even if electricity taxes rise, prices will fall in 2025

Launched in a quest for savings in all directions, the government plans to raise the tax on electricity, while promising that the price of electricity will fall.

If the increase in a tax accompanied by a reduction in prices may seem contradictory, it is because in the price of electricity, there are two components, the price on the wholesale market, and the taxes, in particular the famous TICFE. When electricity prices on the markets skyrocketed, because of the war in Ukraine, governments lowered taxes significantly to compensate and cushion the increase. This was the famous tariff shield.

Now, electricity prices have fallen significantly and the TICFE has gradually been raised to 22 euros per megawatt hour. In its quest for savings and revenue for the 2025 budget, which must be presented on Thursday October 10, Michel Barnier’s government wants to raise it to at least the pre-crisis level, i.e. 32 euros per MWh. Despite this increase, the French will pay less for their electricity, promises the government. It ensures that in February 2025, 80% of households, those with regulated tariffs, will pay less for their electricity compared to 2023.

The government’s whole trick is to raise this famous tax to the pre-crisis level at 32, or even 35 euros, per megawatt hour or even 38 euros, so that the price remains just a little below the 2023 rate. According to Bercy, the reduction will be 9%, or a hundred euros less per year on the bill.

The question is where to put the cursor to raise the tax and Agnès Pannier-Runacher, the Minister of Ecological Transition and Energy, is already pointing “the risk” to go too far in increasing this tax, which could weigh on the bill of the most modest. The minister warns in particular those who are at the unregulated rate, i.e. approximately 20% of households.

To summarize, for everyone else, prices will drop very slightly compared to last year. However, the increase in this tax will be debated, since it represents less purchasing power for households. The government hopes, with this tax, to earn at least three billion euros more in 2025.