Electricity prices: why February's 10% increase will be the sole responsibility of the Government - Senate

Electricity prices: why February’s 10% increase will be the sole responsibility of the Government – Senate

Notice of increase in purchasing power. With their eyes glued to their meters during this period of extreme cold, the French fear more bad news on their electricity bills next month. Just in February, the government plans to increase the level of consumption tax on electricity, a charge that the state operates as a contribution to the public service. This was reduced to a minimum two years ago to relieve households within the tariff shield.

Since autumn, Bercy has announced its intention to gradually withdraw from extraordinary support measures after the end of the energy crisis. Article 92 of the Finance Act, which was approved by Parliament at the end of 2023, allows the government to increase the level of excise duty on electricity, as part of a 10% increase in the total price per kilowatt hour including tax. The Ministry of Economy and Finance has until January 31, 2024 to make a decision through an order.

The Energy Regulatory Commission presents its calculations

The Energy Regulatory Commission (CRE) presented this Wednesday its calculation of the development of regulated electricity sales prices, a number that must be proposed on January 15 to the supplier and consumer associations. The authority assumes an almost unchanged level for residential blue tariffs due to the “release of prices in the wholesale market”, which compensates for the removal of the freeze on shield tariffs from 2023. We remind you that the tariffs partly include market prices over a two-year period.

At the request of the Ministry of Economy, CRE specified how much regulated prices should change based on two scenarios. If the price of consumer electricity is maintained at the current level (1 euro per MWh), the regulated price of electricity would practically not change (decrease of 0.01% for natural persons, -3.67% for professionals). If the consumption tax were increased to the maximum level allowed by the Finance Act (22.54 euros per megawatt hour), the price of electricity would increase by 10% for natural persons. In other words, any increase in February would then only be the result of the government moving taxes, not market prices.

For the entire year 2023, the price increased by 26.5%.

This would be further bad news for consumers after two increases in the regulated price last year (15% in February and 10% in August). “For a reference consumer – that is, one who consumes 8,500 kWh per year according to the CRE definition – the price increase in 2023 represents 430 euros,” explains Lucile Buisson, energy project manager, for the public senate. Que Choisir. The same average customer would pay around €200 more this year if prices increased by 10% in February.

UFC-Que Choisir, which disagrees with the raise set last year, opposes the option. “We want the taxation of the regulated selling prices of electricity to remain stable, or if it doesn’t, to ensure growth below inflation,” defends Lucile Buisson. “The decline of the markets allows the government to reduce the cost of the tariff shield, that’s already a saving in our opinion. »

The government faces a dilemma. Bercy is seeking to reduce the deficit to a more sustainable level for public finances, this effort would be aided by the restoration of the consumption tax on electricity from 1 to 22.54 euros per megawatt hour. Knowing that its level was 32 euros before the energy crisis in 2022, the fiscal catch-up is therefore not yet complete. During the December debates, the Senate also tried to oppose this unified support. Senators tried unsuccessfully to boost support for the working and middle classes through stronger energy controls rather than a excise tax cut that would benefit everyone, including the wealthiest households, the biggest consumers. All this for less than the government system.

Time to choose Gabriel Attal

Here is the budget aspect. On the other hand, the executive must also think about the fact that the middle classes need to be taken care of. It was this category of French that the new Prime Minister Gabriel Attal emphasized during the transfer of power with Elisabeth Borne. A ten percent increase in electricity prices after a jump of 26.5% last year would have the worst impact on his assumption of office in this context. And it would represent an angle of attack for the opposition. “If Mr. Attal wanted to signal that he is taking into account the concerns of the French, he could cancel the 10% increase in electricity on February 1,” Manuel Bompard, the national coordinator of Rebel France, said on our morning show this morning.

At a time of ecological transformation, another government priority, this blow to bamboo would be a “contradictory message”, according to Nicolas Goldberg, head of the energy division of the Terra Nova think tank. “There was no urgency to reinstate this tax and raise prices again by 10% where they could stabilize or even fall, thereby sending a signal that the tariff shield is in place until prices stabilize. A missed opportunity”, wrote on the X network this morning.

Epilogue in the next few days when the government order will be published.

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