The volume of EDF Energy’s emissions at 31 December 2022 stood at 0.1 million tonnes (2 million tonnes for 2021). Actual greenhouse gas emissions amounted to €9 million at 31 December 2022 (€36 million at 31 December 2021) and are included in provisions in the balance sheet.
In 2022, EDF Energy surrendered 2 million tonnes in respect of emissions generated in 2021 under the UK ETS (in 2021 it surrendered 3 million tonnes in respect of emissions generated in 2020).
At 30 June 2022, other provisions for contingencies and losses included a provision of €2,749 million for the cost in the second half-year of 2022 of the additional ARENH allocation introduced by the decree of 11 March 2022 and its implementing orders. This provision was used entirely during the second half-year as and when the sales and purchases took place.
At 31 December 2022, a provision for contingencies was also recognised in connection with ongoing negotiations for a significant contract (see note 15.1.1.1).
These provisions also cover various contingencies and expenses related to operations (employers’ matching contributions to employee profit sharing, restructuring operations, contractual maintenance obligations, etc.). No individual provision is significant.
In extremely rare cases, specific litigation covered by a provision may be unmentioned in the notes to the financial statements if such disclosure could cause serious prejudice to the Group.
At 31 December 2021, other provisions for risks and liabilities include a provision related to proceedings before the French Competition Authority (ADLC). On 22 February 2022, in a settlement procedure, the ADLC fined the EDF group €300 million for abuse of its dominant position. The provision was reversed when the expense, which was disbursed in July 2022, was recognised.
Accounting principles and methods
A contingent liability is:
The principal contingent liabilities at 31 December 2022 are the following:
For the period 2008 to 2019, EDF was notified of proposed tax adjustments, notably concerning the tax-deductibility of certain long-term nuclear liabilities. In two rulings made in 2017 and one in 2019, Montreuil Administrative Court recognised the tax-deductibility of these liabilities and validated the position taken by the Company. The Minister appealed against two of these rulings. In January 2020, the Versailles Administrative Court upheld EDF’s position for the year 2008, but the Minister appealed. In a decision of 11 December 2020 the Council of State overturned the Versailles court’s decision and sent the case back before the same court. On 17 June 2021 the Administrative Appeal Court found against the Company and cancelled the first-instance rulings that had been in its favour. The Company lodged a further appeal before the Council of State, which was deemed admissible in late 2022. EDF is now waiting for a hearing date to be set. EDF recognised a net tax liability of €510 million in its 2020 financial statements in connection with this dispute, and has a tax liability covering the residual risk at 31 December 2022.
For the years 2012 to 2019, the French tax authorities questioned the tax- deductibility of certain long-term nuclear provisions. In a ruling of 29 August 2022, Montreuil Administrative Court validated the Company’s position for one of the contested provisions, but upheld the tax adjustment for the other. In execution of this decision, the Company paid €297 million (see note 9.2) and filed an appeal against the unfavourable part of the ruling.
Following the tax inspections of EDF International for the years 2009 to 2014, the French tax authorities questioned the valuation of the bond convertible into shares issued to refinance the acquisition of British Energy. The total amount concerned was approximately €310 million. EDF International contested this reassessment.
In judgements of 2 July 2019 for the period 2009-2013 and 30 January 2020 for the year 2014, Montreuil Administrative Court confirmed the tax reassessments. EDF International therefore paid the tax in execution of these decisions, but also appealed against them. In a ruling of 25 January 2022, Versailles Administrative Court found in favour of EDF International and cancelled the first-instance judgments, thus nullifying the notified reassessments. In early 2022, EDF International received a full refund of the amounts it had paid. In a decision of 16 November 2022, the Council of State overturned the Administrative Court’s ruling and sent the case back to be rejudged before the same court. In application of this decision, EDF International repaid the full amount previously received (see note 9.2).
EDF and its subsidiaries are party to a number of labour lawsuits. The Group considers that none of these lawsuits, individually, is likely to have a significant impact on its financial results or financial position. However, because they relate to situations that could concern a large number of EDF’s employees in France, any increase in such litigations could have a potentially negative impact on the Group’s financial position.
Additionally, EDF and its subsidiaries in France regularly undergo inspections by social security bodies such as URSSAF, some of which are currently in process.
Announcements in France in 2010 of a cut in purchase tariffs for photovoltaic electricity (the PV purchase tariff) triggered an upsurge in connection applications submitted to distribution network operators. By a decree of 9 December 2010 (the “moratorium decree”) the French Government suspended the conclusion of new contracts with purchase obligations for a three-month period, and stated that any applications not approved by 2 December 2010 would have to be resubmitted at the end of this three-month period, based on a new tariff. The decision setting that tariff was issued on 4 March 2011, and significantly reduced the PV purchase tariffs. A tender system was developed in parallel.
A ruling given by the French Council of State on 16 November 2011 rejecting appeals against the moratorium decree generated a large volume of legal proceedings against Enedis and EDF in late 2011 which continued until 2015. Since March 2016, new actions for compensation relating to the photovoltaic moratorium have been definitively barred.
In response to an application for a preliminary ruling, on 15 March 2017 the Court of Justice of the European Union (CJEU) confirmed that the decisions of 10 July 2006 and 12 January 2010 setting the PV purchase tariffs constituted State aid that had been implemented without prior notification to the European Commission, and was therefore illegal. The CJEU concluded that it was now up to the national courts to take the appropriate action.
