Electricite de France SA surged the most since October 2008 in Paris trading after the government allowed an increase in household tariffs that are among the lowest in Europe.
The shares jumped 9.3 percent to 19.40, the biggest gain since Oct. 29, 2008. The volume of shares traded was three times the 90-day average, and EDF was the third-best performer on the Stoxx Europe 600 Index.
Energy Minister Philippe Martin authorized EDF to increase the regulated domestic tariff by 5 percent as of Aug. 1, and by a further 5 percent in August 2014, he said in a statement. The electricity regulator had recommended an increase of 6.8 percent to 9.6 percent this year to cover a shortfall in costs.
“The government decided to spread the increase in tariffs necessary to cover EDF’s costs over more than one year in order to protect households’ buying power as much as possible,” Martin said in the press release.
EDF was raised to neutral from sell at UBS AG, which said the tariff increase and a “very likely” nuclear-reactor life extension would enable the company to keep debt under control.
EDF may continue to pay a 6.5 percent dividend yield, UBS analyst Patrick Hummel said in a note today, raising his 2013-2016 estimate for earnings before interest, taxes, depreciation and amortization, or Ebitda, by 2 to 9 percent.
France’s 2012 household electricity prices adjusted for average income were the second-lowest in the European Union after Finland, according to Eurostat data.