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Exclusive-French power policy shift has left EDF in shock, CEO says

EconomyJan 17, 2022 02:55PM ET
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© Reuters. FILE PHOTO: French state-controlled utility EDF Chief Executive Jean-Bernard Levy speaks during a news conference in Paris, France, October 28, 2019. REUTERS/Charles Platiau/File Photo

By Benjamin Mallet

PARIS (Reuters) -The CEO of EDF (PA:EDF) on Monday broke with the convention that bosses of French state companies don't criticise the government to express "real shock" and indignation after the utility was told to sell more power to rivals at below-market prices.

In a memo to managers seen by Reuters, Jean-Bernard Levy said he had tried to persuade ministers to adopt a different course, and was now looking at steps to defend EDF's interests.

Shares in the firm slumped as much as 25% on Friday after the government of President Emmanuel Macron - facing a re-election battle in three months and keen to head off public anger over rising power bills - ordered the utility to sell more cheap nuclear power to rivals.

"This is not what we had proposed to the government," Levy said in the internal memo. Instead, he said, the firm had recommended targeted help for small businesses and the most vulnerable industrial users.

"Having fought hard against it, this decision comes as a real shock," he said of the government move. "Naturally, we have to deal with it. It is going to weigh very heavily on our results."

Referring to the government measures, combined with technical problems at several nuclear plants that forced them offline, Levy wrote: "This news is rocking the company."

"Many of you have shared with me your support, and even your indignation, and I share your emotions. You should know that the executive committee and I remain very combative," he said.

"Together with the executive committee, we will study the appropriate measures to reinforce the balance sheet of the group, and all measures that protect its interests. At stake is our capacity to safeguard our strategic development. We plan to make these measures public within a month."

The French state owns 84% of EDF's shares. The group forecast last week the government decision would knock around 8 billion euros ($9.13 billion) off its 2022 core earnings before interest, taxes, depreciation and amortization.

($1 = 0.8764 euros)

Exclusive-French power policy shift has left EDF in shock, CEO says
 

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