Measuring the Affordability of Basic Public Utility Services in Italy

In this paper we analyze the affordability of water and energy for Italian households. We first document how the regulatory reform has changed the system of price setting, illustrating the dynamics of utility prices and of household expenditure in the period 1998-2005. We then discuss current indices adopted to measure the affordability of public utilities and propose an alternative one, in order to investigate how many households would incur a potentially excessive burden, if they consumed a minimum quantity of utility services.Finally, we calculate the values of these indices on data from the 'Survey on Family Budgets' over the period, and use them to depict the affordability issue in Italy. Our results show that after the Italian reforms of the Nineties (at least until 2005) the affordability of public utility services has not worsened