Update on cases Verdo has had several unresolved historical cases over a period of twenty years, which have now been settled within a relatively short time span of two to three years.
T
he new management at Verdo has made a focused effort to resolve the open historical cases, and thus create a clear path for customers, employees and the Group. The cases have been handled through open dialogue with the authorities, with the aim of achieving the best possible resolution for all parties. During 2021, we resolved several cases: Water tariffs • The case regarding water tariffs in Verdo Vand up until 2021 was approved by Randers City Council after the foundation for water tariffs during the 2000-2020 period was investigated by leading Danish experts in law and auditing. The result was that there were no outstanding monies between Verdo and consumers, beyond the normal annual regulation. Interest on intercompany loans • The case regarding interest on intercompany loans between Verdo A/S and Verdo Varme A/S during the 2013-2019 period has also been settled. The initial draft decision from the Danish Utility Regulator deemed that Verdo should refund DKK 124 million to heating customers in Randers. In the final decision from mid-2021 it was decided that Verdo Varme A/S should refund DKK 116 million. • We will begin refunding customers as agreed with the Danish Utility Regulator. As in previous cases, we will refund the amount by reducing future
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Annual report 2021
heating bills, as is standard practice in the industry. We have proposed to the Danish Utility Regulator that we initiate the refund on 1 July 2022 and effect it over a three-year period. Depreciation base • The Danish Utility Regulator decided on the case in 2021 regarding the depreciation base for regulatory fixed assets of the Randers CHP plant and district heating network in Randers for the 1982-2018 period. The case was settled as expected, and no refunds are therefore required. In addition to the resolved cases, there are ongoing cases which still await a decision. These are: Return on invested capital in the 20002009 period • While the Group’s production company was investigating similar matters back in the 2000-2009 period, indications were found that Verdo Produktion A/S had recognised a return on invested capital of up to DKK 69 million during the period. It has not been possible to identify a direct legal basis for recognising this return, and discussions have therefore been initiated with the Danish Utility Regulator concerning the matter. It is not yet possible to know when these discussions will be completed. Verdo Produktion A/S has therefore chosen to recognise a provision corresponding to the entire return identified. •
Tax expenses collected • At the beginning of 2021, the Group began discussions with the Danish Utility Regulator regarding a possible repayment of taxes collected from customers of Verdo Varme A/S and Verdo Produktion A/S. The discussions concern the assessment of whether tax is a fully or partially necessary expense for these companies. At this stage, it is not possible to assess the potential accounting implications or when the discussions are expected to be concluded. This has therefore not been recognised. Output model • The Danish Utility Regulator contacted the Group in 2021 about the sector’s usual method for allocating costs between electricity production and heat production – the ‘output model’. The Group is in dialogue with the Danish Utility Regulator about the use of the model. At present, it is not possible to assess whether this enquiry may result in financial consequences for the Group. The refunds currently being made will be completed on 30 June 2022 and 30 June 2023, while the refunds for the two most recently settled cases are expected to commence on 1 July 2022 and will be fully repaid on 30 June 2025.
