Free market, competition between companies and consumer protection
Marta Moreno Heras – Legal & Compliance Manager of Audax Energia
Energy liberalization? Yes but when? First it was July 2019, then July 2020, now it seems that the final date has been reached: January 1, 2022.
The various postponements and delays that have marked the path towards the beginning of the free market demonstrate how delicate the issue is. The Authority itself, ARERA, has rightly recalled the need to gradually arrive at an event of great importance which - involving electricity - closely concerns the daily lives of all citizens.
However, on the other hand and equally rightly, the Italian Antitrust, (Agcm - Competition and Market Authority), in its weekly bulletin 17 February 2020 published the text of the opinion addressed to the presidents of the Chambers reiterating the opinion against a further move that could entail "serious risks for competition" and lack of savings for families, who in the climate of uncertainty of recent years have become wary and not inclined to change. In fact, the Agcm has asked Parliament that the date of January 2022 be "mandatory and, therefore, not susceptible to further postponements”.
A problem, the one highlighted by the Antitrust, which calls into question the principle of free competition in a market, the electricity one, in which it is not always respected. Starting from the fact that, despite the many entities that operate there, only sellers who also act as distributors have the opportunity to supply electricity for those subject to the greater protection service.
A situation that led to “dominant positions on a local basis" And "generated phenomena of abusive exploitation of dominant positions”. For the Agcm, this “reputational advantage” enjoyed by the managers of the protected market must be carefully considered and evaluated when it comes to moving to the liberalized one.
The reasons for this decisive intervention they concern both the protection of the interests of us consumers and our possible savings and the guarantee that a regime of true competition is established in the energy sector which, as we said earlier, is not yet fully achieved. Indeed, the risks of this half-baked transition should not be underestimated. First of all - as the Agcm underlines - the various postponements have caused not only "uncertainty and confusion" but also "a little propensity to change”, with the consequence that many Italians they are currently still tied to the old manager not out of declared "loyalty", but rather because they are uncertain or awaiting greater clarity on the modalities of the transition. A sterile period of time - so to speak - in which users have not even consulted the offers - sometimes advantageous - made by other sales companies operating on the free market.
And this is why the Authority is pushing for the so-called mechanism of "silent assent”. At the stroke of January 1, 2022, those consumers who - for the most disparate reasons - have not yet chosen an energy seller will not have to be automatically reassigned to the sales company directly linked to the manager who was responsible for supplying them with electricity when they were still customers “protected”. To avoid market concentrations on "advantaged" suppliers that a mechanism of this type could entail, the Agcm proposes competitive auctions in which these customers will be snapped up by the companies that will be able to offer them the best tariff conditions. But this will have to be dealt with in detail and – we hope – with the aim of guaranteeing real competition, the Ministry of Economic Development.
Above all because there is no doubt that, to date, consumers' acceptance of free market offers is proceeding slowly: a recent investigation commissioned by Selectra showed how, at the current rate, it would take another 12 years to reach users' 100%…
A situation that reflects on competition in the sector in general. In presence of disoriented or demotivated consumers, who do not look around for advantageous offers (therefore little demand), the space for other companies capable of making interesting and convenient offers becomes increasingly limited. Especially in a market like ours, closed and controlled by a limited number of players, already very strong in themselves due to history, position and percentages of users served.
And in a regime of weak competition, the existence or survival of those companies that try to enter the energy market - offering different, more efficient services and at more competitive prices - is increasingly difficult. If not impossible.
Not only. In view of 2022, there are other issues that have a lot to do with free competition. The most relevant, in terms of weight and impact on the business, concerns the arrears and delays in payments which burden the coffers of energy sales companies.
A problem which, although persistent, has seen, over the years, the introduction of important corrective measures which also protect those who provide the service.
To name one, the fight against the so-called "energy tourism”, or the practice of switching suppliers and leaving unpaid bills behind. A phenomenon that is quite widespread in our country if, according to one promoted study by Facile.it, involves something like 120 thousand people every year.
ARERA intervened to put a stop to this illicit practice thanks to two protection mechanisms:
- first, the SII or SII System (Integrated Information System), a database on the electricity and gas meters active in Italy and their respective holders. In this way the selling company that finds itself with unpaid bills has the possibility of submitting a request for compensation for the recovery of the amount owed
- second, the Arrears Fee or CMOR which allows old energy suppliers to charge a customer's arrears on the invoice of the new electricity and gas supplier company.
A closing reflection. Protecting consumers' interests remains paramount. As well as their satisfaction as customers.
However, the Antitrust note returns to underline a sometimes – unfortunately – forgotten fact: the advantages for consumers generally arise in market contexts that are as liberalized as possible, in which companies can operate in real competition, in full compliance with the logic of competition.
