Italy moves to liberalise market

The Italian government last month finalised a decree which paves the way for the liberalisation of the country`s electricity sector. The decree meets the requirements of European Union regulations on market liberalisation, but has been criticised for falling short of demands to break up state utility Enel.

Under the decree, liberalisation will begin in 1999. Enel`s market power will be gradually reduced although it will retain ownership of the transmission network. Certain consumers will be able to choose their electricity supplier, and private companies will be able to play a greater role in the market.

The plans have been labelled as weak by Italy`s antitrust authority. The majority of consumers will see little change from the liberalisation, although domestic consumers have been promised more advantageous tariffs.

The decree forsees the opening of 30 per cent of the market to competition next year, with customers consuming more than 30 GWh per year able to choose their supplier. This threshold will fall to 20 GWh by 2000 and to 9 GWh by 2002.

No plans for the privatisation of Enel are included in the decree. However, the utility will have to divest 15 000 MW by 2003, and will not be able to produce or import more than 50 per cent of total Italian production. An independent body will operate the network.