The Green Tariff of the Electricite de France

Abstract

Editor's Note. In submitting this article in its English translation the translators wrote: We have sought to adhere to the meaning of the original French but also have taken some editorial license in clarifying the meaning for the reader. The 'Tariff Vert' or Green tariff, instituted late in 1956 by Electricite de France, the nationalized electric utility system of France represents the most advanced and sophisticated application of marginal cost pricing yet attempted. Regardless of whether the principles are specifically applicable to American conditions, the work of Boiteux, Dessus and others associated together in the formulation and implementation of the tariff are worthy of study and have been receiving increasing attention from American economists. This article first describes the impact of inflation on the electric tariff set up in France in the 1935-38 period which was still in effect in 1956. As will become apparent, the original tariff became completely irrational as a result of inflation. The later part of the translation is given to the Green Tariff. It is noted that this tariff is applicable to wholesale service at voltages ranging upward to 220 kv, an extremely high service voltage. Customers apparently furnish their own transformation equipment. Any rates quoted in American currency are at the approximate exchange rates prevailing at the time and have been computed by the translators. Readers are referred to the paper by Professor James R. Nelson at the American Economic Association meetings of December 1962 in which the tariff was analyzed. It is understood that Professor Nelson will bring out a book which will contain translations of numerous French articles and papers on the subject.