Should we fear price increases with the end of the regulated gas tariff?
Regulated gas sales tariff (TRVG), a vestige of the bygone era, will soon end. Due to the liberalization of the market organized by the European Union since 2007, this price determined by the French public authorities as a result of the state monopoly GDF (now Engie) will no longer exist from July 1, 2023. at the age of six, by the decision of the State Council, it was decided that it was against European laws. Defending competition between gas suppliers, without one of them gaining a historic advantage, it is hoped that attractive offers for consumers will multiply in Brussels.
However, as the deadline approaches, concerns grow. In a letter addressed to Emmanuel Macron and released last week, the consumer protection union CLCV is even calling for the cancellation to be postponed, as gas prices have exploded for more than a year. ” Despite a toxic market, we are about to remove the safety net! “, warn Gallery his general representative, François Carlier. Unwarranted cry of alarm over government ensuring Engie’s TRVG doesn’t end” nothing will change for households “.
“This did not ensure price stability in any case, because the natural gas market is reviewed every month to reflect the evolution of prices,” said a well-versed in regulatory matters.
Nobody pays TRVG anymore
To see more clearly, you must first understand what adjustable sales rates are. These gas supply offers, offered only by Engie and local distribution companies (Gaz de Bordeaux, Gaz de Strasbourg, etc.), are strictly controlled by public authorities and prices vary under the control of the minister. Transition, after consultation with the Minister of Economy and the Energy Regulatory Commission (CRE). Thus, they can be seen a priori as more protective than any market offer, since the terms of the contract cannot be changed without strict control by the state.
However, only 25% of the ten million households connected to gas still benefit from this unsubscribed tariff. Proponents of its abolition thus repeat it over and over again: the vast majority of individuals have already chosen to leave it, proving that it is equally, if not more, attractive elsewhere.
First of all, even if framed, the TRVG does not protect consumers from price volatility. Indeed, according to the CRE formula, which is designed to increase the supply costs of suppliers, its amount is updated every month to reflect prices in the wholesale gas market. So much so that in reality, with the energy crisis, no one pays him anymore.
And for good reason, the executive branch simply froze the rate in October 2021 before deciding on a 15% increase from January 2023 to prevent an explosion of accounts for individuals. without this cap, according to CRE estimates, the increase in TRVG in December would have been 120%! », energy broker Xavier Pinon explains. ” It is not the TRVG that protects anymore, but the tariff shield “he insists.
Source: Energy Regulatory Commission
A beacon for the market and the state
Under these circumstances, why would you want to keep TRVG, whose calculation is anyway so strongly linked to the market that it no longer protects individuals when prices start to panic? ” First of all, the contract ensures security! François Carlier replies.
“Engie cannot break it or revise the terms as it likes, which is not the case with other contracts. Moreover, with the increase in gas prices in 2022, there were very sudden price increases and many customers were caught off guard”, prepares the chief representative of CLCV.
Above all, even in an increasingly regulated environment, TRVG still plays the role of a clear reference in the market: a large number of operators refer to it and even constantly adapt to it. So, from the fall of 2021, the state itself relied on this proposal to adjust the tariff shield.
Indeed, the government provides financial compensation to other suppliers calculated according to the rate set by the CRE so that they can comply with the permanently restricted TRVG. All consumers are given the difference between the theoretical regulated price (without price protection, i.e. at +120%) and the government’s frozen price in detail to protect them from the volatility of the markets. If this TRVG disappears, ” so there won’t be a clear beacon to turn to during this difficult time “, believes Francois Carlier.
What the Regulatory Commission denies. Because the administrative body will continue to publish a reference tariff which it needs to take from TRVG to do covers the difference between the actual gas supply cost and the frozen price level “, we can read on his website. a way” allow the consumer to see what price they have to pay and challenge the supplier “A source familiar with the matter explains. In other words, the latter will be able to index themselves, as in TRVG, and the government will rely on it if the tariff shield is extended.
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physical rarity
Still, the argument struggles to convince CLCV. ” Having 25% of households in TRV is not the same thing that makes most suppliers turn to it to be attractive, and a benchmark index placed deep within the CRE site! It says nothing that operators will follow suit once the government gives them subsidies to match the tariff shield. Francois Carlier says.
” This will remain a pressure tool for the consumer if he observes that the prices offered by the supplier are consistent with our index. “, a connoisseur of the favorable sector objects to the end of TRV and requested anonymity. CRE declined to comment when asked.
In this great uncertainty, only one element is not discussed: apart from the future of TRVGs, mainly the extension or lack of tariff shield in 2023 on consumer bills. ” We face the problem of physical resource shortages, and we always will, regardless of price adjustments. There is no magic wand to remove gas prices in France today, and someone will have to pay for it anyway. “Xavier warns Pinon.
