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Regulated Tariffs, Interconnection Capacity and Hydropower Concessions: European Commission Asks France to Take Action


On 29 May 2013, the European Commission presented its recommendations to address the financial and economic situation in several Member States of the EU.

Among the country-specific recommendations (CSR) presented by the European Commission on 29 May 2013, it is worth noting some of the measures proposed in the energy sector in exchange of granting delays for correcting national deficits. The package is based on the adoption of a new strategy for growth and jobs, Europe 2020, in 2010, which includes "guidelines" for Member States' economic and employment policies. This was supplemented in June 2012 by the adoption of a Compact for Growth and Jobs. The monitoring of Member States' performance was then operated through the Annual Growth Survey, the Alert Mechanism Report and in-depth reviews.

The following paragraphs take the particular example of France. The recommendation for a Council Recommendation on France's 2013 national reform programme (COM(2013) 360 final) draws a relatively negative picture of the state of the country:

  • France is experiencing maroeconomic imbalances, which require monitoring and decisive policy action;
  • despite considerable consolidation efforts that brought the headline deficit down from 7.5% of GP in 2009 to 4.8% in 2012, France is not expected to correct its excessive deficit by 2013
  • a worse economic environment than expected
  • Given the high and still increasing debt and the fact that the deadline to correct the excessive deficit is postponed again [to 2015], it is all the more important that the 2013 budget is strictly implemented and substantial consolidation efforts are firmly pursued in subsequent years;
  • As shown by the 2013 In-Depth Review (IDR), France's competitiveness remains a significant challenge, as the strong erosion of its export markets shares in recent years shows;
  • etc.

In a bargain game, the European Commission recommends to the Council to extend the deadlines set for the country for correcting its excessive deficit in exchange of the implementation of a series of measures.

As regards the network industries, including the energy sector, the European Commission points to the "limited progress" which was achieved in 2012 (§13 of the recommendation). A general observation is that "The French electricity market remains one of the most concentrated in the EU". Thregulated tariffs for non-household customers, increased interconnection capacity and hydropower concessions. 
is was already underlined in the 2012 review on the functioning of the internal market. The Commission notes further that a series of required reforms must be undertaken, which indirectly reflects forthcoming Commission's initiatives to be take against France in three specific areas:

  1. "Regulated prices in electricity and gas distort competition and continue to act as a barrier for new entrants. Regulated tariffs for non-household customers should be removed according to the timetable agreed with the French authorities."
  2. "More interconnection capacity with neighbouring countries and ..."
  3. ...."the launch of the tenders for hydro-concessions would also contribute to fostering competition in the electricity market." The French minister in charge of energy declared in October 2012 that she was against the pursuit of the liberalisation of the national hydropower generation market by opening up the concession system to competition through tendering, a reform initiated and voted by the previous government in 2010.

For a complete review of the application of Europe 2020 strategy in Europe and in France, see 

Photo: Credit (c) European Unnion, 2013
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