France to Use Power Company Windfalls to Help Struggling Firms

(Bloomberg) -- France plans to recoup part of windfall profits made by electricity producers to bolster aid to companies and local governments struggling to pay rising bills.

The government will take any surplus made by power generators when they sell above 180 euros ($179) per megawatt-hour, as recently agreed at a European Union level, Finance Minister Bruno Le Maire said. The mechanism, which will be introduced in the 2023 budget bill, should fetch between 5 billion euros and 7 billion euros in extra revenue.

“What we have put in place is fair and balanced,” he told a news conference in Paris. “We’re not taxing everyone, as some people propose. We’re just saying that energy companies can’t benefit unduly from unearned income linked to crazy prices.”

Governments across Europe have been responding to surging energy costs caused by Russia’s dwindling gas deliveries with tens of billions of euros of tax cuts and subsidies for households and businesses. But more manufacturers are reducing output as they struggle to cope with soaring bills. French wholesale power prices have shot even higher than in most neighboring countries amid production issues at some of utility Electricite de France SA’s nuclear plants.

Le Maire said a 3 billion-euro fund the government had already put in place until the end of this year to help companies pay their electricity bills probably won’t be enough.

France is asking the European Commission to double the maximum amount it can hand out to businesses, and is considering even more aid for those that use a lot of power for industrial production such as Aluminium Dunkerque, he said.

The French government will also provide guarantees for companies that struggle to provide their own when signing contracts with energy providers, the minister added.

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