27Provisions

Provisions for onerous contracts

Provisions of CHF 4,126 thousand (prior year: CHF 20,792 thousand) for onerous contracts comprise CHF 0 thousand for onerous energy contracts (prior year: 15,567), CHF 690 for guarantees of origin (prior year: CHF 1,721 thousand) and CHF 3,436 thousand for transport capacity (prior year: CHF 3,504 thousand).

Provisions are reviewed and adjusted on the balance sheet date. The decision on whether there is a threat of loss on a long-term sales or procurement contract and the resulting recognition of a provision essentially depends on the situation regarding the relevant contractual prices and expected future procurement or sales prices.

The adjustment to the provision for onerous energy contracts has a particular impact on Repower’s income. The expected future prices of energy have increased. As a result, this provision was written back in full via energy procurement in the amount of CHF 16,841 thousand after interest had been paid.

The adjustment of provisions for onerous contracts has the effect of reducing energy procurement by a total of CHF 18,511 thousand (prior year CHF 4,737 thousand) (see Note 6).

The provisions were calculated on the basis of risk-adjusted interest rates of between 7.0 and 18.5 per cent (prior year: 8.8 and 15.0 per cent).

Severance pay

When an employment relationship is terminated in Italy, the employee is entitled to severance pay corresponding to almost one month's pay for each year of employment (see Note 34).

Dismantling provisions

The dismantling provisions category comprises various provisions for the dismantling of operating installations. Taken individually they are immaterial. Additions were recognised under tangible assets.

Other provisions

CHF 1,546 thousand in provisions for contractual penalties that are no longer expected were written back in in the Market Italy segment in the 2022 financial year, whereas provisions for excise taxes and other contractual risks, in the amount of CHF 2,812 thousand and CHF 865 thousand respectively, were recognised in the Market Switzerland segment the prior year.