EDF terminates nuclear electricity supply contracts

04/06/2020 09:59 Nuclear


French utility EDF has notified three energy suppliers - Alpiq, Gazel Energie and Total Direct Energie - of the termination of their contracts under a mechanism that allows rival suppliers to buy electricity produced by EDF's nuclear power plants. The suppliers had sought to invoke the force majeure clause in their supply contracts with EDF.

Under the so-called Regulated Access to Incumbent Nuclear Electricity (Accès Régulé à l’Electricité Nucléaire Historique, ARENH) mechanism set up to foster competition, rival energy suppliers can buy electricity produced by EDF's nuclear power plants located in France that were commissioned before 8 December 2010. Under such contracts, between July 2011 and December 2025, suppliers can buy up to 100 TWh - or about 25% of EDF's annual nuclear output - at a fixed price of EUR42 (USD47) per MWh. EDF operates 57 reactors in France, with a total capacity of 62.3 GWe, which together provide about 75% of the country's electricity.


EDF announced today that it had terminated the ARENH contracts it has with Alpiq, Gazel and Total Direct Energie, as provided for in the contracts when an interruption occurs for a period of over two months.


"The COVID-19 health crisis and the emergency measures introduced by public authorities on 17 March 2020 led to a decline in electricity consumption by non-residential clients, impacting all market players, including EDF," the company said. "Faced with this decline in electricity consumption, some suppliers decided to revoke their contractual commitments citing force majeure to reduce the volumes bought last November as part of the ARENH contract."


EDF noted the French Council of State had rejected on 17 April an appeal filed by two energy supplier associations stating that it did not believe the losses incurred by the energy suppliers were "such that they would jeopardise ... the survival of the businesses on a few-month horizon and that the losses would have such an impact during the timeframe required by the competent judge to make a ruling on the claim."


Swiss energy supplier Alpiq and French suppliers Gazel and Total Direct Energie had sought to invoke the force majeure clause in their ARENH contracts owing to the coronavirus outbreak, which had pushed prices in the French electricity market far below the level specified in the companies' existing agreements.


In a series of rulings in late-May, the Paris Commercial Court considered that the conditions for force majeure regarding the ARENH contracts with the three suppliers had been met since the introduction of emergency measures by the government.


"EDF firmly rejects the existence of force majeure conditions relative to the ARENH contracts and has filed an appeal with the Paris appeals court," the utility said.


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