2024-01-22 05:05:11
It’s anything but a surprise. This Sunday evening, guest on TF 1’s 20 Heures, Bruno Le Maire, Minister of the Economy, announced that individuals’ electricity bills would increase by 8.6% for basic rates (10.6 million consumers at the end of 2022) and 9.8% for peak-off-peak rates (9.3 million consumers) from the start of February. “That is to say that for 97% of French households, the increase will be below 10%,” he declared.
Very bad news for consumers’ wallets but bodes well for state coffers. These increases indeed mark the return of one of the main taxes on electricity: the TICFE (domestic final consumption tax on electricity). In December 2021, to help the French cope with soaring prices, particularly because of the war in Ukraine, the government put in place what it called a “tariff shield”. That is to say a set of measures which made it possible to maintain prices for consumers at an acceptable level.
Among these measures was a reduction of the TICFE to the lowest level authorized by the European Commission. Thus, it went from 32 euros per megawatt hour (MWh) to 1 euro. At the time, the government warned that this drop in TICFE would be temporary, until rates returned to acceptable prices.
The end of “whatever it takes”
Since September, the minister has been preparing people’s minds by insisting that a new increase would apply from February 2024, “of 10% maximum”, even though the price levels on the wholesale markets of electricity should actually lead to a much smaller increase.
And for good reason, this tax reduction is very costly to public finances since around nine billion euros per year do not enter the state coffers. An impossible “gift” to keep when France’s debt happily exceeds 3,000 billion euros since the “whatever it takes” episode put in place during the pandemic, and which the government is trying to clean up the accounts.
For the 2025 budget, it is at least 12 billion euros in savings that Gabriel Attal, new Prime Minister, will have to find while at the same time it will be necessary to finance the two billion tax cuts for the middle classes promised by Emmanuel Macron, the generalization of the universal national service (SNU) budgeted at two billion euros and the reduction in production taxes, a commitment made to businesses.
The fourth increase in the bill in two years
By reducing the TICFE to an intermediate rate of 21 euros/MWh, this increase of 8.6% and 9.8% should represent, on average, an additional expense of more than 100 euros per year for households. For a four-room house heated with electricity, the increase will be 18 euros per month, and for a one-room apartment heated with electricity, it should be 8.3 euros per month according to Bercy.
In the end, this is the fourth increase in the electricity bill in two years. A first of 4% in February 2022, then another of 15% in February 2023, followed by a third of 10% in August 2023. With this last increase, the price of electricity will have jumped by 44% in two years .
This new increase of 8.6% and 9.8% will make it possible to recover six billion euros, “while we might have recovered nine billion euros (if the TICFE had increased to 32 euros/MWh), tempers Bruno Le Maire. And a very large part will be used to finance renewable energies, but also the energy check.” The next significant increase in electricity prices is normally expected in 2025, when it will be a question of returning to the pre-crisis TICFE level of 32 euros/MWh.
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