Making the Energy Union work for consumers Guido Bortoni - - - PowerPoint PPT Presentation

Making the Energy Union work for consumers

Guido Bortoni - President Italian Regulatory Authority for Electricity Gas and Water

CERRE Executive Seminar Brussels, 15 October 2015

Electricity bill of a typical Italian family (3kW – 2.700 kWh/y) €/Y

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Under reform Market value

Total = 448 €/y + tax = 508 €/y

+ metering

Retail markets development: scenario to come

Risk hedging:

• increased number of price structures offered

Retailers’ price-cost margin:

• the energy component of the retail price close to the forward value of electricity on

wholesale markets

• ...plus efficient operation costs
• convergence of price-cost margins across EU?

Retail markets structure:

• reduction of incumbents’ market shares
• high number of retailers, including foreign companies (licensing needed)

Proactive consumers and elastic demand:

• ptimal switching and searching behavior
• Demand elasticity

Additional advanced services:

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Retail markets development: actual scenario

High price - cost margins

• Not only UK.
• Germany, Austria, Ireland

Low switching rates (above 10% best practice)

• Even in countries with high saving potentials

Switching mistakes are common among customers Very low trust Highly concentrated markets

• In many countries the market share of the 3 largest suppliers is above 70%

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Regulatory actions

The regulator has launched an organic reform of the regulation of electricity and gas mass retail markets. This reform aims at:

• promoting competition
• empowering customer

The reform will focus not only on the price regulation of the default and last resort services, but also on:

• Data and information management to support a more efficient and accountable switching process (Integrated

Information System)

• Metering (looking forward to 2G smart metering campaign)
• Bill transparency – to be understood by clients
• Distribution tariff structure – cost reflectivity, no subsidies
• Energy footprint
• Fuel poverty measures – social bonus

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Reform of the Maggior Tutela (MT) service

• Today: Maggior Tutela (MT) = default supply and last resort supply
• Decision to reform the MT service (provision 271/2015/R/com)
• Consultation document 421/2015/R/EEL:

first phase electricity market for small businesses thereafter households

• Legislative initiative to abolish the price regulation of the default service (both electricity and

gas) by 2018

• After abolition, Mt is going to be only last resort supply without price control (temporary

service at reasonable price)

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Today: Maggior Tutela (MT) = default supply and last resort supply Decision to reform the MT service (provision 271/2015/R/com) Consultation document 421/2015/R/EEL: first phase electricity market for small business Legislative initiative to abolish the price regulation of the default service (both electricity and gas) by 2018

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household 2012 2013 BT non household 2012 2013 MT non household 2012 2013 Free market MT Last resort

Switching rates households and small businesses

9 Kind of switching LV non - households households

2012 2013 2012 2013 Within free market 7,4% 10,2% 3,4% 4,8% From and to MT 4,5% 5,3% 5,1% 5,6%

• f which: exit

3,3% 4,2% 4,4% 4,9%

• f which: within integrated group

1,5% 0,5% 2,2% 2,9%

• f which: switch back

1,2% 1,1% 0,7% 0,7%

From and to last resort 0,6% 0,5%

• Total switchings

12,4% 16,0% 8,5% 10,4%

Data: Aeegsi – Retail Report

Market concentration

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BUT: high number of small retailers (more than 381 active in the mass market)

Free market

National Concentration Indexes households LV non - households MV non - households 2012 2013 2012 2013 2012 2013

Energy HHI

2.849 2.810 956 920 371 364

C1

50,2% 49,8% 27,2% 26,9% 9,3% 9,5%

C2

62,0% 63,0% 33,4% 33,0% 17,6 % 18,4%

C3

72,8% 72,4% 39,4% 37,8% 22,8% 23,3%

Tutela Simile

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Opzione 2A

Tutela Simile

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Thank you for your attention! Guido Bortoni presidenza@autorita.energia.it