2024-01-09 12:39:43
Last year it was the turtleneck. This year, will we have to resolve to read by candlelight and sleep with our Labrador? The most excited economist from France gives us the details of the electricity bill…
Photo caption: IT’S GOING TO HEAT_ It’s a mess. Our dear Minister of the Economy thought he would calm the angry people by signing an agreement with EDF to ensure price stability. Until the Duck reveals the pot of roses… Thank you, Bruno.
Since the conflict between Russia and Ukraine, the price of electricity has once once more become a political subject. We remember these bakers who saw their energy bills rise sharply and were forced to close their doors. How did we get here ? So to fully understand this eminently complex subject, we must remember a few elements. First, electricity is not storable; which means that when everyone turns on their lights, their coffee makers and their toasters at 7:30 a.m., there must be electricity production that responds almost instantly to this demand. For this, there is what is called “an order of merit” which is put in place to cover this demand by going from the cheapest electricity production (hydraulic, wind, solar and nuclear power plants) to the most expensive (coal and gas power plants). So during peak hours when everyone is drinking their coffee in the morning or heating their hobs to prepare dinner in the evening, all the units are mobilized and the price of electricity is determined by the last unit put into production. This is why, last year, Bruno Le Maire asked us to turn down the heating and put on a turtleneck: he wanted to avoid us having to resort to gas stations during peak hours in a context where the price of gas was soaring with the conflict between Ukraine and Russia (one of the leading gas producers in the world). Secondly, there was a political will to break up EDF. Traditionally, electricity was managed by a public monopoly EDF, but this did not please the European Commission which sees all possible and unimaginable benefits in opening up to competition. It was therefore necessary to break this monopoly and open the electricity market to competition. Historically, gas and electricity prices were set by public authorities, in particular to protect consumers from price volatility. From the 2000s, consumers were offered the possibility of leaving the regulated tariffs of EDF for market offers, the market prices having to be cheaper than those regulated by EDF since, in theory, competition is supposed bring them down. But from mid-2005, market prices began to significantly exceed regulated prices, angering those who had left them to try the adventure of the “alleged benefits of liberalization”. In 2006, the political class responded to users’ discontent and implemented TARTAM (transitional regulated tariffs for market adjustment) which allows consumers who had left protected tariffs to return to them. In 2009, François Fillon, pressed by possible European sanctions, passed a law, the NOME law (new organization of the electricity market) which obliges EDF to cede part of its nuclear production to its competitors.
EXPENDITURE WALL
And what regarding today? EDF, weakened by years of breakage and the obligation to sell off part of its nuclear electricity production to its competitors, is facing a wall of expenses. Nuclear reactors initially planned for 40 years are approaching this anniversary date. Extending their lifespan by ten years will cost at least 50 billion euros. The cost of the Flamanville EPR has completely slipped, going from 3.3 billion to 19.1. Who will ultimately pay all these bills if not the consumer? Yes, you have to prepare for a price increase sooner or later…
Par Thomas Porcher
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