20.4 Provision for onerous contracts
On 15 December 2023, the President of the Energy Regulatory Office issued a decision approving the electricity for customers in G group, for the period from 1 January 2024 to 31 December 2024.
The approved does not fully cover the costs of purchasing electricity resulting from previously concluded purchase contracts, origin energy rights and the costs of regulated activities. Accordingly, on 31 December 2023, the Company established a provision for onerous contracts with customers in Gx groups in 2024 for a total amount of PLN 761 million. The provision was estimated in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, according to which unavoidable costs of contract fulfilment include both variable costs (energy, origin energy y rights) and the Company’s own costs related to providing services to Gx customers and incurred by PGE Obrót S.A., exclusive of general administrative expenses.
In addition, PGE Obrót S.A. recognised a provision in the amount of PLN 74 million due to the extension of the maximum price for micro, small and medium enterprises and local government units to the first half of 2024. PGE Obrót S.A. is obliged to apply maximum prices in settlements with eligible customers until 30 June 2024, also when the cost of electricity purchase for the performance of these contracts is significantly higher than the maximum price.