The key assumptions in the test still concern the useful life of nuclear assets, thelong-term price scenario, the discount rate, changes in costs and investments, andthe capacity revenue. Each of these assumptions was subjected to sensitivity analysesand the results did not call into question the existence of a positive differencebetween the book value and recoverable value.
The updated impairment test at the year-end showed that the recoverable value ishigher than the book value. The loss of value indicated at 30 June based on electricityprice scenarios and a projected decline in the customer portfolio was counterbalancedby an improvement in wind power asset value due to expanded capacities.
For tests of the nuclear plants operated by the ENGIE Group in which Luminus owns a10.2% share (419MW), it has historically been assumed that operations will continueuntil 2025 at the latest depending on the plants.
Sensitivity analyses are conducted to incorporate the risk that the hydropowerconcessions may be shortened, and no associated risk of impairment has beenidentified.
Finally, impairment of €(189) million was recognised in respect of associates at 31 December 2020, concerning coal-fired plants in China, Framatome’s investments in entitiesoperating in sectors greatly impacted by the Covid-19 pandemic, and certain unlisted assets owned by EDF SA (EDF Invest) included in dedicated assets (see note 15.1.2).
The accounting treatment of public distribution electricity concessions in France is determined by the concession agreements, with particular reference to their special clauses. It takes into consideration the possibility that the EDF group, particularly Enedis, may one day lose its status as the sole authorised State concession operator.
In application of the concession agreements, the concession operator manages the facilities at its own risk for the entire term of the concession, and bears substantially all the risks and benefits (both technical and economic) over the useful life of the network infrastructure. Under IAS 16, the assets are controlled by the operator and the grantors have no decisive characteristics of control over the infrastructures as defined by IFRIC 12.
All concession assets are consequently carried in the balance sheet, regardless of their origin (facilities constructed or purchased by the concession operators, and facilities provided by the concession grantors) and the source of financing, while the contractual obligations to the grantor are recognised in the liabilities.
Public electricity distribution facilities that are constructed or purchased by the concession operator are carried at production or acquisition cost:
New facilities provided by the concession grantors are carried at the value of the cost the Company would have borne if it had constructed them itself.
In the specific case of rising mains transferred for no consideration to the public distribution network in application of Article 176 of French law 2018-1021 of2 November 2018 on housing, development and digital affairs (the “ELAN”law), these assets are carried at their market value under Article 213 ofFrance’s national chart of accounts.
Balance sheet liabilities are recognised in respect of new facilities provided for no consideration by the concession grantors and the rising mains transferred under the ELAN law.
Distribution assets (pipes, substations) are depreciated over periods of 30 to60 years, meters and metering equipment over periods of 20 to 30 years. TheGroup regularly checks the relevance of the main accounting parameters for concession assets (depreciation periods, replacement values, management levels).
Since the enactment of the French Law of 8 April 1946, EDF, and subsequently Enedis, has been the concession operator of most of the public distribution networks in France.
SEI is the concession operator for distribution network zones that are not interconnected with the network in mainland France, under identical concession regulations to Enedis.
Électricité de Strasbourg is the concession operator for public distribution networks in a limited zone depending on a non-nationalised distributor, inapplication of the Law of 8 April 1946.
In accordance with France’s Energy Code and Local Authorities Code, the public distribution of electricity is principally operated under the public service concessions system. The authorities granting the concessions (local authorities or public establishments for cooperation acting as an Energy DistributionOrganisation Authority, Autorité organisatrice de la distribution d’énergie– AODE) organise the public electricity distribution service through concession agreements with specifications that define the respective rights and obligations of the parties. Enedis distributes electricity to 95% of the population of mainland France under such concessions, with 421 concession agreements at 31 December 2020. The other 5% are served by Local DistributionCompanies (including Électricité de Strasbourg).
Enedis’ concession agreements correspond to different models depending on the date of signature.
The 1992 concession specifications model (updated in 2007) was negotiated with the FNCCR (National Federation of licensing authorities) and EDF, and approved by the public authorities. This model places Enedis under an obligation to record industrial depreciation and establish provisions for replacement.
On 21 December 2017, the FNCCR, France Urbaine, EDF and Enedis signed a framework agreement for a new concession agreement model. This new model modernises the relationship between Enedis and concession-granting authorities in the long term and reflects the parties’ attachment to the principles of French concessions for electricity distribution: public service, regional solidarity and national optimisation. The FNCCR and France Urbaine represent the concession-granting authorities, particularly towns, syndicated municipalities, boroughs and major cities when they are the authorities with competence to grant public electricity distribution concessions.
As of 2018, newly-signed concession agreements apply the concession agreement model validated on 21 December 2017. At the effective date of anew agreement, the existing special concession liabilities recorded inapplication of the previous concession agreement to represent the concession-granting authority’s rights in the concession assets remain in the accounts. Like earlier concession agreements signed since 2011, the contractual obligation to establish provisions for replacement no longer exists, and the governance of investments is different.
To provide an effective public service, the distribution network operator and the concession-granting authority now agree to jointly set up a governance system to oversee investments in the public electricity distribution network over the area covered by the concession, including replacement of infrastructures. This system mainly takes the form of a master plan taking a long-term view of developments in the network over the concession area, and multi-year investment plans (programmes pluriannuels d’investissements – PPIs) for 4 and5-year periods that are medium-term applications of the master plan.
PPIs contain detailed objectives for each investment purpose, concerning a selection of quantified, localised investments with financial valuations for the duration of the plan.
PPIs are revised when necessary, after consulting with Enedis and the authority granting the concession, to take account of changes in each party’s investment priorities and financial resources.
If it were observed at the end of a PPI that any investment concerned by Enedis’ financial commitment had not been made, the concession-granting authority could oblige Enedis to deposit a sum equal to 7% of the investments still to be made. This deposit would then be returned or retained after a two-year period, depending on the investments made by that time.
In accordance with the agreement reached in late 2017 with the FNCCR andFrance Urbaine, negotiations for concession renewals continued in the regions of France during 2020. By the end of the year, 240 concession agreements had been concluded under the new model validated in December 2017, for local projects with major cities, urban boroughs, syndicated counties or municipalities, and towns or villages. More than two thirds of concession agreements with major cities and urban boroughs have already been renewed under the new model, in addition to the 42 previously renewed or amended concessions that contain stipulations similar to the new model. The aim is to continue negotiations with the concession-granting authorities with a view to ensuring that almost all concessions using the old agreement model are renewed by the end of 2021.
