Shares in Electricite de France (EDF) have fallen by as much as 25%, marking the worst drop on record after French authorities backed a plan to force the multinational to sell more power at extreme discounts to protect consumers.
The drastic move, aimed at decreasing the costs for households, was announced by Finance Minister Bruno Le Maire in an interview with Le Parisien published on Thursday. EDF shares fell to €7.76 on the news, and were trading about 19% lower at €8.41 at 10:15am GMT.
The increase in electricity bills for small businesses and households will be capped at 4% this year, including €8 billion in tax cuts on electricity consumption, according to Le Maire, who highlighted that prices could rise by 35% from February without countermeasures.
The minister also said that EDF’s European rivals are entitled by law to purchase 100 terawatt-hours of the giant’s annual power output at a high discount on current market prices. The utilities will be given the opportunity to buy another 20 terawatt-hours at low prices.
The unprecedented measure, which still needs to be approved by the European Commission, could reportedly cost the utility, partly owned by the French state, €7.7 billion ($8.8 billion) at Thursday’s market prices.
The mandatory price cuts, announced ahead of April’s presidential election, come as Europe struggles with the worst supply crunch in history with energy prices across the continent surging to unprecedented levels.
Separately, France’s biggest electricity supplier said late on Thursday that several of its nuclear power plants located in the country would be offline longer than projected due to repair works. The delays forced EDF to slash its output forecast from reactors by 8%.
EDF added that it can’t know how bad the financial hit could be at this stage and this will depend on market prices for power, but it pledged to “consider appropriate measures to strengthen its balance sheet structure and any measure to protect its interests.”
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