EDF terminates supply contract with rival companies

4 June 2020

France’s EDF has terminated the Arenh contracts linking it with the Alpiq, Gazel and Total Direct Energie power suppliers, as provided for in the contracts when an interruption occurs for a period of over two months.

The Regulated Access to Incumbent Nuclear Electricity (Accès Régulé à l’Electricité Nucléaire Historique - Arenh) mechanism was set up to foster competition and allows rival energy suppliers to buy electricity produced by EDF's nuclear power plants in France that were commissioned before 8 December 2010.

EDF said the COVID-19 health crisis and the emergency measures introduced by public authorities on 17 March had led to a decline in electricity consumption by non-residential clients, impacting all market players, including EDF. Faced with this decline, some suppliers decided to revoke their contractual commitments citing force majeure to reduce the volumes bought last November as part of the Arenh contract.

Confirming the deliberation of the French Energy Regulation Committee's (CRE) of 26 March, the French Council of State rejected on 17 April an appeal filed by two energy supplier associations stating that it did not believe that the losses incurred by the energy suppliers were “such that they would jeopardise (...) the survival of the businesses on a few-month horizon and that the losses would have such an impact during the timeframe required by the competent judge to make a ruling on the claim”.

In late May, the Paris Commercial Court ruled that the conditions for force majeure regarding the Arenh contracts with Switzerland’s Alpiq and France’s Gazel and Total Direct Energie, were fulfilled because of the introduction of emergency measures by the government. This led to the termination of the Arenh contracts for these suppliers. EDF said it firmly rejects the existence of force majeure conditions relative to the Arenh contracts and has filed an appeal with the Paris appeals court.

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