Under the Euro Medium Term Note Programme ... - Finance - EDF
Under the Euro Medium Term Note Programme ... - Finance - EDF
Under the Euro Medium Term Note Programme ... - Finance - EDF
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Risk Factors<br />
The <strong>EDF</strong> Group is exposed to changes in <strong>the</strong> conditions for procuring uranium and<br />
conversion and enrichment services<br />
The <strong>EDF</strong> Group’s operating costs include nuclear fuel purchases.<br />
For its nuclear power plants in France and <strong>the</strong> United Kingdom, <strong>EDF</strong> purchases uranium and<br />
conversion and enrichment services through long-term contracts containing hedging<br />
mechanisms that mitigate and smooth price fluctuation over time. Its main supplier is <strong>the</strong><br />
AREVA group, but <strong>EDF</strong> pursues a diversification policy by also buying supplies from o<strong>the</strong>r<br />
industrial companies. Prices and availability of uranium and conversion and enrichment<br />
services are subject to fluctuations due to factors that are mainly political and economic,<br />
which <strong>the</strong> <strong>EDF</strong> Group cannot control (in particular, increased demand due to worldwide<br />
growth of <strong>the</strong> nuclear energy sector or shortages associated with, for example, an operating<br />
accident in a uranium mine or an internal or external event leading to political instability in a<br />
uranium producing country).<br />
In <strong>the</strong> United States, CENG purchases uranium and conversion, enrichment and assembly<br />
services from several suppliers. The current contracts with <strong>the</strong>se suppliers ensure a supply<br />
of fuel and conversion, enrichment and assembly services for several years for <strong>the</strong> Calvert<br />
Cliffs, Nine Mile Point and Ginna plants.<br />
However, <strong>the</strong> <strong>EDF</strong> Group cannot guarantee that its contracts, in France and abroad, will<br />
completely protect it from sudden or significant price increases. The <strong>EDF</strong> Group cannot<br />
guarantee that when <strong>the</strong>se long-term contracts expire, it will be able to renew <strong>the</strong>m, in<br />
particular at an equivalent price. This could have a negative impact on <strong>the</strong> <strong>EDF</strong> Group’s<br />
financial results.<br />
Risks related to <strong>the</strong> transportation of nuclear fuel<br />
The transportation of new or spent nuclear fuel is a very particular operation that requires<br />
specific and restrictive safety and security measures. These constraints could become more<br />
stringent, generating additional difficulties and costs for <strong>the</strong> <strong>EDF</strong> Group. Fur<strong>the</strong>rmore,<br />
several factors that are beyond <strong>the</strong> <strong>EDF</strong> Group’s control (such as opposition by local<br />
residents or anti-nuclear associations, for example, in <strong>the</strong> form of manoeuvres to prevent<br />
nuclear material from being shipped) may slow <strong>the</strong>se operations. Operations may also be<br />
interrupted, in particular, in <strong>the</strong> event of an accident. In such case, <strong>the</strong> <strong>EDF</strong> Group may be<br />
required to slow or halt some or all power generation at <strong>the</strong> relevant sites, due to nondelivery<br />
of new fuel assemblies or <strong>the</strong> saturation of onsite storage facilities, which may have<br />
a negative impact on <strong>the</strong> <strong>EDF</strong> Group’s financial results.<br />
The nuclear power plants operated by <strong>the</strong> <strong>EDF</strong> Group may require significant and/or<br />
costly repairs or modifications<br />
The group of nuclear facilities that <strong>the</strong> <strong>EDF</strong> Group currently operates in France is highly<br />
standardised. This enables <strong>the</strong> <strong>EDF</strong> Group to achieve economies of scale in equipment<br />
purchases and engineering, to apply improvements made to its newest power plants to all<br />
plants and, in <strong>the</strong> event of a malfunction in a facility, to anticipate <strong>the</strong> measures to be taken<br />
in o<strong>the</strong>r plants. However, such standardisation carries <strong>the</strong> risk of a malfunction that is<br />
common to several power plants or series of power plants. The <strong>EDF</strong> Group cannot<br />
guarantee that it will never again be required to make o<strong>the</strong>r significant or costly repairs or<br />
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