December 4, 2018 / 6:35 PM / 9 days ago

UPDATE 1-French power companies consider legal challenge to price freeze

* France freezes power prices in response to protests

* State Council would likely overrule tariff freeze (Adds detail, analyst comment)

By Benjamin Mallet and Geert De Clercq

PARIS, Dec 4 (Reuters) - French independent power vendors association ANODE is considering making a legal challenge to a government freeze on state-owned EDF’s electricity prices, it said on Tuesday.

The government on Tuesday suspended increases to fuel taxes for at least six months in response to weeks of sometimes violent public protests and said it would keep gas and power prices unchanged this winter.

ANODE president Fabien Chone said the proposed freeze on EDF’s regulated tariffs threatens the survival of some of its members. These operators all compete against EDF, which has an 80 percent share of the retail power market.

The government should lower power taxes or introduce support measures for ANODE’s members, it said.

“Failing that ... we may have to initiate a legal challenge,” Chone told Reuters.

ANODE includes Direct Energie, Engie, Italy’s Eni and dozens of smaller operators.

Government attempts to freeze power prices have been challenged systematically by ANODE in recent years and cancelled by the State Council, France’s highest administrative court, with consumers forced to pay catch-up fees retroactively.

Prime Minister Edouard Philippe said that from Dec. 15 to March 1 the government would organise a nationwide debate on energy and that power and gas prices would not increase in the meantime.

Retail services specialist Colombus Consulting expects French power prices to rise by between 2 percent and 8 percent next year. Even at 5 percent, it would be the highest increase in years.

Energy regulator CRE has said it would make a proposal to the government in February with a view to introducing new tariffs in early 2019.

The government would then have three months to validate the CRE proposal, which means it could postpone a decision until after the May 26 European Parliament elections.

Many French governments have postponed tariff increases to protect consumers and their own approval ratings, but legally the government has no authority to set prices.

“The tariffs freeze allows the government to buy time, but they know they will be overruled and it will come back at them like a boomerang,” said Colombus Consulting’s Nicolas Goldberg.

Unlike power prices, which typically move once a year, gas prices move every month. (Writing by Geert De Clercq Editing by David Goodman)

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