The distribution and measurement of natural gas is regulated by the Regulatory Authority for Energy, Networks and Environment (ARERA). Among its functions are the calculation and updating of the tariffs, and the provision of rules for access to infrastructure and for the delivery of the related services.
The rate system establishes in particular that the reference revenue for the formulation of rates is determined so as to cover the costs incurred by the operator and allow for a fair return on invested capital. Three cost categories are recognised:
The main rate elements are reported below on the basis of the regulatory framework (Resolution no. 570/2019/R/gas as amended)
|Highlights fifth regulatory period (from 1/1/2020 to 31/12/2025)|
|End of Regulatory period (TARIFFS)||31 december 2025|
|Calculation of net invested capital recognized for regulatory purposes (RAB) *||Revalued historical cost|
Parametric method for centralised asset base
|Return on net invested capital recognized for regulatory purposes (WACCpre-tax)||Distribution and Metering: 6.3% Years 2020-2021|
|Incentives on new Investment||Return on investments t-1 to offset regulatory time lag (from 2013)|
|Efficiency Factor (X-factor)||Distribution operating costs:|
3.53% for large companies (RDP > 300.000)
4.79% for medium companies (RDP > 50.000)
6.59% for small companies (RDP < 50.000)
Metering operating costs: 0%
Commercialization operating costs: 1,57%
(*) The RAB of the companies currently included in the scope of consolidation, calculated by applying the criteria adopted by the Authority, with reference to investments made up to 31 December 2021, in the definition of the reference tariffs, is equal to € 8.2 billion.
Resolution no. 570/2019/R/gas, following the consultation process conducted with the documents for consultation no. 170/2019/R/gas and 410/2019/R/gas, approved the regulation of tariffs for gas distribution and metering services for the period 2020-2025.
The Company filed an appeal before the Regional Administrative Court of Lombardy, served on 24 February 2020, challenging the legitimacy of the Resolution no. 570/2019/R/gas in several respects, including the planned reduction in recognised operating costs to the distributors, the reduction in the return on capital invested in metering activities, confirmation of the cap on investments in start-up locations, the proposed single tariff sector for Sardinia with equalization mechanism limited to the first three years only, and the proposal for a fixed x-factor throughout the regulation period. By order of 3 February 2021, the Regional Administrative Court prepared a verification intended to respond to a number of queries of particular technical complexity, which were relevant for the purposes of defining the judgement. As part of the verification activities, the expert witnesses were given the chance to examine, among other things, the data of the separate annual accounts used by ARERA for the adoption of the disputed regulatory provisions. The verification operations must be completed no later than 30 March 2022. The hearing on the merits is set for 21 April 2022.
Resolution no. 106/2020/R/gas redetermined the reference tariffs for gas distribution and metering services for the years 2009-2018 based on the requests of several distribution companies to correct the data. The Resolution also redetermined the reference tariffs for distribution and metering services for 2018 for locations with first year of supply starting from 2017 based on the provisions of Resolution no. 570/2019/R/gas, in relation to the ceiling on the costs recognised to cover capital costs relating to the distribution service in start-up locations. In particular, for 2017 start-ups, the Authority no longer provides for application of the ceiling to the amount of recognised costs, which are therefore remunerated based on the costs actually incurred
Resolution no. 107/2020/R/gas determined the final reference tariffs for gas distribution and metering services for 2019, calculated on the basis of the actual balance sheet figures for 2018.
Resolution No. 596/2020/R/gas approved the mandatory tariffs for natural gas distribution, metering and marketing services and the bimonthly equalisation prepayment amounts for natural gas distribution service for the year 2021. The Resolution also determined the values expressed in euro/re-delivery points, valid for the year 2021, of the components to cover operating costs related to the distribution, metering and marketing service, as well as the component to cover centralised capital costs.
Resolution no. 117/2021/R/gas determined the final reference tariffs for gas distribution and metering services for 2020, calculated on the basis of the actual balance sheet figures for 2019.
Resolution no. 122/2021/R/gas determined the provisional reference tariffs for gas distribution and metering services for 2021, based on the preliminary balance sheet data for 2020 pursuant to Art.3, subsection 2, of the RTDG.
Resolution no. 287/2021/R/gas amended Article 57, subsection 1 of the RTDG, in order to standardise the criteria for decommissioning, for regulatory purposes, the traditional meters replaced in accordance with the Directives for gas metering unit commissioning set out by Resolution no. 631/2013/R/ gas, as amended and supplemented. The Resolution establishes that, regardless of the class of the traditional meter replaced, the decommissioning carried out in accordance with the smart meter directives be conventionally deducted from the stratification of the historical gross values using the values of the gross fixed assets related to the assets installed earliest (so-called regulatory FIFO).
Resolution no. 413/2021/R/gas approved the amounts of operating costs relating to smart metering/remote management systems and concentrators, incurred by the companies which submitted an application for the year 2019.
Resolution no. 414/2021/R/gas granted the request to recognise the operating costs relating to smart metering/remote management systems and concentrators, incurred by the former Company Napoletana Gas for the year 2017, not approved by the previous Resolution no. 568/2020/R/gas, since it is subject to in-depth analysis by the Authority.
Resolution no. 559/2021/R/gas determined the amounts for the recovery of non-depreciation (so-called IRMA) for the G4 and G6 traditional metering units replaced with gas smart meters in accordance with the smart meter directives. The Resolution redetermined the tariffs of reference for the tariff years 2015-2020, in accordance with the new provisions relating to the methods for declaring the decommissioning of G4 and G6 traditional metering units replaced with smart meters.
Resolution no. 575/2021/R/gas concluded the proceeding, initiated with Resolution no. 141/2021/R/gas, for the implementation of the ruling of the Council of State no. 341/2021 confirming the adoption of a constant productivity recovery rate (x-factor) (rather than decreasing with offsetting) in the first semi-period 2014-2016 of the fourth regulation period, therefore maintaining the formulation of Article 11, subsection 1, of the RTDG 2014-2019 in force until 31 December 2016, approved with resolution no. 367/2014/R/gas.
Resolution no. 614/2021/R/gas, following the process initiated with the documents for consultation no. 308/2021/R/gas and 488/2020/R/gas, approved the criteria for determining and updating the rate of return on invested capital for the infrastructural services of the electricity and gas sectors for the 2022-2027 period (TIWACC 2022-2027) and, on the basis of the economic scenario, carried out the infra-period update of the WACC base parameters shared by all regulated infrastructural services of the electricity and gas sectors. The 2PWACC is split into two sub-periods, each lasting three years. Albeit maintaining a three-year update frequency of the parameters relating to the macroeconomic and fiscal context, the Authority introduced an annual update mechanism (at least for the first three-year period) for the macroeconomic variables, if the cumulative effect of the update of the parameters leads to a change in the WACC above a threshold of 50 bps. For gas distribution and metering service, the value of the WACC as of 2022 is set at 5.6%, in pre-tax real terms.
Resolution No. 620/2021/R/gas approved the mandatory tariffs for natural gas distribution, metering and marketing services and the bimonthly equalisation prepayment amounts for natural gas distribution service for the year 2022. The Resolution also determined the values expressed in euro/re-delivery points, valid for the year 2022, of the components to cover operating costs related to the distribution, metering and marketing service, as well as the component to cover centralised capital costs.
In addition, the Resolution:
Resolution no. 634/2021/R/gas postponed until 30 April of year t the publication of the provisional reference tariffs relating to year t and until 31 March of year t+1 the publication of the final reference tariffs relating to year t.
With Resolution no. 74/2021/S/gas of 2 March 2021, the Authority issued Italgas Reti a fine of € 500,000, deeming the company to be in breach of a number of provisions of the Regulation on the Quality of Gas Distribution and Metering services for the 2014-2019 period, regarding the emergency intervention service for the natural gas distribution plant called “Castelnuovo Magra” managed by it. On 19 April 2021, Italgas Reti contested the aforesaid resolution, and the setting of a date for the hearing is currently pending.
With Resolution no. 232/2021/R/gas of 1 June 2021, the Authority made a payment on account of the total net amount of the premiums relating to safety recoveries of the natural gas distribution service, for the year 2018, owing to distribution companies that gave their approval within the prescribed time limits, in the amount of 80%.
With Resolution no. 596/2021/R/gas of 21 December 2021, the Authority determined the premiums and penalties related to the safety recoveries of the natural gas distribution service for 2018. In particular, for subsidiaries and associates companies of Italgas S.p.A., the overall net amount (total premiums and penalties) due for the odorisation and dispersion components is: i) € 8,051,340 for Italgas Reti; ii) € 864,165 for Toscana Energia e iii) € 32,496 for Metano Sant’Angelo Lodigiano. For Umbria Distribuzione Gas, the total amount to be paid to the CSEA by way of balance is instead negative, for € 29,430.
With Resolution no. 63/2021/R/com of 23 February 2021, the Authority defined, pursuant to Law Decree no. 124 of 26 October 2019, the procedures for application of the system for automatic recognition of social gas and water bonuses for economic hardship, replacing the regulatory provisions of the previous “on-demand” system. The automatic recognition of the social gas bonus has a duration of 12 months and the procedures for application take into account the entry into operation of the Integrated Information System (IIS) to cross-check direct supplies and the personal data of an ISEE household, received from INPS [the Italian Social Security Institute], with those listed in its Official Central Register, in order to identify a re-delivery point held by one of the household members.
With Resolution no. 191/2021/R/com of 11 May 2021, the Authority updated the retail monitoring system by requiring that the basic data, found by the IIS, be detected by switching in the gas sector and by the information pertaining to the extent of the re-delivery points served as part of the protection service and in the free market.
With Resolution no. 257/2021/R/com of 22 June 2021, the Authority supplemented and amended the aforesaid Resolution no. 63/2021/R/com, regarding methods for payment of portions of the 2021 social bonuses already accrued, the operator disclosure obligations to end customers and social bonuses for physical discomfort. In particular, for the direct customers of the natural gas sector, if the user associated with the re-delivery point during the bonus period is not the same user associated with the re-delivery point at the moment of identification of the eligible supply, the distribution companies must pay the previous accruals of the 2021 social bonuses in a lump sum to the user associated with the supply for the previous period and to notify him/her of this.
With Resolution no. 227/2021/E/gas of 1 June 2021, the Authority approved the programme for two inspections of gas distribution companies, concerning regulation of the physical and economic items of the natural gas balancing (settlement) service, with particular reference to the 2013-2018 period. The inspections aim to ascertain compliance with the provisions relating to the regulation of physical and economic items, the accuracy of data used, the efficiency of the metering systems and the correct technical operation of the distribution network in relation to the parameters relevant for the purposes of the “delta in-out” control, which expresses the value of the difference between gas injected into the distribution network and gas taken from re-delivery points of the same network.
With Resolution no. 604/2021/R/com of 21 December 2021, the Authority defined the methods for compensating the settlement items deriving from the biennial prescription objections raised by the end customer and by the seller, maintaining the compensation activities of the economic charge pertaining to such items not connected to the settlement processes.
On 12 February 2021, Resolution no. 550/2020/R/efr was contested, with which the tariff contribution for Energy Efficiency Certificates was determined for the year 2019. At present, the hearing on the merits has not yet been scheduled.
On 18 February 2021, a ruling was issued, with which the Regional Administrative Court of Lombardy declared that Resolution no. 270/2020/R/efr did not violate the judgement of the previous Regional Administrative Court of Lombardy ruling no. 2358/2019 on EECs. The latter states that Italian Ministerial Decree of 10 May 2018, in the part where it set the cap on the tariff recognition of costs incurred for the purchase of certificates at € 250/EEC, unlawfully exceeded the tariff powers granted to ARERA. The judgement was only given on the claim of nullity brought by Italgas Reti against Resolution no. 270, but the claim of annulment brought against the ruling has yet to be examined. At present, the setting of a date for a new hearing for the decision on the annulment claim is pending. On 18 May 2021, the Company contested Regional Administrative Court of Lombardy ruling no. 437 of 18 February 2021. By judgement no. 7837 of 23 November 2021, the Council of State confirmed judgement no. 437/2021, declaring that Resolution no. 270/2020/R/efr was null as a result of violation of the judgement. The judgement of the Council of State rejected the claim of nullity but left without prejudice the claim of annulment, which is still pending before the Regional Administrative Court of Lombardy.
On 21 May 2021, the new Ministerial Decree on Energy Efficiency Certificates was published, regulating the four-year period 2021-2024 and retroactively updating the 2020 obligation for distributors. In addition, it provides for the postponement of 2020 compliance from 21 May to 16 July 2021 and introduced a balancing mechanism of future obligations lying with distributors according to certificate availability.
With Resolution no. 01/2020 of 16 June 2021, subsequently amended with Resolution 06/2021 following publication of the Ministerial Decree of 21 May 2021, the Authority updated the national quantitative obligations for the increase in energy efficiency of natural gas end uses, to be achieved in 2020 by distributors with more than 50,000 end customers connected to their distribution network as at 31 December 2018. For subsidiaries and affiliates of Italgas S.p.A., the quantitative obligation for 2020, rounded off to the nearest whole number on a commercial basis and expressed as a number of White Certificates, is: i) 429,881 for Italgas Reti; ii) 62,226 for Toscana Energia and iii) 3,181 for Umbria Distribuzione Gas.
With Resolution no. 358/2021/r/efr of 03 August 2021, the Authority declared the value of the definitive tariff contribution for reference period 2020, which is € 260.00/Energy Efficiency Certificate;
With Determination no. 16/2021 of 10 November 2021, the Authority defined and transmitted to the Ministry of the Ecological Transition and to the GSE the national quantitative obligations for the increase in energy efficiency of natural gas end uses, to be achieved in 2021 by distributors with more than 50 thousand end users connected to its distribution network as at 31 December 2019. For subsidiaries and associates of Italgas S.p.A., the quantitative obligation for 2021, expressed as a number of White Certificates, is: i) 150,380 for Italgas Reti; ii) 22,428 for Toscana Energia and iii) 1,161 for Umbria Distribuzione Gas.
With Resolution no. 547/2021/r/efr of 30 November 2021, the Authority ruled the extraordinary recognition, for reference period 2020, of an exceptional contribution for each certificate annulled during the July 2021 session, not above the achievement of its specific objective, equal to € 7.26/Energy Efficiency Certificate.
With Resolution no. 226/2020/E/com of 23 June 2020, the Authority extended to 31 March 2021, the deadline initially set at 30 June 2020 for the execution of the inspection programme pursuant to Resolution no. 531/2019/E/com on compliance with the Integrated Information System (IIS).
With Resolution no. 432/2020/R/com of 3 November 2020, the Authority introduced extraordinary measures regarding the output-based regulation of gas distribution services:
With Resolution no. 501/2020/R/gas of 1 December 2020, the Authority updated the deadlines of the gas smart meter commissioning obligations in at least 85% of existing redelivery points, with a metering unit class of less than or equal to G6, to 31 December 2021 for distribution companies with more than 200,000 end customers and 31 December 2022 for companies with between 100,000 and 200,000 end customers.
With Resolution no. 81/2021/R/com of 2 March 2021, the Authority extended the measures introduced with Resolution no. 248/2020/R/com intended to manage the reputational guarantee of the credit rating of sales companies in natural gas distribution contracts, in cases of downgrades related to the Covid-19 emergency. In particular, the Authority requires that, if, at the end of the twelve months following the downgrade of the rating, the issuer agency confirms the assessment previously expressed in light of the economic context connected with the ongoing health emergency, the network user can also continue to make use of such assessment in natural gas distribution contracts for the next twelve months.