In application of the European Directives 96/92 and 98/30, the deregulation of the energy market in Italy is governed by the “Bersani Decree” (Legislative Decree No. 79/99) for electricity, and by the “Letta Decree” (Legislative Decree No. 164/2000) for gas.

The two decrees inaugurated the process of deregulation of the activities of the production, importation, exportation, purchase and sale of electricity and the importation, exportation and sale of natural gas.

Before market deregulation, Italy had a monopolistic type of system for both electricity and natural gas.

All of the activities linked to the production, transport and sale of energy were vested solely with Enel (and other companies producing energy had to sell their output to Enel and were not authorised to place it directly on the market). The first phase of the process promoted and developed competition among the various market operators, while the transport of energy along the electricity network continued to be the responsibility of the distributor, which was required to ensure the continuity and efficiency of the service. The second phase, inaugurated with a decree (Legislative Decree No. 73/07, converted into Law No. 125/07) implementing the European Directive 2003/54, was designed to facilitate the deregulation of the selling activity, including with respect to retail consumers.  As early as 1999, wholesale customers were able to purchase energy from operators on the unrestricted market, but it was not until 1 July 2007, when this was also possible for retail customers.

The same considerations can be extended to the gas market, which was also run under a monopolistic system before deregulation, with all market activity, except distribution, being vested with ENI.  Prior to deregulation, distribution in the gas market was marked by fragmentation of market share (although the leading distributor was Italgas, a company controlled by ENI).

The reform introduced by deregulation also regards the commercial aspects of the service: in the unrestricted market, the seller companies purchase electricity and gas and make use of national (and then local) transport networks for the delivery to the final customer. The “network services” supplied by the distributors, namely, the service of distributing energy through to the final customer’s meter and the measurement of consumption, have a cost, with the applicable tariffs established by the Italian Regulatory Authority for Electricity, Gas and Water (AEEGSI) using uniform criteria for the entire national territory. The company completing the sale will invoice the final customer not only for the energy, but also for system charges that are collected to be paid to the distribution companies.