Natural Gas Distribution Industry in Italy: Ongoing Changes and Emerging Problems at the Competitive Level

The natural gas distribution industry in Italy is undergoing profound reorganization. Italian legislators, by decree 164/2000 (the so-called Letta Decree), in compliance with EU guidelines, began liberalizing the natural gas distribution industry. Many regulatory and legislative acts were forthcoming in the following decade, redefining governance of this industry. Many legal and economic studies have been carried out on this matter. What is still lacking is an analysis that considers the effects on the intensity of competition of the Italian retail market, also and especially in light of the 2011 decrees (Decree January 19th, 2011 about tariff areas, Decree June 1st, 2011 about the Italian energy market and its transparency and Decree October 18th, 2011 about the assignment of each of the 8,092 Italian municipalities to a tariff area). This paper bridges this gap in research. The paper, through a qualitative approach, first considers and then discusses the expected results of the new regulation from a competitive-managerial standpoint. Specifically, it examines the changes and the effects on (1) the natural gas distribution industry; (2) the distribution companies; and (3) the users concerning (a) structural; (b) economic; and (c) service quality dimensions. We suggest that only by considering the desired impacts at all three levels (industry as a whole-companies-users) is it possible to have a clear picture both of the benefits and of the pitfalls of the new legislation at the competitive level.