EDF_REGISTRATION_DOCUMENT_2017

2.

RISK FACTORS AND CONTROL FRAMEWORK Insurance

Storm cover 2.5.5.3 In connection with the renewal of the storm insurance coverage, Enedis signed with Swiss Re on 27 June 2016 a parametric insurance contract covering the aerial transmission network against the consequences of exceptional storms. With a term of five years and total cover of €275 million, this innovative insurance contract triggers, in the event of a claim, parametric compensation based on a composite index for wind speeds recorded by Météo-France stations weighted by the vulnerability of the distribution network in each region of the Enedis concession area. Cyber risk cover 2.5.5.4 Since 1 July 2017, cyber risk cover has been put in place. It is €100 million coverage policy underwritten for two years, which covers all entities of EDF SA and the subsidiaries of the Group. Its purpose is to cover the expenses necessary to handling major disorders caused by a cyber-attack against the group's information systems. In France, EDF’s current insurance policies are in compliance with French Act no. 68-943 of 30 October 1968, Act no. 90-488 of 16 June 1990, and Act no. 2006-686 of 13 June 2006 (known as the “TSN” Act), now codified in the French Environmental Code and which codified the civil liability obligations imposed on nuclear facility operators by the Paris Convention (see section 1.5.6.2.2 “Specific regulations applicable to basic nuclear facilities”). The Law on Energy Transition for Green Growth enacted on 17 August 2015 subsequently amended the provisions of Articles L. 597-28 and L. 597-32 of the French Environmental Code and in particular the limits on the civil liability of nuclear operators which, since 18 February 2016, were brought to €700 million for nuclear installations (€70 million for low-risk installations) and €80 million for risks during transport. In order to comply with the new statutory ceilings, EDF issued a contract notice on 10 August 2015 entitled “EDF SA Nuclear Liability Insurance Programme” to obtain and set up appropriate insurance coverage for nuclear civil liability and the related claims management. The insurance coverage obtained following this invitation to tender allows the Group to meet the new obligations while controlling their financial impact. The insurance is shared between the nuclear insurance market (AXA, reinsured by the French nuclear pool Assuratome) the Group’s captive insurance companies, and the nuclear mutual insurance company ELINI. This cover took effect on 18 February 2016 for a three-year term. In view of the likely evolution of the obligations imposed on the operator during the period (notably the entry into force of the Protocols amending the Paris and Brussels Conventions (see section 1.5.6.2.2 “Specific regulations applicable to basic nuclear installations”), clauses allowing an exit from the contract have been included. Claims management has been entrusted to the mutual insurance company ELINI, for its computerised claims processing system, and to the company EQUAD which has the necessary human and network resources. In the United Kingdom, where EDF Energy operates nuclear power plants, the nuclear operator’s civil liability rules are similar to French rules. The UK Parliament SPECIFIC INSURANCE FOR 2.5.6 NUCLEAR FACILITY OPERATIONS Civil liability of nuclear facility 2.5.6.1 operators

approved on 4 May 2016 the “Nuclear Installations Order” (order transposing the above-mentioned amending Protocols of February 2004), which makes substantially the same changes as the French TSN Act in 2006 but which, for the most part, shall enter into force only in conjunction with the Protocols. This Order will raise the British operators’ obligations from the current limit of £140 million to the equivalent of €700 million, and they will be progressively increased over a five-year period to reach a cap of €1.2 billion. Currently, EDF Energy is insured by ELINI and Wagram Insurance Company DAC. The captive insurer Océane Re also carries the risk via a reinsurance contract for Wagram Insurance Company DAC. For further information on the legislation concerning nuclear operators’ civil liability, see section 1.5.6.2.2 “Specific regulations applicable to basic nuclear facilities”; Civil liability for transport of nuclear 2.5.6.2 substances Under the Paris Convention, the operator that is the “shipper” is civilly liable for transport of nuclear substances (unless stipulated otherwise). On 18 February 2016, this liability limit was increased to €80 million with an unchanged scope of damages (for more information see section 2.5.6.1 “Civil liability of nuclear facility operators” and section 1.5.6.2.2 “Specific regulations applicable to basic nuclear installations”); the scope of damages admissible for compensation will then by widened when the amended Paris Convention comes into force. This liability is as of now covered by the aforementioned nuclear operator civil liability policy. Damage to nuclear facilities 2.5.6.3 In addition to the cover obtained through EDF’s membership in the OIL mutual insurance fund, property damage (including following a nuclear accident) to EDF’s nuclear facilities in France and to EDF Energy’s nuclear facilities in the United Kingdom, as well as nuclear decontamination costs, are covered by a joint insurance programme underwritten primarily by the NRI British insurance pool, AXA and Allianz (reinsured by Assuratome, the French nuclear pool) and EMANI (nuclear mutual insurance association) (see section 2.5.2 “Use of captive insurance companies and mutual insurance funds” and section 2.5.7. “Premiums”) for a total capacity of €1,760 million, over and above an amount of €240 million. The Group programme covering power plants in France and the UK was renewed on 1 April 2015 for a period of three years up to 30 March 2018. Furthermore, EDF Inc. is a member of NEIL (Nuclear Electric Insurance Limited) – a mutual nuclear insurance association in the United States, so as to cover the activities of CENG (Constellation Energy Nuclear Group) in the United States. The total amount of insurance premiums for Group programmes for all types of cover amounts to €199.4 million in 2017. EDF deems that policies taken out under the Group Insurance Policy are in line with the insurance market’s current supply capacity for players of similar size and activities in the world, particularly with regard to cover limits and deductibles. The nature, insured amounts and prices of insurance cover in place may be amended at any time based on market condition and the assessment of EDF’s Board of Directors regarding risks and suitability of coverage. PREMIUMS 2.5.7

142

EDF I Reference Document 2017