Energy contracts in France : 4 essential things businesses in France must know?

8 November 2022
energy contracts in france for businesses

As a result of the war in Ukraine, inflation and the temporary shutdown of several nuclear reactors, the increasing prices of energy contracts are a growing concern for  companies in France. Many of them are wondering if they will be able to afford the upcoming increase in energy costs.

 In this context, the government has decided to implement measures in favor of companies. What these measures are ?

First of all, let’s take stock of the different energy contracts.Since the opening of the energy market in 2007, it is possible to choose among different suppliers in order to find the electricity and gas contract that best suits one’s consumption needs.

Energy contracts in France : Electricity

In principle, electricity is offered in two forms of contract with peak/off-peak options:

  • Contract at the regulated rate (blue rate): the price of electricity is set by the public authorities (the State),
  • Contract at the market price: the price of electricity is freely set  by the suppliers. There are two offers whithin this range:

o Fixed-rate offers: the kWh rate remains stable for the duration of the contract (generally 1, 2 or 3 years);

o Offers with indexed tarifs.

Energy contracts in France : Gas

 Professionals are free to choose their gas supplier.  The price of gas is often indexed to the TRV (regulated sales rate), and updated every month. Companies can no longer subscribe to the regulated tariffs, and must choose contracts at the market price.

Update on the regulated tariff of sale of gas :

  • December 20, 2019, marks the end of the marketing of regulated rates of natural gas.
  • For individuals and condominiums, June 30, 2023 is the date of final termination of the regulated tariffs for natural gas. Existing contracts remain valid until this date.
  • For professionals, the end of regulated gas sales tariffs is December 1, 2020.

 

Extension of the tariff shield and its application to small businesses

 

To cope with rising prices, the government has introduced in 2021, the tariff shield. This is a measure to protect French companies against successive increases in electricity and gas rates. Thanks to this shield, price increases will be limited to 15% in January 2023 for gas and 15% in February 2023 for electricity.

Until then, the increase was capped at 4%. An increase that should represent on average 20 euros per household on the bill (instead of 200 euros without shield). Small companies with less than 10 employees and a turnover of less than €2 million will be able to benefit.

To estimate more precisely the average annual amount avoided thanks to the tariff shield, you will have to multiply your annual consumption in kWh by “0.068”. This calculation applies to the cost of electricity.

Other measures have been put in place by the State to support companies whose gas and electricity expenses represent a high proportion of their costs:

 

  • The PGE resilience: it allows to cover up to 15% of the average annual turnover during the last 3 years to support companies with a significant need of cash flow due to the conflict in Ukraine. You should contact your bank to benefit from this loan and check whether you meet the conditions.

  • The aid scheme for companies that are major consumers of gas and electricity: As part of the economic and social resilience plan of March 16, 2022, the government has set up a subsidy to help companies mitigate the effects of the energy crisis. This concerns companies whose gas and electricity expenses exceed at least 3% of their turnover in 2021, with a doubling of their unit cost of energy purchase. This aid includes several components, each with a ceiling of €2.25 and €50 million, depending on the specific characteristics of the company

  • Help available in case of difficulties with your energy supplier: Faced with the increasing number of difficulties between suppliers and customers, the Government has initiated a discussion on October 5, 2022 with energy suppliers to ensure a fair application of current contracts and their renewal conditions. As a result of this meeting, a charter of commitment was signed by suppliers to help consumers cope with the energy crisis.

Recourse available in case of disputes

  • If your company has less than 10 employees and a turnover of less than 2 million euros, you can refer the matter to the national energy ombudsman to resolve the dispute

 

  • If your company has more than 10 employees or a turnover of more than €2 million, you can refer to the company ombudsman or, if your dispute is with the supplier EDF or the supplier ENGIE, to the ombudsman of these companies.

Energy contracts in France :

Practical questions :

 

Does the tariff shield concern all contracts? False

This tariff shield only applies to consumers who have subscribed to a regulated tariff energy supply contract, and to holders of a contract with prices indexed on the regulated tariffs. Households with a fixed price contract are also protected from increases for the duration of their contract. Holders of a contract indexed to market prices do not benefit from the tariff shield.

I no longer benefit from the regulated rate, can I go back?

Yes, but only for electricity. In fact, it is no longer possible to subscribe to the regulated tariff for natural gas.

The principle of reversibility allows you, as a consumer, to go back to a regulated tariff electricity contract after having subscribed to a market offer, or vice versa. This principle allows you to change your mind after having chosen one type of tariff offer rather than another.

Am I subject to the professional or private tariff?

As long as you have a SIRET number, you will in principle be subject to the professional tariff.

Can I benefit from the tariff shield if I am an SME?

Yes, if you are a small company with less than 10 employees and a turnover of less than 2 M€.