The Italian cabinet next week will debate a decree that includes a controversial measure aimed at curbing the price spread between the country's PSV and Dutch TTF gas hubs, through a liquidity service to be funded through the sale of stored gas bought in 2022.
The draft decree, seen by Argus, requires Italian gas transmission system operator Snam and market operator GSE to sell by the end of May the 2.1bn m³ of gas they bought and stored in 2022, following a June 2022 ministerial decree. The ministry will issue details on how the sale will take place within 20 days from the approval of the decree. The decree does not provide further details on how the sale of stored gas would take place, but Argus understands that the sale would not require the physical withdrawal of stored gas, according to market participants.
The revenues stemming from the sale will be used primarily to fund the liquidity service, with any excess funds to be used to reduce transportation tariffs for gas-intensive consumers.
Under the scheme, selected operators will be obliged to submit offers on the PSV during special auction sessions offering pre-defined daily quantities of gas. Sale prices will be anchored to the TTF by a formula based on Dutch trades from the same timeframe. Energy regulator Arera will set the overall amount of gas to be placed into the liquidity mechanism but will have the flexibility to make intra-year adjustments. Selected operators must inject the gas delivered under the scheme into the national pipeline system at one or more entry points designated by the regulator.
The operators will receive a premium for participating in the liquidity mechanism, to be determined according to a competitive procedure and funded using a maximum budget of €200mn.
It will also include a capped risk-mitigation payment to protect operators from price volatility and oblige operators to transfer any excess revenues resulting from obligatory sales to Snam.
The decree also determines that the regulator must send the government a plan for the integration of the German and Italian gas markets using the transport infrastructure in Switzerland, so that operators are not penalised by transport cost distortions.
Sale of the gas stored by Snam in 2022 will represent a loss for the public treasury, as GSE secured the volumes at the peak of the energy crisis that followed Russia's invasion of Ukraine in February 2022, when prices were much higher than now.
Reducing energy costs for gas-intensive industries
Arera will also be required to issue specific measures defining how gas transport and distribution tariffs for gas-intensive industries will be reduced for this year by 28 February, according to the draft decree.
These measures will be provided for final customers directly connected to the transmission network, gas-intensive industrial customers connected to the distribution network and other customers with consumption above 80,000 m³/yr.
The reductions will prioritise tariff classes or consumption brackets with higher cost levels, with the aim of aligning costs across different customer groups and consumption bands. But power producers, civil and residential customers and those with centralised heating through multi-unit buildings will be excluded from the benefit.
