Why your electric bill is unlikely to skyrocket

Why your electric bill is unlikely to skyrocket

Surge in the electricity market in France. In one year, the wholesale price has gone from 85 euros to more than 1,000 euros per megawatt hour by 2023. A multiplication by 12 that is enough to worry households, already tested by galloping inflation. Across the Channel, moreover, the news is terrifying: the UK announced an 80% increase in energy prices in October.

Can such a scenario reach our borders? “The price of the bill should increase in the coming months, but they will never multiply by 12,” says Lamis Aljounaidi, energy economist and director of the consultancy Paris Infrastructure Advisory.

Minimum part of the account

The expert dissects an electricity bill for us, which we can roughly divide into three parts. First, the cost of distribution and transportation of energy. The latter increases a little, due to the renewal of an already dilapidated network, but of the order of 2-3% per year. It’s not enough to blow the price out of your budget. Second, the contribution to the public electricity service (CSPE), which helps finance renewable energy, the extra cost of electricity production in non-metropolitan areas and the energy check for the most modest households. This proportion will logically increase with the increase in precariousness in France, but there should also be a contained increase.

Third, the price of energy itself. It is divided into two (cheer up, we are reaching the end): the cost of marketing – which tends to increase at the same rate as inflation (6% in approximately one year), and the cost of electricity itself, that is, the cost of ARENH (the historic nuclear power, at a globally stable price) and the famous market cost, the same one that has multiplied by twelve.

a reasonable bill

As a result of this autopsy, “the share subject to the market price remains low, from 5 to 10% of the bill. Only this participation will be affected by the strong price increases observed in the electricity market”, demonstrates Lamis Aljounaidi. It is not enough to imagine adding a zero to your bill.

Sophie Meritet, professor of economics (with HDR), specialist in energy, also assures: “In July, the megawatt hour was already at 800 euros without anyone worrying. It’s a back-to-school panic, but the bill shouldn’t go up that much.

The tariff shield to the rescue

Especially with the tariff shield. This should keep the French safe, at least when it comes to EDF customers. And this thanks to the “blue tariff”, explains Patrice Geoffron, Professor of Economics at Paris-Dauphine University: the price of electricity for individuals is regulated by public authorities. The blue rate is 174 euros per megawatt hour, far from the 1,000 euros on the market.

Alternative providers, such as Engie or Total, are divided into two categories: those that operate at a regulated electricity rate, which is therefore also affected by the tariff shield, and those that depend solely on the market price. For the latter, the bill could increase enormously. Nor to multiply by ten, once again: “There is a” buffer “related to the fact that EDF had to sell quantities of its nuclear electricity at “broken” prices to other suppliers”, specifies Patrice Geoffron.

The fact is that many alternative providers are no longer accepting new clients, or even advising their clients to return to EDF for the current year, reports Sophie Meritet.

Avoid the new “yellow vests”

The tariff shield is due to end in early 2023. What just to shift the problem? Raphaël Boroumand, professor of economics at the Paris School of Business, cannot believe it: “An increase of 80% like in the United Kingdom, which would plunge millions of citizens into energy poverty, seems impossible to me. We have seen with the crisis of the “yellow vests” how a few cents of gasoline can put people out on the streets. In such a tense social context, the government will never allow the electricity bill to rise so much. It was very clear, the Minister of the Economy, Bruno Le Maire, and the President of the Renaissance deputies, Aurore Bergé, assuring that even in 2023, the electricity bill would not skyrocket from 30 to 50%. However, Prime Minister Elisabeth Borne warned Tuesday night on TMC that “there will certainly be price increases in early 2023.”

Parallel to the new aid, another solution can be proposed: drastically reduce consumption, the famous energy sobriety. Basic idea: if we no longer buy electricity, it does not cost us much. What if France supplied itself? Is not easy. The country has already become a net importer, and given the state of its nuclear fleet – more than half of the reactors are closed for maintenance or repair – it is likely to become so again, specifies Patrice Geoffron, “especially in the case of cold winter”, sobriety or not.

Furthermore, even if France were self-sufficient, “an important part of the electricity has passed through the market since the opening of the energy markets”, Lamis Aljounaidi develops. So even taking only French electricity, part of the bill would be linked to this passage from 85 to 1,000 euros per megawatt hour.

Electricity, the most profitable form of energy

Despite these two nuances, “the fall in consumption continues to be one of the most effective levers to combat price increases and reduce the rise in bills. The less we buy, the easier it is for the state to give help”, says Raphaël Boroumand.

But is this the meaning of the story? “The trend is towards an increase in the consumption of electricity, which is still the cheapest energy for households, compared to gas or gasoline”, supports Lamis Aljounaidi: “For this reason, it should be interesting that households opt for electric heating to lower your gas bill and switch to an electric or hybrid car to lower your fuel costs.” Complete misunderstanding.

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