“In general, we are more like ‘live well, live discreetly’, but the situation there is serious,” says Jean-Baptiste Dechaumont, head of the foundries of the same name, created in 1860 in Muret, south of Toulouse. For this small company of 150 employees that produces cast iron parts for roads or urban furniture, the energy crisis is not limited to a simple headline in the news. She hits him hard.
That is why he decided to appeal last week to Christophe Bex (Nupes), the new deputy from his constituency. In a video with the parliamentarian, he highlighted the risks for smelters if electricity continues to be sold at such a high price. And the elected official reminded that if jobs were destroyed, it would be difficult to re-create them later.
Because to run its machines and furnaces, it consumes 11 gigabytes of electricity each year, 70% of which is to power the melting process. This is the equivalent of the consumption of a town of 5,000 inhabitants. Which meant an electricity bill of 1.5 million euros this year.
Increase from 70 to 600 euros per MWh
With an annual turnover of 20 million euros, it is far from being a straw. Thus, so much to say that in recent weeks his eyes have been riveted on the price of the kilowatt hour and the energy crisis that has shaken European countries since the beginning of the conflict in Ukraine. “Three years ago this budget was cut in half, to €750,000, with a well-negotiated contract in 2016 at €37 per MWh. Last year we negotiated it at 70 euros per MWh. This morning the price per MWh continues to exceed 600 euros, totally uncorrelated with production prices that are between 80 and 100 per MWh. This would lead us to energy budgets of 6 to 8 million euros by 2023. We cannot accept such a significant increase, it would be detrimental to foundries”, he explains to 20 minutes the businessman who must sign his new contract with EDF before October 31. Contracts that he signed for one, two or three years depending on the price that he had managed to negotiate.
He tells himself that he should have signed last year for two years. But, “without a crystal ball” on Russia’s intentions to invade Ukraine, he did not commit. With a touch of regret. Even if he hesitates to imagine himself in very long contracts, because given the place that energy consumption occupies in his expenses, 8% of his expenses, he wants to allow himself the possibility of buying electricity at a better price if his price ever found a price higher. Reasonable price.
There, if it were forced to pass on the current increase to the prices of its manufactured products, the increases would be closer to 30 or 40%. It could then no longer be competitive with other French and foreign companies, which often continue to use foundry coke, made from coal that is much cheaper but clearly more polluting than electricity. “Today we find an electricity price that is multiplied by ten and a coke that is multiplied by two,” laments Jean-Baptiste Dechaumont, who has already had to manage the Covid-19 and the increase in materials debuts in the last two years.
Received in Bercy next week
For him, there is a real lack of anticipation. The alarm had already been raised a year ago with the bankruptcy of the alternative provider Hydroption. Since then, many have mobilized to demand a review of the rules for calculating market prices. In July aid was launched for companies whose energy represents more than 3% of their turnover. But Fonderies Dechaumont had no right to it. “Because we earn money, little, but we earn,” says the boss.
He asked EDF if he could have a price offer, with part at a regulated rate and another subject to market fluctuations. They told him that it was not possible for companies of his size, too small this time. Among the 25 alternative electricity providers, none made him price offers either. However, it is ready to stop production on days of high consumption, as has already been the case during harsh winters.
Today he is waiting, a little calm seeing that this issue is now at the top of the pile of files to be dealt with within the government, but also within the European Union. And his cry of alarm seems to have been heard. Next week, it will be one of the forge foundry companies of the Federation received in Bercy to discuss these issues. It will go with a leitmotif: “it has to cover and regulate”.
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