(Google Translation) - Original in French attached.
The national electrician ensures that the government measure limiting price increases to 4% will lead to a shortfall of 8 billion euros in 2022. A figure disputed behind the scenes by the state shareholder.
The government is bleeding EDF to moderate the soaring electricity prices and not alienate consumers a few months before the presidential election. This is the message sent by the EDF unions with the tacit silence, even the discreet support of management.
Message that is beginning to percolate into the public debate following the government's announcements last Thursday to divide the increase in the regulated sales tariff by ten and reduce it from 44.5% to 4% on February 1. This little music, more and more noisy, quite annoys the government, which does not want to pass for the bad guy while it divides by ten the increase in the price of electricity in February.
Sold in advance
Thursday, January 13, the Minister of the Economy Bruno Le Maire announced the details of his measures to limit the rise in the price of electricity. The bill will be paid in almost equal shares by the State and EDF. The virtual abolition of the tax on electricity will eliminate 8 billion euros from public coffers in 2022. For its part, the national electrician will have to sell more terawatt hours of nuclear origin (20 terawatt hours in this case) to its competitors, the alternative suppliers. Unfortunately, it no longer has this volume in the hold: it has already sold all its 2022 production in advance and will therefore have to buy back these 20 terawatt hours on the markets at around 200 euros to resell them at 46.20 euros to its competitors.
The measure goes very badly at EDF. The day after the announcements, Friday at 6 p.m., the electrician convened an extraordinary board of directors. The representatives of the State are reprimanded by the independent directors and the representatives of the employees, who denounce the endangerment of the group. The representatives of the State, including the director of the APE, Martin Vial, do not lead far.
After the weekend, the tension does not fall. “After having fought it a lot, we experience this decision as a real shock, writes Jean-Bernard Lévy in a “letter to managers” sent to his executives on Monday. Many of you have expressed your support, even your indignation, and I share your emotion. Know that the executive committee and I remain very combative. The state shareholder says it was not made aware of this mailing to all senior EDF executives.
An invoice considered inflated
In the eyes of the executive, the bill of 8 billion euros advanced by EDF is considered somewhat inflated. The operation of purchase-resale at a loss of nuclear electricity should not cost more than 3 billion euros. "This is not a sale at a loss," said a source within the executive. The president of the energy regulation commission, Jean-François Carenco, made the same judgment Thursday morning on Franceinfo. Admittedly, EDF will buy electricity on the markets which it will have to resell four times cheaper to alternative suppliers. “But these 20 terawatt hours have already been sold and part of it was sold at very high prices, no later than the end of December 2021”, slips the same source.
According to this source, the electrician still had between 30 and 35 terawatt hours of its 2022 production to be sold on December 1. Despite tight negotiations at the same time with the government on a possible increase in the Arenh ceiling (the volume of nuclear electricity that EDF must sell at cost price to its competitors), EDF chose to dispose of all these electrons on the market. And this, even after the government confirmed on December 8 in the press that it wanted to increase the volume of Arenh, and this from 2022.
Despite everything, “EDF has closed all its positions until the end of December”, we deplore within the power. Clearly, EDF sold volumes of electricity which it knew it would have to buy back a few months later. The public company denies having had these 30 terawatt hours of volumes to sell in December. "We were in the process of closing all our positions, it is the group's risk policy which obliges us not to keep a significant open position", we explain.
A "loss of opportunity"
In any case, the sale of these 20 terawatt hours will only cost around 3 billion euros and not 8 billion, underlines the executive, in unison with financial analysts following EDF. The other 5 billion euros missing from EDF's Ebitda can be explained by the lower tariff increase resulting from government action. "This is not a net loss, but a loss of opportunity," said a source familiar with the matter. Certainly EDF will not benefit from a 44.5% increase in its tariffs, but all the same by 19%, which has never happened before and when its production costs are far from having increased in these proportions. Clearly, EDF could not count on these 5 billion results from the moment the Prime Minister, on September 30, indicated that he would limit the increase in the electricity tariff to +4% in 2022 within the framework of its "tariff shield".
“The 8 billion put forward by EDF, it is without the increase in the volume of the Arenh and by letting the prices of consumers and companies explode”, summarizes one within the executive. Some analysts never really expected the government to let consumer and business prices slip away. Vincent Ayral, at JPMorgan, already wrote last summer that the gas and electricity sector risked a “winter freeze” in prices in the event of runaway markets.
Within the executive, we say we regret that everything is put on his back, because EDF is currently experiencing other concerns. Indeed, in parallel with tariff moderation measures, the electrician is facing a potential generic defect in its power plants which has already forced it to shut down or extend the shutdown of five nuclear reactors. This serial incident could cost him between 5 and 10 billion euros in additional results, according to analysts. Here again, EDF will indeed have to buy back on the markets these volumes that it has already sold in order to deliver them as planned to its customers.
Officially, the government plays appeasement and support for the injured company. “We will never let you down, wanted to reassure the Minister of the Economy Bruno Le Maire on Wednesday. Employees have no reason to be worried. We are alongside EDF. We will continue to invest in EDF with the project for new nuclear reactors”.