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Italy is set to outline its plan to dole out $5.4 billion in funds to cut the costs for energy consumers, government officials said on Tuesday.
The measures will be revealed after today's cabinet meeting that began at 11:00am EST. Earlier this year, Italy vowed to set aside 21 billion euros—or $22.7 billion—as part of its 2023 budget to ease the burden of high energy costs. Italy's Prime Minister Giorgia Meloni is reconfiguring that earlier plan using part of those funds that weren't spent because energy prices have fallen since the original plan was put in place.
Dutch TTF—viewed as a pricing proxy for the entire European LNG import market---was trading at 42.53 on Tuesday, down nearly half, from 80.5 at the start of the year, and down from a temporary spike of 320.8 last August. The sharp dropoff in price has left some of those funds that were set aside unspent.
Part of the plan will see an extension of the existing bonus to cut energy bills paid by those whose annual income is less than 15,000 euros. Tax bonuses will also be given to firms whose electric and gas spend in Q1 of this year jumped 30% or more from this same period in 2019. Other measures include a flat-fee bonus for families to offset the high price of gas, which will take effect from October until December.
Energy companies may also see a partial reprieve on the windfall tax, imposing a 50% one-off levy on the portion of 2022 corporate income that is at least 10% higher than each company's average income between 2018 and 2021.
Italy has been particularly vulnerable to energy shocks as imports account for three-quarters of its power consumption.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.