Italy's energy markets are running at "two speeds," with an "inefficient" gas market and a power market "benefiting from open competition," according to Italian energy regulator AEEG.
In a report sent to a parliamentary energy commission, AEEG described the gas market as "very vulnerable," open to gas supply crises and an extremely high price compared to Europe. Both of these, the regulator said, are mainly caused by a lack of infrastructure and competition.
According to data from AEEG, Italy's main utility Eni still controls 84.5% of national gas production and is in charge "directly or indirectly" of 60% of gas import supplies.
After 10 years of market liberalization, the report says, only 8% of households and 2% of small and medium businesses have changed gas suppliers.
It added that the lack of openness has also contributed to the PSV gas trading hub still suffering "severe shortages of liquidity."
The regulator stressed the need to increase the scope of gas infrastructure through more investment in gas pipelines, LNG terminals and storage facilities.
The report said that the first step to opening the gas market to more competition would come mostly through the unbundling of Italy's gas grid operator Snam Rete Gas from Eni's ownership.
At the same time, AEEG said that Italy's power market is benefiting from market liberalization. According to the report, main market driver Enel only occupies 30% of the market. It added that the country's power bourse works and the price difference between the Italian mainland and its islands is being reduced as a result of an expanding power grid.
The report said the free market has reduced power interruptions in Italy from 130 to 46 minutes per year and per client, one of the best in Europe. The frequency of these interruptions has also been reduced by 50%, saving consumers around Eur2.7 billion ($3.68 billion).
AEEG proposed a strengthening of the interconnections with other European markets, which would further converge power prices, and promotion of investment in the power grid and in new plants. This way, the regulator said, it would guarantee market competition and security to the system.
