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    France proposes to the EU to create a fund to balance energy prices

    January 19, 2023 - CE Noticias Financieras


      The reform of the Spanish wholesale electricity market has provoked a wave of protests from the various Spanish energy employers' associations even before the debate has begun in Brussels.

      Likewise, the large European electricity companies, including Endesa and Iberdrola, are finalizing a document of specific measures for the Commission, which they hope to send in the coming weeks. In the meantime, Eurelectric has already put on the table a proposal that will focus on the implementation of a capacity mechanism, which will allow the development of back-up technologies, and contracts for difference (CFD) and long-term PPAs to guarantee the profitability of infra-marginal technologies (nuclear and hydro).

      The French government is the third to present a reform proposal after Greece, which did so last year, and Spain.

      The French government is committed to maintaining the marginalist system and rules out any type of market price intervention, as proposed by the Spanish government for nuclear and hydroelectric energy.

      The 'non paper' distributed by the French government also advocates the creation of a fund to serve as a counterpart mechanism. This vehicle could be managed by the system operators to guarantee neutrality in its application.

      In the Spanish case, the nuclear companies -which would have a regulated price- would be willing to accept a price of 67 euros per megawatt hour (MWh) for the reform of the electricity market, but they are asking the Government for a dialogue to establish conditions regarding the economic context and tax changes.

      Reducing the tax burden

      Ignacio Araluce, president of the Spanish Nuclear Industry Forum, explained to this newspaper that the 67 euros, which covers the costs of the plants, "could even be lower if the tax burden were reduced". And the fact is that the electricity companies must pay 25 euros for each MWh produced in taxes and the fee to Enresa for the future management of nuclear waste.

      Foro Nuclear states that its position on the Executive's proposal, for the preparation of which they have not been consulted, "will depend on the conditions established", such as not increasing the tax burden. In this sense, Araluce recalls that the decision to bury nuclear waste in individual cemeteries implies an extra cost of 2,100 million and that the Parliament of Catalonia will raise the tax on the income from nuclear power plants in Catalonia from 20% to 50%. He also points out the importance of taking into account the CPI and prices of materials in the coming years and of unifying tax management by the government and regional administrations.

      For their part, the Association of Electrical Equipment Goods (AFBEL) and the Association of Engineering, Assembly, Maintenance and Industrial Services Companies (ADEMI) are concerned that the proposed modification of the electricity market will result in a "lack of regulatory stability", which is essential for the legal security of investors. They propose a unification of criteria when justifying investments and expenses in the next inspections.

      Like Foro Nuclear, ADEMI and AFBEL denounce the absence of an in-depth technical debate with all the actors involved" in the preparation of the proposal, since "it offers far-reaching changes that could affect many infra-marginal facilities in operation and their contracts with customers", both organizations point out in a statement.


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