EDF_REGISTRATION_DOCUMENT_2017

PRESENTATION OF EDF GROUP Legislative and regulatory environment

by one of the Ministers within the three months following the receipt of these proposals. The CRE now has significant decision-making power to set the Tariffs for Using the Public Transmission and Distribution Networks (TURPE): it sends its reasoned decision to the administrative authority, which can only ask the CRE for a new decision in the event of non-compliance with energy policy guidelines. Under its residual regulatory power, the CRE also takes network connection decisions, as well as decisions to define the rules for calculating and adjusting the rights of suppliers to the ARENH. The CRE is also vested with very broad powers that enable it to obtain any information that it may deem useful for the fulfilment of its remit, as well as authority to settle disputes and to apply penalties, through the Settlement of Disputes and Sanctions Committee (CoRDIS). The Law on Energy Transition for Green Growth also gives the CRE the possibility of having the information it obtains through its remits audited, at the expense of the audited undertakings. Organic Law no. 2017-54 of 20 January 2017 on Independent Administrative Authorities and Independent Public Authorities and Law no. 2017-55 of 20 January 2017 on the General Statute of Independent Administrative Authorities and Independent Public Authorities, provided these authorities, including the CRE, with a common legal status. These laws mainly lay down the rules relating to the mandate of members, the ethics of members, the operation and organisation of these authorities and parliamentary control. Regulatory framework Tariff for Using the Public Transmission and Distribution Networks (TURPE) Pursuant to Article L. 341-3 of the French Energy Code, the tariff for using the public electricity transmission network is set by way of a reasoned decision by the CRE. A new tariff for use of the public transmission network (TURPE 5 HVB) entered into force on 1 August 2017 for a period of around four years. This tariff was set by the decision of the CRE of 17 November 2016 and was published in the Journal officiel on 28 January 2017. This decision provided for an increase of 6.76% on 1 August 2017, followed by an inflation-based change on 1 August of each year (apart from corrections arising from the income and expense regularisation account). The financial remuneration of RTE's assets is derived from the product of the regulated asset base (RAB), estimated on 1 January 2017 at €13,598 million, by a fixed remuneration rate. This remuneration rate corresponded to a nominal rate before tax of 7.25% for the 2013-2016 tariff period. For the 2017-2021 period, this rate is 6.125% before tax. On this basis, in 2017, network access tariff revenues were around €4.168 million for the electricity transmission network, revenues from services €91 million and revenues from interconnections €389 million. Concerning the transmission and distribution of natural gas (Law no. 2003-08 dated 3 January 2003), see section 1.5.4.2 “French legislation: French Energy Code”. Tariff for using the public electricity distribution networks (distribution TURPE) Over 90% of Enedis’ sales are made up of revenues made from electricity transmission. The tariff for using the public electricity network (TURPE), in terms of levels and structure, is set by the CRE in a transparent and non-discriminatory manner, in order to cover all the costs borne by the efficient network operators. A new tariff for using the public distribution network (TURPE 5 HVA/LV), established through a decision of the CRE of 17 November 2016, entered into force on 1 August 2017 for a period of around four years. lt provides for an average increase of 2.71% on 1 August 2017. It will then change in accordance with inflation on 1 August of each year between 2018 and 2020 (excluding corrective effects from the regularisation account for income and expenses). In the context of TURPE 5 HVA/LV, Enedis' financial remuneration is derived from the sum of the remuneration on managed assets (RAB paid at 2.6%) and the remuneration of regulated shareholders' equity (remunerated at 4.1%).

managers, maximum capacity of the generation facilities eligible for derogation from the obligation to be attached to a balance group, which is set in the decree at 3kW). At this stage, the implementation methods for self-consumption operations are still to be decided and in autumn 2017 the CRE organised self-consumption workshops with stakeholders and launched three calls for contributions on self-consumption: tariff issues, contractual framework and support mechanisms. Closed distribution networks Article 167 of Law no. 2015-992 of 17 August 2015 on Energy Transition for Green Growth authorised the Government to take any measure, by way of an order, arising from the law in order to add a section on closed distribution networks to the French Energy Code to provide a framework for a practice made possible by Article 28 of Directive 2009/72/EC. Following Order no. 2016-1725 of 15 December 2016 on closed distribution networks, Articles L. 344-1 et seq. of the French Energy Code specify the definition of the closed distribution networks, their legal regime, missions assigned to the manager of the closed distribution network and the sanctions applicable if these provisions are not adhered to. Article L. 344-13 of the French Energy Code provides that the terms and conditions for applying these provisions are defined by decree of the Council of State. To date, this decree has not been adopted. A draft law to ratify the order was registered in the French Senate on 15 February 2017. Domestic networks Law no. 2017-1839 of 30 December 2017 ending the research and use of conventional and non-conventional hydrocarbons and introducing various provisions’ relating to energy and the environment was published in the Journal officiel of 31 December. Its purpose, in particular, is to define and authorise the creation and operation of domestic building networks which constitute a new category of networks alongside public electricity distribution or transmission networks, and closed electricity distribution networks. Pursuant to Articles L. 345-1 et seq. of the French Energy Code, domestic networks can now only be legally created if four criteria are met: the domestic building from which the network will be created must i) stand alone, ii) belong to a single owner, iii) be used primarily for offices, iv) not contain any dwellings. A decree must specify the terms and conditions for implementing these legal provisions. Electricity sector regulation The Energy Regulation Commission The Energy Regulation Commission (CRE) is an independent administrative authority created by Article 28 of the Law of 10 February 2000. Articles L. 131-1 et seq. of the French Energy Code give a general definition of the remit of the CRE, which is tasked with contributing to the correct functioning of the electricity and natural gas markets for the benefit of final consumers. In this respect, the CRE ensures, in particular, that the conditions for access to electricity and natural gas transmission and distribution networks do not impede the development of competition. The CRE has significant powers: the power to make proposals, advisory powers and decision-making powers (approval power and regulatory power). The CRE makes proposals, in particular, to the Ministers for the Economy and for Energy regarding the amount of the costs that are attributable to the public service missions assigned to power producers, and the net amount of the related contributions. Once the Decree has been published that specifies the methods for identifying and recognising the costs that are taken into account for the calculation of the ARENH price, the CRE will also propose the ARENH price. Moreover, since 7 December 2015, it has been the CRE’s responsibility to send its justifiable proposals for changes in the regulated sales and transfer tariffs for electricity (on which it previously could only issue an opinion) to the Ministers for the Economy and Energy. The decision is deemed to have been made in the absence of any objections

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EDF I Reference Document 2017