French aid expected to dampen near 84% power price rise

The expected increases would be steepest for the industrial and agricultural sectors at 92%, followed by the service sector at 77% and the public sector at 66%, INSEE found.

French aid expected to dampen near 84% power price rise

(Reuters) - Without government help, French businesses could end up paying 84% more for electricity on average this year than in 2022, French statistics bureau INSEE said in a report Wednesday. That's largely due to businesses holding electricity contracts that vary according to market prices that have risen sharply over the past year. France in particular has faced rising electricity prices following outages at EDF nuclear plants due to stress corrosion and a delayed maintenance schedule, compounded by rising gas costs following Russia's invasion of Ukraine.

Wednesday's report, based on a December survey of power providers and an analysis of market indices, does not attempt to predict actual price rises for business by factoring in contract renegotiations or planned government interventions to blunt the blow in 2023. Last year, the French government froze its regulated tariff (TRV) to a maximum 4% rise. That covered about a third of the nation's businesses -- those holding contracts in the smallest power bracket, which collectively accounted for 17% of business consumption.

This year, that regulated tariff is frozen to a maximum 15% increase. A 2022 lowering of the French tax on final electricity consumption (TICFE) to 1 euro ($1.09) per megawatt-hour (MWh) for all business has also been extended through January 2024. Very small businesses won't pay more than 280 euros/MWh on average in 2023, France's energy ministry announced last month.

Small- and medium-sized businesses who consume too much power to qualify for the regulated tariff in 2023 will be able to get half their electricity at 180 euros/MWh if prices run higher, with a cap of 2 million euros in aid for the year, among other conditions. Companies with more significant electricity consumption can also apply for aid running to 4 million euros, 50 million euros, or as much as 150 million euros - which is reserved for sectors at risk of carbon leakage. These are companies with high carbon emissions that may relocate to countries with less stringent climate policies and cheaper energy costs.

($1 = 0.9156 euros) (Reporting by America Hernandez and Forrest Crellin; Editing by Aurora Ellis)