Universal Registration Document 2022

Regulated electricity sales tariffs in France – “Blue” tariff

In accordance with Article L. 337-4 of the French Energy Code, regulated electricity sales tariffs are set by the Ministers for Energy and the Economy following proposals by the French Energy Regulatory Commission (Commission de régulation de l’énergie or CRE).

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 general economic interest objective of guaranteeing consumers an electricity price that is more stable than market prices.

In accordance with European Directive 2019/944 of 5 June 2019 on ordinary rules for the internal market for electricity, the French Energy and Climate law of 8 November 2019 authorised continuation of regulated sales tariffs, but they are reserved for residential or business consumers with a subscribed power level of up to 36kVA, provided they have fewer than 10 employees and their annual sales, income or balance sheet total is below €2 million.

Tariff changes

In accordance with Article L. 337-4 of the French Energy Code, the CRE is 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 8 July 2021, in view of changes in the TURPE tariff from 1 August 2021 and in application of the Energy Code, the CRE proposed an increase of  0.48% including taxes (1.08% excluding taxes) in the “blue” tariffs for residential customers and 0.38% including taxes (0.84% excluding taxes) in the “blue” tariffs for non-residential customers. The CRE proposed that this change should apply from 1 August 2021.

In 2022, in view of the high increases in electricity market prices, France introduced a “tariff cap” limiting the rise in regulated sales tariffs to a maximum 4% (including taxes) at 1 February 2022 for residential customers compared to the tariffs in force at 1 August 2021. This tariff cap is founded on 2 articles of the Finance Law for 2022 adopted on 30 December 2021:

• under Article 29, a reduction in the TICFE tax (or CSPE) has applied since 1 February 2022 for all customers (residential and business customers, on regulated-tariff or market-price contracts), although a legal minimum level must be maintained (€1/MWh for residential and small business customers). This reduction applies to quantities of energy delivered until 31 January 2023. The new TICFE tariffs have been set by decree;
• under Article 181, if the CRE, despite the reduction in the TICFE, proposes an increase in regulated sales tariffs for residential customers that exceeds 4% (including taxes) compared to the tariffs in force at 31 December 2021, as a dispensation from the Energy Code the French government may object to the proposal and through a joint decision by the Ministers for the Economy and Energy set the regulated sales tariffs, and tariffs for sales to the local distribution companies, at a lower level. If this happens, the law provides for a subsequent catch-up adjustment of regulated sales tariffs in 2023, to be smoothed over twelve months, to cover the loss of income for EDF in 2022. The same article also introduces a mechanism to compensate for losses borne by local electricity distribution companies on regulated-tariff offers and electricity suppliers on market-price offers.

On 13 January 2022 the French government announced further exceptional measures to limit the rise in electricity tariffs for consumers in 2022. The principal measures were extension of the regulated tariff increase cap of 4% (including taxes) to non-residential customers who are still eligible for the regulated tariff in mainland France and non-interconnected zones.

In a decision of 18 January 2022, the CRE proposed an increase of 35.4% including taxes (44.5% excluding taxes) in the “blue” tariffs for residential customers and 35.9% including taxes (44.7% excluding taxes) in the “blue” tariffs for non-residential customers from  1 February 2022. This proposal, which did not take account of the decree of 11 March 2022 defining the terms for EDF making 20TWH of electricity available to ARENH-eligible suppliers between 1 April 2022 and 31 December 2022 (as detailed below), was driven primarily by the significant rise in prices on the energy market. If it had taken account of the maximum decrease in the TICFE confirmed by decree 2022-84 of 28 January 2022, this proposal would have been for a 20% increase (including taxes) in the “blue” tariffs for residential customers and a  20.9% increase (including taxes) in the “blue” tariffs for non- residential customers. In accordance with the tariff cap, this proposal was rejected by the Ministers for the Economy and Energy, who set the increase in the “blue” tariffs for residential customers at 4% including taxes (24.3% excluding taxes) and the increase in the “blue” tariffs for non-residential customers at  4% including taxes (23.6% excluding taxes) through tariff orders of 28  January 2022, published in the Journal officiel of 30 January 2022 and implemented from 1 February 2022.

In a decision of 7 July 2022, the CRE proposed an increase of  3.92% including taxes (4.10% excluding taxes) in the “blue” tariffs for residential customers and 3.56% including taxes (3.73% excluding taxes) in the “blue” tariffs for non-residential customers, to apply from 1 August 2022, principally reflecting the increase in the TURPE distribution tariff from 1 August 2022.

In application of Article 181 of the Finance Law for 2022 and France’s tariff cap, the Ministers’ decision of 28 July 2022, published in the Journal officiel of 31 July 2022, rejected the changes proposed by the CRE, and the regulated tariffs consequently remained unchanged at 1 August 2022.

The Finance Law for 2023, adopted on 30 December 2022, modified the Finance Law for 2022 to extend the tariff cap to all customers eligible for regulated sales tariffs in  2022, and to compensate local distribution companies for their regulated-tariff offerings and suppliers for their market-rate offerings for residential and non-residential customers eligible for regulated tariffs, via the compensation for public service charges (CSPE).

The comparability of sales between periods is thus affected by the tariff changes introduced since 1 January 2021, presented in the table below:

For 2023, the French government decided to prolong the tariff cap, limiting the increase in regulated electricity sales tariffs to 15% (including taxes) above prices at 31 December 2022, for all categories of eligible consumers.

Article 181 of the Finance Law for 2023, adopted on 30 December 2022, thus stipulates that if the reasoned proposals for regulated sales tariffs presented by the CRE lead to tariffs defined under Article R. 337-18 of the same code that are more than 15% higher than the tariffs applicable at 31 December 2022, the Ministers for the Economy, Energy and the Budget may object to the CRE’s proposals and by joint decision set a lower level accounting for 95% of the tariff applied for customers’ consumption, in order to serve the objective of price stability.

In such an event, the law defines a mechanism to compensate EDF and the local distribution companies for the loss of income on their regulated-tariff offerings, and to compensate all suppliers for the loss of income on market-price offerings for residential and non-residential customers eligible for regulated sales tariffs, via the compensation for public service charges (CSPE). EDF therefore recognised a receivable of €1,571 million in 2022 (see notes 4 and 30).

In a decision of 19 January 2023, the CRE proposed an increase of 99.36% including taxes (108.91% excluding taxes) in the “blue” tariffs for residential customers and 97.94% including taxes (106.88% excluding taxes) in the “blue” tariffs for non-residential customers from 1 February 2023.