A proposed windfall tax on energy transmission companies to be introduced with the budget law for 2006 undermines the transparency and stability of regulated companies’ cash flows, ratings agency Fitch has noted in a recent release.

Although details have not yet been disclosed, it is expected that the impact will be approximately €2.5 billion over the period 2006-2008 for both Terna and Snam Rete Gas respectively, Italy’s electricity and gas transmission companies.

“From a credit perspective this move will have a negative effect on companies’ specific risk profiles. It is also likely to undermine the credibility of the overall regulatory framework, compromise the credit profile of other regulated companies and enfeeble the role of the Italian energy regulator, the Authority for Energy Electricity and Gas (AEEG), said the Fitch analysis.