France orders EDF to cut electricity prices
THE French government has ordered EDF to sell more electricity at lower prices than its rivals, sending the company’s shares down 15pc.
The state-controlled nuclear power giant said the move, designed as part of measures to tackle the energy crisis, would cost it billions.
France is also cutting taxes on electricity as part of measures to cap bill increases for households and small businesses this year at 4pc, rather than an expected 35pc jump without any action.
EDF’S competitors are already allowed to buy 100 terawatt hours of power from EDF at a heavy discount due to its monopoly position, but will now be able to buy another 20 terawatt hours at the lower rate. The company said the move would cost it between €7.7bn (£6.4bn) and €8.4bn, with analysts warning it may need to raise capital to make up for the hit. EDF said it “would consider appropriate measures to strengthen its balance sheet”.
EDF is 83pc owned by the French government with 15pc listed in Paris. Shares fell by a quarter to just under €8 in morning trading before recovering slightly. As well as its plants in France, EDF owns the UK’S nuclear fleet and several UK gas-fired power stations, and is building the new Hinkley Point C nuclear power plant in Somerset.
It also has about 11pc of the UK domestic electricity market and about 9pc of the gas market.
The French government move comes as UK ministers face growing pressure to protect consumers from an expected 56pc increase in average bills to about £2,000 when the energy price cap is reset in April to reflect months of soaring wholesale costs.
Potential measures put forward by industry and rival political parties include a VAT cut on energy bills and removing environmental levies.
A global shortage of natural gas supplies is at the heart of the crisis, pushing up power prices as much electricity is still produced in gas-fired power plants.
However, outages at ageing nuclear power plants in both the UK and France have worsened the situation by constraining power supplies. EDF on Thursday cut production forecasts due to longer-than-expected repairs.