Early termination penalties

Penalties for changing electricity supplier: what changes from Jan. 1, 2024

As of January 2024, the rules for changing electricity supplier in Italy have changed. In particular, the possibility was introduced for suppliers to charge penalties in case of early termination of the contract.

This change was introduced by the Regulatory Authority for Energy Networks and Environment (ARERA) in Resolution 673/2022, which amended the Regulations for the Protection of Customers in the Electricity Market.

When do penalties apply?

Penalties can only be applied to fixed-price electricity supply contracts with a predefined duration. Gas supply contracts, variable price electricity supply contracts and PLACET offers are excluded.

How much do the penalties cost?

The amount of penalties is defined by the supplier, but must be proportionate to the economic loss the supplier incurs in the event of early termination of the contract.

ARERA has stipulated that the penalty cannot exceed 25 percent of the expected electricity supply charge for the remaining period of the contract.

How can penalties be avoided?

To avoid paying penalties, you can choose a variable-price or open-ended electricity supply contract. Alternatively, it is possible to withdraw from the contract within 14 days of signing it by exercising the right of withdrawal.

Controversy over penalties

The introduction of penalties for early termination of electricity and gas supply contracts has sparked controversy from consumer associations, which see them as an obstacle to competition and market transparency.

Codacons has announced an appeal to the Regional Administrative Court against the ARERA resolution, arguing that the penalties are vexatious and violate consumers’ rights.

Consumers should therefore pay attention to the contract terms before signing a fixed-price, fixed-term electricity supply contract.