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ARENH – Decision of the CRE and details on the distribution of volumes in case of capping

The CRE published on October 29, 2018 two deliberations taken on October 25 in connection with the reform of the ARENH system.

In its first deliberation, the CRE issues a favorable opinion on the draft decree aimed at reducing the possibilities of arbitration between ARENH and supply on the market. CRE however calls on the government to delay or cancellation of planned wicket January 15, 2019 if the order were to be issued after 1st December 2018.

In its second deliberation, the CRE specifies the distribution modalities of the volumes that it intends to implement from the window of 21 November 2018 for 2019 in case of exceeding the ceiling. In particular, the CRE proposes that the calculation of the penalties applied to suppliers in the event of overvaluation of ARENH volumes takes into account the volume requested by the suppliers and not the volume ultimately obtained. In this case, it also proposes to exclude EDF’s subsidiary suppliers (ES, Dalkia, Sowee) from the device, which would free up volumes.

Finally, the CRE does not investigate the question of the possible increase of the ceiling ARENH which, if it must intervene, can be done only by legislative way. During the adoption of the PACTE law at first reading in the National Assembly, an amendment tabled by LR deputies to increase the ceiling to 150 TWh was rejected. The PACTE law will be examined by the Senate from January 2019.

The draft decree, according to our analysis, intervenes against the clock because it aims to solve a problem that no longer arises in the current market context. It also introduces additional uncertainty for consumers about how ARENH volumes are allocated by suppliers. For this reason, it seems prudent to be able to notify its supplier of its wish to benefit from the ARENH from the first window 2019, which requires having signed a supply contract for 2020 in early January 2019.

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