Decree Grow Italy 2012: liberalization of the gas market

The main novelty introduced by Decree "Grow Italy" in the energy sector concerns the separation between the distribution of gas, ENI and Snam Rete Gas, the company holding the distribution network, which operates 37,000 km of pipes, divided into the National Network Gas Pipeline (8800 km) and the Regional Transport Network (22600 km.) [1]. The government's objective is to ensure conditions for access to the gas transmission infrastructure fully competitive, so as to allow greater freedom of access to new entrants.

In the decree, however, was only added to the obligation of separation of control of distribution infrastructure held by the holding company Snam, which includes the distribution Italgas, the Sogit, in charge of the storage of natural gas and regasification plant Panigaglia by the company management, Enel. The manner in which the separation will take place will be examined and fixed in a future decree of the President of the Council within 6 months.

There will also be changes in the parameters with which the energy authority sets the rates for the protected market, or for those users who, by choice or because they are unable, have not yet arrived at competitive market, also called the free market. At present the rates are indexed to long-term contracts entered into by Eni with large international suppliers. This practice will be replaced by the indexation of prices to the prices of spot contracts traded on the major European markets, thus bringing rates closer to actual market prices.

With this reform, Italy transposes the provisions of the European Directives of 2004 and 2007 with regard to liberalization of the energy market. These Directives aim to achieve, in Europe, a single energy market, where operators can meet with clear rules and shared on the various national scenarios, thus increasing the supply available to end users, whether they are individuals or companies .

As indicated by the Authority for Electricity and Gas (AEEG) in the annual report for 2011, the market of final sale of the gas is still very concentrated. The first three groups, in fact, account for 48% of sales (which Eni and Enel 24.7% to 13.2%, followed by Edison to 10% [2]). The free market is almost totally absent in the segment of domestic consumers (92% of domestic consumers buy gas on the protected market, while only 8% use the free market), while there is increased competition for industry and thermoelectric sector, where respectively 96% and 69.5% of the gas is purchased on the open market. [3]

The average rates of the free market are considerably lower than those in the protected market. Part of this difference, however, lies in the type of customers that have access to two markets. As indicated above, customers who turn to the free market for the vast majority non-domestic customers and, therefore, have access to discounted rates guaranteed for large quantities of gas delivered (over 200,000 m3annui).


Effects of the reform

Calculate what will be the effects of the reform is currently impossible, since we do not yet know the details of how the separation will take place between Eni and Snam Rete Gas, which will both prerogatives, what will be the time of separation and how they established the procedures for new operators' access to the distribution network. However, we can examine what happened in the electricity market and take this as an example to have a comparison of what are the main results possible, given the strong similarity between the two markets.


The liberalization of the electricity market

The Italian electricity market has experienced its "revolution" in 1999, following the so-called "Bersani Decree", which marked the obligation to separate between the management company and distribution of electricity with the properties of the distribution network and possible by new operators to be connected in terms of transparency and competition, in accordance with European Directive EC 96/92. Originally, the electricity market was characterized, in fact, the presence of a monopolist, Enel, owner of the centers of production, management and distribution of the network.

So it was set up the company Terna, which were entrusted to all of the properties held by Enel in the network of high-voltage transmission. Enel, however, remained the main shareholder of the company Terna until 2004, the year he was forced to relinquish stake. In the same year was also set up the Exchange Electricity Market. This was a key breakthrough, because it allowed the release of the definition of the price of protected categories (namely, those who could not or did not want to abandon the single operator, Enel and go to the free market) is no longer an administrative act by the the Energy Authority but through free collective bargaining on the market.

As of 2010, according to reports from the Authority for Electricity and Gas in its annual report, the "continued the trend of increase in the number of sales companies operating in the free market", with an increase of 6% over the 'previous year. Considering both domestic and non-domestic operators (companies, etc.) in the free market, you can record that, although the main operator remains Enel, its market share has considerably decreased compared to last year (from 27% to 19%) , in favor of some competitors, including Edison, Electrabel / ACEA, Eni and Sorgenia. Domestic customers as at 31 December 2005, supplies on the open market, there were about 330,000 in 2010 are 3,200,000. The regions in which the free market and 'most widespread are the northern ones, while in the south the new operators are struggling to enter the market [1].

In terms of prices, we can adjust (according to data of 2008), a sharp decrease in the average tariff on the open market compared to the protected market where, respectively, the prices amounted to 76 € / MWh against 123 € / MWh [1] . It should be remembered that the price of protection, unlike those on the open market, include all costs of dispatching.

The liberalization of the Italian electricity market was definitely a success, which allowed access to numerous operators (in 2010 there are about 100), including some large foreign operators such as Electricité de France (EDF) and Gaz de France-Suez , the German E.on and RWE AG, the Swiss Alpiqe Repower, Austria's Verbund


What lessons can be drawn from each power

From the positive experience with the liberalization of the electricity sector, may be taken of interesting and useful ideas to accelerate the process of transition of the gas market.

Firstly, they must be defined very clearly the manner and timing of separation between Eni and Snam Rete Gas, the roles that the various actors involved in the affair will have (the respective companies, the government and the Energy Authority). Above all, as also advocated at the time of the separation of Enel, Terna by Giorgio Ragazzi in his article published in, the company that owns the distribution infrastructure (ie Snam Rete Gas) is desirable that it remains a public company, so that ensured the prevalence of the public in the management and are limited risks that a private operator could search for "windfall" at the expense of consumers.

An authority for the control of the gas market strong and authoritative, which has well-defined tasks and powers adequate (and the will to use them) to ensure a clear application of the rules. Especially vigilant to ensure that users are given the opportunity to migrate from one operator to another operator in a sufficiently timely manner, without excessive burdens and with a full and transparent advertising on rates and costs of each operator. This will be a key aspect to enable new entrants to acquire new customers and thus increase their market share.

Il Sole 24 Ore has been very positive towards reform, coming to call it revolutionary (of course only if it should be permanently in port). Also according to the judgment of the Sole 24 Ore [2], the spin-off will allow an expansion abroad of Snam Rete Gas, increasing the interconnections of our country with major distributors in Northern Europe, improving the efficiency and capacity of the network transport . As for the effects on economic growth, it is important to understand who will be the future of Snam controller and decide how to manage this critical asset.



For the situation of the liberalization of the European electricity and gas market

Authority for Energy and Gas (AEEG), Annual Reports


[1] Source: AEEG, publication 2009



[1] For more information, see the annual publications of the Authority 'Energy and Gas



[1] Data source: website Snam Rete Gas

[2] Measured according to the volumes sold to end users (data calculated in millions of cubic meters). Source: Authority for Electricity and Gas Annual Report 2011

[3] Source: 2010 report Authority





Translated via software



Italian version of

Seguici su Facebook