A market open to competition
Since the French electricity and natural gas markets were fully opened up to competition on 1 July 2007, consumers have been free to choose their energy supplier.
As a result of deregulation, suppliers other than the incumbent operator, who are known as “alternative” suppliers, entered the retail natural gas market, and consumers are now able to choose between two types of offers:
- Market products, with prices set freely by the suppliers;
- Regulated tariffs, set by the government and proposed by the incumbent operators (ENGIE and the 22 local distribution companies)
Article 63 of Law No. 2019-1147, promulgated on 8 November 2019, on energy and climate (LEC) puts an end to the regulated gas tariffs of incumbent suppliers in several stages. This article provides that regulated gas tariffs can no longer be offered one month after the promulgation of the LEC, i.e. from 8 December 2019.
Consumers whose annual natural gas consumption is less than or equal to 30 MWh/year may cancel their contracts and switch to a new product or supplier at any time, at no additional cost and with no interruption in their supply.
Since 1 January 2019, households whose annual taxable income per head is less than €10,700 may be eligible for an energy voucher, which can be used to pay an energy bill, care home charge or to cover the costs of home energy renovation. The energy voucher is the replacement for the previous “social rates” applied to electricity and gas bills. For more information, visit the government website about it.
Retail natural gas price components
The retail price (net of tax) of an electricity product, whether at the regulated tariff or the market price, includes:
- Fixed costs which are identical for all suppliers, such as network access (the price of which is set by CRE);
- Variable costs which vary between suppliers: natural gas supply costs, storage costs, commercial costs (including customer management costs, energy savings certificate costs, and a reasonable margin). By optimising these costs, suppliers are able to offer lower prices.
The retail natural gas price also includes three taxes and contributions which apply in the same way to the bills paid by consumers at the regulated tariff or at market rates:
- The transmission tariff contribution ("contribution tarifaire acheminement" or CTA). This levy finances specific pension entitlements of employees working in regulated sectors covered by the IEG (electricity and gas industries) regime. Set by ministerial order, it is paid by all suppliers. The CTA is levied on various bases, depending on each supplier’s supply strategy;
- The internal tax on natural gas consumption ("taxe intérieure sur la consommation de gaz naturel" or TICGN). Introduced in 1 April 2014, this tax is paid by all natural gas consumers (consumers of biomethane and certain industrial uses are exempt). Since January 1st 2022, it has amounted to €8.41/MWh (itw as €5.88/MWh in 2017).
- VAT, at a rate of:
- 5.5% on the subscription amount (including the CTA);
- 20% on the proportional component (including the TICGN).
National Energy Ombudsman
Energie-info.fr, the website of the National Energy Ombudsman, offers comprehensive information on the supply of electricity and natural gas. In particular, it gives access to:
- an independent price comparison tool, the only one set up by the public authorities accessible on the internet;
- practical sheets with a lot of information and advice in energy (billing, change of suppliers, taxes, etc.).
Fixed or variable market prices
Both the incumbent and alternative suppliers offer products at market prices.
Consumers may choose:
- Fixed-price offers. The price net of tax remains fixed during the contract period, but taxes and other levies may change. There are various types of fixed-price offers, depending on which billing items remain fixed during the contract period. This may result in a higher final bill.
- Variable-price offers. The price changes in line with changes in regulated sale tariffs or other wholesale market indices specified in the contract.
Regulated sale tariffs
Article 63 of Law No. 2019-1147, promulgated on 8 November 2019, on energy and cli-mate (LEC) puts an end to the regulated gas sales tariffs of incumbent suppliers in several stages:
- on 1 December 2020, for non-domestic final consumers with an annual reference consumption of less than 30 MWh;
- on 1 July 2023, for domestic final consumers with an annual reference consumption of less than 30 MWh, the sole owners of a building for main residential use consuming less than 150 MWh per year and the syndicates of co-owners of such a building.
Regulated tariffs for natural gas remain governed by Articles L. 445-1 to L. 445-4 and R. 445-1 to R. 445-7 of the Energy Code. They are offered by the incumbent suppliers: ENGIE and 22 ELDs in their respective service areas.
Changes to regulated sale tariffs
The regulated sale tariffs for gas charged by each incumbent supplier are set by the Ministers for Economy and Energy, based on an official opinion from CRE. They must cover the supply costs of operators.
These tariffs vary to reflect:
- Changes in gas supply costs, based on the specific supply formula published for each sup-plier by ministerial order;
- Changes in non-supply related costs (transmission, storage, commercial costs).
Between two ministerial tariff orders, suppliers may alter their tariff scale. These apply directly, af-ter being checked by CRE to ensure they satisfy the formula published in the supplier’s specific ministerial order. Tariff changes are monthly for ENGIE, and quarterly for the other incumbent suppliers.
Regulated tariffs
The formula used to estimate supply costs to be taken into account in the regulated tariffs for natural gas applied by ENGIE is published by ministerial order (order of 26 June 2020).
Between January 2008 and September 2021, ENGIE’s regulated sale tariffs increased by €26.96 constant euros 2022.
How the retail markets work
In practice, the retail markets in electricity and gas work according to rules established by working groups set up by CRE in 2005. These WGs include all of the stakeholders concerned: consumer re-presentatives, suppliers, system operators and the government. Under the aegis of CRE, they have defined common operating procedures for professionals in the industry.
The operating rules (or procedures) between suppliers and system operators in respect of professio-nal or residential clients are laid down in the “customer reference base”, which has been in force since the electricity and natural gas markets were opened up to competition. The reference base is the result of work by two consultation bodies: the Electricity Working Group (GTE) and the Gas Working Group (GTG).