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20.2 Notes to the consolidated financial statements for the year ended December 31, 2016
FINANCIAL INFORMATION CONCERNING ASSETS,
FINANCIAL POSITION AND FINANCIAL PERFORMANCE
20
Principles for valuing costs for dismantling and for waste
retrieval and packaging
The valuation of facility dismantling costs is based onmethods that provide the best
estimate of costs and schedules for design studies and operations:
p
for facilities in operation, this involves an upstream valuation based on a technical
and economic model produced mainly with the ETE EVAL application used for
the different types of facilities to be dismantled. It is based on an inventory of
equipment and the latter’s estimated radiological condition, and on models with
unit cost scenarios and ratios. These valuations are updated at least once every
three years and when there is a change in applicable regulations or substantial
technological developments may be expected. The valuation of the future
dismantling of the UP2-800 / UP3 plant at la Hague was thus updated in 2016;
p
for facilities that are shut down and starting from the kick-off of the dismantling
project, a series of studies and the condition of the facility are used to establish
a cost, supplemented by a risk analysis. The estimated are updated every year;
p
the costs are revised to take inflation into account and to reflect economic
conditions for the year. They are then allocated by year, adjusted for inflation
and discounted to present value, as explained in note 1.3.17. A provision is then
recognized based on the present value. The discounting reversal is recognized
in “Net financial expense”.
ASSUMPTIONS
In general, provisions related to nuclear facility dismantling and waste retrieval and
packaging are based on the following assumptions:
p
some waste from fuel treatment operations performed under older contracts
could not be processed on site, as packaging facilities were not yet in service
at that time. This waste will be retrieved and packaged following a scenario and
using technical methods approved by the regulatory authority;
p
an inventory of costs to bring the site to the target decommissioning level will be
established, with buildings generally decontaminated where they stand except
for special circumstances, and with all nuclear waste areas decommissioned to
conventional waste status. The final condition (buildings and soils) of the facilities
to be dismantled serves as a base assumption for the dismantling scenario and
cost estimates. For each facility, a dismantling plan is systematically prepared,
either during the initial license application or during the safety review. Soil cleanup
expenses, if applicable, are determined with the objective of returning the facility
to a final state of decontamination consistent with current regulations. Naturally,
this assumption reflects the future use intended by AREVA for the industrial site
in question, beyond the timeframe planned for dismantling operations;
p
operations would start without any waiting period for radioactive decay after final
shutdown of production;
p
expenses are valued based on anticipated costs, including subcontracting,
personnel costs, radiation protection, consumables, equipment and the treatment
of the resulting waste. The valuation also includes a share of technical support
costs of the entities in charge of the dismantling operations and of the related
sites, as well as taxes and insurance;
p
costs to ship radioactive waste and dispose of it at Andra facilities are estimated
and include the valuation of waste processing and disposal methods that do
not currently exist, such as:
○
estimates of future expenses for deep disposal of long-lived medium- and
high-level waste,
○
the scope and terms for Andra’s future acceptance of waste at its long-lived
low-level disposal site and deep geological repository (CIGEO).
UNCERTAINTIES AND OPPORTUNITIES
In addition to the caution of the above assumptions and in view of the duration
of the end-of-lifecycle commitments, the uncertainties and opportunities cited as
examples below are taken into account when they occur:
p
Uncertainties:
○
revision of scenarios of certain waste retrieval and packaging projects at la
Hague during the qualification of waste retrieval processes;
○
differences between the expected initial conditions of the legacy facilities and
the actual initial conditions (presence of asbestos, for example);
○
uncertainties related to changes in the nuclear safety authority’s requirements
(e.g. for final conditions and soil treatment) and to changes in generally
applicable regulations;
p
Opportunities:
○
gains generated by the learning curve and industrial standardization of
operating procedures;
○
in-depth investigations on the condition of the facilities using new technologies
in order to reduce the uncertainty related to initial facility conditions.
CONSIDERATION OF IDENTIFIED RISKS AND UNFORESEEN EVENTS
The technical cost of end-of-lifecycle operations is backed up by consideration of:
p
a prudent reference scenario that takes operating experience into account;
p
a margin for risks identified through risk analyses conducted in accordance with
the AREVA standard and updated regularly as the projects advance;
p
a margin for unforeseen events designed to cover unidentified risks.
DISCOUNT RATE
The inflation rate is set in accordance with the long-term inflation projections for
the Eurozone and taking into account the European Central Bank’s target rate.
The discount rate is set:
p
pursuant to IAS 37, i.e. based on market conditions at year-end closing and the
specific characteristics of the liability; and
p
to comply with the regulatory cap defined by the decree of February 23, 2007
and the order of March 23, 2015 amending the order of March 21, 2007.
The rate thus results from implementation of the following approach:
p
an initial estimate is made based on the moving average yield of 30-year French
OATs over a 10-year period, plus a spread applicable to prime corporate
borrowers;
p
a rate curve is then constructed based on the rate curve of the French State (OAT
rates) at the closing date, extended for non-liquid maturities using a long-term
break-even rate, plus a spread applicable to prime corporate borrowers and a
liquidity risk premium.
Based on expected disbursements, a single equivalent rate is deducted from the
rate curve constructed in this manner.
For example, the discount rate is revised based on changes in national economic
conditions, with a lasting medium- and long-term impact, in addition to the potential
effects of regulatory caps.
For facilities in France, AREVA adopted an inflation rate of 1.65%and a discount rate
of 4.10%at December 31, 2016 (down 0.40%compared with December 31, 2015).
2016 AREVA
REFERENCE DOCUMENT
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