How, how much and why electricity and gas bills will increase further in Italy

How, how much and why electricity and gas bills will increase further in Italy

From October, electricity bills will increase by 59 percent for consumers under the protected regime. Here is what changes for users of the free market, the changes to the gas bills and the criticisms of some experts

Arera, the Regulatory Authority for Energy, Networks and the Environment, yesterday announced the increase in electricity bills in the fourth quarter of 2022: from the beginning of October to the end of December they will increase by 59 percent, less of the +100 percent forecast months ago.

PROTECTION REGIME

The data refers to the typical family under guardianship. The announced increases therefore concern those domestic users, those VAT numbers and those small businesses – explains Repubblica – that are still part of the protected market and have not switched to the free one: that is to say 35 percent of total consumers.

“In reality”, explains the newspaper, “the increases end up affecting everyone, due to a simple market mechanism”.

WHAT HAPPENS TO CONSUMERS IN THE FREE MARKET

For users who have already switched to the free market, the price of energy is fixed with offers usually lasting two years. In the event that the supply contract is close to expiry, however, the consumer will be notified of a new offer by his supplier, which will have prices aligned with those registered by Arera.

WHAT ARERA SAID

"With an extraordinary intervention, deemed necessary due to the extremely serious conditions of the situation, the Arera limits the increase in electricity prices for families still under protection and, while remaining at very high levels, avoids doubling", the authority explained in a note.

THE CAUSES OF THE INCREASE

The increase is linked to the strong growth in expenditure for the energy component (+59.6 per cent) and in particular for natural gas: it is a raw material widely used to produce electricity, as well as the one that sets its price . System charges remain zero, and there are no increases even in regulated network tariffs (transport, distribution and metering).

EXPENDITURE FORECASTS FOR BILLS

The final price of energy for the typical household under the protection regime is 66.01 cents per kilowatt hour. It is estimated, for this category, an expenditure of approximately 1322 euros for electricity bills in 2022 (from 1 January last to 31 December next), compared to approximately 632 euros in 2021.

WHAT ABOUT THE LARGE COMPANIES?

The increases in bills, as mentioned, concern – beyond domestic consumers – VAT numbers and small businesses, but not medium and large ones. The latter, in fact, usually consuming large quantities of energy, have greater negotiating power towards suppliers, with whom they enter into long-term contracts at discounted prices.

Currently, however, few operators are willing to offer discounts given the high energy prices.

WHAT ABOUT GAS BILLS?

The increases announced by the Arera do not concern gas bills, but only those of electricity: and this is because from 1 October the gas tariffs will be communicated on a monthly basis, and no longer quarterly.

The reason for the change in calculation lies in the condition of high volatility – that is, of considerable price fluctuations – of gas in the last two years. If tariff changes continue to be announced on a quarterly basis, therefore, excessive price differences could occur with respect to the situation on the markets.

THE COMMENTS OF BENEDETTINI AND STAGNARO

Carlo Stagnaro, liberal economist of the Bruno Leoni Institute, wrote on Twitter that "the 'critical issues of the moment' are due to the fact that Arera, to contain the increases, is creating a hole that it hopes to spread over time on 'protected' customers . Impossible after liberalization. A counter-reform to hide a Ponzi scheme. ¡No pasarán! ”.

Simona Benedettini, expert in energy markets, added that “the adoption in the third quarter. an ad hoc discount for enhanced protection bills and the postponement, today, of the recovery of the difference between prices estimated for the last quarter. and real purchase costs of AU create an unjustified disadvantage for free market suppliers ”.


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/arera-bollette-aumenti-quanto-perche/ on Fri, 30 Sep 2022 06:13:31 +0000.