As reported in a separate entry on this database, the Italian Parliament has approved a Legislative Decree creating an Electric and Gas Authority (the "Energy Authority") and mandating the creation of a Telecommunications Authority. The Decree was enacted as Law no. 481 of November 14, 1995 ("Law 481/1995"). Law 481/1995 creates the framework for both Authorities, and sets up the Energy Authority in its second Chapter. However, a number of laws, decrees, and regulations, which Law 481/1995 orders to be issued within specified time limits, must be promulgated before the Authorities become fully operable.

The following legislation must still be enacted with regard to both Authorities: legislation to establish a Telecommunications Authority; legislation to define public needs in the utilities sector and national development goals; and regulations to transfer powers to the Authorities now vested in other agencies, and not provided for in Law 481/1995. For the Energy Authority alone, Law 481/1995 requires the Ministry of Industry to issue regulations defining the system of equalization between the various subjects providing energy utility services. In addition, both Authorities must adopt regulations to establish the following: public hearings with consumer and environmental groups and utilities; procedures for the resolution of disputes between consumers and utilities; and a manner of publishing Authority acts and findings.

Although not explicitly stated in the Decree, it appears that the Ministry of Post and Telecommunications will continue to hold final powers for licensing telecommunications companies, and that the Ministry of Industry, Commerce, and Handicrafts will continue to hold final powers for licensing energy companies. It is uncertain what part of the regulation of television, now handled by the Postal Ministry and the Agency for Television and Media, will be passed to the new Telecommunications Authority; however, that Authority's enabling act could clarify this. The new Authorities will have powers to make proposals to the aforesaid Ministries regarding the renewal, variation, and suspension of licenses, but the Ministries will be free to reject such proposals at their sole discretion.

The Authorities will have rate making power. Law 481/1995 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.

Law 481/1995 gives the Authorities the following functions: to make proposals to the government regarding the licensing system and the development of the market; to make the aforementioned proposals to the Ministries of Post and Industry regarding rates; to examine market access and competition; to refer restraints on competition to the Antitrust Authority; to set rates, as mentioned above; to set general and specific quality standards to which utility companies must conform; to study the market and present Parliament with an annual report; to hear individual and organized consumer claims, and order corrective action; and to require that each utility company publish its standards.

Law 481/1995 gives the Authorities the following powers: to request information and document production; to conduct inspections; 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; and to issue injunctions, including to guarantee continued service during hearings for consumer complaints.

The Authorities will be governed by a president and two commissioners appointed by the President of the Republic following a resolution of the Council of Ministers and nomination by either the Ministry of the Post or that of Industry, for the Telecommunications and Energy Authorities, respectively. The commissioners are guaranteed complete independence and autonomy, and may not have ties with industry at the time they hold office or for two years after they finish their five year terms. Law 481/1995 was published in the Official Gazette on November 18 1995, and entered into force on the following day, now, the process of appointing the commissioners and transferring staff will begin.

The content of this article is intended to provide general information on the subject matter. It does not substitute the advice of legal counsel.