May 17, 2022

Wire Service Canada

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How much has the price of energy gone up?

In recent weeks, many people have received much higher gas and electricity bills than they did a year ago. The same thing happened in the fall to companies experiencing the effects of upfront price trends on families. Many entrepreneurs encounter costs nearly five times in a few months They decided To shut down entire production lines because expenses would have been higher than revenue. Ordinary citizens have less opportunity to reduce costs and that’s why the government has been already intervened In December to limit the expected increases at the beginning of 2022. It was not enough: even with the help of the government, prices rose dramatically.

During a Senate hearing, on Tuesday, the Energy, Networks and Environment Regulatory Authority (ARERA) issued a memo Transfer With some data: Despite government interventions, the price of natural gas in the first quarter of 2022 will increase by 94 percent compared to the same period in 2021, while the increase in electricity will be 131 percent.

In the wholesale market, that is, where energy producers, end market sellers, and high-energy consumers such as businesses can buy and sell large amounts of energy, the increases were much larger: from January to December, monthly prices rose. About 500 percent for natural gas and 400 percent for electricity. The price of natural gas plays a rather important role in the market, because its direction affects the prices of other energy commodities.

A series of accompanying conditions, which include the imbalance between supply and demand in the natural gas market and the increase in demand around the world after it resumed after the lifting of restrictions due to the epidemic, as well as tensions between NATO and Russia. country from which Depends on A large part of the natural gas supply.

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– Read also: How much do we depend on Russian gas?

Russia has also reduced flows through pipelines passing through Belarus, Poland and Ukraine in recent months, in order to push for a pipeline to open. Nord Stream 2The controversial pipeline that runs under the Baltic Sea and goes straight to Germany. The threat of an invasion of Ukraine and the resulting international tensions raised prices.

The implications of this situation are clear: For households, the cost per cubic meter of gas rose from 70.66 cents in the first quarter of 2021 to 137.32 cents in the first quarter of this year, including taxes.

Increases in the price of natural gas have lowered the price of electricity, which is produced by factories that use gas to a large extent. According to Arrera, the price of electricity also increased due to the decline in production from renewable sources that characterized the summer of 2021 compared to the levels of previous years. A year ago, the cost of a kilowatt-hour was 20.06 euro cents, today it is 46.03 cents, also including taxes.

As can be seen from the graphs, the price increase was determined by the increase in raw material costs, which historically in Italy represent between 30 and 50 percent of the final cost of electricity and between 30 and 40 percent of the cost of natural gas before taxes. Transmission, distribution, and metering costs should be added to the cost of raw materials, along with so-called “quasi-financial” taxes and fees, which are associated primarily with incentives to produce energy from billed renewable sources.

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Energy prices are updated on the so-called “enhanced protection” service by ARERA on a quarterly basis taking into account price expectations in the wholesale market. Therefore, families and small businesses see the tangible effects of this trend every three months. However, in the Duty Free, there are many offers that include additional services, at a fixed or variable price. In this case, the differences depend on the terms of the contract and in particular whether a fixed price or market index is provided.

The government is working on proposing a new decree, expected to be issued in the Cabinet on Friday, to reduce gas and electricity costs. According to advances issued by various newspapers, the goal is to allocate another 5 billion euros adding to the 3.8 billion euros. I already entered In the budget law and the amount of 1.7 billion approved in the decree “Sostegni ter” to help families in difficulty in the first quarter of 2022.

Help eliminate system fees on the electric bill for families and small businesses and lower gas quasi-tax fees. The social reward can also be enhanced, that is, the discount on the bill for families in difficulty which today stands at 912 million. It is also expected to be emphasized that the value-added tax will be reduced from 10 or 22 percent, as the case may be, to 5 percent for each of the energy consumed in homes and businesses, with an estimated revenue loss of 608 million annually.

But the government is also concerned about fuel prices, which have risen dramatically in recent weeks. After tensions between Russia and the West, oil prices approached $100 a barrel. Just look at the signs displayed on the distributors to see the consequences: the average weekly price of gasoline was 1,835 euros per liter, while the average price of diesel fuel was 1,708 euros per liter. On the other hand, the price of LPG decreased compared to the peak in November: it amounted to 0.817 euros per liter.

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Several associations representing consumers Note The price of fuel has reached one of the highest levels in the past ten years. It is not easy to understand how these increases will affect Italians’ expenditures. According to estimates by consumer associations, this year families may spend 400 euros more than in 2021.