Power generation regulation

District heating

2018 was a year of intense development with regard to regulation in the district heating sector, attributed to ARERA by Italian Legislative Decree 102/2014.

During the year and after an intense activity of analysis and discussion with operators and associations, ARERA began to outline the guidelines for the future regulation of district heating.

With resolution 24/2018/R/tlr and subsequent resolution 277/2018/R/tlr, ARERA issued the "Consolidated Law on the Regulation of the criteria for determining the connection fees and the procedures for the exercise by the user of the right of withdrawal for the regulatory period 1 June 2018 - 31 December 2021 (TUAR)" in which it defines the regulation of the criteria for determining the connection fees and the procedures for the exercise by the user of the right to deactivate the supply and disconnection from the district heating network for the regulatory period 1 October 2018 - December 2020.

With resolution no. 574/2018/R/tlr of 13 November 2018, ARERA defined the information obligations of parties operating in the district heating and cooling sector with regard to the Operators' and Territorial Register and the procedures for submitting applications for exclusion of networks from the Authority's regulation. The document, called "Information requirements for district heating and cooling operators (OITLR)" establishes that:

1. a) parties operating in the district heating sector that have not yet registered in the "Operators' Register" must do so by 31 December 2018 based on the new provisions;
2. b) network operators must verify and, where necessary, supplement or update the information relating to each network they manage by 31 March 2019 at the latest using the "Anagrafica Territoriale (ATT)" computer protocol.

With Resolution 661/2018/R/tlr, ARERA defined the regulation of the commercial quality of the district heating service for the regulatory period 1 July 2019 - December 2021 and provided for the initiation of a procedure for the revaluation of the provisions on the exercise of the right of withdrawal established by the TUAR and some amendments thereto. ARERA has also launched a consultation on the technical quality of district heating, DCO 691/2018/R/tlr, which is expected to be completed in 2019. Unlike the regulation of other regulated sectors, the regulation of district heating lacks the typical tariff oversight, because while the sector is regulated it operates under market conditions and not according to tariffs established by ARERA. Therefore activities related to quality are ARERA's main contributions to the sector.

In 2019, the regulator published the following integrated texts relating to the sector: (i) RQTT – Regulation of the technical quality of district heating and cooling services – resolution 548/2019/R/tlr and (ii) TITT – Transparency of district heating and cooling services – resolution 313/2019/R/tlr.

With resolution 313/2019/R/tlr, the Regulatory Authority for Energy Networks and Environment (ARERA) defines the transparency regulations for the district heating and cooling sector for the regulatory period 1 January 2020 - 31 December 2023. The scope of the intervention includes the minimum contents of supply contracts and invoicing documents, the methods of publication of prices applied by operators and other information concerning the quality of service and environmental performance. It is also envisaged that the Authority will launch a price monitoring system.

With resolution 548/2019/R/tlr (RQTT), ARERA adopted the regulation of the technical quality of the district heating service, with particular reference to safety and continuity of the service, for the regulatory period 1 July 2020 - 31 December 2023.

Hydroelectric concessions

Italian Law no. 12 of 11 February 2019, which converted Italian Decree Law no. 135 of 14 December 2018 (the "Simplifications" decree), introduced important changes to the regulation of concessions for large hydroelectric derivations. In particular, article 11-quater of Italian Law no. 12 of 11 February 2019 envisages an amendment to Italian Legislative Decree no. 79/1999 essentially establishing the regionalisation of ownership of hydroelectric works upon expiry of concessions or in cases of forfeiture and renunciation thereof. In detail, the article establishes that so-called "wet works" (dams, canals, pipelines, etc.) will be transferred free of charge to the regions, while the so-called "dry works" (buildings, machinery, electrical equipment, etc.) will be transferred to the regions upon payment of a price to be quantified net of depreciated assets.

"Where they do not consider that there is an overriding public interest in a different use of water, incompatible with maintaining the use for hydroelectric purposes", the Regions may award concessions for large hydroelectric derivations:

• to economic operators identified by means of public tenders;
• to companies with mixed public-private capital where the private partner is chosen by means of public tenders;
• through forms of public-private partnerships.

The regions are given until 31 December 2020 to put in place a law regulating the methods and procedures for the allocation of concessions for large water derivations for hydroelectric purposes. For all concessions expiring before 31 December 2023 and for those that have already expired, the regions "govern by law the methods and conditions of the outgoing concession holder for the continuation of the derivation on behalf of the regions themselves"