EDF_REGISTRATION_DOCUMENT_2017

PRESENTATION OF EDF GROUP Description of the Group's activities

January 2016 they have been sold via transparent and non-discriminatory requests for bids. Capacity mechanism 1.4.3.5 Articles L. 335-1 et seq of the French Energy Code, originating from the NOME Law, institute the obligation for each electricity supplier to contribute in mainland France to the security of electricity supply, in compliance with a default criterion set by the government. For this purpose, each supplier must acquire capacity guarantees corresponding to its obligation, calculated by reference to the power and energy consumption of its customers during a peak period defined by RTE. To comply with this obligation, each supplier must therefore get capacity guarantees from producers, which must certify all their means of generation, or from demand response managers. On 8 November 2016, the European Commission gave its authorisation for the implementation, on 1 January 2017, of the French mechanism. An initial market session, managed by EPEX Spot, took place on 15 December 2016 in order to exchange capacity relating to 2017. The price stood at €10/kW which constitutes the market reference price for 2017. A second EPEX Spot auction was held on 27 April 2017 which also related to the capacity for 2017 with the price set at €10.42/kW. The first auctions of capacity guarantees on the European Power Exchange (EPEX Spot) took place on 9 November and 14 December 2017. The clearing prices stood at €9.31/kW and €9.38/kW respectively, resulting in a market reference price for 2018 capacity of €9.34/kW (arithmetic mean of of two auction prices). The first auction making it possible to exchange capacity relating to 2019 also took place on 14 December 2017: the clearing price amounted to €13/kW. The reference price for 2019 capacity, however, will not be known until the end of 2018. Once up and running, a number of other auctions to exchange capacity will be held beginning four years before the delivery year and ending three years thereafter. Thus, auctions will thus take place in 2018 to exchange capacity for 2019 to 2022 as well as for 2017 and 2018. Over-the-counter transactions remain possible. Similarly, for integrated players such as EDF, which possess capacities as producers and have an obligation as vendors, internal capacity transfers are authorised in order to cover their obligations. They will be made at the market price. The DOAAT, in charge of the management of this new system, proceeded with the certification of all the EDF means of production in France for the next few years and the contractual demand response capacities with the customers. If necessary, these certifications will be the subject to regular rebalancing, either upwards or downwards. Similarly, the DOAAT will proceed with the certification and the necessary rebalancing of the means of generation subject to purchase obligations (OA) and sale obligations on the market for associated capacity guarantees. As on the Energy market, the sales/purchases of capacity organised by EPEX Spot managed by the DOAAT on behalf of EDF, are carried out via EDF Trading. ACTIVITIES IN FRANCE The transmission and distribution of electricity in mainland France are regulated activities. They are carried out by RTE and by Enedis, subsidiaries which are managed with complete independence, within the meaning of the provisions of the French Energy Code. Transmission − Réseau de Transport 1.4.4.1 d’Électricité (RTE) Created on 1 July 2000 and a subsidiary since 1 September 2005, the Electricity Transmission Network (RTE) is the owner and operator of the French electricity transmission network, which it operates, maintains and develops. With over 100,000 kilometres of high and extra high voltage circuits and 50 cross-border lines, this is Europe’s largest network. Its geographical location places it at the core of the European electricity market. RTE guarantees the correct operation and safety of the electricity system, and provides free and fair access to all the network users. The company also pays special attention to supporting the development of renewable TRANSMISSION AND DISTRIBUTION 1.4.4

sources of energy in France and their integration into the electricity system, which requires the development of the transmission network and interconnections. On 31 March 2017, EDF, Caisse des Dépôts et Consignations and CNP Assurances finalised the sale to Caisse des Dépôts and CNP Assurances of a 49.9% stake in Co-entreprise Transport d'Electricité (CTE), a holding company which has held 100% of RTE's share capital since 23 December 2016. RTE is indirectly owned (50.1%) by EDF at 31 December 2017, and due to its specific conditions of governance (see section 1.4.4.1.1 “Organisation of CET and RTE”), RTE was not fully consolidated by the Group, but rather consolidated using the equity method. Organisation of CTE and RTE 1.4.4.1.1 CTE is a public limited company (société anonyme) with a Board of Directors, owned by EDF (50.1%), Caisse des Dépôts (29.9%) and CNP Assurances (20%). CTE holds 100% of the capital of RTE, a public limited company (société anonyme) with both an Executive Board and a Supervisory Board. In accordance with its articles of association, the sole purpose of CTE is the acquisition and holding of RTE shares, and more generally, all commercial, financial, intangible and tangible property transactions relating directly or indirectly to its corporate purpose or which might facilitate its achievement or stimulate business growth. The eight members of CTE's Board of Directors include four EDF representatives, two Caisse des Dépôts et Consignations representatives and two CNP Assurances representatives. They are appointed for six years. RTE's compliance auditor also attends meetings of CTE's Board of Directors. RTE’s Supervisory Board is comprised of twelve members appointed for five years: eight members appointed by the Shareholders’ Meeting: ■ two State representatives, including the State as a legal entity, represented ■ by an individual, six representatives of the shareholder; ■ four members elected by the staff. ■ As the composition of the Supervisory Board was modified by the acquisition of holdings by CdC and CNP Assurances, the CRE conducted a review to determine whether the requirements which enabled RTE to maintain its status as an independent transmission network operator (the so-called “ITO” model) had indeed been met. More specifically, the CRE examined the internal organisation and governance rules of the Transmission Network Operator (TNO). After taking into account the opinion of the European Commission, this review led the CRE to adopt the decision of 11 January 2018 to maintain RTE's certification. A Government Commissioner was also appointed and attends Supervisory Board meetings in a consultative capacity. RTE’s Executive Board is made up of five members, who perform their work under the supervision of the Supervisory Board, within the limits fixed by the French Energy Code and RTE’s articles of association. After the consent of the Energy Minister, the Supervisory Board appoints the Chairman of the Executive Board and upon the latter’s proposal, it appoints the other members of the Executive Board. RTE’s activities 1.4.4.1.2 In France, RTE manages the public transmission network and carries out its missions under the conditions set out in model specifications approved by applicable decree until 2051. In accordance with the French Energy Code, transmission network operators must be certified according to a process associating the CRE and the European Commission, which aims to ensure that the entity concerned fulfils the conditions of independence set out by this Code. RTE obtained certification from the CRE in 2012 as an ITO (Independent Transmission Operator). Following the change in its share ownership, RTE applied to the CRE in 2017 to reexamine its certification and thereby maintained its certified status following a CRE decision dated 11 January 2018. Thus RTE manages the transmission infrastructure, guarantees access to the transmission network and manages energy flows. RTE has had to face a variety of challenges in its mission as an electricity transmission network operator: integration of the European market, extensive restructuring of the generation fleet, societal changes reinforcing the constraints of integrating new infrastructure of general interest and maintenance of its industrial facilities to meet the requirements of customers and the community at large.

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DF I Reference Document 2017