37. Provisions for risks and charges - €6,520 million

 

Millions of euro

    
 

at Dec. 31, 2019

at Dec. 31, 2018

 

Non-current

Current

Non-current

Current

Provision for litigation, risks and other charges:

    

- nuclear decommissioning

640

-

552

-

- retirement, removal and site restoration

1,840

102

986

71

- litigation

938

132

1,315

191

- environmental certificates

-

33

-

27

- taxes and duties

312

24

409

23

- other

762

504

742

603

Total

4,492

795

4,004

915

Provision for early retirement incentives

832

401

1,177

397

TOTAL

5,324

1,196

5,181

1,312

   

Millions of euro

 

Accrual

Reversal

Utilization

Unwinding of interest

Provisions for retirement and site restoration

Change in the scope of consolidation

Translation adjustment

Other changes

Reclassifications of liabilities held for sale

 
 

at Dec. 31, 2018

         

at Dec. 31, 2019

Provision for litigation, risks and other charges:

           

- nuclear decommissioning

552

-

-

-

5

83

-

-

-

-

640

- retirement, removal and site restoration

1,057

64

(21)

(41)

16

880

2

(8)

(7)

-

1,942

- litigation

1,506

278

(168)

(582)

52

-

-

(16)

-

-

1,070

- environmental certificates

27

36

(18)

(13)

-

-

-

-

1

-

33

- taxes and duties

432

31

(20)

(109)

5

-

-

(2)

(1)

-

336

- other

1,345

302

(90)

(295)

39

13

3

(41)

(10)

-

1,266

Total

4,919

711

(317)

(1,040)

117

976

5

(67)

(17)

-

5,287

Provision for early retirement incentives

1,574

79

(13)

(437)

36

-

-

-

(6)

-

1,233

TOTAL

6,493

790

(330)

(1,477)

153

976

5

(67)

(23)

-

6,520

     

Nuclear decommissioning provision

At December 31, 2019, the provision reflected solely the costs that will be incurred at the time of decommissioning of nuclear plants by Endesa, a Spanish public enterprise responsible for such activities in accordance with Royal Decree 1349/2003 and Law 24/2005. Quantification of the costs is based on the standard contract between Endesa and the electricity companies approved by the Ministry for the Economy in September 2001, which regulates the retirement and closing of nuclear power plants. The time horizon envisaged, three years, corresponds to the period from the termination of power generation to the transfer of plant management to Endesa (so-called post-operational costs) and takes account, among the various assumptions used to estimate the amount, the quantity of unused nuclear fuel expected at the date of closure of each of the Spanish nuclear plants on the basis of the provisions of the concession agreement.

Non-nuclear plant retirement and site restoration provision

The provision for non-nuclear plant retirement and site restoration represents the present value of the estimated cost for the retirement and removal of non-nuclear plants where there is a legal or constructive obligation to do so. The provision mainly regards the Endesa Group, Enel Produzione and the companies in Latin America. The increase in the provision in 2019 reflects the Group’s decision to promote the halt in generation with coal-fired plants, which prompted an increase in provisions for plant retirement charges for the Bocamina I and Tarapacá plants in Chile and of a number of plants in Italy and Spain.

Litigation provision

The litigation provision covers contingent liabilities in respect of pending litigation and other disputes. It includes an estimate of the potential liability relating to disputes that arose during the period, as well as revised estimates of the potential costs associated with disputes initiated in prior periods. The balance for litigation mainly regards the companies in Spain (€144 million), Italy (€144 million) and Latin America (€723 million).
The decrease compared with the previous year, equal to €436 million, mainly reflects the change in the provision in Latin America and Iberia, attributable in particular to the resolution of the dispute of Enel Distribuição São Paulo with Electrobras and a number of disputes of Edistribución Redes Digitales SL (the former Endesa Distribución Eléctrica).

Provision for environmental certificates

The provision for environmental certificates covers costs in respect of shortfalls in the environmental certificates need for compliance with national or supranational environmental protection requirements and mainly regards Enel Energia.

Provision for charges in respect of taxes and duties

The provision for charges in respect of taxes and duties reports the estimated liability deriving from tax disputes concerning direct and indirect taxes. The balance of the provision also includes the provision for current and potential disputes concerning local property tax (whether the Imposta Comunale sugli Immobili (“ICI”) or the new Imposta Municipale Unica (“IMU”)) in Italy. The Group has taken due account of the criteria introduced with circular no. 6/2012 of the Public Land Agency (which resolved interpretive issues concerning the valuation methods for movable assets considered relevant for property registry purposes, including certain assets typical to generation plants, such as turbines) in estimating the liability for such taxes, both for the purposes of quantifying the probable risk associated with pending litigation and generating a reasonable valuation of probable future charges on positions that have not yet been assessed by Land Agency offices and municipalities.
The decrease compared with the previous year, equal to €96 million, mainly reflects uses, primarily in Spain and Italy.

Other provisions

Other provisions cover various risks and charges, mainly in connection with regulatory disputes and disputes with local authorities regarding various duties and fees or other charges. The decrease of €79 million for the year is mainly attributable to the reversal of part of the provision allocated by e-distribution to manage claims by self-generators following the expiry of the deadline for submitting claims, and the use of the provision following the agreement between Edesur and local authorities to settle reciprocal outstanding claims originated in 2006-2016, partly offset by an increase in provisions for environmental charges recognized by Enel Produzione.
The change in the scope of consolidation is attributable to the acquisition of YouSave SpA.

Provision for early retirement incentives

The provision for early retirement incentives includes the estimated charges related to binding agreements for the voluntary termination of employment contracts in response to organizational needs. The reduction of €341 million for the year reflects, among other factors, uses for incentive provisions established in Spain and Italy in previous years.
In Italy, the latter is largely associated with the union-company agreements signed in September 2013 and December 2015, implementing, for a number of companies in Italy, the mechanism provided for under Article 4, paragraphs 1-7 ter, of Law 92/2012 (the Fornero Act). The latter agreement envisages the voluntary termination, in Italy, of about 6,100 employees in 2016-2020.
In Spain, the provisions regard the expansion, in 2015, of the Acuerdo de Salida Voluntaria (ASV) introduced in Spain in 2014. The ASV mechanism was agreed in Spain in connection with Endesa’s restructuring and reorganization plan, which provides for the suspension of the employment contract with tacit annual renewal. With regard to that plan, on December 30, 2014, the company had signed an agreement with union representatives in which it undertook to not exercise the option to request a return to work at subsequent annual renewal dates for the employees participating in the mechanism.