why some suppliers encourage their customers to join EDF

In recent days, several alternative electricity suppliers have announced further price increases for their customers. While urging them to terminate their contract…

Times are tough for alternative electricity providers. Faced with rising prices, several players in the sector have withdrawn from the market in recent months. Among them Oui Energy, Bulb and Leclerc Energies. For its part, Cdiscount is no longer accepting new customers, while Hydroption was put into compulsory liquidation at the end of 2021.

Recently, Mint Energie sent an email to its customers benefiting from a fixed price contract to announce that the price of their subscription would soon become more expensive due to “the constant increase in the purchase price of electricity in the wholesale market for more than a year “.

But the supplier does not stop there. In the rest of the email, he openly encourages his affected customers to “go to EDF” to take advantage of the regulated sales tariff (TRV). Enough to save a lot of money: 218 euros precisely in the case of a member of a collective of dissatisfied Mint customers, according to an estimate made by the supplier himself.

10,000 contracts terminated at Iberdrola

Same bad surprise for Ohm Energies customers, warned a few days ago about an impending price increase. The supplier, “in the process of letting go”, according to the chairman of the Energy Regulatory Commission (CRE) Emmanuelle Wargon, is not holding back its subscribers any longer, reminding them that they can “terminate their contract without penalty at any time within three months “.

As for Iberdrola, it is also advising its 2% of customers at the end of the contract (i.e. 10,000 people) to look for another operator to ensure that it cannot prevent a price increase. “These are customers who have contracts with a guaranteed interest rate and which expire at the end of October 2022”, explained Emmanuel Rollin, director of Iberdrola France, on BFM Business. If the Spanish supplier had decided to renew these contracts, “we would have been forced to pass on the astronomical increase in the price of electricity, so there is a high risk for our customers. There are contracts on the market with regulated tariffs and it is the opportunity we offer”.

Delayed customers are now encouraged to turn to the offer comparison that the Energy Broker has set up on the internet. But EDF also has an obligation to take back those who want to return to its regulated tariff, which the public group is the only one to offer. This TRV, set three times a year by CRE and approved by the government, aims to ensure consumers a more stable electricity price than market prices. For 2022, the increase is thus limited to 4%.

Arenh’s raised ceiling

If the current situation has made it possible for EDF to no longer lose customers, the alternative suppliers that offer offers at freely determined prices have, on the contrary, been weakened. In the first quarter of 2022, free rate offers “only” won 163,000 customers, i.e. -137% compared to the 3rd quarter of 2021, according to CRE’s latest report.

To support these players exposed to market volatility – most of which do not produce enough electricity – the government took the decision in February to raise the cap of the so-called Arenh mechanism by 20%, raising it from 100 TWh to 120 TWh. Concretely, this corresponds to the amount of cheap nuclear electricity (42 EUR/MWh) that EDF, as a producer with a competitive advantage thanks to its fleet, is obliged to resell to its competitors.

Once this quantity is distributed among the various players, the alternative suppliers must source supplies from the wholesale markets to meet their needs. At prices that this time have nothing to do. For France, MWh has reached 700 euros in recent days. An outbreak that is impossible for suppliers to assume unless they pass it on to their customers or terminate the contract of certain subscribers, as Iberdrola did by inviting them to join EDF.

A resale on the markets?

But why do providers deliberately push some of their subscribers out, sometimes without even waiting to find out if they would accept an increase in their bill? For some, this incentive to leave competitors will aim to take advantage of the Arenh mechanism. Also, that time is chosen by Mint or Iberdrola to encourage their customers to finish questions. In fact, the Arenh quotas available to each alternative operator are calculated over periods of low demand. Either on weekends, on public holidays and above all… in July and August, as is remembered Humanity.

In order to obtain the maximum amount of cheap power, alternative players therefore “have an interest in having the maximum number of customers in the summer”, assesses Fabien Gay, PCF senator from Seine-Saint-Denis on Twitter. Before they seek to reduce their portfolio of subscribers at the end of August. So that they can not only have an amount of Arenh sufficient for their customers’ needs without having to procure supplies in the wholesale markets, but also any surplus that they could resell at a high price in the markets.

Mint customer Romain is not “against the idea” of subscribing to EDF. “But this calls into question the award of Arenh rights to this supplier and their possible resale at exorbitant prices in the markets, instead of giving them to their customers at a decent price. In any case, it seems suspicious that a private company thus invites its own customers to see the competition,” he explains. Contacted, Mint Energie did not respond to our requests.

Emmanuelle Wargon, who received the managers of Iberdrola France on Tuesday, warned for her part: “We discussed two topics with them, she emphasizes. First, compliance with regulations and the fact that “they do not take advantage of it to make excess profits. We will be uncompromising on this,” said the president of CRE. The authority responsible for ensuring a well-functioning energy market had also promised by the end of 2021 to implement “reinforced subsequent control of the use of the allocated quantities ( Arenah).

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