Page 43 - KELAG Annual Report 2017
P. 43

occurrence  (see  additional  notes).  If  the  probability  of  an  outflow  of  resources  embodying
                                      economic benefits is not high enough to require the recognition of provisions and is not remote
                                      either, the relevant obligations are to be disclosed as contingent liabilities. The estimates are made
                                      by the experts responsible, taking market-related inputs into account (where possible).

                                      In these financial statements, provisions are measured based on assumptions and estimates as of
                                      the reporting date (Notes 23 and 27). The major factors here were the expectations regarding the
                                      future  development  of  energy  prices,  the  success  of  negotiations  and  the  discount rate. The
                                      discount rate for provisions due in between one and five years is 0.75% (prior year: 1.00%), for
                                      provisions due in more than five years it is 1.5% (prior year: 2.00%).

                                      In previous financial years, KELAG made offers to compensate for contractually cheaper electricity
                                      supply agreements that stem from the period before the liberalisation. In light of the changed
                                      price  situation  in  the  market  and  the  resulting  environment,  virtually  the  provisioning  was
                                      released in the financial year 2017. A provision of EUR 6.8m had been recognised for this matter
                                      in the prior year.

                                      Provisions  for  measures  due  to  regulatory  requirements  for  power  plants  relate  to  official
                                      regulations as well as other legal requirements, such as the implementation  of the EU Water
                                      Framework  Directive  and  pending  damage  claims.  Accounting  provisions  for  sediment
                                      management measures, which are necessary for the business and envisaged by the authorities,
                                      are also recognised under this item. Any obligations arising from the acquisition of assets for
                                      environmental protection reasons are recorded as subsequent acquisition costs in non-current
                                      assets in accordance with IAS 16.11. This resulted in a total amount recorded in the KELAG Group’s
                                      books and records of EUR 9.4m (prior year: EUR 10.2m).

                                      The company has several long-term natural gas storage agreements with different terms expiring
                                      between 2020 and 2027. Storage capacity remains under economic pressure due to a significant
                                      change in the market model (e.g., accounting on a daily basis for small customers), because sales
                                      can be structured in their entirety via the market. Due to these facts, there are onerous contracts
                                      in terms of IAS 37.10. The loss of EUR 7.7m (prior year: EUR 8.2m) to be provisioned from these
                                      contracts is the cost of meeting the natural gas storage contract obligations net of the income
                                      recoverable from the storage capacities.

                                      Environmental protection notices for Austrian wind turbines impose a duty to remove the wind
                                      turbines after decommissioning or interruption of operation for more than one year. A provision
                                      of EUR 2.6m (prior year: EUR 2.3m) was recognised for these recultivation obligations. The present
                                      value of the obligation calculated in accordance with IAS 37 was recorded on the assets side of
                                      the statement of the financial position  in accordance with IAS 16.16c with an increase in the
                                      carrying amount.
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