Annual Report - EDP

notes to the EDP consolidated - Energias de Portugal, and company S.A. financial statementsNotes for to the the Consolidated years ended and Company 31 december Financial Statements 2012 and 2011for the years ended 31 December 2012 and 2011The movements in the Hydrological account are analysed as follows:Group and CompanyThousands of Euros Dec 2012 Dec 2011Balance at the beginning of the year 69,142 75,098Amounts received / (paid) during the year -15,155 -8,036Financial charges 2,489 2,080Balance at the end of the year 56,476 69,142The hydrological account was established by Decree-law 338/91 and consists of a legal mechanism for compensating the variable costs of generating electricity. Thehydrological account was set up in 1994 when the actual EDP Group was owned by the State, through a charge against the income statement. In 2000, through a spinoffof EDP, REN was set up, and new regulations were issued (through Decree-law 98/2000) which reinforced and maintained the requirement to keep thehydrological account in EDP’s balance sheet.As explained above, REN was part of the EDP Group until 2000. Thus, the entries in the hydrological correction account were made within the EDP Group. Since thesplit of REN in June 2000, EDP, S.A. (the Group parent company) has paid to or received cash from REN, which is booked against the hydrological correction account inthe balance sheet and the related financial charges are booked in the income statement. REN uses the amounts received or paid to compensate the operators in theliberalised market, in accordance with the objectives of the hydrological correction account as explained above.In October 2010 it was issued the Decree-Law 110/210, which determines the extinction of the hydrological account mechanism on 31 December 2016. The differentialof hydrological adjustment should be reflected in the tariff calculation applicable to all energy consumers, to cover the variation risk of tariff costs and revenuesassociated to the hydrological variability in Portugal. This decree regulates that the account of hydrological correction should be maintained in the balance sheet ofEDP - Energias de Portugal, S.A. and the correspondent annual movements explained in the notes to the financial statements. At extinction date, and for purpose ofextinction movement, until 31 December 2016, the government will incorporate a team/workforce composed by representatives of ERSE, of National ElectricityDistribution Network (RND), of National Electricity High Tension Transport (RNT) and National Conseil of Consumption, to determine such final movements.35. FINANCIAL DEBTThis caption is analysed as follows:GroupCompanyThousands of Euros Dec 2012 Dec 2011 Dec 2012 Dec 2011Debt and borrowings - CurrentBank loans:EDP, S.A. 61,567 45,161 61,567 45,161EDP Finance B.V. 2,205,915 358,445 - -EDP Brasil Group 113,666 147,014 - -HC Energia Group 1,917 907 - -EDP Renováveis Group 95,486 126,041 - -EDP Produção 8,862862 8,021 - -Portgás 26,759 33,803 - -Others 4,578 4,724 - -2,518,750 724,116 61,567 45,161Non-convertible bond loans:EDP, S.A. 150,000 - 150,000 -EDP Finance B.V. 348,231 1,621,314 - -EDP Brasil Group 141,521 34,175 - -639,752 1,655,489 150,000 -Commercial paper:EDP, S.A. 319,500 311,400 7,335,000 5,641,400HC Energia Group 2,192 498 - -321,692 311,898 7,335,000 5,641,400Other loans:Investco preference shares 2,847 1,058 - -EDP Brasil Group 8,843 9,176 - -EDP Renováveis Group 2,885 3,111 - -EDP Produção 1,231 1,231 - -15,806 14,576 - -Accrued interest 311,503 292,619 11,053 13,824Total Debt and borrowings - Current 3,807,503 2,998,698 7,557,620 5,700,385(*)Collateral Deposits - CurrentCollateral deposit - BEI -12,732 - -12,732 -Other collateral deposits -719 - - -Total Collateral Deposits - Current -13,451 - -12,732 -3,794,052 2,998,698 7,544,888 5,700,385(*)Collateral Deposits informative noteFollowing EDP's downgrading in 2012 and in the course of negotiations with BEI, on 31 October 2012, EDP has constituted an escrow deposit in the amount of 361,445 thousands ofEuros (348,713 thousands of Euros non-current and 12,732 thousands of Euros current), associated with several loans contracted in previous years with this entity. This escrow depositwill be reduced by the repayment of these loans. In addition, the Group has 67,051 thousands of Euros (66,332 thousands of Euros non-current and 719 thousands of Euros current)of other deposits constituted as collateral for financial guarantee.EDP - Annual Report 2012221