David and Goliath: The Procedures for Selling ENEL Distribution Lines to City-Owned Companies


  • Laura Onofri




The sale of ENEL energy distribution networks to city-owned companies is regulated by Article 9, paragraph 4, of the Legislative Decree of 16 March 1999 (known as the Bersani Decree) which states how the sale of the networks has to be done according to the "normal market rules", but which concurrently imposes on ENEL the obligation to sell its own distribution network. The provision pursuant to Article 9 encourages the purchaser to behave opportunistically. The city-owned company, in fact, enjoys greater bargaining power, because its monopolistic counterpart is forced by law to sell part of its distribution network. In this context, it is in the best interest of the purchaser to renegotiate the price as far down as possible and the seller to increase the amount of time to complete the contract. As a result, this study will focus on the economic analysis (from the perspective of the theory of complete contracts) and the discussion of the effects created by the provisions that Article 9 of the Bersani Decree has introduced in the deregulation process of the Italian electricity sector.