The regulated electricity tariff is to rise by 10% from August 1 as France cuts back on its price protection.
The average household with electric heating will see an increase of around €160 per year on its bills, taking annual costs to €1,800, the government calculates.
The changes will affect more than 20 million households, as well as 1.5 million small businesses – mainly those who are signed up to EDF’s regulated Tarif Bleu deal, but also people with market-rate contracts that are indexed on the regulated tariff.
Prices would have increased 100% this year
Prices were initially limited to a 4% rise in autumn 2021 as part of the government’s bouclier tarifaire (price shield) in response to the global energy crisis.
Prices then rose by 15% at the start of this year, ahead of this second rise due in August.
Usually, prices are re-evaluated twice a year based on recommendations by France’s independent CRE energy regulator.
Without government intervention, electricity prices would have increased by 35% in 2022 and 100% this year, according to calculations by the CRE.
It means that in the second half of the year, the state will cover 37% of the cost of electricity on average, compared to 43% currently, according to the government.
Government tries to balance the books
Minister for Public Accounts Gabriel Attal has said the price shield will be gradually phased out by the end of 2024.
Finance Minister Bruno Le Maire previously claimed it would continue until early 2025.
It is part of the government’s wider fiscal policy to reduce public spending and debt.
Abolishing the price shields for both gas and electricity will save around €14billion by the end of 2027, Mr Le Maire said in April.
The gas price rise freeze was abolished in July, with little impact on consumers since gas prices have fallen below levels set by the government.
Lower bills than most European neighbours
At the end of last year, the government evaluated the cost of the price shield over three years from 2021 to 2023, for households, businesses and local authorities, at €110billion.
The measure has allowed France to maintain lower energy prices than most of its neighbours.
At the start of the year, household electricity bills were half those of the UK and other large European countries, with the exception of Spain and Portugal, according to the comparison website Hello Watt.