A “difficult, but necessary decision”. The Minister of the Economy Bruno Le Maire confirmed on Sunday January 21 that the electricity bill would increase on February 1 by less than 10% for the vast majority of French people, but not all. This decision, explained on the set of the 8 p.m. news on TF1, is in line with the government’s commitment to exit the costly “tariff shield”.
The executive has been organizing for several months the gradual end of this subsidy, announced in the fall of 2021 by Prime Minister Jean Castex, even before the war in Ukraine caused a historic surge in gas and electricity prices.
The government has already almost doubled since January 1 the excise on gas, a tax paid by natural gas suppliers which will be passed on to subscribers’ bills. “The electricity bill on peak/off-peak rates will increase by 9.8% on February 1 and on basic rates by 8.6%. That is to say, for 97% of French households the increase will be less than 10%,” declared Bruno Le Maire on TF1.
Nearly 20 million households affected
This concerns nearly 20 million households subscribing to electricity, including 10.6 million at the base rate, that is to say EDF’s “blue” rate, fixed without off-peak hours. For around 400,000 individual subscribers who have subscribed to a so-called “peak day cancellation” option, the price will increase by 10.1%. These subscribers pay a more advantageous rate but in exchange undertake to reduce their consumption on days when national consumption is very high, on very cold days for example. For small businesses and non-residential subscribers, the increase will be 5.2 to 8% depending on the contracts.
The Ministry of the Economy has given some simulations of bill increases. For a 4-room house heated with electricity (9 MWh/year), it would increase by 17.8 euros per month. A bakery benefiting from the regulated peak/off-peak rate, with 90 MWh of annual consumption, will pay 116 euros more per month. A one-room apartment not heated by electricity would see its average electricity bill increase by 4.5 euros per month.
The government had committed that the revision of the regulated electricity tariff, which takes place each year on February 1 and August 1, will be limited this time to an increase of 10% maximum, all taxes included. Previously, the regulated tariff had increased by 4% in February 2022, 15% in February 2023 and 10% in August 2023. The total increase over two years is therefore of the order of 43 to 44%.
The end of “whatever it takes”
“It is a difficult decision, but it is a decision which is necessary to guarantee our capacity to invest in new electricity production capacities and then to definitively get out of this whatever the cost”, justified Bruno Le Maire .
For two years, the government had reduced a tax on electricity to avoid excessive price increases. It is this “internal tax on final electricity consumption” (TIFCE) which will increase in February, from 1 to 21 euros per megawatt hour, as the 2024 budget allowed. Before the crisis, it was 32.44 euros.
“This is the last increase in this tax for the year 2024. The next one will be on February 1, 2025, we will return to the situation which was that before the tariff shield,” added Bruno Le Maire. “We are two-thirds of the way but not the whole way in restoring this entire tax. We will return to normal on February 1, 2025,” he then detailed during a call with journalists. According to him, the tax increase will bring in 6 billion euros to the State this year, but a complete return to normal could have brought in 9 billion.