2024-01-09 17:07:00
The unprecedented increase in the price of electricity since 2022 worries all users. To reduce bills, the government has put in place several measures. Individuals can benefit from the regulated tariff, the calculation basis for the “tariff shield”. As for communities and small businesses, they can claim the “electricity shock absorber”. However, the evolution of the latter’s terms worries local elected officials. Thierry Suaud, mayor of Portet-sur-Garonne, and president of the Departmental Energy Union of Haute-Garonne (Sdehg) explains why. Interview.
Thierry Suaud, president of Sdehg, remains vigilant regarding the 2024 electricity shock absorber ©Portet-sur-Garonne Town Hall
Thierry Suaud, what were the consequences of the increase in electricity prices on the budgets of communities and small businesses?
Electricity prices soared between June and December 2022, in a tense context of war in Ukraine and post-Covid Asian recovery. Indeed, China, and Asia in general, consume a lot of gas. In Europe, the price of electricity being indexed to that of gas, we have seen a surge in prices. In 2023, prices gradually fell, but many communities and small businesses were still on contracts negotiated the previous year, when prices were the highest. These contracts generally last one to three years, the price increase is still far from being a memory, even in 2024.
To give an idea: in 2021, we were on prices sometimes lower than €100 per megawatt hour. In 2022, we arrived at contracts at €300, €500 or €600 per MWh. We were faced with completely crazy prices! If it is difficult to get an average amount from current bills, because in the same contract, there can be a multitude of different prices depending on the subscription power, the use made of the electricity (public lighting, for example, is subject to the night rate), we can however identify a general trend. Thus, the luckiest communities and small businesses observed a 2 or 3 times increase in the price of energy, but some recorded increases by 5 or 6 and some companies even went out of business.
“Prices will not return to the level of those observed before 2022”
Where are we at the start of 2024?
At the end of 2023, we projected prices around 130 euros per MWh on the 2024 market. This is 4 to 5 times less than the prices known a year earlier. So there is a downward trend, clearly. However, prices will not return to the levels observed before 2022.
For electricity contracts between 180 and 350€/MWh, the bill will increase
Aware of this reality for communities with a budget of more than 2 million euros and small businesses with more than 10 employees, the State has put in place an electricity shock absorber in 2023, to absorb part of the additional cost. What were the terms?
The 2023 shock absorber was triggered at €180 per MWh and the ceiling was set at €500/MWh. He absorbed 50% of the additional cost. Thus, if a community or company had a contract at €300/MWh for example, half of the additional cost (i.e. €60) was covered, which reduced the bill to €240/MWh.
Elected officials expressed their concerns to Thierry Suaud, president of the SDEHG, regarding the 2024 electricity shock absorber ©SDEHG
This ended on December 31, 2023. The State announced the renewal of the electricity buffer, but not under the same conditions. What is changing?
This year, the shock absorber is triggered at €250/MWh and covers 75% of the additional cost. But, if we keep the example of a bill at €300/MWh, which might be reduced to €240 in 2023, it will only be reduced to €262/MWh in 2024. The trigger threshold having increased, the additional cost is then only €50. And even if the State takes 75% of this sum, we are only talking regarding €37.50. Ultimately, for the same contract, a municipality or a company will suffer an increase in the price of energy between 2023 and 2024. Suffice it to say that the 2024 electricity shock absorber does not reassure communities.
“For the same contract, a municipality or a company will suffer an increase in the price of energy between 2023 and 2024”
So, the 2024 electricity shock absorber will be less advantageous than the previous one?
Municipalities and companies having concluded contracts between 180 and 300€/MWh during the energy crisis period, prices which remain scandalous, will effectively lose out. The 2024 shock absorber will only be effective for those who suffer from disproportionate prices, the system no longer being capped. Some people believe that “it’s always better than nothing”, of course! But let’s remember that during the crisis, mega profits were generated in view of the markets which went from 100€/MWh to 300 and more. That money went somewhere! I think it might be used to set up more favorable shock absorbers.
Being able to terminate electricity contracts at excessive prices without charge
Besides, a more favorable shock absorber, than are you asking the government today to fight once morest these exorbitant prices?
The Sdehg calls on the government to allow communities and companies, through a legislative decision, to terminate without charge contracts at prices too far from the projected price for the 2024 market, i.e. €130/MWh. I know that this is not at all the doctrine of energy producers and suppliers, but they have made a lot of money in 2022, so they should be forced to make an effort. An effort which, I think, would be easily absorbed by these companies given the tens of billions of euros in profits that they generated during the crisis by charging prices beyond reasonable… I believe that this proposal is therefore credible. …even if it is not necessarily desired by the government.
“Self-consumption will allow us to escape dependence on energy suppliers”
Beyond requests from the government, what actions does Sdehg take to help communities?
We must learn lessons from this energy crisis, and react fundamentally, on the use and use of electricity. Thus, we first encourage municipalities to be sober in order to save energy. We have also implemented a program, which will make it possible, by 2027, to replace all the lighting in communities that are members of the Sdehg with LEDs. Or 80% energy savings. Financially, we are talking regarding 30 to 35% budget savings, including work.
At the same time, we deployed a self-consumption photovoltaic shade program, which will allow us to move away from dependence on energy suppliers. It might even generate additional income through the resale of excess electricity produced. A first market for 16 car park shade houses to supply municipal buildings is underway.
Finally, we are in the process of create a mixed economy company (SEM), with the active support of the Department of Haute-Garonne, to develop renewable energy projects with local governance. Thus, the wealth produced in the territory will benefit the territory, the SEM being responsible for redistributing this wealth to the municipalities which are shareholders of the projects.
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