Pricing

ELECTRICITY SERVICE PRICING

In Italy, there are two main types of electricity markets: the standard market service and the free market. In the standard market service, the operator of reference of the territory, which operates in a monopoly regime, offers the supply service to the customer at economic and contractual conditions regulated by ARERA. On the other hand, in the free market the services offered and related prices are the result of competition among all operators. In this context, customers choose their supplier and the offer that most meets their requirements. The legislation has established the gradual abandonment of the standard market service, setting the dates by which the transition to the free market system will become definitive, the full entry into force of which is now set for January 2024.

The costs of supplying electricity are made up of three items of expenditure: “energy” (supply and retail marketing), “transport and meter management” (costs for delivery to customers and reading consumption) and “taxes” (consumption tax and VAT), while “system charges” (costs for activities in the general interest of the electricity system, borne by all end customers), present up to 2021, were reduced to zero by the Government.
In 2022, the decreasing trend in the number of customers subscribing to the standard market service was confirmed, accelerated by the increase in prices, mainly due to international tensions, which drove customers to look for more favourable economic conditions and therefore to change suppliers.
According to the latest ARERA data available, the number of standard market service customers, in terms of withdrawal points, accounts for 38% of Italian domestic and non-domestic customers (43% in 2021).
The expansion of the free market is evident observing the volumes of electricity sold: free market customers, in fact, consume 86% of the total energy intended for the end market⁹⁴ (84% in 2021).
For a “standard” consumption on the standard market – equal to 2,700 kWh/year, with a power of 3 kW – the total annual expenditure for electricity, estimated by ARERA⁹⁵ in December 2022, was € 1,081.67, more than double the previous year (€ 515 per year).

Chart no. 28 – Electricity price trend for a standard domestic customer (! cent/kWh) (2021-2022)

WATER SERVICE PRICING

By Resolution no. 580/2019/R/IDR of 27 December, the Energy, Networks and Environment Regulatory Authority (ARERA) approved the Water Tariff Method (WTM-3) for the period 2020- 2023, the guiding principles of which are to overcome the Water Service Divide, making operating and management costs more efficient, promoting environmental sustainability and increasing the public's awareness of their water consumption habits. Moreover, the added tools and checks envisaged ensure that any tariff increases are only possible as a result of investments actually made or certified improvements in management.

Table no. 36 – Average water prices applied (2022)

94 Based on the number of served collection points and the volumes sold in 2021 (ARERA, 2022 annual report).
95 Resolution 289/2022/R/com provides for the monthly update to the spending estimate of oers at variable price and of the protection services in order to include the effects of volatility in prices to allow for an adequate comparison between the fixed price and variable price offers. Source: ARERA – data and statistics.