14.92) - 0.584 s (18:17.39) Transcript: [applause] 0.585 s (18:19.46) - 0.587 s (18:24.49) Transcript: Let's see.Operator: I'd like to welcome you during a press conference, Vice President of Management for Finance, Krzysztof Surma, and Vice President of the Management Board for Trading, Mr. Krzysztof Zawadzki.

Our meeting traditionally will be divided into two parts: first, the presentation of the earnings, and then questions, both those that you will ask in the room as well as the ones that will be asked by our viewers watching our broadcast. I'd like to welcome them.

I'd like to hand over the floor to the President of the Management Board, Grzegorz Lot.

Good morning. It's been two years since we've been here with you together.

Thank you for the two years. On March 7th, that's the anniversary when we have a pleasure to present what happened in 2025.

Two years ago when we met and we spoke about the strategy or about the potential dividend, that's the first message that we as the Management Board, we are recommending the payout of a dividend for 2025. The details will be provided by Krzysztof.

That's one of the most major news that we delivered for 2025. Very good earnings.

Probably you already became acquainted, if not, Krzysztof will be giving you the details: 7 and 1/2 billion of EBITDA, 3.3 billion in net profit. These are very good numbers.

Almost 6 billion of CAPEX on investments, renewables, heat. It's a year of very hard effort, a lot of hard work, but also very good results, very good outcome that the market sees and the customers see.

We are very proud of that. In our strategy, we communicated that 20, 30% of investment outlays will be acquiring from various sources.

I am proud to present here that almost 20% we already achieved. We are the market leader regarding the obtaining of funds, including the National Recovery Plan, the team that is taking on the challenges.

We believe that thanks to that, we will not only accelerate the transition that we planned, but also what we are doing steadfastly. In our renewable strategy, is the strategic direction onshore, yes, the onshore, that's the main part of our investment plan.

We topped 1 GW this year. This is the direction that we are steadfastly taking.

We'll have a chance to present to you the project that we've done and the ones that are being planned, and the ones will be implementing. Definitely, also behind the scenes, the questions about the SMRs, all those new technologies we'll present to you and we'll be ready to answer as part of the Q&A session.

Better energy storage facilities, renewables, and grid investments, all those things are important, but on one condition: that at the very end, there is a customer, as we said in the strategy, what's the core of our strategy, 6 million customers connected to the grid. Everything we do takes into account the point of view of a customer.

What we've done is, first of all, the quality of customer service, improvement. Of course, we are not perfect, but we are far from it.

However, every day we are one day better. We get better.

The example of that is an invoice that's been implemented without any regulations, without any pressure from the outside. Our people implemented and prepared it.

It gave us at least 20% fewer contacts regarding customer billing. This is an impact not only upon the customer service quality, but also upon the cost.

As you will see on the slide, all the metrics that we are measuring, quality metrics, NPS, CSAT, indicate that we are moving in the right direction. However, with each quarter that we are implementing something, customers are asking us to implement new things, the main element being digitization and simplification, where 90% of customers already have electronic invoice.

This is specific savings and specific quality, also the handling, remote handling. 1 million contacts per month, 50% of those are remote contacts.

We are talking about the online, and so on. Please note that if it wasn't for the digitization, we wouldn't be speaking about it.

Digitization, this key was also important. Customer service is not only sales and the customer service.

In the strategy, we have a rapid pace of growth of the distribution and the customer orientation. Giving an example, working on the expansion of the grid, the first thing that the distribution line of business did is a dialogue with the local government units and the social partners, the work.

Before the grid expansion plans were developed, the dialogue and discussion took place where this grid is to be expanded. The next thing is the fact that 50% of grid connections for the household segment are issued electronically.

Easy, banal things, but they make life easier and automatically improve the customer service. Okay.

The strategy that we discussed, we also take into account very strongly the so-called Just Transition. It's both just and profitable, because these two things we take into account in our work.

Mainly, it is focused on the conventional energy. That's the main part of the strategy core is aligned with our declarations.

We didn't withdraw from any area that we are operating in. We are building a new life everywhere.

On one hand, we are maintaining the conventional energy, because it's necessary to supply energy here now to the economy, but also to supply energy for the transition. We won the capacity market for over 200 MW units, full stabilization of the 910 MW unit.

The conventional energy is doing well. We are preparing now for the subsequent auctions for 2027.

In each area, we are conducting the social dialogue both with our people and the local communities, and we are building new solutions. Michał will describe to you what's happening to Jaworzno when we won the capacity market for the peaking gas-fired units.

We are working on the battery energy storage systems. We are building also a hydrogen hub.

In each of the areas that we were conducting operations and we are conducting operations, we'll continue conducting operations, of course, profitable from the investor's point of view. What we are looking at, we are listening to what's happening, what are the trends, expectations.

We are talking about the local content. We are speaking about building the competitive advantage of the Polish economy.

Wherever we can provide support, of course, respecting the legal elements, the competition, we are conducting, maintaining such a relationship with the suppliers. Let me tell you that in the distribution itself, at least 90% now of the local content.

You can look at what the new tender is done for the energy meters, electricity meters. When we look at the supply market and we are making sure that we have fair, very fair competition, an excellent thing that we just did is to reduce the entry barriers for the small entities.

Two years ago, we were looking at the organization that was highly centralized. As a matter of fact, only large consortia, large companies were able to take part in the tender proceedings.

We split those solutions. We allowed a lot of small companies.

This way, we are building those local markets. Now a lot of small companies can start working with us.

What we can see, what's important, is those companies have the basis to start investing. The main entry barrier or growth barrier for the small and medium enterprises was the fact that the energy companies such as ours were unpredictable regarding their CAPEX, regarding their expansion, regarding the delivery on what they were declaring that would do.

After those two years, those companies have become convinced and that this 100 billion plan that we announced is being steadfastly implemented. Based on that, those companies can invest in automation and new solution, and that we can see that.

This means that the technology on the supply that we get is much more advanced. The final thing regarding we deliver is I'd like to demonstrate how we approach the communication issues.

You can see what's the position of TAURON, how it is positioning itself. We want to promote the brand that is for the customer, and this is most important.

It's important how we are being perceived. Other things that happened during that time, the Książ Castle in Lower Silesia, we have our customers there, that's also a unique, special place and wonderful people that we can work with.

We acquired the naming rights, sponsor of the Silesian Park. It's a place in Silesia that's very important.

A lot of people have meetings there. We've been conducting very good cooperation with TAURON Arena.

We continue that. We are a sponsor of Polish volleyball league and the hockey league.

Currently, we are working on further projects. Maybe there's an opportunity, I'll be able to tell you that.

If there are questions, we'll share our insights. Looking from the point of view of whether we deliver, it's a subjective assessment.

We do deliver. Two things I'd like to bring up yet.

When Piotr Gołębiowski was still a member of our Management Board, I must say it because he's watching us, you have greetings and he thanks for that. We have Krzysztof with us, Krzysztof Zawadzki.

He's the head of the trading, of course, of the entire customer. In 2026, that's the composition: very strong, full of energy.

Welcome Krzysztof on board. Now officially moving forward, 2026.

Thank you very much.

Good morning, ladies and gentlemen. It's a great pleasure for me to be here after more than 10 years.

Let me move on to the details, the situation on the energy market. Let me present several key facts regarding 2025, which to a certain extent characterize the past year: increase of the intraday spot and balancing market price amplitudes.

This is, as said, due to a certain system problems and an opportunity for optimization that we like to take advantage of. This optimization can be done through buying renewable energy and then selling it at a higher price.

For instance, this price enables putting online the 200 MW units, for instance, at the prices that will cover the operations at least for the 9 hours of the system; the increase of installed capacity in photovoltaic farms, quite a big growth, 11.6 in 2025. This is also has an impact upon the problem that I just brought up; the growing number of the negative hours in absolute values, these are not big volumes, but they show a certain trend and problem that, in my opinion, will be recurring in the subsequent years.

We also observed the rising CDS in 2025. It's true that the price of the coal went down 30% year-over-year almost.

However, the carbon permits went up and the electricity prices went up. We had also lower average outdoor temperatures in 2025.

Let me refer to the temperatures when I present the data on the sales and supply of heat and production from our sources. A slight decrease of the national electricity consumption is an interesting piece of information.

The GDP went up 3.3% and the national electricity consumption didn't go up. This indicates two phenomena.

The correlation of the GDP with the national power consumption definitely dropped down. This correlation a few years back was 1 0.95, which meant that as the GDP went up, the national consumption went up.

Now we don't see this correlation. We don't see for the second reason, we have a decline of coal-fired production, 2.7%.

This was replaced with renewables and the cross-border exchange, close to 1 TWh. That's the imports balance.

Just an interesting piece of information in the context of what's happening now and the situation related to the Middle East conflict, we can see that there's been a change. Now the balance almost 1.5 TWh.

The situation where electricity is pushed to the adjacent countries where the electricity prices are much higher than in Poland. Redispatching, that's also quite a characteristic element, a feature of 2025, almost 90%.

Let me just remind you that 2025, the redispatching was 1 0.9 GWh. Now we can see this problem growing.

It's related to the increasing volume of renewables in the system. Annual contracting starting from 2025, 2022, 2023, N+1, N+2, N+3, you can see the trend regarding the annual contracts is downward trend.

That's 2027, it became flat and now the prices are stable. Our generation portfolio, regarding the net electricity production, we have an increase plus 7% in the left down corner at the bottom.

You can see the competition with this production. It's mainly related to the production from conventional sources.

We have an increase in renewables, but the share in the entire energy mix is not too high. Let me just draw attention to the hydropower electricity production, quite a significant drop.

Hydrological conditions in 2025 were dramatically bad. In the first quarter of this year, we don't see any improvement, similar as in case of wind conditions.

Increase of heat production, 11.4 PJ. This is related to the previous year's temperatures.

We have an increase of CO2 emissions plus 6%. The cost of redeemed is lower than in 2024.

This is due to the fact that we contracted prices for 2025 in 2024, and the increase is related to 2025. The consumption of coal plus 4%, I'm talking about our conventional sources, and we have an increase of renewables in net production, 15.3%.

That's in line with our strategy. This share will be going up.

Renewables production curtailments, there's a strong growth here. I will elaborate on that in a moment.

Self-curtailments, redispatching, these are our actions. Self-curtailments, we want to avoid the negative prices.

We can see a clear increase. However, we've had an enormous growth.

The limitations that are due to the limitations of the system, system operator acts quite clear. It's the energy that it's not included in the National Power System.

The solution over the next few years is battery energy storage facilities and the ability to use this energy that's not used in the system, but it's an enormous growth year-over-year. Regarding the unit availability, I will not be describing it in detail, but this is the values of our units versus the average availability rate in the National Power System.

In case of the hydropower, we are above the average value. However, in case of the coal-fired units, 82.3, we are below.

The sales supply portfolio, electricity supply, we have a decline, almost 6% down. You can see clearly that this decline is mainly to the business customers and mainly the SMEs, almost 1.7 TWh in those low-margin segments.

Our strategy assumed that we want to acquire customers at the appropriate level of margin. We are trying to restore this volume in the subsequent years, assuming the minimum profitability that we have assumed.

The increase of the greening of our supplies, 13.6% this year. We assume in line with our strategy that this growth will be continued in the subsequent years.

The electricity fed into the grid by the prosumers, the old system in force until 2022 till April, as a matter of fact, this difference is due to the production volume. The new system, the net-billing system, the number of consumers that feed the electricity into the grid is going up 20% year-over-year.

Heat supply to the market, 13.8 PJ. You can easily calculate, we take into account our production, about 17% of energy we buy from other sources.

A few comments about our flagship products related to our tariffs: the new energy product, the fixed-price product over a 9-year time frame, quite a rapid growth of a product that was launched in 2024 in June, 316,000 customers. In January, we acquired 13,000 new contracts.

Mainly, these are households, 266,000 consumption points, electricity consumption, 50,000 these are SMEs customers. The Cheap Hours product, a very interesting product for customers who are highly conscious, highly aware of the electricity consumption, they can manage the consumption to appropriate hours.

We have 26 different hourly rates that we can adjust, adapt to our devices. It leads to major savings.

25,000 customers at the end of January, another 6,000 customers. The popularity of this product is going up.

On this slide, we are showing this in transparent manner, for first time we are showing this slide, what type of auctions we won, what revenue will be expected stemming from those capacity markets up to 2046. Regarding the auctions won in 2025, we have guaranteed 4.4 billion.

Maybe a preemptive answer to a preempt question, how much capacity we have contracted, about 70%, 75%. In 2025, we had 9% of capacity under auction versus in 2026 is 78%.

We assume that we'll be taking part in the additional supplementary auctions, and this ratio will go up to the level that we observed in the previous years. Let me move on to the financial data and hand over the floor to Krzysztof.

Thank you. Ladies and gentlemen, we are talking about a record-breaking year, as the CEO mentioned at the very beginning.

The financial results are at the record-breaking level, although the revenue is 3% lower. However, this is impacted by the market conditions, the decline of electricity price, the withdrawal from the compensation payment system, and a bit lower volume, as Krzysztof mentioned, in the supply line of business.

If we look at EBITDA, more than 7.5 billion PLN, a record-breaking result, more than a billion PLN more than last year. I will elaborate on the individual details on individual segments further on.

If we move to net profit, more than 3 billion PLN, we haven't yet recorded such results. This, of course, impacted, first of all, by the good operating results, but also let us remember that 2025, we didn't deal with any impairment charges, which is very important, any write-downs.

These write-downs were affecting the group very strongly in the previous years. The second thing, the write-down on the result of the deferred tax year-over-year was also better.

Very good financial results enabled us, for first time after 11 years, to recommend the payout of a dividend, more than 350 million PLN. That's 20 0.2 PLN per share.

We recommended, as of now, to in June to be the day of record, the beginning of July, we could pay out the dividend for the shareholders. Regarding the level of capital expenditure, went went up by 10% year-over-year, it topped 5.6 billion PLN.

Michał will elaborate on that during his part of presentation. Regarding the net debt to EBITDA ratio, it went down significantly, material year-over-year.

It was impacted by the good earnings, operating results, very good EBITDA that I mentioned before, on the other hand, the lowering of the net debt. I will elaborate on that further on in the presentation.

As what's important, it's worth noting that EBITDA, reported EBITDA and the comparable EBITDA are very at a very similar level. We're talking about the one-off events that took place in 2025.

They were fully focused in the supply concentrated in the full line of business, in the supply line of business, and they offset one another. The positive impact, the result of the tariff implemented in 2025, we mentioned in the beginning of the 2024, the President of the Energy Regulatory Office set the tariff for 1 and 1/2 years.

This tariff in 2024 was at the level that didn't fully cover the cost. Therefore, the earnings of 2024 in the second half of the year in the G tariff were negative.

We saw showed it on the bridge comparable EBITDA for 2024. In 2025, to a certain extent, we made up for that, for that shortfall.

In the first quarter, President of the Energy Regulatory Office took a decision to change the tariff for the four quarters, which means that first three quarters allowed us to recover major portion of this EBITDA, about 400 million. At the end of 2025, we were affected by two negative factors.

The first factor being the setting of the G tariff for 2026, it didn't fully cover the cost, and therefore, the group took the decision to set up a provision for in the fourth quarter of 2025 in the amount of about 246 million PLN. The second negative factor, the summons by the President of the Energy Regulatory Office, which said after in that after the balance sheet date, the summons of the summons of President of the Energy Regulatory Office related to the potential improper settlement of write-offs to the price difference payout fund, 270 million PLN.

The President of the Energy Regulatory Office stated we set up a provision for 2025 in this amount. The payment was made in March this year.

However, the company will be appealing against this decision. If we move on to the slides that are directly related to individual lines of business, individual segments, let's look at the nominal values of EBITDA.

Here, of course, the the group is made up to a large extent to the distribution EBITDA. We have 4.8 billion PLN, a significant increase year-over-year.

We'll elaborate on that in a moment. It's not a surprise, as represents 64% of EBITDA of the entire group.

However, a surprising result in the generation segment is second last year, it took the second spot, almost 880 million of EBITDA. One can say it's a very good result for the conventional segment.

Spot number three on the podium, the supply and wholesale trading, about 660 billion million PLN of EBITDA. It's a very good result.

We hope we can get these results also in subsequent years, although it's going to be very difficult, especially in the next year, that I will elaborate on when I present the outlook. If we look at the individual factors behind the increase or decline of individual segments versus 2024, of course, the key segment for the group continues to be the distribution line of business.

It was a very good year for the distribution. We had a number of positive impacts on the earnings.

The first one being the growing value of regulatory asset base. I will elaborate on that at the end of the presentation.

The second factor is the growing WACC, weighted average cost of capital. The third thing is the growing, but not so markedly, volume.

That's a very good result. Krzysztof mentioned that in the entire system, we had this zero-minus result, but in our distribution line of business, our result was slightly positive volume regarding the volume, and it generated additional funds and was very important in the context of results year-over-year.

I will elaborate on that in the further part of the presentation is that the amount of regulatory account. The value of regulatory account was negative 2024.

At the same, it was positive 2025. Therefore, the year-over-year result was very positive.

Let us remember that, as a matter of fact, the value of a regulatory account is the settlement of a volume that is diverted between the tariff and the actual performance. If the actual performance was better than what we had envisaged in the tariff under the tariff, then we get the negative adjustment on the regulatory account when it's being accounted for, settled two years later.

The difference on this account determines to a large extent the result of the distribution line of business. I will elaborate on that talking about the outlook for 2026.

If we look at the renewables segment, unfortunately, here a decline around 112 million PLN year-over-year. Why?

Because we had several factors. The declining prices, electricity prices, and the prices of the green certificates.

Then we have to add to that add to that the poor weather conditions, as Krzysztof mentioned. In spite of commissioning more capacity, new capacity, the volume wasn't that good, the weaker prices determined the results.

Regarding the heat segment, results quite good, although the segment had a slight minus, -6 million PLN year-over-year. However, this result was determined by the one-off event that took place in 2024 related to the deconsolidation of the Tameh Czech company subsidiary.

If we look at the operating results themselves, after we strip out the one-offs, then the result would have been positive. This was, first of all, impacted by the volume.

Krzysztof mentioned much lower temperatures year-over-year in during the heating season meant that in the heat line of business, we generated a substantially positive result, which had the decline of the price of on the market had a negative impact upon the margin. The margin of electricity was a bit lower.

Generally, the overall earnings in the segment heat segment were good. Looking at the supply and wholesale trading segment here partly, I described these results.

I talked about the one-off events. If we look at the entire picture, generally, the margin, the additional margin in the G tariff and the margin in the entire business was very good last year.

However, something that surprised us, additional costs, profile costs that were year-over-year around additional cost of 280 million PLN. One can say that this will be impacting us as long as the energy storage facilities are not running at full speed.

We'll be affected by that strongly due to the substantial increase of the renewables assets. That's the problem affecting the entire sector.

One can it's worth noting that TAURON is one of the leaders regarding the balancing. Probably this problem is as big as important, taking into account the fact that we are the leader regarding the balancing is relatively greater, this problem relatively greater in other energy groups.

Regarding the one-off events, both the provision set up, I already mentioned at the very beginning when I talked about the EBITDA, comparable EBITDA. If we move on to the generation segment, as I mentioned talking about why I talk about the nominal EBITDA, 850 million PLN, a very good results, growth year-over-year more than 200 million.

We mean two factors: increase of volume, as Krzysztof mentioned, very good earnings in our segment, looking very good against the backdrop of the entire sector. Let us remember that the coal sector dropped, declined nationwide, and we went up, we rose.

Also another thing regarding volume, regarding capacity market, let's remember that the capacity contracts, apart from the ones that we are winning, those historically concluded for the multiyear year contracts, they are adjusted based on the inflation rate from the year minus 2. This also had a major impact, positive impact upon the earnings.

We also took advantage of the new balancing capacity market that was introduced in the middle of 2024. Moving on to the debt, here good news is also the debt year-over-year went down.

Net debt went down by more than 800 million PLN. Regarding the overall result where we are showing all areas of debt, including CO2, that the decline was about half a billion PLN.

Let me draw attention to two three factors in the entire bridge. The first thing is the gradual departure from the subordinated bonds, that was the most expensive part of the financing in our portfolio.

Of course, it meant the reduction of net debt to EBITDA ratio, because we're not included in the wasn't included in this calculation of this leverage ratio, but we are partly withdrawing from it, departing it. It was part of the plan and partly acquired from the BGK.

The last final tranche we will repay in March this year. In the future, you will not see this part in the bridge view anymore.

We are smoothly converting into the cheapest financing in the portfolio. Because substantially increasing the financing from the National Recovery Plan, last year we drew around 1.6 billion as part of National Recovery Plan, first of all, digitization and modernization and the construction of the new power lines in the distribution line of business.

What's important, we explained it during previous conferences, we are realistically splitting this component due to the fact that this preferential financing from the National Recovery Plan regarding the grid is at a very attractive level, 0.5% fixed interest rate for the entire period of financing. We are stripping out the component according to the International Financial Reporting Standards.

We are stripping out the preferential preferential component. The preferential component as part of the prepayments and accruals is not included in the debt in the financial reporting, financial statements.

The difference between nominal component, the nominal debt and the one that we include in the financial statements is last year came in at about 1 billion PLN. We are showing it in the bridge view.

It's a very significant value. To a large degree, depends upon the moment how close we are to the maturity deadline, what are interest rates on the market.

That has a significant impact upon the difference between the net debt and the gross debt. The full debt calculated according to the nominal value, that's why we are transparently showing it in the bridge view.

Last thing I'd like to draw attention to is the leases. Remember that's not these are not classical leases, but these are, to a large extent, the long-term easements, leases according to the definition introduced of the IFRS 16 introduced some time ago.

This long-term these long-term contracts that are natural for our distribution line of business or green energy will be increasing significantly the value of the leases. If we move on to and go back to the Grzegorz brought up at the very beginning, we deliver, it's worth praising our key strategic components table, financial position, we're not we're not forgetting it.

Last year, one should indicate, first of all, not only the maintaining of investment-grade by improvement, the upgrading of this outlook, the rating agency revised this outlook in the fall last year. The second thing that I'd like to draw attention to is the value of preferential funding obtained.

Ladies and gentlemen, we promised in our strategy that the total value of the preferential funding for the entire time frame of the strategy up to 2035 for respective entire CAPEX, 100 billion PLN, would be at the level of about 20 to 30%. We are today, let's say, 1 and 1/2 year well, that's been 1 and 1/2 year since we announced that strategy, we already have 18 billion, 18% of that was already obtained, including 5.6 billion in 2025 alone.

Here we are talking about the National Recovery Plan programs for the grid, for the digitization, and the renewables. In addition, we acquired subsidy from the Modernisation Fund for the better battery energy storage systems, and a number of other subsidies for the hydrogen and fiber optics.

TAURON, let me brag here, TAURON is the number one leader in the country regarding the funds acquired from the National Recovery Plan. In addition, one should indicate that TAURON has also secured guaranteed secured financing programs that fully cover at least have 12-year lead time in the financing, according to our strategy, at least 12 months ahead.

We always want to be 12 months ahead covered. Those guaranteed lines of credit at the end of 2025 amounted to 6.2 billion PLN.

That's all in this section, main financial section. I'll go back to the finances talking about the outlook.

Let me hand over the floor to Michał, who will speak about the CAPEX program. Michał Orłowski (Vice President of the Management Board for Asset Management and Development):

Ladies and gentlemen, the 2025 is a record-breaking year regarding the earnings, capitalization, but also the CAPEX. In 2025, we invested more than 5.6 billion PLN.

This is a 10% growth year-over-year. The most important segment in our CAPEX continues to be the distribution line of business, that 3.8 billion PLN was allocated to.

What's worth emphasizing, the structure of our expenditures in the distribution changes. Up to now, it was the construction of the new grid connections, our regulatory obligation.

Thanks to preferential financing, we are able now to implement also, to a larger extent, the upgrading, the modernization of the grid assets, which was the original assumption of the efficient transition card and the original assumption of the WACC in this segment. That's why we are implementing those changes successively.

This has an impact upon the material growth of our infrastructure, among others, 3.4 thousand new power lines in the distribution grid, 900 km of upgraded lines, 700 new stations, more than 400 upgraded substations. We are preparing the grid for the future expansion of the grid and improve the metrics.

The next important area is the smart meters. As of today, 43% of our customers have the smart meters.

This is 8% above the regulatory target for 2025, which stood at 35%. We are moving faster than the regulatory requirements.

We want to provide our customers modern meters that are necessary for using the dynamic tariffs. Regarding the renewables segment, the decline year-over-year to 881 million PLN in CAPEX, although in this segment, as a matter of fact, the outlays are important because large portion of implementations are based on advance payments.

The outlays in the segment came in at 1.4 billion PLN, which is a more correct image of the actual progress on those projects. About the details of those projects, I will expand on during next slides.

The heat segment, the main thing is we are at the stage of launching the investment projects. Last year, we launched the gas-fired engine in Bielsko, 30 MW electric capacity, which moved on to the implementation phase.

Other key investment decisions regarding the generation assets that we want to modernize by 2030 will be made this year. As a matter of fact, this year, we will launch the majority of the projects in this segment.

Apart from the construction of the new generation sources, we also have maintenance and the connecting of the new facilities. Last year, we connected more than 30 thermal MW to our grid.

Regarding the supply and other segments, 200 million PLN in the IT investments. Apart from that, maintenance of the lighting infrastructure and expansion of fiber-optic network, these are the most important items.

Year-over-year, the expenses went up in the conventional generation. This is due to the maintenance cycle of the Łagisza power plant.

Let me remind you, power unit number 10 in Łagisza, it's a second most efficient unit in our generation fleet, which also has a heating component that provides Katowice, Chorzów, Dąbrowa Górnicza, Będzin. A large district heating system is a necessary component for this functioning of the system.

This major overhaul was a final major overhaul planned for this unit, in line with the today's assumptions for its life cycle. The unit can be operated until 2030 as of today.

This major overhaul secures the possibility of operating it by the deadline. Apart from that, the CAPEX related to the replacement and repair program of our Nowe Jaworzno, our latest unit, this is a matter of adaptation of certain components that is from required modernization, especially the coal mills and the I&C, instrumentation control, and the out-of-city Jaworzno.

This is a large conventional project that, in December, won the capacity auction as part of which it secured the revenue of about 4 billion PLN. Now we are at the stage of contracting the delivery of the turbine.

We are expecting this middle of April, and this time will allow us to give you a better, more precise answer regarding the assumed CAPEX for this facility. Moving on, 2025 was a record-breaking year regarding the commissioning of renewables projects.

We commissioned 195 MW thanks to which, along with the biomass, recently managed to top 1 GW of the RES installed capacity. It's a big milestone achieved on the road to implementation of our strategy.

Regarding the projects that were commissioned, first of all, in wind farms, Nowa Brzeźnica and Sieradz, which were commissioned last year. However, we have Miejska Górka underway, this project.

The project is moving ahead in line with the plan. We have practically completed the cabling work.

The transformer, GPO, the power supply line, about 90% advancement. 35 out of 53 turbines have already been installed.

Therefore, the wind farm is moving ahead in line with the plan. We are planning to commission in the middle of 2027.

Regarding the photovoltaic farms projects, two projects were commissioned: Bałków and Postomino project. Postomino project is an interesting project because it's a cable pooling with our existing Marszewo 100 MW wind farm, a large-scale cable pooling running, operating normally now.

Also launched two interesting projects in Grudziądz and Myszkowice. Why I'm saying very interesting, first of all, because these are in-house development projects.

Both projects were prepared by ourselves, Myszkowice on our own site, Grudziądz on an third-party site. Myszkowice also recultivation of the post-industrial site will be included in this project.

Both projects have also preferential financing in place from the National Recovery Plan, 126 million PLN of financing was acquired for this. The interest minus 200 bps, it's a highly preferential financing.

We were asked questions about other PV projects. Are other projects of this type of preferential financing?

We have no doubts about the investment decision in this area. We are using the preferential financing to launch further projects.

Moving on, recently, one of the key things that we are doing was to secure the profitability of a battery energy storage systems projects. In total, we commissioned of more than 560 MW.

It was possible thanks to obtaining the preferential financing and the secured capacity market auctions. All the projects that we launched have either the grants from the National Environmental Protection Fund or one capacity market with 2029, 2030 delivery time, especially the grants, 538 million for 260 MW in projects financing is a substantial amount that significantly improves the profitability of our battery energy storage projects.

Those projects, we are launching basically, we think that on this market, there will be some bonus for first-mover advantage. Energy storage will be cannibalizing each other.

Planning this investment project, we're first of all looking at the ability to get a grid connection. We're not waiting for the moment of the support being launched from the capacity market, but we connect those facilities once it's possible based on the grid conditions.

We started with small projects in Dąbrowa and Przewóz that were already commissioned, and this will allow us to test the procedures regarding, first of all, the acceptance of the investment project and the very investment project, and on the other hand, operational and commercial management of those facilities, so as to be ready to work with larger projects, to test the procedures, and to be able to commercialize the other units in an optimum manner right away after they take off. Those energy storages will be gradually commissioned in the subsequent years.

Soon we will commission another 16 MW. However, the bigger 900 MW package in 2027, the majority of the program completed in 2028.

If we look at the total scale of the magnitude of the project that we're implementing in these three segments of wind farms, PVs, and battery energy storage systems, we have 889 MW underway. It's an unprecedented scale looking at the history of our company.

As I mentioned, recently, we topped 1 GW in total capacity in renewables. Now we have about 900 MW underway.

We are accelerating investments in this segment. If we look at implementation of our strategic goals regarding the renewables, then we can see various speeds.

If we talk about the wind segment here, we can see that certain projects were commissioned. However, we didn't manage to, at least over the last six months, acquire new projects to be implemented.

It's related to the fact that when we're looking at the targets in the nominal terms and the availability of the profitable investment projects, we opt for profitability of investment projects. We are frank here that the wind market is demanding.

However, we're looking for solutions. We are looking at options to cooperate and secure projects, but at an earlier development stage, among others, we signed further documents, we're negotiating with the National Agriculture Support program that could provide us with sites for wind farms and also looking for external partners to get projects at an earlier stage of development.

Regarding PV, our pipeline allows us to accomplish the strategic goals, but we are trying to optimize the investment decision, and to use the external financing, as I mentioned, in case of Grudziądz and Myszkowice. From physical point of view, this goal is definitely achievable, but this depends upon the availability of preferential financing whether we are able to fully accomplish it.

We had a major acceleration in the energy storage. We believe in the first-mover advantage, and the majority of strategic goal accomplishment is already secured in this line of business.

Moving on to the final part of the presentation, Outlook for 2026. It's one of the most interesting parts, what will be happening, mostly for you.

Here EBITDA in 2026, we assume that will not be as good as the one we achieved in 2025. If we look at individual segments how we see them performing, distribution segment itself, we assume that EBITDA year-over-year will be lower.

Here we have both positive, negative factors. Let's start with the positive one.

The positive one is the increase of regulatory asset base. I will display one more bridge in a moment related to that.

Second thing is increase of depreciation that also improves the company's earnings. However, the result of investment carried out in the previous years.

However, regarding negative factors, this is the decline of weighted average cost of capital down to 9.5%. This is a major decline year-over-year.

However, the key factor that will determine the earnings year-over-year is the balance of a regulatory account that I mentioned before. The balance was positive 2025, 270 million.

It'll be negative in 2026, 170 million. We have more than 440 million difference year-over-year.

To a large extent, this will determine the result of the distribution line of business. Regarding the renewables, we are expecting a similar result year-over-year.

We look at the two factors that will be determining that. The first factor, let me start with the negative one.

This is the matter of a decline of the prices, the price year-over-year will be lower. We are talking about the electricity price.

The positive factors, we are commissioning new capacities. We believe the new capacities, of course, to a large extent, it'll all depend upon the weather conditions, but we do believe that the new capacity will make up for the lost EBITDA due to the lower prices.

Regarding the heat segment, here we assume better earnings year-over-year. We are talking about the heat part.

We assume the cost of generation would be slightly lower in the heat generation area and a higher transmission tariff regarding the transmission. Of course, the outdoor temperature will also have a major impact upon the final earnings of this segment.

However, the lower margin we assume in the electricity production area, of course, it's not a key part of that segment, however, the lower result will be, first of all, due to the lower prices and the tightening CDSs. If we look at the generation segment, we assume that it'll not be possible to maintain that good results that we managed to post in 2025.

The same factors we are dealing with here as in the heat segment, but their impact is reverse. The determining factor is the electricity, the decline of the prices and the tightening CDSs will lead to the lower margin of electricity generation.

We also have a little bit lower futures contracting. This will reduce the buyback potential.

The final thing that will have a positive impact, but here as in the heat segment, but in the generation segment, it's a much lower impact, is a positive impact of the heat sales. The cost of generation will be year-over-year lower.

This should lead to the better results on heat production. As a matter of fact, the segment that, in our opinion, will have relatively the weakest earnings versus previous year, year-over-year, it's a supply segment.

We start with a positive factor, because, as I already mentioned, that we are doing our best to recover the profitable volume, as I mentioned before. We got rid of onerous contracts, and were a burden to our earnings, and we are recovering this volume.

We hope that, in 2026, we will recover this volume in a profitable manner. The results of the segment will be strongly burdened by the decision on the G tariff, the part of the provisions.

It was reflected in 2025, we set up a provision for that. However, this means that we'll not be generating the margin on the tariff covered customers in 2026, at least if the tariff doesn't change within the year.

Now one can say a few words about the CAPEX. We expect to continue our CAPEX program implementation, as we outlined in the strategy.

The CAPEX will go up year-over-year. This, plus a weaker EBITDA, plus a higher CAPEX, will mean the deterioration of the net debt to EBITDA ratio.

Regarding distribution itself, the final slide, we wanted to show you just to make it easier for you to understand our main segments. We are addressing the expectation of the analyst.

There's always questions about this slide. We want to show what's the structure of regulated revenue, what's the building of the value of regulatory asset base.

Let me start with the first one, what I'd like to draw attention to. I like to draw attention to the fact that this revenue is made up of four key portions.

We are always focusing on the key one for the group is the level of weighted average cost of capital. You look at the structure of an energy bill for the customer in 2026, due to the decline of WACC, it will represent only 17%.

Any movement in WACC, any fluctuations will not have a major impact upon the energy bill for the customer. Talking about the trend of WACC, this is not a main component that changes the energy bill.

The charges are the main component that changes the energy bill, the main component being, in 2025, is the value of a capacity charge. This is a part of energy bill that is not up to TAURON, it's passed on further to the TSO.

As a matter of fact, this is the main determining factor behind the change. Regarding the other components, the increase in depreciation I already mentioned, of course, this component, as the investment program is moving ahead, will be going up.

However, this component of a cost that is declining year-over-year is mainly the determining factor of being the settlement of the regulatory account. If we look at the regulatory asset base, let me draw attention to one important factor.

Here we have dealing with an increase between 20 2025 versus 2024 by about 2 billion PLN. It's something that came up for the first time in 2025.

Now it'll be continued in 2026. Will add 35% of the regulatory asset base, 35% of the planned CAPEX for the coming year.

Before 2025, it didn't exist. So, 2025 meant a step change, increase of regulatory asset base.

Let me emphasize that exactly the same mechanism will be applicable in 2026. Increases the regulatory asset base value in total about 1.5 billion.

As I said, ultimately, the value that we expect is about 26.6 billion PLN for 2026. That's all regarding the presentation.

Now let's move on to the Q&A session.

We agreed the hour mark as part of our presentation. We delivered.

One cannot exceed this value, because you might be angry with us. We don't want that.

Ladies and gentlemen, let's move on to the questions. You can see questions coming up online in our form.

Let's start with the persons present in the audience. Any of you would like to ask a question?

Good morning. Paweł Puchalski, Santander.

Let me refer to practically the last slide, the distribution and the increase of regulatory asset base, because based on what I can see, this new formula, 35% of the current year, is responsible for majority of the increase of regulatory asset base. Two questions.

Whether at a certain point in time, because, in fact, you're eating part of a cake that you haven't yet implemented, you are planning to implement it. Will there be a time where this mechanism, 35% of last and 35% of next year, will be finished, because at this point in time, hypothetically, I'm just thinking, there would be totally no growth of regulatory asset base in certain year.

That's one thing. Second thing, why your CAPEX for this year and next year in distribution is not twice as high, because based on this graph, you can see that simply it's worth investing in the regulatory asset base.

Let me respond to the first part. As of now, we don't have any information regarding a change of the model.

Of course, for some time, there's been a discussion with the President of the Energy Regulatory Office whether the distribution model should change. Today, there's no new information on that.

Since this mechanism was implemented, I also assume that at no point in time no one will withdraw from that, because would set us back and would stop the increase of regulatory asset base at a certain point in time. I do not assume this will materialize.

We do not take into account the fact that this mechanism regarding the calculation of regulatory asset base would be changed. Regarding the value of regulatory asset base and value of CAPEX, let me hand over the floor to Michał in a moment.

Let us remember, we stated the amount in the strategy, the amount of the CAPEX in this line of business, that was 60 billion PLN. As a matter of fact, the biggest portion of 160 billion we plan to spend in distribution alone.

It seems so significantly a lot. That's one thing.

We have to keep the financial discipline in place. We promised the maintaining of investment-grade rating and the leverage ratio to be at the right level.

Let us remember about the implementation market. 100% increase of CAPEX will not be also handled by this market.

If we do it, we would implement the inflation rate increase, we will not be able to complete the CAPEX plan. Would like to add something?

Michał Orłowski (Vice President of the Management Board for Asset Management and Development): I consistently spoke during the previous conferences that the sustainable growth for the construction companies is about 20% year-over-year. We've been sticking to that so far.

I think it's also worth mentioning another issue, the tariff issue. Here substantial increase of the CAPEX would also involves higher pressure on the tariff.

Therefore, the growth plan is year-over-year agreed upon with the President of the Energy Regulatory Office. It's not easy to increase this two times, which would have an impact upon the energy bills in the short term.

We consider this level of growth rate is to be rational both from the contractor's point of view and the tariff point of view.

Yes, but my question is more related to the comparison of TAURON versus PGE. PGE has a higher CAPEX, and has this WACC about I don't remember, 11%, you have a lower one, and you have 9.5%.

Let me be frank, I prefer 11% versus 9.5%, especially that this disparity has been in place for two years in a row. Why isn't TAURON like PGE in the distribution segment?

Let me be frank here, but we will not be commenting on the legislative process. I think in our opinion, according to our knowledge, we have that's true, below PGE, but basically higher than the majority of market players.

We are increasing gradually this CAPEX plan. We have a commitment to a distribution line of business.

We hope that in the subsequent periods, we'll be able to achieve relatively good rate of return versus the rest of market.

Let me just add, we'll not be referring to PGE. PGE hasn't had an earnings conference yet.

He didn't show yet what WACC they will have. We can just expect what level it'll be at.

Let's remember that PGE also has a special subsidies for the eastern part of the country. We don't have those grants, and that's also an important portion of the CAPEX.

One would have to strip out what's the level of CAPEX with the grants and excluding grants. Also remember when the grant is not included in the rate of return.

The question is whether the difference in the CAPEX, does it include the grants or not? I wouldn't say this black or white, but the President of the Energy Regulatory Office is saying that you have an increase of investment, and automatically, the increase of WACC will be the same.

We'd like to have it more strictly defined. It's not just one-to-one process.

One more question regarding your hedging policy. Can you disclose how are you hedged in the conventional and renewables segments?

I'm talking about the electricity prices.

We try not to disclose the contracting. However, regarding the renewables, I can say what percentage of in-house production we have hedged regarding 2026.

With an internal PPA agreements, we have 100% contracting secured for 2026 and 75% for 2027 as part of the internal PPAs, yes. Thank you.

Please note, what's the point here? The business unit generation, renewables, internal trading that takes place, and the external customers, please note that the so-called PPAs we are talking about is the combining of renewable production output with the trading, mixing, profiling, and allocating this electricity with the final customers.

The contracting of generation on one hand is combined with the sales of electricity under long-term contracts with the customers under various models. We have one of the highest, most developed, dispersed PPAs in Europe definitely, 100,000 customers that have contracted electricity supply for nine years ahead.

Krzysztof mentioned before, volumes, large scale. I don't remember the numbers, but we could repeat in a moment.

The entire philosophy is such that securing and hedging of our production, and a new product, it finds automatically contracting on the customer's side. The model we are talking about, the customer profile, 6 million customers, and systematic contracting for various types of products, therefore, we're talking about Going Green.

The production mix, we are talking about something like that, that we are investing onshore, because the production profile from the onshore output is most aligned to the customer consumption profile. Therefore, the balancing is lowest.

We supplement it with PVs and the energy storage that can help us profiling and reducing the profile cost. Any unit of electricity generated by our renewable sources finds a place in the contracting with the customer.

That's why we're talking about the internal PPAs, but this is something more than the traditional classic rock production, trading, and the power exchange.

Next question. Yes, we have a gentleman here.

Thank you very much. Bartłomiej Wiśnicki, Rzeczpospolita Daily, Parkiet.

I have quick three questions, if I may. The first one is related to the annual report, where we can read that you're planning or you're assuming that coal will continue operating until 2030.

You're writing then the contracts are valid of the economics of the so-called old coal for Łagisza, Jaworzno, Rybnik is 2028. I'd like to ask then when can we expect a change of a decision regarding the decommissioning of the coal-fired units at three sites, since we are reading the group is planning to phase out coal for production of heat and commissioning of coal units by 2030.

We know the corporate decisions of 2021, if I remember correctly, assumed that in those sites, those coal will be phased out in 2028. The second question, I want to ask about the ETS.

Tomorrow we are supposed to find out the first indications of European Commission about the changes to the ETS. I'd like to ask about how much you spent last year to purchase carbon credits and how much you're planning to spend this year.

The third question, a bit referring to what President Lot mentioned, classical based on the in-house development, number of projects already are surfacing, the one that you did in-house. For you will be a positive effect, the Grid Law, the act on the grid, that is awaiting the signature of the president?

If it's signed, then will you be consolidating the small and medium renewables developers and you'll be taking over them, either projects or businesses, and hire them?

Okay. Thank you.

As I said before, let me answer first. First thing is that what is written in the strategy is still up to date.

In 2021, the then Management Board passed a resolution and says that if the coal-fired units are not profitable, that you need to phase them out, decommission them. That's also in line with the Code of Commercial Companies provisions.

If something is not profitable, you need to restructure it, shut it down, or improve profitability. That's one point of view.

In the strategy, we said that the capacity market for those 200 MW is valid till 2028. This is the legislation today.

The regulatory condition says as follows: that 2028 is the final year of the 200 MW units operations. If the situation were as today, as it's written in the laws and documents, the 200 MW units are not able to maintain themselves from the electricity production, because the operational hours will be below 2,000 hours, 1,500 hours, 2,000 hours, it's a loss.

There's no chance to have profitable sales from such units long term. Their function is providing security.

As we mentioned, that have a function security. Grzegorz Onichimowski, the President of the TSO, PSE, unequivocally says that a new capacity market, is present today.

That's a part of the competitiveness. The situation is such that, on one hand, we have power sector transition, renewables, nuclear, PVs, storage facilities, but in time, there are conflicts that arise.

Know what will be situation like? We are saying that we have our own coal assets, 200 MW units.

If there is a demand on the market, then we are able to offer this security service within the technical needs, along with the procedure that we have. We're talking about the ring fencing, the profitability, and so on, and so on.

We have taken into account such flexibility for the nationwide, because not only profitability arises, that's very important, and as you can see, we have no doubt about that and we guarantee this profitability, however, also there's this security dimension. We've got 24 hours, seven days a week, everybody wants to have electricity at home.

The situation is, until there is enough renewables capacity, energy storage, or gas-fired units come up in the right number, and we know exactly how it's difficult is to get the production slots for gas-fired turbines or gas-fired engines, and so on, and so on, we know how difficult it is to get the supply chains in place in the offshore and the nuclear markets. These are challenges.

Therefore, looking from the category of the economic and national wisdom, we have those assets that'll be utilized for as long as they are required to ensure the security of supply. That's it.

That's okay. In our strategy, we said that the classic traditional one is necessary to carry out the transition.

From my point of view, the situation is such that we need to accelerate the transition. We need to accelerate the construction of the onshore facilities.

We need to accelerate the construction of the nuclear. Escape forward, that's the best solution.

That's why the messages from Michał, we are speeding up to maximum degree the energy storage facilities is 80%. We're doing our best to get into the new investment project on the offshore sites.

We consider this to be the best form of securing cheap energy and the security until it's not in place, we will not be able to have 100% certainty in Poland that security of supply is secured. We have to use those assets.

I don't know, but President Onichimowski mentioned something like that, that negotiations are underway, there are works underway, how it can be done past 2028. Definitely, as an organization that we want to have cooperation, but also specific trading, we're talking about this, that we have those units in place, we are able to present appropriate, profitable offering.

The product such as the energy security can be proposed. Director, anything to this part?

Michał Orłowski (Vice President of the Management Board for Asset Management and Development):

Let me just say that, based on the statements that was quoted, I think there was a separation between the conventional units that Grzegorz mentioned and the heating units. Remember, as Grzegorz mentioned, the strategy is still in place.

In the heating plants, we are accelerating our CAPEX plan, and this conversion until 20 by 2030 into different type of sources, it's confirmed. The quotation from the report, we are upholding it.

More questions?

Second question was related to the CO2, if I remember correctly. You mentioned it, yes, and the CO2.

Talking about the cost of CO2 emissions in the group for 2025 and how much in 2026.

As far as I remember correctly, group-wide, 2025, the carbon credit price for cancellations 3.1 billion PLN, includes both TAURON Generation and TAURON Heat. For 2026, we expect comparable level.

That's it.

Let me comment the third question regarding the UC84 and the potential acquisition of the developers. Let me say that UC84 act is objectively good for everyone.

It eliminates the basic problem, which is the virtual blocking of the capacity on installations, this will never be built, congesting of the grid, that we are not able to issue further grid connections. We are issuing for the long-term dates on the distribution side.

Because those virtual investments block us for other grid connection capacity, it's an inefficiency of the system, which leads to the inability to implement the investment project, but also leads, on our side, not necessarily the good dimensioning of the infrastructure. That's what should happen.

Therefore, the change of rules in this area is simply an improvement of efficiency of the system, which is objectively good. Therefore, we do hope that the signature under this law from the president will be made.

It doesn't mean that we will be able to take over smaller developers across the market. In practice, as a matter of fact, various transactions with developers and the swapping of lands and discussions on the grid conditions is already taking place, it mainly the financing of a project for this notice that will be modified for smaller developers.

Apart from our in-house development, we are using the so-called DSA, Development Service Agreement, projects that developers prepare projects for us to be ready to build, and this solution, we will be trying to speed up in the near future. We're ready to cooperation here, but either under the project takeover, the land swap of a grid connection conditions.

Definitely, we'll be able to cooperate. Definitely, this is an opportunity, not necessarily it'll materialize through the takeover of companies, it'll bring new opportunities for us.

I understand that the answers satisfied you. We can move on.

Now

Piotr Dzięciołowski. Good morning, from Citi.

Could I ask about the distribution cost in the tariff that you showed of almost 4 billion PLN? This is the revenue.

What is the cost in 2026 of the distribution? I'm trying to find an answer to the question whether there is any OPEX gap or outperformance or what's the situation like.

The second question about the distribution, the 10-year bond in Poland went up 100 bps or 80 bps, quite a lot, strong growth. Will it have an impact upon the automatic revision of the weighted average cost of capital in the subsequent year or maybe not?

What's the expectation?

This number, 4.9 billion PLN, what will be your cost? Because this is a revenue.

Of course, we're showing this from let's say, from the cost and revenue, the gap. The question is the correct one.

Every year, we are trying to make the costs that are within the tariff, which is our revenue, to, in fact, to be not higher than the ones that we are actually incurring. This encompasses two parts.

It'll be under this item, we can split it to one is the balancing difference, luckily not the ones that we mentioned before in the accounting manner, but what's the purchase of electricity for the needs of the balancing difference, and the other costs related to the labor costs, costs of works, and the other things. Last year, this gap, if we look at both components, was positive for the company.

The goal is to have those costs not higher in total, because calculated in total the purchase of electricity for the balancing difference is not to be higher than the tariff ones. The gap is either 0 minus or 0 plus, but it's not material versus the entire group.

You stripped out this regulatory account, because it was

Yes, yes, because I stripped out the regulatory account. What about the WACC?

WACC, will it go up? Because once we had a 5-year system, then after COVID, it went to 1-year.

There's no true regulatory timeframe. What do you think about the weighted average cost of capital for subsequent year in the context of the 10-year bonds, and then will it pass on or will we go back to some longer-term regulatory regimes?

One should mention that there is no clear connection. It's not linked automatically.

It used to be longer, the profitability of a 10-year bonds calculated different ways, averaged or annual, automatically was included in the WACC. When the transition card was signed, was a magic level, plus the investment premium was added.

We moved away from the fluctuations of the bonds year-over-year. There's no link today.

Will we revert to the link? It's hard to say.

It's always an in the discussions with regulator. If this profitability rate would be sustainable, then it's, we know what's happening in the world, there's a conflict underway, definitely this to be valid in longer term, it would be an argument for discussion with a regulator, there's no automatic mechanism.

Will it be a long-term model in place? We would like to have it.

We are working on it. We are proposing some solutions to make the regime, the model, a long-term one.

That's the expectation, but as of now, no confirmation from the regulator.

Okay. Our preference, however, it's also an element that is a challenge for us, gives a incentive to continuously improve, is the long-term distribution tariff, the long-term model, 3, 5 years.

We think it would be the most adequate for this segment. We are doing investment projects in the 3, 5-year term.

Question to President Lot. A lot recently, the local content, everything has to be local content.

Now how much more expensive is local content versus no local content? Because, of course, going to the store, we can always buy Chinese or some other components.

I don't understand, because at the end, it's the customer that pays. So, 14 billion PLN, if we didn't go into local content, what would be the number?

Or maybe in a descriptive manner, not specific number, in the absolute or generally, holistically? Generally, if we could give some examples with a tender for meters and transistors, whatever, if you have two bids, local content versus non-local content.

Local content is one of the best investments that this country can do. Let me answer the first thing.

Let me answer the question in a moment. The first thing is such that, looking at something more than profit generated tomorrow, but more in the longer term, there's no better investment in our country than investment in the local content that will have a specific dimension in a year, 2, 3, 5 years, 10 years, because we have examples of Italian, German, French economies that really made big bet on that.

It's not a question that to buy at a higher price from the local people, but to generate such a culture of thinking to support the local solutions, local distributed sources also preferable, to make it functions, to be smart and to build this local environment. Second thing, the meter that you asked about, today there's a big difference.

I don't want to show you, but there'll be results of the tender that we are doing, but there's a difference between the Chinese meters and the European made. There's a difference in the price.

There are security elements, and so on. Now we are checking, because we also announced a tender, because we have in the grid a set of meters from various countries in place.

We can compare the tenders we did before in last year or two years. We are checking how it's going to be done, once we have tighter regulations.

This tender should be announced this month, I think, or two, within two months. Once we have the results, then I'll answer specifically these question during the next conference.

We also have this examples from the energy storage facilities. Also the local content can be done, because we have local companies that can build it and deliver a certain component.

A lot of modules come from China. There are things that there's quite a big price difference, and at the same time level of quality, but it's difficult to win, and we choose what's the best in terms of price, because we pass on to the customer.

There are certain things that we can see it makes sense regarding the security, durability, and the inflow and/or return of funds to the local communities. Most important for me for those companies to grow, because if such an energy company like ours doesn't make a sense, its existence doesn't make sense if there's no customer, there's no electricity consumption, it doesn't make sense for it to operate.

That in the long term, to deliver electricity and the distribution service at reasonable prices, we have to bring about the electrification, at least doubling by 2050 of electricity distributed. The only solution today to generate this competitive advantage for the economy and to be able to say that we are able to give the businesses, but also the society, low cost of distribution services and electricity, of course, but distribution mostly, we have to increase the volume of electricity distributed.

Thank you very much.

Okay. Please.

Janusz Maruszewski, Strefa Inwestorów, Investors Zone. Congratulations on excellent results, excellent earnings.

That's one thing. Looking at the implementation of the strategy announced 1 and 1/2 year ago, it seems that in a number of areas, you are ahead of schedule in the installed capacity, renewables capacity, or financing area, or the dividend area, which, of course, makes us happy.

I have two questions. What made you make the decision as the Management Board to recommend the payout of a dividend practically three years versus the deadline planned in the strategy?

The responsible business is responsible corporate social responsibility, earnings, first of all. Some of you met us, we had meetings directly after announcing the strategy.

Systematically afterwards, one of you asked you, it was an hour after the announcement of the strategy, when can we check whether the strategy is being delivered? I think you asked about it.

We said in a quarter. We'll meet when we present the reports, quarterly report, and we'll it's the best time to check the whether we deliver.

That's the DNA of this company. What we try to do, and I think we managed to manage to implement it, that it's you need to deliver every day.

Therefore, we are not shifting decisions for later if we they are difficult decisions, risky, but we want to face it and deliver. This dividend is a long discussion that we were conducting, because we are of the fact that we've pay out the dividend today, three years ahead of the time, we'll be expecting dividend from in the subsequent years, as President Surma mentioned, it's most important to have it stable, predictable, and so on.

We also said as follows: that as Management Board, that apart from the fact that we are to do the deliver the security and deliver cheap distribution service and energy, electricity, we are a company that's been listed on the on the Warsaw Stock Exchange. The shares went up again.

We are responsible, I've just looked at it, we're just responsible for the fact that investors that entrusted their money with us should have a benefit out of that, where the stock-listed public company, by definition, should be capable of paying out the dividend. This is our Management Board's obligation, duty, and will, ambition.

Second question, to make it more detailed, is this a one-off, because 2025 was a record-breaking year, or should we expect a change of a dividend policy, because the one announced in strategy is 2028?

Krzysztof is a bigger diplomat regarding the finance, he will explain it better than myself.

As Grzegorz partly answered this question, we are assuming, and that's our ambition, not to make it a one-off event. We repeated this during each quarterly earnings report.

If we did make a decision to pay out the dividend, we don't want to be a one-off. Of course, here this diplomacy that Grzegorz mentioned requires us to always have a caveat and say, depending upon financial situation.

Today, we have a crisis worldwide. We don't know, at the end of the day, how long it'll take, over what timeframe it'll have an impact upon the condition not so much of the group, but the entire country, and then indirectly on the position of the group.

Let me put it this way: we'd like to have it, that's the ambition, that it's a recurring event, but of course, we make a caveat that, depending upon the financial liquidity and financial results, that'll be determined. Thank you very much.

Thank you. Please.

Good morning, Kwieciński, [unclear]. Question, first one, what limitation, what curtailment of renewables production you expect this year, more or less than last year, through redispatching and self-curtailment?

Second thing, I'd like to ask for more information about this tender OCGT Jaworzno, those tenders mid-April. What are these for?

This is under the turnkey solution or a split delivery of turbine and other works? The third thing, if we could say a few words more about the CAPEX for 2026, President Surma mentioned the growth, but can you give an amount, its structure by segment?

A small question at the end, the group still incurs losses on the prosumers' settlements in the net-metering formula? If so, what order of magnitude is it?

Thank you very much. Michał Orłowski (Vice President of the Management Board for Asset Management and Development):

If I understood correctly, the first question was regarding the curtailment of renewables production due to the non-market redispatching or self-curtailment, what's to expect this year. Let's let's start with the non-market redispatching.

It's difficult to foresee. The trend is very clear, growing one, rising share of renewables.

That's might be, in my opinion, will lead to a more redispatching until the more utility-scale, large-scale battery energy storage systems. How much of that?

You have to have a crystal ball. The decision of the operator is difficult to plan.

Regarding the self-curtailment, I assume the level will be comparable, maybe a bit higher than this year. The balance will be an increase of curtailment.

I think they might, but they might slightly go up. Regarding the self-curtailment, regarding the market-based redispatching, is difficult to say.

Second question regarding the tender that we that's underway, OCGT Jaworzno, we decided to carry it out in a separate contract for the delivery of a turbine. The formula that we are contracting is delivery of a turbine, gas-fired turbine along with the stack and the ancillary systems and the long-term support, long-term service agreement, 15 years, for turbine services that ensures the performance during the capacity market.

Following this this contracting, there will be the key tender for the general contractor that will develop will build. Mid-April, the bids with the delivery dates for the delivery of turbine.

Significant, first of all, we determine the selection of the turbine. A tender allows for a single turbine, two turbine system that will have a total capacity of in certain range and certain range.

It's also possible to install outdoor, installations directly outdoor and also the indoor system with a full building, traditional power plant that is done. Based on our knowledge, what's the technological solution regarding the turbine, we'll be able to precisely define the scope of the construction work, construction work that we have we are facing.

That's the sequence of tender, and key point is securing the slot for the wind turbine and delivery date. That's the sequence that, first, deliver or secure the delivery of the turbine.

Third question regarding the CAPEX and 2026 outlook, as Krzysztof mentioned, we assume that the level of CAPEX will go up. Regarding details, that will be dependent on a detailed distribution of CAPEX in the generation related to the tender for the gas-fired turbine, our renewables activities.

Regarding potential acquisitions, or acquiring new projects, as of today, are not included in the forecast. These expenditures will go up to give you some indication.

It's possible to have seven, digit seven in front regarding our CAPEX, a significant increase, but it'll depend upon the renewables and contracting on the TAURON Generation subsidiary.

There was a question about prosumers, losses on the net-metering. Correctly, the total losses and costs incurred due to the prosumers' energy being fed into the grid covered by the supply segment was 750 million PLN per annum.

750 million losses in the net-metering? The total cost and losses that are related to the prosumers feeding energy into the grid, we have the distribution fees, the cost of the so-called storage, 150 million.

How do we cover that? From the margin generated from sales, this is a part of the cost that's incurred by the supply segment.

It's

one of the largest CSR product that you're conducting, and that also indicates that it's a part of a very strong transition. Thanks to that, 1 and 1/2 million 1 and 1/2 billion people in Poland 400 million people in Poland, but not these are people that I meant the net-metering, the prosumers that got connected to the grid by the end of March 2022.

We have 450,000 customers in the grid and 150,000 as the net 470,000 472,000 are prosumers. So, 1 and 1/2 million customers are prosumers, 1.2 million, these are net-metering customers.

These are first customers that moved away from the economic point of view. These are the majority of customers that have heat pumps, larger consumption, because these are detached houses that have lower consumption.

The truth is that according to the net-metering model, this takes 15 years. In a few years, there will be the first changes to the net-billing.

Net-billing is an ideal solution, but gives also the possibility to promote dynamic solutions, time of use-based, and so on. Storage and net-metering is a purely promotional effort, encouraging 1.5 million.

It's a European-level phenomenon to progress the transition. All the prosumers are generating electricity the same time, we have to buy back this electricity from the customers at a specific price, resell it on the market that, of course, is at the given point in time very cheap or even negative, and then ensure this electricity for those customers in a different time of day, because the virtual storage being the grid.

The balance that the president mentioned fully as it is. It doesn't mean that we don't have any mitigation activities that include power to heat, so that the energy that we pick up from the consumers, not to put on the market at lower prices, but store it.

Therefore, we have a program that in Poland takes 15 years. We have to live with that.

I'm not evaluating, I'm not giving opinions, but the role of the professionals in this area is to make sure that, taking into account those legal framework, we have as little loss or cost to be passed on to the customers, to take advantage of. That's why we have this business called the heat that we have in place and the transition to the power-to-heat technology, because thanks to that, throughout summer, the hot water could be heated from the prosumers or PVs frequently at negative prices, because Krzysztof mentioned here that the number of hours with the negative prices is going up year-over-year.

Let me just add to that, but of course, we are looking from the supply subsidiary, but is partly mitigated by the distribution segment, because those distribution fees that I'm telling you, that number is the revenue for the distribution to a large extent constitutes the margin of the distribution segment. Globally this figure from the consolidated point of view is a bit lower, but it's a big problem.

That's true, but we are trying to deal with, as the CEO mentioned. Thank you very much.

Let's move on to the questions from our viewers who are patiently waiting, and there's quite a few of those questions. Let's move on to the questions asked via the form.

First one, what's your opinion of the consensus for 2026 at the EBITDA of 6.5 billion PLN?

We absolutely don't enter the discussion regarding the competences of the analysts. I wouldn't afford to do that.

I am not able to say anything about that. My hat's off to you, I'm so much.

That's it. Thank you.

Next question, what do you think about the attractiveness level of investments in energy storage? Polenergia recently gave up on their battery energy storage system despite having the subsidy.

What level of internal rate of return is assumed today for the battery energy storage systems with a subsidy and without a subsidy? Michał Orłowski (Vice President of the Management Board for Asset Management and Development):

Regarding energy storage facilities themselves, we are dealing with various projects in our portfolio. Some of them have subsidies, some of them have contracts from the capacity market.

However, as part of the energy storage facilities, there's also the economy of scale. They require the power supply points are less economic, the ones that are small, are relatively cheap due to the cheaper application line.

The technical scale vs. a certain capacity jumps that means that not fully linear economy of scale, the IRR is variable.

Also the faith in the profitability of a storage is based on the short-term variability of prices, spread between the two highest and lowest hour during the four hours like that, depending upon the system setup. We are dealing with an evolving power system that will have more and more renewables on one hand.

On the other hand, the storages will be auto-cannibalizing themselves, the more storage in the system, that's the lower the profitability of a project. We are trying to accelerate the implementation of this project, and to a large extent, use the preferential sources, and as elements based on the smart assumption regarding the spreads.

We can see that those projects are able to generate a return in double-digit IRR, depending upon what is the subsidy. This IRR could be closer to the double-digit limit or maybe reach higher [unclear] the end of the spectrum is higher the double digits.

The later they are commissioned, the less optimum configuration will be, the longer the grid connection, it's more difficult to build. You look at this market, relatively low entry barrier for the storage, you need grid conditions, relatively small sites, small area, relatively easy process.

Not all storage systems will be built in Poland. Only the best ones will be made, either the ones who will get preferential financing or the optimum configuration.

With a natural process some of those projects will not be implemented.

However, it's difficult to compare sometimes investment projects for those who only have energy storage systems and no customers, return could be different. When there's a situation when we're building the energy storage systems and they are used to optimize the profile cost.

The storage itself may have different roles. That's why business case could vary.

We have, with 6 million customers, we're able to use the storage system in a number of places. That's why Michał mentioned that we are speeding up and we want to be number one on this market to have the largest potential capacity and benefits of storage to take advantage of.

How many new renewables and energy storage capacity will be commissioned in 2026? Michał Orłowski (Vice President of

the Management Board for Asset Management and Development): The decisions that we've taken at the stage of planning our strategy and the investment decisions that were made in 2025 and the beginning of this year require a certain construction timeframe. The company didn't have too many investment projects prepared, the ones we joined it, that could be implemented already in 2026.

Therefore, the majority of effects that we'll describe to you will take place in 2027, 2028, because these are actions that were realistically launched after the strategy was announced. So, 2026, storage systems will be built another 16 MW, and partly the production will be commenced by the Miejska Górka wind farm, 190 MW.

This will be the production from the startup and the actual sales will start this year, and the official commissioning next year.

What's the process of contracting for the gas peaker that won the capacity market? What level of expenditures is expected?

Michał Orłowski (Vice President of the Management Board for Asset Management and Development):

Regarding the process, I already commented on that. Regarding the level of expenditures, it's a difficult question.

In the previous conferences, I told you about the fact that the market-based range could be up to 3 million PLN. It could be per megawatt, it could be a lower amount.

This estimate that I gave you was based both on the worldwide benchmarks and our RFIs, our market dialogue, and as well as the opinion of the market advisor. The position on the gas turbine market is quite dynamic.

I can tell you that historically it was difficult, there are slots, but the market is a seller's market, not the buyer's market. Now we'll see what the next few months will bring.

Including the big disruption on the gas market, which, on one hand, generates certain challenge and difficulty, but for the turbine suppliers means the canceled orders, a large portion of orders were to go to the Middle East for some manufacturers. The situation may be changing rapidly.

As of today, I uphold the range that we have. The better estimate we'll be able to present to you during the next earnings conference once we complete the tender for the wind turbine.

What impact on this year's earnings to expect stemming from the macro repercussions related to the Iran war?

It's worth saying that we have quite conservative approach to the hedging policy. The majority of positions we already have hedged.

The impact of the conflict in 2026 will not be material, will be negligible. However, it's worth saying that we have such weekly meetings.

Every week, practically, we are monitoring the situation related to the conflict, the impact on the commodities: oil, gas, coal. We are observing what is the cross-border exchange.

As mentioned, in April, we saw a lot of pushing out of electricity to the adjacent countries, to Germany, Slovakia, what led to the higher generation, higher consumption of coal, and decline of inventory levels. We noticed also that the mining companies are selling easier and contracting the coal inventory sales.

However, we are not afraid of such situation in 2026. As I said, we have finalized, and we are monitoring the situation on ongoing basis.

In 2025, in 20 in fourth quarter, what was the revenue from the balancing market and the electricity buyback market?

I think I can say that regarding the conventional segment, the total result on the balancing capacity and buybacks came in in 2025 about 650 million PLN, in Q4 about 160 million PLN. The other segments, renewables and heat was accordingly less, 21 million in renewables over the whole year in the buybacks, electricity, and 1.5 million in the last quarter.

However, heat, 20 million PLN regarding the part related to buybacks.

In the last quarter, 3.4 million PLN. A

request to keep it behind. It's between us, yes, off the record.

Do you see the risk of a change in the distribution?

Regarding the regulatory regime, we already spoke about it. We have the regulatory model in place, it's difficult to take into account the change risk.

We assume that that will be maintained, but the efficient transition card mentioned specific revenue. Do we have extension plan updated every now and then?

Then no major differences we are assumed here. If we ask about the WACC, WACC for this year already been announced, 9.5%.

In the subsequent years, let us remember, we have 7.5% plus 1 percentage point, and we assume that at least these other values will be maintained.

Do you think about entering the data center business as a co-investor?

Definitely, yes. We are open to business opportunities.

Number one, welcome everyone, all investors, including data center investors, where TAURON is operating. Just to give you an example, during the conference in Jaworzno, we presented a specific seven or eight such spots where here now you can build data centers.

This is an official offering, proposal. This is Upper Silesia.

We know where we have sites, where we have capacity. Those capacities between 50 and 300 MW available here now or in a moment.

In many cases, there's also a heat, possible can be retrieved. You're a data center investor who wants to find a partner to invest, then it's on the websites of the distribution line of business, you can find it, you can contact us and build it.

If data centers came to us and told us that we are building such a source, want to discuss with us, there's nothing against it to start thinking about the business opportunity, but in the power part, because we don't have knowledge about the construction of data centers, we know about the heat recovery, heat collection, we can use it, we know we are experts in electricity generation as an energy partner, power partner under different model, why not? On the other hand, we are as production companies are building electricity for themselves for their own needs, nothing against us securing some of the analytics possibility for our needs.

With 6 million customers, we have room to work in. The business is open, we are open.

Actively, we are looking for investors in our area of operations, partners, but actively, we are not entering as an investor into data center business. If there is a business opportunity, why not?

Congratulations on the earnings. Question about the hedging of CO2 in percentage terms for 2026, 2027, what's the group hedging?

The second, what's the level of fixed costs does the Management Board assume for entire 2026?

Regarding the first part of the question, as I said, quite conservative approach to the hedging policy, we secure up front our carbon credits. For this year, we are fully hedged, fully covered.

That's all.

Fixed costs, well, we do not give detailed forecast. Generally, if we were to give you the level cost, we would disclose the one part of the forecast.

I will not answer this question.

Another question. I can tell taking into account our energy mix, generation mix, I have an impression that the share of gas is so low versus coal that we don't expect any material change versus last year.

At such a level of installed capacity in gas, this impact is negligible.

No more online questions. Please, anybody from the audience?

Ladies and gentlemen, therefore, let's finish. Thank you very much to the audience and those of you who watched us online.

Let me remind you that the broadcast from today's conference, earnings conference, will be available on our website. Thank you very much.

Thank you, ladies and gentlemen. Thank you to the Management Board.

Thank you very much.

Thank you. We are at your service here in a moment.

Just thank you. Of course, Management Board is available for your questions and discussions for journalists as well.