S&P Global Ratings sees Italy's regulatory framework for integrated water services as stable, supportive, and consistent with our assessment of providing a strong regulatory advantage to Italian water companies.
Regulation allows operators to recover their capital and operating costs in a comprehensive and predictable manner, and timely parametric reviews ensure the adequacy of remuneration. Output-based remuneration implies limited sensitivity to volumes of water distributed.
Structural downsides persist, given the sector's high fragmentation (with more than 3,000 operators) and the risk of political interference.
The water framework has a shorter track record compared to Italian power and gas regulations, with the regulatory framework for water distribution starting in 2014.
This report does not constitute a rating action.
See the report, "Italian Water Distribution Framework: Supportive," published today on RatingsDirect.
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