The French national utility Electricité de France (EdF) has said that it will cut its tariffs by an average of 14 per cent by the year 2000, a move prompted by the introduction of European-wide competition in the electricity market, Reuters reports. The company estimates that the savings to its customers will be nearly $10 billion.
The member states of the European Union (EU) all have to liberalize their electricity markets before February 1999, following an EU agreement that will allow part of the market to open to competition.
In 1999, 25 per cent of the market will be competitive, in 2000 it will be 30 per cent and in 2003, 33 per cent. Large consumers will then be able to chose their suppliers.
Under another clause of the agreement, integrated utilities have to separate their generation, transmission and distribution businesses for accounting purposes. However, EdF will remain an integrated company, running all three sectors of the business. The company believes this will allow it to benefit from economies of scale.
There are some issues in France that have still to be resolved. A national coal subsidy is paid for by a levy on EdF. In a competitive market, the company argues, this should be spread among all suppliers.