EDF Needs Nuclear Power Rate Increase for Survival, Proglio Says

Electricite de France SA can’t make ends meet unless it can raise the price of wholesale nuclear power it sells to rivals, its chief executive officer said.

“One can’t demand of a company to sell a quarter of its output below cost over the long term,” Henri Proglio told reporters today at a presentation of 2013 results. “No company can survive” on these terms “without compensation.”

Proglio’s comments indicate a battle over the regulated price, known as Arenh, is intensifying as the utility demands the rate be increased, and competitors and industry want it lowered. Under a system meant to boost competition, EDF has to sell about a quarter of its annual atomic output to competitors.

The government has said it will announce the price, currently set at 42 euros ($57) a megawatt-hour, by the end of March. The rate “is a step toward” EDF’s costs of 50 euros a megawatt-hour, Proglio said today.

While the current rate has helped competition, it should be phased out over time, he said. Other utilities “are free to decide” if they want to buy the power or get supplies elsewhere.

Factory owners have stepped up a campaign against energy costs that they say are higher in France because of the system of regulated power rates. They are also being disadvantaged as U.S. competitors benefit from a boom in cheap energy from shale.

Philippe de Ladoucette, head of the energy regulator, told lawmakers last month that the price formula developed in 2011 would lead to a 10 percent increase from the current level.

“There is no indication that the same method will be used in the future decree,” he said. Energy Minister Philippe Martin declined to comment on the rate when asked on Feb. 7.

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