Updated: Sept. 10, 2012 (Initial publication: July 14, 2012)

Sectorial Analysis

On July 10, 2012, the "Conseil d’Etat" (French Council of State) cancels for error of law the order by which the Government had frozen rate gas at one time.



Context and Summary

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The "Conseil d’Etat" (French Council of State) has already had the opportunity, by an order of 28 November 2011, to remind to the Government that the freeze of the gas prices posed great difficulty in law, since it is in referee that as a first step, the action brought by the operators against the Decree of the Government was welcomed. The Council of State decided at the time to suspend the rate freeze.

It is in a fairly predictable way, and in also closed terms, that in its case, GDF Suez and the "Association nationale des opérateurs détaillants en énergie"- Anode ( National Association of energy retail operators), the "Conseil d’Etat" (French Council of State), seized this time on the merits, not in the suspension of the rate freeze, but in cancellation of thereof and gives satisfaction to the applicants.

The "Conseil d’Etat" states that texts require taht the Minister, when he fixed gas rates for consumers and small businesses, must "translate correctly the cost to the provider", except to compensate himself the gap between this found cost and the desired rate. 

In not doing it, the Minister who had frozen tariffs made an "error of law", which justifies annulment of the rates. 

The judgement on the merits is not only the intellectual extension of the order of referee of 28 November 2011. Indeed, this one could only decide by the suspension of the gel, which is a measure for the future, while annulment is retroactive and that the State should return to the applicants the difference in compensation it should give as soon as the Decree of December 9, 2010, by which it unduly froze rates.

To read a more precise analyse, done by Gonzagues de Lorme, click here.

Brief commentary

France, the Government fixed the rate of natural gas to individual consumers and small businesses. The texts predict that this rate is reviewed regularly. But the Government had on several occasions "frozen" rates by adopting a 0% increase. The order was first challenged by the operator in charge of the public service, GDF Suez, before the Council of State, in ordert to obtain the suspension of the rate freeze, which was granted by an order of 28 November 2011. On the merits, the Council of State, by its judgment of 10 July 2012, cancels the rate freeze, in that it does not consider the supplier gas supply costs, what constitutes an error of law.

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