Illustration: Getty, modified by RE.
The Energy Regulatory Commission (CRE) has just announced that the gas bill will increase from July 1 for households. Is this increase a sign of a necessary switch to all-electric in our homes?
The war in Ukraine and European sanctions against Russia have strained natural gas supplies in the European Union over the past two years. To protect French consumers from a spectacular increase in the price of gas, a price shield was put in place to freeze prices. Then, faced with the fall in the price of gas on the wholesale market, the price shield was lifted in July 2023. This decision was concomitant with the end of regulated gas prices (TRV) from June 30, 2023, for individuals and co-owners, forced to choose a market offer between the different existing suppliers.
An increase in the gas bill of 11.7% from July 2024
Since this date, the CRE has published a benchmark price each month which allows consumers to more easily navigate the gas market and better compare suppliers’ offers. This is an indicative price which is reflected according to the commission “an average estimate of the costs borne by suppliers for the supply of natural gas to a residential customer. [Il] integrates both supply costs (cost of energy on the wholesale market) and “non-supply” costs such as commercial costs, transport or storage costs and supplier remuneration“.
Precisely, the CRE has just published its benchmark price for the month of July 2024. It will be up +11.7% compared to that of June 2024 to settle at 129.2 euros/MWh. It should be noted, however, that this new price is down -3.5% compared to the benchmark price of January 1, 2024. To understand the reason for this increase, we must look at the components of a natural gas bill:
- Half concerns the supply of energy itself. It’s a price per m3 which varies depending on the supplier;
- Around a quarter relates to the cost of transporting energy through networks. This price is the same for all suppliers and is set by the public authorities. Its amount is paid to network managers to maintain the transmission and distribution networks;
- Around a quarter concerns taxes and contributions: the transport tariff contribution (CTA), the internal tax on natural gas consumption (TICGN) and VAT. They are identical for all suppliers.
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Network maintenance costs and price increases on wholesale markets justify the increase in gas prices
That being said, let’s return to the price increase announced for the 1er July 2024. The CRE justifies this reassessment by an increase in the transport cost which represents more than half of the announced increase (55%). The increase in natural gas prices on wholesale markets also affects the new price since it represents 37% of the change in the price. Thus, the CRE explains that for an offer which would comply with the benchmark price next July, the annual bill for a household would be 1,184 euros including tax, compared to 1,227 euros including tax in January 2024.
Obviously, as this is a benchmark price, suppliers are free to propose different offers. At the start of the year, the president of the CRE, Emmanuelle Wargon, explained on France Info that the increase in transport costs was necessary to maintain the pipes in which the gas circulates. It turns out that this tariff has remained stable over the past four years and has not been able to cover the costs borne by GRDF. In addition, the increase in transport costs over the coming years will also be used to pay for the energy transition by, for example, allowing new methanization installations to be connected to the network. Finally, it should be noted that gas consumption has tended to decrease in recent years while network maintenance costs are the same, regardless of the number of consumers and the level of consumption. Even if they are fewer in number and consume less, gas consumers will have to pay these network maintenance costs.
Should we prefer electricity to natural gas in our homes?
So, is it time to put an end to gas in our homes and switch to electricity? Let us remember, however, that like gas, electricity is not spared from rising prices. The latest dates back to February 2024 with a revaluation of 8.6% on average. We could say to ourselves that electricity or gas is a bit of the same battle in terms of prices. In reality, it is less obvious than it seems. In fact, the legislation is getting tougher with regard to gas boilers. The new regulations applicable to new buildings, RE2020, have prohibited the installation of a natural gas boiler in new individual buildings since January 2022. However, it is still permitted to keep your existing gas boiler.
Conversely, the development of electric heating is supported by the State. We are not talking here about old electric radiators, but about an economical and ecological heating model, the heat pump (PAC). Operating on electricity, the heat pump uses the calories present in the outside air or that of the basement (in the case of geothermal models) to heat the interior of the home. Sometimes reversible, heat pumps can then cool the home in summer. The heat pump has the advantage of being economical since it produces more thermal energy than it consumes electricity. It is therefore interesting in view of the increase in prices that electricity is also experiencing.
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State aid to prefer electricity to natural gas
For public authorities, it is therefore necessary to encourage households to equip themselves with heat pumps. This is the reason why several aids exist: MaPrimeRénov’, the zero-rate eco-loan or the Heating Boost. The latter allows you to replace a coal, oil or gas boiler with a heat pump. All households are eligible, regardless of means.
But so-called “natural” gas is not used simply for heating. Hot water can also be provided by this energy. If the installation of a simple electric hot water tank does not qualify for aid, the same is not true for thermodynamic models. Expensive to purchase, but economical to use, thermodynamic balloons allow you to benefit in particular from MaPrimeRénov’ and the zero-rate eco-loan.
To conclude, given the surge in gas prices and new economical heating and hot water production devices running on electricity and supported by the State, it may be interesting for households to favor electricity. natural gas.
