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Reference scenario

The international economy continued to grow during 2006, even if a slowdown in the rate of expansion was seen during the last few months of the year, having emerged as particularly elevated during the first six months. Numerous factors affected growth, such as geopolitical factors, the trend in oil prices, the weakening of the dollar and the continuing imparity in the balance of payments.

The drop in the global GDP growth rate during the second half of the year was in particular steered by the US, whose economic growth dropped slightly over the last two quarters mainly as a result of the decrease in investments in the residential property sector and the deficit of the trade balance, accompanied by slowdowns in Europe and China as well during the third quarter of 2006.

Even Italy, after a lengthy period of difficulty in 2006, finally restarted to grow, (+ 2% tendential rate), albeit at more reduced rates than those of its main European partners. An important role was played by internal demand with regards to said growth.

In relation to interest rates, a new and progressive strengthening of the Euro against the Dollar was witnessed during 2006, essentially attributable to the afore-mentioned slowdown of the U.S. economy and the US trade imbalance. In detail, until April the exchange rate fluctuated within the interval ranging between 1.18 and 1.24 US$ per Euro; from the month of May it was always above the quota of 1.25 US$ per Euro and as from the end of November it remained constantly above the quota of 1.31 US$ per Euro, disclosing an annual average of 1.26 US$ per Euro.

On the inflation front, the strengthening of the Euro and the reduction in energy prices during the latter part of the year had positive repercussions on the performance of the consumer price index which slowed down the economic cycle growth rate, standing at 2.1% for 2006 (tendential) as far as the Euro area was concerned.

 20062005% change
$/bbl oil price65.154.419.70%
Euro/$ exchange rate1.261.241.60%
Euro/bbl oil price51.943.918.30%
 

As far as the oil market was concerned, 2006 was a year which featured heavy fluctuations: the average Brent price was approximately 65$/barrel, disclosing an increase of + 19.8% compared with the already high average in 2005 (around 54$/barrel). During 2006, crude touched new record highs, reaching a monthly average in July and August of over 73$/barrel and achieving a new record high of 78.7$/barel at the start of August, after which Brent prices then gradually dropped to 55$/barrel at the end of October, only to then return to a price of 65$/barrel at the start of December, and then once again start to drop.

The high, in addition to extremely volatile, prices, felt the effect of a series of factors identifiable, according to the experts, in the inadequacy of global refining capacity, geopolitical tension and associated speculative activities on future crude markets.

Over the last three years, a long sequence of exceptional events also manifested, which each time temporarily reduced the extraction of crude in specific areas, the last of which taking place in Alaska at the beginning of August.

 

 

Against this backdrop, as far as gas was concerned, the average value of the QE in 2006, calculated on the basis of the Electricity and Gas Authority (AEEG) resolution No. 195/02 for the entire first half of the year and the Electricity and Gas Authority (AEEG) resolution No. 134/06 subsequently, came to 23.45, compared with an average value of 16.86 in 2005 and an expected value of 21.26 for 2007. As can be seen from these figures, the drop in the price of oil recorded during the last few months of 2006, has not yet worked its way through to gas prices and is destined to have repercussions mainly during 2007. This is naturally due to the effect of the delays associated with the formulas for updating gas prices.

 

As far as electricity was concerned, the average exchange sales price (PUN) in 2006 came to 74.75 €/MWh, involving an increase of 28% when compared with the 58.59 €/MWh in the previous year.

During July, the highest average price since the launch of the electricity exchange in April 2004 was recorded (average monthly PUN of 84.49 €MWh.