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French nuclear giant EDF, forced to sell power to competitors below market value, is now suing the French government for over $8 billion in compensation.
EDF says it has lost 8.3 billion euros (nearly $8.6 billion at today’s exchange rate) as of the date of filing the claim against the government, and anticipates losing more than 15 billion euros for the full year.
The French power company, which is already 84% owned by the government and is in the process of being fully nationalized, is forced to sell electricity it produces to rival power plants to increase competition as EDF holds a monopoly.
The initial government decree states that suppliers can purchase up to 25% of EDF’s annual nuclear output between July 2011 and December 2025 at a fixed, discounted price of about $47 per MWh. However, in January this year, the government implemented a larger cap at one-fifth in order to reduce consumer energy bills for this year. Then, in March, the government issued additional decrees, further increasing the volume and reducing the price for EDF.
The losses cited by EDF stem from this time period.
In June, EDF reported earnings showing its largest ever half-year loss. EDF lost 5.3 billion euros in the first half of this year, compared to 4.2 billion euros in profit for the same period of 2021.
EDF’s power stations account for 70-75% of France’s power consumption, and the government is keen on nationalizing the giant in order to ensure energy supplies amid a looming crisis that began when Russia invaded Ukraine.
Losses are mounting for EDF in other areas, as well.
Last week, EDF was forced to slash output at nuclear power stations on two rivers as a heatwave spreading across Europe has rendered the rivers too hot to cool the units.
By Charles Kennedy for Oilprice.com
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