Current reports
Current report no. 38/2014
The Court of Appeal in Warsaw judgement concerning legal proceedings on the compensation related to cover stranded costs of the Pątnów Power Plant II for the year 2008
Legal basis:
Art. 56 section 1 point 1 of the Public Offering Act - Confidential information
Contents of the report:
Zespół Elektrowni "Pątnów-Adamów-Konin" S.A. (hereinafter referred to as the Company), in reference to the current report No. 16/2014 and the information contained in the extended consolidated semi-annual report for the first half of 2014 concerning the legal proceedings on compensation of stranded costs of Elektrownia Pątnów II Sp. z o.o. (a subsidiary of the Company) (hereinafter referred to as EPII) for 2008, informs that, on November 4, the Court of Appeal in Warsaw, as a result of the judicial review, issued a judgement rejecting the EPII appeal against the judgement of the Regional Court in Warsaw – the Court for Protection of Competition and Consumers of 1 December 2010.
According to the previous settlements in this case, the Regional Court in Warsaw – the Court for Protection of Competition and Consumers of 1 December 2010 rejected the EPII appeal against the decision of the President of Energy Regulatory Office S.A. (hereinafter referred to as the President of ERO) of 31 July 2009, pursuant to which EPII was obliged to return to the administrator of compensation system, i.e. Zarządca Rozliczeń S.A., the amount of PLN 52.5 million, as part of the adjustment of stranded costs for 2008.
The judgement of the Appeal Court in Warsaw of 4 November 2014 means that EPII is obliged to execute the decision of the President of ERO of 31 July 2009, i.e. to pay the amount of PLN 52.5 million to Zarządca Rozliczeń S.A.
The judgement of the Appeal Court also results in the obligation of EPII to repay to Zarządca Rozliczeń S.A. the previously received amount of PLN 29.1 million, which was awarded to EPII according to the first judgement of the Court of Appeal in Warsaw of 11 October 2012, which was overruled by the Supreme Court with a judgement of 22 May 2014. The Company informed about the Supreme Court's judgement of 22 May 2014 in the current report No. 16/2014.
On 28 October 2014, from the amount of PLN 29.1 million, which was mentioned above, EPII paid back to Zarządca Rozliczeń S.A. the amount of PLN 5.3 million, which resulted from modification of the application, conducted by EPII, in terms of the amount of the annual adjustment of stranded costs due for 2008 to the company as well as reduction of the required amount from PLN 29.1 million to PLN 23.7 million. We informed about the EPII reduction of the required amount of the adjustment in the extended consolidated semi-annual report for the first half of 2014.
Therefore, at present, following the issue of a judgement of 4 November 2014, by the Appeal Court in Warsaw, EPII is obliged to pay to Zarządca Rozliczeń S.A. the total amount of PLN 76.3 million.
On the basis of the arrangements made with Zarządca Rozliczeń S.A., the obligation of EPII to pay the amount of PLN 76.3 million to Zarządca Rozliczeń S.A. was divided into parts, the payment of which was spread over the years, from 2015 to 2017. The sum of payments in each year is: (1) in 2015 – PLN 5 million, (2) in 2016 – PLN 5 million, (3) in 2017 – PLN 66.3 million.
The Appeal Court's judgement of 4 November 2014 is valid. EPII will identify the grounds to file the cassation appeal against the judgement after receiving and familiarising with the reasons for the judgement in writing.
In accordance with the issued judgement, the Management Board of EPII decided to create a copy of the impairment write-downs against revenues on compensation in respect of the stranded costs, according to the early termination of the long-term sale of energy and electricity.
In the opinion of the Management Board of the Company, the creation of the copy of the impairment write-downs will have a negative impact on the consolidated results of the ZE PAK Group in the third quarter of 2014, i.e. the gross profit will decrease by approximately PLN 76.3 million, and the net result will decrease by around PLN 61.8 million.
According to the Act of 29 June 2007 on the rules of covering costs incurred by the manufacturers owing to the early termination of the long-term contracts concerning the sale of energy and electricity, EPII receives, in the form of annual advance payments and their adjustments (positive and negative), cash to cover the stranded costs at the amount not exceeding in total PLN 1,377.9 million (value at 1 January 2007). The adjustment for 2008, resulting from the recent judicial decision reduces the balance of the cash previously used/received by EPII in order to cover the stranded costs. It means that EPII can reuse this amount under successive, positive annual adjustments, or in 2026, in the final adjustment, which verifies the correctness of all previous payments and calculations.
Signatures of persons representing the company:
Katarzyna Muszkat - President of the Management Board
Anna Striżyk – Vice President of the Management Board