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Think-tank: Artificially low electricity prices ‘not good for EDF’ nor consumers
(EurActiv, 12 Nov 2018) Regulated energy prices in France are one of the reasons why former state monopoly EDF loses money, says Thomas Pellerin-Carlin. Moreover, regulated tariffs are useless to protect vulnerable consumers from energy poverty and “almost never lead to low energy bills,” he argues.
Thomas Pellerin-Carlin is head of the energy centre at the Jacques Delors Institute, a think-tank based in Paris. He spoke to EURACTIV’s energy and environment editor, Frédéric Simon.
- Regulated prices protect incumbent energy operators from competition
- Politicians have an interest to make sure energy prices are as low as possible, which makes France’s EDF lose money and build up debt
- Regulated tariffs applicable to the entire population are inefficient to address energy poverty
- Poor households should not be manipulated to serve the short-term interests of incumbent utilities
- In the long run, regulated prices will act as a break to the development of renewables and demand-response
Why did European countries introduce regulated energy prices in the first place?
Regulated energy prices were introduced when the electricity system started to be organised as a monopoly. And when you have a monopoly, like it was the case in Europe in the 50s and the 60s, you have a possibility that the monopoly abuses its power and imposes higher prices on consumers.
To avoid this problem, states have acted in different ways. One mean of action was to nationalise the monopolies so the benefits would eventually fill public coffers. Another one of was to introduce regulated prices.
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