Gas, the end of the protected market risks increasing bill costs

On January 10th the more protected gas market ended and private individuals should be in competition.But there are no real savings for citizens.

• The protected gas market ended on 10 January 2024.The electricity one will end on July 1, 2024.
• Through the comparison with the tariffs of the "protected" market it can be said that with liberalization the consumer will pay more for his bills.

From January 10, 2024, the protected gas market no longer exists.From now on i consumers they will be forced to choose a supplier of this raw material on the free market.It will also happen for the electricity market:in this case, the date to mark on the calendar is July 1, 2024.But what was the protected market?And what has changed with the free market?Does the consumer spend more or less?Let's go in order.

What is the protected market or also called "greater protection"

The protected gas market in Italy was introduced with the liberalization of the energy sector, which occurred gradually over the years.Liberalization began with law no.164 of 23 March 1999, known as the “Bersani Law”.This legislation opened the electricity and natural gas sector to competition, allowing the entry of private operators and the possibility for consumers to choose their supplier.

Until that date, in fact, the market was in the hands of the state, which controlled the sale of gas and electricity through its subsidiaries.The introduction of the "enhanced protection" market allows for the provision of regulated tariffs for the supply of natural gas (and electricity), offering protection to consumers considered most vulnerable or who have limited consumption.But the protected market is not subsidized by the State, it is only regulated.

The end of this controlled regime is sanctioned by law 4 August 2017, n.124 (annual law for the market and competition) in which 1 July 2019 is established as the deadline, which however is extended several times until the Draghi government establishes January 2024 as the deadline (it remains a form of protection for those who declare themselves "vulnerable customers", which in fact is paid for with citizens' taxes).

The 2017 law, concretely, obliges the customer to choose a gas supplier on the free market, but it is right to remember, to avoid alarmism, that the supply of electricity and gas it will continue to be guaranteed even to those who do not migrate to this market.If, in fact, the end customer does not sign the new supply conditions proposed by the seller, nor a different free market contract with the same or another seller, starting from January 2024 the seller will continue to provide the service under contractual conditions similar to those of Placet offers (which means "free price with equal protection conditions", i.e. with contractual conditions decided by the energy authority and fixed for 12 months).However, the customer will be able to choose a different offer on the free market at any time.

Who sets the prices of electricity and gas

In the Italian context, the protected gas market is managed by the Energy Services Manager (Gse).The tariffs are established by the Regulatory Authority for Energy, Networks and the Environment (Arera) and are subject to periodic reviews.These rates are often used as a reference to compare offers from suppliers on the free market.

But let's get to the crux of the matter: Will the end of the protected market help citizens save money? This is certainly the most delicate point, because although the choice to put an end to the protected market was presented as an advantage in economic terms, in reality things are very different.More than 80 percent of the gas consumed in Italy comes from abroad.The gas is bought via a public platform, and then resold to market operators.In the presence of a monopoly on gas management (a situation that continued until 1999) the risk was that of not being able to know the actual sales price of gas or contact other operators. Supporters of privatization insist on this point:if there is competition, it will be in the companies' interest to offer the most advantageous rate to attract customers.This reasoning may work in theory, but less so in practice.

The president of Arera Stefano Besseghini he assured that Arera and Antitrust will monitor for prevent companies from "carteling", that is, they agree not to go below a certain price quota.In this regard, what is written by the journalist Giorgio Meletti in Appunti, the newsletter of the former editor of Domani, Stefano Feltri, is interesting:“According to the Arera website, in the city where I live, Rome, I will have to choose between 175 operators.But you only need to have completed eighth grade to understand that among the 175 companies that start from a common gas price and publish the rates on the Arera website, the cartel is automatic:in fact, no one has explained to us on which production factors these gas sellers can be more efficient and competitive and beat the competition".

If it goes well, we'll pay the same

In short, if all goes well, we will pay the same as before.After all, just connect to the site Offer portal, the public website that lists and compares electricity and gas offers on the free market:the site calculates the annual amount in relation to the consumption entered and the deviation from the greater protection.The latter, always positive, is the measure of how much the disappearance of the market with greater protection has cost the individual citizen.

But then why abandon the protected market?There is no answer.Meletti adds, critically:“The wonderful idea is to introduce competition on a minimum component of the gas tariff which is made up of an infinite series of mandatory components.Except that no one tells you clearly what part of the price the famous 175 offers above compete on."A contradiction in terms.

FAQ – what you need to know about the protected gas market

• What is the price of gas today in Italy? As of 24 January 2024, the price of gas in Italy is reported by Teleborsa with an IGI index of 29.30 €/MWh, while Il Fatto Quotidiano reports an increase of 6%, closing at 28.8 euros per megawatt hour.These variations are mainly due to delays in shipments of liquefied gas from Qatar.
• Since when is the transition to the free market mandatory? As regards gas, the mandatory transition to the free market for domestic users is expected from 1 January 2024.For small and medium-sized enterprises (SMEs), this step was already mandatory from 1 January 2021.
• What happens if we don't move to the free market?In the event that the transition to the free market is not made, starting from January 2024, the service will continue with economic and contractual conditions similar to those of the Placet offers of natural gas at variable prices, as established by ARERA.However, consumers will not face fines or penalties, but may risk encountering increased energy costs.
• Who can remain in the protected market? Currently, customers considered 'vulnerable' who can remain in the protected system have been quantified at approximately 4.5 million.As regards gas consumption, there are still 6.9 million Italians active on the protected market.