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France Studies Removing State-Set Gas Tariffs for Industry

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June 12 (Bloomberg) -- France’s biggest industries may have to stop paying regulated rates for natural gas by the end of the year as the government bows to pressure from the European Union to expand energy-market competition.

An amended law under consideration in the National Assembly proposes a phaseout of state-set rates for businesses, starting with the largest industrial sites and reaching smaller companies by 2016, according to a draft on the parliament’s website.

Regulated gas prices have caused friction between former monopoly supplier GDF Suez SA, the government and the European Commission, which wants them eliminated in favor of competition. The country and the commission have now reached an agreement designed to end an impasse dating back to 2006, the draft shows.

The CGT labor union, which represents workers in some of the affected industries, said the government is trying to “sneak” the proposal through parliament.

“It’s unacceptable,” Martine Feuillerat, a union representative, said by telephone. “The regulated rates offer protection against swings in market prices and are designed to help industrial development.”

The amended legislation is part of an unrelated consumer law scheduled to be debated in parliament this month. It’s the latest effort to overhaul gas pricing after a series of court rulings forced the government to change the way it sets rates for households, helping utilities cover their costs.

Ending regulated rates for factories and businesses would affect 170,000 GDF Suez clients, which consume about 65 terawatt-hours a year compared with the overall market of 511 terawatt-hours, according to the Paris-based utility. The company has 9.3 million customers that benefit from state-set tariffs, including households.

At the end of March, 22 percent of non-household gas customers had regulated rates, compared with 83 percent of households, according to data from the energy regulator.

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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