Posted Sep 14, 2022, 7:28 PM
Usually it is in September that we announce a return to risk for the government, but that of January promises to deserve this qualifier much more this time. After a year of virtual freeze in energy prices for households, the executive has resolved to let a 15% increase in French gas and electricity bills pass in early 2023, hoping that they will be grateful to him for having cushioned the shock so far.
While public concerns are strong about inflation and gas and electricity prices are experiencing feverish flashes, the executive presented its energy plan for the coming months on Wednesday. “We had to send quick signals to reassure and prevent tensions from fueling price increases,” explains a member of the majority.
Elisabeth Borne reassuring
After letting the risk of possible power rationing for businesses hover at the end of August, Elisabeth Borne wanted to be reassuring this time. “In the most likely scenarios, if everyone takes their responsibilities and shows the necessary sobriety, there will be no cuts,” assured the Prime Minister. The leader of the majority insisted on the need to combine sobriety and European solidarity in the months to come. “Our objective is to stop the explosion in energy prices on a European scale and to bring them back to more moderation,” she added.
But pending a lull, it is on the issue of protecting households against these price increases that the government was most eagerly awaited. In 2022, the price shield put in place had frozen the price of gas and an increase limited to 4% for electricity. “France is the country that has best protected households in Europe,” assured Elisabeth Borne. But it recognized that it was necessary “to continue to respond to concerns while ensuring that we do not increase our debt further”.
To hold both ends of the rope, the government will therefore maintain the tariff shield, but in a less generous format. Clearly, gas and electricity prices will increase by 15% in 2023 (respectively in January and February), where the increase should have been 120% to reflect the evolution of prices, according to the calculations of the ‘executive. For households heating with gas, this represents “an average increase in bills of 25 euros per month, instead of around 200 euros per month without a tariff shield”, assured the Prime Minister, while the increase will be 20 euros per month for those heated by electricity (180 euros per month without tariff shield).
Gargantuan amounts
This is still less than what British, German or Dutch consumers experienced, but the government is well aware that this increase remains very sensitive politically. This is why it accompanies it with exceptional energy checks of 100 to 200 euros sent at the beginning of 2023 to 12 million households – i.e. 40% of the population, which does not make it a particularly targeted device. It’s more generous than the same gesture last year, which concerned half as many people for only 100 euros.
And if that weren’t enough, the Minister of the Economy, Bruno Le Maire, said “not to close the door” to an additional gesture on fuel for workers next year, when this seemed excluded for the moment. .
In the end, while promising targeted devices to close the budgetary floodgates, the plan presented on Wednesday results in a gargantuan bill for the tariff shield of 45 billion euros for public finances. But beware, this is only the gross cost, warns Bercy, who prefers to insist on a net cost of 16 billion (11 billion for gas, 5 billion for electricity).
No return of “whatever it takes”
The energy crisis is also bringing in exceptional revenues – in particular 20 billion euros in excess profits taken over in 2023 from solar and wind energy producers, but also from the Compagnie Nationale du Rhône – which will cushion the shock. The contribution of EDF as last year – which had provoked the ire of the company – also remains in suspense. Finally, the energy check will cost 1.8 billion, financed thanks to balances on the 2022 budget.
Despite these substantial amounts, Bruno Le Maire ensures that “whatever it costs is behind us” with “amounts which are without comparison with those disbursed during the health crisis”. “It is absolutely necessary to avoid returning to such a policy which would only fuel inflation,” he assured.