The State wants EDF to sell more electricity at knock-down prices to its competitors

While the state tariff shield, which currently protects consumers from the explosion of electricity prices, should end in 2023, the government is exploring all the ways to contain the bills of the French beyond this date A dangerous equation, when prices per megawatt hour (MWh) in France rose to more than 900 euros on the spot market for the last quarter of 2022, two to three times more than the rest of France . European Union! Out of a crisis cyclical “and” temporarily “, as estimated by the executive last fall, the situation is out of control and promises to last. And for good reason, in addition to Russia’s war in Ukraine, which aggravates the difficulties of supplying fuel to the Old Continent, the France has to deal with historically low nuclear production forecasts for the next two winters, coupled with a lack of structural margins.

Surprised, the public authorities intend, once again, to put EDF to work, which will soon return to 100% of the State’s bosom after the purchase of 16% of the securities that have escaped it so far. Indeed, the Minister of Energy Transition, Agnès Pannier-Runacher, announced yesterday in the Senate that the executive may increase the electricity quota that EDF must sell at the cost price of its competitors through the ARENH mechanism ( regulated access to historic nuclear power ). He explained that a A cap of 135 terawatt hours (TWh) for 2024 and 2025 is a reasonable compromise ” and that’ ” an amendment may be tabled “.

Effect of French bills

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. In concrete terms, since 2011 it has enabled “alternative” suppliers (ie suppliers other than EDF), which do not own any nuclear power plants, to offer their customers competitive prices by buying electricity from EDF at cost price (with no profit for the latter) rather than fluctuating market prices. Since this tariff has been fixed for ten years by the public authorities at 42 euros per megawatt hour (MWh), ARENH logically represents a considerable advantage for these operators at a time when prices are rising.

Thus, the greater the amount of ARENH requested by the latter is actually provided to them, the less they need to stockpile money, thus limiting the impact of rising prices on their tariff schedules. However, so that EDF does not have a strong advantage, the regulated sales tariff (TRV), to which about 30 million French people subscribe, must also adapt to any increase in the costs of its competitors, according to in the calculation imposed by the Energy Regulation Commission (CRE). Result: in this loaded dice game, the more ARENH available, the lower the consumer bills.

Under these conditions, the government already increased in January the ARENH quota to be provided for the year, which caused the anger of the boss of EDF, Jean-Bernard Lévy. In an announcement that ignited the powder, Bercy was forced to sell an additional 20 TWh of its electricity at 46.20 euros per MWh, in addition to the 100 TWh at 42 euros planned for more than ten years. A device” remarkable “justified by a” amazing sequence “, and that is the response to the crisis of ” short term “, then argued the cabinet of the Minister of Economy, Bruno Le Maire.

A possible moving ceiling, depending on actual production

So the exception should become the rule, at least for the next few years. If the opposition accepts it, without an absolute majority in the Palais Bourbon. In fact, the executive wants to go further, and is considering increasing the ceiling to 150 TWh, i.e. the maximum allowed by the Energy Climate law in 2019. ambition, and voted within the framework of the “purchasing power” bill to reduce the maximum quota of ARENH that may be required by government decree from 150 to 120 TWh until the end of 2023. reasonable compromise “However, Agnès Pannier-Runacher was estimated yesterday, ” taking into account the expected production [d’EDF] in 2023 (between 300 and 330 TWh, compared to around 380 TWh in 2019, a level at the time already considered low).

It remains to be seen what will happen after 2023.” The ceiling [de l’ARENH] seek to increase “, insisted yesterday the Minister of Energy Transition. But while the cause and extent of the famous corrosion defect discovered in several EDF reactors, and which forced it to take control of all its fleet by 2025, remains unknown, the condition of the tricolor company is concerned. And the repurchase by the State of all its shares is not enough in any case to solve the problem, which may prove to be generic. In the chaos, the company of energy also suffered a historic loss of 5.3 billion euros in the first half of 2022, the group said on Thursday. The suggestion we can make to you is to have a moving cap depending on the reality of nuclear energy production “, thus suggested yesterday Agnès Pannier-Runacher. One thing is certain: the question will continue to be at the center of discussions until the end of the ARENH mechanism, scheduled for December 31, 2025.