EDF: when the state becomes fully capitalist

Analysis

October 31, 2022

EDF is the fifth largest energy supplier in the UK currently controlling over 10% of the market. The French multinational is best known for “Leading the UK’s Nuclear Renaissance” exploit everything eight of the UK’s nuclear power stations.

It is owned by Electricité de France SA (Electricity of France, EDF). A predominantly multinational energy producer and supplier (and soon to be only) belonging to the French State. He is one of the top five utility companies in the world.

Created in 1946 by the French government, EDF was created with the intention of rebuilding the French power grid after World War II. Today, 70 years later, EDF has diversified far beyond France, taking advantage of energy consumers from the United States to India. The group is now made up of 144 subsidiaries.

Despite its name, EDF is not only in the field of energy. EDF is also involved in the data software, vehicle traceability, investment, and real estate sectors, to name but a few.

EDF uses partnership agreements to build its brand, for example, the company is a ‘premium partner’ (and official energy supplier) for the Paris Olympic and Paralympic Games in 2024.

How many UK energy customers does EDF have?

Electricity (excluding prepayment): 3 million

Gas (excluding prepayment): 2.1 million

Who owns it?

EDF Energy (UK) Ltd is ultimately owned by EDF SA, Majority-owned French company (84%) by the French government and listed on Euronextthe French stock exchange.

In July 2022, the French government announced that it would buy back the outstanding 16% of EDF shares, canceling partial privatization company in 2005. But it hit a brick wall when investors threatened to sue the government for losses. The French State has begun to finalize its takeover of 100% of EDF shares in September. But at what cost ? The other shareholders claim a fortune, the government having to pay a total of 9.7 billion euros (£8.7 billion) of French taxpayers’ money. It should be noted that the shareholders who stand to benefit from this nationalization are investment giants Blackrock and Vanguard Group.

Is EDF suffering from the cost of living crisis?

At first glance, it does appear that EDF’s profits have plunged in recent years. According EDF Energy (UK) Ltd 2021 accountsEDF posted a loss of €4.8bn (£4.2bn) compared to €268m (£239m) in 2020. No dividends have been paid by EDF Energy (UK) Ltd. in 2021 nor in 2020. However, another UK subsidiary, EDF Energy Holdings Ltd, paid dividends of £1 million in 2021 and £60 million in 2020.

Despite these losses, at the end of 2021, EDF Energy (UK) Ltd still had net assets of €17.9 billion (£16 billion).

Whatever the accounts of the British subsidiary, the EDF group has made all its financial objectives in 2021. The group’s turnover for the year amounts to £8,720m, an increase of 8%. The Group made a profit of €360m (£324m) in 2021a complete reversal in performance from 2020, when the Group recorded a loss of €2.6bn (£2.3bn).

But what about the future? EDF should stack up €100bn (£87.8bn) in debt this year and the French government already pump 3 billion euros (£2.6bn) into the business in the spring. But as you’ll see below, no matter how bad things get, there’s always room for give the CEO a raise.

Who runs EDF?

Jean-Bernard Lévy, the group’s current CEO, is due to leave six months early after a fallout at the top between Lévy and French President Emmanuel Macron over nuclear energy. Lévy is – however – unlikely to be out of work after EDF. It was Previously CEO of arms company Thales and media company Vivendi, and even had a stint as a technical adviser to a government ministry. In 2020, Lévy was listed as the 9th highest paid CEO in the utility industry worldwide, winning a salary of €450,000 (£389,500) and €3,660 (£3,150) benefits.

Moreover, Lévy’s probable successor, Luc Remont, handpicked by Macron (whose nomination is just pending parliamentary approval), will start on a profit-making basis after the The French government announced that she wants to increase the salary of the new CEO of EDF to attract more candidates. The salary of the CEO of the company is currently capped at 450,000 (£389,500). Although no figures have been made public, the EDF group is known to pay high salaries. In 2013, it was revealed that former UK CEO Vincent de Rivaz had received pay of £1 million per year in compensation.

Simone Rossi has been with EDF since 2004, Rossi rose from head of the international division to UK CEO in 2017. But Rossi’s influence goes far beyond the British Isles. As a member of the Executive Committee, Rossi is at the top of the EDF Group. At first it looks like Rossi took a big pay cut, with a 2017 payment package capped at just over £100,000. A modest salary compared to his predecessor, de Rivaz, who was on £1 million per year. But it is very likely that Rossi’s remuneration will now be identical to that of Rivaz at £1 million, as the highest paid director in EDF Energy Holdings Ltd.

Workers’ struggle within EDF

Customers are not the only beneficiaries of EDF’s profit-driven strategy. Cashmere Singh, Prospect union organizer, fighting racism and discrimination in the workplace for half a century. Singh was given a 50-year seniority award in 2021 by Simone Rossi. But Singh’s union released a statement explaining how, during his career, he had been the victim of two grievance and disciplinary procedures for daring to raise EDF’s inability to hire and promote staff of Asian or Black (ABLE) origin.

Subsidiaries in tax havens

EDF Energy (UK) Ltd owns EDF Energy Holdings Ltd, the ultimate holding company for EDF’s UK subsidiaries. While EDF Energy (UK) accounts from 2021 details of €905m (£780m) tax payments corporate tax in 2021some of its subsidiaries are registered in notorious tax havens, including a holding company registered in Hong Kong and an insurance company in Guernsey.

Over the past two decades, EDF financed the conservative party up to £38,499.

More recently, last October EDF Energy Renewables Ltd has donated £4,999 to Conservative Mayor of Tees Valley, Ben Houchen. And like clockwork, by March 2022 EDF has announced plans to build a new hydrogen production center near the former Redcar steelworks on Teeside. The center is called Tees Green Hydrogen.

EDF also made two donations of £6,000 to the Labor Party in October 2003 and September 2005. The timing of these donations coincided with Labor Prime Minister Tony Blair’s announcement. in November 2005 that the government was considering new nuclear for the UK’s future energy supplies. This started the ball rolling for EDF’s £18bn government contract for the construction of the Hinkley Point C power station.

Does the company have close relations with the government?

Over the past decade, EDF has become increasingly close to the government. The company had at least five independent opportunities to promote his program in meetings with British prime ministers, once with David Cameron and four times with Boris Johnson. Company representatives even had an intimate conversation one-on-one with Johnson in January 2022 to discuss the supply of nuclear energy to the United Kingdom, of which EDF has a monopoly.

Since 2012, business representatives also attend at least 151 meetings with government ministersincluding 24 solo meetings with the former Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng, now Chancellor of the Exchequer, responsible for British economic policy.

And comfort is not ready to end anytime soon, EDF is in a good place under Liz Truss. The new PM named former EDF lobbyist Michael Stott as Downing Street’s new commercial link. Stott, who is also a former Conservative press secretary, is expected to lead the government’s new nuclear program.

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