Can the Free Market Help Against High Bills?

By Francesco CALABRETTA

Cluster Leader Italy and Hungary Audax Renewables

Browsing through a magazine I came across a sadly significant cartoon. The scene shows two people, on the street, reduced to poverty, rummaging through a garbage can. One asks the other if the cause of his ruin is gambling or some other addiction. To which the other answers dryly: "No. I just left the light on."

Jokes (bitter) aside, the theme of the expensive energy It will be with us for a long time to come because it has deep-rooted causes that cannot be resolved quickly (I talked about it here). It has to do with long-term issues such as the effects of climate change, an energy transition that has yet to be set up and geopolitical problems that cannot be resolved immediately.

In Italy, there are also a series of other additional elements – taxes, excise duties and charges – that weigh on the bill for us consumers.

In this very complicated situation, perhaps there is a way to protect oneself from the most serious effects and it is called free market. Although it has been active for a few years now, it is not the only possible option, as it is still supported by a market with greater protection. A double path that we will have to deal with until January 2023 when, finally, the last extension provided by the Government will also expire. An extremely long wait, given that, originally, the transition should have taken place by July 2019. The only exception is SME companies that saw the protected market end at the beginning of 2021.

Meanwhile, according to the ARERA Authority, The 57,3% of domestic customers opted for the free electricity market (+5% compared to 2019), while over 60% of families did it for the gas one.

Fig. 1 Electricity

Fig. 2 Natural Gas

But let's see how the problem of high bills and the free market option are intertwined.

In the comparison between protection and liberalized offer, an interesting fact emerges which has often been questioned by those who saw the free market as a further trap for consumers: that the offer of the latter is more advantageous, bringing substantial savings into users' pockets.

This time, an in-depth analysis of theSOS Tariffs Observatory conducted on the comparison of 200 offers on the free market. What emerges from the survey? Two things: 

• first, that the savings compared to the Maggior Tutela are continuously increasing with decidedly high percentages
• second, that with the fixed-price offers it is possible to both save and - in this stormy period - avoid or limit price increases

In a few months – that is, compared to the data from last July – the savings margin guaranteed by the best electricity and gas offers on the free market has grown for the three types of consumption: Single, Couple and Family of 4. Therefore, in October 2021 a Single could save on average 284.6 euros per year choosing the most convenient electricity and gas rates, +58% compared to the data of the previous quarter.

A Couple could have saved even more, up to 433.6 euros per year, for a +70.3% compared to data from July 2021.

Looking at the third consumption profile (the Family of 4), it was able to avoid expenses up to 719.4 euros per year. Which means a saving of more than +61,9%.

But that's not all. Even more interesting if you look at the Fixed price offers: those who chose these rates at the beginning of the year, today get up to 1,000 euros in savings in one year, compared to the protected one.

Even in this case the same argument is valid for the three different types of users. According to the study, a Single who activated offers at a fixed price in January 2021 will obtain a total saving of approximately 435 euros during the year. Even better one CoupleThe simulation leads to an overall saving of over 720 euros. Very good also for the Family, which ends up with a lower cost of 1.037 euros compared to a similar consumer profile that has decided to remain in the protected market.

Given these data, one cannot help but agree with what Laura Serafini writes about Sole24 Ore when he underlines the paradox that has been reached "with the sterilization of increases due to fear of the increase in quarterly adjustments”. In fact, he continues, “If today all users of the majority protection were convinced to switch to the free market, they would benefit from immediate savings of approximately 1.3 billion (13 million for every 100 euros of average savings) ”.

Figures and numbers that should help you choose in a complicated moment. Add to this that in many cases the offer of the free market includes 100% energy from renewables, like the one we offer at Audax Renewables and ours Group. A decisive element in the Energy Transition path, today more urgent than ever.