Greater protection or free market?

Contracts'Greater protection'Those who have not made the transition to' have themfree market ', which has been possible since January 1, 2007 following the total liberalization of the energy market (Decree-Law No. 73/07 converted into Law No. 125 of 3.8.2007, the Bersani Decree to be clear).

The thing to know is that the definition of 'Greater protection’Does not refer to the price but rather to the supply. Like: have you not exercised your right to choose an energy supplier? Well, no one cuts your electricity and gas and you stay with the supplier you had before liberalization under administered tariffs; the prices and economic conditions, however, are set by the Energy Authority, quarter by quarter. And they don't necessarily have the best prices.

So let's be clear: in 'Greater protection'' are domestic customers or small businesses (fewer than 50 employees and less than 10 million in turnover) who have never changed supplier (because they did not want to or more often because they were not aware of the opportunity to change) or the few who they again requested its application after having made free market contracts which they obviously did not like. Users who find themselves without an energy supplier following the failure of the latter are also included in the greater protection.

But the point is: which one is more convenient? Greater protection or free market? According to the latest prices communicated by the Energy Authority (increased by 5.4% for gas and 1.5 for electricity) and the fixed price promotions of some suppliers, the balance is undoubtedly leaning towards the free market ; as long as the prices are blocked for a not too short period.

A few numbers. For the current quarter, the prices of the greater protection of electricity communicated by the Authority for the F1 F2 F3 time slots expressed in € / KWh are:

October: 0.07665 0.07829 0.06343

November: 0.08100 0.08066 0.06344

December: 0.07991 0.08214 0.06345

For 2015 it is not known, but in light of the international tensions that impact on the supply of natural gas with which electricity is also produced and, as regards electricity, the need to finance some system charges (for for example the safety of nuclear power) do not suggest anything good.

If you look at the historical trend of electricity prices applied to the Greater protection over the past 12 years, it is clearly seen that the trend is constantly increasing. It is true that there have been times when the Greater protection it was lower than the free market, but in other periods the exact opposite occurred.

Returning to our question (greater protection or free market?), The free market is certainly beginning to be preferable to the non-choice parking Greater protection, but it depends on the offers of individual operators (the same ones who, let's face it, have pulled the neck of users a bit in some cases.

Today there are offers at a fixed price for 24 months at prices much cheaper than Greater protection in F1 F2 F3. In this way we can guarantee a fixed and fairly low price for two years, while remaining free to change because the 'block' concerns the price and not the right to switch (at most, a notice obligation can be provided, and in general for business users only).

Not many operators are proposing fixed-price rates at a fixed price for at least 24 months. To be able to afford it at competitive prices compared to the Greater protection they are above all the producers of energy from traditional sources and increasingly from renewable sources, which in Italy are not many.

Video: Markets, Efficiency, and Price Signals: Crash Course Economics #19 (January 2022).