AGCM

PRESS RELEASE

GAS: ANTITRUST AUTHORITY, GOOD DECREE SYSTEM FOR GAS STORAGE, BUT REGULATORY FRAMEWORK REQUIRES IMMEDIATE APPLICATION, NOT DEFERMENT TO ADDITIONAL MEASURES

Apply the ceiling on amounts being input to the network and forbid Eni from undertaking new mandates for gas storage management.
Warning communicated to Government and Parliament.

The system proposed in the legislative decree on natural gas is on the right track - it makes significant increases in national gas storage possible. The regulatory framework, however, needs to be finalized immediately by eliminating the decree's deferments to other measures.
This is one of several objections contained in the Antitrust Authority's report to the Government and Parliament.
According to the decree, as noted by the Antitrust Authority, whenever Eni exceeds the indicated market share threshold (40%), it must either augment natural gas storage by 4 billion cubic meters or submit to regulated conditions for gas sales. Whenever Eni's shares climb above 60% of the market, on the other hand, gas release is the only option. In the opinion of the Antitrust Authority, the competitive benefits of this mechanism promise to improve the flexibility and liquidity of the national gas market to the benefit of end users.
The Antitrust Authority recommends that the threshold (as monitored by the Antitrust Authority, which is empowered to apply sanctions in case of non-compliance) at which Eni's obligations are activated should be based on the annual amount of gas input. The only reference point proposed in the decree, however, is a general notion of wholesale market share, a more precise definition of which is deferred to subsequent measures by the Ministry of Economic Development.
The Antitrust Authority also maintains that Eni, which is obliged by the pro-competition measure to develop new storage capacities, needs to be explicitly prohibited from managing this capacity for large gas-user subjects at the same time. The company, otherwise, even in its capacity as a mandated agent, would be able to resume management of the new storage capacity, in effect negating the measure's pro-competition benefits. For the sake of competition, it is critical that these mandates be managed by Eni's active competitors (aka shippers) in the gas sector.
The 50 million euro ceiling on Eni's advance payments to industrial users, in anticipation of the benefits of storage expansion plan, needs to be eliminated. This expense will gradually diminish as the storage capacity is actually created. According to the Antitrust Authority, the pre-definition of a limit on the expenses sustained by Eni (in the form of advance payments to future beneficiaries of increased storage capacity) functions to de-incentivize the need to realize investments as soon as possible in a situation where the cost of the measure is not known ahead of time.
Lastly, the Antitrust Authority notes how the decree will enable industrial end-users with higher gas needs to immediately enjoy the advantages of future new storage capacity, as reflected in the differential between winter and summer gas prices. The Antitrust Authority believes it is important to ensure that the cost of these special terms is not passed on to domestic users and power plants in the guise of higher delivery fees.

Rome - May 19th, 2010