November 30, 2018 / 1:09 PM / 18 days ago

French power prices could soar next year -industry group

PARIS, Nov 30 (Reuters) - French retail power prices could jump at least 8 percent next year, a lobby for industrial consumers warned on Friday, after demand by alternative power suppliers for nuclear power produced by state utility EDF outstripped the available limit.

EDF’s rivals have requested 133 terawatt hours (TWH) of nuclear power for 2019 under the so-called ARENH market mechanism. The programme gives them the right to buy up to 100 TWh of power produced by France’s 58 nuclear reactors at a fixed price of 42 euros ($48) a megawatt hour (MWh).

The record demand for ARENH, which was introduced in 2011 to boost competition after the liberalisation of the electricity market, would have an impact on retail prices next year and even more so in 2020, the CLEEE lobby group said in a statement.

Members of the group include industrial electricity consumers in the French transport, telecoms and retail sectors such as SNCF, RATP, ADP, Orange and Casino.

“All consumers will be impacted, whether private, professional, industrial and whether they are on regulated tariffs at EDF or provided by a competitor,” the statement said.

The ARENH shortage will force suppliers to buy in the wholesale market to cover the shortfall for their customers, it said.

French, and wider European, wholesale power prices for 2019 delivery have risen sharply over the past year to stand at around 58 euros/MWh, above the ARENH price which was calculated to cover EDF’s cost of production, the CLEEE said.

The French electricity contract for 2019 delivery has traded above the ARENH level since April, a trader said, adding that the surge in ARENH demand could also be explained by the fact that EDF’s rivals are grabbing more retail market share.

Although EDF still controls around 80 percent of the French retail power market, it is losing around 100,000 clients per month to its rivals, according to energy market regulator CRE.

“It was inevitable that as the market share of competitors increases every year, the 25 percent share of nuclear reserved for them would eventually be insufficient,” the statement said, calling on the government to raise the ceiling to 200 TWh.

Separately on Friday, the Afieg and Anode lobby groups representing alternative power suppliers issued a statement calling for a substantial increase of the ARENH ceiling, or the removal of the mechanism, in order to guarantee a level playing field for all.

The French government said on Tuesday it plans to reform the mechanism and would make sure that whatever the outcome, French consumers would continue to benefit from power prices which are among the lowest in Europe.

$1 = 0.8794 euros Reporting by Bate Felix; Editing by Kirsten Donovan

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