EDF / 2018 Reference document

FINANCIAL STATEMENTS Notes to the financial statements

3.5

COMPENSATION FOR PUBLIC

For the tariff changes of 2018, the CRE, in accordance with the NOME Law, issued a decision on 11 January 2018 proposing that the Government should raise the “blue” regulated tariffs for residential customers by +0.7% and for non-residential customers by +1.6%. This proposal was confirmed by a tariff decision of 31 January 2018 published in the Journal officiel of 1 February 2018, and implemented at that date. The tariff change of summer 2018 followed the same process. Considering the TURPE adjustment of 1 August 2018 and in application of the French Energy Code, in a decision of 12 July 2018 the CRE proposed a -0.5% reduction in the “blue” regulated tariffs for residential customers and a +1.1% increase in the “blue” tariffs for non-residential customers. The same CRE decision, citing the Council of State’s decision of 18 May 2018, included the phasing out of “blue” tariffs for non-residential customers for all large business sites, suggesting a definition for determining the scope of large businesses based on “decree 2008-1354 of 18 December 2008 on the criteria that will determine the category to which a business belongs for the purposes of economic and statistical analysis”. All items of the CRE’s proposal were approved in a tariff decision of 27 July 2018, published in the Journal officiel of 31 July 2018 and implemented on 1 August 2018. In a decision of 7 February 2019 published on 12 February 2019, the CRE proposed an increase of 7.7% (excluding taxes) in the “blue” regulated tariffs for residential customers and non-residential customers. The date of application is as yet unknown. The government has three months to make an objection to this decision. 3.3 After Law 2017-1839 of 30 December 2017 confirmed the CRE’s competence for supplier commissioning, the CRE issued a new decision on 18 January 2018, published in the Journal Officiel of 25 January 2018. This decision reiterated the principles adopted in its previous decision of 26 October 2017 regarding remuneration payable by distribution network operators to suppliers for their management of customers under a single contract. The content of these decisions upholds the principle of identical commissions for all suppliers selling single-contract market-price offers. Only regulated electricity tariffs will give rise to slightly lower commissions (€4.50 instead of €6.80 per point of delivery until 1 August 2019), and this difference will be progressively reduced to zero by 1 August 2022. For remuneration of past customer management charges (prior to 1 January 2018), the CRE’s decision sets an amount it considers as a cap that can be passed on through the TURPE tariff. However, Law 2017-1839 of 30 December 2017 introduced a measure intended to rule out the possibility of suppliers receiving remuneration from network operators for past customer management services. 3.4 On 22 March 2018, the CRE published its consultation on the levels of contribution due to the Electricity Equalisation Fund for EDF SEI and Électricité de Mayotte for the years 2018 to 2021. The annual average contribution to the Electricity Equalisation Fund for EDF SEI over this period, including the planned smart metering system, is €185 million. SUPPLIER COMMISSIONING ELECTRICITY EQUALISATION FUND

ENERGY SERVICE CHARGES (CSPE)

Legal and regulatory framework The compensation mechanism for public energy service charges (compensation des charges de service public de l’énergie) results from a reform introduced by France’s amended finance law for 2015, published in the Journal Officiel on 30 December 2015. Under the legislative and regulatory framework, the public energy service charges (electricity and gas) were to be compensated via two State budget items included in France’s finance laws from 2016 onwards. The initial finance law for 2019 marks a continuation from 2018, defining the following charges for 2019: a special “Energy Transition” budget item of €7.3 billion, principally to ■ compensate for the additional costs associated with all contracts obliging the operators to purchase renewable energies and biogas and the annual contribution to repayment of the accumulated shortfall in compensation due to EDF; a “Public Energy Service” item of €3.3 billion in the general budget to cover ■ solidarity charges borne by gas and electricity suppliers, costs associated with purchase obligations excluding renewable energies (essentially cogeneration), and the cost of applying the standard national tariffs to zones that are not connected to France’s mainland network. The interest on the accumulated shortfall to be repaid to EDF is also funded through the general budget. Since 1 January 2018, the “basic necessity” (Tarif de première nécessité) rates for electricity and the “special solidarity” (Tarifs spéciaux de solidarité) rates for gas have been replaced by an energy voucher system. The cost of this system is not borne by EDF, but has been budgeted by the State in the “Public Energy Service” programme. However, EDF will bear solidarity charges in 2019 for the national housing solidarity fund and services for vulnerable customers. In 2019, this mechanism of compensation for public service charges is funded as follows: the costs linked to the energy transition, which correspond to the subsidy ■ mechanisms for renewable energies, and the reimbursement of the past accumulated shortfall in compensation borne by EDF as measured at 31 December 2015, are registered in a special “energy transition” budget item created by the amended finance law for 2015. Law no. 2016-1917 of 29 December 2016 (the finance law for 2017) stipulated that the two sources of additional funding for this special budget item would be a portion of the domestic tax on coal, lignite and coke (TICC), and a portion of the domestic tax on energy products (TICPE). The finance law for 2019 replaces the percentages of the TICC and TICPE by a set amount, to avoid the uncertainties of forecast income from these taxes, and broadens the sources of funding for the “Energy transition” budget item by including the proceeds of auctions of Guarantees of Origin as allowed by Article L. 314-14-1 of the Energy Code; other public service charges – excluding costs associated with the subsidy ■ mechanisms for renewable energies (fuel poverty, tariff equalisation in zones that are not connected to France’s mainland network, cogeneration, the budget for the energy ombudsman, etc.) are registered directly in the general budget; income generated by the domestic tax on the final consumption of electricity, ■ now renamed the Contribution to Public Electricity Service (Contribution au service public de l'électricité – CSPE) goes directly into the general budget. The CSPE tax is collected directly from final consumers of electricity in the form of an additional levy on the electricity sale price (and collected from electricity suppliers), or directly from electricity producers that produce electricity for their own uses; the level of the CSPE tax is the same in 2019 as in 2018 with the full rate set at ■ €22.5/MWh, and eight reduced rates ranging from €12/MWh to €0.5/MWh depending on criteria of electro-intensiveness, business category and the risk of carbon leakage from installations (the risk of industries relocating to countries where greenhouse gas emissions are higher due to their electricity mix).

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EDF I Reference Document 2018