France was told that electricity and gas companies had to make further efforts to divide these operations. Paris was also told that low, regulated power prices made it hard for new companies to get a foothold in the electricity market.
So, EDF's prices are so cheap that others cannot compete! So EDF should increase prices so that others can compete, so that market efficiencies can then bring prices down??!!
Do they realize how stupid they sound? Why is the answer to that question is "no"??
(And of course, they cannot even blame France for subsidising EDF, as it doesn't. EDF actually had a BIGGER operating profit than Total in 2005, despite the low prices. In the long run, we're all dead. John Maynard Keynes
In your front page article yesterday on the European Commission action in the energy sector ("Energy at heart of EU bid to open markets") you write the following: 'Paris was also told that low, regulated power prices made it hard for new companies to get a foothold in the electricity market." At the same time, you lament that protectionism from various countries, notably France, prevents the competition that would make possible lower prices in the energy sector.
If I understand you correctly: EDF is selling its electricity so cheaply that others cannot compete with it, so the French regulator (or, presumably, the European regulator you call for) should force it to increase its prices to make the market more competitive, in order for prices to eventually go down? What's wrong with low prices to start with?
It would be appropriate for your journalists to remember that markets do not guarantee lower prices, they only promise more transparent prices, thus theoretically allowing for a better allocation of resources by producers and consumers. In the long run, we're all dead. John Maynard Keynes
"...should force it to increase its prices to allow other companies to enter the market, so that competition can bring prices down? ..."
The best way to have lower prices in a highly capital-intensive industry like energy production is to benefit from lower financing costs via sovereign priced debt - something that sadly European rules no longer allow. Instead, we have chosen to let the private sector invest in the comparatively cheaper to finance gas-fired or coal-fired plants
I think this ties in with the discussion in the last of Agnes' running series of diaries on Public-Private Partnerships, where we discovered much to my horror that PPP is an elaborate creative accounting scheme which only makes things more expensive for the government in the long run, but allows the costs to be accounted as operating and not financing, to get around European rules.
Is, as it increasingly seems the more I learn about it, the EU's monetary and financial policy completely wrong-headed, and what can be done to fix it? guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
Le commissaire chargé de l'énergie, Andris Piebalgs, va en particulier demander des explications à Paris dans le secteur du gaz au moment où l'opérateur public Gaz de France fusionne avec Suez : il met en cause, comme dans l'électricité, la régulation des prix et la séparation insuffisante des activités de génération, et de distribution.
La France est accusée de pratiquer des prix contrôlés, assez bas, qui empêchent tout concurrent d'entrer sur le marché.
