Senators' proposals to scale back family electrical energy payments | EUROtoday

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VSThis is a snub to the federal government and to EDF. The Senate inquiry committee, chaired by the socialist Franck Montaugé, and which focuses on the manufacturing, consumption and worth of electrical energy by 2035 and 2050, printed its suggestions on Thursday, July 4. It points a scathing opinion on the settlement concluded between the State and EDF, formalized in November 2023, which offers that the worth of nuclear electrical energy produced by EDF will attain, from 2026, the goal of 70 euros on common over the following fifteen years.

The data report, written by centrist Vincent Delahaye, is stunned that “the agreement” [ait] was negotiated within the biggest opacity, protects neither EDF nor shoppers and organizes the structural decorrelation of manufacturing prices and electrical energy costs by completely exposing the latter to the vagaries of the wholesale markets.”

Let's go back in time to understand. Until the end of 2025, a system called Arenh (Regulated Access to Historic Nuclear Electricity) runs. Set up in 2011, Arenh requires EDF to sell 100 TWh of production from the historic nuclear fleet (i.e. around a third of its production) at the very competitive price of 42 euros/MWh, outside market prices.

While it allowed EDF's competitors to resell this electricity to consumers at low cost for years, it also put a considerable strain on EDF's accounts and proved insufficient when electricity prices, partly indexed to gas prices, exploded. The new agreement must preserve EDF's profitability. But it is clearly not to the Commission's taste.

Prefer a “contract for difference”, for a saving of more than 300 euros per household

“However, the report continues, EDF (till 2022) and the State (till summer season 2023) have lengthy supported the choice of real regulation of the manufacturing of the historic nuclear fleet by means of a contract for distinction (CfD). The authorities even fought arduous in Brussels to acquire this chance. The underlying causes for the U-turns of EDF and the State stay mysterious.”

We can also read: “The fee of inquiry recommends changing the settlement concluded final November with an actual regulation within the type of a CfD on the present nuclear fleet meant to be prolonged in the long run to all decarbonized means. This CfD, as a result of its monetary flows can be charged to shoppers and can be handed on within the development of regulated electrical energy gross sales tariffs (TRVe), would end in a worth for the provision of electrical energy to shoppers structurally situated at round 60-65 euros per MWh.” The production cost of MWh by EDF is 60 euros.

According to the commission, this alternative would represent “an annual saving of greater than 300 euros for a mean family in comparison with present costs.”

What is a contract for difference?

A contract for difference is signed between the electricity producer, here EDF, and the public authority. The signatories negotiate a price range within which electricity prices can fluctuate freely.

If market prices fall below this range, the state is required to compensate the producer. On the contrary, if market prices exceed the thresholds, the state appropriates the producer's excess revenue.

Since the reform of the European electricity market in December 2023, this mechanism can legally apply to nuclear power produced by Brussels.

A reduction in VAT on “basic” consumption

In addition to proposing this alternative price regulation mechanism, the commission suggests lowering the VAT rate to 5.5%, compared to 20% today, on the first megawatt hours consumed. A “fundamental consumption” can be calculated based mostly on the typical quantity of electrical energy utilized by a family in a dwelling of 80 m2or 4.5 MWh per yr if the heating shouldn’t be electrical, 6 MWh with electrical heating.

The fee estimates that this would scale back the essential invoice by 40% with annual financial savings of 600 euros. It places the measure at a lack of 3.5 billion euros in tax income.

In its programme for the legislative elections, the RN proposes a discount in VAT to five.5% on your complete electrical energy consumption of every family. The fee has estimated this measure at 12 billion euros. In addition to being dearer, additionally it is unfair since households that warmth their houses extra would profit from proportionally larger state support.