Op-ed

What future for State-regulated electricity sales tariffs?

Published on 27 November 2024

In a report dated November 7, 2024, the Energy Regulatory Commission recommended that the government maintain regulated electricity rates. A few days later, the Competition Authority released its own report, which recommended preparing to phase out those rates. How can we explain why these two independent administrative authorities have reached such contradictory conclusions?

Article published in La Tribune on November 27, 2024.

Regulated electricity sales rates (TRVE) are electricity supply contracts whose prices are set by the government, based on a proposal from the Energy Regulatory Commission (CRE). The CRE calculates the rates by stacking costs (regulated access to historic nuclear electricity, the cost of supplementary supply at market price, capacity guarantees, transmission costs, and marketing costs). It submits these proposals to the Minister of the Economy (who will add taxes) and the Minister of Energy. If this proposal does not suit the government, it may reject it and set the TRVE rates itself.

These rates are reserved for households and small businesses. As of June 30, 2024, more than half of the 40 million consumption sites (representing a quarter of the total consumption) had signed a TRVE contract. Amid the move to open the electricity industry to competition, the TRVE tariffs are a relic of the era of an integrated monopoly under strict public control. Should they be retained, as recommended by the CRE, or abolished, as advocated by the Competition Authority (AC)?

The Reasons Behind the Divergence of Views

The arguments of the two independent administrative authorities revolve around the role entrusted to the TRVEs, which are expected to contribute to objectives of general economic interest, notably price stability, security of supply, and social and territorial cohesion (Article L337-9 of the Energy Code)...

Read more in La Tribune.

Illustration: Fine Photographics on Unsplash.