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 EDF:
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 preliminary 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:
On 3 February 2023, the Council of State rejected EDF’s appeal filed on 9 August 2022. 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 the 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.
During 2022, the CRE notified EDF that ARENH deliveries to three alternative suppliers had ceased due to their court-ordered liquidation or suspension of their governmental licence to purchase electricity. 21.9MW of volumes in the May 2022 ARENH session were not delivered by EDF due to (i) defaulting suppliers being placed in liquidation and (ii) non-implementation of the procedure to transfer their ARENH entitlements to the suppliers of last resort, and the CRE reallocated all these volumes to the November session.
ARENH applications during the November 2022 session for delivery in 2023 totalled 148.87TWh (excluding applications from EDF subsidiaries and network operators). The CRE scaled down certain applications (-0.56TWh in total), bringing the total application volumes validated by the CRE to 148.30TWh, and curtailed each supplier’s application, within a total limit of 100TWh. Further volumes were also sold by EDF to its subsidiaries through contracts that replicate the ARENH scheme, and to compensate for network electricity losses (26.6TWh).
Regarding the possibility of a transition to new regulations governing EDF’s nuclear power plants, as announced in the draft multi-year energy programme (PPE) published on 25 January 2019, in January 2020 the French government launched a call for contributions regarding the fundamental findings driving the plan to reform the economic regulations for existing nuclear facilities, and its construction and operating principles. The proposed new regulations would replace the ARENH scheme. Like many other actors in the sector, the EDF group participated in this consultation, which ended on 17 March 2020.
France’s Minister for the Ecological and Inclusive Transition and Minister of the Economy and Finance then commissioned the CRE to carry out an assessment of the costs borne by the nuclear operator, and to determine fair remuneration for its nuclear activities under the government’s potential future regulations for existing nuclear facilities. There have been no significant developments in the terms and conditions of these potential new regulations since 2021.
