The following table shows the impacts of this simulation for Enedis in 2019:

IMPACTS ON THE INCOME STATEMENT

IMPACTS ON THE BALANCE SHEET – EQUITY

Valuation of concession liabilities under this method is subject to uncertainty over costs and disbursements, and is also sensitive to inflation and discount rates.

1.3.23 Investment subsidies

Investment subsidies received by Group companies are included in liabilities under the heading “Other liabilities” and transferred to income as and when the economic benefits of the corresponding assets are utilised.

1.3.24 Assets classified as held for sale and related liabilities, and discontinued operations

Assets that qualify as held for sale and related liabilities are disclosed separately from other assets and liabilities in the balance sheet.

When assets or groups of assets are classified as discontinued operations, income and expenses relating to these discontinued operations are disclosed in a single net amount after taxes in the income statement and net changes in cash and cash equivalents of discontinued operations are also reported separately in the cash flow statement.

Impairment is booked when the realisable value is lower than the net book value.

1.3.25 Nature and extent of restrictions on the Group’s ability to access and use assets or settle liabilities

The main restrictions that may limit the Group’s ability to access or use its assets or settle its liabilities concern the following items:

• assets held to fund employee benefits (principally in France and the United Kingdom – see note 1.3.21) and expenses related to nuclear liabilities (principally in France – see note 48 – and the United Kingdom – see note 32.2);
• tangible and intangible assets and the related liabilities associated with concession agreements, whether or not they are subject to regulatory mechanisms (obligations to supply energy or energy-related services, rules governing investments, an obligation to return concession facilities at the end of the contract, amounts payable at the end of the contract, tariff constraints, etc.). These restrictions mainly apply to assets of this type in France (EDF, Enedis, Électricité de Strasbourg and Dalkia), and to a lesser extent Italy (see notes 1.3.12 and 1.3.22);
• the sale of Group investments in certain subsidiaries requires authorisations from State bodies, particularly when they exercise a regulated activity or operate nuclear power plants (this is the case for EDF Nuclear Generation Ltd. in the United Kingdom, Taishan (TNPJVC) in China and CENG in the United States);
• prudential reserves established and measures taken as regards distribution capacity, so that the insurance subsidiaries will meet their prudential ratio requirements;
• the cash of certain entities that use financing arrangements stipulating that dividend distribution is subject to conditions concerning repayment of bank debt (or qualification for loans) and shareholders, or are subject to regulatory limitations in certain countries.

Certain shareholder agreements concerning companies controlled by the Group include clauses to protect minority shareholders, requiring approval from minority shareholders for certain particularly important decisions.

Finally, certain financing loans granted to Group entities contain early repayment clauses (see note 41.2.6), and certain items of cash and cash equivalents are subject to restrictions (see note 40).

1.3.26 Environment

1.3.26.1 Greenhouse gas emission rights

In ratifying the Kyoto Protocol, Europe made a commitment to reduce its greenhouse gas emissions. EU Directive 2003/87/EC set up a greenhouse gas emission quota system for the European Union which has been in operation since 1 January 2005.

This system was incorporated into national laws. Among other things it requires obligated actors, which is the case of EDF, to surrender to the State a number of greenhouse gas emission credits each year, corresponding to their emissions for the year. The rights and obligations associated with this system are periodically reviewed.

One of the main features of the third phase, running from 1 January 2013 to 31 December 2020, is the discontinuation of free allocation of emission rights in certain countries, including France and United Kingdom.

In the EDF group, the entities subject to this Directive are EDF, EDF Energy, Edison, Dalkia, and Luminus (formerly EDF Luminus).

The accounting treatment of emission rights depends on the holding intention. Two economic models coexist in the Group:

• rights held under the “Trading” model are included in “Other inventories” at fair value. The change in fair value observed over the year is recorded in the income statement;
• rights held to comply with regulatory requirements on greenhouse gas emissions (the “Generation” model) are recorded in “Greenhouse gas emission rights –green certificates”:
  • at acquisition cost when purchased on the market,
  • at nil value when allocated free of charge (in countries that still have a free allocation system).

When the estimated emissions by a Group entity over a given period are higher than the rights allocated for no consideration for the period less any allocated rights sold on the spot or forward market, a provision is established to cover the excess emissions. This provision is equal to the shortfall in rights held (difference between actual emissions and allocated rights held at the closing date).

If no emission rights are allocated free of charge, a provision is systematically recorded equivalent to the actual emissions at the closing date.