WRITTEN QUESTION E-3357/00

by Sergio Berlato (UEN) to the Commission

(27 October 2000)

Subject: Unfair taxation in the energy sector

Given that:

1. The liberalisation of the electricity market launched under the Bersani Decree has not yet been properly implemented owing to ongoing supply-side shortages, which have led to prices rising towards the maximum permitted market value.

2. Electricity costs have been further increased by the rise in oil prices.

3. The system is made still more rigid by half of the already limited import capacity being earmarked for long-term import contracts concluded by ENEL which were already in place at the start of the liberalisation process and by the fact that in 2001 the remaining capacity will be auctioned off under a procedure that is to include the setting of duties, which will lead to a rise in imported energy prices.

4. The new pricing structure introduced by the Energy and Gas Authority has led to a further increase in controlled prices.

5. This situation distorts competition in that it penalises Italian companies, which are obliged to bear higher costs than their competitors in other European countries in which the market has been fully liberalised.

Does the Commission intend to take action to restore a proper balance in this sector, with a view to enabling Italian companies to remain competitive?

Answer given by Mr Monti on behalf of the Commission

(6 December 2000)

The Commission is closely following the ongoing liberalisation process in the electricity sector in Italy and shares the concern expressed by the Honourable Member with regard to the increase in electricity prices and the risks that that would hold for the competitiveness of Italian firms.

With regard to the supply problems referred to by the Honourable Member as one of the causes of rather high prices for eligible clients, the setting up of a competitive supply structure is inevitably a slow process which will depend primarily on new entrants coming onto the electricity supply market and providing an alternative to ENEL S.p.A., the former monopoly holder. The rules contained in the Bersani decree (DL No 79, 16 March 1999) relating to the sale of 15 000 megawatt (MW) in production capacity, should help to broaden the range of suppliers, provided that these rules are implemented quickly and openly.

Electricity imports would also create competitiveness were it not for the obstacle presented by limited interconnection capacity, as the Honourable Member rightly points out. The Commission has started an ex officio procedure (COMP/E-3/37937) into the problem of the reserve interconnection capacity for long-term import contracts. The matter is currently being examined and at this stage, the outcome cannot be predicted. Together with the European regulators the Commission is studying the various methods for allocating interconnection capacity, with a view to finding non-discriminatory solutions which would not hinder the electricity trade between Member States and which would develop interconnection capacity. Sale by auction could, under certain conditions, meet these requirements although it would lead to higher prices for imported electricity.

The Commission has carefully watched the increases in oil prices which the Honourable Member mentions as one of the causes of high electricity prices. It has prepared a communication on oil supplies in the Union(1) and it is drafting a document on the security of energy supplies.

The Commission, in conjunction with national competition authorities, is continuing to apply the rules on competition to the energy sector both carefully and rigorously.

(1) COM(2000) 631.