ERO President decisions concerning annual adjustments of LTC compensations for 2011
45/2012
02.08.2012 13:18
Art. 56 section 1 p. 1 of Act on Public Offering – confidential information
Contents of the report
The Management Board of PGE Polska Grupa Energetyczna S.A. ("PGE") discloses, that it has received information about decisions of the President of the Energy Regulatory Office (the "ERO President") concerning the annual adjustment of the stranded costs and annual adjustment of the costs generated in gas-fired units for the year 2011, which are due to certain generators from PGE Capital Group according to the Act of June 29, 2007 on coverage of stranded costs resulting at generators in relation to accelerated termination of long-term contracts ("LTC Act").
According to decisions of ERO President generators from PGE Capital Group will return to Zarządca Rozliczeń S.A. approximately PLN 537m, a part of advance payments received in 2011.
Total PLN 537m includes:
1) Approx. PLN 84m - adjustment resulting from a difference in generators results which were forecasted while applying for advance payments for 2011 year, ie. in August 2010 and their actual results in 2011. PGE does not dispute this amount.
2) Approx. PLN 446m - adjustment resulting from a different than PGE interpretation of the LTC Act by the ERO President relating to the fact that generators applied so called liquidity method of compensations calculation. In PGE's opinion, return of the disputed amount shall be made at a later date, within a final adjustment which is to be made in 2017. As a result, the Management Board of PGE GiEK S.A. is planning to appeal the respective ERO President decision.
3) Approx. PLN 7m - adjustment relating to the cost of use of the gas collected and cost of the non-collected gas in Rzeszów CHP. The Management Board of PGE GiEK S.A. is planning to appeal the respective ERO President decision. Advance payments of the stranded costs and annual adjustment of the costs generated in gas-fired units for the year 2011 amounted to PLN 1,399m (cash proceeds between April 2011-January 2012). Revenues in 2011 from LTC compensations amounted to approx. PLN 439m.
Return of the amount indicated in ERO President decisions will not have significance for the reported revenues and profits of the PGE Capital Group. Settlement of the dispute might impact a final adjustment of the stranded costs which will be made in 2017.
The Management Board of PGE emphasizes that with respect to LTC compensations for 2011 difference in the LTC Act interpretation refers to other issues than in previous disputes for 2008-2010 years.
According to decisions of ERO President generators from PGE Capital Group will return to Zarządca Rozliczeń S.A. approximately PLN 537m, a part of advance payments received in 2011.
Total PLN 537m includes:
1) Approx. PLN 84m - adjustment resulting from a difference in generators results which were forecasted while applying for advance payments for 2011 year, ie. in August 2010 and their actual results in 2011. PGE does not dispute this amount.
2) Approx. PLN 446m - adjustment resulting from a different than PGE interpretation of the LTC Act by the ERO President relating to the fact that generators applied so called liquidity method of compensations calculation. In PGE's opinion, return of the disputed amount shall be made at a later date, within a final adjustment which is to be made in 2017. As a result, the Management Board of PGE GiEK S.A. is planning to appeal the respective ERO President decision.
3) Approx. PLN 7m - adjustment relating to the cost of use of the gas collected and cost of the non-collected gas in Rzeszów CHP. The Management Board of PGE GiEK S.A. is planning to appeal the respective ERO President decision. Advance payments of the stranded costs and annual adjustment of the costs generated in gas-fired units for the year 2011 amounted to PLN 1,399m (cash proceeds between April 2011-January 2012). Revenues in 2011 from LTC compensations amounted to approx. PLN 439m.
Return of the amount indicated in ERO President decisions will not have significance for the reported revenues and profits of the PGE Capital Group. Settlement of the dispute might impact a final adjustment of the stranded costs which will be made in 2017.
The Management Board of PGE emphasizes that with respect to LTC compensations for 2011 difference in the LTC Act interpretation refers to other issues than in previous disputes for 2008-2010 years.
Signatures of persons representing the company
| Date | Name | Position and function |
|---|---|---|
| 2012-08-02 15:18:28 | Krzysztof Kilian | President of the Management Board |
| 2012-08-02 15:18:28 | Piotr Szymanek | Vice-President of the Management Board |