Tuesday, December 5, 2023

Electricity in Italy is paid tomorrow at €740/MWh and Draghi studies more bonds

The price of electricity in the Italian wholesale market will be paid tomorrow, Monday, on average at €740.09 MW/hour, 10% more than this Sunday, when the price is €670.73 MW/hour, reported the managing body of energy markets in the country, GME.

Faced with this situation, the Acting Executive of Mario Draghi is studying approving a decree in the coming days that extends subsidies to the most vulnerable families and companies until December of this year and the Ministry of Economy is analyzing whether the new aid can become €8 billion.

The price of electricity will start the week again above €700 MW/hour and on Monday it will have its peak between 9:00 and 10:00 and 20:00 and 21:00, when the average price will exceed €790 MW/hour.

Uncertainty about the war in Ukraine and whether Russia will cut off gas supplies to Europe in the winter is driving up gas prices on international markets and this affects the marginalized European electricity market, where combined cycle power plants, which burn gas to produce electricity, are often the ones that set the price of the rest of the sources participating in the auction when the demand is not covered by cheaper technologies.

The largest consumer association in Italy, Codacons, has warned that between September and November each family will spend €711 more than a year ago due to higher energy and food prices; and the business association Confesercenti has warned that SMEs in the services sector will face bills for a total value of up to €11,000 million if the Government does not take action.

Draghi’s intention is to approve a new decree of aid that is financed with the proceeds from the tax on extraordinary profits from energy companies and without a diversion of public spending, an obsession of the former president of the European Central Bank (ECB), who refuses to delay more public debt, which exceeded 150% of gross domestic product (GDP) in 2021.

The leader of the far-right League formation, Matteo Salvini, has called this Sunday for a kind of armistice between the parties, which are campaigning for the general elections on September 25, to find a joint solution and has proposed following the model of “ France, which has set the rise in electricity and gas bills at a maximum of 4%”.

“We have quantified that between €20,000 and €40,000 million are needed,” he said.

The leader of the progressive Democratic Party (PD), Enrico Letta, has pointed out that “high energy prices must not compromise” Italy’s economic growth and that “the government must intervene”, with a price limitation on bills energy companies and doubling taxes on windfall profits from energy companies.

The centrist Azione-Italia Viva coalition, made up of former Prime Minister Matteo Renzi and former Minister Carlo Calenda, has criticized Salvini for now proposing an electoral break when Calenda himself recently suggested that the money to be spent on the campaign intended to curb the rise in energy prices.


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