Contingent assets and liabilities

Energy purchase and sale commitments

Eneco has energy purchase commitments of € 9.7 billion (2011: € 12.4 billion) under contracts relating to 2013 and later years. The purchase commitments comprise energy contracts for the company's own use with various energy generators. There are sales commitments of € 3.2 billion (2011: € 3.9 billion) for 2013 and later years.

There are commitments of € 1.0 billion (2011: € 0.3 billion) for the purchase of heat until 2038.

Lease-and-leaseback transactions

Between 1997 and 2000, lease-and-leaseback transactions were entered into for a large part of the gas, electricity and district heating networks.

These assets are leased for a long period to third parties who have leased the same assets back to Eneco. Eneco is entitled to purchase the sub-leasing rights held by third parties at the end of the lease-back periods, which are between 2015 and 2025.

The table below shows the transactions concluded:

x USD 1 million

Number of transactions

Transaction value

Costs of early termination

Value of investments

Electricity networks

7

1,602

645

557

Gas networks

3

494

194

181

District heating networks

2

524

211

204

Total 31 December 2012

12

2,620

1,050

942

Total 31 December 2011

15

2,899

1,154

993

The transaction values are the appraised values at the time the lease-and-leaseback transactions were entered into, defined for US fiscal purposes on valuation principles prevailing under US tax regulations. Three transactions were terminated early during 2012 (2011: 0), one with a term to 2021 and two to 2025.

Income from lease-and-leaseback transactions is recognised in the year the transaction occurred less the costs expected at that time to be incurred throughout the remaining term. These expected costs are recognised in the balance sheet as Other non-current liabilities. The lease-and-leaseback transactions may restrict the ability to sell the assets. These assets may be sold (in full or in part) subject to certain conditions. If these conditions are not complied with, termination conditions may come into force.

Conditional and unconditional contractual obligations and rights exist in connection with these lease-and-leaseback transactions. The financial obligations and rights cancel each other out and, as they have been transferred to third parties, are not recognised in the balance sheet.

The company has provided security in respect of these obligations in the form of mortgages and pledges on parts of the gas, electricity and district heating networks. In connection with the risk of forced early termination of the lease-and-leaseback transactions, the company has also provided additional security in the form of letters of credit to a value of USD 393 million (2011: USD 476 million), which are covered by subordinated collateral rights in respect of the network.

When the lease-and-leaseback transactions were entered into, some of the proceeds received were invested in US Treasury Bonds or bonds with almost the same creditworthiness. These bonds can be used at a later date to purchase the sub-leasing rights. The market value of these investments on the reporting date amounted to USD 942 million (2011: USD 993 million).

The difference between the costs of early termination and the value of the investments will develop as follows in the coming years:

x USD 1 million

2013

2014

2015

2020

2025

Costs of early termination

1,054

1,060

1,063

282

44

Value of investments

956

970

984

251

44

Difference

98

90

79

31

The portion of the costs of early termination that must contractually be covered by letters of credit depends on the corporate credit rating of Eneco, which, at the reporting date, was ‘A-’ according to Standard & Poor's.

Investment obligations

At 31 December 2012 Eneco had entered into investment obligations with a total amount of € 272 million (2011: € 465 million).

Other obligations and guarantees

At 31 December 2012 there were existing other payment obligations of € 580 million (2011: € 809 million), payable from 2013.

Eneco has issued guarantees of approximately € 31 million (2011: € 20 million).

Eneco has formed fiscal unities for corporate income tax and VAT purposes. Eneco Holding N.V. and the subsidiaries in these fiscal unities are jointly and severally liable for the tax obligations of the fiscal unities.