This week ARERA, the Italian energy market regulator, published a resolution defining various implementation measures relating to the so-called liquidity service for the Italian gas market (click here).
For background and context, in February 2026 the Italian government adopted the Decree-Law on Utility Bills (also referred to as “DL Bollette”) intended as a package of emergency measures to help ease the impact of high power and gas prices on Italian households and businesses. Amongst other things, Article 10 of the decree required ARERA to introduce a “liquidity service” designed to shrink the persistent differential between the Italian PSV and Dutch TTF gas prices.
In June, ARERA launched a consultation on how to implement the scheme. Under ARERA’s proposal, Snam Rete Gas, Italy’s main gas transmission system operator, would run a competitive tender based on criteria and procedures set out by ARERA. The tender would determine which of the selected gas operators receive a premium (determined via their bid, within a maximum set by ARERA) in exchange for committing to sell predefined daily gas quantities into a new auction to be held on the Italian day-ahead market platform run by the GME exchange (i.e. MGP-GAS). The auction price would be capped at TTF plus a “volatility premium”, the latter itself being subject to a separate ARERA-set cap. Any sales revenue above that capped price would have to be handed back to Snam Rete Gas to be used to help reduce transmission tariffs.
The consultation proposed gas injections relating to the scheme to take place exclusively at the Passo Gries entry point (the main entry point through which gas from Northern Europe reaches Italy via Switzerland) with the first auctions initially intended to run from September 2026 and the full service commencing from 1 October 2026. This week, ARERA published its final resolution (376/2026/R/gas) confirming that it would press ahead with the scheme, broadly along the lines consulted on but with some material adjustments.
The resolution confirms that the core mechanism for the scheme will be implemented as per the consultation. This means that Snam Rete Gas will select participating liquidity providers via competitive tender, with bids being ranked on a formula that weights the volatility fee three times more heavily than the premium. The sole injection point will also remain Passo Gries. Several less significant parameters have shifted, however. The MGP-GAS auction session will now close by 17:15, rather than 17:30 as originally proposed, with continuous trading suspended for no more than five minutes rather than for the full fifteen-minute window.
The original implementation timetable has also slipped significantly. Rather than starting on 1 October 2026 as originally planned, ARERA has instead opted for a limited pilot phase comprising a tender for just 100,000 MWh/day, covering January and February 2027, with the maximum premium budget for the pilot capped at 10% of the overall EUR 200 million expenditure limit (that’s around EUR 20 million - see Article 8 on page 23 of the resolution). Full implementation will also now be deferred to 1 October 2027, a side effect of which is that operators will have more time to plan capacity bookings and to let the auction mechanism be tested in the pilot.
It is noteworthy that the scheme doesn’t have a fixed end date but rather will run until the EUR 200 million budget runs out. A major source of contention for many in the market is that the scheme conflicts with the EU’s State aid rules. ARERA uses the resolution to set out a lengthy justification for why it considers that the scheme does not constitute State aid. Its argument references the Altmark Trans case (click here), a 2003 Court of Justice of the European Union (CJEU) ruling which held that public service compensation avoids State aid classification where the obligations are clearly defined, the compensation parameters are pre-set objectively, there is no overcompensation, and the provider is chosen by tender or benchmarked against an efficient operator’s costs (see pages 5 and 6 of the resolution for more detail for those interested).
It is also worthwhile mentioning that Article 10(3) of the DL Bollette decree separately required ARERA to submit a proposal for the full integration of the Italian and German gas markets via Swiss gas transport infrastructure. The resolution confirms that this proposal will be postponed until after the effects of the liquidity service have ceased, with the necessary in-depth analyses to be carried out in the meantime.
