Universal Registration Document 2022

Accounting principles and methods

Sales essentially comprise income from energy sales (to final customers and as part of trading activities) and sales of services. EDF’s energy sales revenues include delivery services through the energy distribution network purchased from the subsidiary Enedis and reinvoiced to end-customers.

Sales are recognised when delivery of goods has taken place or the service has been completed.

The quantities of energy delivered to EDF customers but not yet measured and billed at the end of the period are calculated based on the quantities used by the sites of the EDF balance-responsible entity less the quantities billed, after losses measured by a statistical method presented to the Commission de régulation de l’énergie (CRE), the French Energy Regulation Commission. These quantities are valued using an average price determined by reference to energy invoiced in the previous month.

Sales of goods and services not completed at the balance sheet date are valued by reference to the stage of completion at that date.

Sales of energy to EDF Trading, the EDF group’s trading company, are recorded at their contractually stipulated amount.

Capacity mechanism

French law 2010-1488 of 7 December 2010 on the new organisation of the electricity market introduced an obligation in France to contribute to guaranteeing power supply security from 1 January 2017.

A capacity mechanism was therefore set up in France to ensure secure power supplies during peak periods.

Operators of electricity generation plants and load-shedding operators must have their capacities certified by RTE, and commit to a forecast level of availability for a given year of delivery. In return, they are awarded capacity certificates.

Meanwhile, electricity suppliers and purchasers of power to compensate for network losses (obligated actors) must have capacity certificates equivalent to consumption by their customers in peak periods. Suppliers pass on the cost of the capacity mechanism to final customers through their sale prices.

The system is completed by registers for trading of capacities between actors. Capacity auctions are held several times a year.

EDF is concerned by both aspects of this system, as an operator of electricity plants and as an electricity supplier.

The operations are recorded as follows:

• sales of certificates are recognised in income when the auctions or over- the-counter sales take place;
• the cost of the capacity mechanism passed on to final customers through regulated sales tariffs and market-price offers is recognised in sales revenues as and when the electricity is delivered. In addition, the ARENH price is considered to have included a capacity value since January 2017 when the capacity mechanism took effect, as the terms of transfer for the capacity guarantees associated with the ARENH scheme were defined by the CRE;
• stocks of certificates are stated either at their certification value (i.e. cost of certification by RTE) or at their purchase value on the markets;
• decreases in the stock of certificates are valued at the weighted average unit cost. The timing of recognition depends on the actor:
  • operators of installations: when the auction sales take place,
  • obligated actors: over the 5-month peak period (January to March, November and December).
• for operators of installations, if the effective capacity is lower than the certified capacity, a liability (accrued expenses or provision) is recorded equivalent to the best estimate of the expense necessary to extinguish the obligation (rebalancing or settlement mechanism);
• for obligated actors, if there is a shortfall in the stocks of capacity certificates, a provision is recorded equivalent to the best estimate of the expense necessary to extinguish the obligation;
• at the closing date, if the realisable value of the stock of capacity certificates is lower than its net book value, impairment is recognised.