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In 2017, PGNiG TERMIKA supplied heat to two municipal networks: the Warsaw heating network, owned by Veolia Energia Warszawa SA, and its own heating network, covering Pruszków, Piastów, and Michałowice. The company also used Veolia’s network to supply heat to its own end customers, based on a transmission contract (these customers are billed on different terms as they are classified in PGNiG TERMIKA’s separate tariff group – ‘OKW’).

PGNiG TERMIKA maintains the competitiveness of district heating in Warsaw, ensuring that district heating is the cheapest way to heat buildings in the city. The thermal power generated by the company in 2017 met the requirements set out in the annual schedule agreed with Veolia Energia Warszawa SA, guaranteeing security of heat supply to the residents of Warsaw. Due to the expiry on August 31st 2017 of the multi-annual heat sales contract between PGNiG TERMIKA and Veolia Energia Warszawa S.A., the parties entered into an interim contract for the period until the end of the validity term of the current heat tariff, i.e. until March 17th 2018, and are negotiating a long-term contract.

During the year, the company resumed its efforts to acquire new customers in the OKW tariff group and new customers connected to the Pruszków network. The concept of connecting the Pruszków CHP plant to the Warsaw district heating network was abandoned and a decision was made to start the work on selecting a technical modernisation concept for the Pruszków CHP plant.

Work is in progress on the adaptation of the Kawęczyn Heating Plant to the Best Available Technique (BAT) requirements. The plan to carry out a programme aimed at ensuring compliance of the K9 and K10 water boilers with the BAT Conclusions has been abandoned and a decision was made to implement an alternative solution, consisting in upgrading the natural gas-fired boiler house to add an extra 260 MWt to its capacity. PGNiG TERMIKA actively participated in the consultation processes preceding the adoption of new regulations: it took part in the development of a regulatory framework for implementing ‘capacity market’ mechanisms in Poland (applicable also to co-generation units) and in regulatory consultations concerning renewable energy sources. The company also advocated for maintaining favourable regulations on determination of heat tariffs.

PGNiG TERMIKA is actively seeking potential acquisition targets among district heating systems. At present, the total length of the Generation segment’s heating networks is 391.6 km. The total number of customers supplied by PGNiG TERMIKA (including OKW customers) is 571, while PGNiG TERMIKA EP has approximately 2.7 thousand customers.

On September 1st 2017, the merger of PGNiG TERMIKA EP and Przedsiębiorstwo Energetyki Cieplnej SA was completed. Its key objectives included optimisation of operating costs and business integration of the new entity with PGNiG TERMIKA to enhance business management efficiency and improve the quality of business supervision, and also to exploit the synergies between all the entities involved. As a result of the merger, the company is expected to obtain benefits totalling PLN 48.4m (in nominal terms) in 2017-2023.