Electricity prices: the Senate advocates a targeted reduction in taxation

For the Senate commission of inquiry into electricity, the VAT rate should be reduced from 20% to 5,5% for "basic consumption" of households, defined by a certain volume, and left at 20% at - of the. Added to the establishment of EDF nuclear contracts, this proposal would reduce the French's electricity bill by more than 40% for basic consumption, according to the report.

At the initiative of the centrists, this transpartisan commission, installed at the end of an energy crisis which saw bills skyrocket in 2022, heard more than 140 people in six months.

Its report is published three days before the second round of elections which will renew the National Assembly, while the subject animated the campaign: the RN promises to reduce VAT on energy to 5,5% in an undifferentiated manner.

“The conclusions of our commission come to impact the campaign a little, but at the same time, perhaps also fuel it,” declared rapporteur and centrist senator Vincent Delahaye at a press conference. Because the Senate report recommends targeting this reduction.

The proposed reduction would concern the "basic consumption" of a household, i.e. 4,5 megawatt hours per year (MWh/year) if there is no electric heating and 6 MWh/year with electric heating. Under this volume, VAT would be lowered to 5,5%, the excise on electricity would increase from 21 euros currently to 9,5 euros/MWh, and the transmission contribution (CTA) would be eliminated.

"Everyone benefits from it, on a certain volume, which we could call 'basic consumption', for lighting, cooking... Afterwards, if you have a heated swimming pool or other, we don't particularly help you there ", Mr. Delahaye told AFP. According to him, the measure would cost 3,5 billion euros annually - compared to 12 billion for a general reduction, Bercy estimates.

The report also supports the establishment of contracts with EDF for its existing nuclear power, at 60-65 euros/MWh. These would be CFD contracts ("contract for difference") with, depending on the market price level, a guaranteed price or, on the contrary, payment of the surplus to the State. “That means a contract that protects both the producer and the consumers,” explained the rapporteur, as opposed to the agreement on electricity prices concluded at the end of 2023 between EDF and the French State, considered “very vague".

“Energy programming”

For a household in a four-room apartment heated with electricity consuming 6 MWh/year, this would be 600 euros less on the annual bill, according to the senators. And almost 7.000 euros less for a baker consuming 99 MWh.

The report also looks at tomorrow's electricity production, with needs expected to grow by 38% by 2035 (up to 615 TWh per year) and to 700 TWh in 2050.

France must, by 2035, ensure an “optimized extension” of its nuclear power and “a reasonable increase” in renewable capacities, estimates the report, adopted by 22 of the 23 members of the commission, the elected environmentalist having abstained. .

By 2050, it will be "necessary to extend current power plants beyond 60 years", and to build 14 reactors - a number already announced by the government. But the commission sees the first starting in “2037-2038” instead of 2035 as initially mentioned.

As for renewables (wind, solar), "the more electricity mixes contain a significant share, the higher the average production cost", due to the need for investment in networks, underlines the report.

The commission finally warns of "the risk, too little mentioned, of depletion of natural uranium in the near future", if certain countries relaunch the atom as announced, and calls for "relaunching research on reactors as quickly as possible with fast neutrons" allowing us to "recycle our own waste".

“France needs long-term energy programming more than ever,” believes the Senate, even though the government had given up submitting the subject to Parliament for lack of a majority.