EdF and GdF to lose their supply monopoly for private customers

[Clair]

The market had already been open for companies and on 1st July private customers (particuliers) will no longer have to get their electricity from EDF.

[quote]A l'ouverture du marché de l'énergie au 1er juillet 2007, tous les

clients particuliers seront libres de choisir leur fournisseur

d'énergie. Ils pourront, s'ils le souhaitent, continuer à bénéficier

pour leur contrat de fourniture d'électricité, des tarifs réglementés

par l'Etat pour le logement qu'ils occupent à cette date.

EDF s’engage à permettre à chaque client d’exercer sa liberté de choix

et assure à ceux qui veulent rester chez EDF la même qualité de service

qu’auparavant.

Toujours soucieuse de vous satisfaire et de vous accompagner dans la

durée, EDF a pour ambition de vous proposer de nouvelles offres

innovantes conciliant bien-être, économies et respect de

l’environnement, avec toujours la même qualité de service.[/quote]

With the opening of the energy market on July 1, 2007, private customers will be free to choose their energy supplier.

If they wish to, they will be able to continue to benefit from the EDF state regulated tariffs. EDF is committed to making it possible for each customer to exert his freedom of choice

and ensures those which want to remain at EDF the same quality of

service as before. Aiming for customer satisfaction and long term contact, EDF's ambition is to offer new innovating

tariffs to help balance well-being, savings and respect of the

environment, and always with the same quality of service.

[Benjamin]

Thanks for this information Clair. Unfortunately I haven't seen any information in the papers (sorry but I don't watch French TV).

Are we going to see half a dozen alternative suppliers come forward like in the UK and will there be a regulatory body overseeing fair dealing all round?

[Chezstevens]

We have been on 18kva EJP since 1993.  It will take a very good long term deal to get us to move.  Just have to smile at the 'ugly' grey box by the front door and remember how much we are saving!!

[Clair]

I have not yet looked into which alternatives have been offered to businesses since the deregulation in 2004.

I am sure there will be plenty of info and adverts closer to the time.

Two types of alternative suppliers are likely to emerge: those who can produce energy and those who can by it in bulk to resell.

[Clair]

As I can only use bottled gas, I had not realised the same thing was also going to happen to GdF.

Thread title now amended![:)]

[SC]

[quote user="Clair"]
Two types of alternative suppliers are likely to emerge: those who can produce energy and those who can by it in bulk to resell.
[/quote]

Surely under de-regulation producers can't sell direct to consumers?

If so we'll see the same uncompetitive practices/cartels as in the mobile phone market.

Steve

[Clair]

This article in today's paper highlights the potential problems for consumers with the forthcoming EDF-GDF libéralisation

• EDF sells its electricity at a lower rate than the European average (€90.5 per Mégawatt/heure contre €109.4), which is going to give them an unfair advantage against potential competitors.
• EDF is an electricity producer and supplier, therefore would be able to set its prices, whereas competitors are unlikely to be producers as well as suppliers.

• EDF will be able to carry on selling state-regulated electricity as well as offer market-ruled prices like its competitors.
• Once the consumer moves away from his current EDF supply to a new supplier or to the EDF market prices, there is no going back to state-regulated prices, unless he moves to a) another property where the supplier has never changed or b) a new property where a first-time supply is required.
• same with GDF, but less acute, as the prices are closer to the European average and competitors would find it easier to compete.

[Benjamin]

Thanks for the summary Clair.

We've never lived in the UK since deregulation but this sounds a nightmare for the average Joe and Josephine to decide. Hardly as deregulation appears to be across the channel.

Knowing a little about the local (rural) mentality around here they'll do absolutely nothing.

[Clair]

To be honest, if the situation is as fraught as described in the article, I won't do anything either...

The state-regulated tariffs would be available to those who do not move away from EDF.

These state-regulated prices are currently lower tahn average because most of the energy supplied is nuclear in source. The infrastructure has been in place for years, it is so competitive that EDF is a Europe-wide supplier. Who is going to be able to compete??

Assuming a move to a new supplier, as things stand and unless the consumers associations get the necessary changes, I wouldn't be able to return to my current state-regulated EDF tariffs if I had any problems or if the prices increased beyond my budget.

Hardly any incentive to change...

[P]

Clair

'State regulated tarrifs' - that is new to me.

How does it work and what is it based on - i.e. is there any state subsidy or is it a case of if EDF wish to increase profits they have to do this by charging commercial users more.

Paul

[Clair]

Your question refers to this line in the artcile I have quoted above:

"Deux poids, deux mesures. D’un côté, un régime tarifaire régulé par l’Etat, de l’autre les prix du marché fixés par les fournisseurs d’énergie." but the article does not explain how the tariffs are regulated by the state.

This Wiki article might explain it, but I have not read it in its entirety. I would venture a guess it might have something to do with the state being a majority shareholder.

I am not an economist [:)]

The aim of the thread is to bring to attention the changes which are going to take place on 1st July, and wherever I see something is relevant, to add a brief comment. I hope to help members who might not keep up with French news or assume the news don't affect them.

Another site (in French) to explain the changes: Energie 2007

[Clair]

This site http://www.energie-info.fr/ has been set up to help consumers with the energy choice they will have from 1st July.

The comparer les offres section gives basci info about comparing between the offers.

[Gluestick]

Interesting.............. (From Wiki).

The transformation into a Société anonyme (public company) was implemented for several reasons:

• for one thing, EDF's status of 'EPIC' gave it an advantage over its rivals during the process of the opening of the electricity market, because benefiting from the limitless guarantee of the State, it could borrow at a lesser expense; (** Which was one of the core reasons given by Thatcher to privatise state owned industry! i.e. opening them up to the mythical markets would allow them greater levels of borrowing!  Which was absolute nonsense!)

• in addition, the statute of SA will enable EDF to reinforce its own capital stocks thanks to the entry of investors to the capital, and to develop products other than electricity, without being subjected to the "principle of speciality".

  The transformation into a Société anonyme (public company) was implemented for several reasons:

  • for one thing, EDF's status of 'EPIC' gave it an advantage over its rivals during the process of the opening of the electricity market, because benefiting from the limitless guarantee of the State, it could borrow at a lesser expense;

  • in addition, the statute of SA will enable EDF to reinforce its own capital stocks thanks to the entry of investors to the capital, and to develop products other than electricity, without being subjected to the "principle of speciality".

This creates a troubled future scenario for France.

If the de-regulated and private sector energy markets of the US and UK are used  as a model, then prices are going to rocket!

As always, the devil's in the detail. Converting EDF from an EPIC to an SA and removing its obligation of specialism means that like British Gas (e.g.) it can go off and play in different fields.

EDF already supplies large amounts of electricity to other EU states (including the UK) via the European Grid. Will Sarkozy ( A closet Right Winger) ensure regulation keeps price advantage for France? Or, as a normal commercial company, EDF will demand the right to sell energy on a level playing field. Why should the French consumer buy their power at less than say the Brits or Spaniards?

What is likely to be forgotten here, in the greed-driven "dash for cash" for  is that France took an early decision to go nuclear and invested bundles of public money: it is this that has created the price advantage seen today. That  value could soon be exploited by wheeler dealers in Japan, Korea, the USA etc.

However, quote from above: "thanks to the entry of investors to the capital"  When this happens, then the investor's interests tend to take precedence over the consumer's!

One can only hope that sanity prevails and that state control of EDF energy prices on existing contracts, is not removed, in the future, as le petit Nicolas  falls more in love with the siren call of the financial market robbers.

The downside risk is that M. le President decides to "Pay down state debt" by selling off state owned assets! Hm........................I seem to have heard that one somewhere before! [8-)]

In my mind, Chirac's continuing refusal to open up French energy makets and his obdurate position despite massive EU pressure was both brave and correct. Generally, French incomes are still low: a rapid increase in energy costs would create a high level of privation: particularly amongst elderly rural dwellers, who tend to rely on La Lumiere, as their primary energy source in Winter.

As it has in the UK for all pensioners!

Frankly, I am worried about this development. I shall stay with my existing EDF contract and monitor the situation most carefully.

 

 

[Clair]

I read an article this week (can't remember where right now) about several electrity suppliers across Europe joining forces to create a common energy pool which would benefit consumers by making supplies more widely available and lowering prices.

I'll look for it and post the link if I find it.

[Gluestick]

I would value seeeing that, Clair.

There is already, of course a trans-European grid, intended to balnce out he demands and supplyshortfalls/surpluses. The UK takes increasing quantities from France via the underwater Channel feeder cable into Britain's National grid. This is set to rapidly increase, as the "Dash for Gas" micro-generating plants wear out and UK demand continues inrceasing.

That said, no one can generate electricity cheaper than France, thanks to the early nuclear decision and investments, as I said earlier.

And that's what worries me!

 

[Clair]

This is the article I mentioned earlier: http://news.bbc.co.uk/2/hi/business/6728345.stm

[Gluestick]

Many thanks, Clair.

Under this deal, France becomes mainly a net giver.

The other states are over-reliant on coal, oil and gas.

Spain I believe (which is not part of the deal as yet), has taken French nuclear expertise to build an increasing number of atomic-energy power stations.

 

[Clair]

According to this article in today's Libération, the European Commission is about to look closely at France's regulated gas and electricity tariffs: Une enquête est ouverte aujourd’hui sur les tarifs régulés nationaux.

The regulated tariffs are much lower than the average market prices (anything betwwen 10 and 40%) and the question being considered is whether his could be seen as a form of governement financial support.

Should this be seen as such, there would be a definite impact on consumer prices.

At the moment, JeanDupont/John Smith should not feel directly concerned, as this phase of the investigation relates only to EDF and its commercial clients.

[Clair]

Article (in French) explaining why the changes won't make any change: www.lemonde.fr/

[Clair]

An update in today's news:

Up to now, it had been impossible for a consumer who had chosen an electricity supplier other that EDF to be able to return to EDF regulated tariffs.

This had made life very difficult for other energy suppliers, as most consumers have been wary of signing on with competitors, fearing they would be stuck with a price hike once the signing-on offers had expired.

This aspect of the deregulation had been challenged by consumers' associations and an amendment has now been approved, which will allow former EDF customers to return to EDF, provided they have stuck with the their new supplier for a minimum of 6 months.

On another aspect of deregulation, there are strong hints that the European Commission will act to do away with regulated tariffs by 2010. Once these regulated tariffs disappear, EDF will be able to align its prices to market prices and remove the current price advantage that nuclear technology is offering for the consumer.

To avoid a strong increase in electricity prices after the disappearance of the regulated rates, consumers' associations are suggesting that a mixed tariff should be set up.

According to their suggestion, every household would benefit from a right to draw up to 80% of its electricity needs at a controlled tariff, based on the cost of nuclear technology. The balance of 20% would be bought at market rate.

A typical family living in a detached property in a cold region and using electric heating would pay €835 more a year after 2010, based on a tariff of €75/megawatt/hour, but only €168 more with a mixed tariff as suggested.

[Gluestick]

Taking into account the low incomes of the average French family, one then wonders quite how they will afford this!

And for me, that's the core problem with anyone like Sarkozy wanting to ramrod through major reforms: wages-salaries would have to rise steeply and inflation would rocket.

From a personal and selfish perspective, let's just hope that any incipient price rises are not too dramatic! Like heating oil and road fuel!