The quality of electricity supply: a comparison among Italian regions

The quality of energy supply is an important determinant of competitiveness for firms and of welfare for families. Analyzing the gaps among Italian regions in the continuity of electrical power supply, this study shows how, on average per user, interruptions are in the South at least double both in number and in duration compared to the Center-North, while the frequency of voltage dips is approximately triple (quadruple for those of major severity). Interruptions are costly: an econometric exercise shows a significant loss of productivity for firms, higher for those with a lower capital intensity (more present in the South) which are likely less equipped with machinery that immunizes them from the risks of supply discontinuity. The persistent disparities in power quality reflect those in the capacity, density and meshing of grid infrastructures, all higher in the Center-North where the demand for electricity is greater and all independent in the South from local government behaviors. Although the Regulatory Authority has set up a system of incentives to foster offered quality, the possibility of offsetting penalties received in the South with bonuses in the North may have contributed to the persistence of the gaps. Recent regulatory innovations, targeted primarily to areas with greater room for improvement, and the programs to intensify and upgrade the electricity infrastructure along the entire supply chain, reserving a relevant quota of investment to Southern regions, could help raising and standardizing the quality of supply throughout the Italian territory, alleviating a context factor that adds up to those impairing the attractiveness of the Southern regions.