Italien : February 16, 2010

First a fact.  In 2009 electricity prices on the Italian Stock Exchange fell by some 26.8 percent compared with 2008, settling at a price of €63.72 per megawatt hour (MWh).  While most observers attributed the price decline to depressed economic conditions as many of the country’s factories cut back on production, the head of the GME (Italian Electricity Market) took another view.

Massimo Guarini, in responding to the price drop, suggested that market competition had more to do with the decline.  In his view the decline in generation prices did not match the overall decline in the electricity market.  He credits a more competitive Italian energy market wherein more suppliers and traders forced lower prices in order to attract more business.

A situation not explain by Mr. Guarini was why the spread between the stock exchange price and the delivered price to the end-user is larger in Italy when compared to other European countries.  In reviewing the distribution demand from 2008 to 2009, we see very little difference.  The only change observed was during the summer periods, however, it is accepted that the change was merely increased use of air-conditioning systems by residential users.

In the final analysis, one can attribute some change in pricing due to competition, but the fact remains the world economic slump starting in 2008 and lasting for the better part of 2009 was the main reason Italian electricity fell.