EU-Italy agreement on the bill decree, what the agreement on the price of energy provides

The European Commission underlined that the measure "will be of a temporary nature and will be designed to minimize distortions in the EU electricity market and to preserve incentives for long-term investments in clean energy". Therefore "it will only compensate for the increase in gas costs and will not cover the costs of the ETS system, while guaranteeing the full transfer of benefits to end consumers". Finally, "we expect Italy to quickly notify its plans in accordance with European Union law."

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The agreement reached between Rome and Brussels follows the so-called "Iberian exception" that the Commission granted to Spain and Portugal in 2022: in that case Palazzo Berlaymont effectively allowed a price cap to be imposed on energy. The crux of the negotiation was well known: in Italy the price of electricity on the market and at wholesale is mainly determined by gas and by placing a ceiling exclusively on the cost of the gas used to produce electricity, a lower final price will be created. This is the heart of the bills decree which was launched in February by the Meloni government, and on which negotiations with the EU continued until yesterday.

The mechanism envisaged by the bill decree comes into play leaving intact the CO2 penalties determined by the ETS, which remain the responsibility of the companies, which according to the government constitute another factor in the increase in the final price of electricity. It will therefore be the State that will cover the difference between the real cost of gas and that determined by the ceiling, which will then be negotiated by the government and energy producers.

Read also: Energy, what ETS are and how much they weigh on the final cost of bills

The European Commission, announcing the agreement, also explained that "only consumers who benefit from the measure will contribute to its financing." And I reiterated, as previously stated, that "in 2022 the Commission approved a regime aimed at reducing wholesale electricity prices in the Iberian market, lowering the production costs of fossil fuel-fired power plants. This regime has proven effective in achieving this objective", and the Italian measure is based "on this practice".

Prime Minister Giorgia Meloni, who was in Brussels yesterday to participate in the European Council, commented: "We closed the negotiation with the European Commission on the so-called bill decree, i.e. on measures that we launched months ago that needed an ok from the European Commission, it was a long but constructive negotiation that led us to find a solution. It is very important because this allows us to intervene on the generation of the price of electricity and on the impact that the cost of gas has". According to the prime minister, "these days, especially in the current context, it essentially allows us to intervene to lower bills. I consider it very important and I am very happy with this result".

The Minister of the Environment and Energy Security, Gilberto Pichetto Fratin, said that the government will send to the Commission as soon as possible "a new text of the law, consistent with the temporary state aid framework for the crisis in the Middle East, in order to finalize the formal agreement". The minister expressed "satisfaction with the preliminary political agreement reached between the Italian Government and the European Commission on the measures envisaged by the Bollette decree. It is an important first step, the result of an intense and constructive discussion, which allows us to pursue our priority objective: mitigating the impact of energy costs on families and businesses, limiting the effects of the increase in gas prices on the cost of electricity".

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