Edison SpA (EDN.MI) said Monday its 2010 net profit fell 91% on the year as it booked more than EUR400 million in write-downs and provisions mainly on natural gas assets, and cancelled its annual dividend.

Edison, Italy's second-largest power company controlled by Electricite de France SA (EDF.FR) and A2A SpA (A2A.MI), said its 2010 net profit dropped to EUR21 million from EUR240 million in 2009, while revenue rose 18% to EUR10.45 billion over the period.

In a statement, the Milan-based company said the write downs and provisions totaled EUR407 million, with EUR138 million in the electricity operations, EUR40 million in the impairment of the Taranto facility and the remaining EUR229 million in the hydrocarbon business.

Earnings of energy companies that are purchasing gas under long-term contracts, such as Edison and Eni SpA (E), have been hit by contract prices exceeding those of the spot market making it difficult for them to resell the fuel.

Last week, Edison lowered its estimated 2011 earnings before interest, taxes, depreciation and amortization, or Ebitda, to about EUR900 million as it forecasts the gas contracts to have a negative impact worth around EUR200 million. Its 2010 Ebitda was EUR1.37 million/billion.

Edison is at the center of a power struggle between EDF and Italian municipal utility A2A. The two control it with a shareholder pact but they are negotiating how to end it and have set a Sept. 15 deadline. The Italian government has asked that the EDF doesn't take over Edison as political opposition builds against French takeovers.

Company website: www.edison.it

-By Liam Moloney, Dow Jones Newswires; +39 06 6976 6924; liam.moloney@dowjones.com
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