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British families could find themselves subsidising households in France after the French Government ordered a 2 per cent cap on electricity price increases yesterday.
EDF, which supplies homes on both sides of the Channel, raised its prices to British customers by 22 per cent only two weeks ago. It also put up its charges for gas by 17 per cent - but it will not be allowed to increase French prices by more than 5 per cent.
MPs said that the cap in France, where the law restricts energy price rises to the inflation rate, raised fresh questions about the lack of controls over Britain’s liberalised energy market, which were highlighted in a parliamentary report last month.
EDF, whose talks about acquiring Britain’s nuclear generator British Energy came close to collapse last week, blamed its latest increase in Britain on soaring wholesale gas prices. According to Energywatch, EDF’s latest increase took the price of its average electricity bill to £441 for direct debit customers. That is more than 11 per cent higher than the €500 (£396) that EDF said was the average for its electricity bills in France.
Steve Webb, the Liberal Democrat energy spokesman, said: “EDF will have to make up the shortfall somehow. They may have to look to customers in countries where the markets are less interventionist, like Britain.” He added that the French announcement drew a stark contrast with what he saw as fundamental flaws in the British market that failed to protect consumers. “Energy prices are not like the price of baked beans,” he said. “It matters if people cannot afford to pay, so leaving it all to the market is just not acceptable.”
Patrick South, the head of public affairs at Age Concern, said: “Price capping may not be the appropriate response in the UK energy market, however, as MPs recently identified there are serious flaws in how the energy market operates. These flaws need to be addressed to protect the most vulnerable customers.
“Wideranging reforms, backed by a fair funding package, are needed if we are to tackle escalating fuel poverty levels. As an emergency measure the Government and energy companies must work together to introduce a fuel voucher scheme to help the poorest pensioners this winter.”
EDF, which has 28 million customers in France, rejected the claim that British consumers would have to subsidise their counterparts in France. A spokesman said that the finances of EDF Energy in Britain were self-contained from EDF in France and both were profitable businesses, so there would be no need for cross-subsidy.
He also argued that transnational comparisons were misleading because EDF’s French operation was relatively insulated from rising gas prices as so much of its electricity came from nuclear power. EDF, the world’s biggest nuclear generator with 58 reactors at 19 sites, generates more than 80 per cent of France’s elecricity.
Mark Todd, of energyhelpline.com, said that the relative abundance of gas storage in France was another factor that might allow EDF to absorb the impact of gas price fluctuations there better than in Britain. France has up to four times the amount of gas storage as Britain, allowing it to buy gas in bulk at low prices during the summer for use during high winter demand.
The French energy market was opened to competition in July last year, but the British industry has been liberalised since 1989. British consumers benefited from low prices for more than a decade after privatisation, but soaring wholesale energy costs have forced prices higher in recent years.
Ofgem, the British energy market regulator, declined to comment.
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Of course Gondon Brown's Government is not going to intefer and why should they
The high fuel prices are the more they collect in revenue
They have overspent and are desparate for our money
Andy Smith, Taunton, UK
Deafening silence from the government. No surprise there then.
Simon Marshland, Bath, UK
Wow... Peter McINTYRE, Stanmore, UK You said what I was thinking. Can't believe how badly this article stirs things up. I would have expected better.
Paul, Horsham, UK
Whatever happened to this European Union Free Market we all voted for....
Surely all our utility suppliers and fuel suppliers charge the same.
Oh , hang on , we didn't get that promised vote did we.
Richard Garland, Greater Manchester,
Price capping may not be the appropriate response in the UK energy market.." Why not here, if it is in France? Or are we just the milch-cow which provides EDF with distributable profits?
S. Barraclough, Huddersfield, W. Yorkshire
Absolutely agree with Michael Fremlins, after all our Government issues laws overnight to protect Ministers finances.
Susan Revell, Chiswick, United Kingdom
Better Question, Why dont we store more fuel during the summer?
or even better, why didnt we store more north sea oil to sell at high times such as Norwegian firms are doing?
oh,thats common sense isnt it? sorry forgot i was british.....
Chris, rochdale,
"British industry has been liberalised since 1989"
Funny how NIreland is included in this definition and still doesn't benefit from this. Just ignore us as per usual!
JJ, Craigavon,
Plus ca change.
ronnie, bucks, UK
Surely the answer here would be for all UK EDF customers to change suppliers?
LKN, North Yorkshire,
EDF in France buys virtually no gas or oil. As such they can indeed benefit from their far sighted decision to go 80% nuclear and keep prices down in France. Why should French consumers, having rejected the fearful nonsense of the anti nuclear people, now subsise these same people in the UK?
Mike, Newmarket, UK
OK, but what are the prices of energy in the UK & France. If France's prices begin from a higher base all this hysteria is misplaced
John Ledbury, Kings Lynn, England
What is the Brit govt going to do to protect its citizens? Nothing,I would think. Rather like it has allowed the US govt to extradite UK citizens to the USA for trial, without equal reverse privilege (ie UK is not allowed to extradite USA citizens to UK). To think taxpayers sponsor this!
helen, Norwich,
We are being conned.
One of the main reasons given for hiking the electricity and gas prices was the increase in oil prices. The motor fuel price has now come down almost 8% in my area.
Will we see a redution in the domestic G & E prices? I very much doubt it.
Alan, Llanerchymedd, Wales
well done the french why cannot our set of clowns show some back bone all they seem to be bothered about is filling there pension pots an killing off as many pensioners as posible so they do not have to pay there pensions
cliff williamson, spilsby lincolnshire, england
French customers get this protection because they can't switch supplier.
Jute, London,
"British families could end up subsidising French households after 2 per cent cap imposed in France on electricity price rises"
Not true : the Pound lost 18% against EUR. So the cost of french electricity (+18% in UK) expressed in EUR is same. There is no cost increase, only GBP is down...
Michel Xima, Aix en Provence, France
Will this ridiculous government wake up to tha fact that certain strategic industries should not be in public let alone foreign hands. This outrage where we continue to subsidise the French though our energy bills this time is the mere tip of the iceberg.
Karen, London, Uk
Sounds like we need the re-introduction of price controls (last time used in the late 70's). At least it will give something useful for all the jobsworths to do..
malcolm, ely,
Its no wonder the U.K is referred to as Treasure Island.
At least the French are doing something to protect their own people.
Mr Brown seems to be effected by ostrich syndrome.
Does he think if he sticks his head in the sand for long enough everything will go away?
Dave Bridge, Southport, UK
So the government is listening is it?
Get the hell on with doing your job then.
That is what you should be doing, instead of taking a break.
The world does not stop for a holiday. Like others say here, we are fed up of being robbed. Our Government is in collusion with the energy Companies.
Neil Brown, Maidstone,
If the French can cap energy prices why cannot Mr Brown do the same?
Mike, Sole Street, England
Thatcher spent most of the North Sea oil revenues on unemployment pay, while simultaneously closing down the UK coal industry; this was the time that gas fired electricity generation rocketed.
It's unfair to now blame the French, who didn't have any oil / gas, for their investment in nuclear power.
Peter Hooper, Windsor, UK
"We are now faced with the ultimate humiliation: subsidising the French energy consumer and we cannot even blame the European Union". This is no humiliation. You choosed to play money from City. French preferred to play energy futures. You were winners first, we are winners now... Be fair play !
Michel Xima, Aix en Provence, France
Its the same with oil prices. China & India subside the price to the consumer making market ecomonies like the UK pay a higher price. They have recently cut sudsides & the price of oil has come down. Makes you wonder about the market economies eh ?
JAMES, ABERDEEN, UK
The Fr & UK electricity markets are not comparable. 93% of Fr electricity is generated by nuclear & hydro so they are not subject to the oil price hike of the past 2 yrs. De Gaulle had the courage to realize how vulnerable Fr was to foreign energy & took the visionary step build nuclear stations.
Michael, Bromyard, UK
This article doesnt add up on a number of levels (in fact it reads like the usual xenophobic nonsense from the Sun).
EDF Energy cant just increase prices to its UK consumers to cover a shortfall in France. Most UK consumers would switch to one of a multidude of other suppliers.
Peter McINTYRE, Stanmore, UK
It is normal the french customer benefit now the investment he paid for its nuclear industry in the past. EDF was not private, but state-owned. And investment to get 80% of nuclear power electricity nowadays was paid by the customer, who shall be rewarded now with lower cost energy. Good forecast.
Michel Xima, Aix en Provence, France
You've got your price rises the wrong way round in this article as it is gas that is going up by 22% and electricity by 17%, not the other way round. The principle of extortionate price rises remain, but this is a very basic flaw in your statistics surely. A little more accuracy needed, maybe?
Mark, Leicester,
Nothing like a free market in energy. In fact its nothimg like a free market in energy. Shouldn't the EU intervene?
Robert, Worcester, UK
Judy, Liverpool - Actually people supported by our welfare state dont recieve any subsidy on their fuel bills (older people as an exception where grants are availible). Quite the opposite as many pay an elevated price per unit due to using pre payment meters.
David, Cardiff, Wales
Switched from EDF to British Gas yesterday. EDF had increased gas prices by 80% this year without warning. Their customer service is poor, their prices terrible and the government wishes to sell our nuclear industry to them. Does anyone else feel like we are living in the twilight zone.
John, Glasgow, UK
After all this and we are still not ensuring that all new build homes have renewable energy built into them from the word go. Why is this ?
Daniel, margate, UK
The solution seems simple. Enforce parity of consumer energy prices in France and Britain. This is both fair and preventing the possibility of cross-financing by UK users.
Bart van Mourik, Abingdon,
If they keep beating us with a big stick day after day what do think we are going to do, just lie down and take it!
It's time this Goverment gave us larger grants for ground source, solar heating and small wind turbines, why should the ordinary person keep subsidising these companies share-holders
billythefish, lincoln, U k
We are now faced with the ultimate humiliation: subsidising the French energy consumer and we cannot even blame the European Union.
The fault is entirely Mrs Thatcher's and her government.
She sold off the British family silver, most of which is now owned by the Europeans she so disliked.
Stephen Russell, Maidstone, UK
We need nuclear sourced electricity in the UK.
Edward Johns, Lannion, France
Nice to see the French government looking after their people, not blowing billions on failed financial institutions!
Pete, St Albans, England
The impact on profits is likely to be small. But to the extent that it does EDF will no doubt again cut back on customer service. Dealing with EDF in France is a nightmare. UK customers should be careful what they wish for.
Mark Nicholls, Haute Garonne, France
What exactly is the problem?
John Carr, Coussac Bonneval, France
And we are suffering from yet another of Tony Blair's indecisive failures from 10 years ago. It did not take a superbrain to plan ahead for nationally independant provision of electricity supply but Blair failed and now we pay.
Chris Goodman, Fareham, England
A 2% cap? That brings British gas' recent 35% increase sharply into focus. The British consumer is the victim of theft yet again I see. I'm looking forward to freezing this winter along with millions of others and I don't live on benefits. No doubt those living off the state will be well subsidised.
judy, Liverpool, England
I'm sure someone will wheel out an EU directive that says it can't be done - after all EU directives only apply in the UK don't they ?
Stephen, Porto Alegre, Brasil exUK and France
If the French can do it, why not introduce such a law here?
Michael Fremlins, London,