PARIS: France's energy minister said on Wednesday it was out of the question to apply a sharp rise in power tariffs this summer recommended by the country's energy regulator to help utility EDF cover its production costs.
The country's energy regulator CRE said earlier on Wednesday that electricity tariffs for households should rise between 6.8 percent and 9.6 percent this summer to cover the mainly state-owned, former monopoly's costs.
The government tends not to follow the regulator's recommendations on tariffs, seeking to subdue politically sensitive rises in prices for consumers at a time France struggles with record-high unemployment.
It did not rule out any increase in power bills however, and is likely to apply part of the rise recommended, after it criticised the previous government for meddling in regulated energy tariffs.
"It is out of the question to accept such a cumulated rise in power prices," Energy Minister Delphine Batho told reporters after the weekly cabinet meeting.
"The government will take a decision in July taking into account production costs but also the French people's purchasing power," she said.
The government has in the past been pressured into retroactive tariff rises by legal action by other power sector players such as Poweo Direct Energie, for whom EDF's prices effectively represent a benchmark.
Shares in EDF, Europe's biggest electricity producer, rose by as much as 3.2 percent after the regulator made its recommendations.
By 1114 GMT, after the government voiced its opposition, the stock was trading up 2.4 percent still the day's biggest gainer on a declining French CAC 40 index of blue chips as traders expected the government to apply at least some of the recommended rise in July, which would boost EDF's profits.
The regulator said in its report that the gap between French electricity tariffs and EDF's costs was 1.47 billion euros ($1.92 billion) last year.
EDF, which is 84 percent state-owned, has seen its debt balloon partly because the extra cost of producing renewable energy is more than the subsidies it receives through a tax called CSPE paid by consumers.
The CRE estimated earlier this year that French household electricity bills should jump by 30 percent by 2017 mostly as a result of this rise in costs.
"This strengthens the hypothesis that we had carried out, the wiggle room for a rise is between 30 percent and 35 percent for household tariffs," the head of CRE, Philippe de Ladoucette, told reporters ahead of the report's publication.
Occasional French caps on gas tariff increases in the past have been criticised by gas suppliers for distorting competition, prompting GDF Suez and its competitors to regularly and successfully challenge these in court.
Millions of EDF energy bills for users across France also had to be recalculated after a syndicate of towns around Paris successfully contested their lack of transparency last year.
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