Free market and greater protection: what is the difference? On some electricity bills, the wording 'free market', While on others (especially domestic users) it says'Greater protection'. Let's explain the difference.
Greater protection. If this message appears on your electricity bill, it means that starting from 2007 (the year in which the electricity market was liberalized) you have never exercised the right to change supplier by choosing one in free market. Faced with this 'non-choice' of yours, the company that has always sold you energy (Enel Servizio Elettrico, A2A, HeraComm ...) has not cut your light, but has placed you in the so-called enhanced protection service.
In the enhanced protection service, the electricity sold to the customer is not supplied by the private seller, but purchased in bulk by the Single Buyer (in practice the State) who resells it to end customers at the economic and contractual conditions established by the Authority for Electricity and Gas (AEEG).
The price of electricity sold to protected customers varies every month according to the world trend of the energy market and is communicated quarterly by the AEEG.
Under the enhanced protection regime, private sales companies are only the support that the state uses for billing services. The revenue for the sales companies 'exercising the highest protection' derives solely from the payment by the end customer of a fee for the marketing service (customer management, billing, etc ...).
Free market. Each customer who, starting from 2007 (the year in which the electricity market was liberalized), has decided to change supplier, or to exit the enhanced protection service remaining with the same supplier (which is possible provided that the operators protection keep the two separate) falls within the free market.
In free market the electricity sold to the customer is supplied by the private seller, who either buys it wholesale on national / European energy markets or produces it through its own power plants. The revenue for the sales companies in these cases derives from the margin between the cost of production / acquisition of electricity and the selling price on the end customer.
The free market is the regime in which energy producers can freely offer their energy production, including the 'green' one deriving from any renewable sources (hydroelectric, solar, photovoltaic and cogeneration). The price depends on the bargaining between supplier and customer and that is, precisely, from free market.