Italy: Open energy market? Yes please, but with rules

In less than a month's time the electricity market will be liberalised. Families will soon be able to choose their energy supplier, bringing an end to the era of market monopoly. It is thought that this will bring advantages to users and especially will prompt reduced prices. However the Electricity and Gas Authority has expressed a number of concerns; we asked the Authority's president, Alessandro Ortis, why.

Vita Europe: From the 1st of July people will be able to choose their supplier of electricity. Can you tell us why this change should go hand in hand with measures that safeguard the consumer?
Alessandro Ortis: New markets will emerge – more than 30 million Italian families will soon choose among a range of suppliers all competing to offer even the smallest consumer the best deal. This is nothing new in Europe as it is a trend that has taken off in a number of European countries. It is up to the Authority to make sure that consumers are in the position to make an independent and informed choice and it is up to the government to protect consumers rights and to ensure that there is sufficient competition to keep the prices down.

Vita: What risks are there?
Ortis: The Authority will no longer be able to set the prices meaning that suppliers will have a greater freedom to charge what they want. Further, there is the risk that prices will be charged differently according to geographical area ? in Italy this may mean that higher prices be charged in the South where wholesale price is higher. Finally, it is possible that certain groups of suppliers manage to monopolise the market, as already happened in 2003 following the liberalisation of the natural gas market, thereby strangling the potential for competition. It is therefore really important that European directives be provided for the protection of users, in particular those that are weakest.

Vita: What measures do you think are necessary?
Ortis: Measures that ensure a gradual change over from the old to the new regime, such as the promise that there be reasonable prices for household users and the guarantee that energy be provided even in the case of bankruptcy. It is also important that the Authority be allowed to set price guidelines for both gas and electricity and to ensure that privacy regulations be respected.

Vita: The Authority has put together a number of tariff reform proposals. What are these and what results are expected?
Ortis: The tariff reform has been requested by the European directives and aims to protect the consumer by encouraging competitiveness within the market. The Authority has presented well defined proposals for the domestic sector to ensure that families reap the maximum benefit from this newly opened marked. From the 1st of July till the time when the government and parliament agree upon a ?social tariff? there will be a transition period where the current measures for the protection of consumer rights will apply.

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