(Bloomberg) -- Italy is planning to amend existing legislation on power distribution concessions in exchange for commitments from utilities to upgrade their networks.
Rome will extend accords for as long as 40 years based on companies’ infrastructure renewal plans, according to a budget amendment sponsored by parties from Prime Minister Giorgia Meloni’s ruling coalition that was seen by Bloomberg.
The proposed amendment is scheduled for parliamentary debate later this week, with the overall budget due to be approved by the end of the year.
If adopted, the new legislation could be a game changer, effectively superseding rules dating back to the late 1990s aimed at market liberalization. Under that framework, concessions expire in 2030 with tenders for renewals due to start next year.
Italy grants fixed-length concessions to a number of utilities for electricity distribution.
Power grids have emerged as a priority for Italy given growth in renewables generation and increased electrification. Investments are focusing on resilience to climate events and on flexibility in managing peak loads, according to the World Energy Council’s World Energy Issues Monitor.
Italy’s rule changes could have a significant impact on state-controlled Enel SpA, the country’s biggest utility and its dominant electricity distributor. Enel has planned €16.2 billion ($17 billion) in Italian grid investments through 2027.
Smaller rivals like A2A SpA, Acea SpA, Iren SpA and Hera SpA could also see benefits from the new regulations.
Representatives for Enel, A2A, Acea, Iren and Hera all declined to comment.
“Extending electricity distribution concessions is a positive for the sector and for Enel in particular,” Mediobanca analysts Javier Suarez and Enrico Bartoli wrote in a note, adding that the measure would “allow the country to ensure security, stability and efficiency” in the network.
Under the changed framework Italy will receive additional fees from operators whose concessions are extended, and they in turn will be able to recoup the expenses in the future through tariffs, according to the proposed legislation.
Italian unions have said they favor a change in legislation in order to remove uncertainties over control of power distribution assets.
Increased visibility is necessary to allow utilities to deliver on investment commitments to upgrade aging grids and preserve jobs, unions representing the industry’s workers said in a joint statement Saturday.
--With assistance from Amanda Jordan.
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