Created in May 2006, the " CLEEE " is an association of French professional and industrial electricity consumers.
The goal of our association is to warn French and European authorities about the malfunctioning of the European electricity market.

Our members are not private individuals, nor specifically "electro-intensive" companies. Between those two categories of consumers, we represent companies of all sizes and sectors : car industry, telecommunications, transportation, hotel industry, retailing, food processing industry, building material, steel industry, semiconductors, etc…
Altogether our members represent a turnover of more than 350 billion Euros per year and around 1 700 000 employees, mostly in Europe.

Most of our members are not " electro-intensive " companies. However, Electricity usually represents one of the main items of their budget (salaries excluded).
The liberalization of the European electricity market has led to an extraordinary increase in Electricity prices. For example, the French "Powernext" market price (baseload forward year ahead) has almost tripled between 2003 and 2008, soaring from 24 to 65 €/MWh.

Contrary to generally accepted ideas, the increase of Oil and Gas plays a very small part in this increase: let's remember that the lion share of French Electricity production comes from Nuclear Plants (82%) and Hydro-Electricity (11%) . In other words, the price increase of fossil fuels or CO2 has no or little impact on 93% of the French Electricity production.
The sharp increase of the Market prices is indeed explained by the very structure of the Market : prices automatically align themselves to the production costs of the dearest mean of production required to fulfil 100% of the demand. So, even if a coal or gas plant are required at a given moment only for less than 10% of the production, the production cost of this plant will become the reference price for the Market.

Such a logic can be understood for the day ahead market, where the decision to start a plant to cover the peak consumption has to be financially motivated by market prices that are attractive enough.
But to artificially extend this approach to year-ahead market, as is the case today, is not acceptable for the consumers.
The situation is even worse than that: for example, the French Powernext year-ahead Baseload Price (around 64 €/MWh in January 2008) is much higher than the average of day-ahead prices (40,91 €/MWh in 2007).
A report ordered by the European Commission itself (London Economics, February 2007) highlights the malfunctioning of the market.

Such a situation has dramatic effects on the competitiveness of our industry: with labour costs much higher in Europe than in other parts of the world, the reasonable cost of Electricity was hitherto one important asset for our companies.
This asset has now been deliberately set aside, increasing the risk and rhythm of delocalization out of Europe, increasing the risk of inflation. We do not speak about theory : our members are confronted to crucial decisions and may be led, for economic reasons, to delocalize to parts of the world where more sensible policies on Electricity prices have been led.
The Canadian Province of Quebec is a good example of sensible policy: hydroelectricity represents more than 90% of its electricity production. A reasonable policy leads consumers to benefit from competitive prices and brings a decisive asset to its industry.

We should keep in mind that Electricity is not adapted to a classical market approach as is the case for Gas, Oil, Coal, etc…: short-term inelasticity of demand to prices, impossibility to stock Electricity, enormous production cost differences between the different means of production, different political decisions in each country leading to different Electricity production means, are among the reasons.
Nowhere has a market approach been a success. Most areas of the world that have experienced a market approach are now coming back to more sensible policies : United States is a good example, where the prices have increased much more in the 14 States that have chosen a market approach that in those that have preferred a more regulated solution, and where several states (such as Virginia) are coming back to a more regulated pricing system.
We've tried to discuss with the European Commission. But the very fact of questioning its All-Market approach is regarded there as a taboo.

We do not pretend that the problem is simple, that there is one good solution (total regulation) and one bad solution (market only). But we do think that the debate must at least be reopened, highlighted by experiences in other parts of the world.
The Canadian approach, where the Federal State is in charge of the security of supply but where each Province keeps its specific approach on pricing, according to its energetic mix and energy policy choices, seems to be rational and sensible.
We European Electricity Consumers must act together to increase the awareness of our National and European Authorities to the danger of the present approach on Electricity.

We are fully aware of the rarefaction of fossil energy ; we are fully aware of the need to limit our CO2 emissions and our energy consumption. We approve the European Commission approach on that matter.

But we are not prepared to let an inappropriate and malfunctioning Electricity market put at risk the competitiveness of our industry.