Gas prices set to rise on January 1

GAS prices are set to go up on January 1 – despite promises by the government that they were to remain frozen until after the presidential elections.

This comes as top administrative body the Conseil d’Etat has ruled that a rise must be applied soon, because the freeze breaks official rules which link rises to increases in costs to the national supplier, GDF Suez.

If these were applied strictly, a rise of 8.8-10% would be on the cards says the Energy Regulation Commission (coming on top of a general rise of 20% since 2009 and 60% since 2005).

However Energy Minster Eric Besson has ruled out a “large” rise. According to Le Journal du Dimanche he is in negotiations with GDF Suez over strategies to keep it low, preferably by the firm agreeing to lower its own margins.

To help the least well-off, the managing director of GDF Suez, Gérard Mestrallet, has proposed that more people should be entitled to the “social” gas tariffs, which allow about 1.5 million households to save an average €130 on their bills per year.

The state is also said to be looking at the possibility of a change to the rules on the way price rises are calculated, these being at present more linked to GDF Suez’s supply costs than to general rises in market prices for gas. A change to take more account of the latter could limit the rise to 6%, said Le Figaro.