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France to Revive Plan to Open Hydroelectric Power to Competition

President Francois Hollande will set terms for bidding on French hydroelectric power plant operations, bowing to pressure from the European Union to open them up to competition, finance ministry documents show.

“Additional reforms are envisaged, notably about renewing hydroelectric concessions,” according to an outline of its economic plans for the coming year that was released today. Details will be given by July after an ongoing national debate on energy “to respect competition rules.”

Hollande risks a confrontation with lawmakers in the ruling Socialist Party in reviving a plan to open up dams to competition that was initiated by his predecessor. Former President Nicolas Sarkozy’s government proposed measures in 2010 for tenders to run plants with a combined output of 5,300 megawatts. Vattenfall AB, Enel SpA (ENEL) and EON SE were among potential bidders.

France’s hydro plants, the country’s biggest source of power after nuclear energy, are run by former monopoly power and gas utilities Electricite de France SA and GDF Suez (GSZ) SA.

Socialist lawmakers including Marie-Noelle Battistel have expressed concern that in opening up dams to competitive tenders, France may lose control over energy prices, long seen as providing a competitive edge for industry.

Cheap Power

“We could lose control over our most competitive energy,” Battistel told a parliamentary hearing April 3. Competitive tenders may “go against” industry needs for cheap power, she said.

Socialist Party senators have already proposed that GDF Suez and EDF be allowed to extend their concessions by 25 years, a suggestion that Vattenfall said may contradict national laws.

Other European countries including Sweden, Norway and Switzerland have failed to open their hydroelectric industries to competition, according to Battistel, who said that companies taking over dams would be able to sell the power abroad.

France, where nuclear reactors provide three-quarters of electricity output, has about 25,000 megawatts of hydro power.

The nation “must enable access to hydroelectricity,” Anne Houtman, head of the European Commission’s representation in the country, said at a Paris conference in September.

To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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