Based on its reading of the pact, Standard & Poor’s Ratings Services understands that:– 24 out the 58 nuclear reactors operated by Electricite de France S.A. (EDF; AA-/Stable/A-1+) in France would close by 2025, of which two reactors in Fessenheim would be immediately shut down. The pact aims to reduce France’s dependence on nuclear power to 50% from 75% currently.

– No new nuclear projects would be initiated. We understand, however, that completion of the Flamanville nuclear plant currently under construction would be allowed.

– Existing nuclear fuel recycling and storage operations would be converted into waste treatment and plant dismantling activities.

The electoral pact was concluded ahead of the upcoming French presidential and legislative elections in May and June 2012. In our view, the electoral pact marks the end of France’s long-standing political consensus on nuclear energy.

We believe that the electoral pact, if implemented, could also mark the end of France’s long-standing, nuclear-based independent energy strategy, of which EDF and AREVA (BBB+/Negative/A-2) have been the key pillars and instruments. In our view, the pact could have significant adverse credit implications for both EDF and AREVA over the longer term.

We base our opinion on the following factors:

– Implementation of the electoral pact, in its current form, would likely erode EDF’s cost competitiveness, and therefore constrain its stand-alone credit profile (SACP). In addition, the pact could further impair AREVA’s SACP, which is already constrained by weak cash flow generation caused by cost overruns at one of its nuclear projects and lower order intake following the Fukushima nuclear accident…..

EDF’S COST COMPETITIVENESS AND CASH FLOW GENERATION COULD SUFFER OVER THE LONGER TERM….

IMPLEMENTATION WOULD LIKELY WEAKEN AREVA’S COMPETITIVE POSITION AND CASH FLOW GENERATION OVER THE LONG TERM

http://www.reuters.com/article/2011/11/28/idUSWLB934220111128