The Electricity Buffer

Market Insights :: Market Updates :: France

Following the publication of the 2022-1774 Decree of December 31 2022 (for the purpose of enforcing Article 181, par. VIII & IX, of the 2022-1726 Finance Law for 2023, published December 30 2022), the present feature aims to lay out the characteristics of the aid mechanism introduced by the French Government in the new year: the Amortisseur Electricité or Electricity Buffer.

Who is eligible for the Electricity Buffer?

The electricity buffer targets consumers with a professional electricity supply contract but aren’t eligible for shield rate, aren’t subsidiaries of mid-sized companies or larger groups and who belong to one of the following categories on November 1 2022:

• Private law legal entities employing fewer than 250 people & capable of demonstrating that either their annual turnover or annual balance sheet total doesn’t exceed EUR 50 million or EUR 43 million respectively. Fulfillment of these criteria is assessed according to the example set by Annex I of aforementioned Commission Regulation No 651/2014 of 17 June 2014 (https://eur-lex.europa.eu/lega...),
• Public law legal entities employing fewer than 250 people & capable of demonstrating that their annual revenue doesn’t exceed EUR 50 million. The criteria for what constitutes employment is determined in accordance with the provisions of Article L. 130-1 of the Social Security Code, while the financial criteria can be assessed at the case by case level,
• Public or private law legal entities capable of demonstrating that their annual revenue consists, for at least fifty percent, of public funding, earmarked taxes, donations or contributions,
• Local government and any groupings thereof.

Companies are excluded:

• If they’re in receivership or otherwise undergoing restructuring or liquidation proceedings,
• If they were found to owe unpaid tax or social security on 31 December 2021, with the exception of those which, on the date they submit their application, have settled or have agreed to a settlement plan. A tax debt isn’t sufficient grounds for exclusion if said debt is below EUR 1 500 or the subject of a dispute regarding their existence or amount as of April 1 2022 and awaiting a final decision,
• If they are also eligible for aid to collective residential housing, as laid out by the 2022-1763 Decree of December 30 2022 relating to aid for collective residential housing in the face of the increase in the price of electricity for 2023.

Special exception: Consumers who were recently incorporated (after 1er November 2022), and thus don’t have accounts at the time of their application, are found eligible for the scheme provided that their provisional budget for 2023 meets the financial criteria mentioned above.

How does the Electricity Buffer work?

This form of aid is directly integrated into the electricity bill of the beneficiary consumer.

The buffer is determined by looking at the "commodity" component, which consists of the average annual price of electricity excluding transmission costs (Turpe), taxes and subscription fees. The "commodity" component includes all charges relating to electricity consumption, such as the cost of energy (including the share of allocated ARENH), energy efficiency certificates (CEE), capacity costs, and the cost of any guarantees of origin.

Electricity contracts with different prices in different times or seasons will see this fact taken into account when determining their average annual price, with the specific prices and the beneficiary's actual spread of consumption being reflected. The supplier will estimate the average price at the beginning of the year on the basis of the historical consumption profile and an adjustment will be issued at the end of the year on the basis of the real average.

The buffer overwrites 50% of the bill’s base "commodity" component, as long as that “commodity” component is between 180 €/MWh and 500 €/MWh. The maximum effective reduction in price obtained by the buffer is set at 160 €/MWh. Below is a projection of the amount of relief (expressed in €/MWh) brought by the buffer, depending on the average commodity price contracted by the consumer.

In addition:

• The buffer ceases to apply for any consumption above an upper limit, determined to be 90% of the consumer's historical consumption. Said historical consumption will be calculated in line with instructions to be issued by the ministers responsible for the economy and energy (to date, we’re still awaiting publication of these instructions),
• The buffer ceases to apply on days displayed as red on the public alert system known as Ecowatt. The volumes excluded from the buffer will be calculated according to a decree to be introduced by the ministers responsible for the economy and energy (to date, we’re still awaiting publication of this decree),
• The relief offered by the buffer is limited for all beneficiary consumers to an individual maximum amount of EUR 2 million over calendar year 2023 (except for local government & groupings thereof).

Companies benefiting from the electricity buffer will also be able to benefit from the aid windows maintained in 2023 (should they be eligible for both forms of aid).

How to apply for the Electricity Buffer?

Consumers who wish to receive relief from the buffer must send a certificate to their electricity supplier by 31 March 2023 at the latest. It is advisable to send this certificate as soon as possible so that the supplier can adjust billing as soon as possible.

For contracts entered into after February 28 2023 & beyond, the certificate must be returned within one month of the effective date of the contract.

The aid is tied to a consumer’s SIREN corporate identifier, and as a consequence the buffer takes effect on all sites, i.e. all electricity contracts. In addition to the certificate, we recommend sending the supplier(s) a list of the sites that should benefit from the relief offered by the electricity buffer.

What are the consequences if a company has unjustifiably benefited from the Electricity Buffer?

If a consumer has wrongly benefited from the electricity buffer, they will have to reimburse the supplier the full amount of the aid plus the non-deductible value added tax. In the event of deliberate non-compliance, the consumer will also have to pay a 20% surcharge to the state.

We invite you to check whether you’re eligible for this aid before applying for the electricity buffer.

More: Market Updates, Electricity, Energy Regulation, France Energy Aid 2022/2023, Natural Gas, TURPE

Related Links

• Annex I of Commission Regulation No 651/2014 of 17 June 2014