Opening of the electricity market

The legal separation and independence of network managers, and a stronger role for regulatory authorities were just some of the European directives that guided the opening of France’s electricity supply market to competition. Transposed into French law, these directives have enabled the market to open in stages.

A market open to competition

The law requires the complete separation of businesses involved in electricity production, transmission, distribution and supply. At the same time, it specifies that electricity production and supply businesses must be wholly open to competition.

Companies, professionals, local communities and private consumers thus can freely choose their electricity supplier. They may decide to: :

subscribe to a market-based offer whereby the price is decided by electricity suppliers,

opt for a regulated price decided by public authorities (in partnership with previous suppliers).

Construction of the internal energy market in Europe

The aim of opening France’s national energy (gas and electricity) markets to competition is to construct a European energy market that is open, competitive and regulated. This will thereby: :

guarantee safe energy supply,

reconcile environmental protection with the increase in energy demand,

allow regulatory authorities to perform their function,

promote free and fair competition for the benefit of network users (businesses, local communities, private consumers, producers),

fulfil public service duties and satisfy consumer protection requirements by guaranteeing non-discriminatory access to transmission and distribution infrastructures that are structured as a monopoly.

 

The main stages of opening the electricity market
	Customer segment	Number of sites in France	Market share open to competition
1999	Major industrial consumers (16 GWh/year)	1,300	30 %
2003	Industrial consumers with over 7 GWh per year of consumption	3,500	37 %
2004	All professional consumers	4,5 million	70 %
2007	All professional consumers	Approx. 30 million	100 %

Rules of the game :

European Union directives transposed into French law state:

customers right to choose supplier,

producers right to choose establishment,

access rights to public electricity transmission and distribution networks networks in transparent and non-discriminatory conditions..

The electricity market is now organised into 2 categories: businesses that are open to competition, and regulated businesses.

 

Production, trade	Open to competition
Transmission	Regulated market
Distribution	Regulated market
Retail and supply	Open to competition

 

The opening to competition is supervised by public authorities and monitored by regulatory authorities. These authorities are responsible for enforcing the regulations and ensuring the market’s smooth operation. In France, this organisation is called the Commission de Régulation de l’Énergie (CRE).

 Public service duties for electricity distributiond’électricité

Public services are responsible for electricity transmission and connection to the public electricity distribution network, according to principles defined by the law dated February 10, 2000. These duties are carried out by public distribution network managers, including ERDF, which covers 95% of mainland France. The duties are laid out in concession contracts signed with local authorities (French municipalities or groups of municipalities).

ERDF plays a key role in this new context. As a distribution network manager, it guarantees access to all users in a transparent, objective and non-discriminatory manner. It also guarantees that commercially sensitive information remains confidential, thus allowing the market to operate according to the conditions defined in the documents.