Universal Registration Document 2022

Accounting principles and methods

These liabilities relate to public electricity distribution concessions for the Island Energy Systems (SEI), and hydropower concessions.

Special public electricity distribution concession liabilities

These liabilities represent the contractual obligations specific to the concession rules for public electricity distribution concessions in France, and comprise the following:

• the concession-granting authority’s rights in existing assets (its right to recover all the concession assets), consisting of the value in kind of the facilities (the net book value of assets operated under concessions), less any as yet unamortised financing provided by the operator;
• the concession-granting authority’s rights in assets to be replaced (the operator’s obligations relating to assets due for replacement). These non-financial liabilities comprise:
  • depreciation recorded on the portion of assets considered to be financed by the concession-granting authority,
  • the provision for replacement, exclusively for assets due for replacement before the end of the concession. This is accrued over the asset’s useful life, based on the difference between the asset’s replacement value for identical capacity and functions, and the original value. The replacement value is adjusted at each year-end based on indexes from official publications, and the impact of the adjustment is spread over the residual useful life of the assets concerned. This provision is included in provisions for expenses.

When assets are replaced, the depreciation recorded on the portion of assets considered to be financed by the concession-granting authority, and the provision for replacement established for the relevant asset, are cancelled and transferred to rights in existing assets. Any excess provision is taken to income.

During the concession, the grantor’s rights in assets to be replaced are thus transferred upon the asset’s replacement to become the grantor’s rights in existing assets, with no outflow of cash to the benefit of the grantor.

Special hydropower concession liabilities

These liabilities comprise:

• the value of assets remitted for nil consideration and contributions received;
• differences arising from revaluations in accordance with French legislation for fixed assets commissioned before 1 January 1959 and before 1 January 1977;
• additional depreciation to industrial depreciation for facilities that are to be returned for nil consideration at the end of the concession but whose useful life extends beyond the concession term.

Following the changes made to the accounting treatment of hydropower concessions at 1 January 2009, the 1959 revaluation reserve is transferred to equity when the assets concerned are retired.

The net revaluation reserve generated by the 1976 revaluation is taken to income over the residual useful life of the assets concerned.

The value of assets remitted for nil consideration and contributions received is transferred to the income statement over the assets’ useful lives.