Summary : The Group carries out its hydropower generation activities mainly in France under concessions, licence or delegation agreements. Therefore, the Group does not always own the assets it operates. In France, changes in the legislative and regulatory framework, particularly for the renewal of concessions (provisions for the most powerful facilities), changes in the economic conditions of concession specifications and the conditions for implementing advertising and competitive bidding procedures could have an impact on the Group’s results.
Criticality : ●● Intermediate
The challenges associated with the renewal of hydraulic concessions in France are specified in section 1.4.1.3.1.4 “Issues relating to hydropower generation”. To date, the French State has still not renewed 20 concession titles that expired on 31 December 2020, corresponding to an installed capacity of 2,508MW. On the topic of concessions renewal, discussions are going on between the French State and the European Commission on the resolution of two formal notices dated of 22 October 2015 and 7 March 2019.
There is the risk that the EDF group may not obtain the renewal of each of its concessions in its favour or may obtain the renewal under less favourable economic conditions. In addition, the compensation that should be paid by the State, in particular, in the event of early termination of the operation of a concession, may not fully compensate the loss of revenue borne by the Group. Future regulations could also change in a way that is detrimental to the Group. These factors could have an adverse impact on its activities and financial position.
Depending on the conditions in each country, and mainly in Italy, these concessions may not be continued or may not be renewed in its favour, with changes to the financial terms and conditions of the concession specifications, which would have an adverse impact on the Group’s activities and financial position.
EDF operates as a responsible concession holder through dialogue and joint construction with all its stakeholders and support for local economic development in the regions.
Close collaboration with the economic, political and associative players in the geographic areas concerned and close dialogue with the people living near the structures are part of the day-to-day consultation process (this is planned for 2022 for the construction of a fish passage structure at the Malause dam, the Poutès worksite and the renaturation of the Rhine).
In France, anchoring the economy in the regions means maximising local economic benefits by making almost two-thirds of technical purchases (equipment, works, studies, etc.) in the hydraulic regions to support the local industrial fabric (referencing in the supplier panels of more than 1,800 local companies in the specific hydraulic trades)
Summary : Enedis conducts its distribution activities under public service concessions and does not own most of the assets it operates. Changes in the legislative framework and in concession specifications could have an impact on the Group’s results.
Criticality : ●● Intermediate
In France, the law stipulates that Enedis and the Local Distribution Companies interconnected to the continental metropolitan network), exclusive rights to ensure the public service of public electricity distribution. Similarly, EDF and the LDCs carry out a supply mission in their service areas at regulated tariffs, also under the exclusive rights granted to them by law.
Insofar as the AODE (authority responsible for organising public distribution) competence is entrusted by law to local authorities (municipalities or EPCIs, which are inter-municipality cooperation establishments) and that these AODEs are, except for source stations, the owners of the assets constituting the public electricity distribution network, the law requires Enedis to enter into concession contracts with them for a period generally ranging from 25 to 30 years.
Consequently, Enedis carries out its public service missions (maintenance, renewal and development of the network, metering, connections, etc.) both under the law (the French Energy Code designates the operators in charge of the public service of
electricity distribution and specifies the missions entrusted to them) and under these concession contracts. Moreover, the purpose of such contracts is, yet again in application of the law, to provide access to the regulated sales tariffs; they are therefore trilateral (they bind the AODEs, the distribution network operators and the regulated tariff supplier).
Due to the exclusive rights granted to them, Enedis and EDF, when renewing a concession contract, cannot be pitted against other players. The current process of renewing concession contracts with all of the AODEs is based on a new contract template drawn up in December 2017 by the FNCCR (the French national federation of licensing authorities), France Urbaine, Enedis and EDF. Even though two decisions of the French Conseil d’État (council of state) in July and September 2020 confirmed the compatibility of the exclusive rights granted to Enedis and EDF with, on the one hand, European Union law and, on the other hand, the constitutional principle of the free administration of local authorities, the Group cannot, however, exclude the possibility of these provisions being amended by legislation or following an unfavourable court decision. Furthermore, the Group may not obtain the renewal of these contracts under the same financial terms and conditions.
