Italy: The Main Aspects Related To The Deregulation Of Italian Electric Energy Market

Last Updated: 15 October 1998
The substantial privatisation of ENEL (Ente Nazionale Energia Elettrica) is still to be performed. A lot of work is still to be done by the government and by the advisory because of the area of business of the said company and of the involvement of more government bodies. Therefore, it should be noted that, if the entire corporate capital will be placed, the ENEL placement shall have a value, for the time being of about 24,000 billion of Italian lire.

Therefore the Italian situation in the field of electric energy is in a state of transition.

From a phase of monopoly, created in the sixties, the market is now moving towards a competitive regime, giving private companies the possibility to produce and distribute electric energy.

The national corporation of electric energy (ENEL) was established at the beginning of the sixties, to whom was granted the monopoly in Italy, to practise the production, import/export, transport, transformation, distribution and the sale of electric energy of any produced source.

This situation of legal monopoly on behalf of ENEL was further strengthened, until at the beginning of the nineties, thanks also to the issue of the European Community of some directives on the matter, the situation was modified towards a free domestic market, in which the free circulation of services was assured.

Therefore a law was issued which introduced the possibility for private companies to produce and distribute electric energy.

However, as can be read in the text of this law, ENEL obliges the private companies to assign the whole or fixed part of the energy produced by the plant or the surplus of energy produced from such plant in relation to their needs.

The production of electric energy on behalf of the private companies, as written in this law, is conditioned by:

  • a notice to the Ministry of Industry, Ministry of Commerce, ENEL;
  • entering into an assignment agreement of electric energy between the private company and ENEL, approved by the Ministry of Industry;
  • the sale at a price determined by the Electric Energy Authority.

The Electric Energy and Gas Authority has been recently created to allow, among other things, the privatisation of ENEL (from a public economy entity to a joint-stock company).

The main duties of the above Authorities are as follows:

  • to guarantee the promotion of competition and efficiency in the sector of public services;
  • to define a clear tariff system;
  • to promote the protection of clients and consumers' interests.

2. Future Preview: the directive 96/92 of the European Community.

The European Parliament, on 19th December 1996, issued the directive 96/92 having as its object "common regulations for the domestic market of electric energy" which will revolutionise the present situation of the energy field.

The basic principals contained in the directive are the following:

  • the European directive imposed on ENEL to drop 30% of their production in order to create the "free market" of electric energy (free because it is based on price rather than rate);
  • in the domestic market, the electric plants must be able to operate in prospect of attaining a competitive energy market, respecting the requirements of public service;
  • for the construction of new generation plants the members of the European Community may choose between a system of authorisation and/or a public bid.

The members of the European Community shall acknowledge such directive within the 19th February 1999.

This article was intended to provide general guidelines. Specialist advice should be sought about specific facts.

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