Universal Registration Document 2020

Compte tenu des modalités de financement mises en place par cette même loi, des provisions pour engagements de retraite sont comptabilisées par EDF au titre des droits non couverts par les régimes de droit commun (CNAV, AGIRC-ARRCO) auxquels le régime des IEG est adossé, ou par la Contribution Tarifaire d’Acheminement prélevée sur les prestations de transport et de distribution de gaz et d’électricité.

As a result of this funding mechanism, any change (whether favourable or unfavourable to employees) in the standard French pension system that is not passed on to the IEG pension system is likely to cause a variation in the amount of the provisions recorded by EDF to cover its obligations.

The benefits covered by pension provisions include:

• specific benefits of employees in the deregulated or competitive activities;
• specific benefits earned by employees from 1 January 2005 for the regulated activities (island public electricity distribution) (benefits earned before that date are financed by the CTA levy).

CNIEG management expenses payable by EDF for the administration and payment of retired employees’ pensions are also included.

In addition to pensions, other benefits are granted to IEG status former employees (not currently in active service), as detailed below:

• benefits in kind (energy): Article 28 of the IEG national statutes entitles such employees and current employees to benefits in kind in the form of supplies of electricity or gas at preferential prices. The obligation for supplies of energy to employees of EDF and Engie corresponds to the probable present value of kWh to be supplied to beneficiaries or their dependants during their retirement, valued on the basis of the unit cost. It also includes the payment made under the energy exchange agreement with Engie;
• retirement gratuities: these are paid upon retirement to employees due to receive the statutory old-age pension, or to their dependants if the employee dies before reaching retirement. These obligations are almost totally covered by an insurance policy;
• bereavement benefit: this is paid out upon the death of an inactive or disabled employee, in order to provide financial assistance for the expenses incurred at such a time (Article 26-§5 of the National Statutes). It is paid to the deceased’s principal dependants (statutory indemnity equal to three months’ pension, subject to a ceiling) or to a third party that has paid funeral costs (discretionary indemnity equal to the costs incurred);
• bonus pre-retirement paid leave: all employees eligible to benefit immediately from the statutory old-age pension and aged at least 55 at their retirement date are entitled to 18 days of bonus paid leave during the last twelve months of their employment;
• other benefits include help with the cost of studies, time banking for pre-retirement leave, and pensions for personnel sent on secondment to companies not covered by the IEG system.

1.16.3 Engagements concernant les autres avantages a long terme

These benefits concern employees currently in service, and include:

• annuities following incapacity, invalidity, industrial accident or work-related illness. Like their counterparts in the general national system, IEG employees are entitled to financial support in the event of industrial accident or work-related illness, and invalidity and incapacity annuities and benefits. The obligation is measured as the probable present value of future benefits payable to current beneficiaries, including any possible reversions;
• long-service awards;
• specific benefits for employees who have been in contact with asbestos.

1.17 Instruments dérivés

EDF uses derivatives in order to minimise the impact of foreign exchange risks and interest rate risks.

These derivatives comprise interest rate and currency derivatives such as futures, forwards, swaps and options traded on the over-the-counter market.

The application at 1 January 2017 of ANC regulation 2015-05 concerning forward financial instruments and hedging operations led to recognition of unrealised gains on the foreign exchange optimisation portfolio, and the unrealised gain or loss on currency derivatives classified as hedging instruments, in the balance sheet, in the revaluation surplus accounts created by the regulation. These accounts are netted with the unrealised foreign exchange gains or losses booked in respect of the hedged items.

Hedging derivatives correct the foreign exchange result or interest income on the corresponding asset or liability. If the foreign exchange risk is fully hedged, no provision is recorded. If it is only partly hedged, a provision is recorded for the entire unhedged portion of the unrealised loss.

For other instruments, when there is no hedging relationship, a provision is recorded for unrealised losses and unrealised gains are not recognised.

Instruments in the portfolio at the year-end are included in off-balance sheet commitments at the nominal value of the contracts.

1.18 Contrats de matières premières

Forward financial instruments on commodities are traded for hedging purposes. Gains and losses on these operations are included in sales or in the cost of energy purchases, symmetrically to the hedged items, in accordance with ANC regulation 2015-05 concerning forward financial instruments and hedging operations, which has been applicable since 1 January 2017.

Instruments in the portfolio at the year-end are included in off-balance sheet commitments at the quantities to be delivered or to be received under the contracts.

1.19 Environment

1.19.1 Greenhouse gas emission rights

EU Directive 2003/87/EC set up a greenhouse gas emission quota trading system for the European Union.

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.

EDF applies the accounting methods for greenhouse gas emission rights stipulated in ANC regulation 2012-03 of 4 October 2012, incorporated into Articles 615-1 to 615-22 of ANC regulation 2014-03.

The accounting treatment of emission rights depends on the holding intention. Two economic models coexist at EDF.

Emission rights held under the “Trading” model are included in inventories at acquisition cost. A write-down is recorded when the present value of emission rights is lower than the book value.