Polish Briefing 21 February, 2019 9:00 am   
COMMENTS: Mateusz Gibała

Polish Briefing: The Parliamentary Energy Committee adopted an amendment to the law on energy prices

What goes on in Poland on the 21st of February.

The Parliamentary Energy Committee adopted an amendment to the law on energy prices in the first reading

The document after the heated debate and concerns raised by some deputies and the Energy Regulatory Office went to further work in the Parliament.

12 deputies voted for the adoption of the draft, which was received by the Sejm on Monday, 5 abstained. It assumes among others removing the obligation to set prices and electricity rates for 2019, in the amount higher than the rates from December 31, 2018 for companies dealing in transmission or distribution of energy.

There will be no increase in energy prices

– The amendment to the act will not increase energy prices. Our declarations on this matter remain valid. There will be no turning back from this law – said Deputy Minister of Energy Tadeusz Skobel.

As pointed out by the chairman of the Sejm Energy and Treasury Commission, Maciej Małecki, the aim of the amendment is to ensure uniformity of interpretation and clarify the resulting ambiguities around the Act. – The changes we are proposing today are to ensure the uniformity of interpretation adopted in December of the Act. It is about clarifying doubts, such as the resolution of transmission and distribution, which will remain unambiguously in the hands of the President of the Energy Regulatory Office – he said.

He reminded that the act passed in December 2018 saved Poles from the negative effects of the surge in electricity prices. – The increase in energy prices is observed throughout Europe. It amounted to several dozen percent. Thanks to the bill adopted in December, prices in Poland will not increase and will be maintained at the current level. The record increase in energy prices is directly related to the European Union’s climate policy and the CO2 emissions trading system – added Małecki.

A response to the expectations of the European Commission

– The amendment to the act is a response to the doubts of the European Commission – said Tomasz Świetlicki, director of the Energy and Heat Engineering Department in the Ministry of Energy. He reminded that since the adoption of the law in December last year, the resort has been in constant contact with Brussels. – The European Commission expressed its concerns about the Act. They referred to the possibility of the government administration’s influence on the decisions of the President of the Energy Regulatory Office, and hence the general regulation of the distribution and transmission prices of energy, which remain within its control, precisely through the voted Act. This area, according to EU law, is subject to regulations of local market regulators. The provisions contained in the draft amendment to the Act do not introduce a threat, which is an increase in energy prices and sufficiently compensate for possible increases in distribution or transmission tariffs – he added.

The Energy Regulatory Office has doubts

However, the draft law raises doubts of the Energy Regulatory Office. According to its president, Maciej Bando, the amendment may cost more than the Ministry of Energy estimates.

– As the experience from the past shows, the Ministry of Energy’s assessment of the effects of regulation was underestimated by them. In the case of the power market act, it was more or less 30 percent. I am afraid that the calculations presented by the energy department are also burdened with such a risk and de facto the costs of introducing this law are underestimated – he said.

According to the President of Bando, the Law on energy prices, withdraws the Polish electricity market by 30 years. – This is the end of the word market, this is the end of the energy industry’s efforts and politicians to make the energy market function in a natural way and that the price will not increase as a result of speculation. Political interference in the energy market that we are dealing with today takes us back by 20, and maybe 30 years. I do not see a simple solution to this situation for the next years. I am afraid that the attempt to unscrew it will result in an avalanche of negative effects – said the president of the Energy Regulatory Office.

– About 90 energy production depends on the Ministry of Energy. This is a far-reaching concentration of the market, which started a few years ago and continues. If, due to the owner’s supervision, the ministry needs URE support, we provide assistance. Lowering the excise duty and the interim payment, which has risen for unexplained reasons, is a legitimate and commendable movement. Everything that happens is also destructive for the market – he added.

– What happened on the Polish Power Exchange should result in earlier decisions that were made in December. Therefore, it was necessary to intervene in order to prevent the situation that we observed in the second half of 2018 from continuing in the next year – responded Tadeusz Skobel, deputy minister of energy.