Bills: What are system charges?

In the new bills effective July 1st, initiated by Arera, system charges are included on the energy receipt and are part of the fixed fee, i.e., the amount owed by users even when no consumption occurs, along with the cost of the network and general system charges, items that are not dependent on the contract stipulated with the supplier.

"These cost components are excluded from the portion exposed to competition and negotiable on the free market, which is the energy portion. They are, in fact, decided and managed by the authority and updated annually by the same, to protect consumers," explains Lucia Visconti Parisio, professor of environmental and energy economics at Milan-Bicocca University. "The first system charges, which have evolved over time, were introduced by the so-called Bersani decree of 1999, which paved the way for the opening up of the electricity market by liberalizing the sector. They are added to the costs represented by the power quota and the fixed quota, also decided by the authority and which remunerate dispatching, meter service, system management, and transport."

According to the regulatory authority, ARERA, system expenditure is the amount corresponding to the costs of activities of general interest to the electricity system, established by law, and paid by all end-users of the electricity service. This applies specifically to certain items: incentives for renewable and similar sources, nuclear safety measures and territorial compensation measures, coverage of tariff concessions granted to the railway sector, support for system research, coverage of the electricity bonus (which is not paid by customers receiving the social bonus), coverage of incentives for energy-intensive businesses, supplements for smaller electricity companies, and promotion of energy efficiency.

All these components account for approximately 20% of household bills, while the share is slightly higher for businesses. In 2022, due to price increases stemming from the energy crisis, payment of these charges was suspended, only to be reintroduced in April 2023. This doesn't mean the system charges have been eliminated, but they have been transferred to a special fund established by decree, partly funded by the extraordinary contribution on energy companies' extra profits," Visconti Parisio emphasizes.

The tariff components that comprise system charges are generally expressed in euro cents per withdrawal point per year, euro cents per kW contracted per year, and euro cents per kWh. "These are multi-part tariffs that serve to distribute the burden commensurate with electricity consumption. The share varies according to a proportional mechanism that takes into account both efficiency and equalization aspects," Visconti Parisio explains: "Those who consume more electricity bear the costs proportionately, paying more."