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EDF, GDF Able to Extend French Dam Contracts Under Proposed Law

Feb. 27 (Bloomberg) -- Dam operators including Electricite de France SA and GDF Suez SA would be able to extend concessions for hydropower projects by a quarter to 99 years under a French law proposed by a senator from the ruling Socialist party.

The change, eligible for new contracts and current holders that carry out new investment, would mirror rules in European countries such as Austria, allowing “ambitious projects” to boost capacity, according to the proposals published on the Senate’s website. Concessions now last for as long as 75 years.

Alpiq Holding AG, Enel SpA, EON AG and Vattenfall AB are among European utilities that have sought to join EDF and GDF, the former French monopolies that are its biggest dam operators. France has 25,600 megawatts of installed hydroelectric capacity providing 12 percent of total power output last year, according to data from grid operator Reseau de Transport d’Electricite.

Extending contracts may run counter to European Commission calls for France to boost industry competition. Environment Minister Delphine Batho is studying alternatives to allowing companies to compete for the renewal of concessions, she says, a process started under former French President Nicolas Sarkozy.

While capacity should increase as much as 3,000 megawatts from 2009 to 2020 under government targets, only 300 megawatts of hydropower were added in the past five years as operators wait to see details of possible competitive tenders, according to the law proposed by Socialist senator Roland Courteau.

France “must enable access to hydroelectricity,” Anne Houtman, head of the EC’s representation in France, said in September at a gas and power conference in Paris.

The Energy Ministry in the Sarkozy government was drawing up plans to invite bids, saying in April 2010 that permits to run 10 dams with a combined output of 5,300 megawatts, or about a fifth of the total, would be ready for renewal through 2015.

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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