EDF warns of €8.4bn hit in attempt to protect customers from price spike

French energy group EDF warned it could take a hit of up to €8.4bn as it shoulders the bill from government measures to shield consumers from soaring power prices, pushing the company to scrap its profit guidance for this year.

The group, majority-owned by the government, will have to increase the volume of nuclear power it sells to third-party providers at a fixed price which is currently well below market rates, France’s energy and environment ministry said late on Thursday.

To soften the blow, that set price will be increased slightly to €46.2 per megawatt-hour from the current €42. But the measure, along with a freeze on tariff hikes, could still cost EDF between €7.7bn and €8.4bn based on market prices in December and January, the utility said.

It added it did not yet have a full estimate for the impact on its operating profit, and withdrew its net debt and profit guidance for 2022.

“The group will consider appropriate measures to strengthen its balance sheet structure and any measure to protect its interests,” EDF said.

France had so far been spared some of the price jumps seen elsewhere in Europe as gas costs soar, due in part to its supply of nuclear energy provided by EDF, although the government has brought in help for some low-income households.

It had pledged to keep power price rises at 4 per cent for consumers throughout 2022 — well below the 35 per cent hike they were on track for by February, ministers said — but funding that move will largely fall to heavily-indebted EDF.

Governments across Europe have examined ways to keep price increases in check or shield consumers from higher bills, with many also wary of containing the political fallout from soaring energy prices. Spain announced clawbacks on energy companies’ profits last year, although it later eased some of those measures.

EDF also lowered its nuclear output forecast late on Thursday, after extending the outage period for five of its reactors in France which are being inspected for welding problems.

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