Managing the liberalization of Italy’s retail electricity market: a policy proposal

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Abstract

Italy will phase electricity retail price regulation by July 1st, 2020. This is the last step in the process ofelectricity market liberalization, that started in 1999. Until then, residential customers and smallbusinesses who do not choose their supplier, will be supplied under a transitional, regulated servicenamed “maggior tutela” (greater protection), which is supplied by the local distributor at a price set bythe regulator. This paper reviews the literature on electricity retail competition – with particular regardto its expected effects on prices, innovation and customer engagement – and the condition under whichits benefits may be delivered. Then a Structure-Conduct-Performance analysis of Italy’s retail electricitymarket for residential customers is performed. Two issues are found to be potentially problematic:excessive market concentration and low customer engagement. Energy poverty is also identified as anissue to be addressed. A phase-out mechanism is finally proposed, that relies on graduality, asymmetricregulation and a mandatory, opt-out collective switching exercise. The mechanism aims to rapidlyreducing market concentration by leveraging on behavioral incentives to customers still under regulatedprices to switch to the cheapest supplier.
Lingua originaleEnglish
Titolo della pubblicazione ospiteEUI Working Paper RSCAS
Numero di pagine26
Stato di pubblicazionePublished - 2018

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