Electricity consumption still decreasing in 2016 (-2,1%) and highly concentrated electricity sales: Enel, Edison and Eni (in this order) control 44,2% of the market. For the second consecutive year, Italian industries no longer pay the highest prices in Europe; however they discount a delta of +20% on the EU average. Household bills hold steady but fail to reflect the collapse in wholesale prices, halved in five years, from about 80 euros to just over 42. This distortion is caused by the improper charges that weigh on bills (renewable sources represent 37% of Italian production but cost 12,4 billion a year in incentives net) and which effectively dilute the advantage obtained on the cost of the raw material. Raw materials on the rise with gas prices recovering since the beginning of 2017.
This is the photograph, in light and shadow, that the Energy Authority delivered to the country on the occasion of the 2017 annual report presented to the Chamber. This year the relationship coincides not with a goodbye but with a farewell given that the Authority led by Guido Bortoni with Valeria Termini, Alberto Biancardi and Rocco Colicchio will end its mandate on 11 February 2018 after seven years. The renewal - which involves a complex and lengthy procedure - could happen in the middle of the elections and for this reason various rumors indicate the possibility that the government brings forward the designations before the deadline. Among the names circulating for the succession is that of Federico Testa, current president of Enea, even if it is still early to be able to draw conclusions.
ELECTRICITY: CONCENTRATION AND OPENING OF THE MARKET
The Authority is leaving on the eve of a "revolution" that will affect about 20 million families. With the approval of the law on Competition, from 1 July 2019 the enhanced protection regime will cease to exist (basically, the tariffs administered by the Authority for families) and those who have not yet done so will have to switch to the free market which today it absorbs a 34,4% share of domestic electricity customers.
And if the number of operators on the free market continues to grow (542 but 42 were inactive last year), the dominant operator in terms of quantity remains the Enel group which has a share rising to 35,3% (33,4 % in 2015), still distant from the second group, Edison, which stopped at 4,7% and lost 2%. Third is the Eni group with 4,3% (roughly the same percentage as last year) .
But with this level of concentration, what can be expected from the forthcoming full market liberalization? “The Competition law – assures Guido Bortoni, president of the Authority – prescribes some steps to be taken to give impetus to the free market. The Placet offer, predefined for households and small businesses, under conditions predefined by the Authority, will take effect from January 2018. We are accelerating the offer comparability portal and it will be ready shortly. The vendor list will be available by the end of the year or early 2018 at the latest. We are getting close to the finish line”.
ELECTRICITY: PRICES AND DISTORTIONS
Rather, what is worrying is the distortion created on prices by improper charges that weigh down bills and prevent competition from unfolding its positive effects on prices. “One cannot fail to find visible distortions in some public policies, sometimes excessive”. A complaint with soft tones from the Authority but in reality a heavy indictment on the many charges (shown in the table below) which together with taxes now account for about 50% of the bill. And so the collapse in prices on the wholesale markets has not eased household spending. A real pity given that in 2016 the average energy purchase price (PUN) was the lowest in its history, equal to 42,78 €/MWh, down by 18,2% compared to the previous year. The problem is not only Italian and also concerns Germany and France. However "the system charges - suggests Bortoni - should be passed on to a real fiscal management: we would have a rapprochement of the prices from the wholesale to the retail and a better functioning of the competition at the retail level". However, regulated costs (that is, transport and metering costs) recorded the greatest increases (+40%), canceling out the decreases that occurred in the energy sector.
GAS AND WATER, CONSUMPTION AND PRODUCTION
Consumption up by 5% while national production does not stop its fall and drops by 14,6%. For domestic customers, the Authority notes, prices are the highest in Europe but they are improving. In this case the weight of the tax is decisive. Also in the gas sector the number of sellers is increasing (393) but the level of concentration on the sales market is growing: the first 3 groups control 47,5% of the quantities sold with Eni taking the lion's share followed by Enel Energia and Edison Energia . The top 5 groups hold 55,2% of the market.
For water, the main problem remains investment, with 22% of the aqueduct network over 50 years old and purification reaching 70% of the load. even if, Bortoni observed, the cycle got back on track after a long period of stagnation, going from 961 million euros in 2012 to 1,49 billion euros in 2015 "with an overall increase of 55%". In the four-year period 2016-19, the expectation is that they will rise to 3,2 billion a year. The increase in tariffs, on the other hand, was 4,57% (2016 out of 2015).
Summing up, the wager of the free market will necessarily be at the center of the new Authority's activity. “With our report – concluded Bortoni – we leave a Quo Vadis to ensure a full relay between us and them. We will work until the last day because the Authority cannot stop: both for consumer protection but also for a whole series of measures regarding operators, all immersed in the energy transition. In the coming years, it will be necessary to broaden the view from the national to the European and from the short to medium-long term”. The baton passes to the Authority to come, but when? That of Bortoni expires on 11 February 2018 and the prorogatio any, in ordinary administration, can last a maximum of 60 days as clarified in 2011 by the Council of State. The deadline is April 11, not a day more. That's why there's no time to waste.
