France gas prices: all contracts to increase in July
Millions of households on variable-rate gas deals face the biggest rise as France's benchmark gas price increases.
Both variable and fixed contracts will see increases due to network taxes
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Both fixed and variable rate gas contracts will increase in France in July as market rates rise alongside government taxes.
Millions of households will see gas bills increase by around 7.4% largely due to the continuing conflict in the Middle East.
The Commission de régulation de l’énergie (CRE) announced a 7.4% increase to the benchmark gas price will take effect from July 1, impacting variable-rate gas contracts.
This corresponds to a monthly increase of around €2.70 on average to bills.
While suppliers do not have to follow the price laid out by the benchmark, those who keep prices above this risk losing customers to cheaper alternatives.
By July this benchmark price will have increased 18% since April due to the conflict in the Middle East, the CRE stated, and this is despite a 4.8% reduction in June.
Households on fixed-rate contracts will not be impacted by a rise in supply costs but will see prices increase due to increased taxes.
Supply issues, transmission tax
July’s price increases are made up of two components, supply and transmission.
The ‘supply’ increases are caused largely by the continuing conflict in the Middle East, which has impacted both natural gas production in the region and supply chains for liquefied natural gas.
The Strait of Hormuz is responsible for transporting around a fifth of the globe’s liquefied natural gas.
It affects variable rate contracts that see prices fluctuate based on market rates of gas, making up around 60% or six million contracts in France.
Alongside increases related to supply a tax on the acheminement (transmission) of gas is also set to increase.
This is charged by the government to suppliers for maintenance of France’s gas network, but is passed onto consumers.
On July 1 this tax will increase by 5.87%.
Those on fixed-price contracts – around 40% of gas-powered households – do not see their bills change due to supply prices increasing, however are affected by tax increases including transmission taxes, as monthly payments can be increased for this reason.
Fixed-price contracts will therefore increase by around 1.85% per month, the CRE predicts.
The increase also impacts variable rate contracts, but as the increase comes alongside a rise in benchmark prices will be less noticeable.
