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    France to set new energy price cap to protect consumers


    September 16, 2022 - CE Noticias Financieras

     

      PARIS, Sep 14 (Reuters) - France is set to set an energy price cap for 2023 to help consumers cope with rising inflation, as European governments try to mitigate the impact on households and industries of a gas crisis exacerbated by the war in Ukraine.

      Prime Minister Elizabeth Borne is scheduled to announce the move alongside France's economy and energy ministers at a press conference at 1330 GMT on Wednesday.

      "We are not going to leave the French alone in the face of rising gas and electricity prices," Economy Minister Bruno Le Maire told CNews television hours before the announcement.

      However, he said it was legitimate for a "small part" of the increase in energy costs to be passed on to consumers.

      The new measures are an extension of the current electricity price caps and gas price freeze, which expire this northern winter.

      France, home to the world's largest nuclear reactor fleet after the United States, is less exposed than its European neighbors to a cut in Russian gas supplies in retaliation for Western sanctions.

      But an unprecedented number of reactor shutdowns has pushed French nuclear power production to its lowest level in 30 years, just as Europe struggles to find an alternative to Russian supplies, adding to the continent-wide energy crisis.

      Half of state-owned EDF's nuclear reactors are currently out of service due to corrosion and regular maintenance problems, and concerns that it may not be able to bring them all back online in time for the northern winter have helped drive market prices higher.

      EDF chief Jean-Bernard Levy told a parliamentary hearing Wednesday that repair work on the corrosion-affected reactors was "well underway" and that he expected to achieve roughly the same levels of nuclear output as last northern winter.

      For its part, the national power grid operator, RTE, said there was no risk of total blackout in France during the cold season, although it added that some power cuts during peak demand could not be ruled out.

      "Compared to other European countries, France should be in a structurally less difficult position," he said.

      The Paris government has limited the increase in regulated electricity prices this year to 4%, cutting taxes typically included in electricity bills for consumers and small businesses and forcing EDF to sell more electricity to its competitors at well below market levels.

      As for gas, the government froze regulated prices for the residential sector at October 2021 levels.

      The Ministry of Finance has estimated the cost of the electricity and gas measures at E16.5 billion ($16.5 billion) for the State, and E8 billion for EDF.

      The capping of electricity prices aggravated EDF's financial crisis, prompting the government, which already held an 84% stake, to launch a full nationalization of the power producer.

      The government has also offered a subsidized rebate on car fuel prices at a cost of E7.5 billion, bringing the total cost of its energy price measures to E24 billion, equivalent to 1% of GDP, according to the ministry.

      (1 dollar = 0.9986 euros)

      (Report by Silvia Aloisi and Leigh Thomas; Edited in Spanish by Ricardo Figueroa)

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