10 July 2002 – The effect of a proposed new Italian energy market liberalization law about to be put before the cabinet would be that oil and gas group Eni and former monopoly power generator Enel would have to sell their distribution network, according to a report from the Reuters news agency.

Reuters said it has seen a copy of the bill, which is bringing in market reforms aimed at reducing the high power prices that currently exist in Italy. The draft bill says that all gas and electricity suppliers would be limited to owning ten per cent, directly or indirectly, of their respective transport networks, which could mean large sell-offs by Eni and Enel.

Eni, 32 per cent held by the Treasury, owns 60 per cent of partially floated Snam Rete Gas, whose network carries 97 per cent of Italy’s transported gas.

Enel, 68 per cent state-held, owns unlisted Terna, which in turn wholly owns the national power grid. Independent operator GRTN manages the grid. The bill also foresees the merging of the electricity network’s ownership and management before its flotation.

Enel would also be affected by part of the legislation that abolishes the recouping of “stranded costs” – investments made before energy markets were liberalised that Enel had been recovering in an open market.

However, that loss would be partially offset by other measures including the scrapping of a hydroelectric tax. Enel has substantial hydroelectric capacity.
The bill does not, as some expected, require Enel to divest any further generating capacity beyond the 15 000 MW which it will have sold by the end of this year.

The bill also proposes lowering the threshold over which consumers will be able to choose electricity supplier, bringing the limit down from 100 kWh to 50 kWh.