EDF_REGISTRATION_DOCUMENT_2017

PRESENTATION OF EDF GROUP Legislative and regulatory environment

Through a decision of 19 July 2017, the Council of State annulled the Decree of 16 May 2013 on regulated natural gas sales tariffs on the grounds that maintaining such tariffs is contrary to European Union law. Indeed, regulated natural gas sales tariffs do not fulfil the conditions laid down in Directive 2009/73/EC and, in particular, do not pursue any objective of general economic interest. However, that decision only annulled the disputed decree and not the regulatory provisions of the Energy Code relating to regulated natural gas sales tariffs in force since 1 January 2016. As such, regulated natural gas sales tariffs remain as long as the Prime Minister does not repeal these provisions. Suppliers Article L. 443-4 of the French Energy Code defines suppliers as persons who (i) are established on the territory of a Member State of the European Union or on the territory of another State pursuant to international agreements, and (ii) hold a licence issued by the Minister for Energy. EDF is authorised to supply natural gas to non-household customers that do not provide services in the public interest, pursuant to an Order of the Deputy Minister of Industry of 14 September 2004, and, pursuant to an Order of 9 August 2005, to non-household customers that provide services in the public interest, as well as to natural gas distributors and suppliers, and, pursuant to an Order of 15 June 2007, to household customers. EDF only supplies its customers at market-based prices. Regulated sales tariffs can only be proposed by Engie and LDCs responsible for gas supply. Underground storage and third-party access to natural gas storage facilities Article L. 421-4 of the French Energy Code requires all suppliers to hold, on 31 October of each year, directly or indirectly through an agent, sufficient inventories of natural gas in France to meet their direct or indirect contractual obligations to supply household customers and other customers that provide services in the public interest or that have not contractually accepted an interruptible gas supply, during the period between 1 November and 31 March. Articles R. 421-1 to R. 421-2 of the French Energy Code specify the legal framework that applies to underground storage facilities for natural gas. The Order of 31 July 2017 defined the terms and conditions for taking into account other modulation instruments for the implementation of the obligation of natural gas suppliers to declare and hold stocks and their storage capacities. Law no. 2017-1839 of 30 December 2017 ending the research and use conventional and non-conventional hydrocarbons and introducing various provisions relating to energy and the environment, published in the Journal officiel of 30 December 2017 amends the rules for accessing underground natural gas storage facilities necessary for the security of supply, to establish a regulated access framework, guaranteeing the coverage of the costs borne by the operators of these facilities through the natural gas transmission network access tariffs. Suppliers will be able to subscribe to storage capacities via an auction system, the terms of which will be defined by the CRE. Obligations to hold natural gas stocks by suppliers provided for in Article L. 421-4 of the French Energy Code have therefore been abolished. Control and penalties The French Energy Code grants the Minister for the Economy, the Minister for Energy and the CRE, power to oversee the gas market. The Minister for Energy may also levy a fine, or withdraw or suspend an authorisation to supply natural gas. The CRE can carry out investigations into whether offences that breach the provisions of the French Energy Code have been committed (Article L. 135-13 of the French Energy Code).

electricity distribution service through concession agreements and general specifications that set forth the respective rights and obligations of the contracting authority and the operator. Currently, the contracting authorities are most often public institutions formed by associations of several municipalities cooperating together, however contracting authorities at département level are becoming more common. The separation of supply and network activities imposed by Community Directives has led to the identification of a public service with two distinct missions: on the one hand, the regulated tariff supply mission entrusted to EDF and the LDCs in their exclusive service areas and, on the other hand, the development and operation of the public electricity distribution networks, entrusted to Enedis and the LDCs in their service areas, and EDF for areas not interconnected to the continental metropolitan network. Article L. 334-3 of the French Energy Code provides that the signature of new concession agreements and amendments, as well as renewals of existing concession agreements, must be executed by three parties: the contracting authority, the distribution network manager (for the provisions relating to management of the public distribution network) and by EDF (or the LDC that has the authority in the geographic area) for supply at regulated tariffs. The current concession agreements in force are deemed to have been signed jointly by these three entities. Pursuant to Order no. 2016-65 of 29 January 2016 on concession agreements and its Application Decree no. 2016-86 of 1 February 2016, transposing Community Directive no. 2014/23/EU of 26 February 2014 into national law, concession contracts for the operation of the public distribution network and the supply of electricity at regulated tariffs are concluded by mutual agreement, that is to say without publicity and competitive bidding procedures. Rights of the contracting authorities The rights of the contracting authorities are detailed in section 1.4.4.2.2. (“Distribution Activities”) of this Reference Document. EDF’s business in France, as well as in other countries where EDF operates, is subject to regulations that are applicable to the environment, nuclear power, health, hygiene and safety. Compliance with these increasingly strict and continuously changing regulations exposes the Group to significant costs in order to ensure it does business compliantly. General regulations those are 1.5.6.1 applicable to the environment, health, hygiene and safety Environmental regulations Public involvement in environmental matters The general framework for the public’s involvement in the preparation of regulatory and individual decisions by the public authorities that have an impact on the environment is laid down in Articles L. 120-1 et seq. of the French Environment Code. These provisions apply in the absence of specific provisions that are laid down by specialised legislation. This legal framework has recently evolved with the adoption of Order no. 2016-1060 of 3 August 2016 reforming procedures to ensure public information and involvement in the development of certain decisions that may have an impact on the environment, completed by Decree no. 2017-626 of 25 April 2017. This order, which was adopted pursuant to Law no. 2015-990 of 6 August 2015 on Growth, Business and Equal Opportunities (known as the “Macron Law”), (i) introduced an opening chapter into the French Environment Code that defines the targets for public involvement and the rights of those involved, (ii) expanded the consultation procedure ahead of the decision-making process and (iii) modernised the procedures for downstream consultation. GENERAL REGULATIONS THAT ARE APPLICABLE TO THE ENVIRONMENT, NUCLEAR POWER, HEALTH, HYGIENE AND SAFETY 1.5.6

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1.5.5

PUBLIC ELECTRICITY DISTRIBUTION

CONCESSIONS

French legal system applicable to concessions In accordance with Articles L. 121-4 et seq. and L. 322-1 et seq. of the French Energy Code, and Article L. 2224-31 of the French Local Authorities Code, the public distribution of electricity is operated under a system of public service concessions. Pursuant to this body of law, the contracting authorities organise the public

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EDF I Reference Document 2017