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MEMO/ 09/394

Brussels, 15th September 2009

Commissioners welcome French reform proposal for national electricity market

European Commissioners Neelie Kroes and Andris Piebalgs consider that the proposed reforms made public today by the French Government concerning the electricity market could constitute a step towards the effective opening-up of that market to competition. The French authorities have made the commitment in particular not to maintain regulated tariffs for large and medium-sized companies beyond a limited transition period. These tariffs are currently subject to two investigations being carried out by the European Commission.

Competition Commissioner Neelie Kroes said: “If the commitments made by the French Government to the Commission are implemented, this large-scale reform has the potential to appreciably enhance competition on the French electricity market to the benefit of consumers. It will exert pressure on prices and foster innovation and investment."

Energy Commissioner Andris Piebalgs said: "I welcome the initiative of the French Government aiming to reform the electricity market. In order to reach our objectives of ensuring a sustainable production of electricity and increased security of supply, it is indeed necessary to have a competitive electricity market."

The degree of competition on the French electricity market is currently low. EDF controls a large set of nuclear power plants, with production costs well below electricity wholesale prices. This gives EDF a significant competitive advantage and limits the scope for its competitors to develop their sales of electricity to end-customers (retail activities). In addition, the regulated tariffs for end-users applicable to both companies and households also contribute to hindering the development of competition.

Considering that the regulated tariffs for large and medium-sized undertakings were likely to unfairly favour these undertakings vis-à-vis their competitors and therefore, to constitute state aid incompatible with the Single Market, the Commission opened an in-depth investigation on 13 June 2007 (see IP/07/815 ). The scope of this investigation was extended on 10 March 2009 (see IP/09/376 ). Domestic tariffs are not part of this investigation. The Commission also opened an infringement procedure against France regarding regulated tariffs applicable to companies, considering that these might break the electricity internal market directive 2003/54/EC (see IP/06/1768 ).

The French Government has given commitments which aim to lead to effective competition, to warrant compliance with the EC Treaty rules on the free movement of goods, and to ensure fair treatment of electricity suppliers as well as of the various categories of electricity end-users. The French Government has also undertaken to develop the practical modalities of the mechanism in consultation with market players and the Commission.

In order to enter into application, this reform project will have to become law. Commissioners Kroes and Piebalgs believe that a law, integrating the entirety of the commitments made by the French Government, would be a positive element to be taken into account by the Commission in the two ongoing investigations.

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