Electricity prices: the government’s “whatever it takes” to contain the increase

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Twenty billion euros, or almost a quarter of what income tax brings in. It is the astronomical invoice of the “whatever it takes” to protect the French from soaring electricity prices.

The executive thus decided, Thursday, January 13, that it was going to force EDF to resell a little more electricity to its competitors by raising the ceiling of the Arenh device from 100 to 120 TWh, in exchange for a small increase in the price. , which will drop from €42/MWh to €46.20/MWh for this additional share.

In September, Prime Minister Jean Castex announced the establishment of a «tariff shield» to limit the increase in EDF’s regulated electricity tariff (TRV) to 4%, on 1is February. To achieve this, he then counted on a reduction of the internal tax on the final consumption of electricity(TICFE), of approximately 8 billion euros, “at the lowest of what is authorized by European rules”, it is specified in Bercy.

A price increase of 35%

A revaluation of the energy check (600 million euros) then the distribution of an inflation allowance to 38 million French people (3.8 billion euros) to contain the impact on the purchasing power of households did not not enough. Because electricity prices have since climbed faster than expected, due to the drop in EDF’s nuclear production but above all the surge in gas prices (which represents 20% of electricity production in Europe) , due to both an increase in demand and a drop in deliveries from Russia.

→ ANALYSIS. Electricity: the government is giving itself the means to block tariffs

The fall in the TICFE was thus to offset a rise in electricity prices of around 20%, but which has now reached 35%, according to Bercy. Hence the obligation imposed on EDF to make a little more cheaper electricity available to other operators, whereas market prices are currently around €200/MWh.

A “late” government announcement

The measure enables the government to respect the commitment made to individuals. It has also been demanded for several months by manufacturers, in particular by large electricity consumers, some of whom have started to reduce their production so as not to sell at a loss.

According to calculations by Uniden, which brings together electro-intensive, the increase in Arenh volume will represent a 15.5% drop in the purchase price of their electricity, which will average €87. /MWh this year, representing savings of 2 billion euros. «The government’s announcement is welcome, but it is taken late and will only apply this year and from 1is April, i.e. after the winter months, when prices are traditionally higher “, tempers Charlie Evrard, president of My energy broker.

→ ANALYSIS. Electricity: the disarray of industrialists in the face of soaring prices

The question of a possible catch-up in 2023 remains in any case. The government remains very evasive on the subject and does not provide a clear answer. The setting of the TRV depends on a very complex formula, fixed by law and calculated by the Energy Regulation Commission (CRE), of which the market prices are one of the components, up to a quarter to a third.

“EDF will have to buy the additional share of Arenh at a high price”

However, it is not at all excluded that these remain very high. Unless the temporary and costly fall in the TICFE is extended, the TRV could therefore rise again. If the government does not raise the Arenh ceiling to 150 TWh, to protect it at this level, “consumers risk seeing their electricity bills explode in 2023”, warns the UFC-Que Choisir.

In all cases, the note is likely to be high, for the consumer or the taxpayer. The rise in the Arenh will, in fact, be very expensive for EDF, whose stock plunged on the stock market on Friday 14 January. “He has already sold his electricity for 2022 and will have to buy back Arenh’s additional share at a high market price to resell it at €46.20/MWh”, underlines Julien Teddé, the president of the broker Opéra Énergie.

The State to the rescue of the company

EDF has also just revised its nuclear production downwards for 2022, to 300/330 TWh, against 330/360 TWh previously, due to problems encountered on certain reactors. (read opposite). In total, the electrician expects a drop of around 8 billion euros in its gross operating surplus this year.

→ ANALYSIS. Electricity: RTE does not rule out power cuts in mid-January

It is “a new stage in the spoliation of EDF for the benefit of the competition”, according to the CGT, which accuses the government of ” to kill ” the company. The State, its main shareholder (83.7%) will therefore have to return to the pot by a capital increase. «We will continue to support EDF», we assure Bercy. Already, for this year, the dividends paid to the State will be in title and not in cash.

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Alert on the nuclear fleet

EDF will have to inspect all of its nuclear fleet for corrosion problems, the Nuclear Safety Authority (ASN) said on Friday January 14. Currently, 5 of the 56 reactors are already shut down for corrosion detected on the cooling circuits.

→ THE FACTS. Nuclear: defects observed on the most recent EDF reactors

Until now, this concerned the four most powerful (1,450 MW) and most recent reactors, at Chooz (Ardennes) and Civaux (Vienne). But a similar deficiency has just been noted on that of Penly 1 (1,300 MW). The concern is all the greater as there are 19 other similar reactors in the French fleet. EDF has already announced that the Chooz 2 and Civaux reactors will not restart until December 31, 2022.

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