Soaring electricity prices: the government assures that “the State will protect” consumers

A shield that comes at a price. “Whatever happens, the State will protect” consumers from the surge in electricity prices, assured the Minister of Ecological Transition, Barbara Pompili, on BFM Business this Friday morning. “It is never madness to accompany our fellow citizens in times of crisis”, she insisted.

At the end of September, the Prime Minister announced “a tariff shield” on energy with, in particular, a limitation to 4% of the increase in regulated electricity tariffs next year. This measure, announced at the approach of an election year and in the midst of renewed concerns about purchasing power, should protect the French from the soaring electricity prices on the markets, fueled by many factors, starting with the global economic recovery.

VIDEO. Energy prices: Jean Castex announces a “tariff shield” to compensate for the increase

Problem: the cost to public finances is likely to increase considerably compared to what was expected. The government initially thought to spend 4 billion euros for this promise then had planned 5.9 billion in the new version of the 2022 budget presented in mid-October.

Today, neither Bercy nor the Ministry of Ecological Transition comes forward to quantify this measure. “It is too early to tell, prices are constantly changing. But indeed the State will take the necessary measures according to the observed level of the increase in February ”, indicates the entourage of Barbara Pompili.

“More than 10 billion” euros

It will be “more than 10 billion”, estimates for his part Julien Teddé, general manager of the broker Opéra Energie. Because the 2022 forecast for the regulated sales tariff (TRV), which the government intends to block the increase at 4%, continues to fly, increasing the budgetary effort necessary to maintain it at 4%. The government thought that this TRV should have taken 12% next February, but experts are now talking about an increase of almost 25%.

Behind this outbreak hides a complex but essential mechanism, the one by which suppliers alternative to EDF can access nuclear electricity from the historic producer at low cost: Arenh (regulated access to historic nuclear electricity).

With the current boom in the electricity markets, suppliers have asked overwhelmingly to benefit from this mechanism which guarantees them much cheaper electrons. But their request will not be able to be satisfied in full, far from it: the maximum available ceiling is 100 TWh whereas they have requested a record of 160 TWh.

A hoped-for European market reform

“The Arenh that they would have liked to have and that they did not receive, a priori they will have to replace it with purchases on the wholesale markets”, at very high prices, explains Julien Teddé. This inflation has an automatic effect on the regulated sales tariff, designed to reflect the costs of these alternative suppliers and thus enable them to be competitive with EDF.

In addition to the cost to public finances, the State is faced with another puzzle: the planned reduction in the electricity tax (CSPE) will not be sufficient and another instrument will have to be found. “Even if we completely remove the CSPE, there is still an increase of almost 10%” on the price, says Julien Teddé.

In the longer term, France hopes for a reform of the European electricity market, so that the prices reflect more faithfully the real prices in each country, whereas they are today based on the costs of gas and power plants. coal – which are reaching new heights today.

France wants prices that better reflect its nuclear production or Spain its investments in renewables. These two countries as well as Italy, Greece and Romania thus pushed for a common position in Brussels on Thursday. But these proposals arouse the reluctance of a majority of countries and some, including Germany, this week reaffirmed their hostility to a reform of European markets.

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