France Moves Toward Ending All Regulated Tariffs For Natural Gas Sales

Author:Ms Charlotte Breuvart, Nicolas Brice and Philippe Delelis
Profession:Jones Day
 
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In Short

The Ruling: The Conseil d'État (France's Administrative Supreme Court) has ruled that the public service obligation to supply natural gas at regulated tariffs in France contravened EU law. In particular, it affirmed that no objective of general economic interest could justify the French legislation on regulated tariffs for the sale of natural gas.

The Result: This judgment lays the foundations for a fully competitive retail market for the supply of natural gas in France.

Looking Ahead: Following the Conseil d'État judgment, the French government must set an end date for regulated tariffs for the supply of natural gas in France. Households and small businesses, which are currently supplied at regulated tariffs, will therefore need to consider and compare market offers for the supply of natural gas. In addition, it is likely that regulated tariffs for the sale of electricity in France will attract scrutiny in the coming months and possibly also be terminated.

In July 2013, the Association nationale des opérateurs détaillants en énergie (National Association of Energy Retailers, or "ANODE") brought an action before the Conseil d'État. ANODE sought to invalidate the French Decree on regulated tariffs for the sale of natural gas in France (Decree N° 2013 400). ANODE argued in particular that the legal basis of the Decree (Articles L. 445 1 to L. 445 4 French Energy Code) erroneously disregarded the objectives of the common rules for the EU internal market in natural gas, as set out in Directive 2009/73/EC of July 13, 2009.

As this case raised serious difficulties of interpretation, the Conseil d'État decided to stay the proceedings in December 2014, referring two questions to the Court of Justice of the European Union (CJEU) for a preliminary ruling (CJEU, 7 September 2016, Case C-121/15):

Regarding the first question, in September 2016, the CJEU responded that State intervention in fixing the price of supply of natural gas to the final consumer is an obstacle to achieving a competitive natural gas market, even if such intervention does not prevent competing offers at prices lower than regulated tariffs. Indeed, only the incumbent suppliers (Engie and 22 local distribution companies) are allowed to sell natural gas at regulated tariffs. Concerning the second question, the CJEU ruled in line with previous case law that such State intervention may nonetheless fall within the framework of Directive 2009/73/EC, provided that the following...

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