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

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.

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

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.

READ ALSO: From renovating property to buying a new car: 28 tax ‘bonuses’ you can claim from the Italian government

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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Italian monuments go dark in protest against energy bill hike

Monuments across Italy, from Rome's Capitoline Hill to the Ponte Vecchio in Florence, will go dark on Thursday evening in a symbolic protest by municipal authorities against soaring electricity costs.

Italian monuments go dark in protest against energy bill hike

The ANCI association of Italian communes estimates bills will rise by at least 550 million euros (around $630 million) for local councils, out of a total annual electricity expenditure of 1.6-1.8 billion euros.

“The increase in bills is a burden and puts families and institutions in serious difficulty”, with many already struggling due to the coronavirus pandemic, Rome Mayor Roberto Gualtieri said in a statement.

READ ALSO: Electric bills in Italy set for record 55 percent rise from January

He is switching off the lights of the Capitoline, Rome’s town hall, for an hour from 8:00 pm (1900 GMT).

In Florence, the Palazzo Vecchio, Ponte Vecchio and Palazzo Medici Riccardi will be turned off for 30 minutes at the same time.

Similar action is planned in Milan, Turin, Bologna, Pisa and others as part of the ANCI-organised initiative.

ANCI chief Antonio Decaro said government support so far is not enough.

Prime Minister Mario Draghi’s government has so far pledged 5.5 billion euros to help households and businesses with soaring electricity and gas bills.

Draghi on Wednesday said the government was preparing a further “far-reaching intervention in the coming days”.

READ ALSO: Italy ups financial aid as energy costs soar again

Beppe Sala, the mayor of Milan, said his city already used many LEDS.

“There’s not much more we can do (to reduce costs) other than to reduce the lighting,” he said.

The temporary blackout was intended to “give a message to the government”, he said.

Energy prices have soared over the past year and Italy is heavily dependent on imports to meet its oil and natural gas needs.

According to a study by S&P Global Ratings, cited by La Stampa daily, the rise in electricity will cost at least 35 billion euros extra for the country in 2022.