UPDATE 1-EDF wants lower power tax, French government says cut your costs

EDF's Chief Executive Jean-Bernard Levy called on Wednesday on the French government to consider lowering taxes on low-carbon electricity, while the environment minister said the state-owned utility needed to reduce its high costs and salaries.

Levy defended a planned six percent increase in regulated power tariffs next month, which he said reflected higher commodities prices as well as higher taxes, and said that electricity was taxed very highly compared to fossil fuels, despite the need to reduce carbon emissions. "Taxes account for more than a third of power bills, it is as if we had a value-added tax of 55 percent on electricity... we know the government is studying the issue of environmental taxes, maybe it should consider taxing electricity less," he said on Europe 1 radio.

Environment minister Francois de Rugy also interviewed on Europe 1, shot right back and said EDF should focus on reducing its cost base. "If we lower the taxes, we lower state revenues. We cannot lower all taxes," he said.

De Rugy said that EDF generates nearly all electricity in France and that the cost of power production has been going up for years for reasons that are linked to EDF. "Firstly, EDF's salary burden is higher than those of other energy companies. Secondly, there is the high cost of France's nuclear fleet. EDF's debt is there to prove it, over 35 billion euros ($39 billion). EDF is in debt because it cannot cover its production costs with its revenue," de Rugy said.

He also pointed to the fact that EDF employees can buy their electricity at just one-tenth of the price that French consumers pay, which has been regularly criticised by the Cour des Comptes, the state audit body. "They have a 90 percent discount. Maybe the CEO of EDF could change that. That is his responsibility," de Rugy said. ($1 = 0.8965 euros) (Reporting by Geert De Clercq and Felix Bate Editing by Dominique Vidalon and Susan Fenton)