EDF / 2019 Universal registration document

1. The Group, its strategy and activities Legislative and regulatory environment

Legislative and regulatory environment 1.5 EDF group entities are subject to a considerable array of regulations in the performance of their business activities. In particular, EDF is subject to the European legislation on the electricity and gas markets, which has been transposed into French law, as well as to the applicable environmental, nuclear power, health and safety regulations.

Public service in France 1.5.1.2 Statutory definition of public service in France

Articles L. 121-1 et seq. of the French Energy Code outline the framework for the public electricity service (see section 1.5.2.1.2 “French legislation: the Energy Code” below for a description of this regulation). Public service missions Articles L. 121-1 et seq. of the French Energy Code state that the public electricity service must develop a balanced supply of electricity, develop and operate public electricity networks and supply electricity at regulated sales tariffs. Balanced development of electricity supply mission The purpose of developing a balanced supply of electricity, which is defined in Article L. 121-3 of the French Energy Code, is to achieve the objectives defined in the multi-year energy programme (PPE). The PPE was defined by decree, and sets out priority courses of action for the public authorities for the management of all forms of energy in continental metropolitan France. It must be compatible with the greenhouse gas emission reduction targets set in the carbon budget and the low-carbon strategy, which are defined by Decree no. 2015-1491 of 18 November 2015. The PPE contains sections on (i) the security of supply, (ii) improving energy efficiency and reducing primary energy consumption, in particular fossil fuel, (iii) developing the utilisation of renewable energies and energy recovery, (iv) the balanced development of energy networks, storage and conversion, and managing the demand for energy, (v) the preservation of consumer purchasing power and the competitiveness of energy prices, in particular for undertakings that are exposed to international competition, (vi) the evaluation of the needs for professional skills in the field of energy and how training courses can be adapted to these needs, and (vii) the strategy for developing clean mobility. It defines the quantitative objectives for the plan and the maximum indicative budget for the public funds that the State and its public institutions will mobilise in order to attain them. It may be broken down by objective and by industry sector. The first PPE must cover an initial period of three years (2016-2018), then a second period of five years (2018-2023). Subsequent PPEs will be drawn up for two successive five-year periods. The first PPE was defined by Decree no. 2016-1442 of 27 October 2016 on the multi-year energy programme. Pursuant to the law, on 6 April 2017, EDF prepared a Corporate Strategy Plan (PSE) presenting the actions that the Company commits to implementing in order to meet the security of supply and electricity generation diversification objectives defined in the first period of the PPE. The PSE was submitted for approval by the Minister for Energy who, after reviewing its compatibility with the PPE, asked EDF to develop a new plan. Between 19 March and 30 June 2018 the public was invited to comment on the draft PPE covering the 2019-2023 and 2024-2028 periods. On 25 January 2019 France’s environment Ministry published the full text of the draft PPE which will form the basis of the country’s energy future in the coming years. The draft PPE was debated by various bodies that issued an opinion in 2019 (the Autorité environnementale, Conseil national de la transition écologique, Conseil supérieur de la construction et de l’efficacité énergétique, Comité de gestion des charges de service public de l’électricité, Conseil supérieur de l’énergie and Comité du système de distribution publique d’électricité). The public will be invited to give further comments online on the PPE in light of the opinion issued by the Autorité environnementale (national environmental authority). Neighbouring states will also be invited to comment.

The following review of legal and regulatory provisions is not designed to be an exhaustive description of all such provisions that are applicable to the EDF group.

EDF: a public undertaking 1.5.1 with a public service mission EDF as a public undertaking 1.5.1.1 Pursuant to the Article L. 111-67 of the French Energy Code, the state must remain the owner of at least 70% of its capital. Furthermore, as an undertaking in which the French State holds a majority share, EDF is subject to the provisions of Order no. 2014-948 of 20 August 2014 on the governance and equity transactions of companies with a public shareholding and its Application Decree no. 2014-949 of the same date. In accordance with the legislation that applies to all undertakings of which the State is a majority shareholder, EDF may have to undergo certain State audit procedures, in particular through an economic and financial evaluation assignment, pursuant to Decree no. 55–733 of 26 May 1955 on State economic and financial evaluation and Decree no. 53–707 of 9 August 1953 on State evaluation of national public undertakings and certain organisations, the purpose of which has an economic or social component. EDF also has to undergo the audit procedures performed by the French General Accounting Office ( Cour des Comptes ) and Parliament. Thus, in addition to the control performed by the Statutory Auditors, the Company’s accounts and management and, where applicable, those of its directly-held majority subsidiaries, fall under the control of the French General Accounting Office, in accordance with Articles L. 111-4, L. 133-1 and L. 133-2 of the French Code of Financial Jurisdictions. Moreover, the Legislative Decree of 30 October 1935 laying out the State’s control over firms, consortia and organisations or companies of any kind calling on State financial aid allows the Minister for the Economy to have EDF audited by the General Finance Inspection Office. Lastly, the disposal of EDF shares by the State, or the dilution of the State’s stake in EDF’s capital, is subject to a specific procedure under Order no. 2014-948 of 20 August 2014 on the governance and equity transactions of companies with a public shareholding. Directive no. 2014/24/EU on Public Procurement and Directive no. 2014/25/EU on Procurement by Entities Operating in the Water, Energy, Transport and Postal Services Sectors, to which EDF is subject as a purchaser, have been transposed into French domestic law by: order no. 2015-899 of 23 July 2015 on public procurement contracts, which ■ unified the various competitive tendering procedures that previously existed in the French Public Procurement Code and Order no. 2005-649 of 6 June 2005; decree no. 2016-260 of 25 March 2016 that implemented the Order of 23 July ■ 2015. These texts entered into force on 1 April 2016.

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EDF | Universal registration document 2019

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