French public and private sectors rush to adapt as winter energy crisis approaches

The French government and private sector have been forced to find ways to adapt as gas and electricity prices have risen steadily for months, threatening several sectors with shutdowns in a bid to cut costs – including swimming pools, gymnasiums and ski resorts.

As autumn approaches, the European energy crisis is affecting several sectors in France. Soaring gas and electricity prices dramatically increase the operating costs of public and private facilities.

Energy prices in France and throughout Europe reached historic highs at the end of August. And it looks like the crisis isn’t over yet: electricity prices in France for the coming year have soared 25% to €1,130 per megawatt-hour, according to the European Energy Exchange, marking the first time the price of French electricity exceeded €1,000.

French President Emmanuel Macron has called on the country to reduce its energy consumption by at least 10% in the coming weeks and months, warning that otherwise the nation could face rationing and cuts this winter.

“The answer is ours,” he said on September 5, urging the French to use less air conditioning and heating to avoid power cuts. While Macron warns that mandatory energy cuts could be introduced if voluntary efforts are not enough, several sectors have already taken action.

Public swimming pools, ice rinks closed

Energy-intensive sectors such as swimming pools and skating rinks are being hit hard by rising gas prices. The operating company Vert Marine has decided to close around thirty public swimming pools that it manages – in Montauban, Versailles and Limoges – on September 5.

About 10% of the 4,000 public swimming pools in France are managed by a public service rather than directly by the community where they are located. Vert Marine told AFP that it was closing “temporarily” a third of the 90 establishments it manages and placed “staff on partial unemployment”.

In a press release, the company said its energy bill had risen from “15 to 100 million euros”, which it said represented “the entire annual turnover of the company”. . It closed the rinks it manages for the same reasons.

The situation has angered many, as the closure denies access to season ticket holders, people participating in sports programs and school groups.

French municipalities have also expressed their anger. The town of Champigny, located in the southeastern suburbs of Paris, told French daily Le Parisien that it was an “authoritarian and unilateral decision”. They also mentioned that discussions were “ongoing” with Vert Marine to reopen the rink “as soon as possible”.

Cabinet ministers said they were working with local officials to find a solution.

“We are working with representatives of swimming pools and ice rinks as well as with local authorities to find ways to reduce energy consumption,” said a joint statement last week from the Minister of Sports, Amélie Oudéa-Castéra, and of the Minister of Energy Transition, Agnès Pannier-Runacher, without giving further details.

“Additional measures will be considered in the event of severe constraints on the electricity network,” they said.

Ski resorts in the crosshairs

Ski resort operators have also expressed concern ahead of the winter season. Current electricity prices are “a huge obstacle”, told AFP Fabrice Boutet, managing director of the SATA group, which manages the ski lifts of several ski resorts. According to projections, current prices would increase the group’s energy bill by around 2 to 20 million euros, he said, noting that elevator speeds and opening hours would also have to be adjusted.

This increase in energy prices is “brutal and totally unprecedented”, said Laurent Reynaud of Domaines Skiables de France, a professional group of ski resort operators. “If electricity represented between 3 and 5% of turnover depending on the area, multiplying the bill by three or even four, as is the case today, would automatically push costs up to 10 to 20% of the turnover. business.”

If professionals in the sector are convinced that their ski resorts will be able to open this year, they have called for state support.

Public services “in danger”

Local authorities have also been affected by the rise in energy prices, which has weighed on the budgets of many French cities. Swimming pools are currently at the top of the spending list, but other local public services such as gymnasiums, museums, libraries and schools could be affected if solutions are not found in the coming months.

“Our budgets are exploding. Inflation is massively affecting all local authority buildings, whether sports, cultural or other,” said André Laignel, vice-president of the Association of Mayors of France. According to the APVF, an association representing small towns in France (Association of Small Towns of France), the energy expenditure of certain municipalities jumped by 50%.

In a report published at the end of July, the French Senate warned that rising energy costs could jeopardize essential public services and could force communities to abandon their investments in the transition to green energy. In addition, they could lead to an increase in local taxes, which affects the purchasing power of households.

The overall increase in energy expenditure for local authorities is expected to reach 11 billion euros in 2022, according to BFMTV.

Several communities have implemented measures for months in order to reduce their energy bills. The town of Limoges, located in central France, has lowered the temperature of its gymnasiums and closed its ice rink this summer. Towns such as Brive-la-Gaillarde in the southwest are planning to implement an energy plan in the coming years which involves initiatives such as reducing the lighting of public places at night.

Partial unemployment and drop in production

Soaring prices are already forcing some companies – like Aluminum Dunkerque in northern France – to make strategic decisions for the coming winter. The smelter has decided to reduce its production by 22% for the last quarter of 2022 in order to be able to pay its bills.

“From October, we will suffer a very significant loss if we continue production as it is,” the company’s managing director, Guillaume de Goÿs, told Reuters. He added that the company’s electricity bills could rise from 40 million euros per month today to 150 million euros in December, depending on electricity prices. For the moment, he specifies, the 650 employees of the site will continue to work full time.

Other steel companies also announced production cuts and internal reorganization to limit the impact of rising electricity costs. Ascométal, which has 1,200 employees in France, will pause activities for two to three weeks in December at its factories in Hagondange (in eastern France) and Fos-sur-Mer (near Marseille). Some employees will start working part-time.

The famous French glass company Duralex announced on September 1 that it would not use its furnace for at least four months from November and would put all its employees on partial unemployment. “Producing at current energy rates would generate unsustainable losses,” company president José-Luis Llacuna said in a statement explaining the decision.

But the hardest part will probably come at the beginning of 2023.

“Almost half of all companies – especially large ones, but not only – have to renew their electricity supply contracts. Some of them could end up with prices increasing fivefold by January 2023”, said entrepreneur Marc Alric. daily Le Monde.

With global energy prices unlikely to stabilize over the next few months, the coming winter could have a severe impact on industrial sectors in France and around the world.

This article is a translation of the original in French.

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