Falling prices complicate implementation of new nuclear price regulation

The agreement reached between EDF and the public authorities last November aims to abolish the ARENH and replace it with a system of taxation to redistribute part of EDF's turnover to consumers when the sale price of nuclear electricity exceeds certain thresholds. At the time of the agreement, the thresholds in question were €78/MWh and €110/MWh, with a tax rate on EDF sales of 50% between €78 and €110/MWh and 90% above. In return for the freedom given to EDF to conduct its commercial policy, the government asked the company to rapidly conclude long-term contracts with electricity-intensive industries and medium-term contracts (5 years) with customers who so wished. The fall in market prices has upset this plan, with EDF finding it hard to convince its customers to commit to long-term contracts at a time when prices are falling. If prices continue to fall, this could jeopardise EDF's financial recovery, as the mechanism does not protect the company against falling market prices.