May 29, 2019 / 7:32 AM / 22 days ago

UPDATE 2-EDF wants lower power tax, French government says cut your costs

(Adds comments on Taishan, Flamanville)

PARIS, May 29 (Reuters) - EDF CEO Jean-Bernard Levy called on the French government to consider lowering taxes on electricity, but the environment minister said the state-owned utility needed to reduce its high costs.

Levy defended a planned six percent increase in regulated power tariffs next month, which he said reflected higher commodities prices as well as higher taxes.

“Taxes account for more than a third of power bills, it is as if we had a value-added tax of 55 percent on electricity... we know the government is studying the issue of environmental taxes, maybe it should consider taxing electricity less,” he said on Europe 1 radio.

Environment minister Francois de Rugy, also interviewed on Europe 1, responded by saying EDF should focus on cutting costs.

“If we lower the taxes, we lower state revenue. We cannot lower all taxes,” he said.

De Rugy said EDF generates nearly all electricity in France and that its costs have been rising for years.

“Firstly, EDF’s salary burden is higher than those of other energy companies. Secondly, there is the high cost of France’s nuclear fleet. EDF’s debt is there to prove it, over 35 billion euros ($39 billion). EDF is in debt because it cannot cover its production costs with its revenue,” de Rugy said.

He also pointed to the fact that EDF employees can buy their electricity at just one tenth of the price that French consumers pay, which has been regularly criticised by state audit body the Cour des Comptes.

“They have a 90 percent discount. Maybe the CEO of EDF could change that. That is his responsibility,” de Rugy said.

Levy responded on Europe 1 that EDF had made proposals to the government about its staff benefits but that nothing had been done.

De Rugy also sharply criticised the long delays on the EPR nuclear reactor EDF is building in Flamanville, as well as its cost, last estimated at 11 billion euros in mid-2018, compared to an initial estimate of 3 billion.

“That is a colossal cost overrun. It was supposed to be inaugurated in 2012, we are in 2019. EDF is not capable of giving us a start date,” de Rugy said.

Levy gave no update on Flamanville, as EDF is waiting for nuclear regulator ASN to rule on whether faulty weldings at the reactor need to be redone or not.

He said that in Taishan, China, where a first EPR is already in operation, the second EPR had run its first nuclear chain reaction on Tuesday.

EDF shares were up 1.5 percent in early trade, outperforming the CAC40 index, which was down 1.6 percent.

$1 = 0.8965 euros Reporting by Geert De Clercq and Felix Bate Editing by Dominique Vidalon and Susan Fenton

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