French President Emmanuel Macron has announced that electricity prices for millions of households in France will increase by 10% starting in August. This decision comes as part of the government’s plan to end the tariff shield support program. In an interview with France 2, Macron justified the price increase by citing geopolitical tensions and market disruptions. He referred to the decision as “proportionate” and assured that the government will continue to support low-income households.
The tariff shield was initially introduced in 2021 to protect citizens from soaring energy bills amidst high inflation rates in the Eurozone. Under this program, electricity price hikes were capped at 15% from February to the end of July this year. However, Macron explained that continuing the tariff shield would ultimately burden taxpayers in the long term, as the state had already invested significantly to absorb the increase in energy costs.
The rising electricity prices in France are not an isolated issue but are connected to broader factors affecting the European Union. Last year, the EU decided to abandon Russian energy as part of its sanctions policy, leading to a surge in electricity prices across the bloc. Additionally, France’s state-owned utility EDF has been struggling with record-low nuclear output due to stress corrosion affecting its fleet of nuclear reactors. These factors have contributed to the recent rise in electricity prices.
According to Gabriel Attal, the minister of public action and accounts, the electricity price cap in France is expected to be completely phased out by the end of 2024. The government estimates that losses incurred due to the tariff shield between 2021 and 2023 amount to over €110 billion ($121 billion). Meanwhile, electricity prices under regulated tariffs have already increased by an average of 31% since the end of 2021.
To address the impact of the price increase on low-income households, the French government will continue to provide support. However, it is important to note that the end of the tariff shield program signifies a shift towards market-driven electricity prices. This decision reflects the challenges faced by the government in sustaining the financial burden of subsidizing energy costs and emphasizes the need for a more sustainable energy strategy in France.
In conclusion, President Macron’s confirmation of a 10% increase in electricity prices in France starting in August marks the end of the tariff shield support program. The decision is justified by geopolitical tensions and market disruptions. As the price cap is gradually phased out, the government will focus on supporting low-income households. However, it is essential for the country to address the underlying issues affecting electricity prices and develop a more sustainable energy plan for the future.
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