The decision to cancel an increase in electricity prices was likely not worth the political cost. While the country is currently experiencing an institutional crisis, following the dissolution of the National Assembly by Emmanuel Macron on June 9, the government sought to avoid escalating the situation. Therefore, the planned increase in electricity prices, initially scheduled for August 1st, will not take place.
As it does annually, the Energy Regulatory Commission (CRE) updates its calculations regarding the TURPE (tariff for the use of the public electricity network). This toll, paid by all suppliers to use the national grid, covers the costs of operating, maintaining, and upgrading the 106,000 km of high-voltage lines and 1.4 million km of medium and low-voltage lines connecting homes and businesses.
“A Common Sense Decision”
The integration of renewable energy sources in electricity production, coupled with decarbonization goals, has resulted in escalating costs in recent years. “Estimated investments in high-voltage lines by 2040 amount to 100 billion euros,” notes the Ministry of Energy. “An additional 100 billion euros is required for the secondary network.”
This “toll” constitutes roughly one-third of the regulated electricity sales tariff (TRVE). The remaining two-thirds are divided between production or purchase costs, commercial expenses, and taxation.
Based on CRE calculations, the electricity transmission tax was set to increase by 4.81%, translating to an additional 10 to 40 euros on French household bills. However, “Forecasts anticipate an equivalent or even greater decrease in future months,” stated Roland Lescure, the Minister Delegate for Industry and Energy. The current lull in wholesale markets will likely impact prices in the coming months. “This decision (to cancel the increase in the regulated electricity tariff) is both a common sense measure and a way to protect consumers from an unnecessary increase,” the Energy Minister added.
A 40% Increase in Bills over the Past Two Years
The fluctuating energy prices significantly impact French households. Their electricity bills have increased by more than 40% in the past two years. Similarly, gas prices jumped by 12% on July 1, just following the first round of legislative elections. This rise sparked panic within the government. The National Rally seized on this opportunity to criticize the government’s energy and pricing policies, advocating for a decrease in VAT on energy products (gas, electricity, fuel oil, fuels) from 20% to 5.5%.
With no clear majority or coalition emerging in the upcoming National Assembly, the opposition has a new target. “For our next deliberation (scheduled for early October), I will ask the CRE to provide long-term forecasts for consumer visibility,” added Roland Lescure. This approach poses a significant risk. Despite market fluctuations, future investments in the network will be necessary, undoubtedly requiring contributions from households.
The game was probably not worth the candle. While the country is currently going through an institutional crisis, following the dissolution of the National Assembly wanted by Emmanuel Macron on June 9, the government did not want to add fuel to the fire. And the rise in electricity prices which was scheduled for August 1st will ultimately not take place.
As it does every year at this time, the Energy Regulatory Commission (CRE) updates its calculations regarding one of the main taxes that weigh on electricity prices: the TURPE (tariff for the use of the public electricity network). This toll, paid by all suppliers so that their electrons are authorized to use the national network, must a minima cover the costs of using, maintaining and modernizing the 106,000 km of high-voltage lines, but also the 1.4 million km of medium and low-voltage lines that connect homes and businesses.
“A common sense decision”
Due in particular to the integration of renewables in electricity production, but also to decarbonization objectives, these costs have continued to soar for several years. “The necessary investments in high-voltage lines are estimated at 100 billion euros by 2040,” recalls the Ministry of Energy. To which must be added an additional 100 billion euros for the secondary network.”
This “toll” accounts for regarding a third of the composition of the regulated electricity sales tariff (TRVE). Another third is directly linked to production or purchase, as well as to commercial costs, while the third third depends directly on taxation.
This year, this tax on the transmission of electricity on the network was to increase by 4.81% according to CRE calculations. “This would have led to an increase of 10 to 40 euros in the bill of the French, warns Roland Lescure, the Minister Delegate for Industry and Energy. Even though forecasts allow us to anticipate an equivalent or even greater decrease in the months to come.” The lull currently observed on the wholesale markets will indeed mechanically impact prices in the coming months. ” This decision (to cancel the increase in the regulated electricity tariff) is therefore both a common sense decision and it helps protect consumers from an unnecessary increase,” added the Minister of Energy.
A 40% increase in the bill over the past two years
It is true that this incessant “yo-yo” of prices greatly disturbs the French. Their electricity bill has increased by more than 40% in the last two years. And that of gas is in keeping with it: it also jumped by 12% on July 1, just at the day following the first round of legislative elections anticipated. Enough to sow panic within the executive. Especially since the National Rally immediately seized on the subject to castigate the government’s energy and pricing policy, and to recall its intention to lower VAT on energy products (gas, electricity, fuel oil, fuels) from 20% to 5.5%.
No way, thenno majority or coalition is emerging for the time being in the future National Assembly, to give the oppositions something to chew on. “For its next deliberation (planned for early October), I will ask the CRE to establish forecasts that allow long-term visibility for consumers,” Roland Lescure adds. A risky bet: because whatever the market movements, at some point or another it will be necessary to launch the necessary investments on the network. And there is no doubt that households will also be fully called upon to contribute.
