Areva - Reference Document 2016

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9.1 Overview OPERATING AND FINANCIAL REVIEW

Test program for the bottom and closure heads of the FA3 reactor vessel In 2016, AREVA carried out the test program concerning the problem of carbon segregation in the bottom head and closure head of the Flamanville 3 reactor vessel, in accordance with the framework of the nuclear safety authority ASN’s requirements, as defined in its letter of December 12, 2015 and supplemented by that of September 26, 2016. Throughout the conduct of this program, it was subject to surveillance by the Notified Organization designated by the nuclear safety authority ASN. EDF was associated with those tests. As a reminder, this program involves carrying out mechanical tests to characterize the properties of the materials and verify their conformity. Three sacrificial parts were used. The final report was sent to the nuclear safety authority ASN on December 16, 2016. It is under review by the latter together with the IRSN. The review will end with an opinion from the ESPN Standing Group, expected in June 2017. Based on that opinion, ASN will issue a technical evaluation of the vessel’s conformity and will refer the matter to the Higher Council for the Prevention of Technological Risks (CSPRT). In addition, the Chinese safety authority conditioned the commissioning of the Taishan 1 power plant under construction on the acceptance of the Flamanville vessel demonstration report by the French safety authority. AREVA considers the results included in the report sent to the safety authority to be satisfactory. A favorable decision by the CSPRT was assumed in the financial statements for the period ended December 31, 2016. Carbon segregation of steam generator channel heads The discovery of high concentrations of carbon on the channel heads of steam generators in EDF’s fleet gave rise in 2016 to a large program of inspections, tests and analyses to demonstrate the suitability for service of those components and to recommend strengthened manufacturing processes to ASN to guarantee that these phenomena are under control. The channel heads concerned are mainly subcontracted parts and are not forged at le Creusot. The analyses provided in 2016 enabled the restart of the reactors in the EDF fleet. Some channel heads manufactured at le Creusot for steam generators in the process of being manufactured will be replaced by new channel heads. All of the corresponding work was evaluated and factored into the costs at completion of the projects concerned. The quality audit of the Creusot plant launched at the end of 2015 continued in 2016. In connection with the audit, all of the quality processes were reviewed and improvement measures are being implemented. Concerning the Creusot plant, the quality audit was supplemented by exhaustive analysis of one category of manufacturing files of forged parts (marked files), with the objective of identifying potential anomalies. Files presenting practices which are not in compliance with Creusot’s quality assurance rules were identified. The anomalies found were the subject of a technical characterization submitted to a technical committee. This work was carried out with the operators and customers concerned. The objective of this work is to validate the characterization performed and to deal with the anomalies by providing customers and the safety authorities appropriate technical justification in terms of the contractual and regulatory requirements ensuring the operability of the parts. An information and discussion process has been implemented in which the nuclear safety authorities in particular are involved. All of the customers concerned by the anomalies identified have been informed by AREVA. Quality action plan concerning the New NP manufacturing plants

To date, the analyses have found that no reported anomaly compromises the mechanical integrity of the parts concerned. Additional tests and analyses are in progress, in particular on an equipment item delivered to the Fessenheim 2 power plant, in order to respond to requests from the nuclear safety authority ASN following the suspension of the test certificate of one of the steam generators. A more extensive analysis of the manufacturing files (unmarked files) is in progress and concerns more than 6,000 files. Additional identified anomalies are being dealt with in the same way. In this regard, an anomaly on a steam generator delivered to the Flamanville 3 site was the subject of characterization for purposes of responding to requests from the safety authority. In addition, since May 2016, the analysis has been extended to the St-Marcel and Jeumont sites. No similar anomalies have been identified at those two sites as of the date of these financial statements. Tensile tests performed at the Creusot laboratory Following the deficiencies found in April 2015 concerning tensile test protocols at the Creusot laboratory, systematic verification was undertaken to justify the parts concerned through analyses or by retesting on test specimens. The identified anomalies are being dealt with in coordination with the customers. Inspection of the Creusot site by the safety authorities of several countries The safety authorities of several countries carried out an inspection of the Creusot site at the end of 2016 following the inspection protocol of the Multinational Design Evaluation Program (MDEP). Following that inspection, the U.S. Nuclear Regulatory Commission (NRC) published its report on February 22, 2017. In the report’s conclusion, the NRC estimates in particular that AREVA NP continues to meet the applicable requirements of the Code of the American Society of Mechanical Engineers (ASME). However, the NRC presented its site visit report to ASME. The Committee on Nuclear Certification (CNC) of ASME could decide to conduct an audit at le Creusot in order to identify potential deficiencies with regard to ASME’s requirements and launch a procedure for the suspension or withdrawal of the certificate(s). CNC’s concerns focus more particularly on the equipment delivered under ASME certificates other than the forgings installed in the United States, which the NRC report did not call into question. A decision to suspend or withdraw could concern all of the designs and components delivered or to be delivered by the Creusot and/or St Marcel sites. A suspension decision would prevent AREVA NP from claiming ASME certification as from the date of the suspension decision and would affect ANP’s ability to meet its contractual obligations when it has committed to delivering certified parts. However, the scope of this restriction should be put into perspective in view of the low level of backlog in progress. A decision to withdraw certification would be retroactive only to its date of delivery, i.e. August 2015. Based on our information, the CNC apparently has decided to contact the ASN for an update on the situation. It is probable that the Chalon site will be inspected by ASME in connection with this line of questioning about the current certificate.

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2016 AREVA REFERENCE DOCUMENT