2023-06-03 05:16:43
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For several years, the price of energy has been constantly rising in France, with significant financial repercussions for the most modest households. Faced with soaring energy prices, which began even before the Russian-Ukrainian conflict, the government announced the establishment of a tariff shield to help households cope with these increases. The objective of this exceptional measure is to limit the increase in energy prices, which will protect consumers from excessive price increases.
This tariff shield is proof of the French government’s commitment to protecting the purchasing power of households and guaranteeing access to energy for all. This measure covers several types of energy, but what is the tariff shield and which energies are concerned?
What is a tariff shield?
A price shield is a measure adopted by the government to protect consumers from excessive increases in energy prices. The terms of these tariff measures are defined in the finance law. The main objective of a tariff shield is to support households once morest excessive increases in energy prices, in particular those with low incomes who would be the most affected by these increases.
The tariff shield aims to guarantee access to energy for all, in particular for the most modest households, by limiting the financial impact of energy price increases. This measure consists of two government interventions, to control these increases, and it includes a tariff component for natural gas and electricity, which is detailed in article 181, as well as a tax component, put in place by the 29.
The price shield in France works as a government measure to protect consumers from excessive energy price increases. It consists of two key measures to control energy price increases:
The freeze on increases in regulated natural gas sales prices
The freeze on increases in regulated natural gas sales prices comes following the increase of 1 October 2021, which was 12.6% including tax. This means that the government has decided to freeze the price of natural gas for consumers, so that they do not suffer further price increases.
Capping the increase in regulated electricity sales tariffs.
With regard to electricity, the cap at 4% including tax on the increase in regulated electricity sale prices in 2022. This measure makes it possible to limit the increase in electricity prices for consumers. This means that the increase in electricity tariffs has been capped at a maximum of 4% in 2022, in order to limit the financial impact on the most vulnerable households.
What energies are covered by the tariff shield?
The energy tariff shield can be applied to various energies. Here are the main energies involved:
The gas tariff shield
The natural gas price shield is a government measure that guarantees a cap on regulated gas sales prices, for individual residential consumers or for small condominiums consuming less than 150 MWh/year. This measure is governed by the finance law and specified by a decree of October 23, 2021.
This decree froze the regulated gas sales tariffs for Engie and local distribution companies (ELD), whose tariffs are higher than those of Engie. This measure guarantees a cap on natural gas prices for consumers who need the most protection.
In September 2022, the government announced a limitation of the gas price increase to 15%. This measure makes it possible to limit the financial impact on the most vulnerable households. Although this increase is greater than the 4% limit that had been announced previously, it still allows consumers’ purchasing power to be preserved and prices to be kept affordable for everyone.
The electricity tariff shield
The electricity tariff shield was put in place by the government to prevent electricity prices from rising by more than 4% (15% since February 2023), for consumers who have subscribed to a tariff regulated. According to the Energy Regulation Commission (CRE), without this device, the price increase would have reached nearly 45% for households this year. This limitation was made possible thanks to two key measures:
- The increase in the ARENH (Regulated Access to Historical Nuclear Electricity) ceiling by 20 TWh over 2022, which allows alternative suppliers to benefit from reduced-price sales of EDF’s production via its nuclear power plants. The purchase price of electricity is regulated by the State, and the volumes made available are limited according to the customer portfolio of the various suppliers.
- The reduction in the domestic tax on final electricity consumption (TICFE) also helped to limit the rise in prices. The implementing decree sets the TICFE rate at €1 per megawatt hour for homes, and 50 cents for businesses, compared to €22.50 per megawatt hour previously.
The tariff shield on petroleum products
The tariff shield on petroleum products works in the same way as that for gas and electricity. Indeed, the State imposes a ceiling on fuel prices, beyond which distributors cannot go. This ceiling is calculated according to the evolution of crude oil prices on international markets. Thus, if the price of oil increases, the ceiling is adjusted accordingly to avoid an excessive increase in prices at the pump.
For the year 2023, a fuel allowance of €100 was granted to low-income workers. This measure is intended to protect the most vulnerable consumers, such as people on low incomes, people living in rural areas or professionals who depend on fuel for their activities. Indeed, the latter are often the most affected by variations in fuel prices, which can have a heavy impact on their budget.
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