Light and gas free market versus protected: you save but spend more on average

The latest monitoring of the Retail 2018 market published by the Energy Authority shows that switching to the free market for electricity and gas also saves 7-10% of expenditure, but in some cases costs are higher than the protected one.

The latest monitoring of the Retail 2018 market published by the Energy Authority shows that by switching to the free market of electricity and gas you can also save 7-10% of spending, especially by activating online offers. The problem is that the all-inclusive promotions are unclear so that customers do not take advantage of the various opportunities offered and in some cases find themselves incurring higher costs than those who have remained with the protected market.

Light, gas and the transition to the free market

The new Arera report shows that in 2019 46.5% of domestic customers and therefore about 13.7 million and 59.1% of small businesses and therefore about 4.1 million switched to the free market for light. As far as gas is concerned, on the other hand, in December last year the free market customers were about 50% of domestic customers. Despite this result, Arera explains that in the electricity sector the competitive dynamics are still disjointed among the various types of customers. In addition, in 2018, there was also an increase in the number of sellers in the free market with +35 units compared with 2018.

Also with regard to natural gas, the number of operators active in the free market in 2018 increased by +39 groups over the year. The share of those who remained in the protected market, however, is still high despite a 6% increase in the number of customers switching to the free market.

Electricity and gas offers

On the Arera’s offer portal last December for lighting there were 774 offers for domestic customers and 705 for SMEs and 57% of the promos were at a fixed price. On the same site, then, there are also Placet offers or those at a free price at equivalent conditions of protection that are 64% of those available.

As far as gas is concerned, on the other hand, there were 887 offers for domestic customers, 792 for non-domestic customers and 673 for condominiums and 52% of the promo offers were at a fixed price. Placet offers were also very popular and accounted for 89% of the total.

Again according to the 2018 figures, it emerges that domestic customers prefer fixed-price offers over variable-price offers. In detail, 85.9% of new domestic contracts for lighting were fixed-price offers, up 2% compared to 2017. For gas, on the other hand, there was +1.8% compared to 2017.

Savings opportunities in the free market

In the free market there are good opportunities for savings in both fixed and variable price offers. In May 2018, for example, among the first Placet offers (on the Arera website) there were savings for variable price offers of 3% for domestic and 0.9% for non-domestic customers, and -7% for fixed price promotions and -9.7% for non-domestic customers. There were also savings with online offers.

Although there were cheaper offers in the free market, domestic customers incurred higher average costs than those left with the protected due to the choice of promotions including additional services. The survey, therefore, shows that there is little awareness of the savings potential of the various offers. This is one of the reasons why the end of the protected energy market is expected to be postponed until 2022.

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