France Says It’s Difficult to Meet EU Requests on EDF Reform

(Bloomberg) --

French Finance Minister Bruno Le Maire said it will be difficult for the country to accept the European Commission's requests regarding a proposed reorganization of Electricite de France SA tied to regulatory reform.

“It seems very complicated to explain to the French -- not to mention EDF employees -- that we'll give in to the demands of the European Commission, which wishes that EDF wouldn't be a single company anymore,” Le Maire said in an interview with LCI television Sunday. “I won't let the European Commission dismantle EDF.”

The European Commission -- the European Union's executive arm, which vets aid to member states -- wants to ensure that a reorganization of EDF won't affect competition in the power market. Le Maire's comments cast doubt on the outcome of talks between the commission and France aimed at giving the state-controlled utility more regulated revenue from its nuclear generation. That money would go to help maintain aging atomic plants, which are the backbone of France's electricity supply.

“We must continue negotiations,” said Le Maire, who added that the Commission would like EDF's nuclear, hydropower and renewables divisions to become entities with “very loose” relations, or even no ties at all.

EU officials weren't immediately available for comment by phone outside of business hours on Sunday evening.

Time Running Out

“As long as we don't agree on the philosophy of that project, on a strategic vision, we won't be able to move forward, and I won't give in,” Le Maire said. “I'll keep working on a reform project that seems essential for EDF.”

Time is running out for the utility and the government to get the Commission's approval for the reform ahead of next April's French presidential election, as the overhaul would need to be approved by parliament.

EDF has long said that the price of the regulated portion of its nuclear power sales to rivals isn't enough to fund the rising costs of reactor maintenance, and investments in renewables. A higher price for its entire atomic output would enable it to better compete in Europe as other utilities expand market-share and major oil companies increase their investments in clean energy.

The government plan includes a potential nationalization of EDF's nuclear and hydropower activities, along with a stock-market listing of a minority stake for its wind, solar, electricity distribution and retail business.

The new publicly traded entity would be able to consider a “significant capital increase as soon as it's listed” and to sell bonds to finance projects, EDF Chief Executive Officer Jean-Bernard Levy wrote to shareholders in May.

Le Maire has said he wants the backing of at least some of EDF's four main unions, which on Thursday reiterated their opposition to the plan, saying it equates to a dismantling of the group.