EDF / 2018 Reference document

RISK FACTORS AND CONTROL FRAMEWORK Legal proceedings and arbitration

SHEM In order to ensure water supplies for the Canal des Nestes, concessionaires and operators of facilities located upstream (EDF and SHEM) are bound by regulatory obligations requiring them to release certain volumes of water each year (“agricultural releases”). Under an “agricultural releases agreement” dated 1 December 2003, EDF and SHEM agreed the technical and financial arrangements for the releases to be carried out by SHEM, on behalf of EDF and against payment. From October 2010 onwards, as the allocation of the facilities between EDF and SHEM had been modified by the State in SHEM’s favour following the renewal of hydroelectricity concessions, the State modified the allocation of the facilities currently affected by agricultural release obligations. As none of the facilities currently operated by EDF are affected by these obligations, EDF felt that the above-mentioned agreement dated 1 December 2003 had ceased to serve any purpose and therefore it rejected SHEM invoices for a total amount of €14.9 million exclusive of tax. In October 2016, SHEM issued proceedings against EDF with the Commercial Court in Paris to obtain the payment of these invoices, as the administrative court had ruled that it lacked jurisdiction to hear the dispute. The case was argued on 4 October 2018. In accordance with EDF's position, by a ruling handed down on 30 November 2018, the Court declared the agreement null and void and dismissed SHEM's claims in their entirety. SHEM has appealed against this decision. Action against the final investment decision for the project Hinkley Point C Authorised in an order issued on 20 June 2016, EDF SA’s central works council (hereinafter the “CCE”) filed an urgent application against EDF with the Presiding Judge of the High Court of Paris, to be heard on 22 September 2016. In particular, the CCE asked the Presiding Judge of the Regional Court in Paris, ruling in urgent proceedings, to order EDF to provide a certain number of documents and/or information to the CCE, to extend the consultation period for EDF’s CCE and to order EDF not to implement the Hinkley Point C project, and this was challenged by EDF. In a decision issued on 27 October 2016, the Presiding Judge of the High Court in Paris, ruling in urgent proceedings, held that the applications filed by the CCE were inadmissible and ordered it to pay €1,500 to EDF SA under Article 700 of the French Code of Civil Procedure. The CCE appealed this decision and a hearing took place before the Court of Appeal in Paris on 9 March 2017. A preliminary ruling on constitutionality (question prioritaire de constitutionnalité – QPC) challenging the compatibility of the law no. 2013-504 dated 14 June 2013 regarding employment protection which sets the conditions under which procedures for the information and consultation of employees representatives have to be conducted in this type of cases has been filed by the CCE. By decision dated 17 May 2017, the Court of Appeal ruled that the QPC raised by the appellants was not lacking in serious character, but did not send it to the Court of Cassation, as it had already had a QPC referred to it on the same question and therefore decided to stay the proceedings while waiting for its decision. The Constitutional Council, in its decision of 4 August 2017, validated the provisions of the French Labour Code that were disputed relative to the prearranged deadline. The proceedings were therefore resumed before the Paris Court of Appeal which, in a judgement dated 7 September 2018, ordered EDF to (i) transmit the full version of Escatha's report within one month of notification of the decision, subject to a penalty payment of €1,000 per day of delay recorded after the expiry of the deadline; and (ii) to convene the CCE "for an extraordinary meeting for consultation on the Hinkley Point C project within two months of the notification of the decision under the same penalty payment", and (iii) to pay all costs and €3,000 under Article 700 of the NCPC. However, the Court did not follow the ECC in its other requests. In particular, it did not order the suspension of the project, which can therefore continue. EDF executed the decision and filed an appeal in cassation. Greenpeace Greenpeace declared that on 24 November 2016, it lodged a complaint against EDF and its Chairman & Chief Executive Officer with the National Financial Prosecutor for market-related offences, claiming that they presented an inaccurate balance sheet and disseminated misleading information. This complaint was lodged following the work conducted by AlphaValue on EDF’s position, at the request of Greenpeace. EDF challenged AlphaValue’s findings and noted that its accounts had been audited and certified by its Statutory Auditors and that the cost of decommissioning its operational nuclear facilities had also been audited on behalf of the Ministry of the Environment, Energy and the Sea, a summary of which had been published on 15 January 2016, which on the whole backed up the Company’s estimates. EDF lodged a criminal complaint on 25 November 2016 to draw the consequences of these false allegations and misleading information.

Referral to the Paris Commercial Court by AET Within the framework of a 20-year basic electricity supply agreement entered into on 20 December 2007, for an annual capacity of 70MW, Azienda Elettrica Ticinese (“AET”), a public company of the Canton of Ticino asked the court to order a renegotiation of energy prices, claiming that the market prices had fallen below the prices agreed in the agreement since 2014 and at certain periods. As the prices in the agreement were non-negotiable and there was no hardship clause, EDF proposed to adjust the prices, in compliance with the original economic balance, stressing that it was under no obligation to renegotiate the prices. On 12 April 2016, AET issued proceedings against EDF with the Commercial Court in Paris, after the negotiations failed to result in a settlement. The Paris Commercial Court gave a decision on 4 December 2017 in favour of EDF rejecting the claims in their entirety. AET has appealed against this decision. The case is pending before the Paris Court of Appeal. Also, AET summonsed EDF on 9 November 2017 in relation to the same contract to claim a share in the benefits of 70MW capacity mechanism. The Paris Commercial Court gave a decision on 22 January 2019 in favour of EDF rejecting the claim of AET. AMF investigation Since 21 July 2016, EDF has been the subject of an investigation by the AMF into the financial information provided to the markets since July 2013. As part of this investigation, EDF has provided the AMF with certain information and a number of documents and responded to its questions. To the best of EDF's knowledge, this investigation is still ongoing and in no way implies a breach that could be attributed to the EDF Group. CRE/REMIT investigation On 1 December 2016, the CRE (Energy Regulation Commission) launched an investigation into whether EDF and its subsidiaries EDF Trading Limited and EDFT Markets Limited were guilty of engaging, since 1 April 2016, in practices that could constitute breaches of the provisions of regulation (EU) no. 1227/2011 of 25 October 2011 on wholesale energy market integrity and transparency (REMIT). The CRE informed EDF by letter dated 5 July 2018 that it had referred the matter to the Settlement of Disputes and Sanctions Committee (CoRDis). On 1 December 2016, the CRE opened another investigation aiming to determine whether EDF and its subsidiaries EDF Trading Ltd. and EDFT Markets Ltd. engaged in practices, from 1 January 2014, that could constitute breaches of the provisions of the REMIT regulation. On 14 December 2017, the CRE also opened a third investigation aiming to establish whether EDF and any other person that may have been related to it engaged in practices, from 1 January 2017, that could constitute breaches of the provisions of regulation (EU) no. 1227/2011 dated 25 October 2011 on wholesale energy market integrity and transparency (REMIT). They do not in any way mean that an offence has been committed that could be attributed to the EDF group. Re-commissioning of nuclear reactors no. 2 in Gravelines, no. 3 in Dampierre and no. 3 in Tricastin Since 2015, following the detection of a flaw on the head domes of the Flamanville EPR vessel, EDF has carried out analyses on nuclear reactors in operation at the request and under the control of the ASN. These tests were designed to ensure that the channel heads (meaning the bottom part) of the steam generators used for the 18 reactors of the 900 or 1,450MWe series operated by EDF are not affected by flaws similar to those discovered in the Flamanville EPR vessel, namely a high carbon content that could affect their mechanical toughness. During the inspections of the steam generators, carbon concentrations were detected in some parts, and only some parts, of twelve reactors equipped with channel heads manufactured by the Japanese company JCFC (Japan Casting and Forging Corporation). These reactors include those at the Gravelines (no. 2), Dampierre (no. 3) and Tricastin (no. 3) nuclear power plants. After several controls conducted by EDF during scheduled shutdowns of these reactors and the provision of additional technical information to ASN proving the fitness for service of the channel heads of these steam generators, ASN consented to the restarting of each of the above-mentioned reactors.

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EDF I Reference Document 2018