Universal Registration Document 2021

In November 2021, EDF Energy submitted Integrated Plan (IP) 22 to the NLA which updated the defueling cost estimates. The updated cost estimate represents an increase of €0.9 billion in the provision compared to 2020. This increase is mainly explained by the unexpected early end of generation at Dungeness B in June 2021, previously expected to be 2028, leading in particular to a longer defueling duration (and hence an increase in costs) due to the unplanned nature of this shutdown.

Furthermore, in 2021 EDF Energy updated the cost estimates relating to phase 2 of the decommissioning plan submission (DPS 21) which includes the other decommissioning activities for the AGR plants, decommissioning of Sizewell B and an update to the Uncontracted Liability Discharge Plan. The updated cost estimate represents an increase in the provision of €0.2 billion which includes the upward effects of the unexpected early end of generation at Dungeness (previously planned for 2028) and the new assumptions regarding the closure of Heysham 2 and Torness AGR plants, scheduled for 2028 (previously 2030), as well as the downward effect of extension of the depreciation period of Sizewell B (PWR plant) at 31 December 2021. Phase 2 will be submitted to the NLA at the end of February 2022.

15.2.4 Discounting of EDF Energy’s provisions related to nuclear generation

The method used to determine the discount rate changed as follows from 31 December 2020:

• Like the discount rate for nuclear provisions in France, the discount rate for EDF Energy’s provisions is now based on an interest rate curve, which comprises a sovereign yield curve constructed on year-end market data for liquid horizons (UK gilt 0-20 year yield) and then converging, using an interpolation curve, towards the very long-term rate UFR (Ultimate Forward Rate) plus a curve of the spread of corporate bonds rated A to BBB. Based on expected disbursements corresponding to nuclear obligations, a single equivalent discount rate is deduced from the curve constructed in this way. This single discount rate is then applied to the forecast disbursement schedules for the costs of the obligations, to determine the provisions;
• The inflation assumption is based on an inflation curve constructed by reference to economic forecasts and inflation-indexed market products, in long term coherence with the inflation assumption underlying the UFR (2%).

Determined under this method, the real discount rate for calculation of all EDF Energy’s nuclear provisions is unchanged overall. In particular, the real discount rate used to calculate provisions for the back-end of the nuclear cycle and decommissioning of nuclear plants is 1.9%, the same as at 31 December 2020.

15.3 Nuclear provisions in belgium

In Belgium, the Belgian law of 11 April 2003 assigned management of provisions concerning the Belgian nuclear plants, and the funds that cover them, to Synatom (a subsidiary of the ENGIE group). Luminus contributes via Synatom to these funds, to cover its share of plant decommissioning and back-end nuclear fuel expenses as a co-owner of 4 nuclear plants. These funding mechanisms are reflected through the following items in the consolidated financial statements:

• obligations presented in the liabilities in the form of provisions, amounting to €272 million at 31 December 2021 (€265 million at 31 December 2020);
• a receivable representing the advance payments made to Synatom, recognised in the consolidated balance sheet assets as financial assets carried at fair value (see note 18.1.3) at the value of €282 million at 31 December 2021 (€263 million at 31 December 2020). This receivable, which corresponds to the fair value of the share of funds held by Synatom on behalf of Luminus, is discounted by applying the same real discount rate used to determine the obligations they will cover.

Other provisions related to nuclear generation in Belgium correspond to liabilities covered by provisions that are not part of the mechanisms described above.