Press release
Energy: Italy’s utility bills significantly reduced starting in April, electricity -5%, gas down almost by -10%
Milan, March 30, 2016
After the decreases already registered in the first three months of the year, energy bills will be sharply reduced starting from April 1. The electricity bill of the typical family[1] will register a -5.0% decrease, whereas the gas bill decrease will be even more substantial, - 9.8% (only partly expected for the summer season), for a total savings of € 67 for the 12 months of the rolling year[2]. These are the provisions of the update of reference prices for family households and small companies for the second quarter of 2016.
Italian versionFor electricity, the typical family expense for the rolling year (1 July 2015 - 30 June 2016) will be approximately € 502, marking a -1.6% decrease compared to the 12 equivalent months of the previous year (1 July 2014 - 30 June 2015), corresponding to a saving of approximately € 8. For gas, the typical family expense for the same period will be about € 1,076 Euros, a -5.2% decrease, which corresponds to a saving of about € 59 for the rolling year.
In the 2nd quarter of 2016, the reduction in the gas bill is mainly due to the exceptional drop in the 'raw materials' component, driven by market performance, and especially the downward expectations reflected in the recent forward prices in all natural gas wholesale markets of Italy and Europe for the next quarter (with expected prices lower by about 30% compared with expectations from those detected only three months earlier for the same period). Thanks to the 2012 Gas Authority reform, which has wholesale price signals work hand in glove with the retail market, these decreases are immediately passed on to the final consumers. The downward trend in the energy commodity markets is affected by the current weakness in the global economic growth, plenty of gas in Europe and the dynamics of offer strategies by producers, which include geopolitical concerns.
The collapse in fuel prices, gas in particular, also benefited the price of electricity, downward on the wholesale market, resulting in the minus sign change on the electricity bill, mainly due to the decrease of the total 'energy material' supply costs. Other major components, such as system, transmission, distribution and metering charges, remain unchanged. There is only a slight increase in the dispatching costs for maintaining the system in balance.
Electricity - The electricity price decrease essentially reflects the sharp fall in total 'energy material' supply costs paid by the Single Buyer, already partly determined and estimated, which determines the -5.0% on the overall change in average customer charges (the 'supply' component includes a significant reduction in electricity purchase costs, -5.6%, and a slight drop in equalization costs, -0,1%, only partly offset by a slight increase in dispatching costs, + 0.7%).
Overall system[3], transmission, distribution and metering charges remain unchanged.
Natural gas - The gas decrease is mainly determined by the exceptional decrease of the raw materials supply component (-27% compared to the previous quarter, which translates into -9.0% on the overall change in average customer charges) reflecting downward expectations for wholesale prices in the forward markets of Italy and Europe. Transportation costs are also down (Qt component, -1.3% on the overall change in average customer charges), and in slight decline is also the CCR component (risk coverage component, designed to cover supply related activities, -0, 1% on the overall change in average customer charges).
The adjustment of the charges covering the costs relating to overdue payments for the last resort service (UG3, equal to +0.4%) and that of the distribution and metering rates (+0.2%, again on the overall change in average customer charges) bear the plus sign, owing to the adjustment of the component covering imbalances in the distribution price equalization system (UG1). This is how we get to the final -9.8% for the average customer bill.
The quarterly update in details
Aggregations and charts comply with the changes introduced by 'Bill 2.0'[4]
Electricity - From 1 April 2016, the reference price for electricity will be 17.91 euro cents per kilowatt hour, including taxes, broken down as follows[5]:
Energy material charges:
- 6.05 euro cents (33.80% of the total bill) for energy supply costs;
- 1.51 euro cents (8.44%) for retail marketing.
- 3.30 euro cents (18.42%) for distribution, metering transportation, transmission and distribution equalization and quality.
- 4.61 euro cents (25.74%) for general system charges, set by law.
- 2.43 euro cents (13.60%) for taxes, which include VAT and excise duties.
All resolutions and related fact sheets are available on the www.autorita.energia.it website.
[1] The typical family's electricity consumption is 2,700 kWh per year with 3 kW committed power capacity; gas consumption is 1,400 cubic meters per year.
[2] The rolling year consists of the quarter covered by the update plus the previous three quarters, considering the consumption for each quarter.
[3] The Ae component - special terms for energy-intensive industries - remains on hold pending the conclusion of the EU procedure verifying compatibility of the standards that introduced it with the EU regulatory framework.
[4] Bill 2.0 provides for the simplification of the content and terms used in the summary bill, the one sent to everybody, which are essential to understanding the final charges. The first page of the bill also shows the average unit cost per kilowatt hour/cubic meter standard, as the ratio between total charges and consumption. Anyone wishing to explore the different charge items can ask his/her provider for additional details, which are pages with an analytical description of the components that determine the overall charges. The detailed elements will always be provided in case of response to complaints. "System charges" are also clearly shown; up until now, this item was shown as part of the grid services. Increased clarity is also provided in case of any recalculations, that is, adjustments, highlighted by a special box.
[5] Starting 1 January 2016, resolution 200/2015/R/COM of 30 April 2015, - Bill 2.0 - provides a different aggregation of the single invoice components billed to the end customers; specifically, the items that were included in Sale services are merged as is with the item Energy Material Charges, whereas the items that were included in Grid services are divided in two separate aggregations, which are Transportation and meter management charges (distribution, metering, transport, transmission and distribution equalization and quality) and System charges.