The price of gas goes down but the bills go up: the clamorous reason

Why do prices go down and bills go up? That’s where you have to look for the answer, in the calculation mechanism.

Gas-photo pinterest


THE gas prices in general they are going down but bills are going up, why is this happening? In December they increased by 23.3%. To find the answer you need to look at the calculation mechanism, count the average of the month compared to the previous one.

For understand nature of this problem we must start from the changes made by the Authority to the methods of calculation due to the crisis that arose after the Russian invasion of Ukraine. In particular, this phenomenon has affected the ways in which the cost of raw materials is updated.

So the quotes of the wholesale market are no longer the starting point for calculating the price of gas under the protected regime. In practice, the price of gas is fixed by considering the average price of the Italian market.

Because the bills keep rising

Gas fire bills prices
Gas-photo pinterest

THE bill prices they continue to increase dramatically, but what does all this depend on? The price update frequency is now monthly instead of quarterly as before. At the beginning of the month, the Energy Regulatory Authority publishes the reference values ​​for the previous month. This means that risk coverage costs are not transferred to bills. And it also makes it possible to more quickly intercept the advantages deriving from a decrease in quotations as occurs in this phase.

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Therefore the price formation mechanism it takes into account the average of the previous month and since in the first half of December there were increases compared to November, the final result is still an increase.

In the first half of the month in December the prices were very high and with prices around 130-135 euros per mwh, while instead in the second half of December, thanks to the climate and a different perception of Europe’s ability to work in this sector and then also taking into consideration the effect of stocks fuller than expected, we have seen a significant collapse. So today we are at 80 euros per mwh.

Looking to month of Januaryif the downward trend in natural gas prices were to continue or if there were no increases in the average for the month, there would be the first positive effects on bills, with a decrease that would begin to compensate for the sequence of increases recorded in the last months.

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This considering the tariffs regulated by the Arera, i.e. the protected market. Those who are on the free market, i.e. the majority of Italians, must instead wait for variable rate contracts to reflect changes in market prices or, in the case of fixed rate contracts, go and look for operators that we have chosen to lower their prices .

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The price of gas goes down but the bills go up: the clamorous reason

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