Italy has reached a preliminary agreement with the European Commission that allows it to set a temporary cap on the price of natural gas used for power generation, as part of moves to lower energy costs for businesses and consumers.
Under the agreement, Italy will use a mechanism similar to the one implemented by Spain and Portugal in 2022, known as the "Iberian exception", to cap wholesale prices at around €60/MWh for at least one year.
Rome will then compensate gas-fired plant operators for the difference between the market price and the cap, passing on the extra costs to consumers through additional charges on energy bills. The PSV gas contract for November was last assessed by Argus at€88.40/MWh
"We managed to clinch a good agreement with the EU… which will set a cap on the price of gas at €60/MWh, which means electricity will cost us less," foreign minister Antonio Tajani said over the weekend.
And in an interview with Italian newspaper Il Messaggero this weekend, energy minister Gilberto Pichetto Fratin said the cap, "around €60/MWh", would cut energy bills by 10pc.
He said the commission had undertaken to expedite the process, adding that "the new mechanism could start in January".
The measure was originally contained in a government decree approved earlier this year that had sought to subsidise gas-fired generators for costs relating to Europe's Emissions Trading System (ETS) scheme, but this was not compliant with EU regulations.
An EU spokesman said the measure would be temporary, aimed at minimising market distortions and preserving long-term incentives in renewable energy. "It will compensate exclusively the rise in gas costs and will not cover ETS costs," the spokesman said.
Italy, which generates around 40pc of its power from gas-fired plants, has spearheaded attempts by a group of EU member states to convince Brussels to reform the ETS scheme to protect industry.
The measure will now be rewritten by officials before being submitted to the EU antitrust, while Italian energy regulator Arera will rule on who will pay the costs in bills. The final reworked draft will have to be approved by the Italian government.
On a separate issue, Pichetto said the government was also considering another energy release to help energy-intensive companies.
