For additional information, the table below shows the estimated impact of a +/-20 base point variation in the discount rate on the present value of provisions for the back-end of the nuclear cycle, decommissioning of nuclear plants and last cores:
| Amounts in provisions at present value | Sensitivity to discount rate | ||||
|---|---|---|---|---|---|
| 31/12/2022 | Balance sheet provision | Pre-tax net income | |||
| (in millions of euros) | +0.20% | -0.20% | +0.20% | -0.20% | |
| Back-end nuclear cycle expenses | |||||
|
11,379 | (200) | 213 | 170 | (182) |
|
12,475 | (684) | 769 | 541 | (614) |
| Decommissioning and last core expenses | |||||
|
12,125 | (518) | 544 | - | - |
|
4,969 | (155) | 165 | 154 | (165) |
|
2,434 | (85) | 90 | - | - |
| TOTAL | 43,382 | (1,642) | 1,781 | 865 | (961) |
| Amount covered by dedicated assets | 31,649 | (1,460) | 1,591 | 764 | (853) |
The impact of a +/-10 base point variation in discount rates on the present value of provisions for the back-end of the nuclear cycle, decommissioning and last cores is estimated at €(837)/894 million, including €444/(490) million on the pre-tax net income.
Articles L. 594-1 and following of France’s Environment Code and their implementing regulations require assets (dedicated assets) to be set aside for secure financing of nuclear plant decommissioning expenses and long-term storage expenses for radioactive waste. These regulations govern the way dedicated assets are built up, and the management and governance of the funds themselves. Dedicated assets are clearly identified and managed separately from the Company’s other financial assets and investments. They are also subject to specific monitoring and control by the Board of Directors and the administrative authorities.
The law requires the realisable value of dedicated assets to be higher than the value of the provisions corresponding to the present value of the long-term nuclear expenses defined in France’s Environment Code.
The Decree of 1 July 2020 codified the regulatory obligations concerning dedicated assets in Articles D5 94-1 and following of the Environment Code, complemented by the ministerial order of 21 March 2007 amended by the order of 1 July 2020. These documents define the list of eligible assets, which is largely based on France’s Insurance Code and mainly includes unlisted assets. In particular, they authorise allocation to dedicated assets of the shares of CTE, which has held 100% of the capital of RTE since 31 December 2017 (see note 26.6.2 below).
EDF received ministerial authorisation on 31 May 2018 to increase the portion of unlisted assets in its dedicated assets from 10% to 15% subject to conditions (this does not apply to the shares of CTE or real estate assets).
Since the decree of 1 July 2020, EDF is no longer obliged to add to dedicated assets when the coverage rate of obligations, determined by the ratio of the assets’ realisable value to the amount of the provisions concerned, is above 100%, and withdrawals from assets are not authorised unless that rate is above 120%. The decree also increased the maximum period for allocating funds to dedicated assets in the event of undercoverage, subject to authorisation by the administrative authority, to 5 years (instead of 3 years previously).
Given the regulations governing dedicated assets, they form a highly specific category of assets.
Dedicated assets are structured and managed according to a strategic allocation defined by the Board of Directors and reported to the administrative authorities. The strategic allocation is designed to meet the overall objective of long-term coverage of obligations, and determines the structure and management of the portfolio as a whole. It takes into account regulatory constraints concerning the nature and liquidity of the dedicated assets, the financial outlook for the equity and bond markets, and the diversifying contribution of unlisted assets.
Several changes have been made to this strategic allocation in order to pursue the diversification into unlisted assets, particularly in 2010 when the shares in RTE (now held via CTE) were allocated to dedicated assets, and in 2013 when an unlisted asset portfolio (consisting of infrastructures, real estate and debt or equity funds) was set up. This portfolio is managed by EDF’s “EDF Invest” Division.
On 29 June 2018 the Board of Directors validated the principle of strategic allocation for dedicated assets:
These targets should be reached gradually by 2025.
