Electricity: UFC-Que Choisir warns of a surge in bills from next year

A sharp drop immediately offset? This is what subscribers to the regulated electricity tariff (TRVE) and those who have chosen an offer whose price is indexed to it could experience from next year, according to UFC-Que Choisir. After an average drop in bills of 15% recorded on February 1 , the consumer association is publishing a study that denounces the inflationary effects of the entry into force of the new nuclear regulation on consumers.

In the fall of 2023, EDF and the State reached an agreement to establish the mechanism that will succeed Arenh (regulated access to historic nuclear electricity), which ends on December 31. In force for about 15 years, this mechanism, widely criticized by EDF, required the historic supplier to sell about a quarter of its nuclear electricity at the knockdown price of 42 euros per megawatt hour (MWh) to industrial large electricity consumers but also to alternative suppliers. Ultimately, the consumer benefited from this "share" of Arenh.

To replace it, a new regulatory mechanism has been planned and translated into Article 4 of the recently adopted draft budget. It therefore stems from the agreement between EDF and the State announced in November 2023 , which defined an electricity price of around 70 euros per MWh on average over 15 years, which had been received coldly by representatives of consumers and industrialists.

Under this agreement, EDF can sell all of its electricity on the markets. In return, above certain price thresholds, Article 4 provides that a fraction of the additional revenues generated by EDF will be collected and allocated to a redistribution mechanism for all consumers, individuals or industrialists, whether or not they are EDF customers. In concrete terms, between 78 euros and 110 euros per MWh, a fraction of 50% of EDF's additional revenues would be collected, and above 110 euros per MWh, it would be 90%.

While the government is defending a mechanism that "allows price increases to be cushioned for consumers", UFC-Que Choisir deplores a new regulation of nuclear power that risks resulting in an explosion of supply costs included in the amount of bills. To this end, the consumer association simulated the application of this reform from this year using the latest data from the Energy Regulation Commission (CRE) on the evolution of regulated tariffs.

This simulation shows that the supply cost would have increased by 44% compared to the current effective level, going from 81.37 euros per MWh to more than 117 euros. "This reform imposes a new method of calculating tariffs, based on the high and unstable prices of the wholesale markets, instead of the real cost of producing electricity in France", explains UFC-Que Choisir, which points out that only 5.4% of the electricity consumed in France was imported in 2023 .

"This explosion in electricity prices is the result of a deliberate political choice: to make the French pay a high price for their electricity, as if it had to be purchased in full on international markets, even though it is produced in France at much lower costs."

In addition, UFC-Que Choisir anticipates that the redistribution of EDF profits to households will in reality be very limited and denounces a mechanism that is "falsely protective of consumers". "In total, on 1 MWh of nuclear production sold on the markets at 120 euros, EDF would pay a tax of 28.5 euros, notes the association. This would therefore offer it a comfortable margin (profit) of 26.5 euros."

But "only 17.1 euros would actually be returned to consumers" because of the drop in the closing coefficient in 2023. Because of this, it is now considered that nuclear power only represents 58% of household electricity consumption and UFC-Que Choisir estimates that "everything suggests that on average only 58% of the tax revenue will be returned to consumers, the rest simply going to the State budget." Therefore, the electricity supply costs of the TRV billed to consumers would be between 107.5 and 113.7 euros and would therefore remain far from the 81.37 euros currently observed.

Concretely, the association calculates that consumers with a basic subscription will pay on average 19% more, or up to 250 euros more per year for an average household, with the entry into force of this reform. An additional cost that will be much more significant for households heated by electricity or who live in thermal sieves.

To avoid this surge in electricity bills, UFC-Que Choisir calls for increasing the taxation of EDF profits and for the full proceeds to be returned to consumers in the form of a direct reduction on bills. Finally, the association wants "the immediate establishment of an independent commission, including consumer associations, to thoroughly rethink the regulation of the electricity market" but also "the creation of a public electricity service" that guarantees consumers "a price reflecting the real costs of nuclear and hydroelectricity, and not dictated by market fluctuations.