French regulator orders Engie to raise gas prices for companies
The French competition authority has ordered Engie to raise its natural gas prices for companies, saying that in some cases the utility was engaging in “predatory pricing” to the detriment of competitors.
The measure against the former monopoly, which still has about 80 per cent of the residential French gas market and more than 60 per cent of the non-residential market, followed a complaint by a rival Direct Energie.
The Autorité de la Concurrence on Monday said “Engie had fixed the prices of its individual market offers … without taking the real costs into account, at the risk of establishing predatory or exclusionary pricing.”
The competition authority also said it is conducting an investigation into the group’s residential gas operations. It is asking if the company is using regulated gas prices in some areas to offer overly cheap rates in others.
“Engie has always applied — scrupulously and with the highest rigour — the rules resulting from legal evolutions of the gas markets, always respecting its clients,” the company said in a statement on Monday. It added that it would look into launching an appeal in the Paris courts.
The antitrust body said it would be several months before they reached a final conclusion in the case.
But if the company is found to have abused its dominant position it could face a fine of as much as €7bn, or 10 per cent of its worldwide annual turnover.
Engie sells gas to retail customers at regulated tariffs set by energy regulator CRE, but also sells gas at unregulated prices to some retail and corporate customers in competition with new market entrants.
The energy company has its annual general meeting on Tuesday during which Isabelle Kocher is set to formally become chief executive, replacing Gérard Mestrallet, who will stay on as chairman.
Ms Kocher wants the company to reduce its exposure to unregulated gas and power markets in the US and Europe. This comes in the wake of falling energy prices, triggered by an oversupply of fossil fuels and government subsidies for renewable energy.
Engie plans to sell €15bn worth of assets over the next three years in energy exploration and production activities, coal-fired power plants and US gas operations to reduce its reliance on unregulated activities.
The plan also involves €22bn of investment in renewable energy, gas networks, gas storage and LNG terminals and in energy services such as heating and cooling networks.
Lower oil prices have put severe pressure on the electricity market as well. Since mid-2015 electricity prices in Europe have fallen between 15 per cent and 40 per cent depending on the market, according to Moody’s.