| 31/12/2020 | 31/12/2019 | |||
|---|---|---|---|---|
| (in millions of euros) | Costs based on year-end economic conditions | Amounts in provisions at present value | Costs based on year-end economic conditions | Amounts in provisions at present value |
| Spent fuel management | Spent fuel management 31/12/20202,318 | Spent fuel management 31/12/2019 1,286 | 2,655 | 1,503 |
| Waste removal and conditioning | Waste removal and conditioning 31/12/20201,875 | Waste removal and conditioning 31/12/2019 546 | 1,979 | 532 |
| Long-term radioactive waste management | Long-term radioactive waste management 31/12/20203,724 | Long-term radioactive waste management 31/12/2019 1,106 | 3,886 | 1,053 |
| BACK-END NUCLEAR CYCLE EXPENSES | BACK-END NUCLEAR CYCLE EXPENSES31/12/2020 7,917 | BACK-END NUCLEAR CYCLE EXPENSES 31/12/2019 2,938 | 8,520 | 3,088 |
Provisions for decommissioning of nuclear plants result from the Group management’s best estimates. They cover the full cost of decommissioning and are measured on the basis of existing techniques and methods that are most likely to be used for application of current regulations.
As explained above, EDF Energy has been in discussions since 2019 with the UK government to agree changes and clarifications to the Restructuring Agreements, to provide for efficient recovery of qualifying costs and clarity that once the AGR stations have finished defueling, they will transfer to the Nuclear Decommissioning Authority (NDA) for subsequent decommissioning activities.
In early 2020, EDF Energy submitted phase 1 of the decommissioning plan submission (DPS 20) which was an update to the defueling liability. This led to a €1.9 billion increase in the provision at 31 December 2019, notably reflecting i) the extension of the defueling period following risk and contingency modelling, ii) better definition of the costs covered, and iii) an updated estimate of the costs of preparing and removing fuel, following a review of the industrial scenario. The NDA’s response to the DPS 20 is expected as part of the conclusion in the discussions with the UK government.
The second phase of the DPS 20 should take place late 2021, and will involve updates of all the other decommissioning activities for the AGR plants and decommissioning of Sizewell. At the same time, there will also be an update to the uncontracted liability discharge plan
During 2020, EDF Energy announced the closure of Hunterston and Hinkley Point B AGR stations, to take place no later than 7 January 2022 and 15 July 2022 respectively. The impact of this assumption update is immaterial in the context of the decommissioning liability.
31/12/2020 | 31/12/2019 | |||
|---|---|---|---|---|
(in millions of euros) | Costs based on year-end economic conditions | Amounts in provisions at present value | Costs based on year-end economic conditions | Amounts in provisions at present value |
PLANT DECOMMISSIONING EXPENSES | PLANT DECOMMISSIONING EXPENSES 31/12/2020 18,175 | PLANT DECOMMISSIONING EXPENSES 31/12/2019 10,069 | 19,278 | 10,187 |
The decrease in the costs based on year-end economic conditions is mainly explained by the effect of translation adjustments.
Until 30 June 2020, the discount rate was calculated using an average series of data for a sample of UK Government gilts over the longest available durations plus the spread of UK Corporate bonds rated A to AA, again over the longest-term duration. The implicit inflation rate used in determining a discount rate is based on a long-term forecast of adjusted retail prices (the UK’s CPIH index).
As of 31 December 2020, the method used to determine the discount rate changed as follows:
The real discount rate determined in this way and applied by EDF Energy at 31 December 2020 for calculation of its nuclear obligations is 1.8% (2.0% at 31 December 2019).
In Belgium, the Belgian law of 11 April 2003 assigned management of provisions concerning the Belgian nuclear plants, and the funds that cover them, to Synatom (a subsidiary of the ENGIE group). Luminus contributes via Synatom to these funds, to cover its share of plant decommissioning and back-end nuclear fuel expenses as a co-owner of 4 nuclear plants. These funding mechanisms are reflected through the following items in the consolidated financial statements:
Other provisions related to nuclear generation in Belgium correspond to liabilities covered by provisions that are not part of the mechanisms described above.
