This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Energy Crunch Hammers French Nuclear Giant EDF
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Energy Crunch Hammers French Nuclear Giant EDF
Markets

Energy Crunch Hammers French Nuclear Giant EDF

Editorial Board Published January 14, 2022
Share
Energy Crunch Hammers French Nuclear Giant EDF
SHARE

The move reflects the fraught decisions facing governments in Europe over how to spread the pain from a surge in natural-gas and electricity prices. Regulated utilities are seen as low-risk bets for investors but Friday’s 15% drop in EDF’s shares was among the biggest for the French firm since it listed in Paris in 2005, according to FactSet data.

More than 80% of EDF’s shares are owned by the French government, limiting the fallout for international investors.

Economy Minister Bruno Le Maire said in an interview published by Le Parisien newspaper Thursday that the government had reached an agreement with EDF that would ensure electricity prices increase by no more than 4% in 2022. Without the measures, he said, they would have shot up more than 35% on Feb. 1.

EDF said the moves could wipe €7.7 billion, equivalent to $8.82 billion, off its earnings this year. The precise effect will depend on market power prices, it said. EDF withdrew its debt and profit forecasts for 2022, and said it would consider steps to strengthen its balance sheet.

Mr. Le Maire said the government also would lower the main tax on electricity, reducing tax receipts by €8 billion.

Energy prices began to shoot up in Europe in early fall due to a shortage of natural gas. Governments in Spain, Italy and elsewhere have sought to cushion the blow on consumers and business with subsidies, tax reductions and support for poorer households. In the U.K., lawmakers have pressed Prime Minister Boris Johnson to act before an anticipated 57% rise in consumer prices set by energy regulators in April.

For the French government, the political pressure is particularly acute in the runup to April’s presidential election. Polls suggest Emmanuel Macron, the incumbent, faces a stiff challenge from Valérie Pécresse, the candidate for the conservative Les Republicains party.

Energy costs have been a political minefield during Mr. Macron’s presidency. A plan to raise taxes on gasoline and diesel sparked the anti-establishment yellow vests movement in 2018, which threatened much of his agenda. Mr. Macron canceled the increase, which aimed to tax the carbon content of fuel.

Starting in December, the government sent a bonus of €100, or $115, to around 38 million French people to offset surging prices for items including fuel and food. 

France generates more than 80% of its electricity from nuclear power, partially shielding the country from the power-price jump that hit Europe in the second half of 2021. But French electricity prices are still strongly influenced by the price of gas, which fuels power plants that fire up or shut down depending on swings in demand.

Money is a sticking point in climate-change negotiations around the world. As economists warn that limiting global warming to 1.5 degrees Celsius will cost many more trillions than anticipated, WSJ looks at how the funds could be spent, and who would pay. Illustration: Preston Jessee/WSJ

Connections to the U.K., Germany, Spain and elsewhere also can lead high power prices in other parts of the region to seep into the French market. Shutdowns of several French nuclear reactors have exacerbated the problem.

European gas prices were volatile Friday after Russian officials said talks with the U.S. over the security situation in Ukraine had stalled, rising more than 6% before ending the day 2.3% lower. The deployment of Russian troops on the border has raised concerns that gas transit through Ukraine to western Europe could face interruptions.

The crux of the French plan is for EDF to sell an additional 20 terawatt-hours of electricity at reduced prices to its competitors, on top of 100 terawatt-hours it already had agreed to deliver to them under a mechanism known as ARENH. These reduced prices would automatically pass onto households and businesses, Mr. Le Maire said.

The trouble for EDF, analysts said, is that it has sold forward most of the power it expects to generate this year. As a result, it will have to buy power at high market prices to sell to rival suppliers at a lower, government-mandated price of €46.20 a megawatt-hour.

For the company, the timing of the government’s measures was unfortunate. Also Thursday, EDF said defects at several nuclear reactors would cut forecast nuclear-power output by almost 10% this year.

Meike Becker, a utilities analyst at Bernstein, said outages at the Civaux, Chooz and Penly stations, combined with the government policies to reduce consumer electricity prices, could knock €15 billion euros off EDF’s earnings this year.

It isn’t the first time EDF has struggled during the price surge. The utility’s trading unit was reported by Le Figaro to have lost €400 million on a wrongway bet on power prices in the fall.

Asked about the report on a call with analysts in November, EDF executives said a limited number of trading books had suffered as a result of market turbulence.

Write to Joe Wallace at [email protected] and Matthew Dalton at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Biden’s policies hit his home state in the pocketbook, skewer Delaware’s biggest industries Biden’s policies hit his home state in the pocketbook, skewer Delaware’s biggest industries
Next Article Fed Pick Raskin Faces Some Heat in Confirmation Fed Pick Raskin Faces Some Heat in Confirmation

Editor's Pick

Diane Keaton Reason behind Demise: Hollywood Legend Passes Away at 79

Diane Keaton Reason behind Demise: Hollywood Legend Passes Away at 79

Studying Time: 2 minutes Display screen legend Diane Keaton has handed away on the age of 79. Diane Keaton attends…

By Editorial Board 3 Min Read
Bihar polls: ‘Undervalued’ by NDA, HAM chief Jitan Ram Manjhi warns of ‘repercussions’ | India Information
Bihar polls: ‘Undervalued’ by NDA, HAM chief Jitan Ram Manjhi warns of ‘repercussions’ | India Information

Jitan Ram Manjhi with PM Modi (File photograph) NEW DELHI: The ruling…

5 Min Read
Musk’s large mouth, and the DOJ’s illegal meme obsession
Musk’s large mouth, and the DOJ’s illegal meme obsession

Injustice for All is a weekly sequence about how the Trump administration is…

10 Min Read

Oponion

E-Com+, Revolutionizing The Industry Of Dropshipping

E-Com+, Revolutionizing The Industry Of Dropshipping

Due to the arising amount of online shoppers post COVID-19,…

December 10, 2022

Antioch man arrested in reference to carjacking, kidnapping

ANTIOCH – Authorities on Wednesday arrested…

November 14, 2024

Alpha Industries N3B Parka Overview: How a Army Jacket Revolutionized Chilly Climate Gear | Fashion

We independently consider all beneficial services…

December 16, 2024

Kentucky metropolis lures distant staff with money and perks in daring inhabitants development technique

Take a look at what's clicking…

June 21, 2025

Prince Harry’s Netflix Bosses ‘Disenchanted’ With Polo Doc: Report

Prince Harry and Meghan Markle’s relationship…

October 2, 2024

You Might Also Like

BlackRock’s bragging rights to quickest rising ETFs
Markets

BlackRock’s bragging rights to quickest rising ETFs

Buyers are plowing cash right into a broad swath of belongings placing the ETF trade within the driver’s seat of…

3 Min Read
Nestle to chop 16,000 jobs as a part of value financial savings initiative
Markets

Nestle to chop 16,000 jobs as a part of value financial savings initiative

HHS Secretary Robert F. Kennedy Jr. discusses efforts to section out petroleum-based artificial dyes within the nation's meals provide on…

4 Min Read
GM takes .6B monetary hit as EV tax credit score adjustments power technique overhaul
Markets

GM takes $1.6B monetary hit as EV tax credit score adjustments power technique overhaul

Energy the Future founder Daniel Turner discusses the Trump administration suing California over its truck emissions requirements and EV mandates…

4 Min Read
ETF race hits T at document velocity
Markets

ETF race hits $1T at document velocity

Traders are plowing cash right into a broad swath of belongings placing the ETF trade within the driver’s seat of…

5 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?