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French regulator targets power price speculation with new ARENH rules
November 8, 2016 / 9:09 AM / 9 months ago

French regulator targets power price speculation with new ARENH rules

PARIS (Reuters) - French energy markets regulator CRE proposed on Tuesday tighter rules under which alternative energy providers buy power from nuclear power station managed by state-controlled utility EDF (EDF.PA).

The move is aimed at curbing potential speculation in the French power market after spot and forward electricity prices surged to record highs over the past weeks due to tight nuclear supply concerns in France.

CRE said its proposal would tighten the conditions under which EDF's smaller rivals terminate their agreements with the former monopoly - a mechanism called ARENH.

EDF asked last month for the whole scheme to be suspended while the market is so tight. The government refused, but tasked the CRE with modifying it to cut out speculative behaviour.

"CRE believes that the termination clause allows suppliers with a late power of arbitration which is not consistent with the principle of annuality of the mechanism," the regulator said.

The proposed rule change aims to prevent EDF rivals from limiting their nuclear electricity purchases to the winter months, during which they can resell to market during peak demand period at potentially high prices.

Under the ARENH mechanism, EDF's rivals can buy up to 100 terawatt/hours per year, about a quarter of EDF's nuclear production, at 42 euros (37 pounds) per megawatt hour to promote competition in the market.

Reporting by Benjamin Mallet and Bate Felix; Editing by Andrew Callus

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