Let’s face it, we would not like to be in the place of the CEO of EDF. At the controls of the energy giant since 2014, Jean-Bernard Lévy is not the type to let his arm be twisted without a fight. But after tough negotiations, the state shareholder (83.9%) ended up imposing its views on it: within the framework of the Regulated Access to Historic Nuclear Electricity (Arenh) mechanism, imposed by Brussels in 2011 in the name of the competition, he will have to sell to his competitors – at a reduced price, it’s in season – 20% more power than usual.
By paying on the beast to finance his “tariff shield”, the government avoids a 35% surge in consumer prices that would create disorder three months before the presidential election.
The State has paid its share by reducing the electricity tax to almost nothing, a loss of revenue of 8 billion euros drowned in the budget deficit. For EDF, the government’s injunction is painful and defies good economic sense: it will buy electricity at 300 euros per megawatt hour (MWh) to resell it for 46.20 euros to its competitors Engie, TotalEnergies or Eni. The announcement had an immediate effect, amplified by technical failures at several power stations: the stock plunged 15% on the stock market on Friday January 14, destroying more than 5 billion euros in value. And the operation will result in a drop in the gross operating surplus around 8 billion in 2022.
The Arenh obliges neither more nor less EDF to help its competitors when electricity prices soar, hampering its investments and increasing its debt. It’s a “poison” which risks killing the company, denounces Mr. Lévy for years. In vain.
Few bosses of public companies are as subject as he is to the oukases of the Elysée, Matignon and Bercy, or as exposed to political vagaries. This interventionism has been reinforced in recent years, with the State alternately making the “electricity fairy” the rescuer of the nuclear sector and a cash cow.
Political staging
In 2016, the state had to come to the aid of a sector that was going down the drain. He had subscribed to three quarters of EDF’s capital increase of 4 billion euros. But Mr. Lévy had been asked to resume manufacturing the reactors of Areva, which was almost bankrupt and also recapitalized to the tune of 5 billion.
The integration of Areva NP, renamed Framatome, has changed EDF’s profile: to its historical trades of architect-assembler of power plants and electricity producer, it has added that of industrial manufacturer. Can you imagine asking Air-France-KLM, already in bad shape, to buy the engine manufacturer Safran? Or to the SNCF, not in great shape, to take over Alstom’s TGVs?
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