Where the Champsaur Commission Has Got It Wrong
(2009) The Electricity Journal — Vol. 22, n° 7, p. 81-86 (2009)
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- One fairly unique feature of France is that it hosts a large fleet of nuclear reactors. It is owned by the incumbent, EdF, and provides this 85-percent state-owned enterprise with an economic advantage to compete on price. Moreover, because the energy mix in continental Europe is unbalanced, French nuclear power generation benefits from an extra scarcity rent which is likely to last for a long time.1 Since the opening of the retail market to competition in July 2007, the allocation of this rent and the survival of EdF competitors have been major issues discussed by French lawmakers. They are both addressed in a white paper, issued this past April, that has been called the Champsaur commission report.2 The Champsaur commission contains three main recommendations: (1) withdrawing the current retail-administered tariff for business; (2) maintaining retail-administered tariffs for households, and (3) introducing a wholesale-administered tariff on electricity from nuclear power generation. We welcome the fact that the commission proposes to abandon the so-called TaRTAM.3 As has been rightly pointed out in the commission's report, this tariff for business4 is very complex to implement (and hence costly) and freezes competition. However, we have reservations about the other two recommendations. Our arguments, explained below, are mainly based on the classical two-prong economic test5 to support a new regulation: (1) assessing its costs and benefits to ensure the latter offsets the former, and (2) comparing the recommended regulation with alternative instruments to verify that it is the best choice.
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Crampes, C., Glachant, J.-M., von Hirschhhausen, C., Lévêque, F., Newbery, D., Perez-Arriaga, I., Ranci, P., Stoft, S., & Willems, B. (2009). Where the Champsaur Commission Has Got It Wrong. The Electricity Journal, 22(7), 81-86. https://doi.org/10.1016/j.tej.2009.07.001 (Original work published 2009)