The protected energy market is about to end, we are moving to the “free” market unless there are new, unlikely extensions. The service, which the Energy, Grid and Environmental Regulatory Authority (Arera) defines as “protected prices”, will end from 2024. There are two interest dates: January 10 for gas, April 1, 2024 for electricity. Political conflict has arisen even within the majority over electricity bills. Meloni’s government has claimed for months that it wants to expand broader conservation service, but this measure was not included in the last approved energy decree. The decision sparked reactions from opponents and allies such as Matteo Salvini, the League, the Democratic Party and the CGIL, all of whom reached an unusual consensus on the issue. Sources from the Ministry of Environment confirmed to Today.it that Minister Gilberto Pichetto Fratin continues negotiations with the European Commission demanding the expansion of the protected electricity market, but the free market is part of Pnrr. Uncertainty does not help consumers who are confused by the changes that will affect their bills: Let’s see what changes will happen from 2024 and what really suits the free market and the protected market.
From protected service to free market: this is not a trauma
The confusion on the issue was also confirmed by a survey commissioned by Facile.it: more than 13 million Italians do not know that the protection service will end. Nearly 1 million people fear supply will run out, and 12 percent said they fear tariffs will increase. Let us immediately point out that the transition from a protected market to a free market will not be traumatic overnight, and above all, no one will be left in the dark and cold. The uncertainty also resulted from a lack of corporate communication. The law establishing the free market provides that Arera “guarantees the promotion and dissemination of information on the conditions for the full opening of the market and the provision of services”, but there is no corporate communication beyond the information contained in the draft law and on the Arera website. .
It should be clarified that even in the free market, Arera will supervise operators who must continue to comply with rules such as transparency of information on invoices, prohibition of unilateral changes to the invoice in less than three months or disabling of utilities. without notice. Another point is very important: It is not mandatory to choose a supplier from the free market, but for those who do not do this, there is a “Graded Protection Service” that guarantees the continuity of electricity supply. How it works: In the app, those who have not yet selected a supplier will see a supplier assigned based on their region of residence.
Thus, with the gradual protection service, it is as if the greater protection service has been extended: the duration of electricity is 3 years and the price is the same for everyone, just like in the protected market, bi-monthly billing and corresponding conditions to the so-called “Placet” offers. The new supplier will be determined through regional auctions that have not yet taken place. Therefore, depending on the place of residence, the user will be assigned to a selected dealer for each of the 26 regions into which Italy is divided. Operators will be determined after the auction and will have to comply with strict requirements on economic-financial, managerial and operational soundness. A maximum of 30% of the areas can be allocated to each supplier. According to the latest data submitted by Arera in a report to the House of Representatives, 29 percent of total domestic users are still in the protected market: approximately 8.7 million out of a total of 30 million customers will be affected by this transition.
Bonds remaining in the hedged market
Of these, approximately 4.5 million are defined as “vulnerable” and the situation is changing for them. Customers who fall into these categories are considered “vulnerable”:
- Those over 75 years of age;
- Those who are economically disadvantaged (for example, they receive energy bonuses due to economic hardship);
- Who is a disabled person;
- Those who find themselves in an emergency shelter facility after catastrophic events;
- Who is the user on a smaller island that is not connected to each other?
For these consumers, the extension of the protection regime is certain, although it is not yet known how long it will last, but even the vulnerable customer can choose an offer from the free market at any time. As for gas, those who do not choose a supplier from the free market will continue to benefit from the service at variable prices, under conditions that Arera describes as “similar to Plaset offers”. However, at any time you can choose a gas or electricity supply contract from the free market without any additional costs.
Comparison of protected market and free market: which is more suitable
Various trade union organizations and consumer associations take sides against the transition to a free energy market, where, as already mentioned, political parties are divided between supporters and opponents. Energy market liberalization was included in the National Recovery and Resilience Plan as a “milestone” (target) to be reached by 2022 to obtain funding for the third installment.
In general, the free market is more “reactive” than the protected market because prices are set by Arera every three months. Therefore, price changes are reflected in the invoices with a delay of at least two months, and this situation becomes even more evident in sharp price fluctuations, as has been the case recently. As can be seen in the chart below, prepared by Today.it based on Arera data, in 2022 all specified types of public services had lower prices on the free market compared to the protected public service, even with savings of over 37 percent. Or again, in the first quarter of 2023, protection tariffs were set at a time when prices were high and therefore more expensive than in the free market.
The typical user Arera cites falls in the middle band of the chart (1,800-2,500); This corresponds to approximately the typical electricity consumption of two people in a year. “Exceeding the price protections will allow end customers to benefit from a more affordable offer, the service with tiered protections and always subject to the regulations of the Energy, Networks and Environment Regulatory Authority,” Simona Benedettini told Today.it. , independent consultant on energy policies – Therefore, the transition to the free market will take place under more advantageous and controlled conditions for end customers.”
Previously, in 2019 and 2020, before the intense decline in consumption due to Covid and the price increases recorded in 2022, the average price of the advanced protection service, excluding taxes, was approximately 13% and 24% lower than the applied price, respectively. in the free market. However, the trend changed in 2021 and is completely reversed in 2022.
Average price data for the first six months of 2023 are not yet available, only turnover data confirming that, according to Arera, “the price advantage of the free market compared to the protected market has emerged from the first half of 2022.” But Arera himself argues that “a gradual renegotiation of fixed-price contracts […] “It will probably determine the reversal of this difference between the free and protected market in the second half of 2023, which will turn positive, leading to higher costs for the consumer”. Regarding gas, prices are almost at the same level.
How to choose the best supplier among offers on the free market?
So how to navigate the different offers given the transition to a free market? Arera offers an electricity and gas offer portal where it is possible to compare all tariffs available on the market according to everyone’s needs, such as annual consumption, availability of discounts, type of meter and fixed or variable offer for electricity and gas. The specified price is the price showing the cost per kilowatt hour (kWh) or cubic meter (m3) of the energy component that we can find in our bill, as seen in the picture below.
To start, the Quote Portal requires you to enter some information that will allow you to make a comparison, such as the type of offer (fixed or variable), consumption time intervals or flat-rate tariffs, offers that include only the use of renewable energy. energy. The more details you enter, the more precise the search and therefore the better the comparison between managers. For this reason, it is important to have your electricity or natural gas bill with you when logging into the portal, so that information that reflects the user’s characteristics as much as possible is entered. For clarifications or issues, Area also offers a “Consumer Help Desk” on its website or at toll-free number 800166654.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
