For EDF it is potentially very good news

October 19, 2011 12:00 AM
For EDF it is potentially very good news

In July 2009, the former boss of EDF Pierre Gadonneix had claimed a price increase of 20 on three or four years. A dramatic statement that had cost him his position. "This issue will rest", predicted before the place. He was right. After having been identified averaged 3.4 on August 15, rates could be increasing again early next year. Of the order of 3 to 4, this time. That prices are likely to increase from 6 to 7 in six months, of the never-seen in decades. And the movement is probably just beginning...

This summer, the rising had been justified by "increasing the pace of investment in networks and production Park" EDF. This time, the explanation is different; It especially to cover the expenses related to the massive development of renewable energy. Neither the Sun nor wind are today totally competitive. The State supports their growth by buying this type of electricity by EDF at a high price, higher than that in which it could supply on the market. The difference is in principle covered by a tax, contribution to the public service of electricity (CSPE), which represents approximately 5 of the invoice of the individuals.

The problem is that, in recent years, the tax has not budged, while EDF was forced to purchase more green electricity. So that the company felt already be of his own pocket of 1.6 billion euros end-2009. After discussion, the Government has to accept a new apparatus of this tax. The result of this arbitration is found in an amendment to the Finance Bill presented by Michel Diefenbacher, UMP member of Lot - et - Garonne, and supported by the Executive. This text provides that, in the absence of an order made by the State before December 31, the Commission for regulation of energy (CRE) may of itself identify January 3 euros per megawatt-hour CSPE. It is currently set at 4.50 euros per megawatt-hour. It could thus go to 7.50 euros per megawatt hour in January, an increase of 67, and triple in three years.

Risked social crisis

"The Government will have until December 31 to maintain the current level, otherwise it is the proposal of the CRE which applies within the limits of 3 euros per megawatt-hour," explains Michel Diefenbacher. The regulator grows long to a strong appreciation of this tax. In a scenario studied recently, he planned to wear at 13 euros per megawatt-hour. Unless the Government fears a too strong political reaction, a first increase of 3 euros seems very likely. This recovery should translate into an increase of 3 to 4 of the final invoice for individuals.

For EDF, it is potentially very good news. The tax increase will prevent that the company continues to move forward on its purse green energy public policy. Social crisis, the expected increase in may, however, be difficult to swallow for individuals.

Same thing for professionals. The relative weakness of the current price is traditionally one of the few competitive assets of French companies. If it disappears gradually, deindustrialization is likely to widen.