UPDATE 1-French minister caps EDF power price hikes again

(Corrects name of Anode chairman in paragraph 10 to Fabien Chone)

By Benjamin Mallet

PARIS, July 16 (Reuters) - French Energy Minister Segolene Royal capped a planned rise in household electricity prices on Thursday, overruling regulatory recommendations designed to compensate power provider EDF (Paris: FR0010242511 - news) for earlier controls.

Royal said power prices would rise by just 2.5 percent from Aug. 1, below the 3.5 to 8 percent range power and gas regulator CRE had recommended on Wednesday to make up for price caps imposed in the past three years.

The smaller rise does go some way towards making up the lost ground for dominant provider EDF. The CRE calculates that power prices should have fallen 0.9 percent this year had it not been for unwinding caps imposed since 2012.

It is the latest in a string of government interventions over the past three years to keep a lid on electricity costs as the French economy has stalled and unemployment climbed.

Outspoken minister Royal frequently cites a determination to lower costs for low-income households and small businesses.

"I'm going to tell them 'no'," she told BFM TV on Thursday. "EDF was asking for an electricity increase of up to 8 percent, that will not be the case. The increase will be 2.5 percent, for some consumers it will be nothing."

According to the CRE, price rises foregone in the past three years have cost state-controlled EDF 2.1 billion euros ($2.3 billion) in lost revenue. The company reported 2014 earnings before interest, tax, depreciation and amortisation of 17.3 billion euros and net income of 3.7 billion.

The state owns about 84 percent of listed EDF's shares, which were up 0.9 percent on Thursday, underperforming a 1.5 percent rise in the main CAC 40 index.

New (KOSDAQ: 160550.KQ - news) entrants to an electricity market that EDF dominates find it hard to compete with prices that are artificially capped, but their legal challenges have so far failed.

"By not increasing tariffs enough we have loaded a colossal backlog in today's charges on to future generations," said Fabien Chone, chairman of Anode, the association of alternative power providers.

EDF is one of six large energy suppliers in Britain that could face a price cap after a competition watchdog found they overcharged households. ($1 = 0.9167 euros) (Additional reporting and writing by Leigh Thomas; and Andrew Callus; Editing by James Regan and Keith Weir)