The efforts of the Polish government to keep electricity prices for end consumers at the level of prices of mid-2018 along with avoiding excessive financial losses of energy companies, have not led to the desired outcome. The expenses of the energy companies have increased due to changing market conditions, rising prices of CO2 emissions and delays in launching new generation capacities. Attempts to solve the problem by making certain changes to the legislation do not produce the desired result.
The recent amendment to the Act amending the Act on the Excise Duty and Selected Other Acts applies primarily to commercial consumers and provides them with market regulated electricity prices.
The amendment was made in the light of the need to create a basis for the application of the EU Rules on State Aid (de minimis), which stipulates that a state may subsidize sound socially important services. Such aid does not need to be coordinated with the EU, as it is considered that small financial subsidies do not affect competition policy. According to the provisions of the Rules, the aid shall not exceed EUR 200,000 over three years per one enterprise. This makes it possible to regulate electricity prices for industrial consumers through market mechanisms (except for energy-intensive enterprises), as they can rely on compensation from a state.
According to experts in this industry, after the amendment of the law, the problem nevertheless exists as the law does not apply to all commercial consumers. Thus, according to the provisions of the Rules, de minimis aid cannot be granted to farmers and food business operators, as they are covered by other state aid programs. In addition, the question remains unanswered with regards to what shall be done with those who have already benefited from such aid and have exhausted the allowed limit, and how energy companies will bill such consumer companies as well. There is currently no regulation to address these issues. Such regulation can be expect only after the amendment is agreed with the European Commission. In the event that Brussels agrees to such a decision, the amendment will apply from mid- 2019.
As of now, businesses and local authorities have already experienced the negative effects of the law. The lack of electricity supply proposals, caused by unresolved issue, forces consumers to address the so-called backup sellers and buy electricity at much higher prices.
For example, the municipal government of Bydgoszcz, which recently announced a tender for electricity supply, has become a hostage to this situation. The only bidder was the state operator of the Enea distribution system. Other entities, without knowing the rules and not having information on the methodology of price calculation, do not risk submitting their bids to tenders throughout Poland. In the case of Bydgoszcz, the prices offered by Enea are higher than in 2018, but if the company hadn’t have submitted the proposal, the municipality would have addressed this company anyways, but as a back-up seller, and, therefore, would have paid a higher price.
Thus, the law, which was intended to make electricity cheaper, led to increase of expenses. The situation, as assumed, will remain uncertain until the formation of a new government following the parliamentary elections in the fall of 2019.
