Tariffs

ELECTRICITY SERVICE PRICING

The electricity market consists of the following segments: the “free market”, in which the consumer directly chooses the operator from which they receive supply of the service, the “more protected market” where the service is provided to the customer under the contractual terms and conditions and pricing ⁶⁸ laid down by the Regulation Authority for Energy, Networks and the Environment (ARERA) – the national regulatory body for the sector – and the remaining “safeguard service”.

The costs included in the energy bill cover four items of expenditure: energy, consisting of a fixed fee and an energy fee, with prices differentiated by hour for users with electronic meters; transport and meter management, consisting of a fixed fee, a power fee and an energy fee, which refer to activities for the delivery of electricity to end customers; system charges, which cover costs for general interest activities of the electricity system and are borne by all end customers; and taxes (consumption tax and VAT).

The more protected service, while recording constant decreases in favour of the free market, continues to represent the segment most used by Italian customers (domestic and non-domestic), with a membership rate of 58.1% (62.6% in the previous year). However, observing the volumes of sold energy, the ratio is inverted and the free market customers consume 78.8% of the energy comprehensively sold to the end market (77.6% in the previous year) ⁶⁹.

In this segment, with “standard” consumption – amounting to 2,700 kWh/year, with 3 kW power – the overall annual expenditure for electricity amounted to about 548 Euros in 2018 (20.3 € cent/Wh), an increase compared to last year (when it had been 19.2 € cent/Wh, totalling about 518.4 Euros). The final price was substantially affected by the increase in the energy component. There was also an uneven trend in system costs, with a marked change in the first half then reabsorbed in the second half of the year, while transport and meter management costs remained stable.

CHART NO. 22 - ELECTRICITY PRICE TREND FOR A STANDARD DOMESTIC CUSTOMER (€ CENT/KWH) (2017-2018)

WATER SERVICE PRICING

With resolution 664/2015, ARERA established a framework of fair, certain and transparent rules concerning the tariff in the water sector for the period 2016-2019.

Such method, based on regulatory schemes, ensures an efficient and economically-financially balanced management, able to incentivise investments and improve services in light of full cost recovery principles (full coverage of industrial and environmental costs of the service) and “who pollutes pays”.

With Resolution 918/17 issued at the end of December 2017, the Authority intervened to amend and supplement Resolution 664/15, regulating the updating criteria for the two-year period 2018-2019 regarding the cost components eligible for tariff recognition. With this measure, starting in 2018, it was possible to request the recognition of an additional component (Opex_QT) that can be traced back to the adaptation to the technical quality standards as per resolution 917/2017.

TABLE NO. 31 - AVERAGE WATER PRICES APPLIED (2018)

68 Tariffs are defined by ARERA and updated every quarter, based on the costs that the Sole Purchaser (AU) bears, minimising costs and risks connected to the various methods of provisioning, to cover the more protected clientele demand on the electricity wholesale market.
69 Based on the number of served collection points and the volumes sold in 2017 (ARERA Annual report 2018)