Italia : October 13, 2010

Despite increasing investments into the country’s gas system by more than 70 percent over the past seven years, the gas market is still very weak.  This condition largely exists due to the slow speed of government authorization, but also by ENI’s stranglehold on the market.

Currently, the electricity and natural gas markets behave in two opposite directions.  In the electricity market, the market is very competitive and active having saved the consuming public approximately 4.5 billion Euros since it opened in 1999.  The gas market can best be described as a frightful situation given the fact ENI controls 92 percent of the infrastructure for gas imports into Italy and 65 percent of the inputs into the national market.

In a recent speech, Alessandro Ortis, the president of the Italian Electricity and Gas Authority, said the only way to improve competition in the gas market was to replicate the way the electricity market was deregulated.  In short, he proposed that ENI needs to split its operation in two – one for network services with the other for supply services

The comparisons between the electricity and gas markets are striking.  Since liberalization was introduced in 1999, 34 percent of industry has switched from its traditional supplier to an alternative supplier with 11 percent of households doing the same.  In the gas market, only 7 percent of both industry and households have made the switch.

As Ortis argues, until we break ENI’s hold on the gas market Italian consumers can continue to expect to pay 10 percent more for their gas supplies when compared to other consumers throughout Europe.