Regulation and incentives for improving continuity of supply: the experience of Italy and a comparison with other EU countries

This paper focuses on the Italian experience in regulating continuity of supply in electricity distribution. In the year 2000, Italy was the first country in Europe to introduce a financial incentive scheme for continuity, and it was soon followed by Norway (2001) and UK (2002). Continuity regulatory schemes share the common idea to link tariffs and actual levels of interruptions, but specific regulatory mechanism are quite different. The Italian scheme is presented here in detail: both the regulatory mechanism and the effects over the first three years of implementation are thoroughly described. A 43% improvement in duration of interruptions has been achieved, with an extra average cost of only 3 Euros per customer per year. Thanks to the work carried out by the CEER (Council of European Energy Regulators) working group on quality of electricity supply, the cases of UK and Norway are compared here with the Italian scheme.