Current report no. 1/2018

Conclusion of the coal purchase agreement with Polska Grupa Górnicza S.A.

Management Board of TAURON Polska Energia S.A. ("Company") would like toinform that a coal purchase agreement ("Agreement") was signed betweenthe Company and Polska Grupa Górnicza S.A. ("PGG") on January 18, 2018.

The subject of the Agreement is the purchase of thermal coal for theproduction needs of TAURON Group's power generating units. The Agreementwas concluded for an indefinite period of time.

The estimated value of coal supplies in the 2018-2021 time frame, basedon the coal price agreed for 2018, will reach the net amount ofapproximately PLN 2.15bn.

The coal price was agreed for the first year of the Agreement's term,while in the subsequent years the coal price will be indexed based onthe formula included in the Agreement, taking into account changes ofthe market conditions.

The Agreement provides for liquidated damages in the amount of 10percent of the value of unrealized deliveries in the given year.