UPDATE 2-French energy minister says power prices won't rise

Fri Jul 4, 2014 1:58pm EDT

Related Topics

* Energy minister contradicts prime minister on tariffs

* Royal says power prices will not increase

* EDF shares close higher despite her comments

* Les Echos says draft decree plans catch-up payment (Adds Les Echos report on planned power price decree)

By Geert De Clercq and Marine Pennetier

PARIS, July 4 (Reuters) - French Energy Minister Segolene Royal said electricity tariffs will not rise this year, contradicting the prime minister, and said it had not been decided whether households would face catch-up payments for the 2012-13 period.

State-controlled French utility EDF lost more than $5 billion of its stock market value on June 19 after Royal said she had cancelled a scheduled 5 percent rise in regulated power tariffs set to take effect on Aug. 1.

Two days later, Prime Minister Manuel Valls said in a statement that power prices would indeed increase in the autumn, but less than initially planned.

"The 5 percent increase is cancelled, and even if it displeases some speculators, we will stick firmly to this decision," Royal said on her twitter feed on Friday.

"I categorically deny a report in Le Parisien (newspaper) which says there will be an increase in power tariffs. On the contrary," she added.

Despite her comments, EDF shares closed 0.6 percent higher, outperforming the CAC 40 index, which ended 0.5 percent lower. EDF stock had risen as much as 2.1 percent during the day.

Le Parisien wrote on Friday that energy consumers would have to pay an extra 30 to 45 euros each as a result of a ruling by France's highest administrative court that a government cap on prices was illegal.

The one-off, catch-up payment to EDF would cover a one-year period to August 2013, in which the government limited price increases to 2 percent.

The Council of State ruling dates from April this year. It gave the government two months to come up with a new pricing structure.

"Concerning the catch-up payment ordered by the Council of State, no decision has been taken. I am negotiating with EDF to protect people's purchasing power," Royal said.

Le Parisien said 29 million customers - some 92 percent of households - would pay the extra 30 euros and that commercial customers would pay 45 euros.

French financial daily Les Echos said on its website it had seen a draft decree prepared by the energy ministry that proposes to spread out a 24 euro catch-up payment over a one-year period, under which French households would pay 2 euros per month from autumn 2014 onwards.

Small businesses would pay 4 euros a month.

Sources told Reuters last month that a planned reform of regulated French power tariffs would bring an element of market prices into the calculation, removing the link with utility EDF's production costs, which would make caps on EDF's power prices less open to legal challenges.

Smaller competitors of EDF and gas utility GDF Suez have successfully challenged previous government price caps on energy in court, arguing they created artificially low prices that did not cover utilities' production costs and prevented smaller competitors from winning market share from the big two.

($1 = 0.7331 Euros) (Editing by Andrew Callus, James Regan and Mark Potter)

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