The State and EDF reached an agreement on Tuesday guaranteeing the average price of nuclear electricity “around 70 euros” per megawatt hour from 2026. The government’s objective: to prevent prices from exploding, but without guarantee that they go down.
After tough negotiations, the government announced the conclusion of an agreement with EDF on Tuesday, November 14. It guarantees an average price level for nuclear electricity “around 70 euros” per megawatt hour (MWh), from 2026, for the following fifteen years. In the facts, “there is a lot of confusion” and households will not pay 70 euros per MWh, explains Anna Creti, professor at Paris Dauphine University. “This amount is not intended to be linked to invoices.”
In fact, several adjustments and parameters must be taken into account before arriving at the final amount paid by consumers. For example, this reference price will only concern electricity of nuclear origin and not that produced from gas, coal or hydraulic power. Will the French bill therefore increase or become lighter in two years, with this new mechanism supposed to better regulate the French energy market?
To try to understand the impact of this long-term agreement on the price of electricity paid each month by households, we must first look at the way in which it is set today. Until the end of 2025, the State requires EDF to sell to its competitors, alternative suppliers, part of the electricity it produces within the framework of Arenh (Regulated access to electricity historic nuclear power plant). This only concerns around a third of EDF’s electricity production, sold at the low price of 42 euros per MWh. This system is supposed to limit the impact of the price increase on the final household bill, but it represents a shortfall for EDF.
The objective of a more stable price
Furthermore, households who have subscribed to the regulated tariff (TRVe), EDF’s famous “blue tariff”, have seen the price of a kilowatt hour (kWh) reach very high levels in recent years. However, the State put in place, in February 2022, a price shield which effectively made it possible to contain the surge in prices on the wholesale markets, where electricity is negotiated before being resold to customers. “Over the last two years, electricity prices have increased by 80%, 90%, 100%, 110%. This price shield will have cost nearly 40 billion euros”said Bruno Le Maire on Tuesday at a press conference.
With the new agreement announced on Tuesday, which will come into force on January 1, 2026, if the European Commission validates it, all nuclear electricity production by EDF in France will be concerned, and no longer just one part. as was the case with the Arenh. The government’s stated objective is price stability, according to the Minister of the Economy. “The biggest advantage for households is a stable price”he insisted on Tuesday at a press conference.
“We had to find another way to guarantee price stability, less costly than the tariff shield. This will be the case with the agreement concluded with EDF.”
Bruno Le Maire, Minister of the Economyat a press conference
Furthermore, the agreement provides for a special provision. When market prices exceed a certain amount, the State takes EDF’s revenue. More precisely, as soon as the average price will exceed 78 to 80 euros per MWh, 50% of the additional revenues earned by EDF will go “to the community”. So to consumers. And if this price exceeds 110 euros, the proportion charged will rise to 90%.
A vagueness on the redistribution of additional income from EDF
However, the practicalities of these discounts remain unclear, according to specialists. “I have not completely understood the system by which we will guarantee a return to the consumer and a way for them to benefit from regulated nuclear electricity”points to franceinfo Nicolas Goldberg, energy market expert at Colombus Consulting.
“We do not yet know if this redistribution only concerns residential consumers or if we include small and medium-sized businesses, for example.”
Anna Creti, professor at Paris-Dauphine Universityat franceinfo
At present, it is therefore still too early to know what the concrete effects will be on individual bills. But “we will thus be equipped with an anti-crisis mechanism to avoid a price explosion similar to that of 2022”assures the Minister of Energy Transition, Agnès Pannier-Runacher.
“There will perhaps be fewer peaks, but there will be structurally high prices and still purchasing power problems”for his part fears Antoine Autier, head of studies at UFC-Que Choisir. “The objective is to have a market that functions, while fulfilling contractual commitments to protect the consumer”believes Anna Creti about this balance, which promises to be difficult to achieve for EDF and the State.