The French energy group EDF has warned that it could suffer a blow of up to € 8.4 billion, as it bears the brunt of government measures to protect consumers from rising power prices, forcing the company to scrap its profit margin for this year.
The group, which is majority-owned by the government, will have to increase the volume of nuclear power it sells to third-party suppliers at a fixed price that is currently well below market rates, France’s energy and environment ministry said late Thursday. .
To mitigate the blow, that fixed price will be slightly increased to € 46.2 per megawatt hour from the current € 42. But the measure, coupled with a freeze on tariff increases, could still cost EDF between € 7.7 billion and € 8.4 billion, based on market prices in December and January, the utility said.
He added he did not yet have a full estimate for the impact on his operating profit, and withdrew his net debt and profit guidance for 2022.
“The group will consider appropriate measures to strengthen its balance sheet structure and any measures to protect its interests,” EDF said.
France has been spared so far price jumps Elsewhere in Europe, gas costs have skyrocketed, in part because of its supply of nuclear energy provided by EDF, although the government has brought in aid for some low-income households.
It has promised to keep power price increases at 4 per cent for consumers throughout 2022 – well below the 35 per cent increase for which they were on course by February, ministers said – but funding that move will largely fall to EDF with heavy debt.
Governments across Europe have explored ways to curb price increases or protect consumers from higher bills, with many also cautious about limiting the political consequences of rising energy prices. Spain announced repayments on energy companies’ profits last year, although it later eased some of those measures.
EDF also lowered its forecast of nuclear power output late Thursday, after extending the cut-off period for five of its reactors in France. be inspected for welding problems.