EDF / 2018 Reference document

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PRESENTATION OF EDF GROUP Description of the Group's activities

In 2018, more than 19,200 photovoltaic self-consumption facilities were also connected, representing close to 80% of the year's connections for small producers. In addition, Enedis has continued its efforts to develop capacities for accepting renewable energies, by implementing construction work on sources as part of the regulatory framework in the regional plans for the grid connection of renewable energies. Electricity market The French electricity sales market has been open to competition for all customers since 1 July 2007. 65 electricity suppliers, operating on the French market, have a contract with Enedis. This contract establishes the terms and conditions for the supplier and the distributor in the event that a customer subscribes to a single contract covering the supply and delivery of electricity. The supply market is facing sharply increased levels of competition, for subscribed power supply greater than 36kVA, since the elimination of regulated sales tariffs at the end of 2016, as well as for subscribed power supply below 36kVA. Over a hundred new third-party players likely to use data on customer consumption with the latter's authorisation contribute to the market's dynamism. Concessions At 31 December 2018, Enedis and EDF were co-concession holders of 475 concessions contracts, covering around 95% of the population. The concession contracts are generally concluded for a period of 20 to 30 years. In France, public electricity distribution is operated under a concession plan that derogates from common law on local public service concessions. Enedis is thus designated by the law (Article L. 121-4 of the French Energy Code) to carry out the development and operation of the public distribution networks (rational service of French territory by public distribution networks, connection and access in accordance with non-discriminatory conditions to the public distribution networks). The company carries out this role over the majority of French territory, with the exception of the zones which are not interconnected to mainland France, in which this same role is the responsibility of EDF, and of the exclusive service zone of the LDCs (Local Distribution Companies). On 21 December 2017, FNCCR, France Urbaine, EDF and Enedis signed a framework agreement based on a new concession agreement model. Twenty-five years after the 1992 agreement with FNCCR, this new framework agreement includes France Urbaine which represents municipalities, large urban inter-municipalities and cities of which the majority of the members have contracting authority status for the public distribution of electricity. The new standard agreement endorsed by this agreement restates the principles of the French concession model: public service, regional solidarity and national optimisation, while at the same time taking into account issues involving energy transition. The official introduction of this new model opens the way to a modernised and lasting relationship between Enedis and the concession contracting authorities. Since 2018, concession contract renewals have been finalised and new negotiations engaged with a view to renewing all current contracts before the end of 2021. At 31 December 2018, close to 60 concession contracts had thus been renewed on the basis of the new model. Moreover, some sixty concession contracting authorities have already undertaken to renew their contract on this basis by 2021 at the latest. Pursuant to Article L. 334-3 of the French Energy Code, concession contracts entered into or amended since the creation of Enedis (under its previous name ERDF), are jointly signed by the contracting authority (local authority or public cooperation institution), by EDF (or territorially competent LDC) for the “regulated tariff supply” portion, and by Enedis (or territorially competent LDC) for the “distribution network” portion. The other current concession contracts are deemed to have been signed in accordance with the same principles.

Within the limits fixed by the law and by the jurisprudence, the contracting authorities are the owners of the distribution networks which constitute returnable assets. (1) . See also sections 1.4.2.2.5 “Public electricity distribution concessions at regulated tariffs” and 1.5.6.2.7 “Regulations applicable to public procurements”. Service shared by Enedis and GRDF 1.4.4.2.3 The service shared by Enedis and GRDF, defined by Article L. 111-71 of the French Energy Code, sets out, in the electricity and gas distribution sector, to build installations, manage works projects, operate and provide maintenance for the networks, and conduct metering operations. It does not have the status of a legal entity. Enedis and GRDF are related through an agreement that sets out their relations in the framework of this common service, the scope of said service and the sharing of costs resulting from it. Concluded for an open-ended period, it can be revoked at any time, provided a prior notice of 18 months is given, during which the parties commit to renegotiating. It is updated regularly. In July 2014, Enedis and GRDF signed a joint communiqué taking note of the scheduled phasing out of the joint activities of meter reading and interventions on meter panels. To date, Enedis has favoured an organisation through the regional directorates integrating all its operational missions at the local level. A more detailed fabric is reserved for local activities. In March 2018, Enedis and GRDF decided on the creation of two mixed entities: UONRH-MS which encompasses employment contracts, studies and medical and social matters; and OIT, the IT and Telecoms Operator which encompasses all telephony and office automation activities. The creation of these two mixed entities takes effect on 1 January 2019. For Enedis, the other support activities (Vehicles & Machines, Disputes and Insurance, Training and Recruitment, and Purchase of services) are grouped under a Support Services Department. Future challenges 1.4.4.2.4 Smart grids and smart meters (Linky) Enedis, guarantor of the electricity distribution public service, invests at all times to develop, modernise and secure the electrical network. The adaptation of the electricity grid to the new needs of society is a major strategic challenge. To achieve this, Enedis has started the industrial deployment of the Linky system, based on a new generation of meters, called “smart meters” that can receive orders and send data without the physical involvement of a technician. This system represents the first stage of smart grid implementation or “Smart networks”. It involves equipping the distribution network with connected objects, including the Linky meters, in order to integrate renewable energy electricity generation, which has undergone a significant expansion, further ensuring the balance between generation and consumption at all points of the electricity grid, and enabling suppliers to offer new energy solutions to their customers. In 2018, the latter put in place new contractual offers made possible with the introduction of Linky on a large scale (differentiated and lower tariffs, for example for the use of “green” electricity generated through photovoltaic panels). With Linky, electricity consumption curves per day, per week or per month are available to customers. This facilitates the management of energy consumption and is a concrete lever that meets the expectations of the public authorities responsible for energy transition. Following a successful experiment, approved by the French government, on 1 December 2015, Enedis launched the first phase of the generalised deployment of the Linky meters, which represents a total investment of €4,045 million (2) over the period 2014-2021.

Returnable assets are those that must imperatively be returned to the granting authority at the end of the concession. Such property is deemed to belong to this local authority (1) from the outset. They are defined by the concession contract or even by the law. By default, generally qualified as such are the assets that are indispensable to the performance of the concession service. The programme completion costs were reviewed downward, from €4,455 to 4,045 million for the period 2014-2021, after taking into account prices of the latest contracts (2) signed for equipment (meters and concentrators) and for installation services.

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I Reference Document 2018