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Energy scenario

Testata Contesto Energy

Energy scenario

Energy contest

Almost 20 years have gone by since, in 1996, the first European Union directives began to drive liberalisation in sectors such as electricity and gas (European Directive 98/30/EC of 22 June 1998 concerning common rules for the internal market in natural gas, transposed by Italian Legislative Decree 23/5/00 No.164 - Letta Decree), which historically had a monopolistic structure. These measures have gradually opened up and harmonised the internal European energy market, granting fair access to the infrastructure, transparency and consumer protection, together with vigorous competition, which for European citizens has led to more efficient services and more advantageous prices. Today, whether they are businesses or individuals, consumers are now free to choose their supplier. For residential customers this has been happening since 1 January 2003 in the gas market, and since 1 July 2007 in the electricity market. In Italy, in parallel to the free market, residential customers can still choose the protected services which have price and supply conditions set by the Italian Regulatory Authority for Energy, Networks, and the Environment. (ARERA).
 

 

The Regulatory Authority (ARERA) is in charge of defining the timing of the completion of the liberalisation of the market, with the complete elimination of protective tariffs.

The Regulatory Authority (AEEG) was set up in Italy in 1995 for Electricity and Gas (it has now become ARERA, dealing since December 2017 with the main network services operated by utilities including, in addition to energy services, also the water service, district heating and waste management services). It is an independent, autonomous and collegial body designed to harmoniously govern the liberalisation process in the sector, fostering effective competition among the various operators on the market, monitoring the tariff system, verifying the quality, efficiency and environmental sustainability of the services provided and, above all, consolidating the role and power of consumers by defining, promoting and protecting their rights.

Therefore, following the liberalisation of the Energy Market in order to promote free competition, in each area the distribution is licensed to a single operator (the "Distributor"), while the sale of energy to end customers is left to separate organizations (sales companies), which in fact in recent years have increased considerably and can offer consumers economic proposals that may differ from each other.

Therefore, the gas and electricity distribution and sales activities are separate, and sales companies and distribution companies operate in the energy market separately with different objectives and activities.
 

 

Standard-offer market and free market: the differences
 

In the electricity market, the standard-offer service is aimed at residential customers and small businesses connected to the low-voltage grid (with less than 50 employees and an annual turnover not exceeding Euro 10 million) who have not signed a free market contract. The economic conditions are set every 3 months by the Italian Regulatory Authority (ARERA). The operators that provide this service are mostly companies linked to the historical local distribution company, as in the case of the Hera Group. If, on the other hand, a customer decides to switch to the free market, the economic and contractual terms and conditions of energy supply are agreed directly between the parties (customer and sales company) and may include discounts or flat monthly fixed prices. Customers are entitled to switch from the free market to the protected market and vice versa at any time. The choice therefore depends on the customer and its needs. Companies that happen to be, even temporarily, without an electricity supply contract in the free market, but who are not entitled to access the standard-offer tariffs, are assigned to the safeguard market.

The safeguard scheme applies to all companies and public bodies that own at least one MV (medium voltage) or HV (high voltage) site in Italy. In addition, companies owning only LV (low voltage) sites with more than 50 employees and an annual turnover of more than Euro 10 million are also subject to the safeguard scheme. The economic conditions charged to customers under the safeguard tariff are defined following tenders to award the service, and are more expensive since they are aimed at encouraging the customer to find a supplier that will enter into a contract with it on the free market.

The companies that can provide this service are chosen through a tender procedure that assigns the service to only one sales company per local area, for a period of 2 years.

Currently, and until 31 December 2020, Hera Comm has been awarded the following regions: Piedmont, Liguria, Valle d'Aosta, Lombardy, Veneto, Trentino-Alto Adige, Friuli-Venezia Giulia, Emilia-Romagna, Lazio, Campania, Molise, Puglia, Basilicata, Sardinia.

In the gas market, only residential customers are still entitled to protection tariffs (including condominiums with consumption of less than 200,000 standard cubic meters per year). Non-residential customers (e.g. large companies) can choose their supplier only on the free market, accessing the offers they consider most advantageous.

Unlike what occurs in the electricity market, where the protection tariff service is offered only by a few concessionaires, in the gas market all operators in the free market must offer, in addition to their own commercial offers, the protection tariff and apply it to the residential customers who wish to access it.

Last resort services have also been introduced, for the benefit of customers who happen to be, even temporarily, without a natural gas supplier, while remaining connected to the network and therefore continuing to withdraw gas, among which:

  1. the last resort supply service, which is activated with respect to residential customers and condominiums that are, for reasons beyond their control, without a supply contract, and with reference to utilities used for public service (therefore cannot be disconnected) even if they are delinquent. In such cases, the supply is guaranteed by a specific supplier selected on a local basis through a tendering procedure and under regulated economic conditions, aimed at encouraging the customer to find a supplier on the free market;
  2. the default service that operates, in the remaining cases, when the service of last resort cannot be activated, including typically cases of delinquency, until the distributor has been able to definitively interrupt the supply of gas, or the delinquent customer has paid his previous supplier (in this case, the customer is assigned to the last resort service, until it finds a new supplier on the market). Also in this case, the service is managed by a supplier that is selected on a local basis, at particularly discouraging conditions for the customer with regard to it remaining in this condition.

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Interactive financial statements
and sustainability reports
The consolidated economic results at 31 December 2022 and the 2022 sustainability report were approved by the Board of Directors of the Hera Group on 21 March 2023

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Hera SpA, Viale Carlo Berti Pichat 2/4, 40127 Bologna, Tel.051287111 www.gruppohera.it