The PGE Group entities are exposed to currency transaction risk and currency translation risk. The main sources of exposure to currency risk are presented below:

• capital expenditures denominated in or indexed to foreign currencies;
• indebtedness denominated in foreign currencies;
• sales of electricity denominated in foreign currencies (export);
• fees denominated in or indexed to foreign currency relevant to purchase of transmission capacities;
• sales and purchases of CO2 emission rights and gas as well as purchases of hard coal denominated in or indexed to foreign currencies;
• expenses related to current use of production goods denominated in or indexed to foreign currencies;
• financial assets with deposit characteristics denominated in foreign currencies.

The PGE Group entities enter into currency based derivative transactions exclusively in the purpose to hedge identified exposure to risk. Thus, the PGE Group entities are not permitted, as regards currency based derivative transactions, to enter into speculative transactions, i.e. those that increase the currency risk exposure in comparison with their level resulting from identified sources of exposure and that aim to obtain additional gains from risk factor changes.

The table below presents the Group’s exposure to currency risk with regards to particular classes of financial instruments: