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GDF Suez Request to Raise Gas Prices Is Too High, State Says

Sept. 12 (Bloomberg) -- France’s government rejected a request by GDF Suez SA, the operator of the country’s natural-gas network, to raise customer prices, saying it was too high.

“In its current form it’s not acceptable,” Najat Vallaud-Belkacem, a government spokeswoman, said today following the weekly cabinet meeting.

GDF Suez, France’s former gas monopoly, has asked for a 7 percent jump in tariffs from Oct. 1, Le Figaro reported today, without saying where it got the information. The change accounts for variations in the cost of supply and makes up for past government failures to pass on costs, the newspaper said.

The government will make a statement on gas prices early next week, according to an Energy Ministry official who asked not to be named. GDF Suez declined to comment.

GDF Suez has long disputed gas prices with the government, which holds a 35 percent stake in the company and has resisted rate changes considered politically unpalatable. The state granted a 2 percent increase in August, which the regulator said wouldn’t cover GDF Suez’s costs and should have been 7.3 percent.

The Paris-based company took the former government to court last year over its failure to pass on supply costs to consumers after freezing prices. The cost is calculated using a formula that takes into account oil and gas prices from long-term contracts as well as the spot market, and currency fluctuations.

The government last week unveiled a draft law to make gas and power more affordable for low-income households and energy-efficient consumers. Debate in parliament on the so-called progressive tariffs law will start next week, according to the ministry official.

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net; 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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