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

Households and businesses in Italy will pay sharply increased energy bills from January, despite government financial intervention.

Household bills in Italy are set to spike from January 1st.
Household bills in Italy are set to spike from January 1st. Photo by DAMIEN MEYER / AFP

A record hike in the cost of household bills is due to come into effect from Saturday, at an increase of 55 percent for electricity and 41.8 percent for gas.

The figures are much higher than estimates warned of only earlier this month, which were predicted to be anywhere between 17 and 25 percent for electricity and up to 50 percent for gas.

The increases for the first quarter of 2022 decided by the Regulatory Authority for Energy Networks and Environment (Arera) mark a new high after a series of increases over the past year.

In July, electricity bills rose by 9.9 percent and 15.3 percent for gas, while in October figures increased by 29.8 percent for electricity and 14.4 percent for gas.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

Although the latest price hikes are historically steep, Arera claimed that they would have been even more if it weren’t for financial support from the government, reported news agency Ansa.

Italy has approved almost €4 billion to contain the effects of price increases in the electricity and natural gas sectors in its Budget Law 2022.

Without it, these latest price rises of wholesale energy products would in fact have led to an increase of 65 percent for electricity and 59.2 percent for gas, according to Arera.

“The budget intervenes with a package of measures strongly desired to counteract the increase in energy bills,” stated economic development minister Giancarlo Giorgetti.

“These are measures that will be further strengthened by the government, which considers it a priority to support our industries and families at a very delicate time,” he added.

EXPLAINED: What will Italy’s new budget mean for you in 2022?

The changes will affect some 29 million families and six million businesses.

Estimates on how much the bills will actually cost vary. According to Arera, the new tariffs will translate into an expenditure of more than €2,300 between April 1st 2021 and March 31st 2022.

Meanwhile, consumer groups claimed that families can expect to face a greater expenditure – of an extra €1,008 in 2022 (€441 for electricity and €567 for gas), according to the Consumers Union, or an added €1,119 according to the calculations of Codacons.

Some consumer associations claimed the government’s measures don’t go far enough and have appealed to the EU to impose fixed prices.

Italy isn’t the only country to be affected by surging energy costs. Europe as a whole is facing soaring power prices as its economy recovers from the coronavirus pandemic, while natural gas reserves on the continent are at a worryingly low level.

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How long will it take Italy to wean itself off Russian gas?

Italy's government has repeatedly said it plans to end its dependence on Russia for gas supplies following the invasion of Ukraine. But as the timeline keeps changing, when and how could this happen?

How long will it take Italy to wean itself off Russian gas?

Italy is heavily dependent on Russian gas, but has been seeking new sources since Moscow’s invasion of Ukraine as part of an effort to end this reliance in the coming years.

But it remains unclear whether Italy can really end its dependence on Russia for its gas supply – or when this might be feasible.

READ ALSO: What does Italy’s Algerian gas deal mean for energy supplies?

The government has been seeking new sources since Moscow’s invasion of Ukraine, including with a recent deal to boost supplies from Algeria.

Prime Minister Mario Draghi said last week the country could be independent of Russian gas by the second half of 2024 – the latest in a series of changing estimates.

“Government estimates indicate that we can make ourselves independent from Russian gas in the second half of 2024,” Draghi told the Senate, while adding that the “first effects” of this plan would be felt by the end of this year.

He said his government was also seeking to boost its production of renewable energy, including by “destroying bureaucratic barriers” to investment, saying it was the “only way” to free Italy from having to import fossil fuels.

Explained: Why and how Italy will pay for Russian gas in rubles

In April, Italy‘s Ecological Transition Minister Roberto Cingolani estimated the country would no longer need Russian gas within 18 months, following an earlier prediction that it could take until 2025.

Italy is one of Europe’s biggest users and importers of natural gas, importing 90 percent of its gas supply with 45 percent of that coming from Russia – up from 27 percent ten years ago.

Italy now imports 29 billion cubic metres of Russian gas a year, which Cingolani said in March “must be replaced” – but he didn’t specify with what.

Analysts have said there are “a lot of questions” about how helpful Italy’s gas deal with Algeria will be.

Despite its vast natural gas reserves, Algeria is already exporting at close to full capacity.

Draghi repeated his strong support for EU sanctions on Moscow last week, including a proposed ban on imports of Russian oil, although this is currently being blocked by Hungary.

“We must continue to keep up the pressure on Russia through sanctions, because we must bring Moscow to the negotiating table,” he said.

But for now, Italian energy giant Eni says it plans to pay for Russian gas supplies in rubles, meeting a demand from Vladimir Putin.

It was not immediately clear whether the plan would fall foul of European Union sanctions, although Eni said it was “not incompatible”.

The company said its decision to open the accounts was “taken in compliance with the current international sanctions framework” and that Italian authorities had been informed.