EDF / 2018 Reference document

PRESENTATION OF EDF GROUP Description of the Group's activities

In the electricity and gas markets many suppliers have been proposing offers to businesses and local authorities since the early 2000's. For residential customers, competition has intensified significantly since 2017 with the entry into the market of gas and electricity suppliers well established in other activities or geographical areas. To supply their customers in 2018, EDF’s alternative suppliers had access to their own generation capacities as well as to the wholesale electricity market and the ARENH for around 82TWh. During the November 2018 application process, the demand from alternative providers reached 132.98TWh for an ARENH distribution volume of 100TWh. See also section 1.4.3.3 “Regulated access to historic nuclear power (Accès Régulé à l’Énergie Nucléaire Historique, or ARENH)”. Regulated electricity sales tariff 1.4.2.1.3 contracts Access to regulated electricity tariffs Since the NOME Law entered into force in 2010, the situation for electricity, by category of customer, is as follows: domestic and non-domestic final consumers who have subscribed power for ■ their site(s) not exceeding 36kVA: these customers benefit from regulated sales tariffs. They can freely switch back and forth between regulated tariffs and market offers; domestic and non-domestic final consumers who have subscribed power for ■ their site(s) exceeding 36kVA: since 1 January 2016 these sites can no longer subscribe to regulated sales tariff products which were cancelled on 31 December 2015; domestic and non-domestic final consumers for their site(s) located in areas not ■ connected to the continental metropolitan network: these customers have the right to regulated sales tariffs; on 1 January 2018 the basic necessity tariff offered since 1 January 2005 was ■ replaced with the energy cheque which came into effect after trials in 2016 and 2017 in the Ardèche, Aveyron, Côtes d’Armor and Pas-de-Calais départements. Tarifs bleus” (blue tariffs applicable mainly to households and small companies) - decisions of the Council of State of 18 May 2018 and 3 October 2018 Appeals were lodged by Anode and Engie before the Council of State against the tariff decisions of 2016 and 2017 on the grounds that the regulated electricity sales tariffs known as “Tarifs bleus” for households and small companies do not comply with European law. Ruling on these appeals and by decisions of 18 May and 3 October 2018, the Council of State accepts the principle of regulated electricity tariffs, recognising in particular that they pursue the objective of general economic interest of guaranteeing that consumers pay for electricity at a price which is more stable than market prices. The Council of State confirmed that this objective can only be met by a less restrictive state intervention than a general electricity unit price regulation and that the regulation on “Regulated electricity tariffs” (TRV in French) guarantees equal access to consumers by electricity companies and is not discriminatory. However, the Council of State considered that the regulation was disproportionate as to its permanent duration and its scope of application, which now includes the sites of large companies with a subscribed power of less than 36kVA. These elements justify the partial cancellation of the tariff decisions of 28 July 2016 and 27 July 2017. The onus is now on the French government to implement these decisions. It is now working on the necessary legislative measures through the future Pacte law. “Tarifs bleus” - tariff changes Since 8 December 2015, in accordance with Articles L. 337-4 and L. 337-13 of the French Energy Code (“NOME law”), the CRE has been responsible for notifying the ministries in charge of the economy and energy of its justified proposals for regulated electricity sales tariffs (TRV). If there is no opposition to the latter before a deadline of three months, such proposals are deemed to have been approved. Regarding 2018 tariff changes, the CRE, in accordance with the NOME law, proposed to the Government by a deliberation dated 11 January 2018 an increase of +0.7%, excluding tax in residential “Tarifs bleus” and +1.6% excluding tax in

non-residential “Tarifs bleus” This proposal, confirmed by a tariff decision dated 31 January 2018, published in the “Journal Officiel” on 1 February 2018 was implemented on 1 February 2018. Thereafter, the tariff level of summer 2018 was also changed in accordance with this process: given the change in TURPE on 1 August 2018 and pursuant to the French Energy Code, the CRE proposed in a deliberation dated 12 July 2018 a reduction of -0.5% excluding tax in residential blue tariffs and an increase of +1.1% excluding tax in non-residential “Tarifs bleus” Furthermore, referring to the decision of the Council of State of 18 May 2018 as set out above, it also included in its deliberation of 12 July 2018 the abolition of non-residential “Tarifs bleus” for all sites of large companies, by suggesting a definition to be used to determine the scope of large companies, based on “Decree 2008-1354 of 18 December 2008 relating to criteria enabling the membership category of a company to be determined for the purposes of statistical and economic analysis.” The CRE's proposal, in its entirety, was confirmed by a tariff decision dated 27 July 2018, published in the Journal Officiel on 31 July 2018 and implemented on 1 August 2018. With respect to 2019 tariff changes, the CRE proposed to the government, via the decision of 7 February 2019 published on 12 February 2019, that residential and non-residential “Tariffs bleus” be increased by 7.7%, excluding tax. The proposal was reached by taking into account the rise in costs resulting from several components of electricity regulated sales tariffs (TRV), primarily wholesale energy costs and the price of capacity guarantees, as well as the effects of the ARENH’s capping mechanism. The date this will be brought into effect is not known. The Government has a three-month period in which to refuse. Electricity supply contracts 1.4.2.1.4 In France, customers are free to leave the regulated sales tariffs at any time and without prior notice for a market offer proposed by any other supplier, including EDF. With the exception of customers directly connected to the transmission network, who must sign separate supply and delivery contracts, all other customers may enter into a single contract with the supplier of their choice for their electricity supply and transit. In this respect, a commissioning is paid by the distributor to any supplier offering a single contract to its customers since, by doing so, it fulfils obligations on behalf of the distributor. The quality of supply, which is the distributor's responsibility, is monitored on a regular basis under contracts with the distributors. EDF monitors the impact of outages and the quality of supply to its customers and their satisfaction with the aim of working with the distributor on a continuous improvement basis (see section 1.4.4.2.2 “Distribution activities”). The Customer Division 1.4.2.2 EDF’s sales and supply activities in France (excluding overseas departments and Corsica) are managed by the Customer Division. Presentation and supply strategy 1.4.2.2.1 In France, EDF markets energy and services to nearly 30 million customer sites (excluding overseas departments and Corsica). On the electricity market, EDF’s sales in 2018 were close to 280TWh, excluding LDCs, which represents a market share of almost 65%. EDF provides gas supply to all types of customers. In 2018, EDF marketed 31TWh of gas (compared with 30.1TWh in 2017), which represented a market share of 6.6%, to more than 1.5 million customers. Besides gas and electricity supply, EDF accompanies its customers through energy efficiency offers and new decentralised energy solutions. Furthermore, in order to meet the expectations of its customers and assist them with the digital revolution in progress, EDF is continuing to digitise its products and customer relationship management. These efforts are being channelled through EDF Pulse Studio, the Group's innovation accelerator, which supports initiatives by means of an internal ecosystem and a network of external partners. EDF also has its Smart Lab dedicated to innovative applications, for example in artificial intelligence. The Group continues to lead the way in energy innovation and customer service. It also intends, in relation to its residential customers, to combine “sustainable well-being at home” with an economic and societal promise.

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EDF I Reference Document 2018