The utility bills decree: how the gas price cap works and who will benefit from it

The government has approved the introduction of a price cap on the cost of gas paid by thermal power stations in order to keep down the cost of energy bills for households and businesses. The measure, approved yesterday by the Council of Ministers, amends Article 6 of the Energy Bills Decree passed in February and implements the agreement reached with the European Commission following lengthy and complex negotiations.

But how does the mechanism set out in the Decree-Law work? The scheme, which will come into effect on 1 January 2027, provides for a reimbursement to producers whenever there is a positive difference between the price recorded on the TTF spot market (the benchmark index for gas in Europe) on the previous day and a fixed threshold of 58.9 euro/MWh – the cap set by the decree.

The cap will remain in place for a maximum period of 18 months (12 months of full application plus 6 months of gradual phasing out) and its cost will not be borne by the State, but will be self-financing through specific charges applied by ARERA at electricity withdrawal points, payable by those responsible for system balancing (and by producers for on-site consumption within simple production and consumption systems). ARERA, the decree specifies, the decree, that ARERA will regulate the reimbursement mechanism to be granted to thermoelectric plants solely in those market sessions in which they are co-marginal in price formation, as well as to those fuelled by derived gases, excluding plants subject to essentiality schemes with cost reimbursement.

But who will foot the bill for this scheme? The decree, in accordance with Brussels’ guidelines, stipulates that the cost will be borne by all those who benefit from the price cap, namely consumers with variable-rate contracts indexed to the PUN (the single national price), onto whom the reduction achieved through the price cap is passed on. The government estimates this reduction to be around 15 euros per megawatt-hour on average compared to the PUN (currently over 200 euros per MWh).

The greatest savings, as Prime Minister Giorgia Meloni has also emphasised, will, however, benefit businesses. Based on the figures released following the Council of Ministers meeting, it is estimated that, for 2027 consumption, these savings will amount to around 280 euros for a typical small craft business, with an annual consumption of 40 MWh; around 210,000 euros for a large food industry company, with an annual consumption of 30,000 megawatt-hours; and around 520,000 euros for an energy-intensive company with a significant share of self-generated energy and an annual consumption of 40,000 MWh.