Italy Approves New Energy Decree to Cap Natural Gas Prices Starting in 2027

The Italian Council of Ministers approved a new energy decree on Monday that introduces a temporary price cap on natural gas utilized in thermoelectric power generation. Designed to lower wholesale electricity prices, the measure will take effect in January 2027 and remain operational for a maximum of 18 months, following months of negotiations and reviews with the European Commission.

Announced by Minister of Environment and Energy Security Gilberto Pichetto Fratin, the legislative package is expected to generate an average reduction of approximately 15 euros per megawatt-hour on wholesale electricity prices. Prime Minister Giorgia Meloni stated that the objective is to ensure that declining costs from renewable energy production translate into tangible savings for consumers and enterprises, despite potential opposition from energy producers.

The regulatory mechanism establishes a ceiling of around 59 euros per megawatt-hour on the gas used to generate electricity, whereas current European prices have hovered around 82 euros. Because Italy's wholesale electricity market links power pricing directly to natural gas costs, limiting the fuel expense is intended to drive down the National Single Price, which serves as the reference index for variable-rate supply contracts.

Nearly 18 million utility customers across the country are expected to fall within the scope of the new system. This group includes vulnerable households under regulated tariffs, consumers in gradual protection services, and individuals on the open market with variable pricing structures. Consumers who hold fixed-rate contracts will not see automatic adjustments to their billing terms.

Financing the compensation mechanism involves a reimbursement structure where thermoelectric plants receive partial coverage for the difference between market rates and the newly established cap. In accordance with European Union guidelines, the associated costs will be covered through system charges placed on the beneficiaries. Government officials maintain that the overall savings will outweigh these added charges, ensuring a net advantage for the end users.

Reactions to the government's announcement varied significantly among political figures and trade organizations. Business associations such as Confcommercio welcomed the initiative as a necessary step to mitigate high operating expenses, noting that the electricity bills for commerce, tourism, and services rose sharply over the third quarter. Conversely, political opposition members and consumer advocacy groups criticized the scale of the relief.

Critics pointed out that the actual impact on individual households might prove minimal. Projections from climate think tanks indicate that a typical family could save approximately 17 to 30 euros annually, amounting to roughly 1.40 euros per month. Opposition representatives like Angelo Bonelli characterized the adjustment as insufficient, arguing that the policy fails to address the foundational issue of Italy's structural dependency on natural gas.

In addition to the electricity measures, the Council of Ministers approved a separate infrastructure decree containing financial adjustments. This complementary action increases the housing support fund for separated or divorced parents and allocates dedicated funding to ensure air transport continuity for Sardinia amid fluctuating aviation fuel costs, alongside investments for liquefied natural gas depots.