Police against police: the competition authority recommended on Tuesday that the Government prepare the exit of regulated electricity prices (TRVE), subscribed by a majority of households to protect themselves from market fluctuations, a position contrary to that of the Regulatory Commission of Energy (CRE), which recommends maintaining this offer. For the competition regulator, this offer, whose price is set by public authorities, at the proposal of the CRE, “limits the development of competition in retail markets.”
Regulated prices “capture an important part of the demand” from individuals and companies “which are thus kept away from the competitive game,” estimates this independent administrative authority attached to Bercy, in charge of fighting against anti-competitive practices by companies. Consequently, it recommends “concretely preparing for the suppression of TRVs, without giving up the public policy objectives attributed to them, but rather assigning them better targeted instruments.”
The CRE defends an offer that allows “softening” prices
An opinion that is not shared by the Energy Regulatory Commission (CRE), another independent authority, responsible for ensuring the proper functioning of French energy markets for the benefit of consumers. On Tuesday, he recommended to the Government that the TRVE system be maintained for five years. While the energy crisis that followed the war in Ukraine caused a rapid increase in energy prices, placing them at the center of the political debate after the last electoral elections, he emphasizes that the “smoothing” of prices “over a long period of time helps mitigate the impacts of market variations.
Due to the post-Covid recovery and the war in Ukraine, electricity prices have increased by more than 43% in two years, despite the price shield established by the State. For the first time since the start of the energy crisis, consumers benefiting from regulated or indexed tariffs should experience a significant drop on February 1, 2025, of around 9%, due to the fall in electricity prices, and despite the increase of a. tax and the end of the tariff shield. The French estimate that the amount paid in addition to their energy bill this year is 213 euros on average, according to an Odoxa survey published this week commissioned by Voltalis, a company specialized in energy savings.
Currently, “only the TRVEs offer this softening” which is allowed to 59% of French residential consumers who benefit from these rates, and 16% who have subscribed to an offer indexed to these regulated rates, estimates the CRE. He emphasizes that despite the “much cheaper (up to 15 or 20%)” market offers for several months, there is “low mobility of TRVE customers towards market offers”, which shows that “the Price is not the only criterion. Therefore, the CRE emphasizes the “important role” that these rates play “for the benefit of the consumer” and considers at the same time that these prices, the amount of which is set by the public authorities at the proposal of the CRE, “are compatible with good market functioning and the development of competition.
The government should advocate for maintaining TRV
“I note that the two authorities (…) have opposite conclusions on some points,” reacted the Minister of Energy, Olga Givernet, in a statement to the press. The Government must, based on these divergent recommendations, prepare a report for the European Commission, with a view to the disappearance at the end of 2025 of the Arenh, a system negotiated with Brussels to allow the emergence of competition for EDF and which provides for the provision of alternative electricity providers.
Although she does not comment on the conclusions of the future report, Olga Givernet underlines the “strong” commitment “of the French and the national representation” for regulated prices, which “play a crucial role for the proper functioning of the market, especially with the end of the Arenh”.
He underlines the “political risk” that an elimination of these protectionist tariffs would imply, just over a year before the presidential elections of 2027, and hopes for a status quo on the part of Europe in this matter.
Source: BFM TV
