Mechanisms against energy price instability – What is France planning?

The French government recently proposed a new mechanism known as the Rendezvous Clause (Appointment clause)which should enable the adjustment of electricity taxes in accordance with fluctuations in energy prices on the market. The plan is intended to be part of the budget for 2025, with the promise of reducing electricity costs by about 9 percent by February 2025 for approximately 80 percent of households.

In response to global crises and the energy transition, which causes great volatility in electricity prices, the proposed clause aims to adjust the tax to current market prices in order to avoid high financial burdens for citizens when paying their bills. Those on regulated tariffs or whose contracts are indexed to market prices, which includes about 76 percent of French households, will directly benefit from this adjustment.

Although the concept of adjusting domestic bills to market prices is relatively new in France, similar mechanisms have already been implemented in different parts of the world, proving to be effective in maintaining the financial stability of consumers during periods of high volatility in energy prices.

For example, in Great Britain there is a mechanism for capping energy prices, known as energy price capwhich is regularly adjusted to market conditions. Although the mechanism is not directly linked to market prices, it still protects consumers from sudden and excessive price increases. The limit covers about 28 million households and is updated every three months. Also, by fixing the maximum price that can be charged for a unit of energy, the tariff is regulated. For the period from October 1 to December 31, the price of gas is capped at 6.24 pence per kilowatt-hour, which is approximately €7.50, while the price of electricity is capped at 24.50 pence per kilowatt-hour, which amounts to slightly more than 29 euros.

In Serbia, for example, there is currently no system that directly connects electricity prices for consumers with energy price fluctuations on the market, as France is planning with its clause. Electricity prices for households in Serbia are mostly regulated and determined by the state, although there are variations in tariffs depending on the time of day, which allow citizens to save money by using energy in periods when it is cheaper. However, these tariffs are not directly related to the current market prices of energy products. In fact, prices paid by consumers are usually revised annually or as needed, in accordance with general economic conditions at a given moment, but do not reflect direct changes in the global energy market.

Countries around the world are looking for different ways to adapt to current energy flows, as prices fluctuate, skyrocket, and climate targets put pressure on the already constant increase in demand for electricity.

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