Press release

Electricity: from 1st of August new rules to appropriate dispatching costs in consumer bills

Milan, July 28, 2016

Italian Flag Italian version

From 1st August the first new rules to avoid the risk of opportunistic or anomalous behaviour  from operators on the dispatching market were activated. This type of conduct aims to obtain undue profits from the voluntary balancing between forecasts and the actual exchange of energy on the wholesale markets, thus transferring improper costs onto the bills of final consumers. The changes introduced (which were implemented as part of the resolution 393/2015 and consulted with documents 163/2015 and 316/2015 from June) immediately concern all wholesalers, traders and vendors, small and large producers in different ways and from January 2017 also small producers that use renewable sources.

In particular, to prevent anomalous behaviours the mechanism for price recognition in case of balancing [1] has been modified (prices recognised for the energy used for maintaining system equilibrium), preventing individual operators from taking undue advantage from voluntary balancing actions, contrary to the principles of diligence, skill, prudence and foresight required by regulations. In fact, regulations already counteracted the phenomenon of voluntary balancing, i.e. with different energy withdrawal programmes in relation to the most diligent forecasts. Now the prices recognised in case of balancing are changed, making sure that the existing ban on voluntary balancing is combined with a financial disincentive. Therefore, those with anomalous behaviours, over a predefined 'band' of predicted-actual tolerance [2], will not only be prevented from gaining economic advantages, but rather will be penalised. For large thermoelectric producers the tolerance band has already been deleted.

Therefore, so-called arbitration phenomena can also be avoided, i.e. excess purchase of wholesale energy on the day-before market in relation to the actual consumption necessary for their customers, then resold at a greater cost on the more profitable dispatching market. The introduction of further monthly checks on the final balance by the Network Operator (Terna) is also foreseen in order to monitor the proper operation of the market. These new rules complete the prescriptive rules, of asymmetric regulation and sanction as a result of the initiatives contained in the resolution 342/2016 of 24th June, whose first effects related to the Authority's notice of ending speculative behaviour on the wholesale market have already led to positive results in terms of reduction of anomalous conduct. All of the measures put in place contribute to correct the various anomalies on the wholesale market, which could have found structural completion on the supply side if the capacity market segment was already active, designed by the Regulatory Authority in 2012, confirmed by the Ministry of Economic Development in June 2014 and in discussion by the European Commission, which is still lacking an operational launch. The Regulatory Authority's actions will continue with the comprehensive reform of the governance of balancing (as already outlined in the consultation document 368/2013/R/eel), for which adjustment of the European regulatory framework on Balancing guidelines is awaited (the future European regulation on the balancing market), which is currently being developed, and the consequent fully operational design of the dispatching service market. For these reasons the comprehensive reform cannot be finalised before 2017 and will be applied not earlier than two years from now, also taking into account the European approval times and implementation by Terna.

[1] Balancing is the difference between the actual withdrawal schedule presented and the reasonable forecasts made previously, thus creating a difference between the forecasts themselves and actual supply/withdrawal from the network. These differences should be kept to a minimum according the diligence, skill, prudence and foresight towards the system, in as much as balancing significantly affects the security of the system. Conduct does not comply with these principles when balancing is expanding voluntarily to profit from the individual operator. 
[2] Range of +/- 15% from August 2016, +/-7.5% from January 2017