Good morning, ladies and gentlemen, on the conference for the media, investors, and analysts, with respect to the TAURON Group's financial results for the third quarter of 2023. The host of today's meeting is Mr. Krzysztof Surma, the Vice President of the Management Board for Finance. My name is Łukasz Zimnoch, I am the press spokesman of TAURON Polska Energia Company, and I will be conducting today's conference.
Ladies and gentlemen, the presentation will be conducted in Polish, alongside the simultaneous interpreting into English. Outside of the broadcast, you can listen in to today's meeting using the teleconference mode of operation. Already, I'd like to ask you to send questions using the form that's available on the broadcast website. That's the only option that you have to ask questions, so please use that form. Mr. President, let's move on to the presentation, then traditionally, we'll be holding a Q&A session. Please, let's go ahead with presentation.
Good morning, ladies and gentlemen. I had a pleasure to conduct the conference for Q3 2023. In Q3 2023, we were dealing with good financial results posted by the group. On one hand, very good financial results, on the other hand, very weak, much weaker operating results. This mix of data means that in total, we're dealing with good data. Data regarding revenue and EBITDA themselves were the historical highs. The group posted the EBITDA after Q3, close to PLN 5.5 billion. At the same time, the group also generated higher revenue, more than 20% higher year-over-year, generating more than PLN 32 billion after three quarters on a cumulative basis.
At the same time, that's Q3 on a cumulative basis, we posted the net profit of PLN 2,258 million. These good operating data meant that our net debt to EBITDA ratio after Q3 came in at 1.6, and thus it was at a sector, sectorally, very safe level from a point of view of a financing agreement. With respect to the CapEx, they went up by 11% year-over-year. I will be elaborating on that on the subsequent slides. Regarding the weaker operating data, here we are dealing, unfortunately, with a decline of volume of electricity distributed. It's about a 5% decline regarding the first three quarters of this year versus first three quarters of last year. We were dealing also with a decline of electricity production from renewable energy sources.
The main reason for that decline is the decline of the biomass-fired generation units outputting the high price of the biomass. Regarding the production of coal-fired units, we have a significant decline year-over-year, more than 20% decline. This was caused both by the electricity consumption decline in Poland, the decline of the production of electricity in Poland, I will provide on the subsequent slide. At the same time, the high coal prices, hard coal prices, and the merit order of the coal-fired units owned by TAURON Polska Energia. Also, regarding, based on the profitability of those units in the Polish, in the national electricity system, national power system. At the same time, we also dealt with a decline of a heat generation. Here, the weather conditions are the main reason behind this.
Last year, the temperature was lower than the average. The average temperature was lower than in the first three quarters of this year. We are talking, first of all, I mean here, the first quarter and the end of Q3 as well, because they, as a matter of fact, determine the intensity of the heating season. Regarding the retail electricity supply, also a minimum drop regarding the comparable data year-over-year. Let's move on to the data for Q3 alone. Here, the trends are similar. In terms of EBITDA, very good quarter. In terms of revenue, slightly smaller rise, quarter-over-quarter. I will expand on that on the subsequent slides. Regarding the operating data, they are also very similar to the ones for the three quarters.
Here, what's worth mentioning, the first one, the first aspect worth noting is the positive growth rate of volumes from the renewable energy sources, and the second aspect is a greater decline regarding heat generation. Here, one have to say, one has to say that the heating season began last year in September. This year, September was very warm, and thus, the heating season got shifted till the next month. If we look at the highlights of this year, most of them have already been discussed by us during the Q1 conference call and the H1 conference call. Let me remind you that the main aspect that was the subject of works of the group, the key, of key importance for the group, is the works on the negotiations of the key terms regarding the spin-off, spin-off of the coal assets.
We expanded on that during the last conference. Regarding the events that took place after the balance sheet date and after the last conference, earnings conference call, here, what's worth mentioning is the signing of the agreement BGK, worth PLN 750 million. It's a revolving credit agreement. The second important event, that's very important from the point of view of TAURON Group, is a matter of ratings assigned by Fitch Ratings. Again, TAURON got the investment grade rating BBB with a stable outlook, and with significant pointing to the distribution is our key segment, based on which the earnings and the financial stability of TAURON Group is built upon. Let us move on to the CapEx. Here, we are observing an increase year-over-year by 11%.
What's worth noting is that the beneficiaries of that growth, with respect to the individual segments year-over-year, is the distribution, the renewables lines of business. Let us remember that last year, we also used to have a mining substitute in our structure of our group, and the lack of investment in this area was basically shifted to significant degree to distribution. It's more than 30% up the CapEx in that segment, and practically in the distribution line of business, the CapEx came in at close to PLN 2 billion. The key area, more than 50% of the capital spending, was allocated to the new grid connections, new consumer grid connection, PLN 1.06 billion. In addition, also the grid refurbishment, overhaul spending went up year-over-year.
The second beneficiary, the renewables line of business, more than 30%+ increase year-over-year. Currently, we are in the process of constructing six new generation sources, two photovoltaic farms and four wind farms, with a capacity of close to 230 MW. The other lines of business, also the CapEx in the heat line of business, the refurbishment, replacement, capital spending and generation, and quite significant expenditures in the IT and lighting areas. The very macroeconomic situation this year was marked by a slowdown, economic slowdown. For quite some time, the PMIs have been coming in at below 50 points, which means that they continue to indicate a recession environment. This had to be reflected in the decline of electricity consumption. This decline is close to 5% if we compare the data year-over-year.
This, in turn, has an impact upon the decline of production output, with decline of electricity consumption, alongside with increase of imports. And still let us note that last year, Poland used to be the exporter, net exporter of electricity. Prices in Poland were lower than the adjacent countries. This year, situation is reversed, has been reversed. The prices in Poland are higher than the neighboring countries, and thus, we are dealing with a change in the balance export, of exports and imports. This year, we are a net importer of electricity. These two factors, the economic slowdown, the decline of electricity consumption, plus the electricity imports from outside Poland, means that we have a close to 9% decline of electricity generation in Poland. And what's worth noting here is how this decline in production is spread over individual sources.
This partly explains the weak operating results in our generation segment, at a more than 20% decline regarding the volume of electricity generated. Because in Poland, we observed a significant increase over production, the renewables area. We are dealing here with a close to 20% increase year-over-year. We have a clear rebound, a strong rebound in the production from the gas-fired units. The key factor, of course, is the issue of a significant decline of the gas prices, natural gas prices year-over-year, and we have a very significant decline over production, both from the lignite-fired units as well as the hard coal-fired unit. In here, in the case of the hard coal-fired units, as you can see on this graph, generally, nationwide, it's more than 13% decline. In case of our units, it's more than 20%.
As I mentioned, this is the result of possibility rate ranking in the merit order, and we unfortunately are the negative beneficiary of a decline of electricity consumption or electricity generation from the hard coal-fired units. Let us move on to the detailed financial data for the first three quarters of 2023. Here, let me go back to the issue of the revenue. As I mentioned, the revenue, we had a more than 20% increase year-over-year. The main issue here is the increase of electricity sales price, and the second key factor is the increase of the rate, of the price of the distribution service.
Here, the rate for the distribution of electricity services, and they, these two factors, to a large degree, determine this increase year-over-year. If we talk about the net profit, here, one can say that, for first time, since a long time, we had a time when we didn't have major impairment charges, write-downs on, related to the assets on the group level, and therefore, the year net profit generated year-over-year is significantly higher this year. The second part is related to EBITDA. EBITDA also, the recurring year-over-year adjusted by one-offs, taking, stripping out one-offs is significantly higher based. Looking at the number of one-off events, we can see how many one-off events took place this year, too.
Let us remember, this year is quite special, because practically, there is no segment in our group which didn't, that wasn't impacted by, quite significantly, by the legislative regulations, which were introduced at the end of last year and also this year. They had an impact both on the recurring earnings as well as the one-off events, and this is worth remembering, discussing the full year results this year. But it's true, EBITDA year-over-year is significantly higher. Positive impact on this EBITDA came from the balance of the, as far as one-off events, is the balance of the upward adjustment in the distribution line of business. The negative impact came from the provision set up in Q3 in the supply segment to reduce the household bills by PLN 125.
An additional positive impact came from the RAFAKO damages and EBITDA alone, recurring EBITDA, is a bit lower than the reported value due to a number of significant one-off events. On the other hand, it's significantly higher versus last year. Let us remember, when at that time, we had a long number of events that had a negative impact, especially on the generation segment. I will expand on that later on. Regarding Q3 alone, here, a significant market improvement regarding quarter-to-quarter comparison. But let us remember, this is the time when last year we were setting up, first of all, a provision for onerous contracts. Secondly, last year, we were also dealing with an outage of the Nowe Jaworzno, Nowe Jaworzno unit didn't operate.
At that time, at the worst moment regarding electricity prices, we were doing a lot of buybacks on the market. So that's why such a big difference in the results year-on-year in Q3 2023 versus 2022. Looking at the individual segments, again, one should emphasize that our key segment is distribution. As always, its results, its earnings, make up the key part of our EBITDA. The distribution's EBITDA, after three quarters, is close to PLN 3.5 billion. What's worth noting is a very good result of the generation segment this year, after a very weak results last year and a big loss, wide loss. This year, EBITDA in the generation segment already topped PLN 1 billion. Moving on to Q3, here, you can clearly see that the distribution segments are a key line of business.
More than 90% of the earnings of, in Q3 came from the distribution line of business. The negative impact on EBITDA came from the one-off event. This is the provision that I already mentioned. The provision set up in the supply line of business, which is due to the regulation that was introduced, and it translates into the reduction of, bills for all the consumers that, meet the criteria defined in that regulation. The provision, let me remind you, that we disclosed it, was PLN 566 million. Moving on to EBITDA and the distribution of EBITDA, or demonstrating the impact, how the EBITDA was changing in the individual lines of business year-over-year. Again, you can see clearly that the biggest contributor, positive contributors to the earnings were the distribution and the generation segments.
As I mentioned, the distribution segment, after a very wide loss last year, we have clearly better results, and that's why such a big difference in the earnings year-over-year, more than PLN 1.7 billion. In the distribution line of business, let me draw your attention to one of events. And here, the upward adjustment balance, I will come to that when I discuss the segment. Regarding the other segments, especially the renewables and the supply segments, one should emphasize here that the earnings of these segments were impacted by the legislative events, and the one-off events. The one-off events are related to the supply segment, first of all, and the provision that was set up regarding the renewables segment.
Here, we have the impact of regulations and the price caps that were imposed based on the act and the regulation that had been passed at the end of last year. If we move on to the few, the results for the, for Q3 alone, you can see that two segments have a positive big impact upon the increase of EBITDA year-over-year, and the negative impact came from, this is the distribution and generation, of course, but whereas the negative impact comes from the supply segment, as I mentioned before, here on this Q3 alone results, you can see best the impact of provision that was set up, we determined the earnings in Q3.
Moving on to the detailed analysis of individual segments, in case of a distribution segment, I would like to draw attention regarding the positive aspects of impact on this 3.5 billion PLN EBITDA. I would like to draw your attention to two aspects. The first one is the upward adjustment balance. I already mentioned it the third time, because since Q1, this effect can be observed, but it is worth noting once again, the pricing implication of this adjustment is around 600 million PLN, and that is worth noting when the Q1 of next year, looking at the market trends and the current price on the market, which will be the basis, probably, for agreeing upon the price with the President of Energy Regulatory Office. In Q1 next year, we'll be dealing with the reverse effect. This is worth noting.
We've been noting that since the beginning of this year, this is to a certain extent, in effect, to a certain degree, one-off, and it's very highly dependent upon the difference, price difference on the market. We do not expect this to be reversed, but to apply to the entire amount, PLN 600 million, but a part of it will probably be reversed in Q1 next year. The second aspect that had a very positive impact upon the earnings in the first three quarters is the margin on the distribution service. As a matter of fact, an increase of the distribution rate, increase of WACC, and the increase of the distribution rate as a result.
This has a very positive impact, and it's spread uniformly throughout the year, whereas from the cost point of view, the level of this margin is impacted by the cost of a difference, of the balancing differences, covering of the balancing differences. This balancing difference is not spread so uniformly throughout the year. It's more heavy, the company's, the company is more burdened with differences in the first and fourth quarter, especially Q4, the company is burdened most by that. So that's why I'd like to draw your attention to the fact that the earnings per quarter will not be spread uniformly. Already, you can see it in the first three months, and the earnings for Q1 and Q4 probably will not be spread evenly, of course.
Of course, we will be waiting until we, what the final result on the balancing difference, but statistically, it's not spread uniformly throughout the year. This year, due to the cost of the balancing difference, it has a significant impact upon the earnings, which you can already see after Q3, because the distribution rate already includes this cost. So the revenue part already includes this uniform distribution of that cost, while the cost of the balance differences, whereas the balancing differences themselves are estimated, adjusted after each quarter, and they are not distributed evenly, uniformly. So that's why the difference between quarters could be significant. In terms of the negative impacts in this segment, two issues should be noted. The first one is, of course, the settlement of the Regulatory Account. We already brought it up before.
As a matter of fact, in case of a change in the volume in the given year, the, it's if we have a positive impact from that, for that reason, the N plus one in the given year, it is placed on the Regulatory Account, when in the N plus two periods, it is deducted, and by deducting this positive result from a previous year, so then it has a negative impact. So a good year, 2021, has a negative impact upon the revenue in 2023. And the volume that we are now showing as the second negative impact, the other, the second PLN 273 million, that, that happens to be the same numbers, but they have nothing to do with each other.
The good, the weak result this year, the decline of volume, PLN 193 million, is also placed on the regulatory account. It'll be returned to the company in the N plus two period, if this balance stays at that level until the end of this year. Regarding the Q3 alone, earnings? Here, it can clearly see that, you don't have such a big, price impact regarding the upward adjustment. But as I mentioned, this is more visible in Q1, and it's worth noting again, the uneven distribution of, distribution rate versus the cost of balancing different. Looking at the quality parameters for the distribution segment, here, another quarter during which all the parameters set by the president of the Energy Regulatory Office have been met.
So as of now, we don't see any risk as far as the negative deviation, the impact of a negative deviation on the tariffs next year. So no negative impact upon the tariff in the subsequent years, because we meet the parameters required. Moving on to the renewable segment. In this segment, as a matter of fact, let me start with the positives. The positive impact came from the volume of electricity generation. Remember that the renewable does not include the biomass fired units. This segment only includes the production of the hydropower plants, wind farms, and the photovoltaic farms, and this year is getting better and better year-over-year, mainly due to the production of the hydroelectric power plants. This volume is roughly about 10% increase year-over-year.
We have a slightly higher production from the wind farms, but let's remember that we commissioned new capacities, so the very wind conditions year-over-year have been a bit weaker, and these were the positive impacts, whereas the negative impact comes from the issue of the pricing and the price caps that were introduced based pursuant to the act, the legal act. The second negative impact is the declining prices of the carbon credits. The obligation to redeem green certificates was lowered, but had an impact automatically upon the price on the market and had an impact upon the earnings of the renewables segment. Regarding Q3 alone, the impact of those factors had an impact upon the renewable segment, is very similar as for the first three quarters.
Volume production continues to have a positive impact, a little better. The negative impact comes from the energy pricing issues, both prices of electricity as well as the property rights. In the generation segment, I already touched certain issues, but I'll go back to last year's issues. Last year, we are dealing with two issues. First of all, for a large portion of the year, the new Jaworzno unit was not operational, especially in the second part of the year when the unexpected failure occurred in August last year, the company had to buy back electricity at very high prices on the market, which generated, of course, large losses. We disclosed that in our regulatory filings. In addition, the company had to set up a provision for onerous contracts.
Let's remember that last year, the hard coal prices went up significantly, and it led to the lack of profitability on some contracts concluded in the preceding years on the market. We are not dealing with the situation this year anymore. This year, the prices of the contracts, of course, concluded still in 2022, versus the forward prices of the market in 2022. They cover both the hard coal prices, which are of course high. In addition, this year, we are dealing with a stable operation of the unit, and even if there are buybacks, for instance, due to the fact that the units are not operating due to the recommendations of TSO, or due to the profitability of that from the commercial point of view, we are dealing with a positive result on the buybacks.
So the year-over-year situation is completely different. Last year, we had to buy back at this, at very high prices, much higher than the ones we had contracted. We generated a major loss for the TAURON generation subsidiary. This year, the situation has been reversed. All the buybacks that we do on the market generate a positive result, and which means that year-over-year, we have a significant, very significant leap in the EBITDA generated. The second factor, which is of lesser importance, but still significant as one of the events, but we also mentioned during the previous conferences, is the settlement of the RAFAKO contract and the damages received because of that, in the amount of 225 million PLN.
Regarding the earnings of Q3 in the generation segment, you can see even more clearly the difference that I mentioned. Let's remember, August last year, a failure of a new Jaworzno unit. In addition, we show the provisions for onerous contracts. These two factors, stripping them out, means that year-over-year, we have very strong growth of the earnings. However, you can see the EBITDA itself for Q3 is quite strongly normalized, and in general, it's not as high. PLN 128 million, also to a certain degree, is due to high hard coal prices on the market. If we move on now to the supply segment, here, the key element is a one-off event that I already mentioned, the setting up of a provision for worth PLN 125. The provision set up in Q3, it significantly reduced the earnings year-over-year.
However, it's also worth noting certain positives regarding the positive aspects. Again, this year, we had a fully passed-on cost in Tariff G, which of course, had a positive impact upon the earnings of the segment. Negative implications, negative impacts come from the write-downs from impairment charges, the financial condition of some customers has deteriorated, and therefore, for some accounts receivable, we had to book a write-down, impairment charge, and this impairment charge had negative impact on the earnings of a segment. Another negative impact comes from the value of the write-down. The majority of the write-downs in TAURON, in contrast to the other electric utilities in Poland, and this is focused in TAURON in supply agreement, about PLN 30 million plus has been booked as this write-down has a negative impact on its earnings.
If we move on to the Q3 earnings of the supply segment, as a matter of fact, the key event, but I again repeated the provision that was set up, and this provision meant that practically the entire EBITDA result in this quarter was consumed by the provision that was set up. Moving on to the debt and financing topic. Now, as I mentioned, after the balance sheet date, we signed the loan agreement with BGK. At this point, we have about PLN 4 billion of available financing. The maturities over the next few years are not very large. Of course, they are significant, but not very large. The earnings generated at the EBITDA level, as well as good management of the working capital, means that the.
After Q3, we have a net debt to EBITDA ratio of 1.66, which is a very satisfactory level. Nevertheless, the key aspect for the financing area in the subsequent months, years, will be the issue of spinning off the generation assets, because this will determine the ability to obtain financing also from the liquidity point of view. The issue of a payment for the CO2 emissions will be a certain challenge in the subsequent years. If this segment were not to be spun off from a point of view of the provisions of a finance agreement, not so much the availability of the financing itself. That's all regarding the data and representation. Let's have a Q&A session.
A number of questions have been sent, a lot of some of them very elaborate. Let me remind you that the only way that you can ask questions is to use a form available on the broadcast website. The first question: What is the reason for such a small write-downs for the Price Change Fund payout? It was 450 million PLN, at Enea it is 2.1 billion PLN, and at PGE, it's 4.8 billion PLN. So, Mr. President?
Well, first of all, let me start with the structure of the production, supply, and sales of individual utilities. Let us remember, in PGE, first of all, in that case, the structure of electricity generation production is totally different than in case of TAURON. TAURON, basically, is player number three on the market, with a relatively small share in the electricity generation market. PGE is number one player, Enea number two.
So the generation segment in our group has a much lower weight than the other energy groups. Secondly, the issue of the profitability of those units. Let us remember that we have a lot of 200 MW units in our group. Already in our presentation, you could see how low the production is, how much it dropped year-over-year in the generation segment, and thus the amount of impairment charges or the charges. I'm talking about the charge in the generation segment. It's, as I mentioned in the presentation, the major portion of the charges were charged in the supply segment.
Of course, the price caps are different in that segment. This price cap is based on the margin, and basically, the charge appears in the supply line of business in TAURON Polska Energia, around PLN 30 million-PLN 35 million. In the generation segment, it's only PLN 65 million. As I said, it is due to the volume of electricity generated and the profitability of electricity generation. That's such a wise reason for such a big difference in the charges between our energy groups.
Another question or a group of questions: Does the company see the risk of setting up a provision in the supply segment, taking into account the interpretation of the President of the Energy Regulatory Office regarding the incorrect settlements performed by the electric utilities? In case of TAURON, in contrast to PGE, you have seen higher bills invoicing for customers versus the legal, what's legally required. Was it justified? Were the customers excluded from the act on the cap, on the margins?
I will not be answering from PGE. I will start with a simpler part of the question. I have analyzed the approach of PGE regarding the issue of incorrect billing. As of now, no one has determined that yet. First of all, we are dealing with a certain interpretation of the President of Energy Regulatory Office. Of course, in our company, we reviewed it, we are analyzing it. We are also conducting legal analysis regarding this topic.
However, let us remember that the first analysis indicates that, in the case when why one should to make a charge based on, book a charge based on the hypothetical revenue, based on the initial review of what was published on the Energy Regulatory Office's website, it is difficult to agree with this approach. However, let us remember that, TAURON is a member of, trading, participating association. This association also sent a letter regarding this topic to the President of Energy Regulatory Office.
Of course, we identified aligned with this position. As I said, we are in the process of analysis. If such a situation were to occur that the company came to the conclusion that its approach is incorrect regarding making charges to the Price Difference Fund, that would make us recalculations, that we have to set up a certain provision and make an appropriate disclosure, regulatory filing in such a case. But as of now, as I said, we are in the process of analyzing this topic, this issue, and the first review indicates that the calculating the charge on the hypothetical revenue or income is not justified.
Next question, has the company taken part in this year's renewables auctions? What capacity did the company acquire? For what sources did the company receive the entire amount of claims agreed upon as part of a settlement agreement with RAFAKO? And once again, also, let me read, number three, question number four regarding the RAFAKO deal. Have all the provisions of the agreement, settlement agreement with RAFAKO been implemented? Does TAURON, do TAURON and RAFAKO cooperate regarding the Jaworzno project or any other project?
Well, let's go one by one. Have we taken part in the auctions? No, we have not taken part in the auctions this year. Regarding the receipt of the funds, yes, we have received, not really from RAFAKO, but from bank guarantees. Yes, the funds have been received. Have everything been fulfilled? Basically, yes. Of course, we have one more item regarding the settlements with the insurance company.
Here, we both, ourselves and RAFAKO, expect a certain payout of damages from the insurance company, but it doesn't have any impact upon the implementation of the provisions of the settlement agreement that was concluded. So let me confirm that all the funds we have received and the settlement agreement has been implemented, has been performed.
Regarding to what was. Do TAURON and RAFAKO still cooperating regarding any project in Jaworzno or any other project?
Well, TAURON having following the conclusion of the settlement agreement, TAURON fully supervises the operations and is operating the new Jaworzno, the new Jaworzno unit. RAFAKO is not involved in that. I'm not familiar with any project where we were to cooperate as of now with RAFAKO. Now, a very extensive question from Editor Sawicki from Rzeczpospolita.
In conjunction with the tariff-related regulation, the reduction of electricity prices for household by PLN 125, will TAURON submit a request, an application for an adjustment of the tariff to the, for this year still? What is the position of TAURON regarding the guidelines regarding the, price difference, payout charge? Do you share, the charges also related to the, applicable to the compensation for the profit lost? So how much would TAURON have to pay back, if we were sticking strictly to the guidelines of, Energy Regulatory Office? So let's start with those questions first, one and two. So in conjunction with, tariff regulation and the reduction of, household, invoices, will TAURON submit a petition, an application for an adjustment of the tariff for this year?
TAURON hasn't submitted such an application, and as of now, as for, as my knowledge now which is concerned, is not intending to apply, application for a tariff adjustment for this year. However, in line with the regulations in force, we have submitted the tariff applications both in the supply area and the distribution area, and we are in the process of, tariffing process regarding tariffs for next year. And of course, those tariff applications may also be referring, may also have references regarding to the payout to the customers of those 105 .
The second question: What is the position of TAURON regarding the guidelines for the calculation of a charge to the Price Difference Fund? Do you share, do you agree with the interpretation of the president of energy, where the charge should also be applicable to the lost revenue payout? How much would TAURON have to pay back if you were to be in line with the interpretation of the office?
Well, I already answered this question partly. It seems that this interpretation is excessive, I would say. It would also be applicable to the hypothetical revenue. Of course, for our own needs, we are calculating that, but we are in the process of calculations how much it could be. It's not a simple calculation. We are practically looking into each contract. We are trying to make these, these calculations. However, this position that was presented as of now seems excessive.
Next question is related to the coal contracting. What is the situation regarding the coal contracting for the generating units for 2024? Have the contracts been already signed, and why the PSCMI price, hard coal price, was at such a record level, despite the fact that we already passed the peak of energy crisis?
Well, regarding the contracting issue, we are in the process of commercial negotiations. I don't want to disclose too much. Of course, they are very highly sensitive, and that's true, the company is in the process of agreement. Some of the contracts might be close to the finalization. Regarding the rest, so in reference to the index, let us remember that the index has a certain historical feature, and contracts are also historical. So this was reflected also in our earnings. Both contracts for electricity that we are performing today, as well as the hard coal contracts, were concluded to a large extent last year, so during the energy crisis.
And as I said, from my point of view, we take decisions on signing contracts based on the margins, so the CDS that we can obtain. So if the contract has a higher electricity price, then the hard coal price can also be higher. So this index, in fact, reflects the situation from last year and the performance of last year's contract. Not so much, it doesn't reflect the current market situation, the contracting for subsequent years. So in the subsequent years, we will see factually the fluctuation of the index in the company's report.
There's a fourth question from Mr. Sawicki. We are seeing the extension of the decision about maintaining the 200 MW units until the end of 2028, according to the decision... In line with the decision following the trialogue of the European Union, is this decision about extension of the 200 MW units extension by 3 years final, and will there be some overhauls planned, and the potential correction of the settlements with the NABE, National Energy Security Agency?
Well, in the impairment tests, we assume the estimated revenue from potential capacity market. Of course, this capacity market has not been finally approved yet, so this does not predetermine definitely either the extension of the life cycle of these units, or about the overhauls. This is just an assumption, assumption that was made for the impairment test purpose. Well, I mentioned about the, answered about the overhauls, the correction of the settlements with NABE, National Energy Security Agency. It's difficult to speak about it.
Let us remember that we have prepared everything for the spin-off of the coal assets. What will be the formula of the spinning off of those assets? We'll probably find that out in the coming weeks or months, at the time when the government will be formed. It's a government concept. Therefore, we are, of course, prepared for the spin-off, but it's difficult to speak about the correction of any settlements because the very National Energy Security Agency has not been yet set up.
Ladies and gentlemen, Mr. President, this was the last question that we have received. Let me refresh just to check if there's anything else new. That was the last question during today's earnings conference call. Let me invite you for the next meeting, directly following the publishing of 2023 full year report. We will provide the information about the date of the conference in a traditional manner. Thank you very much, and see you next time. Also, thank you very much. Goodbye. Have a nice day.