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Royal Says No Decision on France Power Rates in Talks With EDF

July 4 (Bloomberg) -- French Energy Minister Segolene Royal said talks are on with Electricite de France SA and a decision to increase power tariffs has yet to be taken.

“I am negotiating with EDF to protect purchasing power,” Royal said in a tweet today, after Le Parisien newspaper reported consumer tariffs could be increased by 30 euros ($41) as early as September. “No decision has been taken,” she said, referring to a court order that EDF should be allowed to recoup costs from rates that were set too low by the government.

Royal in recent weeks has spurred concern about EDF’s earnings from electricity sales to French households. Regulated rates charged by the state-controlled power utility and former monopoly GDF Suez SA are politically sensitive. A succession of energy ministers have aimed to keep them as low as possible for consumers even as investors and competitors want them increased to cover costs.

The Conseil d’Etat court ruled in April that a 2 percent increase in power rates for the year starting in August 2012 was too little to cover the utility’s costs. The court gave the government two months to set new rates retroactively, a deadline that has passed.

Royal made a surprise move on June 19 when she announced that a planned 5 percent increase in state-set electricity prices for the year starting Aug. 1 would be canceled and replaced by a new calculation method. The news sent EDF share prices plummeting.

“The 5 percent increase is canceled even if it doesn’t please some speculators,” the minister wrote today on Twitter. “The decision firmly stands.”

EDF’s competitors through an organization called Anode have asked the Conseil d’Etat court to rule on the now-scrapped Aug. 1 increase in power rates. The court’s past rulings on gas prices led to a revamped system for setting them and have allowed GDF Suez to cover costs.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Indranil Ghosh, Tony Barrett

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