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ORIGINAL FRENCH ARTICLE: La libéralisation défavorable aux consommateurs

by Pierre-Henri Lab

Gas and Electricity: Liberalization Bad for Consumers, according to French Consumer Association

Translated Thursday 21 June 2007, by Isabelle Métral

After studying the effects of the liberalization of these markets abroad, especially in Great Britain, the French consumer association "UFC-Que choisir" warns that French private users should expect no benefit from the opening to competition of the gas and electricity markets from July 1.

In a recent press conference Alain Bazot, the president of the association Que choisir, explicitly invited consumers to “stick to the fixed prices” and advised them to ignore the offers that the various operators will make: no real advantages to consumers, he said, “is to be expected from them”. The association has been studying the effects of the liberalization of electricity and gas markets abroad, especially in Great Britain, and the consequences of the opening of these markets to competition for corporate users (already in force). This has led UFC-Que choisir to the conclusion that “no lasting decrease in retail prices can be reasonably expected.” On the contrary “the broad trend is generally for prices to go up.”

Also to be borne in mind, he added, is the fact that while 78% of the electricity consumed in France comes from nuclear power-stations and has a stable cost price, lower than that of the electricity produced in fossil-fuelled plants, it is the latter (higher) cost price that serves as a reference for fixing market prices. The association notes that the members of the French National Assembly themselves clearly had this fact in mind when they amended the housing law by providing that fixed rates be retained, justifying this amendment by specifying that “fixed rates are significantly lower than market rates. (…) Opting for market prices would push up consumer prices by 60% approximately.”

The association therefore “deplores” the fact that the government has not planned any information campaign on the opening of the electricity and gas private-users market to competition and on its modalities. UFC-Que choisir intends to alert subscribers to the fact that “should they sign for the ’eligibility’ option they will not be allowed to go back to the fixed rates”, and, moreover, when moving to a new house, subscribers won’t be allowed to “keep their former fixed-rate contract if the previous occupier has opted for competition.” It is also essential to remember that only EDF (for electricity) and GDF (for gas) will continue to offer fixed rates and that consequently the dual package offers the operators will make will make for both gas and electricity entails renouncing the fixed rates for both gas and electricity.

Other than these user-unfriendly dispositions the association also warns consumers against the probability of aggressive marketing drives, especially in door-to-door selling, which increases the possibility of having a number of exorbitant clauses slipped into contracts. UFC-Que choisir has decided to launch its own information campaign through its 170 local branches, its call centres and on its website (www.quechoisir.org) . It is determined to demand that “fixed rates remain available to all” and that “the eligibility option be reversible.”


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