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France asks Engie to take hedging positions over gas price freeze

France asks Engie to take hedging positions over gas price freeze
FILE PHOTO: The logo of French gas and power group Engie is seen on the company tower at La Defense business and financial district in Courbevoie, near Paris, France. May 16, 2018. REUTERS/Charles Platiau   -   Copyright  CHARLES PLATIAU(Reuters)
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PARIS (Reuters) – The French government said on Sunday it had asked utility Engie <ENGIE.PA> to take hedging positions to ensure gas prices do not rise until June next year.

Unlike power prices, which typically move once a year, gas prices move every month in France and are set using a formula that takes into account production costs.

Many French governments have postponed tariff increases to protect consumers and their own approval ratings in the past, but legally the government has no authority to set prices.

Earlier this month, the government suspended increases to fuel taxes for at least six months in response to weeks of sometimes violent public protests against President Emmanuel Macron’s policies and said it would keep gas and power prices unchanged this winter.

The environment ministry said on Sunday it wanted to ensure Engie’s gas prices do not change until June 2019 but gave no explanation on the new timeframe of the requested price freeze.

Officials at the environment ministry were not immediately available to comment.

“Engie has taken notice of the government’s request and will realise the necessary operations in order to guarantee the stability of the regulated tariffs of natural gas until the end of June,” Engie said in an emailed statement.

(Reporting by Matthias Blamont; editing by David Evans)

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