Universal Registration Document 2021

Accounting principles and methods

The accounting treatment of concession agreements depends on the nature of the agreements and their specific contractual features.

Concessions in France

In France, the Group is the operator for three types of concessions:

• public electricity distribution concessions granted by local authorities (municipalities or syndicated municipalities) (see note 11);
• hydropower concessions granted by the State;
• heat generation and distribution concessions from public authorities.

Hydropower concessions

Hydropower concessions follow standard rules approved by decree. For concessions granted before 1999, hydropower concession assets consist solely of hydropower generation equipment (dams, pipes, turbines, etc.), while for more recent concessions, they also include hydropower generation equipment and switching facilities (alternators, etc.).

Most concessions that expired before 2012 were initially for 75 years and were renewed for terms of 30 to 50 years. However, the French government has not yet renewed 29 concessions that have expired. Since their expiry these concessions have thus been in the “rolling extension” situation defined by the law, which stipulates that at the expiry date of a concession, if no new concession has been established “the concession is extended on the existing terms until such time as a new concession is granted”, so as to ensure continuity of operations in the meantime (Article L. 521-16 par. 3 of the French Energy Code).

As these concession agreements are not concerned by IFRIC 12 “Service concession agreements”, the assets used, whether directly owned or part of the concession, are recorded under “Property, plant and equipment operated under concessions other than French public electricity distribution concessions” at acquisition cost.

The main depreciation periods applied are:

• Hydroelectric dams: 75 years ;
• Electromechanical equipment used in hydropower plants: 50 years.

Heat generation and distribution concessions from public authorities

Heat generation and distribution concession agreements signed by Dalkia with public authorities confer the right to operate facilities remitted by or constructed at the request of those authorities for a limited period, under the concession-granting authority’s supervision.

These agreements set the terms for remuneration and transfer of the facilities to the concession-granting authority or another operator taking over at the end of the agreement.

The assets are recorded as “Other intangible assets”, in accordance with IFRIC 12 “Service concession agreements”.

Concession assets generally comprise:

• boiler houses;
• networks;
• network extensions;
• network connections; and
• sometimes cogeneration assets

Intangible assets are depreciated on a straight-line basis over the term of the concession, which is generally between 15 and 25 years.

Almost all of these assets are located in France.

Foreign concessions

Foreign concessions are governed by a range of contracts and national laws. Most assets operated under foreign concessions are recorded under “Property, plant and equipment operated under concessions other than French public electricity distribution concessions”. Foreign concessions essentially concern Edison in Italy, which operates local gas distribution networks, hydropower generating plants and energy services under concessions. Edison owns all the assets except for some items of property, plant and equipment on the hydropower generation sites, which will be returned to the concession-granting authority for nil consideration or with an indemnity when the concession ends. In compliance with IFRIC 12, certain concession agreements are recorded as intangible assets. Hydropower generation assets which will be returned for nil consideration at the end of the concession are depreciated over the duration of the concession.