Italy to spend €3bn on keeping household energy bills down as prices soar across Europe

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Italy to spend €3bn on keeping household energy bills down as prices soar across Europe
(FILES) In this file photo taken on May 29, 2007 gas hobs burn in Paris. - The UK government on September 20, 2021 sought to dampen the flames from soaring wholesale gas prices that have added to concerns over runaway inflation. (Photo by Eric PIERMONT / AFP)

The Italian government on Thursday announced new measures aimed at keeping gas and electricity bills down this winter, after a price rise of up to 40 percent was predicted from next month.


Italian Prime Minister Mario Draghi on Thursday announced the measures, worth three billion euros ($3.5 billion), as power prices surge across Europe.

He told the Confindustria employers association the measures would be aimed primarily at the poorest and most vulnerable.

"In the absence of government intervention, in the next quarter the price of electricity could increase by around 40 percent, and that of gas by 30 percent," Draghi said.

"For this reason we have decided to eliminate for the last quarter of the year the system costs for gas for everyone, and for electricity for families and small companies."

System costs are an extra charge added to energy bills in Italy, said to cover everything from incentives for renewable energy sources to the decommissioning of nuclear power plants.

Draghi said the government will also boost energy bonuses for the less-well off groups, in a package worth more than three billion euros, which followed 1.2 billion euros pledged in June.

Italian Prime Minister Mario Draghi. Photo: Roberto MONALDO / POOL / AFP


While this means Italian businesses and families won't be hit by a 40 percent price rise, energy costs are still likely to increase to some extent.

Last quarter, energy bills were expected to shoot up by more then 20 percent.

The 1.2 billion euros in state aid that time meant the retail cost of electricity rose by 9.9% and gas by 15.3% from July 1st in the last quarterly tariff update, according to Italy’s energy regulatory authority Arera.

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Draghi said many of the reasons for the energy price increases were temporary but called for long-term action, including at a European level, to address the problem, including through
diversifying supplies.

Italy is highly dependent on imports and consumes a large amount of gas.

Some 40 percent of its primary energy consumption is gas, compared with about 15 percent in France, according to official statistics for both countries.

Consumer association Unione Nazionale Consumatori said cutting out the system costs would not be enough to help struggling families and the government should also axe the excise duty as well.

Europe is facing soaring power prices as its economy recovers from the coronavirus pandemic, while natural gas reserves are at a worrying low level as winter approaches.

A profound EU transformation towards a low-carbon future, phasing out fossil fuels, is thought to be temporarily adding to the pressure.

The European Commission said on Wednesday it is poised to validate "short-term temporary measures" to tackle the effects of a global energy crisis.


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