13 Mar 2002 – Italy’s electricity and gas regulator warned Tuesday that proposals aimed at reducing the monopoly Enel may be weakened by measures currently under consideration by the government.

The upper house of parliament debates some 300 amendments to the legislation, which is intended to introduce greater competition into the electricity market and reduce power prices – amongst the highest in Europe.

The electricity and gas authority is most critical of two amendments which governing coalition members are proposing – which it says will result in consolidating Enel’s role as dominant player and restrict access to newcomers wishing to enter the market.

The first amendment proposes that the limit of 50 per cent market share for Enel only apply up to 2010. The regulator said that this opened the door to Enel regaining a monopoly position in Italy within eight years. The amendment also prevents the 59 per cent limit being raised in future.

This is a legal guarantee for Enel to maintain its dominant position, given it is clear a 50 per cent limit in itself is not enough to bring (about) competition,” the authority said in a letter sent to parliament.

The authority was also critical of the proposal that the power to set tariffs be transferred to the Industry and Economy Ministries rather than the authority themselves. “Fixing tariffs by law could be to the detriment of a stable regulatory environment,” which would be instead guaranteed by a non-political body, the regulator said.

Enel must divest itself of 15 000 MW of generating capacity, which represents 20 per cent of national capacity. The Italian government hopes that by breaking up the market and bringing in new players, a more competitive market place will evolve. The first generating company, Elettrogen, has been sold and bidding is under way for Eurogen.

As a result, Spain’s Endesa, several Italian utilities and Electricite de France have entered the market but this liberalization has yet to have any impact on consumers.

The sell-off of generating capacity must be completed by the year-end. Enel