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ENERGY

Italy ups financial aid as energy costs soar again

Italy said Friday it was stepping up efforts to ease the strain of high electricity and gas bills for homes and businesses, with a total of €5.5 billion worth of measures.

Energy prices in Italy
Italy's rising electricity prices. Photo: analogicus / Pixabay

The government had already alloted €3.8 billion for households and companies for the first quarter of 2022 in the budget, but added €1.7 billion on Friday, mainly for large businesses.

The state suspended or reduced taxes and charges related to gas and electricity bills last year, spending €4.2 billion in 2021 on supporting people and firms hit hard by the coronavirus pandemic.

Italy, which has not produced nuclear energy for over three decades, is extremely dependent on imports and consumes a lot of gas.

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

Gas accounts for between 35 and 40 percent of the country’s primary energy consumption, compared with around 15 percent in France, according to official statistics from both countries.

Natural gas prices have reached historic highs in recent months, affecting electricity prices across Europe.

The cost of energy for service sector companies in Italy is expected to reach €19.9 billion in 2022, compared to €8.9 billion in 2020, according to calculations by trade organization Confcommercio.

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ENERGY

Which households in Italy will benefit from falling gas prices?

Gas prices are returning to lower levels but which Italian households will see the benefits on their utility bill? Here’s what you need to know.

Which households in Italy will benefit from falling gas prices?

Italy’s energy regulator Arera announced on Thursday that gas bills had dropped by an average 34 percent in January, marking a change in trend after increases recorded in December and November.

Arera said the fall in prices was largely driven by lower wholesale gas prices, but was also aided by “lower supply costs” and the government’s three-month suspension of gas-related standing charges.

But not everyone in the country will feel the effects of the price change.

The decrease reported by Arera will benefit customers on a ‘protected’ or maggior tutela contract, where rates are directly determined by Arera as opposed to private suppliers – this applies to approximately 41.5 percent of Italian households.

READ ALSO: EXPLAINED: When can you turn your heating on in Italy this winter?

For customers with private suppliers, who are instead on mercato libero (free market) contracts, any change in price will depend on the contract itself, particularly on whether it’s based on a fixed or variable rate.

Gas prices within the mercato libero (or ‘free market’) are determined by private companies, so variations in Arera’s tariffs do not directly affect these contracts.

Gas stove

Variations in Arera’s gas tariffs do not directly affect free market clients. Photo by Ida Marie ODGAARD / Ritzau SCANPIX / AFP

Some ‘hybrid’ contracts from private suppliers index their gas prices to Arera’s rates, and customers with this type of contract are likely to see a reduction in fees.

That said, the European market registered comparatively low gas prices in January – gas cost an average of 0.74 euros per cubic metre last month, down from the average 1.25 recorded in December. This may very well result in lower gas bills for free market customers in Italy.

But overall, despite January’s decrease, gas tariffs remain much higher than they were before the start of the energy crisis.

READ ALSO: Heating homes: What are Italy’s rules on using fires and wood-burners?

The average Italian household on a contratto tutelato will still spend 1,769 euros on gas bills alone in the next 12 months (from February 2022 to January 2023) – a whopping 36-percent increase against the same period of time last year.

National consumer group UNC warned against the optimism expressed by several government figures on Thursday, saying while “families may now take a breather”, bills are still “unsustainable for too many Italians”. 

UNC also urged the government to extend the three-month suspension of standing charges for another three months when it expires at the end of March.

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