France : September 18, 2009

The French electricity market, currently dominated by EDF, is expected to change in the years to come.  A report prepared by the Champsaur commission suggests solutions to the market in the hopes of enlivening competition amongst suppliers.  The commission was headed by Paul Champsaur, former chairman of the French regulatory telecommunications authority.

For several years, the European Commission has complained that the French government has done little to promote competition in its electricity market.  By EU mandate, all member states must operate liberalized energy markets.  Defenders of the current market environment in France counter that the EU Commission does not take into consideration the fact that 85 percent of the electricity generated in the country is by nuclear means.  Nuclear power in France is considered one of the cheapest means of electricity generation in Europe.

With electricity prices so low in France’s regulated market, there is little room for competition in the deregulated arena.  After a surge in prices in the deregulated market last year, the government has decided to take steps in narrowing the price difference between regulated and market prices by creating a tariff limiting deregulated prices. 

The Champsaur report aims to tackle the inequality between suppliers by giving them access to production prices at the nuclear plant level.  The possible abolition of regulated tariffs in 2015 for businesses and access to lower cost power production for electricity suppliers would effectively mute the criticism from the EU Committee regarding the lack of competition in France.

Carbon Tax Update After discussions amongst major stakeholders, French President Nicolas Sarkozy announced the carbon tax would be set at €17 per ton for households and certain commercial enterprises.  The tax is a far cry from the €32 recommended by the CO₂ commission headed by former Prime Minister Michel Rocard.