The Authority criticizes them in particular for their poor readability and for being an “obstacle to free competition”, asking for their replacement with other devices.
This is a real kick in the anthill. The Competition Authority recommends this Tuesday to the government to “prepare the removal of regulated electricity sales prices » (TRV). Today 59% of private individuals and 35% of small professionals use it. The Authority criticizes them in particular for their poor readability, for being a “obstacle to the free play of competition and potential benefits of the latter – in terms of price, innovation or even investments”. They have already been eliminated in the gas.
Consumers, individuals and small businesses, however, cheered them on when electricity prices on wholesale markets skyrocketed in 2022, taking subscription prices with them. “at the market price”. Burned by skyrocketing bills, more than a million consumers then exchanged their contracts for TRV subscriptions, putting a sudden halt to the market transformation. A paradoxical situation in which all private individuals benefited from the protection of the tariff shield. Since then, wholesale prices have started to fall again and customers are returning to the market’s offerings. According to the Energy Regulatory Commission (CRE), as of June 30, 2024, 169,000 more customers have signed up for a market offering compared to March 30, 2024. “Although this figure is lower than the level observed before the crisis and in the previous quarter (+244,000 sites), it confirms the recovery of market offers since the end of the energy price crisis,” underlines the CRE.
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One year after the agreement on the price of nuclear electricity, EDF and the State are at an impasse
A shock absorber upwards…and downwards
Today, due to the way they are calculated, TRVs are significantly higher than market-based prices. Regulated prices are established taking into account the previous two years, which allows changes, both upwards and downwards, to be cushioned. In 2022 and 2023 the government has also chosen, given the ability, to limit the increase in TRVs. As of February 1, 2023, the increase was limited to 15%, while according to CRE calculations it should have been 99%. As of February 1, 2025, they are expected to decline by about 9%, reflecting falling wholesale prices, but also rising taxes. At the same time, market prices are expected to increase due to taxes. A double movement that is difficult to read for the consumer!
What motivates the conclusions of the report of the Competition and Market Authority: “In light of the expected disappearance, on 31 December 2025, of regulated access to historic nuclear electricity (Arenh), the Authority recommends that the Government thoroughly review the organization of electricity markets in France and prepare for the abolition of TRVs ”. For the Authority, them “they have not prevented ad hoc interventions by public authorities on the level of retail prices (…), they obscure the price signal that should encourage consumers to be more energy efficient and have a strong impact on competition”.
“TRVs strengthen EDF’s already very important role in electricity markets and its image among consumers”
Competition Authority
The Authority criticizes TRVs for limiting competition in retail markets for shipping “a guiding sign” against which all suppliers position their market offers. In fact, many contracts mention them, more or less directly, for example to praise them “a guaranteed price that is always cheaper than the TRV”promised “-25% on the price excluding VAT of the kWh compared to the TRV”… For the competition regulator, TRV “strengthen EDF’s already very important role on the electricity markets and its image among consumers”. Neither EDF nor consumers are spared: TRV’s success “seems to be due to the monopolistic past of the market and the relative passivity of consumers”.
A benchmark index to replace TRVs
Faced with this litany of defects, the Authority therefore recommends arranging for their removal, but “without giving up the public policy objectives assigned to them”. TRVs are in particular a tool for consumer protection, but also for social and territorial cohesion. Additionally, other devices may be installed such as “the designation of one or more suppliers of last resort”. Nor is it about leaving consumers without guidance in such a critical sector as electricity. The Competition Authority recommends the establishment of a benchmark calculated by the CRE, using the same method used today for TRVs. Offers could be indexed to this index, to reassure consumers attached to the current system.
Other more technical systems could also be created, in particular in the so-called non-interconnected areas (NIZs, mainly islands) and in areas served by local electricity distribution companies (ELDs). The latter represent around 5% of the territory and concern cities such as Strasbourg or Grenoble.
How will the disappearance of regulated access to historic nuclear electricity impact consumers and competitors in the energy market?
Interview Between Time.news Editor and Energy Market Expert
Time.news Editor: Today, we’re diving into a pressing issue regarding regulated electricity tariffs in France. With us is Dr. Camille Moreau, an expert in energy policy. Dr. Moreau, thank you for joining us.
Dr. Camille Moreau: Thank you for having me.
Editor: The recent report from the Competition Authority is quite damning, asking for the removal of regulated electricity sales prices, or TRVs. Could you elaborate on why these prices are seen as an obstacle to competition?
Dr. Moreau: Certainly. The Authority argues that TRVs create a false sense of security for consumers and dampen the competitive spirit in the electricity market. Since a majority, 59% of individual consumers and 35% of small businesses, rely on these prices, it makes it difficult for alternative suppliers to compete effectively. The report emphasizes that the current structure limits the benefits that come from healthy competition—namely in terms of pricing, innovation, and investment.
Editor: That’s a significant point. The article notes that during the energy crisis of 2022, many consumers flocked to TRVs for protection against skyrocketing prices. How do you reconcile this with the current push for their removal?
Dr. Moreau: It is indeed paradoxical. When wholesale prices surged, TRVs provided a cushion, which consumers appreciated. However, these protected prices are now often higher than the market rates. The Competition Authority is essentially arguing that while TRVs served a purpose during a crisis, they are not sustainable in a competitive market and need reassessment for long-term viability. They obscure the true market signals essential for encouraging efficiency and investment.
Editor: You mentioned that the TRVs are relatively higher. Can you explain how they are calculated and why this is a problem?
Dr. Moreau: TRVs are based on an average of previous wholesale prices over the past two years. While this method can cushion abrupt price changes, it doesn’t reflect real-time market conditions. Consequently, the prices can lag behind market adjustments, making it challenging for consumers to understand the true cost of electricity. As wholesale prices decline, TRVs may still remain high due to this outdated calculation model, which complicates consumers’ decision-making.
Editor: Given that the report indicates the expected disappearance of regulated access to historic nuclear electricity by 2025, what does this mean for the future of French electricity markets?
Dr. Moreau: The recommendation to abolish TRVs is closely tied to the anticipated changes in the market landscape. As we move away from a regulatory framework that has historically favored large state-owned entities like EDF, there is a need for a more transparent and competitive market that encourages diverse energy suppliers. This means consumers will likely need to adapt to fluctuating market prices and actively engage in choosing their electricity providers.
Editor: In light of all these changes, what can consumers do to prepare for the potential shift in how electricity pricing works?
Dr. Moreau: Consumers should start familiarizing themselves with various market offerings and pricing structures beyond the TRVs. This can involve researching competitive tariffs, understanding how price fluctuations might impact their bills, and potentially opting for contracts that favor their consumption patterns. Having a digital literacy around energy consumption and pricing will be crucial.
Editor: Dr. Moreau, you’ve highlighted some critical insights regarding the future of energy in France. Thank you for your time today.
Dr. Moreau: Thank you for the discussion. It’s an important topic, and I hope to see informed consumers advocating for their interests in this evolving market.