PGE Polska Grupa Energetyczna Stock

Good morning. Welcome to the press conference of PGE Polish Energy Group, during which we will sum up the financial and operational results for the first quarter of 2026. In today's conference, we will have Katarzyna Rozenfeld, Deputy COO; Przemyslaw Jastrzebski, CFO; and Piotr Sudol, Financial Director. Good morning. Traditionally, I will moderate the conference. My name is Konrad Mroz. And traditionally, we will start with presentations, after which there will be a Q&A session. And that's all from me right now, over to Katarzyna Rozenfeld, the COO.

Good morning again. I'm really happy to be here with you this morning because for the first time, I can see you. And it is exceptional for me. I'm also glad and welcome all of you who are connected online. I understand we have a broadcast and there is a group of listeners. Ladies and gentlemen, traditionally, we will start with an overview of the financial overview of the first quarter, starting with showing you the results, the repeated EBITDA, we have developed on a solid level. It's PLN 4.14 billion. There's a record high EBITDA also in the Gas Energy segment. And comparing the first quarter of 2025 to the first quarter of 2026, we have noted an increase of 99% in the gas sector and this repeated EBITDA is PLN 179 million.

Similarly there's a record high in the Heating sector. The year-on-year growth is of 25% and that's PLN 1.1 billion. Why do we have such a record high results? Ladies and gentlemen, we all know that we experienced an exceptionally cold winter. There was some intense frost and that meant that the volume of the production and distribution of electricity but also heating was record high. Also at the same time as typically the case, it has some disadvantages. So the frosty winter also translated to a slight decrease in investment outlay. This is 3% year-on-year and this amount of our outlay in the first quarter is PLN 1.83 billion. In the first quarter, the electricity production was 16.49 TWh. So which is 3% more than in the same period of 2025. The distribution of electricity is 11.49 TWh and that's a 7% growth compared to the previous year. And then sales of Heating grew by 13% year-over-year and it accounted for 23.65 PJ.

The next sector that I want to talk to you about and present a brief summary is Renewables and warehousing -- storing -- Energy Storage. Consequently, in line with our strategy, we are reinforcing the portfolio of renewable sources of energy. We implement the key assumptions of the strategy. In quarter 1, we purchased a wind farm in Dzwola, 35 megawatts power. This is located in Lubelskie in the Janowski district. And this purchase of the farm was another step of implementing one of our key strategic goals, and it is thanks to this acquisition that we increased our power in the onshore technology to 832 megawatts. In quarter 1, we continued our work in offshore wind energy. We stopped the -- we have completed the campaign of drilling in Baltica 2 project. We had a successful completion by the consortium [ Rongos Arbias Yanitski ]. And I'm mentioning this because consequently, we are implementing the local content policy and strategy. So it is my pleasure to mention that this was completed by Polish subcontractors. For Baltica 2, we have also finished the preparation of the bottom of the Baltic for the cables, 150 Km of route for internal cabling, which will connect the offshore turbines with the onshore electrical stations.

The overall work included geotechnical studies alongside the planned route of the cable lines and checking the area for potential explosives as well as removing any higher stones from the planned route. So we're focusing on the next section right now, 260 Km long for export cables. We are aware that you are very interested in our projects, offshore projects. So let me mention that early in May, the Baltica 2 project came -- went into its key implementation phase. The foundations started to be constructed. Right now, we have over 20 [ bales ]. There's going to be 111 in the end and the completion of the foundation construction is planned for quarter 4 this year.

In parallel, we are also constructing an onshore electrical station and the whole connection infrastructure in the [ Hotevo ] municipality, which will make it possible to export power to the energy system. Another important element, you can see that in the slide already we are implementing the renewables project. And as part of this initiative, we completed a transaction of takeover from RWE of an on -- offshore Baltica 2 station, 350-megawatt power. And this wind farm, together with Baltica 9 is going to be called Baltica 9+. The development of renewables would not have been possible without investing in energy storage. This is a very important element of our strategy.

At the end of quarter 1, we launched procurement procedures for four investments with the overall capacity of 372 megawatt hours. And that's Pelplin, Scieki, Lotnisko Airport and Wojciechowo. So all of these four projects, as you can imagine, will be co-located with the existing on wind farms. And of course, what I mentioned is that we are going to try and promote really the local content component in the procurement procedures that we are organizing. Also work is ongoing concerning the [ Zarnowiec ] energy storage facility. And in April, we started mounting the storage units. At this point, we've already installed 65 out of 204 storage units and the process will be completed in late June, early July. I recently visited this location. And indeed, the work is impressive. And it was very interesting for me to see the storage units getting mounted and installed very quickly. Now in April, we also completed the procurement procedure for another storage facility of 400 megawatts and 800-megawatt hour capacity. This will be in Gryfino. The installation will be subcontracted to a Polish consortium.

Another sector that I'm going to say a few words about is the Gas and Heating sector. Again, in this quarter, we are continuing some of the work and strategic ambitions concerning the development of the gas energy. And the next element of the strategy will be 2 block -- 2 units in Gryfino and Rybnik, 600 megawatts each. And we selected the contractor for both investments early this year. In March, we drafted and signed a contract. The overall value of the contracts that also include the 12-year servicing period is PLN 6 billion. The leader of the consortium that is going to be responsible for the rollout of the project is Polimex Mostostal. So we're not slowing down, and we're already analyzing options for more gas fuel projects. We have recently launched some preliminary consultations for new units in Lublin. The planned capacity would be 300 megawatts. It is our goal to get information concerning our maximum possible share of the national domestic component in this investment. We've also continued work in the Gryfino unit, 28 thermal-megawatts in February. We had a delivery and mounting of 3 boilers, and we will have the possibility to deliver fuel to this unit. We are modernizing the infrastructure and the whole -- the handover is planned in August 2026.

The next element on Heating and Decarbonization. I think -- you have a lot of points that we can list here in our strategy. This component is going really, really well, the Heating and Decarbonization. So a few words about this point. In [ Szczecin ], we have the [ Pomorzany ] power plant. We have selected the general contractor, the first stage of the construction of the new source of gas-powered heat with a power of 24 megawatts. It will be rolled out by the Polish company, Metrolog and the handover deadline will be 2028. That's the time frame. In Gdansk, we signed a contract for the new cogeneration source in the power plant of Gdansk, and that will include 8 identical gas motors with the overall combined power of 63 megawatts. The contractor, again, for this project is a consortium of Polish companies. The leader of the consortium is [ MIKO-TECH ] and the commissioning is planned for 2028.

Our next location is Krak體. We have continued some work with coal generation boilers of overall power of 100 megawatts in the power plant in Krak體, and we signed a contract with JSA for the pipeline to the new infrastructure. And then the Gdynia location, this is the Gdynia plant, more decarbonization work is ongoing. Pipeline -- gas pipeline has been completed and 3 boilers have been commissioned. The overall capacity is 90 megawatts. We have commissioned cogeneration aggregates as well. And in parallel, we have concluded 2 biomass boilers with a power of 30 megawatts. Now when I talk about the investments that are ongoing as part of the decarbonization project, like I said before, perhaps it's the third time that I've mentioned this, the local content is very important for us. And we are indeed promoting subcontractors that are Polish, and we canvass the market to see the potential of doing this work by Polish companies. This is something that we do all the time.

And we come to distribution. That is obviously another key element in our chain because carrying out such extensive works related to modification of the production generation mix requires a proprietary prepared distribution network. In the first quarter, as part of investment in distribution, we built or modernized 439 kilometers of medium and low-voltage lines, including 104 kilometers of medium voltage as part of 30% Cabling Programme. That's the name of this initiative that we are carrying out. And as a result, we reached over 27% of share of cables in medium voltage. Additionally, we installed 179,000 remote readers, including 166,000 as part of remote readers and 12,800 as replacement outside this program. We also completed over 11,200 connection agreements for customers consuming medium and low voltage for the total capacity of 238,000 megawatt hours.

And the last element, it is my first conference here. So colleagues have told me it would be probably a new thing to you as part of those quarterly presentation, namely client as the focus of our attention. As you know perfectly well, the world is changing dynamically. It's becoming increasingly difficult to win new customers. And we have two strategic objectives that focus on clients. One of those streams is customer service quality and the other is PGE as #1 as a business partner. And this is something on which we are focusing very much to which we dedicate a lot of attention and we try to make sure that this is something that underlies our activities, ensuring high-quality customer service makes us introduce greater availability of remote channels and digital solutions. As part of those preparations, we are working on a new billing system and CRM as a target solution, it will improve our settlements, invoicing, and it will also replace the existing billing systems. As you know, we have a few of them. As a result, documents will flow more efficiently and data will be sent again in a more transparent manner. However, migrating the data from several billing systems to a single one, as you may easily imagine, is an extremely complex project. In particular, if you service almost 6 million clients as PGE does. That is why the implementation of the system is carried out in stages. In the first quarter, it covered 1.2 million clients in Zamosc and Skarzysko-Kamienna.

Now the next stage, that is something that goes beyond our results of the first quarter, but an important element. On the 18th of May, we started the next stage for 2.2 million clients from Warszawa, Bialystok and Lublin. Another initiative is the implementation of paperless attitude to work. In many companies, this has been in place for quite a while now, and we are now promoting this intensely in our customer service points. So all customer service offices are able to offer this service now. Currently, over 70% of agreements are sent electronically. It is our ambition to reach 100%, and we will keep you updated on how good we are at implementing this. We carry out also on activities as part of this client-centric approach. Both corporate customers and individual customers should have the best possible impressions at all contact points with the customer. And that is why we are building the customer journey map to make sure that indeed, the company provides the best possible service at each contact point. All those contact points are supported by dedicated teams whose targets include this customer-focused service. So we hope that customers will be even more satisfied with our services.

Without digitization, it would be impossible to talk about efficient customer service. We have a mobile customer service office. And in the first quarter, we recorded 224 downloads of the application among our clients. In the third quarter, we will have a voice bot. And this voice bot, you probably have experienced contacts with such voice bots. These are devices that can work 24 hours a day. And that is something that customers expect to be able to reach the customer service at any time of the day. Thank you. That's it from me.

Good morning, ladies and gentlemen. Let's move on to market data and a more closer look of financials. As for the developments in the market, in the first quarter 2026, we could see a strong growth of domestic consumptions of energy. 5.3% was the annual scale of growth. And this is probably no surprise that the booster of this growth was the weather, namely very low temperatures in January, but also to some extent in February that caused a significant growth in the demand. As for gas prices, in January and February, gas prices were lower. There were low temperatures and low wind intensity, which together translated into lower exports of energy by 0.8 terawatt hours. And in March, for geopolitical reasons, the war in Persian Gulf drove gas prices. And since then, we have recorded a clear exports growth. As you know, this is the situation that was driven by the war. As of today, it is frozen, but the uncertainty continues. So higher prices of gas and other fuels are still here. 1.5 terawatt hours was the generation and high demand due to low temperatures.

As for renewable energies, generation in the first quarter went down. Low wind intensity was the reason for that. And in wind farms, the drop was by 0.5 terawatt hours, while we saw a growth in photovoltaics by 0.4 terawatt hours. We saw a growth in generation from gas by 1 terawatt hour. This is year-on-year. And the first two months of the first quarter actually were responsible for this growth because in March, we experienced turbulences linked to the situation in Iran. In coal market, a growth by 1.5 terawatt hours and generation on lignite dropped by 0.9 terawatt hours.

Regarding prices in the spot market, they were about PLN 37 higher than in the first quarter 2025. It should be noted here that this is a high level as it seems to be the highest price since the second quarter 2023. So the growth was marked. In the first quarter, the daily price volatility was similar to what we saw last year. And in March, again, we saw hours with negative prices. This month, we saw an increase in energy exports. So as a result, the situation was offset. The number of negative hours was noticeably lower than in the comparable period last year. As for CO2 in the first quarter, we noticed a significant decrease in the emissions rights prices from EUR 90 to about EUR 70 at the end of March. A very important element here were the discussions or the debate within the European Union and in the market in general regarding changes in the ETS system. As of now, we do not know the details of those changes, but the very debate about any possible changes and the major reshuffle in this market, already that caused a noticeable decrease in the costs on this parameter for us.

We still have a conflict in the Persian Gulf, which drove gas prices. And in Poland, the growth amounted to about 32%, which compared to the European market where the growth was at about 50% is relatively good as a result, this growth was not as dynamic as elsewhere in Europe. However, energy prices monthly in March dropped by about 9% from February. And the growth from the comparable period last year was about 7%. In our case, this positive price change on CO2 was the catalyst of positive changes for us.

As regards operating results, our generation in the discussed quarter increased by 0.4 terawatt hours. That is about 3% up, mainly that was in gas fueled units and in power plants fueled by coal. We follow the market, and this increase resulted from greater demand driven by the weather. We had higher generation in gas by 0.8 terawatt hours. And an important noticeable effect here is [ EC Czechnica and EC Bydgoszcz ], which were handed over for use in 2025. In coal, we had the growth at 0.4 terawatt hours as a result of greater demand. But lower generation on lignite, down by 0.8 terawatt hours. This decrease was driven not so much by market conditions as a result of decreased capacity at [ Turuf ]. We recorded greater sales of heat energy. It is no surprise. We talked about very low temperatures. Here, the increase was by almost 0.2 petajoules. So that was a 13% growth. Average temperature in the analyzed quarter was 2.2 degrees Celsius lower than multi-year average, which shows the scale of how extraordinary the situation was.

In the distribution part in PGE distribution, we recorded greater volumes of distributed energy, 0.6 terawatt hours, up by 6%. Again, the weather and greater demand played a major role here, mainly in G tariff, that is households as well as SMEs and large enterprises in B tariff. In railway energy, the volume of distributed energy also went up in a similar scale by 12%, even slightly over 12% and in volume, 0.14 terawatt hours. This was due to higher demand in the traction segment with the demand for transportation -- passenger transport was greater.

Now for retail, we have a decrease year-on-year 0.5 terawatt hour, 6% and a decrease in sales in the tariff groups A, B and C. Now I'm going to talk about all of this impacted EBITDA. This was mentioned by our COO. We have noted repeated EBITDA on the level of PLN 4.1 billion. This is a decrease by 5% year-over-year. And now regarding generation result, it's better by PLN 0.4 billion, PLN 400 million. That's higher revenue from the sales of electricity due to increased demand. And this is the outcome visible in the PLN 300 million, 3 terawatt hour higher volume and higher prices, PLN 10 per megawatt hour. The group also achieved higher revenue from the heating sales, higher volume of sales 2.8 petajoules increase higher use of fuels for coal and gas. But in total, lower prices of these fuels resulted in a drop of fuel cost by PLN 100 million.

We noted higher cost of CO2, PLN 300 million. So here, we have the outcome of higher prices mostly that have contributed to this. An increased margin, we noted that in heating and gas energy sectors as well as the coal energy sector. The sales of electricity to final consumers noted a drop by PLN 0.4 billion. This is mostly the outcome of lower margins on tariff progress vis-a-vis 2025. So there's a high baseline because in 2025, we had the 1.5-year tariff that covered the costs or surpassed the cost even. But in 2026, we're facing a situation where the regulator did not really recognize the full costs translated into tariffs. So we are facing a different situation. In distribution, we have a slight increase and increased margin by about PLN 20 million, a positive outcome of higher volume, but it was largely limited by the negative impact of the decreased work.

Now margin in the Railway sector, there is a similar growth here as we can see in distribution. So for that segment, higher margin on distribution services was limited by a lower outcome in energy. Now regarding the reserves, in total, on the consolidated level, the outcome is minus PLN 170 million. Activated costs, mostly in Coal Energy sector, and the remaining items, that's also a slight negative impact. We had a very detailed presentation of what happened in quarter 1 regarding the amounts in terms of cash, the expenditure is PLN 1.8 billion. This was lower by PLN 62 million vis-a-vis the previous year and the comparable period, that's a 3% drop. The biggest increase in expenditure is in the renewable sector. Now the Baltica 2, of course, accounts for most of that because it's gaining speed and momentum. It's right now in the construction phase, both the on-land and -- onshore and offshore. In the next quarters, we can expect that this will be the driving force for all the expenditure in renewables.

Now for Heating, we noted an increased expenditure of PLN 42 million Gdynia and Krak體 power plants and in the railway sector also by PLN 6 million. This is mostly distribution and traction that's responsible for that, a significant drop of expenditures, PLN 270 million in the gas energy sector. But like you can see before, these are just very big individual projects that were the timetable of expenditure overlaps. So quarter-to-quarter, this can be misleading. Some of the repayment timetables are not regular. There are bigger or smaller amounts to be repaid. So it is not really a negative sign. It is just due to the repayment schedules.

Now for Distribution, we have a decrease of expenditure by about PLN 130 million and a smaller number of connections. But distribution is something that feels the negative impact most of the frosty weather and the weather conditions that have helped us on the one hand, creating a high demand for energy, but continuing investment in field was definitely difficult, and then this was a factor that slowed it down. But in the next months and quarters, this should be made up. Now traditionally, in coal energy, we are seeing a small decrease, but the baseline is also low, and that's PLN 15 million, and that's a continuation of our policy. We want to keep a discipline of these expenses, and we want to focus mainly on keeping the equity. There are no developments there.

Now the net indebtedness at the end of March, it was just over PLN 7 billion. That's PLN 7.1 billion. It was higher by PLN 2.9 billion than the indebtedness at the end of 2025. And the main influence was to generate EBITDA of PLN 4.1 billion to decrease the indebtedness. The settlement of CO2 was changed, and that had an impact of PLN 1.9 billion, increasing our indebtedness. Investment outlines, PLN 1.8 billion increased our debt level and a deposit of PLN 1.5 billion. This has not really featured before. We generally consider this was the decision that we made to put some of the investment surplus for a slightly longer period we -- to put that in the deposit, and that's a new component that we have vis-a-vis what we -- the practices we used in the previous meetings, previous periods.

Tax -- income tax, PLN 800 million, that increased our indebtedness. And we had to pay the fee on the fund of equalizing prices, the WRC fund, that's PLN 600 million. And the last item is PLN 400 million, and that's the M&A, so the takeover of the [ Lada ] wind farm, that's an onshore wind farm. And the completion of the transaction -- conclusion of the transaction of the RWE offshore wind farm acquisition. So in total, we have a quarter-on-quarter decrease by PLN 500 million of our indebtedness year-on-year. And in terms of our economic indebtedness, which includes the CO2 settlement, the level of that towards the end of the period we're talking about is PLN 15.3 billion. And the economic debt to 12-month EBITDA ratio is 1.2 billion.

And the next slide. Traditionally, during every meeting, we make a reference to our perspective and the outlook for the rest of the year. And now vis-a-vis what I said during our previous meeting, we decided to change one category, one item, and that is Gas Energy. After the results of the first quarter, we are changing the perspective from stable to growing due to the fact that we are predicting a slightly higher margin on sales. And then the remaining segments, we are sustaining our position from the previous presentation. So not many changes there. I don't think we need to be discussed. Perhaps there will be some questions later on.

And now the net results, the last item that we would like to discuss. There is no such significant change there as we saw towards the year-end. we haven't recognized an important impact of noncash events or one-off events such as a reserve or write-offs. The EBITDA was encumbered with reserves from contracts in the coal energy sector. And the overall total was PLN 244 million in that category in the turnover and the total reserve was about PLN 100 million. The reported EBITDA dropped by about PLN 50 million due to the fact that one-off events had to be booked mainly voluntary leave, voluntary redundancies and the energy adjustment for the previous periods.

In the quarter 1, there was something that had a significant impact on financial outcomes. That's the derivative instruments, and this will happen every quarter. This is the international accounting standard requirement. So a derivative to account for inflation, which is embedded in CFD. That relates to our offshore Baltica 2 wind farm. And in this quarter, we have PLN 249 million. This is a non-cash item, and it does not impact the cash flow at all. Now for tax settlements, we did not note any significant one-off events and the net profit was about PLN 2 billion over this period. And that's all from me. Thank you very much.

Thank you, sir. And now traditionally, this is a Q&A session that I'm opening right now. You will remember from our previous months that we have some questions collected already that I will read out, and then I will give the floor to the audience. Question number one that occurs quite often, has PGE reviewed its strategy already? Will there be some adjustments? For example, how can the gas or nuclear potential change?

Thank you for this question. I am aware, ladies and gentlemen, that when the annual results were announced, the CEO undertook that we were going to make such a review. The current crew, of course, sustains this willingness to do so. You will remember our strategy that's announced last year is a 10-year strategy, 10 years in today's world is a very long period of time.

Even if investments are made that account for 4, 5 years, anything that happens in the world and how the regulations are changing and what we are surprised with all the time has fundamental impact on what we can do and how flexible we need to be to be able to respond to all these factors. So yes, indeed, we are working on the review of our strategy. It will be presented most likely in quarter 3 of this year.

We also have this ambition to communicate to you every year an update so that you are not surprised with the fact that there might be some changes in our strategy.

So we're hoping that really in quarter 3, we can start this good tradition of updating the strategy. And some -- what elements of this strategy could be reviewed or updated? we know that, and this is broadly commented in the public space, changes in ETS. This has been shown in our financial statements. And that represents a cost of almost PLN 2 billion every year for the group. So end changes in ETS take place will have a very significant impact on both our results and our strategy. That is why we decided to show you this review and update in the third quarter because we believe that the talks and decisions are likely to take place in the summer, in July, the information not -- will not be fully reliable.

So that's why we opted for the third quarter. We also know that there won't be any additional auctions for 2030 this year. That is why we are recalculating assumptions in our strategy in the gas segment, for example, to make sure that the assumptions are valid as of now and they correspond to the development in the market. Last year, the situation of photovoltaics changed essentially. And we are all reminded of what balancing market is and how much the cost of the balancing market have changed.

Also, the valuations changed downward the profiles of evaluations development and photovoltaics are consistent in this downward trend. So we need to have another look at it. We don't expect any changes in the heat energy. We are the leader in this segment. We often praised for doing that so well and often asked what we are doing to be so good at it. Also, we talked about another segment of renewable energy sources Offshore. Here, everything is on track. So I think that will be it for this upcoming update that will be presented in the third quarter.

One more question to you. This is something that already came up in your comments, namely the status of offshore projects.

Okay. I'm just wondering what I should add to what has been said together with [indiscernible], we have already said that as for Baltica 2, everything is on plan, on schedule, and we expect the launch to be on time. Regarding Baltica 3, that is also part of the entire pool of offshore project, together with a partner 脴rsted we are working to be able to finalize as soon as possible the reconfiguration of the project and resume the procedure for the purchase of key components.

I also mentioned Baltica 9. Now we are at the stage where within the next weeks or months, weeks. I'm looking at the CEO. Within weeks, we should complete the process of selecting the partner for the project. And let me also remind me that in the context of CFD mechanism both Baltica 9 and the other projects have to start its generation by 2032.

We also have a portfolio of other offshore wind projects, Baltica 1 and 7. These are realistic options for further growth that allow the PGE group to keep the strategic flexibility in the context of subsequent stages of market development in this regard. That would be it as regards Baltica.

Thank you. Now for change financials to Mr. Jastrzebski. What is the reason of the high results in the distribution results. And at the same time, you show the growth by PLN 22 million here.

Okay. So the growth of EBITDA in distribution compared to the first quarter last year, this comes from the valuation upward. In the first quarter 2026, the results of this segment grew over PLN 170 million. But it was a noncash settlement within the entire group. So when we show that on the consolidated level or in management reporting, we try to make adjustments for any intra-group settlements.

Additionally, the weather. In distribution, there was a significant growth in sales volumes, 0.6 terowatt hours up, which is also quite a significant element. And we should not forget the impact of WACC. So all those things taken together, internal settlements might have caused this confusion and this interest about where this difference comes from.

One more short question. Why did you have low operating cash flow in the first quarter? What were the drivers of it?

Yes, indeed, we had accumulation of several factors that contributed to this level being relatively low. Above all, we had CO2 expenditures that was over PLN 7 billion. We had a corporate income tax payment of almost PLN 800 million and the already mentioned up valuation all that together may this level seem significantly lower.

But in subsequent quarters, there won't be a similar accumulation events. So we will return on track and next CO2 payments will come about December. So in short answer to your question, accumulation of certain events nothing dangerous.

In a moment, I will ask the audience for questions. But the last question online to Mr. Jastrzebski assumes 11.5% EBITDA. Taking into account first quarter's result aren't those assumptions too conservative?

Well, generally, I believe that a conservative approach is the right one. And the carbon market where there are so many variables, like geopolitics, regulations, all those things will be under control. We always try to be as conservative as we can or relatively conservative to surprise the market in a good way if we manage. The worst thing for listed companies would be to overpromise and then fail to deliver.

I think the major factor is that we are operating in a very unstable situation. And it is not only about domestic market, but global geopolitics which affects every single business in Poland, in Europe, and also us. That is the answer. Thank you.

Now over to the audience here in the room. [Operator Instructions]

[indiscernible]. I have three questions. And the presentation for investors on Page 35. Generation and sale of energy. You say in the context of business customers, but the sales of energy sales was 3.4 terawatt hours to business customers. And then the similar period last year that was over 5%. So my question is how come you had decrease? Are you losing clients? Or maybe there are some other reasons?

And again, the same presentation, you present on Page 36. Energy prices, contracts for the following year as part of annual contracts and it was PLN 444. Now it is PLN 429. Does it mean that -- or is it some indicator, the prices for next year are likely to go down even more than they have decreased by now. And the last question, in the management report, you regularly, which is a very good thing, refer to legislation also draft legislation. And here, surprisingly, you referred to this nuclear act of parliament or draft legislation mentioning impact on PGE.

So if you are referring to this fact, preparation of investments for nuclear energy. Does it mean that PGE will be involved in the nuclear project in some way?

I will try to answer the first question. And I will say right away that the conclusion that the prices are likely to drop next year is a bold one. I will ask press office to track the contracted prices, and we will give you a detailed answer. Mr. Jastrzebski will address the question. But as for the first one, this decrease regarding large customers, business customers from A and B tariff groups.

In A tariff, indeed, the decrease was almost 26% year-on-year. I need to notice here that a group clients with consumption, maybe 100 and even 1,000 gigawatt hours, therefore, losing just a single customer like that has a major impact on the decrease in the volume. That is the major reason here.

I am responsible for trade. So the question was well addressed. We make sure that contracting is profitable. That is our key assumption. We do not want to maintain volumes in an artificial way, while those volumes are not profitable. But instead, we want to make sure that the offers that we make to our clients generate margins. And those margins are not too high.

Therefore, the decrease in volume is mainly the fact that -- we talk about clients. I don't know exactly how many clients from a group. Therefore, their volumes are very significant. So even the loss of a single customer who might have had 900 to 1000 gigawatt hour consumption that caused the results.

For the second question, you will get written reply, and Przemyslaw will address the third one.

As for nuclear energy, nothing has changed in our approach. We have a company that analyzes individual locations. I do not have the slide here with me, and I don't remember the details. But the market and the development in nuclear energy is something that we monitor.

Every decision at governmental or parliamentary level is relevant to us because that is an entire system. For example, For example, Belchat贸w is one of the locations that is being considered as the location of the second large nuclear power plant. And what's going to happen there will very much impact our group.

This will influence our plans, our attitude to planning of the future functioning of currently operating our plant in long term. So you should not be surprised that we consider that monitor and track the development. Nothing has changed though as for our plans as of now.

As of now, we are not considering involvement or building large-scale nuclear power plant. But we do analyze locations. We are vitally interested in that because that is relevant, and we want to take part in this transformation. We are mainly focusing on Belchat贸w this context.

Any other questions?

Julia Cydejko [indiscernible] I have three questions, and I will try to squeeze them in first. My question is whether you can give us more details regarding Baltica 3. Because in your management report for the third quarter, you have some more figures. And you say, for example, that in 2025, you had a reconfiguration done in April this year, you applied for modification of environment decision and permission to create artificial isles.

So I would like to find out what that was exactly about and also offshore yesterday, the government adopted solutions that facilitate this kind of facilities, and you are the leader in installed capacity in such wind farms.

So my question is what other conditions should materialize for you to make those decisions about modernization of onshore wind mills? And I'd like to hear your comment on the costs. Not much has been said about this in your report and other companies are willing to talk about this.

So what -- I was wondering how you are coping with the Picasso system at the balancing market at this point. And the next changes are expected that could potentially be a challenge from the trading perspective but also a technical perspective.

So I wanted to ask you. Well, how do you do that, that the renewables sector and its result doesn't really see the impact of the challenges that other companies are talking about. So hence my curiosity. I'd like to hear a comment.

Baltica 3. Regarding the details, it's very difficult for me to make reference because these are environmental questions. But regarding the plans on the project itself, we are upkeeping the position that we communicated earlier. We would like to start contracting this year and start launching the product -- project. And this is something that is up to date.

Like I said, I can't tell you about the details of the artificial islands environment decisions. If this is -- of interest to you, we can prepare a publication. A release. We will come back to you from the press office. Now for repowering. Now of course, the legislation is very important. But for us, what is key, a key factor when we enter the process is the economics of the specific wind farms.

If this makes sense economically and the process and the life span of the actual wind mills or wind turbines and the wind farms is drawing to an end. And automatically, they will be on the radar of potential repowering, then of course, we will take that into consideration. But of course, for us, the key is the financial model and whether this makes sense economically because it's easy to talk about repowering.

But -- and as a matter of fact, in many cases, in every case, this is as if we build a new wind farm, right? Because we have a completely different technology. The old farms operate on a slightly different technology. They have smaller turbines, older turbines. So if you want to do -- professionally do the repowering exercise, and as a matter of fact, there's a multitude of actions that needs to be taken. So that's another project actually. But in terms of locations, it will be here rather than the old farm, right?

So the economics really of every single project is key. But of course, we do take that into consideration and we're not excluding such a possibility. Now regarding the profile, I'll give the floor to my colleague.

I think there were two more questions. Let me just add to what has been said by Mr. Jastrzebski. In fact, the Connection Act can release connections for new projects. This is a very important thing. And we will be watching that very closely because it is part of our strategy to include the onshore element as an important one.

I will ask you more about what you wanted to know about Picasso. But for the balancing market, yesterday, we had a meeting with PSE. I think all the stakeholders in the market agree that the balancing market has slightly lost its function. And there are moments and places and entities where it starts to be speculative market, and definitely, that's not its role. And I know for a fact that PSE works very hard on developing solutions that could in fact, prevent the speculative components in the balancing market.

We are in dialogue with them. All of the societies or associations that could be whose members could be active participants of the market. Check such solutions that could change the situation. I do not know what -- your question concerning Picasso was about. These are technical aspects. We will probably have to come back to you with a reply.

Like I said just a minute ago, this knowledge is there in PSE and the market stakeholders are aware of that. I do not know openly, I can tell you to what extent this element concerning the basic function of the balancing market to what extent this is taken on board but we can check that and get back to you.

Yes. [indiscernible] Energy Drink podcast. I have two questions. Upkeeping the conventional powers in the PGE mix, that's number one. How long do you think the power market should be operational for coal and for gas in the optimum version? That's my first question.

And the second question. This topic hasn't mentioned before, I wanted to ask you how you evaluate the profitability of the offshore projects in the current conditions? And what are the conclusions of the PGE Baltica progress in the recent weeks? Can I have a quick comment?

Did I hear you well use energy drink. That is a great name for podcast, my compliments. I am largely impressed with the creativity of people who do such things. But going to the point, getting to the point, I don't think any one of us here is capable of giving you the exact point in time when the power market will be needed because, again, this depends on a number of factors. We can start a discussion on it. For example, when are we going to have a nuclear power plant. We have an efficiently accepted timetable. We would all wish for it to happen. But we can see that the macroeconomic factors, the geopolitical situations can impact the scenario.

Now the situation we're in is I'm sure you're aware that the coal sector has billions of an operational loophole. And of course, internally, we are working on it, and we're doing everything we can to make sure we can change the situation and to decrease the loophole.

But for all of us and for all of you, it is obvious that we cannot do it ourselves without the help of the power market post 2028. Because on the one hand, we have the multibillion operational loophole, and we are aware that many of those units are not profitable. But on the other hand, we're also aware and PSE also chose us and the systemically we're experiencing this.

We know that we need until, of course, a nuclear power plant is built. We need to have a specified number of units that are able that are operable that we can influence. I'm not sure if you're following this, but for example, during the May holiday, when we had wind, and we had sun and we had the great supply from the renewables, that was all good. But imagine the situation when the weather is changeable in over 5 minutes, we don't have any wind or any in sunshine and we need to very quickly supply specific volumes that we can operate on.

So on one hand, we know the profitability of these units is close to nothing, many of them. But on the other hand, we see that operable units are needed. So what I would say is that until the support market is needed as long as we do not have sufficient volumes of all reliable sources, stable, operable supply units that we can manage.

There was another question. Now for the profitability of offshore. Not sure if I understood your question well. You were asking about how we foresee the profitability of offshore projects, right? As a rule, these conditions have not changed so much. I could even risk saying that they have been stabilized or improved because of the loosening of the supply chains.

So geopolitical situation and a certain limitation of the projects globally, especially in the U.S. Well, when we are doing the procurement for Baltica 2, this was very tight. The production capacity of the global suppliers of all the components were really tied up.

But now it's slightly more relaxed. I think the market is more stable now balanced. There is no advantage of the supplier versus the buyer potentially in the next two projects. So number 3 and 9 plus, the situation will be sustained, and we will have a lot better negotiating position. So we do not see any threats here. We currently have three projects that, as a matter of fact, fulfill our strategic goals regarding the installed capacity that will be 3.8 gigawatt combined in the three projects.

So strategically, we have that sorted out and we are covered, and we're happy with that.

But now regarding subsequent projects, it all depends on whether the auctions will take place and how profitable it is in a long term. And the key factor here is stable revenue. Profitability is one of the components, but the other is to what extent the revenue is stable. Without CFD contracts this will no longer have its rationale and you cannot go ahead with offshore projects. Nobody in the world would -- I don't think, nowhere in the world. Would you have a project that's only be subject to market volatility.

If there are contracts on the right level and if calculated in the economics are okay, then I don't see any counter indications, but we're focusing on the three projects right now to date. So completing Baltica 2 and commissioning the next two projects. You are asking about Baltica 2. You wanted me to say something more about it?

No. Okay.

We have -- there's construction on the bottom -- for Baltica 2. We are very happy with the budget discipline. And with the whole project, there are no risks at this point. Everything is under control.

Alexandra [indiscernible]. I would like to ask about the program of voluntary leaving of the company. What do you plan for the upcoming year in Belchat贸w. And the second question about energy storage facilities. So what business case you have for the following years for energy storage facilities? How do you plan to make money on that?

I will start with the program of voluntary leaving. We have implemented this program and practiced that in Dolna Odra. Statistically, I even had some crib notes here with me. So I can give you more specific information. In Dolna Odra, this program was used by the end of March 2026 by 58 employees.

Social, protective and energy vacation also at the end of March 2026, 68 employees and arrangement with trade unions with compensation equal to 27x remuneration because that was the result of negotiations, 145 employees benefited from this mechanism.

I will not reveal a secret if I say that this employee arrangements negotiated in Dolna Odra, which means the compensation of 27 remuneration became a benchmark with the employees of our group in the case of potential redundancies we'll expect.

And the second question was about energy storage facilities. Przemyslaw, will you take this?

As for energy storage facilities, as of now, our strategy has not changed, although we may not exclude the possibility a revision in the third quarter. Let's not determine it right now. Currently, we have two storage facilities being built. One is an advanced stage of construction. The other is just beginning. I'm talking about Zarnowiec and Gryfino. We are open to potential acquisitions, M&A transactions of storage facilities.

The key to profitability or business rationale of acquiring potential facilities is that they must be governed by the older rules of power market because these were more beneficial. If we move forward to more recent times, the economic calculation is more challenging here. And we are analyzing multiple potential targets for M&A transactions. We're also very selective about those parameters. That is what I can say on this.

Again, the comment or additional questions of off-mike. You also asked about Belchat贸w. Okay. As of now, that is still an internal matter in GEK, and we don't want to comment on this yet.

[indiscernible] I would like to continue on the question raised by [indiscernible] this 18% drop in volume was not a quarterly phenomenon. It is something that you experienced also previously. In the first quarter, you had also a decrease in margins, a very significant one. Will that continue along similar lines in the future? Or are you planning to strike back to stop this decrease?

And the second question is about cost of Tur贸w and Belchat贸w. The current strategy is silent on how these costs are to be covered in the future. We know that they will not be covered from the power market. So will the new strategy somehow address this issue.

Answering the question how and whether we are going to counter attack would mean that we would disclose too much of our activities. But yes, obviously, we are monitoring this very closely. We are now at the stage where almost every single offer is analyzed, but we may focus on price generating, price driving elements.

We look at how the offers are prepared, what components they comprise in order to better understand why we are losing the volume. And you might also compare the first quarter of financial results across the sector among various companies against this backdrop, with perfectly well.

I do not want to brush off this element of decreasing volumes that is at the top of my priority list or among top issues in my priority list. Of course, I do not want to discuss in the details, but we have already taken action in order to understand thoroughly the logic underlying this decrease in volumes.

And the second question. Yes, fixed cost overheads are problematic. And the largest problem is linked to the years where the power market comes to an end. It is said this will not cover all overheads. Well, as part within the group, we regularly monitor the efficiency, and we are working on improving overall efficiency in coal, but we have to be honest about it. On our own, we won't be able to -- even to break even in longer term.

So if we talk about power gap and nuclear power plant joining the system soon. Somewhere -- some sort of support program from the government must be put in place. That's a must have. We are now in talks. So it is not that we are waiting passively without doing anything.

There are just concepts called reserve many other ideas that are just being analyzed that are just emerging. So the system might be supplemented of some sort of support elements, and we will find -- we wil strike the right balance.

We continue to analyze efficiency. And the second element, which is necessary, in particular, in longer term, are or is some additional support system to keep those units operational because realistically, they are needed. The gap will not disappear by word of magic. And it has to be replaced with something, nuclear energy, but the nuclear energy requires a longer time. And by then, energy has to be generated some more and secure it somehow.

Our partners do have understanding of that, but we cannot discuss in details yet. But you agree that if such a system is put in place for coal power plants, lignite power plants might have problems. Well, they do not have to take advantage of auctions. The system is being discussed with a variety of solutions still being considered as potential ones.

It's very difficult to discuss such hypothetical solutions. Both the government and we have the awareness of the specific nature of individual sectors of energy generation. Each has its own specific conditions. By the time nuclear power plant is generated in large scale, on large scale in Poland, someone has to supply energy in large quantities.

As of now, to a large extent, it is us who do that. If there is an exceptionally cold weather, then Coal-fueled energy magically becomes necessary. If there [indiscernible] is a that we had last year also coal, energy supplied energy. So we must reach a broad consensus and the final solutions will be discussed in terms of to what extent they cover fixed costs or not. I don't want to comment on any hypothetical scenarios because they are just hypothetical and virtual.

[indiscernible] So I have two questions. The first is about discussion about trade. In connection with this margin rather than volume, approach, you have any target? And if so, can you disclose it?

And the second question is about finding an investor for Baltica 9. Should that be a sector or financial investor. And it's in the sector, when will PGE have its own know-how and we'll become interested solely in money and not in partners' expertise that's a third project. So probably you have learned something. What is this know-how transfer like?

I will start with the second question. As of now, our strategic objective is to find a sector investor we are still learning this sector, but a very important assumption that we take into consideration and to communicate to our potential partners is that the role of PGE in the project both in Baltica 3 and Baltica 9 plus will be significantly higher than it was in Baltica 2.

So we have acquired certain knowledge, a certain experience. So we have certain expertise. So our role will be greater. And for sure, we will want to make sure the local content is significantly higher than it is in Baltica 2. When will we be ready?

Maybe Phase III, but it's hard to say it's just too distant as a projection. But we are slowly moving in this direction, professionalizing our expertise. And for sure, in subsequent projects, our role will be greater. Also in Baltica 2, also our role was not small either, we were responsible for this inland part with -- where we have the greatest expertise.

As for your first question, obviously, for the target, this is what was planned as part of our financial plan for this year. And we believe that this financial target that was formulated for 2026 will be achieved.

As I have said, we are going to dedicate a lot of effort and resources to customer service. And all elements related to that based on experience our own and both our own and that of other operators in this segment, but customer service is of key importance. So we need to make customers more loyal in several key areas of our operations.

And coming back to the volumes in trade, the situation has said that if we had a situation where there is any segment that generates fantastic margins in a certain margin, we would only -- we could only say -- we could say we only want to have this tariff Y whatever.

If we knew that this tariff generates very high margins, that could potentially be our strategy to focus on this Y tariff and clients who are serviced within this tariff. But that is not the case. So we need to find a formula where we keep the margin which will be, at the same time, driving volumes because achieving the determined financial targets is impossible without taking into account various target groups. It remains an open question how we formulate our pricing offers or what are the lowest levels of margins we are ready to accept in order not to lose the clients. And that's not easy.

Another element of this picture is that in the case of a big client, the amount of work that needs to be put in is similar as in the case of a customer of a completely different size. So this is a rather complex picture. As you said, we see a certain trend which is not positive. So we put in a lot of efforts and resources to change it. But like I said, with specific projects, and there is a couple of them, I don't want to disclose specific information because the competition is wide awake.

Thank you. I can see that there is another question in the room.

Political insight. I wanted to ask you about the upward valuation for the fund, there was an appeal launched and some further steps are inevitable. I wanted to ask what your outlook and expectations for that?

Yes. Indeed, this was paid as the upward valuation was paid. It's an administrative issue, procedural issue, we have to pay it. But , yes, we filed a case with the court. We don't want to do any forecast. We have communicated our position before we sustain it. It is our view that the valuation amount was not calculated correctly. But this is a question -- a legal question how this will be resolved. At this point, the transfer was made.

And the case is in court. Pending. So I don't want to -- I don't want to forecast anything.

It will not conclude quickly as I'm sure you all feel.

Thank you. I can see no further questions in the room. I have one more that has been given to send to us financial. The economic indebtedness net is adjusted with the -- for the loans that you took from the resilience program. And if not, what's the nominal value of the loans?

Yes, this has an impact. But frankly, I cannot calculate the amount right now. If this is an important issue, we could perhaps release this information later.

Okay. So please, whoever asked this question. Can you contact us with the press office or the Investment Relations office.

Unless there are any further questions in the room, I would like to thank you all very much and take this opportunity to tell you that we have the platinum megawatts, so journalistic rewards award. So congratulations in advance to everyone who wins it.

Do you know the results? Okay. Well, fingers crossed for you. Ladies and gentlemen, thank you. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, welcome to the press conference of PGE, the Polish Energy Group, to sum up our financial and operating results of Q3 2025. We have VP for Operations, Maciej Górski; VP for Financial Matters, Mr. Jastrzebski; and Head of Finance, Piotr Sudol. Traditionally, as always, we will start with the presentation. And after that, there will be time for questions. So now over to VP, Maciej Górski.

[Interpreted] Good morning, everyone. As every quarter, it is a pleasure to have you. I would like to especially welcome representatives of our main shareholder. Good morning. And well, you might have had a chance to read our report for Q3. It's been published, and we announced it yesterday. Results for Q3 when it comes to our operations and financials are quite close to what we estimated a dozen or so days ago.

But let me just give you a brief overview. In Q3 2025, apart from the fact that we posted good results when it comes to EBITDA, repeatable EBITDA, PLN 3 billion, which is 20% growth compared to the previous year. And what's really important, we have managed to achieve very good results in terms of CapEx. We have spent nearly PLN 2.7 billion, which is an increase of 3% year-on-year. When it comes to our operations, and well, we will also mention CapEx. Our strategy from June 2025 has just amplified the fact that CapEx is really the apple of our eye and there is a lot of organizational efforts that we put into making sure that everything that is linked to our growth or development should be done, as efficiently as possible when it comes to Heat and Electricity results are similar to last year. So there is 0.6 terawatt hour, which is a very small variance. And when it comes to Heat again, it's a very, very small variance, practically bordering on statistical error.

What was important in Q3? Definitely, there was a supplementary auction 2.6 gigawatt has been contracted. This is an important revenue item in our results. When it comes to investment projects, and I will mention it in a moment, but the most spectacular ones is a tender procedure for new gas units, Gryfino and Rybnik, we want to add to what already exists. So there is a CCGT in Gryfino and in Rybnik, so those tender procedures are ongoing. And well, we need to learn and evaluate bids between the main auction that is planned for December. There was also a tender for a storage facility in Gryfino, probably you've been following that. As PGE, we are trying to focus on the largest warehousing -- the largest storage projects. So 400 megawatts, 800-megawatt hours. I mean, these are one of the largest facilities that will be happening in Poland. So we're very happy because we have received three bids. It's a competitive procedure. So actually, companies are interested in bidding for us and working with us.

When it comes to projects that have been finalized, well, 5 gas engines in Bydgoszcz, and well, maybe not huge success in terms of installed capacity, but when it comes to decarbonization and transformation, energy transformation process, well, it is a contribution. Projects like this one definitely show that this business line where we're going to spend around PLN 15 billion as well. This business line is moving, and we're doing all kinds of projects, including small projects.

Now on this slide, you can see our key projects, our key initiatives. Good news, very good news is that our flagship projects for -- when it comes to renewables, Baltica 2, this project is happening according to schedule, on budget. Last time that we met, we were mentioning that we had a partner who had some challenges at that point. Orsted was actually during their issuance campaign, but now they've done it, and they are trying to curb their exposure to new projects, and they only focus on projects that are ongoing, that are in progress. And actually, Baltica 2 is something that they describe as a really important project in their portfolio. So we are very happy to be fulfilling our priorities onshore.

We're building a station, while Orsted started working offshore, and we're preparing sea-bed for cables, for foundations, and we've managed to achieve some tangible results, tangible successes between the sea and land. They had some challenges with drilling on our side, it went very well. I need to mention [ Yanitski ], which is a Polish company from the region of [indiscernible], and they are a great example of fantastic local content that's been helping us with that part of the project. I was actually there in person. It looks very impressive. So there is a distance of around 100 meters, from the shore, and that's where there is a device, some set of equipment that's doing some guided drilling and then cables appear somewhere 1.2 kilometers away from that particular spot already on the sea-bed. So it's looking really, really impressive, all the work that's being done there.

When we're talking about Baltica 2, there's something else that's very interesting and probably you've noticed it, especially that it's been in the public domain, namely local content. We, as PGE, together with Orsted, we're working on making sure that dialogue with Polish subcontractors being maintained. I myself went to [indiscernible] recently, and I met with [indiscernible]. They actually work for us. They also do a project for [indiscernible], and their work involves special platforms made of secondary steel. If you visit -- if you have a chance to visit a manufacturer like this, really take this opportunity. They have 500 people when it comes to permanent personnel, and there's 200 additional people working for offshore energy. They were called [indiscernible]. Today, they're called [indiscernible], and they are a great example of local content, the Polish supply chain working for the offshore energy sector. As I talk to them, I learned that they were creating their own supply chain among Polish companies. So they're a subcontractor working with many partners.

So I say that local content in offshore is something that we're very much doing. We also have a project in Rybnik, CCGT in Rybnik done by [indiscernible] and work is actually progressing, is quite advanced. we started already transfer -- and transferring power. And when it comes to Zarnowiec, we formally started the construction of the largest storage facility, 981 megawatt hours. We already have a permit to install the cable to take off the power. We're working with LG very closely, and we're keeping our fingers crossed for them as they're relocating their production capabilities. When it comes to Heat, we are doing a project for -- in Kraków, a very nice project, a large one, 100 megawatts.

In Gas, we have signed a contract with a contractor. And there is another small project, but there's a lot about it in the media, which is a heat facility in Gryfino. There is a contract already signed, and it stipulates that by the time we shut down the last 2 units at Dolna Odra, we'll have a new heat source ready. So this project is ongoing. It's happening on schedule, and it will be launched in Q3 next year. When it comes to Distribution, we spent most of our money in Distribution on a variety of initiatives and tasks. We're doing -- we're connecting, of course, new off-takers. Each new off-taker is like -- is like PLN 19,000. So it's not a lot per off-taker, but we're also cabling our network. So we have another section of 165 kilometers in the previous quarter, and we're installing remote meters. So we installed 186,000 such meters in Q3. These projects are really interesting because they help us enhance and strengthen our network, more cables, then, of course, better quality of our performance. And of course, we have to take into account landscape, right?

Our cables, cable lines are not disfiguring local landscapes, which is really important for those communities who live there. And of course, when we're talking about remote meters, this is really important. It's a big step towards digitizing our capabilities so that we can be more efficient and more flexible in our operations.

If you follow what [indiscernible] says publicly, every single operator becomes -- has more and more significance for our stability. There are parameters like what percentage of our Distribution or Transmission is happening via which network. Actually, 90% went through PSE until recently. But currently, there are more and more local sources. So the share of power that goes through the transmission network falls to 40%. So our networks, our capabilities sort of start taking over, which goes to show how important our investments are in terms of modernizing our network, in terms of modernizing our substations.

So now let me tell you briefly about our revenue side. As I said before, electricity consumption fell by 0.7 terawatt hour. And we can see already in the first month of Q4 that the rebound that happened in September is continuing. So as we're looking at macroeconomic indicators, everything is speeding up. So our local consumption goes up with it. Actually, we have a situation -- we have a reversal of what was happening in Q1 because our neighbors witnessed falling prices of gas, so cheaper energy appeared, and we could import it. So we had a little bit less production on our side, like 1.75 terawatt hour. And then the situation sort of reversed, and we imported over 1 terawatt hour more compared to the previous year. So there was a certain trend, then it reversed. So that was about volumes.

When it comes to prices, during Q3, we had a bit of a peak, but it was small, somewhere between PLN 410, PLN 430 per megawatt hour because, well, but the average price is at the level of PLN 424. In Q3, unfortunately, CO2 increased from EUR 70 to somewhere around EUR 80 per tonne. There was EUR 70 in July and around EUR 80 per tonne in September. So well, our margins when it comes to coal-fired units went down. But on the other hand, we had a favorable situation where margins grew with our Gas units, especially Gryfino, Dolna Odra were involved. When it comes to -- well, actually, let me go back because there was something about Q2 negative prices, and it was widely commented in the public domain.

I mean the weather was not what we expected, especially July. Well, it was not as productive in terms of [indiscernible] and there was less wind due to, well, seasonality and also -- well, the weather in general was not what we expected. So indeed, we had some, what we call negative hours, and there were fewer of them than we expected. So now a brief summary of what I already mentioned. So probably this slide is something that you've seen or these numbers are something that you've seen.

So we had higher production in Dolna Odra and less production in Lignite fired units. So we fell from 13.2% to somewhere at the level of 12.5%. There is a stable -- in terms of Distribution, it's quite stable. Sales towards final offtakers a little bit less, especially when we're talking about B and C tariffs. When it comes to Heat, it's -- the situation was influenced by the temperature because the temperature was -- average temperature was lower by 0.3 degree Celsius compared to the previous year. So this is it when it comes to our operating results and investments.

So now over to my colleague, Jastrzebski.

[Interpreted] Thank you. So again, let me give you some analytical data around our EBITDA in Q3. EBITDA, as it's been mentioned before, in Q3 this year is nearly PLN 3 billion, which constitutes a growth of around 20% year-on-year. In this quarter, in the quarter that we're discussing, for the first time in the whole year, we saw a lower margin in segments that were based on Conventional sources, around PLN 380 million. That's the amount we're talking about. Why?

Mostly because margin was lower on Coal and Lignite. We generated based on Coal and Lignite. There was less demand on power, higher imports and lower prices. Basically, revenue was lower by around PLN 1.5 billion. This was due to lower prices, PLN 90 per megawatt hour. It was a negative change. It was a drop. And our sales volume also fell by 0.7 terawatt hour. So these were the main factors that contributed to the change that I'm talking about, the change in revenue. It has been compensated partially by lower CO2 cost that was around PLN 1 billion or around -- that's around PLN 0.5 billion and lower cost of fuel around PLN 100 million. But basically, the change that I'm talking about is negative.

We could see a lower margin in Coal-based production, but Gas and -- well, especially Gryfino, but also Heat we're doing well. A big and important source of revenue are all kinds of market mechanisms, the balancing mechanisms. In Q3, we noted an increase of total margin by PLN 166 million year-on-year. And there's additional revenue coming from supplementary auctions for the second half of 2025. However, in Q3 '25, there was a decrease of revenue from the balancing market. When it comes to electricity and sales to end off-takers, final off-takers, well, we had a lower base, and we were trying to catch up after what happened with tariff G in the second half of 2024.

When it comes to other elements of our EBITDA, this is a positive result on our Distribution activities. PGE distributed plus PLN 104 million and [indiscernible] so the Railway part, it's also several million polish zloty. Also, we had a higher balance of a provision that was dissolved from Q3 '24. We're talking about PLN 110 million. All the other factors are not really material or significant, so I will skip them.

When it comes to CapEx in Q3 '25, as has been mentioned, we've seen an increase. The largest increase in spending and probably it's not a surprise for you, what happened in Renewables. It's over PLN 980 million more. And here, we're mostly talking about Baltica 2. We spent on delivery and installing of the foundations, and we had onshore and offshore substations installed. When it comes to Heat production, there was an increase by PLN 182 million. We spent more on Gdynia and Czechnica. In Distribution Our growth was EUR 44 million, and this was mostly because we connected new offtakers, and we spent money on remote meters and cabling work. But there was a drop over PLN 840 million and it happened in Gas. And it comes from the fact that the projects that we're doing currently simply have a very specific schedule.

For example, in Rybnik, work is quite advanced already at this point. And there was quite a lot of spend in Gryfino, Dolna Odra. So the base was really, really very high to begin with. When it comes to Railway, we have a drop, but it's a very special area. We do not fully control the spend schedule. We are, in a way, dependent to what the railway company, PLK is doing. So they're modernizing their systems. and building new substations. So that's the result.

When it comes to Coal, and we've been stressing this a few times already, it is our policy to be very disciplined in terms of spending. We spent mostly on maintenance and the decrease that we noted in Q3 '25 is actually proof that this policy is working and that we're doing it consistently. So actually, we spent nearly PLN 260 million more compared to Q3 '24. And well, that's the direction that we're going to maintain. So the dynamic will grow simply because it's aligned with the strategy that we announced in June.

So now let's talk about net debt. As of the end of Q3, it was PLN 400 million, and it was PLN 9.1 billion less than at the end of 2024. And well, our net debt was mostly shaped by the fact that EBITDA was PLN 10.6 billion. So it contributed to less debt. There was a change of PLN 4.8 billion due to CO2 settlement and clearing of CO2 contract. So again, lower debt. We spent PLN 7.2 billion, and that was investment, which increases our debt. Income tax, PLN 1.4 billion, again, higher debt, and there was a loan from the National Recovery Plan, PLN 2.3 billion. We talked about it during our last conference, and I remember analysts had a number of questions about it. This is -- well, the difference is between the amount that we received and fair value.

When it comes to the future in Q4, we are due PLN 7.4 billion for CO2. So again, this goes -- this indicates a certain direction in which our debt will go, our net debt will increase. When we take into account CO2 payments, -- our debt quarter-to-quarter will increase by around PLN 800 million. And our economic debt as of the end of the quarter that we're discussing is PLN 15.5 billion and net debt to LTM EBITDA is 1.1x.

As we always do at every conference, we're trying to tell you about our outlook for the coming future and how we feel our EBITDA will shape up. So this is what we're doing on this slide. When it comes to Renewables, we expect that EBITDA should fall, and it will be mostly impacted by less revenue from the balancing market, and we'll see some negative impact from our revenue coming from Green Certificates. And well, the price of these Green Certificates should change. When it comes to Gas, we expect steady EBITDA that will be impacted by higher margin from energy, from the sales of energy, but we'll have less revenue from the balancing market.

When it comes to Coal, we are expecting a drop in EBITDA because margins on electricity should fall. So I would say renewables will be growing, will be developing which will have a negative impact on the use of our assets, specially conventional assets. There will be lower volumes produced through conventional assets and there will be continued pressure on energy prices. So actually coal will see lower EBITDA.

In terms of heat, we expect steady EBITDA we expect lower revenue from electric will be compensated by lower fuel CO2 emission credits. We expect higher revenue coming from higher performance coal generation because at Czechnica will have had its full year of operations. We also have new assets in Bydgoszcz plus new engines will be introduced to the Gdynia location.

In terms of revenue from Heat, we expect lower rates, lower electricity prices. In terms of Distribution, we expect that our EBITDA will be stable, steady, but there's a risk in the sense that we're still discussing, and we're not sure about our WACC. And we don't know what the regulator will dictate, which is -- which adds uncertainty. We're expecting stable EBITDA from Distribution. But again, we don't know about the weighted average cost of capital WACC in next year. So our regulatory value of assets should increase.

In terms of our Railway segment, we expect stable EBITDA. But again, we don't know about WACC. This is key data for the next year that we don't have. And in terms of Trade, we -- well, we have a higher base in '25. We were trying to catch up after 2024. So because the base was high, if there's an adjustment, it could be negative. The following slide, which is an additional slide that we believe you should see.

When we published our estimates, the media started picking it up and talking about lower net profit in Q3 that we estimated. The media was saying that the net profit was much lower than the market consensus. But well, the market consensus is something that we don't have any control over. It's a group of analysts that come up with it. But what we want to tell you now is how and why this difference appeared. When it comes to EBITDA, no one had any doubts. The reported EBITDA was well within that sort of consensus corridor. So what about our net profit?

Our revenue, financial revenue and cost, the balance was PLN 0.7 billion negative, which, of course, influenced our net performance, our net result. And it was impacted negatively by the valuation of derivatives, which are part of our CfD on Baltica 2. So right now, we believe that the CfD, that this contract fulfills all the requirements for a subvention according to accounting standards, there were two instruments. There were two derivatives. And those derivatives are -- they result from the very CfD as a mechanism. So part of the CfD price can be set in Euro. And there is an inflation index that is used to refer it to the Polish Zloty, which means that on a regular basis, we need to evaluate those instruments. And then, of course, the values that we arrived at impact our net results.

The parameters that have to be taken into account for those evaluations are outside of our control, like, for example, Euro to Zloty, exchange rate projection or expected inflation in the Euro area and in Poland. These are parameters that we don't have any control over. What's really important is that those changes, those differences come from accounting operations, but this is strictly non-cash. As we're looking at CfD contracts, which are a way to fund our offshore projects long term, there is still discussion ongoing between experts, renowned reputable auditors. So they discuss the International Accounting Standards and certain things are not precisely described in said accounting standards. So maybe over time, there will be some new standards that will emerge, telling us how to approach the matter. And maybe then the market and analysts will find it easier to plug that into their financial models.

But for now, the situation with International Accounting Standards is what it is. Hopefully, I've managed to explain the matter of net profit. So this is it for now. Let us move on to the following part of our conversation.

All right. Thank you, gentlemen. You have -- we have listened to questions or we were looking at questions that were coming to us. So we will actually ask two first questions ourselves because they come from among the most frequently asked questions coming from you.

One question is about our projects like Gryfino and Rybnik Gas units as well as the storage facility. Where are we? What about selection of contractors and so on?

Right. As I have mentioned before, when it comes to these three projects, everything is going on schedule, according to plan. We are processing one of our Gas -- the Gas units, both in Gryfino and Rybnik. We're processing it in such a way that we are going to get bids from contractors before the main auction. So for now, as far as I remember, the bids are due by the 3rd of December, and we will see what we're going to get, but we're optimistic. We already went through dialogue. We received remarks, to draft contracts that we prepared. So we have reason to believe that potential contractors are interested in joining those projects, which makes us very happy. And we are hoping that we will receive those bids. And we know what's happening with turbines all around the world because Gas turbines are a rare commodity these days.

Production slots at Siemens, at Mitsubishi, [indiscernible], GE, those slots are booked not only by European companies. We do know that Germany has very ambitious plans, increasingly ambitious plans to develop Gas, but also the United States are in the picture. Gas turbines play a big role in the United States, supporting their data centers. that are very much driven by AI and this -- the fact that AI is booming, plus there's so many projects, gas turbine and gas unit projects ongoing all around the world. So these are all competitors. And there is another paradox. There is one specific component of turbines, blades, there is a huge competition coming from aviation, civil aviation and military aviation. And again, it's a global trend that everyone is competing not only for turbines, but also blades. So turbine manufacturers have their capacity blocked for different competing projects all around the world. And then their suppliers have their capacity blocked for -- specifically for blades for all kinds of sectors all around the world. So that's what's happening.

And the manufacturers of gas turbines, its their time to shine, so to speak. Everyone [indiscernible] them and their production slots are really very hot. So we're trying to be as transparent as possible in our processes, and we give bidders as much time as they need to prepare all the documents, to submit all the documents. And I do feel that we're going to get bids that will allow us to participate in the auctions that I mentioned. What's special about all those different projects is that there is a lot of comments coming from turbine suppliers that Poland is special, in terms of companies who can do EPC. So very often, they [indiscernible] we PGE, we have their shares and they are doing big projects together. They've actually Dolna Odra. They've done Rybnik for us, CCGT. They've done Czechnica. They've done Bydgoszcz for us. And they're doing -- they're participating in an offshore project as well. So we don't only use their capabilities, but turbine suppliers notice that and they say, it's wonderful that Poland has companies, have players who can do EPC to such an extent. So this is something good for us. This is something in our favor. And hopefully, we will have local content provided for. We'll have a Polish designer, Polish contractor among those bids that will come to us, hopefully, and we'll see how things will go, and we will keep you informed.

When it comes to our storage facility in Gryfino. We got three bids. As you may know, these bids are quite competitive. They are different because some of them are based on Korea -- something is based on Korean technology, something is based on Chinese technology, American technology. I would say the Chinese technologies, I would say, debatable or dubious. But again, it goes to show that there are Chinese companies that can participate in a public tender procedure. But what I appreciate is in that all those bids, there are Polish contractors present. Polish companies that we've seen before, that we've done projects with before. And we know that these are reputable players who deliver good quality on time and on budget.

On the other hand, it shows that Polish companies are trying to learn. They are trying to learn the roads and do very innovative projects in Poland. I mean, apart from [indiscernible], no one has ever done anything the size of this. There hasn't been a storage facility this big. So it's wonderful to see that there are consortium groups of Polish companies that can go for it. They can design and do such large projects in storage. So hopefully, we'll select something from the bids that we've received. We do need a little bit of time to technically and economically evaluate the bids that we've received. All of them are above our budget, but we do have the right as the buyer to run our analysis and still choose one of these bids. Thank you.

[Interpreted] Thank you. The other topic that you would like to -- that we would like to mention right now because it sparks interest, namely the efficiency team for improving the efficiency of shaping tariffs. This is an interesting question, I guess. So let us talk about it.

[Interpreted] Well, this topic has been quite interesting, let's say and popular. And just like we were saying during the presentation, I would like to mention that WACC for us in distribution is really a key component when it comes to our EBITDA shapes up. And we've been talking about it time and time again that distribution, the area of distribution generates such high levels of EBITDA, which in turn translates into a very intensive investment process, and it is no secret that distribution generally and the distribution network still requires quite a lot of investment. We need to connect new sources especially renewables so if these investments, if these projects were to slow down, then automatically the positive impact of them will stretch over time and the scale of possible connections will be lower and undoubtedly any movement on WACC will automatically be lined to EBITDA and that will be linked to our investment plan.

And second, when it comes to the team, it is too early to talk about how it will impact things. It's just -- and of course, as much as we can, we will be participating in the workings of that team. But even look at different calendars. When we're talking about establishing WACC for the next year, we're talking about mid-December, while the team, it has just been established. It has to do some work. It has to come up with some analysis before it has an opinion. So probably these calendars will not coincide. So we're talking, I guess, the first quarter at the earliest next year for the team to really come up with some concepts and ideas. And then we will be able to say more to whatever is suggested by the team and how it could impact our performance, especially in distribution.

Thank you very much. I think that now we've reached the point where we can allow questions from the room, but we do have some restrictions. [Operator Instructions].

Julia [indiscernible] Political Insight. I have three questions, actually. So we'll see how it will go. But all these questions about are about the new energy facility. So my question is at what stage is [indiscernible], Will you be interested in repowering of wind farms or wind facilities in the coming years? Especially that there are some legislative changes, that may make it easier for you.

And my question is about storage for the distribution network and the pump storage mortar facility. There is this new draft of the Grid Act that talks about just one provision where distributors will be able to build and own storage facility. So I wonder whether you're going to use that possibility when it comes.

[Interpreted] Right. So I can select two out of three. I think you might have even asked four questions. Well, when it comes to your first question, the [indiscernible] facility for sure, this project is being developed. And from our point of view, this project is really looks good. Nice decent location where we have access to the gas network by gas system. We also have a way to take-off power. So we're working on this project. It's one of our priorities.

As I said, we are trying to develop some more and more gas projects. We have a dozen or so different locations where we could develop new gas sources. But indeed, [indiscernible] is well, I think it's really a good one because we can quite easily shape it and plan it based on Gryfino and based on Rybnik. I'm talking about CGTs, because, well, we have had some idea that it could be a project that it could be done as a simple cycle facility. So actually, based on progress in [ Astros ]. One could say clearly that this project will be -- well, it is actually next in line after Gryfino and after Dolna Odra. So that was your first question answered.

And now question to repowering. Repowering is still something that we have to look at that we have to monitor. In our fleet, we have 23 locations, 23 in terms of onshore wind. We have around 800-megawatt installed capacity, but some of these locations are older, I could say. So on the one hand, we would like to take advantage of all those locations of those assets as much as possible because if there is a turbine that's been installed, it would be good, for it to pay itself off.

But we have like an internal project that's all about identifying, designating locations that could be analyzed from the point of view of repowering, but it's early days. This process is at its very early stages. So if I were to say something today, repowering wouldn't be a big driver or a big lever leading to higher capacity installed in onshore wind, actually a bigger driver to increase capacity in onshore wind, would be through acquisitions. So we are maintaining our ambition to indeed, acquire other onshore wind projects at any stage of development. And of course, the later the stage of development are something that's operating and something that's operational, the better for us. We would be really comfortable. We don't have a problem to purchase an installation an asset that's been operating for a few years because it's complementary to our existing fleet. So we are in a privileged situation currently because we have the largest servicing and maintenance organization, for wind farms. We have nearly 200 people at work, which really leads to some cost advantage. And this allows us to enjoy decent margins, on this part of our business.

And the third question you asked was about storage. I'm not sure if it's such a great idea because I think that electricity or energy storage to be efficient to make sense it has to have more than one reason to exist. Distribution and the distribution organization cannot engage in trade. I don't know how legislation would look at our revenue from System Services, especially balancing-related services. So when we look at our utility scale storage facilities that are connected to mid-voltage or higher voltage -- high-voltage. We developed quite a lot of time and thought into bringing all these revenue streams together. It's really very difficult to get storage to an extent, if you don't have 3 other revenue sources like capacity market, arbitrage and system services.

Of course, looking at how the capacity market develops, we see the derating factor and what's happening and how this revenue stream is actually eroding for every storage facility and any new storage facility, but still, we end up with two revenue streams that are intertwined or interdependent because they cannibalize one another. But still, there's a lot of revenue. There's a lot of margin there. So from our point of view, commercial storage facilities for sure, it's a way to go. That's what we want to explore with any available trusted technology. But having energy storage linked to distribution, then one will have to really precisely know what the role is and maybe they may make certain things more expensive, making distribution costs and transmission costs too high, then we would have to get it back to tariffs, and then it could lead to some kind of inflation of our tariffs. The [indiscernible] facility definitely qualifies when it comes to what we can do. It's one of the best pump store facilities that we have. So whenever we have good favorable regulatory environment, I mean [indiscernible] favorable regulatory environment, we're continuing to spend money and time on the project. We would like to build the [indiscernible] facility, the pump storage [indiscernible] facility. So if we can get some sort of a support system, especially that it cannot be financed from the existing capacity market.

So well, if we find support for it, we would like to build it, and we're very happy that there are other storage pump projects in Poland, and we can see -- we can see that there are developers, players who are interested in such facilities. So hopefully, some new regulatory solutions will appear that will make it easier to do those projects. All right. There was another person who wanted to add something?

I have two questions. One is about distribution. -- there is this draft law from the President and there are discussions with representatives of the President Administration and there were two arguments for the lowering of WACC. The first argument was that WACC doesn't take into account the influx of cheap money from Eastern Europe and why dividend for parent companies is so high. Distribution paid like PLN 2 billion. So this money doesn't stay in the group or in the companies.

And the other question is about tariff G. We have two tariffs that have been approved. They are around PLN 500 -- there is the trading fee. So there's this idea from the government that such a fee could be introduced, and those tariffs would be at the level of PLN 500. So these two things coming together. Would it be satisfactory for you?

[Interpreted] When it comes to -- well, I'll go back to something that I said before, cheap money, influx of cheap money. We're talking about the National Recovery Plan and loans that have very, very favorable interest like 0.5% on an annual basis, long-term loans, very nice. Yes.

But we are looking at this as a whole, in totality, we have certain investment needs. We have to modernize our distribution network. We have to develop it, grow it further. But for us, it's not either or. It's not a substitute for WACC or for tariffs. Our policy is whatever we earn, we spend, we invest. So now moving to your question about the dividend. Basically, any dividends in our group that are paid, that's part of our way to manage our liquidity within the group. So the money comes back to the distribution organization in the form of loans. So it's not like taking money away, taking money off distribution companies to fund some other business areas. No.

Suffice to say, look at our EBITDA, look at how much we're investing. Look at it on a yearly basis, and you will easily see that this money comes back. This money gets reinvested to a very large extent. And there was something else I guess, G tariff, right?

For now, we wouldn't like to say anything because it's a process, we're in the middle of it. So any calculations attempts to quote any specific numbers, it's too early. But very soon we'll know for certain what the situation is. Well, no one has ever proposed it. It's difficult for us to make any comments on ideas that have never been -- that have never reached any stage of the legislative process. There's plenty of ideas how one could try and lower. Well, we're waiting -- and we're still in dialogue with the other party, but let's not ask -- let's not answer questions about ideas that emerged only when something is in the legislative process, then we can answer, we can comment on it. We can engage in formal consultation.

Right. I would like to say that I envy people who can allow themselves to just talk about a specific subject that's part of a bigger picture. I think that what's been recently discussed publicly, tariffs and WACC. Now everyone seems to be an expert on WACC. I mean, Polish people have been expressed on football, then on ski jumping, then a lot of people become specialists on COVID, later, a lot of people started being experts on defense because of the war against Ukraine and now everyone seems to have something to say about WACC.

But joking aside, I think it makes sense to talk about the energy sector and the electricity sector in Poland. Let's look at it. And let's think about our distribution and transmission systems, how flexible they are. You know that there's yet another conference and there is a conference, all kinds of developers of energy sources come in, and they complain saying that PSC refuses to issue terms of connection that takes time to connect new off-takers, like industrial parts. Our discussions around poor quality of energy -- of electricity transmission and so on and so on. But actually, it's not about us having higher profits at the end of the day, unless we can execute a project that improves our grid, makes it more flexible, makes it more modern. I mean certain things, you don't even see them like remote meters. No one gets excited about it, but it's a must, and we are spending hundreds of millions just like lanes cables, like cables, not very exciting. Someone puts cables underground, making sure that new sections of the network are free from impact of the weather. Well, we had an example in the [indiscernible] region recently with the weather.

So well, we are aware that the reason why this discussion even began is that our industry is less and less competitive and especially those energy-intensive sectors make it high cost. So we are very much interested in dialogue in being in conversation about the level of WACC, about the level of -- about how money from the National Recovery Plan is treated and how we share tariffs. But if we are in a dialogue, let's never forget the context. Just like Mr. [indiscernible] said, there is -- well, our grid is just different. The way it operates is different. We can still connect new sources. We have ambition to connect new off-takers, be it industrial enterprises or individual households, but we have to remember about the context. We have to remember about the off-takes of getting a reward from investments, getting some return on investment on capital. That's all logic. We're not thinking just about the President and the discussion that we started and then the Ministry of Energy that talks about dialogue around distribution and transmission tariffs.

But we look at midterm and long-term perspectives as well, which means that at the end of the day, someone has to spend the money to make our economy more modern. To make our customers to -- give them access to modern green and renewable energy sources. But actually, those new energy sources require a completely different grid than the one we've been used to. For example, the fact that we have around 25 gigawatts of PV, 11 gigawatt onshore wind, very soon several gigawatts of offshore. That's not the end. We'll see more and more PV. We'll see increasingly more wind, even though there might be some regulatory restrictions, and well, of course, everything changes so when -- or if ultra-wind starts appearing. So we will see we would like to build storage facilities. We would like to build data centers. So distribution and transmission networks have to be invested in. Money has to be spent. There's no other way around it. And that's the other side of the coin called WACC.

On the one hand, its our EBITDA or EBITDA of our distribution operations. And of course, on the other hand, we have CapEx. We as well as other utilities, we believe that these things are a priority for us.

[Interpreted] [indiscernible], I have two questions. In the context of our national specialty and namely distribution, as you are indicating in your report, WACC is PLN 12.96. Basically, its the highest of all the companies in the group. What would happen with investing if it went down to PLN 8.5 would you stop investing? Would you restrict limit investing on Monday? And I said, and because usually your conference comes after another conference, so I am quoting [indiscernible] conference to you again. WACC [indiscernible] distribution is around 20%, up further distribution is around is 20% and it's around 10% of their -- of their performance overall. And -- what about Dolna Odra 1? Because I think that the court repealed the environmental decision for it. So what would happen with this facility. It has been operating for 2 years.

[Interpreted] Well, going to your first question, I wouldn't like to talk about all those levels that you mentioned because you talked about 8%, you spoke quite quietly, we would not like to get into this discussion, 8.5%, 9.5%, or 10.5%. Let's wait. Let's not engage in a discussion. It's really going to be known very soon. Card will be on the table very soon. But anyway, regardless of what's the share of what in the regulated revenue because well, all regulated revenue is really minority.

But our process, our investment programs are calculated and designed in such a way that most of our EBITDA is -- gets reinvested. So if this EBITDA gets somehow in any way, impacted or affected as a result of those decisions, we will have to sit down and think about it, but not getting WACC. Simply knowing when we know what it is, then we will think about possible adjustments. But if this changes sides, probably we'll find a way to compensate for it. If WACC goes way down, then it could, it indeed could have an impact on our investment program in distribution because our strategy involves number of areas where we have quite ambitious CapEx plans. So well, then we'd have to choose i guess. But for now, we're not assuming that -- for now, we're not assuming that other areas of our operations should fund CapEx and distribution.

We would prefer to continue the policy of reinvesting what the distribution segment makes. And that's the way to go, and let's -- when we know all the data, we can get back to the discussion.

And [indiscernible] says that for then 1 percentage point on WACC less it's minus EUR 200 million revenue. Is the scale, the proportion more or less similar with you?

[Interpreted] I would say more or less. You just -- there is a simple equation. And if you round it, like this, yes, we're talking about hundreds of million. One could assume that, more or less. But I think that we should sort of demystify certain things. What we're talking about is not WACC. Talking about WACC is a simplification to find a common denominator for all the different questions. But I would say the problem in Poland is the cost of electricity for businesses, for the enterprise sector. I'm talking about large enterprises who are exposed to high cost of electricity. And because of that, their competitiveness is under threat.

When it comes to customers under tariff G. We are being very responsible, very conscious. We do not have any intention to make individual households costs higher. So this discussion will not affect them, I guess, everyone in the energy sector, but also the government or regulators try to do everything that's possible make cost of electricity for households rational, affordable. From our point of view, this has been addressed.

Well, cost of electricity for businesses will be very reason why the team and that we talked about before was appointed because we're talking about competitiveness, especially of energy-intensive sectors of this economy. And -- but it goes way beyond WACC. There's something else, for example, power exchange and certain minimum levels that have to be achieved. We're talking about 55%, maybe a little bit less after some shutdowns. But still, we sell our electricity in a way that's transparent and competitive, but there's something else, gas and obligatory levels of gas, maybe not everyone is aware of the fact that we have the most [indiscernible] gas in the world.

So looking at how the electricity and energy sectors change. And probably, you've talked about it and you have similar questions to [indiscernible]. We're not the only ones who want to invest in new gas units. And we're not talking about clean dark spreads. We'll start talking about clean spark spreads as well very soon. So again, all kinds of initiatives that lead to making the Polish economy more competitive, these initiatives should be maintained, should be executed because as a result, the price, especially for the energy-intensive sectors will go lower, but that's the true name of the game or name of the problem. And we are more than open to all kinds of discussions, all kinds of conversations, and we are very much in favor of introducing certain regulations about gas, and about certain obligatory level of gas, because maybe this could lead to better competitiveness.

We're also a good customer that can take good advantage of gas. So I think these are the things we have to take into account. I mean when you know what WACC is, it's easy to mention it and give it meaning, but it goes way more -- way beyond WACC. There's also tariffs that we have to think of, and we are more than open to conversations to communication, and we don't want to overcomplicate things, and we don't want to engage in discussions like oh, when WACC goes down, we will stop investing. Of course, it will not happen. And these are things that are interconnected, interdependent. Of course, we might have to adjust or modify our investment program, given tariffs and we always do that. We are in a habit of doing that.

You mentioned [indiscernible], who started also adjusting and doing some calculations. And well, they did. But please remember that there's something else here, for example, financial levers, and financial leverage because EBITDA is a parameter, a performance measure that allows you to maybe take on debt if you need that. If -- so well, you invest not only the money that you have made, may invest some money that you borrowed. I'm talking about it at length because I don't have much to say about the Dolna Odra project or Dolna Odra facility, which was your second question.

I know that there is something about the integrated permit. You called it Dolna Odra 1, but actually, it might be Dolna Odra 2, because Dolna Odra 1 was coal. We call it PGE Gryfino-Dolna Odra, that's our name for it, that sort of reflects the new -- the old and the new -- and of course, we are there. We are working. We are doing detailed analysis of what happened there. You need to remember that these events that unfolded, they actually unfolded before 2024. But the facility has been operating for a year now. So it is our intent to clear this matter up to really settle it once and for all, and we are right now engaging in -- engaging with our legal advisers, and we've opened -- we've initiated dialogue with the government sector to understand better, why the decision, this court verdict took place. So for now, well, we're not seeing a big trend for the operation, the functioning of that facility, but we do know that there is some sort of regulatory and organizational effort that needs to be involved to get back to the right regulatory conditions that will allow us to operate that facility properly and smoothly.

[Interpreted] Do you have any more questions? Well, you may have a single question you may ask it. Well, or we maybe take away some of your questions from the next conference.

[Interpreted] Joking. Well, I would like to ask about something else. Not gas, not distribution. Coal, so how long will your open-cut facility in [indiscernible], how long will it be operated? Is it nearly over? And then [indiscernible] will be the only one that's left? Do you have any idea when you will stop [indiscernible], and do you have any idea or plans to recultivate this area?

[Interpreted] Well, not much has changed, when it comes to moving from [indiscernible] to the other -- to the other facility, but it's running low. Will it be this year? Will it finish next year? I will answer to you via e-mail because I have to check the schedule. When it comes to recultivation, our environmental permit stipulates clearly that we have to recultivate this area, both [indiscernible] and Turow. So for now, there is a plan -- this initial plan has never changed that that we will try -- we would get those areas to their to the required states. We would recultivate those areas by flooding them.

[Interpreted] Right. But what about costs? What about investment?

[Interpreted] Well, yes, of course, according to regulations, we established provisions for recultivation, and we do know that this area will need to be cultivated for sure. Well, it's a tricky question or, well, I haven't prepared to encounter a question like this. But if you're really curious, we will deliver this information to you. It's a very niche topic. So we'll tell you more, we will write an email and we'll respond.

I'm looking at the room, I don't see any more questions. Thank you very much for coming. Thank you those of you who are watching us online, and of course, see you at our next conference. Thank you. Have a good day.

Good morning. Welcome to the press conference concerning the financial and operational results of PGE in the second quarter of 2025. Welcome to the audience of our room here and press agency and people who are online. We will have the Deputy President for Operations, Mr. Maciej Górski; the Deputy President and CFO, Mr. Przemyslaw Jastrzebski; and we will have the Financial Director, Mr. Piotr Sudol. I will have the pleasure to moderate the conference. My name is Konrad Mroz.

Traditionally, as you might recall, we will start with the presentation. And in the second half of our conference, we will ask you. We will give the floor to you to ask questions. Now Maciej Górski, over to you, sir.

Good morning. Welcome. It is a small room, but I think it's nice to communicate when I have the mic on. How do we switch the slides? Let's move on perhaps to the next one very briefly. It is a great pleasure for me to present to you the review of what has been happening in quarter 2, 2025. But also what's even more interesting is what happened afterwards, the balance sheet date and a short comment on what's going to happen and which way forward as regards our strategy.

The EBITDA in quarter 2 of 2025 was PLN 3.3 billion. It's a good result, 28% above last year's result. But what I think is even better news is that we are effectively performing with our investment program. The investment outlay in quarter 2, 2025 is a very similar number PLN 3.2 billion. That's CapEx, and that's also an increase vis-a-vis last year by a quarter. And I think more will be said about this in the later part of our presentation. But I do think that, as a matter of fact, the level of CapEx here is possibly one of the most important parameters that we are trying to communicate to you about, explain, present, but also internally in the capital group, we're trying to monitor it.

There are some slight changes as regards to the main operational parameters, electricity generation and heat sales, and that's respectively, 11.43 terawatt hour. That's 1.5 terawatt hour less than the parallel period of last year. Now heat sales, we have a slight increase here year-by-year, and I will tell you where it came from, mostly weather. And now what has happened in the topic of our participation in the power market, capacity market. This is an unprecedented year in the history of the power and the capacity market in Poland because we have a lot -- exceptionally many auctions. And the year that we're reporting for, there were 2, and there was a supplementary auction for the second half of 2025, a catch-up auction where we contracted -- the supplementary auction is where we contracted 2.2 gigawatts in coal assets and about 100 megawatts in other assets, and that's good news.

And then another catch-up was the first of this kind in history where mid-year, there was an auction that supplemented whatever had been auctioned in the December auction, and we managed to contract a few of our assets over 100 megawatts in total. And something that has been news to you for the second quarter of 2025, that's our capital strategy up to 2035. And as you probably know, we have planned significant investment outlays, PLN 235 billion. So that's cumulative CapEx until 2035, which is meant to result in our EBITDA growing up to PLN 30 billion a year. And I think that this strategy was of a well-balanced document and we represented our ambitions there concerning the development of new business lines where this was the outcome of many months of talks with our stakeholders.

On the one hand, Polish electro-energy network and institutions -- financial institutions on the other side, but also we try to reflect our view on the world on the changing paradigm of the electricity and energy in the world. You might recall that our strategy was based on a few pillars. But the main message there, and I think that this morning displays that very well is that, unfortunately, the issues of security are becoming ever so much more important. And in our understanding, this is the security of our infrastructure of electricity supply. So the energy security is extremely important, and we put a lot of emphasis on it. Hence, the planned CapEx on distribution infrastructure development, which, as a matter of fact, guarantees access to electricity and whose effective development, improving the flexibility of the electricity and energy sector functioning and operation is key.

This is a message in our strategy, and this will be the main area where we will be spending money, PLN 75 billion out of the PLN 235 billion is to be earmarked towards the development of distribution area, which we think is a responsible attitude to what's happening today and the geopolitical situation in the country, but it's also a response to the capabilities that we have in the distribution segment. We have, of course, been displaying quite a significant EBITDA in this area, but we've also been clear about the fact that we have some commitments towards the energy regulatory authority, and we try to implement the investment program in as much as possible and our ambitions are growing.

Now regarding the issues of growing renewables, we have demonstrated our ambitions for wind offshore energy, but also land wind energy, and there's quite a significant level of investment, PLN 235 billion. So offshore wind and renewable account for PLN 85 billion. And we believe that we have managed to keep a rational balance where the initial assumption concerning coal assets was quite specific, and I will be going back to that later.

Now briefly about what's happening on the electricity market at home. Slightly smaller use in the second quarter compared to the previous year, 3% less -- minus 3%, 1.2 and the electricity generation, a decrease of 1.7% and the balance of foreign exchange, that's an increase of 0.52 terawatts hour. In the first quarter, as you can recall, we saw a situation where there was some -- there was low production from renewables, especially wind, not just in Poland, but in Western Europe as well. And that meant that the -- there was a negative balance of the transboundary exchange and our coal assets at the time were more intensely used as a consequence. In second quarter, however, the situation stabilized somewhat. And in terms of prices, you can see here the pricing is quite stable.

As regards to the prices that we saw in the second quarter, -- now we see a decrease by PLN 115 per megawatt hour compared to the first quarter. That is, on the one hand, the result of a reduction in demand, which is a typical phenomenon after winter and an increase in generation from renewable energy sources, even though May was not sunny. That was quite a surprise to us. But in principle, we saw an increase in generation from renewable energy sources.

As for weather, these weather conditions have a major impact on how much we generate and what prices we obtain from the energy generated. And here, we saw untypically low temperatures in June. This, combined with high generation from wind resulted in rather typical pricing levels. I'm looking at my notes, and I see that the things that are worth highlighting and that probably are beneficial to us as of now is that we are now evaluating our competencies in participation of balancing capacity market positively. Based on how well we heard after June, we see that now we operate in increasing volatility in the market, in particular, in the balancing market.

Also in the context of volatility after we exceeded to the PICASSO platform, you probably wrote about this, and we heard reports of record low prices at the balancing market, even at 34,000 per megawatt hour. That shows how sensitive the energy market has become. And incorrect balancing within just a quarter of an hour can cancel financial results developed over a longer period. And that is what we see in our trading activity.

In the following slide, you will see a very brief outline of how it translated into our operating results. Decrease in generation by 1.48 terawatt hour compared to the same period last year, mainly as a result from lignite and coal fueled power plants generation. And also Gryfino Dolna Odra, our greatest gas fueled unit contributed to that. As for distribution of electricity, a decrease in demand in the tariff of small- and medium-sized enterprises is mitigated by greater demand in households, large enterprises, and railway electricity.

As for sales to end users, we have the same reasons for the results, as mentioned before, 0.19 terawatt hour decrease in demand and the temperatures on average, 2 degrees centigrade difference resulted in greater sales of energy.

In the following slide, you will see brief information about our key investment projects. As I have already signaled, these projects include the ones that are underway and the ones that are in the pipeline. I would like to talk you through those projects in as much detail as possible because as already mentioned in our strategy, we presented our view of investments in all segments that we see as promising great development. And for example, we have gas-fired generation in Rybnik of almost 900-megawatt capacity. Here, we are on schedule and on plan. Steam turbine has been delivered to the site. We see full mobilization on the side of consortium of Polimex. And we expect that next year, as planned, the facility will be completed.

Other two installations in open-ended combustion cycle in Rybnik and Gryfino with a capacity of about 600 megawatts each. We have announced tenders and these are conditional on obtaining some form of support, in particular, in the form of power support contract. And we are getting ready for the upcoming main auction. As for renewables and energy storage, as you might recall, two major pillars of our strategy are shown in under the same heading. But in our strategy, we see them as two separate areas. Key projects here include Baltica 2. That's a project that's on schedule. And we already see some tangible effects of the work done by the contractors.

You can go to the sea side and see the transformer station being built, the excavation work under the beach and those elements of works are moving on as planned. What is less visible, but also moving forward as planned is the preparation of seabed. Here, everything is on schedule as well. That's a complex, complicated project, but we are happy. It's being carried out in a very efficient manner and in good cooperation with our partner, Orsted. Large-scale energy storage is as new to us as those offshore wind farms. Here in Zarnowiec, we are planning to start the official construction there. This is going to be a landmark project in the development of our energy storage assets for chemical assets.

Also, we announced a tender for construction of an energy storage facility in Gryfino. That's a huge scale, 800-megawatt hours on 400-megawatt connection. We hope to obtain the first bids within the next 4 weeks. Here, we have high expectations, high demand. We exclude suppliers from third countries. We have a policy of energy security management, and we are very disciplined in carrying out those projects. We intend to operate these assets. They are important to us. So we set the bar very high in how we go about implementing those projects.

A lot is happening with regard to heating. There are not many large or spectacular investments here. One that was recently handed over for use was Czechnica with a capacity of 179 megawatt hours in heat and 315 thermic megawatt hours. That was the largest project, slightly smaller one, but equally interesting, was about 5 gas engines with a total capacity of 50-megawatt hours in Bydgoszcz, also handed over recently, and Kraków, where we concluded a contract with the general contractor for completion of 250-megawatt gas engines, and we obtained cogeneration premium in all those projects.

There are a few other important projects in district heating. And there might be some questions or emotions around the Gryfino project. We also concluded a contract with the general contractor to construct a new heat source, and it will be performed according to the timetable that will enable the heat to be delivered to our customers, hopefully in August next year. So those are very ambitious deadlines, but this is not a very large unit. So I believe there should not be any problems with the timetable of this project.

And the distribution, well, spectacular projects include areas of ICT or remote reading meters. And these are small investments, a few hundred million is the most -- the biggest. But in the area of distribution, we are quite disciplined when it comes to the implementation of our investment programs. And we are successful in doing so. And I think that actually, the clearly defined need to develop our distribution network in the context of connecting new renewable sources, but also connecting new recipients and making the grid more flexible, the network more flexible.

I think that this bodes in very well with the changing landscape of the Polish energy and electricity market. But we view it through our lens, the energy security lens. We are responsible and accountable because our network is largely located in Eastern Poland. And fortunately, that's where we have the biggest exposure when it comes to the risk of some hostilities or something that some events happening like the ones that we have experienced last night. So distribution generates a big EBITDA, and it is important, but it's not the apple of our eye because it is the area that we have to devote a lot of time to due to the fact that it's necessary to ensure its security for our infrastructure security and for the security of our clients.

And in all the investment projects that we have, and I think it's worth noting, we have mentioned -- I have mentioned the qualifying suppliers from the point of view of security, but what's really important and what we also emphasize on the level of our strategy is the issue of local content. And I think we largely try whenever possible to make sure that there is as high as possible share of Polish suppliers, and these are Polish suppliers, for example, from Rybnik. We have Polimex -- in Baltica, we have Polimex as well. The drill between the sea and land also is being performed by a Polish company called Janicki. Now in Zarnowiec as well. LG has Polish subcontractors working for us. In Czechnica and Bydgoszcz, we also have Polimex.

So on smaller projects, for example, EC. In Gryfino, we have Ervigo. So there are quite a lot of Polish companies. This is particularly well seen in distribution because the share of the Polish content is very high there, and we are glad to see it. We make all the possible efforts to find the right balance between the share of Polish suppliers, contractors, and promoting the CapEx here in the Polish economy. But on the other hand, we also try to make sure that the solutions that are insured are top of the art and modern, and this is a success. We've managed to do it. And I think it's one of the areas where we are accountable. And I being accountable for the area of investment, I'm particularly happy to see that the local content is successfully being integrated in our DNA of the PGE Capital Group. And of course, we do have the strategy to lead us forward up to 2035. But on the other hand, we are all bearing in mind that such measures should be taken up and that we should navigate our investment process in such a way so as to make it possible for Polish companies to participate.

Now the last slide from my part of the presentation, and I will be wrapping up. This is the completion of the coal asset carve-out team. We've all been waiting for this report that was tabled in early July. It had been prepared by the team appointed by the Minister of Financial Assets, and we really did expect the content to be as it was. It so happened that we wanted to publish our strategy regardless of whether or not the report was going to be published and when it was going to be published. However, our assumptions in the strategy were confirmed in this report. There is no justification to create NABE in the shape as it was suggested by the previous government. That's number one.

Second finding is that it is necessary to define the need to develop support mechanisms independently of already existing solutions. And we are also in agreement with this conclusion. There is an optimum set of coordinated measures. They are here called the Decarbonization Mechanism, the capacity market, and the Non-Fossil Flexibility mechanism. And I think after putting more detail to these solutions, it will be the good way forward to further support investment programs, especially our investment program in the units that will be operating beyond 2030, assuming that the capacity market entails these units that will be performing up to 2030.

So we are quite interested in seeing where these solutions will be going and what kind of mechanisms will ultimately be created and how they will be created. And of course, there is the issue regarding the Transformation of the Electricity System. One of the pillars of our strategy that we presented was the responsible transformation, the location, energy needs to transform as a sector. And since we are an important actor on this energy scene in the energy coal generation and lignite energy generation, we are very much interested in seeing the transformation being performed in a responsible way. And we believe that this will be a big challenge. However, I think we're at a stage today where an increasing number of ideas are coming up as to how these assets will be transformed, what kind of activities we can run in our today's key points on the map for coal energy.

And now that is it regarding the overview of the situation, key operational data and investment data. Now it is a pleasure for me to give the floor to Przemyslaw.

Hello. As it was mentioned earlier, we have quite good operational profit, but it is not quite as spectacular as it was in quarter 1, which was a winter quarter, but also additionally, it was quite specific because the production was quite low of renewables. We can see that in generation, where the result year-on-year improved by PLN 413 million. Previously, that was a much better result, over PLN 900 million. But then we experienced an increase in generation, while in the second quarter, we had pressure on curbing the production, the generation. We also had a positive contribution of lower costs of fuels at the level of about PLN 200 million. Then PLN 1.5 billion was the positive contribution of lower CO2 costs, but that was leveled off -- offset by prices.

We have a change in megawatt hour and volume, 1.4 terawatt hour. We see a positive contribution of Gryfino Dolna Odra and of longer heating period revenues. That was a positive anomaly from the perspective of revenues. The heating season was probably the longest among those recorded. It ended sometime in mid-May, which helped very much in driving demand for heating. The result was also supported by capacity mechanisms. In the second quarter, we recorded a significant growth by [ PLN 215 million ] up. But also, there was some distortion to the base as the market of balancing power started in mid-June. So that was the last quarter in which the statistical base was distorted.

As for sales of electricity to end users, we recorded a growth, but it should be noted that to a large extent, this was also linked to covering the costs that we had to bear as a result of lower tariff costs of public consultations and also greater employment in offshore energy, renewables and gas energy, greater employment as a consequence of development of those segments. We also dissolved the provision on contracts related to the G tariff, but the scale of that was lower than in the comparable quarter of the previous year, which had a negative contribution to EBITDA. We saw, on the other hand, positive results on investments. In PGE distribution and railway energy, we had a positive impact of PLN 57 million and PLN 32 million, respectively.

In this slide, you can see an overview of our CapEx in the second quarter. Until now, we have only shown the cash perspective. But here, we also show the presentation by type of cost. And the differences were even up to PLN 800 million resulting from the schedule of payments made by the group. These payments took place in July and August. For example, payments for the project in Baltica 2 amounting to over PLN 700 million is just one of the events of this type. Increase in cash was recorded in gas energy by about 120% as a result of Rybnik power plant construction in renewables, Baltica 2, then deferment to the third quarter, that was about delivery of foundations for turbines and construction of sea transformer stations. Decrease in distribution expenses over PLN 300 million down. That is the result of connecting new users in the second quarter.

In railway energy, we had a decrease in expenditures. And this mainly concerned MOSA supply system and also a lower level of connection of new users. In heating, we saw a decrease as compared to the second quarter 2024. That was the result of major investment on the Bydgoszcz unit. Here, we completed an advanced phase of work involving delivery of main equipment to the construction site. The effect was partially offset by EC Czechnica, not fully though, and that's why the total result was negative.

In coal energy, we revised our energy requirements. We reduce expenditures here to the levels that require stable operation of our units, but this is typical maintenance work. We are not considering any capital expenditures on increasing our capacity in this area. So to sum up, we spent slightly over PLN 260 million less than in the second quarter last year. But by type of expenditures, PLN 200,000 more investments. And we plan to maintain this direction in order to implement the strategy that was announced in June this year.

As for debt, we extended our analytical activities. We believe that we need to show a broader context of debt because showing net debt only in a short-term perspective is misleading. The reported net debt was lower than last year when it was PLN 9.5 billion. This is, of course, developing towards a decrease of overall debt as a consequence of growing EBITDA. We paid taxes, so tax payments increased our debt. Additionally, we also had a new element, namely the loan from the recovery and resilience program.

On the other hand, taking into account future payments for CO2, we saw a decrease here, but it was less than PLN 2 billion. Economic debt is PLN 14.5 billion. 1.07 is debt to recurring EBITDA ratio. However, it is very important to notice also the details, not just the general ratios. -- we expect that in the fourth quarter, net debt will amount to about PLN 11 billion. So you can see that in our case, the category of net debt is rather volatile, and it depends on terms of payment for CO2.

Traditionally, at the end, our view of what is likely to happen still in 2025. We decided to introduce some changes in renewables. We expect greater results from balancing power market. These revenues will be supporting the coal segment and revenues that contracted from the supplementary auction will be important here, but we're not quite convinced as to it will be -- as to whether or not it will be possible to get a higher revenue from the balancing market. We expect the perspective to be rather stable, but the dialogue goes on for quarter 4. And until there is a final resolution here, we will still have some uncertainty as to what it will look like.

Thank you. I think that will be all from me. And we move on traditionally to the Q&A session.

Thank you very much, gentlemen. Traditionally, Q&A, we start with questions that we have received before. Please prepare microphones for the audience here. Let me just read the questions that we have gathered first. First one is, what about the nuclear project? Is PGE continuing the talks? Or were they terminated as for the gas unit? Can we address this to Mr. Górski?

The talks are being held. The project for the company is still within our interest. This is due to the fact that, as we prepared in our strategy, we want to be involved in the location studies from the point of view of being able to implement a second nuclear power plant in Poland, but also from the point of view of potential locations for nuclear reactor modules. And well, in reference to the question about the gas unit, the gas steam unit that we spoke about last quarter, well, that's an interesting reference. However, those are two distinct projects, and it's a coincidence that the seller is potentially the same. But there is no analogy in terms of the talks held, but I can say as of today that we are sustaining our interest in having the 50% of the shares in PGE PAK EJ to buy them from ZE PAK SA.

And we believe that we have a pretty good idea how to use the company, which already has location permit for the Konin surrounding area and it has performed a number of basic location studies for this Konin location, but it also has a well-educated and experienced staff, which is not common for nuclear energy in Poland. So we would be really willing to use the competence of that team to continue the work, the analytical work that we already perform in our location in Belchatów. We have completed the first stage of very basic studies from the point of view of excluding any potential seismic threats. And it looks as though we can proceed with the following stage to check whether there are any contraindications to still be considering the area of Belchatów for nuclear energy.

And the second priority here would be to launch similar studies. For the Turów location, we want to locate an SMR there potentially in the future as we roll in our strategy and having a company in our portfolio that has tangible real experience in performing this stage and the subsequent stage for the analysis of drilling, I think that will be very useful for us. Thank you very much.

Second question is on write-offs. Why has PGE written off some of the coal assets? And is it a complete write-off?

Why? The reason why is it's a natural consequence of the market situation. And for the financial results of this area, and I don't think it should be a very big surprise for you on the market. But out of the 5 coal assets that we have, 4 have been written off completely. And I think the potential here for the future in this area is already limited. That's all I can say. But in very specific intervals, we are committed to justify the rationale between such tests, and it's very difficult to decide 100% or state that it is definitely the end of the coal area. It will all very much depend on the perspectives of the segment. But indeed, the massive write-offs here, I think something that's already -- we've turned the page on it.

Let me just perhaps add a response because it's been something that's been keeping us awake, well, the renewable energy and potentially keeping you awake. The last write-off also concerned our investments in wind -- PV and wind onshore. And I would leave that aside because immaterial, but the PV -- perhaps it wasn't material for the group. It was just over PLN 300 million. But compared to the value of the assets in the books before the write-off, well, that is perhaps a significant amount to look at because it was PLN 1.3 billion, but we've wrote off over PLN 300 million. So I think that, that slightly shows the discipline that we have in terms of investments.

So today, we are witnessing some very deep transformations in the electricity market. Prices are not just prices that are -- the following the next day prices or potentially long-term contract-related prices such as PPA, but it is a realistic cost of balancing and profiling. And I think that we see that the market conditions are very demanding for PV, for solar energy. And I think that a year ago, when we met, I made a statement that was not forgotten saying that it is a misleading technology that solar panels were a misleading technology. I think back then, we were already aware that even though it looks nice and pleasant, a technology that you can freely adapt to any place in Poland.

Already then, at the time, we started seriously thinking about revising our attitude to this ambitious investment plan that we had seen 3,000 megawatts in PV and solar. So this write-off really demonstrates that we are right, as a matter of fact, that solar investments should be even more disciplined than we would have thought back in the day. And the reality at hand today is that part of the products that were put in place, not just by us, it's not an exception, but big energy groups and some private investors just rolled out projects that were too expensive in solar energy and especially if they roll them out in the south facing technology, this profile is very exposed to negative pricing and potential limitations today.

But we do think that this was possibly the only decision to take at that time, so we tested these assets against loss of value, and we were not sentimental about accepting these impairments. And this disciplines us and motivates us further to see that this interesting renewable source still requires an investment discipline and requires decisions that are based on rational evidence and allowing us to build value.

Thank you very much. A topic that already came up in what Mr. Górski was saying, the extra auction for the capacity market. Why did you not ask for extra capacity in spite of taking part in the auction? And what do you plan to offer in December?

If I look back, this extra auction was organized for a reason. We might recall that in the main auction, which took place in December 2024, NEA projects, in particular, did not get capacity contracts. Hence, a decision was made to organize this extra auction. that was a new phenomenon in the power landscape in Poland. While considering new gas fueled capacity in Poland, we took a short-term perspective, but we believe that the medium-term and long-term perspectives are more important. We were not prepared well enough to successfully win the power contract. But that was not the last auction nor was it the only one that offered support systems.

So what we are doing right now is that we are being very disciplined. I will reiterate this word. We are disciplined in how we make any commitments at all because making a commitment in the power market is assuming a liability. Previously, we were not ready for that. As of now, after the small Gryfino, the 600-megawatt Gryfino was prepared after Dolna Odra new project was prepared in Ostrów Wielkopolski. These are the projects that we want to present in the next auction or upcoming auctions depending on how that is organized. It is not yet defined what will be offered in terms of support. But what we want to do is to be better prepared for those events.

We are catching up a bit on our history debt, legacy debt. [indiscernible] my joining of the Management Board was also a certain change in the functioning and we joined the company at some stage in the development of those large projects, which are complex, which require resources. And if we want to assume liabilities like the ones that result from the power contracts is something that has to be done within a broader strategy, and that's what we are doing right now in order to be able to participate reasonably in the upcoming auctions. We will take part in the auction, but what the result of that will be, -- of course, that will depend on the competitive process. But I can tell you today that we will try to maximize our ability to win those power contracts and build the new gas fuel units as soon as possible.

Last question. Well, in fact, these are a few questions, but they are all related to funds from recovery and the resilience program. Are you applying for any additional funds? Are you applying those funds? And if so, for which companies?

We are in the process that regards PGE Distribution and PGE Railway Energy. But it's hard to talk about any specifics right now. Only after we receive confirmations, will we be able to discuss details and only after the relevant agreements with [indiscernible] signed, will you be informed about this as will the market.

Thank you very much. Now questions from the room. Please introduce yourself.

I have a few questions. Mr. President, I understand from what you have been saying that in Konin, you are considering building not only a large conventional nuclear power plant, but also putting up an SMR.

No. I have not said that we are considering any major change to what we are doing in Konin. But let me take a step back. In principle, we are considering various possible sites as being suitable for nuclear power plants or SMRs. Konin turns up in the governmental nuclear energy program as the second possible location. And again, in principle, we want to focus on location studies, what kind of power plant would be advisable in any particular location. But what actually will be built there is not within our remit. So these are the projects that are being carried out by the state treasury. So the answer is no. There is no decision on our part or no change of our view of the Konin location.

What I meant was that our interest of buying a 50% stake from PAK was that we wanted to be the only owner of this company. The cooperation that our predecessors made with regard to collaboration with this company was not optimum from our perspective. That's why we are in talks now. If we conclude these talks successfully, we will have a company with a team able to examine more sites and with the relevant documentation. Then if at the governmental level, the decision is made to consider this specific location for the second nuclear power plant, then we should be able to make available this documentation. Thank you.

I also have a question to Mr. Jastrzebski. You have already made most of those impairment write-offs. But have you already made them for your coal units in Opole units 5 and 6. Have you already done this? Or is it still ahead of you?

In Opole, this is something that we still have on our balance sheet for both units.

Partially, the write-off was already done for those units, but there is a remainder still staying on our balance sheet.

So I have more questions. Estimate of prices for G11 tariff for next year. Do you think that it is possible to go down to the level of PLN 500 per megawatt hour? Your competitors talked yesterday about the amount of PLN 540. Do you think it is possible to go down to this level if PLN 500 is achievable at all? I would also like to ask you about cost of balancing the profile and system for renewables because, again, your market competitors calculated that those two variables amounted to PLN 120 per megawatt hour is going to multiply.

And in the context of gas tenders, aren't you afraid that this market is too limited when it comes to the suppliers of technology and contractors? And will it not be the case of [indiscernible] again vis-a-vis your market competitors that you will be having to pick the supplier in a free procedure -- direct procedure?

That's what happens when you organize press conferences on results after our market competitors have already done so, especially the one that organized theirs yesterday.

I did not listen to details, I must admit to what our colleagues were saying, but I did -- I must admit I received some summary, which, yes, really pertain to the first two issues, and that is price for next year and the issue of costs of profiling and the balance. Mr. [indiscernible] probably responded to that question very well, and he could be quoted on that. We are still at the level of contracting. Electricity for the G11 tariff group for next year. So we cannot really make a binding declaration today as to what the price will be in the tariff, especially because we do not fully know the extent of the costs, but also because this will be the outcome of a dialogue that we will be having with the Energy Regulatory Authority.

The season for tariffs will start in the next quarter. That's early in quarter 4. We will be working intensely and having this dialogue. Now the way forward is well known. In G11, we will be lowering the prices. That's for sure. And our ambition is to lower them in a way that will make it possible for us to have profitable operations because, well, regardless of what happens, this is the duty of Management Board of the company that supplies electricity to individual customers.

But on the other hand, we do understand that there is a reference point in terms of the frozen price of PLN 500 per megawatt hour, which as we understand, will remain frozen until the end of the year, at least these are the declarations that we've heard. So we do not expect this to be a good way forward to suddenly raise the prices from the 1st of January. Whether it will be PLN 540 or another amount, well, still today, this depends on a number of factors.

And we -- assuming that we would -- we were to resolve one more issues -- one more issue, the balancing of consumers. That's one component that, in fact, impacts our operational costs. We could perhaps approach PLN 500 rather than what was announced yesterday, the PLN 540 that was mentioned. However, this is the space where we have freedom to move, I think. So we're looking for a figure that would sound good, but I wouldn't want to really disclose it today because it might be anchored in the comments and the news and references and still the tariffing process has its own dynamic.

We try to present our own argument saying that we have the cost of energy that we are contracting. We have additionally costs that have to do with profiling operational costs. So I am hoping that we will be able to reach a rational compromise of the PLN 500 plus and wrap up the negotiations with the authority for next year. We have prosumers, there are quite a lot of them. We have the revenue, PDO turnover PDO distribution, 500,000 consumers, and that's quite an important volume of electricity that is introduced into the network especially this being a point that has to be taken on board with reference to the prosumers that are in net metering.

They were treated in a preferential manner, very much so, I would say since we are the company serving these customers we need to deal with the cost of introducing this energy into the grid, and then delivering it to them. That was a very long answer to a very short question. So let me be concise for the rest of them profiling and balancing cost. Yes, those are significant cost, already now they are seen, they are the other side of the coin, which is also linked to the increasing weather-dependent sources in the network. We have I think over 35 gigawatts of power and 11 gigawatts of onshore and almost 25 -- around 25 GV, whereas this does not help definitely. It impacts the profile costs and well, actually, we are trying to minimize the transfer of this cost to our consumers, but yes I do agree that this is an important factor.

I think perhaps PLN 100 per megawatt hour is a correct figure, and I think the way forward is well known. We are expecting these cost to be actually increasing. Point #3, regarding our tenders for Gryfino and lower order. That is a very pertinent question. We have seen one online before why didn't we win anything in the extra auction. It could have ended that way, we could have made a commitment before having the information about who and how much for would be performing the project, but this could have ended up in having unnecessary rush or lack of competitiveness.

What we decided to do instead was to go ahead with a disciplined approach. We have announced the tenders for Gryfino and for Rybnik today. We want to find out what competitive bids will come forward before we make a commitment on the power mechanism in the market or capacity market whatever else. Right now, we see that there is interest in those projects. We can see that all the four typical suspects, the Siemens, GE, Ansaldo and Mitsubishi are companies that are interested in the Polish market.

It seems to us that they will be or we will be able to get competitive bids from them. We are also hoping that the standards that we have set for how these tenders are organized will make an impact. We are quite clear about excluding third country suppliers, and we're hoping that this will not further limit that competitiveness. We're already seeing signs today that this does not translate into a decrease in interest.

So we believe that the approach, the algorithm that we have adopted and the principles in the tenders are correct. And thanks to that, we will be able to create a good competitive environment, and we will be able to select such suppliers, such contractors that will not raise any doubts as to the security of performance of the project, but also such that we will bear in mind the fact that we have a strong preference for our local content. We do care about such projects, major projects, about PLN 2 billion plus. We do care about them being performed with the share of the Polish capital. Thank you very much.

[indiscernible] Podcast Energy Drink. I would like to ask about this SMR, where specifically could it be located? And have you already considered a possible technology? The second question is about the events of this morning. The blackout package presented by the operator assumes some activities for the protection of physical infrastructure.

This morning, we discovered how important that is. Will PGE take any additional activities like applying for the EU funds for strengthening the resilience of the energy sector?

As for the second question, I think it is important in the context of what's going on -- we are aware of the need to ensure security, including physical security for our infrastructure. It is not the case that we have suddenly found ourselves in a situation where we have some infrastructure that suddenly requires additional protection.

We have always had critical infrastructure. So we have always had procedures for the event of possible threats, either physical or cybersecurity threats. And we have always known that we have to bear this in mind. We have always understood this context of ensuring physical security. The actions that we take are the actions that have been taken systematically over the past months. We have been trying not necessarily to communicate all of these activities, but some of these, at least, like 450 project, ensuring communication for possible crisis events is essential.

We saw that during the flooding where rescue services try to use mobile services, and it was not always effective. For sure, it wouldn't work in the situation of a blackout. So ensuring communication will be critical from our perspective. So this project is one of the initiatives that show that for quite a while now, we have been thinking about physical security and cybersecurity. Having large generation units and distribution network in the eastern part of Poland means that we are very disciplined in thinking about that.

As for applying for EU funds, to enhance the security, wherever possible, we do that. And if new opportunities arise, we will use them. But the availability of those funds is not the main factor determining our investment. And I forgot your first question, SMR.

Okay. We would very much like to understand the whole context regarding SMRs worldwide. I'm happy that now the discussions go beyond PowerPoint presentations because a couple of years ago everyone seemed to be convinced that SMRs would come up anywhere in the world. It -- SMR requires a different regime as compared to a regular nuclear power plant, but it still remains a form of nuclear energy generation plant.

So first of all, we will consider our own sites where we are already operating in coal energy, Turów was mentioned, for example. And probably, it is there that we will start exploration. But I cannot tell you today that where such an SMR will be located. And I do not know in which year that will happen. Although we're taking all possible initiatives to analyze modular energy technologies.

In particular, Turów, will be the first location for which location studies will be carried out.

[indiscernible] Polityka Insight. I have two questions about conventional energies and two about renewables. Let me start with the conventional energies. The Minister of Energy announced changes in a manner of tariffication for Heating with some funds being drawn from public funds and EU funds. Do you think these changes are realistic, will they be feasible to be implemented relatively quickly? And if so, how they will translate into your investments in Heating?

And also your attitude to this new substitution capacity market, this can only concern individual capacities and small margin of capacities number. Then what happens about Baltica 3. What will be the way forward?

Also, as I'm interested in wind farms with relatively low per turbine installed power that could be built relatively quickly. Do you prefer 4 or 5-megawatt products that need longer time to build? Or do you prefer those shorter ones?

To answer the first two of your questions about Heating. I do not want to put into question the initiatives that are taken by our supervisory authority or decision makers. We are pursuing a common goal. On the one hand, we want to complete the process of modernizing Polish Heating. And there is no doubt that decarbonization initiatives are in good direction. What has been done so far shows that heat can be generated in a more efficient manner. And it can be managed. In fact, the heating profile can be managed.

Today, we are making pioneering decisions with regard to this market, and we already see this very promising direction of changes. We try to analyze all those decisions responsibly, we are in dialogue with the Ministry of Energy and Ministry of Environment. Decarbonization of Heating can take place and for sure it is better if it takes place not so quickly, the year 2030 is a very ambitious deadline. But if we give ourselves a bit more time and space, we can achieve the same result in a more efficient manner in an optimum manner.

And again, without any comments on the developments in the regulatory environment, a lot will depend on cooperation with power grids. The most efficient model of the heating system is to coordinate investments in generation sources, and distribution networks on a local level, and we have already started very constructive talks with local government in locations where we do not own heating grids. We believe that this is one of the manners in which the reduction of capital expenditures can be achieved.

Appropriate mix of sources of technology and at the same time, modernization of the grid can mean that the total expenditures can become optimum as compared to the situation of running those two processes separately.

We have started the process already, and we believe that this is definitely a win-win situation, and I believe that reaching such an understanding may mean that we spend money in a more optimal manner. And that will translate to not forwarding the expenditure into tariffs. And another thing is that we see District Heating today, has some sort of an unnecessary element of the energy transformation.

Well, for a long time, this was not a comfort zone for us in PGE. District Heating is something that we largely just bought when we acquired assets from EDF and we had to learn it. And I think that now we see that, well, if it's wisely planned, it can be a significant component of the energy transformation. And on the one hand, it electrify District Heating. That's one of the megatrend -- one of the two megatrends that will impact the increased demand to 2050. We are already doing it now so that we can use the infrastructure when the price gets really low.

But on the other hand, in order to be able to use it more effectively, we very intensely analyzed each of our locations from the point of view of installing heat storage. Heat storage was something that will probably be more needed than we originally had thought. And first investments have already been put in place on a small scale, and they will be repeated definitely to a larger scale of the storage facilities. So we're not really trying to find fold with it, we're trying to be proactive, making sure that we can implement our investment plans. We are not in racing at least the deadlines that have been put for decarbonization. We're trying to skillfully and reasonably implement these processes by ensuring competitiveness of the tender process.

We feel that these investments within gas engine or electrode, they can be put in place in a balanced way and then the outcome is good price, reliable contractor and a good investment process, which combined with what I said earlier, the coordination that with the modernizing of the network, it brings a long-term outcome.

Your second question was about the more boring area. I think all of these areas are interesting. Hence, my question here because they are, and it was. Well, I can quote [indiscernible] as a matter of fact is the person who will make things happen in the development of the sector in Poland. He defines the flexible gas capacity -- determines the possibility of developing renewables.

So the fact that was no big emphasis on the development of flexible capacity is negligence. You cannot manage -- you -- transformation does not necessarily have to increase the cost, but the transformation into renewables has to be done in a way that enables balancing the system. When the weather is not suitable when there's no wind, when there's no sun.

And I think that as a role, we are part of the PSE plant, PSE sees the whole sector. And I think the whole initiatives -- the initiatives that are being defined by the Ministry of State Assets and also the team on carving out assets, they are largely being coordinated with the Polish network. And I think that thanks to the fact that they are being coordinated with the Polish electricity and energy networks. They stand a big chance of being successful because we can be integrated in any support system.

And historically, we have managed on every auction in the capacity market. We have managed to successfully get contracts. But today, we feel the need for further evolution of the Polish segment to be more coordinated. And I think the fact that the management of the Polish electrical energy network has really made an effort to play an active role in the process is very good news.

And we believe that thanks to that, the subsequent stages of this reform of the sector and introducing new mechanism will guarantee that this pathway will be made and chosen not having an impact on what this process looks like. We still have a very optimistic outlook on this process. And we are hopeful that in the near future, it will shape up and it will then subsequently be taken up and implemented in a dialogue with the EU.

And Baltica 3 means that we have -- I think the best lesson we could have had, we could have learned for the offshore wind energy. Our partnership with Ørsted, is for better and for worse. We celebrated the success related to the final investment decision for Baltica 2. And in January, we made a formal communication that we have the financing package ready and that we are performing Baltica 2 without any delay whatsoever and in a perfect way.

But Baltica 3 is part of the reconfiguration process since a while ago. And so we are taking a breath to see what's happening in Ørsted today. We know that, well, this is the time right now, the last few weeks or perhaps months and the next few weeks or perhaps months will be time for them to do the issue and to recognize what might happen to them in the future in the U.S. because quite frankly speaking, I do not envy them. I have had the opportunity to talk to people who manage Ørsted and I can see the challenge that they see up ahead. So the process of reconfiguring Baltica 3 is one of the topics that we talk about, but we also know that what's happening today around Ørsted may have an impact on the dynamic of the decisions they take.

This does not have an impact on their appetite to perform the project. We have moved the deadline for the project implementation already. During our talks, we still are in CRD and we know that the project has to be performed sooner or later. But I would not be expecting a decision on Baltica 3 within the next few weeks to come, mostly because within the next week to come we will know -- we might know that Ørsted has the resources to deal with other things rather than its own issue or Revolution Wind or Sunrise or the big project that launched the issue.

But in general, we're optimistic about Baltica 3. And as of today, we see no reason to question the feasibility of completing this project within the time scheduled in the support system granted to us. As for wind farms, we see what is going on. We see the dynamic of the dialogue between the Parliament and the Presidential Palace. We have already grown out of the 2-megawatt turbines and that is a major part of renewable sources in our group, and we have the skills and the capacity to maintain the turbines because you need to have the right skills.

We, in effect, cut our teeth on operating these. That is our competitive advantage. So from this perspective, we can say that these are not better or worse. We are skillful in operating them definitely. Personally, I would probably prefer to have super large machines in the fancy projects. And probably we will have these soon. But if projects become available with the use of smaller machinery, definitely, we will use them because that is our comfort zone. Inland wind farms are our comfort zone. We know that we can not only make the right studies but we can also operate such turbines efficiently. The capacity installed in our portfolio confirms that perfectly.

We are also in dialogue with those who are more efficient in operating those larger projects. That's why we are also interested in buying projects at various stages of development. Preferably, those at late stage of development or already operational projects. Our ambition is to build the portfolio at the capacity level of about 4,000 megawatt hours, as mentioned in our strategy, and we are interested in increasing this capacity significantly. That's it.

Pawel Puchalski, Santander. I have a few questions each on a different topic. First, distribution and WACC. What kind of WACC do you expect next year? The second question is about coal capacity and auction for next year? What coal fuel capacity will lose support in December 2025? Or how much you can put up for tomorrow's auction?

Another question is about any possibility of PGE getting to a greater level of commitment in offshore given the situation in Ørsted? And the next question in one of the slides I saw there was a positive contribution of KPO programs on economic debt at the level of PLN 3.5 billion. Could you please explain this because I don't quite understand how external funding can reduce financial net debt.

Let me start with the first question, WACC. It's hard to answer what level of WACC there will be. We don't want to say what we expect, the minimum is 7.5%, and that's the minimum but we also assume that this level is going to be higher. We have certain tasks and investment plans. So it seems now that the president of the Regulatory Authority is aware that this is kind of compensation for investments being carried out. If we want to increase and increase significantly our CapEx on expansion and modernization of our distribution network, then a significant reduction of the parameter, which funds those investments would be counterproductive.

As for amounts or levels, please forgive me, but I will not give you any details. And you have also another question about the debt from the recovery and resilience programs affects net debt. It reduces balance sheet debt. It's about valuation of debt according to net present value. According to the International Finance Reporting Standards, we have to value this way. Nominal value is close to the balance sheet value. But with the fixed interest rate 50% means that we received PLN 3.5 billion in cash. Well, our liability was valued at PLN 1.3 billion. The difference was recognized in the deferred periods, and we will recognize that 1/5 a year. So that's the result of a different interest rate under this program versus the market. In the short term, yes.

You mentioned Baltica. That's not something we are considering right now. In Baltica, we are doing things as planned. We are implementing the project in the 50-50 format. And in our assessment, it is a good setup for the implementation of such projects. I do not see any reasons why we should change this before handing over this facility for operation, Ørsted, there is significant liability for offshore projects, and we want them to have skin in the game there. That would be our spontaneous answer to this question.

If you ask this question more specifically, we would probably ask Ørsted what implications that would have. A bold statement could be that we are interested in offshore wind energy. We are interested in increasing investments on this segment, and we believe that the system of support from the first phase, good one. That's why we would very much like to complete Baltica 2 within the budget and on time. We think it's highly likely.

As soon as possible, we will come back to the discussion about Baltica 3, and we will push very much for taking specific decisions about Baltica 3 because that is the subsequent stage, which makes it more likely to move on to the next stage of the project. Our partner today is Ørsted, but the collaboration with Ørsted shows that such large project, this offshore wind farms are better done in collaboration with a larger and more experienced partner. On our own, it would be difficult to decide to -- responsibly to complete this project.

And again, what bank did you say?

Tomorrow. If I could answer this question tomorrow, please. Well, it doesn't make any difference, does it because we're working long term. So I think this is one of the more sensitive types of information. I don't want to speculate. I don't want us to unnecessarily impact the decisions of our competitors during our -- during -- well, tomorrow.

Santander, out of curiosity, is it the same bank still or -- because I thought there was going to be coming out of some sort.

Okay, [indiscernible].

Good morning [indiscernible]. Just about auctions still. I wanted to check whether for the December auction for gas projects you are planning to report these to Rybnik and Gryfino or other gas projects perhaps? And another thing I wanted to come back to the May auction, supplementary auction, and ask you whether as an -- as important beneficiary of this auction, you are thinking of -- you believe that you should be remunerated for the first week of July and the first decade of September because that's when the decision of the European Commission was made given the derogation, would that money be lost? Would you not be getting remuneration for this? Is this clear? What is your position on this?

And outside auctions, I would like to hear your comment about what changes you would be expecting on the electricity markets if the 55 obligation was introduced. It's not even the same group, but what would be the market consequences of that?

Okay. The auction in December will be subject to quite a lot of emotions. I don't think it's just us, but our competitors also did the homework and they wanted to launch as -- an important number of projects. We want to have readiness to be able to take on the auction as well. We have a subsequent project which is at a different type of advancement, different level of advancement. But I think that while listening to the interventions here, representatives of energy of -- we're hoping that the December auction is not the last one. We're hoping that on the one hand, the mechanisms that are being discussed will be created so fast that we can make it more probable to create these units within the next few months.

But on the other hand, we are quite interested to see what the other projects -- how the other projects will develop and how the mechanisms will develop because this extra auction that was, as a matter of fact, organized with the thought to support the biggest possible number of new flexible gas units. It was allocated to DSR or foreign units. I'm not sure to what extent it fulfilled its original function. So we think that the -- outside the main auction that is planned, the subsequent auctions or whatever formats of support will be reflecting more the need, and we think that's how I understand it, of PSE to ensure the new flexible options.

So you are not excluding these extra auction?

If there is such an option, we'll definitely be deciding to take part in such format. So if PSE takes the decision -- this decision, we will be trying to make sure that the next subsequent auction is something that we're ready to and that we're ready with interesting projects. We have a pipeline of projects, which is quite widespread because I think looking at how PSE is using our Gryfino, here, they need the assets to stabilize the system in Poland and to make it possible to grow the renewable energy that we're interested in. And I think that's the first question, and that is it.

The second question. The settlement since July to August, we were ready, we were ready to comply with this obligation to provide the service. So I think there is no reason why we should consider that this is a period we should -- for which we should not be remunerated. Our position is that as a rule, there was a service provided by us. So we should be remunerated for our preparedness, for our readiness to provide the service. We -- there is a dialogue going on, on that. We are trying to provide the arguments to support this.

This is not a standard situation for the contracting party for PSE where there was no derogation for them for several dozen days. And I think for the July and first decade of August. Well, our remuneration that is due is not perhaps very significant from the point of view of our operations, but it's not an amount that we were just overlooked by saying that, well, well, let's forget about it. So as a rule, today without trying to assess the probability. The dialogue is still going on about this. That's all I can say.

And the obligation, it seems that it should not have a significant impact on the prices of electricity. That's our first assessment. In the past, the -- this had an impact on price. It had -- it was a tendency, but it was linked not just to the fact that it was an obligation, but it was an obligation together with some accompanying events. So it's almost as if we were saying that today this doesn't seem to be having a very important impact on the prices of electricity, unless you want to add something sir?

[indiscernible] I hope you will be brief [indiscernible] I would like to ask you about distribution tariff for 2025. Do you expect a constant decrease and in the context of what Pawel Puchalski asked? Another question. The regulatory model so far has not provided for always this lending money or borrowing money at a price much different from the market price. Do you see any space for changes here?

Regarding this last part of your question, as of now, these tariffs are not included in subsidies, and loans have very attractive interest rates. So here, the exclusion does not apply. How should I put it? Whether we see in the space? Well, basically what -- in the case of distribution, what we get in the tariff mostly is reinvested. So it is a complex project, WACC and other solutions.

Of course, we are in discussions and debates with the Regulatory Authority but I don't want to comment on any specific solutions. This is one bigger system, one bigger hole which should be analyzed in the context of the challenges ahead of us, in the context of the investments made. Both questions are about a philosophy underlying distribution tariffs. It seems to me that what is very relevant today is what we do with the benefits with the money that we generate from one or another tariff.

Let me reiterate once again that this amount of over PLN 4 billion on expenditures to make reinvestment in distribution is just the beginning. In the upcoming decade, we are talking about the investment of the order of PLN 75 million. So these tariffs exist for us to make the expenditures. It's nice to talk about WACC or other ratios, but we believe -- mentioned about how this tariffs develops at the end of the day.

Business customers have to think about costs of energy as well. I think it is a kind of paradox, the capital expenditures that we incur determine the manner of making more flexible the way in which clients use the energy. The grids are becoming smarter and smarter. And now our clients to a greater extent are able to invest in some generation installation with a meter. Our clients can more and more invest in energy storage. And in the next step that allows them to be more active participants of the market. Another consequence is that there are no longer recipients of electricity, and they can start being active players in the electricity market and very soon also of balancing capacities. So as a result, clients think no longer in terms of prices, but in terms of costs of electricity.

Maybe not in the short term, but for sure in the medium-term perspective, clients can reduce their costs of electricity. It seems the key paradigm here to give a chance to the clients to reduce their costs. For example, also active users of electro-mobility. Very seriously, we think that we do have an idea how to reasonably invest money in those capital expenditures. And we have a good idea how to make our grid more flexible, how to make the possibilities of using electricity more flexible and how to increase the flexibility of participating in the electricity market and capacity market. As for preferential funding, I had a long conversation with the Marta Postula about how wisely we can spend the money borrowed from Bank Gospodarstwa Krajowego.

We, as the energy company and Bank Gospodarstwa Krajowego have the understanding of the money being spent wisely. So there is lower interest rate, but the benefits are additive. The fact that we have lower costs of interest means that we can spend more money on investing. And we do that and responsibly so. In principle, we try to generate free cash flow as much as possible. But indeed, as of today, distribution and transfer generate the possibility of reforming the electricity system. On top of that, there is this ambition to build a flexible grid. And as a consequence, we can build more weather-dependent sources of energy. And we can make our economy even more competitive.

So overall, it seems that if we look at the system -- as a system of communicating vessels, we see that it all makes sense. We get money from BGK in large amounts in a very reasonable way as an alternative of other ways of obtaining funding in a dialogue with the Regulatory Authority. So that is about the tariff update.

Thank you very much. Thank you, all of you, ladies and gentlemen, for joining our conference. See you at the next conference.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]