Francia : July 20, 2010

The much publicized NOME law passed by the French Assembly back in June is scheduled to go before the Senate at the end of September.  While the law is intended to increase electric retail competition within France, the CGT, the country’s main union, is putting up severe opposition to its enactment.

According to a recent CGT pamphlet, due to the NOME law (nouvelle organization du marché de l’électricité) consumers can expect substantial increases to their electricity bills.  They allege that competition regarding the energy markets does not make sense as more than 96 percent of French consumers are still faithful to their traditional supplier EDF.  CGT states that EDF will be forced to shed 25 percent of its market share when the NOME law takes effect in 2011.  They view this forced reduction in market share as being akin to daylight robbery wherein consumers will be subsidizing the profits of EDF’s competition.

The CGT makes three (3) basic arguments against NOME.  First, they argue that there cannot be any competition where prices are low as are France’s when compared to neighboring European countries.  The enactment of NOME spurring greater competition is therefore nothing more than a price increase for the consumer.  Second, competing suppliers will be receiving the benefits of the market without making any investment of their own.  Third, the law is illegal as it states new suppliers will only be able to purchase from EDF an amount equivalent to their existing market share.  The union argues that this provision is not legally valid and therefore it will be overturned by the courts at which point EDF will be carved up and sold to the highest bidder.

While many of the union charges are sensational in nature and it could be argued as factually misguided, it does illustrate the tension and angst of some as France begins to deregulate its electricity market in earnest.  While it is true that in all probability electricity rates will increase, it should be pointed out that they have been kept artificially low through TaRTAM.  Despite the union’s dire predictions, we see France’s entry into meaningful liberalization as not only placing itself in good stead with its European neighbors, but also helping create a more dynamic and robust energy market.