French consumers will face higher electricity prices in 2012 due to necessary investments in maintenance to their ageing power grid,  increments on the contributions to the renewable energy fund (CESP), safety upgrades in their 58 nuclear reactors mandated by the Nuclear Safety Authority, after the disaster of the Fukushima plant in Japan, the ARENH mechanism, that forces Electricité de France (EDF) to sell a quarter of its nuclear output to its competitors, and the yearly inflationary adjustment that hovers just below 3%; all this factors will add up to an annual increase of 6%, that would be maintained until 2016, explained Philippe De Ladoucette, head of the Commission of Energy Regulation. He warned that the increase could reach a 30% over the same period, if changes to the current regulatory framework governing energy prices are not enacted.

With an upcoming presidential election in April - May, the French Government is under political pressure to keep prices low to consumers that already have been hit with recent increases in other sources of energy. Other factors would likely push prices up, like pressures from Brussels on the French Government end with state controlled tariffs that keep electricity prices approximately 30% lower than their neighbors; or the possible shut down of the oldest nuclear plants in the county, already scheduled as part of a phase-off policy, supported by the opposition, but resisted by the UMP government. The increasing prices would likely be off-putting to the 35 million French households (60% of the population) that have shifted to electricity only power.

Written by Agathe Damour (agathe.damour.int@ubifrance.fr)