The cost of the energy tariff shield looks heavier than expected

Posted Nov 17, 2022, 7:30 AMUpdated Nov. 17, 2022, 8:02 a.m.

“France is close to the euro”, insists for several weeks Bruno Le Maire, the Minister of the Economy. But this speech does not prevent the executive from skimping on the expense in the face of the energy crisis. Thus the bill for the measures taken since 2021 to counter the effects of inflation could grow further and reach up to 170 billion euros by 2027, according to the recent report by Jean-François Husson, the general rapporteur of the Budget in the Senate (LR), which relates to the finance bill for 2023.

Officially, the government says it has put on the table 110 billion euros for “expenditure incurred by the State to support households, local authorities and businesses in the face of soaring energy prices”, according to the words of Gabriel Attal, Minister Delegate for Public Accounts.

Bill up

This sum represents all the sums committed between 2021 and 2023, and reflects the enormous weight of the tariff shield on gas and electricity prices: thus the compensation paid to gas suppliers represents 19.6 billion over three years, while that the shortfall of electricity suppliers amounts to 35.7 billion.

But for accounting reasons, part of the cost of the tariff shield will in fact only be accounted for public finances in 2024. Thus the State will still have to pay 19.8 billion in two years for electricity suppliers under measures decided this year, and even 0.9 billion for gas suppliers. That is nearly 21 billion additional to the overall bill, according to data collected by the Senate.

In addition, the government’s budget trajectory for 2027 – as described in the public finance programming law currently under review – is based on “the assumption of maintaining the tariff shield until 2027”, according to the report by Jean-François Husson, who surveyed Bercy on this subject. In fact, the executive has built its budget scenario based on the idea that the tax component of the tariff shield on electricity – the reduction in the domestic tax on final electricity consumption (TICFE) – would a priori be renewed each year until 2027.

“Excessive cost”

“Principle of caution”, we explain to Bercy. In fact, it is a way of recognizing that it will be politically difficult to quickly return to the world before in terms of energy. In total, this measure alone increases the bill by 10 billion per year (40 billion cumulative until 2027). In total, the report therefore points to around 60 billion more for the cost of measures to deal with the energy crisis.

“That the executive is anticipating a drop in the TICFE until 2027 is rather prudent. But overall, the cost seems excessive for public finances, and the deterioration could have been less if the executive had had more targeted aid. We have also been paying for poor energy choices for ten years,” criticizes Jean-François Husson.

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