EDF_REGISTRATION_DOCUMENT_2017

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PRESENTATION OF EDF GROUP Legislative and regulatory environment

Generation facilities Anyone can operate an electricity generation facility provided that, above a certain power threshold determined by decree, an operating licence issued pursuant to Article L. 311-5 of the French Energy Code is obtained. The powers and responsibilities of local authorities with regard to electricity generation are defined in Articles L. 2224-32 and L. 2224-33 of the French Local Authorities Code, and in Article 88 of Law no. 2010-788 of 12 July 2010 on the national commitment to the environment. Regulated Access to Electricity from the Existing Nuclear Fleet (ARENH) The rules governing Regulated Access to Electricity from the Existing Nuclear Fleet (ARENH), provided for in Articles L. 336-1 et seq. of the French Energy Code, have been implemented since 1 July 2011. See section 1.4.3.3 “Regulated access to historic nuclear power (Accès Régulé à l’Énergie Nucléaire Historique, or ARENH)” on this point. Choice of electricity supplier All customers, without exception, have been eligible since 1 July 2007, i.e. they may freely sign a contract for the purchase of electricity with a producer or supplier of their choice that is established on the territory of the European Union or on the territory of a State that is party to an international agreement with France (Article L. 331-1 of the French Energy Code). Customers can choose to benefit from regulated electricity sales tariffs under the conditions set out in Articles L. 337-7 et seq. of the French Energy Code. Pursuant to these provisions: household and non-household final consumers whose power demand is less than ■ or equal to 36 kVA benefit, at their request, from regulated sales tariffs; this is also true for all customers in areas that are not interconnected to continental metropolitan France; household and non-household final consumers whose power demand is greater ■ than 36 kVA, who had not exercised their eligibility on 7 December 2010 were able to benefit from regulated sales tariffs until 31 December 2015. Since 1 January 2016, these consumers no longer benefit from regulated tariffs. Article 25 of Law no. 2014-344 of 17 March 2014 on consumption provided for a six-month transitional period, during which customers who had not signed a new contract with the supplier of their choice before 31 December 2015 could, in order to guarantee the continuity of their electricity supply, continue to benefit from a contract with EDF (1) during a maximum transitional period of six months, at the end of which they would no longer be supplied (i.e. on 30 June 2016). During this period, customers had the opportunity to terminate this contract at any time without having to pay an indemnity. EDF had an obligation to inform the customers concerned, by letter, of the expiration of the transitional contract three months and one month before it ended. Order no. 2016-129 of 10 February 2016 introduced, from 1 July 2016, a mechanism ensuring the continuity of the gas and electricity supply: customers who, on 30 June 2016, had not subscribed to the market offering were deemed to have accepted a new contract proposed by the designated supplier, following a competition procedure, by the CRE in its decision of 4 May 2016. In November 2016, the CRE organised a new call for tenders for the lots that could not be allocated in May 2016. This call for tenders was unsuccessful for the lots concerning electricity supply contracts. Article L. 111-84 of the French Energy Code requires internal accounts to be kept that make it possible to distinguish between supply to customers who exercised their right to eligibility and supply to customers at regulated tariffs. The State and the CRE have a right of access to the electricity companies’ accounts. Third-party access to networks Article L. 111-91 of the French Energy Code provides that network managers must guarantee access to the public transmission and distribution networks in order to: perform the public service missions to supply electricity at regulated electricity ■ sales tariffs and at basic necessity special rates; perform electricity procurement contracts; ■ perform electricity export agreements signed by a producer or by a supplier who ■ is located on French national territory.

Disputes concerning third-party access to networks are heard by the Settlement of Disputes and Sanctions Committee (CoRDIS), which is part of the Energy Regulation Commission (CRE). The tariffs for using the Public Electricity Transmission and Distribution Networks (TURPE) referred to in Articles L. 341-2 et seq. of the French Energy Code entered into force on 1 August 2017. They have been defined, with regards to transmission (TURPE 5 HVB) through a decision of the CRE of 17 November 2016 and a decision of the same date concerning distribution (TURPE 5 HVA/LV). In a decision dated 12 January 2017, which was published in the Journal Officiel of 17 January 2017, the Minister for the Environment, Energy and Sea, in accordance with Article L. 341-3 of the Energy Code, asked the CRE to draw up a new draft decision on the tariffs for the public electricity distribution networks, on the basis of the Minister’s energy policy guidelines. In particular, the Minister asked for new uses that are linked to energy transition and local movable peak times be better taken into account and asked for a higher level of remuneration that will allow the network manager to carry out its missions and for the application of the method for determining the tariff that complies with the legal framework introduced by the Law on energy transition. The CRE, therefore, adopted a new decision on 19 January 2017, indicating that there was no need for a new decision to modify its decision of 17 November 2016. Through its decision of 26 October 2017, the CRE added to its decision of 17 November 2016 on TURPE five distribution of a decision determining the conditions for covering the costs associated with customer management (“supplier commissioning”). Subsidy mechanisms for certain production sectors EDF is subject to electricity purchase obligations that result in contracts being signed with facility operators. The purchase obligation system, which was created by Law no. 2000-108 of 10 February 2000 on the modernisation and development of the public electricity service, was amended by Law no. 2015-992 of 17 August 2015 on Energy Transition for Green Growth, which clarified some aspects of this system and created a new form of subsidy in the guise of additional remuneration. The subsidy mechanism for certain production sectors that results from the aforementioned Law of 17 August 2015 now has three separate systems. Firstly, the purchase obligation regime provided for by Articles L. 314-1 et seq. of the French Energy Code. These articles provide that EDF (as well as the LDCs that are responsible for supply in their service area) must sign purchase contracts, at the request of producers, for the electricity generated by technology sectors, the development of which the public authorities wish to support, either because they use sources of renewable energies, or because they have a specific form of energy efficiency (e.g. cogeneration). The eligible facilities are listed in Article D. 314-15 of the French Energy Code. Article R. 314-2 of the French Energy Code provides that producers who benefit from the purchase obligation must sell all of their production to EDF under agreements entered into on the basis of indicative models approved by the Minister for Energy. Purchasing terms and conditions, specifically the electricity purchase prices, are set by order of the Ministers for Energy and the Economy. Secondly, the additional remuneration regime, which was introduced by Law no. 2015-992 of 17 August 2015 on Energy Transition for Green Growth and is governed by Articles L. 314-18 et seq. of the French Energy Code. The additional remuneration takes the form of a premium that is paid to producers as a complement to their income from selling the electricity they produce on the market, as well as the assignment of their capacity certificates. In this respect, EDF is obliged to enter into an additional remuneration contract with eligible producers who request one and with certain producers who currently benefit from a purchase obligation and who wish to benefit from an additional remuneration agreement for the remainder of the term of their initial purchase contract. The eligible facilities with additional remuneration are listed in Article D. 314-23 of the French Energy Code. Thirdly, the tendering procedure which, pursuant to Articles L. 311-10 et seq. of the French Energy Code, may be launched by the Minister for Energy when production capacities do not meet the targets of the multi-year energy plan. EDF is then required, outside the areas served by LDCs, to enter into an electricity purchase contract or a contract that provides for additional remuneration with the selected bidder(s) (this is a memorandum of understanding in the event that it is EDF itself in the capacity of “producer” that is chosen following the call for tenders). The additional costs for EDF and the LDCs that result from contracts signed pursuant to the obligation to purchase energy are compensated by the State and financed, in particular, by the “Energy Transition” special purpose account, created by the Amending 2015 Finance Law. For 2016, the special purpose account (CAS) was

Or their Local Distribution Company. (1)

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EDF I Reference Document 2017