Price formation in a market dominated nuclear [in French]

A research of equilibrium between efficiency and equity

Abstract :The price of electricity on the european wholesale market has more than doubles between 2002 and 2006. Because of market integration, this rise affects the wholesale price in France, eventhough nuclear technology is dominant. The increase of price reveals the non optimization of European electricity parks and leads to a scarcity rent for nuclear equipments. If this scarcity rent is economically justified may be contested on the view of social justice. The French producer, which main shareholder is the state may be constrainted to reallocate this rent for equity reasons. This reallocation could be done through various means. A reallocation through external elements form the electricity bill-the revenues-could be implemented. Our paper examines reallocation modes through prices : keeping readjusted regulated tariffs, a subsidy acting like a negative CSPE, a block of patrimonial energy inspired from the quebecois model, and finally coproprerty rights on existing nuclear equipments for consumers and sold back to producers. These mechanisms are compared through the following criteria : allocative efficiency on the consumption level and/or the levels of investments to realize, redistribution modes of the rent, compatibility with the existing reglementary and legislative frames. We show that the mechanism “regulated tariffs” is the economically the least efficient and the furthest from the reglementary principles. The three other mechanisms are economically more efficient. Nevertheless, they exhibit singularities that have to be taken into account in the respective evaluation of their economic efficiency.

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