Gas and electricity prices: the government’s dilemma due to the tariff shield

Bruno Le Maire, ministre de l'Economie, veut recentrer les dispositifs d'aides pour les « ménages qui en ont le plus besoin ».

Attention, sensitive file. Although it has been bragging for months about having taken costly measures to protect the French from inflation, the government must accelerate its reflection on the follow-up that should be given to the most emblematic of them, the shield tariff on the price of gas. and electricity With the concern expressed in the majority of a gradual launch of this device, while ensuring that price increases remain reasonable.

Last fall, Jean Castex’s team took two decisive measures to counteract the effects of inflation that was already making its effects felt in energy prices: freezing the price of gas at its then level, and an increase in the electricity limited to +4% in 2022. The first system should be finished by the end of the year and the second by next February. The sector regulator, the CRE (Energy Regulation Commission), announced this Tuesday that the average level of regulated gas prices from 1Ahem September would have been 105.10% higher than fall 2021, without the price shield.

gasoline records

Officially, the executive is giving himself some time to decide what to do next. “Everything will depend on the level of energy prices at the end of the year,” it is argued within the government. But the current levels are enough to break a cold sweat for Bruno Le Maire, the Minister of the Economy: this week, the price of gas has reached new highs, the MWh delivered to Rotterdam reached a maximum of 295 euros on Monday.

A novelty that will increase the cost of this tariff shield for 2022 -16,000 million for electricity and 4,700 million for gas according to the last calculation made in July due to the new price increase- and puts pressure for next year.

However, the status quo seems hard to imagine. “We had to absorb part of the shock, but I think we have gone a little too far and that it is not a good idea for the State to assume the entire cost of the energy crisis. Maintaining the gas price freeze would contradict the message of sobriety,” Judge Philippe Martin, dean of the School of Public Affairs at Sciences Po.

Help Guidance

In fact, within the majority, we are aware that an evolution is necessary. “France is the country whose state has provided the most support, and this will continue. But we will not be able to stay forever in this system of tariff shield and blockade of the price of gas, we will have to organize a gradual exit and move towards more specific devices”, assures Jean-René Cazeneuve, deputy for the Renaissance and general rapporteur of the budget. in the National Assembly.

In addition to low-income households, this targeting should also affect, in his opinion, industries that consume a lot of gas, which currently benefit from a special regime that will also end at the end of the year. “At a time when we are talking about the necessary reindustrialization, we must preserve competitiveness,” he insists.

However, the path is narrow for the government, which wants to avoid social tensions similar to those in Germany and especially in Great Britain. “There will be, like every year, an increase in electricity and gas prices in 2023. But it is too early to say its level. Our goal is also to refocus aid on those who need it most”, we explained at Bercy.

Red line

An increase in bills from 70% to 80% – similar to what is in germ in Great Britain for the month of October, if the future government does nothing – certainly seems politically unthinkable for the executive. Therefore, you will have to navigate as accurately as possible based on the course evolution. “An increase of 10 to 20% in the price, added to a boost to the most modest with a reinforcement of the energy check, could be a solution. The shock would remain buffered, but there would still be a price signal to reduce consumption”, says Philippe Martin.

For the economist, this gradual removal of the tariff shield cannot be, however, the only answer to the current crisis. “In spring, the European states had asked the Commission to work to establish a maximum price for the purchase of Russian gas at continental level. France should push this file ”, he judges.

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