I OVERVIEW

The energy market in France has undergone a progressive liberalisation as a result of the European plan to establish a unique energy market that would end national monopolies. This has naturally led to an important legislative and regulatory change, which was codified by an Order dated 9 May 2011 and which created the legislative part of the French Energy Code.2 This Code sets out provisions relating to electricity, gas, renewable energy, hydropower, oil and both heating and cooling networks.

This chapter focuses mainly on electricity and gas markets since they are the markets that have been affected the most by these changes. It should be underlined, however, that the other sources of energy are also subject to specific regulation.

After the Second World War, to rebuild the infrastructure and the network, the French authorities decided to grant a state monopoly to Electricité de France (EDF) and Gaz de France (GDF, now Engie) with regard to the production, transportation and distribution of electricity and gas, respectively.3 This situation remained substantially unchanged for half a century until France had to implement into its national law two Directives dated 1996 and 1998 adopted by the European Commission to promote an effective and efficient internal energy market, open to competition. These Directives were progressively transposed into French law as of 2000 and initiated the beginning of the liberalisation, although initially only large industrial consumers could benefit from this system.

Further opening of the energy market occurred several years later with the transposition into French law of new Directives dated 2003, which aimed to make this opening available to all professional consumers by 1 July 2004, and to all consumers, including residential customers, by 1 July 2007.4

Although significant progress had been made, the European Commission adopted the Third Energy Package to further liberalise the energy market, which included two new Directives5 replacing the former electricity and gas Directives. These were transposed into French law on 7 December 2010 by a new law commonly referred to as Law NOME,6 which led to the removal of several obstacles to the development of competition in the French electricity market. Greater price liberalisation for industrial and residential customers has been achieved, notably by requiring EDF to sell a substantial part of its existing nuclear facilities to alternative suppliers at a regulated price, between January 2011 and 2025, so as to allow alternative suppliers to compete fairly with the historical supplier.

Finally, France launched an energy transition with the adoption of Law No. 2015-992 on 17 August 2015. This Law established new rules supporting renewable energy production and stated ambitious objectives that were specified by the multi-annual energy programming for the period 2016–2023.

II REGULATION

i The regulators

Compliance with the new energy market regulations is mainly controlled by the Commission of Regulation of Energy (CRE), the sectoral regulator, which was created by the Law dated 10 February 2000.7 Its overall mission is to 'contribute to the proper operation of the electricity and natural gas markets, to the benefit of final customers'.

The CRE is principally in charge of:

  1. powers of decision, approval or authorisation (system operators, contributions to the public electricity sector, etc.);
  2. dispute settlement and sanctions relative to access to the electricity and gas networks;
  3. powers of proposal (tariffs for the use of public electricity grids, contributions to public electricity services, etc.);
  4. information and investigative powers with stakeholders;
  5. advisory powers (tariffs, regulated access to incumbent nuclear electricity, etc.); and
  6. additional powers (processing of tenders for electricity generation, etc.).

The Dispute Settlement and Sanctions Committee (CoRDIS) committee, which is an independent body of the CRE, acts in matters where the CRE has competence with regard to sanctions, and settles disputes relating to the access and use of public electricity grids and natural gas networks.

Further, an energy ombudsman has been put in place, whose role is to provide consumers with all necessary information concerning their rights, current legislation and the means of settlement available to them in the event of a dispute.

In addition, the French Competition Authority (FCA) has the power to prevent and sanction anticompetitive practices in any economic sector, including electricity and gas. It must inform the CRE when seized of any matter that would fall under the CRE's jurisdiction. The FCA must also notify the CRE of any abuse of a dominant position or any anticompetitive practice in the gas or electricity sector.8

Finally, the Higher Energy Council is a body established by the Ministry of Energy that is composed of several members, including Members of Parliament. Its main purpose is to advise on national energy policy. The Council is consulted on regulatory acts relative to that policy and on decisions relating to the electricity and gas markets.

ii Regulated activities

The energy market is composed of four main areas of activity: production (generation), transmission, distribution and supply (commercialisation). Under the regime that was in place until 2000, these four activities were carried out by EDF and GDF, which self-regulated the monopoly.

Greater strides have been taken towards liberalisation as production and supply are now open to competition. However, transmission and distribution are still public service activities supervised by the CRE. Where, to guarantee this public service mandate, a legal and financial separation between these activities has taken place,9 transmission is performed by GRT (gas) and RTE (electricity), and distribution is performed by GRDF (gas) and Enedis (electricity) or local distribution companies.10

More generally, some activities, such as the exploitation of electricity production facilities, require an administrative authorisation when the installed power of the facility exceeds a certain threshold, with different thresholds applicable for different types of facilities. Decree No. 2016-687 of 27 May 2016, for example, provides that the installation of an electricity generating facility using renewable energy will require an administrative authorisation if its installed power exceeds 50MW.11 The previous threshold ranged from 12MW to 30MW. The authorisation is issued by the Minister of Energy according to specific considerations such as security, energy efficiency, technical and economic capacities of the applicant.12 Similarly, gas exploration requires an administrative authorisation or a concession, which is granted subject to a public inquiry and a tender procedure.13

iii Ownership and market access restrictions

Although the French Energy Code does not provide for any restriction in relation to the acquisition of assets in the energy sector by foreign companies or individuals, it clearly states that the French state must hold at least 70 per cent of the capital and voting rights of EDF and one third of Engie14 (to protect the French national interest, the state may benefit from specific shares within the capital of Engie).15

iv Transfers of control and assignments

Any merger or any change in control over businesses in the energy sector, or any acquisition of utility assets, must be notified and supervised by the FCA if the following three cumulative conditions are met:16

  1. worldwide aggregate turnover of all the parties to the concentration exceeds €150 million;
  2. turnover in France of each or at least two parties concerned exceeds €50 million; and
  3. the transaction does not meet the thresholds set by Council Regulation (EC) No. 139/2004 (the EU Merger Regulation).

The examination process by the FCA is twofold. In Stage I (which takes up to 40 working days), the FCA has 25 working days to examine the transaction, starting from the date when a complete notification is received. When remedies are proposed to the FCA, this period is extended by up to 15 working days. At the end of this period, the FCA can clear the transaction, with or without remedies, or proceed to an in-depth investigation. In the absence of any decision, the transaction is tacitly cleared.

Stage II takes between 65 and 85 working days. If serious doubts remain as to the competitive effects of the transaction, the FCA proceeds with an in-depth investigation. During Stage II, if the transaction relates to a regulated area, the FCA may request a non-binding opinion from the relevant regulator (e.g., the CRE). At the end of Stage II, the FCA can either clear the transaction with or without remedies or prohibit the transaction. At this stage, the Ministry of the Economy has the ability to intervene and to take a position on the transaction for considerations of general interest, other than fair competition, that would compensate the harm to competition resulting from the transaction.

The FCA's authorisations for acquisitions may be subject to conditions.17

In addition, the French government issued Decree No. 2014-479 dated 14 May 2014, expanding the list of strategic sectors, including the energy sector, in which foreign investments in France require the prior authorisation of the French Minister of the Economy.18

III TRANSMISSION/TRANSPORTATION AND DISTRIBUTION SERVICES

i Vertical integration and unbundling

Vertical integration is the process in which different aspects of the market are controlled by a common company or entity. Prior to the deregulation of the energy industry, French energy companies were largely vertically integrated, which created potential conflicts of interest and monopolies.

The European Commission issued Directives 2003/54/EC and 2003/55/EC principally to ensure efficient and non-discriminatory network access, to ensure free choice of suppliers by consumers and to encourage investment. This legislation was transposed into the French system by a Law dated 9 August 2004, which provided for a legal unbundling of regulated activities (distribution and transmission) from non-regulated activities (production and supply). After an inquiry launched in 2005 by the European Commission, however, serious shortcomings in the electricity and gas markets were identified, including an inadequate level of unbundling between network and supply interests deemed to have negative effects on the market and investment.19 Consequently, under Directives 2009/72/EC and 2009/73/EC, priority was given to achieving effective unbundling of network and supply activities.

As has been explained, these Directives were transposed into French law so that the transmission and distribution system operators would be legally and fully unbundled companies. Accordingly, transmission and distribution system operators must be equipped with all the necessary human, technical, physical and financial resources to fulfil their obligations under French law and, in particular, they must own the assets necessary for their activity.

ii Transmission/transportation and distribution access

Non-discriminatory and fair access to transmission and distribution networks for gas and electricity are at the core of the free market approach.20 Any discrimination, prevention of new participants from entering the market or restriction to fair competition in favour of the consumer is subject to sanctions issued by the CoRDiS committee.21

Among the measures guaranteeing non-discriminatory and fair access, any refusal to enter into an agreement must be justified and notified to the applicant, and to the CRE, specifying that any refusal is justified by objective, transparent and non-discriminatory reasons.22 Furthermore, any transport or distribution system operator serving more than 100,000 clients must draw up a code of conduct to ensure compliance with the non-discrimination principle.23

Finally, the CRE must publish an annual report concerning compliance with the code of conduct and a summary of its assessment of the independence of the transport or distribution system operators.24

iii Terminalling, processing and treatment

There are currently three natural gas terminals in France: Fos Tonkin and Fos Cavanou, both near Marseille, and Montoir-de-Bretagne, near Saint-Nazaire. Tariffs for the use of natural gas terminals, which are regulated, are set by the CRE.

The operation of storage facilities is subject to a concession.25 The storage of natural gas must ensure (1) the proper operation and balancing of systems connected to underground natural gas storage facilities, (2) the direct or indirect meeting of domestic clients' needs, and (3) compliance with public service obligations. Access to storage is guaranteed; the operators of underground storage facilities are free to negotiate the terms of their offers with their customers, with the latter being able to rely on objective, transparent and non-discriminatory criteria.26

iv Rates

The aim of access tariffs to networks is to guarantee transparent and non-discriminatory access to public networks. These fees are calculated in a way that covers all costs supported by the system operators (costs arising from their public service duties, the research and development needed to increase the transmission capacity, and the grid connection).

The methodology used to establish access tariffs to the network is set up by the CRE. In addition to fixing the rates, the CRE grants appropriate incentives for transmission and distribution system operators in both the short and long term to increase efficiency, to foster market integration and security of supply and to support related research activities.27

v Security and technology restrictions

Security of electricity and gas supply is an essential public service obligation.28 The Ministers of Energy and Economy must ensure the fulfilment of this public service mission mainly by EDF, GDF, RTE, GRT, Enedis, GRDF and local distribution companies. In the event of a serious energy shortage, the government may subject energy resources to control and allocation.29 These measures mainly concern production, imports, exports, storage, acquisition and transportation. In the event of a serious energy market crisis, or a threat to the safety or security of the networks and of people, the Minister of Energy may take protective measures to grant or suspend licences for the operation of power generating facilities.30 In times of war or serious international tension, the government may regulate or even suspend oil imports or exports completely.31

In addition, to ensure energy autonomy, France has put in place a capacity market that entered into force on 1 January 2017. The aim of the capacity mechanism is to encourage demand management, especially during peak hours, via the purchase or sale of certificates depending on whether energy consumption needs are met.

IV ENERGY MARKETS

i Development of energy markets

The sale of energy takes place within either the wholesale market or the retail market. The wholesale market is where electricity and gas are traded (bought and sold) before delivery in the network to final customers (individuals or companies), whereas the retail market concerns the final clients who may freely choose their suppliers (eligible customers).32

The participants of the wholesale market are:

  1. producers who trade and sell their production;
  2. suppliers who trade and supply gas or electricity before selling gas or electricity to the final client; and
  3. brokers or traders who purchase gas or electricity for resale and thus favour market liquidity.

As most of the activity in the wholesale gas and electricity markets takes place over the counter, through direct transactions or through intermediaries (brokers and trading platforms),33 the opening of these markets to competition has led to the emergence of organised markets, namely trading platforms (such as Epex Spot, France or EEX Power Derivatives France).

ii Energy market rules and regulation

Even if the supply of energy is open to competition, it is still subject to certain requirements and monitoring.

First, the sale of electricity or gas is subject to government approval. Indeed, suppliers willing to purchase electricity or gas to sell it to consumers need an administrative authorisation that is delivered subject to their technical, economic and financial capacities, and according to their project's compatibility with the security of supply obligation.34

Second, each transaction performed on the French market that would involve the participation of a producer, broker or energy supplier must be monitored by the CRE, regardless of the trading method (two-way trades, with or without a broker or transactions within organised markets).35

Third, free competition is limited with respect to pricing practices since, in certain circumstances, 'regulated tariffs' may be chosen within the electricity market by customers having contracted for less than 36kVA.36 However, because of the European Commission's unhappiness, especially with the electricity retail market and the dominant position exercised by EDF, Law NOME ended regulated tariffs for customers having contracted for more than 36kVA by 31 December 2015.37 Furthermore, in the gas market, the suppression of gas-regulated tariffs for all non-domestic consumers entered into force on 1 January 2016.38 The removal of these tariffs has induced more competition, with new participants entering the wholesale market, even though price differences remain small. As per a decision dated 19 July 2017, the Council of State declared that the gas-regulated tariffs were not in line with European Union law as they were a restriction on the existence of a competitive common gas market that failed to respect the conditions that would have made this restriction permissible under European Union law.39

Finally, the Contribution to the Public Electricity Service, which has been funded since 2016 by the domestic consumption tax on electricity for end users, was created to compensate public service charges assigned mainly to EDF, such as support schemes for renewable energy or social electricity tariffs.

iii Contracts for sale of energy

The legal unbundling between the production and the distribution activities imposed by the energy market creates several inconveniences for the consumer who, as a result, gets an increasing number of contractors, the responsibilities of which are diminished.

To prevent this, the Law dated 7 December 2006, completed by the Law NOME, created a new section in the French Consumer Code titled 'electricity supply or natural gas contracts',40 the provisions of which apply to contracts concluded by consumers and professionals for less than 36kVA (electricity) or less than 30,000kW (gas).

The energy supplier 'must give the client an opportunity to sign a single contract dealing with both the supply and the distribution of electricity or natural gas'.41 This contract, which should last for at least one year, thus creates a tripartite relationship between the supplier, the distributor and the consumer, even though the supplier often remains the consumer's main interlocutor.

The supplier must mention several specific provisions both in the offer and the contract. Failure to do so is subject to sanctions.42 The consumer can rescind the energy supply contract at any time if it plans to change supplier. Professionals are not entitled to ask the consumer for any costs other than those incurred by the rescission, provided that these costs were mentioned in the offer.43

iv Market developments

Market developments have taken place in different areas, and in particular on the cost of electricity with the Law NOME and on renewable energies with the Law on energy transition. Moreover, the regime of hydraulic concessions has been reformed, notably regarding the procedure applicable to the granting of such concessions.

Finally, the implementation of legal frameworks for the self-consumption of electricity and for closed energy distribution systems, such as the one set up by Order No. 2016-1725 of 15 December 2016 subjecting the operation of these systems to the issuance of an administrative licence, might enhance the development of local energy markets in the future.

V RENEWABLE ENERGY AND CONSERVATION

i Development of renewable energy

In July 2007, the French government launched the Grenelle Environment Forum, a major national consultation that led to the emergence of priority targets in terms of controlling energy consumption and promoting renewable energies. This forum led to the enactment of two Grenelle Laws, on 3 August 2009 (Grenelle I) and 12 July 2010 (Grenelle II) respectively,44 with the aim of promoting environmental objectives such as an increase in the share of renewable energy to at least 23 per cent of final energy consumption before 2020, in accordance with European Union Directive 2009/28/EC. In 2017, the share of renewable energy corresponded to 16.3 per cent of the final consumption while 19.5 per cent was targeted by the French government to reach the 2020 goal.45 These laws were codified in a separate section dedicated to renewable energy in the French Energy Code. Law No. 2015-992 of 17 August 2015 on energy transition and its several implementing decrees substantially modified the applicable legal framework on renewable energy.

To enhance the development of renewable energies, public authorities can use two economic instruments: (1) the purchase obligation,46 requiring EDF to buy electricity produced from renewable sources, for a regulated tariff over a long period, which can be changed and is slightly higher than the market price; and (2) the supplementary remuneration,47 which provides that EDF is obliged to enter into a contract for the purchase of electricity – the duration of which shall not exceed 20 years – with renewable energy producers, according to which an additional remuneration shall be paid to them.

The regime, eligibility for and articulation of these two schemes were later substantially reformed by three Decrees:

  1. Decree No. 2016-691 of 28 May 2016 defining the list and characteristics of the installations eligible to one or the other of the support mechanisms;
  2. Decree No. 2016-690 of 28 May 2016 setting out the terms and conditions of the assignment of the purchase obligation contract; and
  3. Decree No. 2016-682 of 27 May 2016 on the purchase obligation and on the supplementary remuneration.

ii Energy efficiency and conservation

To achieve a 20 per cent increase in energy efficiency, in accordance with the climate and energy package, the European Union adopted Directive 2012/27/EU on energy efficiency on 25 October 2012. It lays down rules designed to remove barriers in the energy market and to overcome market failures that impede efficiency in the supply and use of energy, and provides for the establishment of indicative national energy efficiency targets for 2020. These targets were recently revised as per the Law on Energy and Climate adopted in 2019 (see also Section VI.i).

The transposition of this Directive into French law led to the adoption of several measures intended to improve energy efficiency, such as:

  1. the creation of an obligation for companies to be subject to an energy audit every four years;48
  2. the submission by France of a report on its efficiency energy target to the European Commission on 24 April 2014; and
  3. the establishment of a requirement for public purchasers to buy products and services and to buy or rent buildings that have a high energy efficiency.49

Law No. 2017-1839, adopted on 30 December 2017, brought to a definite end the search and exploitation of hydrocarbons. The government's principal aim being the progressive phasing out of hydrocarbon production in the French territory by 2040, the Law provides that no new research permit for hydrocarbons will be granted by the government.

iii Technological developments

Directive 2012/27/EU also includes several provisions relating to the development of smart grids and smart meters, the aim of which is to reduce bills by paying what has actually been consumed and by understanding consumption patterns better. The development of smart grids is based on the idea that it improves energy efficiency and better integrates renewable energy resources in the network.

The development of smart grids has also been decided. Indeed, a Decree dated 31 August 2010 provided that new connection points must be equipped with smart meters from 1 January 2012 and provided for a test run or pilot for such equipment.

Following the government announcement that 35 million smart meters will be provided to electricity customers throughout the country by 2020, the deployment started in December 2015. According to Enedis, this goal should be reached in 2021.

VI THE YEAR IN REVIEW

The year 2019 and the beginning of 2020 have been characterised by several developments in the energy sector.

i New Law on Energy and Climate

Adopted on 8 November 2019, the Law on Energy and Climate revised several objectives set forth in the Law on Energy Transition dated 17 August 2015, in particular to achieve carbon neutrality by 2050 in response to the climate emergency and to comply with the Paris Agreement.50

The law focuses on four main areas:

  1. the gradual phasing out of fossil fuels and the development of renewable energies through several measures:
    • a reduction in fossil fuel consumption by setting a reduction target of 40 per cent by 2030, compared to 30 per cent previously;
    • the cessation of coal-fired power generation by 2022;
    • mandatory installation of solar panels or any other process for the production of renewable energy or vegetalisation on new warehouses and commercial buildings;
    • securing the legal framework for the environmental evaluation of projects;
    • the creation of the notion of a 'renewable energy community', which will allow that community to produce, consume, store and sell renewable energy or to share the renewable energy it produces within the community; and
    • the implementation of a support and traceability system for virtuous hydrogen;
  2. the fight against thermal sieves (i.e., accommodations whose energy consumption falls under Classes F and G based on the energy efficiency diagnosis (known as DPE) carried out by an accredited professional required by the law for the rent and sale of real-estate properties)51 deemed to cause 20 per cent of the French greenhouse gas emissions with the implementation of a three-phase action plan from 2021 to 2028. The ultimate goal is to achieve the renovation of all thermal sieves within 10 years;
  3. the introduction of new tools for the steering, governance and evaluation of climate policy with the creation of the High Council for the Climate in charge of evaluating France's climate strategy. A five-year programming law will set, from 2023 onwards, the major energy objectives regarding renewable energy sources, energy consumption, fossil fuel output and the minimum and maximum levels of obligation for energy saving certificates. This Council is chaired by French-Canadian climate scientist Corinne Le Quéré and is composed of 13 members selected for their expertise in the fields of climate science, economics, agronomy and energy transition; and
  4. the regulation of the electricity and gas sector through the following measures:
    • the ability for the government to increase, by decree, the cap to access to historic nuclear electricity from 100TWh to 150 TWh;
    • the reduction of France's dependency on nuclear power through the shutdown of two reactors of the Fessenheim power plant by summer 2020 and the postponement to 2035 (instead of 2025) of the 50 per cent reduction of electricity production from nuclear sources; and
    • the reinforcement of controls to fight against fraud affecting energy efficiency certificates.

The Law on Energy and Climate also changes the rules for gas-regulated tariffs. As of 20 November 2019, it is no longer possible to subscribe for gas-regulated tariffs and all existing contracts will only be valid until 1 December 2020 (for non-domestic consumers) and 30 June 2023 (for domestic consumers).52 This Law takes into account a decision by the Council of State dated 19 July 2017 according to which the gas-regulated tariffs were not in line with European Union law as it was a restriction on the existence of a competitive common gas market that failed to respect the conditions that would have made this restriction permissible under European Union law.53

ii Road map for energy strategy (2019 to 2028)

In the course of 2018, the draft of a new decree setting forth the multi-annual energy programmes was publicly debated and submitted to several consultative bodies up to the middle of 2019. Taking into account the feedback received on the first draft, a revised version of the draft decree was finally published and submitted to further public consultation between 20 January 2020 and 19 February 2020. The purpose of this road map is to define the priority actions to be taken by public authorities to reach the goals set forth by the law in the energy sector and, ultimately, puts France on a trajectory that will lead to carbon neutrality by 2050. The revised version of the draft decree includes the following measures:

  1. development of the production of energy from renewable sources, in particular by launching competitive tendering procedures for onshore wind power, offshore wind power, photovoltaics and hydropower according to a tentative calendar set forth in the Decree;
  2. the roll-out of more recharging infrastructure for alternative fuels (e.g., 100,000 public electric charging points for electric vehicles);
  3. the definition of goals for the incorporation of biofuel in fuel;
  4. the impossibility for the administration to deliver new authorisation to operate a thermal power plant, except for those already selected after a competitive tendering procedure held before the entry into force of the Decree; and
  5. the development of peak shaving capacity for electricity (4.5GW in 2023 and 6.5GW in 2028).

iii Inclusion of energy storage within foreign direct investment regulation

The Pacte Act has strengthened the regulation of foreign direct investment in France.54 First, the Decree dated 31 December 2019 lowers the threshold from 33 per cent to 25 per cent of the voting rights of the French target company from which the control may be triggered.55 Second, the list of strategic sectors in which the government will be able to oppose a foreign takeover has been extended to include energy storage in the critical technologies mentioned in the new Article R151-3 of the French Monetary and Financial Code (which enters into force on 1 April 2020).56 Initially, the only energy activities covered by the foreign direct investments regulation were those guaranteeing integrity, security or continuity of the energy supply.57

iv New procedure against EDF and Energie by the French data protection authority

Following on-site investigations, the National Commission for Data Protection (CNIL) issued formal notices against EDF and Engie as (1) the consent collected from their users for the processing of their energy consumption was neither specific nor sufficiently informed for the processing of data relating to their energy consumption every 30 minutes and their daily energy consumption and (2) the retention periods of energy consumption data were excessive in relation to the purpose of their processing.58

The CNIL gave EDF and Engie three months to take action to remediate these non-compliance matters.

According to the CNIL, the aim of the publication of these formal notices was to increase users' awareness of their rights under the General Data Protection Regulation, having noted that these companies have a very high number of users whose energy consumption is recorded through the Linky smart meter (and noting that 35 million smart meters should be installed by 2021).

v Derogation of regulated tariff not possible

To favour the development of renewable energy, public authorities have implemented a purchase obligation59 requiring EDF to buy electricity produced from renewable sources for a regulated tariff. In recent case law, facing a payment claim from an electricity producer whose installation benefits from the purchase obligation, EDF claimed that the tariff agreed by the parties was unenforceable as it was not in line with the regulated tariff. The Marseilles Administrative Court of Appeal held that the contract was fully enforceable as it considered that the regulated tariff did not prevent EDF granting producers more favourable tariffs and that the error made by EDF on the applicable tariff did not vitiate its consent.60 As per a decision dated 22 January 2020, the Council of State overruled this decision and held that the parties to such an agreement with a purchase obligation cannot derogate to the regulated tariff, even if the contractual provisions are more favourable to the producer.61

vi Special measures for payment of invoices during coronavirus pandemic

On 24 March 2020, an emergency law that enables the declaration of a state of health emergency and further restrictions on the freedom of movement, enterprise and assembly was enacted to tackle the spread of the coronavirus in France.62 These measures (implemented by ordinance or decree) also affect the energy sector. As per Ordinance No. 2020-316 dated 25 March 2020, certain businesses disrupted because of the pandemic may benefit from delaying payment of their energy invoices payable between 12 March 2020 and the end of the declaration of a state of health emergency with no penalty.63 Payment of the deferred invoices shall be distributed evenly between subsequent invoices after the last day of the month following the date of the end of the declaration of a state of health emergency, for a period that cannot be less than six months.64 Similarly, gas and electricity providers will not be allowed to suspend, interrupt or reduce (including through a termination of the agreement) the provision of energy for the above-mentioned businesses until the end of the declaration of a state of health emergency.65

vii Uncertainty around renewal methods of hydraulic concessions

In 2023, 150 concessions will expire. Although the regime of hydraulic concessions has been reformed, notably regarding the procedure applicable to the granting of these concessions,66 the European Commission sent formal notices to France on 7 March 2019 as it considered that both the legislation and the practice by French authorities for the renewal of these concessions are contrary to European Union law. The exact parameters of the renewal are yet to be defined and the French government, still in discussions with the European Commission, is considering options to limit the use of competitive procedures.

VII CONCLUSIONS AND OUTLOOK

Since 2007, the liberalisation of the energy market and the energy transition continue together step by step. While historically France is strongly committed to a public energy service, a huge step towards liberalisation and energy transition has been achieved in the past few years, notably with the end of regulated tariffs and the adoption of the Law on Energy Transition on 17 August 2015, which aims to develop the role of renewable energy.

Furthermore, the implementation of President Emmanuel Macron's energy programme will have to be followed. Under this programme, Emmanuel Macron intends to close all coal-fired power plants by 2022, to fix a bottom carbon price for the European Union, to double the capacity of wind and solar energy production, and to maintain the prohibition of shale gas exploration and the objective of reducing the use of nuclear energy.

Finally, the amendment and the adoption by the European Parliament and the Council of the European Commission's Fourth Energy Package and its transposition and implementation by France will have to be closely monitored. Containing proposals for no fewer than four Regulations and four Directives, the Fourth Energy Package may well have an impact on France's regulation of its energy market.


Footnotes

1 Fabrice Fages and Myria Saarinen are partners at Latham & Watkins AARPI. This chapter was written with the assistance of Floriane Cruchet, an associate at the firm.

2 Order No. 2011-504 of 9 May 2011.

3 Law No. 46-628 of 8 April 1946 concerning the nationalisation of electricity and gas, repealed by Law No. 2004-803.

4 Law No. 2004-803 of 9 August 2004 concerning the electricity and gas public service and the electricity and gas companies; Law No. 2005-781 of 13 July 2005 setting out the guidelines for energy policy regarding professionals; Law No. 2006-1537 of 7 December 2006 related to the energy sector. These laws transpose (1) Directive 2003/54/EC of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC, and (2) Directive 2003/55/EC of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC.

5 Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC; Directive 2009/73/EC of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC.

6 Law No. 2010-1488 of 7 December 2010 establishing a new organisation of the electricity market.

7 French Energy Code, Articles L131-1 to L135-16.

8 id., at Article L134-16.

9 Law No. 2004-803 of 9 August 2004 concerning the electricity and gas public service; Law NOME.

10 Local distribution companies are defined by Article L111-54 of the French Energy Code.

11 French Energy Code, Article R311-1 et seq.

12 id., at Article L311-5.

13 French Mining Code, Articles L131-1, L132-3 and L132-4.

14 French Energy Code, Articles L111-67 and L111-68.

15 id., at Article L111-69; Order No. 2014-948 of 20 August 2014, Article 31.

16 French Commercial Code, Articles L430-1 and L430-2.

17 See, e.g., the decision of the FCA dated 7 February 2012: the FCA made its authorisation of the acquisition of Enerest by Electricité de Strasbourg conditional on a number of commitments designed to resolve competition concerns, such as the commitment not to make offers for two energies that include at least one component at a regulated tariff. This commitment, the effectiveness of which is to be guaranteed by separating the sales teams responsible for electricity and gas at Electricité de Strasbourg, notably eliminates any risk of the company using its business of supplying energy at regulated tariffs as a tactic to win customers on the open market.

18 French Monetary Code, Article L151-3.

19 Final report from the European Commission relating to the inquiry pursuant to Article 17 of Regulation (EC) No. 1/2003 into European gas and electricity sectors, dated 10 January 2007.

20 French Energy Code, Article L111-91 et seq.

21 id., at Article L134-25 et seq.

22 id., at Article L111-93 (for electricity) and Article L111-102 et seq. (for gas).

23 id., at Article L111-61.

24 id., at Article L134-15.

25 French Mining Code, Articles L211-2 and L231-1.

26 French Energy Code, Articles L421-5 and L421-8.

27 id., at Articles L341-3 (electricity), L452-2 and L452-3 (gas).

28 id., at Articles L121-1 (electricity) and L121-32 (gas).

29 id., at Article L143-1.

30 id., at Article L143-4.

31 id., at Article L143-7.

32 id., at Article L331-1.

33 Commission of Regulation of Energy [CRE], Electricity and gas market report, fourth quarter of 2011.

34 French Energy Code, Articles L333-1 (electricity), L443-1 and L443-2 (gas).

35 id., at Article L131-3; see also 'Functioning of the wholesale electricity and natural gas markets 2018', CRE, at www.cre.fr/en/Documents/Publications/Thematic-reports/functioning-of-the-wholesale-electricity-and-natural- gas-markets-2018.

36 id., at Article L337-7.

37 French Energy Code (version applicable until 10 November 2019), Article L337-9.

38 id., at Article L445-4.

39 Council of State Decision dated 19 July 2017, No. 370321.

40 French Consumer Code, Articles L224-1 to L224-5.

41 id., at Article L224-8.

42 id., at Articles R242-6 to R242-15.

43 id., at Article L224-15.

44 Law No. 2009-967 of 3 August 2009 relating to the implementation of the Grenelle Environment Forum; Law No. 2010-788 of 12 July 2010 relating to national commitment for the environment.

46 French Energy Code, Articles L314-1 to L314-13.

47 id., at Articles L314-18 to L314-27.

48 id., at Article L233-1.

49 id., at Article R234-1.

50 Law No. 2019-1147 dated 8 November 2019 relating to Energy and Climate.

51 French Construction and Housing Code, Article L134-1 et seq.

52 id., at Article 23.

53 Council of State Decision dated 19 July 2017, No. 370321.

54 Law No. 2019-486 dated 22 May 2019, Articles 152 to 154.

55 Decree No. 2019-1590 dated 31 December 2019, Article 1.

56 Order dated 31 December 2019, Article 6.

57 French Monetary Code, Article L151-3.

58 CNIL Decision No. MED-2019-035 dated 31 December 2019 (EDF) and CNIL Decision No. MED-2019-036 dated 31 December 2019 (Engie).

59 French Energy Code, Article L314-1.

60 Marseilles Administrative Court of Appeal dated 12 February 2018, No. 17MA01582.

61 Council of State Decision dated 22 January 2020, No. 418737.

62 Law No. 2020-290 dated 23 March 2020.

63 Ordinance No. 2020-316 dated 25 March 2020, Article 3.

64 id.

65 id., at Article 2.

66 Order No. 2016-518 dated 28 April 2016; Decree No. 2016-530 dated 27 April 2016.