EU ‘mafia system’ to blame for electricity cost surge – forcing EDF to sell at a loss

Generation Frexit President Charles-Henri Gallois made the claim after French Economy Minister Bruno Le Maire said the State will inject around £1.75billion (€2.1billion) into troubled electric provider EDF. Mr Le Maire said the state capital injection will be made via a rights issue, announced by EDF, aimed at raising £2.1billion (€2.5billion) to plug holes in the firm’s own balance sheet. EDF, which is largely owned by the French state, warned the combined effect of having to sell power at below-market prices and nuclear outages is likely to slash around £15.8billion (€19billion) from its forecast core profits in 2022.

Its shares dropped two percent when the Paris stock market opened on Friday morning, adding to a downward spiral that has seen its stock plummet by 19.3 percent in value since the start of this year.

But the cash injection move has come under fierce attack from Mr Gallois, who warned the EU will be to blame when electricity bills surge for tens of millions of Europeans.

In 2020, Eurozone households spent an average of £999 (€1,200) a year on electricity and gas, but that figure is set to surge to £1,540 (€1,850) in 2022, according to analysts from the Bank of America.

This is being driven by geopolitical tensions pushing up natural gas prices which the scarce supply of energy from renewable sources cannot offset.

Mr Gallois tweeted: “The mafia system of the EU – EDF is forced to sell at a loss to private competitors who are artificially profitable.

“The losses are borne by the public company EDF and the State must recapitalise them.

“Thank the EU when the electricity bill goes up.”

The future of the eurozone had apparently been bright – at the end of last year, the European Central Bank said it expected the economy to grow by 4.2 percent in 2022, driven by a 5.9 percent surge in private consumption.

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But taking Italy as an example, gas and electricity prices will knock 2.9 percent of household consumption in 2022 and 1.1 percent off GDP if they remain close to their current levels, according to consultancy firm Nomisma Energia.

Nomisma Energia’s chairman Davide Tabarelli said: “The weakness of Italian consumption has always been one of the main impediments for stronger GDP growth and 2022 levels will further worsen the problems.”

In Spain, economists at BBVA put the impact on growth at 1.4 percent for this year.

Miguel Cardoso of BBVA Research warned: “If price increases come from higher demand, they are less damaging.

“The current situation is not like that. We are seeing a negative supply shock.”