on activities of PGE Capital Group for the 3-month and 9-month period

Management Board's report on activities of the PGE Capital Group for

ended September 30, 2024

1 of 91

1.4.1
	1.4.2	Management Board 9 Supervisory Board 10
	1.4.3	Committees of the Supervisory Board11

	1.5.1	Share capital of PGE S.A. and ownership structure12
	1.5.2	Shares of the parent company and shares in the entities related to PGE S.A. owned by the members
		of management and supervisory authorities 13



	2.2.1	Situation in the National Power System (NPS) 15
	2.2.2	Electricity prices – domestic market 17
	2.2.3	Electricity prices - international market18
	2.2.4	Prices of certificates 22
	2.2.5	Prices of CO2 emission rights 22


	2.4.1 2.4.2	Domestic regulatory environment 24 International regulatory environment 28




	3.3.1	Key results in business segments1 38
	3.3.2	Renewables39
	3.3.3	Gas-fired Generation44
	3.3.4	Conventional Generation48
	3.3.5	District Heating 53
	3.3.6	Distribution60
	3.3.7	Railway Energy Services 65
	3.3.8 3.3.9	Supply69 Circular Economy72
	3.3.10	Other Operations 74



	4.1.1	Changes in the Management Board and Supervisory Board 76
	4.1.2	Project of carve-out of coal generation assets76
	4.1.3 4.1.4	Regulatory changes77 Environmental decision on the Turów Lignite Mine 79
	4.1.5	Impact of war between Russia and Ukraine on PGE Group's activities 80
	4.1.6	Restructuring proceedings at ENESTA sp. z o.o80
	4.1.7	Implementation by PGE Paliwa sp. z o.o. of the decision of the Prime Minister concerning the purchase
		of coal80
	4.1.8	Recommendation not to pay dividend for 2023 81
	4.1.9	Impairment tests 81
	4.1.10 4.1.11	Nuclear power plant construction project 81 Signing of an annex to the syndicated loan 81
	4.1.12	The impact of the approval of the G tariff on the financial results of the PGE Capital Group 82
	4.1.13	Estimation of electricity imbalance 82
	4.1.14	Conclusion of the agreement by Elektrociepłownia Zielona Góra S.A. for the supply of gas fuel82
	4.1.15	The General Meetings83
	4.1.16	Setting new commissioning dates of CCGT units in PGE Gryfino 2050 sp. z o.o83
	4.1.17	Contractual penalties for the contractor for unit 7 at Turów Power Plant 83
	4.1.18	Signing of a loan agreement with the European Investment Bank 84
	4.1.19	Signing of an annex to the term loan agreement with Bank Gospodarstwa Krajowego 84

4.6. Publication of financial forecasts
4.7. Significant off-balance sheet items
4.8. Factors which, in the issuer's opinion, will have an impact on its results over at least the next quarter 85
4.9. Agreements and other information important for the assessment of the personnel and financial situation, financial result of the PGE Capital Group and their changes, as well as information important for the assessment of the Group's ability to fulfil its obligations
5. Statement of the Management Board on the reliable preparation of the financial statements 86
6. Approval of the Management Board's Report

KEY FINANCIAL DATA

Key financial data	Unit	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
Sales revenues	PLN m	15 562	21 515	-28%	46 856	71 075	-34%
EBIT	PLN m	1 297	1 206	8%	4 156	4 755	-13%
EBITDA	PLN m	2 458	2 458	0%	7 598	8 330	-9%
EBITDA margin	%	16%	11%		16%	12%
Recurring EBITDA	PLN m	2 454	2 450	0%	7 291	8 655	-16%
Recurring EBITDA margin	%	16%	11%		16%	12%
Net profit	PLN m	722	950	-24%	2 811	3 121	-10%
Capital expenditures	PLN m	2 580	2 682	-4%	7 225	6 635	9%
Net cash from operating activities	PLN m	8 514	9 192	-7%	14 619	9 531	53%
Net cash from investing activities	PLN m	-2 692	-2 704	0%	-7 394	-8 195	-10%
Net cash from financial activities	PLN m	-598	-3 893	-85%	-4 384	-260	1 586%

Key financial data		September 30, 2024	December 31, 2023	% change
Working capital	PLN m	-8 392	-7 107	18%
Net debt	PLN m	4 4321	11 121	-60%
Net debt /LTM reported EBITDA 2	x	0.48	1.11
Net debt /LTM recurring EBITDA 2	x	0.47	1.04

One offs affecting EBITDA		Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
Change of reclamation provision	PLN m	-4123	0	-	-20	-331	-94%
Change of actuarial provision	PLN m	-32	0	-	0	-52	-
Voluntary Leave Program (VLP)	PLN m	-2	0	-	-2	0	-
LTC compensations	PLN m	4	3	33%	-3	-28	-89%
Correction of estimated contribution to Price Difference Payment Fund for year 2022	PLN m	0	5	-	0	86	-
Write-down of receivables from PKP Cargo S.A.	PLN m	-6	0	-	-120	0	-
Adjustment of compensations for electricity for previous years	PLN m	452	0	-	452	0	-
Total	PLN m	4	8	-50%	307	-325	-

¹ Estimated level of economic financial net debt (taking into account future payments for CO² emission rights) amounts to PLN 19 021 million.

² LTM EBITDA - Last Twelve Months EBITDA.

³Effect of discount rate change.

1.PGE Capital Group - organisation

Characteristics of activities

Capital Group of PGE Polska Grupa Energetyczna S.A. ("PGE Capital Group", the "Capital Group", "PGE Group", the "Group") is the largest vertically integrated producer of electricity and heat in Poland. With a mix of own fuel sources, generation assets and distribution network, PGE Group provides a safe and reliable supply of electricity to households, businesses and institutions. Moreover, PGE Group is the largest heat producer in the country.

The parent company of PGE Capital Group is PGE Polska Grupa Energetyczna S.A. (also "PGE S.A.", "PGE", the "Company"). PGE Group organizes its activities in nine operating segments:

The core business of the segment includes electricity generation from renewable sources and in pumped-storage power plants.

The core business of the segment includes electricity generation from gas-fired sources.

CONVENTIONAL GENERATION

Core business of the segment includes extraction of lignite, production of electricity and heat from conventional sources.

DISTRICT HEATING

The core business of the segment includes production of electricity and heat in cogeneration sources as well as transmission and distribution of heat.

The core business of the segment includes supply of electricity to final off-takers through the grid and HV, MV and LV infrastructure.

RAILWAY ENERGY SERVICES

The segment's main activities are the distribution and sale of electricity to railway operators and customers functioning within the railway system, the sale of fuels, as well as the maintenance and modernisation of overhead contact line network, together with other auxiliary services.

The core business of the segment includes wholesale trading of electricity on domestic and international market, sale of electricity to final off-takers, trading of CO² allowances, energy certificates and fuels and provision of services of the Corporate Centre to companies from the PGE Group.

The activities of the segment include the provision of comprehensive services in the field of management of combustion by-products ("UPS"), provision of services in auxiliary areas for electricity and heat producers and the supply of materials based on UPS.

OTHER OPERATIONS

Other operations include provision of services, through the subsidiaries, to PGE Capital Group, which include organisation of capital raising in form of Eurobonds (PGE Sweden), provision of IT services and investing in startups. Additionally, within the segment there are project companies of the Group.

Organisational structure

PGE Capital Group as at September 30, 2024 consisted of:

PGE S.A. the parent company,
⁷⁹ subsidiaries subject to full consolidation,
2 joint operations,
⁶ associates and joint subsidiaries.

All of PGE Group's companies are organised in 9 operating segments indicated in the chart below.

The following diagram illustrates the Group's structure. A full composition of PGE Group, divided into segments as well as directly and indirectly consolidated subsidiaries, is presented in note 1.3 to the consolidated financial statements.

Chart: Structure of PGE Capital Group¹

¹Simplified structure – includes key entities.

2 Previous company name: PGE Gryfino 2050 sp. z o.o.

Significant changes in the organisation of the Capital Group

Significant changes which occurred in the PGE Capital Group's structure in the period from January 1, 2024 until the publication date of this report, are presented in note 1.3 to consolidated financial statements and described below.

ACQUISITION OR DISPOSAL OF SHARES BY THE COMPANIES

Segment	Shares of the company	Date of transaction/ registration in the National Court Register (NCR)	Comment
Other operations	PGE Inwest 12 sp. z o.o.– taking up shares by PGE S.A. and joining the PGE Inwest 12 sp. z o.o. and taking up new shares by National Fund for Environmental Protection and Water Management (NFOŚiGW)	October 24, 2023 / March 4, 2024	On October 16, 2023 PGE S.A. and NFOŚiGW signed an investment agreement regarding financing of PGE Inwest 12 sp. z o.o. in order to implement construction of the pumped-storage power plant in Młoty (commune Bystrzyca Kłodzka, Lower Silesia voivodship). As a result of performance of the above mentioned contract on October 17, 2023 Extraordinary Assembly of Partners of PGE Inwest 12 sp. z o.o. adopted a resolution on increase of the share capital and decided that the new shares in the increased share capital will be taken up respectively by PGE S.A. and NFOŚiGW in exchange for cash contributions. On October 24, 2023 PGE S.A. and NFOŚiGW took up new shares in PGE Inwest 12 sp. z o.o. PGE S.A. currently holds 51%, and NFOŚiGW 49% in the share capital of this company.
Supply	ENESTA sp. z o.o. in restructuring with seat in Stalowa Wola - increase of the share capital and subscription of all new shares by PGE Obrót S.A.	December 18, 2023 / June 17, 2024	On December 18, 2023 the Extraordinary Meeting of Partners of ENESTA sp. z o.o. in restructuring adopted a resolution on increasing the share capital of the company from PLN 82 402 000 to PLN 116 402 000 PLN, i.e. by PLN 34 000 000, by issue of new 34 000 shares of the company with a nominal value of PLN 1 000 per share. PGE Obrót S.A. as one of the company's shareholders, took up all the company's new shares in the increased share capital. As a result of the share capital increase and the subscription of all new shares of the company by PGE Obrót S.A., the share of PGE Obrót S.A. in the share capital of the company increased from 92.25% to 94.51% as of the date of registration of the company's share capital increase in the National Court Register, i.e. as of June 17, 2024.
District Heating	PGE Toruń S.A. with seat in Toruń – compulsory buy-out by PGE Energia Ciepła S.A. of shares from minority shareholders of PGE Toruń S.A.	June 11, 2024 / August 12, 2024 entry was made in the register of shareholders of PGE Toruń S.A.	Ordinary General Meeting o PGE Toruń S.A. on the ground of art. 4181 of the On June 11, 2024 the Commercial Companies Code decided on compulsory buy-out by PGE Energia Ciepła S.A. of 48 220 shares, representing 0.12% of the share capital of PGE Toruń S.A., from minority shareholders of PGE Toruń S.A. As a result of the buy-out and entry of the appropriate change in the register of shareholders of PGE Toruń S.A., the share of PGE Energia Ciepła S.A. in the share capital of PGE Toruń S.A. increased from 95.22% to 95.34%.

LIQUIDATION OF COMPANIES

Segment	Company in liquidation	Date of transaction/ registration in the National Court Register	Comment
-	PGE Trading GmbH in liquidation with seat in Berlin	March 1, 2021 As of September 30, 2024, the company has not been removed from the commercial register	On March 1, 2021 the Extraordinary Assembly of Partners of PGE Trading in liquidation, in which PGE holds 100% of the share capital, adopted resolution on dissolution of the company and appointment of a liquidator to carry out liquidation activities. The liquidation process of the company is currently underway.
-	PGE Nowa Energia sp. z o.o. in liquidation with seat in Warsaw	March 31, 2022 /On 16 February 2024, the register court decided to delete the company from the Register of Entrepreneurs of the NCR. On April 22, 2024, the deletion of the company from the NCR became effective.	On March 31, 2022 the Extraordinary Assembly of Partners of PGE Nowa Energia sp. z o.o. in liquidation, in which PGE holds 100% of the share capital, adopted resolution on dissolution of the company and appointment of a liquidator to carry out liquidation activities. On February 16, 2024, the liquidation of PGE Nowa Energia sp. z o.o. in liquidation was completed and the company was deleted from the National Court Register. On April 22, 2024, the deletion of the company from the National Court Register became effective.
-	Railen GmbH in liquidation with seat in Berlin	January 31, 2023 / As of September 30, 2024, the company has not been removed from the commercial register	On January 26, 2023 the Extraordinary Assembly of Partners of Railen GmbH in liquidation, in which PGE Energetyka Kolejowa Holding sp. z o.o. holds 100% of the share capital, adopted resolution, effective January 31, 2023, resolution on dissolution of the company and appointment of a liquidator to carry out liquidation activities. The liquidation process of the company is currently underway.
-	Railen Baltics, UAB with seat in Vilnius	October 3, 2023/ On January 31, 2024, the Administrator of the Lithuanian Register of Legal Entities reversed the liquidation of Railen Baltics, UAB, i.e. the company is not currently under liquidation	On October 3, 2023, the Administrator of the Lithuanian Register of Legal Entities initiated the liquidation of the company Railen Baltics, UAB in liquidation, in which PGE Energetyka Kolejowa Holding sp. z o.o. holds 100% of the share capital. The decision to initiate liquidation was appealed, as a result of which, on January 31, 2024, the Administrator of the Lithuanian Register of Legal Entities revoked the decision to place Railen Baltics, UAB into liquidation, i.e. currently the company is not in liquidation.

RESTRUCTURING OF THE COMPANIES

Segment	Company in liquidation	Date of transaction/ registration in the National Court Register	Comment
Supply	ENESTA sp. z o.o. in	June 21, 2022 / No	On June 21, 2022, the District Court in Rzeszów, 5th Commercial Division, opened restructuring (recovery)
	restructuring with seat in	completion of restructuring	proceedings of the company ENESTA sp. z o.o. in restructuring and appointed an Administrator as part of these
	Stalowa Wola	proceedings as at	restructuring proceedings. The restructuring process of the company is currently underway. PGE Obrót S.A.
		September 30, 2024	currently holds 94.51% share in the share capital of the company.

Composition of the management and supervisory bodies

1.4.1 Management Board

MANAGEMENT BOARD MEMBERS

Table: Composition of the Company's Management Board as at January 1, 2024

Name and surname of the Management Board	Position	Period of office
Wojciech Dąbrowski	President of the Management Board	from February 20, 2020 to February 7, 2024
Wanda Buk	Vice-President for Regulatory Affairs	from September 1, 2020 to February 7, 2024
Przemysław Kołodziejak	Vice-President for Operations	from May 1, 2023
Lechosław Rojewski	Vice-President for Finance	from June 9, 2021 to February 28, 2024
Rafał Włodarski	Vice-President for Support and Development	from January 9, 2023 to February 7, 2024

CHANGES IN THE MANAGEMENT BOARD IN 2024

On February 7, 2024, the Supervisory Board adopted the following resolutions:

No. 287/XII/2024 on dismissal of Wojciech Dąbrowski, President of the Management Board, from the Management Board,
No. 288/XII/2024 on dismissal of Wanda Buk Vice-President of the Management Board for Regulations,
No. 289/XII/2024 on dismissal of Rafał Włodarski Vice-President of the Management Board for Support and Development.

Moreover, the Supervisory Board of the Company on February 7, 2024 adopted resolutions to delegate Supervisory Board Members:

No. 290/XII/2024 Eryk Kosiński to temporarily perform the duties of the Member of the Management Board of the Company for the 3-month period and to entrust him the duties of the President of the Management Board of the Company,
No. 291/XII/2024 Małgorzata Banasik to temporarily perform the duties of the Member of the Management Board of the Company for the 3-month period.

On February 28, 2024 the Supervisory Board of the Company has adopted a resolution No. 304/XII/2024 on dismissal of Lechosław Rojewski, Vice-President of the Management Board for Finance.

On March 6, 2024, following the qualification procedure, the Supervisory Board adopted the resolutions:

No. 312/XII/2024 on appointing Dariusz Marzec to the Management Board of PGE S.A., entrusting him the position of President of the Management Board as from March 18, 2024,
No. 313/XII/2024 on appointing Marcin Laskowski to the Management Board of PGE S.A., entrusting him the position of Vice-President of the Management Board for Regulations as from March 18, 2024.

Also on March 6, 2024 the Company's Supervisory Board adopted resolutions to:

No. 314/XII/2024 terminate as of March 17, 2024 delegation of Eryk Kosiński, Supervisory Board Member, to temporarily perform the duties of the Member of the Management Board of PGE acting as the President of the Management Board of PGE,
No. 315/XII/2024 terminate as of March 8, 2024 delegation of Małgorzata Banasik, Supervisory Board Member, to temporarily perform the duties of the Member of the Management Board of PGE.

On March 21, 2024, following the qualification procedure, the Supervisory Board adopted the resolution:

No. 326/XII/2024 on appointing Robert Kowalski to the Management Board of PGE S.A., entrusting him the position of Vice-President of the Management Board for Support and Development as from May 15, 2024.

On April 4, 2024, following the qualification procedure, the Supervisory Board adopted the resolution:

No. 336/XII/2024 on appointing Renata Czech to the Management Board of PGE S.A., entrusting her the position of Vice-President of the Management Board for Finance as from April 15, 2024.

Also on April 4, 2024 the Supervisory Board adopted the resolution:

No. 343/XII/2024 on dismissal of Przemysław Kołodziejak, Vice-President of the Management Board for Operations.

On April 5, 2024 the Supervisory Board received a statement of Renata Czech, appointed as the Vice-President of the Management Board for Finance, on resignation from this position due to personal reasons.

On May 20, 2024, following the qualification procedure, the Supervisory Board adopted the resolution:

No. 368/XII/2024 on appointing Maciej Górski to the Management Board of PGE S.A., entrusting him the position of Vice-President of the Management Board for Operations as from June 24, 2024.

On June 24, 2024 , following the qualification procedure, the Supervisory Board adopted the resolution:

No. 378/XII/2024 on appointing Przemysław Jastrzębski to the Management Board of PGE S.A., entrusting him the position of Vice-President of the Management Board for Finance as from July 15, 2024.

THE CURRENT COMPOSITION OF THE COMPANY'S MANAGEMENT BOARD

Table: Composition of the Company's Management Board at the date of signing of this report

Name and surname of the Management Board	Position
Dariusz Marzec	President of the Management Board
Maciej Górski	Vice-President for Operations
Przemysław Jastrzębski	Vice-President for Finance
Robert Kowalski	Vice-President for Support and Development
Marcin Laskowski	Vice-President for Regulations

1.4.2 Supervisory Board

Supervisory Board of PGE S.A. operates on the basis of the Act of September 15, 2000 - Code of Commercial Companies and the Company's Statute and Regulations of the Supervisory Board, the content of which is available on the Company's website: Regulations of the Supervisory Board.

Table: Composition of the Supervisory Board as at January 1, 2024

Name and surname of the Management Board	Position
Anna Kowalik	Chairman of the Supervisory Board
Artur Składanek	Vice-Chairman of the Supervisory Board – independent
Radosław Winiarski	Secretary of the Supervisory Board
Janina Goss	Supervisory Board Member - independent
Tomasz Hapunowicz	Supervisory Board Member - independent
Mieczysław Sawaryn	Supervisory Board Member - independent

CHANGES TO THE COMPOSITION OF THE COMPANY'S SUPERVISORY BOARD IN 2024

On January 25, 2024, the Minister of State Assets by a statement appointed Michał Domagała to the Supervisory Board.

On January 31, 2024 the Extraordinary General Meeting:

Dismissed from the Supervisory Board the following persons:
- Janina Goss
- Tomasz Hapunowicz
- Mieczysław Sawaryn
- Artur Składanek
- Radosław Winiarski

appointed to the Supervisory Board the following persons:
- Małgorzat^a Banasik
- Eryk Kosiński
- Andrzej Kozyra
- Elżbieta Niebisz
- Sławomir Patyr^a
- Andrzej Rzońc^a
- Andrzej Sadkowski

On February 7, 2024, a new Presidium of the Supervisory Board was elected. Also on February 7, 2024 the Supervisory Board adopted resolutions to delegate Supervisory Board Members:

Eryk Kosiński to temporarily perform the duties of the Member of the Management Board of the Company for the 3-month period and to entrust him the duties of the President of the Management Board of the Company,
Małgorzata Banasik to temporarily perform the duties of the Member of the Management Board of the Company for the 3-month period.

On March 6, 2024, the Supervisory Board adopted resolutions concerning the termination of the delegation of Supervisory Board Members to temporarily perform the duties of Members of the Management Board of PGE S.A.

On September 11, 2024 the Company received a resignation of Mr. Eryk Kosiński from the position of a member of the Company's Supervisory Board.

			Table: Composition of the Company's Supervisory Board at the date of signing of the report

Name and surname of the Management Board	Position
Michał Domagała	Chairman of the Supervisory Board – independent
Andrzej Sadkowski	Vice-Chairman of the Supervisory Board – independent
Anna Kowalik	Secretary of the Supervisory Board
Małgorzata Banasik	Member of the Supervisory Board – independent
Andrzej Kozyra	Member of the Supervisory Board – independent
Elżbieta Niebisz	Member of the Supervisory Board – independent
Sławomir Patyra	Member of the Supervisory Board – independent
Andrzej Rzońca	Member of the Supervisory Board – independent

1.4.3 Committees of the Supervisory Board

Table: Composition of the committees of the Supervisory Board as at January 1, 2024

Name and surname of the member of the Supervisory Board	Audit Committee	Corporate Governance Committee	Strategy and Development Committee	Appointment and Remuneration Committee
Janina Goss	Member			Member
Tomasz Hapunowicz		Chairman	Member
Anna Kowalik	Member	Member	Member	Member
Mieczysław Sawaryn	Member	Member	Member	Chairman
Artur Składanek	Chairman		Member
Radosław Winiarski	Member		Chairman

On January 25, 2024, the Minister of State Assets by a statement appointed Michał Domagała to the Supervisory Board.

On January 31, 2024, the Extraordinary General Meeting dismissed the following persons from the Supervisory Board: Janina Goss, Tomasz Hapunowicz, Mieczysław Sawaryn, Artur Składanek, Radosław Winiarski, and appointed to the Supervisory Board: Małgorzata Banasik, Eryk Kosiński, Andrzej Kozyra, Elżbieta Niebisz, Sławomir Patyra, Andrzej Rzońca and Andrzej Sadkowski.

On September 11, 2024 the Company received a resignation of Mr. Eryk Kosiński from the position of a member of the Company's Supervisory Board.

Table: Composition of the committees of the Supervisory Board as at the signing date of the report

Name and surname of the member of the Supervisory Board	Audit Committee	Corporate Governance Committee	Strategy and Development Committee	Appointment and Remuneration Committee
Małgorzata Banasik			Chairwoman	Member
Michał Domagała	Member			Member
Anna Kowalik	Member	Member		Chairwoman
Andrzej Kozyra		Member		Member
Elżbieta Niebisz	Member		Member
Sławomir Patyra		Chairman		Member
Andrzej Rzońca	Chairman		Member
Andrzej Sadkowski			Member

Shares and shareholders

1.5.1 Share capital of PGE S.A. and ownership structure

SHARE CAPITAL

As at January 1, 2024, June 30, 2024 and the date of signing of this report, the share capital of PGE S.A. was PLN 19 183746098.70 and split into 2 243 712 994 shares with a nominal value of PLN 8.55 each. There were no changes in share capital of PGE S.A. during the three quarters of 2024.

Table: Share capital of the Company.

Series/ issue	Type of shares	Type of privilege	Number of shares	Value of series/issue at nominal value	Capital payment method
"A"	ordinary	n/a	1 470 576 500	12 573 429 075.00	contribution in kind/cash
"B"	ordinary	n/a	259 513 500	2 218 840 425.00	cash
"C"	ordinary	n/a	73 228 888	626 106 992.40	merger with PGE GiE S.A.1
"D"	ordinary	n/a	66 441 941	568 078 595.55	merger with PGE Energia S.A.
"E"	ordinary	n/a	373 952 165	3 197 291 010.75	cash
Total			2 243 712 994	19 183 746 098.70

¹ PGE Górnictwo i Energetyka S.A.

SHAREHOLDERS WITH A SIGNIFICANT STAKE

According to the letter from the Ministry of the State Assets of May 20, 2022, the State Treasury held 1 365 601 493 ordinary shares of the Company, representing 60.86% of the Company's share capital and entitling to 1 365 601 493 votes on the General Meeting of the Company, constituting 60.86% of total votes.

In addition, The State Treasury informed about the subsidiary holding PGE shares and the total number of votes by both entities and its percentage share in the total number of votes. According to the notification, taking into account the number of shares (18 697 608) held by a subsidiary of the State Treasury, i.e. Towarzystwo Finansowe Silesia sp. z o.o.(TF Silesia), the State Treasury holds a total of 1 384 299 101 shares constituting 61.70% of the share capital of the Company and entitling to exercise 1 384 299 101 votes, which constitutes 61.70% of the total number of votes.

Table: Shareholding structure at January 1, 2024, September 30, 2024 and at the signing date of this report¹ .

State Treasury and its subsidiary		Other shareholders		Total
Nominal value of shares (PLN)	% in share capital and votes	Nominal value of shares (PLN)	% in share capital and votes	Nominal value of shares (PLN)	% in share capital and votes
11 835 757 313.55	61.70	7 347 988 785.15	38.30	19 183 746 098.70	100.00

¹ The ownership structure is presented on the basis of information available to the Company.

All of the Company shares have been paid.

Although the Company's shares are not privileged, the Statutes of the Company provide for special rights of the State Treasury until it remains a Shareholder of the Company.

Table: Shareholders holding directly or indirectly by subsidiaries at least 5% of the total votes at the General Meeting of PGE S.A. January 1, 2024, September 30, 2024 and at the signing date of this report.

Shareholder	Number of shares	Number of votes	% in total votes on General Meeting
State Treasury	1 365 601 493	1 365 601 493	60.86%
State Treasury's subsidiary – TF Silesia	18 697 608	18 697 608	0.84%
State Treasury and its subsidiary - total	1 384 299 101	1 384 299 101	61.70%
Others	859 413 893	859 413 893	38.30%
Total	2 243 712 994	2 243 712 994	100.00%

During the three quarters of 2024, there were no changes in the shareholding structure of PGE S.A.

Chart: Shareholding structure of PGE S.A.

1.5.2 Shares of the parent company and shares in the entities related to PGE S.A. owned by the members of management and supervisory authorities

According to the best knowledge of the Management Board of the Company, none of the members of management and supervisory authorities of the Company held shares of the parent company or shares in entities related to PGE S.A. as at September 30, 2024 and as at the date of signing of this report

2.Electricity market and regulatory and business environment

Macroeconomic environment

PGE Group's main operating area is Poland, and the domestic macroeconomic backdrop has a substantial impact on Group's results. At the same time, the condition of Poland's economy remains largely tied to the situation across the European Union and in global markets. The Group's financial results are affected by both the situation in specific segments of the economy and the financial markets, which determine the terms of PGE Group's debt financing.

In Poland there is a dependence between change in electricity demand and change in the rate of economic growth. Considering PGE Group's position on the Polish power generation market, as well as its substantial share in the electricity sales and distribution market, changes in electricity and heat demand may have a significant impact on the Group's results.

Third quarter of 2024 saw a significant weakening of economic growth compared to the first half of 2024. Seasonally adjusted GDP increased by 1.70% in the third quarter compared to the same period of the previous year. The described situation is in line with the observed trends in electricity demand.

Chart: Seasonally adjusted GDP change vs. change in domestic gross electricity consumption.

Source: Central Statistical Office of Poland, Polskie Sieci Elektroenergetyczne S.A. (PSE S.A.)

The PMI index of the Polish industrial sector stood at 48.6 points in September 2024, up from 47.8 points in August, the highest reading since November 2023. The index, which exceeded analysts' expectations in August 2024 (47.3 points), signals a slower deterioration in economic conditions in the sector, with the decline in production and new orders slowing down and employment stabilising. Although new orders fell for the thirty-first consecutive month, the rate of decline was the slowest since November last year. The average PMI in the third quarter of 2024 was 47.9 points, compared to 43.5 points in the third quarter of 2023. Price pressures remain weak and exports are showing a slower rate of decline, despite further signs of weakness in the German market, which has a very strong influence on performance in the Polish market. The performance of the Polish index is better than the Eurozone PMI, which stood at 44.8 points in September 2024 against 45.6 points in August 2024. This is a much lower result than expected by experts. The PMI declines concern the largest economies: Germany, France and the UK. German industry is still in a deep recession, with a PMI of 40.3 points (compared to 42.4 points in August). The index for France was 44.0 points, up slightly from 43.9 points a month earlier.

Chart: Manufacturing PMI in Poland and Eurozone (in points).

Source: Market Economics

Despite an improvement in the condition of the Polish industrial sector, industrial output sold in September 2024 was 0.3% lower than in September 2023, which was lower than analysts had expected. However, it is a 9.0% increase compared to August. In the period from January to September 2024, the dynamics of sold production increased by 0.2% compared to the same period of the previous year. According to preliminary data, in September 2024, an increase in sold production was recorded, among others, in the production of other transport equipment - by 18.7%, in waste management and recovery of raw materials - by 7.6%. Among the selected industrial divisions, compared to September last year, the largest decrease was recorded in the mining of coal and lignite by 21.0%, in the repair, maintenance and installation of machinery and equipment - by 17.6%, in the production of electrical equipment - by 15.7%. Since the beginning of the year, mining and quarrying recorded the largest year-on-year decrease of 7.3% in 2023.

Market environment

2.2.1 Situation in the National Power System (NPS)

Table: Domestic electricity consumption (TWh).

	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
Domestic electricity consumption, including:	39.94	39.89	0%	125.26	123.01	2%
Wind farms	4.74	3.67	29%	17.55	14.07	25%
Industrial thermal hard-coal fired power plants	14.56	17.62	-17%	49.47	55.20	-10%
Industrial thermal lignite fired power plants	9.22	8.30	11%	26.56	25.66	4%
Industrial gas-fired power plants	4.16	2.55	63%	11.52	9.48	22%
International exchange balance	0.16	1.75	-91%	2.28	4.10	-44%
Other (hydro power plants, other RES)	7.10	6.00	18%	17.88	14.50	23%

Source: PSE S.A. data

Q3 2024

In the third quarter of 2024, domestic electricity consumption increased by 0.05 TWh, mainly due to a lower base. As a result of an increase in installed capacity and more favourable wind conditions, wind generation increased by 1.07 TWh compared to the same period last year. In the third quarter of 2024, similar to a year ago, Poland was per balance an importer of energy, while there was a significant decrease in the balance of foreign exchange (by -1.59 TWh y/y). There was a decrease in production at coal-fired stations (-3.06 TWh). At the same time, there was an increase in generation from lignite (0.92 TWh), which could be attributed to the low base of the previous year, and from gas (1.61 TWh), which was the result of a decrease in gas prices on wholesale markets and an increase in installed capacity. There was also an increase in generation from other electricity sources (1.10 TWh), primarily PV plants due to an increase in installed capacity.

Chart: Energy balance in the NPS (TWh).

1 2 3 4 5 6

Source: own work based on data from PSE S.A.

Q1-Q3 2024

On a cumulative basis, domestic electricity consumption increased by 2.25 TWh y/y. The increase was due to the low base of the previous year - as a result of the slowing economy due to higher commodity prices caused by Russia's war with Ukraine. As a result of the increase in installed capacity and more favourable wind conditions, wind generation increased by 3.48 TWh compared to the same period last year. For the first three quarters of 2024, similar to a year ago, Poland was an energy importer, with imports lower than last year by 1.82 TWh. There was a decrease in production at coal-fired power plants (-5.73 TWh). At the same time, we recorded an increase on lignite (0.90 TWh), which may have been the result of the low base of last year and the increase in demand this year, and on gas (2.04 TWh), which was the result of the fall in gas prices on wholesale markets and the increase in installed capacity. There was also an increase in generation from other electricity sources (3.38 TWh), primarily PV plants due to an increase in installed capacity.

Chart: Energy balance in the NPS (TWh).

Source: own work based on data from PSE S.A.

2.2.2 Electricity prices – domestic market

Table: Day-Ahead market (RDN, SPOT market) 1

Market/measure	Unit	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
RDN – average price	PLN/MWh	450	532	-15%	410	572	-28%
RDN – trading volume	TWh	12.24	14.57	-16%	35.47	41.77	-15%

¹Data from TGE, include weighted average monthly BASE prices.

Table: Selected price factors affecting RDN quotations

Factor	Unit	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
CO2 emission rights1	EUR/t	68.09	85.67	-21%	66.19	88.21	-25%
Polish Steam Coal Market Index PSCMI-1	PLN/GJ	22.02	33.56	-34%	22.53	33.20	-32%
Wind generation NPS	TWh	4.74	3.67	29%	17.55	14.07	25%
Ratio: wind generation/ NPS consumption	%	12%	9%		14%	11%
Ratio: international trading/ NPS consumption	%	0%	4%		2%	3%

¹Source: own work based on ICE quotations.

In the first three quarters of 2024, the average electricity price on the day-ahead market was PLN 410/MWh and was lower by 28% than average price (PLN 572/MWh) in the analogical period of the previous year. Increased generation from RES sources and higher average daily temperatures y/y contributed to the price drop.

Average level of PSCMI-1 in the first three quarters of 2024 was PLN 22.53/GJ, i.e. lower by 32% than in the base period.

Chart: Average monthly prices on the day-ahead market in 2023–2024 (TGE).¹

¹Data from TGE, include weighted average monthly BASE prices.

Table: Forward market (RTT)

Market/measure	Unit	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
BASE Y+1 – average price	PLN/MWh	453	639	-29%	458	690	-34%
BASE Y+1 – trading volume	TWh	10.35	10.52	-2%	26.98	21.94	23%
PEAK5 Y+1 – average price	PLN/MWh	484	706	-31%	494	834	-41%
PEAK5 Y+1 – trading volume	TWh	1.74	0.96	81%	3.95	2.64	50%

Energy prices on the forward market in the first three quarters of 2024 fell significantly for both BASE and PEAK5 contracts in comparison to the analogical period of the previous year. The decrease was due to the high base of the previous year, when increases were influenced by the market situation related to the limited supply of hard coal and natural gas due to the ongoing conflict in Ukraine.

Chart: Average monthly prices on the forward market in 2023–2024 (TGE).¹

¹ Monthly average index level for forward contracts for the next year (Y+1), baseload and peak, weighted by the trading volume.

2.2.3 Electricity prices - international market

WHOLESALE MARKET (COMPARISON OF SPOT MARKETS)

Chart: Comparison of average electricity prices on Polish market and on European markets in the first three quarters of 2024 (prices in PLN/MWh, average exchange rate EUR/PLN 4.30).

Source: TGE - RDN price level calculated on the basis of hourly quotations (fixing), EEX, Nordpool

Chart: Evolution of spot market prices.

Source: TGE, EEX, Nordpool

There was a year-on-year fall in prices in neighbouring markets in the first three quarters of 2024. The largest y/y declines were recorded in Germany (PLN -84/MWh), while there was an increase in Hungary (PLN +68/MWh). The differentiation of energy prices results from a higher share of renewable energy sources in the technological mix and from the situation on the markets for related products. The price spread between Poland and its neighbouring countries is also due to differences in realised coal prices and also to prices of natural gas at home and abroad. The reason for the price drop was a change in the market situation – in the analogical period of the previous year the supply of hard coal and natural gas were limited due to the ongoing conflict in Ukraine.

Chart: Hard coal indices ARA vs PSCMI-1 1 .

Source: ARP, Bloomberg (API21MON OECM Index), own work.

¹The comparison is illustrative only. Methodologies of counting the ARA and PSCMI1 indexes are different. Among other things, the ARA index includes insurance and delivery costs. The PSCMI 1 is an ex-mine index without insurance and delivery costs. Standards for calculating the caloric values are also different (ARA – 25.12 GJ/t vs. PSCMI1 caloric value - range 20-24 GJ/t). The aim is to compare the trend and not the absolute level. For illustration purposes ARA index is recalculated from USD/t to PLN/GJ.

-1 500,0 0 -1 250,0 0 -1 000,0 0 -750,00 -500,00 -250,00 0,0 0 250 ,00 500 ,00 750 ,00 1 00 0,00 1 25 0,00 1 50 0,00 1 75 0,00

-4000 -3000 -2000 -1000 0 1000 2000 3000 4000 5000

INTERNATIONAL TRADING

Chart: Monthly imports, exports and cross-border exchange balance in 2023-2024.

Source: own work based on data from PSE S.A.

The fall in global fuel prices (which translate into lower energy production costs) has driven down electricity prices in neighbouring countries, resulting in higher energy imports into Poland in the first seven months of 2024. In contrast, we have been an exporter of energy since August, driven primarily by PV generation and lower prices relative to our neighbours.

Chart: Quarterly trading volumes – import, export and international trading balance in years 2013 - 2024.

Source: own work based on data from PSE S.A.

In the third quarter of 2024, Poland was a net importer of electricity, with a trade balance of 0.2 TWh (import 2.8 TWh, export 2.6 TWh). Imports from Germany (1.4 TWh), Sweden (0.6 TWh) and Czechia (0.5 TWh) had the greatest impact on the trade balance. At the same time, we exported the most electricity to Slovakia (1.2 TWh), Lithuania (0.5 TWh) and Germany (0.3 TWh).

In the three quarters of 2024, Poland was a net importer of electricity, with a trade balance of 2.5 TWh (import 9.5 TWh, export 7.0 TWh). Imports from Germany (4.2 TWh), Sweden (2.4 TWh) and Czechia (1.6 TWh) had the greatest impact on the trade balance. At the same time, we exported the most electricity to Slovakia (2.8 TWh), Lithuania (1.4 TWh) and Germany (1.1 TWh).

RETAIL MARKET

The diversity of electricity prices for retail customers in the European Union depends mainly on the level of the wholesale prices of electricity, fiscal system (taxes and fees), regulatory mechanism and support schemes in particular countries. In Poland in the first half of 2024² an additional burden (over sale price and cost of electricity distribution) for individual customers accounted for 50% of the electricity price. The Germans paid the most for electricity, for whom additional charges also accounted for 29% of the final price.

² Eurostat data on retail market are published in semi-annual intervals.

Chart: The share of additional charges in electricity prices for the individual customers in selected EU countries in the first half of 2024 (prices in PLN/MWh, average exchange rate EUR/PLN 4.32).

Source: own work based on Eurostat data.

Chart: The share of additional charges in electricity prices for the individual customers in selected EU countries in the first half of 2024 (prices in PLN/MWh, average exchange rate EUR/PLN 4.32).

Source: own work based on Eurostat data.

2.2.4 Prices of certificates

In the three quarters of 2024 the average price of green certificates (index TGEozea) reached PLN 51/MWh and was lower by 72% compared to the analogical period of the previous year.

An obligation to redeem green certificates changed as compared to 2023 (12%) and stands at 5% for 2024. In turn, at the end of August 2024, the Ministry of Climate and Environment published the level of the green certificates redemption obligation for 2025, which will amount to 8.5%.

Chart: Average quarterly prices of green certificates (TGEozea).

Source: Own work based on TGE quotations.

2.2.5 Prices of CO² emission rights

EUA (European Union Allowances) prices are one of the key factors determining wholesale energy prices and PGE Group's financial results. Installations emitting CO² in the process of electricity or heat production bear the expenses for purchasing EUA allowances to cover the deficit (i.e. the difference between CO² emissions at PGE Group's generating units and the free-of-charge allowances received under derogation in accordance with the National Investment Plan). Wherein, last allocations granted free of charge were planned for realisation of investment tasks for 2019. It means that the free allocations for electricity generation, in accordance with the currently used method, ended when 2019 allowances were received.

In the first three quarters of 2024 the weighted average price of EUA DEC was EUR 66.19/t and was lower (by approx. 25%) than the average price of EUR 88.21/t in the similar period of the previous year.

Chart: Prices of CO² emission rights.

Source: own work based on ICE exchange quotations.

CO² emission rights granted free of charge

In accordance with Commission Implementing Regulation (EU) 2019/1842 of October 31, 2019 laying down rules for the application of Directive 2003/87/EC of the European Parliament and of the Council as regards further arrangements for adjustment of the allocation of free CO² emission allowances due to changes in activity levels, the competent authority may suspend the issuance of free emission allowances to an installation until it is determined that there is no need to adjust the allocation to that installation or the Commission has adopted a decision concerning adjustments to the allocation to that installation.

In national legislation, the Act on the Greenhouse Gas Emission Trading Scheme introduced an additional condition for the issuance of emission allowances to installations. Due to the amendment of Directive (EU) 2023/959 of the European Parliament and of the Council of May 10, 2023, amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Union, the deadline for issuing emission allowances has changed from February 28 to June 30 each year, following the publication of information in the Public Information Bulletin on the website of the Ministry of Climate and Environment.

In accordance with legal requirements, activity level reports for individual installations for 2023 have been submitted, with a deadline of March 31, 2024. A further adjustment will be made during 2024 to reflect increases and decreases in production volumes resulting from revised activity level reports submitted for individual installations.

Table: Emission of CO2 vs allocations of allowances for 2024 (in tons).

Product	CO2 emissions in Q3 2024	Allocation of CO2 emission rights for 20241
Electricity	12 287 160	-
Heat	335 960	595 229
Total	12 623 120	595 229

1Allowances for heat production.

Regulatory environment

PGE Group operates in an environment with a significant impact of domestic and foreign regulations. Presented below is a summary of the most significant decisions, which could have an impact on PGE Group's operations in the coming years.

Legal regulations regarding the current rules for determining the prices of electricity and heat and the compensations due in this respect are described in chapter 4.1.3 of this report in the section Regulatory changes.

2.4.1 Domestic regulatory environment

Segments	Regulation	Regulation objectives	Latest conclusions and next stages	Impact on PGE Group
	The Act on energy vouchers and on changes of other acts in order to temporary cap the price for electricity, natural gas and system heat.	Among other things, the Act regulates electricity prices from July 1, 2024 to December 31, 2024. The Act imposed an obligation on electricity traders in the form of submitting an application for a change in the existing tariff for 2024 within seven days of the date of entry into force of the Act, or at the request of the ERO President. The revised tariff is effective from July 1, 2024 to December 31, 2025. The bill also provides for an extension of the maximum price mechanism for electricity. This price is in effect in the second half of 2024, and is set at PLN 500/MWh for household consumers and at PLN 693/MWh for local government units and public utilities, as well as micro, small and medium-sized entrepreneurs. In addition, according to the law, an energy voucher has been introduced, which is a one-time cash benefit intended for lower-income households, to be paid in the second half of 2024. In addition, the Law provides for a temporary exemption from the power fee for households. The legislation also refers to limiting the increase in the cost of heat, but with a gradual increase in maximum prices and rates.	The Act came into force on June 13, 2024.	The Act affects the financial results of power utilities with respect to their settlement with electricity consumers and the resulting level of compensation. It also provides for the application of heat prices and tariffs at a level not higher than that indicated in the Act in return for compensation.
	Draft Act amending the Renewable Energy Sources Act and certain other acts.	The draft law envisages accelerating the issuance of permits in the area of RES by shortening the existing time limits for proceedings. In addition, it assumes the recognition of activities concerning the construction or modernisation of RES installations and the equipment and installations necessary for the connection of a given RES installation to the grid, as well as heat pump installations with a capacity of up to 50 MW, as being of overriding public interest. The bill also introduces changes to the net-billing system for prosumers by maintaining after July 1, 2024 the possibility to settle based on the monthly market price of electricity and increasing the value of funds for energy injected into the grid and recognised in the prosumer deposit in the event of a settlement method change. The draft regulation also brings aid schemes into line with the European Commission's state aid guidelines by removing the possibility of supporting cogeneration based on carbon fuels.	On November 8, 2024, the law was passed in the session of the Sejm. On November 12, 2024, the law was forwarded to the President and the Speaker of the Senate.	The bill is of significant importance for the Supply segment due to the need to adapt to changes in settlements with prosumers, as well as for the Distribution segment due to changes in the deadlines for issuing connection conditions. The project is also important for the District Heating segment and the Renewables segment due to the introduction of procedural facilitations for investments in RES and heat pump installations.

Regulation	Regulation objectives	Latest conclusions and next stages	Impact on PGE Group
Draft Act amending the act - Environmental Protection Law and certain other acts.	The draft provides for climate change adaptation to be taken into account in documents related to spatial planning and development, the sustainable design of urban spaces, as well as clarifying the provisions on climate risk analyses in environmental impact assessment proceedings, by indicating that these analyses include an analysis of the vulnerability of projects to climate change.	On November 15, 2024, the draft was referred to the first reading in the Committee on Environmental Protection, Natural Resources and Forestry and the Committee on Local Self-Government and Regional Policy.	The bill is important because of the need to take into account its vulnerability to climate change during the environmental impact assessment and to include adaptation plans as part of local spatial plans.
Draft Act amending the Energy Law and certain other acts.	The project is an implementation of provisions for the implementation of the Polish Hydrogen Strategy until 2030 with an outlook until 2040. The regulation introduces in the Energy Law a grid of concepts necessary for the development and operation of the hydrogen market in Poland, as well as provisions on the rights and obligations of hydrogen market participants and the President of the Energy Regulatory Office by introducing the principle of certification and designation of hydrogen system operators, defining the scope of their obligations and the principles of ownership unbundling, introducing the obligation to provide hydrogen transmission and storage services by energy companies.	On November 7, 2024, the first reading was held at the meeting of the Committee for Energy, Climate and State Assets.	The draft law introduces a strategic framework for the implementation of the hydrogen economy in Poland with a particular focus on the use of low carbon and renewable hydrogen in energy, heating, transport and industry.
Draft law amending the Agricultural Tax Act, the Local Taxes and Fees Act, the Forest Tax Act and the Stamp Duty Act.	The bill provides for a change in the legal definition of a building and a structure by creating autonomous definitions for the purposes of the Tax Act, independent of the definitions functioning on the basis of the Act - Construction Law, as well as the inclusion in the legal definition of construction equipment of other technical facilities.	On November 6, 2024, the first reading of the bill took place at a session of the Sejm and the bill was considered at a meeting of the Public Finance Committee. On November 19, 2024, the report of the Public Finance Committee on the draft was presented.	The entry into force of the legislation as proposed could lead to a significant increase in the property tax burden for all PGE Group assets.

Regulation	Regulation objectives	Latest conclusions and next stages	Impact on PGE Group
Draft Act amending the Act on stocks of crude oil, petroleum products and natural gas and the principles of proceeding in situations of threat to the state's fuel security and disturbances on the oil market and some other acts.	The main objective of the project is to change the current model for the creation and maintenance of strategic stocks of natural gas. The regulation imposes on the Government Strategic Reserve Agency the exclusive obligation to create and maintain strategic stocks of natural gas, and obliged entities will bear the cost of their maintenance through a gas fee.	The bill was referred to the Committee for European Affairs for consideration.	The entry into force of the legislation will result in the PGE Group paying a gas levy as an obligated entity from the gas year 2024/2025.
Draft Decree of the Minister of Climate and Environment on specific qualitative and dimensional characteristics of energy wood.	The purpose of the proposed regulation is to define the specific qualitative and dimensional characteristics of energy wood, to indicate the characteristics of wood raw material that is not suitable for industrial use or has limited potential for use in the non-energy sector.	PGE S.A. submitted comments during the public consultation on the draft.	The entry into force of the legislation as proposed will tighten the criteria for wood used in the energy sector.
Draft Regulation of the Minister of Climate and Environment on the maximum price for electricity generated at offshore wind farms and injected into the grid that may be indicated in bids submitted by generators in an auction.	The draft regulation determines the maximum price for electricity generated in offshore wind farms and introduced to the grid in PLN per 1 MWh under the second phase of the support scheme. The public consultation report shows that the project proponent has updated and set it at PLN 512/MWh.	On October 30, 2024, the project was considered by the Economic Committee of the Council of Ministers.	The draft regulation is of key importance for the Renewables segment as it will enable applying for the right to cover the negative balance in phase II of the support scheme for OWFs to be claimed.
Draft Act amending the Act on investments in wind power plants and certain other acts.	Above all, the draft abolishes the general 10H rule3, by introducing a minimum distance of 500 m from residential buildings, national parks and Natura 2000 areas. The proposed changes also concern the modification of the functioning of the mechanism for making at least 10% of the capacity of a wind power plant available to residents who use the generated energy under the virtual prosumer formula. In addition, the draft law introduces a support system for biomethane in installations above 1 MW in the form of an auction and allows the entire stream from the biodegradable part of RDF4 and biomass co-firing in a multi-fuel firing combustion plant to be treated as emission-free.	The public consultation closed on October 16, 2024. PGE S.A. submitted comments during the public consultation on the draft.	The bill introduces facilities for the location of onshore wind farms, which will contribute to the development of the RES sector and thus have a positive impact on the investments made by the Renewables segment. In other respects, the bill is of significant importance for the Supply segment, due to the need to adapt to changes in settlements with prosumers.
Ordinance of the Ministry of Climate and Environment on the change of the quantitative share of the sum of electricity resulting from redeemed certificates of origin confirming the generation of electricity from renewable energy sources in 2025.	Regulation sets level of redemption of certificates of origin for 2025 confirming: - the generation of electricity from RES – 8.5%, - the generation of electricity from the combustion of agricultural biogas – 0.5%.	The regulation entered into force on August 31, 2024.	The regulation is important for the Supply segment due to the obligation to obtain an appropriate share of sold energy from RES and for generators in the Renewables segment that participate in the system of certificates of origin.

³ Rule 10H - ten times the height of the wind turbine as the minimum distance of a new development from existing residential buildings and forms of nature conservation.

⁴ RDF - waste that has been treated to meet industrial guidelines, regulations or specifications, primarily to achieve a high calorific value.

Regulation	Regulation objectives	Latest conclusions and next stages	Impact on PGE Group
Bill to amend the Capacity Market Act	The purpose of the proposed law is to introduce a supplementary auction mechanism in the Capacity Market in the period from the second half of 2025 to the end of 2028. Supplementary auctions will purchase additional power for energy security purposes under the Capacity Market mechanism and, by way of derogation, high-carbon units will be able to participate in them.	The bill was referred to the Committee for European Affairs for consideration.	The entry into force of the legislation as proposed may allow units not meeting the 550 kg/MWh emission limit to participate in the Capacity Market mechanism until the end of 2028.
Decree of the Ministry of Climate and Environment on the parameters of the main auction for the year of delivery 2029 and the parameters of the additional auctions for the year of delivery 2026, as well as the parameters of the preliminary auctions for these auctions.	Among other things, the regulation defines the power demand in the main auction for the delivery period falling in 2029, the corrective dispatch coefficients for individual technology groups for this auction and the parameters of the supplementary auction for 2026. Entities planning to participate in the auctions may decide to participate in the auction or to opt out and to adopt an appropriate auction participation strategy.	The regulation entered into force on August 2, 2024.	The regulation affects the generation and storage segments, including pumped storage power plants, which will participate in the main Capacity Market auction in 2029 and the supplementary auctions in 2026.
Draft Law amending the Law on Value Added Tax, the Law on Excise Tax and certain other laws	The draft proposes to extend the operation of the reverse charge mechanism for VAT on gas in the gas system, electricity in the electricity system and services for the transfer of greenhouse gas emission allowances until December 31, 2026.	On October 28, 2024 the bill was referred to the Committee on Legal Affairs for consideration.	The project is part of the sector's call for an extension of the reverse charge mechanism for VAT on electricity, gas and greenhouse gas emissions until December 31, 2026.
Draft Regulation of the Ministry of Climate and Environment on reference values for new and substantially modernised cogeneration units in 2025.	The Regulation specifies the reference values for new cogeneration units and for substantially retrofitted cogeneration units, applicable in the following calendar year.	The regulation was published on October 30, 2024. It will come into force on January 1, 2025.	Regulation affects the level of revenue from the support scheme for the District Heating segment in 2025.
Draft Regulation of the Ministry of Climate and Environment on the maximum quantity and value of energy from high efficiency cogeneration covered by support and unit amounts of the guaranteed premium in the year 2025.	The regulation indicates the maximum quantities and values of electricity from high-efficiency cogeneration supported and the unit amounts of the guaranteed premium in 2025.	The regulation was published on October 31, 2024. It will come into force on January 1, 2025.	Regulation affects the level of revenue from the support scheme for the District Heating segment in 2025.

2.4.2 International regulatory environment

Regulation	Regulation objectives	Latest conclusions and next stages	Impact on PGE Group
Directive 2023/959 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 on the establishment and operation of the market stability reserve.	Combating climate change. Development of investment incentives through a CO2 price signal to develop low-emission sources.	The EC is currently implementing the reform of the ETS system. On April 4, 2024 an amendment to the Delegated Regulation on the rules for free allocation of allowances was published. The EC is currently working on an amendment to Implementing Regulation 2019/1842, which lays down rules for the application of Directive 2003/87/EC with regard to further arrangements for adjustments to the free allocation of emission allowances due to changes in activity levels (determination of the allowance allocation method). Consultation on a draft of this regulation is announced for the fourth quarter of 2024 and its adoption for the first quarter of 2025. The EC is finalising the revision of the implementing regulation 2018/2066 on monitoring and reporting of greenhouse gas emissions, with amendments scheduled for the fourth quarter of 2024.	Increased competitiveness of renewable sources compared to generation assets using high emission fuels. Increase in operating costs for conventional generation of electricity and heat. Option to obtain investment support from the Modernisation Fund and Innovation Fund and additional free allocation of allowances to district heating.
Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control – IED).	Introduction of new requirements determining emission levels in the integrated permit, the rules for obtaining derogations from BAT requirements and giving new competences to the EC. Public participation in appeal proceedings will be increased.	On July 15, 2024, Directive (EU) 2024/1785 of the European Parliament and of the Council amending Directive 2010/75/EU of the European Parliament and of the Council on industrial emissions (integrated pollution prevention and control) and Council Directive 1999/31/EC on the landfill of waste was published in the Official Journal of the EU and entered into force on the 20th day after publication. Member States have 22 months to implement the provisions into national law.	The entry into force of the agreed solutions involves additional administrative costs due to the need to adapt the environmental management system (including in relation to the need to prepare a transformation plan). The role of the public in permitting and in monitoring the implementation of IED obligations by operators of installations will be enhanced.
Directive of the European Parliament and of the Council on corporate sustainability due diligence (CSDDD).	To establish a framework that encourages companies to contribute to the pursuit of respect for human rights and environmental legislation in their operations and through their value chains.	Directive (EU) 2024/1760 was published in the Official Journal of the EU on July 5, 2024 and entered into force on the 20th day after publication. The deadline for transposition of the directive was July 26, 2026.	Increasing reporting obligations for PGE Group's value chain in terms of environmental impact and respect for human rights. Incorporating the due diligence policy on sustainability in the activities of the PGE Group.

3. Activities of PGE Capital Group and operational segments

Basic operational data of PGE Capital Group		Gas-fired	Conventional			Railway Energy
	Renewables	Generation	Generation	District Heating	Distribution	Services	Supply
Key assets of the segment	21 wind farms 43 photovoltaic power plants 29 run-of-river hydro power plants 4 pumped-storage power plants, including 2 with natural flow	1 gas-fired power plant1	5 conventional power plants 2 lignite mines	16 CHP plants	302.5 th km of distribution lines	18.4 th km of distribution lines	-
Installed capacity electricity/heat	2 627 MWe/-	1 366 MWe1 /-	12392 MWe/958 MWt	2477 MWe/5 976 MWt	-	-	-
Electricity volumes	Net electricity generation 0.63 TWh	Net electricity generation 1.06 TWh	Net electricity generation 10.48 TWh	Net electricity generation 0.99 TWh	Electricity distribution volume 8.78 TWh2	Electricity distribution volume 1.01 TWh; Sales to final off-takers 0.73 TWh	Sales to final off-takers 7.57 TWh3
Heat volumes	-	-	Net heat production 0.37 PJ	Net heat production 3.26 PJ	-	-	-
Market position	PGE Group is the largest electricity producer from RES with market share of approx. 6% (excluding co-combustion of biomass and bio-gas)	Gryfino power plant - the largest gas-fired power plant in Poland	PGE Group is a national leader in electricity and district heat generation		Second domestic electricity distributor with regard to number of customers	Leader of energy services for railway infrastructure and the largest distributor and seller of electricity to the traction grid	Leader in wholesale and retail trading in Poland
1 Unit no. 9 commissioned on August 14, 2Data for PGE Dystrybucja S.A.	2024, unit no. 10 on October 18, 2024.

3Data for PGE Obrót S.A.

Key operating results of PGE Group

KEY OPERATING RESULTS OF PGE GROUP

Table: Key operating data.

Key operating data	Unit	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
Electricity generation, net	TWh	13.16	13.10	0%	40.67	41.12	-1%
including RES generation	TWh	0.59	0.46	28%	2.05	1.90	8%
Sales of electricity outside the PGE Capital Group	TWh	17.59	20.24	-13%	51.38	59.58	-14%
Sales of electricity to final off-takers1	TWh	8.30	8.49	-2%	25.34	25.96	-2%
Heat production	PJ	3.63	3.51	3%	30.57	32.65	-6%
Heat sales	PJ	3.46	3.44	1%	29.81	31.82	-6%
Electricity distribution	TWh	9.79	9.64	2%	29.90	28.46	5%

¹After eliminating sales within the PGE Group, sales carried out mainly by PGE Obrót S.A. and additionally by PKP Energetyka Kolejowa S.A.

BALANCE OF ENERGY OF PGE CAPITAL GROUP

Table: Sales, purchase, production and consumption of electricity in the PGE Capital Group (TWh).

Sales volume	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
A. Sales of electricity outside the PGE Capital Group:	17.59	20.24	-13%	51.38	59.58	-14%
 Sales to end-users1	8.30	8.49	-2%	25.34	25.96	-2%
 Sales on the wholesale and balancing market	9.29	11.75	-21%	26.04	33.62	-23%
B. Purchases of electricity from outside of PGE Group (wholesale and balancing market)	5.32	7.67	-31%	13.93	21.06	-34%
C. Net production of electricity in units of PGE Capital Group	13.16	13.10	0%	40.67	41.12	-1%
D. Own consumption DSO, lignite mines, pumped storage power plants (D=C+B-A)	0.89	0.53	68%	3.22	2.60	24%

¹Sales carried out mainly by PGE Obrót S.A. and additionally by PGE Energetyka Kolejowa S.A.

The total volume of purchased and generated electricity is higher than the volume of electricity sold. The difference presented in point D results from the necessity to cover grid losses in the distribution business (DSO), consumption of energy at lignite mines and consumption of energy at pumped-storage power plants.

Lower energy sales on the wholesale market, including the balancing market, result from higher share of RES production. The lower purchase on the wholesale market is mainly the result of PGE Obrót's lower sales to end customers in the corporate client and large business segments, who tend to diversify energy sources, mainly with greater use of RES. At the same time, an increase was recorded in sales to the end customers as an effect of the recognition of electricity sales realised by PKP Energetyka Kolejowa S.A. in the first three quarters of 2024 that in the similar period of the previous year took place only in the second and third quarter (Railway Energy Services segment consolidated since April 3, 2023).

Table: Net production of electricity (TWh).

Production volume	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
NET ELECTRICITY PRODUCTION IN TWh, including:	13.16	13.10	0%	40.67	41.12	-1%
Lignite-fired power plants	7.94	7.13	11%	22.93	21.95	4%
Coal-fired power plants	2.54	4.21	-40%	8.85	10.82	-18%
Including co-combustion of biomass	0.01	0.01	0%	0.03	0.01	200%
Gas-fired power plants	1.06	0.00	-	1.50	0.00	-
Coal-fired CHP plants	0.34	0.40	-15%	2.11	2.67	-21%
Gas-fired CHP plants	0.55	0.59	-7%	2.53	2.90	-13%
Biomass-fired CHP plants	0.09	0.07	29%	0.27	0.33	-18%
Communal waste-fired CHP plants	0.01	0.02	-50%	0.02	0.03	-33%
Pumped-storage power plants	0.15	0.32	-53%	0.73	0.89	-18%
Hydroelectric plants	0.06	0.07	-14%	0.33	0.34	-3%
Wind power plants	0.34	0.28	21%	1.27	1.17	9%
PV plants	0.08	0.01	700%	0.13	0.02	550%
including RES generation	0.59	0.46	28%	2.05	1.90	8%

The level of electricity generation in the three quarters of 2024 was 1% lower than in the first three quarters of 2023.

The slightly lower level of electricity generation in the PGE CG is mainly due to the high coverage of domestic demand by renewable sources and gas.

Lower production from coal-fired CHPs, gas-fired CHPs and biomass-fired CHPs (total decrease of 1.0 TWh) is the result of lower CHP production due to weather conditions (higher average temperatures).

Lower production in hard coal-fired power plants (total decrease of 2.0 TWh) took place at the Opole Power Plant (by 1.6 TWh) and the Dolna Odra Power Plant (by 0.3 TWh) and at the Rybnik Power Plant (by 0.1 TWh). The change was caused by lower average load factor of units at the Opole Power Plant (by 15 MW) and Dolna Odra Power Plant (by 5 MW). Opole and Dolna Odra power plants were in reserve downtime longer by 4 049 hours.

In addition, in total, all power plants remained under repair for 2 355 hours longer.

Lower production at pumped storage plants is due to lower use of the plant by PSE S.A.

Units at Gryfino Power Plant generated 1.5 TWh of electricity.

Higher generation at lignite-fired power plants (increase by 1.0 TWh) is due to higher production at Bełchatów Power Plant (increase by 1.6 TWh) caused by higher average load factor of units by 26 MW. At the same time, there was lower production at the Turów Power Plant (decline by 0.6 TWh), which operated with average load factor of units lower by 19 MW.

Higher production at wind farms due to better windiness in farm areas.

Higher photovoltaic generation is due to new capacity being commissioned.

Production at municipal waste-fired thermal power plants and hydroelectric power plants remained at the level of the comparable period.

HEAT PRODUCTION

Table: Net production of heat (PJ).

Heat production volume	Q3 2024	Q3 2023	% change	Q1-Q3 2024	Q1-Q3 2023	% change
Net production of heat in PJ	3.63	3.51	3%	30.57	32.65	-6%
Lignite-fired power plants	0.29	0.28	4%	1.58	1.68	-6%
Coal-fired power plants	0.08	0.08	0%	0.43	0.44	-2%
Coal-fired CHP plants	1.12	2.35	-52%	20.69	23.19	-11%
Gas-fired CHP plants	1.56	0.62	152%	5.83	6.03	-3%
Biomass-fired CHP plants	0.37	0.14	164%	1.46	1.00	46%
CHP plants fuelled by municipal waste	0.04	0.02	100%	0.09	0.09	0%
Other CHP plants	0.17	0.02	750%	0.49	0.22	123%

External temperatures contributed more than any other factor to lower net generation of heat in 2024 (y/y). The average temperatures in the three quarters of 2024 were by 1.1° C higher y/y, which translated into decreased production of heat.

HEAT SALES

In the third quarter of 2024 the heat sales volume in PGE Capital Group totalled 3.5 PJ and was higher by 0.1 PJ y/y.

In the three quarters of 2024 the heat sales volume in PGE Capital Group totalled 29.8 PJ and were lower by 2.0 PJ y/y. The above result was caused mainly by lower demand for heat due to the higher average outside temperatures than in 2023.

PGE Group's key financial results

The best way to measure the profitability of energy companies is recurring EBITDA. This is a result before depreciation, amortization, income tax and financial activities, including interest from drawn debt. EBITDA makes it possible to compare the results of companies regardless of the value of their assets, level of debt and existing income tax rates. Additionally, recurring EBITDA is adjusted for one-offs.

PGE Group's consolidated EBITDA is composed of the financial results of each of its operating segments. The following segments have the largest share in the Group's recurring EBITDA for the third quarter of 2024: Distribution (47%), Conventional Generation (20%), Renewables (16%) and Railway Energy Services (12%). Supply segment negatively affects the Group's recurring EBITDA result, while other segments have an insignificant share in the result.

Chart: Recurring EBITDA of PGE Capital Group (PLN million)

Management Board's report on activities of the PGE Capital Group for the 3-month and 9-month period ended September 30, 2024

Chart: Key factors affecting EBITDA in PGE Capital Group (in PLN million).

	EBITDA Q3 2023	Contribution to PDP fund1	Result on the sale of electricity at producers2	CO2 emission rights	Fuel costs, other production materials, other	Revenues from support of highly-efficient co-generation	Revenues from ancillary services and Capacity Market3	Result on the sale of electricity to final customers4	Revenues from heat sales5	Margin on distribution services6	Personnel expenses7	Capitalised costs	Provision for onerous contracts	distribution services and on electricity to final customers Railway Energy Services	Other8	EBITDA Q3 2024
Change		1 124	-2 475	992	641	-31	228	-581	54	178	-182	-38	198	37	-141
Reported EBITDA Q3 2023	2 458
One-offs Q3 2023	8
Recurring EBITDA Q3 2023	2 450	1 124	10 101	5 591	2 225	41	1 035	247	526	1 491	1 856	338	11	322	866
Recurring EBITDA Q3 2024		0	7 626	4 599	1 584	10	1 263	-334	580	1 669	2 038	300	209	359	1 007	2 454
One-offs Q3 2024																4
Reported EBITDA Q3 2024																2 458

¹Without impact of correction of estimated contribution to the fund for 2022 (one-off).

²Revenue from the sale of electricity reduced by the purchase cost of electricity.

³Including balancing service revenues.

4 Including compensations (without adjustment for previous years), margin adjustment on certificates at PGE Group; without additional estimation of the cost of the balancing difference.

5 Including compensations.

6 Including revenues from distribution services, compensations, transmission services (PSE), balance of transferred fees and costs of electricity purchased to cover balancing difference; without additional estimation of the cost of the balancing difference.

⁷Without impact of the change in the actuarial provision and Voluntary Leave Program (one-offs).

⁸Without LTC compensations, change in the reclamation provision ad write-down of receivables from PKP Cargo S.A. (one-offs).

Chart: Structure of assets and equity and liabilities (in PLN million).

Chart: Net change in cash (in PLN million).

	Cash and cash equivalents at January 1, 2024	Net cash from operating activities	Proceeds from the issuance of shares of non controlling shareholders	Purchase/sale of property, plant and equipment and intangible assets	Balance of repayments/ inflows of loans, borrowings, bonds and finance lease	Interest paid - loans, borrowings, bonds and financial instruments	Other	Cash and cash equivalents at September 30, 2024
Impact on level of cash		14 619	37	-7 375	-3 937	-573	70
Cash and cash equivalents	6 033							8 874

Chart: Net financial debt (in PLN million).

¹ Estimated level of net economic debt (taking into account forward payment for CO2 emission rights) amounts to PLN 19 021 million.

Characteristics of business segments

3.3.1 Key results in business segments¹

From 2024 a Gas-fired Generation segment was established and the data of the Other Operations segment for the third quarter of 2023, which in previous reporting periods included companies transferred to the newly created segment, were adjusted for comparability.

3.3.2 Renewables

This segment is involved in the generation of electricity from renewable sources and in pumped storage power plants.

The data presented below concerns the third quarter of 2024.

¹Adjusted for one-offs.

The Renewables segment is based mainly on revenues from the sale of electricity, however contrary to production at industrial plants within the Conventional Generation segment, this revenue is subject to a larger degree to changes in weather conditions and prices on the spot market due to the renewables sales model in place. Electricity output volume translates into production of property rights (green certificates) and revenue from the sale of energy origin certificates obtained by the segment's assets, excluding hydropower plants over 5 MWe.

Revenue from the Capacity Market, a mechanism introduced to prevent electricity shortages in the National Power System, constitutes a significant item in the segment's revenue, starting from 2021. Selected power plants in the Renewables segment receive fees for performing the capacity obligation (a Capacity Market Entity being on standby to supply electricity to the system and the obligation to supply specified capacity to the system when the system is under threat). Capacity Market revenue compensated for revenue from ancillary services. The readiness intervention reserve service was discontinued. Since mid-June 2024, the next phase of the Balancing Market reform has been implemented. As a result of the above reform, power plants have the possibility to offer balancing energy and balancing capacity. The new catalogue of balancing services includes: frequency maintenance reserve, frequency restoration reserve and replacement reserve. New balancing services are recognised as ancillary services revenue.

The significant cost items of the segment's operations are: use of energy to pump water at pumpedstorage plants, depreciation of segment assets and third-party services, mainly the repair and maintenance services. Property tax and labour costs also constitute a significant cost item in this segment.

Under the provisions of the Emergency Measures in 2023 Act, electricity generating entities were required to make a contribution to the Price Difference Payment Fund.

ASSETS AND OPERATIONAL DATA

The PGE Capital Group's operations in renewable energy are managed by the PGE Energia Odnawialna S.A. Due to the profile of operations, the segment also includes companies from the Offshore area, which are responsible for all activities related to offshore wind energy.

Assets in the segment include:

21 wind farms,
43 photovoltaic power plants,
29 run-of-river hydro power plants,
4 pumped-storage power plants, including 2 with natural flow.

Diagram: Main assets of the Renewables segment and their installed capacity.

Table: Energy production (TWh).

Type of power plant	Q3 2024	Q3 2023	% change
Pumped-storage power plants	0.15	0.32	-53%
Run-of-river hydro power plants	0.06	0.07	-14%
Wind farms	0.34	0.28	21%
PV	0.08	0.01	700%
Total	0.63	0.68	-7%

KEY FINANCIAL FIGURES IN THE SEGMENT

Chart: Key changes of EBITDA in Renewables (in PLN million) – managerial perspective.

	EBITDA Q3 2023	Electricity revenues1	Certificates revenues	electricity for pumped storage plants	Ancillary services and Capacity Market2	Personnel costs3	PDP Fund	Other	EBITDA Q3 2024
Change		-147	44	146	150	-10	42	-10
Reported EBITDA Q3 2023	167
One-offs Q3 2023	0
Recurring EBITDA Q3 2023	167	480	4	208	68	47	42	88
Recurring EBITDA Q3 2024		333	48	62	218	57	0	98	382
One-offs Q3 2024									-1
Reported EBITDA Q3 2024									381

¹Electricity revenues include revenues from main generation technologies (wind, water, PV, pumped storage).

2 Including income from balancing services.

³Includes actuarial provision (one-off).

Table: Data on one-offs in Renewables segment (in PLN million.

One-offs	Q3 2024	Q3 2023	% change
Change in actuarial provision	-1	0	-
Total	-1	0	-

Key factors affecting the y/y results of Renewables:

Lower revenues from electricity sales results from: lower average electricity sale price by PLN 182 /MWh y/y, what translated into decrease of revenues by PLN 114 million, lower sales volume by 46 GWh, what caused revenues decrease of PLN 33 million.
Increased revenues from sales of certificates resulting from higher average electricity sale price by PLN 152/MWh y/y, as a result revenues increased by PLN 44 million.
The decrease in electricity purchase costs for pumping in pumped storage power plants results from: lower purchase volume by 399 GWh, contributing to a decrease in costs by PLN 147 million, higher average electricity purchase price by PLN 7/MWh y/y, what translated into an increase in costs by PLN 1 million.
Higher revenues from the Capacity Market and ancillary services result mainly from revenue from balancing services introduced from June 2024 and higher utilisation of production units in the power system.
The increase in personnel costs is mainly a result of higher employment due to the development of the Offshore Energy and Renewable Energy areas and concluded wage agreements.
Lack of contribution to PDP Fund, which occurred in 2023.
Value change in item Other results mainly from higher revenues from the sale of guarantees of origin for electricity and a lower adjustment to the settlement of the RES auction with Zarządca Rozliczeń.
Value change in item Other is mainly due to higher operating costs due to the development of the Offshore Energy and Renewable Energy areas.

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in Renewables segment.

	PLN million	Q3 2024	Q3 2023	% change
Investments in generating capacities, including:		467	375	25%
	Development	346	337	3%
	Modernisation and replacement	121	38	218%
Total		467	375	25%

KEY EVENTS IN RENEWABLES

Offshore wind farms construction program

The strategic goal of the PGE Group in the offshore energy area is to build at least 6.5 GW of capacity by 2040.

The group has 8 location permits for an offshore wind farms in the Baltic Sea. 5 proceedings (with a total capacity potential of 3.9 GW) were resolved in favour of the PGE Group in 2023 and 3 location permits were obtained by the Group in 2012, based on which it is preparing investments in the Baltic Sea with a total capacity of approx. 3.5 GW (including 2.5 GW in JO with Ørsted). Commissioning of the first project carried out jointly with Ørsted - Baltica 2 with a capacity of 1.5 GW is planned by 2030.

The Baltica 1 project (approximately 0.9 GW) is in the early stages of preparation for implementation. In the third quarter of 2024, the environmental report for the OWF area was submitted to the Regional Directorate for Environmental Protection and work was being carried out to prepare a transboundary impact report under the so-called Espoo procedure. Geotechnical studies and a post-validation campaign for wind measurements were also conducted. In July 2024, an agreement was also concluded with the contractor of the basic design for the power derivation from the installation (Energoprojekt-Katowice S.A.) and conceptual work began.

The Baltica 2 project (approximately 1.5 GW) is at an advanced stage of preparation for implementation. Key contracts for construction and installation works and the supply of components have already been concluded. During the third quarter of 2024, work was carried out under the contract for the construction of the power derivation system in the onshore section, for which a work order was issued on June 28, 2024. Work is currently underway on the construction of the foundations of the switchgear buildings of the Onshore Transformer Station.

The Baltica 3 project (approx. 1 GW) is under preparation for implementation. In the third quarter of 2024, the geotechnical documentation of the subsoil was completed and environmental surveys for migratory birds and bats were carried out in the area of the so-called buffer zone.

PGE Group PV Development Program

So far, projects with a total capacity of approx. 197 MW have been commissioned under the programme, including farms with capacity of 102 MW in the third quarter of 2024, with PV Jeziórko of 100 MW among others.

PV farm projects with a total capacity of approximately 228 MW continued in the third quarter of 2024, including PV Pokrzywnica (7 MW), where commissioning is planned for the fourth quarter of 2024, and PV Żółtańce (15 MW), PV Tyszki - Wądołowo (10 MW) and PV Jedlanka Stara (5 MW), where commissioning is planned for the first quarter of 2025.

Modernisation of technological equipment at the Dębe hydro power plant

On September 30, 2024, the commissioning of the last (fourth) hydroset was carried out. Thus, the implementation of the project was completed.

Comprehensive modernisation program of Porąbka-Żar pumped-storage power plant

The scope of works includes the modernization of the technological part of the upper reservoir and the construction facilities of the waterway. The main works related to the modernisation of the upper reservoir and the fairway have been completed. Work on the technological part, i.e. the modernisation of the four hydrosets, will be carried out sequentially so that partial operation of the power station is possible. At present, dismantling work is starting for hydroset no. 3, after which the main modernisation work will be carried out. Design work is also continuing.

3.3.3 Gas-fired Generation

The segment's business is the generation of electricity in gas-fired sources.

The data presented below concerns the third quarter of 2024.

¹ Managerial perspective.

The primary source of revenue for the Gas-Fired Generation segment is revenue from the sale of electricity on the wholesale market based on the price of electricity determined by supply and demand balancing mechanisms, taking into account the variable costs of generation. At the same time, the most significant cost items of the segment, by virtue of their size and volatility, and therefore impact on the operating result, are the costs of natural gas consumption and the costs of CO² emission charges.

A significant item in the segment's revenue is revenue fromtheCapacity Market, a mechanism introduced to prevent a shortage of electricity in the NPS. The power plants are remunerated for the fulfilment of the capacity obligation (the Capacity Market unit's remaining ready to supply electricity to the system and its commitment to supply a certain capacity to the system during an emergency period). An additional item in the segment's revenue is revenue from for the provision of ancillary services.

ASSETS

The Gas-fired Generation segment will ultimately comprise 2 gas-fired power plants: the Gryfino Power Plant (2 units, each with an installed capacity of 683 MW) and the Rybnik Power Plant (1 unit with a capacity of 882 MW).

On March 4, 2024 unit no. 9 at the Gryfino Power Plant was synchronised with the NPS. On August 14, 2024 the unit was commissioned.

On May 22, 2024 unit no. 10 at the Gryfino Power Plant was synchronised with the NPS. On October 18, 2024 the unit was commissioned.

Diagram: Main assets of the Gas-fired Generation segment and their installed capacity.

KEY FINANCIAL FIGURES IN THE SEGMENT

Chart: Key changes of recurring EBITDA in Gas-fired Generation (in PLN million) – managerial perspective¹ .

	Q3 2023	production2	services and Capacity Market	natural gas	CO2	ZHZW3	costs		Q3 2024
Change		490	43	-402	-20	-6	-16	-6
EBITDA Q3 2023	-4	0	0	0	0	0	5	-1
EBITDA Q3 2024		490	43	402	20	6	21	5	79

¹Due to separation of the Gas-fired Generation segment from Other Operations segment data for Q3 2023 were restated for comparability.

²Managerial perspective.

³ZHZW – agreement for Commercial Management of Generation Capacities.

Key factors affecting EBITDA of Gas-fired Generation segment y/y:

Revenues from the sale of electricity, as a result of the sale of 1.1 TWh of electricity.
Revenue from the Capacity Market, i.e. remuneration for the performance of the capacity obligation.
Costs of natural gas consumption, as a result of consumption of 6.5 GJ million of the fuel in the production process.
CO² costs, as a result of emission of 0.07 tonnes m in the production process.
Costs of ZHZW i.e. costs of commercial management of generation capacities.
Higher personnel costs, mainly due to the start of the production process at the Gryfino Power Plant.
The item Other, mainly takes into account other variable costs incurred in the production process and the costs of repairs and assets operations.

Table: Data on production fuels consumption in Gas-fired Generation.

	Q3 2024			Q3 2023
Rodzaj paliwa	Volume (m3 ths)	Cost (PLN m)	Volume (m3 ths)	Cost (PLN m)
Gas	174 279	402	-	-
Total	174 279	402	-	-
Table: Data on CO2 costs in Gas-fired.
Dane dot. CO2	Q3 2024		Q3 2023	% change
CO2 emission (tons)		65 112	-	-
Average CO2 costs (PLN/t CO2)		302.26	-	-

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in Gas-fired Generation segment¹

PLN million	Q3 2024	Q3 2023	% change
Investments in generating capacities, including:	819	199	312%
 Development	819	199	312%
Total	819	199	312%

¹Segment separated from the Other Operations segments as from 2024.

KEY EVENTS IN GAS-FIRED GENERATION

In the third quarter of 2024, work continued on the project to build a CCGT unit with a gross capacity of 882 MW in Rybnik (Rybnik 2050 sp. z o.o.). Foundation work for the main buildings is nearing completion. Further excavations are being carried out and reinforcement is being distributed for concreting the walls of the buildings. Site preparation for the cooling water system has begun. Components for the recovery boiler support structure were delivered to the site.
In the third quarter of 2024 work continued also on the construction of two new gas-and-steam units of 683 MWe each (PGE Gryfino Dolna Odra sp. z o.o.). On July 23, 2024 a settlement with the General Contractor was concluded in front of the mediator of the arbitration court at the Solicitor's Office of the Republic of Poland, in which ne commissionings dates of the units were set: August 15, 2024 for unit no. 9 and September 30, 2024 for unit no. 10. As part of the Settlement the Contractor has committed to pursue additional works. The change of completion date of the contract did not cause a change of the contractual remuneration. There was a 35-days joint grace period for both units for non-compliance with the mentioned commissioning dates that could be prolonged in the event of early commissioning of unit no. 9. Unit no. 9 was commissioned on August 14, 2024, unit no. 10 – on October 18, 2024.

KEY PROJECTS IN GAS-FIRED GENERATION SEGMENT

Aim of the project	Budget	Expenditures incurred1	Capital expenditures in 9M 20241	Fuel/ Net efficiency	Contractor	Investment completion date
Construction of two CCGT units at PGE Gryfino Dolna Odra sp. z o.o.	PLN 4.3 bn	PLN 3.8 bn		PLN 592 m Natural gas /	Syndicate of companies:	Unit no. 9 – August 14, 20242
				63.2 %	General Electric (consortium leader) and Polimex Mostostal	Unit no. 10 – October 18, 20242
Construction of gas-steam unit	PLN 4.0 bn	PLN 1.2 bn	PLN 1 050 m Natural gas /		Syndicate of companies:	December 2026
at Rybnik 2050 sp. z o.o.				63.9 %	Polimex Mostostal S.A. (consortium leader), Siemens Energy sp. z o.o., Siemens Energy Global GmbH & Co. KG

¹ Expenditures incurred do not include financing costs and expenses in the form of advances paid to the General Contractor for the Investment and to the other contractors.

² Completed

3.3.4 Conventional Generation

This segment includes lignite mining and generation of electricity in conventional sources.

The data presented below concerns the third quarter of 2024.

Main revenue items	PLN m				Main cost items	PLN m
Sale of electricity1	6 249	Electricity generation		10.48 Twh	Fees for CO2 emissions	4 316
Capacity market	603				Personnel costs2	894
Revenues from ancillary services	339	Heat			Cost of production fuels used	654
Sale of heat		generation	0.37 PJ		External services	518
Including contracted capacity and heat distribution	30				Depreciation and	354
					amortisation, liquidation, write-offs
		Main result items		PLN m
		EBIT recurring		144
		EBIT reported		-296
		EBITDA recurring		484
		EBITDA reported		58

¹ Managerial perspective.

²Adjusted for one-offs.

The main source of revenue in the Conventional Generation segment is revenue from the sale of electricity on the wholesale market, based on electricity prices that are shaped by supply and demand mechanisms, taking into account the variable costs of generation. At the same time, the segment's key cost items, given their size and volatility, and thus their impact on operating results, are the fees for CO2 emissions and cost of production fuels, mainly hard coal. Lignite-based production, which is of key significance for the Group, is based on own mines, therefore its cost is relatively stable and reflected mainly in fixed-cost items, i.e. personnel costs, third-party services and depreciation.

Revenue from the Capacity Market, a mechanism introduced to prevent electricity shortages in the NPS, constitutes a significant item in the segment's revenue in 2021. PGE GiEK S.A.'s power plants receive fees for performing the capacity obligation (a Capacity Market entity being on standby to supply electricity to the system and the obligation to supply specified capacity to the system when the system is under threat). Capacity Market revenue compensated for revenue from ancillary services. The cold intervention reserve and operational capacity reserve services were discontinued, while revenue from capacity reallocation remained. Since mid-June 2024, the next phase of the Balancing Market reform has been implemented. As a result of the above reform, power plants have the possibility to offer balancing energy and balancing capacity. The new catalogue of balancing services includes: frequency maintenance reserve, frequency restoration reserve and replacement reserve.

In addition, this segment generates revenues from sales of heat produced at industrial plants.

Under the provisions of the Emergency Measures Act in 2023, electricity generating entities were required to make a contribution to the Price Difference Payment Fund.

ASSETS

Conventional Generation segment consists of: 2 lignite mines and 5 conventional power plants.

Conventional Generation segment is the leader of lignite mining (its share in the extraction market of this raw material accounting for 96%⁵ of domestic extraction), it is also the largest generator of electricity as it generates approx. 29%⁶ of domestic gross electricity production. The generation is based on lignite extracted from mines owned by the company as well as hard coal.

Diagram: Main assets of the Conventional Generation segment with their installed capacity.

Table: Electricity production (TWh).

Main fuel types	Q3 2024	Q3 2023	% change
Hard coal	2.53	4.21	-40%
Lignite	7.94	7.13	11%
Biomass	0.01	0.01	0%
Total	10.48	11.35	-8%

Table: Heat production (PJ).

Main fuel types	Q3 2024	Q3 2023	% change
Hard coal	0.08	0.08	0%
Lignite	0.29	0.28	4%
Total	0.37	0.36	3%

⁵ Own calculations based on data from Central Statistical Office of Poland.

⁶ Own calculations based on data from PSE S.A.

KEY FINANCIAL FIGURES IN THE SEGMENT

Chart: Key changes of recurring EBITDA in Conventional Generation (in PLN million) – managerial perspective.

	EBITDA Q3 2023	Electricity production -volume1	Electricity production - price1	Ancillary services and Capacity Market2	PDP Fund	Costs of fuel	Costs of CO2	Costs of ZHZW3	Personnel costs4	Other5	EBITDA Q3 2024
Change		-708	-2 178	30	958	1 049	1 008	75	-9	-51
Reported EBITDA Q3 2023	310
One-offs Q3 2023	0
Recurring EBITDA Q3 2023	310		9 135	912	958	1 703	5 324	338	885	529
Recurring EBITDA Q3 2024			6 249	942	0	654	4 316	263	894	580	484
One-offs Q3 2024											-426
Reported EBITDA Q3 2024											58

¹Managerial perspective.

2 Including revenue from balancing services.

³ZHZW – agreement for Commercial Management of Generation Capacities.

⁴ Personnel costs without impact of the change in actuarial provision and costs of Voluntary Leave Program (one-offs).

5 Item Other without impact of the change in reclamation provision (one-off).

Table: Data on one-offs in the Conventional Generation segment (PLN million).

One-offs	Q3 2024	Q3 2023	% change
Change in reclamation provision	-410	-	-
Change in actuarial provision	-14	-	-
Costs of Voluntary Leave Program	-2	-	-
Total	-426	-	-

Key factors affecting the EBITDA result of Conventional Generation segment on y/y basis:

Decrease in revenues from the sale of electricity, which results from: lower average selling price of electricity by PLN 212/MWh y/y, which translated into a decrease in revenues by approx. PLN 2 178 million; lower sales volume by 0.9 TWh, which resulted in a decrease in revenues by approx. PLN 708 million.
Higher result obtained from the Capacity Market, as a result of the higher average price and higher revenues from the secondary market and lower revenues from ancillary services, mainly as a result of the high 2023 base, i.e. revenues from settlements with the TSO due to the reallocation of electricity

production between PGE GiEK branches within the Balancing Market, which was mostly offset by revenue from new balancing services in the third quarter of 2024.

Lack of contribution to PDP Fund, which occurred in 2023.
Lower fuel consumption costs, mainly hard coal as a result of the lower consumption of this fuel by 14.5 GJ m due to lower electricity production and lower price by PLN 17.8/GJ. Main changes on different types of fuel are presented in the chart below.
Lower CO² costs as a result of lower average cost of CO² by PLN 66.4/t and lower CO2 emissions by 0.5 tons m as a result of lower electricity production. Main changes are shown in the chart below.
Lower ZHZW costs results mainly due to lower average price of electricity.
Higher personnel costs mainly in connection with the implementation of agreements concluded with the social party.

	Cost of fuels Q3 2023	Hard coal Hard coal price volume		Biomass Biomass price volume		Light and heavy oil volume	Light and heavy oil price	Cost of fuels Q3 2024
Change		-598	-461	1	-1	9	1
Cost of fuels Q3 2023	1 703	1 664		4		35
Cost of fuels Q3 2024		605		4		45		654

Table: Data on use of production fuels consumption in Conventional Generation.

		Q3 2024	Q3 2023
Fuel type	Volume (tons ths)	Cost (PLN million)	Volume (tons ths)	Cost (PLN million)
Hard coal	1 134	605	1 780	1 664
Biomass	5	4	4	4
Fuel oil – light and heavy	18	45	14	35
Total		654		1 703

CO2 costs
Q3 2024	4 316

Table: Data on CO² costs in Conventional Generation.

Data on CO2	Q3 2024	Q3 2023	% change
Allocation of free allowances for CO2 emissions (tons)	14 886	15 696	-5%
CO2 emission (tons)	11 740 668	12 270 343	-4%
Average CO2 costs (PLN/t CO2)	368.08	434.45	-15%

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in Conventional Generation segment

PLN million	Q3 2024	Q3 2023	% change
Investments in generating capacities, including:	182	349	-48%
 Development	1	11	-91%
 Modernisation and replacement	181	338	-46%
Other	21	32	-34%
Total	203	381	-47%

KEY EVENTS IN CONVENTIONAL GENERATION

As part of the construction of the start-up station at the Dolna Odra Power Plant on September 18, 2024, an amended Heat Generation Licence was issued. A final settlement of the task is planned by November 29, 2024.
As part of the task called The construction of a steam generator at the Rybnik Power Plant on October 18, 2024, a Heat Generation Licence was issued.
In the scope of the task of the Extension of the industrial wastewater treatment plant at the Turów Power Plant, a 720-hour trial run with guarantee measurements has been in progress since October 9, 2024.
Further contractual penalties were accrued in respect of the completed task of the Construction of Unit No. 7 at the Turów Power Plant. A detailed description can be found in p. 4.1.17 of this report.

3.3.5 District Heating

Core business of the District Heating segment includes production of electricity and heat from cogeneration sources as well as distribution of heat.

The data presented below concerns the third quarter of 2024.

¹Managerial perspective.

²Adjusted for one-offs.

As in the case of Conventional Generation, this segment's significant revenues are revenues from electricity sales, however, they are usually directly related to generation of heat which in turn depends on demand that is highly seasonal and depends on external temperatures. This is why, in contrast to industrial power plants in Conventional Generation, as a rule, CHP plants do not have any considerable impact on the development of prices for electricity on the wholesale market.

Revenues from the sale and distribution of heat are regulated revenues. Energy companies independently set tariffs and present them to the President of the Energy Regulatory Office (the "ERO President") for approval. Heat production at PGE Group takes place in cogeneration units, which tariffs for heat are calculated using a simplified approach (compared to tariffs based on a full cost structure), based on reference prices, conditioned on average sales prices for heat generated in units with specific fuel other than cogeneration units. They are published each year by the ERO President. Tariffs for heat production for cogeneration units in a given tariff year thus reflect changes in the costs of heat-generation units (not cogeneration units) in the previous calendar year. The cost approach is applied in the case of tariffs for heat distribution, which allows to cover justified costs (mainly the costs of heat losses and property tax) and a return on invested capital, in line with guidelines from the ERO President. Distribution tariffs for heat are in place at branches in Gorzów and Zgierz, as well as by KOGENERACJA S.A., PGE Toruń and Zielona Góra CHP.

Generation of heat and electricity is directly related to key variable costs of the segment, i.e. the cost of production fuel used (in particular, hard coal and gas) and the cost of fees for CO² emissions.

Electricity production in high-efficiency cogeneration is additionally remunerated. CHP plants receive support at a level covering increased operating costs related to production. The support mechanism in the form of certificates is in place also for biomass-fired generating assets. This type of production is additionally remunerated by awarding origin certificates, i.e. green certificates, the sale of which generates additional revenue. Within the segment such revenues is obtained at Szczecin CHP plant and biomass unit in Kielce CHP.

performing the capacity obligation (a Capacity Market entity being on standby to supply electricity to the system and the obligation to supply specified capacity to the system when the system is under threat).

Weather conditions substantially affect the segment's results. Temperatures directly shape the level of heat demand. Simultaneously, the level of heat production determines the level of electricity production in cogeneration, which is an additional source of revenues that decisively affects the CHP plant's profitability.

Under the provisions of the Emergency Measures in 2023 Act, electricity generating entities were required to make a contribution to the Price Difference Payment Fund.

ASSETS

The following companies are included in the segment: PGE Energia Ciepła S.A., KOGENERACJA S.A., EC Zielona Góra S.A., PGE Toruń S.A., MEGAZEC sp. z o.o. and the district heating network in Gryfino.

Currently, the segment includes 16 combined heat and power plants.

District Heating is the largest heat producer in Poland. Generation is based mainly on hard coal and natural gas.

Diagram: Main assets of the District Heating segment and their installed capacity.

TARIFFS IN DISTRICT HEATING

Due to the fact that the income on heat sales for CHP plant are tariffed as part of the so-called simplified method, they are characterised by a relative delay in the transfer of costs (annual or two-year). They are based on the year-to-year dynamics of average costs (including fuels used) incurred by entities that are not co-generation entities for the year preceding the time of tariff setting.

Charts: Changes in the reference price of heat for hard coal and natural gas (PLN/GJ).

Source: ERO.

Charts: Changes in costs of fuels – hard coal (PLN/GJ) – PSCMI-2 ⁷ and gas (PLN/MWh) - TGE.

Source: ARP, TGE.

Chart: Changes in price of CO² emission rights⁸ (PLN/t).

Price of CO² emission rights

Source: ICE.

Reflecting previous cost increases, the reference price of heat produced from hard coal increased by 60% in 2023. It is a base to the increase in heat prices for co-generation entities establishing the tariff during 2024. In 2024 the average market price of coal decreased by 35%, while the average price of CO² emission rights decreased by 24% in comparison to 2023.

Tariffs for the production of heat from gas in 2024 are set based on an change in the reference price, whereas in 2024 gas prices are lower than in previous periods. Prices of gas in TGE forward contracts stood at approx. PLN 162/MWh (i.e. decrease by 59%).

⁷ PSCMI-2 Polish Steam Coal Market Index 2 - the average prices for pulverised coals sold on the domestic heating market.

⁸ Arithmetic average of the daily and monthly records in a given period (spot price).

Chart: Key changes of EBITDA in District Heating (in PLN million) – managerial perspective.

	EBITDA Q3 2023	Heat production - volume	Heat production - price1	Electricity production - volume	Electricity production – price1	Capacity Market	Revenues from support of highly efficient cogeneration		PDP Fund Cost of fuel	Costs of CO2	Personnel costs2	Other3	EBITDA Q3 2024
Change		22	11	-51	6	4	-31	84	21	16	2	-17
Reported EBITDA Q3 2023	89
One-offs Q3 2023	3
Recurring EBITDA Q3 2023	86		534	676		45	41	84	463	342	159	162
Recurring EBITDA Q3 2024			567	631		49	10	0	442	326	157	179	153
One-offs Q3 2024													1
Reported EBITDA Q3 2024													154

¹Value adjusted for costs of certificates redemption; data for Q3 2023 adjusted to current presentation - including heat price compensation.

²Personnel costs without taking into account of change in the actuarial provision (one-off).

³Item Other without taking into account the impact of changes in the LTC compensations and change in the reclamation provision (one-offs).

Table: Data on one-offs in District Heating (PLN million).

One-offs	Q3 2024	Q3 2023	% change
Change in the reclamation provision	-2	-	-
Change in the actuarial provision	-1	-	-
LTC compensations	4	3	33%
Total	1	3	-67%

Key factors affecting the EBITDA result of District Heating segment on y/y basis:

Higher volume of net heat production in the third quarter of 2024 y/y is a result of lower outside temperatures compared to analogical period of 2023. The average temperatures in the third quarter of 2024 were by 0.1 ^oC lower, what translated into increased heat production (by 0.1 PJ).
Increase of heat sale price is a result of increased tariffs for heat for the CHP plants in the third quarter of 2024 following the publication by the ERO of reference prices for heat production in units not being cogeneration units.
Decrease in revenues from the sale of electricity results from: lower sales volume by 0.1 TWh, which resulted in a decrease in revenues by approx. PLN 51 million; higher average selling price of electricity by PLN 5/MWh y/y, which translated into an increase in revenues by approx. PLN 6 million.
Higher revenues from Capacity Market, due to the higher volume of dispatch capacity.
Lower revenues due to support for high-efficiency cogeneration due to the granting of a lower individual cogeneration bonus for gas-fired units.

Lack of contribution to PDP Fund, which occurred in 2023. In 2024, the final settlement of the contribution took place.
Lower fuel consumption costs which are caused by lower prices of hard coal. The details are shown in the chart below.
Lower CO² costs are mainly a result of lower volume of emissions. The details are shown in the chart below.
Lower personnel costs due to a decrease in average employment.

Chart: Consumption costs of production fuels in District Heating (in PLN million).

	Costs Q3 2023	Hard coal volume	Hard coal price	Gas volume	Gas price	Biomass volume	Biomass price	Fuel oil and other raw materials volume	Fuel oil and other raw materials price	Costs Q3 2024
Change		-20	-64	-5	88	6	-28	3	-1
Costs of fuel Q3 2023	463	222		184		50		7
Costs of fuel Q3 2024		138		267		28		9		442

Table: Data on production fuels consumption in District Heating.

	Q3 2024		Q3 2023
Fuel type	Volume	Cost	Volume	Cost
	(tons ths)	(PLN million)	(tons ths)	(PLN million)
Hard coal	276	138	296	222
Gas (cubic metres ths)	154 408	267	162 999	184
Biomass	127	28	111	50
Fuel oil and other raw materials	-	9	-	7
Total		442		463

Table: Data on CO² costs in District Heating.

Data on CO2	Q3 2024	Q3 2023	% change
Allocation of free allowances for CO2 emissions (tons)	37 911	47 274	-20%
CO2 emission (tons)	817 340	889 459	-8%
1 Average CO2 costs (PLN/t CO2)	418,35	406,26	3%

¹ Managerial perspective.

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in District Heating segment.

PLN million	Q3 2024	Q3 2023	% change
Investments in generating capacities, including:	234	367	-36%
 Development	109	259	-58%
 Modernisation and replacement	125	108	16%
Other	24	29	-17%
Total	258	396	-35%

KEY EVENTS IN DISTRICT HEATING

The turnkey construction of the New Czechnica CHP plant, i.e. CCGT unit with a total gross capacity of 179 MWe and 163 MWt, heat accumulator and four water boilers with total capacity of 152 MWt, is in progress. The water boiler plant, which was commissioned on November 16, 2023, operates as a part of the district heating system of Siechnice and Wrocław. In the third quarter of 2024, commissioning work continued on the gas and steam unit, including the so-called hot start-up and the first firing of both gas turbines. The contractual deadline for completing the investment is the second quarter of 2024, but mediation is currently underway in this regard at the Arbitration Court at the General Prosecutor's Office of the Republic of Poland.

The construction of a reserve-peak boiler plant with a total capacity of 182 MWt continued at Lublin CHP plant. Assembly work has been completed and the project is at the start-up stage.
At Rzeszów CHP plant the construction of the second line with a capacity of 80 000 tons of waste / year of the Waste-to-Energy Incinerator is in progress. During the third quarter of 2024, installation work was carried out on the main equipment and auxiliary installations. Commissioning is planned for the first quarter of 2025.
At Bydgoszcz CHP plant (EC II) the contract is being pursued for construction of a cogeneration source based on five gas engines with a total capacity of 52.6 MWe/ 50.8 MWt and a reserve-peak heat source. In the third quarter of 2024, the installation of the cogeneration aggregates was completed. In parallel, assembly work continued on the remaining manufacturing units and tasks on other work fronts, including the electrical front. The contractual commissioning date is the first quarter of 2025.
At Kielce CHP plant the start-up and regulation run of the cogeneration system was carried out based on a 7.32 MWe and 12.42 MWt gas turbine with a recovery boiler took place in the first half of 2024. The plant was commissioned in August 2024.
PGE Energia Ciepła S.A. began the implementation phase of the programme for the construction of photovoltaic power plants to meet part of particular facilities' own needs at selected locations. The programme includes the construction of PV installations with a total capacity of approximately 13 MW and is being carried out in eight locations. In the third quarter of 2024, projects under construction included: PV Rzeszów II, PV Kielce, PV Zgierz and PV Lublin with a total capacity of approximately 4 MW. In August 2024, PV Rzeszów I plant with 0.3 MW capacity was commissioned. Simultaneously, the required administrative decisions are being obtained and tenders are being conducted for the selection of general contractors for the remaining sites.
Design work is underway at Gdynia CHP plant for the construction of new generation sources gas engines of up to 50 MWe and a 30 MWt biomass boiler. Construction work is scheduled to start in the fourth quarter of 2024 (engine scope) and in the first quarter of 2025 (biomass boiler scope).

Aim of the project	Budget1	Expenditures incurred1	Capital expenditures in 9M 20241	Fuel/ Net efficiency	Contractor	Investment completion date
Construction of New Czechnica CHP Plant	PLN 1.2 bn	approx. PLN 1 bn	PLN 81 m	Gaz ziemny/ Kogeneracja 85%	Syndicate of: Polimex Mostostal S.A. (Leader) / Polimex Energetyka sp. z o.o.	Contractual date: Q2 2024 (mediation in progress)

KEY PROJECT IN DISTRICT HEATING

¹ Expenditures incurred do not include financing costs and expenses in the form of advances paid to the General Contractor for the Investment and to the other contractors.

3.3.6 Distribution

Core business of the segment includes supply of electricity to final off-takers through the grid and HV, MV and LV infrastructure.

The data presented below concerns the third quarter of 2024.

¹ Managerial perspective

² Adjusted for one-offs

ERO President every year at company request what means that it is regulated. The tariff takes into account reasonable operating costs related to the distribution system operator's activities, depreciation costs, costs of taxes on distribution assets, costs related to the necessity to cover network losses on electricity distribution or the purchase of transmission services from the TSO. At the same time, the tariff reflects the costs transferred in fees such as the RES fee, the transition fee, the co-generation fee and the capacity fee.

The key element shaping the Distribution segment's result is return on company's invested capital. For this purpose, the so-called Regulatory Asset Base (RAB) is determined and calculated on the basis of incurred investment costs including depreciation of assets. The RAB is the basis for calculating the return on capital employed, using the weighted average cost of capital (WACC), which is determined by the ERO President in the tariff process. It is within the competence of the ERO President to differentiate the remuneration from capital employed, taking into account the prioritisation of the DSO's development objectives, so that priority investment projects can be remunerated using an additional reinvestment bonus mechanism. In addition, return on capital depends on the achievement of individual quality targets set by the ERO President for performance indicators including: interruption time, interruption frequency and connection time for years 2018-2025.

As part of the government's Solidarity Shield, a package of laws was adopted in 2022 to protect consumers, including with respect to the pricing of electricity distribution services. Under its terms, for some eligible customers, within certain limits, the prices of electricity distribution services in 2023 were frozen at the 2022 price level, which was in force until the end of June 2024. As a result of the entry into force of the Energy Voucher Act from July 1, 2024, prices for electricity distribution services have been unfrozen, with the result that rates from the current tariff apply. DSOs are entitled to compensation to cover the application of reduced prices for distribution services. The compensation is the difference in the electricity distribution service charges between the 2024 tariff and the 2022 tariff up to the maximum limit. The entity responsible for the payment of compensation is the company Zarządca Rozliczeń S.A. As a result of the entry into force of the Energy Voucher Act from July 1, 2024 the settlement deadline for compensation for 2023 was also postponed from June 30, 2024 to October 31, 2024.

AREA, VOLUME, CUSTOMERS

PGE Dystrybucja S.A. operates in the area⁹ of 129 938 sq. km and delivers electricity to approximately 5.8 million customers.

Diagram: Area of PGE distribution grid.

Table: Volume of distributed energy (TWh)

Tariff	Q3 2024	Q3 2023	% change
A tariff group	1.32	1.28	3%
B tariff group	3.65	3.57	2%
C+R tariff groups	1.49	1.47	1%
G tariff group	2.32	2.32	0%
Total	8.78	8.64	2%

Table: Number of customers according to power take-off points.

Tariff	September 30, 2024	September 30, 2023	% change
A tariff group	158	145	9%
B tariff group	14 509	13 921	4%
C+R tariff groups	476 484	475 151	0%
G tariff group	5 286 309	5 218 941	1%
Total	5 777 460	5 708 158	1%

⁹ The area of municipalities in which PGE Dystrybucja S.A. operates.

KEY FACTORS FOR THE RESULTS OF THE SEGMENT

Chart: Key changes of EBITDA in Distribution (in PLN million) – managerial perspective.

	EBITDA Q3 2023	Electricity distribution volume	Network losses1	Revenues from connection fees	Other revenue from distribution services	Real estate tax	Personnel costs2	Other	EBITDA Q3. 2024
Change		28	86	-25	69	-11	-41	35
Reported EBITDA Q3 2023	1 001
One-offs Q3 2023	0
Recurring EBITDA Q3 2023	1 001	1 754	366	69	89	127	404	-5
Recurring EBITDA Q3 2024		1 782	280	44	158	138	445	30	1 142
One-offs Q3 2024									-12
Reported EBITDA Q3 2024									1 130

¹Adjusted for revenues from the Balancing market.

²Personnel costs without impact of the change in the actuarial provision (one-off).

Table: Data on one-offs in Distribution (PLN million).

One-off	Q3 2024	Q3 2023	% change
Change in actuarial provision	-12	0	-
Total	-12	0	-

Key factors affecting results of Distribution segment y/y:

An increase in the volume of distributed electricity by 0.14 TWh, resulting mainly from higher demand for electricity in the industrial customers, large companies and small and medium-sized enterprises tariffs.
Lower costs of electricity purchases to cover network losses mainly as a result of drop in electricity prices.
Increase in connection fee revenue as a result of lower completion of connection projects during the reporting period.
Increase in other revenue from distribution services mainly due to reactive power fees.
Increase of costs of tax on real estate results from higher tax rates and an increase in the value of the buildings as a result of the investments and expansion of the power grid.
Increase in personnel costs mainly due to realisation of agreements concluded with the social party.
Value change in item Other, results mainly from increased capitalised costs, partially offset by higher repair and operating costs. The item additionally includes a higher result on other operating activities.

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in Distribution segment.

PLN million	Q3 2024	Q3 2023	% change
Investments in generating capacities, including:	767	1 086	-29%
 Development	371	432	-14%
 Modernisation and replacement	396	654	-39%
Total	767	1 086	-29%

KEY EVENTS IN DISTRIBUTION

Connecting new customers

The Customer Connection Program to the distribution network was implemented, under which in the third quarter of 2024 expenditures were incurred in the amount of PLN 328 million.

Program LTE450

The objective of the Programme is the construction of a modern Special Communications Network in the LTE450 technology for the provision of services such as critical communication, control of energy infrastructure and remote reading for PGE Dystrybucja S.A. The entity responsible for the execution of this task within the PGE Capital Group is PGE Systemy S.A.

In the third quarter of 2024, in accordance with the framework schedules resulting from the concluded contracts, implementation work continued in the main project streams covering the deployment of further components of the CORE core network, the RAN radio network and the backbone telepresence network. In the CORE project, work related to the testing and acceptance of the Test Environment and the installation of equipment dedicated to the Production Environment was carried out. In the RAN project, works related to the commissioning of the OSS surveillance system were carried out. In the Teletransmission project, the implementation of synchronisation sources was completed and further implementation work was carried out. In parallel, the modernisation of towers belonging to PGE Dystrybucja S.A. dedicated to the installation of base stations of the system continued.

The final selection of the Contracting Authority in two public tenders for the purchase of Power Systems and for the lease of space on commercial operators' towers to complement the backbone of the LTE450 network under construction has been published.

The input documents to the National Recovery Plan proposal for co-financing the implementation of LTE450 were updated and documents were submitted to the Ministry of State Assets.

The launch of the LTE450 service is planned for the second quarter of 2025 and the full coverage of the PGE Dystrybucja S.A. operating area by the end of second quarter of 2026.

Cabling program

In the third quarter of 2024 PGE continued to implement its cabling program for medium-voltage (MV) grids up to the level of 30% of MV networks owned by PGE Dystrybucja S.A., incurring expenditures in amount of PLN 84 million.

4 555 kms of MV cable lines were completed from the start of the Program in 2019.

Installation program for Remote Reading Meters

This project implementation is mandatory and results from the requirements imposed on Distribution System Operators (DSO) by the legislator in the amended Energy Law. In the third quarter of 2024, the tasks with a value of PLN 125 million were realized in order to:

supply of meters for end customers connected to the LV network and for MV/LN substations,
modernisation of MV/LN substations with regard to ensuring the possibility of installing remote reading balancing meters,
installation of meters at off-takers and at substations,
selection of suppliers of remote reading meters for end off-takers for the years 2024 2025.

According to the provisions of the law, the DSO until December 31, 2028 is to install remote reading meters connected to a remote reading system at power take-off points, representing at least 80% of the total number of end-customer energy consumption points.

Implementation of central systems CRM and Billing (NCB Program)

The aim of the NCB Program is the implementation of a comprehensive, central IT solution to support key business processes at PGE Group being performed by PGE Obrót S.A. and PGE Dystrybucja, consisting of two billing systems – separate for each of the companies – and a CRM system for PGE Obrót S.A. The entity responsible for the execution of this task within the PGE Capital Group is PGE Systemy S.A.

In the third quarter of 2024 implementation works of the pilot stage were continued, covering selected local billing systems. At the same time, as part of dedicated accompanying projects included in the Programme, works were carried out to ensure the necessary integration of the new solution with other components of the IT environment in the PGE Capital Group. In the stream dedicated to the adaptation of PGE CG's IT environment to the requirements of the Central Energy Market Information System (CSIRE), work was started in the communication module in preparation for the pilot at PSE S.A. The initial feeding of CSIRE was carried out in October 2024.

the start of the system within the pilot phase is planned for the fourth quarter of 2024, and completion of key tasks under the NCB Program in 2025.

3.3.7 Railway Energy Services

The segment include activities by the PGE Capital Group mainly in field of distribution and sale of electricity to railway operators and customers functioning within the railway system, the sale of fuels, as well as the maintenance and modernisation of overhead contact line network, together with other ancillary services.

The data presented below concerns the third quarter of 2024.

¹Adjusted for one-offs.

One of the primary sources of revenue in the Railway Energy Services segment is the sale of electricity. This revenue is derived from the supply of energy to railway operators and entities connected to the segment's distribution network. Rail operators are additionally the recipients of fuel sales services.

Another important source of revenue is the revenue form the distribution of electricity. Similarly to the Distribution segment, this revenue is subject to applicable regulations and based on a tariff approved by the ERO President. In principle, this tariff ensures a transfer of reasonable costs and a return on the capital invested in the distribution network. The activities of the Railway Energy Services segment as a distribution network operator are limited to the areas along railway lines throughout the country.

The most significant cost items of the segment include the purchase of the distribution services, as well as the purchase of electricity and fuels for resale.

The scope of the Railway Energy Services segment's activities comprises works related to the maintenance of the overhead contact line network and the performance of local modernisation works on this network. The segment also provides power engineering services outside the ranges of the overhead contact line network, such as equipment maintenance, as well as the construction and maintenance of railway traffic control systems. In this type of activity, the most significant costs are personnel costs.

Additionally, on the basis of the provisions of the Act of December 7, 2023 amending the acts to support consumers of electricity, gas fuels and heat, the system of compensation for trading companies for the application of capped prices and discounts was extended until June 30, 2024. In addition, as a result of the Act of May 23, 2024 on the energy voucher and amendments to other acts, from July 1, 2024, maximum prices for households, SMEs and local authorities were introduced.

VOLUMES, CUSTOMERS AND OPERATING DATA

The main part of the segment's assets consists of electricity distribution assets held by PGE Energetyka Kolejowa SA. Among other elements, these assets include 544 overhead contact line network substations supplying power to railway lines throughout the country. The total length of the company's network lines is 18.4 thousand kilometres. The network serves approximately 57 thousand customers.

Table: Volume of electricity sold to final off-takers (TWh).

Tariff	Q3 2024	Q3 2023	% change
B tariff group	0.69	0.68	1%
C+R tariff groups	0.02	0.03	-33%
G tariff group	0.02	0.01	100%
Total	0.73	0.72	1%

Table: Number of retail sale customers by power take-off points.

Taryfy	September 30, 2024	September 30, 2023	% change
B tariff group	294	314	-6%
C+R tariff groups	7 302	8 147	-10%
G tariff group	29 863	27 683	8%
Total	37 459	36 144	4%

Table: Volume of distributed electricity (TWh).

Tariff	Q3 2024	Q3 2023	% change
B tariff group	0.89	0.87	2%
C+R tariff groups	0.11	0.11	0%
G tariff group	0.01	0.02	-50%
Total	1.01	1.00	1%

Table: Number of distribution customers by power take-off points.

Tariff	September 30, 2024	September 30, 2023	% change
B tariff group	670	637	5%
C+R tariff groups	25 887	25 907	0%
G tariff group	30 181	27 946	8%
Total	56 738	54 490	4%

KEY FACTORS FOR THE RESULTS OF THE SEGMENT

Chart: Key changes of recurring EBITDA in Railway Energy Services (in PLN million) – managerial perspective.

	Q3 2023	distribution1		operations2			Q3 2024
Change		-128	40	67	-12	-37
Reported EBITDA Q3 2023	356
One-offs Q3 2023	0
Recurring EBITDA Q3 2023	356	379	40	71	129	75
Recurring EBITDA Q3 2024		251	0	138	141	38	286
One-offs Q3 2024							-8
Reported EBITDA Q3 2024							278

¹ Excluding the costs of transmission services from PSE S.A., including compensation revenues, connection revenues, resumption of supplies and adjusted for the cost of the balancing difference.

²Other activities mainly concern the sale of fuel and traction services.

³Adjusted for one-offs.

Table: Data on one-offs in Railway Energy Services segment (PLN million).

One-offs	Q3 2024	% change
Recognition of write-down of receivables from PKP Cargo S.A.	-6	-
Change in actuarial provision	-2	-
Total	-8	-

Key factors affecting results of Railway Energy Services segment y/y:

The lower result on distribution is mainly the result of a decrease in connection fee revenue due to the schedule of the Power Supply System Modernisation Program (MUZa) offset in part by a lower cost of energy purchased for losses due to a decrease in electricity prices and higher capacity realisation.
Lack of contribution to the PDP Fund, which occurred in 2023.
Higher result on other activities mainly relates to Operations in area of traction services in connection with the indexation of contracts with contractors and is due to the change in presentation applied in 2024, resulting in an increase in the result on Other operations and a decrease on item Other.
Higher personnel costs mainly in connection with realization of the agreements with the social party.
Change in item Other mainly due to the implementation of intercompany agreements and the change in presentation applied in 2024, resulting in an increase in the result in Other operations and a decrease in Other. This decrease was partially offset by a positive result in Other operating activities, resulting from the write-down of receivables over 90 days past due in 2023.

CAPITAL EXPENDITURES

Table: Capital expenditures in Railway Energy Services segment

PLN million	Q3 2024	Q3 2023	% change
Investment in generation capacities, including:	100	274	-64%
 Development	76	254	-70%
 Modernisation and replacement	24	20	20%
Total	100	274	-64%

KEY EVENTS IN THE SEGMENT

MUZa Program - Power Supply Systems Modernisation programme

The MUZa programme was continued, that is being implemented on the basis of the "Agreement on the principles of establishing a connection to the distribution network" entered into with PKP Polskie Linie Kolejowe S.A. (PKP PLK) and its objectives are the following:

enabling an increase in the capacity of railway lines (increase in train traffic),
introducing locomotives with higher power (of the order of 6 MW) allowing for an increase in speed up to 200 km/h,
electrifying railway lines,
reducing the distribution network and equipment failure rate as well as improving the quality parameters of electricity,
meeting the power supply requirements according to the standards set out in the Technical Specifications for Interoperability (TSI) of the "Energy" subsystem – obtained authorisation from the President of the Railway Transport Office (RTO).

On the part of the Railway Energy Services segment, the programme consists in the modernisation and construction of overhead contact line network substations in accordance with the agreements for network connections entered into with PKP PLK. In the third quarter of 2024 expenditures incurred amounted to PLN 46 million. Since the start of the programme in 2012, 296 connection agreements were signed, of which 264 were completed.

On July 29, 2024 a term loan agreement in amount of PLN 1 billion was signed with the European Investment Bank for financing of MUZa Program.

Connection of new electricity consumers

The program for connecting new customers to the distribution network was realised, under which expenditures of PLN 14 million were incurred in the third quarter of 2024.

ZUBI project - project aimed at installing remote reading balancing meters

Project aimed at installing remote reading balancing meters (Balancing Systems Installation – BSI ) was continued. The implementation of the project is mandatory under the requirements imposed on DSOs by the Legislator in the Energy Law of May 20, 2021. The deadline for the completion of the task is determined for December 31, 2025. In the third quarter of 2024, tasks were carried out aimed at:

purchase of balancing cabinets with installed remote reading metres for MV/LV substations,
purchasing current transformers for MV/LV substations,
purchasing installation services for balancing cabinets at MV/LV substations,
installing 1 254 balancing cabinets at MV/LV substations.

Expenditures of PLN 13 million were incurred in the third quarter of 2024 for third project.

3.3.8 Supply

Supply segment activities include Group's wholesale and retail trading of electricity. Wholesale trading includes mainly electricity trading on behalf of and for Conventional Generation segment, District Heating segment and Renewables segment.

The data presented below concerns the third quarter of 2024.

¹Data for PGE Obrót S.A.

² Managerial perspective.

As part of retail-market activities, the key source of segment's revenue is sale of electricity to final customers. This is sale to business and institutional clients, which constitutes almost 70% of the sales volume, and to retail clients. The segment's revenue also includes the sale of natural gas and fuels, mainly: pulverised coal and coarse coal, which is sold by PGE Paliwa sp. z o.o.

Electricity sales are matched by the costs to purchase electricity on the wholesale market and costs to redeem certificates as part of the support system for renewable sources and energy efficiency.

As part of the activities on the wholesale market, CO² purchases are made for the needs of the Conventional Generation and District Heating segments, which is reflected both in terms of costs and revenues. At the same time, a significant revenue item is the provision of services to the Group's companies related to the management of purchases and sales of electricity and related products.

The Supply segment also incurs costs related to the operations of the Group's corporate centre.

VOLUME, CUSTOMERS AND OPERATING DATA

Table: Volume of electricity sales to final off-takers (TWh)¹ .

Tariffs	Q3 2024	Q3 2023	% change
A tariff group	1.07	1.35	-21%
B tariff group	2.86	2.83	1%
C+R tariff groups	1.44	1.43	1%
G tariff group	2.20	2.16	2%
Total	7.57	7.77	-3%

¹Data for PGE Obrót S.A.

Table: Number of customers according to power take-off points¹ .

Tariffs	September 30, 2024	September 30, 2023	% change
A tariff group	144	163	-12%
B tariff group	11 082	11 200	-1%
C+R tariff groups	396 509	420 436	-6%
G tariff group	5 287 778	5 215 422	1%
Total	5 695 513	5 647 221	1%

¹Data for PGE Obrót S.A.

Chart: Key changes of EBITDA in Supply (in PLN million) – managerial perspective.

-400
	EBITDA Q3 2023	Result on electricity - volume1	Result on electricity - price1	Revenues from services provided to other segments of the PGE Group2	Result on sale of gas and other fuels	Result on sale of CO2	Personnel costs3	Other4	EBITDA Q3 2024
Change		-14	-567	-60	33	23	-53	127
Reported EBITDA Q3 2023	387
One-offs Q3 2023	5
Recurring EBITDA Q3 2023	382		247	418	9	-17	159	-116
Recurring EBITDA Q3 2024			-334	358	42	6	212	11	-129
One-offs Q3 2024									450
Reported EBITDA Q3 2024									321

¹Item without taking into account the adjustment of electricity compensation revenues for previous years (one-off).

²This item does not include the margin on CO² transactions with PGE Group companies E.

³Item without taking into account impact of the change in actuarial provision (one-off).

⁴Item without taking into account correction of the contribution to the PDP Fund for 2022 in PGE Obrót S.A. (one-off).

Table: Data on one-offs in Supply segment (PLN million).

One-offs	Q3 2024	Q3 2023	% change
Correction of estimated contribution to Price Difference Payment Fund for 2022 at PGE Obrót	-	5	-
Adjustment of electricity compensation revenues for previous years	452	-	-
Actuarial provision	-2	-	-
Total	450	5	8 900%

Key factors affecting EBITDA of Supply segment y/y:

The lower result on electricity sales is mainly due to higher portfolio balancing costs.
Decrease of revenues from services performed within the Capital Group resulting from the decrease in revenues under the ZHZW agreement, which is a consequence of the lower value of trade in electricity under management.
Higher result on sale of gas and other fuels is an effect of higher margins and sales volumes of coarse coal.
Higher result on CO² sales mainly as a result of higher interim valuation of CO² forward contracts.
Higher personnel expenses as a consequence of organisational changes and in connection with the implementation of wage agreements.
Change of value of other operating activities mainly as a consequence of releasing the provision for onerous contracts, which relates to the lack of coverage of part of justified operating costs in the household tariff for 2024 approved by the ERO President.

3.3.9 Circular Economy

The data presented below concerns the third quarter of 2024.

Segment includes companies: PGE Ekoserwis S.A. and ZOWER sp. z o.o. On October 2, 2023, PGE Ekoserwis S.A. acquired the company EPORE S.A., which had previously belonged to the segment.

The management of combustion by-products at PGE Group turns waste into high-value substances that are used in other branches of economy (cement industry, construction, road-building, mining) and thus reduces the volume of ultimate waste generated.

The main revenue source in the Circular Economy segment is revenue from the economic use of combustion by-products, which includes revenue from the sale of products manufactured on the basis of combustion by-products in internal production processes and the sale of services related to the management of combustion by-products. The level of revenue depends on multiple factors, including commercial potential for selling combustion by-products, in processed and unprocessed form, seasonality of industries purchasing combustion by-products, seasonality of suppliers of combustion by-products (power plants, combined heat-and-power plants), volumes collected, efficiency of production infrastructure, capabilities for storing combustion by-products as materials inventories intended for production, as well as market conditions.

Revenue from other services includes revenue from the sale of continuous and ad hoc services provided to electricity and heat producers, including the operation of ash handling systems and equipment, operation of technological lines, operation of mill facilities and operation of fuel and combustion by-product storage sites.

Chart: Key changes in recurring EBITDA in Circular Economy segment (in PLN million) – managerial perspective.

	EBITDA Q3 2023	Revenues from sale of combustion by-products	Revenue from sale of services	Personnel costs	External services	Value of goods and materials sold	Other	EBITDA Q3 2024
Change		22	7	-4	-3	-5	-1
EBITDA Q3 2023	21	53	34	31	19	11	5
EBITDA Q3 2024		75	41	35	22	16	6	37

Key factors affecting EBITDA of Circular Economy segment y/y:

Higher revenues from sale of combustion by-products, due to the higher sales price realized.
Higher revenue from sales of services as a result of the inclusion of higher prices due to the signed annex for 2024.
Higher personnel costs mainly due to the implementation of wage agreements.
Higher external services costs, resulting inter alia from higher costs for renovation and maintenance services, consultancy and legal services and the cost of maintaining the gypsum warehouse on Mount Kamieńsk.
Higher value of goods and materials sold, resulting mainly from an increase in the purchase price of UPS due to the signing of an annex on the rates applicable in 2024.

3.3.10 Other Operations

Core activities of the segment include provision of services to PGE Capital Group, inter alia organisation of capital raising in form of Eurobonds (PGE Sweden), provision of IT services.

The segment also includes the company PGE Ventures sp. z o.o., which is responsible for investments in startups at every stage of the investment cycle: from projects in the earliest phase of development, through projects in the early growth phase, to mature start-ups in the late growth and expansion phase.

The data presented below concerns the third quarter of 2024.

KEY FACTORS FOR THE RESULTS OF THE SEGMENT

Chart: Key change in recurring EBITDA in Other Operations segment (in PLN million) – managerial perspective¹ .

EBITDA Q3 2024 134 76 14 21 23 ¹Due to the separation of the Gas-fired Generation segment from the Other Operations segment, data for the third quarter of 2023 have been adjusted for comparability.

EBITDA Q3 2023 35 84 38 6 5

Key factors affecting EBITDA of Other Operations segment y/y:

Higher revenues from the sale of services due to a wider range of services provided by PGE Systemy S.A. for companies in the PGE Group and moving Elbest Security sp. z o.o. to Other Operations segment as from the beginning of 2024. In 2023 company was reported in Conventional Generation segment.
Higher personnel costs due moving Elbest Security sp. z o.o. to Other Operations segment, the increase in the minimum wage, inflation pressure and hiring of new employees in PGE Systemy S.A. in connection with the development of the LTE450 program and the takeover of PGE Energetyka Kolejowa S.A. employees.
Higher costs of advisory services due to a wider range of advisory services contracted by Elbis sp. z o.o. due to the implementation of the Dębe Hydroelectric Power Station modernisation project and due to a wider range of projects being implemented by PGE Systemy S.A.
Change of value on item 'Other' mainly as a result of settlement of acquisition of part of the activities of PGE Synergia sp. z o.o. by PGE S.A.

CAPITAL EXPENDITURES

Table: Capital expenditures incurred in Other Operations segment¹

PLN million	Q3 2024	Q3 2023	% change
Investments in generation capacities, including:	50	28	79%
 Modernisation and replacement	50	28	79%
Total	50	28	79%

¹Due to the separation of the Gas-fired Generation segment from the Other Operations segment, data for the third quarter of 2023 have been adjusted for comparability.

KEY EVENTS IN OTHER OPERATIONS

At company PGE Inwest 14 sp. z o.o. work is in progress on a Battery Electricity Storage System (BESS) project in Żarnowiec, which will be one of the largest energy storage facilities of its kind in Europe. On 8 Oct 2024, the company received the final environmental decision Currently, the project is in the implementation preparation phase. Two bids were received in November 2024 as part of the tender published in July 2024 for the selection of a General Contractor for the construction of the storage facility including the power derivation system. In parallel, work is being carried out to prepare the site for construction (logging, dividers, geotechnical studies).
At PGE Inwest 12 sp. z o.o., work is underway on the project Construction of the Młoty pumped storage power plant. Currently, the project is at an early stage of preparation for implementation. In June 2024, efforts were formally initiated to issue a decision on environmental conditions by submitting an application to the Regional Directorate of Environmental Protection together with the Project Information Sheets for Młoty PSP plant and the power derivation.

4.Other elements of the report

Significant events of the reporting period affecting operation in the first three quarters of 2024 and subsequent periods.

4.1.1 Changes in the Management Board and Supervisory Board

A detailed description of the changes in the composition of the Management Board and the Supervisory Board can be found in p. 1.4 of this report.

4.1.2 Project of carve-out of coal generation assets

BENEFITS OF COAL ASSETS CARVE-OUT

The discontinuation of Conventional Generation's operations based on coal combustion results from the strategy of the PGE Capital Group, which assumes climate neutrality by 2050. The spin-off coal assets will bring measurable benefits for the Group, among others, in the following areas:

greater and more favourable access to sources of debt and equity financing, lower financing costs;
greater and more favourable access to the insurance market;
lower cash requirements for hedging CO² emission costs and stocks of production raw materials;
release of credit limits in financing institutions as a result of reducing the demand for EUA allowances;
increasing the possibility of using financial resources for investments in distribution networks and green technologies, with a higher rate of return;
reducing the risk of exposure to the price of CO² emission allowances.

All the above actions, in the opinion of the Management Board, will increase the attractiveness of the Company for shareholders.

ACTIVITIES FOR THE CARVE-OUT OF GENERATING COAL ASSETS

On May 9, 2024, a team was set up by order of the Minister of State Assets with a view to spinning off coal assets from energy sector enterprises in which the State Treasury holds shares.

The team's tasks include:

analysis of the conditions for a spin-off of coal assets from state-owned companies in the energy sector;
cooperation with state-owned companies in the energy sector to develop guidelines, directions and methods for conducting the spin-off process;
development of recommendations for necessary or recommended legislative changes aimed at the execution of the planned spin-off;
identification of the circle of entities responsible for the execution of the spin-off and the distribution of tasks among these entities.

In the second quarter of 2024, the aforementioned team started works.

At the same time, PGE S.A. together with its advisor PwC Advisory sp. z o.o. started work on a new concept for the separation of coal assets, taking into account current economic and market conditions.

RECOGNITION OF ASSETS RELATED TO PGE GIEK S.A. IN THE FINANCIAL STATEMENTS

In the opinion of the PGE Capital Group, as at the reporting date, the conditions of IFRS 5 concerning operations held for sale regarding assets and liabilities as well as revenue and expenses for the described coal-fired units are not met.

Consequently, as at September 30, 2024, assets related to PGE GiEK S.A. are not reclassified to discontinued operations. PGE S.A. also did not make adjustments bringing the value of assets related to PGE GiEK S.A. to the values required by IFRS 5. The values of assets, liabilities, revenue, costs and results of the Conventional Generation segment, showing the data for PGE GiEK S.A. and its subsidiaries, are presented in note 6.1 to the financial statements.

The book value of the consolidated net assets of PGE GiEK S.A. and its subsidiaries was PLN 303 million on September 30, 2024. The book value of the shares of PGE GiEK S.A. in the stand-alone financial statements was PLN 0 on September 30, 2024.

4.1.3 Regulatory changes

SUPPORT MECHANISMS FOR ELECTRICITY CONSUMERS

Due to the electricity market crisis, the legislator decided to introduce regulations that temporarily introduced exceptional solutions for electricity prices and tariffication in 2023. On October 18, 2022, the Act of October 7, 2022, on special measures to protect electricity consumers in 2023 in connection with the situation on the electricity market (Act for Households) entered into force and, the Act of October 27, 2022 on Emergency Measures in 2023 aimed at capping electricity prices and supporting certain consumers (Act on Emergency Measures in 2022) in entered into force on November 4, 2022.

Pursuant to the Act for households, in 2023 an electricity trading company was required to apply to the aforementioned households customers prices equal to those contained in the tariff in force on January 1, 2022 for individual tariff groups up to certain consumption limits. On the other hand, once the Act of August 16, 2023 amending the Act for Households entered into force, the consumption limits for each category of customer were increased by an additional 1MWh. Once the consumption limits for household consumerswere exceeded, a maximum price of PLN 693/MWh (price excluding VAT and excise duty) was used for billing offtakers in households in accordance with the Emergency Measures Act in 2023. This means that electricity prices have been fixed by law and therefore in 2023 the tariffs approved by the President of the Energy Regulatory Office did not have a direct impact on electricity prices for households.

Additionally, in accordance with the Emergency Measures Act in 2023, the maximum electricity price for other eligible customers was set at PLN 785/MWh (price excluding VAT and excise duty). After the Act of August 16, 2023 amending the Act for households and certain other acts entered into force, the maximum price was, similarly to that for households, PLN 693/MWh. This price, in principle, applied from December 1, 2022, however, the changed amount applied from October 1, 2023 to December 31, 2023. The maximum price limit for eligible customers also applied to electricity sales agreements concluded or amended after February 23, 2022, in which case the maximum price also applied to settlements for the period from the date of conclusion or amendment of these agreements until November 30, 2022. Electricity companies were required to make systematic refunds resulting from the application of the maximum prices until the end of 2023.

Electricity trading companies, in accordance with the implemented regulations, was entitled to compensation for applying electricity prices in their settlements with household customers at the same level as on January 1, 2022. The compensation was the product of the electricity consumed at the point of consumption, up to the maximum consumption limits entitling customers to apply to them the prices from 2022 and the difference between the price of electricity resulting from the electricity tariff approved by the President of the Energy Regulatory Office for 2023 and the electricity prices approved in the tariff for 2022. In turn, for applying the maximum price of PLN 693/MWh in settlements with household customers, trading companies were entitled to compensation in the amount of the product of the volume of electricity consumed in a given month and the difference between the reference price and the maximum price, for each energy point. The reference price was the price of electricity resulting from the electricity tariff approved by the President of URE for 2023. Compensation is also due for the use of maximum prices in settlements with other eligible entities. In this case, in principle, the reference price for compensation payments was calculated on the basis of electricity prices in exchange contracts and the prices of electricity purchased for sale to eligible customer, plus the cost of redemption of energy certificates of origin and a margin.

The mechanisms introduced in the Act for Households and the Emergency Measures in 2023 Act should as a rule compensate trading companies for the price reduction.

In accordance with the provisions of the Act of December 7, 2023 on amending laws to support consumers of electricity, gaseous fuels and heat, which came into force on December 31, 2023 (the Act for 2024), the mechanisms for freezing tariff prices and the maximum price were extended until June 30, 2024.

On June 13, 2024 the Act on energy vouchers entered into force. It regulates electricity prices from July 1, 2024 to December 31, 2024. The Act imposed an obligation on electricity traders to submit an application to change the existing tariff for 2024 within seven days of the entry into force of the corresponding Act or at the request of the President of the ERO. The revised tariff applies from July 1, 2024 to December 31, 2025. In a decision dated June 28, 2024, the President of the Energy Regulatory Office approved a change in the electricity tariff of PGE Obrót S.A. for the period from July 1, 2024 to December 31, 2025. The approved price of electricity for the G11 tariff group is PLN 628/MWh. The Act also provides for an extension of the period for the functioning of the capped electricity price mechanism. This price applies in the second half of 2024 and was set at PLN 500/MWh for household consumers, and at PLN 693/MWh for local government units and public institutions (including schools, hospitals, social welfare units), as well as micro, small and mediumsized entrepreneurs.

If the tariff approved by the ERO President is higher than the capped price for households, household customers will be billed according to the capped price of PLN 500/MWh. By virtue of the application of a capped price in settlements with customers, trading companies will be entitled to compensation amounting to the difference between the tariff price in force from July 1, 2024 and the capped price. Electricity customers who have concluded contracts for the sale of electricity with a dynamic price have been excluded from the possibility of taking advantage of the capped price.

In the three quarters of 2024, compensation revenue amounted to PLN 2 939 million. The amounts of compensation received by the sales companies were intended to compensate for the losses these entities suffered due to the price freeze.

The above values concerning due compensation are estimates determined in accordance with the best knowledge available to the PGE Capital Group as at the date of the preparation of this report.

On November 19, 2024, the Council of Ministers adopted a draft law amending the Act on Emergency Measures in 2023 and 2024 and certain other laws, which was sent to the Sejm on the same day. The draft envisages maintaining the maximum price at the level of PLN 500/MWh for household consumers until September 30, 2025. At the same time, the maximum prices for other energy consumers, i.e. local government units and public utility entities (including schools, hospitals, social welfare units), as well as micro, small and medium-sized entrepreneurs, are not expected to be maintained from January 1, 2025. In addition, the proposed law requires electricity traders to apply for a change to the tariff in force until December 31, 2025 by April 30, 2025, which may result in a reduction of the price of electricity in the tariff in several months of 2025. If the application of the maximum price for household customers is not extended beyond September 30, 2025, the price of electricity set in the tariff approved by the President of the ERO will be used for settlements with these customers as of October 1, 2025

PDP FUND

From December 1, 2022 PGE Group's financial position was also affected by the provisions of the Emergency Measures in 2023 Act, which provide for the requirement to make monthly contributions to the account of the Price Difference Payment Fund (PDP Fund) by electricity producers and power companies that are engaged in the business of electricity trading. The contribution to the PDP Fund was the product of the volume of electricity sales and the positive volume-weighted average difference of the market price of electricity sold and the volume-weighted average of the price cap of electricity sold, as regulated in the Regulation of the Council of Ministers of November 8, 2022 on the method of calculating the price cap.

A different way of calculating the price cap has been defined for individual generation sources:

for units generating energy from lignite and hard coal, the price limit takes into account, among other things, the unit cost of fuel consumed, the cost of CO2 emission allowances, the efficiency of the generating units, a margin and a certain level of investment allowance and for coverage of fixed costs of PLN 50/MWh.
for units generating energy from RES, the price limit was determined with reference to the reference price referred to in art. 77 sec. 3 p. 1 of the Renewable Energy Sources Act, whereby for hydroelectric power plants the price limit is 40% of this reference price.

For electricity trading companies, on the other hand:

for energy sold to final consumers, the price limit was the product of the volume-weighted average price of electricity purchased on a given day and a margin defined as 1.035 or 1.03 (plus the unit cost of redemption of certificates of origin),
for energy sold to customers other than final consumers, the price limit was the product of the volumeweighted average price of energy purchased on a given day and the margin defined as 1.015 or 1.01.

From January 1, 2023 onwards, trading companies calculated the amount of the contribution to the Fund for the calendar month to which the settlement related, taking into account the volume of electricity sales, the market price and the price cap for periods of 3 decades of that month, i.e. from the 1st to the 10th, from the 11th to the 20th and from the 21st to the last day of the month. Until December 31, 2022, the Fund contributions were calculated separately for each day of the month.

On March 1, 2023 and September 1, 2023, an amendments to the Act on Extraordinary Measures in 2023 came into force, determining the rules for paying contributions to the PDP Fund.

The amendment concerned, among other things, the extension of the catalogue of revenue items that constitute the basis for calculating the contribution to the PDP Fund. As a result, the amount of contributions transferred by the PGE Capital Group increased.

In connection with doubts concerning the interpretation of the provisions and the qualification of revenue from additional cash settlements, which should be taken into account in the calculation of contributions to the Fund, PGE S.A. applied to the President of the Energy Regulatory Office for an individual interpretation confirming the applied interpretation of the Act, as a result of which revenue from selected agreements should not be taken into account in the calculation of contributions to the Fund. The President of the ERO did not share the Company's position. PGE S.A., disagreeing with the adverse decision of the President of the ERO, appealed against it to the Regional Court in Warsaw.

In 2023, the contribution due to the Fund amounted to PLN 6 569 million (including the adjustment for 2022) reducing the financial result. In turn, compensation income for 2023 amounted to PLN 7 658 million. Compensation revenues are independent of the amount of contributions to the PDP Fund. As described above, the funds received by the sales companies were intended to compensate for the losses these entities suffered due to the price freeze. In turn, the contributions to the PDP Fund limited the margins realised by individual energy companies to the detailed levels indicated in the regulations.

The system of contributions to the PDP Fund was not closed by December 31, 2023. Contributions to the Fund have to be transferred also in 2024 in the case of sales made in the last weeks of 2023. In the Act for 2024, the legislator did not decide to extend the obligation to make contributions to the Fund to 2024, which means that the last month for which a contribution to the Fund should have been paid was December 2023. In the three quarters of 2024, an adjustment to the contribution to the Fund for the previous period in the amount of PLN 23 million was recognised as a reduction of costs.

REGULATION OF THE MINISTRY OF CLIMATE AND ENVIRONMENT OF SEPTEMBER 9, 2023

On September 11, 2023, the regulation of the Ministry of Climate and Environment of September 9, 2023 was published, amending the regulation on the method of shaping and calculating tariffs and the method of settlement in electricity trading and entered into force on September 19, 2023. This regulation reduced electricity bills for household consumers by PLN 125 on average in 2023, provided that one of the conditions mentioned was met. Power utilities conducting business activities related to electricity trading are obliged to make the reduction at the latest in the last electricity invoice in 2023. No compensation has so far been granted to trading companies for this reduction due to the lack of legislation that would provide a basis for it.

On December 31, 2023, taking into account the number of recipients who met at least one of the conditions set out in the regulation, revenue was reduced by PLN 535 million (of which PLN 230 million was an estimate).

As at September 30, 2024, the amount representing the estimate as at the end of 2024, i.e. PLN 230 million, has been settled. On the side of receivables from customers, an estimate of PLN 2 million remains, representing items to be clarified or adjusted taking into account the fulfilment of the required prerequisites by customers.

On June 10, 2024, PGE CG received a tax interpretation granting the right to reduce the tax base and the amount of output tax in connection with the above-described reduction of bills by PLN 125. In the three quarters of 2024, the estimate of sales revenue was increased by approximately PLN 97 million on this account.

4.1.4 Environmental decision on the Turów Lignite Mine

On May 31, 2023, the Provincial Administrative Court in Warsaw suspended – pending an analysis of the relevant complaint – the enforceability of the environmental decision on lignite mining for the Turów Mine. The environmental decision sets out the conditions for the implementation of the project: "Continuation of the exploitation of the Turów lignite deposit, carried out in the commune of Bogatynia". The complaint against the environmental decision was filed by, among others, the Frank Bold Foundation, Greenpeace and the EKO-UNIA Ecological Association.

On June 12, 2023, PGE GiEK S.A. filed a complaint with the Supreme Administrative Court in Warsaw against the decision concerning the Turów Mine and issued by the Provincial Administrative Court on May 31, 2023. This was the company's response to the Provincial Administrative Court's suspension of the enforceability of the environmental decision issued by the General Directorate of Environmental Protection in September 2022.

On July 18, 2023, the Supreme Administrative Court overturned the decision of the Provincial Administrative Court of May 31, 2023 to suspend the enforceability of the environmental decision concerning the Turów Mine. The complaints filed by the General Directorate of Environmental Protection, PGE GiEK S.A. and the National Public Prosecutor's Office were taken into consideration.

On August 31, 2023, the Provincial Administrative Court suspended the proceedings on the environmental decision issued by the General Directorate of Environmental Protection and concerning the Turów Mine until the formal conclusion of the proceedings relating to the application of PGE GIEK S.A. for amending the environmental decision. Proceedings at the request of PGE GIEK S.A. to change the environmental decision ended with a final and legally binding decision to discontinue the proceedings.

On March 13, 2024, the Regional Administrative Court overturned the decision of the General Directorate of Environmental Protection, specifying the environmental conditions for the further exploitation of the Turów lignite deposit. As the Regional Administrative Court stressed, this does not mean either closure or suspension of work at the Turów Mine. The ruling is not legally binding.

On April 30, 2024, PGE GiEK S.A. was served with a copy of the judgment with a statement of reasons. The ruling is not legally binding. On May 29, 2024 PGE GiEK S.A. filed a cassation complaint against the above judgment to the Supreme Administrative Court.

The same judgment was also appealed in its entirety on May 17, 2024 by General Directorate of Environmental Protection. PGE GiEK S.A., after serving the cassation appeal of General Directorate of Environmental Protection, filed a response to the cassation appeal on July 2, 2024 and requested that it be upheld and that the appealed verdict of the Provincial Administrative Court be revoked.

The verdict of the Voivodship Administrative Court was appealed by environmental organisations. PGE GiEK S.A. filed replies to the cassation appeals.

4.1.5 Impact of war between Russia and Ukraine on PGE Group's activities

The war between Russia and Ukraine may affect the PGE Capital Group's operations and future financial performance. There were no significant changes in the issues reported compared to the latest published financial statements. In particular, the following items may be assessed/changed: the recoverable amount of selected asset items, the level of expected credit losses and the valuation of financial instruments. The PGE Group monitors the course of the war, the macroeconomic consequences and the market implications on an ongoing basis. Any events that occur will be reflected accordingly in the Group's future financial statements.

4.1.6 Restructuring proceedings at ENESTA sp. z o.o.

In 2021 ENESTA sp. z o.o. (currently ENESTA sp. z o.o. in restructuring) terminated unfavourable contracts for the supply of electricity and natural gas. In 2022, some contractors brought their claims to court. After unsuccessful attempts to reach an agreement with its counterparties, ENESTA sp. z o.o. applied for restructuring proceedings. On June 21, 2022, restructuring proceedings were opened. In September 2023 ENESTA's capital was increased by PLN 32 million. All shares in the increased capital were acquired and paid by PGE Obrót S.A. In December 2023 another resolution was passed regarding a capital increase of PLN 34 million.

As at September 30, 2024, the value of assets and equity and liabilities of ENESTA sp. z o.o. amounts to PLN 97 million and the value of equity to PLN -129 million.

4.1.7 Implementation by PGE Paliwa sp. z o.o. of the decision of the Prime Minister concerning the purchase of coal

In years 2022-2024, PGE Paliwa sp. z o.o. was implementing the decisions of the Prime Minister issued in mid-2022 instructing the purchase of at least 3 million tonnes of thermal coal with parameters similar to the quality parameters used by households and its import into the country (the Decision).In connection with a significant decrease in market prices of coal and continued low coal prices in the first quarter of 2024 the company realised a negative result on sales of coal purchased in order to implement the Decision and which was not sold by April 30, 2023.

The total result on the sale of this coal, together with other costs incurred to implement the decision, recognised in the financial results in the three quarters of 2024 amounted to PLN -219 million. Coal that was sold by April 30, 2024 was subject to an impairment write-down of PLN 239 million as of December 31, 2023. The write-down was partially utilised in amount of PLN 195 million, including PLN 178 million in period until April 30, 2024.

An agreement signed in 2023 with the Ministry of Climate and Environment for the financing of the implementation of the Prime Minister's decision provides for the reimbursement of costs incurred in connection with the implementation of the decision. A report on the implementation of the decision as at April 30, 2023, as required by the provisions of the agreement, was submitted on time by PGE Paliwa sp. z o.o. to the Ministry

of Climate and Environment. The company submitted an update to the Report as at April 30, 2024 in accordance with the deadlines set out in the Agreement. On July 30, 2024, the update to the Report was accepted by the Ministry of Climate and Environment and on August 7, 2024, the company received requested funds in the net amount of PLN 483 million.

In 2023, revenue of PLN 849 million was recognised under the Agreement. This revenue consisted of PLN 406 million received in 2023 and an estimate of the remaining compensation of PLN 443 million. The final compensation amounted to PLN 890 million net, of which PLN 41 million was recognised in the results of the current period.

4.1.8 Recommendation not to pay dividend for 2023

On April 3, 2024 the Management Board of PGE S.A. decided on the recommendation not to pay dividend for 2023 to the PGE's shareholders. Decision was taken in accordance with the dividend policy and is a result of analysis of total Company's indebtedness and expected capital expenditures, in the context of lack of implementation of coal assets carve-out project and deteriorating operational conditions of the coal-fired power plants that are reflected in results of the impairment tests of property, plant and equipment in the Conventional Generation segment. The Ordinary General Meeting of the Company of June 28, 2024 agreed with the recommendation.

4.1.9 Impairment tests

Property, plant and equipment is the most significant asset item of the PGE Capital Group. Due to the changing macroeconomic and regulatory environment, the PGE Group periodically reviews indications that the recoverable value of its assets may be impaired. In assessing the market situation, the PGE Capital Group uses both its own analytical tools and the support of independent analytical centres. In previous reporting periods, the PGE Capital Group recognised significant impairment losses on non-current assets.

In the first half of 2024 period the Group analysed indications and identified factors that could significantly contribute to change of value of the non-current assets.

Results of the impairment tests on property, plant and equipment are described in note 3 to the consolidated financial statements.

4.1.10 Nuclear power plant construction project

On October 31, 2022 PGE S.A. signed with Korea Hydro & Nuclear Power Co. Ltd. and ZE PAK S.A. a letter of intent, the aim of which is to start cooperation as part of the strategic Polish-Korean project to build a nuclear power plant in Pątnów-Konin area. The planned capacity of the plant is 2 800 MWe, based on the use of two PWR (Pressurised Water Reactor) nuclear reactors with the Korean APR 1400 technology. The cooperation also includes field and environmental studies, the implementation of a feasibility study and the obtainment of all necessary administrative decisions.

In the Polish Nuclear Power Programme (PNPP), the Pątnów-Konin area is recommended as one of the possible locations for the construction of a nuclear power plant in Poland. The investment project is also in line with the principles of the development of nuclear technologies contained in Poland's Energy Policy until 2040.

On May 22, 2023, PGE PAK Energia Jądrowa S.A. was registered in the National Court Register. PGE S.A. and ZE PAK S.A. each hold 50% of the shares in PGE PAK Energia Jądrowa S.A.

On August 11, 2023, PGE S.A., ZE PAK S.A. and PGE PAK Energia Jądrowa S.A. entered into a shareholders' agreement setting out the rules of this company's corporate governance and business activity.

On August 16, 2023, PGE PAK Energia Jądrowa S.A. filed an application with the Ministry of Climate and Environment for the issuance of a fundamental decision for the construction of a nuclear power plant in the Konin region.

On November 24, 2023, the Ministry of Climate and Environment issued the fundamental decision for the construction of a nuclear power plant in the Konin region.

4.1.11 Signing of an annex to the syndicated loan

On February 6, 2024 an annex was signed to the revolving loan agreement which was signed on March 1, 2023 by PGE S.A. with a syndicate consisting of the following banks: Powszechna Kasa Oszczędności Bank Polski S.A., Bank Polska Kasa Opieki S.A., Bank of China (Europe) S.A., Industrial and Commercial Bank of China (Europe) S.A., Alior Bank S.A. and Santander Bank Polska S.A. As a result of the annex China Construction Bank (Europe) S.A. with its seat in Luxembourg joined the agreement and the amount of the Loan was increased from PLN 2 330 million to PLN 3 150 million.

The subject matter of the agreement includes granting by the banks of the revolving loan which may be utilised for:

finance the day-to-day operations of PGE S.A. and the Group in particular in line with the long term Group strategy aiming at reduction of emissions and increase of production of electricity from renewable sources;
finance investment and capital expenditure in connection with the operations of PGE S.A. and the PGE group, other than investments in new carbon assets;
refinancing of the financial liabilities of PGE and PGE Group.

The final repayment date falls on March 1, 2027. Interest rate of the loan is calculated on the floating rate based on the relevant WIBOR rate (reference rate) plus margin. The margin may be periodically adjusted depending on the ESG rating assigned to PGE by a specialised agency. According to the provisions of the agreement, PGE undertakes to keep the consolidated net debt to consolidated EBITDA at a level not higher than 4:1 in the case PGE holds investment grade credit rating or at a level not higher than 3.5:1 in the case PGE does not held investment grade credit rating. The loan is not secured on any of the assets of PGE or of the PGE Group.

Signing of an annex to the syndicated loan

4.1.12 The impact of the approval of the G tariff on the financial results of the PGE Capital Group

On June 28, 2024 the ERO President approved the electricity sale price for off-takers in G11 tariff for the period July 1, 2024 – December 31, 2025 for PGE Obrót S.A. at an level of PLN 628 per MWh¹⁰. The sales price for electricity approved by the ERO President is significantly lower compared to the tariff approved in December 2023 which was to be applicable throughout the entire year 2024 and which resulted in creation by PGE Obrót S.A. of a provision for onerous contracts for December 31, 2023. The analysis conducted by the Group did not indicate the need to update the provision as at September 30, 2024.

The impact of the approval of the G tariff on the financial results of the PGE Capital Group

4.1.13 Estimation of electricity imbalance

At the end of the current reporting period, the Group has estimated an imbalance of electricity fed into the grid by prosumers. The energy generated and fed into the grid by prosumers enters the grid during periods of overproduction, thereby reducing the Group's need to purchase energy in the market. However, during the autumn and winter period, when prosumers consume energy in the absence of production covering their own demand, the Group has to purchase the missing electricity from the market. For this reason, the Group created an estimated liability of PLN 622 million. The estimate of the liability most closely reflects the Group's interim results, which stabilise at the end of the year during the winter period and reduce to negligible values.

In the previous period, the Group was not able to reliably make such an estimate, as it did not have sufficient information and tools. Using current knowledge, the estimate of the liability would be approximately PLN 497 million as at September 30, 2023. The figures for the comparative period were not restated.

4.1.14 Conclusion of the agreement by Elektrociepłownia Zielona Góra S.A. for the supply of gas fuel

On July 1, 2024 Elektrociepłownia Zielona Góra S.A. (company from PGE Group) concluded a framework agreement with ORLEN S.A. for the comprehensive sale of gas fuel in the distribution system together with an individual contract to the Agreement.

The framework agreement was concluded for an indefinite period, while the individual contract provides for gas fuel deliveries from July 2, 2024 to January 1, 2037.

The estimated value of the individual contract during its validity period, determined on the basis of gas market prices and distribution rates, amounts to a total of PLN 6.3 billion net. The basis for calculating the price formula in the individual contract will be variable components based on quotation of gas price indexes, taking into account the conditions of gas supplies from local deposits.

The agreement is secured by a bank guarantee for the amount of PLN 33 million and a surety provided by PGE in the amount of PLN 40 million.

Conclusion of the agreement for the supply of gas fuel

¹⁰ The average price for G tariff group is PLN 623 per MWh.

4.1.15 The General Meetings

The Ordinary General Meeting was held on June 28, 2024 and on July 25, 2024 (after the break in the proceedings).

On January 31, 2024, the Extraordinary General Meeting passed resolutions on changes to the composition of the Supervisory Board. The General Meeting dismissed the following persons from the Supervisory Board: Janina Goss, Tomasz Hapunowicz, Mieczysław Sawaryn, Artur Składanek, Radosław Winiarski, and appointed to the Supervisory Board: Małgorzata Banasik, Eryk Kosiński, Andrzej Kozyra, Elżbieta Niebisz, Sławomir Patyra, Andrzej Rzońca and Andrzej Sadkowski.

On June 28, 2024, the Annual General Meeting adopted the reports for 2023.

On July 25, 2024, during the continuation of the meeting of June 28, 2024, the Annual General Meeting passed resolutions:

concerning a refusal to grant discharge for the performance of duties in the year 2023 to: Wojciech Dąbrowski, Ryszard Wasiłek, Wanda Buk, Paweł Śliwa, Lechosław Rojewski, Rafał Włodarski and Przemysław Kołodziejak.
concerning the acknowledgement of the fulfillment of duties for the year 2023 to: Anna Kowalik, Radosław Winiarski, Cezary Falkiewicz.

The Ordinary General Meeting did not pass resolutions concerning the acknowledgement of the fulfillment of duties for the year 2023 to: Artur Składanek, Janina Goss, Mieczysław Sawaryn, Tomasz Hapunowicz, Zbigniew Gryglas and Marcin Kowalczyk.

The content of adopted resolutions is presented in the locations on the PGE S.A. website indicated below:

Content of OGM resolutions from June 28, 2024 Content of OGM resolution from July 25, 2024

4.1.16 Setting new commissioning dates of CCGT units in PGE Gryfino 2050 sp. z o.o.

On July 23, 2024 PGE Gryfino Dolna Odra sp. z o.o. and the syndicate of General Electric Global Services GmbH (leader of syndicate), Polimex Mostostal S.A. and GE Vernova LLC concluded before the mediator of the arbitration court at the Solicitor's Office of the Republic of Poland a settlement regarding the realisation of the contract for construction of two CCGT units with a capacity of 683 MWe each.

As a consequence of the Settlement, the commissioning date of unit no. 9 was set at August 15, 2024 and of unit no. 10 at September 30, 2024. There was a 35-days joint grace period for both units for non-compliance with the mentioned commissioning dates that could be prolonged in the event of early commissioning of unit no. 9.

Unit no. 9 was commissioned on August 14, 2024, unit no. 10 – on October 18, 2024.

New commissioning dates for units at PGE Gryfino 2050

4.1.17 Contractual penalties for the contractor for unit 7 at Turów Power Plant

In 2022, PGE GiEK S.A. charged the contractor for unit no. 7 at Turów Power Plant - a consortium of Mitsubishi Power Europe GmbH, TECNICAS REUNIDAS S.A. and BUDIMEX S.A. - with a contractual penalty of PLN 562 million for failing to meet the unit's availability rate in the first year of the guarantee period. In July 2022, the Company submitted a demand for payment to the consortium, to which it received a negative response. In 2022, the contractual penalty was subject to an impairment charge in the same amount. On June 15, 2023, PGE GiEK S.A. applied to the General Prosecutor's Office of the Republic of Poland for mediation with the participation of a mediator of the Court of Arbitration at the General Prosecutor's Office of the Republic of Poland in order to attempt an amicable settlement of disputes arising from the contract. The mediation, which lasted in 2023 and 2024, had not been completed by the date of this report. In addition, PGE GiEK S.A. held bank performance guarantees in the total amount of PLN 135 million and bank advance payment refund guarantees in the total amount of PLN 7 million. On June 21, 2024, PGE GiEK S.A. delivered to the bank requests for payment of amounts resulting from the guarantees held and in July 2024 received the amount of PLN 142 million. The amount of PLN 135 million under the performance bond was not recognised in the financial result due to uncompleted mediation proceedings.

On October 30, 2024, PGE GiEK S.A. issued a debit note in the amount of PLN 357 million for failure to meet the availability rate of the unit in the second year of the warranty period and a contractual penalty for delay

in removal of defects. Due to the significant risk of this note being disputed by the Contractor and the significant probability of not receiving payment, it was subject to a write-down in the full amount.

4.1.18 Signing of a loan agreement with the European Investment Bank

On July 29, 2024 PGE signed a term loan agreement with the European Investment Bank ("EIB"). The value of the loan agreement amounts to PLN 1 billion and the loan will be intended for financing of capital expenditures of PGE Energetyka Kolejowa S.A. for the Modernisation of Power Supply Systems implemented in years 2023-2028 which will ensure modernisation of railway network power supply systems throughout Poland.

The loan will be drawn in instalments. Each instalment may be drawn in PLN or EUR. The final maturity date will be maximum 18 years from the drawing date of the last instalment whereby the last instalment may be drawn no later than 24 months from the Agreement signing date. The interest rate will be determined before the payment of the each instalment. The Agreement does not provide for tangible collaterals. After signing of the Agreement, total nominal value of the financing from the EIB amounts to PLN 6 663 million.

Signing of a loan agreement with EIB

4.1.19 Signing of an annex to the term loan agreement with Bank Gospodarstwa Krajowego

On November 20, 2024 an annex was signed to the term loan agreement with Bank Gospodarstwa Krajowego (BGK). As a result of the annex the amount of the loan was increased from PLN 2.5 billion to PLN 3.9 billion and the financing period has been extended from maximum of 8 years to maximum of 12 years. The final maturity date was set at December 20, 2036. In addition the annex introduces possibility to use the financing in EUR currency on the floating interest rate based on the relevant EURIBOR rate (reference rate) plus margin.

After signing the above mentioned annex, total debt resulting from the term loans from BGK may amount to no more than PLN 4.6 billion while the total debt resulting from all loan agreements with BGK may amount to no more than PLN 7.5 billion.

Signing of an annex with BGK

Proceedings in front of court, body appropriate for arbitration proceedings or in front of public administration authorities

Significant proceedings pending in front of courts, competent arbitration authority or public administration authority are described in note 24.3 to the consolidated financial statements. This note discusses, inter alia the issue of compensation regarding the conversion of shares, issues related to the request by the Polimex-Mostostal consortium for an increase in remuneration for the construction of a CHP plant in Siechnice and environmental decision on the Turów Lignite Mine.

Information concerning the guarantees for loans granted by the Company or its subsidiary

During the three quarters of 2024 PGE S.A. and subsidiaries did not grant guarantees to other entities or to a subsidiary, where total value of guarantees is significant.

Information on issue, redemption and repayment of debt securities and other securities

Information on issue, redemption and repayment of debt securities and other securities is described in p. 1.3 of the foregoing report and in note 1.3 to the consolidated financial statements.

Transactions with related entities

Information about transactions with related entities is presented in note 26 to the consolidated financial statements. In addition, note 6 to the consolidated financial statements indicates that PGE CG accounts for inter-segment transactions as if they related to unrelated parties - on an arm's length basis.

Publication of financial forecasts

PGE S.A. did not publish financial forecasts.

Significant off-balance sheet items

Significant off-balance sheet items are described in notes 11 and 24 to the consolidated financial statements.

Factors which, in the issuer's opinion, will have an impact on its results over at least the next quarter

Significant factors and events that, in the issuer's opinion, will affect its results over at least the next quarter are described in the remaining sections of this report.

Agreements and other information important for the assessment of the personnel and financial situation, financial result of the PGE Capital Group and their changes, as well as information important for the assessment of the Group's ability to fulfil its obligations

In the three quarters of 2024, apart from the events indicated in the other sections of this report, there were no other events that are important for the assessment of the personnel and financial situation, financial result of the PGE Capital Group and their changes, as well as for the assessment of the Group's ability to fulfil its obligations.

5.Statement of the Management Board on the reliable preparation of the financial statements

To the best knowledge of the Management Board of PGE S.A., the quarterly financial report, including condensed interim consolidated financial statements of the Capital Group and quarterly financial information for PGE Polska Grupa Energetyczna S.A. and comparative data, were prepared in accordance with the governing accounting principles, presents a fair, true and reliable view of the material and financial situation of PGE Capital Group and its financial result.

The report of the Management Board on the activities of PGE Capital Group presents a true view of the development, achievements and situation of the Capital Group.

6.Approval of the Management Board's Report

The foregoing Management Board's Report on activities of PGE Capital Group was approved for publication by the Management Board of the parent company on November 26, 2024. Warsaw, November 26, 2024

Signatures of members of the Management Board of PGE Polska Grupa Energetyczna S.A.

President of the Management Board	Dariusz Marzec
Vice-President of the Management Board	Maciej Górski
Vice-President of the Management Board	Przemysław Jastrzębski
Vice-President of the Management Board	Robert Kowalski
Vice-President of the Management Board	Marcin Laskowski

Glossary
Ancillary control services (ACS)	services provided to the transmission system operator, which are indispensable for the proper functioning of the National Power System and ensure the keeping of required reliability and quality standards.
Achievable capacity	the maximum sustained capacity of a generating unit or generator, maintained continuously by a thermal generator for at least 15 hours or by a hydroelectric generator for at least five hours, at standardized operating conditions, as confirmed by tests.
ARA	USD hard coal price index in EU. Loco in harbours Amsterdam-Rotterdam-Antwerp
Balancing market	a technical platform for balancing electricity supply and demand on the market. The differences between the planned (announced supply schedules) and the actually delivered/off-taken volumes of electricity are settled here. The purpose of the balancing market is to balance transactions concluded between individual market participants and actual electricity demand. The participants of the balancing market can be the generators, customers for electricity understood as entities connected to a network located in the balancing market area (including off-takers and network customers), trading companies, electricity exchanges and the TSO as the balancing company.
Base, baseload	standard product on the electricity market: a constant hourly power supply per day in a given period, for example week, month, quarter or year.
BAT	Best Available Technology
Best Practices	Documents "Best Practice for WSE Listed Companies 2016" adopted by the resolution of the WSE Supervisory Board of October 13, 2015 and effective from January 1, 2016 until June 30, 2021 and "Best Practice for WSE Listed Companies 2016 2021" adopted by the resolution of the WSE Supervisory Board of March 29, 2021 and effective from July 1, 2021.
Biomass	solid or liquid substances of plant or animal origin, subject to biodegradation, obtained from agricultural or forestry products, waste and remains or industries processing their products as well as certain other biodegradable waste in particular agricultural raw materials.
Black energy	popular name for energy generated as a result of combustion of black coal or lignite.
CCGT	Combined Cycle Gas Turbine
Circular economy	system that minimises the consumption of resources and the level of waste as well as emissions and energy losses by creating a closed loop of processes in which waste from one process is used as resources in other processes so as to maximally reduce the quantity of production waste
Co combustion	the generation of electricity or heat based on a process of combined, simultaneous combustion in one device of biomass or biogas together with other fuels; part of the energy thus generated can be deemed to be energy generated with the use of renewable sources.
Co	the simultaneous generation of heat and electricity or mechanical energy in the
generation Constrained	course of one and the same technological process. the generation of electricity to ensure the quality and reliability of the national
generation	power system; this applies to generating units in which generation must continue due to the technical limitations of the operation of the power system and the necessity of ensuring its adequate reliability.
CVC fund	Corporate Venture Capital; in the CVC model, portfolio companies, aside from financial support, receive the opportunity to verify their ideas in a corporate setting
Distribution	transport of energy through distribution grid of high (110 kV), medium (15kV) and low (400V) voltage in order to supply the customers.
Distribution System Operator (DSO)	a power company engaging in the distribution of gaseous fuels or electricity, responsible for traffic in the gas or electricity distribution systems, current and long term security of operation of the system, the operation, maintenance, repairs and indispensable expansion of the distribution network, including connections to other gas or power systems.

Energy cluster	civil-law arrangement that may include natural persons, legal entities, scientific units, research institutes or local government units, concerning the generation, distribution or trade in energy and energy demand balancing, with this energy being from renewable sources or other sources or fuels, within a distribution grid with nominal voltage below 110 kV, within the operational area of the given cluster, not exceeding the area of one district (powiat) in the meaning of the act on district authorities) or 5 municipalities (gmina) in the meaning of the act on municipal authorities; an energy cluster is represented by a coordinator, which is a cooperative, association, foundation appointed for this purpose or any member of the energy cluster indicated in the civil-law arrangement
ERO	Energy Regulatory Office (pol. URE).
EUA	European Union Allowances: transferable CO2 emission allowances; one EUA allows an operator to release one tonne of CO2.
EU ETS	European Union Greenhouse Gas Emission Trading Scheme) EU emission trading scheme. Its operating rules are set out in the ETS Directive, amended by the Directive 2009/29/EC of the European Parliament and of the Council of April 23, 2009 (OJ EU L. of 2009, No. 140, p. 63—87).
EV	Electric vehicle
FIT/FIP	Feed-in-Tariff (FIT) and Feed-in-Premium (FIP): system of subsidies to the market price of electricity performed by Zarządca Rozliczeń S.A.
Generating unit	a technically and commercially defined set of equipment belonging to a power company and used to generate electricity or heat and to transmit power.
GJ	Gigajoule, a unit of work/heat in the SI system, 1 GJ = 1000/3.6 kWh = approximately 278 kWh.
GPZ	main power supply point, a type of transformer station used for the processing or distribution of electricity or solely for the distribution of electricity.
Green certificate	popular name for energy generated from renewable energy sources.
GW	gigawatt, a unit of capacity in the SI system, 1 GW = 109 W.
GWe	one gigawatt of electric capacity.
GWt	one gigawatt of heat capacity.
HCl	hydrogen chloride.
Hg	mercury.
HICP	Harmonised Index of Consumer Prices
High Voltage Network (HV)	a network with a nominal voltage of 110 kV.
IED	Industrial Emissions Directive
IGCC	Integrated Gasification Combined Cycle.
Installed capacity	the formal value of active power recorded in the design documentation of a generating system as being the maximum achievable capacity of that system, confirmed by the acceptance protocols of that system (a historical value, it does not change over time.
IRGiT	Izba Rozliczeniowa Giełd Towarowych S.A. (commodities clearing house)
IRZ	Cold Intervention Reserve Service – service consisting of maintaining power units ready for energy production. Energy is produced on request of PSE S.A.
ITRE	European Parliament Committee on Industry, Research and Energy
KRI	Key Risk Indicator
KSE	the National Power System, a set of equipment for the distribution, transmission and generation of electricity, forming a system to allow the supply of electricity in the territory of Poland.
KSP	the National Transmission System, a set of equipment for the transmission of electricity in the territory of Poland.
kV	kilo volt, an SI unit of electric potential difference, current and electromotive force; 1kV= 103 V.
kWh	kilowatt-hour, a unit of electric energy in the SI system defined as the volume of electricity used by the 1 kW equipment over one hour. 1 kWh = 3,600,000 J = 3.6 MJ.

kWp	a power unit dedicated to determining the power of photovoltaic panels, means the amount of electricity in the peak of production.
Low Voltage Network (LV)	a network with a nominal voltage not exceeding 1 kV.
LTC	long-term contracts on the purchase of capacity and electricity entered into between Polskie Sieci Elektroenergetyczne S.A. and electricity generators in the years 1994-2001.
Medium voltage network (MV)	an energy network with a nominal voltage higher than 1 kV but lower than 110 kV.
MEV	Minimum Energy Volumes.
MSR	Market Stability Reserve (relating to CO2)
MW	a unit of capacity in the SI system, 1 MW = 106 W.
MWe	one megawatt of electric power.
MWt	one megawatt of heat power.
NAP	National emissions Allocation Plan, prepared separately for the national emission trading system and for the EU emission trading system by the National Administrator of the Emission Trading System.
NAP II	National CO2 emissions Allocation Plan for the years 2008-2012 prepared for the EU emission trading system adopted by the Ordinance of the Council of Ministers of July 1, 2008 (Dz. U. of 2008, No. 202, item 1248).
NH3	ammonia
Nm3	normal cubic meter; a unit of volume from outside the SI system signifying the quantity of dry gas in 1 m3 of space at a pressure of 101.325 Pa and a temperature of 0°C.
NOx	nitrogen oxides.
N:W ratio OTF	Ration of volume of overburden removed in m3 to the mass of extracted coal in tons Organised Trading Facilities
Operational Capacity Reserve (ORM)	ORM constitutes of generation capacities of active Production Schedular Units (JGWa) in operation or layover, representing excess capacity over electricity demand available to the TSO under the Energy Sale Agreements and on the Balancing Market in unforced generation
Peak, peakload	a standard product on the electricity market; a constant power supply from Monday to Friday, each hour between 7:00 a.m. and 10:00 p.m. (15-hour standard for the Polish market) or between 8:00 a.m. and 8:00 p.m. (12-hour standard for the German market) in a given period, for example week, month, quarter or year.
Peak power pumped storage plants	special type of hydro-power plant allowing for electricity storage. It uses the upper reservoir, to which water is pumped from the lower reservoir using electricity (usually excessive in system). The pumped storage facilities provide ancillary control services for the national power system. In periods of increased demand for electricity, water from the upper reservoir is released through the turbine. This way, electricity is produced.
PJ	Petajoule, a unit of work/heat in the SI system, 1 PJ = approx. 278 GWh
Property rights	negotiable exchange-traded rights under green and co-generation certificates
Prosumer	end customer who purchases electricity under a comprehensive agreement and generates electricity only from renewable sources at a micro-installations for own purposes, unrelated to economic activities
PSCMI1	Polish Steam Coal Market Index 1 - average level of prices of coal dust sold to industrial-scale power plants in Poland
RAB	Regulatory Asset Base.
Red certificate	a certificate confirming generation of electricity in co-generation with heat.
Red energy	popular name for electricity co-generated with heat.

Regulator	the President of ERO, fulfilling the tasks assigned to him in the energy law. The regulator is responsible for, among others, giving out licenses for energy companies, approval of tariffs for energy companies, appointing Transmission System Operators and Distribution System Operators.
Renewable Energy Source (RES)	a source of generation using wind power, solar radiation, geothermal energy, waves, sea currents and tides, flow of rivers and energy obtained from biomass, landfill biogas as well as biogas generated in sewage collection or treatment processes or the disintegration of stored plant or animal remains.
RIG	Readiness Interventional Reserve - the power plant's readiness to provide the active power generation service or its consumption at the request of PSE.
SCR	Selective catalytic reduction
Start-up	early-stage company established in order to build new products or services and characterised by a high level of uncertainty. The most common features of start-ups are: short operational history (up to 10 years), innovativeness, scalability, higher risk than in the case of traditional businesses but also potential higher returns on investment
Tariff	the list of prices and rates and terms of application of the same, devised by an energy enterprise and introduced as binding on the customers specified therein in the manner defined by an act of parliament.
Tariff group	a group of customers off-taking electricity or heat or using services related to electricity or heat supply to whom a single set of prices or charges and terms are applied.
TGE	Towarowa Giełda Energii S.A. (Polish Power Exchange), a commodity exchange on which trading can take place in electricity, liquid or gas fuels, extraction gas, emission allowances and property rights whose price depends directly or indirectly on electric energy, liquid or gas fuels and emission allowances, admitted to commodity exchange trading.
TPA, TPA rule	Third Party Access, the owner or operator of the network infrastructure to third parties in order to supply goods/services to third party customers.
Transmission of electricity	transport of electricity through high voltage (220 and 400 kV) transmission network from generators to distributors.
Transmission System Operator (TSO)	a power company engaging in the transmission of gaseous fuels or electric energy, responsible for traffic in a gas or power transmission system, current and long-term security of operation of that system, the operation, maintenance, repair and indispensable expansion of the transmission system, including connections with other gas or power systems. In Poland, for the period from July 2, 2014 till December 31, 2030 Polskie Sieci Elektroenergetyczne S.A. was chosen as a TSO in the field of electricity transmission.
TWh	terawatt hour, a multiple unit for measuring of electricity unit in the system SI. 1 TWh is 109 kWh.
Ultra-high voltage network (UHV)	an energy network with a voltage equal to 220 kV or higher.
V (volt)	electrical potential unit, electric voltage and electromotive force in the International System of Units (SI), 1 V= 1J/1C = (1 kg x m2) / (A x s3).
W (watt)	a unit of power in the International Systems of Units (SI), 1 W = 1J/1s = 1 kg x m2 x s-3
Yellow certificate	a certificate confirming generation of energy in gas-fired power plants and CCGT power plants.
Yellow energy	popular name for energy generated in gas-fired power plants and CCGT power plants.
ZHZW	Commercial Management of Generation Capacities.

AI Terminal

PGE Polska Grupa Energetyczna S.A.

5758_rns_2024-11-26_fb2463af-8140-4f2b-9d2f-0453fb3bc328.pdf

on activities of PGE Capital Group for the 3-month and 9-month period

KEY FINANCIAL DATA

1.PGE Capital Group - organisation

Characteristics of activities

CONVENTIONAL GENERATION

DISTRICT HEATING

RAILWAY ENERGY SERVICES

OTHER OPERATIONS

Organisational structure

Significant changes in the organisation of the Capital Group

ACQUISITION OR DISPOSAL OF SHARES BY THE COMPANIES

LIQUIDATION OF COMPANIES

RESTRUCTURING OF THE COMPANIES

Composition of the management and supervisory bodies

1.4.1 Management Board

MANAGEMENT BOARD MEMBERS

Table: Composition of the Company's Management Board as at January 1, 2024

CHANGES IN THE MANAGEMENT BOARD IN 2024

THE CURRENT COMPOSITION OF THE COMPANY'S MANAGEMENT BOARD

1.4.2 Supervisory Board

Table: Composition of the Supervisory Board as at January 1, 2024

Radosław Winiarski

1.4.3 Committees of the Supervisory Board

Shares and shareholders

1.5.1 Share capital of PGE S.A. and ownership structure

SHARE CAPITAL

SHAREHOLDERS WITH A SIGNIFICANT STAKE

1.5.2 Shares of the parent company and shares in the entities related to PGE S.A. owned by the members of management and supervisory authorities

2.Electricity market and regulatory and business environment

Macroeconomic environment

Market environment

2.2.1 Situation in the National Power System (NPS)

Q3 2024

Chart: Energy balance in the NPS (TWh).

Q1-Q3 2024

2.2.2 Electricity prices – domestic market

Table: Day-Ahead market (RDN, SPOT market) 1

Table: Selected price factors affecting RDN quotations

Table: Forward market (RTT)

2.2.3 Electricity prices - international market

WHOLESALE MARKET (COMPARISON OF SPOT MARKETS)

INTERNATIONAL TRADING

RETAIL MARKET

2.2.4 Prices of certificates

2.2.5 Prices of CO2 emission rights

CO2 emission rights granted free of charge

Regulatory environment

2.4.1 Domestic regulatory environment

2.4.2 International regulatory environment

3. Activities of PGE Capital Group and operational segments

Key operating results of PGE Group

KEY OPERATING RESULTS OF PGE GROUP

Table: Key operating data.

BALANCE OF ENERGY OF PGE CAPITAL GROUP

Table: Sales, purchase, production and consumption of electricity in the PGE Capital Group (TWh).

Table: Net production of electricity (TWh).

HEAT PRODUCTION

HEAT SALES

PGE Group's key financial results

Management Board's report on activities of the PGE Capital Group for the 3-month and 9-month period ended September 30, 2024

Chart: Structure of assets and equity and liabilities (in PLN million).

Chart: Net financial debt (in PLN million).

Characteristics of business segments

3.3.1 Key results in business segments1

3.3.2 Renewables

1Adjusted for one-offs.

ASSETS AND OPERATIONAL DATA

Table: Energy production (TWh).

KEY FINANCIAL FIGURES IN THE SEGMENT

Table: Data on one-offs in Renewables segment (in PLN million.

CAPITAL EXPENDITURES

KEY EVENTS IN RENEWABLES

Offshore wind farms construction program

PGE Group PV Development Program

Modernisation of technological equipment at the Dębe hydro power plant

Comprehensive modernisation program of Porąbka-Żar pumped-storage power plant

3.3.3 Gas-fired Generation

2.2.5 Prices of CO² emission rights

CO² emission rights granted free of charge

3.3.1 Key results in business segments¹

¹Adjusted for one-offs.

¹Managerial perspective.

²Adjusted for one-offs.

Price of CO² emission rights

Table: Data on CO² costs in District Heating.

¹Adjusted for one-offs.

¹Data for PGE Obrót S.A.

² Managerial perspective.