Complaint by EDF against the state: “There is a dissonance between EDF’s role and that which the state wants it to play”

Tensions between the state and EDF are increasing. He announced on Tuesday that he had appealed to the State Council and demanded compensation of 8.34 billion euros from the state. The electrician intends to obtain compensation for the losses caused by the “tariff umbrella” imposed by the state. This system, intended to curb the increase in regulated electricity prices to 4% in 2022, forced them to reduce the annual electricity quota sold at a reduced price to their competitors by 20% to 120 TWh (compared to 100 TWh previously). ) to increase the principle of regulated access to historic nuclear power” (Arenh). The latter requires EDF to sell its energy to its competitors at a very advantageous price compared to current market prices, in order to encourage diversity of supply and allow consumers to benefit from attractive prices benefit.

EDF must remain a “unique” group, not having renewable energy is a “utopia” (Jean-Bernard Lévy, CEO)

A conflict that intervenes while the state announced in early July the nationalization of EDF by September. In addition to acquiring the remaining 16% of Electrician’s capital – the state already owns 84% ​​- this operation raises many questions, starting with the role of EDF and what the state wants to give it, as explained Phuc-Vinh Nguyen, researcher in European and French energy policy at the Jacques Delors Institute Energy Center in La Tribune.

Why is customs protection at the heart of EDF’s complaints against the state?

EDF is in a difficult situation for two reasons. On the one hand because of the weak production of its nuclear fleet, which will bring it considerable losses. In fact, France traditionally exports electricity in the summer. However, this year we have to import it. And this winter, too, the weakness of the nuclear fleet will be felt. There is also this question from tariff sign » which is partially funded by EDF as part of Arenh.

This complaint from EDF, which therefore feels called upon, can therefore also be seen as a means of challenging this measure. Indeed, the fact that it funds the price tag may raise questions, as EDF is not necessarily designed to protect the consumer from a possible rise in energy prices. Rather, it is up to the government to take action to support consumers. The current system was set up in an emergency to enable the executive to react quickly. But it shouldn’t be permanent.

Especially since if the Arenh is negotiated at European level, the state has accepted its establishment in France in exchange for other concessions on the subject. There is a dissonance to be resolved about the image and role that EDF must play and that the government intends to play. EDF’s nationalization may clarify this situation.

What will change with the nationalization of EDF?

The state already owns 84% ​​of EDF’s capital, so taking it to 100% won’t change much. In a sense, it is the first stage of a rocket that will enable large-scale reform of the EDF. Although the government justifies this nationalization as essential to its new energy policy, it is above all a clarification of EDF’s role in this new policy. So this has more of a symbolic meaning, if only for the signal that is being sent to public opinion. In terms of public relations, if you want to take charge of the country’s energy policy, owning 100% EDF is better.

Renationalizing EDF: Understand everything in seven questions

What challenges does this nationalization bring?

Although it has already been announced that the government will open a public takeover bid (OPA) of 9.7 billion by the beginning of September. This applies in particular to the Arenh mechanism, which expires at the end of 2025. It is therefore necessary to come to an agreement with the European Commission on this issue and to reach at least a broad agreement before the next European elections in 2024. Because the main actors in this dossier are not only Emmanuel Macron and Economy Minister Bruno Le Maire, but also EU Competition Commissioner Margreth Vestager. However, it is not certain that she will continue to hold this office after the elections.

Another issue is likely to cause tension: that of the Hercules reform (This project envisages the splitting of EDF into three entities: a public company for nuclear power plants, another public company for power distribution and renewable energy, and a third for hydroelectric power plants. editor). When it was debated in 2019, the issue sparked strong tensions among unions, who feared it would be cut by privatization. However, the question of the Hercules project could well come up again. The state will therefore have to clarify in which direction it wants to go.

EDF renationalization: that difficult balance between public finances and shareholder satisfaction

Finally, guarantees must be given for the technical feasibility of the energy policy desired by the state through the nationalization of EDF, and this remains a great unknown. The state will get its hands on the wallet, but will EDF be able to deliver the EPR orders? Does the group have the necessary manpower and expertise? Which doesn’t seem obvious at the moment. Answers are also expected on the successor to his CEO, Jean-Bernard Lévy. The challenges ahead for EDF are significant and we need to find someone knowledgeable about energy issues. Finding the ideal candidate is not an easy task, especially in such a short time, since all these questions have to be answered quickly.