GDF Suez SA (GSZ), the former French gas monopoly, will reduce prices for households by 0.5 percent on Feb. 1 because of the introduction of a new regulatory pricing system, Environment Minister Delphine Batho said in a statement.
Prices will be adjusted by the state each month, with 36 percent of supply now linked to spot prices, up from 26 percent.
Regulated natural-gas prices have caused friction between GDF Suez, the biggest supplier in France, the government and smaller companies seeking to compete. A failure by successive administrations to allow prices to reflect costs have led to losses for GDF and imposed barriers to potential new entrants. The revised method takes into account new contract terms between the utility and long-term gas suppliers such as OAO Gazprom.
France’s highest court, the Conseil d’Etat, is expected to rule this month on whether last year’s price gains allowed the utility to cover its costs. If the court decides in favor of the utility, as expected following four prior rulings, the company will recoup the shortfall from consumers over 18 months, GDF Suez Chief Executive Officer Gerard Mestrallet said this month.
The failure by the government to raise tariffs sufficiently to cover production expenses during the second half of 2012 cost the company 185 million euros ($248 million), he said.
To contact the reporter on this story: Tara Patel in Paris at email@example.com