AASB issues amendments for Power Purchase Agreements

Wednesday, February 12, 2025

The AASB has issued AASB 2025-1 Amendments to Australian Accounting Standards – Contracts Referencing Nature-dependent Electricity to amend AASB 7 and AASB 9. The Standard is available on the Pronouncements Web Portal.

The amendments clarify the application of the ‘own-use’ criteria, permit hedge accounting (if appropriate) and add new disclosure requirements.

This Standard amends AASB 7 Financial Instruments: Disclosures and AASB 9 Financial Instruments to allow entities to better reflect contracts referencing nature-dependent electricity in the financial statements. The amendments:

• clarify the application of the ‘own-use’ criteria to nature-dependent electricity contracts;
• permit hedge accounting if these contracts are used as hedging instruments; and
• add new disclosure requirements to enable users of financial statements to better understand the effect of these contracts on an entity’s financial performance and cash flows.

AASB 2025-1 applies to annual periods beginning on or after 1 January 2026.  Earlier application is permitted.

The Standard can be located on the pronouncements portal under the Future Periods tab on the Accounting Standards page – see the list of amending pronouncements not yet fully compiled.