London (Platts)--19Dec2012/740 am EST/1240 GMT

France's CSPE public service tax on power consumers should should rise by 76% to Eur18.5/MWh ($24.40/MWh) next year to cover higher payments to renewables plants in particular solar power, energy regulator CRE said in a report.

Under current regulations, if no new government decree is issued before the end of December, the CSPE will rise by only 29% to Eur13.50/MWh, CRE said in a document published Tuesday.

EDF, France's state-controlled dominant power firm, pays renewable plant operators special high tariff rates for which it is repaid through the CSPE tax in customers' bills. The government-set CSPE charges have failed to keep up with rising renewables payments associated with rising wind and solar output, which has left EDF in deficit of some Eur5 billion.

CRE said that if the CSPE charge ticks up by 29% in January, this would create a further deficit for EDF of Eur2 billion for next year.

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Analysts at Citigroup bank said Wednesday that the regulator's report shows the potential impact on bills if the amount owed was recovered in full at once.

"Our model assumes a Eur2-3/MWh annual increase in the CSPE that will allow for a very gradual recovery of the deficit," the bank said in a note.

CRE warned in November that the CSPE should rise to Eur7.2 billion in 2013, due to higher costs associated with growing solar and wind sectors and Eur2.1 billion in catch up payments for low levels paid in 2011.

Costs to cover new photovoltaic solar projects are to hike to Eur2.1 billion due to higher feed in tariffs, with solar payments representing 41% of all charges, by far the largest share.

Contributions towards windfarms in 2013 are predicted at Eur567 million, 11% of the total service tax, while costs associated with balancing other decentralized production represent Eur1.4 billion.

The Socialist government of President Francois Hollande has pledged to support solar and wind industries following a slowdown in growth.

In future years the contributions will likely factor in further costs associated with ambitious offshore wind targets.

--Robin Sayles, newsdesk@platts.com
--Edited by Jonathan Dart, jonathan_dart@platts.com

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