French Minister Proposes Semi-public Firms Run Hydropower Plants

French Energy Minister Segolene Royal suggested creating semi-public companies to run hydropower stations after a former minister criticized a plan to open up the sector to competition, under pressure from the European Union.

Many utilities and big electricity consumers have expressed an interest in France's hydroelectric sector, which is dominated by former state monopoly EDF, given that the cost of building dams has mostly been recouped.

Delphine Batho, a former energy minister who was dismissed by President Francois Hollande last July, criticised on Monday what she said was a secret plan to liberalise the sector against the wishes of many Socialist MPs.

Royal said in a statement on Tuesday that she had proposed a compromise that would maintain government control of the hydropower licences and still respect EU competition requirements.

She suggested the creation of joint ventures between private companies and local governments, modelled on the Compagnie nationale du Rhone (CNR) in which GDF Suez holds an indirect minority stake and the rest is owned by a raft of local authorities and the state holding company.

Under French law, private investors cannot own less than 15 percent in a semi-public company (societe d'economie mixte, SEM).

In 2010, the more than 400 hydroelectric concessions had capacity totalling 24,300 MW, nearly half the total of France's 58 nuclear power plants and 20 percent of its overall capacity.

Royal said 150 concessions were set to expire before 2023, accounting for 25 percent of French hydropower production.

Some 80 percent of state-owned concessions are now managed by EDF and 12 percent indirectly by GDF Suez.

When EDF became a corporation in 2004, the European Union called for the opening up of some capacity to competition. Companies such as Direct Energie, Sweden's Vattenfall and Germany's E.ON have expressed an interest.

(Reporting by Michel Rose; editing by Jane Baird)