Electricite de France SA

PAR:EDF

Earnings Call Transcript 2018-Q1

[Operator]

Good day, and welcome to the EDF first quarter results conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Xavier Girre, CFO. Please go ahead, sir.

[Xavier Girre]

Good afternoon. I'm very pleased to welcome you to this conference call. I will walk you through our first quarter sales, starting with the main highlights over the period. And I will close my presentation with our financial outlook. As usual, I would leave as much time as possible for the Q&A session. And this call is expected to end at 6:45 p.m. Paris time. Let me start with the key strategic highlights on Slide 3. Over the last few months, we continued to accelerate the development of our renewable activities. We did so in several ways. First, the launch on 27th March of the Electricity Storage Plan, which is a natural complement to our Solar Plan presented in December. Under this plan, EDF aims at building 10 gigawatts of storage capacity by 2035, out of which, 60 gigawatts of grid scale capacity. For example, we target the launch of 3 battery projects within the coming 12 months. First in line is the 49-megawatt West Burton battery storage project for National Grid in the U.K., which is set to launch before summer. Second, in Brazil, EDF Energies Nouvelles was awarded beginning of April a wind power project of 114 megawatts in the state of Bahia. Third, on 30th April, 2018, the group inaugurated 200 megawatts of solar capacity in Dubai together with its partners, Masdar and the Dubai Electricity & Water Authority. This front is the first unit of the 800 megawatts Doel 3 facility and will be followed by 2 300-megawatt units to be commissioned in 2019 and 2020. Lastly, we announced on 3rd May the acquisition of a 450-megawatt offshore wind project in Scotland with a 15-year contract for difference in place. As regard the client solutions and energy services. There are clearly another business activity that saw significant developments. First, Edison completed on 22nd February the acquisition of Gas Natural Vendita Italia, thereby increasing by 50% its customer base in Italy to 1.5 million. Second, Dalkia completed on 30th of March the acquisition of a 25% minority share in TIRU. This company specialize in waste recycling and waste-to-energy is now 100% owned by Dalkia. Last but not least, on new nuclear projects, the Taishan project reached this easy step with authorization and the start of fuel loading operations in the first reactor. In India, an Industrial Way Forward Agreement was signed on 10 March with NPCIL and the Indian authorities for the implementation of 6 EPR reactors at the Jaitapur site. Under this agreement, EDF will act as a supplier of the EPR technology only. As you know, we also announced on 10th of April some quality deviations in the weldings of the main secondary system of Flamanville 3. We will be able to update you when ongoing additional tests are completed and reviewed by the ASN. Now moving to Slide 4 with financial and operating highlights of this first quarter of 2018. Nuclear generation in France came to 112.9 terawatt hours over the first 3 months of 2018. Improved availability of the fleet helped grow the output by 4.4 terawatt hours. In the U.K., an outage at Sizewell B that extended until the beginning of February contributed to a 0.9 terawatt-hour drop in the fleet nuclear output. Total group renewable output went up 4.9 terawatt hours to 20.6 terawatt hours. This was driven first by hydro generation in France with an increase in output of 3.8 terawatt hours reaching 14.6 terawatt hours over the first 3 months of the year, thanks to much more favorable hydro conditions than in 2017, which had been, as you know, a very dry year. The growth of group renewable output was also fueled by wind and solar at EDF Energies Nouvelles and in Belgium as well as by hydro in Italy. So overall, group sales for the first quarter of 2018 came to EUR 20.4 billion, up 3% in organic terms, supported by growth in sales across all segments. Let's move to the next slide with a detailed overview of the year-on-year evolution. Before commenting the numbers per se, let me just highlight that with the application of IFRS 15 as of 1st of January 2018, certain items are no longer recognized as revenues. Regarding gas and electricity delivery. The delivery component of energy supply contracts was previously included in sales revenue by all group entities that supply electricity on gas under our so-called principal position. Under IFRS 15, the review of the regulatory framework and applicable contracts led to modified disqualification for France and Belgium and moved to an agent position. This new qualification reduces at the same time revenue and purchases of delivery included in fuel and energy purchases by the same amount. This impacts sales revenue of mainly 2 segments: France, Generation and Supply; and the Other International segment for delivery of electricity and gas supplied by EDF Luminous. In addition, IFRS 15 also impacts energy purchases and sales on the markets as part of optimization activities. Optimization transactions are now accounted for on a net basis in Italy and Belgium, providing a more relevant reflection of the economic substance as was already the case in France and the U.K. In all cases, revenue reduction following the application of IFRS 15 will be offset by a decrease in fuel and energy purchases with no impact on EBITDA. We also improved our segment reporting. EDF Energies Nouvelles and Dalkia will be reported as standalone segments in our financial statements. Both entities were part of the Other Activities segment until now. In addition, we will be disclosing groupwide financial KPIs for renewables on the one hand and for Energy Services on the other hand. These KPIs will include sales at quarterly financial update as well as EBITDA and net investments for half year and full year results. Finally, Framatome is consolidated in our financial statements since the 31st of December 2017 and is presented as a standalone reporting segment. As I already said, group sales came to EUR 20.4 billion, 3% organic growth compared to the EUR 19.7 billion restated sales for Q1 2017. All segments contribute to this strength, especially regulated activities in France as well as EDF trading in other activities. Let me walk through each segment in more detail, starting with Generation and Supply in France. Sales in this segment were close to EUR 8 billion, roughly flat compared to the first quarter of 2017. Before looking at the bridge of the sales numbers, let me comment the upstream/downstream electricity balance. The chart shows on the right-hand side that overall, sales volumes increased by 10 terawatt hours compared to Q1 2017. Volumes supplied under ARENH were up 3 terawatt hours while demand from end customers were 3 terawatt hours mainly due to the erosion of market shares in B2C. So the overall 10 terawatt hours increase in sales volumes is reflected in net market sales. On the left-hand side of the chart, you can see that these additional wholesale market sales were mostly sourced from higher nuclear and hydro output. The important thing to understand is that this increase in output did not translate into higher sales revenues. The reason is that in euro terms, the group was a net buyer on wholesale markets during the first quarter of 2018. In Q1 2017, the net financial position between purchases and sales was even wider. So the increase in French nuclear and hydro output and the improvement in price conditions allowed for a reduction in net financial purchases but did not contribute to increased sales despite the net positive balance on wholesale markets in terawatt-hours. Moving now to the sales bridge, up just 0.2% at EUR 8 billion. The main positive driver for our reported sales in this segment came from weather conditions. The first quarter was colder on average than last year, triggering 2.1 terawatt hours of additional demand and a EUR 94 million increase in sales year-on-year. The impact of tariffs is slightly negative for the Generation and Supply segment as the energy component of related sales tariffs was down on average. The overall tariffs increased in August 2017 and February 2018, but this was mainly driven by the tough component. We will see that in a minute with sales in the regulated activity segment. Market share erosion and reduction in demand excluding weather effects, carried a negative impact on sales volumes to end customers. But this was more than offset by positive price effects linked to the evolution of our customer portfolio mix. Turning now to Slide 8. Over the first 3 months of 2018, cumulated nuclear output in France was up 4.4 terawatt hours at 112.9 terawatt hours. This reflects the improved availability of the fleet overall. You may remember that Q1 2017 had been negatively impacted by outages linked to the last additional controls on steam generators to address the carbon degradation issue as well as by extended outages at [ Gravelines 5 ] and [ Fessenheim 5 ] in particular. Accordingly, the group confirms its assumption of a 2018 French nuclear output for both 395 terawatt hours. Moving to French Hydro on the next slide. Output grew sharply to 14.6 terawatt hours, up 3.8 terawatt hours versus Q1 2017. As you can see on the right-hand side, generation was supported by significantly improved hydro conditions in January compared to 2017 which was very dry. In addition, hydropower capacity was highly dispatched at the beginning of the year. This helped meet strong demand and prepare the world in the context of significant snow cover, the melting of which is expected to support output until the summer season. It proved this actually benefit from very good hydro conditions, keeping cumulative output on the strong trends experienced since the beginning of the year. Sales in French regulated activities grew 6.7% in organic terms to EUR 5.2 billion. Three main positive drivers: First, cold weather that boosted distributed volumes by 2.9 terawatt hours; second driver, the August 2017 tariff increase; and lastly, favorable evolutions of the customer portfolio mix in the context of the introduction of new 205 tariff category as well as a pickup in the number of new grid connections. As you know, the 205 was [ conserved ] in March by the Conseil d'Éta and the regulator is expected to take a mutual deliberation to be effective on August 1, 2018. However, the decision is not retroactive, and the numbers I just presented will not be affected by the new tariff. Moving to the EDF Energies Nouvelles, where sales were up 14.7% organically to EUR 379 million. This was mainly driven by the commissioning of additional capacity in 2017. Together with the contribution from the Futuren portfolio, this led to a 25% increase in output. Overall, net installed capacity grew nearly 25% to 7.9 gigawatts and growth capacity under construction stands at a strong level at 1.7 gigawatts. As I said earlier, we are disclosing groupwide sales numbers for our entire renewable business for the first time. In this first quarter, sales from renewables activities across the group came to EUR 1.3 billion, that's up 9.6% versus Q1 2017. This was first driven by the significant increase in French Hydro output. In addition, wind capacity benefited in Europe from favorable weather conditions. Dalkia sales were up 4% organically to EUR 1.2 billion. Sales were mostly supported by higher gas prices and, to some extent, newly won contracts in 2017. Overall, sales by Energy Services activities across the group were up 11.8%. This reflects, in particular, the investment efforts that resulted in several acquisitions in 2017, most notably Imtech in the U.K. and Ireland. Framatome sales reached EUR 721 million over the first quarter and recorded several positive developments. On operations, first, the ASN approved resumption of manufacturing activities at Le Creusot, a key result of the quality action plan that has been implemented. On M&A, Framatome successfully completed the acquisition of Schneider Electric's implementation and control activity in North America. This operation will enrich Framatome's line of products and support globally the Instrumentation and Control business line. On the commercial front. Vattenfall selected Framatome to deliver fuel assembly reloads to its Swedish reactor starting 2021. Looking now at the U.K. where EDF Energy sales came to EUR 2.6 billion, up 1.9% in organic terms. Higher electricity tariffs and strong weather driven gas demand carried a positive impact on EDF Energy's customer business whereas the B2C division experienced a 2% decrease in the residential customer base in the context of continued heightened competition. Nuclear generation in Q1 was penalized by both lower realized prices and lower output at Sizewell B outage extended into 2018 and refueling operations volumes increased. This lower Q1 output is part of a generally changing context in the U.K. for 2018. Early March, EDF Energy was penalized by gas supply disruptions linked to weather conditions. Last week, we announced an extended outage at Hunterston B, which is expected to carry a 3 terawatt hours impact on 2018 U.K. nuclear output. In Italy, sales were up 3.5% to EUR 2.3 billion. Sales in electricity activities reflect higher B2B sales volumes, partly offset by lower sales prices, mainly on wholesale power markets. Sales in hydrocarbon activities were supported by higher Brent prices and growing residential gas demand driven by the weather. Sales in the Other International segment came to EUR 666 million. Taking into account the disposal of EDF Polska in November 2017, this corresponds to a slight organic growth of 0.9%. This trend was mainly supported by Belgium with a favorable weather effect on gas demand and the growth in wind capacity following the commissioning of the [indiscernible] and diesel plants. The price review under EDF Norte Fluminense PPA in Brazil also carried a slight positive impact. As a side note, the extended outages at Doel 3 and Tihange 3 have no impact on sales revenues as volumes of electricity sold to end customers during this first quarter were unchanged. Looking now at Slide 18 with sales from the other activity segment, which now excludes EDF EN and Dalkia. This sale was up 16.9%, reaching close to EUR 751 million. This was mainly driven by EDF trading as the cold Q1 weather in Europe and North America carried a favorable impact on volatility and prices. Moving to our financial guidance on Slide 19. We confirm the objectives set for 2018. We aim to reach EUR 4.8 billion in OpEx reduction compared to the 2015 level. 2018 EBITDA is expected to range between EUR 14.6 billion and EUR 15.3 billion. Cash flow, excluding the net impact of Linky, new developments and the asset disposals plan is expected to be slightly positive or close to balanced. Total investments, excluding acquisitions and the disposal plan, are expected to come below EUR 15 billion. Net debt-to-EBITDA will stand at/or below 2.7x. As we have stated in the past, it is clearly a maximum, not what we aim for. And we also confirmed that we are on track to completing the EUR 10 billion disposal plan by the end of the year, 2 years ahead of schedule. Finally, we are expecting a net income payout ratio of 50% for fiscal year 2018, excluding nonrecurring items and interests paid on hybrid debt. Before we move to the Q&A session, let me summarize the salient points of this first quarter financial information. First, we started to apply IFRS 15, and we improved our segment reporting. Second, hydro generation in France stands at a strong level, but this will only be reflected in EBITDA. Third, we are facing a few challenges with nuclear generation in the U.K. and enhanced competition in French and U.K. downstream activities. And fourth, we carry on with the implementation of the CAP 2030 strategy with new significant developments in renewables as well as customer solutions and services. Let's now open the floor to your questions.

[Operator]

[Operator Instructions] Our first phone question will come from Sam Arie with UBS.

[Samuel James Hugo Arie, Managing Director and Research Analyst]

I've got 2 questions. The first is, if you could just update us on the latest developments with nuclear policy and regulation in France? There was some speculation in the press last year that French nuclear fleet might move one day to a regulated model. And I just wondered if you could update us if there's anything new on this discussion that we should be following? And secondly on renewables. From your presentation today, it looks like you have a lot of very good opportunities in front of you. The question is -- obviously, you had to finance them. So on this point, do you think that some of the dedicated asset portfolio could be used to support your investment plan for renewables? I know there are other changes you are looking for, but from the financing side, is this an area where we will might see some change. And do you think that, that could increase your capacity to invest in renewables, especially in France? Those are my 2 questions.

[Xavier Girre]

Thank you for your questions. As regards the French nuclear generation, we have constantly highlighted the fact that we consider it necessary to have a specific regulation for future new nuclear in order to enable and to incentivize investors to invest in these assets in the very long-term and to give them the necessary visibility on the returns. But for the time being, there is nothing specific to update on that matter. As regards the renewables, you are right. We have plenty of opportunities, so we go on with our -- with the model we have set some years ago. In particular, we are very strict in the returns we [ issued ] for. And as you know, we also have organized some disposals of some assets, what we call the DSSAs in order to select the best opportunities and to keep the value when we have developed some assets and we are in a position to reset them. So we are going on along these lines, and there is no change in our model, in our renewables and in our -- the way we finance it. What is evolving positively is the fact that we are accelerating our development but along the same principles.

[Samuel James Hugo Arie, Managing Director and Research Analyst]

So can I ask a quick follow-up on that? Because I think when we spoke recently on your solar plan, the sort of level of investment that you talked about was a couple of hundred million euros a year. And yet the financial portfolio that you have that's against the nuclear liability is sort of pushing EUR 30 billion now. So I'm just wondering if there's a sort of different scale of investment that will be possible if you had some flexibility on how those assets could be invested?

[Xavier Girre]

As you know, we have already started for the investments. We are doing the net investments in the renewables. We are in the range of EUR 500 million per year 3 years ago. Last year, it was higher than EUR 700 million. So we are clear on this ramp-up trend. As we go at the dedicated assets, as you know, we have some listed and some nonlisted assets. We have, in this nonlisted assets, some assets that we have transferred from the group to the dedicated assets with the example of RTE. And as we have said, we are considering also the possibility to transfer some not controlled assets to these dedicated assets. It's not yet done. We are currently working on it, as we have already said, as we presented our full year results in February. And this would be, I mean, a good way of increasing the amount we manage in the dedicated assets. And we will, of course, update you when this will be done.

[Operator]

We do have another question from Ahmed Farman from Jefferies.

[Ahmed Farman, Equity Analyst]

Two questions from my side. Actually, I want to start with your nuclear output guidance. So I mean, if just want to look at your sort of target for 395. That implies a 4% year-on-year improvement to last year. Whereas you are running, the data you show here, is about 2% cumulative year-to-date increase in the nuclear output. Should we take it that while you still are expecting to reach 395, that perhaps the headroom that you may have in your guidance for unplanned outages may have sort of come down since you last updated us? So that's my first question. My second question is on Edison, where, I think, you have a -- or Italy where you have a, I think, sort of EUR 700 million-or-so guidance. Could you tell us a little bit sort of the oil and gas prices assumed behind that guidance and the sensitivity of, let's say, 10% move in oil and gas price to that EBITDA and perhaps a bit of color on hedging profile so we can understand how that division may benefit from the sort of higher commodity prices we have seen recently?

[Xavier Girre]

Thank you for this question. But I'm sorry I will disappoint you because -- I mean, as regards our nuclear output guidance, so we've confirmed our sort of the 395 target, higher than 395 terawatt hours. We said that there is some headroom. But of course, we do not discuss it. And as regards the Edison guidance, we do not -- neither give additional details, I mean, on this guidance, which is part, of course, of our global guidance for the group.

[Ahmed Farman, Equity Analyst]

Okay. Could you maybe perhaps [indiscernible] and just comment on typically how the hedging for that oil and gas portfolio works?

[Xavier Girre]

For the oil and gas, we haven't given the precise information. As regards the electricity hedging, as we have already said. And I mean, we more or less start 2 years ahead the hedging process. And we try to be almost fully hedged before entering a year in operation.

[Operator]

And we do have another question over the phone that comes from Vincent Ayral from JPMorgan.

[Vincent Jean Michel Ayral, Analyst]

A couple of questions here. The first one is on the news that we had the other weekend. A speaker for the State Council did talk about ending the electricity tariffs. This since pretty much have helped with the specific differentiation the State Council did 1 year ago when he highlighted that electricity was the first necessity product. The first question is why this change? And if it disappears, will it also be our end of it here? Is the government thinking about a mechanism to bring to the floor for sustainability and security of supply reasons? I understand that tariffs are now higher and closer to the ARENH. So the period of pressure and fear here regarding EDF may have receded. But here, we're talking about potentially reopening fully deregulating the generation. So that's the question one. The question two is regarding the 205. The State Council did cancel the 205 distribution tariffs. And the regulator now has to come back with the new tariff before the summer. So do you have any color on the expected timing of the tariffs iteration? And any quantification regarding the potential impact -- positive impact, actually, for EDF? And the third question is regarding the Minister of Energy, Nicolas Hulot, who said in an interview with Le Figaro that EDF must ask itself if it should review its organization. That came probably as an answer to Mr. Lévy, who said at that time that the comment did not ask EDF to look at the potential fleet of EDF. Now I think you all made it clear that EDF doesn't need to be asked, and it must ask itself these questions. So have you started looking to work on such a scenario? Have you had exchanges with the government on the matter? Any color there would be appreciated.

[Xavier Girre]

Thank you very much, Vincent. As regards to your different questions, first, as regards the regulated tariffs, you're right. So the reporter has recommended to the Conseil d'État to conserve the regulated tariffs last Friday. So of course, we have taken notes of this recommendation made by the reporter. And the Conseil d'État shall take a decision in the coming weeks. Of course, it's important to note that the reporter confirmed that the deregulated tariffs then serves as -- for the purpose of general economic interest, which was exactly what we highlighted. But she found that the measure itself, regulated tariff, is not proportionate to the -- to that purpose and therefore, not compliant with the European law. They -- and of course, now what is ahead is a decision to be taken by the Conseil d'État. And then if the Conseil d'État consoles this tariff, there will be a decision to be taken by the state and most probably also some timeframe associated to the phaseout of the regulated tariff. As regards your second question concerning 205, the decision that has been taken by the Conseil d'Éta on the 9th of March is not retroactive. And as you know, the regulator is not compelled the adjusted tariff for the remuneration that Enedis should have been entitled to during 204 and 205. And in addition, the decision leaves some room for maneuver to the regulator in the adjustment for year 2018 to 2021. So that's why it's quite difficult to give a precise impact to the -- for the future tariff. What we can say is that the impact might be a small positive. But clearly, it's too early to articulate a number. And as regards to your third question, I mean, I don't have any comment to add to the ones you've just made.

[Vincent Jean Michel Ayral, Analyst]

Just to come back on that, might be small positive regarding 205. Is a magnitude of 4% of EPS, something reasonable to expect?

[Xavier Girre]

I don't have anything more to add to what I've just said.

[Operator]

Our next question will come from Peter Bisztyga with Bank of America.

[Peter Andrew Bisztyga, Head of Pan]

Two questions for me. Firstly, just a follow-up on this French-regulated tariffs issue. If the Conseil d'Ét decides to phase out the regulated Blue tariffs or if the government decides to phase it out over time, is there something we can read across from the phaseouts of yellow and green tariffs? So I guess have you ever disclosed what the impacts on EBITDA or of those tariffs handing was? And is that something that we could read across to the end of the blue tariff? So that's my first question. And then my second question is, I want to understand a little bit better your funding model for the EUR 8 billion 10-gigawatt energy storage plan, is that something you plan to do on the balance sheet or with partners? Just some more color on that will be helpful.

[Xavier Girre]

Thank you for these questions. First, as regards the regulated tariff. Clearly, it's much too early to say anything more than what we have just shared. I mean, it's important to wait for the decision to be taken by the Conseil d'Ét. And then, of course, we will be in a position to update you as much as necessary. No question about that. Secondly, as regards the energy storage program, we've presented it as a 10-gigawatt target, which is more or less EUR 8 billion investment. We do not intend to invest that 100%, of course. We intend to finance that with partners and also with project financing. So we do consider that this may represent, let's say, more or less EUR 1 billion equity injection in the period of this energy storage program, no more than that.

[Peter Andrew Bisztyga, Head of Pan]

If I could just sort of follow up. Could you ever disclose what the EBITDA impact in 2017 was from the end of the yellow and green tariffs?

[Xavier Girre]

No, we haven't given the detail. We have explained on a regular basis that it was quite -- of course, it was very significant because we had to renegotiate all the -- with all our customers. And as you know, we -- this had sort of 2 impacts as regards the end of the yellow and green tariffs. First, we lost more or less 25% of the customers that were concerned by these tariffs, and we renewed contracts with 75% of them. And secondly, the price that we have negotiated was lower. But clearly, there is no read across between these yellow and green tariffs and the regulated tariffs, the blue tariffs. So really, I think it's very important to wait for the decision to be taken, and we'll have more.

[Operator]

Our next question will come from Carolina das Dores of Morgan Stanley.

[Carolina Botacini das Dores, Equity Analyst]

I have two. First one is, if I'm not mistaken, in a hearing for the national assembly, Mr. Levy said that EDF will probably go beyond the EUR 10 billion disposal program, which makes sense given that you're almost there in 2018. We also had some press reports on EDF looking to sell a stake on its U.K. nuclear plants. I was wondering if this is the first round of big disposals, part of a new plan? And my second question, your comment on Framatome seemed more positive in terms of revenues. If you could give us an idea, has the trajectory of the EBITDA have improved over the past months? So we still -- we should think around the EUR 300 million level for Framatome?

[Xavier Girre]

Thank you for these questions. As regards the disposal program, I mean, and as you know very well, I mean, we do not implement what we might dispose of before having done it. So I will not give additional details about that. But I fully confirm that we are really in a good position to finalize this EUR 10 billion disposal program before the end of this year. With 10 years -- it was 2 years, sorry, with a 2-year shortened period. So we'll see. We have some ideas. And of course, we will go on with our performance program in the years to come. Secondly, as regards Framatome. I will not give any view on the EBITDA. We -- you have in mind the figure that we gave, which is in our budget, which is more or less EUR 300 million contribution of Framatome to the group's EBITDA. And for the time being, there is no reason for changing anything in this target.

[Operator]

And at this time we'll move on to Olivier Van Doosselaere from Exane.

[Olivier Pascal Michel Van Doosselaere, Analyst of Utilities]

I just have 2 questions remaining. First one is on ARENH. We understand there is a consultation phase going on, on the ARENH mechanism at the moment. Could you help us understand well what is being discussed in terms of scope? Are we just talking about the timing at which alternative suppliers could go for ARENH volumes? Or is there also any discussion happening on the price or the actual volume gap of ARENH? And then the second question is on Flamanville and Fessenheim. I understand you will update us later on the situation of the welding in Flamanville 3. But is the timing of commissioning of Flamanville 3 still directly connected with Fessenheim? Or should there be any delay on Flamanville commissioning? Would that not affect the decommissioning of Fessenheim, which, at this moment, is scheduled for the end of this year or early next?

[Xavier Girre]

Thank you for these questions. As regards the ARENH, the consultation has been launched by DGEC. The key point is about the technical modalities of the ARENH process. And in particular, the question of the schedule. As you know, today, the schedule is very poor because the ARENH had to be decided at the very end of the year, in November, just before the start of the year of operations, which creates a very significant uncertainty. So what is currently in the line is the consequences of the possibility to organize these tenders earlier in the year, maybe in different tenders in order to give a better visibility to all the different players. Of course, this would be, in our mind, a positive change in the ARENH technicalities. As regards Flamanville and Fessenheim, the principle that has been set, and for the time being, there is no change about that, is that Fessenheim has to be stopped when the fuel will be charged within Flamanville 3. So this is, for the time being, how it's organized.

[Operator]

Our next question will come from Emmanuel Turpin from Societe Generale.

[Emmanuel Philippe Turpin, Equity Analyst]

Actually, a follow-up on your answer on Flamanville. I would like to take the reverse angle. If indeed the Flamanville commissioning was to be delayed by a few weeks, a few months, a bit more, would you be able, from a regulatory standpoint, from [indiscernible] authorization standpoint from -- and industrial standpoint to carry on running Fessenheim until Flamanville meet up? Basically, could we really have essentially an unchanged or close to unchanged output in our model even if there is some delay in Flamanville? That would be my first question. My second question would be on another -- on the ongoing big topic for EDF. Is there any update on the timeline or discussions on hydro concessions, discussions between the French government and the European authorities?

[Xavier Girre]

Thank you. As regards Flamanville, the principles has been set is that we have to ask to stop Fessenheim 6 months before the fuel loading within Flamanville in order to organize the stop of Fessenheim and the date of the loading of Flamanville. So this is the -- how it's set once more to date. This has been set last year. And for the time being, there is no change. So then we will, of course, update. As regards Flamanville, after the [ control ] to be currently being organized on the welding. And then we'll see for -- as regards Fessenheim. But as a matter of principle today, there is no change as regards the link between the date of the fuel loading within Flamanville and the date of the stop of the operations of Fessenheim. Secondly, as regards the [ drill ] concession, for the time being, there is nothing new on this matter. Any other question? One last question or...

[Unknown Executive]

I don't think there is anyone. Any request from -- okay, we are done.

[Xavier Girre]

So if there is no additional questions, I thank each of you for your time, for your questions. And I wish you a very nice day. Bye-bye.

[Operator]

This does concludes our conference for today. Thank you for your participation.