French Regulator Sanctions Firm for Abusing ARENH Rights

This week the Dispute Settlement and Sanctions Committee (CoRDiS) of CRE, the French energy regulator, announced (click here) that it had fined Ohm Energie EUR 6 million for abusing ARENH contracts. The original investigation was announced in September 2022 (click here).

For the uninitiated, ARENH (Accès Régulé à l'Électricité Nucléaire Historique) contracts are a feature of the French electricity market which is dominated by nuclear generation produced by EDF. ARENH is a regulatory mechanism that was set up in 2010 which allows other (i.e. non-EDF) electricity suppliers to access a portion of the nuclear electricity produced by EDF in an attempt to foster competition in the retail market. Since 1 July 2011 ARENH has given alternative suppliers access to wholesale power at a regulated price. ARENH contracts are capped to a total of 100 TWh in any one year (or roughly 25% of the output of the French legacy nuclear power plants).

The details provided in the Ohm Energie enforcement case are scarce as no detailed order was published which is usually the case for CRE wholesale market abuse cases under, for example, REMIT. It appears from other reports in 2022 when the investigation was originally announced that Ohm had resold power on the wholesale market that it had acquired through ARENH. This is generally prohibited under ARENH rules where suppliers must be able to demonstrate the need for ARENH volumes to satisfy only their customer demand. Note that this behaviour is not explicitly confirmed in the recent announcement however.

The announcement does confirm though that the fine relates to the years 2021 and 2022, and that this is the first time that an electricity company has been fined for abuse of ARENH contracts. The announcement also claims that:

"This is the largest penalty handed down by CRE's CoRDiS and the first relating to the retail market."

 RegTrail Insights

The original investigation announcement in 2022 suggested that multiple ongoing investigations into the potential abuse of the ARENH scheme were underway. The ARENH scheme itself expires at the end of 2025. Its replacement is a controversial topic with an expected cap on prices from French nuclear generation via a contracts for difference (CFD) arrangement being abruptly displaced in November 2023 with an opaque and generally unpopular fixed price scheme.