The European Commission has opened an investigation into what it called potentially illegal French state aid to large and medium-sized companies in the form of low, subsidised electricity rates.
"The state financing of certain companies' electricity costs could distort competition between European industries and prevent consumers from fully enjoying the benefits of the single market," Competition Commissioner Neelie Kroes said in a statement today.
State aid is prohibited in the European Union for businesses, except under special conditions, because it tilts the level playing field of competition.
The Commission is focusing on tariffs - known as "green" and "blue" - used by large and medium-sized firms. Low-cost electricity for energy-intensive industries can affect the price of the products they produce, the EU's executive arm said.
France has one month to respond to the charges, and the Commission said it does not pre-judge the outcome. Companies could be forced to repay any subsidies. The Commission said its investigation did not cover regulated electricity tariffs for houses and small businesses.
It said that although French electricity consumers had a choice of purchasing from a liberalised market, regulated electricity prices were "considerably lower".
Customers who have left the regulated market and want to come back are now permitted by the government to return. They wind up paying prices higher than the original regulated fees, but still below market prices.
"The system appears to be financed mainly by the state-owned company Electricite de France and by parafiscal contributions levied on all French electricity consumers and administered by the state", the Commission said.
The investigation does not cover so-called "yellow" tariffs for small companies and consumers. Separately, Energy Commissioner Andris Pielbalgs earlier opened an investigation into French regulated tariffs as being potentially incompatible with the Electricity Liberalisation Collective. Early this year, the Commission also opened a probe into some regulated tariffs in Spain.