The French government will decide in the coming days what tools it will use to rein in electricity prices that jumped in the wake of Russia’s attack on Ukraine, an aide to Energy Transition Minister Agnes Pannier-Runacher said.
(Bloomberg) — The French government will decide in the coming days what tools it will use to rein in electricity prices that jumped in the wake of Russia’s attack on Ukraine, an aide to Energy Transition Minister Agnes Pannier-Runacher said.
On Tuesday, European Union countries reached an agreement on an overhaul of the bloc’s power market, with the aim to curb electricity prices to restore the region’s competitiveness. While EU nations agreed to reduce their reliance on fossils by boosting renewables, France may use the reform to support its nuclear industry, stoking German concerns about anti-competitive policies.
Following the accord, French authorities will weigh various options with a view to ensuring that power bills paid by households and businesses are more in line with the country’s production mix, which is mostly made up of nuclear- and renewable-generated power, the aide said. A decision should be made within days.
President Emmanuel Macron pledged last month to regain control of power prices, which have been driven higher by surging natural gas costs in the wake of Russia’s invasion of Ukraine. That comes as businesses express concerns about rising costs of the transition away from fossil fuels, and the loss of competitiveness compared with the US and China.
Thanks to the EU deal, the price of atomic power produced by state-owned Electricite de France SA may be set by the government under a so-called contracts for difference, the aide said. That price would reflect EDF’s production costs, ensuring it enough revenue to meet its investment needs, while protecting users from price swings.
Other options include power purchase agreements, a price cap on nuclear power sales via a levy, and various types of tariff shields, according to the adviser.
European competition authorities would have to vet some of these tools such as CFDs, and may require so-called remedies to ensure that a level-playing field is maintained, the aide said, adding that France will ensure that EDF’s structure isn’t jeopardized by such remedies.
French businesses and power suppliers are asking for new power market rules as soon as possible, as current regulations on the price at which EDF sells a large amount of nuclear power — which only partly shielded users during the recent prices surge — expires at the end of 2025.
New regulations “will allow us to limit the surge in prices when gas costs will reach peaks,” Pannier-Runacher said on France Info radio Wednesday.
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