France Unveils Rule to Partly Protect EDF From Power Price Jump

(Bloomberg) -- The French energy regulator unveiled details of a plan aimed at partly protecting Electricite de France SA from the surge in electricity prices.

The state-controlled utility’s finances are at risk with the government forcing it not to pass on the full cost of the jump in power prices to households and small businesses. The administration this week announced measures to shield EDF, highlighting challenges in finding a balance between protecting consumers as well as the debt-laden company.

To help cap the increase in electricity bills for small users at 4% this year, the government has cut a levy on power, postponed part of the increase of regulated tariffs into next year, and has asked EDF to raise by 20% the volume of nuclear power it sells to rivals at a deep discount to market prices. EDF has said the measure will cost it billions of euros as it usually sells most of its production in advance, meaning it has to buy back the power shortfall at market prices.

EDF’s rivals benefiting from buying power at a below-market 46.20 euros per megawatt-hour will have to sell a similar volume back to the state-controlled utility. That sale will be at the average power prices for 2022 delivery recorded on exchanges between Dec. 2 and 23 of last year, France’s Commission de Regulation de l’Energie said Saturday in a statement.

That average price was 257 euros per megawatt-hour last December, a representative of the Ecologic Transition Ministry said Wednesday. In comparison, France’s forward day-ahead baseload power closed at 256 euros Friday after reaching as high as 560 euros Monday.

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