EDF Would Study Grid Sale If Needed for Industrial ReasonTara Patel and Caroline Connan
Electricite de France SA, Europe’s biggest power generator and the owner of French grid operator RTE, said it would consider reducing its stake if required for an “industrial project.”
“We can’t include the grid in our industrial strategy so if RTE has a development project that would necessitate an evolution we would listen and study it,” said Thomas Piquemal, EDF’s head of finance. Otherwise the utility remains “very happy as a financial shareholder.”
Talk of an RTE sale has surfaced regularly in the past as EDF sought to lower debt and meet the rising cost of maintaining equipment and improving safety at its aging nuclear reactors. The CGT labor union, the biggest in France’s energy industry, has rejected such an idea, vowing to oppose any move to sell all or part of the grid operator.
“The only reason we would consider not owning 100 percent of RTE is for an industrial project,” Piquemal said in an interview last week. “This would have to be explained by RTE.”
State-controlled EDF holds all of RTE, short for Reseau de Transport d’Electricite, which operates the biggest power network in Europe. Fifty percent of the stake is held by an EDF fund dedicated to nuclear dismantling.
By law, RTE shareholders have to be either EDF, the state, or public-sector entities. Environment Minister Philippe Martin said in September that the government wants to keep an “integrated” EDF.
RTE declined to comment on Piquemal’s remarks last week.
To comply with European Commission competition rules, RTE operates under a different management structure from EDF and keeps its debt separate. EDF has four seats on RTE’s 12-member supervisory board, one of which is filled by Piquemal.
RTE owns and operates more than 100,000 kilometers (62,000 miles) of high-voltage power lines in France and 46 cross-border links with other European countries. Its 2012 net income was 407 million euros ($550 million) and investment this year is about 1.4 billion euros.
EDF said earlier this month it’s reviewing industrial strategy and spending plans as it raised a target for cost cuts. It faces an estimated 55 billion euros of expenses to improve safety and extend the lives of French plants through 2025.
The utility is also expanding nuclear operations abroad. The Paris-based company reached an agreement last month to develop two U.K. reactors for about 16 billion pounds ($26 billion) after the British government offered a power price that’s almost double current market rates, as well as loan guarantees to assist with the cost of construction.
“If you compare with the market price now, you can consider that it looks too high,” Piquemal said. “Looking over the long term we believe that it’s a fair deal for the U.K. customer.”