Gas Prices: Understanding the Reference Price

The End of the Regulated Gas Tariff

July 1, 2023 marked a turning point for gas consumers in France: the definitive end of the regulated sales tariff (TRV) for gas. This historical tariff, offered by Engie, was abolished in accordance with European legislation on energy market liberalization. For more on the energy market in France, explore our guides.

What Changed

The approximately 2.6 million households still on the TRV were automatically switched to a market offer from their supplier. This transition occurred without interruption or particular action required from consumers.

The Reference Price: A Compass for Consumers

To help consumers navigate a fully liberalized market, the Energy Regulatory Commission (CRE) publishes a monthly "reference selling price for natural gas". This indicative price allows comparing market offers to a transparently calculated reference.

How Is the Gas Price Composed?

The Three Components

Energy Cost: This is the price of gas itself, purchased on wholesale markets. It represents about 30 to 40% of the bill and fluctuates according to global supply and demand.

Transmission: These are the costs of using the transmission and distribution network. They represent about 25 to 30% of the bill and are regulated.

Taxes: VAT, TICGN (Internal Tax on Natural Gas Consumption), CTA. They represent about 20 to 25% of the bill.

Different Consumption Classes

Transmission rates and offers vary according to your annual consumption level:

Base (less than 1,000 kWh/year): Cooking only
B0 (1,000 to 6,000 kWh/year): Cooking and hot water
B1 (6,000 to 30,000 kWh/year): Individual heating
B2i (more than 30,000 kWh/year): Collective heating or high consumption

Recent Price Evolution

The 2022 Energy Crisis

The war in Ukraine and reduction of Russian gas supplies caused a surge in European gas prices. Wholesale prices were multiplied by 10 at their peak before gradually declining.

The Price Shield

The French government implemented a price shield to limit consumer impact. This mechanism capped price increases and was gradually lifted during 2023-2024.

The Current Situation

Gas prices have stabilized at levels higher than pre-crisis but well below 2022 peaks. The market remains sensitive to geopolitical tensions and weather conditions.

Types of Gas Offers

Indexed Price Offers

The kWh price evolves according to a reference index (often the CRE reference price or market rates). You benefit from decreases but bear increases.

Fixed Price Offers

The price is locked for 1 to 3 years. You're protected against increases but don't benefit from potential decreases.

Variable Price Offers

The price directly follows wholesale market prices. This is the riskiest option but potentially the cheapest during low-price periods.

Advice for Consumers

Compare Regularly

Unlike electricity where the TRV still exists, gas is an entirely free market. Compare offers at least once a year using the reference price as a benchmark.

Beware of Overly Attractive Offers

Be wary of abnormally low offers. Some less solid suppliers went bankrupt during the crisis, leaving their customers without immediate solutions.

Monitor Your Consumption

The best protection against high prices remains consumption control. Optimize your heating, insulate your home, and consider energy renovation work.

Consider Alternatives

Fossil gas is a carbon-based energy. In the long term, its taxation should increase. Alternatives like heat pumps or wood heating can be attractive, especially during renovation. Consider MaPrimeRénov' aid for heating system upgrades.

Conclusion

The end of the regulated gas tariff requires increased consumer vigilance. The CRE reference price remains a valuable tool for navigating a complex market. Don't hesitate to shop around while prioritizing solid suppliers.

The information provided in this article is for informational purposes. Prices change monthly. Consult the CRE website for the latest reference price.