EDF / 2019 Universal registration document

1. The Group, its strategy and activities Description of the Group’s activities

Activities of EDF Energy 1.4.5.1.2 Nuclear generation 1.4.5.1.2.1

Regulation Brexit and Euratom Treaty The UK voted to leave the membership of the European Union on 23 June 2016 (also see section 2.2.1 “Market regulation, political and legal risks”). Following the vote to leave, a Withdrawal Agreement (WA) and Political Declaration (PD), setting out the framework for the future relationship between the European Union and the UK after the UK’s exit from the European Union and Euratom, were originally agreed in November 2018 but were subsequently revised in October 2019. The revised documents (WA and PD) have subsequently been approved by both the UK Parliament and the EU institutions in January 2020. As a result, the UK has left the EU on 31 January 2020 and has thereafter entered into a transition period that is currently due to end on 31 December 2020. During the Transition Period, EDF Energy should not be significantly impacted by the UK’s withdrawal, particularly with regards to UK trade with the EU and the Rest of the World and required access to EU labour (people/worker mobility arrangements). Importantly, the elements of the WA and PD documents that relate specifically to “Energy” and “civil nuclear” were largely unchanged between the November 2018 and October 2019 versions. The civil nuclear section of the PD includes a commitment to a wide-ranging Nuclear Cooperation Agreement (NCA) between Euratom and the UK. The PD also states that both sides will keep the same high standards on state aid, competition, social and employment standards, the environment, climate change, and relevant tax matters. The UK Government has made good progress in addressing a number of important key issues for the civil nuclear sector that require to be addressed (for Brexit) at a national level, including: all Euratom Withdrawal issues were agreed between UK and EU; ■ the creation of a UK nuclear safeguards regime and its subsequent accreditation ■ by the IAEA; and agreement of NCAs with the USA, Canada and Australia and a new nuclear ■ cooperation agreement with Japan. In spite of this Government progress and the mitigation actions that have been taken by EDF Energy and EDF group, risks to our business remain, particularly from a “no-deal” scenario, when it comes to a future relationship after 31 December 2020. Potential impacts from Brexit include tariffs and non-tariff barriers, 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 more limited access to the skilled labour required, including for the construction of Hinkley Point C. Working with other stakeholders with respect to access to labour in a “no-deal” situation, EDF Energy is continuing to engage with UK Government on its outline proposals for its future (post Brexit) immigration system. EDF Energy will continue to monitor external events going forward and update our mitigation plans as appropriate. Capacity Market Following the decision on 15 November 2018 by the General Court of the Court of Justice of the European Union to annul the European Commission’s decision not to object to the British Capacity Market scheme on State aid grounds, the UK Government put standstill arrangements in place under which payments to capacity providers were suspended but other elements of the scheme continued to operate where possible. On 21 February 2019, the European Commission opened an in-depth investigation into the scheme. On 24 October 2019, following this in-depth investigation, the Commission approved the British Capacity Market scheme on State aid grounds and on the following day, the UK Government ordered the reinstatement of the full operation of the Capacity Market. Deferred payments in respect of the standstill period were made to capacity providers in January 2020.

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 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. In 2019, no safety events were recorded higher than Level 1 – anomaly – on the International Nuclear Event Scale (INES scale). In 2018 there was one event classed as INES 2 – incident. 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 2019, the average individual dose received by all workers on EDF Energy’s existing nuclear sites was approximately 0.055mSv. The highest individual dose received in 2019 was 4.4mSv, with the legal dose limit being 20mSv per year. 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. In addition, every ten years, the stations are subject to a more detailed and wide ranging Periodic Safety Review (PSR) of design, operational and organisational safety which must also be accepted by the ONR in order to secure continued operation. Since 2014, the following stations have received ONR acceptance for their respective PSRs: Sizewell B, Hinkley Point B, Hunterston B, Dungeness B, Hartlepool and Heysham 1. Heysham 2 and Torness PSR has taken place during 2018 with ONR acceptance received in January 2020. The next PSR due for submission to ONR is in January 2024 for Sizewell B, with their decision expected in January 2025. The AGRs were designed with a nominal 25 year lifetime, and Sizewell B with a 40 year lifetime. However, with the aggregation of technical information, and operational and safety experience of EDF Energy, it has been possible to extend the expected AGR lifetimes. Since British Energy was acquired by EDF, the AGR lifetimes have been further extended by an average of eight years. The last extensions were declared in February 2016. Hartlepool and Heysham 1 were extended by a further five years, and Heysham 2 and Torness were extended by seven years. Although the work has not yet been carried out to support the extension of Sizewell B, EDF Energy expects that it should be possible to extend it by c.20 years.

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EDF | Universal registration document 2019

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