both for new projects and for the existing fleets. The Group closely involves its industrial partners with the achievement of these objectives.
Each company is responsible for the proper conduct of its nuclear activities and sets the appropriate delegations at each decision and action level. The Group guarantees the allocation of the necessary resources for nuclear safety.
An internal entity in charge of an independent safety evaluation is put in place at the level of each site, each company and of the Group. Each one reports to the manager concerned, independently of other managerial functions; furthermore, each one has the duty to alert the superior hierarchical level if the reaction of the level directly involved is not what is expected.
The Group’s nuclear operating companies regularly receive international evaluation teams (WANO Peer Review(1) and OSART from the l’AIEA(2)).
Clear and honest communication on the events and their possible impacts are promoted within the Group. This high-quality dialogue is sought and maintained with the salaried personnel and its representatives, subcontractors, the supervisory authorities (Nuclear Safety Authority in France, Office for Nuclear Regulation in the United Kingdom), local communities and all other stakeholders in nuclear safety.
The Nuclear Safety Council, which the Chairman and CEO of EDF chairs, meets several times a year and, periodically reviews the annual assessment of nuclear safety for the EDF group. A General Inspector for nuclear safety and radiation protection (IGSNR) is appointed by the Chairman and CEO to whom he/she reports. He/she carries out inspection missions on all of the nuclear activities of the EDF group. Each year, it gives an opinion on safety within EDF. Its report is presented and debated in the Nuclear Safety Council. It is then made public (see section 1.4.1.1.3).
In addition to the control of nuclear safety (risk 5C), the operation of existing nuclear facilities (risk 5A) and new nuclear projects (risk 4A), the Group is exposed, in the context of nuclear activities, to the control of the nuclear fuel cycle.
Criticality in view of the control actions undertaken: Intermediate.
The Group’s operating costs include nuclear fuel purchases.
EDF is supplied with uranium, conversion and enrichment services, fuel assembly supplies and spent fuel reprocessing operations for its nuclear fleet in France and the United Kingdom.
Prices and volumes are subject to fluctuations that depend on factors beyond the Group’s control, including political and economic factors (in particular, profitability outlook for mining investments, supply/demand imbalance or tension on the supply side, associated, for example, with the occurrence of an operating incident in a uranium mine or cycle plant, a delay in the commissioning of a new mine or an event leading to institutional instability in a producing country, or restrictions/sanctions/embargos).
The storage and transport of new or spent nuclear fuel is an industrial activity that requires specific safety and security measures. These requirements could become more stringent, generating additional difficulties and costs for the Group.
In the event of the collapse of this industrial logistics system, the Group could reduce or even interrupt all or part of the electricity generation at the affected sites, either due to the non-delivery of new assemblies or to the saturation of intermediate storage facilities, which could have a negative impact on the Group’s financial position (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues”).
Despite the project to build a large-capacity spent fuel storage pool (see section 1.4.1.1.4 “The nuclear fuel cycle and associated issues”), the risk of the impossibility, in the long term, of implementing multi-recycling in its 3rd generation pressurised water reactors or recycling in fourth generation reactors known as “GENIV” (abandonment of the ASTRID fast neutron reactor project), could call into question the fuel cycle, with consequences both in terms of operation and in financial terms.
In France, EDF has booked provisions for spent nuclear fuel management operations (transport, processing, conditioning for recycling) (see note 32 of the appendix to the consolidated financial statements for the financial year ended 31 December 2019) based on the price and volume conditions of the master agreement signed with Orano in December 2008 and broken down in the successive implementation agreements. The implementation agreement for the period from 2016-2023 was signed in February 2016 (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues”). The amount of provisions currently booked to cover the period not covered by the current agreement should be reassessed if the terms under which this agreement is renewed prove more onerous than those currently applicable.
Note 32 “Analyses of sensitivity to macro-economic assumptions” and note 32 “Nuclear provisions in France” of the appendix to the consolidated financial statements as of 31 December 2019 shows the connection between “costs based on year-end economic conditions”, which represent estimated amounts as at 31 December 2019, and “provisions made at present value”. As regards spent fuel management, the costs based on year-end economic conditions are estimated at €18,737 million and the corresponding provision is €10,823 million.
However, the Group cannot guarantee that its contracts, in France and abroad, will completely protect it from sudden or significant price increases. The Group cannot guarantee that when these long-term contracts expire, it will be able to renew them, in particular at an equivalent price. This could have an adverse impact on the Group’s financial position.
The coronavirus epidemic that appeared in China in December 2019 is likely to affect the health of employees and service providers, the Group’s operations and projects, as well as its financial position. Even if the impacts are difficult to quantify at this stage, the main risk factors of this epidemic have been identified. Without being exhaustive, they are as follows:- disruption of industrial supply chains for products or equipment from countries affected by the epidemic (risk 4E); -health impacts on the activity of the Group’s employees and service providers (risk 4C)-disruption of the running of the Group’s operations, construction sites and major projects in the event of restrictions likely to affect business continuity (risk 4A) and possibly the level of production, particularly in the event of an impact on nuclear unit shutdowns (risk 5A) – impact of a possible slowdown in economic activity with regard to the price of raw materials and electricity on the wholesale markets, as well as on the level of demand for electricity or counterparty risks (risks 2C and 2E); -impact of a disruption in the financial markets through a decrease in the valuation of the portfolio of dedicated assets or pension assets affecting the Group’s financial results and the coverage rate of nuclear provisions, and impact of a decrease in interest rates on the calculation of the amount of nuclear provisions and provisions for employee benefits (risks mentioned in chapter 2.2.2).
(1) WANO: World Association of Nuclear Operators.
(2) OSART: Operational Safety Analysis Review Team, International Atomic Energy Agency (IAEA).
