Italy's power, gas and water regulator said late Wednesday it will cut domestic gas and power tariffs for the second quarter following a drop in wholesale prices through the first quarter.
Autorita per l'energia elettrica il gas e il sistema idrico (AEEGSI) said the gas bill for the typical consumer would fall 9.8% from the first quarter, while the electricity bill would be reduced by 5.0%.
The reductions come on the back of falls in raw material prices, the regulator said, as well as current prices and the expectation for a cheaper second quarter on the wholesale markets.
According to Platts assessments, Italian front quarter-delivered gas in the first quarter fell from Eur16.475/MWh on January 4 to Eur13.80/MWh on March 30, while the average for the first quarter was Eur14.43/MWh.
This is a fall of 28.3% from an average of Eur20.133/MWh for front quarter-delivered gas during Q4 2015, although the Q1 price is traditionally higher than Q2 due to the seasonal boost in gas demand in the winter months.
AEEGSI said the reference price for natural gas would be Eur0.06938/cu m during Q2, with 37.8% of that corresponding to raw material costs.
In the power sector, prices also showed a steep decline from the fourth quarter, with gas prices having a significant bearish effect throughout the period due to the prevalence of gas in the generating mix.
Front quarter-delivered baseload in Italy dropped from Eur42.65/MWh on January 4 to Eur33.70/MWh on March 30, with an average closing price of Eur36.44/MWh during the first quarter.
This was a decline of 24.5% from the average assessment of Eur48.88/MWh during Q4 2015 for first quarter-delivered power.
AEEGSI said its reference price for Q2 electricity will be Eur0.1791/kWh, with 42.2% of that related to the cost of generation, raw materials and marketing.
