Ban on advance billing in Italy overturned

Italy’s energy regulator has climbed down on a temporary ban that it had imposed on advance billing – a practice that sees credit consumers pay upfront for their energy consumption rather than on receipt of a bill.

A new rule from the Italian Regulatory Authority for Electricity, Gas and Water (Rule 738/2016) recognises that there are already offers in the Italian market based on the advance payment system, even if the country’s meters do not yet allow for a real prepaid mechanism with pre-charged credits.

This decision overturns the Authority’s earlier ruling, which had effectively prohibited any kind of prepayment or advance billing until Italy’s second generation of smart meters is rolled out.

Conditions for advance payment plans

Under the new rules, energy suppliers can offer advance payment plans for consumers provided they meet certain conditions:

  • It is up to the customer to choose the amount of the advance payment and suppliers must tell them how much energy the prepayment includes.
  • Customers can modify the amount of the prepayment at anytime and without penalties.
  • At least once a year, there must be a settlement based on actual consumption.
  • In the meantime, suppliers should provide customers with regular consumption data, so that they can properly monitor their usage.

These conditions are designed to protect consumers from receiving unrealistic consumption estimates from their suppliers.

Good news for Wekiwi

The regulatory green light for advance billing is a welcome outcome for Italian new entrant Wekiwi, whose business model is based on this payment method.

Wekiwi’s offer allows customers to choose a monthly payment amount (the ‘Carica’), in line with their typical usage. They then pay upfront for three months at a time, and receive a discount if they keep their consumption within the chosen monthly Carica. Wekiwi provides various monitoring tools to help customers track their usage against the Carica, as well as benchmark their consumption against other similar homes in the neighbourhood.

“This is great news for us, but also for the liberalised market,” said Massimo Bello, Wekiwi’s CEO. “We firmly believe that differentiation in market offers can help competition.”