ARERA electricity services activities Commercial and Trading Segment

Budget Law 2018 (Maxi-bills and limitation of two years)

The 2018 Italian budget law no. 205 of 27 December 2017 approved the so-called amendment on “maxibollette” (maximum bills), reducing the period of limitation of the right to remuneration for electricity and gas supply contracts to two years, in relations between customers (domestic, professionals and micro-enterprises) and the seller, and in relations between the distributor and the seller, and in those with the transport operator and with other subjects in the supply chain. These rules apply with reference to bills whose due date is later than 1 March 2018 for the electricity sector and 1 January 2019 for the gas sector.

With subsequent resolutions, the Authority is aligning the regulations with the primary norms. In fact, with Resolution 97/2018/R/com, the Authority provided the first guidelines for the application of the provisions of the 2018 budget law, establishing that to start with the two-year limitation would apply to all customers connected in low voltage who request it, following appropriate information provided by the seller on the bill or at least 10 days in advance with respect to its expiry. With subsequent resolution 264/2018/R/com, the Authority implemented a further transitional measure regarding the application of the limitation in the relations between sellers and distributors, establishing that if an end customer objected to the limitation of the amount invoiced by the seller with reference to consumption dating back more than two years, for cases concerning adjustments deriving from corrections attributable to the distribution company the seller could request the reversal of the bills concerned and the return of any excess amounts paid to the distribution company.

On 18 May the Authority asked the company for information on the application of the provisions of Resolution 97/2018/R/com regarding the seller's disclosure obligations with respect to end customers, as well as the number of bills containing consumption following with the period of limitations. The response was provided on 15 June.

With Resolution 569/2018/R/com, the Authority approved the interventions (previously illustrated in DCO 408/2018/R/com) for the strengthening of protections in the event of bills containing amounts relating to consumption dating back more than two years, definitively identifying the subjective perimeter against which the interventions are applied and defining the sellers' disclosure obligations, as well as the forms of presentation and management of any claims by end customers. In particular, it is envisaged that:

the seller adds the notices and the form to object to the limitation in an initial page added to the bill;
the amounts for consumption dating back more than 2 years are shown separately on the same bill or through the issue and simultaneous sending of two separate bills, providing for the suspension of any automatic collection methods for the part beyond limitations.

The Authority established that these provisions should be effective with reference to the invoices issued starting from 1 January 2019. In this regard, Acea Energia informed the Authority of the difficulties related to the implementation of the actions requested in the proposed time and, through the trade associations, presented a request for review in order to extend the entry into force of the regulations by nine months in such a way as to have adequate time to develop and introduce the required IT workarounds and a definitive and certain regulatory framework. In fact, in parallel, the ARERA has published DCO 570/2018/R/com concerning the definition of the attribution of responsibilities (between distributor and end customer) regarding the billing of amounts related to consumption more than two years old. On this occasion, both the trade associations and Acea reaffirmed the need for a certain, complete regulatory framework.

Finally, although it rejected the request presented by the associations for the review of Resolution 569/18, with Resolution 683/2018/R/com the Authority nevertheless allowed the operators to be able to implement the resolution with specific and differentiated methods while safeguarding the right to protect the customer in relation to information and the possibility of objecting to the limitation. Furthermore, in the resolution the Authority established that in the event of failure to record consumption due to the responsibility of the distributor, distributors can return the sums they have paid to the sellers by offsetting subsequent payments of transport invoices rather than through an activity of reversal, and confirmed the daily criterion for the purposes of determining the consumption out of limitation. The following are thus postponed to a subsequent order:

the procedures for requesting Terna or Snam Rete Gas to review the values relating to the dispatching or balancing service in the event of a limitation applied due to the fault of the distributor;
the definition of the methods for attributing sums deriving from missed collections due to limitations objections to the parties responsible.

Electronic invoicing

With Resolution 712/2018/R/com, the Authority dictated the first provisions to coordinate the regulation regarding the bill for end customers and electricity and natural gas bills issued by distributors with legislative changes in force since 1 January 2019 on the subject of electronic invoicing as required by the 2018 budget law.

Compliance with the judgements of the Lombardy Regional Administrative Court and the Council of State regarding guarantees for the collection of the general charges of the electrical system

On 30 November 2017 the State Council rejected the appeals filed by E-Distribuzione and the Authority against the regional administrative court's rulings of January 2017, thus confirming the annulment of the provisions of the Electricity Grid Code that provide for the inclusion of general system charges in the calculation of guarantees that sellers must offer to distributors for the conclusion of the transport contract, but stated that the guarantees can be requested for the sums collected by the sellers from end customers. Thereafter, with a press release on 29 December 2017 the Authority reiterated that the transitional provisions regarding the reduction of the distributor guarantee amounts defined by resolution 109, taking into account the highest unpaid ratio declared by the sellers to the Authority, had been fully applied in all its parts.

In order to settle the whole matter, with the consultation document 52/2018/R/eel the Authority gathered operator comments to establish a mechanism that from 2019 would allow sellers to recover general system charges (incurred in 2016) from those paid to the distribution companies but not collected by the final customer and any transfer costs and legal costs related to these charges. The document also envisaged that in cases of particular difficulty of the seller it can submit an early application for recovery, in 2018. With its own document the Acea Group proposed clarifications and improvements to the mechanism in question. On 2 February the Authority asked the company to quantify as precisely as possible the amounts recoverable through the mechanism proposed in the consultation document for the two-year period 2016-2017. Acea Energia therefore estimated these amounts to be around € 8.5 million.

Given the outcome of the consultation, which highlighted the impossibility of reconciling the various interests involved, and given the absence of primary legislation defining the issue, with resolution 430/2018/R/eel the Authority suspended the definition of the specific recovery mechanism, considering it more appropriate to implement a reform of the entire sector regulation by 30 June 2019.

Integration of the grid code type for the transport service in terms of guarantee updating

With Resolution 655/2018/R/eel, the Authority expanded the Electricity Grid Code (Annex B of resolution 268/2015) with respect to the regulation of guarantees. In particular, the transport contract is expected to be terminated even in cases where the seller, despite the reminder and warning from the distribution company, does not proceed promptly with the updating of the guarantee.

2G smart metering systems and gas smart meters

With Resolution 700/2017/R/eel which follows DCO 466/2017/R/eel, the Authority ordered the TIS modifications aimed at applying hourly processing for use points equipped with 2G smart metering systems. In particular, the resolution provided for the IWS to carry out the first aggregation for the purpose of settling the daily quarter-hour curves relating to withdrawal points gradually equipped with 2G smart meters with regard to the measurement data for August 2018 (anticipating the transition to hourly processing starting from the thirteenth month after commissioning, guaranteeing dispatching users at least 12 months of measurement data for correct scheduling of use). The date of entry into force of the new standard formats relating to measurement data from 2G systems was postponed to 1 January 2019 from the previous 1 October 2018.

With Resolution 88/2018/R/eel, the Authority published the methods and time frames for exploiting and displaying the configurable information for the 2G withdrawal points in operation via IWS, applicable starting from 1 October 2018.

With Resolution 669/2018/R/gas, the Authority confirmed the need to continue the commissioning process of the G4-G6 class smart meters (typical for home use), updating resolution 631/2013.

In particular, distribution companies with more than 100,000 customers are expected to commission at least 85% of the new grid points by 2021.

Imbalance fees for non-programmable renewable sources

With resolution 80/2017/C/eel, the Authority decided to appeal against the rulings of the Lombardy administrative court for partial cancellation of Resolution 522/2014/R/eel. This Resolution, in part cancelled, provided that for the validity period of Resolution 281/2012/R/EFR (cancelled by the Administrative Court), i.e. from 01/01/2013 to 31/12/2014, relating to the imbalances for renewable energy sources that cannot be planned, the original framework contained in Resolution No. 111 of 2006 would apply. According to this framework, for production units supplied by sources that cannot be planned, an exemption from the imbalance costs was arranged, except for the case in which the aforesaid units had participated in the intra-day market. With the judgement no. 7317 of 31 December 2018, the Council of State overturned the sentences of the TAR and declared the provisions of Resolution 522/2014/R/EEL legitimate for the past, i.e. "for the period between 1 January 2013 (date of entry into force of Resolution 281/2012/R/efr) and 31 December 2014, Terna will apply the imbalance fees as initially defined by Resolution no. 111/06, i.e. in their version prior to resolution 281/2012/R/efr, subsequently voided". Following this pronouncement of legitimacy, the proceeding started with Resolution 593/2018/R/eel, aimed at executing the judgements of the Lombardy Tar, was filed with Resolution 15/2019/R/EEL.

Indicators and comparative publication of the annual report on the management of complaints and the resolution of disputes

Following DCO 493/2018/R/com, the Authority published Resolution 623/2018/R/com with which it modified the TIQV relating to the annual satisfaction survey dealing with the handling of complaints (art. 38) and the Report on the processing of complaints and the resolution of disputes (art. 39). In particular, the Authority confirmed the 4 quantitative indicators already subject to consultation, namely:

complaint indicator (ICR);
complaint response capability indicator (ICRC);
information request indicator (IINFO);
response to information request indicator (ICINFO).

The Authority therefore established that the Report to be published in May 2019 relating to 2017 will not contain the comparative publication of individual indicators, but only an analysis by homogeneous groups of unnamed companies, while starting with the data for 2018 it will contain the comparative publication of the individual indicators, each of which will contain a ranking, not individual, but in the form of non-anonymous clusters that bring together operators with similar performance levels.

The ICS satisfaction indicators will be reported in a specific section of the report, i.e. the indicators related to the customer satisfaction survey, for which the publication of responses to complaints is expected starting from the interviews carried out in 2018 with publication for the years 2018-2020 through non-anonymous clusters that group operators with similar performance and characteristics. Starting in 2021 the comparative ranking of the ICSs will be carried out by single operator.

PLACET offer and minimum contractual conditions for other free market offers

With Resolution 555/2017/R/com, the Authority approved the regulation of PLACET offers together with the minimum contractual conditions for all other free market offers other than PLACET offers. These provisions came into force on 1 January 2018. In particular, the Resolution envisaged that PLACET offers be inserted by each free market operator in their commercial offers both for the electricity sector (for domestic and non-domestic grid points connected to low voltage), and for the gas sector (for domestic and non-domestic points of delivery, including apartment buildings for domestic use for points with an annual consumption of less than 200,000 m3). As regards the general supply conditions, the seller alternatively had the choice to use either the form prepared by the Authority or draw up their own general contractual conditions in accordance with the resolution, the form and regulations which do not contain any additional contractual conditions. As regards the economic conditions for the part to cover the costs typical of the procurement and marketing of the commodity, PLACET offers require a fixed amount €/point/year and an energy amount €/kWh or €/m3. It is envisaged that the energy amount will have two separate price formulas, a fixed price and a variable price (based on the National Single Price (PUN) for the electricity sector and on the TTF for the gas sector). Prices are freely determined by individual suppliers.

With Resolution 848/2017/R/com, the Authority extended the entry into force of the PLACET offer until the date of approval by the Authority of the general supply conditions form. With Resolution 89/2018/R/com, the Authority therefore resolved that starting from 1 March 2018 all sellers were required to make PLACET offers available on the retail market. The provision also approved the modules of the general conditions of supply of the PLACET offers. In accordance with the dates specified by the Authority, Acea Energia has made the offer available through the shop and via the website.

With Resolution 288/2018/R/com, the Authority established the obligation for sellers to transmit instrumental data for the monitoring of PLACET offers, establishing that starting from 1 March 2018 they submit by the month following the end of each quarter the number of contracts with PLACET offer activated and terminated.

Approval of the 3rd decision level for the resolution of disputes

With Resolution 639/2017/E/com, the Authority approved the 3rd decision level for the resolution of disputes between customers and operators, to be activated as an alternative to legal recourse and if such disputes have not been resolved either through a written complaint or a reconciliation procedure. The new procedure entered into force on 1 January 2018.

Update of RCV and DISPbt components

With Resolution 927/2017/R/eel the Authority published the updated RCV and DISPbt components for 2018, following criteria and methodologies already applied in the previous year.

As regards the RCV (Centre-South territorial area) there was a decrease in the recognised value for domestic points (from 4,345.30 to 4,076.76 €c/grid point) and an increase in the recognised value for points relating to other uses (from 12,536.55 to 14,623,02 €c/grid point) based on an unpaid Centre-South ratio which, compared to last year, is down for domestic customers from 1.0893% to 1.0762% and an increase for other uses from 3.1250% to 3.8664%.

With respect to the compensation of arrears mechanism (Centre-South territorial area) the value has fallen for domestic points (from 884.17 to 825.06 €c/grid point) and increased for points relating to other uses (from 5,873.78 to 8,082.69 €c/grid point); for the purposes of admission to this mechanism, the minimum unpaid ratio value for domestic points has fallen to 1.12% while for points relating to other uses it has risen to 5.13%.

Compared to 2017, the DISPBT has gone from -2,314.50 and -2,298.86 €c/grid point for domestic resident points and from -1,484.30 to -1,468.70 €c/grid point for non-domestic resident points, while going from -434.37 to -187.55 €c/grid point for points relating to other uses; the DISPBT component is also applied to energy amount for resident domestic customers only with values differentiated by consumption bands i.e. 0.269 €/kWh (from 0.272 in 2017) for the consumption band of less than 1,800 kWh/year and 0.619 €/kWh (from 0.583 in 2017) for the consumption band over 1,800 kWh/year. With respect to the incentive mechanism for increased dissemination of electronic bills, the Authority has on the other hand confirmed the last year’s values.

With Resolution 188/2018/R/eel, in addition to updating the economic conditions of electricity sales as part of the enhanced protection service for the quarter 1 April-30 June 2018, the Authority also updated the DISPBT component with effect from 1 April 2018 in order to take into account the structure of the tariff components for resident domestic customers to cover the general system charges in force from the same date.

With subsequent resolution 364/2018/R/eel, with effect from 1 July 2018 the Authority confirmed the value of the PCV fee already in force in the period from 1 January 2017 to 30 June 2018 (resolution 633/2016/R/eel) waiting to update it after completing the PCV data collections that would be available starting from September 2018.

With Resolution 706/2018/R/eel, the Authority published the PCV, RCV and DISPBT components updated for 2019. With regard to the RCVsm (specific for operators other than the incumbent) for the Central South territorial area, there was a particular decrease for all types of customers and in particular for other uses, where the component dropped to 11,629.87 €c/pdp from 14,623.02 in 2018. This RCV was calculated mainly on the basis of:

an average unpaid ratio in Central-Southern Italy of July 2015 and June 2016 turnover, which is down compared to last year for both domestic customers (from 1.0762% to 0.85%) and for other uses (from 3.8664% to 2.83%) with a higher level of arrears for former customers;
in relation to the remuneration of net invested capital taking into account an average exposure between the activity of purchase and sale of electricity equal to 38 days (against 41 days in 2017) and a WACC level of 6.5%.

Also with regard to the mechanism for compensating for arrears (Central-Southern area) the values show a significant decrease: domestic customers went from 825.06 c€/pdp in 2018 to 383.56 and other uses from 8,082.69 c€/pdp to 4,282.63 with new minimum unpaid ratio values (reference in order to be able to participate in the mechanism) also decreasing: domestic from 1.12% in 2018 to 1.06% and other uses from 5.13% to 3.56%.

The same resolution also updated the DISPBT component with the new monomial structure for domestic customers (the 626/2018), which no longer includes, for resident domestic customers, the energy share with differentiated values by consumption levels, but only the withdrawal point amount.

With regard to the PCV fee, applied to protected customers and defined in line with the marketing costs incurred by an efficient operator on the free market, there was a slight increase compared to 2018. In fact the 2019 fee for servants amounted to 6,538.46 c€/pdp (from the previous 5,778.84) and for other uses equal to 12,184.84 c€/pdp (from the previous 11,837.77). This PCV was calculated mainly on the basis of:

an average unpaid ratio on July 2014 and June 2015 turnover and on July 2015 and June 2016 turnover which is 1.68% for domestic customers and 1.99% for other uses;
in relation to the remuneration of net invested capital taking into account an average exposure between the activity of purchase and sale of electricity equal to 53 days and a WACC level of 6.7% due to the higher risk of sales activity on the free market.

Authority proceedings

ARERA unbundling checks: With Resolution 561/2018/E/eel, the Authority approved a programme of controls on the separation of the brand and communications policies for companies operating in the sale of electricity to free customers and protected customers.

Acea Energia was also involved in these checks and on 14 January 2019 responded to requests for information made by the Authority regarding compliance with brand unbundling obligations. The resolution also envisages that, after this first phase of documentary checks, a second phase of checks would commence by accessing the physical spaces dedicated to sales.

Sanctioning procedure for charging the postal costs for the paper bill: With decree 66/2018/com dated 15 November 2018, the Authority ordered the initiation of a sanctioning and prescriptive procedure against Acea Energia for charging final domestic customers for the receipt of the paper bill for free market offers called "Acea Viva" and "Acea Rapida" in violation of the provisions of Italian Legislative Decree 102/14 and Annex A to Resolution 555/2017/R/com.

On 14 December Acea Energia notified the Authority of the termination of the conduct, updating the economic conditions of the offers in question and presenting the following commitments:

reimbursement of the amounts already paid by domestic customers;
making available to electricity customers who were still active and who had paid the disputed surcharge a free consumption analysis service in order to promote greater efficiency in the use of energy;
strengthening – even through parties external to the Company – the verification of electricity and gas supply contracts that can be selected by domestic customers in terms of compliance with applicable industry regulations.

The deadline for the conclusion of the proceeding is 220 days starting from the communication of its initiation, unless there are justified procedural requirements.

Other topics

Updating of the structure of tariff components to cover general costs for non-domestic customers: On 30 December 2016, Italian Decree Law no. 244 (so-called Milleproroghe 2017) was published, which in article 6, paragraph 9, extends to 1 January 2018 the deadline by which the Authority will have to adjust the structure of the tariff components relating to the general charges for electricity applied to non-domestic customers. With Resolution 481/2017/R/eel, the Authority defined the main characteristics of the tariff structure for the system charges valid starting from 1 January 2018, with the introduction of two groups: general charges to support renewable energies and cogeneration (Asos) and the remaining charges (Arim) with a three-part structure (fixed annual quota, annual power quota and variable consumption quota).

With Resolution 921/2017/R/eel and subsequent resolution 71/2018/R/eel, the Authority then concluded the process of reforming the general charges, defining the new methods for implementing incentives for energy-intensive businesses. With resolutions 285/2018/R/eel and 339/2018/R/EEL, the Authority approved the implementation rules (methods and timing) for the opening of the portal by Cassa for registration in the list of companies with a high electricity consumption for the year 2018. With Resolution 181/2018/R/eel, the Authority established the implementing provisions to allow the Cassa to proceed with the granting of subsidies to energy-intensive businesses pertaining to the years 2016 and 2017 and to other related prerequisites.

Deferral of completion of general reform of charges for domestic customers: After the deferral to 1 January 2019 established with Resolution 867/2017/R/eel, with subsequent resolution 626/2018/R/eel the Authority further deferred the last phase of the tariff reform for general charges of domestic customers to 2020. Specifically, the Authority established:

general charges: for 2019 the two-tier structure in force in 2018 remains in force for domestic customers (up to 1,800 kWh/year and over 1,800 kWh/year) which will definitively be superseded in 2020;
DISPBT: on 1 January 2019 the portion of Euro/kWh by consumption level for resident domestic customers (identical single structure of non-resident customers) will be eliminated;
for customers participating in tariff testing for heat pumps, the tariff structure already in force in 2018 remains confirmed (general costs without groups and DISTBT with single structure for residents and otherwise);

With this action, the Authority sought to minimise the effects that will derive from the reactivation of general charges, partially reduced in the last two quarters to limit the increases in electricity expenditures.

Portal for comparing offers (Annual Market and Competition Law for 2017. Italian Law no. 124 of 4 August 2017): With Resolution 51/2018/R/com (which followed DCO 763/2017/R/COM), the Authority defined the guidelines for the SII Manager's creation and management of an Offers Portal to collect and publish all offers in the retail energy and gas markets for domestic customers and SMEs The portal was published and completed in subsequent steps by December 2018.

The resolution also envisaged future step-by-step implementations that will make it possible to offer additional services, for example through interaction with the IWS, which will allow the portal to calculate the expense associated with the offers displayed by the user based on actual historical consumption.

Suspension of economic compensation for arrears related to fraudulent use Pursuant to Resolution 26/2018/E/eel, on 28 February 2018 and 1 March 2018 an audit by the Authority and Fund for energy and environmental services was carried out at the Acea Energia headquarters with regard to the request for economic compensation for arrears related to fraudulent use presented in 2014 for the period August 2010 - July 2011. The verification did not reveal any critical issues regarding the matter in question. Following the results of the audits carried out at Acea Energia and at Enel, with resolution 568/2018/R/eel the Authority deemed it appropriate to initiate a process to modify the mechanism in question in order to better incentivise the collection of receivables and to better manage some timing, and therefore suspended the regulation governing the collections mechanism for all arrears deriving from fraudulent withdrawals (16bis of the TIV). The conclusion of this procedure is expected by 31 March 2019.

Methods for determining the economic conditions of the natural gas protection service from 1 January 2018 With Resolution 108/2017/R/gas, the Authority determined the economic conditions of the gas protection service starting from 1 January 2018. The measure restores the thermal year (1 October - 30 September), i.e. the time reference for gas protection, at least until the date on which the protection regime is superseded, established as 1 July 2018. Specifically, it is envisaged that the methods of determination will be defined by the end of the 2017-208 thermal year at the latest, having established that, should the protection regime be superseded by the Competition Authority before then end of the thermal year, such dispositions would no longer be applicable. Furthermore, the resolution identifies the market of reference for the determination of the CMEM component starting from 1 January 2018 and defines the levels and criteria for the definition of the CCR component. Lastly, the Authority has confirmed that as of 1 January 2018, the GRAD component for graduality in applying the reform of raw gas material will no longer be applicable.

Modification of the regulation of the natural gas market With the decree of the Minister of Economic Development of 13 March 2017, based on the opinion of the Authority 98/2017/I/gas, the proposal prepared by GME to amend the M-GAS (gas market) regulation was approved. With the new regulations in force since 1 April 2017, the MPL (market for locational products) and MGS (market for storage gas) markets, which constituted the PB-GAS (the specific platform for balancing natural gas), were merged into the renewed M-GAS where GME acts as the central counterparty for transactions concluded by operators. The discipline specifies formal methods of participation, illustrates the technical operation of individual markets and governs administrative aspects like payments, guarantees and disputes. Also in implementation of the same Ministerial Decree, the Authority published Resolution 147/2017/R/gas that approved the agreement between GME and Snam Rete Gas for the management of these markets according to the last structure defined with the decree of the Minister of Economic Development 13 March 2017. With Resolution 804/2017/I/gas, the Authority expressed a positive opinion on the proposed amendments to the M-GAS regulation, prepared by the Energy Markets Manager. Designed to improve the efficiency and liquidity of the natural gas markets and to implement the provisions on neutrality, the amendments became effective on 10 January 2018.

Reform of the switching process in the natural gas retail market With Resolution 850/2017/R/gas, the Authority extended the information content of the Official Central Registry (RCU) of the Integrated Information System (SII), seeking to simplify the exchange of information necessary for the termination of contracts, the provision of data at the beginning of the supply and the activation of last resort services managed during switching processes through the SII. For the purposes of populating the RCU, the Authority has established that: starting in January 2018, by the last working day, for each grid point the commercial counterparties must communicate their membership in the Protection Service or in the Free Market to the SII. Starting in April 2018, both distribution companies and commercial counterparties must upload most of the data required by this resolution. Starting from June 2018 both distribution companies and commercial counterparties must update the data constituting the RCU on condition. With Resolution 77/2018/R/com, the Authority therefore defined the regulation of gas switching via SII starting from 1 November 2018, as well as the management of contractual termination and the activation of services of last resort. The provision confirmed the guidelines set by the Authority in DCO 544/2017 and follows the model currently in use in the electricity sector.