France considering EDF restructuring

27 November 2017

France’s finance ministry is studying several scenarios for restructuring Electricite de France (EDF), including spinning off its nuclear power generation activities into a stand-alone unit, Reuters reported on 23 November, quoting sources familiar with the situation.

EDF, which is 83% state-owned, faces a net debt of €31bn ($36.7bn) but needs investment to upgrade its ageing nuclear plants. The ministry is working on this topic with some officials seeing a nuclear spinoff as a good solution, one of the sources said. EDF has reportedly not been consulted and has no working groups reviewing possible restructuring scenarios.

BFM TV reported on its website that one scenario envisages wholesale power prices being based on EDF's nuclear-operating costs and set by the Commission de Regulation de l'Energie (CRE), similar to the way the CRE sets tariffs for Enedis and RTE. Currently, EDF is legally required to sell up to a quarter of its nuclear electricity to competitors at the price of €42 euros per MWh, regardless of cost.

"The scenario of spinning off nuclear would aim to make it an essential facility where everybody could buy power at the same price," a second source familiar with the situation told Reuters, adding that investment banks, eager to advise on a restructuring, are suggesting several scenarios to state holding company APE.

Another source noted that, when President Emmanuel Macron was working at the finance ministry, he had discussed breaking up EDF, separating nuclear from the rest. In a March 2016 speech to parliament, Macron raised the possibility of delisting EDF's nuclear activities, saying that while a bourse listing is useful for selling  reactors abroad, it is not the best solution for producing nuclear power in France.

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