Italian municipal sales companies could collapse if regulated tariff persists - Federutility
Anger over the regulated tariff price set by Italy’s regulator, AEEG, was still evident this week at the 6th Italian Energy Summit in Rome. Many municipalities have not had offers for gas as a result of the below market price set by AEEG and the end result is likely to be an increase in incumbent Eni’s market share, as well as a financially damaging year for municipalities.
Federutility, an association of municipal supply companies, is taking the regulator to court over the tariffs, which threaten to put their sales companies out of business. The association’s President, Mauro D’Ascenzi told The Heren Report he expected a judgement “by the end of the year.”
He said the majority of municipalities have managed to sign contracts now, but not all: “The number of utilities without a contract is now the minority, but it is still a very serious phenomenon”. Many of the sales companies now look like making a loss next year, he added.
He also stressed a point made by many other competitors on the Italian gas market, that only Eni is able to supply gas at the regulated price: “At this price, the monopolistic role of Eni will increase, because at this price, no-one else will come into Italy to sell.” He said it was possible that Eni would exceed the market share cap put on its Italian business by the Letta decree this year, just because it may end up being the only company with gas to sell.
AEEG president Alessandro Ortis did not answer the question put to him by D’Ascenzi of whether there are more alternative suppliers now in Italy than there were three or four years ago. “In a normal economy, if you don’t like the price, you go elsewhere. But in this case, there are no others,” D’Ascenzi said in an interview with The Heren Report. Ortis had replied in vague terms, that liberalisation has produced “results”, but agreed that the opening up of the gas market had been “much less satisfactory” than on the power market in Italy.
AEEG’s Ortis defended persistent attacks on the regulated tariff, making emotional remarks about the regulator’s duty to protect the weakest consumer and brandishing a league table of European regulators’ performances. When questioned by The Heren Report on whether the regulator would commit to scrapping regulated tariffs at some point in the future, Ortis declined to comment. He also denied it was the case that many municipalities still did not have contracts for the next gas year.
Francesco Giunti of Eni’s Gas and Power Division said there is now 3.5 billion cubic metres (Gm3) of spare import capacity to Italy next year as a result of the below market tariffs. He told The Heren Report on Wednesday that Eni had sold gas in northwestern Europe rather than in Italy, “but we are not the only ones, many other supply companies did the same thing.” He declined to comment on whether Eni would have enough gas to supply more municipalities this year, or whether Eni would end up as a supplier of last resort if some cities started the gas year without contracts. “There are sixteen zones and Eni is only supplier of last resort in one of these,” he said.
Other industry sources have said however that the other suppliers of last resort have replied to requests from the ministry saying they would not be able to provide the gas under any circumstances. As to whether Eni would be put under political pressure to supply in these instances, Giunti said “I suggest you ask the ministry and the regulator.” DL/LB
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