Commitments and contingencies
Commitments and contingencies outstanding at 31 March 2008 and 2007 are summarised in the table below:
| 2008 £m |
2007 £m |
|
|---|---|---|
| Future capital expenditure contracted but not provided for | 1,097 | 1,554 |
| Total operating lease commitments | 737 | 800 |
| Power commitments | 4,753 | 3,731 |
| Other commitments, contingencies and guarantees | 1,387 | 537 |
Information regarding obligations under pension and other post-retirement benefits is given under the heading ‘Retirement arrangements’.
The energy commitments shown in the commitments and contingencies table above reflect obligations to purchase energy under long-term contracts. These contracts are used in respect of our normal sale and purchase requirements and do not include commodity contracts carried at fair value.
We propose to meet all of our commitments from existing cash and investments, operating cash flows, existing credit facilities, future facilities and other financing that we reasonably expect to be able to secure in the future.
Contractual obligations at 31 March 2008
The table of contractual obligations shown below analyses our long-term contractual obligations according to payment period. Purchase obligations reflect commitments under power contracts and future capital expenditure contracted for but not provided. The other long-term liabilities reflected in the balance sheet at 31 March 2008 comprise commodity contracts carried at fair value and other creditors that represent contractual obligations falling due after more than one year.
| Less than 1 year £m |
1-3 years £m |
3-5 years £m |
More than 5 years £m |
Total £m |
|
|---|---|---|---|---|---|
| Financial liabilities | |||||
| Borrowings | (3,379) | (2,725) | (4,732) | (9,894) | (20,730) |
| Interest payments on borrowings | (822) | (1,391) | (2,136) | (5,810) | (10,159) |
| Finance lease liabilities | (266) | (72) | (128) | (19) | (485) |
| Other non-interest bearing liabilities | (2,190) | (347) | – | – | (2,537) |
| Derivatives payments | (647) | (951) | (1,498) | (4,040) | (7,136) |
| Derivatives receipts | 990 | 1,205 | 1,779 | 3,550 | 7,524 |
| Commodity contracts | (490) | (445) | (247) | (32) | (1,214) |
| Other contractual obligations | |||||
| Capital commitments | (956) | (135) | (6) | – | (1,097) |
| Operating leases | (83) | (163) | (135) | (356) | (737) |
| Energy commitments | (1,790) | (1,375) | (425) | (1,163) | (4,753) |
| Total at 31 March 2008 | (9,633) | (6,399) | (7,528) | (17,764) | (41,324) |
Interest on borrowings is calculated based on borrowings at 31 March 2008 and does not reflect future debt issues. Floating rate interest has been estimated using future interest rate curves at 31 March 2008.
Off balance sheet arrangements
There were no significant off balance sheet arrangements other than the contractual obligations and commitments and contingencies described above.
Details of material litigation as at 31 March 2008
We were not party to litigation that we considered to be material as at 31 March 2008.
As noted here, Ofgem decided that we were guilty of breaches of competition law with respect to our metering services business in the UK and have imposed a fine of £41.6 million, which has been suspended pending our appeal to the Competition Appeal Tribunal. We believe that we have never been anti-competitive and that we will be successful in appealing this decision. We have therefore not provided for this fine in our financial statements.
Also as described here, the US Department of Justice is investigating competition issues in the New York City electricity capacity market prior to our acquisition of KeySpan. The civil investigation demands received are requests for information in the course of an investigation and do not constitute the commencement of legal proceedings and no specific allegations have been made against KeySpan.