French Court Bans Regulated Gas Tariffs

France's highest administrative court, the Council of State (Conseil d'Etat) has ruled that state-regulated retail tariffs for gas are contrary to EU law.

Such regulated tariffs are set directly by the government, after consultation only with the French energy regulator CRE.

The court made its ruling, following a request by the French energy retailers association (Anode) for an annulment of a decree of 16 May 2013 governing regulated gas retail tariffs. Anode had argued that the decree was contrary to EU law.

The Council of State said, July 19, after drawing the consequences of a decision rendered in this case by the EU Court of Justice on September 7 2016 in response to a question put to it by the Council of State itself, that it has decided as of July 19 to annul the Decree of 16 May 2013 "on the grounds that the maintenance of such tariffs is contrary to EU law."

However the Council of State said, given the serious uncertainty that such an annulment would create if retroactive to May 2013, it had decided exceptionally that the effects of the annulment shall be retroactive only to January 1 2016.

Anode's members are Direct Energie, Eni, Gaz Europeen, Total-owned Lampiris, Planete OUI, et SAVE -- but not incumbent Engie or state power giant EDF. Direct Energie is France's third largest energy retailer, under its brand 'Poweo'. Gaz Europeen is jointly owned by municipally-owned gas retail businesses in Paris, Lille, Nantes, Lyon, Marseille and Toulouse. Anode had argued that state-regulated tariffs unfairly helped Engie.

Update: Engie stated later that it has taken note of the Council of State's decision, which it said is directed at the state: "Indeed it is the government’s responsibility to deal as quickly as possible with the consequences of this decision through the legislative route, taking the interest of our customers into account. Since the regulated tariff established by the state was regarded as a guarantee by many consumers who deliberately chose it, a sufficiently long transitional phase should be organised to allow them to learn about the offers available on the market under the best conditions. Engie will continue to supply its customers for as long as they wish. The Conseil d'Etat’s decision should also apply as quickly as possible to the regulated tariffs for the sale of electricity, to avoid a distortion of competition being created."

Mark Smedley