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Vattenfall Says French Plan for EDF, GDF Dams May Contradict Law

A French proposal to allow GDF Suez (GSZ) SA and Electricite de France SA to extend their concessions to run hydropower plants by 25 years may contradict national laws on allotting contracts for public services, Vattenfall AB said.

The proposal by senators led by the ruling Socialist Party runs counter to European calls for France to open up hydropower permits and would reduce state royalties, according to Frederic de Maneville, president of the French operations of Vattenfall, one of the companies planning to bid for hydropower concessions.

“Our patience is wearing thin,” de Maneville said in an interview. “The proposed law appears to go against existing laws on concessions. It would cost the state and local governments 3.6 billion euros ($4.7 billion) in royalties.”

Socialist Roland Courteau led 50 senators in proposing a law to extend contracts to 99 years in return for new spending. Vattenfall, Enel SpA (ENEL) and EON AG are among those that planned to bid for 10 concessions in competitive tenders announced by the prior government under President Nicolas Sarkozy. Bidding was to start in 2013 for 5,300 megawatts, or a fifth of hydro capacity.

EDF Chief Executive Officer Henri Proglio says the utility would fight to hold its concessions. Gerard Mestrallet, CEO for GDF Suez, has said the company would seek to retain its current contracts and acquire as much as 2,000 megawatts from bidding.

Environment Minister Delphine Batho, who has said she is studying alternatives to competitive bidding, charged lawmaker Marie-Noelle Battistel with writing a report on concessions.

Report Delayed

A discussion in parliament on the report scheduled for Feb. 19 was later postponed. A ministry official and Karine Lepretre, a spokeswoman for EON, declined to comment on the proposals.

The government should give alternative suppliers access to hydro generation, antitrust regulator Autorite de la Concurrence said in a report last year. Attempts to open the market may fail should competitors begin to abandon the country, it said.

Vattenfall isn’t yet considering that, de Maneville said.

France “must enable access to hydroelectricity,” Anne Houtman, head of the European Commission’s representation in the country, said at a Paris gas and power conference in September. The nation has about 25,000 megawatts of hydropower projects, its second-biggest electricity source after nuclear energy.

“France has promised the European Commission more than once to open the hydroelectric concessions,” de Maneville said.

Vattenfall, based in Solna, Sweden, has planned to bid with ArcelorMittal (MT), Rhodia SA and Societe Nationale des Chemins de Fer Francais, the national railway. The Nordic region’s biggest utility has been among the most vocal in pushing for French market opening. Germany’s EON proposed bidding with Hydrocop Concessions, a power distributor in eight French regions.

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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