A new surge in gas prices looms

A new alarm bell is ringing on the energy front, and this time it risks hitting households’ bills directly. On Tuesday, ARERA will announce the gas price for October for vulnerable customers. Estimates suggest a figure of around 1.8 euros per cubic metre: this would be the highest level ever recorded. This is even higher than the peak reached in December 2022, at the height of the energy crisis following Russia’s invasion of Ukraine, when, however, public support was far more substantial than it is today. And this is precisely the point: unlike what happened in 2022, this time households risk facing the new surge in prices without a public safety net.

The figure comes at a particularly delicate time for the European market. The TTF, the main benchmark for gas prices in Europe, has now surpassed the €100 per megawatt-hour threshold. And the continent’s gas reserves are in a far from reassuring state as the cold season begins. Last week saw the start of gas withdrawals from storage, as colder temperatures set in and demand consequently rose. As at 29 October, Italian storage facilities were 91 per cent full, a relatively reassuring level. However, some of the major consumer countries are lagging far behind: Germany at 62 per cent, the Netherlands at 66 per cent, and Austria at 67 per cent. Should German reserves prove insufficient during the winter, the pressure on gas demand could also spill over into other European countries, including Italy. The consequences are already being felt on the electricity market too. In Italy, the average wholesale price has risen from 111 euros per megawatt-hour in October 2025 to an estimated 231 euros for October 2026. It has more than doubled in twelve months, with a particularly sharp rise in recent months. On the electricity market, there are also suspicions of possible distortions in how prices are formed. ARERA is investigating a number of potentially irregular practices.

Amidst all this, whilst the market races ahead, politics moves at a much slower pace. The Budget Bill, which has just been approved by the Council of Ministers, contains no new direct measures to ease the burden of energy bills on households and businesses. The budget amounts to around 26 billion, but resources have been channelled towards other priorities. The government had aimed to respond to the emergency with an ad hoc energy bills decree, following the agreement reached with the European Commission to introduce a cap on the price of gas used to generate electricity. However, the energy bills decree, which was expected to be announced at the same meeting at which the Budget Law was approved, has been postponed. Officially, this is due to some technical checks. Behind the scenes, however, there are ongoing discussions with industry operators, who are concerned about the effects of the mechanism.

The decree will set a cap on the price of gas used to generate electricity, at around 59 euros per megawatt-hour for 12–18 months. The mechanism aims to reduce the cost of electricity by intervening in the link between the cost of gas and the formation of the wholesale price of electricity. The estimate is a reduction in the PUN – the single national electricity price – of around 10 per cent. For an average household, the benefit would amount to a saving of a few tens of euros a year on their electricity bill. A relief, therefore, but not a turning point. And, above all, not without side effects. An artificially lower electricity price in Italy could, in fact, encourage exports to Austria and Slovenia, where prices would likely be higher. Although, according to those who worked on drafting the decree, the risk would still be limited. A more sensitive issue is who should bear the cost of the scheme. Thermal power stations would continue to purchase gas at the full price on international markets, but would then receive a reimbursement for the difference, enabling them to offer lower prices on the electricity market. It remains to be determined who should finance this compensation: all consumers, only those with variable-price contracts (who would benefit directly from the reduction), or the electricity suppliers, who could then pass the cost on to customers’ bills. It is precisely on this sticking point that the decree has run aground. According to Il Foglio, opposition to the measure has come mainly from electricity suppliers, particularly publicly-controlled companies, who are concerned about having to bear a financial burden without any guarantee that they will be able to recoup it.

On Tuesday, we will see confirmation of how much the latest surge in gas prices is likely to cost households on variable-rate contracts. And the government may find itself without sufficient tools to curb it.