EDF sues French government over electricity sales

Under the so-called Regulated Access to Incumbent Nuclear Electricity (Accès Régulé à l’Electricité Nucléaire Historique, ARENH) mechanism set up to foster competition, rival energy suppliers can buy electricity produced by EDF's nuclear power plants located in France that were commissioned before 8 December 2010. Under such contracts, between July 2011 and December 2025, suppliers can buy up to 100 TWh - or about 25% of EDF's annual nuclear output - at a fixed price of EUR42 (USD47) per MWh. EDF operates 57 reactors in France, with a total capacity of 62.3 GWe, which together provide about 75% of the country's electricity.

In January, the French government - in an attempt to limit the rise in people's energy bills - decided to increase the amount of electricity that had to be sold at the below market-level prices of the ARENH scheme. It declared an additional allocation of 20 TWh of electricity to be sold at a regulated price for 2022. It also announced a postponement of a portion of the 2022 tariff increase over a 12-month period starting from 1 February 2023.

At that time, EDF said it would "consider appropriate measures to strengthen its balance sheet structure and any measure to protect its interests".

The government issued a decree and orders in March defining the specific terms and conditions for the allocation of the additional volume of electricity that can be allocated in 2022 and setting the price at which it will be sold at EUR46.20 per MWh.

"Following an in-depth legal analysis, and in light of the losses incurred as a result of the decree and orders dated March 11, 12 and 25, 2022, EDF today filed a legal claim with the Conseil d'Etat (the French administrative supreme court), as well as a claim for indemnification, for an amount estimated to date at EUR8.34 billion, with the French State," the company has now announced.

It has been a difficult year for EDF with its nuclear output falling as a result of the discovery of "unexpected stress corrosion" which led to the need to carry out checks across much of its French fleet. The cost of the lower than expected nuclear power output was estimated by EDF at EUR11 billion (USD11.2 billion) and in February it launched a EUR2.5 billion rights issue to help its finances following the combined hit from lower output as well as the cost of measures imposed on it by President Emmanuel Macron to limit energy bills.

The French state is also in the process of fully renationalising the company by increasing its shareholding in EDF from 84% to 100%.