France will force EDF to take 8.4 billion euros with an energy bill ceiling | EDF Energy
The French government will force national energy giant EDF to take an €8.4billion (£7billion) financial hit to protect households from soaring energy costs by limiting bill increases to 4% this year.
The company lost a fifth of its market value on Friday after the French government announced its intention to limit rising energy bills, which notably forces EDF to sell the electricity produced by its fleet of nuclear reactors to suppliers. domestic rivals at a price well below the current record high market. prices.
The move underscores pressure on governments across Europe to help households squeezed by the cost of living crisis. UK Chancellor Rishi Sunak has been accused of being ‘missing’ due to soaring energy bills. He has been in talks with MPs and businesses to agree a set of measures to soften the blow of the national energy crisis, but no decision has been made.
In Spain, the government has introduced an exceptional tax on electricity generators and gas producers who are able to take advantage of record market levels to help keep household energy bills low. In Germany, the government has reduced a surcharge on bills used to support renewable energy programs, which will instead receive additional state subsidies from higher carbon taxes.
EDF also told investors that its nuclear power generation for the coming year would be around 10% lower than originally forecast due to technical problems at a handful of its nuclear reactors.
The French government, which faced strong public protests over rising fuel prices in 2018, has already cut some electricity taxes to help slow rising household energy bills, at an estimated cost of 8 billion euros for the state.
Governments across Europe are under pressure to intervene in the energy market to protect households from an unprecedented spike in wholesale market prices, driven by a global gas supply crisis that has propelled markets at unprecedented levels.
As part of the French government’s new measures, it has maintained a tight cap on the regulated price that EDF is allowed to charge for its nuclear electricity, which will rise to €46.2 per megawatt hour, from €42/MWh, despite a record increase in electricity market prices in Europe in recent months.
EDF said the plan could affect its earnings before interest, tax, depreciation and amortization between 7.7 billion euros and 8.4 billion euros based on market prices in December and January. Barbara Pompili, France’s environment minister, said the government planned to help EDF weather the blow, but gave no details.
The nuclear energy giant also told investors that its reactors would produce less electricity than expected this year. This is due to a series of breakdowns at five of its nuclear power plants which will require downtime to undertake maintenance work. EDF estimates that it will produce 300 to 330 terawatt hours this year, against 330 to 360 TWh previously.
The company’s share price fell from €10.35 on Thursday to nearly €7.92 on Friday morning.