Background on gas price relief and electric bills in 2024
To curb electricity price increases, the government has proposed reallocating up to 1.1 billion euros. This money, originally set aside to fund a subsidized gas tariff over the last two years, would be redirected to reduce electricity costs in 2024.
The government previously approved a 3.0 billion euro extra loan in October 2022 to support the so-called cheap gas tariff, the last-resort tariff, or TUR, retroactively from the prior year. This move aimed to prevent an excessive rise in heating and hot water costs for households during the energy crisis (source: Ministry for Ecological Transition data and government communications).
As gas prices have returned to pre-crisis levels, roughly two-thirds of that funding remains unused. Up to September 2023, about 642.2 million euros had been spent across the two years preceding, and for 2024 a maximum allocation of 300 million euros is planned to finance this measure, along with a counterpart program for apartment blocks (referred to as TUR for Neighborhoods). Both programs were extended to June 30, according to another government amendment (attribution: government records).
Specific spending for the last three months of 2023 remains to be disclosed. Based on current low gas prices, the combined total spent and projected for 2024 is likely near 1.0 billion euros. This implies about 2.0 billion euros in surplus, of which the government party intends to reserve up to 1.1 billion euros to ensure the financial sustainability of the electricity system in 2024. The remaining surplus would be returned to the Public Treasury by June 30, 2025, per additional amendments adopted by the governing party (attribution: legislative notes).
Electricity financing relies on the electricity bill, with annual cost projections and revenues guiding the regulator and the government in setting regulated prices at the start of each fiscal year. These charges fund three main areas: subsidies for renewable energy, extra costs for energy production in non-mainland territories, and the historical debt tied to the electricity system (references: regulatory framework and CNMC summaries).
To avoid price spikes in the current year, the Ministry for Ecological Transition froze charges in 2024, keeping them roughly 55 percent below pre-war levels. An analysis by the CNMC notes that of about 7.7 billion euros in estimated costs for the year, electricity bills would cover only around 2.5 billion euros (data and projections cited by CNMC).
The remainder will be funded through CO2 emission rights auctions and taxes, including a 7 percent levy on electricity production, taxes on spent nuclear fuel and waste, hydroelectric royalties, and other charges. The plan also leaves open the possibility of using up to 1.1 billion euros that were not needed to ride out the gas crisis in the near term (as reported by the government and CNMC analyses).