Under the Euro Medium Term Note Programme ... - Finance - EDF

Risk Factors
Increased competition and a decrease in the principal mineral deposits associated with more
stringent regulatory requirements have slowed the rate at which ESCs are produced and
made them more expensive. This trend has been accentuated by the economic crisis, which
has reduced households’ investment capacity and hurt the construction sector.
Against this background, the proposal Energy Efficiency Directive adopted in June 2011 and
the French political decisions that may be taken as a result thereof if the measure is
extended for a third period after 2014 may lead to considerably more stringent obligations.
These provisions could significantly increase EDF’s sales costs and require a considerable
increase in regulated sale rates, because such rates are set by the public authorities.
Therefore EDF cannot guarantee that increased sales costs will be completely reflected in
the rates.
The expansion of an integrated European electricity market may be slowed by a lack
of cross-border transmission system interconnections
The development of an integrated European electricity market is inhibited by a lack of crossborder
interconnections. This situation limits exchange capacity between operators in
different countries, in particular the capacity to rapidly adapt supply to demand (“blackout
risk”), and allows price differences in different countries to persist, which would be
significantly reduced in an efficient integrated European market. It also impedes the
emergence of efficient operators with a European scope as it limits the possibilities for
synergies between companies within a same group located on different sides of a border.
Although there are currently several projects to develop interconnections (investments are
determined by transmission network managers independently from producers), their
construction has nonetheless been slowed down, mainly by environmental, regulatory and
local acceptability considerations.
Furthermore, the lack of adequate interconnections between countries where the EDF Group
is based or the failure to develop such interconnections at an adequate pace may limit the
industrial synergies that the EDF Group strives to achieve between its various entities or may
cause network interruptions in countries in which the EDF Group is established, which could
have a negative impact on its results, business and outlook.
Repeated or widespread blackouts in France or in an area served by a subsidiary of
EDF, particularly if they are attributable to the Group, may have consequences for the
Group’s activities, results and image
The EDF Group may be the source of repeated or widespread blackouts or be blamed for
one, even if the causal event occurred in another network or was attributable to another
operator.
The causes of blackouts vary: local or regional imbalances between electricity generation
and consumption, accidental interruptions to the power supply, cascading power failures
(more difficult to stop in a market with cross-border exchanges), interconnection problems at
borders and difficulty in coordinating operators in a liberalised market.
The initial impact of such power failures would be repair costs incurred to re-establish power
or restore the network. Power failures may also generate capital expenditures if it were
decided, for example, to install additional generation or network capacity. This could also
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