Universal Registration Document 2021

Note 40  Management compensation

The Company’s key management and governance personnel are the Chairman and CEO and the directors. In application of the law, directors representing the employees receive no remuneration for their services.

The total gross compensation (salaries and all types of benefits, excluding employer contributions) paid by EDF to the Company’s key management and governance personnel was as follows in 2020 and 2021.

(1) At its meeting of 17 February 2021 the Board of Directors decided to keep the gross fixed annual compensation of the Chairman and Chief Executive Officer at €450,000 for 2021, the same as in 2020. The Chairman and Chief Executive Officer also receives benefits in kind in the form of a company car.

(2) The General Shareholders’ Meeting of 6 May 2021 approved the Board of Directors’ proposal to set the annual budget for directors’ compensation at €440,000 for 2021.

(3) This amount includes directors’ fees paid in 2021 to directors whose terms of office ended during 2021, amounting to a total €35,505.

(4) This amount includes directors’ fees paid in 2020 to directors whose terms of office ended during 2019, amounting to a total €50,142.

Note 41 Subsequent events

Exceptional regulatory measures and outlook for nuclear power generation in France

Exceptional regulatory measures

In view of the high increases in electricity market prices, France introduced a “tariff cap” for 2022 limiting the raise in regulated sales tariffs for residential customers to a maximum 4% (including taxes) at 1 February 2022 compared to the tariffs in force at 1 August 2021. This tariff cap is founded on two articles of the Finance Law for 2022 (law 2021-1900 of 30 December 2021):

• under Article 29, a reduction in the TICFE tax (or CSPE) is applicable from 1 February 2022 for all customers (residential and business customers, on regulated-tariff or market-price contracts), although a legal minimum level must be maintained (€1/MWh for residential and small business customers). This reduction applies to quantities of energy delivered until 31 January 2023. The new TICFE tariffs have been set by decree;
• under Article 181, if the CRE, despite the reduction in the TICFE, proposes an increase in regulated sales tariffs for residential customers that exceeds 4% (including taxes) compared to the tariffs in force at 31 December 2021, as a dispensation from the Energy Code the French government may object to the proposal and through a joint decision by the Ministers for the Economy and Energy set the regulated sales tariffs, and tariffs for sales to the local distribution companies, at a lower If this happens, the law provides for a subsequent catch-up adjustment of regulated sales tariffs in 2023, to be smoothed over twelve months, to cover the loss of income for EDF in 2022. The same article also introduces a mechanism to compensate for losses borne by local electricity distribution companies on regulated-tariff offers and electricity suppliers on market-price offers.

On 13 January 2022 the French government announced further exceptional measures to limit the rise in electricity tariffs for consumers in 2022. Details of their practical implementation are still forthcoming, but one main step is attribution of an additional volume of 20TWh to the ARENH scheme for 2022, over the period 1 April to 31 December 2022, at the price of €46.2/MWh. This measure, announced in January 2022, has two effects for EDF: i) it is necessary to purchase these 20TWh of ARENH volume for delivery to other suppliers, with a very significant negative price effect given current market prices; ii) the increased ARENH portion in relation to the market-price portion in the “cost stacking” method used to calculate regulated sales tariffs for 2022 will induce a decrease in sales prices to customers on both regulated-tariff and market-price contracts.

The additional measures also concern extension of the 4% regulated tariff increase cap (including taxes) to non-residential customers who are still eligible for the regulated tariff in mainland France and non-interconnected zones.

In a press release of 13 January 2022, EDF acknowledged the measures announced by the French government to limit the rise in electricity tariffs for 2022. EDF stated that the financial consequences could not be accurately determined at that stage. Based on the information available to the Company at the press release date, the impact of these measures on EDF’s 2022 EBITDA, compared to a situation in which they were not implemented, was estimated at around €8.4 billion based on market prices at 31 December 2021, and around €7.7 billion based on market prices at 12 January 2022. EDF stated that the final impact on EBITDA would depend on the market prices over the implementation period, and that it would release information as soon as possible and regularly on adjustments to this estimate. In the meantime it withdrew its 2022 Net Financial Debt/EBITDA guidance.

EDF also stated that it was going to consider appropriate measures to strengthen its balance sheet structure, and any steps that could protect its interests.

In a decision of 18 January 2022, the CRE proposed an increase of 35.4% including taxes (44.5% excluding taxes) in the “blue” tariffs for residential customers and 35.9% including taxes (44.7% excluding taxes) in the “blue” tariffs for non-residential customers from 1 February 2022. This proposed increase was driven primarily by the significant rise in prices on the energy market. If it had taken account of the maximum decrease in the TICFE confirmed by decree 2022-84 of 28 January 2022, this proposal would have been for a 20% increase (including taxes) in the “blue” tariffs for residential customers and a 20.9% increase (including taxes) in the “blue” tariffs for non-residential customers. In accordance with the tariff cap, this proposal was rejected by the Ministers for the Economy and Energy, who set the increase in the “blue” tariffs for residential customers at 4% including taxes (24.3% excluding taxes) and the increase in the “blue” tariffs for non-residential customers at 4% including taxes (23.6% excluding taxes) through tariff orders of 28 January 2022, published in the Journal officiel of 30 January 2022 and implemented from 1 February 2022.

The CRE stated that the average price (excluding taxes) resulting from the new “blue” tariffs for residential customers in mainland France would have been €57.2/ MWh under its tariff proposal, and will be €31.2/MWh in application of the tariff order of 28 January 2022. In accordance with Article 181 of the Finance Law for 2022, the difference will be covered by a catch-up adjustment in 2023, and suppliers to residential customers on market-price contracts and the local distribution companies will be entitled to compensation from 1 February 2022. The CRE also stated that it would assess the impact of the additional ARENH volumes in 2022 at a later date; this should result in a reduction to the catch-up adjustment planned for 2023, and the supplier compensation provided for in Article 181 of the Finance Law.