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EDF Chief Sees Power Price Surge Spurring Nuclear-Reform Efforts

Electricite de France SA said the recent surge in power prices and President Emmanuel Macron’s decision to build new nuclear reactors could help drive efforts to reform the regulation of its atomic output.

France hopes to obtain more favorable rules from the European Union for state-controlled EDF, but talks stalled last year over concessions the utility would have to make. Since then, soaring gas and power prices across Europe have prompted governments to cut taxes to protect consumers, with countries including France seeking longer-term regulatory responses to the energy crisis.

“I’m convinced that the addition of two new events — the president’s decision to build new nuclear plants and the massive surge in power prices — will prompt a reassessment of the organization and financing principles of EDF,” Chief Executive Officer Jean-Bernard Levy said Tuesday. He expects fresh talks with the European Commission, and said they must conclude by the start of 2024 to give EDF and its rivals time to prepare for any change in regulations.

Under current French rules, which expire at the end of 2025, EDF’s competitors are able to buy almost a quarter of its annual domestic atomic output at 42 euros a megawatt-hour — just a fraction of current wholesale prices. France has unsuccessfully sought a higher price for EDF’s nuclear generation to give it the means to invest in low-carbon energy while keeping a lid on customer bills.

The government and EDF will need to define how to fund new reactors, and maintain as much price stability as possible for French consumers, Levy said at a briefing to the AJEF journalists’ association in Paris. State backing is needed to keep financing costs to a minimum and ensure nuclear energy remains competitive, he said.

EDF’s 56 reactors generate more than two-thirds of France’s electricity. The utility is urging the government to give the green light to six new plants to replace aging units, at a cost of about 50 billion euros ($56.4 billion), Levy said. EDF has put forward several financing options which would involve its own funds, the government and private investors.

A final investment decision for the first pair of new reactors — in Penly, northwestern France — must be made within three years to have them built by 2035, Levy said.

Source: Financial Post