Électricité de France SA (EDF), the parent company of the EDF group, is a French société anonyme governed by French law and registered in France (22-30 avenue de Wagram, 75008 Paris), operating in electricity generation and electricity and gas supply. EDF also covers all the business activities of the Island Energy Systems (SEI) for Corsica and France’s overseas departments.
EDF’s financial statements at 31 December 2022 were prepared under the responsibility of the Board of Directors and approved by the Directors at the Board meeting held on 16 February 2023. They will become final after approval at the General Shareholders’ Meeting to be held on 14 June 2023.
EDF’s financial statements are prepared in accordance with the accounting principles and methods defined in regulation 2014-03 of 5 June 2014 issued by the ANC (Autorité des normes comptables, France’s Accounting Standards Authority) concerning the current French national chart of accounts. They also comply with the November 2021 update to ANC Recommendation 2013-02 of 7 November 2013 regarding measurement and recognition rules for retirement commitments and benefits.
The accounting and valuation methods applied are identical to those used in the financial statements for the year ended 31 December 2021 and incorporate changes resulting from the interest rate benchmark reform which has been applicable since 1 January 2021. The principal interest rates concerned that are used by EDF are the Eonia, the Libor USD and the Libor GBP.
This reform is applied prospectively, with no impact on profit and loss, keeping the hedging relationships for the instruments concerned. Its effects are mainly operational (renegotiation of contracts, fallback provisions, information system upgrades). The interest rate replacements already applied are described in note 1.1 to the 2021 financial statements.
When EDF adhered to the ISDA Fallback protocol in November 2021, the Libor GBP was replaced by the Sonia for all the derivatives concerned from 1 January 2022.
The replacement operations for the USD Libor will take place in line with the end date for its publication, i.e. by 30 June 2023.
The preparation of the financial statements requires the use of judgments, best estimates and assumptions in determining the value of assets and liabilities, income and expenses recorded for the period, considering positive and negative contingencies existing at year-end. The figures in EDF’s future financial statements could differ significantly from current estimates due to changes in these assumptions or economic conditions.
In a context characterised by volatility on the financial and energy markets, the parameters used to prepare estimates are based on macro-economic assumptions appropriate to the very long-term cycle of EDF’s assets.
Concerning the impacts of the war in Ukraine, EDF has very limited direct exposure in Russia and Ukraine. Its dependency on Russian uranium imports is low in view of its existing stocks and diversified, long-term supply contracts. EDF has no long-term gas contract with any Russian company, and no exposure with respect to businesses or banks that are currently affected by international sanctions. The Moscow office has been closed.
However, the war has had significant indirect effects on the Company’s financial statements, through the rise in market prices and volatility, supply chain tensions, contributing to inflation (for equipment, components, etc.), and its impact on the financial markets (particularly affecting the value of dedicated assets).
The principal operations for which EDF uses estimates and judgments are the following:
In the specific case of the depreciation period of its French nuclear power plants, EDF’s industrial strategy is to continue operation beyond 40 years, in optimum conditions as regards safety and efficiency.
EDF has therefore been making preparations for several years to extend the operation period, and making the necessary investments under its Grand Carénage industrial refurbishment programme which was approved in principle by the Board of Directors in January 2015.
The depreciation period of 900MW-series power plants was extended from 40 years to 50 years in 2016 (except for Fessenheim where both reactors were permanently shut down in the first half of 2020) since all the technical, economic and governance conditions were fulfilled.
On 23 February 2021, the Nuclear Safety Authority (Autorité de sûreté nucléaire - ASN) issued a resolution on the conditions for continued operation of EDF’s 900MW reactors beyond their fourth 10-year inspection. The ASN considered that “the measures planned by EDF combined with those prescribed by ASN open the prospect of continued operation of these reactors for a further ten years following their fourth 10-year inspection”. This resolution ended the “generic” phase of the review, which concerned the studies and modifications of facilities ordinary to all the 900MW reactors, which all have a similar design model.
After the pilot reactor Tricastin 1 in December 2019 and Bugey 2, Bugey 4 and Tricastin 2 in 2021, six more reactors reached the milestone of 40 years of operation in 2022, and were restarted after a successful fourth 10-year inspection: Dampierre 1, Gravelines 1, Bugey 5, Tricastin 3, Gravelines 3 and Dampierre 2. The fourth 10-year inspection of Blayais 1 began in August 2022 and was in progress at 31 December 2022.
In 2021, the technical, economic and governance conditions for extending the depreciation period of 1300MW-series plants were fulfilled, and their depreciation period was extended from 40 to 50 years.
The depreciation period of the 1450MW-series units (the four reactors at Chooz and Civaux), which are much more recent, currently remains at 40 years as the conditions for extension are not yet fulfilled.
These depreciation periods take into account the date of recoupling with the network after the most recent 10-year inspection.
The measurement of provisions for the back-end of the nuclear cycle, decommissioning and last cores is sensitive to assumptions concerning technical processes, costs, inflation rates, long-term discount rates, the depreciation period of plants currently in operation and disbursement schedules.
These parameters are therefore re-estimated at each closing date to ensure that the amounts accrued correspond to the best estimate of the costs eventually to be borne by EDF.
EDF considers that the assumptions used at 31 December 2022 are appropriate and justified. However, any future change in assumptions could have a significant impact on EDF’s financial statements (see note 26).
The main assumptions and sensitivity analyses relating to nuclear provisions are presented in note 26.5.
