France vows to ‘contain’ soaring electricity costs

France’s finance minister pledged Saturday to keep electricity costs in check for consumers as European energy prices soar.

The Paris government has put in place an energy price cap to shield households until December 31 and Bruno Le Maire said that next year, expected hikes would be “contained increases”.

“The four percent cap will be maintained to the end of the year,” he told a ruling coalition conference in the eastern city of Metz.

“There will be no catch-up of costs on the ceiling in 2023,” he vowed after President Emmanuel Macron had on Wednesday warned of energy price hikes.

Le Maire also said access to a three billion euro fund for businesses unable to meet energy bills would be made easier.

European electricity prices soared to new records this week, presaging a bitter winter as Russia’s invasion of Ukraine inflicts economic pain across the continent.

But the war is not the only culprit in France, where nuclear energy currently covers some 70 percent of the nation’s electricity needs.

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Shutdown of several nuclear reactors

The shutdown of several nuclear reactors due to corrosion issues has contributed to the French electricity price increase.

Traditionally an exporter of electricity, France is now an importer.

The year-ahead contract for French  electricity on Friday surged past 1,100 euros ($1,096) per megawatt hour — a more than tenfold increase on last year.

In Britain, energy regulator Ofgem said it would increase the electricity and gas price cap almost two-fold from October 1 to an average £3,549 ($4,197) per year.

Ofgem blamed the increase on the spike in global wholesale gas prices after the lifting of Covid restrictions and Russian supply curbs.

Energy prices have soared in Europe as Russia has slashed natural gas supplies, with fears of more drastic cuts ahead amid tensions between Moscow and the West over the war.

One-fifth of European electricity is generated by gas-fired power plants, so drops in supply inevitably lead to higher prices.

European gas prices on Friday reached 341 euros per MWh, near the all-time high of 345 euros it struck in March.