New French ARENH electricity tariff calculation delayed

27 February 2014 15:27 Source:ICIS

The updated method to calculate the tariff at which French electricity incumbent EDF is obliged to make 25% of its nuclear generation capacity available to competing suppliers will not be announced in Q1 as originally expected, the French energy regulator CRE said on Thursday.

A ministerial decree for the methodology calculation of the French ARENH tariff will still be published some time in 2014. The tariff will change after the publication of a decree determining its method of calculation. The current tariff is set at €42.00/MWh since 2012. EDF estimates the volume of electricity it will sell in 2014 based on the tariff to be approximately 74.2TWh.

EDF chairman and CEO Henri Proglio said in the last presentation of annual results in February that he expected the ARENH tarrif to gradually reach the economic cost of producing nuclear energy, which was valued at €50/MWh in 2011.

The tariff acts as both a support and a cap on traded power prices. If market rices fall below, demand increases as previous ARENH buyers flock to the market, pushing wholesale prices up to the ARENH price ( see EDEM 23 October 2013 ). If market prices rise far above the tariff, the lower ARENH charge takes liquidity away from the market, lowering demand.

The energy ministry launched a public consultation on the tariff for market participants last week, which is scheduled to end on 14 March, according to a CRE spokeswoman.

The results of the public consultation are subject to further review by the French competition authority, the supreme council for energy and the council of state, as well as CRE itself. Sonja Caymaz

By Sonja Caymaz