French Prime Minister Elisabeth Borne on Wednesday announced that price increases for gas and electricity for French households will be capped at 15% beginning next year.
The new price increase caps will take effect from January for gas and February for electricity. It would mean that households that use gas heating will only pay an average of 25 euros more per month, compared to 200 euros if a cap were not put in place. Households that use electric heating, on the other hand, will see their power bills go up by 20 euros.
“We are determined, just like at the beginning of the crises that we face, to act, adapt and protect the French people and our economy”, Borne said at a press conference.
The French government has already spent billions of euros to soften the blow of inflation amid skyrocketing energy prices. Finance Minister Bruno Le Maire said this new measure would cost the government an additional 16 billion euros.
France has the world’s second biggest fleet of nuclear reactors after the United States. So unlike other European economies, France has less exposure to Russia cutting off natural gas supplies in response to the sanctions imposed by the European Union and the US for Russia’s invasion of Ukraine.
But, as timing would have it, the country has been dealing with an extraordinary number of outages that have pushed the country’s nuclear output to a 30-year-low. But, repair works are “well on track” according to Jean-Bernand Levy, chief of nuclear power group EDF, at a parliamentary hearing. EDF targets reaching the same nuclear power output as the previous winter.
While there is no risk of a total blackout in the country in the coming winter, grid operator RTE is not ruling out power interruptions during demand peaks. The operator said that lowering national power consumption by 1-5% in most scenarios and up to 15% in an extreme scenario of gas shortages and very low winter temperatures could help avert a power shortage.
Information for this briefing was found via Reuters and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.