Study on „Italian-Austrian wholesale price formation in the light of market integration”

ARERA and E-Control have been evaluating the possibility of merging the Italian and Austrian gas market areas to a single trading region. The basic idea behind market merging is that two markets can gain wholesale market volumes and better efficiency by combining their demand and supply volumes into a single wholesale market. This structural reform is suggested by ACER  in the amended Gas Target Model (AGTM) to improve efficiency and the functioning of gas markets as it improves its liquidity.
To perform a preliminary assessment of the potential impact of such a trading region, ARERA and E-Control have jointly commissioned a study to Frontier Economics and DFC Economics in order to investigate the wholesale gas price formation mechanism in the Austrian and Italian gas market before and after the merger of the Italian and Austrian areas.
The study published today contains the results of the analysis performed by the consultants, which the regulators consider very valuable in order to gain a better understanding of the main drivers of the current and perspective price formation mechanisms in the different European gas hubs, and in particular at CEGH and PSV. The analysis highlights that in the medium to long term scenarios (when the potential merging could in principle be realized) the benefits in terms of increased social welfare are vis-à-vis the planning uncertainty involved and the substantial implementation complexity rather limited.
For these reasons, for the time being, ARERA and E-Control have decided not to move forward with further discussions or technical analysis regarding an integration of the Italian and Austrian gas market, while they will keep investigating potential ways to improve the efficient use of the existing interconnection capacity connecting the two market areas to the benefit of all the market participants and gas consumers.



Study "Self-evaluation and regional perspectives for the Austrian gas market"

ACER's "European Gas Target Model - Review and Update" (AGTM) recommends that national regulatory authorities carry out a self-evaluation based on a set of metrics to assess the functioning of the respective national gas wholesale markets. Furthermore, the AGTM recommends to analyse potential structural market reforms in case of non-fulfilment of the requirements.

Against this backgroud, two studies have been prepared in close cooperation between a consultancy company and E-Control Austria:


Evaluation of the Austrian gas wholesale market (0,6 MB)

  • Evaluation of the Austrian gas wholesale market (market area East) on the basis of the "Market Health Metrics"
    and "Market Participants Needs‘ Metrics" for the years 2014 and 2015

Analysis of market integration options (1,2 MB)

  • Analysis of market integration options including a simplified cost-benefit analysis


Related events:

On 1 February 2017 a summary of the results of the two studies was presented in a webinar. To review the webinar and to access the presentation (German language only) please click here.

On 14 March 2017 the results of the studies were presented and discussed at a stakeholder conference. For details, please click here.


Results of the market consultation:

In February/March 2017 a market consultation has been conducted based on the published studies and a provided questionnaire. Related the following documents are provided

Compilation of responses received from market participants for publication.

Summary and appraisal of the received responses from the perspective of  E-Control. This includes a qualitative summary of provided arguments and positions  and focuses on aspects which have been planned for investigation and thus included in the prepared questionnaire.