Italy raises power tariffs 5.7% in Q2 2006

London (Platts)--29Mar2006

Italy's gas and power regulator, AEEG, has increased power tariffs for
the second quarter 5.7% and gas tariffs 2.1% as a result of "expensive oil"
and the "gas emergency" it said Wednesday.
The high oil prices in the first quarter pushed fossil fuel power
production costs, which were also higher due to the appreciation of the US
dollar. AEEG said the gas emergency was caused by increased demand in a cold
winter and increased demand for gas-fired power generation. Supply was
hampered by the Russia-Ukraine situation, start-up problems with the Libyan
pipeline and insufficient infrastructure to import and store gas. AEEG also
cited a misuse of storage by operators, especially in the first part of
winter.
In the gas sector, AEEG said that the recent overturning of an appeal;
against its new methodology (for raw materials) will help buffer gas prices
against the effect of high international oil prices.
Gas tariffs will rise by Eur0.00138/cubic meter - a 2.1% rise. The
average family (consuming 1,400 cu m/yr) will see its bills rise Eur19 every
year. The breakdown is: distribution 11.3%, national transport 4.6%, storage
1.4%, wholesale marketing 5.4%, retail marketing 3.6%. raw materials 31.5%,
taxes 42.2%.
In the power sector, AEEG said prices on the IPEX exchange rose 30% in
the first quarter of 2006 year-on-year to Eur78/MWh. These were caused
primarily by high oil prices, the gas emergency, the cost of carbon dioxide
emissions permits and a reduction in imports. Comparable high prices in other
European markets have also pushed Italian prices, AEEG said.
AEEG said that it thinks the Italian market is still not competitive, in
spite of the entry of new productive capacity.
Power tariffs for the second quarter of 2006 will rise 5.7% or
Eur0.0078/MWh (for an average family with monthly consumption of 225 kWh. The
tariff will rise to Eur0.1451/kWh meaning a Eur21 annual rise for the average
family.
The national tariff will rise 6.9% to Eur0.1233/kWh. The breakdown of the
costs is: transmission, distribution and metering 18.9%, production dispatch
and sale to captive market 70.6%, system costs (renewables, research, nuclear,
stranded costs etc.) 9.2% and others 1.3%.

 

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