The calculation of provisions incorporates a level of risks and unknowns as appropriate to the operations concerned. The valuation of costs also carries uncertainty factors such as:
The value of pensions and other long-term and post-employment benefit obligations is based on actuarial valuations that are sensitive to all the actuarial assumptions used, particularly concerning discount rates, inflation rates and wage increase rates.
The principal actuarial assumptions used to calculate these post-employment and long-term benefits at 31 December 2020 are presented in note 30.4. These assumptions are updated annually. EDF considers the actuarial assumptions used at 31 December 2021 appropriate and well-founded, but future changes in these assumptions could have a significant effect on the amount of the obligations and EDF’s net income.
As explained in note 1.3, the quantities of energy supplied but not yet measured and billed are calculated at the reporting date based on consumption statistic models and selling price estimates. Determination of the unbilled portion of sales revenues at the year-end is sensitive to the assumptions used to prepare these statistics and estimates.
Sales essentially comprise income from energy sales (to final customers and as part of trading activities), and sales of services. EDF’s energy sales revenues include delivery services through the energy distribution network purchased from the subsidiary Enedis and reinvoiced to end-customers.
Sales are recognised when delivery of goods has taken place or the service has been completed.
The quantities of energy delivered to EDF customers but not yet measured and billed at the end of the period are calculated based on the quantities used by the sites of the EDF balance-responsible entity less the quantities billed, after losses measured by a statistical method presented to the Commission de régulation de l’énergie (CRE), the French Energy regulation Commission. These quantities are valued using an average price determined by reference to energy invoiced in the previous month.
Sales of goods and services not completed at the balance sheet date are valued by reference to the stage of completion at that date.
Sales of energy to EDF Trading, the EDF group’s trading company, are recorded at their contractually stipulated amount.
French law 2010-1488 of 7 December 2010 on the new organisation of the electricity market introduced an obligation in France to contribute to guaranteeing power supply security from 1 January 2017.
A capacity mechanism was therefore set up in France to ensure secure power supplies during peak periods.
Operators of electricity generation facilities and load-shedding operators must have their capacities certified by RTE, and commit to a forecast level of availability for a given year of delivery. In return, they are awarded capacity certificates. Meanwhile, electricity suppliers and purchasers of power to compensate for network losses (obligated actors) must have capacity certificates equivalent to consumption by their customers in peak periods. Suppliers pass on the cost of the capacity mechanism to final customers through their sale prices.
The system is completed by registers for trading of capacities between actors. Capacity auctions are held several times a year.
EDF is concerned by both aspects of this system, as an operator of electricity plants and as an electricity supplier.
The operations are recorded as follows:
Research expenses are recognised as expenses in the financial period incurred.
Development costs that meet the requirements for capitalisation laid down in Article 211-5 of the French national chart of accounts are included in intangible assets and amortised on a straight-line basis over their foreseeable useful life.
Other intangible assets mainly consist of software and storage capacity reservation costs.
Royalties paid for SaaS (Software as a Service) are generally charged to expenses as the services are provided. To qualify as intangible assets, expenses on SaaS contracts must confer a right of control to the user in addition to access to the software for a fixed period.
Intangible assets other than research and development expenses are amortised on a straight-line basis over their useful lives regardless of whether they are generated in house or purchased.
