Natural Gas Distribution in Italy: The Implementation of the Reform and its Effects

44 Pages Posted: 16 Feb 2009

Date Written: September 22, 2008

Abstract

This paper analyzes the evolution of the natural gas distribution sector in Italy from the 2000 reform with the aim of evaluating the regulatory framework, its implementation and its effects on firms and consumers. Market fragmentation has diminished significantly over the years; however, the number of very small firms in the market is still high. In the competitive tender procedures held so far, the number of bidders and the concession fees awarded have been high; however, regulatory loopholes and concerns over the ability of municipalities to organize and carry out competitive procedures have emerged. Tariff regulation has led to a reduction of distribution prices, but firms are highly profitable, which might indicate that they still enjoy significant rents. The uncertainty and variability of the tariff system and the delays in the implementation of third-party access regulation has hindered the development of competition in the residential gas market. The new rules on the size of local markets and on bidding criteria should significantly improve the regulatory framework of tenders.

Note: Downloadable document is in Italian.

Keywords: Natural Gas Distribution, Local Public Utilities, Economic Regulation

JEL Classification: L95, L98

Suggested Citation

Giacomelli, Silvia, Natural Gas Distribution in Italy: The Implementation of the Reform and its Effects (September 22, 2008). Bank of Italy Occasional Paper No. 21, Available at SSRN: https://ssrn.com/abstract=1344193 or http://dx.doi.org/10.2139/ssrn.1344193

Silvia Giacomelli (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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