The French energy market

Résumé du document

On July 2007 started the last step of the opening up of the energy market in France, i.e., of the electricity and gas markets. This process started in 1996 when the European Union decided to open up its market and liberalize it, in order to create one single market without monopoly. It was a big step for France, especially because the energy market was nationalized at the end of the Second World War. So, for sixty years the market was supplied by only two companies that held almost the whole market and which were working together. The main difference consists in allowing the 12 million particular consumers to change their energy supplier. Before that, the industrial market in energy supply was deregulated in 2003. However, this deregulation will be controlled by the State in order to protect the consumers and to avoid abuses. After the World War II, many modifications were made in order to change the infrastructures that remained before the war. One of them, and not the least, was the nationalization of the energy market because it was considered for long as a monopoly and inevitably related to the state. That is why the production and the distribution of electricity and gas were nationalized, in France, by the law of the April 8th 1946. This led to two major changes.

Extraits

[...] Consequences of the liberalisation of the energy market A. Consequences for individual consumers Since July 1st consumers have the possibility either to continue to benefit from regulated price rates fixed by the State and supplied by the historical operators EDF and GDF, or to switch to the deregulated market to attain a free price system proposed by the new private suppliers, but also by EDF and GDF. The public suppliers thus have offers according to both price systems. The regulated price rates are fixed by the public authorities, more exactly by the Minister in charge of Economy and Energy, according to the recommendation of the French energy regulator: “Commission de Régulation de l'Energie”. [...]

[...] There were different stages of the opening of the electricity market in France: For large consumers: o February 19th 1996 : 20% of the market that's to say customers using more than 100 GWh o May 29th 2000: 30% of the market (customers using more than 16 GWh) o February 10th 2003: 37% of the market (customers using more than 7 GWh) For companies and firms: o July 1st 2004: 70% of the market For private individuals: o July 1st 2007: complete opening To compare with other European countries, France has waited the limit date of January 1st 2007 imposed by Brussels. The United Kingdom and Germany had opened their energy market for private individuals in 1998. III. [...]

[...] Why a liberalization of the energy market and how? Until the liberalization of the energy market in France, EDF was in charge of all aspects of the electricity market that are production, transport, distribution, and supplying. The Treaty of Rome of 1957, which represents the beginning of Europe, had established principles such as free trade and free-market economy in every economic sector. The article 14 of the Treaty of Rome says that the Community is responsible for creating a market without internal barriers to the movement of goods, services, capital and people. [...]

[...] This is explained by the less pronounced difference between the regulated prices and the market prices of gas. E. Consequences for the historical suppliers Since the liberalization of the energy market, new suppliers have made their arrival on the market and are in direct competition with the former monopoly: EDF and GDF. There are, for example: Altergaz, Alternated, Express Energy, Electrabel, Enercool, Poweo, Proxelia etc Despite the introduction of these new companies, EDF and GDF are still in a dominant position and the others are not enough competitive. [...]

[...] EDF and GDF remain the two owned-state goliaths of the French energy market. They continue to be protected from true competition and there are even consolidation in the sector, such as the pending merger of Suez and GDF. What's more, EDF is very popular and we can think that it is not going to lose lots of its consumers. Bibliography and webography EDF, le marché et l'Europe, Jean Paul Fitoussi, Editions Fayard. EDF-GDF une entreprise publique en mutation, Collectif, La Découverte. [...]