PROGRESS WITH THE LIBERALISATION OF THE ELECTRIC POWER AND NATURAL GAS MARKET
PRESS RELEASE
PRESS RELEASE
ANTITRUST AUTHORITY LAUNCHES FACT-FINDING INVESTIGATION INTO ENERGY SECTOR TO ASSESS MARKET CHANGES
STUDY TO BE CARRIED OUT JOINTLY WITH THE REGULATORY AUTHORITY FOR ELECTRICITY AND GAS
The Italian Competition Authority, at its meeting on 8 August 2006, decided to open a fact-finding investigation to update the situation regarding market liberalisation in the electric power sector. This investigation, carried out jointly with the Regulatory authority for Electricity and Gas following the letter sent to the two Authorities on 26 July 2006 by the Minister of Economic Development, is to ascertain the status of the wholesale electricity market in Italy and the competitive dynamics which govern it. The aim is to determine whether, compared with the previous study which at the end of 2004 found a number of critical elements including the continuing existence of an operator having extensive market influence, the overall context has changed, in particular for 2006.
In its decision to proceed, the Authority draws attention to the fact that in 2005 the electricity market was subjected to structural and regulatory changes. Specifically, new generating capacity was brought on line and/or existing power stations were modernized and brought under the management of operators other than the dominant one, a number of transmission lines linking macro-zones were upgraded and the active participation of demand was introduced to negotiations in the centralized supply marketing system (the Italian Power Exchange). Furthermore, on 12 August of last year, the European Commission declared the acquisition of joint control of Edison Spa by EDF and AEM Spa to be compatible with the EU’s market rules.
Lastly, the Authority pointed out that the Annual Report of the Gestore del Mercato Elettrico (the company wich manages transactions in the Electircity Market) for 2005 and the early months of 2006 shows a trend toward increasing energy prices in a situation where market indices demonstrate reduced levels of concentration and market influence but increased benefits from exercising that influence.
All these elements might suggest an evolution in the structure of the market such as to modify the relative positions of companies in the sector and to influence their supply policies, so that a review is timely.
In its decision, the Authority also recalls a number of the preliminary conclusions reached by the European Commission following a sectoral study begun in 2005 to monitor the progress of liberalization. The information contained in the Report also confirmed that, as of 2005, the electricity markets in the countries of the European Union retained their national dimension and demonstrated a high degree of concentration which favoured the exercise of market influence and the setting of high prices for energy. The Report further showed that the competition deriving from cross-border energy sales is not such as to be an effective brake on the strength of incumbent suppliers in their own markets. The European Commission itself, then, concluded that the investigation needed to continue in order to identify the most suitable remedies for eliminating the barriers to the development of a truly competitive electricity market, by further monitoring of the effect on companies’ competitive conduct of any structural and regulatory interventions at a national level.
Rome, 10 August 2006