Wednesday, May 22, 2024
HomeBusinessFrance considers windfall levy to regain control over energy pricing

France considers windfall levy to regain control over energy pricing

France is considering implementing measures to cap national electricity prices, including a potential windfall levy, to fulfill President Emmanuel Macron’s promise to regain control over prices. One proposal being discussed is for the government to collect and redistribute some of the revenues generated by nuclear power producer EDF. This move is part of a wider reform of power price regulation in France, and it seeks to prevent excessive profits by setting a price ceiling for EDF’s nuclear energy. Revenues exceeding this threshold would be returned to the government and distributed to end users. The hope is that France can implement these measures without violating EU subsidy rules.

While the French government believes it can act independently in implementing these measures, it remains uncertain whether they can truly do so within the framework of EU negotiations on electricity market reforms. Macron’s use of the catchphrase “take back control” has raised concerns in Brussels, particularly due to its association with Brexit. The French government officials emphasize that their goal is not only to control electricity prices but also to increase domestic energy production and reduce reliance on imports. The discussions on price mechanisms are partially driven by the expiration of the current framework, known as Arenh, which will be replaced at the end of 2025.

EDF CEO Luc Rémont is open to a price-ceiling solution, although he has clashed with the government over the level at which it should be set. The government aims to align the price as closely as possible to the estimated cost of producing energy for EDF. However, EDF argues for a higher price to support Macron’s plan of building six new reactors over the next decade. The negotiations and decision-making process regarding these measures will involve discussions with European partners and compliance with EU regulations.

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