EDF’s financial statements are prepared in accordance with the accounting principles and methods defined in regulation 2014-03 of 5 June 2014 issued by the ANC (Autorité des normes comptables, France’s Accounting Standards Authority) concerning the current national chart of accounts.
They also comply with the “Recommendations and observations for taking the consequences of the Covid-19 event into account in financial statements and positions established from 1 January 2020”, published on 18 May 2020 by the ANC and updated on 3 and 24 July 2020 and 8 January 2021.
The accounting and valuation methods applied are identical to those used in the financial statements for the year ended 31 December 2019.
The preparation of the financial statements requires the use of judgments, best estimates and assumptions in determining the value of assets and liabilities, income and expenses recorded for the period, considering positive and negative contingencies existing at year-end. The figures in EDF’s future financial statements could differ significantly from current estimates due to changes in these assumptions or economic conditions.
In a context characterised by volatility on the financial and energy markets, the parameters used to prepare estimates are based on macro-economic assumptions appropriate to the very long-term cycle of EDF’s assets
The principal operations for which EDF uses estimates and judgments are the following:
In the specific case of the depreciation period of its French nuclear power plants, EDF’s industrial strategy is to continue operation beyond 40 years, in optimum conditions as regards safety and efficiency.
The depreciation period of 900MW series power plants was extended from 40 years to 50 years in 2016 (except for Fessenheim where both reactors were permanently shut down in the first half of 2020) since all the technical, economic and governance conditions were fulfilled. The depreciation period of other series (1,300MW and 1,450MW), which are more recent, is currently unchanged at 40 years.
These depreciation periods take into account the date of recoupling with the network after the most recent 10-year inspection.
The Tricastin plant’s reactor 1 was reconnected to the grid on 23 December 2019 after the fourth 10-year inspection. This was the first 900MW series unit to pass the 40-year mark.
The fourth 10-year inspections of units 2 and 4 at Bugey began in 2020 (respectively early and late in the year), and the number of 10-year inspections to be conducted simultaneously in 2021 has increased to 5.
The decision by the French Nuclear Safety Authority ASN (Agence de sécurité nucléaire) setting the technical prescriptions applicable to 900MW series reactors, in view of the conclusions of the “generic” phase of the fourth periodic review, is expected to be issued by the end of February 2021.
Following the final adoption of France’s multi-year energy programme (PPE) in April 2020 (see note 3.1), EDF’s financial statements at 31 December 2020 include the impact of the two early reactor shutdowns to take place in 2027 and 2028 before they reach fifty years of operation. Depreciation plans have been accelerated from 1 July 2020, based on the various possible shutdown scenarios, as the decision regarding which reactors should be shut down does not have to be made yet. Nuclear provisions were re-estimated accordingly at 30 June 2020 (see note 28.3).
The measurement of provisions for the back-end of the nuclear cycle, decommissioning and last cores is sensitive to assumptions concerning technical processes, costs, inflation rates, long-term discount rates, the depreciation period of plants currently in operation and disbursement schedules.
These parameters are therefore re-estimated at each closing date to ensure that the amounts accrued correspond to the best estimate of the costs eventually to be borne by EDF.
EDF considers that the assumptions used at 31 December 2020 are appropriate and justified. However, any future change in assumptions could have a significant impact on EDF’s balance sheet and income statement (see note 28).
The main assumptions and sensitivity analyses relating to nuclear provisions are presented in note 28.5.
The calculation of provisions incorporates a level of risks and unknowns as appropriate to the operations concerned. The valuation of costs also carries uncertainty factors such as:
The value of pensions and other long-term and post-employment benefit obligations is based on actuarial valuations that are sensitive to all the actuarial assumptions used, particularly concerning discount rates, inflation rates and wage increase rates.
The principal actuarial assumptions used to calculate these post-employment and long-term benefits at 31 December 2020 are presented in note 30.4. These assumptions are updated annually. EDF considers the actuarial assumptions used at 31 December 2020 appropriate and well-founded, but future changes in these assumptions could have a significant effect on the amount of the obligations andEDF’s net income.
As explained in note 1.3, the quantities of energy supplied but not yet measured and billed are calculated at the reporting date based on consumption statistic models and selling price estimates. Determination of the unbilled portion of sales revenues at the year-end is sensitive to the assumptions used to prepare these statistics and estimates.
