12. Significant amendments to legal regulations
In the fourth quarter of 2022, regulations to cap electricity prices and protect electricity consumers from price increases came into force. These regulations significantly affect the TAURON Group’s operations in 2022 and in subsequent financial years. The main assumptions and effects of the implemented legislation on the consolidated financial statements are presented in the table below.
| Act of law | Main assumptions | Recognition of the effects in the consolidated financial statements the year ended 31 December 2022 | Note | |||
|---|---|---|---|---|---|---|
| Act of 7 October 2022 on special solutions for the protection of electricity consumers in 2023 (the “Consumer Protection Act”) | Freezing of the electricity price in 2023 at a level of 2022 for households up to level of consumption specified in the Consumer Protection Act.
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Adjustments of revenue from contracts with customers
Pursuant to the Act on the Extraordinary Measures, companies in the Sales segment reduced the revenue from energy sales for the period from 24 February 2022 to 31 December 2022 resulting from the need to apply the maximum prices set out in the Act to certain groups of customers, in the total amount of PLN 655 million. |
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| Establishment of compensation for electricity undertakings due to the application of frozen electricity prices in 2023 in the amount of the product of the electricity covered by the frozen prices and the difference between the energy price resulting from the electricity tariff approved by the President of the ERO for 2023 and the frozen electricity prices. |
Revenue due to compensations
In view of the companies’ right under the Act on the Extraordinary Measures to apply to the Settlement Administrator [Zarządca Rozliczeń S.A.] for compensation payments, the companies in the Sales segment recognized estimated compensations for electricity supply in the period until 31 December 2022 in the amount of PLN 465 million. In accordance with the provisions of the Act on the Extraordinary Measures, the applications for payment of the above compensations will be submitted after the balance sheet date from January 2023 to January 2024. The above amounts of the proceeds due are presented in the consolidated statement of financial position under Other financial assets. The Group asses, that inflow of receivable compensation will occur mainly in 2023. |
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| The Act of 27 October 2022 on extraordinary measures to limit the level of electricity prices and support certain consumers in 2023 (the “Act on Extraordinary Measures”) | Introduction of a fixed price for electricity trading, the so-called “maximum price”, at a defined level of PLN 785/MWh for local government units, small and medium-sized enterprises and public utilities (or PLN 693/MWh for household customers) applicable until 31 December 2023.
Establishment of a system of compensations (calculated depending on the type of customer and the time of conclusion of the agreement) payable on a monthly basis, the payment of which will be the responsibility of the Settlement Administrator [Zarządca Rozliczeń S.A.].
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Advance payments for compensations
In the year ended 31 December 2022, on the basis of the provisions of the Customer Protection Act and the Act on the Extraordinary Measures, the companies in the Sales segment applied for advance payments within electricity trading compensation for the total amount of PLN 981 million, of which by the balance sheet date the companies had received the total of PLN 337 million and the amount of PLN 644 million was received by the companies in January 2023. Advance payments for compensations received in 2022 are presented in the item Accruals, deferred income and government grants in the consolidated statement of financial position. Advance payments received by companies of the Sales segment up to the balance sheet date will be settled in the period up to July 2023. After the balance sheet date, on Januray 2023, further applications for advance payments for compensations totalling PLN 1 003 million were submitted by the companies in the Sales segment in January 2023 and February 2023. |
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| The imposition of an obligation on electricity generators (both in the area of conventional generation and renewable energy sources) and trading companies to transfer contributions to the Price Difference Payment Fund (the “Fund”), for the purpose of paying the compensation established by the Act on Extraordinary Measures, where the above-mentioned entities obtain from the sale of electricity prices exceeding the price limits calculated in accordance with the provisions of the regulation to the aforementioned Act. |
Costs of contributions to the Price Difference Payment Fund
Based on the obligation imposed by the Act on Extraordinary Measures with regard to the transfer of funds to the Price Difference Payment Fund (the “Fund”), companies of the Group recognized estimated costs of contributions to the Fund in the year ended 31 December 2022 in the total amount of PLN 21 million (of which within the segments: RES – PLN 14 million, Sales – PLN 5 million, Generation – PLN 2 million). The estimate is included in the consolidated statement of comprehensive income within tax and fee expenses in the Group’s operations and within other non-financial liabilities in the consolidated statement of financial position. In addition, the Company estimates, after taking into account a scenario analysis of market conditions and operational and technical conditions, that the total write-downs to the Fund in 2023 of the Group companies in the RES, Sales and Generation segments should be contained in the range from PLN 1 billion to PLN 1.3 billion. |
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| Establish a maximum aggregate spending limit from the Fund and a limit for each year covered by the Act. |
Provisions for onerous contracts
Based on its analysis, the Group did not find necessary to recognize a provision for onerous contracts due to the enactment of the Customer Protection Act and the Act on the Extraordinary Measures |
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