EDF / 2018 Reference document

PRESENTATION OF EDF GROUP Description of the Group's activities

In any case, the UK will continue to be a member of the International Atomic Energy Agency (IAEA) and work with international parties to ensure it continues to meet relevant international standards. The UK has signed a replacement, bilateral voluntary offer safeguards agreement with the IAEA that is on track for ratification by 29 March 2019. Capacity Market On 15 November 2018 the General Court of the Court of Justice of the European Union found in favour of Tempus Energy against the European Commission, annulling the European Commission’s decision not to object to the UK Capacity Market on state aid grounds. As a consequence, the UK Government has suspended capacity payment to generators. The Government has said that it will be working closely with the Commission so that the Capacity Market can be reinstated as soon as possible. In the meantime the Government has asked National Grid and the Electricity Settlement Company to continue to operate the Capacity Market as normal (so far as is possible) and confirmed its intention to hold a "T-1" replacement additional auction in mid-2019 (for delivery late 2019/early 2020) that will give successful bidders "conditional capacities". The government would like capacity providers to be eligible for differed payments after the standstill period. However, deferred payments, whether related to agreements on existing capacities or future auctions, remain subject to State aid clearance from the European Commission; on 21 February 2019, the European Commission announced that it was opening an in-depth investigation into the British capacity market scheme. Activities of EDF Energy 1.4.5.1.2 Nuclear generation 1.4.5.1.2.1 EDF Energy owns and operates eight nuclear power stations in the UK (15 reactors) with a total capacity of 8.9GW. Since 2009, Centrica plc. (“Centrica”) has held a 20% shareholding in Lake Acquisitions Limited, the company in which the nuclear generation assets sit (except Nuclear New Build). Nuclear generation fleet technology Seven of the eight nuclear power stations are Advanced Gas-Cooled Reactor (AGR) power stations (Dungeness B, Hartlepool, Heysham 1, Heysham 2, Hinkley Point B, Hunterston B and Torness) and the eighth, Sizewell B, is a Pressurised Water Reactor (PWR) power station. Safety and radiological protection Nuclear safety is EDF Energy’s overriding priority. As in 2017, no major safety event was recorded for the EDF Energy fleet in 2018. In 2018, EDF Energy declared 1 significant safety event (SSE) classified as INES (1) 2 on an AGR site (no INES 2 SSE in 2017). EDF Energy operates to strict procedures to minimise and control the radiation doses received by employees and contractors at all of EDF Energy’s existing nuclear power stations. In 2018, the average individual dose received by all workers on EDF Energy’s existing nuclear sites was 0.058mSv, the legal dose limit being 20mSv per year. The highest individual dose received in 2018 was 7.2mSv. The operating lifetime of the nuclear power plants The actual lifetime of each power station will be determined primarily by the technical and economic practicability of supporting its safety case. This is assessed at each statutory outage for the following operating period through inspection, maintenance, testing and assessment of plant performance. Following the outage, consent is required from the Office for Nuclear Regulation (ONR) before restarting the reactor. The operating period between statutory outages is normally three years for the AGR power stations and eighteen months for Sizewell B.

Pensions Infrastructure Platform, transferring a 49% minority stake in 24 of its wind farms (around 550 MW). EDF Energy will continue to buy all of the energy produced, as well as the Renewable Obligation Certificates for energy generated by wind farms under standard market conditions. Regulation Brexit and Euratom Treaty The UK voted to leave the membership of the European Union on 23 June 2016. This led to a devaluation of sterling impacting the GBP/EUR exchange rate. Further depreciation in the value of sterling is expected if there is a “no deal”. Also see Section 2.1.2 "Risks related to the competitive and general context", and the risk factor entitled: "Description 2H: The United Kingdom's exit from the European Union is likely to have an adverse effect on overall economic conditions, the financial markets and EDF's activities". The European Council of 25 November 2018 approved the withdrawal agreement and the Political declaration setting out the framework for the future relationship between the European Union and the United Kingdom after the United Kingdom's exit from the European Union and Euratom. Energy and civil nuclear are referenced in the Declaration, ensuring both will be on priority list in the future relationship negotiations. The civil nuclear section of the Political Declaration includes a commitment to a wide-ranging Nuclear Cooperation Agreement between Euratom and the UK. Before any Brexit decisions are implemented, the agreement must be approved by the House of Commons. The Group has been reviewing the impact of the UK’s exit from the Euratom Treaty (“European Atomic Energy Community”) together with broader Brexit issues. A comprehensive company-wide impact assessment exercise has led to the development and implementation of a number of mitigations required to address the key risks, particularly focusing on a ‘no-deal’ scenario. The UK Government has also made good progress in addressing a number of important key issues for the civil nuclear sector that require to be addressed at a national level, including: all Euratom Withdrawal issues were agreed between UK and EU; ■ the creation of nuclear safeguards specific to the United Kingdom; ■ nuclear cooperation agreements with the US, Canada and Australia and a new ■ nuclear cooperation agreement with Japan by end March 2019. Taking the UK Government and the EDF mitigation actions together, these should address the most serious potential impacts arising from Euratom and the broader Brexit. Potential impact from Brexit include tariffs and non-tariff barriers and the risk of delays at ports/airports creating disruption to supply chains (and potentially impacting plant performance and the Hinkley Point C construction schedule) and also the ability to access skilled labour, including for the construction of Hinkley Point C. With respect to labour mobility, the UK Government has recently published a white paper on its proposals for the post-Brexit immigration system. Furthermore, on 29 January 2019 the British government announced that given the amount of time required to implement the new British immigration system (which is not set to take effect until at least 2021), transition measures would be applied from 30 March 2019. This means in practice that there will only be limited changes to UK mobility and incoming labour between now and the beginning of 2021.

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International Nuclear Event Scale. (1)

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EDF I Reference Document 2018