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Protection Services

Greater protection and the free market: the differences


In the electricity market, the service offering greater consumer protection is intended for residential customers and small businesses connected to the low voltage grid (with fewer than50 employees and annual turnover not exceeding Euro 10 million) that have not entered into a free market contract. The economic conditions are established by the Authority (Aeegsi) every 3 months. Most operators that provide this service are companies linked to the traditional local distribution business, as in the case of the HERA Group. On the other hand, for those who transfer to the free market, economic and contractual energy supply conditions are agreed upon directly between the parties (customer and sales company) and may include discounts or lump-sum pricing with fixed monthly costs. Customers can move freely between the free and protected markets at any time. Therefore, customers can make their own decisions depending on their needs. Businesses that are even temporarily without a free market electricity supply contract and which are not entitled to access the greater consumer protection market are eligible for safeguard services.

All businesses and public bodies to which at least one MV (medium voltage) or HV (high voltage) site anywhere in the country is registered are subject to the safeguard regime. The safeguard regime also applies to businesses with only LV (low voltage) sites that have more than 50 employees and annual turnover exceeding Euro 10 million. The economic conditions applied to the customer receiving safeguard services, governed by AEEGSI, are more costly for the party concerned, as they are meant to incentivise it to seek to enter into a contract with a supplier in the free market.

Businesses that may provide this service are chosen by means of a tender process that assigns just one sales company per area to provide the service for a period of 3 years. Currently and until 31 December 2016, the service is provided by Enel Energia (for Veneto, Emilia-Romagna, Friuli Venezia Giulia, Sardinia, Campania, Abruzzo, Calabria and Sicily) and Hera Comm (for the remaining regions).

In the gas market, only residential customers are still eligible for protection conditions. Non-residential customers (such as large companies) can choose a supplier exclusively in the free market by selecting the best option for their own needs.
Unlike what happens in the electricity market, in which the protection service is managed only by certain companies holding concessions, in the gas market each free market operator must provide the protection service in addition to its own sales offers and apply it to residential customers that request it.

In addition, last resort services have also been introduced for customers that may be without a natural gas supplier, even temporarily, although they remain connected to the network and therefore continue to use gas, including:

  1. the last resort supply service, which is activated for residential customers and blocks of flats that find themselves without a supply contract for reasons outside of their control, and with reference to utilities devoted to public services (for which the supply cannot be disconnected), even if they are in default. In these cases, the supply is guaranteed by a specific supplier selected for each area by means of a tender process and under regulated economic conditions meant to incentivise the customer to seek out a supplier in the free market;
  2. the default service which operates in the remaining cases when the last resort service cannot be activated, typically in the case of payment default, until the distributor has definitively turned off the gas supply or the defaulting customer has paid its previous supplier (in this case, the customer is placed on the last resort supply service until it finds a new supplier in the market). Also in this case the service is managed by a supplier selected for each area, and particularly costly conditions are applied to disincentivise the customer's continuing use of this service.
 


Page updated 6 August 2019

 
 
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