Can the Free Market help against high bill prices?

By Francesco CALABRETTA

Cluster Leader Italy and Hungary Audax Renewables

While leafing through a magazine I came across a sadly significant cartoon. The scene sees two people on the street, reduced to poverty, rummaging in a rubbish bin. One asks the other if gambling or some other addiction is at the origin of his downfall. To which the latter replies dryly: “No. I just left the light on."

(Bitter) jokes aside, the theme of dear energy it will accompany us for a long time to come because it has profound causes that cannot be resolved quickly (I talked about it here). It has to do with long-term issues such as the effects of climate change, an energy transition still to be implemented and geopolitical problems that are not immediately resolved.

In Italy, there are a series of other additional elements - taxes, excise duties and charges - which weigh on the bill for us consumers.

In this very complicated situation, perhaps there is a way to protect ourselves from the most serious effects free market. Although it has been active for a few years, it is not the only possible option, as it is still supported by a market with greater protection. A double path with which we will have to deal until January 2023 when, finally, the last extension foreseen by the Government will also expire. An extremely long wait, given that, originally, the transition should have taken place by July 2019. The only exception is SME companies which saw the protected market end at the beginning of 2021.

Meanwhile, according to the ARERA Authority, The 57,3% of domestic customers opted for the free electricity market (+5% compared to 2019), while over 60% of families did it for gas.

Fig. 1 Electrical energy

Fig. 2 Natural gas

But let's see how the problem of high bills and the free market option are intertwined.

In the comparison between protection and liberalized supply, an interesting fact emerges which has often been questioned by those who saw the free market as a further trap for consumers: that the latter's supply is more advantageous, bringing substantial savings into users' pockets.

This time, it is an in-depth analysis of theSOS Observatory Rates conducted on the comparison between 200 free market offers. What emerges from the investigation? Two things: 

• first, that savings compared to Greater Protection are continuously increasing with decidedly high percentages
• second, that with fixed price offers it is possible to both save and - in this stormy period - avoid or limit price increases

In a few months - that is, compared to the data from last July - the savings margin guaranteed by the best electricity and gas offers on the free market has grown for the three types of consumption: Single, Couple and Family of 4 people. So, in October 2021 a Single could save on average 284.6 euros per year choosing the most convenient electricity and gas rates, +58% compared to the previous quarter's data.

A Couple he could have saved even more, up to 433.6 euros per year, for a +70.3% compared to data for July 2021.

Looking at the third consumption profile (the family of 4 people), it managed to avoid disbursements of up to 719.4 euros per year. Which means a greater saving of +61,9%.

But that is not all. Even more interesting if you look at the locked price offers: those who chose these rates at the beginning of the year today get up to 1,000 euros in savings in a year, compared to the protected one.

Also in this case the discussion applies to the three different types of users. According to the study, a Single who have activated fixed price offers in January 2021 will obtain a total saving of approximately 435 euros during the year. Better yet one Couple. The simulation leads to an overall saving of over 720 euros. Very good for the too Family, which ends up with a lower cost of 1,037 euros compared to a similar consumption profile that decided to remain in the protected market.

Given these data, we cannot help but agree with what Laura Serafini writes on Sole24 Ore when he underlines the paradox we have arrived at "with the sterilization of increases for fear of the increase in quarterly adjustments”. In fact, he continues, “if today all users of greater protection were convinced to switch to the free market they would benefit from immediate savings of around 1.3 billion (13 million per 100 euros of average savings) ”.

Figures and numbers that should help you choose in a complicated moment. Add to this that in many cases the free market offer includes 100% energy from renewables, like the one we propose at Audax Renewables it's ours Group. A decisive element in the energy transition path that is more urgent today than ever.