French Natural Gas Price Rise is Possible Over Year, Besson Says

France may allow GDF Suez (GSZ) SA, the former monopoly natural gas supplier, to increase prices in the next year, according to Industry Minister Eric Besson.

“Before the presidential election I can’t say for certain,” Besson said during an RMC radio interview, referring to the 2012 poll. There may be an increase, he said. “That doesn’t mean there will be.”

Prime Minister Francois Fillon two days ago said natural gas prices wouldn’t rise July 1 after an average increase of 4.9 percent at the start of this month. He also told parliament there wouldn’t be an increase for a year.

The government plans to work with GDF Suez and the French energy regulator to revise the way regulated prices are calculated to take into account a drop in spot market prices, Besson said today.

“There has to be an automatic revision of gas prices under the law,” he said. “Gas prices for consumers need to reflect costs and until now there was no doubt. There is a doubt now about the method of calculation.”

The rise in regulated rates should have been 7.5 percent on July 1, Fillon said. Most of GDF Suez’s costs of supply to French consumers are through long-term contracts which the utility says are more expensive than the spot market. GDF has said it’s entering discussions with suppliers on the contracts with the aim of pegging a higher volume to market prices.

(Source: http://www.bloomberg.com/news/2011-04-07/french-natural-gas-price-rise-is-possible-over-year-besson-says.html)