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EDF Must Justify Power Production Costs, French Minister Says

Electricite de France SA, the biggest nuclear-reactor operator, must justify its costs of power production and sales before the French government makes a decision on raising prices, Energy Minister Delphine Batho said.

“There is a principle that prices must cover costs so we have to know what is behind the prices,” Batho said today on RMC radio. “There is a need for transparency. I have asked the regulator for an audit of production and sales costs.”

State-controlled EDF has sought higher electricity prices from the government to help finance investments and cover its expenses. While the regulator pushed this week for an increase of almost 30 percent in tariffs over five years, President Francois Hollande has pledged to contain household energy bills even as he drives an expansion in renewable-power generation.

EDF is also required to sell nuclear power to competitors at a regulated rate. That tariff doesn’t reflect generation costs or allow the utility to fund investment needs, Chief Executive Officer Henri Proglio said last week.

Batho, who met with Proglio yesterday, acknowledged a “structural trend” toward higher oil and electricity prices and said “something must be done.”

Hollande has vowed to lower the nation’s dependence on atomic energy, and decided in September that EDF’s oldest reactor at Fessenheim must shut in 2016. The utility’s reactors supply three-quarters of France’s power output, making it the world’s most nuclear-dependent country.

While Batho didn’t exclude the possibility of more reactors closing down permanently, she said France must keep a “portion of nuclear” in the energy mix and invest in aging reactors.

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