19. Provisions for risks and charges

Provisions for risks and charges, which amount to €776 million (€1,014 million at 31 December 2014) are analysed in the table below:

Other changes (€228 million) relate essentially to: (i) the revision of estimated (discounted) costs for site restoration and dismantling (€116 million) in the storage (€79 million) and transportation (€37 million) segments, mainly due to the change in expected discount rates; and (ii) reclassification to the provision for impairment losses on receivables of estimated charges arising from commercial balancing at 31 December 2014 (€85 million), which followed the closure by the Authority of the proceedings to determine the share of costs arising from outstanding receivables owing to the Balancing Supervisor (Snam Rete Gas).³².

From the second half of 2015, provisions for risks and charges, which cover the provision for site dismantling and restoration and the provision for environmental charges, were discounted using a rate corresponding to the yields on Eurozone corporate bonds with an AA rating, rather than the rate corresponding to the yields on Eurozone corporate bonds with an AAA rating, as used previously. This curve, also taking into account the broadest possible basket, represents the best way of presenting the Group’s circumstances. The rate thus determined was between 0.02% and 2.51%.

The provision of €515 million for site dismantling and restoration (€650 million at 31 December 2014) was recognised primarily due to expenses which are expected to be incurred for the removal of facilities and the restoration of sites in the natural gas storage (€430 million) and transportation (€78 million) business segments.

The provision for environmental risks and charges (€131 million, compared with €136 million at 31 December 2014) mainly included costs for environmental soil reclamation, pursuant to Law 471/1999, as amended, primarily for the disposal of solid waste, in relation to the distribution business.

The provision for litigation (€34 million, compared with €52 million at 31 December 2014) included costs which the Company has estimated it will incur for existing lawsuits.

Other provisions for risks and charges (€96 million, compared with €176 million at 31 December 2014) related mainly to: (i) the charges made as a contra-entry to the change in inventories item, resulting from the difference between the estimated quantities of UFG, which the Company expects to finalise in the four-year period 2015-2018, and the forecast quantities that will be transferred in kind by users, pursuant to Resolution 514/2013/R/gas (€40 million); and (ii) the estimated costs of plant upgrades in the distribution segment (€20 million), in response to the results of the checks performed in 2014 as part of the asset protection measure imposed by the judicial authorities, communicated to Italgas in July of the same year.

In accordance with ESMA Recommendation 2015/1608 of 27 October 2015, the effects on provisions of risks and charges arising from a reasonably possible change to the discount rate used at year-end are shown below.

The sensitivity³³ of the discount rate represents the change in the value of the actuarial liability obtained using the end-of-year valuation data, changing the discount rate without any change in the other assumptions.