EDF_REGISTRATION_DOCUMENT_2017

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PRESENTATION OF EDF GROUP Description of the Group's activities

In 2017, more than 11,000 photovoltaic self-consumption facilities were also connected, representing close to 60% of the year's connections for small producers. In addition, Enedis has continued its efforts to develop capacities for accepting renewable energies, by implementing construction work on sources as part of the regulatory framework in the regional plans for the grid connection of renewable energies. Electricity market The French electricity sales market has been open to competition for all customers since 1 July 2007. 54 electricity suppliers, operating on the French market, signed a contract with Enedis. This contract establishes the terms and conditions for the supplier and the distributor in the event that a customer subscribes to a single contract covering the supply and delivery of electricity. The supply market is facing sharply increased levels of competition. This is especially the case for subscribed power supply greater than 36kVA, for which the elimination of regulated sales tariffs at the end of 2016 resulted in a sharp acceleration. The same is the case for subscribed power supply below 36kVA, which is also facing growing competition. Concessions At 31 December 2017, Enedis and EDF were co-concession holders of 509 concessions contracts, covering around 95% of the population. The concession contracts are generally concluded for a period of 20 to 30 years. In France, public electricity distribution is operated under a concession plan that derogates from common law on local public service concessions. Enedis is thus designated by the law (Article L. 121-4 of the French Energy Code) to carry out the development and operation of the public distribution networks (rational service of French territory by public distribution networks, connection and access in accordance with non-discriminatory conditions to the public distribution networks). The company carries out this role over the majority of French territory, with the exception of the zones which are not interconnected to mainland France, in which this same role is the responsibility of EDF, and of the exclusive service zone of the LDCs (Local Distribution Companies). On 21 December 2017, FNCCR, France Urbaine, EDF and Enedis signed a framework agreement based on a new concession agreement model. Twenty-five years after the 1992 agreement with FNCCR, this new agreement provides an opportunity to modernise the relationship between Enedis and contracting authorities over the long term. This new standard agreement embodies the principles of the French concession model: public service, regional solidarity and national optimisation, while at the same time taking into account issues involving energy transition. The framework agreement includes France Urbaine which represents municipalities, large urban inter-municipalities and cities of which the majority of the members have contracting authority status for the public distribution of electricity. Pursuant to Article L. 334-3 of the French Energy Code, ongoing concession contracts are considered as jointly signed by the contracting authority (local authority or public cooperation institution), by EDF (or territorially competent LDC) for the “regulated tariff supply” portion, and by Enedis (or territorially competent LDC) for the “distribution network” portion. When concession contracts are renewed or amended, they are co-signed according to these terms. Within the limits fixed by the law and by the jurisprudence, the contracting authorities are the owners of the distribution networks which constitute returnable assets (1) . See also sections 1.5.2.2.5 “Public electricity distribution concessions at regulated tariffs” and 1.5.6.2.7 “Regulations applicable to public procurements”. Service shared by Enedis and GRDF 1.4.4.2.3 The service shared by Enedis and GRDF, defined by Article L. 111-71 of the French Energy Code, sets out, in the electricity and gas distribution sector, to build

installations, manage works projects, operate and provide maintenance for the networks, and conduct metering operations. It does not have the status of a legal entity. Enedis and GRDF are related through an agreement that sets out their relations in the framework of this common service, the scope of said service and the sharing of costs resulting from it. Concluded for an open-ended period, it can be revoked at any time, provided a prior notice of 18 months is given, during which the parties commit to renegotiating. It is updated regularly. In July 2014, Enedis and GRDF signed a joint communiqué taking note of the scheduled disappearance of the joint activities of meter reading and interventions on meter panels. To date, Enedis has favoured organisation through the regional directorates integrating all its operational missions at local level. A more detailed fabric is reserved for local activities. On 23 October 2017, Enedis and GRDF made a decision to examine the issue in order to improve the organisation of support and logistical activities. Future challenges 1.4.4.2.4 Smart grids and smart meters (Linky) Enedis, guarantor of the electricity distribution public service, invests at all times to develop, modernise and secure the electrical network. The adaptation of the electricity grid to the new needs of society is a major strategic challenge. To achieve this, Enedis has started the industrial deployment of the Linky system, based on a new generation of meters, called “smart meters” that can receive orders and send data without the physical involvement of a technician. This system represents the first stage of smart grid implementation or “Smart networks”. It involves equipping the distribution network with connected objects, including the Linky meters, in order to integrate renewable energy electricity generation, which has undergone a significant expansion, further ensuring the balance between generation and consumption at all points of the electricity grid, and enabling suppliers to offer new energy solutions to their customers. Following a successful experiment, approved by the public authorities, on 1 December 2015, Enedis launched the first phase of the generalised deployment of the Linky meters. Having successfully installed 3 million smart meters, the first stage of the deployment was completed on 6 March 2017. At the end of December 2017, more than 8 million points of delivery were thus equipped with a Linky electricity meter. As a reminder, the initiation of the second phase of deployment was approved by the Enedis Supervisory Board in June 2016, with the objective of replacing 90% of the old meters, or around 34 million units, by the end of 2021. The amount of capital investment approved by the Supervisory Board of Enedis in June 2016 amounted to €4,455 million (2) over the period 2014-2021. At the end of 2017, the cumulative investment already carried out amounted to €1,119 million for the full deployment. The rate of fitting Linky meters went from less than 3,000 meters per day at the beginning of 2016 to around 27,000 meters per day at the end of 2017, reaching the expected rate and enabling phase 2 of the deployment to be started with confidence in 2018, during which 7.9 million meters are expected to be fitted. See also section 1.5.3.2 “French legislation: the French Energy Code”. Foster energy transition Concurrently, Enedis is conducting large scale testing of a number of solutions to provide a greatly modernised network to consumers and companies. This work covers the operation of low- and medium-voltage networks, the integration of renewable energies and electric vehicles, storage management, voltage stability, etc. The challenge for the distributor is to support energy transition while developing the networks at the lowest cost for society. Thanks to new technologies, a more detailed and responsive oversight is possible, based on a better understanding of consumption, generation and the state of the network. This “intelligence” makes it possible to avoid over-investment by adjusting it to consumption peaks, while guaranteeing the reliability of the network, pursuant to Enedis’ double public service objective of performance and security.

Returnable assets are those that must imperatively be returned to the granting authority at the end of the concession. Such property is deemed to belong to this local authority (1) from the outset. They are defined by the concession contract or even by the law. By default, generally qualified as such are the assets that are indispensable to the performance of the concession service. The 5.7 billion Euros amount mentionned by the Cour des Comptes in its annual report published on 8 February 2018 corresponds to estimates made by the Cour des Comptes (2) on a scope that is different from the one taken into account by Enedis and the CRE for the deployment of Linky: this amount covers for example a period beyond 2021 and includes future investments which will be made by the Local Distribution Companies to deploy their own smart meters.

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DF I Reference Document 2017