Flash - ARENH Rights 2024 & 2025: Confirmation of Modification

Market Intelligence :: News Flash :: France

ARENH rights: Confirmation of the modification of the reconciliation coefficient from 2024

In our Flash dated July 24, 2023, we informed you that 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.

On August 24, 2023, the order was officially published.

The aim of this order 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 will mechanically reduce the total ARENH demand for 2024 in the same proportion. The consequence will be a lower ARENH capping rate. consequently, whatever the ARENH ceiling (100 TWh as at present), the final ARENH allocated volume (after capping) will be unchanged. The financial impact should therefore be neutral for any final consumer benefiting from the ARENH mechanism via his 2024 & 2025 supply contract. This will of course have to be monitored carefully.
2. The bad news will 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 will force them to buy about 3,2 TWh at the market price instead of the ARENH price. This will have a significant impact on the cost of the TURPE from 2024 (estimated at a minimum of +3% increase - awaiting additional information).