“France must guarantee its public electricity service”
For a year and a half, the spectacular rise in electricity prices caused a major…
Dfor a year and a half, the spectacular rise in electricity prices caused a major economic and social crisis leading to business bankruptcies, declines in industrial production, relocation risksthreat to jobs, budget cuts for local authorities, brake on investments, fueling inflation.
This surge in prices is not linked to an explosion in electricity production costs in France, but to the method of setting the “European wholesale” market price, which has repercussions on consumer bills. This is determined by the operating cost of the most expensive plant on the interconnected European network, usually a gas plant.
Opening up to responsible competition
Before the liberalization of the sector, all French consumers (households, companies, municipalities) had access to a regulated tariff based on the costs of electricity in France, which were very stable and slightly impacted by the evolution of world prices for fossil fuels.
The opening up of electricity to competition is therefore clearly responsible for this major crisis, the culmination of a succession of dysfunctions that have marked the history of a market that is inherently deeply unstable: when prices, which are very volatile, plunge below the cost of production, like ten years ago, producers are in difficulty. When they fly away, as in recent months, consumers toast. France must guarantee its public electricity service.
The climate and ecological emergency requires us to have an effective tool to manage a very demanding energy transition while guaranteeing everyone, under fair conditions, access to this basic necessity that is electricity. After more than twenty years, the market has demonstrated that it cannot – and will never be able – to meet these requirements.
The emergency measures that have piled up all over Europe are unable to extinguish the fire, just to cushion the shock. For example, in France, very small companies like bakers must be content with a cap of 280 euros per megawatt hour (MWh), i.e. around four times more than the national production cost (usually around 60 euros per MWh).
Complex and wobbly patches
Yet it still seems impossible to get out of it, and the “in-depth reform of the European electricity market” long-awaited has just given birth to a mouse, at the end of a truncated debate. There European Commission indeed offers new patches, always more complex, wobbly and unable to restore this sick system at the base. It even imposes the development of long-term private contracts which would result in the least expensive power plants being reserved for certain consumers at the expense of others, in defiance of the fundamental principle of fair treatment for a basic necessity.
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