• Energy price rises: what is the government doing?
• How much do steep bills amount to?
• Do energy cost increases affect everyone equally?
• If I choose renewables, will I pay less on my bill?
• Is there financial support for households in difficulty?
• Can I pay my bills in instalments?
• Is it possible to save?

In 2022 Italy's growth will be conditioned "by the prolonged pandemic, international tensions and, above all, the cost of energy". As explained by Economy Minister Daniele Franco, speaking on 27 January at Il Sole 24 Ore's Telefisco event, the price rises risk blocking Italy's recovery from the Covid-19 pandemic, as well as weighing unsustainably on households.

The emergency situation is plain to see. For two in ten Italians, the cost of energy bills is the hardest to bear, as reported in the survey on energy poverty conducted at the end of 2021 by the Piepoli research institute on a representative sample of the Italian population. Furthermore, for two out of three households these expenditure items represent the most significant in the family budget.

The reasons that have led to this situation, already covered on LifeGate, in Italy as in the rest of the European Union, are manifold. It can be said that they are linked to supply and demand dynamics in the market: against a surge in demand, there has been a poor response, also tied to geopolitical dynamics that have affected energy storage. Secondly, and to a considerably lesser extent, to the rise in the price of CO2 emission permits.

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Energy price rises: what is the government doing?

In 2021, the price of natural gas on the European reference market grew by almost 500 per cent: it rose from monthly average values of €21 to €120 per megawatt-hour (MWh), with a peak of €180/MWh on 21 December. As a knock-on effect, the wholesale electricity price (Pun) rose by 400 per cent, reaching €288 per megawatt-hour (MWh) from an initial €61.

Anyone hoping for some decrease is destined to be disappointed. As stated by the Regulatory Authority for Energy, Networks and Environment (Arera), which deals in particular with energy and gas markets, in the first quarter a price of €118 per MWh for gas and €300 per MWh for electricity is expected. The government has intervened on several occasions to soften the blow. Most recently, the Council of Ministers of 21 January added €1.7 billion, aimed at supporting businesses, to the already €3.8 billion earmarked, directed more at households. A total of €5.5 billion to counter the surge in prices while at the same time encouraging production from renewable sources.

The rise in energy prices will affect all types of customers in both the free and regulated markets. It is therefore legitimate to ask who will pay more and how much.

How much do steep bills amount to?

On 30 December 2021, Arera announced double-digit increases: +55 per cent for electricity and +41.8 per cent for gas.

Who is affected? The reference is to a household that has opted for the regulated tariff, i.e. where the economic conditions of supply services are set by Arera, and consumes on average 2,700 kWh of electricity per year, with a 3-kilowatt (kW) meter, and 1,400 cubic metres of gas. The Authority explains that the increase is, in both cases, driven by a rise in expenditure on the raw commodity.

Do energy cost increases affect everyone equally?

Those who have taken out a contract in the free market where the cost of the commodity is not variable but agreed between the company and the customer and locked against increases and variations will not, for the agreed period, see any increases for this price component. Increases can, however, affect other elements, such as transport and meter management. Like the commodity cost item, this has a significant impact on the bill as a whole. It is the expenditure of distributors — the companies that manage the networks and own the meters — to carry electricity from the production plant — conventional, gas-fired or hydrocarbon-based, or renewable, hydroelectric or photovoltaic — to the meters via high-voltage pylons and distribution substations.
This item is set by Arera at the same rate for all suppliers, the companies that sell energy.

If I choose renewables, will I pay less on my bill?

Not yet, because the country's energy mix is strongly tied to the use of natural gas and, as noted, the components that make up a bill are numerous. The increase depends on many factors: for example, more is spent if the energy consumed grows and larger quantities need to be transported. Or more is spent if the meter capacity is 10 kW rather than 3. It should be said that focusing on diversifying the energy mix — thus increasing the percentage of energy produced from renewable sources — could guarantee the country greater energy autonomy, reduce dependence on other countries, ensure greater security of supply and lower costs.

It should be remembered that, albeit secondarily, the price of the energy commodity is influenced by the rise in prices for purchasing carbon dioxide emission permits, a system designed to discourage at European level the use of energy produced from non-renewable sources — coal, oil and gas — through the Emission Trading System (Ets).

In the medium term, Arera president Stefano Besseghini explained, speaking on LeoniFiles, the podcast of the Istituto Bruno Leoni, "we will probably see a rationalisation of costs. Probably no one today can realistically say that there will be a significant reduction."

The energy transition process that Italy is undergoing requires looking at the structural change of the energy system. That is, not focusing solely on producing energy from alternative sources but rather at "what will emerge in terms of the capacity to extract effectiveness and efficiency from the world of services, which are already becoming increasingly relevant in the system".

Is there financial support for households in difficulty?

It is clear that these increases will affect everyone, some more than others. For people experiencing financial hardship there are social bonuses, which have been granted automatically since last year. Households in difficult circumstances receive assistance towards their gas, electricity or water bill if they meet at least one of the following criteria:

• the household's Isee must not exceed €8,265;
• the family has at least four dependent children and an Isee of no more than €20,000;
• the household receives the reddito or pensione di cittadinanza.

In this absolutely exceptional situation, Besseghini stresses in a press release, Arera "is trying to make its own contribution by exploiting the limited levers available through bills and the electricity and gas social bonus scheme. As happened during the lockdown phase, the responsible action of consumers will be decisive. Energy saving is a tool to be looked at carefully, but solidarity among consumers is also needed, expressed through prompt payment by those who are in a position to do so!".

Especially as the share of the population facing financial difficulties but not falling within the poorest brackets is growing. And Covid-19 has had a hand in it.

Can I pay my bills in instalments?

Yes. The legge di Bilancio 2022 grants all domestic customers the right to pay in instalments without interest on invoices issued from 1 January 2022 to 30 April of the same year. The Authority has already issued the implementing measure, the delibera of last 30 December, which provides for:

1. the energy supplier must inform the customer of the possibility of paying invoices in instalments in any formal notices or payment reminders sent to customers who have not paid invoices from 1 January to 30 April 2022;
2. the instalments will follow the same frequency as the billing cycle (e.g., if the invoice is bimonthly, the instalment plan will also provide for bimonthly instalments);
3. the number of instalments will be equal to the number of bills ordinarily issued over 10 months (e.g., if billing is monthly, the repayment plan must include ten monthly instalments);
4. the first instalment must be worth at least 50% of the outstanding invoices, while the remainder will be due in subsequent instalments of a fixed amount;
5. if the instalments are of an amount no less than €50, the supplier may reduce the number of instalments;
6. in the event of a change of energy supplier, the outgoing supplier must continue to honour the instalment arrangement (in short, it may not cause the instalment plan to lapse solely because the customer has chosen a different company);
7. if the customer does not comply with the instalment plan, the supplier may suspend the utilities.

For the instalment scheme the government has set aside a fund of 1 billion euros.

Is it possible to save?

There are also a number of measures worth adopting in order to try to save energy and avoid wasting it. These include choosing the latest generation of household appliances in a high energy class, paying attention to the stand-by mode of electrical devices, turning off the heating in rooms that are not in use, and avoiding opening windows when the house is being heated — even though allowing for air circulation is good practice, both for one's health and for saving on bills. Other tips include covering pots with a lid to prevent heat loss and turning down the gas flame once the water reaches boiling point. And it is worth remembering that home automation can help keep consumption under control and monitor it in real time via smartphone.