Emeric de Vigan is head of electricity markets at Kpler, a data analysis company, and a former trader in the economic division
of EDF.
LE FIGARO. - The Minister of the Economy announced, Sunday January 21, an increase from 8.6% to 9.8% in electricity prices in February. How to interpret this choice? Was it inevitable?
Emeric de VIGAN. -
This decision indeed seemed inevitable, because we are emerging from a crisis during which the State protected the consumer.
We cannot continue to increase the public debt and the EDF debt indefinitely: we had to return to the taxation levels which are those before the crisis.
We can hope that this is the last increase.
What about the responsibility of the public energy service? Are we paying for our bad choices today?
We are now paying for the catastrophic nuclear availability of recent years.
The precise responsibility for this situation is an endless debate: it falls both on EDF, which may have erred through arrogance by not listening to the alarmist speeches, and on the public authorities which have not invested enough in EDF.
Rather than looking for the culprits, we must take a step back: the crisis is linked to Russian gas.
Now, if France had had nuclear availability similar to the good years, in 2014 or 2015, France would probably have been able to match its European neighbors.
The gas crisis might not even have happened if EDF had had good nuclear production.
Some, like Loïk Le Floch-Prigent in our columns, former president of Gaz de France, see the rise in prices as the consequences of entry into the European market. What do you answer them?
The European market is in no way responsible, even marginally, for the price increase.
Those who are opposed to France's membership in the European market are for political reasons.
Looking only at the figures, we see on the contrary that this allowed us to import electricity in an optimized manner this year, but also to export it.
The question is rather whether we prefer to export electricity and improve our trade balance and income for EDF, or not to export so that our public prices are lower.
The concept of indexing the electricity market price to gas is too often criticized out of ignorance: there is no indexation as such on the price of gas.
It is a complex mechanism: in an electricity production plant, it is necessary to distinguish fixed costs (investment, personnel, etc.) from variable costs (the necessary fuel).
At the time of the EDF monopoly, some like Marcel Boiteux demonstrated an optimal way to allocate resources efficiently by ensuring that the right power plant is running at the right time in relation to consumption, what we call the pricing at marginal cost.
The only alternative to the market is a return to monopoly: there is no third vote, or otherwise what the government is currently doing, that is to say an injection of public money when the price is considered too high then a correction afterwards.
Emeric de Vigan
How do critics of this indexation system propose to pay the fixed costs of power plants?
They suggest basing everything on an average production cost, but then there is no more optimization, no more incentive to start the right plant at the right time.
The only alternative to the market is a return to monopoly: there is no third vote, or otherwise what the government is currently doing, that is to say an injection of public money when the price is considered too high then a correction afterwards.
It's shaky and inefficient, and monopoly would be a return to inertia.
The market is the least bad solution, as its results show: it brought LNG cargo ships to Europe and reduced electricity consumption.
In 2022, Spain and Portugal have “exceptionally” left the European electricity market. What does that mean? Is this synonymous with exit from the European electricity market? Should we follow in their footsteps?
Spain has shifted the cost of the crisis to the taxpayer rather than solely to the consumer, but this amounts to the same as the measures in France.
This policy encouraged Spain to export electricity to France, because the latter experienced an artificial drop in its price, which was therefore almost counterproductive.
With the European market, there is the idea of benefiting from the geographical particularities of each country.
So, Switzerland has a lot of dams;
we have nuclear power plants: long-term contracts were concluded where France exported electricity most days of the year with the possibility of interrupting certain days to cope with peaks in consumption in France, the Swiss then operating their dams.
Rather than attacking the concept of a European market, we must reintroduce this type of contract.
There are certainly difficulties, because not all European countries have the same energy policies, but energy Europe is far ahead of legal or fiscal Europe.