The Court of Appeal in Warsaw dismissed the appeal of the ERO President regarding the settlement of value of annual adjustment of the stranded costs (so-called LTC compensations) for 2008 for Lublin-Wrotków CHP

The Management Board of PGE Polska Grupa Energetyczna S.A. discloses that on September 17, 2013 the Court of Appeal in Warsaw dismissed the appeal of the President of the Energy Regulatory Office (the “ERO President”) against a judgement of the Regional Court in Warsaw – the Court of Competition and Consumer Protection (the “CCCP”) of May 26, 2010 regarding the settlement of value of annual adjustment of the stranded costs for 2008 for PGE GiEK S.A. Branch Elektrociepłownia Lublin-Wrotków (Lublin-Wrotków CHP) due as a result of the termination of long-term contracts of sale of capacity and electricity (so-called “LTC compensations”). The Court of Appeal re-examined the case following the verdict of the Supreme Court which allowed the cassation appeal of PGE GiEK S.A., repealed the verdict of the Court of Appeal of March 7, 2012 (see current report no 9/2012 dated March 8, 2012) and remitted the case for re-examination by that Court (see current report no 35/2013 dated May 9, 2013). The judgement of the Court of Appeal of September 17, 2013 is final and binding. However the ERO President is entitled to file a cassation appeal with the Supreme Court.

The claim value in the Lublin-Wrotków CHP case, calculated as a difference between the amount of annual adjustment calculated by the company and the amount settled by the ERO President in decisions, amounted to approximately PLN 26.7 million. The total claim value of disputes concerning LTC compensations for 2008 due to generators from the PGE Capital Group amounts to PLN 434.7 million. Generators from the PGE Capital Group are in similar disputes with the ERO President regarding stranded cost compensations for 2009 and 2010. These cases are at various stages of legal proceedings.

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).