France vows to keep electricity prices capped as EU energy costs soar

French Finance Minister Bruno Le Maire has pledged to keep electricity costs in check for consumers as European energy prices soar to record levels.

France's Finance Minister, Bruno Le Maire, has promised to maintain a cap on electricity costs until the end of 2023 as European energy prices soar. © LaTribune

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

Speaking at a ruling coalition conference in the eastern city of Metz: "The four percent cap will be maintained to the end of the year.

"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.

Les hausses des tarifs de l’électricité et du gaz seront « contenues » en 2023 malgré l’envolée des prix de l’énergie, promet Bruno Le Maire https://t.co/my8PhXGKoV

— Le Monde (@lemondefr) August 27, 2022

Ukraine war and the closure of nuclear reactors

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.

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.

• EU asked to reduce gas consumption by 15 percent to face possible Russian cuts
• TotalEnergies discounts fuel at French petrol stations as inflation soars

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 invasion of Ukraine.

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

On Friday, European gas prices reached €341 euros per megawatt hour, near the all-time high of €345 euros in March.