PRESS RELEASE

5 July 2022

Public thematic report

ORGANISATION OF THE ELECTRICITY

MARKETS

In an electricity sector that is open to competition at European level, France has maintained

or created major public intervention tools

–

in connection with the

“New organisation of

the electricity market” (NOME) law of 7 December 2010 –

to meet several objectives: to

allow competition between suppliers, to guarantee stable prices for consumers that reflect

the competitiveness of existing nuclear plants, to ensure the financing of these plants and

to have sufficient capacity to guarantee the balance between electricity supply and demand.

The report published today by the Court of Accounts answers three evaluative questions on

the main public policy mechanisms for the organisation of the electricity markets. It points

out that the combined implementation of these mechanisms over the last ten years no

longer ensures that the original objectives are met. This observation, illustrated to the

extreme in the recent context of soaring gas and electricity prices, calls for advantage to be

taken of the forthcoming deadlines for the revision or obsolescence of existing mechanisms

to clarify the objectives and revisit the tools for intervention in the electricity markets.

Public intervention in response to issues specific to France

The French production system is distinguished within Europe by the weight and

competitiveness of the historical nuclear fleet. Therefore, in the absence of public intervention,

the opening up to competition of the electricity market on a European scale would result in

French customers being supplied at prices likely to be significantly higher than the production

costs of French plants.

Intervention tools implementation of which no longer guarantees achievement of

objectives

To allow for the development of competition on the retail market, the regulated tariffs (TRVs),

to which two-thirds of households still subscribe, are now based on supply costs representative

of those of alternative suppliers (as opposed to historical suppliers, including EDF). The stability

and competitiveness of these tariffs depend increasingly on the proper functioning of the

regulations put in place on the wholesale markets (between producers and suppliers), and in

particular on regulated access to historical nuclear power (the ARENH mechanism). Since 2019,

these tariffs have been increasingly affected by the evolution of wholesale market prices, at the

risk of moving significantly away from the production costs of French plants. Thus, without the

exceptional tariff cap measures introduced by the government at the beginning of 2022,

regulated tariffs would have risen by 35% (inclusive of taxes) on 1 February 2022.