EUROPEAN UNION: French Regulator Criticizes New Rules on Natural-Gas Prices

The French energy regulator said new government rules on natural-gas pricing may be unfair because they don't apply to all distributors, including Gaz de France SA.

The rules, published online today in the government's official bulletin, will only affect some natural-gas distributors, such as Total SA's Total Energie Gaz, and other local suppliers. They won't apply to Gaz de France, the state-controlled utility that supplies 11 million customers in France.

Prices will be modified to reflect changes in the cost of natural-gas supply as well as the costs of using transport networks and storage sites, the government said in the bulletin. The cost of supply will be determined using a basket of oil-product prices and foreign-exchange rates. The new prices will be calculated every three months beginning Jan. 1 through the end of 2010.

``The absence of detailed rules setting rates at Gaz de France goes against the proper functioning of France's natural-gas market,'' the energy regulator wrote separately in the bulletin. ``The lack of visibility is a risk and therefore a barrier to new entrants.''

Earlier this month, the country's highest court overturned three government decisions to freeze rising gas prices, saying the rates didn't cover supply costs. The government announced plans two days ago to allow a price increase of as much as 4 percent for household gas prices from Jan. 1, a level considered too low by some analysts.

The regulator was notified of the government's plan to introduce new rules on Dec. 12 and said that didn't give it enough time to probe the project. The country's system of setting gas and electricity prices is under investigation by the European Commission.

Via: Bloomberg|By Tara Patel

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