In a report of November 7, 2024the Energy Regulatory Commission recommended to the government the maintenance of regulated prices for the sale of electricity. A few days later, it was the turn of the Competition Authority to make its rapportwhich recommended preparing for their removal. How to explain that these two independent administrative authorities reach such contradictory conclusions?
TRVEs and their regulation
Regulated electricity sale prices (TRVE) are electricity supply contracts whose price is set by the public authorities, on a proposal from the Energy Regulatory Commission (CRE). The CRE calculates the tariffs by cost stacking (regulated access to historic nuclear electricity, cost of additional supply at market price, capacity guarantee, transmission costs, marketing costs). She proposes them to the Minister of the Economy (who will be responsible for adding taxes) and to the Minister in charge of energy. If this proposal does not suit the governmenthe can reject it and set the amount of the TRVE himself.
These rates are reserved for households and small businesses. As of June 30, 2024, more than half of 40 million consumption sites (representing a quarter of the quantities consumed) have subscribed to a TRVE contract. In the movement to open up the electricity industry to competition, the TRVEs are a survival of the era of integrated monopoly under strict public control. Should they be kept as recommended by the CRE or deleted according to the wishes of the Competition Authority (AC)?
The causes of the divergence of views
The arguments of the two independent administrative authorities revolve around the role entrusted to the TRVEs which must contribute to the objectives of general economic interest, in particular price stability, security of supply and social and territorial cohesion (article L337-9 of the energy code). For the AC, it is too much to ask for a tariff, especially since, by its mere presence, it distorts the mechanisms of competition on the retail market and only EDF and local distribution companies are authorized to offer it. . The AC considers that electricity prices in a competitive environment must simply reflect the costs of production, transmission and marketing to encourage consumers to avoid peak periods and to acquire equipment that saves energy. energy. As for the objectives of general economic interest, the State has numerous financial and fiscal tools for redistribution that are much more effective than a uniform tariff which relieves consumers of responsibility in their consumption and investment decisions. In its argument, the AC also invokes the directive 2019/944 whose article 5.6 stipulates that Member States may implement public interventions in setting prices for the supply of electricity to residential customers and micro-enterprises, more for a transitional period to establish effective competition between suppliers … and to achieve fully effective market-based retail pricing of electricity.
In defense of TRVE, the CRE adopts the point of view of consumer associations which favor protection against market volatility and appreciate the fact that there is an “official” benchmark to estimate the relative interest of commercial offers. It is also in line with the European authorities who, drawing lessons from the 2021-2022 energy crisis, are asking Member States to enable consumers to make their energy bills affordable and less dependent on price fluctuations in the short-term electricity market. (European Regulation 2024/1747)
Areas of intervention
To understand the divergence of points of view of the two authorities, it is useful to also take into account what each of the administrations will gain or lose in a possible reform of retail electricity prices.
Removing the TRVEs, the development of which is the responsibility of the CRE, means reducing its area of intervention. And since all supply contracts to small consumers become commercial contracts, this broadens the scope of intervention of the CA. The positions taken by the two independent administrative authorities are therefore both well within their field of competence (defending competition for one, avoiding the upheavals of retail trade for the other) but also in their respective interests for the allocation of financial and human resources intended for their operation. Each preaches for her parish.
Given the expansion of the uses of electricity to housing and transport, our lack of economic rationality in deciding our electricity consumption in the face of perpetually changing wholesale prices, and the low appetite of the French for competitive mechanisms, it is likely that TRVEs will continue to have government approval. They have the advantage of existing and are subscribed to by nearly 60% of residential sites, that is to say too large a number of voters for the government to consider removing these prices. But there remains an important step to take: obtaining the green light from Brussels for the next five years.
