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The French energy market

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  1. Introduction
  2. Before the deregulation: From 1946 to 2002
    1. The creation of EDF-GDF
    2. The role of the state
  3. Why a liberalization of the energy market and how?
    1. Goals of liberalization of the energy market
    2. Stages of the opening of the energy market in France
  4. Consequences of the liberalization of the energy market
    1. Consequences for individual consumers
    2. Consequences for the professional customers
    3. Consequences for the historical suppliers
  5. Conclusion
  6. Bibliography and webography

On July 2007 started the last step of the opening up of the energy market in France, i.e., of the electricity and gas markets. This process started in 1996 when the European Union decided to open up its market and liberalize it, in order to create one single market without monopoly. It was a big step for France, especially because the energy market was nationalized at the end of the Second World War. So, for sixty years the market was supplied by only two companies that held almost the whole market and which were working together. The main difference consists in allowing the 12 million particular consumers to change their energy supplier. Before that, the industrial market in energy supply was deregulated in 2003. However, this deregulation will be controlled by the State in order to protect the consumers and to avoid abuses. After the World War II, many modifications were made in order to change the infrastructures that remained before the war. One of them, and not the least, was the nationalization of the energy market because it was considered for long as a monopoly and inevitably related to the state. That is why the production and the distribution of electricity and gas were nationalized, in France, by the law of the April 8th 1946. This led to two major changes.

[...] And, in a period of sharp rise in energy prices, their bills are considered reasonable whilst the switch to the private system is synonymous with a significant increase in prices. If we turn to the suppliers of electricity: the new companies conquered of the electricity market. This figure should continue to grow but EDF remains the main supplier of electricity. Indeed, thanks to its nuclear capacity, EDF produces very cheap electricity, at a cost far lower than the free market prices. [...]

[...] The regulated price rates are fixed by the public authorities, more exactly by the Minister in charge of Economy and Energy, according to the recommendation of the French energy regulator ?Commission de Régulation de l'Energie?. Market prices are freely fixed by the suppliers and determined by a contract. They can fluctuate much more quickly than the regulated price rates. The various situations that the consumer can encounter since the opening of the energy market are the following: 1. The consumer does not change his accommodation : - if he has a contract with EDF or GDF, he can automatically continue to benefit from the regulated price rate ; - If he has chosen to switch to a private energy supplier, he can negotiate a new contract in the free price system. [...]

[...] Concerning gas: of the eligible professionals signed a contract at the market price, mostly with the public supplier Contrary to what we observe on the electricity market, on the gas market the growth of the number of companies which chose free price market offers is on constant increase. This is explained by the less pronounced difference between the regulated prices and the market prices of gas. E. Consequences for the historical suppliers Since the liberalization of the energy market, new suppliers have made their arrival on the market and are in direct competition with the former monopoly: EDF and GDF. There are, for example, Altergaz, Alternated, Express Energy, Electrabel, Enercool, Poweo, Proxelia, etc. [...]

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