The overall management of the PGE Capital Group, including the formulation and identification of strategy and supervision over the activities of PGE CG, is the responsibility of PGE Polska Grupa Energetyczna S.A. – Corporate Centre. The Corporate Centre’s major tasks include the following: the development and updating of the PGE Capital Group’s strategy, the determination of objectives for the Group’s companies and the coordination of work on the implementation of its strategy within the particular segments, the development and updating of the business model, the integration of the activities of the subsidiaries within the scope of the value chain, the supervision of the activities of the particular business segments, the determination of a transfer prices policy, the standardization and harmonization of solutions effective in the PGE Capital Group.
Within the segment of Wholesale Trade, PGE Polska Grupa Energetyczna S.A. is active in the trading of electricity, property rights, CO2 emission allowance, and hard coal on wholesale markets. The Company also carries out transactions with entities from outside PGE CG. Within the Group, the Company manages sales portfolios of other entities belonging to PGE CG, provides services of the Commercial and Technical Operator as well as the Commercial Operator, and is responsible for the balancing of some PGE CG companies and end users on the Balancing Market.
|Sales revenues||9,722||12,489||- 22%|
Decreased margin on the supply market resulting from, among others, growing competition, retail prices catching up on declining wholesale prices in the previous year and increased difference between baseload electricity price and peak price attributed to the lower result on the sales of electricity.
Conventional Generation in PGE Capital Group includes PGE Górnictwo and Energetyka Konwencjonalna S.A. based in Bełchatów. The company comprises 12 branches which are located in nine voivodships of our country. Branches include 2 lignite mines, 4 conventional power plants and 8 CHP plants.
The Group is the leader of lignite mining, with a share in the extraction market of this raw material accounting for 78% of domestic extraction; it is also the largest generator of electricity as it generates approx. 38% of domestic electricity. The generation is based on lignite extracted from mines owned by the company as well as hard coal, gas and biomass.
Conventional generation segment of PGE CG also provides auxiliary services of operating reserve mechanism for the grid operator.
Key factors affecting the results of Conventional Generation in 2014 compared to the results of the previous year included decreased sales revenues due to lower electricity generation volume, which was connected mainly with lower capacity available for sale than in the previous year (repairs in Bełchatów power plant, shut down of unit no 10 in Turów power plant and unit no 3 in Dolna Odra power plant). Decreasing wholesale electricity prices, what caused a drop in revenues from sales. Average sale price of electricity of generating units of Conventional Generation segment dropped to approx. PLN 164/MWh in 2014 from approx. PLN 178/MWh in 2013.
In addition, results of the Conventional Generation segment were affected by the one-off events of PLN 1.7 billion total value. This amount is mainly due to LTC compensations revenues and carbon allowances reversed provision but also a further provisions for Voluntary Leave Program. PGE consolidated financial results were also significantly affected with changed of our accounting policy for the land reclamation provisions.
In 2014 capital expenditures in Conventional Energy segment amounted to PLN 4.362 million (compared to PLN 2,722 million in 2013). Such a large increase is associated with sound investments in generation capacity. In 2014 they concerned mainly the comprehensive modernization of generation capacity in Belchatow Power Plant and the construction of new power units in Opole Power Plant.
The PGE Capital Group’s operations in renewable energy are managed by the PGE Energia Odnawialna S.A. and PGE Energia Natury sp. z o.o. Assets in the segment include:
Both companies provide auxiliary services to support the security of the national power system and generate the electricity produced using environmentally friendly technologies, using renewable energy sources.
|Sales revenues||722||734||- 2%|
Recognition of full year operations of the wind farms acquired in 2013 (total installed capacity of 131 MW) and commissioning of Wojciechowo wind farm (28 MW) in March 2014 resulted in higher sales of electricity from wind farms, while relatively unfavourable hydrogeological conditions caused a decline in sales of electricity from hydro power plants. Lower prices of green certificates, sold by the companies from the segment (inter alia to other companies of the Group) caused a decline in total revenues from green certificates.
In 2014 highest capital expenditures were incurred for construction of generation capacity, especially commissioned to exploitation wind farm Wojciechowo with a capacity of 28 MW as well as construction of wind farm Karwice with a capacity of 40 MW and wind farm Lotnisko with a capacity of 90 MW, both to be commissioned by the end of 2015.
The major task of the PGE Capital Group in the segment of Distribution is to ensure the safety and adequate quality as well as continuity of electricity supply. Within the PGE Capital Group, the distribution of electricity to end users is the responsibility of PGE Dystrybucja S.A., which fulfils the function of the Distribution System Operator (DSO) and delivers electricity to over 5.2 million customers. Eight branches and 40 regions are responsible for the distribution of electricity to end users on the area of 122.4 ths km2. The combined length of its distribution lines at the end of 2014 amounted to 281 ths km.
Increase of the average tariffs, mainly due to fees paid to the Transmission system operator (TSO), what resulted in increased revenues from sales, with the simultaneous rise of the cost of TSO services. Distribution revenue growth additionally comes from the increased volume of distributes energy, partly resulting from growing average domestic consumption, but also from connection of 32 thousand new off-takers to the grid.
Investments pursued in the Distribution segment are of key importance for actions taken by the PGE Group in order to achieve strategic aspirations, such as:
Incurred expenditures have an impact on the program implemented with regard to permanent reduction of electricity supply breaks measured by, among other, SAIDI ratio, and with regard to ongoing process of shortening of new off-takers connection time.
Connection of new off-takers was the most capex consuming area. Capital expenditures included among others:
Supply segment of the Group is dealt with by the PGE Obrót S.A. The segment's operations involve trading in electricity in all the country. PGE Obrót S.A. is a decision-making entity responsible for the management and integration of the segment of Retail Sales. The company achieves its objectives by the constant improvement of the customer service standards, the implementation of state-of-the-art solutions and continuous improvement of the quality of provided services. In 2014 the Group supplies to more than 5.2 million customers: businesses, local self-government units and households.
The volume of electricity sales to final customers amounted to 39.64 TWh, what means a 7% growth in comparison to the previous year.
|Sales revenues||12,371||13,028||- 5%|
|EBIT||- 200||403||- 150%|
|EBITDA||- 193||411||- 147%|
Changing conditions on the end customer’s market, the decline in margins and a change in the support for cogeneration, had a negative impact on the profitability of the segment.
|CONVENTIONAL GENERATION||PGE Górnictwo i Energetyka Konwencjonalna S.A.|
|Przedsiębiorstwo Energetyki Cieplnej sp. z o.o.|
|RENEWABLE ENERGY||PGE Energia Odnawialna S.A.|
|Pelplin sp. z o.o.|
|Elektrownia Wiatrowa Baltica-1 sp. z o.o.|
|Elektrownia Wiatrowa Baltica-2 sp. z o.o.|
|Elektrownia Wiatrowa Baltica-3 sp. z o.o.|
|Eolica Wojciechowo sp. z o.o.|
|PGE Energia Natury S.A.|
|PGE Energia Natury sp. z o.o.|
|PGE Karnice sp. z o.o.|
|PGE Energia Natury Bukowo sp. z o.o.|
|PGE Energia Natury Omikron sp. z o.o.|
|PGE Energia Natury Kappa sp. z o.o.|
|PGE Energia Natury PEW sp. z o.o.|
|PGE Energia Natury Olecko sp. z o.o.|
|WHOLESALE TRADING||PGE Polska Grupa Energetyczna S.A.|
|PGE Dom Maklerski S.A.|
|PGE Trading GmbH|
|DISTRIBUTION||PGE Dystrybucja S.A.|
|SUPPLY||PGE Obrót S.A.|