France Ends ARENH System, Sparking Consumer Concerns Over Rising Electricity Costs

France has officially ended its regulated access to historic nuclear electricity system known as ARENH, which was in effect from July 2011 until December 31, 2025. In its place, the government introduced the Universal Nuclear Payment (VNU) system starting January 1, 2025, aiming to regulate the price of electricity generated by EDF’s nuclear reactors—France’s primary electricity source.

Consumer associations have expressed fears that the shift from ARENH to VNU will expose electricity prices to greater volatility from the wholesale electricity market, potentially leading to inflationary pressures and higher bills for consumers. The VNU system is designed to balance protecting consumers against steep electricity cost spikes while ensuring EDF receives adequate funding for energy infrastructure investments. EDF requires massive financing to fulfill government mandates for constructing at least six new nuclear reactors.

The Ministry of Economy and Finance has underscored its intention to carefully manage this transition to maintain consumer protection without compromising the country's energy development goals. This regulatory overhaul occurs amid broader economic conditions where France has seen its inflation diminish more sharply than in many peer countries, supporting a modest projected GDP growth of about 0.9% for 2025, according to economists.

Despite concerns about public finances and the economic impact of political instability following the National Assembly’s dissolution, businesses have demonstrated resilience. Inflation easing contrasts with persistent fiscal challenges, including high government debt exceeding 117% of GDP. Economists also warn of external trade pressures, notably a surge in imports from China, which may pose a significant challenge to the domestic economy moving forward.

While the energy pricing reform raises immediate worries for consumers regarding electricity cost surges, the government’s approach seeks a delicate equilibrium—safeguarding affordability while financing crucial nuclear infrastructure to meet France’s long-term energy needs and climate commitments.