Universal Registration Document 2022

Introduction

15.3 Nuclear provisions in Belgium

In Belgium, the 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 €377 million at 31 December 2022 (€272 million at 31 December 2021);
  • 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 €253 million at 31 December 2022 (€282 million at 31 December 2021). 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.

At 31 December 2022, nuclear provisions in Belgium reflect the three-year review of nuclear provisions, which incorporated the conclusions of the Nuclear Provisions Commission that were reported to Synatom and Electrabel (ENGIE group subsidiaries) on 16 December 2022. Following the review, decommissioning provisions were increased by €183 million.

Note 16 Provisions for employee benefits

Accounting principles and methods

The Group grants its employees post-employment benefits (pension plans, retirement indemnities, etc.) and other long-term benefits (e.g. long-service awards) in compliance with the specific laws and measures in force in each country where it does business.

Calculation and recognition of employee benefit obligations

Obligations under defined-benefit plans are calculated by the projected unit credit method, which determines the present value of entitlements earned by employees at year-end under all types of plan, taking into consideration the prospects for wage increases and each country’s specific economic conditions.

Post-employment benefit obligations are valued mainly using the following methods and assumptions:

  • retirement age, determined on the basis of the applicable rules for each plan, and the requirements to qualify for a full pension;
  • career-end salary levels, with reference to employee seniority, projected salary levels at the time of retirement based on the expected effects of career advancement, and estimated trends in pension levels;
  • forecast numbers of pensioners, determined based on employee turnover rates and mortality data available in each country;
  • reversion pensions where relevant, taking into account both the life expectancy of the employee and his/her spouse and the marriage rate;
  • a discount rate that depends on the geographical zone and the duration of the obligations, determined at the year-end date by reference to the market yield on high-quality corporate bonds or the rate on government bonds whose duration is coherent with EDF group’s commitments to employees.

The amount of the provision corresponds to the value of obligations less the fair value of the fund assets that cover those obligations. The net expense booked during the year for employee benefit obligations includes:

  • in the income statement:
    • the current service cost, corresponding to additional benefit entitlements earned during the year,
    • the net interest expense, corresponding to interest on obligations net of the return on fund assets, which is calculated using the same discount rate as for the obligations,
    • the past service cost, including the income or expense related to amendments or settlements of benefit plans or introduction of new plans,
    • the actuarial gains and losses relating to other long-term benefits;
  • in other components of consolidated comprehensive income:
    • the actuarial gains and losses relating to post-employment benefits and any return on hedging assets in excess of the discount rates used,
    • the effect of the limitation to the asset ceiling if any.

Post-employment benefit obligations

When they retire, Group employees benefit from pensions determined under local rules. They may also be entitled to benefits directly paid by the companies, and additional benefits prescribed by the relevant regulations.

French entities covered by the IEG system

Entities belonging to the specific IEG (electricity and gas) sector system, namely EDF, Enedis, Électricité de Strasbourg and EDF PEI, are Group companies where almost all employees benefit from the IEG statutes, including the special pension system and other statutory benefits.

After the financing reform for the IEG sector system took effect on 1 January 2005 (law of 9 August 2004), pension provisions were recognised by IEG companies to cover entitlements not funded by France’s standard systems (CNAV, AGIRC and ARRCO), to which the IEG system is affiliated, or by the CTA (contribution tarifaire d’acheminement) levy on gas and electricity transmission and distribution services.

As a result of the system affiliation mechanism, any change (whether favourable or unfavourable to employees) in the standard French pension system that is not passed on to the IEG pension system is likely to cause a variation in the amount of the provisions recorded by the Group to cover its obligations.

The obligations concerned by the pensions and for which a provision is recorded thus include:

  • specific benefits of employees in the deregulated or competitive activities;
  • specific benefits earned by employees from 1 January 2005 for the regulated activities (transmission and distribution) (benefits earned prior to that date are financed by the CTA levy).