The European Commission has considered long-term contracts for sale of power and electricity (LTC) as disallowed public aid, therefore the Polish Parliament passed an act intended to eliminate those contracts. In accordance with the Act on compensations for costs incurred by producers in connection with early termination of long-term contracts for sale of power and electricity dated 29 June 2007 ("LTC Termination Act") the Company is eligible to receive compensation for stranded costs resulting from the early termination of long-term contracts since 1 April 2008.
The maximum amount of stranded costs for power plant Kozienice (currently Enea Wytwarzanie Sp. z o.o.) in accordance with Annex No. 2 to the LTC Termination Act dated 29 June 2007 amounts to 623,612 PLN thousand (discounted amount as at 1 January 2007). This amount includes the amount of stranded costs is also attributable to the year 2007 and the first quarter of 2008, which is the period when the agreements were still in force (termination of contracts took place on 1 April 2008).
- The amount of annual adjustments determined by the President of the Energy Regulatory Office is being disputed by the Company (and is the subject of court proceedings), as a result of divergent interpretation of the LTC Act regarding the calculation of the adjustment, especially the appropriateness of application of any indicators to adjust the amounts presented in the Appendices to the Act. The revenue due to compensation was recognized in the amount of PLN 257,508 thousand. This amount includes the projected annual adjustment for 2014 and full amount of expected final adjustment of stranded costs.
Status of cases:
| Year of adjustments | Decision of ERO [thousand PLN] | Enea Wytwarzanie sp. z o.o. [thousand PLN] | Legally binding decision [thousand PLN] | Court proceedings status |
|---|---|---|---|---|
| 2008 | (-) 89,537 | (-) 4,192 | (-) 4,192 | 27 January 2014 the President of the ERO submitted a cassation appeal to the Supreme Court |
| 2009 | (+) 15,580 | (+) 114,672 | (+) 16,544 | 30 October 2013 the Company ERO submitted a cassation appeal to the Supreme Court - cassation appeal was accepted |
| 2010 | (+) 2,472 | (+) 112,808 | 13 January 2014 annual adjustment decision of the Court of Competition and Consumer Protection (+) PLN 78,640 thousand – the President of the ERO and the Company submitted an appeal | |
| 2011 | (-) 37,397 | (+) 67,734 | 13 February 2015 annual adjustment decision of the Court of Competition and Consumer Protection (+) PLN 67,734 thousand - the President of the ERO announced an appeal | |
| 2012 | (-) 17,687 | (+) 74,841 | 24 November 2014 (+) PLN 74,841 thousand - the President of the ERO submitted an appeal | |
| 2013 | (-) 22,570 | (+) 54,827 | 18 August 2014 the Company submitted an appeal |
- Events of 2014:
Annual adjustment for 2008:
- In January 2014 the President of the Energy Regulatory Office submitted an appeal to the judgment of the Court of Appeal in Warsaw of 10 July 2013 concerning stranded costs for 2008 (decision of the President of Energy Regulatory Office for 2008 was set at (-) PLN 4,192 thousand instead of the initial
(-) PLN 89,537 thousand. - On 17 March 2014 the Company submitted its response to the cassation appeal to the Supreme Court.
Annual adjustment for 2009:
- On 12 August 2014 Supreme Court accepted cassation appeal of the Company on the annual adjustment for 2009.
- On 19 November 2014 a meeting of the Supreme Court on the cassation appeal on the annual adjustment for 2009 took place - the appeal has not been proceeded. The Supreme Court allowed for submission of pleadings by both parties.
- On 5 December 2014 the Company submitted pleading to the Supreme Court.
Annual adjustment for 2010:
- On 13 January 2014 the Court of Competition and Consumer Protection (SOKiK) made a decision, according to which the annual adjustment of stranded costs for 2010 was set at (+) PLN 78,640 thousand, i.e. PLN 76,168 thousand higher than the amount set out in the decision of the President of the Energy Regulatory Office. The Court considered appeal entirely in its original version. The decision is not legally binding. The decision has been appealed to the Court of Appeal in Warsaw by the Company on 18 February 2014 and by the President of the Energy Regulatory Office.
Annual adjustment for 2011:
- With the notification dated 5 September 2015 the President of the Energy Regulatory Office informed the Company of the ex-officio initiation of administrative proceeding concerning charging interest for 2011.
- On 18 September 2014 the Company submitted a formal request to the President of the Energy Regulatory Office, for cancellation and suspension of administrative proceeding pending the Court decision on the Company's appeal against the decision of the President of the Energy Regulatory Office.
- On 29 January 2015 the President of the Energy Regulatory Office issued a decision to suspend the proceeding concerning interests for 2011 based on the Article 35 of LTC Act until the annual adjustment for 2011 is legally binding.
- On 13 February 2015 the Court of Competition and Consumer Protection announced the decision considering the Company's appeal and has established the annual adjustment for 2011 in the amount of (+) PLN 67,734 thousand.
Annual adjustment for 2012:
- On 24 November 2014 the Court of Competition and Consumer Protection issued a decision determining an annual adjustment in the amount of (+) PLN 74,841 thousand.
- On 22 December 2014 the President of the Energy Regulatory Office appealed the decision of the Court of Competition and Consumer Protection to the Court of Appeal in Warsaw.On 27 January 2015 the Company submitted to the Court of Appeal in Warsaw a response to the appeal of the President of the Energy Regulatory Office.
Annual adjustment for 2013
- On 5 August 2014, the Company received a decision of the President of the Energy Regulatory Office dated 31 July 2014, determining the annual adjustment of stranded costs for 2013 which Enea Wytwarzanie Sp. z o.o. should return to Zarządca Rozliczeń SA untill 30 September 2014 - PLN (-) 22,570 thousand.
- On 18 August 2014 the Company appealed the decision to the Court of Competition and Consumer Protection (the appeal includes an application for suspention of execution of the decision pending the outcome of the Court case).
- On 25 August 2014, the Company submitted to the Court of Competition and Consumer Protection a separate application for suspension of execution of the decision of the President of the Energy Regulatory Office.
- On 2 September 2014 the Court of Competition and Consumer Protection issued a decision to suspend execution of the decision of the President of the Energy Regulatory Office.
- With the notification dated 5 September 2015 the President of the Energz Regulatorz Office informed the Company of the ex-officio initiation of administrative proceeding concerning interests for 2013.
- On 18 September 2014 the Company submitted a formal request to the President of the Energy Regulatory Office for cancellation and suspension of administrative proceeding pending the Court decision on Company's appeal of the President of the Energy Regulatory Office decision.
- On 29 January 2015 the President of the Energy Regulatory Office made a decision to suspend the proceeding concerning interests for 2013 in accordance with the Article 35 of LTC Act until the annual adjustment for 2013 is legally binding.