Electrical Regulation

Article 1, paragraphs 4-10 of the 2018 Budget Law, introduced a two-year limitation on electricity supply contracts, initially establishing that end users were not eligible for this in the case of the failed or erroneous recording of consumption data, attributable to users. Paragraph 295 of Article 1 of the 2020 Budget Law eliminated this specification, establishing that the biennial limitation was also applicable in the case of confirmed responsibility on the part of the customer, and introducing objective liability in respect of the electricity chain operator, and in particular, the distributor, in its capacity as metering service operator, even without any liability or inefficiency in terms of its service provision. With Resolution 184/2020/R/com, ARERA transposed the provisions of the 2020 Budget Law with reference to the case of exclusion from the biennial limitation in cases of failed or erroneous recording of the electricity metering data, arising from the confirmed responsibility of the end customer. On 27 July 2020, Areti and Acea Energia submitted an appeal to the Regional Administrative Court to have Resolution 184/2020/R/com cancelled. The appeal was accepted with the consequent cancellation of the resolution on the basis that the interpretation of the 2020 Budget Law had only referred to the duration of the limitation (two years instead of five years), without excluding the applicability of the general civil code regulations regarding limitation.

With Resolution 603/2021, the Authority amended Resolution 569/2018/R/com on the billing of consumption dating back more than two years as a result of DCO 457/21, in order to comply with 14 June 2021 Rulings 1441, 1444 and 1449 of the Lombardy Regional Administrative Court. With this resolution, the Authority confirmed the distributor’s obligation to notify the seller, via certified email (PEC) – contemporaneously with the metering or adjustment data referring to consumption dating back to a period more than two years back – the indication of the presumed existence or non-existence of causes hindering the accrual of the limitation period pursuant to the primary and general reference legislation. It also confirmed that the seller’s information obligations vis-à-vis the end customer should be separated depending on whether or not there are any amounts on the invoice for which the limitation is contested. The Authority has also provided for a transitional phase, pending the implementation of the flows between the various entities in the chain and the IWT, which provides for the same information to be transmitted between the parties in a non-automated manner but with a defined time frame.

Following on from DCO 386/2021, the Authority published Resolution 604/2021/R/com, which provides for:

• an annual compensation mechanism for the greater protection operator or the dispatching user associated with a withdrawal point, making it possible also to recover in the successive annual session any amounts not recovered in the reference annual session;
• a mechanism to make distribution companies liable, whereby from 2023 all electricity distribution companies will be required to pay a penalty to CSEA each year for recalculations invoiced in the previous year due to non-collection of actual readings or adjustments of actual metering amounts previously utilised, for the portion prior to 24 months of the date on which the data was made available.

Subsequently, with a precautionary ordinance, the Regional Administrative court suspended ARERA resolution 603/2021, limited to article 6.4 of the Annex to the same, that is the transitional regulations which require the distributor to respond within 7 days. The public hearing on the merits was set for 1 December 2022. With ordinance 4568/2022 of 13 October 2022, the Court of Bologna clarified that SME and large companies are excluded from the category of entities to which the biennial limitations apply for electricity and gas bills.

To limit the effects of the increased prices of gas/electricity in the last quarter of 2021, on 27 September, Decree Law 130/2021 (Bills Decree) was published in the Official Journal which, for the natural gas sector, reduced the VAT rate to 5 percent for methane gas utilised for fuel in civil and industrial uses relative to invoices issued for estimate or effective consumption in the months of October, November and December 2021. As for the electricity sector, the Bills Law Decree reduced the general system charges for all electricity users for the fourth quarter of 2021; in particular, it cancelled the general charges for LV domestic and non-domestic users with power available up to 16.5 kW. The Authority subsequently published Resolution 396/2021/R/com, which implemented the provisions of the Bills Law Decree. In relation to electricity billing in the last quarter of 2021, the Authority cancelled the rates of the ASOS and ARIM tariff components for all domestic users and other LV users with power available up to 16.5 kW. In the natural gas sector, the measure cancelled the rates of the RE, RET, GS and GST tariff components for October, November and December 2021.

Resolution 396/2021/R/com introduced an additional social bonus for the billing period from 1 October to 31 December 2021.

To combat the economic and humanitarian effects of the Ukraine crisis, in the 1st quarter of 2022 the Authority temporarily suspended the annual update for the social bonus. Hence the amounts of the 2021 bonus were confirmed, as well as the “extraordinary” bonus, already added in Q4 2021 and valid for the entire 1st quarter of 2022.

At the time of the hearings held in the Senate in the context of the conversion into law of Decree Law 21 of 21 March 2022 (“Price Cuts or Ukraine Decree”), the Authority, in memorandum 166/2022, again focussed on the issue of the social bonus, specifying that during 2022 these subsidies could give rise to needs of up to € 1.9 billion, against 540 million the previous year, with a consequent increase in the Arim tariff component. More specifically, for the period from 1 April 2022 to 31 December 2022, article 6 of Law Decree 21 of 21 March 2022 expands the family units that can access electricity and gas social bonuses, raising the ISEE indicator threshold from the current € 8,265 to € 12,000; measures already introduced by the government starting in the 4th quarter of 2021.

With Resolution 35/2022/R/eel, the Authority arranged for the cancellation of the rates for general electricity system charges for Q1 2022 for all types of users, implementing the Supports ter Law Decree. Starting on 1 January 2022, the resolution called for the elimination of the ASOS and ARIM tariff components for all users, supplementing what was already ordered in Resolution 635/2021 for Q1 2022.

On 18 March, Italian Law Decree 21 of 21 March 2022 was approved (the “Price Cuts Law Decree”). Specifically, the decree establishes:

• an increase in tax credits on the cost of electricity and gas, already recognised in Italian Law Decree 17/2020. New tax credits are also established for other types of companies that utilise electricity and gas;
• an increase in the ISEE ceiling for access to the social bonus (from € 8 thousand to 12 thousand) for the period from 1 April to 31 December 2022. This includes approximately 1.2 million more families with respect to the previous provision;
• possible verification of price levels for widely used goods and services by the Guarantor to monitor the prices established in 2007 by the MED. The Guarantor may also request data, news and specific information from companies regarding the reasons that led to price changes. The results of the analysis are then made available to the Antitrust Authority (AGCM). If no response is received within 10 days of a request, an administrative fine is applied ranging from a minimum of € 500 to a maximum of € 5,000;
• holders of gas supply contracts for the Italian market must inform MiTE and ARERA of existing contracts and new contracts signed in the future, as well as amendments made to them;
• instalment arrangements for utility bills of up to two years, which can be requested by companies with registered offices in Italy and by end users of electricity and natural gas from their suppliers for energy consumption between May and June 2022, with the maximum number of monthly instalments not to exceed 24;
• electricity and gas resellers, including producers, must pay a sum in the form of an extraordinary contribution by 30 June 2022. The methods of payment are established through a provision issued by the Director of the Revenue Agency.

The taxable base for the extraordinary contribution consists of the increase in the balance between transactions receivable and transactions payable for the period from 1 October 2021 and 31 March 2022, with respect to the balance for the period from 1 October 2020 and 31 March 2021. The contribution is applied in the amount of 10% (subsequently increased to 25%) if this increase exceeds 5,000,000. The contribution is not due if the increase is less than 10 percent. There is also a ban on transfer to end users: for the period from 1 April to 31 December 2022, entities required to pay the contribution must inform the AGCM of the average purchase and sales prices for electricity, natural gas and methane by the end of each calender month, as well as those for petroleum products, related to the previous month. With assistance from the Guardia di Finanza (Finance Police), the Authority evaluates the data received and any spot checks done to determine whether the conditions for adopting measures exist.

On 1 March 2022, Italian Law Decree 17/2022 (“Energy Decree”) was published in the Official Journal, containing tax provisions. In particular, for Q2 2022 the manoeuvre intended to attenuate the effects of the sharp increase in energy prices was repeated, by:

• eliminating general system charges for the electricity sector and reducing those for the gas sector;
• confirming 5% VAT for the natural gas sector;
• confirming the tax credit for energy intensive businesses;
• establishing a bonus for gas intensive businesses;
• introducing a tax credit for costs incurred by companies in Southern Italy with the aim of achieving higher energy efficiency and promoting self-production of energy from renewable sources.

Additionally, the Authority published Memorandum 108/2022/I/com with which it expressed its considerations on certain aspects of the draft law to convert Italian Law Decree 17 of 1 March 2022, containing “Urgent measures to contain the costs of electricity and natural gas, to develop renewable energy and relaunch industrial policies”. The areas of greatest interest include:

• the elimination of system charges for electricity users for Q2 2022 and the reduction of VAT and general charges in the gas sector. ARERA emphasised that, with the additional outlay to cover this measure, the Government’s mitigation actions have now exceeded a year and, substantially, implement a measure ARERA had been awaiting for some time - that is transferring general system charges to general taxes, which ensures greater equity in terms of contributions. The measure has positive effects on seller companies as it reduces the need to provide financial guarantees. ARERA also noted that, throughout the period, the incentive system for renewable sources and other support mechanisms normally covered by general system charges were in any case handled using financial resources from the government budget, rather than from utility bills. The Authority proposed a programme to progressively make “structural” the covering of general system charges with resources not obtained through utility bills;
• strengthening security in terms of natural gas supplies at fair prices. In this area, ARERA hopes that all consumers can benefit from any gas acquired from the GSE with long-term purchase contracts and not transferred through procedures entrusted to the same GSE Group. ARERA hence suggests that this energy be sold to the market, with any amounts deriving from price differentials returned through specific fees;
• ARERA hopes that immediate and extraordinary action will be taken to increase the availability of additional gas volumes from gas pipeline interconnection points not connected to the European gas pipeline network and in LNG regasification terminals.

On 21 April 2022 the Law converting the Energy Law Decree was approved definitively; this contains urgent provisions to limit the costs of electricity and gas, develop renewable sources and relaunch industrial policies.

Subsequently the Authority published Resolution 141/2022/R/com with which, in relation to the second quarter of 2022 it cancels the general system charges and confirms the bonus and the supplementary component as already laid down for the first quarter.

ARERA published Resolution 188/2022/R/com with which, implementing what was provided for in article 6 of Italian Law Decree 21/2022 which raises for the period from 1 April 2022 to 31 December 2022 the ISEE threshold for accessing the bonus to € 12,000, defines preliminarily the technical methods for the information exchange by INPS to the Operator of the Integrated Information System (IIS). The resolution postpones to a possible subsequent measure, after conversion of the Law Decree into a law, the definition of the applicative methods for the disbursement of these social bonuses to the new right holders. The resolution identifies a new “benefit class”, additional with respect to those already existing, corresponding to family units with an ISEE between € 8,265 and equal to or less than € 12,000, less than 4 children and which do not receive Citizenship Income/Citizenship Pension.

The Decree Law of 17 May 2022 was published in the Official Journal, also known as the (Aid Decree Law), and took effect on 18 May. Art. 1 states that also for the third quarter of 2022 the benefits recognised on the basis of the ISEE value are to be redetermined by ARERA with a resolution to be adopted by 30 June 2022. Paragraph 2 specifies the offsets to be made by the end of December 2022.

Subsequently following Resolution 188/2022, with Resolution 245/2022/R/com ARERA published further preliminary provisions in relation to article 6 of Italian Law Decree 21/22 converted with amendments into Italian Law no. 51 of 20 May 2022 which raises for the period from April to December 2022 the ISEE threshold for accessing the bonus to € 12,000. In particular, ARERA ruled that the perimeter of application of the aforementioned article 6 must be understood as extended to all DSUs (Dichiarazione Sostitutiva Unica - Single Substitutive Declaration) presented during the year 2022 and therefore also for family units that presented a DSU in the first quarter of 2022 (that is before the effects of the Law Decree). The bonus will be calculated automatically with reference to the new benefit classes.

Implementing the provisions of Italian Law Decree no. 80 of 30 June 2022, which lays down for the third quarter:

• the confirmation of the reduction to zero of the general system charges in the electricity sector;
• the confirmation of VAT on gas at 5% and the reduction of the general charges in the gas sector;
• the confirmation of the supplementary social bonus and the implementation of the new provisions for the whole of 2022;
• the identification of the GSE in “coordination” with Snam, as the subject of last instance for filling the gas storages and the expansion of the SACE guarantee to companies that store natural gas;

ARERA, with the quarterly update resolutions, adopted the measures that it was responsible for.

ARERA confirmed, also for the third quarter of 2022, the measures aimed at limiting the costs of electricity and natural gas. In particular, with Resolution 295/2022/R/com the reduction to zero of the general system charges in the electricity sector was confirmed.

Also note that Decree Law 115/2022 was published in the Official Journal, containing “Urgent measures on energy, the water crisis, social and industrial policies" (Aids-bis Decree Law), converted to Law 142 of 21 September 2022 and published in the Official Journal on 21 September 2022. This Decree in particular establishes:

• renewal of the strengthening of electricity and gas social bonuses for the fourth quarter of 2022;
• definition of the scope of vulnerable customers in the gas sector and protection for these customers as of 1 January 2023;
• through 30 April 2023, suspension of the efficacy of any contractual clause that allows suppliers of electricity and natural gas to unilaterally change the general conditions of contracts relative to the definition of the price, even if the right of withdrawal for the counterparty is contractually established. With the subsequent Thousand Extensions Decree, this was extended through 30 June 2023, specifying, however, that the prohibition on changes the prices applied excludes the renewal of economic conditions which have expired;
• the extension for the fourth quarter of the reduction to zero of the general system charges in the electricity sector;
• reduction of VAT and general charges in the gas sector for the fourth quarter of 2022;
• the extension of the tax credit in favour of companies other than “energy intensive” and “gas intensive” ones, for the purchase of electricity and natural gas consumed in the third quarter of 2022, allowing beneficiaries, under certain conditions, to ask the vendor to calculate the increase in the cost of the energy component and the amount of the detraction due for the third quarter of 2022. Within ten days of the date on which the law converting the present decree takes effect, ARERA must define the content of the aforementioned communication and the penalties in the case of non-compliance by the vendor;
• doubling of the fine in the case of full or partial non-payment of the extraordinary contribution to combat high prices applied to energy sector operators, that is when made after 31 August for the advance (40%), and after 15 December 2022 for the balance (60%).

Subsequently, Aid-Ter Decree Law (144/2022) was issued, published in the Official Journal on 23 September 2022 and taking effect the next day. In particular, the Decree established:

• a tax credit with communication requirements for vendors: it will apply (i) to companies with available power equal to or greater than 4.5 kW, who are not energy intensive companies and will be equal to 30% of spending incurred to acquire the energy component, effectively utilised in the months of October and November 2022 and (ii) to companies other than gas intensive ones and will be equal to 40% of spending incurred to purchase gas, consumed in the months of October and November 2022; again ARERA is responsible for issuing the communication within 10 days of the date on which the conversion law for the Decree Law takes effect;
• on the issue of excess profits, destination of the funds no longer to CSEA, to reduce electricity charges, but to the State, until the total amount of € 3,400 million is reached;
• a free government guarantee is envisaged for companies for the payment of bills for energy consumption issued in the months of October, November and December 2022.
• In the subsequent Aid-Quater Decree Law (which took effect on 19 November 2022 and was renamed Energy Decree Law) the following was envisaged:
• the extension of tax credit application also to December 2022 (excluded in the previous Decree Law);
• confirmation of the postponing to 10 January 2024 of the end of protection for domestic gas customers;
• the introduction of instalments (maximum 36) for companies with consumption between 1 October 2022 and 31 March 2023.

As provided for in Italian Law Decree 124/19, ARERA published Resolution 63/2021/R/com, subsequently supplemented by 257/2021/R/com, which governs the new method of disbursing the economic bonus from 2021. The new rules, coming in the wake of a series of focus groups and consultations organised by ARERA, allow final customers in difficult circumstances to automatically receive the discount in their bills without having to specifically apply for them.

The new bonus disbursement process gives a central role to INPS, which has to identify the benefit recipients, and to the IIS, which has to identify the supply to be supported and ensure that the benefit targets only the household and year in question.

The Authority also introduced a series of other measures to regulate the disbursement of the residual bonus accruals for 2020 and the disbursement of the recovery of the accruals, due for the first months of 2021 but still unpaid since the new rules only came into force for sales operators from 1 July 2021.

Intended to cap the supply spending increases expected in the 4th quarter of the year, the subsequent Resolution 396/2021/R/com introduced an additional social bonus for the billing period from 1 October until 31 December 2021. With subsequent resolutions 635/2021/R/com, 141/2022/R/com, 295/2022/R/com and 462/2022/R/com, ARERA confirmed the supplementary social bonus for all of 2022. Finally, with resolution 380/2022/R/com, implementing the provisions of Decree Law 21/22 and Decree Law 50/22, as converted to law, ARERA approved the application methods for recognising electricity and gas bonuses for 2022 and retroactively introduced, starting in April, the new subsidy tier for incomes falling between € 8,265 and 12,000.

At the end of the year, with DCO 646/2022/R/com, ARERA provided its guidelines on extending the range of beneficiaries (with a new ISEE threshold up to € 15,000) and graduation of the bonus in relation to the various ISEE thresholds for 2023, as envisaged in the most recent Budget Law.

The Authority, with Resolution 208/2022/R/eel defined the regulation of the Gradual Protection Service (GPS) for micro-businesses pursuant to Italian Law no. 124 of 4 August 2017 (“annual law for the market and competition”) and the methods of assigning the same, in order to guarantee continuity of the supply to micro-businesses connected in low voltage that are without a contract at free market conditions starting from 1 January 2023.

The service involves:

• micro-businesses that fulfil cumulatively the following conditions:

1. they have less than ten employees and an annual turnover of not more than € 2 million;

2. they are holders of withdrawal points all connected in low voltage with contractually committed power of up to 15 kW;

• other final non-domestic customers different from the micro-businesses, in any case holders of withdrawal points all with contractually committed power of up to 15 kW.

The GPS is activated for the above customers which as of 1 January 2023 are not holders of a supply contract at free market conditions, including customers still supplied in greater protection. The first period of assignment of the GPS for micro-businesses has a duration of 4 years.

The structure of the economic conditions that will be applied to the customers is similar to that of the Gradual Protection Service for small businesses. The tender procedures will be performed according to the model of simultaneous iterative ascending auction, in which an auctioneer (Acquirente Unico) will be present and will indicate in each session and for each area (12 territorial areas) the current price (the current price is the price, expressed in euro cents/POD/year, announced in each session by the auctioneer, in exchange for which the active participants offer to provide the gradual protection service for micro-businesses in the territorial area). A maximum ceiling on the economic offer in €/MWh is provided for. This is differentiated for each territorial area, and will be made known at the same time as the results of the tender procedures, while a minimum limit is not provided for. In the case of persistent parity among several offers for a given territorial area, lots will be drawn electronically, preventing a single operator from obtaining by lot a plurality of territorial areas. The Authority ruled that each participant may be awarded a maximum number of 4 areas, corresponding to 35% of the total number of territorial areas. If there are no bids in the auctions, Acquirente Unico will hold a remedial auction removing the ceiling of awardable areas. The greater protection provider will be required to take charge of the service in the event of default of the operator selected in the tender or in the event of a tender without participants.

The GPS providers are required to present to the Authority a report, by 30/11/2022 from the publication of the results of the tender procedure, according to a standard model to demonstrate that they possess organisational resources and a corporate structure adequate for the purpose of providing the gradual protection service in the territorial areas assigned. This standard model was defined by Determination 2/2022-DMRT. The report must be periodically updated by 31 July 2023, 31 January 2024 and 31 January 2025

The timings for making available to participants in the tender procedures all the information necessary for formulating the offer and for performing the tender procedures are:

• by 14 June: Acquirente Unico will make the information available to participants with provincial details necessary for formulating the offer;
• by 30 May: Acquirente Unico will publish on its website the Regulation for the performance of the auctions;
• beginning of September: the date of the auctions will be defined by the SP in the Regulation so that a minimum interval of at least two and a half months will be guaranteed, with respect to the term within which the pre-procedure information is made available to participants (14 June).

As provided for in Annex B to Resolution 208/2022, on 30 May 2022 the Regulation and the related annexes governing the competitive procedures for assigning the gradual protection service for micro-businesses was published on Acquirente Unico’s website.

By 10 June 2022 Acea Energia presented an application for participation and on 14 June 2022 Acquirente Unico made available the pre-procedure information.

Acquirente Unico noted its admission to the tender procedure by 8 July 2022. The auctions were to have been held from 12 to 16 September, but, following the hacker attack on the SP’s systems, the Authority was forced to postpone, holding them between 21 and 25 November 2022. With resolution 586/2022 published on 18 November 2022, ARERA postponed the activation date for the GPS for the micro enterprises to 1 April 2023, clarifying that, until 31 March 2023, micro enterprises will continue to be served under enhanced protection.

On 16 December, Acquirente Unico published the results of the tender procedure to identify the operators of the Gradual Protection Service for micro enterprises from 1 April 2023-31 March 2027; Acea Energia was awarded area no. 11, including Avellino, Barletta-Andria, Benevento, Brindisi, Trani, Foggia, Lecce, the municipality of Naples and Salerno.

As pre-announced with Consultation Document 564/2020/R/com, the Authority with Resolution 426/2020/R/com provided for the strengthening of the information obligations of electricity and natural gas suppliers to the advantage of final customers in LV and/or with total natural gas consumption of not more than 200,000 Sm3, in both the pre-contractual stage and the contractual stage, through the revision of the commercial conduct code. Among the main changes the Authority provided for the introduction of a data sheet that summarises the contents of the contract and the new summary price indicators, provided for in order to facilitate the comparison between commercial offers; in addition the Authority provided for the sending of a specific communication in the case of changes in the automatic economic conditions. These changes were to have taken effect as of 1 July 2021. However, following the extension request put forward by the trade associations, with resolution 97/2021/R/eel the Authority deferred to 1 October 2021 the efficacy of articles 13 and 14 of Annex A to resolution 426/2020/R/com, leaving unchanged the date of 1 July 2021 for the efficacy of the new measures introduced in the pre-contract stage.

With resolution 176/2022/R/gas, the Authority established that, for calculating annual spending expenses for customers in the natural gas sector, pursuant to Article 17 of the Commercial Conduct Code, as well as estimated annual spending for natural gas offers on the Offer Portal, until 30 June 2022, with reference to Q4 2022 and Q1 2023, the values of the CRC component for the winter period (1 October 2021–31 March 2022) will continue to be used, pursuant to resolution 133/2021/R/gas and that the new values for the CRC component pursuant to the present resolution will be used as of 1 July 2022.

This past 30 June, the Authority published Resolution 289/2022/R/com which provides for both the adjustment of the Commercial Conduct Code to the provisions of Italian Legislative Decree 210/2021 for supplies of electricity on the subject of contractual rights of final customers and the monthly updating of the spending estimate of offers at variable price and of the protection services present in the Comparability Sheets for supplies of electricity and natural gas. The provisions will come into force on 1 October 2022.

Specifically:

• with reference to art. 5, paragraph 6, of Italian Legislative Decree 210/21 on the subject of methods for communicating withdrawal on the part of the final customer, not amend the regulation owing to the compliance of the said regulation with the aforesaid provisions;
• with reference to the provisions of article 5, paragraph 8, of Italian Legislative Decree 210/21, supplement the supply contract and the Summary Sheet, in the part related to the methods and terms for payment of the bills, introducing the reference to the current legislation so as to make explicit and transparent the information for the final customer in relation also to any charges connected with a chosen method of payment observing the criteria of the primary legislation;
• with reference to the provisions of article 5, paragraph 11, of Italian Legislative Decree 210/21 supplement the content of the section “Complaints, dispute resolution and the consumer’s rights ” in the “Other information” box of the Summary Sheet adding the information on the rights connected with the universal public service obligations of electricity sellers;
• with reference to the provisions of article 7, paragraph 5, of Italian Legislative Decree 210/21, on the subject of informing the final customer of the possibility for electricity sellers to impose on final customers the payment of a sum of money in the case of early withdrawal from a temporary or fixed-price electricity supply contract observing the application criteria provided for in Italian Legislative Decree 210/21 itself, provide further details on the subject, in the light of the contrary observations received from the consumers’ associations that expressed the need to provide final customers with an informative framework as transparent, clear and comprehensible as possible on the option for the seller to demand payment of a sum of money in the case of early withdrawal from a temporary or fixed-price electricity supply contract and the related criteria;
• with reference to the change in the calculation of the annual spending estimate of offers at variable price, including protection services, on the Offers Portal, confirm the monthly and no longer quarterly update of the forward indices. In order to guarantee the maximum consistency between the Authority’s Offers Portal and the informative material delivered by sellers to final customers at the pre-contractual stage provide for a monthly frequency of updating the annual spending estimate of the protection services. On this point ARERA accepted partially the operators’ observations providing for a term of 7 working days instead of the 5 working days originally suggested from the publication of the said estimate for updating the Comparability Sheets to be delivered to final customers.

With Resolution 449/2020/R/eel the Authority amended the regulation on network losses for the three years 2019-2021:

• reducing the commercial loss factor recognised in LV which for Areti goes down from 2% to 1.83% valid from the equalisation accruing to 2019 and, as a consequence, the percentage of standard loss to be applied to withdrawals of LV final customers which, from 1 January 2021, goes down from 10.4% to 10.2%;
• awarding the DSOs, for the three years 2019-2021, an equalisation amount equal to the lower between the value obtained counting the energy lost with the selling price to higher protection providers (PAU) differentiated by month and by band and that obtained from the annual average PAU;
• it does not introduce the process of ensuring greater efficiency of commercial losses for DSOs;
• it introduces a mechanism for recognising fraudulent non-recoverable withdrawals based on requests from the companies, to be presented in 2022 with reference to 2019-2021, after verification of the existence of specific requirements, including having an overall net result for equalisation during 2019-2021 to be paid by the company. This amount represents the maximum amount that can be recognised to the DSO if the request is accepted by ARERA.

On 31 May 2022 Areti presented to the Authority an application for recognition of the 2019-2021 network losses attributable to non-recoverable fraudulent withdrawals, under the terms of art. 31 of the TIV.

The Authority published resolution 117/2022/R/eel, which fine-tuned the regulations for adjusting electricity losses on transmission and distribution grids for 2022-2023, confirming the desire anticipated in DCO 602/2021/22l of establishing a process to improve the efficiency of commercial losses but, however, making them more precautionary, with a 4% reduction for 2022 and 2023, bringing the percentages to:

• 1.77% in the Centre zone for 2022;
• 1.72% in the Centre zone for 2023.

A price control mechanism is introduced; this is to be used to determine the loss delta in each of the two years and, for only 2022, it provides for a guarantee clause to protect distributor companies which recognises an equalisation equal to the maximum between zero and the result that would be obtained using the conventional percentage loss factors applied for the three years 2019-2021, if the total economic result equal to the difference between the equalisation balance and the revenues obtained from the tariff regulation of the reactive energy pursuant to paragraph 24.2 of the TIT is positive (net debt position).

The Authority also extends the mechanism for recognising “non-recoverable” fraudulent withdrawals also to the years 2022 and 2023. The conventional percentage standard loss factor to be applied to the electricity withdrawn at the withdrawal points on the low voltage grids is finally set, starting from 1-Jan-2023, at 10%.

With the Integrated Text on output-based regulation in force from 1 January 2020, the Authority introduced the possibility for the DSOs to present regulatory experiments to improve the service quality in particularly critical contexts. A specific feature of these experiments is the suspension of the penalties for the experimental period and their non-retroactive application if the target levels for the indicators of number and duration of interruptions without notice, set by the current regulations, are achieved.

In this context, Areti presented its proposal, outlining a process for improving the technical quality indicators different from that defined by the ordinary regulation. This proposal was approved by the Authority with Determination 20/2020 of 20 November 2020.

Very briefly, the measure postpones to 2024 the calculation of the bonuses and penalties for the entire four-year period 2020-2023 and provides for the activation of an additional bonus mechanism if the target proposed at 2023 is achieved and the effective annual levels achieved are better than those proposed in the experimentation. Two specifications:

• the total bonus obtained cannot be more than that achievable in the ordinary regulation;
• in the event of non-achievement of the improvement commitment indicated, Areti must pay any penalties that it would have incurred in the four-year period, in the absence of an extension.

The Authority published resolution 409/2022/R/com with which it approved an inspection program for 3 electricity distribution companies, with regard to continuity of service, to be implemented by 31 December 2022.

The distribution companies to be inspected will be selected from among those that have not been subject to an audit in the last 5 years for the distribution service continuity incentive mechanism and with relevant geographical areas in a position for the 2021 bonus, for incentive regulations on the average number and duration of interruptions (the audit methods are defined in the annexed document).

On 14 July 2020, Resolution 270/2020/R/efr was published; this contained the new rules for defining the tariff contribution to cover the costs incurred by DSOs with regard to obligations arising from the mechanism of energy efficiency certificates. The measure confirms the value of the cap on the tariff contribution of € 250/EEC and introduces, starting from the current obligation year, a consideration additional to this contribution, to be awarded to each distributor for each EEC used to comply with its obligations. On the one hand, ARERA repeats that it considers the cap an instrument necessary to limit the changes in market prices, on the other, it considers opportune to provide for an additional consideration in support of distributors in the light of the economic losses that they are forced to incur owing to the scarcity of EECs available. On 13 October 2020 the Company presented an appeal for cancellation of the resolution.

The resolution, in addition, introduced the possibility of requesting from CSEA the extraordinary consideration in advance of 18% of the specific target for the 2019 obligation year, in order to finance distributors which having already acquired EECs at the beginning of the period, then suffered the negative effects of the extensions of the end date of the obligation year laid down in the Italian Relaunch Law Decree (30 November 2020). Areti submitted an application on 31 August 2020.

In December 2020, Resolution 550/2020/R/efr confirmed the value of 250 €/EEC for the tariff contribution awarded for the 2019 obligation year and fixed at 4.49 €/EEC the value of the additional consideration.

In view of the continuous increase in prices once again during the first half of 2021, the main sector associations sent a letter to the MiTE, urging the adoption of urgent measures, especially regarding the correction for the current year, and reimbursement of the extra costs.

On 31 May 2021, the Decree of the Ministry for the Ecological Transition was published in the Official Gazette, containing the “Determination of national energy saving targets that could be pursued by electricity and gas distribution companies for 2021-2024 (so-called white certificates)”. The Decree extended the expiry of the obligation year 2020 to 16 July 2021, and the Authority subsequently published Determination 6/2021-DMRT, whereby it determined the primary energy saving obligations for electricity and natural gas distributors for the obligation year 2020, setting Areti an obligation of 54,848 white certificates.

On 3 August 2021, the Authority issued Resolution 358/2021/R/efr, with which it confirmed the cap at 250 €/EEC and the additional unit fee at 10 €/EEC. In view of the extension of the deadline for the 2020 obligation year to 16 July 2021 and the regulatory uncertainty still existing in the run up to this deadline, the Authority published Resolution 547/2021/R/efr in which it confirmed its intentions stated in DCO 359/2021/R/efr. In particular, the Authority established that electricity and natural gas distributors will be granted an exceptional additional component of 7.26 €/EEC for each certificate delivered at the end of the 2020 obligation year, applicable to their own specific target for that obligation year and to any remaining portions of the targets for the 2018 and 2019 obligation years, but not beyond the threshold of their own updated specific target. The exceptional component was envisaged to cover the extra costs incurred by operators for the difficulties in procuring the EEC needed for the upcoming target deadlines. The Authority published determination 16/2021 – DMRT with which it defined the 2021 EEC obligation for the Company, totalling 16,580 EECs, as well as determination 7/2022 – DMRT which defines the 2022 EEC obligation, totalling 27,881 EECs.

Pursuant to resolution 58/2019/E/eel, the Authority initiated a fact-finding investigation in relation to Acea Energia with the aim of acquiring information and useful data concerning the management of the financial items relating to electricity destined for the enclaved states.

In accordance with this Resolution and pending the conclusion of the aforementioned investigation, the Authority has specified to the CSEA that it should proceed on a transitional basis and subject to adjustment with the equalisation of the costs incurred by Acea Energia for 2017 for the purchase and dispatching of electricity intended for standard-offer-market customers.

With Resolution 180/2019/C/eel, the Authority decided to challenge the extraordinary appeal brought by the Azienda Autonoma di Stato per i Servizi Pubblici della Repubblica di San Marino for the annulment of Resolution 670/2018/R/eel (which updated the transmission tariffs for the year 2019) and Resolution 58/2019/R/eel.

Pending the conclusion of the investigation, the Authority asked CSEA – on a temporary basis and subject to adjustment – to suspend any disbursements relating to the equalisation of the costs incurred by Acea Energia for 2018 for the purchase and dispatching of electricity intended for standard-offer-market customers.

With Resolution 491/2019/E/eel, the Authority closed the preliminary investigation by instructing Acea Energia and Areti on the actions to be taken by the end of 2019. Acea Energia informed the Authority that it had complied with the requirements. Resolution 491/2019/E/eel, moreover, gave a mandate (i) to Terna, the relevant distribution companies and CSEA to recalculate the charges for withdrawals by the enclaved states by applying the criteria highlighted in the preliminary findings attached to the same resolution (ii) to the Director of the Sanctions and Commitments Department of the Authority for the documents resulting from the evidence found. As a result of this, with subsequent Determination 5/2020/eel, ARERA initiated two sanction proceedings against Acea Energia and Areti, respectively. On 12 June 2020, Acea Energia sent ARERA its proposal of commitments, including waiver of the amount receivable accrued in relation to the system, payment of compensation to ARERA and the obligation to send two-monthly reporting for a period of ten years.

With Resolution 262/2021, ARERA partially amended the methods for carrying out the recalculation activities indicated in Resolution 491/2019 and CSEA then sent the definitive recalculations to Acea Energia on 12 July 2021. Subsequently, the Authority published its resolution 150/2022/S/eel with which it provisionally accepted the proposal of commitments submitted by Acea Energia. Then began the phase during which third parties could submit their comments, to which Acea Energia must respond. After this phase, ARERA will publish the resolution of final approval of the commitments, thus ending the sanctioning procedure. We await the decision on the final acceptance of the commitments.

With Resolution 576/2021 ARERA amended the regulation concerning the financial items relating to electricity destined for the enclaved states, with the aim of bringing it into line with the principles of national regulation. In particular, the Authority intervened on transmission and transport fees, on dispatching and on the regulation of imbalances.

On 1 August 2022, resolution 354/2022 was published, definitively accepting the commitments presented by Acea Energia and for which compliance is mandatory by 31 October 2022. Acea Energia fulfilled its commitments by the indicated date and sent a report to the Authority by 30 November 2022.