Italy moves to reimburse gas plants to curb power prices

What changes are on the table

Italy is preparing to modify an existing energy-bill decree to offset part of the fuel bill for gas-fired generators, aiming to ease electricity prices. Arera would compute the compensation, but it cannot exceed the gap between Europe's gas benchmark and a €58.90 per megawatt hour reference price.

Why this move now

Because gas-fired plants are a key driver of Italy's wholesale electricity price, higher fuel outlays tend to lift costs across the system. Before the war, Italy was already one of Europe's priciest gas and power markets, and the newest surge has stoked inflation and sparked demonstrations over living expenses ahead of next year's general election, intensifying pressure on Premier Giorgia Meloni's government.

Funding and timeline

The plan could remain effective for up to 18 months and would begin the day after it appears in Italy's official gazette. Funding would come via levies applied across the electricity market, with carve-outs for supply under existing fixed-price contracts, and those levies would be calculated on the volume of electricity withdrawn by customers. European benchmark TTF futures topped €100 last week and traded around €86 on Thursday.

Politics, process and market lens

Meloni's office redirected inquiries to the Energy Ministry; a ministry spokesperson said there was no immediate comment.

The revisions come after talks with the European Commission linked to an energy-bills decree approved earlier this year, with Rome and Brussels settling on an updated tool aimed at limiting how gas costs feed into electricity prices, while avoiding undue market distortions.

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The bottom line: Arera would calculate payouts, limited to how much Europe's gas benchmark exceeds €58.90 per megawatt hour, and the costs would be recovered through market-wide charges that leave out certain fixed-price contracts.

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