29. Commitments and contingencies

Contingent assets and liabilities are presented at nominal value.

Energy purchase commitments

Stedin Group has energy purchase commitments to offset administrative and technical network losses. As the ‘own use exception’ applies to these purchase contracts, they are not recognised in the financial statements. Based on the rates applicable in 2023, the estimated obligation amounts to € 646 million (2022: € 923 million) and relates to the period from 2024 through to 2030. The rates applicable to the purchase commitment for 2024 have largely been fixed already, in line with our purchasing strategy. Where rates have not been fixed yet, Stedin Group uses the expected rates in the energy market for the relevant delivery year as these applied at 31 December 2023. As these rates may be subject to change due to future fluctuations in rates in the energy market, the future amount of the obligation is volatile.

Investment obligations

Stedin Group has entered into investment obligations for the supply of transformers, prefab stations and smart meters. As of 31 December 2023, a total of € 112 million remains for transformers (2022: € - million), € 50 million for prefab stations (2022: € - million) and € 19 million for smart meters (2022: € 32 million). The investment obligations have been entered until 2027.

Guarantees

Stedin Group has issued group and bank guarantees to third parties of € 1 million (2022: € 1 million). Of that total, Stedin Holding N.V. issued € 0 million (2022: € 0 million) in guarantees. This guarantee was provided by a subsidiary.

Stedin Group has taken out directors’ and officers’ liability insurance for the members of the Supervisory Board, the members of the Board of Management, directors and other executives within Stedin Group. To the extent possible, the directors are indemnified by Stedin Group, subject to specific conditions, against costs in connection with civil-law, criminal-law or administrative-law proceedings in which they could be involved because of their position.

Metering services results

The rates that Stedin charges as a grid manager for low-use meters are regulated and based on the Ministerial Metering Tariff Regulation (Ministeriële Regeling Meettarieven, MR), which lays down how the ACM sets such rates. The maximum rates that grid managers may charge are currently based on the 2005 rate levels, plus an annual inflation adjustment in accordance with the consumer price index. Since 2011, the ACM has monitored the costs incurred in executing the metering task. It should be possible in this regard to fund the ‘Large-Scale Smart Meters Roll-out Period’ (GSA) project from the returns that are achieved. The Ministerial Metering Tariff Regulation ensures that consumers ultimately do not pay more than the break-even rates. To this end, the ACM may include the returns achieved in future decisions on rates. The GSA ended in 2021, after Stedin had offered smart meters to 100% of its customers and had actually installed them at more than 80%. In addition, Stedin is also already taking into account the additional mandate from the Ministry of Economic Affairs and Climate Policy (EZK) to seek to achieve an even higher completion rate in the years ahead. In recent years, surplus profits have been returned to consumers by means of tariff reductions. At year-end 2023, the estimated surplus profits decreased to € 74 million negative. The actual status of surplus profits at the end of 2023 can be determined once the 2023 regulation data has been finalised. At year-end 2022, these were € 21 million negative, a lower amount than previously estimated. Stedin’s goal is to reach approximately zero by the end of 2026, so as to enter the new regulation period from 2027 without large subsequent calculations, in connection with which the metering services will become part of the benchmark competition.

Legal proceedings

Stedin Group is involved either as plaintiff or defendant in various legal and regulatory claims and proceedings related to its operations. The amounts claimed in some of these proceedings may be significant to the consolidated financial statements. Liabilities and contingencies in connection with these claims and proceedings are assessed periodically based on the latest information available. A liability is only recognised if an adverse outcome is considered to be probable and the amount of the loss can be reasonably estimated, see 24 Other provisions.

Stedin is involved with several municipalities in claims for municipal sufferance taxes. The potential impact for Stedin is a receivable ranging up to approximately € 37 million (2022: € 37 million). Due to uncertainties, this potential receivable is not recognised in the balance sheet as at 31 December 2023.

Rendant

Stedin has been designated by the Minister of Economic Affairs and Climate Policy as grid manager for a third-party electricity grid and gas grid. Following completed court proceedings, Stedin acquired full - both legal and economic - ownership of this electricity and gas grid in 2022 for a payment of € 1.6 million. This amount has already been recognised in the financial statements. However, the final valuation of these acquired assets is still unknown and will be determined by means of a binding advisory procedure. The outcome of this procedure is expected during 2024. Given the current uncertainties regarding the final valuation, no receivable or additional liability has been recognised in the financial statements as at 31 December 2023.

Fiscal unity

Stedin Holding N.V. forms a fiscal unity for corporate income tax purposes with all its subsidiaries as included in 36 Overview of capital interests, with the exception of Infradock B.V. The companies, including Stedin Holding N.V., that are part of a fiscal unity are jointly and severally liable for the tax obligations of that fiscal unity.

Stedin Holding N.V. forms a fiscal unity for value-added tax purposes with all its subsidiaries as included in 36 Overview of capital interests, with the exception of Infradock B.V. The companies, including Stedin Holding N.V., that are part of a fiscal unity, are jointly and severally liable for the tax obligations of that fiscal unity.

Cash pool

Stedin Holding N.V., Stedin Groep Services B.V., Stedin Groep Personeels B.V. and NetVerder B.V. are part of a cash pool based on a zero balancing agreement and are jointly and severally liable for deficits within this cash pool.