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Home News French PM tells firms to draft energy savings plans to avoid rationing

French PM tells firms to draft energy savings plans to avoid rationing

by jcp

By Leigh Thomas

PARIS (Reuters) -French Prime Minister Elisabeth Borne urged companies on Monday to draft energy savings plans by next month, warning they would be hit first if ever France is left with no choice but to ration the supply of gas and electricity.

Borne told the Medef employers federation’s annual post-summer conference that gas cutoffs by Russia could come at any time in the coming months and power shutdowns should be avoided at all cost.

“If it comes to rationing, companies will be the first to be hit and we all need to prepare for it,” she told the conference at Paris’ Longchamp horse racetrack.

“All companies need to mobilise and take action. I call on each one to draft their own energy savings plan in September,” she said, adding the state would set the example with ministries due to finalise plans next month to cut energy usage by 10%.

French wholesale electricity prices have surged in recent days to record highs, with the year-ahead baseload power price at a record high of 1,200 euros/megawatt hour (MWH) on Monday.

The government urged companies over the summer to save power by dimming lights, closing external doors when running air conditioning units or heating systems, and switching off illuminated advertising hoardings at night among other means.

For energy intensive industries, the challenge is greater, but necessary to avoid rationing, Medef head Geoffroy Roux de Bezieux said. “Companies will play their part to meet energy savings targets in offices, workshops, warehouses and during employees work trips.”

He pushed back against calls from some opposition politicians for a temporary windfall tax on companies making bumper profits on the back of the energy crisis, a prospect the government has not entirely ruled out.

With value added sales tax rising on the back of higher prices, he said: “It’s the state that’s seeing windfall profits rather than the companies.”

The finance ministry has responded to such claims by pointing out that the public sector’s costs were also rising, offsetting any boost from higher tax income.

French consumers have been relatively shielded from the sharp rise in power and gas prices since Russia’s invasion of Ukraine in February thanks to government-imposed caps that run until the end of the year.

“These measures have an unprecedented cost for the public finances. This necessary, indispensable investment will weigh for a long time on the public accounts and make each financial decision more difficult,” Borne said.

France is less reliant than some neighbours on gas imports from Russia, which account for about 17% of its gas consumption. But concerns about supply from Russia nevertheless remain.

Gas giant Engie confirmed on Monday that it was in talks with Algeria’s Sonatrach to increase imports from the North African country, a major oil and gas exporter.

“These exchanges are part of the government’s strategy to diversify gas imports over the past several months,” the energy ministry said in a statement.

(Additional reporting by Dominique Vidalon and Elizabeth Pineau; Writing by Richard Lough and Leigh Thomas; Editing by Louise Heavens and Mark Heinrich)