Universal Registration Document 2022

On 13 July 2022, the CRE published its decision setting the final amount of the allocation from the Electricity Equalisation Fund (Fonds de péréquation de l’électricité) to SEI, following analysis of the network operators’ accounts. SEI’s allocation is set at €158.1 million for 2022.

For the fixed-amount mechanism, the ministerial order of 30 November 2022 set the 2022 contributions payable and allocations receivable from the Electricity Equalisation Fund for distribution network operators. The fixed contribution due by Strasbourg Électricité Réseaux and Enedis amount to €1.6 million and €27.41 million respectively. Enedis is also the CRE’s designated operator for collection and payment of Electricity Equalisation Fund contributions from all the Local Distribution Companies.

ARENH

The ARENH (Accès Régulé à l’Énergie Nucléaire Historique) scheme for regulated access to historic nuclear power, set up in 2011 and due to end on 31 December 2025, allows alternative suppliers to purchase electricity from EDF to supply their final customers, after signing a framework agreement, at a regulated price for set quantities determined under the provisions of the French Energy Code. This scheme is also open to network operators to cover their energy losses.

The ARENH price, determined by the Ministers for Energy and the Economy following a proposal by the CRE, has been fixed at €42/MWh since January 2012. This includes delivery of the electricity and has incorporated the associated capacity guarantees since 2017.

The maximum total ARENH volume that can be sold by law to suppliers who apply to the scheme to cover the needs of their final customers is set by ministerial order and cannot exceed a legal ceiling. Until 31 December 2019, the ceiling was 100TWh per year. It was then raised to 150TWh by the energy and climate law of 8 November 2019.

The “MUPPA (1)” law of 16 August 2022 law introducing urgent measures to protect purchasing power reduced this legal ceiling to 120TWh. The MUPPA law also set a minimum ARENH price of €49.50/MWh, although its application is conditional on prior approval by the European Commission.

On 13 January 2022 the French government announced further exceptional measures to limit the rise in electricity tariffs for consumers in 2022. These measures included EDF making an additional ARENH volume of 20TWh available to eligible suppliers over the period 1 April to 31 December 2022, at the price of €46.20/MWh.

The terms for application of this measure were laid down in a Decree of 11 March 2022 and four ministerial orders. Eligible suppliers wishing to benefit from these additional volumes at the price of €46.20/MWh during the period 1 April to 31 December 2022 were required by the decree to sell EDF an equivalent volume to the volume sold to them by EDF under the ARENH scheme, at the price of €256.98/MWh (the average wholesale market price between 2 and 23 December 2021 for baseload electricity supplies in mainland France in 2022). To allocate the additional volumes between suppliers, the CRE applied the same method as for the delivery period that began on 1 January 2022. In practice, the CRE gave notice of 19.5TWh of additional ARENH volumes allocated.

Applying the procedure set out in its decision 2022-98 of 31 March 2022, the CRE set up a mechanism to monitor and control the methods used by eligible suppliers to pass on the effect of the reduced sourcing cost (resulting from allocation of additional volumes at the price of €46.20/MWh) through their customer invoicing. In accordance with the above CRE decision, EDF was obliged to replicate the terms imposed on alternative suppliers in its own market-price contracts.

This measure thus had two main effects for the Group:

• it was obliged to purchase the additional 19.5TWh of electricity from eligible suppliers at the price of €256.98/MWh (€5.011 billion), and concurrently sell them equivalent volumes of electricity at the price of €46.20/MWh (€900 million), giving a net cost (including the cost of capacity guarantees) of €4.1 billion for the period 1 April 2022 to 31 December 2022; and
• the sale prices to customers on both regulated-tariff and market-price contracts were lower, due to the increased ARENH portion in relation to the market-price portion in the cost stacking system used to calculate regulated tariffs and market-price offers. This measure had a limited incremental impact in 2022 on regulated- tariff contracts because of application of the tariff cap described above, which already limited increases in the regulated electricity tariffs, but it also limits the difference between the frozen tariff and the tariff that would have applied in the absence of the tariff cap in 2022.

In its press release of 13 January 2022, EDF announced that it would take all appropriate measures to protect its interests in view of the decree of 11 March 2022 and the four orders making up the rest of this measure.

As the overall measure generated significant prejudice for the company, EDF made a request to the State in May 2022 for withdrawal of the Decree of 11 March 2022 and the associated orders. The State did not reply within 2 months, indicating an implicit rejection, and on 9 August 2022 EDF filed an appeal against the decree and orders before the Council of State, on the grounds that the State had exceeded its powers.

In parallel, EDF sent the Prime Minister a prior claim for compensation for the prejudice resulting from introduction of this government measure, estimated at €8.34 billion. The State did not reply within 2 months, indicating an implicit rejection, and on 27 October 2022 EDF filed a claim before the Paris Administrative court for full reparation by the State for the prejudices borne as a result of the government measure.

The purpose of this claim before the Paris Administrative Court is to obtain compensation from the State for the prejudices borne by EDF as a direct result of introduction of the Measure. The total amount of these prejudices is estimated at €8.34 billion, the principal causes being:

• the cost of the operation through which EDF purchased volumes of electricity (at the price of €256.98/MWh) which it then sold on to alternative suppliers (at the price of €46.2/MWh), and the associated capacity guarantees in application of the Measure;
• the direct and certain effects of the Measure on the level of regulated electricity sales tariffs (EDF being France’ principal supplier of regulated-tariff electricity) due to the calculation methods for these tariffs defined in the French Energy Code;
• the direct and certain effects of the Measure’s repercussions on the prices of EDF’s market-price contracts in application of the CRE’s decision of 31 March 2022 setting out the terms for passing on the effects of the Measure to customers through power supply contracts.

On 3 February 2023, the Council of State rejected EDF’s appeal filed on 9 August 2022 (see note 2). The proceedings relating to EDF’s claim before the Paris Administrative court for full reparation from the State for the prejudices borne by EDF as a result of the Measure are continuing.

Regarding ARENH allocations for 2022, in decision 2022-287 of 10 November 2022, as required by the Energy Code (Article R. 336-14 of the Energy Code modified by decree 2022-1380 of 29 October 2022), the CRE set out the method for allocating ARENH volumes if applications exceed the maximum total volume defined for 2023. In view of the current exceptional crisis in the electricity market, it also introduced reinforced checks and special rules for accepting the ARENH volumes applied for by suppliers.

The CRE stated that EDF-controlled subsidiaries’ applications taking the total volume above limit would be fully curtailed (this does not apply to network operators) and they could enter into contracts with the parent company that replicate the ARENH scheme and terms of supply, particularly the curtailment rate for alternative suppliers.