0 Comments

 Stop the protection, stop the extension strategy

Stop the protection, stop the extension strategy

Energy issues: we must immediately work on the priority obstacles to overcoming protection regimes. The umpteenth possible postponement of the date foreseen for the overcoming of the system of greater protection in electricity has materialized. Stop the protection, stop the extension strategy.

It is not the first postponement to remember the end of the protection to 1/201/2018, then moved to July 2018, to July 2019 and now to 2020. This extension we know that it is one of the strategies of industrial policy that is best for Italy .

They do not convince the reasons for the extension itself. In essence, the institutions that are interested in energy in our country seem to assume to a certain extent that competition can not be implemented because there is a risk of price increases for end customers, as they would not have the ability to select cost-effective offers.

This motivation circulated in various ways has two aspects that leave us very perplexed:
1. If the institutions really care about the cost of the energy paid by the final customers, it is not clear why the bill continues to be overflowing with other burdens that have increased for years without control and which are certainly not linked to the protection purpose (ex. system charges to remunerate renewables, incentives for energy-eaters, remuneration of regulated assets well above government bond yields, dispatching market that generously remunerates the plants called to balance the system, prices of white certificates to the stars) ;

2. As a citizen, I would then be disappointed to know that the State does not consider me capable of choosing an energy supplier. Especially if you can possibly reciprocate supplier in a month. This applies in particular to certain categories that are certainly not inexperienced and which still today fall under the protection regime: VAT and SMEs, condominiums, high-powered utilities, second homes.

If the most important problem of the protection aim was really the possible increase in the prices of the energy component, it would be enough to create a rule to regulate prices also in post-protection (eg a benchmark, a cap, a benchmark index). An expert task force would need a week to identify one or more methods to control prices.

There is another obvious consequence linked to the extension of the protection regime: customers stay where they are. That is, the customers still in protection remain the dominant operators.
This would be a completely understandable and legitimate situation if it resulted from an expression of the final client’s will.

Stop the protection, stop the extension strategy

Today it is certainly not so in reality, such customers have been in fact known as “entrusted” free of charge to the former monopolists and in this situation the propensity to change the supplier is very low. A discreet conflict of interests also appears evident, since the decision-makers on the subject of the purpose of protection are also controlling shareholders in various capacities of those who enjoy positions dominant by the former monopolist.
The extension of the protection regime therefore has the effect of preserving the concentration of the electricity sector, which is the real obstacle to competition. If the former monopolists are allowed to preserve their customer protection base free of charge, the result will be that the competitors will always remain small-medium sized operators (due to the low propensity to switching) with limited ability to innovate and compete.

Real competition can exist if more competitors with adequate resources are faced with equal arms.
This does not happen in a crystallized market and opportunities for growth and development are lost. A real plurality of supply and of competitors is lacking.

Electric car: Europe is competitive