ESG Report of the
ENEA Capital Group for 2020

43.7. Dispute concerning prices for origin certificates for energy from renewable sources and terminated agreements for the purchase of property rights arising under origin certificates for energy from renewable sources

ENEA S.A. is a party to 8 court proceedings concerning agreements for the purchase of property rights arising under certificates of origin for energy from renewable sources, which includes:
5 proceedings for payment against ENEA S.A. concerning remuneration, contractual penalties or compensation;
2 proceedings for the voidance of ENEA S.A.’s termination or withdrawal from agreements to sell property rights, which took place on 28 October 2016, including 1 proceeding in which claims for payment are being sought at the same time;
1 proceeding for payment, in which ENEA S.A. seeks a claim concerning a contractual penalty.
ENEA S.A. offset a part of receivables due for these counterparties from ENEA S.A. for sold property rights with damages-related receivables due for ENEA S.A. from renewables producers. The damage caused to ENEA S.A. arose as a result of the counterparties' failure to fulfil a contractual obligation to participate, in good faith, in re-negotiating long-term agreements for the sale of property rights in accordance with an adaptation clause that is binding for the parties.
On 28 October 2016, ENEA S.A. submitted statements depending on the agreement: on termination or withdrawal from long-term agreements for the purchase by the Company of property rights resulting from certificates of origin for energy from renewable sources (green certificates) (Agreements).
The Agreements were executed in 2006-2014 with the following counterparties, which own renewable generation assets („Counterparties”):
Farma Wiatrowa Krzęcin Sp. z o.o., based in Warsaw;
Megawind Polska Sp. z o.o., based in Szczecin;
PGE Górnictwo i Energetyka Konwencjonalna S.A., based in Bełchatów;
PGE Energia Odnawialna S.A., based in Warsaw;
PGE Energia Natury PEW Sp. z o.o., based in Warsaw (currently PGE Energia Odnawialna S.A., based in Warsaw);
„PSW” Sp. z o.o., based in Warsaw;
in.ventus Sp. z o.o. EW Śniatowo sp.k., based in Poznań (currently TEC1 Sp. z o.o. EW Śniadowo Sp. k., based in Katowice);
Golice Wind Farm Sp. z o.o., based in Warsaw.
As a rule, the Agreements were terminated by the end of November 2016. The dates on which the respective Agreements were terminated depended on contractual provisions.
The reason for terminating/withdrawing from the Agreements by the Company was the fact that it was no longer possible to restore contractual balance and the equivalence of the parties' considerations, caused by changes in laws.
Legal changes that occurred after the aforementioned Agreements were executed include in particular:
ordinance of the Minister of Economy of 18 October 2012 on a detailed scope of obligations to obtain and present for redemption origin certificates, pay substitute fees, purchase electricity and industrial heat generated from renewable sources and the obligation to validate data concerning the quantity of electricity generated from renewable sources (Polish Journal of Laws of 2012, item 1229);
Act on renewable energy sources of 20 February 2015 (Polish Journal of Laws of 2015, item 478) and associated further legal changes and announced drafts of legal changes, including especially:
Act on amendment of the act on renewable energy sources and certain other acts dated 22 June 2016 (Polish Journal of Laws of 2016, item 925); and
draft of the Ordinance of the Minister of Energy concerning changes in the share of electricity resulting from redeemed origin certificates confirming production of electricity from renewable sources, which is to be issued based on an authorisation under art. 12 sec. 5 of the Act on amendment of the act on renewable energy sources and certain other acts dated 22 June 2016 and certain other acts,
caused an objective lack of possibilities to develop reliable models to forecast the prices of green certificates.
The Agreements were terminated with the intention for the Company to avoid losses constituting the difference between contractual and market prices of green certificates. Due to the changing legal conditions after termination of the Agreements in 2017, especially arising from the Act of 20 July 2017 on amendment of the act on renewable energy sources, the estimated value of future contract liabilities would have changed. In the current legal framework, this would be significantly lower in comparison to the amount estimated when the Agreements were being terminated, i.e. approx. PLN 1 187 million. This decline reflects a change in the way in which the substitute fee is calculated, which in accordance with the content of some of the Agreements constitutes the basis for calculating the contract price and indexing it to the market price. The Company created a PLN 139 464 thousand provision for potential claims resulting from the terminated Agreements in relation to submissions made by 31 December 2020 concerning transactions to sell property rights by the counterparties; the provision is presented in note 33.
In February 2020, ENEA S.A. executed an agreement with Megawind Polska Sp. z o.o., based in Szczecin, which had initiated three court proceedings, regarding an amicable resolution of these disputes, pursuant to which:
in case ref. IX GC 64/17, the proceeding was validly closed due to a court settlement being reached;
in case ref. IX GC 996/16, the proceeding was validly closed after ENEA S.A. withdrew its appeal against the ruling of 29 November 2019;
case IX GC 1167/16 was dismissed after Megawind Polska Sp. z o.o. withdrew the lawsuit and relinquished the claims.
In a case brought by Golice Wind Farm Sp. z o.o. against ENEA S.A., the court issued on 14 August a partial and preliminary ruling, in which it:
withdrew a claim seeking the voidance of ENEA S.A.’s termination of an agreement to sell property rights, which took place on 28 October 2016;
accepted a claim for the payment of consideration for property rights and ordered ENEA S.A. to pay PLN 6 042 thousand, together with interest;
considered the other parts of the claim for payment as justified in general.
This ruling is not final. ENEA S.A. has appealed part of the ruling, i.e. as regards points 2 and 3.
In cases brought by PGE Group companies, i.e.:
PGE Górnictwo i Energetyka Konwencjonalna S.A., based in Bełchatów (file no. IX GC 555/16) on 15 October 2020, the court ruled to suspend the proceeding at the parties' mutual request. The ruling is final;
PGE Energia Odnawialna S.A., based in Warsaw (file no. IX GC 1011/17) through a ruling of 21 October 2020 r. the court suspended the proceeding at the parties' mutual request. The ruling is final;
PGE Energia Odnawialna S.A., based in Warsaw (file no. IX GC 1064/17) through a ruling of 23 October 2020 r. the court suspended the proceeding at the parties' mutual request. The ruling is final.
In a case brought by ENEA S.A. against PGE Górnictwo i Energetyka Konwencjonalna S.A. (file no. X GC 608/20) on 26 October 2020, the court ruled to suspend the proceeding at the parties' mutual request. The ruling is final.
In a case brought by Hamburg Commercial Bank AG against ENEA S.A., in which Hamburg Commercial Bank AG is seeking claims concerning property rights sale agreement no. ENEA/WINDPARK ŚNIATOWO/PMOZE/2013 of 26 February 2014, executed between ENEA S.A. and Windpark Śniatowo Management GmbH EW Śniatowo Sp. k. (currently TEC1 Sp. z o.o. EW Śniatowo Sp. k., based in Katowice), citing their purchased based on a receivables assignment agreement, the District Court in Poznań on 25 February 2021 issued a partial ruling in which it ordered ENEA S.A. to pay PLN 494 thousand plus statutory late interest from 16 December 2016 to the payment date. The ruling is not final. ENEA S.A. has submitted a motion for a written justification of the ruling, which makes it possible for ENEA S.A. to appeal the ruling. Within the remaining scope, concerning a demand made under the extension of claim of 17 January 2019 and a demand made under the extension of claim of 20 August 2019, the case is suspended in a legally valid manner pursuant to a ruling by the District Court in Poznań dated 24 October 2019 until this Court issues a final ruling in case file no. IX GC 552/17.

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