EDF Slips as Path to Fresh France-EU Reform Talks Still Unclear

(Bloomberg) -- Electricite de France SA shares slipped as France and the European Commission remain at odds over regulations that will determine the financial health of the country’s largest electricity generator, with no solution in sight to unblock talks.

EDF shares fell as much as 0.7% in Paris Wednesday, and were trading 0.4% lower at 11.43 euros at 9:55 a.m. It’s the worst performer of Europe’s STOXX 600 Utilities Index, which is up 1.3%. 

The negotiations -- focused on the government’s push to raise regulated prices for EDF’s nuclear output -- should restart, but the basis for doing so is unclear, an official from the French Finance Ministry said on Tuesday.

The government wants to change the rules around electricity pricing so EDF gets more revenue to maintain its aging atomic plants, which are the backbone of the France’s electricity supply. The European Commission is seeking to ensure the move wouldn’t be to the detriment of energy-market competition.

“The Commission has ongoing contacts with the French authorities on the reform of the regulated access to nuclear energy,” a spokesperson said, without providing further details. 

The latest remarks cast fresh doubt on France’s ability to shore up the finances of the debt-laden utility before the presidential election in April next year. The regulatory overhaul is too technical to be a suitable topic for political campaigning, the official said, speaking on the condition that they wouldn’t be named.

At the start of July, French Finance Minister Bruno Le Maire said it will be difficult for the country to accept the Commission’s position that regulatory reform should be tied to a reorganization of EDF, because it would be tantamount to dismantling the company. Later that month, the utility’s Chief Executive Officer Jean-Bernard Levy told investors that the government had indicated discussions with the Commission would resume after a summer recess. 

EDF’s rivals currently have the option to buy more than a quarter of the company’s nuclear output significantly below market prices, a measure intended to boost competition in the retail market for energy. While the policy has deprived EDF of funds, it has also shielded French consumers from large increases in electricity costs due to rising prices for carbon permits, coal and gas. 

The proposed regulatory changes are crucial for EDF to participate fully in the transition to renewable energy, Levy said.

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