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Energy crisis: Italy to spend another €6 billion to offset price rises

The Italian government on Friday announced nearly €6 billion more in aid mainly for businesses hit by soaring energy bills.

Published: 19 February 2022 09:40 CET

energy bill

Soaring energy bills in Italy. Photo: Giorgio Tomassetti / Unsplash

The cabinet-approved package comes on top of some €10 billion already budgeted since last summer to shelter customers and businesses.

“We are putting nearly eight billion euros on the table, including six billion in energy aid”, Prime Minister Mario Draghi told a news conference.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

The decree signed on Friday introduces measures to simplify and speed up the construction of renewable power plants, he said.

It includes €1 billion in support for the Italian automotive industry and less polluting vehicles, which Draghi said were “at the heart of the ecological transition”.

And will also see the government “intervene in a structural manner to increase Italian gas production”.

Italy, which has not produced nuclear energy for over three decades, is extremely dependent on imports and consumes a lot of gas.

Gas accounts for between 35-40 percent of its primary energy consumption, compared with around 15 percent in France, according to official statistics for both countries.

Natural gas prices have reached historic highs in recent months, sending electricity costs spiralling across Europe and pouring cold water on the economic post-pandemic recovery.

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Why your Italian electricity provider could change in 2024

A long-planned reform of Italy’s utility suppliers system means that many customers around the country may have their current electricity provider automatically changed as of July 1st of this year.

But, as new details over the reform have emerged in recent days, it’s now easier to understand what the upcoming change will be all about and what it will mean for customers.

What’s changing?

At the moment, electricity customers in Italy have two options.

You can sign up for an energy supply contract with tariffs set by the Italian national energy regulator Arera under what’s called mercato tutelato, or ‘protected market’.

Or you can sign up for a contract with a private supplier in the mercato libero (or ‘free’ market), with providers setting their own rates and being at liberty to offer a variety of discounts and promotions.

But, following the introduction of laws aimed at increasing market liberalisation in Italy, the ‘protected’ market option is now being phased out, with electricity contracts at state-controlled rates set to expire on July 1st 2024 (the original deadline fell on April 1st but was later postponed by three months).

READ ALSO: Why you may need to switch your Italian energy supplier by 2024

This means that customers on protected contracts (approximately 4.5 million households according to the latest estimates) will have until the start of July to switch to a new provider (and contract) within the free market.

What happens if I don’t make the switch?

Customers who don’t make the switch to a ‘free market’ provider by July 1st will be automatically assigned to a new supplier and placed under a ‘gradual protection contract’ (or servizio a tutele graduali).

This is a special three-year contract designed by national energy regulator Arera to smooth customers’ transition from the protected market to the free market.

Under the contract, private suppliers will offer rates in line with or, at times, lower than previous ‘protected’ tariffs, with customers enjoying a fixed rate (i.e., not varying based on market price fluctuations) for the first 12 months.

READ ALSO: At what time of day is electricity cheapest in Italy?

The switch to the ‘gradual protection’ contract will be free of charge and totally automatic, with previous direct debit arrangements set to be transferred to the new contract.

The switch will apply to all households on protected electricity contracts, except customers identified as ‘vulnerable’ by Arera, who will continue to enjoy protected market tariffs beyond July 2024. These include people over 75, people with disabilities and severely ill patients.

How are my bills going to change?

Automatically assigned private suppliers will apply rates generally in line with previous state-controlled tariffs.

In some cases, the switch to the ‘gradual protection contract’ may even lead to non-negligible savings on your yearly electricity bill.

For instance, customers in Avellino, Benevento, Grosseto, Livorno, Pisa, Pistoia, Prato and Siena may see annual savings of up to 200 euros, according to a report from Italian news website Today.

For any further information on ‘gradual protection’ contracts, see national energy regulator Arera’s website.

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