The CCCP Court in Warsaw issued a verdict which allowed the appeal of PGE GiEK S.A. - ZEDO and changed President of the Energy Regulatory Office decision regarding settlement of value of annual adjustment of the stranded costs for 2009 for ZEDO

The Management Board of PGE Polska Grupa Energetyczna S.A. discloses that on June 4, 2012 the Court of Competition and Consumer Protection (the "CCCP") - in Warsaw allowed the appeal of PGE GiEK S.A. - ZEDO and changed the decision of the President of Energy Regulatory Office from July 30, 2010 regarding the settlement value of annual adjustment of the stranded costs for 2009 for PGE GiEK S.A. - ZEDO due as a result of the termination of long-term contracts of sale of capacity and electricity (so-called "LTC compensations").The judgement is not final and binding. ERO President is entitled to appeal against the verdict.

The total claim value of disputes concerning LTC compensations for 2009 due to generators from the PGE Capital Group, calculated as a difference between the amount of annual adjustment calculated by the companies and the amount settled by the ERO President in decisions, amounts to PLN 672.9 million. The claim value in ZEDO case was PLN 93 million.

Description of the case:

On July 30, 2010, the ERO President issued six decisions in relation to some generators from the PGE Capital Group, i.e. PGE Elektrownia Opole S.A., PGE Elektrownia Turów S.A., PGE Zespół Elektrowni Dolna Odra S.A., PGE Elektrociepłownia Rzeszów S.A., PGE Elektrociepłownia Lublin - Wrotków Sp. z o.o., PGE Elektrociepłownia Gorzów S.A., concerning the annual adjustment of stranded costs and annual adjustment of the cost generated in gas-fired units under the Act of June 29, 2007 on the principles of compensating for generators' costs arising in connection with the early termination of long-term contracts for the sale of capacity and electricity (Dz. U. of 2007 No. 130, Item 905, as amended).

Pursuant to the decisions mentioned, the above companies were obliged to return amounts indicated in the decisions to Zarządca Rozliczeń S.A. or were given lower adjustments than expected. The companies from the PGE Capital Group appealed against the decisions of the ERO President to the CCCP.CCCP verdict from June 4, 2012 is the first court verdict regarding annual adjustments of stranded costs for 2009.

Until the date of this report, the Court of Appeal issued following verdicts in cases regarding the settlement of value of annual adjustment of the stranded costs for 2008:

- dismissal of the appeal by the ERO President in case of Elektrociepłownia Rzeszów on February 2, 2012 (current report no 3/2012 dated February 2, 2012);
- allowance of the appeal by the ERO President in case of Elektrociepłownia Lublin-Wrotków on March 7, 2012 (current report no 9/2012 dated March 8, 2012);
- repealing of the verdict of the Court of Competition and Consumer Protection in case of ZEDO and remittance of the case for re-examination by the Court of Competition and Consumer Protection on March 12, 2012 (current report no 10/2012 dated March 12, 2012);
- dismissal of the appeal by the ERO President in case of Elektrociepłownia Gorzów on March 27, 2012 (current report no 13/2012 dated March 27, 2012).
- dismissal of the appeal by the ERO President in case of Zespół Elektrowni Dolna Odra on April 24, 2012 (current report no 14/2012 dated April 24, 2012).- verdict regarding Elektrownia Opole has not been issued yet.

Generators from the PGE Capital Group are in similar disputes with the ERO President regarding stranded cost compensations for 2010. These cases have not been subject of the court judgement yet.

Legal ground: Art. 56 section 1 point 1 of the Act on public offering, conditions governing the introduction of financial instruments to organised trading, and public companies (Dziennik Ustaw 2009 no 185, item 1439, as amended).