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ENERGY

Which households in Italy will benefit from falling gas prices?

Gas prices are returning to lower levels but which Italian households will see the benefits on their utility bill? Here’s what you need to know.

Radiator knob
Italian gas bills dropped by an average 34 percent in January, but not all households will benefit from the price fall. Photo by Ina FASSBENDER / AFP

Italy’s energy regulator Arera announced on Thursday that gas bills had dropped by an average 34 percent in January, marking a change in trend after increases recorded in December and November.

Arera said the fall in prices was largely driven by lower wholesale gas prices, but was also aided by “lower supply costs” and the government’s three-month suspension of gas-related standing charges.

But not everyone in the country will feel the effects of the price change.

The decrease reported by Arera will benefit customers on a ‘protected’ or maggior tutela contract, where rates are directly determined by Arera as opposed to private suppliers – this applies to approximately 41.5 percent of Italian households.

READ ALSO: EXPLAINED: When can you turn your heating on in Italy this winter?

For customers with private suppliers, who are instead on mercato libero (free market) contracts, any change in price will depend on the contract itself, particularly on whether it’s based on a fixed or variable rate.

Gas prices within the mercato libero (or ‘free market’) are determined by private companies, so variations in Arera’s tariffs do not directly affect these contracts.

Gas stove

Variations in Arera’s gas tariffs do not directly affect free market clients. Photo by Ida Marie ODGAARD / Ritzau SCANPIX / AFP

Some ‘hybrid’ contracts from private suppliers index their gas prices to Arera’s rates, and customers with this type of contract are likely to see a reduction in fees.

That said, the European market registered comparatively low gas prices in January – gas cost an average of 0.74 euros per cubic metre last month, down from the average 1.25 recorded in December. This may very well result in lower gas bills for free market customers in Italy.

But overall, despite January’s decrease, gas tariffs remain much higher than they were before the start of the energy crisis.

READ ALSO: Heating homes: What are Italy’s rules on using fires and wood-burners?

The average Italian household on a contratto tutelato will still spend 1,769 euros on gas bills alone in the next 12 months (from February 2022 to January 2023) – a whopping 36-percent increase against the same period of time last year.

National consumer group UNC warned against the optimism expressed by several government figures on Thursday, saying while “families may now take a breather”, bills are still “unsustainable for too many Italians”. 

UNC also urged the government to extend the three-month suspension of standing charges for another three months when it expires at the end of March.

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ENERGY

Why your Italian electricity provider could change in 2024

A planned change in Italy’s electricity suppliers system means that many customers may be automatically assigned to a new provider in 2024. But what exactly is changing and who will it affect?

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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