Impact of Russian Federation’s aggression against Ukraine

The aggression of the Russian Federation against Ukraine began in February 2022. In the opinion of TAURON Capital Group, the key consequences of the aggression and the risks resulting from it, which had an impact on TAURON Capital Group in 2022, are as follows:

  • crisis on the energy fuel market resulting from the restrictions imposed on the trade exchange with the Russian Federation causes the supply disruptions with respect to the fossil fuels and, as a consequence, leads to a step increase in the volatility and the levels of the prices of the raw materials listed on the commodity markets (including crude oil, gas and coal). This situation (occurring mainly during the second half of 2022) had an impact on an increase in the variable costs of electricity generation, while the options for passing on this cost to bring about the increase in the revenues from the supply and production of electricity were limited. In order to mitigate the above risks, TAURON Group updated its trading strategy on an ongoing basis and responded in a flexible manner to the rapidly changing market conditions,
  • restriction on the supply of hard coal with respect to the contracts concluded with the external suppliers, the logistics disruptions with respect to the hard coal transportation, as well as the regulatory changes which affected the levels of the hard coal inventories required by law. In order to mitigate the above risks, measures were taken to maximize the hard coal supplies from TAURON Wydobycie and to source additional deliveries of fuel both on the domestic as well as foreign markets,
  • high volatility of the prices of electricity in all of the market segments, both in Poland as well as on the European markets, which leads to the continued maintaining of the high level of the market risk. With respect to the trading, the high volatility of the costs of hedging (including the profiling and the trading balancing) the demand of the end customers in the Supply Line of Business was observed. In order to mitigate the above mentioned risks, measures aimed at minimizing the risk exposure were taken by updating the trading strategy on an ongoing basis, as well as by shaping the electricity and gas offers for the business and the retail (household) customers,
  • rise of the inflation rate in Poland, as a result of which the Monetary Policy Council was regularly raising the NBP reference (prime) rate. The volatility of the interest rates was having an impact on the costs of servicing the financing at TAURON Group, as well as it will be affecting the amount of the capital employed in the Distribution Line of Business in 2023. As a result of the economic disturbances, the increased volatility of the foreign exchange (FX) rates and the weakening of the Polish zloty was also observed, which mainly affected the cost of purchasing the CO2 emission allowances and led to an increase in the cost of purchasing the hard coal from abroad as well as the valuation of the EUR denominated debt,
  • observed gradual deterioration of the economic situation in Poland, and what follows, the decline of the electricity supply and distribution volume (observed, in particular, in the third and the fourth quarters of 2022), which had an impact on the level of the revenue of the Distribution Line of Business as well as of the Supply Line of Business. With respect to risk mitigation, TAURON Group was taking actions related to the commercial aspects (balancing of the sale position and the product changes aimed at curbing the impact of the changes in the demand on TAURON Group),
  • escalation of the wage claims and the potential social unrest at TAURON Capital Group as a consequence of the rise of the inflation rate in Poland. With respect to the risk mitigation, among other things, the social dialogue is conducted between TAURON’s Management Board and the Social Council on the basis of the concluded Agreement on the cooperation as part of the social dialogue with the workforce at TAURON Group as a result of which the applicable agreements were signed,
  • implementation of significant national regulations aimed at limiting demand for electricity, introduction of mechanisms to limit electricity price increases for the final consumers, introduction of margin restrictions for electricity generators and trading companies, as well as changes in the rules of operation of the wholesale electricity market (abolition of the power exchange trading obligation, changes in the rules of price setting on the balancing market). The introduction of the above regulations affected TAURON Group’s trading activities in 2022 and will also affect the results of the Supply Line of Business, Conventional Generation Line of Business, RES Line of Business, Heat Line of Business and Distribution Line of Business in 2023. In terms of mitigation activities, consultations were held on shaping the draft regulations within industry organizations, among others. Actions were also taken to adjust TAURON Group’s trading strategy to the changes in the regulatory environment, as well as actions aimed at the technical and operational implementation of the solutions imposed by these regulations.
  • continued high volatility of electricity prices and related products, causing an increase in trading deposits (margins) resulting from contracts entered into on the electricity exchange market. As part of its response, TAURON Group made the maximum use of non-cash forms of collateral and offsetting of deposits (margins) between the Supply and Generation Lines of Business.

With respect to the financial risk and the illiquidity risk, as of the date of drawing up the report, TAURON Group had sufficient financial resources to enable it to meet its current obligations, as well as to carry out the investment activities that had been initiated.

In the subsequent periods, at least some of the risk factors mentioned above are expected to continue to persist, and their impact on TAURON Group's liquidity and earnings will depend on the impact of the Russian Federation’s aggression on the developments in the market, economic and geopolitical environment.

It should be pointed out that the situation related to the Russian military forces’ aggression against Ukraine and its impact on the market and regulatory environment is highly volatile, and its future implications are difficult to estimate precisely.


They will depend, in particular, on the scale and duration of the aggression, the further evolution of the situation, including a potential escalation of the hostilities, as well as its impact on the condition of the economy in Poland and worldwide. The impact of the identified risks may also depend on the further regulatory steps announced at the EU level, as well as at the national level, with respect to implementing intervention measures as well as shaping of the future energy market.

  • economic disturbances that may lead to the financial difficulties for some of TAURON Group’s customers and counterparties and thus to an increase of the credit risk. As part of its response, TAURON Group was carrying out both initial as well as ongoing verification of the financial condition of its counterparties and applying instruments aimed at hedging the credit exposure,
  • continued high volatility of the prices of raw materials and the prices of electricity and related products, persistently high inflation rate, as well as possible disruptions to the supply chains of goods and services, may translate into the timing and profitability of ongoing and planned investment processes. As part of the response, the individual investment activities were subjected to detailed analysis and risk assessment based on the updated knowledge and forecasts, both prior to the release of funds, as well as during the course of the activities,
  • changes in the EU’s energy balance and, as a consequence, the increased level of the utilization of TAURON Capital Group's generating units, which may result in a decrease in their availability rate and the risks arising from the capacity obligations imposed on some of them. In this respect, measures such as the ongoing monitoring of the condition of the assets, analysis of the causes of the failures, taking the preventive measures, monitoring the quality of the overhaul works, as well as optimizing the cost of repurchasing electricity were taken,
  • risks with respect to security and cybersecurity, including the potential restrictions in access to the IT/OT infrastructure systems, the internet and the GSM network, and the physical security of the critical infrastructure elements, the breach of which may cause the disruptions in the functioning of the operational processes and business continuity. At the national level, the alert levels were maintained, indicating the elevated risk associated with the possibility of an occurrence of terrorist incidents. As part of the response, among other things, measures were taken to verify the critical IT systems and the critical OT systems, and to secure the continuity of their operation through the review and update of the business continuity and recovery plans in the event of the unavailability thereof.

In the other areas, as of the date of drawing up this information, TAURON Capital Group has not identified the direct effects of the aggression on its own operating activities and business operations, and the continuity of the functioning of its business processes was not at risk. TAURON Capital Group did not have any assets located on the territory of Ukraine, Russia and Belarus. There were no significant changes in the past due receivables balances. No significant risks were identified in 2022 with respect to the implementation of TAURON Group’s long term expansion directions and Strategy. The current and potential challenges identified in the investment and restructuring processes and related to the volatility of the prices of the raw materials, disruptions in the supply chains of goods and services, as well as inflation, were analyzed in detail based on the updated knowledge and forecasts before making any commitments and releasing significant financial resources.

TAURON Capital Group, taking note of the scale of the risks related to the current situation, was monitoring the impact of the war in Ukraine on an ongoing basis and was taking steps aimed at minimizing the potential effects of the risk materializing, as well as at maintaining the continuity of the operations of the critical infrastructure. In connection with the situation arisen, the dedicated Crisis Teams were set up at TAURON Group’s Subsidiaries, in order to monitor the impact of the current situation on the business processes and to take actions in the event of identifying a risk of the interruption or disruption thereof.

Actions taken to help war-stricken Ukraine

  • in cooperation with the Poland Business Run Foundation, a day-care center for Ukrainian children and their mothers, called „Haven for Children” was launched at TAURON Arena Cracow. The day care center conducted educational, sports and recreational activities. It also took care to provide adequate psychological support for temporary pupils. All those staying at the facility received free meals. Throughout the duration of the project, 3 767 children from Ukraine were provided with care,
  • special service channels were prepared in Ukrainian, for example a dedicated simplified website that allowed Ukrainian citizens and NGOs that provide support for them to deal with the most common matters: In addition, basic processes such as meter installation or electricity supply contract signing were simplified and accelerated for Ukrainian citizens. Furthermore, Ukrainian citizens were able to talk to TAURON consultants in their native language via the service hotline. In the first 3 months since the war broke out, TAURON Group concluded 844 contracts with Ukrainian citizens,
  • TAURON Dystrybucja subsidiary provided in-kind assistance aimed at rebuilding energy infrastructure in Ukraine. The first tranche of technical support, carried out in March 2022, included 25 transformers and six tons of power cables. In April 2022, another shipment was handed over, containing elements of the power infrastructure, including approx. 15 kilometers of power cables, 168 poles and nearly 4 000 additional items to be used for the construction of power lines. In November and December 2022, another shipment of power equipment and materials was handed over: 21 km of cables, 129 insulators, 39 current transformers and 11 overhead circuit breakers. In total, the value of the donated materials stands at nearly PLN 1.6 million. The infrastructure related assistance is carried out in cooperation with the Government Strategic Reserve Agency,
  • 100 camp beds were donated to the Silesian province for the purpose of organizing accommodation for the refugees,
  • fundraisings were organized among TAURON Group’s employees as part of which the participants were able to make payments to the TAURON Foundation’s account and donate gifts for the refugees from Ukraine.

In addition, as part of its relief efforts for refugees from Ukraine, the Management Board of TAURON Polska Energia decided to make a donation of PLN 1 million to the TAURON Foundation to support the Ukrainian population affected by the war.

TAURON Foundation had also provided support to selected associations, foundations, schools or universities. Key figures on the assistance provided by the TAURON Foundation to Ukraine in 2022 are presented in Table below.

Key data on humanitarian assistance for Ukrainian refugees provided by the TAURON Foundation in 2022

Beneficiary Type of support Amount UN goal supported by initiative*
Polish Medical Mission Association Covering part of the cost of equipment for a field hospital in Ukraine PLN 50 000  

Cross Borders Foundation of Katowice Purchase of equipped medical backpacks and wound care supplies PLN 150 000  

St. Martin de Porres Foundation from Ukraine Purchase and installation of a heating system at the St. Martin de Porres Center in Fastov, Kyiv region


PLN 170 000  

Polish Red Cross Purchase of food, dressing materials and securing other priority needs PLN 100 000  

Caritas of the Archdiocese of Katowice Humanitarian aid for refugees from Ukraine PLN 50 000  

SOS Children’s Villages Associations Helping foster children evacuated from Ukraine PLN 50 000  

Opole University Covering the cost of stay of 270 refugees from Ukraine at student dormitories PLN 100 000  

Slow Beskid Foundation from Korczyn Subsidized holiday stay for the children from Ukraine PLN 110 000  

* with respect to the war situation in Ukraine

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