SELECTED ACCOUNTING PRINCIPLES
Provision for CO2 emission liabilities The Group creates a provision for the cost of redemption of CO2 emission allowances. The provision for liabilities arising from emission of gases covered by the emission allowance scheme is created only when the actual emission level for a given year indicates the expected deficit of emission allowances awarded to the Group free of charge, including allocation of free-of-charge emission allowances to facilities belonging to individual Generation companies. The Group companies covered under the EU ETS are required to redeem an allowance for each tonne of carbon dioxide emitted in a given year by 30 April of the following year. The provision is charged to operating expenses (taxes and fees) in the following amount:
At the date of redemption of the allowances, the emission allowances classified as current intangible assets are derecognised in correspondence with the provision for gas emission liabilities. Provision for the obligation to present energy certificates of origin Energy companies trading in and selling electricity to end customers are obliged to acquire property rights resulting from energy certificates of origin and to redeem them or to pay a substitution fee. If in a given financial year the quantitative share of electricity specified in the energy certificates of origin in the total annual sales of electricity to end customers is compliant with the limits provided for in regulations of the Minister of Economy – the obligation shall be deemed satisfied. In order to meet the obligation to present the rights for redemption or to pay a substitution fee, the Group creates a provision at the end of the reporting periods for the costs of meeting this obligation. The provision due to the obligation to present certificates of electricity origin for redemption is recognised:
The provision is charged to operating costs. The settlement of the amount of the provision and the redemption of the property rights shall take place on the day of redemption of these rights by the President of the Energy Regulatory Office or on the day of incurring the substitution fee. |
Table 1
Export to ExcelYear ended 31 December 2020 | Year ended 31 December 2019 | |||||
---|---|---|---|---|---|---|
Provisions for liabilities due to CO2 emission allowances |
Provision for obligation to submit energy certificates |
Provisions total |
Provisions for liabilities due to CO2 emission allowances |
Provision for obligation to submit energy certificates |
Provisions total |
|
Opening balance | 772,299 | 605,934 | 1,378,233 | 111,406 | 384,066 | 495,472 |
Recognition | 920,467 | 759,722 | 1,680,189 | 774,614 | 599,113 | 1,373,727 |
Reversal | – | (3,063) | (3,063) | (75) | (3,841) | (3,916) |
Utilisation | (776,602) | (595,707) | (1,372,309) | (113,646) | (373,404) | (487,050) |
Reclassification to liabilities associated with assets held for sale |
(56,473) | (3,124) | (59,597) | – | – | – |
Closing balance | 859,691 | 763,762 | 1,623,453 | 772,299 | 605,934 | 1,378,233 |
The increase in the cost of creating the provision for CO2 emission liabilities in the year ended 31 December 2020 compared to the comparative period is described in Note 14 to these consolidated financial statements. The utilisation of the provision in the year ended 31 December 2020 in the amount of PLN 776,602 thousand relates entirely to the redemption obligation for 2019 (the Group fulfilled the entire obligation for 2019 in the first half of 2020). In the comparable period, the utilisation of the provision related to the obligation to redeem CO2 emission allowances for 2018 amounted to PLN 113,646 thousand, whereas the remaining redemption obligation for 2018 was already fulfilled in 2018 (PLN 498,369 thousand).
The increase in the cost of creating the provision due to the obligation to present certificates of origin of energy in the year ended 31 December 2020 compared to the comparable period is mainly due to the increase in the obligation to present certificates of origin of energy from renewable sources in 2020 from the level of 18.5% to 19.5% of the volume of electricity sales to end users.