ADVERTISEMENT

Business

The price of electricity is exploding: what impact on your bills?

ADVERTISEMENT

The tariff shield is due to end in December 2022. (© Ralf / Adobe Stock)

Electricity prices are soaring, and consumers are worried.

On the wholesale market (where suppliers buy energy, Ed.), prices have exploded. Those of electricity for 2023 broke a record for France on Friday August 26, reaching more than 1000 euros per megawatt/hour (MWh), compared to around 85 euros per MWh a year ago. That is a price multiplied by 11.7.

Enough to have cold sweats thinking about his next bills.

Why the price of electricity is rising

It is first necessary to look at why the electricity exchange price is soaring.

The price of electricity set depends on the type of fuel used in the last power plant that had to be activated (“call”) to produce the quantity of electricity sufficient to meet the demand at that moment. When the needs exceed the production already covered with renewable energies or with nuclear power plants, it is logically the thermal, gas or even coal power plants that must be “called”.

EDF

And there, the war in Ukraine becomes an important factor, because thermal power plants use gas to generate electricity.

However, the price of gas evolved this week at historic levels, more seen since the beginning of the Russian invasion in Ukraine, that is to say more than 300 euros per MWh. And like Russia delivers much less gas to Europeprices could remain very high.

The war only partly explains this increase. The French nuclear fleet, ie 56 reactors, is a little struggling.

Videos: currently on Actu

Currently, 32 nuclear reactors are shut downincluding 12 for corrosion problems. Thursday, August 25, EDF even extended the shutdown of four reactors for these reasons.

What tend an electricity market in which the actors speculate on the situation and lead to higher prices.

However, while this spike in wholesale prices is impressive, it is not new: EDF was already reporting an increase in electricity prices with the post-covid economic recovery.

What impact on the bill?

The impact will not be the same for each consumer. Indeed, in France there are several types of tariffs for electricity for individuals.

  • The regulated tariff (EDF blue tariff), “fixed by the public authorities and proposed by the historical suppliers, EDF and the local distribution companies”, notes the site life-public. These rates are set once or twice a year.
  • The fixed pricethe price of which is identical throughout the duration of the contract.
  • The indexed tariffwhich globally follows the evolution of regulated prices.
  • The price with evolution or indexation, “therefore the evolution of the price is defined in the contract”, specifies the site of the national energy mediator, energy-info.

Good news for consumers who have chosen regulated tariffs: the government’s “tariff shield”, decided in the fall of 2021, helped limit the rise in electricity prices to 4%. No increase.

On the other hand, if you have opted for a rate with evolution, you must monitor your contract to check whether an increase will not be applied.

Offers indexed on the markets present risks because their price fluctuates strongly according to supply and demand, seasonality and the geopolitical context.

energy-info

Nevertheless, it is always possible to return to the regulated rate. “You just have to make a request to the historical supplier, generally EDF. It is the principle of reversibility”, indicates energy-info.

And next year?

As the tariff shield must end at the end of the year, the question is legitimate: what will happen to electricity prices on 1 January next?

In an interview at ParisianPrime Minister Élisabeth Borne promised that the executive would not not let energy prices explode for households.

After the end of the tariff shield, “we will keep devices to cushion energy prices […] and we will take specific measures to support the most vulnerable”.

The French can be reassured, we will cushion the increases.

Elisabeth BornePrime Minister

During a trip to Metz for a meeting of majority executives, the Minister of the Economy Bruno Le Maire assured that the increase in electricity and gas in 2023 would be “contained”.

Earlier in the day, he had specified that there would be no no “catch-up” on the prices currently capped in 2023, and that the increases would also be contained for gas.

The government reassures

Always to reassure, Bruno Le Maire drew the outlines future help for individuals and businesses.

Next year, for the most modest households, there will be energy vouchers which will help those who are in the most difficulty to pay their energy bills.

Bruno the MayorEconomy Minister

Such checks, for an amount between 48 and 277 euros, have already been granted to low-income households in 2022 to help them pay the energy bills of their homes.

For businesses, the Minister of the Economy has indicated that he wants simplify access to grants for those who do not benefit from a regulated or preferential tariff for electricity and find it difficult to pay their energy bills.

Also present in Metz, the Minister for Energy Transition Agnès Pannier-Runacher asked companies in the tertiary sector to save energy so that electro-intensive industries can continue to operate normally.

“We can act on the temperature of offices, we can act on the ventilation of shopping centers”. The end of energy abundance.

Was this article helpful to you? Note that you can follow Actu in the My Actu space. In one click, after registration, you will find all the news of your favorite cities and brands.



#price #electricity #exploding #impact #bills

ADVERTISEMENT

About the author

madishthestylebar

Leave a Comment