Current Report No. 28/2014

Topic: Update of estimated value of ENERGA Group’s material agreements with PSE SA

Legal grounds: Art. 56 section 1 item 1 Act on Offerings – Confidential Information

The Management Board of ENERGA SA (Company, ENERGA, Issuer) informs that on 27 May 2014 the Company has learned about an annual update by a subsidiary ENERGA Elektrownie Ostrołęka SA (EEO) of estimated value of an agreement concluded on 23 February 2012 on rendering electric energy distribution with Polskie Sieci Energetyczne SA (PSE), as a result of which the Company has updated a combined estimated value of agreements between ENERGA Capital Group (ENERGA Group) and PSE Capital Group.

The agreement revaluated by EEO and described in the Company’s Issue Prospectus approved by the Polish Financial Supervision on 15 November 2013 regulates EEO core business of electric energy sales and system services and has been concluded for an indefinite period. Following the EEO periodic update the estimated net value of the agreement in a five year time horizon has amounted to approx. PLN 3 billion. The agreement’s revaluation has resulted from:

• Due to a drop of electric energy market prices, EEO has increased its plans of sales volume on the Balancing Market (i.e. to PSE) for 2014 and subsequent years vis-a-vis the Wholesale Market, what implies higher revenues for electric energy produces within a ‘must-run’ mode for PSE;
• An additional revaluation driver being the increased payment for Operational Reserve starting from 2014 as a consequence of a so called ‘capacity mechanism’ introduction (payment for available capacity not used in peak hours for market sale).

In the light of the above, as of now a total estimated 5-year-period turnover of the ENERGA Group with PSE has grown to about PLN 7.4 billion.

An agreement signed on 29 August 2007 between a subsidiary ENERGA-OPERATOR SA and PSE for rendering electric energy distribution services is of the highest value since its estimated net value equals PLN 3.8 billion in a five year period. The agreement was concluded for an indefinite period with terms of distribution services.

Agreement was concluded on an undetermined period of time; the transmission service conditions, including the methods and maturity, are defined in the tariff and Transmission Network Operation and Maintenance Manual. The Parties are entitled to terminated the agreement maintaining the six months’ notice period, with effect from 31 December of the year, when the termination occurred. Other terms and conditions of the Agreement do not vary from standard terms and conditions applied in agreements of this type.

The criterion for deeming the Agreement significant is the fact that the standalone value of above agreements, as well as the total value of all ENERGA Group agreements concluded with PSE for last 12 month, exceed 10% of the Company’s equity.

Legal basis:

§ 5 section 1 point 3 of the Decree of the Minister of Finance of 19 February 2009 on current and periodic information disclosed by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member state