Flash - ARENH Rights 2024 & 2025: Draft Modification

CRE deliberation published on July 20th 2023: draft modification of ARENH rights calculations from 2024

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°2023-208 of 20 July.

The aim of this draft is to lower the reconciliation coefficient from 0.964 to 0.844 as of 1 January 2024, to reflect the expected slowdown of nuclear production for 2024 and 2025. This coefficient is a component of the calculation of ARENH Rights. This 12.45% reduction triggers a proportionate drop in the allocated ARENH Rights for every affected consumer.

What impact will this have on the cost of your electricity bills?

  1. Lowering the reconciliation coefficient would mechanically reduce the total ARENH demand for 2024 in the same proportion. The consequence would be a lower ARENH capping rate. Consequently, whatever the ARENH ceiling (100 TWh as at present), 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 2024 supply contract. This will of course have to be monitored carefully.
  2. 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 reconciliation coefficient would force them to buy about 3,2 TWh at the market price instead of the ARENH price. This would have a significant impact on the cost of the TURPE from 2024 (estimated at a minimum of +3% increase - awaiting additional information).

We will of course issue a further newsflash to inform our clients if these projects are finally adopted. As a reminder, an identical decree had been proposed in August last year. However, at the end of September 2022, the French Government decided not to publish it.

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