by the PNRR, as well as the adoption of regional laws still missing.
c.colamonico@macchi-gangemi.com
e.casciani@macchi-gangemi.com
CERTIFIED E-MAIL BOX FULL: WHAT HAPPENS NEXT?
For years the certified e-mail box (PEC – certified electronic email, equivalent of registered mail) has been an essential tool for the lawyer, especially in relation to litigation and the formal service of Courts documents.
This occurs not only when the professional finds himself the recipient of communications or notifications from the judicial bodies and of the counterparties, but also when the lawyer has to proceed against a company and in general against any entity required to have a certified e-mail address (i.e. companies and VAT registered such as individual firms, artisans, freelancers, public administrations – see law 179/2012).
The lawyers and the legal entities referred to above are both responsible for the proper functioning of their PEC; for example, in the case of a defender of a party who does not receive notification of a judgment for the purposes of the appeal because the certified mailbox with which he is equipped is full and, without his knowledge, the terms for the appeal expire. For the Italian Supreme Court in such context the notification is always valid; in fact, “… The failure of the electronic communication of a judicial measure due to the saturation of the capacity of the recipient’s PEC box is an event attributable to the latter …” (Supreme Court, Labour Section 20.05.2019, n° 13532 in Civil Law Mass. 2019).
The Court has therefore sanctioned a real duty of diligence on the part of the professional who is required to equip himself with adequate IT tools to avoid malfunctions or unexpected blocks of the certified e-mail box such as, for example, the installation of warning systems upon reaching certain thresholds for the capacity of the mail account (see legal ref. DM n. 44 of 2021 art. 20, paragraph 5; Supreme Court Section I. 20.09.2021, n. 25426 in Giust. Civ. Mass. 2021; on the inadequate management of the storage space see Supreme Court v. Labour Section, 02.03.2021, n. 5646 in Guida al Diritto, 2021, 14).
In summary, a mere IT malfunction of the certified e-mail service not supported by precise and detailed evidence of an unforeseeable and inevitable external event, places a direct responsibility on the part of the lawyer (for an example this situation see the very recent Ordinance of the Supreme Court. Section VI. 02.03.2022, no. 6912 in italgiure.giustizia.it). The Italian Supreme Court reached similar conclusions in a case of notification of an injunction by certified e-mail, when the notification was not received by the recipient because it was stored in the spam folder and unknowingly deleted by the recipient. In ruling on this case, the Court expressed itself as follows: -“… In the hypothesis of notification of the injunction by certified e-mail, pursuant to article 3 bis of l. n. 53 of 1994, the fact that the PEC notification e-mail ended up in the junk mail (spam) folder of the recipient’s PEC mailbox and was deleted by the receptionist, without opening and reading the envelope, for fear of damage to the company’s IT system, cannot be invoked by the accused as a hypothesis of fortuitous event or force majeure for the purpose of demonstrating the lack of timely knowledge of the decree that legitimizes the proposition of late opposition pursuant to Article 650 of the Italian Code of Civil Procedure … “- v. Cass. Civil, Section III, 23.06.2021, n. 17968 in Giust. Civ. Mass., 2021). However, the topic is still debated: with interlocutory ordinance no. 2755 of 05.02.2020, Section VI of the Italian Supreme Court ordered the referral to the United Sections to further clarify the issue, proposing three distinct solutions to the hypothesis of a full certified mailbox: the first contemplates a sort of obligation to renew the notification according to the rules dictated by articles 137 of the Italian Procedural Civil Code et seq.; with the second, however, the attestation of an actual saturation of the mailbox is considered to be the same as the actual delivery receipt; finally, with the third interpretative solution, a possible order by the judge to renew the notification is hypothesized. We must wait to see how the United Sections of the Italian Supreme Court, which have not yet intervened to settle the question, will express themselves.
e.storari@macchi-gangemi.com
f.montanari@macchi-gangemi.com
THE REOPENING OF THE TERMS FOR THE REVALUATION (STEP UP) OF LANDS AND PARTICIPATIONS.
New edition for the revaluation (step up) of lands and participations: it is possible to access this optional regime in relation to qualified assets held as of January 1, 2022, by paying a substitute tax at a rate of 14%. Payment of the substitute tax and drafting of certification of the requested appraisal can be done until June 15, 2022.
Art. 29 of Law Decree no. 17 of March 1st, 2022 (so-called “Energy Decree”) provides the reopening of the terms for the step up, pursuant to articles 5 and 7 of Law no. 448 of December 28, 2001, of the taxable value of land and shareholdings in unlisted companies.
In particular, the revaluation allows certain taxpayers to reduce or cancel-out any capital gains generated on the sale of stepped-up assets utilizing the redetermined (stepped up) value as arising from an “ad hoc” appraisal’s report in lieu of the “original” tax value.
As clarified by the Italian tax authorities with Circular no. 12 of January 31st, 2002, the following taxpayers may benefit from this optional regime:
– individuals, for transactions that do not fall within the scope of their business activity;
– partnerships and similar entities identified by art. 5 of the Income Tax Code;
– non-commercial entities, if the transaction (e.g. the sale) from which the income derives is not carried out in a business activity;
– non-residents, for capital gains deriving from the sale for consideration of participations in companies resident in Italy that do not refer to permanent establishments. In this regard, please note that the provisions set forth by relevant double tax treaties excluding the taxation of capital gains in Italy shall prevail in any case.
The qualifying assets, which must be owned by qualified taxpayers as of January 1st, 2022, are:
– agricultural or building lands held by way of ownership or other property rights;
– participations represented by securities (shares), participations in the capital or assets of companies not represented by securities (quotas of limited liability companies or partnerships);
– or rights or securities through which the above-mentioned shareholdings can be acquired (e.g. option rights, warrants, bonds convertible into shares).
Moreover, this regime may allow the step-up of the participations in partnerships and/or foreign companies.
In any case, as specified in the Italian tax authorities with Circular no. 12/2002: “these [participations] must be unlisted rights or securities, even if they give the holder the right to acquire shareholdings traded on regulated markets“. Accordingly, participations traded on “AIM Italia” (from October 25th, 2021 “Euronext Growth Milan“) or other multilateral trading systems cannot be stepped up to the extent that they are materially considered as “listed” (see Italian tax authorities, Circular letter no. 1 of January 22nd, 2021, and Circular letter no. 32 of December 23, 2020).
The revaluation is recognized against the payment of a substitute tax at a rate of 14% (i.e., a higher rate than the 11% rate provided in the last edition of this optional regime).
The substitute tax may be paid:
– through a lump-sum payment by June 15th, 2022; or
– in instalments, up to a maximum of three instalments of the same amount by June 15th, 2022, 15th, June 2023, and 15th, June 2024. After the first installment, interest equal to 3% shall be paid on the subsequent instalments.
The substitute tax must be calculated on the entire value of the appraisal (which must also be prepared and certified by June 15th, 2022) and not only on the difference between the estimate value and the cost of the asset being revalued for tax purposes.
In this regard, in the event that taxpayers have already benefitted from a previous revaluation of the value of the same assets, it is possible to deduct the substitute tax due for the new revaluation from the amount of the substitute tax already paid.
a.salvatore@macchi-gangemi.com
f.dicesare@macchi-gangemi.com
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