At this stage known as the main principles

Paul Ravetto is a lawyer at the law firm Gide Loyrette Nouel. It comes as a "great witness" on the Bill to decrypt the key points.

Paul Ravetto: We must distinguish the right tariff (article 30-1) - which is quite different from the original amendment which concerned - of its funding (section 30-2)-, which is very close the amendment which had been adopted by the commission for Economic Affairs of the National Assembly. The right to tariff applies "full right to ongoing contracts", "from the date on which the application is made", but also to the "contracts concluded subsequently, including with another provider" (see box below). has disappeared. The fee may be applied to all existing contracts, provided that the application is "made before July 1, 2007". Consumers may therefore request the application of the transitional tariff to any provider (and to the provider who was their August 1, 2006, Editor's note), which relaxes the device.

P.R.: The consumer may require the tariff adjustment of any provider, in any case for the current contracts. The voted text said that the tariff applies "right from the date to which the application is made to ongoing contracts".

P.R.: In the current state, the voted text - which will be may be specified in the Senate or by regulation - imposes a duty on the current provider. On the other hand, if it imposes on the future provider to apply it also tariff (1), it does the forced not to do so under a contract-type - which would be the end of any contractual freedom on the electricity market. If providers considered transient rates as not interesting, they could offer contracts to the transitional tariff with non-acceptable terms for consumers.

P.R.: Everything will depend on the terms of the compensation. If it is correct and that it integrates all of their costs, suppliers will have interest to have clients, including the transitional tariff. Otherwise, they will be no incentive to offer tariff and some even may decide to withdraw the market, at least on some segments. The transitional tariff is intended to protect consumers. But, if you weigh too much weight on the providers, there is a risk to penalize the consumer himself who would find a provider to offer this tariff. Is therefore no objection consumers and suppliers while in fine the interest of the market covers the interests of one and other! However, the interest of all the actors of the market is that supply is plural and that consumers retain the choice of their provider.

P.R.: The order in Council of State which shall determine the conditions of application will be very important. At this stage, known as the main principles. We know that compensation will be calculated from the difference between sourcing - cost of back production or price of the supply - and the revenue corresponding to the provision in the transitional tariff (2). Is what we will understand by cost of back production, providing prices and corresponding to the provision of tariff revenues. There is a margin of interpretation of these concepts which will be specified in the order and which will see whether or not compensation is sufficient.

P.R.: To avoid that the compensation is served without any limit, members have indeed provided that compensation would be granted to suppliers that if their costs of Returns or supply does not exceed a certain limit. Thus, if the provider buys electricity to 100 and he resells the 80 in respect of the tariff, compensation will be 20. The Minister may decide to compensate beyond 110, for example.

P.R.: This is another uncertainty weighs on suppliers. The voted text refers to the cost of back production and the cost of supply. May consider the decree that the cost of back production differs from the cost of supply on the wholesale market... In any case, it should be really adapted to the situation of the energy market - a situation which, in addition, changing the ceiling by the Minister.

P.R.: It all depends on what is meant by "renewable". Was told, during the discussion, that a period of two years was not enough, and that five years would be too long. Should therefore agree that two years would be renewable once - that four years in total. But this is not written in the text! These "two years renewable" therefore raise a difficulty, since precisely worded criticism of a market situation frozen during the period of application of these rates would be strengthened once this period to lengthen.

P.R.: A simple return to regulated tariffs would have to put an end to the competition. The merit of the system established by the National Assembly is to maintain an apparent competition by enabling all providers to propose transitional rates. Therefore, facialement, the right of the consumer as provided for in the directive - which is a right of free choice - is maintained, and providers have always interest to act on the market, even if that interest is more limited because there is more than price competition. It can therefore defend the idea that the principles of the directive are maintained. That said, if a finer analysis in connection with the intention of the Community legislator - which was to put in place effectively competitive market-, then the criticism is much stronger. The transitional tariff tends to freeze situations. Because, until the end of the contract, it will be the current provider will continue to sell electricity at the rate of adjustment which, beyond the contract, the more likely is that the customer remains with the same provider. The risk is that incoming providers cannot gain market share because they will no longer the price argument to try to get new customers.

P.R.: An action for breach (if someone complain, Editor's note) would in a relatively long calendar, more of a year. If a procedure was initiated, and she was going to end, a possible sanction would only very late and therefore leave time for the device to be implemented. Should be really the procedure goes to completion - at the level of the Court of justice - so that a decision is really necessary to the State.