Gas prices locked until July 2012

THE price of gas has been frozen by the government until July next year, as it seeks to win back the support of voters whose primary concern is spending power.

Energy Minister Eric Besson has also announced that electricity price rises will be limited to a maximum 2.9% between July 1 this year and the same date in 2012.

However the shine has been taken off the pledges by the announcement that EDF will be able to charge more when selling wholesale nuclear-generated electricity to competitors.

The price will go to €40 per megawatt hour in July and then to €42 in January next year - compared
to €35 now.

Consumer champions UFC-Que Choisir said this meant that after July 2012 “there is a risk bills will go shooting up”.

This coincides with changes in laws regulating the energy market this summer. EDF’s rivals, like GDF, had asked that the tariff remain unchanged.

CLEEE, a grouping of large industrial electricity consumers, said it would “inevitably mean large increases for customers, whether the public or businesses.”

Mr Besson however denied this saying “there’s no automatic link between the wholesale price and ones charged to the public”.

Critics have pointed to the fact that President Sarkozy is a friend of EDF president Henri Proglio, and that he has given him fully the amount he asked for.

Former Arcep president Paul Champsaur, charged by the government with reporting on the ideal
price, had estimated €39 would be suitable for EDF to cover its costs.

EDF is obliged to sell part of its production under EU competition rules, however “at €42, the competition is not going to be able to develop”, said Jean-Maurice Chevalier, an economist from Paris-Dauphine university.

The government says the concession is needed so EDF can ensure that its aging nuclear reactors are all wellmaintained, in light of Japan’s Fukushima accident.

Spending power, a key theme of Nicolas Sarkozy’s 2007 election campaign is again topping polls of French voters’ concerns.

Last month the government launches a “basket of essentials” scheme in partnership with the supermarkets.

Large stores are meant to offer a weekly selection of high quality products at attractive prices, identified by a new logo.

Socialist presidential candidate Ségolène Royal wants to go even further - she would freeze the price of 50 basic food and other household products, she said.

However, opponants asked how the president of the Poitou-Charentes region would go about telling her farmers they would have to sell their products at a loss.

In another purchasing power-related scheme, the government plans to pass a law this year making firms with more than 50 employees pay staff bonuses each time their shareholder dividends rise.

The amount will be negotiable between the employers and staff. Smaller firms would also be “encouraged” to offer bonuses by tax breaks.