The Italian Electric Energy and Gas Authority, which was formally created on November 14, 1995, by Law no. 481 of the same date, has not yet come into being for lack of Commissioners, staff, and further implementing legislation. The Italian Minister of Industry, Commerce and Handicrafts, Mr. Pierluigi Bersani, has now begun to supply the first of such missing pieces by proposing persons for the posts of the Commissioners who will head the Authority. The Minister's candidates must now be nominated by the President of the Republic and approved by two-thirds of the competent, Parliamentary Commissions in order to enter their seven year terms of office. The Parliamentary Commissions will be understood to approve the nomination if they do not provide a vote within 30 days after receiving notice of the nomination.
All three candidates are technical experts in the energy field. The candidate for Chairman of the Energy Authority is Mr. Pippo Ranci, age 58, an economist who has authored many works in the industrial policy area and has often collaborated with government ministries. The candidates for the other Commissioner positions are Mr. Giuseppe Ammassari, age 63, who has spent most of his career in the Institute for Industrial Reconstruction ("IRI"), where he directed the energy sources office from 1975 to 1988, and Mr. Sergio Garribba, age 57, who has headed a number of energy institutes.
The Energy Authority will have significant power. Law 481/95 explicitly gives it all rate-setting power. Law 481/95 provides for price caps to be set and adjusted yearly on the basis of defined inflation indexes. Rates may also be adjusted as a function of differing quality standards and for exceptional costs. Electric energy rates must be uniform throughout Italy for similar consumers, and are automatically linked to the price of fossil fuel. Utility companies may submit a proposal for rate changes based on other criteria before September 30 of each year, and if the Energy Authority fails to respond within 40 days, the proposal will be considered to be accepted.
The Authority will have direct supervision over the utilities it regulates, including the power to set quality standards, inspect for compliance, demand documentation, hear consumer claims, and arbitrate disputes between consumers and the utilities. It will have the power to impose fines of from 50 million to 300 billion Lire on utilities that fail to comply with its orders, and suspend for up to six months the activities of those which repeatedly fail to comply. It may issue injunctions, including to guarantee continued service during hearings for consumer complaints.
It is difficult to predict how the Energy Authority will perform. Its immediate predecessor in terms of government regulation, the Antitrust Authority, which was created in 1990, has slowly found its footing and even become quite aggressive in fulfilling its mandate under its present (and second) Chairman, Mr. Giuliano Amato. One threat to the Energy Authority could certainly be "capture" by the energy industry itself. The Italian Electric Energy Company is a monopoly owned by the government, whose directors and managers are appointed by the government itself. Thus the regulator and the regulated are on an equal footing with equal government mandates, and their relationship could well become one of collaboration rather than regulation. This should change with privatization, but it is difficult to predict when the privatization process will result in the government relinquishing control of the Electric Energy Company. If the transaction takes place in a number of steps, such passage of control will probably not occur rapidly.
The content of this article is intended to provide general information on the subject matter. It does not substitute the advice of legal counsel.
Regulation of Public Utilities - Appointment of Energy Commissioners
