First French electricity company sinks – regulator steps in

Hydroption has gone into administration after failing to pay its suppliers and debts. If no buyer is found, its customers will have to find new providers

19 November 2021

Hydroption has gone into administration and will go out of business if a buyer is not found quickly Pic: lovelyday12 / Shutterstock

By Brian McCulloch

High energy prices have led to the first failure of a French energy company. 

Hydroption, a supplier of low carbon electricity, has been placed under judicial administration after failing to pay its suppliers and debts.

If no buyer is found quickly, Hydroption, which supplies electricity to the French army, some government departments, Paris municipality and around 200 businesses, will go out of business.

Affected clients will have to find new suppliers, and risk having to pay millions more for electricity.

At the same time, a number of alternative suppliers have either stopped taking new clients or have been breaking contracts and raising prices, leading to a reprimand from the Commission de régulation de l’énergie (CRE) regulator. 

It warned the companies that they must not behave badly to their clients.

“The majority of suppliers have been well behaved but some have not been up to standard,” the CRE said.

“They are usually the ones who are in difficulty because they did not anticipate the rise in prices and price the risk of such a rise into their business models. This is something which must not be to the detriment of their customers.”

The CRE highlighted that French electricity suppliers can buy nuclear energy at a fixed price of €42 mWh via the long-standing arrangement which sees access to nuclear energy from existing reactors made available to newer companies to make sure EDF did not have an unfair advantage.

Called Arenh, (accès régulé à l’électricité nucléaire historique), the arrangement has previously been criticised because the €42 mW/h tariff was seen as being too high. 

However, in the current climate, where daily open market rates are regularly reaching €100 per mWh and peaking at €200 mWh, it is very attractive. 

The CRE has also called in electricity companies to warn them that re-selling Arenh electricity to other companies is banned, and hefty fines might be in store for anyone caught doing so.

The trade body for the electricity suppliers, Anode, denied that the practice was widespread, adding that only a few companies dealt in such “marginal” deals.

According to French media reports, Hydroption’s difficulties have come as no surprise to many in the electricity supply industry, who say the company had a reputation for offering very low prices to get government contracts, without at the same time taking out insurance against price rises.

Hydroption, which is based in Toulon (Var), denied this, claiming that a simple lack of cash made insurance too expensive and pointing out it has been under a form of protection from creditors since 2018.

In the UK no fewer than 16 electricity and gas suppliers have gone bust in 2021, leading to calls for state intervention, something that the government has declined to do.

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