“EDF’s debt will approach 60 billion euros at the end of 2022 and thus cross the fateful 50 billion euro threshold for rating agencies. If things do not change, EDF will not be able to not pass the course of the end of the year because it is in a deadly impasse”, alerted, this Wednesday, June 15, Philippe Page Le Merour, CGT secretary of the central EDF corporate social committee (CSE). The debt could even go beyond “if other government measures were to follow CRE’s recommendations [le régulateur, ndlr]“who wants EDF to sell more electricity at rock-bottom prices, he warned.
The staff representative body gave a press conference following the right to economic alert procedure, launched last January after the government forced EDF to sell 20 TWh of additional electricity at discounted prices to its competitors, in the framework of the Arenh mechanism. The objective is to curb the surge in electricity prices on the basis of the principle that alternative suppliers will pass on this supply at a lower cost in the prices offered to end consumers.
The right of economic alert is a prerogative given to the CSE when it becomes aware of facts likely to affect the economic situation of the company in a worrying manner. He can then ask the management to provide him with explanations. In the case of EDF, the central CSE expressed concern about the increase in the Arenh ceiling, which will cut the group by 10 billion euros in 2022. The management of the electrician has provided some answers last February. They were deemed unsatisfactory by the staff representative body, which then decided to confirm the right to economic alert and to appoint the accounting firm Secafi.
The continuation of this procedure forced EDF to make a certain number of internal documents accessible (such as the income statements and the budgetary outlook) and to respond to requests for interviews from the Secafi consultancy. This expertise work gave rise to a deliberation which must be submitted to the Board of Directors. In this case, that of EDF will meet on June 29th. “The supervisory body must provide a written and reasoned response to the alerts and recommendations presented in the deliberation within one month”says Philippe Page Le Merour.
In fact, the recommendations of EDF’s central CSE were already presented yesterday to EDF management, on the occasion of an extraordinary session, during which the group’s four trade union organizations unanimously voted for the resolution .
Immediately suspend the Arenh
In concrete terms, the staff representative body pleads for two immediate actions: the suspension of the Arenh and a new method of calculating the regulated electricity sales tariff (TRVE).
“The energy code provides for the suspension of the Arenh, in the event of exceptional circumstances”reports the trade unionist, who evokes the European energy shock, amplified by the war in Ukraine, and the historic unavailability of the French nuclear fleet, with nearly half of the reactors shut down, due to a problem of corrosion under constraint and the delay in maintenance programs linked to the health crisis.
According to EDF’s central CSE, the abolition of the Arenh would mechanically contribute to lowering electricity prices and therefore “has played a major role in controlling inflation in the country”emphasizes Philippe Page le Merour.
The reasoning is as follows: the removal of Arenh automatically leads to the removal of capping, which corresponds to the volume of Arenh not allocated to alternative suppliers, when their total demand exceeds the regulatory threshold. Consequently, the latter must obtain supplies from the markets, where the prices are much higher (about 250 euros per MWh currently, against 42 euros per MWh with the Arenh). These additional costs are then passed on to their customers’ bills where prices are not regulated, but also on the TRVE, due to the so-called “contestability” principle.
According to this principle, the TRVE must be calculated in such a way that the incumbent energy company’s rivals can make lower price offers. It is therefore (partly) to allow competition that the regulated sales tariff is increased.
Disconnect from the European market
The second proposal from EDF’s central CSE consists of “get out of the dogma of competition” and to disconnect France from other European power exchanges where price formation depends on the marginal cost of operating the last power station called to meet demand. However, in some countries, such as Germany, the last plant called often runs on gas, the prices of which have soared since the Russian invasion of Ukraine.
The staff representative body suggests that the formation of the price of electricity reflects the cost of the French production mix.
“The idea is to build the regulated sales tariff according to our basic production, i.e. nuclear and hydro, with a tariff of 60 euros per megawatt hour. This figure takes up the work of the Court of Auditors in the last half of 2021”, says Philippe Page le Mérour.
In this context, basic production could, according to EDF’s central CSE, constitute 80% of the regulated sales tariff. Enough to reduce the share of the “market supplement” from 33 to 20% in the calculation of the TRVE. This drop would then make it possible to contain the impact of market prices, assures the social body.
“EDF management did not question the method of our work and there was no dispute on their part about our plan, which is not their habit”argued the trade unionist.
A complete and lasting renationalization
The staff representative body also pleads for a complete and lasting renationalization of EDF, and castigates the government’s plan, which, according to it, would consist of temporarily renationalizing the company before selling certain activities.
“Mechanical rationalization does nothing to solve EDF’s financial situation, believes Philippe Page le Merour. Nationalization only makes sense if it keeps an integrated public company and if it can help put the company back on track by getting out of competition”he continues.
While in recent months the tone has risen between the CEO of EDF and the State shareholder which holds 84% of the capital of the company, Philippe Page le Merour has, on the contrary, “not the feeling of having a company management that is on the offensive to save the furniture”. “The spirit we felt is a white flag, end of reign spirit,” he added, while many are wondering about an early departure of Jean-Bernard Lévy, whose mandate should normally end in May 2023.
In the past, EDF’s central CSE had already seized the right to economic alert when the electrician had committed to financing the construction of the EPR at Hinkley Point, in England. A decision which also led the financial director at the time, Thomas Piquemal, to resign.
#Tariff #shield #EDF #year #warns #groups #central #CSE