EDF_REGISTRATION_DOCUMENT_2017

PRESENTATION OF EDF GROUP Description of the Group's activities

on 1 January 2018 the basic necessity tariff offered since 1 January 2005 was ■ replaced with the energy cheque which came into effect after trials in 2016 and 2017 in the Ardèche, Aveyron, Côtes d’Armor and Pas-de-Calais départements. Changes to the method of setting the regulated tariffs for electricity Since 8 December 2015, in accordance with Articles L. 337-4 and L. 337-13 of the French Energy Code (“NOME law”), the CRE has been responsible for notifying the ministries in charge of the economy and energy of its justified proposals for regulated sales tariffs for electricity. If there is no opposition to the latter before a deadline of three months, such proposals are deemed to have been approved. In the summer (Jun-Aug) of 2017 changes in the tariff structure took the form of a 1.7% increase (excl. tax) in the regulated residential and nonresidential “Blue Tariffs” effective from 1 August 2017 following a decision on 27 July 2017 (published in the Journal Officiel on July 28, 2017) at confirming the CRE's resolution of 6 July 2017. Furthermore, tariffs also increased on 1 February 2018 with the Residential “Blue” tariff going up by 0.7% and the non-Residential “Blue” tariff by +1.6%. Electricity supply contracts 1.4.2.1.4 In France, customers are free to leave the regulated sales tariffs at any time and without advance notice for an offer proposed by any other supplier. With the exception of customers directly connected to the transmission network, who must sign separate supply and delivery contracts, all other customers may enter into a single contract with the supplier of their choice for their electricity supply and transit. Decision by the Court of Appeal of Paris (gas) and the Council of State (electricity) The Paris Appeal court, in a decision dated 2 June 2016, ruled that the company GRDF (gas distributor) has to “bear, at least in part, the cost of management of the services provided by the suppliers” of gas. It also enjoined GRDF to conclude an amendment to the contract for access to the distribution network (CAD) providing for the payment to Direct Énergie and ENI, the plaintiff companies, of an “equitable and proportionate remuneration with regard to the costs avoided by the public distribution network operator (GRD)”. In addition, it enjoined GRDF to pay, on a retroactive basis, to Direct Énergie, a remuneration with effect from the date of signature of the CAD, i.e. 21 June 2005. On the basis of this decision and in accordance with the principle of non-discrimination, EDF pursued GRDF to obtain remuneration for the services carried out on behalf of the gas network operator, with effect from the signature of the CAD. This decision covering gas was accompanied, on 13 July 2016, in the area of electricity by the cancellation by the Council of State of the deliberation by the CRE dated 10 December 2014, which rejected the request by Engie to withdraw the deliberation of the CRE dated 26 July 2012 relating to the management of customers with a single joint contract, and which had put in place an asymmetric regulation mechanism. The Council of State considered that the remuneration of the suppliers for the customer management tasks carried out on behalf of the network operators of the electricity or gas distribution networks could not legally be transitional and limited to certain suppliers. On 23 December 2016 Engie issued proceedings against Enedis with the Commercial Court in Paris in relation to supplier remuneration for management costs for customers holding a single contract. These proceedings are pending. After initiating an external study at the end of 2016 to assess the costs related to the customer administration services performed by the suppliers on behalf of GRD for clients under a single contract, on 12 January 2017 the CRE published a resolution repealing the resolutions of 26 July 2012 and 3 May 2016 on the management of clients under a single contract as well as the final report of the study. After a consultation held in the first half of 2017, the CRE published a set of final resolutions on 26 October 2017 defining the terms of supplier commissioning and the related costs borne by TURPE. The resolutions confirm the principle of equal commissioning for all suppliers selling single contracts. Only regulated tariffs will have a slight difference in commissioning of around €2 less per point of delivery which will be gradually phased out over five years.

In its resolution the CRE also capped the compensation of past customer management costs incurred before 1 January 2017 at an amount which can be factored into the TURPE tariff. Law n°2017-1839 of 30 December 2017 on hydrocarbons, energy and the environment amends the French Energy Code to validate (subject to court rulings with prejudice) network access agreements between distribution network operators and gas & electricity providers to the extent that these agreements are contested for imposing the cost of customer management on suppliers on behalf of network operators or making suppliers liable for all or part of the costs borne by them for services provided before the law came into effect. This is meant to prevent suppliers from obtaining compensation from network operators for past customer management services provided. See section 2.4.2 “Legal proceedings concerning EDF’s subsidiaries and holdings”. The Customer Division 1.4.2.2 EDF’s sales and supply activities in France (excluding overseas departments and Corsica) are managed by the Customer Division. Presentation and supply strategy 1.4.2.2.1 In France, EDF markets energy and services to nearly 25.4 million customer accounts (excluding overseas departments and Corsica), or almost 30.9 million sites. On the electricity market, EDF’s sales in 2017 were close to 310TWh, which represents a market share of 68%. EDF provides gas supply to all types of customers. In 2017, EDF marketed 30.1TWh of gas (compared with 27.7TWh in 2016), which represented a market share of 6.1%, to more than 1.4 million customers. At the end of 2017, EDF was supplying gas to more than 1.3 million residential customers (in comparison with 1.2 million at end-2016). In addition to supplying electricity and gas EDF serves its customers by offering energy efficiency products by among other things answering calls for tenders on self-consumption issued on a regular basis by the CRE. Furthermore, in order to meet the expectations of its customers and assist them with the digital revolution in progress, EDF is continuing to digitize its products and customer relationship management. These efforts are being channeled through EDF Pulse Studio, the Group's innovation accelerator, which supports initiatives by means of an internal ecosystem and a network of external partners. EDF also has its Smart Lab dedicated to innovative applications, for example in artificial intelligence. The Group continues to lead the way in energy innovation and customer service. It also intends, in relation to its residential customers, to combine “sustainable well-being at home” with an economic and societal promise. For example, residential customers can sign up for “e.quilibre” and receive assistance with reducing their energy consumption. Products offered by Sowee, a Group subsidiary that is the only French firm to link the sale of energy to a connected station, have expanded the range of options available to residential customers. For its business and municipal customers, the Group is continuing to expand its range of offers related to remote monitoring and analysis of consumption through to managing energy use. Implemented in 2006, the energy savings certificates (CEEs) scheme evolved on 1 January 2015 in order, in particular, to contribute to the achievement of the objectives fixed by the Directive of 25 October 2012 relating to energy efficiency: the national obligation for the third period (2015-2017) was fixed at 700TWhc, doubled in comparison with the second period. In 2017 it was decided to reinforce the system with the aim of saving around 1,600TWhc nationwide between 2018 and 2020, of which 400TWhc in favour of households in a situation of energy poverty. Moreover, EDF is positioning itself as a major player in energy transition by its visible and sustainable territorial action. It is promoting future smart electrical systems and experimenting with service offers by participating in the design and operation of innovative electrical solution demonstrators, alongside the principal players, local authorities, equipment manufacturers, telecommunication operators, industrialists and academics in various territories.

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DF I Reference Document 2017