France aims at tiered energy pricing to encourage savings

France's new Socialist government unveiled plans this past week to introduce a tiered energy pricing system to encourage people to reduce their use of electricity, gas and heat. With EU nations trying to cut their greenhouse gas emissions by 20 percent by 2020, France unveiled a system that would see those who waste energy forced to pay higher prices, following in the steps of Japan and the US state of California. "It is a major plan because it concerns 100 percent of our citizens, where they live," and sets the country on a course for a system that "strongly enourages saving energy," said Francois Brottes, the head of the economic affairs committee of the lower house of the French parliament. Under the proposal, a base calculation of energy needs would be made for each household, adjusted for the size of the family, climate and type of heating used. The base amount is to be calculated as if the family lives in a well-insulated home kept at a moderate temperature. Under the scheme, living at this regime would be slightly discounted from current prices. Energy consumption beyond this level would be penalised. First there would be a "comfort level" with a small penalty and a higher penalty applied for amounts considered "wastage". The amounts of the bonus and penalties have not yet been decided, but drafters believe penalties have to be in the double digits in order to encite consumers to change their behavior or invest in improvements. The Socialist dominated parliament is expected to approve the legislation this year so the pricing system could be introduced by the end of 2013. Consumer organisations and unions expressed concern that the reform would push up prices for most households, but reserved judgement until a number of issues are clarified. Brottes said the "ambitious and urgent" reform would be accompanied by measures to protect low-income households. It is expected that the number of households receiving a reduced, so-called social tariff for energy would be increased from the current 600,000 to the four million estimated to have difficulty paying their energy bills. The urgency is due to the impending closure of a number of power plants that run on coal and oil and as tighter pollution rules are set to go into effect in 2015. While France generates most of its electricity from nuclear energy, safety concerns are prompting it to retire at least one reactor. The RTE national electricity distribution company has warned the country likely faces a power generation deficit from 2015. The plan may eventually be expanded to cover households that use fuel oil and wood for heating, as well as water consumption.