France caps electricity price increase at 15% next year to protect consumers

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PARIS, Sept 14 (Reuters) – Increases in electricity and gas prices for French households will be capped at 15% next year, Prime Minister Elisabeth Borne said on Wednesday, as European governments seek to to fight against the prices which skyrocketed after the invasion of Ukraine by Russia.

Borne said the new gas price cap increase would take effect from January, while the electricity cap increase would follow a month later.

“We are determined, as at the start of the crises we are facing, to act, adapt and protect the French people and our economy,” Borne told a press conference.

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President Emmanuel Macron’s government has spent billions of euros on measures to blunt the inflationary impact of soaring energy prices on the market, including a rebate on fuel pump tariffs.

France, home to the world’s largest fleet of nuclear reactors after the United States, is less exposed than its European neighbors to a cut in Russian gas supplies in retaliation for Western sanctions.

But an unprecedented number of reactor shutdowns has driven French nuclear power production to its lowest level in 30 years, as Europe scrambles to find an alternative to Russian supplies, adding to the energy crisis at the continent-wide.

The 2023 caps mean that households with gas heating will pay on average 25 euros more each month instead of an extra 200 euros in the absence of a cap. The average household with electric heating will see its electricity bills increase by 20 euros per month, added the Prime Minister.

France recorded the lowest inflation rate in the European Union in August, at 6.5% in EU harmonized terms.

Finance Minister Bruno Le Maire said the new measures would cost the state an additional €16 billion, including €11 billion needed for the gas cap and €5 billion for electricity.

There was no risk of a total blackout in France this winter due to the energy crisis, but some power cuts could not be ruled out during peak consumption, the manager said earlier. of the TEN network. Read more

RTE said a reduction in national electricity consumption of 1% to 5% in most scenarios and up to 15% in an extreme scenario of gas shortages and very cold weather could help avoid a crisis. of electricity. He added that he would be on alert to monitor market developments from November, or earlier if necessary. RTE generally starts its winter monitoring in January.

“Compared to other European countries, France should be structurally in a less difficult position,” RTE said.

The head of the EDF nuclear power group, Jean-Bernard Levy, told a parliamentary hearing that repair work on reactors affected by corrosion problems was “on track” and that the utility hoped to reach around the same levels of nuclear production as last winter. Read more

Governments across Europe have already invested hundreds of billions of euros in tax cuts, aid and subsidies to deal with a crisis that is driving up inflation, forcing industries to shut down production and ramp up bills before winter. Read more

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written by Silvia Aloisi; Editing by Alexander Smith and Richard Lough

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