Italy enacts limited energy law amendments

4 April, 2002 – The upper house of the Italian parliament agreed on Wednesday to pass a new electricity law aimed at further liberalizing the country’s electricity market. But two significant amendments had been dropped by the lower house thereby weakening the effect.

The new law will speed up the process needed to build new power stations to compete with former state monopoly company Enel.

The dropped amendments included the introduction of a ceiling that barred any player from holding more than a 50 per cent share in Italy’s nominal installed generating capacity after October 1.

The amendment, had it been passed, would have forced Enel to sell an estimated 3000 MW more generating capacity than originally stated in a prior law.

Enel is already in the process of selling 15 000 MW of capacity by the end of 2002 to comply with a previous law designed to bring the former monopoly under a 50 percent threshold – where the threshold was defined as “generated electricity.” Enel has conducted the sale of two out of three generating units designed to comply with the capacity reduction.

The other amendment that was thrown out in parliament was the elimination of reimbursements connected to “stranded costs” – investments made before energy markets were liberalized that companies cannot recover in an open market.

Enel has said it expects to recover €350m from stranded costs for 2000 and 2001.

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