PARIS: French retail gas prices could rise 4.5 percent next year, France's Industry Minister said on Sunday, as the government looks to reach a compromise with energy firms to avoid an increase that could hurt consumer purchasing power.
The government was forced to lift rates after the country's highest court in November ordered it to suspend a plan to keep prices steady ahead of next April's presidential election, after legal appeals by energy suppliers.
"A compromise rise of between 4-4.5 percent seems likely," Eric Besson said on Radio J. French daily Le Figaro reported on Friday that the rise would be 4.3 percent. Besson said that was "plausible", although Prime Minister Francois Fillon would have the final say.
The government had originally frozen household gas prices in April for a year, although prices are reviewed every three months. The regulator in October said rates should go up by between 8.8 and 10 percent.
Fillon said on Dec. 6 he would not allow a rise of 10 percent as suggested by the regulator, because it would harm people's purchasing power.
Gas suppliers, including Direct Energie, Poweo and Altergaz, brought the case to the constitutional court, which ordered the government to reverse its decision because it made competition with industry heavyweight GDF Suez impossible.
GDF Suez, which controls some 90 percent of the residential gas market, also filed a case at the court, saying it needed rate increases to cover the extra cost of buying gas from its suppliers resulting from the rising price of oil, to which gas prices are linked.
"There is a legal requirement that would have seen prices rising 8-10 percent," government spokeswoman Valerie Pecresse said on Europe 1 radio. "The government does not want this rise and wants to limit the impact on French energy bills."
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