The French government has announced a significant reduction in electricity tariffs, with prices expected to drop by 14% starting February 1, 2025. This change is likely to provide much-needed financial relief to consumers facing high energy costs amid persistent inflation.
The announcement follows the publication of a decree by the government, which also states the end of the existing price shield—a temporary measure put in place during the sharp increase in electricity prices during 2022 and 2023. Despite the cessation of this protective measure, the new regulations confirm there will be no increase to the electricity taxes (accise), which were previously planned to rise. Interestingly, the tax will return to pre-crisis levels adjusted for inflation—reaching €33.70 per megawatt-hour for consumers—without any additional hikes.
According to Marc Ferracci, the Minister of Industry, "Les augmentations de taxes prévues dans le projet de loi de finances initial n'entrent pas en vigueur" (The proposed tax increases planned in the initial financial law will not come to pass). This change allows the regulated tariff to mirror falling international market prices, directly benefiting consumers.
Former Prime Minister Michel Barnier had suggested raising the taxation on electricity to generate €3.4 billion to alleviate public deficits. If this tax elevation had proceeded, reductions for households could have been limited to just 9%. Barnier previously stated, "Cela permettra une baisse des prix de l’électricité de 14 %, qui ira donc bien au-delà de la baisse de 9 % prévue initialement" (This will enable a 14% drop in electricity prices, which will go well beyond the previously anticipated 9% decrease).
The government’s recent decision reflects continued pressure from various political factions, with strong opposition emanated from parties such as the National Assembly (RN) and France Insoumise (LFI). Their resistance hinged on fears of increasing financial strain on households and the wider public. The pushback was so intense it resulted in the former government having to retreat from its planned tax increases, though this did not save it from political censure.
Approximately 22.4 million households and businesses—about 56% of electricity subscribers—are set to enjoy the benefits of the reduced tariffs. For the average household consuming 5.7 MWh annually, this would amount to savings of roughly €222 per year. Meanwhile, households consuming approximately 10 MWh could see annual savings closer to €380. Having experienced cumulative tariff increases of up to 40% over the last two years, this forthcoming drop brings some good news for consumers.
Market insights indicate favorable trends for electricity prices, stemming from improved conditions within the nuclear and hydropower production sectors, which have historically been the backbones of France’s energy strategy. The continued downward pressure on international prices signifies the potential for stable pricing in the future.
With the fiscal measures presented and the stability of pricing reaffirmed, millions of French households can breathe easier, anticipating less financial strain as they navigate their budgets through challenging economic times. This step by the French government to phase out the price shield and implement significant cost reductions signifies not just economic relief but also reassures consumers of their government’s attentiveness to their financial welfare.
Overall, the upcoming adjustments to electricity tariffs are expected to provide relief and aid to household budgets across France. The initiative aims to alleviate some of the burdens stemming from previous price surges, illustrating how policy decisions directly impact everyday lives. Consumers can look forward to this change, which allows for some respite after enduring prolonged financial pressures.
