Universal Registration Document 2020

6. Financial statements

5.4.1 Operating subsidies

This item mainly comprises the subsidy received or receivable by EDF in respect of the compensation for public energy charges (CSPE), excluding the annual repayment of the past CSPE receivable and associated interest, reflected in the financial statements through recognition of income of €8,081 million for 2020 (€7,662 million for 2019). The operating receivable corresponding to the CSPE is recorded in other liabilities at 31 December 2020 (see note 13.3.4).

Compensation for public energy charges (CSPE) (France)
Mechanism

The compensation mechanism for public energy service charges (compensation des charges de service public de l’énergie) resulted 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 2020 marked a continuation from 2019, defining the following measures for compensation of charges for 2020:

  • a special “energy transition” budget item of €6.3 billion, principally to compensate for the additional costs associated with all contracts obliging the operators to purchase renewable energies and (to a much smaller degree) biogas, and covering the last annual contribution to repayment of the accumulated shortfall in compensation due to EDF;
  • a “Public Energy Service” item of €2.7 billion in the general budget, notably to cover solidarity charges borne by gas and electricity suppliers, costs associated with purchase obligations excluding renewable energies (essentially cogeneration), and the cost of applying the standard national tariffs to zones that are not connected to France’s mainland network. The interest on the accumulated shortfall to be repaid to EDF is also funded through the general budget.

From 1 January 2018, the “basic necessity” rates for electricity and the“special solidarity” rates for gas were replaced by an energy voucher system.The cost of this system is not borne by EDF, but budgeted by the State in the“Public Energy Service” programme. EDF has borne solidarity charges for the national housing solidarity fund and services for vulnerable customers in both2019 and 2020.

In 2020, this mechanism of compensation for public service charges is funded as follows:

  • the costs linked to the energy transition, which correspond to the subsidy mechanisms for renewable energies, and the reimbursement of the past accumulated shortfall in compensation borne by EDF as measured at 31 December 2015, are registered in a special “energy transition” budget item created by the amended finance law for 2015. Law no. 2016-1917 of29 December 2016 (the finance law for 2017) stipulated that the two sources of additional funding for this special budget item would be a portion of the domestic tax on coal, lignite and coke (TICC), and a portion of the domestic tax on energy products (TICPE), the latter providing most of the funding. The finance law for 2020 replaced the percentages of the TICC andTICPE by a set amount, to avoid the uncertainties of forecast income from these taxes, and broadens the sources of funding for the “energy transition”budget item by including the proceeds of auctions of Guarantees of Origin as allowed by Article L. 314-14-1 of the Energy Code. The initial French finance law for 2020 also proposes to discontinue this “energy transition”budget item in 2021, with the costs concerned subsequently covered directly by the general budget;
  • other public service charges excluding costs associated with the subsidy mechanisms for renewable energies (i.e. costs relating to fuel poverty, tariff equalisation in zones that are not connected to France’s mainland network, cogeneration, the budget for the energy ombudsman, etc.) are registered directly in the general budget;
  • income generated by the domestic tax on the final consumption of electricity, now renamed the Compensation for Public Electricity Charges(CSPE) goes directly into the general budget. The CSPE tax is collected directly from final consumers of electricity in the form of an additional levy on the electricity sale price (and collected from electricity suppliers), or directly from electricity producers that produce electricity for their own uses.

The level of the CSPE tax was set in 2016 at a full rate of €22.5/MWh, and eight reduced rates ranging from €12/MWh to €0.5/MWh depending on criteriaof electro-intensiveness, business category and the risk of carbon leakage from installations (the risk of industries relocating to countries where greenhouse gas emissions are higher due to their electricity mix). The level remains unchanged in 2020.

The amended finance law no. 4 for 2020 also applied an upward adjustment to the amounts of compensation payable by the State in 2020 for:

  • public service charges borne in 2019 (the total differential observed between the readjusted forecast for 2019 charges established in July 2019and the actual charges for 2019 observed in July 2020);
  • and public service charges borne in 2020 (the partial differential between the initial forecast for 2020 charges established in July 2019 and there adjusted forecast established in July 2020).

These expenses had increased due to the larger differential between the market price for electricity and the purchase obligation tariff payable to producers.

5.4.2 Net income on deconsolidation and gains on disposal of fixed assets

In 2020, net income on deconsolidation and gains on disposal of property, plant and equipment mainly includes gains on sales of EDF Renewables’ generation assets as part of the Development and Sale of Structured Assets (DSSA) activities, amounting to €210 million (€560 million in 2019 including notably the sale of NnG, see note 3.1.2).

5.4.3 Other items

Other items mainly include costs relating to energy savings certificates used or consumed during the year, additional remuneration paid to producers of electricity from renewable sources in France and losses consisting of non-recoverable operating receivables. The unfavourable change in other items in 2020 is principally explained by the increase in this additional remuneration and the rising costs related to energy savings certificates.

The additional remuneration paid to electricity producers using renewable energies was introduced by France’s law on the Energy Transition for green growth. It is a support mechanism intended to guarantee reasonable remuneration for producers who sell their energy directly on the markets, by compensating for the differential between the revenues from those sales and a reference amount. This mechanism complements the purchase obligation system.

From the first half of 2020, other items also include income and expenses related to closure of the Fessenheim plant.

Closure of Fessenheim nuclear power plant

In accordance with the application for termination of operations and the declaration of the permanent shutdown of both reactors at Fessenheim nuclear power plant sent by EDF to the Minister for the Ecological and Inclusive Transition and to the ASN on30 September 2019, EDF shut down reactor 1 on 22 February 2020 and reactor 2 on30 June 2020.

On 27 September 2019, due to the cap on nuclear power output set by the “energy transition for green growth” law of 17 August 2015, the French State and EDF signed a protocol agreement whereby the State will compensate EDF for the early closure of Fessenheim.