EDF and gas of France historic operators

The rise in the price

"Is not the sale, it is of the racketeering." The tone adopted by the UMP MP Philippe Auberger citing increases in electricity prices in the debate in the National Assembly on June 14, illustrates well the State of current mind of the parliamentarians. "I am amazed to see that we offer on the deregulated market energy rates higher than those of the Germany, of Spain, United States, of Finland, the Sweden, while we have a nuclear potential should ensure the competitiveness of our electricity, and that these prices have increased by 75 in five years and 48 per cent in one year"repeated the President of the Board of finance, the UMP Pierre Méhaignerie (2). Almost no country practice for higher prices than those of the France. I am certainly not the financial constraints on EDF (but) some facts demonstrate us that the electricity market does not obey the rules of the competition.

In the opposing camp, the MP PS Christian battle insurgent against "an absurd policy that returns back to back all energies in a same single price and gum the competitive advantage of nuclear energy.". The consumer, which drew advantage for a reasonable price, will become indifferent and will not lead to defend energy that only brings no benefit. ""You cause in opinion that anti-nuclear activists have failed (to do)", he concluded. "The nuclear advantage has made long fire", was the estimated next Senator UDF Jean Arthuis, even on the France nuclear choices: "Why continue on the path of nuclear power if disadvantages are more offset tariff benefits on the price of electricity." I expect that EDF so quickly an attitude to autism.

"Increasing the pressure on the operators."

The Government has sought to appease the spirits: "must be taken into consideration (the) concerns (a) SMEs and SMIs, because their contract prices increase sometimes unacceptable way", launched the Minister of the economy Thierry Breton, in the Senate. By declaring even ready to "go further: If we need to legislate, I am ready to discuss with you how we can - we not afraid of the words - increase the pressure on operators that would not sufficiently meet their clients, so that the SMEs and SMIs, inter alia, found a certain normality in pricing.

"We are ready to search with you all the intelligent solutions which are part of the opening of the markets so that consumers benefit from the competitiveness of nuclear generation Park and take advantage of this famous nuclear annuity, who founded the French force and originality", he continued.

Price ceilings for the électro-intensifs

The électro-intensifs were of course not been forgotten. "(Their) situation is not satisfactory, noted Pierre Méhaignerie.". The procedure of tender does them not know if they will have to pay 25, 27 electricity, or even 40 euros. "According to the UMP MP Michel Bouvard,"the release of long-term contracts posed a sword of Damocles of the existence of numerous industrial sites of our country." "It has proposed to study"of complementary solutions to the consortium (3)", and including"implementing proximity sites of electricity tariffs, solution recently implemented in Germany." These rates would make losses online energy savings in transportation and improve the industrial tariffs, the electricity can represent for some industries up to 8 of the cost. "A proposal that the Government views with" interest: it has the disadvantage of calling into question the principle of Equalization of rates, but the dialogue must continue ", said Industry Minister François Loos. On their side, the large électro-intensifs industrial are claiming price cap "to avoid the found abuse today." "Nothing prohibits the practice of price ceilings consumption profiles function, provided that those prices cover the cost of production (supply), more a reasonable margin (the costs of the DIDEME reference, for example)", argued the Uniden before GESC.

What eligibility

For the opening of markets to individuals, "the solution we have proposed should (their) allow to keep the benefit of the tariff by playing on the site-person couple", explained the UMP MP and President of GESC Jean-Claude Lenoir to the National Assembly, June 14. "Someone who moves should not be forced out of the tariff", he commented. This eligibility per site and per person was defended by the DGEMP a few weeks ago before the GESC, said DGEMP believing that all of the players in the GESC (consumers, trade unions, operators,...) were "rather positive" in this formula.

Review the eligibility of local communities

Also, drive the required eligibility of local communities. In debates in the GESC, Suez spoke of "the need to review the terms and conditions for the exercise of the eligibility of local communities, the context has evolved since the opinion made in 2004 by the Council of State". In April 2005, the Director General operations of Electrabel Jean-Baptiste Séjourné told energy news: "what will happen calls tender of the SIPERREC, the Sigeif and a few major cities is very important." If those who are thinking about the launch of calls for tender abandoned everything, it will we problem (4). "However, the SIPERREC and the Sigeif both said their calls for unsuccessful tenders, respectively for the supply of electricity and natural gas. Concerns about the competitor number one - to date... - EDF and gas of France historic operators.

The maintenance of tariffs

"The ability to maintain (the regulated tariffs) will be listed in the Act, like the creation of a social tariff", said Thierry Breton economy Minister on 14 June at the National Assembly. In the Senate, he said be "ready to consider extending the benefit of prices regulated for new professional sites after December 31, 2007 - date limit prescribed by the Act of 2005". But what should be meant by "maintenance" of tariffs

"Everyone wonders what will become the regulated price, voiced the MP PS Jean Gaubert.". Perhaps will maintain a rate regulated, but it will follow the market price. And the increase of 48 experienced by entrepreneurs in 2005, they are individual consumers that will suffer the in 2007. "Senator UMP Henri Revol is also in favour of extending the rates regulated, but" for a period without preliminary question, because it seems very unlikely that the European Commission and our partners could accept longer term. " As the UMP MP Hervé Novelli, regulated, tariffs it wants "not for eternity."

"That a minimum, they ensure the coverage of costs".

Parliamentary positions reflect those displayed during the debates which took place in GESC. "The competition does not mean a permanent coexistence of prices and tariffs, said the representative of the Association française de gas (AFG), Georges Bouchard." This coexistence must not be considered over a long period because the differences between the rates and prices would be unmanageable both economically than politically. They would also block the opening of the market to competition. If the authorities wish to maintain rates regulated for a short transitional period, the rates in this case must cover all costs and allow a reasonable commercial margin. "Same tone at Electrabel, which the Director General operations Jean-Baptiste Séjourné judge"is not possible, in the long term, to reconcile the maintenance of rates which the production is low, with the financing of new investments." The legal Director of EDF Marianne Laigneau considers, that "the level of the regulated tariffs must be able to evolve in particular coherence with the provisions of the public service contracts." The CRE supports these positions, pointing out "the problem of coexistence in the medium term rates and market prices". It "wish that rates are close to market prices." CRE and operators are stressed "the need for an adjustment of the level of rates to a minimum, they in all cases provide coverage"

", as is the law".

Taking the opposite of the positions of the operators and the CRE, trade unions and consumer associations believe instead that it is "indispensable to ensure the sustainability of regulated tariffs for various consumer protection" and refuse to "appeal to the increase in rates".

The right of return

"How explain to SMEs - SMIs which have seen their energy costs increase by more than 60 that they cannot return to the tariff after playing their eligibility," asked the MP UMP Serge Poignant in the debate in the National Assembly on June 14, calling then "a tariff of specific for these cases return". A request supported by other parliamentarians, whereas the Act of 13 July 2005 provides the irreversibility of eligibility on a site. However, it is not excluded that this principle is evolving.

"Nothing must be excluded".

"With regard to the reversibility of the tariffs, the Government is open to all solutions, provided that they fit within the framework of the European directives", indeed stated the Minister of industry François Loos. However, "directives do not pronounce on the maintenance of regulated tariffs and bring no element on the reversibility," noted the DGEMP at the meetings of the GESC - in other words, the Government believes that the legal route is free for measurements of reversibility. "Nothing should be excluded", also supported the Minister of the economy Thierry Breton, acknowledging that "the scope of the constraints is real, or complex." "We will be ready, if necessary, to consider legislative measures, he said. So, we must be careful to not engaging in the way of a false solution. Let us not descend into demagoguery. The establishment of a reversibility of rates would induce many potential constraints. First, from the point of view of energy policy, the measures taken must promote investment and not deter them. From the point of view community then, should maintain competition in the field of electricity while the Commission already wondered about the maintenance of the regulated tariffs. From an internal point of view, should avoid economic difficulty the players in the market. "And he predicted that"A simple return to tariffs could have disadvantages and would not perennial. (It would be) a perilous way legal, political and industrial. It would lead to the removal of incentives to investment. Paradoxically, it would lead to a situation where reversibility would aggravate the causes of price it is supposed to combat. But I am open to review of any measure adopted by legislation. I am ready to discuss with you the strong measures to respond to the current difficulties of the French industry, taking into account the constraints that I have just described.

Reversibility or irreversibility

A Government position maintaining enough blur to feed hopes of those who, as the Uniden, argue that "irreversibility be abolished", or, as the trade unions, claimed "a reversibility full." Conversely, the operators believe that reversibility completes "would be in fact to stop the process of opening up markets". SEU and says "its strong commitment to the irreversibility of the eligibility". Same tone to the Uprigaz and in France gas and EDF, Suez, whose representatives had constantly repeat in GESC meetings that the year of eligibility by a client "must be irreversible."

Between the position of consumers and operators, professional organizations UNELEG, ANROC and FNSICAE (5) were desired that the reversibility is permitted for a residential consumer moving. Order "to avoid for a same consumption site, Roundtripping to regulated tariffs that would eventually be charged if residential consumers benefited from the full reversibility". A middle solution between two extremes.

More powers for the CRE

Competition problems, markets not transparent... Since a few months, the increase in the price of electricity restored to the weight to the arguments of those who, a year ago, claiming more powers for the CRE. Debates prior to the vote on the law of July 2005, members of Parliament had referred to "reprehensible practices", "criticize manipulations, including on border trade". They said want to "develop still EDF to respond to requests for explanation of the CRE. They are were beaten, in vain, to give more powers to the regulator. And today they have the intention to resume their battle.

"We need a regulator fort".

"If Bill, we again table series of amendments strengthening the powers of control and intervention of the CRE", announced the UDF Deputy Jean Dionis stay. Same tone in his UMP Hervé Novelli colleague: "any market needs a regulator with genuine powers of investigation and control, which is currently not the case of the CRE." Senator Philippe Marini UMP again claimed the status of legal personality and financial autonomy for the CRE, because "We need a regulator without complacency the Executive, but especially for large companies in the sector and historical operators and strong", he explained. His colleague also UMP Ladislas Poniatowski is, him, "an evolution of the powers of the regulator in the image of what exists in Belgium, where all the gas and electricity producers are private and where the regulator has the opportunity to ask providers informations on prices and recommend development of rates". This is according to him a guarantee against too high prices, "since Belgian prices are among the lowest in Europe".

Before the GESC, the Suez Group also recommended "to respond favourably to the request for additional powers to the CRE, beyond its current mission of surveillance of organized markets and exchanges across borders, to allow it to monitor the markets of over the counter in real time and thus increase their transparency".

"Rethinking the skills" of the CRE

As claims visibly rather well received by the economy Minister Thierry Breton, in the debate in the National Assembly, which has "envisaged to enhance the transparency of markets by an extension of the powers of the CRE monitoring, including (to the) agreement and not by the only markets organized markets." "In regards to the CRE, we are ready to move forward on this subject, including by legislation", he said. This appeal to "review all of the skills of (CRE) or even to expand if necessary" must however be considered with caution. Is remembered in the former Industry Minister Patrick Devedjian who was first pronounced against the extension of the powers of the CRE to the Assembly before to show "favourable" to the Senate (6)... to finally renounce in the joint mixed Committee!

The role of local communities

The project of privatization of gas of France raises questions in the environment of local communities (7). In the debate in the Senate on 15 June, the Minister of the economy attempted to reassure them by stating that "the privatization of gas of France not affect obligations arising from the concession contracts, including review by the local authorities that they intend." The Minister of industry François Loos was, him, specified that "public gas distribution networks belong to local communities and (that) it is of course not question to subject this property.

To those who believe that one of the consequences of the privatization of gas of France could be the privatization of local distribution companies (LDC), Thierry Breton said: "the shareholders of these companies is absolutely not concerned by the project of reconciliation between Suez and gas of France."

New mediators

A Bill, local communities could be granted a mediation role in the competitive sector of the supply, Thierry Breton seeing this as "a very good proposal." "On this point, the organising authority of a public electricity and gas network can exercise missions of conciliation for the settlement of disputes relating to the supply of last resort which would be submitted to it by consumers energy"

"eligible connected to its network or those of their suppliers", he said. A role also claimed by the FNCCR (8).

Review the guidelines

"If Europe does not revise the conditions of implementation of the directive of 2003, we then have a problem with it", has launched Patrick Ollier, UMP President of the commission for Economic Affairs of the National Assembly. "In respect to energy, we have a duty to show the utmost vigilance." "This we needed to enter the law guarantee that individuals rates would be set free from the consequences of deregulation of 2007", he explained. Some members went even further in the frond. "The State must engage in a non-conforming industrial policy to the common law of the"all competition";" We must not let our interests depend on the "bingo" speculative world; You must return to power which removed you by all competition; "it must change Brussels rules, otherwise we will have no more control of the energy policy of our country," thus launched the UMP Jacques Myard to the Minister of the economy. Senator Roland Courteau PS has, more soberly claimed "that a new European debate take place before any in competition for individuals".

Gazprom, "Russian Fox in the henhouse French."

"If, by misfortune, Gazprom takes control of the Suez, you seek then with a magnifying glass those who, in this Chamber, is will be opposed to the establishment of a new French world champion!", has launched - and almost threatened - the MP UMP and former Minister Patrick Devedjian in the National Assembly, June 14. "Industrial champion (Suez-gas of France, Editor's note) would provide 20 of the gas distribution in Europe, allowing him to resist Gazprom - trying to impose his law - and to negotiate prices with suppliers - certainly without waiting for miracle - in force more favourable report", he commented. His colleague UMP Pierre Lellouche is, him, not convinced: "With or without a golden share of the French State, the Group thus constituted would not opéable by predators such as Gazprom, which has not hidden his desire to control all of the gas market in Europe, production in Russia to the distribution in Europe" This is exactly the speech held Mr. Miller, the head of Gazprom, the Europeans that he was summoned to Moscow. What does thus merged group improve the capabilities of the French State to guarantee its gas supplies, knowing that Suez does not own reserves for gas production "" This is the problem. " ", also responded to the Minister of the economy Thierry Breton. "What the merger would prohibit the new set to be opéable by a French operator, German, Italian or Russian interested in energy issues or matters of water" asked MP PS David Habib. "Run we risk seeing the new set formed by Suez and GDF be in turn threatened, for example by Gazprom, in a few months or a few years" "In which case we could have not won much", added the MP UMP Nathalie Kosciusko-Morizet.

"The new set will be more opéable."

In any case, for the UMP Deputy Jacques Myard, the threat is clear: "the liberalization and deregulation of the gas market are likely to enter the Russian Fox, Gazprom, in the French and European henhouse!". In Germany, Gazprom has well kept to ally with the distributors and historical producers: (she) has set up its own companies and is cutting croupiers German business of origin. There are still what wonder! "" Must be the sovereign power to prevent Gazprom all absorb. " ", he insisted.

There was yet again not what disturb the Minister of industry François Loos. To the question of whether gas of France could be the target of a takeover bid, he replied: "obviously, not. France gas could be more marginalization. The detention of one-third of the capital by the State makes any attempt to OPA on gas of France unrealistic. In addition, the specific action proposed by the Government will ensure the continuity of supply. ""The new set will be more opéable", he concluded.

The blocking minority "already validated by the ECJ.

"The threshold for detention by the State of one-third of the capital will be part of the Bill", said Thierry Breton economy Minister on 14 June at the National Assembly. "The golden share, as we envision it, has already been posted by the Court of justice of the European communities", he said. What Senator UMP Ladislas Poniatowski, confirmed that this is a way to strengthen security of supply: "the State will retain a kind of golden share giving it broad powers with regard to the most strategic decisions of the company, i.e. those relating to the continuity and security of supply, as regards the distribution and the storage of gas or a number of positions LNG.". These points were discussed in the negotiations between the Government and the European Commission, which made no objection. "MP PS Jean Gaubert is clearly less optimistic:" who will it be believe that a blocking minority is used to run a business. " A blocking minority is used the most to prevent a company work! Remember the very clear! Either you have the majority or you participate in a majority Pact, either you have the blocking minority but in this case - you know-, you cannot use it because it would be too dangerous for the company that you want to build.

A marriage to three Suez-gas of France/Enel

What happens if the merger Suez-gas of France happens "OPA of Enel is prepared, prevents the MP UMP Gilles Carrez. Funding of EUR 50 billion is bouclé. If OPA is triggered, Suez will be sold by pieces. "Other parliamentarians, as trade unions, are boosting the idea of a merger of EDF/gas France:"The Germans have succeeded, certainly not at the same time, such reconciliation between Ruhrgas and E.ON." Why not we ", is therefore the UDF Deputy Jean Dionis stay. But, for the Minister of the economy Thierry Breton, "the merger between France gas and EDF is impossible." It is time to look at itself and stop obligingly keep the eye on the mirror. "The anti-competitive effects (of such amalgamation) would lead the European authorities to require dramatic counterparties throughout the chain of gas and electricity", said before the national representation.

A plan B

MP UMP François-Michel Gonnot remained on his hunger: "if it is politically impossible to accept by Parliament the solution of the merger, it will be good anyway that there is a plan B!" "Are there other projects, then asked Thierry Breton." Perhaps. In any case, it is to the company, not we define. But must still give him the flexibility to do so.

The UMP MP Hervé Novelli proposes to explore a new track: "Are we unable to imagine the birth of a European set combining gas France, Suez and Enel, to allow the emergence of the European Group of the energy we need" Sacha Guitry said that in love, happy marriages are often three! It is same as regards the energy!

1 Senior Committee for electricity and gas (GESC). The President of the GESC - MP UMP Jean-Claude Lenoir - handed May 31 to the Minister of industry François Loos a report on the opening of the markets on July 1, 2007.

2 See energies news no. 124, p. 1.

3 See energies news no. 126, pp. 8-9.

4 See energies news no. 100, pp. 6-7.

5 National union local business electricity and gas (UNELEG), National Association of boards of public services and organizations that are established by local communities (ANROC), National Federation of societies of interest collective farm of electricity (FNSICAE).

6 See energies news no. 101, p. 1.

7 See energies news no. 123, pp. 6-7 and no. 125, pp. 4-5.

8 National Federation of concessionary communities and authorities (FNCCR). See energy news no. 125, pp. 4-5.