Italy to define details of energy reform

LONDON (Reuters) - Every Italian will be able to select a power supplier from July 1, but the government needs to define rules of customer protection before the European Union's deadline, Italy's energy market regulator said on Thursday.

In Italy, laws defining the final stage of the energy market liberalization have been stalled in parliament for nearly a year, raising concerns that the country may miss the EU deadline to give every household a choice to pick electricity suppliers.

"Starting from the 1st of July all household customer will have the freedom to switch (to a new supplier)," Italy's energy regulator AEEG Chairman Alessandro Ortis told the Reuters Global Energy Summit.

"The deadline will have to be respected in any case. But the rules of how it will be done, with regards to the protection of the most vulnerable customers should be defined by the law," he said.

Government sources have said the cabinet would discuss a special decree on the final stage of power market liberalization -- which involves about 30 million households or about a quarter of the total power market -- later on Thursday.

Special government decree, a tool often used in Italy as a last minute resort to push through a legislation, comes into effect immediately but needs to be approved by parliament within 60 days.

Ortis said he expected the government to approve the decree soon as it would be necessary to protect household consumers in a transition period and guarantee supplies for those who have not made up their minds about switching suppliers.

Particular attention should be paid to vulnerable social groups like low income families and disabled people whose treatment requires a lot of electricity consumption.

Ortis reiterated that the regulator has taken measures to help customers to make a "free, aware and economically convenient choice," by providing them with simplified bills and obliging suppliers to follow a code of commercial conduct and give customers a chance to compare offers.

But he said power generation costs -- which account fro about 60 percent of electricity bills in Italy -- were beyond the regulator's control and more competition in the sector was needed to bring down the prices.

Italians pay the highest electricity bills in Europe because the country needs to import energy suppliers, mostly gas and oil, to cover 80-90 percent of its needs.

Ortis said ownership unbundling in gas sector, still dominated by Italy's biggest oil and gas group Eni, was essential to spur competition which would help price falls.

Ortis said Italy needed to diversify energy supplies and the regulator had introduced some tariff incentives for boosting gas transmission, storage and regasification capacity to promote more security and competition.