Electricité de France S.A. – Annual report – 31 December 2016
Note 3 SIGNIFICANT EVENTS AND TRANSACTIONS (extract)
3.1 EXTENSION TO 50 YEARS OF THE DEPRECIATION PERIOD OF THE 900MW PWR SERIES IN FRANCE 1
The Group considers that all the technical, economic and governance conditions necessary to bring the depreciation periods of its 900MW PWR power plants in France into line with its industrial strategy are fulfilled in 2016.
In view of studies and work already completed, particularly concerning replacement of components and controlled equipment ageing, the Group has sufficient assurance of the plants’ technical capacity to operate for at least 50 years. This is also confirmed by the international benchmark.
The Group has also made progress with the Nuclear Safety Authority (Autorité de Sûreté Nucléaire (ASN)) on the question of the content of the fourth 10-year inspections of this series as part of the Grand Carénage overhaul programme. Although some points remain to be finalised, the components of these inspections are currently in a convergence process with the ASN. This is demonstrated by the Re-examination Orientation File response sent by the ASN to EDF in April 2016, in which the ASN stated its agreement with the company’s chosen themes and commitments for these inspections. This was an important step in the process, giving EDF secure grounds for industrial preparations for the 10-year inspections pending the ASN’s generic opinion, which should be issued a few months before the first of the inspections begins.
Once its fourth 10-year inspections are completed, the 900MW PWR series will have reached a level of safety that is both as close as possible to EPR safety level and one of the highest worldwide.
Extending the nuclear reactors’ operating lifetimes beyond 40 years also offers clearly positive returns that are higher than in a 40-year scenario, even in the event of long-term price depression.
Furthermore, the principle of operating lifetimes of more than 40 years is laid down in France’s multi-year energy plan (Programmation Pluriannuelle de l’Énergie (PPE)) adopted by Decree 2016-1442 of 27 October 2016 as a necessity for secure power supplies. Extending the depreciation period of the 900MW series is consistent with the objectives of the PPE (particularly development of renewable energies, and control of greenhouse gas emissions).
In view of all these factors, the Group considers that the best estimate for the depreciation period of the 900MW series is now 50 years. This change in accounting estimate does not affect the ASN’s decisions to authorise continued operation. Authorisations will be given individually for each unit after each 10-year inspection, which is currently the case as required by law.
The Group therefore undertook this change of accounting estimate at 1 January 2016 for all its power plants in the 900MW series in France, except for Fessenheim.
- Except for Fessenheim
This change of accounting estimate is applied prospectively, and has the following consequences for the Group’s consolidated financial statements at 31 December 2016:
- At 1 January 2016, due to timing differences in the payment schedules, provisions relating to nuclear power generation were reduced by €2,044 million (see note 29), including €1,657 million covered by dedicated assets (see note 47.4). This reversal from provisions does not affect the income statement, but is allocated to the net book value of the assets in compliance with IFRIC 1 (see note 22.1). It is almost entirely taxable and generates a current tax liability of €679 million.
- The impacts in 2016, are estimated as follows :
- The 10-year extension of the accounting depreciation period, and the reduction in the value of assets at 1 January 2016 in line with the decrease in nuclear provisions, leads to a lower depreciation charge compared to depreciation based on a 40-year depreciation period, estimated at €965 million for the year;
- the reduction in nuclear provisions at 1 January 2016 leads to a €90 million decrease in the cost of unwinding the discount;
- income related to partner advances made to EDF under the nuclear plant financing plans is down by €42 million;
- overall, the various effects lead to a €1,013 million increase in the income before taxes, and a €664 million increase in consolidated net income.