Gas purchase commitments are given by EDF in connection with its expanding gas supply business.
Gas purchases for supply, delivery and storage are mostly undertaken through long-term contracts and forward purchases from EDF Trading.
A contingent liability is:
The principal contingent liabilities at 31 December 2021 are the following:
For the years 2012 to 2019, the French tax authorities notified the Company of certain recurrent tax reassessments concerning the Contribution sur la Valeur ajoutée des Entreprises (tax on corporate value added) and questioned the deductibility of long-term provisions.
In the crisis caused by the Covid-19 pandemic, some suppliers applied to the President of the Paris Commercial Court in 2020 for an emergency order suspending ARENH deliveries either totally, or partially, equivalent to the decline in electricity consumption by their customer portfolio during the crisis, citing the force majeure clause contained in the master ARENH agreement signed with EDF.
On 20, 26 and 27 May 2020, after summary proceedings the Paris Commercial Court issued provisional rulings on the applications for suspension of ARENH contracts made by four alternative suppliers (Total Energies, Gazel, Alpiq and Vattenfall). The urgent application judge ruled that force majeure was established, and ordered the suspension of deliveries for three of the applicants (TotalEnergies, Gazel, and Alpiq). EDF appealed against this ruling. On 28 July 2020, the Paris Court of Appeal upheld these Commercial Court decisions. On 24 September 2020 EDF filed an appeal before the Court of Cassation. TotalEnergies is the only remaining party in the ongoing proceedings.
Meanwhile, as a precautionary measure to protect its rights, on 2 June 2020 EDF notified the energy suppliers Alpiq, Gazel and TotalEnergies of the termination of their ARENH contracts. By an order of 1 July 2020, the President of the Paris Commercial Court declared this termination null and void. EDF appealed against that decision. On 19 November 2020, the Paris Court of Appeal overturned the Commercial Court’s order and stated that there were no grounds for summary proceedings, thus restoring the effects of the termination.
Further summary proceedings were initiated in late September 2020 by Ohm Energie, seeking a suspension of payments due for ARENH volumes, claiming that deliveries had been continued illegally by EDF since it had requested suspension of ARENH deliveries from April to June 2020 due to force majeure. On 23 October 2020 the Paris Commercial Court rejected all of Ohm Energie’s claims.
In parallel, seven cases concerning the substance of the matter have been brought by suppliers, claiming compensation from EDF for the prejudice caused by its allegedly unlawful refusal to apply the force majeure clause. The suppliers concerned are Hydroption, Vattenfall, Priméo Energie Grands Comptes and Priméo Energie Solutions, Arcelor Mittal Energy, Plüm Energy and Plüm Entreprises et Collectivités, TotalEnergies and Ekwateur.
On 13 April 2021, the Paris Commercial Court issued a first judgement on the merits in the Hydroption case, ordering EDF to pay the claimant €5.88 million in damages. The court considered that the conditions for force majeure were fulfilled and concluded that in continuing its ARENH deliveries against Hydroption’s wishes EDF had committed a breach of contract for which it could be held liable. On 15 October 2021, the Paris Court of Appeal overturned the Commercial Court’s judgement insofar as it considered EDF liable and ordered it to pay damages to Hydroption, considering that the exemption clause of force majeure was not established, and that EDF was not obliged to satisfy a request for suspension of the contract. On 2 December 2021, the Toulon Commercial Court placed Hydroption SAS in liquidation. The liquidator has not taken an appeal to the Court of Cassation.
The Paris Commercial Court issued two more judgements on the merits on 30 November 2021, in the Total Energies and Ekwateur cases, ordering EDF to pay these companies damages totalling several dozen million euros.
The other cases are still ongoing.
France’s Competition Authority (the ADLC) is currently investigating the EDF group in connection with four separate matters.
The first, relating to the commercial practices of EDF and some of its subsidiaries in the energy services markets, follows a complaint filed on 17 October 2016 by Xélan. Following this complaint, the ADLC conducted search and seizure operations at the premises of EDF and several of its subsidiaries on 22 and 23 November 2016. This investigation is still ongoing.
The second investigation follows a complaint filed by Engie on 19 June 2017 relating to EDF’s commercial practices regarding retail electricity and gas sales, and specifically the circumstances in which EDF gave electricity suppliers, upon request, access to its file of customers paying the regulated “Green” and “Yellow” tariffs from the end of 2015, when these tariffs were about to be discontinued. Documents collected during search and seizure operations in November 2016 were used in the Engie proceedings. On 27 May 2021 EDF, Dalkia, Dalkia Smart Building, Citelum and Cham were notified of the ADLC’s objections concerning the markets for retail electricity and gas supply, multi-technique management/ maintenance and energy optimisation services, and energy control measures leading to issuance of energy savings certificates. The ADLC’s decision is awaited, after a meeting was held before the ADLC’s panel in November 2021.
The third investigation follows an ex-officio referral to the ADLC on 4 November 2019 and concerns the formation of a partnership for heat network operations. On 3 May 2021 EDF, Dalkia, Electricité de Strasbourg, ES Services Energétiques and EDEV were notified of the ADLC’s objections and responded on 16 July 2021. This procedure, which allows both sides to present their arguments, will continue in 2022.
The fourth investigation, relating to EDF’s pricing policy for its electricity supply offers to non-residential customers with a connection capacity of less than 36kVa, follows a complaint by Plüm Energie dated 14 September 2020. This complaint was accompanied by an application for precautionary interim measures, intended to make the ADLC take urgent action. On 18 February 2021, the ADLC rejected Plüm’s application for interim measures. The investigation on the merits of the complaint is ongoing.
Finally, in a decision of 18 January 2022 the ADLC dismissed a complaint and application for interim measures made against EDF by ANODE (the national association of retail energy operators). This complaint concerned EDF’s refusal to provide access to the database of non-residential customers concerned by discontinuation of the “blue” regulated sales tariffs, who were switched automatically to a follow-on market-price contract at 31 December 2020. However, the ADLC considered that ANODE’s arguments were not backed up by sufficient evidence proving the existence of the alleged practices. This decision is open to appeal for a one-month period from its notification to the parties.
Should the ADLC conclude in any of these investigations, after examining the merits of the matter, that anti-competitive practices have been involved, the possible penalties in application of Article L. 464-2 of the French Commercial Code include a fine of up to 10% of the Group’s worldwide sales excluding taxes.
A provision was recognised at 31 December 2021.
EDF is party to a number of labour lawsuits, primarily regarding working hours. EDF estimates that none of these lawsuits, individually, is likely to have a significant impact on its results or financial position. However, because they relate to situations that could concern a large number of EDF’s employees, any increase in such litigations could have a potentially negative impact on EDF’s financial position (although the risk has been mitigated by the signature of a 2016 agreement on fixed numbers of working days).
