Annual Report 2010 - Enel.com

Costs
Millions of euro
2010 2009 restated 2010-2009
Electricity purchases 24,714 23,660 1,054
Consumption of fuel for electricity generation 6,892 5,835 1,057
Fuel for trading and gas for sales to end users 2,655 2,003 652
Materials 2,321 1,408 913
Personnel 4,907 4,908 (1)
Services, leases and rentals 13,503 9,757 3,746
Other operating expenses 2,950 2,277 673
Capitalized costs (1,765) (1,593) (172)
Total 56,177 48,255 7,922
Costs for electricity purchases increased by €1,054 million
in 2010 (up 4.5%). These developments mainly reflected
increased costs for Endesa (€743 million) connected with
the effects of the application as from July 1, 2009 of the
Tarifa de Ultimo Recurso (TUR), discussed in the comments
on revenues, and the change in the method used to consolidate
Endesa from proportionate to full line-by-line as
from the end of June 2009 (€523 million). The increase in
costs for electricity purchases abroad is also attributable
to increased costs for electricity purchases on the Russian
and Slovakian markets (a total of €469 million), partially
offset by a decline in electricity purchases on Italian markets
(€1,135 million) as a result of the fall in demand.
Costs for the consumption of fuel for electricity generation
in 2010 totaled €6,892 million, up €1,057 million
compared with the previous year (an increase of 18.1%).
In addition to the change in the method used to consolidate
Endesa (€507 million), the increase reflects higher
costs for fuel consumption by the foreign companies associated
with increased amounts used for thermal generation
(€712 million). These effects were only partially
offset by the contraction in quantities used for generation
in Italy (€162 million).
Costs for the purchase of fuels for trading and gas for
sales to end users came to €2,655 million, up €652 million
or 32.6% over 2009. The rise is attributable to increased
purchases of natural gas for the domestic and
Spanish markets for sales to end users as a result of the
pick-up in demand (€533 million), as well as the effects
of the change in the method used to consolidate Endesa
(€119 million).
Costs for materials came to €2,321 million in 2010, up
€913 million compared with 2009. The increase was
mainly accounted for by the activities of the companies
in the Iberia and Latin America Division, the International
Division and the Renewable Energy Division, as well as the
greater contribution of Endesa following the change in
the consolidation method.
Personnel costs for 2010 totaled €4,907 million, a de-
crease of €1 million, with a decrease in the average work-
force of 4.2%. Excluding the effects of the change in the
consolidation method and the increase in costs for the
contract renewal, personnel costs in 2010 fell by €298
million or 5.8%, while the average size of the workforce
contracted by 3.2%.
Costs for services, leases and rentals totaled €13,503
million in 2010, up €3,746 million or 38.4% over 2009.
This development essentially reflects increased electricity
transport costs on domestic markets (€333 million) and
the markets in which Endesa operates (€2,696 million).
More specifically, the latter increases include €1,437 million
in respect of the effects of the regulatory changes
connected with the application of the TUR, €458 million
from the different method used to consolidate Endesa
and €177 million in greater charges for the disposal of nuclear
waste.
Other operating expenses totaled €2,950 million in
2010, up €673 million compared with the previous year
(up 29.6%). The increase was largely associated with the
change in the method used to consolidate Endesa (€183
million), system costs attributed under Royal Decree
14/2010 to the generation companies in Spain (€233
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