French lawmakers propose extension of power price clawback

PARIS (Reuters) – Lawmakers from several of France’s biggest parties have proposed amendments to the 2024 budget bill to prolong a clawback mechanism on power companies’ revenues when prices are high.

Lawmakers from the ruling Renaissance, far-left and centrist parties have tabled amendments to prolong the so-called inframarginal price cap next year rather than letting it expire at the end of this year.

France adopted the mechanism last year in response to the energy price crisis and in line with an European Union regulation allowing countries to cap non-gas power producers’ market revenues at 180 euros per megawatt hour on the grounds that exceptionally high prices meant they reaped big gains without their operating costs rising.

Lawmakers in the finance commission of the lower house of parliament are due to begin debating the 2024 budget bill from Tuesday. The fact that several large parties support an extension of the mechanism means there is a good chance it will be adopted.

Finance Minister Bruno Le Maire did not include plans to prolong the measure in the government’s original draft bill, but said he would be in favour if lawmakers included it in an amendment.

The European Commission said in June that the application of the price cap mechanism had varied widely among member states and recommended against extending its use on the grounds that it could distort markets and created regulator uncertainty.

The fall in power prices since the start of the year means the mechanism ended up generating far less revenue than expected this year.

(Reporting by Leigh Thomas; Editing by Mark Potter)