EDF / 2019 Universal registration document

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

English law: the new capacity market 1.5.2.1.4 See section 1.4.5.1.1 “United Kingdom – Strategy”. Gas market legislation 1.5.2.2 European legislation 1.5.2.2.1 Directive 98/30/EC of 22 June 1998 and Directive 2003/55/EC of 26 June 2003 were the major steps towards opening up the gas market to competition. New rules aimed at improving the functioning of the internal natural gas market were defined in Directive 2009/73/EC of 13 July 2009, and by regulation (EC) no. 715/2009 of 13 July 2009 on conditions for access to the natural gas transmission networks. Pursuant to this legislation, the network codes for capacity allocation mechanisms (CAM) and balancing rules officially entered into force on 1 November and 1 October 2015 respectively. The first requires the capacities at interconnection points between transmission networks to be commercialised by bundling the output capacity of the first network with the input capacity of the second network, and by selling these interconnection capacities via auction. This first code has been replaced by a new code from regulation (EU) 2017/459 of 16 March 2017. The purpose of the second is to harmonise the balancing rules on transmission networks. These codes have been completed by a network code on the standardisation of tariff structures for the transmission of gas from regulation (EU) 2017/460 of 16 March 2017. French legislation: the Energy Code 1.5.2.2.2 Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 was transposed into French law by Order no. 2011-504 of 9 May 2011, which organised the legislative section of the French Energy Code. The French Energy Code entered into force on 1 June 2011. Access to natural gas networks The French Energy Code provides that customers, suppliers and their agents have a right to access natural gas transmission and distribution infrastructures, as well as LNG facilities, under the terms and conditions set forth in an agreement with the operators that run them. Natural gas network operators must refrain from discriminating between users or categories of users in any way. Customers Since 1 July 2007, all customers can freely choose their supplier. Through a decision of 19 July 2017, the Council of State annulled the Decree of 16 May 2013 on regulated natural gas sales tariffs on the grounds that maintaining such tariffs is contrary to European Union law. Indeed, regulated natural gas sales tariffs do not fulfil the conditions laid down in Directive 2009/73/EC and, in particular, do not pursue any objective of general economic interest. However, that decision only annulled the disputed decree and not the regulatory provisions of the Energy Code relating to regulated natural gas sales tariffs in force since 1 January 2016. As such, regulated natural gas sales tariffs remain as long as the Prime Minister does not repeal these provisions. The Energy and Climate Law of 8 November 2019 phases out regulated natural gas sales tariffs. Regulated natural gas sales tariffs are abolished for all consumers at the following times: for non-household customers: one year after the publication of the law; ■ for household customers, the single owners of a residential building and ■ condominium associations: 30 June 2023. The Energy and Climate Law also bans the marketing of regulated natural gas sales tariffs for new sites, one month after the publication of the Energy and Climate Law. The incumbent supplier, Engie, has announced that it will cease marketing regulated tariffs from 20 November 2019. Customers supplied under regulated natural gas sales tariffs when they are phased out will automatically switch to the market-based prices of the incumbent supplier. The Energy and Climate Law also includes a mechanism to provide a supply of last resort to household consumers without a natural gas supplier and to provide an emergency supply in replacement of a supplier incapable of or barred from doing business in order to ensure continuity of supply to end consumers.

Accordingly, until the end date of regulated sales tariffs, household and non-household customers using less than 30,000kWh per year may benefit from regulated tariffs, at their request and without having to meet any conditions. After that date, new sites will cease to be eligible for regulated sales tariffs and any regulated contracts in force will be terminated at the dates set out in the Energy and Climate Law (see above). Non-household end consumers using more than 30,000kWh per year have already ceased to be eligible for these tariffs: for non-household consumers who are connected to the transmission network, ■ since 18 June 2014; for non-household consumers whose consumption level exceeds 200,000kWh per ■ year, since 31 December 2014; for non-household consumers whose consumption level exceeds 30,000kWh per ■ year, since 31 December 2015. Suppliers Article L. 443-4 of the French Energy Code defines suppliers as persons who (i) are established on the territory of a Member State of the European Union or on the territory of another State pursuant to international agreements, and (ii) hold a licence issued by the Minister for Energy. EDF is authorised to supply natural gas to non-household customers that do not provide services in the public interest, pursuant to an Order of the Deputy Minister of Industry of 14 September 2004, and, pursuant to an Order of 9 August 2005, to non-household customers that provide services in the public interest, as well as to natural gas distributors and suppliers, and, pursuant to an Order of 15 June 2007, to household customers. EDF only supplies its customers at market-based prices. Regulated sales tariffs can only be proposed by Engie and LDCs responsible for gas supply. Underground storage and third-party access to natural gas storage facilities Law no. 2017-1839 of 30 December 2017 ending the research and use conventional and non-conventional hydrocarbons and introducing various provisions relating to energy and the environment, published in the Journal officiel of 30 December 2017 has amended the rules for accessing underground natural gas storage facilities necessary for the security of supply, to establish a regulated access framework, guaranteeing the coverage of the costs borne by the operators of these facilities through the natural gas transmission network access tariffs. Suppliers will be able to subscribe to storage capacities via an auction system, the terms of which will be defined by the CRE. Obligations for suppliers to hold natural gas stocks by suppliers provided for in Article L. 421-4 of the French Energy Code have therefore been abolished. Decree no. 2018-221 of 30 March 2018 on building additional natural gas stores, mentioned in Article L. 421-6 of the French Energy Code, and Decree no. 2018-276 of 18 April 2018 amending various provisions of the regulatory section of the French Energy Code on the natural gas sector, amended the regulatory section of the French Energy Code on access to natural gas underground storage to take legislative changes introduced by Law no. 2017-1839 of 30 December 2017 into account. The Order of 9 May 2018 on taking storage capacity rented from another member state of the European Union into account when applying Article D. 421-12 of the French Energy Code repealed the decree of 31 July 2017. Lastly, the CRE implemented the reform of natural gas storage by means of three decisions issued on 22 February 2018 pertaining to (i) the tariff for using natural gas underground storage infrastructure, (ii) the terms under which storage capacity may be sold, and (iii) the introduction of a storage tariff payment in the tariff for using GRTgaz’s and TIGF’s transmission networks, to which was added, after the storage capacity auction, the CRE’s decision on 27 March 2018 to set the amount of the storage tariff payment in the tariff for using natural gas transmission networks. Control and penalties The French Energy Code grants the Minister for the Economy, the Minister for Energy and the CRE, power to oversee the gas market. The Minister for Energy may also levy a fine, or withdraw or suspend an authorisation to supply natural gas. The CRE can carry out investigations into whether offences that breach the provisions of the French Energy Code have been committed (Article L. 135-13 of the French Energy Code).

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EDF | Universal registration document 2019

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