Depiction of Water regulation in Italy: considerations on the new MTI-4

Water regulation in Italy: considerations on the new MTI-4



Ahead of the new regulatory period for the integrated water service, in December 2023, ARERA (Autorità di Regolazione per Energia Reti e Ambiente) published the decision setting the new regulatory framework for Italian water networks, the so-called MTI-4.

According to the latest evidence, the regulation contributed to improve the outcomes of the Italian water sector, both in terms of higher investments, better realisation of planned interventions, and efficiency levels.

However, in recent years, exceptional events that affected the broader macroeconomic and environmental context – such as the tensions on the gas and electricity markets and the increase in temperatures and more frequent droughts – highlighted some shortcomings of the previous regulatory framework. Although more structural changes, often called for by the sector, have not been included, ARERA introduced some targeted changes, that represent a positive development compared to the previous regime. These positive aspects, discussed in more detail in the note, include:

  • the mechanism setting the allowance for energy costs;
  • the flexibility in remodulating tariff adjustments (conguagli) beyond the regulatory period;
  • the attention to upstream investments.

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