Energy Law in Italy. By Mahsa Olyaee, Researcher of Energy Law

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Italy Legislative Framework Italy has been a republic since 1947. Although sovereignty is vested in the state, important powers are given to decentralized government institutions. Some regions are almost autonomous. Since 1990s more powers have been given to the provinces, metropolitan areas, and municipalities (communes). Institutional development began in 1972 when, in implantation of constitutional provisions, the regions were created as entities vested with legislative and administrative functions, carried out by the regional parliament (Consiglio Regionale) and the regional government (Giunta Regional). In general, the regions may resign certain functions within their own structure (provinces, which form a region and municipalities or comuni). The state maintains vis-á-vis the regions a co-ordination and guidance role with a view to ensuring a harmonized overall policy.

The Italian legal system consists of primary law, the constitution of 1946, and two categories of secondary law: “Legge Formale” means a law adopted by the parliament and “Legge Sostanziale” means a law not adopted by the procedure typical of a legge formale but having the same binding nature. The latter category includes provisions which may be the object of a legislative decree (DLgvo), a prime minister’s Decree (DPCM), or an inter-ministerial decree, or ministerial decree (DM), depending on the competence of a given ministry. A decree-law (Decreto- Legge – DL) is adopted by the government for reasons of urgency and inters into force immediately but it must be converted into a law (by the parliament) within 60 days from entry into force. If not, it losses effect unless it is resubmitted within that deadline and within amendments. Note that repeated resubmission in not always welcomed by the parliament.

Summary of Energy in Italy Italy depends on import over four-fifth of its energy supplies. As far as final energy consumption is concerned, oil is the most important energy resources as it accounts for over half of final consumption. Gas accounts for about a quarter of primary energy consumption. Hence, Italy is the third largest gas consumer in Europe. The demand for electricity generation is steadily increasing. As nuclear energy is being phased out, about 80 per cent of electric power is generated on the basis of the thermal energy, mostly oil-fired plants.

Two major companies dominated the Italian energy sector. Since 1962 ENEL has had a monopoly over the import and supply of electricity and most of the electricity production. The company Ente Nationale Idrocarburi (ENI) dominates the hydrocarbons sector. ENI is a vertically integrated company as it directly (or indirectly) operates the production and supply of hydrocarbons, ie oil, gas and coal. Whereas ENI’s subsidiary AGIP controls a substantial share of the gas reserves and producers almost all the gas, ENI also controls about 35 per cent of Italy’s downstream oil supplies. SNAM, another wholly owned subsidiary of ENI, is responsible for the purchase, transport and sale of most natural gas to distributers and to industrial consumers. Both ENI and ENEL are in the process of being privatized.

Energy Law in Italy The Italian legal system has no basic law in energy. Instead there is a wide range of regulations and public entities organizing the energy sector. The need for energy regulation was felt in the 1930s because of the significant role energy played in the process if industrialization. Consequently, the civil code was amended in order to include the provision that every type of energy is to be considered a natural good. Article 43 of the constitution is of special importance, and applies to the energy sector in the widest meaning, including all industrial appliances. Although the origins of energy law lie at the beginning of the century, its main development started in the 1960s when several energy sector-specific statutes were adopted. The section of the constitution entitled “Economie Relationship” regulate both “Public and Private Enterprises” and “Property and Ownership”. Respectively articles 41 and 43, and articles 42 and 44. Article 42 of the constitution rules that property and ownership can be private or public and, subsequently, that economic commodities can belong to the state, public bodies, or private persons. Although the constitution states that private economie enterprises are open to all, is also provides some limits for these enterprises. In the most civil law countries, the constitution confirms that the Italian legal system is based on the principle of private ownership. Article 43 of the constitution represents the most significant provision with regard to the energy sector as it provides for the nationalization of the industry.

Present Legal System The privatization process that started in 1992 led to the transformation of public entities into share companies. In 1994 and 1995 legislation was adopted which accelerated the

privatization and liberalization process as the legislator provided for the transfer of state interests to the market. It should be noted that the direct governmental control diminished as a result of the privatization process. In order to safeguard the role of market forces and to avoid the creation of a private monopoly, the legislator also provided for the establishment of a separate regulator for the gas and electricity sector. These regulators plays an important role in the entire liberalization process.

The Regulatory Authorities The main competent authorities that currently determine regulatory policies with respect to the energy sector are the Italian Regulatory Authority for Energy, Networks and the Environment (ARERA, formerly AEEGSI), the Energy Services Manager (GSE), as the parent company of the relative GSE group, the Fund for Energy and Environmental Services (CSEA), the Ministry of Economic Development (MISE) and the Ministry of the Environment, Land and Sea (MATTM). The purpose of these regulators are to take over the role of the relevant ministers in setting prices and general regulations. The energy regulators id entitled:

• To advice the government about the services that should be regulated within existing legislation, looking into account technology, market developments and EC policy.

• To purpose amendments to permits and service conditions.

• To purpose the revocation of permits.

• To examine market access and competition.

• To refer anticompetitive behavior to the competition authority.

• To set prices and tariffs.

• To ensure that suppliers comply with principles of transparency, equity of service and environmental protection.

• To fine supplies not comply with regulations and to suspend the activities of companies repeatedly violating regulations and

• To request information and documents.
  

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Resources:

Telarico, Giorgio., Cigno, Mario., Scime Sevena, Amelia. The energy regulation and market review. Edition 9. Roggenkamp, RØne, Redgwell and Del guayo. Energy law in Europe. Oxford publication.