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Natural gas distribution in Italy: the implementation of the reform and its effects

Author

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  • Silvia Giacomelli

    () (Banca d'Italia)

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.

Suggested Citation

  • Silvia Giacomelli, 2008. "Natural gas distribution in Italy: the implementation of the reform and its effects," Questioni di Economia e Finanza (Occasional Papers) 21, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_21_08
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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2008-0021/QEF_21.pdf
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    More about this item

    Keywords

    Natural Gas Distribution; Local Public Utilities; Economic Regulation;

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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