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ENERGY

What would France do if Russia cuts off the gas supply?

French Economy Minister Bruno Le Maire has said that the country is making "preparations" should Russia decide to cut off the gas supply.

French Economy Minister Bruno Le Maire announced that France was preparing for the possibility that Russia might cut off the gas supply.
French Economy Minister Bruno Le Maire announced that France was preparing for the possibility that Russia might cut off the gas supply. (Photo by Tobias SCHWARZ / POOL / AFP)

France and Germany are preparing for a cut in Russian gas deliveries, France’s economy minister said on Thursday, as Russian President Vladimir Putin warned Moscow will turn off the taps for those who refuse to pay in rubles.

“On the sanctions against Russia, we will not accept the payment of gas in any other currency than stated in the contract,” said Bruno Le Maire following talks in Berlin with his German counterpart Robert Habeck.

“There could be a situation tomorrow in which there is no longer any Russian gas. It’s up to us to prepare for these scenarios and we are preparing.” 

On Tuesday the head of France’s main gas distribution network, Laurence Poirier-Dietz, said the government may be required to pass a load-shedding decree, in which parts of the country have gas cut off on a rotating basis to ration supply. Hospitals, schools and retirement homes would be spared. 

“We have enough gas coming from other sources and supplies to get by until next winter,” she said in an interview with Sud-Ouest

“The question will be asked about how to fill reserve stocks during the summer.” 

French newspaper Les Echos report that filling the reserve stocks would cost in the region of €10 billion. 

France has the option of importing gas from other countries like Norway, Libya or Azerbaijan. It also has its own supplies of subterranean gas in the northern département of Pas-de-Calais and a number of methane plants, the biggest of which is in Seine-et-Marne. 

“We can try to stimulate investment and double production capacity,” said Carole Mathieu a researcher with the French Institute of International Relations, during an interview with France Info. “That would bring us to 40 billion cubic metres at the European level, but Russia produced 155 billion cubic metres last year. There is work to do.”

The French government said that load-shedding would be a last resort. 

Earlier in March, Prime Minister Jean Castex announced that the government would seek to end French dependency on Russian gas and oil supplies by 2027. 

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ENERGY

French electricity bills set to decrease from February 2025

France's energy commission has announced it will delay the revaluation of electricity prices until February 2025, when it expects the cost of electricity to decrease.

French electricity bills set to decrease from February 2025

The French energy regulatory commission (commission de régulation de l’énergie, CRE) had planned to re-evaluate electricity prices for the regulated (flat-rate) tariff plan in August 2024, but this has been postponed to February 2025, according to French daily SudOuest.

The revaluation in February will take into consideration the rise of transmission costs, as well as a predicted decrease in electricity prices, CRE announced on Wednesday.

As a result, the higher transmission costs are expected to be offset by decreased electricity prices, leading what CRE predicts will be a 10 percent total decrease in bills for those on the regulated electricity tariff plan.

What does this mean for household bills?

This change will affect people who are on the ‘regulated rate’ plan, also called the tarif bleu. According to SudOuest, there are 22.4 million of these contracts, including both households and small businesses.

According to Ouest France, this means that for the average French household – who sees annual electricity bills of €2,000 – they would save at least €200.

There are other types of electricity contracts in France who are not included in this change – for example, the peak hours contract, which differs from the flat-rate because it offers a lower price per kilowatt during off-peak hours, and a more expensive one during peak hours.

The 17.5 million contracts (which include households and businesses) that are not on the regulated tariff plan will see an increase in transmission prices from November 1st.

Why the delay?

The revaluation was initially planned for August, but it was pushed back to February at the behest of the French government, SudOuest reported.

The French government, who was at the time concerned with an ongoing political crisis after snap parliamentary elections, was reportedly concerned that swinging prices would be confusing for consumers.

In 2021-2022, amid inflation, post-Covid recovery and the war in Ukraine, electricity prices soared by more than 43 percent, despite a price shield the government put into place.

Therefore, the French government asked that CRE make a decision that “takes into account their recommendations for stability”.

CRE thus decided that they would put the annual transmission update into force on November 1st, but “in the interest of price stability and clarity” they promised to postpone the increase for households and very small businesses on regulated tarif plans until February, when the fall in electricity prices is expected to occur.

How is the electricity price calculated?

In France, in addition to the type of plan you have, the final price of electricity depends on three components – transmission costs (or the tarif réseau), the price of the electricity itself (which includes marketing costs, the supplier margin and energy supply costs), and the tax applied.

As for the February revaluation, it is the tarif réseau component that will increase by one percent from February 1st, but the CRE believes this will be absorbed in an overall decline in the price of electricity, leading to 10 percent drop in flat-rate bills.

The price of electricity still remains higher than pre-2021, when the cost was between €40-50 per megawatt hour (MWh).

Prices are currently stabilising around €60-70 per MWh, which is far lower than peaks seen in 2022.

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