Managers at electricity supplier EDF found themselves in the unusual position of supporting workers in a strike over price-capping by the government – the company’s main shareholder.
At the centre of the dispute was the announcement that EDF, which should be enjoying record profits from high electricity prices, would bear the brunt of the government’s pledge at the time to keep electricity price rises to 4%, initially planned until April.
Regulated energy prices, from which all others are given, are usually raised or dropped twice a year, with this year’s first change of 4% coming into force in February. A second change is pencilled in for the start of August.
Most analysts believe the present wholesale price peaks should fall to more normal levels in the summer.
The regulated prices are decided by economy and transition écologique ministers, who receive advice from the Commission de Régulation de l’Énergie.
EDF losses could affect economy
Estimates are that EDF will lose between €7.7billion and €8.4billion in 2022 as a result of the government’s decision to cap power price increases.
Most electricity in France is produced by and bought from EDF, which is 83.9%-owned by the state, so the strategy look as though the government is shooting itself in the foot.
Before the price rises, official forecasts were that the government expected dividends worth between €2billion and €3billion this year from EDF, which it earmarked for spending measures to boost the economy.
It would have been the first time in five years that the company has paid dividends in cash. Shareholders have been paid in shares during this period to allow the company to repay some of its debts.
Investment in alternative energy at risk
Unions claimed that by making EDF bear the brunt of the 4% price rise pledge (without it, price rises would be in the order of 35%), the government is crippling the company which, they say, is in urgent need of research and development work on how to cope with alternative energy sources, and financing for new power stations and catch-up maintenance.
What was particularly galling was the order to sell more cheap nuclear power to rivals to limit the rise in electricity prices.
The system originally imposed as a way of ‘levelling the playing field’ so that EDF, with its nuclear power stations paid for by the taxpayer, did not remain the dominant player is now being used for political purposes, the unions claimed, and they called a strike in late January.
Managers at the company let it be known they were also angry and in support of the unions.
President Macron’s U-turn on Alstom
While the government took away with one hand, it also gave with the other – buying back Alstom’s power station turbine business from General Electric.
To celebrate, President Macron laid out his vision for future electricity production at a visit in February to the Belfort factory, where the giant turbines, branded Arabelle, are built.
They are currently the most powerful in the world and are used mainly in nuclear power stations – including some of the new ones France will be building. Mr Macron has committed to at least six new nuclear reactors in future decades, placing nuclear power at the heart of France’s drive for carbon neutrality by 2050.
The visit to Belfort was also seen as President Macron making amends for what some call his ‘original sin’, which has haunted his political career.
As an official in the finance ministry and then as minister, he was in place when Alstom was sold to General Electric in the first place, in 2015 – provoking an outcry from French people who did not want to see their know-how fall into the hands of the Americans.