The electricity freeze will have to be compensated later, says EDF CEO

VIDEO – The CEO of EDF estimated this Thursday that the “accounts” will have to be made and that the freeze on the increase in electricity will have to be paid “at another time”. The energy giant risks being attacked before the Council of State by its opponents for distortion of competition.

This Thursday, the CEO of EDF, Jean-Bernard Lévy, declared that the cost of electricity will have to be “translated into the bills” of the French “at another time”. “The accounts will have to be made,” he added. While the government has promised that electricity and gas prices will not increase this winter, the head of the company added that the Minister of Energy had “not warned the operators, no more EDF than the others ”before making this decision.

On Wednesday, the Minister of the Environment, François de Rugy, had declared that the State services were working “on a certain number of measures […] which will make it possible not to have the increase in electricity prices ”. The authorities want to find a “safe” solution to prevent EDF’s competitors from challenging the future tariff in court, as they threatened to do on Tuesday after the government announcements. In the past, their challenges had already been accepted by the Council of State, which had ruled in their favor against the tariff freeze organized in the summer of 2014 by Ségolène Royal. The energy giant’s competitors had justified their action by arguing that it was a threat to competition. “Our competitors want our prices to increase; we just want the application of the law, ”concluded Jean-Bernard Lévy on Thursday.

Is the freeze an obstacle to competition?

, the Prime Minister, is contrary to the law, which stipulates that the costs of supplying EDF are fully reflected in the regulated tariffs which concern 26.5 million households. However, an increase of at least 3% was planned for the beginning of next year. This incorporates several elements, starting with the sharp increase in wholesale electricity prices in recent months. Usually, the government hikes electricity prices at the beginning of August, when summer torpor prevents an overflow of reactions. But in 2018, the agenda meant that the increase came at the start of the year. It should be the same in 2019, with a price movement already scheduled in early February.

The absence of a mark-up means that EDF keeps its regulated prices artificially low when the alternative suppliers obtain their supplies at much higher market prices.

In this context of absence of increase announced by Édouard Philippe, the rivals of EDF can file an appeal before the Council of State for distortion of competition. Their argument is clear: the absence of a mark-up means that EDF keeps its regulated prices artificially low when the alternative suppliers obtain their supplies at much higher market prices – which they are obliged to pass on to the consumer’s bill. In short, they are the losers when the law gives them the means to be competitive with EDF.

The appeal to the Council of State is not an innovation for the rivals of EDF. In the past, they have already done it several times for gas, after the government refused to approve increases for the tariffs applied by Engie (ex-GDF Suez). Each time, the Council of State ruled in favor of the alternative suppliers and Engie had to adjust tariffs. In short, sooner or later, the consumer should not escape an increase in electricity, if the decision of Édouard Philippe is brought before the Council of State. Which is highly probable.

So does the state have room for maneuver in this matter? Maybe he could play for time. Thus the Energy Regulatory Commission (CRE), which sets the increases in energy prices, could do so a little later than expected, when the tension has subsided.

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