Infotech Gas price freeze: five questions on Castex’s “tariff shield”

Gas price freeze: five questions on Castex’s “tariff shield”

Never seen ! The increase in regulated gas prices reached a record level, + 12.6% on Friday 1er October, a jump all the more costly for the five million households concerned as it follows a series of increases in the price of gas, month after month. Six months before the presidential election, the subject is politically explosive. This is why Prime Minister Jean Castex announced Thursday evening a freeze of regulated tariffs for the next seven months, until April 2022. This “tariff shield” announced by the head of government raises questions.

1. How does the “tariff shield” work?

Regulated gas prices could have jumped another 30% this winter, under pressure from rising international prices. This will not be the case: there will be “No more increase in the price of gas” after that of 12.6% at 1er October, promised Jean Castex. Engie’s regulated tariffs will therefore remain at their current level until the end of May.

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But consumers will still end up footing the bill: a “catching-up” will take place during the following year, when prices fall. This therefore amounts to “smoothing” the increase, that is to say to spread it over a longer period to make it less painful. Result: for households, the total cost remains the same, although spread over a longer period.

2. What will happen after April?

The government is betting that prices will drop. “ From April, the price of gas is expected to drop ”Said Jean Castex, who relies on market forecasts anticipating a sharp decline in international gas prices when demand is weaker. This is when consumers will pay the extra winter costs.

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In the opposite hypothesis, if prices remain high, Jean Castex then promises “a review clause”, or even a possible “lowering of taxes” on gas. The issue can therefore return to the government’s agenda at a time when the presidential election will also take place.

3. Why has the tax system not been lowered?

This is what most opposition politicians are asking for, who see the “tariff shield” as an electoral measure in the run-up to the presidential election in April 2022.

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It is also the proposal of the UFC-Que Choisir, which denounces “A false tariff shield”. According to the consumer association, “ the sole mobilization of two fiscal levers, namely the reduction of VAT on consumption from 20% to 5.5% and the end of the application of VAT on taxes specifically affecting gas would have had the concrete effect of making lower the annual bill for a gas-heated household by around 230 € “.

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However, lowering taxes will not lower prices, only limit the increase. In addition, seeking to lower the price of carbon-based energy would contradict the objectives of combating global warming.

4. Can the measure be challenged in court?

In any case, Engie’s competitors are preparing for it. “We will use all means, including litigation” to respond to the decision, warned Naïma Idir, president of Anode, Friday on BFM Business. ” The blocking of regulated tariffs will have an impact on suppliers because the prices of alternative suppliers are indexed to regulated tariffs “, She warned. Jean Castex recognized “ a cash flow problem For distributors who would sell gas to consumers at a lower price than they will have paid for it during the fall and winter, and assured that they will be supported.

A price freeze has already been attempted, especially in 2011 under the government of François Fillon. The suppliers had seized the Council of State which had given them reason and which had imposed a retroactive increase for the consumers.

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5. What about electricity and the “energy check”?

The government capped the increase in EDF’s blue tariff at 4% over one year, during the period between February 2022 and February 2023. A “shield”, which concerns 7 out of 10 households, and which makes it possible to contain the increase of 12 % which was expected on 1er next february.

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As for the boost to the “energy check”, it is maintained. But its revaluation of 100 euros for 5.8 million low-income households was not enough to offset the expected rise in energy prices.

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