Italy prepares energy package to curb surging bills, sources say

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Italy is preparing measures, including an increase in domestic gas output, to try to lower surging energy bills, four government and political sources told Reuters, adding the measures could be approved as early as this month.

But a possible windfall tax to recover some of the profits energy companies are believed to have made from high market prices requires further consideration and a close analysis of legal issues, the sources said.

Governments across Europe are attempting to limit the impact on households and industry of a spike in power prices caused by strong demand, fears over gas supplies from Russia and low gas storage levels.

Italy’s industry minister on Wednesday said Rome was likely to tax increased profits and his right-wing League party said top utility Enel had made ‘crazy’ margins.

In response, Enel said it had not made extra profits and had to buy gas from third parties at high prices.

A scheme introduced by Rome in 2008 to recover profits from a surge in oil prices was ruled as unconstitutional in 2015.

Some lawmakers have said companies generating power from cheap renewable sources, including hydro, solar and wind, have benefited the most from high prices.

Prime Minister Mario Draghi, caught up in the process to elect a new President of the Republic this month, has placed energy at the heart of his agenda.

Already Italy has spent more than 8 billion euros ($9.14 billion) in tax payers’ money to mitigate the impact of energy price increases.

Last month Energy Transition Minister Roberto Cingolani sent a list of proposals to Draghi to ease the situation, one of the sources said.

The measures, which would not increase the public deficit, could be discussed as early as a cabinet meeting next week with the hope of approving the package this month.

Among the 10 proposals, which include moving system-cost levies out of energy bills into general taxation, is a move to raise domestic gas production to cut imports, the sources said.

However, that would take time as permits would be needed to reopen gas fields.

Italy, which imports more than 90% of its gas, consumed 66 billion cubic meters in the first 11 months of last year. It produces around 4.5 bcm per year domestically.

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