The Court of Auditors published this Tuesday a severe report on the growing dysfunctions of the electricity market in France for 10 years.

It will ask the government for a rapid change, within 18 months, of the regulatory tools put in place since the liberalization of the European electricity market.

The Court has embarked on a rare and unique evaluation of the complex public policy put in place for ten years.

The government has indeed had to comply with the Brussels requirements to introduce competition on the electricity markets, while trying to preserve low tariffs for consumers, resulting from the long-depreciated nuclear power of the incumbent public operator. EDF.

Organization of #electricity markets: the Court considers it necessary to clarify the objectives and revisit the tools of public intervention ⬇️ https://t.co/4yCLkLUyR9#Energie @Ecologie_Gouv @CRE_energie

– Court of Auditors (@Courdescomptes) July 5, 2022


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An organization “neither readable nor controllable”

Its verdict is final: the organization of the electricity market in France "is no longer either readable or controllable", underlines the Court in this 268-page report produced after more than a year of work.

It encourages the public authorities to negotiate before "at the latest by the end of 2023" a new means of regulation.

To arrive at its finding, the Court dissected the operation and the gradual slippage of the three main intervention mechanisms put in place by the Nome law (new organization of the electricity market) of 7 December 2010 to regulate the market.

These are the Regulated Sales Tariff (TRV), from which almost 70% of households benefit, Regulated Access to Historic Nuclear Power (Arenh), which grants a reduced price until the end of 2025 on an annual quota of nuclear electricity sold to industrial energy consumers and alternative electricity distributors, and finally the "capacity mechanism".

This "gentleman's agreement", very profitable between large industrial consumers, makes it possible to prioritize needs to avoid blackouts during winter consumption peaks.

The European Commission only accepted it until 2026.

A system that causes inflation

The Court notes that the TRVs, which are supposed to protect consumers from sudden changes in the wholesale markets, and accepted by way of derogation by Brussels, have been since 2019 “increasingly exposed to variations in market prices”.

The system set up around the incumbent operator to mechanically instil a kind of competition has de facto created an inflation in electricity prices, underlines the Court.

In fact, EDF is no longer able to guarantee that consumer prices will be aligned with its production costs, which was the objective, note the magistrates.

The Court also underlines that the Arenh scheme "did not go as planned" but that it enabled "the coverage of EDF's full costs" over the ten years, even emphasizing that the "overall income derived from the nuclear production were 1.75 billion euros higher than the accounting costs of this production between 2011 and 2021”, contrary to what EDF and its unions claim.

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