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France to Extend ‘Social’ Rates for Power, Gas, Ayrault Says

France will extend to 4 million households lower rates for electricity and natural gas to make energy more affordable while at the same time raising taxes on industries that pollute the air, Prime Minister Jean-Marc Ayrault said today.

Making more people eligible for so-called “social” utility rates will make energy more accessible, he said in a speech at an environment conference in Paris. Existing law allows for 1 million households to benefit, he said.

The 2013 budget will include a “general tax” on businesses that contribute to air pollution, he said. The government also plans to review the CSPE tax on electricity bills that goes toward paying the higher costs of renewable energy.

President Francois Hollande has embarked on a plan to lower France’s reliance on nuclear power and overhaul energy costs for consumers. Electricite de France SA and GDF Suez (GSZ) SA, the Paris- based former monopolies, have the rates that they charge households in their home market regulated by the government.

A draft law aimed at boosting energy efficiency and lowering demand would make rules on the tariffs more complex because they will depend on home insulation and revenues.

“I want to encourage moderation in energy use,” Ayrault said today. Under the plan, the government wants 1 million homes renovated annually for which financial aid will be available, he said.

Business Costs

“What worries us the most is how much this will cost and who will pay,” Laurence Parisot, head of the business organization Medef, said after the conference on the government’s energy policies and the planned pollution tax. “We can’t keep raising costs for companies without a big impact on jobs and competitiveness.”

The government will also start tenders by the end of the year for two offshore wind parks near Le Treport in the Channel and Noirmoutier island off the Atlantic coast, as well as large- scale solar installations, Ayrault said. This will be accompanied by a streamlining of administrative procedures for development of onshore turbines.

EDF and partners including turbine maker Alstom SA won in April a French government tender to build three offshore wind farms, while Iberdrola SA (IBE) got one. That first round was for almost 2,000 megawatts that will add an estimated 1.1 billion euros to household electricity bills when the wind farms are running, the government has said.

France, which doesn’t yet have any offshore wind power, plans to install 6,000 megawatts of offshore wind, tidal and wave power by 2020 to boost clean energy.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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