ARERA electric services: commercial and trading segment

2020 Budget Law

The 2020 Budget Law, no. 160 of 27 December 2019, abrogated paragraph 5 of art. 1 of the 2018 Budget Law envisaged the non-applicability of the two-year limitation period for consumption in the event of failure or erroneous collection of consumption data resulting from ascertained liability of the user. 

The law also introduced additional rules for the benefit of the end customer. Indeed, utilities operators have an obligation:

to communicate the suspension of supplies in the event of failure to pay, with adequate notice of no less than forty days by registered letter with return receipt;

to pay a penalty equal to 10% of the amount that is disputed and not due, in any case, for an amount of no less than € 100, in case of issuing debit bills for which the illegality of the conduct of the manager and the operator concerned is ascertained, for violations relating to the methods of detection of consumption, execution of adjustments or billing as well as for charges of unjustified expenses and costs for consumption, services or goods not due, and of course to reimburse any amounts already paid by the customer.

Collection of general electricity system charges 

In the presence of a legislative framework and numerous rulings in this regard which attribute exclusively to end customers the responsibility for the payment of general system charges, with Resolution no. 430/2018/R/eel – Extension of the procedure concerning guarantees and collection of general system charges for the electricity sector, initiated by Resolution no. 109/2017/r/eel, in compliance with the rulings of the Lombardy regional administrative court 237/2017, 238/2017, 243/2017 and 244/2017 – by 30 June 2019 ARERA had planned to define a mechanism to allow sellers to recover general system charges paid since January 2016 (date of entry into force of the electricity distribution network code) but not collected from end customers. At present the issue is very controversial and the Authority, pending a stable determination of the process of collection of general charges, has set up a technical roundtable involving various stakeholders to define a transitional mechanism that allows the repayment of the sums advanced by sellers.

CADE update

Through two separate consultations, no. 412/2019/R/eel – Modification of the process of termination of dispatching and transport contracts and activation of services of last resort in the electricity sector – and no. 530/2019/R/eel – Updating of the standard network code for the electricity transport service – the Authority described its guidelines in order to strengthen the entire system. The proposed actions relate to the reduction of debt collection times and contractual termination, thereby reducing the cost of the guarantee system for compliant transport users. In fact, ARERA hypothesised a reduction in the amounts of the guarantees to be given by sellers, which are currently commensurate with 3-5 months of turnover, down to 2-4 months of turnover. Moreover, it proposed measures to reinforce guarantees, with particular attention to the rating and the insurance surety, as well as the clause verifying the regularity of payments and the procedures for verifying the adequacy of the amounts of guarantees given.

Dispatching contract

With Resolution no. 83/2019/R/eel – Verification of the conformity of proposals to amend the grid transmission, dispatching, development and security code in relation to the system of guarantees to be provided by users of withdrawal dispatching – the Authority positively assessed some proposals to amend Terna's Grid Code with respect to the system of guarantees to be provided by users of withdrawal dispatching.

Specifically:

• the minimum value of the guarantee set at € 50,000;
• the reduction of the time for the integration of the guarantee to 7 business days;
• expansion of the payment punctuality observation period to 12 months;
• possibility for users to issue a first-request bank or insurance surety as a guarantee.

With Resolutions 272/2019/R/eel - Provisions functional to the extension of the ex-ante verification of the annual average power value with reference to the switching requests submitted by each dispatching user – and 494/2019/R/eel – Approval of the proposal by Terna of the method for correlating the financial value of the guarantees given by the dispatching user to its equivalent in mw for the purposes of determining the value of max PMAu for each user – the Authority introduced the concept of Annual Average Power (AAP) value for which the dispatching user is required to issue guarantees. The request for switching is now also subject to the IWS's verification of the AAP value, which cancels the request in the event of a negative outcome. 

The Authority plans to extend the same mechanism to the transport contract.

Restoration of financial compensation for arrears related to fraudulent withdrawals

With resolution 568/2018/R/eel, the Authority initiated 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).

Following DCO 49/2019 and with subsequent Resolution 119/2019/R/eel – Measures to make the management of fraudulent use by end customers of the standard service more efficient, with greater protection and revision of the mechanism referred to in article 16bis of the TIV – the Authority reinstated the rule governing the compensation mechanism, but with amendments.

It introduced the obligation to issue the invoice for fraudulent withdrawals separately and within 45 days (90 days for invoices already issued in 2016 and 2017) from the date of receipt of the meter data reconstructed by the distributing company, providing for a reduction in compensation of -10% for each month of delay, up to a maximum of -50%.

With the same measure, the Authority therefore specified the timing related to the application to be submitted in 2019 (by 30 September 2019), classified the case of fraudulent use in the absence of a contract and established the information flow, through the IIS, with which the distributor informs the main utility provider of the fraudulent withdrawal that has been ascertained.

Postponed to a subsequent provision the adoption of measures to improve the efficiency of the management of fraudulent withdrawals by distribution companies and the regulation relating to the disconnection of withdrawal points subject to fraudulent withdrawals.

On 3 June 2019, Acea Energia filed an appeal requesting the annulment of Resolution 119/2019/R/eel contesting the retroactive application of the mechanism linking the amount to be offset to the date of issuing the bill containing the reconstruction for fraudulent withdrawals also for the periods prior to the entry into force of the resolution itself (April 2019), i.e. from 2016 to March 2019 in which there were no specific billing timeframes that would affect the amount subsequently granted to the main utility provider.

On 30 September 2019 Acea Energia filed an application for participation in the compensation mechanism with regard to bills issued in 2016.

Cessation of price protection schemes (Annual Market and Competition Law for 2017. Italian Law no. 124 of 4 August 2017)

The "Annual Market and Competition Law", no. 124 of 2017, which entered into force on 29 August 2017, provided for the termination of price protection schemes both in the electricity and gas sectors starting from 1 July 2019. The implementing decree of the MISE, expected by April 2018 and not yet issued, should define the measures to ensure the termination of the transitory price regulation and the conscious entry into the market of final customers, according to mechanisms that should ensure competition and the plurality of suppliers and offers in a free market. 

On 21 September 2018, Italian Law 108, which converted Italian Decree Law no. 91 of 25 July 2018, postponed the termination of the price protection schemes until 1 July 2020.

On 31 December 2019, Italian Decree Law no. 162/2019 was approved (so-called 1000 Postponements) establishing a further postponement of the termination of the price protection schemes to 1 January 2022. 

In the meantime, with Resolution 59/2019/R/com - Voluntary guidelines for the promotion of electricity and natural gas offers benefiting purchasing groups aimed at domestic end customers and small businesses – the Authority prepared Guidelines (LGA) with voluntary participation for the promotion of commercial offers of electricity and gas benefiting purchasing groups and the creation of IT platforms that can facilitate the aggregation of small consumers. These guidelines, effective from 1 May 2019, establish rules of conduct that purchasing groups are required to observe for a period of at least two years after voluntarily adhering to them.

New Standard service for end of the default service

With a consultation (DCO 397/2019 - Standard service for final domestic customers and small businesses in the electricity sector referred to in article 1, paragraph 60 of Italian Law no. 124/17) ARERA proposed its guidelines on the new Standard Service for small customers (i.e. final customers currently using the default service) who will find themselves without a supplier the day after the termination of the default service, hoping for a gradual transition with the application of this service initially only to non-domestic customers, after the necessary legislative action (approach reiterated also with the subsequent Brief 468/2019/I/com – Brief of ARERA on the recent update of the final prices of electricity and natural gas and on the initiatives launched by it to benefit consumers with regard to the standard service – of 18 November 2019).

The Authority has proposed a three-year service starting from the assignment through tenders of lots (subject of a subsequent DCO) of about 500,000 to 1 million customers, similar in terms of characteristics and level of arrears, which will be reserved for operators with solid economic, financial, managerial and operational requirements. 

The service is assigned to the best price at a discount (or increase) of the PCV. The difference between the PCV and the price offered in the tender, called "alpha" fee, will be charged to the customer after 12 months for domestic and 6 for non-domestic customers or immediately if the "alpha" fee is negative and also applied to free market offers, to avoid distortions between the standard and free markets.

The Regulator therefore proposes two possible alternative models of the service:

Model 1: with a Single Buyer responsible for procurement and the main utility provider in charge of sales (with the further hypothesis 1bis in which the Single Buyer is also responsible for the management of the amounts paid by end customers and their distribution among the various parties in the chain);

Model 2: with the main utility provider in charge of both procurement and sales.

With regard to the contractual conditions, the Authority proposes that they should be equivalent to the standard PLACET offer, including the prohibition of the inclusion of an additional product or service with respect to the supply of electricity, but with the possibility of always being able to offer one's own product on the free market. 

The Acea Group submitted its comments in 5 November 2019, pointing out that under Italian Law no. 124 of 2017 (Competition Law), it appears that the scope of application of the new Standard Service is limited only to customers who, on the date of termination of the price protection, were left without a supplier. 

Annual report on the management of complaints and the resolution of disputes

With Resolution no. 54/2019/I/com – Annual report on the treatment of complaints and the resolution of disputes of electricity and natural gas customers - year 2017 – the Authority published the first Annual report on the treatment of complaints and the resolution of disputes for 2017 in accordance with the new procedures introduced by Resolution no. 623/2018/R/com for articles 38 and 39 of the TIQV. 

In general, it should be noted that the customers with the greatest theoretical capacity are those most likely to complain. In fact, the unregulated market accounts for 53% of total complaints in the electricity sector and 58% in the gas sector, despite the fact that the free market represents only 43.7% of the 53.4 million end customers served by the 590 sellers under analysis. Moreover, in the unregulated market it is the non-domestic customers with low and medium voltage supply and those with more complex contracts (multisite or dual fuel) who tend to report more critical issues.

2018 annual report on the quality of call centres and written responses to complaints

With Resolutions 330/2019/I/com - Quality of the telephone services of vendors of electricity and gas. Annual Report - year 2018 – and 331/2019/I/com – Annual report on the treatment of complaints and the resolution of disputes of electricity and natural gas customers - year 2018 – the Authority provided the annual customer satisfaction framework for call centre services and written responses to complaints.

With regard to the quality of call centres, the report showed a decrease in the number of calls compared to 2017, particularly for operators who have developed more technological contact channels, like web services and smartphone apps. In general, the overall satisfaction index (ICS) for call centre services remained high and stable in 2018 (92.3).

With regard to the quality of written responses to written complaints, the report showed a decrease in both complaints and written requests for information compared to 2017, respectively -8.9% and -22.7% in the free market, -17.4% and -16.4% in the standard market. In particular, in 2018 billing issues were again the main topics of complaints and conciliations.

ARERA inspection on sanctioning procedure for failure to or late payment of automatic indemnities

On 20 February 2019, the Authority carried out an inspection at Acea Energia's headquarters to verify (i) the cessation of the conduct contested in 2015 by resolution 111/2015/S/EEL – Initiation of proceedings for the adoption of sanctioning and prescriptive measures for failure or late payment of automatic compensation – concerning the failure to pay compensation to standard service customers within eight months of the date of receipt of the written complaint, (ii) as well as the implementation of the commitments made therein. 

On that occasion, Acea Energia provided all the documentation requested by the Authority (mainly relating to demonstrating the correct payment of compensation in the event of responses to complaints sent late) and as of today has not received any complaint from the Authority.

Other Deliberations of the Authority

The electricity and gas "Consumption Portal" online

With Resolution no. 270/2019/R/com – Establishment of the electricity and natural gas consumption portal in implementation of Italian Law 205/2017 – the Authority announced the availability of the "Consumption Portal" as of 1 July 2019 (www.consumienergia.it), an instrument integrated with the IIS and managed by the Single Buyer in order to "empower" the final customer with respect to its electricity and gas consumption (regardless of the level of consumption) and to comply with the provisions of Italian Legislative Decree 102/2014 on the right of the final customer to access its use data.

Subsequent developments allowed access to the Portal by third parties authorised by the customer (e.g. energy service providers) and the development of synergies with the Offers Portal, so that customer annual expenditure estimates are calculated on the basis of actual past consumption.

Provision of GAS measurement data via IIS

With Resolution 271/2019/R/gas – Provisions relating to the process of making available the technical data of the redelivery points and the measurement data to the Integrated Information System and modification of the communication standards with reference to the gas sector – and subsequent Resolution 6/2019 – Modifications and integrations to the Operating Instructions and the xml structures to be used for the exchange of information with respect to the communication standards for the natural gas sector – the Authority gave a mandate to the IWS Operator for the publication of new data files, which, from February 2020, will be used for: 

the provision of technical data, information and measurement data collected during the replacement of the meter and other technical service

the provision of the periodic measurement data collected in accordance with the TIVG, the self-readings made by end customers, the measurement data collected during switching, as well as other technical services requiring the collection of measurement data

making available the corrections to the measurement data submitted with the two previous flows.

At the same time, the Authority has defined the procedures and timing that, given the specified starting date, allow the distribution companies to transfer the largest number of measurements to the IIS to be used for their settlements.

The effective date of the new data files was later extended to 1 June 2020 with Resolution no. 493/2019/R/gas – Update of the methods and timelines for making available the technical data of redelivery points and measurement data for the gas sector to the Integrated Information System.

New regulations for the compensation system on the IIS - gas 

With Resolution 406/2018/R/com – Entry into force of the regulation of the indemnification system within the Integrated Information System, for the electricity and natural gas sectors – the Authority established that from 1 June 2019 the processes relating to the indemnification system would be managed exclusively within the IIS, even for the gas sector. 

Reform of charges for domestic customers

With Resolution no. 626/2018/R/eel – Further deferral of the completion of the reform of the tariff components to cover general system charges for domestic electricity customers, as set out in the Authority's Resolution no. 582/2015/R/eel – the Authority further delayed the completion of the tariff reform for general system charges for domestic customers until 2020. In the meantime, from 1 January 2019 only DISPbt (euro/POD) will apply to resident domestic customers, while the tariff structure already in force in 2018 will be confirmed for customers participating in the heat pump tariff experiment (non-staggered general charges and DISTBT with monomial structure for residents and non-residents).

Electronic invoicing

With resolution 712/2018/R/com – Interventions following the provisions of Italian Law 205/2017 on electronic invoicing with regard to Bill 2.0 for the standard network code for the electricity transport service and for the standard network code for natural gas distribution – the Authority established the first functional provisions to coordinate the regulation of summary bills for end customers and electricity and natural gas transport invoices issued by distributors with new laws in force since 1 January 2019 on electronic invoicing as envisaged by the 2018 Italian Budget Law.

With the subsequent resolution 246/2019/R/com – Additions and amendments to the Authority's resolution no. 712/2018/R/com on electronic invoicing following the provisions of Italian Law 205/2017 – the Authority returned to the subject, supplementing and amending some technical aspects of the previous resolution:

• the possibility to include in the "invoice file" (replacing the summary bill) the corresponding alphanumeric code (unique and encrypted);
• the inclusion of the reference to the corresponding electronic invoice number submitted to the SDI in the summary bill;
• the obligation to record and archive the summary bill, details and accounting documents of the distribution service for at least 10 years.