Italy considers power bill reform as energy costs soar

Italy considers power bill reform as energy costs soar
Retail power prices in Italy are due to rise by 40 per cent in the next quarter, energy transition minister Roberto Cingolani said on Monday

Italy is looking to review the way electricity bills are calculated in an effort to curb prices at a time when energy costs are running high, two sources familiar with the matter said on Tuesday.

Energy transition minister Roberto Cingolani said on Monday retail power prices in Italy were set to rise by 40 per cent in the next quarter, driven by higher international gas prices and carbon permit costs.

The price rise, if confirmed by the regulator which sets electricity prices on the non-liberalised retail market every three months, follows a rise of 9.9 per cent in the second quarter.

That increase would have been around 20 per cent if Rome had not injected 1.2 billion euros (£1.02 billion) of resources to cut the so-called ‘oneri di sistema’, or system, costs.

A 40 per cent rise in power bills would lead to higher costs for families of 1,300 euros (£1109) a year, according to consumer group Assoutenti.

The reform under consideration would include a review of the system costs item in consumer bills, one of the sources said, adding one proposal could be to book them in the general tax system.

The reform is expected this year, the source said.

According to Davide Tabarelli, head of energy think tank Nomisma Energia, taking system costs out of final consumer bills could offset price rises triggered by commodity prices that he said are “destined to keep rising”.

“But it won’t be easy because many of these items are energy related,” he said.

System costs, which include things like overheads to cover renewable energy incentives and nuclear safety, account on average for more than 20 per cent of the final bill for Italians.

In its quarterly review, the energy regulator sets power prices for consumers still on the non-liberalised retail market – about a third of the total. Italy is looking to complete liberalisation of its retail power market in 2023.

The move by Rome comes as governments across Europe come under pressure to curb energy bills to help families and small businesses as economies slowly emerge from the pandemic.

On Monday, Prime Minister Pedro Sanchez said Spain would cap gas prices, cut taxes and redirect energy company profits as part of a package to bring down soaring electricity prices.

Elevated demand for natural gas, tight supply conditions and costlier emissions permits have sent power prices surging in many countries, with forward prices indicating the problem is unlikely to go away before winter.