Italy’s Meloni Plans €3 Billion Energy Aid to Curb Bills
(Bloomberg) -- Italy is set to approve as soon as next week a €3 billion ($3.6 billion) package to cut energy costs for consumers and companies, according to people familiar with the matter.
Giorgia Meloni’s government plans to cut electricity and gas bills through tariff adjustments and other interventions, according to a draft of the decree seen by Bloomberg News and people familiar with the matter.
The package would be partly funded by shifting the allocation of funds already in budget, the people added, speaking on condition of anonymity. The decree, which has been delayed before, could also help Meloni to rally consensus ahead of next year general election.
The draft plan also includes a system to reduce the spread between European gas prices, set at the Dutch TTF hub, and the Italian market, known as PSV. Other measures include short-term bill relief, according to the draft document.
The new measures would bring closer together Italy’s and European gas markets, encouraging gas flows and boosting liquidity, with Germany seen as a key partner. Under the new rules, traders could buy at the German hub, which closely tracks TTF, and sell at PSV, helping to compress the PSV premium over the benchmark.
Italy also aims use part of its Emissions Trading System auction proceeds to help fund electricity cost relief for energy-intensive industries, effectively recycling carbon market proceeds to support competitiveness high power prices.
The draft could still be subject to changes before final approval. A spokesperson for Italy’s government declined to comment.
Market participants have been closely monitoring the legislative process on the matter, after earlier drafts sparked backlash from trading groups, warning that interventions tied to price spreads could conflict with European Union rules on tariffs and market integrity. Eurogas previously said similar measures raised questions over their legal compatibility.
Italy is the European Union’s second-largest gas consumer after Germany and relies on the fuel for about 40% of its energy mix, a feature of the market which means that Italians face higher energy costs compared to France and Spain. Meloni is trying to boost Italy’s industry to help the economy grow out of its mammoth debt.
Meloni is trying to ease one of the most pressing constraints on Italian industry and boost consensus for the next general election. The economy likely grew 0.6% last year according to government forecasts and was outpaced by France which has cheaper domestically produced nuclear energy, despite that country’s fiscal troubles clouding the outlook.
Earlier this week, the government backed measures aimed at curbing illegal migration, a move seen as a potential attempt to woo voters as a far-right flank of coalition party the League splintered into a new movement.
(Updates with more details from the draft)
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