France is planning to cap energy-price hikes for households at 15% starting next year as it seeks to ease the financial pain of an energy crisis that has gripped the continent.
The European Commission earlier proposed a mandatory cut on energy use in the bloc, as well as steps to ease the crunch in markets caused by ballooning collateral demands. Commission President Ursula von der Leyen laid out plans to raise 140 billion euros from energy companies’ profits. The changes all need to be signed off by member states and discussions won’t be easy.
Gas prices rose, following extreme volatility in recent weeks. They’re about eight times higher than the typical levels for this time of the year, underscoring the challenge policy makers face.
France to Cap Price Hikes From January
France said it will limit energy price increases to 15% for households from the start of next year to ease the burden of the energy crisis on consumers.
The caps will cost the government a net 16 billion euros ($16 billion) in 2023, Finance Minister Bruno Le Maire said. Prices would have risen by 120% without the limit, he said. The state will also continue handing over subsidies, with a one-time payment of up to 200 euros each going to 12 million poorer households, Prime Minister Elisabeth Borne said.
French Grids Urge Less Fuel Use
France’s gas system can cope with demand for an “average” winter, as well as underpinning the power sector and contributing to Europe’s “solidarity,” grid operators GRTgaz and Terega said in a statement. In a very cold winter, the gas deficit for the period could reach 5% of French winter demand. Cold snaps are easier to manage in the first part of winter due to larger storage-injection capacities.
Meanwhile, France is working on capacity to send 100 GWh/day of natural gas to Germany from October, GRTgaz chief Thierry Trouve said at a press conference. The would go through a pipeline previously used to send flows from Germany to France.
EU Proposes Easier Collateral Rules
The Commission has proposed a series of regulatory changes that could help mitigate the liquidity crisis currently ripping through the continent’s energy providers. Measures include raising the clearing threshold for commodities and other derivatives to €4 billion ($4 billion) and allowing bank guarantees to be accepted as collateral against margin calls, according to the document.