Home energy bills in Italy to jump next quarter – regulator

Power lines connecting high-voltage electricity pylons are seen in Montalto di Castro, Italy, August 11, 2017. REUTERS/Max Rossi

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MILAN (Reuters) – Italian household electricity prices will jump 55 percent in the first quarter of next year and gas prices will rise 41.8 percent due to higher commodity prices, the energy watchdog Arrera said on Thursday.

The increases take into account the 3.8 billion euros ($4.3 billion) of public funds that the government raised to curb the increase in retail energy bills in the first three months of next year.

Without these measures, ARERA said, electricity and gas prices for households in the regulated market would have gone up by 65% ​​and 59.2%, respectively.

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Rising energy prices, caused by rising gas demand as economies look to emerge from the coronavirus pandemic, have prompted governments across Europe to introduce measures such as subsidies and tax breaks to try to protect consumers from higher bills.

It has also led to calls in some countries for EU-wide solutions, although other governments are wary of long-term regulatory reform of what they say could be short-term price hikes.

The president of ARERA, Stefano Pesegini, acknowledged that many Italians are facing serious and unexpected difficulties.

“ARERA is considering making changes to the part of the regulations that normally apply to the regular stages, adapting them…to the unprecedented situation.”

Rome, which is keen to support low-income families while the health pandemic takes hold, has spent about 8 billion euros in total since July to curb rising energy bills.

Combined with one-off actions, including a 5% value-added tax cut on gas in the first quarter, it looks to a long-term structural reform of the energy market.

Arrera said funds from the government allow for “system fees” to be suspended in bills temporarily.

The system fees, which include things like renewable energy subsidies and nuclear decommissioning, represent on average more than 20% of Italians’ final bills.

ARERA reviews energy and gas prices on a quarterly basis for households that are still in the “protected” or regulated market in Italy. Certain actions can also affect the greater part of consumers and businesses that are now in the liberalized market.

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(Reporting by Stephen Geokes; Editing by Maria Pia Quaglia and Nick McPhee)

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