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System of remunerating Management Board members and key managers

The rules of remuneration for the Company’s Management Board members were adopted by resolution of the TAURON Extraordinary Shareholder Meeting held on 15 December 2016 in the performance of the provisions of the Act of 9 June 2016 on the Rules for Remunerating Persons Heading Certain Companies.

In 2016, the Company applied the rules of remunerating its Management Board members as set forth in the Remuneration policy for members of supervisory and management bodies with a description of the rules for its adoption at TAURON Polska Energia S.A. (Executive Compensation Policy) adopted by Supervisory Board Resolution No. 15/II/2011 of 24 February 2011, and the rules for setting the executive compensation for members of the Management Board (Executive Compensation Rules) as laid down in a 15 December 2016 Resolution of the TAURON Extraordinary Shareholder Meeting and defined in more detail by the Supervisory Board in its Resolution No. 94/IV/2016 of 19 December 2016 on setting the executive compensation of members of the TAURON Polska Energia S.A. Management Board. The executive compensation rules were adopted in performance of the provisions of the Act of 9 June 2016 on the Rules for Remunerating Persons Heading Certain Companies (Journal of Laws 2016 item 1202).

Both the Remuneration Policy and the Remuneration Setting Rules define the system for remunerating members of the Management Board in relation to the tasks to be performed in pursuit of the Company’s Strategy, directions of development and financial plans. The primary objective of the remuneration system is to ensure an incentive-based nature of compensation paid to senior management and to provide the foundation for its development.

Objectives of the remuneration systems currently in place:

  • ensuring an incentive-based and consistent remuneration system;
  • linking the remuneration rules with monitoring of the implementation of strategic plans and the fulfilment of financial plans;
  • setting the amount of remuneration payable to members of the Management Board in relation to the achievement of their objectives;
  • growing in the Company’s value through the development of senior management;
  • perfecting the remuneration systems to better serve the pursuit of the Company’s Strategy and directions of development.

The Company’s systems for paying remunerations and bonuses to Management Board members contain mechanisms that make the amounts of remuneration dependent on the Company’s financial standing and value growth on an annual basis in combination with the achievement of strategic objectives. These systems do not tie the amounts of remuneration to instruments linked to the Company’s stock.

The remuneration model adopted both in the Remuneration Policy and in the Remuneration Setting Rules contains a two-component system of remuneration for Management Board members. It is composed of a lump-sum monthly base salary (fixed remuneration) and supplementary compensation for a given financial year (variable remuneration), depending on the degree of achievement of management objectives.

For senior management, also a two-component remuneration system is in place, consisting of a fixed part and a variable part, correlated with the fulfillment of certain performance criteria.

In compliance with the applicable regulations, the amounts of remuneration for Management Board members are set by the Supervisory Board within the range defined by the Company’s Shareholder Meeting.

Management Board members are not covered by the Company’s share-based bonus scheme and do not receive any remuneration or bonuses for the positions held in the authorities of other TAURON Group companies.

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General information on the adopted remuneration system for key managers

The rules for payment of remuneration and bonuses to key managers and other staff are laid down in the Employee Compensation Bylaws at TAURON Polska Energia S.A., as adopted by the Company’s Management Board.

Remuneration structure of key managers
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The remuneration and bonus system currently applicable to key managers provides for correlating the level of remuneration with the Company’s financial standing on an annual basis in combination with the achievement of strategic objectives. It is a two-component remuneration system composed of a monthly base salary and a variable incentive-based part linked to the performance of assigned tasks, both of a financial and non-financial nature.

The primary objective of this remuneration system is to ensure an optimal and motivating amount of remuneration linked to the value and type of work in a given job and the quality of work and the results achieved by each employee.

The remuneration structure consists of the following elements:

  • fixed part – which is the base salary set in accordance with the pay grade table and monthly personal grade rates adopted by the Company. The assigned level of base salary reflects the value and type of work and the quality of the employee’s work, as determined by an evaluation of his or her competences;
  • variable part – dependent on performance, evaluated in terms of the degree of achievement of the objectives and tasks set within the framework of an MBO bonus system;
  • benefits – as defined in the Company’s internal regulations.

The bonus system, which is based on market mechanisms, enables cascading the objectives set by the Company’s Management Board – at the TAURON Group level and at the Company level – into specific, parameter-based tasks for staff occupying lower levels of the organizational structure. Thanks to this, the management-by-objectives culture shaped throughout the Company reflects the specific nature of the various functions performed in the Company and enables the use of dialog mechanisms between superiors and subordinates in the process of setting the objectives and evaluating their achievement, which translates into the performance of the whole organization. In parallel, this tool permits a precise correlation of the objectives (KPIs) set for Management Board members with the objectives set for the Company’s key managers for a given year. A preliminary assessment of the degree of achievement of the objectives is performed after the end of the first half-year. After the end of the second half-year, Management Board members perform a final assessment of the degree of achievement of the objectives by the Company’s key managers.

Moreover, work was launched in 2016 on the establishment of a bonus system for the sales area the objective of which will be to motivate the achievement of higher revenues for the TAURON Group.

The Company’s employees do not receive any remuneration or bonuses for the positions held in the authorities of other TAURON Group companies.

The chart above illustrates the remuneration structure of key managers.

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Management Board

Rules, terms and amounts of remuneration for Management Board members

The total amount of remuneration, construed as the value of compensation, bonuses and benefits obtained in cash, in kind or in any other form, payable or paid in 2016 by the Company to Management Board members was PLN 6,125,000 gross.

Remuneration structure of Management Board members
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The following table presents the remuneration of members of the Company’s Management Board in 2016 broken down into components.

 

Remuneration of members of the Company’s Management Board in 2016 broken down into components
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No. Name Period in office in 2016 Remuneration*
(PLN ‘000)
Bonus remuneration*
(PLN ‘000)
Other benefits*
(PLN ‘000)
Total
(PLN ‘000)
1. Jarosław Broda 01.01.2016 – 31.12.2016 900 197 122 1 219
2. Filip Grzegorczyk** 15.11.2016 – 31.12.2016 98 0 0 98
3. Kamil Kamiński 01.01.2016 – 31.12.2016 900 194 51 1 145
4. Remigiusz Nowakowski 01.01.2016 – 14.11.2016 884 249 166 1 299
5. Anna Striżyk 01.01.2016 – 08.01.2016 30 53 0 83
6. Marek Wadowski 29.01.2016 – 31.12.2016 829 151 40 1 020
7. Piotr Zawistowski 01.01.2016 – 31.12.2016 900 197 164 1 261
Total   4 541 1 041 543 6 125

* Without overhead.

** Contract for the provision of management services.

 

In 2016, the Company’s Management Board members did not receive any remuneration or bonuses for the positions held in the authorities of other TAURON Group companies.

The Remuneration Policy was applied to the Management Board members listed in the above table, except for the President of the Management Board who was covered by the Remuneration Setting Rules.

The remuneration systems are based on the following assumptions:

  1. Remuneration policy for members of supervisory and management bodies with a description of the rules for its adoption at TAURON Polska Energia S.A.

The Remuneration Policy, as adopted by the Company’s Supervisory Board by Resolution No. 15/II/2011 of 24 February 2011, provides for a two-component remuneration system consisting of a fixed part (monthly base salary) and a variable part correlated with the fulfillment of certain performance criteria (fulfillment of tasks). Both the monthly base salaries and the performance criteria for the granting of annual bonuses are set by the Company’s Supervisory Board.

The Supervisory Board sets the percentage of the annual bonus for each of the following indicators:

  • consolidated EBITDA from the approved consolidated material and financial plan for the relevant financial year;
  • consolidated gross profit from the approved consolidated material and financial plan for the relevant financial year;
  • current ratio calculated for the TAURON Group from the approved consolidated material and financial plan for the relevant financial year;
  • achievement of the non-financial objectives indicated for the relevant year in an approved Strategy.

The financial components of the annual bonus are awarded based on data from the Company’s audited consolidated financial statements for the first half of the relevant financial year and for the whole financial year. The non-financial component of the annual bonus is awarded for the achievement of the objectives set for the relevant financial year and depends on the Supervisory Board’s semi-annual and annual performance assessment.

To enable Management Board members to receive the benefits available to the Company’s employees, the Remuneration Policy has been supplemented by a list of additional benefits of a social welfare, transportation and insurance nature.

In compliance with the Remuneration Policy in force, employment contracts were signed with Management Board members. On 15 March 2017, the current Management Board members signed agreements on termination of their existing employment contracts and non-competition agreements upon termination of their employment.

  1. Remuneration rules for Management Board members

The remuneration setting rules, as laid down in a 15 December 2016 resolution of the TAURON Extraordinary Shareholder Meeting and defined in more detail by the Company’s Supervisory Board in its resolution of 19 December 2016, provide for a two-component remuneration setting system consisting of a fixed component (monthly base salary) and a variable component (supplementary compensation) of an incentive nature, linked to the achievement of the management objectives set for the relevant financial year. Both the monthly base salary and the variable component of compensation are set by the Company’s Supervisory Board on the basis of the rules and the general list of management objectives set by the TAURON Shareholder Meeting.

In accordance with the Remuneration Setting Rules, on 19 December 2016 a management contract was signed with the President of the Management Board providing for the obligation of the provision of management services in person regardless of whether or not the President of the Management Board renders his services within the framework of his own business activity. On 15 March 2017, after the termination of employment contracts, similar management contracts were signed with the other Management Board members.

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Agreements with managers providing for compensation upon resignation or dismissal from the position without important reason or if their dismissal results from a merger through an acquisition

The management contracts entered into with the Management Board members of the 5th joint term of office on 15 March 2017 provide that if the contract is dissolved or terminated by the Company for reasons other than those specified in the contract, the Management Board member is entitled to a severance pay equal to 3 monthly fixed salaries, provided that the Management Board member has discharged his or her function for at least 12 months prior to the termination of the contract. The severance pay will not be due in the event of dismissal, termination or change of the contract resulting from a change in the function discharged by the Manager in the Management Board, or the dismissal, termination or change of the contract resulting from the Manager’s appointment to the Management Board for the next term of office, or the Manager’s assumption of the function of a management board member in another Group company, or his or her resignation from the function.

In connection with Management Board members’ access to confidential information the disclosure of which might expose the Company and other TAURON Group companies to losses, the management contracts signed with the Management Board members on 15 March 2017 contain provisions prohibiting competition during the term of the contract and after the termination of discharge of the function. In accordance with the provisions of these contracts, persons refraining from running a competitive business within a specified period after the termination of the contract are entitled to compensation.

The Company’s Management Board members did not discharge the functions of management board members in any other TAURON Group companies.

The management contract entered into with the President of the Management Board in 2016 provided that if the contract is dissolved or terminated by the Company for reasons other than those specified in the contract, the President of the Management Board will receive a severance pay equal to 3 monthly fixed base salaries, provided that he has discharged his function for at least 12 months prior to the termination of the contract.  By contrast, employment contracts entered into with the other Management Board members did not provide for compensation upon resignation or dismissal from the position without important reason or if their dismissal resulted from a merger of the Company through an acquisition.

In connection with Management Board members’ access to confidential information the disclosure of which might expose the Company and other TAURON Group companies to losses, the said management contract contained provisions prohibiting competition after the termination of discharge of the function. As regards the other Management Board members, non-competition agreements were signed with them. In accordance with the provisions of these contracts, persons refraining from running a competitive business within a specified period were entitled to compensation.

The Company’s Management Board members did not discharge the functions of management board members in any other TAURON Group companies.

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Non-financial remuneration components for Management Board members and key managers

As at the date of publication of this report, under the management contracts, the Management Board members are provided with Company-owned technical equipment and resources necessary for the discharge of their functions, including a company car.

In 2016, all Management Board members, except for the President of the Management Board hired under a management contract, and employees holding key positions in the Company were entitled to benefits and non-financial remuneration components offered by the Company.

In 2016, all Management Board members, except for the President of the Management Board hired under a management contract, and employees holding key positions in the Company were entitled to benefits and non-financial remuneration components offered by the Company.

These additional benefits included the following options:

  • participation in the Employee Pension Plan maintained by the employer (condition: continued employment relationship with the Company or any other TAURON Group company for at least 1 year);
  • a medical package funded by the Company;
  • a company car provided for the employee’s exclusive use;
  • a company apartment if the employee’s availability is necessary due to the nature of his or her work and the scope of his or her duties.
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Information on changes in the remuneration policy during the last financial year

In 2016, the Company introduced new remuneration setting rules for Management Board members.

In the financial year 2016, the TAURON Extraordinary Shareholder Meeting, in the performance of the Act of 9 June 2016 on the Rules for Remunerating Persons Heading Certain Companies, adopted a resolution on 15 December 2016 by the power of which new remuneration setting rules for Management Board members were introduced. Consequently, work was launched on the development of a new Remuneration Policy, consistent with the said resolution and a resolution adopted by the Company’s Supervisory Board on 19 December 2016 on setting the remuneration of members of the TAURON Polska Energia S.A. Management Board.

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Evaluation of the remuneration policy in place in the context of achievement of its objectives, in particular of a long-term growth in shareholder value and the enterprise’s operating stability

The applied system for remunerating Management Board members is consistent with the adopted Remuneration Policy and the Remuneration Setting Rules. The system in place is incentive-based, coherent and tied to the monitoring of annual financial plans and the adopted Strategy and directions of development.

The form, structure and level of remuneration are in line with the conditions prevailing on the market and are geared toward enabling the recruitment and retention of persons fulfilling the criteria required to run the Company in a manner that takes into account the interests of shareholders (creation of shareholder value) and prevents the emergence of conflicts of interest between Management Board members and shareholders. At the same time, they are built in a manner that is transparent to investors, allowing for building their trust in the Company and ensuring an incentive function for the Management Board.

The payment of variable remuneration components is linked to predefined measurable performance criteria which contribute to the Company’s long-term stability. They also include certain criteria of a non-financial nature fostering the creation of the Company’s long-term value.

The indicators used to determine the granting and value of the variable remuneration components are defined in accordance with the SMART principle and thus are specific, measurable, achievable, relevant and time-bound.

The remuneration and bonus system in place in the TAURON Group supports the achievement of strategic objectives and makes the amounts of remuneration dependent on the Company’s financial standing on an annual basis.

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System for remunerating Supervisory Board members

Until 15 December 2016, the Company applied the rules of remunerating its Supervisory Board members as set forth in the Remuneration Policy and in Resolution No. 29 of the TAURON Ordinary Shareholder Meeting of 6 May 2011 on setting the rules and amounts of remuneration for members of the TAURON Polska Energia S.A. Supervisory Board. However, the remuneration system currently in place was introduced on 15 December 2016 by Resolution No. 6 of the TAURON Extraordinary Shareholder Meeting dated 15 December 2016 on setting the rules for setting the remuneration of Supervisory Board members, adopted in of the Act of 9 June 2016 on the Rules for Remunerating Persons Heading Certain Companies (Journal of Laws 2016 item 1202).

Both the previous remuneration system applicable to Supervisory Board members and the system in place as at the date of this report provide for one-component monthly remuneration of a varying amount depending on the function discharged in the Supervisory Board.

According to the aforesaid 15 December 2016 resolution of the Extraordinary Shareholder Meeting, monthly remuneration for Supervisory Board members is set as the product of the average monthly remuneration in the corporate sector without profit-sharing in the fourth quarter of the previous year, as announced by the President of the Central Statistical Office, and the following multiplier:

  • 1,7 for the Supervisory Board Chairperson;
  • 1,5 for other Supervisory Board members.

Supervisory Board Members are entitled to receive their remuneration regardless of the frequency of meetings formally convened.

The remuneration is not due for the month in which the Supervisory Board member did not attend any of the formally convened meetings for unjustified reasons. The Supervisory Board decides by way of a resolution whether the absence of a Supervisory Board member from its meeting is justified or unjustified.

The remuneration is calculated pro rata to the number of days in which the function is discharged if the appointment of dismissal was effected during the calendar month.

The Company also covers the costs incurred in connection with the performance of the functions entrusted to Supervisory Board members, in particular the costs of travel from their place of residence to the place where the meeting of the Supervisory Board or of the relevant Supervisory Board committee is held and back, costs associated with the exercise of personal oversight and food and lodging expenses.

The following table presents the remuneration of members of the Company’s Supervisory Board in 2016.

 

Remuneration of members of the Company’s Supervisory Board in 2016
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No. Name Period in office in 2016 Remuneration and bonuses
(PLN ‘000)
1. Anna Biesialska 01.01.2016 – 30.12.2016 106
2. Stanisław Bortkiewicz 30.12.2016 – 31.12.2016 0
3. Beata Chłodzińska 01.01.2016 – 31.12.2016 142
4. Michał Czarnik 01.01.2016 – 30.12.2016 106
5. Maciej Koński 01.01.2016 – 06.06.2016 47
6. Leszek Koziorowski 01.01.2016 – 31.12.2016 107
7. Anna Mańk 01.01.2016 – 31.12.2016 130
8. Wojciech Myślecki 01.01.2016 – 14.11.2016 94
9. Jan Płudowski 30.12.2016 – 31.12.2016 0
10. Jacek Rawecki 08.06.2016 – 31.12.2016 59
11. Jacek Szyke 01.01.2016 – 31.12.2016 118
12. Stefan Świątkowski 08.06.2016 – 31.12.2016 60
13. Renata Wiernik-Gizicka 01.01.2016 – 06.06.2016 47
14. Agnieszka Woźniak 16.12.2016 – 31.12.2016 3
Total   1 019

 

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Liabilities resulting from pensions and similar benefits for former Management Board members and Supervisory Board members

The Company does not have any liabilities toward its former Management Board members or Supervisory Board members resulting from pensions or benefits of a similar nature.

At the same time, it should be noted that on account of the Company’s liabilities toward its former members of the TAURON Management Board, the total amount of bonuses for the achievement of KPIs in 2015 (without overhead) and compensations for refraining from running a competitive business was PLN 5,616 thousand in 2016.

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White certificates white certificates "White" certificates "white" certificates Certificates confirming the saving of a specific quantum of energy as a result of completing investments to enhance energy efficiency.
Biomass biomass Denotes a biodegradable fraction of products, waste and residue from agricultural and forestry production and related branches of industry, including fishing and aquaculture, and biogas and a biodegradable fraction of industrial and communal waste.
Sub peak power generation units sub peak power generation units Power generation units used during a period when the power system has a higher demand for capacity. Power generation units in this class are used from 2000 to 4000 hours a year.
Peak power generation units peak power generation units Power generation units used only during a period when the power system has the highest demand for capacity. Power generation units in this class are used fewer than 2000 hours a year.
Blue certificates blue certificates "Blue" certificates "blue" certificates Certificates confirming the generation of energy from agricultural biomass.
CAPEX Capital expenditures.
Red certificates red certificates "Red" certificates "red" certificates Certificates confirming the generation of energy in highly-efficient coal co-generation.
Net debt net debt Liabilities for loans and borrowings less cash and cash equivalents.
Dividend dividend Portion of a company’s net earnings per share designated for payment to shareholders.
EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization.
Electromobility electromobility Using electric vehicles, both individual vehicles such as an electric car, electric scooter, electric motorcycle and electric bicycle and public transport means: trams, trolleybuses and trains. The assumptions for the Electromobility Development Plan and the domestic framework for the policy of alternative fuel infrastructure development call for there being one million electric vehicles on Polish roads by 2025. TAURON is conducting research and analyses on developing, promoting and disseminating electromobility among Polish nationals, developing the electromobility industry in Poland and in particular collaborating in launching and implementing the findings of scientific and technical work in this area. Moreover, jointly with PGE, Energa and Enea, TAURON has submitted an application to the Office of Competition and Consumer Protection to receive a permit to establish a company called ElectroMobilityPoland to create grounds for developing electromobility.
EMAS EMAS Eco Management and Audit Scheme, an EU instrument to encourage all types of organizations to improve their environmental protection constantly. Functions on the basis of Regulation (EU) no. 1221/2009 of the European Parliament and of the Council of 25 November 2009 on the voluntary participation by organizations in a Community eco-management and audit scheme (EMAS). The EMAS requirements constitute guidelines for organizations to structure their environmental protection duties, optimize costs and effectively manage energy and resources. EMAS is also a system for reporting an organization’s environmental impact making it easier to conduct dialogue in this area with stakeholders. Registration in the EMAS system means that an organization has satisfied the most rigorous environmental requirements.
Prosumer energy prosumer energy Generation of electricity, chiefly for one’s own needs and on a small-scale in installations harnessing renewable energy sources. Households and businesses that do this are called prosumers, meaning that they simultaneously play the role of energy producer and consumer.
Energy from distributed sources energy from distributed sources energii ze źródeł rozproszonych energetyka rozproszona rozproszone wytwarzanie generacja rozproszona energetyki rozproszonej generacji rozproszonej distributed energy Generation of energy by small generation units or facilities connected directly to distribution grids or located in the user’s electrical energy grid that usually generate electricity from renewable energy sources or non-conventional sources, frequently in cogeneration with the generation of thermal energy (distributed cogeneration). The following parties, for instance, may be part of a distributed generation grid: prosumers, energy cooperatives and municipal power plants.
Purple certificates purple certificates "Purple" certificates "purple" certificates Certificates confirming the generation of energy from methane captured in mines.
grid parity Grid parity Signifies the equivalence of the production costs of renewable energy with the energy generated in conventional power plants.
TGE’s FCM Indices Towarowa Giełda Energii (TGE) is the power exchange running the following markets: electricity (Forward Commodity Market - FCM), Day-Ahead Market - DAM, Intraday Market - IDM) and gas (FCMg, DAMg) and the Property Right Market.
smart metering Smart metering Comprehensive and integrated information system encompassing electrical energy smart meters for users of energy, telecommunication infrastructure, central database and management system. Smart metering systems support two-way communication in real time between information systems and electronic electricity meters installed in customers’ locations. Moreover, they may automate the entire billing process for energy users - from obtaining metering data to processing and aggregating them to issuing invoices.
Stakeholder stakeholder stakeholders Natural or legal entity (individual, community, institution, organization, office etc.) which may affect the company or remain under the influence of its actions.
IoT Internet of Things – concept according to which clearly identified objects may directly or indirectly collect, process or exchange data via computer network.
Emergency Cold Reserve IRZ Mechanism introduced by the transmission system operator in 2016. It involves the TSO paying the owners of generation sources which are planned to be withdrawn for keeping them ready to run in response to the operator’s instruction during the anticipated periods of capacity shortage.
ISO 14001 PN-EN ISO 14001:2005 standard PN-EN 14001 standard One of the ISO standards used in managing environmental protection. This standard designated for all organizations regardless of their type and size defines the requirements whose satisfaction supports the achievement of environmental (for instance preventing the emission of pollutants) and economic objectives.
Covenant covenant Contractual clause, order or ban imposed on a borrower to minimize the risk of its invsolvency. Covenents most frequently constitute protection for sources of debt payment to creditors, e.g. by banning further borrowing or disposing of assets.
Aggregate aggregate Bulk organic or mineral material used mainly to produce construction mortar and concrete and build roads.
HV and MV Lines linii WN i SN sieci WN i SN HV - high voltage grid in which the voltage ranges from 110 kV. This grid is used to transmit electrical energy over large distances. MV - medium voltage grid, i.e. an electrical energy grid in which the electrical voltage ranges from 1 kV to 110 kV. Medium voltage is broadly used in electrical energy grids to transmit electrical energy over medium distances and switch energy. It is used as an intermediate voltage between high voltage and low voltage connected to end-users.
Customer loyalization customer loyalization Strategy to acquire and retain customers in this time of growing competition.
Micro-grid micro-grid Electrical energy micro-grid – set of generation equipment, electrical energy storage and receiver units connected in a joint network to ensure the reliable supply of electrical energy and minimize its cost.
Micro-cogeneration micro-cogeneration Technological process involving the cogeneration of thermal and electrical energy based on the utilization of small-scale equipment and medium capacities. Micro-cogeneration may be employed in all facilities in which there is a concurrent need for electrical and thermal energy. The greatest benefits from employing micro-generation are obtained in facilities in which the demand for these two types of energy does not oscillate much or is constant. That is why individual users, hospitals and educational centers, sports centers, hotels and public utilities are usually the most frequent users of cogeneration systems.
MSCI Emerging Markets Europe 10/40 Index Index comprising key companies listed on emerging markets in Europe.
MSCI Poland Index Index comprising more than 20 key companies listed on the Warsaw Stock Exchange.
Best Available Technology BAT The most efficient and sophisticated level of technology development and methods for conducting a given business. BAT are defined for various branches of industry. In the energy sector BAT forms the basis for determining borderline emission quantities, among others, to eliminate, or if that is not practicable, limit emissions and their overall environmental impact.
Sensitive user sensitive user According to the Act entitled Energy Law, a sensitive user is a person to whom a housing allowance has been awarded and who is a party to a comprehensive agreement or electricity sale agreement and who lives in the place where electrical energy is supplied.
Impairment losses impairment losses Losses because of the impairment of non-current assets taken in accordance with the regulations of international accounting IFRS (MSSF) standard.
Corporate Social Responsibility CSR Corporate Social Responsibility – business philosophy and management strategy calling for an organization to take responsibility for the impact exerted by its decisions and actions on society and the environment. Its foundations are rooted in ethical and transparent conduct, taking into consideration the expectations of stakeholders and cultivating good long-term relations with the overall environment. Corporate social responsibility is one of the key methods of achieving sustainable socio-economic development.
PV cells Photovoltaic cell (PV) – semi-conductor material in which the energy of solar radiation is converted into electrical energy.
omni-channel Omni-channel According to the omni-channel idea, the future of commerce is to conduct online sales while simultaneously encouraging customers to make traditional purchases. Online and offline sales during the digital revolution should fluidly penetrate one another.
Operating Capacity Reserve ORM Mechanism of providing operational reserves by the Centrally Discharged Units (JWCD), where they were able to deliver electricity to the system, but for market reasons were not used. It was implemented in Poland in 2014.
RES Renewable energy sources.
PM-RES Property rights to certificates of energy for electrical energy generated in RES.
Polygeneration polygeneration Parallel generation of energy and chemicals.
RESPECT Index Index consisting of companies listed on the Warsaw Stock Exchange to identify companies managed in a responsible and sustainable manner. It takes into account the quality of reporting, the level of investor relations, corporate governance and liquidity, among others, whereby it simultaneously constitutes a real point of reference to measure the attractiveness of companies as investments.
Balancing market balancing market The balancing market is what is referred to as a technical market. That means it is not a place to sell energy. Its purpose is the physical delivery of the energy purchase/sale agreements executed by participants and balancing the demand for electricity with its generation in real time in the national electrical energy system (KSE). The existence of the balancing market is indispensable for the energy market to function. Entities that buy energy have an obligation to participate in this market.
CATALYST Market Catalyst market Bond market. It is run on the transaction platforms of the Warsaw Stock Exchange and BondSpot.
SAIDI System average interruption duration index in the supply of electricity calculated in minutes per user. It is a reliability index whose value is the sum of the products of interruption duration in energy supply and the number of users affected by the consequences of such an interruption during a year divided by the total number of users connected to a grid.
SAIFI System average interruption frequency index of long interruptions in energy supply. It is a reliability index whose value is the number of users affected by the consequences of all such interruptions during a year divided by the total number of users.
Gangue gangue The rock that is extracted from a deposit of a given mineral that is considered to be unusable waste.
Smart City smart city Smart city is a project involving the implementation of specific solutions exerting a real impact on citizens. One example is supplying tools to urban residents to monitor energy consumption, among others. This is possible thanks to the special platform called eLicznik (eMeter). TAURON supplies smart meters, for instance, under the Smart City Wrocław project.
Smart Home smart home System to control a smart home. SMART HOME technologies control burglar alarms, temperature control and electricity supply systems. This is a real-time power consumption monitoring solution that TAURON offers via a platform to check readings from the smart power meter.
Smart grid smart grid Smart electrical energy grids to facilitate communication between participants on the energy market to supply energy services while cutting costs and enhancing efficiency and integrating distributed sources of energy, including renewable energy.
smart metering Smart metering Smart metering system – electronic system used to measure energy consumption obtaining more information than from a conventional meter, and to send and receive data through electronic communication.
small carbonate sorbent Small carbonate sorbent Fine carbonate sorbent (limestone powder) – is a product derived from the process of dehydrating and profound milling of limestone whose active ingredient is calcium carbonate, CaCO3. Fine carbonate sorbent is used in processes to desulfurize flue gas – to remove SOx.
Enterprise Risk Management System ERM Set of rules, standards and tools to accomplish the fundamental objective of risk management i.e. ensuring the security of the TAURON Group’s operations. This system is regulated by the document entitled Enterprise Risk Management System in the TAURON Group, defining the TAURON Group’s enterprise risk management framework and rules.
Tauronet tauronet TAURON Group’s corporate intranet portal, one of the most important tools of communicating with employees. One of the largest platforms of its type in Poland at the time of publishing this report.
CCS Carbon dioxide capture, transport and geological storage technology.
CCU Capture and use (management) of carbon dioxide, eg. in the the chemical industry.
Smart Technology smart technology Control system in a smart home, among others - it is responsible for the safety and living comfort of residents.
Towarowa Giełda Energii S.A. Polish Power Exchange TGE Towarowa Giełda Energii (TGE) (Polish Power Exchange) is the only licensed power exchange in Poland. Presently, TGE runs the following markets: Day-Ahead Market (DAM), Commodity Forward Market with physical delivery (CFM), Property Rights Market for RES and Cogeneration. TGE also keeps a register of the Certificates of Origin for electrical energy produced in RES and in highly efficient cogeneration sources and the CO2 Emission Allowance Market.
Energy Regulatory Office ERO Government authority regulating the Polish energy market (electricity and gas, among others).
Coal winnings coal winnings The rock material taken from the mine face. It includes the mineral and gangue.
WACC Financial ratio - weighted average cost of capital.
WIBOR Warsaw Inter Bank Offered Rate Warsaw Inter Bank Offered Rate - interest rate used on the Polish interbank market for interbank loans.
WIG Index comprising all the companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
WIG20 Index comprising the 20 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG30 Index comprising the 30 largest and most liquid companies listed on the Main Market of the Warsaw Stock Exchange.
WIG-Energy Sectoral index comprising companies participating in the WIG index and simultaneously classified in the energy generation sector.
WIG-Poland National index comprising only the domestic companies listed on the Main Market of the Warsaw Stock Exchange that fulfill the basic criteria for inclusion in its indices.
Underground mining pit underground mining pit Space created as a result of mining works.
Highly-efficient cogeneration high-efficiency cogeneration Generating electrical or mechanical energy and usable thermal energy in cogeneration to save the original energy used in the cogeneration unit in an amount no lower than 10% compared to the generation of electrical energy and thermal energy in separate systems or in a cogeneration unit with an installed electricity capacity under 1 MW compared to the generation of electrical energy and thermal energy in separate systems.
Green certificates green certificates "Green" certificates "green" certificates Certificates of origin, i.e. a document that confirms the generation of electricity with renewable energy sources. The green certificate system has been in force in Poland since 1 October 2005 (and has changed in the new RES Act).
Yellow certificates yellow certificates "Yellow" certificates "yellow" certificates Certificate certifying the origin of energy. Operators of cogeneration units fired with gaseous fuels or with a total installed power source of less than 1 MW may be compensated with yellow certificates.
TPA Third Party Access - TPA is one of the most important principles (besides unbundling) on which the deregulated energy market is founded. TPA gives an energy user the right to buy it from any energy seller of its choosing.
EUA CO2 emission unit.
IFRS International Financial Reporting Standards – standards and their interpretations approved by the International Accounting Standards Board (IASB).
RFX Request for proposal.
Global Reporting Index GRI Independent international organization whose mission is to create a joint global framework for communicating responsibility and sustainable development. The GRI guidelines are an international reporting standard for organizations regardless of size, business sector and venue. Their application gives a guarantee of consistency in terminology and indicators.
International Integrated Reporting Council IIRC The International Integrated Reporting Council is an organization whose purpose is to create globally accepted integrated reporting guidelines based on combining financial, environmental, social and corporate governance reporting in a clear, succinct, coherent and comparable format. It consists of global leaders such as the International Federation of Accountants (IFAC), the International Accounting Standards Board, the United Nations Environmental Program (UNEP), the International Organization of Securities Commissions, the World Business Council for Sustainable Development and the Global Reporting Initiative (GRI).
integrated reporting non-financial reporting standard International integrated reporting standard encompassing financial and non-financial data devised by IIRC.

GRI indicators