Oliviero BERNARDINI 1W�llM ltolion Regulotory Authority for Electricity ond Gos ICCI 2001 BİLDİRİSİ Cogeııeratioıı, 'Jll/aste rec.(}verg, '%,rıe�ıı.ifr.s & 0,ı,--site (jtııeratwıı authorities. The resul! was that, on the eve of liberalisation the electricity sector was essentially a legal monopoly in all phases down to the final user; the gas sector had the characteristics of a de facto monopoly with one company dominating imports, transport and storage and numerous companies in exclusive monopolistic control of the local distribution market. Electricity The ltalian power industry was nationalised in 1962. For over 35 years imports and exports were reserved exclusively to the State owned company Enel. Electricity generation, transmission, distribution and sales were also a legal reserve of Enel, but with some exceptions: a number of municipally owned utilities; smal l companies distributing less than 15 GWh/year; industrial generators producing electricity, of which at least 70 % for their own consumption, the rest being sold exclusively to Enel. Transmission for own use was also allowed, but amounted to less than 3 % of the total. in 1998, the year before liberalisation, the share of the incumbent in total imports, generation and distribution of the nation's power supplies was, respectively 100 %, 73 % and 83 % (table 1). Natura/ gas in 1925 a decree established municipal rights over the loca! distribution of gas. in 1953 law n. 136 establishing Eni granted the State company exclusive exploration, production and transport rights in the oil and gas rich Po Valley and Northern Adriatic offshore; moreover it extended to Eni rights over the local distribution of gas. Mineral laws regarding the conversion of depleted fields into underground reservoirs also favoured the creation of a storage monopoly under the control of Eni, with currently about 99 % of total storage capacity. AII import infrastructures are owned and operated by Eni, which also dominates national transport with 96 % of the total. in 1999, the year before liberalisation, the share of the incumbent in total imports, production and distribution was, respectively 90, 88 and 44 % (table 2). Key features of the electricity and gas directives and their implementation in ltaly As discussed in the final section, significant steps in the liberalisation of ltaly's electricity and gas markets were undertaken with considerable advance of the European electricity and gas directives. However, these directives provided a European framework and timetable. Three key aspects of the directives have been of foremost importance in the opening of the electricity and gas markets to competition: accounting and administrative separation between the different phases of vertically integrated industries, as if they were undertaken by separate concerns; access to transport and distribution networks for eligible consumers to buy electricity and gas from suppliers of their own choice; schedule of market opening defineci in terms of eligible customers and of the liberalised share of the total market. After a process of consultation which involved all concerned parties (the electricity and gas regulator, energy industries, consuming industries, consumer groups, political parties, trade unions, ete.), implementation of European directives 96/92/CE and 98/30/CE into ltal ian law was undertaken by the ltal ian Government with only a minor delay with respect to the agreed timetable in the case of electricity (February 19, 1999) and some months before the deadline in the case of gas (August 1 O, 2000). in both cases, the legislation adopted was more far reaching than required by the European directives. Legislative decree n. 79 of March 16, 1999 implementing the electricity directive into ltal ian law: sets a maximum quota on production and imports of any one company and orders divestment of 15 GW of the incumbent's generating capacity by 2003; institutes an independent transmission system operator; defines access to transmission facilities on the basis of regulated tariffs and non discriminatory network codes; provides for progressive recognition of eligibility, amounting to over 65 % of the total market by 2003 ; establishes a wholesale market operator; identifies a single buyer for the franchise market; defines a new regime for distribution concessions. Legislative decree n. 164 of May 23, 2000 implementing the natural gas directive into ltal ian law: sets maximum quotas on supplies and final sales of any one company; mandates legal separation of transport, distribution and trading activities into different companies with distinct balance sheets; defines access to transport, storage and distribution facilities on the basis of regulated tariffs and non discriminatory network codes; provides for the broadest recognition of eligibility, attaining 100 % of the final market by 2003; introduces competitive mechanisms for local distribution activities. Despite these radical restructuring measures, the electricity and gas sectors in ltaly seem likely to continue to be dominated each by a single company for the foreseeable future. in the electricity sector Enel companies seem certain to contribute at least 50 % to total generation in 2005 and over 60 % to final distribution until 2030. Based on existing divestment plans, their contribution to the mid merit power market, which is a critical element in the determination of the wholesale price of electricity, may be estimated at about 80 % in 2005. Likewise, in the gas sector, though the share of competitors is expected to increase to 35 % in overall supplies (production and imports) and to 45 % in final sales by the end of the decade, Eni companies seem certain to remain about 5 or 6 times larger than any other operating on the ltal ian market. ECOGENERATION WORI O m 27
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