France is considering implementing a mechanism to cap national electricity prices, potentially through a windfall levy on state-owned nuclear power producer EDF. The move is part of President Emmanuel Macron’s plan to regain control over prices and reform the regulation of power prices in France. The hope is that this framework will not violate EU subsidy rules, as it would set a price ceiling for EDF’s nuclear energy, with revenues above that threshold being redistributed back to end users. However, the extent to which France can act unilaterally is uncertain, and Macron’s use of the phrase “take back control” has caused confusion in Brussels, where negotiations for electricity market reforms are ongoing.
Beyond just addressing prices, Macron’s push for control over the power sector reflects a desire for France to produce more of its energy domestically and avoid becoming a net power importer. The country’s fleet of nuclear reactors operated by EDF has been a competitive advantage, but EDF’s state ownership and dominant position have led to constant negotiations with the European Commission over state aid and competition rules. The current framework, Arenh, which involves fixed-price agreements with rival distributors, is set to expire at the end of 2025, prompting discussions on price mechanisms. France will need to consult with its European partners regarding its plans.
EDF’s CEO, Luc Rémont, is reportedly open to a price-ceiling solution, but the government and EDF have differing views on the level it should be set at, especially considering Macron’s plans for building new reactors. France’s energy regulator has established that the cost of producing energy for EDF would be around €61 per megawatt hour, but the state is pushing for a price as close to that as possible. EDF argues for a higher price to support its nuclear plant expansion plans, which would cost an estimated €52 billion. The group declined to comment on the matter.
