Francia : June 24, 2008

The prices of petroleum products and natural gas have risen sharply in recent months. As a result, the annual bill for French small to medium consumers will increase sharply in 2008.

After an initial rate increase on January 1, 2008, a double digit increase occurred again in April. By the end of April, gas prices rose by 2.64 € per Mwh with another rise occurring during the month of May. Prior to April of this year, gas suppliers charged a tax on natural gas consumption greater than 5,000 Mwh per year. Now this tax is being charged to all businesses regardless of their consumption profiles resulting in another increase in pricing of 1.19 € per Mwh. This increase coincides with the enactment of European Directive 2003/96/EC into French law. While not directly attributable to the increases in gas prices, it could not have come at a worse time as the public is looking to blame the European Union and its directives for rising energy prices.

It should be remembered that the liberalization of the continent’s electricity market by the European Commission was not desired by all consumers. In fighting the sentiment of the EC order, the French National Assembly voted to create a transitional tariff to limit price increases in the deregulated electricity market.

In the view of many European consumers, the EC lacks flexibility in dealing with rising energy prices other than to extol the virtues of a completely liberalized market.