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France is exploring ways to cap national electricity prices without violating EU subsidy rules, including the possibility of imposing unexpected fiscal taxes to fulfill President Macron’s pledge to “take back control of prices.”
One option being considered is for the state to collect and reallocate some of the revenue from nuclear power producer EDF, people familiar with the matter said. The move is part of a wider overhaul of how France regulates electricity prices and would echo emergency measures authorized by Brussels during the energy crisis to collect “excess profits” when electricity prices soar.
The mechanism would involve setting a price cap on the price state-owned EDF can sell nuclear energy to other power distributors and industrial groups. Revenue above this threshold is returned to the government and distributed back to end users.
Paris hopes it can operate such a framework without raising objections from the European Commission, which oversees state support for industry and households that distorts EU markets.
But whether France can actually take unilateral action remains unclear. Macron’s use of Brexiteer slogans this week sparked chaos in Brussels as EU countries and the European Commission simultaneously tried to negotiate electricity market reforms.
“By the end of this year, we will take back control of electricity prices at French and European level,” Macron said on Monday. He gave no details on how this would work, other than saying France planned to introduce a new law to this effect.
A senior EU diplomat said Macron’s pledge was worrying. “Last time someone promised to take back control, it didn’t end well for the single market,” the person quipped, a nod to Brexit.
Macron’s move reflects some of the dissatisfaction expressed in France during European-level negotiations over reforms to the design of the electricity market, with Paris and Berlin clashing over how to treat France’s nuclear power industry and whether it can benefit from certain subsidies.
A French official said plans to establish a state-controlled electricity price system were not inconsistent with ongoing reforms in Brussels. “Obviously, we hope that Europe will reach an agreement on market reforms. But such an agreement will not solve all problems,” the official said, adding that France would take action on its own “if necessary.”
Another French government official said Macron’s move to “take back control” of the power industry would have wider consequences than just prices. The official said it reflected France’s efforts to produce more energy at home and ensure France avoids a repeat of the reactor outages that last year forced France to become a net importer of electricity for the first time in decades.
France has long viewed the 56 nuclear reactors operated by EDF as a competitive advantage, underpinning its low-carbon strategy and helping businesses and households, thanks to low prices before last year’s energy crisis. But former monopoly EDF is state-owned and has a dominant position, and its every move involves wrestling with Brussels to ensure state aid and competition rules are respected.
Discussions around alternatives to the current framework called Arenh, under which EDF sells most of its electricity to rival distributors at fixed prices agreed with the EU, are due to expire at the end of 2025. Rethinking the Price Mechanism.
“In any case, France must discuss its plans with its European partners,” said Nicholas Goldberg, a partner at energy experts Columbus Consulting.
EDF Chief Executive Luc Rémont is open to price cap solutions, people familiar with the matter said. But Raymond clashed with the government over what it was supposed to be, adding another layer of complexity to the government’s plans.
A recent report by the French energy regulator stated that the cost of energy production from EDF will be equivalent to 61 euros per megawatt hour in the next few years, and the French government is pushing to get as close to this price as possible.
EDF argued it needed a taller reactor to achieve Macron’s plan to build at least six new reactors over the next decade at an estimated cost of 52 billion euros.
The group declined to comment.
Additional reporting by Alice Hancock in Strasbourg and Leila Abboud in Paris
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