The European Commission has extended an investigation into what it called France’s artificially low electricity tariffs for companies classed as “large” and “medium-sized” electricity consumers. In 2007, the Commission launched an investigation into these regulated rates due to concerns the tariffs could hinder the overall competitiveness of the European economy. The Commission has already started infringement proceedings against a group of EU Member States, including France, over their regulated tariff schemes for businesses that might have violated the EU Electricity Liberation Directive. The Commission has now stated that it will look at France’s recent prolongation of its “return tariffs” system and its extension to new beneficiaries.

The State-administered “return tariff” system, where tariffs are set below the market price, has been available since 2007 to consumers buying their electricity on the free market. Initially, companies in France could take advantage of the system for two years if they applied before 1 July 2007. In August 2008, France extended the system until 30 June 2010 and opened it up to new beneficiaries.

The Commission fears that the system gives France’s largest electricity consumers an unfair advantage over their competitors. The Commission’s investigation comes at a time when it has sought actively to reform the energy sector, for example by raiding the premises of French electricity giant EDF on 11 March 2009 on suspicion of abusing its dominant market position.