Regulated electricity tariffs in France will see a significant 15% reduction starting February 1st, benefiting around 20 million customers on regulated rates, as well as small businesses. This change will lower average annual bills by approximately 190 euros. While larger consumers will see greater savings, subscribers to the TEMPO tariff will experience a modest 2% decrease. Future adjustments to tariffs and new competitive offers are expected, alongside a program for small consumers to access more affordable daytime rates.
Significant Reduction in Regulated Electricity Tariffs
This topic has been at the forefront of political discussions since summer and gained traction with the National Rally (RN) prior to the censorship surrounding Michel Barnier’s government. The focus is on the changes to regulated electricity tariffs, with the Energy Regulatory Commission (CRE) announcing on Thursday a remarkable 15% decrease in these tariffs effective February 1st. This translates to an average reduction of 42 euros per megawatt-hour (MWh). Emmanuelle Wargon, the president of the CRE, remarked, “It’s unprecedented.”
Who Benefits from the Decrease?
This tariff reduction will impact a significant portion of the French population, particularly the 20 million individuals subscribed to regulated tariffs (TRVE) and the 4 million households with contracts linked to TRVE through other suppliers. Small businesses utilizing the blue tariff (consuming under 36 kVA) will also benefit from this adjustment.
For the largest electricity consumers—those who rely on electricity for heating, hot water, and cooking—the decrease will be more pronounced compared to those with lower consumption levels. The electricity tariff is composed of three main parts: the cost of electricity, network tariffs, and taxes. While electricity prices have dropped considerably, network tariffs and taxes have risen, resulting in a greater overall benefit for larger consumers.
Given that the average consumption for those on regulated tariffs is 4.4 MWh, the typical annual bill is expected to decline from 1,240 euros to 1,050 euros, equating to a yearly savings of approximately 190 euros.
Impact Based on Household Profiles
The CRE has outlined three scenarios to clarify how this reduction will affect bills based on customer profiles. For those billed on actual consumption every two months, the new rates will be reflected in their first bill after February 1st. Meanwhile, those on a monthly payment plan can expect their suppliers to implement the changes swiftly, beginning in March.
However, subscribers to the TEMPO tariff—about one million individuals—will experience a more modest decrease of only 2%. This contract encourages minimal consumption on designated red days, and the CRE’s president, Emmanuelle Wargon, explained that the offer is already significantly cheaper than standard rates.
Importantly, the CRE’s ruling does not extend to taxation, meaning that the new government and Parliament retain the ability to amend taxes (such as TICFE and VAT) within the year, potentially resulting in future bill increases.
Future Adjustments and Offers
For the 10 million households with offers from other suppliers, the impact of the network tariff and tax increases will depend heavily on the suppliers’ decisions. We can anticipate new offers emerging shortly that will likely remain competitive.
Additionally, the CRE plans to announce by the end of January adjustments to peak and off-peak hours, aiming to provide subscribers with more off-peak options during the day. This change will benefit around 9 million consumers who currently enjoy savings of up to 30% during off-peak periods.
An experimental program is also set to launch for small consumers on the basic option, who find it challenging to switch to a peak/off-peak system due to their limited electricity usage, such as for lighting. This initiative will seek to provide them with more affordable daytime rates.