EDF / 2019 Universal registration document

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

Article L. 334-3 of the French Energy Code provides that the signature of new concession agreements and amendments, as well as renewals of existing concession agreements, must be executed by three parties: the contracting authority, the distribution network manager (for the provisions relating to management of the public distribution network) and by EDF (or the LDC that has the authority in the geographic area) for supply at regulated tariffs. The other current concession agreements in force are deemed to have been signed jointly by these three entities. In accordance with Order no. 2016-65 of 29 January 2016 on concession contracts and its implementing Decree no. 2016-86 of 1 February 2016, which transposed Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 into French domestic law, concession contracts for the operation of the public network for the distribution and supply of electricity at regulated tariffs are awarded directly, i.e. without a contract notice or competitive tendering procedure. The ELAN Housing bill adds chapter 5 about rising mains to the section of the French Energy Code on accessing and connecting to electricity networks. Rising mains put into service after the law is published will belong to the public distribution network. Those put into service before the law is published must be integrated into the public distribution network within two years as from 24 November 2018. Owners and joint owners can apply to have their rising mains integrated ahead of time. They can also choose to retain ownership of the mains. Rights of the contracting authorities The rights of the contracting authorities are set out in section 1.4.4.2.2 (“Distribution activities”) of this Universal Registration Document. Since 1996, three European Directives have been issued to set out the common rules for the generation, transmission, distribution and supply of electricity. Directive 96/92/EC of 19 December 1996 laid the foundation for opening up the electricity market to competition. Directive 2003/54/EC of 26 June 2003 reiterated the major principles and took an additional step on the path to opening up the market, by progressively expanding eligibility to all customers. Directive 2009/72/EC of 13 July 2009, known as the “Third Directive”, was adopted as part of the third “Energy Package”. This Directive primarily strengthens the guarantees of the independence of transmission system operators and increases the power of the national regulatory authorities. These provisions have now been incorporated into the French Energy Code. These texts have been reformed by regulation 2019/943 on the internal market for electricity and Directive 2019/944 of 5 June 2019 on common rules for the internal market for electricity. Although they restate the main principles governing the operation of the market for electricity defined in the previous legislation, they do strengthen the role of the consumer and take into account new forms of generation and consumption (storage, self-consumption, etc.). Moreover, the rules that govern the conditions for access to the network for cross-border exchanges in electricity are currently defined by regulation (EC) no. 714/2009 of the European Parliament and of the Council of 13 July 2009, which is part of the third Energy Package. This regulation, inter alia, provides for a compensation mechanism between transmission system operators for the costs incurred by hosting cross-border flows of electricity on their networks. This compensation is paid by the operators of the national transmission systems from which cross-border flows originate and the systems where those flows end. Finally, the “Security of Electricity Supply” Directive 2005/89/EC, which was adopted on 18 January 2006, is designed to provide a better definition of the responsibilities of the various operators, ensure that minimum operational standards are respected, maintain balance between demand and supply, and channel investments toward the systems. The objectives of this Directive have been taken into account in various French laws and regulations. These regulations concern the organisation of the wholesale and retail markets for electricity, and are designed to give increased importance to consumer-centred measures. They are also an opportunity to confirm or propose new European targets Energy markets 1.5.2 Electricity markets 1.5.2.1 European legislation 1.5.2.1.1

for 2030 in terms of energy efficiency (30%) and renewable energy (32%). A new regulation is proposed for security of supply, and a revised regulation is proposed concerning the Agency for the Cooperation of Energy Regulators (ACER). All these regulations are intended to create a more cohesive organisational framework for the electricity markets, for the benefit of the European energy and climate policies, as part of the planned European Energy Union. The regulation on the Governance of the Energy Union completes the package and specifies the method for monitoring the achievement of targets by the Member States. French legislation: the Energy Code 1.5.2.1.2 The various pieces of legislation on energy law  (1) were incorporated into the French Energy Code by Order no. 2011-504 of 9 May 2011, with the exception of the majority of the provisions on nuclear energy, which were incorporated into the French Environment Code, pursuant to Order no. 2012-6 of 5 January 2012. Moreover, Decree no. 2015-1823 of 30 December 2015 organised the regulatory section of the French Energy Code. Consequently, around one hundred decrees on energy law have been repealed. The Law of 17 August 2015 on Energy Transition for Green Growth amended numerous provisions of the French Energy Code, and in particular the objectives of the energy policy, which are now focused on the emergence of a competitive economy that creates an abundance of jobs through the mobilisation of all the industrial sectors (in particular the green growth sectors), security of supply and the reduction of reliance on imports, competitive and attractive energy prices, the preservation of human and environmental health, social and territorial cohesion, the fight against fuel poverty, and contributing to the implementation of a European Energy Union. The Energy and Climate Law no. 2019-1147 of 8 November 2019 transposes into French law some of the measures enacted in the documents making up the “Clean Energy for all Europeans” package and updates the targets of the energy policy to reflect the Climate Plan adopted in 2017, the National Low-Carbon Strategy (SNBC) and the multi-year energy programme (PPE). The new targets are as follows: - carbon neutrality by 2050: 40% reduction in fossil fuel use compared to 2012 by 2030 (up from the previous target of 30%); - target of reaching a 50% nuclear share in the electricity mix postponed to 2035 (from 2025) (closure of 14 reactors). The law also introduces a Haut Conseil pour le climat (High Council for Climate). Its role is to assess the government’s climate action. It is tasked to analyse, once a year, the implementation and effectiveness of the measures adopted to reduce greenhouse gas emissions, develop carbon sinks and reduce the carbon footprint, including budgetary and fiscal provisions with an impact on the climate. The law also sets up a mechanism to limit greenhouse gas emissions from the electricity generation sector from 1 January 2022. The working life of the most polluting power plants is capped. Generation facilities Anyone can operate an electricity generation facility provided that, above a certain power threshold determined by decree, an operating licence issued pursuant to Article L. 311-5 of the French Energy Code is obtained. The powers and responsibilities of local authorities with regard to electricity generation are defined in Articles L. 2,224-32 and L. 2,224-33 of the French Local Authorities Code, and in Article 88 of Law no. 2010-788 of 12 July 2010 on the national commitment to the environment. Regulated Access to Electricity from the Existing Nuclear Fleet (ARENH) The rules governing Regulated Access to Electricity from the Existing Nuclear Fleet (“ARENH”), provided for in Articles L. 336-1 et seq. of the French Energy Code, have been implemented since 1 July 2011. See section 1.4.3.3 “Regulated access to historic nuclear power ( accès régulé à l’énergie nucléaire historique , or ARENH)” on this point. The Energy and Climate Law revised the ARENH mechanism by (i) specifying that it contributes to price stability for the end consumer, and (ii) increasing the upper limit of the ARENH maximum overall volume to 150TWh. Article L. 337-16 also specifies that changes in the consumer price index and the maximum overall volume that can be sold from the existing nuclear fleet may be taken into account to revise the ARENH price. However, there is no direct link between price increases and increases in the maximum overall volume.

(1) Law of 15 June 1906, law no. 46–628 of 8 April 1946, law no. 2000-108 of 10 February 2000, law no. 2003-8 of 3 January 2003, law no. 2004-803 of 9 August 2004, law no. 2006-1537 of 7 December 2006, law no. 2010-1488 of 7 December 2010.

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EDF | Universal registration document 2019

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