national level (in particular those that might impact the base for determining the dedicated assets to be constituted by EDF (1)) or European level may lead to more stringent requirements regarding the constitution of dedicated assets and have a significant impact on EDF’s financial position.
In order to ensure the control of provisions and the management of dedicated assets, the Group has put in place specific governance arrangements:
Summary : In addition to controlling industrial performance, and given the importance of nuclear generation within the EDF group, the way EDF exercise its responsibility as a nuclear operator – with nuclear safety being the number one priority – determines the Group’s overall performance. As a result of its nuclear activities, the Group is exposed to nuclear civil liability risks.
Criticality : ●● Intermediate
The primary responsibility for nuclear safety lies with the nuclear operator throughout the operating cycle of nuclear reactors. This principle along with the principle of control are reaffirmed in the EDF group’s nuclear safety policy. Liability as a nuclear operator falls under the “nuclear safety, health and security” aspect of the Group’s CSR policy (section 3.3.1 “Health & Safety”). The Chairman & Chief Executive Officer delegates this responsibility to the Group Senior Executive Vice- President, Nuclear and Thermal and the Group Senior Executive Vice-President, New Nuclear Projects and Engineering, who then sub-delegate it to the Directors of the Divisions involved, who in turn sub-delegate it to the Unit Managers.
The top priority is nuclear safety, as defined in the Group’s Nuclear Safety Policy, and this is a factor in the industrial performance of the nuclear business as a whole. Nuclear safety takes into account the design by the nuclear operator and the operation by the designer. Failure to control operating safety could have major or even vital consequences on the value of the Group’s industrial assets, its financial position and its development outlook or even on the continuation of its industrial activity.
Any serious event related to the Group’s nuclear activities, with a potential or proven impact on the population, the environment or a territory, could lead to a significant increase in the operating constraints of the Group’s industrial sites, or even the partial or total interruption of the Group’s nuclear activities. Such an event could have a significant negative impact on the Group’s activities, financial position, strategy and reputation.
The nuclear civil liability scheme that applies to nuclear facility operators of States parties to the Paris Convention, and the insurance applicable thereto, are described in section 2.1.3.7 (“Insurance”). This scheme is based on the principle of the operator’s strict liability. Accordingly, if an event occurs that causes nuclear damage, the Group would be automatically liable up to a monetary maximum set by the law applicable in the country, regardless of the source of the event that caused the damage and any safety measures that may have been taken.
In countries where the Group operates nuclear facilities, statutory liability limits may be increased or repealed. For example, the protocols amending the Paris Convention and the Brussels Convention, in force since 1 January 2022, provide for these maximum amounts to be increased and a substantial expansion of the damage to be covered. The operator’s liability in France amounts to €700 million in the event of a nuclear accident in a facility and €80 million in the event of a nuclear accident during transport. The entry into force of the other changes laid out in these protocols is likely to increase yet again the cost of insurance, and such insurance covering this liability may not always be available or maintained. Insurance coverage for the Group’s nuclear operator’s civil liability and for the transport of nuclear substances is described in section 2.1.3.7 “Insurance”.
Property damage to EDF’s nuclear facilities is covered by insurance programmes (see section 2.1.3.7 “Insurance”). Despite this cover, any event that may cause significant damage to a nuclear facility of the Group could have an adverse impact on the Group’s business and financial position.
Lastly, the Group cannot guarantee that the insurers that cover both its liability as a nuclear plant operator and property damage to its facilities will always have available capacity or that the costs of cover will not significantly increase, particularly in light of the impacts on the insurance market of events such as the nuclear accident in Japan that occurred in March 2011.
In view of these risks, and pursuant to the Group’s policy, each Group company operating nuclear facilities acts within the framework of legal and regulatory requirements specific to the country in which it operates and is obliged to comply with them. Each one ensures the nuclear safety of its facilities and constantly improves the level of this safety based on its methods, skills and values. The Group develops common principles aiming to obtain the best level of prevention of incidents and protection of workers, the public and the environment. These principles apply to all stages of the activity, both for new projects and for the existing fleets or sites being decommissioned. The Group closely involves its industrial partners in the achievement of these objectives.
Each company is responsible for the proper conduct of its nuclear activities and sets the appropriate delegations at each decision and action level. The Group guarantees the allocation of the necessary resources for nuclear safety.
An internal entity in charge of an independent safety evaluation is put in place at the level of each site, each company and the Group. Each one reports to the manager concerned, independently of other managerial functions; furthermore, each one has the duty to alert the superior hierarchical level if the reaction of the level directly involved is not what is expected.
(1) The French Cour des comptes’ report to the Senate Finance Committee on the decommissioning and dismantling of nuclear power plants, published on 4 March 2020, recommends that the costs of all decommissioning preparation operations, post-operational expenses and the cost of taxes, levies and insurance premiums directly attributable to decommissioning sites should gradually be included in the long-term expense categories.
