(Bloomberg) — The Italian government said premiums paid to the national power grid operator were justified despite emerging prices for consumers, protecting a practice cited in a Bloomberg News investigation.
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Consumer spending would have been even higher if operator Terna SpA had been rewarded for its cost-cutting efforts in the so-called “forward” market, Vannia Gava, deputy minister of environment and electrical safety, told lawmakers. on Thursday.
“Under equal conditions, without Terna’s optimization interventions, in 2022 the cost of the dispatching service would have been equal to almost double that recorded,” Gava told the lower house’s committee on businesses and tourism, referring to the secondary market used to fill supply gaps and avoid blackouts.
High fuel costs make it harder to reduce those expenses, he said in reaction to a formal request for comment from an opposition parliamentarian.
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Bloomberg News reported in November that Italian military companies had taken advantage of the country’s Covid-19 lockdown, a business strategy that generated 1. 2 billion euros ($1. 3 billion) in additional profits compared to wholesale electricity costs in 2020.
The investigation found that a solution aimed at reducing those bargains resulted in a higher net spend of €692 million for consumers in 2022, and that the Italian network operator nonetheless earned €334. 7 million in bonuses that year for tariff discounts under a government program.
Two weeks after the report’s release, lawmaker Enrico Cappelletti officially asked government ministers to review prices to consumers and premiums paid to Terna.
“The issue is that there have been no savings on consumers’ bills,” Cappelletti, a member of the Five Star Movement party, said at Thursday’s hearing in reaction to the deputy minister.
Terna has said that high gas prices in 2022 made it harder to cut costs, and that improvements to its grid and trading strategies helped keep them from going even higher. The grid manager and power regulator ARERA said they had taken action to reduce costs on the dispatch market, where Terna has often spent many times the wholesale price of power. Those costs are passed on to consumers via their electricity bills.
The Bloomberg report was part of a yearlong global investigation that has revealed how electricity consumers have been hit with surprise extra costs thanks to grid shortcomings, policy loopholes and maneuvers by companies with strong market power.
—With those of Chiara Albanese, Jerrold Colten and Gina Turner.
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