The state wants EDF to sell even more electricity to its competitors at bargain prices
While government tariff protection, which is currently protecting consumers from the explosion in electricity prices, is due to end by 2023, the government is exploring all options to contain French bills beyond that date. A dangerous equation when prices per megawatt hour (MWh) in France rose to over 900 euros on the spot market in the last quarter of 2022, two to three times higher than in the rest of France. European Union ! out of a crisis cyclic ” and ” in the interim “As per the Executive Branch’s assessment last fall, the situation is out of control and promises to be permanent. And for good reason, alongside Russia’s war in Ukraine exacerbating fuel supply difficulties for the old continent, France is grappling with historically low nuclear production forecasts for the next two winters, coupled with a structural lack of margins manage with that.
Perplexed, the public authorities intend again to get EDF up and running, which should soon return to the bosom of the state at 100% after purchasing the 16% of the securities it is currently losing. In fact, Energy Transition Minister Agnès Pannier-Runacher announced yesterday in the Senate that the Executive could increase the quota of electricity that EDF has to sell at cost to its competitors via the ARENH mechanism (Regulated Access to Historic Core Electricity). She explained that a A cap of 135 terawatt hours (TWh) for 2024 and 2025 would be a reasonable compromise ” and the’ ” an amendment could be tabled “.
Impact on French invoices
This system is at the heart of the functioning of the electricity market in France and the way in which the price actually paid by the consumer is determined. More specifically, since 2011 it has enabled “alternative” suppliers (ie suppliers other than EDF) who cannot own a nuclear power plant to offer their customers competitive prices by purchasing electricity from EDF at cost price (with no profit for the latter). instead of at the fluctuating market price. Since this tariff has been set by the public sector at 42 euros per megawatt hour (MWh) for ten years, ARENH logically represents a considerable advantage for these operators in times of rising prices.
The more ARENH quantity requested by the latter is actually delivered to them, the less they need to stock up on cash, thereby limiting the impact of the price increase on their tariff plans. However, in order for EDF not to have too strong an advantage, its regulated sales tariff (TRV), to which around 30 million French people subscribe, must also adapt to any cost increases of its competitors, according to Energy’s calculations by the Regulatory Commission (CRE). Result: The more ARENH is available in this charged dice game, the smaller the consumer bills will be.
In these conditions, as early as January, the government had increased ARENH’s quota to be delivered over the year, provoking the ire of EDF boss Jean-Bernard Lévy. In an announcement that set fire to the powder, Bercy had in fact forced it to sell another 20 TWh of its electricity at 46.20 euros per MWh, in addition to the 100 TWh it had planned for more than ten years at 42 euros. A device ” exceptionally “justified by a” extraordinary episode “, and those on the crisis on ” short term ‘ argued the cabinet of Economics Minister Bruno Le Maire at the time.
A possible movable ceiling, depending on the actual production
The exception should therefore become the rule, at least for the next few years. At least assuming the opposition accepts it, in the absence of an absolute majority in the Palais Bourbon. In fact, the executive wanted to go even further and considered raising the cap to 150 TWh, the maximum allowed by the Energy Climate Act of 2019. But a coalition of MPs NUPES, RN and LR short-circuited their ambitions and voted under the “Purchasing Power” law to lower the maximum quota of ARENH recoverable by government decree from 150 to 120 TWh by the end of 2023. reasonable compromise “Nevertheless, Agnès Pannier-Runacher appreciated yesterday” taking into account the expected manufacturability [d’EDF] in 2023 (between 300 and 330 TWh, compared to almost 380 TWh in 2019, a level already considered low at the time).
It remains to be seen what will happen after 2023.” The blanket [de l’ARENH] would aim to increase “, emphasized the Minister for Energy Transition yesterday. But while the cause and extent of the famous corrosion defect discovered in several EDF reactors, forcing the company to control its entire fleet by 2025, remains unknown, the Tricolor company’s situation is worrying. And anyway, having the state buy back all of its shares wouldn’t be enough to solve what could prove to be a generic problem. In the turbulence, the energy group also suffered a historic loss of 5.3 billion euros in the first half of 2022, the group announced on Thursday. ” The suggestion we could make to you would be a floating cap depending on the reality of nuclear power generation ‘ Agnès Pannier-Runacher suggested yesterday. One thing is certain: the question will remain at the center of discussions at least until the end of the ARENH mechanism, which is scheduled for December 31, 2025.