Universal Registration Document 2022

Introduction

Note 29 Provisions for other expenses and contingent liabilities

29.1 Provisions for other expenses

    Increases Decreases    
(in millions of euros) 31/12/2021 Operating Utilisations Reversals Other 31/12/2022
Provisions for:            
  • personnel expenses
 36 29 (23) (2) - 40
  • replacement of assets operated under concessions
 281 14 (0) (4) (13) 278
  • other expenses*
 1,107 3,558* (3,277)* (15) - 1,373
PROVISIONS FOR OTHER EXPENSES 1,424 3,601 (3,300) (21) (13) 1,691

* Provisions for other expenses include a specific provision of €2,749 million recognised at 30 June 2022 for the cost in the second half-year of 2022 of the additional 19.5TWh ARENH allocation introduced by the decree of 11 March 2022 and its implementing orders. This provision was used entirely during the second half-year as and when the sales and purchases took place (see note 5 (2)). At 31 December 2022, a provision for expenses was also recognised in connection with ongoing negotiations for a significant contract (see note 26.1). At 31 December 2021, other provisions for other expenses include a provision related to proceedings before the French Competition Authority (ADLC) (see note 12). On 22 February 2022, in a settlement procedure, the ADLC fined the EDF group €300 million for abuse of its dominant position. The provision was reversed when the expense, which was disbursed in July 2022, was recognised (see note 29.2).

29.2 Contingent liabilities

Accounting principles and methods

A contingent liability is:

  • a potential obligation arising from past events, which will only be confirmed by the occurrence (or non-occurrence) of one or more uncertain future events that are not completely within the entity’s control, or
  • a present obligation arising from past events that is not recognised in the financial statements because an outflow of resources representing economic benefits is unlikely to be necessary to extinguish the obligation, or because the amount of the obligation cannot be measured reliably.

The principal contingent liabilities at 31 December 2022 are the following:

Tax inspections

The French tax authorities questioned the tax-deductibility of certain long-term nuclear provisions for the years 2012 to 2019. In a ruling of 29 August 2022, Montreuil Administrative Court validated EDF’s position for one of the contested provisions, but upheld the tax adjustment for the other.

In execution of this decision, the Company paid €297 million (see note 13.2) and filed an appeal against the unfavourable part of the ruling.

ARENH dispute –  Force majeure 

In the crisis caused by the Covid-19 pandemic, some suppliers applied to the President of the Paris Commercial Court in 2020 for an emergency order suspending ARENH deliveries either totally, or partially, equivalent to the decline in electricity consumption by their customer portfolio during the crisis, citing the force majeure clause contained in the master ARENH agreement signed with EDF.

On 20, 26 and 27 May 2020, after summary proceedings the Paris Commercial Court issued provisional rulings on the applications for suspension of ARENH contracts made by four alternative suppliers (TotalEnergies, Gazel, Alpiq and Vattenfall). The urgent application judge ruled that force majeure was established, and ordered the suspension of deliveries for three of the applicants (TotalEnergies, Gazel, and Alpiq). EDF appealed against this ruling. On 28 July 2020, the Paris Court of Appeal upheld these Commercial Court decisions. On 24 September 2020 EDF filed an appeal before the Court of Cassation which was rejected on 11 May 2022.

Meanwhile, as a precautionary measure to protect its rights, on 2 June 2020 EDF notified the energy suppliers Alpiq, Gazel and TotalEnergies of the termination of their ARENH contracts. By an order of 1 July 2020, the President of the Paris Commercial Court declared this termination null and void. EDF appealed against that decision. On 19 November 2020, the Paris Court of Appeal overturned the Commercial Court’s order and stated that there were no grounds for summary proceedings, thus restoring the effects of the termination.

Further summary proceedings were initiated in late September 2020 by Ohm Energie, seeking a suspension of payments due for ARENH volumes, claiming that deliveries had been continued illegally by EDF since it had requested suspension of ARENH deliveries from April to June 2020 due to force majeure. On 23 October 2020 the Paris Commercial Court rejected all of Ohm Energie’s claims.

In parallel, seven cases concerning the substance of the matter have been brought by alternative suppliers, claiming compensation from EDF for the prejudice caused by its allegedly unlawful refusal to apply the force majeure clause. The suppliers concerned are Hydroption, Vattenfall, Priméo Energie Grands Comptes and Priméo Energie Solutions, Arcelor Mittal Energy, Plüm Energy et Entreprises et Collectivités, TotalEnergies and Ekwateur.

On 13 April 2021, the Paris Commercial Court issued a first judgement on the merits in the Hydroption case, ordering EDF to pay the claimant €5.88 million in damages. The court considered that the conditions for force majeure were fulfilled and concluded that in continuing its ARENH deliveries against Hydroption’s wishes EDF had committed a breach of contract for which it could be held liable. On 15 October 2021, the Paris Court of Appeal overturned the Commercial Court’s judgement insofar as it considered EDF liable and ordered it to pay damages to Hydroption, considering that the exemption clause of force majeure was not established, and that EDF was not obliged to satisfy a request for suspension of the contract. On 2 December 2021, the Toulon Commercial Court placed Hydroption SAS in liquidation. The liquidator filed an appeal before the Court of Cassation on 19 January 2022, and the proceedings are still ongoing.