CRE deliberation published on 4 August 2022: draft modification of ARENH rights calculations from 2023
In addition to two amendments to the bill aimed at increasing the ARENH price (minimum 49.5 instead of 42.0 €/MWh) and limiting the ARENH ceiling to 120 TWh (see our newsletter Tome 30 of 25 July 2022), a new draft order modifying the calculation of ARENH Rights received a favourable opinion from the French Energy Regulatory Commission (CRE) in its deliberation n°2022-217 of 27 July.
The aim of this draft is to lower the closure coefficient from 0.964 to 0.819 as of 1 January 2023. This coefficient is a component of the calculation of ARENH Rights. By reducing it by 15%, the ARENH Rights allocated to consumers would decrease in the same proportion.
What impact will this have on the cost of your electricity bills?
- Lowering the closure coefficient would mechanically reduce the total ARENH demand for 2023 in the same proportion. The consequence would be a lower ARENH capping rate. Consequently, whatever the ARENH ceiling (100 TWh as at present or 120 TWh as recommended by CRE), the final ARENH allocated volume (after capping) would be unchanged. The financial impact should therefore be neutral for any final consumer benefiting from the ARENH mechanism via his 2023 supply contract. This will of course have to be monitored carefully.
- The bad news would be an indirect effect on the cost of transport (TURPE mainly). The network operators (Transport and Distribution) are allowed to compensate their network losses via the ARENH mechanism. The decrease of the closure coefficient would force them to buy about 4 TWh at the market price instead of the ARENH price. This would have a significant impact on the cost of the TURPE from 2023 (estimated at a minimum of +5% increase - awaiting additional information).
We will of course keep you informed in our next newsletters/flashes if these projects are finally adopted.
The information above is an excerpt from the applicable report referenced above. For a full and complete copy of this report please complete the form below, sign up for our newsletters or schedule a virtual meeting at your convenience.