The Gas Industry in Italy: Liberalization Process and New Business Models

The current thesis will represent a mapping of the Gas industry in Italy, with a focus on the liberalization process of the industry that has changed the course of the internal market. It is fundamental to understand that the Gas industry is a part of a major Industry: “The Utilities Industry”. The processes of liberalization of the industry began in May the 23rd of 2000 with the “Decreto Letta” (Enrico Letta: Ministro dell’industria, del commercio e dell’artigianato), the Law decree 164/2000 has established that the following activities are completely liberalized in the Gas industry in Italy: -??Gas Import; -??Transportation and dispatching; -??Storage; -??Distribution; -??Sale of Gas. The Industry in Italy has a special characteristic, more than 90% of the Gas in Italy comes from outside of the country (ARERA, 2019), this is a fundamental fact in the analysis of the Gas industry, the Gas Import activity is the input of the whole system. The gas imported needs to reach the customers, the transportation and dispatching activities scope is to move the gas from imports or national producers of gas along the country. The gas is transported until the different local distribution networks, and in some special cases to major consumers. The dispatching activity is considered and strategic activity that manages the domestic flows on the transportation network. The main scope of the storage activity is to compensate for the fluctuations and guarantee a strategic reserve inside of the national gas system. Two actors play a fundamental role in the Industry: the distributors and the sellers, these two players are in direct contact with the final customers. The distributors in Italy are “Regionalized”, this means that virtually a Distributor has a typology of exclusiveness in the local Markets, they are the ones, for example, that owns the Gas meter device in the PDR “Punto di Riconsegna” (see glossary), some of the responsibilities and duties for the Distributors in Italy are: -??Resolve any failures in the devices; -??Moving the devices from one point to another; -?? Connection of a new point to the network; -??The detachment of the Gas Meter Device from the network (e.g. contractual termination). In the Gas industry in Italy the final customer can decide who to buy from, and here is the “Crux of the matter”, since 2003 the final customers have been empowered by the government, Customers can analyze the offers in the market and can decide who to buy from. The sellers differentiate each other with two special characteristics: Price of the cubic meter and Customer service. In recent times the market has evolved in so a notable way that many sellers are offering not only Gas but also Electricity (also liberalized, not objective of this thesis), bundling the two principal commodities in the market creates simplicity for the final customers. In the process of achieving an actual mapping of the Gas industry in Italy and how the liberalization process has contributed to the creation of new business models, the following structure of the thesis has been defined: 1)??Introduction; 2)??Objectives; 3)??The utilities Industry; 4)??The gas industry in Italy; 5) Price Composition, 6) New business models: 7) Conclusions.