May 23, 2019 / 1:19 PM / in 2 months

EDF must sell more nuclear power at fixed cost to protect consumers-lobby groups

PARIS, May 23 (Reuters) - France should double the amount of nuclear energy that state-controlled utility EDF must sell to rivals at a fixed price to protect consumers from higher prices, alternative suppliers and consumer lobbies said on Thursday.

Under the so-called ARENH nuclear power market mechanism, EDF sells up to 100 terawatt hours (TWh) or about a quarter of its annual nuclear output at a price of 42 euros ($46.76) per megawatt hour (MWh) to small suppliers.

EDF’s rivals in the French power market, such as Total , Engie, Uniper and Eni, want the government to raise the ceiling to at least 200 TWh.

EDF is the sole operator of France’s 58 nuclear reactors that account for over 75 percent of its electricity needs. It believes the ARENH price is too low and too advantageous for its competitors.

Wholesale power prices had mostly traded below the ARENH price until a tight nuclear power market, resulting from safety checks on French reactors in 2016 and 2017, lifted prices.

The lobby groups and energy suppliers called on lawmakers, who are debating an energy market reform bill, to lift the 100 terawatt hour ceiling by October, as well as to provide long-term visibility on its future.

“We cannot wait for the market reform. We need a short-term solution now. We need the ARENH ceiling to be reviewed immediately,” Frank Roubanovitch, president of France’s industrial power users lobby CLEEE, told a forum in Paris.

Combined with the sharp rise in European carbon emissions prices, the French year-ahead baseload electricity contract averaged 54.80 euros/MWh in 2018, up from 41.60 euros in 2017. The contract is currently at 51.75 euros.

The rise in power prices has increased demand for power from the ARENH mechanism which is sold in an auction window. In last November’s auction, the alternative suppliers requested 132.93 terawatt hours of EDF’s 2019 nuclear output, far above the 100 limit.

Roubanovitch said the present ceiling imposed an extra cost of around 1.5 billion euros ($1.7 billion) on consumers because suppliers had to buy their shortfall on the wholesale market and pass this on.

In 2017, the rivals bid for 94.6 TWh under the mechanism.

EDF’s nuclear generation stood at 393.2 TWh last year and it is targeting 395 TWh in 2019.

Timothée Furois, deputy director of energy markets at the French energy ministry, said the ARENH ceiling would be discussed as part of the energy bill and a decision would be made at that time. ($1 = 0.8982 euros) (Reporting by Bate Felix; Editing by Sudip Kar-Gupta and Alexandra Hudson)

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