The CRE issued two decisions of 21 January 2021(published in France’s Journal Officiel 0096 of 23 April 2021) on the TURPE 6 Transmission (high voltage) and TURPE 6 Distribution (medium voltage – low voltage), after the Higher Energy Council (Conseil supérieur de l’énergie) gave its approval. These tariffs apply from 1 August 2021 for a period of approximately 4 years.
For distribution expenses, in its tariff decision n°2021-13 of 21 January 2021, the CRE set the margin on assets at 2.5% and the additional return on regulated equity at 2.3%. The average tariff increase is +0.91% at 1 August 2021 and +1.39% per year for the whole tariff period, assuming average annual inflation of 1.07%.
For transmission expenses, in its tariff decision n°2021-12 of 21 January 2021, the CRE set a nominal pre-tax weighted average cost of capital (WACC) of 4.6% for the return on RTE’s regulated asset base. The average tariff increase is +1.09% at 1 August 2021 and +1.57% per year for the whole tariff period, assuming average annual inflation of 1.07%.
In application of the CRE’s decision of 18 January 2018, energy suppliers receive remuneration from distribution network operators for the service of managing single-contract customers on their behalf.
The commissioning principle is identical for all suppliers selling single-contract market-price offers. Only regulated electricity tariffs have given rise to slightly lower commissions (€4.50 instead of €6.80 per point of delivery until 1 August 2019), with progressive reduction of this difference to zero by 1 August 2022.
For remuneration of past customer management charges (prior to 1 January 2018), the CRE’s decision set an amount it considered as a cap that can be passed on through the TURPE tariff.
However, Law 2017-1839 of 30 December 2017 introduced a measure intended to rule out the possibility of suppliers receiving remuneration from network managers for past customer management services. On 23 December 2016, ENGIE brought an action against Enedis before the Paris Commercial Court claiming such remuneration. In the course of this litigation, ENGIE filed an application for a preliminary ruling on constitutionality concerning the arrangements introduced by the French “Hydrocarbons” law which ended the possibility of obtaining supplier commissioning for past services. These arrangements were validated by the Constitutional Council in its decision 2019-776 of 19 April 2019. The proceedings at the Paris Commercial Court are still ongoing.
The TURPE tariff for the medium and low-voltage network is identical for every electricity network operator. It is determined on the basis of forecast expenses to be borne by Enedis, provided they correspond to an efficient network operator, and forecasts of the number of consumers connected to Enedis’ networks, their consumption, and the power level subscribed.
As this tariff cannot always cover the specific needs of certain service zones, the Electricity Equalisation Fund (FPE) exists to compensate for disparities in network operating conditions. The Energy Code requires electricity distribution costs resulting from public network operation to be shared between public distribution network operators. There are two equalisation mechanisms: one based on fixed amounts, the other set by the CRE based on analysis of the network operators’ accounts. The calculation method for the fixed-rate allocation mechanism is defined by decree and ministerial order. The EDF entities concerned by the Electricity Equalisation Fund are Enedis, Électricité de Strasbourg and SEI.
On 28 July 2021, the CRE published its decision setting the final amount of the allocation from the Electricity Equalisation Fund (fonds de péréquation de l’électricité) to SEI, following analysis of the network operators’ accounts. SEI’s allocation is set at €195.3 million for 2021.
For the fixed-amount mechanism, the ministerial order of 7 October 2021 set the 2021 contributions payable and allocations receivable from the Electricity Equalisation Fund for distribution network operators. The fixed contribution due by Strasbourg Électricité Réseaux and Enedis amount to €1.7 million and €26.4 million respectively. Enedis is also the CRE’s designated operator for collection and payment of Electricity Equalisation Fund contributions from all the Local Distribution Companies.
The ARENH scheme for regulated access to historic nuclear power, set up in 2011, allows alternative suppliers to purchase electricity from EDF to supply their final customers, after signing a framework agreement, at a regulated price for set quantities determined under the provisions of the French Energy Code. This scheme is also open to network operators to cover their energy losses.
The ARENH price, determined by the Ministers for Energy and the Economy following a proposal by the CRE, has been fixed at €42/MWh since January 2012. This includes delivery of the electricity and has incorporated the associated capacity guarantees since 2017.
The maximum total volume that can be sold under the ARENH scheme to suppliers who apply to the scheme to cover the needs of their final customers is set at 100TWh per year (see note 23).
In decision 2021-339 of 8 November 2021, as required by the Energy Code, the CRE set out the method for allocating ARENH volumes if applications exceed the maximum total volume defined for 2022. In view of the current exceptional crisis in the electricity market, it also introduced reinforced checks and special rules for accepting the ARENH volumes applied for by suppliers.
The CRE stated that EDF-controlled subsidiaries’ excess applications would be fully curtailed (this does not apply to network operators) and they could enter into contracts with the parent company that replicate the ARENH scheme and terms of supply, particularly the curtailment rate for alternative suppliers.
The Energy and Climate law of 8 November 2019 introduced new measures. It raised the initial 100TWh ceiling for ARENH sales to 150TWh from 1 January 2020, allowing the French government to raise the maximum total volume of ARENH deliveries above 100TWh by ministerial order, and to revise the ARENH price by ministerial order during a transition period (see note 23).
ARENH applications during the November 2021 session for delivery in 2022 totalled 160.36TWh (excluding applications from EDF subsidiaries and network operators). The CRE scaled down certain applications (-0.03TWh in total), bringing the total application volumes validated by the CRE to 160.33TWh, and curtailed each supplier’s application. Further volumes were also sold by EDF to its subsidiaries through contracts that replicate the ARENH scheme, and to compensate for network electricity losses (26.4TWh).
Litigation relating to the ARENH scheme has also been instigated in 2020 by some energy suppliers in the context of the Covid-19 pandemic. Details are provided in note 17.3.4.
As announced in the draft multi-year energy programme (PPE) published on 25 January 2019, in January 2020 the French government launched a call for contributions regarding the fundamental findings driving the plan to reform the economic regulations for existing nuclear facilities, and its construction and operating principles. The proposed new regulations would replace the ARENH scheme. Like many other actors in the sector, the EDF group participated in this consultation, which ended on 17 March 2020. France’s Minister for the Ecological and Inclusive Transition and Minister of the Economy and Finance then commissioned the CRE to carry out an assessment of the costs borne by the nuclear operator, and to determine fair remuneration for its nuclear activities under the government’s potential future regulations for existing nuclear facilities. There were no significant developments in 2021 concerning the terms and conditions of these potential new regulations.
