EDF and GDF still dominate the French retail power market

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12 March 2013, Gas, Electricity

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On the face of it, the switching rates look positive for a highly regulated country like France. For GDF Suez, since full retail competition was unleashed in July 2007, 1.2 million of the country's 10.6 million household customers (11.3%) have left. In contrast, less than 7% of EDF's customers have switched away from its tariffs (2.1 million households out of its total base of 30.8 million).

However, these switching rates hide the fact that EDF and GDF are actually exchanging nearly all the customers who switch. EDF has become the main alternative gas supplier with 782, 000 clients as of the end of2012, an increase of some 163,000 from 2011. Similarly, GDF Suez has gained ground in electricity.

In all, less than 5% of small retail energy customers have switched to an alternative supplier, such as Enercoop, Energem, or Direct Energie, meaning competition is progressing at a snail's pace. Further, the switch rate for residential sites over 2012 varied between a mere 0.60% and 1.20%, despite the more attractive price points that new entrants have offered to beat the highly regulated tariffs offered by EDF and GDF Suez. The CRE found that an "average" client using gas heating could save 8% (EUR130 per year) and that an electricity client could save 5% (EUR60 per year).

The availability of savings and the low switching rates are compelling evidence for the regulator to intervene, as is the fact that only 50% of retail customers are aware that they can switch.

The French market stands in stark contrast to the UK, where Datamonitor's Residential Market Share Monitor shows that churn rates, although decreasing over the last three years, hover near 15%. Competition between the "Big Six" players in the UK retail energy market provides impetus for switching, as does the plethora of independent price comparison and switching sites. The CRE would certainly be acting in the interests of consumers if it followed Ofgem's lead in promoting switching awareness, although for the moment neither EDF nor GDF Suez have cause for concern.

www.datamonitorenergy.com / asken@datamonitor.com / @DatamonitorEN

Source: MarketLine

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