EDF may extend nuclear plant depreciation - paper

Tuesday, November 12, 2013

Nov 12 (Reuters) - French state-controlled utility EDF will consider extending the depreciation period for its nuclear plants, its chief executive told a newspaper, potentially freeing up cash for the country's promised shift towards greener energy.

Sources close to the matter told Reuters in September that France could help finance a drive for more renewable energy by extending the depreciation period of EDF's nuclear plants, which would boost EDF's profit and the dividends it pays the government.

"The accounting issue will be presented to the board in due time," EDF CEO Henri Proglio was quoted as saying by French daily Les Echos on Tuesday.

Proglio gave no further details and an EDF spokeswoman declined to elaborate.

An extension of the depreciation period could come ahead of the approval of the lifespan of EDF's reactors by nuclear watchdog ASN, although there is a precedent for that.

In 2003, EDF extended the depreciation schedule for nuclear reactors in its accounts to 40 years from 30 years, a full six years before the ASN agreed to the extension of the fleet.

EDF's 58 nuclear power reactors are on average 27 years old, with the first reactor reaching 40 in 2018.

An industry source told Reuters that EDF already does major repair and upgrading work to its reactors, which effectively extends their lifespan beyond 40 years and that an extension of the depreciation schedule would reflect the effective lifespan of the assets.

Even if EDF's auditors would allow it to make the accounting change now, it could backfire on the company later because the ASN decision in principle on whether or not to allow extensions will not be made until 2015 and final decisions will be made reactor by reactor from 2020.

The watchdog's head of nuclear power plants told Reuters last month that the ASN has no preconceived idea of an acceptable lifespan for nuclear plants but said that the longer the extension, the harder it is to justify.

Proglio also said that if France wants to keep 50 percent of nuclear power in its power generation mix, shutting down reactors after forty years would mean the country would need to decide on renewing them now, as it takes ten years between deciding on new nuclear plants and connecting them to the grid.

French President Francois Hollande has pledged to reduce the share of electricity generated by nuclear power from the current 75 percent to 50 percent by 2025.

Proglio has said that this target will be achieved by keeping nuclear output steady as demand grows.

Proglio told Les Echos that he expects the current fleet would be replaced by 1,600 megawatt EPR reactors designed by French state-controlled nuclear group Areva, with which EDF is also working on designing a 1,000 megawatt reactor.

"We need to broaden the range of our reactors," he said.

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