EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Notes to the consolidated financial statements

REGULATORY CHANGES IN FRANCE NOTE 4 REGULATED ELECTRICITY SALES 4.1 TARIFFS IN FRANCE

decision of 17 November 2016 had not taken national energy policy orientations into consideration. In a new decision of 19 January 2017, the CRE reiterated its initial decision of 17 November 2016. Both decisions were published in the Journal officiel of 28 January 2017. On 2 February 2017, Enedis filed an application before the Council of State for cancellation of these two CRE decisions. On 3 February 2017, EDF, in its capacity as the shareholder of Enedis, also filed an application before the Council of State for cancellation of the same CRE decisions. Supplier commissioning The CRE complemented its decision of 17 November 2016 with a decision of 26 October 2017 published in the Journal officiel of 14 December 2017 concerning the remuneration payable by Enedis to suppliers for customer management under a single contract (“supplier commissioning”). Noting the amendments to the French Energy Code resulting from Law 2017-1839 of 30 December 2017 “ending the search and operation of conventional and non-conventional hydrocarbons and introducing measures concerning energy and the environment”, particularly as regards the CRE’s competence for supplier commissioning, the CRE issued a new decision on 18 January 2018, due to be published in the Journal officiel in the next few weeks, reiterating all of its decision of 26 October 2017. The content of these decisions upholds the principle of identical commissions for all suppliers selling single-contract market-price offers. Only regulated tariffs will give rise to slightly lower commissions (around €2 per delivery point), and this difference will be progressively reduced to zero over a period of 5 years. For remuneration of past customer management charges (prior to 1 January 2017), the CRE’s decision sets an amount it considers as a cap that can be taken into consideration through the TURPE. Law 2017-1839 of 30 December 2017 mentioned above introduces a measure intended to rule out the possibility of suppliers receiving remuneration from network managers for past customer management services. On 23 December 2016, Engie brought action against Enedis before the Paris Commercial Court claiming such remuneration. These legal proceedings are ongoing. Electricity Equalisation Fund On 30 November 2017 the CRE published its consultation 2017-017 on the levels of contribution to be made to the Electricity Equalisation Fund for EDF SEI for the years 2018 to 2021. This consultation takes into consideration both the remuneration levels and the expected regulation framework for EDF SEI. The associated decision is expected in early 2018. Legal and regulatory framework The compensation mechanism for public energy service charges (compensation des Charges de Service Public de l’Energie) results from a reform introduced by France’s amended finance law for 2015, published in the Journal officiel on 30 December 2015. Under the legislative and regulatory framework, the public energy service charges (electricity and gas) were to be compensated via two State budget items included in France’s finance laws from 2016 onwards. The initial finance law for 2018 marks a continuation from 2017, defining the following charges for 2018: a special “Energy Transition” budget item of €7.2 billion, principally to ■ compensate for the additional costs associated with all contracts obliging the operators to purchase renewable energies and biogas, the annual contribution to repayment of the accumulated shortfall in compensation due to EDF, and reimbursement of advances to industrial operators who benefited from ceilings for their CSPE tax prior to 2016; COMPENSATION FOR PUBLIC 4.3 ENERGY SERVICE CHARGES (CSPE)

“Blue” tariffs Since 8 December 2015, in accordance with the NOME Law on organisation of the French electricity market (articles L. 337-4 and L. 337-13 of the French Energy Code), the CRE has been responsible for sending the Ministers for the Economy and Energy its reasoned proposals for regulated sales tariffs for electricity. If no objections are made within three months, the proposals are deemed to have been approved The tariff change of summer 2017 followed this process; and by a decision of 27 July 2017 confirming the CRE’s proposal of 6 July 2017, the “blue” regulated tariffs for residential and non-residential customers (excluding taxes) were raised by 1.7% from 1 August 2017. In preparing its tariff revision in 2017, the CRE undertook an audit of the allocation of EDF’s selling costs, to confirm proper application of the methodology ensuring that regulated sales tariffs do not bear development costs for market-price offers by EDF. This point was publicly confirmed in the CRE’s decision of 6 July 2017 containing its tariff change proposal. Appeals against the tariff changes of 2016 and 2017 have been brought before the Council of State by Anode and Engie. TURPE 5 Transmission and Distribution tariffs On 17 November 2016, the CRE published its decisions for the TURPE 5 Transmission and TURPE 5 Distribution tariffs for the period 2017-2020. The new TURPE 5 tariff scale took effect on 1 August 2017. The TURPE 5 Transmission tariff includes a 6.76% tariff increase which took ■ effect on 1 August 2017, with subsequent rises due on 1 August in the years 2018 to 2020, based on average inflation observed over the previous calendar year, adjusted by a correcting factor to balance the income and expenses adjustment account (CRCP) (1) . The TURPE 5 Transmission tariff sets the weighted average cost of capital (WACC) at 6.125% for the return on RTE’s asset base versus 7.25% for TURPE 4. The TURPE 5 Distribution tariff includes a 2.71% tariff increase which took effect ■ on 1 August 2017, with subsequent rises due on 1 August in the years 2018 to 2020, based on average inflation observed over the previous calendar year, adjusted by a correcting factor to balance the CRCP. The TURPE 5 continues to use the previous method for calculating cost of capital, setting the margin on assets at 2.6% and the return on regulated equity at 4.1%. The CRCP income and expenses adjustment account The income and expenses adjustment account (CRCP) is a non-accounting mechanism that has existed since the TURPE 2 tariffs to monitor differences between the actual figures for clearly-identified income and expense items and the forecasts on which tariffs are based, and to take account of financial incentives resulting from application of the regulatory incentive systems included in the tariff. The CRCP is cleared at each tariff change on 1 August, leading to adjustment of the annual tariff movement (upward adjustment if there is a shortfall compared to the tariff, or downward adjustment if there is a surplus compared to the tariff). Publications in the Journal officiel and appeals By a decision of 12 January 2017 published in the Journal officiel of 17 January 2017; the French Minister for Energy, acting within the two-month response period, requested a new decision from the CRE as she considered that the “TURPE” NETWORK ACCESS 4.2 TARIFFS

6.

A mechanism to measure and offset differences between the actual figures and the forecasts on which tariffs are based. (1)

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EDF I Reference Document 2017