In response to matters submitted by ANODE (the national association of retail energy operators) and Engie, France’s Council of State ruled in decisions of 18 May and 3 October 2018 that the principle of regulated electricity sales tariffs is compatible with European Union law when such tariffs serve the objective of guaranteeing consumers an electricity price that is more stable than market prices. The Council of State confirmed that this objective cannot be achieved by softer State intervention and that regulation of sales tariffs guarantees electricity firms equal access to consumers and is not discriminatory.
However, the Council of State considered that the tariff regulation was disproportionate in its duration, which is permanent, and its scope of application, which covers large business sites with subscribed power levels below 36kVA. These facts were cited as justification for partial cancellation of the tariff decisions of 28 July 2016 and 27 July 2017.
Directive (EU) 2019/944 of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU was published in the OJEU on 14 June 2019. This directive requires continuation of regulated sales tariffs for residential customers and very small businesses.
France’s Energy and Climate law sets out the terms of the discontinuation of regulated electricity sales tariffs for non-residential customers, in compliance with this directive and the Council of State’s decision. These tariffs are now reserved for all consumers, whether residential or business customers, with subscribed power levels of 36kVA provided they have fewer than 10 employees and their annual sales, income or balance sheet total is below €2 million.
The discontinuation of regulated electricity sales tariffs for customers who are no longer eligible will take effect at 1 January 2021. In the meantime, The Energy and Climate law and the official decisions(1) made for application of that law define a process to be led by the historical suppliers. The steps in this process include identifying and informing the customers concerned, and making their data available to alternative suppliers, in compliance with the rules governing management of personal data. Consumers affected by discontinuation of the regulated sales tariffs will no longer be able to subscribe or modify a regulated-tariff contract from 1 January 2020. From 1 January 2021, any such consumers who have not subscribed a new contract will automatically be switched to a market-rate contract with their previous supplier.
Since 8 December 2015, in accordance with the NOME Law on organisation of the French electricity market (Articles L. 337-4 and L. 337-13 of the French Energy Code), the French Energy Regulatory Commission (Commission de régulation de l’énergie or CRE) has been responsible for sending the Ministers for the Economy and Energy its reasoned proposals for regulated sales tariffs for electricity. If no objections are made within three months, the proposals are deemed to have been approved.
In a decision of 7 February 2019 published on 12 February 2019, the CRE proposed an increase of 7.7% (excluding taxes) in the “blue” regulated tariffs for residential and non-residential customers, or 5.9% including taxes. The government had announced in late 2018 that electricity tariffs would not increase during the winter period, and only approved the CRE’s proposal in early May 2019, within the three-month period allowed under the Energy Code. The tariff decisions of 28 May 2019 were published in the Journal officiel of 30 May 2019 and took effect on 1 June 2019.
The consumer associations UFC Que Choisir and Consommation Cadre de Vie Logement (CLCV) challenged these decisions through an ultra vires application to the Council of State requesting their cancellation, together with an urgent petition for suspension of execution of the decisions until a ruling on the merits of the case could be issued. In an ordinance of 12 July 2019, the urgent applications judge refused to grant the suspension since there was no urgency. The Council of State subsequently rejected the merits of the challenge in a decision of 6 November 2019, thus validating the tariff structure implemented by the CRE on the grounds of the Energy Code.
Also, given the change in the “TURPE” network access tariff applicable from 1 August 2019, and in application of the Energy Code, in a decision of 25 June 2019 published on 2 July 2019 the CRE proposed an increase of 1.47% excluding taxes (1.26% including taxes) in “blue” tariffs for residential customers and 1.34% excluding taxes (1.10% including taxes) in “blue” tariffs for non-residential customers. The CRE’s proposal was confirmed in a tariff decision of 30 July 2019, published in the Journal officiel of 31 July 2019, and implemented on 1 August 2019.
Finally, in a decision of 16 January 2020 the CRE proposed an increase of 2.4% (including taxes) in the “blue” tariffs for residential and non-residential customers (3.0% excluding taxes for residential customers and 3.1% excluding taxes for non-residential customers). This proposed increase takes account of the rise in prices on the wholesale energy markets, the level of ARENH curtailments for 2020, higher selling costs including the costs of purchasing energy savings certificates, and the adjustments made to narrow the gap between costs and revenues observed on regulated electricity sales tariffs during 2019, notably following application from 1 June 2019 of the CRE’s tariff proposal of 7 February 2019. This latest CRE proposal was confirmed by tariff decisions of 29 January 2020 that were published in the Journal officiel of 31 January 2020, and applied from 1 February 2020.
On 17 November 2016, the CRE published its decisions for the TURPE 5 Transmission (high voltage) and TURPE 5 Distribution (medium voltage and low voltage) tariffs for the period 2017-2020. The new TURPE 5 tariff frame took effect on 1 August 2017.
The TURPE 5 Transmission tariff came into force with a 6.76% tariff increase effective from 1 August 2017, to be followed by subsequent estimated rises on 1 August in the years 2018 to 2020, based on average inflation observed over the previous calendar year, adjusted by a correcting factor to balance the income and expenses adjustment account (CRCP)(2). The TURPE 5 Transmission tariff sets the weighted average cost of capital (WACC) at 6.125% for the return on RTE’s asset base versus 7.25% for TURPE 4.
On 6 June 2019 the CRE adopted a decision concerning the TURPE 5 tariff for the high voltage network and its revision at 1 August 2019, following the 3% increase on 1 August 2018. The tariff scale increased by an average 2.16% from 1 August 2019, comprising +1.61% for inflation and +0.55% to balance the CRCP.
The TURPE 5 Distribution tariff came into force with a 2.71% tariff increase, which took effect on 1 August 2017, to be followed by subsequent estimated rises on 1 August in the years 2018 to 2020, based on average inflation observed over the previous calendar year, adjusted by a correcting factor to balance the CRCP. The TURPE 5 continues to use the previous method for calculating cost of capital, setting the margin on assets at 2.6% and the return on regulated equity at 4.1%.
(1) Decision of 12 December 2019 concerning identification and provision of the list of non-domestic customers no longer eligible for regulated electricity sales tariffs; Decision of 12 December 2019 concerning information of consumers on regulated electricity sales tariffs, by their supplier, about the discontinuation of their regulated-tariff contracts; Decision of 26 December 2019 listing the data suppliers offering regulated-tariff electricity sales contracts must make available to other electricity suppliers upon request.
(2) A mechanism to measure and offset differences between the actual figures and the forecasts on which tariffs are based.
