End of regulated tariffs : after gas, electricity ?

By its decision made public on 19 July, the Council of State annulled a decree of 2013 governing the terms and conditions of determination of tariffs for regulated sales (TRV) of the gas. The latter had been attacked by the national Association of operators energy retailers (Anode), bringing together Direct Energy, Eni Gas&Power France, Gas, european, Lampiris, Planète YES and SAVE, on the ground that these rates are contrary to the law of the european Union. What thus comes to confirm the Council of State, which had previously posed a preliminary question to the Court of justice of the european Union.

In effect, the Council of State considered that the public interest grounds which, up to now, based on the existence of a tariff fixed by the State and applicable to the whole of the national territory to 5.4 million individual customers and professionals had more justification.

“Their maintenance” constitutes an obstacle to the realization of the competitive gas market, without this restriction complies with the conditions that would have allowed to look at it as eligible under the law of the european Union. “

Smooth Transition

This decision comes in the wake of statements by the minister of Energy Nicolas Hulot in front of the Senate, in which he spoke of ” orders from Brussels. “”We can make sure that it is smoothed in the time, but we have already pushed back the deadline, and it is the gas as electricity, at one time or another, it will be necessary to comply with it,” he added.

He also said ” we can make it so that it is smoothed in the time “, and assured that the government would ” ensure that it is the least painfully as possible. “And this is exactly what should happen.

In such cases, three solutions are possible : retroactive, immediate or deferred. But the decision of the Council of State specifies

“Thus, given the uncertainties severe than a retroactive annulment would be born on the contractual situation the past several million consumers and the urgent need to prevent the infringement of the principle of legal security that would result, it is appropriate to provide, exceptionally, that the effects produced by the decree under appeal are, subject to proceedings already commenced at the date of this decision, regarded as definitive. “

“The retroactive effect of the removal of regulated tariffs as at 1 January 2013 would have had repercussions will be tragic for the incumbent, not so much on the financial plan, in terms of administrative management or to the courts.”, observe Master René-Pierre Andlauer, a specialist in energy law at the firm Cornet Vincent Ségurel.

But the approximately 5.2 million customers Engie should not know about the big bang. As they had in reality the possibility for the past 7 years, and have already done nearly half of them, they may decide to leave Engie for an alternate provider. Or choose to stay with Engie, which also offers contracts off the TRV, as the”energy of the recalls on his website, where you can read

“The State Board shall not call into question contracts, which means that they are still valid, and that, of course, ENGIE will continue to supply its customers as long as they wish. “

“If you have a contract at the Regulated Rate, you are affected by the decision of the State Council. This decision calls into question the TRV because they do not conform to european law. But your contract is still valid. To take into account the decision of the Council of State, the public authorities must organize for the future the terms of the end of the TR gas. ENGIE will, of course his clients informed. “

Awareness of alternative suppliers

How long this temporary situation will she survive ?

“If the ANODE requires that it be enjoined” the State from taking, to the date of the decision made by the State Council, all the measures to ensure the disappearance of the contracts to the [rate-regulated sales] “, the annulment of the decree of may 16, 2013 imposed by the present decision does not necessarily imply that the State take an enforcement action in this sense. These findings can therefore only be rejected ” one can also read in the conclusion of the decision of the Council of State.

In a letter addressed to the Prime minister following the decision of the Council of State, the Anode asks him to repeal within two years of the latest regulatory provisions applied to the TRV, in the meantime integrated into the Code of the Energy.

In other words, the customers of the incumbent operator must change the contract of supply, if not from the supplier. “It has already lasted long enough like this, infuriates Fabien Choné, CEO of Direct Energie and chairman of the Anode. We will be vigilant to ensure that the subject enjoys a large-scale communication, a neutral, non-discriminatory and transparent. “

To convince consumers, a major issue

Already, this decision will no doubt advance the body of knowledge within the general public. “The main effect of this decision is going to be on the level of communication, believes Me, René-Pierre Andlauer. Alternative providers will be able to represent their offerings in a context where the TRV is no longer considered the alpha and the omega and without a doubt, develop communications policies and marketing more aggressive. “

“When regulation ends, which involves a change of behavior of the users, it is in the State to communicate “, says Fabien Choné.

The catch is that the consumer associations are wind standing against this decision. They see in effect in the TRV in a sort of “price ceiling” reference protecting the consumer.

Yet ” to Think that the TRV constitute a ceiling for the price of gas is a pure fantasy to the extent that they are more than 50 % indexed on those of the wholesale market of the oil reminds Me Andlauer. In Italy and Germany, where there are no regulated tariffs, gas prices are not higher than in France. “

A previous notice announcing the deletion of the TRV electric ?

To what extent this decision will have on the gas prefigures a similar decision on electricity, on not 5, but 27 million customers EDF ? Unlike Engie, the electrician was represented at the hearing of the Council of State.

Most of the reasons given for the cancellation of the TRV of gas which apply to electricity.

A directive energy in preparation for the european Commission, which is expected to be completed by the end of 2017 for implementation in 2019, and advocates in effect the total abolition of regulated tariffs. The question of the transposition in national law should not arise before 2019/2020.

But in the Senate, Nicolas Hulot has referred to the heralded end of the two families of TRV.

And Engie is a powerful reminder that ” the decision of The Council of State should, also, be applied as simultaneously as possible to the regulated tariffs of electricity sales to avoid creating competitive distortions. “

“The criteria for determining the anti-community of TRV have been clearly defined at the european level as well as their application at the national level, and may be invoked for the TRV of electricity “, confirms to Me Andlauer.

The general interest in question

The lawyer advanced, however, two aspects that differ between the gas and the energy. The general interest criterion includes equalization, which allows all French citizens, including the inhabitants of areas less well served, to pay the same price for their energy. The argument was rejected on the gas as only 30% of the French communes are connected, but the situation is different for electricity. “All the components of the price of electricity are national “, meets Fabien Choné, and the law requires that providers offer a single price on the entire territory “. Exit thus the argument according to which only the TRV (s) for the equalization. Regarding nuclear energy, the Anode has requested the extension of the ARENH (regulated access to nuclear power history), this rate currently set at 42 euros per megawatt-hour, in which EDF is forced to sell a part of its production to alternative suppliers.

On the other hand, unlike gas, electricity is a “product of primary necessity” that benefit from social tariffs. “This social tariff for customers in precarious or without vendors “, is going to disappear with the check energy, ” says Fabien Choné, who also proposed the designation of a supplier of last resort.

The current tariffs do not cover the costs of the operator

In his eyes, the situation is even more problematic in the electricity than in the gas. In fact, the TRV, which successive governments have refused the increases claimed by the incumbent, does not even cover its costs. “This is not a desirable situation for the community, because then it is the taxpayer who pays,” said Fabien Choné.

“EDF is primarily a victim of the politicization of the tariffs of electricity,” he says. More competitive pressure lead to increased productivity in all suppliers. Of larger market shares will enable alternative providers to be more competitive again, for the benefit of the consumer, ” he says, recalling its objective of bringing Direct Energy (5% to 6% today) to 10% market share in 2020.

But if EDF is forced to increase its prices to cover costs that will be growing, there is a risk to attend a hemorrhage of its customers. Unless alternative providers do the following in this price increase, bringing water to the mill of the consumers ‘ associations.

“The process of removing the TRV is likely to be slow by the position of the associations of consumers (as voters) who will not push the government to an excessive zeal “, for its part, considers Me Andlauer.

Leave a Reply