As we move towards the liberalization of the energy market, this year’s pleasant surprise lies ahead: electricity bills are falling again. For users of the protected market, the cost will drop by 10.8% in the first quarter of 2024. This was announced by Arera (the energy, networks and environment regulatory authority), which sets electricity and gas tariffs in protected markets. All things considered, a typical family’s annual expenditure between 1 April 2023 and 31 March 2024 will be approximately €684, which is -50% compared to the equivalent twelve months of the previous year (1 April 2022 – 31 March 2023). ). Coldiretti underlines the double positive effect of the reduction in energy expenditure: It increases the purchasing power of citizens and families and reduces the costs of businesses. However, the head of the authority himself, Stefano Besseghini, reminds that “the absolute value of prices is still approximately twice as high as before the crisis and the European energy system is not immune from risks.”
In fact, Codacons, along with Assoutenti and Unione Consumatori, estimate savings of around 82.5 euros per family on an annual basis, while warning: Tariffs are “significantly higher than in the pre-crisis period, such that average household expenditures are lower than in the first quarter of 2020.” “It will be 151 euros higher per year on an annual basis.” He also added that starting next July, Italians could face a heavy blow linked to the end of the protected electricity market.
When presenting the new rates, Arera reminds that when the system of strengthening the social bonus in force in the last two years ends (which expanded the range of beneficiaries), from January 2024 the ISEE threshold for obtaining it will be equal to 9,530 euros. For large families, that is, families with more than three children, this figure reaches 20 thousand euros. The extraordinary contribution, which increases as the number of family members increases, is approved and is automatically applied to people who already receive electricity bonuses in accordance with the 2024 budget law.
Because the electricity bill will decrease at the beginning of 2024
So why are the electricity bills decreasing by the way? Looking at the individual components in the bill, the final price of electricity for a typical family was 25.24 euro cents (kWh) per kilowatt hour (kWh), including taxes; In the previous quarter, this figure was 28.29 euro cents per kilowatt-hour. The decline of -10.8% is driven, first of all, by the general decline in energy expenditure of around -14%; this decline is partially offset by increases in regulated network tariffs (transportation and meter management, +2.1%) and overall system costs (+1.1%). .
Arera explains that things could have gone even better if tensions had not erupted in the Middle East in recent months, interrupting the downward trend in prices of energy raw materials, including oil and natural gas. However, it must be said that gas demand remains limited and European storage levels remain just under 90% of available capacity. The contraction in gas consumption continues, especially in the thermoelectric sector, due to the recovery of production from the French nuclear park and the contribution of production from renewable sources. This facilitated the decline in electricity prices (the single national price called “Pun”) in the current quarter.
But on the state aid front, Federconsumatori still wants the government to do more. We said, “In addition to the VAT reduction on gas and maintaining the current access parameters to energy and gas bonuses, it is necessary to support families in difficult situations by allocating funds against energy poverty, which is unfortunately becoming increasingly widespread in the country.” In a note from the association. According to Federconsumatori, despite the 10.8% drop in the electricity tariff, “spending is still at unsustainable levels for many families who already have to deal with significant increases in the gas bill marked by the transition to a free market where prices are fixed higher and in no case cheaper” .
In this context, the association calls on the government to reconsider its choice to “remove some of the conservation measures defined to find a solution to the energy crisis, abolish the VAT deduction for gas and narrow the range of energy and gas bonuses.” With these “unacceptable stepbacks” we risk “completely canceling out the benefits brought by the decline in electricity and in any case creating a burden on consumers.”
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.
