A stable and sustainable business model
The RTE monopoly is regulated by the French Energy Regulatory Commission (CRE). Regulating mechanisms are designed to smooth out and correct the impact of various contingencies (climatic and economic) on electricity transmission in France. They provide us with a robust long-term financial outlook, able to withstand external factors over a period of years.
Since the introduction of European sectorial legislation in the late nineteen nineties, power transmission has become a regulated activity. The transposition of those texts into French law (specifically in the Code de l’Energie or Energy Code) sets out the conditions in which RTE is expected to carry out its missions. In particular, the law clearly highlights our administrative independence with regard to our shareholder, as well as our neutrality towards all power system stakeholders.
How are RTE tariffs set?
RTE income is not linked to a market price but rather to a tariff, specifically the Public Transmission User Tariff (known in French as the TURPE). Pursuant to the French Energy Code, this tariff is set by the CRE. It is set in a transparent and non-discriminatory manner so as to:
- cover all RTE costs, insofar as they reflect the costs of an efficient system operator,
- ensure a fair return on capital employed through investment programmes.
The tariff being applied as of August 1, 2025 (TURPE 7) runs for approximately four years. CRE has established a new tariff for the use of the public transmission electricity grids, known as TURPE 7 HTB, applicable as of 1 August 2025, for a period of approximately four years (the upcoming tariff period, 2025-2028). It takes account RTE's anticipated needs over the period to achieve the objectives of decarbonization and reindustrialization of the economy. The CRE also approves annually RTE’s investment volumes and sets the company's profitability targets.
A regulated business: what does this mean for RTE?
RTE draws up his annual investment programme and submits it to the CRE for approval and oversight. As an exception to the French Commercial Code, the RTE’s Supervisory Board has limited powers. This means that decisions pertaining to grid management or development are not a matter for the Supervisory Board. As a reminder, since September 2020, RTE’s Supervisory Board comprises 2 State representatives, 6 shareholder representatives and 4 employee representatives.
3.47 billion of investments for 2025
The investment programme for 2025 totals €3.47 billion and has been approved by the CRE. It is consistent with the trajectory adopted by the CRE in its decision on TURPE 7.
Network access tariff (TURPE)
Decisions in defining the TURPE fall within the remit of CRE. The French State has two months in which to publish CRE tariff decisions in the Bulletin Officiel (the Official Journal of the French Republic). Within this period however, it may formally ask CRE to review its decision if it believes that the initial ruling does not take sufficient account of energy policy.
With regards to power transmission, the TURPE is determined on the basis of projected projected network expenditure. Objective: covering these costs following deduction of other revenues (interconnection auction revenues, services, etc.).
The tariff covers two categories of costs :
- Operating costs (power system operation – electric system losses, congestion, ancillary services - purchases, payroll, taxes and duties). Forecasts for these costs include incentives that encourage RTE to enhance its productivity.
- Capital costs (depreciation and return on capital) linked to investment spend that RTE is encouraged to better control. The return on capital employed is the product of two terms:
- Base: The Regulatory Asset Base (RAB), which is the accounting value of RTE-owned assets minus investment subsidies (participation for connection by users, European subsidy for some interconnection projects),
- A rate of return: WACC (Weighted Average Cost of Capital), determined by means of an evaluation model incorporating various parameters such as the risk-free rate represented by State bonds, additional compensation for a risk-free rate requested by bond investors, return on equity in view of risk sensitivity. For the TURPE 7 period, this RAB has been split into two compartments to which separate rates are applied: one dedicated to land assets (WACC at 5%), the other dedicated to offshore assets (WACC at 5,5%).
In addition, the tariff framework includes an arrangement for recovering income and expenditure that are considered to be difficult to forecast and non-controllable: the CRCP, or Income & Expenditure Regulation Account. Its purpose is to adjust for discrepancies observed between the hypotheses on which the tariff is based and actual figures for certain income and expenditure items (extractions, interconnection revenues, loss purchase, etc.). It allows these discrepancies to be passed on to transmission system users through tariff changes.
The annual revision of the TURPE 7 tariff takes account of the consumer price index and a CRCP settlement factor, calculated on the basis of the CRCP balance on 31 December of the previous year and financial clearance applied to this balance (and limited to +/-3%). The tariff can therefore rise or fall.
The TURPE 7 deliberation also provides for financial incentives to encourage the system operator to streamline its costs, enhance quality of service and carry on its R&D program.
General principles of the tariff paid by transmission system users
CRE builds the tariffs for the use of public transmission electricity grids by complying with several fundamental principles:
- Pricing of network access is independent of the distance between the injection site and the withdrawal site: “stamp” pricing,
- The same tariffs for network use apply across the whole national territory: standardised tariff,
- Pricing must reflect the costs generated by each user category independently of their final use of the electricity: non-discrimination / cost reflection,
- Time and season variations.
