(Bloomberg) -- The French government should scrap Electricite de France SA’s regulated power tariffs to boost competition from rival suppliers, the nation’s competition authority recommended Tuesday.
Loosening the state-owned utility’s grip on the consumer market may help stem inflation, driven to some extent by high energy costs in the last couple of years. Although prices have declined of late, they remain a flashpoint in France and a major hazard for the weak minority government.
The regulated prices offered to millions of households and small non-residential users are set by the energy regulator and the government. But they are “blurring the price signal that should incite consumers to a greater energy sobriety, and are heavily weighing on the competition landscape,” Autorite de la Concurrence said in a report Tuesday.
While the retail market is open to competition, 59% of households and 35% of small non-residential users are still subscribing to regulated offers provided by EDF and its local subsidiaries, the regulator said.
France is due to present a report on its retail power market regulation to the European Union competition authorities by the end of the year, as part of a planned reassessment. The nation is also working on new rules for its wholesale electricity market.
In a separate report published Tuesday, France’s energy regulator recommended to keep the regulated tariffs for another five years as they provide a useful benchmark for consumers, and because they can be replicated by EDF rivals.
The Commission de Regulation de l’Energie pointed out that users are still reluctant to switch to market offerings even as they can be as much as 20% cheaper than regulated prices. It also made proposals to boost competition and better protect consumers.
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